Exhibit 10.2


 





 


ADOLOR CORPORATION


INCENTIVE COMPENSATION PLAN


 


Purpose


 


This Incentive Compensation Plan
(the “Plan”) is designed to provide Participants (as defined) with an
incentive, in the form of a cash payment (an “Award”), to achieve specified
corporate and/or individual objectives during a period of time selected by the
Board of Directors (the “Board”) to which the Award relates (a “Performance
Period”).


 


Eligibility


 


Persons employed by Adolor
Corporation (the “Company”) during a Performance Period in active
service for all or any part of the Performance Period are eligible to be “Participants”
under the Plan for such Performance Period and may be considered for an Award, in
each case subject to the “Exclusions, Limitations and Other Conditions” set
forth below. An employee is not rendered ineligible to be a Participant by
reason of being a member of the Board.


 


Objectives; Award Levels


 


Major corporate
objectives (and the relative weighting of such objectives) (the “Corporate
Objectives”) will be established and approved by the Board of Directors,
upon the recommendation of the Compensation Committee of the Board (the “Committee”).
 The Corporate Objectives may be based on,
among other things: revenue or other Company financial objectives; research and
development, clinical, regulatory or manufacturing objectives; operational
efficiency measures; other measurable objectives tied to the Company’s success;
or such other criteria as the Board shall determine in its discretion.  Individual and departmental objectives (“Individual
Objectives”) for employees other than the President and Chief Executive
Officer will be established and approved by one or more of the Executive
Officers of the Company or their designees.


 


The Board or
the Committee will establish the Award level that may be paid to each Executive
Officer if certain performance criteria are achieved (a “Target Award Amount”).  Target Award Amount for employees at the
levels of Vice President and below will be established by the Executive Officers
from time to time.


 


Evaluation of Performance Against Corporate Objectives


 


The Committee
will evaluate corporate performance against the pre-established Corporate
Objectives.  In making this evaluation, the
Committee also may consider achievement of other milestones that had not been
previously established as Corporate Objectives, or such other items that it
considers relevant in its discretion. 
Based on this analysis, the Committee will determine the percentage of
achievement against the Corporate Objectives for consideration and approval by
the Board.  A minimum of 60% achievement
against the Corporate Objectives is necessary for any Award payout under the Plan.


 


Any Award
under this Plan to the President and CEO will be based on the level of
achievement of the Corporate Objectives approved by the Board.  The Award amount determined may be increased
or decreased by the Board.


 

















 


Awards, if
any, under the Plan to Participants other than the President and CEO will be
determined based upon a weighting of Corporate Objectives and Individual
Objectives.


 


Evaluation
of Performance Against Individual Objectives


 


The evaluation
of individual performance against Individual Objectives for each Participant
(other than the President and CEO) will be made by management of the
Company.  In the case of the Executive
Officers of the Company other than the President and CEO, achievement against
their respective Individual Objectives shall be made by the President and CEO,
subject to the ratification and approval of the Committee and/or the Board.


 


Determination of Awards


 


The Board, upon the
recommendation of the Committee, shall review and approve the aggregate amount
of Award dollars available for payment to the Participants under the Plan, as
well as the individual Awards, if any, to be made under the Plan to the President
and CEO and the other Executive Officers.


 


The President and CEO will
review and approve the individual Awards to be made to all non-Executive
Officer Participants under the Plan.


 


Exclusions, Limitations and Other Conditions


 


·                  Awards, if any, under the Plan will
be distributed not more than 90 days following the end of the Performance
Period.


·                  Employees must be actively employed
by the Company on the day the Award is distributed to be eligible to receive
such Award.


·                  If an employee is eligible to receive
an Award but is on an approved leave of absence when such Award is distributed,
the employee will receive such Award upon return to active status.


·                  New hires must have been employed for
at least 90 days during the Performance Period to be deemed to be a Participant
under the Plan, and any Award to such a Participant will be prorated for the
year’s length of service.


·                  Employees must have attended all
mandatory training and acknowledged compliance with all policies and required
SOPs to receive as Award under the Plan.


·                  Managers must have completed mid-year
and annual performance reviews for all of their employees to receive incentive
compensation payout.


·                  An employee will be ineligible to
receive an Award if on a Performance Improvement Plan or under any formal
disciplinary action at the time of the payout. 
Eligibility will be prorated for any time during the year that an
employee is on a Performance Improvement Plan or under any formal disciplinary
action.


·                  No person shall have any claim to an
Award under the Plan and there is no obligation for uniformity of treatment of
Participants under the Plan. Awards under the Plan may not be assigned or
alienated.


·                  Neither the Plan nor any action taken
hereunder shall be construed as giving to any Participant the right to be
retained in the employ of the Company.


·                  The Company shall have the right to
deduct from any Award to be paid under the Plan any federal, state or local
taxes required by law to be withheld with respect to such payment.


 


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·                  The Board or the Committee shall have
full discretionary power to administer and interpret the Plan and to establish rules for
its administration (including the power to delegate authority to others to act
for and on behalf of the Board or the Committee) subject to such resolutions,
not inconsistent with the Plan, as may be adopted by the Board. In making any
determinations under or referred to in the Plan, the Committee (and its
delegates, if any) shall be entitled to rely on opinions, reports, analysis or
statements of employees of the Company and its affiliates and of counsel,
public accountants and other professional or expert persons.


·                  The Plan shall be governed by the
laws of the State of Delaware and applicable Federal law.


 


The Board may modify or
terminate the Plan at any time, effective at such date as the Board may
determine.


 


Adopted
by Board of Directors January 6, 2005


Amended
and Restated February 22, 2007


Amended
and Restated April 9, 2008


Amended
and Restated January 6, 2009


 


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