Exhibit 10.4
ALCOA INC.
PERFORMANCE SHARE AWARD
CERTIFICATE
Alcoa Inc. (the “Company”) has on
[DATE] granted to
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[NAME]
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[EMPLOYEE ID NUMBER]
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(Name)
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(Employee ID)
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(“Participant”), a performance share
award of [NUMBER] units, contingent on achievement of corporate
performance goals, based upon the following terms:
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1.
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This
performance share award is granted under the provisions of the 2004
Alcoa Stock Incentive Plan, as last amended prior to the date above
(the “Plan”), and is subject to the provisions of the
Plan and the applicable Terms and Conditions for the grant (the
“Governing Documents”).
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2.
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This
performance share award grant vests, if at all, on [DATE] if the
Participant is still an active employee of the Company or any of
its controlled subsidiaries or affiliates, subject to the further
provisions set forth in the Governing Documents.
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3.
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Company common
stock, if any, is issued when the award vests.
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Issued in Pittsburgh, Pennsylvania
on the date set forth above.
ALCOA INC.
TERMS AND CONDITIONS FOR
PERFORMANCE SHARE AWARDS
Effective January 1,
2006
These terms and conditions are authorized by the
Compensation and Benefits Committee of the Board of Directors. They
are deemed to be incorporated into and form a part of every
Performance Share Award issued under the 2004 Alcoa Stock Incentive
Plan as last amended prior to the grant (the “Plan”) on
or after January 1, 2006, unless the Award certificate
relating to the grant provides otherwise.
Terms that are defined in the Plan have the same
meanings in these terms and conditions, except that Alcoa or
Company means Alcoa Inc. or any of its controlled subsidiaries or
affiliates.
General Terms and
Conditions
1. Performance Share Awards are subject to the
provisions of the Plan, the provisions set forth in the
Participant’s Award certificate relating to the grant and
these terms and conditions.
2. A Performance Share Award is a commitment by
the Company to issue, on the third anniversary date of the date of
the grant of the Award, from 0 to 200% of the number of shares of
Alcoa common stock (“Stock”) indicated in the
Participant’s Award certificate relating to the grant based
on Alcoa’s return on capital (“ROC”) relative to
the median return on capital of the Company’s selected
external comparator group during the performance period (the first
year of the three-year vesting period). A minimum earned award of
60% of the original grant will be provided if the Company’s
ROC meets or exceeds its cost of capital for the performance
period. Awards may be adjusted as deemed appropriate in the
Committee’s business judgment. Alcoa common stock, if any,
will not be issued until the Award vests. The provisions of these
terms and conditions, including this paragraph 2, apply to
Performance Share Awards granted in 2005 as well as future
grants.
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3. The exact amount of Stock to be received
under this Performance Share Award, if any, will be determined no
later than 18 months after the grant date, and such determination
will be made in accordance with the following schedule:
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Alcoa’s ROC as a
Percentage of
Median ROC for
the Comparator
Group
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Performance
Share Award
Payout %
(Payouts are
prorated between
levels)
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50%
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0.0%
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60%
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20.0%
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70%
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40.0%
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80%
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60.0%
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90%
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80.0%
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100%
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100.0%
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110%
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120.0%
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120%
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140.0%
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130%
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160.0%
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140%
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180.0%
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150%+
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200.0%
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As indicated above, a minimum earned award of
60% of the original grant will be provided if the Company’s
ROC meets or exceeds its cost of capital for the performance
period.
Vesting and
Payment
4. A Performance Share Award will vest on the
third anniversary date of the date of grant, unless the Committee
establishes a later date for vesting with respect to all or a
portion of the shares subject to the Award at the time of the grant
of the Award.
5. As a condition to a Performance Share Award
vesting, a Participant must remain an Alcoa employee actively at
work through the date of vesting. Except to the extent otherwise
provided herein, if the Participant’s employment with Alcoa
terminates prior to the vesting date of the Performance Share
Award, the Award is forfeited and is automatically
canceled.
6. Prior to issuance of Stock upon vesting, the
Participant has no voting rights or rights to receive dividends
with respect to shares covered by the Performance Share Award.
However, prior to issuance of any Stock, the Committee may
authorize the payment of cash dividend equivalents. Such amounts,
if authorized, will be equal to the common stock dividend per share
payable on Alcoa common stock multiplied by: (i) during the
first 12 – 18 months following the date of grant, the number
of shares covered by the Award and specified in the Award
certificate, or (i
