Exhibit 10.41
2006
Management
Incentive
Plan
PLAN DOCUMENT
(GRAPHIC PACKAGING LOGO) [g05714g0571405.gif]

 

--------------------------------------------------------------------------------

 

GRAPHIC PACKAGING INTERNATIONAL, INC.
ANNUAL MANAGEMENT INCENTIVE PLAN
2006
Table of Contents
 

              Section #   Subject   Page #  
I
  Plan Purpose     3  
II
  Financial Performance     3  
III
  Award Determination and Approval     3-4  
IV
  Individual Performance Factors     4  
V
  Currency     4  
VI
  Participation Level and New Participants     5  
VII
  Revisions to Plan     5  
VIII
  Form and Timing of Awards     5-6  
IX
  Employees on Leave     6  
X
  Termination, Death or Disability     6  
XI
  Other Plan Design Considerations     6-8  

Attachment I — Corporate Financial Award Components and Performance Graph
Attachment II — Personalized Participation Statement

 

--------------------------------------------------------------------------------

 

I.   PLAN PURPOSE:       The purpose of the Annual Management Incentive Plan
(“Annual Plan”) is to offer a meaningful incentive award opportunity for key
managers who can make significant contributions to the growth and profitability
of Graphic Packaging International, Inc. (“Company”). The Annual Plan is
designed to emphasize management’s commitment to financial success and to the
Company’s ultimate purpose of delivering a superior return on the investment of
its shareholders.   II.   FINANCIAL PERFORMANCE:       Awards from the Annual
Plan are financially-driven and for 2006 will be based on Corporate Consolidated
results. All Participants, therefore, will have their award opportunity tied to
overall Graphic Packaging financial performance. Focusing on Corporate financial
results reinforces management’s essential obligation to the shareholders to do
everything possible to achieve the best result in total Company performance. It
will also promote better cooperation and teamwork across Graphic Packaging’s
global business operations and support functions.       The 2006 Annual Plan is
comprised of one financial award component — EBITDA. Each Participant’s
incentive award opportunity is based on the specific Corporate financial goal
established during the annual operating plan approval process, and approved by
Graphic Packaging’s Board of Directors.   III.   AWARD DETERMINATION AND
APPROVAL:       The Annual Plan is specifically designed to create substantial
incentive opportunity for the achievement of Graphic Packaging’s most important
financial goal: surpassing the 2006 Corporate EBITDA. For the 2006 annual plan
design, awards are generated when EBITDA earnings exceed $285.0 million,
“Threshold” achievement of plan. 96.7% achievement of Plan ($295.0 million)
yields an award of 50% of an individual’s target award. A full “Target” award is
generated at 100% achievement of plan or $305.0 million. An award of 200% of an
individual’s target award is generated at 107% of plan or $327.0 million.

3

--------------------------------------------------------------------------------

 

    Performance against Corporate EBITDA is expressed as a percentage of the
annual plan achieved or surpassed. As illustrated in Attachment I, as Corporate
financial performance increases along the horizontal axis, the participant’s
formula-driven financial award opportunity correspondingly increases.   IV.  
INDIVIDUAL PERFORMANCE FACTORS:       Potential payments (before individual
performance factors) range from 0% to 200% of target bonus. The individual
performance factor can be up to + or — 25% of an individual’s target award.
Individual performance factors may include actual contributions to the Corporate
EBITDA goal. All adjustments to calculated awards based on individual
performance factors are determined by the President and CEO. The total of all
adjustments will not increase or decrease the calculated bonus pool. If some
awards are increased, others must be decreased so there is no change to the
pool.       All awards are calculated by the Corporate Human Resources group and
ultimately approved by the President and CEO of the Company. Awards must also be
approved by the Compensation and Benefits Committee of the Board of Directors.  
    **** IF THE COMPANY FAILS TO MEET ANY OF OUR QUARTERLY FINANCIAL COVENANT
MEASURES, NO 2006 INCENTIVE AWARDS WILL BE PAID. ****   V.   CURRENCY:       All
Corporate, financial results will be stated on a U.S. dollar reporting basis for
purposes of determining actual performance against the annual operating plan.

4

--------------------------------------------------------------------------------

 

VI.   PARTICIPATION LEVEL AND NEW PARTICIPANTS:       Participation level is
defined as the target incentive award opportunity provided to Participants under
the Annual Plan. Each Participant’s approved participation level is determined
and communicated annually.       For Participants who change participation level
during the 1st Quarter of a plan year, the change will become effective
retroactive to the first day of the plan year. If the change occurs in the 4th
Quarter of the plan year, it will take effect on January 1st of the following
year’s plan. Changes occurring in the 2nd or 3rd Quarter of the plan year will
result in any awards earned calculated on a strictly prorated basis for the
number of months assigned to each level of participation.       New Participants
shall have any awards earned strictly prorated by the number of months of
participation in their first plan year, except if hired during the 4th Quarter.
In this event, their participation will become effective the following year.  
VII.   REVISIONS TO PLAN:       Revisions to annual financial performance goals
for incentive plan purposes may be considered to recognize circumstances beyond
the control of Plan participants. Such revisions will be rare in practice and
only respond to extraordinary and unforeseeable events. It is understood that
revisions may adjust for positive windfalls as well as negative shortfalls.  
VIII.   FORM AND TIMING OF AWARDS:       The annual incentive award is expressed
as a percentage of a Participant’s base salary actually earned during the plan
year. All awards under the Annual Plan will be paid in cash and in local
currency. Awards will be subject to all applicable social insurance, income tax
and other withholding requirements effective at the time of payment.      
Awards paid to Participants in hyper-inflationary countries will be monetarily
corrected to adjust for currency devaluation between the close of the plan year
and the award payment date.

5

--------------------------------------------------------------------------------

 

    All earned awards will be paid during the 1st Quarter of the business year
following the close of the plan year.   IX.   EMPLOYEES ON LEAVE:       Awards
for employees on approved leave will be prorated to exclude the time away from
work. Approved leaves include: sick, personal, family medical, and military
leaves of absence.   X.   TERMINATION, DEATH, OR DISABILITY:       Awards will
be paid to Participants who are actually employed and on the payroll on the last
day of the applicable plan year. A Participant whose employment terminates prior
to the end of the plan year shall forfeit any and all rights to an award from
the Annual Plan except for approved special circumstances. Specifically, those
participants who terminate employment due to death, disability, normal
retirement, Company approved early retirement, or who are displaced as a result
of a position elimination will be paid a pro rata portion of any award earned
based on their date of termination. Such prorated payments will be made at the
time and in the form received by all other Participants. Any executive who is
entitled to a payment upon termination of employment under a Graphic Packaging
Employment Agreement shall not also be entitled to an award under the Annual
Incentive Plan for the year in which termination takes place.   XI.   OTHER PLAN
DESIGN CONSIDERATIONS:       The Annual Plan will be managed by each Group
executive and administered by Corporate Compensation. All reported financial
results will be confirmed by the Chief Financial Officer upon completion of the
annual report of independent accountants. Awards will be approved by the
President and Chief Executive Officer and the Compensation and Benefits
Committee of the Board of Directors, as appropriate. Communication of all awards
will be provided by the business unit’s senior management only upon written
confirmation of all required approvals.

6

--------------------------------------------------------------------------------

 

    No Participant shall have the right to anticipate, alienate, sell, transfer,
assign, pledge, or encumber his or her right to receive any award made under the
Annual Plan.       No Participant shall have any lien on any assets of the
Company by reason of any award made under the Annual Plan.       The adoption of
the Annual Plan or any modification or amendment hereof does not imply any
commitment to continue or adopt the same plan, or any modification thereof, or
any other plan for incentive compensation for any succeeding year, provided that
no such modification or amendment shall adversely affect rights to receive any
amount to which any Participant has become entitled prior to such modifications
and amendments. The Company specifically reserves the right to amend, modify, or
terminate the Annual Plan at any time for any reason. Neither the Annual Plan
nor any award made under the Annual Plan shall create any employment contract or
imply any relationship between the Company and any Participant, other than
employment terminable by either party at will.       No one may participate in
the Annual Plan, or have any components of it changed after initial notification
of participation, without the expressed written notice of approval by the Plan
Administrators. Every Annual Plan position and proposed additional positions are
reviewed for eligibility on an annual basis.       No one participating in
another incentive plan may participate concurrently in the Annual Plan, except
where such other participation is legally mandated and/or approved in writing by
Plan Administrators.       Eligible participants must maintain at least a
“successful” performance rating throughout the year to be eligible for payment
of an award regardless of corporate performance. Sustained performance problems
may result in permanent disqualification of participation in the Annual Plan.  
    The Annual Plan design is dynamic and is reviewed annually by executive
management to insure that performance measures, their relative weighting and
award

7

--------------------------------------------------------------------------------

 

    parameters address Graphic Packaging’s business strategy and its annual
financial objectives.
          The President and Chief Executive Officer reserves the right to
increase, decrease, or eliminate any and all Annual Plan awards if, in the
exercise of his business judgment, such modifications would be in the best
interest of the Company.

* * * *

8