SEC Info - Hexion Inc. - ‘10-K’ for 12/31/19

Hexion Inc. – ‘10-K’ for 12/31/19 – ‘EX-10.107’

On: Tuesday, 3/3/20, at 5:05pm ET · For: 12/31/19 · Accession #: 13239-20-6 · File #: 1-00071

Document/Exhibit Description Pages Size 1: 10-K Annual Report HTML 2.33M 2: EX-10.107 Hexion 2020 Incentive Comp Plan HTML 51K 3: EX-21.1 List of Subsidiaries of the Registrant HTML 62K 4: EX-31.1A Section 302 CEO Certification HTML 41K 5: EX-31.1B Section 302 CFO Certification HTML 41K 6: EX-32.1 Section 906 CEO & CFO Certification HTML 37K 99: R1 Document and Entity Information Document HTML 66K 50: R2 Consolidated Balance Sheets HTML 165K 15: R3 Consolidated Balance Sheets (Parentheticals) HTML 52K 81: R4 Consolidated Statements of Operations HTML 95K 100: R5 Consolidated Statements of Comprehensive Income HTML 70K 51: R6 Consolidated Statements of Cash Flows HTML 143K 17: R7 Consolidated Statement of Equity (Deficit) HTML 75K 84: R8 Background and Basis of Presentation HTML 49K 97: R9 Significant Accounting Policies HTML 146K 94: R10 Emergence from Chapter 11 Bankruptcy (Notes) HTML 71K 80: R11 Fresh Start Accounting (Notes) HTML 288K 19: R12 Reorganization Expense (Notes) HTML 50K 57: R13 Restructuring HTML 87K 93: R14 Related Party Transactions HTML 90K 79: R15 Goodwill and Intangibles HTML 144K 18: R16 Fair Value HTML 73K 55: R17 Debt Obligations HTML 181K 95: R18 Leases (Notes) HTML 129K 78: R19 Commitments and Contingencies HTML 93K 37: R20 Pension and Postretirement Expense HTML 721K 48: R21 Stock Option Plans and Stock Based Compensation HTML 64K 122: R22 Dispositions (Notes) HTML 39K 77: R23 Income Taxes HTML 247K 36: R24 Summarized Financial Information of Unconsolidated HTML 67K Affiliate 47: R25 Segment Information HTML 341K 121: R26 Changes in Accumulated Other Comprehensive Income HTML 72K (Notes) 76: R27 Significant Accounting Policies Level 2 (Policies) HTML 251K 35: R28 Fresh Start Accounting (Tables) HTML 285K 49: R29 Reorganization Expense (Tables) HTML 49K 53: R30 Restructuring Level 3 (Tables) HTML 83K 13: R31 Goodwill and Intangibles Level 3 (Tables) HTML 144K 82: R32 Fair Value Level 3 (Tables) HTML 65K 96: R33 Debt Obligations Level 3 (Tables) HTML 148K 54: R34 Leases (Tables) HTML 177K 14: R35 Commitments and Contingencies Level 3 (Tables) HTML 77K 83: R36 Pension and Postretirement Expense Level 3 HTML 707K (Tables) 98: R37 Stock Option Plans and Stock Based Compensation HTML 54K Level 3 (Tables) 52: R38 Income Taxes Level 3 (Tables) HTML 239K 16: R39 Summarized Financial Information of Unconsolidated HTML 71K Affiliate Level 3 (Tables) 45: R40 Segment Information Level 3 (Tables) HTML 340K 31: R41 Changes in Accumulated Other Comprehensive Income HTML 75K (Tables) 67: R42 Background and Basis of Presentation (Details) HTML 40K 109: R43 Significant Accounting Policies Level 4 (Details) HTML 124K 46: R44 Emergence from Chapter 11 Bankruptcy (Details) HTML 77K 32: R45 Fresh Start Accounting Reorganization Value HTML 53K (Details) 68: R46 Fresh Start Accounting Schedule of Fresh Start HTML 384K Adjustments to the Balance Sheet (Details) 111: R47 Fresh Start Accounting Reorganization Adjustments HTML 69K - Liabilities Subject to Compromise (Details) 43: R48 Fresh Start Accounting Reorganization Adjustments HTML 59K - Sources and Uses of Cash (Details) 34: R49 Fresh Start Accounting Reorganization Adjustments HTML 49K - Equity Value (Details) 26: R50 Fresh Start Accounting Reorganization Adjustments HTML 69K - Narrative (Details) 63: R51 Fresh Start Accounting Reorganization Adjustments HTML 50K - Cumulative Effect of Emergence (Details) 102: R52 Fresh Start Accounting Fresh Start Adjustments - HTML 64K Schedule of Cumulative Adjustments (Details) 86: R53 Fresh Start Accounting Fresh Start Adjustments - HTML 45K Narrative (Details) 25: R54 Reorganization Expense (Details) HTML 49K 62: R55 Restructuring Level 4 (Details) - Restructuring by HTML 74K Type 101: R56 Related Party Transactions Level 4 (Details) HTML 94K 85: R57 Goodwill and Intangibles Level 4 (Details) - HTML 55K Schedule of Goodwill 24: R58 Goodwill and Intangibles Level 4 (Details) - HTML 70K Rollforward of Goodwill 64: R59 Goodwill and Intangibles Level 4 (Details) - HTML 75K Schedule of Intangible Assets 117: R60 Goodwill and Intangibles Level 4 (Details) - HTML 51K Estimated Annual Amortization Expense 74: R61 Fair Value Level 4 (Details) - Fair Value HTML 55K Hierarchy 30: R62 Fair Value Level 4 (Details) - Fair Value of Debt HTML 51K 41: R63 Debt Obligations Level 4 (Details) Debt HTML 119K Outstanding 114: R64 Debt Obligations Level 4 (Details) - Scheduled HTML 58K Maturities 71: R65 Debt Obligations Debt Footnote Disclosures HTML 114K (Details) 27: R66 Debt Obligations Debt Transactions (Details) HTML 37K 38: R67 Debt Obligations Predecessor Debt (Details) HTML 83K 119: R68 Leases Lease Cost and Supplemental Information HTML 64K (Details) 70: R69 Leases Assets and Liabilities, Lessee (Details) HTML 54K 87: R70 Leases Schedule of Maturities of Lease HTML 121K Liabilities(Details) 105: R71 Commitments and Contingencies Level 4 (Details) - HTML 82K Environmental Liabilities 58: R72 Commitments and Contingencies Level 4 (Details) - HTML 44K Non-Environmental Liabilities 20: R73 Commitments and Contingencies Level 4 (Details) - HTML 51K Annual Purchase Commitments 90: R74 Pension and Postretirement Expense Level 4 HTML 110K (Details) - Change in Benefit Obligations 108: R75 Pension and Postretirement Expense Level 4 HTML 117K (Details) - Amounts Recognized 61: R76 Pension and Postretirement Expense Level 4 HTML 68K (Details) - Components of Net Pension and Non-pension postretirement Expense 23: R77 Pension and Postretirement Expense Level 4 HTML 39K (Details) - Amounts Recognized in Other Comprehensive Income 91: R78 Pension and Postretirement Expense Level 4 HTML 40K (Details) - Amounts in Accumulated Other Comprehensive Income Expected to be Recognized in Next 12 Months 103: R79 Pension and Postretirement Expense Level 4 HTML 56K (Details) - Weighted Average Rates used to Determine the Benefit Obligations 88: R80 Pension and Postretirement Expense Level 4 HTML 54K (Details) - Weighted Average Rates used to Determine Net Periodic Pension Expense 106: R81 Pension and Postretirement Expense Level 4 HTML 52K (Details) - 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Exhibit 10.107

HEXION HOLDINGS CORPORATION

2020 INCENTIVE COMPENSATION PLAN (the “Plan”)

Purpose of the Plan

The Plan is sponsored by Hexion Holdings Corporation (“Hexion Holdings”) to reward associates of Hexion Inc. (“Hexion”) and its subsidiaries for delivering increased value by profitably growing the business and controlling costs. The Plan is designed to link rewards with critical financial metrics for the purpose of promoting actions which are the most beneficial to Hexion’s short-term and long-term value creation.

Administration

The Plan shall be administered by and awards under the Plan shall be authorized by the Compensation Committee (the “Committee”) of Hexion Holdings’ Board of Directors (the “Board”). The Committee may delegate some of its authority under the Plan to management or as is otherwise stated in the Plan. The Committee has the right to amend or terminate this Plan at any time.

Plan Year

January 1, 2020 - December 31, 2020

Eligibility for Participation

Participation is based on each associate's scope of responsibility and contribution to the organization. Each participant has a plan assignment of Corporate, Corporate-BU Blended (Global Hexion plus Business Unit) or Business Unit.

Plan Performance Measures

The Plan performance measures are based on three performance criteria: EBITDA, EH&S and Cash Flow.

EBITDA

EBITDA refers to Earnings before Interest, Taxes, Depreciation and Amortization, adjusted to exclude (i) certain non-cash items, (ii) certain other income and expenses and (iii) discontinued operations. EBITDA is a critical measure on which the investment community and future shareholders will evaluate Hexion's performance. As a result, participants should be focused and incented to manage the business to achieve EBITDA targets.

EBITDA will be measured for Global Hexion and for each specified Hexion Business Unit. Participants have a total of sixty-five (65) percent of their incentive target based on the achievement of EBITDA targets. EBITDA achievement measured for Global Hexion and each specified Business Unit may exclude certain unusual, non-recurring items at the discretion of the Committee.

Environmental Health and Safety (EH&S)

EH&S measures environmental and safety results including (i) SIFs – severe incident factors, (ii) OIIR – occupational illness and injury rate and (iii) total environmental events (ERI). EH&S will be measured for Global Hexion.

Participants have a total of ten (10) percent of their incentive target based on the achievement of EH&S goals – five (5) percent for SIF’s and two and one-half (2.5) percent each for OIIR and ERI.

New in 2020: In the definition of total environmental events, Hexion Reportable Release is being replaced by PSI Tier 2 Spill (which is a Loss of Primary Containment that meets the Tier 2 threshold quantity as defined by the Center for Chemical Process Safety (CCPS)). Total environmental incidents will still include Top Level Environmental Events (federally reportable releases and permit exceedances).

Cash Flow

Cash Flow represents the amount of cash generated by business operations. Cash flow is defined as EBITDA, net trading capital improvement and/or usage, capital spending and interest paid along with other operating cash flow items such as income taxes paid and pension contributions. The purpose of this component is to focus on cost control and cost reduction actions to preserve an

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adequate amount of liquidity to fund operations and capital expenditures, service debt, and ultimately sustain the business through difficult economic cycles.

Cash Flow will be measured for Global Hexion, and may exclude certain unusual, non-recurring items at the discretion of the Committee.

Participants have a total of twenty-five (25) percent of their incentive target based on the achievement of Cash Flow targets.

New in 2020: Free Cash Flow has been replaced with Cash Flow from Operations.

Target Incentive

Each participant will have a target incentive opportunity expressed as a percent of his or her base salary. Plan assignments and targets are determined by the associate's business responsibilities and scope of his or her role and contributions within the organization.

Plan Structure

The following tables depict the structure described above.



Plan Level	EBITDA	EH&S	Cash Flow
Corporate	65% Global Hexion	10% Global Hexion	25% Global Hexion
Corporate-BU Blended	35% Global Hexion 10% Global Resins 10% Global Epoxy 10% Global Formaldehyde	10% Global Hexion	25% Global Hexion
Business Unit¹	32.5% Global Hexion 32.5% Business Unit	10% Global Hexion	25% Global Hexion


(1)	Business Unit shall refer to the applicable business unit plan assignment as determined by the Committee.

Calculation of Incentive Payments

Payment based on the EBITDA measure will range from a minimum of one (1) percent of the EBITDA incentive opportunity to a maximum of 200 percent of the EBITDA incentive opportunity based on applicable EBITDA achievement. Payment based on the Cash Flow measure will range from a minimum of one (1) percent of the Cash Flow incentive opportunity to a maximum of 200 percent of the Cash Flow incentive opportunity based on applicable Cash Flow achievement. Payment based on the EH&S measures will range from 30 percent of the applicable EH&S incentive opportunity to a maximum of 200 percent of the applicable EH&S incentive opportunity based on the applicable EH&S achievement. There will be no payout based on EH&S achievement if, during the plan year, any incident at a Hexion site results in a fatality.

Calculation of EBITDA performance between the minimum and target performance levels and the target and maximum performance levels will be linear, rounded to the nearest 1/10^th of one percent. There is no additional payment made for performance above the maximum level of performance.

Each of the performance measures is evaluated independently such that a payout for achieving one performance measure is not dependent upon the achievement of any other performance measure.

Basis for Award Payouts

Financial Results

Any Plan payouts require the prior approval of the Chairs of the Audit and Compensation Committees of the Board if they are to be made before audited financial results have been formally approved and publicly announced.

Plan Assignments

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Any change in a participant’s plan assignment that is not related to a job transfer must be approved by an appropriate Vice President. Plan assignments for each associate are audited at the start of the plan year to conform to any additions or removals of plan assignments.

Limitations

The Committee may elect to modify the calculation of the annual targets based on acquisitions, divestitures or other unusual, non-recurring events or transactions that occur during the plan year.

Eligibility Requirement

To receive an incentive payment, a plan participant must be actively employed by Hexion on the final day of the Plan Year.

Payments

Generally, payouts under the Plan are made no later than the last payroll period in April following

the end of the Plan Year. Incentive payments are subject to applicable taxes, garnishment, and

wage orders. If a plan participant is on a leave of absence at the time of payout, the award will

be paid at the same time as other plan participants.

Proration of Payments

Proration of payments will be made on a daily basis. A participant's incentive payment will be prorated for any of the following conditions:


a.	New Hires: Awards to participants who commenced employment during the Plan Year will be prorated. Rehires are considered new hires, when an associate terminates and is rehired in the same plan year.


b.	Salary: Awards will be calculated based on the participant's base salary as of July 1st. Awards to participants whose base salary changes after July 1 will be prorated. Changes to part-time status will be adjusted for accordingly.


c.	Job Changes or Transfers:


1.	Awards to participants who experience a job change or transfer during the Plan Year—which results in a different ICP target or plan assignment—will be prorated.


2.	In the event of currency change, the payment will be made in the currency of record on of 12/31.


d.	Leaves of Absence: For approved leaves of absence that exceed 12 cumulative weeks (84 days), the amount of time not worked beyond the 12 weeks will be excluded from the Plan Year and the associate will receive a prorated incentive.

The Plan remains at the total discretion of the Committee. Hexion Holdings retains the right to amend or adapt the design and rules of the Plan. Local laws will prevail where necessary.

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This ‘10-K’ Filing

Date

Other Filings

12/31/20

Filed on:

3/3/20

8-K

1/1/20

For Period end:

12/31/19

List all Filings

As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 3/10/21 Hexion Inc. 10-K 12/31/20 132:30M

Hexion Inc. – ‘10-K’ for 12/31/19 – ‘EX-10.107’

On: Tuesday, 3/3/20, at 5:05pm ET · For: 12/31/19 · Accession #: 13239-20-6 · File #: 1-00071

Previous ‘10-K’: ‘10-K’ on 4/11/19 for 12/31/18 · Next & Latest: ‘10-K’ on 3/10/21 for 12/31/20 · 1 Reference: By: Hexion Inc. – Next & Latest ‘10-K’ on 3/10/21 for 12/31/20

Annual Report — Form 10-K — Sect. 13 / 15(d) – SEA’34
Filing Table of Contents

‘EX-10.107’ — Hexion 2020 Incentive Comp Plan

This Exhibit is an HTML Document rendered as filed. [ Alternative Formats ]

Dates Referenced Herein and Documents Incorporated by Reference

1 Subsequent Filing that References this Filing

Hexion Inc. – ‘10-K’ for 12/31/19 – ‘EX-10.107’

On: Tuesday, 3/3/20, at 5:05pm ET · For: 12/31/19 · Accession #: 13239-20-6 · File #: 1-00071

Previous ‘10-K’: ‘10-K’ on 4/11/19 for 12/31/18 · Next & Latest: ‘10-K’ on 3/10/21 for 12/31/20 · 1 Reference: By: Hexion Inc. – Next & Latest ‘10-K’ on 3/10/21 for 12/31/20

Annual Report — Form 10-K — Sect. 13 / 15(d) – SEA’34Filing Table of Contents

‘EX-10.107’ — Hexion 2020 Incentive Comp Plan

This Exhibit is an HTML Document rendered as filed. [ Alternative Formats ]

Dates Referenced Herein and Documents Incorporated by Reference

1 Subsequent Filing that References this Filing

Annual Report — Form 10-K — Sect. 13 / 15(d) – SEA’34
Filing Table of Contents