Exhibit 10.16

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INSITUFORM TECHNOLOGIES, INC.

MANAGEMENT ANNUAL INCENTIVE PLAN

This Management Annual Incentive Plan (the “Plan”) of Insituform Technologies,
Inc. (the “Company”) is effective as of the 1st day of January, 2009.

 

A. Plan Purpose

The purpose of this Plan is to enhance business performance by motivating and
rewarding executive and management employees for the achievement of incentive
goals structured to achieve desired corporate results.

 

B. Eligible Employees

A committee comprised of the Company’s Chief Executive Officer, General Counsel
and Chief Administrative Officer, Chief Financial Officer and Vice President –
Human Resources (together, the “Plan Committee”), shall designate the employees
of the Company and its subsidiaries who are to be participants (the
“Participants”) in the Plan for the applicable fiscal year (the “Plan Year”).
Except where prohibited by law, as a condition to participation in the Plan and
the receipt of any payment hereunder, Participants shall be required to sign any
confidentiality, non-solicitation and/or non-competition agreement and/or
acknowledgement of the Company’s right to recoup any incentive compensation
required by the Company.

 

C. Participant Incentive Award Goals

The Plan Committee shall establish an incentive award goal (a “Goal”) for each
participant that shall be expressed as a percentage of such participant’s annual
base salary. Participant Goals shall be reviewed and approved by the Plan
Committee on an annual basis. The Compensation Committee shall approve Goals of
all executive officers of the Company.

 

D. Funding and Award Summary

Except as may otherwise be set forth herein or as determined by the Plan
Committee under certain circumstances, the Plan shall be funded as to 10% based
on total Company performance for the Plan year and as to the remaining 90% based
on the performance of each business unit for the Plan year. Each participant
Goal shall be divided between these two funding criteria. Total Company
performance shall be measured based on the actual consolidated Company Net
Income achieved as compared against the targeted consolidated Company Net Income
for the Plan Year, as approved by the Board of Directors of the Company.
Business unit performance shall be measured based on the actual Operating Income
achieved by a business unit of the Company as compared against the targeted
Operating Income for such business unit for the Plan Year, as approved by the
Company’s Chief Executive Officer. Goal awards from the business unit funded
portion of the Plan pool shall be earned based on an individual participant’s
performance during the Plan Year, as determined by the individual participant’s
achievement of certain measurable business objectives (“MBOs”) assigned to such
participant.

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E. Net Income

For purposes of this Plan, “Net Income” shall be defined as “net income before
extraordinary items” of the Company for the Plan Year, which shall mean the
consolidated net income of the Company during the fiscal year, as determined by
the Plan Committee in conformity with accounting principles generally accepted
in the United States of America and contained in financial statements that are
subject to an audit report of the Company’s independent public accounting firm,
but excluding:

 

  (i) losses associated with the write-down of assets of a subsidiary, business
unit or division that has been designated by the Board of Directors as a
discontinued business operation or to be liquidated;

 

  (ii) gains or losses on the sale of any subsidiary, business unit or division,
or the assets or business thereof;

 

  (iii) gains or losses from the disposition of material capital assets (other
than in a transaction described in subsection (ii)) or the refinancing of
indebtedness, including, among other things, any make-whole payments and
prepayment fees;

 

  (iv) losses associated with the write-down of goodwill or other intangible
assets of the Company due to the determination under applicable accounting
standards that the assets have been impaired;

 

  (v) gains or losses from material property casualty occurrences or
condemnation awards taking into account the proceeds paid by insurance companies
and other third parties in connection with the casualty or condemnation;

 

  (vi) any other material income or loss item the realization of which is not
directly attributable to the actions of current senior management of the
Company;

 

  (vii) any income statement effect resulting from a change in generally
accepted accounting principles, except to the extent the effect of such a change
is already reflected in the target Net Income amount; and

 

  (viii) the income taxes (benefits) of any of the above-designated gains or
losses.

The Compensation Committee shall have final authority with respect to any
determination by the Plan Committee regarding the definition of “Net Income”
and, in exercising such authority, may consult with the Company’s independent
auditor and/or Audit Committee as it deems necessary and advisable.

 

F. Operating Income

For the purposes of this Plan, “Operating Income” shall be defined as revenues
minus operating expenses before taxes, as determined by the Plan Committee in
conformity with accounting principles generally accepted in the United States of
America.

 

Effective January 1, 2009   2  

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G. Consolidated Company Financial Performance Pool Funding

The portion of the Plan funded based on the financial performance of the Company
as a whole shall be referred to as the “Consolidated Company Financial
Performance Pool.” At the outset of each Plan Year, the Compensation Committee
shall determine the consolidated Company Net Income target (the “Net Income
Target”) for the Plan Year and the threshold funding amount (the “Company
Threshold”) for the Consolidated Company Financial Performance Pool. The actual
amount funded to the Consolidated Company Financial Performance Pool shall be
determined upon calculation of actual consolidated Company Net Income (the
“Actual Net Income”) after the end of the Plan Year, subject to any deletions or
additions required pursuant to Section E hereof, and shall be adjusted from the
Company Threshold as follows:

 

  •  

If Actual Net Income equals the Net Income Target, the Consolidated Company
Financial Performance Pool shall be equal to the Company Threshold.

 

  •  

If Actual Net Income exceeds the Net Income Target, the Consolidated Company
Financial Performance Pool shall be equal to the Company Threshold plus
one-third of the amount that exceeds the Net Income Target.

 

  •  

If Actual Net Income is less than the Net Income Target, but equals or exceeds
90% of the Net Income Target, the Consolidated Company Financial Performance
Pool shall be equal to the Company Threshold minus thirty-three and 1/3 cents
(33 1/3 cents) for each dollar by which Actual Net Income is less than the Net
Income Target.

 

  •  

If Actual Net Income is less than 90% of the Net Income Target, but equals or
exceeds 75% of the Net Income Target, the Consolidated Company Financial
Performance Pool shall be equal to the Company Threshold minus 3.33% of the Net
Income Target minus the amount by which the Actual Net Income is less than 90%
of the Net Income Target.

 

  •  

If Actual Net Income is less than 75% of the Net Income Target, the minimum
amount funded to the Consolidated Company Financial Performance Pool shall be
equal to $700,000; provided, however, that such minimum amount shall only be
awarded to individual Participants for extraordinary performance, as determined
by the Company’s Chief Executive Officer in his sole discretion.

There shall be no set maximum funding amount for the Consolidated Company
Financial Performance Pool. In all events, the Compensation Committee, subject
to any required approval of the Board of Directors, shall have the ability and
authority to increase or decrease the amount of the Consolidated Company
Financial Performance Pool calculated in accordance with the provisions of this
Plan to reflect any extraordinary or unforeseen events or occurrences during the
Plan Year.

 

H. Consolidated Company Financial Performance Bonus Pool Awards

The Consolidated Company Financial Performance Pool shall be awarded to
Participants based on 10% of their Goals and subject to available pool funding.
There is no individual performance factor required to receive an award from the
Consolidated Company Financial Performance Pool, but a participant must be an
employee in good standing at the time the award is paid (that is, the
participant must be an active employee not on a performance improvement plan in
order to be eligible for an award from this pool).

 

Effective January 1, 2009   3  

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I. Business Unit/Individual Performance Pool Funding

The portion of the Plan funded based on the performance of the Company’s
individual business units shall be referred to as the “Business Unit/Individual
Performance Pool” for each business unit; provided, however, that for corporate
staff, the funding of this portion of the Plan shall be based on Actual Net
Income achievement.

Funding for Individual Business Units

At the outset of each Plan Year, the Plan Committee shall determine the targeted
Operating Income (the “Operating Income Target”) for the Plan Year for each
applicable business unit. The actual amount funded to the Business
Unit/Individual Performance Pool for the applicable business unit shall be
determined upon calculation of actual Operating Income (the “Actual Operating
Income”) for such business unit after the end of the Plan Year and shall be
adjusted from the applicable BU Threshold (as defined below) as follows:

 

  •  

The “BU Threshold” shall be equal to 90% of the sum of the business unit
Participants’ Goals for the Plan Year for the Participants in the Plan at the
time the award is to be paid.

 

  •  

If Actual Operating Income is greater than or equal to 90% of the Operating
Income Target, the Business Unit/Individual Performance Pool shall be equal to
the BU Threshold multiplied by the percentage determined by dividing the Actual
Operating Income by the Operating Income Target.

 

  •  

One third of this pool is available for distribution to the Business Unit
Participants, conditioned upon their individual MBO results.

 

  •  

The remaining two thirds of the pool is available for distribution to the
Business Unit Participants, provided they achieve their business unit’s YOY
growth gate. Funding based on the growth gate occurs on a linear trend line as
per exhibit A.

 

  •  

If Actual Operating Income is less than 90% of the Operating Income Target, the
Business Unit/Individual Performance Pool for such business unit shall not be
funded.

Funding for Corporate Staff

The amount funded to the Business Unit/Individual Performance Pool for Business
Unit Resource and Corporate staff shall be determined in accordance with the
Consolidated Company Financial Performance Pool funding mechanism as set forth
above.

 

J. Business Unit/Individual Performance Pool Awards

The portion of a participant’s Goal relating to the Business Unit/Individual
Performance Pool shall be awarded based on such participant’s individual
performance during the Plan Year. Individual performance shall be measured by
such participant’s achievement of designated MBOs for the Plan Year. The level
of achievement of a participant’s individual MBOs shall be determined by such
participant’s direct supervisor, approved by the participant’s Business Unit
leader and confirmed by the next level Corporate Officer above such Business
Unit leader. All awards from the Business Unit/Individual Performance Pool are
subject to pool funding as set forth above.

 

Effective January 1, 2009   4  

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K. Timing of Awards

Awards for a Plan Year are annual and shall be awarded in March of the
succeeding year. Participants who are not employed on the payment date shall not
be eligible to receive any payment. Participants must be employed as of
October 1 in a Plan Year to be eligible to participate in the Plan for that Plan
Year. A participant who is employed after January 1 but prior to October 1 of a
Plan Year shall only be eligible to receive an award prorated for the amount of
time the participant was employed during the Plan Year.

 

L. Nature of Plan

This Plan is a statement of intent and is not a contract. It is not a guarantee
of employment, and each participant’s employment with the company remains “at
will”. This Plan may be modified, suspended or terminated at any time, and all
awards are at the discretion of the Company’s Board of Directors or the
Compensation Committee. This Plan may be changed during a Plan Year without any
obligation of the Company to pay for the elapsed part of the Plan Year in the
manner described in the Plan. The decisions of Company management, the Plan
Committee, the Board of Directors and/or the Compensation Committee in
administering and interpreting the Plan are final and binding on all persons.

 

Effective January 1, 2009   5  

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Exhibit A

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Effective January 1, 2009   6