EXHIBIT 10.1
[CANCERVAX LOGO]
2004 MANAGEMENT INCENTIVE
COMPENSATION PLAN
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EXHIBIT 10.1
CancerVax Corporation
2004 Management Incentive Compensation Plan
The CancerVax Corporation (CancerVax) Management Incentive Compensation Plan is
designed to offer incentive compensation to key Associates by rewarding the
achievement of corporate goals and specifically measured individual goals that
are consistent with and support overall corporate goals. The Management
Incentive Plan will create an environment which will focus key Associates on the
achievement of objectives. Since cooperation between departments and Associates
will be required to achieve corporate objectives that represent a significant
portion of the Compensation Plan, the Plan should help foster improved teamwork
and a more cohesive management team.
Purpose of the Plan
The CancerVax Management Incentive Compensation Plan (the "Plan") is designed
to:
- - Provide an incentive program to achieve overall corporate objectives and
to enhance shareholder value
- - Reward those individuals who significantly impact corporate results
- - Encourage increased teamwork among all disciplines within the Company
- - Incorporate an incentive program in the CancerVax overall compensation
program to help attract and retain key Associates
Plan Governance
The Plan will be governed by the Compensation Committee of the Board of
Directors. The President and CEO of CancerVax will be responsible for
administration of the Plan. The Compensation Committee of the Board will be
responsible for approving any incentive awards to officers of the Company and
for determining and approving any incentive awards to the President and CEO.
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Eligibility
Key Associates who may be eligible to participate in the Plan shall be selected
at the sole discretion of the Company. In order to be eligible to receive any
incentive award under this plan, a participant (a) must have been in an eligible
position for at least three (3) consecutive months during the Plan year; (b)
must have had at least an acceptable, "Meets Standard" (3.0 or higher) rating on
his or her most recent performance review; and (c) if the participant has been
on probation for performance or other issues at any time during the plan year or
during the period from the end of the plan year until the time at which bonus
determinations are made, any award to such individual must be approved by and
will be subject to the discretion of the Compensation Committee of the Board of
Directors.
Form of Incentive Award Payments
Incentive award payments may be made in cash, through the issuance of stock or
stock options, or by a combination of cash, stock and/or stock options, at the
discretion of the Company's Compensation Committee, subject to the approval of
the Company's Board of Directors. In the event that the Compensation Committee
and the Board of Directors elect to pay incentive awards in stock or stock
options, the Compensation Committee, in its sole discretion, will make a
determination of the number of shares of stock or stock options to be issued to
each Plan participant based, in part, upon each participant's Corporate and
Individual Performance, as described below. The issuance of stock and stock
options may also be subject to the approval of the Company's stockholders, and
any stock options issued will be subject to the terms and conditions of the
Company's 2003 Equity Incentive Award Plan, as amended from time to time by the
Company.
Corporate and Individual Performance
Prior to the beginning of the Plan year, the President and CEO will present to
the Board of Directors a list of the overall corporate objectives for the coming
year, which are subject to approval by the Board. All participants in the Plan
will then develop a list of key individual objectives, which must be approved by
the responsible Vice President and by the President and CEO.
The Plan calls for incentive awards based on the achievement of annual corporate
and individual objectives that have been approved as indicated above.
The relative weight between corporate and individual performance factors may
vary based on the individual's level within the organization. The weighting will
be reviewed annually and may be adjusted, as necessary or appropriate. The
weighting for 2004 will be as follows:
Corporate Individual
--------- ----------
President and CEO 100%
Vice Presidents/Executive Directors 75% 25%
Directors/Associate Directors/Senior Managers 50% 50%
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Target Awards Multiplier
Incentive Awards will be determined by applying an "achievement multiplier" to
the base salary of participants in the Plan. The following target award
multipliers will be used for this purpose:
Position Target Award Multiplier
- -------- -----------------------
President and CEO 50%
Vice President/Officers 35%
Executive Directors 25%
Senior Directors/Directors 20%
Associate Directors/Senior Managers 15%
The target award multiplier will be used to establish the target incentive award
at the beginning of each year. The target award multiplier will be equal to the
actual award multiplier used at year-end in situations where corporate and
individual objectives have been met for the year.
Performance Measurement
The following scale will be used to determine the actual award multiplier for
incentive award calculations based upon measurement of corporate and individual
performance versus objectives. Separate payment multipliers will be established
for both the individual and the corporate components of each award. The same
payment multiplier for the corporate component of each participant's annual
award shall be used for all Plan participants in any given year.
Performance Category Award Multiplier
-------------------- ----------------
1. Performance for the year met or exceeded objectives
or was excellent in view of prevailing conditions 75% - 125%
2. Performance generally met the year's objectives or
was very acceptable in view of prevailing conditions 50% - 75%
3. Performance for the year met some, but not all, objectives 25% - 50%
4. Performance for the year was not acceptable in view of
prevailing conditions 0%
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Calculation of Cash Incentive Award
The example below shows sample cash incentive award calculations under the
CancerVax Management Incentive Compensation Plan. First, a total target award is
calculated by multiplying the Associate's base salary by the target award
multiplier. This dollar figure is then divided between its corporate component
and its individual component based on the performance factor mix for that
specific position. This calculation establishes specific dollar target awards
for the performance period for both the individual and corporate components of
the award.
At the end of the performance period, corporate and individual award multipliers
will be established using the criteria described above. The corporate award
multiplier, which is based on overall corporate performance, is used to
calculate corporate performance awards for all Plan participants. This is
accomplished by multiplying the target corporate award established for each
individual at the beginning of the performance period by the actual award
multiplier. The individual award multiplier, which is based on an individual's
performance against objectives, is used in the same way to calculate the actual
individual performance award.
Example:
Cash Award Calculation
Position: Executive Director
Base Salary: $120,000
Target award multiplier: 25%
Target award dollars: $ 30,000
Target award components (based on performance factor mix):
Target award based on corporate performance (75%): $ 22,500
Target award based on individual performance (25%): $ 7,500
Actual Cash Award Calculation
Assumed payment multipliers based on assessment of
corporate and individual performance:
Corporate multiplier 75%-performance generally met year's objectives
Individual multiplier 125%-performance generally exceeded objectives
Cash Award:
Corporate component $ 16,875 ($22,500 x 75%)
Individual component 9,375 ($ 7,500 x 125%)
Payment of the Incentive Award
Annual performance reviews for Plan participants will be completed by February
28, 2005. Payment of incentive awards will be made as soon as practicable
thereafter. Incentive award calculations will be based on the participant's base
salary as of December 31, 2004. In addition to the required review process,
incentive award payments to the President/CEO and to the Vice President/CFO will
be made after the completion and issuance of the Company's year-end audited
Financial Statements.
Participants who have been in an eligible position for less than a year, but for
at least three months, will receive a pro-rata bonus based on the number of days
in an eligible position. Participants promoted
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during the year from one "Target Award Multiplier" level to another will have
their Incentive Award calculated using their base pay on December 31, 2004.
Providing the promotion occurred prior to October 1, 2004, the calculation will
be pro-rated, based on the number on months at each Target Award Multiplier
level. If the promotion occurred after October 1, 2004, the entire calculation
will be based on the Target Award Multiplier percentage applicable prior to the
promotion.
Termination
A Plan participant whose employment terminates voluntarily prior to the payment
of the incentive awards, will not be eligible to receive an incentive award. If
a participant's employment is terminated involuntarily during the calendar year,
or prior to payment of awards, it will be at the absolute discretion of the
Company whether or not an award payment is made.
Company's Absolute Right to Alter or Abolish the Plan
CancerVax reserves the right in its absolute discretion to abolish the Plan at
any time or to alter the terms and conditions under which incentive compensation
will be paid. Such discretion may be exercised any time before, during, and
after the Plan year is completed. No participant shall have any vested right to
receive any compensation hereunder until actual delivery of such compensation.
Employment Duration/Employment Relationship
This Plan does not, and CancerVax's policies and practices in administering this
Plan do not, constitute a contract or other agreement concerning the duration of
any participant's employment with the Company. The employment relationship of
each participant is "at will" and may be terminated at any time by CancerVax or
by the participant, with or without cause.
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CANCERVAX CORPORATION
2004 MANAGEMENT INCENTIVE COMPENSATION PLAN
This is to acknowledge that I have received a copy of the 2004 MANAGEMENT
INCENTIVE COMPENSATION PLAN.
Name: ______________________________ Date: _________________
(print)
______________________________
(signature)
Please return signed copy to the Human Resources Department.
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