Exhibit 10.20

Hexion Specialty Chemicals, Inc.

2010 INCENTIVE COMPENSATION PLAN

Purpose of the Plan

The purpose of the Plan is to reward associates for profitably growing the
business and controlling costs. The Plan is designed to link rewards with
critical financial metrics for the purposes of promoting actions which are the
most beneficial to the company’s short-term and long-term value creation.

Plan Year

1 January 2010 – 31 December 2010

Eligibility

Participation is based on each individual associate’s scope of responsibility
and contribution within the organization, as well as the market prevalence for
incentive in the country where they are employed.

Associates must be employed in an incentive eligible position for at least three
consecutive full months during the Plan year and must be actively employed by
Hexion Specialty Chemicals, Inc. or a subsidiary company on 1 January 2011.

Eligible compensation for incentive calculation is based on the participant’s
base rate of pay as of 31 December, 2010. The participant’s incentive
calculation will be prorated if a change in salary or incentive target occurs
after 1 April of the Plan year.

Plan Performance Measures

EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization and
excluding restructuring (as approved by the Board), gains/losses from the sale
of businesses and integration expenses (same as ‘Segment’ EBITDA).

The achievement of EBITDA growth is the critical measure on which the investment
community and future shareholders will evaluate Hexion’s performance in 2010. As
a result, the participants should be focused and incentivized to manage the
business to achieve growth in EBITDA.

50% of the participant’s incentive target will be based on the achievement of
the EBITDA targets.

EBITDA will be measured for Global Hexion, each Division and specified Business
Units.

EHS: Measures the Occupational Incidents Injury Rate (OIIR)

10% of the participant’s incentive target will be based on the achievement of
the EHS Goals.

The applicable EHS goals must be achieved at 100% or better in order to be
eligible for an incentive award. EHS will be measured for Global Hexion, each
Division and specified Business Units.

 

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Payment of the EHS measure is contingent upon the EBITDA results of the
participant’s primary area of responsibility (Global Hexion, Division or
Business Unit) meeting the minimum financial payout threshold.

Cash Flow: Represents the amount of cash generated by business operations.

40% of the participant’s incentive target will be based on the achievement of
Cash Flow targets.

Cash Flow will be separately calculated from EBITDA for payout. Even if the
EBITDA target is not achieved, it is still possible to meet or exceed Cash Flow
targets for partial payout.

Cash Flow will be measured for Global Hexion and the Divisions at the end of the
plan year.

Target Incentive

Each eligible participant will have a target incentive opportunity expressed as
a percent of their base salary. Targets are determined by the associate’s pay
Band, country of employment, the scope of their role and contributions within
the organization.

If the maximum EBITDA and Cash Flow performance targets are attained and the EHS
performance is at 100% or better, the Plan will pay 175% of the Target Incentive
Award.

Plan Structure

The structure of each participant’s incentive is determined by the individual’s
role in the organization and whether they report at a business unit level, a
divisional level or at the corporate level.

 

     Global Hexion
EBITDA   Division EBITDA   Business Unit EBITDA   EHS Goals
(Funds through
EBITDA achievement)   Cash Flow
(Funds Independently)

Hexion Corporate Level

   50%

(Funds EHS Goals)

      10%

Global Measure

  40%

Global Measure

Division Level

   10%   40%

(Funds EHS Goals)

    10%

Division Measure

  40%

Division Measure

Business Unit Level

     10%   40%

(Funds EHS Goals)

  10%

Business Unit
Measure

  40%

Division Measure

Calculation of Incentive Payments

The EBITDA measure will have the following relationship towards incentive award
payout at Global Hexion level:

 

2010 Plan

   Minimum     Lower
Midpoint     Target     Upper
Midpoint     Maximum  

Financial performance as % of Target

   89.3 %    94.7 %    100 %    105.5 %    110.9 % 

Incentive Payout %

   50 %    75 %    100 %    138 %    175 % 

Sr. LeadershipTeam Incentive Payout %

   50 %    75 %    100 %    150 %    200 % 

 

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For actual performance between the Minimum, Target and Maximum points above, a
straight line calculation will be made, rounded to the nearest 1/10th percent.
There is no additional payment made for performance above the maximum. The final
financial award will be determined when the 2010 audited financial performance
results are available.

Basis for Award Payouts

Financial Results: Bonus payments will be based on audited and approved
financial results. No bonus payment will be made until formal results have been
approved by Hexion’s corporate officers.

Payment against the achievement of the financial measures will be as follows:

a. Payment of any financial element is contingent on its own merit.

b. If there is more than one financial measure, payment against each of the
measures will be independent of each other.

For example, if measure 1: “Business Unit” is met, it will pay out regardless of
whether measure 2: “Division” is met.

c. Payment on achievement of EHS measure is contingent upon meeting the EBITDA
financial measure for the participant’s direct reporting relationship.

Limitations: All incentive payments must be self-funded from profits generated
at the corporate, divisional, or business unit level. The Compensation Committee
of the Board of Directors may elect to modify the annual EBITDA targets based on
acquisitions or divestitures that may occur during the calendar year. Hexion
Specialty Chemicals has the right to amend or terminate this plan at any time.

Employment: Participants must be actively employed by Hexion Specialty
Chemicals, Inc. or a subsidiary company on 1 January, 2011 and must have been in
an incentive eligible position for at least three full consecutive months during
the financial year.

Performance-Related Issues: Awards to participants who are subject to a
disciplinary review of performance, or are on a performance improvement plan,
need to be reviewed with the HR Divisional/Functional Leader to determine if the
associate is eligible for a partial award.

Incentive Payments: Payments are subject to applicable taxes and
garnishment/wage orders, and if the associate participates in the Hexion
Specialty Chemical US retirement plan, all incentive payments are subject to
deferral and to plan provisions.

Pro-ration: A participant’s incentive payment will be prorated for any of the
following conditions:

 

  a. Base Salary and Incentive Group: Awards are normally calculated on the
participant’s base salary as of 31 December of the Plan year.

 

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  b. New Hires: Awards to participants who commenced employment during the Plan
year will be pro-rated on the basis of full month’s service during the Plan
year. Employees who commence employment on or before the 15th of any month will
be considered to have a full month’s service for that month but must be employed
on or before October 1, 2010 to be eligible to receive any payout

 

  c. Re-hires: Awards to participants who terminated during the Plan year and
are subsequently rehired during the Plan year will be eligible to receive
incentive provided they have worked at least three full consecutive months in
the Plan year in an incentive eligible role. Any incentive payments will be
prorated based on: 1 – their rate of pay during the full months they were
employed prior to termination, and 2 – their rate of pay at the end of the Plan
year for each full month of active employment after their date of rehire. If the
participant was not in an incentive eligible role at termination, no credit will
be given for incentive payout for that period.

 

  d.

Salary/Incentive Target Changes: Awards to participants whose base rate of pay
and/or incentive group changes after January 1st of the Plan year will be
pro-rated on the basis of full month’s service at each job level during the
year. (Job changes on or before the 15th of any month will be considered as in
respect of the full month. Changes that take effect after the 15th of the month
will be counted as effective the 1st of the next month for incentive calculation
purposes.)

 

  e. Transfers: Awards to participants transferring between Divisions/Business
Units/Sites during the Plan year will be pro-rated on the basis of full month’s
service in each Division/Business Unit/Site during the year. Business
performance against each applicable measure will be based on the full year
performance. The award will be funded based on the direct reporting relationship
of the associate. (Transfers on or before the 15th of any month will be
considered as in respect of the full month. Transfers that take effect after the
15th of the month will be counted as effective the 1st of the next month for
incentive calculation purposes.)

 

  f. Leaves of Absence/Disability: Approved leaves of absence for 12 weeks or
less in the Plan year will not be excluded from the incentive payment, i.e. the
associate will be eligible to receive the full incentive payment. If an
associate is absent or on a leave that exceeds 12 cumulative weeks, then any
time not worked beyond the 12 weeks will be excluded for the Plan year and the
associate will receive a prorated incentive.

Timing of Payments: Typically, financial results are announced in March
following the end of the Plan year and any earned incentive payments are made in
April. In no event shall payments be made prior to the final audited year end
financial results of Hexion Specialty Chemicals, Inc. being formally announced
and the subsequent Incentive Compensation Plan payout approval by the
Compensation Committee of the Board of Directors. No leader within the
organization is to make prospective statements regarding the payment of
Incentive Compensation until the Compensation Committee has given approval.

The Hexion Incentive Compensation Plan remains at the total discretion of the
Company. Hexion retains the right to amend or adapt the design and rules of the
plan. Local legislation will prevail where necessary.

 

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