Exhibit 10.26
CENTURY ALUMINUM COMPANY
1996 STOCK INCENTIVE PLAN
IMPLEMENTATION GUIDELINES
[PERFORMANCE SHARE AWARDS]
(AS AMENDED DECEMBER 14, 2001)
1. PURPOSE
These guidelines ("Guidelines") are intended to provide direction for
implementation of the Century Aluminum Company's (the "Company") 1996
Stock Incentive Plan (the "Plan") with respect to Performance Share
Awards. The Plan is intended to advance the interests of the Company by
enabling Executive Officers and other key employees of the Company and
its Subsidiaries to acquire proprietary interests in the Company, which
interests, to the extent deemed reasonably possible by the Committee,
are "performance-based compensation" within Section 162(m) of the
Internal Revenue Code of 1986, as amended, and the regulations
promulgated thereunder, through achievement by the Company of specified
future performance and earnings goals.
2. BACKGROUND AND GENERAL CONSIDERATIONS
The Company is a relatively small new entrant in a highly volatile
commodity business. Its goals are to grow and to achieve financial
results that meet or exceed those attained by its best-performing
competitors. The Company began its public existence in 1996 with
several competitive disadvantages. It was small, its principal
production facilities were high cost and approximately 40 years old,
and it inherited the dual financial burdens of funding one of the
nation's most under-funded pension plans and infusing needed capital
into facilities badly in need of the same. Faced with these goals and
challenges, Management has completed several important projects that
will contribute to reaching the Company's goals. It has profitably
divestited its non-profitable, capital-intensive, rolling business,
acquired interests in the lower-cost Mt. Holly and Hawesville reduction
plants and funded the pension plan, among other things.
In retrospect, and looking forward, it is clear Managements'
performance goals and objectives, and the weighting of those goals and
objectives, appropriately may vary widely in importance from
time-to-time. In order for the Implementation Guidelines to fulfill the
purposes described above, then, the Goals established by the Committee
likewise might vary in importance and weighting from time-to-time.
Furthermore, in order to deal with the uncertainties of the volatile
aluminum market, these Guidelines should provide flexibility to
encourage the Company to manage through commodity cycles, not manage to
them.
In general, Guideline Goals (as defined below) might include some or
all of the following, or other factors determined by the Committee to
be of material importance to the growth and profitability of the
Company, weighted or valued as determined by the Committee:
A. Strategic performance Goals, such as completing an
acquisition, disposing of non-performing assets,
achieving a strategic restructuring, competitively
securing a key resource (e.g., electrical power or
alumina) or developing key management through
recruiting, training and succession planning;
B. Cost reductions, such as lowering cash operating
costs by targeted amounts, or meeting other
operational improvement performance objectives such
as successfully completing capital expenditure
programs or contributing to the growth of the Company
through research, processing or manufacturing
improvements and marketing gains; and
C. Meeting financial performance targets that may be the
aggregate of each annual profit plan in any Plan
Period or may be expressed in terms of (i) earnings
per Share, (ii) pre-tax profits (either at the
Company or business unit level), (iii) net earnings
or net worth, (iv) return on equity or assets, (v)
any combination of the foregoing, or (vi) any other
standard or standards deemed appropriate by the
Committee.
3. DEFINITIONS
A. "Award" shall be as defined in Section 5.
B. "Award Targets" generally shall include elements of
all of the following, with the relative weighting of
each element to be as determined by the Committee;
however, the Committee retains full discretion to
include fewer than all of these elements in an Award
Target:
(1) The achievement of one or more strategic or other
Goals of the sort described in Section 2. A.; and
(2) The accomplishment of cost improvements or other
operational performance Goals as generally described
in Section 2. B; and
(3) The attainment by the Company of specified
financial performance Goals as described in Section
2. C.
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Goals set for Award Target purposes shall be guided by (but need not be
the same as) the goals and objectives for the Company as contained in
and submitted to the Board annually in Company three-year business
plans.
C. "Board" shall mean the Board of Directors of the
Company.
D. "Committee" shall mean the Compensation Committee of
the Board of Directors of the Company, two members or
more of whom shall be "outside directors" within the
meaning of Internal Revenue Code Section 162(m).
E. "Company" shall mean Century Aluminum Company.
F. "Participant" shall mean any full-time salaried
employee of the Company or a Subsidiary designated as
a Participant by the Committee.
G. "Performance Shares" shall have the meaning set forth
in the Plan and shall entitle the grantee to receive
one share of the Company's common stock for each
Performance Share awarded.
H. "Plan Periods" shall mean overlapping periods of
three consecutive calendar years each, the first of
which commenced January 1, 2001, and will end
December 31, 2003.
I. "Section" shall mean a section of these Guidelines.
J. "Subsidiary" shall mean any corporation the voting
stock of which is 50% or more is owned, directly or
indirectly, by the Company.
4. TERM
Implementation of these Guidelines shall commence with the Plan Period
that commenced as of January 1, 2001, and shall continue until such
time as terminated by the Board.
5. AWARD
A. AWARD. The Committee, on or before each May 15 during
each of the Plan Periods, shall make an award of
Performance Shares to each Participant, which award
shall be communicated in writing to each Participant
by the Chief Executive Officer of the Company.
Initially, Awards shall not be granted in amounts
that exceed the
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applicable percentages set forth below (i.e., 45% to
100%). Awards may be increased above those amounts
only at the end of a Plan Period, and then only in
the event (and to the extent) that the Committee
determines the Company has exceeded its Target or
Targets. For an Award to be granted at 150% of the
applicable percentage, the Committee must determine
that the Company has exceeded every one of its
Targets for the applicable Plan Period. Awards will
be issued as provided in Section 6. The Award for
each Participant shall be determined by creating a
monetary award, and converting that monetary award to
Performance Share units. The monetary award shall be
a percentage of such Participant's base salary
(within the allowable range), which percentage shall
be established by the Committee at the beginning of
each of the Plan Periods. The allowable percentages
are as follows:
PARTICIPANT'S POSITION RANGE OF ALLOWABLE PERCENTAGES
---------------------- ------------------------------
(of Base Salary)
CEO; President 45% to 100%
Executive VPs 45% to 80%
All Other VPs 45% to 60%
Business Unit Head
and Senior Staff 15% to 45%
The number of Performance Shares in a Participant's
Award shall be determined by dividing the
Participant's monetary award by the average closing
price for the Company's common stock for the month
preceding the month in which the grant is made.
B. AWARD TARGET; ADJUSTED AWARD; AMENDING TARGET
ASSUMPTIONS.
(1) COMMITTEE DISCRETION. Notwithstanding any
other provision of these Guidelines, the
Committee shall have full and complete
discretion to modify any award otherwise
payable hereunder in light of considerations
deemed appropriate by the Committee. This
discretion shall include the right to
determine that no award should be payable.
(2) AWARD TARGET. If the Award Targets are
achieved in their entirety within the
expectations of the Committee, then
Participants shall be issued the number of
shares equal to the number of Performance
Share units in Participants' Awards
initially granted as provided in Section 5.
A.
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(3) ADJUSTED AWARD. If some or all of the Award
Targets are exceeded, the Committee may
approve Awards in excess of the initial
grants; however, the Committee may not
approve Awards at the 150% level unless all
of the Award Targets have been exceeded. If
the Award Targets are not achieved in their
entirety, Awards shall be adjusted downward
from the initial Awards or eliminated
entirely, at the discretion of the
Committee, and Participants shall be issued
proportionally reduced number of shares, or
none at all.
(4) AMENDING AWARD TARGET ASSUMPTIONS.
Achievement of specified financial Award
Targets under Section 3. C. may depend on
the accuracy of the Company's forecasts of
LME primary aluminum prices. In such cases,
to the extent average LME prices vary, plus
or minus, by more than $50 from forecasted
LME aluminum prices in any year of a Plan
Period, the Committee will have the
discretion to appropriately amend the Award
Target to more accurately reflect LME
aluminum prices for such year, and the
Company's performance will be measured
against such amended Award Target.
6. ISSUANCE OF AWARDS
A. On or before March 15 of each calendar year (or, if
required, such later date when the annual audited
financial statement of the Company are available) the
Company shall, with respect to the Plan Period that
has just ended, issue to each Participant Performance
Shares in an amount equal to such Participant's Award
or Adjusted Award.
B. Except as provided in Section 6.C., no payment with
respect to any Award shall be made to a Participant
who is not employed full time by the Company or a
Subsidiary on the 31st day of December preceding the
date of issuance provided in Section 5.A.
C. In the event of death, permanent disability or
retirement of a Participant in any year following an
Award, the Participant or his representative or
designated beneficiaries shall be entitled to receive
a portion of the amount calculated under Section
6.A., and payable in the year following death,
permanent disability or retirement, determined by
multiplying such amount by a fraction, the numerator
of which is the number of weeks of full employment
during any Plan Period and the denominator of which
is 156 for any Plan Period.
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D. If an employee is selected as a Participant at any
time other than the beginning of any Plan Period,
such Participant shall be entitled to receive a
portion of the amount calculated under Section 6.A.
by multiplying such amount by a fraction the
numerator of which is the number of weeks that such
employee was a Participant under the plan during any
Plan Period and the denominator of which is 156. For
the purposes of this Section 6.D. an employee shall
be deemed to have been a Participant under the Plan
as of January 1 of the calendar year in which such
employee was first selected as a Participant if such
selection occurred on or before May 15 of such
calendar year, and if such selection occurred after
May 15 of any calendar year the employee shall be
deemed to have first become a Participant on January
1 of the calendar year immediately following the
employee's election as a Participant.
7. ADMINISTRATION
A. Each grant of a Performance Share shall be evidenced
by an agreement executed on behalf of the Company by
an officer designated by the Compensation Committee
and accepted by the recipient. Such agreement shall
state that such award is subject to all the terms and
provisions of the Plan.
B. Full power and authority to amend, modify, terminate,
construe, interpret and administer these Guidelines
shall be vested in the Committee. Any interpretation
of these Guidelines by the Committee or any
administrative act by the Committee shall be final
and binding on all Participants.
8. NON-ASSIGNABILITY
Nothing in these Guidelines shall be deemed to make rights granted
pursuant hereto assignable or transferable by a Participant except
pursuant to the laws of descent and distribution. No rights under these
Guidelines may be hypothecated or encumbered in any manner whatsoever,
and creditors of Participants shall have no right or power to obtain
all or any portion of grants made hereunder. Any attempted assignment,
hypothecation or encumbrance by a Participant shall be null and void.
Each Participant may, however, designate one or more beneficiaries
under the Plan on a form to be supplied by the Secretary of the
Company.
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Adopted by the Board on December 14, 2001.
/s/ Craig A. Davis
------------------------------
Craig A. Davis, Chairman
/s/ Gerald J. Kitchen
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Gerald J. Kitchen, Secretary
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