Document:

EX-10.26 FORM OF NOVELIS LONG TERM INCENTIVE PLAN

Exhibit 10.26

Novelis – Long-Term Incentive Plan (LTIP) – FY 2008 – FY 2010

Key features of the Scheme:

	 	1.	 	Title and Administration: The scheme shall be referred to as the Novelis Long-Term
Incentive Plan FY 2008 – FY 2010. The scheme will be administered by the Human Resources
team at the Novelis Corporate Office.
	 
	 	2.	 	Performance Period: For this scheme, the performance period will be FY 2008, FY 2009
and FY 2010. The exact period of assessment will be April 1, 2007 to March 31, 2010.
Payouts, computed on the basis of performance, may be effected in July 2008, July 2009 and
July 2010.
	 
	 	3.	 	Coverage: The coverage of this scheme will be Grade 38 and above. As of now, this
will cover 170 Managers. High potential and critical resource employees at Grade 37 and
below will participate on an exception basis.
	 
	 	4.	 	Pay Opportunity : The target pay opportunity for Grades 38 and above will be as
follows

	 	 	 	 	 
	Grade	 	Long-Term Incentive Opportunity in US$
	38
	 	$	20,000	 
	39
	 	$	28,000	 
	40
	 	$	40,000	 
	41
	 	$	55,000	 
	42
	 	$	75,000	 
	43
	 	$	98,000	 
	44
	 	$	117,000	 
	45
	 	$	155,000	 
	46
	 	$	223,000	 
	47
	 	$	323,000	 
	48
	 	$	454,000	 
	President and COO
	 	$	2,098,000	 

	 	 	 	While this will be the target pay opportunity by grade, individual amounts may vary,
depending on performance, potential and criticality of role.

 

 

	 	5.	 	Measures and application of weights to each measure to be used for computation of
LTIP: For FY 2008 – FY 2010, two measures shall be used to compute the LTIP payouts. These
measures will be applied at the overall Novelis performance level. The two measures to be
used for 2007-08 are as follows :

	 	a.	 	Economic Profit (EP): Defined as Net Operating Profit After Tax
[NOPAT], less capital charge. NOPAT equals NOPBT less 35% tax. NOPBT is EBIT
subject to certain adjustments. EBIT will be derived by adding back the Interest
Cost including amortization of debt issuance costs (net of interest Treasury
Income) to the Profit Before Tax and Minority Interest as reported in the
quarterly / annual filings. The Capital Charge will be 10% p.a. on the quarter’s
average Capital Employed. Average Capital Employed for a quarter would be the
average of the opening and closing Capital Employed. Capital Employed on any date
would be the sum of Shareholders Equity, Minority Interest and Total Debt
(including Short Term and current portion of Long Term Debt), less cash and cash
equivalents and construction work in progress. EP would be calculated at the end
of each quarter with the annual EP being the sum of the EP for each of the four
quarters. This will carry an 80% weightage on the overall plan. A manual
documenting how to calculate EP and various adjustments to be made to the EP
measure has been created and agreed upon with Novelis and Hindalco executive
management. A Committee comprised of the Novelis President, the Novelis CFO and
the Hindalco CFO will consider any situations not addressed in the manual, such as
major acquisitions, divestitures and restructuring and will recommend any
adjustments to the Vice Chairman Novelis for approval or further consideration by
the appropriate authority.
	 
	 	b.	 	Innovation EBITDA in FY 2010: Defined as incremental EBITDA in FY
2010, attributable to innovation projects registered in the Novelis Innovation
Management Execution System [NIMES] system which includes those projects that are
true breakthrough innovation compared to CY 2006 products and projects [for
example, all Fusion products] and excluding items that are continuous improvement
or normal growth and not innovation [for example, introducing bright sheet to a
Novelis plant from another Region]. Incremental innovations, such as a modified
process, may count if it allows penetration of a new market. Incremental
innovations within existing markets do not qualify as innovation EBITDA. The
incremental EBITDA will be measured using the same financial rules as the RFA
process so that if incremental costs are added to achieve the project, the
calculated EBITDA is reduced by the incremental costs. If the product replaces an
existing one, only the incremental EBITDA counts. This will carry a 20% weightage
on the overall plan.

 

 

	 	6.	 	Performance Measures and Targets for FY 2008 – FY 2010 : The performance targets for
EP are as follows:

	 	•	 	The FY 2008 target = $98 Million better than CY 2006
	 
	 	•	 	The FY 2009 target = $76 Million better than FY 2008
	 
	 	•	 	The FY 2010 target = $76 Million better than FY 2009
	 
	 	•	 	The cumulative target = $250 Million better than CY 2006

The performance target for Innovation EBITDA is as follows:

	 	•	 	$50 Million incremental EBITDA in FY 2010 compared to CY 2006 products and projects

	 	7.	 	Example of Computation – EP: The total amount of opportunity based on EP results is
80% of the individual’s target opportunity. For example, if the individual’s total
target opportunity is $100,000, $80,000 [80%] will be based on EP results. Each of the
four tranches based on EP results [FY 2008, FY 2009, FY 2010 and Cumulative] will be worth
20% of the individual’s total target opportunity. For example, if the individual’s total
target opportunity is $100,000, $20,000 [20%] will be attributable to each tranche.
	 
	 	 	 	For each tranche, payouts start for achievement of 70% of the EP target for that tranche.
At 70% there is no payout. At 100%, there is a target payout. At 130%, there is a 200% of
target payout. For the FY 2008 tranche, half of any payout would be made in July 2008 and
half in July 2010. For the FY 2009 tranche, half of any payout would be made in July 2009
and half in July 2010. Any payouts for the FY 2010 tranche or the cumulative tranche are
made in July 2010.
	 
	 	 	 	Example of Computation – Innovation EBITDA: The total amount of opportunity based on
Innovation EBITDA results is 20%. For example, if the individual’s total target
opportunity is $100,000, $20,000 [20%] will be based on Innovation EBITDA.
	 
	 	 	 	Payouts start at 75% of the $50 Million target or $37.5 Million. There would be no payout
for Innovation EBITDA at $37.5 Million. There would be a target payout for Innovation
EBITDA at $50 Million. There would be a payout of 200% of target for performance at 150%
of the Innovation EBITDA target or $75 Million.
	 
	 	8.	 	Participation recommendations: For the LTIP FY 2008 – 2010, 154 participants in
grades 38 and above have been recommended for a total target opportunity of $11,149,000.
Additionally, 43 participants below grade 38 have been recommended for a total target
opportunity of $526,000 or less than 5% of the total target opportunity for grades

 

 

	 	 	 	38 and above. The Board reserves the right to increase the total target opportunity if it
feels that is appropriate considering the difficulty of the performance targets.

	 	9.	 	Other aspects of the plan:

	 	a.	 	An individual will be entitled to participate in the LTIP for FY 2008
– FY 2010 if actively employed no later than March 31, 2008. Employees hired
during FY 2008, may at the discretion of management and subject to Committee
review, participate at a full or prorated level of opportunity. Employees hired
after that date will be eligible to participate in any future LTIP plans.
	 
	 	b.	 	In the event of separation on account of resignation initiated by the
employee, any LTIP amounts earned but not yet paid will lapse. All unearned
amounts will lapse.
	 
	 	c.	 	In the event of retirement, death or disability; any earned but
unpaid LTIP tranches will be paid at the same time as everyone else receives
payment. All unearned amounts will lapse.
	 
	 	d.	 	In the event of a company initiated separation for position
elimination that is not performance related (for example a layoff, plant closure,
restructuring or sale), if not offered a comparable position that does not require
a relocation of 50 miles or more, the treatment outlined in c. above will apply.EX-10.27 SEPARATION AND RELEASE AGMT - RICK DOBSON

Exhibit 10.27

SEPARATION AND RELEASE AGREEMENT

This Separation and Release Agreement (“Agreement”) is entered into by and between Rick Dobson
(“Employee”) and Novelis Inc. (“Novelis”) as a result of the termination of the employee’s
employment relationship other than for Cause and as required by Section 2(a) of the Change in
Control Agreement entered into between the Employee and Novelis on September 25, 2006 (the “CIC
Agreement”).

1. Separation Date: The employee’s employment relationship terminated on August 15, 2007
(“Separation Date”).

2. Release: As consideration for the benefits and payments described in the CIC
Agreement, which Novelis agrees to pay in accordance with the CIC Agreement, Employee does hereby
voluntarily waive, release, hold harmless, acquit and forever discharge Novelis, its
predecessors, parents, subsidiaries and affiliated companies, successors and assigns, and the
past, present and future officers, directors, employees, representatives and agents from (i) any
and all claims, charges, complaints, demands, damages, lawsuits, actions or causes of action he
had, has or may have, known or unknown, and of any kind or description whatsoever, which arose
prior to the execution of this Agreement; and (ii) any and all claims or legal action against
Novelis in any way arising out of or in any way related to Employee’s employment with Novelis
(including any claim of which the Employee is not aware and those not mentioned in this paragraph
2); and (iii) any and all claims he had, has or may have under any possible legal, equitable,
tort, contract, common law, public policy or statutory theory, arising under any federal, state
or local law, rule, ordinance or regulation, including but not limited to, the Age Discrimination
in Employment Act of 1967, the Civil Rights Act of 1866, the Civil Rights Act of 1991, Title VII
of the Civil Rights Act of 1964, the Employee Retirement Income Security Act of 1974, and the
Americans with Disabilities Act of 1990, all as amended to the date of this Agreement.

3. Noncompete: Employee agrees that, during the term of his employment with Novelis,
Employee has had global responsibilities that have given Employee access to Novelis’ confidential
and trade secret information and that are essential to maintaining Novelis’ vendor and/or client
relationships. Accordingly, Employee agrees that, for thirty-six (36) months following the
Separation Date, he will not, without the express written consent of Novelis, directly or
indirectly work for, or provide services to, directly or indirectly (e.g., as an employee,
independent contractor or consultant to a service provider), a direct competitor of Novelis in
any role in which Employee could use Novelis’ confidential or trade secret information and/or
exploit Novelis’ vendor and/or client relationships. For purposes of this paragraph 3, a “direct
competitor” is any person engaged in the business of producing aluminum rolled products in the
markets served by Novelis. The restriction on competition in this paragraph extends to all
geographic areas serviced by Novelis during Employee’s employment. Further, the restrictions on
competition in this paragraph are intended only insofar as is reasonably necessary to protect
Novelis and/or any of its affiliates from unfair competition and, if overbroad, should be
reformed as reasonable. Further, Employee agrees that, in any action to enforce this paragraph,
Employee shall not challenge the restrictions of this paragraph as overbroad and/or
unenforceable.

 

 

4. Acknowledgment: By signing this Agreement and in connection with the release of any
and all claims as set forth in paragraph 2, Employee and Novelis acknowledge, agree and represent
that:

	 	(a)	 	The execution of this Agreement shall not constitute any admission
by Novelis that it has violated any federal, state or local statute, ordinance,
rule, regulation or common law, or that Employee has any meritorious claims
whatsoever against Novelis.
	 
	 	(b)	 	No promise or inducement has been offered to Employee, except as
herein set forth;
	 
	 	(c)	 	This Agreement is being executed voluntarily and knowingly by
Employee and Novelis without reliance upon any statements by others or their
representatives concerning the nature or extent of any claims or damages or
legal liability therefore;
	 
	 	(d)	 	This Agreement has been written in understandable language, and all
provisions hereof are understood by Employee and Novelis;
	 
	 	(e)	 	Employee is advised, and has had an opportunity, to consult with an
attorney of Employee’s own choosing prior to executing this Agreement;
	 
	 	(f)	 	Employee will receive, pursuant to this Agreement, consideration in
addition to anything of value to which the Employee is already entitled;
	 
	 	(g)	 	Employee has twenty-one (21) days from the receipt of this Agreement
in which to decide whether to enter into this Agreement, sign it and return it
to Bob Virtue at Novelis’ Human Resource Department, at 3399 Peachtree Rd. NE,
Suite 1500 Atlanta, GA 30326 The Employee may sign this Agreement and return it
to Bob Virtue prior to the expiration of the 21-day period; and
	 
	 	(h)	 	Employee has the right to revoke this Agreement during the seven (7)
day period by mailing a letter of revocation to Bob Virtue at the above address.
Such a letter must be signed and received by Novelis no later than the seventh
day after the date on which Employee signed the Agreement. This Agreement shall
not become effective or enforceable until the seven (7) day revocation period
expires.

5. Entirety of Agreement: This Agreement contains the entire agreement among the parties
hereto with respect to the subject matter hereof, with the sole exception being the CIC
Agreement, the terms of which are incorporated herein by reference. This Agreement may not be
modified, except in writing signed by Employee and Novelis.

 

 

6. Severability: If any term, condition, clause or provision of any paragraph of this
Agreement shall be determined by a court of competent jurisdiction to be void or invalid as a
matter of law, or for any other reason, then only that term, condition, clause or provision as
is determined to be void or invalid shall be stricken from this Agreement and the remaining
portions of such paragraph shall remain in full force and effect in all other respects.

IN WITNESS WHEREOF, Employee and Novelis have freely, voluntarily and knowingly executed this
Agreement as of the day and year first written above.

	 	 	 	 	 	 	 
	 

Employee

	 	 	 	 

Novelis Inc.
	 	 
	 
	 	 	 	 	 	 
	/s/ Rick Dobson
 

	 	 	 	Robert Virtue
 

	 	 
	Date

	 	 	 	Date	 	 
	 
	 	 	 	 	 	 
	August 15, 2007

	 	 	 	August 15, 2007	 	 
	 

Witness

	 	 	 	 

Witness
	 	 
	/s/ Judy Dobson

	 	 	 	/s/ Denise Jones

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