Exhibit 10.3
ZYMOGENETICS, INC.
Executive Compensation
Program
(as of January 1,
2009)
Overview
Critical to the success of
ZymoGenetics, Inc. (the “Company”) is the
company’s ability to attract and retain key executive talent.
The executive compensation program (the “Program”)
outlined here is designed to focus executives on the achievement of
key individual and Company goals, and thereby provide a strong link
between performance and total rewards. By maintaining a strong
executive team and rewarding their success, the Company will align
executive goals with those of shareholders.
Competitive
Benchmarks
The primary benchmark for our
comparison of similarly-sized biotechnology companies is the
Radford Global Life Sciences Compensation Survey with 200 to 600
employees. The secondary element of our competitiveness comparison
is defined as a peer group of U.S. therapeutics-focused biotech
companies between $200 million and $800 million in market
capitalization, in late stage clinical trials (phase II/III)
working towards bringing product to market or companies that have
recently launched product with revenue less than $100
million.
Performance Link
The goal of the Program is to
provide market competitive total compensation (base + short-term
incentives + long-term incentives) for strong performance that
meets or exceeds performance targets, and above market potential
for performance that significantly exceeds established goals. Less
successful performance would result in below market total
compensation.
Pay Strategy
Base Pay
Base pay salary
ranges will be established at the median or 50
th
percentile of the
market, with a range spread of 75%. Actual salaries will be
determined based upon experience and scope of responsibilities.
Annual base salary reviews will be conducted in conjunction with
the Company’s performance management process, with the group
target increase set at the biotechnology industry average as
reported in the most recent edition of the Radford Global Life
Sciences Compensation Survey or other similar report. In addition,
an assessment of competitiveness with other biotech executives of
similar experience and scope of responsibility will be conducted on
a bi-ennial basis.
Short-Term Incentives
(STIs)
Annual short-term incentives will be
based on the following criteria:
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Goals established for the Company
and approved by the Compensation Committee and Board of Directors
prior to or at the beginning of each calendar year. Company goals
will be established as the CEO’s goals.
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•
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Goals established for each
executive at the beginning of the calendar year with direct links
to Company and functional goals.
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Minimum of five goals and a
maximum of eight goals; weighted based on the importance to the
organization as determined by the CEO in concert with overall
corporate goals.
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Target incentives for each level
set at reachable goals, with maximum incentives set at a level
requiring performance significantly beyond expectations. (In highly
unusual circumstances, the CEO would have the flexibility to reward
exceptional performance beyond the established maximum for
extraordinary effort, and correspondingly, performance
significantly below normal expectations may result in no award
payment at all.)
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Payout Levels (percentage of base
pay paid in cash)
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(weighting –
100% corporate goals)
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Minimum:
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0
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%
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Target:
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50
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%
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Maximum:
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75
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%
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(weighting – 60% corporate goals/40% individual goals)
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Executive Vice President:
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Minimum:
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0
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%
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Target:
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40
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%
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Maximum:
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55
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%
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Senior Vice President:
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