exv10w23



 






	10.23	 	Alcan Supplemental Short Term Incentive Plan, dated 11 February 2006.










 





2006 Supplemental Short Term

Incentive Plan (SSTIP)




 





 









 





Table of Contents


	 	 	 	 	 
	INTRODUCTION
	 	 	2	 
	GOVERNANCE
	 	 	2	 
	ELIGIBILITY AND OBJECTIVE SETTING
	 	 	2	 
	AWARDS AND PAYOUT
	 	 	3	 
	FINANCING
	 	 	4	 
	APPENDIX A — ROLE OF STEERING COMMITTEE
	 	 	5	 
	APPENDIX B — PERFORMANCE AND REWARD
	 	 	5	 







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INTRODUCTION



The Supplemental Short Term Incentive Plan (SSTIP) is intended to motivate achievement of
specific individual objectives intended to support improvement in Alcan shareholder value that
would otherwise not be reflected in the traditional EVA metric for 2006.



During 2006 the Human Resources Committee will undertake a comprehensive review of Alcan’s
compensation structure and goals to ensure consistency with overall business strategy.
Directionally it is anticipated that the thrust will be to encourage greater individual performance
recognition and this plan is a step toward that environment.






GOVERNANCE



The plan was approved by the Human Resources Committee on February 11, 2006. The plan will be
administered by a steering committee comprising the CEO, CFO, SVP HR and the Director Compensation
Services.



The steering committee will approve objectives, assess results and be responsible for recommending
payouts against the objectives. Final approval of all payments will be by the Human Resources
Committee.




ELIGIBILITY



Alcan Inc and Business Group management team N-1 and N-2 (excluding the CEO but including Excom
members) are eligible. Total eligible employees are approximately 100.



BG Presidents may determine that an additional supplemental plan is required for other key
individuals below the management team. While that is outside the scope of this document it is
expected that the cost of such a plan would be consistent with the value parameters used in the
overall Alcan plan.




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Objective Setting and Measurement Process



Qualifying objectives will be agreed by the Steering Committee from a list submitted by BG
Presidents or Alcan Inc Functional Heads.



Eligible participants will have half of their SSTIP award based upon their contribution to the
overall Alcan SG&A initiative. The remaining half will be based upon achievement against two
selected individual objectives.




Awards 



In January 2007 the Steering Committee will make final evaluations of achievements against
objectives in preparation for approval by the Excom at its February meeting and payout with EPA
awards at the end of February.



The target payout for the plan is 10% of mid-point base salary range. Half of the award (or 5% of
base salary) will be paid against an executive’s contribution to the group SG&A objective and the
balance (or 5% of base salary) payable for achievement against individual objectives.



Awards will be payable based upon the following scale:




	 	 	 	 	 	 	 	 	 
	 	 	SSTIP Objectives	 	 
	Measurable	 	10% of	 	Achievement of Individual Objectives *
	Objective	 	Base Salary	 	50%	 	100%	 	150%
	Team SG&A Objective	 	5% of Base	 	Evaluation based upon individual contribution to group SG&A objective

	 
	 	 	 	 	 	 	 	 
	Individual Objectives

	 	5% of Base
	 	Payout based upon
evidence of real
progress and
contribution but
falling short of
objective*
	 	Normative payout
based upon target
achievement and
time line
	 	Payout based upon
exceptional
achievement
significantly in
excess of original
goals








 




			
	*	 	Individual awards will be paid at 50%, 100% or 150% consistent for threshold level of
achievement




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EXAMPLE



Illustrative SSTIP payout:





	 	•	 	Base Salary $200,000
	 
	 	•	 	SSTIP Objective 10% of base





	 	 	 	 	 	 	 	 	 
	 	 	 	 	Achievement	 	 	 	 
	SSTIP	 	Attribution of	 	Against	 	Payout	 	 
	Objective	 	10% Objective	 	Objective	 	Calculation	 	Award
	Group
	 	50%	 	100%	 	$200,000
	 	$10,000
	 
	 	 	 	 	 	x10%x50%x100%(1)	 	 
	 
	 	 	 	 	 	 	 	 
	Individual #1
	 	25%	 	50%	 	$200,000
	 	$2,500
	 
	 	 	 	 	 	x10%x25%x50%(2)	 	 
	 
	 	 	 	 	 	 	 	 
	Individual #2
	 	25%	 	150%	 	$200,000
	 	$7,500
	 
	 	 	 	 	 	x10%x25%x150%(3)	 	 








 




			
	(1)	 	Achievement against group objective was at plan and therefore target payout is
payable
	 
	(2)	 	Achievement against objective #1 was at 50% and therefore minimum amount is payable
	 
	(3)	 	Achievement against objective #2 was at 150% and therefore maximum amount is payable




Financing 





	 	 	 	The plan will be financed from a pool of up to a maximum of US$4.5M which
approximates 15% of base salaries of all eligible executives. Expected payouts at
target would equal $3.0M or 10% of base salaries.




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Appendix A — Role of Steering Committee





	 	1.	 	The Committee will:






	 	a.	 	approve individual objectives and confirm
metrics and goals
	 
	 	b.	 	monitor performance and approve any
mid-year adjustments to objectives
	 
	 	c.	 	monitor group performance against stretch
budgets
	 
	 	d.	 	review and approve results prior to final
approval by HRC
	 
	 	e.	 	authorize payment






	 	2.	 	The Committee will assess performance against objectives —
not on their actual impact on share price





Appendix B — Performance and Reward




	 	 	 	 	 
	Compensation Element	 	Expectation	 	Comments
	Base Salary

	 	Overall performance
and ongoing personal
contribution
	 	Subject to
competitive practice
and potential
	 
	 	 	 	 
	EPA

	 	EVA/EHS Performance
of
BG or Alcan Inc
	 	EVA/EHS metrics with

discretionary adjustment for exceptional individual performance
	 
	 	 	 	 
	SSTIP

	 	SG&A and specific
individual objectives
	 	Individual Performance against

selected objectives







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