In the fall of 20182019 we continued our annual engagement with our shareholders. This engagement gave us a basis for further evaluation of our practices in executive compensation and corporate governance. This initiative was led by a group of senior officers of the Company, acting on behalf and at the request of the Committee, by reaching out to shareholders holding 64%65% of our outstanding shares. Out ofFor those shareholders who elected to engage with us (representing approximately 36%39% of our outstanding shares), we organized follow-up calls. This outreach reflects our commitment to understand and address key issues of importance to our shareholders. In line with the high support for our executive compensation program as expressed in the 20182019 annual shareholder advisory vote to approve our NEO compensation, shareholders continued their support for our compensation program and the changes made over the past few years.years:

In considering investor feedback, our evolving business needs, and in furtherance of our desire to continue to link executive pay to performance, the Committee approved the followingdid not make any changes to our executive compensation program for 2019.

We believe our CEO’s total compensation reflects a pay opportunity commensurate with median levels among our Peer Group and aligns payout opportunities with the company'sCompany's long-term performance. Realizable Pay Relative Degree of Alignment (“RPRDA”) is an important measure the Committee uses to assess whether realizable pay is commensurate with the total shareholder return achieved by shareholders relative to our Peer Group.

The RPRDA compares the percentile ranks of thea CEO’s three-year realizable pay and the Company’sa company’s three-year TSR performance relative to the Peer Group.peer group. The RPRDA is equal to the difference between the combined performance rank minus the combined pay rank. Values for the RPRDA can measure between -100 and 100. On that scale, the values can be interpreted as outlined below.

Realizable pay captures the following elements of compensation for the three-year period:

Albemarle has used relative TSRrTSR as its long-term performance measure since 2014. Since then we have consistently measured RPRDA. The following table shows Albemarle's percentile rank relative to the peer groupour Peer Group for the 3-year periods starting in 2014. No compensation data is included for the 2016-20182017-2019 period as such data cannot be obtained until after peer group company proxies are available in 2019.2020.

The following table shows Mr. Kissam’s RPRDA for the 3-year periods, with both relative TSR and CEO compensation ranked in the 4th quartile of the peer group, showing a strong alignment between realizable pay and TSR over the three-year periods.

The Committee designs and oversees the Company’s compensation policies and approves compensation for our NEOs. Our overarching goal is to create executive compensation plans that incent and are aligned with the creation of sustained shareholder value. To accomplish this, our plans are designed to:

We design our compensation programs to keep our NEOs focused on the long-term success of our Company by making a substantial portion of their compensation subject to the achievement of specific performance measures, requiring NEOs to hold a significant amount of Company stock during the term of their employment, and granting stock-based awards with multi-year vesting periods.

The performance period covered by our PSU grants is three years, with the vesting of any award earned occurring in two equal tranches – the first tranche vests after the end of the third year of the performance period and the second tranche vests on the first January 1 after the end of the performance period.following year. PSUs issued in 2018 were based 100% on relative TSR as compared to our Peer Group. PSUs granted in 2019 were based on relative TSRrTSR as compared to our Peer Group and ROIC, each with equal weighting. The Committee chose these measures to provide a strong linkage between the rewards for our leaders and the returns experienced by our shareholders, and also because these measures were thought to be well alignedwell-aligned with the longer three-year performance period and the higher level of investments in capital for that period.

RSUs have a minimum vesting period of three years and also vest in two equal tranches – the first tranche at the third anniversary of the Grant Date and the second tranche at the fourth anniversary of the Grant Date.

Stock option grants made after 2015 cliff vest at the third anniversary of the Grant Date. These awards reinforce the focus of our NEOs on the long-term success of the Company by aligning their personal financial success with that of our shareholders.

The committee uses a group of peer groupcompanies to align executive compensation with comparable positions within that peer group. We use the following criteria for selecting peer companies that we include in our compensation peer group.group (our "Peer Group").

For 2018,2019, Albemarle used the same Peer Grouppeer group that it used in 2017.2017 and 2018, with the exception of A. Schulman Inc. which was acquired in 2018. Our selected 20182019 Peer Group (the "2018"2019 Peer Group") consists of 17the below 16 chemical companies.

The Committee utilizes the Peer Group data and survey data as two of its tools in establishing target levels of compensation. However, the Committee does not rely exclusively on the Peer Groupsuch data or survey data in establishing target levels of compensation, orand does not employ a rigid or formulaic process to set compensation levels. The Committee does utilize the Peer Group data and survey data as one of many tools. In setting compensation levels, the Committee considers the following factors:

The Committee evaluates the performance of each NEO in light of our overall financial performance (as described in greater detail below) and non-financial performance goals and strategic objectives approved by the Committee and the Board of Directors. For 2018,2019, as in past years, the Committee structured a compensation package for our NEOs comprised of base salary and benefits coupled with annual and long-term incentives, which we believe provides an appropriate mix of financial security, risk and reward.

Base salary provides our NEOs with a basic level of financial security and supports the Committee’s objectives in attracting and retaining top talent. Base salaries for our NEOs, other than the CEO, are recommended by our CEO and are reviewed and approved by the Committee. Base salary for our CEO is recommended and approved by the Committee. For 2018 the Committee decided to keep base salary for the CEO at the same level as in 2017.

The Committee designed the AIP to provide both an incentive to achieve, and a reward for achieving, our annual goals and objectives. Each year, the Committee and the Board approve the performance goals under the AIP. These performance goals are intended to ensure that our NEOs execute on short-term financial and strategic initiatives that drive our business strategy and long-term shareholder value.

The Committee chose these performance metrics to align the AIP with our 20182019 goals and objectives. The Committee chose the relative weights of the performance measures based on the desire to emphasize financial results while maintaining a focus on non-financial objectives.

The Committee chose Adjusted EBITDA and Adjusted Cash Flow from Operations as the 20182019 AIP metrics because they were considered the key measures of financial performance in the Company’s 20182019 annual operating plan.

Stewardship metrics were included because they are critical to our license to operate and consistent with our values. These objectiveshealth, safety and environment ("HSE") metrics were ambitious, as the Committee set a quantitative target and superior levels of performance for each of these metrics at levels that required year-over-year improvement, with no payout earned for any one individual Stewardship metric if target performance for that metric was not achieved.

The Committee may take into account extraordinary or infrequently occurring events, or significant corporate transactions in deciding to adjust the results used to determine whether or not the AIP objectives have been met. The Committee retains the right to exercise discretion in determining the final level of the awards paid, in order to ensure that the AIP remains consistent with its stated objectives. In the last 10 years the Committee has not used its discretion in determining the achievement of the company performance metrics.

The performance for the stewardship metrics (occupational safety, process safety, and environmental responsibility) was determined by the Committee’s quantitative assessment of the level of achievement for the three different stewardship objectives. For each of the three stewardship metrics, we have set a target and superior performance level. Performance below target does not pay out. Occupational safety was measured as our lost time severity rate, which is calculated as the number of lost days x 200,000 and divided by the total man-hours worked; process safety was measured by severity score; and environmental responsibility was measured by the number of our environmental incidents. We believe in

The following tables summarize the importancethreshold, target, and superior performance levels set by the Committee and actual results for the Adjusted EBITDA and Adjusted Cash Flow from Operations metrics for 2019, for each of setting meaningful stewardship standardsthe plans that apply to our NEOs. Our Lithium GBU, which is our largest GBU and responsible for more than half of our global organization. WeAdjusted EBITDA and Adjusted Cash Flow from Operations, did not meet theits threshold performance levels in 2019 for Adjusted EBITDA and Adjusted Cash Flow from Operations. As such, Corporate payout was impacted and Lithium payout, driven only by its positive performance on Stewardship, was well below target stewardship levels for the 2018 performance year and have developed specific measures to improve performance in 2019.level.

The following table illustrates the 20182019 AIP payout for the Corporate plan against payout levels over the 4 previous years. We believe the fluctuations in payout confirm the correlation of pay to performance at Albemarle.

The Committee reviewed the Company’s 20182019 performance and determined that the potential awards for the NEOs were funded consistent with the plan metrics set during the first quarter of the year. After this determination was made, Mr. Kissam engaged the Committee in a further discussion of the Company’s performance and of each NEO’s individual performance compared to their objectives. In light of the accomplishments by each NEO that were cited by Mr. Kissam to the Committee, it was recommended by Mr. Kissam and approved by the Committee that the individual performance modifierrelated payout for each NEO be set as follows: Mr. Tozier 100%15%, Mr. Johnson 25%, Ms. Narwold 110%20%, and, Mr. LaBauve 100%Crawford 15%. Due to his departure early 2018, Mr. Juneau did not qualify for a bonus payout.

When applied to and combined with the Company score, this yielded actual bonus payouts for each NEO shown in the table below.

We believe it is important to provide a long-term incentive opportunity to our NEOs charged with driving sustainable growth and long-term value creation for Albemarle, further aligning their interests with those of our shareholders. We do this through an annual LTIP grant, in 20182019 comprised of PSUs, RSUs and stock options, designed to ensure an equity mix that is primarily performance-based and retentive in nature.

We employ longer vesting periods than our peer groupPeer Group median.

The following table illustrates threshold, target and superior relative performance levels and the percentage of the target grant earned for each performance level. Results between threshold and target, and target and superior performance, are interpolated. The table also includes the relative performance result and the percentage of grants earned as determined by the Committee.

The following table shows the grants approved in February 20162017 by the Committee for the NEOs. The table also includes the grant values approved by the Committee in February 20192020 after it determined the 2016-20182017-2019 relative performance results.

In February 2018,2019, the Committee approved a total grant value for the NEOs under the LTIP. The values granted to each NEO are set forth below, as well as the approximate percentage apportioned in the form of PSUs, RSUs and Stock Options. Mr. Kissam’s equity grant reflects our emphasis on long-term incentives in our pay mix. Mr. Juneau did not receive a grant in 2018 given his retirement in early 2018.

The number of units for the PSUs and RSUs was based on the stock closing price at the grant date. The number of stock options was determined using the Black Scholes value of the options.

In February 2018, the Committee approved a grant of PSUs,The performance based PSU grants are based 50% on the grant date closing stock price, to our NEOs, as follows:

The following table illustrates threshold, target and superior relative performance levels for the rTSR PSUs and the percentageperformance of the target grant earned for each performance level. Results between threshold and target and target and superior performance will be interpolated.

Performance and payout opportunities as shown in the table reflect the dual character of theboth rTSR and ROIC PSU grant:grants:

The options vest on the third anniversary of the grant date and expire ten years from the date of the grant.

The Company provides NEOs with the same benefits provided to other Albemarle employees, including:

We maintain a deferred compensation plan that covers executives, including the NEOs, who are limited in how much they can contribute to tax-qualified deferred compensation plans (such as our Savings Plan). We maintain this plan in order to be competitive and because we want to encourage executives to save for their retirement. A participant in the EDCP may defer up to 50% of base salary and/or up to 100% of cash incentive awards (net of FICA and Medicare taxes due). We also provide for employer contributions in the EDCP to provide executives with the same proportional benefits as are provided to all other employees, but that cannot be provided under our tax-qualified plan because of statutory limitations that apply under that plan. The EDCP also provides for a supplemental benefit of 5% of compensation in excess of amounts that may be recognized under the tax-qualified Savings Plan and of the cash incentive bonus award paid during the year.

Beginning on January 1, 2013, all our NEOs, regardless of hire date, participate in the same tax- qualified Savings Plan and EDCP. The new defined contribution plan design has providedprovides all participating employees the opportunity to receive a Company contribution of 11% of their base and bonus earnings for the calendar year if they contribute at least 9% of their base and bonus earnings to the Savings Plan. Such Company contributions go into the tax-qualified Savings Plan up to the compensation and benefit limitations under the Internal Revenue Code (the "Code"), and after that are credited to an EDCP account.

We previously maintained a traditional tax-qualified defined benefit pension plan ("Pension Plan"), which was fully frozen as of December 31, 2014. In 2004, we implemented a new defined contribution pension benefit in our tax-qualified Savings Plan for all non-represented employees hired on or after April 1, 2004, and limited participation in the "Pension Plan" to then-current participants. Mr. Kissam Mr. Juneau and Mr. LaBauve joined the Company prior to April 1, 2004, and, as such, participated in the Pension Plan. We also maintain a supplemental executive retirement plan (“SERP”) to provide participants with the difference between (i) the benefits they would actually accrue under the Pension Plan but for the maximum compensation and benefit limitations under the Code, and (ii) the benefits actually accrued under the Pension Plan, which are subject to the Code’s compensation and benefit limits. Certain provisions of the SERP also permitted the Committee to award key executives additional pension credits related to offset reduction in the Pension Plan plan as a mid-career hire. This provision was also limited to then-current participants in 2004 concurrent with the Pension Plan changes. The Company froze accruals in the Pension Plan and SERP effective December 31, 2014.

Our perquisites are intended to be limited in nature, and are focused in areas directly related to a business purpose, or in helping to foster the health, security and well-being of our senior executives for the benefit of the Company.

When an NEO is required to geographically relocate in order to join the Company, or is asked to relocate due to a change in their work location after joining the Company, we provide them with the same relocation package that is also offered to management and senior professional employees. Certain relocation expenses are grossed-up for taxes, as is the competitive practice within our Peer Group, and more broadly, in the general marketplace.

We also offer limited reimbursement for executive physical exams and limited reimbursement for financial planning. Our policy is toWe do not provide tax gross-ups on such amounts to NEOs.

We believe that providing our executives, including our NEOs, with reasonable severance benefits aligns their interests with shareholders’ interests in the context of potential change in control transactions, and also believe that such benefits help facilitate our recruitment and retention of senior executive talent.

Consistent with this philosophy, we maintain a Severance Pay Plan (“SPP”) that provides severance payments to certain of our employees if we (a) terminate their employment without cause or request that they relocate and they elect not to do so after a change in control or (b) eliminate their position or have a change in our organizational structure with a similar effect absent a change in control. The SPP provides our NEOs with severance payments only in the absence of a change in control.

Between 2006 and 2017, weWe entered into severance compensation agreements (and related amendments) with each of our NEOs, providing for severance payments for a change in control-related termination. None of these severance compensation agreements include an excise tax gross-up.

The Committee periodically reviews our post-employment compensation arrangements taking best practices into consideration, and believes that these arrangements are generally consistent with arrangements currently being offered by our Peer Group. The Committee has determined that both the terms and payout levels are appropriate to accomplish our stated objectives. The Committee also considered the non-competition agreement that we would receive from the NEO in exchange for any