Exhibit 10.1





Exhibit 10.1




Year 2009




Annual




Management Incentive

Program




(Executive Officers Only)




USG Corporation




 


 









 







PURPOSE





To enhance USG Corporation’s ability to attract, motivate, reward and retain key employees of the
Corporation and its operating subsidiaries and to align management’s interests with those of the
Corporation’s stockholders by providing incentive award opportunities to managers who make a
measurable contribution to the Corporation’s business objectives.



INTRODUCTION





This Annual Management Incentive Program (the “Program”) is in effect from January 1, 2009 through
December 31, 2009.



ELIGIBILITY





Individuals eligible for participation in this Program are the Corporation’s executive officers.
This Program is executive officers only.



GOALS





For the 2009 Annual Management Incentive Program, Consolidated Net Earnings and consolidated,
subsidiary and profit center Focus Targets will be determined by the USG Board of Directors after
review by the Compensation and Organization Committee of the USG Board of Directors (the
“Committee”) . The Committee will consider recommendations submitted from management of USG
Corporation.


 


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AWARD VALUES





For this Program, position target incentive values are based on level of accountability and are
expressed as a percent of approved annualized salary. Resulting award opportunities represent a
fully competitive incentive opportunity for 100% (target) achievement of goals:




	 	 	 	 	 
	Position Title or	 	Position Target	 
	Salary Reference Point	 	Incentive	 
	• Chairman & CEO, USG Corporation
	 	 	125	%
	 
	• President & Chief Operating Officer, USG Corporation
	 	 	90	%
	 
	• Executive Vice President & Chief Financial Officer, USG
Corporation
	 	 	70	%
	• Executive Vice President & General Counsel, USG Corporation
	 	 	 	 
	 
	• Vice President; President & CEO, L & W Supply Corp
	 	 	50	%
	• Senior Vice President, Human Resources, USG Corporation
	 	 	 	 
	• Senior Vice President, Communications, USG Corporation
	 	 	 	 
	• Senior Vice President & Controller, USG Corporation
	 	 	 	 
	• Vice President; President, USG Building Systems
	 	 	 	 
	• Vice President; President, USG International
	 	 	 	 
	• Vice President and Chief Technology Officer, USG Corporation
	 	 	45	%
	 
	• Vice President and Chief Innovation Officer, USG Corporation
	 	 	 	 
	• Vice President and Corporate Secretary & Associate General
Counsel, USG Corporation
	 	 	 	 
	• Vice President & Treasurer, USG Corporation
	 	 	 	 
	• Vice President and Chief Information Officer, USG Corporation
	 	 	 	 





 


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AWARDS




Incentive awards for all participants in this Program will be reviewed and approved by the
Committee. For all participants, the annual incentive award par opportunity is the annualized
salary approved by March 31, 2009 that is in effect on April 1, 2009 multiplied by the applicable
position target incentive value percent.




Incentive awards for 2009 will be based on a combination of the following elements:




	I.	 	CONSOLIDATED NET EARNINGS  40% OF INCENTIVE







Consolidated Net Earnings will be as reported on the Corporation’s year-end financial statements
with adjustments for significant non-operational charges. Such adjustments will be defined by March
31, 2009 and have in the past been for Fresh Start Accounting, asbestos, restructuring charges,
bankruptcy expenses and the cumulative impact of new accounting pronouncements. For all
participants, this portion of the award represents 40% of the incentive par. This portion of the
award will be paid from a pool funded by Consolidated Net Earnings results according to the
following schedule:



	 	 	 	 	 
	$0 to $75 Million Net Earnings
	 	2.68% of this tier will fund the pool
	$75+ to $150 Million Net Earnings
	 	2.13% of this tier will fund the pool
	$150+ to $400 Million Net Earnings
	 	1.72% of this tier will fund the pool
	$400+ to $700 Million
	 	1.22% of this tier will fund the pool







This is the same pool from which awards based on Consolidated Net Earnings will be paid under the
USG Corporation 2009 Annual Management Incentive Program for employees, other than executive
officers, occupying positions in Broadband 11 or higher (the “Other Program”). Each tier of
earnings is calculated separately and added together to determine the total pool. This amount is
then divided by the sum of the Net Earnings pars for all participants in this Program and the Other
Program. The factor derived from this method is then applied to each participant’s Net Earnings
pars to determine the individual award for this segment. For each executive officer, (i) their
individual Net Earnings par shall be determined by March 31, 2009, and (ii) their individual factor
shall be determined by taking into account the Net Earnings par of all participants eligible to
participate in the Program and the Other Program as of March 31, 2009 and based on the sum of all
such participants’ Net Earnings par as determined by March 31, 2009. Notwithstanding the prior
sentence nor any other provision in this Program, each executive officer’s factor may be decreased,
but not increased, due to changes in the total Program and Other Program par after March 31,
including, but not limited to, changes triggered by the addition or removal of a participant from
the Program or the Other Program or changes in any participant’s Net Earnings par.




	II.	 	FOCUS TARGETS: 40% OF INCENTIVE







Focus Targets will be measurable, verifiable and derived from the formal strategic planning
process. For 2009, Focus Targets are expected to include Total Overhead, Customer Satisfaction,
Cost Reduction, Business Unit Gross Profit or other operational priorities. The Focus Targets will
be determined by March 31, 2009. The award adjustment factor for this segment will range from 0.5
(after achieving a minimum threshold performance level) to 2.0 for maximum attainment.




The weighting on any individual Focus Target generally will be in 5% increments and not be less
than 10%, although they may carry a different weighting, for example, 8%. The weighting of all
assigned Focus Targets will equal 40% of the individual’s total par.


 


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	III.	 	INDIVIDUAL PERFORMANCE: 20% OF INCENTIVE







Based upon individual performance results in relation to established Corporation or other
performance goals.



	 	 	 	 	 
	Performance Levels	 	Payout %	 
	Exceeds Expectations
	 	up to 150%
	Meets Expectations
	 	up to 110%
	Needs Development/ Partially Achieved
	 	50% – 100%
	Does Not Meet expectations
	 	0%






PAYOUT CRITERIA





No awards will be paid under this Program unless the Corporation’s consolidated EBITDA for 2009 is
at least equal to the amount of awards under this Program and the Other Program.




EBITDA is defined as net earnings before (1) interest, taxes, depreciation and amortization, (2)
the annual Long-Term Incentive Plan non-cash charge, (3) other non-cash charges, such as asset
impairments, and (4) restructuring charges.




Total payments to a participant under this Program must be two times or less of the participant’s
par value amount. No payments will be made beyond this two times maximum payment level.



WEIGHTINGS OF PROGRAM ELEMENTS





All participants in this Program, including the most senior executives, will have the same overall
weightings of 40% on Consolidated Net Earnings, 40% on Operating Focus Targets and 20% on
Individual Performance


 


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GENERAL PROVISIONS





	1.	 	If the Board, or an appropriate committee thereof, has determined that any fraud
or intentional misconduct by an executive officer was a significant contributing factor to
the Corporation having to restate all or a portion of its financial statement(s), the Board
or committee shall take, in its discretion, such action as it deems necessary to remedy the
misconduct and prevent its recurrence. In determining what remedies to pursue, the Board or
committee will take into account all relevant factors, including whether the restatement was
the result of fraud or intentional misconduct. The Board may, to the extent permitted by
applicable law, require reimbursement of any award under this Program paid to the executive
officer after January 1, 2009, if and to the extent that a) the amount of the award was
calculated based upon the achievement of certain financial results that were subsequently
reduced due to a restatement, b) the executive officer engaged in any fraud or intentional
misconduct that caused or contributed to the need for the restatement, and c) the amount of
the compensation that would have been awarded to the executive officer under this Program
had the financial results been properly reported would have been lower than the amount
actually awarded. The remedy specified herein shall not be exclusive and shall be in
addition to every other right or remedy at law or in equity that may be available to the
Corporation. If this paragraph 1 is held invalid, unenforceable or otherwise illegal, the
remainder of this Program shall be deemed to be unenforceable due to a failure of
consideration, and the executive officer’s rights to any incentive compensation that would
otherwise be awarded under this Program shall be forfeited.







In order to be entitled to an award of compensation under this Program, an executive officer
must execute a written acknowledgement that such award shall be subject to the terms and
conditions of this paragraph 1.




	2.	 	The Committee reserves the right to adjust award amounts under this Program down based on its
assessment of the Corporation’s overall performance relative to market conditions, provided,
however, in no event may the Committee adjust an award under this Program upward.







	3.	 	The Committee shall review and approve the awards recommended eligible participants in this
Program. The Committee shall submit to the Board of Directors, for its ratification, a report
of the awards for all eligible participants approved by the Committee in accordance with the
provisions of the Program.







	4.	 	The Committee shall have full power to make the rules and regulations with respect to the
determination of achievement of goals and the distribution of awards. No awards will be made
until the Committee has certified financial achievements and applicable awards in writing.







	5.	 	The judgment of the Committee in construing this Program or any provisions thereof, or in
making any decision hereunder, shall be final and conclusive and binding upon all employees of
the Corporation and its subsidiaries whether or not selected as beneficiaries hereunder, and
their heirs, executors, personal representatives and assignees.





 


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	6.	 	Nothing herein contained shall limit or affect in any manner or degree the normal and usual
powers of management, exercised by the officers, and the Board of Directors or committees
thereof, to change the duties or the character of employment of any employee of the
Corporation or to remove the individual from the employment of the Corporation at any time,
all of which rights and powers are expressly reserved.







	7.	 	The awards made to employees shall become a liability of the Corporation or the appropriate
subsidiary as of December 31, 2009 and all payments to be made hereunder will be made as soon
as practicable, but in any event before two and one half months after December 31, 2009, after
said awards have been approved by the Committee.







ADMINISTRATIVE GUIDELINES




	1.	 	Award values will be based on annualized salary in effect on April 1, 2009 for each
qualifying participant. Any change in duties, dimensions or responsibilities of a current
position resulting in an increase or decrease in salary range reference point or market rate
will result in a pro-rata incentive award. Respective reference points, target incentive
values or goals will be applied based on the actual number of full months of service at each
position.







	2.	 	No award is to be paid to any participant who is not a regular full-time employee, (or a part
time employee as approved by the Senior Vice President, Human Resources, USG Corporation) in
good standing at the end of the calendar year to which the award applies. However, if an
eligible participant with three (3) or more months of active service in the Program year
subsequently retires, becomes disabled, dies, is discharged from the employment of the Company
without cause, or is on an approved unpaid leave, the participant (or beneficiary) may be
recommended for an award which would otherwise be payable based on goal achievement, prorated
for the actual months of active service during the year.







	3.	 	Employees participating in any other incentive or bonus program of the Corporation or a
Subsidiary who are transferred during the year to a position covered by this Program will be
eligible to receive a potential award prorated for actual full months of service in the two
positions with the respective incentive program and target incentive values to apply.







	4.	 	In the event of transfer of an employee from an assignment which does not qualify for
participation in any incentive or bonus plan to a position covered by this Program, the
employee is eligible to participate in this Program with any potential award prorated for the
actual months of service in the position covered by this Program during the year. A minimum
of three months of service in the eligible position is required.







	5.	 	Participation during the current Program year for individuals employed from outside the
Corporation is possible with any award to be prorated for actual full months of service in the
eligible position. A minimum of three full months of eligible service is required for award
consideration.







	6.	 	Exceptions to established administrative guidelines can only be made by the Committee.







 


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