EXHIBIT
10.1


 




	
  

  	
  Short-Term
  Incentive Plan (STI Plan)

  Terms and
  Conditions

  	
   

  






 


Compensation
Philosophy


 


Cubist’s compensation
philosophy is to attract, motivate, retain and reward employees with base pay,
short-term and long-term incentives, and benefits that competitively target the
market.  Cubist’s compensation programs
provide employees with the opportunity to earn increased compensation — based
on Cubist’s and the employee’s achievement of pre-established performance
targets.


 


Plan Overview


 


Cubist’s Short-Term
Incentive Plan (“STI Plan”) is a bonus plan for all Cubist employees (“Participants”)
which is designed to reward them for their roles in the achievement of Cubist’s
annual goals, as established by the Company (“Annual Goals”).  STI Plan awards (“Plan Awards”) are
determined on an annual basis, based on whether and to what extent Cubist
achieves its Annual Goals and each Participant achieves the Participant’s
individual goals for the relevant calendar year (the “Performance Period”).


 


Plan Objective


 


The intent of the STI
Plan is to provide highly competitive total cash compensation through an annual
variable pay program that reflects Cubist’s performance and the Participant’s
performance against goals and objectives. 
The STI Plan is an important variable component of the total
compensation package for all employees.


 


Eligibility


 


All employees of Cubist
are eligible to participate in the STI Plan. 
Participation in the STI Plan in one year does not automatically
guarantee participation in a future year. 
Compliance with all Cubist policies, guidelines and all applicable laws
is a prerequisite to receiving Plan Award. A determination that an employee is
not eligible to receive a Plan Award, or should have his or her Plan Award
reduced, due to his or her failure to demonstrate compliant behavior may be
made by the CEO and Chief Compliance Officer.


 


Performance Periods


 


Each calendar year,
beginning on January 1 of each year, constitutes a separate Performance
Period.


 


Corporate Goals


 


Prior to the beginning of
each Performance Period, the Company will establish corporate goals and
weightings for each of such goals. Cubist must achieve at least 70% of its
overall annual corporate goals and 90% of its annual net U.S. Cubicin revenue
goal for any Participant to be eligible for a Plan Award. For 2010, company
achievement of corporate goals will be capped at a 200% payout.  In addition to achievement of annual
corporate goals, Plan Awards are also determined on the basis of individual
performance and achievement of objectives.


 


Individual
Objectives


 


As part of Cubist’s
annual (or in the case of Participants who join the Company after the
commencement of a Performance Period, ongoing) goal setting process, each
Participant should propose individual objectives for his or her manager’s
approval. Each Participant will be measured by his or her manager against these
objectives, and each functional manager shall make a recommendation to the CEO
as to whether a Participant should receive a Plan Award, and, if so, the amount
of such Plan Award (assuming the minimum goal achievement set forth above has
been met).


 

















 


Funding


 


After the end of each
Performance Period, the CEO will make an initial determination of the aggregate
amount available for Plan Awards (if any) based on the Company’s performance
relative to the annual corporate goals (the “Pool”).  The Pool will be funded based on the Company’s
performance against corporate goals. 
Assuming the Company has achieved the requisite performance level, the
CEO shall then determine the award and amount of any Plan Awards to
Participants in accordance with the STI Target Percentages noted below;
provided that (a) the Board of Directors (the “Board”) shall have final
authority to determine the level of achievement against corporate goals, (b) the
Compensation Committee of the Company’s Board of Directors (the “Compensation
Committee”) shall have final authority to determine the Plan Awards for the Company’s
Section 16 officers (other than the CEO), and (c) the Board shall have
final authority to determine the CEO’s Plan Award.


 


Notwithstanding other
provisions of the Plan, prior to the Company’s calendar year end, the
Compensation Committee may determine a minimum amount, but not less than ninety
percent, that the Company will be obligated to pay based on the forecasted
achievement against annual corporate and individual goals that are objective
and measureable at calendar year end.


 


Calculating the
Amount of Any Target Award


 


Each Participant is
eligible for Plan Awards at a target percentage of salary (“Target Percentage”)
as listed in Figure 1 below. The “Target Award” is the Participant’s target
percentage, which is based upon the Participant’s eligibility group as of the
end of the Performance Period, multiplied by the salary that the Participant
earned during the Performance Period. The Target Award will be pro-rated based
on the portion of the performance period worked by the Participant if the
Participant (a) commenced employment with Cubist after the commencement of
the Performance Period, (b) worked part-time during the Performance
Period, or (c) took a leave of absence during the Performance Period.  Examples of calculations are included in
Figure 2 below.


 


Figure 1: Target
Percentage by Level


 


	
  Eligibility Group

  	
   

  	
  2010 Target

  Percentage (as %

  of salary)

  	
   

  
	
  CEO

  	
   

  	
  100%

  	
   

  
	
  Chief
  Financial Officer

  	
   

  	
  60%

  	
   

  
	
  Executive
  Vice President

  	
   

  	
  60%

  	
   

  
	
  Senior
  Vice President

  	
   

  	
  50%

  	
   

  
	
  Vice
  President, Sales & Marketing

  	
   

  	
  40%

  	
   

  
	
  Vice
  President

  	
   

  	
  35%

  	
   

  
	
  Executive
  Director

  	
   

  	
  25%

  	
   

  
	
  Senior
  Director, National Sales

  	
   

  	
  35%

  	
   

  
	
  Senior
  Director

  	
   

  	
  26%

  	
   

  
	
  Director

  	
   

  	
  22.5%

  	
   

  
	
  Senior
  Manager/ equivalent individual contributor

  	
   

  	
  16%

  	
   

  
	
  Manager/
  equivalent individual contributor

  	
   

  	
  12%

  	
   

  
	
  Scientific
  Employee

  	
   

  	
  8.5%

  	
   

  
	
  Administrative
  Employee

  	
   

  	
  6%

  	
   

  



 

















 


Figure
2: Target Award Calculation Examples


 


	
  Level

  	
   

  	
  Full-time or

  Part-Time

  	
   

  	
  Base Salary 

  	
   

  	
  Target

  Percentage

  	
   

  	
  Pro-Ration

  Factor

  	
   

  	
  Target Award

  	
   

  
	
  Manager

  	
   

  	
  Part Time

  (20 hours/wk)

  	
   

  	
  $75,000

  	
   

  	
  12%

  	
   

  	
  50%

  	
   

  	
  ($75,000 x 12% x
  50%)= $4,500

  	
   

  
	
  Senior Manager

  	
   

  	
  Full Time

  	
   

  	
  $90,000

  	
   

  	
  16%

  	
   

  	
  100%

  	
   

  	
  ($90,000 x 16% x
  100%)= $14,400

  	
   

  



 


Calculating Actual
Awards


A Participant’s
Actual Award is calculated in two portions, which are then added to form the
Plan Award.  The first portion is tied to
the Company’s performance against corporate goals while the second portion is
tied to the Participant’s performance against individual goals as assessed by
the Participant’s Manager.  As the
Participant’s level of responsibility in the organization increases, the
portion tied to Company results increases and the portion tied to individual
results decreases, as listed in Figure 3 below.


 


Calculation
of portion tied to Company results:


The Participant’s
Target Award is multiplied by the portion (percentage) tied to Company results
as listed in Figure 3 for the Participant’s eligibility group.  That number is then multiplied by Cubist’s
achievement against annual corporate goals.


 


Calculation
of portion tied to individual results:


The Participant’s
Target Award is multiplied by the portion (percentage) tied to individual
results as listed in Figure 3 for the participant’s eligibility group.  That number is then multiplied by the
percentage of individual goals met by the Participant as assessed by the
Participant’s Manager.


 


Calculation
of Actual Plan Award:


The Plan Award is
the sum of the portion tied to company results and the portion tied to
individual results.


 


Figure 3: Portions
Tied to Company and Individual Results


 


	
  Eligibility Group

  	
   

  	
  2010 Portion Tied

  to Company

  Results

  	
   

  	
  2010 Portion Tied

  to Individual

  Results

  	
   

  
	
  CEO

  	
   

  	
  100%

  	
   

  	
  Board discretion

  	
   

  
	
  Chief
  Financial Officer

  	
   

  	
  80%

  	
   

  	
  20%

  	
   

  
	
  Executive
  Vice President

  	
   

  	
  80%

  	
   

  	
  20%

  	
   

  
	
  Senior
  Vice President

  	
   

  	
  65%

  	
   

  	
  35%

  	
   

  
	
  Vice
  President, Sales & Marketing

  	
   

  	
  50%

  	
   

  	
  50%

  	
   

  
	
  Vice
  President

  	
   

  	
  50%

  	
   

  	
  50%

  	
   

  
	
  Executive
  Director

  	
   

  	
  40%

  	
   

  	
  60%

  	
   

  
	
  Senior
  Director, National Sales

  	
   

  	
  40%

  	
   

  	
  60%

  	
   

  
	
  Senior
  Director

  	
   

  	
  40%

  	
   

  	
  60%

  	
   

  
	
  Director

  	
   

  	
  30%

  	
   

  	
  70%

  	
   

  
	
  Senior
  Manager/ equivalent individual contributor

  	
   

  	
  30%

  	
   

  	
  70%

  	
   

  
	
  Manager/
  equivalent individual contributor

  	
   

  	
  30%

  	
   

  	
  70%

  	
   

  
	
  Scientific
  Employee

  	
   

  	
  30%

  	
   

  	
  70%

  	
   

  
	
  Administrative
  Employee

  	
   

  	
  30%

  	
   

  	
  70%

  	
   

  



 

















 


Figure 4: Actual
STI Plan Award Calculation Examples


 


	
  Level

  	
   

  	
  Target

  Award from

  Figure 2

  	
   

  	
  Company

  Results

  	
   

  	
  Individual

  Results

  	
   

  	
  Portion tied to

  Company Results

  	
   

  	
  Portion tied to

  Individual Results

  	
   

  	
  Actual STI Plan

  Award

  	
   

  
	
  Manager

  	
   

  	
  $

  	
  4,500

  	
   

  	
  100% of target

  	
   

  	
  100% of goals
  met

  	
   

  	
  $4,500 x 30% x
  100% = $1,350

  	
   

  	
  $4,500 x 70% x
  100% of goals = $3,150

  	
   

  	
  $1,350 + $3,150
  = $4,500

  	
   

  
	
  Senior Manager

  	
   

  	
  $

  	
  14,400

  	
   

  	
  125% of target

  	
   

  	
  100% of goals
  met

  	
   

  	
  $14,400 x 30% x
  125% = $5,400

  	
   

  	
  $14,400 x 70% x
  100% of goals = $10,080

  	
   

  	
  $5,400 + $10,080
  = $15,480

  	
   

  



 


Employment Changes


 


·                  New Hires:


If a Participant is hired
on or before September 30th of a Performance Period, his or her award will
be pro-rated to reflect the portion of the year actually worked with Cubist,
subject to the pro-ration guidelines as described below.  If a Participant is hired after September 30th of a
Performance Period, he or she will not be eligible for an award for the current
Performance Period.


 


·                  Leave of absence:


·                  If a Participant is on an approved leave of absence for
greater than 7 business days, the Participant’s Plan Award, if any, will be
prorated for the number of days the employee was active at work during the
Performance Period.


 


·                  Part-time:


·                  If a Participant is not a full-time employee, the
Participant’s Plan Award, if any, shall be pro-rated based on the Participant’s
regular scheduled work hours or percentage of time worked. If a Participant has
a change in regular scheduled work hours during a Performance Period, the
Participant’s Plan Award shall be pro-rated in accordance with the pro rata
guidelines below.


 


·                  Pro-rata Guidelines:


·                  All pro-rata adjustments occur on a per
day basis


 


·                  Departure or Termination:


·                  If a Participant’s employment terminates
prior to the end of a Performance Period, the Participant shall not be entitled
to a Plan Award unless such termination is as a result of Participant’s death
or Retirement (as defined below) or a Participant becomes disabled, in which
case the Participant, or the Participant’s estate (as the case may be) shall be
eligible for a pro-rated Plan Award payable on the Payment Date (as defined
below) for the Performance Period (as opposed to an earlier date).  “Retirement” means the voluntary retirement
of a Participant as an employee of the Company at any time after age 65 or such
earlier age as the Compensation Committee shall determine.


·                  If a Participant’s employment terminates
after the completion of the Performance Period but prior to the Payment Date, a
Participant shall be eligible for a Plan Award, unless such termination is as a
result of a termination for cause or misconduct.


 


Plan Award Payout
Process


 


Plan Awards, if
any, are paid out following the end of the Performance Period and after the
measurement of Cubist’s achievement of annual corporate goals has been
completed.  The Company will take all
reasonable efforts to ensure that payments to be made in accordance with the
provisions set forth in the STI Plan will be made within two and one-half
months after the Company’s calendar year end. 
Applicable taxes and other withholdings will be deducted from the Plan
Award, as appropriate for each jurisdiction. In the United States, individual
contributions to the 401(k) Plan as well as applicable taxes will be
deducted from the award payment.


 

















 


Glossary of Key
Terms


 


Payment Date: the
date that payments, if any, will be made to Participants under the STI Plan


 


Performance Period: 
the twelve month period beginning on January 1 of each calendar
year


 


Target Award: 
the
Participant’s Target Percentage multiplied by his or her base salary for the
Performance Period


 


Target
Percentage: the
maximum amount of a Participant’s Plan Award eligibility expressed as a
percentage of such Participant’s base salary


 


All payouts under the Plan are subject to the review and
approval of the Company’s Board of Directors. Notwithstanding anything else in
this Plan to the contrary, the Board retains the discretion to reduce, increase
or eliminate the funding for this plan in accordance with the Board’s
assessment of corporate goal achievement.


 


The Company reserves the right to amend or
discontinue the Plan at any time without prior notice. In no event does this STI
Plan alter the “employment-at-will” relationship between Cubist and its
employees. Cubist and its employees are free to terminate the employment
relationship at any time, without cause or notice.