Document:

EX-10.6

Exhibit 10.6

ABM EXECUTIVE OFFICER INCENTIVE PLAN

	 
	1.	 	PURPOSE.

          The purpose of this ABM Executive Officer Incentive Plan (“Incentive Plan”) is to motivate and
reward eligible employees for strong financial performance by making a portion of their cash
compensation dependent on the pre-tax operating income of ABM Industries Incorporated.

	 
	2.	 	DEFINITIONS.

          Capitalized terms used in this Incentive Plan shall have the following meanings:

	 	(a)	 	“Aggregate Fund” means three percent of the Pre-Tax Operating Income for the
Award Year.
	 
	 	(b)	 	“Award Year” shall mean the fiscal year of the Company.
	 
	 	(c)	 	“CEO Committee” means a committee of independent directors that is designated
by the Board of Directors to establish the compensation of the Chief Executive Officer
of the Company.
	 
	 	(d)	 	“Code” means the Internal Revenue Code of 1986, as amended, and the regulations
and interpretations promulgated thereunder.
	 
	 	(e)	 	“Committee” means the Compensation Committee of the Board of Directors of the
Company.
	 
	 	(f)	 	“Company” means ABM Industries Incorporated.
	 
	 	(g)	 	“Covered Employees” shall have the meaning assigned in Section 162(m), which
employees generally include the Chief Executive Officer of the Company and any
executive officer whose total compensation for the taxable year is required to be
reported to stockholders under the Securities Exchange Act of 1934 by reason of such
employee being among the four highest compensated officers for the taxable year (other
than the Chief Executive Officer).

 

 

	 	(h)	 	“PIP” means the Company’s executive performance incentive program as such
program may be amended from time to time.
	 
	 	(i)	 	“Pre-Tax Operating Income” means income from continuing operations before
income taxes as reported in the Company’s Annual Report on Form 10-K for the Award
Year.
	 
	 	(j)	 	“Section 162(m)” shall mean Section 162(m) of the Code and the regulations and
guidance promulgated thereunder, as may be amended from time to time.
	 
	 	(k)	 	“Section 409A” shall mean Section 409A of the Code, and the regulations and
guidance promulgated thereunder, as may be amended from time to time.

	 
	3.	 	ADOPTION AND EFFECTIVE DATE.

          This Incentive Plan was amended and restated by the Board of Directors of the Company on June
3, 2008, to ensure that the annual bonuses paid hereunder to Covered Employees are not subject to
Section 409A and are deductible without limitations under Section 162(m). This Incentive Plan is
subject to and will be effective upon stockholder approval, retroactive to the first day of the
Award Year in which such approval is obtained.

	 
	4.	 	ELIGIBLE EXECUTIVES.

          The individuals eligible for bonus payments hereunder shall be the Covered Employees.

	 
	5.	 	THE COMMITTEE AND THE CEO COMMITTEE.

          The Committee shall consist of at least two outside directors of the Company who satisfy the
requirements of Section 162(m). The CEO Committee shall consist of the members of the Committee
and any additional outside directors of the Company designated by the Board of Directors of the
Company who satisfy the requirements of Section 162(m). The Committee shall have the sole
discretion and authority to administer and interpret this Incentive Plan in accordance with Section
162(m); provided however that awards to the Chief Executive Officer under this Incentive Plan shall
be determined by the CEO Committee.

	 
	6.	 	AWARDS UNDER THE PLAN.

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          Awards under the Plan shall be made in the sole discretion of the Committee; provided however
that awards to the Chief Executive Officer under this Incentive Plan shall be determined by the CEO
Committee. After the close of an Award Year, the CEO Committee shall determine the dollar amount
of the award to the made to the Chief Executive Officer and the Committee shall determine the
dollar amount of the award to be made to each other Covered Employee for that Award Year; provided,
however, that the award amounts shall be subject to the following limitations:

	 	(a)	 	The Aggregate Fund shall be set aside for awards to Covered Employees.
	 
	 	(b)	 	The maximum award payable to any one Covered Employee in the 2006 Award Year
shall be the following:

	 	(i)	 	no more than 35% of the Aggregate Fund to the Chief Executive
Officer of the Company;
	 
	 	(ii)	 	no more than 20% of the Aggregate Fund to one additional
Covered Employee;
	 
	 	(iii)	 	no more than 15% of the Aggregate Fund to the third, fourth
and fifth additional Covered Employees.

          The aggregate awards to such Covered Employees shall not exceed 100% of the Aggregate Fund set
forth in (a) above.

	 	(c)	 	For Award Years after 2006, prior to the beginning of the Award Year, or at a
later time as permitted by Section 162(m), the Committee shall establish maximum
percentages of the Aggregate Fund to be awarded to each of the Covered Employees. In
each Award Year, (i) the aggregate percentages of the Aggregate Fund awarded to such
Covered Employees shall not exceed 100% of the Aggregate Fund set forth in (a) above
for such Award Year and the percentage allocated to any Covered Employee will not
exceed 40% of the Aggregate Fund.
	 
	 	(d)	 	The CEO Committee and the Committee in their sole discretion may reduce the
awards authorized above for the Chief Executive and the other Covered Employees
respectively. In determining the amount of any reduced bonus, the CEO Committee and
the Committee reserve the right to apply objective criteria utilizing measures other
than Pre-Tax Operating Income and/or to apply subjective, discretionary criteria
(including but not limited to those measures and

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	 	 	 	criteria utilized under the PIP) to determine a reduced bonus amount. The
Committee’s exercise of discretion to reduce the award to any Covered Employee may
not result in an increase in the amount payable to another Covered Employee.

	 	(e)	 	The Committee shall specify the manner of adjustment of Pre-Tax Operating
Income to the extent necessary to prevent dilution or enlargement of any award as a
result of extraordinary events or circumstances, as determined by the Committee, or to
exclude the effects of extraordinary, unusual, or non-recurring items; changes in
applicable laws, regulations, or accounting principles; currency fluctuations;
discontinued operations; non-cash items, such as amortization, depreciation, or
reserves; asset impairment; or any recapitalization, restructuring, reorganization,
merger, acquisition, divestiture, consolidation, spin-off, split-up, combination,
liquidation, dissolution, sale of assets, or other similar corporate transaction. Any
adjustment pursuant to this Section 6(e) shall be done in accordance with Section
162(m).

	 
	7.	 	PAYMENT OF BONUSES.

          The bonuses payable hereunder shall be paid in lieu of any bonus payable under the Company’s
PIP. Except as otherwise provided in this Section 7, the bonuses payable hereunder shall be paid
as soon as reasonably practicable after the amount thereof has been determined pursuant to Section
6, but in any event within ten days of the filing of the Annual Report on Form 10-K for the fiscal
year for which the amount of the bonus is determined; provided, however, the bonus payable
hereunder shall be paid no later than March 15th of the year following the end of the
calendar year in which the bonus is earned. Notwithstanding the foregoing, a Covered Employee may
elect to defer all of any portion of the bonus pursuant to the terms of the Company’s Deferred
Compensation Plan by making an election in the manner and within the time prescribed by the
Deferred Compensation Plan and in compliance with Code Section 409A.

	 
	8.	 	ADMINISTRATION.

          Decisions and selections of the Committee and the CEO Committee shall be made by a majority of
their members and, if made pursuant to the provisions of the Plan, shall be final.

	 
	9.	 	INTERPRETATION AND SEVERABILITY.

          The Plan is intended to comply with Section 162(m), and all provisions contained herein shall
be construed and interpreted in a manner to so comply. In case any one or more of the provisions
contained in the Plan shall for any reason be held to be invalid, illegal or

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unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of the Plan, but the Plan shall be construed as if such invalid, illegal or
unenforceable provisions had never been contained herein.

	 
	10.	 	AMENDMENT OR TERMINATION.

          The Board of Directors may terminate or suspend the Plan at any time. The Committee may amend
the Plan at any time; provided that (i) to extent required under Section 162(m), the Plan will not
be amended without approval of the Company’s stockholders, (ii) no amendment shall be made to the
roles and responsibilities of the CEO Committee without the approval of the Board of Directors, and
(iii) no amendment shall retroactively and adversely affect the payment of any award previously
made.

5EX-10.7

Exhibit 10.7

Executive Severance Pay Policy

The severance pay policy of ABM Industries Incorporated (the “Company”) provides financial benefits
to eligible officers in the event of an involuntary termination of employment resulting from job
elimination, reduction in force or certain other changes in the Company’s operations or
organization, as defined in the policy. The policy is not intended to provide severance benefits
for executives who have not met performance requirements or who are terminated for cause. The
policy sets forth the circumstances in which severance pay is available, the requirements for
receipt of severance pay and the amount of severance pay.

Business Situations

An officer may be part of a reduction in force or job elimination due to various changes in the
Company’s operations and organization (excluding those caused by natural disaster or catastrophe),
including, but not limited to:

	 	•	 	Relocation or dissolution of a part of the business
	 
	 	•	 	Withdrawal from a segment of the market
	 
	 	•	 	Elimination of one or more product or service lines
	 
	 	•	 	Elimination, reduction or change in the need for specialized skills
	 
	 	•	 	Organizational change such as business redesign, reorganization or consolidation
	 
	 	•	 	Change in systems or technology
	 
	 	•	 	Reduction in staffing levels
	 
	 	•	 	Sale of any portion of the business, where a position at substantially the same pay
level is not offered
	 
	 	•	 	Significant involuntary reduction in the employee’s regularly scheduled work week,
or
	 
	 	•	 	Involuntary decrease in the employee’s regularly scheduled work week or employment
classification that causes the employee to lose eligibility for medical benefits.

All reductions in force or job eliminations must be approved in advance by the business unit CEO or
President and the ABM Senior Vice President of Human Resources.

Eligible Officers

Subject to the conditions set forth below, officers eligible for benefits under this policy are
employees of the Company who are (1) officers of the Company elected by the Board of Directors
and (2) the officers of the Company’s subsidiaries with the titles President, Executive Vice
President, Regional Vice President, Vice President and Controller. A regular full-time or
part-time employee who is an eligible officer is eligible for severance pay under provisions of
this policy if the officer’s employment is terminated as a result of operational or organizational
changes.

 

 

Individuals who are not regular employees of the Company and, therefore, are not eligible include
but are not limited to:

	 	•	 	Temporary employees;
	 
	 	•	 	Individuals on an unpaid leave of absence who have not been offered a position upon
completion of the leave;
	 
	 	•	 	Persons who are independent contractors.

Severance Pay

Officers who are provided with formal notice of eligibility for severance pay are eligible to
receive severance pay, provided the officer signs a separation agreement and release, described
below. Officers who have six months or more service with the Company are eligible for the
following:

	 	 	 
	Level	 	Severance
	ABM Executive Vice Presidents

	 	18 months base pay and target bonus
	 
	 	 
	Other Direct Reports to the CEO

Business Unit Presidents other than

ABM Executive Vice Presidents

	 	12 months base pay and target bonus
	 
	 	 
	Corporate Vice Presidents 

Business Unit Vice Presidents

	 	9 months base pay
	 
	 	 
	Corporate Assistant Vice Presidents

	 	6 months base pay

Officers who have less than six months service with the Company will receive severance equal to six
months base pay, provided the employee signs a separation agreement and release within 60 days
following the officer’s termination of employment.

In addition, the Company will pay the officer an amount equal to the Company portion of medical
insurance for the length of the severance period, not to exceed eighteen months and the Company
will pay the officer a prorated portion of the bonus, for the fraction of the fiscal year that has
been completed prior to the date of termination, based on the Company’s actual performance for the
entire fiscal year. The pro-rated portion of the bonus shall be paid at such time as bonuses are
paid to employees generally, but in no event later than March 15th of the year following
the end of the fiscal year in which the bonus is no longer subject to a substantial risk of
forfeiture.

Any severance payments in excess of the above listed amounts require advance approval of the Senior
Vice President of Human Resources and the CEO or President of the business unit or their designee.

Except as set forth below, severance payments will be made in semi-monthly installments for the
duration of the severance period.

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For purposes of the above calculations:

	 	•	 	Base pay means annual base pay and does not include shift differentials,
commissions, overtime or bonuses unless specified in the chart above.
	 
	 	•	 	Length of service includes all service with the Company or its subsidiaries,
including active service prior to acquisition.
	 
	 	•	 	For officers who have terminated employment and been rehired, service prior to a
break in service is included unless the prior break in service resulted in severance
payments to the employee.

Benefits

Officers whose positions have been eliminated through a reduction in force or job elimination are
eligible for COBRA coverage, in accordance with Company policy and federal regulations.

Separation Agreement

To receive severance pay under provisions of this policy, an eligible officer is required to
execute a separation agreement and release within 60 days (or such shorter period as provided in
the separation agreement) following the officer’s termination of employment. The Human Resources
Department and General Counsel’s office will prepare all separation agreements. No payment will be
made unless and until the separation agreement and release is signed and returned in accordance
with the policy.

Section 409A

Notwithstanding the above, the officer shall not be considered to have terminated employment with
the Company for purposes of this policy and no payments shall be due to the officer under this
policy unless the officer would be considered to have incurred a “separation from service” from the
Company within the meaning of Section 409A of the Internal Revenue Code (“Section 409A”). Each
amount to be paid or benefit to be provided under this policy shall be construed as a separate
identified payment for purposes of Section 409A, and any payments described in the Severance Pay
section of this policy that are due within the “short term deferral period” as defined in Section
409A shall not be treated as deferred compensation unless applicable law requires otherwise. To
the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A,
amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to
this policy during the six-month period immediately following the officer’s termination of
employment shall instead be paid on the first business day after the date that is six months
following the officer’s termination of employment (or upon the officer’s death, if earlier). In
addition, to the extent required in order to avoid accelerated taxation and/or tax penalties under
Section 409A, if the officer terminates employment after October 15th, amounts that
would otherwise be payable and benefits that would otherwise be provided pursuant to this policy
prior to December 31st of the year in which the termination of employment occurs shall,
subject to the previous sentence of this section, instead be paid on the

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first business day following January 1st of the year following the officer’s termination
of employment.

Responsibilities

Manager To Whom The Officer Reports:

	 	•	 	Assess the case for change based on the business situation;
	 
	 	•	 	Identify jobs/functions to be eliminated or consolidated;
	 
	 	•	 	Review analysis and preliminary recommendations with Human Resources;
	 
	 	•	 	Identify officer(s) to be affected;
	 
	 	•	 	Seek CEO or business unit President approvals.

Human Resources

	 	•	 	Provide guidance to managers in identifying the jobs/functions to be eliminated and
the affected officer(s);
	 
	 	•	 	Participate in workforce analysis;
	 
	 	•	 	Prepare termination materials for affected officer(s);
	 
	 	•	 	Assist managers with the employee meeting(s) and communicate severance pay and other
benefits and transition assistance to affected employee(s).

Office of General Counsel

	 	•	 	Provide guidance to managers pertaining to job eliminations or reductions in force;
	 
	 	•	 	Prepare all separation agreements and releases.

Officer

	 	•	 	Review paperwork provided with notice of eligibility for severance pay;
	 
	 	•	 	Determine whether to sign the separation agreement and release within the
established time frame;
	 
	 	•	 	Comply with terms of the severance agreement.

This policy is approved by the Chief Executive Officer in accordance with the approval of the ABM
Severance Program for Executives by the Compensation Committee of the Board of Directors on June 3,
2008.

Executed the 3rd day of June, 2008

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	/s/ Henrik Slipsager

	 	 
	 	/s/ Erin Andre
	 	 
	 

	 	 	 	 	 	 

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