Document:

layn-ex109_1186.htm

Exhibit 10.9 

 

Layne Christensen Company
Executive Short-Term Incentive Plan 

Amended and Restated by the Board of Directors as of February 1, 2017

 

 

 

 

Compensation Philosophy

Layne Christensen Company’s (“Layne”) compensation philosophy is to structure compensation to drive financial and strategic growth and build long-term stockholder value while attracting and retaining valued talent in the markets and industries Layne serves. 

ESTI Plan Objective

The intent of the Layne Christensen Company Executive Short-Term Incentive Plan (the "ESTI Plan") is to provide competitive cash compensation ("ESTI Bonuses") to reward certain Corporate Executives and Division Presidents as selected by Layne (“Participants”) for their performance and their contributions to Layne's overall performance in any given fiscal year (a “Performance Period”). The ESTI Plan is an important component of a Participant's total compensation package, designed to communicate key annual corporate and individual objectives, reward efforts that achieve these objectives and align employee performance bonuses with Layne's shareholders' interests in a manner that motivates executives and employees to maximize shareholder value. 

Eligibility

The Compensation Committee (the "Compensation Committee") of Layne's Board of Directors (the "Board"), in consultation with Layne's Chief Executive Officer ("CEO"), shall select and recommend to the Board the Participants in the ESTI Plan.  An eligible employee will only become a Participant if the Board approves the Compensation Committee's recommendation. Participation in the ESTI Plan in one year does not automatically guarantee participation in a future year.

Establishment of Goals

For each Performance Period, the Compensation Committee shall, upon the recommendation of Layne, establish goals for the Participants based one or more financial performance criteria, safety, strategic and personal objectives. The goals shall be approved by the Board prior to the end of the first quarter of each Performance Period.

The goals will include:

     

	
 
	
•
	
Specific, measurable consolidated and division level goal(s) for which determination as to whether such goal has been attained can be made solely by reference to Layne's and/or the division's performance during the Performance Period; and 

	
 
	
•
	
Individual level performance goals for which determination as to whether such goals have been attained and the level of such attainment (i.e., threshold, target, maximum or in between these levels) can be made solely by reference to the individual's performance during the Performance Period. 

The applicable weighting for each goal for Participants is based on their job position and level as shown in Appendix A. The weighting among the individual-level goals shall be determined by the Participant's manager. 

Targeted ESTI Opportunity and Payout of Performance Awards 

Goal attainment will be assessed individually with the opportunity to pay out at between 0% and 200% of the Targeted ESTI Opportunity set forth in Appendix B. The eligible bonus amount for each goal shall be determined by multiplying (i) the Participant's Targeted ESTI Opportunity, (ii) the goal's applicable weighting percentage, (iii) the Participant's base salary as of the end of the performance period, and (iv) the applicable payout percentage determined through linear interpolation between the goal's threshold and target values or linear interpolation between the goal's target and maximum values.  The eligible bonus amounts for each goal are then added to determine the Participant's total ESTI Bonus, subject to being increased or decreased as discussed below. 

Attainment of performance awards is to be determined by the Compensation Committee after the end of the Performance Period and then recommended to the Board for approval. All payouts under the ESTI Plan will be based on the Executive's base salary during the Performance Period. Unless the Compensation Committee elects to make payments under the ESTI Plan in the form of bonus shares or another type of equity award granted under Layne's 2006 Equity Incentive Plan (or another shareholder-approved stock plan maintained by Layne), all payouts under the ESTI Plan will be made in cash. Once determined pursuant to the terms and conditions set forth herein, the Board has the ability to increase or decrease individual Participant bonuses by up to 50%. A Participant must be employed by Layne as of the date of payout of a performance award; provided, however, the Board may, in its sole discretion, agree to waive such employment requirement if in its judgment such waiver is warranted and/or such acceleration is in the best interests of the Company.  Payout of performance awards will occur no later than two and one-half (2-1/2) months following the end of the Performance Period. 

Illustration

To illustrate how ESTI Bonuses under the Plan are determined, assume (i) a Corporate Executive has a base salary of $300,000, (ii) a Target ESTI Opportunity of 60%, (iii) the consolidated EBITDA goal is achieved at 80%, (iv) the safety, strategic and individual goals are achieved at 100%,  and (v) the Board does not elect to increase or decrease the Corporate Executive's ESTI Bonus. 

Mechanically, the Corporate Executive's ESTI Bonus is determined by adding the applicable weighted bonus amounts for achievement of each goal as follows:

A..60 (Target ESTI Opportunity)  x  .60 (60% goal weighting factor) x $300,000 (Participant's base salary) x .80 (determined payout percentage based on level of goal achievement) 

(i.e., .6 x .6 x $300,000 x .8 = $86,400)

+

B..60 (Target ESTI Opportunity) x .40 (40% goal weighting factor (Comprised of 20% for strategic, 10% safety, 10% individual) x $300,000
 (Participant's base salary) x 1.0 (determined payout percentage based on level of goal achievement) 

(i.e., .6 x .4 x $300,000 x 1.0 = $72,000)

For a total ESTI Bonus of $158,400 (i.e., $86,400+ $72,000).

Administration

The Compensation Committee is responsible for overseeing the administration of the ESTI Plan for Participants and reviewing and recommending to the Board the payments pursuant to the ESTI Plan.  The Board shall have complete discretion over the ESTI Plan and shall determine the final ESTI Plan performance goals and performance awards for the CEO, based upon recommendations from the Compensation Committee. The Board shall have the sole authority to interpret and construe the ESTI Plan and decisions made by the Board shall be final and binding upon all parties concerned.

The Compensation Committee determines whether the applicable performance thresholds and performance goals have been attained, based upon audited financial results for the Performance Period and shall make recommendations as to such attainment to the Board for its approval.  Where needed, the Compensation Committee will receive reports from Finance/Accounting and Corporate Health & Safety regarding the calculation and tracking of financial and safety performance relating to performance goals, and will receive reports from Layne's human resources department regarding individual and strategic performance goals that are not based upon financial measures. 

The Board retains the right to reassess performance goals and performance awards in light of unanticipated extenuating circumstances, or other reasons, and to increase or decrease the conditions of a performance goal or the value of a performance award as the result of its reassessment. 

The Board may amend or terminate the ESTI Plan at any time, in its sole discretion.

This ESTI Plan confers no right to continued employment or otherwise change a Participant's status as an "at-will" employee. No Participant in the ESTI Plan shall participate in any other Layne short term incentive compensation plans.

The law of the state of Delaware shall be controlling in all matters relating to the ESTI Plan, unless superseded by Federal law.

APPENDIX A – Performance Drivers and Weights

 

							
	
 
	
Performance Drivers and Weights

	
 
	
 
	
Performance Drivers

	
Title / Band
	
Level
	
Financial

Cons.
	
Financial

Division
	
Strategic

Goals
	
Safety 

Goals
	
Individual 

Goals

	
CEO 
	
0 
	
60%
	
 
	
20%
	
10%
	
10%

	
Corporate Executives (CFO, GC) 
	
1 Corp. 
	
60%
	
 
	
20%
	
10%
	
10%

	
Division Presidents 
	
1 Div. 
	
0%
	
60%
	
 
	
20%
	
20%

 

APPENDIX B - Targeted ESTI Opportunitieslayn-ex1019_1194.htm

 

Exhibit 10.19

RETENTION BONUS AGREEMENT

THIS AGREEMENT ("Agreement"), dated as of this 5th day of February, 2018, is by and between Layne Christensen Company, a Delaware corporation ("Layne") and Kevin Maher ("Employee").

RECITALS

Layne anticipates entering into a merger agreement (the "Merger Agreement") with a purchaser that has been separately identified to you (the "Purchaser") relating the acquisition of substantially all the stock of Layne (the "Transaction").

To encourage Employee to remain employed with Company through the anticipated Closing Date of the Transaction, Layne and Employee are willing to enter into this Agreement.

AGREEMENT

Layne and Employee agree as follows:

Article 1

Definitions

 

Whenever used in this Agreement, the following words and phrases have the meanings specified below:

 

"Closing" will be defined in the Merger Agreement.

 

"Closing Date" will be defined in the Merger Agreement.

 

"Company" means Layne Christensen Company and any corporation, trade or business that together with Layne, is treated as a single employer under Internal Revenue Code Section 414. 

 

"Retention Payment" means that payment eligible to be made under Article 2 of this Agreement. 

 

"Section 409A" means Section 409A of the Internal Revenue Code of 1986 and the regulations promulgated thereunder.

 

"Separation from Service" or "Separates from Service" means Employee's death, retirement or other termination of employment or service from Company (at any time on or before the Closing Date).  A Separation from Service will not occur if Employee is on military leave, sick leave or other bona fide leave of absence (such as temporary employment by the government) if the period of such leave does not exceed six months, or if longer, as long as Employee's right to reemployment with Company is provided either by statute or by contract. "Separation from Service" will be interpreted in a manner 

 

consistent with Code Section 409A(a)(2)(A)(i) and the applicable Treasury regulations issued thereunder.  No Separation from Service shall have occurred solely in connection with the Transaction. 

 

Article 2

Retention Payment

2.1.Retention Payment. 

2.1.1  If:

(i) Employee is continuously employed by Company from the date of this Agreement through the six-month anniversary of the Closing Date ("CIC Retention Date"); 

(ii) Company terminates Employee's employment other than for "Cause" (as defined below) (the date of such termination the "Involuntary Termination Date") before the Closing Date and the Closing Date occurs; or 

(iii) Company terminates Employee's employment other than for Cause and the Involuntary Termination Date is before the CIC Retention Date, 

then Layne shall pay Employee $50,000 (the "Retention Payment") in a lump sum at the time set forth in Section 2.1.2.  

2.1.2.If Employee becomes entitled to receive a Retention Payment pursuant to Section 2.1.1., Layne shall make such payment to Employee within twenty business days following (i) the earlier of the CIC Retention Date or the Involuntary Termination Date if such Involuntary Termination Date occurs after the Closing Date or (ii) the Closing Date if an Involuntary Termination Date occurs before the Closing Date.

 

2.1.3.If Employee Separates from Service with Company by reason of voluntary resignation, death, disability or dismissal for "Cause” before the CIC Retention Date, Employee shall forfeit his or her right to the Retention Payment under this Agreement. For purposes of this Agreement, "Cause" shall mean: (a) dishonesty, misconduct, fraud or breach of fiduciary duty on the part of Employee; (b) repeated failure to perform assigned duties or responsibilities; (c) violation of any Company policy; or (d) a conviction, guilty plea, or no contest plea, for any felony or any misdemeanor involving moral turpitude.

 

2.2.Exemption from Internal Revenue Code Section 409A.  It is the intent of Company that any payment made under this Agreement will be exempt from Section 409A pursuant to the “short-term deferral” exemption. Notwithstanding any provision of this Agreement to the contrary, (i) this Agreement shall not be amended in any manner that would cause any amounts eligible to be payable hereunder to become subject to Section 409A (unless they also are in compliance therewith), and the provisions of any purported amendment that may reasonably be expected to result in such non-compliance shall be of no force or effect with respect to this Agreement and (ii) to the extent deemed necessary or advisable in its sole discretion, Layne reserves the right, but shall not be required, to unilaterally amend or modify this Agreement to reflect the intention that the Agreement qualifies for an exemption from or complies with Section 409A in a manner that as closely as practicable achieves 

 

the original intent of this Agreement and with the least reduction, if any, in overall benefit to the Employee to comply with Section 409A on a timely basis, which may be made on a retroactive basis, in accordance with regulations and other guidance issued under Section 409A.   Company makes no representation that this Agreement shall be exempt from or comply with Section 409A and makes no undertaking to preclude Section 409A from applying to this Agreement.

Article 3

Amendments and Termination

 

3.1.This Agreement may be amended or terminated only by a written agreement signed by Layne and Employee. Notwithstanding the foregoing, Layne may amend or terminate this Agreement at any time if, pursuant to legislative, judicial or regulatory action, continuation of the Agreement would (i) cause benefits to be taxable to Employee prior to actual receipt, or (ii) result in significant financial penalties or other significantly detrimental ramifications to Company (other than the financial impact of paying the benefits).

 

3.2.In addition to the termination of this Agreement as set forth in Section 4.8, this Agreement shall terminate without any payment being made to Employee or any liability on Company to make any payment to Employee as of the earliest date that (i) the Transaction is terminated or fails to occur or (ii) Employee forfeits his rights to the Retention Payment under Section 2.1.3.  

 

Article 4

Miscellaneous

4.1.No Guarantee of Employment. This Agreement is not an employment policy or contract. It does not give Employee the right to remain an employee of Company, nor does it interfere with Company's right to discharge Employee. It also does not require Employee to remain an employee nor interfere with Employee's right to terminate employment at any time.

 

4.2.Binding Effect.  This Agreement shall bind Employee, Layne, and their beneficiaries, survivors, executors, successors, assigns, administrators and transferees.

 

4.3.Termination of Employment.  For purposes of this Agreement, if there is any dispute over the employment status of Employee or the date of Employee's Separation from Service, Company has the sole and absolute right to decide the dispute.

 

4.4.Non-Transferability. Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached or encumbered in any manner.

4.5.Tax Withholding.  Company shall withhold any taxes that are required to be withheld from the benefits provided under this Agreement.

4.6.   Applicable Law. The Agreement and all rights hereunder shall be governed by the laws of the State of Delaware.

4.7. Entire Agreement. Except as provided in Section 2.1.4, this Agreement constitutes the entire agreement between Layne (or Company) and Employee, as to the subject matter hereof and supersedes all prior agreements between the parties hereto relating directly to the subject matter hereof including 

 

any prior retention payments or agreements relating to the Transaction. No rights are granted to Employee by virtue of this Agreement other than those specifically set forth herein.

4.8Termination. This Agreement shall terminate on the date that is twelve (12) months from the date hereof if the Closing Date has not occurred prior to such date. 

Employee and Layne have signed this Agreement effective as of the date stated above in the preamble to this Agreement.

 

Employee

                   /s/ Kevin Maher
Kevin Maher

Layne Christensen Company

                  /s/ Michael J. Caliel
By: Michael J. Caliel

Title: President & CEO

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