smid_ex101




 Exhibit 10.1












SMITH-MIDLAND CORPORATION


 



LONG-TERM INCENTIVE PLAN


 



1.            

Purpose






 


The
purposes of the Smith-Midland Corporation Long-Term Incentive Plan
(the “Plan”) are to: (a) enable Smith-Midland
Corporation (the “Company”) and its affiliated
companies to recruit and retain highly qualified executives, other
employees, and directors who are responsible for moving the
business of the Company forward; (b) align the interests of the
Company’s executives and directors with the interests of the
Company’s stockholders by creating a direct link between
compensation and the Company’s performance, thereby enhancing
stockholder return; and (c) incentivize executives, other
employees, and directors to contribute to the long-term success of
the Company.


 



2.            

Administration






 


The
Plan will be administered by the Compensation Committee of the
Board of Directors (the “Committee”); provided,
however, that with respect to non-employee directors of the
Company, the Plan shall be administered by the full Board of
Directors (the “Board”).


 



3.            

Participation






 


The
Company’s officers, other employees, and directors, are
eligible to participate in the Plan, subject to selection and
appointment by the Committee.


 



4.            

Performance
Periods






 


The
Plan’s performance period will be three years (the
“Performance Period”), commencing on the first day of
the Company’s fiscal year and ending on the last day of the
third fiscal year thereafter. A new three-year Performance Period
will start with each new fiscal year, such that when the Plan is
fully-implemented, there will be three overlapping Performance
Periods at any given time.


 



5.            

Performance
Measurement






 


Awards
under the Plan will be granted in accordance with the
Company’s 2016 Equity Incentive Plan (the “Equity
Incentive Plan”) and will be determined based upon five
performance conditions (percentage in parentheticals are the weight
of each factor) (the “Performance
Conditions”):


 




●

Revenue Growth
(35%)








●

EBITDA Margin
(25%)








●

Free Cash Flow
(15%)








●

Retention
(10%)








●

Board Discretion
(15%)






 






Minimum,
Target and Maximum scales will be applicable to the Revenue Growth
and EBITDA Margin Performance Conditions. Free Cash Flow
(“FCF”) will be conditional upon the achievement of the
Minimum EBITDA Margin target. Retention is targeted to drive
loyalty and encourage ownership culture. Board discretion is
designed to provide a measure of discretionary
flexibility.


 



 







 






 


For
purposes of the Plan, the calculation of EBITDA (earnings before
interest, taxes, depreciation and amortization) shall exclude
restricted stock or other equity (compensation) expense incurred by
the Company in connection with grants under this Plan and shall be
subject to equitable determination by the Committee (or the Board,
if applicable) in the event of any or all items determined to be
unusual innature and/or infrequent in occurrence, which may
include, without limitation, the charges or costs associated with
restructurings of the Company or any subsidiary, discontinued
operations, other unusual or infrequently occurring items, the
cumulative effects of accounting changes or such other objective
factors as the Committee (or the Board, if applicable) deems
appropriate (“Adjusted EBITDA”).


 



6.            

Base
Bonus Amount






 


Target
percentages shall be applied against a base bonus amount (the
“Base Bonus Amount”). The Base Bonus Amount shall be
equal to a percentage of the participant’s base salary as in
effect at the commencement of the Performance Period (or $50,000.00
in the case of non-employee directors):


 


	
Participant 


	

Base Bonus Amount


	
Chief Executive
Officer


	
60% of Base
Salary


	
Chief Financial
Officer


	
45% of Base
Salary


	
All
others

	
40% of Base
Salary







 


The
Committee may, at the time of grant, adjust the percentage of Base
Salary utilized to determine Base Bonus Amount for any participant
as its deem appropriate.


 



7.            

Performance
Conditions






 


The
following sets forth the targets and vesting percentages with
respect to each Performance Condition. In the case of Revenue
Growth and EBITDA Margin, with respect to amounts that fall in
between two targets, the bonus percentage shall be determined by
proration between the two.


 



Revenue Growth Target:


The
Revenue Growth Target shall apply for 35% of the performance grant.
The vesting percentage shall be determined by applying a 5%
(Minimum), 7% (Target) or 10% (Maximum) compounded annual growth
rate to the revenues achieved in the fiscal year immediately
preceding the beginning of the Performance Period:


 


	
Annual Revenue Growth During the
Performance Period

	

Vesting Percentage


	
Less than
5%


	
0%


	
5%
or greater but less than 7%


	
from 25% to
35%


	
7%
or greater up to 10%    


	
from 35% to
45%


	
Greater than
10%


	
45%







 


For the
grant with respect to the Performance Period of January 1, 2021 to
December 31, 2023, this Percentage Condition will be measured
against Company revenues achieved in the fiscal year ended December
31, 2020.


 



 







 






 



EBITDA Margin:


 


The
EBITDA Margin target will apply for 25% of the performance grant
and the Minimum, Target and Maximum are 5%, 7% and 10%,
respectively, of EBITDA Margin:


 


	
EBITDA Margin during the Performance
Period

	

Vesting Percentage


	
Less than
5%


	
0%


	
5%
or greater but less than 7%

	
From 15% to
25%


	
7%
or greater but less than 10%

	
From 25% to
35%


	
Greater than
10%


	
35%







 


This
Performance Condition requires that cumulative EBITDA Margin at the
end of the Performance Period must be at least 5% (as adjusted for
special items).


 



Free Cash Flow:


 


The FCF
target will apply for 15% of the performance grant.


 


	
FCF during the Performance
Period

	

Vesting Percentage


	
Less than 15% of
Adjusted EBITDA

	
0%


	
15% or greater of
Adjusted EBITDA

	
15%







 


The
Performance Condition requires that cumulative FCF at the end of
the three-year Performance Period must be at least 15% of Adjusted
EBITDA for the same period and that EBITDA Margin must be a minimum
of 5% over the entire Performance Period.


 



Retention:


 


The
retention target will apply for 10% of the performance grant. This
portion will vest completely on the last date of the Performance
Period, provided that, subject to Section 8, the recipient remains
actively employed by or be a director of the Company (or its
subsidiaries) from the grant date through the last date of the
Performance Period.


 



Board Discretion:


 


To
provide a measure of flexibility, the Committee or, with respect to
non-employee directors, the Board, will have a discretionary target
of 15% of the performance grant. Subject to Section 8, this measure
requires that the recipient remain actively employed by or be a
director of the Company (or its subsidiaries) from the date of
grant through the last date of the Performance Period.


 


The
foregoing targets shall apply for the three year Performance Period
ending December 31, 2023. These targets may be revised for future
Performance Periods by the Committee or, in the case of
non-employee directors, by the Board.


 



 







 






 


Any
bonus payable under the Plan shall be made in shares of restricted
stock, or other equity form, of the Company based on the price of
the Company’s common stock on the date of grant of the award.
Bonuses shall be made as soon as practicable after the end of the
last applicable fiscal year of the Performance Period and no later
than June 1st.


 


For
purposes of the initial award grants, the Committee will assume the
Target amounts will be achieved.


 


Recipients
of awards who have met the following share ownership requirements:
2x base salary for the Chief Executive Officer and 1x base salary
for all others, may elect to be paid in cash in lieu of restricted
shares of common stock, subject to the Company’s compliance
with the Company’s then existing loan agreements and other
cash needs at the sole discretion of the Committee, or in the case
of non-employee directors, the Board.


 



8.            

Continuous
Employment






 


Except
as provided below, to receive an award under the Plan, participants
must be actively employed by or be a director of the Company (or
its subsidiaries) from the date of grant through the last date of
the Performance Period. No award will be earned or due for
participants who do not satisfy this employment condition.
Notwithstanding the foregoing, if a participant leaves employment
(or a directorship) with the Company (or its subsidiaries) due to
retirement (as defined below), disability (as defined in the
applicable award agreement), or death during the Performance
Period, the participant (or his or her estate in the event of
death) will be entitled to a prorated award determined by
multiplying the award amount by a fraction, the numerator of which
will be the number of full months of the Performance Period that
elapsed prior to the termination of employment and the denominator
of which will be 36. The prorated award will be paid on the date on
which the Company pays awards in the normal course for such
Performance Period. For purposes hereof, “retirement”
shall mean separation from service with the Company and its
subsidiaries and affiliates, and cessation of all full-time
employment, on or after reaching 65 years of age.


 



9.            

Amendment






 


The
Board may amend or terminate this Plan at any time.