EXHIBIT 10.1
2002-2004 Long Term Incentive Award Agreement
This Agreement, dated as of March 26, 2002 (the
"Agreement") is made by and between Crompton
Corporation (the "Corporation") and NAME LASTNAME
(the "Executive") of TOWN.
WHEREAS, the Corporation has adopted the 1998
Long Term Incentive Plan (the "Plan") for the purpose
of attracting, motivating and retaining key employees
by offering them long term performance-based
incentives and an opportunity to acquire ownership of
shares of the Corporation's common stock;
WHEREAS, the Corporation and the Executive are
parties to a 2001-2002 Long Term Performance Award
Agreement, dated January 31, 2001, which they wish to
amend, effective March 26, 2002; and
WHEREAS, the Corporation wishes to offer the
Executive the opportunity to earn shares of the
common stock of the Corporation during the period
January 1, 2002, to December 31, 2004;
NOW, THEREFORE, the Executive, a key employee of the
Corporation, and the Corporation hereby agree as
follows:
1. Effective March 26, 2002, the 2001-2002
Long Term Performance Award Agreement between
The Corporation and the Executive, dated
January 31, 2001, is hereby amended to
delete in their entirety sections 2, 3(a),
4, 5 and 6.
2. During the Performance Period (as defined in
Subsection 3(a) hereof), the Executive is granted
the opportunity to earn a maximum of TOTMAX shares
of the common stock of the Corporation.
The actual number of such shares earned by
the Executive, if any, is hereinafter called the
"Performance Award".
3. Definitions
For purposes of this Agreement, the following terms
shall have the following meanings:
(a) "Performance Period" shall mean the period January
1, 2002, to December 31, 2004.
(b) "Retirement" shall mean retirement from active
employment with the Corporation or a subsidiary
of the Corporation occurring on or after the
Executive's sixty-second (62nd) birthday.
(c) "Cause" shall mean (i) the Executive's willful and
continued failure to substantially perform
assigned duties with the Corporation or its
subsidiary corporations (other than any such
failure resulting from incapacity due to
physical or mental illness or any such actual
or anticipated failure resulting from
termination for Good Reason), after a demand
for substantial performance is delivered to the
Executive by the Board of Directors of the
Corporation by which the Executive is employed
(the "Board"), specifically identifying the
manner in which the Board believes that the
duties have not been substantially
performed, or (ii) the Executive's willful conduct
which is demonstrably and materially injurious to
the Corporation or any subsidiary corporation by
which the Executive is employed. For purposes of
this subsection 3(d), no act, or failure to act,
shall be considered "willful" unless done, or
omitted to be done, not in good faith and without
reasonable belief that such action or omission was
in the best interest of the Corporation and the
subsidiary corporation, if any, by which the
Executive is employed.
(d) "Good Reason" shall mean (i) the assignment to the
Executive of any duties inconsistent in any respect
with the Executive's position (including status,
offices, titles, and reporting requirements),
authority, duties or responsibilities as contemplated
by any employment agreement between the Executive and
the Corporation or a subsidiary of the Corporation,
or any other action by the Corporation or the
subsidiary corporation, if any,
by which the Executive is employed which results in a
diminishment in such position, authority, duties, or
responsibilities, other than an insubstantial and
inadvertent action which is remedied by
the Corporation or such subsidiary corporation promptly
after receipt of notice thereof given by the Executive;
(ii) any failure by the Corporation or the subsidiary
corporation, if any, by which the Executive is employed
to comply with any of the provisions of any employment
agreement between the Executive and the Corporation
or such subsidiary corporation, other than an
insubstantial and inadvertent failure which is remedied
by the Corporation or such subsidiary corporation
promptly after receipt of notice thereof given by the
Executive; (iii) any change not concurred in by the
Executive in the location of the office at which the
Executive is principally based on the date hereof,
except for travel reasonably required in the performance
of the Executive's responsibilities and substantially
consistent with prior business travel obligations of
the Executive; or (iv) any purported termination by
the Corporation or the subsidiary corporation,
if any, by which the Executive is employed of
the Executive's employment otherwise than as permitted
by any employment agreement between the Executive and
the Corporation or such subsidiary corporation.
(e) "Change in Control" shall have the meaning set forth
in Section 10 of the Crompton Corporation 1998 Long
Term Incentive Plan (the "Plan").
(f) "Fair Market Value" shall have the meaning set
forth in Section 2 (j) of the Plan.
4. Performance Award
There shall be four equally weighted, performance
objectives used to determine the amount of the
Performance Award, if any, earned by the Executive,
as follows:
(a) Earnings Per Share ("EPS") Objective
This objective shall be the achievement by the
Corporation of a cumulative EPS for the
Performance Period of not less than $2.00 per
common share.
The following table shows that portion of the
Performance Award that may be earned by the
Executive based on the cumulative EPS achieved
by the Corporation during the Performance
Period at three different levels:
Threshold Target Maximum
Cumulative EPS $2.00 $2.31 $2.62
Performance Award THRESHHOLD TARGET MAXIMUM
Earned
The actual number of shares, if any,
earned by the Executive shall be based
upon the cumulative EPS achieved by the
Corporation during the Performance Period,
and except in the event that cumulative
EPS for the Performance Period is equal to
an amount shown in the above table, shall
be determined by interpolation from the
values shown in the table.
(b) Stock Price Appreciation Objective:
This objective shall be the achievement by
the Corporation of a fourth quarter 2004
average daily closing stock price of not
less than $16.83 per common share.
The following table shows that portion of
the Performance Award that may be earned
by the Executive based on the fourth
quarter 2004 average daily closing stock
price at three different levels.
Threshold Target Maximum
AVG Stock
Price for $16.83 $18.70 $20.40
4Qtr 2004
Performance
Award Earned THRESHHOLD TARGET MAXIMUM
The actual number of shares, if any,
earned by the Executive shall be based
upon the average daily closing stock price
during the fourth quarter of 2004, and
except in the event that such price for
the fourth quarter 2004 is equal to an
amount shown in the above table, shall be
determined by interpolation from the
values shown in the table.
(c) Cash Flow-Debt Reduction Objective:
This objective shall be the achievement by
the Corporation of a debt level on the
last day of the Performance Period of not
more than $1,125 million.
The following table shows that portion of
the Performance Award that may be earned
by the Executive based on the debt level
on the last day of the Performance Period
at three different levels:
Threshold Target Maximum
Debt Level $1,125MM $1,037MM $949MM
Performance
Award THRESHHOLD TARGET MAXIMUM
Earned
The actual number of shares, if any, earned by
the Executive shall be based upon the debt level
on the last day of the Performance Period, and
except in the event that the debt level on the
last day of the Performance Period is equal to
an amount shown in the table above, shall be
determined by interpolation from the values
shown in the table.
(d) Cash Flow-Portfolio Restructuring Objective:
This objective shall be the achievement by the
Corporation of a minimum of $100MM in pre-tax
sale proceeds from divested assets during the
Performance Period.
The following table shows that portion of the
Performance Award that may be earned by the
Executive based on the pre-tax proceeds from the
sale of divested assets during the Performance
Period at three different levels.
Threshold Target Maximum
Proceeds
From $100MM $175MM $250MM
Divested
Assets
Performance
Award THRESHHOLD TARGET MAXIMUM
Earned
The actual number of shares, if any, earned by
the Executive shall be based on the actual
amount of pre-tax sale proceeds from divested
assets during the Performance Period, and except
in the event that the amount of such proceeds is
equal to an amount shown in the above table,
shall be determined by interpolation from the
values shown in the table.
5. Payment of Performance Award
Except as otherwise provided in Section 6(b) hereof,
any Performance Award earned by the Executive shall
be paid to the Executive on January 1, 2005.
Any Performance Award earned by the Executive
hereunder shall be payable in shares, or, in the
Corporation's sole discretion, in the cash equivalent
of the Fair Market value of such shares, on the date
payable.
6. Termination of Employment During Performance Period
(a) If the Executive's employment with the
Corporation or a subsidiary of the Corporation
terminates during the Performance Period because
of death, disability or Retirement, the
Organization, Compensation and Governance
Committee of the Board (the "Committee") may, in
its sole discretion, make a pro rata Performance
Award to the Executive.
(b) If, following a Change in Control occurring
after the date of this Agreement, the
Executive's employment with the Corporation or
its successor (or a subsidiary of the
Corporation or its successor) is terminated
during the Performance Period by the Executive
for Good Reason or by the corporation by which
the Executive is employed other than for Cause,
the Executive shall become immediately vested
in, and shall be promptly paid the maximum
Performance Award that the Executive was
eligible to earn hereunder as specified in
Section 2 above.
(c) In the event that the Executive's employment
with the Corporation or its successor (including
any subsidiary of the Corporation or its
successor) terminates during the Performance
Period for any reason other than as specified in
subsections 6(a) and 6(b) hereof, the Executive
shall not be entitled to receive a Performance
Award.
7. Termination of Agreement
This Agreement shall terminate and no Performance
Award may be earned hereunder in the event that,
prior to a Change in Control having occurred, on the
last day of any fiscal accounting period occurring
during the Performance Period:
(a) the Leverage Ratio (as defined in the Five Year
Credit Agreement dated as of October 28, 1999, as
amended on December 21, 2001 ("the Five Year Credit
Agreement")) of the Corporation exceeds the
Applicable ratio set out in Section 5.07(a) of the
Five Year Credit Agreement; or
(b) the Interest Coverage Ratio (as defined in the
Five Year Credit Agreement) of the Corporation for
the four-fiscal quarter period then ending is less
than the applicable ratio set out in
Section 5.07(b) of the Five Year Credit Agreement.
8. Certain Further Payments by the Corporation
In the event that any award paid or distributed to
the Executive pursuant to this Agreement (taken
together with any amounts otherwise paid or
distributed to the Executive in connection with
a change of control referred to in Section
280G(b)(i)) is subject to an excise tax under
Section 4999 of the Code or any successor or
similar provision thereto (the "Excise Tax"),
the Corporation shall pay to the Executive an
additional amount such that, after taking into
account all taxes (including federal, state,
local and foreign income, excise and other
taxes) incurred by the Executive on the
receipt of such additional
amount, the Executive is left with the same
after-tax amount the Executive would have been
left with had no Excise Tax been imposed.
9. At Will Employment
This Agreement does not alter the "at will"
nature of the Executive's employment, which
employment may be terminated at any time by the
Executive or the Corporation by which the
Executive is employed.
10. Successors
This Agreement shall be binding upon and may be
enforced by the Executive against any successor
to the Corporation.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the day and year first above written.
CROMPTON CORPORATION
By:
Xxxxxxx X. Xxxxxxx
Its: Chairman, President and CEO
NAME LASTNAME
Executive
