EX-10.3



 





EXHIBIT
10.3




Layne Christensen Company

Mineral Exploration Division Incentive Compensation Plan




Effective February 1, 2007




SECTION I. Definitions.




     In addition to the terms defined elsewhere throughout this Plan (as defined in Section II
below), the following terms shall have the following meanings:



     “Committee” shall mean the administrative committee of this Plan (as defined in Section III
below).



     “Company” shall mean Layne Christensen Company and its subsidiaries.



     “District” shall mean a separate profit center of the Company within the Division (as defined
below) as determined from the Company’s internal financial records and as set forth in Exhibit A
attached hereto; provided, however, that the Committee shall have the authority in its discretion
to group one or more profit centers into one “District” for purposes of this Plan.



     “Division” shall mean that portion of the Company which forms the Mineral Exploration Division
as determined by the Committee in its sole discretion from time to time.



     “EBIT” shall mean earnings before interest and taxes exclusive of any of the Company’s general
and administrative expenses as determined by the Committee in its sole discretion from time to
time.



     “EBIT Benchmark” shall mean the performance benchmark assigned to a certain District, Region
(as defined below) and/or the Division and based on the EBIT of such respective District, Region or
the Division.



     “Pool” shall mean the bonus pool established for each District, Region and/or the Division for
each fiscal year.



     “Region” shall mean a separate grouping of Districts within the Division identified on Exhibit
B; provided, however, that the Committee shall have the authority in its discretion to change the
grouping of Districts and the makeup of all or any Regions from time to time.



SECTION II. Purpose of the Plan.




     The Company desires to effect a program of making awards as soon as practicable after the end
of each fiscal year, as provided below, to certain employees of the Division who during such fiscal
year, in the judgment of the Committee, have significantly contributed to the achievement of
certain objectives of the Division and of the Districts or Regions in which such employees perform
services. The purpose of this program is to provide additional incentive for the eligible
employees to promote the best interests and most profitable operation of the Division.



     This program shall be known as the “Layne Christensen Company Mineral Exploration Division
Incentive Compensation Plan” (hereinafter referred to as the “Plan”). This Plan supersedes the
Layne Christensen Company District Incentive Compensation Plan effective February 1, 2003 (the
“District Incentive Compensation Plan”) as it relates to participants of this Plan and no
participant of this Plan shall be eligible to participate in the District Incentive Compensation
Plan after February 1, 2007.



 









 







The existence of the Plan shall not be in lieu of or otherwise affect
or be affected by any other compensation plan or arrangement of the Company.



SECTION III. Administration.




     The Plan shall be administered by the Committee. The Committee shall consist of at least
three persons appointed by the Board of Directors of the Company. Except as otherwise permitted by
the Board of Directors of the Company, during the one-year period prior to the commencement of
service of a Committee member on the Committee, such member shall not have participated in, and
while serving and for one year after serving on the Committee, such member shall not be eligible
for participation in, the Plan.



     The Committee shall have full power, in its sole discretion, to interpret, construe and
administer the Plan and adopt rules and regulations relating to the Plan.



     Decisions made by the Committee in good faith and in the exercise of its powers and duties
hereunder shall be binding upon all parties concerned. No member of the Committee shall be liable
to anyone for any action taken or decision made in good faith pursuant to the power or discretion
vested in such person under the Plan.



SECTION IV. Participation.




     All salaried, non-clerical employees of the Division shall be eligible for participation in
the Plan (and shall hereinafter be referred to as “Participants”).



     In addition to the Participants and at the discretion of the Committee, a portion of the Pool
may be set aside for payment to Division employees who do not participate in any other Company
bonus or incentive program.



SECTION V. Calculation of Benchmarks.




     The incentive compensation to be allocated to the Pool for each District, Region and the
Division shall be based on certain performance benchmarks. Each fiscal year, each District, Region
and the Division will be assigned an EBIT Benchmark. The EBIT Benchmark for each District, Region
and the Division shall be calculated by adding the EBIT for each respective District, Region and
the Division for the three (3) immediately preceding fiscal years and dividing the sum of those
three (3) numbers by three (3); provided, however, with respect to the EBIT Benchmark calculation
for any fiscal year commencing after fiscal year 2008, the EBIT for any of such three (3)
immediately preceding fiscal years shall not be less than three percent (3%) of the revenue, nor
more than one hundred twenty-five percent (125%) of the EBIT Benchmark, for such fiscal year.



SECTION VI. Generation of Bonus Pools.




     Subject to the provisions of the second paragraph of this Section VI below, as soon as
practical following the end of each fiscal year, a Pool shall be established for each District,
Region and the Division in an amount equal to (i) $0.02 for each $1.00 of EBIT generated during
such fiscal year to the extent such District, Region or the Division achieves less than eighty
percent (80%) of its respective EBIT Benchmark; or (ii) $0.03 for each $1.00 of EBIT generated
during such fiscal year to the extent such District, Region or the Division achieves eighty percent
(80%) to one hundred percent (100%) of its respective EBIT Benchmark (in which case no amount shall
be credited to any Pool under clause (i) above); or (iii) $0.045 for each $1.00 of EBIT generated
during such fiscal year to the extent such District, Region or the Division achieves more than one
hundred, but less than one hundred twenty-five percent
(125%) of its respective EBIT Benchmark (in
which case no amount shall be credited to any Pool under clauses (i) or (ii) above); or (iv) $0.065
for each $1.00 of EBIT generated during such fiscal year to the extent such District, Region or the
Division achieves more than one hundred twenty-five percent



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(125%) of its respective EBIT Benchmark
(in which case no amount shall be credited to any Pool under clauses (i), (ii) or (iii) above).


SECTION VII. Determination of Amount of Award.




     The amount of incentive award to be granted from the Pool to a Participant shall be determined
by the Committee.



     The amount of the individual awards shall be discretionary and in the sole judgment of the
Committee, based upon the Participant’s performance for the fiscal year in which the incentive
award is based, provided, however, that the amount of any cash incentive award shall not exceed:
(i) 100% of the Participant’s annual regular salary for Participants included in Group I (as set
forth in Exhibit C), (ii) 75% of the Participant’s annual regular salary for Participants included
in Group II (as set forth in Exhibit C) and (iii) 50% of the Participant’s annual regular salary
for Participants included in Group III (as set forth in Exhibit C). The term “annual regular
salary” shall mean the annual regular salary of the Participant as of the first day of such fiscal
year.



SECTION VIII. Type of Award.




     The incentive compensation award will be paid in cash or, as permitted under the Company’s
2006 Equity Incentive Plan, in shares of restricted or unrestricted common stock of the Company, or
a combination of any of the foregoing as determined by the Board of Directors of the Company or the
Compensation Committee thereof. To the extent such award is payable in stock, the Participant shall
receive the Company’s common stock, par value $.01 per share.



SECTION IX. Termination of Employment.




     In the event a Participant voluntarily terminates his or her employment with the Company at
any time prior to the close of the fiscal year, the Participant will not be eligible for any award
otherwise payable for the fiscal year.



     In the event a Participant is involuntarily terminated (without cause) prior to the close of
the fiscal year, the Participant will be considered for receipt of the award he or she would have
otherwise received (as determined by the Committee in its sole discretion) and, if awarded,
prorated to reflect the length of the Participant’s service during the relevant fiscal year. The
Committee will take into consideration the circumstances of the termination in determining the
propriety and amount of the award. The Company’s payment of severance or post-employment salary
support to a Participant will not be considered part of the Participant’s annual regular salary for
purposes of the Plan.



SECTION X. Miscellaneous.




     There shall be deducted from each cash payment made under the Plan the amount of any tax
required by any governmental authority to be withheld by the Company with respect to such
payment. A Participant receiving stock hereunder shall have deducted by the Company from the
award the amount of any taxes which the Company is required by any governmental authority to
withhold with respect to such stock prior to calculation of the number of shares of stock to be
awarded.



     Nothing in the Plan shall be construed to give any person any benefit, right or interest
except as expressly provided herein, and nothing in the Plan shall be construed as establishing any
right of continued employment by the Company.



     A Participant’s rights and interests under the Plan may not be assigned or transferred. In
the case of a Participant’s death prior to payment of a Participant’s award, payment in an amount
equal to what the Participant would have otherwise received had he or she been employed on the last
day of the fiscal year (as determined by the Committee in its sole discretion), prorated to reflect
the length of the



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Participant’s service during the relevant fiscal year, shall be made to the
personal representatives of the Participant’s estate or such other person or persons as the
Committee deems appropriate.



     The Board of Directors of the Company, or the Compensation Committee thereof, may discontinue
the Plan, in whole or in part, at any time, or may, from time to time, amend the Plan in any
respect that such Board (or Committee) may deem advisable. In the event the Plan is terminated, no
further payments will be made under the Plan.



SECTION XI. Effective Date.




     The Plan, as amended, shall be effective as of February 1, 2007.




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