Document:

EX-10.1

Exhibit 10.1

Novelis — Long-Term Incentive Plan (LTIP) — FY 2010 — FY 2013

Key features of the Scheme:

	 	1.	 	Title and Administration: The scheme shall be referred to as the Novelis Long-Term
Incentive Plan FY 2010 — FY 2013. The scheme will be administered by the Human Resources
team at the Novelis Corporate Office.
	 
	 	2.	 	Performance Period: For this scheme, the performance period will be FY 2010, FY 2011,
FY 2012 and FY 2013. The exact period of assessment will be April 1, 2009 to March 31,
2013.
	 
	 	3.	 	Coverage: The coverage of this scheme will be Band 6 and above. As of now, this means
that 147 Managers are entitled for coverage under this plan. High potential and critical
resource employees at Band 7 and below will participate on an exception basis.
	 
	 	4.	 	Pay Opportunity : The target pay opportunity for each Grade will be defined based on
contemporary market practices and be designed to motivate and retain key employees in the
organization
	 
	 	5.	 	Pay Design Summary :

	 	a.	 	A work team, with representation from Hindaclo HR, Novelis HR and
Group HR was constituted to put together a work design for LTIP FY2010-13
	 
	 	b.	 	The work team has proposed a design that is based on the price
movement of Hindalco shares
	 
	 	c.	 	The pay opportunity will be in the form of Stock Appreciation Rights
(SAR’s) with the value of one SAR equivalent to increase in price of one Hindalco
share.
	 
	 	d.	 	The SARs would vest 25% each year for 4 years, subject to performance
criteria being fulfilled.
	 
	 	e.	 	The performance criterion for vesting is actual vs. target
performance of Normalized Operating EBITDA for Overall Novelis as approved each
year
	 
	 	f.	 	The threshold would be 75% performance of target each year, at which
point 75% of SARs due that year, would vest — there would be straight line vesting
up to 100%
	 
	 	g.	 	Vested SARs could be exercised at any time during the seven-year life
of the plan by the employee.
	 
	 	h.	 	The value of the SARS is dependent on the share price of Hindalco at
the time of exercise

 

 

	 	i.	 	Cash payouts will be restricted to a maximum of 2.5 times target if
exercised within one year of vesting.
	 
	 	j.	 	Cash payouts will be restricted to a maximum of 3 times target if
exercised after first year

	 	6.	 	Measures to be used for vesting of SAR’s as part of the LTIP: For FY 2010 — FY 2013,
the SAR’s will vest subject to the actual v/s target Operating EBITDA threshold being met.
Normalized Operating EBIDTA has been defined as under :

	 	a.	 	Normalized Operating EBITDA: Defined as Net Revenues — COGS without
depreciation — S&AE — R&D + Realized G/L on Derivatives. A manual documenting how
to calculate EBITDA and various adjustments to be made to the measure will be
created and agreed upon with Novelis and Hindalco executive management. A
Committee comprised of the Novelis President, the Novelis CFO and the Hindalco CFO
will consider any situations not addressed in the manual, such as major
acquisitions, divestitures and restructuring and will recommend any adjustments to
the Vice Chairman Novelis for approval or further consideration by the appropriate
authority.

	 	7.	 	Example of Computation of number of SAR’s for the purpose of Grant: The computation
of SAR’s will be as explained in the following example.

	 	a.	 	Target Dollar Opportunity / (Black-Scholes Value [Indian Equivalent]
x current Hindalco share price) = # of Stock Appreciation Rights (SARs)
	 
	 	b.	 	Example:

	 	i.	 	Participant is a Band 3
	 
	 	ii.	 	Target Opportunity is $129,000
	 
	 	iii.	 	Assume Black Scholes value is 40%
	 
	 	iv.	 	Assume Hindalco share price on grant date is
200 Rupees and converts to $5.00 per share (assumes exchange rate of
US$1=INR40)
	 
	 	v.	 	$129,000 / (40% x $5.00) = 64,500 SARs priced
at 200 Rupees each
	 
	 	vi.	 	Subject to vesting rules and cap on payout-
participant is entitled to the gain in the market value of Hindalco
shares with each SAR representing the opportunity on one Hindalco share

	 	8.	 	Other aspects of the plan:

	 	a.	 	Valuation: The Black Scholes method of valuation will be used. This
valuation will be used as an input to arrive at the number of SAR’s to be granted
to employees.
	 
	 	b.	 	Date of Grant: The SAR’s are proposed to be granted on the date of
approval from the Board i.e. June 25, 2009

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	 	c.	 	An individual will be entitled to participate in the LTIP for FY 2010
 — FY 2013 if actively employed no later than June 1, 2009. Employees hired
during FY 2010, are proposed to be treated in the following manner :

	 	i.	 	For those who join between June — September,
target opportunity to be 90% of the target amount for the Grade
	 
	 	ii.	 	For those who join between October — December,
target opportunity to be 75% of the target amount for the Grade
	 
	 	iii.	 	For those who join between January — March,
target opportunity to be 50% of the target amount for the Grade

	 	d.	 	It is not proposed to revise the LTIP Opportunity for existing
employees in the event of a grade change during the year, except in case of
employees who had not been covered under the plan earlier and then move to a role
that is Band 6 or above during the course of the year.
	 
	 	e.	 	In the event of separation on account of resignation initiated by the
employee, any unvested SAR’s will lapse and vested SAR’s have to be exercised
within 90 days.
	 
	 	f.	 	In the event of retirement, more than one grant from grant date,
SAR’s will continue to vest and must be exercised no later than the 3rd
anniversary following retirement.
	 
	 	g.	 	In the event of death or disability, there will be immediate vesting
of all SAR’s with one year to exercise.
	 
	 	h.	 	Upon change in control being triggered, there would be immediate
vesting and cashout of all SAR’s.

3EX-10.2

Exhibit 10.2

Novelis
— Annual Incentive Plan — 2009-10

Key features of the Scheme:

	 	1.	 	Title and Administration: The scheme shall be referred to as the Novelis Annual
Incentive Plan (N-AIP) 2009-10). The scheme will be administered by the Human Resources
team at Corporate Office, Novelis.
	 
	 	2.	 	Performance Year: For this scheme, the performance year will be 2009-10. The exact
period of assessment will be April 1, 2009 to March 31, 2010. Payouts, computed on the
basis of performance, will be effected in July 2010, subject to necessary approvals.
	 
	 	3.	 	Coverage: The coverage of this scheme will be Grade 38 (or the equivalent job bands)
and above. As of now, this will cover 152 Managers. Employees at Grade 37 and below will
be governed by local schemes in the respective locations.
	 
	 	4.	 	Pay Opportunity : The pay opportunity across regions will be in line with market
practice and defined to be competitive, self funded and motivate employees to drive the
desired behavior in the organization.
	 
	 	5.	 	Measures and application of weights to each measure to be used for computation of
AIP: For 2009-10, four measures shall be used to compute the eligibility of AIP. These
measures will be applied at two levels: Overall Novelis Performance and Regional Novelis
Performance. The four measures to be used for 2008-09 are as follows :

	 	a.	 	Normalized Operating EBITDA: Defined as Net Revenues – COGS without
depreciation – S&AE – R&D + Realized G/L on Derivatives. This will carry a 40%
weightage on the overall plan.
	 
	 	b.	 	Operating Free Cash Flow: Defined as Operating EBITDA — CAPEX -
Change in Working Capital — Change in Deferred Items. In terms of specifics, the
measure of operating free

 

 

	 	 	 	cash flow will be used for the regions and Free Cash Flow (FCF) [which includes
interest, tax, dividends and corporate costs] will be used for overall Novelis
performance. This will carry a 40% weightage on the overall plan.
	 
	 	c.	 	Environment , Health and Safety : This has 3 sub-parameters :

	 	i.	 	Recordable Case Rate: Workplace accident
resulting in an injury requiring more than first aid treatment. This
will carry a 3% weightage on the overall plan.
	 
	 	ii.	 	LTII Case rate: Workplace injury or illnesses
resulting in lost time of one shift or more. This will carry a 3%
weightage on the overall plan.
	 
	 	iii.	 	Completed Strategic EHS Initiatives:
Environmental initiatives that lead to significant reductions in water,
emissions, energy or waste aligned with the site’s significant
environmental aspects or ongoing cases of non-compliance. OHS
initiatives based on the site’s significant OHS risk and exposure. All
initiatives are pre-approved and tracked in a database. This will carry
a 4% weightage on the overall plan.

	 	d.	 	Individual Performance : This is based on the individual performance
rating in the Performance Management System for Novelis. This will carry a 10%
weightage in the overall plan

	 	6.	 	Proposed mix of business performance impact: Different levels and roles will carry a
differential weightage on the basis of line of sight and impact. Some of the weightings
will be as follows :

	 	a.	 	All Corporate Staff Grade 38 and above ( wherever they may be placed
on the revised job banding model) are 100% based on overall Novelis results.
	 
	 	b.	 	Region Presidents are 50% overall Novelis performance and 50% on
Region performance.
	 
	 	c.	 	Business Unit heads and major function heads may also be 50% overall Novelis performance and 50% on Region performance or 40%
overall Novelis and 60% Region. This coverage will be communicated to individuals
in advance.
	 
	 	d.	 	All other Region Staff grades 38 and above are 20% overall Novelis
and 80% Region
	 
	 	e.	 	Employees below grade 38 in the Corporate office or a Region office
would be most closely linked to overall Novelis results (Corporate staff) or
Region results (Region staff)

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	 	 	Note: EHS results are not split; corporate staff are 100% overall Novelis and Region Staff
are 100% Region.
	 
	7.	 	Performance Measures and Targets for 2009-10 : The performance measures and targets
for 2009-10 for Novelis as well as each of the regions will be as approved by the Board
for FY2010.
	 
	8.	 	Overall Threshold : The concept of the overall threshold is being introduced for the
first time in Novelis. Under this overall threshold, an achievement of 60% of the overall
Normalized Operating EBITDA target is required to be met, for any payouts on overall or
Region EBITDA and Cash Flow performance, and, for any individual performance payouts. Only
the EHS portion of AIP could be earned if this threshold is not met
	 
	9.	 	Example of Computation: Computation of quantums is contingent on the threshold number
being achieved either at Overall Novelis level or at the region level. E.g.: Suppose any
particular region is “disappointing” on EBITDA and Free Cash flow numbers, and on Target
for EHS Performance, whereas the performance is “Superior” for overall Novelis performance
for EBITDA and Free Cash flow and on target for EHS Performance. In such case, the Region
President with a 50% weightage on business and 50% weightage on Novelis performance will
forego his AIP that is linked to Region performance, earn his AIP on target for EHS but
will earn 150% of target AIP on account of Novelis performance. As already referenced earlier, any payouts on
account of Normalized Operating EBITDA, Cash Flow and Individual performance, are subject
to the overall threshold of 60% for Normalized Operating EBITDA being met.
	 
	 	 	There will be instances wherein the actual performance on all or any of the parameters
falls in-between any two performance points ( e.g. higher than “Target”, but lower than
“Superior”). In such case, the calculation of performance, will be on a linear scale,
between the two performance points.

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	10.	 	Other aspects of the plan :

	 	a.	 	An individual will be entitled to prorated AIP if he / she
superannuates during the course of the year, on a pro-rata basis. Such payouts
will be made at the time that it is done for all other employees (i.e. in July
2010).
	 
	 	b.	 	In the event of separation on account of resignation (initiated by
the employee) or company initiated separation during the performance year, the
concerned individual will not be entitled to any AIP for the year. However, if
the company initiated separation is the result of a position elimination that is
not performance related (for example a layoff, plant closure, restructuring or
sale), the employee will be eligible for prorated incentive consideration at the
time that consideration is being given to all other employees
	 
	 	c.	 	However, if any event as described in (b) occurs after the
performance year, but before the timing of payout, such individual shall be
entitled to AIP for the entire year.

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