Document:

Exhibit

                                                                          Exhibit 10.26

                                          
                                    

Year 2016

Annual
Management Incentive
Program

(Executive Officers Only)

USG Corporation

            

PURPOSE

To enhance USG Corporation's ability to attract, motivate, reward and retain key employees of the Corporation and its operating subsidiaries and to align management's interests with those of the Corporation's stockholders by providing incentive award opportunities to managers who make a measurable contribution to the Corporation’s business objectives.

INTRODUCTION

This Annual Management Incentive Program (the “Program”) is in effect from January 1, 2016 through December 31, 2016.

ELIGIBILITY

Individuals eligible for participation in this Program are the Corporation’s executive officers. This Program is executive officers only.

GOALS

For the 2016 Annual Management Incentive Program, Consolidated Net Earnings adjusted for incentive plan purposes and consolidated, subsidiary and profit center Focus Targets will be determined by the USG Board of Directors after review by the Compensation and Organization Committee of the USG Board of Directors (the “Committee”). The Committee will consider recommendations submitted from management of USG Corporation. 

1

AWARD VALUES

For this Program, position target incentive values are based on level of accountability and are expressed as a percent of approved annualized salary.  Resulting award opportunities represent a fully competitive incentive opportunity for 100% (target) achievement of goals:

	
		
	Position Title
	Position Target Incentive

	•    Chairman, President & Chief Executive Officer, USG Corporation
	120%

	•    Executive Vice President & Chief Financial Officer, USG Corporation
	75%

	•    Executive Vice President, USG Corporation; President, USG International; President, L&W Supply Corporation
•    Senior Vice President & General Counsel, USG Corporation
•    Senior Vice President, USG Corporation; President, North America
	70%

	•    Executive Vice President, Chief Operations and Innovation Officer, USG Corporation
•    Executive Vice President and Chief Administrative Officer, USG Corporation
	65%

	•    Vice President and Associate General Counsel, USG Corporation
•    Vice President and Treasurer, USG Corporation
•    Vice President and Controller, USG Corporation
•    Senior Vice President, Human Resources, USG Corporation
•    Vice President, Corporate Innovation Center, USG Corporation
	45%

2

AWARDS

Incentive awards for all participants in this Program will be reviewed and approved by the Committee.  For all participants, the annual incentive award par opportunity is the annualized salary approved by March 31, 2016 that is in effect on March 1, 2016 multiplied by the applicable position target incentive value percent. 
 
Incentive awards for 2016 will be based on a combination of the following elements:

		
	I.
	CONSOLIDATED NET EARNINGS ADJ. FOR IC PLAN PURPOSES:    50% OF INCENTIVE

Consolidated Net Earnings adjusted for incentive plan purposes will be as reported on the Corporation’s year-end financial statements with adjustments for significant non-operational charges. Such adjustments will be defined by March 31, 2016 and have in the past been for Fresh Start Accounting, asbestos, restructuring charges, bankruptcy expenses and the cumulative impact of new accounting pronouncements.  For all participants, this portion of the award represents 50% of the incentive par. This portion of the award will be paid once threshold is met.  The threshold award begins at 50% of segment par.  The maximum award for this segment is capped at two times par. Straight line interpolation will be used to determine points between par and minimum or maximum.           
For each executive officer, (i) their individual Net Earnings par shall be determined by March 31, 2016, and (ii) their individual factors shall be determined by March 31, 2016. Notwithstanding the prior sentence nor any other provision in this Program, each executive officer’s factor may be decreased, but not increased, due to changes in the total Program and Other Program par after March 31, including, but not limited to, changes triggered by the addition or removal of a participant from the Program or the Other Program or changes in any participant’s Net Earnings par.   
    
		
	II.
	FOCUS TARGETS:    50% OF INCENTIVE

Focus Targets will be measurable, verifiable and derived from the formal strategic planning process.  For 2016, Focus Targets are expected to include North American Operations and L&W Gross Profit and USG Boral JV Adjusted Net Earnings, Wallboard Cost, and SG&A or other operational priorities.  The Focus Targets will be determined by March 31, 2016.  The award adjustment factor for this segment will range from 0.5 (after achieving a minimum threshold performance level) to 2.0 for maximum attainment.  

The weighting on any individual Focus Target generally will be in 5% increments and not be less than 10%.The weighting of all assigned Focus Targets will equal 50% of the individual’s total par.

3

PAYOUT CRITERIA

No awards will be paid under this Program unless the Corporation’s annual adjusted operating profit for 2016 is positive as calculated net of all expenses associated with all incentive programs. Positive annual adjusted operating profit is defined as calendar year gross profit less overhead expenses and before other special items that are included within operating profit/loss as reflected on the consolidated statement of operations. Special items include litigation settlement income/expense, restructuring and long-lived asset impairment charges, goodwill and other intangible asset impairment charges, unusual or non-recurring items, and changes in accounting principles.

The maximum payment to a participant is two times the participant’s par value amount. No payments will be made beyond this two times maximum payment level.

WEIGHTINGS OF PROGRAM ELEMENTS

All Corporate Officer participants in this Program, including the most senior executives, will have the same overall weightings of 50% on Consolidated Net Earnings adjusted for incentive plan purposes and 50% on Focus Targets.

4

GENERAL PROVISIONS

		
	1.
	If the Board, or an appropriate committee thereof, has determined that any fraud 

or intentional misconduct by an executive officer was a significant contributing factor to the Corporation having to restate all or a portion of its financial statement(s), the Board or committee shall take, in its discretion, such action as it deems necessary to remedy the misconduct and prevent its recurrence. In determining what remedies to pursue, the Board or committee will take into account all relevant factors, including whether the restatement was the result of fraud or intentional misconduct. The Board may, to the extent permitted by applicable law, require reimbursement of any award under this Program paid to the executive officer after January 1, 2016,  if and to the extent that a) the amount of the award was calculated based upon the achievement of certain financial results that were subsequently reduced due to a restatement, b) the executive officer engaged in any fraud or intentional misconduct that caused or contributed to the need for the restatement, and c) the amount of the compensation that would have been awarded to the executive officer under this Program had the financial results been properly reported would have been lower than the amount actually awarded.  The remedy specified herein shall not be exclusive and shall be in addition to every other right or remedy at law or in equity that may be available to the Corporation. If this paragraph 1 is held invalid, unenforceable or otherwise illegal, the remainder of this Program shall be deemed to be unenforceable due to a failure of consideration, and the executive officer’s rights to any incentive compensation that would otherwise be awarded under this Program shall be forfeited.

In order to be entitled to an award of compensation under this Program, an executive officer must execute a written acknowledgement that such award shall be subject to the terms and conditions of this paragraph 1.
    
		
	2.
	The Committee reserves the right to adjust award amounts under this Program down based on its assessment of the Corporation’s overall performance relative to market conditions, provided, however, in no event may the Committee adjust an award under this Program upward. 

		
	3.
	The Committee shall review and approve the awards recommended eligible participants in this Program.  The Committee shall submit to the Board of Directors, for its ratification, a report of the awards for all eligible participants approved by the Committee in accordance with the provisions of the Program. 

		
	4.
	The Committee shall have full power to make the rules and regulations with respect to the determination of achievement of goals and the distribution of awards.  No awards will be made until the Committee has certified financial achievements and applicable awards in writing.

		
	5.
	The judgment of the Committee in construing this Program or any provisions thereof, or in making any decision hereunder, shall be final and conclusive and binding upon all employees of the Corporation and its subsidiaries whether or not selected as beneficiaries hereunder, and their heirs, executors, personal representatives and assignees.

5

		
	6.
	Nothing herein contained shall limit or affect in any manner or degree the normal and usual powers of management, exercised by the officers, and the Board of Directors or committees thereof, to change the duties or the character of employment of any employee of the Corporation or to remove the individual from the employment of the Corporation at any time, all of which rights and powers are expressly reserved.

The awards made to employees shall become a liability of the Corporation or the appropriate subsidiary as of December 31 of the year earned and all payments to be made hereunder will be made as soon as practicable, but in any event before two and one half months after December 31 of the year earned, after said awards have been approved by the Committee.

ADMINISTRATIVE GUIDELINES

		
	1.
	Award values will be based on annualized salary in effect on March 1, 2016 for each qualifying participant.  Any change in duties, dimensions or responsibilities of a current position resulting in an increase or decrease in salary range reference point or market rate will result in a pro-rata incentive award.  Respective reference points, target incentive values or goals will be applied based on the actual number of full months of service at each position. 

		
	2.
	No award is to be paid to any participant who is not a regular full-time employee, or a part time employee as approved by the Executive Vice President and Chief Administrative Officer, USG Corporation, in good standing at the end of the calendar year to which the award applies.  However, if an eligible participant with three (3) or more months of active service in the Program year subsequently retires, becomes disabled, dies, is discharged from the employment of the Company without cause, or is on an approved unpaid leave, the participant (or beneficiary) may be recommended for an award which would otherwise be payable based on goal achievement, prorated for the actual months of active service during the year. 

		
	3.
	Employees participating in any other incentive or bonus program of the Corporation or a Subsidiary who are transferred during the year to a position covered by this Program will be eligible to receive a potential award prorated for actual full months of service in the two positions with the respective incentive program and target incentive values to apply.  

		
	4.
	In the event of transfer of an employee from an assignment which does not qualify for participation in any incentive or bonus plan to a position covered by this Program, the employee is eligible to participate in this Program with any potential award prorated for the actual months of service in the position covered by this Program during the year.  A minimum of three months of service in the eligible position is required.

		
	5.
	Participation during the current Program year for individuals employed from outside the Corporation is possible with any award to be prorated for actual full months of service in the eligible position.  A minimum of three full months of eligible service is required for award consideration.

		
	6.
	Exceptions to established administrative guidelines can only be made by the Committee.

6Exhibit

EXHIBIT 10.1

AMENDED AND RESTATED
EXECUTIVE LEADERSHIP COUNCIL

MANAGEMENT INCENTIVE BONUS PLAN

General
Management Incentive Bonus (MIB) Plan provides annual cash bonuses to eligible executives for the achievement of explicit performance objectives established prior to each fiscal year.  The ELC MIB is in two parts: a financial portion representing 90% of the overall MIB, and individual objectives representing the remaining 10%.

Eligibility
All executives in career bands 2 and 3 are eligible to participate in the ELC MIB Plan.  Generally an individual is eligible for a potential award under the ELC MIB Plan if they were an executive for six or more months during the fiscal year. 

Overall Structure
MIB awards will be determined by performance during the fiscal year as measured by the following:
		
	*
	Financial Objectives

		
	•
	Attainment of revenue targets by the business to which the participant is assigned. *

		
	•
	Attainment of AOI targets by the business to which the participant is assigned. *

		
	•
	Attainment of AOI margin targets by the business to which the participant is assigned. *

		
	*
	Individual Objectives

		
	•
	Individual or team objectives the plan participant is expected to attain during the fiscal year.

Bonus potential will be based upon the "guideline" or standard percent of salary set at the beginning of the fiscal year for an eligible executive.  The apportionment of the bonus payoff elements is reflected in this diagram:

MANAGEMENT INCENTIVE BONUS - OVERALL STRUCTURE

	
						
	 
	 
	Total Bonus Opportunity
	 
	 

	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 

	Financial Objectives (90%)
	 
	 
	Individual Objectives (10%)

	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 

	Revenue 
(25%)
	AOI 
(40%)
	AOI Margin
(25%)
	 

To establish the performance expectations for the fiscal year, as close as possible to the start of each fiscal year, individuals are provided with an ELC MIB Plan that specifies:  (1) the appropriate business Revenue, AOI & AOI Margin targets, and (2) an area to develop individual objectives.

Determination of Bonus Targets - Financial Portion
For purposes of determining bonus targets, Revenue & AOI & AOI Margin are defined as follows:

		
	Revenue
	Sales as reported internally to Corporate Accounting and used for external financial reporting.

		
	AOI
	Adjusted Operating Income inclusive of Corporate and other overhead allocations determined pursuant to the Corporation’s accounting policies and procedures.

		
	AOI Margin
	AOI divided by Revenue.

If these definitions differ from those included within the final year-end financial statements of the business, the definitions which were used in establishing the Revenue, AOI and AOI Margin targets will be attached to each performance plan.

In a limited number of cases and where business warrants, the financial targets and percentages may be other than those shown here.  All such changes, however, must be approved by the Chief Executive Officer in advance.

Determination of Awards - Financial Portion
For all financial metrics,  payouts under the financial portion of the MIB vary as financial targets are over or under achieved.  The minimum bonus, equal to 25% of the guideline amount, is awarded provided a minimally acceptable "threshold" level of performance is achieved.  (No bonus will be awarded for performance below the threshold for that metric.)  Bonuses increase to the guideline amount if targets are achieved fully and may increase up to a maximum ("ceiling") of 150% to 200% of the guideline amount if performance increasingly exceeds the target levels.
Bonus awards for performance between threshold and ceiling will be computed by interpolating between either:  (1) the threshold and target awards, or (2) the target and ceiling awards, as appropriate.

The levels for threshold and maximum bonus payouts (referred to as the "leverage curve"), may vary among organizations, reflecting financial volatility resulting from the magnitude of the unit's business plan.  For example, a 

lower volatility business may begin to pay out at 90% of target attainment, while a higher volatility business may begin to pay out at 85% of target attainment.

Determination of Individual Objectives and Awards
The remaining parts of the ELC MIB Plan provide for establishing the individual objectives upon which those portions of the bonus will be based.

Generally, objectives will be established for each participant at the start of the fiscal year.  The individual objectives will not duplicate the measures of annual financial performance addressed under the financial portion of the MIB.  Rather, they will address those concerns which most contribute to the business gaining a sustainable competitive advantage.  Attainment of them is measured for and during the fiscal year for which they are set.  Unplanned objectives that emerge during the fiscal year and which take priority over the planned objectives may be added (or substituted) as appropriate.

For each part, the guideline bonus amounts will be awarded if performance fully meets the target expectations defined in these objectives.  If performance differs from expectations, the bonuses awarded will vary proportionally with performance, from 0 to 150% of the guideline amount.

Total MIB Award
The total MIB award will be the sum of the bonuses awarded for each of the performance measures: Revenue, AOI, AOI Margin and individual objectives.

Payment of Awards
		
	1)
	Earned awards are paid (minus appropriate tax withholdings) as soon as practicable after receipt of the audited year-end financial reports, but in no event more than 2.5 months after the end of the calendar year in which it was earned.  

Except in cases of voluntary or involuntary termination (discussed in 2 below), the following provisions apply:

		
	*
	If the executive has worked at least 6 months, but less than 12 and is still employed at the end of the bonus (fiscal) year, the participant will receive a pro-rata share of the earned bonus award (e.g., if the executive has worked for 9 months, 75% of the calculated total bonus will be awarded).

		
	*
	If the executive has served in two or more components or units covered by this plan, the earned award will be calculated on the portion of the year served in each component or unit.

		
	*
	If the executive was promoted during the year and his or her guideline bonus amount changed, the earned award will be prorated.  However, if the executive remains in the same position with essentially the same duties and responsibilities, and the participant's guideline amount changed during the fiscal year, the guideline amount at year end will be used in determining the award for the entire year.

		
	2)
	No bonus award is payable to an executive whose employment terminates, voluntarily or involuntarily, prior to completion of the bonus (fiscal) year except in the event that the executive becomes permanently disabled, retires having reached the age of 60 with five years of service or dies while employed.    Exceptions in certain cases of involuntary termination may be granted with prior approval of the Chief Executive Officer of ARAMARK.  If an executive becomes permanently disabled, retires having reached the age of 60 with five years of service, or dies while employed, he or she will be entitled to receive a pro-rata share of the earned bonus at the same time as earned bonuses are otherwise payable to active employees.

An executive whose employment terminates after the close of the bonus year but before awards are paid will be eligible to receive any award attained under the payout formula of the financial portion of the Plan.  Any bonus awards for individual achievement in the case of such terminations may be payable at the discretion of the Chief Executive Officer of ARAMARK.

In no case, however, will a bonus award be made to an individual whose employment is terminated at any time for “cause," as defined in the plan participant’s Agreement Relating to Employment and Post Employment Competition.

Deferral
Payment of all or part of the MIB award may be deferred in accordance with procedures established by ARAMARK and amended from time to time, in accordance with the applicable deferral provisions of Section 409A of the Internal Revenue Code (“Section 409A”).

Administration
This ELC MIB Plan is intended to be provide for compensation that is exempt from the requirements of Section 409A.  The Chief Executive Officer of ARAMARK is the sole interpreter and arbiter of the provisions of the ELC MIB Plan and has the right to amend, withdraw, or revoke them before the beginning of any fiscal year or to grant specific exceptions.

In administering the ELC MIB Plan, the Chief Executive Officer of ARAMARK has the final authority to adjust financial performance standards or actual results for unusual non-recurring income, expense or balance sheet items (e.g., non-operating gains/losses, acquisitions, divestitures) so that comparisons between actual and planned performance are consistent.  Any earned bonus award of any plan participant who, as of the end of a given bonus (fiscal) year is a named executive officer of ARAMARK may not be greater than the maximum bonus amount that may be earned under the ARAMARK Holdings Corporation Senior Executive Annual Performance Bonus Plan or any successor plan, as in effect from time to time.  

Objectives and formulas for all portions of the MIB must be approved by the Chief Executive Officer of ARAMARK.  He also must approve any unplanned objectives added during the year.

Bonus awards are reviewed and approved by the Compensation and Human Resources Committee (or any designated sub-committee thereof); provided that bonus awards for executives in career band 3 (other than executive officers) may be approved by the Chief Executive Officer or the Executive Vice President, Human Resources.

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