Document:

Exhibit 10.8

 

MFA FINANCIAL, INC.

AMENDED AND RESTATED 2010 EQUITY COMPENSATION PLAN

 

PHANTOM SHARE AWARD AGREEMENT

(PERFORMANCE BASED VESTING)

 

AGREEMENT, dated as of the _____ day of __________, 20_____ (the “Grant Date”), by and between MFA Financial, Inc., a Maryland corporation (the “Company”), and ________________ (the “Grantee”).

 

WHEREAS, the Company maintains the MFA Financial, Inc. Amended and Restated 2010 Equity Compensation Plan, as it may be amended from time to time (the “Plan”) (capitalized terms used but not defined herein shall have the respective meanings ascribed thereto by the Plan);

 

WHEREAS, the Grantee, as an employee of the Company, is an Eligible Person; and

 

WHEREAS, the Committee has determined that it is in the best interests of the Company and its stockholders to grant Phantom Shares to the Grantee subject to the terms and conditions set forth below.

 

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

 

1.                                      Grant of Phantom Shares.

 

The target amount of Phantom Shares granted pursuant to this Agreement is [X] Phantom Shares (the “Target Amount”); provided that the Grantee has the opportunity to earn up to [2X] Phantom Shares (the “Maximum Amount”) based upon achievement of performance goals and the terms and conditions described herein.  The Phantom Shares are subject to the terms and conditions of this Agreement and are also subject to the provisions of the Plan.  The Plan is hereby incorporated by reference as though set forth herein in its entirety.

 

2.                                      Vesting.

 

(a)                                 The number of Phantom Shares that shall vest on ___________ ___, 20____ (the “Vesting Date”), if any, shall be calculated in accordance with Exhibit A attached hereto based upon the achievement of the performance goals set forth on Exhibit A (the “Performance Goals”) during the period beginning on ________________, 20____ and ending on _________ ____, 20___ (the “TSR Performance Period”).

 

(b)                                 In the event the Grantee experiences a Termination of Service for any reason prior to the Vesting Date, the Phantom Shares shall, with no further action, be forfeited and cease to be outstanding as of the Grantee’s Termination of Service.

 

(c)                                  Any Phantom Shares that do not vest as of the Vesting Date shall, with no further action, be forfeited and cease to be outstanding as of the Vesting Date.

 

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3.                                      Dividend Equivalent Rights.

 

(a)                                 A DER is hereby granted to the Grantee, consisting of the right to receive, with respect to each outstanding Phantom Share that vests in accordance with paragraph 2 and Exhibit A, an amount equal to the cash dividend distributions paid in the ordinary course on a share of Common Stock of the Company (“Share”) to the Company’s stockholders (each, a “Dividend Payment”) during the TSR Performance Period as set forth in this Section 3.

 

(b)                                 Any such DER payments shall only be payable with respect to Phantom Shares that vest and shall be paid in the form of additional Shares at the time Phantom Shares are settled pursuant to Section 4.  At such time, the Grantee shall receive additional Shares with an aggregate value (determined as described below) equal to the aggregate value of the Dividend Payments distributed during the TSR Performance Period with respect to the number of Shares equal to the number of vested Phantom Shares.

 

(c)                                  The number of additional Shares to be distributed pursuant to sub-paragraph (b) shall be calculated as follows:  (i) the accumulated Dividend Payments during the TSR Performance Period, multiplied by (ii) the number of Shares to be distributed with respect to the vested Phantom Shares, divided by (iii) the per Share stock price of Common Stock on _____________ ____, 20___.

 

4.                                      Settlement.

 

Each vested and outstanding Phantom Share shall be settled in one Share within 30 days following the date on which such Phantom Share vests as set forth in Section 2 above (the “Settlement Date”), subject to delay to the extent required by Section 409A of the Code as set forth in Section 6(o) below.

 

5.                                      Confidentiality, Non-Competition and Non-Solicitation.

 

(a)                                 In consideration for the Grant under this Agreement, during the Grantee’s term of employment and at all times thereafter, the Grantee hereby agrees to maintain the confidentiality of all confidential or proprietary information of the Company and any of its subsidiaries or affiliates, if any, or of any other person or entity with which the Grantee is involved as a direct or indirect result of the Grantee’s employment by, or performance of consulting or other services (including, without limitation, as a director, officer, advisor, agent, consultant or other independent contractor) for, the Company or any of its subsidiaries or affiliates, and, except in furtherance of the business of the Company or as specifically required by law or by court order, the Grantee shall not directly or indirectly disclose any such information to any person or entity nor shall the Grantee use any such confidential information for any purpose except for the legal benefit of the Company.  This restriction shall apply regardless of whether such information is in written, graphic, recorded, photographic, data or any machine readable form or is orally conveyed to, or memorized by the Grantee.

 

(b)                                 In consideration for the Grant under this Agreement, the Grantee agrees that during the Grantee’s employment with the Company, the Grantee shall not, without the prior written consent of the Company, manage, operate, control or be connected as a stockholder (other than as a holder of shares publicly traded on a stock exchange or the NASDAQ National Market System, provided that the Grantee shall not own more than five percent of the outstanding shares of any publicly traded company engaged in acquiring

 

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mortgaged backed securities) or otherwise engage in any element of the business of acquiring or investing in mortgage-backed securities with any mortgage real estate investment trust or with any entity or person of which any element of the business strategy of such entity or person is based on acquiring or investing in mortgage-backed securities (the “Business”), or partner with, or serve as an officer, director, employee or consultant for, any entity or person engaged in any element of the Business, including any private or public investment firm or broker dealer whose business strategy is based on or who engages in the trading, sales, investment or management of mortgage-backed securities.

 

(c)                                  In consideration for the grant under this Agreement, MFA reserves the right, upon any Termination of Service of the Grantee for any reason, to require the Grantee to comply with the restrictions set forth in Section 5(b) for a period of up to 90 days following such Termination of Service (such 90-day or shorter period, the “Restricted Period”), provided that, to the extent the Company exercises such right, then during the Restricted Period, the Grantee shall receive severance payments in the form of continuation of the Grantee’s base salary during the Restricted Period in accordance with the Company’s customary payroll practices, but no less frequently than monthly.  In the event the Grantee is eligible to receive severance or termination payments pursuant to any other agreement or arrangement between the Grantee and the Company, such other agreement or arrangement shall govern, and the Grantee shall not be entitled to any payments pursuant to this Section 5(c), but for the avoidance of doubt, the Grantee shall be bound by the provisions of Section 5 of this Agreement. Notwithstanding the foregoing, to the extent the Company shall exercise its right under this Section 5(c) nothing herein shall prevent the Grantee during the Restricted Period from providing services to or otherwise being associated with an entity or a subsidiary, division or affiliate thereof or any other person that is engaged in the Business so long as (i) the Grantee’s services are not provided, directly or indirectly, within the division, subsidiary, affiliate or business unit of the entity that engages in the Business, and (ii) the Grantee has no responsibilities regarding such Business.

 

(d)                                 In consideration for the Grant under this Agreement, during the Grantee’s employment with the Company and the one year period immediately following the Grantee’s Termination of Service for any Reason, the Grantee agrees that the Grantee will not, without the prior written consent of the Company, directly or indirectly (individually, or through or on behalf of another entity as owner, partner, agent, employee, consultant, or in any other capacity), (i) solicit, encourage, or engage in any activity to induce any employee of the Company or its affiliates to terminate employment with the Company or its affiliates, or to become employed by, or to enter into a business relationship with, any other person or entity; or (ii) hire or retain any person who was an employee of the Company or its affiliates within the six month period preceding such action; provided that, (x) this Section 5(d) shall not apply to any administrative employee of the Company or its affiliates or any person who was an administrative employee of the Company or its affiliates and (y) any hiring or solicitation pursuant to a general solicitation conducted by an entity that has hired or agreed to hire the Grantee and that does not directly or indirectly target current or former employees of the Company or its affiliates, or by a headhunter employed by such entity, which in either case does not involve the Grantee, shall not be a violation of this Section 5(d).

 

(e)                                  The Grantee acknowledges, agrees and represents that the type and periods of restrictions imposed in this Section 5 are fair and reasonable, and that such restrictions are intended solely to protect the legitimate interests of the Company, rather than to prevent the Grantee from earning a livelihood.  The Grantee further acknowledges and agrees that the business of the Company is highly competitive and that the Company’s confidential information and proprietary materials have been developed by the Company at significant expense and effort, and that the restrictions contained in this Section 5 are reasonable and necessary to protect the legitimate business interests of the Company. The Grantee represents that: (i) the Grantee is familiar with the covenants set forth in this Section 5, (ii) the Grantee is fully aware of his or her obligations hereunder, including, without limitation, the length of time, scope and geographic coverage of

 

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these covenants, (iii) the Grantee finds the length of time, scope and geographic coverage of these covenants to be reasonable and (iv) the Grantee is receiving valuable and sufficient consideration for the Grantee’s covenants not to compete and not to solicit.

 

(f)                                   The Grantee acknowledges that each of the covenants in this Section 5 has a unique, very substantial and immeasurable value to the Company, that the Grantee has sufficient assets and skills to provide a livelihood while such covenants remain in force and that, as a result of the foregoing, in the event that the Grantee breaches such covenants, monetary damages would be an insufficient remedy for the Company and equitable enforcement of the covenants would be proper.  The Grantee therefore agrees that the Company, in addition to any other remedies available to it, will be entitled to preliminary and permanent injunctive relief against any breach by the Grantee of any of the covenants in this Section 5, without the necessity of showing actual monetary damages or the posting of a bond or other security.  The Grantee also agrees that, in addition to any other remedies available to the Company and notwithstanding any provision of this Agreement to the contrary, in the event the Grantee breaches in any material respect any of his obligations under this Section 5, the Company may immediately cease all payments, if any, under Sections 5(c), the Phantom Shares granted under this Agreement (whether vested or unvested) may be immediately forfeited, and the Company may require that the Grantee repay any after-tax amounts previously paid to the Grantee under Sections 5(c), if any, and any Shares delivered or other amounts paid (each on an after-tax basis) with respect to the Phantom Shares granted hereunder.

 

(g)                                  The Grantee and the Company further agree that, in the event that any provision of this Section 5 is determined by any court of competent jurisdiction to be unenforceable by reason of its being extended over too great a time, too large a geographic area or too great a range of activities, that provision will be deemed to be modified to permit its enforcement to the maximum extent permitted by law.

 

(h)                                 The provisions of this Section 5 shall not affect the Company’s ability to enforce the provisions of any other agreement in effect between the Company and the Grantee, including without limitation, the covenants contained in any offer letter or employment agreement.

 

6.                                      Miscellaneous.

 

(a)                                 The value of a Phantom Share may decrease depending upon the Fair Market Value of a Share from time to time. Neither the Company nor the Committee, nor any other party associated with the Plan, shall be held liable for any decrease in the value of the Phantom Shares. If the value of such Phantom Shares decrease, there will be a decrease in the underlying value of what is distributed to the Grantee under the Plan and this Agreement.

 

(b)                                 With respect to this Agreement, (i) the Phantom Shares are bookkeeping entries and the Grantee shall not have any rights of a shareholder with respect to Common Stock unless and until the Phantom Shares vest and are settled by the issuance of such Shares of Common Stock, (ii) the obligations of the Company under the Plan are unsecured and constitute a commitment by the Company to make benefit payments in the future, (iii) to the extent that any person acquires a right to receive payments from the Company under the Plan, such right shall be no greater than the right of any general unsecured creditor of the Company, (iv) all payments under the Plan (including distributions of Shares) shall be paid from the general funds of the Company and (v) no special or separate fund shall be established or other segregation of assets made to assure such payments (except that the Company may in its discretion establish a bookkeeping reserve to meet its obligations under the Plan). The award of Phantom Shares is intended to be an

 

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arrangement that is unfunded for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended.

 

(c)                                  THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF MARYLAND, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect.  This Agreement may not be amended or modified except by a written agreement executed by the parties hereto or their respective successors and legal representatives. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

 

(d)                                 The Committee may construe and interpret this Agreement and establish, amend and revoke such rules, regulations and procedures for the administration of this Agreement as it deems appropriate. In this connection, the Committee may correct any defect or supply any omission, or reconcile any inconsistency in this Agreement or in any related agreements, in the manner and to the extent it shall deem necessary or expedient to make the Plan fully effective. All decisions and determinations by the Committee in the exercise of this power shall be final and binding upon the Company and the Grantee.

 

(e)                                  All notices hereunder shall be in writing and, if to the Company, shall be delivered to the Board or mailed to its principal office, addressed to the attention of the Committee and, if to the Grantee, shall be delivered personally or mailed to the Grantee at the address appearing in the records of the Company. Such addresses may be changed at any time by written notice to the other party given in accordance with this Section 6(e).

 

(f)                                   The failure of the Grantee or the Company to insist upon strict compliance with any provision of this Agreement or the Plan, or to assert any right the Grantee or the Company, respectively, may have under this Agreement or the Plan, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement or the Plan.

 

(g)                                  Nothing in this Agreement shall (i) confer on the Grantee any right to continue in the service of the Company or its Subsidiaries or otherwise confer any additional rights or benefits upon the Grantee with respect to the Grantee’s employment with the Company or (ii) interfere in any way with the right of the Company or its Subsidiaries and its stockholders to terminate the Grantee’s service at any time.

 

(h)                                 If any change is made to the outstanding Common Stock or the capital structure of the Company, the Phantom Shares shall be adjusted in accordance with the Plan.

 

(i)                                     The Phantom Shares and the rights relating thereto shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, garnishment, levy, execution, or other legal or equitable process, either voluntary or involuntary; and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, attach or garnish, or levy or execute on the Phantom Shares and the rights relating thereto shall be void.

 

(j)                                    The Company may assign any of its rights under this Agreement.  This Agreement will be binding upon and inure to the benefit of the successors and assigns of the Company.  Subject to the restrictions on transfer set forth herein, this Agreement will be binding upon the Grantee and the Grantee’s beneficiaries, executors, administrators and the person(s) to whom the Phantom Shares may be transferred by will or the laws of descent or distribution.

 

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(k)                                 The Plan is discretionary and may be amended, suspended or discontinued by the Company at any time, in its discretion. The grant of the Phantom Shares in this Agreement does not create any contractual right or other right to receive any Phantom Shares or other Grants in the future. Future Grants, if any, will be at the sole discretion of the Company. Any amendment, suspension or discontinuation of the Plan shall not constitute a change or impairment of the terms and conditions of the Grantee’s employment with the Company.

 

(l)                                     The issuance and transfer of Shares shall be subject to compliance by the Company and the Grantee with all applicable requirements of federal and state securities laws and with all applicable requirements of any stock exchange on which the Shares may be listed.  No shares of Common Stock shall be issued or transferred unless and until any then applicable requirements of state and federal laws and regulatory agencies have been fully complied with to the satisfaction of the Company and its counsel.

 

(m)                             The Grantee shall be required to pay to the Company or make arrangements satisfactory to the Company regarding payment of any federal, state or local taxes of any kind that are required by law to be withheld with respect to the Phantom Shares.  The Grantee may elect to have any tax withholding which becomes payable at the time the Phantom Shares are to be settled pursuant to Section 3 satisfied, in whole or in part, by authorizing the Company to withhold a number of Shares to be issued pursuant to this Agreement with an aggregate Fair Market Value as of the date withholding is effected that would satisfy the withholding amount due; provided however, that no Shares shall be withheld with an aggregate value exceeding the minimum amount of tax required to be withheld by law.  Notwithstanding anything contained in the Plan or this Agreement to the contrary, the Grantee’s satisfaction of any tax withholding requirements imposed by the Committee shall be a condition precedent to the Company’s obligation as may otherwise be provided hereunder to provide Shares to the Grantee, and the failure of the Grantee to satisfy such requirements with respect to this Grant shall cause this Grant to be forfeited.

 

(n)                                 The Phantom Shares shall be subject to any applicable clawback policy implemented by the Board from time to time.

 

(o)                                 This Agreement is intended to comply with Section 409A of the Code or an exemption thereunder and shall be construed and interpreted in a manner that is consistent with the requirements for avoiding additional taxes or penalties under Section 409A of the Code.  To the extent any payment pursuant to this Agreement is required to be delayed six months pursuant to the special rules of Section 409A of the Code related to “specified employees,” each affected payment shall be delayed until six months after the Grantee’s Termination of Service with the first such payment being a lump sum equal to the aggregate payments the Grantee would have received during such six-month period if no payment delay had been imposed. Any payments or distributions delayed in accordance with the prior sentence shall be paid to the Grantee on the first day of the seventh month following the Grantee’s Termination of Service (or the Grantee’s death, if earlier).  Each payment hereunder shall be treated as a separate payment for purposes of Section 409A of the Code.  Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement comply with Section 409A of the Code and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by the Grantee on account of non-compliance with Section 409A of the Code.

 

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(p)                                 This Agreement contains the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, written or oral, with respect thereto.

 

[remainder of the page left intentionally blank]

 

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IN WITNESS WHEREOF, the Company and the Grantee have executed this Agreement as of the day and year first above written.

 

	
 
    	
MFA   FINANCIAL, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

The Grantee hereby agrees and acknowledges that the Grantee will be bound by the terms and conditions of this Agreement and the Plan and that all determinations by the Committee will be final and binding on all persons.

 

	
 
    	
 
    
	
 
    	
[GRANTEE]
    

 

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Exhibit A

 

This Exhibit A sets forth the Performance Goals applicable to the Phantom Shares granted pursuant to the Agreement to which this Exhibit A is attached.  Unless otherwise specified in this Exhibit A, all defined terms shall have the meanings set forth in the Agreement.

 

The Phantom Shares will vest based on the Company’s average total shareholder return (“MFA Average TSR”) for the TSR Performance Period.

 

The number of Phantom Shares, if any, that vest on the Vesting Date shall be based on MFA Average TSR compared to the Target TSR for the TSR Performance Period.

 

The “Target TSR” is an 8% per annum simple cumulative return over the TSR Performance Period.

 

Average TSR for the TSR Performance Period shall be calculated as follows:

 

·                  The “MFA Average TSR” for the Performance Period shall be the MFA TSR divided by 3.

·                  The “MFA TSR” is equal to (x) the excess of the Average Final Price over the Average Initial Price, plus Dividends Paid on Common Stock during the TSR Performance Period, divided by (y) the Average Initial Price.

·                  The “Average Initial Price” is equal to the average closing daily price of a Share during the first 20 trading days in ______________ 20____.

·                  The “Average Final Price” is equal to the average closing daily price of a Share during the last 20 trading days in ______________ 20____.

·                  The “Dividends Paid” shall equal the cumulative dividends (including any stock dividends) paid per Share during the TSR Performance Period.  For this purpose, dividends declared, but not yet paid, on a Share within the 45 day period preceding ____________ ____, 20____ will be counted as Dividends Paid.

 

The portion of the Target Amount that will vest on the Vesting Date shall be determined by comparing the MFA Average TSR to the Target TSR and may range from zero up to a maximum vesting of 200% of the Target Amount.

 

The number of Phantom Shares that will vest on the Vesting Date shall equal the product of (i) the Target Amount and (ii) the sum of (A) one (1) and (B) a fraction (which fraction can be a negative number), the numerator of which is MFA Average TSR less Target TSR and the denominator of which is eight (8).  For purposes of the preceding sentence, in the event that MFA Average TSR is (x) less than zero, then MFA Average TSR shall be zero, and (y) greater 16%, then MFA Average TSR shall be 16%.

 

Any Phantom Shares that do not vest on the Vesting Date shall be forfeited.

 

Within 30 days following the Vesting Date, vested Phantom Shares and related DERs, if any, will be settled as described in the Agreement.

 

Set forth below are examples which are intended to be used purely for illustrative purposes:

 

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Example 1:

 

Assume a Target Amount of 10,000 Phantom Shares.  If MFA Average TSR over the TSR Performance Period were 2%, then the portion of the Phantom Share award that would become vested would be equal to two-eighths (2/8) of the Target Amount, or 2,500 Phantom Shares.

 

Example 2:

 

Assume a Target Amount of 10,000 Phantom Shares.  If MFA Average TSR over the TSR Performance Period were 12%, then the portion of the Phantom Share award that would become vested would be equal to 1.5 times (or twelve-eighths (12/8) of) the Target Amount, or 15,000 Phantom Shares.

 

Example 3:

 

Assume a Target Amount of 10,000 Phantom Shares.  If MFA Average TSR over the TSR Performance Period were 16%, then the portion of the Phantom Share award that would become vested would be equal to two times (or sixteen-eighths (16/8) of) the Target Amount, or 20,000 Phantom Shares (maximum vesting).

 

10Exhibit 4.5

 

 

Matching Program

 

2014 Cycle

 

Rewarding Long Term Sustainable Performance

 

Important notice: The concession of the Program and the definition of all its conditions are a prerogative of the company, and participation in this program is completely optional and voluntary to employees, once all of the eligibility criteria are met and all conditions for participation are formally accepted by the employee. The purchase of shares is characterized as a risky investment, since it represents the investment of funds in variable income (e.g. publicly traded shares). By choosing to enter the program, the employee recognizes and takes risks, such as: capital market volatility, share liquidity and oscillation of their amounts in the stock exchange. The combination of these risks may bring earnings or losses to the employee who enters the program.

 

The purchase and the sale of the shares issued by Vale S.A., after a certain time, as well as the profits (dividends, interests, etc) earned by each employee between the purchase and the sale, may have tax consequences, especially the eventual incurrence of personal income taxes, if there is a positive result from the sale of the shares. We clarify that the guidelines and eligibility criteria contained herein are subjected to changes and interpretation dynamics from country to country. The Human Resources Centers will provide generic and relevant information about these consequences and each employee should be responsible for evaluating their specific individual financial condition, and for consulting their own accountants/financial advisors to ensure they are aware of all of the financial implications linked to participating in this Program.

 

Human Resources

 

Variable Pay Department | RH CoE

 

January, 2014

 

 

I.                                        Table of Contents

 

	
I.
    	
Table of Contents
    	
2
    
	
 
    	
 
    	
 
    
	
II.
    	
About the   Matching Program | 2014 Cycle
    	
3
    
	
 
    	
 
    	
 
    
	
III.
    	
Eligibility   and Investment Options
    	
4
    
	
 
    	
 
    	
 
    
	
III.1.
    	
Fundamental Conditions for Eligibility to the Program
    	
4
    
	
 
    	
 
    	
 
    
	
III.2.
    	
Rules for Placing the Executives in Groups A, B   or C
    	
4
    
	
 
    	
 
    	
 
    
	
IV.
    	
How to Join the Program
    	
6
    
	
 
    	
 
    	
 
    
	
IV.1.
    	
Enrollment Form
    	
6
    
	
 
    	
 
    	
 
    
	
IV.2.
    	
Opening of account and/or Updating the Registration   Information with the Brokerage Firms
    	
6
    
	
 
    	
 
    	
 
    
	
IV.3.
    	
Funds for Investment in the Program
    	
8
    
	
 
    	
 
    	
 
    
	
V.
    	
Acquisition   of Shares or ADRs with the Investment
    	
9
    
	
 
    	
 
    	
 
    
	
V.1.
    	
Acquisition   Date and Type of Shares
    	
9
    
	
 
    	
 
    	
 
    
	
V.2.
    	
Calculation   of the Number of Shares or ADRs Acquired
    	
9
    
	
 
    	
 
    	
 
    
	
V.3.
    	
Administration of the Acquired Shares or ADRs
    	
9
    
	
 
    	
 
    	
 
    
	
V.4.
    	
Brokerage   Fees
    	
10
    
	
 
    	
 
    	
 
    
	
V.5.
    	
Dividends   and Interests on Equity
    	
10
    
	
 
    	
 
    	
 
    
	
V.6.
    	
Conditions   for Staying in the Program
    	
10
    
	
 
    	
 
    	
 
    
	
VI.
    	
Reward of   Matching at the End of the Cycle
    	
11
    
	
 
    	
 
    	
 
    
	
VII.
    	
Specificities   Regarding Expatriate and/or Repatriate Employees
    	
11
    
	
 
    	
 
    	
 
    
	
VIII.
    	
Early   Payment for Employees Terminated During the Cycle of the Program
    	
12
    
	
 
    	
 
    	
 
    
	
VIII.1.
    	
Resignation   or Dismissal for Cause
    	
12
    
	
 
    	
 
    	
 
    
	
VIII.2.
    	
Dismissal   by Vale / Retirement
    	
12
    
	
 
    	
 
    	
 
    
	
VIII.3.
    	
Death   or Retirement for Disability
    	
12
    
	
 
    	
 
    	
 
    
	
VIII.4.
    	
Executives   from Associated or Subsidiary Companies that Undergo Change of Control or   Vale’s Divestiture
    	
12
    
	
 
    	
 
    	
 
    
	
VIII.5.
    	
Summary   Table of Conditions for Early Payment (Before the End of the Cycle)
    	
13
    
	
 
    	
 
    	
 
    
	
IX.
    	
Main Dates   of the 2014 Cycle
    	
14
    
	
 
    	
 
    	
 
    
	
Annex A: List of Participating Companies
    	
15
    
	
 
    	
 
    
	
Annex B: Methodology For Currency Conversion
    	
19
    
	
 
    	
 
    	
 
    
	
For   Acquisition of Shares/ADRs
    	
19
    
	
 
    	
 
    
	
For   Payments Before the End of the Cycle
    	
19
    
	
 
    	
 
    
	
Annex C: Methodology for Calculating the Average Price of   Shares
    	
20
    
	
 
    	
 
    
	
Annex D: Amount of the Investment Options
    	
21
    
	
 
    	
 
    
	
Annex E: Distribution for Placement of the Eligible   Executives
    	
22
    
					

 

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II.                                   About the Matching Program | 2014 Cycle

 

Matching is a long term incentive program that composes the total reward of Vale’s executives and its associated/subsidiary companies’ employees that also participate in the program(1) according to rules and conditions set forth herein. The program aims to:

 

·                  Encourage the sense of “ownership”;

 

·                  Increase the capacity of retention and attraction of talents; and

 

·                  Reinforce the culture of sustainable performance and skill development of our executives.

 

Fundamental characteristics of the program:

 

·                  The level of investment with which an executive can enroll depends on:

 

(i) the position of the executive in the last cycle of Career & Succession (C&S);

 

(ii) the hierarchical level of the executive in the company on December 31st, 2013(2);

 

(iii) the location where the executive is based on and/or the group’s company he/she is active at, both on December 31st, 2013(2);

 

(iv) the base salary of the executive on December 31st, 2013(2).

 

·                  The program has duration of three years (vesting): it begins in March/April, 2014 and it ends in March/April, 2017(3).

 

Important note:

 

Note that the rules described in this document are valid only for the Matching Program that starts in 2014(4).

 

(1)  See the attached list of companies whose executives may be eligible to the Matching Program | 2014 Cycle. (Annex A: List of Participat).

(2)  As registered in payroll systems in that date.

(3)  The closing date of the program may be reviewed if Vale is in a restricted negotiation period (“black-out period”), as stipulated by Vale ́s Securities Trading Policy.

(4)  The concession of the Matching Program, in the cycle starting in 2014, does not oblige Vale or its associated/subsidiary companies to grant this incentive, or any other similar program, in future years. Vale reserves the right to examine and determine the eventual concession of similar incentives in subsequent years. Thus, employee’s participation in the 2014 Cycle shall not generate expectations of future entitlement to similar programs.

 

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III.                              Eligibility and Investment Options

 

III.1.                    Fundamental Conditions for Eligibility to the Program

 

The executives who meet all of the following conditions will be eligible to participate in the Matching|2014 Cycle(5):

 

·                  He/she must be working for Vale or one of the participating companies (see Annex A: List of Participating Companies) on December 31st, 2013, and occupying one of the below positions:

 

(i)                 CEO;

 

(ii)              Executive Director;

 

(iii)           Director (or the equivalent in the Technical Career);

 

(iv)          Manager (or the equivalent in the Technical Career); and

 

(v)             Project Leader.

 

·                  He/she must be an active employee of Vale, or one of the participating companies at the time of the shares acquisition;

 

·                  He/she must accept all the conditions to participate in the Program through the formal enrollment option (Enrollment Form), within the deadline established.

 

III.2.                    Rules for Placing the Executives in Groups A, B or C

 

Investment Options

 

If the executive chooses to participate in the Matching|2014 Cycle, there are two options for investment:

 

(i)                 Standard Option; and

(ii)              Extra Option (option only granted to executives with potential and performance as described below).

 

In both possibilities, Standard and Extra, the investment amount varies by hierarchical level and by region or participating company (see Annex A: List of Participating Companies). The amount is defined according to the following criteria:

 

(i)                 Pre-set amount based on the base salary of the executive on December 31st, 2013(6); and

 

(ii)              Time proportion, considering the number of months the executive worked at Vale, or any participating company, in the course of 2013.

 

Placement of the Executives in Groups A, B or C

 

In addition to meeting the main conditions, the executives must meet specific conditions to be classified into one of the three groups, A, B, or C, shown in Table III.1 below:

 

(5)  Situations not covered in this Manual should be evaluated and defined case by case by the Matching Program Management Commitee, composed of the CFO and the HR Executive Director.

(6)  As registered in payroll systems in that date.

 

4

 

Table III.1: Eligibility to the different investment options.

 

	
Group
    	
 
    	
Who should be placed in the group
    	
 
    	
Investment options
    
	
Group A
    	
 
    	
·                  Executives who meet the fundamental conditions (see section III.1)   and are deemed (according to the last C&S evaluation) as employees with   recognized potential and solid or high performance(7).
    	
 
    	
·                  These executives have the following investment options in the   Matching|2014 Cycle:

·                  Extra Option related to their level and region/company;

·                  Standard Option related to their level and region/company; or

·                  Do not invest in the program.
    
	
Group B
    	
 
    	
·                  Executives who meet the fundamental conditions (see section III.1)   and are deemed (according to the last C&S evaluation) as employees at   potential and solid or high performance; and

·                  Executives who meet the fundamental conditions (see section III.1)   and have been recently hired (not evaluated in the last C&S), recently   shifted(8) or were evaluated   in the C&S in a position hierarchically different to the one they are   entitled to the program(9).
    	
 
    	
·                  These executives have the following investment options in the   Matching|2014 Cycle:

·                  Standard Option related to their level and region/company; or

·                  Do not invest in the program.
    
	
Group C
    	
 
    	
·                  Executives who meet the fundamental conditions (see section III.1)   and were evaluated (according to the last C&S evaluation) as   low-performance employees, regardless his/her potential.
    	
 
    	
·                  These executives are not eligible to   invest in the program.
    

 

Important note:

 

The amounts of the investment options for your level and region/company are presented in Annex D: Amount of the Investment Options.

 

Each approving manager must ensure that, amongst those eligible in his/her approval scope (executives from Groups A and B), only a maximum of 30%, are classified into Group A (for reasons of numerical rounding, the distribution indicated inAnnex E: Distribution for Placement of the Eligible Executives must be used). The approving manager varies from executive to executive, as shown in the following table:

 

Table III.2: Approving manager for each hierarchical level.

 

	
Hierarchical level of the eligible executive
    	
 
    	
Approving manager
    
	
·                  Managers (and equivalent in the Technical Career); and

·                  Project Leaders (except Executive Project Leaders).
    	
 
    	
·                  Immediate Director or Executive Project Leader.
    
	
·                  Directors (and equivalent in the Technical Career); and

·                  Executive Project   Leaders.
    	
 
    	
·                  Immediate Director or Executive Director.
    

 

(7)  Executives with solid or high performance are the ones evaluated as such according to the most recent C&S cycle, and executives with recognized potential are those who have been evaluated with potential of “1 to 3 years” or potential of “0 to 1 year” according to the most recent C&S cycle.

(8)  Recent shiftings: changes that took place after June 31st, 2013 and represent in Brazil (excluding Vale Fertilizers) a rise in career of, at least, two (2) salary grades or, for the rest of the company (including Vale Fertilizers), a change in executive’s level (“L”, “P” or “T”).

(9)  Cases in which this occurs: (i) evaluated in the C&S as Staff or Supervisor and eligible to the program as Manager (or equivalent); (ii) evaluated in the C&S as Manager (or equivalent) and eligible to the program as Director (or equivalent).

 

5

 

IV.                               How to Join the Program

 

IV.1.                     Enrollment Form

 

The adhesion of the executive to the program will happen through his/her formal acceptance of the guidelines and rules of the Matching|2014 Cycle by signing (electronically or physically) the Enrollment Form, and by submitting the required documentation for registration or re-registration in the stock market regulatory bodies, and for opening their brokerage account, as follows:

 

·                  Bradesco, for the executives who are in Brazil when they sign the Enrollment Form;

 

·                  JP Morgan, for the executives who are outside Brazil when they sign the Enrollment Form.

 

IV.2.                     Opening of account and/or Updating the Registration Information with the Brokerage Firms

 

For Executives in Brazil on December 31st, 2013

 

Executives who receive their (monthly) fixed remuneration in Brazil, must complete/update the forms received from Bradesco and send them as follows:

 

(i)                Registration of new executives

 

Executives who are not currently registered with Bradesco shall provide the following documentation:

 

·                  Bradesco Enrollment Form

 

·                  Intermediation and Sub-custody Contract

 

·                  Copy of documents (ID or Driver’s License with CPF (Individual Taxpayer’s Roll))

 

·                  Copy of proof of residence (this is the address where participants will receive important information regarding their account)

 

The Enrollment Form and the Intermediation and Sub-custody Contract must be filled in, signed and submitted (original documents), along with the copy of the other documents listed above, by the date informed by your local HR, 2014 to Bradesco, to the following address: Avenida Paulista, 1450 - 7th Floor - CEP: 01310-100, to Bruna Sampaio and Jessica Fanini.

 

Questions related to the documentation should be directly addressed with Bradesco, through the email address comercial@bradescobbi.com.br, or the phone number +55 11 2178 5088.

 

Important note:

 

The Enrollment Form and the Intermediation and Sub-custody Contract must have, in addition to the participant’s signature, the grant of an authorizer from Vale’s HR or from its associated and subsidiary companies (procurator) in order to be accepted by the brokerage. The Enrollment Form, on the other hand, must have the signature of a witness, besides the signature of the participant and the grant mentioned above.

 

(ii)            Information revalidation of the executives already registered

 

Executives that are active in the company and willing to participate in the program must update, every 2 (two) years, their registration information. Therefore, the participant whose registration has been performed/revalidated 2 (two) years ago or more, will receive from Bradesco, by email, their registration form, which must be updated/revalidated and submitted to the brokerage firm, highlighting in the body of the email, the updates in the Registration Form, if applicable, otherwise, the executive must return the email with the file

 

6

 

stating that there was no change in their data to date, with the documents listed below. In order to be accepted by the brokerage, the information should be sent through the corporate business email (this will be the evidence for revalidation of the data). The documents necessary for the revalidation are listed below:

 

·                  Enrollment Form

 

·                  Copy of documents (ID or Driver’s License with CPF - Individual Taxpayer’s Roll)

 

·                  Copy of proof of residence (this is the address where participants will receive important information regarding their account).

 

Important note:

 

The information revalidation process is solely the responsibility of the participant. The executive that does not send the registration information within the deadline set by the broker may lose the right to participate in the program

 

(iii)        Share status consultation via internet

 

For online consultation about transactions and number of shares, the participant may access the web address http://www.myportfolio.com.br/bradesco/ at anytime. Questions related to online access should be sorted out through the email address comercial@bradescobbi.com.br, or the phone number +55 11 2178 5088.

 

For executives outside Brazil on December 31st, 2013

 

Executives who receive their fixed remuneration outside Brazil (including those on international assignment) will be contacted by their local HR Center for filling/updating their enrollment information and will be required to submit it as below:

 

(i)                Registration of new employees

 

The participants will receive the following documents from their local HR:

 

·                  Personal information sheet

 

·                  W-8BEN Form

 

Participants’ personal information sheet shall be filled in and submitted, via e-mail, to JP Morgan.

 

New participants must also fill in the W-8BEN Form (Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding), referring to the income declaration, in case of receiving dividends or selling ADRs (American Depositary Receipt). If this form is not completed, the participant may be subject to pay taxes under his/her own responsibility.

 

The W-8BEN Form (original document) shall be filled in, dated, signed, and mailed to the brokerage firm.

 

Important note:

 

The W-8BEN Form is valid for 3 years and the brokerage firm will contact each participant by mail about its update (it is important to keep the mailing address updated).

 

7

 

(ii)            Information revalidation of the employees already registered

 

Annually, before the beginning of each Cycle, local HR Centers must revalidate, via e-mail, the personal information of each executive participating in the Matching Program through a control sheet provided by JP Morgan Brokerage. The following information should be revalidated:

 

·                  Full address (this is the address where the participant will receive important information related to his/her account)

 

·                  Option for reinvesting, or not, the dividends in ADRs

 

Questions related to the required documentation, or the sale of ADRs, should be directly addressed with JP Morgan, contact person Marcos Rivero, through the email address marcos.rivero@jpmorgan.com, or the phone number +1 302 552 0257.

 

Participants who are outside the United States and wish to have general information about their account (registration, ADRs balance, dividends, etc.), may call 800 990 1135 (within the U.S.) or +1 651 453 2128 (outside the U.S.).

 

IV.3.                     Funds for Investment in the Program

 

The eligible executive, who voluntarily chooses to invest in this program, is responsible for funding the acquisition of the shares.

 

In order to facilitate the availability of funds for the participant to invest in the Matching|2014 Cycle, Vale or the associated/subsidiary company will use funds from the Short-Term Variable Remuneration (AIP — Annual Incentive Plan), to be paid to the executive in 2014 (related to the year of 2013), via the automatic payroll deduction of the amount chosen by the executive to join the program. The deduction will be performed under the condition that the net amount of the Short-Term Variable Remuneration (AIP) is equal to or greater than the amount of the adhesion to the program, to be deducted, and that all of the conditions of enrollment have been formally accepted by him/her.

 

If the net amount of the Short-Term Variable Remuneration (AIP) of the employee is lower than the amount of his/her investment for joining the program, Vale or the associated/subsidiary company will not perform its deduction. In this case, the participant will be informed by local HR, that in order to participate in the Matching|2014, they will need to carry out a wire transfer of the total amount of the investment for his/her enrollment to the program (amount in cash equivalent to the investment option - Standard or Extra - chosen by him/her and formalized through the signing of the Enrollment Form), until the date informed by the local HR, in local currency, to a specific account to be indicated by Vale or the associated/subsidiary company.

 

Important note:

 

Executives living abroad who have tax registration in Brazil (CPF) should take special care to ensure that the registry data reported to the broker reflect the current status of the tax situation in the Brazilian treasury department, ie, domiciled in Brazil or outside Brazil. Any discrepancy between the registers may cause tax implications to the executive.

 

8

 

V.                                    Acquisition of Shares or ADRs with the Investment

 

V.1.                          Acquisition Date and Type of Shares

 

The Matching|2014 Cycle starts on March/April, 2014 upon the purchase of class “A” preferred shares(10) or ADRs(11) backed in preferred shares of same class, and issued by Vale(12) through the authorized brokerage firms for each location (in Brazil, Bradesco; in other countries, JP Morgan). The executives located in Brazil shall purchase VALE5 shares, while executives outside Brazil shall buy ADRs VALE.P.

 

V.2.                          Calculation of the Number of Shares or ADRs Acquired

 

For the executives that acquire shares at BM&FBOVESPA, the brokerage firm in Brazil (Bradesco) will purchase the largest number of whole shares, and the remaining funds shall be wired back to the executive bank account as informed in the Bradesco Enrollment Form(13). For the employees that acquire Vale ADRs at NYSE, the brokerage firm in the USA (JP Morgan) has a procedure that allows the purchase of fractional numbers of shares, therefore, no remaining funds will be returned.

 

The brokerage firm will execute the purchase of shares at market prices in March or April, 2014

 

(i)                Example of calculation for executives that acquire shares at BM&FBOVESPA:

 

·                  Funds remitted = R$ 50,000.00

 

·                  Hypothetical share price = R$ 30.00

 

·                  Number of shares purchased = 1,666

 

·                  Remaining funds to be wired to the Employee’s bank account = R$ 20.00

 

(ii)            Employee that has acquired Vale ADR’s at NYSE

 

·                  Funds remitted = $ 25,000.00

 

·                  Hypothetical share price = $ 15.50

 

·                  Number of shares purchased = 1,612.90

 

V.3.                          Administration of the Acquired Shares or ADRs

 

The brokerage firms will be responsible for the custody of shares and/or ADRs throughout the entire cycle of the program. Vale will be informed about any stock transaction made by the participants.

 

The executives may sell all or part of their shares and/or ADRs at any time. However, by doing so, they shall forfeit the right to receive the reward of the Matching|2014 and shall also be responsible for any costs arising from such sale.

 

(10) They offer: (a) priority in receiving dividends, which will be calculated according to Vale’s Bylaws’ Chapter VII, corresponding to (i) at least 3% (three per cent) of the amount of the stockholder’s equity, calculated based on the obtained financial statements that served as reference for the payment of dividends, or (ii) 6% (six per cent) on the portion of capital represented by this class of shares, whichever is the highest one among them; (b) the right to participate in distributed profits, on an equal basis with common shares, after the latter paid a dividend equal to the minimum established in accordance with subparagraph “a”; and (c) the right to participate in occasional bonuses, on an equal basis with common shares, observing the established priority for the dividends distribution.

(11) American Depositary Receipt (ADR) is a negotiable title that represents shares of a non-US company that trades in the US financial markets.

(12) ADRs based on class “A” preferential shares traded on the New York Stock Exchange.

(13) Keeping the account information updated with the brokerage firm is responsibility of the executive.

 

9

 

V.4.                          Brokerage Fees

 

During the cycle, participants will not incur any administration or brokerage fee expenses (they will be defrayed by Vale or its associated/subsidiary companies).

 

The participants cannot acquire shares and/or ADRs for personal investment using the same account reserved for the Matching Program. Shares and/or ADRs purchased outside the program, through the same brokerage firms that administer the shares/ADRs of the Matching, should be acquired in a separate account and will be subject to the management and brokerage fees imposed by each brokerage firm, without any involvement of Vale.

 

V.5.                          Dividends and Interests on Equity

 

In the event of declaration of dividends and / or interest on equity by Vale:

 

·                  Executives who use a brokerage firm in Brazil will have the dividend amounts deposited into their respective bank accounts;

 

·                  Executives who use a brokerage firm outside of Brazil may receive a check in dollars or opt for automatic reinvestment in new ADRs.

 

The shares / ADRs acquired with amounts received as dividends and / or interest on equity will not be considered for Matching and therefore not accrue the balance of shares / ADRs to be awarded by the end of the cycle.

 

V.6.                          Conditions for Staying in the Program

 

In order to receive the Matching|2014 reward, at the end of the cycle of 3 (three) years, the participating executives must meet the following conditions:

 

·                  They cannot sell and/or transfer shares from their account during the term of the cycle.

 

·                  Investments can only be performed in the Matching account with amounts received as dividends and/or interests on equity, when allowed by the brokerage. The Matching account shall be blocked for other share acquisitions, also subject to the provisions of section V.5 above.

 

·                  Transactions involving derivatives, that constitute short selling of Vale shares, are prohibited, as well as renting of purchased shares linked to the program to third parties, since the purpose of the plan is the exposure and alignment of executives to Vale listed shares during the period of the program.

 

·                  The transactions described above are also prohibited (involving derivatives or shares renting) for any Vale shares held by the executive, while he/she is an active participant, even if they were purchased outside of the program, while he is an active participant of the program. Any breach of this rule will be subject to consequences set out in Vale ́s Code of Ethics.

 

10

 

VI.                               Reward of Matching at the End of the Cycle

 

At the end of the cycle, three years after the acquisition of shares, the executives balance will be checked with the brokerage firms. Participants who have kept, under their property, all of the shares/ADRs acquired in the beginning of the program, during the entirety of the term of the cycle, will be eligible to a reward equivalent (1:1) to the number of shares/ADRs purchased by the executive in the beginning of the cycle(14).

Some points should be taken into consideration at the time of payment:

 

·                  Vale or the associated/subsidiary company assumes the taxes on the payment of the participant’s reward (gross up).

 

·                  The area/company responsible for the executive costs at the time of the payment, will also be responsible for his/her Matching | 2014(15) reward.

 

VII.                          Specificities Regarding Expatriate and/or Repatriate Employees

 

The responsibility for monitoring the Matching process (communication, calculations, validations etc.) of the eligible expatriates will be with their respective local HR (in case of expatriates / repatriates, Host Country HR). If the participant is expatriated before the cycle completion, the purchased shares will remain in his/her account with the brokerage firm that acquired the shares in the beginning of the cycle, as well as the shares/ ADRs received as dividends. As for the Matching | 2014 reward, the payment will be made by the company in the country where he/she is located (this rule are valid for all the cycles the executive is participating in).

 

If the participant starts and ends a cycle outside his/her home country, the shares/ADRs purchased abroad will remain in his/her account and the reward will be paid by the respective brokerage. If the executive is repatriated before the end of the cycle, he will be rewarded in the country where he/she is located at the time of the payment.

 

According to the Brazilian legislation, non-resident employees are not allowed to purchase shares in Brazil. Therefore, Brazilians expatriates must have their participation acquired in ADRs with the brokerage outside Brazil, JP Morgan.

 

(14) In case of stock split of shares/ ADRs during the cycle, the number of shares / ADRs to be awarded will also be adjusted to reflect any stock split

(15) The amount to be disbursed by the respective areas/companies must be budgeted and provisioned by them, according to the guidelines of the applicable budget cycles.

 

11

 

VIII.                     Early Payment for Employees Terminated During the Cycle of the Program

 

The conditions below define what shall happen in case the executive leaves Vale or the associated/subsidiary companies before the conclusion of Matching | 2014 Cycle:

 

VIII.1.           Resignation or Dismissal for Cause

 

The executive shall not be eligible for the Matching | 2014 reward. However, he/she may sell or keep the shares/ADRs that were acquired with his/her funds. The employee will become responsible for the administration costs of the fund, if applicable, starting from the effective date of resignation or dismissal for cause.

 

VIII.2.           Dismissal by Vale / Retirement

 

The executive dismissed without cause or retired will receive his/her Matching | 2014 reward, in cash, proportionally to the number of months worked for Vale, or associated/subsidiary company (see Annex A: List of Participat), during this cycle. The area/company responsible for the personnel expenses of the executive (e.g. base salary) at the time that he/she leaves Vale or the associated/subsidiary company, is also responsible for the payment of his/her Matching | 2014 reward. The employee may sell or keep the shares/ADRs that were acquired with his/her funds and he/she will become responsible for the administration costs of the fund, if applicable, starting from the effective date of dismissal.

 

VIII.3.           Death or Retirement for Disability

 

The employee or his/her legal heirs will receive the full Matching | 2014 Cycle reward in cash. The area/company responsible for the personnel expenses of the executive (e.g. base salary) at the time of his/her death or retirement for permanent disability, is also responsible for the payment of the Matching | 2014 reward to the executive or his/her legal heirs. They may also sell or keep the shares/ADRs acquired with the executive’s funds. The employee or his/her legal heirs will become responsible for the administration costs of the fund, if applicable, starting from the effective date of retirement for disability or death.

 

VIII.4.           Executives from Associated or Subsidiary Companies that Undergo Change of Control or Vale’s Divestiture

 

Executives from associated or subsidiary companies (see Annex A: List of Participat) that undergo Change of Control or Vale ́s divestiture, will receive the Matching | 2014 Cycle reward, in cash, proportionally to the number of months worked for the associated/subsidiary company during this cycle and before the Change of Control or Vale ́s divestiture. The area/company responsible for the personnel expenses of the executive (e.g. base salary) on the date when the Change of Control or divestiture occurs, is also responsible for the payment of his/her Matching | 2014 reward. The employee may sell or keep the shares/ADRs acquired with his/her own funds and will become responsible for the administration costs of the fund, if applicable, starting from the effective date of the termination.

 

12

 

VIII.5.           Summary Table of Conditions for Early Payment (Before the End of the Cycle)

 

Table VII.1: Summary of conditions for early pay.

 

	
#
    	
 
    	
Condition for
   early pay
    	
 
    	
Eligibility
   for reward
    	
 
    	
Reward
   Form
    	
 
    	
Reference date for
   calculations(16)
    	
 
    	
Time proportion for
   calculating the
   reward
    	
 
    	
Timing of reward payment
    	
 
    	
Responsibility for the
   costs related to the
   reward
    	
 
    	
Ownership of
   the shares
   acquired to join
   the program
   (with
   executive’s
   funds)
    	
 
    	
Responsibility
   for
   administration
   costs of the
   fund as of the
   resignation date
    
	
1
    	
 
    	
Resignation or   Dismissal For Cause
    	
 
    	
No
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
Executive
    	
 
    	
Executive
    
	
2
    	
 
    	
Dismissal by Vale   / Retirement
    	
 
    	
Yes
    	
 
    	
Cash
    	
 
    	
Last business day   of the month preceding the termination of the employment
    	
 
    	
Number of months   worked for Vale during this cycle
    	
 
    	
Should follow   local laws and practices and should be made, preferably, along with the   payment of severance.
    	
 
    	
Area/company   responsible for the personnel expenses of the executive at the date of   termination
    	
 
    	
Executive
    	
 
    	
Executive
    
	
3
    	
 
    	
Death or   Retirement for Disability
    	
 
    	
Yes
    	
 
    	
Cash
    	
 
    	
Last business day   of the month preceding the termination or retirement of the employee
    	
 
    	
Full reward (no   time proportion)
    	
 
    	
Should follow   local laws and practices and should be made, preferably, along with other   payments due upon the referred incident.
    	
 
    	
Area/company   responsible for the personnel expenses of the executive at the date of   termination or retirement
    	
 
    	
Executive or   his/her heirs
    	
 
    	
Executive or   his/her heirs
    
	
4
    	
 
    	
Executives from   Associated or Subsidiary Companies that Undergo Change of Control or Vale’s   Divestiture
    	
 
    	
Yes
    	
 
    	
Cash
    	
 
    	
Last business day   of the month preceding the date of the effective change of control (closing of operation)
    	
 
    	
Number of months   worked for the associated/subsidiary company during this cycle before the change   of control or Vale’s divestiture
    	
 
    	
Preferably on the   first event of payroll after the change of control or Vale’s divestiture, or   as stipulated in the change of control /Vale’s divestiture contracts.
    	
 
    	
Area/company   responsible for the personnel expenses of the executive at the date of the   change of control or Vale’s divestiture
    	
 
    	
Executive
    	
 
    	
Executive
    

 

(16) See Annex B: Methodology For Currency Conversionand Annex C: Methodology for Calculating the Average Price of Sharesfor methodologies for early pays (before the end of the cycle).

 

13

 

IX.                              Main Dates of the 2014 Cycle

 

Table IX.1: Main dates of the 2014 Cycle.

 

	
#
    	
 
    	
Date
    	
 
    	
Brief description of the event
    
	
01
    	
 
    	
Jan/Feb, 2014
    	
 
    	
·                  Period for the executive to formalize the   option of enrollment
    
	
02
    	
 
    	
AIP Payment
    	
 
    	
·                  Payroll deduction date of the amount of   Matching|2014 Cycle(17)
    
	
03
    	
 
    	
March/April,   2014(18)
    	
 
    	
·                  Acquisition of shares and/or ADRs for the Matching|2014 Cycle
    
	
04
    	
 
    	
March/April,   2017
    	
 
    	
·                  Payment of Matching|2014 reward to the eligible Executives
    

 

(17)  Eligible executives, who choose to participate in the program and do not have their bonus discounted from the short-term payment (STI) may make the contribution with its own resources.

(18)  The amount invested by the Executive will not be adjusted in the period between investment (bonus discount or employee contribution) and the purchase of shares.

 

14

 

Annex A: List of Participating Companies

 

Below is the list of the associated/subsidiary companies whose executives may be eligible to the Matching Program commencing in 2014, with the respective countries where these companies are established and the HR teams in charge of them.

 

Important notes:

 

The pieces of information in the table below are subject to change during the cycle. It is the responsibility of the executive to stay updated about them through their local HR.

 

The following list indicates companies that may have eligible executives. It does not mean that executives of these companies are necessarily eligible to the program.

 

Table A.1: List of subsidiary and associated companies whose executives may be eligible to the Matching | 2014 Cycle.

 

	
#
    	
 
    	
Company
    	
 
    	
Country
    	
 
    	
HR Team
    	
 
    	
HR Solutions Center
    
	
1
    	
 
    	
Associação Instituto Tecnologico Vale
    	
 
    	
BRAZIL
    	
 
    	
RH Brasil
    	
 
    	
América Latina
    
	
2
    	
 
    	
California Steel Industries, Inc.
    	
 
    	
UNITED STATES
    	
 
    	
Base   Metals & North America HR
    	
 
    	
Base Metals & North America
    
	
3
    	
 
    	
Camberwell Coal Pty Ltd.
    	
 
    	
AUSTRALIA
    	
 
    	
Australia HR
    	
 
    	
Asia Pacific,   Europe & Middle East
    
	
4
    	
 
    	
Carborough Downs   Coal Management Pty Ltd.
    	
 
    	
AUSTRALIA
    	
 
    	
Australia HR
    	
 
    	
Asia Pacific,   Europe & Middle East
    
	
5
    	
 
    	
Companhia Portuaria Baia de Sepetiba
    	
 
    	
BRAZIL
    	
 
    	
RH Brasil
    	
 
    	
América Latina
    
	
6
    	
 
    	
Compañia Minera Miski Mayo S.R.L.
    	
 
    	
PERU
    	
 
    	
RH Fertilizantes
    	
 
    	
Fertilizantes
    
	
7
    	
 
    	
Ferrovia Centro-Atlântica S.A.
    	
 
    	
BRAZIL
    	
 
    	
RH Carga Geral
    	
 
    	
Carga Geral
    
	
8
    	
 
    	
Ferrovia Norte Sul S.A
    	
 
    	
BRAZIL
    	
 
    	
RH Carga Geral
    	
 
    	
Carga Geral
    
	
9
    	
 
    	
Fundação Vale do Rio Doce
    	
 
    	
BRAZIL
    	
 
    	
RH Brasil
    	
 
    	
América Latina
    
	
10
    	
 
    	
Glennies Creek   Coal Management Pty Ltd.
    	
 
    	
AUSTRALIA
    	
 
    	
Australia HR
    	
 
    	
Asia Pacific,   Europe & Middle East
    
	
11
    	
 
    	
Integra Coal   Operations Pty Ltd.
    	
 
    	
AUSTRALIA
    	
 
    	
Australia HR
    	
 
    	
Asia Pacific,   Europe & Middle East
    

 

15

 

	
#
    	
 
    	
Company
    	
 
    	
Country
    	
 
    	
HR Team
    	
 
    	
HR Solutions Center
    
	
12
    	
 
    	
Potássio Rio Colorado S.A.
    	
 
    	
ARGENTINA
    	
 
    	
RH Fertilizantes
    	
 
    	
Fertilizantes
    
	
13
    	
 
    	
PT International   Nickel Indonesia Tbk
    	
 
    	
INDONESIA
    	
 
    	
Base   Metals & North America HR
    	
 
    	
Base Metals & North America
    
	
14
    	
 
    	
PT Vale Eksplorasi Indonesia
    	
 
    	
INDONESIA
    	
 
    	
Australia HR
    	
 
    	
Asia Pacific,   Europe & Middle East
    
	
15
    	
 
    	
Salobo Metais S.A
    	
 
    	
BRAZIL
    	
 
    	
RH Brasil
    	
 
    	
América Latina
    
	
16
    	
 
    	
Transbarge Navegacion S.A
    	
 
    	
PARAGUAY
    	
 
    	
RH América Latina
    	
 
    	
América Latina
    
	
17
    	
 
    	
Vale Americas Inc
    	
 
    	
UNITED STATES
    	
 
    	
Base   Metals & North America HR
    	
 
    	
Base Metals & North America
    
	
18
    	
 
    	
Vale Asia Kabushiki Kaisha
    	
 
    	
JAPAN
    	
 
    	
Singapore HR
    	
 
    	
Asia Pacific,   Europe & Middle East
    
	
19
    	
 
    	
Vale Australia Pty Ltd
    	
 
    	
AUSTRALIA
    	
 
    	
Australia HR
    	
 
    	
Asia Pacific,   Europe & Middle East
    
	
20
    	
 
    	
Vale Canada Limited
    	
 
    	
CANADA
    	
 
    	
Base   Metals & North America HR
    	
 
    	
Base Metals & North America
    
	
21
    	
 
    	
Vale Europe Ltd.
    	
 
    	
UNITED KINGDOM
    	
 
    	
Base Metals &   North America HR
    	
 
    	
Base Metals & North America
    
	
22
    	
 
    	
Vale Exploracion Argentina S.A.
    	
 
    	
ARGENTINA
    	
 
    	
RH América Latina
    	
 
    	
América Latina
    
	
23
    	
 
    	
Vale Exploraciones Chile Ltda
    	
 
    	
CHILE
    	
 
    	
RH América Latina
    	
 
    	
América Latina
    
	
24
    	
 
    	
Vale Exploraciones Mexico S.A.
    	
 
    	
MEXICO
    	
 
    	
Austria HR
    	
 
    	
Asia Pacific,   Europe & Middle East
    
	
25
    	
 
    	
Vale Exploration Peru SAC
    	
 
    	
PERU
    	
 
    	
RH América Latina
    	
 
    	
América Latina
    
	
26
    	
 
    	
Vale Exploration Pty Ltd
    	
 
    	
AUSTRALIA
    	
 
    	
Australia HR
    	
 
    	
Asia Pacific,   Europe & 
    

 

16

 

	
#
    	
 
    	
Company
    	
 
    	
Country
    	
 
    	
HR Team
    	
 
    	
HR Solutions Center
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Middle East
    
	
27
    	
 
    	
Vale Fertilizantes S.A.
    	
 
    	
BRAZIL
    	
 
    	
RH Fertilizantes
    	
 
    	
Fertilizantes
    
	
28
    	
 
    	
Vale International Holdings GmbH
    	
 
    	
AUSTRIA
    	
 
    	
Austria HR
    	
 
    	
Asia Pacific,   Europe & Middle East
    
	
29
    	
 
    	
Vale International S.A
    	
 
    	
SWITZERLAND
    	
 
    	
Switzerland HR
    	
 
    	
Asia Pacific,   Europe & Middle East
    
	
30
    	
 
    	
Vale International SA-DIFC
    	
 
    	
UAE
    	
 
    	
Singapore HR
    	
 
    	
Asia Pacific,   Europe & Middle East
    
	
31
    	
 
    	
Vale International Singapore
    	
 
    	
SINGAPORE
    	
 
    	
Singapore HR
    	
 
    	
Asia Pacific,   Europe & Middle East
    
	
32
    	
 
    	
Vale Japan Ltd.
    	
 
    	
JAPAN
    	
 
    	
Singapore HR
    	
 
    	
Asia Pacific,   Europe & Middle East
    
	
33
    	
 
    	
Vale Logística da Argentina S.A
    	
 
    	
ARGENTINA
    	
 
    	
RH América Latina
    	
 
    	
América Latina
    
	
34
    	
 
    	
Vale Logística de Carga Geral S.A
    	
 
    	
BRAZIL
    	
 
    	
RH Carga Geral
    	
 
    	
Carga Geral
    
	
35
    	
 
    	
Vale Logistics Limited
    	
 
    	
MALAWI
    	
 
    	
RH África
    	
 
    	
África
    
	
36
    	
 
    	
Vale Malaysia Minerals SDN. BHD.
    	
 
    	
MALAYSIA
    	
 
    	
Malaysia HR
    	
 
    	
Asia Pacific,   Europe & Middle East
    
	
37
    	
 
    	
Vale Manganês S.A
    	
 
    	
BRAZIL
    	
 
    	
RH Brasil
    	
 
    	
América Latina
    
	
38
    	
 
    	
Vale Minerals   China Co. Ltd
    	
 
    	
CHINA
    	
 
    	
China HR
    	
 
    	
Asia Pacific, Europe &   Middle East
    
	
39
    	
 
    	
Vale Mozambique Ltda.
    	
 
    	
MOZAMBIQUE
    	
 
    	
RH África
    	
 
    	
África
    
	
40
    	
 
    	
Vale Newfoundland & Labrador Ltd.
    	
 
    	
CANADA
    	
 
    	
Base   Metals & North America HR
    	
 
    	
Base Metals & North America
    
	
41
    	
 
    	
Vale Nickel   (Dalian) Co. Ltd
    	
 
    	
CHINA
    	
 
    	
China HR
    	
 
    	
Asia Pacific, Europe &   Middle East
    
	
42
    	
 
    	
Vale Nouvelle-Calédonie S.A.S.
    	
 
    	
NEW CALEDONIA
    	
 
    	
Base   Metals & North America 
    	
 
    	
Base Metals & North America
    

 

17

 

	
#
    	
 
    	
Company
    	
 
    	
Country
    	
 
    	
HR Team
    	
 
    	
HR Solutions Center
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
HR
    	
 
    	
 
    
	
43
    	
 
    	
Vale Óleo e Gás S.A
    	
 
    	
BRAZIL
    	
 
    	
RH Brasil
    	
 
    	
América Latina
    
	
44
    	
 
    	
Vale Oman   Distribution Center LLC
    	
 
    	
OMAN
    	
 
    	
Oman HR
    	
 
    	
Asia Pacific,   Europe & Middle East
    
	
45
    	
 
    	
Vale Oman   Pelletizing Company LLC
    	
 
    	
OMAN
    	
 
    	
Oman HR
    	
 
    	
Asia Pacific,   Europe & Middle East
    
	
46
    	
 
    	
Vale Operações Portuárias S.A
    	
 
    	
BRAZIL
    	
 
    	
RH Carga Geral
    	
 
    	
Carga Geral
    
	
47
    	
 
    	
Vale Projectos e Desenvolvimento Moçambique Ltd.
    	
 
    	
MOZAMBIQUE
    	
 
    	
RH África
    	
 
    	
África
    
	
48
    	
 
    	
Vale S.A.
    	
 
    	
BRAZIL
    	
 
    	
RH Brasil
    	
 
    	
América Latina
    
	
49
    	
 
    	
Vale Taiwan Limited
    	
 
    	
TAIWAN
    	
 
    	
Base   Metals & North America HR
    	
 
    	
Base Metals & North America
    
	
50
    	
 
    	
Vale Technology   Development (Canada) Limited
    	
 
    	
CANADA
    	
 
    	
Base   Metals & North America HR
    	
 
    	
Base Metals & North America
    
	
51
    	
 
    	
Vale Trading   (Shanghai) Co., Ltd
    	
 
    	
CHINA
    	
 
    	
China HR
    	
 
    	
Asia Pacific,   Europe & Middle East
    
	
52
    	
 
    	
Vale Zambia, pty LTD.
    	
 
    	
ZAMBIA
    	
 
    	
RH África
    	
 
    	
África
    
	
53
    	
 
    	
ValeServe Malaysia Sdn. Bhd.
    	
 
    	
MALAYSIA
    	
 
    	
Malaysia HR
    	
 
    	
Asia Pacific,   Europe & Middle East
    

 

18

 

Annex B: Methodology For Currency Conversion

 

For Acquisition of Shares/ADRs

 

When the currency conversion is needed, it is recommended to use the following calculation methodology:

 

·                  Source of information: http://www.oanda.com/;

 

·                  Reference currency [A]: Currency in which the executive received his/her base salary on December 31st, 2013(19) (in the case of expatriates, host country currency);

 

·                  Currency of share trading [B]: Currency in which shares/ADRs are negotiated (BRL for shares negotiated in Brazil and USD for ADRs negotiated outside Brazil);

 

·                  Reference date for calculation: AIP payment day;

 

·                  Conversion rate: average selling (bid) rate which reflects reference date, in the form [B] for 1 (one) unit of [A];

 

·                  Conversion: the reference amount shall be converted into the currency of share trading, thus, determining the amount for the purchase of shares/ADRs;

 

·                  Rounding rules: all amounts used in the calculations must be rounded to 2 (two) decimal places, following the internationally recognized rounding rules.

 

For Payments Before the End of the Cycle

 

Cases of payment before the end of the cycle are detailed in section VIII.1. For these cases, when the currency conversion is necessary, it is recommended to use the following calculation methodology:

 

·                  Source of information: http://www.oanda.com/;

 

·                  Reference currency [A]: Currency in which the executive receives his/her base salary (in the case of expatriates, host country currency);

 

·                  Currency of share trading [B]: Currency in which shares/ADRs are negotiated (BRL for shares negotiated in Brazil and USD for ADRs negotiated outside Brazil);

 

·                  Reference period for calculation: 30 trade sessions previous to the reference dates informed in Table VII.1, according to each specific case;

 

·                  Conversion rate: weighted average of selling (bid) rate, based on the trading amount in each of the 30 trade sessions considered, in the form [A] for 1 (one) unit of [B];

 

·                  Conversion: the amount due (calculated in the currency of share trading) must be converted into the reference currency, thus, determining the amount for payment;

 

·                  Rounding rules: all amounts used in the calculations must be rounded to 2 (two) decimal places, following the internationally recognized rounding rules.

 

(19)  As registered in payroll systems in that date.

 

19

 

Annex C: Methodology for Calculating the Average Price of Shares

 

Cases of payment before the end of the cycle are detailed in section VIII.1. For those cases, when the calculation of price of the share/ADR is needed, it is recommended to use the following calculation methodology:

 

·                  Source of information: http://www.vale.com;

 

·                  Reference currency [A]: Currency in which the executive receives his/her base salary (in the case of expatriates, host country currency);

 

·                  Currency of share trading [B]: Currency in which shares/ADRs are negotiated (BRL for shares negotiated in Brazil and USD for ADRs negotiated outside Brazil);

 

·                  Reference period for calculation: 30 trade sessions previous to the reference dates informed in Table VII.1, according to each specific case;

 

·                  Average price (in [B]): weighted average of the daily closing prices of the shares/ADRs, based on the trading amount in each of the 30 trade sessions considered; and

 

·                  Rounding rules: all amounts used in the calculations must be rounded to 2 (two) decimal places, following the internationally recognized rounding rules.

 

20

 

Annex D: Amount of the Investment Options

 

Amounts applicable to executives in the following companies: [Companies outside Brazil to which the table below applies].

 

Table D.1: Amount of the investment options.

 

	
Hierarchical level
    	
 
    	
Grade
    	
 
    	
Amount of the Standard
   Investment Option
    (% of the gross annual base salary)
    	
 
    	
Amount of the Premium
   Investment Option
    (% of the gross annual base salary)
    
	
Director and equivalent   in Technical career
    	
 
    	
L5
    	
 
    	
XX
    	
 
    	
XX
    
	
 
    	
 
    	
L4/TM
    	
 
    	
XX
    	
 
    	
XX
    
	
Manager and equivalent in   Technical career
    	
 
    	
L3/TS
    	
 
    	
XX
    	
 
    	
XX
    
	
 
    	
 
    	
L2/TT
    	
 
    	
XX
    	
 
    	
XX
    
	
Project Leaders
    	
 
    	
PE
    	
 
    	
XX
    	
 
    	
XX
    
	
 
    	
 
    	
PS
    	
 
    	
XX
    	
 
    	
XX
    
	
 
    	
 
    	
PL
    	
 
    	
XX
    	
 
    	
XX
    

 

Important note:

 

Values indicated here are the ones that will be effectively converted into shares/ADRs.

 

For more information: please contact your local HR.

 

 

21

 

Annex E: Distribution for Placement of the Eligible Executives

 

Table E.1: Distribution for placement of the executives according to the total of eligible executives.

 

	
Total number of
   eligible
   (Group A + Group B)
    	
 
    	
Maximum number of
   executives placed in
   Group A
    
	
1
    	
 
    	
1
    
	
2
    	
 
    	
1
    
	
3
    	
 
    	
1
    
	
4
    	
 
    	
2
    
	
5
    	
 
    	
2
    
	
6
    	
 
    	
2
    
	
7
    	
 
    	
3
    
	
8
    	
 
    	
3
    
	
9
    	
 
    	
3
    
	
10
    	
 
    	
3
    
	
11
    	
 
    	
4
    
	
12
    	
 
    	
4
    
	
13
    	
 
    	
4
    
	
14
    	
 
    	
5
    
	
15
    	
 
    	
5
    
	
16
    	
 
    	
5
    
	
17
    	
 
    	
6
    
	
18
    	
 
    	
6
    
	
19
    	
 
    	
6
    
	
20
    	
 
    	
6
    
	
21
    	
 
    	
7
    
	
22
    	
 
    	
7
    
	
23
    	
 
    	
7
    
	
24
    	
 
    	
8
    
	
25
    	
 
    	
8
    
	
26
    	
 
    	
8
    
	
27
    	
 
    	
9
    
	
28
    	
 
    	
9
    
	
29
    	
 
    	
9
    
	
30
    	
 
    	
9
    
	
31
    	
 
    	
10
    
	
32
    	
 
    	
10
    
	
33
    	
 
    	
10
    
	
34
    	
 
    	
11
    
	
35
    	
 
    	
11
    
	
36
    	
 
    	
11
    
	
37
    	
 
    	
12
    
	
38
    	
 
    	
12
    
	
39
    	
 
    	
12
    
	
40
    	
 
    	
12
    
	
41
    	
 
    	
13
    
	
42
    	
 
    	
13
    
	
43
    	
 
    	
13
    
	
44
    	
 
    	
14
    
	
45
    	
 
    	
14
    
	
46
    	
 
    	
14
    
	
47
    	
 
    	
15
    
	
48
    	
 
    	
15
    
	
49
    	
 
    	
15
    
	
50
    	
 
    	
15
    

 

22

 

	
Total number of
   eligible
   (Group A + Group B)
    	
 
    	
Maximum number of
   executives placed in
   Group A
    
	
51
    	
 
    	
16
    
	
52
    	
 
    	
16
    
	
53
    	
 
    	
16
    
	
54
    	
 
    	
17
    
	
55
    	
 
    	
17
    
	
56
    	
 
    	
17
    
	
57
    	
 
    	
18
    
	
58
    	
 
    	
18
    
	
59
    	
 
    	
18
    
	
60
    	
 
    	
18
    
	
61
    	
 
    	
19
    
	
62
    	
 
    	
19
    
	
63
    	
 
    	
19
    
	
64
    	
 
    	
20
    
	
65
    	
 
    	
20
    
	
66
    	
 
    	
20
    
	
67
    	
 
    	
21
    
	
68
    	
 
    	
21
    
	
69
    	
 
    	
21
    
	
70
    	
 
    	
21
    
	
71
    	
 
    	
22
    
	
72
    	
 
    	
22
    
	
73
    	
 
    	
22
    
	
74
    	
 
    	
23
    
	
75
    	
 
    	
23
    
	
76
    	
 
    	
23
    
	
77
    	
 
    	
24
    
	
78
    	
 
    	
24
    
	
79
    	
 
    	
24
    
	
80
    	
 
    	
24
    
	
81
    	
 
    	
25
    
	
82
    	
 
    	
25
    
	
83
    	
 
    	
25
    
	
84
    	
 
    	
26
    
	
85
    	
 
    	
26
    
	
86
    	
 
    	
26
    
	
87
    	
 
    	
27
    
	
88
    	
 
    	
27
    
	
89
    	
 
    	
27
    
	
90
    	
 
    	
27
    
	
91
    	
 
    	
28
    
	
92
    	
 
    	
28
    
	
93
    	
 
    	
28
    
	
94
    	
 
    	
29
    
	
95
    	
 
    	
29
    
	
96
    	
 
    	
29
    
	
97
    	
 
    	
30
    
	
98
    	
 
    	
30
    
	
99
    	
 
    	
30
    
	
100
    	
 
    	
30
    

 

23

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00225-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00225-of-00352.parquet"}]]