URS GREINER
1998 INCENTIVE COMPENSATION PLAN
TABLE OF CONTENTS
I. PURPOSE OF THE PLAN
II. HOW AWARDS ARE EARNED UNDER THE PLAN
III. OTHER PLAN PROVISIONS
IV. DEFINITIONS
V. EXAMPLES OF PLAN OPERATION
I. PURPOSE OF THE PLAN
I.1 PURPOSE
The URS Greiner 1998 Incentive Compensation Plan (the "Plan") is intended to
provide incentive compensation to individuals who make an important contribution
to URS Greiner's financial performance. Specific Plan objectives are to:
o Focus key Employees on achieving specific financial
targets;
o Reinforce a team orientation;
o Provide significant award potential for achieving
outstanding performance; and
o Enhance the ability of URS Greiner to attract and
retain highly talented and competent individuals.
I-1
II. HOW AWARDS ARE EARNED UNDER THE PLAN
II.1 GENERAL PLAN DESCRIPTION
The Plan provides the opportunity for key Employees of URS Greiner ("URSG") to
receive cash Awards based on a combination of URSC and individual performance.
Here is an overview of how the Plan works. In general, a Target Bonus Pool is
established. This amount represents the total Awards that are expected to be
paid to selected URSG Employees if certain financial Performance Objectives for
URSG have been fully met. The Actual Bonus Pool will vary from the Target Bonus
Pool upward or downward based on URSG actual performance in relationship to its
Performance Objectives. This adjusted bonus pool is the Actual Bonus Pool, from
which Actual Award payouts will be made.
At the beginning of or during the Plan Year, certain Employees will be selected
to participate in the Plan. These individuals are referred to as "Designated
Participants." Upon selection to participate in the Plan, each Designated
Participant will be assigned a Target Award Percentage. This Target Award
Percentage, multiplied by the Participant's Base Salary earned during the Plan
Year, will equal the Participant's Target Award. This Target Award will be
earned for meeting both pre-determined URSG and individual Performance
Objectives. Individual Performance Objectives will vary based on the
Participant's role within the organization. Each Designated Participant's Actual
Award could vary from the Target Award, based on the individual's actual
performance measured against his/her Performance Objectives, subject to the
amount available for distribution from the Actual Bonus Pool.
Another key feature of the Plan is that a portion of the Actual Bonus Pool will
be set aside for discretionary Awards to selected other Employees (referred to
in the Plan as "Non-Designated Participants"), who have demonstrated outstanding
individual performance during the Plan Year.
A detailed description of how the Plan works is presented in the following
sections of this document.
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II.2 DESIGNATED AND NON-DESIGNATED PARTICIPANTS
Plan participation is extended to selected Employees who, in the opinion of the
President of URSG and the Chief Executive Officer ("CEO") of URS Corporation
(the "Parent Company"), have the opportunity to significantly impact the annual
operating success of URSG. These Employees are the Designated Participants and
will be notified in writing of their selection to participate in the Plan. This
notification letter will be signed by the CEO of the Parent Company and the
President of URSG.
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 President of URSG, subject to the approval of the CEO of the Parent Company,
at their sole discretion.
II.3 TARGET BONUS POOL
A Target Bonus Pool is established, equal to the sum of all target awards for
Designated Participants plus an amount set aside for possible distribution to
Non-designated Participants. (The Awards to Non-designated Participants are
estimated at approximately 25% of the total Designated Participants' Bonus
Pool.)
This Target Bonus Pool is determined based on the current group of Designated
Participants and the anticipated group of Non- designated Participants. The
Target Pool is subject to change if the group of Designated Participants, the
group of Non-Designated Participants, or the Base Salaries of Designated
Participants change.
Subject to these potential changes, the Target Bonus Pool for the 1998 Plan Year
is established at $3,204,000.
II-2
II.4 URSG PERFORMANCE OBJECTIVES
URSG Performance Objectives are focused on the need to achieve strong operating
results (i.e., contribution), generate cash through the management of accounts
receivables (DSOs) throughout the Year, and develop new business opportunities.
Accordingly, performance will be evaluated based on a combination of URSG
Contribution, Average Receivables Days Sales Outstanding (DSO) and New Sales.
The URSG Performance Objectives for the 1998 Plan Year are as follows:
URSG Performance Objectives
---------------------------
Performance Measures Performance Objectives
-------------------- ----------------------
Contribution ($000s) $ 34,000
Average DSO (Days) 90
New Sales ($000s) $500,000
URSG Contribution is defined as total 1998 Fiscal Year URSG revenues less:
o Direct cost of sales;
o Indirect expenses; and
o Accrual of expected Awards for both Designated and
Non-designated Participants under the Plan (i.e., the
Plan must pay for itself)
The subtraction of expected Awards from revenues in calculating contribution
under the Plan means that the Contribution Objective, for purposes of the Plan,
is calculated after all bonuses have been accrued, or assumed to have been paid.
URSG Days Sales Outstanding (DSO) is defined by the following formula:
BAR + UAR - BEC
--------------- X 90
REVENUES
where BAR is billed accounts receivable, UAR is unbilled accounts receivable,
BEC is billings in excess of cost, and REVENUES is the sum of the last three
months revenues. DSOs will be calculated monthly, and the average of the twelve
months' DSOs will equal Average DSOs.
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URSG New Sales is defined as gross additions to backlog.
The subtraction of expected Awards from revenues in calculating contribution
under the Plan means that the Contribution Objective, for purposes of the Plan,
is calculated after all bonuses have been accrued, or assumed to have been paid.
II.5 WEIGHTING OF URSG PERFORMANCE OBJECTIVES
The Target Bonus Pool will be weighted based on the aggregate weightings of the
individual Participants' Performance Objectives in the Plan. Contribution will
be the most heavily weighted component followed by DSO performance and New
Sales. An example of the weighting calculation is shown on the following page.
II-4
EXAMPLE OF WEIGHTING CALCULATION (1)
The Target Bonus Pool will be weighted based on the aggregate weightings of the
individual Performance Objectives for the Designated Participants in the Plan.
The following example illustrates the weighting calculation:
Target Bonus Pool = $3,204,000
Portion of Target Pool determined by:
Contribution (71%) $2,262,000
DSO Performance (18%) $ 565,000
New Sales (11%) $ 377,000
(1) Weightings may be subject to change based on the Plan measures of the
Designated Participants at the end of the Plan Year.
II-5
II.6 RELATIONSHIP BETWEEN PERFORMANCE AND THE ACTUAL BONUS POOL
The Actual Bonus Pool will vary from the Target Bonus Pool based on the
relationship between the actual performance of URSG and the Performance
Objectives. The Actual Bonus Pool will vary in relationship to the Target Bonus
Pool based on the following table:
Relationship Between URSG Performance And
The Actual Bonus Pool As A % Of The Target Bonus Pool
URSG Contribution URSG DSO
- ---------------------------------------------------------------------------------- ------------------------------
Actual
Performance Actual Actual
As A % Of Bonus Pool Bonus Pool
Performance Actual As A % Of Actual As A % Of
Objective Performance Target Pool Performance Target Pool
--------- ----------- ----------- ----------- -----------
(%) ($000s) (%) (Days) (%)
greater than or equal to 125% greater than or equal to $42,500 200%(1) less than 85 200%(1)
100% $34,000 100% 90 100%
75% $25,500 30% 95 30%
less than 75% less than $25,500 0% greater than 95 0%
URSG New Sales
- --------------------------------------------------------------------------------
Actual
Performance Actual
As A % Of Bonus Pool
Performance Actual As A % Of
Objective Performance Target Pool
--------- ----------- -----------
(%) ($000s) (%)
greater than 125% greater than or equal to $625,000 200%
100% $500,000 100%
75% $375,000 30%
less than 75% less than $375,000 0%
- ----------------------
(1) Maximum upside opportunity of 200% of the Target Bonus Pool may be raised at
the discretion of the Compensation/Option Committee ("Committee") of the Parent
Company Board of Directors. The calculation of the Actual Bonus Pool As A % Of
Target will be interpolated for performance between discrete points shown in the
table above.
II-6
Based on the table above, the Actual Bonus Pool could vary between 0% and 200%
of the Target Bonus Pool, depending upon actual performance in relation to
Performance Objectives and the weighting of the Performance Objectives. Accrual
of any Actual Pool tied to DSO and New Sales, and is contingent upon
Contribution performance being at or above 75% of the Performance Objective.
Here is an example of the calculation of an Actual Bonus pool:
EXAMPLE OF INTERPOLATION CALCULATION
To interpolate the Actual Award based on performance, apply the appropriate
formula for actual performance above or below the Performance Objective. In all
cases, solve for "X".
o For performance above objective:
(Act. Perf. - Perf. Obj.) X
---------------------------------------- = --------------------------------------------------------
(Max. Perf. - Perf. Obj.) (Max. Award% - Target Award%)
o For performance below objective:
(Act. Perf. - Perf. Obj.) X
---------------------------------------- = --------------------------------------------------------
(Min. Perf. - Perf. Obj.) (Min. Award% - Target Award%)
o Once you have solved for "X", add X to 100%.
Below is a hypothetical example:
EXAMPLE OF ACTUAL BONUS POOL CALCULATION
The following example illustrates the weighting of the Performance Objectives
and calculates the Actual Bonus Pool:
Hypothetical assumptions:
o Target Bonus Pool = $3,204,000
URSG 1998 Performance Objective Actual
--------------------- --------- ------
o Contribution $ 34,000 $ 38,000
o DSO Performance 90 Days 89 Days
o New Sales $500,000 $418,000
II-7
Weighting:
o Contribution portion of Target Pool = $2,262,000
o DSO portion of Target Pool = $ 565,000
o New Sales portion of Target Pool = $ 377,000
Interpolation:
o Contribution Performance = 147%
o DSO Performance = 120%
o New Sales Performance = 34%
Actual Bonus Pool = $4,131,000
($2,262,000 * 147%) + ($565,000 * 120%) +
($377,000 * 34%)
II-8
II.7 DISCRETIONARY BONUS POOL
It is the intent of the Plan that if the Actual Bonus Pool, as calculated in
Section II.6, should fall below 30% of the Target Bonus Pool, then a
Discretionary Bonus Pool will be created instead.
Awards from the Discretionary Pool may be made to selected Employees (both
Designated and Non-designated Participants). Awards to Designated Participants
will be calculated based on actual performance, reduced pro rata based on the
amount of the Discretionary Pool. Awards to Non-designated Participants will be
made on a totally discretionary basis by the President of URSG, subject to the
approval of the CEO of the Parent Company. The formation of the Discretionary
Pool will not guarantee any Award payments. Rather, the Discretionary Pool will
be used to recognize selected outstanding Employees in the event that URSG does
not meet or exceed 75% of its Contribution Performance Objective. The total sum
of Awards made from the Discretionary Pool may not exceed 30% of the total
Target Bonus Pool.
II.8 ACTUAL BONUS POOL ALLOCATION
Awards will be paid from the funds available in the Actual Bonus Pool. The
portion of the pool actually allocated to Non- Designated Participants will be
determined after the end of the Plan Year at the discretion of the CEO of the
Parent Company, subject to the approval of the Committee, and may vary from the
estimated 20% of the total Actual Bonus Pool. The sum of the Actual Awards paid,
including Awards made to Non-designated Participants, may not exceed the
available Actual Bonus Pool.
II.9 TARGET AWARD PERCENTAGES
Each Designated Participant will be assigned a Target Award Percentage. This
Target Award Percentage, when multiplied by the individual's Base Salary earned
during the Plan Year, represents the anticipated payout to a Designated
Participant if all of the URSG and the individual's Performance Objectives are
met. Each Designated Participant's Target Award Percentage and individual
Performance Objectives will be included in the letter of notification mentioned
in Section II.2.
II-9
II.10 ACTUAL AWARDS FOR DESIGNATED PARTICIPANTS
Individual Performance Objectives will be assigned based on the economic unit
(i.e., URSG, a region of URSG, or an office of URSG) on which the Participant's
performance has the greatest financial impact. Each Designated Participant will
be notified of his/her economic unit, the individual Performance Objectives
associated with that unit, the weighting of those Performance Objectives, and
the relationship between individual unit performance and Award levels in the
letter of notification mentioned in Section II.2.
II.11 ADJUSTMENT TO ACTUAL AWARDS
It is possible that the sum of the Actual Awards for Designated Participants
could exceed the Actual Bonus Pool available for Designated Participants. This
result could happen for either one of two reasons. First, the CEO of the Parent
Company could allocate more for Awards to Non-designated Participants than was
accrued. Second, larger economic units could perform worse relative to the
smaller economic units, creating an insufficient Actual Bonus Pool. In these
cases, all Actual Awards will be reduced pro-rata by a factor determined by
dividing the Actual Bonus Pool for Designated Participants by the sum of the
individual Actual Awards for Designated Participants.
If the sum of Actual Awards is less than the Actual Bonus Pool available for
Designated Participants, there will be no upward pro-ration of Awards paid.
II-10
III. OTHER PLAN PROVISIONS
III.1 AWARD PAYMENT
Assessment of actual performance and payout of Awards will be subject to the
completion of the 1998 Year-end independent audit.
The Actual Award earned, up to and in excess of the Target Award level, will be
paid to the Participant (or the Participant's heirs in the case of death) in
cash within 30 days of the completion of the independent audit. Payroll and
other taxes will be withheld as required by law.
III.2 EMPLOYMENT
To receive an Award under the Plan, a Participant must be employed by URSG or an
Affiliate at the end of the Plan Year, except as otherwise noted below.
III.3 TERMINATION
If Termination of a Designated Participant's employment occurs during the Plan
Year by reason of death, permanent disability, or retirement, the Designated
Participant (or the Participant's heirs in the case of death) will be eligible
to receive a pro-rata Award based on the time employed as a Participant and the
Objectives achieved for the Plan Year. Participants who have earned an Award on
this basis will receive payment on the same schedule as other Plan Participants.
A Participant whose employment with URSG or its Affiliates is terminated prior
to the end of the Plan Year for any other reason (whether voluntarily or
involuntarily) will forfeit the opportunity to earn an Award under the Plan.
III.4 OTHER PRO-RATA AWARDS
Individuals who have been selected during the Year for Plan participation and
who have a minimum of three months as a Designated Participant will be eligible
to receive a pro-rata Award based on the time employed as a Participant and the
Objectives achieved for the Plan Year, provided that the Participant is employed
by URSG or an Affiliate at Year-end.
III-1
III.5 PLAN FUNDING
Estimated payouts for the Plan will be accrued monthly and charged as an expense
against the income statement of URSG and its economic units. At the end of each
fiscal quarter, the estimated Actual Bonus Pool 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
Participants.
III.6 PLAN ADMINISTRATION
Responsibility for decisions and/or recommendations regarding Plan
administration are divided among the URSG President, the Parent Company CEO, and
the Committee.
Notwithstanding the above, the Committee retains final authority regarding all
aspects of Plan administration, and the resolution of any disputes. The
Committee may, without notice, amend, suspend or revoke the Plan.
III.7 ASSIGNMENT OF EMPLOYEE RIGHTS
No employee has a claim or right to be a Participant in the Plan, to continue as
a Participant, or to be granted an Award under the Plan. URSG is 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 URSG,
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. URSG reserves the right to elect any person to
its offices and to remove Employees in any manner and upon any basis permitted
by law.
Nothing contained in the Plan will be deemed to require URSG to deposit, invest
or set aside amounts for the payment of any Awards. Participation in the Plan
does not give a Participant
III-2
any ownership, security, or other rights in any assets of URSG or any of its
Affiliates.
III.8 WITHHOLDING TAX
URSG will deduct from all Awards paid under the Plan any taxes required by law
to be withheld.
III.9 EFFECTIVE DATE
The Plan is effective as of November 1, 1997, and shall remain in effect for the
Fiscal Year ending October 31, 1998 unless otherwise terminated or extended by
the Committee.
III.10 VALIDITY
In the event any provision of the Plan is held invalid, void, or unenforceable,
the same shall not affect, in any respect whatsoever, the validity of any other
provision of the Plan.
III.11 APPLICABLE LAW
The Plan shall be governed by and construed in accordance with the laws of the
State of California.
III-3
IV. DEFINITIONS
IV.1 DEFINITIONS
"Actual Bonus Pool" or "Actual Pool" refers to the calculated amount available
to be distributed to all Participants under the terms and provisions of the
Plan.
"Affiliate" refers to any entity owned partially or totally by URS Corporation
including URS Corporation.
"Award" refers to any incentive amount earned under the Plan by a Designated or
Non-designated Participant.
"Actual Award" refers to the calculated incentive amount earned by a Participant
under the terms and provisions of the Plan, before any adjustments caused by the
size of the Actual Bonus Pool.
"Base Salary" refers to 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.
"Compensation/Option Committee" or "Committee" refers to the Compensation/Option
Committee of the Board of Directors of the Parent Company.
"Designated Participant" refers to an Employee of URS Greiner designated by the
CEO of URS Corporation to participate in the Plan. Designation will be
established only in writing.
"Discretionary Bonus Pool" or "Discretionary Pool" is the total amount available
to be distributed if URS Greiner contribution does not reach or exceed
$25,500,000 (75% of the Performance Objective).
"Employee" refers to an Employee of URS Greiner
"Fiscal Year" refers to the twelve months beginning November 1, 1997 and ending
October 31, 1998.
IV-1
"Non-designated Participant" refers to an Employee of URS Consultants 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 President of URS Greiner within guidelines agreed with and
subject to the approval of the CEO of URS Corporation. Unlike Designated
Participants, Non-designated Participants will not be assigned Target Award
Percentages or individual Performance Objectives.
"Parent Company" refers to URS Corporation.
"Performance Objectives" or "Objectives" refers to the pre-established financial
goals upon which overall URS Consultants and economic unit (i.e., URS Greiner, a
region of URS Greiner, or an office of URS Greiner) performance will be
assessed.
"Plan" refers to the URS Greiner 1998 Incentive Compensation Plan, as described
in this document. Any incentives for future years will be covered by subsequent
plan documents.
"Plan Year" or "Year" refers to the twelve months beginning November 1, 1997,
and ending October 31, 1998, over which performance is measured under this Plan.
"Target Award" refers to a Designated Participant's Target Award Percentage,
multiplied by the Participant's Base Salary earned during the Plan Year. This
amount represents the anticipated payout to the Designated Participant if all
URS Consultants and the individual's Performance Objectives are met.
"Target Award Percentage" refers to a percentage of Base Salary assigned to a
Designated Participant in accordance with the terms and provisions of the Plan.
Non-designated Participants are not assigned Target Award Percentages.
"Target Bonus Pool" or "Target Pool" refers to the sum of the Target Awards for
Designated Participants plus an estimated amount for Awards to Non-designated
Participants.
IV-2
"Termination" means the Participant's ceasing his/her service with the Company
or any of its Affiliates for any reason whatsoever, whether voluntarily or
involuntarily, including by reason of death or permanent disability.
"URSG" refers to URS Greiner.
"Year-end" refers to the end of the Fiscal Year, October 31, 1998.
IV-3
V. EXAMPLES OF PLAN OPERATION
EXAMPLE OF WEIGHTING CALCULATION (1)
The Target Bonus Pool will be weighted based on the aggregate weightings of the
individual Performance Objectives for the Designated Participants in the Plan.
The following example illustrates the weighting calculation:
Target Bonus Pool = $3,204,000
Portion of Target Pool determined by:
Contribution (71%) $2,262,000
DSO Performance (18%) $ 565,000
New Sales (11%) $ 377,000
(1) Weightings may be subject to change based on the Plan measures of the
Designated Participants at the end of the Plan Year.
EXAMPLE OF ACTUAL BONUS POOL CALCULATION
The following example illustrates the weighting of the Performance Objectives
and calculates the Actual Bonus Pool:
Hypothetical assumptions:
o Target Bonus Pool = $3,204,000
URSG 1998 Performance Objective Actual
- --------------------- --------- ------
o Contribution $ 34,000 $ 38,000
o DSO Performance 90 Days 89 Days
o New Sales $500,000 $418,000
Weighting:
o Contribution portion of Target Pool = $2,262,000
o DSO portion of Target Pool = $ 565,000
o New Sales portion of Target Pool = $ 377,000
Interpolation:
o Contribution Performance = 147%
o DSO Performance = 120%
o New Sales Performance = 34%
Actual Bonus Pool = $4,131,000
($2,262,000 * 147%) + ($565,000 * 120%) +
($377,000 * 34%)
EXAMPLE OF ACTUAL AWARD ADJUSTMENT
The following example illustrates the Actual Award adjustment that occurs if the
sum of the individual Actual Awards is greater than the Actual Bonus Pool:
Hypothetical assumptions:
o Target Bonus Pool = $3,204,000
o Actual Bonus Pool = $4,131,000
o Sum of individual Actual Awards
(as calculated) = $4,400,000
o Actual Awards (as calculated)
- Participant A = $ 15,750
- Participant B = $ 30,000
Pro-rata reduction factor =
($4,131,000 / $4,400,000) = .94
Individual Awards (after reduction)
o Participant A =
($15,750 * .94) = $ 14,805
o Participant B =
($30,000 * .94) = $ 28,200