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Exhibit 10.2  

 
 

Forest Oil Corporation    
    
    Annual Incentive Plan    
    
    2004    
    

  

 

Forest Oil Corporation

2004 Annual Incentive Plan  

Summary  

Plan Objectives  

        The Annual Incentive Plan (the "Plan") has been designed to meet the following objectives: 

	•
	Provide
an annual incentive plan framework that is performance-driven and focused on objectives that are critical to the Company's success.

	•
	Offer
competitive cash compensation opportunities to all key employees.

	•
	Reward
outstanding achievement. 

Basic Plan Concept  

        The Plan generally provides annual incentive awards, which will be determined primarily on the basis of the Company's consolidated results on selected financial,
operating and other performance measures. However, business unit or department performance and individual performance should also be
considered in determining the actual participant award payout. Therefore, the Company shall have the flexibility to adjust individual awards by as much as (±) 50% to
reflect individual/team performance. 

Performance Measures and Weights  

        Each year the Company will establish the threshold, target and outstanding performance levels on each performance measure and its appropriate weighting. These
performance measures and their weighting will be reviewed over time (and modified, if appropriate) in light of changing Company priorities and strategic objectives. 

        The
recommended 2004 Company performance measures and their respective weightings are described in detail on Attachment I. 

Award Opportunities  

        The 2004 Plan target awards for Plan participants by position (expressed as a percentage of annual salary) are set forth on Attachment II. 

Plan Administration  

        The Plan will be administered by the Compensation Committee ("Committee") of the Board of Directors and the Chief Executive Officer ("CEO") (for all positions
except his own). Certain elements of the Plan administration will be delegated to the senior Human Resources Department executive of the Company. The Chief Accounting Officer will verify the
performance calculation for the performance and operating measures in consultation with the Senior Vice President, Corporate Planning and Development who shall be responsible for the estimation of the
Company's oil and gas reserves.

 

        Actual
performance goals, standards, award determinations and modifications to the Plan design must be approved by the Committee. 

	Measure
 
	 	Weighting (Example)
	 
	Total Shareholder Return	 	20	%
	Cash Cost	 	20	%
	Acquisitions	 	20	%
	Production	 	20	%
	Rate of Return on Capital Investments	 	20	%
	 	Total Financial and Operating	 	100	%

        Once
the total bonus pool has been established following the performance calculations, the CEO shall have the discretion to distribute bonus monies within business units and the
corporate group or to move monies from one group to another, based on his assessment (with advice of other senior managers) as to individual or group performance. 

Targets  

        Targets for the total Plan will be set consistent with the following: 

	•
	Threshold—Level
at which minimum Payout occurs. The threshold percentage is 25% of the target award percentage for each position.

	•
	Target—Level
at which the participant receives the target award percentage.

	•
	Outstanding—Level
at which the participant receives 200% of the target award percentage. 

        Completion
percentages between Threshold, Target and Outstanding will be determined, with the exception of Total Shareholder Return, by interpolation. Completion for results above
Outstanding will be directly proportional to the change in completion between Target and Outstanding. 

        The
Completion Percentage for Total Shareholder Return is defined on the page describing the Total Shareholder Return measure. Targets shall be adjusted for material changes made during
the year to the business plan or scope thereof, or to the capital expenditure budget. 

Maximum Completion  

        Although there will be no limit on completion of individual financial measures, completion for the total Plan will be limited to 200% of target. 

Performance Levels  

        Performance levels will be set for individual measures. Results below the Threshold will equate to a zero completion percentage. 

        A
minimum 25% completion threshold is required for the total Plan. 

Completion Calculation  

        Completion for total financial measures will be the sum of the weighted completion for each individual measure. Weighted completion for each individual measure
will be equal to the completion percentage of each measure times the weighting for that measure.

 

Property Sales  

        In computing results, non-budgeted property sales are not to be considered. To avoid non-budgeted property sales from affecting results,
they will be incorporated into performance measures as though they had been budgeted. 

Participants  

        The CEO of the Company shall determine which employees are to be participants in the Plan. If a participant retires, dies or becomes disabled prior to the payment
of a bonus award, he or she (or the estate, in the case of death), will receive a pro rata portion of the award based upon actual earned salary in the award year. If a participant's employment with
the Company is terminated for any other reason prior to payment, no bonus award will be paid. 

        Plan
participants who change positions, and/or have their individual target incentive levels changed, and/or transfer between business units during the Plan year will have their award
prorated based upon the number of days at each target incentive level and the days within each business unit. All awards paid will be rounded to the nearest $100. 

        Incentive
compensation awards will be calculated based upon the participant's base salary in effect at the end of the Plan year or earned salary if the participant was a new hire during
the year. 

Board of Directors' Discretion  

        The granting of any and all individual incentive compensation awards is at the discretion of the Forest Oil Corporation Board of Directors. 

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Forest Oil Corporation Annual Incentive Plan 2004AMENDED AND RESTATED AMERICAN AXLE & MANUFACTURING, INC. INCENTIVE COMPENSATION PLAN FOR EXECUTIVE OFFICERS

EXHIBIT
10.46

AMENDED AND RESTATED

AMERICAN AXLE & MANUFACTURING, INC.

INCENTIVE COMPENSATION PLAN FOR EXECUTIVE
OFFICERS

ARTICLE 1

DEFINITIONS

When used in the
Plan, the following words and phrases shall have the following meanings unless
the context clearly indicates another meaning:

1.1 Administrator
means the Management Benefits Committee acting through the Corporate Human
Resources Department, as set forth in Article 5.

1.2 Affiliated
Employer means any of the following that, with the consent of the
Compensation Committee, adopt the Plan as provided in Sec. 6.1:

	(i)  	
      any
      of the other corporations which are members of a controlled group of
      corporations (as defined in Code Section 414(b)) which includes the
      Company; 

	(ii)  	
      any
      trade or business (whether or not incorporated) which is under common
      control (as defined in Code Section 414(c)) with the Company;
    

	(iii)  	
      any
      organization (whether or not incorporated) which is a member of an
      affiliated service group (as defined in Section 414(m)) which includes the
      Company; 

	(iv)  	
      any
      other entity required to be aggregated with the Company pursuant to
      Regulations under Code Section 414(o).

1.3 Average Invested
Capital means the simple average of Invested Capital as of January
1 and Invested Capital as of December 31 of the Plan Year in question.

1

1.4 Base
Salary means a Participant’s monthly gross regular rate of pay from
the Company as of December 1 of a Plan Year or on the date of a Participant’s
death, Disability, Retirement or employment by an Affiliated Employer who has
not adopted the Plan, if earlier, before any required reductions or withholdings
or reductions under any salary reduction agreement between a Participant and the
Company. Base Salary shall not include overtime, bonuses, compensation paid in
kind, special allowances or reimbursements to cover expenses paid or incurred on
behalf of the Company or in the course of employment with the Company, the
Company’s contribution to this Plan or to any pension or profit sharing plan to
which the Company makes contributions, or the Company’s contribution to any
employee welfare plan or arrangement.

1.5 Beneficiary
means the Participant’s legal spouse, if married, otherwise the beneficiary or
beneficiaries designated by a Participant as such in connection with the group
term life insurance program maintained by the Company for Eligible Employees as
in effect at the time of the Participant’s death. If no beneficiary is so
designated, a Participant’s beneficiary shall be his or her estate.

1.6 Board of
Directors means the Board of Directors of the American Axle &
Manufacturing Holdings, Inc.

1.7 Bonus
Award means a bonus award under this Plan determined in accordance
with Article 3.

1.8 Bonus
Factors means Return on Invested Capital (ROIC), Cash Flow as a
Percentage of Budgeted Cash Flow and Net Income as a Percentage of Sales (NIPS)
each as defined herein.

2

1.9 Budgeted
Cash Flow means the anticipated Cash Flow as set forth in the
Company’s budget for the Plan Year in question, as approved by the Board of
Directors.

1.10 Cash
Flow means the cash provided by and used in the Company’s operating
activities for the Plan Year in question less the Company’s capital expenditures
for the Plan Year in question, all as determined by the Company in accordance
with generally accepted accounting principles (GAAP) and as reported in the
Company's audited consolidated financial statements for the Plan Year.

1.11 Cash Flow
as a Percentage of Budgeted Cash Flow means one of the Bonus
Factors which, for a particular Plan Year, is computed as the Company’s Cash
Flow for that year divided by the Company’s Budgeted Cash Flow for that
year.

1.12  CEO
means the Chief Executive Officer of Holdings.

1.13  CFO
means the Chief Financial Officer of Holdings.

1.14 Company
means American Axle & Manufacturing, Inc., a Delaware corporation.

1.15 Compensation
Committee means the Compensation Committee of the Board of
Directors.

1.16 Covered
Earnings means a Participant’s Base Salary multiplied by his or her
Months of Participation during a Plan Year.

1.17 Disability
means disability as defined in the short term disability plan maintained by the
Company for Eligible Employees as in effect on the date of disability.

1.18 Eligible
Employee means an Executive Officer designated as an Eligible
Employee by the CEO. 

3

1.19 Executive
Officer means “officer” of the Company or Holdings as defined in
Section 16 of the Securities Exchange Act of 1934 and the rules thereunder, as
determined by the CEO. 

1.20 GAAP means
generally accepted accounting principles in the United States. 

1.21 Holdings means
American Axle & Manufacturing Holdings, Inc., the publicly held parent
corporation of the Company.

1.22 Invested
Capital means the sum of the Company's long-term debt, less cash
and cash equivalents, plus stockholders' equity, all as determined in accordance
with GAAP.

1.23 Management
Benefits Committee means the Management Benefits Committee
authorized by the Compensation Committee to administer the Plan.

1.24 Month of
Participation means each full or partial month during which an
employee of the Company or an Affiliated Employer is an Eligible Employee. An
Eligible Employee who, during the Plan Year, dies, Retires, incurs a Disability,
or is employed by an Affiliated Employer who has not adopted the Plan and who
remains an employee of such Affiliated Employer through the Payment Date, will
be credited with his or her Months of Participation through the month of death,
Retirement, Disability or transfer but not thereafter. 

1.25 Net Income
means the net income of Holdings as determined in accordance with GAAP and as
reported in the audited consolidated financial statements of Holdings.

4

1.26 NIPS
means net income as a percentage (%) of sales. NIPS is computed as the net
income for the Plan Year in question divided by the net sales for the Plan Year
in question, all as determined by Holdings in accordance with GAAP and as
reported in Holdings’ audited consolidated financial statements for the Plan
Year.

1.27 Participant
means an individual who is eligible to receive a Bonus Award in a Plan Year in
accordance with Article 2. 

1.28 Payment
Date means the date or dates on which Bonus
Awards under the Plan are paid to Participants as determined in accordance with
Section 4.1 hereof.

1.29 Peer
Group Companies means the companies
identified by Holdings and reported in its annual proxy statement as members of
a competitor peer group for purposes of comparison of cumulative total
stockholder return. 

1.30 Plan
means this Amended and Restated American Axle & Manufacturing, Inc.
Incentive Compensation Plan for Executive Officers.

1.31 Plan
Year means the 12-month period beginning on January 1 and ending on
December 31 of each year.

1.32 Retire or
Retirement means termination of employment while entitled to an
early, normal, or late retirement benefit under the Salaried Pension Plan.

1.33 ROIC means
return on invested capital and is computed as the sum of Holdings’ net income
and after-tax net interest expense for the Plan Year in question, which sum is
divided by Average Invested Capital for the Plan Year in question, all as
determined in accordance with GAAP and as set forth in Holdings’ audited
consolidated financial statements for the Plan Year.

5

1.34 Salaried
Pension Plan means the American Axle & Manufacturing, Inc.
Retirement Program for Salaried Employees, the American Axle &
Manufacturing, Inc. and Affiliated Corporation Salaried Cash Bonus Pension Plan,
or other retirement plans sponsored by the Company or Affiliated
Employers.

1.35 Target Performance
Levels means performance levels determined as follows:

	a.  	
      in the case of the Bonus Factors:

	1.  	
      for
      ROIC and NIPS, Target Performance Levels are financial performance targets
      reviewed and approved annually each Plan Year by the Compensation
      Committee that are intended to establish performance targets to exceed the
      performance of two thirds of the Peer Group Companies based on the most
      recent trailing 3 year data available for the Peer Group Companies, and
      are specifically identified as Target Performance Levels as established
      and approved in writing by the Compensation Committee for the Plan Year;
      and

	2.  	
      for
      Cash Flow as a Percentage of Budgeted Cash Flow, the Target Performance
      Level means achievement of 100% of Budgeted Cash Flow for the Company in
      the Plan Year in question, and is specifically identified as the Target
      Performance Level as established and approved by the Compensation
      Committee for the Plan Year. 

6

The Target Performance Levels are reviewed and approved annually
by the Compensation Committee. 

1.36 Weighted
Percentage means the percentage allocation
(relative weighting) assigned to each of the Bonus Factors referred to in
Article 3 for each Plan Year, as approved by the Compensation Committee in
consultation with the CEO and CFO.

ARTICLE 2

PARTICIPATION

 

2.1 Participation.
An individual who becomes an Eligible Employee before October 1 of a Plan Year
shall be a Participant for such Plan Year. An individual who becomes an Eligible
Employee on or after October 1 of a Plan Year shall not be a Participant for
such Plan Year, but shall become a Participant for the next succeeding Plan Year
on January 1 of such next succeeding Plan Year in the event and to the extent
such individual remains an Eligible Employee continuously into such succeeding
Plan Year. 

2.2  Eligibility.
Each Participant:

	a.  	
      who
      remains an Eligible Employee through the last day of a Plan Year and
      continuously throughout the next succeeding Plan Year up to and including
      the Payment Date; or 

	b.  	
      whose
      participation in the Plan terminated during the Plan Year due to the
      Participant’s:

	i.  	
      death; or

	ii.  	
      Disability;
      or

	iii.  	
      Retirement;
      or 

7

	iv.  	
      employment
      by an Affiliated Employer who has not adopted the Plan, provided the
      Participant remains employed by such Affiliated Employer through the
      Payment Date or the Participant’s employment by the Affiliated Employer
      terminates due to the Participant’s death, Disability, or Retirement or
      subsequent employment by another Affiliated Employer.

shall be entitled to receive a Bonus Award, except as otherwise
provided herein.

ARTICLE 3

CALCULATION OF BONUS AWARDS

3.1 Bonus
Award Formula. The Bonus Award of an Executive
Officer for a particular Plan Year shall be determined pursuant to this Article
3 and shall be equal to the sum of the amounts calculated under sub-sections (a)
- (c) below: 

	 	
      (a)
	
      ROIC.
      The ROIC component of the bonus award formula for Executive Officers shall
      be computed as follows, referring to the Target Performance Levels
      approved by the Compensation Committee for the Plan
  Year:

	 	
      1.
	
      The
      bonus award percentage for Executive Officers which corresponds to the
      ROIC for the Plan Year; 

	 	
      2.
	
      multiplied
      by the Weighted Percentage assigned to the ROIC Bonus Factor for Executive
      Officers;

	 	
      3.
	
      multiplied
      by the Covered Earnings of the Executive Officer for the Plan Year;
      PLUS

8

	 	
      (b)
	
      Cash
      Flow. The Cash Flow as a Percentage of
      Budgeted Cash Flow component of the bonus award formula for Executive
      Officers shall be computed as follows, referring to the Target Performance
      Levels approved by the Compensation Committee for the Plan
      Year:

	 	
      1.
	
      the
      bonus award percentage for Executive Officers which corresponds to the
      Cash Flow for the Plan Year;

	 	
      2.
	
      multiplied
      by the Weighted Percentage assigned to the Cash Flow as a Percentage of
      Budgeted Cash Flow Bonus Factor for Executive
Officers;

	 	
      3.
	
      multiplied
      by the Covered Earnings of the Executive Officer for the Plan Year;
      PLUS

	 	
      (c)
	
      NIPS.
      The NIPS component of the bonus award formula for Executive Officers shall
      be computed as follows, referring to the Target Performance Levels
      approved by the Compensation Committee for the Plan Year:
  

	 	
      1.
	
      the
      bonus award percentage for Executive Officers which corresponds to Net
      Income As a % of Sales (NIPS) for the Plan
Year;

	 	
      2.
	
      multiplied
      by the Weighted Percentage assigned to NIPS for Executive Officers;
      

	 	
      3.
	
      multiplied
      by the Covered Earnings of the Executive Officer for the Plan
      Year.

9

3.2 Weighted
Percentages. Each Plan Year the Compensation
Committee, in consultation with the CEO and CFO, shall assign a Weighted
Percentage to each of the Bonus Factors. For purposes of determining Bonus
Awards for Executive Officers, the Weighted Percentages for each of the Bonus
Factors must total 100%. A list setting forth all Weighted Percentages for each
of the Bonus Factors shall be established for each Plan Year based on the
recommendation of the CEO and CFO and approval of the Compensation Committee.

3.3 Individual Performance
Adjustments. Anything in this Plan to the contrary
notwithstanding, the amount of a Participant’s Bonus Award for a given Plan Year
shall be subject to review and adjustment by the CEO who shall have the
discretion to increase, decrease, or eliminate entirely (“Individual Performance
Adjustments”) any Bonus Award determined pursuant to this Article 3; provided,
however, that the amount of an Executive Officer’s Bonus Award must be approved
by the Compensation Committee and the sum of all Bonus Awards for all
Participants in a Plan Year may not exceed the maximum annual amount allocated
for Bonus Award payments as such amount is determined each Plan Year by the
Compensation Committee. 

3.4 Effect of
Plan on Other Company Policies.

(a) Company
Programs. Unless otherwise expressly approved by
the Compensation Committee, a Participant shall have his or her Bonus Award
under this Plan for any Plan Year, if any, reduced by any performance based
compensation paid or payable to him or her by the Company for such Plan Year
pursuant to any other Company program, policy or agreement. Notwithstanding

10

the foregoing, a Participant’s Bonus Award shall not be reduced by
any deferred compensation payments or obligations applicable to such Participant
for such Plan Year.

(b) Employment
Agreements. Anything contained in this Plan to the contrary
notwithstanding, in the event a Participant has entered into an employment
agreement with the Company which provides for the payment of a bonus which is
determined, in whole or in part, based upon the financial performance of the
Company for any Plan Year, then in such event such Participant shall be entitled
to receive the bonus calculated for such Plan Year in accordance with the
applicable employment agreement in lieu of any Bonus Award.

3.5 Requirement of
Profitability. Anything contained in this Plan to
the contrary notwithstanding, no Bonus Award shall be payable pursuant to this
Plan to any Participant for any Plan Year in which Holdings’ audited
consolidated financial statements contained in its Annual Report on Form 10-K
filed with the SEC for such Plan Year (or approved for filing with the SEC by
the Board of Directors if such filing has not yet occurred) do not report
positive Net Income for the Plan Year in question after reflecting all costs and
expenses associated with the Plan for such Plan Year.

ARTICLE 4

PAYMENT OF BONUS AWARD

4.1 Time and
Manner of Payment. Payment of a Participant’s
Bonus Award for a Plan Year shall be made not later than March 15 of the
subsequent year. Provided, however, that if the employment of a Participant by
the Company shall 

11

terminate during a Plan Year, or prior to March 15 of the
subsequent year, for a reason other than his or her death, Disability,
Retirement or employment by an Affiliated Employer (so long as such Participant
remains employed by the Affiliated Employer on the Payment Date or terminated
employment with the Affiliated Employer due to such Participant’s death,
disability, or Retirement as determined pursuant to the Affiliated Employer’s
applicable disability or Retirement plan) prior to receiving payment of such
Bonus Award, the Participant shall forfeit all rights to a Bonus Award in such
Plan Year and no Bonus Award shall be paid to such Participant for such Plan
Year. Notwithstanding any provision of the Plan to the contrary, the Company
shall withhold from any Bonus Award all federal, state and local taxes as shall
be required pursuant to any law or governmental regulation or ruling, any
amounts owed by the Participant to the Company to the extent permitted by law,
and any amounts otherwise required to be withheld or deducted under applicable
law or by agreement of the Company and the Participant.

ARTICLE 5

ADMINISTRATION, AMENDMENT AND TERMINATION

5.1 Authority
of Administrator. The Management Benefits
Committee shall monitor the performance of the Plan to ensure that it is
administered by the Human Resources Department in accordance with its terms and
applicable laws and regulations. Except as otherwise expressly stated, the
Compensation Committee, or such other committee, including the Management
Benefits Committee, to which it delegates such authority, shall have the full
power, discretion and authority to construe, interpret and administer the Plan,
including authority to correct any defect or reconcile any inconsistency or
ambiguity. All decisions, acts or interpretations of the

12

 

Compensation Committee shall be final, conclusive and binding upon
all persons. No member of the Compensation Committee, the Management Benefits
Committee or any other committee to which Plan administrative authority has been
delegated, shall be personally liable by reason of any action taken by him or
her in good faith or on his or her behalf as Administrator, nor for any mistake
in judgment made in good faith and the Company and Holdings shall indemnify and
hold harmless each member of the Compensation Committee, the Management Benefits
Committee, the CEO, the CFO, and each other officer, employee or director of the
Company to whom any duty or power relating to the Plan, or its administration or
interpretation, may be delegated, against any cost or expense (including legal
fees) or liability (including any sum paid in settlement of a claim with the
approval of the Board of Directors) arising out of any act or omission to act in
connection with the Plan unless arising out of such person’s own fraud or bad
faith.

    5.2  Amendment
and Termination. The Compensation Committee may at
its discretion amend this Plan in any respect at any time and for any reason and
may terminate the Plan, in whole or in part, at any time and neither notice of
amendment nor of termination is necessary for any amendment or termination to be
effective. Any amendment or termination of the Plan may be made effective
retroactively to the first day of the Plan Year or, in the case of an amendment
or termination of the Plan adopted on or before March 15, the first day of the
preceding Plan Year. No Participant or Beneficiary shall be deemed to have a
vested or contractual right to a Bonus Award until such Bonus Award is actually
paid to the Participant or Beneficiary by the Company. The payment of Bonus
Awards pursuant to this Plan is completely 

13

discretionary on the part of the Company. The existence of this
Plan shall create no rights on behalf of Participants or Beneficiaries or
obligations on behalf of the Company or any Affiliated Employer.

14

 

ARTICLE 6

AFFILIATED EMPLOYERS

6.1 Adoption of Plan by
Affiliated Employers. Any Affiliated Employer may, with the
recommendation of the Management Benefits Committee and the approval of the
Compensation Committee, adopt this Plan on behalf of such of its Executive
Officers. The Affiliated Employer shall pay all Bonus Awards made to Executive
Officers which are payable because of their employment with the Affiliated
Employer. 

ARTICLE 7

MISCELLANEOUS

7.1 Compliance
with Financing Agreements. This Plan may be
subject to the terms and conditions of any agreements entered into between the
Company and any third party lender to whom the Company is now indebted, or may
at any time during the term of this Plan become indebted, and the Bonus Awards
for any Plan Year may be reduced by such amounts as may be necessary to ensure
that the Company is not in default under any such agreements.

7.2 No Right,
Title or Interest in or to the Company’s Assets.
Neither Participants nor Beneficiaries shall have any right, title or interest
whatsoever in or to any investments which the Company may make to aid it in
meeting its obligations under this Plan. Nothing contained in the Plan and no
action taken pursuant to its provisions, shall create or be construed to create
a trust of any kind or a fiduciary relationship between Holdings or the Company
and any Participant, Beneficiary or any other person. 

15

All payments to be made under this Plan shall be paid from the
general assets of the Company. 

7.3 No Alienation of Bonus
Awards. Except as otherwise may be required by
law, no amount payable at any time under this Plan shall be subject in any
manner to alienation by anticipation, sale, transfer, assignment, bankruptcy,
pledge, attachment, charge or encumbrance of any kind, nor in any manner be
subject to the debts or liabilities of any person, and any attempt to so
alienate or subject any such amount, whether presently or thereafter payable,
shall be void.

7.4 No
Contract of Employment. Neither the actions of the
Company in establishing this Plan, nor any provisions of this Plan or any action
taken by Holdings, any Affiliated Employer, the Compensation Committee, the
Administrator or the CEO pursuant to its provisions, shall be construed as
giving to any Eligible Employee or any employee the right to be employed by the
Company or affect the right of the Company to dismiss any employee.

7.5 Governing
Law. This Plan shall be governed by and construed
in accordance with the laws of the State of Michigan without giving effect to
the conflict of laws provisions thereof.

16

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