Exhibit 10.21
1997 UNION CARBIDE CORPORATION
EPS INCENTIVE PLAN
TABLE OF CONTENTS
Section Title Page
Section 1: Purpose . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2: Definitions . . . . . . . . . . . . . . . . . . . . . 1
Section 3: Administration . . . . . . . . . . . . . . . . . . . 6
Section 4: Participation . . . . . . . . . . . . . . . . . . . . 7
Section 5: Pay-At-Risk . . . . . . . . . . . . . . . . . . . . . 7
Section 6: Awards . . . . . . . . . . . . . . . . . . . . . . . 9
Section 7: Payments . . . . . . . . . . . . . . . . . . . . . . 10
Section 8: Termination of Employment . . . . . . . . . . . . . 12
Section 9: Beneficiary Designation . . . . . . . . . . . . . . 14
Section 10: General Provisions . . . . . . . . . . . . . . . . . 15
Section 11: Amendment, Suspension, or Termination . . . . . . . 16
Section 12: Effective Date . . . . . . . . . . . . . . . . . . . 16
1997 UNION CARBIDE EPS INCENTIVE PLAN
Section 1: Purpose
The purpose of the Plan is to incent designated employees of the
Corporation to achieve certain earnings per share goals in calendar
years 1999 and 2000. These employees will forfeit a portion of their
compensation if the earnings per share goals are not achieved and will
receive an incentive payment if the earnings per share goals are
achieved.
Section 2: Definitions
2.1 "Award" shall mean a cash amount payable to a Participant
pursuant to Section 7.2.
2.2 "Award Shares" shall mean the Phantom Shares credited to a
Participant pursuant to Section 6.3.
2.3 "Beneficiary" shall mean a Participant's beneficiary
pursuant to Section 9.
2.4 "Board" shall mean the Board of Directors of the
Corporation.
2.5 "CEO" shall mean the Chief Executive Officer of the
Corporation.
2.6 "Change in Control of the Corporation" shall be deemed to
occur if any of the following circumstances shall occur:
(i) any "person" or "group" within the meaning of Sections 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934 ("Act") becomes the
"beneficial owner" as defined in Rule 13d-3 under the Act of more than
20% of the then outstanding voting securities of the Corporation;
(ii) any "person" or "group" within the meaning of Sections 13(d)
and 14(d)(2) of the Act acquires by proxy or otherwise the right to vote
for the election of directors, for any merger or consolidation of the
Corporation or for any other matter or question with respect to more
than 20% of the then outstanding voting securities of the Corporation;
(iii) if during any period of twenty-four consecutive months,
Present Directors and/or New Directors cease for any reason to
constitute a majority of the Board.
For these purposes, "Present Directors" shall mean individuals
who at the beginning of such consecutive twenty-four month period were
members of the Board and "New Directors" shall mean any director whose
election by the Board or whose nomination for election by the
Corporation's stockholders was approved by a vote of at least two-thirds
of the Directors then still in office who were Present Directors or New
Directors;
(iv) the stockholders of the Corporation approve a plan of complete
liquidation or dissolution of the Corporation; or
(v) there shall be consummated (x) a reorganization, merger or
consolidation of all or substantially all of the assets of the
Corporation (a "Business Combination"), unless, following such Business
Combination, (a) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
outstanding common stock of the Corporation and outstanding voting
securities of the Corporation immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 50% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled
to vote generally in the election of directors, as the case may be, of
the corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such transaction
owns the Corporation or all or substantially all of the Corporation's
assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior
to such Business Combination of the outstanding common stock of the
Corporation and outstanding voting securities of the Corporation, as the
case may be, (b) no "person" or "group" within the meaning of Sections
13(d) and 14(d)(2) of the Act (excluding any corporation resulting from
such Business Combination or any employee benefit plan (or related
trust) of the Corporation or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 20% or
more of, respectively, the then outstanding shares of common stock of
the corporation resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to
the Business Combination and (c) at least a majority of the members of
the board of directors of the corporation resulting from such Business
Combination were members of the Board at the time of the execution of
the initial agreement, or of the action of the Board, providing for such
Business Combination; or (y) any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all, or
substantially all, of the assets of the Corporation, provided, that the
divestiture of less than substantially all of the assets of the
Corporation in one transaction or a series of related transactions,
whether effected by sale, lease, exchange, spin-off, sale of the stock
or merger of a subsidiary or otherwise, shall not constitute a Change in
Control of the Corporation.
Notwithstanding the foregoing, a Change in Control of the
Corporation shall not be deemed to occur: (A) pursuant to clauses (i)
and (ii) above, solely because twenty percent (20%) or more of the
combined voting power of the Corporation's then outstanding securities
is acquired by one or more employee benefit plans maintained by the
Corporation; or (B) pursuant to clause (v)(y) above, if the Board
determines that any sale, lease, exchange or transfer does not involve
substantially all of the assets of the Corporation.
2.7 "Closing Price" shall mean the closing price of the
Corporation's common stock on the New York Stock Exchange - Composite
Transactions.
2.8 "Committee" shall mean the Compensation and Management
Development Committee of the Board.
2.9 "Compensation Deferral Plan" shall mean the 1995 Union
Carbide Compensation Deferral Plan, or any successor plan.
2.10 "Corporation" shall mean Union Carbide Corporation and its
consolidated subsidiaries.
2.11 "Dividend Shares" shall mean the Phantom Shares credited
to a Participant pursuant to Sections 5.5 and 7.7.
2.12 "EPS" shall mean the diluted earnings per share of the
Corporation's common stock as reported in the audited financial
statements of the Corporation.
2.13 "Participant" shall mean an employee of Union Carbide
Corporation and such of its subsidiaries as shall be designated by the
Committee to participate in this Plan.
2.14 "Pay-At-Risk" shall mean the aggregate amount of each
Participant's annual Variable Compensation placed at risk pursuant to
Sections 5.2 and 5.3.
2.15 "Pay-At-Risk Shares" shall mean the Phantom Shares
determined pursuant to Section 5.4.
2.16 "Performance Period" shall mean calendar years 1999 and
2000.
2.17 "Phantom Shares" shall mean units equal to the market
value of the Corporation's common stock on the New York Stock Exchange -
Composite Transactions.
2.18 "Plan" shall mean this 1997 Union Carbide Corporation EPS
Incentive Plan.
2.19 "Recalculated EPS" shall mean EPS as recalculated pursuant
to Section 6.5.
2.20 "Reduced Pay-At-Risk Shares" shall have the meaning set
forth in Section 8.3.
2.21 "Retirement" shall mean termination of employment with the
Corporation with the right to receive immediately a non-actuarially
reduced pension under the Corporation's Retirement Program.
2.22 "Retirement Program" shall mean the Retirement Program
Plan for Employees of Union Carbide Corporation and Its Participating
Subsidiary Companies.
2.23 "Variable Compensation" shall mean variable compensation
under the 1997 Union Carbide Variable Compensation Plan and/or the 1995
Union Carbide Performance Incentive Plan, as the same may be amended, or
any successor plan.
Section 3: Administration
3.1 The Plan shall be administered by the Committee, which
shall have full power and authority to construe and interpret the Plan,
establish and amend administrative regulations to further the purpose of
the Plan and take any other action necessary to administer the Plan.
3.2 In the event of a Change in Control of the Corporation or
other unusual and/or unplanned actions or events that significantly
affect the attainment of the EPS goals of the Plan during the
Performance Period, the Committee is authorized: (i) to increase or
decrease the Awards under the Plan, (ii) accelerate the payments under
the Plan, (iii) change the performance goals, (iv) determine that the
performance goals of the Plan have been met even though the Performance
Period has not been completed, or (v) otherwise alter the terms of the
Plan or make such equitable adjustments, as the Committee shall, in its
sole discretion, determine.
3.3 The Committee's decisions, actions and interpretations
shall be final and binding upon all Participants, Beneficiaries,
shareholders of the Corporation and any other person.
Section 4: Participation
4.1 The CEO, those Corporate Vice-Presidents and Vice-
President/General Managers reporting to the CEO, and certain other
senior managers with major functional responsibilities to achieve the
Corporation's profit growth/cost reduction objectives, as approved by
the CEO and authorized by the Committee, shall be the Participants in
the Plan. In addition, any Participants added to the Plan after March
1, 1998 shall be subject to such terms and conditions for participation
as the Committee shall determine.
Section 5: Pay-At-Risk
5.1 Overview: The Corporation will reduce each Participant's
Variable Compensation by the amount of the Pay-At-Risk, as provided in
Sections 5.2 and 5.3. The Pay-At-Risk will be converted to Pay-At-Risk
Shares as provided in Section 5.4. If the 1999 and 2000 performance
goals established pursuant to this Plan are not met, the Pay-At-Risk
Shares will be forfeited. If the goals are met, a Participant will
receive the value of the Pay-At-Risk Shares and the Award Shares as
provided in Sections 6 and 7.
5.2 Determination of Pay-at-Risk: The Pay-At-Risk for each
Participant will equal a percentage of such Participant's annual base
salary, in effect as of September 30, 1997, as follows:
CEO = 100%
Corporate Vice Presidents and
Vice President/General Managers = 65%
Other Selected Participants = 40%
5.3 Reduction of Variable Compensation: Variable Compensation,
if any, which would otherwise be paid to the Participant in each of the
three years, 1998, 1999 and 2000 will be reduced by one-third of the
Pay-At-Risk. The reduction shall be made after the Variable
Compensation is determined in accordance with the terms of the plans
under which the Variable Compensation is paid and before any deduction
for deferral of Variable Compensation pursuant to the Compensation
Deferral Plan. If for any reason, the Variable Compensation in any year
is less than the required reduction, any deficit would be carried over
and a subsequent year's Variable Compensation shall be reduced as
approved by the CEO. Based on individual circumstances, the CEO may
allow Participants, other than the CEO, to have the Participant's
Variable Compensation reduced over a period longer than three years.
Upon the request of a Participant, the CEO may allow Participants
(including himself) to elect to have the Participant's Variable
Compensation reduced over a period shorter than three years.
5.4 Phantom Shares: The Pay-At-Risk will be converted to the
number of Phantom Shares determined by dividing the Pay-At-Risk by the
Closing Price on September 24, 1997, which price was $47.75 (the "Pay-
At-Risk Shares"). In the event such conversion results in a fractional
Pay-At-Risk Share, the Pay-At-Risk Shares shall be rounded to the next
highest whole number.
5.5 Dividends: The Pay-At-Risk Shares, the Reduced Pay-At-Risk
Shares and any Dividend Shares thereon will be credited with amounts
equal to dividends paid on the Corporation's common stock and deemed
reinvested in additional Phantom Shares (or fractions thereof) based
upon the Closing Price on the date such dividends are paid by the
Corporation. Whenever the Pay-At-Risk Shares or the Reduced Pay-At-Risk
Shares are forfeited under the terms of the Plan, the Dividend Shares
thereon shall also be forfeited. Whenever the value of the Pay-At-Risk
Shares or Reduced Pay-At-Risk Shares is to be paid to a Participant
under the terms of the Plan, the value of the Dividend Shares thereon
shall also be paid to the Participant.
Section 6: Awards
6.1 Overview: The objective performance goals for the
Performance Period are based on EPS and Recalculated EPS as set forth in
Section 6.2. The Award Schedule set forth in Section 6.3 and the terms
and conditions relating to the achievement of Awards set forth in
Section 6.4 are based upon achievement during the Performance Period of
such performance goals.
6.2 Performance Goals: The performance goals are the
achievement of EPS and Recalculated EPS of $4.00 or more during 1999 and
2000.
6.3 Award Schedule: Subject to the provisions of Section 6.4,
if the performance goals are achieved, a Participant will be granted
additional Phantom Shares (the "Award Shares") according to the
following Award Schedule:
If EPS in 1999 Then the Award Shares shall be a Multiple
or 2000 is: of Pay-At-Risk Shares or Reduced
Pay-At-Risk Shares as follows:
1999 2000
Less than $4.00 0 0
$4.00 to $4.24 1X 1X
$4.25 to $4.49 2X 2X
$4.50 to $4.74 3X 3X
$4.75 or more 4X 4X
Participants shall be granted the Award Shares, if any, as of the
first quarter of 2001, by multiplying a Participant's Pay-At-Risk
Shares, or Reduced Pay-At-Risk Shares, by the multiple set forth in the
Award Schedule. The grant of Award Shares under the Award Schedule
shall be based upon EPS and not Recalculated EPS.
6.4 Eligibility For Award Shares; Forfeiture of Pay-At-Risk
Shares or Reduced Pay-At-Risk Shares: Participants shall be eligible
for Award Shares subject to the following conditions:
(a) If EPS is less than $4.00 for 2000, there will be no grant of Award
Shares for 1999 or 2000 and the Pay-At-Risk Shares or the Reduced Pay-
At-Risk Shares shall be forfeited.
(b) If EPS is $4.00 or more for 2000, but Recalculated EPS is less than
$4.00 in 2000, then there will be no grant of Award Shares for 1999 or
2000 and the value of the Pay-At-Risk Shares or the Reduced Pay-At-Risk
Shares shall be paid to the Participant pursuant to Section 7.1.
(c) If EPS and Recalculated EPS are each $4.00 or more in 2000, a
Participant will be granted Award Shares in accordance with the Award
Schedule for the year 2000.
(d) If EPS and Recalculated EPS are each $4.00 or more in both 1999 and
2000, a Participant will be granted Award Shares in accordance with the
Award Schedule for both the years 1999 and 2000.
6.5 Recalculated EPS: For each of 1999 and 2000, EPS shall be
recalculated using the spreads between customer prices and the cost of
feedstocks for Unipol Polymers, Ethylene Glycol and Polypropylene in
1993. The Committee shall adopt procedures for determining Recalculated
EPS.
Section 7: Payments
7.1 Pay-At-Risk Shares: If a Participant does not forfeit the
Pay-At-Risk Shares or the Reduced Pay-At-Risk Shares pursuant to Section
6.4 or Section 8, then the value of the Pay-At-Risk Shares or the
Reduced Pay-At-Risk Shares shall be paid to the Participant in the first
quarter of 2002, on a date determined by the Corporation.
7.2 Awards: The value of one-third of the Award Shares shall
be paid to the Participant in the first quarter of each of 2002, 2003
and 2004, on a date determined by the Corporation.
7.3 Value: The value of the Pay-At-Risk Shares, the Reduced
Pay-At-Risk Shares and the Award Shares to be paid to the Participant
pursuant to Sections 7.1 and 7.2 shall be determined by using the
average of the Closing Prices on each trading day in January of the year
of payment.
7.4 Deferral: Participants can elect to defer any or all of
the payments under Sections 7.1 and 7.2 in accordance with the terms of
the Compensation Deferral Plan.
7.5 Stock Ownership: If a Participant becomes entitled to
receive the value of the Pay-At-Risk Shares, the Reduced Pay-At-Risk
Shares or Award Shares, and is employed by the Corporation on January
31, 2002 but does not meet by January 31, 2002 the stock ownership
guidelines as heretofore or hereafter established by the Corporation,
the Participant shall forfeit on such date 50% of each of (i) the Pay-
At-Risk Shares or Reduced Pay-At-Risk Shares, (ii) the Award Shares and
(iii) any Dividend Shares credited by January 31, 2002 on such Pay-At-
Risk Shares or Reduced Pay-At-Risk Shares and the Award Shares.
7.6 Pensionable Earnings: The amounts by which a Participant's
Variable Compensation is reduced for Pay-At-Risk will continue to be
counted as part of the Participant's pensionable earnings under the
Corporation's Retirement Program for the year earned in accordance with
the terms of the Retirement Program. Any payment of the Pay-At-Risk
Shares, Reduced Pay-At-Risk Shares or Award Shares under Section 7.1 and
7.2 of this Plan will not be considered pensionable earnings under the
Corporation's Retirement Program or for any other benefit plan purpose.
7.7 Dividends: The Award Shares and any Dividend Shares
thereon will be credited with amounts equal to dividends paid on the
Corporation's common stock and deemed reinvested in additional Phantom
Shares (or fractions thereof) based upon the Closing Price on the date
such dividends are paid by the Corporation. Whenever the Award Shares
are forfeited under the terms of the Plan, the dividends thereon shall
also be forfeited. Whenever the value of the Award Shares is to be paid
to a Participant under the terms of the Plan, the value of the Dividend
Shares thereon shall also be paid to the Participant.
7.8 Corporate Changes: In the event of any change in the
number of outstanding shares of common stock of the Corporation by
reason of any stock split, stock dividend, recapitalization, merger,
consolidation, combination or exchange of shares or other similar
corporate change or in the event of any special distribution to the
stockholders, the Committee shall make such equitable adjustments in the
number of Pay-At-Risk Shares, Reduced Pay-At-Risk Shares and Award
Shares, both under the Plan as a whole and with respect to individuals,
as the Committee determines are necessary and appropriate. Any such
adjustment shall be final and binding upon all Participants,
Beneficiaries, shareholders of the Corporation and any other person.
Section 8: Termination of Employment
8.1 If a Participant terminates employment before 2001, no
Award shall be paid and the Pay-At-Risk Shares shall be forfeited except
as set forth in Sections 8.2 and 8.3, unless the Committee determines it
is in the best interests of the Corporation to permit individual
exceptions.
8.2 In the case of a Participant's death, disability or
termination of employment by the Corporation other than for cause prior
to 1999, the Participant shall not be entitled to any Award Shares and
the then value of the portion of Pay-At-Risk Shares which represents the
Pay-At-Risk for which the Participant's Variable Compensation has
actually been reduced, shall be paid to the Participant within sixty
days after the date of such death, disability or termination of
employment. Such value shall be determined using the average Closing
Price on the first ten days of trading following the date of such death,
disability or termination of employment.
In the case of a Participant's Retirement prior to 1999, the
Participant shall not be entitled to any Award Shares and the value of
the portion of the Pay-At-Risk Shares which represents Pay-At-Risk for
which the Participant's Variable Compensation has actually been reduced,
shall be paid to the Participant as provided in Section 7.1. Such value
shall be determined pursuant to Section 7.3.
8.3 In the case of a Participant's death, disability,
Retirement or termination of employment by the Corporation other than
for cause during 1999 or 2000, the Pay-At-Risk Shares shall be reduced
to equal the Pay-At-Risk Shares multiplied by a fraction, the numerator
of which is the number of days from January 1, 1999 to, and including,
the date of death, disability, Retirement or such termination of
employment, and the denominator of which is 731, and further reduced, if
necessary, to represent only Pay-At-Risk for which the Participant's
Variable Compensation has actually been reduced ("Reduced Pay-At-Risk
Shares"). A grant of Award Shares, if any, to any such Participant
shall be based only upon the Reduced Pay-At-Risk Shares. The value of
the excess of the Pay-At-Risk Shares less the Reduced Pay-At-Risk Shares
(plus dividends on such excess), to the extent such excess represents
Pay-At-Risk for which the Participant's Variable Compensation has
actually been reduced, shall be paid to the Participant as follows: (i)
in the case of the Participant's death, disability or termination of
employment by the Corporation other than for cause, within sixty days
after the date of such death, disability or termination of employment;
and (ii) in the case of Retirement at the time provided for in Section
7.1. For the events described in clause (i) above, such value shall be
determined using the average Closing Price on the first ten days of
trading following the date of such death, disability or termination of
employment. For the event described in clause (ii) above, such value
shall be determined pursuant to Section 7.3. The value of the reduced
Pay-At-Risk Shares and the Award Shares, if any, shall be paid to the
Participant as provided in Section 7.1 and 7.2 and such value shall be
determined as provided in Section 7.3.
8.4 If a Participant terminates employment for any reason other
than termination of employment by the Corporation for cause after 2000,
a Participant shall be entitled to receive payments under this Plan in
accordance with the provisions of Section 7. If a Participant is
terminated for cause after 2000, the Participant shall forfeit any
amount scheduled to be paid under Sections 7.1 and 7.2 after the date of
termination of employment.
Section 9: Beneficiary Designation
9.1 A Participant's Beneficiary under the Plan, who shall be
entitled to receive the amount, if any, payable under the Plan upon the
Participant's death, shall be the Beneficiary designated, or deemed to
be designated, by the Participant under the Compensation Deferral Plan.
If a Participant does not participate in the Compensation Deferral Plan
or if a Participant does participate in the Compensation Deferral Plan
and has not designated or been deemed to have designated a Beneficiary
thereunder, then any payments payable to the Participant under this Plan
shall be distributed to the Participant's estate. If the Corporation is
in doubt as to the right of any person to receive such amount, the
Corporation may retain such amount, without liability for any interest
thereon, until the rights thereto are determined, or the Corporation may
pay such amount into any court of appropriate jurisdiction and such
payment shall be a complete discharge of the liability of the Plan and
the Corporation therefor.
Section 10: General Provisions
10.1 A Participant may not assign any payment under this Plan.
Any attempted assignment shall be null and void. For purposes of this
paragraph, any designation of, or payment to, a Beneficiary shall not be
deemed an assignment.
10.2 The Plan is intended to constitute an unfunded incentive
compensation arrangement for a select group of key personnel. Nothing
contained in the Plan, and no action taken pursuant to the Plan, shall
create or be construed to create a trust of any kind. A Participant's
right to receive any payments under this Plan shall be no greater than
the right of an unsecured general creditor of the Corporation. There
shall not vest in any Participant or Beneficiary any right, title, or
interest in and to any specific assets of the Corporation. All payments
under this Plan shall be paid from the general funds of the Corporation,
and no special or separate fund shall be established and no segregation
of assets shall be made to assure payment of such amount except to the
extent this Plan is covered by the Benefits Protection Trust between the
Corporation and State Street Bank and Trust Company, or any successor
trust.
10.3 Nothing contained in this Plan shall give any Participant
the right to continue in the employment of the Corporation, or affect
the right of the Corporation to discharge a Participant.
10.4 The Plan shall be construed and governed in accordance
with the laws of the State of New York.
10.5 The Corporation shall deduct from all amounts paid under
the Plan all federal, state, local and other taxes required by law to be
withheld with respect to such payments.
Section 11: Amendment, Suspension, or Termination
11.1 The Board reserves the right to amend, suspend or
terminate the Plan at any time; provided however, that any amendment,
suspension or termination shall not adversely affect the rights of
Participants or Beneficiaries to receive amounts they became entitled to
receive prior to such amendment, suspension or termination.
Section 12: Effective Date
12.1 The Plan shall be effective as of September 24, 1997.
UNION CARBIDE CORPORATION
By: /s/ M.A. Kessinger