Icagen (ICGN)

Annual Cash Bonus

The Compensation Committee sets bonus targets for our executives at the outset of each year and has the authority to award annual bonuses, the amount of which is determined in the discretion of the Compensation Committee, to our executives. The annual cash incentive bonuses are intended to compensate our executives for the achievement of company strategic, operational and financial goals. The Compensation Committee works with our chief executive officer to develop performance goals that it believes can be reasonably achieved with diligent efforts over the ensuing year. For 2006 and 2007, bonus targets for executives ranged from 20% to 30% of annual base salary, and executive officers have generally received between 34% and 100% of their maximum target bonus. Bonus targets are set annually by the Compensation Committee in the first quarter of each year as a percentage of the applicable executive’s base salary. We set bonus targets against median market data for bonuses at comparable companies in our industry. When establishing bonus targets for 2008, the Compensation

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Committee considered the BioWorld executive compensation report and data provided by Pearl Meyer & Partners. Bonus targets represent maximum targets, although actual bonuses awarded remain discretionary. The Compensation Committee approves the company performance goals and the weighting of various goals for each executive and determines potential bonus amounts based on achievement of those goals. Annual bonuses are paid in cash in an amount reviewed and approved by the Compensation Committee. Annual bonuses, if any, are ordinarily approved and paid in a single installment in the first quarter following the completion of a given fiscal year.

On January 23, 2009, the Compensation Committee met to consider the payment of cash bonus payments for our named executive officers. The Compensation Committee assessed achievement of our performance objectives for 2008. The corporate performance objectives included progression of research, preclinical and clinical development programs, increasing awareness of Icagen within the investment community, achievement of corporate and business development objectives, timely, effective and efficient completion of public company reporting obligations, completing and maintaining policies and procedures for internal controls and compliance obligations and further developing our intellectual property, technology portfolio, advisory panel and publication strategy in order to retain and build value. In assessing 2008 bonuses, the Compensation Committee considered the performance of Icagen and each executive against these goals. In evaluating the achievement of these goals, each executive is rated based upon a performance scorecard, which represents a composite evaluation of the executive against such goals based on a self evaluation and the evaluation of the executive by the chief executive officer. For each executive, the percentage of achievement of performance goals is the key factor used to determine bonuses. The Compensation Committee agreed that although each executive had performed his or her functions at a high level, factors largely beyond each executive’s control had limited success in the achievement of one or more goals. Accordingly, in light of current economic and financial conditions and other factors, which have impacted overall company performance, the Compensation Committee determined that no cash bonuses would be awarded to the named executive officers for 2008. The 2008 target bonuses and bonus payments were as follows:

Cash bonus targets for the named executive officers for 2009 were unchanged from 2008 levels. Dr. Wagoner’s bonus target for 2009 will be calculated based upon the approved salary rather than her adjusted salary. The Compensation Committee will evaluate our and each executive’s performance against specified corporate performance objectives from time to time during 2009, and may, in its discretion, approve the payment of bonuses in one or more installments during 2009 or in early 2010.

See the narrative disclosure below under “—Outstanding Equity Awards at Fiscal Year End” for a description of the material terms of awards and the retention grant and the option exchange programs approved in September 2006.

Annual Cash Bonus

The Compensation Committee sets bonus targets for our executives at the outset of each year and has the authority to award annual bonuses, the amount of which is determined in the discretion of the Compensation Committee, to our executives. The annual cash incentive bonuses are intended to compensate our executives for the achievement of company strategic, operational and financial goals and, in the case of Dr. Wagoner, individual

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performance objectives. The Compensation Committee works with our chief executive officer to develop performance goals that it believes can be reasonably achieved with diligent efforts over the ensuing year. For 2006 and 2007, bonus targets for executives ranged from 20% to 30% of annual base salary. In the last two years, executive officers have generally received between 34% and 100% of their maximum target bonus. Bonus targets are set annually by the Compensation Committee in the first quarter of each year as a percentage of the applicable executive’s base salary. We set bonus targets against median market data for bonuses at comparable companies in our industry. Bonus targets represent maximum targets, although actual bonuses awarded remain discretionary. The Compensation Committee approves the company and individual performance goals and the weighting of various goals for each executive and determines potential bonus amounts based on achievement of those goals. Annual bonuses are paid in cash in an amount reviewed and approved by the Compensation Committee. Annual bonuses are ordinarily approved and paid in a single installment in the first quarter following the completion of a given fiscal year.

On January 29, 2008, the Compensation Committee approved 2007 cash bonus payments for our named executive officers. The Compensation Committee approved the bonus awards following an assessment of our achievement of our performance objectives for 2007 and, with respect to Dr. Wagoner, individual performance objectives. The corporate performance objectives included progression of preclinical and clinical development programs, increasing awareness of Icagen within the investment community, achievement of corporate and business development objectives, timely, effective and efficient completion of public company reporting obligations, maintaining policies and procedures for internal controls and compliance obligations and further developing our intellectual property portfolio to build value in a cost-effective manner. 80% of Dr. Wagoner’s target bonus was based on corporate performance objectives as described above and 20% of her target bonus was based on individual performance objectives. Dr. Wagoner’s individual performance objectives included strengthening Icagen’s management team, especially in the areas of research and development and general and administrative, and assisting the Nominating/Corporate Governance Committee in the continual development of high performance standards for our board of directors and its committees. In determining 2007 bonuses, the Compensation Committee considered the performance of Icagen and each executive against these goals. In evaluating the achievement of these goals, each executive is rated based upon a performance scorecard, which represents a composite evaluation of the executive against such goals based on a self evaluation and the evaluation of the executive by the chief executive officer. For each executive, the percentage of achievement of performance goals is the key factor used to determine bonuses. The Compensation Committee also considered median bonuses given to executives at comparable publicly-traded companies in our industry. The 2007 target bonuses and bonus payments were as follows:

For 2007, executive officers received between 50% and 80% of their maximum target bonus.

Annual Cash Bonus

The Compensation Committee sets bonus targets for our executives at the outset of each year and has the authority to award annual bonuses to our executives. The annual cash incentive bonuses are intended to compensate our executives for the achievement of company strategic, operational and financial goals and, in the case of Dr. Wagoner, individual performance objectives. The Compensation Committee works with our chief executive officer to develop performance goals that it believes can be reasonably achieved with diligent efforts over the ensuing year. Bonus targets are set annually by the Compensation Committee in the first quarter of each year as a flat target amount or as a percentage of the applicable executive’s base salary. We benchmarked bonus targets against market median data. We set bonus targets as maximum targets, although actual bonuses awarded remain discretionary. The Compensation Committee approves the company and individual performance goals and the weighting of various goals for each executive and determines potential bonus amounts based on achievement of those goals. Annual bonuses are paid in cash in an amount reviewed and approved by the Compensation Committee. Annual bonuses are ordinarily approved and paid in a single installment in the first quarter following the completion of a given fiscal year.

On February 12, 2007, the Compensation Committee approved 2006 cash bonus payments for certain of our named executive officers. The Compensation Committee approved the bonus awards following an assessment of our achievement of our performance objectives for 2006 and, with respect to Dr. Wagoner, individual performance objectives. The corporate performance objectives included progression of preclinical and clinical development programs, increasing awareness of Icagen within the investment community, achievement of corporate and business development objectives, timely completion of public company reporting obligations, developing policies and procedures for internal controls and compliance obligations and further developing our intellectual property portfolio. 75% of Dr. Wagoner’s target bonus was based on corporate performance objectives as described above and 25% of her target bonus was based on individual performance objectives. Dr. Wagoner’s individual performance objectives included broadening Icagen’s management team, especially in the areas of finance, investor relations and business development. In determining 2006 bonuses, the Compensation Committee considered the performance of the company and each executive against these goals. For each executive, the percentage of achievement of performance goals is one factor used to determine bonuses. The 2006 target bonuses and bonus payments were as follows:

Generally for 2006, executive officers received between a third to two-thirds of their maximum target bonus. In light of Dr. Katz’s performance and his efforts regarding our private placement that was completed on February 6, 2007, Dr. Katz received 100% of his target bonus.

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Dr. Hetherington started as our senior vice president, clinical and regulatory affairs on June 15, 2006. On May 10, 2006, the Compensation Committee approved a 2006 target bonus for Dr. Hetherington of up to 30% of his base salary. Dr. Hetherington’s 2006 bonus payment was prorated based on his mid-year start date.

Dr. Hull’s target bonus of up to $75,000 for 2006 was based on achievement of specified performance objectives, including initiation or completion of clinical trials and filings with the U.S. Food and Drug Administration, including investigational new drug applications and new drug applications. Dr. Hull retired from his position as senior vice president, development and regulatory affairs on May 17, 2006. Dr. Hull continued part-time employment with us as our principal clinical research scientist through the end of the year. Because of the stage of our programs, none of these milestones were reached in 2006, and therefore, Dr. Hull did not receive a bonus for 2006.