EXHIBIT 10.4


 





 


Spherion Corporation



Line
of Business

Executive Management



2006 Variable Pay Plan




For Plan Year:
Fiscal 2006



















 


Introduction


The
following Variable Pay Plan (the “Plan”) is designed to reward Plan Eligible
Associates for achievement of specific goals as well as to provide an incentive
to retain talent and encourage future performance with Spherion.  This Plan has been established to align your
individual success with that of Spherion and your business unit.


 


Your
dedication and commitment to the Company is greatly appreciated.  Thank you for your continued support now and
in the future.


 


Effective
Date/Plan Year


This
Plan is in effect for Fiscal Year 2006 (January 2, 2006 through December 31,
2006) (the “Plan Year”).  This Plan
supersedes any prior plans as of the date it becomes effective. This
Plan may be extended beyond the Plan Year at the sole discretion of Spherion.


 


Eligibility


Eligibility
to participate in this Plan is within Spherion’s sole discretion, but in
general is based on an Associate’s position. 
For purposes of this Plan, the term Plan Eligible Associate means an
Associate who Spherion determines is eligible to participate in this Plan.


 


Eligibility
begins on the first day of the accounting month after an Associate begins
employment as a Plan Eligible Associate and terminates immediately when an
Associate’s employment as a Plan Eligible Associate ends.


 


Change
of Positions/Leave of Absence/ Other types of Pro-rated Compensation


In
order to be eligible for or earn any compensation under this Plan, a Plan
Eligible Associate must remain employed by Spherion in some capacity through
the last date of the Variable Pay Period. 
If the Plan Eligible Associate does not meet this condition, he/she will
not earn any compensation under this Plan. 
(See the Variable Pay Period/Payment Section below)   If a Plan Eligible Associate meets this
condition, but was actively employed as a Plan Eligible Associate for only a
part of the Variable Pay Period, his/her compensation under this Plan will be
pro-rated based on the number of weeks he/she was actively employed as a Plan
Eligible Associate.  Some examples
include:


 


1.               New Hires


2.               Leave of Absence - LOA


3.               Change in Work Classification Status
(full-time vs. part-time)


4.               Position Changes resulting in Incentive Plan &/or
Salary Changes


5.               P&L Roll Up Structure Changes (with no
position change)


 


For
a detailed explanation of the administrative policies on how these and other
types of Personnel Changes affect the Plan Eligible Associate’s compensation,
please refer to the Pro-Ration Guidelines found on Explore under Business
Process Map/Associate HR/Incentive Compensation Pro-Ration Guidelines.


 


Components


A Plan Eligible Associate has a Variable Pay
Opportunity which is determined as a percentage (%) of his/her base salary.


 

















 


To the extent permitted by the law, Spherion
shall have the right to withhold, deduct, and/or set off any and all amounts
for bad debts (including write-off’s), re-bills, credits, or other adjustments
from the payment calculations.


 


The Variable Pay Opportunity is made up of
two components: (1) Company EPS; and (2) Line of Business (LOB) Performance
Zone (PZ) targets.  The specifics of
these components are described in more detail below.


 


The targets have been established on the
basis of anticipated growth rates, financial analysis, market analysis, Company
objectives, and other considerations.     
The targets have been set at the beginning of the year, but are subject
to change at the sole discretion of the Company.  Any change to the targets will be
communicated to the impacted Plan Eligible Associate.


 


1.              Company Earnings Per Share (EPS).   75% of the Variable Pay Opportunity is based on the
Company attaining EPS from continuing operations  *   (adjusted for stock option accounting) for
fiscal year 2006.   In order for a Plan
Eligible Associate to earn any compensation under this EPS component, the
Company must attain a minimum Threshold EPS of   *  from
continuing operations.  No EPS component
will be earned if 2006 EPS from continuing operations is less than the
Threshold.  If the EPS Threshold is
reached, the component payout will increase and be precisely interpolated
between Goal Levels as reflected in the chart below:


 


Spherion EPS

(75% of Variable Pay Opportunity)


 




	
  Goal
  Level

  	
   

  	
  EPS from

  continuing

  operations

  	
   

  	
  % of EPS
  Component

  Awarded

  	
   

  
	
  Achievement

  	
   

  	
   

  	
   

  	
  *

  	
  200

  	
  %

  
	
  Target

  	
   

  	
   

  	
   

  	
  *

  	
  100

  	
  %

  
	
  Threshold

  	
   

  	
   

  	
   

  	
  *

  	
  5.88

  	
  %

  
	
  Below Threshold

  	
   

  	
   

  	
   

  	
  *

  	
  0

  	
  %

  






 


The
EPS goal levels are set at the beginning of the year, but are subject to change
at the sole discretion of the Company. 
Any change to the EPS goal levels will be communicated to the Plan
Eligible Associates.


 


Payout of this component will be capped at
200% of the EPS Component Awarded; provided however, in the event that Company
EPS exceeds a 200% payout, the Compensation Committee, in its sole discretion,
upon recommendation by the CEO may create and distribute a pool of additional
payout dollars as it deems appropriate.


 


2.              LOB Performance Zone
(LOB-PZ) Target.  25% of the Variable Pay Opportunity is based
on the 2006 Performance Zone target
established for the Plan Eligible Associate’s LOB.   In order for a Plan Eligible
Associate to earn any compensation under this LOB-PZ component, LOB-PZ must
attain a minimum Threshold of the Target PZ as reflected in the chart below.   Performance Zone theory of management
advocates monitoring the activity of expense dollars and Gross Profit dollars
to ensure


 






* Confidential
portions omitted and filed separately with the Commission.


 

















 


that Gross Profit dollars increase faster than
expense dollars. Performance Zone is 
specifically defined as the following equation:


 


1)              *


2)              *


3)              *


4)              *


5)              *


 


Operating
Expenses will include interest allocation


 


LOB
PZ

(25% of Variable Pay Opportunity)


 


	
  Goal Level

  (Expressed as a % of Target)

  	
   

  	
  Target PZ

  	
   

  	
  % of PZ Component Payout

  	
   

  
	
  Above Target > (100%)

  	
   

  	
   

  	
   

  	
  *

  	
  100

  	
  %

  
	
  Target (100%)

  	
   

  	
   

  	
   

  	
  *

  	
  100

  	
  %

  
	
  Below Target < (100%)

  	
   

  	
   

  	
   

  	
  *

  	
  0

  	
  %

  



 


Please see the example provided
at the end of this Plan.


 


Variable Pay Period/ Payment


The
“Variable Pay Period” is the Plan Year. 
Compensation under this Plan is based on annual results and is therefore
earned on an annual basis.  A Plan
Eligible Associate must be employed by Spherion through the last date of the
Variable Pay Period to be eligible for or earn any compensation under this
Plan.  (See
Termination of Employment Section Below) 
Any compensation earned under this Plan will be paid
within 45 business days after the close of the accounting year.


 


Termination
of Employment


Eligibility
to participate in and ability to earn any, or receive any compensation under
this Plan ceases immediately upon termination of employment with Spherion
regardless of whether such termination of employment is due to resignation,
termination without cause, termination for cause, or otherwise.


 


A
Plan Eligible Associate, whose employment with Spherion terminates prior to the
end of the Variable Pay Period, will not be eligible for or be considered to
have earned compensation under this Plan in whole or in part.


 


In
addition, any Plan Eligible Associate who resigns his/her employment or who is
terminated for cause after the end of the Variable Pay Period but before
Spherion pays the actual compensation earned under this Plan will not be
eligible for or be considered to have earned any compensation under this
Plan.   If a Plan Eligible Associate is
terminated by Spherion without cause after the Variable Pay Period but before
Spherion pays the compensation, the


 






* Confidential
portions omitted and filed separately with the Commission.


 

















 


Plan
Eligible Associate will be considered to have earned compensation under this
Plan through the end of the Variable Pay Period.


 


Retention
Bonus


If variable pay that exceeds
200% of the Plan Eligible Associate’s opportunity is calculated, this retention
bonus will be distributed along with the regularly scheduled variable pay
compensation for Fiscal Year 2007 (within 45 business days after the close of
the 2007 accounting year).  In order to
earn the retention bonus, the Plan Eligible Associate must still be employed
with Spherion on the date the payment is made; provided, that if a Plan
Eligible Associate is terminated by Spherion without cause during the period
between the end of the Variable Pay Period and the date the retention bonus is
paid, the Plan Eligible Associate will still be eligible to receive the
retention bonus.


 


Disputes


If there
is a dispute related to this Plan, including, but not limited to, a dispute
over eligibility or award, it will be resolved by the Principal Executive
Officer or his/her designee, whose decision shall be final.


 


At-Will Employment


The
only matter this Plan is intended to address is variable pay compensation.  Nothing in this Plan shall alter or be
construed as to alter the at-will employment status of any Plan Eligible
Associate.  The Plan Eligible Associate’s
employment is at-will and may be terminated by either party at any time, with
or without cause.


 


Amendments,
Exceptions, or Termination of the Plan


The
Principal Executive Officer or his/her designee will administer this Plan and
have the power to implement, operate, and interpret this Plan and to take such
action as he/she deems equitable and consistent with the purpose of this Plan
in particular circumstances.   No
exception or modification to this Plan will be valid unless it has been
approved in writing by a Principal Executive Officer or his/her designee.


 


The Company reserves the right to change,
modify, alter, amend, or cancel this Plan at any time, with or without notice
and with or without consideration.


 


Acknowledgement


Plan Eligible Associate acknowledges that
he/she has reviewed the Plan and will address any of his/her questions to the
Spherion Compensation Department.  Plan
Eligible Associate hereby reaffirms his/her Acknowledgement of the Plan.


 

















 


EXAMPLE (This example is not intended to
imply any actual percentages, payout, or targets under this Variable Pay
Plan.  It is merely for illustrative
purposes to show how the Variable Pay Plan components may be calculated in a
hypothetical situation)


 


Executive Management Variable Pay
Plan

Line of Business Employees


 


2006 Variable Pay Plan Example


 


	
  Assumptions:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Base Salary

  	
   

  	
   

  	
   

  	
  $225,000

  	
   

  
	
  Variable Pay
  Opportunity (% of base)

  	
   

  	
   

  	
   

  	
  50

  	
  %

  
	
  Variable Pay
  Opportunity ($)

  	
   

  	
  $225,000 x 50%

  	
   

  	
  $112,500

  	
   

  
	
  Spherion EPS
  target

  	
   

  	
   

  	
   

  	
   

  	
  *

  
	
  LOB PZ target

  	
   

  	
   

  	
   

  	
   

  	
  *

  



 


Year End Results


 


	
  1. Spherion EPS

  	
   

  	
  Target

  	
   

  	
   

  	
  *

  
	
  2. LOB
  PZ

  	
   

  	
  Target

  	
   

  	
   

  	
  *

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Variable Pay Calculation:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EPS

  	
   

  	
  ($112,500 x 75%) x 100%

  	
   

  	
  $

  	
  84,375

  	
   

  
	
  LOB PZ

  	
   

  	
  ($112,500 x 25%) x 100%

  	
   

  	
  $

  	
  28,125

  	
   

  
	
  Total
  Variable Pay

  	
   

  	
  $84,375 + $28,125

  	
   

  	
  $

  	
  112,500

  	
   

  



 










* Confidential
portions omitted and filed separately with the Commission.


 

















 


EXHIBIT A


 


	
  Executive
  Name

  	
   

  	
  Title

  	
   

  	
  Annual Incentive

  Award Target

  	
   

  
	
  Byrne K. Mulrooney

  	
   

  	
  President, Staffing Services

  	
   

  	
  75% of annual base salary