a2020mipplandocfor10q






                                                                              EXHIBIT 10.1                                                                                                                                                                                                                              MATERION and SUBSIDIARIES                 MANAGEMENT INCENTIVE PLAN FOR THE 2020 PLAN YEAR                                       Summary Plan Document    I.  INTRODUCTION  The Materion and Subsidiaries Management Incentive Plan for the 2020 Plan Year (the “Plan”), has been established  by the Compensation Committee (the “Compensation Committee”), of the Company’s Board of Directors to provide  incentive compensation to certain eligible employees based principally on annual financial performance.  Plan awards  have  a  significant  portion  based  on  Company  performance  and  potentially  Business  Unit  or  Corporate  Function  Performance  (“Financial  Performance”),  and  a  remaining  component  that  recognizes  individual  and  combined  contributions toward personal/team objectives ("Personal/Team Performance”).    II.  DEFINITIONS  Base Salary:  The Participant's annual base salary as of September 30 of the Plan Year will be used to calculate any earned award.    Plan Year:  Calendar year 2020, which is the fiscal year for which Financial Performance and Personal/Team Performance, and  any Plan awards, will be calculated.    Business Unit or Corporate Function Performance:  The Compensation Committee has delegated authority to the Company’s executive staff to designate the Company’s  business units/subsidiaries and corporate functions (and their eligible employees) that are eligible for participation in  the Plan for the Plan Year.  Each business unit or corporate function has defined Financial Performance measures,  which have in turn been approved by the Compensation Committee and/or the executive staff.  For each of these  Financial Performance measures, a minimum goal, target goal and maximum goal will be established.  Plan awards  include  a  Financial  Performance  component  based  on  Company  Performance  alone,  or  Company  Performance  and/or Business Unit/Corporate Function Performance.     Company Performance:  The  Company  Performance  portion  of  the  Financial  Performance  component  of  Plan  awards  will  consist  of  an  Earnings Before Interest and Taxes measure (weighted at 70%), a Growth in Value-added Sales measure (weighted  at 15%) and a Simple Free Cash Flow measure (weighted at 15%).    Earnings Before Interest and Taxes (“EBIT”):  Earnings  Before  Interest  and  Taxes  is  defined  as  earnings  before  interest  and  taxes,  and  for  domestic  and  international operations, EBIT will include accrued performance or incentive compensation. Any adjustment to exclude  the  effect  of  any  extraordinary,  unusual  or  non-reoccurring  items  will  be  subject  to  review  and  approval  by  the  Compensation Committee.      Growth in Value-added Sales (“VAS”):  Growth in Value-added Sales is defined as the percent increase in VAS for the Plan Year over the prior year. VAS is  the amount equal to (1) the Company’s sales for the Plan Year minus (2) the aggregate cost to the Company for the  Plan Year of gold, silver, platinum, palladium and copper.      Simplified Free Cash Flow (“SFCF”):  Simple Free Cash Flow is defined as the amount equal to (1) operating profit plus depreciation and amortization minus  (2) the change in working capital (accounts receivable, accounts payable, and inventory) and capital investments.                                                                                                                                                       Page 1 of 4     





 






                                                                                              Other Metrics:  From time to time, other metrics may be adopted that are aligned with a business unit’s strategy and market challenges  or a corporate function’s strategic imperatives.  These metrics will be defined and tracked by the corporate accounting  department, subject to approval by the executive staff.    Personal/Team Performance:  An assessment is made of an individual's achievements and his/her contributions to work/project teams during the  Plan  Year.   This  assessment  is  expressed  as  a  percentage  of  Base  Salary.  The  Personal/Team  Performance  component is distinct from the Financial Performance component.    Performance Objectives:  Performance Objectives shall mean the measurable performance objective or objectives established for Participants  under  the  Plan  for  the  Plan  Year.   The  Compensation  Committee  may  provide  for  such  adjustments  in  the  Performance Objectives or their evaluation as it may deem necessary or appropriate for purposes of administering  this Plan.    Target Annual Award Opportunity   Each Plan Year, MIP eligible participants will be assigned a Target Annual Award Opportunity, expressed as a percent  of Base Salary.    III.  PARTICIPATION  At the beginning of the Plan Year, the executive staff will, based on delegated authority  from  the Compensation  Committee, identify exempt salaried employees whose responsibilities affect progress on critical issues facing the  Company, and those employees will participate in the Plan for the Plan Year.  Those individuals selected by the  executive staff will be notified of their participation in the Plan, their Target Annual Award Opportunity and applicable  business unit designation.     Following the beginning of the Plan Year, the executive staff may admit new hires or individuals who are promoted or  assigned additional and significant responsibilities to also participate in the Plan for the Plan Year.  The executive staff  may also alter Target Annual Award Opportunities to reflect changed responsibilities of participants during the Plan  Year.    An employee who replaces or otherwise assumes the job functions or role of another employee does not automatically  assume the Plan participation characteristics that had applied to such other employee. Rather, participation by the  new or replacing employee must be individually considered and approved by the executive staff.    Participants who are newly employed on or before September 30th of the Plan Year will be eligible for a prorated Plan  award based on the number of months of participation in the Plan for such Plan Year. Participants who’s hire date is  on or before the 15th day of the month will receive full credit for the month of hire.  Those hired after the 15th day of the  month will begin participation on the 1st day of the subsequent month.     Plan awards for Participants who transfer from another Materion incentive plan to the MIP Plan for purposes of the  Plan Year, will be prorated based on the number of months of participation in the Plan Year. Participants who’s  transfer date is on or before the 15th day of the month will receive full credit for the month of transfer.  Participants  who transfer after the 15th day of the month will begin participation on the 1st day of the subsequent month. The  transferred employee’s eligibility under the previous incentive plan will cease for the Plan Year.      Changes in a Target Annual Award opportunity during a Plan Year will result in prorated participation for Plan awards.    Employees  who  participate  in  any  other  annual  incentive,  commission  or  performance  compensation  plan  of  the  Company or as a subsidiary are not eligible.  The executive staff may consider prorated participation in the Plan for  the Plan Year under special circumstances.    With two exceptions, Participants must be employed on the day award payments are issued to be eligible for any plan  award.  For a Participant who becomes eligible for and who elects a severance option under the Chronic Beryllium  Disease  Policy  as  amended,  any  award  under  the  Plan  will  be  prorated  to  the  beginning  of  the  month  after  the                                                                                                                                                                               Page 2 of 4   





 






                                                                                              employee exercises the severance option.  The second exception pertains to either the death of the Participant or the  retirement (at age 65, or at age 55 or older with 10 years of service) of the Participant, in which case, any Plan award  will be prorated to the beginning of the month following the employee’s death or the employee’s retirement date, as  applicable.  In no event will a prorated Plan award be earned where the proration percent is less than one-third (1/3).    Participants who have been on a leave of absence more than 13 weeks during the Plan Year will have their Plan  award reduced on a pro-rata basis to reflect their actual contribution.    IV. TARGET ANNUAL AWARD OPPORTUNITY  The  Compensation  Committee  (or  executive  staff),  along  with  a  Participant’s  assigned  salary  grade  level  will  determine the Target Annual Award Opportunity, as a percent of Base Salary, for participants in the MIP. The Target  Annual Award Opportunity for participants in salary levels A, B, and C will be individualized as determined by the  Compensation Committee or executive staff. The Target Annual Award Opportunity for participants in salary levels D,  E, and EE will be determined by their salary grade level and executive staff.    Below  is  a  summary  of  the  Target  Annual  Award  Opportunities  at minimum,  target,  and  maximum  goal  achievement, as a percent of Base Salary, for the 2020 Plan Year:                         Financial            Personal /Team           Total Award                                                       2      Level          Performance           Performance              Opportunity              Min.     Target     Max.   Min.  Target  Max.   Min.    Target    Max.        A – C        Individualized 1                                Individualized 1                       20% or                                 5.00%   30.00%    60 %       D              25%       15% 200%          0%    10%    20%    3.75%   25.00%    50 %               of                  of             Target    10% or  Target                         2.50%   20.00%    40 %       E                         5%                                   1.25%   15.00%    30 %       EE                5%               0%    5%     10%    1.25%   10.00%    20 %               1 Determined by Compensation Committee or executive staff          2 Excludes Named Executive Officers (NEOs)                             V. PLAN AWARD OPPORTUNITY FOR FINANCIAL PERFORMANCE COMPONENT  The Compensation Committee (or the executive staff) will establish minimum, target and maximum goals for each  Financial Performance component of a Plan award opportunity.  The executive staff will assign Participants to a  specific business unit/subsidiary or corporate function for the Financial Performance component of Plan awards.      Performance that reaches the minimum level of a Financial goal will result in an award of 25 percent of the target  opportunity for that measure. Unless the minimum level goal for Operating Profit has been met, no other Financial  Performance component of plan awards (business unit, company, function, sub-unit, and/or other measurement),  will result in an award greater than 100 percent of the target opportunity for that measure.      Performance that reaches or exceeds the maximum goal of a measure will result in an award at 200 percent of  target opportunity for that measure.  Award amounts for levels of achievement between minimum and target     goals,  at  target  goals, and  between  target  and  maximum goals  will  be  prorated  according  to  the  level  of  achievement.    The Financial Performance portion of awards will be prorated for transfers between units (or between business  unit and Corporate) according to the length of service by months in each unit during the Plan Year.                                                                                                                                                                                  Page 3 of 4   





 






                                                                                              VI. PLAN AWARD OPPORTUNITY FOR PERSONAL/TEAM PERFORMANCE COMPONENT  The funding pool of the Personal/Team performance component will be determined by the financial results against  the goals in the Financial Performance component of the Plan. For target levels of performance, the funding of the  Personal/Team award pool will be 10 percent of base salary for Grades A through E, and 5 percent for Grade EE.  The Personal/Team funding pool will be adjusted up or down based on the actual business financial performance.  Performance that reaches the minimum level of a financial goal will result in funding of 25 percent, and Performance  that reaches the maximum level of a financial goal will result in funding of 140 percent. The funding between minimum  and target and target and maximum will be prorated according to the level of achievement.     The business unit executive and the executive staff will decide allocation of the pool among eligible participants based  on their performance throughout the Plan year relative to achieving established goals and objectives.  Personal/Team  incentive awards may range from 0% to 200% of a participant’s Personal/Team target incentive opportunity based on  their individual performance.  The aggregate total dollar amount of awards within each group may not exceed its total  funded pool.    VII.  PAYMENT  Distribution of any payouts for plan awards earned under the Plan to participants will be made in March of the year  following the Plan Year.    VIII.  GENERAL PROVISIONS  The executive staff has authority to make administrative decisions regarding the Plan.     The Company’s Board of Directors, through the Compensation Committee, shall have final and conclusive authority  for interpretation, application, and possible modification of this Plan or established targets. The Board of Directors,  through the Compensation Committee, reserves the right to amend or terminate the Plan at any time.  Subject to the  preceding sentences, any determination by the Company's independent accountants shall be final and conclusive as  it relates to the calculation of financial results.    This Plan is not a contract of employment.                                                                                                                                                                                  Page 4 of 4