Exhibit 10.18
FORM OF
AWARD DESCRIPTION AND AGREEMENT FOR
PERFORMANCE SHARE AWARDS
GRANTED UNDER THE
ARCH CHEMICALS, INC. 1999 LONG TERM INCENTIVE PLAN
GRANTED ________________
1. Terms
The terms and conditions of the Performance Shares (as defined below) are
contained in the Award Certificate evidencing the grant of such shares, this
Award Agreement (as defined below) and in the Arch Chemicals, Inc. 1999 Long
Term Incentive Plan (the "Plan") and such resolutions, rules and policies
previously or hereinafter adopted by the Compensation Committee of the Board of
Directors of Arch Chemicals, Inc. from time to time.
2. Definitions
As used herein:
"Award Agreement" means this Award Description and Agreement.
"Measurement Date" means with respect to a Performance Cycle, the last day
of the second calendar year of the Performance Cycle and the last day of
the third calendar year of such Performance Cycle.
"Participant" means a Salaried Employee granted an award of Performance
Shares under the Plan.
"Payment Schedule" means with respect to a Performance Share, such
Performance Share's schedule as set forth in Exhibit I hereto with respect
to the Performance Cycle to govern determination of the Payment Value of
such Performance Share.
"Payment Value" means with respect to a Performance Share at any given
time, the portion, if any, of such Performance Share which a Participant
has earned at such time under the applicable Payment Schedule during the
Performance Cycle relating to that Performance Share.
"Performance Cycle" means with respect to Performance Shares, a period of
three fiscal years (beginning with the fiscal year in which such
Performance Shares are granted) over which such Performance Shares are to
be earned in accordance with the Payment Schedule; provided a Performance
Cycle shall end upon full payment of the Performance Shares relating
thereto.
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"Performance Goal" means with respect to a particular Performance Share
the particular goal established by the Committee with respect to a
particular performance measure for such Performance Share as set forth in
resolutions of the Committee as adopted from time to time.
"Performance Share" means a unit denominated as one phantom share of Arch
Chemicals, Inc. Common Stock, granted as a Performance Award pursuant to
Section 6(c) of the Plan.
"Valuation Date" means (i) for purposes of paragraphs 4(d) and 4(f) below,
the fourth business day following the public release of the Company's
annual earnings relating to the year in which the Measurement Date that
has triggered the payout of the Performance Shares has occurred and (ii)
in connection with a payment arising as a result of a Change in Control,
on the first business day immediately prior to the Change in Control (or
if in the case of clause (i) or (ii) hereof the Arch Chemicals, Inc.
Common Stock is not traded on such day, the first preceding day on which
such stock is traded).
Other capitalized terms utilized but not defined herein have the meanings
specified in the Plan.
3. Performance Share Awards
Performance Shares which are awarded to a Participant shall have a Payment
Value during a Performance Cycle determined on the basis of the
performance of Arch over such Performance Cycle in accordance with the
applicable Payment Schedule. The Payment Schedules, Performance Cycles and
performance measures applicable to Performance Shares are set forth in
Exhibit I hereto. Except as may be otherwise set forth in the Plan or
herein, no Performance Share may be earned prior to the Measurement Date
of the applicable Performance Cycle and then only to the extent set forth
in the applicable Payment Schedule.
4. Vesting and Payment
(a) Except as otherwise provided in the Plan, a Participant's interest in the
Payment Value of Performance Shares awarded to him or her shall vest, if
at all, only on the Measurement Date of an applicable Performance Cycle,
as the case may be, for such Performance Shares and only to the extent
earned and payable at such time in accordance with the Payment Schedule.
(b) The Payment Value of each Performance Share at a given time shall be the
portion, if any, of such Performance Share called for under the Payment
Schedule at such time applicable to such Performance Share's Performance
Cycle. Each vested Performance Share shall be payable to a Participant in
cash only.
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(c) The portion of each Performance Share not earned by the end of the
Performance Cycle relating to such Performance Share shall be forfeited.
(d) The total amount of Payment Value due and earned by a Participant on the
Measurement Date of an applicable Performance Cycle shall be paid promptly
but no later than the tenth business day after the Valuation Date except
as specifically otherwise provided in the Plan or herein or by the
Committee.
(e) The Participant may defer payment of Payment Values until such date,
before or after retirement or other termination of employment, as provided
in, and subject to, the Company's Employee Deferral Plan.
(f) For Payment Values of Performance Shares that are to be paid in cash, the
Arch Chemicals, Inc. Common Stock will be valued at the average of the
high and low sales prices thereof as reported on the consolidated
transaction reporting system for New York Stock Exchange issues on the
Valuation Date.
(g) With respect to Participants who are "covered employees" within the
meaning of Section 162(m) of the Code, the payment of the Payment Value of
the Performance Shares held by such Participants is expressly conditioned
upon the following events having occurred prior to such payment if
required by such Section: (i) the material terms of the Plan, including
the performance measures, shall have been disclosed to and approved by
Arch's shareholders and (ii) the Committee shall have certified that the
performance measures and other material terms of the Performance Shares
were satisfied in accordance with the terms of the Award Certificate, this
Award Description and the Plan and the payout is consistent therewith. The
Performance Share Awards are hereby designated as "performance-based"
compensation.
5. Termination of Employment
(a) A Participant's outstanding Performance Shares not yet earned and payable
under the Payment Schedule relating to a Performance Cycle shall be
forfeited if the Participant ceases to be an employee of the Company or
any subsidiary of the Company for any reason before the end of such
Performance Cycle except if the Committee provides or has provided
otherwise (or if delegated by the Committee to the Chief Executive
Officer, the Chief Executive Officer so provides).
(b) With respect to any non-forfeited Performance Shares of a terminated
Participant relating to incomplete Performance Cycles, he or she shall be
entitled to the Payment Value at the time provided in and subject to the
applicable Payment Schedule if the Committee (or its delegatee) so
decides.
6. Change in Control
Unless the Committee or the Board has acted otherwise, upon a Change in
Control, outstanding Performance Shares shall become vested, deemed earned
in full and
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promptly paid to the Participants in cash (but no later than the tenth
business day after the Change in Control), in each case without regard to
payment schedules and notwithstanding that the applicable performance
cycle shall not have been completed.
7. Tax Withholding
From any payout of the Performance Shares or Payment Values, federal,
state or local taxes as may be applicable to such payout ("withholding
taxes") shall be deducted for withholding taxes to be paid by the
Participant.
8. Dividend Equivalents
Unless and until the Committee decides otherwise and while a Performance
Share is outstanding, within five business days of each cash dividend
payment date relating to Company Common Stock, the Company will pay to a
Participant for each outstanding Performance Share so held on such
dividend payment date a cash payment equal to the cash dividend payment
made on one share of Company Common Stock on such cash dividend payment
date. Performance Shares carry no voting rights nor shall the holder
thereof be entitled to dividends or other rights enjoyed by shareholders
except as otherwise provided in this Section 8.
9. Miscellaneous
(a) By acceptance of the award of Performance Shares, each employee agrees
that such award is special compensation, and that any amount paid under
the Award Agreement will not affect
(i) the amount of any pension under any pension or retirement plan in
which he or she participates as an employee of the Company,
(ii) the amount of coverage under any group life insurance plan in which
he or she participates as an employee of the Company,
(iii) the benefits under any other benefit plan of any kind heretofore or
hereafter in effect, under which the availability or amount of
benefits is related to compensation.
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EXHIBIT I
Performance Cycle: Ending on [end of three calender years beginning with
the grant year].
Performance Measure: [Return on Equity ("ROE")]* for the calendar year
ending at a Measurement Time.
Payment Schedule:
Payout Units Forfeited
------ ---------------
[ROE]* Equal to or Greater Than the Performance 100%** Not Applicable
Goal for Year Two at end of Year Two**
[ROE]* Equal to or Greater Than the Performance 100% if no Not Applicable
Goal for Year Three at end of Year Three payout for Year
Two occurs;
otherwise, not
applicable.
[ROE]* That is Less Than the Performance Goal 0% 100%
for Year Three at the End of Year Three and
no payout has occurred
* ROE for grants made in 2003, 2004 and 2005. Future grants may use ROE or
another performance measure permitted by the Plan.
** Provided such payout will not occur if it would cause any other performance
share award or performance retention share award granted under the Plan prior to
this award to not payout. In such case, ROE shall not be measured for this award
at the end of Year Two.
No more than one payout may occur for Performance Shares with respect to the
Performance Cycle.