exv10w4






Exhibit 10.4




EAGLE MATERIALS INC.

AMERICAN GYPSUM COMPANY




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 American Gypsum Company (the “Company”). The actual percentage may vary from year to year.



     For
Fiscal Year 2009, the bonus pool will be equal to 2.25% of American Gypsum 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 American Gypsum Company President, Vice Presidents and Plant Managers will be participants in the plan. Additional
participants who have management responsibilities or are in a professional capacity that can measurably impact earnings may
be recommended by American Gypsum Company President subject to the approval of the Eagle Materials 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 American
Gypsum Company’s Long-Term Compensation Program, the Eagle Materials Long-Term Compensation Program and the Eagle Materials
Special Situation Program.



3. Allocation of Pool




     The American Gypsum Company President will be eligible for 20% — 25% of the pool. The American Gypsum Company President
will recommend the distribution of the remainder of the company pool. The participants in the plan and their percentage
of the pool will be approved by the Eagle Materials CEO at the beginning of the fiscal year for which the bonus is being
earned. For example:




 









 





	 	 	 	 
	Participant%	 	of Pool Available
	Company President
	 	22	%
	Vice Presidents
	 	34	%
	Plant Managers
	 	20	%
	Other Participants (Directors, Superintendents)
	 	24	%
	 
	 	 	 
	 
	 	 	 
	Total
	 	100	%






     The American Gypsum Company President’s bonus opportunity will be 50% objective goals and 50% discretionary as determined
by Eagle Materials CEO 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 American Gypsum Company President will determine
the objective and discretionary balance of bonus opportunities for the other participants in this program, subject to
approval by the Eagle Materials CEO.



4. Objective Criteria 




     Objective setting is essential to an effective incentive compensation plan. Objectives 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 establishing 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 accident, 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 OSHA or GA 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.



     Another example might be the case of a dryer system that is allowed to deteriorate. This would tend to lower thermal
efficiency and line speed, but could increase available hours because we didn’t take the necessary down time to repair
the dryer system. A plan built on this premise might have production and BTU per MSF statistics lower than historical
performance but up time shown as higher. Rather than



-2-









 




using plan as the reference point for these criteria, we might use
historical performance for line speed, BTU/msf and a combination of historical and industry average for up time.
The intent would be to cause a focus on the issue of not deferring maintenance.




     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 objectives that impact earnings include:




	 	•	 	Sales






	 	•	 	Volume (total or specific product)
	 
	 	•	 	Price
	 
	 	•	 	Market share






	 	•	 	Plant Efficiencies






	 	•	 	Waste
	 
	 	•	 	Speed
	 
	 	•	 	Delay
	 
	 	•	 	Fuel usage/msf
	 
	 	•	 	Contribution/machine hour






	 	•	 	Production






	 	•	 	Volume
	 
	 	•	 	Cost (total or specific component)






	 	•	 	Quality Rating
	 
	 	•	 	Environmental Compliance
	 
	 	•	 	Managing Capital Projects
	 
	 	•	 	Overhead Reduction
	 
	 	•	 	Working Capital






	 	•	 	Inventory turns
	 
	 	•	 	Receivables






	 	•	 	Long Term Planning






	 	•	 	Gypsum reserves
	 
	 	•	 	Maintenance — protection of assets






	 	•	 	Personnel






	 	•	 	Training and development
	 
	 	•	 	Turnover rate
	 
	 	•	 	Union relations




-3-









 











5. Measuring Performance




     At the close of the fiscal year the American Gypsum Company President will review the performance of the company versus
the objectives submitted at the beginning of the year and recommend the distribution of the pool to the participants.
Distribution of the pool requires approval of the 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 the American Gypsum Company President may also recommend to the Eagle Materials CEO
an SSP award to recognize outstanding individual performances that dramatically improved the Company’s profitability or
long term value.



-4-