Exhibit 10.3

EAGLE MATERIALS INC.

CONCRETE AND AGGREGATES COMPANIES

SALARIED INCENTIVE COMPENSATION PROGRAM

FOR FISCAL YEAR 2011

 

1. Purpose

The purpose of the Eagle Materials Inc. Concrete and Aggregates Companies
Salaried Incentive Compensation Program for Fiscal Year 2011 (the “Plan”) is to
establish an incentive bonus program which: (i) focuses on the performance of
each Concrete and Aggregates company as well as individual performance; and
(ii) aligns the interest of participants with those of the shareholders of Eagle
Materials Inc. (“Eagle”). The Plan is adopted by the Compensation Committee of
the Board of Directors of Eagle (the “Committee”) under the structure of Eagle
Materials Inc. Incentive Plan, as amended, (the “Incentive Plan”) and is subject
to all the terms and conditions of such Incentive Plan, including, without
limitation the limits set forth in Section 8 of the Incentive Plan. The Plan
shall be in effect for the fiscal year ending March 31, 2011.

 

2. Bonus Pool

To insure reasonableness and affordability the available funds for bonus
payments are determined as a percent of earnings of the concrete and aggregates
companies of Eagle. The actual percentage may vary from year to year.

For Fiscal Year 2011, the bonus pool for each concrete and aggregates company
shall be equal to 2.25% of each company’s operating earnings.

Participants must be employed at fiscal year-end to be eligible for any bonus
award. Awards may be adjusted for partial year participation for participants
added during a year.

The Committee hereby delegates to the CEO of Eagle all its duties and
authorities to grant awards under the Plan except that the Committee shall
retain all authority with respect to awards to the Eagle EVP-Concrete and
Aggregates.

 

3. Eligibility

The Eagle EVP-Cement/Aggregates and Concrete, the subsidiary concrete/aggregates
company Presidents, V.P. Sales and Plant Managers will be in the Plan.
Additional participants who have management responsibilities or are in a
professional capacity that can measurably impact earnings may be recommended by
subsidiary company presidents subject to the approval of the Eagle
EVP-Cement/Aggregates and Concrete and Eagle CEO. The addition of new Plan
participants will not affect the total pool available but will in effect dilute
the potential bonuses of the original participants.

A participant must be an exempt salaried manager or professional. No hourly or
non-exempt employee may participate. Participants in this Plan may not
participate in any other company incentive plan with monetary awards, except for
the Concrete and Aggregates Companies’ Long-Term Compensation Program, the Eagle
Materials Long-Term Compensation Program and the Eagle Materials Special
Situation Program.

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4. Allocation of Pool

The Eagle EVP-Cement/Aggregates and Concrete will be eligible for 20% – 25% of
the total of all subsidiary concrete/aggregates pools which percentage shall be
recommended by the CEO and shall be approved by the Committee. The subsidiary
concrete/aggregates company Presidents will each be eligible for 20% – 40% of
the pool funded from their respective subsidiary company which percentage shall
be recommended by the Eagle EVP-Cement/Aggregates and Concrete and approved by
the Eagle CEO. The subsidiary concrete/aggregates company Presidents will
recommend the distribution of the remainder of their subsidiary company pool.
For each participant, the maximum annual bonus award opportunity is represented
by the percentage of the applicable pool assigned to such participant. The
participants in the Plan and their percentage of the applicable pool will
require approval of the Eagle EVP-Cement/Aggregates and Concrete and Eagle CEO
(except for the Eagle EVP-Cement/Aggregates and Concrete and his percentage
which shall be approved by the Committee) at the beginning of the fiscal year
for which the bonus is being earned.

The subsidiary concrete/aggregates company President’s bonus opportunity shall
be 50% specific, objective goals and 50% discretionary taking into consideration
overall job performance and compliance with Eagle Policies and Code of Ethics.
All participants in the Plan must have the ability to significantly affect the
performance of the subsidiary company by achieving measurable, quantifiable,
objectives. The subsidiary company Presidents will determine the objective and
discretionary balance of bonus opportunities for the other participants in their
companies subject to approval by the Eagle EVP-Cement/Aggregates and Concrete
and the Eagle CEO.

 

5. Objective Criteria

At the beginning of the fiscal year goals and objectives shall be established
for each participant.

Objective setting is essential to an effective incentive compensation plan and
should be measurable and focus on areas that have meaningful impact on our
operational performance. Having selected objectives, it is also important to
establish a reference point for that objective which indicates expected
performance.

In addition to consideration of the budget plan as a reference, we will consider
historic performance of a facility, equipment design standards, industry
standards, comparable values from other companies or like situations and any
other qualified source or established reference points or basis for determining
performance.

To illustrate the need for the selection of an objective, the reference point
and how performance deviation from the reference is judged, let’s look at safety
as an example. Let’s suppose a company plans 0 lost time accidents, which is
reasonable to plan. If they have 1 lost time accidents, is the performance a
total failure, poor, fair or reasonable? If they have 2 lost time accidents, is
the performance unacceptable, poor, fair or reasonable? From this information it
would be difficult to assess their overall safety performance. We could give
consideration to the number of incidents requiring doctor’s treatment. We could
include an evaluation of worker’s compensation claims or dollars spent. As an
alternative to these, we could use industry statistics available from an
authoritative source such as MSHA or OSHA which show accident frequency and
severity ratio for comparable facilities. We could establish a mean or average
as our reference point, based on accident frequency and severity, and agree to a
bonus adjustment according to our percentile ranking with comparable industry.

 

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Because our basic products are commodities the level of prices in a given market
area are established by supply and demand over which local management has little
control. Through price leadership, local management can affect prices in a small
range around supply-demand equilibrium. Accordingly, one of the performance
criteria might still be pricing but this does not indicate that an overall bad
or good market is itself a performance indicator of local management. For bonus
purposes, they should neither be penalized nor rewarded for the general economic
conditions.

Fixed assets is another area over which local management exercises limited
control. Each manager basically has to work with the fixed assets he is
assigned. Local management can exercise considerable control over current assets
such as receivable and inventory but, as a heavily capitalized industry with
limited transportability, local management essentially has to do the best they
can with the PP&E they are assigned.

Typical examples for consideration:

 

  •  

Sales

 

  •  

Volumes – cubic yards, tons

 

  •  

Price – cubic yards, tons

 

  •  

Costs

 

  •  

Per yard of dry materials

 

  •  

Per ton of aggregates (produced)

 

  •  

Maintenance per cubic yard

 

  •  

Delivery per cubic yard

 

  •  

Gross margins

 

  •  

Accuracy of monthly reprojections

 

  •  

Safety

 

  •  

Housekeeping & Appearance Production - Efficiency

 

  •  

Concrete yards per truck

 

  •  

Concrete yards per batch plant

 

  •  

% utilization of dry/wet plants

 

  •  

Productivity

 

  •  

Man hours per concrete yard - plant

 

  •  

Man hours per concrete yard - delivery

 

  •  

Aggregates - TPH

 

  •  

Overhead Cost

 

  •  

T & E

 

  •  

Bad debt expense

 

  •  

Working capital -

 

  •  

Receivables - stated as DSO

 

  •  

Inventory R&O, raw materials, fuel, payables or process

 

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  •  

Quality - Uniformity, specific product application

 

  •  

Long-term planning

 

  •  

Reserves

 

  •  

Environmental compliance

 

  •  

Maintenance - protection of assets

 

  •  

Personnel

 

  •  

Organization

 

  •  

Training

 

  •  

Union relations

 

  •  

Other profits

 

  •  

Associated business lines

 

  •  

Sale of surplus assets

 

  •  

Lease or rental income

 

6. Measuring Performance

At the close of the fiscal year each subsidiary concrete/aggregates company
President will review the overall performance of each participant in such
subsidiary and each such participant’s achievement of the goals and objectives
submitted at the beginning of the fiscal year and recommend to the Eagle
EVP-Cement/Aggregates and Concrete distribution of the pool to the participants
(in such subsidiary). Distribution of the pool to participants other than the
Eagle EVP-Concrete and Aggregates requires approval of the Eagle CEO.
Distribution of any portion of the pool to the Eagle EVP-Cement/Aggregates and
Concrete requires the recommendation of the Eagle CEO and the approval of the
Committee.

Any portion of the Company Operating Pool not paid out (unearned) or forfeited
will be added to the Special Situation Program (the “SSP”) at Corporate.

 

7. No Employment Guaranteed

No provision of this Plan hereunder shall confer any right upon any participant
to continued employment.

 

8. Governing Law

This Plan and all determinations made and actions taken pursuant hereto, shall
be governed by and construed in accordance with the laws of the State of Texas,
without reference to any conflicts of law principles thereof that would require
the application of the laws of another jurisdiction.

 

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