Complete 2012 forensic audit documents - Kansas Bioscience ...

would equate to a decrease in pay (from the previous bonus level of 50% of base salary), which
would likely be an appropriate result if the objective metrics have not been satisfied.
In addition to the 60% bonus opportunity, Buck Consultants proposed an additional 10% of base
salary that would be deferred and paid out at a later date. The goal would be for the deferred
compensation to function as a retention vehicle with regard to the CEO. The recommended
deferral period was five years.
The actual July 1, 2010 Employment Agreement for Tom Thornton had a base salary of
$265,000 and provided for a total bonus opportunity of 60% of base salary, 42% at the discretion
of the BOD and 18% tied to the level of NBAF funding secured, the initiation of the NBAF
research mission at BRI and the continued improvement in Kansas’ annual ranking as a
bioscience powerhouse by the Battelle/Business Facilities Magazine.
Therefore, Tom Thornton’s total cash compensation for FY2011 could have totaled $424,000.
BKD verified that Mr. Thornton did not receive any bonus payout for FY2011 upon his
resignation.
Recommendation:
KBA’s BOD should consider the review of the salary structure for all employees on a periodic
basis and ensure that appropriate performance metrics are established for all positions.
Moreover, since KBA performance is one of the factors in determining appropriate
compensation, the BOD should carefully consider and establish an appropriate manner to
evaluate the performance of KBA based on tested and verifiable information.
KBA’S Response:
Buck Consultants is an international human resources consulting firm. KBA engaged Buck
through an RFP process to advise the Board regarding appropriate levels and structure for
compensation of KBA top officers. Buck reviewed and confirmed that the compensation
package offered to Mr. Thornton in the July 1, 2010, employment agreement was consistent with
its recommendations to the Board. As a point of clarification, while the bonus of up to 42
percent potentially available to Mr. Thornton under his employment agreement was at the
discretion of the Board, it was nevertheless tied to an assessment by the Board of the overall
efforts of Mr. Thornton to promote and support KBA strategic and operational goals as set forth
in the fiscal 2011 Annual Operating Plan.
Mr. Thornton resigned his position and received no bonus for 2011.
KBA management will review policies and practices governing employee compensation and
performance evaluations.
Other Payments Under Tom Thornton’s Employment Agreements
K.S.A. 74-99b04(m) and (n) indicate that the President’s salary shall be set by the BOD and that
the BOD may negotiate and enter into an Employment Agreement with the individual selected as
President, which may provide for compensation allowances, benefits and expenses as may be
included in such agreement. In addition, the BOD may provide supplemental benefits to the
President and other employees designated by the BOD in addition to the benefits provided under
KEGA.
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