annualincentiveplan.htm


    Exhibit
10.1

    


    M/I
HOMES, INC.

    2009
ANNUAL INCENTIVE PLAN

    


    The
purpose of the Plan is to foster and promote the long-term financial success of
the Company and its Affiliates and to increase shareholder value by (a)
providing Participants an opportunity to earn incentive compensation if
specified performance objectives are met, (b) enabling the Company and its
Affiliates to attract and retain talented employees, and (c) maximizing the
deduction of compensation paid to Participants.  Incentive
Compensation payable under the Plan is intended to constitute “qualified
performance-based compensation” for purposes of Section 162(m) of the Code and
Treasury Regulation Section 1.162-27, and the Plan shall be interpreted
consistently with such intention.

    


    ARTICLE
I

    DEFINITIONS

    


    When used
in the Plan, the following capitalized words, terms and phrases shall have the
meanings set forth in this Article I.  For purposes of the Plan, the
form of any word, term or phrase will include any and all of its other
forms.

    


    1.1 “Act” means the Securities
Exchange Act of 1934, as amended from time to time, or any successor
thereto.

    


    1.2 “Affiliate” means any entity
with whom the Company would be considered a single employer under Section 414(b)
or (c) of the Code.

    


    1.3 “Board” means the Board of
Directors of the Company.

    


    1.4 “Cause” means: (a) any act of
fraud, intentional misrepresentation, embezzlement or misappropriation or
conversion of the assets or business opportunities of the Company or any
Affiliate by the Participant, (b) conviction of the Participant of a felony, or
(c) the Participant’s (i) willful refusal to substantially perform assigned
duties (other than any refusal resulting from incapacity due to physical or
mental illness or in the event that the assigned duties include any activities
that are unlawful or would violate acceptable accounting, securities or other
specifically defined business principles), (ii) willful engagement in gross
misconduct materially injurious to the Company or any Affiliate, or (iii) breach
of any material term of the Plan; provided, however, that Cause will not arise
solely because the Participant is absent from active employment during periods
of vacation, consistent with the Company’s applicable vacation policy, or other
period of absence initiated by the Participant and approved by the
Company.

    


    1.5 “Change in Control” means any
of the following:

    


    (a)           the
members of the Board on the effective date of this Plan (the “Incumbent
Directors”) cease for any reason other than death to constitute at least a
majority of the members of the Board; provided however, that any individual
becoming a director after the effective date of this Plan whose election, or
nomination for election by the Company’s shareholders, was approved by a vote of
at least a majority of the then Incumbent Directors shall also be treated as an
Incumbent Director, but excluding any individual whose initial assumption of
office occurs as a result of a proxy contest or any agreement arising out of an
actual or threatened proxy contest;

    


    (b)           the
acquisition by any person or group (within the meaning of Sections 13(d)
and 14(d)(2) of the Act), other than the Company, any Subsidiary or any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
Subsidiary, of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Act), directly or indirectly, of thirty percent (30%) or
more of the combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of directors of the
Company;

    


    (c)           the
merger, consolidation or other business combination of the Company with or into
another entity, or the acquisition by the Company of assets or shares or equity
interests of another entity, as a result of which the shareholders of the
Company immediately prior to such merger, consolidation, other business
combination or acquisition, do not, immediately thereafter, beneficially own,
directly or indirectly, more than fifty percent (50%) of the combined voting
power of the then outstanding voting securities entitled to vote generally in
the election of directors of the entity resulting from such merger,
consolidation or other business combination or the Company;

    


    (d)           the
sale or other disposition of all or substantially all of the assets of the
Company; or


    
       

      
        
        

        
          

        

      

      
        
        

      

    

    (e)           the
liquidation or dissolution of the Company.

    Notwithstanding
the foregoing, with respect to the payment of any Performance Award that is
subject to Section 409A of the Code, a Change in Control shall be deemed not to
have occurred unless the events or circumstances constituting a Change in
Control also constitute a “change in control event” within the meaning of
Section 409A of the Code and the Treasury Regulations promulgated
thereunder.

     

    1.6 “Code” means the Internal
Revenue Code of 1986, as amended from time to time, or any successor
thereto.

    


    1.7 “Committee” means the
Compensation Committee of the Board, which will be comprised of at least two (2)
directors, each of whom is as an “outside director” within the meaning of
Section 162(m) of the Code and the Treasury Regulations promulgated
thereunder.

    


    1.8 “Common Shares” means the
common shares, par value $0.01 per share, of the Company.

    


    1.9 “Company” means M/I Homes,
Inc., an Ohio corporation, and any successor thereto.

    


    1.10 “Covered Employee” means a
“covered employee” within the meaning of Section 162(m) of the Code and the
Treasury Regulations promulgated thereunder.

    


    1.11 “Disability” means:
(a) the Participant is unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental impairment that can
be expected to result in death or can be expected to last for a continuous
period of not less than twelve (12) months, (b) the Participant is, by
reason of any medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a continuous period
of not less than twelve (12) months, receiving income replacement benefits for a
period of not less than three (3) months under an accident and health plan
covering employees of the Participant’s employer, or (c) the Participant is
determined to be totally disabled by the Social Security Administration or
Railroad Retirement Board.

    


    1.12 “Incentive Compensation” means
the compensation approved by the Committee to be awarded to a Participant for
any Performance Period under the Plan.

    


    1.13 “Participant” means an officer
or other key employee of the Company or any Affiliate whom the Committee
designates as eligible to participate in the Plan.

    


    1.14 “Payment Date” means the date
the Committee establishes for the payment to a Participant of any Incentive
Compensation under the Plan, as provided in Article IV of the Plan.

    


    1.15 “Performance Award” means an
award granted by the Committee under the Plan that is based on one or more of
the Performance Criteria.

    


    1.16 “Performance Criteria” means
the criteria that are set forth in Section 3.3 of the Plan, any one or more of
which may be used in establishing the terms and conditions of a Performance
Award.

    


    1.17  “Performance Period” means each
fiscal year (or portion thereof) of the Company, or such other period of twelve
(12) months or less, as determined by the Committee.

    


    1.18 “Plan” means the M/I Homes,
Inc. 2009 Annual Incentive Plan, as set forth herein and as may be amended from
time to time.

    


    1.19 “Retirement” means a
Participant’s termination of employment (other than for Cause) on or after the
date on which the sum of the Participant’s years of service with the Company and
its Affiliates plus the Participant’s age is equal to or greater than seventy
(70); provided that the Participant has attained the age of fifty-five
(55).

    


    1.20 “Subsidiary” means any corporation or
other entity in which the Company owns, directly or indirectly, a proprietary
interest of more than fifty percent (50%) by reason of stock ownership or
otherwise.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ARTICLE
II

    ADMINISTRATION

    


    The Plan
shall be administered and interpreted by the Committee; provided that in no
event shall the Plan be interpreted in a manner that would cause any Performance
Award intended to be qualified performance-based compensation under Section
162(m) of the Code to fail to so qualify with respect to a Covered
Employee.  The Committee shall have the power and authority to
construe, interpret and administer the Plan.  Any determination made
by the Committee under the Plan shall be final and conclusive on all
persons.

    


    ARTICLE
III

    ELIGIBILITY,
PERFORMANCE AWARDS AND PERFORMANCE CRITERIA

    


    3.1          Determination of Eligibility by the
Committee.  For each Performance Period, the Committee shall
select the Participants to whom Performance Awards may be granted under the Plan
for such Performance Period consistent with the provisions of the
Plan.  Participants who participate in the Plan may also participate
in other incentive or benefit plans maintained by the Company or any
Affiliate.

    


    3.2          Granting Performance
Awards.  For each Performance Period, the Committee may grant
Performance Awards pursuant to the Plan, in such amounts and on such terms in
accordance with the provisions of the Plan, as the Committee shall
determine.

    


    3.3          Performance
Objectives.

    


    (a)                      For
each Performance Period, the Committee will establish for each Performance Award
the performance objectives that will be applied to determine the amount of
Incentive Compensation payable with respect to such Performance
Award.  One or more of the following Performance Criteria shall be
used by the Committee in setting performance objectives with respect to the
Plan:

    


    (i)                      
Acquisition and integration of companies;

    (ii)                      Acquisition
of assets;

    (iii)                     Balance
sheet management

    
      	
                 
      (iv)

            	
                        Business
      process metrics (e.g., asset turns, cycle time, and one or more elements
      of efficiency or cost or expense);

            


    

    (v)                     Cash
flow;

    (vi)                    Customer
satisfaction;

    (vii)                   Debt
leverage;

    (viii)                  Earnings
per share;

    (ix)                     Earnings
before taxes, interest, depreciation and amortization;

    (x)                      Employee
retention;

    (xi)                     Expense
management/reduction;

    (xii)                    Gross
margin;

    (xiii)                  
Home sales;

    
      	
                     
      (xiv)  

            	
                       
      Interest coverage ratio excluding
impairments;

            


    

    
      	
                     
      (xv)  

            	
                        Investment
      management

            


    

    (xvi)                 
Inventory turnover;

    (xvii)                
Inventory, land or lot improvement or reduction;

    (xviii)              
 Maintenance or improvement of gross and operating profit
margins;

    (xix)          
       Market capitalization;

    (xx)                   Market
share;

    (xxi)          
       Net income;

    (xxii)                
Operating cash flow;

    (xxiii)               
Pretax income;

    (xxiv)               
Reduction or maintenance in selling, general and administrative
expense;

    (xxv)                
Return on assets;

    (xxvi)               
Return on capital;

    (xxvii)              
Return on equity;

    (xxviii)             
Return on opening shareholder equity;

    (xxix)                Return
on operating assets;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (xxx)                
Revenues;

    (xxxi)               
Shareholder returns;

    (xxxii)               Share
price; or

    (xxxiii)              Share
price appreciation.

    


    (b)                      Different
Performance Criteria and performance objectives may be applied to individual
Participants or to groups of Participants and, as specified by the Committee,
may relate to the individual Participant, the Company, one or more Affiliates,
or one or more of their respective divisions or business units, or any
combination of the foregoing, and may be applied on an absolute basis and/or be
relative to one or more peer group companies or indices, or any combination
thereof, in each case, as determined by the Committee in its sole
discretion.

    


    3.4          Modifying Performance
Awards.  To the extent consistent with Section 162(m) of
the Code, performance objectives relating to such Performance Awards may be
calculated without regard to extraordinary items or adjusted, as the Committee
deems equitable, in recognition of unusual or non-recurring events affecting the
Company and/or its Affiliates or changes in applicable tax laws or accounting
principles.

    


    3.5           Adjustments.  The
Committee will make appropriate adjustments to reflect the effect, if any, on
any Performance Criteria or performance objectives of any Common Share dividend
or split, recapitalization (including, without limitation, the payment of an
extraordinary dividend), merger, consolidation, combination, spin-off,
distribution of assets to shareholders, exchange of shares or similar corporate
change.  Notwithstanding the foregoing, no adjustment shall be made
under this Section 3.5 to the extent such adjustment would cause any award to a
Covered Employee intended to qualify as qualified performance-based compensation
under Section 162(m) of the Code to fail to so qualify.

    


    3.6          Amount of Incentive
Compensation.  The amount of Incentive Compensation payable
under the Plan if the performance objectives under a Performance Award are met
may be stated as a specific dollar amount, a percentage of a Participant’s base
salary, a percentage (the sum of which may not be greater than one hundred
percent (100%)) of an aggregate amount allocable to all or specified groups of
Participants or in any other objectively determinable manner, as determined by
the Committee.  Also, the amount of Incentive Compensation payable may
be stated as a target amount due if applicable performance objectives are met
and in larger or smaller increments if the applicable performance objectives are
exceeded or partially met.  As determined by the Committee, the amount
of any Incentive Compensation payable under the Plan shall be subject to
performance objectives consistent with Section 3.3 of the
Plan.  Notwithstanding anything in the Plan to the contrary, during
any fiscal year of the Company, no Participant may receive Incentive
Compensation of more than $5,000,000 through the Plan.

    


    3.7          Period for Determining Performance
Objectives and Amount of Incentive Compensation.  With respect
to each Performance Award, the performance objectives, the applicable
Performance Period and the method for computing Incentive Compensation payable
with respect to the Performance Award will be established by the Committee in
writing before the outcome of such performance objectives is substantially
certain but in no event later than the earlier of: (a) ninety (90) days after
the beginning of the applicable Performance Period; or (b) the expiration of
twenty-five percent (25%) of the applicable Performance Period.

    


    3.8          Certification.  As
of the end of each Performance Period, the Committee will certify in writing the
extent to which the applicable performance objectives with respect to any
Performance Award have or have not been met and whether other material terms, if
any, were satisfied.

    


    3.9          Negative
Discretion.  In the Committee’s sole discretion, the amount of
Incentive Compensation actually paid to a Participant may be less than the
amount determined by the applicable performance objectives under a Performance
Award; provided, however, that the exercise of such negative discretion by the
Committee with respect to any Covered Employee shall not have the effect of
increasing the amount of Incentive Compensation that is payable to any other
Covered Employee.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    ARTICLE
IV

    PAYMENT
OF INCENTIVE COMPENSATION

    


    Unless a
Participant has made a valid election under a deferred compensation plan
maintained by the Company or any Affiliate no later than the date permitted
under such plan and except as otherwise provided in Section 6 of the Plan, a
Participant’s Incentive Compensation for each Performance Period, if any, shall
be paid in one or more cash payments (net of applicable tax and other required
withholdings) after (a) the results for such Performance Period have been
finalized and (b) the Committee has made the certification described in Section
3.8 of the Plan; provided, however, that such Incentive Compensation shall be
paid no later than the later of (i) the fifteenth (15th) day of
the third (3rd) month
following the end of the Participant’s first taxable year in which such
Incentive Compensation is no longer subject to a substantial risk of forfeiture
(within the meaning of Section 409A of the Code) or (ii) the fifteenth (15th) day of
the third (3rd) month
following the end of the first taxable year of the service recipient (within the
meaning of Section 409A of the Code) in which such Incentive Compensation is no
longer subject to a substantial risk of forfeiture.

    


    ARTICLE
V

    TERMINATION
OF EMPLOYMENT

    


    5.1          Involuntary Termination Without Cause
or Termination Due to Death, Disability or Retirement During Performance
Period.  If during a Performance Period a Participant’s
employment is terminated involuntarily without Cause or as a result of the
Participant’s death, Disability or Retirement, the Participant shall be eligible
to receive a pro-rata portion of the Incentive Compensation that would have been
payable if the Participant had remained employed for the full Performance
Period, which shall be determined and paid as follows:

    


    (a)           Following
the end of the applicable Performance Period, the Committee will determine the
extent to which the performance objectives applicable to the Participant’s
Performance Award have been satisfied to measure the amount of Incentive
Compensation that otherwise would have been payable to the Participant under the
Plan had his or her employment not terminated prior to the end of the
Performance Period.

    


    (b)           The
Committee will then multiply the amount determined in accordance with subsection
(a) of this Section 5.1 by a fraction, the numerator of which is the number of
whole calendar months the Participant was employed by the Company or any of its
Affiliates and participated in the Plan during the Performance Period and the
denominator of which is the number of whole calendar months in the Performance
Period.

    


    (c)           Such
resulting amount shall be paid at the time and in the manner provided for in
Article IV of the Plan.

    


    5.2          Forfeiture Upon Other Terminations
During Performance Period. If a Participant’s
employment terminates for any reason other than involuntary termination without
Cause or due to the Participant’s death, Disability or Retirement prior to the
end of a Performance Period, then the Participant shall immediately forfeit and
relinquish any and all rights and claims to receive any Incentive Compensation
hereunder for such Performance Period.

    


    5.3          Termination After Performance
Period.  If a Participant’s employment terminates for any
reason other than for Cause after the end of a Performance Period but prior to
the Payment Date, then such Participant shall be entitled to payment of any
Incentive Compensation for such Performance Period, as determined by the
Committee, on the Payment Date.  If a Participant’s employment
terminates for Cause after the end of a Performance Period but prior to the
Payment Date, then the Participant shall immediately forfeit and relinquish any
and all rights and claims to receive any Incentive Compensation hereunder for
such Performance Period.

    


    ARTICLE
VI

    CHANGE
IN CONTROL

    


    Unless
otherwise determined by the Committee in connection with the establishment of a
Performance Award, if a Change in Control occurs during a Performance Period,
then the Performance Award of each Participant shall be considered to be earned
and payable in the amount designated as “target” for such Performance
Award.  Unless a Participant has made a valid election under a
deferred compensation plan maintained by the Company or any Affiliate no later
than the date permitted under such plan, Incentive Compensation payable with
respect to the Performance Award in accordance with this Section 6 shall be paid
within thirty (30) days following the date of the Change in
Control.

    



    
      
         


      

      
         


        
          

        

      

       

    

    ARTICLE
VII

    MISCELLANEOUS
PROVISIONS

    


    7.1          Non-Assignability.  A
Participant cannot alienate, assign, pledge, encumber, transfer, sell or
otherwise dispose of any rights or benefits under the Plan prior to the actual
receipt thereof, and any attempt to alienate, assign, pledge, encumber,
transfer, sell or otherwise make a disposition prior to such receipt, or any
levy, attachment, execution or similar process upon any such rights or benefits,
shall be null and void.

    


    7.2          No Right to Continue in
Employment.  Nothing in the Plan shall confer upon any
Participant the right to continue in the employment of the Company or any
Affiliate, or interfere with or restrict in any way the right of the Company or
any Affiliate to terminate any Participant at any time.

    


    7.3          Governing Law.  The
Plan shall be governed by and construed in accordance with the laws of the State
of Ohio, without regard to its conflicts of law provisions.

    


    7.4          Binding Effect.  The
Plan shall be binding upon and inure to the benefit of the Company and its
successors and assigns, and the Participants and their respective beneficiaries,
heirs, and personal representatives.

    


    7.5          Construction of
Plan.  The captions used in the Plan are for convenience of
reference only and shall not be construed in interpreting the
Plan.  Whenever the context so requires, the masculine shall also
include the feminine and neuter, and the singular shall also include the plural,
and conversely.

    


    7.6          Section 409A of the
Code.  The Plan is intended to be exempt from the requirements
of Section 409A of the Code and the Treasury Regulations promulgated thereunder,
and the Plan shall be interpreted, administered and operated
accordingly.  Nothing in the Plan shall be construed as an entitlement
to or guarantee of any particular tax treatment to a Participant and none of the
Company, its Affiliates, the Board or the Committee shall have any liability
with respect to any failure to comply with the requirements of Section 409A of
the Code.

    


    7.7          Withholding.  The
Company shall have the right to withhold, or require a Participant to remit to
the Company, an amount sufficient to satisfy any applicable federal, state,
local or foreign withholding tax requirements imposed with respect to the
payment of any Incentive Compensation.

    


    7.8          Beneficiaries.  A
Participant’s beneficiary who shall receive any payments which may be made under
the Plan following the Participant’s death shall be the Participant’s spouse or,
if no spouse survives the Participant, the Participant’s estate.

    


    7.9          Effect of the
Plan.  Neither the adoption of the Plan, nor any action of the
Committee hereunder, shall be deemed to give any Participant any right to
receive Incentive Compensation or to be granted a Performance Award
hereunder.  In addition, nothing contained in the Plan, and no action
taken pursuant to its provisions, shall be construed to give any Participant any
right to any compensation, except as expressly provided herein, or create any
type of fiduciary relationship between the Company and its Affiliates and a
Participant or any other person.

    


    ARTICLE
VIII

    AMENDMENT
OR TERMINATION

    


    The
Committee may at any time, and from time to time, without the consent of any
Participant, amend, revise, suspend, or discontinue the Plan, in whole or in
part, subject to any shareholder approval required by applicable law, rules or
regulations; provided, however, the Committee may not amend the Plan to change
the Performance Criteria without the approval of the majority of votes cast by
the shareholders of the Company in a separate vote to the extent required by
Section 162(m) of the Code.

    


    ARTICLE
IX

    EFFECTIVE
DATE

    


    The Plan
shall be effective on January 1, 2009; subject to shareholder approval that is
consistent with the shareholder approval requirements of Section 162(m) of the
Code.