Exhibit 10.1

CONFIDENTIAL

 

PHATHOM PHARMACEUTICALS

BONUS PLAN

Effective January 1, 2020

INTRODUCTION AND PURPOSE

The Phathom Pharmaceuticals (“Phathom” or the “Company”) Bonus Plan (the “Plan”)
is designed to reward eligible employees for the achievement of corporate
objectives, as well as measured individual objectives that are consistent with
and support the overall corporate objectives. Since cooperation between
departments and employees will be required to achieve corporate objectives that
represent a significant portion of the Plan, the Plan should help foster
teamwork and build a cohesive management team.  For purposes of the Plan, the
"Plan year" will mean each calendar year.

The Plan is designed to:

•

Encourage high performance by providing an incentive program to achieve overall
corporate objectives and to enhance shareholder value.

•

Reward those individuals who significantly impact corporate results.

•

Encourage increased teamwork among all disciplines within Phathom.

•

Incorporate an incentive program in the Phathom overall compensation program to
help attract and retain employees.

•

Provide an incentive for eligible employees to remain employed by Phathom
through and beyond the payout of any earned bonus.

ELIGIBILITY

All regular, exempt employees are eligible to participate in the Plan. Employees
are not eligible if included in a separate formal incentive plan provided by the
Company. In order to be eligible, a participant must remain employed through the
date awards are paid for a Plan year. If the participant is not employed on the
date awards are paid, the participant will not have earned any bonus. If the
participant has been subject to a performance improvement plan or other
disciplinary procedure during the Plan year, any award to such individual will
be at the discretion of the CEO or the Compensation Committee.

Change in Status During the Plan Period:

 

a.

Participants hired during the Plan year:

 

•

Participants hired during the Plan year are eligible for a prorated award based
the number of months employed in an eligible position.

 

•

In order to be eligible, a participant must have been in an eligible position
for at least three (3) full consecutive months prior to the end of the Plan
year.

 

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b.

Promotion/change in level:

 

•

For promotions that occur after the fourth month of the applicable Plan year but
prior to tenth month of the applicable Plan year, the calculation will be
prorated, based on the number of months at each bonus percentage level.

 

•

If the promotion occurred after the ninth month of the applicable Plan year, the
entire calculation will be based on the bonus percentage applicable prior to the
promotion.

 

c.

Transfer to a position that is included in a separate formal Incentive Plan:

Awards will be pro-rated using the same discipline as outlined for promotions
above and in the separate formal incentive plan.

 

d.

Termination of employment:

 

•

If a participant’s employment is terminated voluntarily prior to the date awards
are paid, the participant will not be eligible to receive an award.

 

•

If a participant’s employment is terminated involuntarily prior to the date
awards are paid, it will be at the absolute discretion of the Company whether or
not an award payment is made.

 

e.

Leave of Absence: Employee may be considered for a prorated award in the event
of a leave of absence during the Plan year. The proration requirement can be
waived at the discretion of the Chief Administrative Officer or for members of
Executive Leadership team at the discretion of the Compensation Committee.

AWARD CALCULATION

Awards will be determined by applying a “bonus percentage” to the participant’s
base salary in effect at the end of the Plan year. While the Compensation
Committee may change the bonus percentage for any Plan year, the following bonus
percentages will initially be used for this purpose:

 

Position Title

Bonus Percentage

CEO

50%

COO and CFO

40%

Executive Leadership Team

35%

VP

30%

Senior Director, Director

25%

Associate Director

20%

Senior Manager, Manager

15%

Below Manager

10%

 

Corporate and Individual Performance Factors

The CEO will present to the Compensation Committee a list of weighted corporate
objectives for the applicable Plan year, which are subject to approval by the
Compensation Committee. All participants in the Plan will then develop a list of
key individual objectives, which must be approved by the responsible Vice
President or Senior Vice President and, in the case of executive officers, by
the CEO.  

 

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The relative weight between corporate and individual performance factors varies
based on the individual’s assigned level within the organization. The weighting
may be reviewed periodically and may be adjusted for any Plan year. The
weighting for the performance factors will initially be as follows:

 

 

Corporate

 

Individual

Executive Leadership Team

100%

 

—

Vice President and Above

80%

 

20%

Director Level

70%

 

30%

Senior Manager and Below

60%

 

40%

 

Performance Award Multipliers

Separate award multipliers will be established for both the corporate and, if
applicable, the individual components of each award. The award multiplier for
the corporate component shall be determined by the Compensation Committee each
Plan year, in its sole discretion. The same award multiplier for the corporate
component of the award shall be used for all Plan participants. The award
multiplier for the individual component shall be determined by the responsible
Vice President or Senior Vice President and by the President and / or CEO.  

While the Compensation Committee may change the award multipliers for any Plan
year, the following scale will be used to determine the actual performance award
multiplier based upon the measurement of corporate and, if applicable,
individual performance objectives.

 

 

 

Performance Category

 

Award Multiplier

 

1.

Performance was truly outstanding or exceeded all

 

125% - 150%

 

 

objectives

 

 

 

2.

Performance met or exceeded all objectives or was

 

100% - 125%

 

 

excellent in view of prevailing conditions

 

 

 

2.

Performance generally met the year’s objectives and

 

 

 

 

was very acceptable in view of prevailing conditions

 

50% - 100%

 

3.

Performance for the year met some, but not all, objectives

 

0% - 50%

 

4.

Performance for the year was not acceptable in view of

 

0%

 

 

prevailing conditions

 

 

 

For members of the Executive Leadership team for whom no individual performance
component is applicable, the CEO will determine an individual multiplier between
80% and 120% for approval by the Compensation Committee based on the employee's
individual performance for the Plan year relative to his or her individual
objectives established at the beginning of the Plan year (the "ELT Individual
Multiplier"), which ELT Individual Multiplier, if approved, will be multiplied
by the final corporate award multiplier for the Plan year to determine such
employee's final bonus award payout.  No ELT Individual Multiplier will apply to
the CEO.  

 

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Unless otherwise determined by the Compensation Committee, in no event will an
employee's final bonus award payout exceed 150% of his or her target annual
bonus for the applicable Plan year.

Example for Employee (Other than Executive Leadership Team)

The example below shows a sample cash bonus award calculation under the Plan for
a non-executive employee, which is determined after the end of the Plan year.

Step #1: A potential target bonus award is calculated by multiplying the
employee’s base salary by the participant's assigned target bonus percentage.

Step #2: The calculated potential target bonus award is then split between the
corporate and individual performance factors by the employee’s assigned level
(per the weighting above). This calculation establishes specific potential
dollar awards for the performance period based on both the individual and
corporate performance factor components.

Step #3: After the end of the Plan year, corporate and individual award
multipliers will be established using the criteria described above. Awards are
determined by multiplying the potential target bonus awards in Step #2 by the
actual corporate and individual award multipliers.

 

Example:

Step #1: Determine Target Bonus Award

 

 

 

 

Position:

Associate Director

 

Base salary:

$ 100,000

 

Target bonus percentage:

20%

 

Potential target bonus:

$   20,000

 

 

 

 

Step #2: Split Target Bonus Award Based on Corporate/Individual Weightings

 

 

 

 

Potential corporate performance bonus (70%):

$ 14,000

 

Potential individual performance bonus (30%):

$   6,000

 

 

 

 

Step # 3: Actual Bonus Award Calculation

 

 

 

 

 

Assumed payment multipliers based on assessment of corporate and individual
performance:

 

 

 

 

Corporate multiplier

  75%-performance generally met objectives

 

Individual multiplier

125%-performance exceeded objectives

 

 

 

 

Cash Award:

 

 

            Corporate component

$  10,500   ($ 14,000 x 75%)

 

            Individual component

$    7,500   ($   6,000 x 125%)

 

            Total Award

$  17,500

 

 

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Example for Executive Leadership Team

The example below shows a sample cash bonus award calculation under the Plan for
a member of the Executive Leadership Team, which is determined after the end of
the Plan year.

Step #1: A potential target bonus award is calculated by multiplying the
employee’s base salary by the participant's assigned target bonus percentage.

Step #2: After the end of the Plan year, a corporate award multiplier will be
established using the criteria described above. Awards are determined by
multiplying the potential target bonus awards in Step #1 by the actual corporate
award multiplier.

Step #3: After the end of the Plan year, the CEO will recommend an ELT
Individual Multiplier for approval by the Compensation Committee.  The final
award is determined by multiplying the award after application of the corporate
award multiplier in Step #2 by the final ELT Individual Multiplier.

 

Example:

Step #1: Determine Target Bonus Award

 

 

 

 

 

Position:

Executive Leadership Team

 

Base salary:

$ 300,000

 

Target bonus percentage:

40%

 

Potential target bonus:

$ 120,000

 

 

 

 

Step #2: Bonus Award Calculation Related to Corporate Performance

 

 

 

 

Assumed payment multiplier based on assessment of corporate performance:

 

 

 

 

Corporate multiplier

  75%-performance generally met objectives

 

 

 

 

Cash Award prior to application

 

 

of ELT Individual Multiplier:

$  90,000   ($ 120,000 x 75%)

 

 

 

 

Step #3: Application of ELT Individual Multiplier

 

 

 

 

ELT Individual Multiplier approved by Compensation Committee: 120%

 

 

 

 

Total Award

$  90,000 x 120% = $108,000

 

 

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AWARD PAYMENTS

Bonus award payments may be made in cash, through the issuance of stock, stock
options or another form of equity award, or by a combination of cash, stock,
stock options and/or another form of equity award, at the discretion of the
Compensation Committee. All bonus award payments are subject to applicable tax
withholdings. In the event that the Compensation Committee elects to pay bonus
awards in stock or stock options, the Compensation Committee, in its sole
discretion, will make a determination as to the number of shares of stock or
stock options to be issued to each Plan participant in satisfaction of such
bonus awards. The issuance of stock and stock options may also be subject to the
approval of the Company’s stockholders, and any stock options issued will be
subject to the terms and conditions of the Company’s equity plan.

Payment of bonus awards will be made at such times as determined by the
Compensation Committee, but not later than four months following the Plan
year.  

PLAN PROVISIONS

Governance

The Plan will be administered by the Compensation Committee of the Board of
Directors (the “Compensation Committee”). The CEO of Phathom will be responsible
for the administration of the Plan with respect to non-executive employees. The
Compensation Committee will be responsible for approving any compensation or
incentive awards to executive officers of the Company. All determinations of the
Compensation Committee or the CEO, as applicable, under the Plan, shall be final
and binding on all Plan participants.

Compensation Committee’s Absolute Right to Alter or Abolish the Plan  

The Compensation Committee reserves the right in its absolute discretion to
abolish the Plan at any time or to alter the terms and conditions under which
incentive compensation will be paid. Such discretion may be exercised any time
before, during, and after the Plan year is completed. No participant shall have
any vested right to receive any compensation hereunder until actual delivery of
such compensation. Participation in the Plan at any given time does not
guarantee ongoing participation.

Employment Duration/Employment Relationship

This Plan does not, and Phathom’s policies and practices in administering this
Plan do not, constitute an express or implied contract or other agreement
concerning the duration of any participant’s employment with the Company. The
employment relationship of each participant is “at will” and may be terminated
at any time by Phathom or by the participant, with or without cause.

 

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Plan Unfunded CONFIDENTIAL

The Plan shall be unfunded. Amounts payable under the Plan are not and will not
be transferred into a trust or otherwise set aside. The Company shall not be
required to establish any special or separate fund or to make any other
segregation of assets to assure the payment of any award under the Plan. Any
accounts under the Plan are for bookkeeping purposes only and do not represent a
claim against the specific assets of the Company.

Rights Not Transferable

No rights of any participant to payments of any amounts under the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated.
All rights with respect to an award granted to a participant under the Plan
shall be available during his or her lifetime only to the participant.

Governing Law

The Plan shall be construed, interpreted and the rights of the parties
determined in accordance with the laws of the State of New Jersey (without
regard to principles of conflicts of law).

Any questions pertaining to this plan should be directed to the Human Resources
Department.

 

 

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