Exhibit 10.1
URS CORPORATION
INCENTIVE COMPENSATION PLAN
Adopted by Compensation/Option Committee December 15, 1998
Effective November 1, 1998
1. Purpose. The URS Corporation ("URS") Incentive Equity Plan (the "Plan")
is intended to provide incentive compensation to individuals who make an
important contribution to the financial performance of URS and its Affiliates.
Specific Plan objectives are to: (i) focus key Employees on achieving specific
financial targets; (ii) reinforce a team orientation; (iii) provide significant
award potential for achieving outstanding performance; and (iv) enhance the
ability of URS and its Affiliates to attract and retain highly talented and
competent individuals.
2. Definitions.
(a) "Affiliate" shall mean any entity owned partially or totally by
URS.
(b) "Actual Awards" or "Award" shall mean the incentive amount earned
under the Plan by a Designated or Non-Designated Participant.
(c) "Actual Bonus Pool" or "Actual Pool" shall mean the calculated
amount available for distribution to all Designated and Non-Designated
Participants under the terms and provisions of the Plan.
(d) "Average Day Sales Outstanding" shall mean the average of the
twelve (12) months' Day Sales Outstanding.
(e) "Base Salary" shall mean the actual base earnings of a Designated
Participant for the Plan Year exclusive of any bonus payments under this Plan or
any other prior or present commitment, including contractual arrangements, any
salary advance, any allowance or reimbursement, and the value of any basic or
supplemental employee benefits or perquisites. Base Salary refers only to
amounts earned while a Designated Participant during the Plan Year.
(f) "Board" shall mean the Board of Directors of URS.
(g) "CEO" shall mean the Chief Executive Officer of URS.
(h) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(i) "Compensation/Option Committee" or "Committee" shall mean the
Compensation/Option Committee of the Board. The Committee shall consist solely
of outside directors, as defined in Section 162(m) of the Code.
(j) "Contribution" shall mean Net Income before interest, taxes and
corporate general and administrative expenses with respect to the business
unit(s) for which a Designated Participant has accountability.
1.
(k) "Covered Employees" shall mean the CEO and the four (4) highest
compensated officers, as defined in Section 162(m) of the Code, of URS and its
Affiliates.
(l) "Day Sales Outstanding" or "DSOs" shall mean ninety (90)
multiplied by a fraction the numerator of which is the sum of billed accounts
receivable plus unbilled accounts receivable minus billings in excess of cost,
and the denominator of which is the sum of the last three (3) months revenues,
with respect to the business unit(s) for which a Designated Participant has
accountability. DSOs shall be calculated monthly.
(m) "Designated Participant" shall mean an Employee of URS or an
Affiliate designated by the CEO or the Committee to participate in the Plan.
Designation will be made only in writing.
(n) "Employee" shall mean an employee of URS or an Affiliate.
(o) "Fiscal Year" shall mean the twelve (12) consecutive months
beginning November 1 and ending October 31.
(p) "Maximum Award" shall mean the maximum amount to be paid to a
Covered Employee for each Plan Year, which amount shall be three (3) times base
salary as in effect on the first day of the Plan Year.
(q) "Net Income" shall mean the consolidated revenue less all expenses
(including tax and interest charges) of URS. Net Income will be calculated after
all URS and URS Consultants bonuses are accrued and assumed to have been paid in
full.
(r) "New Sales" shall mean gross additions to backlog with respect to
the business unit(s) for which a Designated Participant has accountability.
(s) "Non-Designated Participant" shall mean an Employee who is not a
Covered Employee and who is selected to receive an award under the Plan on the
basis of outstanding individual performance. Employee selection will be made at
the end of the Plan Year, at the recommendation of the CEO. Unlike Designated
Participants, Non-Designated Participants will not be assigned Target Award
Percentages.
(t) "Performance Objectives" or "Objectives" shall mean the
pre-established financial goals based upon which performance will be assessed.
(u) "Plan" shall mean this URS Corporation Incentive Compensation
Plan, as amended from time to time.
(v) "Plan Year" shall mean the twelve (12) consecutive months
beginning November 1 and ending October 31 over which performance is measured
under this Plan.
(w) "Target Award" shall mean a Designated Participant's Target Award
Percentage multiplied by the Designated Participant's Base Salary earned during
the Plan Year. This amount represents the anticipated payout to the Designated
Participant if all applicable Performance Objectives are met.
2.
(x) "Target Award Percentage" shall mean a percentage of Base Salary
assigned to a Designated Participant in accordance with the terms and provisions
of the Plan.
(y) "Target Bonus Pool" or "Target Pool" shall mean the amount
anticipated to be distributed to all Designated and Non-Designated Participants
if all applicable Performance Objectives are met. Separate Target Bonus Pools
may be established for URS and for one or more of its Affiliates and business
units, as determined by the Committee.
(z) "Termination" shall mean the Designated Participant's ceasing his
or her service with URS or any of its Affiliates for any reason whatsoever,
whether voluntarily or involuntarily, including by reason of death or permanent
disability.
(aa) "URS" shall mean URS Corporation, a Delaware corporation.
(bb) "Year-end" shall mean the end of the Fiscal Year.
3. How Awards Are Earned Under the Plan.
(a) General Plan Description. The Plan provides the opportunity for
key Employees to receive cash Awards based on the performance of URS, one or
more of its Affiliates and/or one or more of its business units and on
individual performance.
Here is an overview of how the Plan works. In general, certain
Designated Participants will be selected to participate in the Plan at the
beginning of or during the Plan Year. Upon selection to participate in the Plan,
each Designated Participant will be assigned a Target Award Percentage. This
Target Award Percentage, multiplied by the Designated Participant's Base Salary
earned during the Plan Year, will equal the Designated Participant's Target
Award. This Target Award represents the amount that is expected to be paid to a
Designated Participant if certain financial Performance Objectives have been
fully met.
In addition, funds will be set aside for discretionary Awards to
selected other Employees (referred to as Non-Designated Participants), who have
demonstrated outstanding individual performance during the Plan Year.
The sum of all Target Awards for Designated Participants and expected
payouts to Non-Designated Participants will equal the Target Bonus Pool. The
Actual Bonus Pool will vary from the Target Bonus Pool upward or downward based
on actual performance in relationship to its Performance Objectives. Separate
Target Bonus Pools may be established for URS and each of its Affiliates.
Actual Awards to Designated Participants and actual funds available
for distribution to Non-Designated Participants will vary from target amounts
based on the relationship between the Actual Bonus Pool and the Target Bonus
Pool.
(b) Designated and Non-Designated Participants. Plan participation is
extended to selected Employees who, in the opinion of the CEO and/or the
Committee, have the opportunity to significantly impact the annual operating
success of URS and/or its Affiliates. These Employees are the Designated
Participants and will be notified in writing of their selection
3.
to participate in the Plan. This notification letter for all Designated
Participants except Covered Employees will be signed by the CEO. The Committee
will determine the Plan participation of all Covered Employees, and the letter
of notification to a Covered Employee will be signed by the Chairman of the
Committee.
In addition to the Designated Participants, there may be a group of
other Employees who are selected to receive Awards based on their outstanding
individual performance during the Plan Year. These other Employees are the
Non-Designated Participants and will not be selected until the completion of the
Plan Year. The selection of Non-Designated Participants will be determined by
the CEO, in his sole discretion.
(c) Target Award Percentages for Designated Participants. Each
Designated Participant will be assigned a Target Award Percentage by the
Committee. The Committee, in its sole discretion, may consider recommendations
made by the CEO as to individual Target Award Percentages for Designated
Participants (other than the CEO). The individual's Target Award Percentage,
when multiplied by the individual's Base Salary earned during the Plan Year,
represents the individual's Target Award, which is the anticipated payout to a
Designated Participant if the applicable Performance Objectives are met. Each
Designated Participant's Target Award Percentage will be included in the letter
of notification described in Section 3(b) above.
(d) Target Bonus Pool. The Target Bonus Pool will equal the sum of all
Target Awards for Designated Participants plus an amount set aside for possible
distribution to Non-Designated Participants.
(e) Performance Objectives. The Performance Objectives for the Plan
Year will be determined by the Committee. Performance Objectives will be based
on any one, all or a combination of the following: Net Income, Contribution,
Average Day Sales Outstanding, and New Sales. The weight to be given to each of
the financial measures listed in the preceding sentence shall be determined by
the Committee. Weighting may be subject to change based on the Plan measures of
Designated Participants, other than Covered Employees, at the end of the Plan
Year. The Committee may establish different Performance Objectives for URS, for
one or more Affiliates and for one or more business units and may establish
different Performance Objectives for each Designated Participant or for groups
of Designated Participants.
(f) Relationship Between Performance and the Actual Bonus Pool. The
Actual Bonus Pool will vary from the Target Pool based on the relationship
between the actual performance of URS or the relevant Affiliate or business
unit(s) and the Performance Objectives. The Actual Pool will vary in
relationship to the Target Pool based on a written schedule of possible outcomes
prepared by the Committee for each Plan Year, and such schedule shall include a
limit on the Actual Bonus Pool, which limit may be later raised at the
discretion of the Committee but without any effect on the Actual Award paid to a
Designated Participant who is a Covered Employee (who shall be subject to a
Maximum Award). The Committee may establish a separate schedule for URS, one or
more Affiliate or one or more business units.
4.
(g) Actual Awards to Designated and Non-Designated Participants.
Actual Awards to Designated Participants will vary from the Target Award levels
based on the relationship between the Actual Bonus Pool and the Target Pool.
After allocating Actual Awards to Designated Participants, the
remaining funds in the Actual Pool will be available for allocation to
Non-Designated Participants.
Actual Awards distributed to Non-Designated Participants will be
determined on a discretionary basis by the CEO. URS and its Affiliates are under
no obligation to distribute any of the Actual Pool to Non-Designated
Participants. The sum of all Awards to Non-Designated Participants may not
exceed the amount available in the Actual Pool after Actual Awards have been
allocated to Designated Participants.
Notwithstanding any provision of the Plan to the contrary, the maximum
payment under the Plan for any Plan Year to any Designated Participant or
Non-Designated Participant shall not exceed three million dollars ($3,000,000).
(h) Special Rules for Covered Employees. Notwithstanding any provision
to the contrary in Sections 3(c), (e), and (f) above, the Committee shall
establish Target Award Percentages, Performance Objectives, the relationship
between actual performance and the Actual Bonus Pool, and any other term
necessary under the Plan to determine the Actual Awards for Covered Employees
not later than ninety (90) days after the beginning of each Fiscal Year;
provided, however, that such ninety (90) day requirement shall not apply in the
case of a Covered Employee whose remuneration, within the meaning of Section
162(m) of the Code, for the Fiscal Year, in the determination of the Committee,
is not expected to exceed one million dollars ($1,000,000).
4. Other Plan Provisions.
(a) Award Payment. Assessment of actual performance and payout of
Awards will be subject to completion of the Year-end independent audit and
certification by the Committee that the applicable Performance Objectives and
other material terms of the Plan have been met.
The Actual Award earned will be paid to the Designated Participant (or
the Designated Participant's heirs in the case of death) in cash within thirty
(30) days following the completion of both the independent audit and the
above-referenced certification by the Committee. Payroll and other taxes will be
withheld as required by law.
Notwithstanding the foregoing, no Award will be paid to any Covered
Employee under the Plan until the stockholders of URS have approved the material
terms of the Plan in accordance with Section 162(m) of the Code. In addition,
the material terms of the Plan must again be approved by the stockholders of URS
no later than the first stockholders' meeting in the fifth year following the
year in which the stockholders previously approved the material terms of the
Plan.
5.
(b) Employment. In order to receive an Award under the Plan, a
Designated Participant must be employed by URS or an Affiliate on the last day
of the Plan Year, except as otherwise provided herein. Selection for
participation in the Plan does not convey any employment rights. Terms and
conditions of Designated Participants' employment agreements with URS or its
Affiliates addressing issues other than payment of bonus or incentive
compensation, if any, supersede the terms and conditions of the Plan.
(c) Termination. If Termination of a Designated Participant occurs
prior to the end of the Plan Year by reason of death, permanent disability or
retirement (excluding the retirement of a Covered Employee), the Designated
Participant (or the Designated Participant's heirs in the case of death) will be
eligible to receive a pro-rata Award based on the time employed as a Designated
Participant and the Performance Objectives achieved for the Plan Year.
Designated Participants who have earned an Award on this basis will receive
payment on the same schedule as other Designated Participants. The formula used
to pro-rate the Awards shall be to adjust an otherwise full award by a fraction,
the numerator of which is the number of days (or whole months) for the which the
Designated Participant was employed as a Designated Participant during the Plan
Year and the denominator of which is 365 (or 12).
If Termination of a Designated Participant occurs prior to the end of
the Plan Year for any other reason (whether voluntarily or involuntarily), the
Designated Participant will forfeit the opportunity to earn an Award under the
Plan, except as otherwise provided for by the Committee; provided, however, that
if Termination of a Covered Employee occurs prior to the end of the Plan Year,
such Covered Employee shall not receive an Award at the discretion of the
Committee or otherwise except as provided in the preceding paragraph.
(d) Other Pro-Rata Awards. Individuals who have been hired and
selected during the Plan Year for Plan participation and who have served a
minimum of three (3) months as a Designated Participant will be eligible to
receive a pro-rata Award based on the time employed as a Designated Participant
and the Objectives achieved for the Plan Year, provided that the Designated
Participant is employed by URS or an Affiliate on the last day of the Plan Year
and, in the case of a Covered Employee, is selected for Plan participation on
his or her date of hire. The Committee will establish the Target Award
Percentage for individuals selected for Plan participation during the Plan Year
as soon as practicable after the individuals are selected, but not later than
fifteen (15) days after the selection date. The formula used to pro-rate the
Awards shall be to adjust an otherwise full award by a fraction, the numerator
of which is the number of days (or whole months) for which the individual was a
Designated Participant during the Plan Year and the denominator of which is 365
(or 12).
(e) Plan Funding. Estimated payouts for the Plan will be accrued
monthly and charged as an expense against the income statements of URS and its
Affiliates, as applicable. At the end of each fiscal quarter, the estimated
Actual Awards under the Plan will be evaluated based on actual performance to
date. The monthly accrual rate will then be adjusted so that the cost of the
Plan is fully accrued at Year-end. Accrual of Awards will not imply vesting of
any individual Awards to Designated Participants.
(f) Plan Administration. Responsibility for decisions and/or
recommendations regarding Plan administration are divided between the CEO and
the
6.
Committee. Notwithstanding the foregoing, the Committee retains final authority
regarding all aspects of Plan administration, the resolution of any disputes,
and application of the Plan in any respect to a Covered Employee. The Committee
may, without notice, amend, suspend or terminate the Plan.
(g) Assignment of Employee Rights. No Employee has a claim or right to
be a Designated Participant or a Non-Designated Participant (collectively, a
"Participant") in the Plan, to continue as a Participant, or to be granted an
Award under the Plan. URS and its Affiliates are not obligated to give uniform
treatment (e.g., Target Award Percentages, discretionary Awards, etc.) to
Employees or Participants under the Plan. Participation in the Plan does not
give an Employee the right to be retained in the employment of URS or its
Affiliates, nor does it imply or confer any other employment rights.
Nothing contained in the Plan will be construed to create a contract
of employment with any Participant. URS and its Affiliates reserve the right to
elect any person to its offices and remove Employees in any manner and upon any
basis permitted by law.
Nothing contained in the Plan will be deemed to require URS or its
Affiliates to deposit, invest or set aside amounts for the payment of any
Awards. Participation in the Plan does not give a Participant any ownership,
security, or other rights in any assets of URS or any of its Affiliates.
(h) Withholding Tax. URS or an Affiliate will deduct from all Awards
paid under the Plan any taxes required by law to be withheld.
(i) Effective Date. The Plan is effective as of November 1, 1998, and
will remain in effect until suspended or terminated by the Committee.
(j) Validity. In the event any provision of the Plan is held invalid,
void, or unenforceable, the same will not affect, in any respect whatsoever, the
validity of any other provision of the Plan.
(k) Applicable Law. The Plan will be governed by and construed in
accordance with the laws of the State of California.
7.