exv10w1






Exhibit 10.1




Kaiser Aluminum

2010 Short-Term Incentive Plan for Key Managers Summary



This is a summary of the Kaiser Aluminum short-term incentive program (STIP) effective January 1,
2010. The STIP performance period is annual. The 2010 program rewards participants for economic
value added (“EVA”) versus our cost of capital with modifiers for safety, business unit, plan and
individual performance objectives.



Purpose of the 2010 Kaiser Aluminum STIP





	1.	 	Focus attention on value creation within Fabricated Products, our core business segment,
and Corporate.






	2.	 	Reward the achievement of aggressive performance goals.






	3.	 	Provide incentive opportunities that are consistent with competitive market.






	4.	 	Link incentive pay to individual performance as well as our success and ability to pay.




STIP Philosophy



Compensation should (i) reward management for value creation and the safe operation of our
business, (ii) stand the test of time to provide continuity in compensation philosophy, (iii)
recognize the cyclical nature of our business, and (iv) provide a retention incentive. In order to
achieve success, participants must continue to seek out and find ways to create value and operate
safely.



Primary Performance Measures





	•	 	EVA will equal our pre-tax operating income (“PTOI”) less a capital charge calculated as a
percentage of our net assets (“Net Assets”). Both PTOI and Net Assets will be based on our
financial statements and certain adjustments described in more detail below.






	 	o	 	Net Assets will equal our Total Assets less Total Liabilities reflected in the
financial statements for our prior fiscal year subject to adjustments to:






	 	§	 	Remove the secondary aluminum and hedging business units (formerly
Primary Products)
	 
	 	§	 	Remove Discontinued Operations
	 
	 	§	 	Eliminate fresh start adjustments for PP&E value and intangible assets,
including the write-up of pre-emergence goodwill
	 
	 	§	 	Eliminate VEBA assets and liabilities
	 
	 	§	 	Exclude financing items
	 
	 	§	 	Exclude capex in progress
	 
	 	§	 	Add capitalized value of long-term leases
	 
	 	§	 	Add prorated value of capital projects and acquisitions larger than 1%
of prior year Net Assets
	 
	 	§	 	Exclude deferred income tax assets or liabilities
	 
	 	§	 	Exclude mark-to-market assets or liabilities associated with Fabricated
Products
	 
	 	§	 	Others as recommended by the CEO and approved by our Compensation
Committee of the Board of Directors (the “Compensation Committee”)





 









 






	 	o	 	PTOI will be adjusted to:






	 	§	 	Exclude LIFO adjustments
	 
	 	§	 	Exclude mark-to-market and lower of cost or market adjustments
at the corporate level on metal inventory on hand
	 
	 	§	 	Add back depreciation associated with step-down in property,
plant and equipment resulting from the implementation of fresh start
accounting
	 
	 	§	 	Amortize the following non-recurring activities over 36 months if
the value exceeds one percent of Net Assets:






	 	•	 	Restructuring charges
	 
	 	•	 	Gains or losses resulting from asset dispositions
	 
	 	•	 	Labor stoppage costs
	 
	 	•	 	Asset impairment charges






	 	•	 	Others as recommended by the CEO and approved by our Compensation
Committee






	•	 	Safety performance will be measured by Total Case Incident Rate (TCIR).




Individual Performance Criteria — Kaiser Aluminum STIP





	•	 	Individual payouts from the 2010 STIP may be adjusted based upon performance against
individual objectives and/or business unit performance.






	•	 	The business unit modifier allows for a plus or minus 50% of target or award based on the
performance of the specific business unit that applies to the individual.






	•	 	There are up to four categories based on individual objectives or targets set in the first
quarter of each year. Each category allows for an individual modifier based on percentage of
the target; provided, however that the aggregate of all individual modifiers at target (before
adjustment based on actual performance) shall not exceed 100%.




Target Incentive





	•	 	A monetary target incentive amount for each participant is established for the STIP
based on competitive market, internal compensation balance and position responsibilities.






	•	 	Participants’ monetary incentive targets are set at the beginning of each annual STIP
performance period.






	•	 	The participant’s monetary incentive target amount represents the incentive opportunity
when certain financial, safety, operational and individual performance goals are met.




How Incentive Awards Are Determined





	•	 	At the end of the year EVA will be determined and used to calculate the Award
Multiple.






	•	 	Award Multiples calculations are audited by an auditor determined by the Compensation
Committee.






	•	 	The Award Multiple is adjusted within a range of plus or minus 10% based upon TCIR.






	•	 	The maximum Award Multiple is 3.0 times target.






	•	 	A pool is established based upon the Award Multiple multiplied by the sum of individual
monetary incentive targets for the STIP participants.






	•	 	The entire pool is paid to participants.









 









 







STIP Award





	•	 	Each participant’s base award is determined as the vested monetary incentive target
times Award Multiple.






	•	 	Based on EVA and TCIR performance as well as business unit and individual performance, the
monetary award can be modified in aggregate up to plus or minus 100% of incentive target or
base award.






	 	o	 	If the award multiple is 1.0 or greater, then the earnings and individual / safety
performance modifier will be a percentage of the calculated award.
	 
	 	o	 	If the award multiple is less than 1.0, then the earnings and individual /
safety performance modifier will be a percentage of incentive target.




Form and Timing of Payment





	•	 	STIP awards are paid, at the Company’s election, in cash, non-restricted shares of the
Company’s common stock or a combination of cash and non-restricted shares no later than March
15 following the end of the year.






	•	 	Award is conditioned on employment on date of payment unless employment is terminated:






	 	o	 	As a result of death, disability, normal retirement or full early retirement
(position elimination);
	 
	 	o	 	Involuntarily by the company without cause; or
	 
	 	o	 	Voluntarily by the employee with good reason




Other Administrative Provisions





	•	 	The STIP will be reviewed annually.






	•	 	Annual incentive awards paid from the STIP count as additional compensation for purposes of
the Company’s Defined Contribution and Restoration Plans but not for other Company benefits.






	•	 	All applicable federal, state, local and FICA taxes will be withheld from all incentive
award payments.






	•	 	Retirement or termination: If participant dies or retires under normal retirement at or
after age 65, full early retirement (position elimination), or is involuntarily terminated due
to position elimination, or becomes disabled, on a date other than December 31 of any year, a
pro-rata incentive award is earned based on actual eligibility during the performance period.






	•	 	Leave of absence participants earn a prorated award based on the number of months of active
employment.






	•	 	Beneficiary designation: In the event of death the deceased participant’s designated
beneficiary will receive any payments due under the STIP. If there is no designated
beneficiary on file with Human Resources, any amounts due will be paid to the surviving spouse
or, if no surviving spouse, to the participant’s estate.






	•	 	Non transferability: No amounts earned under the STIP may be sold, transferred, pledged or
assigned, other than by will or the laws of descent and distribution until the termination of
the applicable performance period. All rights to benefits under the STIP are exercisable only
by the participant or, in the case of death, by the participant’s beneficiary.





 









 






	•	 	The STIP may be modified, amended or terminated by the Compensation Committee at any time.
If the plan is terminated, modified or amended, then future payments from the STIP are
governed by such modifications or amendments. If terminated, then a prorated award will be
determined based on number of months up to termination, and paid before March 15 following the
end of the year.






	•	 	The STIP constitutes no right to continued employment.






	•	 	The Chairman and CEO, with oversight from the Compensation Committee, has the discretionary
authority to interpret the terms of the plan and his decisions shall be final, binding and
conclusive on all persons affected.