EXHIBIT 10.56

 

PLIANT CORPORATION

MANAGEMENT INCENTIVE PLAN (“MIP”)

2003

 

Purpose

 

To provide an attractive and competitive at-risk incentive that recognizes the
achievements of individuals and business groups in the attainment of corporate
financial and operating goals.

 

 

 

Eligibility

 

Officers of Pliant Corporation (the “Company”), Directors and Plant Managers
(“Participants”).  At the option of the Chief Executive Officer (“CEO”), these
percentages may be changed, and other employees not normally eligible for this
program may be included.  MIP Target Payment Levels are as follows:

 

Chief Executive Officer

 

100% of Base Salary

President

 

85% of Base Salary

Executive Vice President

 

70% of Base Salary

Senior Vice President

 

60% of Base Salary

Vice President

 

50% of Base Salary

Director/Plant Manager

 

40% of Base Salary

 

Summary

 

The 2003 Management Incentive Plan (“MIP”) is designed to provide incentive
compensation based upon the achievement of certain EBITDA levels for Pliant
Corporation, Pliant US, Pliant International and Pliant Solutions, along with
the EBITDA performance of Business Units within the segments and/or specific
operational objectives within the Business Units, at the discretion of the
President of each segment.

 

 

 

 

 

Some of the key changes for the 2003 MIP are:

 

 

 

 

 

•                                Target payout percentages have increased by 5%
(except for the CEO) to offset the impact of the 2003 MIP-level salary freeze.

 

 

 

 

 

•        There is no longer a Corporate EBITDA “gate” to pass through in order
to achieve some portion of the MIP.  In other words, if your business unit or
segment meets its EBITDA goals, you will earn some portion of your target payout
even if we fail to meet our Corporate EBITDA goals.

 

 

 

 

 

•        The threshold for all levels of achievement will start with 0% of
target payout at 90% of Plan, then move incrementally to 100% of target payout
at 100% of Plan.  For every full percentage point above 100% of Plan, the payout
will increase by 10%.

 

 

 

 

 

•        The basic structure of the MIP for those within a segment (Pliant US,
Pliant Flexible Packaging, Pliant International, Pliant Solutions) will be as
follows:

 

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 Solutions)

 

 

 

 

 

•                                For Corporate staff, the structure will be as
follows:

 

 

 

 

 

50.0% Pliant Corporate EBITDA

 

 

12.5% Pliant US EBITDA

 

 

12.5% Pliant Flexible Packaging EBITDA

 

 

12.5% Pliant International EBITDA

 

 

12.5% Pliant Solutions EBITDA

 

 

 

 

 

2003 EBITDA PLAN (million $)

 

 

 

Q1

 

Q2

 

Q3

 

Q4

 

Total

 

US

 

25.54

 

27.03

 

26.93

 

25.53

 

105.03

 

Flexible Packaging

 

8.56

 

9.57

 

11.07

 

9.87

 

39.07

 

International

 

2.82

 

3.42

 

4.03

 

4.83

 

15.10

 

Solutions

 

0.40

 

3.00

 

4.10

 

2.40

 

9.90

 

(less SG&A)

 

(4.92

)

(4.72

)

(5.05

)

(4.91

)

(19.60

)

Pliant Corporation

 

32.40

 

38.30

 

41.08

 

37.72

 

149.50

 

 

 

 

*For Pliant US, MIP participants in Industrial, Specialty, and Converter
Business Groups, the allocation will be 25% Pliant US EBITDA, 25% Business Group
EBITDA.

 

 

 

Plan Term

 

The MIP for 2003 shall be in effect from January 1, 2003 to December 31, 2003
(the “Plan Term”).

 

 

 

Distribution

 

Quarterly Bonus Award distributions will be paid within 45 days of the close of
the calendar quarter.

 

 

 

Separations

 

Except as set forth below, in order to be eligible to receive Bonus Awards under
the MIP, a Participant must be employed by the Company on the last day of the
calendar quarter for which an award is payable to receive a Quarterly Bonus
Award.  If a Participant retired during the Plan Term (and qualifies for an
immediate pension under the Pliant Corporation Defined Benefit Pension Plan),
dies or becomes disabled (as defined under the Company’s Long Term Disability
Plan), he/she will receive a pro rata portion of the MIP Bonus Award on the
actual days worked during the Plan Term.  Distributions will be made at the same
time as for all other Participants in the MIP.  If a Participant’s employment is
terminated at any time prior to the end of the quarter or the Plan Term, by the
employee or by the Company, with or without cause, for any reason other than
retirement, death or disability, the Participant shall not be eligible to
participate in the MIP, shall not receive any MIP Award for such calendar
quarter or thereafter, and shall forfeit any rights he/she may have had in the
MIP.

 

 

 

General Provisions

 

1.               Job Change. Eligible officers and executives who become
eligible to participate in the MIP by reason of a job change will be eligible
for a prorated Bonus Award based on the actual days worked during the Plan
Term.  In the case of job changes involving a change in the Bonus Plan Payment
Level, the Participant will receive the new level based on the

 

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actual days worked during the Plan Term at the new level.

 

 

 

 

 

2.               Disciplinary Action.  In order to participate in the MIP, the
Participant must not have been subject to any disciplinary action during the
Plan Term.

 

 

 

 

 

3.               No Employment Right.  Participation in the MIP shall not confer
on a Participant any right to continue in the employment of the Company, nor
shall it interfere with the Company’s right to terminate the employment of a
Participant at any time, for any reason.

 

 

 

 

 

4.               Non-transferability.  A Participant shall not have any right to
assign, transfer, pledge or hypothecate any benefits or payments under the MIP,
other than by will or by the laws of descent and distribution.

 

 

 

 

 

5.               Creditors.  Award payments held by the Company before
distribution shall not be subject to execution, attachment or similar process at
law or in equity.

 

 

 

 

 

6.               Withholding.  The Company will deduct and withhold all federal,
state and local taxes, and any employee benefit related withholdings, required
to be withheld with respect to the payment of any award.

 

 

 

 

 

7.               Definitions.

 

 

 

 

 

EBITDA - Earnings calculated in accordance with GAAP, before interest expense,
income taxes, depreciation and amortization (and after accruals for Awards paid
under the MIP).

 

 

 

Modification of the MIP

 

The Company may modify, supplement, suspend or terminate the MIP at any time
without the authorization of Participants, to the extent allowed by the law.  No
modification, suspension or termination shall adversely alter or affect any
right or obligation under the MIP that existed prior to such modification,
supplement, suspension or termination.  The Company’s Board of Directors will
determine the effect on incentives of any such event and make adjustments and/or
payments as it, in its sole discretion, determines appropriate.

 

 

 

Other

 

Subject to the control of the Executive Committee of the Board of Directors, the
Company’s CEO will exercise exclusive control over the MIP.  The CEO will have
discretion to calculate and adjust EBITDA amounts used in calculating MIP Bonus
Awards.

 

 

 

 

 

The MIP shall be governed by and construed under the laws of the State of
Illinois.

 

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