exv10w23



 






Exhibit 10.23





CADENCE PHARMACEUTICALS, INC.




BONUS PLAN




Effective January 1, 2008




INTRODUCTION AND PURPOSE




The Cadence Pharmaceuticals, Inc. (“Cadence” or the “Company”) Bonus Plan (the “Plan”) is designed
to reward eligible employees for the achievement of corporate objectives, as well as measured
individual objectives that are consistent with and support the overall corporate objectives. Since
cooperation between departments and employees will be required to achieve corporate objectives that
represent a significant portion of the Plan, the Plan should help foster teamwork and build a
cohesive management team.



The Plan is designed to:




	•	 	Encourage high performance by providing an incentive program to achieve overall corporate
objectives and to enhance shareholder value.
	 
	•	 	Reward those individuals who significantly impact corporate results.
	 
	•	 	Encourage increased teamwork among all disciplines within Cadence.
	 
	•	 	Incorporate an incentive program in the Cadence overall compensation program to help
attract and retain employees.
	 
	•	 	Provide an incentive for eligible employees to remain employed by Cadence through and
beyond the payout of any earned bonus.





ELIGIBILITY




All regular, exempt, full-time employees at the Senior Manager level or higher are eligible to
participate in the Plan. Employees are not eligible if included in a separate formal incentive
plan provided by the Company. In order to be eligible, a participant must have been in an eligible
position for at least three (3) full consecutive months prior to the end of the Plan year, and the
participant must remain employed through the end of the Plan year and until awards are paid. If
the participant is not employed on the date awards are paid, the participant will not have earned
any bonus. If the participant has been subject to a performance improvement plan or other
disciplinary procedure during the Plan year, any award to such individual will be at the discretion
of the President and CEO or the Compensation Committee.



Change in Status During the Plan Period:




	 	a.	 	Participants hired during the Plan year:






	 	•	 	Participants hired during the Plan year are eligible for a prorated award based the
number of months employed in an eligible position.
	 
	 	•	 	Participants hired after the end of the third quarter are not eligible to
participate for the plan year.




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	 	b.	 	Promotion/change in level:






	 	•	 	For promotions that occur after April 30th of the applicable Plan year
but prior to October 1st of the applicable Plan year, the calculation will
be prorated, based on the number of months at each bonus percentage level.
	 
	 	•	 	If the promotion occurred on or after October 1st of the applicable Plan
year, the entire calculation will be based on the bonus percentage applicable prior to
the promotion.






	 	c.	 	Transfer to a position that is included in a separate formal Incentive Plan: Awards
will be pro-rated using the same discipline as outlined for promotions above.
	 
	 	d.	 	Termination of employment:






	 	•	 	If a participant’s employment is terminated voluntarily prior to the date awards are
paid, the participant will not be eligible to receive an award.
	 
	 	•	 	If a participant’s employment is terminated involuntarily prior to the date awards
are paid, it will be at the absolute discretion of the Company whether or not an award
payment is made.






	 	e.	 	Leave of Absence: Employee may be considered for a prorated award.





AWARD CALCULATION




Awards will be determined by applying a “bonus percentage” to the participant’s base salary in
effect at the end of the Plan year. While the Compensation Committee may change the bonus
percentage for any Plan year, the following bonus percentages will initially be used for this
purpose:



	 	 	 	 	 
	Position Title	 	Bonus Percentage	 
	President/CEO
	 	50%	 
	EVP, SVP
	 	30%	 
	VP
	 	25%	 
	Senior Director
	 	20%	 
	Director
	 	20%	 
	Associate Director, Senior Manager
	 	15%	 






Corporate and Individual Performance Factors




The President and / or CEO will present to the Compensation Committee a list of the overall
corporate objectives for the applicable Plan year, which are subject to approval by the
Compensation Committee. All participants in the Plan will then develop a list of key individual
objectives, which must be approved by the responsible Vice President or Senior Vice President and
by the President and / or CEO.



The relative weight between corporate and individual performance factors varies based on the
individual’s assigned level within the organization. The weighting



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may be reviewed periodically and may be adjusted for any Plan year. The weighting for the
performance factors will initially be as follows:



	 	 	 	 	 	 	 	 	 
	 	 	Corporate	 	Individual
	President/CEO
	 	 	100	%	 	 	 	 
	SVP/VP
	 	 	60	%	 	 	40	%
	All Other
	 	 	50	%	 	 	50	%






Performance Award Multiplier




Separate award multipliers will be established for both the corporate and the individual components
of each award. The award multiplier for the corporate component shall be determined by the
Compensation Committee each Plan year, in its sole discretion. The same award multiplier for the
corporate component of the award shall be used for all Plan participants. The award multiplier for
the individual component shall be determined by the responsible Vice President or Senior Vice
President and by the President and / or CEO.



While the Compensation Committee may change the award multipliers for any Plan year, the following
scale will initially be used to determine the actual performance award multiplier based upon the
measurement of corporate and individual performance objectives.



	 	 	 
	     Performance Category	 	Award Multiplier
	 
	 	 
	1. Performance for the year met or exceeded objectives or was excellent in view of prevailing conditions
	 	75% - 150%
	 
	 	 
	2. Performance generally met the year’s objectives or was very acceptable in view of prevailing conditions
	 	50% -  75%
	 
	 	 
	3. Performance for the year met some, but not all, objectives
	 	25% -  50%
	 
	 	 
	4. Performance for the year was not acceptable in view of prevailing conditions
	 	0%






Example




The example below shows a sample cash bonus award calculation under the Plan, which is determined
after the end of the performance period.



Step #1: A potential base bonus award is calculated by multiplying the employee’s base
salary by their assigned level bonus percentage.



Step #2: The calculated potential base bonus amount is then split between the corporate
and individual performance factors by the employee’s assigned level (per the weighting above).
This calculation establishes specific potential dollar awards for the performance period based on
both the individual and corporate performance factor components.



Step #3: After the end of the performance period, corporate and individual award
multipliers will be established using the criteria described above. Awards are



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determined by multiplying the potential bonus awards in Step #2 by the actual corporate and
individual award multipliers.



	 	 	 	 	 	 	 	 	 	 	 
	Example:	 	Step # 1: Potential Base Bonus Award Calculation
	 
	 	Position:	 	Sr.Director	 	 	 	 
	 
	 	Base salary:	 	$	100,000	 	 	 	 	 
	 
	 	Bonus percentage:	 	 	20	%	 	 	 	 
	 
	 	Potential base bonus:	 	$	20,000	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	Step # 2: Split award amount based on weighting of Performance Factors
	 
	 	Potential corporate performance bonus (50%):	 	$	10,000	 	 	 	 	 
	 
	 	Potential individual performance bonus (50%):	 	$	10,000	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	Step # 3: Actual Cash Incentive Award Calculation
	 	 	Assumed payment multipliers based on assessment of corporate and individual performance:
	 	 	Corporate multiplier              
              
              
               75%-performance generally met objectives
	 	 	Individual multiplier              
              
              
              125%-performance generally exceeded objectives
	 
	 	Cash Award:	 	 	 	 	 	 	 	 
	 
	 	Corporate component	 	$	7,500	 	 	 	($10,000 x 75	%)
	 
	 	Individual component	 	$	12,500	 	 	 	($10,000 x 125	%)
	 
	 	 	 	 	 	 	 	 	 
	 
	 	Total Award	 	$	20,000	 	 	 	 	 






AWARD PAYMENTS




Bonus award payments may be made in cash, through the issuance of stock, stock options or another
form of equity award, or by a combination of cash, stock, stock options and/or another form of
equity award, at the discretion of the Compensation Committee. All bonus award payments are
subject to applicable tax withholdings. In the event that the Compensation Committee and / or the
Board of Directors elect to pay bonus awards in stock or stock options, the Compensation Committee,
in its sole discretion, will make a determination as to the number of shares of stock or stock
options to be issued to each Plan participant based, in part, upon the overall corporate
performance and each participant’s individual performance, as described. The issuance of stock and
stock options may also be subject to the approval of the Company’s stockholders, and any stock
options issued will be subject to the terms and conditions of the Company’s Equity Incentive Award
Plan, as amended from time to time by the Company.



Payment of bonus awards will be made as soon as practicable after the end of the Plan year but not
before the completion and issuance of the Company’s year-end audited Financial Statements.
Payments will not be impacted by any benefits, with the exception of elected 401(k) contributions
which will be applied.



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PLAN PROVISIONS




Governance




The Plan will be governed by the Compensation Committee of the Board of Directors (the
“Compensation Committee”). The President and / or CEO of Cadence will be responsible for the
administration of the Plan. The Compensation Committee will be responsible for approving any
compensation or incentive awards to officers of the Company. All determinations of the
Compensation Committee, under the Plan, shall be final and binding on all Plan participants.



Compensation Committee’s Absolute Right to Alter or Abolish the Plan




The Compensation Committee reserves the right in its absolute discretion to abolish the Plan at any
time or to alter the terms and conditions under which incentive compensation will be paid. Such
discretion may be exercised any time before, during, and after the Plan year is completed. No
participant shall have any vested right to receive any compensation hereunder until actual delivery
of such compensation. Participation in the Plan at any given time does not guarantee ongoing
participation.



Employment Duration/Employment Relationship




This Plan does not, and Cadence’s policies and practices in administering this Plan do not,
constitute an express or implied contract or other agreement concerning the duration of any
participant’s employment with the Company. The employment relationship of each participant is “at
will” and may be terminated at any time by Cadence or by the participant, with or without cause.



Any questions pertaining to this plan should be directed to the Human Resources Department.



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Cadence Pharmaceuticals, Inc.




Bonus Plan




Effective January 1, 2008




This is to acknowledge that I have received a copy of the Bonus Plan.



	 	 	 	 	 	 	 	 	 	 	 
	Name:

	 	 	 	 	 	Date:	 	 	 	 
	 

	 	 

(Print)
	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	(Signature)	 	 	 	 	 	 	 	 







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