Document:

ex10-14.htm

Exhibit 10.14

 

AEGION CORPORATON

MANAGEMENT ANNUAL INCENTIVE PLAN

This Management Annual Incentive Plan (the “Plan”) of Aegion Corporation (the “Company”) is effective as of the 1st day of January, 2012.

A.           Plan Purpose

The purpose of this Plan is to enhance business performance by motivating and rewarding executive and management employees for the achievement of incentive goals structured to achieve desired corporate results.

B.           Eligible Employees

A committee comprised of the Company’s Chief Executive Officer,  General Counsel and Chief Administrative Officer, Chief Financial Officer and Vice President – Human Resources (together, the “Plan Committee”), shall designate the employees of the Company and its subsidiaries who are to be participants (the “Participants”) in the Plan for the applicable fiscal year (the “Plan Year”).  Except where prohibited by law, as a condition to participation in the Plan and the receipt of any payment hereunder, Participants shall be required to sign any confidentiality, non-solicitation and/or non-competition agreement and/or acknowledgement of the Company’s right to recoup  any incentive compensation required by the Company.

C.           Participant Incentive Award Goals

The Plan Committee shall establish an incentive award goal (a “Goal”) for each Participant that shall be expressed as a percentage of such Participant’s annual base salary.  Participant Goals shall be reviewed and approved by the Plan Committee on an annual basis.  The Compensation Committee shall approve Goals of all executive officers of the Company.

D.           Funding and Award Summary

Except as may otherwise be set forth herein or as determined by the Plan Committee under certain circumstances, the Plan shall be funded as to 10% based on total Company performance for the Plan year and as to the remaining 90% based on the performance of each business unit for the Plan year.  Each Participant Goal shall be divided between these two funding criteria.  Total Company performance shall be measured based on the actual consolidated Company Net Income achieved (“Actual Net Income”) as compared against the targeted consolidated Company Net Income (“Net Income Target”) for the Plan Year, as approved by the Board of Directors of the Company.  Business unit performance shall be measured based on the actual Operating Income achieved by a business unit of the Company as compared against the targeted Operating Income for such business unit for the Plan Year, as approved by the Company’s Chief Executive Officer.  Goal awards from the business unit funded portion of the Plan pool shall be earned based on an individual Participant’s performance during the Plan Year, as determined by the individual Participant’s achievement of certain measurable business objectives (“MBOs”) assigned to such Participant.

 

  

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E.           Net Income

For purposes of this Plan, “Net Income” shall be defined as “net income before extraordinary items” of the Company for the Plan Year, which shall mean the consolidated net income of the Company during the fiscal year, as determined by the Plan Committee in conformity with accounting principles generally accepted in the United States of America and contained in financial statements that are subject to an audit report of the Company's independent public accounting firm, but excluding:

 

	
  

	
(i)

	
losses associated with the write-down of assets of a subsidiary, business unit or division that has been designated by the Board of Directors as a discontinued business operation or to be liquidated;

 

	
  

	
(ii)

	
gains or losses on the sale of any subsidiary, business unit or division, or the assets or business thereof;

 

	
  

	
(iii)

	
gains or losses from the disposition of material capital assets (other than in a transaction described in subsection (ii)) or the refinancing of indebtedness, including, among other things, any make-whole payments and prepayment fees;

 

	
  

	
(iv)

	
losses associated with the write-down of goodwill or other intangible assets of the Company due to the determination under applicable accounting standards that the assets have been impaired;

 

	
  

	
(v)

	
gains or losses from material property casualty occurrences or condemnation awards taking into account the proceeds paid by insurance companies and other third parties in connection with the casualty or condemnation;

 

	
  

	
(vi)

	
any other material income or loss item the realization of which is not directly attributable to the actions of current senior management of the Company;

 

	
  

	
(vii)

	
any income statement effect resulting from a change in generally accepted accounting principles, except to the extent the effect of such a change is already reflected in the target Net Income amount; and

 

	
  

	
(viii)

	
the income taxes (benefits) of any of the above-designated gains or losses.

The Compensation Committee shall have final authority with respect to any determination by the Plan Committee regarding the definition of “Net Income” and, in exercising such authority, may consult with the Company’s independent auditor and/or Audit Committee as it deems necessary and advisable.

F.           Operating Income

For the purposes of this Plan, “Operating Income” shall be defined as revenues minus operating expenses before taxes, as determined by the Plan Committee in conformity with accounting principles generally accepted in the United States of America.

 

  

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G.           Consolidated Company Financial Performance Pool Funding

The Plan shall be funded based on the financial performance of the Company as a whole (such funding pool shall be referred to as the “Consolidated Company Financial Performance Pool”).   At the outset of each Plan Year, the Compensation Committee shall determine the Net Income Target for the Plan Year and the target funding amount (the “Company Target”) for the Consolidated Company Financial Performance Pool.  The actual amount funded to the Consolidated Company Financial Performance Pool shall be determined upon calculation of Actual Net Income after the end of the Plan Year, subject to any deletions or additions required pursuant to Section E hereof.

	
  

	
§

	
If Actual Net Income equals the Net Income Target, the Consolidated Company Financial Performance Pool shall be equal to the Company Target.

 

	
  

	
§

	
If Actual Net Income exceeds the Net Income Target, the Consolidated Company Financial Performance Pool shall equal (1) the Company Target plus (2) $0.33 of each dollar by which the Actual Net Income exceeds the Net Income Target (for each dollar of Actual Net Income greater than 100% of the Net Income Target up to 110% of the Net Income Target) plus (3) $0.50 of each dollar by which the Actual Net Income exceeds the Net Income Target (for each dollar of Actual Net Income greater than 110% of the Net Income Target).

 

	
  

	
§

	
If Actual Net Income is less than the Net Income Target, but equals or exceeds 75% of the Net Income Target, the Consolidated Company Financial Performance Pool shall be equal to the Company Target multiplied by the percentage determined by dividing the Actual Net Income by the Net Income Target.

 

	
  

	
§

	
If Actual Net Income is less than 75% of the Net Income Target, the minimum amount funded to the Consolidated Company Financial Performance Pool shall be equal to $700,000; provided, however, that such minimum amount shall only be awarded to individual Participants for extraordinary performance, as determined by the Company’s Chief Executive Officer in his sole discretion (subject to the review and approval by the Compensation Committee of any Awards to executive officers of the Company).

The maximum funding amount for the Consolidated Company Financial Performance Pool shall be 200% of the Company Target.  In all events, the Compensation Committee, subject to any required approval of the Board of Directors, shall have the ability and authority to increase or decrease the amount of the Consolidated Company Financial Performance Pool calculated in accordance with the provisions of this Plan to reflect any extraordinary or unforeseen events or occurrences during the Plan Year.

H.           Consolidated Company Financial Performance Bonus Pool Awards

A portion of the Consolidated Company Financial Performance Pool shall be awarded to Participants based on 10% of each Participant’s respective Goal (e.g., if a Participant has a 40% Goal, 4% would be paid from the Consolidated Company Financial Performance Bonus Pool, calculated in accordance with Section G hereof) and subject to available pool funding.   There is no individual performance factor required to receive 10% of each Participant’s respective Goal from the Consolidated Company Financial Performance Pool, but a Participant must be an employee in good standing at the time the award is paid (that is, the Participant must be an active employee not on a performance improvement plan in order to be eligible for an award from this pool).

 

  

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I.           Business Unit/Individual Performance Pool Funding

The remainder of each Participant’s Goal shall be funded based on the performance of the Company’s individual business units (this portion of the Consolidated Company Financial Performance Bonus Pool shall be referred to as the “Business Unit/Individual Performance Pool” for each business unit); provided, however, that for corporate employees, the funding of this portion of the Plan shall be based on Actual Net Income achievement.

 

Funding for Individual Business Units

At the outset of each Plan Year, the Plan Committee shall determine the targeted Operating Income (the “Operating Income Target”) for the Plan Year for each applicable business unit.  The actual amount funded to the Business Unit/Individual Performance Pool for the applicable business unit shall be determined upon calculation of actual Operating Income (the “Actual Operating Income”) for such business unit and shall be adjusted from the applicable BU Target (as defined below) as follows:

	
  

	
§

	
The “BU Target” shall be equal to 90% of the sum of the business unit Participants’ Goals for the Plan Year for the Participants in the Plan at the time the award is to be paid.

 

	
  

	
§

	
If Actual Operating Income is equal to 90% but less than 100% of the Operating Income Target, the Business Unit/Individual Performance Pool shall be equal to the BU Target multiplied by the percentage determined by dividing the Actual Operating Income by the Operating Income Target.   If Actual Operating Income equals or exceeds the Operating Income Target, the Business Unit/Individual Performance Pool shall equal (1) the BU Target plus (2) $0.33 of each dollar by which the Actual Operating Income exceeds the Operating Income Target (for each dollar of Actual Operating Income greater than 100% of the Operating Income Target up to 110% of the Operating Income Target), plus (3) $0.50 of each dollar by which the Actual Operating Income exceeds the Operating Income Target (for each dollar of Actual Operating Income greater than 110% of the Operating Income Target).

 

	
  

	
o

	
One third of this pool is available for distribution to the Business Unit Participants, conditioned upon their individual MBO results.

 

	
  

	
o

	
The remaining two thirds of the pool is available for distribution to the Business Unit Participants, conditioned upon their individual MBO results, provided they achieve their business unit’s year-over-year “Growth Gate”.  Funding based on the growth gate occurs on a linear trend line as per Exhibit A.

 

	
  

	
§

	
If Actual Operating Income is less than 90% of the Operating Income Target, the Business Unit/Individual Performance Pool for such business unit shall not be funded.

 

	
  

	
§

	
The “Growth Gate” requires that a business unit achieve a minimum level of year-over-year (“YOY”) growth in Actual Operating Income, which shall be approved during the budgeting process.  At no time for purposes of the incentive plan calculation will the Growth Gate be set at less than 5% YOY Business Unit Operating Income growth.

 

	
  

	
§

	
The applicable business unit for a Participant shall be recommended by the business unit executive and approved by the Plan Committee.

 

  

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Funding for Corporate Employees

The amount funded to the Business Unit/Individual Performance Pool (90% of each Participant’s Goal) for corporate employees shall be determined in accordance with the Consolidated Company Financial Performance Pool funding mechanism as set forth above, but conditioned upon individual MBO results, as appropriate.  That is, 100% of corporate employees’ incentive awards under this Plan shall be determined based upon Actual Net Income achieved as compared against the Net Income Target; provided, however, that 90% of each such award shall be further conditioned upon each corporate employee’s individual MBO results in accordance with Section J hereof.

J.           Business Unit/Individual Performance Pool Awards

The portion of a Participant’s Goal relating to the Business Unit/Individual Performance Pool shall be awarded based on such Participant’s individual performance during the Plan Year.  Individual performance shall be measured by such Participant’s achievement of designated MBOs for the Plan Year.  The level of achievement of a Participant’s individual MBOs shall be determined by such participant’s direct supervisor, approved by the Participant’s Business Unit leader and confirmed by the next level Corporate Officer above such Business Unit leader.  All awards from the Business Unit/Individual Performance Pool are subject to pool funding as set forth above.

K.           Timing of Awards; Allocation of Unearned Awards; Maximum Award Amount

Awards for a Plan Year are annual and shall be awarded by March 15 of the succeeding year.  Participants who are not employed on the payment date shall not be eligible to receive any payment.  Participants must be employed as of October 1 in a Plan Year to be eligible to participate in the Plan for that Plan Year.  A Participant who is employed after January 1 but prior to October 1 of a Plan Year shall only be eligible to receive an award prorated for the amount of time the Participant was employed during the Plan Year based on full months of service.

Any accrued bonus amount attributable to (1) employees on performance improvement plans or (2) employees who are no longer eligible to receive bonus awards due to their employment ending prior to the bonus award payment date, shall be reallocated to other eligible bonus award.

The maximum Award payable under this Plan to any Participant shall be 200% of such Participant’s Goal.

L.           Nature of Plan

This Plan is a statement of intent and is not a contract.  It is not a guarantee of employment, and each Participant’s employment with the company remains “at will” to the maximum extent permitted by applicable law.  This Plan may be modified, suspended or terminated at any time, and all awards are at the discretion of the Company’s Board of Directors or the Compensation Committee.  This Plan may be changed during a Plan Year without any obligation of the Company to pay for the elapsed part of the Plan Year in the manner described in the Plan.   The decisions of Company management, the Plan Committee, the Board of Directors and/or the Compensation Committee in administering and interpreting the Plan are final and binding on all persons.  Information regarding an employee’s annual incentive payment will be part of the employee’s personnel record.

 

  

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Exhibit A

 

 

6ex10-16.htm

Exhibit 10.16

 

	

	
 

17988 Edison Avenue

Chesterfield, MO 63005

 

	
 

Tel:   (636) 530-8000

Fax: (636) 530-8010

www.insituform.com

 

 

 

December 9, 2010

 

 

Brian J. Clarke 

7907 N. Tripp 

Skokie, IL 60076

 

Dear Brian:

 

I am pleased to offer you the position of Senior Vice President of Insituform Technologies, Inc. (the “Company”) reporting directly to me. The principal terms and conditions of the offer are as follows:

 

1.          Base Salary.   You will be compensated for your services as Senior Vice President at an annual base salary rate of $345,000.

 

2.          Annual Incentive Bonus.   During 2011, you will be eligible to participate in the Company’s Annual Incentive Plan (AIP) at a target incentive rate of 60% of base salary, pursuant to the terms and conditions of the Company’s AIP plan document.

 

3.          Equity Compensation.   You will be eligible to participate in the Insituform Technologies, Inc. 2009 Employee Equity Incentive Plan and to receive equity compensation grants. On an annual basis, the Compensation Committee of the Board of Directors dete1mines equity grants and/or awards for selected participants. During the next award cycle in early 2011, you shall receive an equity award having a nominal value of $650,000, subject to final review and approval by the Compensation Committee. This award will be comprised of stock options (50% or $325,000), restricted stock (35% or $227,500), and long-term performance cash (15% or $97,500).

 

(a)          The stock options will be subject to the terms of a stock option agreement, with customary terms and conditions. A sample stock option agreement is enclosed for your reference.

 

(b)          The restricted stock will be subject to the terms of a restricted stock agreement, with customary terms and conditions. A sample restricted stock agreement is enclosed for your reference.

 

  

  

  

 

 

(c)          The target award under the 2011-2013 Long Term Executive Cash Performance Program, payable in March 2013, will be based on the achievement of goals to be established by the Compensation Committee for such three-year period. 

4.          Deferred Compensation.   You are eligible to participate in the Senior Management Voluntary Deferred Compensation Plan (DCP).

 

5.          Additional Benefits and Arrangements. 

(a)          Your position will be based at a suitable office located within twenty miles of your residence as of the date of this letter, which office will be your primary work location. The Company will equip the office with appropriate furnishings, telephone and computer systems and will maintain such furnishings and systems at the Company’s expense. 

(b)          You are eligible to participate in the company’s medical, dental, vision, life insurance, and long-term disability plans on the same terms as are applicable to other participants generally, and any future plans and programs implemented by the Company for its employees generally or by the Compensation Committee for you specifically, and in the Company’s 401(k) Profit Sharing Plan and any future plans or programs supplemental to the Company’s 401(k) Profit Sharing Plan. Details about specific benefits will be provided to you in benefit plan documents. All such plans and benefits are subject to cancellation and change in the Company’s discretion. 

(c)          For purposes of restricted stock awards and other compensation and benefit arrangements of the Company, you are deemed to have six years of full-time service with the Company as of your first day of employment with the Company. 

6.          Severance.   Your employment is for no definite term; however, if your employment is terminated (i) by the Company for reasons other than “Cause” during your employment or (ii) by you for “Good Reason” during your employment and following a “Change in Control”, in either instance you will receive, upon the terms described below, a severance payment equal to twelve months’ of your then current base salary and twelve months of the monthly cost the Company then was paying for health, dental, life, long-term disability and accident insurance for you and your dependants. This amount will (subject to the provisions described below) be paid out in twenty-four (24) equal semi-monthly installments commencing on the Company's first semi-monthly payday following your termination date; provided, however, that no payment will be paid to you prior to the first semi-monthly payday following the 60th day after your termination date (the “First Severance Payment Date”) and on the First Severance Payment Date, you will receive a catch-up payment equal to the sum of the payments that have accrued from your termination date to the First Severance Payment Date. In all instances, any such payment is conditioned upon (i) your entering into an enforceable separation agreement in form and substance satisfactory to the Company, which form will be substantially similar to that attached to this letter, containing a release of all claims you may have against the Company, its subsidiaries and any of their respective directors, employees and agents, cooperation, nondisparagement and confidentiality clauses, and such other terms as are customarily requested by employers in executive separation agreements, and (ii) your resignation of all employment and offices and positions, you hold with the Company and any of its subsidiaries and affiliates within 30 days after your employment terminates. A form of separation agreement will be delivered to you within 30 days after your employment terminates (and if this does not occur then the provision will be deemed waived), and you must sign and deliver the agreement within 22 days after it is delivered. In order to avoid any tax consequences of Section 409A of the Internal Revenue Code, payment of any installments may be deferred until the releases and the separation agreement are enforceable and until the first day following the six (6) month anniversary of the date you have a separation from service within the meaning of Section 409A (in which case any deferred installments will be paid the first pay day after the six (6) month and one (1) day period expires). Any termination of employment will also constitute an automatic resignation from all offices and directorships you may hold with the Company or any of its subsidiaries or affiliates.

 

  

  

  

 

References to “termination of employment” (and corollary terms) mean “separation from service” (as determined under Treas. Reg. Section 1.409A-l(h)).  For purposes of Section 409A, your right to receive installment payments will be treated as a right to receive a series of separate and distinct payments.  Whenever there is a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of the Company.  You are not obligated to seek other employment or otherwise mitigate the amounts payable to you per this Section 6 and such amounts are not subject to offset. In the event of your death prior to full payment of such amounts, any remaining payment will be made to your surviving spouse, or, if none, to your estate.

 

In the event that the Compensation Committee of the Board of Directors approves a severance plan for your position that provides greater benefits than those listed in this section, that plan in its entirety shall supersede this provision.

 

7.          Definitions of “Cause”, “Change in Control” and “Good Reason.” For purposes of this letter, “Cause” shall be defined as:

 

(a)         The willful and continued failure by you to perform substantially your duties with the Company or any of its affiliates (other than a failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to you which specifically identifies the manner in which you have not substantially performed your duties and within a period of 30 days from receipt of said written demand you have not cured said performance; or

 

(b)          Failure or refusal to perform any stated duty or directive (other than a failure resulting from incapacity due to physical or mental illness), after a written demand for performance is delivered to you which specifically identifies the manner in which you have not so performed such duty or directive and within a period of 30 days from receipt of said written demand you have not cured said performance);

 

  

  

  

(c)         Misappropriation of funds; failure to comply with the Company’s Code of Conduct or any policy prohibiting sexual harassment or other form of harassment, or any written agreement with the Company; material failure to comply with any written policy of the Company; engaging in any illegal conduct in connection with your duties for or employment with the Company; whether or not in each case subsequently discontinued or corrected; or

 

(d)          Breach of fiduciary duty, commission of an act of moral turpitude, or any act of fraud or knowing misrepresentation or concealment to the Company or to the Board, whether or not in each case subsequently discontinued or corrected; or

(e)          The conviction of, the entering of a guilty plea or plea of nolo contendere or no contest (or entering into any pretrial diversion program or agreement or suspended imposition of sentence) with respect to either a felony or a crime involving moral turpitude, dishonesty or fraud; or the institution of criminal charges against you which are not dismissed within one hundred twenty (120) days after institution, where such charges are for fraud, embezzlement, any offense involving dishonesty or constituting a breach of trust, or any felony; or

 

(f)          Material violation of any federal, state or local law that may result in a direct or indirect financial loss to the Company or damage the Company’s reputation, or your admission of liability of, or finding of liability for, the violation of any state or federal securities laws; or

 

(g)          Your qualification for benefits under the Company’s group long term disability insurance plan.

 

For purposes of this letter, a “Change in Control” shall be defined as:

 

(a)          The acquisition by one person, or more than one person acting as a group, of ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company; or

 

(b)          The acquisition by one person, or more than one person acting as a group, of ownership of stock of the Company, that together with stock of the Company acquired during the twelve-month period ending on the date of the most recent acquisition by such person or group, constitutes 30% or more of the total voting power of the stock of the Company; or

 

  

  

  

 

(c)          A majority of the members of the Company’s board of directors is replaced during any twelve-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s board of directors before the date of the appointment or election.

 

Persons will not be considered to be acting as a group solely because they purchase or own stock of the same corporation at the same time, or as a result of the same public offering.  However, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company.

 

This definition of Change in Control shall be interpreted in accordance with, and in a manner that will bring the definition into compliance with, the regulations under Section 409A of the Internal Revenue Code.

 

For purposes of this letter, “Good Reason” shall be defined as:

 

(a)          A material reduction in your annual base salary; or

 

(b)          A material reduction in your authority, duties or responsibilities; or

 

(c)          Any other action or inaction that constitutes a material breach by the Company of its obligations under this letter.

 

Any termination of your employment based upon a good faith determination of “Good Reason” made by you shall be subject to a delivery of a Notice of Termination you to the Company within sixty (60) days of the first occurrence of an event that would constitute “Good Reason” and subject further to the ability of the Company to remedy the condition within thirty (30) days of receipt.

 

8.         Employment Status.   Your employment status will be that of an at-will employee, which means that either the Company or you may terminate your employment at any time, with or without reason. This letter does not constitute an employment agreement. Your employment also is conditioned upon your entering into a Confidentiality, Work Product and Non- Competition Agreement.

 

This letter (and the terms of the plans, documents and standard agreements referred to herein) contains the entire agreement of the patties with respect to the subject matter hereof, and supersedes any and all prior oral or written communications, commitments and agreements with respect thereto. It is deemed to be entered into and accepted in the State of Missouri and will be governed by the laws of the State of Missouri without regard to conflicts of law principles. The terms of this letter will benefit and be binding upon successors to the Company.

 

  

  

  

 

This offer is contingent upon a successful completion of a background check and drug screening. We anticipate your initial date of hire to be no later than January 31, 2011.

 

Please formally indicate your acceptance by signing this letter and our Confidentiality, Work Product and Non-Competition agreement.   Please retain one copy of each for your files and return a signed copy in the enclosed envelope.  This offer will expire if it is not accepted and returned to the Company by December 31, 2010.

 

Brian, we believe that your experience will enable you to be a solid contributor on the Insituform team. Please contact me if you have any questions.

 

Best regards,

 

 

INSITUFORM TECHNOLOGIES, INC.

 

 

 

	
/s/ J. Joseph Burgess

	 	 	
 

	 
	

President and CEO

	 	 	
 

	 

 

 

 

ACCEPTED AND AGREED TO AS OF THE DATE OF THIS LETTER:

 

	
/s/ Brian J. Clarke

	 	 	
December 22, 2010

	 
	
Brian J. Clarke

	 	 	
Date

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