EXHIBIT 10.26
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GRACE Personnel Policies
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Annual Incentive Compensation Program Policy No. xx.xx
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PURPOSE:
The Annual Incentive Compensation Program (AICP) is the bonus program for
regular non-sales salaried employees in Bands 1-4. Grace offers the AICP program
as a way to share in the company's financial success.
The AICP program was designed to support:
1. The focus of employees on achieving financial performance targets
2. The concept of measurements as a way to improve performance
3. A "pay for performance" philosophy.
SCOPE:
This policy covers all regular salaried employees in Bands 1-4 who are not
eligible to participate in other incentive plans and whose individual
performance rated is "good" or higher. Except as specified below, employees must
be actively employed by GRACE through the payout date, which will typically be
made in March. Awards will be prorated for employees who did not work for GRACE
for the full year.
POLICY:
Each Business Unit's pool will be funded based on the Business Unit's financial
performance as measured by its Pre-Tax Earnings from Core Operations performance
versus target.
Each year employees eligible for the AICP receive a letter informing them of
their target award percentage range for the current year. The band that an
employee's job is assigned to determines the target award percentage range. The
following table has the target award percentage ranges for each band:
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Band Target Incentive as a % of
Salary
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1 CEO - set by BOD
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2 50%-85%
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3 30%-65%
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4 10%-25%
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It is expected that any employee whose performance is rated at the "Needs
Improvement" or "Unsatisfactory" performance level will not receive an AICP
incentive and their funds will be distributed to the employees' with the highest
ratings. The target awards are adjusted based on the Business Unit performance,
then multiplied by the employee's base salary as of the end of the performance
year for active employees.
EXHIBIT 10.26
The year-end salary for non-US employees is converted to US dollars based on the
average exchange rate for the year. Their AICP award recommendation, which is
initially determined in US dollars during the process, is then converted to a
percent of salary. This percent is applied to their salary in local currency and
the payment is made through their country's payroll system in local currency.
Awards may be further adjusted to accommodate factors such as the performance of
the participant's product-line and region against financial performance and
individual performance. The total of AICP bonuses paid by each Business Unit's
must conform to its annual AICP budget.
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NEW HIRES/PROMOTIONS
New hires may be considered for prorated awards in the AICP program if they have
more than three months' service.
An employee who is promoted from one eligible position to a higher-graded
eligible position will have his/her award calculated and determined on the basis
of the higher-graded position, irrespective of when the promotion was effective
(the actual award reflecting individual performance should take timing into
account).
In the case of employees entering the program from sales-incentive eligible
jobs, their eligibility will commence when the employee becomes ineligible to
participate in a sales incentive program as a result of the job change.
DEMOTIONS/DECREASES IN SALARY GRADE
An employee whose position is decreased from the AICP program to the PFP program
will be paid in accordance with the PFP program guidelines.
TERMINATIONS OF EMPLOYMENT
Employees whose employment terminates prior to the date on which awards are
normally paid may receive an award (usually provided by terms of a written
agreement) if employment terminates for any of the following reasons, provided
they had more than three months' service in an AICP eligible position:
o Retirement under a plan of the Company, or a subsidiary
o Death
o Disability
o Divestment
o Other termination of employment by the Company not for cause
Awards in such cases are to be prorated if employment terminated prior to the
end of the year in which services were performed.
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Policy No: #### Last Modified: January 2002
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