kalu-ex103_231.htm



Exhibit 10.3

 

Kaiser Aluminum 2021-2023 Long-Term Incentive Plan

 


				
	
Management Objective:
	
The applicable measurable performance objective:

 

•    for 60% of the Performance Shares is the percentile ranking (“Relative TSR Ranking”) of the total shareholder return (“TSR”) of Kaiser Aluminum Corporation (the “Company”) over the period from January 1, 2021 through December 31, 2023 (the “Performance Period”) compared to the TSR of companies listed on Annex I hereto (each, a “Peer Company”), each of which is a member of the S&P 1000 Materials Index, over the Performance Period; 

 

•    for 20% of the Performance Shares is the Company’s cost performance (“Cost Performance”), measured by the Company’s total controllable cost exclusive of the total controllable cost relating to the Warrick facility (“Total Controllable Cost”), over the Performance Period; and

 

•    for 20% of the Performance shares is the Company’s reported adjusted earnings before interest, tax, depreciation and amortization (“EBTIDA”) margin (“Adjusted EBITDA Margin”), measured by the Company’s adjusted EBITDA as a percentage of value added revenue (“VAR”).

 

	
 
	
TSR Performance Objective

	
 
	
The Relative TSR Ranking will be based on the Company’s relative stock performance against the Peer Companies, with any dividends being treated as being reinvested on the applicable ex-dividend date. 

	
 
	
The beginning and ending share prices are determined using the 20 trading day averages preceding the beginning and the end of the applicable performance period, respectively.

	
 
	
Any Peer Company that is acquired during the Performance Period shall be omitted from the peer group and will not be included in determining the Relative TSR Ranking.

 

	
 
	
Any Peer Company that files for bankruptcy, or that has its shares delisted from its primary stock exchange because it fails to meet the exchange listing requirements (other than as a result of its acquisition), during the Performance Period shall remain in the peer group and will be ranked last for purposes of determining the Relative TSR Ranking.

 




 



 


				
	
 
	
The Relative TSR Ranking target is the 50th percentile (the “Target TSR Ranking”). The payout for TSR performance at the target level (a multiplier of 1.00x) is 100% of the applicable Performance Shares. The threshold performance required to potentially earn Performance Shares is a Relative TSR Ranking at the 25th percentile. The payout for TSR performance at the threshold level (a multiplier of 0.50x) is 50% of the applicable Performance Shares. If the Relative TSR Ranking is below the 25th percentile, no Performance Shares will be earned. If the Relative TSR Ranking is greater than the 90th percentile, Performance Shares will be earned at the maximum level.  The payout for performance at the maximum level (a multiplier of 2.00x) is 200% of the applicable Performance Shares.

	
 
	
The multiplier for Performance Shares based on TSR Percentile Ranking will be determined by straight line interpolation between the measuring points based on the Relative TSR Ranking as follows:

	
 
	
 
	
TSR Percentile Ranking

<25th percentile
  25th percentile
  50th percentile
  75th percentile
≥90th percentile
	
Multiplier

   0.00x
   0.50x
   1.00x
   1.50x
   2.00x

	
 
	
If the TSR of the Company over the Performance Period is negative, then the multiplier shall be capped at 1.00x.

	
 
	
Cost Performance Objective 

	
 
	
Cost Performance is measured as a percentage of the average annual increase or decrease in Total Controllable Cost over the Performance Period as compared with the Company’s Total Controllable Cost for 2020.  The baseline reflects 2020 costs/performance flexed for volume and mix. 

 

	
 
	
Total Controllable Cost shall equal the sum of (1) controllable variable conversion cost (“Variable Cost”) and (2) controllable plant overhead and selling, general and administrative expenses (“Overhead Cost”), both exclusive of costs related to the Warrick facility and as more fully described to the Company’s compensation committee (the “Committee”).

 




 

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The Cost Performance target is a 0% annualized cost increase requiring the offset of underlying inflation (the “Target Cost Performance”). The payout for Cost Performance at the target level (a multiplier of 1.00x) is 100% of the applicable Performance Shares. If the Cost Performance is equal to or greater than a 2% annualized cost increase, no Performance Shares will be earned. If the Cost Performance equals or exceeds a 2% annualized cost reduction, Performance Shares will be earned at the maximum level.  The payout for performance at the maximum level (a multiplier of 2.00x) is 200% of the applicable Performance Shares.

	
 
	
The multiplier for Performance Shares based on Cost Performance will be determined by a straight line interpolation based on Cost Performance as follows:

	
 
	
 
	
Cost Performance

 

 ≥2% annualized cost increase

   0% annualized cost increase

 ≥2% annualized cost reduction
	
Multiplier

 

   0.00x

   1.00x

   2.00x

 

	
 
	
Adjusted EBITDA Margin Objective

	
 
	
The Company’s Adjusted EBITDA Margin performance is measured by the Company’s adjusted EBITDA as a percentage of VAR over the Performance Period.  

 

	
 
	
Adjusted EBITDA shall equal the sum of the Company’s adjusted EBITDA as reflected in the Company’s Reconciliations of Non-GAAP Measures – Consolidated, as reported in the Company’s earnings materials, for the three years over the Performance Period.  

	
 
	
VAR shall equal the sum of the Company’s Net Sales less the hedged cost of alloyed metal for three years over the Performance Period.




 

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The Adjusted EBITDA Margin target is [a target performance level approved by the compensation committee] (the “Target Adjusted EBITDA Margin Performance”). The payout for Target Adjusted EBITDA Margin Performance (a multiplier of 1.00x) is 100% of the applicable Performance Shares. If the Adjusted EBITDA Margin is equal to or less than [the threshold level approved by the compensation committee], no Performance Shares will be earned. If the Adjusted EBITDA Margin equals or exceeds [the maximum performance level approved by the compensation committee], Performance Shares will be earned at the maximum level.  The payout for performance at the maximum level (a multiplier of 2.00x) is 200% of the applicable Performance Shares.

	
 
	
The multiplier for Performance Shares based on Adjusted EBITDA Margin Performance will be determined by a straight line interpolation based on EBITDA Margin [targets approved by the compensation committee.]

	
Determination of Number of Performance Shares Potentially Earned:
	
The number of Performance Shares earned, if any, will be determined as follows:

•    Following December 31, 2023, the Committee will approve a multiplier (“LTI Multiplier”) for each of the performance metrics described above based on the Company’s performance.  

•    The number of Performance Shares earned, if any, will equal the sum of the product (rounded down to the nearest whole number) of (1) the target number of Performance Shares granted under each performance metric and (2) the LTI Multiplier determined based on each of the applicable Company performance metrics (rounded to the nearest whole percentage point); provided, however, such number will not exceed two times the target number of Performance Shares granted hereunder.

The Committee will approve the LTI Multiplier for each performance metric no later than March 15, 2024.

 

	
Administrative Provisions:
	
Additional administrative provisions are reflected in the terms of the applicable grant documents.




 

 

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Annex I

 

Peer Company List

 


						
	
Ticker
	
Peer Company Name
	
Ticker
	
Peer Company Name
	
Ticker
	
Peer Company Name

	
ARNC
	
Arconic Corporation
	
GEF
	
Greif, Inc.
	
RGLD
	
Royal Gold, Inc.

	
ASH
	
Ashland Global Holdings Inc.
	
GLT
	
Glatfelter Company
	
RPM
	
RPM International Inc.

	
ASIX
	
AdvanSix Inc.
	
HAYN
	
Haynes International, Inc.
	
RS
	
Reliance Steel & Aluminum Co.

	
ATI
	
Allegheny Technologies Incorporated
	
HCC
	
Warrior Met Coal, Inc.
	
RYAM
	
Rayonier Advanced Materials Inc.

	
ATR
	
AptarGroup, Inc.
	
HWKN
	
Hawkins, Inc.
	
SCL
	
Stepan Company

	
AVD
	
American Vanguard Corporation
	
IOSP
	
Innospec Inc.
	
SLGN
	
Silgan Holdings Inc.

	
AVNT
	
Avient Corporation
	
KALU
	
Kaiser Aluminum Corporation
	
SMG
	
The Scotts Miracle-Gro Company

	
BCC
	
Boise Cascade Company
	
KOP
	
Koppers Holdings Inc.
	
SON
	
Sonoco Products Company

	
BCPC
	
Balchem Corporation
	
KRA
	
Kraton Corporation
	
STLD
	
Steel Dynamics, Inc.

	
CBT
	
Cabot Corporation
	
KWR
	
Quaker Chemical Corporation
	
SWM
	
Schweitzer-Mauduit International, Inc.

	
CC
	
The Chemours Company
	
LPX
	
Louisiana-Pacific Corporation
	
SXC
	
SunCoke Energy, Inc.

	
CENX
	
Century Aluminum Company
	
LTHM
	
Livent Corporation
	
SXT
	
Sensient Technologies Corporation

	
CLF
	
Cleveland-Cliffs Inc.
	
MERC
	
Mercer International Inc.
	
TG
	
Tredegar Corporation

	
CLW
	
Clearwater Paper Corporation
	
MTRN
	
Materion Corporation
	
TMST
	
TimkenSteel Corporation

	
CMC
	
Commercial Metals Company
	
MTX
	
Minerals Technologies Inc.
	
TSE
	
Trinseo S.A.

	
CMP
	
Compass Minerals International, Inc.
	
MYE
	
Myers Industries, Inc.
	
UFS
	
Domtar Corporation

	
CRS
	
Carpenter Technology Corporation
	
NEU
	
NewMarket Corporation
	
USCR
	
U.S. Concrete, Inc.

	
EXP
	
Eagle Materials Inc.
	
NGVT
	
Ingevity Corporation
	
VVV
	
Valvoline Inc.

	
FF
	
FutureFuel Corp.
	
NP
	
Neenah, Inc.
	
WOR
	
Worthington Industries, Inc.

	
FOE
	
Ferro Corporation
	
OI
	
O-I Glass, Inc.
	
X
	
United States Steel Corporation

	
FUL
	
H.B. Fuller Company
	
OLN
	
Olin Corporation
	
ZEUS
	
Olympic Steel, Inc.

	
GCP
	
GCP Applied Technologies Inc.
	
 
	
 
	
 
	
 







 

 

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