Exhibit 10.22
(ALLEGHENY TECHNOLOGIES LOGO) [j1820901j1887500.gif]
The Annual Incentive Plan
For Year 2006

 

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          Contents   Page  
At a Glance
    1  
What is the Annual Incentive Plan?
    1  
Who is Eligible for This Plan?
    1  
How Does the Annual Incentive Plan Work?
    1  
 
       
Calculation of the Annual Incentive Plan Award
    2  
Target Bonus Percentage
    2  
Performance Goals and the Target Bonus Percentage
    2  
2006 Performance Goals
    3  
 
       
How the AIP Incentive Award is Calculated When All Goals Are 100% Achieved
    4  
 
       
How the AIP Incentive Award is Calculated for Other Achievement Levels
    5  
Maximums and Minimums
    5  
 
       
Additional Guidelines for the Annual Incentive Plan
    6  
Discretionary Adjustments
    6  
Some Special Circumstances
    6  
Making Payments
    6  
 
       
Administration Details
    7  

 

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At a Glance
What is the Annual Incentive Plan?
The Annual Incentive Plan (the “AIP” or the “Plan”) provides key managers of
Allegheny Technologies Incorporated (“Allegheny Technologies” or the “Company”)
and its operating companies with the opportunity to earn an incentive award when
certain pre-established goals are met at the corporate and operating company
levels.
Who is Eligible for This Plan?
Generally, key managers who have a significant impact on the company’s
operations will be eligible to participate in the Plan. Individuals eligible for
participation are determined annually, based on recommendations of the operating
company presidents, if applicable, and the Company’s chief executive officer,
with the approval of the Personnel and Compensation Committee of the Company’s
Board of Directors (the “Committee”).
How Does the Annual Incentive Plan Work?
Under the Plan, key managers may earn an incentive award based on a percentage
of their base salary, depending on the extent to which pre-established operating
company and/or corporate performance goals have been achieved.

•   For purposes of the Plan, base salary is generally the manager’s annual base
salary rate as of the end of the year, excluding any commission or other
incentive pay. For some special circumstances affecting the amount of base
salary used in the Plan, see page 6.   •   A target bonus percentage is used in
calculating the incentive award. It is explained on the next page. Each
participating manager will have a target bonus percentage.   •   The target
bonus percentage will be adjusted (upward or downward) based on the extent to
which various performance goals are achieved. Under the plan for 2006, all of
the adjustment will be based on company performance.

Incentive award payments will generally be distributed in cash after the
year-end audit is complete.

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Calculation of the Annual Incentive Plan Award
Target Bonus Percentage
The Plan establishes an incentive opportunity for each Plan participant,
calculated as a percentage of the manager’s base salary. Each participant will
be provided with an initial percentage, referred to as a “target bonus
percentage.”
Generally, the target bonus percentage is the percentage of base salary that can
be earned as an award under the Plan if 100% of the various performance goals
are achieved. For 2006, if 100% of the performance goals are achieved, 100% of
the target bonus percentage can be earned.
If there is a change in the key manager’s job position during the year that
changes the manager’s target bonus percentage, the target bonus percentage used
in the award calculation will be determined as follows:

•   If the individual has at least six months of service in the new position,
the newly adjusted target bonus percentage will be used in calculating the
individual’s award for the full year.   •   If the individual has less than six
months of service in the new position, the individual’s award for the year will
be calculated on a pro-rata basis using the two different target bonus
percentages weighted by length of service in each position during the year.

The Committee may change the goals and objectives for the Plan at any time.
Performance Goals and the Target Bonus Percentage
An AIP award is based on the extent to which specified, preestablished
performance objectives are achieved. For 2006, AIP awards will be based on the
extent to which the participant’s company achieves specified levels of
achievement as to:

•   Operating Earnings   •   Operating Cash Flow   •   Manufacturing
Improvements   •   Safety and Environmental Improvements   •   Customer
Responsiveness Improvements

For operating company presidents, 80% of the goals’ overall weight will be based
on the performance of the president’s operating company, and 20% of the goals’
overall weight will be based on corporate level performance.
For corporate staff employees, performance will be measured completely at the
corporate level.

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At the end of the year, the Company will measure actual performance against each
of the preestablished objectives.
The achievements attributable to each performance goal as noted above, then will
be added together, and that sum will be multiplied by: (1) the individual’s
target bonus percentage, times (2) the individual’s annual base salary, to
produce the amount, if any, of the incentive award for 2006.
Note that potential adjustments are described on page 6.
2006 Performance Goals

              The performance goals for 2006 generally consist of:        
•
  Operating Earnings     40 %
•
  Operating Cash Flow     30 %
•
  Manufacturing Improvements     10 %
•
  Safety and Environmental Improvements     10 %
•
  Customer Responsiveness Improvements     10 %

Targeted achievements as to each performance goal above have been set for each
operating company and for corporate staff. Together the above goals comprise
100% of the target bonus percentage.
No annual incentive will be paid if the achievement of Operating Earnings is
less than the established applicable minimum of Operating Earnings,
notwithstanding the achievements as to the other applicable performance goals
for 2006.
A prerequisite to any AIP award is compliance with Allegheny Technologies’
Corporate Guidelines for Business Conduct

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How the AIP Incentive Award is Calculated When All Goals are 100% Achieved
For the Year 2006, if 100% of the performance goals are achieved, then 100% of
the target bonus percentage will be credited to the participant:

                              Goal %     Goal     Earned % of   Goals   of
Target     Achieved %     Target *  
Operating Earnings
    40 %     100 %     40 %
 
                       
Operating Cash Flow
    30 %     100 %     30 %
 
                       
Mfg. Improvements
    10 %     100 %     10 %
 
                       
Safety and Envir. Improvements
    10 %     100 %     10 %
 
                       
Customer Resp. Improvements
    10 %     100 %     10 %
 
                 
Total
    100 %             100 %

 

* Earned % of Target = Goal % of Target X Goal Achieved %

In this example, assume that the operating company manager’s target bonus
percentage is 20%.
The target bonus percentage of 20% is then multiplied by 100% to produce a bonus
award equal to 20% of base salary:

         
Earned Percentage of Target
    100 %
 
       
X Target Bonus Percent
    20 %
 
       
 
       
Equals Percentage of Salary for Incentive Award
    20 %

The sections below discuss the impact of achieving more or less than 100% of
various goals, and they also discuss the impact of other potential adjustments.

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How the AIP Incentive Award is Calculated for Other Achievement Levels
The percentage of a goal achieved will determine the earned percentage of target
for that particular goal. The earned percentage of target will be interpolated
for achievement between the established minimum level and the established target
level for a particular goal. Similarly, the earned percentage of target will be
interpolated for achievement between the established target level and the
established maximum level for a particular goal.
Maximums and Minimums

•   Generally, the maximum percentage calculated as an earned percentage of
target for any goal is 200%, and the overall maximum incentive award that an
individual can earn under the weighting formula is 200% of his or her target
bonus percentage.   •   Where the established minimum of a performance goal is
achieved, only 50% of that goal’s share will be allocated to his or her target
bonus percentage.   •   Where less than the established minimum of a performance
goal is achieved, no amount of that goal will be allocated to his or her target
bonus percentage.

No annual incentive will be paid if the achievement of Operating Earnings is
less than the established applicable minimum of Operating Earnings,
notwithstanding the achievements as to the other applicable performance goals
for 2006.

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Additional Guidelines for the Annual Incentive Plan
Discretionary Adjustments
In some cases, the Plan allows for discretionary adjustments of up to +20% or
–20% of an individual’s calculated award. However, the sum of discretionary
adjustments for all eligible managers of the affected company cannot exceed +5%
of the aggregate calculated awards for that company.
Some Special Circumstances
The above formulas generally determine the amount of the incentive award for the
year. Other factors that may affect the actual award follow:

•   If a manager leaves the company due to retirement, death, or disability, an
award will be calculated based on the actual base salary earned during the year
in which the manager left—so long as the manager worked at least six months of
that year.   •   If a manager leaves the company before the end of the plan year
for any other reason, the manager will not receive a bonus award for that year.
  •   If a manager voluntarily leaves the company after the end of the year but
before the award is paid, the manager would receive any bonus due unless the
employment is terminated for cause. If employment is terminated for cause, the
manager would not be entitled to receive an award under the Plan.   •   Managers
who are hired mid-year may earn a pro-rated award for that year, based on the
salary earned during that year. However, managers with less than two months
service in a plan year (i.e. hired after October 31) would not be eligible for
an award for that year.   •   If the manager received an adjustment in base
salary due to a change in job position (i.e. other than a merit increase), the
manager’s base salary for plan purposes will be the sum of (1) the product of
the number of months prior to the adjustment times the rate of monthly base
salary immediately prior to the adjustment, and (2) the product of the number of
months after the adjustment times the rate of monthly base salary as of the end
of the Plan Year.   •   A prerequisite to any AIP award is compliance with
Allegheny Technologies’ Corporate Guidelines for Business Conduct.

Making Payments
All incentive award payments will generally be paid in cash, less applicable
withholding taxes, after the year-end audit is complete. This is expected to
occur by no later than March 15.

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Administration Details
This summary relates to the Annual Incentive Plan (AIP) of Allegheny
Technologies Incorporated and its subsidiaries. The Plan is administered by the
Committee, which has full authority to:

•   Interpret the Plan;   •   Designate eligible participants and categories of
eligible participants;   •   Set the terms and conditions of incentive awards;
and   •   Establish and modify administrative rules for the Plan.

Plan participants may obtain additional information about the plan and the
Committee from:
Executive Vice President,
Human Resources, Chief Legal and Compliance Officer,
General Counsel and Corporate Secretary
Allegheny Technologies Incorporated
1000 Six PPG Place
Pittsburgh PA 15222 5479
Phone: 412-394-2836                     Fax: 412-394-2837
The Plan will remain in effect until terminated by the Committee. The Committee
may also amend the plan at its discretion.
The Plan is not subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA) and is not “qualified” under Section 401(a) of the
Internal Revenue Code.

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