Exhibit 10.28

 

Chemtura Corporation

 

2013 Management Incentive Program

 

1.                                      Establishment and Purpose.  Pursuant to
its authority under the 2010 Chemtura Corporation Short-Term Incentive Plan (the
“STIP”), and consistent with the STIP as stated therein, the Committee hereby
establishes the Chemtura Corporation 2013 Management Incentive Program (the
“2013 MIP”).  Unless otherwise defined below, all capitalized terms shall have
the meaning given to such terms in or pursuant to the STIP.  The 2013 MIP
provides each Covered Employee and each Eligible Employee (as defined in
paragraph 9 below) designated by the Committee to participate in the 2013 MIP
(each, a “2013 MIP Participant”) with an opportunity to earn a performance-based
compensation award for calendar year 2013 (the “2013 Performance Period”), based
on the attainment of pre-established performance goals, as set forth below (a
“MIP Award”).

 

2.                                      Threshold Performance.  The Committee
shall establish an objective threshold value ( “Threshold”) for each measure of
performance during the 2013 Performance Period (each, a “Performance Factor”),
below which no MIP Award or component of a MIP Award will be paid out with
respect to that Performance Factor.  Each such applicable Threshold is set forth
in the Summaries attached hereto.  In order for any portion of the MIP Award to
be payable, the Threshold of Consolidated Operating Income performance must be
achieved.  In addition, and to the extent not inconsistent with the terms and
conditions set forth herein, the Committee shall make such equitable adjustments
to the Threshold (or other performance targets) for any or all Performance
Factors as described in Adjusted Performance Factor Targets in paragraph 6
below.

 

3.                                      MIP Awards.  At the time of initial
designation and approval by the Committee, each 2013 MIP Participant shall be
assigned to a specific business unit or to a corporate group for the purposes of
the 2013 MIP.  Each 2013 MIP Participant shall also be assigned a percentage of
his or her base salary that will be used in calculating the amount of his or her
MIP Award, if any.  This percentage of base salary shall be referred to as the
“Target Percentage”.  The Committee shall also establish the percentage of the
Target Percentage that shall be paid at Threshold (“Threshold Percentage”) and
the maximum percentage of the Target Percentage that can be earned (“Maximum
Percentage”). The Committee shall further determine which of the Performance
Factors that shall apply to the 2013 MIP Participant for purposes of their MIP
Award.  The amount of a 2013 MIP Participant’s MIP Award will be determined by
multiplying the 2013 MIP Participant’s base salary by the applicable Target
Percentage and each applicable Performance Factor.  The Committee will establish
percentage weightings for each Performance Factor that collectively sum to
100%.  The 2013 MIP Participant’s MIP Award is then subject to adjustment by
multiplying the MIP Award by the applicable Safety Multiplier.  The Committee
shall further equitably adjust the MIP Award by applying any Performance
Adjustment as described in paragraph 7 below.  Collectively, the Threshold
Percentage, Target Percentage and Maximum Percentage, together with any other
percentage value between these percentage values that the Committee shall define
or are mathematically interpolated, shall be the “Percentage Targets”. Each such
applicable Percentage Target is set forth in the Summaries attached hereto.

 

4.                                      Performance Factor Targets.  In addition
to establishing a Threshold value for each selected Performance Factor, the
Committee shall establish the value for each Performance Factor where the 2013
MIP Participant shall earn the Target Percentage (“Target’).  The Committee
shall also establish the value for each Performance Factor where the 2013 MIP
Participant shall earn the Maximum Percentage (“Maximum”).  The Committee will
establish percentage weightings for each Performance Factor that collectively
sum to 100%.  Collectively, the Threshold, Target and Maximum values of each
Performance Factor, together with any other value of Performance Factor between
these values that the Committee shall define or are mathematically interpolated,
shall be the “Performance Factor Targets”.  The definitions of each Performance
Factor and its computation are provided in the Definitions section of this 2013
MIP.  Each such applicable Performance Factor Target is set forth in the
Summaries attached hereto.

 

5.                                      Financials.  To the extent applicable,
the Committee, in determining any MIP Award, will review and approve in writing
the computation of actual performance against each Performance Factor in
accordance with the definitions from the Company’s 2013 audited financial
statements.

 

6.                                      Adjusted Performance Factor Targets. 
The Committee shall make such equitable adjustments to the Performance Factor
Targets for any acquisition or divestiture that is completed during 2013 in
accordance with the provisions of Performance Factor Target Adjustments as
provided in the Definitions section of this 2013

 

2013 MIP - Final

 

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MIP such that the computation of the Performance Factor Targets is consistent
with the measurement of actual performance of those Performance Factors.

 

7.                                      Performance Adjustment.  In determining
a 2013 MIP Participant’s MIP Award, the Committee reserves the absolute
discretion to increase (with respect to any 2013 MIP Participant who is not a
Covered Employee, as defined in the STIP) or decrease, the amount of base salary
computed by comparing the weighted actual performance against each Performance
Factor Target and applying the Percentage Targets, based on the Committee’s
assessment of any personal, function or other performance the Committee
determines should be taken into account (a “Performance Adjustment”); the CEO
will recommend to the Committee any Performance Adjustment for each 2013 MIP
Participant who reports directly to the CEO.  The CEO and the applicable
Business or Function leader will recommend to the Committee any Performance
Adjustment for each other 2013 MIP Participant. The maximum payable to any 2013
MIP Participant, regardless of a Performance Adjustment, is 200% of Target.

 

8.                                      Changes to Target Percentage.  With
respect to a 2013 MIP Participant who is not a Covered Employee, the Committee
may at any time prior to the final determination of MIP Awards: (i) change the
Target Percentage of such 2013 MIP Participant and (ii) assign a different
Target Percentage to such 2013 MIP Participant to reflect any change in the 2013
MIP Participant’s responsibility level or position during the course of the 2013
Performance Period.

 

9.                                      Eligibility.  The Committee shall
designate the Participants in the 2013 MIP from among (i) the Covered Employees
in accordance with the terms of the STIP and (ii) such other employees of the
Company and its subsidiaries recommended by management who have the ability to
contribute to the performance of the Company (“Eligible Employees”).  Each 2013
MIP Participant must be an Eligible Employee as of January 1, 2013, and be
actively employed as of the date MIP Awards, if any, are paid.  Exceptions may
be granted as determined by the Committee in its sole discretion.  Any employee
who becomes an Eligible Employee, as determined by the Committee, as a result of
hire or promotion after January 1, 2013 may become eligible to receive a MIP
Award, pro-rated based on the number of whole months that the employee is an
Eligible Employee during calendar year 2013.  Similarly, where an Eligible
Employee who is not a Covered Employee, for whatever reason, moves to another
role during calendar year 2013 for which different performance measures apply,
his or her MIP Award, if any, will be calculated by taking into account the
performance measures for each role and the actual time that the Eligible
Employee spent in each role during calendar year 2013.

 

10.                               Committee Authority.  The Committee shall be
responsible for the general administration and interpretation of the 2013 MIP
and for carrying out its provisions.  Subject to the terms of the 2013 MIP, the
Committee shall have full power and authority to discharge its duties hereunder,
including, without limitation, to (i) make all legal and factual determinations
under the 2013 MIP; (ii) construe and interpret the terms of the 2013 MIP;
(iii) correct any defects, supply any omission or reconcile any inconsistencies
and (iv) prescribe, amend and rescind any rules and regulations and to take such
actions as it deems necessary or advisable for the administration of the 2013
MIP.  The Committee’s determination shall be final, binding and conclusive on
all interested parties.

 

11.                               Tax Withholding. The Company shall have the
right to deduct applicable taxes from any MIP Award and withhold, at the time of
delivery under the 2013 MIP, an appropriate amount for payment of taxes required
by applicable law or to take such other action as may be necessary or advisable
in the opinion of the Company to satisfy all tax withholding obligations.

 

12.                               Section 409A.  The 2013 MIP is intended to
satisfy the short-term deferral exception to the application of Code
Section 409A.  To the extent any provision of the 2013 MIP becomes subject to
Code Section 409A and the applicable regulations and guidance issued thereunder,
it shall be construed, and payments made hereunder, as the Committee deems
necessary to comply with Code Section 409A.

 

13.                               Other Conditions.  Eligibility for or actual
participation in the 2013 MIP shall not and in no way is intended to create an
agreement of employment for a definite term.  Nothing herein shall or is
intended to, (i) obligate the Company to offer, or offer any employee
participation in, a Management Incentive Program or similar arrangement in the
future, and/or (ii) act as a modification of any employee’s existing terms and
conditions of employment.  Except as expressly set forth herein, the 2013 MIP
shall be subject to and administered in accordance with the terms and conditions
of the STIP.

 

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Definitions:

 

Safety Multiplier

 

“Safety Multiplier”, for calendar year 2013 is based on the achievement of
specified safety program results and measured by a weighted measure of the
actual (i) Total Recordable Case Rate (“TRCR”) for employees and contractors,
(ii) process safety incidents (“PSI”) and (ii) environmental safety incidents
(“ESI”) for the specific business unit or the corporate group to which the 2013
MIP Participant is assigned compared to Performance Factor Targets set forth in
the Summaries attached hereto.

 

Consolidated Operating Income

 

“Consolidated Operating Income” means, for calendar year 2013, earnings or loss
from continuing operations (1) plus, to the extent included in the calculation
of net income for such period in accordance with U.S. GAAP, the sum of
(a) interest expense, (b) income tax expense, (c) reorganization expense, net,
(d) other expense,(e) charges related to facility closures, severance and
related costs, (f) asset impairment charges, (g) charges related to the
accelerated recognition of asset retirement obligations, (h) antitrust costs,
(i) any losses from sales of assets or a business other than in the ordinary
course of business, (j) charges for the accelerated amortization of capitalized
financing costs or debt discounts, (k) expenses including professional fees
associated with the issuance of indebtedness or the amendment, waiver or
restructuring of the principal and terms of existing indebtedness including such
charges related to accounts receivable facilities, (l) charges associated with
the curtailment or settlement of pension and post retirement medical plans as
the result of dispositions, mergers or significant plan amendments, (m) expenses
related to natural disasters such as hurricanes or earthquakes that
significantly disrupt operations, (n) release of cumulative translation losses
related to the liquidation of a consolidated entity, (o) expense accruals
related to environmental remediation liabilities of manufacturing sites of
former business operations no longer operated by the Company, (p) a legal
settlement for any matter that is considered unusual or non-recurring in nature,
(q) any non-recurring expenses associated with an acquisition or a divestiture
completed by the Company during the year including the mark-up of inventory held
by the acquired business at the date of acquisition, the write-off of in-process
R&D and professional fees and expenses related to the transaction, and (r) 
professional fees and expenses related to any transaction that has been
announced but has not closed as of the end of the calendar year and is still
deemed to be probable such transaction will close (2)  minus (a) other income,
(b) any gains from sales of assets or a business other than in the ordinary
course of business, (c) income associated with the accelerated amortization of
premiums on debt and (d) gains associated with the curtailment or settlement of
pension and post retirement medical plans as the result of dispositions, mergers
or significant plan amendments, (e) release of cumulative translation gains
related to the liquidation of a consolidated entity and (f) a favorable legal
settlement that is considered unusual or non-recurring in nature

 

In the event that the Company enters into an agreement to divest a business
during the calendar year and accounts for that business as a discontinued
operation in its financial statements as of December 31, 2013 , but the
transaction has not closed as of that date, the actual operating income of that
business for the calendar year shall be added to the computation of Consolidated
Operating income, being computed from reported earnings or loss from
discontinued operations, net of tax, applying the same methodology as used above
to compute Consolidated Operating Income from reported earnings or loss from
continuing operations.

 

Business Operating Income

 

“Business Operating Income” means, for calendar year 2013, operating income (or
operating loss) (1) plus, to the extent included in the calculation of operating
income for such period in accordance with U.S. GAAP, the sum of, (a) impairment
charges, (b) charges related to the accelerated recognition of asset retirement
obligations, (c) any losses from sales of assets or a business other than in the
ordinary course of business, (d) expenses related to natural disasters such as
hurricanes or earthquakes that significantly disrupt operations, (e) any
non-recurring expenses associated with an acquisition or divestiture during the
year that is integrated into the Business including the mark-up of inventory
held by the acquired business at the date of acquisition, the write-off of
in-process R&D and transaction related expenses, (f)  professional fees and
expenses related to any transaction that has been announced but has not closed
as of the end of the calendar year and is still deemed to be probable such
transaction will close and (g) all allocated functional and corporate expenses
(2)  minus any gains from sales of assets or a sub-segment of the Business other
than in the ordinary course of business.

 

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Consolidated Adjusted EBITDA

 

“Consolidated Adjusted EBITDA” means, for calendar year 2013, Consolidated
Operating Income plus, to the extent included in the calculation of operating
income for such period in accordance with GAAP, depreciation and amortization
expense (adjusted to exclude asset impairments and accelerated depreciation
arising from a facility closure), expense related to provisions for bad debt and
expense recognized from the grant of non-cash stock compensation awards.

 

Business Adjusted EBITDA

 

“Business Adjusted EBITDA” means, for calendar year 2013, Business Operating
Income plus, to the extent included in the calculation of operating income for
such period in accordance with GAAP, depreciation and amortization expense
(adjusted to exclude asset impairments and accelerated depreciation arising from
a facility closure), expense related to provisions for bad debt and expense
recognized from the grant of non-cash stock compensation awards to the extent
directly incurred by the business.

 

Net Working Capital

 

“Net Working Capital” means, for calendar year 2013, for the Company and for
each Business the sum of account receivable and inventory less accounts payable
as of December 31 of the calendar year less the sum of account receivable and
inventory less accounts payable as of December 31 of the prior calendar year. 
Accounts receivable, inventory and accounts payable shall be measured in a
manner consistent with the method used to compute their values in the
preparation of the Statement of Cash Flows in accordance with U.S. GAAP.

 

In the event that the Company enters into an agreement to divest a business
during the calendar year and accounts for that business as a discontinued
operation in its financial statements as of December 31, 2013 of that year, but
the transaction has not closed as of that date, the actual Net Working Capital
of that business for the calendar year shall be added to the computation of
Consolidated Net Working Capital.

 

Investments

 

“Investments” means, for calendar year 2013, for the Company and for each
Business the sum of the value of capital expenditures and investments in
intangible assets, as reflected in the Statement of Cash Flows of the Company.

 

In the event that the Company enters into an agreement to divest a business
during the calendar year and accounts for that business as a discontinued
operation in its financial statements as of December 31, 2013 of that year, but
the transaction has not closed as of that date, the actual Investments of that
business for the calendar year shall be added to the computation of Consolidated
Net Working Capital.

 

Consolidated Abbreviated Free Cash Flow

 

“Consolidated Abbreviated Free Cash Flow” means, for calendar year 2013, the sum
of Consolidated Adjusted EBITDA, less increases in Net Working Capital or plus
reductions in Net Working Capital, less Investments.

 

Business Abbreviated Free Cash Flow

 

“Business Abbreviated Free Cash Flow” means, for calendar year 2013, the sum of
Business Adjusted EBITDA, less increases in Net Working Capital related to the
business or plus reductions in Net Working Capital related to the business, less
Investments related to the business.

 

Performance Factor Target Adjustments

 

“Performance Factor Target Adjustment” means, for calendar year 2013,
adjustments made to the Performance Factor Targets to reflect the completed
acquisition of a business or a material sub-segment of a business (an
“Acquisition”) or the completed divestiture of a business or a material
sub-segment of a business (a “Divestiture”). In each of the following
circumstances the target value of each applicable Performance Factor (the
“Target”) will be adjusted as described (“Adjusted Target”).  The Threshold,
Maximum and other stated values for the Performance Factor shall be adjusted
such that they are the same percentage of the Adjusted Target as were the
original values of the Target:

 

(i)             Should the Company or one of its businesses complete a
Divestiture that was not reflected in a Target for a Performance Factor for that
calendar year, the Consolidated Operating Income Target and/or the Business
Operating Income Target shall be reduced (or increased) by the amount of
Operating Income

 

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(or Loss) that was to be contributed by (or reduced by) the Divestiture before
the deduction of allocated functional and corporate expenses for the calendar
year.  The Consolidated and/or Business Net Working Capital Target for shall be
recalculated excluding Net Working Capital of the Divestiture from the Target
for the calendar year.  The Consolidated and/or Business Investments Target
shall be reduced by the amount of Investments attributable to the Divestiture in
the Target for the calendar year;

 

(ii)          Should the Company or one of its businesses not complete a
divestiture that was reflected in a Target for a Performance Factor for that
calendar year, the Consolidated Operating Income Target and/or the Business
Operating Income Target shall be increased (or decreased) by the amount budgeted
at the start of the year of Operating Income (or Loss) that was to be
contributed by (or reduced by) the divestiture for the calendar year to the
extent they were not included in the Target.  The Consolidated and/or Business
Net Working Capital Target shall be recalculated to include Net Working Capital
of the divestiture to the extent it was not included in the Target.  The
Consolidated and/or Business Investments Target shall be increased by the amount
of Investments attributable to the divestiture budgeted at the start of the
calendar to the extent they were not included in the Target;

 

(iii)       Should the Company or one of its businesses complete an Acquisition
that was not reflected in a Target for a Performance Factor for that calendar
year, the Consolidated Operating Income Target and/or the Business Operating
Income Target shall be increased (or reduced) by the amount of Operating Income
(or Loss) that was projected at the time the Acquisition was approved by the
Company’s Board of Directors for the period from the closing of the transaction
to the end of the calendar year.  The Consolidated and/or Business Net Working
Capital Target for shall be recalculated to include the Net Working Capital of
the Acquisition from the closing date of the transaction, such amounts to be
those projected at the time the Acquisition was approved by the Company’s Board
of Directors.  For the purposes of this computation, any step up in the value of
inventory under purchase accounting principles shall be excluded.  The
Consolidated and/or Business Investments Target shall be increased by the amount
of Investments attributable to the Acquisition for the period from closing of
the transaction to the end of the calendar year that was projected at the time
the Acquisition was approved by the Company’s Board of Directors;

 

(iv)      Should the Company not complete an acquisition during the calendar
year that was reflected in a Target for a Performance Factor for that calendar
year, the Consolidated Operating Income Target and/or the Business Operating
Income Target shall be reduced (or increased) by the amount of Operating Income
(or Loss) that was to be contributed by (or reduced by) that acquisition. The
Consolidated and/or Business Net Working Capital Target for shall be
recalculated excluding the Net Working Capital of the acquisition from the
Target for the calendar year.  The Consolidated and/or Business Investments
Target shall be reduced by the amount of Investments attributable to the
acquisition in the Target for the calendar year;

 

(v)         For Divestitures reflected in a Performance Factor Target for the
calendar year, if the closing occurs three or more months later than was assumed
in the Target, the Consolidated Operating Income Target and/or the Business
Operating Income Target shall be reduced by the amount of stranded allocated
functional and corporate expenses incurred for the period by which closing is
delayed. The Consolidated and/or Business Investments Target shall be increased
by the amount of Investments attributable to the Divestitures in the Target for
the period from the assumed closing date to the actual closing date; and

 

(vi)      For Acquisitions reflected in a Performance Factor Target for the
calendar year, if the closing occurs three or more months later than was assumed
in the Target, the Consolidated Operating Income Target and/or the Business
Operating Income Target shall be reduced by the amount of Operating Income of
the Acquisition included in the Target for the period from the assumed closing
date to the actual closing date. The Consolidated and/or Business Investments
Target shall be reduced by the amount of Investments attributable to the
Acquisition in the Target for the period from the assumed closing date to the
actual closing date.

 

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2013 MIP Performance Target Summary

Executives & Corporate

 

Consolidated Operating Income

 

Level

 

Op Income

 

Payout %

 

Min

 

195.0

 

0

%

 

 

204.0

 

25

%

 

 

213.0

 

50

%

 

 

222.0

 

75

%

Target

 

230.9

 

100

%

 

 

237.3

 

133

%

 

 

243.7

 

166

%

Max

 

250.0

 

200

%

 

Abbreviated Free Cash Flow

 

Level

 

Abr. FCF

 

Min

 

50.0

 

Target

 

79.2

 

Max

 

130.0

 

 

Safety Multiplier

 

 

 

Threshold

 

Target

 

Outstanding

 

ALL GROUPS

 

Multiplier = .9

 

Multiplier = 1

 

Multiplier = 1.1

 

TRCR

 

>=0.73

 

0.38 to 0.72

 

<=0.37

 

 

 

Minus .05

 

No Change

 

Add .05

 

Contractors

 

>=1.27

 

0.67 to 0.1.26

 

<=0.66

 

Process

 

3

 

2

 

0

 

 

 

 

 

 

 

 

 

Maximum Multiplier

 

0.9

 

1

 

1.1

 

 

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