VICE PRESIDENT, CHIEF FINANCIAL OFFICER

Effective: January 1, 2009

 
 

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VICE PRESIDENT, CHIEF FINANCIAL OFFICER

PURPOSE:  To define the compensation plan for the Vice President, Chief
Financial Officer.

SCOPE:  Perma-Fix Environmental Services, Inc.

POLICY:  The Vice President, Chief Financial Officer Compensation Plan is
designed to retain, motivate and reward the incumbent to support and achieve the
business, operating and financial objectives of Perma-Fix Environmental
Services, Inc. (the “Company”).

BASE SALARY:  The Base Salary indicated below is paid in equal periodic
installments per the regularly scheduled payroll.

PERFORMANCE INCENTIVE COMPENSATION: Performance Incentive Compensation is
available based on the Company’s financial results noted in Schedule
A.  Performance Incentive Compensation in the nature of prepayments are payable
in the month following each calendar year quarter in a lump sum.  Annual
performance incentive pay is payable in the month following the close of the
Company’s financial books, but in any event no later than March 15, 2010.  If
the financial books are not closed as of March 15, the annual performance
incentive pay will be based on a good faith estimate of the Company’s financial
results for the applicable year.

SEPARATION:  Upon voluntary or involuntary separation from the Company the
employee will be paid the base salary due to the last day of employment.  If
employment is separated prior to a regularly scheduled quarterly or annual
incentive compensation payment period as noted above, no incentive compensation
is due to the incumbent.

ACKNOWLEDGEMENT:  Payment of Performance Incentive Compensation of any type will
be forfeited, unless the Human Resources Department has received a signed
acknowledgement of receipt of the Compensation Plan prior to the applicable
payment date.

INTERPRETATIONS:  The Compensation and Stock Option Committee (the “Compensation
Committee”) of the Board of Directors retains the right to modify, change or
terminate the Compensation Plan at any time and for any reason.  It also
reserves the right to determine the final interpretation of any provision
contained in the Compensation Plan and it reserves the right to modify or change
the Revenue and Net Income Targets as defined herein in the event of the sale or
disposition of any of the assets of the Company.  While the plan is intended to
represent all situations and circumstances some issues may not easily be
addressed.  The Compensation Committee will endeavor to review all standard and
non-standard issues related to the Compensation Plan and will provide quick
interpretations that are in the best interest of the Company, its shareholders
and the incumbent.

 
 

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VICE PRESIDENT, CHIEF FINANCIAL OFFICER

Base Pay and Performance Incentive Compensation Targets

The compensation for the below named individual as follows:

Annualized Base Pay:
  $ 200,000  
Performance Incentive Compensation Target (at 100% of Plan):
    50,000  
Total Annual Target Compensation (at 100% of Plan):
  $ 250,000  

The Performance Incentive Compensation Target is based on the schedule below.

Target Objectives
                                                         
Performance Target Thresholds
     
Weights
   
100% or less
     
98%-99%
     
96-97%
     
94-95%
     
92-93%
     
90-91%
     
88-89%
                                                               
Administrative Expenses
   
15
%     7,500       9,000       9,751       10,531       11,250       12,000      
13,125                                                                        
Weights
      85-100 %     101-120 %     121-130 %     131-140 %     141-150 %    
151-160 %     161 %+                                                            
     
Net Income
    25 %     12,500       15,000       16,252       17,551       18,749      
20,000       21,875                                                            
       
Accounting
    10 %     5,000       6,000       6,501       7,021       7,500       8,000  
    8,750                                                                    
Accounts Receivable
    10 %     5,000       6,000       6,501       7,021       7,500       8,000  
    8,750                                                                    
SOX Compliance
    10 %     5,000       6,000       6,501       7,021       7,500       8,000  
    8,750                                                                    
Centralization & IT Objectives
    30 %     15,000       18,000       19,503       21,062       22,499      
24,000       26,250                                                            
       
Unbilled Receivables
 
* If criteria (Item #6) for reducing uniblled AR are not met bonus will be
reduced by 15%.
                                                                               
          50,000       60,000       65,009       70,205       74,997      
80,000       87,500  

 
1)
Administrative Expense is defined as the total consolidated administrative
expenses applicable as publicly reported in the Company’s financial
statements.  Administrative expenses will be inclusive of all subsidiaries, and
will exclude Marketing Expenses and Interest Expense. The Board reserves the
right to make adjustments to administrative expenses so as not to penalize the
employee for material unforeseen events outside of the employees responsibility
and it reserves the right to modify or change the Administrative Expense Targets
as defined herein in the event of the sale or disposition of any of the assets
of the Company or in the event of an acquisition.  The Board further reserves
the right to adjust Administrative Expenses to reflect charges resulting from
the vesting of incentive stock options.

 
2)
Net Income is defined as the total consolidated bottom line net income
applicable to Common Stock as publicly reported in the Company’s financial
statements.  The net income will include all subsidiaries, corporate charges,
dividends and discounted operations.  The percentage achieved is determined by
comparing the actual net income to the Board approved budgeted net income.  The
Board reserves the right to make adjustments to net income so as not to penalize
the employee for actions in the current year which will contribute to net income
in future years and it reserves the right to modify or change the Net Income
Targets as defined herein in the event of the sale or disposition of any of the
assets of the Company or in the event of an acquisition.  The Board further
reserves the right to adjust net income to reflect charges resulting from the
vesting of incentive stock options.

 
 
 

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3)
Accounting objective should focus on meeting filing deadlines such as 10K, 10Q,
8K and press releases with complete and accurate information.

 
SEC Filings
 
Performance Target
         
10K – filed timely or
    3 %          
10K – extension
    1.5 %          
1st quarter 10Q – filed timely or
    2 %          
1st quarter 10Q – extension
    1 %          
2nd quarter 10Q – filed timely or
    2 %          
2nd quarter 10Q – extension
    1 %          
3rd quarter 10Q – filed timely or
    2 %          
3rd quarter 10Q - extension
    1 %          
All 8K’s Filed
    1 %          
Total Achievable
    10 %

 
4)
Accounting Receivable objective should focus on achieving certain AR targets.

 
Accounts Receivable
 
Performance Target
 
25% or less of AR > than 60 days
    5.0 %          
30% or less of AR > than 60 days
    2.5 %
9% or less of AR > than 120 days
    5.0 %
10% or less of AR > than 120 days
    2.5 %
Total Achievable
    10.0 %

 
Accounts Receivable will be defined as outstanding accounts receivable, per
companies AR sub-ledger, collectable within the control of the financial and
operational staff.
 
Adjustments for this figure will include but not be limited to:
 
 
1.
Accounts fully reserved when calculating Bad Debt Allowance;

 
 
2.
Accounts that are in litigation; and

 
 
3.
Accounts not receivable due to a legitimate operational delay.  Note this will
only be excluded if invoicing was appropriate despite the operational delay.

 
4)
The SOX Incentive target is based maintaining good internal controls and
minimizing material weaknesses similar to “Permit and License” violations on COO
and CEO Plan.

 
SOX Deficiencies
 

Performance Target
         
0
    10 %          
1
    9 %          
2
    8 %          
3
    5 %          
4
    2 %          
> 4
    0 %

 
 

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5)
Accounting Centralization Objective -   Completion of the following milestones
related to the planned centralization of the accounting function to the
Corporate office. Completion of each objective earns 3% with a maximum target
achievable of 15%.

 
 
Accounting Centralization Objectives
 

Performance Target
         
Continue to centralize the accounting function at DSSI, M&EC, PFF, PFFL and PFO
    3.0 %          
Payroll consolidation is in process and will take affect beginning in January
2009.
    3.0 %          
We will reduce the number of bank accounts effective January 1st 2009 to one
bank account and one lockbox.
    3.0 %          
A transition to centralized accounts payable will be implemented in the 1st
quarter of 2009. All checks will be written and issued from corporate office.
    3.0 %          
A P.O. system (that communicates with our Solomon software) will be implemented
in the first and second quarter of 2009.
    3.0 %          
The multi-company module of Solomon software will be implemented in first
quarter of 2009 to simplify accounting of many facilities from a centralized
location.
    3.0 %

IT Objectives - Completion of the following milestones related to the planned
centralization of the accounting function to the Corporate office. Completion of
each objective earns 3% with a maximum target achievable of 15%.

 
IT Objectives
 

Performance Target
         
Mixed Waste Tracking at PFNW
    3.0 %          
Accounting upgrades
    3.0 %          
System Security
    3.0 %          
System integration plan for the Southeast
    3.0 %          
IT oversight / corporate governance
    3.0 %          
Tele-Com Consolidation
    3.0 %

 
6)      Unbilled trade receivables is the amount of unbilled reported per 10Q or
10K combining both the long term and current portion of unbilled.    Unbilled
trade receivable balances older than 12/31/06 should be reduced by $4 million
from $5,109,963 as of 12/31/08 to $1,109,963 by 12/31/09.

 
 

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Performance Incentive Compensation Prepayments

Performance incentive compensation will be prepaid each calendar to be applied
against the annual performance incentive compensation when payable.  This
prepayment will be calculated as follows:

First Quarter – a prepayment of the performance incentive compensation will be
earned and payable by a comparison of the Board approved budget for the first
quarter to the actual result for the first quarter.  With regard to the
accounting incentives, the total achievable performance target will be adjusted
for the first quarter target when calculating quarterly payment.  For the AR
incentive, the performance target will be calculated by using the total
achievable note updated for the 1st quarter results. For the SOX incentives the
rate used will be the prior year deficiencies until year-end when the final
updated rate will be determined. For the Centralization and IT Incentives,
compensation will be calculated based on achievement of each individual
objective.  The prepayment will be 15% of the performance incentive compensation
which will be earned for the full year if this percentage achievement of the
targets is maintained for the full year.

Second Quarter – a prepayment of the performance incentive compensation will be
earned and payable by a comparison of the Board approved budget for the first
and second quarters to the actual result for the first and second
quarters.  With regard to the accounting incentives, the total achievable
performance target will be adjusted for the first quarter target when
calculating quarterly payment.  For the AR incentive, the performance target
will be calculated by using the total achievable note updated for the 1st
quarter results. For the SOX incentives the rate used will be the prior year
deficiencies until year-end when the final updated rate will be determined.  For
the Centralization and IT Incentives, compensation will be calculated based on
achievement of each individual objective.  The prepayment will be 30% of the
performance incentive compensation which will be earned for the full year if
this percentage achievement of the targets is maintained for the full year less
the amount of the prepayment paid for the first quarter.

Third Quarter – a prepayment of the performance incentive compensation will be
earned and payable by a comparison of the Board approved budget for the first,
second and third quarters to the actual result for the first, second and third
quarters.  With regard to the accounting incentives, the total achievable
performance target will be adjusted for the first quarter target when
calculating quarterly payment.  For the AR incentive, the performance target
will be calculated by using the total achievable note updated for the 1st
quarter results. For the SOX incentives the rate used will be the prior year
deficiencies until year-end when the final updated rate will be determined.  For
the Centralization and IT Incentives, compensation will be calculated based on
achievement of each individual objective.  The prepayment will be 45% of the
performance incentive compensation which will be earned for the full year if
this percentage achievement of the targets is maintained for the full year less
the amount of the prepayment paid for the first and second quarters.

If at the conclusion of any calendar quarter, the performance incentive
compensation prepayment due to an employee is negative as a result of
subtracting the prepayments paid in previous quarters and the amount exceeds
$25,000, the company will recover this overpayment by deducting this amount from
payroll paid in accordance with the company’s normal payroll practices.

ACKNOWLEDGMENT:
I acknowledge receipt of the aforementioned Vice President, Chief Financial
Officer 2009 - Compensation Plan.  I have read and understand and accept
employment under the terms and conditions set forth therein.

/s/Ben Naccarato
 
5/6/09
 
/s/Ben Naccarato
 
Date
         
/s/Lou Centofanti
 
5/6/09
 
/s/ Board of Director
 
Date
 

 
 
 

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