Document:

EXH10.43Novelis2014AIP

EXHIBIT 10.43

NOVELIS INC.
2014 ANNUAL INCENTIVE PLAN (“2014 AIP”) 

1.     Title and Administration: The plan shall be referred to as the 2014 AIP. The plan will be administered by Novelis Corporate Human Resources. 
2.     Performance Year: For this plan the performance period will be April 1, 2013 to March 31, 2014. Payouts, computed on the basis of performance, will be made following necessary approvals. 
3.     Eligibility: Employees in bands 11B and above are eligible to participate. 
4.     Opportunity: The target opportunity across regions will be in line with market practice and defined to be competitive and motivate employees to drive the desired behavior in the organization. 
5.     Measures and application of weights to each measure to be used for computation of the 2014 AIP: Three measures shall be used to compute performance. The three measures are as follows: 
a.     Normalized EBITDA: Defined as Net Revenues minus COGS without depreciation minus S&AE minus R&D plus Realized G/L on Derivatives. This will carry a 50% weighting on the overall plan. 
b.     Operating Free Cash Flow: Defined as Operating EBITDA minus CAPEX minus Change in Working Capital minus Change in Deferred Items. In terms of specifics, the measure of operating free cash flow will be used for the regions and Free Cash Flow (FCF), which includes interest, tax, dividends and corporate costs, will be used for overall Novelis performance. This will carry a 40% weighting on the overall plan. 
c.    Individual Performance: This is based on the individual performance rating in the Performance Management System for Novelis. This will carry a 10% weighting on the overall plan.
6.    Mix of business performance impact: Different levels and roles will carry a differential weighting on the basis of line of sight and impact. Some of the weightings will be as follows : 
a.    All Corporate Staff, members of the Global Operating Committee, employees in Job Band 3, and Global Value Stream Leaders are 100% based on overall Novelis results. 
b.    All other Region staff will be 50% overall Novelis performance and 50% on Region performance. 
7.    Performance Measures and Targets for the 2014 AIP: The performance measures, including thresholds, targets and maximums, will be as approved by the Board for FY 2014. 
8.    Overall Threshold: No AIP bonus will be paid with respect to Normalized EBITDA, Operating Cash Flow, and Individual Performance components unless overall Novelis Normalized EBITDA for the fiscal year is at least 80% of target. Once the 80% minimum overall Novelis Normalized EBITDA threshold is achieved, the actual payout under each of these three components will range from 50% of target (threshold) to 200% of target (maximum) depending upon the actual results attributable to each such component.

EXHIBIT 10.43

9.     Other aspects of the plan: 
a.    Payments will be made in a lump sum during the first quarter following the close of the performance year. An individual needs to either be employed in a 2014 AIP eligible position or transferred or hired into an eligible position during the performance year to receive payout under the AIP. 
b.     Eligibility and payouts for employees who join during the plan year will be determined by the “Plan Rules Administration” document maintained by the Corporate Compensation department. 
c.     Eligibility and payouts for employees who leave during the plan year will be determined by the “Plan Rules Administration” document maintained by the Compensation department. 
 Below are the treatment rules governing separation from the Company: 
	
		
	Reason for Termination
	Bonus Treatment

	Death
	The employee will be entitled to AIP on a pro-rata basis. Such payouts will be made at the time that payouts are made for all other employees. If the event occurs after the performance year, but before the timing of payout, such individual shall be entitled to AIP for the entire year.

	Disability
	The employee will be entitled to AIP on a pro-rata basis. Such payouts will be made at the time that the AIP bonus is paid to all other employees. If the event occurs after the performance year, but before the timing of payout, such individual shall be entitled to AIP for the entire year.

	Retirement

	The employee will be entitled to AIP on a pro-rata basis. Such payouts will be made at the time that the AIP bonus is paid to all other employees. If the event occurs after the performance year, but before the timing of payout, the employee shall be entitled to AIP for the entire year.

	Change in Control

	If the Company initiated separation is the result of a change in control, the employee will be eligible for prorated incentive pay at the time that the AIP bonus is paid to all other employees based on the “Plan Rules Administration” document maintained by the Corporate Compensation department.

	Voluntary
	The employee will forfeit his or her entire AIP bonus.

	Involuntary - Not for Cause
	If the Company initiated separation is the result of a position elimination that is not performance related (e.g., a layoff, plant closure, restructuring or sale), the employee will be eligible for a prorated incentive at the time that the AIP bonus is paid to all other employees based on the “Plan Rules Administration” document maintained by the Corporate Compensation department.

   

EXHIBIT 10.43

		
	10. 
	Definitions. The following terms will have the meaning ascribed to them below. 

		
	a.
	Retirement: For the purposes of this plan, retirement is defined as separation from the Company at 65 years of age or a combination of age and service greater than or equal to 65 with a minimum age of 55. 

		
	b.
	Change in Control: For purposes of this plan, a change in control means the first to occur of any of the following events: (i) any person or entity (excluding any person or entity affiliated with the Aditya Birla Group) is or becomes the beneficial owner, directly or indirectly through any parent entity of the Company or otherwise, of securities of the Company (not including in the securities beneficially owned by such person or entity any securities acquired directly from the Company or its affiliates, other than in connection with the acquisition by the Company or its affiliates of a business) representing 35% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company’s then outstanding securities; or (ii) the majority of the members of the Board of Directors of the Company is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election; or (iii) the consummation of a merger or consolidation of the Company with any other entity not affiliated with the Aditya Birla Group, other than (a) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company, 50% or more of the combined voting power of the voting securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (b) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no person or entity is or becomes the beneficial owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such person or entity any securities acquired directly from the Company or its affiliates, other than in connection with the acquisition by the Company or its affiliates of a business) representing 50% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company’s then outstanding securities; or (iv) the sale or disposition of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of its assets to a member of the Aditya Birla Group. Notwithstanding the foregoing, no “Change in Control” shall be deemed to have occurred if there is consummated any transaction or series of integrated transactions immediately following which the record holders of the common stock of the Company immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions. For purposes of this Section, “beneficial ownership” shall be determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended. 

11.    Interpretation. Novelis shall have the exclusive discretion to interpret and construe the terms and conditions of the plan, including but not limited to the exclusive discretion to make all decisions regarding eligibility for and the amount of benefits payable under the plan.EXH10.44LTIPAmendment

EXHIBIT 10.44
AMENDMENT 
TO THE 
NOVELIS INC. LONG TERM INCENTIVE PLANS

This amendment (“Amendment”), effective as of the 13th day of May, 2013, hereby amends (i) the Novelis Inc. Long Term Incentive Plan for Fiscal Years 2010-2013, (ii) the Novelis Inc. Long Term Incentive Plan for Fiscal Years 2011-2014, (iii) the Novelis Inc. Long Term Incentive Plan for Fiscal Years 2012-2015 and (iv) the Novelis Inc. Long Term Incentive Plan for Fiscal Years 2013-2016 (each, a “Prior Plan”).  
1.Definitions.
		
	(a)
	Company means Novelis Inc.

		
	(b)
	Conversion Date means May 13, 2013.

		
	(c)
	Conversion Payment has the meaning set forth in Section 2.

		
	(d)
	Conversion Plan means the plan to cancel Hindalco SARs in exchange for certain awards as described in this Amendment.

		
	(e)
	Novelis SAR means newly issued phantom stock appreciation rights in the Company.

		
	(f)
	Participating Employee means an employee of the Company who elects to participate in the Conversion Plan.

		
	(g)
	Prior Plan has the meaning set forth in the introductory paragraph.

		
	(h)
	Reimbursement Payment has the meaning set forth in Section 4.

		
	(i)
	Section 409A has the meaning set forth in Section 4.

		
	(j)
	Vested Hindalco SARs means the outstanding Hindalco SARs awarded to a Participating Employee under a Prior Plan which have vested as of the Conversion Date and have not been previously exercised or canceled.

		
	(k)
	Unvested Hindalco SARs means the outstanding Hindalco SARs awarded to a Participating Employee which have not vested as of the Conversion Date and have not been previously canceled.

2.Participation.  For each current employee of Novelis Inc. or its subsidiaries who holds Hindalco SARs as of the Conversion Date, the Company will offer such employee an opportunity to cancel a portion of the employee’s Hindalco SARs in exchange for a lump-sum cash payment (“Conversion Payment”) and Novelis SARs, all in accordance with the terms of this Amendment.    
3.Treatment of Hindalco SARs.  On the Conversion Date, each Participating Employee’s Hindalco SARs will be treated in the manner set forth in Exhibit A (FY 2010-2013), Exhibit B (FY 2011-2014), Exhibit C (FY 2012-2015) or Exhibit D (FY 2013-2016), as applicable.  All values described in this Amendment are in U.S. dollars. 

4.Tax Reimbursement.  If any tax is assessed against a Participating Employee under Section 409A of the U.S. Internal Revenue Code of 1986, as amended (“Section 409A”), with respect to any payment payable by reason of this Amendment, then the Company will pay to the Participating Employee an additional payment (a “Reimbursement Payment”).  The Reimbursement Payment shall be calculated such that, after reduction for federal, state and local income taxes on the 

Reimbursement Payment, the Participating Employee shall be paid a net amount of the Reimbursement Payment equal to the amount of any tax the Participating Employee pays as a result of the application of Section 409A.  Any Reimbursement Payment payable pursuant to this paragraph will be paid by the Company to the Participating Employee no later than the last day of the taxable year of the Participating Employee immediately following the taxable year of the Participating Employee in which he or she remits the related taxes.

5.Non-Participating Employees. Any employee of the Company who does not elect to become a Participating Employee under the Conversion Plan will retain his or her Hindalco SARs in accordance with the terms and conditions of the respective Prior Plan under which such Hindalco SARs were awarded, without regard to this Amendment.

6.No Other Changes.  Except as set forth above, the terms and conditions of the Prior Plans remain in full force and effect.

EXHIBIT A 
FY 2010-2013

		
	(a)
	The total number of the Participating Employee’s Vested Hindalco SARs as of the Conversion Date will be multiplied by 50.00%.  The product of this calculation represents the number of Vested Hindalco SARs which will remain outstanding and will be exercisable after the Conversion Date, in accordance with the terms and conditions of the Prior Plan.  The balance of the Participating Employee’s Hindalco SARs will be cancelled in exchange for the Conversion Payment described in paragraph (b) below.

		
	(b)
	Within 30 days of the Conversion Date, the Participating Employee will receive a Conversion Payment (less applicable tax and other withholdings) equal to:  (A – B) * C * D, where:

“A” equals the estimated value of one Hindalco SAR on the Conversion Date applying the imputed growth rate of the Company from June 25, 2009 (the “2009 Grant Date”) through the Conversion Date,  as determined by a third party valuation services provider engaged by the Corporation for this purpose;

“B” equals the 2009 Grant Date exercise price of one Hindalco SAR; 

“C” equals the number of Vested Hindalco SARs held by the Participating Employee on the Conversion Date; and

“D” equals 50%.

EXHIBIT B 
FY 2011-2014

		
	(a)
	The total number of the Participating Employee’s Vested Hindalco SARs as of the Conversion Date will be multiplied by 37.50%.  The product of this calculation represents the number of Vested Hindalco SARs which will remain outstanding and will be exercisable after the Conversion Date, in accordance with the terms and conditions of the Prior Plan.  The balance of the Participating Employee’s Vested Hindalco SARs will be cancelled in exchange for the Conversion Payment described in paragraph (b).

		
	(b)
	Within 30 days of the Conversion Date, the Participating Employee will receive a Conversion Payment (less applicable tax and other withholdings) equal to:  (A – B) * C * D, where:

“A” equals the estimated value of one Hindalco SAR on the Conversion Date applying the imputed growth rate of the Company from May 25, 2010 (the “2010 Grant Date”) through the Conversion Date,  as determined by a third party valuation services provider engaged by the Corporation for this purpose;

“B” equals the 2010 Grant Date exercise price of one Hindalco SAR; 

“C” equals the number of Vested Hindalco SARs held by the Participating Employee on the Conversion Date; and

“D” equals 62.50%.
		
	(c)
	The total number of the Participating Employee’s Unvested Hindalco SARs will be multiplied by 37.50%.  The product of this calculation represents the number of Unvested Hindalco SARs which will remain outstanding and will become vested and exercisable after the Conversion Date, in accordance with the terms and conditions of the Prior Plan.  The balance of the Participating Employee’s Unvested Hindalco SARs will be cancelled in exchange for an identical number of newly issued Novelis SARs.

		
	(d)
	Each Novelis SAR will vest and become exercisable on a pro rata basis in the same manner and over the same period applicable to the Participating Employee’s Unvested Hindalco SARs which remain outstanding after the Conversion Date.  The value of each Novelis SAR will be calculated from time to time by applying the imputed growth rate of Novelis from the 2010 Grant Date through the exercise date, as determined by a third party valuation services provider engaged by the Company for this purpose.  

EXHIBIT C
 FY 2012-2015

		
	(a) 
	The total number of the Participating Employee’s Vested Hindalco SARs as of the Conversion Date will be multiplied by 37.50%.  The product of this calculation represents the number of Vested Hindalco SARs which will remain outstanding and will be exercisable after the Conversion Date, in accordance with the terms and conditions of the Prior Plan.  The balance of the Participating Employee’s Vested Hindalco SARs will be cancelled in exchange for the Conversion Payment described in paragraph (b).

		
	(b) 
	Within 30 days of the Conversion Date, the Participating Employee will receive a Conversion Payment (less applicable tax and other withholdings) equal to:  (A – B) * C * D, where:

“A” equals the estimated value of one Hindalco SAR on the Conversion Date applying the imputed growth rate of the Company from May 20, 2011 (the “2011 Grant Date”) through the Conversion Date,  as determined by a third party valuation services provider engaged by the Corporation for this purpose;

“B” equals the 2011 Grant Date exercise price of one Hindalco SAR; 

“C” equals the number of Vested Hindalco SARs held by the Participating Employee on the Conversion Date; and

“D” equals 62.50%.
		
	(c) 
	The total number of the Participating Employee’s Unvested Hindalco SARs will be multiplied by 37.50%.  The product of this calculation represents the number of Unvested Hindalco SARs which will remain outstanding and will become vested and exercisable after the Conversion Date, in accordance with the terms and conditions of the Prior Plan.  The balance of the Participating Employee’s Unvested Hindalco SARs will be cancelled in exchange for an identical number of newly issued Novelis SARs.

		
	(d)
	Each Novelis SAR will vest and become exercisable on a pro rata basis in the same manner and over the same period applicable to the Participating Employee’s Unvested Hindalco SARs which remain outstanding after the Conversion Date.  The value of each Novelis SAR will be calculated from time to time by applying the imputed growth rate of the Company from the 2011 Grant Date through the exercise date, as determined by a third party valuation services provider engaged by the Company for this purpose. 

EXHIBIT D
FY 2013-2016

		
	(a)
	The total number of Hindalco SARs as of the Conversion Date will be multiplied by 37.50%.  The product of this calculation represents the number of Hindalco SARs which will remain outstanding and will vest and become exercisable after the Conversion Date, in accordance with the terms and conditions of the Prior Plan.  The balance of the Participating Employee’s Hindalco SARs will be cancelled in exchange for an identical number of newly issued Novelis SARs.

		
	 (b) 
	Each Novelis SAR will vest and become exercisable on a pro rata basis in the same manner and over the same period applicable to the Participating Employee’s Hindalco SARs which remain outstanding after the Conversion Date.  The value of each Novelis SAR will be calculated from time to time by applying the imputed growth rate of the Company from May 22, 2012 (i.e., the grant date) through the exercise date, as determined by a third party valuation services provider engaged by the Company for this purpose.

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