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SEC Filings

S-1/A
OREXIGEN THERAPEUTICS, INC. filed this Form S-1/A on 04/09/2007
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Table of Contents

 
COMPENSATION DISCUSSION AND ANALYSIS
 
Objectives and Philosophy of Executive Compensation
 
The compensation committee of our board of directors, composed entirely of independent directors, administers the Company’s executive compensation program. The role of the compensation committee is to oversee the Company’s compensation and benefit plans and policies, administer its stock plans and review and approve annually all compensation decisions relating to all executive officers. Our company’s compensation programs are designed to:
 
  •      Attract and retain individuals of superior ability and managerial talent;
 
  •      Ensure senior officer compensation is aligned with our corporate strategies, business objectives and the long-term interests of our stockholders;
 
  •      Increase the incentive to achieve key strategic and financial performance measures by linking incentive award opportunities to the achievement of performance goals in these areas; and
 
  •      Enhance the officers’ incentive to increase our stock price and maximize stockholder value, as well as promote retention of key people, by providing a portion of total compensation opportunities for senior management in the form of direct ownership in our company through stock options and/or restricted stock.
 
To achieve these objectives, the compensation committee expects to implement and maintain compensation plans that tie a substantial portion of the executives’ overall compensation to key strategic financial and operational goals such as clinical trial progress, formulations development, continued establishment of intellectual property and implementation of appropriate financing strategies. The compensation committee evaluates individual executive performance with the goal of setting compensation at levels the committee believes are comparable with executives in other companies of similar size and stage of development operating in the biotechnology industry, taking into account our relative performance and our own strategic goals. In order to ensure that we continue to remunerate our executives appropriately, we plan to retain a compensation consultant to review our policies and procedures with respect to executive compensation.
 
Elements of Executive Compensation
 
Executive compensation consists of the following elements:
 
Base Salary.  Base salaries for our executives are generally established based on the scope of their responsibilities, taking into account competitive market compensation paid by other companies for similar positions and recognizing cost of living considerations. Base salaries for Dr. Tollefson, our President and Chief Executive Officer, and Mr. McKinney, our Chief Operating Officer, were set judgmentally, based on negotiations with Eckard Weber, our Chairman of the Board. Base salaries for Mr. Cooper, our Chief Financial Officer, Treasurer and Secretary, Dr. Dunayevich, our Chief Medical Officer, and Dr. Landbloom, our Vice President of Medical and Regulatory Affairs, were set through negotiations with Dr. Tollefson, preliminarily using the Thelander Survey as a reference point. The Thelander Survey is an analysis of compensation which uses private biotechnology companies for benchmarking purposes.
 
Generally, we believe that our executive base salaries should be targeted in the upper half of the range of salaries for executives in similar positions in private biotechnology companies. We use the Thelander Survey for such benchmarking purposes. We have adopted this practice partly to enable us to recruit executives from areas of the United States that have a lower cost of living than San Diego, California. Base salaries are reviewed at least annually, and adjusted from time to time to realign salaries with market levels and adjust for inflation.
 
Annual Performance Bonus.  The compensation committee has the authority to award annual performance bonuses to our executives. Each of our executives is eligible to receive an annual performance bonus equal to up to 25% of his base salary, based solely upon the achievement of performance goals and


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