EXHIBIT 10(h)

WELLMAN, INC.

Second Amended and Restated

Management Incentive Compensation Plan for the Executive Group

ARTICLE I

NAME

1.1 The Plan shall be known as the "Wellman, Inc. Management Incentive
Compensation Plan for the Executive Group."

ARTICLE II

STATEMENT OF PURPOSE

2.1 The purpose of the Plan is to provide a system of incentive compensation
that will promote the maximization of shareholder value over the long-term. In
order to align management incentives with shareholder interests, this Plan will
tie incentive compensation to economic value added and thereby reward management
for increasing shareholder value.

ARTICLE III

DEFINITIONS

3.1 Plan Year means the fiscal year of the Company which is the calendar year.

3.2 Effective Date means (a) January 1, 1992 with respect to the original Plan,
(b) January 1, 1999 with respect to the amended and restated Plan, and (c)
January 1, 2001 with respect to the second amended and restated Plan.

3.3 Committee means the Compensation Committee of the Board of Directors of
Wellman, Inc. or any successor committee.

3.4 Cause in the context of a termination of employment means only one or more
of the following: (i) the commission in the course of employment of any
dishonest or fraudulent act; (ii) a conviction of a felony (from which, through
lapse of time or otherwise, no successful appeal shall have been made) whether
or not committed in the course of employment; (iii) the willful refusal to carry
out reasonable instructions of the Board of Directors of Wellman, Inc. which has
a material adverse effect upon the Company or any of its subsidiaries; and (iv)
the willful disclosure of any trade secrets or material confidential corporate
information to persons not authorized to know same.

3.5 Change of Control shall be deemed to have occurred when (i) any "person" or
"group" (as such terms are used in Sections 13(d)(3) and 14 (d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), other than
the Company, any of its subsidiaries, or any employee benefit plan of the
Company or of any subsidiary, is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing 20% or more of the combined voting power of the
Company's then outstanding Securities; or (ii) during any period of two
consecutive years (not including any period prior to the Effective Date),
individuals who at the beginning of such period constitute the Board cease for
any reason to constitute at least a majority thereof unless the election, or the
nomination for election by the Company's stockholders, of each new director was
approved by a vote of at least two-thirds of the directors of the Company then
still in office who were directors of the Company at the beginning of the
period.

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3.6 Company means Wellman, Inc., a Delaware corporation.

ARTICLE IV

PLAN ADMINISTRATION

4.1 The Plan shall be administered by the Committee which shall have exclusive
and absolute authority and discretion to interpret the Plan, to establish and
modify rules for the administration of the Plan, to impose such conditions and
restrictions as it determines appropriate with respect to the Plan and to take
such other actions and make such other determinations as it may deem necessary
or advisable for the implementation and administration of the Plan. All actions
taken and all interpretations and determinations made by the Committee in good
faith shall be final and binding upon the participants, the Company and all
other interested persons. The Committee may delegate certain responsibilities to
the Chief Executive Officer or Chief Operating Officer including the
responsibility to assign objectives, targets, target percentages or other
administrative responsibilities, as the Committee so designates. No member of
the Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan.

4.2 This Plan may be amended, suspended or terminated any time at the sole
discretion of the Board of Directors of Wellman, Inc., provided, however, that
no such change in the Plan shall be effective to eliminate or diminish the
distribution of any award earned by a Plan participant before the date of such
amendment, suspension or termination. Notice of any such amendment, suspension
or termination shall be given promptly to each Plan participant.

ARTICLE V

PARTICIPATION

5.1 The participants in the Plan consist of those employees who are executives
identified by the Committee.

ARTICLE VI

DESCRIPTION OF PLAN OPERATION

6.1 Each Plan Year the Committee will assign to each Plan participant bonus
targets directly related to corporate and, for operating executives, their
operating unit's profit and individual strategic objectives. Profit will be
based on an appropriate measurement of earnings as shall be determined by the
Committee.

A target percentage will also be assigned to each Plan participant by the
Committee annually (the "target percentage"). The target percentage will be the
percentage of salary a Plan participant will be eligible to earn in bonus if the
Plan participant's targets are met.

The amount of the bonus payable hereunder to each Plan participant will be
determined by the Committee in its sole discretion.

Bonuses hereunder will be paid on or before March 15 following the Plan Year.
Bonus earnings over the target percentage amount must be deferred as mandatory
deferred compensation for the purchase of restricted stock for eligible
participants in the Wellman, Inc. Deferred Compensation and Restricted Stock
Plan.

 

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ARTICLE VII

CHANGE IN STATUS DURING THE PLAN YEAR

7.1 Disability. A participant shall be deemed "permanently disabled" if, because
of physical or mental condition, the participant is unable for a period of at
least one year to perform the principal duties of his/her occupation as
determined by a Company-approved physician. A participant shall receive a pro
rata bonus based on the number of full months worked for the year in which the
disability started. The payment shall be made at the regular time for making
bonus payments.

7.2 Death. A participant's beneficiary, as designated for the life insurance
program, shall receive a pro rata bonus based on the number of full months
worked for the Plan Year in which they die. The payment will be made at the
regular time for making bonus payments.

7.3 Retirement. A participant who retires from the Company upon or after
reaching age 55 shall receive a pro rata bonus based on the number of full
months worked for the Plan Year in which he/she retires. The payment will be
made at the regular time for making bonus payments.

7.4 Resignation or Termination for Cause. Termination of employment for Cause or
voluntary termination by a participant results in the forfeiture of any award
for the Plan Year in which employment terminates.

7.5 Termination without Cause. A participant who is terminated for reasons other
than those described above will receive a pro rata portion of that Plan Year's
award. The payment will be made at the regular time for making bonus payments or
as mutually agreed by the Committee and the terminated participant.

7.6 No Guarantee. Participation in the Plan provides no guarantee that a bonus
under the Plan will be paid in any Plan Year. Similarly, the payment of a bonus
under the Plan in one Plan Year or selection as a participant is no guarantee
that a bonus under the Plan will be paid in any subsequent Plan Year.

ARTICLE VIII

GENERAL PROVISIONS

8.1 Withholding of Taxes. The Company shall have the right to withhold the
amount of taxes which, in the determination of the Company, are required to be
withheld under law with respect to any amount due or paid under the Plan.

8.2 Expenses. All expenses and costs in connection with the adoption and
administration of the Plan shall be borne by the Company.

8.3 No Prior Right or Offer. Except and until expressly granted pursuant to the
Plan, nothing in the Plan shall be deemed to give any employee any contractual
or other right to participate in the benefits of the Plan.

8.4 Disputed Claims for Benefits. In the event a participant (a "claimant") has
a dispute with respect to any of the benefits provided hereunder, the claimant
shall submit evidence satisfactory to the Committee of facts establishing his
entitlement to a payment under the Plan. Any claim with respect to any of the
benefits provided under the Plan shall be made in writing within ninety (90)
days of the annual Plan payment date. Failure by

 

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the claimant to submit his or her claim within such ninety (90) day period

shall bar the claimant from any claim for benefits under the Plan. In reaching
its decision, the Committee shall have complete discretionary authority to
determine all questions arising in the interpretation and administration of the
Plan, to construe the terms of the Plan, including any doubtful or disputed
terms and the eligibility of a participant for benefits.

8.5 Rights Personal to Employee. Any rights provided to an employee under the
Plan shall be personal to such employee, shall not be transferable (except by
will or pursuant to the laws of descent or distribution), and shall be
exercisable, during his or her lifetime, only by such employee.

8.6 Confidentiality. Specific details of any calculations under the Plan must
remain confidential and because of the individuality of the awards, participants
should not share information with each other.

8.7 Wellman, Inc. Profit Sharing Plan. Participants in the Wellman, Inc.
Management Incentive Compensation Plan are not eligible to participate in the
Wellman, Inc. Profit Sharing Plan.

8.8 Change of Control. Upon any Change of Control, unless the Committee in its
sole discretion determines otherwise prior to the Change of Control, the
benefits of the Plan will be paid to all participants within 45 days of the
Change of Control date. Plan payments will be based on the full Plan Year's
forecasted results as defined in the most recent financial forecast presented to
the Board prior to the Change of Control date using the most recent annual base
salary of each participant.

8.9 No Continued Employment. Neither the establishment of the Plan, the
assignment of targets nor the grant of an award hereunder shall be deemed to
constitute an express or implied contract of employment for any period of time
or in any way abridge the rights of the Company to determine the terms and
conditions of employment or to terminate the employment of any employee with or
without cause at any time.

8.10 No Vested Rights. Except as otherwise provided herein, no employee or other
person shall have any claim or right (legal, equitable, or otherwise) to any
award, allocation, or distribution and no officer or employee of the Company or
any other person shall have any authority to make representations or agreements
to the contrary. No interest conferred herein to a participant shall be
assignable or subject to claim by a participant's creditors.

8.11 Not Part of Other Benefits. The benefits provided in this Plan shall not be
deemed a part of any other benefit provided by the Company to its employees. The
Company assumes no obligation to Plan participants except as specified herein.
This is a complete statement of the terms and conditions of the Plan.

 

 

 

 

 

 

 

 

 

 

 

 

 

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