Exhibit 10.1
MICHAEL BAKER CORPORATION
2008 INCENTIVE COMPENSATION PLAN
     Section 1. Purpose. The purpose of the Michael Baker Corporation 2008
Incentive Compensation Plan (the “Plan”) is to provide for an incentive payment
opportunity to employees of Michael Baker Corporation (the “Company”) and its
subsidiaries, which may be earned upon the achievement of established financial
performance goals. By providing a payment based upon profitability, the Company
will establish rewards based on the overall performance of the Company and the
individual contribution of each employee.
     Section 2. Effective Date. The effective date of this Plan is January 1,
2008. The Plan will remain in effect from year to year (each calendar year shall
be referred to herein as a “Plan Year”) until formally amended or terminated in
writing by the Company’s Board of Directors (the “Board”).
     Section 3. Administration of the Plan.
          Section 3.01. Committee. Full power and authority to administer,
construe and interpret the Plan, and any incentive program described within the
Plan (any “Incentive Program”) shall be vested in the Compensation Committee of
the Board (the “Committee”). The Committee may delegate to any agent as it deems
appropriate to assist it with the administration of the Plan. Any determination,
action or records of the Committee shall be final, conclusive and binding on all
Plan Participants, as defined in Section 3.04 of the Plan, and their
beneficiaries, heirs, personal representatives, executors and administrators,
and upon the Company and all other persons having or claiming to have any right
or interest in or under the Plan.
          Section 3.02. Rules and Regulations. The Committee may, from time to
time, establish rules, forms and procedures of general application for the
administration of the Plan and each Incentive Program. The Committee shall
determine the Targets and Awards, as defined in Sections 5.01 and 5.02 of the
Plan, designate the employees who are to participate in the Plan and determine
the Group to which a Participant is assigned, as defined in Section 4.02 of the
Plan.
          Section 3.03. Quorum. A majority of the members of the Committee shall
constitute a quorum for purposes of transacting business relating to the Plan.
The acts of a majority of the members present (in person, or by conference
telephone) at any meeting of the Committee at which there is a quorum, or acts
reduced to and approved unanimously in writing by all of the Committee members,
shall be valid acts of the Committee.
          Section 3.04. Notice of Participation. Each employee shall receive
notice informing the employee of the Plan and specifying the group in which the
employee is designated to participate. Designation of participation does not
guarantee a participant (a “Participant”) that an Incentive Award will be
earned, or that such Participant will continue to participate in the same group
for the current Plan Year (based upon the achievement of Group qualification
metrics) or for future Plan Years.
     Section 4. Eligibility, Groups and Incentive Programs.
          Section 4.01. Eligibility. Any employee of the Company or any
wholly-owned subsidiary of the Company shall be eligible to participate in the
Plan upon written designation by the Committee as provided in Section 3.04,
excluding employees who are covered under a foreign government regulated bonus
plan.

 

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          Section 4.02. Designation of Groups. Any employee who is designated by
the Committee as a Participant for a Plan Year shall be a member of one of the
following Groups:

  Group 1.    Participants in Group 1 shall be the Company’s executive officers,
including Divisional, Department or Office Managers.     Group 2.   
Participants in Group 2 shall be Project Managers.     Group 3.    Participants
in Group 3 shall be any employee who is designated as a Participant in the Plan
and who is not otherwise a member of Group 1 or 2.     Group 4.    Participants
in Group 4 shall be employees of the Energy Division.

With respect to a Participant who moves to or from a Group during a Plan Year,
such Participant shall be treated as a member of each Group for the period of
time in that Group during the Plan Year, and the actual achievement of any
Performance Goals, as defined in Section 5.03 of the Plan, established with
respect to participation in each Group shall be used to calculate the pro-rated
Incentive Award applicable for the period of time in each Group.
          Section 4.03. Incentive Programs. The following Incentive Programs
shall be administered under the Plan:

  •   The Corporate Incentive Program;     •   The Engineering Incentive
Program;     •   The Project Manager Incentive Program;     •   The Energy
Incentive Program; and     •   The Discretionary Incentive Program.

All Group 1 Participants shall participate in the Corporate Incentive Program or
the Engineering Incentive Program. All Group 2 Participants shall participate in
the Project Manager Incentive Plan. All Group 3 Participants shall participate
in the Discretionary Incentive Program. All Group 4 Participants shall
participate in the Energy Incentive Program. Notwithstanding the foregoing, the
Committee may elect to offer the discretionary bonus program as provided in
Section 5.06 hereof, in lieu of any or all of such Incentive Programs.
          Section 4.04. Termination of Employment.
               (a) Except as provided in Section 4.05 of the Plan, a Participant
whose employment with the Company and all subsidiaries is terminated, either
voluntarily, by mutual agreement or by involuntary termination for cause
following the end of a Plan Year but prior to the payment of an Incentive Award
for such Plan Year will forfeit all right to such unpaid Incentive Awards,
except as otherwise determined by the Committee or its delegate; provided
further that a Participant whose employment is terminated by the Company and all
subsidiaries involuntarily other than for cause following the end of a Plan Year
shall not forfeit all right to such unpaid Incentive Awards.
               (b) Except as provided in Section 4.05 of the Plan, a Participant
whose employment with the Company and all subsidiaries is terminated
voluntarily, by mutual agreement or involuntarily for cause at any time during a
Plan Year shall forfeit all rights to any

 

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Incentive Awards for the Plan Year during which termination occurs. A
Participant whose employment is terminated by the Company and all subsidiaries
involuntarily other than for cause on or before June 30 of any Plan Year shall
forfeit all rights to any Incentive Awards for the Plan Year during which
termination occurs; provided further that a Participant whose employment is
terminated by the Company and all subsidiaries involuntarily other than for
cause after June 30 of a Plan Year shall be entitled to a pro-rated Incentive
Award for the period of employment, subject to the other terms and conditions of
the Plan and the achievement of the applicable Performance Goals.
               (c) All incentive awards that are forfeited as provided in
Section 4.04 (a) and (b) above shall be allocated evenly to all remaining plan
participants excluding the Company’s Chief Executive Officer and the next four
highest paid officers that are included within Group 1 as defined in
Section 4.02 of the Plan.
          Section 4.05. Death, Disability or Retirement. If, during a Plan Year,
a Participant dies or becomes disabled, within the meaning of Section 22(e)(3)
of the Internal Revenue Code of 1986, as amended, or retires after attainment of
at least age 55 and with at least 10 years of service with the Company and/or
its subsidiaries, the Committee may, in its discretion or under such rules as it
may prescribe, make a partial or full Incentive Award to the Participant for the
Plan Year provided that the applicable Performance Goals were achieved.
          Section 4.06. New Participants. New employees of the Company or any
wholly-owned subsidiary of the Company hired after June 30 of a Plan Year and
designated for participation will become a Group 3 Participant during such Plan
Year. New employees hired on or before June 30 and designated for participation
may participate (on a pro-rated basis) in any Group during such Plan Year based
upon achievement of Group qualification metrics.
     Section 5. Incentive Targets, Incentive Awards and Performance Goals.
          Section 5.01. Incentive Targets. Each Participant under the Plan shall
be assigned an incentive payment target (an “Incentive Target”) that shall be
determined based on market competitive levels, and which may be expressed as a
percentage of the Participant’s base salary or a percentage of project profits,
as related to the level of achievement attained. Incentive Targets shall be
determined within 30 days after the commencement of each Plan Year and approved
by the Committee. The Incentive Targets for the current Plan Year are attached
hereto as Attachment A.
          Section 5.02. Incentive Awards. No incentive award payment (“Incentive
Award”) may exceed the Participant’s Incentive Target. Payment of any Incentive
Award under the Plan shall be contingent upon (i) the achievement of the Main
Company Performance Goals (measured at target), as defined in Section 5.03(a) of
the Plan, for the Plan Year, (ii) the achievement of the applicable Participant
Performance Goals, as defined in Section 5.03 of the Plan, for the particular
Incentive Program in which the Participant is a member for the Plan Year,
(iii) the Participant’s receiving an overall “Meets Expectations” rating on the
values/work standards portion of his or her Company performance review form for
the Plan Year and (iv) the determination of the amount payable under
Section 5.05 of the Plan.
          Section 5.03. Performance Goals.
               (a) Company Performance Goals. Within 30 days after the
commencement of the Plan Year, the Committee shall establish specific
performance goals for the Company (“Company Performance Goals”), which may be
based upon one or more of the following objective performance measures and
expressed in either, or a combination of, absolute values or rates of change:
earnings per share, earnings per share growth rates, return on total

 

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capital, stock price, revenues, costs, net income, operating income, income
before taxes, operating margin, cash flow, market share, return on equity,
return on assets and total shareholder return. The Committee shall designate one
or more of such Performance Goals as the main Company Performance Goals (the
“Main Company Performance Goals”) and the weighting among the various
Performance Goals established. The Company Performance Goals are attached hereto
as Attachment B. In order for any Incentive Awards to be paid to Participants in
any Incentive Program with respect to a Plan Year, the Main Company Performance
Goals established by the Committee for such Plan Year (measured at target) must
be achieved.
               (b) Divisional Performance Goals. Within 30 days after the
commencement of a Plan Year, the Committee shall establish specific performance
goals for the Company’s divisions (“Divisional Performance Goals”), which may be
based upon one or more of the following objective performance measures and
expressed in either, or a combination of, absolute values or rates of change:
revenues, costs, net income, operating income, income before taxes, operating
margin, cash flow, market share, return on equity or return on assets. The
Divisional Performance Goals are attached hereto as Attachment C.
               (c) Participants’ Performance Goals. Within 90 days after the
commencement of the Plan Year, the Committee shall establish performance goals
for the Participants in each of the Incentive Programs (“Participant Performance
Goals”) as follows:

  (i)   Corporate Incentive Program. The Participant Performance Goals for all
Participants in the Corporate Incentive Program shall be the Company Performance
Goals and, in the case of Group 1 Participants who are Divisional Managers,
Divisional Performance Goals, weighted per Attachment F.     (ii)   Engineering
Incentive Program. The Participant Performance Goals for all Participants in the
Engineering Incentive Program shall be the Engineering Performance Goals and, in
the case of Group 1 Participants who are Engineering Managers, Engineering
Performance Goals, weighted per Attachment F.     (iii)   Project Manager
Incentive Program. The Participant Performance Goals for each Group 2
Participant in the Project Manager Incentive Program shall be (x) the Main
Company Performance Goals and (y) the level of achievement of budgeted project
profits measured for the Plan Year on those particular projects for which the
Participant is primarily responsible, weighted per Attachment F.     (iv)  
Energy Incentive Program. The Participant Performance Goals for all Participants
in the Energy Incentive Program shall be the Energy Performance Goals and, in
the case of Group 1 Participants who are Energy Managers, Energy Performance
Goals, weighted per Attachment F.     (v)   Discretionary Incentive Program. The
Participant Performance Goals for the Participants in the Discretionary
Incentive Program shall be (x) the Main Company Performance Goals and (y) other
goals as established by the Committee in its discretion, weighted per Attachment
F.

 

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               (d) When the Participant Performance Goals are established, the
Committee shall also specify the manner in which the level of achievement of
such Participant Performance Goals shall be calculated. The Committee may
determine that unusual items or certain specified events or occurrences,
including changes in accounting standards or tax laws, shall be excluded from
the calculation, or may within their discretion adjust the performance goals.
          Section 5.04. Discretion. The Committee shall have no discretion to
increase any Incentive Target or Incentive Award payable that would otherwise be
due upon attainment of the Performance Goals, but the Committee may in its
discretion reduce or eliminate such Incentive Target or Incentive Award.
          Section 5.05. Determination of Incentive Award. The amount of a
Participant’s Incentive Award for a Plan Year, if any, shall be determined by
the Committee or its delegate in accordance with the level of achievement of the
applicable Participant Performance Goals, the Participant’s Incentive Target for
such level of achievement, and the other terms of the Plan. Provided the
conditions set forth in Section 5.02 are achieved for any Plan Year, Incentive
Awards payable shall be calculated as a percentage of each of the respective
Incentive Targets, such percentage being equal to (i) 80% of the extent, if any,
to which the Company’s income before taxes exceeds the Company Performance Goal
target for such item, as identified on Attachment B, divided by (ii) the
cumulative total of all Incentive Targets, expressed in terms of dollar amounts,
assigned under the Plan for such Plan Year.
          Section 5.06. Determination of Other Bonuses. The Committee may grant,
from time to time in its sole discretion, a bonus to any Participant based on
any criteria it determines. Such bonus, if specifically designated by the
Committee as payable under this Plan, shall be subject to such provisions of the
Plan as it shall specify.
     Section 6. Payment to Participants.
          Section 6.01. Timing of Payment. Any Incentive Award for a Plan Year
shall be paid to the Participant, or in the case of death to the Participant’s
beneficiary, within 21/2 months following the end of such Plan Year in which the
right to payment is no longer subject to a substantial risk of forfeiture.
Notwithstanding the foregoing, in the event such amount is conditioned upon a
separation from service and not compensation the Participant could receive
without separating from service, then no such payments may be made to the
Participant who is a “specified employee” under section 409A of the Internal
Revenue Code of 1986, as amended, until the first day following the six-month
anniversary of the Participant’s termination.
          Section 6.02. Beneficiary Designation. The deemed beneficiary of a
Participant for this Plan will be the beneficiary elected by the Participant
under the Company’s Life Insurance Plan; provided that a Participant may elect a
different beneficiary by filing a completed designation of beneficiary form with
the Committee or its delegate in the form prescribed. Such designation may be
made, revoked or changed by the Participant at any time before death but such
designation of beneficiary will not be effective and supersede all prior
designations until it is received and acknowledged by the Committee or its
delegate. If the Committee has any doubt as to the proper beneficiary to receive
payments hereunder, the Committee shall have the right to withhold such payments
until the matter is finally adjudicated. However, any payment made in good faith
shall fully discharge the Committee, the Company, its subsidiaries and the Board
from all further obligations with respect to that payment.
          Section 6.03. Tax Withholding. All Incentive Awards and bonuses shall
be subject to Federal income, FICA, and other tax withholding as required by
applicable law.

 

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     Section 7. Miscellaneous.
          Section 7.01. No Recourse. If the actual level of achievement of any
Performance Goal taken into account for determination of an Incentive Award is
found to be incorrect by the Company’s independent certified public accountants
and was more than the correct amount, there shall be no recourse by the Company
against any person or estate. However, the Company shall have the right to
correct such error by reducing any subsequent payments yet to be made under the
Plan for current and future Plan Years by the entire excess amount of any
Incentive Awards paid over the correct amounts.
          Section 7.02. Merger or Consolidation. All obligations for amounts
earned but not yet paid under the Plan shall survive any merger, consolidation
or sale of all or substantially all of the Company’s or a subsidiary’s assets to
any entity, and be the liability of the successor to the merger or consolidation
or the purchaser of assets, unless otherwise agreed to by the parties thereto.
          Section 7.03. Gender and Number. The masculine pronoun whenever used
in the Plan shall include the feminine and vice versa. The singular shall
include the plural and the plural shall include the singular whenever used
herein unless the context requires otherwise.
          Section 7.04. Construction. The provisions of the Plan shall be
construed, administered and governed by the laws of the Commonwealth of
Pennsylvania, including its statute of limitations provisions, but without
reference to conflicts of law principles. Titles of Sections of the Plan are for
convenience of reference only and are not to be taken into account when
construing and interpreting the provisions of the Plan.
          Section 7.05. Non-alienation. Except as may be required by law,
neither the Participant nor any beneficiary shall have the right to, directly or
indirectly, alienate, assign, transfer, pledge, anticipate or encumber (except
by reason of death) any amount that is or may be payable hereunder, including in
respect of any liability of a Participant or beneficiary for alimony or other
payments for the support of a spouse, former spouse, child or other dependent,
prior to actually being received by the Participant or beneficiary hereunder,
nor shall the Participant’s or beneficiary’s rights to benefit payments under
the Plan be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by creditors of the
Participant or beneficiary or to the debts, contracts, liabilities, engagements,
or torts of any Participant or beneficiary, or transfer by operation of law in
the event of bankruptcy or insolvency of the Participant or any beneficiary, or
any legal process.
          Section 7.06. No Employment Rights. Neither the adoption of the Plan
nor any provision of the Plan shall be construed as a contract of employment
between the Company or a subsidiary and any employee or Participant, or as a
guarantee or right of any employee or Participant to future or continued
employment with the Company or a subsidiary, or as a limitation on the right of
the Company or a subsidiary to discharge any of its employees with or without
cause. Specifically, designation as a Participant does not create any rights,
and no rights are created under the Plan, with respect to continued or future
employment or conditions of employment.
          Section 7.07. Minor or Incompetent. If the Committee determines that
any Participant or beneficiary entitled to a payment under the Plan is a minor
or incompetent by reason of physical or mental disability, it may, in its sole
discretion, cause any payment thereafter becoming due to such person to be made
to any other person for his benefit, without responsibility to follow
application of amounts so paid. Payments made pursuant to this provision shall
completely discharge the Company, its subsidiaries, the Plan, the Committee and
the Board.

 

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          Section 7.08. Illegal or Invalid Provision. In case any provision of
the Plan shall be held illegal or invalid for any reason, such illegal or
invalid provision shall not affect the remaining parts of the Plan, but the Plan
shall be construed and enforced without regard to such.
          Section 7.09. Amendment or Termination of this Plan. The Board shall
have the right to amend or terminate the Plan at any time, provided that any
amendment or termination shall not affect any Incentive Awards earned but
unpaid. No employee or Participant shall have any vested right to payment of any
Incentive Award hereunder prior to its payment. The Company shall notify
affected employees in writing of any amendment or Plan termination.
          Section 7.10. Unsecured Creditor. The Plan constitutes a mere promise
by the Company or a subsidiary to make benefit payments in the future. The
Company’s and the subsidiaries’ obligations under the Plan shall be unfunded and
unsecured promises to pay. The Company and the subsidiaries shall not be
obligated under any circumstance to fund their respective financial obligations
under the Plan. Any of them may, in its discretion, set aside funds in a trust
or other vehicle, subject to the claims of its creditors, in order to assist it
in meeting its obligations under the Plan, if such arrangement will not cause
the Plan to be considered a funded deferred compensation plan. To the extent
that any Participant or beneficiary or other person acquires a right to receive
payments under the Plan, such right shall be no greater than the right, and each
Participant and beneficiary shall at all times have the status, of a general
unsecured creditor of the Company or a subsidiary.