Howmet Aerospace (HWM) 8-K Alcoa Announces Organization Changes

2004 Alcoa Stock Incentive Plan

Equity Choice Program

(Performance Equity Award Participants)

Exhibit 10.6

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Contents

Introduction & Overview

What

is

Equity

Choice?

....................................................................3

How

Equity

Choice

Works.

………………………………… ………….3

Election Alternatives

Election

Alternatives

for

Performance-Based

Awards…….…………4

Election

Alternatives

for

Time-Vested

Awards…………….………….4

Exchange

Ratio………………………………… …………….………….4

Examples

………………………………… ………………………….…..5

Performance-Based Award and Time-Vested Award

The Equity Choice Process

Step

1:

Reviewing

Your

Election

Alternatives

...................................6

Stock Incentives Website

Factors to Consider When Making Your Decision

Step

2:

Making

Your

Equity

Choice

Elections……………………..…7

The Election Period

Making Your Elections on the Stock Incentives Website

Applicability of Elections

Sample Website View of Election Alternatives

Step

3:

Determining

Actual

and

Final

Grants……………….……..…8

Frequently

Asked

Questions……………………………… …….……….…9

Glossary………………………………… …………………………………….10

This booklet describes features of the 2004 Alcoa Stock Incentive

Plan (Plan).  The Plan document,  award certificates, and terms and

conditions of each award control the Plan’s operation.  If there are

any differences between this booklet and the official Plan document

and terms and conditions of each award, the Plan document and

terms

and

conditions

of

each

award

will

control.

Alcoa

reserves

the

right to change or terminate the Plan or the terms of existing stock

incentive awards at any time for any reason.  Participation in the Plan

does not give anyone the right to continued employment with Alcoa.

You are encouraged to read the prospectus and consult a personal

tax advisor or financial planner about individual stock incentive award

strategies and tax planning issues.

This document constitutes part of a prospectus covering securities

that have been registered under the Securities Act of 1933.

As of November, 2005

Introduction and Overview

What is Equity Choice?

Alcoa’s

2004

Stock

Incentive

Plan

(Plan)

is

designed

to

provide

senior

leaders

with

financial

rewards

based

on both individual and company performance. The Equity Choice program enhances the value of the Plan’s

long-term

stock-based

incentives

by

providing

greater

individual

flexibility

-

as

requested

by

senior

leaders

-

and

makes

Alcoa’s

long-term

incentive

compensation

more

competitive

in

the

global

marketplace. 

Equity

Choice

allows

you

to

choose

between

different

combinations

of

equity

vehicles

for

your

annual

grants under the Plan to better suit your personal needs. Prior to the end of each year, you will make an

election

that

will

apply

to

the

annual

grant

issued

early

in

the

following

year.

This

annual

process

gives

you

more

control

over

how

you

receive

your

stock-based

incentive

compensation

and

greater

ability

to

tailor

the

rewards

to

your

own

personal

preferences.

(Note

that

the

ability

to

make

an

election

does

not

guarantee

that

you will receive an actual grant.)

How

Equity Choice

Works

As an eligible performance equity award participant, your baseline grant (as planned each year by your

manager) is comprised of two components:

Performance-Based Award:

This component of the grant is made up of performance share awards

(PSAs)

which represent a commitment by the Company to issue, on the third anniversary date of the date

of the grant of the award, from 0 to 200% of the number of shares of Alcoa common stock indicated on

your

award

certificate

relating

to

the

grant

based

on

Alcoa’s

return

on

capital

(“ROC”)

relative

to

the

median

return

on

capital

of

the

Company’s

selected

external

comparator

group

during

the

performance

period

(the

first

year

of

the

three-year

vesting

period).

The

final

number

of

PSAs

earned

can

change

based on Alcoa’s corporate performance. 

Time-Vested

Award:

This

component

of

the

grant

is

made

up

of

stock

options,

which

gives

you

the

right

to

purchase

shares

of

Alcoa

common

stock

in

the

future

(once

the

options

vest

and

prior

to

their

expiration

date)

at

a

preset

price.

Stock

options

are

not

performance

based,

which

means

they

are

not

subject

to

any adjustment based on corporate performance once they are granted.  Therefore, the number of stock

options you are granted will not change.

Equity Choice:

Enhances the value of the long-term stock-based incentive plan

Increases flexibility within the plan

Responds to input from senior leaders

The

foundation

of

Equity

Choice

is

the

opportunity

to

elect

a

different

“mix”

of

equity

vehicles

than

what

is

provided

in

your

baseline

grant.

In

addition

to

PSAs

and

stock

options,

you

will

also

be

able

to

receive:

Performance-Based Award:

Performance Stock Options

-

A PSO represents the right to purchase

shares of stock in the future at a preset price once vested, provided that Alcoa achieves certain financial

performance levels (based on the same measure used for PSAs). A PSO vests 14 months after the grant

date

as

to

one-third

of

the

options

granted,

two

years

after

the

grant

date

as

to

one-third

of

the

options

granted,

and

three

years

from

the

grant

date

as

to

one-third

of

the

options

granted

(unless

the

Committee

specifies a different vesting period).  If you elect to receive PSOs, you will have the opportunity to earn

from

0%

to

200%

of

the

number

of

options

indicated

on

your

award

certificate,

except

as

indicated

in

the

next sentence. If performance results in a payout in excess of 100%, the additional payout will be made in

the form of a stock award grant instead of stock options, based on an exchange ratio of one stock award

for every four additional PSOs earned.  Such stock award would vest, in whole, on the third anniversary of

the grant date of the PSOs to which it relates.  If performance results in a payout below 100%, the number

of

PSOs

below

the

earned

payout

percentage

will

be

automatically

cancelled.

Time-Vested Award:

Stock Awards

-

A commitment by the company to issue shares of Alcoa stock,

upon vesting (the third anniversary date of the date of grant).

Election Alternatives

Election Alternatives for Performance-Based

Awards

You have the following three choices:

You decide

what is best for you.

Choice

1:

Exchange

100%

of

the

PSAs

in

your

baseline grant for performance stock options

(PSOs) which are described further below.

Choice

2:

Exchange

50%

of

the

PSAs

in

your

baseline grant for PSOs.

Choice

3A

(default) :

No

change.

Baseline

grant

allocation.

If you elect to exchange PSAs for PSOs, the

exchange ratio will be one PSA to four PSOs. 

PSOs are subject to the same performance

criteria as PSAs and the final number of PSOs

earned will be adjusted after the end of the

performance period (the first year of the entire

three-year vesting period).

Election Alternatives

You will need to make separate elections for the two components of your baseline grant: one election for

your

performance-based

award

and

one

for

your

time-vested

award.

For

each

election,

you

have

three

alternatives from which to choose, offering a range of combinations and potential values.

Election Alternatives for Time-Vested Awards

You have the following three choices:

Choice

3B

(default) :

No

change.

Baseline

grant

allocation.

Choice

4:

Exchange

50%

of

the

stock

options

in

your baseline grant for stock awards which are

described further below. 

Choice 5:

Exchange 100% of the stock options

in your baseline grant for stock awards.

If you elect to exchange stock options for stock

awards, the exchange ratio will be four stock

options to one stock award.  Stock awards

received in exchange for stock options are not

subject to performance criteria and will not be

adjusted once granted.

Exchange Ratio

The exchange ratio of 4 stock options/PSOs to 1

stock

award/PSA

takes

into

consideration:

Black-Scholes option valuation methodology

Binomial option valuation methodology

Comparisons to exchange ratios used by other

companies implementing similar programs

Employee responses from the Equity

Compensation

Survey

Election Alternatives

EXAMPLES

The

following

examples

illustrate

how

the

exchange

ratio

is

used

to

determine

the

number

of

awards

granted under each election alternative, using a hypothetical baseline grant of 4,250 performance shares

(Choice #3A) and 19,000 stock options (Choice #3B). Remember that the exchange ratio is four stock

options/PSOs to one stock award/PSA.

Performance-Based Award

Time-Vested

Award

If you select

…

Then you are transferring from the

Baseline Grant (Choice #3A ) . . .

Exchange Computation

Performance

Stock Options

Performance

Shares

-

4,250

4,250 x 4 = 17,000

17,000

(4,250)

17,000

-

4,250 x 50% = 2,125

-

4,250

2,125 x 4 = 8,500

8,500

(2,125)

8,500

2,125

Baseline Grant allocation

-

4,250

No Change

-

-

-

4,250

If you select

…

Then you are transferring from the

Baseline Grant (Choice #3B ) . . .

Exchange Computation

Stock Options

Stock

Awards

Baseline Grant allocation

19,000

-

No Change

-

-

19,000

-

19,000 x 50% = 9,500

19,000

-

9,500 / 4 = 2,375

(9,500)

2,375

9,500

2,375

19,000

-

19,000 / 4 = 4,750

(19,000)

4,750

-

4,750

* Approximate allocation of expected value of total equity incentive award

60% stock options*

50% of stock options to stock

awards

100% of stock options to stock

awards

Choice #3B

(default)

Choice #4

Choice #5

Choice #1

Choice #2

Choice #3A

(default)

100% of performance shares to

performance stock options

50% of performance shares to

performance stock options

40% performance shares*

The Equity Choice Process

The Equity Choice process involves three steps:  participants review their election alternatives,

participants make their elections, and the actual and final grants are determined and communicated. 

Below are the details of each step.

Step 1: Reviewing Your Election Alternatives

To help you make your Equity Choice elections, Alcoa provides information, tools and training materials. 

Before you make your elections it is important to be fully informed about the program and to consider key

factors related to your personal situation and financial goals.

Stock Incentives Website

The

Stock

Incentives

website

at

www.alcoastockincentives.com

is

your main resource for important information, a modeling tool and

training materials that will help in your decision making.

The

Library Section

provides the following materials:

Brochures

describing the benefits and provisions of Stock Options,

Stock Awards, Performance Share Awards and Equity Choice

WebEx

training

presentations

on

Equity

Choice

The

Equity Choice Section

provides specific program information,

personalized information, and modeling tools:

Background:

detailed

descriptions

and

examples

for

each

Equity

Choice

election

alternative.

Modeling:

Tool

that

allows

you

to

compare

the

possible

future

economic value of the election alternatives based on your

assumptions for:

–

Stock price at actual grant date;

–

Stock price on the date you sell your stock; and

–

Currency exchange rate on the date you sell your stock.

For each election alternative, you can model up to three scenarios

and display the results in tabular and graphical formats.

Your own risk tolerance;

Your entire financial picture and

how long-term stock-based

incentives fit into it;

The tax implications of stock

options, PSOs, stock awards

and PSAs;

The vesting and other

provisions of stock options,

PSOs, stock awards and PSAs;

The applicability of dividends

and dividend equivalents; and

The upside and downside

potential for stock options,

PSOs, stock awards and PSAs

under different scenarios

Factors to Consider When Making

Your Decision

Once you understand your election

alternatives, consider personal factors

that could affect your decision such as:

The Equity Choice Process

You should consult a personal tax

advisor or financial planner with

respect to your personal

circumstances.

Step

2:

Making

Your

Equity

Choice

Elections

Making Your Elections on the Stock

Incentives Website

Follow these steps to make your elections online:

Election Alternatives          

Performance Based Grants

PSOs

PSAs

O

#1 - 100% PSA to PSO

17,000

O

#2 - 50% PSA to PSO

8,500

2,125

#3A -Baseline Grant (default)

4,250

Election Alternatives             

Time Vested Grants

Stock

Options

Stock

Awards

#3B -Baseline Grant (default)

19,000

O

#4 - 50% stock options to stock awards

9,500

2,375

O

#5 - 100% stock options to stock awards

4,750

Shown below is a sample of what you will see on the website

based on a hypothetical baseline grant of 4,250 performance

shares and 19,000 stock options.

Go to the Stock Incentives website at

www.alcoastockincentives.com

and click on

the Equity Choice section (from the menu in

the left column of the site).  The site provides

detailed instructions to help you through the

process.

Select the election alternatives you want by

clicking on the applicable radio button.  The

highlighted rows indicate your current

elections, or, if you haven’t yet made an

election, the default election.

Your election alternatives will be displayed

based on the midpoint within the regional

grant guidelines established for your specific

job grade and region (Note that  the midpoint

is not an indication of the award you may

receive; individual job performance and other

factors identified by your business or resource

unit determine your actual baseline grant.)

Save your election when finished. Your

election will be applied to your baseline grant

to determine your actual grant. Remember

that you can change your election at any time

up until the end of the election period.

If you do not make an election during the

election period, Choice #3A and #3B –

baseline grant allocation will apply.

The Election Period

Each year, you will be notified of the Equity Choice

election period which is held for approximately two

weeks near the end of the calendar year prior to the year

of grant.  You must make your election via the Stock

Incentives website and are free to change your elections

as many times as you like during the election period. 

Once the election period closes, your final elections

recorded in the Stock Incentives website is final and

irrevocable and cannot be changed for any reason.

If you do not make an election by the close of the

election period, the default allocation of the baseline

grant will apply.

Applicability of Elections

Your

Equity Choice

elections will apply to the

upcoming

year’s annual grants only. It does not

apply to any prior grants or any other future

grants including special quarterly grants, new hire

grants

or

future

years’

annual

grants

New elections must be made for

each future annual grant.

Sample Website View of Election Alternatives

In this sample, no election has been made and therefore the

default elections (Choices #3A and #3B) are highlighted. 

When you make your elections by clicking on the applicable

radio button, your choices will be highlighted.

The Equity Choice Process

Performance-Based Awards

The number of PSOs and/or PSAs you receive will

be adjusted based on Alcoa’s performance relative

to an external comparator group as set forth in the

terms and conditions of the award agreements.

Your

final

grant

can

be

between

0%

-

200%

of

your actual grant and will be determined upon

completion of the performance period.  For PSOs,

if performance results in a payout in excess of

100%, the additional payout will be made in the

form of a stock award grant instead of stock

options, based on an exchange ratio of one stock

award for every four additional PSOs earned. 

Such stock award would vest, in whole, on the

third anniversary of the grant date of the PSOs to

which they relate. If performance results in a

payout below 100%, the number of PSOs below

the earned payout percentage will be

automatically cancelled.

Final award certificates for the performance-based

component

of

your

grant

will

be

available

on

the

Stock Incentives website after the performance

period ends and final grants are determined.

The ability to make an election

does not guarantee that you

will receive an actual grant.

Step 3: Determining Actual and Final

Grants

The amount of your baseline grant and actual grant

will be communicated to you by your manager after

final approval by the Compensation and Benefits

Committee. Your actual grant is determined by

applying your Equity Choice elections to your

baseline grants (default baseline grant allocation

applies if no election is made).

Your actual grant will be posted on the Stock

Incentives website at www.alcoastockincentives.com

within five business days of the grant date.  The

website also allows you to print your award

certificates.

Frequently Asked Questions

Elections can be changed up until the close of

the election period.  After the election period

ends, you cannot change your election for any

reason.

What if I want to change my

election?

The default baseline grant allocation will apply

(Choice #3A and #3B).

What if I become eligible for the

Plan after the election period

closes?

The default baseline grant allocation will apply

(Choice #3A and #3B).

What if I do not make an Equity

Choice election during the election

period?

Contact the plan administrator via e-mail at

StockOptionAdmin.pit@alcoa.com

or

by

phone

800-352-8535 within the U.S. or

412-281-1234 outside the U.S.

Who do I contact with questions

about

the

Stock

Incentives

website

(including log-on ID and password

requests)?

Contact

the

Corporate

Compensation

group

via e-mail

at

ACCEquityChoice@alcoa.com

Who do I contact with questions

about my election

alternatives or

the Equity Choice

Program?

Contact the plan administrator via e-mail at

StockOptionAdmin.pit@alcoa.com

or

by

phone 877-281-2088 within the U.S. or 412-

281-2088 outside the U.S.

Who do I contact with questions

about the stock options, stock

award, performance stock options,

or performance share plan

provisions?

Glossary

Actual

Grant:

Number

of

performance

shares,

performance stock options, stock options and stock

awards granted based on your Baseline Grant and

Equity Choice election.

Annual

Grant:

An

award

given

by

the

Compensatio

n and Benefits Committee of the Board of Directors,

typically in January. Grant terms are set at the

Committee’s discretion.

Baseline

Grant:

Number

of

stock

options

and

performance shares allocated to you within the

Regional Grant Guidelines for your specific job

grade and region, prior to Equity Choice, based on

management’s recommendations.

Board

of

Directors:

Group

of

individuals

elected

at

an annual meeting by the shareholders of a

corporation. The Board of Directors has the authority

to elect officers, issue additional shares of stock,

and declare dividends, among other authorities.

Common

Stock:

A

type

of

public

ownership

in

a

corporation. Owners are usually entitled to vote on

the selection of the board of directors and other

important matters as well as receive common stock

dividends on their shareholdings if they are

declared.

Compensation and Benefits Committee:

Comprised solely of independent directors who have

not been Alcoa employees. The Committee

discharges

the

Board

of

Directors’

responsibilities

relating to the compensation of the company’s

officers, oversees the administration of the

company’s compensation and benefit plans

(particularly the incentive compensation and equity-

based plans of the company) and prepares the

annual report on executive compensation. In

addition, the Committee has oversight responsibility

for the investment policy of the company’s principal

pension and savings plans.

Election

Alternatives:

Different

mixes

of

stock

options, stock awards, performance stock options,

and/or performance shares from which to choose as

part of the Equity Choice Program.

Election Period:

Time period in which Equity

Choice elections can be made.

Equity

Choice:

Program

that

allows

participants

to

choose between different combinations of equity

vehicles

for

their

annual

grants

under

the

2004

Alcoa

Stock

Incentive

Plan

to

better

suit

their

person

al needs.

Final

Grant:

Adjusted

number

of

performance

shares

or

performance

stock

options

granted

that

are determined upon completion of the performance

period.  Final Grants can be between 0% -

200% of

your Actual Grant.

Grant:

An

award

of

stock

options

or

other

stock-based incentives.

Grant

Date:

The

date

on

which

an

option

or

other

award

is

granted.

Performance

Share

Award

(PSA):

A

contractual

promise

to

issue

shares

of

Alcoa

common

stock,

upon

vesting,

provided

that

the

corporation

achieves

certain

financial

performance

levels.

The

same

performance

metric

applies

to

both

performance

shares and performance stock options.

Performance

Stock

Option

(PSO):

The

right

to

purchase shares of stock in the future at a preset

price, upon vesting, provided that the corporation

achieves certain financial performance levels.  The

same

performance

metric

applies

to

both

performance

shares

and

performance

stock

options.

Plan:

2004 Alcoa Stock Incentive Plan

Regional

Grant

Guidelines:

Range

of

stock

options

and

performance

shares,

between

0%

and

200%

of

midpoint,

that

can

be

granted

as

part

of

the

Baseline

Grant

for

each

job

grade

and

region.

Stock

Award:

A

contractual

promise

to

issue

share

s of

Alcoa

stock,

upon

vesting.

Stock

Option:

The

right

to

purchase

shares

of

stock

in

the

future

at

a

preset

price,

upon

vesting.

Time-Vested

Grants:

Grants

of

stock

awards

or

stock options that are not subject to performance

criteria.

Vesting:

A

specified

length

of

time

you

must

hold

a

stock

option

or

performance

stock

option

before

it

can

be

exercised

or

length

of

time

before

you

can

receive

shares

from

a

stock

award

or

performance

share award.  Certain employment criteria must be

met during this period.