Crompton Corporation 2003 Management Incentive Plan
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Summary
This agreement outlines Crompton Corporation's 2003 Management Incentive Plan for key management employees. Eligible participants are selected by company leadership and must meet employment requirements. The plan provides incentive awards based on company earnings, operating performance, and individual contributions, with specific thresholds and maximums for each component. Awards may be prorated for partial-year participants. The plan does not guarantee employment and allows the company discretion over payments if share price performance is low. Key financial definitions and performance metrics are also specified.
EX-10.26 3 d58828_ex10-26.txt MANAGEMENT INCENTIVE PLAN Exhibit 10.26 2003 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. The earnings performance component 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. The operating performance component 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. The individual contribution component of the target award is determined from the attached Operating and Individual Contribution Performance Schedule and may be leveraged from 80% to 150% depending on actual performance. B. 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). If the CK share price percentage change for the year 1/1/03 through 12/31/03 is in the lowest quartile of share price performance of its peer group, then 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 employee's 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. 2003 MIP / SIP Performance Matrix Definitions
NOTE: In arriving at Division Earnings, Business Earnings and Region Earnings, any business unit involved in the antitrust issue will be allocated its portion of antitrust legal costs in arriving at actual earnings for MIP purposes. April 28, 2003
