The Compensation Committee of the Supervisory Board has reviewed and discussed the Compensation Discussion and Analysis section of the proxy statement with management.
Based on our review and discussions, we have recommended to the Supervisory Board that the Compensation Discussion & Analysis be included in LyondellBasells 2017 proxy statement.
This section explains the decisions we made concerning the compensation of our named executive officers for 2016. It also describes the process and
factors considered in determining the amount of compensation awarded. The named executives for 2016 are listed below. In January 2017, we announced that Kevin Brown would be retiring in February 2017 and that Dan Coombs has become Executive Vice
President Manufacturing, Refining, Projects and Technology. The information included in this CD&A is based on the named executives roles and responsibilities in 2016.
For compensation purposes, we measure our performance on several different factors that we believe are important for our short and long-term success and for creating
shareholder value. We delivered solid performance against these measures, but at times fell short of our high expectations to continuously improve and to outperform others. The compensation decisions made for our executives reflect our strong
pay-for-performance
philosophy. The incentive compensation earned by our named executives for 2016 results was, overall, approximately
one-third
less than that earned in 2015. For overall Company performance, our annual bonuses paid out slightly in excess of target based on strong HSE and cost performance, but recognizing that our 2016 EBITDA
did not meet our expectations. The performance share units (PSUs) with a three-year performance period at year end 2016 earned 130% of target. This payout is reflective of our strong performance in ROA in the chemicals business and our cost control,
but recognizes we did not outperform our
peers as well as we have in prior years and that our refining business did not outperform. Below is an overview of the performance factors that went into the 2016 compensation decisions.
Our executive compensation program has received substantial and consistent shareholder support over the past several years. At the 2016 annual meeting, our executive
compensation program received support of 95% of the votes cast. Our Compensation Committee and other members of our Supervisory Board believe that this consistent high level of support from our shareholders is a result of our commitment to ensuring
that our executives are compensated in a manner that provides a strong link between pay and performance.
The Compensation Committee and the Supervisory Board value
our shareholders insights and consider shareholder feedback, evolving business needs, and a desire to further link executive pay to performance when evaluating our compensation program. In response to discussions with shareholders, the
Committee has taken a number of actions, including continually working on our proxy statement disclosure and reviewing our overall program design to align it more closely with our performance and with shareholders interests.
Annually,
the Compensation Committees independent compensation consultant provides a review of executive compensation trends and best practices, as well as regulatory updates that may impact our executive compensation programs. The Committee uses this
information to form decisions on executive compensation and to validate the link between pay and performance.
Based on the annual review, business needs, market practices and shareholder feedback, the Committee has taken actions to
modify our compensation programs. Some of these actions were effective for 2016, while others are effective beginning in 2017.
CEO Performance and Compensation Decisions
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Bob Patel, CEO
Chairman of the Management Board
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Performance:
The Compensation Committee based its assessment of Mr. Patel primarily on its overall evaluation of
the Companys performance in 2016. The Committee considered the Companys performance in executing on its organic growth plans; its HSE performance; the ability to maintain its low fixed cost structure; and its overall operational
performance. The Committee also reviewed Mr. Patels performance in relation to strategic, financial and organizational goals meant to help secure the long-term success of the Company. These goals included aligning with the Supervisory
Board on growth alternatives, capital allocation and balance sheet strategies as well as completing the transition of the Companys management team and continuing to evolve succession plans and employee training and development.
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Compensation Decisions in 2016 for
Mr.
Patel:
After a review of his 2015 performance, Mr. Patel received a salary increase of 10% in 2016. In recognition of performance in 2016, Mr. Patel was paid an annual bonus at 144% of target. The bonus comprised
103% of target for Company performance, which was then multiplied by 1.4 for Mr. Patels individual performance in leading the Company. He also received long-term incentive awards consisting of PSUs, restricted stock units (RSUs) and stock
options with an aggregate value of 650% of his base salary, an 18% increase from his prior target long-term incentive (LTI).
Total Target Direct and Realized Compensation
: Below, we show Mr. Patels total target direct compensation, which includes his base
salary, target annual bonus opportunity and the value at grant of long-term incentive awards. Mr. Patels bonus can pay out anywhere from 0 to 300% of target and the LTI awards will be earned over a three-year period. Their ultimate value
depends on our stock price performance and whether we satisfy performance measures under the PSUs. For these reasons, we also include the compensation realized by Mr. Patel, which includes his base salary, annual bonus earned and the value of
LTI awards that have vested or been exercised.
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Total Target Direct and Realized Compensation
Mr. Patels 2015 total target direct compensation included $12 million of
one-time
LTI awards granted to him in connection with his appointment as CEO, which included RSUs and stock options. The
one-time
awards were for retention and incentive
purposes, in recognition that under the Companys prior compensation programs, executives did not receive annual grants and the RSUs and stock options Mr. Patel received when he joined the
35
Company in 2010 had all fully vested. Mr. Patels 2015 realized compensation included the vesting of the five-year RSU award granted to him in 2010 when he joined the Company.
Mr. Patels 2016 realized compensation includes the vesting of the first tranche of the
one-time
RSU award granted to him in 2015 and the vesting of PSUs with a performance period ended
December 31, 2016 that were granted in 2014 when he was Senior Vice President of O&P EAI and Technology. For more information, see the Grants of Plan Based Awards and Options Exercised and Stock
Vested tables in this CD&A.
Executive Compensation Philosophy
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Design
Principles of our Executive Compensation Program
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Take into account the realities of a cyclical, commodity industry.
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Align the interests of management with those of shareholders.
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Encourage both short and long-term results.
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Attract, retain and incentivize the highest caliber team possible.
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Provide the ability to pay high achievers above market median pay based on individual performance, potential and impact to the Companys results.
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Recognize the current market leading position in HSE performance, cost discipline and business performance.
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Components of Executive Compensation
We believe that the majority of our executives compensation
should be incentive based and, in particular, share based. Tying compensation to the achievement of our business goals ensures that we pay for performance. Including share based compensation as the largest component of our executives
compensation ensures that our executives interests are aligned with our shareholder and incentivizes actions and behaviors that will increase shareholder value. In 2016, the total target direct compensation of our executives was as follows:
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CEO
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All Other Named Executives
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89% incentive based, with 17% in the form of cash bonus opportunity and 72% in share based incentives.
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76% incentive based, with 20% in the form of cash bonus opportunity and 56% in share based incentives.
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Base Salary
: Base salaries provide executives with a regular fixed income in recognition for their job responsibilities.
Executives base salaries are determined when they are hired or promoted into their positions.
Annual Bonus
: Annual bonus opportunities are a
percentage of base salary. The annual bonuses are meant to incentivize our executives and align their compensation with the achievement of the Companys annual priorities. Based on performance, executives will earn from
0-200%
of the target bonus amount. The bonuses also are designed to reflect individual contribution and performance. Each executive will receive an individual modifier for his performance during the year, ranging
from
0-1.5.
The earned percentage of the target is multiplied by this modifier, which can result in an actual payout from
0-300%
of the target bonus.
36
Long-Term Incentives
: Long-term incentive awards are meant to motivate the achievement of increased value over the
longer term and more closely align the interests of our executives with shareholders. They are designed to motivate the achievement of increased shareholder value over the longer term. The aggregate value of long-term incentives awarded to
executives is a percentage of the executives base salary. The LTI awards we grant include:
PSUs
PSUs vest after a three-year performance period. The PSUs are converted to shares when they vest.
Awards can vest from
0-200%
of target, depending on the Companys performance. Performance for the PSUs granted in 2016 is based on ROA as compared to peers, relative TSR, cost competitiveness and capital
project execution. PSUs accrue dividend equivalents in the form of additional units at the same time and in the same amount as dividends paid to shareholders.
RSUs
RSUs vest in full after three-years and receive one share for each unit at vesting. The ultimate value received by
executives is dependent on the Companys share price when the award vests. RSUs receive cash dividend equivalents at the same time and in the same amount as dividends paid to shareholders.
Stock Options
Stock options vest ratably over a three-year period and are exercisable for 10 years. The exercise price is the
fair market value on the date of grant.
Perquisites and Other Benefits
: Our named executives receive the same benefits generally provided to all of our
other employees, which includes vacation allowances, retirement benefits (including matching contributions under our 401(k) plan and accruals under our cash balance plan) and health and welfare benefits. The perquisites received by our executives
that are not offered to all employees include:
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Annual executive physical The Company provides annual physical exams to executives.
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Financial, tax and estate planning The Company will reimburse up to $15,000 of expenses.
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Contributions under the U.S. Senior Management Deferral Plan The Company makes contributions designed to make up for contributions missed under our qualified retirement plans because of IRS limits for
amounts that exceed the IRS limits under our 401(k) plan and our defined benefit pension plan. The amount of the matching contributions is 11% of compensation in excess of the IRS limitations.
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From time to time, the Company provides other benefits intended for business purposes, including tax equalization payments and business club memberships or dues. The tax
equalization payments are designed to make executives whole if they incur income tax in jurisdictions other than their country and/or state of residence. For example, executives may travel to other jurisdictions on Company business and may be taxed
on days worked in that jurisdiction. If and only to the extent those additional taxes cannot otherwise be offset against the executives regular income tax liability (such as in the form of credits), the Company will reimburse the executive
such that his tax liability is equal to the full income tax for his jurisdiction of residence only.
Setting
Compensation and Performance Targets
The Compensation Committee, comprised solely of independent directors, is responsible for determining the
compensation for our named executives and designing our executive compensation program. The Committee reviews and considers a comprehensive analysis and assessment of the executive compensation program, including the elements of each
executives compensation, with the input from the Committees independent compensation consultant. The Committee also receives input on the performance of other executives and the compensation program design from the CEO. The members of
the Supervisory Board review and approve the decisions made by the Compensation Committee relating to the compensation of our executive officers.
The Committee
aims to set our named executives total target direct compensation at around the 50
th
percentile of market, as defined by our peer group and general industry survey data. Total target direct
compensation includes base salaries, target bonuses and grant date value of long-term incentive awards. A large portion of the total compensation opportunity for the named executives is directly related to the achievement of financial and
operational factors that measure our performance in both absolute terms and relative to others.
37
Independent Compensation Consultant
The Compensation Committee retained Frederic Cook & Co., Inc. (Cook & Co.) for advice in executive compensation matters over the last several years.
In 2016, the Committee engaged in a search process for a new independent compensation consultant and in the third quarter of 2016 retained Pearl Meyer.
As required
by rules adopted by the SEC, the Committee engaged its consultants after assessing the firms independence, including taking into account:
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Whether the firm or the engagement partner provides any other services to the Company other than as a consultant to the Nominating & Governance Committee on Supervisory Board related compensation matters;
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The fees received by the firm as a percentage of its total revenues;
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The firms policies and procedures to prevent conflicts of interest;
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The absence of any significant business or personal relationships between the firm or the engagement partner and the members of the Committee;
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The fact that neither the firm nor the engagement partner owns any company stock or equity derivatives; and
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The absence of any personal or business relationships between the firm or the engagement partner and an executive officer of the Company.
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Based on the assessments, the Committee determined that neither the engagement of Cook & Co. nor Pearl Meyer raised any conflicts of interest or other
concerns.
The services provided by the consultant generally include advising on our executive compensation program and evolving industry practices, providing
market data and analysis regarding the competitiveness of our program and evaluating management proposals. Additionally, the consultant will attend regularly scheduled meetings and conference calls throughout the year in connection with reviews and
discussions of executive compensation matters. In 2016, Cook & Co. provided a review and analysis of the competitiveness of the Companys executive compensation program for 2016 compensation decisions and provided an evaluation of the
design of the executive compensation program, including its alignment with corporate governance and compensation design best practices. Pearl Meyer undertook a comprehensive review of the Companys programs and practices; provided a review and
analysis of the competitiveness of the Companys executive compensation program; and advised on the changes to the Companys annual bonus and long-term incentives as set forth under Compensation Committee Actions in 2016.
How We Establish Pay Targets
Annually, the Compensation Committee reviews
the total target direct compensation for each of our executive officers. The Committee then sets each of the executives compensation targets for the current year. This generally involves establishing an annual bonus target and the value of
long-term incentive awards as a percentage of base salary. Regular salary increases, if any, normally become effective on April 1 of the year. The Committees decisions are reviewed and ratified by the full Supervisory Board.
The Committee reviews publicly available financial and compensation information reported by our peer group and general survey data. Information about our peer group can
be found below. The survey data included in this CD&A was collected from the 2016 Willis Towers Watson Executive Compensation Database and reflects a combination of general industry and chemical industry compensation for executives in companies
with corporate or business unit revenues appropriate for each executives scope of responsibility.
38
The Committee reviews the peer group and survey data to determine the median compensation for each executives
position. The median is used as a reference point for pay recommendations. Actual pay and targets vary from median based on the executives industry experience; experience in the role and at the Company; time in position; internal pay parity
amongst our executives; and any other factors the Committee deems relevant.
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Competitive Pay Our 2016 Peer Group
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The Compensation Committee conducts an annual review of the peer group to determine if any changes are necessary. Based on the review, no
changes were made in 2016. The peer group is used to gauge the competitiveness of our named executives compensation. It is also used more generally when the Committee reviews our program designs, which includes types of compensation awarded
and the terms and conditions of compensation components.
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Factors Used in Choosing Peer Group Companies
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2016 Peer Group Companies
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Those operating in a similar industry with similar cost structures, business models and
global reach;
Companies with a similar revenue and market capitalization as ours; and
Sources for executive
talent.
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3M
Air Products and Chemicals
Alcoa
Caterpillar
Dow Chemical
DuPont
Honeywell
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International Paper
Johnson
Controls
Monsanto
Phillips 66
PPG Industries
Praxair
Valero
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2016 Compensation Decisions
The compensation of our named executives is reviewed and approved by the Compensation Committee during the first quarter of each year at a regularly scheduled meeting,
generally held in February. Compensation decisions are made based on performance in the prior year, other than for PSUs. The performance period for PSUs is a three-year period and the compensation decisions are made based on the Companys
performance over that three-year period. The compensation of our named executives in 2016 includes:
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Base salaries earned in fiscal 2016;
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Annual bonuses earned based on 2016 performance (paid in March 2017);
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Grants of annual long-term incentive awards made in February 2016, including:
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Stock options that vest ratably over a three-year period;
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RSUs that vest in full after three-years; and
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PSUs that vest after a three-year performance period that will end on December 31, 2018 and be paid out, if at all, in early 2019; and
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Payouts (in February 2017) of the PSUs that were granted in February 2014 with a three-year performance period that ended December 31, 2016.
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The table below shows the base salaries for the named executives in 2015 and the increases determined by the Compensation Committee in
2016. All increases were made at the February 2016 Compensation Committee meeting and effective April 1, 2016, other than for Mr. Coombs. Mr. Coombs increase was made in connection with his assumption of responsibility for
Global O&P businesses and was effective in January 2016. The Committee reviewed market data for each of the executives and internal pay parity when making its decisions.
39
The Committee also considered prior work experience, additional responsibilities, performance in 2015 and time in the job.
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Name
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2015 Base Salary
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Increase
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2016 Base Salary
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Bob Patel
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$1,250,000
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10%
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$1,375,000
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Thomas Aebischer
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$725,000
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Kevin Brown
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$550,000
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7.5%
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$591,250
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Dan Coombs
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$500,000
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20%
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$600,000
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Jeff Kaplan
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$485,000
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5%
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$509,250
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The increases shown in the table above brought the named executives base salaries more in line with those of the Companys
peer group and closer to the median of market data generally. After the salary increases, our named executives base salaries were as follows:
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Bob Patel 7% below the peer group and survey data median;
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Thomas Aebischer at peer group median and 12% below survey data median;
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Kevin Brown 10% below peer group median and 23% below survey data median;
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Dan Coombs at peer group median and 16% below survey data median; and
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Jeff Kaplan 11% below peer group median and 25% below survey data median.
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The Companys annual bonus program, known as the Short-Term Incentive program (STI), rewards participants for achieving the
Companys short-term objectives. Executives have target bonuses, which are a percentage of their base salaries. In 2016, there were no changes to our named executives target bonuses other than for Mr. Coombs, whose target bonus
percentage was increased from 75% to 85% of base salary when he became responsible for the Companys Global O&P businesses in January 2016. The named executives target bonuses in 2016 were as follows:
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Bob Patel 150% of base salary
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Thomas Aebischer 85% of base salary
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Kevin Brown 80% of base salary
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Dan Coombs 85% of base salary
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Jeff Kaplan 75% of base salary
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How much of the target bonus is actually earned is dependent on the Compensation
Committees determination of how well the Company performed under each component that goes into the STI calculation. We describe those components, the factors used in considering performance for each component and the Committees
determinations below.
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Annual Bonus Calculation
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HSE Performance: 12.5%
Cost Discipline: 12.5%
Business Results: 25%
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}
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Company
Performance
(50%)
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+
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Business
Unit/Function
Performance
(50%)
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x
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Individual Modifier
(ranges from 0-1.5)
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=
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STI Payout
(as a % of
target)
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40
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Company Performance Committee Determined to Payout at 100% of Target
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HSE Performance
Factors considered included Company improvement and comparison to the industry in the areas of personal
safety, process safety and environmental performance. Payout at 120% of target was based on top decile industry performance; a record year for the Company in number of injuries per workhours and improvement over 2015; process safety record among the
best in industry; and holding environmental incidents flat.
Costs
Factors considered included the Companys fixed costs as compared to its
annual budget, industry benchmarks, economic conditions and organizational improvements/initiatives. Payout at 100% of target was based on the Companys fixed costs being
in-line
with the budget for the
year and maintaining our low fixed cost structure as compared to the industry.
Business Results
Factors considered included EBITDA as compared to
prior years and against the economic backdrop for the year. Payout at 90% of target was based on 2016 EBITDA being lower than in prior years and below the Companys forecast as a result of schedule and cost overruns on capital projects and
operational difficulties at the Houston refinery. The determination by the Committee was positively impacted by solid results in light of a heavy maintenance and project schedule and negative market pressures including high feedstock prices and low
market prices in several businesses.
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Business Unit/Function Performance Committee Approved Weighted Average Payout at 105% of Target
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Factors considered for the performance of business units will vary depending on whether they are business units, manufacturing sites, or
service units, such as corporate functions, supply chain or R&D. The different factors include HSE performance, cost discipline and business results of the specific business unit. Service units also have a customer satisfaction factor, which is
a rating based on evaluations by a large group of managers throughout the organization. The average weighted payout of 105% for all 68 business units and functions within the Company reflects a higher than target payout for certain manufacturing
sites and business units that had record years in safety and business results and a lower than target payout for others whose performance during the year was not as strong or did not meet budget expectations. The award unit results for the named
executive officers are shown below.
The individual modifier reflects individual contributions to achieving successful Company performance, whether the individual met or
exceeded expectations for his role and any other significant factors during the year, such as special projects, challenges or other performance issues.
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Name
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Company
Performance (50%)
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Business
Unit/Function
Performance (50%)
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Individual
Modifier
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STI Payout
(as a % of target)
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Bob Patel
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100
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%
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+
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105
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%
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x
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1.4
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=
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144
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%
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Thomas Aebischer
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100
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%
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+
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108
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%
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x
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1.3
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=
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135
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%
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Kevin Brown
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100
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%
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+
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99
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%
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x
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0.8
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=
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80
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%
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Dan Coombs
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100
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%
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+
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109
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%
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x
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1.5
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=
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157
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%
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Jeff Kaplan
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100
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%
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+
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112
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%
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x
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1.1
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=
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117
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%
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The additional factors considered by the Committee for each of the named executives, including their individual performance used in
determining their individual modifiers, are described below.
Bob Patel, Chief Executive Officer:
Business Unit/Function Performance
For Mr. Patel, the weighted average of all 68 business units and functions within the Company are used
for his calculation. This is in recognition of his oversight and ultimate
41
responsibility for the entire organization. The weighted average earned percentage of 105% of target recognizes the performance of all of the business units and functions during 2016, which
varies from the consolidated Company Performance given that each unit and function has its own goals with respect to costs and business performance; safety records; and internal satisfaction results for staff functions.
Individual Modifier
Mr. Patels individual modifier was in recognition of his leadership in 2016 and also reflects his performance in
achieving certain goals and objectives that were
pre-established
by the Compensation Committee and Supervisory Board in discussion with Mr. Patel, including: delivering peer leading performance in HSE
performance and fixed cost discipline; advancing the Companys growth strategy; evolving the Companys culture and increasing employee engagement.
Thomas Aebischer, Executive Vice President and Chief Financial Officer:
Business Unit/Function Performance
Mr. Aebischer is responsible for the Finance and IT functions within the Company. The weighted average
earned percentage for those functions was 108% of target. The factors that went into this determination include results of internal customer satisfaction surveys for these functions. Additionally, each of these functions underwent organizational and
staffing improvements under Mr. Aebischers leadership in 2016 and also met their budget expectations. The Finance and IT functions also were awarded for their work in furthering the Companys balance sheet and capital allocation
strategies, restructuring of several subsidiary structures for additional cost savings and roll-outs of improved information technology systems and programs.
Individual Modifier
Mr. Aebischers individual modifier was based on his overall contributions to the organization and his meeting or
exceeding his individual goals, including his strong leadership within the Finance and IT functions, strengthening the talent pipeline in key roles across the functions, building relationships and external partnerships with the financial community
and driving strong financial management and cash flow management.
Kevin Brown, Executive Vice President Manufacturing and Refining:
Business Unit/Function Performance
Mr. Brown was responsible for manufacturing operations worldwide and the Global Projects
and Global Engineering Services functions in the Company. Additionally, he was responsible for the Refining business segment. The weighted average earned percentage for those businesses and functions was 99% of target. The factors that went into
this determination included the reliability of the Companys manufacturing sites; overall, the Companys reliability and operational issues were limited to a discrete number of sites. Additionally, the refinery business engaged in several
optimization strategies to offset issues at the Houston refinery caused by operational issues. The Global Projects and Global Engineering Services functions performed well in meeting budget expectations, but earned percentages suffered as a result
of schedule delays and cost overruns related to certain capital projects.
Individual Modifier
Mr. Browns
individual modifier was a result of overall contributions to the Company, including strengthening the talent pipeline in key roles within functions for which he was responsible and overseeing a record year of planned maintenance, turn-around and
capital project activities. His modifier was negatively affected by delays and cost overruns in certain large capital projects and operational issues at the Houston refinery.
Dan Coombs, Executive Vice President Global O&P and Technology:
Business Unit/Function Performance
Mr. Coombs was responsible for the O&P Americas, O&P EAI and Technology business
segments. He also was responsible for the Companys PP compounding business and the procurement function. The weighted average earned percentage for those businesses and functions was 109% target. The factors that went into this determination
include the ability of all of the businesses and
42
functions to collectively meet budget expectations as well as record earnings in several of the businesses, particularly in Europe. These results were achieved by successful execution of gap
closure plans and optimization efforts in nearly all of the businesses.
Individual Modifier
Mr. Coombs
individual modifier was based on his contributions to the organization and his meeting or exceeding his individual goals, including providing strong leadership to the Global O&P and Technology businesses, as well as the Procurement function; and
leading the O&P EAI business to a positive trend in global market share and delivering EBITDA and cash flows above business goals.
Jeff
Kaplan, Executive Vice President and Chief Legal Officer:
Business Unit/Function Performance
Mr. Kaplan is
responsible for the Companys Legal function as well as the Public Affairs function, which includes corporate communications and government relations. The weighted average earned percentage for those functions was 112%. The factors that went
into this determination include results of internal satisfaction surveys, the ability to meet or exceed budget expectations, as well as roll-outs of improved employee communications, increased advocacy efforts in government relations and successful
resolution of several legal matters.
Individual Modifier
Mr. Kaplans individual modifier was based on his
contributions to the organization and his meeting or exceeding his individual goals, including his strong contributions to the development of the Companys growth strategies and the assessment and exploration of different alternatives. He led
the Legal department in prevailing in several disputes and the Public Affairs department in its overhaul of the Companys internal and external relations; provided strong leadership in advancing a diverse talent pipeline in his organizations;
and participated in, and supported, a wide range of community activities and legal and ethics training throughout the Company.
2016 Grants of Awards
The long-term
incentives granted to the named executives in 2016 included PSUs, RSUs and stock options. More information about these awards is included under Components of Executive Compensation on page 36.
One-half
of the total LTI award value is in the form of PSUs, with the remainder split evenly between RSUs and stock options.
The value of long-term incentive awards granted to the named executives is determined as a percentage of base salary. These percentages are determined when the
individual is hired or promoted into his position, based on such factors as market data, parity amongst the executives and the individuals experience. The Compensation Committee reviews the target awards and makes changes based on the time and
experience in position, changes in job responsibilities and market data. At the February 2016 Compensation Committee meeting, it was determined that each of the named executives, other than Mr. Aebischer, who joined the Company in January 2016,
would receive an increased LTI target value.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Target
(% of base salary)
|
|
Amount of
Target Granted
|
|
Total Value of
2016 LTI Awards ($)
|
|
Increase to
LTI Target
|
|
New LTI Target
(% of base salary)
|
Bob Patel
|
|
|
|
550
|
%
|
|
|
|
118
|
%
|
|
|
|
8,125,000
|
|
|
18%
|
|
|
|
650
|
%
|
Thomas Aebischer
|
|
|
|
300
|
%
|
|
|
|
100
|
%
|
|
|
|
2,175,000
|
|
|
--
|
|
|
|
300
|
%
|
Kevin Brown
|
|
|
|
200
|
%
|
|
|
|
110
|
%
|
|
|
|
1,210,000
|
|
|
10%
|
|
|
|
220
|
%
|
Dan Coombs
|
|
|
|
175
|
%
|
|
|
|
125
|
%
|
|
|
|
1,320,000
|
|
|
25%
|
|
|
|
220
|
%
|
Jeff Kaplan
|
|
|
|
200
|
%
|
|
|
|
105
|
%
|
|
|
|
1,018,500
|
|
|
5%
|
|
|
|
210
|
%
|
43
The new LTI targets as a percentage of salary brought the executives long-term incentive opportunities more in line
with market and closer to the medians of both our peer group and the survey data. The new LTI targets, as compared to the market data, are as follows:
|
|
|
Bob Patel 14% below peer group median and 16% below survey data median;
|
|
|
|
Thomas Aebischer 4% above peer group median and 25% below survey data median;
|
|
|
|
Kevin Brown 46% below peer group median and 42% below survey data median;
|
|
|
|
Dan Coombs 28% below peer group median and 29% below survey data median; and
|
|
|
|
Jeff Kaplan 23% below peer group median and 40% below survey data median.
|
Earned Percentage for PSUs with Performance Period Ended December 31, 2016
Each of our named executives, other than Mr. Aebischer and Mr. Coombs, received a PSU award in February 2014 that had a performance period that ended
December 31, 2016. Neither Mr. Aebischer nor Mr. Coombs was employed by the Company in 2014. At its meeting in February 2017, the Compensation Committee reviewed the Companys performance and determined that 130% of target had
been earned under the PSUs. As described below, the performance for these PSU awards is based on ROA as compared to peers and costs, with ROA weighted 67% and costs weighted 33%. For relative ROA performance, the Committee reviews the chemicals
businesses, which accounts for 90% of the determination and the refining business, which accounts for the remaining 10%.
The determination that the Company had
earned 130% of target was based primarily on the chemicals business ROA performance and the Companys ability to maintain its fixed costs over the three-year performance period. The Companys chemicals business ROA increased over the
performance period compared to a decrease of ROA by our peers. Also, the Company essentially maintained flat fixed cash costs over the performance period, with those costs increasing by only 6% on a foreign exchange adjusted basis. The
Companys ability to control costs, particularly in light of the additional capacity additions added during the performance period and other investments in the business, led the Committee to determine that the Company had achieved performance
well in excess of target. Negatively affecting the determination was the performance of the refining business, which the Committee determined should lower the overall performance achieved to 130% of target. More information on these determinations
is shown below.
The companies that are used for comparisons in determining the Companys relative performance for PSU measures are shown below. These
companies were chosen for relative performance comparisons based on their similarity of operations, geography and size to the Companys operations. The companies are the same as used in prior years for relative performance comparisons under our
PSUs.
|
|
|
|
|
|
|
|
|
|
|
Chemical Companies
|
|
|
|
Refining Companies
|
|
|
|
|
|
BASF
Borealis
Celanese
CP Chemical Co.
|
|
Dow Chemical
Eastman
Chemical
ExxonMobil Chemical Segment
|
|
Huntsman
Ineos
Westlake
|
|
ALON USA Energy
Holly Frontier
Tesoro
|
|
Valero
Western Refining
|
44
|
|
|
Return on Assets: Weighted 67% for PSU performance. Measured by change
in ROA as compared to the companies shown above, based on the three year performance ended December 31, 2016. The ROA is reviewed for the Companys chemical and refining businesses separately for a more accurate peer
comparison.
|
Chemical Business (weighted 90%)
Of the 11 companies in the peer group, the Companys improvement in ROA was the third highest. The Companys ROA improved by 4% as compared
to an average 1% decline of the peer companies (excluding the Company). The two companies that had a higher ROA than the Company are European producers, whose relative positions at the beginning of the performance period were much lower than the
Companys, given the state of the European markets at that time. The Companys improvement in ROA as compared to the other, multinational peers was more pronounced.
|
|
Refining Business (weighted 10%)
Of the six companies in the peer group, the Companys improvement was the second lowest. The Companys refinery had a 13% decrease in its ROA over the
performance period, compared to an average 6% decline of the peer companies (excluding the Company). Mitigating the poor performance relative to peers was the fact that the peer group benefitted from access to increasingly advantaged mid-continent
crude during most of the performance period.
|
Costs Weighted 33% for PSU performance. Measured by change in
fixed costs based on the three-year performance period ending December 31, 2016.
|
The Companys cash fixed costs have remained nearly flat over the three-year period, as adjusted for foreign
exchange rates, increasing by only 6%. When reviewing the Companys cash fixed costs, the Committee excludes certain items, which generally include bonus accruals in excess of target and restructuring expenses. For 2016, the Committee also
excluded a lump-sum settlement of certain retiree pension obligations that had been approved by the Compensation Committee. The Company held its costs in light of wage inflation, increased spending on IT systems and increased costs associated with
production capacity expansion projects. It did so through other cost saving initiatives and continued resource optimizations.
|
Additional Information Concerning Executive Compensation
|
|
|
|
|
Share ownership and Holding Requirements
|
The Companys Share Ownership Guidelines for executives require the executives to achieve an ownership of Company
shares that is valued at a percentage of their base salary. No shares may be sold unless and until these ownership levels have been met and then only shares in excess of the required levels may be sold. Under the guidelines, shares beneficially
owned and RSUs (net of shares to be withheld in payment of taxes at an assumed rate of 50%) count towards meeting the ownership thresholds. The named executives current share ownership as calculated under our Guidelines is shown below. Mr.
Brown left the Company in February 2017 and at that time had an ownership of over eighteen times his base salary.
|
|
|
|
|
|
|
|
Required Ownership
as a Multiple of Base Salary
|
|
Shares Held
as a Multiple of Base Salary
|
Bob Patel
|
|
6x
|
|
7.9x
|
Thomas Aebischer
|
|
4x
|
|
1.0x
|
Dan Coombs
|
|
4x
|
|
0.4x
|
Jeff Kaplan
|
|
4x
|
|
1.2x
|
|
Clawbacks
|
To the extent permitted by law, if it is determined that an executive engaged in misconduct that increased the value of the
compensation he or she received, the Compensation Committee will recover any compensation, in whole or in part, that it deems appropriate under the circumstances.
|
45
|
Hedging and Pledging Policies
|
All of our executive officers, including the named executive
officers, are subject to our Policy Prohibiting Insider Trading. Under this policy, executives may not purchase or sell options on LyondellBasell shares, engage in short sales or any other derivative transactions that would result in hedging the
economic risk of their share ownership. Additionally, our executives are prohibited from pledging LyondellBasell shares as collateral for personal loans or other obligations.
|
Taxes
|
Section 162(m) of the U.S. Internal Revenue Code limits to $1
million the amount of non-performance based compensation that we can deduct in any calendar year for our CEO and the three other most highly compensated officers (other than the CFO). We have structured our annual bonuses and long-term incentive
awards (other than our RSUs) with the intention of meeting the exception to this limitation for performance-based compensation so that these amounts may be fully deductible for income tax purposes. To maintain flexibility and the ability to pay
competitive compensation, we do not require that all compensation be deductible.
The Company is seeking re-approval from shareholders of its Long Term Incentive Plan in order to meet the requirements of Section 162(m), which
requires companies to seek approval every five years. If shareholders do not re-approve the Plan, awards granted after May 2017 will not meet the exception for the deductibility limit. See Item 11 Re-Approval of Long Term Incentive Plan
for Purposes of Section 162(m).
|
46
Compensation Tables
Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position
|
|
Year
|
|
|
Salary
|
|
|
Stock
Awards (1)
|
|
|
Option
Awards (2)
|
|
|
Non-Equity
Incentive Plan
Compensation
(3)
|
|
|
Change in
Pension
Value
(4)
|
|
|
All Other
Compensation
(5)
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bob
Patel, Chief Executive Officer and
Chairman of the Management Board
|
|
|
2016
|
|
|
|
1,341,827
|
|
|
|
6,093,892
|
|
|
|
2,031,260
|
|
|
|
2,974,125
|
|
|
|
8,611
|
|
|
|
194,277
|
|
|
|
12,643,992
|
|
|
|
2015
|
|
|
|
1,218,151
|
|
|
|
12,356,319
|
|
|
|
6,518,771
|
|
|
|
3,900,000
|
|
|
|
13,450
|
|
|
|
467,122
|
|
|
|
24,473,813
|
|
|
|
2014
|
|
|
|
609,000
|
|
|
|
375,118
|
|
|
|
75,006
|
|
|
|
1,053,885
|
|
|
|
13,822
|
|
|
|
1,193,897
|
|
|
|
3,320,728
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas Aebischer,
Executive Vice
President and Chief Financial Officer
|
|
|
2016
|
|
|
|
725,000
|
|
|
|
2,531,332
|
|
|
|
1,143,764
|
|
|
|
833,170
|
|
|
|
--
|
|
|
|
41,163
|
|
|
|
5,274,429
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin
Brown, Executive Vice President
Manufacturing & Refining
|
|
|
2016
|
|
|
|
580,303
|
|
|
|
907,573
|
|
|
|
302,515
|
|
|
|
369,977
|
|
|
|
12,606
|
|
|
|
52,065
|
|
|
|
2,225,039
|
|
|
|
2015
|
|
|
|
547,161
|
|
|
|
2,025,139
|
|
|
|
1,075,008
|
|
|
|
801,499
|
|
|
|
14,839
|
|
|
|
47,426
|
|
|
|
4,511,072
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dan Coombs, Executive
Vice President
Global O&P and Technology
|
|
|
2016
|
|
|
|
590,385
|
|
|
|
990,101
|
|
|
|
330,018
|
|
|
|
786,233
|
|
|
|
12,500
|
|
|
|
51,692
|
|
|
|
2,760,929
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeff
Kaplan, Executive Vice President
and Chief Legal Officer
|
|
|
2016
|
|
|
|
502,815
|
|
|
|
763,948
|
|
|
|
254,641
|
|
|
|
440,067
|
|
|
|
8,136
|
|
|
|
44,159
|
|
|
|
2,013,766
|
|
|
|
2015
|
|
|
|
456,438
|
|
|
|
688,113
|
|
|
|
229,380
|
|
|
|
739,419
|
|
|
|
13,400
|
|
|
|
39,537
|
|
|
|
2,166,287
|
|
(1) Stock awards granted to named executive officers in 2016 include RSUs and PSUs. The restricted stock units, or RSUs, are granted
under the LyondellBasell Long-term Incentive Plan and entitle the recipient to an equal number of shares upon vesting. Vesting occurs on the third anniversary of the date of grant. RSUs receive dividend equivalents at the same time dividends are
paid on the Companys stock. Amounts included in the table are the aggregate grant date fair values of the awards calculated in accordance with ASC 718. The PSUs are performance share units, also granted under the LTI. The PSUs entitle the
recipient to a number of shares equal to the number of units, multiplied by an earned percentage that can range from 0 200% of the targeted number of units based on Company performance. The PSUs accrue dividend equivalents in the form of
additional units during the performance period. See Note 17 to the Companys Consolidated Financial Statements in our Annual Report on Form
10-K
for the year ended December 31, 2016 for a discussion
of the calculation of the fair value of the awards.
Annual grants of these awards are made at the first regularly scheduled Compensation Committee meeting of the
calendar year. In addition to the annual grant, Mr. Aebischer received a
sign-on
grant of RSUs when he joined the Company in January 2016 that vest ratably over three years beginning on the first
anniversary of the date of grant.
The following shows the aggregate grant date fair value of the PSUs granted in 2016 if we assumed the maximum amounts (200% of
target) will be earned.
|
|
|
Thomas Aebischer $2,175,026
|
|
|
|
Kevin Brown $1,210,097
|
|
|
|
Jeff Kaplan $1,018,545
|
(2) Stock options are also granted under the LTI and annual awards are made at
the first regularly scheduled meeting of the Compensation Committee. The stock options vest ratably over a three-year period beginning with the first anniversary of the date of grant and expire after ten years. Mr. Aebischers stock
options include his annual grant and a
sign-on
grant when he joined the Company in January 2016. The amounts of the stock option awards are the fair value on the date of grant,
47
calculated in accordance with ASC 718. The fair values of stock options were estimated using the Black-Scholes option-pricing model. We use the Black-Scholes formula to calculate an assumed value
of the options for compensation expense purposes; because the formula uses assumptions, the fair values calculated are not necessarily indicative of the actual values of the stock options.
The assumptions used for the annual grants to all of the executives were: a dividend yield of 3%; a risk-free interest rate of 1.3720%; an expected life of 6 years; and
a stock price volatility of 35.97%. The assumptions used for Mr. Aebischers
sign-on
grants were: a dividend yield of 3%; a risk-free interest rate of 1.9265%; an expected life of 6 years; and a
stock price volatility of 35.75%. See Note 17 to the Companys Consolidated Financial Statements in our Annual Report on Form
10-K
for the year ended December 31, 2016 for a discussion of the
calculation of the fair value of the awards.
(3) Amounts of
Non-Equity
Incentive Plan Compensation in 2016 are the annual
bonuses paid out in March 2017 for performance during 2016.
(4) Amounts include increases during 2016 in the actuarial present values of benefits under the
LyondellBasell Retirement Plan. The increases are calculated based on the difference between the total benefit actuarially reduced from age 65 to current age and the present value of the benefits under the plan. See the Pension Benefits
table on page 52 for more information.
(5) Amounts included in All Other Compensation for 2016 in the table above include Company matching
contributions to Companys defined contribution plans; employer contributions under the Companys U.S. Senior Manager Deferral Plan; executive physicals; payment of professional fees for tax filings; payment of business club membership and
dues; car allowance for expatriate employees; financial planning allowances; and tax reimbursements and a gross-up payment on the reimbursement. SEC rules require separate quantification of any amounts that exceed the greater of $25,000 or 10% of
the total amount of perquisites. The amounts required to be disclosed pursuant to this rule include employer contributions under the Deferral Plan in the following amounts: Mr. Patel, $118,451; Mr. Brown, $34,683; Mr. Coombs, $35,792;
and Mr. Kaplan, $26,160. The amount of All Other Compensation for Mr. Patel also includes a tax reimbursement and gross-up on that reimbursement in an aggregate of $26,567 for NewYork taxes that he owed for work in New York on behalf of the
Company.
Grants of Plan-Based Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Grant Date
(1)
|
|
|
Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards (2)
|
|
|
Estimated Future
Payouts
Under Equity Incentive
Plan Awards (3)
|
|
|
All Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(4) (#)
|
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(5)(#)
|
|
|
Exercise
or Base
Price of
Option
Awards
($)
|
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
Target
(#)
|
|
|
Maximum
(#)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B. Patel
|
|
|
02/16/2016
|
|
|
|
2,012,741
|
|
|
|
6,038,222
|
|
|
|
52,131
|
|
|
|
104,262
|
|
|
|
26,066
|
|
|
|
101,108
|
|
|
|
77.93
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T. Aebischer
|
|
|
01/01/2016
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
10,357
|
|
|
|
26,042
|
|
|
|
86.90
|
|
|
|
|
02/16/2016
|
|
|
|
616,250
|
|
|
|
1,848,750
|
|
|
|
13,955
|
|
|
|
27,910
|
|
|
|
6,978
|
|
|
|
27,066
|
|
|
|
77.93
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
K. Brown
|
|
|
02/16/2016
|
|
|
|
464,242
|
|
|
|
1,392,727
|
|
|
|
7,764
|
|
|
|
15,528
|
|
|
|
3,882
|
|
|
|
15,058
|
|
|
|
77.93
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D. Coombs
|
|
|
02/16/2016
|
|
|
|
501,827
|
|
|
|
1,505,482
|
|
|
|
8,470
|
|
|
|
16,940
|
|
|
|
4,235
|
|
|
|
16,427
|
|
|
|
77.93
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Kaplan
|
|
|
02/16/2016
|
|
|
|
377,111
|
|
|
|
1,131,334
|
|
|
|
6,535
|
|
|
|
13,070
|
|
|
|
3,268
|
|
|
|
12,675
|
|
|
|
77.93
|
|
48
(1) The grant date of February 16, 2016 represents the date of the first regularly scheduled Compensation Committee
meeting of the calendar year when annual grants are made. Mr. Aebischer also received grants on January 1, 2016, the first day of his employment with the Company.
(2) The awards shown are the estimated possible payouts of the named executives annual bonus payments for performance in 2016. Actual bonus payments for 2016 are
shown in the Summary Compensation Table under the column
Non-Equity
Incentive Plan Compensation. The named executives target bonuses are a percentage of base salary. The maximum shown in the
table is the maximum amount that can be earned under the terms of the bonus program, which is 300% of target. Each performance measure is assessed and weighted, which can result in a payment of 0 200% of target. This amount is then multiplied
by an individual performance modifier that ranges from 0 to 1.5 based on individual performance.
(3) Represents PSUs. These awards, granted in 2016, are
earned over a three-year performance period ending December 31, 2018, with payouts, if any, in the first quarter of 2019. Each performance criteria for the PSUs is assessed and weighted, which can result in a payment of 0 to 200% of the target
award, which is settled in shares. These awards accrue dividend equivalents in the form of additional units when dividends are paid on the Companys stock.
(4) Represents RSUs. RSUs receive cash dividend equivalents. The regular RSU grants made on February 16 will vest three years from the date of grant. The
sign-on
RSU grant awarded to Mr. Aebischer when he joined the Company vests in three equal annual increments beginning on the first anniversary of the date of grant.
(5) Represents annual stock option grants for all named executives and a
sign-on
grant for Mr. Aebischer. The exercise
price of all options is equal to the fair market value on the date of grant. All stock options included in the table vest in equal increments over a three-year period beginning on the first anniversary of the date of grant and expire ten years after
the date of grant.
49
Outstanding Equity Awards at December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
Equity Incentive Plan
Awards
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
|
|
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)(1)
|
|
|
Option
Exercise
Price ($)
|
|
|
Option
Expiration
Date
|
|
|
Number of
Shares or
Units of
Stock That
Have Not
Vested (#)(2)
|
|
|
Market Value
Of Shares or
Units of Stock
That Have Not
Vested ($)(3)
|
|
|
Number of
Unearned
Shares, Units
or Other Rights
That Have Not
Vested
(#)(4)
|
|
|
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
($)(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B. Patel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,612
|
|
|
|
806
|
|
|
|
85.80
|
|
|
|
02/20/2024
|
|
|
|
131,146
|
|
|
|
11,249,704
|
|
|
|
90,351
|
|
|
|
7,750,309
|
|
|
|
|
22,706
|
|
|
|
204,352
|
|
|
|
76.15
|
|
|
|
01/12/2025
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
23,405
|
|
|
|
46,806
|
|
|
|
89.94
|
|
|
|
02/17/2025
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
--
|
|
|
|
101,108
|
|
|
|
77.93
|
|
|
|
02/16/2026
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
T. Aebischer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
--
|
|
|
|
26,042
|
|
|
|
86.90
|
|
|
|
01/01/2026
|
|
|
|
17,335
|
|
|
|
1,486,996
|
|
|
|
13,955
|
|
|
|
1,197,060
|
|
|
|
|
--
|
|
|
|
27,066
|
|
|
|
77.93
|
|
|
|
02/16/2026
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
K. Brown
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,547
|
|
|
|
31,914
|
|
|
|
81.38
|
|
|
|
01/21/2025
|
|
|
|
20,211
|
|
|
|
1,733,700
|
|
|
|
13,880
|
|
|
|
1,190,626
|
|
|
|
|
3,746
|
|
|
|
7,488
|
|
|
|
89.94
|
|
|
|
02/17/2025
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
--
|
|
|
|
15,058
|
|
|
|
77.93
|
|
|
|
02/16/2026
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
D. Coombs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,625
|
|
|
|
3,246
|
|
|
|
101.10
|
|
|
|
05/29/2025
|
|
|
|
5,522
|
|
|
|
473,677
|
|
|
|
11,043
|
|
|
|
947,269
|
|
|
|
|
--
|
|
|
|
16,427
|
|
|
|
77.93
|
|
|
|
02/16/2026
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
J. Kaplan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
813
|
|
|
|
--
|
|
|
|
13.11
|
|
|
|
04/30/2020
|
|
|
|
5,718
|
|
|
|
490,490
|
|
|
|
11,435
|
|
|
|
980,894
|
|
|
|
|
2,069
|
|
|
|
4,136
|
|
|
|
89.94
|
|
|
|
02/17/2025
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
953
|
|
|
|
1,904
|
|
|
|
101.79
|
|
|
|
05/07/2025
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
--
|
|
|
|
12,675
|
|
|
|
77.93
|
|
|
|
02/16/2026
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
(1)
|
The vesting schedules of the unexercisable stock options are shown below:
|
|
|
|
Name
|
|
Vesting Dates of Unexercisable Stock Options
|
B. Patel
|
|
The 806 stock options with an exercise price of $85.50 vested February 20, 2017.
Of the 204,352 options with an exercise price of $76.15, 34,059 vested January 12, 2017; 56,765 vest
January 12, 2018; and 56,764 vest on each of January 12, 2019 and 2020.
Of the 46,806 options with an
exercise price of $89.94, 23,403 vested on February 17, 2017 and the remaining 23,403 vest on February 17, 2018.
Of the 101,108 options with an exercise price of $77.93, 33,704 vested on February 16, 2017 and another 33,702
will vest on each of February 16, 2018 and 2019.
|
|
T. Aebischer
|
|
Of the 26,042 options with an exercise price of $86.90, 8,682 vested on January 1, 2017
and 8,680 will vest on each of January 1, 2018 and 2019.
Of the 27,066 options with an exercise price of
$77.93, 9,022 vested on February 16, 2017 and another 9,022 will vest on each of February 16, 2018 and 2019.
|
|
K. Brown
|
|
Of the 31,914 options with an exercise price of $81.38, 5,320 vested on January 21, 2017
and 15,046 vested when he left the Company in February 2017. The remaining 11,548 options were forfeited.
|
50
|
|
|
|
|
Of the 7,488 options with an exercise price of $89.94, 3,744 vested on February 17, 2017
and 2,600 vested when he left the Company in February 2017. The remaining 1,144 were forfeited.
Of the 15,058
options with an exercise price of $77.93, 5,020 vested on February 16, 2017 and 4,532 vested in February 2017 when he left the Company. The remaining 5,506 were forfeited.
|
|
D. Coombs
|
|
The 3,246 options with an exercise price of $101.10 will vest in equal increments of 1,623 on
each of May 29, 2017 and 2018.
Of the 16,427 options with an exercise price of $77.93, 5,477 vested on
February 16, 2017, and 5,475 will vest on each of February 16, 2018 and 2019.
|
|
J. Kaplan
|
|
Of the 4,136 options with an exercise price of $89.94, 2,068 vested on each of
February 17, 2017 and the remaining 2,068 vest on February 17, 2018.
Of the 1,904 options with an
exercise price of $101.79, 952 vest on each of May 7, 2017 and 2018.
Of the 12,675 options with an exercise
price of $77.93, 4,225 vested on February 16, 2017 and the remainder will vest in equal increments of 4,225 on each of February 16, 2018 and 2019.
|
(2) Includes restricted stock units for each of the named executives, the vesting schedules for which are shown below:
|
|
|
Name
|
|
Vesting Date of RSUs
|
B. Patel
|
|
14,182 vested on January 12, 2017; 875 vested on February 20, 2017; 23,638 vest on January 12, 2018; 19,110 vest on February 17,
2018; 23,638 vest on January 12, 2019; 26,066 vest on February 16, 2019; and 23,637 vest on January 12, 2020
|
|
T. Aebischer
|
|
3,453 vested January 1, 2017; 3,452 vest on each of January 1, 2018 and 2019; and 6,978 vest on February 16, 2019
|
|
K. Brown
|
|
2,212 vested on January 21, 2017; 9,785 vested when he left the Company in February 2017 and the remaining 8,214 were forfeited
|
|
D. Coombs
|
|
1,287 vest on May 29, 2018; and 4,235 vest on February 16, 2019
|
|
J. Kaplan
|
|
1,689 vest on February 17, 2018; 761 vest on May 7, 2018; and 3,268 vest on February 16, 2019
|
(3) Dollar values are based on the closing price of $85.78 of the Companys shares on the NYSE on December 30, 2016.
(4) Includes PSUs granted in 2015 and 2016 with three-year performance periods ending December 31, 2017 and December 31, 2018, respectively. We have
included the targeted number of PSUs, although payouts on PSUs are made after the Companys financial results for the performance period are reported and the Compensation Committee determines achievement of performance and corresponding
vesting, typically in mid to late February of the next year. The PSUs for the performance period ended on December 31, 2016 are not included in the table as they are considered earned as of December 31, 2016 for proxy disclosure purposes;
those PSUs are included in the Option Exercises and Stock Vested table below. The PSUs in the Outstanding Equity Awards table include those shown below. In connection with his departure from the Company in February 2017, Mr. Brown
forfeited 1,698 and 4,744 PSUs with performance periods ending December 31, 2017 and 2018, respectively.
51
|
|
|
|
|
Name
|
|
PSUs with Three-Year
Performance Period Ending December 31,
|
|
2017
|
|
2018
|
B. Patel
|
|
38,220
|
|
52,131
|
T. Aebischer
|
|
--
|
|
13,995
|
K. Brown
|
|
6,116
|
|
7,764
|
D. Coombs
|
|
2,573
|
|
8,470
|
J. Kaplan
|
|
4,900
|
|
6,535
|
Option Exercises and Stock Vested (1)
|
|
|
|
|
|
|
Stock Awards (2)
|
Name
|
|
Number of Shares Acquired on
Vesting (#)
|
|
Value Realized on
Vesting ($)
|
B. Patel
|
|
14,003
|
|
1,160,448
|
T. Aebischer
|
|
--
|
|
--
|
K. Brown
|
|
5,222
|
|
457,330
|
D. Coombs
|
|
--
|
|
--
|
J. Kaplan
|
|
1,081
|
|
100,198
|
(1) There were no exercises of option awards in 2016 and therefore, the Company has omitted the columns that would otherwise represent
the number of shares acquired and value received on exercises from the table above.
(2) Includes RSUs that vested in 2016 and PSUs granted in 2014 with a
performance period ended December 31, 2016. The determination of achievement of performance and corresponding vesting of the PSUs was performed by the Compensation Committee in February 2017. The number of shares acquired on vesting for both
RSUs and PSUs is the gross number of shares for all named executives, although we withhold shares in payment of minimum statutory withholding taxes when the awards vest. The value realized for RSUs is the number of gross shares vested times the
market price on the date the restrictions lapsed and the value realized for PSUs is the number of gross shares vested times the market price on the date the Compensation Committee determined the earned percentage of shares for the PSUs. The table
below shows the gross number of shares that vested under both RSUs and PSUs for each of the named executives in 2016.
|
|
|
|
|
Name
|
|
RSUs Vested in 2016
|
|
PSUs Earned for Performance Period Ending
December 31, 2016
|
B. Patel
|
|
9,456
|
|
4,547
|
T. Aebischer
|
|
--
|
|
--
|
K. Brown
|
|
1,475
|
|
3,747
|
D. Coombs
|
|
--
|
|
--
|
J. Kaplan
|
|
--
|
|
1,081
|
Pension Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Plan Name
|
|
Number of Years
Credited Service (#)
|
|
Present Value of
Accumulated Benefit
($)(1)
|
|
Payments During
Last Fiscal Year ($)
|
B. Patel
|
|
LyondellBasell Retirement Plan
|
|
|
|
7
|
|
|
78,198
|
|
|
|
--
|
|
T. Aebischer
|
|
--
|
|
|
|
--
|
|
|
--
|
|
|
|
--
|
|
K. Brown
|
|
LyondellBasell Retirement Plan
|
|
|
|
7
|
|
|
94,456
|
|
|
|
--
|
|
D. Coombs
|
|
LyondellBasell Retirement Plan
|
|
|
|
2
|
|
|
21,013
|
|
|
|
--
|
|
J. Kaplan
|
|
LyondellBasell Retirement Plan
|
|
|
|
7
|
|
|
79,295
|
|
|
|
--
|
|
52
(1) The amounts shown in the table are the actuarial present value of each participants accumulated benefits as of
December 31, 2016, calculated on the same basis as used in Note 17 to our Consolidated Financial Statements in our Annual Report on Form
10-K
for the year ended December 31, 2016, with the exception
that each participant was assumed to continue to be actively employed by us until age 65 (earliest unreduced retirement age) and immediately commence his benefit at that time.
The LyondellBasell Retirement Plan is a U.S. qualified defined benefit pension plan that provides pension benefits under a cash balance formula that defines
participants accrued benefits in terms of a notional cash account balance. Eligible employees become participants immediately upon employment and are fully vested upon the earliest of (i) three years of service, (ii) death, or
(iii) reaching age 65. The notional account balance for each participant comprises a pay credit of 5% and interest credits, each of which are accumulated at the end of each quarter. Pay credits are based on quarterly base pay, as limited by the
Internal Revenue Code, and interest credits are based on the 5
th
, 4
th
and 3
rd
monthly-determined 30 year treasury rates before the start of that quarter. Benefits under the plan are payable upon separation from the Company.
Non-Qualified
Deferred Compensation in 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Executive
Contributions in
Last Fiscal Year
($)(1)
|
|
Registrant
Contributions in Last
Fiscal Year
($)(1)(2)
|
|
Aggregate
Earnings in Last
Fiscal Year
($)(3)
|
|
Aggregate
Withdrawals/
Distributions
($)(4)
|
|
Aggregate
Balance at
End of Last Fiscal
Year ($)(5)
|
B. Patel
|
|
|
|
--
|
|
|
118,451
|
|
25,566
|
|
|
|
--
|
|
|
327,356
|
T. Aebischer
|
|
|
|
--
|
|
|
--
|
|
--
|
|
|
|
--
|
|
|
--
|
K. Brown
|
|
|
|
--
|
|
|
34,683
|
|
8,370
|
|
|
|
--
|
|
|
127,795
|
D. Coombs
|
|
|
|
--
|
|
|
35,792
|
|
485
|
|
|
|
--
|
|
|
39,704
|
J. Kaplan
|
|
|
|
--
|
|
|
26,160
|
|
4,647
|
|
|
|
--
|
|
|
58,516
|
(1) The Company maintains a U.S. Senior Management Deferral Plan that allows executives to defer up to 50% of their base salary and up
to 100% of their annual bonus and equity grants (eligible pay) for payment at a future date. Funds deferred under this plan are allocated into notional accounts that mirror selected investment funds in our 401(k) plans, although no
assets are actually set aside or invested to fund the benefit.
(2) Company contributions to the executives Deferral Plan accounts are included in All
Other Compensation, but not Salary, in the Summary Compensation Table. The Deferral Plan provides for Company contributions for that portion of pay that cannot be taken into account for matching contributions or accruals under the
Companys 401(k) plan and defined benefit pension plan due to IRS limits. The eligibility for Company contributions begins in the Deferral Plan once the employees salary has reached the IRS limits for those plans and actual contributions
by the Company are made as of February 15 of the next calendar year. The Companys contribution of these amounts occurs regardless of whether the employee has contributed any amounts under the Deferral Plan or 401(k) plan. Eligible
employees must be employed as of the February 15 date in order to receive the Company contribution.
(3) Earnings on these accounts are not included in any
other amounts in the tables included in this proxy statement, as the amounts of the named executives earnings represent the general market gains on investments, rather than amounts or rates set by the Company for the benefit of the named
executives.
(4) Accounts are distributed as either a lump sum payment or in annual installments upon the later of (i) when the employee has reached at least
55 years of age and has 10 years of service or (ii) termination of employment. Special circumstances may allow for a modified distribution in the event of the employees death, an unforeseen emergency, or upon a
change-in-control
of the Company. In the event of death, distribution will be made to the designated beneficiary in the form previously elected by the executive. In the event
of an
53
unforeseen emergency, the plan administrator may allow an early payment in the amount required to satisfy the emergency. All participants are immediately 100% vested in all of their
contributions, Company contributions, and gains and/or losses related to their notional investment choices.
(5) The balance as of the last year includes the
Company contributions made in respect of the named executives 2016 earnings, although amounts were not credited to the accounts until February 2017.
Potential Payments upon Termination or Change in Control
Each of Mr. Patel and Mr. Brown is or was party to an employment agreement and our other
named executive officers participate in our Executive Severance Program. The employment agreements and the Executive Severance Program provide for severance payments in the event of termination of employment, provided the executive executes a
release in favor of the Company. Additionally, under the terms of our Long Term Incentive Plan and equity award agreements, our named executives will receive accelerated or
pro-rated
vesting of their equity
awards.
In the event of a change in control of the Company, the vesting of equity awards will be accelerated or
pro-rated,
but only if the individuals employment is terminated within one year of the change in control. The Company believes that this double trigger is appropriate because it ensures our executives do not have conflicts in the event of a
change in control situation and it also avoids windfalls for employees participating in our equity programs, including executives. The treatment of the equity awards for the named executives is the same as for all other employees that receive equity
awards.
A summary of the treatment of equity awards in different scenarios under the terms of our LTI Plan and the award agreements is described below.
Termination of Employment for Cause by the Company or without Good Reason by the Executive
|
|
|
All awards are forfeited.
|
Termination of Employment without Cause by the Company
|
|
|
Stock options, RSUs and PSUs vest
pro-rata.
|
|
|
|
For stock options, the
pro-ration
for each tranche is based on the number of months worked from the date of grant until termination divided by the number of months worked from the
date of grant until the otherwise applicable vesting date. The options may be exercised for 90 days after termination of employment.
|
|
|
|
The
pro-ration
of RSUs and PSUs is determined based on the number of months worked divided by the number of months in the vesting or performance period, respectively. The number
of units earned under the PSUs is based on the determinations of the Compensation Committee in the first quarter after the end of the performance period and can range from
0-200%.
|
Termination of Employment without Cause by the Company or with Good Reason by the Executive within 12 Months of a Change in Control
|
|
|
All stock options and RSUs are immediately vested upon termination of employment. The stock options remain exercisable for 90 days.
|
|
|
|
PSUs vest
pro-rata
based on the number of months worked in the performance period divided by the number of months in the performance period. The number of units earned under the
PSUs used for the
pro-rated
calculations is based on the determinations of the Compensation Committee based on Company performance in the first quarter after the end of the performance year.
|
54
Retirement
|
|
|
All awards vest
pro-rata,
based on the same calculations as in the case of a termination without cause. Stock options remain exercisable for five years.
|
Death or Disability
|
|
|
Stock options and RSUs vest immediately. The stock options remain exercisable for one year.
|
|
|
|
PSUs vest
pro-rata,
based on the same calculations as in the case of a termination without cause.
|
In accordance with SEC disclosure requirements, the tables below show the amounts our named executives could receive in different circumstances if the termination
events occurred as of December 31, 2016. In March 2017, the Company entered into an amendment to Mr. Patels employment agreement that increases the amounts he will receive upon termination of employment, including in connection with
a
change-in-control.
Under the terms of his amended agreement, Mr. Patel will now receive 1.5 times (rather than 1 times) his base salary and target bonus if
terminated without cause or with good reason and if within twelve months of a change in control, 2.5 times (rather than 1.25 times) those amounts.
In addition to
the amounts shown in the tables, Mr. Patel would receive twelve months of continued coverage under the Companys health plans for himself and his dependents, which is valued at approximately $22 thousand. Each of the other executives
other than Mr. Brown would receive a lump sum payment of approximately $34 thousand for the cost of eighteen months of continuation coverage premiums for medical coverage for himself and his dependents in any termination event other
than death and disability. Messrs. Aebischer, Coombs and Kaplan would also receive up to $20,000 for reimbursement of outplacement services. We did not include in the tables any amounts for benefits or payments that are available to all salaried
employees of the Company.
The amounts shown below are not the amounts the named executive would actually receive in a termination event. The values for stock
options included are calculated based on the number of options that would vest, multiplied by the difference between $85.78, the fair market value of our common stock as of December 31, 2016, and the exercise price of the stock option. Amounts
actually received by executives would depend on the fair market value of our shares after their termination when they exercise their options. The values of the RSUs are based on the number of RSUs that would vest multiplied by the fair market value
of our stock on December 31, 2016, which may be different than the fair market value of our stock upon a termination event.
55
The values of the PSUs are based on the number of units that would vest multiplied by the fair market value of our stock on
December 31, 2016. The values below assume that the payout is at target, or 100%, but the actual payout would be determined by the Compensation Committee after the performance period. Also, although the values are calculated as of
December 31, the shares would not be issued until the first quarter after the end of the original performance period of the awards.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death or Disability
|
|
|
|
|
|
|
|
|
Accelerated Option Awards
|
|
|
Accelerated RSUs
|
|
|
Pro-rated PSUs
|
|
|
Total
|
B. Patel
|
|
|
$2,761,608
|
|
|
$
|
11,249,704
|
|
|
|
$3,676,273
|
|
|
|
$17,687,585
|
|
T. Aebischer
|
|
|
$212,468
|
|
|
|
$1,486,996
|
|
|
|
$400,164
|
|
|
|
$1,887,160
|
|
K. Brown
|
|
|
$258,627
|
|
|
|
$1,733,700
|
|
|
|
$571,752
|
|
|
|
$2,305,452
|
|
D. Coombs
|
|
|
$128,952
|
|
|
|
$473,677
|
|
|
|
$389,327
|
|
|
|
$863,004
|
|
J. Kaplan
|
|
|
$99,499
|
|
|
|
$490,490
|
|
|
|
$467,072
|
|
|
|
$957,562
|
|
|
|
Termination Without Cause or by Named Executive for Good
Reason
1
|
|
|
|
|
|
Pro-rated Option
Awards
|
|
|
Pro-rated RSUs
|
|
|
Pro-rated
PSUs
|
|
|
Cash Severance
Payment
|
|
|
Total
|
B. Patel
|
|
|
$1,629,016
|
|
|
|
$6,196,613
|
|
|
|
$3,676,273
|
|
|
|
$3,437,500
|
|
|
|
$14,939,402
|
|
T. Aebischer
|
|
|
$119,022
|
|
|
|
$725,856
|
|
|
|
$400,164
|
|
|
|
$1,341,250
|
|
|
|
$2,586,292
|
|
K. Brown
|
|
|
$150,736
|
|
|
|
$954,499
|
|
|
|
$571,752
|
|
|
|
$1,064,250
|
|
|
|
$2,741,237
|
|
D. Coombs
|
|
|
$72,243
|
|
|
|
$172,334
|
|
|
|
$389,327
|
|
|
|
$1,110,000
|
|
|
|
$1,743,904
|
|
J. Kaplan
|
|
|
$55,738
|
|
|
|
$214,486
|
|
|
|
$467,072
|
|
|
|
$891,188
|
|
|
|
$1,628,484
|
|
Termination Without Cause or by Named Executive for Good Reason within 12 Months of a Change in Control
|
|
|
|
Accelerated Option
Awards
|
|
|
Accelerated RSUs
|
|
|
Pro-rated
PSUs
|
|
|
Cash Severance
Payment
|
|
|
Total
|
B. Patel
|
|
|
$2,761,608
|
|
|
|
$11,249,704
|
|
|
|
$3,676,273
|
|
|
|
$4,296,875
|
|
|
|
$21,984,460
|
|
T. Aebischer
|
|
|
$212,468
|
|
|
|
$1,486,996
|
|
|
|
$400,164
|
|
|
|
$1,341,250
|
|
|
|
$3,440,878
|
|
K. Brown
|
|
|
$258,627
|
|
|
|
$1,733,700
|
|
|
|
$571,752
|
|
|
|
$1,064,250
|
|
|
|
$3,628,329
|
|
D. Coombs
|
|
|
$128,952
|
|
|
|
$473,677
|
|
|
|
$389,327
|
|
|
|
$1,110,000
|
|
|
|
$2,101,956
|
|
J. Kaplan
|
|
|
$99,499
|
|
|
|
$490,490
|
|
|
|
$467,072
|
|
|
|
$891,188
|
|
|
|
$1,948,249
|
|
1
|
In the event of a termination of employment by the named executive for Good Reason, only the cash severance payments will be received.
|
Equity Compensation Plan Information
The following table provides information as of December 31, 2016 about the number of shares to be issued upon vesting or exercise of equity awards and the number
of shares remaining available for issuance under our equity compensation plans.
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Category
|
|
Number of Securities to be Issued
Upon Exercise of
Outstanding Options, Warrants
and Rights (2)
|
|
|
Weighted-Average Exercise
Price of
Outstanding
Options,
Warrants and Rights (3)
|
|
|
Number of Securities
Remaining Available
for Future Issuance Under
Equity Compensation Plans (4)
|
|
Equity compensation plans approved by security holders (1)
|
|
|
2,669,561
|
|
|
|
74.19
|
|
|
|
7,782,501
|
|
|
|
|
|
Equity compensation plans not approved by security holders
|
|
|
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,669,561
|
|
|
$
|
74.19
|
|
|
|
7,782,501
|
|
56
(1) Includes the LyondellBasell Industries Long Term Incentive Plan, as amended and restated (the LTIP) and the
LyondellBasell 2012 Global Employee Stock Purchase Plan, as amended and restated (the ESPP).
(2) Includes 927,539 stock options and 295,192 restricted
stock units. As of December 31, 2016, there were 723,415 PSUs outstanding. The Compensation Committee of the Supervisory Board determines the actual number of shares the recipient receives at the end of a three-year performance period which may
range from 0% to 200% of the target number of shares. Because two times the target number of shares may ultimately be issued, we have included an aggregate of 1,446,830 shares, the maximum possible payouts under the PSUs, as the number that may be
issued. Excludes purchase rights that accrue under the ESPP. Purchase rights under the ESPP are considered equity compensation for accounting purposes; however, the number of shares to be purchased is indeterminable until the time shares are
actually issued, as automatic employee contributions may be terminated before the end of an offering period and, due to the pricing feature, the purchase price and corresponding number of shares to be purchased is unknown.
(3) Includes only the weighted-average exercise price of the outstanding stock options. Does not include the restricted stock units or PSUs, as those awards have no
exercise price associated with them. Also excludes purchase rights under the ESPP for the reasons described in (2) above.
(4) The shares remaining available
include 6,487,524 under the LTI and 1,294,977 under the ESPP.
Item 10 Approval of the
Authority of the Management Board to Conduct Share Repurchases
Under Dutch law and our Articles of Association shareholder approval is necessary to
authorize our Management Board to repurchase shares. At the annual meeting in May 2016, shareholders authorized repurchases of up to 10% of our shares. As of April 3, 2017, we have repurchased an aggregate of 22.8 million shares pursuant to this
authorization.
Adoption of the current proposal will give us the flexibility to continue to repurchase shares if we believe it is an appropriate use of our
excess cash.
The number of shares repurchased, if any, and the timing and manner of any repurchases will be determined by the Management Board, with the prior
approval of the Supervisory Board, if it is in the best interest of the Company in light of prevailing market conditions, our available resources and other factors that cannot now be predicted. Under Dutch law, the number of shares held by us, or
our subsidiaries, may generally never exceed 50% of the total number of our issued and outstanding shares.
In order to provide us with sufficient flexibility,
the Management Board proposes that shareholders grant authority for the repurchase of up to 10% of our shares (or, based on the number of shares currently outstanding, approximately 40 million shares) on the open market, through privately negotiated
repurchases, in self-tender offers, or through accelerated repurchase arrangements, at prices ranging up to 110% of the market price at the time of the transaction (or, in the case of an accelerated repurchase arrangement, 110% of the market price
over the term of the arrangement). If approved, the authority would extend for 18 months from the date of the Annual Meeting, or until November 24, 2018.
|
Our Management Board and Supervisory Board recommend that you
vote FOR the proposal to grant authority to the Management Board to repurchase up to 10% of our issued share capital until November 24, 2018 (Proposal 10).
|
57
Item 11 Re-approval
of Long-Term Incentive Plan for
Purposes of Section 162(m)
The LyondellBasell Long Term Incentive Plan (the LTIP) was last approved by shareholders on May 9, 2012. The
LTIP provides for the grants of awards to eligible employees and directors in the form of stock options, restricted stock units (RSUs), performance share units (PSUs), restricted stock awards, stock appreciation rights (SARs), cash awards and other
stock awards.
In order to allow the Company to continue to grant awards under the LTIP that are intended to qualify as
tax-deductible
performance-based compensation within the meaning of Section 162(m) of the Internal Revenue Code, we are asking shareholders to
re-approve
the material terms of the performance goals under the LTIP. Shareholders are not being asked to approve an increase in the number of shares authorized for issuance under the LTIP or any changes to
the LTIP.
Section 162(m) generally prevents a publicly held corporation from claiming U.S. federal income tax deductions for compensation in excess of
$1 million paid to its chief executive officer or its other three highest compensated executive officers (other than the chief financial officer). Compensation is exempt from this limitation if it qualifies as performance-based
compensation.
One requirement for compensation to be performance-based is that the material terms of the performance goals be disclosed to and approved by
shareholders every five years. For purposes of Section 162(m), the material terms include (i) the employees eligible to receive awards, (ii) a description of the business criteria on which the performance goals may be based and
(iii) the maximum amount of compensation that can be paid to an employee under the LTIP during any period. Each of these aspects is discussed below.
If the
material terms of the performance goals under the LTIP are not approved by the shareholders, we may not grant any awards that qualify as performance-based compensation (other than stock options and SARs) under Section 162(m) after the
date of the 2017 annual meeting of shareholders. Nonetheless, we retain the discretion to grant equity awards without regard to whether such awards would be deductible under Section 162(m).
Eligibility for Participation
All regular employees of the Company and its
subsidiaries and Supervisory Board members are eligible to participate in the LTIP, if selected by the Compensation Committee.
Business Criteria for Performance
Goals
The objective performance criteria upon which awards of performance-based compensation may be based will be measured in terms of one or more
of the following objectives, described as they relate to Company-wide objectives or of a subsidiary, division, department or function of the Company:
|
|
cash flow measures (including before or after tax cash flow, cash flow per share, cash flow return on capital, net cash flow or attainment of working capital levels);
|
|
|
earnings before interest, taxes, depreciation, and amortization (EBITDA);
|
|
|
expense measures (including overhead cost, research and development expense, general and administrative expense and improvement in or attainment of expense levels);
|
|
|
earnings per share (actual or targeted growth);
|
|
|
income measures (including net income and income before or after taxes);
|
58
|
|
acquisition of financings;
|
|
|
economic value added (or an equivalent metric);
|
|
|
operating measures (including operating income, funds from operations, cash from operations,
after-tax
operating income, net operating profit after tax, operating efficiency,
production volumes and production efficiency);
|
|
|
return measures (including return on capital employed, return on equity, return on investment and return on assets);
|
|
|
stock price measures (including price per share, growth measures and total stockholder return);
|
|
|
cash available for distribution;
|
|
|
cash available for distribution per share;
|
|
|
obtaining regulatory approvals;
|
|
|
corporate values measures (including but not limited to diversity commitment, ethics compliance, environmental and safety, product liability claims).
|
Maximum Awards Payable to an Employee
No participant may be granted stock
awards (including stock options, SARs, performance shares, restricted stock, restricted stock units or other stock awards intended to qualify as performance-based compensation,) covering or relating to more than 1,000,000 shares, in the
aggregate, during any one calendar year. No more than $10,000,000 may be paid to any one individual in any one calendar year pursuant to cash awards that are intended to qualify as performance-based compensation.
Other Provisions of the LTIP
The following is a summary of the other terms
and provisions of the LTIP. A copy of the LTIP is included as Appendix A to this proxy statement and is also available in printed form upon written request to our Corporate Secretary.
Purpose of the LTIP
. The purpose of the LTIP is to further the long-term growth of the Company by offering competitive incentive compensation related to
long-term performance goals to those employees who will be largely responsible for planning and directing such growth, to reinforce the commonality of interest between the Companys shareholders and the participants in the LTIP and to aid in
attracting and retaining employees of outstanding abilities and specialized skills.
Administration
.
The Compensation Committee administers the LTIP
and selects the persons who are eligible to receive awards under the LTIP. The Compensation Committee may delegate to one or more officers of the Company the authority to make awards to employees of the Company who are not designated as
Section 16 officers of the Company. The Compensation Committee has complete authority to make awards in such format and amounts as it determines and to cancel, suspend or amend awards, provided that it shall not, without shareholder approval,
amend an outstanding option to reduce its exercise price or cancel an option and replace it with an option having a lower exercise price.
59
Shares Available
.
A total of 22,000,000 shares were originally reserved for issuance under the LTIP. The
number of shares authorized for issuance under the LTIP is not being changed or increased, and the remaining shares available for issuance are set forth under Equity Compensation Plan Information on page 56. Any shares issued under the
LTIP may consist, in whole or in part, of authorized and unissued shares or shares held as treasury shares. Any shares subject to any award that are forfeited or withheld in payment of any exercise price or taxes will not again be available for
grant. If an award terminates without the issuance of shares, the shares subject to such award will again be available for grant.
Types of Awards
.
Stock Options, Stock Appreciation Rights (SARs), Stock Awards and Cash Awards may all be granted under the LTIP. Any of the awards granted to employees of the Company may be performance awards. Performance awards that are not meant
to qualify as performance-based compensation under 162(m) are based on the achievement of such goals and subject to the terms, conditions and restrictions that the Committee may determine. For those performance awards that are intended to qualify
under 162(m), such awards will be paid, vested, or otherwise deliverable solely upon the attainment of one or more
pre-established,
objective performance goals established by the Compensation Committee prior
to the earlier of (i) 90 days after the commencement of the period of service to which the performance goals relate, and (ii) the lapse of 25% of the period of service.
A performance goal may be based upon one or more business criteria that apply to the employee, one or more business units of the Company, or the Company as a whole, and
may include, without limitation, any of the business criteria as described above under -Business Criteria for performance Goals.
Prior to the payment
of any compensation based on the achievement of such performance goals, the Compensation Committee must certify in writing that the applicable performance goals and any of the material terms thereof were, in fact, satisfied. Subject to the
foregoing, the terms, conditions, and limitations applicable to any performance awards will be determined by the Compensation Committee.
Stock
Options
The price of any stock option may not be less than the fair market value of our shares on the date of grant. For purposes of the plan, fair market value means the closing price of our shares as reported on
the New York Stock Exchange. The term of any option may not exceed ten years, and no reload options are allowed. The option price may be paid in cash or shares, or a combination thereof, as the Committee may determine.
SARs
Stock appreciation rights entitle the holder to any appreciation in value of a specified number of shares of shares from the date of grant
until the date of exercise. Any appreciation payable is determined by the excess of the fair market value of our shares on the exercise date of the SAR over the fair market value of the stock on the date of grant. The term of any SAR may not exceed
ten years, and no reload SARs are allowed. The payment of the appreciation may be in cash or shares, or a combination of the two, as the Compensation Committee determines.
Stock Awards
Stock Awards under the plan may be in the form of shares or units. The Stock Awards granted may be subject to restrictions and
contingencies regarding vesting, forfeiture and payment as the Compensation Committee may determine.
Cash Awards
The Compensation Committee
may grant cash awards pursuant to terms and conditions that it deems appropriate.
Vesting provisions are covered in award agreements. Unless otherwise provided in
an award agreement, the LTIP provides that in the event of a Change in Control of the Company followed by involuntary termination not for cause or constructive termination within one year, awards held by a participant that were not previously vested
or exercisable become fully vested and exercisable and generally remain exercisable for the remainder of their term.
60
Grants to
Non-Employee
Directors
. Under the LTIP, awards may be made to
directors who are not employees of the Company. With respect to any awards to
non-employee
directors, the Supervisory Board will exercise the powers otherwise reserved to the Compensation Committee under the
LTIP, including authority to select the
non-employee
directors who will receive awards, to select the types of awards and to impose limitations, conditions and restrictions on the awards as the Supervisory
Board may deem appropriate.
Amendment and Termination
. The LTIP may be amended or terminated by the Supervisory Board, provided that no such action shall
impair the rights of a participant without the participants consent and provided that no amendment shall be made without shareholder approval which (a) increases the total number of shares reserved for issuance under the LTIP or the total
number of shares which may be issued to any one individual, (b) changes the class of persons eligible to receive awards under the LTIP or (c) is required to be approved by shareholders to comply with applicable laws or rules.
Income Tax Consequences
The following is a summary of some of the U.S.
federal income tax consequences of transactions under the LTIP. This summary does not describe foreign, state or local tax consequences.
No income will be
recognized by an optionee upon the grant of a stock option. At the time of exercise of a stock option, ordinary income is recognized by the optionee equal to the difference between the option price paid for the shares and the fair market value of
the shares on the date of exercise. At the time of a sale of shares acquired upon exercise of a stock option, appreciation (or depreciation) in value of the shares after the date of exercise will be treated as short-term or long-term capital gain
(or loss) depending on the holding period.
No income will be recognized by a participant in connection with the grant of a SAR. When the SAR is exercised, the
participant will be required to include as ordinary income in the year of exercise an amount equal to the amount of cash received on the exercise.
No income will
be recognized upon the grant of performance shares or performance units. Upon satisfaction of the objective performance criteria upon which any such awards are conditioned, the recipient will be required to include as taxable ordinary income in the
year of receipt an amount equal to the amount of cash received and/or the fair market value of any unrestricted shares received.
The recipient of restricted stock
generally will be subject to tax at ordinary income rates on the fair market value of the restricted stock (reduced by an amount, if any, paid by the participant for the restricted stock) at such time as the shares are no longer subject to
forfeiture for purposes of Code Section 83. However, a participant who elects under Code Section 83(b) within 30 days of the date of receipt of the shares will have taxable ordinary income on the date of receipt of the shares equal to the
excess of the fair market value of the shares (determined without regard to the restrictions) over the purchase price, if any, of the restricted stock. If a Section 83(b) election has not been made, any dividends received with respect to
restricted stock that are subject to the restrictions generally will be treated as compensation that is taxable as ordinary income to the participant.
No income
will be recognized upon the award of restricted stock units. The recipient of a restricted stock unit award will be subject to tax at ordinary income rates on the fair market value of unrestricted shares on the date that the shares are transferred
to the participant under the award (reduced by any amount paid by the participant for the restricted stock units), and the capital gain/loss holding period for the shares will also commence on the date that the shares are transferred to the
participant.
Section 409A of the Code imposes restrictions on certain awards granted under the LTIP that qualify as deferred compensation. If such
an award fails to comply with these restrictions, then the recipient will be subject to accelerated taxation, a 20% tax penalty and interest. The Company intends that the LTIP and any awards granted under the LTIP will either be exempt from, or
comply with, the restrictions imposed by Section 409A and any applicable regulations.
61
To the extent that a participant recognizes ordinary income in the circumstances described above, the Company generally
will be entitled to a corresponding deduction. However, the Companys deduction is only permitted to the extent that the amount recognized as income meets the test of reasonableness, is an ordinary and necessary business expense, is not an
excess parachute payment within the meaning of Code Section 280G and is not disallowed by the limitation on certain executive compensation under Code Section 162(m).
Plan Benefits
Because the Compensation Committee has discretion to
determine which employees and
non-employee
directors will receive awards under the LTIP and the amount and type of those awards, future benefits to be received by a person or group under the LTIP are not
determinable at this time.
|
Our Management Board and Supervisory Board recommend that you
vote FOR the
re-approval
of the Amended and Restated LyondellBasell Industries N.V. Long-Term Incentive Plan (Proposal 11).
|
62
Appendix A
LYONDELLBASELL INDUSTRIES
2017
LONG-TERM
INCENTIVE PLAN
1.
|
Plan.
LyondellBasell Industries N.V. (the Company) previously established the LyondellBasell Industries 2010 Long-Term Incentive Plan. The Company hereby amends and restates the Plan effective as of
February 16, 2017, as set forth herein, and renames the Plan as the LyondellBasell Industries 2017 Long-Term Incentive Plan (the Plan).
|
2.
|
Objectives
. The purpose of the Plan is to further the interests of the Company and its shareholders by providing incentives in the form of Awards to employees and directors who can contribute materially to the
success and profitability of the Company. Such Awards will recognize and reward outstanding performances and individual contributions and give Participants in the Plan an interest in the Company parallel to that of the shareholders, thus enhancing
the proprietary and personal interest of such Participants in the Companys continued success and progress. This Plan will also enable the Company to attract and retain such employees and directors.
|
3.
|
Definitions
. As used herein, the terms set forth below shall have the following respective meanings:
|
Affiliate means any person or entity that directly or indirectly controls, is controlled by or is under common control with the Company.
Award means an Employee Award or a Director Award.
Award Agreement means one or more Employee Award Agreements or Director Award Agreements.
Board means the Supervisory Board of the Company.
Cash Award means an award denominated in cash.
Cause means, in the case of a particular Award, unless the applicable Award Agreement states otherwise, (i) the Company or an Affiliate
having cause to terminate a Participants employment or service, as defined in any employment or consulting agreement between the Participant and the Company or Affiliate in effect at the time of such termination or (ii) in the
absence of any such agreement or definition therein, (A) the Participants conviction for, plea of guilty or nolo contendere to a felony or its equivalent in accordance with local laws, (B) the Participants commission of a
material act or omission involving dishonesty or fraud in the course of a Participants duties to the Company or an Affiliate, (C) the Participants conduct that brings or is reasonably likely to bring the Company or an Affiliate into
public disgrace or disrepute and that affects the Companys or any Affiliates business in any material way, (D) the Participants continuing and willful failure to perform duties as reasonably directed by the Company or
Affiliate (which if curable, is not cured within 10 days after written notice thereof is provided to the Participant) or (E) the Participants gross negligence or willful misconduct with respect to the Company or its Affiliates (which, if
curable, is not cured within 10 days after written notice thereof is provided to the Participant). Any determination of whether Cause exists shall be made by the Committee in its sole discretion, and following a Change of Control such determination
shall not be subject to delegation pursuant to Paragraph 7.
Change of Control is defined in Attachment A.
Code means the Internal Revenue Code of 1986, as amended from time to time. Reference to the Code shall be deemed to include any regulations
or other interpretive guidance.
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Committee means the Compensation Committee or any committee designated pursuant to Paragraph 7.
Common Stock means the Class A ordinary shares of LyondellBasell Industries N.V., par value
0.04 per share.
Company means LyondellBasell Industries N.V., and any successor
entity.
Compensation Committee means the Compensation Committee of the Board or any successor committee of the Board that is designated
by the Board to administer certain portions of the Plan.
Director means an individual serving as a member of the Board.
Director Award means the grant of any Option, SAR, or Stock Award, whether granted singly or in combination, to a Participant who is a
Nonemployee Director pursuant to such applicable terms, conditions, and limitations (including treatment as a Performance Award) as may be established in order to fulfill the objectives of the Plan.
Director Award Agreement means one or more agreements between the Company and a Nonemployee Director setting forth the terms, conditions,
and limitations applicable to a Director Award.
Dividend Equivalents means an amount equal to all dividends and other distributions (or
the economic equivalent thereof) that are payable to shareholders of record on a like number of shares of Common Stock. Dividend Equivalents shall not be provided with respect to any Award granted hereunder, except to the extent specifically
provided under an Award Agreement and subject to the terms thereof.
Employee means any regular employee of a Participating Employer,
including any such individual who is assigned to work for a joint venture with an Affiliate.
Employee Award means the grant of any
Option, SAR, Stock Award, or Cash Award, whether granted singly or in combination, to an Employee pursuant to such applicable terms, conditions, and limitations (including treatment as a Performance Award) as may be established in order to fulfill
the objectives of the Plan.
Employee Award Agreement means one or more agreements between the Company and an Employee setting forth the
terms, conditions, and limitations applicable to an Employee Award.
Fair Market Value of a share of Common Stock means, as of a
particular date, (i) if shares of Common Stock are listed on a national securities exchange, the final closing sales price per share of the Common Stock on the consolidated transaction reporting system for the principal national securities
exchange on which shares of Common Stock are listed on that date, or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported, (ii) if shares of Common Stock are not so
listed, the mean between the closing bid and asked price on that date, or, if there are no quotations available for such date, on the last preceding date on which such quotations shall be available, as reported by the OTC Bulletin Board, or, if not
reported by the OTC Bulletin Board, by Pink OTC Markets Inc., or (iii) if none of the above are applicable, the fair market value of a share of Common Stock as determined in good faith by the Committee in a manner that complies with the
requirements of Section 409A of the Code, if applicable.
Grant Date means the date an Award is granted to a Participant pursuant to the
Plan. The Grant Date for a substituted award is the grant date of the original award.
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Grant Price means the price at which a Participant may exercise his or her right to receive
cash or Common Stock, as applicable, under the terms of an Award.
Nonemployee Director means an individual serving as a member of the
Board who is not an Employee.
Non-Qualified
Performance Award means a Performance Award that is
not intended to qualify as qualified performance based compensation under Section 162(m) of the Code, as described in Paragraph 8(e)(i) of this Plan.
Option means a right to purchase a specified number of shares of Common Stock at a specified Grant Price.
Participant means an Employee or a Director to whom an Award has been granted under this Plan.
Participating Employer means the Company, together with any Affiliate of the Company whose Employees are included in the Plan upon
authorization of the Committee.
Performance Award means an award pursuant to this Plan, including any Option, SAR, Stock Award, or Cash
Award, that is subject to the attainment of one or more Performance Goals.
Performance Goal means one or more standards established by
the Committee to determine in whole or in part whether a Performance Award shall be earned.
Qualified Performance Award means a
Performance Award made to a Participant who is an Employee that is intended to qualify as qualified performance based compensation under Section 162(m) of the Code, as described in Paragraph 8(e)(ii) of this Plan.
Restricted Stock means any shares of Common Stock that are restricted or subject to forfeiture provisions.
Restricted Stock Unit means a Stock Unit that is restricted or subject to forfeiture provisions.
Restriction Period means a period of time beginning as of the Grant Date of an Award of Restricted Stock or Restricted Stock Units and
ending as of the date upon which the Common Stock subject to or evidenced by such Award is no longer restricted or subject to forfeiture provisions.
Stock Appreciation Right or SAR means a right to receive a payment, in cash or Common Stock, equal to the excess of the Fair
Market Value or other specified valuation of a specified number of shares of Common Stock on the date the right is exercised over a specified Grant Price, in each case, as determined by the Committee.
Stock Award means an Award in the form of shares of Common Stock or Stock Units, including an award of Restricted Stock or Restricted Stock
Units.
Stock-Based Award Limitations has the meaning set forth in Paragraph 5.
Stock Unit means a unit evidencing the right to receive in specified circumstances one share of Common Stock or equivalent value (as
determined by the Committee).
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a.
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Employees
. All Employees are eligible for the grant of Employee Awards under this Plan in the discretion of the
Committee. The Committee in its sole discretion shall designate Employees
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A-3
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to be Participants by granting Awards under this Plan. The Committee may grant an Employee Award to an individual whom it expects to become an Employee within the following six months, with the
Employee Award subject to the individuals actually becoming an Employee within that time, and subject to other terms and conditions the Committee establishes.
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b.
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Directors
. Nonemployee Directors are eligible for the grant of Director Awards under this Plan. The Board in its sole discretion shall designate Nonemployee Directors to be Participants by granting Awards under
this Plan.
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c.
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General
. The granting of an Award under the terms of this Plan does not confer upon any Participant any right to any future Award. There is no obligation for uniformity among Participants.
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5.
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Common Stock Available for Awards
. Subject to the provisions of Paragraph 18 hereof, no Award shall be granted if it shall result in the aggregate number of shares of Common Stock issued under the Plan plus the
number of shares of Common Stock covered by or subject to Awards then outstanding under this Plan (after giving effect to the grant of the Award in question) to exceed 22,000,000.
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The number of shares of Common Stock that are the subject of Awards under this Plan that are forfeited or terminated, expire unexercised, are settled in
cash in lieu of Common Stock or in a manner such that all or some of the shares covered by an Award are not issued to a Participant or are exchanged for Awards that do not involve Common Stock, shall again immediately become available for Awards
hereunder.
Shares of Common Stock that are used or withheld to satisfy the Grant Price or tax obligations shall, notwithstanding anything herein to the contrary, not be available again for Awards hereunder. Shares of Common Stock delivered
under the Plan as an Award or in settlement of an Award issued or made (a) upon the assumption, substitution, conversion, or replacement of outstanding awards under a plan or arrangement of an entity acquired in a merger or other acquisition or
(b) as a post-transaction grant under such a plan or arrangement of an acquired entity shall not reduce or be counted against the maximum number of shares of Common Stock available for delivery under the Plan, to the extent that the exemption
for transactions in connection with mergers and acquisitions from the shareholder approval requirements of the New York Stock Exchange for equity compensation plans applies. The Committee may from time to time adopt and observe such rules and
procedures concerning the counting of shares against the Plan maximum or any sublimit as it may deem appropriate, including rules more restrictive than those set forth above to the extent necessary to satisfy the requirements of any national stock
exchange on which the Common Stock is listed or any applicable regulatory requirement. The Board and the appropriate officers of the Company are authorized to take from time to time whatever actions are necessary, and to file any required documents
with governmental authorities, stock exchanges, and transaction reporting systems to ensure that shares of Common Stock are available for issuance pursuant to Awards. Shares of Common Stock delivered by the Company in settlement of Awards may
be authorized and unissued shares, shares held in the treasury of the Company, shares purchased on the open market or private purchase, or a combination of the foregoing.
Notwithstanding anything to the contrary contained in this Plan, the following limitations shall apply to any Awards made hereunder:
a. No Employee may be granted during any calendar year Awards
consisting of Options or SARs that are exercisable for more than 5,000,000 shares of Common Stock;
b. No Employee may be granted during any calendar year Stock
Awards covering or relating to more than 1,000,000 shares of Common Stock (the limitation set forth in this clause (b), together with the limitation set forth in clause (a) above, being hereinafter collectively referred to as the
Stock-Based Award Limitations); and
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c. No Employee may
be granted Cash Awards that are intended to constitute Qualified Performance Awards having a maximum payment value in any calendar year in excess of $10,000,000.
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a.
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This Plan shall be administered by the Committee, except as otherwise provided herein.
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b.
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Subject to the provisions hereof, the Committee shall have full and exclusive power and authority to administer this Plan and to take all actions that are specifically contemplated hereby or are necessary or appropriate
in connection with the administration hereof. The Committee shall also have full and exclusive power to interpret this Plan and to adopt such rules, regulations, and guidelines for carrying out this Plan as it may deem necessary or proper. The
Committee may, in its discretion, provide for the extension of the exercisability of an Employee Award, accelerate the vesting or exercisability of an Employee Award, eliminate or make less restrictive any restrictions applicable to an Employee
Award, waive any restriction or other provision of this Plan (insofar as such provision relates to Employee Awards) or an Employee Award, or otherwise amend or modify an Employee Award in any manner that is either (i) not adverse to the
Participant to whom such Employee Award was granted (including in a manner which could result in accelerated or additional tax under Section 409A of the Code) or (ii) consented to by such Participant. Notwithstanding anything herein to the
contrary, without the prior approval of the Companys shareholders, Options or SARs issued under the Plan will not be repriced, replaced, or regranted through cancellation or by decreasing the exercise price of a previously granted Option or
SAR, except as expressly provided by the adjustment provisions of Paragraph 18. The Committee may correct any defect or supply any omission or reconcile any inconsistency in this Plan or in any Award in the manner and to the extent the Committee
deems necessary or desirable to further the Plan purposes. Any decision of the Committee in the interpretation and administration of this Plan shall lie within its sole and absolute discretion and shall be final, conclusive, and binding on all
parties concerned.
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c.
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No member of the Committee or officer of the Company to whom the Committee has delegated authority in accordance with the provisions of Paragraph 7 of this Plan shall be liable for anything done or omitted to be done by
him or her, by any member of the Committee, or by any officer of the Company in connection with the performance of any duties under this Plan, except for his or her own willful misconduct, bad faith, or as expressly provided by statute.
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d.
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The Board shall have the same powers, duties, and authority to administer the Plan with respect to Director Awards as the Committee retains with respect to Employee Awards.
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7.
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Delegation of Authority
. Following the authorization of a pool of cash or shares of Common Stock to be available for Awards, the Board or the Committee may authorize a committee of one or more members of the
Board, or one or more officers of the Company, to grant individual Employee Awards from such pool pursuant to such conditions or limitations as the Board or the Committee may establish consistent with applicable law. The Committee may delegate to
the Chief Executive Officer and to other employees of the Company its administrative duties under this Plan (excluding its granting authority for Awards, other than pursuant to authorization of a pool,) pursuant to such conditions or limitations as
the Committee may establish. The Committee may engage or authorize the engagement of a third party administrator to carry out administrative functions under the Plan.
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The Committee shall determine the type or types of Employee Awards to be made
under this Plan and shall designate from time to time the Employees who are to be the recipients of such Awards. Each
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Employee Award shall be embodied in an Employee Award Agreement, which shall contain such terms, conditions, and limitations as shall be determined by the Committee in its sole discretion and, if
required by the Committee, shall be signed by the Participant to whom the Employee Award is granted and signed for and on behalf of the Company. Employee Awards may consist of those listed in this Paragraph 8 and may be granted singly or in
combination. Employee Awards may also be granted in combination with, in replacement of (subject to the last sentence of Paragraph 16), or as alternatives to, grants or rights under this Plan or any other employee plan of the Company or any
Participating Employer, including the plan of any acquired entity. Subject to the immediately following Clauses a. and b., an Employee Award may provide for the grant or issuance of additional, replacement, or alternative Employee Awards upon the
occurrence of specified events, including the exercise of the original Employee Award granted to a Participant. All or part of an Employee Award may be subject to conditions established by the Committee, which may include, but are not limited to,
continuous service with the Company and the Participating Employers, achievement of specific business objectives, items referenced in Clause e. below, and other comparable measurements of performance. Upon the termination of employment by a
Participant who is an Employee, any unexercised, deferred, unvested, or unpaid Employee Awards shall be treated as set forth in the applicable Employee Award Agreement or as otherwise specified by the Committee. Notwithstanding the foregoing, any
Award that constitutes a stock right within the meaning of Section 409A of the Code shall only be granted to Participants with respect to whom the Company is an eligible issuer of service recipient stock under Section 409A of
the Code.
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a.
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Options
. An Employee Award may be in the form of an Option. The Grant Price of an Option shall be not less than the Fair Market Value of the Common Stock subject to such Option on the Grant Date. The term of the
Option shall extend no more than 10 years after the Grant Date. Options may not include provisions that reload the Option upon exercise. Subject to the foregoing provisions, the terms, conditions, and limitations applicable to any
Options awarded to Employees pursuant to this Plan, including the Grant Price, the term of the Options, the number of shares subject to the Option, and the date or dates upon which they become exercisable, shall be determined by the Committee.
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b.
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Stock Appreciation Rights
. An Employee Award may be in the form of an SAR. On the Grant Date, the Grant Price of an SAR shall be not less than the Fair Market Value of the Common Stock subject to such SAR. The
exercise period for an SAR shall extend no more than 10 years after the Grant Date. SARs may not include provisions that reload the SAR upon exercise. Subject to the foregoing provisions, the terms, conditions, and limitations applicable
to any SARs awarded to Employees pursuant to this Plan, including the Grant Price, the term of any SARs, and the date or dates upon which they become exercisable, shall be determined by the Committee.
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c.
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Stock Awards
. An Employee Award may be in the form of a Stock Award. The terms, conditions and limitations applicable to any Stock Awards granted pursuant to this Plan shall be determined by the Committee.
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d.
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Cash Awards
. An Employee Award may be in the form of a Cash Award. The terms, conditions, and limitations applicable to any Cash Awards granted pursuant to this Plan shall be determined by the Committee.
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e.
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Performance Awards
. Without limiting the type or number of Employee Awards that may be made under the other
provisions of this Plan, an Employee Award may be in the form of a Performance Award. The terms, conditions and limitations applicable to any Performance Awards granted to Participants pursuant to this Plan shall be determined by the Committee. The
Committee shall set Performance Goals in its discretion which, depending on the extent
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A-6
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to which they are met, will determine the value and/or amount of Performance Awards that will be paid out to the Participant and/or the portion of an Award that may be exercised.
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i.
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Non-Qualified
Performance Awards
. Performance Awards granted to Employees that are not intended to qualify as qualified performance based compensation under Section 162(m)
of the Code shall be based on achievement of such goals and be subject to such terms, conditions and restrictions as the Committee shall determine.
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ii.
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Qualified Performance Awards
. Performance Awards granted to Employees under this Plan that are intended to qualify as qualified performance based compensation under Section 162(m) of the Code (other than Options
and SARs) shall be paid, vest or otherwise become deliverable solely on account of the attainment of one or more objective Performance Goals established by the Committee prior to the earlier to occur of (x) 90 days after the commencement of the
period of service to which the Performance Goal relates or (y) the lapse of 25% of the period of service (as scheduled in good faith at the time the goal is established), and in any event while the outcome is substantially uncertain. A
Performance Goal is objective if a third party having knowledge of the relevant facts could determine whether the goal is met. The business criteria that will be used to establish the Performance Goals shall be based on the attainment of specific
levels of performance by the Employee, one or more business segments, units, or divisions of the Company, or the Company as a whole, and, if so desired by the Committee, by comparison with a peer group of companies (or a combination of these), and
shall be limited to the following:
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Cash flow measures (including but not limited to before or after tax cash flow, cash flow per share, cash flow return on capital, net cash flow or attainment of working capital levels);
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Expense measures (including but not limited to overhead cost, research and development expense, general and administrative expense and improvement in or attainment of expense levels);
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Income measures (including but not limited to net income and income before or after taxes);
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Operating measures (including operating income, funds from operations, cash from operations,
after-tax
operating income, net operating profit after tax, operating efficiency,
production volumes and production efficiency);
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Return measures (including but not limited to return on capital employed, return on equity, return on investment and return on assets);
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Stock price measures (including but not limited to price per share, growth measures and total stockholder return);
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Earnings per share (actual or targeted growth);
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Earnings before interest, taxes, depreciation, and amortization (EBITDA);
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A-7
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Acquisition of financings;
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Economic value added (or an equivalent metric);
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Cash available for distribution;
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Cash available for distribution per share;
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Obtaining regulatory approvals;
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Corporate values measures (including but not limited to diversity commitment, ethics compliance, environmental and safety, product liability claims).
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f.
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Unless otherwise stated, such a Performance Goal need not be based upon an increase or positive result under a particular business criterion and could include, for example, maintaining the status quo or limiting
economic losses (measured, in each case, by reference to specific business criteria). In interpreting Plan provisions applicable to Performance Goals for Qualified Performance Awards, it is the intent of this Plan to conform with the standards of
Section 162(m) of the Code and Treasury Regulation
§1.162-27(e)(2)(i),
as to grants to those Employees whose compensation is, or is likely to be, subject to Section 162(m) of the Code, and the Committee
in establishing such goals and interpreting this Plan shall be guided by such provisions. Prior to the payment of any compensation based on the achievement of Performance Goals for Qualified Performance Awards, the Committee must certify in writing
that applicable Performance Goals and any of the material terms thereof were, in fact, satisfied. Subject to the foregoing provisions, the terms, conditions and limitations applicable to any Qualified Performance Awards made pursuant to this Plan
shall be determined by the Committee.
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The Board may grant Director Awards to Nonemployee Directors of the Company from time
to time in accordance with this Paragraph 9. Director Awards may consist of those listed in this Paragraph 9 and may be granted singly or in combination. Each Director Award may, in the discretion of the Board, be embodied in a Director Award
Agreement, which shall contain such terms, conditions, and limitations
A-8
as shall be determined by the Board in its sole discretion and, if required by the Board, shall be signed by the Participant to whom the Director Award is granted and signed for and on behalf of
the Company.
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a.
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Options
. A Director Award may be in the form of an Option. The Grant Price of an Option shall be not less than the Fair Market Value of the Common Stock subject to such Option on the Grant Date. In no event shall
the term of the Option extend more than 10 years after the Grant Date. Options may not include provisions that reload the option upon exercise. Subject to the foregoing provisions, the terms, conditions, and limitations applicable to any
Options awarded to Participants pursuant to this Paragraph 9, including the Grant Price, the term of the Options, the number of shares subject to the Option and the date or dates upon which they become exercisable, shall be determined by the Board.
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b.
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Stock Appreciation Rights
. A Director Award may be in the form of an SAR. On the Grant Date, the Grant Price of an SAR shall be not less than the Fair Market Value of the Common Stock subject to such SAR. The
exercise period for an SAR shall extend no more than 10 years after the Grant Date. SARs may not include provisions that reload the SAR upon exercise. Subject to the foregoing provisions, the terms, conditions, and limitations applicable
to any SARs awarded to Nonemployee Directors pursuant to this Plan, including the Grant Price, the term of any SARs, and the date or dates upon which they become exercisable, shall be determined by the Board.
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c.
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Stock Awards
. A Director Award may be in the form of a Stock Award. Any terms, conditions, and limitations applicable to any Stock Awards granted to a Nonemployee Director pursuant to this Plan, including but not
limited to rights to Dividend Equivalents, shall be determined by the Board.
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d.
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Performance Awards
. Without limiting the type or number of Director Awards that may be made under the other provisions of this Plan, a Director Award may be in the form of a Performance Award. Any additional
terms, conditions, and limitations applicable to any Performance Awards granted to a Nonemployee Director pursuant to this Plan shall be determined by the Board. The Board shall set Performance Goals in its discretion which, depending on the extent
to which they are met, will determine the value and/or amount of Performance Awards that will be paid out to the Nonemployee Director.
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10.
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Change of Control
. Notwithstanding any other provisions of the Plan, including Paragraphs 8 and 9 hereof, unless
treatment of an Award upon Change of Control is otherwise expressly addressed in the applicable Award Agreement, in the event of a Change of Control during a Participants employment (or service as a Nonemployee Director) with the Company or a
Participating Employer, followed within one year by the involuntary termination of employment of such Participant for any reason other than Cause (or separation from service of such Nonemployee Director), (i) each Award granted under this Plan to
the Participant shall become immediately vested and fully exercisable and any restrictions applicable to the Award shall lapse and (ii) if the Award is an Option or SAR and has not been cancelled pursuant to the terms of the Plan, such Award
shall remain exercisable until the expiration of the term of the Award. Notwithstanding the foregoing, with respect to any Stock Unit or Restricted Stock Unit or other Award that vests, pursuant to the terms of the Award Agreement, solely upon a
Change of Control and that constitutes a nonqualified deferred compensation plan within the meaning of Section 409A of the Code, the settlement of such Award pursuant to this Paragraph 10 shall only occur upon the Change of Control if
such Change of Control constitutes a change in control event within the meaning of Treasury Regulation §
1.409A-3(i)(5).
For purposes of this Paragraph 10, an involuntary termination shall
include constructive termination of employment for good reason, which shall have the meaning set forth in the Award Agreement or, if not otherwise defined, shall mean the occurrence, without the Participants express written consent, of a
material diminution in the Participants
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A-9
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employment duties, responsibilities or authority, any material reduction in the Participants base salary or targeted incentive compensation, or any relocation of the Participants
principal place of employment as of the date of the Change of Control of more than 100 miles, following which (i) the Participant provides written notice of the existence of the condition within 90 days after its existence (ii) the Company
and its Affiliates fail to cure the condition within 30 days after receipt of the notice, and (iii) the Participant terminates employment within twelve months after the Change of Control.
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11.
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Non-United
States Participants
. The Committee may grant Awards to eligible persons outside the United States under such terms and conditions as may, in the judgment of the
Committee, be necessary or advisable to comply with the laws of the applicable foreign jurisdictions and, to that end, may establish
sub-plans,
modified option exercise procedures, and other terms and
procedures. Notwithstanding the above, the Committee may not take any actions hereunder, and no Awards shall be granted, that would violate the Exchange Act, the Code, any securities law, any governing statute, or any other applicable law. For
purposes of paying Awards to persons outside the United States, the currency exchange rate shall be determined using the published intercompany exchange rate in effect for the month in which the payment is to be made; provided that if such rate has
not been determined at the time the payment is processed, the currency exchange rate shall be determined by using the published intercompany exchange rate for the prior month.
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a.
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General
. Payment made to a Participant pursuant to an Award may be made in the form of cash or Common Stock, or a combination thereof as the Committee may determine, and may include such restrictions as the
Committee shall determine, including, in the case of Common Stock, restrictions on transfer and forfeiture provisions. Any certificates evidencing shares of Restricted Stock (to the extent that such shares are so evidenced) shall contain appropriate
legends and restrictions that describe the terms and conditions of the restrictions applicable thereto.
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b.
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Deferral
. With the approval of the Committee and in a manner which is intended to either (i) comply with Section 409A of the Code or (ii) not cause an Award to become subject to Section 409A of the
Code, amounts payable to U.S. Participants in respect of Awards may be deferred and paid either in the form of installments or as a
lump-sum
payment.
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c.
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Dividends, Earnings, and Interest
. Rights to dividends or Dividend Equivalents may be extended to and made part of any Stock Award, subject to such terms, conditions, and restrictions as the Committee may
establish. The Committee may also establish rules and procedures for the crediting of interest or other earnings on deferred cash payments and Dividend Equivalents for Stock Awards.
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d.
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Cash-out
of Awards
. At the discretion of the Committee, an Award settled under Paragraph 12(a) may be settled by a cash payment in an amount that the Board shall determine
in its sole discretion is equal to the fair market value of such Award (which, in the case of an Option or SAR, may be the excess, if any, of the Fair Market Value of the Common Stock subject to such Award over Grant Price of such Award).
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13.
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Option Exercise
. The Grant Price of an Option shall be paid in full at the time of exercise in cash or, if permitted
by the Committee and elected by the optionee, the optionee may purchase such shares by means of tendering Common Stock or surrendering a separate Award valued at Fair Market Value on the date of exercise, or any combination thereof (provided that
such tendered or surrendered shares or Award do not result in adverse accounting treatment to the Company and such shares or Award are not subject to any pledge or security interest). The Committee shall determine acceptable methods for
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A-10
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Participants who are Employees to tender Common Stock or other Employee Awards. The Committee may provide for procedures to permit the exercise or purchase of such Awards by use of the proceeds
to be received from the sale of Common Stock issuable pursuant to an Award. The Committee may also provide that an Option may be exercised by a
net-share
settlement method for exercising
outstanding Options, whereby the exercise price thereof and/or any tax withholding thereon are satisfied by withholding from the delivery of the shares as to which such Option is exercised a number of shares having a fair market value equal to the
applicable exercise price and/or the amount of any tax withholding, canceling such withheld number, and delivering the remainder. The Committee may adopt additional rules and procedures regarding the exercise of Options from time to time, provided
that such rules and procedures are not inconsistent with the provisions of this Paragraph 13.
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14.
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Taxes
. The Company or its designated third party administrator shall have the right to deduct applicable taxes from any Award payment and withhold, at the time of delivery or vesting of cash or shares of Common
Stock under this Plan, an appropriate amount of cash or number of shares of Common Stock or a combination thereof for payment of taxes or other amounts required by law or to take such other action as may be necessary in the opinion of the Company to
satisfy all obligations for withholding of such taxes. The Committee may also permit withholding to be satisfied by the transfer to the Company of shares of Common Stock theretofore owned by the holder of the Employee Award with respect to which
withholding is required. If shares of Common Stock are transferred by the Participant to satisfy tax withholding, such shares must not be subject to any pledge or other security interest, must not result in adverse accounting treatment to the
Company, and shall be valued based on the Fair Market Value when the tax withholding is required to be made.
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15.
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Expatriate Participants.
Grants of Awards and payments of Awards made to expatriate Participants will be, pursuant to the applicable expatriate assignment policy of the Participating Employer, tax normalized
based on typical income taxes and social security taxes in the expatriate Participants home country relevant to the expatriate Participants domestic circumstances.
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16.
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Amendment, Modification, Suspension, or Termination of the Plan and Awards
. The Board may amend, modify, suspend, or terminate this Plan and any Award made thereunder at any time and for any reason, except that
(i) no amendment or alteration that would adversely affect the rights of any Participant under any Award previously granted to such Participant shall be made without the consent of such Participant and (ii) no amendment or alteration shall
be effective prior to its approval by the shareholders of the Company to the extent such approval is required by applicable legal requirements or the applicable requirements of the securities exchange on which the Companys Common Stock is
listed. Notwithstanding anything herein to the contrary, without the prior approval of the Companys shareholders, Options or SARs issued under the Plan will not be repriced, replaced, or regranted through cancellation or by decreasing the
Grant Price of a previously granted Option or SAR except as expressly provided by the adjustment provisions of Paragraph 18.
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17.
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Assignability
. Unless otherwise determined by the Committee and provided in an Award Agreement or the terms of an Award, no Award or any other benefit under this Plan shall be assignable or otherwise transferable
except by will, by beneficiary designation, or by the laws of descent and distribution. In the event that a beneficiary designation conflicts with an assignment by will or the laws of descent and distribution, the beneficiary designation will
prevail. The Committee may prescribe and include in applicable Award Agreements or the terms of the Award other restrictions on transfer. Any attempted assignment of an Award or any other benefit under this Plan in violation of this Paragraph 17
shall be null and void.
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a.
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The existence of outstanding Awards shall not affect in any manner the right or power of the Company or its shareholders to
make or authorize any or all adjustments, recapitalizations,
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A-11
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reorganizations, or other changes in the capital stock of the Company or its business or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior
preference stock (whether or not such issue is prior to, on a parity with or junior to the existing Common Stock), or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding of any kind, whether or not of a character similar to that of the acts or proceedings enumerated above.
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b.
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In the event of any subdivision or consolidation of outstanding shares of Common Stock, declaration of a dividend payable in shares of Common Stock or other stock split, recapitalization or capital reorganization of the
Company, consolidation or merger of the Company with another corporation or entity, the adoption by the Company of any plan of exchange affecting Common Stock or any distribution to holders of Common Stock of securities or property (including cash
dividends that the Board determines are not in the ordinary course of business but excluding normal cash dividends or dividends payable in Common Stock), the Board shall make such adjustments as it determines, in its sole discretion, appropriate to
(x) the number and kind of shares of Common Stock or other securities reserved under this Plan and (y)(i) the number and kind of shares of Common Stock or other securities covered by Awards, (ii) the Grant Price or other price in respect
of such Awards, (iii) the Stock-Based Award Limitations and (iv) the appropriate Fair Market Value and other price determinations for such Awards to reflect such transaction. In the event of a corporate merger, consolidation, acquisition
of assets or stock, separation, reorganization, or liquidation, the Board shall be authorized (x) to assume under the Plan previously issued compensatory awards, or to substitute new Awards for previously issued compensatory awards, including
Awards, as part of such adjustment; (y) to cancel Awards that are Options or SARs and give the Participants who are the holders of such Awards notice and opportunity to exercise for 15 days prior to such cancellation; or (z) to cancel any
such Awards and to deliver to the Participants cash in an amount that the Board shall determine in its sole discretion is equal to the fair market value of such Awards on the date of such event, which in the case of Options or SARs shall be the
excess, if any, of the Fair Market Value of Common Stock on such date over the Grant Price of such Award.
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c.
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Notwithstanding the foregoing: (i) any adjustments made pursuant to Paragraph 18 to Awards that are considered deferred compensation within the meaning of Section 409A of the Code shall be made in a
manner which is intended to not result in accelerated or additional tax to a Participant pursuant to Section 409A of the Code; (ii) any adjustments made pursuant to Paragraph 18 to Awards that are not considered deferred
compensation subject to Section 409A of the Code shall be made in such a manner intended to ensure that after such adjustment, the Awards either (A) continue not to be subject to Section 409A of the Code or (B) do not result in
accelerated or additional tax to a Participant pursuant to Section 409A of the Code; and (iii) in any event, neither the Committee nor the Board shall have the authority to make any adjustments pursuant to Paragraph 18 to the extent the
existence of such authority would cause an Award that is not intended to be subject to Section 409A of the Code at the Grant Date to be subject thereto as of the Grant Date.
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19.
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Restrictions
. No Common Stock or other form of payment shall be issued with respect to any Award unless the Company
shall be satisfied based on the advice of its counsel that such issuance will be in compliance with applicable federal and state securities laws. Any certificates evidencing shares of Common Stock delivered under this Plan (to the extent that such
shares are so evidenced) may be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any securities exchange
or transaction reporting system upon which the Common Stock is then listed or to
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A-12
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which it is admitted for quotation and any applicable federal or state securities law. The Committee may cause a legend or legends to be placed upon such certificates (if any) to make appropriate
reference to such restrictions.
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20.
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Unfunded Plan
. This Plan shall be unfunded. Although bookkeeping accounts may be established with respect to Participants under this Plan, any such accounts shall be used merely as a bookkeeping convenience,
including bookkeeping accounts established by a third party administrator retained by the Company to administer the Plan. The Company shall not be required to segregate any assets for purposes of this Plan or Awards hereunder, nor shall the Company,
the Board or the Committee be deemed to be a trustee of any benefit to be granted under this Plan. Any liability or obligation of the Company to any Participant with respect to an Award under this Plan shall be based solely upon any contractual
obligations that may be created by this Plan and any Award Agreement or the terms of the Award, and no such liability or obligation of the Company shall be deemed to be secured by any pledge or other encumbrance on any property of the Company.
Neither the Company nor the Board nor the Committee shall be required to give any security or bond for the performance of any obligation that may be created by this Plan.
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21.
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Right to Employment; Claims to Award
. Nothing in the Plan or an Award Agreement shall interfere with or limit in any way the right of the Company or any Participating Employer to terminate any Participants
employment or other service relationship at any time, or confer upon any Participant any right to continue in the capacity in which he or she is employed or otherwise serves the Company or any Participating Employer. Nothing in the Plan confers upon
any Employee or Director of the Company or an Affiliate, or other person, any claim or right to be granted an Award under the Plan, or, having been selected for the grant of an Award, to be selected for a grant of any other Award.
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22.
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Successors
. All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a
direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
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23.
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Governing Law
. This Plan and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by mandatory provisions of the Code or the securities laws of the United States, shall
be governed by and construed in accordance with the laws of the State of Texas without regard to conflicts of law principles.
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24.
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Limitation on Parachute Payments
. In the event the Award Agreement or any other agreement between the Participant and a Participating Employer does not contain any contrary provision regarding the method of
avoiding or mitigating the impact of the golden parachute excise tax under Section 4999 of the Code on the Participant, then, notwithstanding any contrary provision of this Plan, if the aggregate present value of all parachute payments payable
to or for the benefit of a Participant, whether payable pursuant to this Plan or otherwise, to the extent necessary, any Awards under the Plan shall be reduced in order that this limit not be exceeded, but only if, by reason of such reduction, the
net
after-tax
benefit to the Participant shall exceed the net
after-tax
benefit if such reduction, together with all other reductions of parachute payments otherwise
applicable, were not made. For purposes of this Paragraph 24, the terms parachute payment, base amount and present value shall have the meanings assigned thereto under Section 280G of the Code. It is the intention
of this Paragraph 24 to avoid excise taxes on the Participant under Section 4999 of the Code or the disallowance of a deduction to the Company pursuant to Section 280G of the Code.
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25.
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Section 409A
. It is the intention of the Company that Awards granted under the Plan either (i) shall not be
nonqualified deferred compensation subject to Section 409A of the Code, or (ii) shall meet the requirements of Section 409A of the Code such that no Participant shall be subject to tax pursuant to
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A-13
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Section 409A of the Code in respect thereof, and the Plan and the terms and conditions of all Awards shall be interpreted accordingly. Notwithstanding any other provision of the Plan to the
contrary, any payments (whether in cash, shares of Common Stock, or other property) with respect to any Award that constitutes nonqualified deferred compensation subject to Section 409A of the Code, to be made upon a Participants
termination of employment shall be made no earlier than (A) the first day of the seventh month following the Participants separation from service (within the meaning of Section 409A of the Code) and (B) the
Participants death if at the time of such termination of employment the Participant is a specified employee, within the meaning of Section 409A of the Code (as determined by the Company in accordance with its uniform policy with
respect to all arrangements subject to Section 409A of the Code).
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26.
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Effectiveness and Term
.
The Plan is restated effective as of February 16, 2017. No Award shall be made under the Plan ten years or more after April 30, 2020.
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27.
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No Rights as Stockholder.
Except as otherwise specifically provided in the Plan or an Award Agreement, no person shall be entitled to the privileges of ownership in respect of shares of Common Stock that are
subject to Awards until such time as such shares have been issued or delivered to that person.
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28.
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Miscellaneous
. Pronouns and other words in respect of gender shall be interpreted to refer to both genders, and the titles and headings of the sections in the Plan and Award Agreements are for convenience of
reference only. In the event of any conflict, the text of the Plan (or applicable Award Agreement), rather than such titles and headings, shall control.
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A-14
Attachment A
Change of Control
The following definitions
apply to the Change of Control provision in Paragraph 10 of the foregoing Plan.
Affiliate shall have the meaning ascribed to such term
in Rule
12b-2
of the General Rules and Regulations under the Exchange Act, as in effect at the time of determination.
Associate shall mean, with reference to any Person, (a) any corporation, firm, partnership, association, unincorporated organization,
or other entity (other than the Company or a subsidiary of the Company) of which such Person is an officer or general partner (or officer or general partner of a general partner) or is, directly or indirectly, the Beneficial Owner of 10% or more of
any class of equity securities, (b) any trust or other estate in which such Person has a substantial beneficial interest or as to which such Person serves as trustee or in a similar fiduciary capacity, and (c) any relative or spouse of
such Person, or any relative of such spouse, who has the same home as such Person.
Beneficial Owner shall mean, with reference to any
securities, any Person if:
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a.
|
such Person or any of such Persons Affiliates and Associates, directly or indirectly, is the beneficial owner of (as determined pursuant to Rule
13d-3
of the
General Rules and Regulations under the Exchange Act, as in effect at the time of determination) such securities or otherwise has the right to vote or dispose of such securities;
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b.
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such Person or any of such Persons Affiliates and Associates, directly or indirectly, has the right or obligation to acquire such securities (whether such right or obligation is exercisable or effective
immediately or only after the passage of time or the occurrence of an event) pursuant to any agreement, arrangement, or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, other rights, warrants, or
options, or otherwise; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own, (i) securities tendered pursuant to a tender or exchange offer made by such Person or any of such Persons
Affiliates or Associates until such tendered securities are accepted for purchase or exchange or (ii) securities issuable upon exercise of Exempt Rights; or
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c.
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such Person or any of such Persons Affiliates or Associates (i) has any agreement, arrangement or understanding (whether or not in writing) with any other Person (or any Affiliate or Associate thereof) that
beneficially owns such securities for the purpose of acquiring, holding, voting (except as set forth in the proviso to subsection (a) of this definition) or disposing of such securities or (ii) is a member of a group (as that term is used
in Rule
13d-5(b)
of the General Rules and Regulations under the Exchange Act) that includes any other Person that beneficially owns such securities;
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provided, however, that nothing in this definition shall cause a Person engaged in business as an underwriter of securities to be the Beneficial Owner
of, or to beneficially own, any securities acquired through such Persons participation in good faith in a firm commitment underwriting until the expiration of 40 days after the date of such acquisition. For purposes hereof,
voting a security shall include voting, granting a proxy, consenting or making a request or demand relating to corporate action (including, without limitation, a demand for a shareholder list, to call a shareholder meeting, or to inspect
corporate books and records), or otherwise giving an authorization (within the meaning of Section 14(a) of the Exchange Act) in respect of such security.
A-15
The terms beneficially own and beneficially owning shall have meanings that are
correlative to this definition of the term Beneficial Owner.
Board shall have the meaning set forth in the foregoing Plan.
Change of Control shall mean any of the following occurring after the Effective Date:
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a.
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any Person (other than an Exempt Person) shall become the Beneficial Owner of 50% or more of the shares of Common Stock then outstanding or 50% or more of the combined voting power of the Voting Stock of the Company
then outstanding; provided, however, that no Change of Control shall be deemed to occur for purposes of this subsection (a) if such Person shall become a Beneficial Owner of 50% or more of the shares of Common Stock or 50% or more of the
combined voting power of the Voting Stock of the Company solely as a result of (i) an Exempt Transaction or (ii) an acquisition by a Person pursuant to a reorganization, merger, or consolidation, if, following such reorganization, merger,
or consolidation, the conditions described in clauses (i), (ii), and (iii) of subsection (c) of this definition are satisfied;
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b.
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individuals who, as of the Effective Date, constitute the Board (the Incumbent Board) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a
director subsequent to the Effective Date whose election, or nomination for election by the Companys shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board; provided, further, that there shall be excluded, for this purpose, any such individual whose initial assumption of office occurs as a result of any actual or threatened Election Contest that is
subject to the provisions of Rule
14a-11
of the General Rules and Regulations under the Exchange Act;
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c.
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the Company shall consummate a reorganization, merger, or consolidation, in each case, unless, following such reorganization, merger, or consolidation, (i) 50% or more of the then outstanding shares of common stock of
the corporation, or common equity securities of an entity other than a corporation, resulting from such reorganization, merger, or consolidation and the combined voting power of the then outstanding Voting Stock of such corporation or other entity
are beneficially owned, directly or indirectly, by all or substantially all of the Persons who were the Beneficial Owners of the outstanding Common Stock immediately prior to such reorganization, merger, or consolidation in substantially the same
proportions as their ownership, immediately prior to such reorganization, merger, or consolidation, of the outstanding Common Stock, (ii) no Person (excluding any Exempt Person or any Person beneficially owning, immediately prior to such
reorganization, merger, or consolidation, directly or indirectly, 50% or more of the Common Stock then outstanding or 50% or more of the combined voting power of the Voting Stock of the Company then outstanding) beneficially owns, directly or
indirectly, 50% or more of the then outstanding shares of common stock of the corporation, or common equity securities of an entity other than a corporation, resulting from such reorganization, merger, or consolidation or the combined voting power
of the then outstanding Voting Stock of such corporation or other entity, and (iii) at least a majority of the members of the board of directors of the corporation, or the body which is most analogous to the board of directors of a corporation
if not a corporation, resulting from such reorganization, merger, or consolidation were members of the Incumbent Board at the time of the initial agreement or initial action by the Board providing for such reorganization, merger, or consolidation;
or
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|
d.
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(i) complete liquidation or dissolution of the Company unless such liquidation or dissolution is approved as part of a
plan of liquidation and dissolution involving a sale or disposition of all or
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A-16
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substantially all of the assets of the Company to a corporation with respect to which, following such sale or other disposition, all of the requirements of clauses (ii)(A), (B), and (C) of
this subsection (d) are satisfied, or (ii) the Company shall consummate the sale or other disposition of all or substantially all of the assets of the Company, other than to a corporation or other entity, with respect to which, following
such sale or other disposition, (A) 50% or more of the then outstanding shares of common stock of such corporation, or common equity securities of an entity other than a corporation, and the combined voting power of the Voting Stock of such
corporation or other entity is then beneficially owned, directly or indirectly, by all or substantially all of the Persons who were the Beneficial Owners of the outstanding Common Stock immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the outstanding Common Stock, (B) no Person (excluding any Exempt Person and any Person beneficially owning, immediately prior to such
sale or other disposition, directly or indirectly, 50% or more of the Common Stock then outstanding or 50% or more of the combined voting power of the Voting Stock of the Company then outstanding) beneficially owns, directly or indirectly, 50% or
more of the then outstanding shares of common stock of such corporation, or common equity securities of an entity other than a corporation, and the combined voting power of the then outstanding Voting Stock of such corporation or other entity, and
(C) at least a majority of the members of the board of directors of such corporation, or the body which is most analogous to the board of directors of a corporation if not a corporation, were members of the Incumbent Board at the time of the
initial agreement or initial action of the Board providing for such sale or other disposition of assets of the Company.
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Common
Stock shall have the meaning set forth in the foregoing Plan.
Company shall have the meaning set forth in the foregoing Plan.
Election Contest shall mean a solicitation of proxies of the kind described in Rule
14a-12(c)
under the Exchange Act.
Exchange Act shall mean the Securities Exchange Act of 1934, as amended.
Exempt Person shall mean any of the Company, any subsidiary of the Company, any employee benefit plan of the Company or any subsidiary of
the Company, and any Person organized, appointed or established by the Company for or pursuant to the terms of any such plan.
Exempt
Rights shall mean any rights to purchase shares of Common Stock or other Voting Stock of the Company if at the time of the issuance thereof such rights are not separable from such Common Stock or other Voting Stock (i.e., are not transferable
otherwise than in connection with a transfer of the underlying Common Stock or other Voting Stock), except upon the occurrence of a contingency, whether such rights exist as of the Effective Date or are thereafter issued by the Company as a dividend
on shares of Common Stock or other Voting Securities or otherwise.
Exempt Transaction shall mean an increase in the percentage of the
outstanding shares of Common Stock or the percentage of the combined voting power of the outstanding Voting Stock of the Company beneficially owned by any Person solely as a result of a reduction in the number of shares of Common Stock then
outstanding due to the repurchase of Common Stock or Voting Stock by the Company, unless and until such time as (a) such Person or any Affiliate or Associate of such Person shall purchase or otherwise become the Beneficial Owner of additional
shares of Common Stock constituting 1% or more of the then outstanding shares of Common Stock or additional Voting Stock representing 1% or more of the combined voting power of the then outstanding Voting Stock, or (b) any other Person (or
Persons) who is (or collectively are) the Beneficial Owner of shares of Common Stock constituting 1%
A-17
or more of the then outstanding shares of Common Stock or Voting Stock representing 1% or more of the combined voting power of the then outstanding Voting Stock shall become an Affiliate or
Associate of such Person.
Person shall mean any individual, firm, corporation, partnership, association, trust, unincorporated
organization, or other entity.
Voting Stock shall mean, (i) with respect to a corporation, all securities of such corporation of
any class or series that are entitled to vote generally in the election of, or to appoint by contract, directors of such corporation (excluding any class or series that would be entitled so to vote by reason of the occurrence of any contingency, so
long as such contingency has not occurred) and (ii) with respect to an entity which is not a corporation, all securities of any class or series that are entitled to vote generally in the election of, or to appoint by contract, members of the
body which is most analogous to the board of directors of a corporation.
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LYONDELLBASELL INDUSTRIES N.V.
DELFTSEPLEIN 27E
3013 AA ROTTERDAM
THE NETHERLANDS
VOTE BY INTERNET -
www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 12:00 p.m. Eastern Time the day before the meeting
date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would
like to reduce the costs incurred by the company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via
e-mail
or the Internet.
To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
VOTE BY PHONE -
1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 12:00 p.m. Eastern Time the day before the meeting date. Have your proxy
card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes
Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR
BLACK INK AS FOLLOWS:
E24512-P88420 KEEP THIS
PORTION FOR YOUR RECORDS
DETACH
AND RETURN THIS PORTION ONLY