International Paper
Champion Merger Integration
Chief Executive Officer Performance Incentive Plan
July 1, 2000
I. Purpose
The purpose of the Chief Executive Officer Performance Incentive Plan (the
Plan) is to provide additional incentive and recognition to the
Participant for achieving the aggressive integration of Champion
International Corporation and International Paper Company resulting in
savings of $425,000,000 by December 31, 2001.
II. Plan Description
The Plan provides shares of stock, performance units, and/or cash to the
Participant upon successful completion. Awards are forfeited if
performance objectives are not achieved as determined by the Management
Development and Compensation Committee (the "Committee").
A. Participation
Participation in this plan is limited to the Chairman of the Board and
Chief Executive Officer. Participation in the Plan, or receipt of an award
under this Plan, does not give the Participant any right to a subsequent
award, nor any right to continued employment by the Company for any
period.
B. Objectives
The primary objective is to achieve $425,000,000 of annual savings by
December 31, 2001. The actual amount of savings will determine the amount
of the earned award according to the following table:
Savings: $340mm $425mm $485mm
% of Target: 50% 100% 125%
Earned Award: 50,000 100,000 125,000
C. Earned Awards
The Target Award is expressed as 125,000 performance units. The
performance units will be granted to the Participant and will be earned in
full or in part based upon the committee's determination of the level of
achievement of the performance objective as identified in Section I.
Earned awards are paid in cash.
Each performance unit will be equal to one share of International Paper
common stock at December 31, 2001. (Share price used to calculate the
award will be the average
<PAGE>
between the high and low for the ten business days immediately proceeding
the last day of the period).
III. Administration
The Plan operates at the discretion of the Committee. The Committee may
exercise considerable discretion and judgment in interpreting the Plan and
adapting, from time to time, rules and regulations that govern the
administration of the Plan.
Decisions of the Committee are final, conclusive and binding on all
parties, including the Company, its Shareholders, and employees.
The Committee may at any time suspend, terminate, modify, or amend any or
all of the provisions of this Plan.
IV. Method and Timing of Payment of Awards
Performance units will be earned on the date the Committee determines the
performance objective has been achieved. Payment may be in cash, in shares
of International Paper common stock, or in any combination of cash and/or
stock as determined by the Committee in its discretion.
The Committee, in its discretion, may award all or part of any unearned
award to the Participant, Participant's estate or beneficiary upon the
Participant's death or total disability.
V. Governing Law
The Plan is governed by the laws of the State of New York.
VI. Tax Withholding
The Company will deduct from any award made under the Plan, a sufficient
amount to cover withholding of any federal, state or local taxes required
by law, or to take such other action as may be necessary to satisfy any
such withholding obligations.
VII. Non-Transferability of Award
No award, Under this Plan, and no rights or interests therein, will be
assignable or transferable by a Participant (or legal representative).
VIII. Change of Control
Should the Company experience a Change of Control as described in the
Participant's letter agreement dated February 11, 1997, all awards
described in the Plan will be
2
<PAGE>
awarded in full at the earlier of the date of the change of control or the
Participant's termination from the Company.
IX. Cost Estimate
Stock Price: $35 $40 $45
At 100% Performance: $4,375,000 $5,000,000 $5,625,000
At 175% Performance: $7,656,250 $8,750,000 $9,843,750
