EXHIBIT 10.1
NEWPARK RESOURCES, INC.
2003 EXECUTIVE INCENTIVE COMPENSATION PLAN
1. PURPOSE
The purpose of the Newpark Resources, Inc. 2003 Executive Incentive
Compensation Plan (the "PLAN") is to advance the interests of Newpark Resources,
Inc. ("NEWPARK") and its subsidiaries by providing an annual incentive bonus
opportunity to certain executive officers of Newpark based on the achievement of
pre-established quantitative performance goals.
2. ADMINISTRATION
2.1 The Plan shall be administered by the Compensation Committee (the
"COMMITTEE") of the Board of Directors of Newpark (the "BOARD"). Each member of
the Committee shall be (a) a "Non-Employee Director" as that term is defined in
Rule 16b-3 promulgated by the Securities and Exchange Commission pursuant to the
Securities and Exchange Act of 1934 (the "EXCHANGE ACT"), and (b) an
"independent director" as defined under the rules of the New York Stock
Exchange, as they may be amended from time to time, except as may otherwise be
permitted by such rules, but no action of the Committee shall be invalid if this
requirement is not met.
2.2 The Committee shall have full power, discretion and authority to
administer, interpret and construe the Plan and any award or agreement made
pursuant to the Plan, and to prescribe and rescind rules, regulations and
policies for administration of the Plan. The Committee's actions,
interpretations and constructions with regard to the Plan shall be final,
conclusive and binding on all persons for all purposes.
2.3 No member of the Committee or the Board shall be liable for any action
or determination made in good faith with respect to the Plan or any award
pursuant to it. Newpark shall indemnify and hold harmless each member of the
Committee and the Board, and the estate and heirs of each such member, against
all claims, liabilities, expenses, penalties, damages or other pecuniary losses,
including legal fees, which such Committee member or Board member or his or her
estate or heirs may suffer as a result of any act or omission to act in
connection with the Plan, to the extent that insurance, if any, does not cover
the payment of such items.
3. ELIGIBILITY
This Plan is applicable to the Chief Executive Officer and to other
executive officers and division presidents of Newpark (each a "PARTICIPANT")
upon recommendation by the Chief Executive Officer of Newpark and approval by
the Committee. In the discretion of the Committee, an employee who becomes
eligible to be a Participant after the commencement of a "Performance Period"
(as defined below) may receive a pro-rated "Performance Award" (as defined
below).
4. PERFORMANCE AWARDS
4.1 AWARD CRITERIA. As promptly as practicable after the beginning of each
calendar year (each a "PERFORMANCE PERIOD") for which an award (a "PERFORMANCE
AWARD") is payable hereunder, and, in any event, before April 1 of such
Performance Period (except as provided in Paragraph 3) the Committee shall
establish the performance factors ("PERFORMANCE MEASURES") to be taken into
account and the performance levels ("PERFORMANCE TARGETS") to be reached by each
Participant in order to receive a Performance Award for that Performance Period.
Unless otherwise determined by the Committee, each Performance Award shall
include a minimum Performance Target that must be attained in order for a
minimum Performance Award to be payable, with the Participant being eligible to
receive a greater Performance Award if the minimum Performance Target is
exceeded. The Committee shall have sole discretion to determine the amount of
each Performance Award, the Performance Measures and Performance Targets
applicable to the Performance Awards and the method of determining whether the
Performance Targets have been met. The amount of each Performance Award, the
Performance Measures and the Performance Targets may vary among Participants and
may be determined based on the Participant's ability to directly impact
Newpark's performance or on an assessment of the Participant's overall
contributions to Newpark's success. The amount of the Performance Awards, the
Performance Measures and the Performance Targets may change from Performance
Period to Performance Period. Performance Measures may include any of the
following factors, alone or in combination, as determined by the Committee: (i)
earnings per share; (ii) return on equity; (iii) return on assets; (iv) business
unit profit; (v) business unit return on capital; (vi) business unit safety; and
(vii) such other criteria as the Committee shall from time to time determine.
Once established, Performance Targets and Performance Measures shall not
be changed during the applicable Performance Period , except for adjustments
contemplated by Paragraph 4.2 below. Each Performance Award granted under the
Plan shall be evidenced by a written agreement ("AWARD AGREEMENT"), in a form
approved by the Committee and executed by Newpark. Each Award Agreement shall
set forth the amount of the Performance Award, the Participant's Performance
Measures and Performance Targets and their relative weights.
4.2 CERTIFICATION AND PAYMENT. As soon as practicable after Newpark's
audited financial statements are available for a Performance Period in which the
Performance Awards will be paid, the Committee will certify the attainment of
the Performance Targets and the Performance Awards to be paid to each
Participant. In performing such evaluation, the Committee is authorized to make
adjustments in the method of calculating attainment of Performance Targets as
follows:
(a) to adjust or exclude the dilutive or anti-dilutive effects of
acquisitions or joint ventures;
(b) to adjust the impact of the disposition of any businesses
divested by the Company during a Performance Period;
(c) to exclude, in whole or in part, restructuring and/or other
nonrecurring charges;
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(d) to exclude, in whole or in part, exchange rate effects, as
applicable, for non-U.S. dollar denominated net sales and operating earnings;
(e) to exclude, in whole or in part, the effects of changes to
generally accepted accounting standards ("GAAP") made by the relevant accounting
authority;
(f) to exclude, in whole or in part, the effects of any statutory
adjustments to corporate taxes;
(g) to exclude, in whole or in part, the impact of any
"extraordinary items" as determined under GAAP;
(h) to exclude, in whole or in part, the effect of any change in the
outstanding shares of common stock of the Company by reason of any stock
dividend or split, stock repurchase, reorganization, recapitalization, merger,
consolidation, spin-off, combination or exchange of shares or other similar
corporate change, or any distributions to common stockholders other than regular
cash dividends;
(i) to give effect, in whole or in part, to any other unusual,
non-recurring gain or loss or other extraordinary item; and
(j) to include or exclude, in whole or in part, any other
extenuating circumstances deemed appropriate by the Committee.
Performance Awards for a Performance Period will be accrued and charged as
an expense in determining Newpark's financial performance under the Plan for
that Performance Period. Performance Awards for any Performance Period shall be
paid in cash no later than April 1 of the following calendar year, or as soon as
practicable thereafter.
4.3 TERMINATION OF EMPLOYMENT. A Participant whose employment is
terminated for any reason other than death, "disability" (as defined below) or
normal retirement at or after the age of 65 prior to the end of a Performance
Period will not be eligible to receive a Performance Award for that Performance
Period. If a Participant's employment is terminated prior to the end of a
Performance Period by reason of death, disability or normal retirement, the
Participant or the Participant's heir or legal representative may, upon the
Committee's approval, be eligible for a prorated Performance Award for that
Performance Period, to be determined and paid as set forth in Section 4.2. As
used herein, the term "disability" shall mean the Participant's full-time
absence from his or her duties with Newpark, as a result of incapacity due to
physical or mental illness.
5. CHANGE OF CONTROL
Unless the Committee shall otherwise provide in an Award Agreement, upon
the occurrence of a Change of Control, all Performance Awards for a Performance
Period not completed at the time of the Change of Control shall be payable in an
amount equal to the product of the maximum award opportunity for the Performance
Award and a fraction, the numerator of which is the number of months that have
elapsed since the beginning of the Performance Period through the later of (a)
the date of the Change of Control or (b) the date the participant terminates
employment, and the denominator of which is twelve. A "CHANGE OF CONTROL" shall
be deemed to occur if:
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(i) a "Takeover Transaction" (as defined below) occurs;
(ii) any election of directors of Newpark takes place (whether by the
directors then in office or by the stockholders at a meeting or by written
consent) and a majority of the directors in office following such election are
individuals who were not nominated by a vote of two-thirds of the members of the
Board of Directors, or, if Newpark had a nominating committee at such time, its
nominating committee, immediately preceding such election; or
(iii) Newpark effectuates a complete liquidation or a sale or disposition
of all or substantially all of its assets.
A "TAKEOVER TRANSACTION" means (a) a merger or consolidation of Newpark
with, or an acquisition of Newpark or all or substantially all of its assets by,
any other corporation or entity, other than a merger, consolidation or
acquisition in which the individuals who were members of the Board of Directors
of Newpark immediately prior to such transaction continue to constitute a
majority of the Board of Directors or other governing body of the surviving
corporation or entity (or, in the case of an acquisition involving a holding
company, constitute a majority of the Board of Directors or other governing body
of the holding company) for a period of not less than twelve (12) months
following the closing of such transaction; or (b) one or more occurrences or
events as a result of which any "person" (as such term is used in Sections13(d)
and 14(d)(2) of the Exchange Act) becomes the "beneficial owner" (as such term
is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
thirty percent (30%) or more of the combined voting power of Newpark's then
outstanding securities.
6. WITHHOLDING TAXES
Newpark shall have the right, at the time of payment of a Performance
Award, to make adequate provision for any federal, state, local or foreign taxes
which it believes are or may be required by law to be withheld with respect to
an award under the Plan ("TAX LIABILITY"), to ensure the payment of any such Tax
Liability. Newpark may provide for the payment of any Tax Liability by
withholding from the amount of the Performance Award or by any other method
deemed appropriate by the Committee.
7. AMENDMENT AND TERMINATION
The Board may at any time suspend, amend or terminate the Plan. No such
action shall adversely affect any outstanding Award Agreement without the
Participant's written consent. The Committee may amend the Plan without
stockholder approval, unless such approval is necessary to comply with
applicable laws, including provisions of the Exchange Act or the Code.
8. SECTION 162(M) COMPLIANCE
Nothing herein precludes Newpark from granting Performance Awards under
the Plan that are not considered "performance-based compensation" under Section
162(m) or from making additional payments or special awards to Eligible
Participants outside of the Plan that may or may not qualify as
"performance-based compensation" under Section 162(m). Newpark, in its
discretion, may take any steps necessary to have Performance Awards qualify as
"performance-based compensation" satisfying the requirements of Section 162(m),
including obtaining stockholder approval of the Plan.
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9. TERM
The effective date of the Plan is January 1, 2003, and the Plan will
terminate on December 31, 2007, unless previously terminated by the Board .
10. MISCELLANEOUS
10.1 Nothing in this Plan or any award granted hereunder shall confer upon
any employee any right to continue in the employ of Newpark or interfere in any
way with the right of Newpark to terminate his or her employment at any time.
10.2 No award granted under the Plan shall be deemed salary or
compensation for the purpose of computing benefits under any employee benefit
plan or other arrangement of Newpark for the benefit of its employees.
10.3 The Plan and the grant of awards under it shall be subject to all
applicable federal and state laws, rules and regulations and to such approvals
by any governmental or regulatory agency as may be required.
10.4 The Plan shall be construed in accordance with and governed by the
laws of the State of Delaware.
10.5 Each Award Agreement shall inure to the benefit of the Participant
and the Participant's heirs, representatives and successors and shall be binding
on Newpark and each successor (direct or indirect, whether by purchase, merger,
consolidation or otherwise).
10.6 No right or interest of a Participant in any Performance Award may be
pledged, encumbered, or hypothecated to or in favor of any party other than
Newpark or an affiliate of Newpark, or shall be subject to any lien, obligation,
or liability of such Participant to any other party other than Newpark or an
affiliate of Newpark. No Performance Award shall be assignable or transferable
by a Participant.
10.7 Notwithstanding any other provision of this Plan, if a Participant
commits fraud or dishonesty toward Newpark, wrongfully uses or discloses any
trade secret, confidential data or other information proprietary to Newpark or
intentionally takes any other action materially inimical to the best interests
of Newpark, as determined by the Committee in its sole and absolute discretion,
such Participant shall forfeit all Performance Awards under the Plan.
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