EXHIBIT 10.3


 





 


Spherion Corporation



Corporate
Executives

Management Variable Pay Plan




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.


 


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.


 


The Variable Pay Opportunity is made up of
one component, Company EPS.


 


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.


 


1.               Company Earnings Per Share (EPS).   100% 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


(100% 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.


 


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.


 






* Confidential portions omitted and filed separately with the
Commission.


 

















 


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 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 Compensation Committee or
its 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
Compensation Committee or its designee will administer this Plan and have the
power to implement, operate, and interpret this Plan and to take such action as
it 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 the Compensation Committee or its 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)


 


Corporate Executive Management


 


2006 Variable Pay Plan Example


 


	
  Assumptions:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Base Salary (January 1, 2006)

  	
   

  	
   

  	
   

  	
  $

  	
  150,000

  	
   

  
	
  Variable Pay
  Opportunity (% of base)

  	
   

  	
   

  	
   

  	
  50

  	
  %

  
	
  Variable Pay
  Opportunity ($)

  	
   

  	
  $150,000 x 50%

  	
   

  	
  $

  	
  75,000

  	
   

  
	
  Spherion EPS
  target

  	
   

  	
   

  	
   

  	
   

  	
  *

  



 


Year
End Results


 


	
  Example #1

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Spherion
  EPS

  	
   

  	
  Target

  	
   

  	
   

  	
  *

  
	
  Variable
  Pay Calculation:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EPS

  	
   

  	
  $75,000 x 100%

  	
   

  	
  $

  	
  75,000

  	
   

  
	
  Total
  Annual Variable Pay

  	
   

  	
   

  	
   

  	
  $

  	
  75,000

  	
   

  



 






* Confidential portions omitted and filed separately with the
Commission.


 

















 


EXHIBIT A


 


	
  Executive
  Name

  	
   

  	
  Title

  	
   

  	
  Annual Incentive

  Award Target

  	
   

  
	
  Roy G. Krause

  	
   

  	
  President and Chief Executive Officer

  	
   

  	
  100% of annual base salary

  	
   

  
	
  William J. Grubbs

  	
   

  	
  Chief Marketing and Corporate Development Officer

  	
   

  	
  60% of annual base salary

  	
   

  
	
  William G. Halnon

  	
   

  	
  Senior Vice President and Chief Information
  Officer

  	
   

  	
  60% of annual base salary

  	
   

  
	
  Lisa G. Iglesias

  	
   

  	
  Senior Vice President, General Counsel and Secretary

  	
   

  	
  60% of annual base salary

  	
   

  
	
  Richard A. Lamond

  	
   

  	
  Senior Vice President and Chief Human
  Resources Officer

  	
   

  	
  60% of annual base salary

  	
   

  
	
  Mark W. Smith

  	
   

  	
  Senior Vice President and Chief Financial
  Officer

  	
   

  	
  60% of annual base salary