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EXHIBIT 10.1
[ALLEGHENY TECHNOLOGIES LOGO]
Specialty Materials That Make Our World
THE ANNUAL INCENTIVE PLAN
FOR YEAR 2005
May 2005
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CONTENTS
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At a Glance
1
What is the
Annual Incentive Plan?
1
Who is Eligible
for This Plan?
1
How Does the
Annual Incentive Plan Work?
1
Calculation of the Annual Incentive Plan
Award
2
Target Bonus
Percentage
2
Performance
Goals and the Target Bonus Percentage
2
2005 Performance
Goals
3
How the AIP Incentive Award is Calculated
When All Goals
4
Are 100% Achieved
How the AIP Incentive Award is Calculated
for Other Achievement Levels
5
Maximums and
Minimums
5
Additional Guidelines for the Annual
Incentive Plan
6
Discretionary
Adjustments
6
Some Special
Circumstances
6
Making Payments
6
Administration Details
7
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AT A GLANCE
WHAT IS THE ANNUAL INCENTIVE PLAN?
The Annual Incentive Plan (the "AIP" or the
"Plan") provides key managers of
Allegheny Technologies Incorporated
("Allegheny Technologies" or the "Company")
and its operating companies with the
opportunity to earn an incentive award when
certain pre-established goals are met at
the corporate and operating company
levels.
WHO IS ELIGIBLE FOR THIS PLAN?
Generally, key managers who have a
significant impact on the company's
operations will be eligible to participate
in the Plan. Individuals eligible for
participation are determined annually,
based on recommendations of the operating
company presidents, if applicable, and the
Company's chief executive officer,
with the approval of the Personnel and
Compensation Committee of the Company's
Board of Directors (the "Committee").
HOW DOES THE ANNUAL INCENTIVE PLAN
WORK?
Under the Plan, key managers may earn an
incentive award based on a percentage
of their base salary, depending on the
extent to which pre-established operating
company and/or corporate performance goals
have been achieved.
- For purposes of
the Plan, base salary is generally the manager's annual
base
salary rate as of the end of the year, excluding any commission
or
other
incentive pay. For some special circumstances affecting the
amount
of base
salary used in the Plan, see page 6.
- A target bonus
percentage is used in calculating the incentive award. It
is
explained on the next page. Each participating manager will have
a
target
bonus percentage.
- The target bonus
percentage will be adjusted (upward or downward) based on
the extent
to which various performance goals are achieved. Under the plan
for 2005,
all of the adjustment will be based on company performance.
Incentive award payments will generally be
distributed in cash after the
year-end audit is complete.
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CALCULATION OF THE ANNUAL INCENTIVE PLAN
AWARD
TARGET BONUS PERCENTAGE
The Plan establishes an incentive
opportunity for each Plan participant,
calculated as a percentage of the manager's
base salary. Each participant will
be provided with an initial percentage,
referred to as a "target bonus
percentage."
Generally, the target bonus percentage is
the percentage of base salary that can
be earned as an award under the Plan if
100% of the various performance goals
are achieved. For 2005, if 100% of the
performance goals are achieved, 100% of
the target bonus percentage can be
earned.
If there is a change in the key manager's
job position during the year that
changes the manager's target bonus
percentage, the target bonus percentage used
in the award calculation will be determined
as follows:
- If the
individual has at least six months of service in the new
position,
the newly
adjusted target bonus percentage will be used in calculating
the
individual's award for the full year.
- If the individual has less than
six months of service in the new position,
the
individual's award for the year will be calculated on a pro-rata
basis
using the
two different target bonus percentages weighted by length of
service in
each position during the year.
The Committee may change the goals and
objectives for the Plan at any time.
PERFORMANCE GOALS AND THE TARGET BONUS
PERCENTAGE
An AIP award is based on the extent to
which specified, preestablished
performance objectives are achieved. For
2005, AIP awards will be based on the
extent to which the participant's company
achieves specified levels of
achievement as to:
- Operating
Earnings
- Operating Cash
Flow
- Manufacturing
Improvements
- Safety and
Environmental Improvements
- Customer
Responsiveness Improvements
For operating company presidents, 80% of
the goals' overall weight will be based
on the performance of the president's
operating company, and 20% of the goals'
overall weight will be based on corporate
level performance.
For corporate staff employees, performance
will be measured completely at the
corporate level.
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