Exhibit 10.1


 


HMS HOLDINGS CORP.


ANNUAL INCENTIVE COMPENSATION PLAN


 


As Amended and Restated


 


 


HMS Holdings Corp. (the “Company”), a Delaware
corporation, hereby establishes and adopts the amended and restated Annual Incentive Compensation Plan (the “Plan”)
to provide incentive awards that are intended to qualify as “performance-based compensation” within the meaning of
Section 162(m) of the Internal Revenue Code of 1986, as amended.


	1.		PURPOSES OF THE PLAN



The purposes of the Plan are to advance the interests of the Company
and its shareholders and assist the Company in attracting and retaining executive officers of the Company and its Affiliates who,
because of the extent of their responsibilities can make significant contributions to the Company’s success by their ability,
industry, loyalty and exceptional services, by providing incentives and financial rewards to such executive officers.


	2.		DEFINITIONS



2.1.“Affiliate” shall mean any corporation,
partnership or other organization of which the Company owns or controls, directly or indirectly, not less than 50% of the total
combined voting power of all classes of stock or other equity interests.


2.2.           
“Award” shall mean any amount granted to a Participant under the Plan.


2.3.           
“Board” shall mean the board of directors of the Company.


2.4.           
 “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and any successor
thereto.


2.5.           
“Committee” shall mean the Compensation Committee of the Board or any subcommittee thereof formed
by the Compensation Committee to act as the Committee hereunder. For purposes of satisfying the requirements of Section 162(m)
of the Code and the regulations thereunder, the Committee is intended to consist solely of “outside directors” as such
term is defined in Section 162(m) of the Code.


2.6.           
“Disability” means any physical or mental condition of a Participant that in the opinion of the Committee
renders the Participant incapable of continuing to be an employee of the Company and its Affiliates.


2.7.           
 “Participant” shall have the meaning set forth in Section 3.1.


2.8.           
“Performance Criteria” shall mean any of the following, as determined under generally accepted accounting
principles (“GAAP”) (where applicable for matters subject to GAAP) or as otherwise adjusted and reported by
the Company as non-GAAP measures: net sales; revenue; revenue growth or product revenue growth; operating income (before or after
taxes); pre- or after-tax income (before or after allocation of corporate overhead and bonus); earnings per share; net income (before
or after taxes); return on equity; total shareholder return; return on assets or net assets; appreciation in and/or maintenance
of the price of the Shares or any other publicly-traded securities of the Company; market share; gross profits; earnings (including
earnings or losses before taxes, before interest and taxes, or before interest, taxes, depreciation and amortization); economic
value-added models or equivalent metrics; comparisons with various stock market indices; reductions in costs; cash flow or cash
flow per share (before or after dividends); return on capital (including return on total capital or return on invested capital);
cash flow return on investment; improvement in or attainment of expense levels or working capital levels, including cash, and accounts
receivable; operating margin; gross margin; year-end cash; cash margin; debt reduction; shareholders equity; operating efficiencies;
and, client growth.






     

     

    

2.9.           
“Performance Period” shall mean the Company’s fiscal year or such other period that the Committee,
in its sole discretion, may establish.


	3.		ELIGIBILITY AND ADMINISTRATION



3.1.           
Eligibility. The individuals eligible to participate in the Plan shall be the Company’s Chief Executive
Officer and any other executive officer of the Company or any other person selected by the Committee to participate in the Plan
(each, a “Participant”). Where the Committee determines it appropriate, a Performance Period can have one or
can have more than one Participant.


3.2.           
Administration.


(a) The Plan shall be administered by the Committee. The Committee
shall have full power and authority, subject to the provisions of the Plan and subject to such orders or resolutions not inconsistent
with the provisions of the Plan as may from time to time be adopted by the Board, to: (i) select the Participants to whom
Awards may from time to time be granted hereunder; (ii) determine the terms and conditions, not inconsistent with the provisions
of the Plan, of each Award; (iii) determine the time when Awards will be granted and paid and the Performance Period to which they
relate; (iv) determine the performance goals for Awards for each Participant in respect of each Performance Period based on the
Performance Criteria and certify the calculation of the amount of the Award payable to each Participant in respect of each Performance
Period; (v) determine whether payment of Awards may be deferred by Participants in a manner consistent with Section 409A of
the Code; (vi) interpret and administer the Plan and any instrument or agreement entered into in connection with the Plan; (vii)
correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent
that the Committee shall deem desirable to carry it into effect; (viii) establish such rules and regulations and appoint such
agents as it shall deem appropriate for the proper administration of the Plan; and (ix) make any other determination and take
any other action that the Committee deems necessary or desirable for administration of the Plan. The Committee may delegate any
ministerial matters to officers or employees of the Company but may not delegate authority or responsibilities described in the
preceding sentence except to the extent ministerial.


(b) Decisions of the Committee shall be final, conclusive
and binding on all persons or entities, including the Company, any Affiliate, any Participant and any person claiming any
benefit or right under an Award or under the Plan.






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	4.		AWARDS



4.1.           
Performance Period; Performance Goals.


(a) Not later than the earlier of (i) 90 days after the commencement
of a Performance Period and (ii) the expiration of 25% of the Performance Period, the Committee shall, in writing, designate (x)
the Participants for the Performance Period and (y) the performance goals for determining the Award for each Participant for each
Performance Period based on attainment of specified levels of one or any combination of the Performance Criteria. Within such time
period the Committee shall also specify the inclusion or exclusion for charges or adjustments related to an event or occurrence
that the Committee determines should appropriately be included or excluded because it involves (a) restructurings, discontinued
operations, or items that are unusual in nature or infrequently occurring, (b) the cumulative effects of tax or accounting changes
in accordance with GAAP, or (c) foreign exchange gains and losses. The performance goals designated by the Committee may be based
solely by reference to the Company’s performance or the performance of an Affiliate, division, business segment or business
unit of the Company, or based upon the relative performance of other companies or upon comparisons of any of the indicators of
performance relative to other companies. Such performance goals shall otherwise comply with the requirements of Section 162(m)
of the Code and the regulations thereunder.


(b) If a person becomes eligible to participate in the Plan after
the Committee has made its initial designation of Participants, such individual may become a Participant if so designated in writing
by the Committee.


4.2.           
Certification. At such time as it shall determine appropriate following the conclusion of each Performance Period,
the Committee shall certify, in writing, the amount of the Award for each Participant for such Performance Period.


4.3.           
Payment of Awards. The amount of the Award actually paid to a Participant may, in the sole discretion of the
Committee, be less than the amount otherwise payable to the Participant based on attainment of the performance goals for the Performance
Period as determined in accordance with Section 4.1. The Committee may not waive the achievement of the applicable performance
goals except in the case of the death or disability of the Participant or a change in control of the Company. The actual amount
of the Award determined by the Committee for a Performance Period shall be paid in the Committee’s discretion in cash or,
to the extent permissible under a shareholder-approved stock plan of the Company, stock based awards under such plan. Payment to
each Participant shall be made no later than the fifteenth day of the third month following the end of the fiscal year of the Company
in which the applicable Performance Period ends, unless payment is deferred pursuant to a plan or arrangement satisfying the requirements
of Section 409A of the Code.


4.4.           
Maximum Award. The maximum dollar value of an Award made to any Participant in any 12-month period is $5,000,000.
This limit is in addition to, and not in replacement of or counted into, the individual grant limit under the Company’s Fourth
Amended and Restated 2006 Stock Plan or any successor plan.



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	5.		MISCELLANEOUS



5.1.           
Amendment and Termination of the Plan. The Board may, from time to time, alter, amend, suspend or terminate the
Plan as it shall deem advisable, subject to any requirement for shareholder approval imposed by applicable law, including Section
162(m) of the Code, or by the NASDAQ Stock Market (or such other principal securities market on which the Company’s
securities are listed or qualified for trading). No amendments to, or termination of, the Plan shall in any way materially impair
the rights of a Participant under any Award previously granted without such Participant’s consent.


5.2.           
Section 162(m) of the Code. Unless otherwise determined by the Committee, the provisions of this Plan shall be
administered and interpreted in accordance with Section 162(m) of the Code to ensure the deductibility by the Company of the payment
of Awards.


5.3.           
Tax Withholding. The Company or an Affiliate shall have the right to make all payments or distributions pursuant
to the Plan to a Participant, net of any applicable federal, state and local taxes required to be paid or withheld. The Company
or an Affiliate shall have the right to withhold from wages, Awards or other amounts otherwise payable to such Participant such
withholding taxes as may be required by law, or to otherwise require the Participant to pay such withholding taxes. If the Participant
shall fail to make such tax payments as are required, the Company or an Affiliate shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to such Participant or to take such other action as may
be necessary to satisfy such withholding obligations.


5.4.           
Right of Discharge Reserved; Claims to Awards. Nothing in this Plan shall provide any Participant a right to
receive any Award or payment under the Plan with respect to a Performance Period. Nothing in the Plan nor the grant of an Award
hereunder shall confer upon any Participant the right to continue in the employment of the Company or an Affiliate or affect any
right that the Company or an Affiliate may have to terminate the employment of (or to demote or to exclude from future Awards under
the Plan) any such Participant at any time for any reason. Except as specifically provided by the Committee, the Company shall
not be liable for the loss of existing or potential profit from an Award granted in the event of the termination of employment
of any Participant. No Participant shall have any claim to be granted any Award under the Plan, and there is no obligation for
uniformity of treatment of Participants under the Plan.


5.5.           
Recoupment. All Awards will be subject to deduction, forfeiture, recoupment or similar requirement in accordance
with any clawback policy that may be implemented by the Company from time to time, including such policies that may be implemented
after the date an Award is granted, pursuant to the listing standards of any national securities exchange or association on which
the Company’s securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection
Act or other applicable law, or other agreement or arrangement with a Participant.


5.6.           
Nature of Payments. All Awards made pursuant to the Plan are in consideration of services performed or to be
performed for the Company or an Affiliate, division or business unit of the Company. Any income or gain realized pursuant to Awards
under the Plan constitute a special incentive payment to the Participant and shall not be taken into account, to the extent permissible
under applicable law, as compensation for purposes of any of the employee benefit plans of the Company or an Affiliate except as
may be determined by the Committee or by the Board or board of directors of the applicable Affiliate.






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5.7.           
Other Plans. Nothing contained in the Plan shall prevent the Board from adopting other or additional compensation
arrangements, subject to shareholder approval if such approval is required; and such arrangements may be either generally applicable
or applicable only in specific cases.


5.8.           
Severability. If any provision of the Plan shall be held unlawful or otherwise invalid or unenforceable in whole
or in part by a court of competent jurisdiction, such provision shall (a) be deemed limited to the extent that such court of competent
jurisdiction deems it lawful, valid and/or enforceable and as so limited shall remain in full force and effect, and (b) not
affect any other provision of the Plan or part thereof, each of which shall remain in full force and effect. If the making of any
payment or the provision of any other benefit required under the Plan shall be held unlawful or otherwise invalid or unenforceable
by a court of competent jurisdiction, such unlawfulness, invalidity or unenforceability shall not prevent any other payment or
benefit from being made or provided under the Plan, and if the making of any payment in full or the provision of any other benefit
required under the Plan in full would be unlawful or otherwise invalid or unenforceable, then such unlawfulness, invalidity or
unenforceability shall not prevent such payment or benefit from being made or provided in part, to the extent that it would not
be unlawful, invalid or unenforceable, and the maximum payment or benefit that would not be unlawful, invalid or unenforceable
shall be made or provided under the Plan.


5.9.           
Construction. As used in the Plan, the words “include” and “including,”
and variations thereof, shall not be deemed to be terms of limitation, but rather shall be deemed to be followed by the words “without
limitation.”


5.10.       
Unfunded Status of the Plan. The Plan is intended to constitute an “unfunded” plan for incentive
compensation. With respect to any payments not yet made to a Participant by the Company, nothing contained herein shall give any
such Participant any rights that are greater than those of a general creditor of the Company.


5.11.       
Governing Law. The Plan and all determinations made and actions taken thereunder, to the extent not otherwise
governed by the Code or the laws of the United States, shall be governed by the laws of the State of Delaware without reference
to principles of conflict of laws that might result in the application of the laws of another jurisdiction, and shall be construed
accordingly.


5.12.       
Effective Date of Plan. The original Plan was established in March 2011 and approved by shareholders at the Company’s
2011 Annual Meeting. The Plan, as amended and restated herein, is being resubmitted for shareholder approval at the Company’s
2016 Annual Meeting and shall be effective on the date of the approval of the Plan by the holders of the then outstanding securities
of the Company entitled to vote generally in the election of directors. The Plan shall be null and void and of no effect if the
foregoing condition is not fulfilled.


5.13.       
Captions. The captions in the Plan are for convenience of reference only, and are not intended to narrow, limit
or affect the substance or interpretation of the provisions contained herein.


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