Executive Deferred Compensation Plan 2017 Plan Year Election Period Other Information and Q&A Distribution Due to Financial Hardship Financial Hardship If you suffer a severe financial hardship (as defined under relevant law), you may petition the Plan committee to distribute amounts reasonably necessary to meet your needs. Need Must Be Unforeseen Payments must be based on an unforeseen hardship. For example, withdrawals cannot be made under this provision to purchase a home or pay tuition. Lump-Sum Payout The withdrawal is paid out in a lump sum, and will be taken pro rata from each account. Cessation of Deferrals If you take a hardship withdrawal distribution, you may not defer compensation into this Plan until the beginning of the Plan year following a full year from the date of the hardship withdrawal distribution. Claims Procedures Making a Claim If you make a claim for a benefit, request information under the Plan, or request an interpretation or ruling under the Plan to the Plan committee, you should receive a response in writing within 30 days. Review If the claim or request is denied, or if you have not received a response within 30 days, you may request a review by notifying the Plan committee within 60 days following the end of the 30-day review period mentioned above. The decision on review should be made within 60 days. Final Decision If the Plan committee requires additional time in order to conduct a hearing or because of other special circumstances, you will be notified in writing and the time limit is extended for another 60 days, for a total of 120 days in which to reach a final decision. The decision shall be in writing and state the reason and relevant Plan provisions. Benefits Protection Trust Unsecured General Creditor To avoid current taxation, any assets set aside for this plan must be subject to the claims of the general creditors of Albemarle in the unlikely event of bankruptcy or insolvency. As a result, you are an unsecured general creditor of the Company with respect to your Plan accounts. Protections To increase the security of your benefits, Albemarle has established a specially designed irrevocable grantor trust, commonly called a rabbi trust. The Trust helps to protect your benefits in the event this Plan is terminated or in the event of a Change in Control of the Company. Events which constitute a change in Control are described in the Plan document. Trust Assets Assets held by the trust are mutual fund shares and phantom shares of Albemarle Corporation common stock. These assets are available to pay benefits to participants if Albemarle is unable to pay benefits for any reason other than bankruptcy or insolvency. However, you have no specific rights in these assets other than as an unsecured general creditor. Trustee The trustee is an independent third party to the plan*. Plan Document Governs This brochure has been prepared to give you a better understanding of the benefits and features of this Plan. Each participant s benefits and rights under this Plan are at all times governed by the text of the EDCP Plan document and are in no way altered or modified by the contents of this brochure. *Trustee services are performed by Bank of America, N.A. a wholly owned banking affiliate of Bank of America Corporation. This document is being provided exclusively by your employer, which retains responsibility for the content. 1
Executive Deferred Compensation Plan 2017 Plan Year Election Period Not an Employment Contract This Plan does not constitute a contract of employment between you and Albemarle. *Trustee services are performed by Bank of America, N.A. a wholly owned banking affiliate of Bank of America Corporation. This document is being provided exclusively by your employer, which retains responsibility for the content. 2
Right to Amend Albemarle reserves the right to amend or terminate this Plan, in whole or in part, at any time. Such amendment or termination may not alter the amounts already credited to your account balance. Distributions will occur according to the Plan document. Administration The Albemarle Employee Relations Committee is the Plan Administrator. This committee has the authority to interpret and enforce all appropriate rules and regulations for the administration of the Plan and decide or resolve any questions and interpretations that may arise in Plan administration. The decision of the Plan committee shall be final, conclusive and binding on all persons having an interest in the Plan. Non-Assignability of Accounts Except in connection with designating a beneficiary, no person can assign or transfer your accounts prior to distribution. This includes seizure of your accounts to pay debts, judgment, alimony or separate maintenance owned by you or any other person, including your or any other person s bankruptcy or insolvency. Naming a Beneficiary You have the right, at any time, to designate a beneficiary (both primary as well as contingent) to whom benefits will be paid in the event of your death prior to complete distribution of your accounts. All beneficiary designations should be completed electronically on Benefits OnLine at www.benefits.ml.com. It is not necessary to obtain notarized spousal consent on a beneficiary designation. If you fail to designate a beneficiary, or your designated beneficiary predeceases you, your beneficiary will be your estate. Nonqualified Unfunded Plan Under ERISA The Plan is a non-qualified, unfunded deferred compensation plan as defined under the Internal Revenue Code and the Employee Retirement Income Security Act of 1974. It is intended to comply with the Internal Revenue Code Section 409A which governs most deferred compensation plans. Consult Your Tax Advisor You should consult a personal tax advisor for detailed information and guidance about the treatment of your Plan account. This Election Period This election period for the 2017 plan year will be held from 8 a.m. (ET) on November 28, 2016 to 4 p.m. (ET) on December 9, 2016. Future Elections You will be provided with Plan information and the opportunity to change your elections each year. Each year (including the end of this year), you will receive information in November to make elections for the Plan year beginning on the following January 1. No Evergreen Election Once you have made an election to defer bonus or base salary into the Plan, those elections will expire at the end of each Plan year. You will have to make a new deferral election each year if you want to continue making deferrals. Note: With respect to bonuses, if you want to make a deferral election, it must be made in the year before the year in which the bonus is earned. So, for example, you could elect now to defer a 2017 bonus which is payable in 2018. If you decide to make a different election for a 2018 bonus payable in 2019, you would have to make the change during the election period held at the end of 2017. Administrative Service Provider Albemarle has contracted with Merrill Lynch to act as record keeper and to provide other administrative services for this Plan. When you have questions about your account, you may call Merrill Lynch at 1-800-228-4015. 3
Human Resources If you have specific questions about how the Plan operates, please contact Jessica Mellieon at 225-388- 7953 or jessica.mellieon@albemarle.com. Questions and Answers Taxation Note: The following is not intended to be legal or tax advice. If you have any specific tax questions, you should seek the advice of your legal or tax advisor. Am I subject to income tax on deferred compensation or earnings before I receive them? In general, no. As long as your deferral election is filed before the year in which you earn the compensation that you defer, you will generally not be taxed until you actually receive this money. However, some state and local taxing authorities do not recognize nonqualified deferred compensation as being tax deferred. For example, Pennsylvania and New Jersey do not recognize deferred compensation and you would generally be taxed now on any amounts deferred in these states. How do my deferrals affect the income tax withholding on my paychecks? Your federal W-2 earnings exclude deferred compensation. Most state and local laws also exclude deferred compensation from earnings. Thus, taxes withheld will be reduced. Are my deferrals included in the Social Security Wage Base? Yes. Deferrals are subject to withholding for FICA, including Medicare taxes, in the year contributed to the Plan. Social Security taxes will be withheld on deferrals made from earnings before the annual Social Security wage base is reached. Medicare will be withheld on all amounts deferred, since there is no limitation on this tax. In addition, FICA taxes are due on employer contributions into the EDCP. Will I pay FICA taxes when I take my distribution? In general, no. So long as FICA taxes were withheld at 4 the time of deferral, the amounts are not subject to FICA taxes when paid. Will the payouts affect my Social Security benefits after I retire? No. Payments made from the Plan will not affect your Social Security benefit. For purposes of Social Security, these payments are considered earned when they are credited to your account. They do not constitute earned income under the earnings test when they are distributed to you. How are amounts taxed when they are distributed to me? All distributions are taxed as ordinary income when distributed to you and are subject to income tax withholding. Special income tax averaging is not available. If you currently live in a state which imposes individual income taxes on benefit payments, and at the time you begin receiving benefit payments you reside in a state which does not impose individual income taxes on such payments, you should seek the advice of your legal or tax advisor regarding state income taxes on these payments. Is the death benefit payable under the Plan taxable income to my beneficiary? Yes. The death benefit payable to your beneficiary is taxable as ordinary income. Will the death benefits paid to my beneficiaries be includible in my gross estate for federal estate tax purposes? Yes. The account balances at the time of your death are includible in your gross estate. If, however, your beneficiary is your spouse and the benefit qualifies for the estate tax marital deduction, there should be no federal estate tax. Distributions Can I withdraw my account before I leave the employment of Albemarle? Yes, but only if you have elected a scheduled withdrawal date that occurs while you are still employed, or if you request and are approved for a hardship withdrawal distribution. Can I change my distribution elections? The time and form of distribution you have elected may be changed only if: (i) the election to make such a change is made at least 12 months before the amount would otherwise have been payable and (ii) the new
election is to further defer the commencement of distributions and the new deferral period is at least five years. Depending on your current elections, further restrictions may apply. Please contact Human Resources if you wish to discuss your options. Security What happens to my account if Albemarle becomes insolvent? In the unlikely event that Albemarle becomes insolvent, you will be an unsecured general creditor of Albemarle. Your claim against the assets of Albemarle will be considered with the claims of other general creditors in the event of bankruptcy. Other Tax Advantaged Accounts Can any of the payments under this Plan be rolled over into a qualified plan or IRA? No. Amounts deferred are not eligible to be rolled over into a qualified plan or IRA. Access to your Accounts How can I find out the status of my accounts? You may log on to Merrill Lynch s Benefits OnLine at www.benefits.ml.com or you may call Merrill Lynch at 1-800-228-4015 to get the status of your accounts on a daily basis. You will also receive statements showing the status of your account after the end of each quarter. Neither Merrill Lynch and its representatives nor Albemarle Corporation provides tax, accounting or legal advice. Any tax statements contained herein were not intended or written to be used, and cannot be used for the purpose of avoiding U.S. federal, state or local tax penalties. Please consult your own independent advisor as to any tax, accounting or legal statements made herein. 5