EXHIBIT
10.1


 


	
  

  	
  Short-Term Incentive Plan (STI Plan)

  Terms and Conditions

  	
   

  



 


Compensation
Philosophy


 


Cubist’s compensation philosophy is to attract, motivate, retain and
reward employees with base pay, short-term and long-term incentives, and
benefits that competitively target the market. 
Cubist’s compensation programs provide employees with the opportunity to
earn increased compensation – based on Cubist’s and the employee’s achievement
of pre-established performance targets.


 


Plan Overview


 


Cubist’s Short-Term Incentive Plan (“STI Plan”) is a bonus plan for all
Cubist employees (“Participants”) which is designed to reward them for their
roles in the achievement of Cubist’s annual goals, as established by the
Company (“Annual Goals”).  STI Plan
awards (“Plan Awards”) are determined on an annual basis, based on whether and
to what extent Cubist achieves its Annual Goals and each Participant achieves
the Participant’s individual goals for the relevant calendar year (the “Performance
Period”).


 


Plan Objective


 


The intent of the STI Plan is to provide highly competitive total cash
compensation through an annual variable pay program that reflects Cubist’s
performance and the Participant’s performance against goals and
objectives.  The STI Plan is an important
variable component of the total compensation package for all employees.


 


Eligibility


 


All employees of Cubist are eligible to participate in the STI
Plan.  Participation in the STI Plan in
one year does not automatically guarantee participation in a future year.  Compliance with all Cubist policies,
guidelines and all applicable laws is a prerequisite to receiving Plan Award. A
determination that an employee is not eligible to receive a Plan Award due to
his or her failure to demonstrate compliant behavior may be made by the CEO and
Chief Compliance Officer.


 


Performance Periods


 


Each calendar year, beginning on January 1 of each year,
constitutes a separate Performance Period.


 


Corporate Goals


 


Prior to the beginning of each Performance Period, the Company will
establish corporate goals and weightings for each of such goals. Cubist needs
to achieve at least 70% of its overall annual corporate goals and 90% of its
annual net U.S. Cubicin revenue goal for any Participant to be eligible for a
Plan Award. For 2009, company achievement of corporate goals will be capped at
a 200% payout.  In addition to
achievement of annual corporate goals, Plan Awards are also determined on the
basis of individual performance and achievement of objectives.


 


Individual
Objectives


 


As part of Cubist’s
annual (or in the case of Participants who join the Company after the
commencement of a Performance Period, ongoing) goal setting process, each
Participant should propose individual objectives for his or her manager’s
approval. Each Participant will be measured by his or her manager against these
objectives, and the manager shall make a recommendation to the CEO as to
whether the Participant should receive a Plan Award, and, if so, the amount of
such Plan Award (assuming Cubist’s annual corporate goals have been achieved to
the requisite level noted above).


 

















 


	
  

  	
  Short-Term Incentive Plan (STI Plan)

  Terms and Conditions

  	
   

  



 


Funding


 


After the end of each Performance Period, the CEO shall determine the
aggregate amount available for Plan Awards (if any) based on the Company’s
performance relative to the annual corporate goals (the “Pool”).  The Pool will be funded based on the Company’s
performance against corporate goals. 
Assuming the Company has achieved the requisite performance level, the
CEO shall then determine the award and amount of any Plan Awards to
Participants in accordance with the STI Target Percentages noted below;
provided that the Compensation Committee of the Company’s Board of Directors
shall make such determinations with respect to the CEO’s bonus and shall
approve the CEO’s recommendations with respect to the bonuses of Section 16
officers.


 


Calculating the
Amount of Any Target Award


 


Each Participant is eligible for Plan Awards at a
target percentage of salary (“Target Percentage”) as listed in Figure 1 below.
The “Target Award” is the Participant’s target percentage, which is based upon
the Participant’s eligibility group as of the end of the Performance Period,
multiplied by the salary that the Participant earned during the Performance
Period. The Target Award will be pro-rated based on the portion of the
performance period worked by the Participant if the Participant (a) commenced
employment with Cubist after the commencement of the Performance Period, (b) worked
part-time during the Performance Period, or (c) took a leave of absence
during the Performance Period.  Examples
of calculations are included in Figure 2 below.


 


Figure 1: Target
Percentage by Level


 


	
  Eligibility Group

  	
   

  	
  2009 Target

  Percentage (as %

  of salary)

  	
   

  
	
  CEO

  	
   

  	
  80

  	
  %

  
	
  Chief Financial
  Officer

  	
   

  	
  50

  	
  %

  
	
  Executive Vice
  President

  	
   

  	
  50

  	
  %

  
	
  Senior Vice
  President

  	
   

  	
  40

  	
  %

  
	
  Vice President,
  Sales & Marketing

  	
   

  	
  40

  	
  %

  
	
  Vice President

  	
   

  	
  35

  	
  %

  
	
  Executive
  Director

  	
   

  	
  25

  	
  %

  
	
  Senior Director,
  National Sales

  	
   

  	
  35

  	
  %

  
	
  Senior Director

  	
   

  	
  26

  	
  %

  
	
  Director

  	
   

  	
  22.5

  	
  %

  
	
  Senior Manager/
  equivalent individual contributor

  	
   

  	
  16

  	
  %

  
	
  Manager/
  equivalent individual contributor

  	
   

  	
  12

  	
  %

  
	
  Scientific
  Employee

  	
   

  	
  8.5

  	
  %

  
	
  Administrative
  Employee

  	
   

  	
  6

  	
  %

  



 


Figure
2: Target Award Calculation Examples


 


	
  Level

  	
   

  	
  Full-time or

  Part-Time

  	
   

  	
  Base Salary

  	
   

  	
  Target

  Percentage

  	
   

  	
  Pro-Ration

  Factor

  	
   

  	
  Target Award

  	
   

  
	
  Manager

  	
   

  	
  Part Time (20 hours/wk)

  	
   

  	
  $

  	
  75,000

  	
   

  	
  12

  	
  %

  	
  50

  	
  %

  	
  ($75,000 x 12% x 50%)=

  $4,500

  	
   

  
	
  Senior Manager

  	
   

  	
  Full Time

  	
   

  	
  $

  	
  90,000

  	
   

  	
  16

  	
  %

  	
  100

  	
  %

  	
  ($90,000 x 16% x 100%)=

  $14,400

  	
   

  



 

















 


	
  

  	
  Short-Term Incentive Plan (STI Plan)

  Terms and Conditions

  	
   

  



 


Calculating Actual
Awards


A Participant’s
Actual Award is calculated in two portions, which are then added to form the
Plan Award.  The first portion is tied to
the Company’s performance against corporate goals while the second portion is
tied to the Participant’s performance against individual goals as assessed by
the Participant’s Manager.  As the
Participant’s level of responsibility in the organization increases, the
portion tied to Company results increases and the portion tied to individual
results decreases, as listed in Figure 3 below. 
Actual Plan Awards are subject to approval by the CEO.  In addition, Actual Plan Awards for Section 16
officers, including the CEO, are subject to approval by the Compensation
Committee.


 


Calculation
of portion tied to Company results:


The Participant’s
Target Award is multiplied by the portion (percentage) tied to Company results
as listed in Figure 3 for the Participant’s eligibility group.  That number is then multiplied by Cubist’s
achievement against annual corporate goals.


 


Calculation
of portion tied to individual results:


The Participant’s
Target Award is multiplied by the portion (percentage) tied to individual
results as listed in Figure 3 for the participant’s eligibility group.  That number is then multiplied by the
percentage of individual goals met by the Participant as assessed by the
Participant’s Manager.


 


Calculation
of Actual Plan Award:


The Plan Award is
the sum of the portion tied to company results and the portion tied to
individual results.


 


Figure 3: Portions
Tied to Company and Individual Results


 


	
  Eligibility Group

  	
   

  	
  2009 Portion Tied

  to Company

  Results

  	
   

  	
  2009 Portion Tied

  to Individual

  Results

  	
   

  
	
  CEO

  	
   

  	
  100

  	
  %

  	
  Board discretion

  	
   

  
	
  Chief Financial
  Officer

  	
   

  	
  80

  	
  %

  	
  20

  	
  %

  
	
  Executive Vice
  President

  	
   

  	
  80

  	
  %

  	
  20

  	
  %

  
	
  Senior Vice
  President

  	
   

  	
  65

  	
  %

  	
  35

  	
  %

  
	
  Vice President,
  Sales & Marketing

  	
   

  	
  50

  	
  %

  	
  50

  	
  %

  
	
  Vice President

  	
   

  	
  50

  	
  %

  	
  50

  	
  %

  
	
  Executive
  Director

  	
   

  	
  40

  	
  %

  	
  60

  	
  %

  
	
  Senior Director,
  National Sales

  	
   

  	
  40

  	
  %

  	
  60

  	
  %

  
	
  Senior Director

  	
   

  	
  40

  	
  %

  	
  60

  	
  %

  
	
  Director

  	
   

  	
  30

  	
  %

  	
  70

  	
  %

  
	
  Senior Manager/
  equivalent individual contributor

  	
   

  	
  30

  	
  %

  	
  70

  	
  %

  
	
  Manager/
  equivalent individual contributor

  	
   

  	
  30

  	
  %

  	
  70

  	
  %

  
	
  Scientific
  Employee

  	
   

  	
  30

  	
  %

  	
  70

  	
  %

  
	
  Administrative
  Employee

  	
   

  	
  30

  	
  %

  	
  70

  	
  %

  



 


Figure 4: Actual
STI Plan Award Calculation Examples


 


	
  Level

  	
   

  	
  Target

  Award from

  Figure 2

  	
   

  	
  Company

  Results

  	
   

  	
  Individual

  Results

  	
   

  	
  Portion tied to

  Company Results

  	
   

  	
  Portion tied to

  Individual Results

  	
   

  	
  Actual STI Plan

  Award

  	
   

  
	
  Manager

  	
   

  	
  $

  	
  4,500

  	
   

  	
  100% of target

  	
   

  	
  100% of goals  met

  	
   

  	
  $4,500 x 30% x

  100% = $1,350

  	
   

  	
  $4,500 x 70% x 100% of
  goals = $3,150

  	
   

  	
  $1,350 + $3,150 = $4,500

  	
   

  
	
  Senior Manager

  	
   

  	
  $

  	
  14,400

  	
   

  	
  125% of target

  	
   

  	
  100% of goals  met

  	
   

  	
  $14,400 x 30% x

  125% = $5,400

  	
   

  	
  $14,400 x 70% x 100% of
  goal = $10,080

  	
   

  	
  $5,400 + $10,080 =  $15,480

  	
   

  



 

















 


	
  

  	
  Short-Term Incentive Plan (STI Plan)

  Terms and Conditions

  	
   

  



 


Employment Changes


 


·                  New Hires:


If a Participant is hired
on or before September 30th of
a Performance Period, his or her award will be pro-rated to reflect the portion
of the year actually worked with Cubist, subject to the pro-ration guidelines
as described below.  If a Participant is
hired after September 30th of a Performance Period, he or she will not be
eligible for an award for the current Performance Period.


 


·                  Leave of absence:


·                  If a Participant
is on an approved leave of absence for greater than 7 business days, the
Participant’s Plan Award, if any, will be prorated for the number of days the
employee was active at worked during the Performance Period.


 


·                  Part-time:


·                  If a Participant
is not a full-time employee, the Participant’s Plan Award, if any, shall be
pro-rated based on the Participant’s regular scheduled work hours or percentage
of time worked. If a Participant has a change in regular scheduled work hours
during a Performance Period, the Participant’s Plan Award shall be pro-rated in
accordance with the pro rata guidelines below.


 


·                  Pro-rata Guidelines:


·                  All
pro-rata adjustments occur on a per day basis


 


·                  Departure or Termination:


·                  If
a Participant’s employment terminates prior to the end of a Performance Period,
the Participant shall not be entitled to a Plan Award unless such termination
is as a result of Participant’s death or retirement, or a Participant becomes
disabled, in which case the Participant, or the Participant’s estate (as the
case may be) shall be eligible for a pro-rated Plan Award payable on the
standard payment date for the Performance Period (as opposed to an earlier
date).


·                  If
a Participant’s employment terminates after the completion of the Performance
Period but prior to the date that Plan Award payments are made (the “Payment
Date”), a Participant shall be eligible for a Plan Award, unless such
termination is as a result of a termination for cause or misconduct.


 


Plan Award Payout
Process


 


Plan Awards are
paid out following the end of the Performance Period and after the measurement
of Cubist’s achievement of annual corporate goals has been completed.  Plan Awards will generally be paid out in the
first quarter following the end of the relevant Performance Period. Applicable
taxes and other withholdings will be deducted from the Plan Award, as
appropriate for each jurisdiction. In the United States, individual contributions
to the 401(k) Plan as well as applicable taxes will be deducted from the
award payment.


 


Glossary of Key
Terms


 


Payment Date: the date that
payments, if any, will be made to Participants under the STI Plan


 


Performance Period: 
the twelve
month period beginning on January 1 of each calendar year


 


Target Award: 
the Participant’s Target Percentage multiplied by his
or her base salary for the Performance Period


 


Target
Percentage: the maximum amount of a Participant’s Plan Award
eligibility expressed as a percentage of such Participant’s base salary


 

















 


	
  

  	
  Short-Term Incentive Plan (STI Plan)

  Terms and Conditions

  	
   

  



 


All payouts under the Plan are subject to the review and
approval of the Company’s Board of Directors. Notwithstanding anything else in
this Plan to the contrary, the Board retains the discretion to reduce, increase
or eliminate the funding for this plan in accordance with the Board’s
assessment of corporate goal achievement.


 


The Company reserves the right to amend or
discontinue the Plan at any time without prior notice. In no event does this STI
Plan alter the “employment-at-will” relationship between Cubist and its
employees. Cubist and its employees are free to terminate the employment
relationship at any time, without cause or notice.