Summary Description of Equity Choice Program



	 

 2004 Alcoa Stock Incentive Plan
 Equity Choice Program
 (Performance Equity Award Participants)
 Exhibit 10.6
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 Contents
 Introduction & Overview
 What
 is
 Equity
 Choice?
 ....................................................................3
 How
 Equity
 Choice
 Works.
 .......................................
.............3
 Election Alternatives 
 Election
 Alternatives
 for
 Performance-Based
 Awards...................4
 Election
 Alternatives
 for
 Time-Vested
 Awards.............................4
 Exchange
 Ratio.......................................
.............................4
 Examples
 .......................................
....................................5
 Performance-Based Award and Time-Vested Award
 The Equity Choice Process
 Step
 1:
 Reviewing
 Your
 Election
 Alternatives
 ...................................6
 Stock Incentives Website
 Factors to Consider When Making Your Decision
 Step
 2:
 Making
 Your
 Equity
 Choice
 Elections.............................7
 The Election Period
 Making Your Elections on the Stock Incentives Website
 Applicability of Elections
 Sample Website View of Election Alternatives
 Step
 3:
 Determining
 Actual
 and
 Final
 Grants..............................8
 Frequently
 Asked
 Questions....................................
....................9
 Glossary.......................................
...........................................10
 This booklet describes features of the 2004 Alcoa Stock Incentive 
 Plan (Plan).  The Plan document,  award certificates, and terms and 

conditions of each award control the Plan’s operation.  If there are

 any differences between this booklet and the official Plan document 

and terms and conditions of each award, the Plan document and 
 terms
 and
 conditions
 of
 each
 award
 will
 control.
 Alcoa
 reserves
 the 
 right to change or terminate the Plan or the terms of existing stock 
 incentive awards at any time for any reason.  Participation in the Plan 
 does not give anyone the right to continued employment with Alcoa.
 You are encouraged to read the prospectus and consult a personal
 tax advisor or financial planner about individual stock incentive award 
 strategies and tax planning issues.
 This document constitutes part of a prospectus covering securities 
 that have been registered under the Securities Act of 1933.
 As of November, 2005
 







	 

 Introduction and Overview
 What is Equity Choice?
 Alcoa’s
 2004
 Stock
 Incentive
 Plan
 (Plan)
 is
 designed
 to
 provide
 senior
 leaders
 with
 financial
 rewards
 based
  on both individual and company performance. The Equity Choice program enhances the
value of the Plan’s 
 long-term
 stock-based
 incentives
 by
 providing
 greater
 individual
 flexibility
 -
 as
 requested
 by
 senior
 leaders
 -
 and
 makes
 Alcoa’s
 long-term
 incentive
 compensation
 more
 competitive
 in
 the
 global
 marketplace.  
 Equity
 Choice
 allows
 you
 to
 choose
 between
 different
 combinations
 of
 equity
 vehicles
 for
 your
 annual 
  grants under the Plan to better suit your personal needs. Prior to the end of each
year, you will make an 
 election
 that
 will
 apply
 to
 the
 annual
 grant
 issued
 early
 in
 the
 following
 year.
 This
 annual
 process
 gives
 you 
 more
 control
 over
 how
 you
 receive
 your
 stock-based
 incentive
 compensation
 and
 greater
 ability
 to
 tailor
 the 
 rewards
 to
 your
 own
 personal
 preferences.
 (Note
 that
 the
 ability
 to
 make
 an
 election
 does
 not
 guarantee
 that 
 you will receive an actual grant.) 
 How
 Equity Choice
 Works
  As an eligible performance equity award participant, your baseline grant (as planned
each year by your 
 manager) is comprised of two components:
 Performance-Based Award:
 This component of the grant is made up of performance share awards 
 (PSAs)
  which represent a commitment by the Company to issue, on the third anniversary date of
the date 
  of the grant of the award, from 0 to 200% of the number of shares
of Alcoa common stock indicated on 
 your
 award
 certificate
 relating
 to
 the
 grant
 based
 on
 Alcoa’s
 return
 on
 capital
 (“ROC”)
 relative
 to
 the
 median
 return
 on
 capital
 of
 the
 Company’s
 selected
 external
 comparator
 group
 during
 the
 performance
 period
 (the
 first
 year
 of
 the
 three-year
 vesting
 period).
 The
 final
 number
 of
 PSAs
 earned
 can
 change 
 based on Alcoa’s corporate performance.  
 Time-Vested
 Award:
 This
 component
 of
 the
 grant
 is
 made
 up
 of
 stock
 options,
 which
 gives
 you
 the
 right 
 to
 purchase
 shares
 of
 Alcoa
 common
 stock
 in
 the
 future
 (once
 the
 options
 vest
 and
 prior
 to
 their
 expiration 
 date)
 at
 a
 preset
 price.
 Stock
 options
 are
 not
 performance
 based,
 which
 means
 they
 are
 not
 subject
 to 
 any adjustment based on corporate performance once they are granted.  Therefore,
the number of stock 
 options you are granted will not change.
 Equity Choice:
 Enhances the value of the long-term stock-based incentive plan
 Increases flexibility within the plan
 Responds to input from senior leaders
 The
 foundation
 of
 Equity
 Choice
 is
 the
 opportunity
 to
 elect
 a
 different
 “mix”
 of
 equity
 vehicles
 than
 what
 is 
 provided
 in
 your
 baseline
 grant.
 In
 addition
 to
 PSAs
 and
 stock
 options,
 you
 will
 also
 be
 able
 to
 receive:
 Performance-Based Award:
 Performance Stock Options
 -
 A PSO represents the right to purchase 
  shares of stock in the future at a preset price once vested, provided that Alcoa
achieves certain financial 
  performance levels (based on the same measure
used for PSAs). A PSO vests 14 months after the grant 
 date
 as
 to
 one-third
 of
 the
 options
 granted,
 two
 years
 after
 the
 grant
 date
 as
 to
 one-third
 of
 the
 options 
 granted,
 and
 three
 years
 from
 the
 grant
 date
 as
 to
 one-third
 of
 the
 options
 granted
 (unless
 the
 Committee 
 specifies a different vesting period).  If you elect to receive PSOs, you will have
the opportunity to earn 
 from
 0%
 to
 200%
 of
 the
 number
 of
 options
 indicated
 on
 your
 award
 certificate,
 except
 as
 indicated
 in
 the 
  next sentence. If performance results in a payout in excess of 100%, the additional
payout will be made in 
  the form of a stock award grant instead of stock
options, based on an exchange ratio of one stock award 
 for every four
additional PSOs earned.  Such stock award would vest, in whole, on the third anniversary of 
 the grant date of the PSOs to which it relates.  If performance results in a payout
below 100%, the number 
 of
 PSOs
 below
 the
 earned
 payout
 percentage
 will
 be
 automatically
 cancelled. 
 Time-Vested Award:
 Stock Awards
 -
 A commitment by the company to issue shares of Alcoa stock,

 upon vesting (the third anniversary date of the date of grant).









	 

 Election Alternatives
 Election Alternatives for Performance-Based 
 Awards
 You have the following three choices:
 You decide 
 what is best for you.
 Choice
 1:

 Exchange
 100%
 of
 the
 PSAs
 in
 your 
 baseline grant for performance stock options 
 (PSOs) which are described further below. 
 Choice
 2:

 Exchange
 50%
 of
 the
 PSAs
 in
 your 
 baseline grant for PSOs. 
 Choice
 3A
 (default) :
 No
 change.
 Baseline
 grant 
 allocation.
 If you elect to exchange PSAs for PSOs, the 
 exchange ratio will be one PSA to four PSOs.  
 PSOs are subject to the same performance 
 criteria as PSAs and the final number of PSOs 
 earned will be adjusted after the end of the 
 performance period (the first year of the entire 
 three-year vesting period).
 Election Alternatives
  You will need to make separate elections for the two components of your baseline grant:
one election for 
 your
 performance-based
 award
 and
 one
 for
 your
 time-vested
 award.
 For
 each
 election,
 you
 have
 three 
  alternatives from which to choose, offering a range of combinations and potential
values. 
 Election Alternatives for Time-Vested Awards
 You have the following three choices:
 Choice
 3B
 (default) :
 No
 change.
 Baseline
 grant
 allocation.
 Choice
 4:
 Exchange
 50%
 of
 the
 stock
 options
 in 
 your baseline grant for stock awards which are 
 described further below.  
 Choice 5:
 Exchange 100% of the stock options 
 in your baseline grant for stock awards. 
 If you elect to exchange stock options for stock 
 awards, the exchange ratio will be four stock 
 options to one stock award.  Stock awards 
 received in exchange for stock options are not 
 subject to performance criteria and will not be 
 adjusted once granted.
 Exchange Ratio
 The exchange ratio of 4 stock options/PSOs to 1 
 stock
 award/PSA
 takes
 into
 consideration:
 Black-Scholes option valuation methodology
 Binomial option valuation methodology
 Comparisons to exchange ratios used by other 
 companies implementing similar programs
 Employee responses from the Equity 
 Compensation
 Survey
 







	 

 Election Alternatives
 EXAMPLES
 The
 following
 examples
 illustrate
 how
 the
 exchange
 ratio
 is
 used
 to
 determine
 the
 number
 of
 awards 
  granted under each election alternative, using a hypothetical baseline grant of 4,250
performance shares 
  (Choice #3A) and 19,000 stock options (Choice #3B).
Remember that the exchange ratio is four stock 
 options/PSOs to one stock
award/PSA.
 Performance-Based Award
 Time-Vested
 Award
 If you select 
 ...
 Then you are transferring from the 
 Baseline Grant (Choice #3A ) . . . 
 Exchange Computation
 Performance 
 Stock Options
 Performance 
 Shares
 -
 4,250
 4,250 x 4 = 17,000
 17,000
 (4,250)
 17,000
 -
 4,250 x 50% = 2,125
 -
 4,250
 2,125 x 4 = 8,500
 8,500
 (2,125)
 8,500
 2,125
 Baseline Grant allocation 
 -
 4,250
 No Change
 -
 -
 -
 4,250
 If you select 
 ...
 Then you are transferring from the 
 Baseline Grant (Choice #3B ) . . . 
 Exchange Computation
 Stock Options
 Stock 
 Awards
 Baseline Grant allocation 
 19,000
 -
 No Change
 -
 -
 19,000
 -
 19,000 x 50% = 9,500
 19,000
 -
 9,500 / 4 = 2,375
 (9,500)
 2,375
 9,500
 2,375
 19,000
 -
 19,000 / 4 = 4,750
 (19,000)
 4,750
 -
 4,750
 * Approximate allocation of expected value of total equity incentive award
 60% stock options* 
 50% of stock options to stock 
 awards 
 100% of stock options to stock 
 awards 
 Choice #3B 
 (default)
 Choice #4
 Choice #5
 Choice #1
 Choice #2
 Choice #3A 
 (default)
 100% of performance shares to
 performance stock options
 50% of performance shares to
 performance stock options 
 40% performance shares* 
 







	 

 The Equity Choice Process
 The Equity Choice process involves three steps:  participants review their election
alternatives, 
  participants make their elections, and the actual and final
grants are determined and communicated.  
 Below are the details of each
step. 
 Step 1: Reviewing Your Election Alternatives
  To help you make your Equity Choice elections, Alcoa provides information, tools and
training materials.  
  Before you make your elections it is important to
be fully informed about the program and to consider key 
 factors related to
your personal situation and financial goals.
 Stock Incentives Website

The
 Stock
 Incentives
 website
 at
 www.alcoastockincentives.com
 is
 your main resource for important information, a modeling tool and 
 training materials that will help in your decision making.
 The
 Library Section
 provides the following materials:
 Brochures
 describing the benefits and provisions of Stock Options, 
 Stock Awards, Performance Share Awards and Equity Choice
 WebEx
 training
 presentations
 on
 Equity
 Choice
 The
 Equity Choice Section
 provides specific program information, 
 personalized information, and modeling tools:
 Background:
 detailed
 descriptions
 and
 examples
 for
 each
 Equity 
 Choice
 election
 alternative.
 Modeling:
 Tool
 that
 allows
 you
 to
 compare
 the
 possible
 future 
 economic value of the election alternatives based on your 
 assumptions for:
 –
 Stock price at actual grant date;
 –
 Stock price on the date you sell your stock; and
 –
 Currency exchange rate on the date you sell your stock. 
 For each election alternative, you can model up to three scenarios 
 and display the results in tabular and graphical formats.
 Your own risk tolerance;
 Your entire financial picture and 
 how long-term stock-based 
 incentives fit into it;
 The tax implications of stock 
 options, PSOs, stock awards 
 and PSAs;
 The vesting and other 
 provisions of stock options, 
 PSOs, stock awards and PSAs;
 The applicability of dividends 
 and dividend equivalents; and
 The upside and downside 
 potential for stock options, 
 PSOs, stock awards and PSAs
 under different scenarios
 Factors to Consider When Making 
 Your Decision
 Once you understand your election 
 alternatives, consider personal factors 
 that could affect your decision such as:
 







	 

 The Equity Choice Process
 You should consult a personal tax 
 advisor or financial planner with 
 respect to your personal 
 circumstances.
 Step
 2:
 Making
 Your
 Equity
 Choice
 Elections
 Making Your Elections on the Stock 
 Incentives Website
 Follow these steps to make your elections online:
 Election Alternatives           
 Performance Based Grants
 PSOs
 PSAs
 O
 #1 - 100% PSA to PSO
 17,000
     
  
 O
 #2 - 50% PSA to PSO
 8,500
       
 2,125
       
 #3A -Baseline Grant (default)
 4,250
       
  
  
 Election Alternatives              

Time Vested Grants
 Stock 
 Options
 Stock 
 Awards
 #3B -Baseline Grant (default)
 19,000
     
 O
 #4 - 50% stock options to stock awards
 9,500
       
 2,375
       
 O
 #5 - 100% stock options to stock awards
  
 4,750
       
 Shown below is a sample of what you will see on the website 
 based on a hypothetical baseline grant of 4,250 performance 
 shares and 19,000 stock options.
 Go to the Stock Incentives website at
 www.alcoastockincentives.com
 and click on 
 the Equity Choice section (from the menu in 
 the left column of the site).  The site provides 
 detailed instructions to help you through the 
 process.
 Select the election alternatives you want by 
 clicking on the applicable radio button.  The 
 highlighted rows indicate your current 
 elections, or, if you haven’t yet made an 
 election, the default election.
 Your election alternatives will be displayed 
 based on the midpoint within the regional 
 grant guidelines established for your specific 
 job grade and region (Note that  the midpoint 
 is not an indication of the award you may 
 receive; individual job performance and other 
 factors identified by your business or resource 
 unit determine your actual baseline grant.)
 Save your election when finished. Your 
 election will be applied to your baseline grant 
 to determine your actual grant. Remember 
 that you can change your election at any time 
 up until the end of the election period.
 If you do not make an election during the 
 election period, Choice #3A and #3B –
 baseline grant allocation will apply.
 The Election Period
 Each year, you will be notified of the Equity Choice 
 election period which is held for approximately two 
 weeks near the end of the calendar year prior to the year 
 of grant.  You must make your election via the Stock 
 Incentives website and are free to change your elections 
 as many times as you like during the election period.  
 Once the election period closes, your final elections 
 recorded in the Stock Incentives website is final and 
 irrevocable and cannot be changed for any reason.
 If you do not make an election by the close of the 
 election period, the default allocation of the baseline 
 grant will apply.
 Applicability of Elections
 Your
 Equity Choice
 elections will apply to the 
 upcoming
 year’s annual grants only. It does not 
 apply to any prior grants or any other future 
 grants including special quarterly grants, new hire 
 grants
 or
 future
 years’
 annual
 grants
 New elections must be made for 
 each future annual grant.
 Sample Website View of Election Alternatives
 In this sample, no election has been made and therefore the 
 default elections (Choices #3A and #3B) are highlighted.  
 When you make your elections by clicking on the applicable 
 radio button, your choices will be highlighted.
 







	 

 The Equity Choice Process
 Performance-Based Awards
 The number of PSOs and/or PSAs you receive will 
 be adjusted based on Alcoa’s performance relative 
 to an external comparator group as set forth in the 
 terms and conditions of the award agreements.
 Your
 final
 grant
 can
 be
 between
 0%
 -
 200%
 of 
 your actual grant and will be determined upon 
 completion of the performance period.  For PSOs, 
 if performance results in a payout in excess of 
 100%, the additional payout will be made in the 
 form of a stock award grant instead of stock 
 options, based on an exchange ratio of one stock 
 award for every four additional PSOs earned.  
 Such stock award would vest, in whole, on the 
 third anniversary of the grant date of the PSOs to 
 which they relate. If performance results in a 
 payout below 100%, the number of PSOs below 
 the earned payout percentage will be 
 automatically cancelled. 
 Final award certificates for the performance-based 
 component
 of
 your
 grant
 will
 be
 available
 on
 the 
 Stock Incentives website after the performance 
 period ends and final grants are determined.
 The ability to make an election 
 does not guarantee that you 
 will receive an actual grant.
 Step 3: Determining Actual and Final 
 Grants
 The amount of your baseline grant and actual grant 
 will be communicated to you by your manager after 
 final approval by the Compensation and Benefits 
 Committee. Your actual grant is determined by 
 applying your Equity Choice elections to your 
 baseline grants (default baseline grant allocation 
 applies if no election is made).
 Your actual grant will be posted on the Stock 
 Incentives website at www.alcoastockincentives.com
 within five business days of the grant date.  The 
 website also allows you to print your award 
 certificates.
 







	 

 Frequently Asked Questions
 Elections can be changed up until the close of 
 the election period.  After the election period 
 ends, you cannot change your election for any 
 reason.
 What if I want to change my 
 election?
 The default baseline grant allocation will apply 
 (Choice #3A and #3B).
 What if I become eligible for the 
 Plan after the election period 
 closes?
 The default baseline grant allocation will apply 
 (Choice #3A and #3B).
 What if I do not make an Equity 
 Choice election during the election 
 period?
 Contact the plan administrator via e-mail at 
 StockOptionAdmin.pit@alcoa.com
 or
 by
 phone
 800-352-8535 within the U.S. or
 412-281-1234 outside the U.S.
 Who do I contact with questions 
 about
 the
 Stock
 Incentives
 website 
 (including log-on ID and password 
 requests)?
 Contact
 the
 Corporate
 Compensation
 group
 via e-mail
 at
 ACCEquityChoice@alcoa.com
 Who do I contact with questions 
 about my election
 alternatives or 
 the  Equity Choice
 Program?
 Contact the plan administrator via e-mail at 
 StockOptionAdmin.pit@alcoa.com
 or
 by
 phone 877-281-2088 within the U.S. or 412-
 281-2088 outside the U.S.
 Who do I contact with questions 
 about the stock options, stock 
 award, performance stock options, 
 or performance share plan 
 provisions?
 







	 

 Glossary
 Actual
 Grant:
 Number
 of
 performance
 shares, 
 performance stock options, stock options and stock 
 awards granted based on your Baseline Grant and 
 Equity Choice election.
 Annual
 Grant:
 An
 award
 given
 by
 the
 Compensatio
 n and Benefits Committee of the Board of Directors, 
 typically in January. Grant terms are set at the 
 Committee’s discretion.
 Baseline
 Grant:
 Number
 of
 stock
 options
 and 
 performance shares allocated to you within the 
 Regional Grant Guidelines for your specific job 
 grade and region, prior to Equity Choice, based on 
 management’s recommendations.
 Board
 of
 Directors:
 Group
 of
 individuals
 elected
 at 
 an annual meeting by the shareholders of a 
 corporation. The Board of Directors has the authority 
 to elect officers, issue additional shares of stock, 
 and declare dividends, among other authorities.
 Common
 Stock:
 A
 type
 of
 public
 ownership
 in
 a 
 corporation. Owners are usually entitled to vote on 
 the selection of the board of directors and other 
 important matters as well as receive common stock 
 dividends on their shareholdings if they are 
 declared.
 Compensation and Benefits Committee:
 Comprised solely of independent directors who have 
 not been Alcoa employees. The Committee 
 discharges
 the
 Board
 of
 Directors’
 responsibilities 
 relating to the compensation of the company’s 
 officers, oversees the administration of the 
 company’s compensation and benefit plans 
 (particularly the incentive compensation and equity-
 based plans of the company) and prepares the 
 annual report on executive compensation. In 
 addition, the Committee has oversight responsibility 
 for the investment policy of the company’s principal 
 pension and savings plans.
 Election
 Alternatives:
 Different
 mixes
 of
 stock 
 options, stock awards, performance stock options, 
 and/or performance shares from which to choose as 
 part of the Equity Choice Program.
 Election Period:
 Time period in which Equity 
 Choice elections can be made.
 Equity
 Choice:
 Program
 that
 allows
 participants
 to 
 choose between different combinations of equity 
 vehicles
 for
 their
 annual
 grants
 under
 the
 2004 
 Alcoa
 Stock
 Incentive
 Plan
 to
 better
 suit
 their
 person
 al needs.
 Final
 Grant:
 Adjusted
 number
 of
 performance
 shares
 or
 performance
 stock
 options
 granted
 that
 are determined upon completion of the performance 
 period.  Final Grants can be between 0% -
 200% of 
 your Actual Grant.
 Grant:
 An
 award
 of
 stock
 options
 or
 other
 stock-based incentives.
 Grant
 Date:
 The
 date
 on
 which
 an
 option
 or
 other
 award
 is
 granted.
 Performance
 Share
 Award
 (PSA):
 A
 contractual 
 promise
 to
 issue
 shares
 of
 Alcoa
 common
 stock, 
 upon
 vesting,
 provided
 that
 the
 corporation
 achieves 
 certain
 financial
 performance
 levels.
 The
 same 
 performance
 metric
 applies
 to
 both
 performance 
 shares and performance stock options.
 Performance
 Stock
 Option
 (PSO):
 The
 right
 to 
 purchase shares of stock in the future at a preset 
 price, upon vesting, provided that the corporation 
 achieves certain financial performance levels.  The 
 same
 performance
 metric
 applies
 to
 both 
 performance
 shares
 and
 performance
 stock
 options.
 Plan:
 2004 Alcoa Stock Incentive Plan
 Regional
 Grant
 Guidelines:
 Range
 of
 stock 
 options
 and
 performance
 shares,
 between
 0%
 and 
 200%
 of
 midpoint,
 that
 can
 be
 granted
 as
 part
 of
 the 
 Baseline
 Grant
 for
 each
 job
 grade
 and
 region.
 Stock
 Award:
 A
 contractual
 promise
 to
 issue
 share
 s of
 Alcoa
 stock,
 upon
 vesting.
 Stock
 Option:
 The
 right
 to
 purchase
 shares
 of
 stock 
 in
 the
 future
 at
 a
 preset
 price,
 upon
 vesting.
 Time-Vested
 Grants:
 Grants
 of
 stock
 awards
 or 
 stock options that are not subject to performance 
 criteria.
 Vesting:
 A
 specified
 length
 of
 time
 you
 must
 hold 
 a
 stock
 option
 or
 performance
 stock
 option
 before
 it 
 can
 be
 exercised
 or
 length
 of
 time
 before
 you
 can 
 receive
 shares
 from
 a
 stock
 award
 or
 performance 
 share award.  Certain employment criteria must be 
 met during this period.