Exhibit 10.1


 


 TETRA TECH, INC.


 


 


EXECUTIVE COMPENSATION POLICY


 


Approved By:


Compensation Committee:                            11/14/2005


Document Owner:                        Compensation
Committee


 


 


TABLE OF CONTENTS


 


	
  Section

  	
   

  	
   

  	
   

  
	
  1.0

  	
  PURPOSE

  	
   

  
	
  2.0

  	
  PHILOSOPHY

  	
   

  
	
  3.0

  	
  SCOPE

  	
   

  
	
  4.0

  	
  ROLES AND RESPONSIBILITIES

  	
   

  
	
  5.0

  	
  EXECUTIVE COMPENSATION COMPONENTS AND PLAN

  	
   

  
	
  6.0

  	
  PROCESS
  FLOW/SCHEDULE

  	
   

  
	
  7.0

  	
  APPENDIX I - POSITIONS COVERED BY THE EXECUTIVE COMPENSATION POLICY

  	
   

  
	
  8.0

  	
  APPENDIX
  II - EXAMPLES

  	
   

  
	
  9.0

  	
  APPENDIX
  III - APPROVAL FORMS

  	
   

  



 


Tetra Tech Confidential


 


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1.0                               PURPOSE


 


The purpose of this document is to define the executive compensation
policy for Tetra Tech, Inc.


 


2.0                               PHILOSOPHY


 


Tetra Tech’s executive compensation program is designed to:


 


•                  Align
the interests of executive officers with those of the stockholders;


 


•                  Attract,
motivate, reward, and retain top level executives upon whom, in large part, the
success of the Company depends;


 


•                  Be
competitive with compensation programs for companies of similar size and
complexity with whom the Company competes for executive talent, including
direct competitors;


 


•                  Provide
compensation based upon the short-term and long-term performance of both the
individual executive and the Company; and


 


•                  Strengthen
the relationship between pay and performance by emphasizing variable, at-risk
compensation that is dependent upon the successful achievement of specified
corporate and individual goals.


 


3.0                               SCOPE


 


This policy applies to all executive officers of Tetra Tech, Inc. as
well as any other positions recommended by the Chief Executive Officer (CEO) in
consultation with the Chairman and approved by the Board of Directors that have
a particularly significant impact on the overall success of the Company.


 


4.0                               ROLES AND RESPONSIBILITIES


 


Compensation Committee


 


•                  Under
delegated authority from the Board of Directors, develops, administers, and
monitors executive compensation in the long-term interests of the Company and
its stockholders;


 


•                  Evaluates
the performance of the Chairman and the CEO, and establishes the compensation
of the Chairman and the CEO ;


 


•                  Establishes
the compensation of all executive officers of the Company based, in part, on
the CEO’s recommendations; and


 


•                  Determines
that performance goals have been attained before payment.


 


Audit Committee


 


•                  Jointly
with the Compensation Committee determines the individual performance factor for
the CFO position.


 


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Chief Executive Officer


 


•                  Reviews
the performance of all other officers of the Company, and, in consultation with
the Chairman, makes specific recommendations to the Compensation Committee in
regard to their compensation; and


 


•                  Develops
performance targets for all other executive officers and, in consultation with
the Chairman, recommends those performance targets to the Compensation
Committee.


 


Human Resources


 


•                  Acquires
information regarding peer group and other competitor pay practices, and
provides analysis of this information to the CEO, the Chairman, and the
Compensation Committee; and


 


•                  Provides
compensation practice trend data to the CEO, the Chairman, and the Compensation
Committee.


 


Finance and Accounting


 


•                  Provides
Corporate performance data for use in determining the degree to which certain
performance objectives have been met; and


 


•                  Assures
payments have been properly accrued for and reported.


 


5.0                               EXECUTIVE COMPENSATION COMPONENTS AND PLAN


 


The primary components of compensation for
executive officers are base salary, annual performance bonuses, and long-term
incentive compensation.


 


5.1                               BASE SALARY


 


Base salaries for positions in Appendix I are
reviewed on an annual basis to ensure internal equity and external
competitiveness.  Salaries are reviewed
to determine whether the base compensation is within a reasonable range of
executive pay levels at other companies that potentially compete with the
Company for business and executive talent. 
Total compensation is considered during this analysis.  Consideration is given to individual
performance, experience and time in the position, initiative, contribution to
overall corporate performance, and salaries paid to other executives in the
Company.  The review and determination
occur as shown in Section 6.0.


 


5.2                               ANNUAL PERFORMANCE BONUSES


 


This component is intended to promote the
interests of the Company by providing both an incentive and a financial reward
for those managerial and other key employees who contribute most to the
operating results and growth of the Company. 
Each year the Company identifies a target amount of incentive
compensation for each executive officer and the other key positions listed in
Appendix I.  This target is expressed as
a percentage of base salary.


 


Bonuses are paid based upon meeting
pre-determined performance criteria. 
These criteria fall into two categories: (1) overall corporate
performance, designated the Corporate Performance Factor (CPF), based on
assessment of how the overall corporation did in achieving its key objectives
and (2) individual contribution, designated the Individual Factor (IF), based
on


 


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individual performance.  The CPF determined by the Compensation
Committee shall have a range of 0 to 1.4 with a target of 1.0 based on
achievement of key objectives. The CPF for group executives and group
controllers will be determined by the CEO based on the contribution of the
specific group to the Corporation. The IF shall have a range of 0 to 1.2 with a
target of 1.0 for expected contribution level. 
The IF will be recommended by the CEO and approved by the Compensation Committee
with the exception of the Chairman, Vice Chairman, CEO, and CFO positions. The
IF for the Chairman/Vice Chairman will be determined by the Compensation
Committee. The IF for the CEO will be recommended by the Chairman and determined
by the Compensation Committee. The IF for the CFO will be recommended by the
CEO and determined jointly by the Audit Committee and Compensation Committee,
giving strong consideration to the Audit Committee’s assessment of the strength
of the Company’s internal financial controls and the accuracy and
appropriateness of its financial reporting.


 


Target bonus amounts as a percentage of base
salary are as follows:


 


TARGET
BONUS AMOUNTS


 


	
  POSITION

  	
   

  	
  PERCENTAGE (%)

  	
   

  
	
  Chairman/Vice Chairman

  	
   

  	
  100

  	
   

  
	
  Chief Executive Officer

  	
   

  	
  75

  	
   

  
	
  Chief Operating Officer

  	
   

  	
  55

  	
   

  
	
  President

  	
   

  	
  55

  	
   

  
	
  Chief Financial Officer

  	
   

  	
  55

  	
   

  
	
  Other Executive Officers

  	
   

  	
  40

  	
   

  
	
  Other Key Positions

  	
   

  	
  30-40

  	
   

  



 


Each Officer is eligible to receive an annual
bonus in the range of 0% to 168% of target, i.e, CPF (1.4) x IF(1.2) = 1.68
(168%) x target)


 


MINIMUM/MAXIMUM
OF BASE


 


	
  POSITION

  	
   

  	
  TARGET PERCENTAGE (%)

  	
   

  	
  MINIMUM (%)

  	
   

  	
  MAXIMUM (%)

  	
   

  
	
  Chairman/Vice Chairman

  	
   

  	
  100

  	
   

  	
  0

  	
   

  	
  168

  	
   

  
	
  Chief Executive Officer

  	
   

  	
  75

  	
   

  	
  0

  	
   

  	
  126

  	
   

  
	
  Chief Operating Officer

  	
   

  	
  55

  	
   

  	
  0

  	
   

  	
  92.4

  	
   

  
	
  President

  	
   

  	
  55

  	
   

  	
  0

  	
   

  	
  92.4

  	
   

  
	
  Chief Financial Officer

  	
   

  	
  55

  	
   

  	
  0

  	
   

  	
  92.4

  	
   

  
	
  Other Executive Officers

  	
   

  	
  40

  	
   

  	
  0

  	
   

  	
  67.2

  	
   

  
	
  Other Key Positions

  	
   

  	
  30-40

  	
   

  	
  0

  	
   

  	
  50.4-67.2

  	
   

  



 


The Board of Directors reserves the right to “zero”
the CPF if results are significantly below expected targets or a manageable
event negatively and severely impacts stockholder value.  The minimum performance threshold is .6;
achievement of less than 60% in either the CPF or IF will result in the
elimination of the bonus paid. Notwithstanding the above, the Compensation


 


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Committee, in consultation with the Chairman
and the CEO, reserve the discretion to adjust specific performance bonus
amounts when deemed to be in the interests of the shareholders.


 


Bonus payments are made by December 15 of
each year, based upon performance in the recently concluded fiscal year.


 


5.3                               LONG-TERM INCENTIVE COMPENSATION


 


Long-term incentive awards are designed to
encourage recipients to achieve long term sustained growth of stockholder
value.  The long-term incentive
compensation program encourages executives to maintain a long-term financial
perspective by linking a substantial portion of their compensation to
stockholder returns and the Company’s long-term financial success.


 


Long-term incentives are generally provided
in the form of equity compensation, such as stock options and/or other equity
related programs.  However, the Board of
Directors reserves the right to utilize deferred cash incentives if beneficial
to the interests of the Company and its stockholders. Long-term incentive
awards may have certain restrictions, such as mandatory vesting periods which
encourage participating executives to continue in the Company’s employ and
thereby act as a retention incentive.


 


Any equity compensation shall be in
accordance with the provisions and limitations of the Equity Incentive Plan
periodically adopted by the Board of Directors and approved by stockholder
vote.  The schedule for distribution of
long term-incentives is shown in Section 6.


 


In addition to the above, the following
guidelines will apply to the long-term incentive plan:


 


•                  A
maximum of 2% of outstanding shares of stock and/or options will be distributed
in any one year period. The Board of Directors retains the discretion to
increase this amount due to special circumstances, such as an acquisition.


 


•                  A
reserve of 10% minimum of the shares available for distribution each year will
be held outside the normal distribution for special needs (i.e., hiring,
retention, etc.) that occur during the year.


 


•                  All
restricted stock grants shall be approved by the Compensation Committee of the
Board of Directors


 


•                  No
more than 0.5% of the outstanding shares of stock and/or options can be
distributed to Executive Officers in one year.


 


•                  The
plan shall target 8-15% of the non-officer population for inclusion in the long
term incentive program.


 


•                  Minimum
grants to non-officers will be 500 shares and maximum grants to non-officers
will be 10,000 shares.


 


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6.0                               PROCESS FLOW/SCHEDULE


 





 


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APPENDIX
I – POSITIONS COVERED BY THE EXECUTIVE COMPENSATION POLICY


 


Consistent with Section 3.0 of the Executive
Compensation Policy, this policy applies to all executive officers of Tetra
Tech, Inc. as well as any other positions recommended by the CEO and approved
by the Board of Directors that have a particularly significant impact on the
overall success of the Company.  Each of
these positions is listed below:


 


Officer Positions:


Chairman


Vice Chairman


Chief Executive Officer


Executive Vice President/Chief Operating
Officer


President


Executive Vice President/Chief Financial
Officer


Senior Vice President Corporate
Administration


Vice President, General Counsel, Secretary


Vice President, Finance and Enterprise
Systems


Vice President, Corporate Controller


Vice President, Investor Relations and
Corporate Development


 


Other Key Positions:


Senior Vice President Tt and President
Remediation and Construction Group


Controller- Remediation and Construction
Group


Senior Vice President Tt and President Environmental
Engineering and Consulting Group


Controller- Environmental Engineering and
Consulting Group


Senior Vice President Tt and President
Systems Support and Security Group


Controller- Systems Support and Security
Group


Senior Vice President Tt and President Civil
Infrastructure Group


Controller- Civil Infrastructure Group


Senior Vice President Tt and President
Government Environmental Services Group


Controller- Government Environmental Services
Group


Vice President, Human Resources


Vice President, Information Services


Vice President, Contracts


Vice President, Marketing and Business
Development


Vice President, Tax and Treasury


 


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APPENDIX II
– EXAMPLES


 


Example 1


 


Narrative:                                            The Company
significantly exceeds each of its key objectives and the CEO significantly
exceeds all individual contribution expectations, maximizing the bonus payment.


 


	
  Position:

  	
  CEO

  	
  Base Salary: $500,000

  	
  CPF: 1.4

  	
  IF: 1.2

  



 


Bonus to be paid:  $500,000 X 0.75 X 1.4 X 1.2 = $630,000


 


Example 2


 


Narrative:                                            The Company
achieves all and exceeds some of its key objectives, and the COO meets all
individual contribution expectations.


 


	
  Position:

  	
  COO

  	
  Base Salary: $360,000

  	
  CPF: 1.2

  	
  IF: 1.0

  



 


Bonus to be paid:  $360,000 X 0.55 X 1.2 X 1.0 = $237,600


 


Example 3


 


Narrative:                                            The Company
meets its key objectives, and the General Counsel meets individual contribution
expectations.


 


	
  Position:

  	
  General Counsel

  	
  Base Salary: $250,000

  	
  CPF: 1.0

  	
  IF: 1.0

  



 


Bonus to be paid: $250,000 X 0.40 X 1.0 X 1.0
= $100,000


 


Example 4


 


Narrative:                                            The Company
meets 80% of its key objectives, and the Corporate Controller significantly
exceeds individual contribution expectations.


 


	
  Position:

  	
  Corporate Controller

  	
  Base Salary: $205,000

  	
  CPF: 0.8

  	
  IF: 1.2

  



 


Bonus to be paid:  $205,000 X 0.40 X 0.8 X 1.2 = $78,820


 


Example 5


 


Narrative:                                            A Group
President leading a company significantly misses key objectives while the
overall corporation meets its goals.


 


	
  Position:

  	
  Group President

  	
  Base Salary: $350,000

  	
  CPF 0.5

  	
  IF: 1.0

  
	
   

  	
   

  	
  (below
  threshold)

  	
   

  



 


Bonus to be paid:   $350,000 X 0.4 X 1.0 X 0.0 = 0


 


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APPENDIX
III – APPROVAL FORMS


 


To:                              Compensation Committee


 


In accordance with the terms and conditions
of the Executive Compensation Policy, the following executives have earned
bonus payments in the amounts indicated. 



 


	
  NAME

  	
   

  	
  POSITION

  	
   

  	
  BONUS TO BE PAID ($)*

  
	
   

  	
   

  	
  Chairman**

  	
   

  	
   

  
	
   

  	
   

  	
  Vice
  Chairman**

  	
   

  	
   

  
	
   

  	
   

  	
  Chief
  Executive Officer**

  	
   

  	
   

  
	
   

  	
   

  	
  Executive
  Vice President- Chief Operating Officer

  	
   

  	
   

  
	
   

  	
   

  	
  President

  	
   

  	
   

  
	
   

  	
   

  	
  Executive
  Vice President- Chief Financial Officer

  	
   

  	
   

  
	
   

  	
   

  	
  Senior
  Vice President Corporate Administration

  	
   

  	
   

  
	
   

  	
   

  	
  Vice
  President, General Counsel, Secretary

  	
   

  	
   

  
	
   

  	
   

  	
  Vice
  President, Finance and Enterprise Systems

  	
   

  	
   

  
	
   

  	
   

  	
  Vice
  President, Corporate Controller

  	
   

  	
   

  
	
   

  	
   

  	
  Vice
  President, Investor Relations and Corporate Development

  	
   

  	
   

  
	
   

  	
   

  	
  Vice
  President, Human Resources

  	
   

  	
   

  
	
   

  	
   

  	
  Vice
  President, Information Services

  	
   

  	
   

  
	
   

  	
   

  	
  Vice
  President, Contracts

  	
   

  	
   

  
	
   

  	
   

  	
  Vice
  President, Marketing and Business Development

  	
   

  	
   

  
	
   

  	
   

  	
  Vice
  President, Tax and Treasury

  	
   

  	
   

  
	
   

  	
   

  	
  Senior
  Vice President Tt and President Remediation and Construction Group

  	
   

  	
   

  
	
   

  	
   

  	
  Controller-
  Remediation and Construction Group

  	
   

  	
   

  
	
   

  	
   

  	
  Senior
  Vice President Tt and President Environmental Engineering and Consulting
  Group

  	
   

  	
   

  
	
   

  	
   

  	
  Controller-
  Environmental Engineering and Consulting Group

  	
   

  	
   

  
	
   

  	
   

  	
  Senior
  Vice President Tt and President Systems Support and Security Group

  	
   

  	
   

  
	
   

  	
   

  	
  Controller-
  Systems Support and Security Group

  	
   

  	
   

  
	
   

  	
   

  	
  Senior
  Vice President Tt and President Civil Infrastructure Group

  	
   

  	
   

  
	
   

  	
   

  	
  Controller-
  Civil Infrastructure Group

  	
   

  	
   

  
	
   

  	
   

  	
  Senior
  Vice President Tt and President Government Environmental Services Group

  	
   

  	
   

  
	
   

  	
   

  	
  Controller-
  Government Environmental Services Group

  	
   

  	
   

  



 


	
  Recommended:

  	
  Chief Executive Officer

  	
   

  
	
   

  
	
  Approved:

  	
  Compensation Committee Chairperson

  	
   

  
				



 










*Worksheet attached


**Bonus amount to be determined by
Compensation Committee


 


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PERFORMANCE BONUS WORKSHEET


 


	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  PERFORMANCE FACTOR

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  TARGET

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  AGGREGATE

  	
   

  	
  BONUS

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  BASE

  	
   

  	
  BONUS

  	
   

  	
  CORPORATE

  	
   

  	
  INDIVIDUAL

  	
   

  	
  PERFORMANCE

  	
   

  	
  TO BE

  	
   

  
	
  POSITION

  	
   

  	
  NAME

  	
   

  	
  SALARY

  	
   

  	
  %

  	
   

  	
  $

  	
   

  	
  (0 - 1.4)

  	
   

  	
  (0-1.2)

  	
   

  	
  FACTOR

  	
   

  	
  PAID

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


 


	
  Vice
  President, Corporate Human Resources

  	
   

  	
   

  
	
   

  
	
  Chief
  Executive Officer