Exhibit 10.1






Exhibit 10.1


INCENTIVE COMPENSATION PLAN

September 8, 2010




I. Introduction of the Plan



Each fiscal year, Versar, Inc., (“Company”) establishes a company-wide Incentive Compensation Plan (“Plan”) for Versar
employees under the general supervision of the Compensation Committee of the Board of Directors (“Committee”). The
intent of the Plan is to reward eligible Versar employees for their contribution to increasing shareholder value. The
Board of Directors approves each year’s Plan and the Committee oversees the Plan’s implementation.



II. Philosophy of the Plan



The Company’s Plan is based on the “Pay for Performance” (“PFP”) principle. According to the Plan, individual
employees eligible to participate (“Participants”) are rewarded based on two factors: 1) the Company meets or exceeds
certain pre-approved financial goals and 2) each Participant contributes to the Company’s profitability by meeting or
exceeding certain financial performance and strategic goals. The objective of this principle is to increase
shareholder value over the long term by growing the Company’s profitability and implementing the objectives of the
Company’s Strategic Plan.



This Plan does not include the Company’s Business Development Incentive Program and Major Program Performance Incentive
Program.



III. Eligibility for Compensation



A. Full Eligibility 



1. The Chief Executive Officer and the Executive Leadership Team



The Chief Executive Officer (CEO) and the members of the Executive Leadership Team are eligible for compensation if
they are employed on the day of the payout date and have met at least 80% of their written financial and strategic
goals. The Participants of the Executive Leadership Team include: the President, the Chief Financial Officer (CFO), the
General Counsel (GC), the Chief Administration Officer (CAO), Senior Vice President for Corporate Initiative (CI2) and
Operating Senior Vice Presidents.



2. Management Team



The Participants from the Management Team are eligible for compensation if they are employed on the day of the payout
date and have met at least 80% of their written financial and strategic goals. The Participants of the Management Team
include Division Heads and Corporate Vice Presidents.




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3. Staff



The Participants from the Staff are eligible for compensation if they are employed on the day of the payout date and
have met at least 80% of their written financial and strategic goals. The Participants of the Staff include Versar
employees below the Management Team.



B. Prorated Eligibility 



If eligible Participants are newly hired or promoted and have been in the eligible position for more than 6 full
calendar months, then their compensation will be prorated on the number of months eligible. In case of Participant’s
prorated eligibility, his/her performance will be measured according to the contribution to the Company’s performance,
as well as the set of written goals, if such were discussed and written at the time of hire or promotion.



C. Eligibility Based on Manager Discretion 



In case of a written warning or probation during performance period, eligibility for compensation will be based on
manager’s (supervisor’s) discretion.



IV. Funding of the Plan



The Plan is funded through meeting profitability goals that are set in accordance to the annual operating plan and
budget for each fiscal year. After the end of each fiscal year, the CFO will calculate the overall cash bonus pool and
the Corporate Controller will review CFO’s calculations. These calculations, after the CEO’s review, will be provided
to the Committee’s Chairman.



V. Forms of Compensation



A. Cash Bonuses



Under the Plan, a discretionary bonus pool is created each fiscal year contingent on the Company’s meeting certain
minimum pre-tax income targets set by the Board. The bonus pool is divided into three different categories: 1) the CEO
and the Executive Leadership Team; 2) Management Team; and 3) Staff. For bonus distribution calculations refer to the
example in Attachment A.



In accordance with the Sarbanes-Oxley Act, the cash compensation for the CEO and the Participants from the Executive
Leadership Team is decided by the Committee. The cash compensation for the Participants from the Management Team and
Staff is decided by the Executive Officers, reviewed by the CFO and approved by the CEO.




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B. Awards of Restricted Stock



A block of restricted stock is set aside in the Plan to reward individual performance and improve retention of key
employees. Restricted stock awarded to each individual vests over a minimum 2 year period.



The CEO and the Participants from the Executive Leadership Team are awarded restricted stock by the Committee. The
Participants from the Management Team and the Staff are awarded stock by the Committee, based on the recommendations
from the CEO and the Executive Officers.



VI. Procedures for Determining Compensation



A. Measurement of Performance



Each eligible member in the Plan has a written set of goals to be achieved during the fiscal year. Goals of the
Executive Officers are approved by the Committee. The goals of the Management Team and Staff are approved by the
Executive Officers.



The goals for each eligible member total at 100 points: 60% — 65% of the weight of the goals is quantitative metrics
that relate to meeting financial performance and profitability of the Company or the respective opening unit of each
participant; and 35% — 40% of the weight of the goals is directed to meeting strategic goals including growth, future
position, and market share of the Company or the respective operating unit of each participant.



The Committee evaluates the goals of the Executive Officers. Each Executive Officer or the Division Head reviews the
goals of the Participants from the Management Team and Staff under his/her supervision.



B. Recordkeeping of Performance Goals



The CEO or the person assigned by the CEO will keep records of the written goals set by each Participant.



C. Documentation of Survey Sources



Committee has the right to hire independent consultants, legal advisors and other professional advisors to determine
the amount of compensation. Committee must identify all sources and materials it relies on while making compensation
decisions. The list of all sources should also be included in the Committee Meeting Minutes.



VII. Timeline of the Plan



The Discussions and recommendations for compensation occur during August of each fiscal year. The Compensation
Committee usually meets during the first week of September. Cash bonuses are usually paid during the first pay period after October 1st, while Restricted
Stock Awards are issued by the Compensation Committee during its September meeting.




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VIII. Impact of Regulatory Requirements



The Company’s Plan fully complies with all federal and state laws and regulations including those set out in the
Sarbanes-Oxley Act, as well as the regulations of the New York Stock Exchange. Further, the Company’s Board of
Directors and the Compensation Committee endeavor to implement the “best practices” in corporate governance pursuant to
their legal duties and independent judgment requirements of Delaware law.



IX. Limitations of the Plan



This Plan does not constitute an employment contract, nor is it a guarantee of employment for any fixed period of time.
Employment with the Company is at-will, which means that both employee and the Company are free to terminate the
employment relationship at any time for any lawful reason, with or without notice.



All incentive awards under this program are entirely discretionary. Participation in the Plan does not constitute a
guarantee of an award for the entire Plan year or any specific time period. The Company reserves the right to
prospectively change, amend, alter, or terminate the Plan at any time.



The Compensation Committee retains full control and complete discretion over all decision regarding the interpretation
of the program, eligibility criteria, the amount, timing and form of payments and any other aspect of the program and
the manner in which it is administered.



Even if employees may be given progress reports regarding business results during the year, no such statements or
projections shall constitute a promise or a guarantee that incentives will be paid under this program at any particular
time, to any particular employee, or in any particular amount.




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