Summary of Oral Agreement for Payment of Services between Cephalon, Inc. and its Board of Directors (August 2, 2006)
Cephalon, Inc. has an agreement with its non-employee directors outlining their compensation. Directors receive a mix of cash payments and stock options, including annual retainers, meeting fees, and committee service fees. Stock options are granted upon joining the board and annually, with specific vesting schedules. Directors are also reimbursed for travel and business expenses, but do not receive retirement benefits. Dr. Baldino, a director, does not receive additional pay for his board service. The agreement is governed by the company's 2004 Equity Compensation Plan.
EXHIBIT 10.1
Summary of Oral Agreement for Payment of Services
between Cephalon, Inc.
and
its Board of Directors
dated August 2, 2006
Cephalon, Inc. ( the “Company”) compensates its non-employee directors through a mix of base cash compensation and stock option grants, summarized as follows:
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| Cash Compensation: |
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| · Board Service Annual Retainer |
| $35,000 |
| · Per Meeting Fees |
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| · Attendance in person |
| $3,000/mtg. |
| · Attendance by telephone |
| $2,000/mtg. |
| · Committee Service Fees |
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| · Committee Chair Annual Retainer |
| $12,000 |
| · Committee Member Annual Retainer |
| $10,000 |
| · Presiding Director Annual Retainer |
| $20,000 |
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| Options: |
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| · Initial Grant (upon first election or appointment to Board) |
| 15,000 shares |
| · Annual Grant (dated as of the date of the Annual Meeting) |
| 10,000 shares |
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Under the Company’s 2004 Equity Compensation Plan (the “2004 Plan”), all options granted to non-employee directors prior to May 5, 2002 generally vest over a four-year period with an exercise price equal to the closing market price of the Company’s Common Stock on the date of the grant. Annual grants made to non-employee directors on or after May 5, 2002, will be fully exercisable on the date of grant with an exercise price equal to the closing market price of the Company’s Common Stock on the date of grant. Initial grants made to non-employee directors on or after May 5, 2002 vest over a four-year period with an exercise price equal to the closing market price of the Company’s Common Stock on the date of grant. The Board of Directors may also grant options to non-employee directors in addition to the automatic grants described above.
Dr. Baldino receives no additional remuneration for his service as a director. The Company also reimburses directors for travel expenses incurred in connection with attending Board, committee and stockholder meetings and for other Company business-related expenses. The Company does not provide retirement benefits to non-employee directors under any current program.
