Document:

Exhibit

Exhibit 10.4

Kaiser Aluminum 2020-2022 Long-Term Incentive Plan
	
								
	Management Objective:
	The applicable measurable performance objective:

	 
	 
	 

	 
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	for 60% of the Performance Shares is the percentile ranking (“Relative TSR Ranking”) of the total shareholder return (“TSR”) of Kaiser Aluminum Corporation (the “Company”) over the period from January 1, 2020 through December 31, 2022 (the “Performance Period”) compared to the TSR of companies listed on Annex I hereto (each, a “Peer Company”), each of which is a member of the S&P 1000 Materials Index, over the Performance Period; 

	 
	 
	 

	 
	Ÿ
	for 20% of the Performance Shares is the cost performance (“Cost Performance”) of the Company, measured against the Company’s total controllable cost (“Total Controllable Cost”), over the Performance Period; and

	 
	 
	 

	 
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	for 20% of the Performance shares is the Company’s earnings before interest, tax, depreciation and amortization (“EBTIDA”) margin (“EBITDA Margin”), measured by the Company’s adjusted EBITDA as a percentage of value added revenue (“VAR”).

	 
	 
	 

	 
	TSR Performance Objective

	 
	 
	 

	 
	The Relative TSR Ranking will be based on the Company’s relative stock performance against the Peer Companies, with any dividends being treated as being reinvested on the applicable ex-dividend date.

	 
	 
	 

	 
	The beginning and ending share prices are determined using the 20 trading day averages preceding the beginning and the end of the applicable performance period, respectively.

	 
	 
	 

	 
	Any Peer Company that is acquired during the Performance Period shall be omitted from the peer group and will not be included in determining the Relative TSR Ranking.

	 
	 
	 

	 
	Any Peer Company that files for bankruptcy, or that has its shares delisted from its primary stock exchange because it fails to meet the exchange listing requirements (other than as a result of its acquisition), during the Performance Period shall remain in the peer group and will be ranked last for purposes of determining the Relative TSR Ranking.

	 
	 
	 

	
								
	 
	The Relative TSR Ranking target is the 50th percentile (the “Target TSR Ranking”). The payout for TSR performance at the target level (a multiplier of 1.00x) is 100% of the applicable Performance Shares. The threshold performance required to potentially earn Performance Shares is a Relative TSR Ranking at the 25th percentile. The payout for TSR performance at the threshold level (a multiplier of 0.50x) is 50% of the applicable Performance Shares. If the Relative TSR Ranking is below the 25th percentile, no Performance Shares will be earned. If the Relative TSR Ranking is greater than the 90th percentile, Performance Shares will be earned at the maximum level.  The payout for performance at the maximum level (a multiplier of 2.00x) is 200% of the applicable Performance Shares.

	 
	 
	 

	 
	The multiplier for Performance Shares based on TSR Percentile Ranking will be determined by straight line interpolation between the measuring points based on the Relative TSR Ranking as follows:

	 
	 
	 
	 
	 

	 
	 
	 
	TSR Percentile Ranking
<25th percentile
  25th percentile
  50th percentile
  75th percentile
≥90th percentile
	Multiplier
   0.00x
   0.50x
   1.00x
   1.50x
   2.00x

	 
	 
	 

	 
	If the TSR of the Company over the Performance Period is negative, then the multiplier shall be capped at 1.00x.

	 
	 
	 

	 
	Cost Performance Objective

	 
	 
	 

	 
	The Company’s Cost Performance is measured as a percentage of the average annual increase or decrease in Total Controllable Cost over the Performance Period as compared with the Total Controllable Cost for 2019.  The baseline reflects 2019 costs/performance flexed for volume and mix.

	 
	 
	 
	 
	 
	 
	 
	 

	 
	Total Controllable Cost shall equal the sum of the Company’s (1) controllable variable conversion cost (“Variable Cost”) and (2) controllable plant overhead and selling, general and administrative expenses (“Overhead Cost”) as more fully described to the Company’s compensation committee (the “Committee”).

	 
	 
	 

	 
	The Cost Performance target is a 0% annualized cost increase requiring the offset of underlying inflation (the “Target Cost Performance”). The payout for Cost Performance at the target level (a multiplier of 1.00x) is 100% of the applicable Performance Shares. If the Cost Performance is equal to or greater than a 2% annualized cost increase, no Performance Shares will be earned. If the Cost Performance equals or exceeds a 2% annualized cost reduction, Performance Shares will be earned at the maximum level.  The payout for performance at the maximum level (a multiplier of 2.00x) is 200% of the applicable Performance Shares.

	 
	 
	 
	 
	 
	 
	 
	 

	
								
	 
	The multiplier for Performance Shares based on Cost Performance will be determined by a straight line interpolation based on Cost Performance as follows:

	 
	 
	 
	 
	 

	 
	 
	 
	Cost Performance

 ≥2% annualized cost increase
   0% annualized cost increase
 ≥2% annualized cost reduction
	Multiplier

   0.00x
   1.00x
   2.00x

	 
	 
	 
	 
	 
	 
	 
	 

	 
	EBITDA Margin Objective

	 
	 
	 
	 
	 
	 
	 
	 

	 
	The Company’s EBITDA Margin performance is measured by the Company’s adjusted EBITDA as a percentage of VAR over the Performance Period.  

	 
	 
	 
	 
	 
	 
	 
	 

	 
	Adjusted EBITDA shall equal the sum of the Company’s adjusted EBITDA as reflected in the Company’s Reconciliations of Non-GAAP Measures - Consolidated, as reported in the Company’s earnings materials, for the three years over the Performance Period.  

	 
	 
	 
	 
	 
	 
	 
	 

	 
	VAR shall equal the sum of the Company’s Net Sales less the hedged cost of alloyed metal for three years over the Performance Period.

	 
	 
	 
	 
	 
	 
	 
	 

	 
	The EBITDA Margin target is [a target performance level approved by the compensation committee] (the “Target EBITDA Margin Performance”). The payout for Target EBITDA Margin Performance (a multiplier of 1.00x) is 100% of the applicable Performance Shares. If the EBITDA Margin is equal to or less than [the threshold level], no Performance Shares will be earned. If the EBITDA Margin equals or exceeds [the maximum performance requirement], Performance Shares will be earned at the maximum level.  The payout for performance at the maximum level (a multiplier of 2.00x) is 200% of the applicable Performance Shares.

	 
	 
	 
	 
	 
	 
	 
	 

	 
	The multiplier for Performance Shares based on EBITDA Margin Performance will be determined by a straight line interpolation based on EBITDA Margin targets approved by the compensation committee.

	 
	 
	 
	 
	 
	 
	 
	 

	Determination of Number of Performance Shares Potentially Earned:
	The number of Performance Shares earned, if any, will be determined as follows:

	 
	 

	 
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	Following December 31, 2021, the Committee will approve a multiplier (“LTI Multiplier”) for each of the performance metrics described above based on the Company’s performance.  

	 
	 
	 

	 
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	The number of Performance Shares earned, if any, will equal the sum of the product (rounded down to the nearest whole number) of (1) the target number of Performance Shares granted under each performance metric and (2) the LTI Multiplier determined based on each of the applicable Company performance metrics (rounded to the nearest whole percentage point); provided, however, such number will not exceed two times the target number of Performance Shares granted hereunder.

	 
	 
	 

	 
	The Committee will approve the LTI Multiplier for each performance metric no later than March 15, 2023.

	 
	 
	 

	Administrative Provisions:
	Additional administrative provisions are reflected in the terms of the applicable grant documents.

Annex I

Peer Company List

	
				
	Ticker
	Company Name
	Ticker
	Company Name

	AKS
	AK Steel Holding Corporation
	LTHM
	Livent Corporation

	ASH
	Ashland Global Holdings Inc.
	LXU
	LSB Industries, Inc.

	ASIX
	AdvanSix Inc.
	MERC
	Mercer International Inc.

	ATI
	Allegheny Technologies Incorporated
	MTRN
	Materion Corporation

	ATR
	AptarGroup, Inc.
	MTX
	Minerals Technologies Inc.

	AVD
	American Vanguard Corporation
	MYE
	Myers Industries, Inc.

	BCC
	Boise Cascade Company
	NEU
	NewMarket Corporation

	BCPC
	Balchem Corporation
	NGVT
	Ingevity Corporation

	CBT
	Cabot Corporation
	NP
	Neenah, Inc.

	CC
	The Chemours Company
	OI
	O-I Glass, Inc.

	CENX
	Century Aluminum Company
	OLN
	Olin Corporation

	CLF
	Cleveland-Cliffs Inc.
	POL
	PolyOne Corporation

	CLW
	Clearwater Paper Corporation
	RGLD
	Royal Gold, Inc.

	CMC
	Commercial Metals Company
	RPM
	RPM International Inc.

	CMP
	Compass Minerals International, Inc.
	RS
	Reliance Steel & Aluminum Co.

	CRS
	Carpenter Technology Corporation
	RYAM
	Rayonier Advanced Materials Inc.

	EXP
	Eagle Materials Inc.
	SCL
	Stepan Company

	FF
	FutureFuel Corp.
	SLGN
	Silgan Holdings Inc.

	FOE
	Ferro Corporation
	SMG
	The Scotts Miracle-Gro Company

	FUL
	H.B. Fuller Company
	SON
	Sonoco Products Company

	GCP
	GCP Applied Technologies Inc.
	STLD
	Steel Dynamics, Inc.

	GEF
	Greif, Inc.
	SWM
	Schweitzer-Mauduit International, Inc.

	GLT
	P. H. Glatfelter Company
	SXC
	SunCoke Energy, Inc.

	HAYN
	Haynes International, Inc.
	SXT
	Sensient Technologies Corporation

	HCC
	Warrior Met Coal, Inc.
	TG
	Tredegar Corporation

	HWKN
	Hawkins, Inc.
	TMST
	TimkenSteel Corporation

	IOSP
	Innospec Inc.
	TSE
	Trinseo S.A.

	IPHS
	Innophos Holdings, Inc.
	UFS
	Domtar Corporation

	KALU
	Kaiser Aluminum Corporation
	USCR
	U.S. Concrete, Inc.

	KOP
	Koppers Holdings Inc.
	VVV
	Valvoline Inc.

	KRA
	Kraton Corporation
	WOR
	Worthington Industries, Inc.

	KWR
	Quaker Chemical Corporation
	X
	United States Steel Corporation

	LPX
	Louisiana-Pacific Corporation
	ZEUS
	Olympic Steel, Inc.Exhibit

Exhibit 4.2

DESCRIPTION OF REGISTERED SECURITIES

As of December 31, 2019, Federal Home Loan Bank of Pittsburgh (the “Bank”) has one class of securities, capital stock, registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  The capital stock is registered pursuant to Section 12(g) of the Exchange Act.

DESCRIPTION OF CAPITAL STOCK

The following description of the Bank’s capital stock and the relevant provisions of the Bank’s amended bylaws and amended capital plan are summaries and are qualified in their entirety by reference to the Bank’s organization certificate, amended bylaws and amended capital plan.

General
The Bank issued shares of capital stock, par value $100.00 per share, in accordance with the provisions of the Federal Home Loan Bank Act, applicable regulations and the Bank’s capital plan.  The amount of capital stock may be increased to provide for the issuance of capital stock to Bank members in accordance with the provisions of the Federal Home Loan Bank Act.  The capital stock was issued under a capital plan approved by the Bank’s regulator, the Federal Housing Finance Agency (formerly, the Federal Housing Finance Board, (Finance Agency)) and is uncertificated.  The Bank currently has two subclasses of capital stock:  B-1 (Membership Stock) and B-2 (Activity-Based Stock).  Only members of the Bank may purchase capital stock.  Capital stock is issued, redeemed and repurchased at par value per share.  Bank members are required to purchase a minimum amount of capital stock, calculated in accordance with the terms of the capital plan.  Per the capital plan, this requirement is subject to change at the discretion of the Board of Directors.

Upon a simple majority vote by the members of the Board of Directors of the Bank, a request to amend the capital plan may be submitted to the Finance Agency.  To become effective, any amendment must be approved by the Finance Agency.

Dividends
Dividends may be declared and paid on capital stock as determined by the Board of Directors, provided the Bank’s capital position is not, and will not be after payment, below its minimum regulatory capital requirement and provided that such payment is not subject to restriction or prohibition pursuant to 12 C.F.R. Part 1277.  The Board of Directors may declare and pay different dividends for each subclass of capital stock; provided that, the dividend rate declared and paid on Subclass B-2 stock shall at least equal or exceed the dividend rate declared and paid on Subclass B-1 stock.  Dividends may be declared and paid in either cash or capital stock. The Bank’s practice has been to pay only a cash dividend.  Dividends are non-cumulative.

In accordance with the Joint Capital Enhancement Agreement, as amended, entered into by the Bank, as amended, the Bank allocates 20% of its quarterly net income to a separate restricted retained earnings account until the account balance equals at least 1% of the Bank’s average balance of outstanding consolidated obligations for the previous quarter. These restricted retained earnings are not available to pay dividends.

Voting Rights
Bank members are only entitled to vote on matters related to director elections and any merger of the Bank.  There are no voting preferences for any share of capital stock.  Voting rights with respect to the election of directors are set forth in 12 C.F.R. 1261 and voting rights with respect to a merger are set forth in 12 C.F.R. 1278.  Consistent with Finance Agency regulations and the Bank’s capital plan, members’ voting rights are tied to the shares of Bank capital stock the members are required to hold as of a set record date (“Required Shares”).

With respect to director elections, each member may vote the lesser of (i) its Required Shares; or (ii) the average Required Shares, determined on a state-wide basis per member, for both (a) each open member director seat in such member’s state; and (b) each open independent director seat located within the Bank’s entire district.  With respect to the merger of the Bank into another Federal Home Loan Bank, each member may vote the lesser of (i) its Required Shares; or (ii) the average Required Shares of each member, determined on a district-wide basis, to ratify a merger.  

Repurchase and Redemption Rights
The Bank may repurchase excess stock, stock held by a member in excess of the minimum stock purchase requirement, at any time and on a pro rata basis.  Once repurchased, the shares of capital stock are retired.

Subclass B-1 stock is redeemable five years from the date a member terminates its membership or withdraws from the Bank.  If membership is terminated due to a merger or consolidation of the member, the Subclass B-1 stock is deemed to be excess stock and is eligible to be repurchased.  Subclass B-2 stock relating to termination, withdrawal, merger or consolidation is recalculated based on the underlying member activity with the Bank. Any excess Subclass B-2 stock is eligible to be repurchased on an ongoing basis, at the Bank’s discretion.  Therefore, the redemption period could be less than five years if the capital stock becomes excess stock.  However, the redemption period could extend beyond five years if the underlying activity is still outstanding.  Once redeemed, the shares of capital stock are retired.  

The repurchase and redemption of capital stock is subject to applicable restrictions as set forth in 12 C.F.R. Part 1277, including, without limitation, the Bank must continue to meet its regulatory capital requirements after any repurchase or redemption.  

Liquidation Rights
If an institution ceases to be a member of the Bank for any reason, the member shall continue to hold the capital stock necessary to support any outstanding advances, letters of credit or acquired member assets. Upon the repayment of all amounts due to the Bank, such capital stock shall become excess stock subject to repurchase or redemption.  

In the event the Bank is liquidated, a member will be entitled to the rights and benefits granted to it by the Finance Agency and/or the United States Congress. 

Voluntary Merger
Votes on voluntary mergers of the Bank are not conducted at stockholder meetings. The votes each stockholder is entitled to cast are governed by the Federal Home Loan Bank Act and the rules, regulations and guidance promulgated by the Finance Agency, including 12 C.F.R. 1278.6 and any successor regulation.  In the event the Bank merges with or consolidates into another Federal Home Loan Bank, a member will be entitled to the rights and benefits set forth in the agreement of merger approved by the board of directors of each bank and the Finance Agency.

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