Exhibit 10.27
Summary of Director Compensation Program
     Penwest Pharmaceuticals Co. (“the Company”) maintains a director
compensation program for its non-employee directors that is administered by the
Compensation Committee of the Board of Directors of the Company Under this
program, the Company’s non-employee directors receive annual fees, meeting fees
and equity compensation as follows:
Annual Fees
     Each non-employee director receives:

         
Annual retainer as a director
  $ 20,000  
Additional annual retainer for chairman of the board
    15,000  
Additional annual retainer for audit committee chair
    15,000  
Additional annual retainer for other audit committee members
    5,000  
Additional annual retainer for other board committee chairs
    10,000  
Additional annual retainer for other board committee members
    3,000  

     The Company pays these annual retainers in quarterly installments on the
first business day of each calendar quarter. Directors may elect to receive
these fees in cash, shares of the Company’s common stock, or a combination of
both. The Company determines the number of shares of common stock issued in lieu
of cash fees by dividing the fees to be paid in stock by the closing price of
the Company’s common stock on the date the fees are otherwise due.
Meeting Fees
     The Company also pays to non-employee directors, in cash or shares of the
Company’s common stock pursuant to directors’ elections, fees of $1,500 for each
board meeting attended in person and fees of between $500 and $1,000 for each
board meeting attended telephonically. The Company determines the number of
shares of common stock issued in lieu of cash fees by dividing the fees to be
paid in stock by the closing price of the Company’s common stock on the date the
fees are otherwise due.
Equity Compensation
     On the first business day of each calendar year, the Company issues to each
non-employee director either options to purchase 12,000 shares of the Company’s
common stock or a grant of 6,000 shares of restricted common stock, as elected
by each director. The exercise price of these options equals the closing price
of the Company’s common stock on the grant date. Options granted pursuant to
this program vest on the first anniversary of the date of grant. Restricted
common stock granted pursuant to this program is granted without requiring
payment of additional consideration by the directors and vests on the first
anniversary of the grant date. The vesting of options and of the restricted
common stock is subject to acceleration in full upon a change in control of the
Company.
     In addition, upon the date of the initial election of a non-employee
director to the Company’s board, the Company grants such non-employee director
20,000 shares of restricted common stock and grants an additional 12,000 shares
of restricted common stock every four years thereafter. These shares vest in
four equal annual installments commencing upon the first anniversary of the date
of the grant. The vesting of the restricted common stock is subject to
acceleration in full upon a change in control of the Company.
Expense Reimbursement
     The Company reimburses its non-employee directors for all reasonable
expenses incurred in attending meetings of the board of directors and committees
of the board.