Exhibit 10.1
RESTRICTED ACCESS POLICY
PHOENIX INTERNATIONAL LIFE SCIENCES INC.
WORLDWIDE EXECUTIVE REMUNERATION PLAN, GRADES AND TITLES
Version 1.8
September 25, 1998
THIS POLICY CONTAINS CONFIDENTIAL INFORMATION
PERTINENT TO INDIVIDUAL EXECUTIVE REMUNERATION.
ACCESS IS STRICTLY RESTRICTED TO
MEMBERS OF THE BOARD OF DIRECTORS,
THE CEO, COOS AND THE CFO
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PHOENIX INTERNATIONAL LIFE SCIENCES INC.
POLICY
WORLDWIDE EXECUTIVE REMUNERATION PLAN, GRADES AND TITLES
Version 1.8
September 25, 1998
1. BACKGROUND
Until mid-1997, Phoenix International was primarily a Canadian-based specialized
CRO, focussing on the North American market for Phase I and bioanalytical
studies. However, at the time of writing Phoenix International has transformed
into a global CRO with operations in many countries, and is in the process of
acquiring or starting operations in other countries. It is considered important
for harmonious and collaborative teamwork and to attract and retain executives,
that executives in acquired companies, existing executives in Phoenix
International's original operations, and newly hired executives, be remunerated
on an equitable basis worldwide, and in a manner that is competitive in the
international market for CRO executives.
It is Phoenix International's policy that executive titles are standardized
worldwide, to reflect salary grades and level of responsibility, and to ensure
that executives and other senior staff relate appropriately, based on
consistency of titles among all of Phoenix International's operations.
This version 1.8 is the first official authorized version of this policy,
although certain 1998 salary changes have been based on earlier drafts.
2. OBJECTIVES
The objectives of this policy are:
2.1 To ensure that Phoenix International has a competitive and equitable
Executive Remuneration Plan (ERP) that will appropriately attract,
retain and reward high calibre executives at Phoenix International, in
all countries in which Phoenix International has executive level
personnel.
2.2 To define standard titles for executives worldwide
3. SCOPE
All employees whose responsibilities, as judged by the HR committee of the Board
of Directors,
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are consistent with an executive level position in the CRO industry. This will
usually apply to employees with the title of Vice President or higher. However,
in some Phoenix International business units, certain employees who do not have
executive responsibility have the title Vice President, based on historical
practice prior to the acquisition of the business unit by Phoenix International.
Such employees do not qualify for treatment under this policy.
4. RESPONSIBILITY
The CEO is responsible for administration and application of this policy. He/she
is also responsible for keeping records of executive salaries, bonuses, stock
option eligibility and awards, and salary ranges; this responsibility may be
delegated with appropriate supervision and review.
5. SALARIES, GRADES AND TITLES
5.1 ESTABLISHED EXECUTIVES
An Established Executive is an executive who has served 3 or more years
with Phoenix International or an organization acquired by Phoenix
International, or a comparable organization, at the level of his/her
current responsibilities. In general, Phoenix International pays
salaries to Established Executives typical of those of the world's top
10 publicly traded CROs (most are based in the USA). These are referred
to as "Salary Norms". Norms are generally maxima for executives with
extensive experience, except in special circumstances (see below)
since, as is common with high growth high technology-based
organizations, Phoenix International prefers to pay "typical" salaries
to established executives, and reward superior performance with
superior annual incentives, rather than with higher than typical
salaries.
5.2 NEW EXECUTIVES
A New Executive is a newly appointed executive at Phoenix International
who has less than three years experience with Phoenix International or
a company acquired by Phoenix International or a comparable
organization, at the level of his her current responsibilities. Such
executives will usually be hired at salaries below the Norms, usually
at the low end of the range, and may expect to progress to the Norm
over a period of 1-3 years, depending on ability to meet the criteria
for the position, and previous experience at the same executive level.
5.3 BASIS FOR SETTING THE NORMS
5.3.1 CEO AND COO
Data on competitive salaries for the CEO and COOs are readily
available from the
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regulatory filings of publicly traded competitors. As of
January 1, 1998, salaries for these positions and those with
similar responsibilities will be based on the relevant (as
determined by the HR Committee of the Board of Directors) mean
salary for publicly traded CROs with annual net revenues of
greater than or equal to US$40 million, based on the last
available 12 month period published by those competitive CROs.
These data will usually be adjusted for inflation, since they
are typically one year out of date. When such salaries are
reviewed in future years, the US$40 million threshold will
be adjusted to reflect the average growth rate of the industry
between the time of review of this Policy, and the last review
of the Policy.
5.3.2 OTHER EXECUTIVES
Data for executives below the CEO and COO levels are not
generally publicly available and Norms will therefore be set
by the company's Corporate Executive Committee, based on
perceived market value and demand. The market for some CRO
industry executives with particular qualifications or
experience pays higher salaries than the CRO market for
executives in general, and than other executives fulfilling
similar functions in other areas of the business. These
qualifications and experience are:
5.3.2.1 Executives who have an M.D. degree
5.3.2.2 Executives with advanced technical knowledge in an
area where such knowledge is in great demand and
short supply
5.3.2.3 Executives who are founding members of a company
An executive in any of the above categories, as judged by the
CEO, will normally receive a salary in a grade one higher than
that justified by his/her responsibilities. In extraordinary
circumstances, for industry leading executives, salaries could
be two grades higher.
5.4 SALARY RANGES
The market for CRO executives is a world market, with substantial
executive movement within and between continents. Since the largest
single-country market for CRO executives is the USA, the basis used for
setting salary ranges in this Policy was US comparables in 1997,
translated into Canadian dollars at the June, 1998 exchange rate.
Factors affecting differences in salaries among countries include
exchange rates, taxation, the purchasing power of the local currency,
cost of living variations between countries, etc, and market supply and
demand for executives. Although all such factors will be taken into
account when translating ranges among countries, in view of the number
of factors, their fluctuation, and the fact that some act positively
and some negatively, the actual chosen ranges will inevitably be
somewhat arbitrary.
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For the first year of this policy, US and European ranges have been set
simply using the exchange rates for the Canadian dollar prevailing at
the time of original drafting of this policy (June, 1998). Critical
evaluation of these ranges indicates that this produces executive
salaries that are competitive at the time of writing. Salary Norms and
ranges ranges for the period June 1, 1998 to May 31, 1999 are shown in
Table 2, attached. Ranges are from 20% less than the Norm to 10% higher
than the Norm. However, as a matter of policy, the Norm will usually be
the highest salary for an executive, except in extraordinary
circumstances as judged by the CEO and the HR committee of the Board of
Directors, and as authorized by both the CEO and the HR Committee.
5.6 ANNUAL REVIEWS OF SALARIES, SALARY NORMS AND RANGES
The basis for executive salary increases shall be the level of
experience and expertise the incumbent CURRENTLY brings to the
position, compared to that required of an Established Executive. Note
that superior performance will be rewarded through an annual incentive
(bonus and stock option) plan, and not by changes in salaries. All
executive salary changes must be approved by the executive's direct
supervisor and the next highest executive. For grades E1 and E2 and the
CFO, all salary changes must be approved by the Human Resources
Committee of the Board of Directors.
The Salary Norms and ranges for executives specified in this policy
will normally be changed effective May 31 of each year by the Human
Resources Committee of the Board of Directors, to reflect the actual
(for CEO and COO) and estimated (for all other positions) change in CRO
industry executive salaries worldwide.
Salaries will be reviewed annually on the anniversary of the last
salary review for each executive.
5.7 GRANDFATHERED EXECUTIVES
As of the implementation or revision of this policy, some existing
executives may have higher salaries than the Norm for their grade,
usually as a result of salary policies in companies acquired by Phoenix
International, before these companies were acquired. The salaries of
these executives are "grandfathered" and are not subject to reduction
to match the requirements of this policy. However, while annual raises
are applicable, these will normally be lower than is typical for other
Phoenix International executives until such time as the salaries are
compatible with Norms.
5.8 ASSIGNED AND PAID GRADES FOR INDIVIDUAL EXECUTIVES
These will be listed by executive in a table maintained and updated by
the CEO and made
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available to the Human Resources Committee of the Board of Directors.
6. EXECUTIVE BONUS PLAN
Annual bonuses are intended to provide an incentive for executives to achieve
superior financial results and address objectives that will produce short term
and/or long term beneficial change in the organization and their own
performances. Only Senior Executives will benefit from the plan below. All other
personnel with executive status or titles will benefit only from the company
Plan for Incentives for Employees (PIE). A "Senior Executive" is an employee who
is so identified by the CEO, as advised by the company's Corporate Executive
Committee.
Executive bonuses will consist of up to three components, based on worldwide
profitability expressed as earnings per share (EPS) (Corporate Bonus),
profitability (pretax profit) of the local business unit (Local Bonus), and
achievement of personal objectives (Objectives Bonus). Bonuses will be paid
based on % achievement for each of these components, multiplied by a "Base
Bonus" for each component. Base Bonuses are specified percentages of the salary
paid to the executive in the relevant fiscal year.
All executive bonuses are subject to approval by the Human Resources Committee
of the Board of Directors.
6.1 BASE BONUSES
Bonuses are based on percentages of salary paid in the year. For 100%
achievement for any component, the executive will be paid the Base
Bonus for that component, as defined in the table below for various
categories of executives:
BASE BONUS AS % OF SALARY
CORPORATE LOCAL OBJECTIVES
BASE BONUS BASE BONUS BASE BONUS
Related to Related to Related to Total
Corporate Fiscal Target Strategic Base
Nominal Grade Net Profit Of Bus. Unit Objectives Bonus
------------- ---------- ------------ ---------- -----
CEO 37.5% 0% 12.5% 50%
COO 10% 20% 10% 40%
CFO 20% 0% 15% 35%
Other Line Executive 7.5% 15% 7.5% 30%
Staff Executive 10% 0% 15% 25%
A "Line Executive" is responsible either for a profit center, or for
business development.
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A "Staff Executive" is responsible for a cost center, or for a
co-ordinating role.
6.2 CORPORATE BONUS
The Corporate Bonus will be paid based on Phoenix International's
worldwide earnings per share (EPS), as compared to the budgeted EPS.
The Corporate Base Bonus is subject to upwards or downwards
adjustments, based on an Adjustment Factor. This Factor is (% of target
- 70%)/30, with a value of zero for less than or equal to 70% of target
and a value of 2.0 for greater than or equal to 130% of target. Thus,
the Corporate Bonus is calculated as follows:
Salary Paid x [Actual EPS - 0.7 x Budgeted EPS]/[0.3 x Budgeted EPS] x
Base Bonus
6.3 BASED ON PROFITABILITY OF THE LOCAL PROFIT CENTER (LOCAL BONUS)
No Local Bonus, is payable if EITHER corporate or local profit
achievement is less than or equal to 70% of target.
The Local Bonus will be paid on the pretax profit of the local business
unit. The Local Base Bonus is subject to upwards or downwards
adjustments, based on an Adjustment Factor. This Factor is (% of target
- 70%)/30, with a value of zero for less than or equal to 70% of target
and a value of 2.0 for greater than or equal to 130% of target. Thus,
this bonus is calculated as follows:
Salary Paid x [Actual Pretax Profit - 0.7 x Budgeted Pretax
Profit]/[0.3 x Budgeted Pretax Profit] x Base Bonus
Note that for bonus purposes, local pretax profit excludes taxes and
certain allocated corporate charges, but includes amortization of
acquisition costs, interest charges associated with acquisition, and
corporate charges for directly provided services, software, etc.
6.4 BASED ON ACHIEVEMENT OF NON-FINANCIAL OBJECTIVES (OBJECTIVES BONUS)
The Objectives Base Bonus is subject to adjustment through
multiplication of the Base Bonus by percentage achievement of
objectives. These objectives must be agreed before the end of the first
quarter of each year between the executive and his/her direct
supervisor, or in the case of the CEO, with the Board of Directors. At
the end of the fiscal year, the direct supervisor (or the HR Committee
of the Board for the CEO) shall discuss with the executive the extent
to which these objectives are achieved. While agreement between an
executive and his/her supervisor on percentage completion is the
objective, in the event of lack of agreement, the direct supervisor
shall be the sole judge of the final percentage completion. This bonus
shall be calculated as follows:
Salary Paid x % Achievement of Objectives x Base Bonus
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The Objectives Bonus is payable regardless of corporate or local
financial achievement.
6.5 BONUS FOR OUTSTANDING ACHIEVEMENT WHEN FINANCIAL PERFORMANCE IS
DEPRESSED
If Phoenix International does not achieve 70% of its financial
objectives in any particular year, and/or if a particular business unit
does not achieve 70% of its financial objectives, then fiscally related
bonuses may be minimal or zero. Under these circumstances, Phoenix
International wishes to ensure that executives who have performed in an
outstanding fashion despite the poor financial results, can be
rewarded. Thus, in such years, the Human Resources Committee of the
Board of Directors has the power to make Outstanding Performance Bonus
awards to deserving individuals.
6.6 CALCULATION AND PAYMENT OF BONUSES
All bonuses are calculated after subtraction of potential bonuses from
Phoenix International's profit figures. Since this results in a
circular calculation, it will be iterated several times.
For bonus purposes, financial data for budgeted and actual results
shall be calculated on a consistent basis. Extraordinary losses and
gains will normally be excluded from such calculations.
Annual Bonuses will be paid within 3 months of the end of the fiscal
year. If an executive resigns or is dismissed for cause, any unpaid
bonus shall be forfeited. If an executive dies, or is permanently
disabled or is dismissed other than for cause, or his/her contract is
not renewed, he/she shall receive, within one month of the event, a
bonus proportionate to results achieved in the period between the first
day of the fiscal year and the date in the fiscal year when the event
occurs.
7. ANNUAL STOCK OPTION AWARDS
Consistent with industry practice, annual stock option awards are provided to
certain Senior Executives, as decided from time to time by the Human Resources
Committee of the Board of Directors. These awards will be made each year at the
first meeting of the Human Resources Committee of the Board of Directors
following the fiscal year end (expected on or before November 15). The first
such award will take place in the Fall of 1998. The number of options to be
awarded annually will be calculated by taking the total value of the salary paid
to the executive in the fiscal year, multiplying by the exchange rate of the
Canadian dollar at the end of that year, multiplying by a fraction which will
vary among Senior Executives, and dividing by the year end share price for
Phoenix International shares in Canadian dollars. For Example, assuming the
salary paid to a Senior Executive is US$150,000, a US dollar is equal to
Can$1.40, and Phoenix International shares are trading at Can$15.00, and the
fraction of salary is 25%, the
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number of options to be awarded would be:
150,000 x 1.40 x 0.25/15.00 = 3,500 share options
Annually awarded share options vest differently from options awarded on hiring
or promotion. Annually awarded options vest 20% for each year of service
following the award of such options.
8. BENEFITS
Some executives will receive a car allowance. All executives will receive
increased insurance coverage for death or disability. Benefits may vary by
country and according to local situations and practice.
9. START UP AND FUTURE REVIEW OF THIS POLICY
Phoenix International has implemented this policy by:
9.1 Adjusting salaries for incumbent executives whose salaries are
significantly lower than specified by this policy.
9.2 Establishing an executive incentive scheme (bonus plan) based on
corporate and local profitability and achievement of objectives. Since
the company's financial resources and results, the nature of its
business, and its objectives are all subject to more or less frequent
change, the bonus plan is also subject to possible substantial change
each year.
9.3 Providing for annual stock option awards to certain Senior Executives.
10. OVERRIDING FACTORS AND EXCEPTIONS
Notwithstanding provisions elsewhere in this policy, salary increase and bonus
policies and plans are contingent on the company's economic circumstances each
year, and contingent on annual review by the HR committee of the Board of
Directors, and approval of the Board of Directors. This review and approval
shall deviate from this policy only if the economic circumstances of the company
require this, or in the event of a significant performance issue for a
particular executive, or in the event of a change in this policy as a result of
a policy review initiated by the Board of Directors.
On a country by country basis, the Chairman and CEO may authorize adjustment of
the Norms for any grade except those subject to approval of the HR committee of
the Board of Directors, in countries where this is necessary to reflect local
conditions, such as taxation and competitive salaries in the particular country.
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TABLE 1
TITLES, GRADES AND FUNCTIONS
----------------------------
TITLE GRADE
- -------------------------------------------------------------------
Normal Founder Normal Founder/Expert Description
- ------ ------- ------ -------------- -----------
Chairman and CEO Same E1 Same The company's legal Chief Executive Officer
President and COO Same E2 E1* An executive responsible for all business for a
country or group of countries, with
combined annual net revenues in excess of
US$35 million, or a corporate executive
with line responsibilities second only to
those of the CEO.
President, CFO Same E3 E2* An executive responsible for all business
for a country, or group of countries, or
other independent business unit, with
annual net revenues of between US$15 and
$35 million, or the corporate CFO.
President Same E4 E3* An executive responsible for all business
for a country or independent business
unit(s) with annual net revenues in the
range US$7.5-15 million.
Senior Vice President Same E4 E3*# A business development executive responsible
for a business volume in excess of US$50 million
and who has relationships with pertinent drug
development executives above the Director
level in client companies, or an executive
responsible for a substantial business
unit within an operating organization.
VP (line or staff) Senior VP E5 E4*# Corporate or local Line or Staff VP with
substantial direct staff management responsibilities.
Business development executive responsible for an
annual business volume in the range US$25-50 million
and supervising greater than or equal to 4 BD - directors.
VP (line or staff) Senior VP E6 E5*# Corporate or local line or staff VP with minimal
staff management responsibilities, or senior
director level employee with skills or knowledge in very
high demand. Business Development executive responsible
for annual business volume in the range US$25-50
million, and supervising less than or equal to 4 BD
directors.
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* = Founder, # = Expert
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