**EXHIBIT10.509**

 

DESCRIPTION OFCHIRON CORPORATION’S

2004 EXECUTIVEOFFICERS VARIABLE COMPENSATION PROGRAM

 

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

 

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

 

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

 

The CompensationCommittee reserves the right to modify executive officer variable compensationif, in its sole discretion, it determines that executive officer performance orCompany performance warrant such modifications.

 

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