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Exhibit 10.15
LONG-TERM PERFORMANCE SUBPLAN
OF THE 1997 OMNIBUS LONG-TERM COMPENSATION PLAN
1998-2000 PERFORMANCE PERIOD
EASTMAN CHEMICAL COMPANY
Effective January 1, 1998
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LONG-TERM PERFORMANCE SUBPLAN
OF THE 1997 OMNIBUS LONG-TERM COMPENSATION PLAN
1998-2000 PERFORMANCE PERIOD
TABLE OF CONTENTS
Section Title
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Section 1. Background
Section 2. Definitions
Section 3. Administration
Section 4. Eligibility
Section 5. Form of Awards
Section 6. Size of Awards
Section 7. Composition of Peer Group
Section 8. Preconditions to Receipt of an Award
Section 9. Manner and Timing of Award Payments
Section 10. No Rights as Shareowner
Section 11. Application of Plan
Section 12. Amendments
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EASTMAN CHEMICAL COMPANY
LONG-TERM PERFORMANCE SUBPLAN
OF THE 1997 OMNIBUS LONG-TERM COMPENSATION PLAN
1998-2000 PERFORMANCE PERIOD
Section 1. Background. Under Section 11 of the Eastman Chemical Company 1997
Omnibus Long-Term Compensation Plan (the "Plan"), the "Committee" (as defined
in the Plan), may, among other things, award shares of the $.01 par value
common stock ("Common Stock") of Eastman Chemical Company (the "Company") to
"Employees" (as defined in the Plan), and such awards may take the form of
performance shares, which are contingent upon the attainment of certain
performance objectives during a specified period, and subject to such other
terms, conditions, and restrictions as the Committee deems appropriate. The
purpose of this Long-Term Performance Subplan (this "Subplan") is to set forth
the terms of the grant of performance shares for the 1998-2000 Performance
Period specified herein, effective as of January 1, 1998 (the "Effective
Date").
Section 2. Definitions.
(a) The following definitions shall apply to this Subplan:
(i) "Actual Grant Amount" means the number of shares of Common
Stock to which a participant is entitled under this Subplan,
calculated in accordance with Section 6 of this Subplan.
(ii) "Award Payment Date" means the date the shares of Common
Stock covered by an award under this Subplan are delivered to
a participant.
(iii) "Compared Group" means the Company and the companies in the
Peer Group.
(iv) "Maximum Deductible Amount" means the maximum amount
deductible by the Company under Section 162(a), taking into
consideration the limitations under Section 162(m), of the
Internal Revenue Code of 1986, as amended, or any similar or
successor provisions thereto.
(v) "Target Grant Amount" means, with respect to any eligible
Employee, the number of shares of Common Stock specified on
Exhibit A hereto for the Salary Grade applicable to such
Employee.
(vi) "Participation Date" means June 30, 1998.
(vii) "Peer Group" means the group of companies identified in
Exhibit B hereto, with any changes made by the Committee
pursuant to Section 7 of this Subplan.
(viii) "Performance Period" means January 1, 1998 through December
31, 2000.
(ix) "TSR" means total return to shareowners, as reflected by the
sum of (A) change in stock price (measured as the difference
between (I) the average of the closing prices of a company's
common stock on the New York Stock Exchange, or of the last
sale prices of such stock on the Nasdaq Stock Market, as
applicable, over the first 20 trading days of the period for
which such change is being measured and (II) the average of
such closing or last sale prices for such stock over the
final 20 trading days of the period for which such change is
being measured) plus (B) dividends declared, assuming
reinvestment of dividends, and expressed as a percentage
return on a shareowner's hypothetical investment.
(b) Any capitalized terms used but not otherwise defined in this Subplan
shall have the respective meanings set forth in the Plan.
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Section 3. Administration. This Subplan shall be administered by the
Committee. The Committee shall have authority to interpret this Subplan, to
prescribe rules and regulations relating to this Subplan, and to take any other
actions it deems necessary or advisable for the administration of this Subplan,
and shall retain all general authority granted to it under Section 3 of the
Plan.
Section 4. Eligibility. The Employees who are eligible to participate in this
Subplan are those Employees who, as of the Effective Date, have been designated
as "officers" of the Company for purposes of Section 16 of the Exchange Act and
those Employees designated by the Company's Chief Executive Officer during
1998, which shall generally include Employees who, as of the Effective Date or
the Participation Date, held positions with the Company considered by the Chief
Executive Officer to carry responsibilities and functions generally associated
with a vice-president-level position. Employees who are promoted during the
Performance Period to a position that would meet the above criteria, but who do
not hold such position as of the Participation Date, are not eligible to
participate in this Subplan; however, the ability of the Chief Executive
Officer under this Section 4 to designate eligible Employees at any time during
1998 is intended to allow the participation of Employees who, as of the
Participation Date, held positions with the Company that may not have been
considered to carry responsibilities and functions generally associated with a
vice-president-level position but which positions are or were evaluated during
1998 and determined by the Chief Executive Officer to carry such
responsibilities and functions.
Section 5. Form of Awards. Subject to the terms and conditions of the Plan
and this Subplan, Awards under this Subplan shall be paid in the form of
unrestricted shares of Common Stock, except for conversions to cash and
deferrals under Section 9 of this Subplan, and except that if a participant is
entitled to any fraction of a share of Common Stock, as a result of Section 10
of this Subplan or otherwise, then in lieu of receiving such fraction of a
share, the participant shall be paid a cash amount representing the market
value, as determined by the Committee, of such fraction of a share at the time
of payment.
Section 6. Size of Awards. Exhibit A hereto shows by Salary Grade the Target
Grant Amount. The Salary Grade to be used in calculating the size of any Award
to a participant under this Subplan shall be the higher of (a) the Salary Grade
applicable to the position held by the participant on the Participation Date
(or, in the case of participants whose employment is terminated prior to the
Participation Date, the Effective Date) and (b) the Salary Grade assigned to
such position during 1998 as a result of any reevaluation of the Salary Grade
appropriate for such position. The Actual Grant Amount shall be determined by
comparing the Company's TSR during the Performance Period to the TSRs of the
companies in the Peer Group during the Performance Period. Specifically, the
Company and each company in the Peer Group shall be ranked by TSR, in
descending order, with the company having the highest TSR during the
Performance Period being ranked number one. The Company's rank, by TSR, in
relation to the Compared Group, shall determine a multiplier to be applied to
the Target Grant Amount. Multipliers range from 2.0 (i.e. 200%), if the
Company's TSR is ranked number one, to 0.0 (with no shares of Common Stock
being delivered to participants under this Subplan), if the Company's rank is
lower than company fifteen in the Compared Group. The payout table with
multipliers for each TSR rank is shown in Exhibit C. The Actual Grant Amount
is determined by applying the multiplier corresponding to the Company's TSR
rank (Exhibit C) to the Target Grant Amount. Notwithstanding the foregoing, if
the Peer Group produces fewer than 19 distinct TSRs (as a result of the removal
of a company from the Peer Group without substitution of a replacement company
therefor, as described in Section 7 of this Subplan), then the Committee shall,
in its sole discretion, determine the appropriate means of calculating the
Actual Grant Amount.
Section 7. Composition of Peer Group. The members of the Peer Group
identified in Exhibit B hereto have been identified as companies currently
relevant for purposes of TSR comparisons under this Subplan. However, the
Committee shall have the authority, at any time and from time to time, to
determine that any member of the Peer Group is no longer appropriate for
inclusion. Circumstances that might require such a determination include,
without limitation, the following events: a company's common stock ceasing to
be publicly traded on an exchange or on the Nasdaq Stock Market; a company's
being a party to a significant merger, acquisition, or other reorganization; or
a company's ceasing to operate in the chemical industry. In any case where the
Committee determines that a particular company is no longer appropriate for
inclusion in the Peer Group, the Committee may designate a replacement company,
which shall then be substituted in the Peer Group for the former member. In any
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such case, the Committee shall have authority to determine the appropriate
method of calculating the TSR of such former and/or replacement company or
companies, whether by complete substitution of the replacement company (and
disregard of the former company) over the entire Performance Period or by pro
rata calculations for each company or otherwise. Alternatively, in any case
where the Committee determines that a particular company is no longer
appropriate for inclusion in the Peer Group, the Committee may remove such
company from the Peer Group without substituting a replacement company
therefor.
Section 8. Preconditions to Receipt of an Award.
(a) Continuous Employment. Except as specified in paragraph (b) below, to
remain eligible for an Award under this Subplan, an eligible Employee
must remain continuously employed with the Company or a Subsidiary at
all times from the Participation Date (or the Effective Date) through
the Award Payment Date.
(b) Death, Disability, Retirement, or Termination for an Approved Reason
Before the Award Payment Date. If a participant's employment with the
Company or a Subsidiary is terminated due to death, disability,
retirement, or any approved reason prior to the Award Payment Date,
the participant shall receive, subject to the terms and conditions of
the Plan and this Subplan, an Award representing a prorated portion of
the Actual Grant Amount to which such participant otherwise would be
entitled, with the precise amount of such Award to be determined by
multiplying the Actual Grant Amount by a fraction, the numerator of
which is the number of full calendar months in the Performance Period
from the Effective Date through and including the effective date of
such termination, and the denominator of which is 36 (the total number
of months in the Performance Period). If the effective date of a
participant's termination of employment occurs on or after the last
business day of a particular calendar month, then such month shall be
considered a full calendar month and shall be counted in determining
the numerator of the fraction described in the preceding sentence; if
the effective date of such termination occurs prior to the last
business day of a particular calendar month, then such month shall not
be so counted.
Section 9. Manner and Timing of Award Payments.
(a) Timing of Award Payment. Except for deferrals under Sections 9(b) and
9(c), if any Awards are payable under this Subplan, the payment of
such Awards to eligible Employees shall be made as soon as is
administratively practicable after the end of the Performance Period.
(b) Deferral of Award in Excess of the Maximum Deductible Amount. If
payment of the Award would, or could in the reasonable estimation of
the Committee, result in the participant's receiving compensation in
excess of the Maximum Deductible Amount in a given year, then such
portion (or all, as applicable) of the Award as would, or could in the
reasonable estimation of the Committee, cause such participant to
receive compensation from the Company in excess of the Maximum
Deductible Amount shall be converted into the right to receive a cash
payment, which shall be deferred until after the participant retires
or otherwise terminates employment with the Company and its
Subsidiaries.
(c) Election to Defer the Award. Any participant in this Subplan may
elect to defer the Award until after the participant retires or
otherwise terminates employment with the Company and its Subsidiaries
under the terms and subject to the conditions of the Eastman Executive
Deferred Compensation Plan, as the same now exists or may be amended
hereafter (the "EDCP"). If the participant chooses to defer the
Award, the Award shall be converted into the right to receive a cash
payment.
(d) Award Deferral to the EDCP. In the event that all or any portion of
an Award is converted into a right to receive a cash payment pursuant
to Sections 9(b) or 9(c), an amount representing the Fair Market
Value, as of the date the Common Stock covered by the Award otherwise
would be delivered to the participant, of the Actual Grant Amount (or
the deferred portion thereof) will be credited to the Stock Account of
the EDCP, and hypothetically invested in units of Common Stock.
Thereafter, such amount shall be treated in the same manner as other
investments in the EDCP and shall be subject to the terms and
conditions thereof.
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Section 10. No Rights as Shareowner. No certificates for shares of Common
Stock shall be issued under this Subplan nor shall any participant have any
rights as a shareowner as a result of participation in this Subplan, until the
Actual Grant Amount has been determined and such participant has otherwise
become entitled to an Award under the terms of the Plan and this Subplan. In
particular, no participant shall have any right to vote or to receive dividends
on any shares of Common Stock under this Subplan, until certificates for such
shares have been issued as described above; provided, however, that if payment
of all or any portion of an Award under this Subplan has been deferred pursuant
to Section 9 of this Subplan or otherwise, but such Award otherwise has become
payable hereunder, then during the period during which payment is deferred, the
deferred Award shall be credited with additional units of Common Stock, and (if
applicable) fractions thereof, based on any dividends declared on the Common
Stock, in accordance with the terms of the EDCP.
Section 11. Application of Plan. The provisions of the Plan shall apply to
this Subplan, except to the extent that any such provisions are inconsistent
with specific provisions of this Subplan. In particular, and without
limitation, Section 11 (relating to performance shares), Section 12 (relating
to qualification of Awards as "performance-based" under Code Section 162(m)),
Section 17 (relating to nonassignability), Section 18 (relating to adjustment
of shares available), Section 19 (relating to withholding taxes), Section 20
(relating to noncompetition and confidentiality), Section 21 (relating to
regulatory approvals and listings), Section 23 (relating to the governing law),
Section 24 (relating to changes in ownership), Section 25 (relating to changes
in control), Section 26 (relating to no rights, title, or interest in Company
assets), and Section 27 (relating to securities laws) shall apply to this
Subplan.
Section 12. Amendments. The Committee may, from time to time, amend this
Subplan in any manner.
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EXHIBIT A
EASTMAN CHEMICAL COMPANY
LONG-TERM PERFORMANCE SUBPLAN GRANT TABLE
1998-2000 CYCLE
Original on File in
Management Compensation
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EXHIBIT B
COMPANIES IN THE PEER GROUP
Air Products and Chemicals, Inc.
ARCO Chemical Company
Crompton & Knowles Corporation
Dow Chemical Company
E. I. du Pont de Nemours and Company
H. B. Fuller Company
The Geon Company
Georgia Gulf Corporation
W. G. Grace, Inc.
Great Lakes Chemical Corporation
M. A. Hanna Company
Hercules Chemical Corporation
Lyondell Petrochemical Company
Millenium
Morton International, Inc.
Rohm and Haas Company
Union Carbide Corporation
Wellman, Inc.
Witco Corporation
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EXHIBIT C
EASTMAN CHEMICAL COMPANY
LONG-TERM PERFORMANCE SUBPLAN
1998-2000 PERFORMANCE PERIOD
PAYOUT TABLE
Eastman's TSR Payout Multiplier
Ranking (Times Target Grant Amount)
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1 2.0 X
2 1.9 X
3 1.8 X
4 1.7 X
5 1.6 X
6 1.5 X
7 1.4 X
8 1.3 X
9 1.2 X
10 1.1 X
11 0.9 X
12 0.7 X
13 0.5 X
14 0.3 X
15 0.1 X
16 0.0 X
17 0.0 X
18 0.0 X
19 0.0 X
20 0.0 X
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