Exhibit 10.2

 

 

INTERNATIONAL PAPER COMPANY

EXECUTIVE MANAGEMENT INCENTIVE PLAN

 

 

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TABLE OF CONTENTS

 

ARTICLE 1 ESTABLISHMENT OF PLAN    1

1.1

  

Background

   1

1.2

  

Purpose

   1

1.3

  

Effective Date

   1 ARTICLE 2 DEFINITIONS    1

2.1

  

Definitions

   1 ARTICLE 3 ADMINISTRATION    2

3.1

  

Committee

   2

3.2

  

Authority of Committee

   2

3.3

  

Decisions Binding

   3 ARTICLE 4 ELIGIBILITY    3

4.1

  

Designation of Participants

   3

4.2

  

Partial Year Participation

   3

4.3

  

Demotions

   3 ARTICLE 5 OPERATION OF THE PLAN    3

5.1

  

Company Business Objectives

   3

5.2

  

Individual Award Limit

   3

5.3

  

Intermediate Performance Objectives

   4

5.4

  

Establishment of Target Bonuses

   4

5.5

  

Payout Form and Timing

   4 ARTICLE 6 AMENDMENT, MODIFICATION AND TERMINATION    4

6.1

  

Amendment, Modification and Termination

   4

 

II-i

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INTERNATIONAL PAPER COMPANY

EXECUTIVE MANAGEMENT INCENTIVE PLAN

ARTICLE 1

ESTABLISHMENT OF PLAN

1.1 BACKGROUND. This Executive Management Incentive Plan (the “Executive MIP” or
the “Plan”) is a subplan of the International Paper Company 2009 Incentive
Compensation Plan (the “2009 Incentive Plan”), consisting of a program for the
grant of annual performance-based cash awards under Article 10 of the 2009
Incentive Plan. This Plan has been established and approved, and will be
administered by, the Committee pursuant to the terms of the 2009 Incentive Plan,
including without limitation, Article 11 thereof. It is intended that the
Performance Bonuses earned under this Plan shall be Qualified Performance-Based
Awards with respect to Participants who are Covered Employees, with the intent
that the Performance Bonuses will be fully deductible by the Company without
regard to the limitations of Internal Revenue Code Section 162(m). The
applicable Award limits of Section 5.4 of the 2009 Incentive Plan shall apply
with respect to this Plan. As of the Effective Date, Section 5.4 of the 2009
Incentive Plan provides that the maximum aggregate amount that may be paid with
respect to cash-based Awards under the 2009 Incentive Plan to any one
Participant in any fiscal year of the Company is $10,000,000. In the event of
any actual or alleged conflict between the provisions of the 2009 Incentive Plan
and the provisions of this Plan, the provisions of the 2009 Incentive Plan shall
be controlling and determinative.

1.2. PURPOSE. The purpose of this Plan is to provide for the payment of a cash
bonus to eligible employees of the Company, the payment of which will be based
on the achievement of Company Business Objectives during a Plan Year. Company
Business Objectives are designed to focus on overall corporate financial results
that drive shareowner value.

1.3. EFFECTIVE DATE. This Plan was approved by the Committee on February 9,
2009, to be effective as of the beginning of Plan Year 2009, contingent on
shareowner approval of the 2009 Incentive Compensation Plan.

ARTICLE 2

DEFINITIONS

2.1. DEFINITIONS. Capitalized terms used herein and not otherwise defined shall
have the meanings assigned to such terms in the 2009 Incentive Plan. In
addition, the following terms shall have the following meanings for purposes of
this Plan, unless the context in which they are used clearly indicates that some
other meaning is intended.

Company Business Objectives. The Company Business Objectives established by the
Committee for a Plan Year, as provided in Article 5.

Effective Date. January 1, 2009.

 

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Executive Management Incentive Plan or Plan. The International Paper Company
Executive Management Incentive Plan, a subplan of the 2009 Incentive Plan, as
set forth in this document together with any subsequent amendments hereto.

GAAP. Generally accepted accounting principles for U.S. companies.

Individual Award Limit. Has the meaning described in Section 5.2.

Performance Bonus. The bonus payable to a Participant under this Plan calculated
by reference to the achievement of applicable Company Business Objectives, as
determined in accordance with Article 5.

Plan Year. January 1 to December 31 of each year.

Schedule. Means a document setting forth Company Business Objectives for a Plan
Year, and the relative weightings of such measures and such other information as
the Committee determines is appropriate.

ARTICLE 3

ADMINISTRATION

3.1. COMMITTEE. This Plan shall be administered by the Committee.

3.2. AUTHORITY OF COMMITTEE. Without limiting its authority under Article 4 of
the 2009 Incentive Plan, the Committee has the exclusive power, authority and
discretion to:

(a) Designate Participants for each Plan Year;

(b) Establish and review Company Business Objectives and weightings for
different Company Business Objectives for each Plan Year;

(c) Establish Target Bonuses for Participants for each Plan Year;

(d) Determine whether and to what extent Company Business Objectives were
achieved for each Plan Year;

(e) Increase (subject to the Individual Award Limit) or decrease the Performance
Bonus otherwise payable to any Participant resulting from the achievement of
performance objectives in any Plan Year, based on such subjective factors as the
Committee shall deem relevant;

(f) Establish, adopt or revise any rules and regulations as it may deem
necessary or advisable to administer this Plan;

(g) Make all other decisions and determinations that may be required under this
Plan or as the Committee deems necessary or advisable to administer this Plan;
and

(h) Amend this Plan as provided herein.

 

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3.3. DECISIONS BINDING. The Committee’s interpretation of this Plan and all
decisions and determinations by the Committee with respect to this Plan are
final, binding, and conclusive on all parties.

ARTICLE 4

ELIGIBILITY

4.1. DESIGNATION OF PARTICIPANTS. Officers of the Company who hold the title
Senior Vice President or higher are eligible to participate in the Plan. Exhibit
A sets forth the eligible participants as of January 1, 2009. On or before
March 31 of each Plan Year, the Committee shall approve and substitute a new
Exhibit A indicating the Participants for that Plan Year.

4.2. PARTIAL YEAR PARTICIPATION. If a Participant begins employment or is
promoted to an eligible position after the beginning of a Plan Year, the
Committee, in its discretion, may determine whether such person may participate
in this Plan and if so, the terms of such participation, which will be prorated
based on the number of days such person participated in this Plan during the
Plan Year, unless the Committee determines otherwise. If a Participant takes a
leave of absence during the Plan Year for any reason the Participant will
receive a pro rata share of a Performance Bonus, if any, for such Plan Year,
unless the Committee decides otherwise.

4.3. DEMOTIONS. If a Participant is demoted during the Plan Year, the Committee
will determine whether Plan participation ends at that time, or is continued,
perhaps at a reduced level. If participation ends, any Performance Bonus earned
during the time of participation will be prorated for the Plan Year.

ARTICLE 5

OPERATION OF THE PLAN

5.1. COMPANY BUSINESS OBJECTIVES. On or before March 31 of each Plan Year, the
Committee will approve and substitute a new Schedule 1 indicating the Company
Business Objectives for that Plan Year, which shall be based on one or more of
the Qualified Business Criteria approved by shareowners under Section 11.2 of
the 2009 Incentive Compensation Plan. Unless waived by the Committee in the case
of death or Disability of a Participant, or the occurrence of a Change in
Control, no Performance Bonuses shall be payable under the Plan for any Plan
Year unless the Company Business Objectives have been achieved. The maximum
aggregate payout of awards under the Plan based on the Company Business
Objective shall also be set forth on Schedule 1, which shall not exceed the
Individual Award Limit times the number of Participants for that Plan Year.

5.2. INDIVIDUAL AWARD LIMIT. In any Plan Year in which the Company Business
Objectives are achieved, the Performance Bonus payable to each Participant under
the Plan for such Plan Year shall be $10,000,000 (the “Individual Award Limit”)
or any lesser amount determined by the Committee based on criteria determined by
the

 

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Committee. As described herein, it is anticipated that the Committee will
exercise discretion, as contemplated in Section 11.3 of the 2009 Incentive
Compensation Plan, to determine that the Performance Bonus payable to any
Participant for a Plan Year is less than the Individual Award Limit for such
Participant. In exercising such discretion, the Committee may establish or
approve intermediate performance objectives and their respective weightings, and
intermediate incentive opportunity ranges, as it deems appropriate to encourage
and reward particular areas of performance, with regard to Company or individual
performance. Such intermediate objectives and opportunity ranges may, but are
not required to, be identical to the Company’s Management Incentive Plan.

5.3. INTERMEDIATE PERFORMANCE OBJECTIVES. On or before March 31 of each Plan
Year, it is anticipated that the Committee will approve intermediate performance
objectives for that Plan Year in addition to Company Business Objectives, and
shall set forth such intermediate performance objectives on Schedule 1. These
intermediate performance objectives shall provide the formula that the Committee
will use as a guide for determining a Participant’s Performance Bonus at a level
below the Individual Award Limit.

5.4. ESTABLISHMENT OF TARGET BONUSES. The Committee intends to establish Target
Bonuses (other than the Individual Award Limit) for each Plan Year that will be
awarded to the Participant for that Plan Year if Company Business Objectives are
achieved and if the pre-established intermediate performance objectives are
achieved at the targeted level of performance (the “Target Bonus”). The Target
Bonus shall be based on the percentage of the midpoint of each Participant’s
defined salary range for his or her position level. The actual Performance Bonus
paid to a Participant may be greater or less than his or her Target Bonus,
depending on the level of achievement of the pre-established performance
objectives (but in no event shall the bonus exceed the Individual Award Limit).
In any Plan Year in which the Committee fails to set a Target Bonus for a
Participant, the Performance Bonus for that Participant shall be zero for that
year unless the Committee determines otherwise (but in no event shall the bonus
exceed the Individual Award Limit).

5.5. PAYOUT FORM AND TIMING. Performance Bonuses will be paid within the first
two and one-half months of the year next following the end of the Plan Year for
which the Performance Bonuses, if any, were earned.

ARTICLE 6

AMENDMENT, MODIFICATION AND TERMINATION

6.1. AMENDMENT, MODIFICATION AND TERMINATION. The Committee may, at any time and
from time to time, amend, modify or terminate this Plan. The Committee may
condition any amendment or modification on the approval of shareowners of the
Company if such approval is necessary or deemed advisable with respect to tax,
securities or other applicable laws, policies or regulations, including without
limitation Internal Revenue Code Section 162(m).

 

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The foregoing is hereby acknowledged as being the International Paper Company
Executive Management Incentive Plan as adopted by the Committee on February 9,
2009, to be effective as of January 1, 2009, contingent on shareowner approval
of the 2009 Incentive Compensation Plan.

 

INTERNATIONAL PAPER COMPANY By:   /s/ Paul J. Karre   Senior Vice President,
Human Resources & Communications

 

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EXHIBIT A

PARTICIPANTS AS OF JANUARY 1, 2009

UNDER THE EXECUTIVE MANAGEMENT INCENTIVE PLAN

 

Name

  

Title

John V. Faraci    Chairman and Chief Executive Officer Tim S. Nicholls    SVP –
Chief Financial Officer Maura A. Smith    SVP – General Counsel & Corporate
Secretary H. Wayne Brafford    SVP – Printing & Communications Papers Thomas G.
Kadien    SVP – President xpedx Carol L. Roberts    SVP – Industrial Packaging
Thomas Gestrich    SVP – President IP Asia Jerome N. Carter    SVP – Human
Resources & Communications Mary A. Laschinger    SVP – President IP Europe, M.
East, Africa and Russia Michael J. Balduino    SVP – Consumer Packaging Carlton
C. Ealy    SVP – Corporate Development Maximo Pacheco    SVP – President IP do
Brazil John N. Balboni    SVP – Chief Information Officer Mark S. Sutton    SVP
– Supply Chain Tommy S. Joseph    SVP – Manufacturing & Technology

 

A-1

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Schedule 1

EXECUTIVE MANAGEMENT INCENTIVE PLAN

2009 COMPANY BUSINESS OBJECTIVE AND INTERMEDIATE PERFORMANCE OBJECTIVES

 

Plan Element

  

162(m) Limit Approved by Committee

Company Business Objective:

  

•        Positive EBITDA Before Special Items

Intermediate Performance Objectives:

  

•        Same as 2009 Management Incentive Plan objectives

 

S-1