Exhibit 10.20


 


SHORT-TERM INCENTIVES


 


At its August 7, 2002 meeting, the
Compensation Committee of the Board reviewed and agreed to, in principle,
recommendations regarding short-term incentives.  The recommendations were as follows:


 


•                  Adopt an executive target incentive plan with
awards contingent upon an appropriate combination of quantifiable corporate,
business unit and/or division results along with a non-quantifiable element.


•                  Consider setting goals in the following
quantifiable performance areas:


•                  Corporate – ROIC, after-tax profit


•                  Business Unit – New work margin, gross
profit, ROCE


•                  Division – New work margin, gross profit,
ROCE


•                  Use a target incentive worksheet to manage
short-term incentives and document and communicate the program to participants.


 


TARGET INCENTIVE APPROACH


 


Under this approach, a target amount of
incentive compensation is identified for each participant.


•                  This target award is expressed as a percent
of salary.


•                  This amount is not guaranteed.  It reflects what is payable if expected
results are achieved.


•                  Actual awards could be larger or smaller than
targeted amounts based on results.


 


PERFORMANCE GOALS


 


For each quantifiable performance
measure selected, three levels of goals will be defined to determine the amount
of incentive that will be payable (adjusted for weighting).


 


•                  Threshold
– At 70% of “Ambitious but Expected” performance, 25% of target incentives
would be payable.


•                  Ambitious but Expected – At this level of performance, 100% of target incentive values would
be payable.


•                  Clearly Outstanding – At 130% of “Ambitious but Expected” performance, 150% of target
incentive values would be payable.


 


For non-quantifiable performance
measures, e.g., safety, diversity, cooperation among business units,
discretionary judgments will be made from unacceptable to clearly outstanding.


 


The goals will be reviewed each year to make
sure they are appropriate for the coming year and are reflective of current
circumstances and budgets.


 

















 


AWARD GUIDELINES


 


Based on competitive practices, we have
developed the following target incentive percentages by level, and the
corresponding mix of corporate, business unit, and/or division measures:


 


	
  Level

  	
   

  	
  Position

  	
   

  	
  Target

  	
   

  	
  Quantifiable

  	
   

  	
  Non–

  Quantifiable

  	
   

  
	
   

  	
   

  	
   

  	
  Corporate

  	
   

  	
  Business
  Unit

  	
   

  	
  Division

  	
   

  	
   

  
	
  42

  	
   

  	
  President / CEO

  	
   

  	
  120

  	
  %

  	
  80

  	
  %

  	
  —

  	
   

  	
  —

  	
   

  	
  20

  	
  %

  
	
  41

  	
   

  	
  Sr. EVP

  	
   

  	
  100

  	
  %

  	
  80

  	
  %

  	
  —

  	
   

  	
  —

  	
   

  	
  20

  	
  %

  
	
  40

  	
   

  	
  EVP

  	
   

  	
  100

  	
  %

  	
  80

  	
  %

  	
  —

  	
   

  	
  —

  	
   

  	
  20

  	
  %

  
	
   

  	
   

  	
  Bus. Unit President

  	
   

  	
  100

  	
  %

  	
  50

  	
  %

  	
  30

  	
  %

  	
  —

  	
   

  	
  20

  	
  %

  
	
  32

  	
   

  	
  Sr. VP

  	
   

  	
  50

  	
  %

  	
  80

  	
  %

  	
  —

  	
   

  	
  —

  	
   

  	
  20

  	
  %

  
	
   

  	
   

  	
  Bus. Unit EVP*

  	
   

  	
  50

  	
  %

  	
  50

  	
  %

  	
  30

  	
  %

  	
  —

  	
   

  	
  20

  	
  %

  
	
  31

  	
   

  	
  VP (Corporate)

  	
   

  	
  35

  	
  %

  	
  80

  	
  %

  	
  —

  	
   

  	
  —

  	
   

  	
  20

  	
  %

  
	
   

  	
   

  	
  Bus. Unit SVP

  	
   

  	
  35

  	
  %

  	
  50

  	
  %

  	
  30

  	
  %

  	
  —

  	
   

  	
  20

  	
  %

  
	
  30

  	
   

  	
  Bus. Unit VP

  	
   

  	
  25%
  - 35

  	
  %

  	
  40

  	
  %

  	
  20

  	
  %

  	
  20

  	
  %

  	
  20

  	
  %

  



 












* It is planned that future targets for Business
Development will be set at the same level as Bus. Unit Presidents.


 


ESTIMATED COSTS


 


Targeted incentive awards for meeting
expected performance objectives and maximum incentive awards for meeting
outstanding performance objectives are as follows:


 


•                  Number of executives = approximately 120


•                  Target Incentives = approximately $10,500,000


•                  Maximum Incentives = approximately
$15,750,000


 


MIDDLE MANAGEMENT INCENTIVE PLAN


 


•                  A similar target incentive approach will be
used for middle management positions.


•                  Approximately 230 managers are eligible for
participation.


•                  Target incentive values will typically range
from 10% to 15% of salary.


•                  Total estimated target incentive awards would
equal $3.7 million.


 


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