Document:

exv10w1

 

EXHIBIT 10.1

STEWART INFORMATION SERVICES CORPORATION

EXECUTIVE OFFICERS’ BONUS PLANS

MARCH 31, 2006

The following summarizes the terms of the bonus arrangements approved by our Compensation Committee
with respect to our executive officers:

MALCOLM S. MORRIS, as Chairman of the Board and Co-Chief Executive Officer, shall receive in
addition to his salary, 1% on the first $20,000,000 of the consolidated pretax income (calculated
after deducting minority interests) of Stewart Title Guaranty Company as reported to its stockholder, .75%
of the pretax profits from $20,000,001 to $40,000,000, .50% of the pretax profits from $40,000,001
to $60,000,000 and .35% of the pretax profits exceeding $60,000,000. For the calendar year 2006,
there is no minimum bonus compensation.

STEWART MORRIS, JR., as President and Co-Chief Executive Officer, shall receive in addition to his
salary, 1% on the first $20,000,000 of the consolidated pretax income (calculated after deducting minority
interests) of Stewart Title Guaranty Company as reported to its stockholder, .75% of the pretax
profits from $20,000,001 to $40,000,000, .50% of the pretax profits from $40,000,001 to $60,000,000
and .35% of the pretax profits exceeding $60,000,000. For the calendar year 2006, there is no
minimum bonus compensation.

MAX CRISP, as Executive Vice President and Chief Financial Officer, shall receive in addition to
his salary, .50% of the first $50,000,000 of the consolidated pretax income (calculated after deducting
minority interests) of Stewart Title Guaranty Company as reported to its stockholder, .40% of the
pretax profits from $50,000,001 to $75,000,000, .30% of the pretax profits from $75,000,001 to
$100,000,000 and .20% of the pretax profits exceeding $100,000,000. For the calendar year 2006,
there is no minimum bonus compensation, and Mr. Max Crisp’s compensation from base salary plus
bonus may not exceed 75% of the total base salary plus bonus earned by a Chief Executive Officer.

E. ASHLEY
SMITH, as Executive Vice President — General Counsel, shall receive in addition to his
salary, .25% of the first $50,000,000 of the consolidated pretax income (calculated after deducting minority
interests) of Stewart Title Guaranty Company as reported to its stockholder and .125% of the pretax
profits from $50,000,001 to $150,000,000. For the calendar year 2006,
Mr. E. Ashley Smith shall receive no less than
$125,000 in bonus compensation.

MATTHEW
W. MORRIS, as Senior Vice President — Planning and Development, shall receive in addition
to his salary, .15% of the consolidated pretax income (calculated after deducting minority interests) of
Stewart Title Guaranty Company as reported to its stockholder. For the calendar year 2006, there
is no minimum bonus compensation. In addition, Mr. Matthew W. Morris may be eligible to receive up
to $25,000 of discretionary bonuses based on the completion of certain projects and the approval of
Mr. Stewart Morris, Jr.exv10w1

 

Exhibit 10.1

Quanta Services, Inc.

Term Sheet

Annual Incentive Plan 2006 — Operating Units

	 	 	 	 	 
	Participants	 	Employees will be selected to participate in the
Annual Incentive Plan annually at the discretion
of the CEO with the approval of the Compensation
Committee.
	 
	 	 	 	 
	Target Incentive

	 	•
	 	Target incentive ranges have been or will
be developed for each participant in the Plan.
	 
	 	 	 	 
	 

	 	•
	 	Management will make recommendations to
the Compensation Committee regarding the target
incentive for each participant based on a
competitive range.
	 
	 	 	 	 
	Performance Measures

	 	•
	 	The Annual Incentive for each Operating
Unit will be based on an operating income target
to be approved by the Compensation Committee
annually.
	 
	 	 	 	 
	 

	 	•
	 	For purposes of the plan, operating income
will be defined as operating income before
goodwill, plus/minus insurance true-up, plus/minus
intercompany interest income or expense, less
external interest expense, and excluding gains or
losses on sales of property and equipment.
	 

	 	•
	 	There will be no discretionary portion for
the annual incentive.
	 
	 	 	 	 
	Incentive Determination
	 	 	 	 

	 	 	 	 	 	 	 	 	 
	 	 	Percentage of Target /	 	Incentive as a % of
	 	 	Objective Obtained	 	Target Incentive
	 
	 	Less than 75%	 	 	0	%
	 
	 	 	75	%	 	 	25	%
	 
	 	 	80	%	 	 	40	%
	 
	 	 	85	%	 	 	55	%
	 
	 	 	90	%	 	 	70	%
	 
	 	 	95	%	 	 	85	%
	 
	 	 	100	%	 	 	100	%
	 
	 	 	150	%	 	 	150	%
	 
	 	200% or greater	 	 	200	%

	 	 	 	 	 	 	 
	 

	 	 	•	 	 	Subject to the limitations described
below, the amount of incentive will be determined
based on the table above.
	 
	 	 	 	 	 	 
	 

	 	 	•	 	 	The salary to be used in the incentive
calculation will be the base salary in effect on
the December 31 immediately preceding the date of
the calculation.
	 
	 	 	 	 	 	 
	 

	 	 	•	 	 	When performance falls between the
designated points in the table, the incentive will
be determined by interpolation.

 

 

	 	 	 	 	 	 	 
	Limitations	 	•	 	The bonus calculation is subject to the
following limitations; sequenced as follows:
	 
	 	 	 	 	 	 
	 	 	 	 	Step 1:
	 
	 	 	 	 	 	 
	 	 	 	 	Is target bonus pool > 10% of the operating
income before goodwill and after insurance true-up
(before consideration of intercompany interest
income or expense, interest expense, and gains or
losses on the sale of property and equipment)?
	 
	 	 	 	 	 	 
	 	 	 	 	     If Yes, Go to Step 2.
	 
	 	 	 	 	 	 
	 	 	 	 	     If No, use the Incentive Determination chart
above. Any bonus earned (for the aggregate pool)
is limited to 10% of operating income (as
defined). Further, any individual bonuses are
capped at 200% of the target bonus.
	 
	 	 	 	 	 	 
	 	 	 	 	Step 2:
	 
	 	 	 	 	 	 
	 	 	 	 	Has the Operating Income Goal been met or
exceeded? If Yes, go to b., If No, go to a.
	 
	 	 	 	 	 	 
	 

	 	 	 	a.
	 	Use the Incentive Determination chart above
with the following limitations: Bonuses earned
under this section (for the pool) are limited to
10% of actual operating income (as defined).
	 
	 	 	 	 	 	 
	 

	 	 	 	b.
	 	Use the Incentive Determination chart above
with the following limitations:
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Up to 10% of the operating income goal (as
defined) can be earned by the pool participants.
For every dollar of operating income (as defined)
in excess of the operating income goal, $.25 will
be contributed to the bonus pool. Add this amount
to the results of the Incentive Determination
chart. The total contribution under this
paragraph b. is limited to 100% of the target
bonus for each of the pool participants.
	 
	 	 	 	 	 	 
	 	 	•	 	Any calculated incentive will be subject
to (i) assessment of overall company performance
to ensure that payout of calculated incentives
will not jeopardize the financial stability of the
company and (ii) approval by the Compensation
Committee.

2

 

	 	 	 	 	 	 	 
	 	 	•	 	A participant must be employed by the
company on the date the bonus is paid. Any
participant not employed by the company on the
payment date forfeits any and all rights to such
bonus. It is the company’s intention to pay
bonuses earned under the plan in March following
the end of the calculation period.
	 
	 	 	 	 	 	 
	 	 	•	 	A new participant added to this Plan
during the Plan year will be pro-rated from their
date of hire. In any event, a new participant must
be employed by October 1 to be eligible for
incentives in the current plan year.
	 
	 	 	 	 	 	 
	Incentive Payout	 	Any incentive earned under the Annual Incentive
Plan is intended to be paid in cash.

3

 

Quanta Services, Inc.

Term Sheet

Annual Incentive Plan 2006 — Corporate

	 	 	 	 	 
	Participants

	 	Employees will be selected to participate in the
Annual Incentive Plan at the discretion of the CEO
with the approval of the Compensation Committee.
	 
	 	 	 	 
	Target Incentive

	 	•
	 	Target incentive ranges have been or will
be developed for each participant in the Plan.
	 
	 	 	 	 
	 

	 	•
	 	Management will make recommendations to
the Compensation Committee regarding the target
incentive for each participant based on a
competitive range.
	 
	 	 	 	 
	Performance Measures

	 	•
	 	The annual incentive will be based on an
operating income target to be determined annually
by the Compensation Committee. This target will
be adjusted, as appropriate, at the discretion of
the Compensation Committee to take into account
any business acquisitions or divestitures during
the Plan year.
	 
	 	 	 	 
	 

	 	•
	 	For purposes of the plan, operating income
will be operating income less interest expense,
net of interest income.
	 
	 	 	 	 
	 

	 	•
	 	There will be no discretionary portion for
the annual incentive.
	 
	 	 	 	 
	Incentive Determination
	 	 	 	 

	 	 	 	 	 	 	 	 	 
	 	 	Percentage of Target /	 	Incentive as a % of
	 	 	Objective Obtained	 	Target Incentive
	 
	 	Less than 75%	 	 	0	%
	 
	 	 	75	%	 	 	25	%
	 
	 	 	80	%	 	 	40	%
	 
	 	 	85	%	 	 	55	%
	 
	 	 	90	%	 	 	70	%
	 
	 	 	95	%	 	 	85	%
	 
	 	 	100	%	 	 	100	%
	 
	 	 	150	%	 	 	150	%
	 
	 	200% or greater	 	 	200	%

	 	 	 	 	 
	 

	 	•
	 	The amount of incentive earned will be
based on the table above.
	 
	 	 	 	 
	 

	 	•
	 	The salary to be used in the calculation
will be the base salary in effect on the December
31 immediately preceding the date of the
calculation.
	 
	 	 	 	 
	 

	 	•
	 	When performance falls between the
designated points in the table, the incentive will
be determined by interpolation.
	 
	 	 	 	 
	Limitations

	 	•
	 	Any calculated incentive will be subject
to (i) assessment of overall company performance
to ensure that payout of calculated incentives
will not jeopardize the financial

4

 

	 	 	 	 	 
	 

	 	 	 	stability of the
company and (ii) approval by the Compensation
Committee.
	 
	 	 	 	 
	 

	 	•
	 	A participant must be employed by the
company on the date the bonus is paid. Any
participant not employed by the company on the
payment date forfeits any and all rights to such
bonus. It is the company’s intention to pay
bonuses earned under the plan in March following
the end of the calculation period.
	 
	 	 	 	 
	 

	 	•
	 	A new participant added to this Plan
during the Plan year will be pro-rated from their
date of hire. In any event, a new participant must
be employed by October 1 to be eligible for
incentives in the current plan year.
	 
	 	 	 	 
	Incentive Payout	 	Any incentive earned under the Annual Incentive
Plan is intended to be paid in cash.

5

 

Quanta Services, Inc.

Term Sheet

Supplemental Incentive Plan

2006 — Operating Units

	 	 	 	 	 	 	 
	Participants	 	•	 	Employees will be selected to participate
in the Supplemental Incentive Plan annually at the
discretion of the CEO with the approval of the
Compensation Committee.
	 
	 	 	 	 	 	 
	 	 	•	 	For purposes of the supplemental
incentive, Field Unit participants will be
classified into two categories: Stock Eligible or
Cash-only Eligible participants, at the discretion
of the CEO with the approval of the Compensation
Committee.
	 
	 	 	 	 	 	 
	Target Incentive	 	Each participant will be assigned a target
supplemental incentive expressed as a dollar value
annually.
	 
	 	 	 	 	 	 
	Performance Measures	 	Performance Award
	 
	 	 	 	 	 	 
	 	 	•	 	Fifty percent of a participant’s
supplemental incentive value will be based on
Modified Return on Asset (MROA) performance versus
target.
	 
	 	 	 	 	 	 
	 	 	•	 	MROA will be calculated by dividing net
operating income by total assets. Operating Income
is defined as operating income before goodwill,
after insurance true-up (before consideration of
intercompany interest income or expense, interest
expense, and gains or losses on the sale of
property and equipment).. Total assets will be
based on the quarterly average for the fiscal year
excluding inter-company accounts and cash on hand.
	 
	 	 	 	 	 	 
	 	 	Discretionary Award
	 
	 	 	 	 	 	 
	 	 	For 2006, the remaining fifty percent of the
supplemental incentive will, in lieu of a
discretionary component, be based on the
following:
	 
	 	 	 	 	 	 
	 	 	•	 	Safety:
	 
	 	 	 	 	 	 
	 

	 	 	 	     Ø
	 	Each Operating Unit has a “Total Incident
Injury Rate” (“TIIR”) target. Subject to each
participant’s ethical behavior and compliance with
the Code of Ethics and Business Conduct, one-half
of the discretionary award will be based on
achieving the TIIR target.
	 
	 	 	 	 	 	 
	 

	 	 	 	     Ø
	 	Each Operating Unit’s performance will be
measured against the “Safety Severity Rating
Index”, which analyzes job-related incidents
taking into account both the work status of the
injured employee and the incurred insurance
reserves associated with the incident. Subject to

6

 

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	each participant’s ethical behavior and compliance
with the Code of Business Conduct, one-half of the
discretionary award will be based on the Operating
Unit’s Safety Severity Rating. Operating Unit’s
that achieve a score of 0 to 74 points will earn
100% of this component of the award, and Operating
Unit’s that achieve a score of 75 to 149 points
will earn 75% of this component of the award. No
award is earned under this component of this plan
if an operating unit’s score exceeds 149.
	 
	 	 	 	 	 	 
	Incentive Determination
	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 
	 	 	Percentage of Target /	 	Incentive as a % of
	 	 	Objective Obtained	 	Target Incentive
	 
	 	Less than 75%	 	 	0	%
	 
	 	 	75	%	 	 	25	%
	 
	 	 	80	%	 	 	40	%
	 
	 	 	85	%	 	 	55	%
	 
	 	 	90	%	 	 	70	%
	 
	 	 	95	%	 	 	85	%
	 
	 	 	100	%	 	 	100	%
	 
	 	 	150	%	 	 	150	%
	 
	 	200% or greater	 	 	200	%

	 	 	 	 	 
	Limitations

	 	•
	 	The Performance Award will be determined
according to the table above.
	 
	 	 	 	 
	 

	 	•
	 	When performance falls between the
designated points in the table, the incentive will
be determined by interpolation.
	 
	 	 	 	 
	 

	 	•
	 	Any calculated incentive will be subject
to (i) assessment of overall company performance
to ensure that payout of calculated incentives
will not jeopardize the financial stability of the
company and (ii) approval by the Compensation
Committee.
	 
	 	 	 	 
	 

	 	•
	 	In any year, stock awarded under this and
all other plans shall not exceed 1% of the
outstanding stock. The Compensation Committee and
the Board of Directors will review this limitation
annually.
	 
	 	 	 	 
	 

	 	•
	 	A participant must be employed by the
company on the date the bonus is paid. Any
participant not employed by the company on the
payment date forfeits any and all rights to such
bonus. It is the company’s intention to pay
bonuses earned under the plan in March following
the end of the calculation period.
	 
	 	 	 	 
	 

	 	•
	 	A new participant added to this Plan
during the Plan year will be pro-rated from their
date of hire. In any event, a new participant must
be employed by October 1 to be

7

 

	 	 	 	 	 
	 

	 	 	 	eligible for
incentives in the current plan year.
	 
	 	 	 	 
	Incentive Payout

	 	•
	 	Stock Eligible participants, at the
election of the CEO with approval by the
Compensation Committee, may receive any incentive
earned under the Supplemental plan in cash,
restricted stock or a combination thereof.
Subject to the above limitations, the portion of
the incentive awarded in restricted stock will be
multiplied by 1.15 and then that amount will be
divided by the current stock price to determine
the number of shares Any shares awarded will vest
ratably over a three-year period following the
date of grant. A participant receiving restricted
stock must be employed by the company at each
vesting date. If a participant leaves the
employment of the company, all unvested restricted
stock awards are forfeited.
	 
	 	 	 	 
	 

	 	•
	 	Cash-only Eligible participants will
receive any incentive earned for the year in cash.

8

 

Quanta Services, Inc.

Term Sheet

Supplemental Incentive Plan 2006 — Corporate

	 	 	 	 	 
	Participants

	 	•
	 	Employees will be selected to participate
in the Supplemental Incentive Plan annually at the
discretion of the CEO with the approval of the
Compensation Committee.
	 
	 	 	 	 
	 

	 	•
	 	For purposes of the supplemental
incentive, Corporate participants will be
classified annually into two categories: Stock
Eligible or Cash-only Eligible participants, at
the discretion of the CEO with the approval of the
Compensation Committee.
	 
	 	 	 	 
	Performance Measures	 	Performance Award
	 
	 	 	 	 
	 	 	Fifty percent of a participant’s supplemental
incentive value will be based on return on equity
after eliminating the effects of goodwill (ROE)
versus the target for the year. This target will
be determined annually by the Compensation
Committee. The target will be adjusted as
appropriate, at the discretion of the Compensation
Committee, to take into account any business
acquisitions or dispositions during the Plan year.
	 
	 	 	 	 
	 	 	Discretionary Award
	 
	 	 	 	 
	 	 	The remaining fifty percent of a participant’s
supplemental incentive value will be determined on
a discretionary basis. The Discretionary Award
will be based on obtaining pre-established
objectives established for each participant for
the year and on exhibiting ethical behavior and
compliance with the Code of Ethics and Business
Conduct.
	 
	 	 	 	 
	Incentive Determination
	 	 	 	 

	 	 	 	 	 	 	 	 	 
	 	 	Percentage of Target /	 	Incentive as a % of
	 	 	Objective Obtained	 	Target Incentive
	 
	 	Less than 75%	 	 	0	%
	 
	 	 	75	%	 	 	25	%
	 
	 	 	80	%	 	 	40	%
	 
	 	 	85	%	 	 	55	%
	 
	 	 	90	%	 	 	70	%
	 
	 	 	95	%	 	 	85	%
	 
	 	 	100	%	 	 	100	%
	 
	 	 	150	%	 	 	150	%
	 
	 	200% or greater	 	 	200	%

	 	 	 	 	 
	 

	 	•
	 	The Performance Award will be determined
according to the table above.
	 
	 	 	 	 
	 

	 	•
	 	When performance falls between the
designated points in the table, the incentive will
be determined by interpolation.

9

 

	 	 	 	 	 
	Limitations

	 	•
	 	Any calculated incentive will be subject
to (i) assessment of overall company performance
to ensure that payout of calculated incentives
will not jeopardize the financial stability of the
company and (ii) approval by the Compensation
Committee.
	 
	 	 	 	 
	 

	 	•
	 	In any year, stock awarded under this and
all other plans shall not exceed 1% of the
outstanding stock. The Compensation Committee and
the Board of Directors will review this limitation
annually.
	 
	 	 	 	 
	 

	 	•
	 	A participant must be employed by the
company on the date the bonus is paid. Any
participant not employed by the company on the
payment date forfeits any and all rights to such
bonus. It is the company’s intention to pay
bonuses earned under the plan in March following
the end of the calculation period.
	 
	 	 	 	 
	 

	 	•
	 	A new participant added to this Plan
during the Plan year will be pro-rated from their
date of hire. In any event, a new participant must
be employed by October 1 to be eligible for
incentives in the current plan year
	 
	 	 	 	 
	Incentive Payout

	 	•
	 	Stock Eligible participants, at the
election of the CEO with approval by the
Compensation Committee, may receive any incentive
earned under the Supplemental plan in cash,
restricted stock or a combination thereof.
Subject to the above limitations, the portion of
the incentive awarded in restricted stock will be
multiplied by 1.15 and then that amount will be
divided by the current stock price to determine
the number of shares. Any shares awarded will
vest ratably over a three-year period following
the date of grant. A participant receiving
restricted stock must be employed by the company
at each vesting date. If a participant leaves the
employment of the company, all unvested restricted
stock awards are forfeited.
	 
	 	 	 	 
	 

	 	•
	 	Cash-only Eligible participants will
receive any incentive earned for the year in cash.

10

 

Quanta Services, Inc.

Term Sheet

Discretionary Incentive Plan 2006 — All 

	 	 	 	 	 
	Discretionary Payout	 	Annually, the Compensation Committee shall
establish a discretionary incentive pool that
will be available to reward exceptional
performance. This pool will be awarded at the
discretion of the CEO, with the Compensation
Committee’s approval, in cash, restricted stock,
or a combination thereof. A participant must be
employed by the company on the date the bonus is
paid. Any participant not employed by the
company on the payment date forfeits any and all
rights to such bonus. It is the company’s
intention to pay bonuses earned under the plan
in March following the end of the calculation
period.

11

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