Document:

tndm-ex103_132.htm

Exhibit 10.3

2018 COMPENSATION AGREEMENT

 

This 2018 Compensation Agreement (“Compensation Agreement”) is made and entered into effective as of January 5, 2018 by and between Tandem Diabetes Care, Inc. (the “Company”) and Kim Blickenstaff (“Executive”) with reference to the following facts and intentions:

A.Executive is the President and Chief Executive Officer of the Company;

B.At Executive’s request, on January 5, 2018 the Board of Directors of the Company (the “Board”) approved a reduction in Executive’s annual base salary from his 2017 annual base salary of $583,495 (the “Prior Base Salary”), to $1.00 for 2018.  Executive also declined consideration of a discretionary cash bonus payment for performance in 2017. 

C.In connection with the reduction in Executive’s base salary, the Board approved the adoption of a cash bonus arrangement that will be utilized to calculate the cash bonus, if any, that may become payable to Executive with respect to fiscal year 2018 (the “2018 Cash Bonus”).  The 2018 Cash Bonus is designed to align Executive’s interests with the Company’s business goals and strategies, and to further the objectives of the Company’s executive compensation program.

 

WHEREFORE based on these facts and intention, the Company and Executive agree as follows:

 

1.For calendar year 2018, effective January 1, 2018 Executive will receive a base salary of $1.00.

 

2.With respect to calendar year 2018, Executive will also be eligible for the 2018 Cash Bonus in the amount of $583,495, less required payroll deductions (“Prior Base Salary”), pursuant to the following terms and conditions:

 

a.The 2018 Cash Bonus will be earned in full only upon the achievement of all of the following Company financial performance objectives as determined by the Board:

 

	
 
	
i.
	
The Company’s actual revenue for fiscal year 2018 must be at least equal to the 2018 revenue target established by the Board during the first quarter of 2018.

 

	
 
	
ii.
	
The Company’s actual operating margin for fiscal year 2018 must be no greater than the 2018 operating margin target established by the Board during the first quarter of 2018.

 

	
 
	
iii.
	
The Company’s Earnings before Interest, Taxes, Depreciation and Amortization (excluding stock-based compensation and any payment of the 2018 Cash Bonus to Executive) must be positive for the fourth fiscal quarter of 2018.

 

Exhibit 10.3

b.If the Company does not achieve all of the above financial performance objectives, as determined by the Board, no 2018 Cash Bonus will be payable to Executive. 

 

c.If the Company achieves all of the above financial performance objectives, as determined by the Board, the 2018 Cash Bonus, less required payroll deductions, will be paid to Executive in full by no later than March 15, 2019 subject to the express condition that Executive is employed continuously as the President and Chief Executive Officer of the Company for the full year ending December 31, 2018.

 

3.In the event the Company terminates Executive’s employment, or Executive voluntarily resigns, or his service ends due to disability or death, at any time during 2018, Executive will be entitled to receive payment of the pro-rata portion of the Prior Base Salary based on the number of days elapsed in 2018 through the date of termination, less required payroll deductions.  In addition, with respect to the Amended and Restated Employment Severance Agreement dated November 4, 2013 by and between the Company and Executive (the “Severance Agreement”), Section 4(a) of the Severance Agreement is amended to read in its entirety as follows:  

“Base Compensation” means the Employee’s (i) annual base salary paid by the Company for services performed as in effect on the Termination Date; and (ii) target cash bonus and/or other forms of cash incentive compensation for the fiscal year in which the Change of Control is effective.  Notwithstanding the foregoing, in the event of a Change of Control resulting in Executive’s Involuntary Termination or Resignation for Good Reason during calendar year 2018 “Base Compensation” will mean: (i) Executive’s 2017 base compensation of $583,495 and (ii) his target cash bonus for the 2017 calendar year (without consideration of Executive’s election to decline a cash bonus for such period). , .

 

4.Executive will not be eligible for any additional cash incentive compensation for his service during 2018 except as expressly set forth in this Compensation Agreement or as otherwise subsequently determined by the Board.  Further, this Compensation Agreement applies for 2018 only and the Board reserves the right to determine Executive’s compensation for future periods. 

 

5.No waiver of a provision of this Compensation Agreement shall constitute a waiver of any other provision, whether or not similar.  No waiver shall constitute a continuing waiver.  No waiver shall be binding unless executed in writing by the party making the waiver.

 

6.All parts of this Compensation Agreement shall in all cases be construed according to their plain meaning and shall not be construed in favor or against either of the parties.  If any term, provision, covenant or condition of this Compensation Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, in whole or in part, the remainder of this Compensation Agreement shall remain in full force and effect and shall not be affected, impaired or invalidated thereby.  

 

Exhibit 10.3

7.This Compensation Agreement, the Severance Agreement (as amended hereby) and the employment letter agreement dated September 1, 2007, as applicable, constitutes the entire agreement between the parties pertaining to the compensation of Executive by the Company for calendar year 2018, and supersedes all prior and contemporaneous agreements, representations, promises and understandings of the parties, whether oral or in writing.  No supplement, modification or amendment of this Compensation Agreement shall be binding unless executed in writing by all parties and this Compensation Agreement may not be altered, amended, or modified by any other means.

 

IN WITNESS WHEREOF, each of the parties has executed this Compensation Agreement, in the case of the Company by a duly authorized officer, as of the day and year set forth below its signature below.

 

COMPANY:TANDEM DIABETES CARE, INC.

 

 

By: /s/ Susan M. Morrison

Name: Susan M. Morrison

	
 
	

	
Title: Executive Vice President, Chief Administrative Officer

Date: July 30, 2018

 

 

 

 

EMPLOYEE/s/ Kim D. Blickenstaff

Kim D. Blickenstaff

Date: July 30, 2018

 

 

 

Exhibit 10.3tndm-ex104_131.htm

Exhibit 10.4

 

Tandem Diabetes Care, Inc.

2018 Sr. Management Cash Bonus Plan

 

The Tandem Diabetes Care, Inc. 2018 Sr. Management Cash Bonus Plan (the “Bonus Plan”) has been designed to align plan participants with the business goals and strategies of Tandem Diabetes Care, Inc. (“Tandem” or the “Company”) and to further the objectives of the Company’s executive compensation program. This Bonus Plan is an important part of the Company’s commitment to recognizing key employees who contribute to the achievement of important Company performance goals. Specifically, the objectives of the Bonus Plan are as follows:

	
 
	
•
	
Attract, retain and reward highly skilled individuals, including executive officers, with the background and experience required for the Company’s future growth and success by providing meaningful cash incentive payments to plan participants who are in a position to contribute significantly to Company success.

	
 
	
•
	
Align the interests of plan participants with those of the Company’s stockholders by tying a meaningful portion of their total compensation opportunity to the achievement of specific Company performance objectives, such as an annual revenue target.

	
 
	
•
	
Together with base salary, long-term equity incentives and other components of compensation, create an appropriate balance of cash versus non-cash, and guaranteed versus at risk compensation opportunities. 

Performance Period

The Bonus Plan is primarily intended to reward plan participants for their individual contributions to the Company’s achievement with respect to Company performance objectives for the 2018 fiscal year.  However, the Company’s Board of Directors or the Compensation Committee of the Board of Directors (the “Compensation Committee”) also has the discretion to consider individual or Company performance after December 31, 2018 and until the date of any actual bonus determination under the Bonus Plan in measuring performance and determining the amount of an award, if any, under the Bonus Plan.

Eligibility

Employees of the Company eligible for an award under this Bonus Plan will be limited to individuals serving as a Vice President or more senior management role within the Company, as determined by the Board of Directors or the Compensation Committee. If, following January 1, 2018, an individual is promoted or hired and becomes an eligible participant under the Bonus Plan at any time during the 2018 calendar year, then the individual will be eligible to participate under the Bonus Plan on a pro-rata basis, calculated in the reasonable discretion of the Compensation Committee, unless otherwise specifically provided by the Board of Directors or the Compensation Committee.  

Bonus Opportunity

A target cash incentive amount (a “Target Bonus Amount”) for each eligible plan participant will be set as a percentage of the participant’s base salary.  Cash incentives may be earned under the Bonus Plan based on the achievement of both financial performance objectives and product development objectives.  The financial performance objectives are comprised of two parts and will collectively represent 80% of the overall Target Bonus Amount and the product development objectives will collectively represent 20% of the overall Target Bonus Amount. 

1.

 

Financial Performance Objectives

The portion of the cash bonuses that relate to the Company financial objectives may be earned based on the Company’s actual revenue for fiscal year 2018 as compared to a pre-established 2018 revenue target (the “Revenue Target”), provided the Company also achieves at least a minimum operating margin percentage (the “Minimum Operating Percentage Target”).  Subject to the foregoing, the Company financial objective portion of the cash bonuses may be earned under the Bonus Plan as follows:  

	
 
	
•
	
A minimum percentage growth rate over the Company’s actual 2017 revenue, which places the Company’s revenue for 2018 at 75% of the Revenue Target (the “Minimum Revenue Target”), must be achieved for any bonus to be earned under the financial performance objectives portion of the 2018 Cash Bonus Plan.  

	
 
	
•
	
If the Company’s actual revenues are between this Minimum Revenue Target and the Revenue Target, the goal achievement for the financial performance objectives will be calculated proportionately in a straight-line from 0% to 100%.  If the Company’s actual revenues exceed the Revenue Target, the goal achievement for the financial performance objectives will be calculated proportionately as a percentage of the Revenue Target. 

	
 
	
•
	
No more than 90% payout can be earned under the financial objectives portion of the Bonus Plan unless the Company’s actual quarterly Earnings before Interest, Taxes, Depreciation and Amortization (and further excluding non-cash stock based compensation expense and any payment of the 2018 Cash Bonus payable to the Company’s Chief Executive Officer) (“EBITDA”) for fiscal year 2018 is positive (the “EBITDA Goal”).  

Potential Incremental Bonus

If the Company’s actual revenues are above 105% of the Revenue Target, and provided that the Company also achieves both the EBITDA Goal and a secondary minimum operating margin percentage target that reflects more favorable performance as compared to the Minimum Operating Percentage Target, then the 2018 Cash Bonus Plan has two levels of potential incremental overall goal achievement:

	
 
	
•
	
If the Company’s actual revenues are above 105% of the Revenue Target and up to 115% of the Revenue Target, the percentage of overall goal achievement with respect to the Company financial objectives under the Bonus Plan will first be calculated as described above, and then for each percent of revenue achievement above 105% of the Revenue Target and up to 115% of the Revenue Target, an additional 1.0% will be added to the overall goal achievement under the 2018 Cash Bonus Plan, and the cash bonus will be calculated based on this modified level of goal achievement; or

	
 
	
•
	
If the Company’s actual revenues are above 115% of the Revenue Target of the Revenue Target, the percentage of overall goal achievement with respect to the Company financial objectives under the Bonus Plan will first be calculated as described above, and then for each percent of revenue achievement above 105% of the Revenue Target, an additional 2.0% will be added to the overall goal achievement under the 2018 Cash Bonus Plan, and the cash bonus will be calculated based on this modified level of goal achievement. 

2.

 

Company Product Development Milestones

The portion of the cash bonuses that relates to the Company product development milestones generally require the Company to submit regulatory filings or obtain regulatory clearance and commercially launch certain products under development.  Subject to the Committee’s final discretion, an individual product development milestone must be achieved within a required time period for the applicable portion of the 2018 Cash Bonus Plan to be achieved. Overall goal achievement of the Company’s product development milestones will be based on the portion of the product development milestones that the Company actually achieves during fiscal year 2018. 

Award Determination

Bonus payments under the Bonus Plan, if any, will be made at the discretion of the Board or the Committee. The financial performance components and product development components of the Bonus Plan may be earned independent of one another. If the Company does not achieve any portion of any of the financial performance components or the product development components of the Bonus Plan, no payouts will be made unless the Board or the Committee, in their sole discretion, determines that there are other factors that merit consideration in the determination of bonus awards, which may be determined on an individual basis.  All determinations and decisions made by the Compensation Committee and the Board of Directors pursuant to the provisions of the Bonus Plan shall be final, conclusive and binding on all persons, and shall be given the maximum deference permitted by law.

 

Payout and Administration

Payment of bonuses will be made as soon as practical after the end of the plan year, but not later than March 15, 2019.  Participants must be actively employed at the time of payout to be eligible for any bonus payment. Only the Board of Directors may approve a payment under this Bonus Plan to the Company’s Chief Executive Officer. The Board of Directors or the Compensation Committee may approve payments to any other eligible plan participant. The Board of Directors or the Compensation Committee can modify the Bonus Plan, including timing and form of payments, at any time in their sole discretion.  Amounts payable under the Bonus Plan are intended to comply with the “short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations and thus be exempt from the provisions of Section 409A of the Internal Revenue Code of 1986, as amended.  The Board of Directors and the Compensation Committee intend to administer the Bonus Plan in a manner consistent with this rule.  Any amounts paid hereunder shall be subject to recoupment in accordance with The Dodd-Frank Wall Street Reform and Consumer Protection Act and any implementing regulations thereunder, any clawback policy adopted by the Company or as is otherwise required by applicable law.

3.

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