Notes to Consolidated Financial Statements

Note 1 - Summary of Significant Accounting Policies Note 2 - Segment Information Note 3 - Earnings Per Share Note 4 - Employee and Retiree Benefits Note 5 - Investments Held by VEBA Trust Note 6 - Former Natural Resource Operations Note 7 - Costs Associated With Exit Activities Note 8 - Property and Equipment Note 9 - Impairment of Long-Lived Assets Note 10 - Other Assets Note 11 - Accrued Liabilities Note 12 - Other Liabilities Note 13 - Long-Term Debt Note 14 - Accounts Receivable and Asset Securitization Note 15 - Operating Leases Note 16 - Equity-Based Compensation Plans Note 17 - Capital Stock Note 18 - Income Taxes Note 19 - Supplemental Cash Flow Information Note 20 - Other Operating Income, Net Note 21 - Other Nonoperating Income (Expense), Net Note 22 - Risk Management Note 23 - Other Commitments and Contingencies Note 24 - Selected Quarterly Financial Data (unaudited)

Note 16 - Equity-Based Compensation Plans

The Company has stock incentive plans to encourage employees and nonemployee directors to remain with the Company and to more closely align their interests with those of the Company’s shareholders.

Stock Option Plans

The Company grants options under its 1988 Stock Option Plan (the “1988 Plan”) to executives and key employees and under its Non-Employee Directors’ Stock Option Plan (the “Non-Employee Plan”) to outside directors, to purchase common stock at a price not less than the average quoted market value at the date of grant. All grants under the 1988 Plan made in the last three years have a maximum term of six years and substantially all of these grants either vest over three years from the date of grant or vest 100% at the end of the third year. The Non-Employee Plan options are granted with a maximum term of ten years and vest in full at the end of six months. There are 1.3 million shares underlying options for both plans that are authorized, but not yet granted.

The table below summarizes the activity in all plans for options for the Company’s common stock for 2003, 2002 and 2001.

The following table summarizes information about stock options outstanding as of December 31, 2003.

Exercisable options at the end of the year for common stock were 2.3 million in 2003, 2.1 million in 2002, and 1.7 million in 2001.

Employee Stock Purchase Plan

Under the 1994 Employee Stock Purchase Plan (the “ESPP”), as amended, the Company is authorized to issue up to 1.0 million shares of common stock (of which 0.9 million shares had been issued as of December 31, 2003) to eligible employees. The ESPP is a noncompensatory plan that allows eligible employees to buy the Company’s common stock at below market value, subject to plan limitations on the amount an employee may purchase annually. Under the ESPP, the Company sold approximately 0.2 million shares of common stock to employees in 2003, approximately 0.1 million shares in 2002 and approximately 0.1 million in 2001.