EXHIBIT 10(17)
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LAYNE CHRISTENSEN COMPANY
DISTRICT INCENTIVE
COMPENSATION PLAN
REVISED EFFECTIVE FEBRUARY 1, 2000
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SECTION I. DEFINITIONS.
In addition to the terms defined elsewhere throughout this Plan (as
defined in Section II below), the following terms shall have the following
meanings:
"Average Assets" for a certain District shall mean that District's
prior twelve (12) month average assets ending with the last month of the fiscal
year for which the calculation is being performed.
"Committee" shall mean the administrative committee of this Plan (as
defined in Section II below).
"Company" shall mean Layne Christensen Company.
"District" shall mean a separate profit center of the Company as
determined from the Company's internal financial records; provided, however,
that the Committee shall have the authority in its discretion to group one or
more profit centers into one "district" for purposes of this Plan.
"Ebit" shall mean earnings before interest and taxes.
"EBIT Benchmark" shall mean the performance benchmark assigned to a
certain District and based on that District's EBIT.
"Expense Factor" shall mean the percentage relationship on a
consolidated basis between the total of all Company field, selling, and general
and administrative expenses and total Company revenue.
"EPS" shall mean basic earnings per share as reflected in the Company's
consolidated financial statements (net of extraordinary gains and losses as
determined by the Committee in its sole discretion).
"IGS Allocated Expenses" shall mean the Expense Factor multiplied by
the IGS Revenue for a certain IGS Project.
"IGS Job Margin" shall mean the total job margin recognized in a fiscal
year from a certain IGS Project, less any job margin recognized by the Subject
District for a job that is included as a component of such IGS Project.
"IGS Profit" shall mean the IGS Job Margin for a certain IGS Project
minus the IGS Allocated Expenses for such project; provided, however, if the IGS
Profit is less than zero, then the IGS Profit shall be deemed to equal zero for
the purposes of this Plan and the calculations to be made hereunder.
"IGS Project" shall mean an integrated groundwater service project that
includes either (i) the design or construction of water supply systems which
include one or more of the following elements: (a) a water treatment plant, (b)
a Ranney collector well, (c) a Bridgewater manufactured product, or (d) a
hydrological study, or (ii) the design or construction of water well fields
which will allow the Company to supply water over an extended period of time;
provided, however, notwithstanding the foregoing definition, the Committee shall
have full power, in its sole discretion, to determine whether or not any project
constitutes an IGS Project for the purposes of this Plan.
"IGS Revenue" shall mean the total revenue recognized in a fiscal year
from a certain IGS Project, less any revenue recognized by the Subject District
for a job that is included as a component of such IGS Project.
"Pool" shall mean the bonus pool established for each District for each
fiscal year.
"Return on Assets" for a certain District shall mean that District's
EBIT for a certain fiscal year divided by Average Assets for such fiscal year.
"Return on Sales" for a certain District shall mean that District's
EBIT for a certain fiscal year divided by that District's revenue for such
fiscal year.
"Revenue Benchmark" shall mean the performance benchmark assigned to a
certain District and based on that District's revenue.
"Subject District" shall mean the District for whom the Pool is being
calculated.
SECTION II. PURPOSE OF THE PLAN.
The Company desires to effect a program of making awards as soon as
practicable after the end of each fiscal year, as provided below, to certain
employees of the Company and its subsidiaries, Christensen Boyles Corporation,
Boyles Bros. Drilling Company and Layne Christensen Canada Limited, who during
such fiscal year, in the judgment of the Committee have significantly
contributed to the achievement of certain objectives of the Company and of the
District within the Company in which such employees perform services. The
purpose of this program is to provide additional incentive for the eligible
employees to promote the best interests and most profitable operation of the
Company.
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This program shall be known as the "Layne Christensen Company District
Incentive Compensation Plan" (hereinafter referred to as the "Plan"). This Plan
amends and supersedes the Layne Christensen Company District Incentive
Compensation Plan previously approved and adopted by the board of directors on
August 3, 1999. The existence of the Plan shall not be in lieu of or otherwise
affect or be affected by any other compensation plan or arrangement of the
Company.
SECTION III. ADMINISTRATION.
The Plan shall be administered by the Committee. The Committee shall
consist of at least three persons appointed by the Board of Directors of the
Company. During the one-year period prior to the commencement of service of a
Committee member on the Committee, such member shall not have participated in,
and while serving and for one year after serving on the Committee, such member
shall not be eligible for participation in, the Plan.
The Committee shall have full power, in its sole discretion, to
interpret, construe and administer the Plan and adopt rules and regulations
relating to the Plan.
Decisions made by the Committee in good faith and in the exercise of
its powers and duties hereunder shall be binding upon all parties concerned. No
member of the Committee shall be liable to anyone for any action taken or
decision made in good faith pursuant to the power or discretion vested in such
person under the Plan.
SECTION IV. PARTICIPATION.
All salaried, non-clerical employees, other than corporate general and
administrative employees and Integrated Groundwater Services Division employees
responsible for business development, shall be eligible for participation in the
Plan (and shall hereinafter be referred to as "Participants").
In addition to the Participants and at the discretion of the
District/Branch Manager, with the concurrence of the operating vice president
responsible for the District, a portion of the Pool may be set aside for payment
to District employees who do not participate in any other Company bonus or
incentive program.
SECTION V. CALCULATION OF BENCHMARKS.
The incentive compensation of each Participant and the Pool for each
District shall be calculated based on certain performance benchmarks. Each
fiscal year, each District will be assigned a Revenue Benchmark and an EBIT
Benchmark. The Revenue Benchmark and the EBIT Benchmark for each District for
the 2001 fiscal year shall be as set forth on Schedule I attached to this Plan.
The Committee shall have the authority to amend Schedule I at any time to
increase or decrease the performance benchmarks, to add or remove Districts or
otherwise as the Committee, in its sole discretion, deems necessary or
advisable. For each fiscal year following the 2001 fiscal year, the Revenue
Benchmark for each District shall be calculated by adding that District's
Revenue Benchmark for the immediately preceding fiscal year to the amount of
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revenue credited to such District during such fiscal year and dividing the sum
of those two numbers by two; provided, however, in no event shall the Revenue
Benchmark for a fiscal year ever be less than the Revenue Benchmark for the
immediately preceding fiscal year. For each fiscal year following the 2001
fiscal year, the EBIT Benchmark for each District shall be calculated by adding
that District's EBIT Benchmark for the immediately preceding fiscal year to the
amount of EBIT credited to such District during such fiscal year and dividing
the sum of those two numbers by two; provided, however, in no event shall the
EBIT Benchmark for a fiscal year ever be less than the EBIT Benchmark for the
immediately preceding fiscal year.
SECTION VI. GENERATION OF BONUS POOLS.
As soon as practical following the end of each fiscal year, a Pool
shall be established for each District in an amount equal to $0.02 for each
$1.00 of revenue generated during such fiscal year by such District that is over
and above that District's Revenue Benchmark for such fiscal year, plus $0.22 for
each $1.00 of such District's EBIT for such fiscal year that is over and above
that District's EBIT Benchmark for such fiscal year. In addition, regardless of
whether or not a District meets its Revenue Benchmark or its EBIT Benchmark
during any fiscal year, (i) if a District has EBIT for any fiscal year that are
greater than fifteen percent (15%) of such District's revenues for such fiscal
year, then a contribution will be made to such District's Pool in an amount
equal to one-quarter of one percent (0.25%) of such District's revenues for such
fiscal year, and (ii) if a District has a Return on Assets during any fiscal
year that is greater than fifty percent (50%), then a contribution will be made
to such District's Pool in an amount equal to one quarter of one percent (0.25%)
of such District's revenues for such fiscal year. For the purposes of
calculating the revenue, EBIT, Return on Assets and Return on Sales of each
District, other than the Bridgewater, Bridgewater Construction and GeoSciences
Districts, fifty percent (50%) of the IGS Revenue and fifty percent (50%) of the
IGS Profit from any IGS Project performed in a District's geographic territory
(as determined by the Committee in its sole discretion) shall be added to the
financial results of such District upon the last to occur of (i) completion of
such IGS Project and (ii) recognition of the IGS Revenue and/or IGS Profit for
such IGS Project in the Company's financial results.
Notwithstanding the foregoing, (i) the Committee shall have the option,
at its sole discretion, of eliminating part or all of the incentive compensation
awards which otherwise could be made under this Plan in any given fiscal year in
which the Company's EPS is negative for such fiscal year; (ii) no incentive
compensation awards shall be made to a District's Participants in any given
fiscal year if that District's Return on Sales is less than eight percent (8%)
for such fiscal year; and (iii) the Committee shall have the option, at its sole
discretion, of eliminating part or all of any project with revenues over $5
million performed by a District during any given fiscal year from the
calculation of that District's revenues, EBIT, Return on Sales or Return on
Assets for such fiscal year and electing to provide incentive compensation with
respect to such projects, if any, separately from this Plan on a project by
project basis.
SECTION VII. DETERMINATION OF AMOUNT OF AWARD.
The amount of incentive award to be granted from the Pool to all
General, District and Branch Managers shall be determined by the operating vice
president responsible for that District
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with the concurrence of the Company President. The amount of the incentive award
to be granted from the Pool to all other Participants shall be determined by the
General, District and/or Branch Managers with the concurrence of the operating
vice president responsible for that District. The amount of the individual
awards shall be discretionary, in the sole judgment of those making the awards,
based upon the individual's performance for that fiscal year, provided, however,
that in no event shall the amount of any Participant's award exceed 100% of that
Participant's annual regular salary as of the first day of that fiscal year.
SECTION VIII. TYPE OF AWARD.
Notwithstanding anything to the contrary elsewhere in this Plan, if the
Company's EPS for the fiscal year are equal to or less than the Company's EPS
for the immediately preceding fiscal year, the Board of Directors of the
Company, or the Compensation Committee thereof, shall have the authority, in its
discretion, to pay awards under the Plan in cash, common stock of the Company,
or a combination of both. If the Company's EPS for the fiscal year are greater
than the Company's EPS for the immediately preceding fiscal year, each
Participant shall receive his or her individual award in cash.
SECTION IX. TERMINATION OF EMPLOYMENT.
In the event a Participant voluntarily terminates his or her employment
with the Company at any time prior to the close of the fiscal year, the
Participant will not be eligible for any award otherwise payable for the fiscal
year.
In the event a Participant is involuntarily terminated (without cause)
prior to the close of the fiscal year, the Participant will be considered for
receipt of the award he or she would have otherwise received (as determined by
the Committee in its sole discretion) and, if awarded, prorated to reflect the
length of the Participant's service during the relevant fiscal year. The
Committee will take into consideration the circumstances of the termination in
determining the propriety and amount of the award. The Company's payment of
severance or post-employment salary support to a Participant will not be
considered part of the Participant's annual regular salary for purposes of the
Plan.
SECTION X. MISCELLANEOUS.
There shall be deducted from each cash payment made under the Plan the
amount of any tax requested by any governmental authority to be withheld by the
Company with respect to such payment. A Participant receiving stock hereunder
shall have deducted by the Company from the award the amount of any taxes which
the Company is required by any governmental authority to withhold with respect
to such stock prior to calculation of the number of shares of stock to be
awarded.
Nothing in the Plan shall be construed to give any person any benefit,
right or interest except as expressly provided herein, and nothing in the Plan
shall be construed as establishing any right of continued employment by the
Company.
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A Participant's rights and interests under the Plan may not be assigned
or transferred. In the case of a Participant's death prior to payment of a
Participant's award, payment in an amount equal to what the Participant would
have otherwise received had he or she been employed on the last day of the
fiscal year (as determined by the Committee in its sole discretion), prorated to
reflect the length of the Participant's service during the relevant fiscal year,
shall be made to the personal representatives of the Participant's estate or
such other person or persons as the Committee deems appropriate.
The Board of Directors of the Company, or the Compensation Committee
thereof, may discontinue the Plan, in whole or in part, at any time, or may,
from time to time, amend the Plan in any respect that such Board (or Committee)
may deem advisable. In the event the Plan is terminated, no further payments
will be made under the Plan.
SECTION XI. EFFECTIVE DATE.
The Plan, as amended, shall be effective as of February 1, 2000.
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