Exhibit 10.1

MICHAEL BAKER CORPORATION

2007 INCENTIVE COMPENSATION PLAN

Section 1. Purpose. The purpose of the Michael Baker Corporation 2007 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
performance goals. By providing an incentive payment opportunity based upon
market-based performance goals, the Company will establish a clear line of sight
between 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, 2007.
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 Incentive Targets and Incentive 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 Managers. Group 2.    Participants in Group 2 shall be the
Engineering Project Managers, the Energy Project Managers, the Sales Managers
and the Office 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.

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 Project Manager Incentive Program;

 

  •  

The Sales Manager Incentive Program;

 

  •  

The Office Manager Incentive Program; and

 

  •  

The Discretionary Incentive Program.

All Group 1 Participants shall participate in the Corporate Incentive Program.
All Group 2 Participants who are Engineering Project Managers or Energy Project
Managers shall participate in the Project Manager Incentive Plan. All Group 2
Participants who are Sales Managers shall participate in the Sales Manager
Incentive Program. All Group 2 Participants who are Office Managers shall
participate in the Office Manager Incentive Program. All Group 3 Participants
shall participate in the Discretionary 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.

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(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 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.

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 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 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

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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) Sales Manager Performance Goals. Within 30 days after the commencement of a
Plan Year, the Committee shall establish specific performance goals for the
Company’s Sales Managers (“Sales Manager 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.
The Sales Manager Performance Goals are attached hereto as Attachment D.

(d) Office Manager Performance Goals. Within 30 days after the commencement of a
Plan Year, the Committee shall establish specific performance goals for the
Company’s Office Managers (“Office Manager 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, expenses. The Office Manager Performance Goals are attached hereto as
Attachment E.

(e) 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) 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.

 

  (iii) Sales Manager Incentive Program. The Participant Performance Goals for
each Group 2 Participant in the Sales Manager Incentive Program shall be (x) the
Main Company Performance Goals and (y) the Sales Manager Performance Goals,
weighted per Attachment F.

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  (iv) Office Manager Incentive Program. The Participant Performance Goals for
each Group 2 Participant in the Office Manager Incentive Program shall be
(x) the Main Company Performance Goals and (y) the Office Manager 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.

(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 2 1/2 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

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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.

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

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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.

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.