Exhibit 10.1
SANTARUS, INC.
2006 BONUS PLAN*
 
* Excludes those covered under the Sales Incentive Plan

 

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Santarus, Inc.
2006 Bonus Plan
The Santarus, Inc. (“Santarus” or the “Company”) Bonus Plan is designed to offer
employees a performance-based plan that rewards the achievement of corporate
goals, as well as individual goals that are consistent with the corporate goals.
The Bonus Plan will create an environment that focuses employees on the
achievement of the 2006 goals. A combination of corporate performance and
individual performance will determine individual bonus payouts.
Purpose of the Plan
The Santarus Bonus Plan (the “Plan”) is designed to:

  •   Provide a bonus program that helps achieve overall corporate goals and
enhances shareholder value     •   Reward individuals for achievement of
corporate and individual goals     •   Encourage teamwork among all disciplines
within the Company     •   Offer an attractive bonus program to help attract and
retain key employees

Plan Governance
The Compensation Committee of the Board of Directors is responsible for
reviewing and approving the Plan and any proposed modifications to the Plan. The
President and CEO of Santarus is responsible for administration of the Plan;
provided that the Compensation Committee of the Board of Directors is
responsible for reviewing and approving all compensation, including compensation
under this Plan, for all officers, vice presidents and any other employees with
an annual base salary greater than or equal to $200,000.
Eligibility
All regular employees of the Company working at least 20 hours per week will be
eligible to participate in the Plan. Temporary employees and part-time employees
(working less than 20 hours per week) are not included in this Plan. In order to
be eligible to receive any bonus award (“Bonus”) under this Plan, a participant:
(a) must have commenced their employment with the Company prior to November 15
of the Plan year and remained continuously employed through the end of the Plan
year and until the time Bonuses are paid; and (b) must be an employee in good
standing (i.e., not on a performance improvement plan or a Needs Improvement
performer).

 

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Corporate and Individual Performance
The President and CEO will present to the Compensation Committee and the Board a
list of the overall corporate goals for the Plan year, which is subject to
approval. All participants in the Plan will then develop a list of key
individual goals, which will be approved by the responsible Vice President.
The total bonus pool for the Plan will be based on achievement of the 2006
corporate goals and individual objectives that have been approved as indicated
above.
Bonus Awards
The Bonus will be paid in cash and is based on achievement of the 2006 corporate
goals and achievement of individual objectives. The Bonus will be calculated by
using the Base Salary, Weighting Factor, Target Bonus Percentage and Goal
Multipliers as identified below:
Weighting Factor
The relative weight between corporate and individual performance factors will
vary based on levels within the organization. The weighting factors will be
reviewed annually and adjusted, as necessary or appropriate. The weighting for
2006 will be as follows:

                  Position   Corporate     Individual  
President and CEO
    100%          
Group G (Officers)
    100%          
Group F (Non-Officer VPs)
    80%       20%  
Group E (Directors)
    80%       20%  
Group D (Managers)
    60%       40%  
Group C
    40%       60%  
Group A & B
    20%       80%  

Target Bonus Percentages
Bonus awards will be determined by applying a “target bonus percentage” to the
base salary of employees in the Plan. Following are the 2006 target bonus
percentages:

      Position   Target Bonus Percentages
President and CEO
  50%
Group G
  35%
Group F
  30%
Group E
  20%
Group D
  15%
Group C
  10%
Group B
  7.5%
Group A
  5%

 

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The base salary as of December 31, 2006 times the target bonus percentage will
be used to establish the target bonus award for the 2006 year.
Goal Multipliers
Corporate Goal Multiplier: The following scale will be used by the Board of
Directors to determine the actual “corporate goal multiplier” based upon
measurement of actual corporate performance versus pre-established corporate
goals and objectives. The goal multiplier will be used with the calculated
target bonus award and the weighting factor to determine the actual cash award
for each individual based on corporate performance.

     
Performance Category
  Goal Multiplier
 
   
1. Performance for the year met or exceeded goals or was excellent in view of
prevailing conditions
  90% - 150%  
2. Performance generally met most of the year’s goals or was acceptable in view
of prevailing conditions
  50% - 90%  
3. Performance for the year met some, but not all goals
  25% - 50%  
4. Performance for the year was not acceptable in view of prevailing conditions
  0%

Individual Goal Multiplier: The “individual goal multiplier” will be determined
by taking into account the performance rating (Pinnacle, Standing Ovation, Great
Performance, etc.) given to the individual through the 2006 review cycle as well
as any other relevant criteria relating to the individual’s job performance
during 2006. The specific multipliers for each performance rating level is
reviewed and approved by Executive Management each year.
Calculation of Award
The example below shows a sample bonus award calculation under the Plan. First,
a target bonus award is calculated for each Plan participant by multiplying the
employee’s base salary by the target bonus percentage. This dollar figure is
then divided between the corporate component and the individual component based
on the weighting factor for that position. This calculation establishes specific
dollar target bonus awards for the performance period for each of the corporate
and individual components.
At the end of the performance period, corporate and individual goal multipliers
will be established using the criteria described above. The corporate goal
multiplier, which is based on overall corporate performance, is used to
calculate the corporate bonus awards

 

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for all Plan participants. This is accomplished by multiplying the target
corporate bonus award established for each individual by the actual corporate
goal multiplier. The individual goal multiplier, which is based on an
individual’s performance rating, is used in the same way to calculate the actual
individual bonus award.
Example:          Actual Cash Bonus Award Calculation

     
Group Level
  B
Position
  Executive Assistant
Base Salary as of December 31, 2005
  $50,000
Target Bonus Percentage
          7.5%
Target Bonus Award
  $  3,750

     
Target Bonus Award Components:
   
Target Bonus Award based on corporate performance (20%):
  $   750
Target Bonus Award based on individual performance (80%):
  $3,000

     
Corporate Goal Multiplier
  80%
Individual Goal Multiplier
  90%

     
Actual Cash Bonus Award Calculation:
     
Corporate Bonus Award
  $   600 ($750 x 80%)
Individual Bonus Award
  $2,700 ($3,000 x 90%)
Total Actual Cash Bonus Award
  $3,300

Payment of the Actual Cash Bonus Award
Annual performance reviews for Plan participants will be completed by
February 28, 2007. Payments of actual cash bonus awards will be made as soon as
practical, but not later than March 15, 2007. Participants’ entitlement to
Bonuses under this Plan does not vest until the Bonuses are actually paid.
Participants who join the Company prior to November 15 of the Plan year and
remain continuously employed through the end of the Plan year will be eligible
to participate in the Plan and have their actual cash bonus award prorated based
on their actual time with the Company during the Plan year.
A participant whose employment terminates voluntarily prior to the payment of a
Bonus award will not be eligible to receive the Bonus award. Continued
employment is a condition of vesting. If a participant’s employment is
terminated involuntarily during the Plan year, or prior to payment of Bonus
awards, it will be at the absolute discretion of the Company whether or not a
Bonus award payment is made. A participant must also be an employee in good
standing (not on a performance improvement plan or Needs Improvement performer)
in order to be eligible to receive a Bonus payment.

 

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Company’s Absolute Right to Alter or Abolish the Plan
Santarus reserves the right in its absolute discretion to abolish the Plan at
any time or to alter the terms and conditions under which bonus 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 payment until actual delivery of such compensation. Notwithstanding
the generality of the foregoing, at the Company’s discretion all or a portion of
a Bonus payment may be made in shares of the Company’s common stock.
Employment Duration/Employment Relationship
This Plan does not, and Santarus’ 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 Santarus or by the participant with or without cause.