Exhibit 10.1
1997 INCENTIVE COMPENSATION PLAN
MICHAEL BAKER CORPORATION
INDEX
ARTICLE I - GENERAL
1.1 ESTABLISHMENT OF THE PLAN
1.2 PURPOSE
1.3 ADMINISTRATION
ARTICLE II - DEFINITIONS
2.1 DEFINITIONS
2.2 GENDER AND NUMBER
ARTICLE III - ELIGIBILITY AND PARTICIPATION
3.1 ELIGIBILITY
3.2 PARTICIPATION
3.3 PARTIAL PLAN YEAR PARTICIPATION
ARTICLE IV - AWARDS
4.1 COMPONENTS OF PARTICIPATION AWARDS
4.2 CORPORATE PERFORMANCE MEASURES AND GOALS
4.3 BUSINESS UNIT PERFORMANCE
4.4 BUSINESS SEGMENT PERFORMANCE
4.5 INDIVIDUAL PERFORMANCE
ARTICLE V - PAYMENT OF AWARDS
5.1 PAYMENT OF AWARDS
5.2 PLAN FUNDING
ARTICLE VI - CHANGE IN CONTROL
6.1 CHANGE IN CONTROL
6.2 DEFINITION OF CHANGE IN CONTROL
ARTICLE VII - MISCELLANEOUS PROVISIONS
7.1 NON-TRANSFERABILITY
7.2 TAX WITHHOLDING
7.3 AMENDMENTS
7.4 INDEMNIFICATION
7.5 BENEFICIARY DESIGNATION
7.6 RIGHTS OF PARTICIPANTS
7.7 GOVERNING LAW
7.8 EFFECTIVE DATE
1997 INCENTIVE COMPENSATION PLAN - ATTACHMENT 1
ELIGIBILITY
OPPORTUNITY
PERFORMANCE MEASUREMENT
POTENTIAL PAYOUT (PERCENTAGE OF ANNUAL SALARY)
FREQUENCY OF PAYOUT
1997 INCENTIVE COMPENSATION PLAN
MICHAEL BAKER CORPORATION
ARTICLE I
GENERAL
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1.1 ESTABLISHMENT OF THE PLAN:
Michael Baker Corporation, a Pennsylvania corporation (the "Company"), hereby
adopts this Plan, which shall be known as the MICHAEL BAKER CORPORATION 1997
INCENTIVE COMPENSATION PLAN (the "Plan").
1.2 PURPOSE:
The purpose of the Plan is to focus attention on shareholder value, drive
performance in support of this goal and other business goals, and reward
individual performance.
1.3 ADMINISTRATION:
(a) The Plan shall be administered by the Incentive Compensation Committee
(the "Committee"), of the Company with the concurrence of the
Compensation Committee of the Board of Directors of the Company. The
members of the Committee shall be appointed by the Chief Executive
Officer (the "CEO"), and any vacancy on the Committee shall be filled
by an appointee of the CEO.
(b) Subject to the limitations of the Plan, the Committee shall, subject to
approval by the CEO and Compensation Committee of the Board of
Directors: (i) select from the regular, full-time exempt Employees of
the Company, those who shall participate in the Plan (a "Participant"
or "Participants"), (ii) make awards in such forms and amounts as the
Committee shall determine, (iii) impose such limitations, restrictions,
and conditions upon such awards as the Committee shall deem
appropriate, (iv) interpret the Plan and adopt, amend, and rescind
administrative guidelines and other rules and regulations relating to
the Plan, (v) correct any defect or omission or reconcile any
inconsistency in this Plan or in any award granted hereunder, and (vi)
make all necessary determinations and take all other actions necessary
or advisable for the implementation and administration of the Plan.
The Committee's determinations on matters within its authority shall be
conclusive and binding upon the Company and all other Persons.
ARTICLE II
DEFINITIONS
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2.1 DEFINITIONS:
Whenever used herein, the following terms shall have the meaning set forth
below, unless otherwise expressly provided.
(a) "Base Salary" shall mean the regular salary actually paid during a Plan
Year to a participant while participating in the Plan. Regular salary
shall include any salary reduction contributions made to the Company's
Internal Revenue Code Section 401(k) Plan or other deferred
compensation plans, but exclusive of any awards under this Plan and of
any other bonuses, incentive pay, exercise of stock options, overtime
pay, special awards, hiring/retention awards, imputed income related to
company provided life insurance, reimbursement for moving expenses,
tuition reimbursement, additional compensation related to international
assignments such as expatriate differential compensation, tax
equalization, etc., or any other extraordinary income.
(b) "Board" shall mean the Board of Directors of Michael Baker Corporation.
(c) "Committee" shall mean the Incentive Compensation Committee of the
Company, which shall consist of at least three employees of the
Company.
(d) "Company" shall mean Michael Baker Corporation and its Subsidiaries.
(e) "Corporate" shall mean relating to Michael Baker Corporation.
(f) "Employee" shall mean a regular, full-time, exempt Employee of the
Company who is in a position meeting the defined eligibility criteria
for participation in the Plan, as stated in Section 3.1.
(g) "Participant" shall mean an Employee who is approved by the Committee
for participation in the Plan for a specified Plan Year.
(h) "Performance Management Process" shall mean the Company's three-step
performance cycle. The cycle begins with setting individual
performance goals, followed by performance coaching, and ending with
formal performance review at the end of the performance period.
(i) "Plan Year" shall mean the Company's fiscal year.
(j) "Business Unit" shall mean, in 1997, the operating units of: Buildings,
Civil, Energy, Environmental and Transportation, and any other Business
Unit added during the year.
(k) "Business Segment" shall mean, in 1997, Business Unit segments of:
Buildings-Design, Buildings-Construction, Civil-Engineering,
Civil-Baker Support Services, Inc., Energy-Baker/MO,
Transportation-Engineering and Transportation-Construction (Heavy &
Highway) and any other Business Segment added during the year.
(l) "Contribution to Corporate Overhead and Profit" shall mean the
following:
Business Unit Level -- Income before income taxes plus Corporate
overhead, Engineering Support overhead (related only to Engineering
segments), I/C insurance premiums (VGIC) and Internal interest expense
(VGIC).
Engineering Segment Level -- Income before income taxes plus Corporate
overhead, Business unit overhead, Engineering Support Overhead, I/C
insurance premiums (VGIC) and Internal interest expense (VGIC).
Non-Engineering Segment Level -- Income before income taxes plus
Corporate overhead, Business unit overhead, I/C insurance premiums
(VGIC) and Internal interest expense (VGIC).
2.2 GENDER AND NUMBER:
Except when otherwise indicated by the context, words in the masculine gender,
when used in the Plan, shall include the feminine gender, the singular shall
include the plural, and the plural shall include the singular.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
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3.1 ELIGIBILITY:
Eligibility for participation in the Plan shall be limited to regular,
full-time exempt Employees of the Company.
3.2 PARTICIPATION:
Participation in the Plan shall be determined by the executive management of
the Company. The CEO shall determine Corporate participants and the Business
Unit Heads shall determine Business Unit participants, in all cases with the
concurrence of the Michael Baker Corporation CEO and the Compensation
Committee of the Board of Directors of the Company. The number of
participants in the Plan shall be influenced by the Business Unit's ability to
financially support the accrual for the projected payout opportunity. (See
Plan Funding 5.2) Participants are to include executive management, business
unit managers, and selected managers who are accountable for significant
contributions to Corporate, as determined by the CEO, and to the Business
Unit, as determined by the Business Unit head. Participants are to be
designated as having accountability associated with Corporate, overall
Business Unit or specific Business Segment performance. Participants are to
be designated as having Tier 1 or Tier 2 accountability as defined in an
attachment to the Plan.
3.3 PARTIAL PLAN YEAR PARTICIPATION:
An Employee who becomes eligible after the beginning of a Plan Year may
participate in the Plan for that Plan Year. Such situations may include, but
are not limited to (i) new hires, (ii) when an Employee is promoted from a
position which did not meet the eligibility criteria, (iii) when an Employee
is transferred from an affiliate which does not participate in the Plan, or
(iv) when job responsibilities become consistent with other Plan participants.
The CEO retains the right to prohibit or allow participation in the initial
Plan Year of eligibility for any of the aforementioned Employees. Any so
added participant will be eligible to receive a pro-rated share based upon a
2,080 work-hour year.
Any Employee who leaves the employment of the company prior to July 1 of the
Plan Year is not eligible to receive any payout from the Plan for that year.
Subject to the conditions of the following sentence, any employee who leaves
the employment of the Company after June 30 of the Plan Year is eligible to
receive a pro-rata payout from the Plan for that year based upon the percent
of the fiscal year employed. Employees who are terminated for cause or
voluntarily resign their positions from the company at any time during the
Plan year are not eligible to receive any payout from the Plan that year.
ARTICLE IV
AWARDS
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4.1 COMPONENTS OF PARTICIPANT AWARDS:
Each award may be based on (i) Corporate performance, (ii) Business Unit
performance, (iii) Business Segment performance, and (iv) individual
performance plan accomplishments.
4.2 CORPORATE PERFORMANCE MEASURES AND GOALS:
For each Plan Year, the Committee shall recommend, and the CEO shall approve,
a range of performance goals for Corporate results. Each performance range
shall include a level of performance at which awards shall be earned.
Measures of performance may include, but are not limited to, one or more
financial ratios such as earnings per share, profitability, return on equity
and return on assets. Performance measures need not be the same within the
Company.
For 1997, corporate results shall be dependent upon audited corporate earnings
per share (after all incentives have been paid).
For 1997, performance level goals for earnings per share are:
Corporate
Performance Goal Setting
Level (Earnings Per Share)
------------- -------------------
Level 1 On Plan $.55
Level 2 Commendable $.60
Level 3 Outstanding $.65
New goal setting amounts for corporate profitability will be suggested to the
CEO by the Compensation Committee of the Board each year of the Plan.
4.3 BUSINESS UNIT PERFORMANCE:
Business Unit performance shall be reflected in the final award based upon the
Business Unit's Contribution to Corporate Overhead and Profit. The Incentive
Compensation Committee shall establish and approve Competent, Commendable and
Outstanding Contribution goals specific to each Business Unit at the beginning
of the Plan year. The Competent goal shall serve as a Threshold target which
must be met in order for Business Unit Managers and those having overall
Business Unit accountability to be eligible to receive an incentive payout
based upon their individual performance plans. In addition, the Competent
goal shall serve as a Threshold target which must be met in order for all
Business Segment participants to receive a payout based upon Business Unit
performance. For Business Segment participants, the incentive compensation
award related to Business Unit performance is based upon "step" accomplishment
of Competent, Commendable, or Outstanding goals and is not to be pro-rated.
Any Business Unit with an objective of a positive contribution performance
(net income before tax plus corporate overhead) which results in a year-end
negative contribution, may be eligible for the portion of incentive
compensation dependent on overall corporate earnings per share performance,
pending CEO approval as advised by the Incentive Compensation Committee. Any
Business Unit with an objective of a negative contribution performance (net
income before tax plus corporate overhead) which results in a year-end more
negative contribution, may be eligible for the portion of incentive
compensation dependent on overall corporate earnings per share performance,
pending CEO approval as advised by the Incentive Compensation Committee.
Factors to be taken into consideration may include the amount of deviation
from objective, impact of the contribution of the Business Unit to the
Corporation and any extraordinary issues. Any Business Unit with an objective
of a negative contribution which results in a year-end more favorable
performance, will be eligible for the portion of incentive compensation
dependent on overall corporate performance.
4.4 BUSINESS SEGMENT PERFORMANCE:
Business Segment performance shall be reflected in the final award based on
the Business Segment's Contribution to Corporate Overhead and Profit. The
Incentive Compensation Committee shall approve Competent, Commendable and
Outstanding Contribution goals specific to each Business Segment at the
beginning of the Plan year. The Competent goal shall serve as a Threshold
target which must be met in order for participants within the Segment to be
eligible to receive an incentive payout based upon individual performance
plans.
Any Business Segment with an objective of a positive contribution performance
(net income before tax plus corporate overhead) which results in a year-end
negative contribution, may be eligible for the portion of incentive
compensation dependent on overall corporate earnings per share performance
and/or Business Unit Contribution to Overhead and Profit, pending CEO approval
as advised by the Incentive Compensation Committee. Any Business Segment with
an objective of a negative contribution performance (net income before tax
plus corporate overhead) which results in a year-end more negative
contribution, may be eligible for the portion of incentive compensation
dependent on overall corporate earnings per share performance and/or Business
Unit Contribution to Overhead and Profit, pending CEO approval as advised by
the Incentive Compensation Committee. Any Business Segment with an objective
of a negative contribution which results in a year-end more favorable
performance, will be eligible for the portion of incentive compensation
dependent on overall corporate performance and Business Unit Contribution to
Overhead and Profit.
4.5 INDIVIDUAL PERFORMANCE:
Individual performance shall be reflected in the final award based on the
performance rating assigned to an Employee as part of the Performance
Management Process and is based upon a number of factors established by the
participant's manager(s) at the beginning of the Plan Year.
Guidelines of performance goals and percentage weights for Business Unit
managers are recommended to be:
% of Business Unit
Performance Plans
-------------------
Business Unit Contribution to 35%
Corporate Overhead and Profit
New Work Added To The Company 45%
TQM Goals 10%
Human Resources Development 10%
Guidelines of performance goals and percentage weights for Business Segment
managers are recommended to be:
% of Business Segment
and Individual
Performance Plans
-----------------------
Business Segment Contribution to 35%
Corporate Overhead and Profit
New Work Added To The Company 20%
Implementation of New Growth Strategies 15%
Accounts Receivable 10%
TQM Goals 10%
Human Resources Development 10%
Individual performance measures for incentive compensation participants are to
be developed jointly with the employee's immediate supervisor, be consistent
with the participant's respective job responsibilities, and be included on the
participant's performance plan. The performance plans are to be submitted to
the CEO by the Business Unit head during March of the Plan year. For
individuals who become eligible for participation in the Plan during the
course of the year, a completed performance plan is to be submitted within
four weeks of the individual becoming eligible for participation.
Performance Plans of incentive compensation participants are to be submitted
to the CEO based upon timetables to be established in the respective Plan
Year.
At the end of the Plan Year, incentive compensation participants' managers
will determine the level of performance accomplished by the participant.
Participant performance which does not meet or exceed the Competent-On Plan
Performance-3 level on a specific goal will result in no incentive payout for
that specific performance goal. Once performance has exceeded the Competent-On
Plan Performance-3 level on a specific goal, any performance beyond the 3
level will result in a pro-rated weighted calculation of the incremental
incentive compensation earned by the participant, until the maximum level 5
performance is achieved.
Payout for participants meeting individual performance goals will occur when
Business Unit or Business Segment (as applicable) operating profit
accomplishes threshold performance indicated in each Business Unit's or
Business Segment's Performance Plan (after all individual incentives have been
paid). Individual performance goals are developed with each participant's
manager and payout is based on the applicable Business Unit or Business
Segment performance plan.
The specific accomplishments associated with these goals are to be recorded on
each participant's annual Performance Plan at the end of the Plan Year.
In addition to individual performance incentives, a discretionary pool may be
created within Corporate and within each Business Unit to selectively award
those individuals who have exceeded expected performance. Guidelines for
discretionary awards are indicated within the Corporate and within each
Business Units' Incentive Compensation Plan Summary in the attachments.
Functional Unit discretionary awards are to be selected by the CEO with the
concurrence of the Incentive Compensation Committee. Business Unit
discretionary awards are to be selected by the Executive Vice President of the
Business Unit with the concurrence of the Incentive Compensation Committee.
ARTICLE V
PAYMENT OF AWARDS
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5.1 PAYMENT OF AWARDS:
At the end of each Plan Year, the CEO shall report the overall Corporate and
individual performance levels to the Compensation Committee of the Board of
Directors, who shall then approve the payment of awards.
The incentive compensation earned as a result of the Company achieving
corporate profitability goals and through the achievement of Business Unit,
Business Segment and individual goals, will be paid in cash no later than
March 15 of the year after which it was earned.
5.2 PLAN FUNDING:
Accrual for the Incentive Compensation Plan will be established annually by
the Committee, subject to the approval of the CEO. The approved accrual for
the Incentive Compensation Plan shall pre-fund the amounts available to be
earned for incentive compensation distributions. Any forfeitures associated
with the termination of those in the incentive compensation plan prior to
year-end will be allocated toward the funding of the incentive pool for the
following year. In addition, if the incentive pool is not paid out in full
because of Business Unit, Business Segment or participants' failure to achieve
goals established under the Plan or the Performance Management Process, the
unearned portion would be allocated toward the funding of the incentive pool
for the following year.
Any excess pre-funding accrual based upon corporate goals which are not met
and, therefore, not earned by Incentive Compensation Plan participants, will
be removed from expense.
ARTICLE VI
CHANGE IN CONTROL
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6.1 CHANGE IN CONTROL:
In the event of a Change in Control of the Company, as defined below, a
Participant shall be entitled to, for the Plan Year in which the Change of
Control occurs, the award determined using:
(i) The Participant's actual Base Salary rate in effect on the date of
the Change in Control,
(ii) Actual Corporate performance results to the date of Change in
Control, and
(iii) Participant's Individual Performance results.
The Committee as constituted immediately prior to the Change in Control shall
determine how actual Corporate performance should be measured for purposes of
the award calculation in 6.1. The Committee's determination shall be
conclusive and final.
Awards and any previously accrued awards shall be paid in cash to the
Participant promptly following any discontinuance of the Plan on or after a
Change of Control.
6.2 DEFINITION OF CHANGE IN CONTROL:
A "Change in Control" will be deemed to have occurred on the first to occur of
the following:
(a) The Company acquires actual knowledge that any Person other than the
Company, a Subsidiary, the Company's Stock Ownership Plan and Trust or
any employee benefit plan(s) sponsored by the Company has acquired the
Beneficial Ownership, directly or indirectly, of securities of the
Company entitling such Person to 20% or more of the Voting Power of the
Company;
(b) A Tender Offer is made to acquire securities of the Company entitling the
holders thereof to 20% or more of the Voting Power of the Company; or
(c) A solicitation subject to Rule 14a-11 under the 1934 Act (or any
successor Rule) relating to the election or removal of 50% or more of the
members of any class of the Board shall be made by any person other than the
Company or less than 51% of the members of the Board shall be Continuing
Directors; or
(d) The shareholders of the Company shall approve a merger, consolidation,
share exchange, division or sale or other disposition of assets of the
Company as a result of which the shareholders of the Company immediately
prior to such transaction shall not hold, directly or indirectly, immediately
following such transaction a majority of the Voting Power of (i) in the case
of a merger or consolidation, the surviving or resulting corporation, (ii) in
the case of a share exchange, the acquiring corporation or (iii) in the case
of a division or a sale or other disposition of assets, each surviving,
resulting or acquiring corporation which, immediately following the
transaction, holds more than 10% of the consolidated assets of the Company
immediately prior to the transaction.
The term "person" shall mean and include any individual, corporation,
partnership, company, association or other "person," as such term is used in
Section 14(d) of the Exchange Act, other than the Company or any employee
benefit plans sponsored by the Company.
"Continuing Directors" shall mean a director of the Company who either (a) was
a director of the Company on the effective date of the Plan or (b) is an
individual whose election, or nomination for election, as a director of the
Company was approved by a vote of at least two-thirds of the directors then
still in office who were Continuing Directors (other than an individual whose
initial assumption of office is in connection with an actual or threatened
election contest relating to the election of directors of the Company which
would be subject to Rule 14a-11 under the 1934 Act, or any successor Rule).
ARTICLE VII
MISCELLANEOUS PROVISIONS
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7.1 NON-TRANSFERABILITY:
No right of interest of any Participant in this Plan shall be assignable or
transferable, or subject to any lien, directly, by operation of law or
otherwise, including execution, levy, garnishment, attachment, pledge, and
bankruptcy.
7.2 TAX WITHHOLDING:
The Company shall have the right to deduct from all payments under this Plan
any foreign, Federal, state, or local taxes required by law to be withheld
with respect to such payments.
7.3 AMENDMENTS:
The Company, in its absolute discretion, without notice, at any time and from
time to time, may modify or amend, in whole or in part, any or all other
provisions of this Plan, or suspend or terminate it entirely; provided, that
no such modification, amendment, suspension, or termination may reduce the
right of a Participant (or his beneficiary as the case may be) to a payment or
distribution in accordance with the provisions contained in this Plan or
change to the detriment of a Participant of any potential rights in that Plan
Year pursuant to Section 6.1 of this Plan.
7.4 INDEMNIFICATION:
Each person who is or shall have been a member of the Committee or the Board
or who is or shall have been an Employee of the Company shall be indemnified
and held harmless by the Company against and from any loss, cost, liability,
or expense, including, without limitation, fees and expenses of legal counsel,
that may have been imposed upon or reasonably incurred by him in connection
with or resulting from any claim, action, suit, or proceeding to which he may
be a party or in which he may be involved by reason of any action taken or
failure to act under the Plan and against and from any and all amounts paid by
him in settlement thereof, with the Company's approval, or paid by him in
satisfaction of any judgment in any such action, suit, or proceeding against
him provided he shall give the Company an opportunity, as its own expense, to
handle and defend the same before he undertakes to handle and defend it on his
own behalf. The foregoing right of indemnification shall not be exclusive of
any other rights of indemnification to which such person may be entitled under
the Company's Certificate of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold
them harmless.
7.5 BENEFICIARY DESIGNATION:
Each Participant under the Plan may name, from time to time, beneficiary or
beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in case of his death before he receives
any or all of such benefit. Each designation will revoke all prior
designations by the same Participant, shall be in a form prescribed by the
Company, and will be effective only when filed by the Participant in writing
with the Company during his lifetime. In the absence of any such designation,
or if the designated beneficiary is no longer living, benefits shall be paid
to the surviving member(s) of the following classes of beneficiaries, with
preference for classes in the order listed below:
(a) Participant's spouse (unless the parties were divorced or legally
separated by court decree);
(b) Participant's children (including children by adoption); or
(c) Participant's executor or administrator.
Payment of benefits shall be made exclusively to the member(s) of the first
class, in the order listed above, which has surviving member(s). If that
class have more than one member, benefit payment shall be made in equal shares
among members of that class.
7.6 RIGHTS OF PARTICIPANTS:
Nothing in this Plan shall interfere with or limit in any way the right of the
Company to terminate or change a Participant's employment at any time, nor
confer upon any Participant, any right to continue in the employment of the
Company for any period of time or to continue his present or any other rate of
compensation. No Participant in a previous Plan Year, or other Employee at
any time, shall have a right to be selected for participation in a current or
future Plan Year.
7.7 GOVERNING LAW:
The Plan shall be construed in accordance with and governed by the laws of the
State of Pennsylvania.
7.8 EFFECTIVE DATE:
The Plan shall be deemed effective as of January 1, 1997.
1997 Michael Baker Corporation Incentive Compensation Plan - Summary
Attachment 1 February 14, 1997
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ELIGIBILITY FOR INCENTIVE COMPENSATION PLAN
- ----------------------------------------------------------------------------
Number of Participants Tier 1: approximately 50
Tier 2: approximately 50
Tier 3: Discretionary
- ----------------------------------------------------------------------------
Participants
TIER 1
Corporate Executive Management, Officers and
Directors
Business Units Business Unit Heads
Selected Staff who support the
functions of the entire Business Unit
(Designated by Business Unit Head)
Business Segments- Profit Center Managers with greater
Engineering and Design than $2.5 Million net revenue
responsibility
(Designated by Business Unit Head)
Business Segments-Construction Profit Center Managers with greater
and Heavy/Highway and Baker than $60 Million gross revenue
Support Services, Inc. responsibility
(Designated by Business Unit Head)
TIER 2
Corporate Selected Functional Unit Managers
Business Units Selected Staff who support the
functions of the entire Business Unit
(Designated by Business Unit Head)
Business Segments Selected Managers, Other Profit
Center Managers, and selected Senior
Project Managers
(Designated by Business Unit Head)
TIER 3 Discretionary
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Participant Recommendation Corporate participants and Business
Unit Heads (CEO)
Within Business Units (Head of
Business Unit)
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Participant Approval President and Chief Executive Officer
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Participants Added During Year? Yes, Pro-rata
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Ineligible Employees Termination for Cause/Voluntary
Resignation
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INCENTIVE COMPENSATION OPPORTUNITY
Tier 1 Tier 2 Tier 3
Total % of Annual Salary 0-25% 0-15% Discretionary
First Level (total maximum) 8.333% 5% (Accumulative
15 % of Total
Second Level (total maximum) 16.667% 10% Unit
Incentive
Third Level (total maximum) 25% 15% Payout)
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PERFORMANCE MEASUREMENT
Corporate Participants, Heads of Business Units and Staff, Managers with
multiple Business Unit responsibility, and all Environmental Business Unit
Participants
Corporate Profitability Goals 50 % of Potential Award
Individual Performance Plan Goals 50 % of Potential Award
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Business Unit-Segments and Profit Center Managers
Corporate Profitability Goals 25 % of Potential Award
Business Unit Performance Goals 25 % of Potential Award
Individual Performance Plan Goals 50 % of Potential Award
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PERFORMANCE GOALS
Corporate Profitability Goals
- -----------------------------
Audited Corporate Earnings Per Share % of Payout Based Earnings
(After All Incentives Have Been Paid) Upon Corporate Plan Per Share
------------------- ---------
1st Level (On-Plan Performance) 33% $.55
2nd Level (Commendable) 33% $.60
3rd Level (Outstanding) 34% $.65
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INDIVIDUAL PERFORMANCE PLAN GOALS
% of % of
(Number of goals and % for each Business Business
specific goal is to be customized Unit Segment Functional
for each participant based Participants' Participants' Unit
upon Operating Objective, Individual Individual Individual
Marketing driven orientation Performance Performance Performance
and level of accountability. % Plans Plans Plan
is not to be less than 10% for -------------- ------------ -----------
any goal)
Business Unit or Business Segment 35% 35% *
Contribution to Corporate Overhead
and Profit
New Work Added to the Company 45% 20% *
Strategic Initiatives 15% *
Accounts Receivables 10% *
TQM Goals 10% 10% 10%
Human Resources Development 10% 10% 10%
*Functional Unit Performance Plans are to be determined by Dept. Heads and
participants with CEO approval
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POTENTIAL PAYOUT Corporate Individual
Profitability Performance
Goals Goals
(% of Annual Salary) ------------ -----------
Tier 1 Corporate and Business
Unit Heads and Staff
1st Level (On-Plan Performance) 4.167% 4.167%
2nd Level (Commendable) 8.334% 8.334%
3rd Level (Outstanding) 12.500% 12.500%
Business
Corporate Unit Individual
Profitability Performance Performance
Goals Goals Goals
------------- ----------- ----------
Tier 1 Business Unit-Segments
1st Level (On-Plan Performance) 2.084% 2.084% 4.167%
2nd Level (Commendable) 4.167% 4.167% 8.334%
3rd Level (Outstanding) 6.250% 6.250% 12.500%
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Corporate Individual
(% of Annual Salary) Profitability Performance
Goals Goals
-------------- -----------
Tier 2 Corporate and Business Unit Staff
1st Level (On-Plan Performance) 2.50% 2.50%
2nd Level (Commendable) 5.00% 5.00%
3rd Level (Outstanding) 7.50% 7.50%
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POTENTIAL PAYOUT (CONTINUED) Business
Corporate Unit Individual
Profitability Performance Performance
Goals Goals Goals
------------ ---------- ------------
Tier 2 Business Unit-Segments
1st Level (On-Plan Performance) 1.25% 1.25% 2.50%
2nd Level (Commendable) 2.50% 2.50% 5.00%
3rd Level (Outstanding) 3.75% 3.75% 7.50%
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THRESHOLD
Corporate
Minimum earnings per share for any Potential Payout $0.55
on Corporate Component (after all incentives have been paid)
Business Units and Business Segments
Minimum Contribution to Overhead and Profit (After Accrual for Incentive
Compensation Payments and Internal Interest Charges)
Contribution
-------------
Civil Business Unit $7,834,774
Civil-Engineering $9,540,871
Baker Support Services, Inc. $568,028
Buildings Business Unit $3,034,430
Buildings-Design $1,932,946
Buildings-Construction $2,086,060
Transportation Business Unit $6,985,940
Transportation-Engineering $8,321,368
Transportation-Heavy & Highway $940,552
Environmental Business Unit $2,266,517
Energy Business Unit $3,637,332
Energy/Baker MO $1,756,275
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TYPE OF PAYOUT Cash
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FREQUENCY OF PAYOUT Annually, with payment by the end of
the following year's first quarter
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FUNDING Pre-funding accrual in the year earned
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FORFEITURES Allocated toward next year's funding
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