International Paper
Champion Merger Integration Savings and Synergy Plan
July 1, 2000
I. Purpose
The purpose of this plan is to encourage and promote focused and united
efforts and interests by Integration Team Members by providing additional
incentive compensation to achieve the most effective and successful
integration of Champion International Corporation and International Paper
Company by December 31, 2001.
II. Plan Description
The performance period begins July 1, 2000 and ends December 31, 2001.
Awards may be earned provided stated savings have been achieved during the
period and specific conditions pertaining to the integration have been
met. Target awards are considered stock units and are assigned at the
beginning of the period. The actual amount of the award depends upon the
level of achievement of the objectives and the stock price at the end of
the period.
A. Participation
Executives identified as the Integration Steering Committee and
Integration Team Leaders are eligible to participate in the plan. As the
organization is finalized the Chairman and Chief Executive Officer may add
or delete participants as required.
B. Objectives
The primary objective is to achieve $425,000,000 of annual savings by
December 31, 2001. The projected on-going savings will determine the
amount of the earned award according to the following table:
Savings: $340mm $425mm $485mm $550mm
% of Target: 50% 100% 125% 175%
These awards can be further adjusted by plus or minus 25% depending upon
the overall success of the integration process as measured by the
following:
o Retention of all major customers,
o Retention of high potential individuals identified for placement in
the combined company, and
o Integration of best practices of each of the combined companies to
include social integration of corporate cultures.
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C. Earned Awards
Earned awards are paid in cash. The value of the earned award depends upon
performance relative to the established objectives and to the share price
at December 31, 2001. (Share price used to calculate the award will be the
average between the high and low for the ten business days immediately
proceeding the last day of the period).
Target awards are expressed as stock units and are determined by the level
of the participant.
Level Description Target Award
--------------------------------------------------------------
I Integration Steering Committee 10,000 units
II Integration Team Leader 3,000 units
III. Administration
The plan is administered by the Chairman and Chief Executive Officer.
Earned awards and degree of objective achievement are recommended by the
Chairman for final approval to the Management Development and Compensation
Committee of the Board of Directors.
Earned awards are paid as soon as practicable following the close of the
performance period.
IV. Cost Estimate
Stock Price $35 $40 $45
At 100% Performance 8.0mm 9.2mm 10.3mm
At 175% Performance 14.0mm 16.0mm 18.0mm
(Note: Cost Estimate Assumes 16 participants at Level I and 23 at Level
II)
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