EXHIBIT 10.40 REYNOLDS METALS COMPANY SUPPLEMENTAL INCENTIVE PLAN Effective January 1, 1996 1. PURPOSE The purpose of the Supplemental 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 by permitting awards to be based on other than completely objective criteria; and (c) motivating designated key executives to achieve important qualitative 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 Company's 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. 3. PARTICIPATION Each calendar year, the Committee shall designate employees eligible to participate in this Plan during that calendar year. 4. MAXIMUM AWARD LEVELS After consultation with management, the Committee shall designate maximum award levels to be earned by participants for a calendar year. Such maximum awards may vary by management level. These maximum award levels shall be independent of any award levels established under any other incentive plan of the Company. The Committee shall also establish a performance threshold that must be reached before any award can be paid hereunder for the year. No award may be paid hereunder unless the Company achieves adequate financial performance as established in the performance threshold, such as achievement of the minimum goals established under the Company's Performance Incentive Plan for the calendar year. 5. PERFORMANCE GOALS The Committee shall establish performance goals for participants to help it determine awards for each calendar year. Such goals shall be different from and independent of any goals established under any other incentive plan of the Company and 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 Subject to the limitations imposed by Paragraph 4, each calendar year the Committee shall, after consultation with management, determine the award earned by each participant under this Plan for the calendar year based upon the achievement of the performance goals established hereunder for the participant for the calendar year. 7. COMMUNICATION Participants shall be advised in writing of their participation in the Plan and of the performance goals applicable to their awards. 8. PAYMENT OF AWARDS Awards shall be payable in cash as soon after the close of the calendar 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. 9. EFFECTIVE DATE OF PLAN The Plan shall be effective January 1, 1996, and shall continue in effect, as amended from time to time, until it is terminated by the Board. Executed and adopted as of January 1, 1996, pursuant to action taken by the Board of Directors of Reynolds Metals Company at its meeting on November 17, 1995. REYNOLDS METALS COMPANY By: F. Robert Newman Vice President, Human Resources