EXHIBIT
10.509


 


DESCRIPTION OF
CHIRON CORPORATION’S


2004 EXECUTIVE
OFFICERS VARIABLE COMPENSATION PROGRAM


 


Decisions on compensation
(base salary and variable compensation) of Chiron Corporation’s (“Chiron” or
the “Company”) executive officers are made by the Compensation Committee of the
Board of Directors.


 


The Compensation
Committee and, with respect to the Chairman and CEO, the Board of Directors met
on February 17 and February 18, 2005, respectively, and authorized base salary
adjustments effective February 28, 2005 and bonuses for 2004 performance for
Named Executive Officers as of December 31, 2004. In addition, the Compensation
Committee approved the 2005 goals under the Annual Incentive Plan, upon which
the executive officers variable compensation program is based.  The Committee continued the Company’s
approach that base salaries for executive officers should be measured by
reference to the 60th percentile of salaries for benchmark positions in
comparator companies.  Further, the
Compensation Committee provided that a significant portion of total cash
compensation (salary plus variable compensation) in the form of annual variable
cash compensation potential should be “at risk”, dependent upon individual,
business unit and overall Company performance.  
Variable cash compensation for executive officers overall was targeted
to yield total cash compensation at the 50th percentile, but with the
opportunity to significantly vary, up or down, from the 50th percentile of
total cash compensation as shown by comparative data, based on Company,
business unit, and individual performance.


 


The Compensation
Committee bases its decisions regarding variable compensation for executive
officers upon its evaluation of performance against pre-established performance
metrics developed at the Company, business unit and functional or corporate
unit level. Under the program, participants earn cash bonus compensation based
upon achievement by the Company and/or a particular business unit of specific
performance measures and based upon their individual performance.  Each participant’s target award is a
percentage of that employee’s base salary. 
The financial measures for executive officers are based on a revenue
metric and earnings per share metric focused on year over year growth.  The non-financial measures for executive
officers are significant research, development, commercial and other business
milestones.  Each of the business unit
presidents is also measured on the financial performance of his or her business
unit (on the basis of revenue and operating income) and specific research,
development and commercial milestones which are sector specific, and which
focus on priorities within each organization for this year.  If performance objectives are met, the Named
Executive Officers are eligible, at the discretion of the Compensation
Committee, for a cash bonus based on the following percentage of their annual
base salary (with potential for higher bonuses if performance substantially
exceeds the target level):  CEO – 120%;
President and COO – 100%; Presidents of Businesses – 100%; CFO – 75%.  The Compensation Committee approves the bonus
targets, measurement criteria and final determination of success against the
measurements.


 


The Compensation
Committee reserves the right to modify executive officer variable compensation
if, in its sole discretion, it determines that executive officer performance or
Company performance warrant such modifications.