EX-10.25



 






Exhibit 10.25




Allegheny Technologies Incorporated




Key Executive Performance Plan




Effective as of January 1, 2004

And as amended February 24, 2005

and as further amended on February 22, 2006




Article I. Adoption and Purpose of the Key Executive Performance Plan





     1.01 Adoption. This Key Executive Performance Plan is adopted by the Personnel and
Compensation Committee of the Board of Directors as a part of the Allegheny Technologies
Incorporated executive compensation program effective January 1, 2004. The KEPP Payments,
if any, earned under this Plan are intended as performance based compensation within the
meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended, as incentive
compensation determined solely with reference to attainment in predetermined levels of
Earnings and Operational Goals within the relevant Performance Period.




     1.02 Purpose. The purposes of the KEPP are (i) to direct the focus of key management
employees to the achievement of goals deemed necessary for the success of the Corporation,
(ii) to assist the Corporation in retaining and motivating selected key management employees
of the Corporation and its subsidiaries who will contribute to the success of the
Corporation and (iii) to reward key management employees for the overall success of the
Corporation as determined with reference to predetermined levels of Earnings of the
Corporation and attainment of Operational Goals. The KEPP is intended to act as an
incentive to participating key management employees to achieve long-term objectives that
will inure to the benefit of all stockholders of the Corporation measured in terms of
achievement of predetermined levels of Earnings of the Corporation and attainment of
Operational Goals.




     1.03 Plan Document. This KEPP plan document is intended as the plan document as
adopted by the Committee, which will govern all Performance Periods of the KEPP beginning in
or after 2004.



Article II. Definitions




     For purposes of this Plan, the capitalized terms set forth below shall have the following
meanings:




     2.01 Award means an opportunity to earn a KEPP Payment in a particular Performance
Period. Each Award shall be denominated in dollars that can be earned upon
attainment of predetermined Earnings thresholds (Level 1) and the maximum amount that may be
paid with respect to Operational Goals before the application of Negative Discretion (Level
2).



 









 






     2.02 Award Agreement means a written agreement between the Corporation and a
Participant or a written acknowledgment from the Corporation specifically setting forth the
terms and conditions of a KEPP Award granted to a Participant pursuant to Article VI of this
Plan.




     2.03 Board means the Board of Directors of the Corporation.




     2.04 Cause means a determination by the Committee that a Participant has engaged in
conduct that is dishonest or illegal, involves moral turpitude or jeopardizes the
Corporation’s right to operate its business in the manner in which it is now operated.




     2.05 Change in Control means any of the events set forth below:




               (a) The acquisition in one or more transactions, other than from the Corporation, by
any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of a number of Corporation Voting Securities in excess of 25% of the
Corporation Voting Securities unless such acquisition has been approved by the Board; or




               (b) Any election has occurred of persons to the Board that causes two-thirds of the
Board to consist of persons other than (i) persons who were members of the Board on January
1, 2001 and (ii) persons who were nominated for election as members of the Board at a time
when two-thirds of the Board consisted of persons who were members of the Board on January
1, 2001; provided, however, that any person nominated for election by the Board at a time
when at least two-thirds of the members of the Board were persons described in clauses (i)
and/or (ii) or by persons who were themselves nominated by such Board shall, for this
purpose, be deemed to have been nominated by a Board composed of persons described in clause
(i); or




               (c) Approval by the stockholders of the Corporation of a reorganization, merger or
consolidation, unless, following such reorganization, merger or consolidation, all or
substantially all of the individuals and entities who were the respective beneficial owners
of the Outstanding Stock and Corporation Voting Securities immediately prior to such
reorganization, merger or consolidation, following such reorganization, merger or
consolidation beneficially own, directly or indirectly, more than 60% of, respectively, the
then outstanding shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of directors or
trustees, as the case may be, of the entity resulting from such reorganization, merger or
consolidation in substantially the same proportion as their ownership of the Outstanding
Stock and Corporation Voting Securities immediately prior to such reorganization, merger or
consolidation, as the case may be; or




               (d) Approval by the stockholders of the Corporation of (i) a complete liquidation or
dissolution of the Corporation or (ii) a sale or other disposition of all or substantially
all the assets of the Corporation.



2









 






     2.06 Committee means the Personnel and Compensation Committee of the Board.




     2.07 Corporation means Allegheny Technologies Incorporated, a Delaware corporation, and
its successors.




     2.08 Corporation Voting Securities means the combined voting power of all outstanding
voting securities of the Corporation entitled to vote generally in the election of the
Board.




     2.09 Date of Award means the date as of which an Award is granted in accordance with
Article VI of this Plan.




     2.10 Disability means any physical or mental injury or disease of a permanent nature
which renders a Participant incapable of meeting the requirements of the employment
performed by such Participant immediately prior to the commencement of such disability. The
determination of whether a Participant is disabled shall be made by the Committee in its
sole and absolute discretion. Notwithstanding the foregoing, if a Participant’s employment
by the Corporation or an applicable subsidiary terminates by reason of a disability, as
defined in an Employment Agreement between such Participant and the Corporation or an
applicable subsidiary, such Participant shall be deemed to be disabled for purposes of the
KEPP.




     2.11 Earnings means the earnings of the Corporation determined in accordance with
generally accepted accounting principles, provided, however, for the 2005 through 2007 and
the 2006 through 2008 Performance Periods, Earnings shall be expressed in terms of income
before taxes.




     2.12 Effective Date means January 1, 2004.




     2.13 Exchange Act means the Securities Exchange Act of 1934, as amended.




     2.14 KEPP Payment means the amount actually earned by a Participant in a particular
Performance Period. Each KEPP Payment shall be the sum of the amounts earned by a
Participant during a Performance Period as Level I and Level 2 achievement or, for the
2006-2008 Performance Period, the amount under the Participant Retention Achievement Bank
under Section 8.04.




     2.15 Level 1 means that portion of an Award that may be earned based on attainment of
Earnings.




     2.16 Level 2 means that portion of an Award that may be earned, after application of
Negative Discretion by the Committee, based on attainment of Operational Goals. The
Level 2 portion of any Award shall be denominated in the maximum amount that may be earned
with respect to Operational Goals prior to the application of Negative Discretion.



3









 






     2.17 Negative Discretion means the power of the Committee to be exercised solely in the
Committee’s discretion to reduce the Level 2 portion of any Award. It is anticipated that
the Committee will review with the Chief Executive Officer of the Corporation the
relative attainment of Operational Goals during a particular Performance Period before the
Committee exercises its Negative Discretion.




     2.18 Operational Goals means the goals set by the Committee at the commencement of a
Performance Period to be attained by the Participants during the course of a particular
Performance Period. Operational Goals will be set forth in terms of operating objectives
and/or criteria, which may or may not be earnings measures that, in the judgment of the
Committee after consultation with the Chief Executive Officer of the Corporation, will
enhance the success of the Corporation during and beyond a particular Performance Period.



     2.19 Participant means any key management employee selected by the Committee, pursuant
to Section 5.01 of this Plan, as eligible to participate under the KEPP for any one or more
Performance Period.




     2.20 Performance Period means a period of more than one fiscal year of the Corporation
over which the attainment of Earnings and Operational Goals shall be measured.




     2.21 Plan or KEPP means the Key Executive Performance Plan as set forth in this plan
document or as the same may be amended from time to time.




     2.22 Retirement means, a termination of employment with the Corporation and each
subsidiary of the Corporation at or after (i) attaining age 55 and (ii) completing five
years of employment with the Corporation and/or any subsidiary of the Corporation.




     2.23 Withholding Obligations means the amount of federal, state and local income and
payroll taxes the Corporation determines in good faith must be withheld with respect to a
KEPP Payment. Withholding Obligations may be settled by the Participant, as permitted by
the Committee in its discretion, in cash, previously owned shares of common stock of the
Corporation or any combination of the foregoing.



Article III. Administration





     In addition to any power reserved to the Committee under the governing documents of the
Corporation, the KEPP shall be administered by the Committee, which shall have exclusive and
final authority and discretion in each determination, interpretation or other action
affecting the KEPP and its Participants. The Committee shall have the sole and absolute
authority and discretion to interpret the KEPP, to amend or modify this Plan for the KEPP,
to select, in accordance with Section 5.01 of this Plan, the persons who will be
Participants hereunder, to set all Earnings thresholds and Operational Goals, to determine
all performance criteria, levels of Awards and KEPP Payments payable, to determine, after
review of the Corporation’s financial reports, the degree to which any threshold of Earnings
has been achieved for a Performance Period with respect to the Level 1 portion of any Award,
to review the attainment of Operational Goals and exercise Negative Discretion with



4









 







respect to the Level 2 portion of any Award, to impose such conditions and restrictions as
it determines appropriate and to take such other actions and make such other determinations
in connection with the KEPP as it may deem necessary or advisable.



Article IV. Overview of KEPP





     4.01 Cash Bonus Plan. KEPP is designed to pay cash bonuses to participating key
executives after the end of a Performance Period based on the level (i) of achievement of
predetermined Earnings thresholds and (ii) attainment of Operational Goals (to which the
Committee may exercise Negative Discretion).




     4.02 Levels of Awards. KEPP Awards are granted with two levels. The first level,
Level 1, is a cash bonus payment based on achievement of Earnings that the Committee has no
discretion to reduce. KEPP Payments earned under Level 1 will be earned solely with
reference to Earnings attained during the Performance Period. The second level, Level 2 is
a cash bonus payment based on level of attainment of Operational Goals that the Committee
has the Negative Discretion to reduce. The Committee’s judgment in exercising its Negative
Discretion to arrive at a KEPP Payment under Level 2 is expected to be guided by the degree
to which the Corporation generally or the participating key executives in particular have
attained predetermined Operational Goals. The Committee is expected to review the level of
attainment of Operational Goals with the Chief Executive Officer of the Corporation before
exercising any Negative Discretion. For the 2006-2008 Performance Period, the Committee has
established the Participant Retention Achievement Bank under Section 8.04.




     4.03 Participating Key Executives. It is intended that the number of participating key
executives shall be limited to those key executives with the most direct influence on the
attainment of Earnings and operational goals.



Article V. Participation





     5.01 Designation of Participants. Participants in the KEPP shall be such key
management employees of the Corporation or of its subsidiaries as the Committee, in its sole
discretion, may designate as eligible to participate in the KEPP for any one or more
Performance Periods. No later than 90 days after the commencement of each Performance
Period during the term of the KEPP, the Committee shall designate the Participants who are
eligible to participate in the KEPP during such Performance Period. The Committee’s
designation of a Participant with respect to any Performance Period shall not require the
Committee to designate such person as a Participant with respect to any other Performance
Period. The Committee shall consider such factors as it deems pertinent in selecting
Participants. The Committee shall promptly provide to each person selected as a Participant
written notice of such selection.



5









 





Article VI. Grants under the KEPP





     6.01 Annual Determination Regarding Performance Period. No later than the
60th day of each calendar year, the Committee shall determine whether to
establish a Performance Period, provided, however, for a Performance Period established in
calendar year 2004, the Committee may make a determination under this Section 6.01
at any time prior to the 90th day of calendar year 2004.




     6.02 Determination of Grants, Awards (both Level 1 and Level 2) and Performance
Criteria. For each Performance Period, the Committee shall take the following actions no
later than the 90th day of the first calendar year of that Performance Period:




          (a) Identify Participants for that Performance Period.




          (b) Establish the level of Level 1 and Level 2 opportunities for each
Participant.




          (c) Set the Earnings target(s).




          (d) Set the Operational Goals and relative weightings after discussing such
goals and weighting with the Chief Executive Officer in order to bring the
Operational Goals as closely as possible in line with the Corporation’s business
plans.




     6.03 Termination of Employment. If a Participant terminates employment with the
Corporation and each subsidiary of the Corporation during a then uncompleted Performance
Period for reasons other than death, Disability or Retirement, any KEPP Award for any then
uncompleted Performance Period shall be forfeited automatically. If a Participant
terminates employment with the Corporation and each subsidiary of the Corporation for
reasons of death, Disability or Retirement during a then uncompleted Performance Period, the
Participant shall be entitled to receive a pro rata KEPP Payment for each then uncompleted
Performance Period determined:




          (a) when the KEPP Payments for all other Participants in such Performance
Period(s) are determined; and




          (b) based on the actual level of achievement of Earnings for that Performance
Period and the attainment of Operational Goals, after the application of Negative
Discretion.



6









 





Article VII. Determination of Achievement of Earnings and Operational Goals





     7.01 Determination of Earnings and Operational Goals. As promptly as administratively
feasible but in no event later than the March 1st of the calendar
year following the last
calendar year of each Performance Period, the Committee shall determine Earnings of the
Corporation and the attainment of Operational Goals and the degree, if any, to which the
Committee will exercise Negative Discretion.




     7.02 Determination of KEPP Payments. KEPP Payments for a particular Performance Period
for a particular Participant shall be the result of adding (i) the amount earned by a
particular Participant under Level 1 based on the Corporation’s actual Earnings during the
Performance Period and (ii) the amount earned by a particular Participant under Level 2
based on attainment of Operational Goals and after the application, if any, by the Committee
of Negative Discretion or, for the 2006-2008 Performance Period, the Participant Retention
Achievement Bank amount determined under Section 8.04.



Article VIII. Miscellaneous





     8.01 Change in Control. In the event of a Change in Control, KEPP Payments shall be
determined for all then uncompleted Performance Periods as of the date of the Change in
Control at the highest level Earnings for each such uncompleted Performance Period and KEPP
Payments shall be delivered to the Participant as soon after the Change in Control as is
administratively feasible.




     8.02 Non-Uniform Determinations. The actions and determinations of the Committee need
not be uniform and may be taken or made by the Committee selectively among employees or
Participants, whether or not similarly situated.




     8.03 Amendment and Termination of the Plan. The Committee shall have complete power
and authority to amend or terminate this Plan at any time it is deemed necessary or
appropriate. No termination or amendment of the Plan may, without the consent of the
Participant to whom any award shall theretofore have been granted under the KEPP, adversely
affect the right of such individual under such award; provided, however, that the Committee
may, in its sole discretion, make such provision in the Award Agreement for amendments
which, in its sole discretion, it deems appropriate.




     8.04 Participant Retention Achievement Bank for 2006-2008 Performance Period. In order to
retain participants designated as eligible to participate in KEPP for the 2006-2008 Performance
Period, for that 2006-2008 Performance Period, KEPP Payments will be made under this Participant
Retention Achievement Bank provision if greater than the KEPP Payment otherwise due under the KEPP
for the 2006-2008 Performance Period. The aggregate amount in the Participant Retention
Achievement Bank shall be equal to the sum of the three amounts (none less than 0) determined as of
the close of each year in the 2006-2008 Performance Period by taking the amount of Earnings for
that year in the 2006-2008 Performance Period multiplied by three and determining the Level 1
amount due for



7









 







that level of achievement for the entire three year, 2006-2008 Performance Period and then dividing
the KEPP Payment due under the foregoing clause by three. The resulting amount will be one of the
three amounts added together (one for each year in the 2006-2008 Performance Period) to comprise
the aggregate Participant Retention Achievement Bank. The amount of the KEPP Payment due to any
individual Participant for the 2006-2008 Performance Period will be equal to the amount determined
by multiplying the Participant Retention Achievement Bank by a fraction, the numerator of which is
the Level 1 KEPP Payment due to that Participant if actual performance for the 2006-2008
Performance Period was at the 1X Threshold Reference and the denominator of which is the sum of all
payments due at Level 1 for 1X achievement for all Participants for the 2006-2008 Performance
Period.