Document:

Exhibit
10.1

Sonus
Pharmaceuticals, Inc.

Compensation
Policy

1.              Purpose

a.               This policy outlines the Philosophy, Guiding
Principles, Programs and Eligibility Timelines, and Delegation of Authority
related to all compensation programs at Sonus Pharmaceuticals.

2.              Philosophy

a.               Attracting and retaining human talent is a
critical element of our ability to achieve the goals and objectives outlined in
our business plan.

b.              The labor markets in which we compete for
human talent, nationally and locally, are very competitive.  To be successful, we have to offer
compensation programs that are competitive with life sciences companies, large
and small, that are competing for the same talent.

c.               The components of these compensation
programs, including base salary, annual merit increases, short term incentive
awards, and long term incentive awards, should align incentives and rewards for
employees with the overall business strategies, goals and objectives of Sonus,
and also take into account the company’s ability to fund these programs.

d.              While our corporate goals and objectives for
any year are clearly defined, our business strategy also contains an
opportunistic element, and compensation programs should therefore ensure
flexibility to fairly compensate employees when business priorities and
objectives change in a year.

3.              Guiding Principles

a.               “Compensation” at Sonus includes the
following components:

i.                  A Base Salary, which is determined for each
employee at their time of hire, promotion, and/or significant change in duties
and responsibilities;

ii.               Annual Merit Increases, which are intended to
adjust base salaries for cost of living increases, and which take into account
each employee’s performance against individual and team goals and objectives;

iii.            Short Term Incentive Awards, which are
designed to provide an annual bonus opportunity, payable in cash or stock, to
reward employees for performance to corporate, team and individual goals and
objectives; and

 

iv.           Long Term Incentive Awards, which consist of both new-hire stock option
grants at the time an employee is hired and annual refresher stock option
grants, and are designed to provide an incentive opportunity for each employee
to participate in increases in long-term shareholder value.

b.              For every full-time employee position in
Sonus, targeted levels of compensation for each of the elements defined above
is determined by benchmarking similar positions in comparable, or “peer”, life
sciences companies.  This is accomplished
through an annual review of multiple survey sources, including recognized
compensation surveys covering the biotechnology and pharmaceutical industries,
and through direct competitive analysis of peer companies.  The company may, from time to time, engage recognized
external consultants to assist with this analysis.

c.               In addition to competitive practices as
outlined above, compensation for each position in the company will take into
account the strategic importance of the position as well as the experience,
skills and capabilities of the incumbent or new hire.

d.              Subject to the above, targeted levels of
compensation for each of the elements is as follows:

	
  

  	
   

  	
  Total Cash Compensation

  	
   

  	
  Target Stock Option

  
	
  Base Salary

  	
   

  	
  Target Total Cash

  	
   

  	
  Maximum Total Cash

  	
   

  	
  Equity Grant

  
	
  50th – 60th Percentile

  	
   

  	
  50th Percentile

  	
   

  	
  60th – 75th Percentile

  	
   

  	
  50th Percentile

  (subject to dilution constraints)

  

 

i.                  Employee base salaries fall within bands,
which are divided into thirds.  The
market reference range is defined as the middle third of the band and consists
of the amounts within plus or minus 10% of the 50th percentile.

ii.               Executive base salaries fall at the targeted
levels plus or minus 15% depending upon performance, strategic importance of
the position, retention needs and competitive practices.

e.               By policy, annual merit increase guidelines
will be the same for employees at all levels of the company.  The actual annual merit increase for a given
employee may be higher or lower than the guideline based on that employee’s
performance to team and individual goals and their position relative to
targeted salary guidelines.

 2
 

 

f.                 Following application of the annual merit
increase, if any employee is still outside the competitive guidelines for base
salary, a one time Technical Adjustment may be applied to bring that employee’s
salary in compliance with the guidelines.

4.              Programs and Eligibility

a.               All employees who fill a regular, approved
position are eligible for participation in the Employee Compensation
Program.  Any other type of employee,
including but not restricted to temporary, agency, contract, consultants or
other similar positions, are not eligible to participate.

b.              Employees at the level of vice president or
higher may participate in the Executive Compensation Program if they are
recommended for participation by the President & CEO and are approved for
participation by the Board of Directors or the Compensation Committee of the
Board.

c.               An employee can only participate in one
compensation program, i.e. either the Executive or Employee program.

5.              Timeline

a.               The process begins annually in July-August
with a presentation to the Compensation Committee of a preliminary review of
trends in compensation and identification of potential issues regarding any of
the three components of compensation.

b.              Based on feedback from the Compensation
Committee, Human Resources works with an outside consulting firm to produce an
Executive Compensation Review with recommendations for each of the compensation
components.  The consulting firm may be
involved in employee compensation as well. 
This material is forwarded to and discussed with the Compensation
Committee in October, which is the month the formal performance review process
begins.

c.               In November the Compensation Committee
receives recommendations for all components of compensation for executives and
for employees.

d.              In December the Board of Directors and the
Compensation Committee complete final review of the recommendations and approve
specific amounts of each component for each executive and maximum pool amounts
for employees.

 3
 

 

6.              Delegation of Authority

a.               The Delegation of Authority for the Employee
Compensation Program is outlined in Exhibit A.

b.              The Delegation of Authority for the Executive
Compensation Program is outlined in Exhibit B.

 4

 

APPENDIX A

EMPLOYEE
COMPENSATION PROGRAM

DELEGATION OF AUTHORITY

	
  Employee

  	
   

  	
  New Hires

  	
   

  	
  Existing Employees

  
	
   

  	
  ·  Salary

  	
   

  	
   

  	
  ·  Salary bands set by program guidelines
  approved by board

  ·  Specific offers within program guidelines
  approved by CEO

  	
   

  	
   

  	
  ·  N/A

  
	
   

  	
  ·  Annual Merit Increases

  	
   

  	
   

  	
  ·  N/A

  	
   

  	
   

  	
  ·  Board approves maximum total pool based on
  Comp Com recommendations

  ·  Comp Com approves actual payout pool based
  on CEO recommendations and up to maximum pool approved by board

  ·  CEO approves individual employee payouts
  within pool approved by Comp Com

  
	
   

  	
  ·  Annual Performance Bonuses

  	
   

  	
   

  	
  ·  Eligibility for level of maximum targeted
  payout determined by guidelines approved by Board

  ·  Specific offers within program guidelines
  approved by CEO

  	
   

  	
   

  	
  ·  Board approves maximum total pool based on
  Comp Com recommendations

  ·  Comp Com approves actual payout pool based
  on CEO recommendations and up to maximum pool approved by board

  ·  CEO approves individual employee payouts
  within pool approved by Comp Com

  
	
   

  	
  ·  Stock Option Awards

  	
   

  	
   

  	
  ·  Eligibility for level of maximum targeted
  award determined by guidelines approved by Board

  ·  Specific offers within program guidelines
  approved by CEO

  	
   

  	
   

  	
  ·  Board approves maximum total pool based on recommendations
  by Comp Com

  ·  Comp Com approves actual payout pool based on
  CEO recommendations and up to maximum approved by board

  ·  CEO approves individual employee payouts
  within pool approved by Comp Com

  

 

 

APPENDIX B

EXECUTIVE
COMPENSATION PROGRAM

DELEGATION OF AUTHORITY

	
  Executive

  	
   

  	
  New Hires

  	
   

  	
  Existing Employees

  
	
   

  	
  ·  Salary

  	
   

  	
   

  	
  ·  Specific
  offers approved by Comp Com based on recommendations of CEO and communicated
  to Board

  	
   

  	
   

  	
  ·  N/A

  
	
   

  	
  ·  Annual Merit Increases

  	
   

  	
   

  	
  ·  N/A

  	
   

  	
   

  	
  ·  Board approves maximum potential increase
  per executive based on Comp Com recommendations

  ·  Comp Com approves actual increase per
  executive based on CEO recommendations and up to maximum payout approved by
  board

  ·  Board approves amount for the President
  & CEO based on recommendation from the Comp Com

  
	
   

  	
  ·  Annual Performance Bonuses

  	
   

  	
   

  	
  ·  Eligibility
  for level of maximum targeted payout determined by guidelines approved by
  Board

  ·  Specific
  offers within program guidelines approved by Comp Com based on
  recommendations from CEO

  	
   

  	
   

  	
  ·  Board approves maximum payout per executive
  based on Comp Com recommendations

  ·  Comp Com approves actual payout per
  executive based on CEO recommendations and up to maximum payout approved by
  board

  ·  Board approves amount for the President
  & CEO based on recommendation from the Comp Com

  
	
   

  	
  ·  Stock Option Awards

  	
   

  	
   

  	
  ·  Eligibility
  for level of maximum targeted award determined by guidelines approved by
  Board

  ·  Specific
  offers within program guidelines approved by Comp Com based on
  recommendations from CEO

  	
   

  	
   

  	
  ·  Board approves maximum award per executive
  based on recommendations by Comp Com

  ·  Comp Com approves actual award per executive
  based on CEO recommendations and up to maximum award approved by board

  ·  Board approves amount for the President
  & CEO based on recommendation from the Comp ComExhibit 10.2

Sonus
Pharmaceuticals, Inc.

Executive
Compensation Program

I.                                        PURPOSE

The Sonus
Pharmaceuticals, Inc. (Company) Executive Compensation Program describes the
components of the Company Compensation Policy (Policy) as it relates to
executives.

II.                                    ADMINISTRATION

The program is
administered by the President & CEO and the Vice President of Human
Resources pursuant to Sonus’ Compensation Policy within maximum amounts
approved by the Board of Directors and subject to performance measures,
weightings and performance levels for the short-term incentive program
established by the Board.  All decisions
on base pay, short-term incentive (bonus), and long-term incentive (performance
awards) are made in December of each year.

The Compensation
Committee and the Board of Directors administer the annual compensation program
as it applies to the President & CEO and consider all relevant factors,
including all of the executive criteria stated in the Policy and the Program.

III.                                COMPONENTS
OF COMPENSATION

A.  BASE
SALARY

See Appendix A,
Components of Executive Compensation, for New-Hire Salary and Annual
Merit Increases.

B.            SHORT-TERM INCENTIVE
PROGRAM (STIP)

See
Appendix A, Components of Executive Compensation,
for STIP.

Target
Award Levels

Target award levels for each STIP participant have been established
based on competitive practice and Sonus’ compensation philosophy.  Threshold and maximum award levels represent
50% and 150% of target, respectively.

	
  Title

  	
   

  	
  Target STIP Award (as a % of base salary)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  President &
  CEO

  	
   

  	
  45

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Senior Vice
  President

  	
   

  	
  35

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Vice President

  	
   

  	
  25

  	
  %

  

 

Award
Payout of STIP

The Compensation Committee
retains the discretion to recommend that STIP awards be paid in cash,
restricted stock, stock options, promissory note, or to defer payments via a
nonqualified deferred compensation program.

C. 
LONG-TERM INCENTIVE PROGRAM (LTIP)

See Appendix A, Components of Executive Compensation,
for LTIP for new-hire awards and for performance awards.

All stock option awards are based on practices for similarly-situated
employees at other life sciences organizations. 
Target award levels reflect multiple perspectives, including number of
shares, typical ownership levels for similar positions, and aggregate share use
(dilution.)  Awards for annual
performance include individual performance, strategic value of the individual,
and retention objectives.

Target Award Levels

	
   

  	
   

  	
  Performance Award Range

  	
   

  	
   

  
	
  Title/Level

  	
   

  	
  Target

  	
   

  	
  Maximum

  	
   

  	
   

  
	
  CFO/SVP

  	
   

  	
  40,000

  	
   

  	
  60,000

  	
   

  	
   

  
	
  CMO

  	
   

  	
  40,000

  	
   

  	
  60,000

  	
   

  	
   

  
	
  Vice Presidents

  	
   

  	
  20,000

  	
   

  	
  30,000

  	
   

  	
   

  

 

                  

 

IV.                                MISCELLANEOUS PROVISIONS

A.                                   This
Program is effective as of July 25, 2006 and will continue until the
Compensation Committee and/or Board terminates the Program.  The Compensation Committee and/or Board
retain the right to amend, alter, or terminate this Program at any time.

B.                                     All
decisions made by the Compensation Committee and/or Board regarding
administration and interpretation of the Program shall be final and binding on
all persons, including the Company and all employees.

C.                                     Nothing
contained in this document shall be deemed to alter the relationship between
the Company and an employee or the contractual relationship between an
executive and the Company if there is a written contract regarding such
relationship.  Furthermore, nothing
contained in this document shall be construed to constitute a contract of
employment between the Company and an executive.  The Company and each of the Participants
continue to have the right to terminate the employment or service relationship
at any time for any reason, except as provided in a written contract.

 2
 

 

APPENDIX A

COMPONENTS OF EXECUTIVE COMPENSATION

	
  COMPONENTS

  	
   

  	
  NEW HIRES

  	
   

  	
  EXISTING EMPLOYEES

  
	
  NEW-HIRE
  BASE SALARY

  	
   

  	
  Benchmark comparable position in peer and competitor
  companies; consult published salary surveys; evaluate skill set, experience,
  education, prior performance, aptitude for success in position and at Sonus.
  May consider strategic importance, scarcity of skills, and other pertinent
  factors.

  	
   

  	
  NA

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ANNUAL
  MERIT INCREASES

  	
   

  	
  Eligibility

  Hired on or before Sept. 30. Any increase will be
  pro-rated per date of hire.

  Amount

  Based upon achievement against corporate, team, and
  individual goals and objectives, strategic value of the position, internal
  equity, market analysis, salaries for comparable positions in specified
  comparator companies, and other relevant factors. Determined during Q4.

  	
   

  	
  Eligibility

  Currently an active employee.

   

   

  Amount

  Based upon achievement against corporate, team, and
  individual goals and objectives, strategic value of the position, internal
  equity, market analysis, salaries for comparable positions in specified
  comparator companies, and other relevant factors. Determined during Q4.

  

 

 3
 

 

 

	
  COMPONENTS

  	
   

  	
  NEW HIRES

  	
   

  	
  EXISTING EMPLOYEES

  
	
  SHORT-TERM
  INCENTIVE (STIP)

  	
   

  	
  Eligibility

  Hired on or before Sept. 30. Pro-rated per date of
  hire. If hired on or after Oct. 1 may be eligible for personal objectives
  only.

  Calculation

  Aggregate total calculated for each goal. If
  threshold not achieved, no points are earned. If superior achieved, no more
  than maximum points will be earned. Total aggregate points are multiplied by
  each executive’s target STIP award to establish the earned award percentage.
  This percentage is then multiplied by each executive’s base salary to
  determine the dollar value of the award.

  Award Payout

  Bonuses are paid during Q1 of the year following the
  review year. An executive must be actively employed on the date awards are
  paid in order to receive an award. Pro-rated per date of hire.

  	
   

  	
  Eligibility

  Currently an active employee.

   

   

   

  Calculation

  Aggregate total calculated for each goal. If threshold
  not achieved, no points are earned. If superior achieved, no more than maximum
  points will be earned. Total aggregate points are multiplied by each
  executive’s target STIP award to establish the earned award percentage. This
  percentage is then multiplied by each executive’s base salary to determine
  the dollar value of the award.

   

   

   

  Award Payout

  Bonuses are paid during Q1 of the year following the
  review year. An executive must be actively employed on the date awards are
  paid in order to receive an award.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LONG-TERM
  INCENTIVE (LTIP)

  	
   

  	
  Eligibility New-hire Award

  As soon as administratively possible after hire
  date.

   

   

  Exercise Price

  The closing price of Sonus stock on the day the
  award is approved. Approvals of awards shall be made effective as of the last
  business day of the month during which employment commences.

   

  Vesting

  Vesting shall commence as of the last business day
  of the month during which employment commences. Four-year time-based vesting
  with one-quarter of the total award vesting after one year and the remainder
  in 36 equal monthly installments.

  	
   

  	
  Eligibility Annual Performance Award

  Hired on or before June 30 of the review year. If
  less than a full year, will be pro- rated per date-of-hire.

   

  Exercise Price

  The closing price of Sonus stock on the day the
  award is approved. Approvals of awards shall be made effective as of the last
  business day of the year.

   

   

   

  Vesting

  Vesting shall commence as of the last business day
  of the year. Four-year time-based vesting with one-quarter of the total vesting
  after one year and the remainder in 36 equal monthly installments.

  

 

 4

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