EX-10.1






EXHIBIT 10.1




Compensatory Arrangements for Executive Officers




     The Compensation Committee (the “Committee”) of the Board of Directors of OSI Pharmaceuticals,
Inc. (“OSI” or the “Company”) approved the 2008 salaries and 2007 cash bonuses for OSI’s principal
executive officer, principal accounting officer and other named executive officers (as that term is
defined in Item 402 of Regulation S-K) (“NEOs”) as set forth in OSI’s proxy statement dated May 2,
2008 (the “2008 Proxy”). The following table sets forth the annual base salary level of such
officers for 2008 and the 2007 cash bonuses for each such officer:



	 	 	 	 	 	 	 	 	 
	Name and Position	 	2008 Base	 	2007 Bonus
	 
	Colin Goddard, Ph.D.
	 	$	640,000	 	 	$	900,000	 
	Chief Executive Officer
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Michael G. Atieh
	 	$	435,000	 	 	$	260,000	 
	Executive Vice President, Chief Financial Officer and
Treasurer
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Gabriel Leung
	 	$	438,300	 	 	$	235,000	 
	Executive Vice President and President, (OSI) Oncology
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Anker Lundemose, M.D., Ph.D., D.Sc.
	 	£	224,400	 	 	£	121,000	 
	Executive Vice President and President, (OSI) Prosidion
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Robert L. Simon
	 	$	393,300	 	 	$	221,500	 
	Executive Vice President, Pharmaceutical Development
and Manufacturing
	 	 	 	 	 	 	 	 







Cash Bonuses




     The 2007 bonus awards were computed in accordance with the Committee’s policy awarding annual
bonuses for executive officers, as disclosed in the Compensation Discussion and Analysis section of
the 2008 Proxy, and are consistent with past practices. OSI has established a discretionary annual
cash bonus program for all of its employees, including its executive officers. The bonus targets,
which are a percentage of base salary, for all of its executive officers are based upon their
respective grade levels. The amount of bonus actually paid to its employees, including the
executive officers (other than OSI’s CEO) is a function of the corporate and individual performance
measures. The CEO’s bonus is based entirely on corporate performance measures. Consistent with its
compensation objectives, a larger portion of the bonuses for OSI’s executive officers is tied to
corporate performance as compared to individual performance. While achievement against the
applicable key objectives and goals of our business plan is given substantial weight in scoring the
individual performance of our NEOs, consideration is also given to an evaluation of the NEO’s
individual performance based on the following subjective criteria: (i) leadership, (ii) management,
(iii) judgment and decision making skills, (iv) results orientation and (v) communication.



 









 





     The actual amount of the bonuses paid to its executive officers, including the CEO, varies
depending upon the Company’s performance (which is 80% of the total bonus) and, for executive
officers other than the CEO, such executive officers’ individual performance (which is 20% of the
total bonus). In 2007, the Committee set the corporate component at 150% for the CEO and 120% for
all other executive officers. The individual component of the annual cash bonus is based on the
executive officer’s individual performance rating, determined in the manner discussed above. For
2007, the individual performance component of the annual cash bonus was set between approximately
80% and 130% for executive officers who received one of the top three performance ratings.



     The bonus targets for the NEOs are either set in accordance with their employment agreements
or are based upon their respective grade levels. The 2008 bonus targets (which represents a
percentage of base salary) for the NEOs are as follows:



	 	 	 	 	 
	Name	 	Target
	Colin Goddard, Ph.D.
	 	 	100	%
	Michael G. Atieh
	 	 	50	%
	Gabriel Leung
	 	 	50	%
	Anker Lundemose, M.D., Ph.D., D.Sc.
	 	 	50	%
	Robert L. Simon
	 	 	50	%






Equity Awards




     OSI grants equity awards to our executive officers, including our NEOs, under our Amended and
Restated Stock Incentive Plan. Our practice is to grant equity awards at the end of the year
following our annual performance review; there is no relationship between the timing of our equity
grants and the release of non-public material information. Equity grants to the NEOS are designed
to provide a level of equity compensation that is at the approximate 50th percentile of that
awarded by OSI’s peer group of companies. For 2007, individual equity grants for our NEOs were
made within a range of plus or minus 20% of the targeted award level based on each NEOs’ individual
performance rating. Following our review of market practices, we determined to make equity awards
for 2007 as a mix of stock options and restricted stock units with 50% in the form of stock options
and 50% in the form of restricted stock units. The value of the 2007 option and restricted stock
unit awards granted to the CEO represented values at approximately the 60th percentile
of the market data reviewed in 2007.



Perquisites




     We provide very few perquisites to our executive officers. Certain of our named executive
officers receive reimbursement of relocation and temporary housing expenses, car allowances, 401K
plan match and retirement plan contributions, legal services related to preparation of an
employment agreement, home security systems, tax services and telephone expenses.