EX-10.4






THE SHAW GROUP INC.




2001 EMPLOYEE INCENTIVE COMPENSATION PLAN

(as amended and restated through January 27, 2006)




1. Purpose of Plan.



The Shaw Group Inc. 2001 Employee Incentive Compensation Plan has been established by the
Company to (i) attract and retain persons eligible to participate in the Plan; (ii) motivate
participants, by means of appropriate incentives, to achieve long-range goals; (iii) provide
incentive compensation opportunities that are competitive with those of other similar companies;
and (iv) further identify participants’ interests with those of the Company’s other shareholders
through compensation that is based on the Common Stock thereby promoting the long-term financial
interest of the Company and its Subsidiaries, including the growth in value of the Company’s equity
and enhancement of long-term shareholder return.



2. Definitions.



Unless otherwise required by the context, the following terms when used in the Plan shall have
the meanings set forth in this Section 2:




(a) “Agreement”: An agreement evidencing an Award in such form as adopted from time to time
by the Committee pursuant to the Plan.




(b) “Award”: Any award or benefit granted under the Plan, including without limitation, the
grant of Options, SARs, Restricted Stock, Performance Shares or Incentive Bonuses, or any
combination thereof, under the Plan.




(c) “Board of Directors”: The Board of Directors of the Company.




(d) “Cause”: For purposes of the Plan, whether the termination of a Participant’s
employment shall have been for Cause shall be determined by the Committee in its sole
discretion, if said Participant has: (i) been convicted of, or has pleaded guilty or nolo
contendere to a charge that he committed a felony under the laws of the United States or any
state or a crime involving moral turpitude, including but not limited to fraud, theft,
embezzlement or any crime that results in or is intended to result in personal enrichment at the
expense of the Company or its Subsidiaries; (ii) perpetrated a fraud against, or theft of
property of the Company or any of its Subsidiaries; (iii) committed acts amounting to gross
negligence, intentional neglect or willful misconduct in carrying out his duties and
responsibilities as an employee of the Company or one or more of its Subsidiaries; (iv)
willfully or persistently failed to attend to his duties as an employee of the Company or one or
more of its Subsidiaries; or (v) as a result of his gross negligence or willful misconduct,
committed any act that causes, or has knowingly failed to take reasonable and appropriate action
to prevent, any material injury to the financial condition or business reputation of the Company
or any of its Subsidiaries.




(e) “Change of Control”: For the purposes of the Plan, the term Change in Control shall
mean the happening of any of the following:




(i) any “person” as defined in Section 3(a)(9) of the Exchange Act, and as used in
Section 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) of the
Exchange Act (but excluding any shareholder of record of the Company as of January 1, 2000,
owning 10% or more of the combined voting power of the Company’s securities which are
entitled to vote in the election of directors of the Company) directly or indirectly becomes
the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), of securities of
the Company representing 20% or more of the combined voting power of the Company’s then
outstanding securities which are entitled to vote with respect to the election of directors;




(ii) When, during any period of 24 consecutive months, the individuals who, at the
beginning of such period, constitute the Board of Directors of the Company (the “Incumbent
Directors”) cease for any reason other than death or disability to constitute at least a
majority thereof; provided, however, that a director who was not a director at the beginning
of such 24-month period shall be deemed to have satisfied such 24-month requirement (and be
an Incumbent Director) if such director was elected by, or on the recommendation of or with
approval of, at least two-thirds of the directors who then qualified as Incumbent Directors
either actually (because they were directors at the beginning of such 24-month period) or by
operation of this provision;




(iii) The acquisition of the Company or all or substantially all of the Company’s assets
by an entity other than the Company (or a Subsidiary) through purchase of assets, or by
merger, or otherwise, except in the case of a transaction pursuant to which, immediately
after the transaction, the Company’s shareholders immediately prior to the transaction own
immediately after the transaction at least a majority of the combined voting power of the
surviving entity’s then outstanding securities which are entitled to vote with respect to the
election of directors of such entity; or




(iv) The Company files a report or proxy statement with the Commission pursuant to the
Exchange Act disclosing in response to Form 8-K, Form 10-K or Schedule 14A (or any successor
schedule, form or report or item therein) that a change in control of the Company has or may
have occurred or will or may occur in the future pursuant to any then-existing contract or
transaction.




(f) “Code”: The Internal Revenue Code of 1986, as amended from time to time.




(g) “Commission”: The Securities and Exchange Commission.




(h) “Committee”: The Compensation Committee of the Board of Directors or such other
committee appointed by the Board of Directors which meets the requirements set forth in Section
14.1 hereof.




(i) “Company”: The Shaw Group Inc., a Louisiana corporation.




(j) “Consultant”: Any professional advisor to the Company or its Subsidiaries as well as
any employee, officer or director of a corporation that serves as an advisor, consultant or
independent contractor to the Company or its Subsidiaries. The term “Consultant” shall not,
however, include any director, officer or employee of the Company or its Subsidiaries.




(k) “Effective Date”: The date on which the Plan shall become effective as set forth in
Section 16 hereof.




(l) “Exchange Act”: The Securities Exchange Act of 1934, as amended, together with all
regulations and rules issued thereunder.




(m) “Exercise Price”: (i) In the case of an Option, the price per Share at which the Shares
subject to such Option may be purchased upon exercise of such Option and (ii) in the case of an
SAR, the price per Share which upon grant, the Committee determines shall be used in calculating
the aggregate value which a Participant shall be entitled to receive upon exercise of such SAR.




(n) “Fair Market Value”: As applied to a specific date, the fair market value of a Share on
such date as determined in good faith by the Committee in the following manner:




(i) If the Shares are then listed on any national or regional stock exchange, the Fair
Market Value shall be the last quoted sales price of a Share on the date in question, or if
there are no reported sales on such date, on the last preceding date on which sales were
reported;




(ii) If the Shares are not so listed, then the Fair Market Value shall be the mean
between the bid and ask prices quoted by a market maker or other recognized specialist in the
Shares at the close of the date in question; or




(iii) In the absence of either of the foregoing, the Fair Market Value shall be
determined by the Committee in its absolute discretion after giving consideration to the book
value, the revenues, the earnings history and the prospects of the Company in light of market
conditions generally.



The Fair Market Value determined in such manner shall be final, binding and conclusive on all
parties.




(o) “Incentive Bonus”: An Award granted pursuant to Section 8 of the Plan.




(p) “ISO”: An Option intended to qualify as an “incentive stock option,” as defined in
Section 422 of the Code or any statutory provision that may replace such Section and designated
as an incentive stock option by the Committee.




(q) “Officer”: An officer of the Company or its Subsidiaries meeting the definition of
“officer” in Rule 16a-1(f) (or any successor provision) promulgated by the Commission under the
Exchange Act.




(r) “NQSO”: An Option not intended to be an ISO and designated as a nonqualified stock
option by the Committee.




	 	(s)	 	“Option”: Any ISO or NQSO granted under the Plan.






(t) “Participant”: An officer or other employee of or Consultant to the Company or any of
its Subsidiaries who has been granted an Award under the Plan.




(u) “Performance Measures”: The Performance Measures described in Section 9.1 of the Plan.




(v) “Performance Period”: For the purposes of the grant of Performance Shares, the time
period during which the applicable performance goal(s) must be met.




(w) “Performance Shares”: An Award granted pursuant to Section 7 of the Plan.




(x) “Plan”: This The Shaw Group Inc. 2001 Employee Incentive Compensation Plan, as the same
may be amended from time to time.




(y) “Related”: (i) In the case of an SAR, an SAR that is granted in connection with, and to
the extent exercisable, in whole or in part, in lieu of, an Option or another SAR; and (ii) in
the case of an Option, an Option with respect to which and to the extent an SAR is exercisable,
in whole or in part, in lieu thereof, has been granted.




(z) “Restricted Stock”: Shares which have been awarded to a Participant under Section 6
hereof.




(aa) “Restriction Period”: The time period during which Restricted Stock awarded under the
Plan must be held before it becomes fully vested, unless additional conditions have been placed
upon the vesting thereof.




(bb) “SAR”: A stock appreciation right awarded to a Participant under Section 5.3 hereto.




(cc) “Shares”: Shares of the Company’s authorized but unissued or reacquired no par value
per share common stock, or such other class or kind of shares or other securities as may be
applicable pursuant to the provisions of Section 4.4 hereof.




(dd) “Subsidiary”: Any “subsidiary corporation” of the Company, as such term is defined in
Section 424(f) of the Code.



3. Participation.



Participants shall be selected by the Committee from the officers (whether or not they are
directors), employees of the Company or its Subsidiaries (either full or part-time) and
Consultants. An Award may be granted to an employee, in connection with hiring, retention or
otherwise, prior to the date the employee first performs services for the Company or the
Subsidiaries, provided that such Awards shall not become vested prior to the date the employee
first performs such services.



4. Shares Subject to Plan.



4.1 Shares Subject to the Plan. The maximum number of Shares that may be delivered to
Participants and their beneficiaries pursuant to the Plan shall be equal to 9.5 million shares of
Common Stock. The limitations established by the preceding sentence shall be subject to adjustment
as provided in Section 4.4 of the Plan.



4.2 Accounting for Number of Shares. For purposes of determining the aggregate number of
Shares available for delivery to Participants pursuant to the Plan, any Shares granted under the
Plan which are forfeited back to the Company because of the failure to meet an award contingency or
condition shall again be available for delivery pursuant to new Awards granted under the Plan. Any
Shares covered by an Award (or portion of an Award) granted under the Plan, which is forfeited or
canceled, expires or is settled in cash, shall be deemed not to have been delivered for purposes of
determining the maximum number of Shares available for delivery under the Plan. Likewise, if any
Option is exercised by tendering Shares to the Company as full or partial payment in connection
with the exercise of an Option under this Plan or the Prior Plan, only the number of Shares issued
net of the Shares tendered shall be deemed delivered for purposes of determining the maximum number
of Shares available for delivery under the Plan. Further, Shares issued under the Plan through the
settlement, assumption or substitution of outstanding Awards or obligations to grant future Awards
as a result of acquiring another entity shall not reduce the maximum number of Shares available for
delivery under the Plan.



4.3 Maximum Total Option and SAR Awards. Notwithstanding the provisions of Section 4.1, over
the term of the Plan, the total number of Shares that may be issued upon exercise of all Options
and SARs granted under the Plan shall not exceed 9.5 million shares of Common Stock (as adjusted to
reflect a two-for-one Common Stock split distributed on December 15, 2000). The limitations in this
Section 4.3 shall be subject to adjustment as provided in Section 4.4 below.



4.4 Adjustments. In the event of a corporate transaction involving the Company (including,
without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization,
reorganization, merger, consolidation, split-up, spin-off, combination or exchange of shares, or
other similar transactions or award), the Committee may adjust Awards as well as the total number
of shares subject to the Plan to preserve the benefits or potential benefits of the Awards. Action
by the Committee may include: (i) adjustment of the number and kind of Shares (or other securities
or property) which may be delivered under the Plan; (ii) adjustment of the number and kind of
Shares (or the securities or property) subject to outstanding Awards; (iii) adjustment of the
Exercise Price of outstanding Options and SARs; and (iv) any other adjustments that the Committee
determines to be equitable, in its sole discretion.



5. Awards of Options and SARs.



5.1 General Terms and Conditions. The Committee shall have full and complete authority and
discretion, except as expressly limited by the Plan, to grant Options and SARs and to provide any
and all terms and conditions (which need not be identical among the Participants) thereof. In
particular, the Committee shall prescribe the following terms and conditions:




(a) The Exercise Price of the Option or SAR, which may not be less than 100% of the Fair
Market Value per Share at the date of grant of the Option or SAR;




(b) The number of Shares subject to, and the expiration date of, the Option or SAR;




(c) The manner, time and rate (cumulative or otherwise) of exercise of the Option or SAR;
provided, however, that except as otherwise specified in the Plan, no Option or SAR awarded to a
Participant who is an Officer shall expressly provide for exercise prior to the expiration of
six months from the date of grant; and




(d) The restrictions or conditions (such as performance goals), if any, to be placed upon
the Option or SAR, the exercisability of the Option or SAR or upon the Shares which may be
issued upon exercise of the Option or SAR. The Committee may, as a condition of granting an
Option or SAR, require that a Participant agree not to thereafter exercise one or more Options
or SARs previously granted to such Participant.



5.2 Maximum Award of Options and SARs. The number of Shares that may be allotted by the
Committee pursuant to Options and SARs awarded to any individual Participant shall not exceed, in
any fiscal year, 2.0 million Shares (as adjusted to reflect a two-for-one Common Stock Split
distributed on December 15, 2000) (subject to further adjustment pursuant to Section 4.4 of the
Plan). If an Option is in tandem with an SAR, such that the exercise of the Option or SAR with
respect to a Share cancels the tandem SAR or Option right, respectively, with respect to such
Share, the tandem Option and SAR rights with respect to such Share shall be counted as covering but
one Share for purposes of applying the limitations of this Section 5.2.



5.3 SAR Awards.



(a) Grant of SARs. An SAR shall, upon its exercise, entitle the Participant to whom such SAR
was granted to receive a number of Shares or cash or combination thereof, as the Committee in its
discretion shall determine, the aggregate value of which (i.e., the sum of the amount of cash
and/or Fair Market Value of such Shares on date of exercise) shall equal the amount by which the
Fair Market Value per Share on the date of such exercise shall exceed the Exercise Price of such
SAR multiplied by the number of Shares with respect of which such SAR shall have been exercised. An
SAR may be related to an Option or may be granted independently of an Option, as the Committee
shall from time to time in each case determine. A Related SAR may be granted at the time of grant
of an Option or, in the case of an NQSO, at any time thereafter during the term of the NQSO.



(b) Related SARs. The Exercise Price of a Related SAR shall be the same as the Exercise Price
of the Related Option. A Related SAR shall be exercisable only at such time or times and only to
the extent that the Related Option is exercisable and then only when the Fair Market Value per
Share on the date of exercise exceeds the Exercise Price. A Related SAR shall expire no later than
the Related Option. Upon exercise of a Related SAR, in whole or in part, the Related Option shall
be cancelled automatically to the extent of the number of Shares covered by such exercise, and such
Shares shall no longer be available for delivery pursuant to future Awards. Conversely, if the
Related Option is exercised, in whole or in part, the Related SAR shall be cancelled automatically
to the extent of the number of Shares covered by the Option exercise.



5.4 Exercise of Options and SARs.



(a) General Exercise Rights. Except as provided in Section 5.9, an Option or SAR ranted under
the Plan shall be exercisable during the lifetime of the Participant to whom such Option or SAR was
granted only by such Participant, and except as provided in Section 5.4(c) and Section 5.9 hereof,
no Option or SAR may be exercised unless at the time such Participant exercises such Option or SAR,
such Participant is an employee of and has continuously since the grant thereof been an employee
of, the Company or an any of its Subsidiaries. Transfer of employment between Subsidiaries or
between Subsidiary and the Company shall not be considered an interruption or termination of
employment for any purpose under this Plan. Neither shall a leave of absence at the request, or
with the approval, of the Company or Subsidiary be deemed an interruption or termination of
employment, so long as the period of such leave does not exceed 90 days, or, if longer, so long as
the Participant’s right to re-employment with the Company or Subsidiary is guaranteed by contract.
An Option or SAR also shall contain such conditions upon exercise (including, without limitation,
conditions limiting the time of exercise to specified periods) as may be required to satisfy
applicable regulatory requirements, including, without limitation, Rule 16b-3 (or any successor
rule) promulgated by the Commission.



(b) Notice of Exercise. An Option or SAR may not be exercised with respect to less than 100
Shares, unless the exercise relates to all Shares covered by the Option or SAR at the date of
exercise. An Option or SAR may be exercised by delivery of a written notice to the Company, which
shall state the election to exercise the Option or SAR and the number of whole Shares in respect of
which it is being exercised, and shall be signed by the person or persons so exercising the Option
or SAR. In the case of an exercise of an Option or SAR, such notice shall either: (i) if
applicable, be accompanied by payment of the full Exercise Price and all applicable withholding
taxes, in which event the Company shall deliver any certificate(s) representing Shares to which the
Participant is entitled as a result of the exercise as soon as practicable after the notice has
been received; or (ii) fix a date (not less than 5 nor more than 15 business days from the date
such notice has been received by the Company) for the payment of the full Exercise Price and all
applicable withholding taxes, against delivery by the Company of any certificate(s) representing
Shares to which the Participant is entitled to receive as a result of the exercise. Payment of such
Exercise Price and withholding taxes shall be made as provided in Sections 5.4(d) and 13,
respectively. In the event the Option or SAR shall be exercised pursuant to Section 5.4(c)(i) or
Section 5.9 hereof, by any person or persons other than the Participant, such notice shall be
accompanied by appropriate proof of the right of such person or persons to exercise the Option or
SAR.



(c) Exercise after Termination of Employment. Except as otherwise determined by the Committee
at the date of grant of the Option or SAR and as is provided in the applicable Agreement evidencing
the Award, upon termination of a Participant’s employment with the Company or any of its
Subsidiaries, such Participant (or in the case of death, the person(s) to whom the Option is
transferred by will or the laws of descent and distribution) may exercise such Option or SAR during
the following periods of time (but in no event after the expiration date of such Option or SAR) to
the extent that such Participant was entitled to exercise such Option or SAR (or portion thereof)
at the date of such termination (i.e., the Option or SAR (or portion thereof) must be “vested” at
the time of termination to be exercisable thereafter):




(i) In the case of termination as a result of death, disability or retirement of the
Participant, the Option or SAR shall remain exercisable for a one-year period following such
termination; for this purpose, “disability” shall exist when the Participant is unable to engage
in any substantial, gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or which has lasted or can be expected to
last for a continuous period of not less than 12 months, as determined by the Committee in its
sole discretion, and “retirement” shall mean voluntary retirement at or after the Participant’s
normal retirement date as determined by the Committee in its sole discretion;




(ii) In the case of termination for Cause, the Option shall immediately terminate and shall
no longer be exercisable; and




(iii) In the case of termination for any reason other than those set forth in subparagraphs
(i) and (ii) above, the Option or SAR shall remain exercisable for three months after the date
of termination.



To the extent the Option or SAR is not exercised within the foregoing periods of time, the Option
or SAR shall automatically terminate at the end of the applicable period of time. Notwithstanding
the foregoing provisions, failure to exercise an ISO within the periods of time prescribed under
Sections 421 and 422 of the Code shall cause an ISO to cease to be treated as an “incentive stock
option” for purposes of Section 421 of the Code.



(d) Payment of Option Exercise Price. Upon the exercise of an Option, payment of the Exercise
Price shall be made either (i) in cash (by a certified check, bank draft or money order payable in
United States dollars), (ii) with the consent of the Committee and subject to Section 5.4(e)
hereof, by delivering the Participant’s duly-executed promissory note and related documents, (iii)
with the consent of the Committee, by delivering Shares already owned by the Participant valued at
Fair Market Value as of the date of exercise, (iv) with the consent of the Committee, by
irrevocably authorizing a third party to sell shares of Common Stock (or a sufficient portion of
such shares) acquired upon exercise of the Option and remit to the Company a sufficient portion of
the sales proceeds to pay the entire Exercise Price and any tax withholding resulting from such
exercise, or (v) by a combination of the foregoing forms of payment.



(e) Payment with Loan. The Committee may, in its sole discretion, assist any Participant in
the exercise of one or more Options granted to such Participant under the Plan by authorizing the
extension of a loan to such Participant from the Company. Except as otherwise provided in this
Section 5.4(e), the terms of any loan (including the interest rate and terms of repayment) shall be
established by the Committee in its sole discretion. Any such loan by the Company shall be with
full recourse against the Participant to whom the loan is granted, shall be secured in whole or in
part by the Shares so purchased, and shall bear interest at a rate not less than the minimum
interest rate required at the time of purchase of the Shares in order to avoid having imputed
interest or original issue discount under Sections 483 or 1272 of the Code. In addition, any such
loan by the Company shall become immediately due and payable in full, at the option of the Company,
upon termination of the Participant’s employment with the Company or its Subsidiaries for any
reason or upon the sale of any Shares acquired with such loan to the extent of the cash and fair
market value of any property received by the Participant in such sale. The Committee may make
arrangements for the application of payroll deductions from compensation payable to the Participant
to amounts owing to the Company under any such loan. Until any loan by the Company under this
Section 5.4(e) is fully paid in cash, the Shares shall be pledged to the Company as security for
such loan and the Company shall retain physical possession of the stock certificates evidencing the
Shares so purchased together with a duly executed stock power for such Shares. No loan shall be
made hereunder unless counsel for the Company shall be satisfied that the loan and the issuance of
Shares funded thereby will be in compliance with all applicable federal, state and local laws, and
such counsel shall be consulted prior to the funding of any such loan.



5.5 Settlement of Awards of Options and SARs. Settlement of Awards of Options and SARs is
subject to Section 10.



5.6 Options or SARs Awarded to Consultants. Any provision of this Section 5 to the contrary
notwithstanding, (i) an Option or SAR may be exercised at any time by a Participant who is a
Consultant during the applicable period in the manner provided in Section 5.4(b) above; provided,
that in the event of the death of a Participant who is a Consultant, the Option or SAR may be
exercised by the executors or administrators of the estate of such Consultant or by the person or
persons who shall have acquired the Option or SAR directly by bequest or inheritance; and (ii) the
Exercise Price for an Option or SAR awarded to a Consultant must be paid in cash (by a certified
check, bank draft of money order).



5.7 Rights as a Shareholder. A Participant shall have no rights as a shareholder with
respect to any Shares issuable on exercise of an Option or SAR until the date of the issuance of a
stock certificate to the Participant for such Shares. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property) or distributions or
other rights for which the record date is prior to the date such stock certificate is issued,
except as provided in Section 4.4 hereof.



5.8 Special Provisions for ISOs.



Any provision of the Plan to the contrary notwithstanding, the following special provisions
shall apply to all ISOs granted under the Plan:



(a) The Option must be expressly designated as an ISO by the Committee and in the Agreement
evidencing the Option;



(b) No ISO shall be granted more than ten years from the Effective Date of the Plan and no ISO
shall be exercisable more than ten years from the date such ISO is granted;



(c) The Exercise Price of any ISO shall not be less than the Fair Market Value per Share on
the date such ISO is granted;



(d) Any ISO shall not be transferable by the Participant to whom such ISO is granted other
than by will or the laws of descent and distribution and shall be exercisable during such
Participant’s lifetime only by such Participant;



(e) No ISO shall be granted to any individual who, at the time such ISO is granted, owns stock
possessing more than 10% of the total combined voting power of all classes of stock of the Company
or any Subsidiary unless the Exercise Price of such ISO is at least 110% of the Fair Market Value
per Share at the date of grant and such ISO is not exercisable after the expiration of five years
from the date such ISO is granted;



(f) The aggregate Fair Market Value (determined as of the time any ISO is granted) of any
Company stock with respect to which any ISOs granted to a Participant are exercisable for the first
time by such Participant during any calendar year (under this Plan and all other stock option plans
of the Company and any of its Subsidiary and any predecessor of any such corporations) shall not
exceed $100,000 as required under Section 422(d)(i) of the Code. (To the extent the $100,000 limit
is exceeded, the $100,000 in Options, measured as described above, granted earliest in time will be
treated as ISOs); and



(g) any other terms and conditions as may be required in order that the ISO qualifies as an
“incentive stock option” under Section 422 of the Code or successor provision.



Notwithstanding the provisions of Section 5.4(c)(i), the favorable tax treatment available
pursuant to Section 422 of the Code upon the exercise of an ISO will not be available to a
Participant who exercises any ISO more than (i) 12 months after the date of termination of
employment due to the Participant’s disability, or (ii) three months after the date of termination
of employment due to retirement of the Participant.



5.9 Limited Transferability. No Option or SAR, nor any interest therein, may be assigned,
encumbered or transferred except, in the event of the death of a Participant, by will or the laws
of descent and distribution. Notwithstanding the foregoing, the Committee shall have the
discretionary authority to grant NQSOs and SARs (that are not Related to an ISO) that are
transferable by the Participant to the Participant’s children, grandchildren, spouse, one or more
trusts for the benefit of such family members, or a partnership in which such family members were
the only partners. The holder of an NQSO or SAR transferred pursuant to this Section 5.9 shall be
bound by the terms and conditions that govern the NQSO or SAR during the period that it was held by
the Participant; provided, however, that such transferee may not transfer the NQSO or SAR except by
will or the laws of descent and distribution.



6. Restricted Stock.



6.1 General Terms/Conditions. The Committee may, in its discretion, grant one or more Awards
of Restricted Stock to any Participant. Each Award of Restricted Stock shall be evidenced by an
Agreement which shall specify the number of Shares to be issued to the Participant, the date of
such issuance, the price, if any, to be paid for such Shares by the Participant, the Restriction
Period and any other conditions imposed on such Shares as the Committee, in its discretion, shall
determine. Notwithstanding the foregoing, the Committee shall impose upon each Award of Restricted
Stock made to a Participant who is an Officer a Restriction Period expiring no earlier than six
months after the date of grant of the Restricted Stock.



6.2 Maximum Award of Restricted Stock. The maximum number of Shares that may be allotted by
the Committee pursuant to Restricted Stock awarded to any individual Participant shall not exceed,
in any fiscal year, 300,000 Shares (subject to further adjustment as provided in Section 4.4 of the
Plan).



6.3 Restrictions and Forfeitures.



(a) Shares included in Restricted Stock Awards may not be sold, assigned, transferred, pledged
or otherwise disposed of or encumbered, either voluntarily or involuntarily, until such Shares have
fully vested.



(b) Participants holding shares of Restricted Stock granted hereunder may be granted the right
to exercise full voting rights with respect to those Shares during the Restriction Period. During
the Restriction Period, Participants holding shares of Restricted Stock granted hereunder may be
credited with regular cash dividends paid with respect to the underlying Shares while they are so
held. The Committee may apply any restrictions to the dividends that the Committee deems
appropriate. Without limiting the generality of the preceding sentence, if the grant or vesting of
Restricted Stock is designed to comply with one or more of the Performance Measures set forth in
Section 9.1, the Committee may apply any restrictions it deems appropriate to the payment of
dividends declared with respect to such Restricted Stock, such that the dividends and/or the
Restricted Stock maintain eligibility under Section 162(m) of the Code.



(c) In the event that the Participant shall have paid any cash for the Restricted Stock, the
Agreement shall specify whether and to what extent such cash shall be returned upon a forfeiture
(with or without an earnings factor).



(d) The Restricted Stock shall be evidenced by a stock certificate registered only in the name
of the Participant, which stock certificate shall be held by the Company until the Restricted Stock
has fully vested.



(e) The occurrence of any of the following events shall cause the immediate vesting of the
Restricted Stock:




(i) the death of the Participant;




(ii) the retirement of the Participant on or after the Participant’s normal retirement
date;




(iii) the disability of the Participant.



For the purposes of this Subsection, the term “disability” shall be defined as such term is
defined in Section 5.4(c)(i). Notwithstanding the foregoing, to the extent a condition(s) other
than a Restriction Period has been imposed by the Committee upon the Restricted Stock, the
occurrence of the foregoing shall not cause immediate vesting unless and until such condition(s)
has been met.



(f) A Restricted Stock Award shall be entirely forfeited by the Participant in the event that
prior to vesting, the Participant breaches any terms or conditions of the Plan, the Participant
resigns from or is terminated by the Company, or any condition(s) imposed upon vesting are not met.



6.4 Legend on Certificates. Each certificate evidencing a Restricted Stock Award under the
Plan shall be registered in the name of the Participant and deposited by the Participant, together
with a stock power endorsed in blank, with the Company and shall bear the following (or a similar)
legend:




“The transferability of this certificate and the shares of Common Stock represented hereby
are subject to the terms and conditions (including forfeiture) contained in The Shaw Group Inc.
2001 Employee Incentive Compensation Plan and a Restricted Stock Agreement entered into between
the registered owner and The Shaw Group Inc. Copies of such Plan and Agreement are on file in
the offices of the Secretary of The Shaw Group Inc., 4171 Essen Lane, Baton Rouge, Louisiana
70809.”



6.5 Section 83(b) Elections. Within 30 days after the issuance of shares of Restricted Stock
to a Participant under the Plan, the Participant shall decide whether or not to file an election
pursuant to Section 83(b) of the Code and Treasury Regulation Section 1.83-2 (and state law
counterparts) with respect to such Restricted Stock. If the Participant does file such an election,
the Participant shall promptly furnish the Company with a copy of such election.



7. Performance Shares.



7.1 Grant of Performance Shares. Subject to the terms of the Plan, Performance Shares may be
granted to Participants in such amounts and upon such terms, and at any time and from time to time,
as shall be determined by the Committee, provided that no more than 50,000 Shares (as adjusted to
reflect a two-for-one Common Sock split distributed on December 15, 2000) (subject to further
adjustment as provided in Section 4.4 of the Plan) may be subject to any Performance Share Awards
granted to any individual Participant in any fiscal year.



7.2 Value of Performance Shares. Each Performance Share shall have an initial value equal to
the Fair Market Value of a Share on the date of grant. The Committee shall set performance goals in
its discretion which, depending on the extent to which they are met, will determine the number
and/or value of Performance Shares that will be paid out to the Participant.



7.3 Earning of Performance Shares. Subject to the terms of the Plan, after the applicable
Performance Period has ended, the holder of Performance Shares shall be entitled to receive payout
on the number and value of Performance Shares earned by the Participant over the Performance
Period, to be determined as a function of the extent to which the corresponding performance goals
have been achieved.



7.4 Form and Timing of Payment of Performance Shares. Payment of earned Performance Shares
shall be made in a single lump sum following the close of the applicable Performance Period.
Subject to the terms of this Plan, the Committee, in its sole discretion, may pay earned
Performance Shares in the form of cash or in Shares (or in a combination thereof) which have an
aggregate Fair Market Value equal to the value of the earned Performance Shares at the close of the
applicable Performance Period. Such Shares may be granted subject to any restrictions deemed
appropriate by the Committee. The determination of the Committee with respect to the form of payout
of such Awards shall be set forth in the Agreement pertaining to the grant of the Award of
Performance Shares.



At the discretion of the Committee, Participants may be entitled to receive any dividends
declared with respect to Shares which have been earned in connection with grants of Performance
Shares which have been earned, but not yet distributed to Participants (such dividends shall be
subject to the same accrual, forfeiture, and payout restrictions as apply to dividends earned with
respect to Shares of Restricted Stock, as set forth in Section 6 hereof). In addition, Participants
may, at the discretion of the Committee, be entitled to exercise their voting rights with respect
to such Shares.



7.5 Termination of Employment Due to Death, Disability, or Retirement. Unless determined
otherwise by the Committee and set forth in the Agreement evidencing an Award of Performance
Shares, in the event the employment of a Participant is terminated by reason of death, disability,
or retirement during a Performance Period, the Participant or his legal representative shall
receive a payout of the Performance Shares which is prorated, as specified by the Committee, in its
sole discretion. For purposes of this Section 7.5, the term “disability” shall be defined as such
term is defined in Section 5.4(c)(i).



Payment of earned Performance Shares shall be made at a time specified by the Committee in its
sole discretion and set forth in the Agreement evidencing such Award. Notwithstanding the
foregoing, with respect to Performance Shares that have been awarded with the intention of
qualifying as “performance-based compensation” under Section 162(m) of the Code to a Participant
who retires during a Performance Period, payment shall be made pursuant to such Performance Share
Award at the same time as payments are made to Participants who did not terminate employment during
the applicable Performance Period.



7.6 Termination of Employment for Other Reasons. In the event that a Participant’s
employment terminates for any reason other than those reasons set forth in Section 7.5 above, all
Performance Shares shall be forfeited by the Participant to the Company unless determined otherwise
by the Committee, as set forth in the Agreement evidencing such Award.



7.7 Non-Transferability. Except as otherwise provided in an Agreement evidencing such Award
of Performance Shares, Performance Shares may not be sold, assigned, transferred, pledged or
otherwise disposed of or encumbered, either voluntarily or involuntarily, until such Performance
Shares have fully vested. Further, except as otherwise provided in an Agreement evidencing such
Award of Performance Shares, a Participant’s rights under the Plan shall be exercisable during the
Participant’s lifetime only by the Participant or the Participant’s legal representative.



8. Incentive Bonuses.



8.1 Awards of Incentive Bonuses. The Committee shall have the discretionary authority to
designate Participants to whom Incentive Bonuses are to be paid. Incentive Bonuses shall be
determined exclusively by the Committee pursuant to procedures established by the Committee;
provided, however, that for any fiscal year, no individual Participant may receive Incentive
Bonuses aggregating more than $5 million.



8.2 Terms and Conditions. The Committee, at the time an Incentive Bonus is made, shall
specify the terms and conditions that govern the granting thereof. Such terms and conditions may
include, by way of example and not limitation, requirements that the Participant complete a
specified period of employment with the Company or a Subsidiary, or that the Company or Subsidiary
or the Participant attain stated objectives or goals as a prerequisite to payment under an
Incentive Bonus. The Committee, at the time the Incentive Bonus is granted shall also specify what
amount shall be payable under the Incentive Bonus and whether amounts shall be payable in the event
of the Participant’s death, disability or retirement.



8.3 Settlement of Incentive Bonuses. Settlement of Incentive Bonuses is subject to Section 1



9. Performance-Based Compensation.



9.1 Performance Measures. The Committee may designate whether an Award being granted to any
Participant is intended to be “performance-based compensation” as that term is used in Section
162(m) of the Code. Any such Awards designated by the Committee to be “performance-based
compensation” shall be conditioned on the achievement of one or more Performance Measures, to the
extent required by Code Section 162(m). The Performance Measures that may be used by the Committee
for such Awards shall be based on any one or more of the following, as selected by the Committee:




	 	(a)	 	Earnings per share;






	 	(b)	 	Net income (before or after taxes);






	 	(c)	 	Return measures (including, but not limited to, return on assets, capital,
equity or sales);






	 	(d)	 	Earnings before or after taxes;






	 	(e)	 	Share price (including, but not limited to, growth measure and total
shareholder return);






	 	(f)	 	Gross revenues;






	 	(g)	 	Working capital measures; or






	 	(h)	 	Backlog.





For Awards under this Section 9 intended to be “performance-based compensation”, (i) the grant of
the Awards and the establishment of the Performance Measures shall be made during the period
required by Section 162(m) of the Code and (ii) the Committee shall certify in writing that the
Performance Measure has been met. The Committee shall have the discretion to define the Performance
Measures on a corporation or subsidiary or business division basis or in comparison with peer group
performance.



9.2 Board Authority. In the event that applicable tax and/or securities laws change to
permit the Committee discretion to alter the governing Performance Measures without obtaining
shareholder approval of such changes, the Board of Directors of the Company shall have the sole
discretion to make changes in the Performance Measures without shareholder approval.



10. Settlement of Awards.



The obligation to make payments and distributions with respect to Awards may be satisfied
through cash payments, the delivery of shares of Common Stock, the granting of replacement Awards,
or combination thereof as the Committee shall determine, in its sole discretion. Satisfaction of
any such obligations under an Award, which is sometimes referred to as “settlement” of the Award,
may be subject to such conditions, restrictions, and contingencies as the Committee shall
determine. The Committee may permit or require the deferral of any Award payment, subject to such
rules and procedures as it may establish, which may include provisions for the payment or crediting
of interest or dividend equivalents. Each Subsidiary shall be liable for payment of cash due under
the Plan with respect to any Participant to the extent that such benefits are attributable to the
services rendered for that Subsidiary by the Participant. Any disputes relating to liability of a
Subsidiary for cash payments shall be resolved by the Committee.



11. Consultants.



An Award made to a Consultant hereunder must be supported by bona fide services actually
rendered by the Company to the Consultant. However, in no event shall an Award be made to a
Consultant (i) for services rendered by the Consultant in connection with the offer or sale of
securities in a capital raising transaction or (ii) who directly or indirectly promotes or
maintains a market for the Company’s securities.



12. Government Regulations.



This Plan, the granting of Awards under this Plan and the issuance or transfer of Shares
(and/or the payment of money) pursuant thereto are subject to all applicable federal and state
laws, rules and regulations and to such approvals by any regulatory or governmental agency
(including without limitation “no action” positions of the Commission) which may, in the opinion of
counsel for the Company, be necessary or advisable in connection therewith. Without limiting the
generality of the foregoing, no Awards may be granted under this Plan, and no Shares shall be
issued by the Company, pursuant to or in connection with any such Award, unless and until, in each
such case, all legal requirements applicable to the issuance or payment have, in the opinion of
counsel to the Company, been complied with. In connection with any stock issuance or transfer, the
person acquiring the Shares shall, if requested by the Company, give assurances satisfactory to
counsel to the Company in respect of such matters as the Company may deem desirable to assure
compliance with all applicable legal requirements. The Company shall not be required to deliver any
Shares under the Plan prior to (i) the admission of such Shares to listing or for quotation on any
stock exchange or automated quotation system on which Shares may then be listed or quoted, and (ii)
the completion and effectiveness of such registration or other qualification of such Shares under
any state or federal law, rule or regulation, as the Committee shall determine to be necessary or
advisable.



13. Tax Withholding.



The Company shall have the right to withhold from amounts due Participants, or to collect from
Participants directly, the amount which the Company deems necessary to satisfy any taxes required
by law to be withheld at any time by reason of participation in the Plan, and the obligations of
the Company under the Plan shall be conditional on payment of such taxes. The Participant may,
prior to the due date of any taxes, pay such amounts to the Company in cash, or with the consent of
the Committee, in Shares (which shall be valued at their Fair Market Value on the date of payment).
There is no obligation under this Plan that any Participant be advised of the existence of the tax
or the amount required to be withheld. Without limiting the generality of the foregoing, in any
case where it determines that a tax is or will be required to be withheld in connection with the
issuance or transfer or vesting of Shares under this Plan, the Company may pursuant to such rules
as the Committee may establish, reduce the number of such Shares so issued or transferred by such
number of Shares as the Company may deem appropriate in its sole discretion to accomplish such
withholding or make such other arrangements as it deems satisfactory. Notwithstanding any other
provision of this Plan, the Committee may impose such conditions on the payment of any withholding
obligation as may be required to satisfy applicable regulatory requirements, including, without
limitation, Rule 16b-3 (or successor provision) promulgated by the Commission.



14. Administration of Plan.



14.1 The Committee. The Plan shall be administered by the Committee, which shall be
comprised of two or more members of the Board of Directors, each of whom shall be a “Non-Employee
Director” as defined in Rule 16b-3(b)(3) (or any successor provision) promulgated by the Commission
and each of whom shall qualify as an “outside director” as defined in Section 162(m) of the Code.



14.2 Committee Action. A majority of the members of the Committee at the time in office
shall constitute a quorum for the transaction of business, and any determination or action may be
taken at a meeting by a majority vote or may be taken without a meeting by a written resolution
signed by all members of the Committee. All decisions and determinations of the Committee shall be
final, conclusive and binding upon all Participants and upon all other persons claiming any rights
under the Plan with respect to any Award. Members of the Board of Directors and members of the
Committee acting under the Plan shall be fully protected in relying in good faith upon the advice
of counsel and shall incur no liability except for willful misconduct in the performance of their
duties.



14.3 Committee Authority. In amplification of the Committee’s powers and duties, but not by
way of limitation, the Committee shall have full authority and power to:



(a) Construe and interpret the provisions of the Plan and establish, amend and rescind rules
and regulations relating to the Plan and to make all other determinations that may be necessary or
advisable for the administration of the Plan not inconsistent with the Plan;



(b) Decide all questions of eligibility for Plan participation and for the grant of Awards;



(c) Determine the types of Awards and the number of Shares covered by the Awards, if any, to
be granted to any Participant, to establish the terms, conditions, Performance Measures,
restrictions and other provisions of such Awards, and (subject to the restrictions imposed by
Section 17) to cancel or suspend Awards;



(d) Adopt forms of agreements and other documents consistent with the Plan;



(e) Engage agents to perform legal, accounting and other such professional services as it may
deem proper for administering the Plan; and



(f) Take such other actions as may be reasonably required or appropriate to administer the
Plan or to carry out the Committee activities contemplated by other sections of this Plan.



14.4 Indemnification. In addition to such other rights of indemnification as they may have
as directors or as members of the Committee, the Board of Directors and the members of the
Committee shall be indemnified by the Company against the reasonable expenses, including court
costs and reasonable attorneys’ fees, actually incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal therein, to which they or any of them
may be a party by reason of any action taken or failure to act under or in connection with the Plan
or any Award granted hereunder, and against all amounts paid by them in settlement thereof or paid
by them in satisfaction of a judgment in any such action, suit or proceeding, except where such
indemnification is expressly prohibited by applicable law.



15. Change of Control.



Subject to the provisions of Section 4.4 (relating to the adjustment of Shares), or except as
otherwise provided in the Agreement evidencing the Award, upon the occurrence of a Change of
Control:



(a) all outstanding Options (regardless of whether in tandem with SARs) shall become fully
exercisable,



(b) all outstanding SARs (regardless of whether in tandem with Options) shall become fully
exercisable,



(c) all Restricted Stock and Performance Shares shall become fully vested, and



(d) All Incentive Bonuses that have been approved and accrued shall become fully payable.



16. Effective Date and Shareholder Approval.



The Effective Date of the Plan shall be November 27, 2000 (the date the Plan was approved by
the Board of Directors) subject to receipt within one year of such date the approval of the Plan by
the holders of a majority of the total voting power of the voting securities of the Company present
in person or represented by proxy at a meeting of shareholders at which the approval of such Plan
is considered.



17. Amendment and Termination.



17.1 The Plan



(a) Amendment. The Board of Directors may amend the Plan from time to time in its sole
discretion, provided that, unless the requisite approval of shareholders is obtained, no amendment
shall be made to the Plan if such amendment would (i) increase the number of Shares available for
issuance under the Plan or increase the limits applicable to Awards under the Plan, in each case,
except as provided in Section 4.4; (ii) lower the Exercise Price of an Option or SAR grant value
below 100% of the Fair Market Value of one Share on the date of the Award, except as provided in
Section 4.4; (iii) remove the repricing restriction set forth in Section 17.2; or (iv) require
shareholder approval pursuant to applicable federal, state or local law or under rules of the New
York Stock Exchange, if the Shares are then listed on such exchange. No amendment shall adversely
affect the rights of any Participant under any Award theretofore made under the Plan, without the
Participant’s consent.



(b) Termination. The Plan shall terminate automatically on the tenth anniversary of the
Effective Date, and the Board of Directors may suspend or terminate the Plan at any earlier time.
Upon termination of the Plan, no additional Awards shall be granted under the Plan; provided,
however, that the terms of the Plan shall continue in full force and effect with respect to
outstanding Awards and Shares issued under the Plan.



17.2 Awards. Subject to the terms and conditions and the limitations of the Plan, the
Committee may in the exercise of its sole discretion modify, extend or renew the terms of
outstanding Awards granted under the Plan, or accept the surrender of outstanding Awards (to the
extent not theretofore exercised); provided, however, that the Committee shall not have the
authority to accept the surrender or cancellation of any Options and any SARs that relate to such
Options outstanding hereunder (to the extent not theretofore exercised) and grant new Options and
any SARs that relate to such new Options hereunder in substitution therefore (to the extent not
theretofore exercised) at an Exercise Price that is less than the Exercise Price of the Options
surrendered or canceled. The foregoing shall not limit any adjustments made under Section 4.4 of
the Plan. Notwithstanding the provisions of this Section 17.2, no modification of an Award shall,
without the consent of the Participant, impair any rights or obligations under any Awards
theretofore granted under the Plan.



18. Miscellaneous.



18.1 No Individual Rights. No person shall have any claim or right to be granted an Award
under the Plan, or having been selected as a Participant for one Award, to be so selected again.
Neither the establishment of the Plan nor any amendments thereto, nor the granting of any Award
under the Plan, shall be construed as in any way modifying or affecting, or evidencing any
intention or understanding with respect to, the terms of the employment of any Participant with the
Company or any of its Subsidiaries.



18.2 Multiple Awards. Subject to the terms and restrictions set forth in the Plan, a
Participant may hold more than one Award.



18.3 Written Notice. As used herein, any notices required hereunder shall be in writing and
shall be given on the forms, if any, provided or specified by the Committee. Written notice shall
be effective upon actual receipt by the person to whom such notice is to be given; provided,
however, that in the case of notices to Participants and their transferees, heirs, legatees and
legal representatives, notice shall be effective upon delivery if delivered personally or three
business days after mailing, registered first class postage prepaid to the last known address of
the person to whom notice is given. Written notice shall be given to the Committee and the Company
at the following address or such other address as may be specified from time to time:




The Shaw Group Inc.


4171 Essen Lane


Baton Rouge, Louisiana 70809


Attention: Secretary



18.4 Unfunded Plan. The Plan shall be unfunded and shall not create (and shall not be
construed to create) a trust or a separate fund or funds. The Plan shall not establish any
fiduciary relationship between the Company and any Participant. To the extent any person holds any
obligation of the Company by an Award granted under the Plan, such obligation shall merely
constitute a general unsecured liability of the Company and accordingly, shall not confer upon such
person any right, title or interest in any assets of the Company.



18.5 Applicable Law; Severability. The Plan shall be governed by and construed in all
respects in accordance with the laws of the State of Louisiana. If any provision of the Plan shall
be held by a court of competent jurisdiction to be invalid or unenforceable, the remaining
provisions of the Plan shall continue to be fully effective.