EXHIBIT 10.4
ALLEGHENY TECHNOLOGIES INCORPORATED
KEY EXECUTIVE PERFORMANCE PLAN
EFFECTIVE AS OF JANUARY 1, 2004
ARTICLE I. ADOPTION AND PURPOSE OF THE KEY EXECUTIVE PERFORMANCE PLAN
1.01 ADOPTION. This Key Executive Performance Plan is adopted by the
Personnel and Compensation Committee of the Board of Directors as a part
of the Allegheny Technologies Incorporated executive compensation program
effective January 1, 2004. The KEPP Payments, if any, earned under this
Plan are intended as performance based compensation within the meaning of
Section 162(m) of the Internal Revenue Code of 1986, as amended, as
incentive compensation determined solely with reference to attainment in
predetermined levels of Earnings and Operational Goals within the relevant
Performance Period.
1.02 PURPOSE. The purposes of the KEPP are (i) to direct the focus
of key management employees to the achievement of goals deemed necessary
for the success of the Corporation, (ii) to assist the Corporation in
retaining and motivating selected key management employees of the
Corporation and its subsidiaries who will contribute to the success of the
Corporation and (iii) to reward key management employees for the overall
success of the Corporation as determined with reference to predetermined
levels of Earnings of the Corporation and attainment of Operational Goals.
The KEPP is intended to act as an incentive to participating key
management employees to achieve long-term objectives that will inure to
the benefit of all stockholders of the Corporation measured in terms of
achievement of predetermined levels of Earnings of the Corporation and
attainment of Operational Goals.
1.03 PLAN DOCUMENT. This KEPP plan document is intended as the plan
document as adopted by the Committee, which will govern all Performance
Periods of the KEPP beginning in or after 2004.
ARTICLE II. DEFINITIONS
For purposes of this Plan, the capitalized terms set forth below shall
have the following meanings:
2.01 AWARD means an opportunity to earn a KEPP Payment in a
particular Performance Period. Each Award shall be denominated in dollars
that can be earned upon attainment of predetermined Earnings thresholds
(Level 1) and the maximum amount that may be paid with respect to
Operational Goals before the application of Negative Discretion (Level 2).
2.02 AWARD AGREEMENT means a written agreement between the
Corporation and a Participant or a written acknowledgment from the
Corporation specifically setting forth the terms and conditions of a KEPP
Award granted to a Participant pursuant to Article VI of this Plan.
2.03 BOARD means the Board of Directors of the Corporation.
2.04 EARNINGS means the earnings of the Corporation determined in
accordance with generally accepted accounting principles.
2.05 CAUSE means a determination by the Committee that a Participant
has engaged in conduct that is dishonest or illegal, involves moral
turpitude or jeopardizes the Corporation's right to operate its business
in the manner in which it is now operated.
2.06 CHANGE IN CONTROL means any of the events set forth below:
(a) The acquisition in one or more transactions, other than
from the Corporation, by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of a number of Corporation Voting Securities in excess of 25% of the
Corporation Voting Securities unless such acquisition has been approved by
the Board; or
(b) Any election has occurred of persons to the Board that
causes two-thirds of the Board to consist of persons other than (i)
persons who were members of the Board on January 1, 2001 and (ii) persons
who were nominated for election as members of the Board at a time when
two-thirds of the Board consisted of persons who were members of the Board
on January 1, 2001; provided, however, that any person nominated for
election by the Board at a time when at least two-thirds of the members of
the Board were persons described in clauses (i) and/or (ii) or by persons
who were themselves nominated by such Board shall, for this purpose, be
deemed to have been nominated by a Board composed of persons described in
clause (i); or
(c) Approval by the stockholders of the Corporation of a
reorganization, merger or consolidation, unless, following such
reorganization, merger or consolidation, all or substantially all of the
individuals and entities who were the respective beneficial owners of the
Outstanding Stock and Corporation Voting Securities immediately prior to
such reorganization, merger or consolidation, following such
reorganization, merger or consolidation beneficially own, directly or
indirectly, more than 60% 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 or
trustees, as the case may be, of the entity resulting from such
reorganization, merger or consolidation in substantially the same
proportion as their ownership of the Outstanding Stock and Corporation
Voting Securities immediately prior to such reorganization, merger or
consolidation, as the case may be; or
(d) Approval by the stockholders of the Corporation of (i) a
complete liquidation or dissolution of the Corporation or (ii) a sale or
other disposition of all or substantially all the assets of the
Corporation.
2.07 COMMITTEE means the Personnel and Compensation Committee of the
Board.
2.08 CORPORATION means Allegheny Technologies Incorporated, a
Delaware corporation, and its successors.
2.09 CORPORATION VOTING SECURITIES means the combined voting power
of all outstanding voting securities of the Corporation entitled to vote
generally in the election of the Board.
2.10 DATE OF AWARD means the date as of which an Award is granted in
accordance with Article VI of this Plan.
2.11 DISABILITY means any physical or mental injury or disease of a
permanent nature which renders a Participant incapable of meeting the
requirements of the employment performed by such Participant immediately
prior to the commencement of such disability. The determination of whether
a Participant is disabled shall be made by the Committee in its sole and
absolute discretion. Notwithstanding the foregoing, if a Participant's
employment by the Corporation or an applicable subsidiary terminates by
reason of a disability, as defined in an Employment Agreement between such
Participant and the Corporation or an applicable subsidiary, such
Participant shall be deemed to be disabled for purposes of the KEPP.
2.12 EFFECTIVE DATE means January 1, 2004.
2.13 EXCHANGE ACT means the Securities Exchange Act of 1934, as
amended.
2.14 KEPP PAYMENT means the amount actually earned by a Participant
in a particular Performance Period. Each KEPP Payment shall be the sum of
the amounts earned by a Participant during a Performance Period as Level I
and Level 2 achievement.
2.15 LEVEL 1 means that portion of an Award that may be earned based
on attainment of Earnings.
2.16 LEVEL 2 means that portion of an Award that may be earned,
after application of Negative Discretion by the Committee, based on
attainment of Operational Goals. The Level 2 portion of any Award shall be
denominated in the maximum amount that may be earned with respect to
Operational Goals prior to the application of Negative Discretion.
2.17 NEGATIVE DISCRETION means the power of the Committee to be
exercised solely in the Committee's discretion to reduce the Level 2
portion of any Award. It is anticipated that the Committee will review
with the Chief Executive Officer of the Corporation the relative
attainment of Operational Goals during a particular Performance Period
before the Committee exercises its Negative Discretion.
2.18 OPERATIONAL GOALS means the goals set by the Committee at the
commencement of a Performance Period to be attained by the Participants
during the course of a particular Performance Period. Operational Goals
will be set forth in terms of operating objectives and/or criteria, which
may or may not be earnings measures that, in the judgment of the Committee
after consultation with the Chief Executive Officer of the Corporation,
will enhance the success of the Corporation during and beyond a particular
Performance Period.
2.19 PARTICIPANT means any key management employee selected by the
Committee, pursuant to Section 5.01 of this Plan, as eligible to
participate under the KEPP for any one or more Performance Period.
2.20 PERFORMANCE PERIOD means a period of more than one fiscal year
of the Corporation over which the attainment of Earnings and Operational
Goals shall be measured.
2.21 PLAN or KEPP means the Key Executive Performance Plan as set
forth in this plan document or as the same may be amended from time to
time.
2.22 RETIREMENT means, with the consent of the Corporation, a
termination of employment with the Corporation and each subsidiary of the
Corporation at or after (i) attaining age 55 and (ii) completing five
years of employment with the Corporation and/or any subsidiary of the
Corporation.
2.23 WITHHOLDING OBLIGATIONS means the amount of federal, state and
local income and payroll taxes the Corporation determines in good faith
must be withheld with respect to a KEPP Payment. Withholding Obligations
may be settled by the Participant, as permitted by the Committee in its
discretion, in cash, previously owned shares of common stock of the
Corporation or any combination of the foregoing.
ARTICLE III. ADMINISTRATION
In addition to any power reserved to the Committee under the
governing documents of the Corporation, the KEPP shall be administered by
the Committee, which shall have exclusive and final authority and
discretion in each determination, interpretation or other action affecting
the KEPP and its Participants. The Committee shall have the sole and
absolute authority and discretion to interpret the KEPP, to amend or
modify this Plan for the KEPP, to select, in accordance with Section 5.01
of this Plan, the persons who will be Participants hereunder, to set all
Earnings thresholds and
Operational Goals, to determine all performance criteria, levels of Awards
and KEPP Payments payable, to determine, after review of the Corporation's
financial reports, the degree to which any threshold of Earnings has been
achieved for a Performance Period with respect to the Level 1 portion of
any Award, to review the attainment of Operational Goals and exercise
Negative Discretion with respect to the Level 2 portion of any Award, to
impose such conditions and restrictions as it determines appropriate and
to take such other actions and make such other determinations in
connection with the KEPP as it may deem necessary or advisable.
ARTICLE IV. OVERVIEW OF KEPP
4.01 CASH BONUS PLAN. KEPP is designed to pay cash bonuses to
participating key executives after the end of a Performance Period based
on the level (i) of achievement of predetermined Earnings thresholds and
(ii) attainment of Operational Goals (to which the Committee may exercise
Negative Discretion).
4.02 LEVELS OF AWARDS. KEPP Awards are granted with two levels. The
first level, Level 1, is a cash bonus payment based on achievement of
Earnings that the Committee has no discretion to reduce. KEPP Payments
earned under Level 1 will be earned solely with reference to Earnings
attained during the Performance Period. The second level, Level 2 is a
cash bonus payment based on level of attainment of Operational Goals that
the Committee has the Negative Discretion to reduce. The Committee's
judgment in exercising its Negative Discretion to arrive at a KEPP Payment
under Level 2 is expected to be guided by the degree to which the
Corporation generally or the participating key executives in particular
have attained predetermined Operational Goals. The Committee is expected
to review the level of attainment of Operational Goals with the Chief
Executive Officer of the Corporation before exercising any Negative
Discretion.
4.03 PARTICIPATING KEY EXECUTIVES. It is intended that the number of
participating key executives shall be limited to those key executives with
the most direct influence on the attainment of Earnings and operational
goals.
ARTICLE V. PARTICIPATION
5.01 DESIGNATION OF PARTICIPANTS. Participants in the KEPP shall be
such key management employees of the Corporation or of its subsidiaries as
the Committee, in its sole discretion, may designate as eligible to
participate in the KEPP for any one or more Performance Periods. No later
than 90 days after the commencement of each Performance Period during the
term of the KEPP, the Committee shall designate the Participants who are
eligible to participate in the KEPP during such Performance Period. The
Committee's designation of a Participant with respect to any Performance
Period shall not require the Committee to designate such person as a
Participant with respect to any other Performance Period. The Committee
shall consider such factors as it deems
pertinent in selecting Participants. The Committee shall promptly provide
to each person selected as a Participant written notice of such selection.
ARTICLE VI. GRANTS UNDER THE KEPP
6.01 ANNUAL DETERMINATION REGARDING PERFORMANCE PERIOD. No later
than the 60th day of each calendar year, the Committee shall determine
whether to establish a Performance Period, provided, however, for a
Performance Period established in calendar year 2004, the Committee may
make a determination under this Section 6.01 at any time prior to the 90th
day of calendar year 2004.
6.02 DETERMINATION OF GRANTS, AWARDS (BOTH LEVEL 1 AND LEVEL 2) AND
PERFORMANCE CRITERIA. For each Performance Period, the Committee shall
take the following actions no later than the 90th day of the first
calendar year of that Performance Period:
(a) Identify Participants for that Performance Period.
(b) Establish the level of Level 1 and Level 2 opportunities
for each Participant.
(c) Set the Earnings target(s).
(d) Set the Operational Goals and relative weightings after
discussing such goals and weighting with the Chief Executive Officer
in order to bring the Operational Goals as closely as possible in
line with the Corporation's business plans.
6.03 TERMINATION OF EMPLOYMENT. If a Participant terminates
employment with the Corporation and each subsidiary of the Corporation
during a then uncompleted Performance Period for reasons other than death,
Disability or Retirement, any KEPP Award for any then uncompleted
Performance Period shall be forfeited automatically. If a Participant
terminates employment with the Corporation and each subsidiary of the
Corporation for reasons of death, Disability or Retirement during a then
uncompleted Performance Period, the Participant shall be entitled to
receive a pro rata KEPP Payment for each then uncompleted Performance
Period determined:
(a) when the KEPP Payments for all other Participants in such
Performance Period(s) are determined; and
(b) based on the actual level of achievement of Earnings for
that Performance Period and the attainment of Operational Goals,
after the application of Negative Discretion.
ARTICLE VII. DETERMINATION OF ACHIEVEMENT OF EARNINGS AND OPERATIONAL GOALS
7.01 DETERMINATION OF EARNINGS AND OPERATIONAL GOALS. As promptly as
administratively feasible but in no event later than the March 1st of the
calendar year following last calendar year of each Performance Period, the
Committee shall determine Earnings of the Corporation and the attainment
of Operational Goals and the degree, if any, to which the Committee will
exercise Negative Discretion.
7.02 DETERMINATION OF KEPP PAYMENTS. KEPP Payments for a particular
Performance Period for a particular Participant shall be the result of
adding (i) the amount earned by a particular Participant under Level 1
based on the Corporation's actual Earnings during the Performance Period
and (ii) the amount earned by a particular Participant under Level 2 based
on attainment of Operational Goals and after the application, if any, by
the Committee of Negative Discretion.
ARTICLE VIII. MISCELLANEOUS
8.01 CHANGE IN CONTROL. In the event of a Change in Control, KEPP
Payments shall be determined for all then uncompleted Performance Periods
as of the date of the Change in Control at the highest level Earnings for
each such uncompleted Performance Period and KEPP Payments shall be
delivered to the Participant as soon after the Change in Control as is
administratively feasible.
8.02 NON-UNIFORM DETERMINATIONS. The actions and determinations of
the Committee need not be uniform and may be taken or made by the
Committee selectively among employees or Participants, whether or not
similarly situated.
8.03 AMENDMENT AND TERMINATION OF THE PLAN. The Committee shall have
complete power and authority to amend or terminate this Plan at any time
it is deemed necessary or appropriate. No termination or amendment of the
Plan may, without the consent of the Participant to whom any award shall
theretofore have been granted under the KEPP, adversely affect the right
of such individual under such award; provided, however, that the Committee
may, in its sole discretion, make such provision in the Award Agreement
for amendments which, in its sole discretion, it deems appropriate.