ex-10_11.htm


    Exhibit 10.11


       

      EASTMAN
CHEMICAL COMPANY

       

      EASTMAN
UNIT PERFORMANCE PLAN

      (amended
and restated effective December 31, 2007)

       

      ARTICLE
1. PURPOSE

       

      Total
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 stockholders.

       

      ARTICLE
2. SUMMARY OF PLAN DESIGN

       

      The 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" of the CEO Unit.

      


      A Unit
Award Pool will be determined by multiplying, for each participant in a
Unit:

      


      
        	
                1)  

              	
                Each
      participant's annual base pay rate on December 31 of the year in which
      Company and Unit performance is measured (the "Performance Year"),
      times

              


      

      


      
        	
                2)  

              	
                The
      participant's "UPP Target Award Percentage", which is a target award
      percentage, expressed as a percentage of annual base rate, and determined
      by the participant's 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 200% for each UPP
measure.

              


      

      


      UPP
Target Award Percentages are established by the Committee for executive officers
of the Company.   UPP Target Award Percentages for Plan
participants other than executive officers are determined by the CEO and
reviewed by the Committee.

      


      The
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.

      



      
        
           
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      At 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
individual's 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.

       

      ARTICLE
3. ELIGIBILITY AND PARTICIPATION

       

      3.01
General Eligibility

      


      The 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.

      


      3.02
New Participants and Job Changes During the Performance Year

      


      Individuals
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:

      


      
        	
                 
      

              	
                I.

              	
                The
      Performance Year will be divided into four, three-month (quarterly)
      intervals (January 1 to March 31; April 1 to June 30; July 1 to September
      30; and October 1 to December 31)

              


      

      


      
        	
                 
      

              	
                II.

              	
                Anyone
      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 follows:

              


      

      


      Table
1. Promotion into UPP

      
        	
                Quarter

              	
                Date
      of Promotion

              	
                Prorated
      Percent of Target UPP Variable Pay Allocated to Unit Award
      Pool

              
	
                1st

              	
                January
      1 - March 31

              	
                100%

              
	
                2nd

              	
                April
      1 - June 30

              	
                75%

              
	
                3rd

              	
                July
      1 - September 30

              	
                50%

              
	
                4th

              	
                October
      1 - December 31

              	
                25%

              


      

      



      
        
           
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      Table
2. Change in UPP participation level

      
        	
                 

                Quarter

              	
                 

                Date
      of Change in UPP participation level

              	
                Percent
      of Target UPP Variable Pay Prior to Change Allocated to Unit Award
      Pool

              	
                Percent
      of New Target UPP Variable Pay After the Change Allocated to Unit Award
      Pool

              
	
                1st

              	
                January
      1 - March 31

              	
                0%

              	
                100%

              
	
                2nd

              	
                April
      1 - June 30

              	
                25%

              	
                75%

              
	
                3rd

              	
                July
      1 - September 30

              	
                50%

              	
                50%

              
	
                4th

              	
                October
      1 - December 31

              	
                75%

              	
                25%

              


      

      


      Table
3. Terminations

      
        	
                Quarter

              	
                Date
      of Termination

              	
                Prorated
      Percent of Target UPP Variable Pay Allocated to Unit Award
      Pool

              
	
                1st

              	
                January
      1 - March 31

              	
                25%

              
	
                2nd

              	
                April
      1 - June 30

              	
                50%

              
	
                3rd

              	
                July
      1 - September 30

              	
                75%

              
	
                4th

              	
                October
      1 - December 31

              	
                100%

              


      

      


      3.03
Terminations

      


      In 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.

      


      Participants
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.

       

      ARTICLE
4. PERFORMANCE YEAR AND PERFORMANCE GOALS

       

      4.01
Performance Year

      


      The
Plan's Performance Year shall be the calendar year beginning on January 1 and
ending on December 31.

      


      4.02
Performance Goals

      


      Each
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
appropriate.

      



      
        
           
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      Once
established, performance goals for a particular Performance Year can only be
modified during the Performance Year in the event of a change in the business,
operations, corporate structure, capital structure, method of conducting
business, or other events or circumstances which render the performance goals
unsuitable. Any modification of performance goals during the Performance Year
requires the approval of the Committee.

       

      ARTICLE
5. AWARD DETERMINATION

       

      5.01
Certification of Performance

      


      As 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.

      


      In
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
conditions.

      


      5.02
Calculation of Unit Award Pool and Individual Awards; Report to
Committee

      


      Based
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 pre­established 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.

       

      ARTICLE
6. PAYMENT OF AWARDS

      
UPP award
payments shall be made by the 15th day of March for performance in the previous
Performance Year., based upon the Unit management's allocation of awards from
the Unit Award Pools.


      
        
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      ARTICLE
7. SALARY ADJUSTMENTS AND BENEFITS

       

      7.01
Salary Adjustment Upon Entry Into the UPP

      


      The 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.

      


      7.02
Salary Conversion Upon Withdrawal From the UPP

      


      In
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.

      


      7.03
Relationship to Benefits

      


      The 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.

       

      ARTICLE
8. OTHER TERMS AND CONDITIONS

      


      8.01
Claims

      


      No 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.

      


      8.02
No Employment Rights

      


      Neither
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.

      


      8.03
Withholding

      


      For
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 MEDI obligation) required by law to be
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.


      
        
           
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      ARTICLE
9. ADMINISTRATION

       

      9.01
Power and Authority of the Committee

      


      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, 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.

      


      9.02
Committee's Delegation of Authority

      


      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.

      


      9.03
Amending or Terminating the Plan

      


      By action
of the Committee, the Plan may be amended, modified, suspended, or terminated,
in whole or in part, at any time for any reason.

       

      ARTICLE
10. PLAN AUDIT

       

      The
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 and the
CEO.

      



      
        
           
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