Exhibit 10.2

 

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ADOLOR CORPORATION

INCENTIVE COMPENSATION PLAN

 

Purpose

 

This Incentive Compensation Plan (the “Plan”) is designed to provide
Participants (as defined) with an incentive, in the form of a cash payment (an
“Award”), to achieve specified corporate and/or individual objectives during a
period of time selected by the Board of Directors (the “Board”) to which the
Award relates (a “Performance Period”).

 

Eligibility

 

Persons employed by Adolor Corporation (the “Company”) during a Performance
Period in active service for all or any part of the Performance Period are
eligible to be “Participants” under the Plan for such Performance Period and may
be considered for an Award, in each case subject to the “Exclusions, Limitations
and Other Conditions” set forth below. An employee is not rendered ineligible to
be a Participant by reason of being a member of the Board.

 

OBJECTIVES; AWARD LEVELS

 

Major corporate objectives (and the relative weighting of such objectives) (the
“Corporate Objectives”) will be established and approved by the Board of
Directors, upon the recommendation of the Compensation Committee of the Board
(the “Committee”).  The Corporate Objectives may be based on, among other
things: revenue or other Company financial objectives; research and development,
clinical, regulatory or manufacturing objectives; operational efficiency
measures; other measurable objectives tied to the Company’s success; or such
other criteria as the Board shall determine in its discretion.  Individual and
departmental objectives (“Individual Objectives”) for employees other than the
President and Chief Executive Officer will be established and approved by one or
more of the Executive Officers of the Company or their designees.

 

The Board or the Committee will establish the Award level that may be paid to
each Executive Officer if certain performance criteria are achieved (a “Target
Award Amount”).  Target Award Amount for employees at the levels of Vice
President and below will be established by the Executive Officers from time to
time.

 

EVALUATION OF PERFORMANCE AGAINST CORPORATE OBJECTIVES

 

The Committee will evaluate corporate performance against the pre-established
Corporate Objectives.  In making this evaluation, the Committee also may
consider achievement of other milestones that had not been previously
established as Corporate Objectives, or such other items that it considers
relevant in its discretion.  Based on this analysis, the Committee will
determine the percentage of achievement against the Corporate Objectives for
consideration and approval by the Board.  A minimum of 60% achievement against
the Corporate Objectives is necessary for any Award payout under the Plan.

 

Any Award under this Plan to the President and CEO will be based on the level of
achievement of the Corporate Objectives approved by the Board.  The Award amount
determined may be increased or decreased by the Board.

 

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Awards, if any, under the Plan to Participants other than the President and CEO
will be determined based upon a weighting of Corporate Objectives and Individual
Objectives.

 

Evaluation of Performance Against Individual Objectives

 

The evaluation of individual performance against Individual Objectives for each
Participant (other than the President and CEO) will be made by management of the
Company.  In the case of the Executive Officers of the Company other than the
President and CEO, achievement against their respective Individual Objectives
shall be made by the President and CEO, subject to the ratification and approval
of the Committee and/or the Board.

 

DETERMINATION OF AWARDS

 

The Board, upon the recommendation of the Committee, shall review and approve
the aggregate amount of Award dollars available for payment to the Participants
under the Plan, as well as the individual Awards, if any, to be made under the
Plan to the President and CEO and the other Executive Officers.

 

The President and CEO will review and approve the individual Awards to be made
to all non-Executive Officer Participants under the Plan.

 

EXCLUSIONS, LIMITATIONS AND OTHER CONDITIONS

 

·                  Awards, if any, under the Plan will be distributed not more
than 90 days following the end of the Performance Period.

·                  Employees must be actively employed by the Company on the day
the Award is distributed to be eligible to receive such Award.

·                  If an employee is eligible to receive an Award but is on an
approved leave of absence when such Award is distributed, the employee will
receive such Award upon return to active status.

·                  New hires must have been employed for at least 90 days during
the Performance Period to be deemed to be a Participant under the Plan, and any
Award to such a Participant will be prorated for the year’s length of service.

·                  Employees must have attended all mandatory training and
acknowledged compliance with all policies and required SOPs to receive as Award
under the Plan.

·                  Managers must have completed mid-year and annual performance
reviews for all of their employees to receive incentive compensation payout.

·                  An employee will be ineligible to receive an Award if on a
Performance Improvement Plan or under any formal disciplinary action at the time
of the payout.  Eligibility will be prorated for any time during the year that
an employee is on a Performance Improvement Plan or under any formal
disciplinary action.

·                  No person shall have any claim to an Award under the Plan and
there is no obligation for uniformity of treatment of Participants under the
Plan. Awards under the Plan may not be assigned or alienated.

·                  Neither the Plan nor any action taken hereunder shall be
construed as giving to any Participant the right to be retained in the employ of
the Company.

·                  The Company shall have the right to deduct from any Award to
be paid under the Plan any federal, state or local taxes required by law to be
withheld with respect to such payment.

 

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·                  The Board or the Committee shall have full discretionary
power to administer and interpret the Plan and to establish rules for its
administration (including the power to delegate authority to others to act for
and on behalf of the Board or the Committee) subject to such resolutions, not
inconsistent with the Plan, as may be adopted by the Board. In making any
determinations under or referred to in the Plan, the Committee (and its
delegates, if any) shall be entitled to rely on opinions, reports, analysis or
statements of employees of the Company and its affiliates and of counsel, public
accountants and other professional or expert persons.

·                  The Plan shall be governed by the laws of the State of
Delaware and applicable Federal law.

 

The Board may modify or terminate the Plan at any time, effective at such date
as the Board may determine.

 

Adopted by Board of Directors January 6, 2005

Amended and Restated February 22, 2007

Amended and Restated April 9, 2008

Amended and Restated January 6, 2009

 

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