Executive Severance Agreement



 Exhibit 10(b) 
  

			
	

	 	 Alcoa
 390 Park Avenue
 New York, New York 10022 USA
  
 Alain J. P. Belda
 Chairman and Chief Executive Officer


 March 19, 2008 
 Mr. J. Michael Schell 
 336 Central Park West, #4A 
 New York, NY 10025 
 Dear Michael: 
 As
Executive Vice President - Business Development and Law, you are a key part of the senior executive management team of Alcoa Inc. (the “Company”). The business relationships you have developed both inside and outside of the Company, your
knowledge of the Company’s business affairs and your management experience are all of great importance to the Company, and I value your continuing contributions. As I am sure you can also appreciate, it is important to the Company’s future
success that you, me and the other members of the senior executive leadership team are able to enhance our ability to increase shareholder value, and if necessary, to ease transitions when it is in the best interest of the Company to do so.
Accordingly, it is my pleasure to be able to provide you with this letter agreement (the “Agreement”) which sets forth the terms of an arrangement between you and the Company concerning your continuing and post-employment obligations.

 Voluntary Resignation or Retirement  
 You may terminate your employment relationship with the Company by voluntarily resigning or by retiring. If you wish to resign or retire, you will provide the Company with at least three (3) months’ advance written notice (the
“Notice Period”), after which the following conditions shall apply: 
 A. The Company Accepts Your Notice of Resignation or
Retirement. If the Company accepts your notice to resign or retire, your active service with the Company will be terminated at the end of the Notice Period. Except for the lump sum payment upon your execution of the release attached as Exhibit A
(the “Release Agreement”) and discussed in paragraph C, subsequent to the Notice Period there will be no further compensation paid by the Company. 
 During the Notice Period, the Company may in its sole discretion, assign you such duties as it sees fit, or elect to advance your resignation or retirement date. Should 

  

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the Company advance your resignation or retirement date, the Company will continue to pay your base salary through the Notice Period. 
 B. The Company Requests You to Extend Your Notice Period. If the Company at it sole discretion, desires that you stay longer than the Notice
Period, at the Company’s request and with your mutual agreement, the Notice Period will be extended for an additional agreed upon period of time (the “Extended Notice Period”). The Extended Notice Period will not exceed twenty-four
(24) months. 
 During either the Notice Period or the Extended Notice Period, the Company may in its sole discretion, assign you such
duties as it sees fit, or elect to advance your resignation or retirement date. Should the Company advance your resignation or retirement date, the Company will continue to pay your base salary through the Notice Period and the Extended Notice
Period. If you fulfill your obligations as set forth in this Agreement, continue to work through the Extended Notice Period and you execute the Release Agreement, following the date of your resignation or retirement the Company will continue to pay
you your monthly base salary as of your last day of employment with the Company, less any amounts required or authorized to be withheld by law, for a period which is equivalent to the Extended Notice Period (“Salary Equivalent”). The
Salary Equivalent will be paid in lieu of any other involuntary separation benefits, severance payments or any other such payments which you may be eligible to receive from the Company. It is also understood that the Salary Equivalent will not be
paid to you in the event that you receive severance pay and benefits under the Company’s Change in Control Severance Plan. In addition, if you fulfill the aforementioned obligations, you will be provided with additional pension accrual
equivalent to the Extended Notice Period. Upon your retirement, your retirement benefit will be calculated as if you had the additional pension accrual. The additional pension benefit as calculated under the plan will be paid to you as a
non-qualified retirement benefit. After your resignation or retirement at the end of the Extended Notice Period you will also be provided with continued healthcare benefits for a period equivalent to the Extended Notice Period. 
 C. Severance. In conjunction with your execution of the Release Agreement, the Company shall pay you a lump sum payment in an amount equal to
$50,000.00 (the “Severance Payment”), less all amounts required to be withheld by law. The Release Agreement will become effective pursuant to its terms. 
  

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 Involuntary Termination  
 The Company may terminate your employment for any reason, including with or without Cause. 
 If you are
involuntarily, the following conditions shall apply: 
 A. Involuntary Termination with Cause. In the event that it is determined by
the Company that your active service will be terminated for reasons which in its sole discretion constitute Cause, your service will be immediately terminated and there will be no further compensation paid by the Company. 
 For purposes of this Agreement, “Cause” shall have the following meaning: (i) any refusal by you to follow the lawful directives of the
Board or of the Chief Executive Officer, which are consistent with the scope and nature of your duties and responsibilities; (ii) your conviction of, or plea of guilty or nolo contendere to, a felony or of any crime involving moral turpitude,
fraud or embezzlement; (iii) any gross negligence or willful misconduct in the conduct of your duties; or (iv) any violation of any statutory of common law duty of loyalty to the Company or any of its subsidiaries; provided, no act or
omission shall be “willful” if conducted in good faith and with a reasonable belief that such conduct was in the best interests of the Company. 
 B. Involuntary Termination without Cause. In the event that it is determined by the Company that your active service will be terminated for reasons, which in its sole discretion are without Cause, and you
fulfill your obligations as set forth in this Agreement, and execute the Release Agreement, the Company shall pay you an amount equivalent to your base salary plus your target annual bonus as of your last day of employment with the Company, less any
amounts required or authorized to be withheld by law, for a period of two (2) years following your termination date (“Salary Continuance”). The Salary Continuance will be paid in lieu of any other involuntary separation benefits,
severance payments, or any other such payments which you may be eligible to receive from the Company. It is also understood that the Salary Continuance will not be paid to you in the event that you receive severance pay and benefits under the
Company’s Change in Control Severance Plan. In conjunction with your execution of the Release Agreement, the Company shall pay you the Severance Payment. In addition, if you fulfill the aforementioned obligations, on your last day of employment
you will receive a payment equivalent to 6% (i.e. 2 years x 3%) of your base salary and target incentive award. After your termination, you will be provided with continued healthcare benefits for a period of two (2) years. You will remain in
your current medical plan and Alcoa will continue to make contributions to the plan and you will pay the normal employee premiums for two (2) years from date of termination; provided, 

  

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however, that (other than a benefit plan providing for reimbursement of expenses referred to in Section 105(b) of the Internal Revenue Code of 1986, as
amended from time to time, relating to amounts expended for medical care) the amount of benefits and payments to be provided in this sentence during a calendar year shall not affect the amount of benefits and payments to be provided in any other
taxable year and any such benefits and payments shall not be subject to liquidation or exchange for another benefit. 
 If you are entitled to receive
severance benefits under this Agreement, you will not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, and any amount received from subsequent employment will not offset your
Salary Continuation payments (as defined under this Agreement). 
 Restrictive Covenants  
 In light of the unique character of your position with the Company, the business relationships you have developed and will continue to develop while
employed by the Company, and your knowledge of the Company’s business affairs including the Confidential Information (as defined below), and with the acknowledgment of the continuing consideration which you will receive from the Company as a
member of its senior executive management team, and the personal financial security which is provided under this Agreement in the event of your Involuntary Termination, or in the event of a change in control as defined in the Company’s Change
in Control Severance Plan, you agree to the following Restrictive Covenants: 
 Noncompetition: During your employment and for a
period of two (2) years thereafter (regardless of whether the termination of your employment is voluntary or involuntary), you will not directly or indirectly provide services, whether as a director, officer, partner, owner, employee, inventor,
consultant, advisor, agent, or otherwise, to any domestic or international business or firm that is engaged or has plans to become engaged in the manufacturing, fabricating, distributing or selling of aluminum and/or aluminum related products for
the aerospace, automotive, packaging, home exterior or other aluminum fabricated product markets, the mining of bauxite, conversion and refining of bauxite into alumina and/or the sale or distribution of alumina or alumina related chemical products
or any other line of business in which the Company is involved or becomes involved during your employment with the Company (collectively, the “Aluminum Business”). However, you may own up to five percent (5%) of the outstanding
securities of any publicly traded company. 
 It is not the Company’s intention to restrict or limit your activities, unless it is
believed that there is a substantial possibility that your future employment, or activities 

  

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in any of the lines of business in which the Company is engaged may be detrimental to the Company. So as to not unduly restrict your future employment, if
you desire to enter into any employment arrangement or relationship with any entity in the above identified markets within the two year period, please consult with me to discuss your intended relationship with the competitive entity. You and the
Company recognize that due to the many different businesses which presently compete, or which in the future may compete with the Company in the Aluminum Business, the Company will discuss your desire to enter into a business or professional
relationship with any manufacturer or firm which may be perceived as a competitor. Please contact the Company’s General Counsel if you wish to discuss future business relationships. 
 Nonsolicitation: During your employment and for a period of two (2) years thereafter (regardless of whether the termination of your
employment was voluntary or involuntary), you will not directly or indirectly (i) solicit, induce or attempt to solicit or induce any current or future employee of the Company to leave the Company for any reason, or (ii) solicit business
from, or engage in business with, any current or future customer or supplier of the Company which you met and dealt with during your employment with the Company for any purpose. In the event that you become aware that any present or future employee
of the Company has been hired by any business or firm with which you are then affiliated, you will immediately notify the Company’s General Counsel to confirm your non-solicitation of said employee. 
 Confidentiality: During your employment with the Company and at all times thereafter, you will maintain the confidentiality of any and all
information about the Company which is not generally known or available outside the Company, including without limitation, strategic plans, technical and operating know-how, business strategy, trade secrets, customer information, business operations
and other proprietary information (“Confidential Information”), and you will not, directly or indirectly, disclose any Confidential Information to any person or entity, or use any Confidential Information, whether for your benefit or the
benefit of any new employer or any other person or entity, or in any other manner that is detrimental to or inconsistent with any interest of the Company. If you receive notice that you may be required to disclose any Confidential Information
pursuant to a subpoena or other lawful process, you must notify the Company’s General Counsel immediately. 
 You acknowledge and agree
that given the nature of the Company’s business, which is conducted throughout the world, and your position of confidence and trust with the Company, the scope and duration of these Restrictive Covenants are reasonable and necessary to protect
the legitimate business interests of the Company. You further acknowledge that you have received substantial compensation from the Company and that your general skills and abilities are such that you can be gainfully employed in 

  

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noncompetitive employment, and that this Agreement will in no way prevent you from earning a living following your employment with the Company. 

You also recognize and agree that any breach or threatened or anticipated breach of any part of these Restrictive Covenants will result in irreparable
harm to the Company, and that the remedy at law for any such breach or threatened breach will be inadequate. Accordingly, in addition to any other legal or equitable remedies that may be available to the Company, you agree that the Company shall be
entitled to obtain an injunction, without posting a bond, to prevent any breach or threatened breach of any part of these Restrictive Covenants. You agree to reimburse the Company for all costs and expenses, including reasonable attorney’s fees
and costs, incurred by the Company in connection with the enforcement of its rights under this Agreement. 
 In the event that any court of
competent jurisdiction finds that the limitations set forth in these Restrictive Covenants are overly broad with respect to duration, geographic scope or scope of prohibited activities, such court shall have the authority to reduce the duration,
area or activities of such provisions so as to be enforceable to the maximum extent compatible with applicable law, and such provisions shall then be enforced as modified. In the event that a court reduces the duration of the restriction, any unpaid
Salary Equivalent or Salary Continuance, as set forth above, shall be reduced on a pro rata basis. 
 Governing Law; Jurisdiction  

This Agreement shall be governed and interpreted in accordance with the laws of the State of New York without reference to its choice of law
principles. Any action arising out of or related to this Agreement shall be brought in the state or Federal courts located in New York City, and you and the Company consent to the jurisdiction and venue of such courts. 
 Amendment; Waiver  
 No provision of this
Agreement may be modified, waived, or discharged unless such waiver, modification or discharge is in writing and signed by you and the Chief Executive Officer of the Company. Any failure by you or the Company to enforce any of the provisions of this
Agreement shall not be construed to be a waiver of such provisions or any right to enforce each and every provision in the future. A waiver of any breach of this Agreement shall not be construed as a waiver of any other or subsequent breach.

 Successors; Binding Agreement  
  

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 The Company shall have the right to assign its rights and obligations under this Agreement to any entity
that acquires all or substantially all of the assets of the Company and continues the Company’s business. The rights and obligations of the Company under this Agreement shall inure to the benefit and shall be binding upon the successors and
assigns of the Company. 
 Severability  
 In the event that any one or more of the provisions of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remainder of this Agreement shall not in way be affected or
impaired thereby. 
 Entire Agreement  
 You acknowledge that you have not relied upon any representations (whether oral or written) from the Company, other than as set forth in this Agreement. This Agreement sets forth the entire agreement and understanding between you and the
Company and merges and supersedes any and all prior discussions, agreements, arrangements and understandings with regard to the subject matter hereof, and may not be modified, amended, discharged or supplemented in any respect, except by a
subsequent writing signed by you and the Company. In the event that the Salary Equivalent, Salary Continuance, Severance Payment, additional years of pension service and continued healthcare benefits in the aggregate are more than 2.99 times of your
base salary and bonus, and such payments constitute an excess parachute payment under Section 4999 of the Internal Revenue Code of 1986, as amended, the payments which you will be eligible to receive under this Agreement will be reduced
accordingly. Except for involuntary separation benefits or other similar severance payments, this Agreement does not supersede the terms of any other compensation plans, stock option programs, welfare benefit plans, or other such plans or programs
in which you are eligible to participate, or may become eligible to participate. The entitlements due to you hereunder shall be in addition to any entitlements due to you under your employment agreement dated March 19, 2008. 
 I.R.C. Section 409A 
 Notwithstanding anything to the contrary in this
Agreement or elsewhere, if you are a “specified employee” as determined pursuant to Section 409A of the Internal Revenue Code of 1986, as amended, as of the date of your “separation from service” (within the meaning of Final
Treasury Regulation 1.409A-1(h)) and if any payment or benefit provided for in this Agreement or otherwise both (i) constitutes a “deferral of compensation” within the meaning of Section 409A and (ii) cannot be paid or
provided in the manner otherwise provided without subjecting you to “additional tax”, interest or 

  

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penalties under Section 409A, then any such payment or benefit that is payable during the first six months following your “separation from
service” shall be paid or provided to you on the first business day of the seventh calendar month following the month in which your “separation from service” occurs. In addition, any payment or benefit due upon a termination of your
employment that represents a “deferral of compensation” within the meaning of Section 409A shall only be paid or provided to you upon a “separation from service.” Finally, for the purposes of this Agreement, amounts payable
under the “Involuntary Termination without Cause” section of this Agreement shall be deemed not to be a “deferral of compensation” subject to Section 409A to the extent provided in the exceptions in Treasury Regulation
Sections 1.409A-1(b)(4) (“short-term deferrals”) and (b)(9) (“separation pay plans,” including the exception under subparagraph (iii)) and other applicable provisions of Treasury Regulation Section 1.409A-1 through A-6.

 If you agree to the terms of this Agreement, please sign on the line provided on the next page and return two signed copies to Donna
Dabney, Corporate Secretary. A fully executed copy will be returned to you for your files after it is signed by the Company. 
  

			
	 Sincerely,
 ALCOA INC.

		
	By:	 	/s/ Alain J.P. Belda
	Title:	 	Chairman of the Board and
Chief Executive Officer
		
	Dated:	 	March 19, 2008
	
	Agreed to and accepted:
	
	/s/ J. Michael Schell
	J. Michael Schell
	 Executive Vice President
 Business
Development and Law


  

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 Exhibit A 
 RELEASE AGREEMENT 
 RELEASE AGREEMENT (this “Release Agreement”), dated as of ,
between Alcoa Inc. (the “Company”), and J. Michael Schell (“Releasor”). 
 WHEREAS, Releasor was employed by the Company
as Executive Vice President – Business Development and Law; 
 WHEREAS, Releasor and the Company are parties to a letter agreement dated
March 19, 2008 (the “Letter Agreement”) and an executive severance agreement, dated as of March 19, 2008 (the “Severance Agreement”). 
 WHEREAS, Releasor’s employment with the Company terminated as of
                                         
                                   . 
 NOW, THEREFORE, in consideration of the promises and of the releases, representations, covenants and obligations contained herein, the parties hereto
agree as follows: 
 1. Severance Payment. Subject to Releasor’s execution of this Release Agreement and compliance with the
terms of the Letter Agreement, the Company shall pay Releasor an amount equal to $50,000.00, less all amounts required or authorized to be withheld by law including, but not limited to, any applicable federal, state or local taxes following the
Effective Date (as defined in paragraph 5 below). Notwithstanding any other provision of this Release Agreement, the Company shall also pay Releasor any additional amounts and benefits to which Releasor is entitled under the terms of the Letter
Agreement and the Severance Agreement. 
 2. Release. Releasor knowingly and voluntarily releases and forever discharges the Company,
its parents, and each of their respective subsidiaries and affiliates, together with their respective present and former directors, managers, officers, 

  

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shareholders, employees, agents, and each of their respective predecessors, heirs, executors, administrators, successors and assigns (collectively, the
“Releasees”) from any and all debts, obligations, demands, actions, causes of action, accounts, covenants, contracts, agreements, damages, omissions, promises, and any and all claims and liabilities whatsoever, of every name and nature,
known or unknown, suspected or unsuspected, both in law and equity (“Claims”), which Releasor ever had, now has, or may hereafter claim to have by reason of any matter, cause or thing whatsoever arising out of or relating to: (a) any
events, occurrences or omissions from the beginning of time to the time Releasor signs this Release Agreement, or (b) Releasor’s employment with the Company or termination thereof (the “Release”). The Release shall apply to any
Claim of any type, including, without limitation, any and all Claims of any type that you may have arising under the common law, the Age Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act, Title VII of the Civil
Rights Act of 1964, the Civil Rights Act of 1991, the Americans With Disabilities Act of 1990, the Family and Medical Leave Act of 1993, the Employee Retirement Income Security Act of 1974, or the New York State and City Human Rights Laws, each as
amended, and any other federal, state or local statutes, regulations, ordinances or common law creating employment-related causes of action, or under any policy, agreement, understanding or promise, written or oral, formal or informal, between
Releasor and any of the Releasees, and all Claims for alleged tortious, defamatory or fraudulent conduct; provided, however, that nothing in the Release shall: (i) affect any vested employee benefits (including equity awards) to which Releasor
may be entitled under any existing employee benefit plans of the Company, or (ii) prohibit Releasor from enforcing this Release Agreement, the Letter Agreement or the Severance Agreement. Nothing herein shall be deemed to be a release by
Releasor of his rights to be indemnified and/or advanced expenses under any corporate document, agreement, or applicable law or to be covered under any directors’ and officers’ liability insurance policies. By signing this Release
Agreement, Releasor represents that he or she shall not be entitled to any personal recovery in any action or proceeding that may be commenced on his or her behalf in any way arising out or relating to any of the matters that are the subject of the
Release. 
 3. Representation. Releasor represents that he or she has not commenced or joined in any claim, charge or action against
any of the Releasees, arising out of or relating in any way to Releasor’s relationship with the Company, or the termination thereof. 
 4. Continuation of Restrictions. Releasor represents and agrees that the obligations and representations set forth in the Restrictive Covenants in the Letter Agreement, on their stated terms, regarding noncompetition, nonsolicitation
and confidentiality, shall remain in full force and effect. 
  

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 5. Consultation with Attorney; Voluntary Agreement. Releasor represents that the Company has
advised Releasor to consult with an attorney of Releasor’s choosing prior to signing this Release Agreement. Releasor further represents that he or she understands and agrees that he or she has the right and has been given the opportunity to
review this Release Agreement, with an attorney of Releasor’s choice. Releasor further represents that he or she understands and agrees that the Company is under no obligation to offer the payment set forth in paragraph 1 above, and that
Releasor is under no obligation to consent to this Release Agreement, and that Releasor has entered into this Release Agreement freely and voluntarily. Releasor shall have at least twenty-one (21) days to consider this Release Agreement, unless
Releasor is terminated in connection with a an exit incentive or other group termination program, in which case Releasor shall have at least forty-five (45) days to consider this Release Agreement. In either case, once Releasor has signed this
Release Agreement, Releasor shall have seven (7) additional days from the date of execution to revoke his or her consent. Any such revocation shall be made in writing to the Vice President, Human Resources and shall be deemed to have been duly
given when hand delivered or when mailed by United States certified mail, return receipt requested. If no such revocation occurs, this Release Agreement shall become effective on the eighth (8th) day after Releasor shall have executed and
returned it to the Company (the “Effective Date”). In the event that Releasor revokes his or her consent to this Release Agreement prior to the Effective Date, this Release Agreement shall be null and void and no payments shall be due
hereunder. 
 6. Entire Agreement. Releasor acknowledges that he or she has not relied upon any representations (whether oral or
written) from the Company, other than as set forth in this Release Agreement. This Release Agreement sets forth the entire agreement and understanding between Releasor and the Company and merges and supersedes any and all prior discussions,
agreements, arrangements and understandings with regard to the subject matter hereof, except for the Letter Agreement, and may not be modified, amended, discharged or supplemented in any respect, except by a subsequent writing signed by Releasor and
the Company. 
 7. Successors; Binding Agreement. The Company shall have the right to assign its rights and obligations under this
Release Agreement to any entity that acquires all or substantially all of the assets of the Company and continues the Company’s business. The rights and obligations of the Company under this Release Agreement shall inure to the benefit and
shall be binding upon the successors and assigns of the Company. 
 8. Severability. In the event that any one or more of the
provisions of this Release Agreement shall be held to be invalid, illegal or unenforceable, the validity, 

  

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legality and enforceability of the remainder of this Release Agreement shall not in way be affected or impaired thereby. 
 9. Governing Law; Jurisdiction. Without reference to any principles concerning choice of law, this Release Agreement shall be governed and
interpreted in accordance with the laws of the State of New York. Any action arising out of or related to this Release Agreement shall be brought in the state or Federal courts located in New York City, and you and the Company consent to the
jurisdiction and venue of such courts. 
 10. Counterparts. This Release Agreement may be executed in counterparts, each of which
shall be deemed an original but all of which together shall constitute one and the same instrument. 
 IN WITNESS WHEREOF, the Company and
Releasor have executed this Release Agreement, on the date and year set forth below. 
  

			
	ALCOA INC.
		
	By:	 	 
		 	[NAME]
		 	[TITLE]
	
	 
	[NAME]
	Dated: ____________________


  

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