exv10w3






Exhibit 10.3




EAGLE MATERIALS INC.

CONCRETE AND AGGREGATES COMPANIES




SALARIED INCENTIVE COMPENSATION PROGRAM

FOR FISCAL YEAR 2009




1. Bonus Pool




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



     For
Fiscal Year 2009, the bonus pool for each concrete and aggregate company shall be equal to
2.25% of each company’s operating profit.



     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.



     Eagle Materials CEO retains the final right of interpretation and administration of the plan
and to amend or terminate the plan at any time.



2. Eligibility




     The Eagle Materials Concrete and Aggregate EVP, 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 Materials
Concrete and Aggregate EVP and Eagle Materials CEO. The addition of new 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 Aggregate Companies’ Long-Term
Compensation Program, the Eagle Materials Long- Term Compensation Program and the Eagle Materials
Special Situation Program.



3. Allocation of Pool




     The subsidiary concrete/aggregates company Presidents will each be eligible for 20% — 40% of
the pool funded from their respective subsidiary company. The subsidiary concrete/aggregates
company Presidents will recommend the distribution of the remainder of their subsidiary company
pool. The participants in the plan and their percentage of the pool will require approval of the
Eagle Materials Concrete and Aggregate EVP and Eagle Materials CEO at the beginning of the fiscal
year for which the bonus is being earned.



 









 





     The subsidiary concrete/aggregates company President’s bonus opportunity will be 50% specific,
objective goals and 50% discretionary as determined by Eagle Materials Concrete and Aggregate EVP
taking into consideration overall job performance and compliance with Eagle Materials 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 participants in their companies subject to approval by Eagle Materials
Concrete and Aggregate EVP and Eagle Materials CEO.



4. Objective Criteria




     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.



     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.



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     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






	 	•	 	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





5. Measuring Performance




     At the close of the fiscal year each subsidiary concrete/aggregates company President will
review the performance of their respective subsidiary company versus the objectives submitted at
the beginning of the year and recommend to Eagle Materials Concrete and



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Aggregate EVP distribution of the pool to the participants. Distribution of the pool requires
approval of both Eagle Materials Concrete and Aggregate EVP and Eagle Materials CEO.




     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.



     At
anytime during the fiscal year each concrete and aggregate company
President may also recommend to the Eagle Materials Concrete and
Aggregate EVP and CEO an SSP award to recognize outstanding
individual performances.



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