Document:

exv10w3

Exhibit 10.3

[Tier I Grants]

Performance Shares Award Agreement

Under the Amended and Restated 2006

Equity and Performance Incentive Plan

Kaiser Aluminum Corporation

 

 

Kaiser Aluminum Corporation

Amended and Restated 2006 Equity

and Performance Incentive Plan

Performance Shares Award Agreement

     You have been selected to receive a grant of Performance Shares pursuant to the Kaiser
Aluminum Corporation Amended and Restated 2006 Equity and Performance Incentive Plan (the “Plan”),
as specified below:

     Participant:
_______________________________________

     Date of Grant: ______________________________________

     Number of Performance Shares Granted: _________________

     End of Performance Period: December 31, 20___

     Management Objectives: The Management Objectives which, if achieved, will result in payment
hereunder are set forth on Exhibit A hereto.

     Formula for Determining Performance Shares Earned: The specific number of Performance Shares
earned hereunder, if any, will be determined based on the level of achievement of the Management
Objectives in accordance with the formula set forth on Exhibit A hereto. Except as
otherwise provided in Section 5 or Section 6 of this Agreement, before the Performance Shares will
be earned and paid, the Committee must certify the level of achievement of the Management
Objectives.

     Performance Vesting Date: The later of (1) the third anniversary of the Date of Grant and (2)
the date on which the Committee certifies the level of achievement of the Management Objectives
specified above, on which the specific number of Performance Shares earned hereunder, if any, shall
become vested and earned.

 

     THIS PERFORMANCE SHARES AWARD AGREEMENT, effective as of the Date of Grant set forth above
(this “Agreement”), represents the grant of Performance Shares by Kaiser Aluminum Corporation, a
Delaware corporation (the “Company”), to the Participant named above pursuant to the provisions of
the Plan.

     The Plan provides a complete description of the terms and conditions governing the Performance
Shares granted hereunder. If there is any inconsistency between the terms of this Agreement and
the terms of the Plan, the Plan’s terms shall completely supersede and replace the conflicting
terms of this Agreement. All capitalized terms shall have the meanings ascribed to them in the
Plan unless specifically set forth otherwise herein.

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     1. Employment with the Company. Except as may otherwise be provided in Sections 5 or 6 of
this Agreement, the Performance Shares granted hereunder are granted on the condition that the
Participant remains an Employee of the Company from the Date of Grant set forth above through (and
including) the Performance Vesting Date.

     2. Account for Performance Shares; Restrictions on Transfer.

	 	(a)	 	The Performance Shares covered by this Agreement are granted to the
Participant effective on the Date of Grant set forth above and are subject to, and
granted upon, the terms, conditions and restrictions set forth in this Agreement and
in the Plan. The Performance Shares granted hereunder shall be earned as set forth
under “Formula for Determining Performance Shares Earned” above. The Performance
Shares granted hereunder shall be credited to a bookkeeping entry in the
Participant’s name established and maintained by the Company until payment or
forfeiture of such Performance Shares in accordance with this Agreement.
	 
	 	(b)	 	Except as may otherwise be provided herein and in the Plan, neither the
Performance Shares granted hereunder nor any right or interest under this Agreement
(including, without limitation, any interest in the Common Shares underlying such
Performance Shares) shall be transferable prior to payment in accordance with
Section 3 of this Agreement other than as contemplated by Section 8 of this
Agreement or by will or the laws of descent and distribution. If Performance Shares
granted hereunder or any right or interest under this Agreement (including, without
limitation, any interest in the Common Shares underlying Performance Shares) are
sold, transferred, pledged, assigned or otherwise alienated or hypothecated, whether
voluntarily or involuntarily, other than in accordance with this Agreement or the
Plan, or if any attachment, execution, garnishment or lien shall be issued against
or placed upon Performance Shares granted hereunder or any right or interest under
this Agreement (including, without limitation, any interest in the Common Shares
underlying Performance Shares), all Performance Shares shall be immediately
forfeited by the Participant and all obligations of the Company under this Agreement
shall terminate.

     3. Payment of Performance Shares.

	 	(a)	 	Each Performance Share granted hereunder that becomes vested and earned
or deemed earned shall entitle the Participant to receive one (1) Common Share.
	 
	 	(b)	 	The Company shall issue or deliver Common Shares to the Participant to
settle vested and earned Performance Shares granted hereunder as soon as practicable
following the Performance Vesting Date or, if the Performance Shares are vested and
deemed earned prior thereto upon an event contemplated by Section 5(b), 5(c) or 6 of
this Agreement, the date of such event (the applicable date being referred to herein
as the “Vesting Date”). Notwithstanding the foregoing, if the Vesting Date is a
date when trading in the Common Shares is subject to a “blackout period” or any
other restriction on trading under the Company’s trading policy, the issuance or
delivery to the Participant of the Common Shares underlying the vested and earned
Performance Shares will be deferred until the end of such “blackout period” or other
restriction on trading, provided that, in all cases, the Common Shares
underlying the

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	 	 	 	vested and earned Performance Shares will be issued or delivered to the Participant
no later than 2-1/2 months after the end of the calendar year in which the Vesting
Date occurs.
	 
	 	(c)	 	Except to the extent determined by the Committee and permitted by the
Plan, the Company may not issue or deliver Common Shares to the Participant in
respect of the Performance Shares granted hereunder at a time earlier than otherwise
expressly provided in this Agreement.
	 
	 	(d)	 	The Company’s obligations to the Participant with respect to this
Agreement and the Performance Shares vested and earned hereunder shall be satisfied
in full upon the issuance or delivery of Common Shares in respect of such
Performance Shares.

     4. No Rights as Stockholder; Dividend Equivalents.

	 	(a)	 	The Participant shall have no rights of ownership in the Performance
Shares granted hereunder and shall have no voting or other ownership rights in
respect of the Common Shares underlying the Performance Shares granted hereunder
until the date on which such Common Shares, if any, are issued or delivered to the
Participant pursuant to Section 3 of this Agreement.
	 
	 	(b)	 	If the Company declares a dividend or distribution on the Company’s
Common Shares payable other than in shares of the Company’s capital stock and the
record date for such dividend or distribution occurs prior to the date set forth
under “End of Performance Period” above, the Participant shall be paid, on the
payment date for such dividend or distribution, the amount and type of dividend or
distribution that the Participant would have received if the number of Common Shares
issuable or deliverable assuming the Target Performance Shares (as defined in
Section 5(a)) are vested and earned had been issued and outstanding and held of
record by the Participant on such record date. If the Company declares a dividend
or distribution on the Company’s Common Shares payable other than in shares of the
Company’s capital stock and the record date for such dividend or distribution occurs
on or after the date set forth under “End of Performance Period” above but before
Common Shares are issued or delivered to the Participant in settlement of any Earned
Performance Shares (as defined in Section 5(a)) pursuant to Section 3 of this
Agreement, the Participant shall be paid, on the later of the payment date for such
dividend or distribution and the date on which such Common Shares, if any, are so
issued or delivered to the Participant, the amount and type of dividend or
distribution that the Participant would have received if such Common Shares had been
issued and outstanding and held of record by the Participant on such record date.
Notwithstanding the foregoing, in no event shall any such dividend equivalents be
paid later than the 45th day following the calendar year in which the
related dividends are paid. For purposes of the time and form of payment
requirements of Section 409A of the Code, such dividend equivalents shall be treated
separately from the Performance Shares.
	 
	 	(c)	 	The obligations of the Company under this Agreement are unfunded and
unsecured, and the rights of the Participant hereunder will be no greater than those
of an
unsecured general creditor. No assets of the Company will be held or set aside as
security for the obligations of the Company under this Agreement.
	 
	 	(d)	 	In the event the Participant ceases to be an Employee of the Company for
any reason other than the reasons set forth in Section 5(a), 5(b), 5(c) or 5(d) of
this Agreement prior to the Performance Vesting Date, the Company shall have the
right to demand that all or any portion of dividend or distribution equivalents
received in respect of the Performance Shares granted hereunder be repaid to the
Company and the Company may, to the extent permitted by law, set off the amounts
payable to it against any amounts that may be owing from time to time by the Company
or any Subsidiary to the Participant, whether as wages or vacation pay or in the
form of any other benefit or for any other reason; provided,
however, that, except to the extent permitted by Treasury Regulation Section
1.409A-3(j)(4), such offset shall not apply to amounts that are “deferred
compensation” within the meaning of Section 409A of the Code.

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     5. Termination of Employment.

	 	(a)	 	By Death. In the event the Participant ceases to be an Employee of the
Company by reason of death prior to the date set forth under “End of Performance
Period” above, a number of Performance Shares granted hereunder that would become
vested and earned assuming achievement of the target level of Management Objectives
set forth above and assuming the Participant were an Employee of the Company from
the Date of Grant through (and including) the Performance Vesting Date (“Target
Performance Shares”) shall immediately become 100% vested and deemed earned and the
Company shall issue or deliver the Common Shares underlying the Target Performance
Shares as soon as practicable following the date of death to the Person or Persons
that have been named as the Participant’s beneficiary or beneficiaries, as
contemplated by Section 8 of this Agreement, or to such Person or Persons that have
acquired the Participant’s rights to such Performance Shares by will or the laws of
descent and distribution. In the event the Participant ceases to be an Employee of
the Company by reason of death on or after the date set forth under “End of
Performance Period” above but on or before the Performance Vesting Date, a number of
Performance Shares granted hereunder that would become vested and earned on the
Performance Vesting Date assuming the Participant were an Employee of the Company
from the Date of Grant through (and including) the Performance Vesting Date (“Earned
Performance Shares”) shall become 100% vested and earned upon the Performance
Vesting Date and the Company shall issue or deliver the Common Shares underlying the
Earned Performance Shares as soon as practicable following the Performance Vesting
Date to the Person or Persons that have been named as the Participant’s beneficiary
or beneficiaries, as contemplated by Section 8 of this Agreement, or to such Person
or Persons that have acquired the Participant’s rights to such Performance Shares by
will or the laws of descent and distribution. Notwithstanding the foregoing, if the
Participant’s death or the Performance Vesting Date, as applicable, occurs on a date
when trading in the Common Shares is subject to a “blackout period” or any other
restriction on trading under the Company’s trading policy, the issuance or delivery
to such Person or Persons of the Common Shares underlying the Target Performance
Shares shall be deferred until the end of such “blackout period” or other
restriction on trading, provided that, in all cases, the Common Shares
underlying the Target Performance Shares shall be issued or delivered to such Person
or Persons no later than 2-1/2 months after the end of the calendar year in which the
Vesting Date occurs.
	 
	 	(b)	 	By Disability. In the event the Participant ceases to be an Employee of
the Company by reason of Disability (as defined in this Section 5(b)) prior to the
date set forth under “End of Performance Period” above, the Target Performance
Shares shall immediately become 100% vested and deemed earned, and the Company shall
issue or deliver the Common Shares underlying the Target Performance Shares to the
Participant in accordance with Section 3 of this Agreement. In the event the
Participant ceases to be an Employee of the Company by reason of Disability on or
after the date set forth under “End of Performance Period” above but on or before

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	 	 	 	the Performance Vesting Date, any Earned Performance Shares shall become 100%
vested and earned upon the Performance Vesting Date and the Company shall issue or
deliver the Common Shares underlying the Earned Performance Shares to the
Participant in accordance with Section 3 of this Agreement.
	 
	 	 	 	“Disability” shall be defined as a total and permanent disability as a result of
bodily injury, disease or mental disorder which results in the Participant’s
entitlement to long-term disability benefits under the Kaiser Aluminum Self-Insured
Welfare Plan or the Kaiser Aluminum Salaried Employees Retirement Plan.
	 
	 	(c)	 	Involuntary Termination Other Than for Cause or Detrimental Activity. In
the event the Participant ceases to be an Employee of the Company prior to the date
set forth under “End of Performance Period” above because either (i) the Company or
any of its Subsidiaries terminates such employment for any reason other than for
Cause or other Detrimental Activity or (ii) the Participant terminates his or her
employment for Good Reason, the Target Performance Shares shall immediately become
100% vested and deemed earned and the Company shall issue or deliver the Common
Shares underlying the Target Performance Shares to the Participant in accordance
with Section 3 of this Agreement. In the event the Participant ceases to be an
Employee of the Company on or after the date set forth under “End of Performance
Period” above but on or before the Performance Vesting Date because either (i) the
Company or any of its Subsidiaries terminates such employment for any reason other
than for Cause or other Detrimental Activity or (ii) the Participant terminates his
or her employment for Good Reason, any Earned Performance Shares shall become 100%
vested and earned upon the Performance Vesting Date and the Company shall issue or
deliver the Common Shares underlying the Earned Performance Shares to the
Participant in accordance with Section 3 of this Agreement.
	 
	 	(d)	 	Retirement. In the event the Participant ceases to be an Employee of the
Company as a result of normal retirement at age 65, all of the shares of Performance
Shares granted hereunder held by the Participant at the time of retirement shall,
subject to the forfeiture provisions contained in this Agreement, remain outstanding
and any Earned Performance Shares shall become 100% vested and earned upon the
Performance Vesting Date and the Company shall issue or deliver the Common Shares
underlying the Earned Performance Shares to the Participant in accordance with
Section 3 of this Agreement.
	 
	 	(e)	 	For Other Reasons. In the event the Participant ceases to be an Employee
of the Company prior to the Performance Vesting Date for any reason other than the
reasons set forth in Sections 5(a), 5(b), 5(c) or 5(d) of this Agreement, all
Performance Shares granted hereunder and any rights to dividend equivalents related
thereto shall be forfeited by the Participant. The Company shall have the right, at
the sole discretion of the Committee, to determine that all or any portion of the
Performance Shares that would otherwise be forfeited has been vested and earned.

     6. Change in Control. Notwithstanding anything to the contrary in this Agreement, in the
event of a Change in Control of the Company prior to the date set forth under “End of Performance

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Period” above and while the Participant continues to be an Employee of the Company, the Target
Performance Shares shall become 100% vested and deemed earned and the Company shall issue or
deliver the Common Shares underlying the Target Performance Shares to the Participant in accordance
with Section 3 of this Agreement. In the event of a Change in Control of the Company on or after
the date set forth under “End of Performance Period” above but on or before the Performance Vesting
Date, any Earned Performance Shares shall become 100% vested and earned upon the Performance
Vesting Date and the Company shall issue or deliver the Common Shares underlying the Earned
Performance Shares to the Participant in accordance with Section 3 of this Agreement.

     7. Detrimental Activity. If the Participant, either during employment by the Company or any
Subsidiary or within one (1) year after termination of such employment, shall engage in any
Detrimental Activity, and the Committee shall so find, forthwith upon notice of such finding, the
Participant shall:

	 	(a)	 	Forfeit any Performance Shares granted hereunder;
	 
	 	(b)	 	Return to the Company all Common Shares that the Participant has not
disposed of that were acquired pursuant to this Agreement within one (1) year prior
to the date of the commencement of such Detrimental Activity; and
	 
	 	(c)	 	With respect to any Common Shares so acquired that the Participant has
disposed of, pay to the Company in cash the aggregate Market Value per Share of the
Common Shares on the date of such acquisition.

To the extent that such amounts are not paid to the Company, the Company may, to the extent
permitted by law, set off the amounts so payable to it against any amounts that may be owing from
time to time by the Company or any Subsidiary to the Participant, whether as wages or vacation pay
or in the form of any other benefit or for any other reason; provided, however,
that, except to the extent permitted by Treasury Regulation Section 1.409A-3(j)(4), such offset
shall not apply to amounts that are “deferred compensation” within the meaning of Section 409A of
the Code. For purposes of this Section 7, Common Shares shall be deemed to be acquired pursuant to
this Agreement at such time as they are issued or delivered to the Participant to settle earned
Performance Shares.

     8. Beneficiary Designation. The Participant may, from time to time, name any beneficiary or
beneficiaries (who may be named contingently or successively) to whom any benefit under this
Agreement is to be paid in case of the Participant’s death before the Participant receives all of
such benefit. Each such designation shall revoke all prior designations by the Participant, shall
be in a form prescribed by the Company, and shall be effective only when filed by the Participant
in writing with the Vice President Human Resources of the Company during the Participant’s
lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant’s
death shall be paid in accordance with the Participant’s will or the laws of descent and
distribution.

     9. Continuation of Employment. This Agreement shall not confer upon the Participant any right
with respect to continuance of employment with the Company or any Subsidiary, nor shall this
Agreement interfere in any way with any right that the Company or any Subsidiary would otherwise
have to terminate the Participant’s employment or other service at any time.

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     10. Miscellaneous.

	 	(a)	 	To the extent applicable, this Agreement and the Plan are intended to
comply with Section 409A of the Code and all provisions of this Agreement and the
Plan shall be administered, construed and interpreted in a manner consistent with
the requirements for avoiding taxes or penalties under Section 409A of the Code. To
the extent that the Performance Shares, or the issuance or delivery of the Common
Shares in respect of the Performance Shares, are subject to Section 409A of the
Code, the Performance Shares shall be awarded, and any Common Shares in respect
thereof shall be issued or delivered, in a manner that will comply with Section 409A
of the Code, including proposed, temporary or final regulations or any other
guidance issued by the Secretary of the Treasury and the Internal Revenue Service
with respect thereto. Notwithstanding any provision of this Agreement to the
contrary, in light of the uncertainty with respect to the proper application of
Section 409A of the Code, the Company reserves the right to make amendments to this
Agreement as the Company deems necessary or desirable to avoid the imposition of
taxes or penalties under Section 409A of the Code. In any case, the Participant
shall be solely responsible and liable for the satisfaction of all taxes and
penalties that may be imposed in connection with this Agreement (including any taxes
and penalties under Section 409 of the Code), and neither the Company nor any
Subsidiary shall have any obligation to indemnify or otherwise hold the Participant
harmless from any or all of such taxes or penalties.
	 
	 	(b)	 	This Agreement and the rights of the Participant hereunder are subject to
all the terms and conditions of the Plan, as the same may be amended from time to
time, as well as to such rules and regulations as the Committee may adopt for
administration of the Plan. It is expressly understood that the Committee is
authorized to administer, construe and make all determinations necessary or
appropriate to the administration of the Plan and this Agreement, all of which shall
be binding upon the Participant.
	 
	 	(c)	 	In accordance with Section 19 of the Plan, the Board may terminate, amend
or modify the Plan.
	 
	 	(d)	 	The Participant shall pay to the Company or make arrangements
satisfactory to the Committee for payment of any federal, state and local taxes
(including the Participant’s FICA obligation), whether domestic or foreign, required
by law to be withheld on account of any event under this Agreement.
	 
	 	 	 	The Participant acknowledges that the Company shall have the power and the right to
deduct or withhold from the Participant’s compensation an amount sufficient to
satisfy federal, state and local taxes (including the Participant’s FICA
obligation), whether domestic or foreign, required by law to be withheld with
respect to any event under this Agreement should the Participant fail to make
timely payment of all taxes due.
	 
	 	 	 	The Participant may elect, subject to the Plan, approval by the Committee and any
procedural rules adopted by the Committee, to satisfy the withholding requirement,

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	 	 	 	in whole or in part, by having the Company withhold Common Shares issuable or
deliverable hereunder having an aggregate Market Value per Share on the date the
tax is to be determined equal to the amount required to be withheld.

	 	(e)	 	The Participant shall take all steps necessary to comply with all
applicable provisions with respect to transfers of the Company’s securities imposed
by the Company’s certificate of incorporation, bylaws and insider trading policies
and federal and state securities laws, each as in effect from time to time, in
exercising his or her rights under this Agreement.
	 
	 	(f)	 	All obligations of the Company under the Plan and this Agreement shall be
binding on any successor (whether direct or indirect, by purchase, merger,
consolidation, reorganization or otherwise) to all or substantially all of the
business or assets of the Company.
	 
	 	(g)	 	This Agreement shall be governed by and construed in accordance with the
internal substantive laws of the State of Delaware.
	 
	 	(h)	 	Notice hereunder shall be given to the Company at its principal place of
business, and shall be given to the Participant at the address set forth below, or
in either case at such address as one party may subsequently furnish to the other
party in writing.
	 
	 	(i)	 	If there is any inconsistency between the terms of this Agreement and the
terms of a written employment agreement between the Participant and the Company or
any Subsidiary relating to the earning or payment of the Performance Shares granted
hereunder, the terms of this Agreement shall control.
	 
	 	(j)	 	Notwithstanding any other provisions of this Agreement, the Company shall
not be required to issue or deliver any Common Shares pursuant to this Agreement on
a date on which such issuance or delivery would violate the Securities Act of 1933,
as amended, or any other applicable federal or state securities laws.
	 
	 	(k)	 	By accepting the grant of Performance Shares contemplated hereby, the
Participant is deemed to be bound by the terms and conditions set forth in the Plan
and this Agreement regardless of whether the Participant executes and delivers to
the Company a copy hereof.
	 
	 	(l)	 	For the avoidance of doubt, Performance Shares which are not vested and
earned hereunder either (i) on the Certification Date based on the level of
achievement of the Management Objectives set forth above or (ii) upon an event
contemplated by Section 5 or 6 of this Agreement, shall be forfeited by the
Participant on the Certification Date or the date of such event, as applicable.
However, the Company shall have the right, at the sole discretion of the Committee,
to determine that all or any portion of the Performance Shares that would otherwise
be forfeited has been vested and earned.

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     11. Definitions.

	 	(a)	 	“Beneficial Owner” or “Beneficial Ownership” shall have the meaning
ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the
Exchange Act.
	 
	 	(b)	 	“Board” or “Board of Directors” means the Board of Directors of the
Company.
	 
	 	(c)	 	“Business Combination” means a reorganization, merger or consolidation,
or sale or other disposition of all or substantially all of the assets of the
Company or the acquisition of assets of another corporation or entity, or other
similar transaction.
	 
	 	(d)	 	“Cause” means (i) the Participant’s engaging in fraud, embezzlement,
gross misconduct or any act of gross dishonesty with respect to the Company or its
affiliates, (ii) the Participant’s habitual drug or alcohol use which impairs the
ability of the Participant to perform his duties with the Company or its affiliates,
(iii) the Participant’s indictment with respect to, conviction of, or plea of guilty
or no contest to, any felony, or other comparable crime under applicable local law
(except, in any event, for motor vehicle violations not involving personal injuries
to third parties or driving while intoxicated), or the Participant’s incarceration
with respect to any of the foregoing that, in each case, impairs the Participant’s
ability to continue to perform his duties with the Company and its affiliates, or
(iv) the Participant’s material breach of any written employment agreement or other
agreement between the Company and the Participant, or of the Company’s Code of
Business Conduct, or failure by the Participant to substantially perform his or her
duties for the Company which remains uncorrected or reoccurs after written notice
has been delivered to the Participant demanding substantial performance and the
Participant has had a reasonable opportunity to correct such breach or failure to
perform.
	 
	 	(e)	 	“Change in Control” means the occurrence on or after the date of this
Agreement of any of the following events:

	 	(i)	 	the acquisition by any Person of Beneficial Ownership of 35%
or more of the combined voting power of the then-outstanding Voting Stock of
the Company; provided, however, that:

	 	(A)	 	for purposes of this Section 11(e)(i), the
following acquisitions shall not constitute a Change in Control: (1)
any acquisition of Voting Stock of the Company directly from the
Company (x) pursuant to the POR or (y) that is approved by a majority
of the Incumbent Directors, (2) any acquisition of Voting Stock of the
Company by the Company or any Subsidiary, (3) any acquisition of Voting
Stock of the Company by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any Subsidiary (other than
any voluntary employee beneficiary association established in
connection with the POR), and (4) any acquisition of Voting Stock of
the Company by any Person pursuant to a Business Combination that
complies with clauses (A), (B) and (C) of Section 11(e)(iii) below;

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	 	(B)	 	if any Person acquires Beneficial Ownership of
35% or more of combined voting power of the then-outstanding Voting
Stock of the Company as a result of a transaction described in clause
(A)(1) of Section 11(e)(i) and such Person thereafter becomes the
beneficial owner of any additional shares of Voting Stock of the
Company representing 1% or more of the then-outstanding Voting Stock of
the Company, other than in an acquisition directly from the Company
pursuant to the POR, in an acquisition directly from the Company in a
transaction that is approved by a majority of the Incumbent Directors
or other than as a result of a stock dividend, stock split or similar
transaction effected by the Company in which all holders of Voting
Stock are treated equally, such subsequent acquisition shall be deemed
to constitute a Change in Control;
	 
	 	(C)	 	a Change in Control will not be deemed to have
occurred if a Person acquires beneficial ownership of 35% or more of
the Voting Stock of the Company as a result of a reduction in the
number of shares of Voting Stock of the Company outstanding unless and
until such Person thereafter becomes the beneficial owner of any
additional shares of Voting Stock of the Company representing 1% or
more of the then-outstanding Voting Stock of the Company, other than in
an acquisition directly from the Company pursuant to the POR, in an
acquisition directly from the Company in a transaction that is approved
by a majority of the Incumbent Directors or other than as a result of a
stock dividend, stock split or similar transaction effected by the
Company in which all holders of Voting Stock are treated equally; and
	 
	 	(D)	 	if at least a majority of the Incumbent
Directors determine in good faith that a Person has acquired beneficial
ownership of 35% or more of the Voting Stock of the Company
inadvertently, and such Person divests as promptly as practicable a
sufficient number of shares so that such Person beneficially owns less
than 35% of the Voting Stock of the Company, then no Change in Control
shall have occurred as a result of such Person’s acquisition; or

	 	(ii)	 	a majority of the Directors are not Incumbent Directors; or
	 
	 	(iii)	 	the consummation of a Business Combination, unless, in each
case, immediately following such Business Combination (A) all or substantially
all of the individuals and entities who were the beneficial owners of Voting
Stock of the Company immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of the combined voting
power of the then outstanding shares of Voting Stock of the entity resulting
from such Business Combination (including without limitation an entity which
as a result of such transaction owns the Company or all or substantially all
of the Company’s assets either directly or through one or more subsidiaries),
(B) no Person (other than the Company, such entity resulting from such
Business

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	 	 	 	Combination, any employee benefit plan (or related trust) sponsored or
maintained by the Company, any Subsidiary or such entity resulting from such
Business Combination (other than any voluntary employee beneficiary
association established in connection with the POR) or any Person that
immediately prior to such Business Combination owns, directly or indirectly,
35% or more of the Voting Stock of the Company so long as such Person does not
at such time own, directly or indirectly, more than 1% of the securities of
the other corporation or other entity involved in such Business Combination to
be converted into or exchanged for shares of Voting Stock of the entity
resulting from such Business Combination pursuant to such Business
Combination)) beneficially owns, directly or indirectly, 35% or more of the
combined voting power of the then outstanding shares of Voting Stock of the
entity resulting from such Business Combination, and (C) at least a majority
of the members of the Board of Directors of the entity resulting from such
Business Combination were Incumbent Directors at the time of the execution of
the initial agreement or of the action of the Board providing for such
Business Combination; or

	 	(iv)	 	approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company, except pursuant to a Business
Combination that complies with clauses (A), (B) and (C) of Section 11(e)(iii).

	 	(f)	 	“Director” shall mean a member of the Board of Directors of the Company.
	 
	 	(g)	 	“Employee of the Company” means an officer of the Company or one or more
of its Subsidiaries.
	 
	 	(h)	 	“Exchange Act” means the Securities Exchange Act of 1934, as amended from
time to time, or any successor act thereto.
	 
	 	(i)	 	“Good Reason” means, without a Participant’s consent, the occurrence of
any of the following events which is not cured by the Company within ten (10)
business days following the Participant’s written notice to the Company of the event
constituting Good Reason; provided, however, that any such written
notice received by the Company following the thirty (30) day period after the date
on which the Participant first had knowledge of the occurrence of such event giving
rise to Good Reason (or, in the case of multiple events, the latest to occur of such
events) shall not be effective and the Participant shall be deemed to have waived
his/her right to terminate employment for Good Reason with respect to such event:

	 	(i)	 	Demotion, reduction in title, reduction in position or
responsibilities, or change in reporting responsibilities or reporting level
that is materially and adversely inconsistent with the Participant’s then
position or the assignment of duties and/or responsibilities materially and
adversely inconsistent with such position; or
	 
	 	(ii)	 	Relocation of the Participant’s primary office location more
than fifty (50) miles from the Participant’s then current office location; or

11

 

	 	(iii)	 	Reduction of greater than 10% in the Participant’s then base
salary or reduction of greater than 10% in the Participant’s then long term or
short term incentive compensation opportunity or a reduction in the
Participant’s eligibility for participation in the Company’s benefit plans
that is not commensurate with a similar reduction among similarly situated
employees.

	 	(j)	 	“Incumbent Directors” means the individuals who, as of the date hereof,
are Directors of the Company and any individual becoming a Director subsequent to
the date hereof whose election, nomination for election by the Company’s
stockholders, or appointment was approved by a vote of at least two-thirds of the
then Incumbent Directors (either by a specific vote or by approval of the proxy
statement of the Company in which such person is named as a nominee for director
without objection to such nomination); provided, however, that an
individual shall not be an Incumbent Director if such individual’s election or
appointment to the Board occurs as a result of an actual or threatened election
contest (as described in Rule 14a-12(c) of the Exchange Act) with respect to the
election or removal of Directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board.
	 
	 	(k)	 	“Person” shall have the meaning ascribed to such term in Section 3(a)(9)
of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a
“group” as defined in Section 13(d) thereof.
	 
	 	(l)	 	“POR” means the Second Amended Joint Plan of Reorganization of Kaiser
Aluminum Corporation, Kaiser Aluminum & Chemical Corporation and Certain of Their
Debtor Affiliates, as modified, filed pursuant to Section 1121(a) of Title 11 of the
United States Code and confirmed by an order of the United States Bankruptcy Court
for the District of Delaware entered on February 6, 2006, which confirmation was
affirmed by an order of the United States District Court for the District of
Delaware entered on May 11, 2006.
	 
	 	(m)	 	“Voting Stock” means securities entitled to vote generally in the
election of directors (or similar governing bodies).

12

 

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed effective as of the
Date of Grant.

	 	 	 	 	 
	 	Kaiser Aluminum Corporation

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

The foregoing Agreement is hereby accepted and the terms and conditions thereof are hereby agreed
to by the Participant.

	 	 	 	 	 
	 	 	 
	 	
 	 
	 	Participant 	 
	 	 	 
	 	Participant’s name and address:

 	 
	 	
 	 
	 
	 	 	 
	 	
 	 
	 
	 	 	 
	 	
 	 
	 
	 	 	 
	 	
 	 
	 	 	 
	 	 	 
	 

DESIGNATION OF BENEFICIARY:

I hereby designate                                                                                                                                                      
                          

as my primary beneficiary, and                                                                                                                                                                 as my
 contingent beneficiary, hereunder in the event of my death.

13

 

Exhibit A

Management Objectives

[Specify Management Objectives and set forth the formula and procedures for determining the number
of Performance Shares which will be vested and earned if performance is at or above the minimum
level but falls short of full achievement of the specified Management Objectives.]exv10w4

Exhibit 10.4

Long-Term Incentive

Management Objectives and Formula

	 	 	 
	Management Objective:

	 	The applicable Management Objective is average economic value
added (“EVA”) for 2009, 2010 and 2011 (“Average 2009-2011
EVA”). For each such year, EVA will equal (1) pre-tax
operating income for such year (“PTOI”) less (2) a percentage
of net assets as of the end of the immediately preceding year
(“Net Assets”).

In determining EVA for a particular year:
	 
	 	 
	 

	 	(1) Net Assets will equal total assets less total liabilities,
subject to adjustments to:
	 
	 	 
	 

	 	•    Remove the Company’s primary aluminum segment;

	 
	 	 
	 

	 	•    Remove discontinued operations;

	 
	 	 
	 

	 	•    Eliminate fresh start adjustments for PP&E value and
intangible assets, including the write-up of pre-emergence
goodwill;

	 
	 	 
	 

	 	•    Eliminate assets and liabilities of voluntary employee
beneficiary associations;

	 
	 	 
	 

	 	•    Exclude financing items;

	 
	 	 
	 

	 	•    Exclude capital expenditures in progress;

	 
	 	 
	 

	 	•    Add capitalized value of long-term leases;

	 
	 	 
	 

	 	•    Add prorated value of capital projects and
acquisitions larger than 1% of prior year Net Assets;

	 
	 	 
	 

	 	•    Exclude any deferred income tax asset value;

	 
	 	 
	 

	 	•    Exclude mark-to-market assets or liabilities
associated with Fabricated Products; and

	 
	 	 
	 

	 	•    Address other items as recommended by the Company’s
Chief Executive Officer and approved by our Committee; and

	 
	 	 
	 

	 	(2) PTOI will be adjusted to:

	 
	 	 
	 

	 	•    Exclude LIFO adjustments;

	 
	 	 
	 

	 	•    Exclude mark to market and lower of cost or market
adjustments at the corporate level on metal inventory on hand;

	 
	 	 
	 

	 	•    Add back depreciation associated with step-down in
property, plant and equipment resulting from the
implementation of fresh start accounting;

 

 

	 	 	 
	 

	 	•    Amortize the following non-recurring activities over
36 months if the value exceeds one percent of Net Assets:

	 
	 	 
	 

	 	•    Restructuring charges;

	 
	 	 
	 

	 	•    Gains or losses resulting from asset dispositions;

	 
	 	 
	 

	 	•    Labor stoppage costs; and

	 
	 	 
	 

	 	•    Asset impairment charges; and

	 
	 	 
	 

	 	•    Address other items as recommended by the Company’s
Chief Executive Officer and approved by our Committee.

	 
	 	 
	 

	 	The 2009 — 2011 average annual EVA target is an amount
specified by the Committee. The payout factor is calculated by
dividing the average annual EVA of each year of the three year
performance period by the average annual target
	 
	 	 
	 

	 	The threshold for vesting performance shares is an annual
average EVA of zero. Payout at the target level (a payout
factor of 1) is 50% of the performance shares, 100% of the
performance shares are earned at 2X the average annual EVA
target.
	 
	 	 
	Determination of
Number of

	 	The number of Performance Shares which are earned will be
determined as follows:
	Performance Shares 

Which Are Earned:

	 	
•    Following the end of each of 2009, 2010 and 2011, the
Committee will certify EVA for such year based on the
Company’s financial statements.

	 
	 	 
	 

	 	•    Following the end of 2011, the Committee will also
certify (1) the Average 2009-2011 EVA and (2) Average
2009-2011 EVA as a percentage of Target Average 2009-2011 EVA
(the “Payout Multiplier”).

	 
	 	 
	 

	 	•    The number of Performance Shares which are earned will
equal the product (rounded down to the nearest whole number)
of (1) one-half of the number of Performance Shares granted
hereunder (the “Target Performance Shares”) and (2) the Payout
Multiplier; provided, however, such number will not exceed the
number of Performance Shares granted hereunder.

	 
	 	 
	 

	 	The Committee will certify the Average 2009-2011 EVA and the
Payout Multiplier not later than March 15, 2012.
	 
	 	 
	Administrative Provisions:

	 	Additional administrative provisions are reflected in the
terms of the applicable grant documents.

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