Synta Pharmaceuticals Corp. Director Compensation Policy (Non-Employee Directors)

Summary

Synta Pharmaceuticals Corp. has established a compensation policy for non-employee directors, effective January 1, 2005. Under this policy, each eligible director receives a stock option grant upon joining the Board and an annual fee, which can be taken in cash, company stock, or a combination of both. The policy outlines the number of shares, vesting schedules, exercise price, and terms for stock options, as well as the timing and method for electing and receiving annual compensation. The policy aims to attract and retain qualified directors by providing flexible and competitive compensation.

EX-10.3 7 a2149719zex-10_3.txt EX-10.3 Exhibit 10.3 SYNTA PHARMACEUTICALS CORP. DIRECTOR COMPENSATION POLICY The Board of Directors of Synta Pharmaceuticals Corp. (the "Company") has approved the following policy which establishes compensation to be paid to non-employee directors of the Company, effective January 1, 2005, to provide an inducement to obtain and retain the services of qualified persons to serve as members of the Company's Board of Directors. Each such director will receive as compensation for his or her services (i) a stock option grant upon his or her initial appointment or election to the Board of Directors of the Company and (ii) an annual fee payable in cash and/or stock, all as further set forth herein. APPLICABLE PERSONS This Policy shall apply to each director of the Company who (a) is not an employee of the Company or any Affiliate and (b) does not receive compensation as a consultant to the Company or any Affiliate unless such compensation is received solely for services provided as a member of the Scientific Advisory Board (each, an "Outside Director"). Affiliate shall mean a corporation which is a direct or indirect parent or subsidiary of the Company, as determined pursuant to Section 424 of the Internal Revenue Code of 1986, as amended. STOCK OPTION GRANT UPON INITIAL APPOINTMENT OR ELECTION AS A DIRECTOR NUMBER OF SHARES Each new Outside Director on the date of his or her initial appointment or election to the Board of Directors, shall be granted a non-qualified stock option to purchase 60,000 shares of the Company's common stock under the Company's then applicable stockholder-approved stock plan (the "Stock Plan"), subject to automatic adjustment in the event of any stock split or other recapitalization affecting the Company's common stock. VESTING PROVISION Such option shall vest as to 25% of such grant on the first anniversary of the date of grant of the option and as to an additional 6.25% of such grant at the end of each successive three-month period thereafter continuing until the fourth anniversary of the date of grant, provided such Outside Director continues to serve as a member of the Board of Directors. However, in the event of termination of service of an Outside Director, such option shall vest to the extent of a pro rata portion through the Outside Director's last day of service based on the number of days accrued in the applicable period prior to his or her termination of service. EXERCISE PRICE AND TERM OF OPTION Each option granted shall have an exercise price per share equal to the Fair Market Value (as defined in the Stock Plan) of the shares of common stock of the Company on the date of grant of the option, have a term of ten years and shall be subject to the terms and conditions of the Stock Plan. Each such option grant shall be evidenced by the issuance of a non-qualified stock option agreement. EARLY TERMINATION OF OPTION UPON TERMINATION OF SERVICE If an Outside Director: a. ceases to be a member of the Board of Directors for any reason other than death or disability, any then vested and unexercised options granted to such Outside Director may be exercised by the director within a period of three months after the date the director ceases to be a member of the Board of Directors and in no event later than the expiration date of the option; or b. ceases to be a member of the Board of Directors by reason of his or her death or disability, any then vested and unexercised options granted to such director may be exercised by the director (or by the director's personal representative, or the director's survivors) within a period of one year after the date the director ceases to be a member of the Board of Directors and in no event later than the expiration date of the option. ANNUAL FEE Each Outside Director shall be compensated on an annual basis for providing services to the Company. Except as otherwise set forth in this Policy, director compensation shall be paid for the period from July 1 through June 30 of each year. Each Outside Director shall receive compensation consisting of one of the following combinations of cash and/or a grant of common stock, subject to certain contractual restrictions, under the Stock Plan, at the election of each Outside Director, as follows: o $40,000 cash, o $30,000 cash and such number of shares of the Company's common stock as is equal to $10,000 on the date of grant of the shares, o $20,000 cash and such number of shares of the Company's common stock as is equal to $20,000 on the date of grant of the shares, o $10,000 cash and such number of shares of the Company's common stock as is equal to $30,000 on the date of grant of the shares, or o such number of shares of the Company's common stock as is equal to $40,000 on the date of the grant of the shares. The number of shares to be received by an Outside Director shall be calculated by dividing the total dollar amount that the Outside Director has elected to be paid in shares of common stock by the Fair Market Value (as defined in the Stock Plan) of the shares of common stock of the Company on the last business day prior to the date of grant of the shares (rounded down to the nearest whole number so that no fractional shares shall be issued). ELECTION Each Outside Director shall make an election on the form provided by the Company, indicating the combination of his or her annual compensation, prior to each annual meeting of stockholders. If the Company does not schedule an annual meeting of stockholders to be held on or before June 30th of any year, each Outside Director shall make his or her election by June 15th of the applicable year. CASH PAYMENTS Any cash portion to be paid to an Outside Director shall be paid quarterly in arrears as of the last day of each calendar quarter. If an Outside Director dies, resigns or is removed during any quarter, he or she shall be entitled to a cash payment on a pro rata basis through his or her last day of service. RESTRICTED STOCK GRANTS Shares of common stock shall be granted at the first meeting of the Board of Directors following each annual stockholders meeting, or if no such meeting of the Board of Directors shall occur before June 30 of the applicable year, by unanimous written consent dated June 30 of that year. The shares shall be subject to a lapsing repurchase right such that the shares shall be subject to forfeiture to the Company if such Outside Director does not continue to serve as a member of the Board of Directors as of the end of the applicable quarter as follows: the repurchase right shall lapse as to 25% of each such grant on each of September 30, December 31, March 31 and June 30 thereafter, provided such Outside Director continues to serve as a member of the Board of Directors as of the applicable date. INITIAL ANNUAL FEE UPON INSTITUTION OF POLICY On the date of adoption of this Policy, each Outside Director then serving shall be entitled to receive compensation prorated for the period from January 1, 2005 through June 30, 2005. Each Outside Director shall make an election on or before January 14, 2005 as to the combination of cash and/or stock to be received. The Board of Directors shall, by unanimous written consent dated January 18, 2005, grant any shares to be issued as part of such compensation. The shares to be issued shall be subject to a lapsing repurchase right such that the Company's repurchase right shall lapse as to 50% of each such grant on each of March 31, 2005 and June 30, 2005, provided such Outside Director continues to serve as a member of the Board of Directors as of the applicable date. INITIAL ANNUAL FEE FOR NEWLY APPOINTED OR ELECTED DIRECTORS Each Outside Director who is first appointed or elected to the Board of Directors after the date of the adoption of this Policy shall receive his or her first year's annual fee prorated in accordance with the terms of this Policy from the beginning of the next calendar quarter after his or her initial appointment or election through the following June 30. Each such Outside Director shall make an election prior to the beginning of the next calendar quarter after his or her initial appointment or election as to the combination of cash and/or stock. The Board of Directors shall, by unanimous written consent dated the date of the first day of such quarter, grant any shares to be issued to such Outside Director as part of such compensation. Any such shares shall be subject to a pro rata lapsing repurchase right as of the last day of each quarter remaining in such initial period, provided such Outside Director continues to serve as a member of the Board of Directors as of the end of the applicable quarter. PURCHASE PRICE AND OTHER PROVISIONS APPLICABLE TO ALL STOCK GRANTS Shares granted shall have a purchase price equal to the par value of the common stock on the date of grant and shall be subject to the terms and conditions of the Stock Plan. The terms of such grant shall be evidenced by a restricted stock agreement to be entered into between the Company and the Outside Director. In addition, in the event of termination of service of an Outside Director, the Company's lapsing repurchase right shall be deemed to have lapsed to the extent of a pro rata portion of the shares through the Outside Director's last day of service based on the number of days accrued in the applicable period prior to his or her termination of service. BOARD COMMITTEE COMPENSATION Each Outside Director shall also receive an annual fee of $5,000 for each Committee of the Board of Directors on which such individual serves. However, the Chairman of each Committee, other than the Audit Committee, shall receive an annual fee of $10,000, and the Chairman of the Audit Committee shall receive an annual fee of $15,000 for services as Chairman. Payment shall commence effective January 1, 2005 and shall be made quarterly in arrears on the last day of each calendar quarter and upon death, resignation or removal, payment shall be made pro rata through the last day of service. EXPENSES Upon presentation of documentation of such expenses reasonably satisfactory to the Company, each Outside Director shall be reimbursed for his or her reasonable out-of-pocket business expenses incurred in connection with attending meetings of the Board of Directors, Committees thereof or in connection with other Board related business. AMENDMENTS The Board of Directors shall review this Policy from time to time to assess whether any amendments in the type and amount of compensation provided herein should be adjusted in order to fulfill the objectives of this Policy. DATED: January 11, 2005