Exhibit 10.1


 


DEPOMED, INC. BONUS PLAN


 


Depomed’s
Bonus Plan is designed to provide employees with a performance-based plan that
rewards the achievement of individual goals and corporate performance. Such
Bonus Plan is administered at the absolute discretion of the Company’s
Management, including its Board of Directors.


 


Background


Depomed
has a history of rewarding its high performing employees for their efforts and
accomplishments. As the Company continues to mature and grow, we have
formalized the structure of employees’ activities to be consistent with Depomed’s
Corporate Goals and have defined a specific process for calculating bonuses
consistent with employees’ individual contributions. Management and the Board
of Directors maintain absolute discretion in administering this plan so that it
remains flexible in meeting the changing needs of the organization.


 


All
levels of Depomed employees have been directed to establish individual goals
and objectives consistent with Depomed’s Corporate Goals. By following their
defined goals and objectives, the employees’ activities will focus on and
directly support the Corporate Goals. These goals are to be reviewed together
by employees and their supervisors on an ongoing basis throughout the calendar
year. The review period for accomplishing the current calendar year’s goals and
objectives ends on December 31.


 


Eligibility


All
existing, regular employees who work at least 30 hours per week will be
eligible to participate in the Plan. New employees who join the company by August 1
will be eligible to participate in the current year’s plan on a pro-rated
basis.


 


Bonus Target


A
“Bonus Target” has been identified for different levels of personnel and is
based on a percentage of base pay. The Bonus Target is based on two elements,
including the employee’s individual contribution and the achievement of the
corporate goals. If, in management’s opinion, an individual achieves all their
goals, they could be eligible to receive the entire bonus target percentage at
the end of the year, subject to overall corporate performance. This is
explained in more detail below.


 


Corporate Multiplier


The
portion of the Bonus Target attributed to the Corporate Goals will be subject
to a “Corporate Multiplier,” which will reflect the Company’s overall success
and fiscal concerns. In a year, where the corporate goals are met and the
Company’s finances are on target, the Corporate Multiplier could be 100%. Conversely,
in a year where only a portion of the corporate goals are met and finances are
not on target, a corporate multiplier of 75%, 50% or zero, for example, might
be applied to the Bonus Target. At the end of the subject year, the Company’s
performance will be evaluated by the CEO, COO, CFO and the Compensation
Committee of the Board of Directors and the Corporate Multiplier will be set.


 

















 


The
Bonus Targets have been set as follows:


 


	
   

  	
   

  	
   

  	
   

  	
  Weighting Related to

  	
   

  
	
   

  	
   

  	
  Bonus Target

  	
   

  	
  Corporate Goals

  	
   

  	
  Personal Goals

  	
   

  
	
  CEO

  	
   

  	
  50

  	
  %

  	
  80

  	
  %

  	
  20

  	
  %

  
	
  COO

  	
   

  	
  40

  	
  %

  	
  70

  	
  %

  	
  30

  	
  %

  
	
  Vice Presidents

  	
   

  	
  35

  	
  %

  	
  60

  	
  %

  	
  40

  	
  %

  
	
  Sr./Directors/Assoc.
  Directors

  	
   

  	
  25

  	
  %

  	
  60

  	
  %

  	
  40

  	
  %

  
	
  Sr./Managers

  	
   

  	
  15

  	
  %

  	
  50

  	
  %

  	
  50

  	
  %

  
	
  Supervisors

  	
   

  	
  10

  	
  %

  	
  40

  	
  %

  	
  60

  	
  %

  
	
  Independent
  Contributors

  	
   

  	
  5

  	
  %

  	
  20

  	
  %

  	
  80

  	
  %

  



 


Weighting of Goals


For
each individual goal identified, a weight will be assigned reflecting the
significance of the goal and the level of effort required to achieve it; the
combined weight of the different goals should total 100%. When establishing the
weight for a given goal, attention should be paid to the significance of the
goal and the effort required. For example, an ongoing goal that consumes 50% of
someone’s time for the year would receive a weight of 50%; a fixed-term goal or
standard that consumes 100% of an employee’s effort for three months would
receive a weight of 25% (reflecting 25% of the year). Other goals or standards
will be weighted and judged based on their significance or potential impact to
the company. For instance, a new multi-million dollar deal with a new partner,
might be weighted at 70%, regardless of the time involved to finalize the terms.
Or, a goal to streamline a new procedure in the lab and resulting in
significant time savings, might result in a weight of 75% (given that the
impact on the company is significant and long-lasting).


 


Bonus Calculation


Throughout
the year and at year-end, employees’ goals and achievements will be assessed by
management. An employee who achieved an individual goal will receive a “1” for
full credit of the goal; a goal that is well under way, but has not been fully
achieved could receive a “.5” for partial credit;
a goal not achieved will receive a “0” for no credit. An employee who not only
achieved his or her goal, but well exceeded expectations, resulting in tangible
evidence of significant improvement of the well being of the company, could receive a rating in excess of “1”. Management
maintains absolute discretion in determining the scope and impact of
accomplishments as well as taking into consideration key management and
employee behavioral attributes and job skills that are monitored on a quarterly
basis.


 


Performance Assessment and Payment of Bonuses


In
early January, following the plan year, individual and corporate goals will be
assessed and performance reviews will be prepared and delivered to employees. Bonuses
will be calculated and payment of bonuses will be made to employees no later
than March 15.


 


Employees
must be employed by Depomed on the day payment is made to be eligible for a
bonus payment. No employee, who has been under formal disciplinary action, will
be eligible to receive a bonus for that calendar year.


 


Depomed
retains the right to alter or eliminate the Plan and its terms and conditions
at any time and for any reason, before, during or after the plan year. All
decisions made by Management, including the Board of Directors, will be in
their absolute discretion, final and not subject to dispute.


 


No
participant shall have any vested right to receive any payment until actual
delivery of such compensation. This plan does not constitute a contract or
other agreement concerning employment with Depomed. Employment at Depomed is “at
will” and may be terminated at any time by Depomed or by the employee,
either with or without cause.


 


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