Document:

exv10w11

Table of Contents

Exhibit 10.11 Alcan Executive Performance Award Plan, dated 1 January 2007, as amended and restated.

Alcan

Executive Performance

Award (EPA) Plan

For Grades 38 and above

Plan Description 

January 2007

 

	 	 	 
	Alcan Executive Performance Award (EPA) Plan

	 	Grades
38 and above
	 

TABLE OF CONTENTS

									

Table of Contents

Contents

	 	 	 	 	 
	 
	 	 	 	 
	AN OVERVIEW OF ALCAN’S COMPENSATION STRATEGY
	 	 	 	 
	 
	 	 	 	 
	Total Direct Compensation
	 	 	2	 
	Base Salary
	 	 	2	 
	Executive Performance Award (EPA) Program
	 	 	2	 
	Long Term Incentive Program (LTI)
	 	 	3	 
	Total Shareholder Return Plan (TSR)
	 	 	3	 
	Alcan Restricted Share Unit Plan (RSU)
	 	 	3	 
	In Summary
	 	 	4	 
	 
	 	 	 	 
	GENERAL
	 	 	 	 
	 
	 	 	 	 
	Introduction to Alcan’s Executive Performance Award (EPA) Plan
	 	 	4	 
	 
	 	 	 	 
	DESCRIPTION OF THE PLAN
	 	 	 	 
	 
	 	 	 	 
	Participation
	 	 	5	 
	Period of Participation
	 	 	5	 
	Control
	 	 	5	 
	Administration
	 	 	5	 
	Performance Period
	 	 	5	 
	Target Award
	 	 	5	 
	 
	 	 	 	 
	PERFORMANCE AWARD COMPONENTS
	 	 	 	 
	 
	 	 	 	 
	Financial Performance Award (FPA)
	 	 	6	 
	Individual/team Award (ITA)
	 	 	6	 
	Objective Setting (Commitments)
	 	 	6	 
	Payout Scale
	 	 	7	 
	 
	 	 	 	 
	CALCULATION OF AWARD
	 	 	 	 
	 
	 	 	 	 
	Adjustments
	 	 	8	 

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Table of Contents

	 	 	 
	Alcan Executive Performance Award (EPA) Plan

	 	Grades
38 and above
	 

An Overview of Alcan’s Compensation Strategy

Executives of Alcan are eligible
to receive compensation delivered
through several plans. Each
component is designed to incentivize
a certain behaviour or activity that
maximizes the value of Alcan for its
stakeholders. While each plan has
its own objectives, together they
create a powerful incentive to focus
on enhancing shareholder value.

The relative value of each salaried
position within the organization is
determined by a job evaluation.
Alcan’s designated method for
evaluating professional and
managerial positions worldwide is
the Hay system. After each job is
evaluated they are grouped together
for the purpose of establishing
salary grades and total cash levels.

Total Direct Compensation

Total Direct Compensation (TDC)
comprises all of the elements of
compensation including base salary,
short term incentive and long term
incentive which includes Restricted
Share Units (RSU Plan) and Total
Shareholder Return (TSR plan) for
eligible participants. TDC levels
are set to reflect both the
responsibility of each position
(internal equity) and competitive
market levels (external
competitiveness). TDC and its
components are periodically (usually
annually) compared with the
compensation levels of other major
global companies of similar size.
To ensure Alcan’s competitiveness
and its ability to attract and
retain its senior managers and
executives, market comparisons are
not always restricted to the local
national market. Today, talented
individuals move easily across
borders. Therefore, in certain
markets in Europe and North America,
Alcan may blend market data from
more than one country to achieve
competitive compensation guidelines.
The TDC policy is set at the median
of the compensation peer group.

This overview of TDC is supported by
detailed descriptions of the plans
in each plan text. A summarized
description of each component of TDC
and its objectives are outlined
below:

Base Salary

Base salary is a fixed element of
pay that may be reviewed annually to
reflect performance or competitive
market movement. Base salaries are
administered within a salary scale
that enables Alcan to reward an
employee’s individual performance
and contribution in a particular
role.

Executive Performance Award Program

The Executive Performance Award
(EPA) Program is annual and is
subject to Alcan’s performance as
well as individual/team performance
against key metrics. Currently
these comprise the profitability of
the company as measured by Economic
Value Added (EVA) 70% and
individual/team objectives 30%.
The latter includes Environment,
Health and Safety (EHS) objectives.

Each position has a target award
expressed as a percentage of base
salary mid point reflecting both the
responsibilities of the position and
competitive compensation levels.
The actual award is dependent upon
Alcan’s performance against the
metrics outlined above, and to
reflect individual and/or team
performance. The role that these
measures play in creating
shareholder value is explained more
fully in the present document.

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Table of Contents

	 	 	 
	Alcan Executive Performance Award (EPA) Plan

	 	Grades 38 and above
	 

Long Term Incentive Program

The Long Term Incentive (LTI)
Program consists of two components:
the RSU plan and the TSR plan for
executives in position grade 43 and
above. An LTI compensation target
is set for each grade, and
therefore the target is the same
for all employees within a country
that have the same grade. The
target is set to be competitive
with Alcan’s compensation peer
group.

Total Shareholder Return (TSR) Plan

The TSR Plan aligns the interests of Alcan
executives with those of shareholders by
rewarding them for Alcan’s performance over a
three-year period. The plan is a cash incentive
plan that provides awards based on Alcan’s share
price and cumulative dividend yield performance
relative to the performance of companies
included in the Standard & Poors Materials
Index.

If Alcan relative performance ranks less than
the 30th percentile, no award is
payable for the performance period. At the
50th percentile, the award is 100% of
the target, and at the 75th
percentile or higher, the payout is 250% of the
target award. The award pay-out is prorated
between these rankings.

Alcan Restricted Share Unit (RSU) Plan

A RSU is a notional Alcan share
that replicates the value of Alcan shares but without the voting or
other rights attached to Alcan
common shares. Additional RSUs are
added to the RSU account for
declared dividends on common shares
throughout the vesting period. RSUs
usually vest three years after the
respective grant. Specific
conditions may apply depending on
the country of residence.

LTI compensation values are set,
and awards granted, annually.
Details pertaining to the RSU and
the TSR plans are available in
their respective plan text.

In Summary

In summary, Alcan
TDC is designed to
motivate Alcan
executives to
deliver enhanced
value to the
various
stakeholders of
Alcan.

Alcan’s Executive Compensation Model

	 	 	 	 	 	 	 
	 	 	Components	 	Measure	 	 
	100% compared to
competitive market

	 	Long Term Incentive
	 	TSR (43 +)

RSU
	 	

The components vary in proportion relative to the salary grades.
	 
	 	 	 	 	 	 
	 

	 	Executive Performance Award
	 	70% EVA

30% individual/team
	 	Higher salary grades have proportionately more variable compensation.
	 
	 	 	 	 	 	 
	 

	 	Base Salary
	 	Fixed Component	 	 

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Table of Contents

	 	 	 
	Alcan Executive Performance Award (EPA) Plan

	 	Grades
38 and above
	 

General

Introduction to Alcan’s Executive Performance Award (EPA) Plan

The Executive Performance Award (EPA) Plan is designed to
provide a performance-related reward to employees who
contribute substantially to the success of Alcan. A
participant’s total cash compensation, in any calendar year,
therefore consists of a base salary plus a performance award
(if any) that may be paid under this plan.

The EPA plan comprises two elements:

	 	 ̈	 	Financial Performance Award (FPA) — 70%
	 
	 	 ̈	 	Individual/Team Award (ITA) — 30%

The financial objective of Alcan and its Business Groups are
approved by the Human Resources Committee (HRC) of the Board.
The ITA objectives are set by the salary administrator of the
employee and approved by the business leader of the parental
entity (i.e., 2-up approval) or delegated to the corresponding
Human Resources Director of the parental entity. Objectives
are approved at the beginning of each performance period.

The FPA is related to the level of achievement of an Economic
Value Added (EVA) target for the appropriate business
group/unit of the company, and its parental entity. The ITA
is related to the achievement of the specified individual/team
objectives.

Target awards are determined for each participant on the basis
of market surveys that are periodically updated. The overall
objective is that the annual cash compensation (salary scale
plus target bonus) remains competitive with that paid by
comparable companies, in the same geographic area, under
similar circumstances. Target award values for each
participant may be available from his/her salary
administrator.

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Table of Contents

	 	 	 
	Alcan Executive Performance Award (EPA) Plan

	 	Grades
38 and above
	 

Description of the Plan

Participation

Employees of Alcan or its
subsidiaries in position grades 38
and above, in the Alcan grading
structure, are generally eligible to
participate in the Plan. The HRC
reserves the right to extend
participation to, or restrict
participation of, certain groups of
employees.

Period of Participation

Employees becoming eligible to
participate in the Plan during the
course of a performance period are
entitled to an award pro-rated for
the number of months of
participation.

When the employment of a participant
terminates, except for cause, a
prorated award is calculated and paid
based on the date of termination and
the performance rating for the year.
The award is paid before April 1st of
the calendar year following the date
of termination of employment.
Specific conditions may apply
depending on the country of
residence.

When the employment of a participant
is terminated for cause, no award is
payable for the performance year in
which such termination occurs.

In the case of death of a
participant, the award is calculated
on the basis of target bonus for the
period between January 1st
and the date of death and is payable
immediately.

If there is a change in a
participant’s job grade or a change
in the salary scale during a
performance year, the final award is
calculated on the basis of a weighted
average of the award guidelines at
each grade and the annual performance
ratings corresponding to the
objective periods.

Control

The HRC has full and exclusive power
to interpret the Plan rules and to
make, amend, and rescind rules and
regulations for its administration.
The HRC may delegate responsibilities
to management.

Administration

For those employees in job grade 43
and above, the Plan is administered
by Alcan’s Human Resources Group in
Montreal. For all other employees,
the administration is done at the
appropriate Business Group or Unit
level.

Performance Period

All award metrics are set and
measured on a calendar year basis,
i.e., from January 1 to December 31.
Awards are disbursed prior to April 1
of the calendar year following the
end of the performance period.

Target Award

Target awards are normally expressed as percentage of base salary midpoints.

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Table of Contents

	 	 	 
	Alcan Executive Performance Award (EPA) Plan

	 	Grades
38 and above
	 

Performance Award Components

Financial Performance Award (FPA)

In order to identify and generate
synergies throughout the Company,
the plan encourages business units
and business groups to work more
closely together. Therefore, FPA
also includes a component
representing the EVA of the parental
entity (unit, sector, business
group, Alcan Inc.).

The FPA accounts for 70% of the
total target award and is based on
EVA performance. This award is
divided between the entity of the
employee (70%) and its parental
entity (30%)

Illustration

Individual/team Award (ITA)

The ITA accounts for 30% of the
total target award and is based on
individual/team objectives which
include EHS objectives.

This portion of the EPA award aims
to recognize higher individual and
team performance that may not be
immediately captured by EVA.

A set of key measurable
individual/team objectives is
established. Objectives are set by
the employee and his/her salary
administrator and approved through
Alcan’s usual 2-up approval process
or delegated to the corresponding
Human Resources Director of the
parental entity.

Objective Setting (Commitments)

Annual objectives are set on the
basis of Alcan’s Value Maximization
methodology and consistent with the
business planning process. The
annual Business Group and Corporate
EVA targets are approved by the HRC
of the Board.

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Table of Contents

	 	 	 
	Alcan Executive Performance Award (EPA) Plan

	 	Grades
38 and above
	 

Payout Scale

Under the Plan, the Alcan CEO annually recommends
to the HRC the EVA target level for Alcan Inc. and
the four Business Groups that must be achieved to
warrant a 100% performance rating. The CEO also
recommends the levels that warrant a 0% performance
rating up to a maximum of 200% performance rating.
(The payout scale is established annually as a
straight line between 0% and 200%.) Actual
achievements are measured against the approved
rating scale as shown in the following illustrative
graph.

Below the Business Group level, the payout scale for each relevant
EVA centre is also established annually as a straight line between
0% and 200%. The target and the range are set by following the
guidelines issued by Corporate HR/Finance, and approved through the
usual 2-up approval process.

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Table of Contents

	 	 	 
	Alcan Executive Performance Award (EPA) Plan

	 	Grades
38 and above
	 

Calculation of Award

The Total Award is the sum of the FPA and ITA.

Total Award = Target Award x (FPA rating x 70% + ITA rating x 30%)

Illustration of an EPA framework

	 	 	 	 	 	 	 	 	 
	Target EPA	 	EVA Component	 	Individual and/or Team Targets
	 	 	70% ($ 35,000)	 	30% ($ 15,000)
	 	 	 	 	Objectives	 	Weighting
	 

	 	Business Unit: 70%
	 	1.Integrate a key technology
	 	 	33	%
	$50,000

	 	 	 	2.Optimize use of certain assets
	 	 	33	%
	 

	 	Business Group: 30%
	 	3.EHS Targets
	 	 	33	%

Example of payout computation

	 	 	 	 	 	 	 
	 	 	 	 	 	 	ITA (30%)
	 	 	FPA (70%)	 	Individual /
	Target Award	 	EVA Rating	 	Team
	 	 	Employee entity	 	Parental entity	 	 
	 	 	70%	 	30%	 	 
	 	 	 	 	 	 	 
	$50,000
	 	Rating of 120%
	 	Rating of 130%
	 	Rating of 90%

	 	 	 
	Total Award

	 	= $50,000 x 70% (120% X 70% + 130% x 30%) + $50,000 X 30% X 90%
	 

	 	= $43,050 + $13,500
	 

	 	= $56,550

Adjustments

Adjustments may be made to the actual EVA performance for major factors reasonably beyond
the control of management. Any adjustments must be reviewed and approved by senior
management (FPA Committee) and the HRC of the Board. It is expected that adjustments will
be few and limited to:

	•	 	the impact of accounting changes or restatements;
	 
	•	 	exchange rates, metal price and other specified commodities/energy price
fluctuations;
	 
	•	 	other significant “pass through lag” items such as resins and films; and
	 
	•	 	adjustments for divestments/acquisitions and/or
mergers.

8exv10w15

 

Exhibit 10.15 Alcan Pension Plan for Officers, dated 1 January 2006, as amended and restated.

ALCAN INC.

ALCAN PENSION PLAN

FOR OFFICERS

Amended and Restated

As of 1 January 2006

 

 

ARTICLE I: INTRODUCTION

	1.01	 	This document sets out the terms of the Alcan Pension Plan for Officers (Plan), amended and
restated as of 1 January 2006.
	 
	1.02	 	The Plan provides a pension based on your earnings in excess of the cap on earnings set under
your home country pension plan (HCPP).
	 
	1.03	 	The effective date of the Plan is 1 January 2003.

ARTICLE II: ELIGIBILITY

	2.01	 	You participate in the Plan if you are an officer of Alcan Inc. and the Human Resources
Committee of the Board of Alcan Inc. (HRC) designates you a participant.
	 
	2.02	 	Your participation in the Plan begins on the first day of the month and year determined by
the HRC and ends on the last day of the month and year determined by the HRC or if occurring
before, on the last day of the month following either your death, retirement or termination of
employment.

ARTICLE III: PENSION CALCULATION

	3.01	 	The pension formula set out below is the basis on which your pension payable under the Plan
is calculated. It takes into account the following three elements:

	 	•	 	your pensionable earnings which are your basic salary plus guideline Executive
Performance Award (EPA) subject to a maximum fixed from time to time by the HRC;
	 
	 	•	 	your highest average earnings (HAE) which is the annual average of your 60 highest
consecutive months of pensionable earnings as defined above in excess of your highest
average earnings for the purpose of your HCPP. Your HAE is determined as of the date
that your participation in the Plan ends in accordance with section 2.02;
	 
	 	•	 	your years (including fractional years) of participation in the Plan;

	3.02	 	The pension formula is the following:

3% x HAE x years of participation up to 10

plus

2% x HAE x years of participation between 10 and 20

equals

1

 

your annual pension (max. 50% of HAE).

	 	3.03	 	Your annual pension calculated in accordance with the pension formula in section 3.02 is
reduced by 10% for each year that your years of service with the Alcan group of companies is
less than ten at your retirement, termination or death.

	 	 	 	The HRC may, in its sole discretion, waive in whole or in part the reduction contemplated by
this section.

ARTICLE IV: PENSION PAYMENT

	 	4.01	 	Notwithstanding anything to the contrary contained in the Plan, your pension entitlement is
conditional on your continued employment with Alcan Inc. or any Alcan Group Company until your
entitlement to a vested pension under your HCPP.
	 
	 	4.02	 	If you retire or terminate employment on or after age 60 and with ten years or more of
service with the Alcan group of companies, your annual pension is calculated according to the
provisions of Article III and is payable from the first day of the month next following in
equal monthly installments during your lifetime with the last payment due on the first day of
the month of your death.
	 
	 	4.03	 	If you retire or terminate employment before age 60 or with less than ten years of service
with the Alcan group of companies, your annual pension is calculated according to the
provisions of Article III and is payable from the first day of the month next following your
attainment of age 65 in equal monthly installments during your lifetime with the last payment
due on the first day of the month of your death.
	 
	 	 	 	At your request, payment of your pension shall be made to begin on the same date as your
HCPP pension in which case the amount of the monthly payments shall be adjusted based on an
actuarially determined equivalent stream of payments.
	 
	 	4.04	 	If you die before payment of your pension begins, the actuarial value of your pension
entitlement shall be paid to the beneficiary designated by you for the purpose of the Plan or
where there is no such beneficiary, to your beneficiary designated under your HCPP or where
there is no such beneficiary, to the legal representative of your estate.
	 
	 	4.05	 	At your request, payment of your pension shall be made to correspond to one of the optional
forms elected by you for payment of your HCPP pension in which case the amount of the monthly
payments shall be adjusted based on an actuarially determined equivalent stream of payments.
	 
	 	4.06	 	Your pension under the Plan shall be calculated and paid in United States dollars and at your
request shall be paid in the currency of your HCPP converted at the rate of exchange
prevailing at determination of the pension.
	 
	 	4.07	 	Any request made by you pursuant to either section 4.03, 4.05 or 4.06 shall be irrevocable.

2

 

ARTICLE V: OTHER PROVISIONS

	 	5.01	 	The Plan may be amended or terminated at any time by the HRC provided that such amendment or
termination shall not reduce any rights which you have acquired prior to the amendment or
termination date. Your acquired rights shall be determined on the basis of your years of
participation and your earnings at that date.
	 
	 	5.02	 	Unless otherwise determined by the HRC, the Plan shall remain an unfunded obligation of Alcan
Inc. or of any Alcan Group Company and all pensions payable under the Plan represent merely
unfunded, unsecured promises of Alcan Inc. or any Alcan Group Company to pay or cause to be
paid a sum of money in the future. No funds will be contributed by any person to a third
party or otherwise set aside to secure pensions under the Plan.
	 
	 	5.03	 	The administration of the Plan shall be managed jointly by Alcan’s Human Resources (Executive
Compensation) Department and Alcan Adminco (2000) Inc. Any question arising in the
administration of the Plan or the construction of any term of the Plan shall be resolved by
the HRC, in its sole discretion.
	 
	 	5.04	 	The administrators of the Plan shall keep accurate and detailed records of participation in
the Plan and upon request shall provide to a participant a statement of benefits.
	 
	 	5.05	 	Nothing in the Plan shall be deemed to give a participant the right to be retained in the
service of any Alcan group company or to interfere with the rights of any Alcan group company
to terminate a participant’s employment at any time.
	 
	 	5.06	 	Unless otherwise determined by the HRC, all pensions payable under the Plan shall not be
subject to any periodic or ad hoc increases according to an index.
	 
	 	5.07	 	The Plan shall be governed by the laws of the Province of Quebec and the laws of Canada. If
any part of the Plan is determined to be void or unenforceable, the validity and
enforceability of remaining parts of the Plan shall not be affected as a consequence.

 

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