EX-10.1






TERMS OF METAL MANAGEMENT, INC. FISCAL 2006 RONA INCENTIVE COMPENSATION PLAN APPLICABLE TO

EXECUTIVE OFFICERS




Purpose



The objective of the Fiscal 2006 RONA Incentive Compensation Plan (the “Plan”) is to maintain
flexibility in the determination of individual awards while providing guidelines for senior
managers that are financially sound and practical.



Performance Measure; Calculation of RONA Returns



As in prior fiscal years, the Plan will measure performance of the Chief Executive Officer, the
Chief Financial Officer and other senior corporate executives based on Company return on net assets
(“RONA”). For fiscal 2006, the Compensation Committee of the Board of Directors (the “Compensation
Committee”) established threshold, target and maximum RONA levels at 16%, 20% and 24%,
respectively. Required returns will be determined by applying the applicable percentage of 16%,
20% or 24% to the Company’s enterprise value at the beginning of Fiscal 2006 as determined by the
Compensation Committee, plus or minus changes in net assets during Fiscal 2006. For purposes of
the calculation, the term “change in net assets” refers to the change measured in the balances of
cash, accounts receivable, inventories, prepaid expenses, other current assets, net property, plant
and equipment and long term assets (including goodwill and other intangibles) minus the sum of
accounts payable, accrued expenses, and other current liabilities.



Eligibility



Employees must be actively employed by the Company at the end of the fiscal year, March 31, 2006,
to be eligible for participation in the Plan. Bonus targets, expressed as a percentage of base
salary at threshold, target and maximum RONA levels, for the Company’s senior management are as
follows:



	 	 	 	 	 	 	 	 	 	 	 	 	 
	Job Category	 	Bonuses as % of Base Salary Paid in Fiscal Year
	 	 	Threshold	 	Target	 	Maximum
	Chief Executive Officer
	 	 	50	%	 	 	100	%	 	 	200	%
	CFO
	 	 	25	%	 	 	50	%	 	 	100	%
	Other Senior Corporate Executives
	 	 	25	%	 	 	50	%	 	 	75	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 






Bonus targets will be calculated on a linear method from the threshold level to the maximum level
based on actual performance. Performance above the maximum level may generate awards over the
maximum targets at the discretion of the Compensation Committee.



Administration



The Plan is administered by the Compensation Committee. The Compensation Committee consists of
members of the Board who are not employees and who are not eligible for participation in this Plan.



The Compensation Committee may establish such rules and regulations as it deems necessary for the
Plan and its interpretation. The Compensation Committee may adjust RONA performance requirements
the Company’s enterprise value, or other factors as it deems equitable in recognition of unusual or
non-recurring events affecting the Company, changes in applicable tax laws or accounting principles
or such other factors as the Compensation Committee may determine. The Compensation Committee, in
its discretion, may also reduce the bonus award payable to any participant upon his or her
achievement of threshold, target or maximum level, but not, except under certain circumstances, but
not to an amount below the threshold level.



Awards Distribution



At the end of the fiscal year, the program will be administered and awards determined by the Chief
Executive Officer and President, subject to the approval of the Compensation Committee. It is
contemplated that payments under the RONA Plan will be distributed in the last payroll of May 2006.
Awards under the Plan will be made, at the discretion of the Compensation Committee, in the form
of a cash bonus, stock options and restricted stock, or any combination thereof.