Document:

EX-10.4

 

Exhibit 10.4

PERFORMANCE/RESTRICTED STOCK AGREEMENT

     This Performance/Restricted Stock Agreement (the “Agreement”) made as of the 21st day of
February, 2007 by and between ALLEGHENY TECHNOLOGIES INCORPORATED, a Delaware corporation (the
“Corporation”) and «Name» (the “Employee”).

     WHEREAS, the Corporation sponsors and maintains the Allegheny Technologies Incorporated Stock
2000 Incentive Plan (the “Incentive Plan”);

     WHEREAS, the Corporation desires to encourage the Employee to remain an employee of the
Corporation and, during such employment, to contribute substantially to the financial performance
of the Corporation and, to provide that incentive, the Corporation has awarded, subject to the
performance and employment restrictions described herein, the Employee an aggregate of «Shares»
shares of the common stock of the Corporation, $0.10 par value per share (“Common Stock”);

     WHEREAS, half of the Shares Subject to Restrictions are subject to the Corporation’s
attainment of the performance requirements set forth in Paragraph 3(a) (the “Performance
Criteria”); and half of the Shares Subject to Restrictions are subject to the Employee’s remaining
an Employee (except in instances of death, disability or Retirement as described below) during the
Restriction Period set forth in Paragraph 3(b), subject to accelerated termination of the
Restriction in the event of attainment of the Performance Criteria; and

     WHEREAS, the Corporation and the Employee desire to evidence the award of the Shares Subject
to Restrictions and the terms and conditions applicable thereto in this Restricted Stock Agreement.

     NOW THEREFORE, in consideration of the mutual promises and covenants contained herein and
intending to be legally bound, the Corporation and the Employee agree as follows:

     1. Grant of Shares Subject to Restrictions. The Corporation hereby grants to the
Employee, as of the date first written above, the Shares Subject to Restrictions subject to the
restrictions and other terms and conditions set forth herein. Simultaneously with the execution
and delivery of this Agreement, the Employee shall deliver to the Corporation a stock power
endorsed in blank relating to the Shares Subject to Restrictions (including in such power any
increases or adjustments to the Shares Subject to Restrictions). As soon as practicable after the
Date of Grant, the Corporation shall direct that the Shares Subject to Restrictions be registered
in the name of and issued to the Employee and initially bearing the legend described in Paragraph
5. The Shares Subject to Restrictions and any certificate or certificates representing the Shares
Subject to Restrictions shall be held in the custody of the Corporation or its designee until the
expiration of the applicable

 

 

Restrictions. Upon any forfeiture in accordance with Paragraph 4 of the Shares Subject to
Restrictions, the forfeited shares and any certificate or certificates representing the forfeited
Shares Subject to Restrictions shall be canceled.

     2. Restrictions. Employee shall have all rights and privileges of a stockholder of
the Corporation with respect to the Shares Subject to Restrictions, except that the following
restrictions shall apply:

     (a) None of the Shares Subject to Restrictions may be sold, transferred, assigned, pledged or
otherwise encumbered or disposed of during the “Restriction Period” as defined below, except to the
extent of the Corporation’s earlier attainment of the Performance Criteria, as defined below.

     (b) The Shares Subject to Restrictions are subject to forfeiture during the Restriction Period
in accordance with Paragraph 4 of this Agreement.

     (c) The Shares Subject to Restrictions and any certificate representing the Shares Subject to
Restrictions shall be held in custody by the Corporation or its designee until such time as either
the Performance Criteria are attained or the Restriction Period shall have been completed.

     (d) Dividends paid with respect to the Shares Subject to Restrictions during the Restriction
Period shall be paid to the Employee.

     3. Term of Restriction.

     (a) Subject to the forfeiture provisions of Paragraph 4 of this Agreement, the Restrictions
shall lapse (i) with respect to half of the Shares Subject to Restrictions on the earlier of (x)
February 21, 2012 if the Employee is an employee of the Corporation on February 21, 2012, unless
the Employee’s cessation of employment was due to the Employee’s death, disability or Retirement
(as defined below), or (y) as soon after the completion of the audit of the Corporation for the
2009 fiscal year as it may be determined that the Performance Criteria have been attained and (ii)
with respect to half of the Shares Subject to Restrictions, as soon after the completion of the
audit of the Corporation for the 2009 fiscal year as it may be determined that the Performance
Criteria have been. With respect to the half of the Shares Subject to Restrictions subject only to
the Performance Criteria, if the Corporation does not attain the Performance Criteria on or before
the three year measurement period ending December 31, 2009, such half of the Shares Subject to
Restrictions shall be forfeited immediately upon the completion of that three-year measurement
period.

     (b) For purposes of this Agreement, the “Performance Criteria” shall mean that the net income
of the Corporation, measured under GAAP, shall exceed $900 million, in the aggregate, for the 2007,
2008 and 2009 fiscal years of the Corporation. The period for measuring the Performance Criteria
shall end as of December 31,

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2009 and the Personnel and Compensation Committee shall as promptly as possible following the
completion of the audit of the Corporation for the 2009 fiscal year determine whether the
Performance Criteria have been met.

     (c) The period from the Date of Grant until the lapse of the applicable of the Restrictions
with respect to the Shares Subject to Restrictions is the “Restriction Period” for purposes of this
Agreement.

     (d) As soon as administratively practicable following the lapse of the Restrictions without a
forfeiture of the applicable Shares Subject to Restrictions, and upon the satisfaction of all other
applicable conditions as to such Shares Subject to Restrictions, including, but not limited to, the
payment by the Employee of all applicable withholding taxes, if any, the Corporation shall deliver
or cause to be delivered to the Employee shares of Common Stock, which may be in the form of a
certificate or certificates for such shares, equal in number to the applicable Shares Subject to
Restrictions, which shall not be subject to the transfer restrictions set forth above and shall not
bear the legend described in Paragraph 5. Without limiting the foregoing, (i) if the Performance
Criteria are met, all Shares Subject to Restrictions shall become non-forfeitable and such Shares
or the certificate representing such non-forfeitable shares of common stock of the Corporation
shall be delivered as described above and (ii) if the Performance Criteria are not met, (x) half of
the Shares Subject to Restrictions shall be forfeited immediately after the end of the measurement
period for such Performance Criteria and (y) the remaining half of the Shares Subject to
Restrictions shall be non-forfeitable, if at all, at the end of the Restriction Period.

     4. Forfeiture of Shares Subject to Restrictions. If Employee’s employment with the
Corporation and all of its direct or indirect subsidiaries is terminated by either party for any
reason, including, but not limited to, the involuntary termination of the Employee’s employment
with the Corporation for any reason, with or without cause, other than the Employee’s death,
disability or retirement with the consent of the Corporation when the Employee is at least 55 years
of age with at least five years of service (“Retirement”), (i) all rights of the Employee to the
Shares Subject to Restrictions which remain subject to the Restrictions shall terminate immediately
and be forfeited in their entirety, and (ii) the forfeited Shares Subject to Restrictions and any
stock certificate or certificates representing the forfeited Shares Subject to Restrictions shall
be canceled. If the Employee dies or becomes disabled during the Restriction Period, the Shares
Subject to Restrictions will immediately vest. If the Employee retires with the consent of the
Corporation when the Employee is at least 55 years of age with at least five years of service, the
Employee (or the Employee’s beneficiary) shall receive the Shares Subject to Restrictions when, if
and to the extent, the Restrictions lapse under Paragraph 3.

     5. Change of Control. All Shares Subject to Restrictions shall fully vest in the
event of a Change of Control as defined in the Incentive Plan.

3

 

     6. Legend. During the Restriction Period, the shares of Restricted Stock and any
share certificate or certificates evidencing the Shares Subject to Restrictions shall be endorsed
with the following legend (in addition to any legend required under applicable securities laws or
any agreement by which the Corporation is bound):

THE TRANSFERABILITY OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS
AND CONDITIONS OF A RESTRICTED STOCK AGREEMENT ENTERED INTO BY AND BETWEEN ALLEGHENY
TECHNOLOGIES INCORPORATED AND THE HOLDER OF THIS CERTIFICATE. A COPY OF SUCH AGREEMENT IS
ON FILE AT THE OFFICE OF THE CORPORATION.

     7. Withholding. The Corporation or its direct or indirect subsidiary may withhold
from the number of Shares Subject to Restrictions or from any cash amount payable hereunder or any
other cash payments due to Employee all taxes, including social security taxes, which the
Corporation or its direct or indirect subsidiary is required or otherwise authorized to withhold
with respect to the Shares Subject to Restrictions.

     8. Adjustments to Number of Shares. Any shares issued to Employee with respect to the
Shares Subject to Restrictions in the event of any change in the number of outstanding common stock
of the Corporation through the declaration of a stock dividend or a stock split or combination of
shares or any other similar capitalization change shall be deemed to be Shares Subject to
Restrictions subject to all the terms set forth in this Agreement.

     9. No Right to Continued Employment; Effect on Benefit Plans. This Agreement shall
not confer upon Employee any right with respect to continuance of his or her employment or other
relationship, nor shall it interfere in any way with the right of the Corporation or its direct or
indirect subsidiary to terminate his or her employment or other relationship at any time. Income
realized by Employee pursuant to this Agreement shall not be included in Employee’s earnings for
the purpose of any benefit plan in which Employee may be enrolled or for which Employee may become
eligible unless otherwise specifically provided for in such plan.

     10. Employee Representations. In connection with the issuance of the Shares Subject
to Restrictions, Employee represents the following:

     (a) Employee has reviewed with Employee’s own tax advisors, the federal, state, local and
foreign tax consequences of this Agreement and the transactions contemplated hereby. Employee is
relying solely on such advisors and not on any statements or representations of the Corporation or
any of its agents. Employee understands that Employee (and not the Corporation) shall be
responsible for Employee’s own tax liability that may arise as a result of this Agreement and the
transactions contemplated hereby.

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     (b) Employee has received, read and understood this Agreement and the Incentive Plan and
agrees to abide by and be bound by their respective terms and conditions.

     11. Miscellaneous.

     (a) Governing Law. This Agreement shall be governed and construed in accordance with
the domestic laws of the Commonwealth of Pennsylvania without regard to such Commonwealth’s
principles of conflicts of laws.

     (b) Successors and Assigns. The provisions of this Agreement shall inure to the
benefit of, and be binding upon, the successors, permitted assigns, heirs, executors and
administrators of the parties hereto. Neither this Agreement nor any rights hereunder shall be
assignable or otherwise subject to hypothecation without the consent of all parties hereto.

     (c) Entire
Agreement; Amendment. This Agreement contains the entire understanding
between the parties hereto with respect to the subject matter of this Agreement and supersedes all
prior and contemporaneous agreements and understandings, inducements or conditions, express or
implied, oral or written, with respect to the subject matter of this Agreement. This Agreement may
not be amended or modified without the written consent of the Corporation and Employee.

     (d) Counterparts. This Agreement may be executed simultaneously in any number of
counterparts, each of which when so executed and delivered shall be taken to be an original and all
of which together shall constitute one document.

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     (e) Definitions. Initially capitalized terms not otherwise defined in this Restricted
Stock Agreement shall have the meanings ascribed thereto in the Incentive Plan.

     IN WITNESS WHEREOF, the parties have executed this Shares Subject to Restrictions Agreement as
of the date first written above.

ALLEGHENY TECHNOLOGIES INCORPORATED

	 	 	 	 	 
	By:

	 	 	 	 
	Name:

	 	 

Jon D. Walton
	 	 
	Title:

	 	Executive Vice President,	 	 
	 

	 	Human Resources, Chief Legal

and Compliance Officer	 	 

	 	 	 	 	 
	PARTICIPANT

	 	WITNESS	 	 
	 
	 	 	 	 
	 

	 	 

	 	 

6EX-10.5

 

Exhibit 10.5

The Annual Incentive Plan

For Year 2007

 

 

	 	 	 	 	 
	Contents	 	Page
	At a Glance
	 	 	1	 
	What is the Annual Incentive Plan?
	 	 	1	 
	Who is Eligible for This Plan?
	 	 	1	 
	How Does the Annual Incentive Plan Work?
	 	 	1	 
	 
	 	 	 	 
	Calculation of the Annual Incentive Plan Award
	 	 	2	 
	Target Bonus Percentage
	 	 	2	 
	Performance Goals and the Target Bonus Percentage
	 	 	2	 
	2007 Performance Goals
	 	 	3	 
	 
	 	 	 	 
	How the AIP Incentive Award is Calculated When All Goals
	 	 	4	 
	Are 100% Achieved
	 	 	 	 
	 
	 	 	 	 
	How the AIP Incentive Award is Calculated for Other Achievement Levels
	 	 	5	 
	Maximums and Minimums
	 	 	5	 
	 
	 	 	 	 
	Additional Guidelines for the Annual Incentive Plan
	 	 	6	 
	Discretionary Adjustments
	 	 	6	 
	Some Special Circumstances
	 	 	6	 
	Making Payments
	 	 	6	 
	 
	 	 	 	 
	Administration Details
	 	 	7	 

 

 

At a Glance

What is the Annual Incentive Plan?

The Annual Incentive Plan (the “AIP” or the “Plan”) provides participants of Allegheny Technologies
Incorporated (“Allegheny Technologies” or the “Company”) and its operating companies with the
opportunity to earn an incentive award when certain pre-established goals are met at the corporate
and operating company levels.

Who is Eligible for This Plan?

Generally, participants who have a significant impact on the Company’s operations will be eligible
to participate in the Plan. Individuals eligible for participation are determined annually, based
on recommendations of the operating company presidents, if applicable, and the Company’s chief
executive officer and the Company’s executive vice president-human resources, with the approval of
the Personnel and Compensation Committee of the Company’s Board of Directors.

How Does the Annual Incentive Plan Work?

Under the Plan, participants may earn an incentive award based on a percentage of their base
salary, depending on the extent to which pre-established operating company and/or corporate
performance goals have been achieved.

	•	 	For purposes of the Plan, base salary is generally the
participant’s annual base salary rate as of the end of the year,
excluding any commission or other incentive pay. For some special
circumstances affecting the amount of base salary used in the
Plan, see page 6.
	 
	•	 	A target bonus percentage for each participant is used in
calculating the incentive award and is explained on the next page.
	 
	•	 	The target bonus percentage will be adjusted (upward or downward)
based on the extent to which various performance goals are
achieved.

Incentive award payments will be distributed in cash after the year-end audit is complete and the
awards have been approved by the Personnel and Compensation Committee.

Page 1 

 

Calculation of the Annual Incentive Plan Award

Target Bonus Percentage

The Plan establishes an incentive opportunity for each Plan participant, calculated as a percentage
of the participant’s base salary. Each participant will be provided with an initial percentage,
referred to as a “target bonus percentage.”

Generally, the target bonus percentage is the percentage of base salary that can be earned as an
award under the Plan if 100% of the various performance goals are achieved. For 2007, if 100% of
the performance goals are achieved, 100% of the target bonus percentage can be earned.

Generally, if there is a change in a participant’s target bonus percentage during the year, the newly adjusted target bonus percentage will be used to calculate the individual’s award for the
full year. If an individual becomes a participant in AIP during the year, the individual’s award
for the year will be based on a pro rata calculation.

Performance Goals and the Target Bonus Percentage

For 2007, AIP awards will be based on the extent to which the participant’s company, division or
area of responsibility achieves specified levels of achievement as to:

	•	 	Operating Earnings

	•	 	Operating Cash Flow

	•	 	Manufacturing Improvements

	•	 	Safety and Environmental Compliance

	•	 	Customer Responsiveness

For operating company presidents, 80% of the goals’ overall weight will be based on the performance
of the president’s operating company, and 20% of the goals’ overall weight will be based on
corporate-wide performance.

For executive officers and certain other senior employees, performance will be measured completely
on a corporate-wide basis.

Page 2 

 

At the end of the year, the Company will measure actual performance against each of the
pre-established objectives.

The achievements attributable to each performance goal as noted above, then will be added together,
and that sum will be multiplied by: (1) the individual’s target bonus percentage, times (2) the
individual’s annual base salary, to produce the amount, if any, of the incentive award for 2007.

Note that potential adjustments are described on page 6.

2007 Performance Goals

The performance goals for 2007 generally consist of:

	 	 	 	 	 	 	 
	•

	 	Operating Earnings
	 	 	40	%
	•

	 	Operating Cash Flow
	 	 	30	%
	•

	 	Manufacturing Improvements
	 	 	10	%
	•

	 	Safety and Environmental Compliance
	 	 	10	%
	•

	 	Customer Responsiveness
	 	 	10	%

Targeted achievements as to each performance goal above have been established for each operating
company and for corporate participants. Together the above goals comprise 100% of the target bonus
percentage.

No annual incentive will be paid if the achievement of Operating Earnings is less than the
established applicable minimum of Operating Earnings, notwithstanding the achievements as to the
other applicable performance goals for 2007.

The AIP program allows the Personnel and Compensation Committee of the Board of Directors to
exercise negative discretion to reduce payments if actual performance does not exceed performance
targets.

A prerequisite to any AIP award is compliance with Allegheny Technologies’ Corporate Guidelines for
Business Conduct and Ethics.

Page 3 

 

How the AIP Incentive Award is Calculated When All Goals are 100% Achieved

For the Year 2007, if 100% of the performance goals are achieved, then 100% of the target bonus
percentage will be credited to the participant:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Goal %	 	Goal %	 	Earned % of
	Goals	 	Target	 	Achieved	 	Target *
	Operating Earnings
	 	 	40	%	 	 	100	%	 	 	40	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Operating Cash Flow
	 	 	30	%	 	 	100	%	 	 	30	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Manufacturing Improvements
	 	 	10	%	 	 	100	%	 	 	10	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Safety and Environmental
Compliance
	 	 	10	%	 	 	100	%	 	 	10	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Customer Responsiveness
	 	 	10	%	 	 	100	%	 	 	10	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Total
	 	 	100	%	 	 	 	 	 	 	100	%

 

			
	*	 	Earned % of Target = Goal % of Target X Goal Achieved %

In this example, assume that the participant’s target bonus percentage is 15%.

The target bonus percentage of 15% is then multiplied by 100% to produce a bonus award equal to 15%
of base salary:

	 	 	 	 	 
	Earned Percentage of Target
	 	 	100	%
	 
	 	 	 	 
	X Target Bonus Percent
	 	 	15	%
	 
	 	 	 	 
	 
	 	 	 	 
	Equals Percentage of
Salary for Incentive Award
	 	 	15	%

The sections below discuss the impact of achieving more or less than 100% of various goals,
and they also discuss the impact of other potential adjustments.

Page 4 

 

How the AIP Incentive Award is Calculated for Other Achievement Levels

The percentage of a goal achieved will determine the earned percentage of target for that
particular goal. The earned percentage of target will be extrapolated for achievement between the
established minimum level and the established target level for a particular goal. Similarly, the
earned percentage of target will be extrapolated for achievement between the established target
level and the established maximum level for a particular goal.

Maximums and Minimums

	•	 	Generally, the maximum percentage calculated as an earned
percentage of target for any goal is 200%, and the overall maximum
incentive award that a participant can earn under the weighting
formula is 200% of the participant’s target bonus percentage.

	•	 	Where the established minimum of a performance goal is achieved,
only 50% of that goal’s share will be allocated to the
participant’s target bonus percentage.

	•	 	Where less than the established minimum of a performance goal is
achieved, no amount of that goal will be allocated to the
participant’s target bonus percentage.

No annual incentive will be paid if the achievement of Operating Earnings is less than the
established applicable minimum of Operating Earnings, notwithstanding the achievements as to the
other applicable performance goals for 2007.

Page 5 

 

Additional Guidelines for the Annual Incentive Plan

Discretionary Adjustments

The Plan allows for discretionary adjustments of up to +20% or –20% of an individual’s calculated
award. However, generally, the sum of discretionary adjustments for all eligible participants
cannot exceed +5% of the aggregate calculated awards.

Some Special Circumstances

The above formulas generally determine the amount of the incentive award for the year. Other
factors that may affect the actual award follow:

	•	 	If a participant leaves the Company due to retirement, death, or
disability, an award will be calculated based on the actual base
salary earned during the year in which the manager left—so long as
the participant worked at least six months of that year.

	•	 	If a participant leaves the Company before the end of the plan
year for any other reason, the manager will not receive a bonus
award for that year.

	•	 	If a participant voluntarily leaves the Company after the end of
the year but before the award is paid, the participant would
receive any bonus due unless the employment is terminated for
cause. If employment is terminated for cause, the participant
would not be entitled to receive an award under the Plan.
	 
	 	 	Participants who are hired mid-year may earn a pro-rated award
for that year, based on the salary earned during that year.
However, managers with less than two months service in a plan year
(i.e. hired after October 31) would not be eligible for an award
for that year.

	•	 	A prerequisite to any AIP award is compliance with Allegheny
Technologies’ Corporate Guidelines for Business Conduct and
Ethics.

Making Payments

All incentive award payments will be paid in cash, less applicable withholding taxes, after the
year-end audit is complete
and payment has been approved by the Personnel and Compensation Committee.

Page 6 

 

Administration Details

This summary relates to the Annual Incentive Plan (AIP) of Allegheny Technologies Incorporated
and its subsidiaries. The Plan is administered by the Personnel and Compensation Committee, which
has full authority to:

	•	 	Interpret the Plan;
	 
	•	 	Designate eligible participants and categories of eligible participants;
	 
	•	 	Set the terms and conditions of incentive awards; and
	 
	•	 	Establish and modify administrative rules for the Plan.

Plan participants may obtain additional information about the plan and the Committee from:

Executive Vice President,

Human Resources, Chief Legal and Compliance Officer,

General Counsel and Secretary

Allegheny Technologies Incorporated

1000 Six PPG Place

Pittsburgh PA 15222 5479

Phone: 412-394-2836                     Fax: 412-394-2837

The Plan will remain in effect until terminated by the Personnel and Compensation Committee. The
Personnel and Compensation Committee may also amend the Plan at its discretion.

The Plan is not subject to the provisions of the Employee Retirement Income Security Act of 1974
(ERISA) and is not “qualified” under Section 401(a) of the Internal Revenue Code.

Page 7

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