EXHIBIT 10.27
2002
MANAGEMENT INCENTIVE PLAN
I. Eligibility
A. Participation will be limited to key management personnel
who are approved by the Organization, Compensation and
Governance Committee of the Board of Directors and/or the
President and Chief Executive Officer. Names of proposed
participants, who are recommended by the Executive Vice
Presidents, Senior Vice Presidents, and Regional Vice
Presidents, should be received by the Senior V. P.
Organization and Administration in the corporate office, by
December 31st of the preceding year. Personal objectives for
approved participants should be received by April 15th.
B. To be eligible for the Management Incentive Plan (MIP),
participants must be employees of Crompton and/or its eligible
subsidiaries as of January 1st of the Plan year and remain on
the payroll through the date the MIP awards, if any, are made.
Exceptions may be granted to employees who are participating
as of January 1st of the Plan year; complete at least six
months of employment during the Plan year, and then retire or
leave involuntarily (except for cause). Such participants may
be eligible for prorated payments.
C. Employees who are either hired as a MIP eligible
participant or are promoted and become a MIP eligible
participant after the beginning of the Plan year may be
assigned prorated target incentives based upon salary at
eligibility and the number of months in the position provided
they have a minimum of six-months participation.
II. Target Award
Each participant's target award opportunity is a function of
actual base salary at the beginning of the Plan year or later
date of entry into the Plan.
III. Earnings Performance
A. One half of the target award is determined based on
applicable Net Income After Tax (NIAT) or Earnings results.
(See Performance Matrix).
B. Threshold performance for earning an award is at 80%
achievement of the applicable earnings budget. Where earnings
are split, the elements of earnings will be calculated on a
weighted average based on the split. The weighted average
must reach 80% of budget.
C. The maximum award level for earnings performance is
reached at 120% achievement of the applicable earnings budget.
D. The Earnings Performance component of an incentive award
is determined from the attached Earnings Performance Schedule
and is leveraged from 50% (at 80% of earnings budget) to 200%
(at 120% of earnings budget).
IV. Operating Performance
A. One quarter of the target award is determined based on
operating performance, (Return on Capital Employed, Sales,
Cash Flow, Working Capital, etc.)
B. The threshold for earning an award for operating
performance is 80% achievement of operating performance goals
and the maximum award level, for quantifiable operating
performance, is reached at 120% achievement of operating
performance goals.
C. The Operating Performance component of an incentive award
is determined from the attached Operating Performance and
Individual Contributions Schedule and is leveraged from 80% to
150% depending on actual performance.
V. Individual Contributions
A. One quarter of the target award is determined based on
achievement of individual Contributions.
B. The Individual Contribution component of an incentive
award is determined from the attached Operating and Individual
Contribution Performance Schedule and may be leveraged from
80% to 150% depending on actual performance.
C. Non-quantifiable Individual Contributions will be
leveraged from 80% to 100% depending on actual performance.
Quantifiable Individual Contributions will be leveraged from
80% to 150% depending on actual performance.
VI. No incentive for either Earnings or Operating Performance
may be earned by an individual if the earnings performance
applicable to that individual is less than 80% (Threshold).
The Corporation reserves the right to determine in its sole
discretion, whether, and, if so, in what amount of incentive
compensation shall be paid in any year to any employee of the
Corporation under the Plan. Participation in the MIP is in no
way an employment agreement, and each employees' employment by
Crompton remains, and shall continue to remain, at will.
Nothing in the MIP changes or in any way affects an employee's
right to resign his or her employment at any time, or
Crompton's right to terminate such employee's employment at
any time.
2002 MIP / SIP
(PERFORMANCE MATRIX)
CEO Division Region SBU Region SBU Opns./
EVPs VPs Heads Mktg. Mktg. Mfg.
Heads Heads Heads
Consolidated
NIAT 50% 10% 10%
Division
Earnings 30% 10% 50%
Business
Earnings
(Division/
Region) 50% 30% 50%
Region
Earnings 10% 40% 10%
EARNINGS
PERFORMANCE 50% 50% 50% 50% 50% 50% 50%
Consolidated
Cash Flow 10%
Consolidated
ROCE 10% 10%
Business
Cash Flow 10%
Business
Sales 10% 10% 15% 15% 20%
Business
Accts.
Rec.(DSO)
& Inv.(DSI) 10% 5% 5% 5%
EHS
Contributions 5% 5% 5% 5% 5% 5% 10%
Sales
OPERATING
PERFORMANCE 25% 25% 25% 25% 25% 25% 25%
INDIVIDUAL
CONTRIBUTIONS 25% 25% 25% 25% 25% 25% 25%
Div. Div. Div. Region Region Corp.
R&D Staff Staff Staff Staff Staff
Heads Finac Non-Fin Finac Non-Fin Sales
Consolidated
NIAT 50%
Division
Earnings 50% 50% 50% 15%
Business
Earnings
(Division/
Region)
Region
Earnings 50% 50%
EARNINGS
PERFORMANCE 50% 50% 50% 50% 50% 50% 15%
Consolidated
Cash Flow 10%
Consolidated
ROCE 10%
Business
Cash Flow 20% 10%
Business
Sales 10% 10% 20%
Business
Accts.
Rec.(DSO)
& Inv.(DSI) 20% 5%
EHS
Contributions 15% 5% 5% 5% 5% 5% 5%
Sales 75%
OPERATING
PERFORMANCE 25% 25% 25% 25% 25% 25% 85%
INDIVIDUAL
CONTRIBUTIONS 25% 25% 25% 25% 25% 25% 0%
Note: See attachment for definitions.
02/19/2002