NOVELIS DEFERRED SHARE UNIT PLAN FOR NON-EXECUTIVE DIRECTORS
Published on March 30, 2005
Exhibit 10.26
NOVELIS INC.
DEFERRED SHARE UNIT PLAN
FOR
NON-EXECUTIVE DIRECTORS
ADOPTED WITH EFFECT FROM JANUARY 5, 2005
1. PURPOSE AND DEFINITIONS
1.1 Purpose
The purpose of this Plan is to enhance the Company's ability to
attract and retain talented individuals to serve as members of the
Board of Directors of the Company and to promote a greater alignment
of interests between Members and the shareholders of the Company.
1.2 Definitions
Unless the context indicates otherwise, the following terms have the
following meanings:
(a) "Account" means a book account maintained by the Company
reflecting the Units credited to each Member pursuant to Article
4.1.
(b) "Average Share Price" means the average of the closing sale
prices for board lots for the Shares on The Toronto Stock
Exchange and for record lots for the Shares as reported on the
New York Stork Exchange - Consolidated Trading, on each day
during the last five trading days prior to the date on which
Units are awarded with respect to a Quarter pursuant to Articles
4.1.1 and 4.1.2, the dividend declaration date (pursuant to
Article 4.1.3) or the redemption date (pursuant to Articles 4.2,
4.3 and 4.4, as applicable), any currency conversion being made
at the Bank of Canada noon rate of exchange on the relevant day.
(c) "Board" means the board of directors of the Company.
(d) "Committee" means any committee of the Board and any successor
committee (and includes the Human Resources Committee).
(e) "Company" means Novelis Inc. and any successor corporation
whether by amalgamation, merger or otherwise.
(f) "Director" means a director of the Company.
(g) "Employee" means an employee (otherwise than in the capacity of a
director) of the Company or of any company in which the Company
holds more than fifty percent of the outstanding voting shares.
(h) "Director's Annual Remuneration" means all amounts payable to a
Non-Executive Director by the Company in respect of the services
provided to the Company by the Non-Executive Director in a
calendar year.
(i) "Member" means an individual who joins the Plan in accordance
with Article 3.
(j) "Non-Executive Director" means a Director of the Company who is
not an Employee.
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(k) "Human Resources Committee" means the Human Resources Committee
of the Board and any successor committee.
(l) "Plan" means this Novelis Inc. Deferred Share Unit Plan for
Non-Executive Directors, as amended by the Board from time to
time.
(m) "Quarter" means a period of three consecutive calendar months
commencing on the first day of the months of January, April, July
or October, as the case may be.
(n) "Retirement Date" means the date on which a Member ceases to be a
Director (subject to Article 4.5).
(o) "Secretary" means the Secretary of the Company.
(p) "Share" means a common share of the Company.
(q) "Spouse" means the person, who, on the day preceding the death of
a Member, is the person who has been designated in accordance
with Article 5.1 of the Plan and who is legally married to the
Member or, in the event the Member is not married, the person who
qualifies as a spouse under the laws applying to the Plan.
(r) "Unit" means a unit of measurement for record-keeping purposes
under the Plan, and shall include fractional units.
2. CONSTRUCTION AND INTERPRETATION
2.1 The effective date of the Plan shall be January 5, 2005.
2.2 The Plan shall be governed and interpreted in accordance with the laws
of the Province of Ontario and the applicable laws of Canada.
2.3 If any provision of the Plan is determined to be void or unenforceable
in whole or in part, such determination shall not affect the validity
or enforcement of any other provision or part thereof.
2.4 Headings are for reference purposes only and do not limit or extend
the meaning of the provisions of the Plan.
2.5 References to the masculine include the feminine; references to the
singular shall include the plural and vice versa.
3. ELIGIBILITY MEMBERSHIP AND RETIREMENT
3.1 Every person who is a Non-Executive Director on January 5, 2005 shall
be eligible to become a Member as of that date.
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3.2 Every person who becomes a Non-Executive Director after January 5,
2005 shall be eligible to become a Member as of the date he becomes
such a Director.
3.3 Upon becoming eligible to become a Member, the Director shall signify
his intention of becoming a Member by signing a form prescribed for
this purpose and delivering it to the Secretary. Membership in the
Plan becomes effective upon receipt by the Secretary of such duly
executed prescribed form.
3.4 Subject to Article 4.5, a Member shall be deemed to retire on the date
he ceases to be a Director.
3.5 Nothing herein shall be deemed to give any Member the right to be
retained as a Director of the Company.
4. BENEFITS
4.1 Calculation of Benefits
4.1.1 Annual Compensation of Non-Executive Directors
Effective January 5, 2005, each Member will receive his
Director's Annual Remuneration payable quarterly for the Quarter
commencing January 5, 2005 and for each subsequent Quarter as
follows:
(a) 50% in Units; and
(b) 50% in Units or cash, as elected by the Member pursuant to
Article 4.1.2
Notwithstanding the provisions set out above in this Article
4.1.1, the Human Resources Committee shall have the right, in its
sole discretion, to require payment of a Member's Director's
Annual Remuneration solely in cash or Units or a combination of
cash and Units as determined by the Human Resources Committee.
Units granted to a Member pursuant to this Article 4.1.1 or
Article 4.1.2 shall be credited to the Member's Account on the
first day following the end of every applicable Quarter. The
portion of Director's Annual Remuneration payable in cash in
respect of a Quarter pursuant to this Article 4.1.1 shall be paid
as soon as practicable after the last day of the applicable
Quarter.
The number of Units (including fractional Units) to be credited
on each of the dates prescribed in this Article 4.1.1 shall be
determined by dividing the amount of the Director's Annual
Remuneration to be satisfied by Units on such date by the Average
Share Price on such date.
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Any currency conversion required for the purposes of this Article
4.1 shall be made at the Bank of Canada noon rate of exchange on
the relevant day.
4.1.2 Election to Receive Units
To elect a form or forms of payment of Director's Annual
Remuneration pursuant to Article 4.1.1(b) for the year in which
this Plan becomes effective, the Member shall complete and
deliver to the Secretary an initial written election by no later
than 15 business days before the last day of the Quarter
commencing on or immediately after the effective date of this
Plan, respecting the Director's Annual Remuneration payable for
such Quarter and the remaining Quarters for that year. To elect a
change in the form of payment of Director's Annual Remuneration
for subsequent years, the Member shall complete and deliver to
the Secretary a new written election by no later than the last
business day of the year preceding the first year in which the
Director's Annual Remuneration to which such election applies
becomes payable. The Member's election under this Article 4.1.2
should be in a form prescribed by the Human Resources Committee
and shall designate the percentage of his Director's Annual
Remuneration that is (i) to be satisfied by Units, and (ii) to be
paid in cash, such designation to be in whole percentages only.
In the absence of a new election made in accordance with this
Article 4.1.2, the Member's election for the latest year with
respect to the percentage of the Director's Annual Remuneration
that is to be satisfied by Units and paid in cash shall continue
to apply to all subsequent Director's Annual Remuneration
payments payable pursuant to the Plan until the Member submits
another written election in accordance with this Article 4.1.2.
An election shall be irrevocable for the year commencing
immediately following the date of the election and for any
subsequent year unless the Member makes a new election in
accordance with this Article 4.1.2 by the last business day of
the year immediately prior to the year in respect of which the
new election is intended to apply.
If no election is made, and no prior election remains effective,
or if the Member does not make an initial election in accordance
with this Article 4.1.2, the Member shall be deemed to have
elected the Director's Annual Remuneration payable to him
pursuant to Article 4.1.1(b) to be paid in cash.
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4.1.3 Dividends
In respect of every cash dividend declared on the Shares, each
Member's Account will be credited with an additional number of
Units, determined as follows:
Units held in each respective Account on dividend declaration date
multiplied by
a dollar amount equal to the dividend declared per Share
divided by
the Average Share Price.
The credit of such additional Units shall be made on the dividend
declaration date.
4.1.4 Certain Adjustments
In the event of a reorganization, recapitalization,
reclassification, stock split, stock dividend, combination of
shares, merger, amalgamation or consolidation, or the sale,
conveyance, lease or other transfer by the Company of all or
substantially all of the assets of the Company, pursuant to any
of which such events the then outstanding Shares are split or
combined or changed into, become exchangeable at the holder's
election for, or entitle the holder thereof to, other shares of
stock, or any similar change in the Shares or other similar
event, each Member's Account shall be adjusted in an equitable
manner to reflect such change or other event. Such adjustment
shall be made by the Human Resources Committee and shall be
conclusive and binding for all purposes of the Plan. Except as
provided for in this Article, Members shall have no other rights
as a result of any change in the Shares or of any other event.
For greater certainty, no amount will be paid to, or in respect
of, a Member under the Plan or pursuant to any other arrangement,
and no additional Units will be granted to such Member to
compensate for a downward fluctuation in the price of Shares, nor
will any other form of benefit be conferred upon, or in respect
of, a Member for such purpose.
4.2 Payment of Benefits on Retirement
4.2.1 On a Member's Retirement Date, the Member will be able to redeem
the Units credited to his Account by filing a written notice of
redemption with the Secretary, specifying a redemption date of at
least 5 business days from the delivery of the said notice to the
Company but no later than 15 December of the first calendar year
commencing after the Director's
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Retirement Date. The Units credited to such Member's Account will
then be multiplied by the Average Share Price on such redemption
date. In any event, the payment of the Member's benefits under
the Plan will take place no later than 31 December of the first
calendar year commencing after the Director's Retirement Date.
If a Member fails to advise the Company of his selection of a
redemption date within the above-mentioned period, the redemption
date shall be considered to be 15 December of the first calendar
year commencing after the Director's Retirement Date.
4.2.2 The value of the redeemed Units shall be paid by the Company to
the Member as soon as possible after the determination of the
redemption date and the deduction of appropriate taxes and other
required withholdings (if any), at the Member's option, in
either:
(a) cash,
(b) Shares, or
(c) a combination thereof.
In the case of a payment in Shares, the Company will purchase the
Shares on the open market, through a broker, on behalf of the
Member. If, after the broker applies the value of a Member's
Units to the purchase of whole Shares as provided in this Article
4.2.2, an amount remains payable under the Plan in respect of a
Member, the Company shall pay such amount in cash, net of
applicable withholdings, to the Member or the Member's spouse or
legal representative, as applicable.
4.3 Benefits Before Retirement
4.3.1 Death
In the event of death of a Member prior to the Retirement Date,
the Spouse of such Member, or where there is no surviving Spouse,
the Member's legal representative, shall be able to redeem the
Units credited to the Member's Account by filing a written notice
of redemption with the Secretary, specifying a redemption date of
at least 5 business days from the delivery of the said notice to
the Company but no later than 15 December of the first calendar
year commencing after the death of the Member. The same
conditions of payment will then apply to the Spouse (or the
Member's legal representative, as the case may be) as they would
have applied to the Member had he retired on that date.
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4.4 Death After Retirement
In the event that a Member dies after the Retirement Date, the Spouse
of such Member, or where there is no surviving Spouse the Member's
legal representative, shall, provided the Member had not already done
so, be able to redeem the Units credited to the Member's Account by
filing a written notice of redemption with the Secretary, specifying a
redemption date of at least 5 business days from the delivery of the
said notice to the Company but no later than 15 December of the first
calendar year commencing after the death of the Member. The same
conditions of payment will then apply to the Spouse (or the Member's
legal representative, as the case may be) as they would have applied
to the Member.
4.5 Suspension of Benefits upon becoming an Employee
4.5.1 Director becoming an Employee
If a Member becomes an Employee but continues to be a Director,
his membership in the Plan shall be suspended effective the date
of the commencement of his employment and shall resume upon
termination of such employment.
If prior to the termination of his employment, such Employee
Director ceases to be a Director, such Member will be deemed to
retire on the date he ceases to be an Employee.
4.6 Taxes
All benefits paid under the Plan or in respect of a Member who is not
a resident of Canada to the extent attributable to services performed
in Canada are subject to applicable tax legislation.
4.7 Currency
4.7.1 Unless Article 4.7.2 applies, all benefits under the Plan shall
be determined in the same currency as the Director's Annual
Remuneration.
4.7.2 A Member or his Spouse, or where there is no surviving Spouse
the Member's legal representative, may request the Company to pay
his benefits in a currency other than the designated currency
under Article 4.7.1, in which event the currency conversion shall
be made at the Bank of Canada noon rate of exchange on the day
preceding the date of payment.
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5. BENEFICIARIES AND CLAIMS FOR BENEFITS
5.1 Every Member, upon becoming a Member, shall advise the Secretary in
writing of the name and address of his Spouse on a prescribed form.
Every Member shall advise the Company of any change in such
information.
5.2 In the event of death of a Member and provided that there is a
surviving Spouse, the benefits under the Plan shall only be paid to
the Spouse of such Member as named on the latest filing on the
prescribed form which has been delivered to the Secretary. Where there
is no surviving Spouse, the benefits under the Plan shall be paid to
the Member's legal representative pursuant to Articles 4.3 and 4.4.
6. ADMINISTRATION
6.1 Unless otherwise determined by the Board, the Plan shall remain an
unfunded obligation of the Company and all benefits payable to or in
respect of Members under the Plan represent merely unfunded, unsecured
promises of the Company to pay a sum of money to the Members in the
future.
6.2 The Plan shall be administered by the Human Resources Committee and
any question regarding the proper administration of the Plan or the
construction of any term of the Plan shall be resolved by the Human
Resources Committee, in its sole discretion.
6.3 The Plan may be amended or terminated at any time by the Board, except
as to rights already accrued hereunder by the Members. Notwithstanding
the foregoing, any amendment or termination of the Plan shall be such
that the Plan continuously meets the requirements of paragraph 6801(d)
of the regulations under the Income Tax Act (Canada) or any successor
to such provision.
6.4 For the purpose of the above Article 6.3, the accrued right in respect
of a Member prior to his Retirement Date shall be a right to receive
benefits in accordance with the terms of the Plan up to but excluding
the date of the amendment or termination of the Plan.
6.5 The Company shall keep accurate and detailed records of all
transactions for all Accounts and provide quarterly benefit statements
to Members.
6.6 All expenses associated with the establishment, maintenance and
termination of this Plan shall be borne by the Company.
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7. NON-ALIENATION
7.1 Except as provided for herein, no transfer by a Member of any right to
any payment or benefit under the Plan, whether voluntary or
involuntary, by operation of law or otherwise, and whether by means of
alienation by anticipation, sale, transfer, assignment, bankruptcy,
pledge, attachment, charge or encumbrance of any kind, shall vest the
transferee with any interest or right, and any attempt to so alienate,
sell, transfer, pledge, attach, charge or otherwise encumber any such
amount, whether presently or thereafter payable shall be void and of
no force or effect.
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