phat-ex101_133.htm



Exhibit 10.1

CONFIDENTIAL

 

PHATHOM PHARMACEUTICALS

BONUS PLAN

Effective January 1, 2020

INTRODUCTION AND PURPOSE 

The Phathom Pharmaceuticals (“Phathom” 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.  For purposes of the Plan, the "Plan year" will mean each calendar year.

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 Phathom.





	
•
	
Incorporate an incentive program in the Phathom overall compensation program to help attract and retain employees.





	
•
	
Provide an incentive for eligible employees to remain employed by Phathom through and beyond the payout of any earned bonus.




ELIGIBILITY 

All regular, exempt employees 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 remain employed through the date awards are paid for a Plan year. 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 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.





	
 
	
•
	
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.




 


			
	
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b.
	
Promotion/change in level:





	
 
	
•
	
For promotions that occur after the fourth month of the applicable Plan year but prior to tenth month 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 after the ninth month 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 and in the separate formal incentive plan.


	
 
	
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 in the event of a leave of absence during the Plan year. The proration requirement can be waived at the discretion of the Chief Administrative Officer or for members of Executive Leadership team at the discretion of the Compensation Committee.




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

	
CEO
	
50%

	
COO and CFO
	
40%

	
Executive Leadership Team
	
35%

	
VP
	
30%

	
Senior Director, Director
	
25%

	
Associate Director
	
20%

	
Senior Manager, Manager
	
15%

	
Below Manager
	
10%




 

Corporate and Individual Performance Factors 

The CEO will present to the Compensation Committee a list of weighted 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, in the case of executive officers, by the CEO.  

 


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

	
Executive Leadership Team
	
100%
	
 
	
—

	
Vice President and Above
	
80%
	
 
	
20%

	
Director Level
	
70%
	
 
	
30%

	
Senior Manager and Below
	
60%
	
 
	
40%




 

Performance Award Multipliers 

Separate award multipliers will be established for both the corporate and, if applicable, 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 be used to determine the actual performance award multiplier based upon the measurement of corporate and, if applicable, individual performance objectives. 

 


	
 
	
 
	
Performance Category
	
 
	
Award Multiplier

	
 
	
1.
	
Performance was truly outstanding or exceeded all
	
 
	
125% - 150%

	
 
	
 
	
objectives
	
 
	
 

	
 
	
2.
	
Performance met or exceeded all objectives or was
	
 
	
100% - 125%

	
 
	
 
	
excellent in view of prevailing conditions
	
 
	
 

	
 
	
2.
	
Performance generally met the year’s objectives and
	
 
	
 

	
 
	
 
	
was very acceptable in view of prevailing conditions
	
 
	
50% - 100%

	
 
	
3.
	
Performance for the year met some, but not all, objectives
	
 
	
0% - 50%

	
 
	
4.
	
Performance for the year was not acceptable in view of 
	
 
	
0%

	
 
	
 
	
prevailing conditions
	
 
	
 




 

For members of the Executive Leadership team for whom no individual performance component is applicable, the CEO will determine an individual multiplier between 80% and 120% for approval by the Compensation Committee based on the employee's individual performance for the Plan year relative to his or her individual objectives established at the beginning of the Plan year (the "ELT Individual Multiplier"), which ELT Individual Multiplier, if approved, will be multiplied by the final corporate award multiplier for the Plan year to determine such employee's final bonus award payout.  No ELT Individual Multiplier will apply to the CEO.  

 


			
	
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Unless otherwise determined by the Compensation Committee, in no event will an employee's final bonus award payout exceed 150% of his or her target annual bonus for the applicable Plan year. 

Example for Employee (Other than Executive Leadership Team) 

The example below shows a sample cash bonus award calculation under the Plan for a non-executive employee, which is determined after the end of the Plan year. 

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

Step #2: The calculated potential target bonus award 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 Plan year, corporate and individual award multipliers will be established using the criteria described above. Awards are determined by multiplying the potential target bonus awards in Step #2 by the actual corporate and individual award multipliers. 

 


	
Example:
	
Step #1: Determine Target Bonus Award

	
 
	
 
	
 

	
 
	
Position:
	
Associate Director

	
 
	
Base salary:
	
$ 100,000

	
 
	
Target bonus percentage:
	
20%

	
 
	
Potential target bonus:
	
$   20,000

	
 
	
 
	
 

	
 
	
Step #2: Split Target Bonus Award Based on Corporate/Individual Weightings

	
 
	
 
	
 

	
 
	
Potential corporate performance bonus (70%):
	
$ 14,000

	
 
	
Potential individual performance bonus (30%):
	
$   6,000

	
 
	
 
	
 

	
 
	
Step # 3: Actual Bonus Award Calculation
	
 

	
 
	
 
	
 

	
 
	
Assumed payment multipliers based on assessment of corporate and individual performance:

	
 
	
 
	
 

	
 
	
Corporate multiplier
	
  75%-performance generally met objectives

	
 
	
Individual multiplier
	
125%-performance exceeded objectives

	
 
	
 
	
 

	
 
	
Cash Award:
	
 

	
 
	
            Corporate component
	
$  10,500   ($ 14,000 x 75%)

	
 
	
            Individual component
	
$    7,500   ($   6,000 x 125%)

	
 
	
            Total Award
	
$  17,500




 

 


			
	
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Example for Executive Leadership Team 

The example below shows a sample cash bonus award calculation under the Plan for a member of the Executive Leadership Team, which is determined after the end of the Plan year. 

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

Step #2: After the end of the Plan year, a corporate award multiplier will be established using the criteria described above. Awards are determined by multiplying the potential target bonus awards in Step #1 by the actual corporate award multiplier. 

Step #3: After the end of the Plan year, the CEO will recommend an ELT Individual Multiplier for approval by the Compensation Committee.  The final award is determined by multiplying the award after application of the corporate award multiplier in Step #2 by the final ELT Individual Multiplier. 

 


	
Example:
	
Step #1: Determine Target Bonus Award
	
 

	
 
	
 
	
 

	
 
	
Position:
	
Executive Leadership Team

	
 
	
Base salary:
	
$ 300,000

	
 
	
Target bonus percentage:
	
40%

	
 
	
Potential target bonus:
	
$ 120,000

	
 
	
 
	
 

	
 
	
Step #2: Bonus Award Calculation Related to Corporate Performance

	
 
	
 
	
 

	
 
	
Assumed payment multiplier based on assessment of corporate performance:

	
 
	
 
	
 

	
 
	
Corporate multiplier
	
  75%-performance generally met objectives

	
 
	
 
	
 

	
 
	
Cash Award prior to application
	
 

	
 
	
of ELT Individual Multiplier:
	
$  90,000   ($ 120,000 x 75%)

	
 
	
 
	
 

	
 
	
Step #3: Application of ELT Individual Multiplier

	
 
	
 
	
 

	
 
	
ELT Individual Multiplier approved by Compensation Committee: 120%

	
 
	
 
	
 

	
 
	
Total Award
	
$  90,000 x 120% = $108,000




 

 


			
	
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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 elects 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 in satisfaction of such bonus awards. 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 plan. 

Payment of bonus awards will be made at such times as determined by the Compensation Committee, but not later than four months following the Plan year.  

PLAN PROVISIONS

Governance 

The Plan will be administered by the Compensation Committee of the Board of Directors (the “Compensation Committee”). The CEO of Phathom will be responsible for the administration of the Plan with respect to non-executive employees. The Compensation Committee will be responsible for approving any compensation or incentive awards to executive officers of the Company. All determinations of the Compensation Committee or the CEO, as applicable, 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 Phathom’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 Phathom or by the participant, with or without cause. 

 


			
	
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Plan Unfunded CONFIDENTIAL 

The Plan shall be unfunded. Amounts payable under the Plan are not and will not be transferred into a trust or otherwise set aside. The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to assure the payment of any award under the Plan. Any accounts under the Plan are for bookkeeping purposes only and do not represent a claim against the specific assets of the Company. 

Rights Not Transferable 

No rights of any participant to payments of any amounts under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated. All rights with respect to an award granted to a participant under the Plan shall be available during his or her lifetime only to the participant. 

Governing Law 

The Plan shall be construed, interpreted and the rights of the parties determined in accordance with the laws of the State of New Jersey (without regard to principles of conflicts of law). 

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

 

 


			
	
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