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Exhibit 10.25    
    

 
 

ANACOR PHARMACEUTICALS, INC.
  
  CHANGE OF CONTROL AND SEVERANCE AGREEMENT    
    

        This Change of Control and Severance Agreement (the "Agreement") is dated as of
[                        ], by and
between                                    ("Employee") and Anacor Pharmaceuticals, Inc., a Delaware corporation
(the "Company" or "Anacor"). This Agreement is intended to provide Employee with certain benefits
described herein upon the occurrence of specific events. 

RECITALS 

        A.    It
is expected that another company may from time to time consider the possibility of acquiring the Company or that a change in control may otherwise occur, with or
without the approval of the Company's Board of Directors. The Board of Directors recognizes that such consideration can be a distraction to Employee and can cause Employee to consider alternative
employment opportunities. The Board of Directors has determined that it is in the best interests of the Company and its stockholders to assure that the Company will have the continued dedication and
objectivity of the Employee, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined below) of the Company. 

        B.    The
Company's Board of Directors believes it is in the best interests of the Company and its stockholders to retain Employee and provide incentives to Employee to
continue in the service of the Company. 

        C.    The
Board of Directors further believes that it is imperative to provide Employee with certain benefits upon termination of Employee's employment, in connection with a
Change of Control and otherwise, which benefits are intended to provide Employee with financial security and provide sufficient income and encouragement to Employee to remain with the Company,
notwithstanding the possibility of a Change of Control. 

        D.    To
accomplish the foregoing objectives, the Board of Directors has directed the Company, upon execution of this Agreement by Employee, to agree to the terms provided in
this Agreement. 

        Now
therefore, in consideration of the mutual promises, covenants and agreements contained herein, and in consideration of the continuing employment of Employee by the Company, the
parties hereto agree as follows: 

        1.    At-Will Employment.    The Company and Employee acknowledge that Employee's
employment is and shall continue to be at-will, as defined under applicable law, and that Employee's employment with the Company may be terminated by either party at any time for any or no
reason. If Employee's employment terminates for any reason, Employee shall not be entitled to any payments, benefits, award or compensation other than as provided in this Agreement. The terms of this
Agreement shall terminate upon the earlier of (i) the date on which Employee ceases to be employed as an officer of the Company, other than as a result of an involuntary termination by the
Company without Cause (as defined below) or Employee's resignation for Good Reason (as defined below) following a Change of Control; or (ii) the date that all obligations of the parties
hereunder have been satisfied. A termination of the terms of this Agreement pursuant to the preceding sentence shall be effective for all purposes, except that such termination shall not affect the
payment or provision of compensation or benefits on account of a termination of employment occurring prior to the termination of the terms of this Agreement. The rights and duties created by this
Section 1 may not be modified in any way except by a written agreement executed by an officer of the Company upon direction from the Board of Directors. 

        2.    Benefits Upon Termination of Employment.    

        (a)    Termination In Connection with or Following a Change of Control.    In the event that
Employee's employment is terminated as a result of an involuntary termination other than for Cause or if Employee resigns for Good Reason at any time within ninety (90) days prior to and 

 

twelve
(12) months following the effective date of a Change of Control, then Employee will be entitled to receive severance benefits as follows: (i) severance payments during the period
from the date of Employee's termination until the date nine (9) months after the effective date of the termination (the "Severance Period") equal
to the base salary which Employee was receiving immediately prior to the Change of Control, which payments shall be paid during the Severance Period in accordance with the Company's standard payroll
practices, (ii) continuation of the health insurance benefits provided to Employee for Employee and his/her eligible dependents immediately prior to the Change of Control at Company expense
pursuant to the terms of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA") or other applicable law through the earlier of
the end of the Severance Period or the date upon which Employee is no longer eligible for such COBRA or other benefits under applicable law, and (iii) each stock option to purchase the
Company's Common Stock and all shares of restricted stock granted to Employee over the course of his/her employment with the Company and held by Employee on the date of termination of employment shall
become immediately vested as to 100% of the then unvested options and shares. In addition, Employee will receive payment(s) for all accrued and unpaid salary, bonuses and PTO as of the date of
Employee's termination of employment. 

        (b)    Termination Not In Connection with or Following a Change of Control.    In the event
that Employee's employment is terminated as a result of an involuntary termination other than for Cause or if Employee resigns for Good Reason at any time more than ninety (90) days prior to or
more than twelve (12) months following the effective date of a Change of Control, and such termination occurs after completion of an underwritten
public offering by the Company of shares of its Common Stock under the Securities Act of 1933, as amended (an "IPO"), then Employee will be entitled to
receive severance benefits as follows: (i) severance payments during the period from the date of Employee's termination until the date six (6) months after the effective date of the
termination (the "Benefit Period") equal to the base salary which Employee was receiving immediately prior to the termination date, which payments shall
be paid during the Benefit Period in accordance with the Company's standard payroll practices, and (ii) continuation of the health insurance benefits provided to Employee and his/her eligible
dependents immediately prior to the termination date at Company expense pursuant to COBRA or other applicable law through the earlier of the end of the Benefit Period or the date upon which Employee
is no longer eligible for such COBRA or other benefits under applicable law. In addition, Employee will receive payment(s) for all accrued and unpaid salary, bonuses and PTO as of the date of
Employee's termination of employment. 

        (c)    Termination for Cause or Voluntary Resignation other than for Good Reason.    If
Employee's employment is terminated for Cause at any time or if Employee voluntarily resigns from the Company at any time for any reason other than Good Reason, then Employee shall not be entitled to
receive payment of any severance benefits under this Agreement. Employee will receive payment(s) for all accrued and unpaid salary and PTO as of the date of Employee's termination of employment and
Employee's benefits will be continued under the Company's then existing benefit plans and policies in accordance with such plans and policies in effect on the date of termination and in accordance
with applicable law. 

        3.    Definition of Terms.    The following terms referred to in this Agreement shall have the
following meanings: 

        (a)    Change of Control.    "Change of
Control" shall mean a sale of all or substantially all of the Company's assets, or any merger or consolidation of the Company with or into another corporation other than a
merger or consolidation in which the holders of more than 50% of the shares of capital stock of the Company outstanding immediately prior to such transaction continue to hold (either by voting
securities remaining outstanding or by their being converted into voting 

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securities
of the surviving entity) more than 50% of the total voting power represented by the voting securities of the Company, or such surviving entity, outstanding immediately after such
transaction. For purposes of clarification, neither an equity financing occurring prior to an IPO nor an IPO will be a Change of Control, even if equity securities representing greater than 50% of the
total voting power of the Company are sold in the transaction. 

        (b)    Cause.    "Cause" shall mean, as
determined by the Board acting in good faith and based on information then known to it: (A) gross negligence or willful misconduct in the performance of duties to the Company where such gross
negligence or willful misconduct has resulted or is likely to result in substantial and material damage to the Company or its subsidiaries; (B) a material failure to comply with the Company's
written policies after having received from the Company notice of, and a reasonable time to cure, such failure; (C) repeated unexplained or unjustified absence from the Company;
(D) conviction of a felony or a crime involving moral turpitude causing material harm to the standing and reputation of the Company; (E) unauthorized use or disclosure of any proprietary
information or trade secrets of the Company or any other party to whom Employee owes an obligation of non-disclosure as a result of Employee's relationship with the Company, which use or
disclosure causes or is likely to cause material harm to the Company; or (F) Employee's death or Permanent Disability. 

        (c)    Good Reason.    "Good Reason" for
Employee's resignation of his/her employment will exist following the occurrence of any of the following without Employee's consent: (A) a material reduction or change in job duties,
responsibilities or authority inconsistent with Employee's position with the Company and Employee's prior duties, responsibilities or authority; (B) a reduction of Employee's then current base
salary by more than 10 percent (10%); or (C) a relocation of the principal place for performance of Employee's duties to the Company to a location more than twenty-five
(25) miles from the Company's then current location; provided that Employee gives written notice to the Company of the event forming the basis of the Good Reason resignation within sixty
(60) days of the date the Company gives written notice to Employee of its affirmative decision to take an action set forth in (A), (B) or (C) above, the Company fails to cure such
basis for the Good Reason resignation within thirty (30) days after receipt of Employee's written notice and Employee terminates employment within one hundred twenty (120) days following
the date on which Employee received notice from the Company of the event forming the basis for the Good Reason resignation. 

        (d)    Permanent Disability.    "Permanent
Disability" shall mean Employee's inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last for a continuous period of not less than six (6) months. 

        4.    Parachute Payments.    In the event that the acceleration and severance benefits
provided for in this Agreement (A) constitute "parachute payments" within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code") and (B) but for this paragraph, would be subject to the excise tax imposed by Section 4999 of the Code, then Employee's benefits
hereunder shall be payable either: (X) in full, or (Y) as to such lesser amount which would result in no portion of such severance benefits being subject to excise tax under
Section 4999 of the Code, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999, results
in the receipt by Employee on an after-tax basis, of the greatest amount of benefits hereunder, notwithstanding that all or some portion of such benefits may be taxable under
Section 4999 of the Code. Unless the Company and Employee otherwise agree in writing, any determination required under this paragraph shall be made in writing by the public accountants
designated by the Company (the "Accountants"), whose determination shall be conclusive and binding upon Employee and the Company for all purposes. For
purposes of making the calculations required by this paragraph, the Accountants may make reasonable assumptions and 

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approximations
concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Section 280G and 4999 of the Code. The Company and Employee shall
furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this paragraph. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations contemplated by this paragraph. 

        5.    Limitations and Conditions on Benefits    

        (a)    Income and Employment Taxes.    Employees agrees that he/she shall be responsible for
any applicable taxes of any nature (including any penalties or interest that may apply to such taxes) that the Company reasonably determines apply to any payment made hereunder, that his/her receipt
of any benefit hereunder is conditioned on his/her satisfaction of any applicable withholding or similar obligations that apply to such benefit, and that any cash payment owed hereunder will be
reduced to satisfy any such withholding or similar obligations that may apply. 

        (b)    Code Section 409A.    Notwithstanding any provision of this Agreement to the
contrary, if, at the time of Employee's termination of employment with the Company, Employee is a "specified employee" (as defined in Section 409A of the Code) and the deferral of the
commencement of any severance payments or benefits otherwise payable pursuant to this Agreement as a result of such termination of employment is necessary in order to prevent any accelerated or
additional tax under Section 409A of the Code, then the Company will defer the commencement of the payment of any such severance payments or benefits hereunder (without any reduction in such
payments or benefits ultimately paid or provided to Employee) that will not and could not under any circumstances, regardless of when such termination occurs, be paid in full by March 15 of the
year following Employee's termination and are in excess of the lesser of (i) two (2) times Employee's then annual compensation or (ii) two (2) times the limit on
compensation then set forth in Section 401(a)(17) of the Code and will not be paid by the end of the second calendar year following the year in which the termination occurs, until the first
payroll date that occurs after the date that is six (6) months following Employee's "separation of service" with the Company (as defined under Code Section 409A). If any payments are
deferred due to such
requirements, such amounts will be paid in a lump sum to Employee on the earliest of (a) Employee's death following the date of Employee's termination of employment with the Company or
(ii) the first payroll date that occurs after the date that is six (6) months following Employee's "separation of service" with the Company. For these purposes, each severance payment or
benefit is hereby designated as a separate payment or benefit and will not collectively be treated as a single payment or benefit. This paragraph is intended to comply with the requirements of
Section 409A of the Code so that none of the severance payments and benefits to be provided hereunder will be subject to the additional tax imposed under Section 409A of the Code and any
ambiguities herein will be interpreted to so comply. Employee and the Company agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions which
are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition prior to actual payment to Employee under Section 409A of the Code. 

        (c)    Release Prior to Receipt of Benefits.    Prior to the receipt of any benefits under
this Agreement, Employee shall execute a release of claims agreement (the "Release") in the form provided by the Company. Such Release shall specifically relate to all of Employee's rights and claims
in existence at the time of such execution and shall confirm Employee's obligations under the Company's standard form of proprietary information agreement. The Company shall use reasonable efforts to
provide the form Release to Employee within fifteen (15) days of Employee's termination date. 

        6.    Conflicts.    Employee represents that his/her performance of all the terms of this
Agreement will not breach any other agreement to which Employee is a party. Employee has not, and will not 

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during
the term of this Agreement, enter into any oral or written agreement in conflict with any of the provisions of this Agreement. Employee further represents that he/she is entering into or has
entered into an employment relationship with the Company of his/her own free will and that he/she has not been solicited as an employee in any way by the Company. 

        7.    Successors.    Any successor to the Company (whether direct or indirect and whether by
purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company's business and/or assets shall assume the obligations under this Agreement and agree
expressly to perform the obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. The
terms of this Agreement and all of Employee's rights hereunder and thereunder shall inure to the benefit of, and be enforceable by, Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. 

        8.    Notice.    Notices and all other communications contemplated by this Agreement shall be
in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. Mailed notices to
Employee shall be addressed to Employee at the home address which Employee most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to its
corporate headquarters, and all notices shall be directed to the attention of its Secretary. 

        9.    Miscellaneous Provisions.    

        (a)    No Duty to Mitigate.    Employee shall not be required to mitigate the amount of any
payment contemplated by this Agreement (whether by seeking new employment or in any other manner), nor shall any such payment be reduced by any earnings that Employee may receive from any other
source. 

        (b)    Waiver.    No provision of this Agreement shall be modified, waived or discharged
unless the modification, waiver or discharge is agreed to in writing and signed by Employee and by an authorized officer of the Company (other than Employee). No waiver by either party of any breach
of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at
another time. 

        (c)    Whole Agreement.    No agreements, representations or understandings (whether oral or
written and whether express or implied) which are not expressly set forth in this Agreement have been made or entered into by either party with respect to the subject matter hereof. This Agreement
supersedes any agreement concerning similar subject matter dated prior to the date of this Agreement and by execution of this Agreement both parties agree that any such predecessor agreement shall be
deemed null and void. 

        (d)    Choice of Law.    The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of California without reference to conflict of laws provisions. 

        (e)    Severability.    If any term or provision of this Agreement or the application thereof
to any circumstance shall, in any jurisdiction and to any extent, be invalid or unenforceable, such term or provision shall be ineffective as to such jurisdiction to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable the remaining terms and provisions of this Agreement or the application of such terms and provisions to circumstances other than those
as to which it is held invalid or unenforceable, and a suitable and equitable term or provision shall be substituted therefor to carry out, insofar as may be valid and enforceable, the intent and
purpose of the invalid or unenforceable term or provision. 

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        (f)    Arbitration.    Employee and the Company agree to attempt to settle any disputes
arising in connection with this Agreement through good faith consultation. In the event that Employee and the Company are not able to resolve any such disputes within fifteen (15) days after
notification in writing to the other,
Employee and the Company agree that any dispute or claim arising out of or in connection with this Agreement will be finally settled by binding arbitration in Santa Clara County, California in
accordance with the rules of the American Arbitration Association by one arbitrator mutually agreed upon by the parties. The arbitrator will apply California law, without reference to rules of
conflicts of law or rules of statutory arbitration, to the resolution of any dispute. Except as set forth in Subparagraph (e) above, the arbitrator shall not have authority to modify the terms
of this Agreement. The Company shall pay the costs of the arbitration proceeding. Each party shall, unless otherwise determined by the arbitrator, bear its or his/her own attorneys' fees and expenses,
provided however that if Employee prevails in an arbitration proceeding, the Company shall reimburse Employee for his/her reasonable attorneys' fees and costs. Judgment on the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. Notwithstanding the foregoing, the Company and Employee may apply to any court of competent jurisdiction for preliminary or interim
equitable relief, or to compel arbitration in accordance with this paragraph, without breach of this arbitration provision. 

        (g)    Legal Fees and Expenses.    The parties shall each bear their own expenses, legal fees
and other fees incurred in connection with the execution of this Agreement. 

        (h)    No Assignment of Benefits.    The rights of any person to payments or benefits under
this Agreement shall not be made subject to option or assignment, either by voluntary or involuntary assignment or by operation of law, including (without limitation) bankruptcy, garnishment,
attachment or other creditor's process, and any action in violation of this Section 9(h) shall be void. 

        (i)    Assignment by Company.    The Company may assign its rights under this Agreement to an
affiliate, and an affiliate may assign its rights under this Agreement to another affiliate of the Company or to the Company. In the case of any such assignment, the term "Company" when used in a
section of this Agreement shall mean the corporation that actually employs the Employee. 

        (j)    Counterparts.    This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together will constitute one and the same instrument. 

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        The
parties have executed this Agreement on the date first written above. 

	 	ANACOR PHARMACEUTICALS, INC.
	

 	

By:	

    

	

 	

Title:	

    

	

 	

Address:	

1060 East Meadow Circle

Palo Alto, CA 94303-4230
	

 	

EMPLOYEE
	

 	

Signature:	

    

	

 	

Address:	

    

    

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Exhibit 10.25

ANACOR PHARMACEUTICALS, INC. CHANGE OF CONTROL AND SEVERANCE AGREEMENTQuickLinks
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Exhibit 10.26    
    

  

 
 

ANACOR PHARMACEUTICALS, INC. EMPLOYEE BONUS PLAN    
    

        The Anacor Pharmaceuticals, Inc. Employee Bonus Plan (the "Plan") is designed for Anacor Pharmaceuticals, Inc. ("Anacor" or the "Company") with the
intention to reward all eligible Plan Participants based on achievement of performance results at the Company and individual levels. The Plan is designed to support the following design principles: 

	1.
	Create
a compelling incentive plan positioned for competitive recruiting and talent retention;

	2.
	Align
and drive individual, team and Company efforts to key performance results in support of Anacor's mission and core values, for maximum stakeholder value;

	3.
	Assure
a fair, consistent system across the Company; and

	4.
	Reward
stellar performance and contributions. 

PLAN YEAR  

	•
	The
"Plan Year" is the calendar year, January 1 through December 31. 

PLAN PARTICIPANTS AND ELIGIBILITY  

	•
	All
regular, full-time employees of the Company (and certain regular part-time employees if required by law), who have been notified in writing of
their eligibility are considered eligible Plan Participants ("Plan Participants"). For all eligible Plan Participants, the Plan replaces and supersedes all other primary performance bonus plans which
may have existed prior to the Plan's inception.

	•
	Plan
Participants must be active employees of the Company on the date of bonus payments in order to be eligible to earn and receive those respective Plan incentives. Dates
of bonus payments will be determined solely by the Company.

	•
	Eligible
employees who join the Company during a Plan Year, to the extent notified by the Company of their eligibility, will be eligible for Plan incentives on a
pro-rata basis corresponding to the active service time provided to the Company during that Plan Year, provided they will have been actively employed for at least one full month during the
respective Plan Year. Such prorating will be based upon the Plan Participant's actual earned base pay (and overtime pay as applicable) during the applicable period in the Plan Year.

	•
	Plan
Participants on a Company approved leave of absence may be eligible for partial Plan incentives at the discretion of Anacor's Chief Executive Officer ("CEO").

	•
	Plan
Participants must be in satisfactory performance standing as defined solely by the Company in order to be eligible to receive Plan incentives. 
Anacor Confidential (Feb 2008)

 

TARGET BONUS  

        The overall Plan Year bonus opportunity for each Plan Participant is expressed as a target percent of annualized base pay (the "Target Bonus"), which percentage
is determined for each Plan Year by a Plan Participant's position within the Company. The Target Bonus is comprised of two Plan components: Company and Individual, each weighted with a target
percentage. 

BONUS PLAN COMPONENTS  

        The two Plan components are defined below as: (1) Company Component and (2) Individual Component. 

1. Company Component  

        The "Company Component" represents a designated percentage of the Target Bonus corresponding to a Plan Participant's position grade level, (at target, the
"Company Component Target Amount") and is based on the level of achievement of Company performance objectives as defined by Anacor's Board of Directors (the "Board"). 

        Performance
targets, weightings, and achievement of each Company Component objectives will be assessed and approved by Anacor's Board at the end of each Plan Year or soon thereafter. The
Company Component bonus will be distributed to Plan Participants formulaically as achieved, such that if the Company Component performance objectives are achieved at 80%, then each Plan Participant
would receive 80% of their Company Component Target Amount for that Plan Year. Adjustments for achievement below Target will be done on a linear basis with actual percentage of achievement applied
against the Company Component Target Amount to determine the actual amount of the Company Component bonus to be paid. There is no minimum performance threshold for the Company Component in order for
this component to be funded at some level. 

2. Individual Component  

        The "Individual Component" represents a designated percentage of the Target Bonus corresponding to a Plan Participant's position grade level, and is based on a
Plan Participant's individual performance as evaluated by their management (and approved by Human Resources) on their formal performance review(s) during the Plan Year. Formal performance review
ratings as well as percentage achievement of Plan Participant performance objectives will be considered in determining Individual Component bonus awards. In addition, relative level of contribution
and achievement will also be assessed at the discretion of the Plan Participant's management. Because such discretionary management assessment will be used together with the performance review
rating(s) and results to determine the actual Individual Component bonus award, Plan Participants receiving the same performance rating may not receive the same percentage of their Individual
Component target. 

WHEN PLAN AWARDS ARE EARNED AND PAID  

Company Component:  

        Achievement of the Company Component objectives will be assessed and approved by the Board following the end of each Plan Year (December 31). Depending on
the performance achieved, the Plan Participant will earn and be paid a corresponding Company Component incentive following the close of that Plan Year and in any event no later than March 15 of
the following year. 

Anacor Confidential (Feb 2008)

2

 

Individual Component:  

        Achievement of the Individual Component will be assessed by the Plan Participant's management and approved by Human Resources and the CEO either quarterly,
semi-annually, or annually as designated for each Plan Participant. Depending on the performance rating(s) and results achieved on the formal performance review(s) for the performance
period, the Plan Participant will earn and be paid a corresponding Individual Component incentive at the time of quarterly, semi-annual, or annual award payment. The Company Component need
not be achieved or earned in order for the Individual Component to be earned. 

GENERAL PAYMENT INFORMATION:  

        Award assessment and approval decisions provided by Anacor's CEO, Board, or the Board's Compensation Committee, as applicable, will be final and binding. The Plan
Participant must be an active employee on the date of bonus award payment in order for any respective incentive amount to be earned. 

        The
calculation of bonus awards will be made for each relevant Plan component based on the amount of base pay (and overtime pay as applicable) paid to the Plan Participant during the
corresponding component's performance period. The performance period for the Company Component is the Plan Year, January 1 through December 31. There are additional performance periods
within a Plan Year for the Individual Component as designated for each Plan Participant. 

        Plan
Participants who receive promotions during a Plan Year which provide for a new Target Bonus percentage will have the prior Target Bonus percentage applied to the relevant portion of
the performance periods prior to the promotion and the new Target Bonus percentage applied to the relevant portion of the performance periods following the promotion. 

        All
bonus payments earned under the Plan will be made net of all applicable taxes and withholdings. 

LEAVE OF ABSENCE AND TERMINATION OF EMPLOYMENT  

        The CEO of Anacor will determine together with Human Resources, in their sole discretion whether a Plan Participant on an approved leave of absence during a Plan
Year will be eligible to earn a partial or prorated bonus payment under the Plan. Plan Participants must be actively employed on the day of bonus award determination and payment in order to be
eligible for and earn those respective incentives payments, and regardless of reason for employment termination (whether with or without cause) the Plan bonus will not normally be considered a
component of termination pay or severance pay paid to a Plan Participant, if any. 

        Participation
in this Plan is not an agreement (express or implied) between the Plan Participant and the Company that the Company will employ the Plan Participant for any specific period
of time, nor does it contemplate any agreement for continuing or long-term employment. Except as may otherwise be specified in a Plan Participant's individual employment agreement, the
Plan Participant and the Company each have the right to terminate the employment relationship at any time, and with or without cause. This at-will employment relationship can only be
modified by an agreement signed by the Plan Participant and the Company's CEO. 

Anacor Confidential (Feb 2008)

3

 

GENERAL INFORMATION, DETERMINATIONS, CHANGES, EXCEPTIONS TO PLAN  

        This document highlights the principal features of the Plan, but it does not describe every situation that can occur. The Company and the Board retain the right
to interpret, revise, modify or terminate the Plan at their sole discretion at any time. Additionally, the structure of the bonus plan may change for future Plan Years. Except as otherwise determined
in writing by approval of the CEO or the Board, as applicable, this document together with the corresponding formal notice of Plan eligibility provided to Plan Participants, replaces and supersedes
any previous performance bonus plans and any written or verbal representations regarding the subject matter of this Plan, including any provisions stated in the Plan Participant's offer letter or
employment agreement specifying eligibility, amount, and participation in any incentive or bonus program which are inconsistent with this Plan. The Company reserves the right to make any reasonable
adjustments to the Plan, including but not limited to project assignments, position and/or salary changes affecting Bonus Targets, the ability to award bonus payments beyond Bonus Targets for
exceptional performance, or as otherwise necessary to reflect business and economic conditions. The CEO, Human Resources, CFO, and/or Board or the Compensation Committee, as
applicable, must approve any exceptions, modifications or adjustments to the Plan. The Company further retains full and final discretion to determine whether a Plan Participant has earned any
incentives pursuant to the Plan. All such determinations will be final and binding. Participation in the Plan during any Plan Year will not convey any entitlement to participate in this or future
plans or to the same or similar bonus benefits or opportunities. 

Anacor Confidential (Feb 2008)

4

 

  

 
 

BONUS PLAN ATTACHMENT    
    

	

 
 

Anacor Pharmaceuticals, Inc. Employee Bonus Plan Acknowledgment Form    
    

        I understand that I have been designated a Participant in the Anacor Pharmaceuticals, Inc. Employee Bonus Plan (the "Plan"). I have received a copy of the
Plan document. 

        I
understand that, notwithstanding any other agreements, arrangements or understandings that may exist, my current Target Bonus percentage for the Plan Year
2008 is                         %. This Target Bonus Percentage is split between the Company
Component and Individual Component as follows: 

Company
Component                         % of the Target Bonus

Individual Component                         % of the Target Bonus 

        The
Individual Component, if earned, will be paid on a <quarterly, semi-annual, or annual> basis. 

        I
hereby agree to the terms and conditions set forth in the Plan. I understand that I have no right to earn any amount under this Plan until all conditions described in the Plan have
been met, as determined by the Compensation Committee of the Board of Directors, in its sole judgment. I acknowledge and agree that participation in this Plan is not an agreement (express or implied)
between the Plan Participant and the Company that the Company will employ the Plan Participant for any specific period of time, nor does it contemplate any agreement for continuing or
long-term employment. 

	

 	
 	

 	

 	

 
	
 PLAN PARTICIPANT <Name>	 	 	
 DATE	 
	

 CFO	
 	

 	

 DATE	

 

Anacor Confidential (Feb 2008)

5

QuickLinks

Exhibit 10.26

ANACOR PHARMACEUTICALS, INC. EMPLOYEE BONUS PLAN

BONUS PLAN ATTACHMENT

Anacor Pharmaceuticals, Inc. Employee Bonus Plan Acknowledgment Form

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