1
Exhibit 10.08
ARISTECH CHEMICAL CORPORATION
LONG TERM INCENTIVE PLAN
PLAN DOCUMENT
1. PURPOSE
The Aristech Chemical Corporation (the "Company" or "Aristech") Long Term
Incentive Plan ("LTIP" or the "Plan") has four key objectives:
* Focus executives on measures of performance that lead to the sustained
creation of value in the commodity chemicals industry
* Attract and retain talented executives for senior positions
* Provide the opportunity for executives to earn competitive long term
incentive awards, commensurate with performance
* Align long term incentive payments with Aristech's performance over a
multi-year period
2. EFFECTIVE DATE
The LTIP shall be effective upon approval by the Board of Directors of the
Company (the "Board"), including the retroactive design of the Plan which
allows performance cycles to commence the measurement of performance as of
January 1, 1995.
3. PLAN ADMINISTRATION
The LTIP shall be administered by the Board. Mitsubishi Corporation, which
maintains majority control (i.e., more than 50% of voting stock) of the
Company, shall have the authority to designate a representative(s) (the
"Mitsubishi Representative") to review and approve all aspects of the Plan,
including the calculation of awards earned and payments to be made under the
Plan. All determinations of the Board in the administration of the Plan shall
be binding and conclusive on all parties. The Board may delegate all or any
portion of its administrative responsibilities hereunder to a committee of the
Board or any other designated individual or committee. In the event of such
designation, references in this plan to the Board shall be deemed to refer to
the Board's delegate.
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4. OVERVIEW
The LTIP establishes a target long term incentive opportunity for each selected
Aristech executive that is intended to be competitive with the opportunities
granted to similar executives at comparable companies. Actual awards earned
may vary significantly from this target amount, based on the degree of
attainment of performance objectives as set forth in this document. Awards
earned under the provisions of this Plan will be paid in cash, although Plan
participants will have the opportunity to defer receipt of such awards, if and
to the extent permitted under the Company's deferred compensation plan(s).
5. LENGTH OF PERFORMANCE CYCLES
Performance cycles of the LTIP shall be four years in length. A new four-year
performance cycle of the Plan shall start every two years; therefore, two
performance cycles will be active at a given time.
Notwithstanding the aforementioned, performance cycles of shorter duration than
four years may be established at the inception or conclusion of the Long Term
Incentive Plan, as deemed appropriate by the Board and the Mitsubishi
Representative, in order to provide appropriate long term incentive
opportunities to management during periods of administrative transition.
For example, the first performance cycle payments under the LTIP shall be made
in conjunction with a two-year transition performance cycle covering the
1995-1996 performance period. The first full, four-year performance cycle of
the Plan shall start concurrently and cover the 1995-1998 period.
6. ELIGIBILITY FOR INDIVIDUAL PARTICIPATION
Members of Aristech's management team may be selected for participation in the
LTIP by the Board. Criteria for selection include executives who hold
positions that are typically eligible for long term incentives among comparable
companies and executives who significantly contribute to decisions impacting
the long term performance of the Company. Each participant shall be informed
by the Company that he or she has been selected to participate in the Plan, and
the amount of his or her individual target award, as defined under the first
paragraph of Section 8, at the beginning of each cycle.
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7. SUPPLEMENTAL POOL ELIGIBILITY
The Board has the authority to establish the target amount of a supplemental
award pool under the LTIP. The maximum amount of this pool shall be determined
at the conclusion of the performance cycle, by multiplying the target amount of
the supplemental pool by the percentage of the target award earned for the
Company's performance during the performance cycle, as determined under the
provisions of Section 15.
At the end of a performance cycle, this pool shall be distributed to top line
and staff executives who are not eligible for individual target awards for that
cycle.
The selection of recipients and amounts of individual awards under this
supplemental LTIP pool shall be determined by the Corporate Management
Committee (CMC) at the conclusion of a cycle, based on an individual's
contribution to Company performance during the performance cycle.
Although the allocation of this supplemental pool shall occur only at the
conclusion of a performance cycle, the CMC retains the authority to identify at
any time during a cycle executives who may qualify for awards under this
supplemental LTIP pool, and communicate to them the performance objectives by
which the total amount of the pool will be determined. This identification
shall in no circumstance entitle an executive to an award, of any size, under
the supplemental pool. The Company has no obligation to distribute any amount
of the supplemental pool earned.
8. TARGET AWARD LEVELS
At the beginning of each cycle, a target LTIP award, expressed as a percentage
of an individual's base salary, will be established for each executive named as
a participant in the Plan in accordance with Section 6. A participant's target
award under the LTIP shall equal the stated percentage of salary multiplied by
that individual's average base salary during the performance cycle, defined as
the individual's entire aggregate salary during the performance cycle divided
by the number of years in the cycle.
The total amount of the Company's target award pool shall equal the sum of the
individual target awards as defined above, plus any supplemental target amount
established by the Board in accordance with Section 7.
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9. PERFORMANCE MEASURES
Performance assessment under the plan is based on two performance measures:
Relative Return on Gross Assets (ROGA) and Growth in Gross Assets. The
procedure for calculating actual performance on each of these measures is set
forth below in Section 14.
10. WEIGHTING OF PERFORMANCE MEASURES
For the purpose of determining actual awards to be paid from the target and
supplemental pools, Relative ROGA shall be weighted 75% and Growth in Gross
Assets shall be weighted 25%. In addition, the portion of the award from the
target and supplemental pools based on Growth in Gross Assets is payable only
if Aristech's ROGA during the period exceeds a minimum Return on Gross Assets
established at the beginning of the cycle (the "ROGA threshold"). The ROGA
threshold will be established for each cycle by the Board.
11. DETERMINATION OF RELATIVE ROGA
Relative ROGA is defined as the comparison of Aristech's ROGA with the median
ROGA of comparable chemical manufacturing companies with publicly-available
data. These companies, as a group, are referred to as the "Peer Group." A
schedule of awards to be earned based on this comparison is set forth in
Section 15.
In order to maintain a high degree of accuracy and comparability in determining
the peer group median performance during a performance cycle, data must be
available for a peer company in all years of the cycle. In the event that a
peer's data are not available for all years, that company should be removed
from the group (see also Sections 12 and 13 below).
The peer group for the initial cycle of the Plan has been developed in
accordance with the provisions set forth above (see Attachment 1 for a list of
companies included in the peer group).
12. ADDITIONS TO THE PEER GROUP
From time to time, the Board may become aware that additional companies meet
the criteria established in Section 11 for inclusion in the peer group. The
Board may exercise the authority to add these companies to the peer group for
subsequent cycles (i.e., cycles that have not begun at the time of potential
peer additions).
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13. SUBTRACTIONS FROM THE PEER GROUP
In the event that a peer company no longer publicly releases the data necessary
for the calculations described in Section 14, that company will no longer be
considered a member of the peer group. This removal from the peer group shall
apply to both active and subsequent performance cycles, unless the removed
company is reinstated to the peer group for future cycles in accordance with
Section 12.
From time to time, the Board may become aware that a member of the peer group
has ceased to maintain comparability with the Company, as described in Section
11. The Board may exercise the authority to remove this company from the peer
group for active and/or subsequent cycles. As a general rule, for active
cycles, a company should not be removed from the peer group if it was
comparable to Aristech for at least half of the cycle.
14. CALCULATION OF PERFORMANCE
For the purpose of determining amounts to be paid from the target and
supplemental pools under the Plan, Aristech's performance shall be calculated
in accordance with the following definitions:
Return on Gross Assets (ROGA):
EBIDAT (defined below)
divided by
Average Gross Assets (defined below; each
year, the average of 13 month-end Gross
Asset calculations, from December 31 of the
preceding year to December 31 of that year)
Earnings before Interest and Depreciation After Taxes (EBIDAT):
Net Income (after taxes) before
Extraordinary Items
plus After-Tax Interest Expense (defined below)
plus Depreciation and Amortization Expense
Gross Assets:
Total Assets
less NIBCL's (defined below)
plus Accumulated Depreciation and Amortization
Non-Interest Bearing Current Liabilities (NIBCL's):
Current Liabilities
less Current Portion of Long Term Debt
After-Tax Interest Expense:
Pre-Tax Interest Expense
times (1 minus Statutory Tax Rate)
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Growth in Gross Assets (in percentage terms):
End-of-year Gross Assets
divided by
Beginning-of-year Gross Assets
minus 1
The LTIP is designed to measure "steady-state" operating performance. The Board
may consider, as appropriate, the exclusion of major investments/divestitures
from performance calculation for the year of the event and future years
remaining in an active cycle, and such determination should be communicated to
participants at the time of the event. As a general rule, for example, an asset
such as a new plant would be included in performance calculations at the
beginning of the next year after it is operational.
ROGA and Growth in Gross Assets shall be calculated for Aristech on an annual
basis. At the conclusion of each cycle, Aristech's ROGA performance over the
cycle shall be determined by averaging the Company's ROGA for each of the years
comprising the cycle. Aristech's Growth in Gross Assets for the cycle shall be
determined by averaging the Company's Growth in Gross Assets for each of the
years comprising the cycle.
In addition, ROGA shall be calculated annually for each of the companies in the
peer group. At the conclusion of each cycle, each company's ROGA performance
over the period ("average ROGA") shall be determined by averaging that
company's ROGA for each of the years comprising the cycle. The peer group
median shall be defined as the value at which precisely half of the peer
companies have a greater average ROGA and precisely half of the companies have
a lesser average ROGA.
15. AWARD SCHEDULE
75% of the total award opportunity under the target and supplemental pools is
based on Aristech's Relative ROGA. This amount is payable in full if
Aristech's average ROGA is equal to the median average ROGA of the peer group.
In the event that Aristech's ROGA is greater or less than the peer median, the
following schedule applies to all target awards, including the target amount of
the supplemental pool:
Aristech % of Relative ROGA- % of Total
Performance Based Award Earned Award Earned
- ----------- ------------------- ------------
450+ basis points above median 250% 188%
300 basis points above median 200% 150%
150 basis points above median 150% 113%
Equal to the peer median 100% 75%
150 basis points below median 50% 38%
More than 150 b.p. below median 0% 0%
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NOTE: Interpolation will be used to determine awards for performance that falls
between discrete points on the schedule above. The peer median is defined as
the ROGA level at which precisely half of the companies in the peer group have
a higher ROGA and half of the companies in the peer group have a lower ROGA.
The other 25% of the total award opportunity is based on Aristech's Growth in
Gross Assets, provided that a minimum return is achieved. Assuming that
Aristech's average ROGA over the performance cycle exceeds the threshold level,
the following schedule applies for the Growth in Gross Assets portion of the
LTIP:
Average Annual Growth % of Gross Asset Growth- % of Total
in Gross Assets Based Award Earned Award Earned
- --------------------- ------------------------- -------------
10% or more 250% 63%
8% 200% 50%
6% 150% 38%
4% 100% 25%
2% 50% 13%
Below 2% 0% 0%
or if 4-year average ROGA is
less than or equal to threshold 0% 0%
NOTE: Interpolation will be used to determine awards for performance that
falls between discrete points on the schedule above.
See Attachments 2 and 3 for an illustration of the calculation of awards.
16. DISCRETIONARY ADJUSTMENTS
In determining the actual payments to be made to participants upon completion
of a cycle, the Board may, in its discretion, increase or decrease the
calculated value of the award; provided, however, this adjustment -- whether
positive or negative -- may not exceed 10% of the total target award pool, as
defined in Section 8, and the adjustments shall be proportioned among all of
the participants.
Criteria for making discretionary adjustments include (but are not limited to):
relative cost in the core businesses, new product development, cooperation with
Mitsubishi Corporation to optimize commercial synergies, and environmental,
health, and safety performance.
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17. PAYOUT SCHEDULE
At the completion of each performance cycle, Aristech's performance will be
evaluated and the award values for each participant under the target and
supplemental pools will be determined based on the above schedules. Following
review and approval by the Board, and subject to any discretionary adjustment
the Board may make, 50% of the award will be paid to participants immediately.
The remaining 50% of the award will be paid without interest during January of
the following year (i.e., approximately one year after the completion of the
performance cycle). Plan participants shall have the opportunity to defer
receipt of such awards, if and to the extent permitted under the Company's
deferred compensation plan(s).
18. METHOD OF PAYMENT
All awards from the target and supplemental pools shall be paid in cash. The
general funds of the Company shall be the sole source of payments under the
Plan, and the Company shall have no obligation to establish any separate fund
or trust or other segregation of assets to provide for LTIP payments. Nothing
contained in this plan, and no action taken pursuant to its provisions, shall
create or be construed to create a trust of any kind, or a fiduciary
relationship, between the Company and a participant or any other person. To
the extent any person acquires rights to receive payments hereunder from the
Company, such rights shall be no greater than those of an unsecured creditor.
19. WITHHOLDING
The Company shall, to the extent required by law, have the right to deduct from
payments of any kind otherwise due to the recipient the amount of any federal,
state, or local taxes required by law to be withheld with respect to the
amounts earned under the Plan.
20. TERMINATION OF EMPLOYMENT
A participant's right to receive full or partial award payment from the target
and supplemental pools in the event of termination of employment prior to
completion of payment of awards for the performance cycle shall depend on the
reason for termination:
a) Retirement, disability, or involuntary termination without
cause. The participant shall be entitled to a pro-rated award payment for all
active cycles, based on the percentage of a
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cycle (defined as the number of full months actively worked divided by the
maximum number of months in the cycle) in which the participant was actively
employed by the Company. This payment shall be made not at the time of
termination, but at the same time as payments are made to participants
continuing in the employ of the Company. Payment as a percentage of the target
award to a participant shall be based on performance over the entire
performance cycle, and be equal to the same percentage of target earned by
participants in the Plan who remain employed by the Company for the entire
cycle.
b) Death. The beneficiary designated by a participant in
accordance with Section 25 shall be entitled to a pro-rated award payment for
all active cycles, based on the percentage of a cycle (defined as the number of
full months actively worked divided by the maximum number of months in the
cycle) in which the participant was actively employed by the Company. This
payment shall be made at the same time as payments are made to other
participants in the performance cycle, with payment as a percentage of the
target award based on performance over the entire performance cycle, and equal
to the same percentage of target earned by other participants in the Plan,
unless the Board determines, in its discretion, that payment to the
participant's beneficiary should be made as soon as practical following the
participant's death. In the event that the Board elects to accelerate payment
to the beneficiary, the award earned as a percentage of target shall be equal
to the greater of 100%, or the actual amount earned as a percentage of target
through the most recently-completed fiscal year.
c) Voluntary termination or involuntary termination for cause.
The participant will forfeit all rights to payments not yet made in connection
with active cycles, or in connection with the 50% portion of earned awards for
which it is mandatory for payment to be deferred for one year. The participant
shall not forfeit amounts deferred at the election of the participant, except
to the extent expressly provided in the applicable deferred compensation plan.
Following retirement, disability, or involuntary termination without cause, a
participant shall forfeit any right to receive payment upon the commencement of
employment or a consulting relationship with another company deemed to be a
competitor of the Company by the Board.
For the purpose of this provision, "disability" shall be defined as the
inability of a participant to complete the duties of the position that resulted
in his/her selection to the Plan, for a period of at least 180 consecutive
days. "Cause" shall be defined as (i) action by a participant involving
willful and wanton malfeasance involving specifically a wholly wrongful and
unlawful act; (ii) a participant being convicted of a felony;
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(iii) a material violation by a participant of any rule, regulation, or policy
of the Company generally applicable to all employees; or (iv) a participant's
failure or refusal to substantially perform a material duty of such
participant's employment, as determined in the unanimous judgment of the
Executive Committee of the Board, other than the participant if such
participant is a member of the Executive Committee of the Board. For the
purpose of the Plan, a participant shall not be subject to termination for
"Cause" without (A) reasonable written notice to the participant setting forth
the reasons for the Company's intent to terminate the participant and (B) an
opportunity for the participant to cure any of the actions or omissions forming
the basis for such intended termination, if possible, within 15 days after
receipt of such written notice.
21. AMENDMENT AND TERMINATION OF THE PLAN
The LTIP shall remain in effect unless revoked by the Board.
The Board may modify, alter, amend, or terminate the Plan at any time. Any
such action shall take effect at the beginning of the next cycle of the Plan,
unless stated otherwise by the Board, and shall continue for any subsequent
cycles of the Plan. Notwithstanding the foregoing, after the occurrence of a
change in control (as defined in Section 22), no amendment to the Plan may
reduce the benefits payable under the Plan to a participant with respect to a
performance cycle that is active at the time such change in control occurs.
Notwithstanding the aforementioned, the Board also retains the authority to
terminate a cycle while in progress. In this event, payment to participants,
as a percentage of the target award, shall be the greater of:
i) 100% of the target award level, or
ii) The actual percentage of the award earned prior to termination
The actual amount paid shall be pro-rated by multiplying the amount earned as a
percentage of target, as defined above, times a participant's target award,
times the fraction representing the number of full months completed in the
cycle divided by the maximum number of months in the cycle (i.e., 48 months for
a four-year cycle).
22. CHANGE IN CONTROL
a) Change in Control. The LTIP shall terminate upon the
consummation of a change in control, as defined below, or an
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initial public offering of Company stock, unless extended by the acquiring or
continuing entity. If the Plan is terminated in accordance with this
provision, all cycles of the Plan shall terminate immediately, and a pro-rated
award payment shall be made in cash, in accordance with Section 22 (b).
b) Calculation of Award Payment following a Change in Control.
The amount of the award earned for each cycle, as a percentage of the target
award, shall be defined as the greater of:
i) 100% of the target award level, or
ii) The actual percentage of the award earned prior to the change
in control
The actual amount paid shall be pro-rated by multiplying the amount earned as a
percentage of target, as defined above, times a participant's target award,
times the fraction representing the number of full months completed in the
cycle divided by the maximum number of months in the cycle (i.e., 48 months for
a four-year cycle; see Attachment 4 for an illustration of this calculation).
Inasmuch as the LTIP is designed to have two active cycles at any given time,
the total amount paid to participants will, under most circumstances, equal the
sum of two awards earned based on this methodology.
Payments shall be made to participants within 90 days following the termination
of the Plan under these provisions.
A change in control shall be defined as: (i) any transaction that results in
Mitsubishi Corporation and its subsidiaries (collectively, the "MC Group") no
longer being the beneficial owner of stock possessing at least fifty percent
(50%) of the combined voting power of the issued and outstanding shares of all
classes of the Company's stock entitled to vote generally in the election of
directors ("Voting Stock"), whether as a result of the issuance of securities
of the Company, any direct or indirect transfer of securities of the Company or
otherwise; or (ii) approval by the stockholders of the Company of a
reorganization, merger or consolidation, unless, following such reorganization,
the MC Group beneficially owns, directly or indirectly, stock possessing at
least fifty percent (50%) of the total combined voting power of the issued and
outstanding shares of all classes of Voting Stock of the corporation resulting
from such reorganization, merger or consolidation; or (iii) approval by the
stockholders of the Company of a complete liquidation or dissolution of the
Company; or (iv) the sale or disposition of 60% or more by value of the assets
of the Company other than to a corporation with respect to which, following
such sale or
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disposition, the MC Group beneficially owns, directly or indirectly, stock
possessing at least fifty percent (50%) of the total combined voting power of
the issued and outstanding shares of all classes of Voting Stock.
23. EXCLUSION FROM EMPLOYEE BENEFITS
Payments under the Plan shall in no circumstance be included as compensation
for the purpose of determining any retirement income, life insurance, or any
other related employee benefit program.
24. ASSIGNMENT OF EMPLOYEE RIGHTS
No employee has a claim or right to be a participant in the Plan, to continue
as a participant, or to be granted awards under the Plan. The Company is not
obligated to give uniform treatment (e.g., equal target amounts, etc.) to
participants. Participation in the Plan does not give a participant the right
to be retained in the employment of the Company, nor does it imply or confer
any other employment rights.
Nothing contained in the Plan will be construed to create a contract of
employment with any participant.
25. BENEFICIARY DESIGNATION
A participant may designate a beneficiary or beneficiaries to receive, in the
event of the participant's death, all or part of the amounts to be distributed
to the participant under the Plan. A designation of a beneficiary may be
replaced by a new designation or may be revoked by the participant at any time.
A designation or revocation shall be on a form to be provided for such purpose
and shall be signed by the participant and delivered to the Company prior to
the participant's death. Any amount that is distributable to a participant
upon death and is not subject to such a designation shall be distributed to the
participant's estate. If there shall be any question as to the legal right of
any beneficiary to receive a distribution under the Plan, the amount in
question may be paid to the estate of the participant, in which event the
Company shall have no further liability to any one with respect to such amount.
26. DEMOTION
The Board has the authority to remove from the Plan during an active cycle a
participant who has been demoted to a position within the Company which is not
eligible for participation in the
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LTIP. In this event, the participant shall be entitled to a pro-rated payment,
based on performance over the entire Plan cycle, and made at the same time as
payments to continuing participants are made. The amount of this payment shall
be equal to the percentage of the target award earned by participants for the
entire cycle, multiplied by the demoted participant's target award, multiplied
by the fraction equal to the number of full months in the cycle completed prior
to the demotion divided by the maximum number of months in the cycle.
27. VALIDITY
In the event any provision of the Plan is held invalid, void, or unenforceable,
the same will not affect, in any respect whatsoever, the validity of any other
provision of the Plan.
28. APPLICABLE LAW
The Plan will be governed by and construed in accordance with the laws of the
Commonwealth of Pennsylvania other than the conflict of laws provisions
thereof.
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Attachment 1
COMPANY NAME
------------
Albemarle Corp.
Arco Chemical
Borden Chemicals & Plastics
Ethyl Corp.
Geon Company
Georgia Gulf Corp.
Hercules Inc
Lyondell Petrochemical Co.
Rohm & Haas Co.
Uniroyal Chemical Corp.
Witco Corp.
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Attachment 2
Illustration -- CALCULATION OF AWARDS
Aristech LTIP
1995-1996 Cycle (2-Year Transition Cycle)
Performance LTIP Award
------------ Cycle Pool
Year 1 Year 2 Average ($000's)
TARGET AWARD POOL* $2,600
RETURN ON GROSS ASSETS
Weighting: 75% of Total
Award $1,950
Example:
Aristech 15.0% 10.5% 12.8%
Peer Group Median 10.0% 12.0% 11.0%
-----
Performance
(Basis point spread) 180 basis
points
above peer
median
ROGA-based payment 160% $3,120
as a % of Target of
Target
GROWTH IN GROWTH ASSETS
Weighting: 25% of Total Award $650
Example:
Aristech 2.7% 6.6% 4.7%
----
Growth-based payment 118% $767
as a % of Target of
Target ____
TOTAL AWARD POOL EARNED based on Performance* $3,887
as a % of Target Award Pool 150%
* Includes supplemental award pool
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Attachment 3
Illustration -- CALCULATION OF AWARDS
Aristech LTIP
1995-1998 Cycle (First Full 4-Year Cycle)
Performance
Year Year Year Year LTIP Cycle Award Pool
1 2 3 4 Average ($000's)
TARGET AWARD POOL* $2,600
RETURN ON GROSS ASSETS
Weighting: 75% of Total Award $1,950
Example:
Aristech 15.0% 10.5% 12.5% 20.0% 14.5%
Peer
Group Median 10.0% 12.0% 10.5% 11.5% 11.0%
-----
Performance 350 basis points
(Basis point spread) above peer median
ROGA-based payment 217% $4,232
as a % of Target of Target
GROWTH IN GROSS ASSETS
Weighting: 25% of Total Award $650
Example:
Aristech 2.7% 6.6% 4.3% 6.4% 5.0%
----
Growth-based payment 125% $813
as a % of Target of Target
TOTAL AWARD POOL EARNED based on Performance* $5,044
as a % of Target Award Pool 194%
*Includes supplemental award pool
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Attachment 4
Illustration -- CALCULATION OF AWARDS
Aristech LTIP
Change in Control Provisions
All dollars in thousands
Performance ---------------------------------------Year---------------------------------
Assumptions 1995 1996 1997 1998 1999 2000 2001 2002
PAYMENT SCHEDULE: Without Change in Control
Cycle A
Amount Earned as %
of Target 149%
Total Award Pool
Earned $3,874
50% Paid at 50% Paid
End of Cycle One Year Later
($1,937) ($1,937)
Cycle B
Amount Earned as %
of Target 194%
Total Award Pool Earned $5,044
50% Paid at 50% Paid
End of Cycle One Year Later
($2,522) ($2,522)
Cycle C
Amount Earned as % of Target 130%
Total Award Pool Earned $3,380
50% Paid at 50% Paid
End of Cycle One Year Later
($1,690) ($1,690)
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Attachment 4 (Cont)
PAYMENT SCHEDULE: Assumes Change in Control January 1,1998
Cycle A
Amount Earned as % of Target* 149%
Total Award Pool Earned $3,874
50% Paid at 50% Paid
End of Cycle One Year Later
($1,937) ($1,937)
Cycle B (Based on Performance from Jan '95 to Dec '97)
Amount Earned as % of Target 148%
Award Pool Earned for Full Cycle $3,848
Pro-Rated at 75% (Jan '95 - Dec '97) $2,886
Paid at Change
in Control
($2,886)
Cycle C (Based on Performance from Jan '97 to Dec '97)
Amount Earned as % of Target* 152%
Award Pool Earned for Full Cycle $3,952
Pro-Rated at 25% (Jan '97 - Dec '97) $988
Total Change in Control Payment $2,886 Paid at Change
+ $988 in Control
------ ($988)
$3,874
* In the event of a change in control, the minimum amount earned as a percent
of target is 100%
NOTE: Assumes total target pool of $2.6 million (including the supplemental
pool) for all LTIP cycles
Performance levels shown are for illustrative purposes only
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Attachment 5
APPROVED PARAMETERS FOR FIRST TWO CYCLES
Aristech LTIP
1995-1996 and 1995-1998 Cycles
2-Year First
Transition Cycle Full Cycle
Issue 1995-1996 1995-1998
- --------------------------------------------------------------------------------------------------------
Target Awards for Individual Participants (as % of Salary)
CEO 160% 160%
COO 120% 120%
Other CMC Members 100% 100%
Approximate Target Award Pool $1,600,000 $1,600,000
(assuming 6 Individual Participants)
Supplemental Target Award Pool $1,000,000 $1,000,000
Approximate Total Target Award Pool $2,600,000 $2,600,000
ROGA Threshold 8% 8%