Document:

exh_101.htm

Exhibit 10.1

 

 

 

 

 

PROGRAM DESCRIPTION

 

2015 Short-Term Incentive Compensation Program

 

2015 Long-Term Incentive Compensation Program

 

 

Introduction

 

 

You have been selected to participate in the Company's 2015 Short-Term Incentive Compensation Program and its 2015 Long-Term Incentive Compensation Program.  These two programs give you the opportunity to earn additional cash compensation depending on the achievement of financial and personal goals in calendar year 2015, as well as to earn stock-based compensation that is dependent on the achievement of goals at the end of a three-year period beginning January 1, 2015.

 

The purpose of these programs is to advance the interests of the Company's stockholders by enhancing the Company's ability to attract, retain and motivate persons who make (or who are expected to make) important contributions to the Company.  Participants do not have any special right to continued employment by the Company because of their participation in the programs.

 

The cash incentive compensation program is referred to as the Short-Term Incentive Compensation Program, or STIP, and the stock-based incentive compensation program is referred to as the Long-Term Incentive Compensation Program, or LTIP.  In this Program Description, the Company's common stock will be referred to simply as common stock.

 

Both the Short-Term Incentive Compensation Program and the Long-Term Incentive Compensation Program were adopted by the Compensation Committee of the Board of Directors of the Company to be effective on January 1, 2015.  The LTIP has been adopted under the Company's Stock Incentive Plan, which, among other things, provides for stock-based awards.

 

Sterling sets high goals — goals that are designed to encourage key employees to exert an extra effort to raise the Company's performance to the next level.  The STIP and the LTIP are designed to provide you with that incentive, both in the near term and over the course of several years.

 

These programs reflect the pay-for-performance philosophy of the Company by linking your opportunity to earn additional compensation to the achievement of Company, operating unit, and individual performance goals.

 

References in this Program Description to being an employee of the Company or employment with the Company mean an employee of or with the Company or one of its operating divisions.

______________

 

 

	
2015 Incentive Compensation Programs

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Part I:  The Short-Term Incentive Compensation Program

 

STIP Target Amount.

 

Each participant in the STIP is assigned an STIP Target Amount, which is expressed as a percentage of his or her base salary.  Participants do not necessarily have the same STIP Target Amounts.  Your 2015 STIP Target Amount is set forth in Appendix A to this Program Description.

 

The STIP Target Amount is the amount that you can earn if 100% of the 2015 financial goal and your personal goals are met.  The actual payout, if any, may be less than or more than your STIP Target Amount depending on the Company's actual financial results, your operating unit's actual financial results (if you are employed by one of the Company's operating units) and your individual performance during the year measured against personal goals that are set at the beginning of the year.

 

STIP Performance Goals.

 

There are three types of STIP goals for participants with operating responsibilities, and two types of goals for participants who do not have operating responsibilities.

 

	 	
·

	
A Company financial goal, which is based on achieving a target level of earnings per share in 2015, which is referred to as the EPS Goal.

 

	 	
·

	
An operating unit financial goal, which is based on your operating unit achieving a target level of earnings before interest and taxes in 2015, which is referred to as the EBIT Goal.

 

	 	
·

	
Personal goals, which are established at the beginning of the year and consist of tasks to be accomplished in 2015 that are considered to require an extra or particular effort on your part.

 

Your STIP Target Amount is allocated among the goals, as follows:

 

	
Participant

	
Company

EPS Goal

STIP Target %

	
Operating Unit

EBIT Goal

STIP Target %

	
Personal Goals

STIP Target %

	
Operating Unit Participants

	
25%

	
50%

	
25%

	
Non-Operating Unit Participants

	
50%

	
N/A

	
50%

 

Calculation of Payouts.

 

At the end of 2015, the level of the achievement of the EPS Goal and the EBIT Goal will be determined from the Company's audited financial statements.

 

The level of the achievement of your personal goals will be determined by the manager to whom you report directly, and for some participants, by a committee of the Board of Directors.

 

Once the levels of achievement have been determined, the payout for each goal will be determined.

 

	 	
·

	
Payout for Financial Goals.  The payout, if any, for financial goals is determined from the following formula in which STA refers to your STIP Target Amount:

 

STA times the percent of STA allocated to the financial goal, times the percent of the financial goal that was achieved in 2015.  However, there is a minimum and a maximum achievement level:

 

If the achievement level of a financial goal is below 80%, no payout will be made for that goal.

 

If the achievement level of a financial goal is more than 100%, the payout cannot exceed 120% of the STA allocated to that goal.

 

	
2015 Incentive Compensation Programs

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·

	
Payout for Personal Goals.  The payout for the completion of personal goals is determined by the percentage of your goals that you complete satisfactorily in 2015.  Just as for financial goals, the formula for payout on personal goals is —

 

STA times the percent of STA allocated to personal goals, times the percentage of personal goals satisfactorily completed.  However, any positive level of achievement will result in some payout, but there cannot be more than a 100% payout for satisfactorily completing all of your personal goals.

 

Termination of Employment During Calendar Year 2015.  In the event that you cease to be an employee of the Company during 2015, your participation in the STIP will be treated as follows:

 

	
Reason for Termination

	 	
Effect on your Participation in the STIP

	
For Cause (as defined in your LTIP award agreement)

	 	
No payment under the STIP will be made to you.

	
Your Resignation

	 	
No payment under the STIP will be made to you.

	
Without Cause, Permanent Disability, Death or Retirement (as defined by the Compensation Committee)

	 	
The incentive compensation that you would have earned, if any, had your employment not terminated, based on the level of achievement of the financial goal or goals at the end of 2015, and assuming that you had completed all of your personal goals satisfactorily, will be multiplied by a fraction, the numerator of which is the number of days in 2015 that you were an employee of the Company, and the denominator of which is 365.  The resulting incentive compensation, if any, will be paid to you at the end of the Program Cycle.

Part II:  The Long-Term Incentive Compensation Program

 

LTIP Target Amount.  Each participant in the LTIP is assigned an LTIP Target Amount, which, just like the STIP Target Amount, is a percentage of the participant's base salary.  Your LTIP Target Amount is set forth in Appendix A.  Participants do not necessarily have the same LTIP Target Amounts, and your LTIP Target Amount is not necessarily the same as your STIP Target Amount.

 

Awards.  Awards under the LTIP are for a three-year period, referred to as the Program Cycle, that starts on January 1, 2015 and ends at 5:30 p.m. Central Time on December 31, 2017.  The award will consist of one or both of the following:

 

	 	
·

	
Time-Based Shares. Time-Based Shares are shares of common stock that are subject to restrictions on their sale or other transfer, and that are released from those restrictions (that is, they vest) at the end of the Program Cycle so long as the participant is an employee of the Company at the end of the Program Cycle.

 

	 	
·

	
RSU's.  RSU stands for restricted stock unit.  An RSU is an unfunded and unsecured, non-transferable promise by the Company to issue (subject to the terms and conditions of the award agreement) one share of common stock.  RSU's will be converted into shares of common stock (that is, they will vest) at the end of the Program Cycle based on the extent to which, if at all, a goal based on the Company's stock price — the TSR Goal — is met.  For RSU's to vest, you must also be an employee of the Company at the end of the Program Cycle, except as otherwise described below.

 

Some participants will be awarded only Time-Based Shares.  A participant's LTIP Target Amount is converted into an award of Time-Based Shares or RSU's, or a combination of both, by dividing the LTIP Target Amount by the simple average of the closing prices of the common stock during December 2014.  Any RSU's that are awarded to a participant are referred to as his or her Target RSU's.  All awards under the LTIP are contingent on the participant signing the Company's form of LTIP Award Agreement.

 

	
2015 Incentive Compensation Programs

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The number of Time-Based Shares and RSU's, if any, that you have been awarded is also set forth in Appendix A.

 

Vesting.  No un-vested Time-Based Shares and no un-vested Target RSU's may be transferred by a participant during the Program Cycle.

 

	 	
·

	
Time-Based Shares.  Your Time-Based Shares will vest if you are still an employee of the Company at the end of the Program Cycle.  If they vest, the Time-Based Shares become no longer subject to the LTIP's transfer restrictions.

 

	 	
·

	
Target RSU's.  At the end of the Program Cycle, Target RSU's will be eligible for vesting based on the level of achievement of the TSR Goal, which is described below.  Vested RSU's are converted into shares of common stock that are no longer subject to the LTIP's transfer restrictions.

 

	 	
·

	
Continuing Restrictions.  Vested Time-Based Shares and shares of common stock issued for vested RSU's remain subject to all restrictions imposed on them by federal and state securities laws, rules and regulations, and by the Company's policies and rules relating to common stock.

 

	 	
·

	
Forfeitures.  Time-Based Shares that fail to vest are automatically forfeited, returned to the Company, and retired.  Target RSU's that fail to vest are automatically forfeited, canceled, and cease to be subject to vesting.  No compensation is paid to a participant for any of his or her Time-Based Shares or Target RSU's that are forfeited.

 

The TSR Goal.  The vesting level of Target RSU's is based on the total shareholder return, or TSR, of the Company over the course of the Program Cycle compared to the TSR of a list of publicly-traded companies, a Peer Group.  The Compensation Committee believes that the companies in the Peer Group are sufficiently similar to the Company in size and/or other characteristics as to make a comparison with them appropriate.  In this way, the TSR Goal is a measure of the Company's performance within the context of other companies that are subject to the same industry and economic trends and factors as the Company.

 

	 	
·

	
TSR.  TSR is the percentage change in a company's stock price (plus dividends paid) over a period of time.  For the LTIP, TSR is the change in the Company's stock price over the course of the Program Cycle.  Although dividends are included in the calculation of a company's TSR, the Company has not paid any dividends in the past, and does not anticipate doing so in the future.  It is likely that some of the companies in the Peer Group will pay dividends during the Program Cycle.  A list of the companies in the Peer Group is set forth in Appendix B-1 to this Program Description.

 

	 	
·

	
For purposes of computing the Company's TSR, the beginning stock price will be the simple average of its closing stock prices during the month of December 2014, and the ending stock price will be the average in December 2017.

 

	 	
·

	
TSR Goal Achievement.  Achievement of the TSR Goal is based on the percentile ranking of the Company's TSR against the TSR's of the Peer Group.  The following table shows possible levels of the Company's TSR ranking, and the corresponding percentage of Target RSU's that would vest at that level.  As can be seen in the table, it is possible for more RSU's to vest than a participant's Target RSU's, and at the other extreme, it is possible for none of a participant's Target RSU's to vest.  The Company's TSR ranking that falls between the percentages in the table will be determined by linear interpolation.

 

	
2015 Incentive Compensation Programs

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The Company's TSR 

Percentile Rank

	
Percentage of Target 

RSU's that Vest

	
80% or higher

	
150%

	
50%

	
100%

	
25%

	
25%

	
Below 25%

	
0%

 

By way of illustration only, an example of how the Company's ranking might appear at the end of the Program Cycle is attached as Appendix B-2 to this Program Description.

 

Termination of Employment.  In the event that a participant's employment with the Company terminates before the end of the Program Cycle, his or her Time-Based Shares and RSU's, if any, will be treated as follows:

 

	
Reason for Termination

	 	
Effect on Time-Based Shares and RSU's

	
For Cause (as defined in the award agreement)

	 	
All Time-Based Shares and RSU's, if any, will be forfeited.

	
Resignation by the Participant

	 	
All Time-Based Shares and RSU's, if any, will be forfeited.

	
Without Cause, Permanent Disability or Death (as defined in the award agreement)

	 	
All Time-Based Shares and RSU's will vest.

	
Retirement (as defined by the Compensation Committee)

	 	
The number of Time-Based Shares and any Target RSU's that would have vested had your employment not terminated, based on the Company's TSR ranking at the end of the Program Cycle, will be multiplied by a fraction, the numerator of which is the number of whole calendar months in the Program Cycle that you were an employee of the Company, and the denominator of which is 36.  The resulting number of Time-Based Shares and RSU's, if any, will vest at the end of the Program Cycle.

Part III:  Terms Affecting Both Programs

 

Administration of the Programs.  The two programs are administered by the Compensation Committee of the Board of Directors.  Among other things, the Committee determines those employees who are eligible to participate in the programs; the participants' STIP and LTIP Target Amounts; the allocations between Time-Based Shares and RSU's; and the goals and other performance measures.  At the end of the Program Cycle, the Committee determines whether and to what extent the financial goals, and in some cases the personal goals and other performance measures, have been met.

 

The Committee will correct any defects, supply any omissions, and reconcile any inconsistencies in the programs or in any award made under the programs in the manner and to the extent it believes necessary or advisable to implement the programs.  The decisions by the Committee on matters that are not expressly determined by award agreements will be made in the Committee's good faith discretion.  In the event of a conflict between the terms of this Program Description and a participant's award agreement, the terms of the award agreement will govern.  In the event of a conflict between this Program Description and the Stock Incentive Plan, the terms of the Stock Incentive Plan will govern.

 

	
2015 Incentive Compensation Programs

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Taxes & Tax Consequences.  STIP Payouts.

 

	 	
·

	
Any payout under the STIP will be made in the first quarter of 2016, but no later than March 15, 2016.

 

	 	
·

	
Payouts under the STIP are treated as 2016 supplemental income for federal income tax withholding purposes.  The Company is currently required to withhold 25% of the payout amount plus Social Security and Medicare taxes on the payout.

 

	 	
·

	
Payouts may also be subject to state income tax withholding, and to any garnishment, levy or other wage withholding order affecting the participant.

 

	 	
·

	
Payouts are not eligible for deferral into a participant's Company 401(k) account.

 

Taxes & Tax Consequences.  LTIP Vesting.

 

	 	
·

	
Generally, a participant will not recognize taxable income at the time Time-Based Shares and RSU's are received, but will recognize taxable income when they vest — that is, when the LTIP restrictions on Time-Based Shares expire, and when Target RSU's are converted into shares of unrestricted common stock.  The taxable income recognized by a participant is equal to the fair market value of the vested shares on the vesting date, which is the last day of the Program Cycle.  The Company is currently required to withhold from the participant 25% of the taxable income recognized as well as Social Security and Medicare taxes.

 

	 	
·

	
The Compensation Committee permits participants to satisfy the Company's LTIP withholding requirements (but not the STIP withholding requirements) by transferring to the Company shares of common stock that have vested under the LTIP (or any shares of common stock owned by the participant that he or she has held for at least six months) and that have a market value on the last trading day of the Program Cycle equal to the taxes that the Company is required to withhold.

 

	 	
·

	
More information about the tax consequences of participating in the LTIP is contained in the Plan Description of the Stock Incentive Plan.

 

The Company's Claw-Back Policy.  The Company's Claw-Back Policy applies to all payments made under the STIP, and all RSU's, Time-Based Shares and shares of common stock issued under the LTIP.  A copy of the Claw-Back Policy is attached as Appendix C to this Program Description.  Please read it.  It affects any incentive compensation (cash or stock) that was paid to you if the Company subsequently, for whatever reason, restates the financial statements on which all or a portion of that incentive compensation was based.

 

Change of Control.  A "Change of Control" of the Company is defined in the Company's Stock Incentive Plan, and generally refers to an acquisition of the Company or a large portion of the Company through acquisition of shares of common stock, acquisition of assets of the Company, a merger or the like.  If there is a Change of Control before the end of the Program Cycle, your STIP Target Amount will become payable in full and all Target RSU's and Time-Based Shares will vest.

 

Governing Law.  The provisions of the STIP and the LTIP are governed by, and interpreted in accordance with, the laws of the State of Delaware, without regard to any of its conflicts of law provisions.

 

Compliance with Section 409A of the Code.  The Company intends that the STIP and the LTIP and each award agreement either (a) complies with Section 409A of the Internal Revenue Code of 1986, as amended, and the guidance thereunder; or (b) is excepted from the provisions of Section 409A.  As a result, the Company has the right to amend the programs or any award agreement, or both, in order to cause them to be in compliance with Section 409A or to qualify for being excepted from the provisions of Section 409A, and to take any other actions under the programs and any award agreement to achieve that compliance or exception.

______________

 

	
2015 Incentive Compensation Programs

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[Form of] Appendix A

 

Your Key Numbers for Both Programs

 

The Short-Term Incentive Compensation Program

 

	
Financial Goals:

	
The 2015 Company EPS Goal:

Your 2015 Operating Unit EBIT Goal:

 

Your STIP Target Amount:

	
Your 2015 

Base Salary

	
Your STIP Target 

Amount

Percent — Dollars

	
Your STIP Target 

Amount

EPS Goal 

Allocation

Percent — Dollars

	
Your STIP Target 

Amount

EBIT Goal 

Allocation

Percent — Dollars

	
Your STIP Target 

Amount

Personal Goals

Allocation

Percent — Dollars

	  	  	  	  	  

 

Your personal goals will be set forth on the form developed for that purpose by the Human Resources Department.

 

A change in your base salary during 2015 will not affect your STIP Target Amount.

  

The Long-Term Incentive Compensation Program

 

TSR Ranking Goal:

 

Your LTIP Target Amount

 

	
Your 2015 Base Salary:

	
Your LTIP Target Amount — Percent:

	
Your LTIP Target Amount — Dollars:

	
The average common stock closing price per share in December 2014:

	
Time-Based Shares

	  	
Restricted Stock Units

	
Percent

	
Dollars

	
Shares

	 	
Percent

	
Dollars

	
RSU's

	  	  	  	  	  	  	  

 

A change in your base salary during 2015 will not affect your LTIP Target Amount.

______________

  

  

  

[Form of] Appendix B-1

The Peer Group*

Sorted by Revenues

  

	
Name

	
2014 

Revenues

	
Average Closing 

Price in 

December 2014

	
Market 

Capitalization at 

December 31, 2014

	
Net Income

	
Sterling Construction Company, Inc.

	  	  	  	  
	
MasTec, Inc.

	  	  	  	  
	
Tutor Perini Corporation

	  	  	  	  
	
Granite Construction Incorporated

	  	  	  	  
	
Willbros Group Inc.

	  	  	  	  
	
Primoris Services Corporation

	  	  	  	  
	
Dycom Industries Inc.

	  	  	  	  
	
Layne Christensen Company

	  	  	  	  
	
Great Lakes Dredge & Dock Corporation

	  	  	  	  
	
U.S. Concrete, Inc.

	  	  	  	  
	
Integrated Electrical Services, Inc.

	  	  	  	  
	
Orion Marine Group, Inc.

	  	  	  	  
	
Argan, Inc.

	  	  	  	  

 

	
*

	
Any company that ceases to be publicly traded during the Program Cycle will be deleted from the Peer Group.

  

  

  

[Form of] Appendix B-2

A Hypothetical TSR Ranking List

  

This is an example of how the TSR ranking list might look at the end of the Program Cycle.  The actual numbers will be different.

 

	
Company Name By Descending Stock Price

	
Average Stock Price 

December 2014

	
Average Stock Price 

December 2017

	
Change in 

Stock Price

	
TSR

	
Percent 

Rank

	
Sterling Construction Company, Inc.

	  	  	  	  	  
	
MasTec, Inc.

	  	  	  	  	  
	
Tutor Perini Corporation

	  	  	  	  	  
	
Granite Construction Incorporated

	  	  	  	  	  
	
Willbros Group Inc.

	  	  	  	  	  
	
Primoris Services Corporation

	  	  	  	  	  
	
Dycom Industries Inc.

	  	  	  	  	  
	
Layne Christensen Company

	  	  	  	  	  
	
Great Lakes Dredge & Dock Corporation

	  	  	  	  	  
	
U.S. Concrete, Inc.

	  	  	  	  	  
	
Integrated Electrical Services, Inc.

	  	  	  	  	  
	
Orion Marine Group, Inc.

	  	  	  	  	  
	
Argan, Inc.

	  	  	  	  	  

  

  

  

Appendix C

 

Sterling Construction Company, Inc.

 

Claw-Back Policy

 

	
1.

	
It is the policy of the Company that the amount of any bonus or other incentive compensation (together, "Incentive Compensation") that has already been paid to an employee of the Company (either in cash or in common stock of the Company, or both) that was based on financial statements that are subsequently restated shall, if necessary, be adjusted either by repayment by the employee to the Company or by making an additional payment to the employee so that the employee will have received no more and no less than the amount that he or she would have received had the financial statements been restated before the amount of the Incentive Compensation was determined.

 

	
2.

	
If as a result of the restatement, the Incentive Compensation is shown to have been —

 

	 	
(a)

	
Overpaid, the recipient shall return the amount of the overpayment within sixty days of a written demand therefor by the Company.

 

	 	
(b)

	
Underpaid, the Corporation shall pay the amount of the underpayment within thirty days of the completion of the restatement.

 

	
3.

	
In the event that any repayment by an employee under this policy involves the re-conveyance to the Company of shares of common stock that have been sold by the employee, the proceeds realized from the sale shall be repaid to the Corporation.  If the shares shall have been otherwise transferred, or shall have been pledged or encumbered, the employee shall convey to the Company either —

 

	 	
(a)

	
The market value of such shares at the date of such transfer, pledge or encumbrance or at the date the demand for repayment is made, whichever is higher; or

 

	 	
(b)

	
Shares of common stock of the Company having such market value.

 

	
4.

	
Any payment and/or conveyance of shares to the Company under this policy shall be made whether or not the employee required to make the payment or conveyance was culpable with respect to the error, event, act or omission that caused the restatement to be made, but nothing in this policy shall be construed to prevent the Company from pursuing other remedies against the employee if the Company determines that he or she was in fact culpable in any respect.

 

________________

 

Adopted by the Board of Directors on January 18, 2011exh_102.htm

Exhibit 10.2

STERLING CONSTRUCTION COMPANY, INC.

 

Long-Term Incentive Program Award Agreement

 

This Long-Term Incentive Program Award Agreement (this "Agreement") is made effective as of January 1, 2015 (the "Effective Date") and is entered into between you, [Name of Participant], and Sterling Construction Company, Inc. (the "Company") pursuant to the Company’s Stock Incentive Plan.  The Stock Incentive Plan is incorporated into this Agreement by this reference to it.  If there is a conflict between the terms of this Agreement and the terms of the Stock Incentive Plan, the terms of the Stock Incentive Plan will govern.

By signing this Agreement, you acknowledge that you have received a copy of the Stock Incentive Plan, a summary description of the Stock Incentive Plan, and the Program Description for this Award (the "Program Description") and that you accept this award.  If there is a conflict between the terms of this Agreement and the Program Description, the terms of this Agreement will govern.

 

In consideration of the foregoing recitals and the covenants made in this Agreement, you and the Company agree as follows:

 

	
1.  

	
The 2015 Long-Term Incentive Compensation Program.  On December 11, 2014, the Compensation Committee of the Board of Directors of the Company (the "Committee") established the 2015 Long-Term Incentive Compensation Program (the "2015 LTIP Program") which gives you and other participants the opportunity to earn shares of common stock of the Company.  References in this Agreement to "common stock" mean the Company's common stock, $0.01 par value per share.  The 2015 LTIP Program begins on January 1, 2015 and ends on December 31, 2017.  That period is referred to in this Agreement as the "Program Cycle."

 

	
2.  

	
Time-Based Shares.  The Company hereby awards to you under the terms and conditions of this Agreement [#,###] shares of common stock.  These shares are referred to in this Agreement as the "Time-Based Shares."

 

	 	
(a)

	
Restrictions on Transfer.  You may not sell, assign, transfer, pledge or otherwise dispose of, or encumber any of the Time-Based Shares, or any of your rights or interests in them except by your will or according to the laws of descent and distribution (the "Restrictions.")

 

	 	
(b)

	
Vesting.  If you are an employee of the Company on December 31, 2017, the Restrictions will expire, and the Time-Based Shares will vest.  If you are not an employee on December 31, 2017, your Time-Based Shares will be automatically forfeited except as otherwise provided below in Section 5 of this Agreement.

 

	 	
(c)

	
Rights as a Stockholder.  Subject to the Restrictions and the other limitations and conditions set forth in this Agreement, while you are the owner of the Time-Based Shares, you will have all of the rights of a stockholder of the Company, including the right to vote the shares.

 

	
3.  

	
Restricted Stock Units.

 

	 	
(a)

	
RSU's.  The Company hereby also awards to you under the terms and conditions of this Agreement [#,###] restricted stock units (the "Target RSU's.")  Each of the Target RSU's is an unfunded and unsecured, non-transferable promise, subject to the vesting and other terms and conditions of this Agreement, to issue to you one share of common stock if the RSU vests.

 

	 	
(b)

	
Restrictions on Transfer.  The Target RSU's are subject to the same restrictions on transfer as are described above in Section 2(a) for the Time-Based Shares.

 

	 	
(c)

	
Vesting — Performance Levels.

 

	 	
(i)

	
Target RSU's are eligible to be converted into shares of common stock and vest depending on the ranking of the total shareholder return ("TSR") of the Company at the end of the Program Cycle compared to the TSR at the end of the Program Cycle of each company listed in Appendix A to this Agreement (the "Peer Group.")

 

  

  

  

	 	
(ii)

	
TSR is the percentage change in a company's stock price (plus dividends paid) over a period of time.  For the 2015 LTIP Program, it is the change in the Company's stock price over the course of the Program Cycle.

 

	 	
(iii)

	
For purposes of computing the Company's TSR, the beginning stock price will be the simple average of the closing stock prices on the Nasdaq Stock Market during the month of December 2014, and the ending stock price will be the simple average in December 2017.

 

	 	
(iv)

	
The following table shows possible percentage rankings of the Company's TSR and the corresponding number, if any, of your Target RSU's that would vest.  A ranking that falls between the ranking percentages in the table will be determined by lineal interpolation.  Any fractional share that results from the calculations will be rounded up to the next whole share.  As can be seen in the table, it is possible for more RSU's to vest than the number of your Target RSU's.

 

	 	
The Company's TSR Percentile Ranking

	
Percentage of Target RSU's that Vest

	 
	 	
80% or higher

	
150%

	 
	 	
50%

	
100%

	 
	 	
25%

	
25%

	 
	 	
Below 25%

	
0%

	 

 

	
4.  

	
Forfeiture.

 

	 	
(a)

	
Any Time-Based Shares that do not vest are automatically forfeited, returned to the Company, and retired.

 

	 	
(b)

	
Any Target RSU's that do not vest are automatically forfeited, canceled, and cease to be subject to vesting.

 

	 	
(c)

	
No compensation will be paid to you for any of your Time-Based Shares or Target RSU's that are forfeited.

 

	
5.  

	
Termination of Employment & Change of Control.

 

	 	
(a)

	
If during the Program Cycle your employment is terminated by the Company for Cause (as defined below), or if you resign as an employee of the Company, your Time-Based Shares and Target RSU's will be forfeited.

 

	 	
(b)

	
If during the Program Cycle your employment is terminated by the Company without Cause, or because you have become permanently disabled (as defined below) or because of your death, your Time-Based Shares and Target RSU's will vest in full.

 

	 	
(c)

	
If during the Program Cycle you retire (as defined by the Committee) the number of Time-Based Shares and any Target RSU's that would have vested had your employment not terminated, based on the Company's TSR ranking at the end of the Program Cycle, will be multiplied by a fraction, the numerator of which is the number of whole calendar months in the Program Cycle that you were an employee of the Company, and the denominator of which is 36.  The resulting number of Time-Based Shares and RSU's, if any, will vest at the end of the Program Cycle.

 

	 	
(d)

	
If during the Program Cycle there is a Change of Control of the Company (as that term is defined in the Stock Incentive Plan) all of the Time-Based Shares and Target RSU's will vest.

 

	 	
(e)

	
Cause & Permanent Disability.  For purposes of this Agreement —

 

  

  

  

	 	
(i)

	
The term Cause and the terms permanent disability or permanently disabled will have the meanings set forth in any employment agreement between you and the Company that is in effect when your employment terminates.

 

	 	
(ii)

	
If there is no employment agreement between you and the Company then in effect, or if there is an employment agreement in effect, but either or both of those terms are not defined in the agreement —

 

	 	
(A)

	
Whether you have become permanently disabled will be determined in the good faith judgement of the Compensation Committee; and

 

	 	
(B)

	
The word Cause will mean the termination of your employment for one or more of the following reasons:

 

	 	
·

	
You failed to perform your duties and/or responsibilities in a satisfactory manner after being given written notice of the failure and a reasonable period of time in which to cure the failure.

 

	 	
·

	
You were grossly negligent in the performance of your duties and/or responsibilities.

 

	 	
·

	
You refused to perform your duties and/or responsibilities.

 

	 	
·

	
You committed any act of theft or other dishonesty, including, but not limited to any intentional misapplication of the Company's or its affiliates' funds or other property.

 

	 	
·

	
You were convicted of any other criminal activity (other than a traffic violation or a minor misdemeanor.)

 

	 	
·

	
You participated in any activity involving moral turpitude that is or could reasonably be expected to be injurious to the business or reputation of the Company.

 

	 	
·

	
You used alcohol immoderately and/or used non-prescribed narcotics that had the effect of adversely and materially affecting your performance of your duties and/or responsibilities.

 

	 	
·

	
You committed a material breach of a Company policy.

 

	
6.  

	
Issuance of Time-Based Shares & Converted RSU's.

 

	 	
(a)

	
Your Time-Based Shares at the beginning of the Program Cycle, as well as any Target RSU's that vest and are converted into shares of common stock at the end of the Program Cycle will in each case be issued to you as a "book entry" in an account in your name at the Company's transfer agent.  You will be advised of the issuance.

 

	 	
(b)

	
When the shares are no longer subject to the Restrictions, you may leave them in your account at the transfer agent; you may have them electronically transferred to your brokerage account; or on written request to the Company's Chief Human Resources Officer, you may have them delivered to you in the form of a paper stock certificate.

 

	
7.  

	
Other Terms and Conditions.

 

	 	
(a)

	
Continuing Restrictions.  Vested Time-Based Shares and shares of common stock issued for vested RSU's remain subject to all restrictions imposed on them by federal and state securities laws, rules and regulations, and by the Company's policies and rules relating to common stock.

  

  

  

	 	
(b)

	
Claw-Backs.  All Time-Based Shares, RSU's, and shares of common stock awarded and/or issued under this Agreement are subject to recovery by the Company under the terms of the Company's Claw-Back Policy.  A copy of the policy is attached to the Program Description.

 

	 	
(c)

	
Stock Dividends etc.  Any additional shares of common stock that are issued during the Program Cycle on account of the Time-Based Shares as a result of stock dividends, stock splits or recapitalizations (whether by way of mergers, consolidations, combinations or exchanges of shares or the like) will be subject to the terms and conditions of this Agreement, and are deemed included in the definition of the term "Time-Based Shares."  In the event of any stock dividend, stock split or recapitalization, the number of your Target RSU's will be adjusted appropriately to reflect the event.

 

	 	
(d)

	
Securities & Other Laws.  The Company may require as a pre-condition to the delivery to you of any shares of common stock that they have been duly listed, upon official notice of issuance, upon any national securities exchange or automated quotation system on which the Company's common stock is then listed or quoted; and that either (i) a registration statement under the Securities Act of 1933 (the "Act") relating to the shares is in effect; or (ii) in the opinion of counsel to the Company, the issuance of the shares is exempt from registration under the Act.  You agree to make the undertakings and agreements with the Company that the Company may reasonably require, and to take such other steps, if any, as counsel to the Company considers necessary to comply with any law applicable to the shares.  The shares may be made subject to a stop order or other restriction if counsel for the Company considers it necessary to comply with applicable laws.

 

	 	
(e)

	
Taxes.  You are responsible for any and all taxes that become payable by you by reason of the award and/or vesting of Time-Based Shares and Target RSU's.  A summary of those tax consequences can be found in the Program Description.  In accordance with the procedures adopted by the Committee, you may elect to satisfy any taxes that the Company is required to withhold upon vesting by transferring shares of common stock to the Company that have vested and been issued under this Agreement (or shares that you have otherwise acquired and have held for at least six months) that have a value on the last trading day of the Program Cycle equal to the taxes required to be withheld.

 

	 	
(f)

	
Compliance with Section 409A of the Code.  The Company intends that this Agreement either (a) complies with Section 409A of the Internal Revenue Code of 1986, as amended, and the guidance thereunder; or (b) is excepted from the provisions of Section 409A.  As a result, the Company has the right to amend this Agreement and the Program Description, or both, in order to cause them to be in compliance with Section 409A, or to qualify for being excepted from the provisions of Section 409A, and to take any other actions under the Program Description and this Agreement to achieve that compliance or exception.

 

	 	
(g)

	
Decisions by the Committee.  Any dispute or disagreement that arises under, or as a result of, or relating to, this Agreement will be resolved by the Committee in its sole and absolute discretion, and any resolution or any other determination by the Committee, and any interpretation by the Committee of the terms and conditions of this Agreement will be final, binding, and conclusive on all persons affected by it.

 

	 	
(h)

	
When used in this Agreement, the word "will" is either predictive or is synonymous with the word "shall", meaning "required"; and the word "may" means "permitted."

 

	 	
(i)

	
Governing Law.  The provisions of the 2015 LTIP Program and all awards made under this Agreement are governed by, and will be interpreted in accordance with, the laws of the State of Delaware, without regard to any of its conflicts of law provisions.

  

  

  

In Witness Whereof, the parties have signed this Agreement to be effective as of the Effective Date.

 

 

Sterling Construction Company, Inc.

 

 

	By:	 	 	 	 
	 	
Name:

	 	 	 
	 	
Title:

	 	 	
[Name of Participant]

 

 

 

 

 

 

  

  

  

Appendix A

The Peer Group

 

	
Name

	
2014 Revenues 

in Millions of

Dollars

	
Average Closing

Price Per Share in

December 2014

	
Market

Capitalization at

FYE in Millions of

Dollars

	
Sterling Construction Company, Inc.

	  	  	  
	
MasTec, Inc.

	  	  	  
	
Tutor Perini Corporation

	  	  	  
	
Granite Construction Incorporated

	  	  	  
	
Willbros Group, Inc.

	  	  	  
	
Primoris Services Corporation

	  	  	  
	
Dycom Industries, Inc.

	  	  	  
	
Layne Christensen Company

	  	  	  
	
Great Lakes Dredge & Dock Corporation

	  	  	  
	
U.S. Concrete, Inc.

	  	  	  
	
Integrated Electrical Services, Inc.

	  	  	  
	
Orion Marine Group, Inc.

	  	  	  
	
Argan, Inc.

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