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Exhibit
10(x)
ALCOA INC.
CHANGE IN CONTROL
SEVERANCE PLAN
The Company hereby adopts, as
of January 11, 2002, the Alcoa Inc. Change in Control
Severance Plan for the benefit of certain employees of the Company
and its subsidiaries, on the terms and conditions hereinafter
stated. All capitalized terms used herein are defined in
Section 1 hereof.
Section 1. DEFINITIONS . As
hereinafter used:
1.1 “ Affiliate
” shall have the meaning set forth in Rule 12b-2 under
Section 12 of the Exchange Act.
1.2 “ Applicable
Multiplier ” shall mean three (3); provided, however,
that, with respect to an Eligible Employee who incurs a Severance
during the three year period immediately preceding such
individual’s Mandatory Retirement Age, such multiplier shall
be equal to (x) the number of full and partial months
remaining until such Eligible Employee attains Mandatory Retirement
Age, (y) divided by twelve.
1.3 “ Applicable
Period ” shall mean the thirty-six (36) month period
immediately following an Eligible Employee’s Severance Date;
provided, however, that, with respect to an Eligible Employee who
incurs a Severance during the three year period immediately
preceding such individual’s Mandatory Retirement Age, the
Applicable Period shall mean the period remaining until such
Eligible Employee attains Mandatory Retirement Age.
1.4 “ Beneficial
Owner ” shall have the meaning set forth in Rule 13d-3
under the Exchange Act.
1.5 “ Board
” means the Board of Directors of the Company.
1.6 “ Cause
” means: (i) the willful and continued failure by the
Eligible Employee to substantially perform the Eligible
Employee’s duties with the Employer that has not been cured
within thirty (30) days after a written demand for substantial
performance is delivered to the Eligible Employee by the Board,
which demand specifically identifies the manner in which the Board
believes that the Eligible Employee has not substantially performed
the Eligible Employee’s duties, or (ii) the willful
engaging by the Eligible Employee in conduct which is demonstrably
and materially injurious to the Company, monetarily or otherwise.
For purposes of clauses (i) and (ii) of this definition,
(x) no act, or failure to act, on the Eligible
Employee’s part shall be deemed
“willful” unless done, or omitted to be done, by the
Eligible Employee not in good faith and without reasonable belief
that the Eligible Employee’s act, or failure to act, was in
the best interest of the Company and (y) in the event of a
dispute concerning the application of this provision, no claim by
the Company that Cause exists shall be given effect unless the
Company establishes to the Board by clear and convincing evidence
that Cause exists and the Board finding to that effect is adopted
by the affirmative vote of not less than three quarters
(3/4) of the entire membership of the Board (after reasonable
notice to the Eligible Employee and an opportunity for the Eligible
Employee, together with the Eligible Employee’s counsel, to
be heard by the Board).
1.7 “ Change in
Control ” shall be deemed to have occurred if the event
set forth in any one of the following paragraphs shall have
occurred:
(a) any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) (a “Person”) becomes the
beneficial owner (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of either (A) the
then-outstanding shares of common stock of the Company (the
“Outstanding Company Common Stock”) or (B) the
combined voting power of the then-outstanding voting securities of
the Company entitled to vote generally in the election of directors
(the “Outstanding Company Voting Securities”);
provided , however , that, for purposes of this
Section 1.7, the following acquisitions shall not constitute a
Change of Control: (i) any acquisition directly from the
Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any Affiliated Company or
(iv) any acquisition pursuant to a transaction that complies
with Sections 1.7 (c)(A), 1.7(c)(B) and 1.7(c)(C);
(b) individuals who, as of
the date hereof, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a
majority of the Board; provided , however , that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company’s
shareholders was approved by a vote of at least two-thirds (
2 /
3 ) of the directors then comprising the
Incumbent Board shall be considered as though such individual was a
member of the Incumbent Board, but excluding, for this purpose, any
such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board;
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(c) consummation of a
reorganization, merger, statutory share exchange or consolidation
or similar transaction involving the Company or any of its
subsidiaries, a sale or other disposition of all or substantially
all of the assets of the Company, or the acquisition of assets or
stock of another entity by the Company or any of its subsidiaries
(each, a “Business Combination”), in each case unless,
following such Business Combination, (A) all or substantially
all of the individuals and entities that were the beneficial owners
of the Outstanding Company Common Stock and the Outstanding Company
Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, 55% or more of the
then-outstanding shares of common stock (or, for a non-corporate
entity, equivalent securities) and the combined voting power of the
then-outstanding voting securities entitled to vote generally in
the election of directors (or, for a non-corporate entity,
equivalent governing body), as the case may be, of the entity
resulting from such Business Combination (including, without
limitation, an entity that, as a result of such transaction, owns
the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership immediately
prior to such Business Combination of the Outstanding Company
Common Stock and the Outstanding Company Voting Securities, as the
case may be, (B) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit
plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns,
directly or indirectly, 20% or more of, respectively, the
then-outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting
power of the then-outstanding voting securities of such
corporation, except to the extent that such ownership existed prior
to the Business Combination, and (C) at least a majority of
the members of the board of directors (or, for a non-corporate
entity, equivalent governing body) of the entity resulting from
such Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement or of the action
of the Board providing for such Business Combination; or
(d) the shareholders of the
Company approve a plan of complete liquidation or dissolution of
the Company.
1.8 “ Code
” means the Internal Revenue Code of 1986, as it may be
amended from time to time.
1.9 “ Committee
” means the Compensation Committee of the Board.
1.10 “ Company
” means Alcoa Inc., or any successors thereto.
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1.11 “ DB Pension
Plan ” means any tax-qualified, supplemental or excess
defined benefit pension plan maintained by the Company or any of
its Affiliates and any other defined benefit plan or agreement
entered into between the Eligible Employee and the Company or any
of its Affiliates which is designed to provide the Eligible
Employee with supplemental defined benefit retirement
benefits.
1.12 “ DC Pension
Plan ” means any tax-qualified, supplemental or excess
defined contribution plan maintained by the Company or any of its
Affiliates and any other defined contribution plan or agreement
entered into between the Eligible Employee and the Company or any
of its Affiliates which is designed to provide the Eligible
Employee with supplemental defined contribution retirement
benefits.
1.13 “ Eligible
Employee ” means any Tier I, Tier II or Tier III
Employee. An Eligible Employee becomes a “ Severed
Employee ” once he or she incurs a Severance.
1.14 “ Employer
” means the Company or any of its subsidiaries which is an
employer of the Eligible Employee.
1.15 “ Entity
” means any individual, entity, person (within the meaning of
Section 3(a)(9) of the Exchange Act or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act),
other than (i) an employee plan of the Company or any of its
Affiliates, (ii) any Affiliate of the Company, (iii) an
underwriter temporarily holding securities pursuant to an offering
of such securities, or (iv) a corporation owned, directly or
indirectly, by shareholders of the Company in substantially the
same proportions as their ownership of the Company.
1.16 “ Exchange
Act ” shall mean the Securities Exchange Act of 1934, as
amended from time to time.
1.17 “ Excise
Tax ” shall mean any excise tax imposed under section
4999 of the Code.
1.18 “ Good
Reason ” in respect of an Eligible Employee means the
occurrence, after a Change in Control (or prior to a Change in
Control, under the circumstances described in the second sentence
of Section 1.26 hereof, treating all references below to a
“Change in Control” as references to a “Potential
Change in Control”), of:
(i) the assignment to the
Eligible Employee of any duties inconsistent with the Eligible
Employee’s employment status with the Employer
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immediately prior to the Change in
Control or a substantial adverse alteration in the nature or status
of the Eligible Employee’s responsibilities from those in
effect immediately prior to the Change in Control, including, but
not limited to, (x) with respect to a Tier I Employee, the
Eligible Employee’s ceasing to hold the office as the sole
chief executive officer of the Company (or its parent or successor)
and to function in that capacity, reporting directly to the board
of directors of a public company, and (y) with respect to a
Tier II Employee, the Eligible Employee’s ceasing to report
directly to the chief executive officer of a public
company;
(ii) a reduction by the
Company in the Eligible Employee’s total compensation and
benefits in the aggregate from that in effect immediately prior to
the Change in Control. Total compensation and benefits includes,
but is not limited to (1) annual base salary, annual variable
compensation opportunity (taking into account applicable
performance criteria and the target bonus amount of annual variable
compensation); (2) long term stock-based and cash incentive
opportunity (taking into account applicable performance criteria
and the target stock option amount); and (3) benefits and
perquisites under pension, savings, life insurance, medical,
health, disability, accident and material fringe benefit plans of
the Company or its subsidiaries or Affiliates in which the Eligible
Employee was participating immediately before the Change in
Control;
(iii) the relocation of the
Eligible Employee’s principal place of employment to a
location more than fifty (50) miles from the Eligible
Employee’s principal place of employment immediately prior to
the Change in Control; or
(iv) the failure by the
Employer to pay to the Eligible Employee any portion of the
Eligible Employee’s compensation, within fourteen
(14) days of the date such compensation is due.
The Eligible Employee’s
right to terminate the Eligible Employee’s employment for
Good Reason shall not be affected by the Eligible Employee’s
incapacity due to physical or mental illness. The Eligible
Employee’s continued employment shall not constitute consent
to, or a waiver of rights with respect to, any act or failure to
act constituting Good Reason hereunder. For purposes of any
determination regarding the existence of Good Reason, any good
faith determination by the Eligible Employee that Good Reason
exists shall be conclusive. Notwithstanding anything in this
Section 1.18 to the contrary, any termination of employment by
a Tier I Employee or a Tier II Employee, whether voluntary or
involuntary, for any reason or no reason, within a thirty
(30) day period commencing on a date six months immediately
following a Change in Control shall be deemed to constitute a
termination for Good Reason hereunder.
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1.19 “ Gross-Up
Payment ” shall have the meaning set forth in
Section 2.2 hereof.
1.20 “ Incumbent
Board ” shall mean individuals who, as of the date
hereof, constitute the Board cease for any reason to constitute at
least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company’s
shareholders was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered
as though such individual was a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended, other than the Board.
1.21 “ Mandatory
Retirement Age ” means, solely for purposes of this Plan,
age 75.
1.22 “ Notice of
Termination ” shall have the meaning set forth in
Section 3.6.
1.23 “ Plan
” means the Alcoa Inc. Change in Control Severance Plan, as
set forth herein, as it may be amended from time to
time.
1.24 A “ Potential
Change in Control ” shall be deemed to have occurred if
the event set forth in any one of the following paragraphs shall
have occurred:
(a) the Company is
negotiating an agreement, the consummation of which may result in
the occurrence of a Change in Control;
(b) the Company or any Entity
states an intention to take or to consider taking actions which, if
consummated, would constitute a Change in Control;
(c) any Entity becomes the
Beneficial Owner, directly or indirectly, of securities of the
Company representing 5% or more of either the then outstanding
shares of common stock of the Company or the combined voting power
of the Company’s then outstanding securities with the purpose
or with the effect of changing or influencing the control of the
Company.
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A Potential Change in Control
shall be considered to be pending during the period beginning on
the date when it occurs and ending on the occurrence of a
subsequent Change in Control; provided, a Potential Change in
Control shall be considered to cease to be pending on the first
anniversary of such date unless either (i) a Change in Control
has previously occurred or (ii) the Incumbent Board determines
that the Potential Change in Control is still pending; and if the
Incumbent Board does so determine, then the Potential Change in
Control shall continue to be considered pending until the
occurrence of a Change in Control or a determination by the
Incumbent Board that the Potential Change in Control is no longer
pending.
1.25 A “ Separation
from Service ” means (i) an Eligible Employee ceases
to provide any services to the Company in any capacity (whether as
an employee or an independent contractor), other than bona fide
services at a level that does not exceed more than fifty
(50) percent of the average level of bona fide services
(whether as an employee or an independent contractor) performed by
the Eligible Employee over the preceding thirty-six (36) month
period (or the full period of services to the Company if the
Eligible Employee has been providing services to the Company for
less than thirty-six (36) months), and (ii) the Company
and the Eligible Employee reasonably anticipate that such cessation
will be permanent.
1.26 “ Severance
” means an Eligible Employee’s Separation from Service
on or within three years immediately following the date of the
Change in Control, (x) by the Employer other than for Cause,
or (y) by the Eligible Employee for Good Reason. In addition,
for purposes of this Plan, the Eligible Employee shall be deemed to
have incurred a Severance, if (i) the Eligible
Employee’s Separation from Service occurs because his
employment is terminated by the Employer without Cause prior to a
Change in Control (whether or not a Change in Control ever occurs)
and such termination was at the request or direction of an Entity
who has entered into an agreement with the Company the consummation
of which would constitute a Change in Control or (ii) the
Eligible Employee’s Separation from Service occurs because he
terminates his employment for Good Reason prior to a Change in
Control (whether or not a Change in Control ever occurs) and the
circumstance or event which constitutes Good Reason occurs at the
request or direction of such Entity. For purposes of any
determination regarding the applicability of the immediately
preceding sentence, any position taken by the Eligible Employee
shall be presumed to be correct unless the Company establishes to
the Board by clear and convincing evidence that such position is
not correct. An Eligible Employee will not be
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considered to have incurred a Severance
if his or her employment is discontinued by reason of the Eligible
Employee’s death or a physical or mental condition causing
such Eligible Employee’s inability to substantially perform
his or her duties with the Company, including, without limitation,
such condition entitling him or her to benefits under any sick pay
or disability income policy or program of the Company.
1.27 “ Severance
Date ” means the date on which an Eligible
Employee’s Severance takes place.
1.28 “ Severance
Pay ” means the payment determined pursuant to
Section 2.1(a) hereof.
1.29 “ Tier I
Employee ” means the Chief Executive Officer of the
Company.
1.30 “ Tier II
Employee ” means (i) the Chief Financial Officer,
the President and Chief Operating Officer, the General Counsel and
the head of Corporate Development for the Company, and
(ii) any such other officer (other than an assistant officer)
of the Company as the Committee determines.
1.31 “ Tier III
Employee ” means (i) any officer (other than an
assistant officer) of the Company and (ii) any such other key
executive of the Company or any of its subsidiaries or Affiliates
as the Committee determines, which employee, in each case, is not a
Tier I Employee or Tier II Employee.
Section 2. BENEFITS .
2.1 Severance Payments and
Benefits . Each Eligible Employee who incurs a Severance shall
be entitled, subject to Section 2.4, to receive the following
payments and benefits from the Company.
(a) Severance Pay equal to
the product of (i) the sum of (x) the Severed
Employee’s annual base salary, and (y) his or her target
annual variable compensation with respect to the year in which the
Change in Control occurs, and (ii) the Applicable Multiplier.
For purposes of this Section 2.1(a), annual base salary shall
be the higher of (i) base monthly salary in the calendar month
immediately preceding a Change in Control or (ii) base monthly
salary in the calendar month immediately preceding the Severed
Employee’s Severance Date (in either case without regard to
any reductions therein which constitute Good Reason) multiplied by
twelve.
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(b) During the Applicable
Period, the Company shall arrange to provide the Severed Employee
and anyone entitled to claim through
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