Performance-Driven Culture

A company cannot achieve its vision and goals without a disciplined performance management system. We are committed to cultivating a performance-driven culture that rewards results. That's why we have rigorous performance management and goal-setting processes at all levels of the company.

Our executive offices, business segments and corporate functions all use a three-point scale of "exceeds," "achieves," and "below" to rate performance in critical areas. This goal-setting activity aligns department, team and individual goals to company goals. We formally evaluate progress at all levels at mid-year and year-end.

Employees work with their managers to develop goals annually, defining expectations that meet and exceed specific objectives. During performance reviews, the results of how well goals were or were not met are discussed and evaluated, which feeds into the salary action process. Salaried employees use a performance management plan system, while hourly employees use a goal-setting process. North American nonexempt production and maintenance employees generally set team-based goals that are reflected in their sites' objectives. How this is accomplished varies by business segment.

Although our performance management systems differ in some ways, the end objective is the same — to align each employee's work to company and unit business goals.

EMPLOYEE COMPENSATION TIED TO PERFORMANCE

Our compensation program for salaried employees, including executive officers, ties each employee's interests to the interests of shareholders and stakeholders. Our compensation program is designed to:

• Focus decision-making and behavior on goals consistent with overall business strategy. This includes goals relating to environmental, safety, diversity and other social performance measures.
• Reinforce a pay-for-performance culture through a balance of fixed and incentive pay opportunities.
• Ensure the company can attract and retain employees with the skills critical to its long-term success.

Employee compensation consists of base salary, annual cash incentives and long-term equity incentives, plus retirement, medical and other benefits.