EX-10.4



 





Exhibit 10.4




Layne Christensen Company

Executive Incentive Compensation Plan




(As Amended and Restated, Effective February 1, 2007)




 

 






SECTION I. Purpose of the Plan.




     Layne Christensen Company (hereinafter referred to as the “Company”) desires to effect a
program of making awards as soon as practicable after the end of each fiscal year to certain
executive employees of the Company who, in the judgment of the Board of Directors of the Company
(the “Board”) have made significant contributions to the Company during the most recent fiscal
year. The purpose of this program is to provide additional incentive for the executive employees
to promote the best interests and most profitable operation of the Company.



     This program shall be known as the “Layne Christensen Company Executive Incentive Compensation
Plan” (hereinafter referred to as the “Plan”). This Plan amends and supersedes the Layne, Inc.
Executive Incentive Compensation Plan previously approved and adopted by the Board of Directors on
February 1, 1994; the Layne Christensen Company Executive Incentive Compensation Plan effective May
1, 1997; and the Layne Christensen Company Executive Incentive Compensation Plan effective January
1, 2005. 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 II. Administration.




     The Plan shall be administered by the Board. The Board 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 Board in good faith and in the exercise of its powers and
duties hereunder shall be binding upon all parties concerned. No member of the Board 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 III. Participation.




     The following officers, and such other key executive employees of the Company as shall be
determined by the Board from time-to-time, shall be eligible to participate in the Plan (and shall
hereinafter be referred to as “Participants”);



	 	 	 
	Group I

	 	Group II
	 
	 	 
	President

	 	Chief Financial Officer

General Counsel






SECTION IV. Selection of Targets.




     As soon as practicable after the commencement of each fiscal year, the Board shall establish
one or more performance targets, which collectively shall constitute the “Target” hereunder, upon
which the incentive compensation of each Participant shall be calculated for such fiscal year. If
more than one performance target is selected for the Target, the Board shall assign relative
calculation weights to each performance target in determining the Target. Incentive compensation
awards hereunder for each Participant are to be based on that Participant’s performance during that
fiscal year as compared to the Target. The Target may vary among Participants at the sole
discretion of the Board.



SECTION V. Determination of Amount of Award.




     Subject to the last sentence of this Section V, the amount of the incentive compensation award
for a fiscal year shall be equal to a percentage (the “Base Salary Percentage’”) of a Participant’s
annual regular salary (as determined by the Board) as of the beginning of the fiscal year for which
the Target is established (the “Base Salary”). The Base Salary Percentage shall he determined as
follows:



 









 





GROUP I




     If 100% of the Target is achieved, then the Base Salary Percentage shall be 85%. If more than
100% of the Target is achieved, then for each 1% increase above the Target, the Base Salary
Percentage shall be increased by 1.5%; provided, however, that in no event shall the Base Salary
Percentage exceed 100%. If less than 100% of the Target is achieved, then for each 1% decrease
below the Target, the Base Salary Percentage shall be decreased by 1 %; provided, however, that if
80% or less of Target is achieved then the Base Salary Percentage shall be 0.



GROUP II




     If 100% of the Target is achieved, then the Base Salary Percentage shall be 60%. If more than
100% of the Target is achieved, then for each 1 % increase above Target, the Base Salary Percentage
shall be increased by 1.5%; provided, however, that in no event shall the Base Salary Percentage
exceed 100%. If less than 100% of the Target is achieved, then for each 1% decrease below the
Target, the Base Salary Percentage shall be decreased by 1%; provided, however, that if 80% or less
of Target is achieved then the Base Salary Percentage shall be 0.



ILLUSTRATION




     The percentage of the Target achieved and the corresponding Base Salary Percentage are
illustrated as follows:



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Percentage	 	 	 	Group I	 	Group II
	 	 	Target	 	 	 	Base Salary	 	Base Salary
	 	 	Achieved	 	 	 	Percentage	 	Percentage
	 

	 	 	130	%	 	 	 	 	100	%	 	 	87	%
	 

	 	 	120	%	 	 	 	 	100	%	 	 	78	%
	 

	 	 	110	%	 	 	 	 	97.75	%	 	 	69	%
	Target

	 	 	100	%	 	 	 	 	85	%	 	 	60	%
	 

	 	 	90	%	 	 	 	 	76.5	%	 	 	54	%
	 

	 	 	80	%	 	or less
	 	 	0	%	 	 	0	%






     Notwithstanding the foregoing, the amount of the incentive compensation award for a fiscal
year may be increased or decreased in the sole discretion of the Board by an amount not greater
than one third of the incentive compensation award which would be determined under the preceding
provisions of this Section V if 100% of the Target were achieved.



SECTION VI. Methods of Payment.




     The incentive compensation award will be paid in cash, common stock of the Company, or a
combination of both, in the sole discretion of the Board. Unless a Participant properly makes a
deferral election in accordance with Section VII, payment shall be made during the April
immediately after the close of the fiscal year for which the award is made.



SECTION VII. Deferred Accounts.




     (a) Deferral Account. The Company shall maintain in its records an account, called the
Deferred Account, for each Participant as to whom any payment of incentive compensation awarded
under the Plan is deferred in accordance with this Section VII. All amounts deferred pursuant to
Section VI above shall bear interest from the date of deferral until the date of payment at the
average of the 26-week U.S. Treasury Bill interest rate in effect during said period. All amounts
credited to the Deferred Account shall be paid in accordance with Section VII(c), below.



     (b) Timing of Deferral Election. If a Participant desires to defer the receipt of the
incentive compensation award, if any, that, absent such a deferral would otherwise be paid to the
Participant, the Participant must make such deferral election by filing a written deferral election
with the Board no later than the close of the taxable year immediately preceding the taxable year
in which the services for which such incentive compensation award would relate. Notwithstanding
the foregoing, if the compensation paid in the form of an incentive compensation award would
qualify as “performance-based compensation based on services performed over a period of at least 12
months” as referred to in Section 409A(a)(4)(B)(iii) of the Internal Revenue Code, as amended (the
“Code”), the Participant may be permitted to defer the payment of the incentive compensation award,
if any, that



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would otherwise be paid to the Participant at the end of the current fiscal year if such
deferral election is made no later than six months prior to the end of such current fiscal year.




     (c) Payment of Deferred Account. As soon as reasonably practicable following the Participant’s
separation from service, as defined below, the amount in the Deferred Account (with interest as
required by Section (a), above), shall be paid to the Participant in a lump sum. Notwithstanding
the above, in the event that the Participant is a “specified employee”, as defined in Code Section
409A(a)(2)(B)(i), no payment may be made any earlier than the date which is six (6) months after
the date of the Participant’s separation from service (or, if earlier, the date of the
Participant’s death.) A “separation from service” shall have the same meaning as the term is
defined under Code Section 409A(a)(2)(A)(i) and interpreted pursuant to the applicable guidance
issued thereunder.



SECTION VIII. Termination of Employment or Change in Control Group




     In the event a Participant’s employment with the Company terminates (for reasons other than
retirement, disability or death) said termination being instituted by the Participant or by the
Company for cause, prior to the close of a fiscal year, such Participant shall not be entitled to
any incentive compensation award for that fiscal year.



     In the event a Participant’s employment with the Company terminates, said termination being by
the Company without cause or on account of retirement, disability or death, prior to the close of a
fiscal year, such Participant shall be entitled to the incentive compensation award set forth in
Section V, pro-rated as of the date of termination.



     If at the beginning of a fiscal year the Participant is in one Group under the Plan, and
during the fiscal year the Participant is assigned to a different Group, the Participant’s
incentive compensation award for that fiscal year shall be calculated by prorating the award by the
number of months for which the Participant was a member of each Group.



SECTION IX. 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 common stock hereunder shall be required to pay to the Company the amount
of any taxes which the Company is required by any governmental authority to withhold with respect
to such common stock.



     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 obligate the Company with
respect to the duration of employment of any employee.



     A Participant’s rights and interests under the Plan may not be assigned or transferred. In
the case of a Participant’s death, payment of the Participant’s incentive compensation award shall
be made to the Participant’s designated beneficiary or beneficiaries, or in the absence of such
designation, by will or the laws of descent and distribution.



     The Board of Directors of the Company 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 may deem advisable;
provided, however, (i) that no such amendment shall be effective to modify or change any right or
obligation with respect to any award of incentive compensation theretofore made by the Board, (2)
that such Board may not, without approval by the holders of a majority of the issued and
outstanding shares of common stock of the Company, materially increase the benefits accruing to
Participants under the Plan or materially increase the class of Participants under the Plan and (3)
that no such discontinuation of the Plan shall result in any Deferred Account being paid to a
Participant until such time as the Participant is otherwise entitled to a payment from his or her
deferred account in accordance with Section VII.



SECTION X. Effective Date.




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




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