1996 Stock
Incentive Plan
Implementation Guidelines
[Performance Share Awards]
(As Amended December 14, 2001)
These guidelines
(“Guidelines”) are intended to provide direction for
implementation of the Century Aluminum Company’s (the
“Company”) 1996 Stock Incentive Plan (the
“Plan”) with respect to Performance Share Awards. The
Plan is intended to advance the interests of the Company by
enabling Executive Officers and other key employees of the Company
and its Subsidiaries to acquire proprietary interests in the
Company, which interests, to the extent deemed reasonably possible
by the Committee, are “performance-based compensation”
within Section 162(m) of the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder, through
achievement by the Company of specified future performance and
earnings goals.
2. BACKGROUND AND
GENERAL CONSIDERATIONS
The Company is a
relatively small new entrant in a highly volatile commodity
business. Its goals are to grow and to achieve financial results
that meet or exceed those attained by its best-performing
competitors. The Company began its public existence in 1996 with
several competitive disadvantages. It was small, its principal
production facilities were high cost and approximately
40 years old, and it inherited the dual financial burdens of
funding one of the nation’s most under-funded pension plans
and infusing needed capital into facilities badly in need of the
same. Faced with these goals and challenges, Management has
completed several important projects that will contribute to
reaching the Company’s goals. It has profitably divestited
its non-profitable, capital-intensive, rolling business, acquired
interests in the lower-cost Mt. Holly and Hawesville reduction
plants and funded the pension plan, among other things.
In retrospect, and looking
forward, it is clear Managements’ performance goals and
objectives, and the weighting of those goals and objectives,
appropriately may vary widely in importance from time-to-time. In
order for the Implementation Guidelines to fulfill the purposes
described above, then, the Goals established by the Committee
likewise might vary in importance and weighting from time-to-time.
Furthermore, in order to deal with the uncertainties of the
volatile aluminum market, these Guidelines should provide
flexibility to encourage the Company to manage through
commodity cycles, not manage to them.
In general, Guideline
Goals (as defined below) might include some or all of the
following, or other factors determined by the Committee to be of
material importance to the growth and profitability of the Company,
weighted or valued as determined by the Committee:
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A.
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Strategic performance Goals, such as
completing an acquisition, disposing of non-performing assets,
achieving a strategic restructuring, competitively securing a key
resource (e.g., electrical power or alumina) or developing key
management through recruiting, training and succession
planning;
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B.
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Cost reductions, such as lowering
cash operating costs by targeted amounts, or meeting other
operational improvement performance objectives such as successfully
completing capital expenditure programs or contributing to the
growth of the Company through research, processing or manufacturing
improvements and marketing gains; and
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C.
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Meeting financial performance
targets that may be the aggregate of each annual profit plan in any
Plan Period or may be expressed in terms of (i) earnings per
Share, (ii) pre-tax profits (either at the Company or business
unit level), (iii) net earnings or net worth, (iv) return
on equity or assets, (v) any combination of the foregoing, or
(vi) any other standard or standards deemed appropriate by the
Committee.
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A.
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“Award” shall be as
defined in Section 5.
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B.
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“Award Targets”
generally shall include elements of all of the following, with the
relative weighting of each element to be as determined by the
Committee; however, the Committee retains full discretion to
include fewer than all of these elements in an Award
Target:
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(1)
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The
achievement of one or more strategic or other Goals of the sort
described in Section 2. A.; and
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(2)
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The
accomplishment of cost improvements or other operational
performance Goals as generally described in Section 2. B;
and
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(3)
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The
attainment by the Company of specified financial performance Goals
as described in Section 2. C.
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Goals set for Award Target
purposes shall be guided by (but need not be the same as) the goals
and objectives for the Company as contained in and submitted to the
Board annually in Company three-year business plans.
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C.
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“Board” shall mean the
Board of Directors of the Company.
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D.
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“Committee” shall mean
the Compensation Committee of the Board of Directors of the
Company, two members or more of whom shall be “outside
directors” within the meaning of Internal Revenue Code
Section 162(m).
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E.
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“Company” shall mean
Century Aluminum Company.
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F.
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“Participant” shall mean
any full-time salaried employee of the
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