Exhibit 10.1


 


Pharmacopeia Drug Discovery, Inc.


2006 Incentive Compensation Plan


 


Purpose


 


This plan is designed to
provide Pharmacopeia Drug Discovery, Inc. (Pharmacopeia) employees with an
incentive to achieve the Company’s annual corporate objectives.


 


Corporate
Objectives


 


Major objectives for each
year will be established by the Board of Directors


 


Evaluation
of Corporate Performance


 


The Compensation
Committee will evaluate corporate performance against each objective as
follows:


 


	
  Description of Performance

  	
   

  	
  Performance

  Rating

  	
   

  
	
  Made significant
  progress toward achieving the objective

  	
   

  	
  0 to 94%

  	
   

  
	
  Achieved objective

  	
   

  	
  95% to 105%

  	
   

  
	
  Exceeded objective

  	
   

  	
  106% to 150%

  	
   

  
	
  Outstanding achievement

  	
   

  	
  151% to 200%

  	
   

  



 


Overall Corporate Rating and
Bonus Pool


 


An
overall corporate rating will be determined by multiplying each goal’s
weighting by each goal’s performance rating.


 


Determination of the Bonus Pool


 


The
Compensation Committee will determine the bonus pool.  The bonus pool will be based upon the overall
corporate rating multiplied by the salaries of bonus eligible employees
multiplied by their individual bonus targets.


 


Bonus Pool Allocation


 


The
Compensation Committee shall annually review and approve bonus awards for the
CEO and his executive direct reports. 
For payment of bonuses to the CEO and his direct reports, a minimum
overall corporate performance rating of 70% must be achieved.  For all other employees, the CEO will review and
approve the allocations of the bonus pool based upon the achievement of overall
corporate performance and the contribution of each group to the corporate
objectives.


 


Determination of Individual Bonuses


 


Each employee has
individual goals for each year.  These
relate directly to the corporate goals. 
Individual bonuses will be based on the overall corporate rating, the
achievement of each


 

















 


objective, individual
performance for both teams and departments, and bonus eligibility.  Each of these factors will impact any bonus
awards.  The Compensation Committee may
also consider individual discretionary bonus payments for exceptional
individual or team performance.


 


Criteria


 


•                  Bonus payments,
if awarded, will be distributed in March of the subsequent year.


 


•                  Employees must
be actively employed on the day the bonus payout is distributed in order to
receive that bonus payout.


 


•                  New hires are
eligible for the Incentive Program after completion of 90 days of employment,
and bonus payments will be prorated for the year’s length of service.


 


•                  Employees must
have attended all mandatory training and acknowledged compliance with all
policies and required SOPs in order to receive the bonus payout.


 


•                  Managers must
have completed performance reviews for all of their employees in order to
receive the bonus payout.


 


•                  Bonus
eligibility will be prorated for any time during the year that an employee is
on a Performance Improvement Plan or under any formal disciplinary action.  In addition, an employee will be ineligible
to receive a bonus if they are on a Performance Improvement Plan or under any
formal disciplinary action at the time of bonus payout.


 


•                  Pharmacopeia
reserves the right to modify this plan at any time.


 


Adopted
by Compensation Committee of the Board of Directors February 21, 2006.