** **

 

** **

**UNITED STATES****SECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

** **

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**FORM 10-K/A**

**Amendment No. 1**

| **(Mark One)** |
|----------------|
| x              | **ANNUAL  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES EXCHANGE ACT OF 1934** |
|           | ** ** |
| ** **     | **For the  fiscal year ended December 31, 2008** |
| ** **     | ** ** |
| ** **     | **or** |
| ** **     | ** ** |
| o              | **TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES EXCHANGE ACT OF 1934** |
|           | ** ** |
| ** **     | **For the  transition period from          to          ** |
| ** **     | ** ** |

**CommissionFile Number 000-30469**

 

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**deCODE genetics, Inc.**

(Exact name of registrant as specified in itscharter)

 

| **Delaware**(State or other jurisdiction of incorporation or organization) | ** ** | **04-3326704**(I.R.S. Employer Identification No.) |
|----------------------------------------------------------------------------|------------|----------------------------------------------------|

** **

**Sturlugata8, Reykjavik, Iceland**(Address of principal executive offices)

 

**+354-570-1900**(Registrant’s telephone number, including area code)

 

**Securitiesregistered pursuant to Section 12(b) of the Act:**

 

| **Title of each class**        | ** ** | **Name of each exchange on which  registered** |
|--------------------------------|------------|------------------------------------------------|
| Common  Stock, $.001 par value |       | The Nasdaq Stock Market LLC                    |

** **

**Securitiesregistered pursuant to Section 12(g) of the Act:**None

 

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Indicate by check mark if the registrant is a well-known seasonedissuer, as defined in Rule 405 of the Securities Act. Yes o    No x

 

Indicate by check mark if the registrant is not required to filereports pursuant to Section 13 or Section 15(d) of the ExchangeAct. Yes  o    No  x

 

Indicate by check mark whether the registrant (1) has filed allreports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorterperiod that the registrant was required to file such reports), and (2) hasbeen subject to such filing requirements for the past 90 days. Yes  x    No  o

 

Indicate by check mark whether the registranthas submitted electronically and posted on its corporate Web site, if any,every Interactive Data File required to be submitted and posted pursuant to Rule 405of Regulation S-T during the preceding 12 months (or for such shorter periodthat the registrant was required to submit and post such files). Yes  o    No  o

 

Indicate by check mark if disclosure of delinquent filers pursuant toItem 405 of Regulation S-K is not contained herein, and will not becontained, to the best of registrant’s knowledge, in definitive proxy orinformation statements incorporated by reference in Part III of this Form 10-Kor any amendment to this Form 10-K.  o

 

Indicate by check mark whether the registrant is a large acceleratedfiler, an accelerated filer, a non-accelerated filer or a smaller reportingcompany. See definitions of “large accelerated filer”, “accelerated filer” and “smallerreporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

| Large  accelerated filer  o | Accelerated  filer  x | Non-accelerated  filer  o             | Smaller  reporting company  o |
|---------------------------------------|---------------------------------|-------------------------------------------------|-----------------------------------------|
|                                  |                            | (Do not check if  a smaller  reporting company) |                                    |

 

Indicate by check mark whether the registrant is a shell company (asdefined in Rule 12b-2 of the Exchange Act). Yes  o    No  x

 

The aggregate market value of the voting and non-voting common equityheld by non-affiliates of the registrant, computed by reference to the price atwhich the common stock was last sold as of the last business day of theregistrant’s most recently completed second fiscal quarter was $55,528,787.

 

Indicate the number of shares outstanding of each of the registrant’sclasses of common stock, as of April 15, 2009.

 

| **Class**                                | ** ** | **Number of Shares** |
|------------------------------------------|------------|----------------------|
| Common Stock,  $.001 par value |       | 61,761,805           |

** **

**DOCUMENTSINCORPORATED BY REFERENCE**

 

None.

 

 

 

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**EXPLANATORYNOTE**

 

                deCODE genetics, Inc. hereby amends its AnnualReport on Form 10-K for the year ended December 31, 2008, as filedwith the Securities and Exchange Commission on March 31, 2009, for thesole purpose of adding Items 10-14 of Part III.

 

                As required by applicable rules, currently-datedcertifications from our Chief Executive Officer and Chief Financial Officer areincluded as exhibits to this Amendment No. 1.

 

                Except as described above, no other revisions oramendments have been made to any portion of the Form 10-K. This Amendment No. 1does not reflect events occurring after March 31, 2009, the date of theoriginal filing of the Form 10-K, or modify or update any disclosures thatmay have been affected by subsequent events.

 

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**PART III**

 

**ITEM 10.****DIRECTORS,EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE**

 

**Directors**

 

                The name, age and principaloccupation of each person who is currently serving as a director is providedbelow, along with summaries of their respective backgrounds.   The directors hold office until theexpiration of their respective terms and until their respective successors areelected and qualify, or until death, resignation or removal.  The terms of J. Neal Armstrong, James R.Beery and Earl M. Collier, Jr. are to expire at our Annual Meeting ofStockholders in 2009.  The terms of KariStefansson and Peter Goodfellow are to expire at our Annual Meeting ofStockholders in 2010.

 

*                KariStefansson, M.D., Dr. Med.*, 60, has served as our President, ChiefExecutive Officer and a director since he co-founded deCODE in August 1996.  Dr. Stefánsson wasappointed to serve as the Chairman of our Board of Directors in December 1999.From 1993 until April 1997, Dr. Stefánsson was a professor ofNeurology, Neuropathology and Neuroscience at Harvard University. In addition,from 1993 through December 1996 he was Director of Neuropathology at BethIsrael Hospital in Boston, Massachusetts. From 1983 to 1993, he held facultypositions in Neurology, Neuropathology and Neurosciences at the University ofChicago. Dr. Stefansson received his M.D. and Dr. Med. from theUniversity of Iceland and is board-certified in neurology and neuropathology inthe United States.  He has publishednumerous articles on the genetics of common complex diseases.

 

*J**. Neal Armstrong*, 70, has served as a director since October 2003.  He currently serves as Chairman of our AuditCommittee and a member of our Compensation Committee.  Mr. Armstrong is Vice President, ChiefFinancial Officer and Secretary of Aspect Medical Systems, Inc., adeveloper and manufacturer of an anesthesia monitoring system.  Mr. Armstrong previously served asAspect’s Vice President of Investor Relations from 2005 to 2006, and as itsVice President, Chief Financial Officer, Secretary and Treasurer from 1996until his retirement in 2005.  From 1990to 1996, Mr. Armstrong served as Vice President of Finance, ChiefFinancial Officer and as a director of Haemonetics, Inc., a manufacturerof blood processing systems. From 1985 to 1990, he was the Vice President ofFinance and Administration, Treasurer and Chief Financial Officer at BTUInternational, a manufacturer of thermal processing systems. Prior to 1985, heserved for 14 years in senior operating and financial positions at TexasInstruments, Inc., an electronics company. Mr. Armstrong serves as a member of the Board of Directors andaudit committee, of TransMedics, Inc.

 

*James R. Beery*, 67, has served as a director since April 2004.  He currently serves as Chairman of ourNominating and Corporate Governance Committee and a member of our AuditCommittee.  Mr. Beery is Senior OfCounsel in the London office of Covington & Burling, an internationallaw firm. Prior to his retirement in 2001, Mr. Beery served as Senior VicePresident and General Counsel of GlaxoSmithKline plc, a UK-based globalpharmaceutical company. From 1993 until the formation of the merged companyGlaxoSmithKline, Mr. Beery served as Senior Vice President, GeneralCounsel and Corporate Secretary of SmithKline Beecham plc. Mr. Beery holdsan AB from Harvard College and a JD from Stanford Law School. He is currently adirector of Martek Biosciences Corporation, Orchid Cellmark, Inc., InionOY and the London Centre for the International Education of Students, and is amember of the Board of Visitors of Stanford Law School and the AdvisoryCommittee of the Stanford Law School Program in Law, Science and Technology.

 

*Earl M. “Duke” Collier, Jr.*, 61,**joined ourBoard of Directors in July 2006.  Hecurrently serves as Chairman of our Compensation Committee and a member of ourAudit Committee.  Mr. Collier is anExecutive Vice President at Genzyme Corp. He has previously served as Presidentof Vitas Healthcare, was a partner at the Washington, DC-based law firm ofHogan and Hartson, and served as Deputy Administrator of the Health CareFinance Administration (now CMS) in the Department of Health and HumanServices. Mr. Collier received his BA from Yale University and his JD fromthe University of Virginia. He serves on the Board of Directors of PervasisTherapeutics, Inc., a private company in Cambridge, Massachusetts, andNewton-Wellesley Hospital.

 

*Peter Goodfellow*, 57, joinedthe Board of Directors in September 2006. He currently serves as a member of our CompensationCommittee. Dr. Goodfellow serves as a Science Advisor to AbingworthManagement Ltd, a venture capital firm that invests in both private and publiclife science companies.  In addition, heserves as a trustee and member of the Governing Board of the Institute ofCancer Research and as a member of several advisory boards, including those ofthe Beatson Institute, Max Plank Institute Berlin and the Sick Kids ResearchInstitute in Toronto.  Dr. Goodfellow was formerly Senior VicePresident, Discovery Research at GlaxoSmithKline.  He has 

 

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also held senior positions at SmithKline Beecham,the Balfour chair in genetics at Cambridge University and research positions atthe Imperial Cancer Research Fund.  Dr. Goodfellowreceived his doctorate from Oxford University and held a postdoctoralfellowship at Stanford University.

 

**Audit Committee**

 

                The Board of Directors has anAudit Committee.  The Audit Committeeconsists of Mr. Armstrong, Mr. Beery and Mr. Collier.  All members of our Audit Committee are “independent”as defined by the listing standards of The Nasdaq Stock Market and within themeaning of applicable regulations of the Securities and Exchange Commission.The Board of Directors has determined that Mr. Armstrong is an auditcommittee financial expert.

 

**Executive Officers Who Are Not Directors**

 

                The name, age and position ofeach person who is currently serving as an executive officer (but not also as adirector) is listed below, followed by summaries of their backgrounds andprincipal occupations.  Executiveofficers are elected annually and serve at the discretion of the Board ofDirectors.

 

| **Name**          | ** ** | **Age** | ** ** | **Position(s)**                                        |
|-------------------|------------|---------|------------|--------------------------------------------------------|
| Lance  Thibault   |       | 42      |       | Chief  Financial Officer and Treasurer                 |
| Axel Nielsen      |       | 44      |       | Chief Operating Officer                                |
| Mark  Gurney      |       | 54      |       | Senior  Vice President, Drug Discovery and Development |
| Jakob  Sigurdsson |       | 45      |       | Senior  Vice President, Corporate Development          |
| Daniel  Hartman   |       | 47      |       | Senior  Vice President, Product Development            |

 

*                Lance Thibault* joined deCODE in February 2001 andwas named Chief Financial Officer and Treasurer in June 2001. He was aDirector with the Global Capital Markets practice of PricewaterhouseCoopers inLondon, England prior to joining deCODE. Mr. Thibault received a B.S. inAccountancy from Bentley College in 1988 and is a certified public accountant.

 

*                Axel Nielsen* joined deCODEin June 1998 and was named deCODE’s Chief Operating Officer in June 2007.Previously he served as Chief Operating Officer of deCODE’s US operations,overseeing our US chemistry and structural biology subsidiaries where heintegrated these businesses into deCODE after we acquired Medichem  Life Sciences, Inc. in 2002.  From 1998 to 2002, Mr. Nielsen served invarious positions with deCODE, including as VP Investor Relations, VP, Financeand Treasurer and Chief Financial Officer. Before joining deCODE, Mr. Nielsenheld positions with Icelandair Inc. and McKinsey & Co. He holdsdegrees in computer science and finance from the University of Iceland and anMBA from MIT Sloan School of Management.

 

*                Mark Gurney, Ph.D.* has served as our Senior Vice President,Drug Discovery and Development since February 2005. From October 2003to February 2005 he served as our Senior Vice President, Drug Discovery. Dr. Gurneyjoined deCODE in August 2000 and was elected our Vice President,Pharmaceutical Discovery in October 2000 and our Vice President, DrugDevelopment in August 2002. He was formerly Director, Genomics Research atPharmacia Corporation. Prior to his positions at Pharmacia, Dr. Gurneyheld academic appointments in the Department of Pharmacological andPhysiological Sciences at the University of Chicago and in the Department ofCell, Molecular and Structural Biology at the Northwestern University MedicalSchool. He received his B.A. in Biology from the University of California atSan Diego in 1975 and his Ph.D. from the California Institute of Technology in1980. In 1994, he completed his M.B.A. at Northwestern University’s KelloggSchool of Management.

 

*                Jakob Sigurdsson* joined deCODEin October 2006 as Senior Vice President, Corporate Development.  Mr. Sigurdsson was formerly CEO andPresident of Alfesca, a multinational foods group with major operations inIceland, the UK, France and Spain. Prior to his position at Alfesca, Mr. Sigurdssonheld senior positions in the United States and Europe for Rohm and HaasCompany, a NYSE-listed specialty materials company.  Mr. Sigurdsson holds a B.S. degree inchemistry from the University of Iceland and an M.B.A. from the Kellogg Schoolof Management at Northwestern University.

 

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*                Daniel Hartman, M.D.,* joined deCODE in July 2005 as ourSenior Vice President, Product Development. Prior to joining deCODE, Dr. Hartmanhad served since 2001 in senior clinical development positions at Pfizer,including Global Clinical Leader, Allergy and Respiratory Diseases; ClinicalExploratory Head, Cardiovascular and Metabolic Diseases; and ExperimentalMedicine Therapy Area Leader, Cardiovascular, Metabolism and Anaderm. From 2000to 2001, Dr. Hartman was Vice President of Worldwide Clinical Developmentat Esperion Therapeutics. Prior to joining Esperion, he was Director, ClinicalCardiovascular and Therapy Head, Thrombosis and Cardiopulmonary Disease atPfizer. From 1995 to 1999, Dr. Hartman served in senior clinical researchpositions at Eli Lilly & Company. Dr. Hartman received his M.D.from Wayne State University, and held post-doctoral and faculty positions atthe Indiana University School of Medicine. He is board certified in internalmedicine and is a member of numerous medical societies.

 

**Section 16(A) BeneficialOwnership Reporting Compliance**

 

                Section 16(a) of theSecurities Exchange Act of 1934, as amended, requires our executive officersand directors and persons who beneficially own more than ten percent of aregistered class of our equity securities to file reports of ownership andchanges in ownership with the Securities and Exchange Commission and The NasdaqStock Market.  Based solely upon ourreview of the copies of Forms 3, 4 and 5 furnished to us, we believe that allof our directors, officers and greater than 10% stockholders have timely filedall required reports, except that Terrance McGuire, a former director, was inadvertentlytwo weeks late in filing a Form 4 reporting the forfeiture of unvested sharesof restricted stock as a result of his resignation and Dr. Stefansson and Messrs. Thibault,Gurney, Nielsen, Sigurdsson and Hartman inadvertently filed Forms 4 reportingtheir respective receipt of options one week late.

 

**Codeof Ethics**

 

        Wehave adopted a Code of Business Conduct and Ethics that applies to all of ourdirectors, officers and employees, including our principal executive officer,principal financial officer and controller. The Code of Business Conduct and Ethics can be found on our website atwww.decode.com.

 

**ITEM 11.****EXECUTIVECOMPENSATION**

 

**Compensation Committee Interlocks and Insider Participation**

 

                The members of our CompensationCommittee during 2008 were Mr. Armstrong, Mr. Collier and Dr. Goodfellow.  No member of the Compensation Committee wasat any time during 2008, or formerly, an officer or employee, nor had anyrelationship with us requiring disclosure under Item 404 of Regulation S-Kunder the Exchange Act of 1934, as amended. No executive officer has served as a director or member of thecompensation committee (or other committee serving an equivalent function) ofany other entity whose executive officers served as a director of deCODE or amember of our Compensation Committee.

 

**CompensationCommittee Report**

 

                The Compensation Committee hasreviewed and discussed with deCODE’s management the following CompensationDiscussion and Analysis.  Based on suchreview and discussions, the Compensation Committee has recommended to the Boardof Directors that the Compensation Discussion and Analysis be included indeCODE’s Annual Report on Form 10-K/A for the year ended December 31,2008.

 

Respectfullysubmitted,

CompensationCommittee

 

Earl Collier

J. Neal Armstrong

Peter Goodfellow

 

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**Compensation Discussion and Analysis**

 

***Introduction***

 

                The Compensation Committee of our Board of Directors(the “Committee”) administers our executive compensation program.  The Committee, which is composed entirely ofindependent directors, reviews executive officer performance and reviews andapproves executive officer compensation. The  Committee also administersour 1996, 2002 and 2006 Equity Incentive Plans and in that capacity selects theemployees and non-employee directors of deCODE and its subsidiaries who willreceive awards, determines the number of shares covered thereby, andestablishes the terms, conditions, and other provisions of the grants.

 

                The Committee operates under a charter adopted by theBoard of Directors and has authority to hire consultants and advisers to assistit in fulfilling its mission.  TheCommittee makes regular reports to the Board summarizing the matters reviewedand actions taken at its meetings.

 

***CompensationPhilosophy***

 

                Our executive compensation programs seek to balancethe interests of stockholders and the executive officers while supporting ourneed to attract and retain competent executive management.  Toward this end, the Committee develops anexecutive compensation policy and supporting executive compensation plans andprograms which are intended to attain the following objectives:

 

·              Emphasizethe enhancement of stockholder value;

 

·              Supportthe acquisition and retention of talented executives;

 

·              Deliverthe total executive compensation package in a cost-effective manner;

 

·              Reinforcekey business objectives; and

 

·              Encouragemanagement ownership of deCODE’s common stock

 

                We believe that executive compensation should varywith our performance in achieving our financial and non-financial objectives,should be tied to individual performance, and should be structured to align theinterests of our executive officers with the interests of ourstockholders.  Accordingly, we seek tocreate a merit-based, incentive-driven system which provides a totalcompensation package that is fair in relation to the compensation practices ofcomparable companies and which is consistent across our executiveofficers.  To achieve this, historicallywe have sought to provide competitive salaries based upon individualperformance together with cash bonuses and stock options, where appropriate,based on our overall performance relative to our corporate objectives and theexecutive officer’s individual contributions and teamwork.

 

                The Committee normally grants stock options, and insome cases, restricted stock as well, upon the commencement of an executiveofficer’s employment in order to strengthen the alignment of the interest ofthe executive officer with that of our stockholders.  Thereafter, it may grant stock options and/orrestricted stock as part of its periodic review of the executive officer’scompensation package or as part of a program of periodic grants to allemployees.

 

                We believe that it is important to maintain acompetitive compensation program.  At theCommittee’s request, in 2007 we commissioned a study by an outside compensationconsulting firm of the cash and equity compensation practices of 15-20publicly-held companies in the life sciences industry (the “Peer Group”).  These companies were chosen for inclusion inthe study based on business characteristics similar to ours, including****revenues, state of development, employee headcount andmarket capitalization.  In 2008 wereceived an updated report from the compensation consultant regarding thecompetitiveness of the cash compensation of our officers. In addition toreviewing the results of these reports, the Committee takes into accountinformation from other sources such as independent members of the Board ofDirectors and publicly available data relating to the compensation practicesand policies of other companies in our industry.  While we believe that benchmarking is notnecessarily appropriate as a sole tool for setting compensation because someaspects of our business and objectives may be unique to us, we believe thatgathering and reviewing this information is an important part of decision-makingprocess for determining compensation. Consistent with this view, the Committee has not targeted apredetermined percentile of the Peer Group companies in determiningcompensation.

 

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                The Committee has not adopted formal guidelines forallocating total compensation between long-term and current compensation orequity compensation and cash compensation but rather allocates on acase-by-case basis as appears appropriate in meeting these objectives.  However, the Committee has requestedmanagement to prepare a plan for annual and long-term incentive compensation toguide its work in the future.

 

                Section 162(m) of the Internal Revenue Codeof 1986, as amended, generally disallows a federal income tax deduction topublic companies for certain compensation over $1,000,000 paid to the company’schief executive officer and the three other most highly compensated executiveofficers other than the chief financial officer.  Qualifying performance-based compensationwill not be subject to the deduction limit if certain requirements aremet.  The Company does not believe that Section 162(m) orother accounting and tax treatment of particular forms of compensationmaterially affect its compensation decisions.  However, it will evaluate the effect of suchaccounting and tax treatment on an ongoing basis and will make appropriatemodifications to its compensation policies where appropriate.

 

***Componentsof Compensation***

 

                The primary elements of total compensation we paid in2008 to our executive officers, including the Chief Executive Officer (the “CEO”)and the other executive officers identified in the Summary Compensation Tablewhich appears below (the “Named Executive Officers”)  include the following:

 

·                  Base salary;

 

·                  Awards under our Equity Incentive Plans;

 

·                  Benefits under our defined contribution plans; and

 

·                  Benefits under our health and welfare benefits plans.

 

*       ***Base Salary**

 

                Base salaries for our Named Executive Officers aredetermined annually by reviewing three key areas: (1) the pay practices ofthe Peer Group; (2) the skills and performance level of the individualexecutive officer; and (3) our actual performance.  Salary adjustments are made, whereappropriate, to maintain salaries at competitive levels, taking into accounteach executive officer’s experience and individual performance, to maintain anequitable relationship between executive officer salaries and overall salariesfor other employees and to reflect the executive’s annual performance evaluation.

 

**        Performance Based Cash Compensation**

 

                The Committee determines whether the Named ExecutiveOfficers should receive discretionary cash bonuses based on our achievement ofour major corporate objectives and the contribution of the executive officer toour overall success and achievements. The Committee believes that a significant fraction of any bonus shouldbe tied to the Company’s overall performance rather than the individualexecutive’s performance but it does not assign weights or rankings to anysingle performance factor.  The Board ofDirectors may adopt Company-wide performance goals at the beginning of the yearto guide the Committee in its performance reviews for the year.  To date the Committee has not establishedindividual performance goals for executive officers the satisfaction of whichwill result in the payment of cash bonuses, but it may do so in the future.

 

***       *****Awards under the Company’s EquityIncentive Plans**

 

                We use the grant of stock options and restrictedstock under our Equity Incentive Plans as the primary vehicle for providinglong-term incentive compensation opportunities to our senior officers,including the Named Executive Officers. The options we have granted have a per share exercise price which is notless than 100% of the closing price of one share of our common stock on TheNasdaq Stock Market on the date prior to the date that the option isgranted.  Accordingly, options grantedunder the Plans have no value unless the market price of our common stockincreases after the date of grant.  ThePlans also provide for the grant of restricted stock awards.  In general, we have made grants of restrictedstock awards to senior officers only in connection with the commencement oftheir employment.  The Plans are designedto provide at-risk (incentive) compensation that aligns management’s financialinterests with those of our stockholders, encourages management ownership ofour common stock, supports the achievement of corporate short and long-termfinancial objectives, and provides competitive 

 

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equity rewardopportunities.  When determining stockoption awards, the Committee considers the executive officer’s responsibilitiesand anticipated contributions to meeting our long-term strategic performancegoals, his or her position with deCODE, industry practice in the Peer Group andits judgment about whether the complete compensation package provided to theexecutive officer is sufficient to retain, motivate and adequately reward himor her  We have not adopted any specificpolicy regarding the amount or timing of any stock-based compensation under thePlans.

 

***       *****Defined Contribution Plans**

 

                We maintain a 401(k) plan for the benefit of allof our eligible full-time employees in the United States, including therelevant Named Executive Officers.  Theamount of our contributions is fixed by the plan and is a percentage of theexecutive officer’s contributions to the plan up to a cap fixed bystatute.  As required by Icelandic law,we contribute an amount equal to eight percent of the salary of each Icelandicemployee, including the relevant Named Executive Officers, to Icelandic pensionorganizations.  In accordance withcustomary Icelandic employment practices, we also make a matching contribution(up to two percent of salary) with respect to contributions made by anIcelandic employee to such pension organizations.  In addition to these contributions, we maymake discretionary contributions for specific individuals, which we have donefor Dr. Stefansson and Mr. Sigurdsson.  We also make discretionary contributions toIcelandic pension organizations on behalf of Mr. Nielsen in an amountequal to what the employer contribution would be if Mr. Nielsen were anIcelandic employee plus an amount comparable to the discretionary contributionsmade for Dr. Stefansson and Mr. Sigurdsson.

 

*       ***Health and Welfare Employee Benefits Plans**

 

                We provide****employeebenefits programs, which in the United States include healthcare, life anddisability insurance, to our employees, including the Named ExecutiveOfficers.  We believe that our employeebenefits programs should be comparable to those maintained by other members ofthe Peer Group so as to assure that we are able to maintain a competitiveposition in terms of attracting and retaining officers and otheremployees.  Our employee benefits plansare provided on a non-discriminatory basis to all employees.

 

*       ***Other Compensation**

 

*               *We provide the Chief Executive Officerwith a leased car in accordance with customary practice for managementemployees in Iceland. ** **We believe that this benefit isappropriate additional compensation in light of competitive conditions andstandard practices in Iceland**. **In general, we do not viewperquisites as a significant element of our comprehensive compensationstructure but believe that they can be used in conjunction with base salary toattract, motivate and retain individuals in a competitive environment.  In 2005 the Compensation Committee fixed thecombined value of the Chief Executive Officer’s salary and perquisites suchthat an increase or decrease in the value of his perquisites will result in acorresponding change in the salary component of his compensation. We alsoprovide our Senior Vice President for Corporate Development with a leased carin accordance with customary practice for management employees in Iceland asprovided by his employment agreement.  Inaddition, we provide housing in the United States for our Chief OperatingOfficer.

 

***Roleof Executive Officers in Determining Executive Compensation***

 

                The Committee establishes compensation policies andpractices for the Chief Executive Officer. The Chief Executive Officer recommends compensation packages for theremaining executive officers, including the Named Executive Officers, based onhis review of Peer Group salaries, our performance on a company-wide basis andthe officer’s contribution to this performance, the executive officer’s annualperformance review and salary levels for our employees in general.  The Committee reviews these recommendationsand after discussion with the Chief Executive Officer makes whatevermodifications it believes are appropriate and then approves compensationpackages for the other executive officers.

 

***Evaluationof Named Executive Officer Performance in 2008***

 

                In light of our financial condition, salaries for2008 were maintained at their 2007 levels except with respect to our ChiefFinancial Officer, whose salary was increased to a level comparable to that ofother Named Executive Officers, and no bonuses were awarded.  In 2008 the Named Executive Officers and other employees of the Corporationreceived stock options as part of the Corporation’s annual option grantprogram.  The sizes of the grants to theNamed Executive Officers were set at a level intended to motivate them  and address issues of retention and equitablecompensation a with the goal of keeping management intact.

 

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***Severanceand Change in Control Arrangements***

 

In November 2007our Board of Directors adopted a Change in Control Benefits Plan.  The Plan provides benefits to the NamedExecutive Officers and others in the event of a change in control.  See “Payments Upon Termination or Change inControl” below for a description ofthis Plan.   In addition, prior toadoption of the Plan, we entered into an employment agreement with Mr. Sigurdssonpursuant to which he will be entitled to receive severance benefits if weterminate his employment without cause or upon the occurrence of certainenumerated events following a change in control.  See “Payments Upon Termination or Change inControl” below for a description ofthese provisions.

 

We believe that our severance arrangements with Mr. Sigurdsson represent a fairallocation of the risks of termination between us and him, preserving a measureof economic security for him while making it possible for us to terminate himwithout additional liability in the event of changes in our condition andaffairs.  We believe that the change incontrol payments described above provide a structure that will help (i) assurethe Named Executive Officers’ full attention and dedication to our business andaffairs, free from distractions caused by personal uncertainties and risksrelated to a pending or threatened change in control, (ii) assure theNamed Executive Officers’ objectivity for stockholders’ interests, (iii) assurethe Named Executive Officers of fair treatment in case of involuntarytermination following a change in control, and (iv) attract and retain keytalent during uncertain times.

 

***Restatement of FinancialStatements***

 

TheCommittee believes that, to the extent permitted by law, it has authority toretroactively adjust any cash or equity-based incentive award paid to anysenior officer (including any Named Executive Officer) where the award wasbased upon our achievement of specified financial goals and it is subsequentlydetermined following a restatement of the our financial statements that thespecified goals were not in fact achieved.

 

***Stock Ownership Guidelines***

 

OurBoard of Directors believes that the interests of our senior officers and ourstockholders should be aligned and for this reason encourages our seniorofficers, including the Named Executive Officers, to acquire a significantownership position in our common stock so as to have a meaningful personalfinancial stake in our success.  However,we have not adopted formal stock ownership guidelines.

 

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**Summary Compensation Table**

 

                The following table sets forthinformation concerning the compensation for services to us for the fiscal yearsended December 31, 2006, 2007 and 2008 of our (i) principal executiveofficer, (ii) principal financial officer, and (iii) three other mosthighly compensated executive officers who were serving as such on December 31,2008 (the “Named Executive Officers”).

 
| **Name and  Principal Position** | **   ** | **Year** | **   ** | **Salary  ($)** | ** ** | **Bonus  ($)** | ** ** | **Stock   Awards ($)(1)** | **   ** | **Option  Awards ($)(1)** | ** ** | **All  Other   Compensation ($)** | ** ** | **Total  ($)** | ** ** |
|----------------------------------|------------------------|----------|------------------------|-----------------|------------|----------------|------------|---------------------------|------------------------|---------------------------|------------|-----------------------------------|------------|----------------|------------|
| Kari Stefansson                  |                   | 2008     |                   | $683,811        | (2)        | —         |       | —                    |                   | $340,680                  | (3)        | $92,057                           | (4)(5)     | $1,116,548     |       |
| Chairman,  President and         |                   | 2007     |                   | 662,296         | (2)        | —         |       | —                    |                   | 783,073                   | (6)        | 146,462                           | (4)(7)     | 1,591,831      |       |
| Chief Executive  Officer         |                   | 2006     |                   | 655,559         | (2)        | $400,000       | (8)        | —                    |                   | 507,160                   | (9)        | 113,939                           | (4)(10)    | 1,676,658      |       |
| Lance Thibault                   |                   | 2008     |                   | 350,769         |       | —         |       | —                    |                   | 94,945                    | (3)        | 4,994                             | (11)       | 450,708        |       |
| Chief Financial  Officer and     |                   | 2007     |                   | 287,885         |       | —         |       | —                    |                   | 160,846                   | (6)        | 6,750                             | (11)       | 455,481        |       |
| Treasurer                        |                   | 2006     |                   | 230,000         |       | 120,000        | (8)        | —                    |                   | 64,754                    | (9)        | 6,600                             | (11)       | 421,354        |       |
| Axel Nielsen                     |                   | 2008     |                   | 365,000         |       | —         |       | —                    |                   | 312,089                   | (3)        | 85,224                            | (12)       | 762,313        |       |
| Chief Operating  Officer         |                   |     |                   |            |       |           |       |                      |                   |                      |       |                              |       |           |       |
| Mark Gurney                      |                   | 2008     |                   | 360,000         |       | —         |       | —                    |                   | 123,373                   | (3)        | 5,000                             | (11)       | 488,373        |       |
| Senior Vice  President, Drug     |                   | 2007     |                   | 353,510         |       | —         |       | —                    |                   | 355,651                   | (6)        | 6,750                             | (11)       | 715,911        |       |
| Discovery and  Development       |                   | 2006     |                   | 322,500         |       | 200,000        | (8)        | —                    |                   | 250,516                   | (9)        | 6,600                             | (11)       | 779,616        |       |
| Jakob Sigurdsson                 |                   | 2008     |                   | 365,500         |       | —         |       | —                    |                   | 342,641                   | (3)        | 56,247                            | (4)(13)    | 764,388        |       |
| Senior Vice  President,          |                   | 2007     |                   | 365,000         |       | —         |       | —                    |                   | 424,815                   | (6)        | 76,800                            | (4)(14)    | 866,615        |       |
| Corporate  Development           |                   |     |                   |            |       |           |       |                      |                   |                      |       |                              |       |           |       |

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(1)           Amounts calculated in accordance withFASB Statement of Financial Accounting Standards No. 123 (revised 2004) (“FAS123R”).  The assumptions made in thevaluation of these awards are set forth in Note 16 to the ConsolidatedFinancial Statements included in deCODE’s Annual Reports on Form 10-K forthe fiscal years ended December 31, 2006 and 2007 and in Note 18 to theConsolidated Financial Statements included in deCODE’s Annual Report on Form 10-Kfor the fiscal year ended December 31, 2008.

 

(2)           In 2005 the Compensation Committeefixed the combined value of Dr. Stefansson’s salary and perquisites at$714,914 such that an increase or decrease in the value of his perquisites willresult in a corresponding change in the salary component of hiscompensation.  See, “CompensationDiscussion and Analysis—Components of Compensation—Other Compensation”

 

(3)           Represents the dollar amount of  the expense recognized by deCODE in 2008 foraccounting purposes with respect to stock option awards granted in 2008 andprior years.  For information regardingoptions granted in the last fiscal year, see, “Grants of Plan-Based Awards in2008.”

 

(4)           Represents compensation paid, orvalue calculated, in Icelandic kronas. Figures reflect exchange rate of 120.87, 62.00 and 71.83 Icelandickronas to $1.00, the exchange rate determined by the Central Bank of Iceland onDecember 31, 2008, December 31, 2007 and December 31, 2006,respectively.

 

(5)           Represents (i) matching contributionsmade to Icelandic pension organizations on Dr. Stefansson’s behalf inaccordance with customary Icelandic employment practices ($50,795), (ii) discretionarycontributions made to Icelandic pension organizations on Dr. Stefansson’sbehalf ($10,159), and (iii) the aggregate cost to us to provide anautomobile ($31,103) for the benefit of Dr. Stefansson.  Does not include mandatory contributions madeto pension organizations on behalf of Dr. Stefansson in accordance withIcelandic law.  See, “DefinedContribution Plans.”

 

(6)           Represents the dollar amount of  (i) the expense recognized by deCODE in2007 for accounting purposes with respect to stock option awards granted in2007 and prior years, and (ii) the additional expense deCODE recognized in2008 for accounting purposes with respect to stock options awarded in lieu of acash bonus in February 2008 following the Compensation Committee’s reviewof our performance and that of the Named Executive Officers in 2007.

 

(7)           Represents (i) matching contributionsmade to Icelandic pension organizations on Dr. Stefansson’s behalf inaccordance with customary Icelandic employment practices ($78,203), (ii) discretionarycontributions 

 

9

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made to Icelandic pensionorganizations on Dr. Stefansson’s behalf ($15,641), and (iii) theaggregate cost to us to provide an automobile ($52,618) for the benefit of Dr. Stefansson.  Does not include mandatory contributions madeto pension organizations on behalf of Dr. Stefansson in accordance withIcelandic law.  See, “DefinedContribution Plans.”

 

(8)           Reflects cash bonuses awarded (i) inFebruary 2006, following the Compensation Committee’s review of, amongother things, our and our peer group’s compensation levels; and (ii) in March 2007,following the Compensation Committee’s review of our performance and that ofthe Named Executive Officers in 2006.

 

(9)           Represents the dollar amount of theexpense recognized by deCODE in 2006 for accounting purposes for equity awardsgranted in 2006 and prior years.

 

(10)         Represents (i) matchingcontributions made to Icelandic pension organizations on Dr. Stefansson’sbehalf in accordance with customary Icelandic employment practices ($27,427), (ii) discretionarycontributions made to Icelandic pension organizations on Dr. Stefansson’sbehalf ($27,427), and (iii) the aggregate cost to us to provide housing($14,828) and an automobile ($44,257) for the benefit of Dr. Stefansson.  Does not include mandatory contributions madeto pension organizations on behalf of Dr. Stefansson in accordance withIcelandic law.  See, “DefinedContribution Plans.”

 

(11)         Represents matching 401(k) contributionsmade on behalf of the Named Executive Officer. See, “Defined Contribution Plans.”

 

(12)         Represents (i) discretionarycontributions made to Icelandic pension organizations on Mr. Nielsen’sbehalf ($44,678), and (ii) the aggregate cost to us to provide housing inthe United States for the benefit of Mr. Nielsen ($40,546).

 

(13)         Represents (i) matching contributionsmade to Icelandic pension organizations on Mr. Sigurdsson’s behalf inaccordance with customary Icelandic employment practices ($27,113), (ii) discretionarycontributions made to Icelandic pension organizations on Mr. Sigurdsson’sbehalf ($8,134), and (iii) the aggregate cost to us to provide anautomobile ($21,000) for the benefit of Mr. Sigurdsson.  Does not include mandatory contributions madeto pension organizations on behalf of Mr. Sigurdsson in accordance withIcelandic law.  See, “Defined ContributionPlans.”

 

(14)         Represents (i) matchingcontributions made to Icelandic pension organizations on Mr. Sigurdsson’sbehalf in accordance with customary Icelandic employment practices ($37,242), (ii) discretionarycontributions made to Icelandic pension organizations on Mr. Sigurdsson’sbehalf ($11,172), and (iii) the aggregate cost to us to provide anautomobile ($28,386) for the benefit of Mr. Sigurdsson.  Does not include mandatory contributions madeto pension organizations on behalf of Mr. Sigurdsson in accordance withIcelandic law.

 

10

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                The following table providesinformation with respect to equity awards granted during the fiscal year 2008to our Named Executive Officers.

 

**Grants of Plan-Based Awards in 2008**

 

| **Name**         | ** ** | **Grant  Date** | ** ** | **Estimated  Future  Payouts  Under Equity  Incentive Plan  Awards —  Target(1)** | ** ** | **Exercise or Base  Price  of Option Awards  ($/Sh)(2)** | ** ** | **Grant Date  Fair Value  of Stock  and Option  Awards ($)** | ** ** |
|------------------|------------|-----------------|------------|----------------------------------------------------------------------------------------|------------|----------------------------------------------------------|------------|--------------------------------------------------------------|------------|
| Kari Stefansson  |       | 2/12/2008       |       | 100,000                                                                                |       | $                                                        | 3.02       |                                                         | $          | 181,730 |   |
| Lance Thibault   |       | 2/12/2008       |       | 50,000                                                                                 |       | $                                                        | 3.02       |                                                         | 90,865     |   |
| Axel Nielsen     |       | 2/12/2008       |       | 50,000                                                                                 |       | $                                                        | 3.02       |                                                         | 90,865     |   |
| Mark Gurney      |       | 2/12/2008       |       | 50,000                                                                                 |       | $                                                        | 3.02       |                                                         | 90,865     |   |
| Jakob Sigurdsson |       | 2/12/2008       |       | 50,000                                                                                 |       | $                                                        | 3.02       |                                                         | 90,865     |   |
|                  |            |                 |            |                                                                                        |            |                                                          |            |                                                              |            |  |  |

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(1)                                  Options vested as to 1/2 of the shares onthe date of grant and vest as to 1/48th of the remaining shares on the 12th dayof each month thereafter.

 

(2)                                  In accordance with the terms of the ourequity incentive plans, the exercise price of an option granted under ourequity incentive plans may not be not less than the “fair market value” of ourcommon stock on the date of grant.  “Fairmarket value” is defined as the closing price of our common stock as reportedon The Nasdaq Stock Market on the day prior to the date of grant.  See, “Equity Incentive Plans.”

 

**Employment Agreements**

 

                At the time of commencement ofemployment, our executive officers generally receive offer letters specifyingbasic terms and conditions of their employment. Our executive officers have signed agreements which require them tomaintain the confidentiality of our information and to assign inventions tous.  These agreements also prohibit theseofficers from competing with us during the terms of their employment and for acertain period thereafter by engaging in any capacity in any business which is,or on the date of termination of their employment was, competitive with ourbusiness.

 

                In October 2006 we entered into an employment agreement with JakobSigurdsson.  Pursuant to his employmentagreement, Mr. Sigurdsson’s initial base salary was $365,000 per year,payable in Icelandic kronas at the exchange rate in effect on the last day ofthe month before the month in which payment is made.  In addition Mr. Sigurdsson will beeligible to receive an annual bonus of up to 50% of his annual salary atthe determination of the Board of Directors or Compensation Committee.  Mr. Sigurdssonwill also receive, at his option, either an automobile for his use or anautomobile allowance, and we will pay reasonable operating expenses (includinggas and insurance) for any automobile provided to Mr. Sigurdsson.  In accordance with the terms of hisemployment agreement, Mr. Sigurdssonreceived two stock options.  Further, if Mr. Sigurdssonterminates his employment following a Change in Control and the occurrence ofspecified adverse changes to his employment or compensation, we will pay himcertain severance benefits.  See, “PaymentsUpon Termination or Change in Control — Benefits Under Employment Agreements.”

 

**Defined Contribution Plans**

 

                As required by Icelandic law, deCODE contributes topension organizations for personnel in Iceland. In accordance with the law and Icelandic employment practices, wecontribute 8% of an employee’s salary, plus up to an additional 2% in matchingcontributions, to a pension organization of the employee’s choosing.  deCODE has no additional obligation to makecontributions, but may make discretionary contributions.  deCODE made total contributions (in Icelandickronas) equivalent to $1,771,000 for the year ended December 31, 2008based on the effective krona to dollar exchange rate at December 31, 2008.

 

11

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                deCODE maintains a 401(k) planavailable to eligible full-time employees in the United States.  Pursuant to the 401(k) plan, employeesmay elect to reduce their current compensation by up to the statutorilyprescribed annual limit ($15,500 in 2008) and have the amount of such reductioncontributed to the 401(k) plan.  The401(k) plan requires that we make additional matching contributions onbehalf of participants at a rate of 50% of employee contributions up to amaximum of 6% of their base salary. Contributions by employees to the 401(k) plan and income earned onsuch contributions are not taxable to employees until withdrawn from the 401(k) plan.  In the year ended December 31, 2008,deCODE made contributions of $218,000 to the 401(k) plan.

 

**EquityIncentive Plans**

 

Stock awards aregranted under deCODE’s 2002 Equity Incentive Plan or its 2006 Equity IncentivePlan (collectively, the “Plans”).  ThePlans are intended to provide selected (i) employees of deCODE, (ii) consultantsand advisers who perform services for deCODE, and (iii) non-employeedirectors of deCODE with an opportunity to acquire our common stock. The Plansare designed to help us attract, retain, and motivate certain employees,consultants, and non-employee directors to make substantial contributions tothe success of our business. Our non-employee directors, employees andconsultants are eligible to receive stock options, restricted stock and stockappreciation rights (including stock appreciation rights granted in tandem withstock options) pursuant to the terms of the Plans. Incentive stock options(including incentive stock options granted in tandem with stock appreciationrights) may be granted only to employees.

 

The Plans areadministered by the Compensation Committee. Each award granted under the Plans is in such form and contains suchterms and conditions as the Compensation Committee deems appropriate. The totalnumber of shares of stock subject to an award granted under the Plans may, butneed not, be allotted in periodic installments, which will become exercisableover time (generally four years with respect to options). The exercise price ofan option granted under the Plans may not be less than the closing price of ourcommon stock on the date immediately prior to the date of grant. No optiongranted under the Plans may be exercisable after the expiration of ten yearsfrom the date it is granted.

 

All optionsdescribed in the above table were granted under, and in accordance with, deCODE’s2006 Equity Incentive Plan.

 

12

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The following table provides information with respectto outstanding equity awards held by our Named Executive Officers at December 31,2008.

 

**Outstanding Equity Awards at FiscalYear End for 2008**

 
| ** **       | ** ** | **Option Awards**                                                           | ** ** |
|------------------|------------|-----------------------------------------------------------------------------|------------|
| **Name**         | ** ** | **Number of  Securities  Underlying  Unexercised Options  Exercisable (#)** | ** ** | **Number of  Securities  Underlying  Unexercised  Options  Unexercisable (#)** | ** ** | **Option  Exercise  Price ($)** | ** ** | **Option   Expiration  Date** | ** ** |
| Kari Stefansson  |       | 600,000                                                                     |       | — |   | $8.96 |   | 11/17/2013 |   |
|             |       | 262,500                                                                     |       | 337,500 | (1) | 3.45 |   | 3/5/2017 |   |
|             |       | 60,417                                                                      |       | 39,583 | (2) | 3.02 |   | 2/12/2018 |   |
|             |       |                                                                        |       |   |   |   |   |   |   |
| Lance Thibault   |       | 80,000                                                                      |       | — |   | 8.13 |   | 3/12/2011 |   |
|             |       | 20,000                                                                      |       | — |   | 8.00 |   | 11/1/2011 |   |
|             |       | 50,000                                                                      |       | — |   | 8.96 |   | 11/17/2013 |   |
|             |       | 65,625                                                                      |       | 84,375 | (3) | 3.45 |   | 3/5/2017 |   |
|             |       | 30,208                                                                      |       | 19,792 | (4) | 3.02 |   | 2/12/2018 |   |
|             |       |                                                                        |       |   |   |   |   |   |   |
| Axel Nielsen     |       | 50,000                                                                      |       | — |   | 8.96 |   | 11/17/2013 |   |
|             |       | 100,000                                                                     |       | — |   | 8.06 |   | 6/24/2014 |   |
|             |       | 43,750                                                                      |       | 56,250 | (5) | 3.45 |   | 3/5/2017 |   |
|             |       | 94,792                                                                      |       | 255,208 | (6) | 3.38 |   | 11/5/2017 |   |
|             |       | 30,208                                                                      |       | 19,792 | (4) | 3.02 |   | 2/12/2018 |   |
|             |       |                                                                        |       |   |   |   |   |   |   |
| Mark Gurney      |       | 120,000                                                                     |       | — |   | 10.00 |   | 7/17/2010 |   |
|             |       | 120,000                                                                     |       | — |   | 8.96 |   | 11/17/2013 |   |
|             |       | 30,000                                                                      |       | — |   | 8.43 |   | 1/7/2014 |   |
|             |       | 87,500                                                                      |       | 112,500 | (7) | 3.45 |   | 3/5/2017 |   |
|             |       | 30,208                                                                      |       | 19,792 | (4) | 3.02 |   | 2/12/2018 |   |
|             |       |                                                                        |       |   |   |   |   |   |   |
| Jakob Sigurdsson |       | 72,917                                                                      |       | 177,083 | (8) | 5.55 |   | 10/25/2016 |   |
|             |       | —                                                                      |       | 50,000 | (9) | 5.55 |   | 10/25/2016 |   |
|             |       | 59,375                                                                      |       | 128,125 | (10) | 3.86 |   | 5/7/2017 |   |
|             |       | 30,208                                                                      |       | 19,792 | (4) | 3.02 |   | 2/12/2018 |   |

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(1)                                  Option vests as to 12,500 shares on the last day of each calendar month.

 

(2)                                  Option vests asto 1,042 shares on the 12th day of each calendar month.

 

(3)                                  Option vests as to 3,125 shares on the last day of each calendar month.

 

(4)                                  Option vests asto 521 shares on the 12th day of each calendar month.

 

(5)                                  Option vests asto 2,083 shares on the 5th day of each calendar month.

 

(6)                                  Option vests asto 7,292 shares on the 5th day of each calendar month.

 

(7)                                  Option vests asto 4,167 shares on the last day of each calendar month.

 

(8)                                  Option vests asto 3,906 shares on the last day of each calendar month.

 

(9)                                  Option vestsupon the satisfaction of certain performance criteria.

 

(10)                            Option vests as to 3,125 shares on the 7th day of eachcalendar month.

 

13

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**Option Exercises and Stock Vested in2008**

 

                Noneof our Named Executive Officers exercised any stock options, and no restrictedstock held by any Named Executive Officer vested, during the fiscal year ended December 31,2008.

 

**Payments Upon Termination or Change in Control**

 

***Change in Control Benefits Plan***

 

                In November 2007 our Board of Directors adopteda Change in Control Benefits Plan (the “Change in Control Plan”).  The Change in Control Plan provides benefitsto the Named Executive Officers and others in the event of a change incontrol.  Change in Control is defined toinclude (i) a merger or consolidation in which stockholders of deCODEprior to the transaction do not own a majority of deCODE’s stock following themerger, (ii) approval of a plan of liquidation of deCODE or sale of allits assets, (iii) acquisition of 40% of the outstanding stock by anyperson and (iv) failure of current directors to be majority of the Boardof Directors over a 24 month period.  TheChange in Control Plan applies to the Chief Executive Officer, the executiveofficers (i.e., the officers required to file reports under Section 16(a) ofthe Securities Exchange Act of 1934), the officers of deCODE elected by theBoard of Directors from time to time and such other employees as theCompensation Committee or the Board of Directors may designate from time totime.

 

                Payment under the Change in Control Plan is triggeredby a “single trigger” (a change in control without more) with respect to theChief Executive Officer and the other executive officers and by a “doubletrigger”  (a change in control followedby a termination without cause or a resignation for “good reason” within 24months) for other covered employees.  “GoodReason” is defined as (i) material reduction in salary, (ii) relocationof place of employment from one state to another or one country to another, (iii) assignmentof duties inconsistent with position at time of change in control or adversealteration in nature or status of position or responsibilities, (iv) failureof deCODE to provide benefits at the same level as before the change incontrol, (v) failure of a successor to deCODE to agree to keep the plan ineffect, and (vi) attempted termination that does not comply with theChange in Control Plan.

 

Followingthe applicable trigger, benefits are payable under the Change in Control Planas follows:  The Chief Executive Officeris entitled to receive a lump sum equal to three (3) times salary andannual bonus and continuation of insurance benefits for thirty-six (36) months;the executive officers are entitled to receive a lump sum equal to two (2) timessalary and annual bonus and continuation of insurance benefits for twenty-four(24) months; and other covered employees are entitled to receive a lump sumequal to one (1) times salary and bonus and continuation of insurancebenefits for twelve (12) months.  Inaddition the Change in Control Plan provides that all options and other equityawards would vest automatically upon a change in control whether held by a coveredemployee or not.

 

 Benefits under the Change in Control Plan willbe reduced to the extent that they are duplicated by benefits under employmentplans or agreements or payable by law. In addition a covered employee to whom the single trigger applies whohas an employment agreement that provides benefits upon future termination ofemployment following a change in control must waive those benefits (up to theamount received under the Change in Control Plan) as a condition to receipt ofbenefits under the plan. Mr. Sigurdsson has such and employment agreement.See, “Payments Upon Termination or Change in Control — Benefits UnderEmployment Agreements.”

 

***Benefits under EmploymentAgreements***

 

In accordance with the terms of his employment agreement, if following the occurrence of a Change inControl,  Mr. Sigurdsson terminateshis employment agreement due to specified adverse changes, we will pay him, inaddition to any compensation earned prior to the date of termination and inaddition to any compensation required by Icelandic law, a lump sum cash paymentin an amount equal to twelve (12) times his monthly salary at the time of his termination plus one and one-half(11⁄2) times the average annualbonus paid to him during the preceding two (2) years.  In addition, the unvested portion of Mr. Sigurdsson’soption to purchase 250,000 shares shall become 100% vested immediately upon aChange in Control and upon a termination of Mr. Sigurdsson’s employmentother than for Cause (as defined in deCODE’s 2002 Equity Incentive Plan).

 

14

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Under Icelandiclaw, Mr. Sigurdsson is entitled to receive three months notice oftermination.  Pursuant to the terms ofhis employment agreement, this notice period was extended to twelvemonths.  In the event that Mr. Sigurdssonwas terminated without cause, and such termination was effective immediately,he would be entitled to receive an amount equal to twelve (12) times hismonthly salary at the time of his termination.

 

Inorder to receive benefits under the Change in Control Plan, Mr. Sigurdssonmust waive his right to receive benefits to which he is entitled under theterms of his employment agreements upon future termination of employmentfollowing a change in control (up to the amount received under the Change inControl Plan). See, “Payments Upon Termination or Change in Control — Change inControl Benefits Plan.”

 

The following table sets forth estimated amountspayable to each of our Named Executive Officers if on December 31, 2008: (i) weterminated the Named Executive Officer’s employment other than for cause, or (ii) therewas a Change in Control:

 

| ** **                 | ** ** | **Salary  Continuation/  Severance** | ** ** | **Continuation  of Insurance  Benefits** | ** ** | **Total(1)** | ** ** |
|----------------------------|------------|--------------------------------------|------------|------------------------------------------|------------|--------------|------------|
| Kari Stefansson            |       |                                 |       |                                     |       |         |       |
| Termination  without Cause |       | $                                    | 178,792    | (2)                                      | —     |         | $          | 178,729 |   |
| Change in  Control         |       | 2,276,973                            |       | —                                   |       | 2,276,973    |       |
|                       |       |                                 |       |                                     |       |         |       |
| Lance Thibault             |       |                                 |       |                                     |       |         |       |
| Termination  without Cause |       | —                               |       | —                                   |       | —       |       |
| Change in  Control         |       | 764,075                              |       | $                                        | 21,261     |         | 785,336    |   |
|                       |       |                                 |       |                                     |       |         |       |
| Axel Nielsen               |       |                                 |       |                                     |       |         |       |
| Termination  without Cause |       | —                               |       | —                                   |       | —       |       |
| Change in  Control         |       | 774,075                              |       | 28,446                                   |       | 802,521      |       |
|                       |       |                                 |       |                                     |       |         |       |
| Mark Gurney                |       |                                 |       |                                     |       |         |       |
| Termination  without Cause |       | —                               |       | —                                   |       | —       |       |
| Change in  Control         |       | 764,075                              |       | 7,638                                    |       | 771,713      |       |
|                       |       |                                 |       |                                     |       |         |       |
| Jakob Sigurdsson           |       |                                 |       |                                     |       |         |       |
| Termination  without Cause |       | 365,000                              | (3)        | —                                   |       | 365,000      |       |
| Change in  Control         |       | 774,075                              |       | —                                   |       | 774,075      |       |
|                            |            |                                      |            |                                          |            |              |            |  |  |  |

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(1)                                  Does not include the value of the sharesunderlying options for which vesting would have been accelerated, nor the valueof the shares underlying vested options that were then currently exercisablewithout regard to any termination without cause or change in control, as nosuch options were in the money based upon the closing price of our common stockon December 31, 2008 of $0.19.

 

(2)                                  Represents salary payable to Dr. Stefanssonin lieu of  the three month notice oftermination period to which he is entitled in accordance with Icelandic law andemployment practices.

 

(3)                                  Represents salary payable to Mr. Sigurdssonin lieu of (i) the three month notice of termination period to which he isentitled in accordance with Icelandic law and employment practices, and (ii) theadditional nine month notice of termination period to which he is entitled inaccordance with his employment agreement. See, “Employment Agreements.”

 

15

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**DirectorCompensation**

 

Thefollowing table sets forth information concerning the compensation paid tonon-executive officer directors during the year ended December 31, 2008 inaccordance with the policies described immediately following the table.

 

| **Name of each Director(1)** | ** ** | **Fees  Earned or  Paid in  Cash ($)(2)** | ** ** | **Stock   Awards ($)  (3)(4)** | ** ** | **Option  Awards ($)  (3)(5)** | ** ** | **Total ($)** | ** ** |
|------------------------------|------------|-------------------------------------------|------------|--------------------------------|------------|--------------------------------|------------|---------------|------------|
| J. Neal  Armstrong           |       | $                                         | 51,500     |                           | $          | 24,000                         |       | $             | 112,597    |   | $ | 174,597 |   |
| James Beery                  |       | 53,500                                    |       | 16,000                         |       | 104,710                        |       | 157,710       |       |
| Linda Buck(6)                |       | 35,000                                    |       | —                         |       | 45,749                         |       | 70,749        |       |
| Earl M.  Collier, Jr.   |       | 43,500                                    |       | 8,000                          |       | 62,601                         |       | 100,601       |       |
| Peter Goodfellow             |       | 39,500                                    |       | —                         |       | 42,700                         |       | 71,700        |       |
| Terrance  McGuire(7)         |       | 11,000                                    |       | 8,000                          |       | 42,622                         |       | 61,622        |       |
| Birgit Stattin  Norinder(6)  |       | 43,500                                    |       | —                         |       | 34,217                         |       | 61,217        |       |
|                              |            |                                           |            |                                |            |                                |            |               |            |  |  |  |  |

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(1)                                  This table doesnot include Kari Stefansson, our President and Chief Executive Officer, as hedoes not receive any additional compensation for services as a director.

 

(2)                                  Includes feespaid in 2009 to all of the listed directors (other than Mr. McGuire) forhis or her service in the last quarter of 2008 as a member of the specialcommittee of our Board of Directors established in October 2008 inconnection with our review of strategic alternatives (the “Special Committee”).

 

(3)                                  Amounts calculated in accordance withFASB Statement of Financial Accounting Standards No. 123 (revised 2004) (“FAS123R”).  The assumptions made in thevaluation of these awards are set forth in Note 18 to the ConsolidatedFinancial Statements included in deCODE’s Annual Report on Form 10-K forthe fiscal year ended December 31, 2008.

 

(4)                                  The grant date fair value of therestricted stock granted to each of Messrs. Armstrong, Beery and Collierin 2008 was $24,000, $16,000, and $8,000, respectively.  As of December 31, 2008, Messrs. Armstrong,Beery, and Collier held 28,847, 19,232, and 24,000 shares of restricted stock,respectively.  In 2008, Mr. McGuirereceived an award of restricted stock with a grant date fair value of $16,000;however, a portion of these shares were forfeited upon Mr. McGuire’s resignation.  At December 31, 2008 Mr. McGuireheld 15,842 shares of restricted stock.

 

(5)                                  The amounts in this column reflect notonly the expense recognized for the options granted in 2008, but for optionsgranted in prior years as well.  Thegrant date fair values of the option awards granted to Dr. Buck and Mrs. StattinNorinder in 2008 were $44,604 and $44,604, respectively.  As noted below, these options did not vestand were forfeited upon their resignations. No option awards were granted to Mr. Armstrong, Mr. Beery, Dr. Goodfellow,Mr. Collier or Mr. McGuire in 2008. The aggregate number of shares underlying option awards held by each ofthe current directors as of as of December 31, 2008 was as follows: Mr. Armstrong(120,000), Mr. Beery (106,667), Mr. Collier (56,274), and Dr. Goodfellow(73,753).  The aggregate number of sharesunderlying option awards held by Dr. Buck, Mr. McGuire and Mrs. StattinNorinder as of December 31, 2008 were 108,333, 140,000 and 97,667,respectively; however, in accordance with the terms of their respective optionagreements, all unvested options were forfeited immediately upon theirresignations and the remainder of these options expired three months from thedate of their resignation.

 

(6)                                  Resigned in January 2009

 

(7)                                  Resigned in December 2008

 

                The Board of Directors hasadopted a policy for compensating directors who are not also employees.  Pursuant to this policy, we pay each director(i) an annual retainer of $12,000 (or a pro rated portion of such amountin case of a partial term), (ii) $2,000 for each board or committeemeeting that he or she attends, whether personally or by telephone (excludingmeetings of the Audit Committee meetings, committee meetings held inconjunction with a Board meeting and standing telephonic meetings of theNominating and Corporate Governance Committee, the Special Committee and theCompensation Committee), (iii) $500 for each standing telephonicNominating and Corporate Governance Committee, Special Committee andCompensation Committee meeting that he or she 

 

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attends,(iv) $3,000 per fiscal quarter for his or her service as a member of theAudit Committee during that quarter, and (v) $2,000 per day for each otherday on which he or she provides services to deCODE at deCODE’s request.  The foregoing attendance fees are furtherincreased by $1,000 for each Board or committee meeting that a director attendsfor which long-distance travel was required. In addition, in accordance with this policy we grant (i) to eachdirector upon his or her appointment, election or re-election to the Board anon-qualified stock option to purchase 60,000 shares (or a pro rated portion ofsuch amount in case of a partial term) of our common stock at a price equal tothe closing price of the stock as reported on The Nasdaq Stock Market on theday prior to such director’s election or appointment to the Board of Directors,with such option to vest in three equal annual installments over the course ofthe director’s term, (ii) annually on the date of the annual meeting ofstockholders to the chairman of the Audit Committee a number of shares ofrestricted stock having a fair market value on the date of grant (based on theclosing price of our common stock as reported on The Nasdaq Stock Market on theday prior to the annual meeting of stockholders for that year) of $24,000 (or apro rated portion of such amounts in case of a partial term), with one quarterof such restricted stock to vest immediately and the remainder to vest in threeequal installments on the last day of each fiscal quarter following the quarterin which the grant is made, and (iii) annually on the date of the annualmeeting of stockholders to each member of the Audit Committee (other than theChairman), a number of shares of restricted stock having a fair market value onthe date of grant (based on the closing price of our common stock as reportedon The Nasdaq Stock Market on the day prior to the annual meeting ofstockholders for that year) of $16,000 (or a pro rated portion of such amountsin case of a partial term), with one quarter of such restricted stock to vestimmediately and the remainder to vest in three equal installments on the lastday of each fiscal quarter following the fiscal quarter in which the grant ismade.

 

                In addition to the compensationdescribed above, we reimburse all directors for their expenses incurred inconnection with attendance at Board and committee meetings.

 

                Allstock options and shares of restricted stock granted to the Board of Directorsin 2008 were granted under our 2006 Equity Incentive Plan.

 

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**Item 12. *Security Ownership of Certain Beneficial Owners andManagement and Related Stockholder Matters***

 

                The following table sets forthcertain information as of April 15, 2009, except as otherwise noted,regarding the beneficial ownership of our common stock by (i) each currentdirector, (ii) each Named Executive Officer, (iii) all of our currentdirectors and executive officers as a group, and (iv) each person known tous to be the beneficial owner of more than five percent of the outstandingshares of the common stock.

 
| **Name and Address of  Beneficial Owner**                                                   | ** ** | **Amount and  Nature of  Beneficial Ownership(1)** | ** ** | **Percent of  Outstanding  Common Stock(2)** | ** ** |
|---------------------------------------------------------------------------------------------|------------|----------------------------------------------------|------------|----------------------------------------------|------------|
| T. Rowe Price Associates, Inc.(3)  100 E. Pratt Street   Baltimore, MD 21202           |       | 8,830,813                                          |       | 14.3                                         | %          |
| Whitebox Advisors, LLC(4)  3033 Excelsior Boulevard  Suite 300  Minneapolis, MN 55416  |       | 5,046,216                                          |       | 7.6                                          |       |
| Kari Stefansson(5)  c/o deCODE genetics, Inc.  Sturlugata 8  IS-101 Reykjavik, Iceland |       | 3,629,459                                          |       | 5.8                                          |       |
| Lance  Thibault(6)                                                                          |       | 273,568                                            |       | *                                            |       |
| Mark Gurney(7)                                                                              |       | 416,834                                            |       | *                                            |       |
| Axel Nielsen(8)                                                                             |       | 468,125                                            |       | *                                            |       |
| Jakob  Sigurdsson(9)                                                                        |       | 323,295                                            |       | *                                            |       |
| J. Neal  Armstrong(10)                                                                      |       | 153,931                                            |       | *                                            |       |
| James Beery(11)                                                                             |       | 129,288                                            |       | *                                            |       |
| Earl M.  Collier(12)                                                                        |       | 88,274                                             |       | *                                            |       |
| Peter  Goodfellow(13)                                                                       |       | 57,753                                             |       | *                                            |       |
| All directors  and executive officers as a group (10 persons)(14)                           |       | 5,893,027                                          |       | 9.1                                          | %          |

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*              Comprises less than one percent ofthe outstanding common stock.

 

(1)                                  The number of shares beneficially ownedby the individuals and entities listed in the table is determined in accordancewith the rules of the Securities and Exchange Commission, and may not beconclusive as to ownership of those securities for any other purpose.  Under those rules, an individual (or entity)is deemed to beneficially own shares of common stock as to which the individualcurrently has certain sole or shared powers or as to which the individual canacquire such powers within 60 days by the exercise of any option, warrantor other right.  Accordingly, the tableincludes shares underlying options and warrants which will be exercisablewithin 60 days of April 15, 2009, but does not include shares underlyingoptions and warrants that will become exercisable more than 60 days after April 15,2009.  The footnotes to the table setforth the number of such shares included in the table.  We have been advised that each stockholderlisted in the table has sole voting and dispositive power with respect to suchshares unless otherwise noted in the footnotes below.

 

(2)                                  Applicable percentage of ownership isbased on 61,761,805 shares of common stock outstanding on April 15, 2009.

 

(3)                                  Reflects beneficial ownership as of December 31,2008, as set forth in a joint statement on Schedule 13G/A filed on February 12,2008 by T. Rowe Price Associates, Inc. (Price Associates) and T. RowePrice New Horizons Fund, Inc.  (NewHorizons).  Represents securities ownedby various individual and institutional investors, including3,418,500 shares owned by New Horizons for which Price Associates servesas investment advisor with power to direct investments and/or sole power tovote the securities.  Of the reportedshares, T. Rowe Price Associates, Inc. reported that it has sole votingpower of 1,589,318 shares, 

 

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no shared votingpower, sole dispositive power of 8,830,813 shares and no shared dispositivepower; and T. Rowe Price New Horizons Fund, Inc. reported that it has solevoting power of 3,418,500 shares, no shared voting power, no sole dispositivepower and no shared dispositive power.

 

(4)                                  Reflects beneficial ownership as of December 31,2008, as set forth in a joint statement on Schedule 13G filed on February 25,2009 by Whitebox Advisors, LLC (“WA”), Whitebox Combined Advisors, LLC (“WCA”),Whitebox Combined Partners, L.P. (“WCP”), Whitebox Combined Fund, L.P. (“WCFLP”),Whitebox Combined Fund, Ltd. (“WCFLTD”), Whitebox Convertible ArbitrageAdvisors, LLC (“WCAA”), Whitebox Convertible Arbitrage Partners, L.P. (“WCAP”),Whitebox Convertible Arbitrage Fund, L.P. (“WCAFLP”), Whitebox ConvertibleArbitrage Fund, Ltd. (“WCAFLTD”), Whitebox Diversified Convertible ArbitrageAdvisors, LLC (“WDCAA”), Whitebox Diversified Convertible Arbitrage Partners, L.P.(“WDCAP”), Whitebox Diversified Convertible Arbitrage Fund, L.P. (“WDCAFLP”),Whitebox Diversified Convertible Arbitrage Fund, Ltd. (“WDCAFLTD”), WhiteboxHedged High Yield Advisors, LLC (“WHHYA”), Whitebox Hedged High Yield Partners,L.P. (“WHHYP”), Whitebox Hedged High Yield Fund, L.P. (“WHHYFLP”), and WhiteboxHedged High Yield Fund, Ltd. (“WHHYFLTD”). WA, acting as investment adviser to its clients, is deemed tobeneficially own, and has shared voting power with respect to, 5,046,216 sharesof common stock.  WCA,  WCP, WCFLP and WCFLTD are each deemed tobeneficially own, and have shared voting power with respect to, 1,798,215shares of common stock of the as a result of its indirect ownership ofconvertible bonds.  WCAA,  WCAP, WCAFLP and WCAFLTD are each deemed tobeneficially own, and have shared voting power with respect to, 526,429 sharesof common stock as a result of its indirect ownership of convertiblebonds.  WDCAA, WDCAP, WDCAFLP andWDCAFLTD are each deemed to beneficially own, and have shared voting power withrespect to, 142,857 shares of common stock as a result of its indirectownership of convertible bonds. WHHYA,  WHHYP, WHHYFLP andWHHYFLTD are each deemed to beneficially own, and have shared voting power withrespect to, 1,920,786 shares of common stock as a result of its indirectownership of convertible bonds.  As aresult of the relationships described in the statement, each of WA, WCA, WCFLP,WCFLTD, WCAA, WCAFLP, WCAFLTD, WDCAA, WDCAFLP, WDCAFLTD, WHHYA, WHHYFLP andWHHYFLTD may be deemed to possess indirect beneficial ownership of the sharesof common stock issuable upon the conversion of convertible bonds held by oneor more of WCP, WCAP, WDCAP, WHHYP and other investment advisory clients. WA,WCA, WCFLP, WCFLTD, WCAA, WCAFLP, WCAFLTD, WDCAA, WDCAFLP, WDCAFLTD, WHHYA,WHHYFLP and WHHYFLTD each disclaim indirect beneficial ownership of the sharesof common stock except to the extent of their pecuniary interest in suchshares.

 

(5)                                  Includes 1,004,167 shares of common stockissuable upon exercise of options held by Dr. Stefansson.

 

(6)           Includes 267,709 shares of commonstock issuable upon exercise of options held by Mr. Thibault.

 

(7)           Includes 415,834 shares of commonstock issuable upon exercise of options held by Dr. Gurney.

 

(8)                                  Includes 378,125 shares of common stockissuable upon exercise of options held by Mr. Nielsen.

 

(9)                                  Includes 322,916 shares of common stockissuable upon exercise of options held by Mr. Sigurdsson.

 

(10)                            Includes 120,000 shares of common stockissuable upon exercise of options held by Mr. Armstrong.

 

(11)                            Includes 106,667 shares of common stockissuable upon exercise of options held by Mr. Beery.

 

(12)                            Includes 56,274 shares of common stockissuable upon exercise of options held by Mr. Collier.

 

(13)                            Represents shares of common stockissuable upon exercise of options held by Mr. Goodfellow.

 

(14)                            Represents an aggregate of 2,861,082shares of common stock and 3,031,945 shares of common stock issuable uponexercise of options.

 

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**Equity Compensation PlanInformation**

 

                    The following table sets forth information concerning the number of outstanding options, the weighted average exercise price of those options and the number of stock awards remaining to be granted under existing equity plans, whether approved or not approved by security holders, as of December 31, 2008.

 
| **Plan Category**                                           | ** ** | **Number of Securities  To Be Issued Upon Exercise  of Outstanding Options,  Warrants and Rights** | ** ** | **Weighted-Average Exercise  Price of Outstanding  Options,  Warrants and Rights** | ** ** | **Number of Securities  Remaining Available for Future Issuance Under Equity  Compensation Plans** | ** ** |
|-------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------|------------|
| Equity  compensation plans approved by security holders(1)  |       | 8,453,355                                                                                          |       | $                                                                                  | 5.76       |                                                                                               | 6,154,945  |   |
| Equity  compensation plans not approved by security holders |       | N/A                                                                                                |       | N/A                                                                                |       | N/A                                                                                                |       |
| Total                                                       |       | 8,453,355                                                                                          |       | $                                                                                  | 5.76       |                                                                                               | 6,154,945  |   |

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(1)   Includesthe deCODE genetics, Inc. 1996 Equity Incentive Plan, 2002 EquityIncentive Plan and 2006 Equity Incentive Plan

 

**Item 13. *Certain Relationships and Related Transactions andDirector Independence***

 

**CertainRelationships**

 

                We have adopted awritten policy regarding related party transactions.  For purposes of this policy, related partytransactions are those that are required to be disclosed pursuant Securitiesand Exchange Commission Regulation S-K, Item 404.  Pursuant to this policy, all related partytransactions must be documented in writing and reviewed, approved and monitoredby the Audit Committee.

 

                The policy providesthat (i) our General Counsel will review in advance each proposed contractor other proposed transaction to determine whether the contemplated transactionis a related party transaction and (ii) if a proposed transaction isidentified as a related party transaction, management will provide to the AuditCommittee sufficient information about the parties and the transaction for theAudit Committee to make an informed review and assessment.  It is the policy of the Audit Committee notto approve any proposed related party transaction unless it is on terms that,in the judgment of the Audit Committee, are fair to deCODE.

 

                Pursuant to thepolicy, not less than annually, each officer and director is required tocomplete and deliver to the General Counsel a questionnaire designed toidentify all related party transactions to which such officer or director is aparty or about which he or she has knowledge. In addition, the Audit Committee is required to review annually all existing related party transactions todetermine that the conduct of such transactions is consistent with what wascontemplated at the time of initial Audit Committee approval and that suchtransactions continue to be appropriate.

 

                During 2008 we did not engage inany related party transactions that arerequired to be disclosed pursuant Securities and Exchange Commission RegulationS-K, Item 404.

 

**Director Independence**

 

**               **The Board hasdetermined that allof the directors  (other than Dr. Stefansson)are “independent” as defined by the listing standards of The Nasdaq StockMarket and within the meaning of applicable regulations of the Securities andExchange Commission.

 

                Indetermining the independence of each of the directors, the Board considered thefollowing matters for the year ended December 31, 2008: (i)  we paidfees to Covington & Burling, a law firm of which Mr. Beery servesas Senior Of Counsel, for legal services; and (ii) we received contract revenue from Genzyme Corporation, ofwhich Mr. Collier is an officer. The Board determined that neither of these matters, which occurred inthe ordinary 

 

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course of business and are not required to bedisclosed pursuant to Securities and Exchange Commission Regulation S-K, Item404, impaired the independence of the directors.

 

**Item 14. *Principal Accountant Fees and Services***

 

                Deloitte & Touche LLP,the member firms of Deloitte Touche Tohmatsu, and their respective affiliates (“Deloitte”)served as our independent registered public accounting firm for the fiscal yearended December 31, 2008.   The followingtable summarizes the fees billed or expected to be billed by Deloitte forservices rendered for the fiscal years ended December 31, 2008 and 2007:

 

| **Type of Fees** | ** ** | **Fiscal Year Ended  December 31,  2008** | ** ** | **Fiscal Year Ended  December 31,  2007** | ** ** |
|----------------------------|------------|----------------------------------------------------------|------------|----------------------------------------------------------|------------|
| Audit Fees                 |       | $                                                        | 814,500    |                                                     | $          | 901,360 |   |
| Audit-Related  Fees        |       | 0                                                        |       | 24,600                                                   |       |
| Tax Fees                   |       | 142,800                                                  |       | 142,850                                                  |       |
| All Other Fees             |       | 0                                                        |       | 0                                                        |       |
| Total Fees                 |       | $                                                        | 957,300    |                                                     | $          | 1,068,810 |   |

 

                The caption “audit fees”includes fees for professional services for the audit of our financialstatements included in our Form 10-K, review of our financial statementsincluded in our Form 10-Qs, issuance of comfort letters and/or consents inconnection with registration statements filed with the Securities and ExchangeCommission, and the attestation report on our internal control over financialreporting as required by Section 404 of the Sarbanes-Oxley Act of 2002. “Audit-relatedfees” are fees for grant audits, statutory audits, mergers and acquisitions andconsultations. “Tax fees” are fees for tax compliance, tax advice and taxplanning.

 

**AuditCommittee Pre-Approval of Audit and Permissible Non-Audit Services byIndependent Accountants**

 

                The Audit Committee has adoptedpolicies and procedures relating to the approval of all audit and legallypermissible non-audit services provided by our independent registered publicaccounting firm.  Pursuant to thispolicy, all services to be performed by our independent registered publicaccounting firm must be approved by the Audit Committee in advance.  Pre-approval is generally provided for up toone year as to a detailed list of services, subject to a budget.  The Audit Committee may also pre-approveparticular services on a case-by-case basis. The Audit Committee has delegated the authority to each of its membersto pre-approve services that exceed the budgeted amounts or that were notpreviously pre-approved when time constraints do not permit pre-approval by thefull Audit Committee.  Any suchpre-approvals must be reported to the Audit Committee as its next meeting.

 

                The Audit Committee pre-approvedall services performed by our independent registered public accounting firmduring 2007 and 2008.

 

**PART IV**

 

**Item 15.*****Exhibits, FinancialStatement Schedules***

 
| 3.     |   | Exhibits                                                                                                                                         |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                             |
|   |   | The exhibits required to be filed are listed on the  “Exhibit Index” attached hereto, which is incorporated herein by  reference. |

 

 

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**SIGNATURES**

 

                Pursuant to therequirements of Section 13 or 15(d) of the Securities Exchange Act of1934, the registrant has duly caused this Amendment No. 1 to Annual Reporton Form 10-K/A to be signed on its behalf by the undersigned, thereuntoduly authorized.

 
|   | deCODE  genetics, Inc. |
|--------|-----------------------------|
|   |                        |
|   | By:                         | /s/ KARI  STEFANSSON |
|   |                        | Kari Stefansson,  Chairman, President and |
|   |                        | Chief Executive  Officer |
|   | Dated:  April 30, 2009 |

 

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**EXHIBIT INDEX**

 
| **Exhibit********Number** | ** ** | **Description**                                                                 |
|---------------------------|------------|---------------------------------------------------------------------------------|
| 31.1                      |       | Certifications  pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 31.2                      |       | Certifications  pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |

 

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