FOR AWARDS GRANTED UNDER THE
TOTAL SHAREHOLDER RETURN
INCENTIVE COMPENSATION PROGRAM
ALLEGHENY TECHNOLOGIES INCORPORATED
2000 INCENTIVE PLAN
This document constitutes part of a Prospectus
covering securities that have been registered
under the Securities Act of 1933.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this Prospectus. Any representation to the contrary is a
NAME OF PROGRAM: Allegheny Technologies Incorporated (the
"Company") Total Shareholder Return Incentive
Compensation Program ("TSRP" or the "Program").
PURPOSE: The primary purposes of the TSRP are to:
(i) reward senior executives for the overall
success of the Company as determined by the value
created for stockholders relative to peer
companies; and (ii) provide a means of
encouraging Company stock ownership by senior
PERFORMANCE PERIOD: A performance period under the TSRP is three
years. The initial performance period began
January 1, 2001 and will end December 31, 2003.
GRANT FREQUENCY: It is anticipated that a new performance period
will begin every year, which will create
overlapping performance periods.
TSRP STRUCTURE: Each participant will be assigned a target number
of shares. Participants can earn from 50%
(at threshold) to 200% (at maximum) of their target
shares based on performance. Performance below threshold
will earn 0%.
SIZE OF AWARDS: Target awards will be established for each
participant, according to the following schedule:
TARGET AWARDS AS
POSITION PERCENT OF SALARY
Segment Executives, Selected Corporate
Other Corporate Officers, Selected
Business Unit Heads 40%
Selected Business Unit General Managers 30%
Targeted Awards will be calculated according to the following formula:
Base Salary at x Target Opportunity / Average Closing Price For = Target
Beginning of As a Percent of Salary 30 Trading Days Prior to Number of
Performance Period Beginning of Three-Year Shares
Performance Period Awarded
PERFORMANCE MEASURE: Performance under the TSRP is calculated as a function of
the percentile ranking of ATI's total shareholder return
during the performance period (TSR) versus a peer group
composed of Companies selected at the beginning of the
performance period. For the 2003 - 2005 performance
period, the peer companies shall be the companies
identified in Appendix A.
TSR is the return that a shareholder realizes through
stock price appreciation and dividend reinvestment on an
equity instrument throughout a specified period. The
return for a period is calculated as the stock price at
the end of a period plus the dividends paid during the
measurement period divided by the stock price at the
beginning of the performance period.
TSRP PAYOUTS: TSRP payouts are equal to:
x Percent of target earned from peer group percentile
ranking in TSR
PERFORMANCE GOALS: The following table shows the performance reward
relationships for the TSRP:
OUTCOME RELATIVE TO PEER GROUP TSR
THREE-YEAR PERCENTILE PERCENT OF TARGET
LEVEL OF PERFORMANCE RANKING IN TSR AWARD EARNED
Below Threshold Below 35th percentile 0%
Threshold 35th percentile 50%
Target 50th percentile 100%
Excellent 75th percentile 200%
NOTE: Interpolation between points will be made on a
straight-line basis on each scale. Below the 35th
percentile (and above the 75th percentile), there will be
DIVIDENDS: No dividends will be paid on shares that are not yet
FORM AND TIMING OF All payouts from the TSRP will be made in Company Common
PAYOUT: Stock, as soon as practicable following the award
calculation; however, stock may be withheld in order to
satisfy tax withholding requirements.
CERTAIN TERMINATIONS In the event of a participant's death, disability, or
OF EMPLOYMENT: retirement (when the executive is at least 55 years of age
with at least five years of service), pro rata awards
based on the number of full months worked during that
performance period will be calculated. Such awards will be
based on goal achievement over the entire performance
period. Awards in these situations will be calculated and
paid after the end of the performance period.
Amounts paid on account of death will be paid to a
beneficiary designated by the participant. If no
beneficiary has been designated, amounts will be paid to
the participant's estate.
OTHER TERMINATIONS In the event of a termination of employment not
OF EMPLOYMENT: constituting a disability, death or retirement discussed
above, the participant will forfeit any right to any
payout for all performance periods in progress under the
TSRP. For terminations after the end of a performance
period, however, but before payout, payout will be made as
though the termination had not occurred.
TAX CONSIDERATIONS: The employee must report taxable income in the year in
which the award is paid.
TAX WITHHOLDING: The Company has the right to deduct any taxes or statutory
deductions required by law to be withheld from all
payments under the TSRP. See "Certain Federal Income Tax
CHANGE IN The number and kind of shares subject to outstanding
CAPITALIZATION: awards will be appropriately adjusted to reflect any stock
dividend, stock split, combination or exchange of shares,
merger, consolidation or other change in capitalization
with a similar substantive effect upon the TSRP or the
awards granted under the TSRP. The Committee shall have
the power and sole discretion to determine the amount of
the adjustment to be made in each case.
CHANGE IN CONTROL: If a Change in Control (as defined in the TSRP) is deemed
to have occurred, then all outstanding award cycles will
automatically vest and be paid out (with the consent of
the Committee, in cash) at the target level or the actual
performance level (as of the Change in Control), whichever
GENERAL INFORMATION ABOUT THE INCENTIVE PLAN AND THE TSRP
The Allegheny Technologies Incorporated 2000 Incentive Plan (the "INCENTIVE
PLAN") was adopted by the Company's Board of Directors on January 31, 2000 and
was approved by the Company's stockholders on May 11, 2000. The purpose of the
Incentive Plan is to help attract and retain key employees and promote their
commitment to achieving long-term corporate objectives.
The Incentive Plan enables the Company to award various types of stock-based
compensation. The following summary covers the terms of the Incentive Plan that
relate to awards made by the Committee under the TSRP. Because it is a summary,
it may not contain all the information that could be important to you. A copy of
the complete text of the TSRP is attached to this Information Statement as
Appendix A.1 and incorporated herein by reference. At your request, the Company
will provide you with a copy of the complete text of the Incentive Plan without
charge. See "Where You Can Find More Information."
The Personnel and Compensation Committee of the Company's Board of Directors
administers the Incentive Plan with respect to participants in the Incentive
Plan other than persons who are subject to the provisions of Section 16 of the
Securities and Exchange Act of 1934 ("STATUTORY INSIDERS"). The Stock Incentive
Award Subcommittee of the Personnel and Compensation Committee administers the
Incentive Plan as it applies to the Company's statutory insiders. (The Stock
Incentive Award Subcommittee and the Personnel and Compensation Committee are
referred to in this Information Statement as the "COMMITTEE").
The Committee has full authority to interpret the Incentive Plan, designate
eligible participants and categories of eligible participants, set the terms and
conditions of performance awards and establish and modify administrative rules
for the Incentive Plan. In addition, the Board of Directors may exercise any of
the powers and authority of the Committee under the Incentive Plan. The
Committee is comprised of directors who are appointed by and serve at the
pleasure of the Company's Board of Directors.
You are eligible to receive awards under the Incentive Plan if you are an
officer or key employee of the Company or its subsidiaries who has been
designated as a participant by the Committee in its sole discretion.
STOCK SUBJECT TO THE INCENTIVE PLAN
The Company may issue a maximum of up to 10% of its outstanding shares of Common
Stock under the Incentive Plan. The Committee may adjust this number in certain
The Common Stock offered under the Incentive Plan may be either authorized and
unissued shares or issued shares that the Company has reacquired and holds in
its treasury. If for any reason an award terminates or expires, the shares of
Common Stock covered by the award will again be available for the grant of new
awards under the Incentive Plan.
THE TOTAL SHAREHOLDER RETURN INCENTIVE COMPENSATION PROGRAM
The Committee adopted Administrative Rules under the Incentive Plan, effective
as of January 1, 2001, that establish the TSRP.
The Committee has the sole discretion to designate those executives and senior
managers who it believes most directly effect the Company's long-term success as
eligible for the Program. The Committee makes these determinations and
designations based on the recommendations of the Company's Chief Executive
Officer (the "CEO").
The terms and conditions of an Award, as established by the Committee, are set
forth in a total shareholder return incentive compensation award agreement
between the Company and the participant who has been granted the Award. These
agreements need not contain similar provisions with respect to Awards made to
different participants or Awards made to the same participant at different
Each award agreement describes:
o The performance period for measuring the achievement of performance
objectives, in whole or in part;
o the performance levels for the TSRP, including the target level of
performance, to be achieved during the performance period, and the number
of shares of Common Stock available to the participant upon achieving the
target level of performance (the "TARGET AWARD"); and
o the applicable percentage of the target award that will be paid depending
on the extent to which the target level of performance is fully or
partially achieved or surpassed (the "PERCENT OF TARGET AWARD EARNED").
For the 2003-2005 performance period, the maximum Award, equal to 200% of your
target award, is payable if the Company's three year percentile ranking in TSR
is at or above the 75th percentile of the applicable peer group. No Award is
paid if the Company's three-year percentile ranking in TSR is below the 35th
PAYMENT OF AWARDS
After the end of the award period, the Committee determines the number of shares
of Common Stock, if any, to be paid based on the extent to which the target
level of performance was fully or partially achieved or surpassed. All payouts
will be made as soon as practicable following the award calculation. Generally,
however, you will forfeit your right to payment of any Award under the TSRP
unless you are continuously an employee of the Company or any of its affiliates
from the date of grant of the Award to the date of payment. There are
exceptions, however, in the case of retirement, disability or death, as
You do not have the right to vote or receive dividends on the shares or have any
other rights of a stockholder with respect to the shares, unless and until the
shares are issued to you.
Awards under the Program are not transferable other than by will or by laws of
descent and distribution. During your lifetime, Awards are payable only to you.
AMENDMENT AND TERMINATION
The Incentive Plan will remain in effect until terminated by the Board of
Directors. The Board may at any time amend or terminate the Incentive Plan or
the TSRP. Without your consent, no such action may materially impair your rights
with respect to awards previously granted to you.
The Committee has the discretion to suspend the payment of an Award if it
determines that any of the following actions are necessary or desirable:
o any listing or registration of the shares of Common Stock;
o obtaining any consent or approval of any governmental body; or
o obtaining any other agreement or consent.
In that situation, the Award will be suspended until the Committee is satisfied
that the applicable action has been completed in a manner satisfactory to the
Also, neither your selection for participation in the Program nor the execution
of an award agreement will require the Company to retain your services for any
period of time.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
This section summarizes the United States federal income tax consequences as of
the date of this Information Statement to a participant who is a United States
citizen with respect to shares of Common Stock that may be received as payment
of an Award under the Program. THE COMPANY URGES YOU TO CONSULT YOUR PERSONAL
TAX ADVISOR WITH RESPECT TO THE APPLICATION OF THE FEDERAL INCOME TAX LAWS TO
YOUR PERSONAL CIRCUMSTANCES, CHANGES IN THESE LAWS, AND THE POSSIBLE EFFECT OF
Payment of Awards will result in ordinary income to you in the years in which
the shares of Common Stock are paid to you. The taxable amount is the fair
market value (as defined in the Program) of the shares. If you sell the shares
you received in payment of an Award, the difference between any amount realized
on the sale and the fair market value of these shares at the time they were paid
to you will be taxed as capital gain or loss, which will be short-term or
long-term, depending on the length of time you held these shares before sale.
The holding period for determining short-term or long-term capital gains or
losses begins on the date of payment of an Award.
The Award will be treated as supplemental wages that require a minimum of 27%
federal income tax withholding. You should also bear in mind that the federal
income tax rate on capital gains from sales of property held for less than 12
months (short-term capital gains) generally is the same as your maximum ordinary
income rate (maximum marginal federal rate for 2003 is 38.6%). Also, the tax
rate on capital gains from sales of capital assets held for more than 12 months
(long-term capital gains) is generally 20%. The capital gains rate applicable to
property acquired after December 31, 2000 and held for more than five years is
generally 18%. State income taxes generally apply to the Award and the
subsequent sale of the shares, and local income taxes may also be applicable.
When payments are made to you of amounts awarded under the Program, the Company
will notify you of the amount of withholding taxes, if any, which must be paid
under federal, state or local law. The Company may, with the consent of the
Committee, arrange for payment of the withholding taxes in any one or
combination of the following ways:
o accepting your cash payment of the amount;
o reducing the number of shares to be issued to you under the Program by the
whole number of shares having a fair market value (as defined in the
Program) equal to or greater than the amount the Company is required to
No shares of Common Stock will be delivered to you under the Program until all
applicable taxes have been paid in full.
The Program and the Incentive Plan generally do not impose restrictions upon the
resale of Common Stock that you acquire under the Program. However, under
certain circumstances, the Company may refuse to issue shares in connection with
the Incentive Plan until it is satisfied that you have complied with applicable
RESELLING BY AFFILIATES
Under the federal securities laws, if you are deemed to be an "affiliate" of the
Company, you are restricted in the resale of your Common Stock (whether acquired
under the Incentive Plan or otherwise). For this purpose, an "affiliate" of the
Company is any person who controls the Company, is controlled by the Company, or
is under common control with the Company, whether directly or indirectly through
one or more intermediaries. A corporation's "affiliates" would usually include
all persons whose security holdings are substantial enough to affect the
corporation's management. Also, all statutory insiders are presumed to be
In general, unless specifically registered for resale, shares owned by
affiliates can be sold only in compliance with Rule 144 of the Securities and
Exchange Commission or another applicable exemption from registration. Among
other things, Rule 144 imposes limitations on the amount of securities sold by
an affiliate in any three-month period and requires that sales be conducted
through a broker.
SECTION 16 - RESTRICTIONS ON STATUTORY INSIDERS
In addition, if you are subject to the provisions of Section 16 of the
Securities Exchange Act - a "statutory insider" of the Company - you must comply
with the reporting and short-swing profit forfeiture provisions of that Section.
Section 16(a) contains reporting requirements applicable to statutory insiders.
Section 16(b) sets forth rules concerning short-swing profit forfeiture that may
require these persons to disgorge profits realized upon the sale and purchase or
purchase and sale of Company securities within any six-month period.
If you have any questions about the impact of Rule 144 or Section 16 on Awards
granted to you under the Program, you should contact the Company at the address
or telephone number set forth under the heading "Where You Can Find More
Information" or, if appropriate, personal legal counsel.
The Incentive Plan is not a "qualified" plan within the meaning of Section
401(a) of the Internal Revenue Code and is not subject to any provisions of the
Employee Retirement Income Security Act of 1974, as amended.
WHERE YOU CAN FIND MORE INFORMATION
As required by the Securities and Exchange Commission, the Company has filed a
Registration Statement on Form S-8 relating to the Incentive Plan. The
Registration Statement incorporates by reference certain other documents that
the Company files with the Securities and Exchange Commission. Those documents
are also incorporated by reference into the prospectus relating to the Incentive
Plan that meets the requirements of Section 10(a) of the Securities Act of 1933.
This Information Statement is a part of the Section 10(a) prospectus. This means
that the Company can disclose important information to you by referring you to
the documents incorporated by reference. The information incorporated by
reference is an important part of the Section 10(a) prospectus, and information
that the Company files later with the Securities and Exchange Commission will
automatically update and supersede this information.
You may request a free copy of
o the Incentive Plan and the Program,
o the documents incorporated by reference into the Registration Statement and
the Section 10(a) prospectus (other than certain exhibits),
o all previously furnished Incentive Plan information documents that
constitute part of the Section 10(a) prospectus, and
o the Company's Annual Report to Stockholders for its latest fiscal year,
by writing or telephoning the Office of the Senior Vice President, Chief Legal
and Administrative Officer of the Company, at Allegheny Technologies
Incorporated, 1000 Six PPG Place, Pittsburgh, Pennsylvania 15222-5479, or (412)
394-2800 telephone, or (412) 394-2837 fax.
APPENDIX A: LIST OF PEER COMPANIES (2003-2005 PERFORMANCE PERIOD)
AK Steel Corporation Oregon Steel Mills
Alcan, Inc. Phelps Dodge Corporation
Alcoa Inc. Precision Castparts Corporation
Brush Engineered Materials Quanex Corporation
Carpenter Technology Corporation Reliance Steel and Aluminum
Commercial Metals Company RTI International Metals
Freeport McMoran Copper & Gold Ryerson Tull, Inc.
Gibraltar Steel Steel Dynamics
Inco Limited Titanium Metals Corporation
IPSCO Steel, Inc. UCAR International, Inc.
KEMET Corporation USX - U.S. Steel
Kennametal Inc. Worthington Industries, Inc.
ALLEGHENY TECHNOLOGIES INCORPORATED
2000 INCENTIVE PLAN
ADMINISTRATIVE RULES FOR THE
TOTAL SHAREHOLDER RETURN INCENTIVE COMPENSATION PROGRAM
EFFECTIVE AS OF JANUARY 1, 2001
ARTICLE I. ADOPTION AND PURPOSE OF THE PROGRAM
1.01 ADOPTION. These rules are adopted by the Personnel and
Compensation Committee and the Stock Incentive Award Subcommittee of
the Board of Directors as a part of the Allegheny Technologies
Incorporated 2000 Incentive Plan (the "Plan") pursuant to the authority
reserved in Section 3.01 of the Plan. The Total Shareholder Return
Incentive Compensation Program (the "TSRP") shall be the guidelines for
making certain Performance Awards or Other Stock-Based Awards under
Article VIII of the Plan. Capitalized terms used but not defined in
these rules shall have the same meanings as in the Plan.
1.02 PURPOSE. The purposes of the TSRP are (i) to assist the
Corporation in retaining and motivating selected key management
employees of the Corporation and its subsidiaries who will contribute
to the success of the Corporation, (ii) to reward key management
employees for the overall success of the Corporation as determined by
the value created for shareholders as measured by the percentile
performance of Corporation Common Stock relative to a peer group and
(iii) to provide a means of encouraging key management employees to
acquire and hold shares of Corporation Common Stock. The TSRP
encourages key management employees to acquire and hold shares of
Corporation Common Stock by offering them an opportunity to receive
shares of Common Stock which, in accordance with the terms and
conditions set forth below, will be earned only if the sum of the price
and yield of the Common Stock measured against the sums of prices and
yields of shares of common stock of a peer group of corporations meets
or exceeds the performance reward relationships set at the beginning of
an Award Period. Awards under the TSRP are intended to act as an
incentive to participating key management employees to achieve
long-term objectives that will inure to the benefit of all stockholders
of the Corporation measured in terms of relative stock prices.
ARTICLE II. DEFINITIONS
For purposes of these rules, the capitalized terms set forth below
shall have the following meanings:
2.01 AWARD AGREEMENT means a written agreement between the
Corporation and a Participant or a written acknowledgment from the
Corporation specifically setting forth the terms and conditions of a
TSR Target Award granted to a Participant pursuant to Article VI of
2.02 AWARD TARGETS means the percentage of a TSR Target Award
which shall be earned for a particular TSR Performance Period at
Threshold, Target and Excellent, respectively.
2.03 BOARD means the Board of Directors of the Corporation.
2.04 BUSINESS DAY means any day on which the New York Stock
Exchange shall be open for trading.
2.05 CAUSE means a determination by the Committee that a
Participant has engaged in conduct that is dishonest or illegal,
involves moral turpitude or jeopardizes the Corporation's right to
operate its business in the manner in which it is now operated.
2.06 CHANGE IN CONTROL means any of the events set forth
(a) The acquisition in one or more transactions,
other than from the Corporation, by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
Act) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of a number of Corporation Voting
Securities in excess of 25% of the Corporation Voting Securities unless
such acquisition has been approved by the Board; or
(b) Any election has occurred of persons to the Board
that causes two-thirds of the Board to consist of persons other than
(i) persons who were members of the Board on January 1, 2001 and (ii)
persons who were nominated for election as members of the Board at a
time when two-thirds of the Board consisted of persons who were members
of the Board on January 1, 2001; provided, however, that any person
nominated for election by the Board at a time when at least two-thirds
of the members of the Board were persons described in clauses (i)
and/or (ii) or by persons who were themselves nominated by such Board
shall, for this purpose, be deemed to have been nominated by a Board
composed of persons described in clause (i); or
(c) Approval by the stockholders of the Corporation
of a reorganization, merger or consolidation, unless, following such
reorganization, merger or consolidation, all or substantially all of
the individuals and entities who were the respective beneficial owners
of the Outstanding Stock and Corporation Voting Securities immediately
prior to such reorganization, merger or consolidation, following such
reorganization, merger or consolidation beneficially own, directly or
indirectly, more than 60% of, respectively, the then outstanding shares
of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of
directors or trustees, as the case may be, of the entity resulting from
such reorganization, merger or consolidation in substantially the same
proportion as their ownership of the Outstanding Stock and Corporation
Voting Securities immediately prior to such reorganization, merger or
consolidation, as the case may be; or
(d) Approval by the stockholders of the Corporation
of (i) a complete liquidation or dissolution of the Corporation or (ii)
a sale or other disposition of all or substantially all the assets of
2.07 COMMITTEE means the Stock Incentive Award Committee of
the Board, in the case of individuals who are executive officers of the
Corporation, and the Personnel and Compensation Committee of the Board,
in the case of individuals who are not executive officers of the
2.08 CORPORATION means Allegheny Technologies Incorporated, a
Delaware corporation, and its successors.
2.09 CORPORATION VOTING SECURITIES means the combined voting
power of all outstanding voting securities of the Corporation entitled
to vote generally in the election of the Board.
2.10 DATE OF GRANT means the date as of which a TSR Target
Award is granted in accordance with Article VI of these rules.
2.11 DISABILITY means any physical or mental injury or disease
of a permanent nature which renders a Participant incapable of meeting
the requirements of the employment performed by such Participant
immediately prior to the commencement of such disability. The
determination of whether a Participant is disabled shall be made by the
Committee in its sole and absolute discretion. Notwithstanding the
foregoing, if a Participant's employment by the Corporation or an
applicable subsidiary terminates by reason of a disability, as defined
in an Employment Agreement between such Participant and the Corporation
or an applicable subsidiary, such Participant shall be deemed to be
disabled for purposes of the TSRP.
2.12 EFFECTIVE DATE means January 1, 2001.
2.13 EXCHANGE ACT means the Securities Exchange Act of 1934,
2.14 EXCELLENT means a relative level of achievement of
Performance Reward Criteria at which the TSR for the Corporation for a
TSR Performance Period is at a percentile of the TSR for the Peer Group
for that Performance Period as determined by the Committee under
Section 6.02. Excellent shall be the highest level of performance for
which a TSRP Reward will be paid.
2.15 FAIR MARKET VALUE means, as of any given date, the
average of the closing trading price of the Common Stock on such date
as reported on the New York Stock Exchange or, if the Common Stock is
not then traded on the New York Stock Exchange, on such other national
securities exchange on which the Common Stock is admitted to trade, or,
if none, on the National Association of Securities Dealers Automated
Quotation System if the Common Stock is admitted for quotation thereon;
provided, however, if there were no sales reported as of such date,
Fair Market Value shall be computed as of the last date preceding such
date on which a sale was reported; provided, further, that if any such
exchange or quotation system is closed on any day on which Fair Market
Value is to be determined, Fair Market Value shall be determined as of
the first date immediately preceding such date on which such exchange
or quotation system was open for trading.
2.16 OUTSTANDING STOCK means, at any time, the issued and
outstanding Common Stock.
2.17 PARTICIPANT means any key management employee selected by
the Committee, pursuant to Section 5.01 of these rules, as eligible to
participate under the TSRP for any one or more TSR Performance Period.
2.18 PEER GROUP means a group of corporations with publicly
traded common stock listed on a national securities exchange(s) deemed
comparable to the Corporation as the number and identity of such group
is determined by the Committee, in its discretion, for a particular TSR
Performance Period. In the event of bankruptcy, delisting, merger,
spin-off or other special circumstances affecting members of the Peer
Group during a Performance Period, the Committee shall make such
adjustments in the Peer Group as the Committee determines appropriate
in its discretion. The Committee may select the number and identity of
members of the Peer Group separately for each TSR Performance Period.
2.19 PERFORMANCE REWARD CRITERIA means the relative standing
of the Corporation TSR, expressed in percentiles and ranked at
Threshold, Target and Excellent, as compared to the TSR for the Peer
Group, in each case for a particular TSR Performance Period.
2.20 PERFORMANCE LEVEL means the level of actual achievement
of Performance Reward Criteria for a particular TSR Performance Period.
In determining final Performance Levels, the Committee shall use
straight-line interpolation between Threshold and Target, Target and
Excellent but there shall be no interpolation above Excellent or below
2.21 PLAN means the Allegheny Technologies Incorporated 2000
Incentive Plan, as the same may be amended from time to time.
2.22 RETIREMENT means a termination of employment with the
Corporation and each subsidiary of the Corporation at or after (i)
attaining age 55 and (ii) completing five years of employment with the
Corporation and/or any subsidiary of the Corporation.
2.23 TARGET means a relative level of Performance Reward
Criteria at which the Corporation TSR for a particular TSR Performance
Period is at a percentile of TSR for the Peer Group for that TSR
Performance Period as determined by the Committee under Section 6.02.
2.24 THRESHOLD means a relative level of Performance Reward
Criteria at which the Corporation TSR for a particular TSR Performance
Period is at a percentile of TSR for the Peer Group for that TSR
Performance Period as determined by the Committee under Section 6.02.
Threshold shall be the lowest level of Performance Reward Criteria for
which a Plan Reward will be earned.
2.25 TSR is the percentile ranking of the sum of stock price
appreciation of and dividend reinvestment with respect to a share of
Corporation Stock as compared to the comparable amount among the Peer
Group for a particular TSR Performance Period as calculated on the Fair
Market Value of a share of Stock as of the end of the TSR Performance
Period plus dividends paid on a share of stock during the TSR
Performance Period divided by the Fair Market Value of a share of Stock
at the beginning of the TSR Performance Period using the methodology
described in item 402(l) of Regulation S-K as promulgated under the
Securities Act, as such act or regulation may be amended from time to
time, or any successor to either.
2.26 TSRP means the Total Shareholder Return Incentive
Compensation Program as set forth in these rules as the same may be
amended from time to time.
2.27 TSR PERFORMANCE PERIOD means a three calendar year period
beginning on the January 1st designated by the Committee and continuing
until the third December 31st thereafter.
2.28 TSR REWARDS means the number of shares of Stock earned
for a particular TSR Performance period after application of the
2.29 TSR TARGET AWARD means an award of an opportunity to earn
a number of shares of Stock in a TSR Performance Period. The number of
shares for a particular Participant shall be determined by the
Committee for each TSR Performance Period by dividing the Participant's
base salary at the commencement of the TSR Performance Period by the
average Fair Market Value for the 30 Business Days preceding the first
Business Day of that TSR Performance Period and multiplying the result
by a decimal determined appropriate by the Committee based on the
Participant's responsibilities and opportunity to contribute to the
success of the Corporation.
2.30 STOCK means Common Stock, par value $0.10 per share, of
2.31 WITHHOLDING OBLIGATIONS means the amount of federal,
state and local income and payroll taxes the Corporation determines in
good faith must be withheld with respect to a TSR Rewards. Withholding
Obligations may be settled by the Participant, as permitted by the
Committee in its discretion, in shares of Stock otherwise deliverable
under the TRSP, cash, previously owned shares of Stock or any
combination of the foregoing.
ARTICLE III. ADMINISTRATION
In addition to any power reserved to the Committee under
Article III of the Plan, the TSRP shall be administered by the
Committee, which shall have exclusive and final authority and
discretion in each determination, interpretation or other action
affecting the TSRP and its Participants. The Committee shall have the
sole and absolute authority and discretion to interpret the TSRP, to
modify these administrative rules for the TSRP, to select, in
accordance with Section 5.01 of these rules, the persons who will be
Participants hereunder, to determine all performance criteria, levels
of awards and rewards payable, to impose such conditions and
restrictions as it determines appropriate and to take such other
actions and make such other determinations in connection with the TSRP
as it may deem necessary or advisable.
ARTICLE IV. STOCK ISSUABLE UNDER THE TSRP
4.01 NUMBER OF SHARES OF STOCK ISSUABLE. Subject to
adjustments as provided in Section 11.07 of the Plan, the maximum
number of shares of Stock available for issuance under the TSRP shall
be 1,500,000. The Stock to be offered under the TSRP shall be
authorized and unissued Stock, or Stock which shall have been
reacquired by the Corporation and held in its treasury.
4.02 SHARES SUBJECT TO TERMINATED AWARDS. Shares of Stock
forfeited as provided in Section 6.03 of these rules may again be
issued under the TSRP.
ARTICLE V. PARTICIPATION
5.01 DESIGNATION OF PARTICIPANTS. Participants in the TSRP
shall be such key management employees of the Corporation or of its
subsidiaries as the Committee, in its sole discretion, may designate as
eligible to participate in the TSRP for any one or more TSR Performance
Periods. No later than 90 days after the commencement of each TSR
Performance Period during the term of the TSRP, the Committee shall
designate the Participants who are eligible to participate in the TSRP
during such TSR Performance Period. The Committee's designation of a
Participant with respect to any TSR Performance Period shall not
require the Committee to designate such person as a Participant with
respect to any other TSR Performance Period. The Committee shall
consider such factors as it deems pertinent in selecting Participants.
The Committee shall promptly provide to each person selected as a
Participant written notice of such selection.
ARTICLE VI. GRANTS UNDER THE TSRP
6.01 ANNUAL DETERMINATION REGARDING TSR PERFORMANCE PERIOD. No
later than the 60th day of each calendar year, the Committee shall
determine whether to establish a TSR Performance Period, provided,
however, for a TSR Performance Period established in calendar year
2001, the Committee may make a determination under this Section 6.01 at
any time prior to the 90th day of calendar year 2001.
6.02 DETERMINATION OF GRANTS, AWARDS AND PERFORMANCE CRITERIA.
For each TSR Performance Period, the Committee shall take the following
actions no later than the 90th day of the first calendar year of that
TSR Performance Period:
(a) Identify Participants for that TSR Performance
(b) Establish the level of the TSR Target Awards for
(c) Set the Performance Reward Criteria in terms of
percentile ranking among the Peer Group for such period at Threshold,
Target and Excellent, respectively;
(d) Set the Award Targets for Threshold, Target and
(e) Determine the Peer Group for that TSR Performance
6.03 TERMINATION OF EMPLOYMENT. If a Participant terminates
employment with the Corporation and each subsidiary of the Corporation
during a then uncompleted TSR Performance Period for reasons other than
death, Disability or Retirement, any TSR Target Award for any then
uncompleted TSR Performance Period shall be forfeited automatically and
the shares represented by such TSR Target Awards shall again be
eligible for awards under these Rules. If a Participant terminates
employment with the Corporation and each subsidiary of the Corporation
for reasons of death, Disability or Retirement during a then
uncompleted TSR Performance Period, the Participant shall be entitled
to receive a pro rata Plan Reward for each then uncompleted TSR
Performance Period determined:
(a) when the TSR Rewards for all other Participants
in such TSR Performance Period(s) are determined;
(b) based on the actual level of achievement of
Performance Reward Criteria for that TSR Performance Period and the
Participant's TSR Target Award;
(c) pro rated by multiplying the number of shares of
Stock the Participant would have received if the Participant completed
the TSR Performance Period multiplied by a fraction, the numerator of
which is the number of months of such TSR Performance Period completed
before the Participant's termination of employment and the denominator
is 36; and
(d) certificates representing the number determined
above shall be delivered at the same time as all other certificates for
such TSR Performance Period are delivered to Participants who completed
the TSR Performance Period.
ARTICLE VII. DETERMINATION OF PERFORMANCE REWARD CRITERIA AND DELIVERY OF STOCK
7.01 DETERMINATION OF ACTUAL ACHIEVEMENT OF PERFORMANCE REWARD
CRITERIA. As promptly as administratively feasible but in no event
later than the March 1st of the calendar year following last calendar
year of each TSR Performance Period, the Committee shall determine the
TSR of the Corporation and the average TSR of each member of the Peer
Group and determine the Performance Level, if any, at which the
Performance Reward Criteria have been achieved.
7.02 DETERMINATION OF PLAN REWARDS. Plan Rewards for a
particular TSR Performance Period for a particular participant shall be
the result of multiplying that Participant's TSR Target Award by the
Performance Level for that TSR Performance Period determined under
7.03 DELIVERY OF STOCK CERTIFICATES. As promptly as
administratively feasible after the but in no event later than the
March 15th of the calendar year following the last calendar year of a
TSR Performance Period, the Corporation shall prepare for each
Participant due a Plan Reward under Section 7.02 one or more stock
certificates registered in the name(s) indicated by such Participant
and shall deliver such certificates to the Participant promptly
following the Participant's settlement of the Withholding Obligations
by placing such certificates or causing such certificates to be placed
in the U.S. mail, postage prepaid, to the address indicated by the
ARTICLE VIII. MISCELLANEOUS
8.01 APPLICATION OF PROVISIONS OF PLAN. Except as set forth in
these Rules, the provisions of the Plan, including, but not limited to,
Article X, the Terms Applicable Generally to Awards Granted under the
Plan, shall apply to these Rules and are incorporated herein as if set
forth at length.
8.02 CHANGE IN CONTROL. In the event of a Change in Control,
Plan Rewards shall be determined for all then uncompleted TSR
Performance Periods as of the date of the Change in Control at the
greater of (i) the Performance Level actually attained prior to the
Change in Control and projected for the remainder of such uncompleted
TSR Performance Periods or (ii) Target for each such uncompleted TSR
Performance Period and certificates (or, with the consent of the
Committee an amount in cash representing the Fair Market Value of such
certificates) representing the Plan Rewards shall be delivered to the
Participant as soon after the Change in Control as is administratively
8.03 SECURITIES LAWS AND SECTION 162(M) RESTRICTIONS. Any TSR
Award denominated in Common Stock shall be subject to the requirement
that if at any time the Committee shall determine that any listing or
registration of the shares of Common Stock or any consent or approval
of any governmental body or any other agreement or consent is necessary
or desirable as a condition to the granting of a TSR Award or issuance
of shares of Common Stock or cash in satisfaction thereof, such grant
of an award or issuance of shares of Common Stock may not be
consummated unless such requirement is satisfied in a manner acceptable
to the Committee. It is intended, unless the Committee determine
otherwise, that the TSRP comply with Rule 16b-3 as issued by the
Securities and Exchange Commission and Section 162(m) of the Code. All
interpretations of the TSRP relating to Statutory Insiders shall be
consistent with that Rule 16b-3, the Exchange Act and Section 162(m) of
the Code. In order to maintain compliance with any of Rule 16b-3, the
Exchange Act or the Code, the Committee may adopt such other rules or
provide restrictions on outstanding TSR Awards as it in its discretion
shall deem necessary and such rules or restrictions shall apply to
outstanding TSR Awards as if set forth in the respective TSR Award
8.04 INVESTMENT REPRESENTATION. Each TSR Award Agreement may
provide that the Participant shall deliver to the Committee upon demand
by the Committee a written representation that the shares of Common
Stock to be delivered are acquired by the Participant for investment
and not for resale or with a view to the distribution thereof. Upon
demand, delivery of such representation prior to the delivery of shares
of Common Stock shall be a condition precedent to the Participant's
right to receive such shares of Common Stock.
8.05 NO RIGHTS AS STOCKHOLDERS. Participants shall have no
rights as shareholders of the Corporation prior to the actual delivery
of shares of Common Stock. The existence of these Rules and/or any TSR
Awards then outstanding shall not be a bar or affect in any way the
power or authority of the Corporation or any of its then stockholders
to take any action regarding the Corporation, its assets or its capital
8.06 NON-UNIFORM DETERMINATIONS. The actions and
determinations of the Committee need not be uniform and may be taken or
made by the Committee selectively among employees or Participants,
whether or not similarly situated.
8.07 AMENDMENT AND TERMINATION OF RULES. The Committee shall
have complete power and authority to amend or terminate these Rules at
any time it is deemed necessary or appropriate. No termination or
amendment of the Rules may, without the consent of the Participant to
whom any award shall theretofore have been granted under the TSRP,
adversely affect the right of such individual under such award;
provided, however, that the Committee may, in its sole discretion, make
such provision in the Award Agreement for amendments which, in its sole
discretion, it deems appropriate.