SecProbe.io

CORRESP
1
filename1.htm

THERAVANCE, INC.

901 GATEWAY BLVD.

SOUTH SAN FRANCISCO, CA 94080

(650) 808-6000

  December 3,
  2010

Via
Edgar

Securities
and Exchange Commission

Division
of Corporation Finance

100
F Street, N.E.

Washington,
D.C. 20549

Attention:                           Jeffrey P.
Riedler

Michael Rosenthall

Re:                 November 22,
2010 Supplemental Staff Comment Letter Concerning Theravance, Inc. Form 10-K
for the Fiscal Year ended December 31, 2009 filed February 26, 2010
and Definitive Proxy Statement on Schedule 14A filed March 24, 2010

File No. 000-30319

Dear Messrs. Riedler and Rosenthal:

This
letter responds to the further comment of the staff (the “Staff”) of
the Securities and Exchange Commission (the “Commission”) to the filing of the
above-referenced annual report (the “2009 10-K”) and proxy statement (the “2010
Proxy”, and together with the 2009 10-K, the “Filings”), which were the subject of
your supplemental letter dated November 22, 2010 (the “Comment Letter”).

In
this letter, we have reproduced your comment in italicized print and have
followed the comment with our response.
References in this letter to “we,” “our” or “us” mean Theravance, Inc.

Definitive Proxy Statement on
Schedule 14A

Annual Incentive Compensation, page 35

1.                                      We note
your response to our prior comment 1 regarding the weighting assigned to each
of your performance goals.  Please
provide us with an analysis demonstrating why these weightings are not material
to an investor’s overall understanding of your compensation practices.

RESPONSE
TO COMMENT 1:

As
we disclosed in our CD&A, our Board established performance objectives and
goals for 2009 and the Compensation Committee established weightings for each
goal for the purposes of our Company-wide cash bonus program.  Also as disclosed in our CD&A, since more
performance goals were established than could reasonably be achieved, the
cumulative weighting of all goals added up to 150% of target since the
likelihood of achieving all the goals and paying out cash bonuses at 150% of
target was extremely low. The individual percentage weightings of each goal
were not disclosed to anyone outside of the Board of Directors or the senior
management of the Company, principally due to the competitive concerns and the
employee morale concerns detailed in our response to the Staff dated November 5,
2010.

Based
on the Company’s performance in 2009, the Committee determined that four of
eight performance goals were achieved.
The weightings associated with the four goals that were achieved added
up to 85%, or 56.7% of the 150% potential cash bonus pool.  Thus, the amount paid out of the cash bonus
pool (56.7% of the total bonus potential) was consistent with the number of
performance goals achieved (50% of the total number of performance goals).

We
respectfully submit that the forgoing analysis demonstrates the reason why the
individual goal weightings were not material to an investor’s overall
understanding of our compensation practices in 2009:  from an investor’s perspective, the Company
achieved 50% of its goals and in turn paid out cash bonus compensation equal to
approximately 50% of the potential cash bonus pool.  In addition, we note that the Company
regularly communicates its progress against major corporate operating goals in
its periodic reports and in other public communications.  Generally, these publicly communicated
corporate milestones have a substantial overlap with the highest weighted
performance goals for the

2

Company’s
cash bonus program.  Thus, even before the
Company’s description of its compensation program in its proxy statement,
investors have an understanding of the Company’s priorities and its achievement
against those priorities.

We
acknowledge that:

·                  we are
responsible for the adequacy and accuracy of the disclosure in the Filings;

·                  Staff comments
or changes to disclosure in response to Staff comments do not foreclose the
Commission from taking any action with respect to the Filings; and

·                  we may not
assert Staff comments as a defense in any proceeding initiated by the
Commission or any person under the federal securities laws of the United
States.

Please
do not hesitate to contact me at (650) 808-6171 or Heather M. Shane, our
Assistant General Counsel, at (650) 808-4078 if you have any questions or would
like additional information regarding this matter.

  Very
  truly yours,

  /s/
  Bradford J. Shafer

  Bradford
  J. Shafer

  Senior
  Vice President and General Counsel

cc:              Rick E
Winningham

William D. Young

Heather M. Shane, Esq.

Elizabeth Webb, Esq.

David T. Young, Esq.

3