Document:

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Exhibit 10.3

COMPENSATION OF DIRECTORS

Effective as of July 6, 2006

     Each non-employee director of Kaiser Aluminum Corporation (the “Company”) shall receive:

	 	•	 	an annual retainer of $30,000 per year;
	 
	 	•	 	an annual grant of restricted stock having a value equal to $30,000;
	 
	 	•	 	a fee of $1,500 per day for each meeting of the Board of Directors (the “Board”)
attended in person and $750 per day for each such meeting attended by phone; and
	 
	 	•	 	a fee of $1,500 per day for each Board committee meeting attended in person on a
date other than a date on which a meeting of the Board is held and
$750 per day for each
such meeting attended by phone.

In addition, the Lead Independent Director shall receive an additional annual retainer of $10,000,
Chairman of the Audit Committee of the Board shall receive an additional annual retainer of
$10,000, the Chairman of the Compensation Committee of the Board shall receive an additional annual
retainer of $5,000 and the Chairman of the Nominating and Corporate Governance Committee of the
Board shall receive an additional annual retainer of $5,000, with all such amounts payable at the
same time as the annual retainer.

Each non-employee director may elect to receive shares of common stock, par value $0.01 per share,
of the Company (“Common Stock”) in lieu of any or all of his or her annual retainer, including any
additional annual retainer for service as the Lead Independent Director or the Chairman of a
committee.

     The Company shall reimburse all directors for travel and other disbursements relating to
meetings of the Board and committees thereof, and non-employee directors shall be provided accident
insurance with respect to Company-related business travel.exv10w4

 

Exhibit 10.4

Summary of the

Kaiser Aluminum

2006 Short Term Incentive Plan

For Key Managers

This is a summary of the Kaiser Aluminum short term incentive program (STIP) effective January
1, 2006. The STIP performance period is annual. The 2006 program rewards participants for
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) from the Fabricated
Products business unit. The 2006 STIP is intended to serve as a bridge to future programs
following the transition from Chapter 11 to emergence. The metrics for the 2006 STIP are derived
from the design criteria employed in the Fabricated Products business unit from 2000 through 2005.

Purpose of the 2006 Kaiser Aluminum STIP

	1.	 	Focus attention on earnings (as measured by EBITDA) within Fabricated Products, Kaiser’s
core business segment.
	 
	2.	 	Reward the achievement of aggressive performance goals.
	 
	3.	 	Align the focus on earnings with achievement of other business objectives.
	 
	4.	 	Provide incentive opportunities that are consistent with competitive market.
	 
	5.	 	Link incentive pay to individual performance as well as the Company’s success and ability to
pay.

STIP Philosophy 

Compensation should be related as closely as possible to the success and safe operations of
our business. In order to achieve success, participants must continue to seek out and find ways to
not only enhance earnings but also to move the Company to a higher level of ongoing achievement.

The monetary incentive awards from the 2006 STIP will be based on EBITDA with modifiers for
achievement of plant, individual, and safety performance objectives.

Primary Performance Measures 

	•	 	The financial performance measure to
determine incentive awards is Earnings
Before Interest, Taxes, Depreciation and
Amortization (EBITDA) from the
Fabricated Products business unit.
Fabricated Products safety performance
as measured by Total Case Incident Rate
(TCIR) will be utilized as a performance
modifier.

	•	 	EBITDA for incentive compensation will
be as reported in the 10-K. However,
the EBITDA may be adjusted for certain
re-structuring costs, gains related to
divestitures or shutdown of locations,
or other extraordinary items. These
adjustments may spread certain
extraordinary items over a period of
years based upon the recommendation of
the CEO and the approval of the
Compensation Committee of the Board of
Directors.

 

 

Individual
Performance Criteria — Kaiser Aluminum STIP 

	•	 	Individual payouts from the 2006 STIP
may be adjusted based upon performance
against individual objectives and/or
business segment earnings.
	 
	•	 	The Business Unit modifier allows for a
plus or minus 50% of target or award
based on the performance of the specific
business segment that applies to
individuals.
	 
	•	 	There are up to four categories based on
individual objectives or targets set in
the first quarter of each year. Each
category allows for an individual
modifier of plus or minus 25% of target
or award.

Target Incentive 

	•	 	A monetary target incentive amount for
each participant is established for the
STIP based on competitive market,
internal compensation balance and
position responsibilities.

	•	 	Participants’ monetary incentive targets
are set at the beginning of each annual
STIP performance period.

	•	 	The participant’s monetary incentive
target amount represents the incentive
opportunity when certain financial,
safety, operational and individual
performance goals are met.

How Incentive Awards Are Determined 

	•	 	At the end of the year “EBITDA” is determined from Fabricated Products operating income plus depreciation and
amortization as reported in the 10-K and as adjusted by re-structuring amounts and other special adjustments (if
any).

	•	 	The “EBITDA” achievement is then use to determine the Award Multiple.

	•	 	The Award Multiple may be adjusted within a range of plus or minus 10% based upon Fabricated Products TCIR.

	•	 	The maximum Award Multiple is 3.0 times the sum of the individual monetary incentive target.

	•	 	A pool is established based upon the Award Multiple multiplied by the sum of individual monetary incentive targets
for the STIP participants. The entire pool is paid to participants.

STIP Award

	•	 	Each participant’s base award is determined as the vested monetary incentive target times Award Multiple.

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	•	 	Based on the Fabricated Products EBITDA and TCIR performance as well as business unit and
individual performance, the monetary award can be modified in aggregate up to plus or minus
100% of incentive target or base award.

	 	o	 	If the award multiple is 1.0 or greater, then the earnings and individual / safety
performance modifier will be a percentage of the calculated award.
	 
	 	o	 	If the award multiple is less than 1.0, then the earnings and individual / safety
performance modifier will be a percentage of incentive target.

Form and Timing of Payment

	•	 	Annual monetary incentive awards from the STIP are paid in cash no later than March 31
following the end of the year.

Other Administrative Provisions

	•	 	Annual monetary incentive awards paid from the
STIP count as additional compensation for purposes
of the Company’s Defined Contribution and
Restoration Plans but not for other Company
benefits. All applicable federal, state, local
and FICA taxes will be withheld from all incentive
award payments.

	•	 	Retirement or termination: If participant dies or
retires under “normal” (age 62), full early
retirement (position elimination), or is
involuntarily terminated due to position
elimination, or becomes disabled, on a date other
than December 31 of any year, a pro-rata incentive
award is earned based on actual eligibility during
the performance period. Leave of absence
participants earn a prorated award based on the
number of months of active employment. Incentive
awards are forfeited for all voluntary
terminations prior to the end of the performance
period (December 31).

	•	 	Beneficiary designation: In the event of your
death your designated beneficiary will receive any
payments due under the STIP. If there is no
designated beneficiary on file with Human
Resources, any amounts due will be paid to your
surviving spouse or, if no surviving spouse, to
your estate. Contact Division Human Resources to
designate or change your beneficiary.

	•	 	Non transferability: No amounts earned under the
STIP may be sold, transferred, pledged or
assigned, other than by will or the laws of
descent and distribution until the termination of
the applicable performance period. All rights to
benefits under the STIP are exercisable only by
you or, in the case of your death, by your
beneficiary.

	•	 	The STIP may be modified, amended or terminated by
the Compensation Committee at any time. If the
plan is terminated, modified or amended, then
future payments from the STIP are governed by such
modifications or amendments. If terminated, then
a prorated award will be determined based on
number of months up to termination, and paid
before April 30 following the end of the year.

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	•	 	The STIP constitutes no right to continued
employment. The Chairman and CEO, with oversight
from the Compensation Committee of the Board of
Directors, has the discretionary authority to
interpret the terms of the plan and his decisions
shall be final, binding and conclusive on all
persons affected.

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Exhibit 10.5

EMPLOYMENT AGREEMENT

     EMPLOYMENT AGREEMENT (this “Agreement”) dated as of July 6, 2006, between KAISER ALUMINUM
CORPORATION, a Delaware corporation (the “Company”), and JACK A. HOCKEMA (the “Executive”).

     The Company wishes to continue to employ the Executive, and the Executive wishes to continue
his employment with the Company, on the terms and conditions set forth in this Agreement.

     Accordingly, the Company and the Executive hereby agree as follows:

	1.	 	Employment; Duties and Acceptance.

     1.1.     Employment Duties. The Company hereby agrees to employ the Executive for the
Term (as defined in Section 2.1), to render exclusive and full-time services to the Company , in
the capacity of president and chief executive officer of the Company and to perform such other
duties consistent with such position (including service as a director or officer of any affiliate
of the Company if elected) as may be assigned by the Board of Directors of the Company (the
“Board”); provided, however, that the Executive may serve on the Board of Directors of one other
business at any time during the Term that does not compete with the Company and may participate in
civic, charitable and industry organizations to the extent that such participation does not
materially interfere with the performance of his duties hereunder. The Executive’s title shall be
President and Chief Executive Officer, or such other titles of at least equivalent level consistent
with the Executive’s duties from time to time as may be assigned to the Executive by the Board, and
the Executive shall have all authorities as are customarily and ordinarily exercised by executives
in similar positions in similar businesses in the United States. The Executive shall report solely
to the Board. The Company agrees to use its best efforts to cause the Executive to be elected to
the Board and to have the Executive serve as a member of the Board throughout his service during
the Term.

     1.2.     Acceptance. The Executive hereby accepts such employment and agrees to render
the services described above. During the Term, and consistent with the above, the Executive agrees
to serve the Company faithfully and to the best of the Executive’s ability, to devote the
Executive’s entire business time, energy and skill to such employment, and to use the Executive’s
best efforts, skill and ability to promote the Company’s interests.

     1.3.     Location. The duties to be performed by the Executive hereunder shall be
performed primarily at the Company’s offices in Foothill Ranch, California or such other location
as mutually agreed by the parties, subject to reasonable travel requirements consistent with the
nature of the Executive’s duties from time to time on behalf of the Company. The Executive shall
not be required to change his principal residence in the event the Company relocates its offices.

	2.	 	Term of Employment.

     2.1.     Term. The term of the Executive’s employment under this Agreement (the “Term”)
shall commence on the effective date of the Company’s Plan of Reorganization in the

 

 

pending bankruptcy cases (the “Effective Date”), and shall continue until the earlier of (i)
the fifth anniversary of the Effective Date and (ii) such earlier date on which the Term is
terminated pursuant to Section 4. The Term shall automatically be renewed and extended for
successive periods of one (1) year unless either party hereto shall have notified the other party
hereto in writing that such extension shall not take effect at least one (1) year prior to the end
of the initial Term or of any extension.

	3.	 	Compensation; Benefits.

     3.1.     Salary. As compensation for the services to be rendered pursuant to this
Agreement, the Company agrees to pay to the Executive during the Term a base salary, payable
monthly in arrears, at the initial annual rate of $730,000 (the “Base Salary”). On each
anniversary of the Effective Date or such other appropriate date as may be agreed by the parties
during the Term, the Company shall review the Base Salary and determine if, and by how much, the
Base Salary should be increased. Once the Base Salary has been increased hereunder, it shall not
be decreased without the Executive’s consent. All payments of Base Salary or other compensation
hereunder shall be less such deductions or withholdings as are required by applicable law and
regulations.

     3.2.     Bonus. In addition to the amounts to be paid to the Executive pursuant to
Section 3.1, if the Company achieves 100% or more of the Company’s target objectives for a fiscal
year of the Company, such target objectives which are recommended by the Executive and approved by
the Compensation Committee of the Board (the “Compensation Committee”) not later than March 31 of
such year, the Executive shall receive an annual bonus (an “Annual Bonus”) equal to the product of
(i) the Executive’s Base Salary at the rate in effect at the end of such fiscal year and (ii)
68.5%. Should the Company achieve such target objectives in a fiscal year which are significantly
beyond expectations for the Company’s performance for such year, the 68.5% multiplier set forth in
clause (ii) of the preceding sentence shall be increased up to a maximum of 300% of the target
bonus opportunity (or 205.5% of Base Salary). A formula will be established to provide for
recognition of threshold objectives below such target objectives and for pro rata awards between
the threshold award opportunity and the maximum award opportunity. Any Annual Bonus earned
hereunder shall be payable not later than the 15th day of the third month following the
end of the fiscal year to which it relates.

     In the event that the Executive’s employment shall terminate other than on a date which is the
last day of a fiscal year of the Company, the Executive’s target Annual Bonus with respect to the
fiscal year in which employment terminates shall be prorated for the actual number of days of the
Executive’s employment under this Agreement during the fiscal year in which occurs the Executive’s
termination of employment, and such Annual Bonus shall be payable to the Executive within ten (10)
business days following such termination of employment. Notwithstanding the foregoing, the
Executive shall be entitled to no Annual Bonus in respect of or the fiscal year of the Company in
which his Employment terminates if such termination is pursuant to Section 4.4.

     3.3.     Emergence Grant. As of the Effective Date, the Executive is awarded a one-time
grant of 185,000 shares of restricted stock, subject to a three-year cliff vesting schedule and
other customary restrictions that shall lapse on the third anniversary of the date of such award or

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earlier upon a Change of Control or the Executive’s retirement, death, Disability, termination
of employment under this Agreement other than for Cause or termination by the Executive for Good
Reason. For purposes of this Section 3.3, the term “retirement” means the Executive’s termination
of employment for any reason at or after the earlier of (i) age 65, or (ii) the end of the initial
Term of this Agreement.

     3.4.     Incentive Compensation. For fiscal year 2007 and each fiscal year thereafter,
the Executive will be eligible to receive grants of long-term incentive compensation, including,
but not limited to equity awards (such as restricted stock, stock options and performance shares)
having a target economic value of 165% of the Base Salary for the fiscal year, on similar terms as
grants made to senior executives; provided, however, that the grants shall provide for full vesting
at retirement (as defined in Section 3.3) and shall further provide that in the event of a
termination of the Executive’s employment, other than pursuant to Section 4.4 or a non-renewal of
the Term of this Agreement, the Executive’s vested interest in each outstanding grant shall be not
less favorable than had such grant provided for vesting in proportion to the actual number of days
of the Executive’s employment during the applicable vesting period over the total number of days in
such vesting period.

     3.5.     Business Expenses. The Company shall pay or reimburse the Executive for all
reasonable expenses actually incurred or paid by the Executive during the Term in the performance
of Executive’s services under this Agreement, subject to and in accordance with applicable expense
reimbursement and related policies and procedures as in effect from time to time.

     3.6.     Vacation. During each year of the Term, the Executive shall be entitled to a
paid vacation period or periods of four (4) weeks taken in accordance with applicable vacation
policy as in effect from time to time.

     3.7.     Benefits; Perquisites. During the Term, the Executive shall be entitled to
participate in those retirement plans, deferred compensation plans, group insurance, life, medical,
dental, disability and other benefit plans of the Company at the same level as those benefits are
provided by the Company from time to time to senior executives of the Company generally. Also,
during the Term, the Executive shall be entitled to fringe benefits and perquisites at the same
level as those benefits are provided by the Company from time to time to senior executives of the
Company generally. However, nothing herein shall require the Company to establish and/or maintain
any such plans.

     3.8.     Legal Expenses. The Company agrees to pay the legal fees and expenses incurred
by the Executive in connection with the negotiation and consummation of this Agreement.

     3.9.     Termination of Severance Agreements. Prior to the Effective Date, Executive is a
participant in the Company’s Key Employee Retention Program, approved by the Bankruptcy Court on
September 3, 2005, consisting of the Retention Plan, Severance Plan, Change in Control Severance
Program and Long-Term Incentive Plan. Executive shall continue his participation in the Retention
Plan and the Long-Term Incentive Plan following the Effective Date with respect to awards granted
prior to the Effective Date, subject to the terms and

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conditions set forth in such plans. The parties intend that this Agreement will replace and
supersede the Severance Plan and the Change in Control Severance Program.

	4.	 	Termination.

     4.1.     General. Following any termination of the Executive’s employment, the Company
shall pay or provide to the Executive, or his estate or beneficiary, as the case may be, (i) Base
Salary earned through the date of such termination; (ii) except in the case of a termination
described in Section 4.4, any earned, but unpaid, annual cash incentive or other incentive awards,
including the Executive’s Annual Bonus earned pursuant to Section 3.2; (iii) a payment representing
the Executive’s accrued but unpaid vacation; (iv) any vested, but not forfeited benefits on the
date of such termination under the Company’s employee benefit plans, as determined in accordance
with the terms of such plans but subject to the provisions of Section 3.3 and 3.4; and (v) benefit
continuation and conversion rights to which the Executive is entitled under the Company’s employee
benefit plans.

     4.2.     Death. If the Executive shall die during the Term, the Term shall immediately
terminate and the Executive shall be entitled to no further payments or benefits hereunder, except
for those payments and benefits described in Section 4.1. All outstanding equity grants shall vest
in the manner provided in the applicable award (subject to the provisions of Section 3.3 and 3.4),
and any vested but unexercised grants shall become exercisable and shall remain so for the period
commencing on the date of such termination through the second anniversary of such termination.

     4.3.     Disability. If during the Term the Executive shall become physically or mentally
disabled (a “Disability”), whether totally or partially, such that the Executive is unable to
perform the Executive’s principal services hereunder for a period of not less than ninety (90)
consecutive days, the Company may at any time after the last day of such period (provided that such
disability is continuing), by written notice to the Executive, terminate the Term. Upon
termination under this Section 4.3, all outstanding equity grants shall vest in the manner provided
in the applicable award (subject to the provisions of Section 3.3 and 3.4), and any vested but
unexercised grants shall become exercisable and shall remain so for the period commencing on the
date of such termination through the second anniversary of such termination. In addition to those
payments and benefits described in Section 4.1, the Executive shall be entitled to payments made to
the Executive pursuant to a Company insurance plan.

     4.4.     For Cause; Without Good Reason. If the Company terminates the Executive’s
employment for Cause or the Executive terminates his employment other than for Good Reason, the
Term shall terminate immediately and (i) the Executive shall be entitled to receive no further
amounts or benefits hereunder, except those payments and benefits described in Section 4.1 or as
required by law, (ii) all unvested equity grants pursuant to Section 3.3 and 3.4 shall be
immediately forfeited, and (iii) all vested but unexercised equity grants shall be forfeited on the
date which is ninety (90) days following such termination. For purposes of this Agreement, “Cause”
shall mean the Executive (A) being convicted of, or pleading guilty or no contest to, a felony
(except for motor vehicle violations); (B) engaging in conduct that constitutes gross misconduct or
fraud in connection with the performance of his duties to the Company, or (C) materially breaching
this Agreement which the Executive does not cure within thirty (30) days

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after the Company provides written notice of such breach to the Executive. The Executive
shall not terminate his employment without Good Reason prior to the date which is thirty (30) days
following the date on which the Executive provides written notice of such termination to the
Company; provided, however, that the Company may waive such notice period in writing.

     4.5.     Without Cause; For Good Reason. If during the Term the Company terminates the
Executive’s employment without Cause or if the Executive terminates his employment with Good
Reason, the Term shall immediately terminate and the Executive shall be entitled to no further
payments or benefits hereunder other than his Accrued Benefits, except: (i) the Company shall make
a lump sum payment to the Executive within ten (10 ) business days of such termination in an amount
equal to two hundred percent (200%) of the sum of the Base Salary plus target Annual Bonus
opportunity for the fiscal year in which occurs the Executive’s termination of employment; (ii)
continuing receipt of group insurance, life, medical, dental, disability and other similar benefits
described in Section 3.7 (to the extent to which such are in place from time to time, but excluding
perquisites) during the twenty-four month period commencing on the date of such termination; and
(iii) all outstanding equity grants shall vest in the manner provided in the applicable award
(subject to the provisions of Section 3.3 and 3.4), and any vested but unexercised grants shall
become exercisable and shall remain so for the period commencing on the date of such termination
through the second anniversary of such termination.

     For purposes of this Agreement, “Good Reason” shall mean, without the Executive’s consent, the
occurrence of any of the following during the Term: (A) any reduction in the Executive’s Base
Salary, target bonus opportunity or benefits pursuant to Section 3 of this Agreement without the
Executive’s prior consent; (B) a material change in the Executive’s position causing it to be of
materially less stature or responsibility, or a change in the Executive’s duties, authorities,
responsibilities or reporting relationship, but in each case only if the Company does not cure such
change within thirty (30) days after the Executive provides written notice of such change to the
Company; (C) the Company materially breaches this Agreement and does not cure such breach within
thirty (30) days after the Executive provides written notice of such breach to the Company; or (D)
the Executive is not nominated for election to the Board, or the Executive is not timely
renominated for election to the Board or is involuntarily removed from the Board under
circumstances that would not constitute Cause or Disability hereunder. The Company shall not
terminate the Executive’s employment without Cause prior to the date which is thirty (30) days
following the date on which the Company provides written notice of such termination to the
Executive; provided, however, that the Executive may waive such notice period in writing.

     Notwithstanding anything to the contrary in clause (i) immediately above, if the Executive
constitutes a “key employee” as defined in Section 416(i) of the Internal Revenue Code and as
applied under Section 409A of the Internal Revenue Code at such termination, the payment under
clause (i) immediately above shall be paid on the first business day following the sixth month
anniversary of the Executive’s termination of employment if necessary to comply with Section 409A
of the Internal Revenue Code and regulations issued thereunder.

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     4.6.     Change of Control.

          4.6.1     In the event of a Change of Control, the Executive shall become fully vested in all
outstanding equity grants as of the date of the Change of Control. In addition to those payments
and benefits described in Section 4.1, if during the Term the Company terminates the Executive’s
employment without Cause or the Executive terminates his employment with Good Reason, in each case
within two (2) years following a Change of Control or the Effective Date, whichever is later, the
Term shall immediately terminate and the Executive shall be entitled to no further payments or
benefits hereunder other than his Accrued Benefits, except: (i) the Company shall make a lump sum
payment to the Executive within ten (10 ) business days of such termination in an amount equal to
three hundred percent (300%) of the sum of the Base Salary plus target Annual Bonus opportunity for
the fiscal year in which occurs the Executive’s termination of employment; (ii) continuing receipt
of group insurance, life, medical, dental, disability and other similar benefits described in
Section 3.7 (to the extent to which such are in place from time to time, but excluding perquisites)
during the thirty-six month period commencing on the date of each termination; (iii) any previously
unvested grants shall become exercisable and all outstanding grants shall remain exercisable for
the period commencing on the date of such termination through the earlier the second anniversary of
such termination; and (iv) the payment required, if any, pursuant to Section 4.6.3. If the
Executive constitutes a “key employee” as defined in Section 416(i) of the Internal Revenue Code
and as applied under Section 409A of the Internal Revenue Code at such termination of employment,
the payment due under clause (i) immediately above shall be paid on the first business day
following the sixth month anniversary of Executive’s termination of employment if necessary to
comply with Section 409A of the Internal Revenue Code and regulations issued thereunder.

          4.6.2     For purposes of this Agreement, a “Change of Control” shall be deemed to occur upon: (i)
the sale, lease, conveyance or other disposition of all or substantially all of the Company’s
assets as an entirety or substantially as an entirety to any person, entity or group of persons
acting in concert other than in the ordinary course of business; (ii) any transaction or series of
related transactions (as a result of a tender offer, merger, consolidation, issuance of securities
pursuant to the Plan of Reorganization, purchase or otherwise) that results in any Person (as
defined in Section 13(h)(8)(E) under the Securities Exchange Act of 1934) other than the Union VEBA
Trust becoming the beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of
1934), directly or indirectly, of 20% or more of the aggregate voting power of all classes of
common equity of the Company, except if such Person is (w) a subsidiary of the Company, (x) an
employee benefit plan for employees of the Company or (y) a company formed to hold the Company’s
common equity securities and whose shareholders constituted, at the time such company became such
holding company, substantially all the shareholders of the Company; or (iii) a change in the
composition of the Board over a period of twenty-four (24) consecutive months or less such that a
majority of the then current Board members ceases to be comprised of individuals who either (a)
have been Board members continuously since the beginning of such period, or (b) have been elected
or nominated for election as Board members during such period by at least a majority of the Board
members described in clause (a) who were still in office at the time such election or nomination
was approved by the Board. The parties recognize that a Change of Control may occur
contemporaneous with or prior to the Company’s emergence from bankruptcy or the Effective Date.

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          4.6.3.     If it shall be determined that any payment or distribution of any type to or in respect
of the Executive made directly or indirectly by the Company, whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement or otherwise (the “Total Payments”), is or
will be subject to the excise tax imposed by Section 4999 of the Internal Code of 1986, as amended
(the “Code”), or any interest or penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties, are collectively referred to as the “Excise Tax”),
then the Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an
amount such that after payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes) imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Total Payments.

          4.6.4     All computations and determinations relevant to Section 4.6.3 and this 4.6.4 shall be
made by an independent accounting firm selected and reimbursed by the Company (The “Accounting
Firm”), subject to the Executive’s consent (not to be unreasonably withheld), which firm may be the
Company’s accountants. Such determination shall include whether any of the Total Payments are
“parachute payments” (within the meaning of Section 280G of the Code). In making the initial
determination hereunder as to whether a Gross-Up Payment is required, the Accounting Firm shall
determine that no Gross-Up Payment is required if the Accounting Firm is able to conclude that no
“Change of Control” has occurred (within the meaning of Section 280G of the Code). If the
Accounting Firm determines that a Gross-Up Payment is required, the Accounting Firm shall provide
its determination (the “Determination”), together with detailed supporting calculations regarding
the amount of any Gross-Up Payment and any other relevant matter both to the Company and the
Executive by no later than ten (10) days following its Determination, if applicable, or such
earlier time as is requested by the Company or the Executive (if the Executive reasonably believes
that any of the Total Payments may be subject to the Excise Tax). If the Accounting Firm
determines that no Excise Tax is payable by the Executive, it shall furnish the Executive and the
Company with a written statement that such Accounting Firm has concluded that no Excise Tax is
payable (including the reasons therefor) and that the Executive has substantial authority not to
report any Excise Tax on his federal income tax return.

          4.6.5     If a Gross-Up Payment is determined to be payable, it shall be paid to the Executive
within twenty (20) days after the Determination (and all accompanying calculations and other
material supporting the Determination) is delivered to the Company by the Accounting Firm. Any
determination by the Accounting Firm shall be binding upon the Company and the Executive, absent
manifest error.

          4.6.6     As a result of uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments
not made by the Company should have been made (“Underpayment”) or that Gross-Up Payments will have
been made by the Company which should not have been made (“Overpayments”). In either such event,
the Accounting Firm shall determine the amount of the Underpayment or Overpayment that has
occurred. In the case of an Underpayment, the amount of such Underpayment (together with any
interest and penalties payable by the Executive as a result of such Underpayment) shall be promptly
paid by the Company to or for the benefit of the Executive.

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          4.6.7     In the case of an Overpayment, the Executive shall, at the direction and expense of the
Company, take such steps as are reasonably necessary (including the filing of returns and claims
for refund), follow reasonable instructions from, and procedures established by, the Company, and
otherwise reasonably cooperate with the Company to correct such Overpayment, provided, however,
that (i) the Executive shall not in any event be obligated to return to the Company an amount
greater than the net after-tax portion of the Overpayment that he has retained or has recovered as
a refund from the applicable taxing authorities and (ii) this provision shall be interpreted in a
manner consistent with the intent of this Section 4.6, which is to make the Executive whole, on an
after-tax basis, from the application of the Excise Taxes, it being acknowledged and understood
that the correction of an Overpayment may result in the Executive repaying to the Company an amount
which is less than the Overpayment.

          4.6.8     The Executive shall notify the Company in writing of any claim by the Internal Revenue
Service relating to the possible application of the Excise Tax under Section 4999 of the Code to
any of the payments and amounts referred to herein and shall afford the Company, at its expense,
the opportunity to control the defense of such claim (for the sake of clarity, if the Internal
Revenue Service is successful in any such claim or the Executive reaches a final settlement with
the Internal Revenue Service with respect to such claim (after having afforded the Company, at its
expense, the opportunity to control the defense of such claim), the amount of the Excise Tax
resulting from such successful claim or settlement shall be determinative as to whether or not
there has been an Underpayment or an Overpayment for purposes of Section 4.6.6).

          4.6.9     Without limiting the intent of this Section 4.6.9 to make the Executive whole, on an
after-tax basis, from the application of the Excise Taxes, all determinations by the Accounting
Firm shall be made with a view to minimizing the application of Sections 280G and 4999 of the Code
of any of the Total Payments, subject, however, to the following: the Accounting Firm shall make
its determination on the basis of substantial authority and shall provide opinions to that effect
to both the Company and the Executive upon the request of either of them.

     4.7.     End of Term. If the Company notifies the Executive that the Term will not be
extended in accordance with the provisions of Section 2.1, the Executive shall be entitled to no
further payments or benefits, except for those payments and benefits described in Section 4.1. All
outstanding equity grants shall vest in the manner provided in the applicable award (subject to the
provisions of Section 3.3 and 3.4), and any vested but unexercised grants shall become exercisable
and shall remain so for the period commencing on the expiration of the Term and continuing through
the second anniversary of the end of the Term.

     4.8.     No Mitigation. Upon termination of the Executive’s employment with the Company,
the Executive shall be under no obligation to seek other employment or otherwise to mitigate the
obligations of the Company under this Agreement.

	5.	 	Protection of Confidential Information; Non-Competition.

     5.1.     The Executive acknowledges that the Executive’s services will be unique, that they will
involve the development of Company-subsidized relationships with key customers,

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suppliers, and service providers as well as with key Company employees and that the
Executive’s work for the Company will give the Executive access to highly confidential information
not available to the public or competitors, including trade secrets and confidential marketing,
sales, product development and other data and information which it would be impracticable for the
Company to effectively protect and preserve in the absence of this Section 5 and the disclosure or
misappropriation of which could materially adversely affect the Company. Accordingly, the
Executive agrees:

          5.1.1     Except in the course of performing the Executive’s duties provided for in Section 1.1,
not at any time, whether before, during or after the Executive’s employment with the Company, to
divulge to any other entity or person any confidential information acquired by the Executive
concerning the Company’s or its affiliates’ financial affairs or business processes or methods or
their research, development or marketing programs or plans, or any other of its or their trade
secrets. In the event that the Executive is requested or required to make disclosure of
information subject to this Section 5.1.1 under any court order, subpoena or other judicial
process, then, except as prohibited by law, the Executive will promptly notify the Company, take
all reasonable steps requested by the Company to defend against the compulsory disclosure and
permit the Company to control with counsel of its choice any proceeding relating to the compulsory
disclosure. The Executive acknowledges that all information, the disclosure of which is prohibited
by this section, is of a confidential and proprietary character and of great value to the Company.

          5.1.2     to deliver promptly to the Company on termination of the Executive’s employment with the
Company, or at any time that the Company may so request, all confidential memoranda, notes,
records, reports, manuals, drawings, blueprints and other documents (and all copies thereof)
relating to the Company’s business and all property associated therewith, which the Executive may
then possess or have under the Executive’s control.

     5.2.     In consideration of the Company’s entering into this Agreement, the Executive agrees that
at all times during the Term and thereafter, until the first anniversary of the date of the
termination of the Term for any reason, the Executive shall not, directly or indirectly, for
himself or on behalf of or in conjunction with, any other person, company, partnership,
corporation, business, group, or other entity (each, a “Person”):

          5.2.1     provide services to a “Competitor” (as defined below), as an officer, director,
shareholder, owner, partner, joint venturer, or in any other capacity, whether as an executive,
independent contractor, consultant, advisor, or sales representative; or

          5.2.2     call upon any Person who is or that is, at such date of termination, engaged in activity
on behalf of the Company or any affiliate of the Company for the purpose or with the intent of
enticing such Person to cease such activity on behalf of the Company or such affiliate.

     For purposes of this Agreement, “Competitor” means, on any date, a person or entity that is
primarily engaged in a material line of business conducted by the Company.

     5.3.     If the Executive commits a breach of any of the provisions of Section 5.1 or 5.2 hereof,
the Company shall have the right and remedy to have the provisions of this Agreement

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specifically enforced by any court having equity jurisdiction, it being acknowledged and
agreed that any such breach will cause irreparable injury to the Company and that money damages
will not provide an adequate remedy to the Company, and, if the Executive attempts or threatens to
commit a breach of any of the provisions of Section 5.1 or 5.2, the right and remedy to be granted
a preliminary and permanent injunction in any court having equity jurisdiction against the
Executive with respect to the attempted or threatened breach, it being agreed that each of such
rights and remedies shall be independent of the others and shall be severally enforceable, and that
all of such rights and remedies shall be in addition to, and not in lieu of, any other rights and
remedies available to the Company under law or in equity.

     5.4.     If any of the covenants contained in Section 5.1, 5.2 or 5.3, or any part thereof,
hereafter are construed to be invalid or unenforceable, the same shall not affect the remainder of
the covenant or covenants, which shall be given full effect, without regard to the invalid
portions.

     5.5.     The period during which the prohibitions of Section 5.2 are in effect shall be extended
by any period or periods during which the Executive is in violation of Section 5.2.

     5.6.     If any of the covenants contained in Section 5.1 or 5.2, or any part thereof are held to
be unenforceable because of the duration of such provision or the area covered thereby, the parties
agree that the court making such determination shall have the power to reduce the duration and/or
area of such provision so as to be enforceable to the maximum extent permitted by applicable law
and, in its reduced form, said provision shall then be enforceable.

     5.7.     The parties hereto intend to and hereby confer jurisdiction to enforce the covenants
contained in Sections 5.1, 5.2 and 5.3 upon the courts of any state within the geographical scope
of such covenants. In the event that the courts of any one or more of such states shall hold such
covenants wholly unenforceable by reason of the breadth of such covenants or otherwise, it is the
intention of the parties hereto that such determination not bar or in any way affect the Company’s
right to the relief provided above in the courts of any other states within the geographical scope
of such covenants as to breaches of such covenants in such other respective jurisdictions, the
above covenants as they relate to each state being for this purpose severable into diverse and
independent covenants.

	6.	 	Inventions and Patents.

     The Executive agrees that all processes, technologies and inventions (collectively,
“Inventions”), including new contributions, improvements, ideas and discoveries, whether patentable
or not, conceived, developed, invented or made by him during the Term shall belong to the Company,
provided that such Inventions grew out of the Executive’s work with the Company or any of its
subsidiaries or affiliates, are related in any manner to the business (commercial or experimental)
of the Company or any of its subsidiaries or affiliates or are conceived or made on the Company’s
time or with the use of the Company’s facilities or materials. The Executive shall further (a)
promptly disclose such Inventions to the Company; (b) assign to the Company, without additional
compensation, all patent and other rights to such Inventions for the United States and foreign
countries; (c) sign all papers necessary to carry out the foregoing; and (d) give testimony in
support of the Executive’s inventorship.

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	7.	 	Intellectual Property.

     Notwithstanding and without limiting the provisions of Section 6, the Company shall be the
sole owner of all the products and proceeds of the Executive’s services hereunder, including, but
not limited to, all materials, ideas, concepts, formats, suggestions, developments, arrangements,
packages, programs and other intellectual properties that the Executive may acquire, obtain,
develop or create in connection with or during the Term, free and clear of any claims by the
Executive (or anyone claiming under the Executive) of any kind or character whatsoever (other than
the Executive’s right to receive payments hereunder), the Executive shall, at the request of the
Company, execute such assignments, certificates or other instruments as the Company may from time
to time deem necessary or desirable to evidence, establish, maintain, perfect, protect, enforce or
defend its right, title or interest in or to any such properties.

	8.	 	Indemnification.

     In addition to any rights to indemnification to which the Executive is entitled under the
Company’s charter and by-laws, to the extent permitted by applicable law, the Company will
indemnify, from the assets of the Company supplemented by insurance in an amount customary for
corporations similar in size and value to the Company and engaged in business activities similar to
the business activities of the Company, the Executive at all times, during and after the Term, and,
to the maximum extent permitted by applicable law, shall pay the Executive’s expenses (including
reasonable attorneys’ fees and expenses, which shall be paid in advance by the Company as incurred,
subject to recoupment in accordance with applicable law) in connection with any threatened or
actual action, suit or proceeding to which the Executive may be made a party, brought by any
shareholder of the Company directly or derivatively or by any third party by reason of any act or
omission or alleged act or omission in relation to any affairs of the Company or any subsidiary or
affiliate of the Company of the Executive as an officer, director or employee of the Company or of
any subsidiary or affiliate of the Company. The Company shall maintain during the Term and
thereafter insurance coverage sufficient to satisfy any indemnification obligation of the Company
arising under this Section 8.

	9.	 	Notices.

     All notices, requests, consents and other communications required or permitted to be given
hereunder shall be in writing and shall be deemed to have been duly given if delivered personally,
one day after sent by overnight courier or three days after mailed first class, postage prepaid, by
registered or certified mail as follows (or to such other address as either party shall designate
by notice in writing to the other in accordance herewith):

     If to the Company, to:

Kaiser Aluminum Corporation

27422 Portola Parkway, Suite 350

Foothill Ranch, California 92610

Attn: General Counsel

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     If to the Executive, to the Executive’s principal residence as reflected in the records of the
Company.

	10.	 	General.

     10.1.     This Agreement shall be governed by and construed and enforced in accordance with the
laws of the State of Delaware applicable to agreements made between residents thereof and to be
performed entirely in Delaware.

     10.2.     The section headings contained herein are for reference purposes only and shall not in
any way affect the meaning or interpretation of this Agreement.

     10.3.     This Agreement sets forth the entire agreement and understanding of the parties relating
to the subject matter hereof and supersedes all prior agreements, arrangements and understandings,
written or oral, relating to the subject matter hereof. No representation, promise or inducement
has been made by either party that is not embodied in this Agreement, and neither party shall be
bound by or liable for any alleged representation, promise or inducement not so set forth.

     10.4.     This Agreement, and the Executive’s rights and obligations hereunder, may not be
assigned by the Executive, nor may the Executive pledge, encumber or anticipate any payments or
benefits due hereunder, by operation of law or otherwise. The Company may assign its rights,
together with its obligations, hereunder (i) to any affiliate or (ii) to a third party in
connection with any sale, transfer or other disposition of all or substantially all of any business
to which the Executive’s services are then principally devoted, provided that no assignment
pursuant to clause (ii) shall relieve the Company from its obligations hereunder to the extent the
same are not timely discharged by such assignee. In this regard, the parties acknowledge that
Executive shall be employed by the Company’s subsidiary, Kaiser Aluminum Fabricated Products, LLC,
a Delaware limited liability company (“KAFP”), and that while Executive is employed by KAFP, KAFP
shall assume the payment obligations of the Company under this Agreement subject to the proviso set
forth above in the preceding sentence which states that the Company shall not be relieved of its
obligations hereunder to the extent that the obligations assumed by KAFP are not timely discharged
by KAFP.

     10.5.     The respective rights and obligations of the parties hereunder shall survive any
termination of this Agreement or the Term to the extent necessary to the intended preservation of
such rights and obligations.

     10.6.     This Agreement may be amended, modified, superseded, canceled, renewed or extended and
the terms or covenants hereof may be waived, only by a written instrument executed by both of the
parties hereto, or in the case of a waiver, by the party waiving compliance. The failure of either
party at any time or times to require performance of any provision hereof shall in no manner affect
the right at a later time to enforce the same. No waiver by either party of the breach of any term
or covenant contained in this Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be, or construed as, a further or continuing waiver of any such
breath, or a waiver of the breach of any other term or covenant contained in this Agreement.

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     10.7.     This Agreement may be executed in two or more counterparts, each of which shall be
deemed to be an original but all of which together will constitute one and the same instrument.

	11.	 	Dispute Resolution.

     Subject to the rights of the Company pursuant to Section 5.3 above, any controversy, claim or
dispute arising out of or relating to this Agreement, the breach thereof, or the Executive’s
employment by the Company shall be settled by arbitration with one arbitrator. The arbitration
will be administered by the American Arbitration Association in accordance with its National Rules
for Resolution of Employment Disputes. The arbitration proceeding shall be confidential, and
judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction.
Any such arbitration shall take place in the Orange County, California, or in any other mutually
agreeable location. In the event any judicial action is necessary to enforce the arbitration
provisions of this Agreement, sole jurisdiction shall be in the federal and state courts, as
applicable, located in California. Any request for interim injunctive relief or other provisional
remedies or opposition thereto shall not be deemed to be a waiver of the right or obligation to
arbitrate hereunder. The Company shall pay or promptly reimburse the Executive for all reasonable
costs, fees and expenses relating to such dispute, including reasonable legal fees.

	12.	 	Subsidiaries; Affiliates; and Benefits.

     As used herein, the term “subsidiary” shall mean any corporation or other business entity
controlled directly or indirectly by the corporation or other business entity in question; the term
“affiliate” shall mean and include any corporation or other business entity directly or indirectly
controlling, controlled by or under common control with the corporation or other business entity in
question; and references to “benefits” and “benefit plans” shall include the benefits provided by
the Company and the Company’s subsidiaries from time to time to senior executives of the Company
generally and the underlying plans.

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

	 	 	 	 	 
	 	KAISER ALUMINUM CORPORATION

 	 
	 	By:  	/s/ John M. Donnan
 	 
	 	 	Name:  	John M. Donnan 	 
	 	 	Title:  	Vice President, Secretary & General Counsel 	 
	 

	 	 	 	 	 
	 	 	 
	 	 	/s/ Jack A. Hockema
 	 
	 	 	Jack A. Hockema 	 
	 	 	 	 
	 

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