Exhibit 10.1
ENGLOBAL CORPORATION
INCENTIVE BONUS PLAN
SECTION I
PURPOSE
ENGlobal Corporation, a Nevada corporation
(the "Corporation"), hereby
adopts this Incentive Bonus Plan (this "Plan"), effective as of
July 1, 2009, to
promote and advance the interests of the Corporation and its
stockholders by
enabling the Corporation and its Affiliates to attract, retain and
reward
certain valued employees (the "Participants").
SECTION II
DEFINITIONS
Capitalized terms in the Plan shall have
the following meanings:
1. "Achievement Percentages" means the
Threshold Percentage, the Target
Percentage and the High Performance Percentage.
2. "Affiliate" means any company
controlled by, controlling or under common
control with the Corporation.
3. "Base Salary" means 50% of the
Participant's annual salary at the
beginning of the Performance Period without inclusion of earn-outs,
bonuses
granted outside of this Plan, stock options or other equity
incentives, or any
other forms of compensation.
4. "Bonus" means an amount awarded to an
individual Participant and payable
by the Corporation, subject to the terms and conditions of this
Plan.
5. "Bonus Measures" means the Metrics
Hurdles and Metrics Weighting
applicable to any particular Participant or group of
Participants.
6. "Calculation Statement" means the
information provided in writing to any
Participant or group of Participants setting forth, for each
Performance Period,
the Bonus Measures and Achievement Percentages applicable to that
Participant,
in the form of Appendix A.
7. "Change of Control" means (i) a sale of
substantially all of the assets
of the Corporation to a person or entity that is not an Affiliate
of the
Corporation; (ii) any sale in a single transaction or in a series
of related and
substantially similar contemporaneous transactions of the issued
and outstanding
securities of the Corporation representing 50% or more of the total
number of
shares of the Corporation then outstanding to any person or entity
that is not
an Affiliate of the selling stockholders; or (iii) any merger,
consolidation or
reorganization of the Corporation with or into one or more entities
that are not
Affiliates of the Corporation, as a result of which less than 50%
of the
outstanding voting securities, partnership interests or membership
interests of
the surviving or resulting entity are owned by the holders of the
Corporation's
securities (or their Affiliates) immediately prior to such merger,
consolidation
or reorganization. Notwithstanding anything to the contrary
provided herein, the
issuance of securities by the Corporation in an acquisition by the
Corporation
or by any of its Affiliates of another business shall not
constitute a Change of
Control.
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8. "Code" means the Internal Revenue Code
of 1986, as amended, and the
regulations under the Code.
9. "Committee" means the Compensation
Committee of the Board of Directors.
The Committee shall be comprised of not less than the number of
directors
required to satisfy the requirements of Code Section 162(m), the
Securities Act
of 1933, and the rules and regulations of NASDAQ or any exchange on
which the
Corporation's shares may be traded. In addition, the Committee
shall be composed
solely of "outside directors" within the meaning of Code Section
162(m).
10. "High Performance Percentage" means
the percentage utilized in the
calculation of a Participant's Bonus if the high performance
Metrics Hurdles set
forth in the applicable Calculation Statement are met.
11. "Maximum Percentage" means the
percentage of a Participant's Base
Salary payable to the Participant as Bonus if all of the High
Performance
Metrics Hurdles set forth in the applicable Calculation Statement
are met.
12. "Metrics" means the criteria against
which the Committee decides to
measure performance. As of the Effective Date, the Metrics are:
A.
Consolidated Earnings Per Share - Consolidated Earnings per
Share
shall be determined in accordance with the reviewed or, if
available, the
audited consolidated financial statements for the applicable
Performance Period.
B. Segment
Profit Contribution ("Contribution") - Earnings of a
Segment after depreciation, amortization, and allocation of bonuses
under this
Plan, but before corporate overhead, interest and taxes, determined
in
accordance with the reviewed or, if available, the audited
consolidated
financial statements for the applicable Performance Period.
Contribution may
also be calculated and utilized as a Metric for business units
within a Segment.
Contribution will not apply as a Metric for Participants serving in
general
corporate functions not associated with a particular Segment.
C. Safety -
The Total Recordable Incidents per 200,000 hours worked
("TRIR") (as defined by the United States Department of Labor's
Occupational
Health and Safety Administration) during the applicable Performance
Period. Any
lost time or days away from work cases that occur within a Segment
or its
business unit will result in that Segment or business unit failing
to meet the
threshold level for Safety for the Performance Period. Any fatality
that occurs
within the Corporation and its Affiliates will result in all
Participants
failing to meet the threshold level for Safety for the Performance
Period.
D. Days
Sales Outstanding ("DSO") - The number of days within which
the Corporation as a whole (the aggregate of all of the Segments),
or the
applicable Segment or business unit collects amounts due for work
performed on
average, whether or not the customer has received an invoice, as
computed by the
Corporation in accordance with its standard accounting practice.
Month ending
DSOs for the six months of each Performance Period will be
mathematically
averaged to arrive at the DSO value to be utilized in the Bonus
calculation.
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The Corporation may add, delete or modify the Metrics at any time
as to any
future Performance Period.
13. "Metrics Hurdles" means the assigned
threshold, target and high
performance criteria that correspond with each Metric against which
performance
is measured.
14. "Metrics Weighting" means the
percentage allocation of a Participant's
potential Bonus among Metrics (e.g., Net Income, Safety, etc.).
15. "Payout" means the actual payment of a
Bonus earned by a Participant.
16. "Performance Period" means the period
from January 1 of each year to
June 30 of that year, and the period from July 1 of each year to
December 31 of
that year, or any other period specified by the Committee during
which the
Metrics are to be measured.
17. "Required Payment Date" means the date
on which a Payout is required to
be made, as provided in Section IV.8.B.
18. "Segment" means one of the four
operating segments designated by the
Corporation for financial and SEC reporting purposes, as modified
from time to
time by the Corporation.
19. "Senior Management Team" means the
Chief Executive Officer, the Chief
Operating Officer, if any, the Chief Financial Officer, the Chief
Governance
Officer, any Segment President, and any Senior Vice-President of
the
Corporation.
20. "Target Percentage" means the
percentage utilized in the calculation of
a Participant's Bonus if the target Metrics Hurdles set forth in
the applicable
Calculation Statement are met.
21. "Threshold Percentage" means the
percentage utilized in the calculation
of a Participant's Bonus if the threshold Metrics Hurdles set forth
in the
applicable Calculation Statement are met.
SECTION III
ADMINISTRATION
The Plan shall be administered by the
Committee. Subject to the provisions
of the Plan, and except as expressly provided in a particular
Calculation
Statement, the Committee shall have exclusive authority to
interpret the Plan,
to adopt, amend and rescind rules and regulations relating to the
Plan and to
make all other determinations that the Committee believes are
necessary or
advisable in connection with the administration of the Plan. The
determinations
of the Committee pursuant to this authority shall be
conclusive.
SECTION IV
OPERATION OF INCENTIVE PLAN
1. Determination of Bonus Measures. Prior
to the beginning of each
Performance Period (except for the first Performance Period), or as
soon after
the beginning of the Performance Period as practical:
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A. The
Committee shall determine the Bonus Measures applicable to the
Corporation's Chief Executive Officer, Chief Financial Officer, and
Chief
Operating Officer, if any. The Committee may not delegate this
task. Bonuses to
the Chief Executive Officer, the Chief Financial Officer and any
other "covered
employees" as defined in Section 162(m) of the Code, shall comply
with the
requirements of Section 162(m) for the payments to be
deductible.
B. The Chief
Executive Officer, or his designee, shall determine the
Bonus Measures for each other Participant.
2. Bonus Calculation Formula. Subject to
Section IV.6.A, each Bonus shall
be calculated as follows: (i) For each Metric, the Metrics Hurdles
shall be
applied to the actual performance of the Corporation to determine
the level of
achievement; (ii) the Achievement Percentage for each Metric shall
be multiplied
by the applicable Metrics Weighting percentage, with the resulting
weighted
achievement for all Metrics then totalled; and (iii) the amount
determined in
(ii) shall be multiplied by the Maximum Percentage for the
applicable
Participant's Bonus. The percentage amount so calculated shall be
multiplied by
the Participant's Base Salary for the Performance Period to
determine the total
amount of the Bonus for the Participant. A sample calculation is
attached as
Appendix B.
3. Restatement of Financial Statements. If
the Corporation awards a Bonus
based on financial statements that are later restated, the amount
of the Bonus
shall be adjusted to reflect the restated financial statements, and
the
Corporation shall pay (on the applicable Payout Dates) any
additional Payout
owing to the Participant based on the restated financial
statements, or, if
applicable, the Participant shall refund any overpayment of Payouts
that the
Participant received from the Corporation.
4. Maximum Bonus Payable.
A. Unless
otherwise determined by the Committee, the maximum aggregate
annual Bonuses payable under this Plan cannot exceed 15% of
consolidated pre-tax
net income, after consideration of the Bonus expense. However, the
Committee
may, in its sole discretion, establish a different maximum amount
of aggregate
Bonuses to be awarded under this Plan. In addition, the Committee
may establish
a maximum amount to be awarded to any group of Participants. The
Committee's
determination may be expressed either as a percentage of a
financial measure, an
absolute dollar amount, or in any other manner.
B. Unless
otherwise provided in a particular Calculation Statement, no
Participant may be granted a Bonus:
(i) For all members of the Senior Management Team, an amount
that
does not exceed 75% of their respective Base Salary; and
(ii) For all other Participants, an amount within the range of
10% to 60% of their respective Base Salary.
C.
Calculation Statement. The Corporation shall provide each
Participant with a copy of a Calculation St
