2012 Proxy Statement


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Kaiser Aluminum Corporation
27422 Portola Parkway, Suite 200
Foothill Ranch, CA 92610-2831

April 27, 2012

Dear Stockholder:

You are cordially invited to attend the Annual Meeting of Stockholders of Kaiser Aluminum Corporation to be held at the company's corporate office, located at 27422 Portola Parkway, Suite 200, Foothill Ranch, California 92610 on Thursday, June 7, 2012, at 9:00 a.m., local time.

During the Annual Meeting, stockholders will consider and vote upon (i) the election of three members to the board of directors, (ii) the approval, on a non-binding, advisory basis, of the compensation of our named executive officers, and (iii) the ratification of the selection of Deloitte & Touche LLP as our independent registered public accounting firm. The attached Notice of Annual Meeting of Stockholders and Proxy Statement describe fully the formal business to be transacted at the Annual Meeting.

While the company does not expect to make a separate presentation, certain directors and officers will be present at the Annual Meeting and will be available to respond to any questions you may have.

Whether or not you plan to attend the Annual Meeting, we urge you to review carefully the accompanying material and to vote by proxy without delay. To do so, please submit your voting instructions over the Internet or by telephone as indicated on the enclosed proxy card or by completing, signing and dating the enclosed proxy card and returning it by mail in the accompanying envelope. If you attend the Annual Meeting, you may vote in person even if you have previously submitted your voting instructions over the Internet, by telephone or by mail.

 
Sincerely,
 
 
Jack A. Hockema
 
President, Chief Executive Officer and
 
Chairman of the Board





Kaiser Aluminum Corporation
27422 Portola Parkway, Suite 200
Foothill Ranch, CA 92610-2831

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 7, 2012

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Kaiser Aluminum Corporation will be held at the company's corporate office, located at 27422 Portola Parkway, Suite 200, Foothill Ranch, California 92610 on Thursday, June 7, 2012, at 9:00 a.m., local time, for the following purposes:

(1)
To elect three members to our board of directors for three-year terms to expire at our 2015 annual meeting of stockholders;

(2)
To approve, on a non-binding, advisory basis, the compensation of our named executives officers as disclosed in this Proxy Statement;

(3)
To ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm for 2012; and

(4)
To consider such other business as may properly come before the Annual Meeting or any adjournments thereof.

Information concerning the matters to be acted upon at the Annual Meeting is set forth in the accompanying Proxy Statement.

The close of business on April 12, 2012 has been fixed as the record date for determining the stockholders entitled to notice of, and to vote at, the Annual Meeting or any adjournments thereof.

We urge stockholders to vote by proxy by submitting voting instructions over the Internet or by telephone as indicated on the enclosed proxy card or by completing, signing and dating the enclosed proxy card and returning it by mail in the accompanying envelope, which does not require postage if mailed in the United States.

 
By Order of the Board of Directors
 
 
John M. Donnan
 
Senior Vice President, Secretary and
 
General Counsel







Kaiser Aluminum Corporation
27422 Portola Parkway, Suite 200
Foothill Ranch, CA 92610-2831

PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
To Be Held On June 7, 2012
_________________________________________________
TABLE OF CONTENTS
 
Page
GENERAL QUESTIONS AND ANSWERS
PROPOSALS REQUIRING YOUR VOTE
Proposal for Election of Directors
Proposal for Advisory Vote on Executive Compensation
Proposal for Ratification of the Selection of our Independent Registered Public Accounting Firm
CORPORATE GOVERNANCE
Stockholder Communications with the Board of Directors
Board and Committee Meetings and Consents in 2011
Annual Meetings of Stockholders
Director Independence
Annual Performance Reviews
Stock Ownership Guidelines and Securities Trading Policy
Director Designation Agreement
Board Leadership Structure and Risk Oversight
Risks Arising from Compensation Policies and Practices
Board Committees
EXECUTIVE OFFICERS
EXECUTIVE COMPENSATION
Compensation Committee Report
Compensation Discussion and Analysis
Summary Compensation Table
All Other Compensation
Grants of Plan-Based Awards in 2011
Employment-Related Agreements and Certain Employee Benefit Plans
Outstanding Equity Awards at December 31, 2011
Option Exercises and Stock Vested in 2011
Pension Benefits as of December 31, 2011
Nonqualified Deferred Compensation for 2011
Potential Payments and Benefits Upon Termination of Employment
DIRECTOR COMPENSATION
Director Compensation for 2011
Director Compensation Arrangements
EQUITY COMPENSATION PLAN INFORMATION
PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWNERSHIP
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Director Designation Agreement
Stock Transfer Restriction Agreement
Registration Rights Agreement
Union VEBA Annual Variable Cash Contribution
Review, Approval of or Ratification of Transactions with Related Persons
AUDIT COMMITTEE REPORT
INDEPENDENT PUBLIC ACCOUNTANTS
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
OTHER MATTERS
FORM 10-K
STOCKHOLDER PROPOSALS
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to Be Held on June 7, 2012: The Proxy Statement and our Annual Report to Stockholders are available at http://bnymellon.mobular.net/bnymellon/kalu.






GENERAL QUESTIONS AND ANSWERS

Q:
When is the Proxy Statement being sent to stockholders and what is its purpose?

A:
This Proxy Statement is first being sent to our stockholders on or about May 7, 2012 at the direction of our board of directors in order to solicit proxies for our use at the Annual Meeting.

Q:
When is the Annual Meeting and where will it be held?

A:
The Annual Meeting will be held on Thursday, June 7, 2012, at 9:00 a.m., local time, at our corporate office, located at 27422 Portola Parkway, Suite 200, Foothill Ranch, California 92610.

Q:
Who may attend the Annual Meeting?

A:
All of our stockholders may attend the Annual Meeting.

Q:
Who is entitled to vote?

A:
Stockholders as of the close of business on April 12, 2012 are entitled to vote at the Annual Meeting. Each share of our common stock is entitled to one vote.

Q:
On what am I voting?

A:
You will be voting on:

The election of three members to our board of directors to serve until our 2015 annual meeting of stockholders;

The approval, on a non-binding, advisory basis, of the compensation of our named executive officers as disclosed in this Proxy Statement;

The ratification of the selection of Deloitte & Touche LLP as our independent registered public accounting firm for 2012; and

Such other business as may properly come before the Annual Meeting or any adjournments.

Q:
How does the board of directors recommend that I vote?

A:
The board of directors recommends that you vote your shares:

“FOR ALL” the director nominees identified in “Proposals Requiring Your Vote - Proposal for Election of Directors” below;

“FOR” the approval of the compensation of our named executive officers as disclosed in this Proxy Statement; and

“FOR” the ratification of the selection of Deloitte & Touche LLP as our independent registered public accounting firm for 2012.

Q:
How can I vote?

A:
You can vote in person at the Annual Meeting or you can vote prior to the Annual Meeting by proxy. Whether or not you plan to attend the Annual Meeting, we urge you to vote by proxy without delay.


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Q:
How do I vote by proxy?

A:
If you choose to vote your shares by proxy, you have the following options:

Over the Internet: You can vote over the Internet at the website shown on your proxy card. Internet voting will be available 24 hours a day, seven days a week, until 11:59 p.m., Eastern Time, on Wednesday, June 6, 2012.

By telephone: You can vote by telephone by calling the toll-free number shown on your proxy card. Telephone voting will be available 24 hours a day, seven days a week, until 11:59 p.m., Eastern Time, on Wednesday, June 6, 2012.

By mail: You can vote by mail by completing, signing and dating your proxy card and returning it in the enclosed prepaid envelope.

Q:
I want to attend the Annual Meeting and vote in person. How do I obtain directions to the Annual Meeting?

A:
You may obtain directions to the Annual Meeting by calling us at (949) 614-1740.

Q:
What constitutes a quorum?

A:
As of April 12, 2012, the record date, 19,290,841 shares of our common stock were issued and outstanding. A majority of these shares present or represented by proxy will constitute a quorum for the transaction of business at the Annual Meeting. If you properly vote by proxy by submitting your voting instructions over the Internet, by telephone or by mail, then your shares will be counted as part of the quorum. Abstentions or votes that are withheld on any matter will be counted towards a quorum but will be excluded from the vote relating to the particular matter under consideration. Broker non-votes are counted towards a quorum but are excluded from the vote with respect to the matters for which they are applicable. A broker non-vote occurs when a broker holding shares for a beneficial owner does not vote on a particular proposal because the broker does not have discretionary voting power with respect to that proposal and has not received instructions with respect to that proposal from the beneficial owner. Among our proposals, brokers will have discretionary voting power only with respect to the proposal to ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm for 2012.

Q:
What are the voting requirements for the proposals?

A:
There are different voting requirements for the proposals.

Directors will be elected by a plurality vote of all votes cast for the election of directors at the Annual Meeting. Accordingly, the three nominees receiving the highest number of votes will be elected. If you withhold authority to vote for any particular director nominee, your shares will not be counted in the vote for that nominee and will have no effect on the outcome of the vote.

The approval of the holders of a majority of the total number of outstanding shares of our common stock present in person or represented by proxy at the Annual Meeting and actually voted on the proposal is necessary (1) to approve, on a non-binding, advisory basis, the compensation of our named executive officers as disclosed in this Proxy Statement, and (2) to ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm for 2012. If you abstain from voting on the proposal to approve the compensation of our named executive officers as disclosed in this Proxy Statement, the proposal to ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm for 2012, or both proposals, your shares will not be counted in the vote for such proposal(s) and will have no effect on the outcome of the vote.

Q:
If my shares are held in “street name” by my broker, will my broker vote my shares for me?

A:
As discussed above, among our proposals, brokers will have discretionary voting power only with respect to the proposal to ratify the selection of Deloitte & Touche LLC as our independent registered public accounting firm for 2012. To be sure your shares are voted, you should instruct your broker to vote your shares using the instructions provided by your broker.






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Q:
What will happen if the compensation of the company's named executive officers is not approved by the stockholders?

A:
Because this is an advisory vote, our board of directors and compensation committee will not be bound by the approval of, or the failure to approve, the executive compensation of our named executive officers as disclosed in this Proxy Statement. The board of directors and the compensation committee, however, value the opinions that our stockholders express in their votes and will consider the outcome of the vote when determining future executive compensation programs.

Q:
What will happen if the selection of Deloitte & Touche LLP as our independent registered public accounting firm for 2012 is not ratified by stockholders?

A:
Pursuant to the audit committee charter, the audit committee of our board of directors has sole authority to appoint our independent registered public accounting firm, and the audit committee will not be bound by the ratification of, or failure to ratify, the selection of Deloitte & Touche LLP. The audit committee will, however, consider any failure to ratify the selection of Deloitte & Touche LLP in connection with the appointment of our independent registered public accounting firm the following year.

Q:
Can I change my vote after I give my proxy?

A:
Yes. If you vote by proxy, you can revoke that proxy at any time before voting takes place at the Annual Meeting. You may revoke your proxy by:

voting again over the Internet or by telephone no later than 11:59 p.m., Eastern Time, on Wednesday, June 6, 2012;

submitting a properly signed proxy card with a later date;

delivering, no later than 5:00 p.m., Eastern Time, on Wednesday, June 6, 2012, written notice of revocation to our
Secretary, c/o Computershare, P.O. Box 3550, South Hackensack, New Jersey 07606-9250; or

attending the Annual Meeting and voting in person.

Your attendance alone will not revoke your proxy. To change your vote, you must also vote in person at the Annual Meeting. If you instruct a broker to vote your shares, you must follow your broker's directions for changing those instructions.

Q:
What does it mean if I receive more than one proxy card?

A:
If you receive more than one proxy card, it is because your shares are held in more than one account. You must vote each proxy card to ensure that all of your shares are voted at the Annual Meeting.

Q:
Who will count the votes?

A:
Representatives of Computershare, our transfer agent, will tabulate the votes and act as inspectors of election.

Q:
How much will this proxy solicitation cost?

A:
We have hired MacKenzie Partners, Inc. to assist us in the distribution of proxy materials and solicitation of votes at a cost not to exceed $4,500, plus out-of-pocket expenses. We will reimburse brokerage firms and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to the owners of our common stock. Our officers and regular employees may also solicit proxies, but they will not be specifically compensated for these services. In addition to the use of the mail, proxies may be solicited personally or by telephone by our employees or by MacKenzie Partners.







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PROPOSALS REQUIRING YOUR VOTE

Proposal for Election of Directors

General

Our board of directors currently has 10 members, consisting of our President and Chief Executive Officer and nine independent directors. Our current directors are:
Carolyn Bartholomew
William F. Murdy
 
 
David Foster
Alfred E. Osborne, Jr., Ph.D.
 
 
Jack A. Hockema
Jack Quinn
 
 
Teresa A. Hopp
Thomas M. Van Leeuwen
 
 
Lauralee E. Martin
Brett E. Wilcox

Mr. Hockema, our President and Chief Executive Officer, serves as our Chairman of the Board, and Dr. Osborne serves as our Lead Independent Director.

Our certificate of incorporation and bylaws provide for a classified board of directors consisting of three classes. The term of the Class III directors will expire at the 2012 annual meeting of stockholders; the term of the Class I directors will expire at the 2013 annual meeting of stockholders; and the term of the Class II directors will expire at the 2014 annual meeting of stockholders.

The nominating and corporate governance committee of our board of directors has recommended, and our board of directors has approved, the nomination of the three nominees listed below. The nominees have indicated their willingness to serve as members of the board of directors if elected; however, in case any nominee becomes unavailable for election to the board of directors for any reason not presently known or contemplated, the proxy holders have discretionary authority to vote proxies for a substitute nominee. Proxies cannot be voted for more than three nominees.

The board of directors recommends a vote “FOR” each of the persons nominated by the board of directors.

Nominees for Election as Class III Directors

Set forth below is information as to the nominees for election as Class III directors at the Annual Meeting, including their ages, present principal occupations, other business experiences, directorships in other public companies, membership on committees of our board of directors, and reasons why each individual nominee's specific experience, qualifications, attributes or skills led our board of directors to conclude that the nominee should serve as a director of the company.

David Foster, 64, has served as a director of Kaiser since June 2009. Mr. Foster has been the executive director of Blue Green Alliance, a strategic national partnership between labor unions and environmental organizations to expand the job-creating potential of the green economy and improve the rights of workers at home and around the world, since June 2006. Prior to joining Blue Green Alliance, he was a director of the United Steel, Paper and Foresting, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO, CLC (referred to herein as the “USW”) for District #11 from March 1990 to February 2006. Mr. Foster has been an adjunct faculty member of the University of Minnesota since January 2003. Mr. Foster has also been a member of the board of directors of Evraz North America, d/b/a Oregon Steel Manufacturing, a subsidiary of Evraz, a global steel company, since June 2006. Mr. Foster holds a Bachelor of Arts degree in English from Reed College. Mr. Foster serves on the audit and the nominating and corporate governance committees of our board of directors. Pursuant to the terms of the Director Designation Agreement described below, Mr. Foster was designated by the USW as a director candidate in connection with our 2009 annual meeting of stockholders and again in 2012 in connection with the upcoming Annual Meeting. However, his experience with our company exceeds 15 years and includes his role as the primary USW negotiator of our master labor agreement with the USW. Mr. Foster was also extensively involved in our chapter 11 bankruptcy representing the USW and hourly employees in negotiations with our creditors through our emergence in 2006. Mr. Foster's extensive labor experience representing the USW and, more recently, his experience with the Blue Green Alliance

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allow him to provide guidance and insight to our board and management regarding labor relations, including with the USW, relations with our hourly workforce, the impact of environmental and regulatory initiatives on US based manufacturers and sustainability.

Teresa A. Hopp, 52, has served as a director of Kaiser and chair of the audit committee since July 2006. Prior to Ms. Hopp's retirement, she was the Chief Financial Officer for Western Digital Corporation, a hard disk drive manufacturer, from January 2000 to October 2001 and its Vice President, Finance from September 1998 to December 1999. Prior to her employment with Western Digital Corporation, Ms. Hopp was with Ernst & Young LLP from 1981 where she served as an audit partner for four years. During her tenure at Ernst & Young LLP, she managed audit department resource planning and scheduling and served as internal education director and information systems audit and security director. Ms. Hopp also served on the board of directors of On Assignment, Inc. from June 2003 to December 2007 and as its audit committee chair. She graduated summa cum laude from California State University, Fullerton, with a Bachelor's degree in Business Administration. Ms. Hopp serves on the executive and audit committees of our board of directors. Ms. Hopp was one of the original directors selected by a search committee consisting of our creditors (referred to herein as the “search committee”) to serve as an initial director of our company upon our emergence from chapter 11 bankruptcy in 2006, and was selected because of her accounting and finance experience and background, including her prior experience with Ernst & Young, and because of her prior experience as a board member and audit committee chair. Ms. Hopp's experience and background, qualification as an audit committee financial expert, experience as a director of our company and chair of the audit committee of our board of directors since 2006, and understanding of our company's financial statements allow her to provide guidance and insight to our board of directors and management regarding accounting and financial issues.

William F. Murdy, 70, has served as a director of Kaiser since July 2006. Mr. Murdy has been the Chairman of Comfort Systems USA, a commercial heating, ventilation and air conditioning construction and service company, since June 2000 and served as its Chief Executive Officer from June 2000 to December 2011. Mr. Murdy previously served as President and Chief Executive Officer of Club Quarters, and Chairman, President and Chief Executive Officer of Landcare USA, Inc. Mr. Murdy has also served as President and Chief Executive Officer of General Investment & Development, and as President and Managing General Partner with Morgan Stanley Venture Capital, Inc. He previously served as Senior Vice President and Chief Operating Officer of Pacific Resources, Inc. Mr. Murdy has served on the board of directors of Comfort Systems USA since 2000 and UIL Holdings Corp. since 2003. He holds a Bachelor of Science degree in Engineering from the U.S. Military Academy, West Point, and a Master's degree in Business Administration from the Harvard Business School. Mr. Murdy serves on the compensation and nominating and corporate governance committees of our board of directors. Mr. Murdy was selected by the search committee to serve as an initial director of our company upon our emergence from chapter 11 bankruptcy in 2006 because of his business experience and background, including his experience as a chief executive officer, board member and compensation committee member. Mr. Murdy's background and experience, including his experience as a director of our company and chair of the compensation committee of our board of directors since 2006, and his understanding of our compensation programs and their history allow him to provide guidance and insight to our board of directors and management on financial, strategic and compensation issues.

Continuing Directors

Set forth below is information as to the continuing directors, including their ages, present principal occupations, other business experiences, directorships in other public companies, membership on committees of our board of directors, and reasons why each individual director's specific experience, qualifications, attributes or skills led our board of directors to conclude that the director should serve on our board of directors.

Class I Directors

Alfred E. Osborne, Jr., Ph.D., 67, has served as a director of Kaiser since July 2006. Dr. Osborne has been the Senior Associate Dean at the UCLA Anderson School of Management since July 2003 and a Professor of Global Economics and Management since July 2008. Dr. Osborne was an Associate Professor of Global Economics and Management from July 1978 to June 2008. From July 1987 to June 2003, Dr. Osborne served as the Director of the Harold and Pauline Price Center for Entrepreneurial Studies at the UCLA Anderson School of Management. Dr. Osborne has served on the board of directors of Heckmann Corporation since August 2007, of First Pacific Advisor's New Income Fund, Capital Fund and Crescent Fund since December 1999, and of Wedbush, Inc., a financial services and investment firm, since January 1998. Dr. Osborne also served on the board of directors of EMAK Worldwide, Inc. from December 2000 to June 2008, of K2, Inc. from February 1999 to August 2007 and of Nordstrom, Inc. from August 1987 to May 2006. He holds a Doctorate degree in Business Economics, a Master's degree in Business Administration, a Master of Arts degree in Economics and a Bachelor's degree in Electrical Engineering from Stanford University. Dr. Osborne serves on the audit and nominating and corporate governance committees of our board of directors and is our Lead Independent Director. Dr. Osborne has served on many boards and board committees

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of public companies and investment funds over a more than 20-year period. During that time, Dr. Osborne worked extensively on the development of board and director best practices, as well as director training and governance programs sponsored by the UCLA Anderson School of Management. Dr. Osborne was selected by the search committee to serve as an initial director of our company upon our emergence from chapter 11 bankruptcy in 2006 because of his public company experience and governance background. During his service on our board of directors, Dr. Osborne has gained an understanding of our company and the environment in which we operate. Dr. Osborne's experience as a director of public companies, as a member of various board committees of public companies, and as an educator in the fields of business management and corporate governance allow him to draw on his experience and offer guidance to our board of directors and management on issues that affect our company, including governance and board best practices.

Jack Quinn, 61, has served as a director of Kaiser since July 2006. Mr. Quinn has been the president of Erie Community College in Buffalo, New York since April 2008. Mr. Quinn was the President of Cassidy & Associates, a government relations firm which assists clients promoting policy and appropriations objectives in Washington, D.C. with a focus on transportation, aviation, railroad, highway, infrastructure, corporate and industry clients, from January 2005 to March 2008. From January 1993 to January 2005, Mr. Quinn served as a United States Congressman for the state of New York. While in Congress, Mr. Quinn was Chairman of the Transportation and Infrastructure Subcommittee on Railroads. He was also a senior member of the Transportation Subcommittees on Aviation, Highways and Mass Transit. In addition, Mr. Quinn was Chairman of the Executive Committee in the Congressional Steel Caucus. Prior to his election to Congress, Mr. Quinn served as supervisor of the town of Hamburg, New York. Mr. Quinn has served as a trustee of the AFL-CIO Housing Investment Trust since 2005. Mr. Quinn received a Bachelor's degree from Siena College in Loudonville, New York, and a Master's degree from the State University of New York, Buffalo. Mr. Quinn serves on the compensation and nominating and corporate governance committees of our board of directors. Mr. Quinn, another director selected by the search committee to serve as an initial director of our company upon our emergence from chapter 11 bankruptcy in 2006, was selected because of his background and experience in Washington, D.C. Mr. Quinn was designated by the USW as a director candidate in connection with the search process, and pursuant to the terms of the Director Designation Agreement, Mr. Quinn was designated by the USW as a director candidate in connection with our 2007 annual meeting of stockholders and again in connection with our 2010 annual meeting of stockholders. During his service on our board of directors, Mr. Quinn has gained an understanding of our company and the environment in which we operate. Mr. Quinn's experience in Washington, D.C., including as a U.S. Congressman, and his working relationship with the USW allow him to offer guidance and insight to our board of directors and management regarding government relations, policy and appropriations for defense and other government funded programs that utilize our products and labor relations.

Thomas M. Van Leeuwen, 55, has served as a director of Kaiser since July 2006. Mr. Van Leeuwen served as a Director - Senior Equity Research Analyst for Deutsche Bank Securities Inc. from March 2001 until his retirement in May 2002. Prior to that, Mr. Van Leeuwen served as a Director - Senior Equity Research Analyst for Credit Suisse First Boston from May 1993 to November 2000. Prior to that time, Mr. Van Leeuwen was First Vice President of Equity Research with Lehman Brothers, and Mr. Van Leeuwen held the positions of research analyst with Sanford C. Bernstein & Co., Inc. and systems analyst with The Procter & Gamble Company. Mr. Van Leeuwen holds a Master's degree in Business Administration from the Harvard Business School and a Bachelor of Science degree in Operations Research and Industrial Engineering from Cornell University. Mr. Van Leeuwen is also a Chartered Financial Analyst. Mr. Van Leeuwen serves on the audit, compensation and nominating and corporate governance committees of our board of directors. Mr. Van Leeuwen was selected by the search committee to serve as an initial director of our company upon our emergence from chapter 11 bankruptcy in 2006 because of his experience working with investment banks, including as an analyst in the aluminum industry. Mr. Van Leeuwen's experience as an equity research analyst and service as a director of our company since 2006 allow him to provide guidance and insight to our board of directors and management with respect to financial analyses of our company, whether generated internally or externally, as well as other financial issues, and with respect to the investment community's understanding of our company.

Class II Directors

Carolyn Bartholomew, 54, has served as a director of Kaiser since June 2007. Ms. Bartholomew has served as Commissioner of the U.S.-China Economic and Security Review Commission since April 2003. She also served as its Vice Chairman from January 2006 to December 2006, January 2008 to December 2008 and January 2010 to December 2010 and its Chairman from January 2007 to December 2007 and January 2009 to December 2009. Ms. Bartholomew has also served as Director of Government Relations of Education Development Center, a non-profit organization focused on implementation of education and health programs and research, since February 2009. She was also the Executive Director of the Basic Education Coalition, a non-profit organization that works to raise public and private support for basic education for children in the United States and abroad, from July 2004 to August 2008. From August 1987 to April 2003, Ms. Bartholomew served as Legislative Director, District Director and Chief of Staff to Congresswoman Nancy Pelosi. Ms. Bartholomew graduated cum laude with a Bachelor of Arts degree in anthropology from the University of Minnesota. She also holds a Master of Arts degree in anthropology from Duke University and a Juris Doctorate from Georgetown University. Ms. Bartholomew serves on the audit

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and nominating and corporate governance committees of our board of directors. Pursuant to the terms of the Director Designation Agreement, Ms. Bartholomew was designated by the USW to fill a vacancy on our board of directors in 2007, and Ms. Bartholomew was designated by the USW as a director candidate in connection with our 2008 and 2011 annual meetings of stockholders. Ms. Bartholomew's experience in Washington, D.C. and with the U.S.-China Economic and Security Review Commission allow her to provide guidance and insight to our board of directors and management regarding government relations, policy and appropriations for defense and other government funded programs that utilize our products and our efforts to expand into Chinese markets and effectively compete with Chinese manufacturers.

Jack A. Hockema, our President and Chief Executive Officer, serves as Chairman of the Board and serves on the executive committee of our board of directors. For information as to Mr. Hockema, see “Executive Officers” below. Mr. Hockema's substantial experience with our company and in the metals industry allows him to provide a unique perspective to our board of directors regarding our business and strategic direction for our company.

Lauralee E. Martin, 61, has served as a director of Kaiser since September 2010. Ms. Martin has served as Executive Vice President and Chief Operating and Financial Officer of Jones Lang LaSalle since October 2005. Prior to being appointed the additional position of Chief Operating Officer of Jones Lang LaSalle, Ms. Martin served as its Executive Vice President and Chief Financial Officer from January 2002 to October 2005. She served as Executive Vice President and Chief Financial Officer of Heller Financial, Inc., a commercial finance company, from May 1996 to November 2001. Ms. Martin had previously held the positions of Senior Group President, responsible for Heller Financial's Real Estate, Equipment Financing, and Small Business Lending groups, and President of its Real Estate group. Prior to joining Heller Financial in 1986, Ms. Martin held certain senior management positions with General Electric Credit Corporation. Ms. Martin is a member of the board of directors and the Global Executive Committee of Jones Lang LaSalle and chairs its Global Operating Committee. She is also a member of the board of directors and the audit committee of HCP, Inc., a real estate investment trust focusing on properties serving the healthcare industry. She was a member of the board of directors of each of Key Corp, a bank holding company, from December 2003 to November 2010, Gables Residential Trust, a real estate investment trust, from 1994 to 2005 and Heller Financial from May 1991 to July 1998. She received a Bachelor's degree from Oregon State University and holds a Master's degree in Business Administration from the University of Connecticut. Ms. Martin serves on the audit and compensation committees of our board of directors. Having served as both the chief financial officer and the head of the real estate lending group at Heller Financial, a commercial finance company with international operations, as well as having now been the chief operating and financial officer for Jones Lang LaSalle for six and 10 years, respectively, Ms. Martin has significant experience in all aspects of corporate financial and operational matters, including the oversight of complex financial, accounting and corporate infrastructure functions. Her service as a member of the boards of directors of two real estate investment trusts and a major bank holding company have reinforced those qualifications and also have deepened her expertise in corporate governance and matters relating to the Sarbanes-Oxley Act of 2002. Ms. Martin also has a deep foundation in evaluating acquisition opportunities, managing banking relationships and investor relations. Ms. Martin's experience and background, qualification as an audit committee financial expert, and understanding of our company's financial statements allow her to provide guidance and insight to our board of directors and management regarding business, strategic, accounting and financial issues.

Brett E. Wilcox, 58, has served as a director of Kaiser since July 2006. Mr. Wilcox has been an active investor in, on the board of directors of, or an executive consultant for, a number of metals and energy companies since 2005. From June 2005 to December 2011, Mr. Wilcox served as Chief Executive Officer of Summit Power Alternative Resources where he managed the development of wind generation and new energy technologies. From 1986 to 2005, Mr. Wilcox served as Chief Executive Officer of Golden Northwest Aluminum Company and its predecessors. Golden Northwest Aluminum Company and certain of its subsidiaries filed for bankruptcy in December 2003, while Mr. Wilcox served as its Chief Executive Officer. Mr. Wilcox has also served as: Executive Director of Direct Services Industries, Inc., a trade association of large aluminum and other energy-intensive companies; an attorney with Preston, Ellis & Gates in Seattle, Washington; Vice Chairman of the Oregon Progress Board; Chairman of the Oregon Economic and Community Development Commission; a member of the Oregon Governor's Comprehensive Review of the Northwest Regional Power System; and a member of the Oregon Governor's Task Forces on structure and efficiency of state government, employee benefits and compensation, and government performance and accountability. Mr. Wilcox received a Bachelor's degree from the Woodrow Wilson School of Public and International Affairs at Princeton University and a Juris Doctorate from Stanford Law School. Mr. Wilcox serves on the executive, audit and compensation committees of our board of directors. Mr. Wilcox was selected by the search committee to serve as an initial director of our company upon our emergence from chapter 11 bankruptcy in 2006, was selected because of his business and financial background and experience, including his experience as the Chief Executive Officer of Golden Northwest Aluminum Company and its predecessors, his experience working successfully with the USW and his experience in the power industries, and because of his qualification as an audit committee financial expert. Mr. Wilcox was designated by the USW as a director candidate in connection with the search process, and, pursuant to the terms of the Director Designation Agreement, Mr. Wilcox was designated by the USW as a director candidate in connection with our 2008 and 2011 annual meetings of stockholders. Mr.

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Wilcox's experience as a chief executive officer, his financial expertise and his working relationship with the USW allow him to offer guidance and insight to our board of directors and management on business, finance, strategic and labor issues.

Proposal for Advisory Vote on Executive Compensation

In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, and Section 14A of the Securities Exchange Act of 1934, we are asking stockholders to vote on a non-binding, advisory basis resolution regarding executive compensation. Our board of directors has adopted a policy to hold annual advisory votes on executive compensation until the next advisory vote on the frequency of stockholder votes on executive compensation at the 2017 annual meeting of stockholders, or until our board of directors determines to hold such advisory vote at a different frequency. The vote is not intended to address any specific component of our executive compensation program, but rather the overall compensation of our named executive officers as described in this Proxy Statement. The text of the resolution is as follows:

RESOLVED, that the compensation paid to the named executive officers of Kaiser Aluminum Corporation, as described in the proxy statement for the company's 2012 annual meeting of stockholders pursuant to Item 402 of SEC Regulation S-K (which disclosure includes the “Executive Compensation - Compensation Disclosure and Analysis” section and the Summary Compensation Table and other compensation tables and related narrative discussion within the “Executive Compensation” section), is hereby APPROVED.
As described in detail in the “Executive Compensation - Compensation Discussion and Analysis” section of this Proxy Statement, or CD&A, our compensation structure was developed and designed to:

align the interest of our named executive officers and stockholders by tying a significant portion of compensation to enhancing stockholder value;

attract, motivate and retain highly experienced executives vital to our short-term and long-term success, profitability and growth;

deliver a mix of fixed and at-risk compensation with the portion of compensation at risk increasing with seniority; and

tie our executive compensation to our safety performance and ability to pay.

The compensation of our named executive officers is targeted at the 50th to 65th percentile of our compensation peer group and consists primarily of the following components:

a base salary targeted at the 50th percentile of our compensation peer group (1) compensating each named executive officer based on his level of responsibility, individual expertise and prior experience and (2) providing a fixed amount of cash compensation upon which our named executive officers can rely;

a short-term annual cash incentive targeted at the 50th percentile of our compensation peer group (1) payable only if the Company achieves a threshold performance level measured by economic value added, or EVA, measured by the adjusted pre-tax operating income, or PTOI, of our core Fabricated Products business, including corporate expenses, less a capital charge calculated as a percentage of our adjusted net assets, as more fully described below, and (2) adjusted based on our safety performance using our total case incident rate, or TCIR; and

an equity-based, long-term incentive targeted at between the 50th and 65th percentile of our compensation peer group and designed to align compensation with the interest of our stockholders and to enhance retention of our named executive officers consisting of (1) restricted stock with three-year cliff vesting and (2) performance shares that vest, if at all, based on the average annual EVA (which is also measured by the adjusted PTOI of our Fabricated Products business, including corporate expenses, less a capital charge calculated as a percentage of our adjusted net assets, as more fully described below) achieved during a three-year performance period.

We no longer maintain a defined benefit pension plan or retiree medical program that covers members of senior management. Retirement benefits to our senior management, including our named executive officers, are provided through a defined contribution retirement program consisting of a 401(k) plan (which we refer to as our Savings Plan) and a nonqualified and unsecured deferred compensation plan intended to restore benefits that would be payable to designated participants but for the limitations on benefit accruals and payments imposed by the Internal Revenue Code of 1986 (which we refer to as our Restoration Plan).

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We do not view perquisites as a significant element of our compensation structure and our use of perquisites as an element of compensation is very limited and largely based on business-related needs.

For 2011, approximately 75% of our chief executive officer's target total compensation, and approximately 57% to 67% of the target total compensation of our other named executive officers, consisted of at-risk compensation, which we define as compensation that either (1) will be realized, if at all, only if certain financial performance levels are achieved as in the case of our annual short-term incentive and the portion of our long-term incentive consisting of performance shares or (2) is substantially impacted by the overall performance of the company as in the case of the portion of our long-term incentive compensation consisting of restricted stock.

As previously noted, we use EVA measured by the adjusted PTOI of our Fabricated Products business, including corporate expenses, less a capital charge calculated as a percentage of our adjusted net assets and TCIR as the performance measures to determine our annual short-term incentive. We also use adjusted PTOI of our Fabricated Products business to determine the number of performance shares, if any, vesting at the end of the three-year performance period under our long-term incentive compensation program. The capital charges used are 7.5% and 10.0% of our adjusted net assets, respectively. In each case, adjusted PTOI must equal or exceed the capital charge before any portion of the target incentives is earned.

EVA used for purposes of our annual short-term incentive and the determination of the number of performance shares, if any, vesting under our long-term incentive compensation program is the same with the exception of (1) the use of a higher capital charge in connection with the long-term incentive to reflect the higher threshold level of performance we believe should be required after considering the use of time-based restricted shares and (2) the use of the average annual performance over a three-year performance period in connection with the long-term incentive. In addition, our long-term incentive does not include a safety modifier and measures performance over a three-year period. We use PTOI to help us measure the return on net assets employed in our business, and we believe this structure is an appropriate measure of the creation of short- and long-term shareholder value under our incentive programs.

TCIR is the average number of work-related injuries incurred by 100 workers during a one-year period and is used to measure our safety performance. Workplace safety is important to us; thus, we believe it is appropriate to include safety as a measure of our corporate performance.

Our compensation structure is supported by effective corporate governance and further aligns the interest of our senior management and stockholders by the use of:

stock ownership guidelines that require our chief executive officer to own company stock equal in value to at least six times his annual base salary and each of the direct reports to the chief executive officer, including each of our named executed officers, other than our chief executive officer, and other members of senior management, to hold company stock equal in value to at least three times their annual base salary;

three-year vesting and performance periods for our restricted stock and performance shares granted to our named executive officers and other members of senior management, to ensure that three years of unvested grants are outstanding at any time, increase retention and encourage decisions that create long-term value;

compensation recovery, or “clawback,” provisions that can result in the loss of equity-based awards and resulting benefits if we determine that a recipient, including any of the named executive officers, has engaged in activities detrimental to us; and

a securities trading policy that prohibits members of management, including our named executive officers, from engaging in speculative transactions involving our securities, including buying or selling puts or calls, short sales, buying on margin or holding our securities in a margin account.

In February 2012, our board of directors increased the stock ownership requirement for our chief executive officer and the members of our board of directors from five times their annual salary or annual base retainer to six times their annual salary or annual base retainer.

In addition to the clawback provisions contained in our long-term incentive plans, in March 2012, the compensation committee approved a 2012 short-term annual cash incentive plan with clawback provisions that can result in the loss of any cash award received under such plan if we determine that a recipient, including any of the named executive officers, has engaged in activities detrimental to us.

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We urge our stockholders to review our CD&A which describes our compensation philosophy and programs in detail and to approve the compensation of our named executive officers. While this vote on executive compensation is non-binding and solely advisory in nature, our board of directors and the compensation committee value the opinions that our stockholders express in their votes and will consider the outcome of the vote when determining future executive compensation programs.

The board of directors recommends a vote “FOR” approval of the compensation of our named executive officers as disclosed in this Proxy Statement.

Proposal for Ratification of the Selection of our Independent Registered Public Accounting Firm

Pursuant to the audit committee charter, the audit committee has the sole authority to retain an independent registered public accounting firm for our company. The board of directors requests that the stockholders ratify the audit committee's selection of Deloitte & Touch LLP as our independent registered public accounting firm for 2012.

The audit committee will not be bound by the ratification of, or failure to ratify, the selection of Deloitte & Touche LLP, but the audit committee will consider any failure to ratify the selection of Deloitte and Touche LLP in connection with the appointment of our independent registered public accounting firm for 2013.

The board of directors recommends a vote “FOR” ratification of the audit committee's selection of Deloitte & Touche LLP as our independent registered public accounting firm for 2012.







































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CORPORATE GOVERNANCE

Our board of directors is responsible for providing effective governance over the affairs of our company. Our corporate governance practices are designed to align the interests of the board of directors and management with those of our stockholders and to promote honesty and integrity throughout the company. Highlights of our corporate governance practices are described below.

A copy of the current charter, as approved by our board of directors, for each of the executive committee, audit committee, compensation committee and nominating and corporate governance committee and a copy of our corporate governance guidelines and code of business conduct and ethics, which applies to all of our employees, including our executive officers, are available on our Internet website at www.kaiseraluminum.com under “Investor Relations - Corporate Governance.” Copies are also available to stockholders upon request from our Corporate Communications Department, Kaiser Aluminum Corporation, 27422 Portola Parkway, Suite 200, Foothill Ranch, CA 92610-2831. Furthermore, we will post any amendments to our Code of Business Conduct and Ethics, or waivers of the Code for our directors or executive officers, on our Internet website at www.kaiseraluminum.com under “Investor Relations - Corporate Governance.”

Stockholder Communications with the Board of Directors

Stockholders may communicate with our board of directors as a group or with the chair of the executive committee, audit committee, compensation committee or nominating and corporate governance committee by sending an email to boardofdirectors@kaiseraluminum.com, execchair@kaiseraluminum.com, auditchair@kaiseraluminum.com, compchair@kaiseraluminum.com, or nominatingchair@kaiseraluminum.com, respectively, or by writing to such group or person at Kaiser Aluminum Corporation, Attn: Corporate Secretary (Board of Directors), 27422 Portola Parkway, Suite 200, Foothill Ranch, California 92610-2831. Communications that are intended specifically for any other group of directors or for any individual director, such as the independent directors as a group or the Lead Independent Director, should be sent to the attention of our corporate secretary at the address above or via email to corpsecretary@kaiseraluminum.com and should clearly state the individual director or group of directors that is the intended recipient of the communication.

Our corporate secretary will review each communication and determine whether or not the communication is appropriate for delivery. Communications that, in the judgment of our corporate secretary, are clearly of a marketing nature, that advocate that our company engage in illegal activity, that do not reasonably relate to our company or our business or that are similarly inappropriate will not be furnished to the intended recipient. If, in the judgment of the corporate secretary, any communication pertains to an accounting matter, it will be forwarded to our compliance officer.

Communications that, in the judgment of our corporate secretary, are appropriate for delivery will, unless requiring immediate attention, be assembled and delivered to the intended recipients on a periodic basis, generally at or in advance of each regularly scheduled meeting of our board of directors. Any communication that, in the judgment of our corporate secretary, requires immediate attention will be promptly delivered. In no case will the corporate secretary provide anyone but a member of our board of directors with access to any such communication, except as noted above with respect to communications pertaining to accounting matters.

Board and Committee Meetings and Consents in 2011

During 2011, our board of directors held nine meetings and acted by unanimous written consent three times. In addition to meetings of the full board of directors, directors attended meetings of board of directors committees. Each incumbent director attended at least 75% of the aggregate number of meetings of the full board of directors held during the period he or she was a director in 2011 and each committee on which he or she served held during the period he or she served on such committee in 2011.

Annual Meetings of Stockholders

Members of our board of directors are expected to make reasonable efforts to attend our annual meetings of stockholders. All directors then serving attended our 2011 annual meeting of stockholders.

Director Independence

Our corporate governance guidelines require that a majority of the members of our board of directors satisfy the independence requirements set forth in the rules of the NASDAQ Stock Market LLC. We refer to these requirements as the general independence criteria. Additionally, the audit committee charter, compensation committee charter and nominating and

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corporate governance committee charter require that all respective committee members satisfy the general independence criteria. There are no family relationships among our officers or directors.

Based upon information requested from and provided by each director concerning his or her background, employment and affiliations, including family relationships, our board of directors has determined that each of Mmes. Bartholomew, Hopp and Martin and Messrs. Foster, Murdy, Osborne, Quinn, Van Leeuwen and Wilcox, representing nine of our 10 directors, satisfies the general independence criteria and is independent within the meaning of such term under our corporate governance guidelines. The tenth director, Mr. Hockema, cannot meet the independence requirement as our President and Chief Executive Officer. In making such determination, the board of directors considered the relationships that each of the directors had with our company and all other facts and circumstances the board of directors deemed relevant in determining the independence of each of the directors in accordance with the general independence criteria.

Annual Performance Reviews

Under our corporate governance guidelines, our board of directors is required to conduct an annual self-evaluation to determine whether the board of directors and its committees are functioning effectively. Additionally, the charter for each committee of the board of directors requires each committee to annually evaluate its performance. In addition to the evaluation performed by the nominating and corporate governance committee with respect to whether an incumbent director should be nominated for re-election to the board of directors upon expiration of such director's term, the chair of the nominating and corporate governance committee conducts performance reviews of individual directors.

Stock Ownership Guidelines and Securities Trading Policy

In February 2012, our board of directors increased the stock ownership requirements applicable to our non-employee directors. Our stock ownership guidelines now require our non-employee directors to own company stock equal to six times their annual base retainer within five years of becoming a member of our board of directors. For purposes of measuring our non-employee directors' compliance with our stock ownership guidelines, restricted stock is valued at the closing price of our common stock on the grant date and all other shares of common stock purchased or acquired are valued at the purchase price of such shares. Currently, each of our non-employee directors, except for Mr. Foster, who was elected to our board of directors in June 2009, and Ms. Martin, who was appointed to our board of directors in September 2010, satisfies the applicable stock ownership requirements under the stock ownership guidelines. We expect Mr. Foster and Ms. Martin to meet the stock ownership requirements under the stock ownership guidelines within the applicable five-year periods.

Our securities trading policy contains anti-hedging provisions prohibiting our directors and employees, including our named executive officers, from engaging in any speculative transactions involving our securities, including (1) buying or selling puts or calls, (2) short sales, or (3) buying on margin or holding our securities in a margin account.

Director Designation Agreement

On July 6, 2006, we entered into a Director Designation Agreement with the USW under which the USW has certain rights to designate for nomination individuals to serve on our board of directors and committees. The rights of the USW under the Director Designation Agreement are currently set to expire on September 30, 2015. Under the Director Designation Agreement, the USW has the right to designate for nomination the minimum number of director candidates necessary to ensure that, assuming the nominated candidates are elected by our stockholders, at least 40% of the members of our board of directors immediately following the election are directors who have been nominated by the USW in accordance with the Director Designation Agreement. The Director Designation Agreement contains requirements as to the timeliness, form and substance of the notice the USW must give to the nominating and corporate governance committee in order to nominate candidates. The nominating and corporate governance committee is required to determine in good faith whether each properly submitted candidate satisfies the qualifications set forth in the Director Designation Agreement. Pursuant to the terms of the Director Designation Agreement, if the nominating and corporate governance committee determines that a nominated candidate satisfies the qualifications, the committee will, unless otherwise required by its fiduciary duties, recommend the candidate to our board of directors for inclusion in the slate of directors to be recommended by the board of directors in our proxy statement. Similarly, the board of directors will, unless otherwise required by its fiduciary duties, accept the recommendation and include the candidate in the slate of directors that the board of directors recommends.

The Director Designation Agreement also provides that the USW will have the right to nominate an individual to fill a vacancy on the board of directors resulting from the death, resignation, disqualification or removal of a director nominated by the USW. The Director Designation Agreement further provides that, in the event of newly created directorships resulting from an increase in the number of our directors, the USW will have the right to nominate the minimum number of individuals to fill

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the newly created directorships necessary to ensure that at least 40% of the members of the board of directors immediately following the filling of the newly created directorships are directors who have been nominated by the USW. In each case, the USW, the nominating and corporate governance committee and the board of directors will be required to follow the nomination and approval procedures described above.

A candidate nominated by the USW may not be an officer, employee, director or member of the USW or any of its local or affiliated organizations as of the date of his or her designation as a candidate or election as a director. Each candidate nominated by the USW must also satisfy:

the general independence criteria;

the qualifications to serve as a director as set forth in any applicable corporate governance guidelines adopted by the board of directors and policies adopted by the nominating and corporate governance committee establishing criteria to be utilized by it in assessing whether a director candidate has appropriate skills and experience; and

any other qualifications to serve as director imposed by applicable law.

Finally, the Director Designation Agreement provides that, so long as our board of directors maintains an audit committee, executive committee or nominating and corporate governance committee, each of these committees will, unless otherwise required by the fiduciary duties of the board of directors, include at least one director nominated by the USW (provided at least one director nominated by the USW is qualified to serve on the applicable committee as determined in good faith by the board of directors). Current members of our board of directors that have been nominated by the USW are Ms. Bartholomew and Messrs. Foster, Quinn and Wilcox.

Board Leadership Structure and Risk Oversight

Mr. Hockema, our President and Chief Executive Officer, serves as the Chairman of the Board, and Dr. Osborne serves as our Lead Independent Director. We believe that Mr. Hockema's experience with our company and in the metals industries, the independence of the other directors, our governance structure and the interaction between and among Mr. Hockema, our Lead Independent Director and the other directors make our board leadership structure the most appropriate for our company and our stockholders. As a result of his substantial experience with our company and in the metals industries, Mr. Hockema is uniquely qualified to provide clear leadership for our company and a single point of accountability. Our corporate governance guidelines and governance structure require an Independent Lead Director selected by a majority of the independent directors, thereby ensuring that there is independent leadership within our board of directors and allowing our independent directors to function as a body distinct from management and to evaluate the performance of Mr. Hockema and our management independently and objectively. In addition, each of the audit, compensation and nominating and corporate governance committees consist solely of independent directors.

Under our corporate governance guidelines, each member of our board of directors may submit items to be included on the agenda for any meeting of our board of directors and raise subjects that are not on the agenda at any meeting of our board of directors, and our independent directors are required to meet at least quarterly in executive sessions at which only independent directors are present. Our Lead Independent Director establishes the agenda for executive sessions, may call a meeting of independent directors upon the request of a majority of independent directors and serves as a liaison between our independent directors and our chief executive officer. Our Lead Independent Director has other responsibilities that the independent directors designate, presides at meetings of our independent directors, solicits advice and input from our independent board members, and routinely meets and confers with our chief executive officer to address comments, issues and areas of interest expressed or identified by our independent directors, to assess the governance of our board of directors and our company, and to review board responsibilities, meeting schedules, meeting agenda and information requested or otherwise provided to our directors routinely or in connection with meetings of our board of directors. The chair of each committee of our board of directors serves as a liaison to keep the full board of directors and our chief executive officer apprised of the work performed by such committee at each of our regularly scheduled board meetings and as otherwise required. Finally, under our Bylaws, special meetings of our board of directors may be called by a majority of the board members, nine of 10 of whom are currently independent.

We encourage direct communication among our directors and with our chief executive officer before, during and after formal board and committee meetings and facilitate those communications around our scheduled meetings. Our directors also have full access to our officers, employees and advisors. The nominating and corporate governance committee of our board of directors is specifically charged with responsibility for, among other things, identifying new director candidates, evaluating incumbent directors, evaluating our chief executive officer, evaluating stockholder recommendations, recommending nominees

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for election at annual stockholder meetings, reviewing our corporate governance guidelines and assisting in management succession.

We have policies in place to identify, assess and manage potential risks and to continually review the procedures that we have designed and implemented to mitigate such risks. We believe that our board of directors provides effective oversight of the risk management function. Under its charter, the audit committee of our board of directors is responsible for discussing our management policies, including, without limitation, the steps to be taken to monitor and control our major financial risk exposures. In addition, our full board of directors is actively engaged in the review and assessment of our risk management policies, conducts a comprehensive review at least annually during a regularly scheduled board meeting and routinely requests that specific risk-related items be included on board and committee meeting agendas. In 2009, we began an enterprise risk management project to formally identify, categorize and assess our risks and risk mitigation strategies and routinely report the status of the project to the audit committee and the full board of directors. This process is continuing.

Risks Arising from Compensation Policies and Practices

Our compensation policies and practices, discussed more fully below, are designed to create and maintain alignment between our employees and stockholders by rewarding employees, including our senior management, for achieving strategic goals that successfully drive our operations and enhance stockholder value and to preclude the taking of unreasonable risk through the use of incentive compensation that rewards decisions that result in strong performance in both the short- and long-term. We do not believe that our compensation policies and practices for our employees are likely to have a material adverse effect on our company. Our determination is based on, among other factors, the following:

Potential payouts under our incentive plans are capped, and overall variable compensation does not materially impact our financial results;

Our overall compensation is comprised of a mix of long- and short-term compensation which discourages short-term decisions that could be at the expense of long-term results;

A significant portion of the variable compensation is in the form of restricted stock and performance shares with three-year vesting and performance periods, which ensure that three years of unvested grants are outstanding at any time and encourage decisions that create long-term value;

All of our incentive programs contain clawback provisions, described in more detail in the “Executive Compensation - Employment-Related Agreements and Certain Employee Benefit Plans - Equity Incentive Plan” section of this Proxy Statement, which provide for the forfeiture of outstanding unvested awards and the return of vested awards;

Our short-term incentive plan and our performance shares require the attainment of a threshold company performance levels before any payments are earned or performance shares vest; and

Our stock ownership guidelines require our board of directors and senior management to retain significant equity interests in our company to ensure the ongoing alignment of senior management and our stockholders.



















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Board Committees

Currently, we have four standing committees of the board of directors: an executive committee; an audit committee; a compensation committee; and a nominating and corporate governance committee.

The following table sets forth the chair and members of each committee of the board of directors, the number of meetings each committee held during 2011, and the number of times each committee acted by unanimous written consent.
 
 
 
 
 
 
Number of Times Acted
 
 
 
 
Number of Meetings
 
By Unanimous
Committee
 
Members
 
Held in 2011
 
Written Consent
Executive Committee
 
Jack A. Hockema*
 
-
 
4
 
 
Teresa A. Hopp
 
 
 
 
 
 
Brett E. Wilcox
 
 
 
 
Audit Committee
 
Carolyn Bartholomew
 
9
 
-
 
 
David Foster
 
 
 
 
 
 
Teresa A. Hopp*
 
 
 
 
 
 
Lauralee E. Martin
 
 
 
 
 
 
Alfred E. Osborne, Jr.
 
 
 
 
 
 
Thomas M. Van Leeuwen
 
 
 
 
 
 
Brett E. Wilcox
 
 
 
 
Compensation
 
Lauralee E. Martin
 
6
 
3
Committee
 
William F. Murdy*
 
 
 
 
 
 
Jack Quinn
 
 
 
 
 
 
Thomas M. Van Leeuwen
 
 
 
 
 
 
Brett E. Wilcox
 
 
 
 
Nominating and
 
Carolyn Bartholomew
 
4
 
-
Corporate Governance
 
David Foster
 
 
 
 
Committee
 
William F. Murdy
 
 
 
 
 
 
Alfred E. Osborne, Jr.*
 
 
 
 
 
 
Jack Quinn
 
 
 
 
 
 
Thomas M. Van Leeuwen
 
 
 
 
*Committee chair
 
 
 
 
 
 

Executive Committee

The executive committee of our board of directors manages our business and affairs requiring attention prior to the next regular meeting of our board of directors. However, the executive committee does not have the power to (1) approve or adopt, or recommend to our stockholders, any action or matter expressly required by law to be submitted to our stockholders for approval, (2) adopt, amend or repeal any bylaw of our company, or (3) take any other action reserved for action by the board of directors pursuant to a resolution of the board of directors or otherwise prohibited to be taken by the executive committee by law or pursuant to our certificate of incorporation or bylaws.

The executive committee charter requires that a majority of the members of the executive committee satisfy the general independence criteria. In addition, the members of the executive committee must include the Chairman of the Board and at least one of the directors nominated by the USW.

Audit Committee

The audit committee of our board of directors oversees our accounting and financial reporting practices and processes and the audits of our financial statements on behalf of our board of directors. The audit committee is responsible for appointing, compensating, retaining and overseeing the work of our independent auditors. Other duties and responsibilities of the audit committee include:

establishing hiring policies for employees or former employees of the independent auditors;

reviewing our systems of internal accounting controls;

discussing risk management policies;

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approving related-party transactions;

establishing procedures for complaints regarding financial statements or accounting policies; and

performing other duties delegated to the audit committee by our board of directors from time to time.

The audit committee charter requires that all members of the audit committee satisfy the general independence criteria. The charter also requires that no audit committee member may have participated in the preparation of our financial statements during the three years prior to his or her appointment as a member and that each audit committee member be able to read and understand fundamental financial statements, including a balance sheet, an income statement and a cash flow statement. Additionally, at least one member of the audit committee must have had past employment experience in finance or accounting, requisite professional certification in accounting, or any other comparable experience which results in that individual's financial sophistication, including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities and that member or another member must have sufficient education or experience to have acquired the attributes necessary to meet the criteria of an “audit committee financial expert,” as that term is defined in the rules promulgated by the Securities and Exchange Commission, or the SEC. In addition, the members of the audit committee must include at least one of the directors nominated by the USW.

Our board of directors has determined that all seven members of the audit committee (1) meet the general independence criteria, as well as the criteria for independence set forth in Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, and (2) are able to read and understand fundamental financial statements. Our board of directors also determined that no member of the audit committee participated in the preparation of our financial statements during the three years prior to their appointment as members of the committee. Finally, our board of directors has determined that Mmes. Hopp and Martin and Mr. Wilcox satisfy the financial sophistication criteria described above and satisfy the criteria necessary to serve as the “audit committee financial expert,” in each case based on his or her experience described in “Proposals Requiring Your Votes - Proposal for Election of Directors” above.

Compensation Committee

General

The compensation committee of our board of directors establishes and administers our policies, programs and procedures for compensating our senior management, including determining and approving the compensation of our executive officers. Other duties and responsibilities of the compensation committee include:

administering plans adopted by our board of directors that contemplate administration by the compensation committee, including our Amended and Restated 2006 Equity and Performance Incentive Plan (referred to herein as our Equity Incentive Plan);

overseeing regulatory compliance with respect to compensation matters;

reviewing director compensation; and

performing other duties delegated to the compensation committee by our board of directors from time to time.

The compensation committee solicits the views of our chief executive officer on compensation matters, including as they relate to our compensation of the other members of senior management reporting to the chief executive officer. The compensation committee has retained Meridian Compensation Partners, LLC, a spin-off of Hewitt Associates, LLC, our compensation consultant prior to 2010 (both referred to herein as Meridian), to advise the compensation committee on all matters related to compensation of our chief executive officer and other members of senior management. Meridian's services in this regard include (1) providing competitive market data and related assessments of executive compensation as background against which the compensation committee considers executive compensation, (2) preparing and reviewing tally and compensation summary sheets for our named executive officers, (3) apprising the compensation committee of trends and best practices associated with executive and director compensation, (4) providing support with respect to legal, regulatory and accounting considerations impacting compensation and benefit programs, (5) the development and review of a list of compensation peer group companies, and (6) attending meetings of the compensation committee and our board of directors when requested. These services are typically directed by the compensation committee and coordinated with our human resources department.

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The compensation committee charter requires that all members of the compensation committee satisfy the general independence criteria, as well as qualify as “non-employee directors” within the meaning of Rule 16b-3 promulgated under the Securities Exchange Act of 1934.

Compensation Committee Interlocks and Insider Participation

None of the members of the compensation committee (1) was an officer or employee of our company during 2011, (2) was formerly an officer of our company, or (3) had any relationships requiring disclosure by us under the SEC's rules with respect to certain relationships and related-party transactions. Furthermore, none of our executive officers serves as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our board of directors or compensation committee.

Nominating and Corporate Governance Committee

The nominating and corporate governance committee of our board of directors identifies individuals qualified to become members of our board of directors, recommends candidates to fill vacancies and newly-created positions on our board of directors, recommends director nominees for election by stockholders at the annual meetings of stockholders and develops and recommends to our board of directors our corporate governance principles.

We believe that the nominating and corporate governance committee considers an appropriate range of criteria in assessing candidates for a position on the board of directors. Our corporate governance guidelines require that the criteria utilized by the corporate governance committee in assessing such candidates include factors such as judgment, diversity, integrity, experience with businesses and other organizations of comparable size, the interplay of a candidate's experience with the experience of other members of the board of directors and anything else that may bear upon the extent to which a candidate would be a desirable addition to our board of directors and any committees of our board of directors. The policies relating to the recommendation of director candidates adopted by the nominating and corporate governance committee are designed to ensure flexibility with respect to the process of evaluating candidates and do not establish specific minimum qualifications that an individual must meet to become a member of our board of directors. The nominating and corporate governance committee believes that our company is best served when it can draw from a variety of experiences and backgrounds provided by members of our board of directors. However, the nominating and corporate governance committee also believes that our company is best served when each member of the board of directors:

exhibits strong leadership in his or her particular field or area of expertise;

possesses the ability to exercise sound business judgment;

has a strong educational background or equivalent life experiences;

has substantial experience both in the business community and outside the business community;

contributes positively to the existing collaborative culture among members of the board of directors;

represents the best interests of all of our stockholders and not just one particular constituency;

has experience as a senior executive of a company of significant size or prominence or another business or organization comparable to our company;

possesses skills and experience which make him or her a desirable addition to a standing committee of the board of directors;

consistently demonstrates integrity and ethics in his or her professional and personal life; and

has the time and ability to participate fully in activities of the board of directors, including attendance at, and active participation in, meetings of our board of directors and the committee or committees of which he or she is a member.

Other duties and responsibilities of the nominating and corporate governance committee include:

assisting in succession planning;


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considering possible conflicts of interest of members of our board of directors and management and making recommendations to prevent, minimize or eliminate such conflicts of interests;

evaluating whether an incumbent director should be nominated for re-election to our board of directors upon expiration of the incumbent's term;

making recommendations to our board of directors regarding the appropriate size of our board of directors; and

performing other duties delegated to the nominating and corporate governance committee by our board of directors from time to time.

The nominating and corporate governance committee has adopted policies and procedures by which our stockholders may submit director candidates to the nominating and corporate governance committee for consideration. If the nominating and corporate governance committee receives, by a date not less than 120, nor more than 150, calendar days before the anniversary of the date that the proxy statement was mailed to stockholders in connection with our previous year's annual meeting, a recommendation for a director nominee from a stockholder or group of stockholders that beneficially owned more than 5% of our outstanding common stock for at least one year as of the date of the recommendation, then such director candidate will be considered and evaluated by the nominating and corporate governance committee for the annual meeting immediately succeeding the date that proper written notice was timely delivered to and received by the nominating and corporate governance committee. When the date of our annual meeting of stockholders changes by more than 30 calendar days from the previous year's annual meeting, the written notice of the recommendation for the director candidate will be considered timely if, and only if, it is received by the nominating and corporate governance committee no later than the close of business on the tenth calendar day following the first day on which notice of the date of the upcoming annual meeting is publicly disclosed by us.

Written notice from an eligible stockholder or group of eligible stockholders to the nominating and corporate governance committee recommending a director candidate must contain or be accompanied by:

proof that the stockholder or group of stockholders submitting the recommendation has beneficially owned, for the required one-year holding period, more than 5% of our outstanding common stock;

a written statement that the stockholder or group of stockholders intends to continue to beneficially own more than 5% of our outstanding common stock through the date of the next annual meeting of stockholders;

the name and record address of each stockholder submitting a recommendation for the director candidate, the written consent of each such stockholder and the director candidate to be publicly identified (including, in the case of the director candidate, to be named in the company's proxy materials) and the written consent of the director candidate to serve as a member of our board of directors (and any committee of our board of directors to which the director candidate is assigned to serve by our board of directors) if elected;

a description of all arrangements or understandings between or among any of the stockholders or group of stockholders submitting the recommendation, the director candidate and any other person or persons (naming such person or persons) pursuant to which the submission of the recommendation is to be made by such stockholder or group of stockholders;

with respect to the director candidate, (1) his or her name, age, business and residential address and principal occupation or employment, (2) the number of shares of our common stock beneficially owned by him or her, (3) a resume or similar document detailing his or her personal and professional experiences and accomplishments, and (4) all other information relating to the candidate that would be required to be disclosed in a proxy statement or other filing made in connection with the solicitation of proxies for the election of directors pursuant to the Securities Exchange Act of 1934, the rules of the SEC or the rules of the NASDAQ Stock Market LLC; and

a written statement that each submitting stockholder and the director candidate shall make available to the nominating and corporate governance committee all information reasonably requested in connection with the committee's evaluation of the candidate.

The notice must be signed by each stockholder submitting the proposal and the director candidate. The notice must be sent to the following address by registered or certified mail: Kaiser Aluminum Corporation, Attn: Corporate Secretary (Nominating and Corporate Governance Committee), 27422 Portola Parkway, Suite 200, Foothill Ranch, California 92610-2831.

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The nominating and corporate governance committee charter requires that all members of the nominating and governance committee satisfy the general independence criteria. In addition, the members of the nominating and corporate governance committee must include at least one of the directors nominated by the USW so long as at least one such director is appropriately qualified.


EXECUTIVE OFFICERS

The following table sets forth the names and ages of each of our executive officers and the positions they held as of April 12, 2012, the record date.

Name
 
Age
 
Position(s)
Jack A. Hockema
 
65
 
President, Chief Executive Officer and Chairman of the Board; Director
Daniel J. Rinkenberger
 
53
 
Senior Vice President and Chief Financial Officer
John Barneson
 
61
 
Senior Vice President - Corporate Development
John M. Donnan
 
51
 
Senior Vice President, Secretary and General Counsel
James E. McAuliffe, Jr. (1)
 
66
 
Senior Vice President - Human Resources
Melinda C. Ellsworth
 
53
 
Vice President and Treasurer
Neal E. West
 
53
 
Vice President and Chief Accounting Officer
_________________

(1) On July 1, 2011, our company announced Mr. McAuliffe's expected retirement on April 30, 2012.

Set forth below are brief descriptions of the business experience of each of our executive officers.

Jack A. Hockema has served as our President and Chief Executive Officer and a director since October 2001 and as Chairman of the Board since July 2006. He previously served as Executive Vice President of Kaiser Aluminum Corporation (referred to herein as Kaiser) and President of the Kaiser Fabricated Products division from January 2000 to October 2001, and Executive Vice President of Kaiser from May 2000 to October 2001. He served as Vice President of Kaiser from May 1997 to May 2000. Mr. Hockema was President of Kaiser Engineered Products from March 1997 to January 2000. He served as President of Kaiser Extruded Products and Engineered Components from September 1996 to March 1997. Mr. Hockema served as a consultant to Kaiser and acting President of Kaiser Engineered Components from September 1995 to September 1996. Mr. Hockema was an employee of Kaiser from 1977 to 1982, working at our Trentwood facility in Spokane, Washington, and serving as plant manager of our former Union City, California can plant and as operations manager for Kaiser Extruded Products. In 1982, Mr. Hockema left Kaiser to become Vice President and General Manager of Bohn Extruded Products, a division of Gulf+Western, and later served as Group Vice President of American Brass Specialty Products until June 1992. From June 1992 to September 1996, Mr. Hockema provided consulting and investment advisory services to individuals and companies in the metals industry. Mr. Hockema served on the board of directors of Clearwater Paper Corp. from December 2008 to June 2009. He holds a Master of Science degree in Industrial Management and a Bachelor of Science degree in Civil Engineering, both from Purdue University. Mr. Hockema has more than 20 years of experience with Kaiser and another 20 years in the metals industries, and, as a result, has a depth of experience in the aluminum and metals industries. As the only management representative on the board of directors, Mr. Hockema provides an insider's perspective in board of directors discussions about our business and the strategic direction for our company.

Daniel J. Rinkenberger has served as our Senior Vice President and Chief Financial Officer since April 2008. Mr. Rinkenberger served as our Vice President from January 2005 to April 2008 and as our Treasurer from January 2005 to July 2008. Prior to January 2005, he served as our Vice President of Economic Analysis and Planning from February 2002. He served as Vice President, Planning and Business Development of the Kaiser Fabricated Products division from June 2000 through February 2002. Prior to that, he served as Vice President, Finance and Business Planning of the Kaiser Flat-Rolled Products division from February 1998 to February 2000, and as our Assistant Treasurer from January 1995 through February 1998. Before joining Kaiser, he held a series of positions of increasing responsibility in the Treasury Department at Pennzoil Corporation. He holds a Master of Business Administration degree in finance from the University of Chicago and a Bachelor of Education degree from Illinois State University. He is a Chartered Financial Analyst.

John Barneson has served as our Senior Vice President - Corporate Development since December 2007. He previously served as our Senior Vice President and Chief Administrative Officer from August 2001 to December 2007 and as our Vice President and Chief Administrative Officer from December 1999 through August 2001. He served as Engineered Products Vice

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President of Business Development and Planning from September 1997 to December 1999. Mr. Barneson served as Flat-Rolled Products Vice President of Business Development and Planning from April 1996 to September 1997. Mr. Barneson has been an employee of Kaiser since September 1975 and has held a number of staff and operation management positions within the former Flat-Rolled and Engineered Products business units. He holds a Master of Science degree and a Bachelor of Science degree in Industrial Engineering from Oregon State University.

John M. Donnan has served as our Senior Vice President, Secretary and General Counsel since December 2007. On July 1, 2011, our company announced the expected retirement of James E. McAuliffe, Jr., our Senior Vice President - Human Resources, and that Mr. Donnan would assume Mr. McAuliffe's responsibilities at that time. Mr. Donnan is also responsible for our company’s corporate legal, compliance, internal audit, environmental, safety and quality functions. He previously served as our Vice President, Secretary and General Counsel from January 2005 to December 2007. Mr. Donnan joined the legal staff of Kaiser in 1993 and was named Deputy General Counsel of Kaiser in 2000. Prior to joining Kaiser, Mr. Donnan was an associate in the Houston, Texas office of the law firm of Chamberlain, Hrdlicka, White, Williams & Martin. He holds a Juris Doctorate degree from the University of Arkansas School of Law and Bachelor of Business Administration degrees in finance and accounting from Texas Tech University. He is a member of the Texas and California bars.

James E. McAuliffe, Jr. has served as our Senior Vice President - Human Resources since December 2007. As previously noted, on July 1, 2011, our company announced Mr. McAuliffe's expected retirement on April 30, 2012. He previously served as our Vice President - Human Resources from January 2002 to December 2007. Mr. McAuliffe joined Kaiser in 1998 as Vice President - Human Resources for our fabricating business. Prior to joining Kaiser, Mr. McAuliffe served as Vice President of Human Resources for Rexam, Inc., a manufacturer of industrial coatings for graphics, photographic and computer industries and J.P Industries, a manufacturer of automotive engine and transmission components. He holds a Bachelor of Arts degree in Labor Relations and Industrial Psychology from Michigan State University and attended graduate school at Central Michigan University.

Melinda C. Ellsworth has served as our Vice President and Treasurer since July 2008. Prior to joining Kaiser, Ms. Ellsworth was Vice President, Treasurer and Investor Relations at HNI Corporation, a leading provider of office furniture and hearth products, from February 2002 to May 2007. From May 1998 to January 2002, she served in several roles with Sunbeam Corporation, ending her tenure as Vice President, International Finance and Treasury. She additionally has over a decade of experience in commercial banking. She holds a Bachelor of Business Administration degree in accounting from St. Bonaventure University and is a Certified Public Accountant (inactive).

Neal E. West has served as our Vice President and Chief Accounting Officer since June 2008. Prior to joining Kaiser, Mr. West served as the Principal Accounting Officer of Gateway, Inc. from June 2005 to May 2008. Mr. West was also the Vice President and Corporate Controller of Gateway, Inc. from April 2005 to May 2008. Prior to joining Gateway, Inc., Mr. West was the Vice President and Controller for APL Logistic, Ltd. from April 2000 to April 2005. In addition, Mr. West has held a number of finance, service and support positions at APL Ltd. Mr. West also previously worked for Standard Pacific and West-Tronics, Inc. as Division Controller and Financial Manager. Mr. West is a Certified Public Accountant and a Certified Management Accountant and holds a Master of Science degree in information systems from Roosevelt University and a Bachelor of Science degree in accounting and business administration from Illinois State University.


EXECUTIVE COMPENSATION

Compensation Committee Report

The compensation committee has reviewed and discussed with management the compensation discussion and analysis section included below. Based on its review and discussions with management, the compensation committee recommended to the board of directors that such compensation discussion and analysis be included in this Proxy Statement.

This report is submitted by the members of the compensation committee of the board of directors:

Compensation Committee
William F. Murdy (Chair)
Lauralee E. Martin
Jack Quinn
Thomas M. Van Leeuwen
Brett E. Wilcox


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Compensation Discussion and Analysis

Introduction

This section provides (1) an overview of our 2011 performance highlights, (2) an overview of the compensation committee, (3) a discussion of the objectives of our comprehensive compensation structure and the design of our overall 2011 compensation program for senior management, and (4) a discussion of all material elements of 2011 compensation for each of our named executive officers whose names and titles are set forth in the following table:

Name
 
Title
Jack A. Hockema
 
President and Chief Executive Officer (principal executive officer)
Daniel J. Rinkenberger
 
Senior Vice President and Chief Financial Officer (principal financial officer)
John Barneson
 
Senior Vice President - Corporate Development
John M. Donnan
 
Senior Vice President, Secretary and General Counsel
James E. McAuliffe, Jr. (1)
 
Senior Vice President - Human Resources
_________________

(1) On July 1, 2011, our company announced Mr. McAuliffe's expected retirement on April 30, 2012.
2011 Performance Highlights

In 2011, despite continued economic uncertainty and challenges, we delivered solid operating performance. Our key achievements in 2011 include:

$55 million in operating income and $86 million in adjusted operating income (adjusted for non-run-rate items);

record aerospace value added revenue dollars;

record automotive value added revenue dollars and dollars per vehicle;

completion of a strategic acquisition of the extrusion facility of Alexco, L.L.C. in Chandler, Arizona, which manufactures hard alloy extrusions for the aerospace industry;

successful rollout of KaiserSelect® Precision Rod®;

reaching a multi-year agreement in principle with Airbus to supply aluminum plate and sheet for use in the production of commercial aircraft;

record safety performance;

record quality performance;

amendment of our revolving credit facility to increase the commitment by $100 million to $300 million, provide improved pricing and financial flexibility and extend the maturity to September 2016; and

payment of dividends totaling $19 million (or $0.96 per share for the year) to our stockholders.

Overview of the Compensation Committee

The compensation committee of our board of directors is comprised entirely of independent directors. In 2011, our board of directors increased the size of the compensation committee from three to five members. By design, members of the compensation committee also serve on other board committees, including the audit committee and the nominating and corporate governance committee. We believe this structure helps coordinate the efforts of the respective committees. The compensation committee's primary duties and responsibilities are to establish and implement our compensation policies and programs for senior management. While the nominating and corporate governance committee has the responsibility to evaluate the overall performance of the chief executive officer, the compensation committee coordinates with and assists the nominating and corporate governance committee in that evaluation.


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The compensation committee has the authority under its charter to engage the services of outside advisors, experts and others to assist it. Pursuant to that authority, the compensation committee engaged Meridian to advise it on all matters related to compensation of our chief executive officer and other members of senior management, including the other named executive officers.

The compensation committee meets formally and informally throughout the year. Informal meetings frequently occur when our directors are together for meetings of our full board of directors and telephonically at the request of one or more committee members. Our chief executive officer, other members of our management and outside advisors may be invited to attend all or a portion of a compensation committee meeting depending on the nature of the agenda items; however, neither our chief executive officer nor any other member of management votes on items before the compensation committee.

The compensation committee works with our senior management and Meridian to determine the agenda for its formal meetings and to prepare meeting materials. The compensation committee and board of directors also solicit the views of our chief executive officer on compensation matters, including, among others:

Objectives for our compensation programs;

The structure of our compensation programs;

Succession planning; and

Compensation of other members of senior management, including our other named executive officers.

Objectives of our Compensation Structure

Our compensation structure was developed to achieve the following objectives, which we believe are critical for enhancing stockholder value and our long-terms success:

Creating alignment between senior management and our stockholders by rewarding senior management for achieving strategic goals that successfully drive our operations and enhance stockholder value;

Attracting, motivating and retaining highly experienced executives vital to our short-term and long-term success, profitability and growth;

Correlating senior management compensation with actual performance; and

Providing competitive, targeted compensation levels that are benchmarked to our compensation peer group discussed below as follows:

for base salary, the 50th percentile;

for annual cash incentives at target-level performance, the 50th percentile; and

for annualized economic equity grant value of long-term incentives, between the 50th and the 65th percentiles.

Design of our 2011 Compensation Program

Our 2011 compensation program for senior management, including the named executive officers, was designed to reinforce performance and accountability through the use of:

a short-term annual cash incentive payable only if the performance threshold is met; and

an equity-based, long-term incentive consisting of (1) shares of restricted stock with a three-year cliff vest schedule to incentivize senior management retention, and (2) performance shares that vest, if any, based on the performance achieved over a three-year performance period (2011 through 2013) that is above the threshold.

In addition to focusing on “pay for performance,” our 2011 compensation program:

Balanced short-term and long-term goals, with:

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approximately 57% of the chief executive officer's target total compensation being delivered through long-term incentives; and

approximately 39% to 62% of the target total compensation for the other named executive officers being delivered through long-term incentives;

Delivered a mix of fixed and at-risk compensation directly related to our overall performance and the creation of stockholder value, with:

approximately 75% of the chief executive officer's target total compensation being at-risk compensation payable only if certain corporate performance levels are achieved; and

approximately 57% to 67% of the target total compensation for the other named executive officers being at-risk compensation payable only if certain corporate performance levels are achieved;

Provided compensation that is competitive with the compensation peer group recommended by the compensation committee's independent consultant;

Utilized equity-based awards, stock ownership guidelines and annual incentives linked to stockholder value and achievement of corporate performance;

Emphasized the importance of safety performance; and

Utilized forfeiture provisions that can result in the loss of awards and resulting benefits if we determine that a recipient, including any of the named executive officers, has engaged in certain activities detrimental to us.

Periodically, but not less than annually, each element of compensation is reviewed and considered by the compensation committee and our board of directors both individually and collectively with the other elements of compensation to ensure that each element is consistent with the objectives of both our comprehensive compensation structure and that particular element of compensation. Any suggestions or concerns identified in the course of that review and consideration are shared with senior management and Meridian and addressed in a manner that is satisfactory to the compensation committee and our board of directors. This process occurs over a series of meetings of the compensation committee, the board of directors and the independent directors meeting in executive sessions without members of management present.

In designing the overall compensation program and each individual element of compensation for senior management, including the named executive officers, the compensation committee considers the following factors, among others:

The external challenges to our near- and long-term ability to attract and retain strong senior management;

Each individual's contributions to our overall results;

Our historical and anticipated operating and financial performance compared with targeted goals; and

Our size and complexity compared with companies in our compensation peer group.

The compensation committee uses tally and other summary sheets that provide a summary of the compensation history of our chief executive officer and those members of senior management reporting to the chief executive officer. These tally and other information sheets, include a historical summary of base salary, annual bonus and equity awards.

In reviewing and deliberating over our 2011 compensation program, the compensation committee considered, among other things:

Economic conditions in the United States and abroad;

The company's business plan and underlying assumptions;

The goal of maintaining alignment between senior management and our stockholders through the use of short- and long-term, performance-based compensation;

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The benefits of maintaining a consistent approach to compensation and the structure of our programs through business cycles;

The anticipated performance of the company's compensation programs based on the company's business plan and current financial position; and

Information and reports prepared by proxy advisors, including Glass Lewis & Co., ISS and Taft-Hartley.

The review included discussions with Meridian and management regarding existing and contemplated market practices, as well as the structure and objectives of each component of our compensation program.

The compensation committee also reviews the compensation and benefit practices, as well as levels of pay, of a compensation peer group of companies. In 2006, working with our compensation consultant, our management selected for inclusion in the compensation peer group companies that were determined to: (1) be of a similar size; (2) have positions of similar complexity and scope of responsibility; and/or (3) compete with us for talent. The compensation committee, working with our compensation consultant, reviews, evaluates and updates the compensation peer group, which includes companies in both similar and different industries, at least annually. For 2011, our compensation committee approved the following 33-company peer group:

Ameron International Corporation
Neenah Paper, Inc.
Applied Industrial Tech, Inc.
Olin Corporation
Ash Grove Cement Company
OMNOVA Solutions Inc.
Brady Corporation
Pella Corporation
Briggs & Stratton Corporation
Polaris Industries Inc.
Cameron International Corporation
Rayonier Inc.
Crane Company
Sauer-Danfoss Inc.
Donaldson Company, Inc.
Steelcase Inc.
ESCO Technologies Inc.
Texas Industries, Inc.
Fellowes, Inc.
The Timken Company
Gardner Denver, Inc.
Valmont Industries, Inc.
Graco Inc.
Vulcan Materials Company
Joy Global Inc.
Walter Energies, Inc.
Kaman Corporation
Waters Corporation
Kennametal Inc.
Watts Water Technologies, Inc.
Martin Marietta Materials, Inc.
Woodward Governor Company
Mueller Water Products, Inc.
 

Importantly, the compensation committee recognizes that we compete for talent with companies much larger than those included in our compensation peer group. These larger companies, including Alcoa, Constellium and Sapa, aggressively recruit for the best qualified talent in particularly critical functions. Due to the differences in size among the companies in our peer group, Meridian uses a form of regression analysis to adjust survey data results based on our revenue as compared to the revenue of other companies in our peer group. As a result, to attract and retain talent, the compensation committee may from time to time determine that it is in the best interests of our company and stockholders to provide compensation packages that deviate from targeted pay levels.














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Elements of 2011 Compensation

The table below summarizes the elements of our named executive officers' compensation in 2011:
Element
 
Form of Compensation
 
Objective
 
Performance Metrics
Base Salary
 
Cash
 
Ÿ
Provide a competitive, fixed
 
Not performance based
 
 
 
 
 
compensation upon which our
 
 
 
 
 
 
 
named executive officers can rely.
 
 
 
 
 
 
Ÿ
Target at the 50th percentile of our
 
 
 
 
 
 
 
compensation peer group.
 
 
 
 
 
 
 
 
 
 
Short-Term Incentives
 
Cash
 
Ÿ
Create financial incentive for
 
EVA (based on adjusted
 
 
 
 
 
achieving or exceeding company
 
PTOI, including
 
 
 
 
 
performance goals.
 
corporate expenses, less a
 
 
 
 
Ÿ
Target at the 50th percentile of our
 
capital charge of 7.5% of
 
 
 
 
 
compensation peer group.
 
our adjusted net assets)
 
 
 
 
 
 
 
and TCIR
 
 
 
 
 
 
 
 
Long-Term Incentives
 
Restricted Stock
 
Ÿ
Create financial incentive for
 
Not performance based
 
 
 
 
 
continued employment with our
 
(retention based and "at
 
 
 
 
 
company through three-year cliff
 
risk" to the extent
 
 
 
 
 
vesting.
 
underlying performance
 
 
 
 
Ÿ
Together with performance shares,
 
impacts stock price and
 
 
 
 
 
target at between the 50th and 65th
 
value of underlying
 
 
 
 
 
percentile of our compensation
 
shares.
 
 
 
 
 
peer group.
 
 
 
 
 
 
 
 
 
 
 
 
Performance Shares
 
Ÿ
Create financial incentive for
 
EVA (based on adjusted
 
 
 
 
 
achieving or exceeding company
 
PTOI, including
 
 
 
 
 
performance goals.
 
corporate expenses, less a
 
 
 
 
Ÿ
Together with restricted stock,
 
capital charge of 10% of
 
 
 
 
 
target at between the 50th and 65th
 
our adjusted net assets)
 
 
 
 
 
percentile of our compensation
 
 
 
 
 
 
 
peer group.
 
 
 
 
 
 
 
 
 
 
Retirement Benefits
 
Defined Contribution
 
Ÿ
Part of our broad-based employee
 
Not performance based
 
 
Plan
 
 
benefit programs.
 
 
 
 
 
 
 
 
 
 
 
 
Deferred Compensation
 
Ÿ
Restore the benefits of matching and
 
Not performance based
 
 
Plan
 
 
fixed rate contributions that we would
 
 
 
 
 
 
 
otherwise pay but for the limitations
 
 
 
 
 
 
 
on benefit accruals and payment
 
 
 
 
 
 
 
imposed by the Internal Revenue Code
 
 
 
 
 
 
 
of 1986.
 
 
 
 
 
 
 
 
 
 
Perquisites
 
Vehicle Allowance
 
Ÿ
In connection with base salary,
 
Not performance based
 
 
and Certain
 
 
attract, motivate and retain individuals
 
 
 
 
Reimbursements
 
 
in a competitive environment.
 
 

Each compensation element is discussed in detail below.

Base salary

The compensation committee annually reviews base salaries for our chief executive officer and those members of senior management reporting to the chief executive officer, including our other named executive officers, and determines if a change is appropriate. In reviewing base salaries, the compensation committee considers factors, including, among others:

Level of responsibility;
Prior experience;
Base salaries paid for comparable positions by our compensation peer group; and
The relationship among base salaries paid within our company.


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The intent is to fix base salaries at levels consistent with the design of our overall compensation program for the particular year. Effective April 1, 2011, the compensation committee provided increases of 2.9%-3.0% to the base salaries of our named executive officers, other than Messrs. Rinkenberger and Donnan, principally to align base salaries with targeted levels based on a review of compensation peer group. In 2011, the compensation committee increased Mr. Rinkenberger's based salary by 9.2%, principally to more closely align Mr. Rinkenberger's base salary with market and survey information regarding chief financial officers with similar experience, and increased Mr. Donnan's base salary by 17.5% in total compared to 2010, principally to reflect his increased responsibilities and relocation from Texas to California announced in July 2011. Base salaries for our named executive officers in 2011 were as follows:
Name
 
Amount of Base Salary Increase for 2011
 
2011 Base Salary
Jack A. Hockema
 
$
24,000

 
 
$
831,000

 
Daniel J. Rinkenberger
 
$
30,000

 
 
$
355,000

 
John Barneson
 
$
9,000

 
 
$
319,000

 
John M. Donnan
 
$
53,000

 
 
$
355,000

(1)
James E. McAuliffe, Jr.
 
$
7,000

 
 
$
248,000

 
_________________

(1)
Effective April 1, 2011, Mr. Donnan's base salary was increased by $9.000 to $311,000, and effective July 1, 2011, Mr. Donnan's base salary was further increased by $44,000 to $355,000 in connection with his assumption of additional responsibilities and relocation to from Texas to California.

Annual cash incentives

Like our 2010 short-term incentive plan, our 2011 short-term incentive plan, which we refer to as our 2011 STI Plan, was designed to reward participants for achieving adjusted PTOI of our core Fabricated Products business, including corporate expense, less a capital charge equal to 7.5% of adjusted net assets, with modifiers for safety performance (as measured by TCIR). PTOI at the target level indicates that we are generating returns on invested capital at rates higher than the cost of capital. Among other things, we use PTOI to help us measure the return on net assets employed in our business and believe it is an appropriate measure of the creation of shareholder value under our incentive programs.

Because we value the safety of our employees, consistent with prior plans, our 2011 STI Plan also takes into consideration corporate safety performance as well as financial performance. Safety performance, as measured by TCIR, was applied to the calculation of the multiplier used to determine the pool available for distribution under the 2011 STI Plan. The 2011 STI Plan provided that safety performance above or below a threshold could increase or decrease the payout pool available for distribution by 10%; provided, however, that no increase could increase the pool beyond the maximum payout opportunity.

In calculating PTOI under our 2011 STI Plan, which the compensation committee approved on March 4, 2011, the adjustments to our net assets to determine the capital charge and PTOI included, among others:

Adjustments to net assets:

Removing results of our Secondary Aluminum and Hedging business units;

Removing discontinued or former operations and legacy environmental accruals;

Eliminating fresh start accounting adjustments to the value of property, plant and intangible assets;

Eliminating voluntary employees' beneficiary association, or VEBA, assets and liabilities;

Excluding financing items;

Excluding capital expenditures in progress;

Adding the prorated value of capital projects and acquisitions larger than 1% of net assets;

Excluding income tax assets and liabilities; and

Excluding derivative assets or liabilities associated with our core Fabricated Products business.

27




Adjustments to PTOI:

Excluding non-cash last-in, first out inventory charges (benefits) and respective non-cash metal gains (losses);

Excluding non-cash mark-to-market and lower of cost or market adjustments;

Adding back depreciation associated with step-down in property, plant and equipment resulting from implementation of fresh start accounting;

Amortizing the following non-recurring activities over three calendar years with the first year being the year of the initial charge if the value exceeds 1% of adjusted net assets:

Restructuring charges;

Gain or losses resulting from asset dispositions;

Labor stoppage costs; and

Asset impairment charges;

Excluding discontinued operations and legacy environmental income and expenses; and

Excluding VEBA income and expense.

The adjustments listed above were designed to prevent dilution of the performance required to achieve payouts. For example, the Company could not achieve payouts by merely acquiring other profitable companies because the performance measure took into account the value of any acquired assets.

Our 2011 STI Plan tied pay to performance and only increased the incentive pool for returns in excess of the threshold performance level (subject to the payout maximum). Under our 2011 STI Plan, no payout would be made unless we achieve a threshold PTOI for our core Fabricated Products business equal to or in excess of the capital charge or cost of capital. A payout at the target level required adjusted PTOI of 15% of our adjusted net assets, and payout at the maximum level required adjusted PTOI of 35% of our adjusted net assets. Consistent with our objective of aligning senior management and our stockholders by rewarding senior management for achieving strategic goals that successfully drive our operations and enhance stockholder value, our 2011 STI Plan provided that performance in excess of the threshold performance level would result in an increase in the overall incentive pool by 6% of adjusted PTOI in excess of the threshold performance level up to the maximum payout opportunity. Potential payouts increased on a straight line basis from the threshold up to the maximum payout as our adjusted PTOI for our core Fabricated Products business exceeded the threshold.

As more fully described below, our adjusted 2011 PTOI for our core Fabricated Products business exceeded the threshold by approximately $23 million.

For 2011, the compensation committee established a cash target under the 2011 STI Plan for each plan participant at the beginning of 2011, taking into consideration, among other things:

A targeted level benchmarked to the 50th percentile of our compensation peer group;

Internal compensation balance;

Position responsibilities;

Our business plan and its key underlying assumptions;

The expectations under then-existing and anticipated market conditions; and

The opportunity to generate stockholder value.


28




The 2011 STI Plan multiple based on our 2011 results was approximately 0.90. After applying the safety modifier based on the final 2011 TCIR, the multiple was increased to the final award multiple of approximately 0.93. The 0.93 multiple represents performance greater than the threshold, but less than the performance required to achieve the target payout. All payouts made to our named executive officers in connection with the 2011 STI Plan were made in cash.

The table below sets forth for our 2011 STI Plan the possible payouts that could have been earned by our named executive officers at each performance level and the actual amounts earned by them.
Name
 
Below Threshold
 
Threshold
 
Target
 
Maximum
 
Actual
Jack A. Hockema
 
 
$
284,500

 
 
$569,000
 
$
1,707,000

 
 
$
528,032

 
Daniel J. Rinkenberger
 
 
$
117,500

 
 
$235,000
 
$
705,000

 
 
$
218,080

 
John Barneson
 
 
$
72,000

 
 
$144,000
 
$
432,000

 
 
$
133,632

 
John M. Donnan
 
 
$
110,000

 
 
$220,000
 
$
660,000

 
 
$
204,160

 
James E. McAuliffe, Jr.
 
 
$
55,500

 
 
$111,000
 
$
333,000

 
 
$
103,008

 

Consistent with our philosophy to pay for performance, the 2011 STI Plan provided that participants would not receive any payout if the threshold-level performance was not achieved, and, at the same time, that participants would have the potential to receive three times the target-level payout if our PTOI exceeded 35% of our adjusted net assets. In addition to being designed to reward participants for corporate performance, our 2011 STI Plan recognized that our business is cyclical and, consistent with prior years, required a return and economic conditions that would facilitate our ability to pay.

In early 2012, our actual results for 2011 and the resulting award multiple were determined. Each participant's award under the 2011 STI Plan was determined by multiplying his or her monetary incentive target by the award multiple.

The performance of our core Fabricated Products business for 2011 was calculated as follows:
Our adjusted 2011 PTOI for our core Fabricated Products business of approximately $75 million was determined by adjusting our reported 2011 PTOI of $55 million pursuant to the terms of the 2011 STI Plan to, among other things, exclude unrealized mark-to-market gains and losses on metal derivative positions and lower of cost or market adjustments on inventory;

Our adjusted net assets of approximately $694 million as of December 31, 2010 was determined by adjusting our reported net assets as of December 31, 2010 of $912 million pursuant to the terms of the 2011 STI Plan to, among other things, exclude assets and liabilities of the Secondary Aluminum business unit and the Hedging business unit, financing items, VEBA assets and liabilities, capital expenditures in progress, income tax assets and liabilities and derivative assets and liabilities;

The $52 million threshold of adjusted 2011 PTOI (compared to $44 million for 2010) for our core Fabricated Products business required before the minimum payout under the 2011 STI Plan (50% of the target payout) was determined by multiplying our adjusted net assets of approximately $694 million as of December 31, 2010 by 7.5% to determine the applicable capital charge;

The 2011 STI Plan pool of approximately $3.2 million was determined by adding (i) approximately $1.7 million (one half of the target payout under the 2011 STI Plan for equaling or exceeding the threshold) and (ii) approximately $1.4 million, representing 6% of the approximately $23 million excess of adjusted 2011 PTOI for our core Fabricated Products business of approximately $75 million over the $52 million threshold, and then adding approximately $0.1 million for positive safety results in 2011; and

The final 2011 STI Plan multiplier of 0.93 was determined by dividing the approximately $3.2 million 2011 STI Plan pool by the approximately $3.5 million target payout under the 2011 STI Plan.








29



The table below sets forth for our 2011 STI Plan, the target, STI multiplier before the safety modifier, STI multiplier after the safety modifier, the unadjusted award determined by multiplying the target for each named executive officer by the STI multiplier after safety and the actual award received for each of our named executive officers:

Name
 
Target
 
Preliminary STI Multiplier
 
Unadjusted Award
 
Final Multiplier After Safety Modifier
 
Actual Payout
Jack A. Hockema
 
$
569,000

 
 
0.897
 
$
510,393

 
 
0.928
 
$
528,032

 
Daniel J. Rinkenberger
 
$
235,000

 
 
0.897
 
$
210,795

 
 
0.928
 
$
218,080

 
John Barneson
 
$
144,000

 
 
0.897
 
$
129,168

 
 
0.928
 
$
133,632

 
John M. Donnan
 
$
220,000

 
 
0.897
 
$
197,340

 
 
0.928
 
$
204,160

 
James E. McAuliffe, Jr.
 
$
111,000

 
 
0.897
 
$
99,567

 
 
0.928
 
$
103,008

 

Long-term incentives

We believe that consistent execution of our strategy over multi-year periods will lead to an increase in shareholder value. We use equity awards to provide our named executive officers with an incentive to focus on long-term shareholder value creation. Our long-term incentive program for 2011 through 2013, which we refer to as our 2011 - 2013 LTI Program, for key employees, including our named executive officers, was approved by the compensation committee on March 4, 2011. Consistent with our 2010 - 2012 long-term incentive program, our 2011 - 2013 LTI Program was designed to “pay-for-performance” and to include retention features by rewarding participants with (1) shares of restricted stock that will cliff vest in 2014 and (2) performance shares that vest only if a certain average annual performance of our core Fabricated Products business for 2011, 2012 and 2013 is achieved.

Our 2011 - 2013 LTI Program provides, with respect to the performance shares, for a threshold performance level up to which no performance shares will vest, a target performance level at which the target number of performance shares will vest, a performance level at or above which the maximum number of performance shares (equal to two times the target number of performance shares) will vest, and pro rata vesting between the threshold and maximum performance levels. Each performance share that becomes vested entitles the participant to receive one share of our common stock.

Similar to our 2011 STI Plan, performance under our 2011 - 2013 LTI Program will be calculated using adjusted PTOI less a capital charge equal to a percentage of our adjusted net assets. The threshold performance required for payout under the 2011 - 2013 LTI Program must equal or exceed a higher capital charge (10% of adjusted net assets) than that required under the 2011 STI Plan (7.5% of adjusted net assets) to reflect the higher level of threshold performance we believe should be required after considering the use of time-based restricted shares as part of our 2011-2013 LTI Program.

The target monetary value for each named executive officer was determined in accordance with the following objectives of our compensation structure which we believe are critical for enhancing stockholder value and our long-term success:

An annualized economic equity grant value of long-term incentives between the 50th and the 65th percentiles of our compensation peer group;
Balanced short-term and long-term goals, with:

Approximately 50% of the chief executive officer's target total compensation being delivered through long-term incentives; and

Approximately 40% of the target total compensation for the other named executive officers being delivered through long-term incentives.

Internal compensation balance; and

Recognition of differing position responsibilities.

The compensation committee determined that each named executive officer, with the exception of Mr. Hockema, should receive time-based restricted stock having an economic value equal to 50% of his target monetary value and a target number of performance shares having an economic value equal to 50% of his target monetary value. As provided by Mr. Hockema's employment agreement and consistent with the foregoing objectives, Mr. Hockema received time-based restricted stock having

30



an economic value equal to 36% of his target monetary value and a target number of performance shares having an economic value equal to 64% of his target monetary value.

The table below sets forth the target monetary value under our 2011 - 2013 LTI Program and the number of shares of restricted stock and performance shares granted to our named executive officers during 2011:

Name
 
Target Monetary Value
 
Number of Shares of
Restricted Stock(1)
 
Number of
Performance Shares(2)
Jack A. Hockema
 
$
1,886,000

 
 
15,533

 
 
65,958

 
Daniel J. Rinkenberger
 
$
480,000

 
 
5,490

 
 
13,114

 
John Barneson
 
$
398,000

 
 
4,552

 
 
10,874

 
John M. Donnan
 
$
450,000

 
 
5,052

 
 
12,068

 
James E. McAuliffe, Jr.
 
$
222,000

 
 
2,539

 
 
6,065

 
____________
(1)
The restrictions on 100% of the shares of restricted stock granted will lapse on March 5, 2014 or earlier if the named executive officer's employment terminates as a result of death or disability, the named executive officer's employment is terminated by us without cause, the named executive officer's employment is voluntarily terminated by him for good reason or in the event of a change in control. If the named executive officer's employment terminates before March 5, 2014 as a result of his retirement at or after age 65, the shares of restricted stock granted to him will remain outstanding and the restrictions on 100% of such shares will lapse on March 5, 2014. The number of shares of restricted stock was calculated by dividing 50% of the target monetary value by the sum of (i) the closing prices of our company's common stock on the grant dates, which were $49.41 per share and $55.52 per share on March 5, 2011 and July 1, 2012, respectively, reduced by (ii) 11.53%, the discount factor provided by Meridian to reflect the design characteristics, including the vesting period, of the restricted stock.
(2)
The table below sets forth the number of performance shares that will vest for each of Messrs. Hockema, Rinkenberger, Barneson, Donnan and McAuliffe under our 2011 - 2013 LTI Program at the threshold, target and maximum performance levels:
Name
 
Threshold
 
Target
 
Maximum
Jack A. Hockema
 
 
32,979

 
 
65,958

 
Daniel J. Rinkenberger
 
 
6,557

 
 
13,114

 
John Barneson
 
 
5,437

 
 
10,874

 
John M. Donnan
 
 
6,034

 
 
12,068

 
James E. McAuliffe, Jr.
 
 
3,032

 
 
6,065

 

The number of performance shares, if any, that vest based on the level of performance achieved during the three-year performance period will vest on the later to occur of March 5, 2014 and the date on which the compensation committee certifies the performance level achieved during the three-year performance period, which shall be no later than March 15, 2014. If, prior to December 31, 2013, the named executive officer's employment terminates as a result of death or disability, the named executive officer's employment is terminated by us without cause, the named executive officer's employment is voluntarily terminated by him for good reason or in the event of a change in control, the target number of performance shares will vest. If the named executive officer's employment terminates on or after December 31, 2013 but prior to the vesting date, his performance shares will remain outstanding and the number of performance shares, if any, that will vest on the vesting date will be determined based on the performance level achieved during the three-year performance period, except that the performance shares will be forfeited if the executive officer's employment is terminated by us for cause or is voluntarily terminated by him without good reason. If, prior to the vesting date, the named executive officer's employment terminates as a result of his retirement at or after age 65, the performance shares granted to him will remain outstanding and the number of performance shares, if any, that will vest upon the vesting date will be determined based on the performance level achieved during the three-year performance period.
The threshold, target and maximum number of performance shares that may vest, if at all, in 2014 under our 2011-2013 LTI Program are determined as follows:
the threshold number of performance shares reflects that no performance shares will vest in 2014 under our 2011-2013 LTI Program unless the Company's performance exceeds the threshold performance required over the 2011 through 2013 performance period;
the target number of performance shares was calculated by dividing 50% of the target monetary value by the sum of (i) the closing prices of our company's common stock on the grant dates, which were $49.41 per share and $55.52 per

31



share on March 5, 2011 and July 1, 2012, respectively, reduced by (ii) 25.93%, the discount factor provided by Meridian in connection with the calculation of the economic value of the performance shares for purposes of determining the number of performance shares to be granted on the grant date; and
the maximum number of performance shares was calculated by dividing 100% of the target monetary value by the economic value of each performance share on the grant date.

On March 5, 2012, the three-year vesting period applicable to the grant of restricted stock under our long-term incentive program for 2009 through 2011, which we refer to as our 2009-2011 LTI Program, ended and the earned shares vested in accordance with the terms of the underlying grant. In addition, in early 2012 our compensation committee determined that approximately 3.2% of the target performance shares (approximately 1.6% of the total performance shares) granted under our 2009-2011 LTI Program had been earned based on average performance for 2009, 2010 and 2011. The remaining performance shares granted under our 2009-2011 LTI Program were forfeited. Despite solid performance over the 2009-2011 performance period, our financial results and the resulting multiplier for the 2009-2011 LTI Program were negatively impacted by more than two years of recessionary economic conditions.

Retirement benefits

We no longer maintain a defined benefit pension plan or retiree medical program that covers members of senior management. Retirement benefits to our senior management, including our named executive officers, are currently provided through a defined contribution retirement program consisting of the following two principal plans:

the Kaiser Aluminum Savings and Investment Plan, a tax-qualified profit-sharing and 401(k) plan (which we refer to as our Savings Plan); and

a nonqualified and unsecured deferred compensation plan intended to restore benefits that would be payable to designated participants in the Savings Plan but for the limitations on benefit accruals and payments imposed by the Internal Revenue Code of 1986 (which we refer to as our Restoration Plan).

The defined contribution retirement program has the following three primary components, which are discussed more fully below:

A company match of the employee's pre-tax deferrals under our Savings Plan;

A company contribution to the employee's account under our Savings Plan; and

A company contribution to the employee's account under our Restoration Plan.

Under the terms of our Restoration Plan, cash balances are maintained in a “rabbi trust” where they remain subject to the claims of our creditors and are otherwise invested in funds designated by each individual from a menu of possible investments. In addition, the cash balances maintained in the rabbi trust are forfeited if the individual is terminated for cause.

The compensation committee believes the Savings Plan and the Restoration Plan support the objectives of our comprehensive compensation structure, including the ability to attract and retain senior and experienced mid- to late-career executives for critical positions within our organization. Each of these plans is discussed more fully below.

Perquisites

During 2011, all of our named executive officers received a vehicle allowance. Messrs. Barneson, and Rinkenberger were reimbursed for admission to, and the dues for, a club membership, and Mr. Donnan was reimbursed for his relocation expenses and a club membership following his relocation.

Our use of perquisites as an element of compensation is very limited and largely based on business-related entertainment needs. We do not view perquisites as a significant element of our comprehensive compensation structure but do believe that they can be used in conjunction with base salary to attract, motivate and retain individuals in a competitive environment.





32



Stock Ownership Guidelines

In order to further align the interests of senior management, including our named executive officers, with those of our stockholders, we have stock ownership guidelines. Under those guidelines, members of our senior management are expected to hold common stock having a value equal to a multiple of their base salary as determined by their position. In February 2012, we increased the multiple applicable to our chief executive officer. The guidelines now provide for a target multiple of six times base salary for our chief executive officer and three times base salary for the other named executive officers. Each member of senior management covered by our stock ownership guidelines is expected to retain at least 75% of the net shares resulting from equity compensation awards until he or she achieves the applicable ownership level required by the stock ownership guidelines. For purposes of these guidelines, stock ownership includes shares over which the holder has direct or indirect ownership or control, including restricted stock and restricted stock units, but does not include unexercised stock options. For purposes of measuring compliance with our stock ownership guidelines (1) restricted shares are valued at the closing price of the company's common stock on the grant date, (2) performance shares are valued using the target number of performance shares and the closing price of our common stock on the grant date, and (3) all other shares of common stock purchased or acquired by non-employee directors and members of our senior management are valued at the purchase price of the shares. The ownership guidelines are expected to be met within five years. Each of our named executive officers has satisfied the applicable stock ownership requirements under the stock ownership guidelines.

Our securities trading policy contains anti-hedging provisions prohibiting our directors and employees from engaging in any speculative transactions involving our securities, including (1) buying or selling puts or calls, (2) short sales and (3) buying on margin or holding our securities in a margin account.

Employment Contracts, Termination of Employment Arrangements and Change-in-Control Arrangements

As discussed more fully below, in November 2010 we entered into an amended and restated employment agreement with Mr. Hockema. The compensation committee, working with Meridian, determined that the negotiated terms of the agreement were consistent with market practice. The compensation committee also determined that extending the term of the employment agreement with Mr. Hockema was important to, among other things:

Provide an economic incentive for Mr. Hockema to delay his retirement until at least July 2015;

Improve our ability to retain other key members of senior management; and

Provide assurance to our customers and other stakeholders of the continuity of senior management for an extended period.

The compensation committee determined that the agreement and the terms of the agreement were in the best interests of our company and stockholders.

Also, as discussed more fully below, certain members of senior management, including each of our named executive officers, continue to have benefits related to terminations of employment in specified circumstances, including in connection with a change in control, by us without cause and by the named executive officer with good reason. These protections were implemented in 2002 in connection with our Chapter 11 bankruptcy and limit our ability to downwardly adjust certain aspects of compensation, including base salaries and target incentive compensation, without triggering the ability of the affected named executive officer to receive termination benefits.

Tax Deductibility

Section 162(m) of the Internal Revenue Code (“Section 162(m)”) generally limits the deductibility of compensation in excess of $1 million paid to our principal executive officer and our next three highest paid executive officers, other than the principal financial officer, unless certain criteria are satisfied. The compensation committee considers the anticipated tax treatment to our company and our executive officers in the review and establishment of compensation programs and payments. Historically, the compensation committee determined not to limit compensation to the compensation deductible under Section 162(m) in light of the limited impact of Section 162(m) on our company and our substantial tax attributes, including net operating loss carry-forwards, available to use to offset taxable income. Accordingly, in prior years, including 2011, our short-term and long-term incentive plans and programs have not met all the requirements necessary for payouts thereunder to be considered “performance-based” for purposes of Section 162(m). The compensation committee, however, has continued to explore potential modifications to our short- and long-term incentive plans and programs that would increase the deductibility of our incentive compensation, and in March 2012, the compensation committee approved umbrella arrangements under our

33



Equity Incentive Plan (which was designed to allow the qualification of awards under Section 162(m)) to gain tax efficiency with respect to our incentive programs. The approval of such arrangements is consistent with our policy to utilize available tax deductions whenever appropriate and consistent with our compensation philosophy. However, we may still from time to time pay compensation to our executives that may not be fully deductible.

Actions With Respect to 2012 Compensation

The compensation committee has reviewed and determined our compensation program for 2012. The review included discussions with Meridian and management regarding existing and contemplated market practices, as well as the structure and objectives of each component of our compensation program. Upon completion of the review, in March 2012, the compensation committee approved the annual base salaries of our named executive officers for 2012, effective April 1, 2012. The annual salaries of Messrs. Hockema and McAuliffe were not increased from 2011. Mr. Rinkenberger received an increase of 12.7% to reflect the market analysis performed by Meridian, Mr. Barneson received a modest 3.5% increase, and Mr. Donnan received an increase of 5.6% to further reflect his assumption of additional responsibilities and his relocation from Texas to California.

In addition, the compensation committee concluded that our short- and long-term incentives appeared to be performing through the business cycle as designed, determined that no material modifications to the design of such incentives were necessary, and, accordingly, in March 2012, approved (1) a short-term incentive plan for 2012 with a structure, terms and objectives generally consistent with the structure, terms and objectives of prior plans, except for the addition of a clawback provision that is consistent with the clawback provision contained long-term incentive programs, and (2) a long-term incentive program for 2012 through 2014 with a structure, terms and objectives generally consistent with the structure, terms and objectives of our prior programs. For more information regarding the 2012 compensation of our named executive officers, see our Current Report on Form 8-K filed with the SEC on March 9, 2012.

In March 2012, the compensation committee approved umbrella arrangements under our Equity Incentive Plan (which was designed to allow the qualification of awards under Section 162(m)) to gain tax efficiency with respect to our incentive programs. These umbrella arrangements are based on net cash provided by operating activities as a single objective performance metric. The payouts calculated under the umbrella arrangements are not intended to be the actual payouts to the covered employees; rather, it is anticipated that the payouts to the covered employees under the umbrella arrangements will be reduced by the compensation committee through the exercise of negative discretion (which is permitted under Section 162(m). The umbrella arrangements will not result in any duplication of payouts.

The Role of the Advisory Vote on Executive Compensation

The Company provides its stockholders with the opportunity to cast an annual vote on executive compensation. At our 2011 annual meeting of stockholders, a substantial majority of the shares of our common stock voted on the proposal were voted to approve the compensation of our named executive officers as disclosed in the proxy statement relating to such meeting. The compensation committee has considered the outcome of the vote on executive compensation at our 2011 annual meeting of stockholders and believes it affirms our stockholders' support of our overall approach to executive compensation. Accordingly, we have not made any changes to our overall approach to executive compensation as a result of the 2011 advisory vote. The compensation committee will continue to consider the outcome of the annual vote on executive compensation when making future compensation decisions for the named executive officers.


















34



Summary Compensation Table

The table below sets forth information regarding compensation for our named executive officers: (1) Jack A. Hockema, our President, Chief Executive Officer and Chairman of the Board; (2) Daniel J. Rinkenberger, our Senior Vice President and Chief Financial Officer; and (3) each of John Barneson, John M. Donnan and James E. McAuliffe, Jr., our three other most highly compensated executive officers (based on total compensation for 2011).

 
 
 
 
 
Name and Principal
Position
 
Year
 
Salary
 
Stock Awards (1)
 
Non-Equity
Incentive Plan
Compensation
(2)
 
Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings (3)
 

 
All Other
Compensation
 (4)(5)(6)
 
Total
Jack A. Hockema,
 
2011
 
$825,000
 
$
2,321,634

 
 
$
528,032

 
 
$
21,769

 
 
$
340,224

(7)
 
$
4,036,659

 
President, Chief
 
2010
 
$802,000
 
$
1,507,433

 
 
$
421,322

 
 
$
13,342

 
 
$
295,839

(7)
 
$
3,039,936

 
Executive Officer
 
2009
 
$787,000
 
$
906,186

 
 
$
338,700

 
 
$
9,624

 
 
$
236,570

(7)
 
$
2,278,080

 
and Chairman of the Board
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Daniel J. Rinkenberger,
 
2011
 
$347,500
 
$
573,489

 
 
$
218,080

 
 
$
69,298

 
 
$
124,943

(8)
 
$
1,333,310

 
Senior Vice President and Chief
 
2010
 
$318,750
 
$
527,020

 
 
$
152,653

 
 
$
47,226

 
 
$
106,329

(8)
 
$
1,151,978

 
Financial Officer
 
2009
 
$300,000
 
$
314,160

 
 
$
121,400

 
 
$
36,878

 
 
$
91,375

(8)
 
$
863,813

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
John Barneson,
 
2011
 
$316,750
 
$
475,520

 
 
$
133,632

 
 
$
66,361

 
 
$
126,940

(9)
 
$
1,119,203

 
Senior Vice President -
 
2010
 
$308,000
 
$
438,624

 
 
$
106,094

 
 
$
51,070

 
 
$
111,602

(9)
 
$
1,015,390

 
Corporate Development
 
2009
 
$302,000
 
$
263,188

 
 
$
91,700

 
 
$
43,351

 
 
$
108,292

(9)
 
$
808,531

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
John M. Donnan,
 
2011
 
$330,750
 
$
536,241

 
 
$
204,160

 
 
$
59,181

 
 
$
261,664

(10)
 
$
1,391,996

 
Senior Vice
 
2010
 
$300,250
 
$
412,562

 
 
$
117,543

 
 
$
39,317

 
 
$
87,130

(10)
 
$
956,802

 
President, General
 
2009
 
$295,000
 
$
247,840

 
 
$
101,500

 
 
$
30,145

 
 
$
80,408

(10)
 
$
754,893

 
Counsel and Secretary
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
James E. McAuliffe, Jr.
 
2011
 
$246,250
 
$
265,228

 
 
$
103,008

 
 
$
7,717

 
 
$
65,305

(11)
 
$
687,508

 
Senor Vice President -
 
2010
 
$239,500
 
$
243,668

 
 
$
82,432

 
 
$
4,668

 
 
$
68,888

(11)
 
$
639,156

 
Human Resources
 
2009
 
$235,000
 
$
146,600

 
 
$
75,600

 
 
$
3,320

 
 
$
66,367

(11)
 
$
526,887

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
____________

(1)
Reflects the aggregate grant date fair value of restricted stock and performance share awards to our named executive officers determined in accordance with Financial Accounting Standards Board Accounting Standard Code Topic 718 (referred to herein as ASC Topic 718), without regard to potential forfeiture. The aggregate grant date fair value of the performance share awards reflected in this table has been determined assuming the most probable outcome of the performance condition on the date of the grant and without adjustment for actual performance during the period. The aggregate grant date fair value of the performance share awards determined assuming the most probable outcome of the performance condition and assuming an outcome of the performance condition at the maximum level are as follows:

 
 
 
 
Aggregate Grant Date Fair Value
Name
 
Year
 
At Probable
Performance
 
At Maximum
Performance
Jack A. Hockema
 
2011
 
$
1,597,951

 
 
$
3,258,985

 
Daniel J. Rinkenberger
 
2011
 
$
317,710

 
 
$
480,000

 
John Barneson
 
2011
 
$
263,442

 
 
$
398,000

 
John M. Donnan
 
2011
 
$
296,222

 
 
$
450,000

 
James E. McAuliffe, Jr.
 
2011
 
$
131,415

 
 
$
222,000

 
____________

For information regarding the compensation cost of restricted stock and performance share awards with respect to our 2009, 2010 and 2011 fiscal years, see Note 10, Note 12 and Note 10 of the Notes to Consolidated Financial Statements included in our Annual Reports on Form 10-K for the fiscal years ended December 31, 2009, December 31, 2010 and December 31, 2011, respectively.
(2)
Reflects payments earned under our short-term incentive plans.

35



(3)
Reflects the aggregate change in actuarial present value of the named executive officer's accumulated benefit under a defined pension benefit plan previously maintained by us for our salaried employees, which we refer to as our Old Pension Plan, during the applicable fiscal year, calculated by (a) assuming mortality according to the RP - 2000 Combined Health mortality table published by the Society of Actuaries and (b) applying a discount rate of 5.75%, 4.70%, and 3.75% per annum for 2009, 2010 and 2011, respectively, to determine the actuarial present value of the accumulated benefit at December 31 of the preceding year and a discount rate of 6.00%, 5.75%, and 4.70% per annum, respectively, to determine the actuarial present value of the accumulated benefit at December 31 of the applicable year. Effective December 17, 2003, the Pension Benefit Guaranty Corporation, or PBGC, terminated and effectively assumed responsibility for making benefit payments in respect of our Old Pension Plan, whereupon all benefit accruals under the Old Pension Plan ceased and benefits available thereunder to certain salaried employees, including Messrs. Hockema and Barneson, were significantly reduced due to the limitations on benefits payable by the PBGC. Above-market or preferential earnings are not available under our Restoration Plan, which is our only plan or arrangement pursuant to which compensation may be deferred on a basis that is not tax-qualified, or any of our other benefit plans.
(4)
Includes contributions made or to be made by us under our Savings Plan. For 2011, includes contributions as follows: Mr. Hockema, $26,325; Mr. Rinkenberger, $20,317; Mr. Barneson, $32,500; Mr. Donnan, $24,242; and Mr. McAuliffe, $26,299. For 2010, includes contributions as follows: Mr. Hockema, $26,262; Mr. Rinkenberger, $23,201; Mr. Barneson, $32,500; Mr. Donnan, $24,227; and Mr. McAuliffe, $26,232. For 2009, includes contributions as follows: Mr. Hockema, $26,262; Mr. Rinkenberger, $24,500; Mr. Barneson, $34,300; Mr. Donnan, $24,500; and Mr. McAuliffe, $28,394.
(5)
Includes contributions made or to be made by us under our Restoration Plan (which is intended to restore the benefit of contributions that we would have otherwise paid to participants under our Savings Plan but for limitations imposed by the Internal Revenue Code of 1986). For 2011, includes contributions as follows: Mr. Hockema, $123,234; Mr. Rinkenberger, $29,699; Mr. Barneson, $26,698; Mr. Donnan, $20,587; and Mr. McAuliffe, $13,143. For 2010, includes contributions as follows: Mr. Hockema, $110,622; Mr. Rinkenberger, $20,814; Mr. Barneson, $23,458; Mr. Donnan, $15,946; and Mr. McAuliffe, $11,581. For 2009, includes contributions as follows: Mr. Hockema, $125,886; Mr. Rinkenberger, $24,620; Mr. Barneson, $34,678; Mr. Donnan, $24,120; and Mr. McAuliffe, $15,862.
(6)
Includes dividend and dividend equivalent payments which were not factored into the reported grant date fair value of the 2009 and 2010 restricted stock and performance share awards. For 2011, includes such payments as follows: Mr. Hockema, $176,095; Mr. Rinkenberger, $57,487; Mr. Barneson, $48,215; Mr. Donnan, $46,196; and Mr. McAuliffe, $15,052. For 2010, includes such payments as follows: Mr. Hockema, $125,286; Mr. Rinkenberger, $43,529; Mr. Barneson, $36,405; Mr. Donnan, $34,272; and Mr. McAuliffe, $20,264. For 2009, includes such payments as follows: Mr. Hockema, $69,852; Mr. Rinkenberger, $24,216; Mr. Barneson, $20,287; Mr. Donnan, $19,104; and Mr. McAuliffe, $11,300.
(7)
Includes the cost to us of perquisites and other personal benefits for Mr. Hockema. Such costs include a vehicle allowance of $14,570 for each of 2011, 2010 and 2009, and, for 2010, legal fees and expenses incurred by Mr. Hockema in connection with the negotiation and consummation of his amended and restated employment agreement with us.
(8)
Includes the cost to us of perquisites and other benefits for Mr. Rinkenberger. For 2011, includes such costs as follows: club membership dues, $5,152; and vehicle allowance, $10,288. For 2010, includes such costs as follows: club membership dues, $8,497; and vehicle allowance, $10,288. For 2009, includes such costs as follows: club membership dues, $7,751; and vehicle allowance, $10,288.
(9)
Includes the cost to us of perquisites and other personal benefits for Mr. Barneson. For 2011, includes such costs as follows: club membership dues, $8,307; and vehicle allowance, $10,459. For 2010, includes such costs as follows: club membership dues, $8,780; and vehicle allowance, $10,459. For 2009, includes such costs as follows: club membership dues, $8,568; and vehicle allowance, $10,459.
(10)
Includes the cost to us of perquisites and other personal benefits for Mr. Donnan. Such costs include a vehicle allowance of $12,684 for each of 2011, 2010 and 2009 and, for 2011, club fees in the amount of $2,862 and reimbursement of relocation costs of $155,093.
(11)
Includes the cost to us of perquisites and other personal benefits for Mr. McAuliffe. Such costs include vehicle allowance of $10,811 for each of 2011, 2010 and 2009.

As reflected in the table above, the base salary received by each of our named executive officers as a percentage of their respective total compensation was as follows:

For 2011, Mr. Hockema, 20.4%; Mr. Rinkenberger, 26.1%; Mr. Barneson, 28.3%; Mr. Donnan, 24.8%; and Mr. McAuliffe, 35.8%.


36



For 2010, Mr. Hockema, 26.4%; Mr. Rinkenberger, 27.7%; Mr. Barneson, 30.3%; Mr. Donnan, 31.4%; and Mr. McAuliffe, 37.5%; and

For 2009, Mr. Hockema, 34.5%; Mr. Rinkenberger, 34.7%; Mr. Barneson, 37.4%; Mr. Donnan, 39.1%; and Mr. McAuliffe, 44.6%.

All Other Compensation

The table below sets forth information regarding each component of compensation included in the “All Other Compensation” column of the Summary Compensation Table above.
Name
 
Year
 
 
 
 
 
Savings Plan
Contributions
 
Restoration
Plan
Contributions
 
Club
Membership
Dues
 
Vehicle
Allowance
 
Other
 
Dividend
and
Dividend
Equivalent
Payments
 
Total
Jack A. Hockema
 
2011
 
$26,325
 
$
123,234

 
 
 
$14,570
 
 
 
 
 
$
176,095

 
 
$
340,224

 
 
 
2010
 
$26,262
 
$
110,622

 
 
 
$14,570
 
$
19,098

(1)
 
$
125,286

 
 
$
295,839

 
 
 
2009
 
$26,262
 
$
125,886

 
 
 
$14,570
 
 
 
 
 
$
69,852

 
 
$
236,570

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Daniel J. Rinkenberger
 
2011
 
$20,317
 
$
29,699

 
 
$7,152
 
$10,288
 
 
 
 
 
$
57,487

 
 
$
124,943

 
 
 
2010
 
$23,201
 
$
20,814

 
 
$8,497
 
$10,288
 
 
 
 
 
$
43,529

 
 
$
106,329

 
 
 
2009
 
$24,500
 
$
24,620

 
 
$7,751
 
$10,288
 
 
 
 
 
$
24,216

 
 
$
91,375

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
John Barneson
 
2011
 
$32,500
 
$
26,698

 
 
$9,068
 
$10,459
 
 
 
 
 
$
48,215

 
 
$
126,940

 
 
 
2010
 
$32,500
 
$
23,458

 
 
$8,780
 
$10,459
 
 
 
 
 
$
36,405

 
 
$
111,602

 
 
 
2009
 
$34,300
 
$
34,678

 
 
$8,568
 
$10,459
 
 
 
 
 
$
20,287

 
 
$
108,292

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
John M. Donnan
 
2011
 
$24,242
 
$
20,587

 
 
2,862
 
$12,684
 
$
155,093

(2)
 
$
46,196

 
 
$
261,664

 
 
 
2010
 
$24,227
 
$
15,948

 
 
 
$12,684
 
 
 
 
 
$
34,272

 
 
$
87,130

 
 
 
2009
 
$24,500
 
$
24,120

 
 
 
$12,684
 
 
 
 
 
$
19,104

 
 
$
80,408

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
James E. McAuliffe, Jr.
 
2011
 
$26,299
 
$
13,143

 
 
 
$10,811
 
 
 
 
 
$
15,052

 
 
$
65,305

 
 
 
2010
 
$26,232
 
$
11,581

 
 
 
$10,811
 
 
 
 
 
$
20,264

 
 
$
68,888

 
 
 
2009
 
$28,394
 
$
15,862

 
 
 
$10,811
 
 
 
 
 
$
11,300

 
 
$
66,367

 
____________
(1)
Represents reimbursement of legal fees and expenses incurred by Mr. Hockema in connection with the negotiation and consummation of his amended and restated employment agreement with us.
(2)
Represents reimbursement of relocation costs incurred by Mr. Donnan in connection with his relocation from Texas to California, where our corporate office is located.

























37



Grants of Plan-Based Awards in 2011

The table below sets forth information regarding grants of plan-based awards made to our named executive officers during 2011.
Name
 
 
 
 
 
 
 
Grant
Date
 
 
 
 
 
 
Award
Approval
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
(#)
 
Grant Date
Fair Value
of Stock and
Option
Awards (4)
($)
 
Threshold
($)
 
Target
($)
 
Maximum
($)
 
Threshold (#)
 
Target (#)
 
Maximum (#)
 
Jack A. Hockema
 

 
 

 
 
$
284,500

 
 
 
$
569,000

 
 
 
$
1,707,000

 
 

 

 

 

 
 
 

 
 
 
3/5/2011

 
 
3/4/2011

 
 
 

 
 
 

 
 
 

 
 

 

 

 
15,533

(5)
 
 
$
723,682

 
 
 
3/5/2011

 
 
3/4/2011

 
 
 

 
 
 

 
 
 

 
 

 
32,979

 
65,658

 

(6)
 
 
$
1,597,951