Exhibit 10.1

 

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Rural/Metro Management Incentive

Program Summary

 

Purpose of Plan

 

Rural/Metro’s Management Incentive Program (MIP) is an annual cash incentive
plan for the key executive positions as designated below. The MIP is designed to
promote, recognize, and financially reward exceptional performance. This is
accomplished by:

 

•   Establishing goals to encourage and influence superior performance and a
high degree of accountability

 

•   Communicating to eligible employees the importance of performance
excellence, of substantially exceeding budget expectations, and of achieving
other objectives annually agreed to as “soft goals”

 

•   Aligning executive accountability and corporate goals

 

This Plan summary document does not establish enforceable employee rights,
contractual or otherwise, and does not establish an employment relationship
enforceable by the participant. Further, the annual amounts, budget
expectations, and soft goals require review and approval by the Board of
Directors.

 

Plan Document

 

In an effort to provide the incentive to outperform the goal, “Consolidated
Budgeted Net Income from Continuing Operations”, in the case of corporate
executives and “Regional Budgeted Operating Income from Continuing Operations”,
in the case of Group Presidents, the Company has established a “sliding scale”
award system as follows:

 

Percentage of Goal

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   CEO

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Executive

Vice President

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Senior

Vice President

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Corporate

Vice President

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Group

Presidents

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90%

   50.00 %   31.00 %   31.00 %   28.00 %   28.00 %

100%

   80.00 %   50.00 %   50.00 %   45.00 %   45.00 %

125%

   100.00 %   62.00 %   62.00 %   56.00 %   56.00 %

150%

   125.00 %   75.00 %   75.00 %   67.00 %   67.00 %

 

The potential award is adjusted incrementally at each 1% point for goal
achievements between 90% and 150%.

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For example: If the Company achieved 104% of goal; the CEO award would calculate
to 83.20% (or 1.04 * 80%), while the Senior Vice President award would calculate
to 52% (or 1.04 * 50%).

 

Note: The MIP is discretionary and subject to change or termination by the Board
of Directors at any time without notice.

 

Administration

 

•   The Compensation Committee of the Board of Directors, under the leadership
of the Chair, is responsible for the overall administration of the MIP. The
Compensation Committee is, therefore, defined as the “Plan Administrator”.

 

•   The CEO and the company’s Vice President & Treasurer serve as staff to the
Plan Administrator to provide reports, make recommended design modifications,
and ensure accuracy of reporting.

 

•   The Plan Administrator resolves any disputes concerning the plan, including
payout disputes.

 

•   The Board of Directors approves any or all recommendations made by the
Compensation Committee before they are considered to be adopted.

 

Duration of the Plan

 

The MIP is measured in terms of hard and soft goals. Hard goals are measured
from July 1st to June 30th of the respective fiscal year, and soft goals are
measured from January 1st to November 30th of the respective calendar year. The
MIP is, by design and intent, fully discretionary and the provisions may be
modified at any time to meet specific business objectives of the Company.

 

The MIP is designed as a calendar year plan; however, audited June 30th fiscal
year–end financial statements available by September 30th are utilized to
substantiate hard goal achievements.

 

Eligibility

 

To participate in the MIP, certain eligibility requirements apply in addition to
the position titles designated above, i.e., throughout the duration of the
specific MIP period as defined above, the participant must:

 

  •   Not be functioning under any corrective action plan;

 

  •   Not terminate (or give notice to terminate) his/her employment with the
company (unless otherwise agreed to in a separate employment agreement); and

 

  •   Unless specifically exempted by the Plan Administor, have continuously
functioned in an eligible position until the MIP payout date.

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Determination of Scoring Criteria

 

•   Awards are calculated utilizing the predetermined relative value scoring
criteria established for each annual goal. Ultimately, however, the eligibility
for, and payment of, any and all incentive compensation under the MIP is
entirely discretionary and subject to the recommendation of the Plan
Administrator and approval of the Board of Directors.

 

•   The MIP allows the Chief Executive Officer in conjunction with the
Compensation Committee to recommend an incentive award that may be in excess of
100% of the projected relative value scoring criteria based on individual
achievements of hard and soft goals.

 

•   Participants who are hired, transferred or promoted into or out of an
eligible position or whose employment ends due to death, disability, retirement
or separation under the Corporation’s Severance Policy, may, but need not be,
considered for a prorated incentive award based on the actual number of months
worked.

 

•   In the case of a participant transferring from one eligible position to
another eligible position, past performance is considered in determining an
award.

 

Development of Scoring Criteria

 

•   Unless otherwise stipulated by an employment agreement, each participant
develops, in cooperation with their Supervisor, specific scoring criteria
including hard and soft goals. The ‘percentage of goal’ to be applied is
primarily based on “Consolidated Actual Net Income from Continuing Operations”,
or in the case of Group Presidents on “Regional Actual Operating Income from
Continuing Operations” as adjusted for cost of capital and goodwill impairment
charges, if any. The Board of Directors, at its discretion, can adjust the
Consolidated Actual Net Income from Continuing Operations calculation to
consider Board actions taken in the best long-term interest of the Company. Hard
goals are then weighted at 70% and soft goals are weighted at 30% of the overall
award. Soft goals are specific to regional or corporate directives with emphasis
on accountability related to each individual participant.

 

•   The Plan Scoring Criteria Form (“PSCF”) outlines specific goals with an
assigned relative value weighting. This relative value weighting is reviewed and
recommended by the Plan Administrator with final approval of the Board of
Directors.

 

•   It is envisioned that the MIP relative value scoring criteria will total
100%; however, at the recommendation of the Plan Administrator and by approval
of the Board of Directors this award may exceed 100%.

 

Payout Conditions

 

•   A preliminary report is given to the Board of Directors in October
presenting the audited numbers for the hard goals and the preliminary
expectations on the soft goals. The majority of the soft goals are completed by
October, therefore, it is possible to provide a reasonable estimate. Any
necessary updates on soft goals completed after the October Board meeting will
be provided during the December meeting.

 

•   It is the intention of this Plan that the Board of Directors will receive
the appropriate information at the December Board Meeting to review and approve
the awards and the awards would be paid as soon as possible after each December
Board Meeting but in no case later than December 31st.

 

•   Incentive awards are calculated using the participants’ annual base pay at
the time of the award payout.

 

•   Incentive awards are subject to normal payroll withholding.