EXHIBIT 10v
1996
ANNUAL MANAGEMENT INCENTIVE PROGRAM
USG CORPORATION
PURPOSE
To enhance USG Corporation's ability to attract, motivate, reward and
retain key employees of the Corporation and its operating subsidiaries and to
strengthen the existing mutuality of interest between such key employees and the
Corporation's stockholders by offering such key employees, who discharge their
accountabilities in a manner which makes a measurable contribution to the
Corporation's earnings, incentive award opportunities.
INTRODUCTION
This Annual Management Incentive Program is in effect from January 1, 1996
through December 31, 1996.
ELIGIBILITY
Individuals eligible for participation in this Program are those officers and
other key employees occupying management positions having 775 or more points as
determined by the Corporation's position evaluation system. Employees who
participate in any other annual incentive program of the Corporation or any of
its subsidiaries are not eligible to participate in this Program.
GOALS
For the 1996 Annual Management Incentive Program, goal income targets for USG
Corporation, Subsidiaries and Profit Centers will be determined by the
Compensation and Organization Committee after considering recommendations
submitted from USG Corporation, Operating Subsidiaries and Profit Centers
respectively. Additionally, Working Capital Management Targets will be
established. Profit Center goals will be established which are consistent with
Corporate and Operating Subsidiary goals. Except in the case of a Named
Executive Officer (as defined in the Administrative Guidelines below), Profit
Center goals may be adjusted by the Chairman of USG Corporation if business
conditions or other significant unforeseen circumstances beyond the control of
the Profit Center have a major impact on opportunity.
AWARD VALUES
For the 1996 Annual Management Incentive Program, position par values are based
on level of accountability and are expressed as a percent of approved annualized
position reference point (midpoint). Resulting award opportunities represent a
fully competitive incentive opportunity for 100% (target) achievement of
Corporate, Operating Subsidiary and/or Profit Center goals:
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Position Par Value
USG Corporation
Chairman - USG Corporation 65% of Reference Point
President & CEO - USG Corporation 65% of Reference Point
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Executive Vice President North American Gypsum; 55% of Reference Point
President & CEO, U.S. Gypsum Company
Executive Vice President Worldwide Ceilings;
President & CEO, USG Interiors, Inc.
Executive Vice President International Development
and Distribution, USG Corporation
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USG CORPORATION 50% Of Reference Point
Senior Vice President & General Counsel
Senior Vice President & Chief Administrative Officer
Senior Vice President & Chief Financial Officer
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USG CORPORATION & OPERATING SUBSIDIARIES
OFFICERS AND MANAGERS
Vice President, USG Corporation; 45% of Reference Point
President & CEO, L&W Supply Corporation
President & CEO, CGC, Inc 40 % of Reference Point
Executive Vice President & COO, U.S. Gypsum Company
Vice President & Treasurer, USG Corporation
Vice President & Controller; Chief Financial Officer
North American Gypsum Group, USG Corporation
Vice President Research, USG Corporation
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GENERAL MANAGERS (PROFIT CENTER HEADS)
Sales of $50 Million and over 30% of Reference Point
Sales Under $50 Million 25% of Reference Point
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USG CORPORATION, OPERATING SUBSIDIARIES & PROFIT CENTERS
OFFICERS AND MANAGERS
Position Reference Point: $174,120 and over 35% of Reference Point
Position Reference Point: $154,005 - $174,119 30% of Reference Point
Position Reference Point: $125,085 - $154,004 25% of Reference Point
Position Reference Point: $111,600 - $125,084 20% of Reference Point
Position Reference Point: $ 89,400 - $111,599 15% of Reference Point
Position Reference Point: Below $89,400 10% of Reference Point
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AWARDS
Incentive awards for all participants in the 1996 Annual Management Incentive
Program will be reviewed and approved by the Compensation and Organization
Committee of the USG Corporation Board of Directors.
For all participants, the annual incentive award opportunity is the annualized
position reference point (midpoint) in effect at the beginning of the calendar
year multiplied by the applicable position par value percent.
Incentive awards for 1996 will be based on
o GOAL INCOME: (net sales less cost of sales and selling and administrative
expenses) based on the Corporation's year-end financial statements.
o WORKING CAPITAL MANAGEMENT: average monthly Net Working Capital (net
accounts receivable plus FIFO inventory minus accounts payable) as a percent of
annual net sales.
o Personal Performance (except in the case of the nine (9) most senior
executives whose awards are based solely on achievement of financial results).
o Except in the case of a Named Executive Officer, other appropriate
performance measures as approved by the Compensation and Organization Committee
of the Board of Directors.
1. For participants to qualify for the USG Corporation segment of an award,
USG Corporation must achieve 75% or higher of the Corporation's goal income
target. For Group, Subsidiary and Profit Center participants to qualify for
the Group/Subsidiary/ Profit Center segment of an incentive opportunity,
the respective Group, Subsidiary or Profit Center must achieve 75% or
higher of its goal income target. The Compensation and Organization
Committee may eliminate awards to any participant who fails to receive a
personal performance rating of "Achieved Expectations" (85) or better under
the Corporation's Performance Planning and Review system (PPR).
2. Once the threshold qualifiers for an incentive award are satisfied, basic
incentive award amounts will be determined by Corporate performance
achievement which meets or exceeds 75% of the Corporate goal income or by
Group, Subsidiary or Profit Center achievements which meet or exceed 75% of
their respective goal income targets, according to the following schedule:
Goal Goal Income Adjustment Factor
Income For Corporate, Group, Subsidiary
Achievement or Profit Center Performance
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Below 75% 0%
75% 50%
80% 60%
90% 80%
100% 100%
110% 120%
120% 140%
140% 180%
150% 200%
3. Basic incentive award amounts are adjusted to the extent that the
percent of net working capital to net sales is reduced from or exceeded
by the 1995 actual level. Achievement of working capital management
targets will be measured for USG Corporation, North American Gypsum
Group and Worldwide Ceilings Group. Each 0.1 reduction or increase in
the percentage will respectively increase or decrease basic incentive
awards by 2% of par according to the following schedule:
Average Working Capital Percent of Net Sales
Reduction in Increase in
Percentage Award Percentage Award
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0.0 0%
0.1 + 2% 0.1 - 2%
0.5 + 10% 0.5 - 10%
1.0 + 20% 1.0 - 20%
2.0 + 40% 2.0 - 40%
3.0 + 60% 3.0 - 60%
4.0 + 80% 4.0 - 80%
5.0 +100% 5.0 -100%
4. Except with respect to the nine (9) most senior executives, including
the Named Executive Officers, whose awards are based solely on
achievement of Goal Income and Working Capital Management Targets,
incentive awards based upon achievement of Goal Income and adjusted for
achievement of Working Capital Management Targets will be further
adjusted based upon the eligible participants' individual Incentive
Performance Rating derived from the accomplishment of incentive
performance targets according to the following schedule:
Individual Personal Performance
Incentive Rating Adjustment Factor
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Distinguished 105.0
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102.5
Excellent 100.0
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97.5
Good 95.0
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The maximum incentive award under this Program is 200% of par.
5. Basic incentive award opportunities and calculations of awards for
participants will be based on the achievement of specific Corporate,
Group, Subsidiary and/or Profit Center goal income targets as displayed
below or, except with respect to Named Executive Officers, as otherwise
may be established subject to approval of the Chairman:
Working Capital
Incentive Award Management
Participants Opportunity/Calculation Measure
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USG Corporation 33 1/3% USG Corporation Performance USG Corp
33 1/3% North American Gypsum Performance NAG
33 1/3% Worldwide Ceilings Performance WWC
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North American Gypsum
Executive VP, North American Gypsum; 33 1/3% USG Corporation Performance USG Corp
President & CEO, U.S. Gypsum Co 33 1/3% North American Gypsum Performance NAG
VP & Controller; CFO North American 33 1/3% Worldwide Ceilings Performance WWC
Gypsum Group, USG Corporation
General Mgr - IGD 20% North American Gypsum Performance NAG
General Mgr - Materials Division 30% Subsidiary Performance NAG
Profit Center Staff 50% Profit Center/Division Performance NAG
VP & General Mgr, CGC, Inc
(Subject to subsidiary discretion)
President & CEO, CGC, Inc 20% USG Corporation Performance USG Corp
President & General Mgr, YPSA 30% North American Gypsum Performance NAG
U.S. Gypsum Staff 50% Subsidiary Performance NAG
CGC, Inc Staff
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Worldwide Ceilings
Executive VP, Worldwide Ceilings; 33 1/3% USG Corporation Performance USG Corp
President & CEO, USG Interiors, Inc 33 1/3% North American Gypsum Performance NAG
33 1/3% Worldwide Ceilings Performance WWC
USG Interiors, Inc Staff 20% USG Corporation Performance USG Corp
USG International, Ltd Staff 30% Worldwide Ceilings Performance WWC
50% Subsidiary/Region Performance WWC
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L&W Supply Corporation
President & CEO 33 1/3% USG Corporation Performance USG Corp
33 1/3% North American Gypsum Performance NAG
33 1/3% Worldwide Ceilings Performance WWC
L&W Supply Corporation Staff 20% USG Corporation Performance USG Corp
30% North American Gypsum Performance NAG
50% Subsidiary Performance NAG
Director Operations 20% North American Gypsum Performance NAG
General Mgr Operations 30% Subsidiary Performance NAG
50% Profit Center/Division Performance NAG
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6. SPECIAL AWARDS
In addition to the incentive opportunity provided by this Program, a
special award may be recommended for any participant or
non-participant, other than a Named Executive Officer, who has made an
extraordinary contribution to the Corporation's welfare or earnings.
7. STRATEGIC TARGETS
In select cases, not including Named Executive Officers and other
Corporate Officers and Subsidiary CEOs, where the participant can make
an individual, measurable and quantifiable contribution which will have
significant impact on the Corporation's financial performance and
profitability, up to 25% of the position par or opportunity may be
allocated to personal performance. Such allocations require approval of
the Chairman of USG Corporation at the beginning of the Program year.
For Corporate, Group, Subsidiary and Profit Center participants with a
25% strategic award allocation, the Incentive Award
Opportunity/Calculation will be determined at the beginning of the
Program year.
The strategic award opportunity which is available for personal
performance will be adjusted to the extent that actual performance
exceeds or fails to meet the targeted goal.
GENERAL PROVISIONS
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1. The Compensation and Organization Committee of USG Corporation's Board
of Directors shall review and approve the awards recommended for
officers and other employees who are eligible participants in the 1996
Annual Management Incentive Program. The Compensation and Organization
Committee shall submit to the Board of Directors, for their
ratification, a report of the awards for all eligible participants
including corporate officers approved by the Committee in accordance
with the provisions of the Program.
2. The Compensation and Organization Committee shall have full power to
make the rules and regulations with respect to the determination of
achievement of goals and the distribution of awards. No awards will be
made until the Compensation and Organization Committee has certified
goal achievement and applicable awards in writing.
3. The judgement of the Compensation and Organization Committee in
construing this Program or any provisions thereof, or in making any
decision hereunder, shall be final and conclusive and binding upon all
employees of the Corporation and its subsidiaries whether or not
selected as beneficiaries hereunder, and their heirs, executors,
personal representatives and assigns.
4. Nothing herein contained shall limit or affect in any manner or degree
the normal and usual powers of management, exercised by the officers
and the Board of Directors or committees thereof, to change the duties
or the character of employment of any employee of the Corporation or to
remove the individual from the employment of the Corporation at any
time, all of which rights and powers are expressly reserved.
5. No award will be paid to a Program participant who is not a regular
full-time employee in good standing at the end of the calendar year to
which the award applies; except an award which would otherwise be
payable based on goal achievement may be recommended in the event of
retirement, disability or death or in the event the participant is
discharged without cause from the employment of the company during the
year.
6. The awards made to employees shall become a liability of the
Corporation or the appropriate subsidiary as of December 31, 1996 and
all payments to be made hereunder will be made as soon as practicable
after said awards have been approved.
ADMINISTRATIVE GUIDELINES
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1. Award values will be based on position reference points (midpoints) in
effect for each qualifying position at the beginning of the year. Any
change in duties, dimensions or responsibilities of a current position
resulting in a new evaluation and an increase or decrease in reference
points will be applied for Incentive Program purposes on a prorata
basis with the respective reference point and par value to apply for
the actual number of full months of service at each evaluation except
for such a change with respect to a Named Executive Officer, in which
case any change in reference points and par value, for any reason,
shall not become effective until January 1 of the following year.
2. As provided by the Program, no award is to be paid any participant who
is not a regular full-time employee in good standing at the end of the
calendar year to which the award applies. However, in the event an
eligible participant with three (3) or more months of active service in
the Program year subsequently retires, becomes disabled or dies, or is
discharged from the employment of the Company without cause, the
participant (or beneficiary) may receive an award which would otherwise
be payable based on goal achievement, prorated for the actual months of
active service during the year.
3. Employees participating in any other incentive or bonus program of the
parent Corporation or a Subsidiary who are transferred during the year
to a position covered by the Annual Management Incentive Program
(other than a Named Executive Officer) will be eligible to receive a
potential award prorated for actual full months of service in the two
positions with the respective incentive program and par values to
apply. For example, a Marketing Manager promoted to Director,
Marketing on August 1, will be eligible to receive a prorata award for
seven months based on the Marketing Manager Plan provisions and
values, and for five months under the Annual Incentive Program
provisions and par values.
4. In the event of transfer of an employee (other than a Named Executive
Officer) from an assignment which does not qualify for participation in
any incentive or bonus plan to a position covered by the 1996 Annual
Management Incentive Program, the employee is eligible to participate
in the Annual Incentive Program with any potential award prorated for
the actual months of service in the position covered by the Program
during the year. A minimum of three months of service in the eligible
position is required.
5. Participation during the current Program year for individuals employed
from outside the Corporation is possible with any award to be prorated
for actual full months of service in the eligible position. A minimum
of three full months of service is required for award consideration.
6. Exceptions to established administrative guidelines can only be made by
the Compensation and Organization Committee and only with respect to
participants other than Named Executive Officers.
7. For purposes of this Program, a "NAMED EXECUTIVE OFFICER" will include
any executive officer who is deemed a "named executive officer" for
1996 under Item 402 (a)(3) of Regulation S-K under the Securities
Exchange Act of 1934 and was employed by the Corporation or a
Subsidiary on the last day of the year.