Exhibit 10.55
L. B. FOSTER COMPANY 2005
MANAGEMENT INCENTIVE COMPENSATION PLAN
I. PURPOSE
This Plan is designed to motivate employees to achieve goals, to reward
employees who achieve such goals and to improve corporate performance.
II. CERTAIN DEFINITIONS
The terms below shall be defined as follows for the purposes of this Plan.
The definitions shall be subject to such adjustments as, from time to time, may
be made, by the Committee.
2.1 "Base Compensation" shall mean the total base salary, rounded to the
nearest whole dollar, actually paid to a Participant during the Fiscal
Year, excluding payment of overtime, incentive compensation, commissions,
reimbursement of expenses, severance, car allowances or any other payments
not deemed part of a Participant's base salary; provided, however, that the
Participant's contributions to the Corporation's Voluntary Investment Plan
shall be included in Base Compensation. Base Compensation for Participants
who die, retire or are terminated shall include only such compensation paid
to such during the fiscal year with respect to the period prior to death,
retirement or termination.
2.2 "Committee" shall mean the Compensation, Nomination and Governance
Committee of the Board of Directors and any successors thereto.
2.3 "Corporation" shall mean L. B. Foster Company and those subsidiaries
thereof in which L.B. Foster Company owns 100% of the outstanding common
stock.
2.4 "Department/Individual Goals" are those goals approved by the Chief
Executive Officer and utilized to establish incentive awards pursuant to
Section 4.3
2.5 "Fiscal Year" means the 2005 calendar year.
2.6 "Incentive Award" shall mean the payment made to a Participant under this
Plan, after and/or subject to adjustments under this Plan.
2.7 " Incentive Income" shall mean the pre-tax income (after, inter alia,
deductions for benefits payable under the annual sales incentive and profit
sharing plans) for the Corporation or, as applicable, for an Operating Unit
for the Fiscal Year, but determined in accordance with generally-accepted
accounting principles, excluding (i) benefits payable under this Plan; (ii)
dividends and related interest with respect to Dakota Minnesota & Eastern
Railroad Corporation preferred stock to the extent not included in the
Corporation's Planned Incentive Income; and (iii) any portion of gains or
losses arising from transactions not in the ordinary course of business
which the Committee, in its sole discretion, determines to exclude.
2.8 "Operating Unit" shall mean the following units or divisions which are
reported in the Company's internal financial statements: CXT Rail, CXT
Buildings, Foster Coated Pipe, Threaded Products, Rail Products (excluding
CXT Rail), Piling, Fabricated Products and Geotech, subject to such
adjustments as may be made by the Chief Executive Officer.
2.9 "Participant" shall mean a salaried employee of the Corporation who
satisfies all of the eligibility requirements set forth in Article III
hereof.
2.10 "Plan" shall mean the L. B. Foster Company Management Incentive
Compensation Plan, which Plan shall be in effect with respect to the Fiscal
Year.
2.11 "Planned Incentive Income" shall mean, as applicable, Incentive Income for
the Corporation and each Operating Unit as approved by the Corporation's
Board of Directors.
2.12 "Target Award" shall mean the product of a Participant's Base Compensation
multiplied by said Participant's Target Percentage.
2.13 "Target Percentage" shall mean those percentages assigned to Participants
pursuant to Section 4.1 hereof, multiplied by 90%.
III. ELIGIBILITY
Unless changed or amended by the Committee, an employee shall be deemed a
Participant in the Plan only if all of the following requirements are satisfied:
3.1 A Participant must be a salaried employee (but excluding an employee whose
sole title is Chairman of the Board) of the Corporation, at a grade level
set forth in Section 4.1 or as otherwise approved both by the Corporation's
Chairman of the Board and Chief Executive Officer, for at least six (6)
months of the entire fiscal year, unless deceased or retired.
3.2 A Participant may not have: (i) been terminated for cause; (ii) voluntarily
have resigned (other than due to retirement with the Company's consent)
prior to the date Individual Incentive Awards are paid; (iii), unless the
Corporation agrees in writing that the employee shall remain a Participant
in this Plan, been terminated for any reason whatsoever and have received
money from the Corporation in connection with said termination, or (iv)
have been primarily employed by Natmaya or Fosmart during the Fiscal Year.
3.3 A Participant's Target Percentage shall be based on the Participant's Grade
Level on July 1, 2005. Those Participants who have retired or died prior to
July 1, 2005 shall have a Target Percentage based upon their grade level at
death or retirement.
3.4 A Participant may not, unless agreed to in writing by the Chief Executive
Officer, be a participant in any other incentive plan maintained by the
Corporation, other than the Corporation's stock option plans.
3.5 As used herein, "cause" to terminate employment shall exist upon (i) the
failure of an employee to substantially perform his duties with the
Corporation; (ii) the engaging by an employee in any criminal act or in
other conduct injurious to the Corporation; or (iii) the failure of an
employee to follow the reasonable directives of the employee's superior(s).
IV. CALCULATION OF INCENTIVE AWARDS
4.1 Eligibility and Target Percentages. Each Participant shall have a Target
Percentage, prior to adjustment under Section 2.13, based upon the grade
level of such Participant, as follows:
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Target
Management Grade Level Percentage
- ------------------------ ---------------------
Grade 23+ 45.0%
- ------------------------ ---------------------
Grade 22 35.0%
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Grade 21 35.0%
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Grade 20 35.0%
- ------------------------ ---------------------
Grade 19 30.0%
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Grade 18 30.0%
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Grade 17 30.0%
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Grade 16 30.0%
- ------------------------ ---------------------
Grade 15 20.0%
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Grade 14 20.0%
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Grade 13 15.0%
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Grade 12 10.0%
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Grade 11 5%
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Grade 10 5%
- ------------------------ ---------------------
Other employees selected, in writing, by the Corporation's Chairman of the Board
and Chief Executive Officer may also be made Participants in the Plan on such
terms as may be approved by the Chairman of the Board and Chief Executive
Officer.
4.2 Thresholds. The following table shows how Incentive Awards are calculated,
prior to adjustment and to limitations under this Plan:
- ------------------------------------------- ------------------------------------
Actual Performance, based on Unadjusted Incentive Award, as
Percentage of Planned Incentive Percentage of Lower of Target Award
Income Achieved or Target Award at Incentive Planned
Income
- ------------------------------------------- ------------------- ----------------
Outstanding Corporate Operating Unit
- ------------------------------------------- ------------------- ----------------
160% and over 200% 200%
- ------------------------------------------- ------------------- ----------------
155% 190% 190%
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150% 180% 180%
- ------------------------------------------- ------------------- ----------------
145% 170% 170%
- ------------------------------------------- ------------------- ----------------
140% 160% 160%
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135% 150% 150%
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130% 140% 140%
- ------------------------------------------- ------------------- ----------------
125% 130% 130%
- ------------------------------------------- ------------------- ----------------
Exceeding
- ------------------------------------------- ------------------- ----------------
120% 120% 120%
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115% 115% 115%
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110% 110% 110%
- ------------------------------------------- ------------------- ----------------
105% 105% 105%
- ------------------------------------------- ------------------- ----------------
Target
- ------------------------------------------- ------------------- ----------------
100% 100% 100%
- ------------------------------------------- ------------------- ----------------
Threshold
- ------------------------------------------- ------------------- ----------------
90% 80% 80%
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80% 60% 60%
- ------------------------------------------- ------------------- ----------------
70% 40%
- ------------------------------------------- ------------------- ----------------
The calculation of "Unadjusted Incentive Award" in the second and third columns
of the above table shall be adjusted proportionately to reflect "Percentage of
Income Achieved" between the levels in the table. For example, if Corporate
achieved 73% of "Planned Incentive Income", the percentage in the second column
would be deemed to be 46%; if Corporate achieved 137% of "Planned Incentive
Income" the percentage in the second column would be deemed to be 154%.
4.3 Allocated Target Awards. For purposes of calculating Incentive Awards, a
Participant's Target Award shall be allocated as follows, which allocations
shall be approved by the Chief Executive Officer.
- -------------------- --------------- ---------------- -------------------------
Corporate Operating Unit Department/Individual
Goals
- -------------------- --------------- ---------------- -------------------------
CEO 100%
- -------------------- --------------- ---------------- -------------------------
Operating Unit
Heads 20% 70% 10%
- -------------------- --------------- ---------------- -------------------------
Corporate 90% 10%
- -------------------- --------------- ---------------- -------------------------
General Managers &
other Participants
with a grade level
13 & above 20% 70% 10%
- -------------------- --------------- ---------------- -------------------------
Other Participants 80% 20%
- -------------------- --------------- ---------------- -------------------------
4.4 Limitations and Adjustments to Awards. The portion of a Participant`s
Target Award allocated to "Department/Individual Goals" shall be adjusted
to the same extent that the Participant's Target Award(s) allocated to
Corporate or Operating Units are adjusted under Sections 4.2 and 4.4 based
upon the primary allocation of the Participant's Target Award between
Corporate and Operating Units(s).
All Incentive Awards attributable to an Operating Unit or the Corporation
(including Incentive Awards attributable to Department/Individual Goals) may not
exceed 16% of the Operating Unit's or Corporation's actual Incentive Income when
the Corporation or the Operating Unit, as applic- able, attains 100% or less of
its Planned Incentive Income. Such Incent- ive Awards allocated to an Operating
Unit or the Corporation, if necess- ary, shall be proportionately adjusted
downward so that the sum of such resulting Incentive Awards does not exceed 16%
of the applicable Corporation's or Operating Unit's actual Incentive Income.
If Incentive Income exceeds 100% of Planned Incentive Income, the Incentive
Award shall be adjusted by (i) proportionately adjusting downward, if necessary,
the Incentive Awards allocated to the Operating Unit or the Corporation so that
the sum of the resulting Incentive Awards allocated to the Operating Unit or the
Corporation does not exceed 16% of the applicable Corporation's or Operating
Unit's Planned Incentive Income; and then (ii) by multiplying the Incentive
Award that would have been paid at Planned Incentive Income by the applicable
percentage in the right hand column of the table in Section 4.2.
The Chief Executive Officer may, in his discretion, reduce any Incentive Awards
payable under this Plan by up to 25% and the total amount of such reduction(s)
shall be added to the amount available for discretionary awards under Article V.
4.5 Department/Individual Goals. Determinations on the achieve- ment of
Department/Individual Goals shall be approved by the Chief Ex- ecutive
Officer.
Example 1:
General Manager Smith works for CXT Buildings and has a Target Award of $18,000
(i.e. Base Compensation of $100,000 and an 18% Target Percentage). In 2005, the
Corporation earns $7,000,000 of Incentive Income, which is 100% of its Planned
Incentive Income and CXT Buildings earns $2,000,000 of Incentive Income which is
125% of its Planned Incentive Income ($1, 600,000). The CEO determines that Mr.
Smith has achieved 1/2 of his Department/Individual goals. Mr. Smith's Incentive
Award (ignoring the 16% limits and the CEO's ability to adjust upward or
downward), would be calculated as follows:
a. $ 3,600 of Mr. Smith's Target Award (20% X $18,000) would be allocated to
Corporate. Assuming that Corporate total awards do not exceed 16% of the
Corporation's Incentive Income and since Corporate achieved 100% of its
Planned Incentive Income, Mr. Smith would receive $ 3,600 from the
Corporate allocation. See Sec. 4.2.
b. $ 12,600 of the Target Award (or 70% of $18,000) would be allocated to the
Operating Unit. Since CXT Buildings earned 125% of Planned Income, Mr.
Smith would receive $ 16,380 ($12,600 X 130%) from the Operating Unit
allocation.
c. $1,800 (or 10% of $18,000) was allocated to individual/departmental Goals.
Since Mr. Smith's Target Award was primarily allocated to an Operating
Unit, Mr. Smith would have been eligible to receive a maximum of $2,340
($1800 X 130%) from the achievement of individual/departmental goals. Since
Mr. Smith achieved 50% of his goals, he would receive $1,170 from the
individual/departmental goals allocation.
d. Mr. Smith's total Incentive Award would be $21,150.
Example 2:
Same facts as Example 1, except that: (i) the total of all unadjusted Incentive
Awards (without reference to 16% limitations and with CXT Buildings Incentive
Income being 125% of its Planned Income of $1,600,000) based on Target Awards
allocated to CXT Buildings would have been $450,000; and (ii) the total
Incentive Awards payable from Corporate, without adjustment, would have been
$600,000. Mr. Smith's Incentive Award would be calculated as follows:
a. Mr. Smith's Corporate allocation would be unaffected by the 16% caps since
the maximum Corporate allocation would be 16% X $7,000,000, or $1,120,000,
which exceeds the $600,000 of Incentive Awards payable from Corporate;. Mr.
Smith would receive $3,600 from his Corporate allocation.
b. If CXT Buildings had achieved its Planned Incentive Income of $1,600,000
its maximum aggregate Incentive Awards could not have exceeded $256,000
($1,600,000 X 16%). Since CXT Buildings achieved 125% of its Planned
Incentive Income, the total Incentive Awards would be limited to $256,000 X
130%, see Sec. 4.2, or $332,800. Accordingly, Mr. Smith would receive 74%
($332,800 / $450,000) of the unadjusted $17,550 ($16,380 + $1,170, see (b)
and (c) of Example 1), or $12,987 from the Operating Unit allocation.
c. Mr. Smith's total Incentive Award would be $16,587.
Example 3:
Same facts as Example 2, except that General Manager Smith works for Fabricated
Products which has a planned loss for 2005:
a. Mr. Smith's Corporate allocation would be unaffected and he would receive
$3,600 from the Corporate allocation.
b. Fabricated Product's maximum aggregate Incentive Awards at Planned
Incentive Income are negative and the only award Mr. Smith would be
eligible to receive, other than Mr. Smith's corporate allocation, would be
a discretionary award under Article V below.
c. Mr. Smith's total Incentive Award would be $3,600; plus any discretionary
award under Article V.
The examples are for illustrative purposes only and do not contain the
Company's or any Operating Unit's actual Planned Incentive Income.
V. DISCRETIONARY AWARDS
An amount shall be available for discretionary awards equal to the sum of
(i) the difference between (x) the amount which would have been payable to
Participants if the Target Percentages set forth in Section 4.1 had not been
adjusted under Section 2.13 and (y) the amount payable to Participants after the
adjustment under Section 2.13 (without reference to discretionary awards under
this Article V); (ii) the amount which would have been paid except that an
individual was not a Participant due to such individual's failure to satisfy the
requirements of Sections 3.2(i) or 3.2(ii); (iii) the amount of any reduction in
Incentive Awards made by the Chief Executive Officer under Section 4.4; and (iv)
any amount, otherwise available for payment, that was not paid due to a failure
to achieve Department/Individual goals pursuant to Sections 4.3 and 4.4.
Discretionary awards shall be determined by the Chief Executive Officer, except
that any discretionary awards to officers, elected by the Board of Directors,
must be approved by the Committee. Amounts available under this Article V, but
not paid, shall remain the Corporation's property.
VI. PAYMENT OF AWARDS
Payment of Individual Incentive Awards will be made on or before the later of
March 15, 2006 or the completion of the audit for the Corporation's Fiscal Year.
VII. ADMINISTRATION AND INTERPRETATION OF THE PLAN
The Chief Executive Officer, if there is a dispute, shall determine the
Operating Unit(s) that will receive credit for any sale and/or how credit for
any sale is to be allocated among any Operating Units. The Chief Executive
Officer's decisions are subject to final review by the Committee if the
Committee requests such review.
A determination by the Committee in carrying out, administering or interpreting
this Plan shall be final and binding for all purposes and upon all interested
persons and their heirs, successors and personal representatives.
The Committee may, from time to time, amend the Plan;.
The Chief Executive Officer may delegate any of his duties herein.
The Corporation's Internal Audit Department will review and verify the
calculation of Incentive Awards.