Exhibit 10.61
Compensatory Arrangements for Non-Employee Directors
     OSI Pharmaceuticals, Inc. (“OSI” or the “Company”) compensates its
non-employee directors for service on the Company’s Board of Directors (the
“Board”) with both cash and equity compensation upon initial election and annual
election to the Board. In 2007, the Compensation Committee of the Board (the
“Committee”) engaged Radford Consulting (“Radford”), its independent
compensation consultant, to evaluate OSI’s Board compensation. Upon evaluation
and review, Radford, the Committee and the Board determined that the
compensation structure should be revised in order to (1) better align Board
members’ compensation with their responsibilities and (2) align Board
compensation with the more typical practices at peer companies. OSI’s current
Board compensation provides greater compensation upon initial election to the
Board as opposed to subsequent elections. Pursuant to Radford’s recommendation
and the Committee’s and Board’s review, the Board approved changes to the
compensation structure (1) to compensate the Chairs of Board committees and
service on more than one committee and (2) in general, to decrease the amount of
compensation upon initial election to the Board and increase the amount of
annual compensation. The Board approved the changes effective beginning the date
of the Company’s 2008 Annual Meeting of Stockholders in June (the “Annual
Meeting”). In addition, in order to be more equitable and avoid any windfalls,
the Board approved a requirement that all members of the Board elected to the
Board prior to the Annual Meeting must serve at least three years on the Board
before they are eligible to receive the increases to their annual equity grants
described below.
Annual Retainer Fee:
     The annual cash retainer fee payable to the members of the Board until the
Annual Meeting is set forth in the table below.

         
Chair of the Board
  $ 150,000  
Chair of the Audit Committee
  $ 90,000  
Member of the Audit Committee
  $ 75,000  
Member of Other Board Committee
  $ 62,500  

     The annual cash retainer fee payable to the members of the Board of
Directors effective after the Annual Meeting is set forth in the table below.

         
Baseline Cash Compensation                      
         
Board Member Retainer Fee
  $ 50,000  
 
       
Additional Cash Compensation                  
         
Chair of Board
  $ 100,000  
Chair of Audit Committee
  $ 30,000  
Chair of Compensation Committee
  $ 15,000  
Chair of Corporate Governance and Nominating Committee
  $ 10,000  
Chair of All Other Committees
  $ 10,000  
Member of Audit Committee
  $ 15,000  
Member of Compensation Committee
  $ 7,500  
Member of Corporate Governance and Nominating Committee
  $ 5,000  
Member of All Other Committees (excluding the Executive Committee)
  $ 5,000  

 

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Option Grants and Other Stock Awards:
Initial Grants
     Each non-employee director receives an initial grant of options upon his or
her initial election to the Board. Until the Annual Meeting, each individual who
becomes a director with the exception of the Chairman of the Board receives an
initial option to purchase 25,000 shares of common stock and an award of 8,500
shares of restricted stock, restricted stock units or deferred stock units.
Until the Annual Meeting, the Chairman receives an additional grant of options
to purchase 25,000 shares of common stock and an additional award of 8,500
shares of restricted stock, restricted stock units or deferred stock units.
After the Annual Meeting, each individual who becomes a director will receive an
option to purchase 15,000 shares of common stock and an award of 5,000 shares of
restricted stock, restricted stock units or deferred stock units upon his or her
initial election to the Board.
Annual Grants
     In addition to initial equity awards, non-employee directors receive annual
equity grants. Until the Annual Meeting, non-employee directors with the
exception of the Chairman of the Board receive an option to purchase 3,000
shares of common stock and an award of 1,500 shares of restricted stock,
restricted stock units or deferred stock units. Until the Annual Meeting, the
Chairman of the Board receives an option to purchase 6,000 shares of common
stock and an award of 3,000 shares of restricted stock, restricted stock units
or deferred stock units. After the Annual Meeting, each non-employee director
will receive options to purchase 7,500 shares of common stock and an award of
2,500 shares of restricted stock, restricted stock units or deferred stock units
upon each re-election for a one-year Board term so long as each current director
has served 3 years on the Board. After the Annual Meeting, the Chairman will
receive options to purchase 10,000 shares of common stock and an award of 4,000
shares of restricted stock, restricted stock units or deferred stock units upon
re-election for a one-year Board term.
Forms of Awards
     The restricted stock and restricted stock units represent the right of a
director to receive one share of OSI common stock upon vesting. Each deferred
stock unit represents the right of a director to receive one share of OSI common
stock upon the earlier of the director’s termination from service on the Board
or on a date no earlier than two years from the date of grant, as designated by
the director.
       The stock option awards and restricted stock awards, including restricted
stock units and deferred stock units, granted to the directors after June 14,
2006 vest annually over four years of the date of grant. The option awards
expire on the seventh anniversary of their respective grant dates, subject to
the earlier expiration upon the occurrence of certain events set forth in the
Company’s Amended and Restated Stock Incentive Plan. The exercise price of all
option awards is equal to 100% of the fair market value of the underlying common
stock on the date of grant.
Post-Retirement Medical Benefits:
     Prior to April 2007, we provided post-retirement medical and life insurance
benefits to eligible employees and qualified dependents, and members of our
Board of Directors. Eligibility was based on age and service requirements. These
benefits are subject to deductibles, co-payment provisions and other
limitations. In April 2007, we terminated this benefit and grandfathered the
directors who were eligible for participation in the plan at the time of
termination (Mr. White and Drs. Mehta and Granner).

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