Document:

Exhibit

Exhibit 10.4

Kaiser Aluminum 2017-2019 Long-Term Incentive Plan
	
								
	Management Objective:
	The applicable measurable performance objective:

	 
	 
	 

	 
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	for 40% 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, 2017 through December 31, 2019 (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 600 Small Cap Materials Sector index, over the Performance Period; 

	 
	 
	 

	 
	Ÿ
	for 40% 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 economic value added performance (“EVA Performance”) of the Company, measured by the pre-tax operating income of the Company’s fabricated products business (“PTOI”) less a capital charge, over the Performance Period.

	 
	 
	 

	 
	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.

	 
	 
	 

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	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 50% 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 25% 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 100% 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 2016.  The baseline reflects 2016 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 50% of the applicable Performance Shares. If the Cost Performance is equal to or greater than a 3% annualized cost increase, no Performance Shares will be earned. If the Cost Performance equals or exceeds a 3% 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 100% of the applicable Performance Shares.

	 
	 
	 
	 
	 
	 
	 
	 

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	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

 ≥3% annualized cost increase
   0% annualized cost increase
 ≥3% annualized cost reduction
	Multiplier

   0.00x
   1.00x
   2.00x

	 
	 
	 
	 
	 
	 
	 
	 

	 
	EVA Performance Objective

	 
	 
	 

	 
	For each year of the Performance Period, EVA will equal (1) PTOI less (2) 15% of net assets as of the end of the immediately preceding year (“Net Assets”).

	 
	 
	 
	 
	 
	 
	 
	 

	 
	In determining EVA for a particular year:

	 
	 
	 

	 
	Net Assets will equal total assets less total liabilities of our Consolidated financial statements, subject to adjustments to:

	 
	 
	 

	 
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	remove discontinued operations and legacy environmental accruals;

	 
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	remove VEBA related assets and liabilities;

	 
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	exclude financing items;

	 
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	exclude capital expenditures in progress;

	 
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	add prorated value of capital projects and acquisitions larger than 1% of prior year Net Assets except to the extent necessary to avoid over-stating Net Assets;

	 
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	exclude income tax related assets and liabilities; 

	 
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	exclude mark-to-market assets and liabilities relating to hedging activities except for those relating to option premiums; and

	 
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	address other items as recommended by the Company’s Chief Executive Officer and approved by the Committee. 

	 
	 
	 

	 
	PTOI will be adjusted to:

	 
	 
	 

	 
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	exclude non-cash LIFO inventory charges (benefits) and respective non-cash metal gains (losses);

	 
	 
	 

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	exclude non-cash mark to market and lower of cost or market adjustments;

	 
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	amortize the following non-recurring activities over three calendar years with the first year being the year of the initial charge if the value exceeds one percent of Net Assets:

	 
	 
	- Restructuring charges;

	 
	 
	- Gains or losses resulting from asset dispositions;

	 
	 
	- Labor stoppage costs; and

	 
	 
	- Asset impairment charges;

	 
	Ÿ
	exclude discontinued operations and legacy environmental income and expenses;

	 
	Ÿ
	exclude unrealized mark-to-market gains (losses) related to hedging activities;

	 
	Ÿ
	exclude VEBA income and expense;

	 
	Ÿ
	exclude workers compensation gains (expenses) caused by changes in the discount rate; and

	 
	Ÿ
	address other items as recommended by the Company’s Chief Executive Officer and approved by the Committee.

	 
	 
	 

	 
	The EVA Performance target is is an amount specified by the Committee
(the “Target EVA Performance”). The payout for EVA Performance at the target level (a multiplier of 1.00x) is 50% of the applicable Performance Shares. If the EVA Performance is equal to or less than the threshold amount specified by the Committee, no Performance Shares will be earned. If the EVA Performance is greater than or equal to the maximum EVA performance specified by the Committee, Performance Shares will be earned at the maximum level.  The payout for performance at the maximum level (a multiplier of 2.00x) is 100% of the applicable Performance Shares.

	 
	 
	 
	 
	 
	 
	 
	 

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

	 
	 
	 
	 
	 

	 
	 
	 
	EVA Performance

 ≤ [Threshold EVA Performance] 
    [Target EVA Performance]
 ≥ [Maximum EVA Performance]
	Multiplier

   0.00x
   1.00x
   2.00x

	 
	 
	 
	 

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

	 
	 
	 

	 
	Ÿ
	Following December 31, 2019, the Committee will approve a multiplier (“LTI Multiplier”) for each of the performance metric 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 number of Performance Shares granted under each performance metric and (2) one-half of the LTI Multiplier determined based on each of the applicable Company performance (rounded to the nearest whole percentage point); provided, however, such number will not exceed the number of Performance Shares granted hereunder.

	 
	 
	 

	 
	The Committee will approve the LTI Multiplier not later than March 15, 2020.

	 
	 
	 

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

	 
	 
	 
	 
	 
	 
	 
	 

	 
	The number of Performance Shares earned by any Covered Employee will be subject to any “umbrella plan” adopted by the Company in order to improve the tax efficiency of the Performance Shares granted to such Covered Employee.

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Annex I

Peer Company List

	
		
	A. Schulman, Inc.
	Innospec Inc.

	AdvanSix Inc.
	KapStone Paper and Packaging Corporation

	AK Steel Holding Corporation
	Koppers Holdings Inc.

	American Vanguard Corporation
	Kraton Performance Polymers Inc.

	Balchem Corp.
	LSB Industries Inc.

	Boise Cascade Company
	Materion Corporation

	Calgon Carbon Corporation
	Myers Industries Inc.

	Century Aluminum Co.
	Neenah Paper, Inc.

	The Chamours Company
	Olympic Steel Inc.

	Clearwater Paper Corporation
	PH Glatfelter Co.

	Deltic Timber Corporation
	Quaker Chemical Corporation

	Flotek Industries Inc.
	Rayonier Advanced Materials Inc.

	Future Fuel Corp.
	Schweitzer-Mauduit International Inc.

	HB Fuller Co.
	Stepan Company

	Hawkins Inc.
	Stillwater Mining Co.

	Haynes International, Inc.
	SunCoke Energy Inc.

	Headwaters Incorporated
	TimkenSteel Corporation

	Ingevity Corporation
	Tredegar Corp.

	Innophos Holdings Inc.
	U.S. Concrete

6Exhibit

Exhibit 10.5

KAISER ALUMINUM CORPORATION
2006 EQUITY AND PERFORMANCE INCENTIVE PLAN
AMENDMENT TO RESTRICTED STOCK UNIT AWARD AGREEMENT
THIS AMENDMENT TO RESTRICTED STOCK UNIT AWARD AGREEMENT (this “Amendment”), effective as of March 8, 2017, amends the Restricted Stock Award Agreement, effective as of March 5, 2016 (the “Award Agreement”), evidencing the grant of Restricted Stock Units by Kaiser Aluminum Corporation, a Delaware corporation (the “Company”), to the undersigned Participant (the “Participant”) pursuant to the provisions of the Kaiser Aluminum Corporation 2006 Equity and Performance Incentive Plan (the “Plan”).  All capitalized terms used herein shall have the meanings ascribed to them in the Plan unless specifically set forth otherwise herein.;
WHEREAS, the Company and the Participant have determined that it is in the best interests of both such parties to amend the Award Agreement.
NOW THEREFORE, the Company and the Participant agree as follows:
1.Section 3(b) of the Award Agreement is hereby amended to read in its entirety as follows:

		
	(b)
	The Company shall issue or deliver Common Shares to settle vested RSUs granted hereunder:  (i) except with respect to Sections 5 and 6 of this Agreement, on the applicable date set forth under the “Vesting Schedule” on the electronic cover page to which this Agreement is attached; (ii) in the event of the Participant’s death (the event contemplated by Section 5(a) of this Agreement) or “separation from service” from the Company within the meaning of Section 409A of the Code and Section 1.409A-1(h) of the Treasury Regulations (the event for purposes of Section 409A of the Code contemplated by either Section 5(b), 5(c), or 5(d) of this Agreement), on the date of such event; or (iii) with respect to an event contemplated by Section 6 of this Agreement, on the date of the Change in Control; provided, that if the Change in Control does not constitute a “change of control event” (as described in Treasury Regulation Section 1.409A-3(i)(5)(i)) with respect to the Company, the Common Shares will not be issued or delivered as a result of such event and shall instead be issued or delivered in accordance with this Section 3(b) of this Agreement upon the next event contemplated hereby.

2.Section 3 of the Award Agreement is hereby revised to add a new subsection (c) thereto to read in its entirety as follows (with all subsequent subsections of Section 3 being re-lettered accordingly):

		
	(c)
	Notwithstanding anything in this Agreement, including Section 3(b) of this Agreement, to the contrary, if, on the date the Participant ceases to be an Employee of the Company, the Participant is deemed to be a “specified employee” within the meaning of that term under Section 409A(a)(2)(B) of the Code, then, with regard to any payment that is considered nonqualified deferred compensation under Section 409A of the Code payable on account of a “separation from service,” such payment or benefit will be made on the earlier of: (i) the fifth business day of the seventh month after such “separation from service” or (ii) the Participant’s death.

3.The first sentence of Section 5(b) of the Award Agreement is hereby amended to read in its entirety as follows:

In the event the Participant ceases to be an Employee of the Company by reason of Disability (as defined in this Section 5(b)) during a Period of Restriction, all RSUs granted hereunder and held by the Participant at the time of employment termination shall no longer be subject to the Period of Restriction and shall become 100% vested and the Company shall issue or deliver the Common Shares underlying such RSUs to the Participant in accordance with Section 3(b) of this Agreement, subject to any delay required pursuant to Section 3(c) of this Agreement.
4.Sections 5(c) and 5(d) of the Award Agreement are hereby amended to read in their entirety as follows:

		
	(c)
	Involuntary Termination Other Than For Cause or Detrimental Activity; Termination For Good Reason.  In the event the Participant ceases to be an Employee of the Company during a Period of Restriction because either (i) the Company or any of its Subsidiaries terminates such employment for any reason other than for Cause or other Detrimental Activity or (ii) the Participant terminates his or her employment for Good Reason, all RSUs granted hereunder and held by the Participant at the time of such employment termination shall no longer be subject to the Period of Restriction and shall become 100% vested and the Company shall issue or deliver the Common Shares underlying such RSUs to the Participant in accordance with Section 3(b) of this Agreement, subject to any delay required pursuant to Section 3(c) of this Agreement.

		
	(d)
	Retirement.  In the event the Participant ceases to be an Employee of the Company as a result of retirement at or after age 65 during a Period of Restriction, a pro rata portion, determined in accordance with the next following sentence, of all RSUs granted hereunder and held by the Participant at the time of such retirement at or after age 65 shall no longer be subject to the Period of Restriction and shall become vested and the Company shall issue or deliver the Common Shares underlying such RSUs to the Participant in accordance with Section 3(b) of this Agreement, subject to any delay required pursuant to Section 3(c) of this Agreement.  Such pro rata portion shall be determined based on a fraction, the numerator of which shall be the number of days the Participant was employed during a Period of Restriction and the denominator of which shall be the total number of days in such Period of Restriction.  RSUs granted hereunder and held by the Participant at the time of a retirement at or after age 65 contemplated by this Section 5(d) that do not vest as provided above shall be forfeited by the Participant upon such retirement at or after age 65.

5.Section 6 of the Award Agreement is hereby amended to read in its entirety as follows:

6.    Change in Control.  Notwithstanding anything to the contrary in this Agreement, in the event of a Change in Control during a Period of Restriction and while the Participant continues to be an Employee of the Company, the Period of Restriction shall immediately lapse, with all RSUs granted hereunder and held by the Participant at the time of such Change in Control no longer being subject to any Period of Restriction and becoming 100% vested, and the Company shall issue or deliver the Common Shares underlying such RSUs to the Participant in accordance with Section 3(b) of this Agreement.
6.Section 11(j) of the Award Agreement is hereby amended to add the following sentence at the end thereof:

Notwithstanding any other provision to the contrary, a termination or cessation of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of “deferred compensation” (as such term is defined in Section 409A of the Code and the Treasury Regulations promulgated thereunder) upon or following a termination or cessation of employment unless such termination or cessation is also a “separation from service” from the Company within the meaning of Section 409A of the Code and Section 1.409A-1(h) of the Treasury Regulations and, for purposes of any such provision of this Agreement, references to “employment termination,” “termination of employment,” “employment cessation,” “cessation of employment” or like terms shall mean “separation from service.”
7.Section 12 of the Award Agreement is hereby revised to add a new subsection (l) thereto to read in its entirety as follows (with the subsequent subsection of Section 12 being re-lettered accordingly):

(l)    “Vesting Date” means the applicable vesting date referred to in Section 5 or 6.

8.Except as expressly set forth herein, the provisions of the Award Agreement shall continue in full force and effect.
[Signatures are located on the next page.]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the date first above written.
	
					
	 
	 
	 
	 
	 

	 
	 
	KAISER ALUMINUM CORPORATION

	 
	 
	 
	 
	 

	 
	 
	By:
	 
	 

	 
	 
	Name:
	 
	 

	 
	 
	Title:
	 
	 

	 
	 
	 
	 
	 

	 
	 
	PARTICIPANT

	 
	 
	 
	 
	 

	 
	 
	By:
	 
	 

	 
	 
	Name:
	 
	 

	 
	 
	Title:

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