EXHIBIT 10.04
GENELABS TECHNOLOGIES, INC.
ANNUAL & LONG-TERM INCENTIVE
BASED COMPENSATION PLAN
Effective July 29, 1994, Amended October 7, 1994
Amended & Renewed July 29, 1997
Renewed June 1, 2000 for term July 29, 2000 through July 28,
2003 and Amended February 2, 2001
Amended and Renewed July 18, 2003 for term July 29, 2003 through
July 28, 2006
1. PURPOSE
The purpose of this Genelabs Technologies, Inc. Annual and Long-Term
Incentive Based Compensation Program (the "Plan") is to enable Genelabs
Technologies, Inc. and its wholly owned subsidiaries (the "Company") to
(i) attract, retain and motivate employees who contribute to the
success of the Company, (ii) reward performance in the achievement of
corporate objectives and, (iii) provide an incentive to senior
executives and designated key employees to increase the profitability
and advance the interests of the Company through participation in a
bonus plan in accordance with the provisions of this Plan.
2. DEFINITIONS
For purposes of this Plan, the following terms shall be defined as
follows:
a. "Award" means an Incentive Award that may be granted to a
Participant upon completion of certain performance conditions
set forth in this Plan.
b. "Award Cycle" means a period during which Company and
individual performance is measured as determined by the Board
of Directors of the Company (the "Board") from time to time.
Participants may participate in one or more Award Cycles,
which may run concurrently or successively.
c. "Award Level" means one of three categories into which
Participants are classified as set forth in Section 5 of this
Plan.
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d. "Company Objectives" means the criteria of measurement of
individual, division, department or company wide performance
goals. In the case of individual, division or departmental
performance goals, these are established by the Participant's
manager and approved by management of the Company; in the case
of company-wide performance goals, these are approved by the
Board, pursuant to Section 4 of this Plan for each Award
Cycle, including but not limited to budgeting and cash flow
objectives.
e. "Fiscal Year" means the fiscal year of the Company, which is
January 1 to December 31.
f. "Incentive Award" means an Award that may be granted to a
Participant upon completion of Company Objectives pursuant to
the terms of Sections 4, 5, and 6 of this Plan.
g. "Incentive Percentage" means the percentage, if any, of the
total base salaries of the Participants during an Award Cycle,
as determined by the Board, in the case of company wide
performance or performance of senior executives, and as
determined by management, in the case of individual, division
or department performance, for each Award Cycle if certain
Company Objectives are satisfied.
h. "Participant" means any regular employee of the Company who
has been with the Company a minimum of 90 days.
3. MAXIMUM AMOUNT OF AWARDS
There is no maximum limit on aggregate Awards paid with respect to any
Award Level.
4. DETERMINATION OF COMPANY AND INDIVIDUAL PERFORMANCE OBJECTIVES
a. Company Objectives. With respect to each Award Cycle, the
Board shall establish the company-wide Company Objectives,
based upon the recommendations of executive management. The
measurement of the Company Objectives for each Award Cycle
shall be based on (i) the attainment of certain division,
department or company wide strategic objectives, and (ii) the
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attainment of certain individual, division, department or
company-wide financial objectives, including annual budgeted
spending and/or annual revenue/income and cash flow targets.
b. Written Description. The Company Objectives shall be set forth
in writing and communicated to each Participant during each
Award Cycle.
5. CALCULATION OF AMOUNT OF INCENTIVE AWARD
a. Award Levels. Unless otherwise determined by the Board, each
Participant will be eligible to receive an Incentive Award in
an amount calculated according to the Award Level for such
Participant set forth below. A Participant may participate in
more than one Award Level if such Participant is eligible for
such Award Level.
Award
Level Description Participant
----- ----------- -----------
1 Annual Award All Participants
2 Annual Award Directors and Above
3 Long-Term Vice Presidents and Above
Incentive or at the discretion of
the HR Committee
Unless otherwise determined by the Board the achievement of Company
Objectives will be apportioned for each Award Level as follows:
(1) Award Level 1 - Annual Award. A Participant shall be
eligible to receive up to ten (10%) percent of his or
her salary multiplied by the applicable percentage
for completion of Company objectives.
(2) Award Level 2 - Annual Award. A designated
Participant shall be eligible to receive up to forty
(40%) percent of his or her salary as determined
pursuant to Section 5(b).
(3) Award Level 3 - Long-Term Incentive. A designated
Participant shall be eligible to receive up to
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thirty-five (35%) percent of his or her salary on a
deferral basis (Long-Term Incentive) over a period of
three (3) years paid 33% each year. This
discretionary level may include any employee of the
Company approved by the CEO and presented at the HR
Committee.
b. Percentage of Salary. With respect to each Award Cycle, the
Board shall establish for all Participants based upon the
recommendations of the Chief Executive Officer, the Incentive
Percentage to be paid to each organizational level for
achievement of each of the Company Objectives.
c. Incentive Awards made to a designated Participant. Incentive
Awards made to Participants in Award Level 3 (Long-Term
Incentive) shall be paid in accordance with the following
vesting schedule, unless otherwise determined by the Board of
Directors:
YEARS OF EMPLOYMENT PERCENTAGE
BASED ON AWARD CYCLE OF AWARD
(JAN 1 - DEC 31)
Less than one full year of up to 10%
employment from the first day of pro-rated
the Award Cycle (discretionary)
One full year of service (1/3)
from the first day of the 33.3% of Award
previous Award Cycle
Two full years of service (2/3)
66.6% of Award
Three or more full years (3/3)
of service 100% of Award
6. GRANT OF THE INCENTIVE AWARDS
a. As soon as practicable after the end of an Award Cycle, but no
later than April 1 following the end of such Award Cycle, the
Board shall determine whether the Company has achieved any of
the Company Objectives. Based upon (A) the degree of
achievement of Company Objectives and (B) the Incentive
Percentage determined by the Board for the Award Cycle, the
Board
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shall grant an Incentive Award to Participants in accordance
with Section 5 of this Plan.
b. Participants who do not complete 12 months of employment in
the calendar year shall be eligible for a pro-rated share of
an Award with respect to such Award Cycle.
7. TERMINATION OF SERVICE
If, during an Award Cycle, a Participant's employment with the Company
terminates by reason of death, permanent disability (as defined in the
Company's group long-term disability plan) or retirement, the Board in
its sole discretion may cause to be paid to the Participant or his or
her designated beneficiary an Award, or a pro-rated share of an Award,
if any, based upon the service performed during the Award Cycle and
upon the degree of achievement of Company Objectives for such Award
Cycle. Any such payment of an Award shall be made to the Participant or
his or her beneficiary in the Fiscal Year following permanent
disability, death or retirement. A Participant who terminates
employment with the Company prior to the end of an Award Cycle for any
reason other than death, permanent disability or retirement shall not
be entitled to receive any Award.
8. TIME AND FORM OF PAYMENT
An Award shall be paid to the Participant or his or her designated
beneficiary as soon as practicable after the end of the Award Cycle, or
in the case of a Level 3 Award, at the time that such Award becomes
vested pursuant to Section 5(c) of this Plan, in cash. The form of
payment of Awards in Award Level 3 is intended to be primarily in the
form of cash. Notwithstanding the foregoing, Awards will be paid to
Participants who are Directors or Officers (as defined in Section 16 of
the Exchange Act of 1934, as amended) of the Company only in the form
of cash.
9. DESIGNATION OF BENEFICIARY
The effective designation of a beneficiary under the Company's Section
401(k) Plan (including any required spousal consent) shall for all
purposes also be deemed a designation of beneficiary under this Plan.
If no such beneficiary designation is in effect at the time of a
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Participant's death, or if no designated beneficiary survives the
Participant, or if such designation conflicts with the law, the payment
of the amount, if any, payable under the Plan upon his or her death
shall be made to the Participant's estate. If the Company is in doubt
as to the right of any person to receive any amount, the Company may
retain such amount, without liability for any interest thereon, until
the rights thereto are determined, or the Company may pay such amount
into any court of appropriate jurisdiction, and such payment shall be a
complete discharge of the liability of the Company.
10. NO CONTINUED EMPLOYMENT
Nothing in this Plan or any Award granted hereunder shall confer upon
any Participant any right to continue in the employ of the Company or
interfere in any way with the right of the Company to terminate his or
her employment at any time. No Award payable under the Plan shall be
deemed salary or compensation for the purpose of computing benefits
under any other employee benefit plan or other arrangement of the
Company for the benefit of its employees unless the Company shall
determine otherwise.
11. LEAVE OF ABSENCE
Absence on leave approved by the Company shall not be considered
interruption or termination of employment for any purposes of the Plan
unless the Board determines otherwise; provided, however, that no Award
may be granted to an employee while he or she is absent on leave.
12. ADMINISTRATION
The Plan shall be administered by the Board or by the Human Resources
Committee or such other committee appointed by the Board. The Board
shall have full power, discretion and authority to interpret, review,
renew, and administer the Plan. The Board's interpretation and
application of the Plan shall be binding and conclusive for all persons
for all purposes. The Board may conclusively rely upon any opinion,
computations or other advice received from any such counsel,
independent auditors or consultants. The Board's actions may include,
but not be limited to, the determination of:
a. the employees of the Company to be designated as
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Participants upon recommendation of the Chief Executive
Officer of the Company,
b. the Incentive Percentage for each Award Cycle,
c. the achievement of Company Objectives,
d. the Award Levels or the amount of any Award payable with
respect to any Award Level, and
e. the specific terms, conditions and restrictions of any Award
consistent with the terms of this Plan.
13. WITHHOLDING
The amount payable to a Participant or his or her beneficiary shall be
reduced by any amount that the Company is required to withhold with
respect to such payments under the then applicable provisions of
federal, foreign, state or local income tax laws unless the Participant
satisfies such withholding requirements in some other manner approved
by the Board.
14. UNFUNDED PLAN; GOVERNING LAW
Nothing contained in the Plan, and no action taken pursuant to its
provisions, shall create or be construed to create a trust of any kind,
or a fiduciary relationship between the Company or the Board, or both,
on the one hand, and any Participant or other person on the other. To
the extent that any person acquires a right to receive payments from
the Company under this Plan, such right shall be no greater than the
right of an unsecured general creditor of the Company. All payments to
be made hereunder shall be paid from the general funds of the Company
and no special or separate fund shall be established and no segregation
of assets shall be made to assure payments of such amounts. The Plan is
an unfunded incentive compensation plan and all rights hereunder shall
be governed by and construed in accordance with the laws of California.
15. AMENDMENT OR TERMINATION OF THE PLAN
The Plan shall be effective on July 29, 1994. Awards may be granted
pursuant to this Plan from time to time within a period of three (3)
years from the date on which this Plan is approved by the Board. The
Board may terminate this Plan
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at any time, or amend it from time to time.
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