December 14, 1995
PERINI CORPORATION
AMENDED AND RESTATED
CONSTRUCTION BUSINESS UNIT
INCENTIVE COMPENSATION PLAN
1. PURPOSE
This incentive plan is designed to encourage profitable
performance at the Business Unit level and to reward and recognize
those who directly affect and contribute to the achievement of
specifically targeted profit levels. It is anticipated that by tying
incremental compensation to operating performance over which the
Participants have a substantial degree of influence, the Plan will
promote higher levels of productivity and additional profits for the
Company's stockholders. It is also designed to tie all business unit
Participants to the overall performance of the Corporation and to
provide a portion of their incremental compensation from how well the
Corporation meets its targets.
In order to accomplish the objective of increased productivity
and corporate profitability, the Plan has been designed to meet the
following criteria:
- That there be a bonus available to Managers and other
key Business Unit personnel that is directly related
to predetermined levels of profit.
- That outstanding achievement will result in
outstanding reward, i.e., the more profit earned, the
more Bonus key personnel will receive, subject to
overall Plan limitations.
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2. DEFINITIONS
For Plan purposes, except where the context otherwise
indicates, the following terms shall have the meanings which follow:
"Base Salary" shall mean the annual base salary of a
Participant as reported on such Participant's W-2 Form, inclusive of a
"gross up" for 401K and group insurance deductions but exclusive of
overtime compensation, housing or travel allowances, bonuses, deferred
compensation or other special compensation of any kind.
"Beneficiary" shall mean the person or persons, who may be
designated by a Participant from time to time in writing to the
Committee, and who shall receive the Bonus, if the Participant dies.
"Board" shall mean the Board of Directors of the Corporation.
"Bonus" shall mean stock issued or cash paid to a Participant.
"Bonus Period" shall mean a period, generally a fiscal year, over
which performance will be measured as determined by the Committee. "Business
Unit" shall mean a construction division or subsidiary of the Company or its
subsidiaries designated as a construction business unit by the Committee. "CEO"
shall mean the Chief Executive Officer of the Company. "Committee" shall mean
the Compensation Committee, or such other Committee of the Board, which shall be
designated by the Board to administer the Plan. The Committee shall be composed
of such number of directors as from time to time are appointed to serve by the
Board. Each member of the Committee, while
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serving as such, shall also be a member of the Board and shall be a
disinterested person within the meaning of Rule 16b-3 of the Securities
Exchange Act of 1934.
"Company" shall mean Perini Corporation and its consolidated
subsidiaries.
"Corporation" shall mean Perini Corporation and its consolidated
subsidiaries.
"Fair Market Value" shall mean, with respect to any given Payment
Date, the average of the last reported sale of Stock as reported by the American
Stock Exchange Composite Tape for the five (5) consecutive business days
immediately preceding the first (1st) business day prior to the Payment Date.
"Participant" shall mean an individual designated as a participant
hereunder by the CEO with the approval of the Committee. Such individual shall
be a participant at the construction business unit level.
"Payment Date" shall mean the date in any year the Bonus is paid
to the Participant with respect to performance during the prior year, which will
generally be on or before April 14 of the year following the Bonus Period in
which the Bonus is earned.
"Performance Goal" shall mean such Bonus Period objective or
objectives as determined by the Committee. Such objective or objectives shall be
Pretax Profits and/or such other performance indicators of the business unit's
results during a Bonus Period, which may involve establishment of predetermined
ranges of Pretax Profits with a bonus pool calculated based upon a percentage of
actual Pretax Profits achieved as set forth in Schedule A(I) with such schedule
subject to review by the Committee annually. In the case of the Corporate
Performance goal, a minimum earnings per
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share result and/or other minimum hurdle required to qualify for bonus
payments will be applied consistent with the minimum earnings per share
result and/or other minimum hurdle required by the Perini Corporation
Corporate General Incentive Compensation Plan in each year and payment
under this segment of the plan will be made as indicated in Schedule
A(II).
"Plan" shall mean the Perini Corporation Amended and Restated
Construction Business Unit Incentive Compensation Plan as set forth herein and
as amended from time to time.
"Pretax Profit - Business Unit" shall mean the contribution to
corporate earnings after deduction for all business unit expenses, including,
without limitation, general and administrative expenses (including general and
administrative expenses allocated from general corporate overhead and "in-house"
service departments), over- or under-absorbed equipment costs, over-or
under-absorbed payroll fringes, interest income or expense (including imputed
interest), bonuses payable under the Company's Project Management Incentive Plan
and 401K plan expenses, but prior to provision for taxes and for Bonuses under
this Plan.
"Pretax Profit - Corporation" shall mean pretax earnings of the
corporation, after Bonuses for Corporate and Business Unit performance.
"Stock" shall mean the common stock of the Company having a par
value of $1.00 per share.
3. ADMINISTRATION
(a) The Compensation Committee, or such other Committee of the
Board of Directors designated by the Board, shall administer the Plan.
The administration of the Plan shall include the power to: (i) approve
Participants participation in the Plan, (ii) establish Performance
goals, (iii) determine if and when any Bonuses shall be paid, (iv) pay
out any Bonuses, in cash or Stock or a combination thereof, as the
Committee shall determine from year to year, (v) determine the amount,
which may be calculated utilizing the allocations established in
accordance with Section 6 hereof, and the form of the Bonus, and if
deemed appropriate to adjust targets or payments to reflect special
achievements for which no bonus would, by strictest adherence to the
plan, be due or to adjust actual results to be used for bonus
performance measures in the event of one- time-only or unusual charges
or additions to earnings such as special write-offs or extraordinary
gains. (vi) impose, and change from time to time, the maximum amounts
or percentages payable under the Plan, (vii) construe and interpret the
Plan, and (viii) establish rules and regulations and to perform all
other acts it believes reasonable and proper, including the authority
to delegate responsibilities to others to assist in administering the
Plan. Any decision made, or action taken, by the Committee, arising out
of, or in connection with, the interpretation and administration of the
Plan shall be final and conclusive.
(b) Until such time as the Committee makes a determination to
make payment of the incentive compensation hereunder with respect to
the actual results compared to the Performance Goals for the
immediately preceding Bonus Period, no Participant shall have any
vested right to receive any amount which might be calculated as payable
pursuant to the Plan. Furthermore, for any Bonus Period and up until
the Payment
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Date, the Committee may cancel any Bonuses awarded under the Plan if a
Participant conducts himself or herself in a manner which the Committee
determines to be inimical to the best interests of the Company.
4. ELIGIBILITY
(a) Eligibility to participate under the Plan is limited to
individuals who are managers and key employees at the Company's
construction Business Unit level whose duties and responsibilities
provide them the opportunity to (i) make a material and significant
impact to the financial performance of the Company; (ii) have major
responsibility in the control of the business unit assets; and (iii)
provide critical staff support necessary to enhance operating
profitability.
(b) Eligibility and designated levels of participation will be
determined by the CEO subject to Committee approval. Such eligibility
and level of participation may be revised and updated from time to time
up until July 31 of the Bonus Period, and thereafter only for unusual
circumstance. The fixing of eligibility and level of participation
shall not create any vested right in any participant to receive a bonus
hereunder.
(c) A Participant may have responsibilities at levels other
than at the Business Unit level and therefore qualify to receive a
bonus, if any, based on the performance of such other level under
another plan of the Company. The Committee, as it deems fair and
equitable in its sole discretion, shall apportion such Participant's
Base Salary between such pools for purposes of determining such
Participant's Bonus allocation.
(d) Eligible Participants who are transferred during the Bonus
Period may have their Bonus pro-rated, based on their normal Base
Salary charged to the business unit level or other level within the
Company during such Bonus Period.
5. RESERVATION OF STOCK FOR ISSUANCE
After the end of each Bonus Period but prior to the Payment
Date applicable for such Bonus Period, the Board shall reserve for
issuance, from authorized but unissued Stock or reacquired shares of
Stock held in Treasury, such number of shares of Stock sufficient to
pay that portion, if any, of the Bonus to be paid in Stock under the
Plan as may be determined for such year in accordance with subsection
3(a)(iv) hereof for the immediately preceding Bonus Period; provided,
however, the aggregate number of shares of Stock issued and reserved
for issuance under the Plan shall not violate the rules or regulations
of any stock exchange (including but not limited to any rule requiring
stockholder approval for the issuance of Stock hereunder) on which the
Stock is listed or any governmental authority having jurisdiction
thereunder.
6. EARNING THE BONUS
The Bonus to be earned will depend on the following factors:
(a) 75% of the bonus earned will be based on Achievement
of Business Unit Pretax Profit as established in
Section 7 and Schedule A.
(b) 25% of the bonus earned will be based on Achievement
of Corporate Pretax Profit, as described in Section
2.
The total payout will be limited by the amount established
from the Business Unit Bonus Pool.
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7. ESTABLISHMENT OF THE BONUS POOL
For each Bonus Period, the pool to be established for the
determination of Bonuses (the "Bonus Pool") shall be the lower of a
percentage, subject to a maximum of 10%, of the applicable business
unit's Pretax Profits as determined by the Committee in its sole
discretion or $1000 per point based on the aggregate number of
Participants' points. Such percentages and levels of Pretax Profits
will be reviewed annually and may be revised by the CEO subject to
Committee approval. The initial Performance Goals for the construction
Business Units and the resulting Bonus Pool percentages are as set
forth in Schedule A annexed hereto.
8. ALLOCATION OF BONUS POOL
(a) The number of points to which the Participant is entitled
is determined by multiplying the Participant's Base Salary, in
thousandths, by the Point Factors assigned to his or her level of
participation as set forth in Schedule B annexed hereto. For example, a
Level IV Participant earning $66,000 will have 33 points [66 (Base
Salary in thousandths) x .50 (Point Factor assigned to Level IV) = 33].
(b) The total number of points awarded to all Participants is
divided into the available Bonus Pool to determine the "dollar value
per point", subject to a maximum of $1,000 per point.
(c) The amount of a Participant's Bonus is then determined by
multiplying the number of points to which the Participant is entitled
by the "dollar value per point".
(d) Up to 25% of each Participant's Bonus may be (i)
reallocated to previously established pool Participants on a basis
other than the initial salary points assigned, or (ii) reduced by such
amount, at the discretion of the CEO, subject to Committee approval.
This reallocation to other Participants may result in such other
Participants earning Bonuses of greater than $1,000 per point, subject
to a maximum of one times the Participant's Base Salary. In the event
of reallocation, the amount of the total Bonus Pool may not exceed
$1,000 multiplied by the total points assigned to such Business Unit.
9. PAYMENT OF BONUSES
(a) If approved by the Committee, payment of the cash portion
of any Bonus under the Plan shall be made on the Payment Date. Bonuses
may be paid in cash or Stock or any percentage of cash and Stock as the
Committee shall determine in its sole discretion.
(b) If any portion of the Bonus is to be paid in Stock, on the
Payment Date, or as soon thereafter as practical, the Participant shall
be issued a certificate registration in his or her name, for the number
of shares of Stock which would result by dividing the dollar value of
that portion of the Participant's Bonus to be received in Stock by the
Fair Market Value with respect to the Payment Date. No fractional
shares will be issued. Cash will be paid in lieu of any fractional
shares.
(c) Payment of 75% of the bonus pool calculated in accordance
with Sections 7 and 8 under this plan will be paid out based on the
achievement of Business Unit Pretax Profit Targets and 25% of the bonus
pool calculated in accordance with Sections 7 and 8 under this plan
will be paid out based on the achievement of the Corporate Pretax
Profit Target.
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10. TERMINATION OF EMPLOYMENT
In the event a Participant ceases to be employed by the
Company or any subsidiary Company of the Company:
(a) Due to normal retirement, or early retirement with
Committee consent, under a formal plan or policy of the Company, or
total and permanent disability, as determined by the Committee, or
death, Participant's eligibility, pro rata, shall continue to remain in
effect for the duration of the applicable Bonus Period. In the event of
such a termination of employment, the Participant, or her or his
Beneficiary, on the Payment Date, shall receive the Participant's pro
rated Bonus for the applicable Bonus Period.
(b) In the event that a Participant shall cease to be an
employee of the Company or any subsidiary corporation of the Company
upon the occurrence of any other event, participant's eligibility under
the Plan shall be cancelled and terminated forthwith, and no Bonuses
shall be payable under the Plan except as and to the extent the
Committee may determine otherwise.
(c) For purposes of the preceding, it shall not be considered
a termination of employment when a Participant is placed by the Company
or subsidiary company of the Company on military or sick leave or such
other type of leave of absence, for a period of six months or less,
which is considered as continuing intact the employment relationship of
the Participant. For any such leave extending beyond six months the
Committee shall decide whether and when there has been a termination of
employment.
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11. ADJUSTMENTS
If there shall be any change in the Stock subject to the Plan
through merger, consolidation, reorganization, recapitalization, stock
dividend, stock split, exchange of stock or other change in the
corporate structure, appropriate adjustments shall be made in the
aggregate number and kind of shares subject to the Plan to reflect such
changes, if and to the extent determined by the Committee, whose
determination shall be conclusive.
12. AMENDMENT AND TERMINATION OF PLAN
The Board may, at any time, and from time to time, suspend or
terminate the Plan in whole or in part or amend it from time to time in
such respects as the Board may deem appropriate and in the best
interests of the Company.
13. GOVERNMENT AND OTHER REGULATIONS
The obligation of the Company to issue, or transfer and
deliver shares for Bonuses under the Plan shall be subject to all
applicable laws, regulations, rules and orders which shall then be in
effect.
14. UNFUNDED PLAN
The Plan, insofar as it provides for payments, shall be
unfunded and the Company shall not be required to segregate any assets
which may at any time be subject to Bonuses under the Plan. Any
liability of the Company to any person with respect to any award under
this Plan shall be based solely upon any contractual obligations which
may be created under this Plan.
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15. MISCELLANEOUS PROVISIONS
(a) Right to Continued Employment: No person shall have any
claim or right to be granted a Bonus under the Plan, and the grant of a
Bonus under the Plan shall not be construed as giving any Participant
the right to be retained in the employ of the Company or any subsidiary
company of the Company and the Company expressly reserves the right at
any time to dismiss a Participant with or without cause, free from any
liability, or any claim under the Plan.
(b) Non-Transferability: Except by will or the laws of descent
and distribution, no right or interest of any Participant in the Plan
shall be assignable or transferable and no right or interest of any
Participant shall be liable for, or subject to, any lien, obligation or
liability of such Participant.
(c) Withholding Taxes: The Company shall have the right to
withhold from cash payments sufficient amounts to cover tax withholding
for income and employment taxes, and if the amount of cash payment is
insufficient, the Company may require the Participant to pay to it the
balance required to be withheld. Likewise, the Company may require a
payment to cover applicable withholding for income and employment taxes
in the event any part of the Bonus is paid in Stock.
(d) Plan Expenses: Any expenses of administering this Plan
shall be borne by the Company.
(e) Legal Considerations: No person, including a Participant,
or his or her Beneficiary, shall have any claim or right to the payment
of an award, if, in the opinion of counsel for the Company, such
payment does not comply with legal requirements, or
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is opposed to governmental public policy.
(f) Other Plans: Nothing contained herein shall prevent the
Company from establishing other incentive and benefit plans in which
Participants in the Plan may also participate. However, any amounts
paid to a Participant with respect to Bonuses under the Plan shall not
affect the level of benefits provided to or received by any Participant
(or his or her estate or Beneficiary) as part of any other employee
benefit plan of the Company.
(g) No Warranty of Tax Effect: No opinion shall be deemed to
be expressed or warranties made as to the effect for federal, state or
local tax purposes of any Bonuses.
(h) Construction of Plan: The place of administration of the
Plan shall be in the Commonwealth of Massachusetts, and the validity,
construction, interpretation, administration and effect of the Plan and
of its rules and regulations, and rights relating to the Plan, shall be
determined solely in accordance with the laws of the Commonwealth of
Massachusetts.
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Schedule A
Calculation of Bonus Pools
I. Contributions to Pretax Profits* by Construction's
Building Heavy Bonus Pool
Business Units Business Units Percentages**
-------------- -------------- -------------
<= $ 1,999,000 <= $ 2,999,000 0%
2,000,000 3,000,000 2%
2,500,000 4,000,000 3%
3,000,000 5,000,000 4%
3,500,000 6,000,000 5%
4,000,000 7,000,000 6%
4,500,000 8,000,000 7%
5,000,000 9,000,000 8%
5,500,000 10,000,000 9%
>= 6,000,000 >= 11,000,000 10%
----
* Pretax Profits falling within the above specified levels will result in
a Bonus Pool percentage based upon straightline interpolation between
the specified levels. For example, building construction's contribution
of $2,225,000 to Pretax Profits will result in a Bonus Pool equal to
2.5% of the Pretax Profits.
** Represents percentages applied to Pretax Profits to determine amount in
Bonus Pool, subject to maximum bonus pool limitation of $1000 per
point.
II. The payout of the 25% based on Corporate Pretax Profits will be as follows:
75-79% of Corporate Performance Goal = 10% of bonus (2 1/2% of total)
80-84% of Corporate Performance Goal = 35% of bonus (8 3/4% of total)
85-89% of Corporate Performance Goal = 75% of bonus (18 3/4% of total)
90% + of Corporate Performance Goal = 100% of bonus (25% of total)
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Schedule B
Participant's Level of Participation and
Related Point Factors
Point Factor
Assigned
--------
Level I 1.00
Level II 0.75
Level III 0.60
Level IV 0.50
Level V 0.40
Level VI 0.25
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