BARRETT BUSINESS SERVICES, INC.


ANNUAL CASH INCENTIVE AWARD PLAN


 


THIS ANNUAL CASH INCENTIVE
AWARD PLAN (the "Plan") was adopted by Barrett Business Services, Inc., a Maryland corporation ("Corporation"),
effective March 7, 2014. Capitalized terms that are not otherwise defined herein have the meanings set forth in Section 6.


 


SECTION
1.

PURPOSE


 


The purpose of the
Plan is to attract and retain capable executives, to motivate selected key employees of the Corporation to attain and maintain
high standards of performance, and to encourage executives to achieve specific business goals established by the Corporation.


 


SECTION
2.

ELIGIBILITY


 


Any key executive of
the Corporation who is designated by the Committee as being eligible to participate in the Plan will be eligible to participate
in the Plan.


 


SECTION
3.

INCENTIVE AWARDS


 


3.1Target Award. Each Award opportunity
will specify a targeted incentive opportunity (the "Target Award") expressed either as a dollar amount or as a percentage
of a Participant's regular annualized base salary.


 


3.2Incentive Awards. The amount
paid for each Award will be equal to the product of the Total Success Percentage for the Participant for the Plan Year multiplied
by the Participant’s Target Award for the Plan Year. However, in no event may a Participant's Award payment for a Plan Year
exceed the lesser of (i) 200 percent of the Participant's Target Award, or (ii) $2,000,000.


 


3.3Performance Goals. Unless otherwise
permitted under Code Section 162(m), the Committee shall establish the Performance Goal(s) applicable to each Award intended
to be performance-based in writing no later than the earlier of (a) the date 90 days after the commencement of the applicable Plan
Year or (b) the date on which 25% of the Plan Year has elapsed, and, in any event, at a time when the outcome of the Performance
Goal(s) remains substantially uncertain. The Goals that will be used to measure a Participant's Award will consist of one or more
of the following:


 


(a)Corporate Goals
measuring financial performance related to the Corporation as a whole. Corporate Goals may include one or more measures related
to earnings, profitability, efficiency or return to stockholders and may include earnings, earnings before interest, taxes, depreciation
and amortization (EBITDA), earnings per share, operating profit, cash flow, revenue growth, return on equity, return on assets,
return on invested capital, or other measures whether expressed as absolute amounts, ratios, or percentages of other amounts. Success
may be measured against various standards including budget targets, improvement over prior years, and performance relative to other
companies or industry groups.


 






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(b)Individual Goals
measuring success in developing and implementing particular tasks assigned to an individual Participant. Individual Goals will
naturally vary depending upon the responsibilities of individual Participants and may include, without limitation, goals related
to success in developing and implementing particular management plans or systems, reorganizing departments, establishing business
relationships, or resolving identified problems.


 


3.4Weighting of Goals. Each Goal
will be weighted with a Weighting Percentage so that the total Weighting Percentages for all Goals used to determine a Participant's
Award is 100 percent.


 


3.5Achievement Percentage. Each
Goal will also specify the Achievement Percentages (ranging from 0 to 200 percent) to be used in computing the payment of an Award
based upon the extent to which the particular Goal is achieved. Achievement Percentages for a particular Goal may be based on:


 


(a)An "all or
nothing" measure that provides for a specified Achievement Percentage if the Goal is met, and a zero Achievement Percentage
if the Goal is not met;


 


(b)Several levels of
performance or achievement (such as a threshold level, a target level, and a maximum level) that each correspond to a specified
Achievement Percentage; or


 


(c)Continuous or numerical
measures that define a sliding scale of Achievement Percentages.


 


3.6Computation of Awards. As soon
as possible after the completion of each Plan Year, a computation will be made for each Participant of:


 


(a)The extent to which
Goals were achieved and the corresponding Achievement Percentages for each Goal:


 


(b)A Weighted Achievement
Percentage for each Goal equal to the product of the Achievement Percentage and the Weighting Percentage for that Goal;


 


(c)The Total Success
Percentage equal to the sum of all the Weighted Achievement Percentages for all the Participant's Goals; and


 


(d)An Award amount
equal to the product of the Total Success Percentage and the Participant's Target Award.


 






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3.7Right to Receive Award. A Participant
must continue Employment with Corporation through the date an Award is paid (the "Payment Date") in order to be entitled
to receive the Award. Awards may be subject to such additional requirements regarding length of employment as may be specifically
approved by the Committee. If a Participant terminates Employment with Corporation before the Payment Date for a reason other than
death or Disability, the Participant will not be entitled to any Award for the Plan Year. If a Participant terminates Employment
with Corporation before the Payment Date due to death or Disability, the Participant or the Participant’s beneficiary or
estate may be entitled to receive a prorated Award, as finally determined under the Plan.


 


3.8Payment of Awards. Each Participant's
Award will be paid in cash in a lump sum within 30 days after the amount of the Award has been determined, and in no case later
than the 15th day of the third month following the end of the calendar year in which the Award is no longer subject to substantial
risk of forfeiture as that term is defined in Treasury Regulation Section 1.409A-1(d). Payment of any Award may be made subject
to such additional restrictions or limitations, in addition to those related to the attainment of performance goals, as may be
expressly provided for by the Committee and made applicable to such Award.


 


SECTION
4.

ADMINISTRATION


 


For each Plan Year,
the Committee will approve the Target Awards for all Participants and will approve Corporate Goals and Achievement Percentages
for the Corporate Goals. After the end of each Plan Year and before payment of any Award, the Committee will certify in writing
that applicable Performance Goals and any of the material terms thereof were, in fact, satisfied. In addition, the Committee will
have exclusive authority to establish Goals, Weighting Percentages, and Achievement Percentages, to certify achievement, and to
take all other actions with respect to Awards for Corporation's Chief Executive Officer and any other Participants that the Committee
determines may be subject to Section 162(m) of the Code. This Plan is intended to be exempt from the requirements of Section 409A
of the Code by reason of all payments under this Plan being "short-term deferrals" within the meaning of Treasury Regulation
Section 1.409A-1(b)(4), and all provisions of this Plan shall be interpreted in a manner consistent with preserving this exemption.


 


SECTION
5.

MISCELLANEOUS


 


5.1Nonassignability of Benefits.
A Participant's benefits under the Plan cannot be sold, transferred, anticipated, assigned, pledged, hypothecated, seized by legal
process, subjected to claims of creditors in any way, or otherwise disposed of.


 


5.2No Right of Continued Employment.
Nothing in the Plan will confer upon any Participant the right to continued Employment with Corporation or interfere in any way
with the right of Corporation to terminate the person's Employment at any time.


 






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5.3Withholding. The Corporation
will withhold from any payment under the Plan any amount required to satisfy applicable tax and other legally or contractually
required withholdings.


 


5.4Clawback. In the event
that there is a subsequent change in the Corporation's audited financial statements that affects whether Goals were satisfied,
Participants will be required to repay to the Corporation any amount that was paid based solely on the satisfaction of a bonus
target that was not, after such change, satisfied.


 


5.5Amendments and Termination.
The Committee has the power to terminate this Plan at any time or to amend this Plan at any time and in any manner that it may
deem advisable.


 


SECTION
6.

DEFINITIONS


 


For purposes of this
Plan, the following terms have the meanings set forth in this

Section 6:


 


"Achievement
Percentage" means a percentage (from 0 to 200 percent) corresponding to a specified level of achievement or performance
of a particular Goal.


 


"Award"
means an incentive award under the Plan.


 


"Code"
means the Internal Revenue Code of 1986, as amended.


 


"Committee"
means the Compensation Committee of the Board; provided, however, that for purposes of establishing and administering Performance
Goals under the Plan, and granting Awards intending to qualify as a performance-based award under Code Section 162(m), "Committee"
means a duly constituted committee consisting of a sufficient number of "outside directors" within the meaning of 162(m)
of the Code so as to qualify the Committee for purposes of Section 162(m)(4)(C) of the Code.


 


"Corporation"
means Barrett Business Services, Inc., a Maryland corporation.


 


"Disability"
means the condition of being permanently unable to perform Participant's duties for Corporation by reason of a medically determinable
physical or mental impairment that can be expected to result in death or that has lasted or can be expected to last for a continuous
period of at least 12 months.


 


"Employee
and Employment" both refer to service by Participant as a full-time or part-time employee of Corporation, and include
periods of illness or other leaves of absence authorized by Corporation.


 


"Goal"
means one of the elements of performance used to determine Awards under the Plan as described in Section 3.3.


 






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"Participant"
means an eligible employee selected to participate in the Plan for all or a portion of a Plan Year.


 


"Plan
Year" means a calendar year.


 


"Target
Award" means the targeted incentive award for a Participant for a Plan Year as provided in Section 3.1.


 


"Total
Success Percentage" means the sum of the Weighted Achievement Percentages for all of the Goals for a Participant.


 


"Weighted
Achievement Percentage" means the product of the Achievement Percentage and the Weighting Percentage for a Goal as
provided in Section 3.6.


 


"Weighting
Percentage" means a percentage (from 0 to 100 percent) applied to weight a Goal as provided in Section 3.4.


 


 






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