EXHIBIT (10)
July 1, 2004
USG CORPORATION
KEY EMPLOYEE RETENTION PLAN
(July 1, 2004 - December 31, 2005)
General Program Description
The USG Corporation Key Employee Retention Program (KERP) provides eligible
participants with a cash payment equal to a specified percentage of their annual
Base Salary payable in semi-annual installments in return for continued
employment with USG Corporation or one of its participating subsidiaries. To be
eligible for payment of an award for any semi-annual period, the participant
must continue to be an employee in good standing (as defined below) on the last
day of the semi-annual period. The current Plan is effective July 1, 2004
through December 31, 2005 or though and including the effective date of a Plan
of Reorganization of USG Corporation and its subsidiaries, whichever comes
first. USG Corporation retains the right to propose a subsequent retention plan
to begin following the conclusion of the current KERP.
Eligibility
To be eligible for the Key Employee Retention Program, you must be employed by
USG Corporation or a participating subsidiary, and be eligible to participate in
the USG Corporation Long Term Equity Program.
Award Amounts
Awards under the Key Employee Retention Program are computed as a percentage of
annual Base Salary in effect on the first day of the semi-annual award period.
Individual KERP award percentages and projected dollar awards are provided to
each participant in the form of a Statement of Acceptance. Salary increases or
position changes during a semi-annual period will not affect the award during
that period. Such changes will be factored into the award amount effective with
the next semi-annual award period.
Award Qualification
The participant must be an "employee in good standing" of USG Corporation or one
of its participating subsidiaries throughout and including the last day of any
semi-annual period to receive that installment of the KERP award. The first
semi-annual period of this KERP ends on December 31, 2004 and the last ends on
December 31, 2005. Certain participants are eligible for payments under this
plan that are deferred until June 30, 2006 and their employment must continue
through such deferred date to receive the final deferred payment.
July 1, 2004
An "employee in good standing" means that the participant is employed by USG or
a participating subsidiary throughout and including the last day of the
semi-annual period in an eligible regular full-time or part-time position that
is not temporary and is actively fulfilling the duties of the position, is on an
approved paid leave from that position, or is on an unpaid leave protected by
statute. This does not include employees on continuing payrolls, unpaid leave
(not protected by statute), or suspension.
Award Determination
Awards earned as of December 31, 2004 and June 30, 2005 are not subject to a
performance adjustment. Awards earned as of December 31, 2005 and those deferred
until June 30, 2006 are subject to a performance adjustment based on 2005
calendar year results. Awards will be adjusted based on Adjusted Net Earnings
defined as Corporation Consolidated Net Earnings with adjustments for
significant non-operational items. Such items have in the past been Fresh Start
Accounting, asbestos, restructuring charges, bankruptcy expenses and the
cumulative impact of new accounting pronouncements. Awards subject to
performance adjustment will be subject to the following schedule:
2005 Corporation Percent of Earned
Adjusted Net Earnings Award to be Paid*
- ----------------------- -----------------
Less than $75,000,000 -0-
$75,000,000 50%
$150,000,000 75%
$225,000,000 100%
$300,000,000 or greater 125%
*scaled between points (e.g., 58.3% at $100,000,000 of adjusted net earnings).
Award Payment
Awards earned under the plan shall become a liability of USG Corporation or the
appropriate subsidiary as of the last day of any semi-annual period and will be
paid in the next month or as soon as practical. Awards are taxable to the
eligible participant when paid and are not considered benefit eligible for the
USG Corporation Retirement Plan, the USG Corporation Investment Plan, and/or
supplemental plans that complement these plans.
July 1, 2004
Termination by Disability, Death, Retirement or Discharge Without Cause
In the event that an eligible participant in the KERP dies, becomes disabled,
retires or is discharged without cause, that participant may be recommended for
a pro rated award for the current semi-annual period based on the number of full
months worked.
All Other Terminations and Voluntary Resignations
Participants whose employment is terminated for any reason other than those
listed above, including voluntary resignation, will not be eligible for a KERP
pro rated award payment for the semi-annual period in which they terminate
employment .
Newly Eligible Participants
Participants who become eligible for the KERP during a semi-annual period
through promotion or who are hired into a position that is eligible to
participate in the USG Corporation Long Term Equity Program may be recommended
for a pro rated award payment for that semi-annual period provided they remain
an "employee in good standing" through the last day of the period. The pro rated
award payment would be based on the number of full months worked. A participant
must be in an eligible position for two full months to earn a pro rated award.
General Provisions
The KERP and its provisions have been approved by the Compensation and
Organization Committee of the USG Corporation Board of Directors. Program
eligibility, award amounts, award payments and administrative rules are
interpreted, determined and approved by the Vice President, Human Resources, USG
Corporation. In the event that the effective date of a Plan of Reorganization
for USG corporation and its subsidiaries occurs prior to the end of the plan, a
pro rate award will be determined for the current semi-annual period and for the
portion of awards deferred until June 30, 2006, and such amounts may be paid to
participants after the effective date of such Plan of Reorganization.
Nothing herein contained shall limit or affect in any manner or degree the
normal and usual powers of management, exercised by the officers and the Board
of Directors or committees thereof, to change the duties or the character of
employment of any employee or to remove the individual from the employment of
the Corporation at any time, all of which rights and powers are expressly
reserved.