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EXHIBIT 10.3
2019 Short-Term Incentive Plan
Canada/International

Purpose
As a means of rewarding employees for their contribution towards the success of
the Company, a 2019 Short‑Term Incentive Plan (STIP) has been adopted. The STIP
is designed to link a portion of employees’ total compensation to the attainment
of specific, measurable, and bottom-line oriented key company performance
indicators as well as to recognize and reward individual performance.
Eligibility
The Plan applies to non-unionized, regular, salaried employees working in Canada
and in other countries, except the United States. Eligibility for or receipt of
incentive pay should not be considered as automatic, retroactive or
precedent-based.
Performance Period
The STIP is tied to the performance of the Company, its divisions and its
employees over the period from January 1, 2019 to December 31, 2019.
Plan Design
The STIP is designed to reflect the different employee accountabilities and
diversity of positions. In order to tie incentive payouts to employee
performance and the achievement of key performance indicators, the STIP’s design
is adapted to all groups of employees: Operations, Sales and Corporate.
 
The amount of award that employees are eligible to receive is expressed as a
certain percentage of their base salary. Base salary is the rate in effect at
December 31, 2019. The Company determines the threshold, target and maximum
incentive payouts for participants, which vary per grade level. Immediate
managers are responsible to inform their employees of their respective
threshold, target and maximum incentive award payouts.
Discretionary Plan and Plan Administration
4    Incentive payouts are within the complete and sole discretion of the
Company.
4    Before awards are paid, the Company determines and approves achievement of
Company performance metrics, individual performance of each eligible employee as
well as each payable award, subject to the overall maximum incentive payout
described below under “Maximum and Minimum Payout”.
 
4    The Company has the right to adjust any or all awards; this includes the
right to eliminate any or all awards for any year despite achievement of
performance metrics, even if such decision is made after the end of the
performance period.
 
4    The Company may modify, suspend, amend or terminate the STIP at any time.
4    Any payment made under this plan is subject to the Company's recoupment
policy.
 
4    With respect to any employee, the Company reserves the right to reduce or
even cancel incentive awards in the event an employee has demonstrated an
inadequate level of performance, whether or not the applicable performance
metrics have been met.
 
4    Adjustments may be made to the financial metrics for closure costs,
impairment charges and other related charges, severance costs, net loss or gain
on the disposition of assets, strategic capital expenditures and similar items.
 
4    Adjustments may be made to the cost metrics for specific reasons such as
market downtime, major variation in grade mix, major changes in input price,
restructuring or reorganization costs, and similar items.
 
4    Any adjustment to the performance metrics has to be formally approved
before implementation.
 
4    Awards under the STIP are to be paid in a lump sum no later than
March 15, 2020.

This plan text replaces and supersedes any and all prior versions and summary
fact sheet. It is gender neutral and the masculine form is used only to
facilitate its reading.
June 2019                                             1/7

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2019 Short-Term Incentive Plan
Canada/International

Company Performance Metrics & Weighting

Eighty-five percent (85%) of the incentive payout is calculated based on the
performance of the Company and its divisions. The table below contains corporate
and divisional performance metrics.
Company Performance Metrics1

 
Criteria
Threshold
Target
Exceeding Target
 
Income from operations – Resolute
$348.5M (80% of budget)
$435.6M (budget)
$522.7M (120% of budget)
 
Manufacturing costs – division2
2% > budget
budget
2% < budget
 
SG&A costs3
$136.6M (2% > budget)
$133.9M (budget)
$129.2M (3.5% < budget)
 
Pulp and paper sales – Profit per metric ton4
80% of budget
budget
120% of budget
 
Pulp and paper sales – Improvement of account receivable collection time
Improvement of payment terms
0.8%
1.3%
1.8%
 
Improvement of DSO5
0.8%
1.3%
1.8%
 
Safety – OSHA rate6
0.75
0.65
≤ 0.50
 
Safety – Severity rate7
19
17
≤ 15
 
Number of Class 1 & 2 environmental incidents8
25
20
≤ 15
 

1 Expressed in U.S. dollars.
2 For the Hydro-Saguenay division, threshold is set at budget, target is set at
2% below budget and maximum payout is set at 5% below budget.
3 Excluding incentive and equity compensation costs.
4 Performance metrics differ for the Wood Products sales force.
5 Improvement of the days sales outstanding.
6 The frequency of safety incidents is the OSHA incident rate measured by the
number of recordable incidents (lost time plus temporary assignments or
restricted work plus medical treatments), multiplied by 200,000 and divided by
the total number of hours worked. The calculation methodology for the
mills/divisions varies from the calculation methodology for corporate employees.
7 The severity of safety incidents is measured by the number of days lost due to
lost time incidents and incidents resulting in temporary assignments or
restricted work, multiplied by 200,000 and divided by the total number of hours
worked.
8 Performance is based on the results of the Company, provided that i) pulp and
paper mill employees will not be entitled to a payout for the environmental
metric if the number of Class 1 & 2 incidents recorded at their respective mill
is 4 or greater and ii) employees of other facilities and divisions will not be
entitled to a payout for the environmental metric if the number of Class 1 & 2
incidents recorded at their respective facility or division is 2 or greater.

This plan text replaces and supersedes any and all prior versions and summary
fact sheet. It is gender neutral and the masculine form is used only to
facilitate its reading.
June 2019                                             2/7

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2019 Short-Term Incentive Plan
Canada/International

Company Performance Weighing
Weighting
Pulp and Paper
Mills
Wood Products Divisions
Sales1
Corporate
Income from operations (RFP)
35%
35%
55%
55%
Manufacturing costs (mill/division)
40%
40%
 
 
SG&A costs (RFP)
 
 
3%
20%
Profit per metric ton
 
 
9%
 
Monthly days sales outstanding – terms
 
 
4%
 
Monthly days sales outstanding – days
 
 
4%
 
Safety – OSHA (mill/division) (RFP)2
15% (mill)
15% (division)
15% (RFP)2
15% (RFP)2
Safety – Severity (mill/division) (RFP) 2
5% (mill)
5% (division)
5% (RFP)2
5% (RFP)2
Environmental incidents (RFP)3
5%
5%
5% (RFP)4
5% (RFP)4

1 Weighting and performance metrics differ for the Wood Products sales force.
2 Weighted average of divisions’ results, including corporate employees.
3 See note 8 of the previous table.
4 Weighted average of divisions’ results

This plan text replaces and supersedes any and all prior versions and summary
fact sheet. It is gender neutral and the masculine form is used only to
facilitate its reading.
June 2019                                             3/7

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2019 Short-Term Incentive Plan
Canada/International

Individual Performance Component
Fifteen percent (15%) of the incentive payout is calculated based the individual
performance of each eligible employee.

An Individual Performance Component has been created to better align short-term
incentive awards with each eligible employee’s performance.

The individual performance payout for each employee will be determined based on
each employee’s individual contribution during the performance period, as
assessed by management, exercising managerial judgment and subject to the
availability of funds in the pool.

The individual performance payout can fall in the range of 0% to 30%. In
establishing the individual performance payout for each employee, managers
consider the following elements during the performance period:

 
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Except for the Executive Team (President and Chief Executive Officer and Senior
Vice Presidents), the individual performance pool is set at 15% of eligible
employees’ incentive targets. However, if the actual achievement of performance
metrics by a mill or a division exceeds 100%, the available pool will increase
to correspond to 15% of eligible employees’ incentive targets multiplied by the
actual performance payout of such mill or division. The portion of the award
attributed to individual performance will be calculated as follows:

 
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This plan text replaces and supersedes any and all prior versions and summary
fact sheet. It is gender neutral and the masculine form is used only to
facilitate its reading.
June 2019                                             4/7

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2019 Short-Term Incentive Plan
Canada/International

 
For the Executive Team, the individual performance pool is set at 15% of their
incentive targets multiplied by the actual achievement of Corporate performance
measures. The portion of the award attributed to individual performance will be
calculated as follows:
 
 
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Maximum and Minimum Payout
The overall maximum incentive payout under the STIP payable 1) to the members of
the Executive Team and 2) to the employees in grades 25 and above for the
Company performance portion of the incentive payout, cannot exceed 5% of the
free cash flow (FCF) generated by the Company in 2019 (maximum available
envelope). If the total amount determined based on actual achievement of
performance metrics exceeds the maximum available envelope, the incentive awards
payable 1) to the members of the Executive Team and 2) to the employees in
grades 25 and above for the Company performance portion of the incentive payout,
are reduced on a prorata basis. If the total payout determined based on actual
achievement of performance metrics is lower than the maximum available envelope,
the excess envelope is not distributed to participants.
There is no minimum payout under the STIP.
 
Cash Flow Measure

For purpose of the STIP, free cash flow is defined as net cash provided by
operating activities, less maintenance, safety and environmental capital
expenditures, adjusted for:

 
 
4    Cash reorganization and restructuring costs
4    Optional pension contributions towards past service
4    Other special items
 
Final Payout Calculation for employees in grades 24 and below
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Final Payout Calculation for employees in grades 25 and above
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This plan text replaces and supersedes any and all prior versions and summary
fact sheet. It is gender neutral and the masculine form is used only to
facilitate its reading.
June 2019                                             5/7

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2019 Short-Term Incentive Plan
Canada/International

Final Payout Calculation for Executive Team
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Vacation
Any payment made pursuant to the STIP is deemed to include any and all vacation
pay that may be owed pursuant to applicable minimum employment standards.
 

Administrative Guidelines
New Hires

Employees hired into a regular position on or before September 30, 2019 are
eligible to participate in the STIP on a prorated basis, effective upon their
date of hire. Employees hired into a regular position on or after October 1,
2019 are not eligible for participation in the STIP.
 
Promotion or Status Changes
 
4    If an employee is promoted or demoted to a position covered by a different
incentive payout level, any incentive payout calculation will be prorated for
time spent in respective positions. In either case, the base salary rate used to
determine the prorated incentive payout will be the base salary rate in effect
at December 31, 2019.
 
4    If an employee is transferred internally, any incentive payout calculation
will be prorated for time spent in respective locations or groups. The base
salary rate used to determine the prorated incentive payout will be the base
salary rate in effect at December 31, 2019.
 
4    If an employee’s status changes from temporary salaried, unionized salaried
or hourly to regular non-unionized salaried (and vice versa) during the
performance period, the employee will be eligible to participate for time spent
as a regular non-unionized salaried employee, and any incentive payout
calculation will be prorated for time spent as a regular non-unionized salaried
employee. The base salary rate used to determine the prorated incentive payout
will be the base salary rate in effect at December 31, 2019.
 
 
 
Termination

4    An employee who retires or who dies during the performance period will be
entitled to receive a prorated incentive payout, based on actual achievement for
time as an active eligible employee, if and when the Board approves the
incentive payouts and does not otherwise cancel payment. For the purpose of this
plan, employees are deemed to retire if they are age 57 or above on their last
day of active work and have completed at least 2 years of continuous service.
Nevertheless, employees who hand in their resignation to start new employment
within 3 months of their last day of work are considered to have resigned and
not deemed to retire. Notwithstanding the above, the Company reserves the right,
at its discretion, to make the final decision on award eligibility.
 
4    Employees who are involuntarily terminated and whose last day of active
work is on or before June 30, 2019 will not be entitled to receive an incentive
payout, unless they are deemed to retire pursuant to the previous paragraph.

This plan text replaces and supersedes any and all prior versions and summary
fact sheet. It is gender neutral and the masculine form is used only to
facilitate its reading.
June 2019                                             6/7

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2019 Short-Term Incentive Plan
Canada/International

 
4    An employee who is involuntarily terminated and whose last day of active
work is on or after July 1, 2019 will be entitled to receive a prorata amount of
an incentive payout, based on actual achievement for time as an active eligible
employee, if and when the Board approves the incentive payouts and does not
otherwise cancel payment.
 
4    Employees who hand in their resignation before payment is made will not be
eligible to receive an award.
 
4    Notwithstanding anything to the contrary, employees who are terminated for
cause, as determined at the discretion of the Company or their specific
employer, whether during the performance period or after the performance period
and before actual payouts, will not receive an award.
 
Leaves
 
4    Maternity/parental/adoption leave: The length of the leave is not included
in the calculation of any incentive payout.
 
4    Leave without pay: The length of the leave is not included in the
calculation of any incentive payout.
 
4    Short-term absence due to illness: The length of the absence is included in
the calculation of the incentive payout if it is a bona fide absence pursuant to
the disability medical leave procedure.
 
4    Long-term absence due to illness (time on long-term disability): The length
of the absence is not included in the calculation of the incentive payout.

Approved by:
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Yves Laflamme
President and Chief Executive Officer

This plan text replaces and supersedes any and all prior versions and summary
fact sheet. It is gender neutral and the masculine form is used only to
facilitate its reading.
June 2019                                             7/7