Exhibit 10.1

 

[g204771kgi001.jpg] TETRA TECH, INC.

 

 

EXECUTIVE COMPENSATION POLICY

 

Approved By:

Compensation Committee:                            11/14/2005

Document Owner:                        Compensation Committee

 

 

TABLE OF CONTENTS

 

Section

 

 

 

1.0

PURPOSE

 

2.0

PHILOSOPHY

 

3.0

SCOPE

 

4.0

ROLES AND RESPONSIBILITIES

 

5.0

EXECUTIVE COMPENSATION COMPONENTS AND PLAN

 

6.0

PROCESS FLOW/SCHEDULE

 

7.0

APPENDIX I - POSITIONS COVERED BY THE EXECUTIVE COMPENSATION POLICY

 

8.0

APPENDIX II - EXAMPLES

 

9.0

APPENDIX III - APPROVAL FORMS

 

 

Tetra Tech Confidential

 

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1.0                               PURPOSE

 

The purpose of this document is to define the executive compensation policy for
Tetra Tech, Inc.

 

2.0                               PHILOSOPHY

 

Tetra Tech’s executive compensation program is designed to:

 

•                  Align the interests of executive officers with those of the
stockholders;

 

•                  Attract, motivate, reward, and retain top level executives
upon whom, in large part, the success of the Company depends;

 

•                  Be competitive with compensation programs for companies of
similar size and complexity with whom the Company competes for executive talent,
including direct competitors;

 

•                  Provide compensation based upon the short-term and long-term
performance of both the individual executive and the Company; and

 

•                  Strengthen the relationship between pay and performance by
emphasizing variable, at-risk compensation that is dependent upon the successful
achievement of specified corporate and individual goals.

 

3.0                               SCOPE

 

This policy applies to all executive officers of Tetra Tech, Inc. as well as any
other positions recommended by the Chief Executive Officer (CEO) in consultation
with the Chairman and approved by the Board of Directors that have a
particularly significant impact on the overall success of the Company.

 

4.0                               ROLES AND RESPONSIBILITIES

 

COMPENSATION COMMITTEE

 

•                  Under delegated authority from the Board of Directors,
develops, administers, and monitors executive compensation in the long-term
interests of the Company and its stockholders;

 

•                  Evaluates the performance of the Chairman and the CEO, and
establishes the compensation of the Chairman and the CEO ;

 

•                  Establishes the compensation of all executive officers of the
Company based, in part, on the CEO’s recommendations; and

 

•                  Determines that performance goals have been attained before
payment.

 

AUDIT COMMITTEE

 

•                  Jointly with the Compensation Committee determines the
individual performance factor for the CFO position.

 

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CHIEF EXECUTIVE OFFICER

 

•                  Reviews the performance of all other officers of the Company,
and, in consultation with the Chairman, makes specific recommendations to the
Compensation Committee in regard to their compensation; and

 

•                  Develops performance targets for all other executive officers
and, in consultation with the Chairman, recommends those performance targets to
the Compensation Committee.

 

HUMAN RESOURCES

 

•                  Acquires information regarding peer group and other
competitor pay practices, and provides analysis of this information to the CEO,
the Chairman, and the Compensation Committee; and

 

•                  Provides compensation practice trend data to the CEO, the
Chairman, and the Compensation Committee.

 

FINANCE AND ACCOUNTING

 

•                  Provides Corporate performance data for use in determining
the degree to which certain performance objectives have been met; and

 

•                  Assures payments have been properly accrued for and reported.

 

5.0                               EXECUTIVE COMPENSATION COMPONENTS AND PLAN

 

The primary components of compensation for executive officers are base salary,
annual performance bonuses, and long-term incentive compensation.

 

5.1                               BASE SALARY

 

Base salaries for positions in Appendix I are reviewed on an annual basis to
ensure internal equity and external competitiveness.  Salaries are reviewed to
determine whether the base compensation is within a reasonable range of
executive pay levels at other companies that potentially compete with the
Company for business and executive talent.  Total compensation is considered
during this analysis.  Consideration is given to individual performance,
experience and time in the position, initiative, contribution to overall
corporate performance, and salaries paid to other executives in the Company. 
The review and determination occur as shown in Section 6.0.

 

5.2                               ANNUAL PERFORMANCE BONUSES

 

This component is intended to promote the interests of the Company by providing
both an incentive and a financial reward for those managerial and other key
employees who contribute most to the operating results and growth of the
Company.  Each year the Company identifies a target amount of incentive
compensation for each executive officer and the other key positions listed in
Appendix I.  This target is expressed as a percentage of base salary.

 

Bonuses are paid based upon meeting pre-determined performance criteria.  These
criteria fall into two categories: (1) overall corporate performance, designated
the Corporate Performance Factor (CPF), based on assessment of how the overall
corporation did in achieving its key objectives and (2) individual contribution,
designated the Individual Factor (IF), based on

 

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individual performance.  The CPF determined by the Compensation Committee shall
have a range of 0 to 1.4 with a target of 1.0 based on achievement of key
objectives. The CPF for group executives and group controllers will be
determined by the CEO based on the contribution of the specific group to the
Corporation. The IF shall have a range of 0 to 1.2 with a target of 1.0 for
expected contribution level.  The IF will be recommended by the CEO and approved
by the Compensation Committee with the exception of the Chairman, Vice Chairman,
CEO, and CFO positions. The IF for the Chairman/Vice Chairman will be determined
by the Compensation Committee. The IF for the CEO will be recommended by the
Chairman and determined by the Compensation Committee. The IF for the CFO will
be recommended by the CEO and determined jointly by the Audit Committee and
Compensation Committee, giving strong consideration to the Audit Committee’s
assessment of the strength of the Company’s internal financial controls and the
accuracy and appropriateness of its financial reporting.

 

Target bonus amounts as a percentage of base salary are as follows:

 

TARGET BONUS AMOUNTS

 

POSITION

 

PERCENTAGE (%)

 

Chairman/Vice Chairman

 

100

 

Chief Executive Officer

 

75

 

Chief Operating Officer

 

55

 

President

 

55

 

Chief Financial Officer

 

55

 

Other Executive Officers

 

40

 

Other Key Positions

 

30-40

 

 

Each Officer is eligible to receive an annual bonus in the range of 0% to 168%
of target, i.e, CPF (1.4) x IF(1.2) = 1.68 (168%) x target)

 

MINIMUM/MAXIMUM OF BASE

 

POSITION

 

TARGET PERCENTAGE (%)

 

MINIMUM (%)

 

MAXIMUM (%)

 

Chairman/Vice Chairman

 

100

 

0

 

168

 

Chief Executive Officer

 

75

 

0

 

126

 

Chief Operating Officer

 

55

 

0

 

92.4

 

President

 

55

 

0

 

92.4

 

Chief Financial Officer

 

55

 

0

 

92.4

 

Other Executive Officers

 

40

 

0

 

67.2

 

Other Key Positions

 

30-40

 

0

 

50.4-67.2

 

 

The Board of Directors reserves the right to “zero” the CPF if results are
significantly below expected targets or a manageable event negatively and
severely impacts stockholder value.  The minimum performance threshold is .6;
achievement of less than 60% in either the CPF or IF will result in the
elimination of the bonus paid. Notwithstanding the above, the Compensation

 

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Committee, in consultation with the Chairman and the CEO, reserve the discretion
to adjust specific performance bonus amounts when deemed to be in the interests
of the shareholders.

 

Bonus payments are made by December 15 of each year, based upon performance in
the recently concluded fiscal year.

 

5.3                               LONG-TERM INCENTIVE COMPENSATION

 

Long-term incentive awards are designed to encourage recipients to achieve long
term sustained growth of stockholder value.  The long-term incentive
compensation program encourages executives to maintain a long-term financial
perspective by linking a substantial portion of their compensation to
stockholder returns and the Company’s long-term financial success.

 

Long-term incentives are generally provided in the form of equity compensation,
such as stock options and/or other equity related programs.  However, the Board
of Directors reserves the right to utilize deferred cash incentives if
beneficial to the interests of the Company and its stockholders. Long-term
incentive awards may have certain restrictions, such as mandatory vesting
periods which encourage participating executives to continue in the Company’s
employ and thereby act as a retention incentive.

 

Any equity compensation shall be in accordance with the provisions and
limitations of the Equity Incentive Plan periodically adopted by the Board of
Directors and approved by stockholder vote.  The schedule for distribution of
long term-incentives is shown in Section 6.

 

In addition to the above, the following guidelines will apply to the long-term
incentive plan:

 

•                  A maximum of 2% of outstanding shares of stock and/or options
will be distributed in any one year period. The Board of Directors retains the
discretion to increase this amount due to special circumstances, such as an
acquisition.

 

•                  A reserve of 10% minimum of the shares available for
distribution each year will be held outside the normal distribution for special
needs (i.e., hiring, retention, etc.) that occur during the year.

 

•                  All restricted stock grants shall be approved by the
Compensation Committee of the Board of Directors

 

•                  No more than 0.5% of the outstanding shares of stock and/or
options can be distributed to Executive Officers in one year.

 

•                  The plan shall target 8-15% of the non-officer population for
inclusion in the long term incentive program.

 

•                  Minimum grants to non-officers will be 500 shares and maximum
grants to non-officers will be 10,000 shares.

 

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6.0                               PROCESS FLOW/SCHEDULE

 

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APPENDIX I – POSITIONS COVERED BY THE EXECUTIVE COMPENSATION POLICY

 

Consistent with Section 3.0 of the Executive Compensation Policy, this policy
applies to all executive officers of Tetra Tech, Inc. as well as any other
positions recommended by the CEO and approved by the Board of Directors that
have a particularly significant impact on the overall success of the Company. 
Each of these positions is listed below:

 

OFFICER POSITIONS:

Chairman

Vice Chairman

Chief Executive Officer

Executive Vice President/Chief Operating Officer

President

Executive Vice President/Chief Financial Officer

Senior Vice President Corporate Administration

Vice President, General Counsel, Secretary

Vice President, Finance and Enterprise Systems

Vice President, Corporate Controller

Vice President, Investor Relations and Corporate Development

 

OTHER KEY POSITIONS:

Senior Vice President Tt and President Remediation and Construction Group

Controller- Remediation and Construction Group

Senior Vice President Tt and President Environmental Engineering and Consulting
Group

Controller- Environmental Engineering and Consulting Group

Senior Vice President Tt and President Systems Support and Security Group

Controller- Systems Support and Security Group

Senior Vice President Tt and President Civil Infrastructure Group

Controller- Civil Infrastructure Group

Senior Vice President Tt and President Government Environmental Services Group

Controller- Government Environmental Services Group

Vice President, Human Resources

Vice President, Information Services

Vice President, Contracts

Vice President, Marketing and Business Development

Vice President, Tax and Treasury

 

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APPENDIX II – EXAMPLES

 

EXAMPLE 1

 

Narrative:                                            The Company significantly
exceeds each of its key objectives and the CEO significantly exceeds all
individual contribution expectations, maximizing the bonus payment.

 

Position:

CEO

Base Salary: $500,000

CPF: 1.4

IF: 1.2

 

Bonus to be paid:  $500,000 X 0.75 X 1.4 X 1.2 = $630,000

 

EXAMPLE 2

 

Narrative:                                            The Company achieves all
and exceeds some of its key objectives, and the COO meets all individual
contribution expectations.

 

Position:

COO

Base Salary: $360,000

CPF: 1.2

IF: 1.0

 

Bonus to be paid:  $360,000 X 0.55 X 1.2 X 1.0 = $237,600

 

EXAMPLE 3

 

Narrative:                                            The Company meets its key
objectives, and the General Counsel meets individual contribution expectations.

 

Position:

General Counsel

Base Salary: $250,000

CPF: 1.0

IF: 1.0

 

Bonus to be paid: $250,000 X 0.40 X 1.0 X 1.0 = $100,000

 

EXAMPLE 4

 

Narrative:                                            The Company meets 80% of
its key objectives, and the Corporate Controller significantly exceeds
individual contribution expectations.

 

Position:

Corporate Controller

Base Salary: $205,000

CPF: 0.8

IF: 1.2

 

Bonus to be paid:  $205,000 X 0.40 X 0.8 X 1.2 = $78,820

 

EXAMPLE 5

 

Narrative:                                            A Group President leading
a company significantly misses key objectives while the overall corporation
meets its goals.

 

Position:

Group President

Base Salary: $350,000

CPF 0.5

IF: 1.0

 

 

(below threshold)

 

 

Bonus to be paid:   $350,000 X 0.4 X 1.0 X 0.0 = 0

 

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APPENDIX III – APPROVAL FORMS

 

To:                              Compensation Committee

 

In accordance with the terms and conditions of the Executive Compensation
Policy, the following executives have earned bonus payments in the amounts
indicated. 

 

NAME

 

POSITION

 

BONUS TO BE PAID ($)*

 

 

Chairman**

 

 

 

 

Vice Chairman**

 

 

 

 

Chief Executive Officer**

 

 

 

 

Executive Vice President- Chief Operating Officer

 

 

 

 

President

 

 

 

 

Executive Vice President- Chief Financial Officer

 

 

 

 

Senior Vice President Corporate Administration

 

 

 

 

Vice President, General Counsel, Secretary

 

 

 

 

Vice President, Finance and Enterprise Systems

 

 

 

 

Vice President, Corporate Controller

 

 

 

 

Vice President, Investor Relations and Corporate Development

 

 

 

 

Vice President, Human Resources

 

 

 

 

Vice President, Information Services

 

 

 

 

Vice President, Contracts

 

 

 

 

Vice President, Marketing and Business Development

 

 

 

 

Vice President, Tax and Treasury

 

 

 

 

Senior Vice President Tt and President Remediation and Construction Group

 

 

 

 

Controller- Remediation and Construction Group

 

 

 

 

Senior Vice President Tt and President Environmental Engineering and Consulting
Group

 

 

 

 

Controller- Environmental Engineering and Consulting Group

 

 

 

 

Senior Vice President Tt and President Systems Support and Security Group

 

 

 

 

Controller- Systems Support and Security Group

 

 

 

 

Senior Vice President Tt and President Civil Infrastructure Group

 

 

 

 

Controller- Civil Infrastructure Group

 

 

 

 

Senior Vice President Tt and President Government Environmental Services Group

 

 

 

 

Controller- Government Environmental Services Group

 

 

 

Recommended:

Chief Executive Officer

 

 

Approved:

Compensation Committee Chairperson

 

 

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*Worksheet attached

**Bonus amount to be determined by Compensation Committee

 

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PERFORMANCE BONUS WORKSHEET

 

 

 

 

 

 

 

 

 

PERFORMANCE FACTOR

 

 

 

 

 

 

 

TARGET

 

 

 

 

 

AGGREGATE

 

BONUS

 

 

 

 

 

BASE

 

BONUS

 

CORPORATE

 

INDIVIDUAL

 

PERFORMANCE

 

TO BE

 

POSITION

 

NAME

 

SALARY

 

%

 

$

 

(0 - 1.4)

 

(0-1.2)

 

FACTOR

 

PAID

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vice President, Corporate Human Resources

 

 

 

Chief Executive Officer

 

 

 

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