Exhibit 10.1


 


	
  

  	
   

  	
   

  	
   

  	
   

  



 


 


Executive
Incentive Plan


 


	
   

  	
  Adopted, as amended,

  
	
   

  	
  July 29, 2005

  



 


Overview


 


The EXACT Sciences Executive
Incentive Plan has been designed to be an effective management tool that will
bring focus to the company’s, fiscal year objectives and incentivize
performance to not just meet, but accelerate and overachieve the accomplishment
of those objectives.  The plan is based
on specific and measurable objectives for both the company and each individual
participant, with performance against those to be weighted equally.  As a financial incentive, each executive will
have a significant percentage of their annual total compensation tied to
meeting the corporate and individual objectives that have been established for
the year with the opportunity to receive greater payouts for overachievement.


 


Participation


 


In order to be eligible to participate in the Executive Incentive Plan
for a given plan year, an executive must meet the following criteria:


 


•                  Be an employee
of EXACT Sciences and hold the position of CEO or Vice President


 


•                  Have
a hire date not later than July 1st for such year and have
worked at least 1040 hours of a given plan year


 


•                  Be
an employee in good standing as of December 31st of a given
plan year


 


•                  Executives
hired between February 1st and June 30th of a
given plan year will have bonus amounts earned, if any, prorated to the number
of full months of employment during the plan year


 


•                  If
an executive does not meet the preceding criteria, they may still be allowed to
participate in the plan under any such terms as approved by the Compensation
Committee


 


Methodology


 


Objectives


 


The EXACT Executive
Incentive plan includes setting objectives for both the corporation and for
each executive individually.  The Board
of Directors reviews and approves corporate objectives for the fiscal year.  Achievement of these objectives drives the
corporate component of the plan.  Working
with the CEO, each executive will prepare their individual functional unit objectives
using a similar form and will be a key basis for any cash payments under the
plan.  It is understood that plans and objectives
may change


 


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dynamically
and need to be updated and that key achievements may occur that were not initially
envisioned.  Such factors will be
considered as the plan is reviewed at year-end.


 


Performance Assessment


 


Each quarter, the Board
of Directors will review overall
corporate performance against objectives, with the Compensation Committee doing
biannual reviews of individual
executive performance.  After the end of each fiscal year, the
Compensation Committee working with the full Board will make a determination of
the level of corporate performance for the year.  The CEO will assess the
performance of each executive and make a recommendation regarding a payout
under this plan to the Compensation Committee for approval.  CEO
performance will be determined by the Compensation Committee and the Board of
Directors.   Individual performance is determined both against
written functional area objectives and by subjective performance assessment.


 


Payouts


 


In order to achieve any
payouts under the plan, it is first necessary for the company to hit approximately
70% of its corporate objectives.  Upon
achieving this threshold, payouts are then divided into two distinct, but
related components.  The Compensation
Committee may recommend to the full Board to vary payout formulae to reflect
corporate accomplishments as they determine appropriate.  Specifically, the Compensation Committee may
determine that despite achieving or not achieving any number of individual
corporate objectives, the overall performance or status of the Company is such
that payouts may be increased, reduced or eliminated altogether.


 


Corporate Performance


 


For assessment, corporate
performance is divided into three levels of approximately 70%, 85% or 100% of objectives
achieved.


 


Payouts for corporate
performance may be made in cash or common stock at the discretion of the
Compensation Committee.  The amount of the
payout for corporate performance will be based on a value calculated as a multiple
of an executive’s individual performance cash payout according to the following
matrix:


 




	
  Performance Level

  Corporate

  	
   

  	
  Calculation for Value of Payout

  	
   

  
	
  100% (i.e., 6/6
  objectives achieved)

  	
   

  	
  2.5 times
  Individual Cash Payout

  	
   

  
	
  85% (i.e., 5/6
  objectives achieved)

  	
   

  	
  2.0 times
  Individual Cash Payout

  	
   

  
	
  70% (i.e., 4/6
  objectives achieved)

  	
   

  	
  No Multiplier of
  Cash Payout

  	
   

  






 


In the event that that
the Compensation Committee determines to use common stock for payouts for
corporate performance, the stock grants will be made pursuant to the
corporation’s stock option and incentive plan as follows:  50% immediately and 50% on the first
anniversary thereafter.  The formula to
calculate the number of shares to be granted on each applicable date is as
follows:  Total Value of Grant ÷ 2 ÷ closing
price of the Corporation’s common stock on the date of the grant. It is
intended that there be


 


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no
restrictions upon the sale of the stock except for quiet periods and other
restrictions that may be imposed by applicable securities laws.  If an employee terminates his or her
employment before the date of grant of any stock or cash award, the stock or
cash award is forfeited.


 


Individual Performance


 


For assessment,
individual performance is divided into three levels: Outstanding, Above
Expectations, and Effective.  Under the
plan, an individual must perform to be rewarded and no incentive payouts will
be made to individuals who do not achieve at least an effective level of
performance regardless of the level of corporate performance.


 


Payouts for individual
performance are made in cash according the following matrix:


 




	
  Performance Level

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Individual

  	
   

  	
  CEO

  	
   

  	
  EVP

  	
   

  	
  VP

  	
   

  
	
  Outstanding

  	
   

  	
  $60-$70

  	
   

  	
  $40-$50

  	
   

  	
  $30-$35

  	
   

  
	
  Above

  	
   

  	
  $50-$55

  	
   

  	
  $30-$35

  	
   

  	
  $20-$25

  	
   

  
	
  Effective

  	
   

  	
  $15-$35

  	
   

  	
  $7.5-$25

  	
   

  	
  $5-$15

  	
   

  






 










* all amounts in ‘000’s


 


Total Compensation


 


The following table shows
the range of total compensation available under the plan:


 


	
   

  	
   

  	
  CEO

  	
   

  	
  EVP

  	
   

  	
  VP

  	
   

  
	
  Performance
  Level

  	
   

  	
  Ind.
  Award

  	
   

  	
  Corp.
  award

  	
   

  	
   

  	
   

  	
  Ind.

  	
   

  	
  Corp
  Award

  	
   

  	
   

  	
   

  	
  Ind. Award
  

  	
   

  	
  Corp
  Award

  	
   

  	
   

  	
   

  
	
  Corp

  	
   

  	
  Individual

  	
   

  	
  $

  	
   

  	
  $

  	
   

  	
  Total $

  	
   

  	
  Award $

  	
   

  	
  $

  	
   

  	
  Total $

  	
   

  	
  $

  	
   

  	
  $

  	
   

  	
  Total $

  	
   

  
	
   

  	
   

  	
  Outstanding

  	
   

  	
  60-70

  	
   

  	
  150-175

  	
   

  	
  210-245

  	
   

  	
  40-50

  	
   

  	
  100-125

  	
   

  	
  140-175

  	
   

  	
  30-35

  	
   

  	
  75-87.5

  	
   

  	
  105-122.5

  	
   

  
	
  100

  	
  %

  	
  Above

  	
   

  	
  50-55

  	
   

  	
  125-137.5

  	
   

  	
  175-193

  	
   

  	
  30-35

  	
   

  	
  75-87.5

  	
   

  	
  105-122.5

  	
   

  	
  20-25

  	
   

  	
  50-62.5

  	
   

  	
  70-87.5

  	
   

  
	
   

  	
   

  	
  Effective

  	
   

  	
  15-35

  	
   

  	
  37.5-87.5

  	
   

  	
  52.5-122.5

  	
   

  	
  7.5-25

  	
   

  	
  18.8-62.5

  	
   

  	
  26-87.5

  	
   

  	
  5-15

  	
   

  	
  12.5-37.5

  	
   

  	
  17.5-52.5

  	
   

  
	
   

  	
   

  	
  Outstanding

  	
   

  	
  60-70

  	
   

  	
  120-140

  	
   

  	
  180-210

  	
   

  	
  40-50

  	
   

  	
  80-100

  	
   

  	
  120-150

  	
   

  	
  30-35

  	
   

  	
  60-70

  	
   

  	
  90-105

  	
   

  
	
  85

  	
  %

  	
  Above

  	
   

  	
  50-55

  	
   

  	
  100-110

  	
   

  	
  150-165

  	
   

  	
  30-35

  	
   

  	
  60-70

  	
   

  	
  90-105

  	
   

  	
  20-25

  	
   

  	
  40-50

  	
   

  	
  60-75

  	
   

  
	
   

  	
   

  	
  Effective

  	
   

  	
  15-35

  	
   

  	
  30-70

  	
   

  	
  45-105

  	
   

  	
  7.5-25

  	
   

  	
  15-50

  	
   

  	
  22.5-75

  	
   

  	
  5-15

  	
   

  	
  10-30

  	
   

  	
  15-45

  	
   

  
	
   

  	
   

  	
  Outstanding

  	
   

  	
  60-70

  	
   

  	
  0

  	
   

  	
  60-70

  	
   

  	
  60-70

  	
   

  	
  0

  	
   

  	
  60-70

  	
   

  	
  30-35

  	
   

  	
  0

  	
   

  	
  30-35

  	
   

  
	
  70

  	
  %

  	
  Above

  	
   

  	
  50-55

  	
   

  	
  0

  	
   

  	
  50-55

  	
   

  	
  50-55

  	
   

  	
  0

  	
   

  	
  50-55

  	
   

  	
  20-25

  	
   

  	
  0

  	
   

  	
  20-25

  	
   

  
	
   

  	
   

  	
  Effective

  	
   

  	
  15-35

  	
   

  	
  0

  	
   

  	
  15-35

  	
   

  	
  15-35

  	
   

  	
  0

  	
   

  	
  15-35

  	
   

  	
  5-15

  	
   

  	
  0

  	
   

  	
  5-15

  	
   

  



 










* all
amounts in ‘000’s


 


The following example
shows a potential total compensation calculation for a Vice President assuming
that corporate performance awards are made in common stock:


 


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  Assumptions:

  	
   

  	
  Company achieves 85% of
  objectives

  
	
   

  	
   

  	
  Individual performance
  is rated as Outstanding at highest end of cash payout range

  
	
   

  	
   

  	
  Common stock price on
  first vest date is $10.00

  
	
   

  	
   

  	
  Common stock price on
  second vest date is $20.00

  



 


	
  Cash Payout:

  	
   

  	
  $35,000

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Stock Payout:

  	
   

  	
  $70,000 Total Value

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Compensation:

  	
   

  	
  $105,000

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  # of Shares Granted:

  	
   

  	
  3,500 on first vest
  date

  	
   

  	
  ($70,000 ÷ 2 ÷ $10.00)

  
	
   

  	
   

  	
  1,750 on second vest
  date

  	
   

  	
  ($70,000 ÷ 2 ÷ $20.00)

  



 


Timing


 


It is anticipated that the
Compensation Committee will review corporate and individual performance under
this plan with the Board of Directors at its January meeting.  After that review and pending final approval
of awards by the Committee, cash awards under this plan, if any, will be made
as of the third Thursday in February of the year following the applicable
fiscal year.  Awards made in stock will
have a first vesting date of the third Thursday in February of the year
following the applicable fiscal year and a second vesting date of the third Thursday
in February of the following year. 
Share amounts will be calculated using the closing price of EXACT
Sciences common stock on the day previous to the vesting date.  The Compensation Committee may elect to alter
this schedule at it deems appropriate.


 


Plan Changes


 


At any time in any given
plan year, the CEO with the approval of the Compensation Committee or the
Compensation Committee acting in its sole discretion may alter any terms of the
Executive Incentive Plan.  In particular,
if the financial resources of the company are inadequate to support the plan
regardless of performance, payouts may be restructured using equity, deferred
to such future date when financial resources can appropriately accommodate them
or eliminated altogether.


 


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