XOMA XOMA Corporation

2010 Long Term Incentive and Stock Award Plan

On February 24, 2016, the Compensation Committee of the Board of Directors (the “Board”) (the “Compensation Committee”) of XOMA Corporation (the “Company”) recommended to the Board, and on February 25, 2016, the Board adopted, subject to stockholder approval, an amendment to the Company’s 2010 Long Term Incentive and Stock Award Plan (the “2010 Plan”). At the 2016 Annual Meeting of Stockholders of the Company, held on May 19, 2016 (the “Annual Meeting”), the Company’s stockholders voted on and approved the amendment to the 2010 Plan.

The amendment (a) increases the number of shares of Common Stock issuable over the term of the plan by 3,400,000, to 22,171,206 shares in the aggregate; (b) provides that, for each stock appreciation right, restricted share, restricted stock unit, performance share, performance unit, divided equivalent or other stock-based award issued, the number of available shares under the plan will be reduced by 1.08 shares; and (c) increases the number of shares of common stock issuable under the plan as incentive stock options, or ISOs, by an additional 3,400,000 to 11,500,000 shares.

A summary of the 2010 Plan is set forth in the Company’s proxy statement filed with the Securities and Exchange Commission on April 8, 2016. The description of the amendment is qualified in its entirety by reference to the text of the 2010 Plan, which is filed as Exhibit 10.1 hereto and incorporated herein by reference.

2016 Incentive Compensation Plan

On February 24, 2016, the Compensation Committee approved the 2016 Incentive Compensation Plan (the “2016 Bonus Plan”) to replace the Company’s CEO Incentive Compensation Plan (the “CICP”), Management Incentive Compensation Plan (the “MICP”) and Bonus Compensation Plan (the “BCP” and, together with the CICP and the MICP, the “Previous Plans”). The 2016 Bonus Plan provides XOMA’s executive officers and other eligible employees the opportunity to earn bonuses based on the level of achievement by XOMA of certain corporate achievement goals, or “CAGs”, and on each participant’s individual performance during any performance period, which the Compensation Committee set to coincide with the calendar quarters from January 1, 2016 through December 31, 2016.

The Board has approved the CAGs and assigned a weighting to each objective. All full-time employees at the beginning of a performance period are eligible to participate in the 2016 Bonus Plan. Individual performance is assessed at the end of each quarter, and a performance score is determined by each participant’s immediate supervisor, or, in the case of the Chief Executive Officer, by the Board. The Compensation Committee has set targets for each named executive officer, with weighting of corporate and individual goals, as follows:

Whereas, under the Previous Plans, awards were paid annually based on the attainment of predetermined corporate and individual goals, employees and executive officers now may receive quarterly payments based primarily on the attainment of corporate goals, with individual performance as a secondary factor. XOMA believes that this new methodology for determining awards will serve to focus efforts on results that will contribute to long-term value for XOMA.

Under the 2016 Bonus Plan, the target percentage is set at the beginning of each performance period, and payouts ranging from zero to 200% of target for each CAG, or from zero to 150% for individual performance, are possible, depending on achievement. Bonus targets may be adjusted at the discretion of the Compensation Committee, or by the Board in the case of the Chief Executive Officer, but are reviewed at least every two years for ongoing market competitiveness.

The description of the 2016 Bonus Plan contained herein does not purport to be complete and is qualified in its entirety by reference to the 2016 Bonus Plan, a copy of which is attached hereto as Exhibit 10.2 and is incorporated by reference herein.