Stock Ownership Guidelines for Executive Officers and Directors

The Board of Directors (the “Board”) of Tetra Tech, Inc. (the “Company”) adopted stock ownership guidelines for its executive officers and directors, on November 7, 2010, which have been amended and restated. The Board may further update these guidelines from time to time. The Board believes that share ownership aligns the interests of its executive officers and directors with the interests of shareholders, promotes sound corporate governance, and demonstrates a commitment to the Company.

Guidelines for Executive Officers

All executive officers are required to own shares of Company stock having a total value equal to a specified multiple of base salary, as set forth in the following table:

Position Multiple of Base Salary
Chief Executive Officer 6
President 3
Executive Vice President 3
Senior Vice President 2

Until an executive officer’s stock ownership requirement is met, the executive officer must retain at least 75% of Gain Shares resulting from the exercise of a stock option or vesting of a restricted stock or performance share award. With respect to stock options, “Gain Shares” means the total number of shares of the Company stock that are being exercised less the number of shares, if any, used in the case of a cashless exercise to pay for the exercise price. With respect to a restricted stock unit award, “Gain Shares” means the total number of shares of Company stock subject to any such equity award that vests.

Gain Shares shall in no event include shares of Company stock that are used to satisfy tax withholding obligations for federal and state income and employment taxes on any gain attributable to a stock option exercise or receipt of vested shares from a restricted stock unit award.

Executive officers will have five years to attain the required level of stock ownership applicable to their positions. Executive officers who are subsequently promoted to either the CEO, President or an Executive Vice President position will have five years from the date of promotion to acquire any additional shares needed to attain the required level of stock ownership.

Guidelines for Directors

Directors are required to own shares of Company stock having a total value equal to at least five times the director’s annual base cash retainer.

Until a director’s stock ownership requirement is met, the director must retain at least 75% of Gain Shares resulting from the exercise of a stock option or vesting of a restricted stock or performance share award. “Gain Shares” shall have the same meaning as described above except that Gain Shares shall exclude shares of Company stock that would have been used to satisfy minimum tax withholding obligations had the director been employed by the Company as a common law employee.

Directors will have five years from the date of their election to the Board to attain the required level of stock ownership.

Stock Ownership

The following types of equity instruments count in determining stock ownership for purposes of these guidelines:

  • Shares owned separately by the executive officer or director or owned either jointly with, or separately by, his or her immediate family members residing in the same household;
  • Shares held in trust for the benefit of the executive officer or director or his or her immediate family members;
  • Shares purchased on the open market;
  • Shares obtained through stock option exercise (and not thereafter sold);
  • Unvested restricted stock and restricted stock units.

Unvested stock options, vested but unexercised stock options, and unvested performance share units do not count in determining stock ownership.

Noncompliance

Failure to comply with the stock ownership guidelines may result in the Committee requiring an executive officer or director use up to one-third of any net annual cash bonus or retainer, as applicable, to purchase Company stock as determined by the Committee. In addition, in the event of non-compliance, the Compensation Committee may exercise its discretion to declare an executive officer or director ineligible to receive equity grants under the Company’s plans until such time as compliance is achieved. Progress toward meeting the guidelines, measured using the closing stock price on the date of the end of the fiscal year, will be presented to the Compensation Committee at least annually.

Exceptions

There may be rare instances where the stock ownership guidelines would place a financial hardship on an executive officer or director. The Compensation Committee may, in its discretion, grant a waiver to an executive officer or director from the stock ownership requirements in special circumstances, and for a limited period.

Administration

These guidelines shall be administered and interpreted by the Compensation Committee.