Document:

exv10w15

 

Exhibit 10.15

 

2010 Bonus Plan

 

March 2010

 

 

 

Sterling Chemicals, Inc.

2010 Bonus Plan

Introduction:

          Our 2010 Bonus Plan (our “Bonus Plan”) will be made up of the following two programs
(collectively, our “Bonus Programs”) that will provide eligible salaried employees with
opportunities to receive cash compensation in addition to their salaries:

	 	•	 	Corporate Performance Bonus Program — pays bonuses based on our
attainment of environmental and safety goals, our achievement of specified levels
of Operating Cash Flow and on individual performance; and
	 
	 	•	 	Individual Performance Bonus Program — pays bonuses based on
individual performance, irrespective of our environmental or safety performance or
the amount of Operating Cash Flow we earn during the year.

All of our salaried personnel (each an “Eligible Employee”), whether exempt or non-exempt
and including our President and Chief Executive Officer and our Senior Vice Presidents (our
“Executives”), are eligible to receive cash bonuses under our Bonus Plan. In order to be
paid a bonus, an Eligible Employee must be employed by us at the time bonuses are paid, unless the
employee has retired, died or become disabled, in which event a pro rata bonus payment will be made
based on full months of service for the relevant year. For purposes of our Bonus Plan,
“retired” means the voluntary cessation of employment with us after attaining age 55 with
at least five years of services or the voluntary cessation of employment with us after attaining
age 65 (with no service restriction), and “disabled” has the meaning set forth in our
disability plan.

Corporate Performance Bonus Program:

General.

          Under our Corporate Performance Bonus Program, the amount of bonus that each of our Eligible
Employees is eligible to earn for any year is determined by the Eligible Employee’s Bonus Target
and performance during that year relative to our corporate performance goals and his or her
individual performance goals. An Eligible Employee’s “Bonus Target” is a stated percentage
of the Eligible Employee’s annual base salary (set by our Compensation Committee or our Board of
Directors in the case of our Executives and by our Human Resources & Administration Department in
the case of all of our other Eligible Employees). The maximum amount of bonus that can be earned
by an Eligible Employee for any year is 100% of his or her Bonus Target for performance relative to
corporate performance goals and 100% of his or her Bonus Target for performance relative to
individual performance goals. As in the past, attaining threshold level of Operating Cash Flow
will be required for any bonus to be paid under our Corporate Performance Bonus Program.

 

 

Corporate Performance Goals

          Our corporate performance goals under our Corporate Performance Bonus Program are based on:

	 	•	 	the number of Employee OSHA recordable injuries experienced during the
year;
	 
	 	•	 	the number of Contractor OSHA recordable injuries experienced during
the year;
	 
	 	•	 	the number of environmental and process safety management incidents
experienced during the year (subject to meeting all process safety
management regulations); and
	 
	 	•	 	the amount of “Operating Cash Flow” earned during the year.

Our Board of Directors has set threshold, target and maximum goals for each of these categories for
performance in 2010 as follows:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Goal	 	Threshold	 	 	Target	 	 	Maximum	 	 	 	 
	Employee OSHA 

Recordable Injuries(1)
	 	 	2	 	 	 	1	 	 	 	0	 	 	 	10	%
	Contractor OSHA 

Recordable Injuries(1)
	 	 	2	 	 	 	1	 	 	 	0	 	 	 	10	%
	Environmental and 

Process Safety Incidents(1)(2)
	 	 	3	 	 	 	2	 	 	 	1	 	 	 	10	%
	Operating Cash Flow(3)
	 	$	5.6M	 	 	$	7.0M	 	 	$	12.0M	 	 	 	70	%

 

			
	(1)	No credit if incident results in a fine
	 
	(2)	•	Environmental Incident defined as:

- A release of chemicals that results in a Superfund reportable event; 

	 
	 	 	
- Any other environmental incident that requires immediate
notification to state or federal agencies (e.g., fire/explosion with potential
impact outside the facility); or

	 
	 	 	- A violation resulting in a Notice of Enforcement that is not
resolved administratively.
	 
	 	•	Process Safety Incident defined as an incident in which a significant
fire, explosion, chemical release or injury occurred due to the direct involvement
of a chemical process. This includes a fire or explosion causing more than $50K in
direct cost to Sterling, a chemical release to the environment which impacts the
community or a serious injury attributed to such an event resulting in at least one
lost work day.
	 
	 	•	All Process Safety Management regulations must be met to qualify.
	 
	 	•	All incidents caused by Acts of God are excluded.
	 
	(3)	Operating Cash Flow means operating cash flow (from our cash flow statements)
minus maintenance capital expenditures and proceeds from the sale of non-PP&E assets.

          At the end of each calendar year, the amount of bonus potentially payable to each
Eligible Employee for performance relative to our corporate performance goals is determined by
multiplying that Eligible Employee’s Bonus Target times the aggregate percentage earned during that
year for performance relative to our corporate performance goals times 50%. The aggregate

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percentage is determined using the table above with the relevant percentage from the table being
multiplied by 0.5 if Threshold level is achieved, 1.0 if Target level is achieved and 2.0 if
Maximum level is achieved. Performance relative to our Operating Cash Flow goals that is in
between the established levels is prorated on a straight line basis. As an example, if an Eligible
Employee has a base salary of $50,000 and Bonus Target of 10% and we achieved Target level for
Operating Cash Flow and Maximum level for Employee OSHA Recordable Injuries, Contractor OSHA
Reportable Injuries and Environmental and Process Safety Incidents, the Eligible Employee’s
potential bonus for performance relative to our corporate performance goals would be:

	 	•	 	$50,000 times 10% (or $5,000) times aggregate percentage earned during the year
times 0.5, with the aggregate percentage being:

	 	 	 	 	 	 	 	 	 
	Employee OSHA Recordable Injuries 
	 	 	20	%	 	 	(10% @ 2X = 20	%) 
	Contractor OSHA Recordable Injuries 
	 	 	20	%	 	 	(10% @ 2X = 20	%)
	Environmental and Process Safety Incidents
	 	 	20	% 	 	 	(10% @ 2X = 20	%)
	Operating Cash Flow 
	 	 	70	%	 	 	(70% @ 1X = 70	%)
	 
	 	 	 	 	 	 	 
	Aggregate Percentage 
	 	 	130	%	 	 	 	 

As a result, the Eligible Employee in the example would be eligible for a bonus for performance
relative to our corporate performance goals of up to $5,000 times 130% times 0.5, or $3,250.

Individual Performance Goals.

          If we attain at least the threshold level of Operating Cash Flow for the relevant year, the
rest of the bonus paid to each Eligible Employee under our Corporate Performance Bonus Program (up
to 1X) will be based on that Eligible Employee’s Bonus Target times the aggregate percentage earned
during that year for performance relative to his or her individual performance goals. The
“aggregate percentage” earned during any year by an Eligible Employee for his or her performance
relative to his or her individual performance goals will be determined using a table established
for such Eligible Employee at the beginning of that year for his or her individual performance
goals (set by our Board of Directors in the case of our Executives and by our Executives in the
case of all of our other Eligible Employees). As is the case for our corporate performance goals,
the relevant percentage for each individual performance goal will be multiplied by 0.5 if Threshold
level is achieved, 1.0 if Target level is achieved and 2.0 if Maximum level is achieved and those
percentages will then be added together (with the multiplier for the relevant percentage pro-rated
for performance between any two levels on a straight-line basis for performance goals based on
arithmetic calculations).

          Continuing with the example given above, if the same Eligible Employee had four individual
performance goals, with each weighted at 25%, and Target level was achieved for two individual
performance goals and Maximum level was achieved for two individual performance goals, his or her
potential bonus based on his or her performance relative to his or her individual performance goals
would be:

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$50,000 times 10% (or $5,000) times aggregate percentage earned during the year times
0.5, with aggregate percentage being calculated as follows:

	 	 	 	 	 	 	 	 	 
	Goal #1 
	 	 	25	%	 	 	(25% @ 1.0 = 25	%)
	Goal #2 
	 	 	25	%	 	 	(25% @ 1.0 = 25	%)
	Goal #3 
	 	 	50	%	 	 	(25% @ 2.0 = 50	%)
	Goal #4 
	 	 	50	%	 	 	(25% @ 2.0 = 50	%)
	 
	 	 	 	 	 	 	 
	Aggregate Percentage 
	 	 	150	%	 	 	 	 

As a result, the Eligible Employee in the example would be eligible to receive a bonus for his or
her performance relative to his or her individual performance goals of up to $5,000 times 150%
times 0.5 (or $3,750) and a total potential bonus of up to $7,000 ($3,250 based on performance
relative to our corporate performance goals and $3,750 based on performance relative to his or her
individual performance goals).

Individual Performance Bonus Program:

          If we do not attain the threshold amount of Operating Cash Flow for any year, each of our
Eligible Employees (excluding our Executives and any of our salaried employees with a Salary Grade
of 12) has the ability to earn up to a 1/2X bonus under our Individual Performance Bonus Program.
If we earn at least the threshold amount of Operating Cash Flow under our Corporate Performance
Bonus Program, no bonus is paid under our Individual Performance Bonus Program. The actual
potential bonus of each of our Eligible Employees under our Individual Performance Bonus Program
will be based solely on his or her performance relative to his or her individual performance goals,
and will be an amount equal to 50% of the potential bonus that could have been paid to such
Eligible Employee under the individual performance goals portion of our Corporate Performance Bonus
Program if we had attained at least the threshold level of Operating Cash Flow for that year.
Under the example used above, the Eligible Employee would have been eligible for a bonus of up to
$7,000 under our Corporate Performance Bonus Program, with $3,750 attributable to performance
relative to his or her individual performance goals. As a result, he or she would be eligible for
a bonus of up to $1,875 (50% of $3,750) under our Individual Performance Bonus Program. Our
Executives and any of our salaried employees with a Salary Grade of 12 are not eligible for bonuses
under our Individual Performance Bonus Program.

General Terms:

Total Bonus Calculation and Payment.

          At the end of each year, our performance under each of our corporate performance goals will be
determined. Our financial results will determine the amount of Operating Cash Flow earned during
that year and, consequently, whether a bonus will be paid under our Corporate Performance Bonus
Program or under our Individual Performance Bonus Program. At the same time, each Eligible
Employee’s performance relative to his or her individual performance goals will be assessed and the
amount of bonus paid to that employee under our Corporate Performance Bonus Program or Individual
Performance Bonus Program, as applicable, will be determined. If the amount of bonus (prior to any
payment reductions) to be paid to any Eligible Employee (other than employee whose rating is DM) is
less than the amount

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paid to each hourly employee under our Gainsharing Program, then the amount of that Eligible
Employee’s bonus will be increased to match the amount paid under our Gainsharing Program. All
bonuses will be paid to all Eligible Employees on or before March 14 in a single lump sum after all
taxes have been withheld. The payment of a bonus does not affect any employee’s base pay in any
manner and has no impact on the amount or level of benefits under any of our other benefit plans.

Payment Adjustments.

          The amount of bonus paid to an Eligible Employee under our Bonus Plan assumes continued
employment with us in active status throughout the year. For purposes of our Bonus Plan, active
status is made up of regular hours worked, vacation time, jury duty, service as a witness under
court subpoena, funeral leave and military leave. Non-active status includes all other absences
from work for any reason, including illness, injury, personal business, doctor’s appointment,
excused absence, family illness, leave of absences and personal leave, etc. Once the amount of
bonus to be paid to an Eligible Employee is determined under our Bonus Plan, that amount may be
reduced if the Eligible Employee has accumulated absences totaling at least 44 working days (352
hours for shift workers) during the relevant year. The amount of reduction will be 16.67% for the
first 44 working days (352 hours for shift workers) of non-active status plus an additional 8.33%
reduction for each additional 22 working days (176 hours for shift workers) of non-active status
during the year for which the bonus is being paid. The amounts of bonuses paid to Eligible
Employees may also be reduced by the Executives or our Board of Directors or Compensation Committee
for various business considerations or adjusted, up or down, based on additional individual
performance factors.

          The bonus paid to any Eligible Employee under our Bonus Plan who was hired after July 1 of the
year during which performance is being assessed will be pro rated based on the number of full
months of service during that year. The amount of bonus paid to any Eligible Employee who became
eligible under our Bonus Plan in the first half of a year due to a promotion or change in job
classification or being hired will not be pro rated due to such promotion, job reclassification or
hiring (i.e., all months of service with us during the relevant year will be treated as if they
were performed in the Eligible Employee’s most recent position). The amount of bonus paid to any
Eligible Employee who has a change is status under our Bonus Plan on or after July 1 due to a
promotion or change in job classification will be pro rated based on the number of months of
service in the year in each status. For example, if an Eligible Employee’s salary and bonus
percentage were increased October 1 due to a promotion, 3/4s of such Eligible Employee’s bonus
would be calculated using his or her salary and bonus percentage prior to such promotion and 1/4 of
such Eligible Employee’s bonus would be calculated using his or her salary and bonus percentage
after such promotion.

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Exhibit
10.18(b)

Second Amendment To The

Sterling Chemicals, Inc. Comprehensive Welfare

Benefit Plan

     Whereas, Sterling Chemicals, Inc. (the “Corporation”) currently
maintains a Comprehensive Welfare Benefit Plan (as amended, the “Existing Plan”);

     Whereas, pursuant to Section 10.02 of the Existing Plan, the Sterling Chemicals, Inc.
Employee Benefits Plans Committee ( the “Committee”) has the right to amend the Existing
Plan or any benefit agreement at any time; and

     Whereas, the Committee desires to, and hereby elects to, modify the medical and
prescription drug benefit programs under the Existing Plan as provided in this Second Amendment to
the Sterling Chemicals, Inc. Comprehensive Welfare Benefit Plan (this “Amendment”);

     Now, Therefore, this Amendment is hereby adopted.

     Section 1. Amendment of Article IV of the Existing Plan. Article IV of the Existing
Plan is hereby amended by adding a new sentence thereto and the end thereof to read in its entirety
as follows:

Notwithstanding any other provisions of the Retiree Medical Plan or the
Retiree Prescription Drug Plan, a Participant who is receiving benefits
under the Medicare Supplement portion of the Retiree Medical Plan will, upon
reaching the lifetime benefit limit of $50,000, have coverage terminate on
the last day of the month following the month in which such Participant is
notified of reaching the $50,000 limit; provided, however, that such
Participant will only be allowed prescription drug fills or refills of a 30
day supply (or one month supply) during this grace period.

     Section 2. Effect of Amendments. Except as amended and modified by this Amendment,
the Existing Plan shall continue in full force and effect. The Existing Plan and this Amendment
shall be read, taken and construed as one and the same instrument. This Amendment shall supersede
any provisions of the Existing Plan to the extent those provisions are inconsistent with the
provisions of this Amendment. Upon the effectiveness of this Amendment, each reference in the
Existing Plan to “this Plan” or “the Plan” shall mean and be a reference to the Existing Plan as
amended hereby.

     Section 3. Binding Effect. This Amendment shall inure to the benefit of, and shall be
binding upon the Employer (as defined in the Existing Plan) and its successors and assigns and upon
the Participants (as defined in the Existing Plan) and their respective heirs, executors, personal
representatives, administrators, successors and assigns.

     Section 4. Severability. Should any clause, sentence, paragraph, subsection or
Section of this Amendment be judicially declared to be invalid, unenforceable or void, such

 

 

decision will not have the effect of invalidating or voiding the remainder of this Amendment, and
the part or parts of this Amendment so held to be invalid, unenforceable or void will be deemed to
have been stricken herefrom as if such stricken part or parts had never been included herein.

     Section 5. Governing Law. To The Extent Not Superseded By The Laws Of The United
States, This Amendment Shall Be Construed and Enforced in Accordance With, and the Rights
of the Parties Shall Be Governed By, the Internal Laws of the State of Texas, Without Reference to
Principles of Conflicts of Law. 

     In Witness Whereof, the Corporation has caused this Amendment to be duly executed in
its name and on its behalf by its proper officer thereunto duly authorized effective as of November
25, 2008.

	 	 	 	 	 
	 

	 	Sterling Chemicals, Inc.	 	 
	 
	 
	 	 	 	 
	 

	 	 

Kenneth M. Hale
	 	 
	 

	 	Senior Vice President and General Counsel	 	 

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