Exhibit 10.26

THE L. B. FOSTER COMPANY

2016

EXECUTIVE ANNUAL INCENTIVE COMPENSATION PLAN

The purpose of this document is to establish in writing the 2016 performance
goals and other terms applicable to the 2016 awards authorized under the L. B.
Foster Company Executive Annual Incentive Compensation Plan (“Plan”) for the
Fiscal Year (as defined below).

 

I. DEFINITIONS

Capitalized terms not otherwise defined herein shall have the meaning ascribed
thereto in the Plan. The following terms shall be defined as follows:

1.1. “Company” shall mean L. B. Foster Company and those subsidiaries thereof in
which L. B. Foster Company owns 100% of the outstanding common stock.

1.2. “Operating Unit” shall mean the Company’s units or divisions which are
reported in the Company’s internal financial statements and approved by the
Committee as applicable to this Plan and set forth on an exhibit on file with
the Committee.

1.3. “Financial Performance Award” shall mean an award, as determined for each
Participant, equal to (i) the “Participant’s Target Incentive” multiplied by
(ii) the applicable aggregate percentage specified for Financial Performance
Awards under Section 3.2, with the amount to be paid with respect thereto to be
calculated based upon the attainment of the objective financial performance
goals established by the Committee for Corporate and Operating Unit Adjusted
EBITDA, Corporate and Operating Unit Working Capital as a Percentage of Sales,
and Corporate ROIC for the Fiscal Year, excluding the results and any other
impact of IOS Holdings Inc. as approved by the Committee and set forth on an
exhibit on file with the Committee, and subject to the Committee’s right to
exercise discretion with respect to the amount to be paid with respect to any
such award.

1.4. “Base Compensation” shall mean base salary, rounded to the nearest whole
dollar, as in effect for a Participant on March 1, 2016. To the extent
applicable, Base Compensation for Participants who terminate during the Fiscal
Year shall include only such Base Compensation paid to such Participants during
the Fiscal Year for the period prior to such termination.

1.5. “Participant” shall mean all executive officers of the Company set forth on
Schedule 1.10.

1.6. “Participant’s Target Incentive” shall mean the product of the Base
Compensation of a Participant multiplied by the specific target percentage
established for a Participant by the Committee as described in Section 3.1
hereof.

1.7. “Fiscal Year” means the 2016 calendar year (January 1, 2016 through
December 31, 2016).

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1.8. “Adjusted EBITDA” (Earnings before interest, taxes, depreciation, and
amortization) shall mean with respect to the Company or an Operating Unit, for
the Fiscal Year, determined in accordance with generally accepted accounting
principles, including the applicable LIFO charge or credit (a) income from
continuing operations; (b) plus income tax expense; (c) plus interest expense;
(d) minus interest income; (e) plus depreciation expense; and (f) plus
amortization expense. Adjusted EBITDA shall be calculated without regard to:
(i) the effect of changes in accounting principles, (ii) any on-going and/or
one-time costs and/or expenses attributable to an acquisition, including but not
limited to, those related to the negotiation, completion and/or integration of
an acquisition, incurred during the Fiscal Year, (iii) any costs related to the
purchase accounting step up in the basis of tangible or intangible assets not
classified as depreciation or amortization, (iv) any on-going and/or one-time
costs and/or expenses related to the unsuccessfully attempted acquisition of a
business during the Fiscal Year (exclusive of employee travel), (v) any on-going
and/or one-time costs and/or expenses (exclusive of employee travel) associated
with the sale or attempted sale of a business in the Fiscal Year, (vi) any
significant or non-recurring items which are disclosed in management’s
discussion and analysis of financial condition and results of operations in the
Company’s Annual Report on Form 10-K for such period and which would have an
adverse effect on the pay-out amount of a Participant’s Financial Performance
Award, (vii) the costs of the Plan for domestic Operating Units, (viii) the
impact on any Operating Unit attributable to any administrative intercompany
charges related to transfer pricing compliance where the consolidated impact is
zero, (ix) the reported results of an acquisition (as well as results of
operations and financial position) completed in the Fiscal Year, and (x) the
results and any other impact of IOS Holdings, Inc. Notwithstanding the
foregoing, in the event that a business is sold during the Fiscal Year, such
business’ target and adjusted actual results shall be eliminated from all
calculations.

1.9. “Working Capital as a Percentage of Sales” (“W/C as a % of Sales”) shall
mean with respect to the Company, or as applicable, for an Operating Unit, for
the Fiscal Year, the average monthly balances of Inventory and Accounts
Receivable less the average monthly balances of Accounts Payable and Deferred
Revenue divided by annual net sales, provided however that all the above items,
shall be determined without regard to: (i) any on-going and/or one-time costs
and/or expenses relating to acquisitions transacted during the Fiscal Year,
(ii) businesses reclassified as “Discontinued Operations,” (iii) the impact on
any Operating Unit attributable to any administrative intercompany charges
related to transfer pricing compliance where the consolidated impact is zero,
(iv) the reported results (as well as results of operations and financial
position) of an acquisition completed in the Fiscal Year, and (v) the results
and any other impact of IOS Holdings, Inc. Notwithstanding the foregoing, in the
event that a business is sold during the Fiscal Year, such business’ target and
adjusted actual results shall be eliminated from all calculations.

1.10. “Return on Invested Capital” (“ROIC”) shall mean, with respect to the
Company for the Fiscal Year: (a) after tax earnings from continuing operations
before interest income and interest expense and amortization charges (all tax
affected using the effective corporate tax rate), divided by (b) an average of
month end total assets

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less the sum of cash, marketable securities and non-interest bearing current
liabilities, determined in accordance with generally accepted accounting
principles. ROIC shall be expressed as a percentage and shall be determined
without regard to: (i) the effect of changes in accounting principles, (ii) any
on-going and/or one-time costs and/or expenses attributable to an acquisition,
including but not limited to, those related to the negotiation, completion
and/or integration of an acquisition, incurred during the Fiscal Year, (iii) any
costs related to purchase accounting step up in the basis of tangible or
intangible assets not classified as amortization, (iv) the impact of all assets
and liabilities purchased or incurred as a result of an acquisition, (v) any
on-going and/or one-time costs and/or expenses (exclusive of employee travel)
related to the unsuccessfully attempted acquisition of a business during the
Fiscal Year, (vi) any on-going and/or one-time costs and/or expenses associated
with the successful or unsuccessful sale of a business (exclusive of employee
travel), (vii) any significant or non-recurring items which are disclosed in
management’s discussion and analysis of financial condition and results of
operations in the Company’s Annual Report on Form 10-K for such period and which
would have an adverse effect on the pay-out amount of a Participant’s Financial
Performance Award, (viii) the reported results (as well as the results of
operations and financial position) of an acquisition completed in the Fiscal
Year, and (ix) the results and any other impact of IOS Holdings, Inc.
Notwithstanding the foregoing, in the event that a business is sold during the
Fiscal Year, such business’ target and adjusted actual results shall be
eliminated from all calculations.

1.11. “Target Working Capital as a Percent of Sales (Corporate and Operating
Unit), Target Adjusted EBITDA (Corporate and Operating Unit), and Target ROIC”
shall mean the respective targets approved by the Committee as applicable to
this Plan and set forth on an exhibit on file with the Committee, which
excludes, in each case, any impact of IOS Holdings, Inc.

1.12. “Section 162(m) Officer Bonus Pool” shall mean 7% of the Adjusted EBITDA
for the Fiscal Year, which shall be allocable to the Section 162(m) Officers in
the percentages set forth on an exhibit on file with the Committee, subject to
the Committee’s right to reduce any such allocations in its sole discretion.
Adjusted EBITDA for the Section 162(m) Officer Bonus Pool shall be defined as
set forth on an exhibit on file with the Committee.

1.13. “Section 162(m) Officer” shall mean the officers of the Company who are
listed as Section 162(m) Officers on an exhibit on file with the Committee, and
who the Company has determined may be subject to the limitations imposed on
“covered employees” under Section 162(m) of the Internal Revenue Code of 1986,
as amended.

 

II. ELIGIBILITY

2.1. Additional Conditions. Subject to the terms and conditions set forth herein
and in the Plan and unless the Committee determines otherwise, in its sole
discretion, a Participant’s right, if any, to receive payment of their
respective Financial Performance Awards shall also be contingent upon
satisfaction of each of the following requirements:

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a. A Participant must execute a Confidentiality, Intellectual Property and
Non-Compete Agreement in a form satisfactory to the Committee and deliver the
executed agreement to the Company’s Vice President, Human Resources and
Administration on or before October 1 of the applicable Fiscal Year. If a
Participant previously has executed a Confidentiality, Intellectual Property and
Non-Compete Agreement, the Participant need not execute and deliver another
Confidentiality, Intellectual Property and Non-Compete Agreement.

b. A Participant’s Target Percentage award shall be specifically established by
the Committee as set forth in Section 3.1. In the event a Participant changes
from one position to another position or is promoted into one of the positions
approved by the Committee as described in Section 3.1 during the Fiscal Year
performance period, the Target Percentage for such Participant shall be
pro-rated between the Target Percentages of each position held during the Fiscal
Year based on which position was held on the first day of each month in the
Fiscal Year performance period and may be allocated among different Operating
Units as determined by the Committee. Any newly hired Participant shall have a
specific Target Percentage established by the Committee, provided their
employment began in such position by October 1 of the Fiscal Year performance
period.

c. Except as otherwise expressly set forth in Section 6 of the Plan or as
otherwise determined by the Committee, if a Participant’s employment terminates
with the Company prior to the Payment Date, the Participant shall forfeit any
and all rights to payment or any Financial Performance Award granted hereunder.

d. For Participants who are Section 162(m) Officers, funding of the
Section 162(m) Officer Bonus Pool.

 

III. AWARDS

The Section 162(m) Officer Bonus Pool shall be funded and allocable to
Participants who are Section 162(m) Officers in the percentages set forth on an
exhibit on file with the Committee, subject to the Committee’s right to reduce
any such allocations in its sole discretion. In this regard, the Target
Percentage and Target Amount, as described in Sections 3.1 and 3.2 below, will
be considered by the Committee in exercising its right of discretion.

3.1. Target Percentages. Each Participant shall have a Target Percentage based
upon the position held by such Participant as approved by the Committee on
January 25, 2016 and set forth on an exhibit on file with the Committee.

Other employees selected by the Committee may also be made Participants in the
Plan on such terms as may be approved by the Committee and consistent with the
terms of the Plan.

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3.2. Target Amount. The target amount of a Participant’s Financial Performance
Award, if any, shall be determined and allocated based on the percentages
specified in the table below:

 

    

Metric

   CEO, Sr VP & CFO;
VP-Business
Development; VP-
Human
Resources & Admin; VP
& General Counsel; and
Controller and CAO   VP’s and
SVP Responsible
for Operating
Unit(s)

Financial

Performance

Awards

   Corporate ROIC    15%   —      Operating Unit Adjusted EBITDA    —     50%   
Working Capital as a % of Sales    15%   20%    Corporate Adjusted EBITDA    70%
  30%

3.3. Financial Performance Award Multiplier. Subject to the terms and conditions
set forth herein and in the Plan, the amount of Financial Performance Award
earned shall be calculated and adjusted upward or downward based on the actual
level of attainment of Target W/C as a % of Sales (Corporate and Operating
Unit), Target Adjusted EBITDA (Corporate and Operating Unit) and/or Target ROIC
(as allocated under Section 3.2) utilizing the percentage multiplier as set
forth in the following tables:

a. Adjusted EBITDA Multiplier (Corporate/Operating Unit)

 

% of Target Adjusted

EBITDA

  

Corporate or Operating Unit Multiplier

170% and over

   200%

160%

   185%

150%

   175%

140%

   160%

130%

   145%

120%

   130%

110%

   115%

100%

   100%

90%

   84%

80%

   68%

70%

   52%

60%

   36%

50%

   20%

Less than 50%

   0%

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b. ROIC Multiplier

 

% of Target ROIC

  

ROIC Multiplier

127.5% and over

   200%

123.0%

   167%

112.8%

   133%

100.0%

   100%

93.7%

   73%

87.8%

   47%

80.0%

   20%

Less than 80.0%

   0.0%

c. W/C as a % of Sales Multiplier

 

% of Target Average W/C

as a % of Sales

  

Corporate or Operating Unit Multiplier

86.0% and under

   200%

88.7%

   175%

91.3%

   150%

94.3%

   130%

97.4%

   115%

100.0%

   100%

102.9%

   80%

106.5%

   60%

110.0%

   40%

113.9%

   30%

118.0%

   20%

121.5%

   10%

Greater than 121.5%

   0%

The calculation of the percent of target achieved in the above tables shall be
adjusted proportionately to reflect whole percentages achieved between the
levels in the table. For example, if Corporate achieved 73% of Target Adjusted
EBITDA, the percent of target achieved would be 57%; if Corporate achieved 137%
of Target Adjusted EBITDA, the percent of target achieved would be 156%.

3.4. Limitation on Financial Performance Award. Notwithstanding any provision to
the contrary, a Participant’s Financial Performance Award shall not exceed
(i) $1,500,000 for any Participant for the Fiscal Year performance period under
the Plan (and after including any other awards granted under the Plan for the
Fiscal Year) or (ii) if lower, for any Participant who is a Section 162(m)
Officer, such Participant’s designated performance pool percentage of the
Section 162(m) Officer Bonus Pool as set forth on an exhibit on file with the
Committee. In the event that the amount of any award(s) for the Fiscal Year
earned exceed $1,500,000, in the aggregate, for a Participant, or the designated
performance pool percentage for any Section 162(m) Officer, such award(s) shall
be reduced to $1,500,000 or, if lower, the applicable designated performance
pool percentage. The decision as to how and, if applicable, which award(s) shall
be reduced shall be made in a manner determined in the sole discretion of the
Committee.

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IV. RECOUPMENT

In the event the Company is required to prepare an accounting restatement
applicable to any financial reporting period covering a period within the Fiscal
Year due to the material noncompliance of the Company with any financial
reporting requirement under the securities laws or other applicable law and if
the Committee, in its discretion, so determines, each “Specified Participant”
(as defined below) shall pay to the Company, in cash, all cash paid to or on
behalf of such Participant under the Plan for the Fiscal Year in excess of the
amount of such compensation that would have been paid to the Participant for the
Fiscal Year based on the restated financial results. Any such payment shall be
made within the time periods prescribed by the Committee. The term “Specified
Participant” means any Participant that the Committee has determined, in its
sole discretion, has committed fraud, negligence, or intentional misconduct that
was a significant contributing factor to the Company having to prepare an
accounting restatement. A Specified Participant’s failure to make any such
timely payment to the Company constitutes an independent and material breach of
the terms and conditions of the Plan, for which the Company may seek recovery of
the unpaid amount as liquidated damages, in addition to all other rights and
remedies the Company may have against the Participant. By participating in the
Plan, each Participant agrees that timely payment to the Company as set forth in
this Section IV is (i) reasonable and necessary, (ii) is not a penalty, and
(iii) does not preclude the Company from seeking all other remedies that may be
available to the Company.

The Committee, in its discretion, shall determine whether the Company shall
effect any such recovery (i) by seeking repayment from the Specified
Participant, (ii) by reducing (subject to applicable law and the terms and
conditions of the applicable plan, program or arrangement) the amount that would
otherwise be payable to the Specified Participant under any compensatory plan,
program or arrangement maintained by the Company or any of its affiliates,
(iii) by withholding payment of future increases in compensation (including the
payment of any discretionary bonus amount) or grants of compensatory awards that
would otherwise have been made in accordance with the Company’s otherwise
applicable compensation practices, or (iv) by any combination of the foregoing.

Notwithstanding any other provisions of this document, any awards made hereunder
shall be subject to recovery under any law, governmental regulation, stock
exchange listing requirement or Company policy applicable to them, including any
related deductions, recoupment and/or claw-back as may be required to be made
pursuant to such law, government regulation, stock exchange listing requirement,
or Company policy, as may be in effect from time to time, and which may operate
to create additional rights for the Company with respect to the awards and
recovery of amounts relating thereto (the “Clawback Requirement”). By accepting
Financial Performance Awards granted hereunder and under the Plan, Participants
agree and acknowledge that they are obligated to cooperate with, and provide any
and all assistance necessary

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to, the Company to recover or recoup any award or amounts paid under the Plan
subject to claw-back pursuant to such law, government regulation, stock exchange
listing requirement or Company policy. Such cooperation and assistance shall
include, but is not limited to, executing, completing and submitting any
documentation necessary to recover or recoup any award or amounts paid under the
Plan from a Participant’s accounts, or pending or future compensation or awards.
In the event the awards granted pursuant to this document and the Plan become
subject to such Clawback Requirement, then the awards shall be subject to such
Clawback Requirement, and the foregoing provision of this Section IV shall no
longer apply to such awards.

Notwithstanding the foregoing, the Company shall not be required to make any
additional payment in the event that the restated financial results would have
resulted in a greater payment to any Participant.

 

V. COMPENSATION COMMITTEE

All determinations with respect to any Financial Performance Award shall be made
by the Committee and shall be final, conclusive and binding on the Company, the
Participant and any and all interested parties. No payment of a Financial
Performance Award shall be made prior to the Committee certifying in writing
that the performance goals and other material terms applicable to such awards
for the Fiscal Year as set forth herein (including the Schedule attached hereto
and/or the applicable exhibits on file with the Committee) have been attained.

The undersigned Chairman of the Committee hereby certifies, on behalf of the
Committee, that the performance goals and other material terms applicable to the
awards for the Fiscal Year as set forth herein (including the Schedule attached
hereto) have been determined and approved at the Committee meeting on
January 25, 2016.

 

By:        

/s/ William H. Rackoff

  William H. Rackoff   Chairman, Compensation Committee

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Schedule 1.10

 

Participants

  

Title*

  

Operating Unit(s)

Robert P. Bauer    President and CEO    Consolidate Corporate Merry L. Brumbaugh
   VP—Tubular Products    Tubular Steven R. Burgess   

VP—Concrete Products

President—CXT

   Rail (inc. Buildings) Samuel K. Fisher    VP—Rail Distribution    Rail (inc.
Buildings) Patrick J. Guinee    VP and General Counsel    Consolidated Corporate
John F. Kasel    Sr VP—Rail Business    Rail (inc. Buildings) Brian H. Kelly   
VP—Human Resources & Administration    Consolidated Corporate Gregory W. Lippard
   VP—Rail Product Sales    Rail (inc. Buildings) Konstantinos Papazoglou   
VP—Rail Technology    Rail (inc. Buildings) Christopher T. Scanlon    Controller
   Consolidated Corporate David J. Russo    Sr VP and CFO    Consolidated
Corporate David R. Sauder    VP—Global Business Development    Construction
(excluding Bridge
Products)

 

* Subject to change pursuant to Section 3.1.

 

Approved by Committee this

25th day of January, 2016.

 

/s/ William H. Rackoff

Chairman