EASTMAN CHEMICAL COMPANY
EASTMAN UNIT PERFORMANCE PLAN
(amended and restated effective January 1, 2004)
ARTICLE 1. PURPOSE
Total cash compensation for all Company employees, including Plan participants, is intended to be competitive with pay in the applicable labor market and in the chemical industry for similar jobs when target levels of performance are achieved. The Eastman Unit Performance Plan ("UPP", or the "Plan") is a variable compensation plan for management level individuals at Eastman Chemical Company (the "Company") and subsidiaries of the Company, as recommended by the Chief Executive Officer ("CEO")) and as designated by the Compensation and Management Development Committee (the "Committee") of the Board of Directors. It is designed to deliver a portion of annual cash compensation according to corporate and organizational unit performance and the attainment of individual objectives and expectations. The UPP is intended to provide an incentive for superior business and individual performance, and to tie the interests of management-level individuals to the performance of the Company's businesses and, thereby, the interests of the Company and its shareowners.
ARTICLE 2. SUMMARY OF PLAN DESIGN
The UPP is designed so that a pool of dollars ("Award Pool") is generated for each major functional organization (a "Unit") within the Company. For purposes of this plan, the CEO shall be a participant in the CEO Unit Award Pool, and the Committee shall be the "head" and "management" of the CEO Unit.
A Unit Award Pool will be determined by multiplying, for each participant in a Unit:
Each participant’s annual base pay rate on December 31 of the year in which Company and Unit performance is measured (the "Performance Year"), times
The participant’s "UPP Target Award Percentage", which is a target award percentage, expressed as a percentage of annual base rate, and determined by the participant’s salary grade, times
A "Unit Performance Factor", expressed as a percentage and determined by pre-set corporate and/or specified organizational unit ("Business Group Units") performance goals. Generally, the Performance Factor can range from 0%, if performance goals are not met, up to the maximum performance factor of 250% for each UPP measure.
The Unit Award Pool is then determined by summing the result of 1) multiplied by 2) multiplied by 3) for each participant in the Unit.
The performance goals and correlative Performance Factors for each Unit will be established as soon as practicable, either prior to the beginning of each Performance Year or as soon as reasonably determinable at the beginning of the Performance Year. The performance goals and correlative Performance Factors are established by the Committee, based (in all cases except for the CEO) upon the recommendation of the CEO.