Exhibit 10.1
HARSCO CORPORATION
1995 EXECUTIVE INCENTIVE COMPENSATION PLAN
AUTHORIZATION, TERMS, AND CONDITIONS OF
ANNUAL INCENTIVE AWARDS
(As Amended and Restated April 27, 2004)

1.   Purposes of Annual Incentive Awards       The grant of Annual Incentive
Awards (“Awards”) under the 1995 Executive Incentive Compensation Plan is
intended to further the profitable growth of Harsco Corporation (the “Company”)
by offering a short-term incentive opportunity, in addition to base salary, to
officers and key corporate and divisional employees of the Company and its
subsidiaries who are largely responsible for such growth, to the benefit of the
Company’s stockholders. Such Awards are expected to encourage recipients to
improve their performance and remain with the Company and its subsidiaries, and
encourage other qualified persons to seek and accept employment with the Company
and its subsidiaries.   2.   Overview       This document (the “Terms and
Conditions”) sets forth the authorization, terms, and conditions of Awards under
the Company’s 1995 Executive Incentive Compensation Plan (the “1995 Plan”), as
determined by the Management Development and Compensation Committee (the
“Committee”). These Terms and Conditions are subject to, and qualified in their
entirety by reference to, the 1995 Plan, including Section 6(h) of the 1995 Plan
setting forth certain terms relating to Awards. If any of the Terms and
Conditions are inconsistent with the 1995 Plan, the terms of the 1995 Plan shall
control. Words used in these Terms and Conditions but not otherwise defined
herein shall have the meanings ascribed to such words in the 1995 Plan.   3.  
Definitions       In addition to terms defined in Sections 1 and 2 hereof, the
following terms shall be defined as set forth below:

  3.1   Base Salary means salary actually earned by a Participant during the
Performance Year to which the Award relates (as distinct from the annual salary
rate in effect at the end of such Performance Year). This amount excludes
(i) payments resulting from awards authorized under the Company’s Annual and
Long-Term Incentive Plans in effect prior to

 

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      1995 and (ii) payments under the 1995 Plan, the Terms and Conditions, or
any Awards thereunder.     3.2   Bonus Multiple means the sum of the Excess
Bonus Multiple and the Target Multiple. The Bonus Multiple will not be less than
zero.     3.3   Cash Bonus means the product of the Bonus Multiple and the
Target Bonus, provided however that the Bonus Multiple used in this calculation
shall not exceed 2.0.     3.4   Cause means (i) the willful and continued
failure by the Participant to substantially perform his or her duties with the
Company or a subsidiary (other than such failure resulting from the
Participant’s incapacity due to physical or mental illness), or (ii) the willful
engaging by the Participant in illegal conduct, or (iii) the willful engaging by
the Participant in conduct in violation of any provision of the Code of Conduct
or other published policies of the Company, or (iv) the willful engaging by the
Participant in any act of serious dishonesty which adversely affects, or in the
reasonable judgment of the Committee, could in the future adversely affect, the
value, reliability or performance of the Participant to the Company. For
purposes of this definition, no act, or failure to act, on the part of the
Participant shall be considered “willful” unless done, or omitted to be done, by
the Participant in bad faith and without reasonable belief that his or her
action or omission was in, or not opposed to, the best interests of the Company.
    3.5   EVA or Economic Value Added means the level of economic value added
generated by the Company or by a designated EVA Center during a given
Performance Year or other specified period and which is determined in accordance
with the procedures and guidelines established by the Company prior to the
Performance Year.     3.6   EVA Center means the Company as a whole or any
division, subsidiary or business unit of the Company recognized by the Committee
for purposes of this Plan and for which a separate EVA calculation is performed.
    3.7   EVA Improvement means, for any Performance Year for any EVA Center,
the difference between the current Performance Year’s EVA and the EVA for that
same EVA Center for the immediately prior Performance Year. EVA Improvement may
be a negative number.     3.8   EVA Interval means the difference between the
Targeted EVA Improvement and the EVA Improvement at the point at which the first
dollar of bonus will be earned. (The EVA Interval is also equal to the
difference between the EVA Improvement level at which the Bonus

 

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      Multiple is 2.0 and the Targeted EVA Improvement.) The EVA Interval will
be established by the Committee in accordance with Section 4.1.     3.9   Excess
Bonus Multiple means the quotient of the Excess EVA Improvement divided by the
EVA Interval. This amount can be a negative number.     3.10   Excess EVA
Improvement means the difference between the EVA Improvement for a Performance
Year less the Target EVA Improvement for that same Performance Year. Excess EVA
Improvement can have a negative value.     3.11   Fair Market Value of Common
Stock as of any given date means the average of the high and the low sale prices
of a share of common stock reported in the table entitled “New York Stock
Exchange Composite Transactions” contained in The Wall Street Journal (or an
equivalent successor table) for such date or, if no such prices are reported for
such date, on the most recent trading day prior to that date for which such
prices were reported.     3.12   Normal Retirement means retirement at or after
age 62 with at least 30 years of service, or at or after age 65.     3.13  
Participant means an officer or key employee of the Company or a subsidiary, who
has been identified by the Committee as being eligible for a potential award.  
  3.14   Performance Year means the fiscal year or other specified period during
which the achievement of Target EVA Improvement with respect to a given Award
shall be measured.     3.15   Salary Level means the numbered category assigned
to each Participant for purposes of determining annual salary rate under the
Company’s executive compensation program, as of the end of the Performance Year
to which an Award relates.     3.16   Supplemental Stock Options mean options to
purchase the Common Stock of Harsco Corporation granted pursuant to Article 6 of
these Terms and Conditions. Supplemental Stock Options shall be separate from
and in addition to any stock options which may otherwise be granted under the
Plan.     3.17   Target Bonus means an amount equal to the product of the
Participant’s Base Salary, Salary Level and 0.02 (.03 X .666) for any given
Performance Year.

 

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  3.18   Target EVA Improvement means level of EVA improvement the Company or
any EVA Unit is to achieve in a given Performance Year. Targeted EVA Improvement
is generally intended to represent a level of performance which the Committee
believes, in its sole discretion, would merit payment of incentive compensation
at a normal or median level. The Target EVA Improvement shall be established by
the Committee in accordance with Section 4.1.     3.19   Target Multiple means,
for purposes of calculating a Participant’s Award, 1.0.     3.20   Termination
means a termination of employment immediately after which the Participant is not
an employee of the Company or any subsidiary. Conversion from full-time or
part-time employment or a leave of absence from employment, if approved by the
Committee, shall not be deemed to be a Termination for purposes of these Terms
and Conditions.

4.   Performance Objectives and Award Notification

  4.1   Performance Objectives. Prior to the commencement of each Performance
Year, the Committee shall specify the Target EVA Improvement and the EVA
Interval for the Company and each EVA Center. Initially, the Target EVA
Improvement and the EVA Interval shall be established for each Performance Year
of the subsequent three year performance cycle. Annually thereafter, the
applicable Target EVA Improvement and EVA Interval will be established by the
Committee shall be only for the third year of the ongoing three year performance
cycle. The Committee, in its sole discretion, may adjust any previously
established Target EVA Improvement or EVA Interval for any Performance Year,
provided that such adjustment must be made prior to the commencement of such
Performance Year.     4.2   Notification of Awards. The Company shall notify
members of the class of eligible employees of their selection for participation
and the applicable Target EVA Improvement and EVA Interval for the Performance
Year as promptly as practicable. Such notification shall be accomplished in any
reasonable manner, in the discretion of the Committee.

 

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5.   Settlement of Awards

  5.1   Determination of Award and Limitation Thereof. As promptly as
practicable following the end of each Performance Year, the Company shall
determine the EVA achieved by the Company and each EVA Center for such year. The
Committee shall review the EVA determinations along with the other material
terms and conditions relating to the payout of an award under the Plan. If all
conditions for the payout of an Award have been satisfied, the Committee shall
then determine the Award if any, deemed to be earned as a result of the actual
EVA achieved by the Company and/or the EVA Center for the Performance Year. The
Earned Award shall be calculated by determining the EVA Improvement for the
Performance Year and comparing that with the Targeted EVA Improvement and the
EVA Interval to determine the Excess EVA Improvement. The Committee shall then
determine the Excess Bonus Multiple, the Bonus Multiple and the Cash Bonus. In
the event that a Participant’s Cash Bonus exceeds $2,000,000, the Cash Bonus for
such Participant shall be reduced to that amount. An sample calculation of an
award is attached as Exhibit A to this Plan.     5.2   Payment of Cash and Grant
of Stock. At the time the Committee determines a Participant’s Cash Bonus under
Section 5.1, each Participant shall become entitled, subject to Sections 5.3 and
5.4, to receive a payment in cash equal to his or her Cash Bonus. Such cash
payment shall be made as promptly as practicable after the determination by the
Committee of the Participant’s Cash Bonus.     5.3   Committee Discretion. The
Committee may, at any time prior to the payment under Section 5.2, adjust or
modify the Cash Bonus determined under Section 5.1: (1) in recognition of
unusual or nonrecurring events affecting the Company or any EVA Center, or the
financial statements or results thereof, or in response to changes in applicable
laws (including tax, disclosure, and other laws), regulations, accounting
principles, or other circumstances deemed relevant by the Committee, (2) in view
of the Committee’s assessment of the business strategy of the Company and/or the
EVA Centers thereof, performance of comparable organizations, economic and
business conditions, personal performance of the Participant, and other
circumstances deemed relevant by the Committee, or (3) with respect to any
Participant whose position or duties with the Company or any subsidiary has
changed; provided, however, that no such adjustment or modification may be made
with respect to an Award granted to a “covered employee” within the meaning of
Code Section 162(m) and regulations thereunder if and to the extent that such
adjustment or modification would increase the amount of compensation payable to

 

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      such covered employee. Examples of considerations which might influence
the Committee in exercising its discretion hereunder include:

  (a)   Achievement of a rate of return on stockholders’ equity which was either
significantly more or significantly less than the Committee’s estimate of the
Company’s competitive cost of equity.     (b)   The existence of compensation
restraints at an EVA Center.     (c)   A substantial change in the established
strategic performance objectives during the period.     (d)   A substantial
change in the composition of an EVA Center during the period.

  5.4   Settlement of Award In the Event of Termination. In the event of a
Participant’s Termination, such Participant (or his or her beneficiary) shall
receive, in lieu of payment of all amounts specified in Section 5.2, settlement
of such Participant’s Award as provided in this Section 5.4.         In the
event of a Participant’s Termination by reason of Normal Retirement, death, or
full and permanent disability (as determined by the Committee) prior to the end
of a Performance Year to which an award relates, the calculation of the
Participant’s Cash Bonus shall be determined under Section 5.1. However, the
definition of “Base Salary” will have the effect of prorating the Participant’s
Award according to the salary actually earned during the year to the date of
retirement. In the event of a Participant’s Termination for any reason other
than an involuntary Termination for Cause after the end of a Performance Year to
which an Award relates but prior to settlement of an Award relating to such
Performance Year, the Participant’s Cash Bonus shall be determined under
Section 5.1.         Any settlement under this Section 5.4 shall be made in the
form of a payment in cash only (as adjusted under this Section 5.4).         In
the event of a Participant’s Termination (i) for any reason other than Normal
Retirement, death, or full and permanent disability (as determined by the
Committee) prior to the end of a Performance Year to which an Award relates or
(ii) which is an involuntary Termination for Cause after the end of a
Performance Year to which an Award relates but prior to the Committee’s
determination of the Participant’s Cash Bonus, the Award of such Participant for
such Performance Year shall be forfeited.

 

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  5.5   Certification. Determinations by the Committee under this Section 5
shall be set forth in a written certification, which may include for this
purpose approved minutes of a meeting of the Committee at which such
determinations were made.

6.   Supplemental Stock Options

  6.1   In the event the Bonus Multiple for any Participant exceeds 2.0, the
Participant shall be eligible to receive a grant of Supplemental Stock Options,
the value of which shall be equal to the difference between (i) the product of
the Bonus Multiple and the Target Bonus and (ii) the product of 2.0 and the
Target Bonus. Any fractional amount shall be rounded to the nearest whole share
amount. The Committee shall review every grant of Supplemental Stock Options
authorized under this Section to confirm that such payments can be made under
the terms of the Plan and that necessary shares are available to make such
payment. The Committee shall have discretion to reduce or eliminate the
Supplemental Stock Option grant provided for in this Section 6.1 if it
determines, in its sole discretion that the granting of the Supplemental Stock
Options would not be in the best interest of the Company.     6.2   No payment
of Supplemental Stock Options shall be made to any Participant if (i) the
Participant’s Cash Bonus for the given Performance Year was equal to $2,000,000
or (ii) if such Participant was not eligible to receive a grant of Supplemental
Stock Options for that Performance Year under the terms of the 1995 Plan. In
addition, any Participant’s Supplemental Stock Option grant which may be payable
under Section 6.1 shall be reduced to the extent that the sum of the values of
the Participant’s Cash Bonus and Supplemental Stock Option grant under
Section 6.1 exceeds $2,000,000.     6.3   For purposes of determining the number
of Supplemental Stock Options to be granted under Section 6.1 the Black-Scholes
method of stock option valuation shall be used. No Supplemental Stock Options
for fractional shares shall be issued. The valuation of Supplemental Stock
Options for purposes of Section 6.2 shall also be determined in accordance with
the Black-Scholes method of valuing stock options

7.   Administration       Administrative details relating to Awards shall be
handled by the Administrator, which shall be one or more individuals, employed
in the Company’s corporate office, designated by the Chief Executive Officer of
the Company to serve in such capacity.

 

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EXHIBIT A
EXAMPLE BONUS CALCULATION

                      2001     2002  
EVA
    ($19.5 )   $ 15.0  
 
               
EVA Improvement
          $ 34.5  
Less: Target EVA Improvement
          $ 4.8  
 
             
= Excess EVA Improvement
          $ 29.7  
 
               
Divide by Interval
          $ 32.0  
 
             
= Excess Bonus Multiple
            0.93  
 
               
+ Target Multiple
            1.00  
 
             
= Bonus Multiple
            1.93  
x Target Bonus
          $ 10,000  
 
             
 
               
 
             
= Bonus Declared
          $ 19,281