Exhibit
10.1


 


Chemtura Corporation


 


2009 Management Incentive Program


 


1.             Establishment and Purpose.  Pursuant to its authority under the 2005
Crompton Corporation Short-Term Incentive Plan (the “STIP”), and
consistent with the purpose of the STIP as stated therein, the Committee hereby
establishes the 2009 Chemtura Corporation Management Incentive Program (the “2009
MIP”).  Upon adoption by the Board of
Directors, the 2009 MIP replaces and supersedes the proposed 2009 Management
Incentive Program previously approved by the Board of Directors on March 13,
2009.  Unless otherwise defined below,
all capitalized terms shall have the meaning given to such terms in or pursuant
to the STIP.  The 2009 MIP provides each
Participant with an opportunity to earn a performance-based compensation Award
for the calendar year 2009 (the “2009 Performance Period”), based on the
attainment of pre-established performance goals, as set forth below (a “MIP
Award”).


 


2.             Threshold
Performance.  The Committee shall
establish an objective threshold (a “Minimum Threshold”) for each
measure of performance during the 2009 Performance Period (each, a “Performance
Factor”), below which no MIP Award or component of a MIP Award will be paid
out with respect to that Performance Factor. 
Each such applicable Minimum Threshold is set forth in the Exhibits
attached hereto.  In order for any
portion of the bonus to be payable, the minimum threshold of Consolidated
EBITDA performance must be achieved.  In
addition, and to the extent not inconsistent with the terms and conditions set
forth herein, the Committee may in its discretion, adjust the threshold (or
other performance targets) to: (i) reflect a change in corporate
capitalization, such as a stock split or stock dividend; (ii)reflect a corporate
transaction, such as a merger, consolidation, separation, acquisition,
divestiture, reorganization or partial or complete liquidation; or (iii)reflect
the occurrence of any extraordinary event, any change in applicable accounting rules or
principles, any change in the Company’s method of accounting, any change in
applicable law, any change due to any merger, consolidation, acquisition,
divestiture, reorganization, stock split, stock dividend, combination of shares
or other changes in the Company’s corporate structure or shares; or (iv) reflect
any other change of a similar nature.  To
the extent applicable in determining any MIP Award, charges to earnings,
including but not limited to fines and penalties related to past: (i) antitrust
events; (ii) environmental events; and/or (iii) corporate
restructuring, including plant closures, sale of businesses and severance, will
be excluded.


 


3.             Financials.  To the extent applicable, the Committee, in
determining any MIP Award, shall use the information set forth in the Company’s
audited financial statements.


 


4.             MIP Awards.  At the time of initial selection / approval
by the Committee for participation in the 2009 MIP, each Participant shall be
assigned a percentage of his or her “base pay” (as defined in the STIP) that
will be used in calculating his or her MIP Award, if any.  This percentage of base pay shall be referred
to as the “Target Percentage”. 
The Committee shall further determine in which unit of employees the
Participant shall be included for purposes of the 2009 MIP.  The amount of a Participant’s MIP Award will
be determined by multiplying the Participant’s base pay by the applicable
Target Percentage, applicable Performance Factor and the applicable safety
multiplier, subject to any Performance Adjustment described in the following
paragraph.


 


In
determining a Participant’s MIP Award, the Committee reserves the absolute
discretion to increase or decrease the amount produced under the last sentence
of the preceding paragraph, based on the Committee’s assessment of any
personal, function or other performance the Committee determines should be
taken into account (a “Performance Adjustment”); the CEO will recommend
to the 


 

















 


Committee
any Performance Adjustment for each Participant who reports directly to the
CEO.  The CEO and the applicable Business
or Function leader will recommend to the Committee any Performance Adjustment
for each other Participant.


 


5.             Changes to
Target Percentage or Performance Factor. 
The Committee may at any time prior to the final determination of MIP
Awards: (i) change the Target Percentage of any Participant; (ii) assign
a different Target Percentage to a Participant to reflect any change in the
Participant’s responsibility level or position during the course of the
Performance Period; or (iii) change a Performance Factor to reflect a
change in corporate capitalization, such as a stock split or stock dividend, or
a corporate transaction, such as a merger, consolidation, separation,
acquisition, divestiture, reorganization or partial or complete liquidation, or
to equitably reflect the occurrence of any extraordinary event, any change in
applicable accounting rules or principles, any change in the Company’s
method of accounting, any change in applicable law, any change due to any merger,
consolidation, acquisition, divestiture, reorganization, stock split, stock
dividend, combination of shares or other changes in the Company’s corporate
structure or shares, or any other change of a similar nature.


 


6.             Eligibility.  The Committee shall designate Participants in
the 2009 MIP in accordance with the terms of the STIP and as set forth
herein.  Each Participant must be an
Eligible Employee as of January 1, 2009, and be actively employed as of
the date MIP Awards, if any, are paid. 
Exceptions may be granted as determined by the Committee in its sole
discretion.  Any employee who becomes an
Eligible Employee, as determined by the Committee, as a result of hire or
promotion after January 1, 2009 may be eligible to receive a MIP Award,
pro rated based on the number of whole months that the employee is an Eligible
Employee during calendar year 2009. 
Similarly, where an Eligible Employee, for whatever reason, moves to
another role during calendar year 2009 for which different performance measures
apply, his or her MIP Award, if any, will be calculated by taking into account
the performance measures for each role and the actual time that the Eligible
Employee spent in each role during calendar year 2009.


 


7.             Committee Authority.  The Committee shall have the sole discretion
to make all determinations under the 2009 MIP and the Committee’s determination
shall be final, binding and conclusive on all interested parties.


 


8.             Other
Conditions.  Eligibility for or
actual participation in the 2009 MIP shall not and in no way is intended to
create an agreement of employment for a definite term.  Nothing herein shall or is intended to, (i) obligate
the Company to offer, or offer any employee participation in, a Management
Incentive Program or similar arrangement in the future, and/or (ii) act as
a modification of any employee’s existing terms and conditions of
employment.  Except as expressly set
forth herein, the 2009 MIP shall be subject to and administered in accordance
with the terms and conditions of the STIP.


 


Definitions:


 


Consolidated EBITDA


 


“Consolidated
EBITDA” means, for the calendar year of 2009, net income (or net loss) from
continuing operations (1) plus, to the extent included the calculation of
net income for such period in accordance with GAAP, the sum of (a) interest
Expense, (b) income tax expense, (c) reorganization expense, net, (d) other
expense, (e) depreciation expense, (f) amortization expense, (g) charges
related to facility closures, severance and related costs, (h) impairments
of long-lived assets, (i) charges related to the accelerated recognition
of asset retirement obligations, (j) antitrust costs, (k) any losses
from sales of assets or a business other than in the 


 


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ordinary
course of business, (l) charges for the accelerated amortization of
capitalized financing costs or debt discounts, (m) expenses including
professional fees associated with the issuance of indebtedness or the
amendment, waiver or restructuring of the principal and terms of existing
indebtedness including such charges related to accounts receivable facilities, (n) charges
associated with the curtailment or settlement of pension and post retirement
medical plans, (o) expenses related to natural disasters such as
hurricanes or earthquakes that disrupt operations and (p) the accrual of
expense related to the Emergence Incentive Plan (2)  minus  (a) other income, (b) any gains
from sales of assets or a business other than in the ordinary course of
business, (c) income associated with the accelerated amortization of
premiums on debt and (d) gains associated with the curtailment or
settlement of pension and post retirement medical plans.


 


Should
the Company divest a business(s) during the calendar year, the Consolidated
EBITDA Target shall be reduced (or increased) by the amount of EBITDA that was
to be contributed by (or reduced from) the business(s) before the
deduction of allocated functional and corporate expenses for such period as the
EBITDA of the business(s) is no longer reflected in actual 2009
Consolidated EBITDA from continuing operations of the Company (“Adjusted Target”).  The Threshold and Maximum Consolidated EBITDA
values and all other Consolidated EBITDA values identified in the Management
Incentive Plan documentation shall be adjusted such that they are the same
percentage of the Adjusted Target as were the original values of the original
Target.


 


Consolidated
DSO (Days Sales Outstanding)


 


“DSO”
means, the ratio of Consolidated Accounts Receivable as of end of each quarter
divided by trailing three months of net consolidated sales multiplied by the
number of days in the quarter.


 


Consolidated
DCI (Days Cost in Inventory)


 


“DCI”
means, the ratio of Consolidated Inventory as of end of each quarter divided by
trailing three months of consolidated cost of goods sold multiplied by the
number of days in the quarter.


 


Business
Unit EBITDA


 


“Business EBITDA”
means for the applicable business unit, for the calendar year of 2009,
Operating Income of the business plus depreciation and amortization expense
plus the accrual of expense related to the Emergence Incentive Plan.  Should the Company divest a sub-segment of
the business during the calendar year, the Business Unit EBITDA Target shall be
reduced (or increased) by the amount of EBITDA of the sub-segment that was to
be contributed by (or reduced from) the business before the deduction of
allocated functional and corporate expenses for such period as the EBITDA of
the business sub-segment is no longer reflected in actual 2009 Business Unit
EBITDA (“Adjusted Target”).  The
Threshold and Maximum Business Unit EBITDA values and all other Business Unit
EBITDA values identified in the Management Incentive Plan documentation shall
be adjusted such that they are the same percentage of the Adjusted Target as
were the original values of the original Target.


 


Business
Unit DSO (Days Sales Outstanding)


 


“DSO” means, the
ratio of Accounts Receivable of the business unit as of end of each quarter
divided by trailing three months of net sales of the business multiplied by the
number of days in the quarter.


 


Business
Unit DCI (Days Cost in Inventory)


 


“DCI” means, the
ratio of Inventory of the business unit as of end of each quarter divided by
trailing three months of cost of goods of the business sold multiplied by the
number of days in the quarter.


 


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EXECUTIVE PARTICIPANTS


 


1.             For each Executive Participant, as
determined by the Committee, his or her 2009 MIP Award if any shall be
calculated based on the following Performance Factors, in the following
proportions (each as identified in Exhibit A):


 


	
  Metric

  	
   

  	
  Weighting

  	
   

  
	
  Consolidated EBITDA

  	
   

  	
  70

  	
  %

  
	
  Consolidated Days Sales Outstanding

  	
   

  	
  15

  	
  %

  
	
  Consolidated Days Cost in Inventory

  	
   

  	
  15

  	
  %

  



 


2.             In order for any portion of the
bonus to be payable, the minimum threshold of Consolidated EBITDA performance
must be achieved.  Set forth in Exhibit A
is a schedule identifying the Minimum Threshold for each Performance Factor
identified above, as well as a scale of payout eligibility based on performance
relative to target, subject in all cases to the other terms and conditions set
forth in the 2009 MIP, including the STIP and Exhibit A.


 


3.             Each level of performance on the
scale is expressed as a percentage of actual performance relative to target
performance.


 


4.             Each level of performance also is
assigned a corresponding percentage (between 0% and 200%) that is eligible for
payout with respect to that Performance Factor.


 


5.             For example, where actual
performance is equal to target performance, then 100% of that Performance
Factor is eligible for payout, subject to the other terms and conditions set
forth in the 2009 MIP, including the STIP and Exhibit A.


 


6.             In no event will any Participant be
eligible for a payout of more than 200% of target for any Performance Factor.


 


7.             The steps in the
scale between minimum, target and maximum also are shown in Exhibit A.  If performance and/or pay out percentage are
not equal to the numbers shown in Exhibit A, actual pay out percent will
be interpolated.


 


8.             Consolidated DSO
and DCI performance will be measured quarterly and paid out at the end of the
year if Consolidated EBITDA threshold performance is achieved.


 


9.             A Safety Multiplier
of .9 to 1.1 shall be applied to the final MIP payout.  The multiplier will be based on achievement
of specified safety program results and measured by Total Recordable Case Rate
results as defined in Exhibit A.


 


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FUNCTION
PARTICIPANTS


 


1.             For each Function Participant, as
determined by the Committee, his or her 2009 MIP Award if any shall be
calculated based on the following Performance Factors, in the following
proportions (each as identified in Exhibit A):


 


	
  Metric

  	
   

  	
  Weighting

  	
   

  
	
  Consolidated EBITDA

  	
   

  	
  50

  	
  %

  
	
  Consolidated Days Sales Outstanding

  	
   

  	
  10

  	
  %

  
	
  Consolidated Days Cost in Inventory

  	
   

  	
  10

  	
  %

  
	
  Function Goals (3-5 Goals)

  	
   

  	
  30

  	
  %

  



 


2.             In order for any portion of the
bonus to be payable, the minimum threshold of Consolidated EBITDA performance
must be achieved.  Set forth in Exhibit A
is a schedule identifying the Minimum Threshold for each Performance Factor identified
above, as well as a scale of payout eligibility based on performance relative
to target, subject in all cases to the other terms and conditions set forth in
the 2009 MIP, including the STIP and Exhibit A.


 


3.             Each level of performance on the
scale is expressed as a percentage of actual performance relative to target
performance.


 


4.             Each level of performance also is
assigned a corresponding percentage (between 0% and 200%) that is eligible for
payout with respect to that Performance Factor.


 


5.             For example, where actual
performance is equal to target performance, then 100% of that Performance
Factor is eligible for payout, subject to the other terms and conditions set
forth in the 2009 MIP, including the STIP and Exhibit A.


 


6.             In no event will any Participant be
eligible for a payout of more than 200% of target for any Performance Factor.


 


7.             The steps in the
scale between minimum, target and maximum also are shown in Exhibit A.  If performance and/or pay out percentage are
not equal to the numbers shown in Exhibit A, actual pay out will be
determined by interpolation.


 


8.             Quarterly DSO and
DCI performance will be measured quarterly and paid out at the end of the year
if Consolidated EBITDA threshold performance is achieved.


 


9.             A Safety Multiplier
of .9 to 1.1 shall be applied to the final MIP payout.  The multiplier will be based on achievement
of specified safety program results and measured by Total Recordable Case Rate
results as defined in Exhibit A.


 


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BUSINESS PARTICIPANTS


 


1.             For business unit Participants, as
determined by the Committee, his or her 2009 MIP Award if any shall be
calculated based on the following Performance Factors for his or her business
unit, in the following proportions.  (The
metrics for each business unit are identified in an exhibit to this Plan):


 


	
  Metric

  	
   

  	
  Weighting

  	
   

  
	
  Business Unit EBITDA

  	
   

  	
  70

  	
  %

  
	
  Business Unit Quarterly Days Sales Outstanding

  	
   

  	
  15

  	
  %

  
	
  Business Unit Quarterly Days Cost in Inventory

  	
   

  	
  15

  	
  %

  



 


2.             In order for any portion of the
bonus to be payable, the minimum threshold of Consolidated EBITDA and Business
Unit EBITDA performance must be achieved. 
Set forth in an exhibit is a schedule identifying the Minimum Threshold
for each Performance Factor identified above, as well as a scale of payout
eligibility based on performance relative to target, subject in all cases to
the other terms and conditions set forth in the 2009 MIP, including the STIP
and an exhibit.


 


3.             Each level of performance on the
scale is expressed as a percentage of actual performance relative to target
performance.


 


4.             Each level of performance also is
assigned a corresponding percentage (between 0% and 200%) that is eligible for
payout with respect to that Performance Factor.


 


5.             For example, where actual
performance is equal to target performance, then 100% of that Performance
Factor is eligible for payout, subject to the other terms and conditions set
forth in the 2009 MIP, including the STIP and an exhibit.


 


6.             In no event will any Participant be
eligible for a payout of more than 200% of target for any Performance Factor.


 


7.             The steps in the
scale between minimum, target and maximum also are shown in an exhibit.  If performance and/or pay out percentage are
not equal to the numbers shown in an exhibit, actual pay out will be determined
by interpolation.


 


8.             Quarterly DSO and
DCI performance will be measured quarterly and paid out at the end of the year
if Consolidated EBITDA threshold performance is achieved.


 


9.             A Safety Multiplier
of .9 to 1.1 shall be applied to the final MIP payout.  The multiplier will be based on achievement
of specified safety program results and measured by Total Recordable Case Rate
results as defined in the exhibit related to the applicable business unit.


 


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Exhibit A


 


PERFORMANCE TARGETS AND PAYOUT PERCENTAGES


 


EXECUTIVE AND FUNCTION PARTICIPANTS


 


CONSOLIDATED
EBITDA (In Millions)


 


	
  Level

  	
   

  	
  Performance Against

  Target

  	
   

  	
  Consolidated EBITDA

  Performance

  	
   

  	
  MIP Pay Out %

  	
   

  
	
  Threshold

  	
   

  	
  60

  	
  %

  	
  150

  	
   

  	
  0

  	
  %

  
	
   

  	
   

  	
  70

  	
  %

  	
  175

  	
   

  	
  13

  	
  %

  
	
   

  	
   

  	
  80

  	
  %

  	
  200

  	
   

  	
  25

  	
  %

  
	
   

  	
   

  	
  90

  	
  %

  	
  225

  	
   

  	
  65

  	
  %

  
	
  Target

  	
   

  	
  100

  	
  %

  	
  250

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
  110

  	
  %

  	
  275

  	
   

  	
  133

  	
  %

  
	
   

  	
   

  	
  120

  	
  %

  	
  300

  	
   

  	
  166

  	
  %

  
	
  Maximum

  	
   

  	
  130

  	
  %

  	
  325

  	
   

  	
  200

  	
  %

  



 


CONSOLIDATED
DAYS SALES OUTSTANDING


 


	
  Level

  	
   

  	
  Performance

  Against Target

  	
   

  	
  Q1 DSO

  Performance

  	
   

  	
  Q2 DSO

  Performance

  	
   

  	
  Q3 DSO

  Performance

  	
   

  	
  Q4 DSO

  Performance

  	
   

  	
  MIP Pay

  Out %

  	
   

  
	
  Threshold

  	
   

  	
  90

  	
  %

  	
  84

  	
   

  	
  72

  	
   

  	
  66

  	
   

  	
  66

  	
   

  	
  0

  	
  %

  
	
  Target

  	
   

  	
  100

  	
  %

  	
  76

  	
   

  	
  65

  	
   

  	
  60

  	
   

  	
  60

  	
   

  	
  100

  	
  %

  
	
  Maximum

  	
   

  	
  105

  	
  %

  	
  72

  	
   

  	
  62

  	
   

  	
  57

  	
   

  	
  57

  	
   

  	
  200

  	
  %

  



 


CONSOLIDATED
DAYS COST IN INVENTORY


 


	
  Level

  	
   

  	
  Performance

  Against Target

  	
   

  	
  Q1 DCI

  Performance

  	
   

  	
  Q2 DCI

  Performance

  	
   

  	
  Q3 DCI

  Performance

  	
   

  	
  Q4 DCI

  Performance

  	
   

  	
  MIP Pay Out

  %

  	
   

  
	
  Threshold

  	
   

  	
  90

  	
  %

  	
  124

  	
   

  	
  105

  	
   

  	
  88

  	
   

  	
  88

  	
   

  	
  0

  	
  %

  
	
  Target

  	
   

  	
  100

  	
  %

  	
  113

  	
   

  	
  95

  	
   

  	
  80

  	
   

  	
  80

  	
   

  	
  100

  	
  %

  
	
  Maximum

  	
   

  	
  105

  	
  %

  	
  107

  	
   

  	
  90

  	
   

  	
  76

  	
   

  	
  76

  	
   

  	
  200

  	
  %

  



 


Safety Metric: 
Total Recordable Case Rate (TRCR) — Total Company


 


·                  If TRCR is less than or equal to .65, then a multiplier of 1.1 will be
applied to the total bonus payable


·                  If TRCR is .66 to .85, then a multiplier of 1 will be applied to the
total bonus payable


·                  If TRCR is greater than .85, then a multiplier of .9 will be applied to
the total bonus payable


 


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