EXHIBIT 10.4
REYNOLDS METALS COMPANY
Performance Incentive Plan
As Amended and Restated
Effective January 1, 1996
TABLE OF CONTENTS
Page
1. PURPOSE 1
2. ADMINISTRATION 1
3. PARTICIPATION 2
4. TARGET AWARD LEVELS 2
5. PERFORMANCE GOALS 2
6. DETERMINATION OF AWARDS 3
7. COMMUNICATION 3
8. PAYMENT OF AWARDS 3
9. COMPANY STOCK 6
10. EFFECTIVE DATE OF PLAN 7
1. PURPOSE
The purpose of the Performance Incentive Plan (the "Plan") is to
promote the financial success of Reynolds Metals Company (the
"Company") by:
(a) providing compensation opportunities which are competitive with
those of other major companies;
(b) supporting the Company's goal-setting and strategic planning
process; and
(c) motivating key executives to achieve annual business goals by
allowing them to share in the risks and rewards of the business.
2. ADMINISTRATION
(a) The Plan shall be administered by the Compensation Committee (the
"Committee") of the Board of Directors (the "Board"). No member
of the Committee shall be eligible to participate in the Plan.
(b) The Committee shall have the power and authority to adopt, amend
and rescind any administrative guidelines, rules, regulations,
and procedures deemed appropriate to the administration of the
Plan, and to interpret and rule on any questions relating to any
provision of the Plan.
(c) The decisions of the Committee shall be final, conclusive and
binding on all parties, including the Company and participating
employees.
(d) The Board may from time to time amend, suspend or terminate the
Plan, in whole or in part. Notwithstanding the foregoing, the
Board may, in any circumstance where it deems such approval
necessary or desirable, and shall, to the extent necessary to
maintain compliance with Rule 16b-3 under the Securities Exchange
Act of 1934 as in effect from time to time, require stockholder
approval as a condition to the effectiveness of any amendment or
modification of the Plan.
3. PARTICIPATION
Company officers and other key employees of the Company and its
subsidiaries who are recommended by the Chief Executive Officer of the
Company and who are approved by the Committee shall be eligible for
participation in the Plan during a Plan year.
4. TARGET AWARD LEVELS
After consultation with management, the Committee may designate target
award levels to be earned by participants for a given Plan year. Such
target awards may vary by management level.
5. PERFORMANCE GOALS
To the fullest extent possible, management shall establish performance
goals for participants to help it determine the awards it will
recommend for the Plan year. Such goals may relate to corporate
performance, divisional performance, and individual performance as
appropriate to the purpose of the Plan and the positions and
responsibilities of the participants.
6. DETERMINATION OF AWARDS
As soon as practicable following the close of each Plan year, the
Committee shall, after consultation with management, determine the
award earned by each participant for the Plan year. In special cases
of meritorious performance, after consultation with management, the
Committee may make awards to individuals who were not previously
designated as eligible for participation during the Plan year. If a
participant has died during the Plan year, an award may be made to the
participant's spouse or legal representative if the Committee so
determines.
7. COMMUNICATION
Participants shall be advised in writing of their participation in the
Plan and of any performance goals applicable to their awards.
8. PAYMENT OF AWARDS
Awards shall be payable in cash as soon after the close of the Plan
year as feasible; provided, however, that payment of part or all of
any award may be deferred in accordance with the terms of any
incentive deferral plan maintained from time to time by the Company.
(c) Any other provision of the Plan to the contrary notwithstanding,
except as otherwise determined by the Committee in accordance
with Paragraph 6(a) of the Company's Stock Ownership Guidelines
for Officers (the "Guidelines"), the following provisions shall
apply to the payment of an award to any participant who is
subject to the Guidelines and who had not met the applicable
minimum stock ownership level of the Guidelines as of the
December 31 immediately preceding the date of payment of an award
under the Plan.
The award to any such participant shall be paid part in cash and
part in the form of shares of Common Stock of the Company
("Shares"). The number of Shares issued under this provision
shall be equal to the number of Shares that would have been
necessary to bring the participant into compliance with the
Guidelines as of the December 31 immediately preceding the date
of payment of the award; provided, however, that in no event
shall more than half of the value of a participant's award be
paid in the form of Shares; and provided, further, that the part
of the award for any participant that is payable in Shares shall
not exceed the annual rate of base salary in effect for the
participant at the time of the award. The remainder of the
participant's award shall be paid in cash. Awards of Shares
shall be made without payment of a purchase price.
Any payment in accordance with this subsection (c) shall be
subject to the following terms and conditions:
(i) An award shall be converted into Shares by dividing (y) the
cash value of the part of the award to be paid in Shares by
(z) the arithmetic average of the high and low sales prices
of the Shares as reported on New York Stock Exchange
Composite Transactions on the date preceding the date on
which the award is paid. Any fractional Share shall be paid
in cash.
(ii) The mandatory share award provisions of this subsection (c)
shall not apply to the extent the participant has already
elected under the Company's New Management Incentive
Deferral Plan (y) to defer a portion of his or her award
under the Plan and (z) to have such deferred award be
credited with additional income based on shares of phantom
stock of the Company.
(iii) Except to the extent a participant has elected to have a
deferred award be credited with additional income based on
shares of phantom stock of the Company, any voluntary
deferral of the payment of part or all of an award under the
Plan shall apply only to the part of the award that is
payable in cash after the application of this subsection
(c); provided, however, that any such voluntary deferral
shall be reduced as necessary to ensure the payment of all
applicable payroll taxes.
(iv) To the extent a participant is subject to a mandatory
deferral of the payment of part or all of an award under the
Plan, the mandatory deferral shall apply first to the part
of the award that is payable in cash. To the extent the
award that would be paid in Shares remains subject to the
mandatory deferral, the payment that would otherwise be made
in the form of Shares shall instead be deferred under the
Company's New Management Incentive Deferral Plan to earn
income based on shares of phantom stock of the Company.
9. COMPANY STOCK
Shares reserved for issuance under the Plan may be authorized but
unissued shares, shares reacquired by the Company, or a combination of
both, as the Board may from time to time determine. If any stock
dividend is declared upon the Shares, or if there is any stock split,
stock distribution, or other recapitalization of the Company with
respect to the Shares, resulting in a split-up or combination or
exchange of shares, the Shares reserved for issuance under the Plan
shall be proportionately and appropriately adjusted.
10. EFFECTIVE DATE OF PLAN
The Plan as originally adopted was effective for the fiscal year
commencing January 1, 1983 and continued in effect thereafter as
amended from time to time. This amended and restated Plan shall be
effective January 1, 1996, subject to stockholder approval at the 1995
Annual Meeting, and shall continue in effect, as amended from time to
time, until it is terminated by the Board.
Executed and adopted this 21st day of April, 1995, pursuant to
action taken by the Board of Directors of Reynolds Metals Company at its
meeting on November 18, 1994, and approved by the Stockholders of Reynolds
Metals Company at the 1995 Annual Meeting.
REYNOLDS METALS COMPANY
By: Donald T. Cowles
Executive Vice President, Human
Resources and External Affairs