†††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† EXHIBIT 10.02
††††††††††††††††††††††††††† EASTMAN CHEMICAL COMPANY
ANDRESTATED EFFECTIVE FEBRUARY 1, 2001)
FEBRUARY 5, 2003)
††††††††††††††††††††††††††††††† Table of Contents
<S>†††††††††††††† <C>††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† <C>
Article 1†††††††† Introduction...............................................................................
Article 2†††††††† Definitions................................................................................
Article 3†††††††† Eligibility................................................................................
Article 4†††††††† Determination of Plan Payout...............................................................
Article 5†††††††† Mechanism of Plan Payout...................................................................
Article 6†††††††† Claim Against Performance Payment..........................................................
Article 7†††††††† Inability to Locate Payee..................................................................
Article 8†††††††† Plan Document Controls.....................................................................
Article 9†††††††† Right to Amend or Terminate................................................................
Article 10††††††† No Employment Rights.......................................................................
Article 11††††††† Conclusiveness of Records..................................................................
Article 12††††††† Administration, Actions by the Company.....................................................
ARTICLE 1. INTRODUCTION.
The Eastman Performance Plan, as set forth in this document, has been approved
by the Board of Directors of Eastman Chemical Company (the "Company") as a
variable compensation program which provides eligible employees with tangible
recognition for their contributions to the success of the Company.
The Company's Board of Directors is responsible for approving the declaration of
Plan Payouts under this Plan each year, except for Plan payouts to executive
officers of the Company, which shall be approved by the Compensation Committee.
No declaration of Plan Payout by the Board or the Compensation Committee for any
given year shall commit the Board or the Compensation Committee to any given
level of Plan Payout in future years.
ARTICLE 2. DEFINITIONS.
2.00†††† AFFILIATED COMPANY. See Section 2.28A.
2.01†††† BOARD. The Board of Directors of the Company.
2.03†††† CAPITAL. Capital shall designate the funds invested in the Company
through either debt or equity, including funds loaned to the Company from
financial institutions or through the issuance of bonds, debentures or other
private debt instruments, plus the shareholders' cumulative investment in the
Company through the ownership of all outstanding shares of all classes of stock.
2.04†††† CODE. The Internal Revenue Code of 1986, as amended.
2.05†††† COLLEGE COOPERATIVE STUDENT. College Cooperative Student shall refer to
an employee who is a college student pursuing studies of interest to the Company
and who generally works a full-time schedule on an alternate work/school block
2.06†††† COMPANY. Eastman Chemical Company or its corporate successors.
Notwithstanding the foregoing, whenever reference is made in this Plan to "the
Company" in the context of financial performance, e.g., "the Company's capital
debt", the "Company" shall mean Eastman Chemical Company and all of its
affiliates that are included on its consolidated financial statements.
2.08†††† COMPENSATION COMMITTEE. The Compensation and Management Development
Committee of the Board, or such other committee designated by the Board,
authorized to administer the Plan as provided herein.
COSTOF CAPITAL. The Cost of Capital reflects the cost of debt and the
cost of equity, expressed as a percentage reflecting the percentage of interest
charged on debt and the percentage of expected return on equity.
2.11†††† EARNINGS FROM CONTINUING OPERATIONS. Earnings from Continuing
Operations shall be defined as the total sales of the Company minus the costs of
all operations of any nature used to produce such sales, including taxes, plus
after-tax interest associated with the Company's capital debt.
EASTMANINVESTMENT ANDEMPLOYEE STOCK OWNERSHIP PLANOR EIP/ESOP. The
Eastman Investment and Employee Stock Ownership Plan, a qualified savings and
employee stock ownership plan under Sections 401(a), 401(k), and 4975 of the
Code, including any amendments which may from time to time be adopted thereto.
2.15†††† ELIGIBLE EMPLOYEE. Eligible Employees shall be all those individuals
who meet the eligibility criteria set forth under Article 3; provided however,
that nonresident aliens working outside of the
shall not be United States
defined as Eligible Employees for the purposes of this Plan.
2.17†††† LIMITED SERVICE EMPLOYEE. Limited Service Employee shall refer to any
individual hired by the Company for the specific purpose of meeting needs of
Nine Hundred (900) hours or less in any consecutive twelve (12) month period and
who is designated as a Limited Service Employee when hired.
2.18†††† PARTICIPATING AFFILIATES. Participating Affiliates shall signify all
those Subsidiaries or Affiliated Companies which from time to time accept the
provisions of the Plan as applying to the employees of such Subsidiary or
2.19†††† PARTICIPATING EARNINGS. Participating Earnings for a given Performance
Year shall be an Eligible Employee's Participating Earnings set forth in
Appendix A for such Performance Year.
2.20†††† PAYOUT BASIS. The Payout Basis shall signify the applicable percentage
set forth in accordance with the Payout Table contained in Section 4.04.
2.20A††† PAYOUT TABLE. The Payout Table shall be that Table set forth under
Section 4.04 providing for the correlation between the Performance Indicator and
the Payout Basis.
2.21†††† PERFORMANCE INDICATOR. The Performance Indicator shall mean the Return
on Capital minus the Cost of Capital. Such calculation shall be expressed as a
percentage, which shall be calculated to the third place after the decimal point
(i.e., xx.xxx%), and then rounded to the second place after the decimal point
2.22†††† PERFORMANCE YEAR. The Performance Year shall be the calendar year,
running from January 1 through December 31, with respect to which the financial
performance of the Company shall be determined.
PLAN.† The EastmanPerformance Plan.
PLANPAYOUT. The Plan Payout shall consist of those monies to which the
Eligible Employee shall be entitled in accordance with the provisions of this
FULL-TIME EMPLOYEE. Regular Full-Time Employee shall refer to
those individuals who are defined as such on the payrolls of the Company or a
Participating Affiliate and who work a regular schedule of:
†††††††† (a)††††† 40 or more hours per week (or shorter time periods where
†††††††† required by law, by Company needs, or by the employee's health); or
†††††††† (b)††††† Alternative work schedules such as alternating 36 and 48-hour
†††††††† workweeks comprised of 12-hour days.
2.26†††† REGULAR PART-TIME EMPLOYEE. Regular Part-Time Employee shall refer to
those individuals who are defined as such on the payroll of the Company or a
Participating Affiliate, who work a regular schedule of less than 40 hours per
week, and who are not defined as Regular Full-Time Employees under Section 2.25.
2.27†††† RETURN ON CAPITAL. The Return on Capital shall mean the return produced
by funds invested in the Company and shall be determined as Earnings from
Continuing Operations, as defined in Section 2.11, divided by the Average
Capital Employed. Average Capital Employed shall be derived by adding the
Company's capital debt plus equity at the close of the last day of the year
preceding the Performance Year, to the Company's capital debt plus equity at the
close of the last day of the present Performance Year, with the resulting sum
being divided by two. Capital debt is defined as the sum of Borrowing by the
Company Due Within One Year and Long-Term Borrowing, as designated on the
Company's balance sheet. The resulting ratio shall be multiplied by One Hundred
(100) in order to convert such
to a percentage. Such percentage shall be calculated to the third place after
the decimal point (i.e., xx.xxx%), and then rounded to the second place after
the decimal point (i.e., xx.xx%).
2.28†††† SPECIAL PROGRAM EMPLOYEE. Special Program Employee shall refer to a
high school study-work student, a drafting trainee employed to work one quarter
or semester, a clerical assistant trainee hired to work for one quarter or
semester, a summer technical employee, a visiting scientist, or a normal
temporary employee hired for a limited period.
2.28A††† SUBSIDIARY OR AFFILIATED COMPANY. Subsidiary or Affiliated Company
shall mean (i) any business organization which is required to be affiliated with
Eastman Chemical Company under Code Sections 414(a) or (b); and (ii) any joint
venture or other business organization in which Eastman Chemical Company or an
entity described in clause (i) has a direct or indirect stock ownership or
capital and profits interest of at least 20%. Not every Subsidiary or Affiliated
Company is a Participating Affiliate under this Plan. Regardless of Subsidiary
or Affiliated status, the Eastman Performance Plan shall not apply or be
extended to employees who are under a collective bargaining agreement (unless
the express terms of such agreement so require). In addition, the
Performance Plan shall not apply or be extended to any subsidiary, division, or
plant site specified in Exhibit B to this Plan, entitled "Excluded
2.29†††† TERMINATION ALLOWANCE
PLANOR TAP. Termination Allowance Plan or TAP
shall mean the Termination Allowance Plan adopted by the Company effective
January 1, 1994, and as amended thereafter from time to time.
ARTICLE 3. ELIGIBILITY.
3.01†††† BASIC ELIGIBILITY
All Regular Full-Time Employees and Regular Part-Time Employees of
Chemical Company and any other Participating Affiliates as may from time to time
participate under this Plan, are eligible to receive a Plan Payout as described
herein if they:
†††††††† (a)††††† Meet all of the following requirements;
††††††††††††††††† (i)††††† Are employed by Eastman Chemical Company or one of
††††††††††††††††† the Participating Affiliates on the last scheduled workday for
††††††††††††††††† such employee during the Performance Year; and
††††††††††††††††† (ii)†††† Receive Participating Earnings with respect to the
††††††††††††††††† Performance Year; and
††††††††††††††††† (iii)††† Are living at 11:59 p.m. on the last scheduled
††††††††††††††††† workday for such Employee during the Performance Year (e.g.,
††††††††††††††††† if an Employee regularly works a Monday to Friday shift, his
††††††††††††††††† last scheduled workday for the 1996 Performance Year would be
December 31, 1996);
†††††††† (b)††††† Meet the requirements of Section 3.02.
†††††††† (c)††††† Are not on Company Final Warning as of December 31 of
†††††††† the Performance Year.
3.02†††† SPECIAL ELIGIBILITY
Regular Full-Time Employees and Regular Part-Time Employees who are not actively
employed with the Company or a Participating Affiliate as of December 31 of the
Performance Year are eligible to participate under the provisions of this Plan
provided that they meet one of the following criteria:
†††††††† (a)††††† Such employee has retired in accordance with the
†††††††† Retirement Assistance Plan on or after February 1 of the Performance
†††††††† Year; or
†††††††† (b)††††† Such employee has exhausted Short-Term Disability benefits
†††††††† during the Performance Year and:
††††††††††††††††† (i)††††† Is approved for benefits under the
†††††††† Disability Plan; or
††††††††††††††††† (ii)†††† Is not approved for benefits under the
†††††††† Long-Term Disability Plan and is terminated by the Company due to lack
†††††††† of prescribed work; or
†††††††† (c)††††† Such employee's employment with the Company was terminated
†††††††† during the Performance Year and as a result of such termination the
†††††††† employee becomes entitled to a Termination Allowance Benefit under the
†††††††† Company's Termination Allowance Plan; or
†††††††† (d)††††† All of the following conditions are met: (i) an employee's
†††††††† employment with the Company is terminated during the Performance Year
†††††††† under a layoff as defined in Section 4.01 of TAP, a special separation
†††††††† as defined in Section 4.02 of TAP, or a divestiture as defined in
†††††††† Section 4.03 of TAP; (ii) such employee does not become entitled to a
†††††††† Termination Allowance Benefit under TAP; and (iii) management of the
†††††††† Company nevertheless resolves in writing that such employee shall be
†††††††† entitled to participate in the Performance Plan for such Performance
†††††††† Year upon meeting such conditions as management shall determine in its
†††††††† sole discretion. For this purpose, "management of the Company" shall
†††† ††††mean any of the following: the Board of Directors of the Company, a
†††††††† committee of the Board; a committee of the Company responsible for
†††††††† benefits plans oversight; or an officer of the Company; or
†††††††† (e)††††† Such employee is (i) paid on a United States-based salary
†††††††† structure, and (ii) is temporarily employed with a non-participating
†††††††† affiliate of the Company and serving outside the borders of the United
†††††††† States at the direction or request of the Company or any Participating
†††††††† Affiliate; or
†††††††† (f)††††† Such employee's employment with the Company was terminated
†††††††† during the Performance Year in order to accompany or follow their
Eastmanemployee spouse who is transferred to a company unit or
†††††††† subsidiary or affiliated company in a different geographic area which
†††††††† is not a Participating Affiliate.
3.03†††† TRANSFER INTO
Employees who transfer to the Company during the course of any Performance Year
from a subsidiary or affiliated company which is not a Participating Affiliate
in the Plan will be eligible for the Plan Payout payable for the Performance
Year if they satisfy the eligibility requirements of Section 3.01 or 3.02 above.
Earnings and allowances received from such subsidiary or affiliated company are
not included in Participating Earnings.
3.04†††† TRANSFER FROM
Employees who are transferred during any Performance Year from the Company to
employment with a subsidiary or affiliated company which is not a Participating
Affiliate will qualify for the Plan Payout payable for that Performance Year,
provided that they are employed full-time or part time by the Subsidiary or
Affiliated Company on the last scheduled workday for such employee during the
Performance Year or meet the requirements of clause (a), (b), or (c) of the
immediately following paragraph. However, earnings and allowances received from
such subsidiary or affiliated company are not included in Participating
If such a transferred regular full time or regular part time employee terminates
employment with the Subsidiary or Affiliated Company prior to the last scheduled
workday of the Performance Year for such employee, then such employee shall
nevertheless be eligible to participate under this Plan if the employee meets
one of the following criteria:
†††††††† (a)††††† Such employee has retired in accordance with the defined
†††††††† benefit retirement plan for the Subsidiary or Affiliated Company
†††††††† (b)††††† Such employee was terminated during the Performance Year and
†††††††† as a result of such termination, the employee becomes eligible for a
†††††††† benefit from such Subsidiary or Affiliated Company which in the
†††††††† judgment of the Compensation Committee or its delegate is comparable to
†††††††† the benefits under the Company's Termination Allowance Plan.
†††††††† (c)††††† Such employee has exhausted Short-Term Disability benefits
††††† †††during the Performance Year; and is approved for benefits under the
†††††††† Subsidiary's or Affiliated Company's Long-Term Disability Plan; or is
†††††††† not approved for benefits under the Subsidiary or Affiliated Company's
†††††††† Long-Term Disability Plan and is terminated due to lack of prescribed
Limited Service Employees, Special Program Employees, College Cooperative
Employees, and all other employees of the Company and Participating Affiliates
not defined as Regular Full-Time Employees or Regular Part-Time Employees are
not eligible to receive a Plan Payout as authorized herein unless reclassified
before December 31 of the Performance Year into a class of employees eligible to
receive a Plan Payout in accordance with Sections 3.01 and 3.02. For such
reclassified employees, except those employees who were classified as Limited
Service Employees prior to such reclassification, earnings before
reclassification are included in Participating Earnings.
The Eastman Performance Plan shall not apply or be extended to employees who are
under a collective bargaining agreement (unless the express terms of such
agreement so require). In addition, the Eastman Performance Plan shall not apply
or be extended to any subsidiary, division, or plant site specified in Exhibit B
to the Plan, entitled "Excluded Participants."
3.06†††† PARTICIPATION OF RECENTLY HIRED EMPLOYEES
Notwithstanding any language to the contrary contained herein, for the
Performance Year in which an Eligible Employee is first hired by the Company or
by a Participating Affiliate, the Eligible Employee shall not receive a Plan
Payout. For the first full Performance Year after the Eligible Employee's date
of hire, the Eligible Employee shall receive a full (100%) Plan Payout as
calculated under Section 4.06(a). Such allocation made shall be paid entirely in
cash pursuant to the provisions of Section 5.01.
3.07†††† TERMINATION OF EMPLOYMENT SUBSEQUENT TO PERFORMANCE YEAR
Any Eligible Employee who has met the requirements for participation contained
in this Article 3 for the Performance Year and with whom the employment
relationship with the Company or any Participating Affiliate is subsequently
terminated for any reason prior to the distribution of the Plan Payout for that
Performance Year shall be entitled to the Plan Payout for that Performance Year.
Payment of such Plan Payout shall be made in accordance with the provisions set
forth under Section 5.01.
3.08†††† ELIGIBILITY IN CASE OF DEATH
Notwithstanding any language contained herein, if an employee dies before
qualifying for the Plan Payout for the Performance Year, the Company may, in its
sole discretion, elect to pay all, part, or none of the Plan Payout to the
estate of the employee or to a designated beneficiary thereof. However, if an
Eligible Employee dies after qualifying for but before receiving a given Plan
Payout, such Plan Payout will be paid to the decedent's estate as a legal right.
ARTICLE 4. DETERMINATION OF
4.01†††† IN GENERAL
The Plan Payout, if any, is intended to reflect the financial performance of the
Company over the course of the Performance Year. Financial performance shall be
measured in terms of the Performance Indicator. Such Plan Payout, if any, shall
be calculated as determined under Section 4.06. The resulting Plan Payout for
each Eligible Employee shall be distributed pursuant to the provisions of
Article 5 below.
4.02†††† DETERMINATION OF PERFORMANCE INDICATOR
Before or as soon as practicable after the first day of a Performance Year, the
Compensation Committee shall establish in writing for that Performance Year, the
Performance Indicator (including the Cost of Capital for the Performance Year),
the Payout Basis, the General Payout Table, and the formula or method for
calculating the Plan Payout payable to each Eligible Employee if certain levels
of the Performance Indicator are attained.
The Performance Indicator for any Performance Year shall be the Return on
Capital (as defined in Section 2.27) minus the Cost of Capital (as defined in
Section 2.09), expressed as a percentage, which shall be calculated to the third
place after the decimal point (i.e., xx.xxx%), and then rounded to the second
place after the decimal point (i.e., xx.xx%). Except as otherwise provided in
the next sentence, measurement of the Company's performance against the
performance goals established by the Committee shall be objectively determinable
and, to the extent they are expressed in standard accounting terms, shall be
determined according to generally accepted accounting principles as in existence
on the date on which the performance goals are established and without regard to
any changes in such principles after such date. In determining whether the
performance goals established by the Committee have been met, the Committee may
in its discretion adjust the financial results for a Performance Year to exclude
the effect of unusual charges or income items or other events (including,
without limitation, acquisitions or divestitures), which are distortive of
financial results for the Performance Year.
4.03†††† DETERMINATION OF PAYOUT BASIS
The Payout Basis, expressed as a percentage as follows, shall be determined
according to the Payout Table shown in Section 4.04. If the Return on Capital
minus Cost of Capital is not an even percentage, then the exact Payout Basis
shall be calculated by straight line interpolation, and shall be calculated to
the third place after the decimal point (i.e., xx.xxx%), and then rounded to the
second place after the decimal point (i.e., xx.xx%).
4.04†††† PAYOUT TABLE
†††††††††††††† RETURN ON CAPITAL
COSTOF CAPITAL††††††††††††††††††††††††††††† PAYOUT BASIS*
††††††††††††††† ------------†††††††††††††††††††††††††††††††††††††† ------
†††††††††††††††† 10 or More††††††††††††††††††††††††††††††††††††††††† 25
†††††††††††††††††††† 9†††††††††††††††††††††††††††††††††††††††††††††† 22
†††††††††††††††††††† 8†††††††††††††††††††††††††††††††††††††††††† ††††19
†††††††††††††††††††† 7†††††††††††††††††††††††††††††††††††††††††††††† 17
†††††††††††††††††††† 6†††††††††††††††††††††††††††††††††††††††††††††† 15
†††††††††††††††††††† 5†††††††††††††††††††††††††††††††††††††††††††††† 13
†††††††††††††††††††† 4†††††††††† ††††††††††††††††††††††††††††††††††††11
†††††††††††††††††††† 3†††††††††††††††††††††††††††††††††††††††††††††† 9.5
†††††††††††††††††††† 2††††††††††††††††††††††††††††††††††††††††††††††† 8
†††††††††††††††††††† 1†††††††††††††††††††††††††††††††††††††††††††††† 6.5
†††††††††††††††††††† 0††††††††††††††††††††††††††††††††††††††††††††††† 5
†††††††††††††††††††† -1†††††††††††††††††††††††††††††††††††††††††††††† 4
†††††††††††††††††††† -2†††††††††††††††††††††††††††††††††††††††††††††† 3
†††††††††††††††††††† -3††††††††††††††† †††††††††††††††††††††††††††††††2
†††††††††††††††††††† -4†††††††††††††††††††††††††††††††††††††††††††††† 1
††††††††††††††††††† <-5†††††††††††††††††††††††††††††††††††††††††††††† 0
* Actual Payout percentages may vary based on pay at risk as determined
under Section 4.06.
4.06†††† CALCULATION OF INDIVIDUAL
Calculations of the individual Plan Payout shall be done as follows:
The Plan Payout for each Eligible Employee shall be calculated by multiplying
the Participating Earnings of the Eligible Employee for the Performance Year by
a fraction, the numerator of which is the Payout Basis derived from the Payout
Table contained in Section 4.04 and the denominator of which is One (1) minus
that percentage of the Eligible Employee's pay at risk as of the Performance
Year as defined under the regular employment practices of the Company. Such
fraction shall be calculated to the third place after the decimal point (i.e.,
xx.xxx%), and then rounded to the second place after the decimal point (i.e.,
xx.xx%). Thus, the calculation shall be expressed as follows:
†††††††† Plan Payout (Total)† = Participating Earnings x Payout Basis
†††††††††††††††††††††††††††††††††††††††††††††††††††††††† 1† -† % of Pay at Risk
The Vice President and Chief Financial Officer, or his delegate shall, on or
about the close of each quarter of the Company's fiscal year, estimate the
annual Payout Basis for the Plan based upon financial performance for the
Performance Year to date. The estimates thus generated shall subsequently be
communicated to Eligible Employees in such a manner as determined by the
4.08†††† FINAL DETERMINATIONS BY BOARD
ANDBY COMPENSATION COMMITTEE
As soon as practicable following the availability of performance results for the
completed Performance Year, the Committee shall determine the Company's
performance in relation to the Performance Indicator for that period and certify
in writing the Company's performance. Such certification shall include
confirmation of the Return on Capital (determined as described in Section 2.27),
and final approval and declaration of the Plan Payout to executive officers.
Notwithstanding any language contained herein, final approval for any Plan
Payout to Eligible Employees other than executive officers determined in
conjunction with this Article 4 must be given by the Board of Directors of the
Company. No declaration of Plan Payout by the Board or the Compensation
Committee for any given year shall commit the Board or the Compensation
Committee to any given level of Plan Payout in future years.
4.09†††† SHAREOWNER APPROVAL
No Plan Payout payable in cash shall be paid under the Plan to any "Covered
Employee" (within the meaning of Section 162(m) of the Code) for any Performance
Year after 1996 and through and including 1999, unless and until the material
terms (within the meaning of Section 162(m) of the Code) of the Plan, including
the performance goals on which the Plan Payout would be based, are disclosed to
the Company's shareowners and are approved by the shareowners by a majority of
the votes cast.
ARTICLE 5. MECHANISM OF
Approved Plan Payouts for any Performance Year shall be made in the subsequent
Performance Year and shall, at the discretion of the Company, be paid out in
March of the subsequent Performance Year in cash by check or into an account
designated by the Eligible Employee and held with a commercial bank. The Plan
Payout shall reflect any deductions made by the Company for purposes of Federal
or other taxation or pursuant to request for deferral of benefits made by the
Eligible Employee under the provisions of Article 5.02.
5.02†††† EASTMAN INVESTMENT
ANDEMPLOYEE STOCK OWNERSHIP PLAN ANDEASTMAN
EXECUTIVE DEFERRED COMPENSATION
Eligible Employees who are also eligible to participate in the Eastman
Investment and Employee Stock Ownership Plan may elect to defer the Plan Payout
for a given Performance Year into the Eastman Investment and Employee Stock
Ownership Plan, to the extent provided under such Plan. Eligible Employees who
are also eligible to participate in the Eastman Executive Deferred Compensation
Plan may elect to defer the Plan Payout for a given Performance Year into the
Eastman Executive Deferred Compensation Plan, to the extent provided under such
Plan. Any funds deferred pursuant to the provisions of this Section 5.02 shall
become subject to the rules and regulations of the EIP/ESOP or the Executive
Deferred Compensation Plan, and shall reflect any deductions made for purposes
of payment of social security taxes due under the Code.
5.04†††† DEFERRAL OF AWARD
Notwithstanding anything in this Article 5 to the contrary, if the Compensation
Committee determines that the current payment of any award under this Article 5
could result in the Eligible Employee's receiving compensation in excess of the
maximum amount deductible by the Company for Federal income tax purposes, then
such Committee in its sole discretion may determine that such award shall not be
paid currently, and instead shall be transferred to the Employee's account under
the Eastman Executive Deferred Compensation Plan (and thereafter shall be
subject to the provisions of the Executive Deferred Compensation Plan).
ARTICLE 6.††††††††† CLAIM AGAINST PERFORMANCE PAYMENT.
The payment of any Plan Payout which may be subject in whole or in part to
execution, lien, assignment, or other claim, notice of which is received by the
Company on or before the Plan Payout payment date, may be delayed for an
appropriate time in order to facilitate proper handling of the claim and in
order to make any necessary adjustments.
ARTICLE 7.††††††† INABILITY TO LOCATE PAYEE.
If the Company is unable to make payment hereunder to any Eligible Employee to
whom a Plan Payout is due because the Company is unable to ascertain the
whereabouts of such Eligible Employee after reasonable efforts have been made,
such payment otherwise due shall be forfeited one (1) year after the date the
Plan Payout was to be made.
In the event of a conflict between this Plan document and any other information
or enrollment materials provided to the Eligible Employees (whether written or
oral), the provisions of this document shall control.
ARTICLE 9. RIGHT TO AMEND OR TERMINATE.
Although the Company intends to continue the Plan indefinitely, the Plan may be
terminated, suspended or modified, in whole or in part, at any time for any
reason by action of the Compensation Committee.
ARTICLE 10. NO EMPLOYMENT RIGHTS.
Nothing contained in this Plan shall give any Eligible Employee the right to be
retained in the employment of the Company or affect the right of the Company to
dismiss any employee. The adoption and maintenance of this Plan shall not
constitute a contract between the Company and the Eligible Employee for
consideration for, or inducement or condition of, the employment of the Eligible
ARTICLE 11. CONCLUSIVENESS OF RECORDS.
The records of the Company with respect to financial data, Participating
Earnings, and all other relevant matters shall be conclusive for purposes of the
administration of the Plan described in this document.
ARTICLE 12. ADMINISTRATION; ACTIONS BY THE COMPANY.
The Committee shall have full power and authority to administer and interpret
the provisions of the Plan and to adopt such rules, regulations, agreements,
guidelines, and instruments for the administration of the Plan and for conduct
of its business as the Committee deems appropriate or advisable. The Committee
sets and interprets policy, establishes annual performance goals, evaluates
Company performance against the goals, and confirms and certifies the extent to
which Company performance goals were satisfied under the Plan.
The Committee shall have full power to delegate to any officer or employee of
the Company the authority to administer and interpret the procedural aspects of
the Plan, subject to the Plan's terms, including adopting and enforcing rules to
decide procedural and administrative issues.
†††††††††††††††††††††††††††††††††† APPENDIX A.
Pay† for all time worked including:
†††††††† Wages and salaries
†††††††† Pay for clothes change
†††††††† Pay for time spent attending meetings
†††††††† Paid lunch periods
†††††††† Pay for time in Eastman Medical Department (scheduled hours only)
†††††††† Pay for work on community campaigns and special community projects (at
†††††† ††company request)
Pay when serving as pallbearer (at company request)
Compensating time off
Holiday pay, premiums, and allowances (including payment for holiday during a
full week of absence)
Vacation pay (including payment in lieu of vacation and
excluding purchased vacation cashout)
Pay for travel status
Lack of work allowance
Time spent by Apprentices in supervised tests or labs
Medical pay allowance (as recommended and arranged by the Eastman Medical
Adjustment for amount of time spent on Final Warning (for 2000 Performance Year
Note 1:† For the 2000 Performance Year only, Participating Earnings does not
†††††††† include pay during the period of time while a Employee is on Final
†††††††† Warning Status, as determined under the Company's regular employment
†††††††† practices. This adjustment is made by taking an Employee's
†††††††† Participating Earnings for the 2000 Performance Year, and excluding a
†††††††† pro rata portion based on the amount of time that the Employee was on
†††††††† Final Warning Status during such year.
Eastman Performance Plan payouts
Annual Performance Plan payouts
Omnibus Plan awards such as:
†††††††† Stock Option grants
†††††††† Restricted Stock grants
†††††††† Long-Term Performance Award Plan awards
Educational support payments
Termination allowance and special separation allowance
Moving expenses and allowances as the result of domestic relocation
Additions to allowances on prizes for tax purposes
Taxable awards and prizes such as:
†††††††† 25-year service awards
†††††††† 40-year service awards
†††††††† Safety awards
†††††††† Attendance awards
Allowances for excused absences due to:
†††††††† accident at work
†††††††† death of a relative
†††††††† emergency blood donation
†††††††† emergency relief activities
†††††††† organized color guard
†††††††† employee medical or dental appointment
†††††††† serving in public office
†††††††† personal absences
†††††††† temporary military duty
†††††††† time spent voting
†††††††† voluntary community services
†††††††† other allowances not specifically identified under Participating
Allowances for expatriates:
†††††††† cost-of-living allowance
†††††††† housing allowance
†††††††† tax makeup allowance
†††††††† travel allowance
†††††††† education allowance
Foreign service premium payments Payment in lieu of notice of termination
Short-Term Disability benefits
Taxable portion of insurance premium paid by company
Workers' Compensation payments and allowances:
†††††††† makeup payments
†††††††† statutory payments
All other payments or allowances not specifically identified as Participating
†††††††††††††††††††††††††††††††††† APPENDIX B.
††††††††††††††††††††††††††††† EXCLUDED PARTICIPANTS
†††††††† 1. All employees assigned to the plant site in
, South Holland, Illinois
formerly known as Accurate Dispersions.
†††††††† Employees who transfer to the South Holland,
site during the Illinois
Performance Year will be eligible to receive an Eastman Performance Plan payment
based on Participating Earnings they accumulated during the Performance Year,
prior to being assigned to the South Holland,
EX-10.09 4 exhibit1009.htm AMENDED EASTMAN
and restated effective
cash compensation for all Company employees, including Plan participants, is
intended to be competitive with pay in the applicable labor market and in the
chemical industry for similar jobs when target levels of performance are
achieved. The Eastman Unit Performance Plan ("UPP", or the "Plan") is a variable
compensation plan for management level individuals at Eastman Chemical Company
(the "Company") and subsidiaries of the Company, as recommended by the Chief
Executive Officer ("CEO")) and as designated by the Compensation and Management
Development Committee (the "Committee") of the Board of Directors. It is
designed to deliver a portion of annual cash compensation according to corporate
and organizational unit performance and the attainment of individual objectives
and expectations. The UPP is intended to provide an incentive for superior
business and individual performance, and to tie the interests of
management-level individuals to the performance of the Company's businesses and,
thereby, the interests of the Company and its shareowners.
UPP is designed so that a pool of dollars ("Award Pool") is generated for each
major functional organization (a "Unit") within the Company. For purposes of
this plan, the CEO shall be a participant in the CEO Unit Award Pool, and the
Committee shall be the "head" and "management"
Unit Award Pool will be determined by multiplying, for each participant in a
1. Each participantís annual base pay rate on December 31 of the year in which Company and Unit performance is measured (the "Performance Year"), times
2. The participantís "UPP Target Award Percentage", which is a target award percentage, expressed as a percentage of annual base rate, and determined by the participantís salary grade, times
3. A "Unit Performance Factor", expressed as a percentage and determined by pre-set corporate and/or specified organizational unit ("Business Group Units") performance goals. Generally, the Performance Factor can range from 0%, if performance goals are not met, up to the maximum performance factor of 250% for each UPP measure.
Unit Award Pool is then determined by summing the result of 1) multiplied by 2)
multiplied by 3) for each participant in the Unit.
performance goals and correlative Performance Factors for each Unit will be
established as soon as practicable, either prior to the beginning of each
Performance Year or as soon as reasonably determinable at the beginning of the
Performance Year. The performance goals and correlative Performance Factors are
established by the Committee, based (in all cases except for the CEO) upon the
recommendation of the CEO.
the end of each Performance Year, the Committee will certify performance in
relation to the pre-established performance goals, thereby determining the
Performance Factor and Award Pool for each Unit. The CEO, after consultation
with the Company executive officers with management responsibility for the
affected Units, will determine whether, in his discretion, any adjustments to
the amounts of any of the Unit Award Pools is appropriate. Once the amount of
each Unit Award Pool has been determined within each Unit, management will
exercise discretion in allocating the Award Pool for individual payouts. The
payouts will be based on the attainment of individual objectives and
expectations established at the beginning of such Performance Year by Unit
management for each individual participant. Maximum potential for an individual
award could exceed an individualís assigned UPP Target Award Percentage
multiplied by the Unit Performance Factor, based on management's assessment of
individual performance. However, except in the case of the CEO Unit Award Pool
and the Unit Award Pool for the executive officers, the sum of all individual
awards cannot exceed the sum of all Unit Award Pools. As the Committee approves
executive officer awards and determines the CEO award, it may, in its
discretion, adjust the CEO Unit Award Pool and the Unit Award Pool for the
executive officers. Any adjustment to these Unit Award Pools will result in an
adjustment to the sum of all Unit Award Pools for the Company.
UPP is designed for management-level individuals who have an impact on the
financial performance of the Company. Prior to or at the time performance goals
are established for a Performance Year, the Committee, upon the recommendation
of the CEO, will confirm in writing the eligibility criteria for participation
in the UPP for such Performance Year and the portion of each participant's total
annual compensation that is variable under the Plan.
New Participants and Job Changes During the Performance Year
who are appointed to positions eligible for UPP participation during the
Performance Year become eligible for participation on the first day of the month
of the appointment. Individuals who become participants during the Performance
Year will be eligible to receive a UPP award based on the discretion of Unit
management. Each participant's "Target UPP Variable Pay", (for each participant,
1) his or her annual base pay rate, 2) multiplied by his or her UPP Target Award
Percentage, 3) multiplied by the Unit Performance Factor(s)) will be allocated
to a Unit Award Pool based upon the following process:
Performance Year will be divided into four, three-month (quarterly) intervals
(January 1 to March 31; April 1 to
1 to December 31)
promoted into UPP, who changes UPP participation level, or who moves between
Units at any time during one of these three-month intervals will have a portion
of his/her Target UPP Variable Pay allocated to a Unit Award Pool as
1. Promotion into UPP
Percent of Target UPP Variable Pay Allocated to Unit Award Pool †
1 - March 31
1 - June 30
1 - September 30
2. Change in UPP participation level
of Change in UPP participation level
of Target UPP Variable Pay Prior to Change Allocated to Unit Award Pool †
of New Target UPP Variable Pay After the Change Allocated to Unit Award
1 - March 31
1 - June 30
1 - September 30
1 - December 31
Percent of Target UPP Variable Pay Allocated to Unit Award Pool †
1 - March 31
1 - June 30
1 - September 30
1 - December 31
the event an eligible participant (1) retires, (2) dies, (3) becomes disabled
under the Eastman Long-Term Disability Plan, or (4) terminates employment as a
result of, pursuant to, or in connection with layoff, special separation,
divestiture, or similar circumstances, such person's Target UPP Variable Pay
will be allocated to his or her Unit's Award Pool for such Performance Year in
accordance with the process outlined in Section 3.02, Part II, Table 3, under
the column " Prorated Percent of Target UPP Variable Pay Allocated to Unit Award
Pool ." He/she will be eligible to receive a UPP award for such Performance Year
at the sole discretion of the Unit management.
who terminate employment with the Company for reasons other than those specified
under this Section 3.03 will be credited to a Unit Award Pool and be eligible to
receive an award under the UPP only if they were actively employed on the last
scheduled workday of the Performance Year.
Plan's Performance Year shall be the calendar year beginning on January 1 and
ending on December 31.
year, the CEO will recommend to the Committee performance goals for each Unit
for a given Performance Year. Such performance goals may be for one or more
Units, for the Company as a whole, or for a combination of one or more Units and
the Company. Either by the first day of the Performance Year, or such later date
as is practicable, the Committee shall establish in writing, with respect to the
Performance Year, a target objective(s) with respect to such performance goals
and formulae or methods for computing the applicable Performance Factor(s) based
on the extent to which such performance goals are attained. Performance Factors
can range from 0%, if performance goals are not met, to the maximum performance
factors for each UPP measure. Performance goals for each measure may be based
upon any quantitative and objectively determinable business or financial
criteria, alone or in combination, as the CEO and the Unit heads shall deem
established, performance goals for a particular Performance Year cannot be
changed during the Performance Year.
5. AWARD DETERMINATION
soon as practicable following the availability of performance results for the
completed Performance Year, the Committee shall certify performance in relation
to the pre-established goals, thereby determining the Performance Factor(s) and
Award Pools for each Unit. To the extent the performance goals are expressed in
standard accounting terms, they shall be measured according to generally
accepted accounting principles as in existence on the date on which the
performance goals are established and without regard to any changes in such
principles after such date.
determining whether the performance goals have been met, to the extent that such
goals are expressed in terms of financial performance, the Committee may adjust
the financial results for a Performance Year to exclude the effect of unusual
charges or income items or other events which are distortive of financial
results for the Performance Year. Notwithstanding actual performance, the
Committee may, in its sole discretion, adjust the amounts of the Unit Award
Pools to reflect overall Company performance and business and financial
of Unit Award Pool and Individual Awards; Report to Committee
upon Company and/or Unit performance against the performance goals, the
Performance Factors are determined as provided in Sections 4.02 and 5.01. The
amount generated for each Unit Award Pool will equal the aggregate of the Target
UPP Variable Pay for each eligible participant in the Unit. The CEO, after
consultation with the Company executive officers with management responsibility
for the affected Units, will determine whether, in his discretion, any
adjustments to the amounts of any of the Unit Award Pools is appropriate. Once
the amount of each Unit Award Pool has been determined within each Unit,
management shall have the sole discretion to allocate the Unit Award Pool among
eligible participants, based on objective or subjective assessments of the
participants' achievement of pre≠established goals and expectations for the
Performance Year. If the sum of individual awards as allocated by the Unit
management within a particular Unit exceeds the Award Pool amount for that Unit,
the Unit management shall make adjustments to individual awards to account for
the difference. In certain circumstances (e.g. participants transferring between
Units), however, awards in a Unit may exceed the Unit Award Pool. As a result,
corresponding adjustments must be made to another Unit Award Pool. The sum of
all individual awards shall not exceed the sum of all Unit Award Pools for the
Company. Final allocations of the Unit Award Pools shall be reported to the CEO,
who shall report the UPP results to the Committee. The Committee shall approve
the UPP award amounts for all executive officers of the Company, and shall
determine the UPP Award amount for the CEO. As the Committee approves executive
officer awards and determines the CEO award, it may, in its discretion, adjust
the CEO Unit Award Pool and the Unit Award Pool for the executive officers. Any
adjustment to these Unit Award Pools will result in an adjustment to the sum of
all Unit Award Pools for the Company.
6. PAYMENT OF AWARDS
awards shall be paid by the' Company in March for performance in the previous
Performance Year, based upon the Unit management's allocation of awards from the
Unit Award Pools. The Committee has the authority, in its discretion, to defer
payment of a participant's award into the Executive Deferred Compensation Plan
until the participant retires or otherwise terminates employment, if the
Committee determines that payment of the award could result in the participant
receiving compensation in excess of the maximum amount deductible by the Company
for Federal income tax purposes.
Adjustment Upon Entry Into the UPP
UPP is a variable compensation program whereby participants may earn
compensation based upon corporate, organizational, and individual performance.
New participants to the Plan are immediately administered on the appropriate
rate schedule for their assigned salary grade. This may reduce or eliminate
promotional increases, depending upon the person's pay position in the rate
range of the new salary grade. Subsequent salary treatment will depend upon
pay/performance relationships for their assigned grade.
Conversion Upon Withdrawal From the UPP
unusual circumstances when it is necessary for an individual to be removed from
the Plan, the individual's base salary and target annual cash compensation will
be reviewed to ensure competitiveness with pay in the applicable labor market
and in the chemical industry for similar jobs when target levels of performance
are achieved. Should the removal from the Plan involve a reduction in salary
grade, base salary in the new salary grade will be selected based upon the
individual's applicable training and experience.
UPP award payout is considered in calculating the basis for calculation of
certain benefits. For participants who are U. S.-based employees, base salary,
the actual UPP payout (if applicable), the actual Annual Performance Plan
("APP") payout (if applicable), and the actual Eastman Performance Plan ("EPP")
payout (if applicable), are included in calculating retirement benefits. For,
Participants who are non-U.S.-based employees, generally retirement benefits are
calculated using only base salary plus amounts earned under the UPP, and APP,
and EPP; however, some countries have different rules concerning the pay that
must be counted in calculating retirement benefits, and non-U.S. based employees
should contact their human resources representatives if they have questions.
person shall have any legal claim to be granted an award under the Plan. Except
as may be otherwise required by law, payouts under the Plan shall not be subject
in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, charge, garnishment, execution, or levy of any kind, either
voluntary or involuntary. Plan payouts shall be payable from the general assets
of the Company and no participant shall have any claim with respect to any
specific assets of the Company.
the UPP nor any action taken under the UPP shall be construed as giving any
employee the right to be retained in the employ of the Company or to maintain
any participant's compensation at any level.
Participants who are U.S.-based employees, the Company shall have the power and
the right to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy Federal, state, and local taxes
(including the participant's OASDI and
withheld. For Participants who are non-U. S. based employees, the Company shall
have the power and the right to deduct or withhold, or require a Participant to
remit to the Company, an amount sufficient to satisfy all applicable foreign and
local taxes required by law to be withheld.
and Authority of the Committee
Committee shall have full power and authority to administer and interpret the
provisions of the Plan and to adopt such rules, regulations, agreements,
guidelines, and instruments for the administration of the Plan and for conduct
of its business as the Committee deems appropriate or advisable. The Committee
sets and interprets policy, confirms the individual participants in the UPP and
the amounts of variable pay under the UPP, establishes annual performance
measures and performance goals, certifies the extent to which performance goals
were satisfied under the Plan, and approves the UPP award amounts to
participants who are executive officers of the Company.
Delegation of Authority
Committee shall have full power to delegate to any officer or employee of the
Company the authority to administer and interpret the procedural aspects of the
Plan, subject to the Plan's terms, including adopting and enforcing rules to
decide procedural and administrative issues.
or Terminating the Plan
action of the Committee, the Plan may be amended, modified, suspended, or
terminated, in whole or in part, at any time for any reason.
Senior Vice President, Human Resources, has responsibility for monitoring and
reporting on the administration and effectiveness of the Plan. The Senior Vice
President's role is to provide independent, objective appraisal and guidance to
both the Committee and the CEO, in the administration of the UPP. Each year, the
Senior Vice President will provide a formal review to the Committee end the CEO
on the overall effectiveness of the UPP.