Exhibit 10.18


PANOLAM/PIONEER

SENIOR MANAGEMENT

ANNUAL PERFORMANCE BONUS PLAN



PLAN RULES—2007


 


 


1.                                       Membership of the Plan is restricted to
key executives and managers as annually agreed by the Compensation
Committee of Panolam Industries’ Board of Directors.  Inclusion in the Plan from year to year is
discretionary.


2.                                       This Plan will be in effect for calendar
year 2007. Given the discretionary nature of the Plan and the uncertainty of
future contingencies, the terms of the Plan and its operation will be reviewed
annually and may be modified and/or canceled as determined by the Board of
Directors.  Details of the Plan will be
indicated to members annually.


3.                                       The Bonus Plan is based on an Adjusted
EBITDA.  Additions/deletions of
operations or other extraordinary events during a Plan year will give rise to
adjustment of targets at the sole discretion of the Compensation Committee.


4.                                       Bonus payments will be calculated on base
salary level at year-end.  Each
participant’s base bonus percentage target is established at the discretion of
the Chairman and CEO.  Details of any
bonus payment under the Plan will be notified to each member in writing after
year completion and Board approval of the audited results of the Company.  Plant, Distribution Center, Sales and Area
Managers and their Controllers will have 50 percent of their bonus based on the
Company’s overall performance, and 50 percent based on their respective areas.


5.                                       Plan members will only be entitled to
receive payment providing that they are on the Company payroll at the time of
payment.  Members who resign or are
dismissed with or without just cause before the payment for any reason
whatsoever will not be eligible for pro-rata awards.  Pro-rata adjustments may be made, however,
where a member joins the Plan during the course of the fiscal year, becomes
disabled, retires or dies.


6.                                       Payments made under the Plan will attract
income tax in the year in which actual payment is made.


7.                                       Operation of the Plan remains entirely at
the discretion of the Board through its nominated Compensation Committee whose
decision remains final in all matters relating to the Plan.


8.                                       The minimum Adjusted EBITDA to achieve a
bonus is $74.0 million, or 85.00 percent of target.


9.                                       The actual bonus payout can be adjusted
from the target calculation to reflect an individual’s actual contribution to
the company’s performance, at the sole discretion and in the opinion of the
Chairman and CEO.


 

















Table 1

Pool 1



2007 Revised Bonus Plan


 


•              Target Adjusted EBITDA $87.0
Million


•              Minimal Adjusted EBITDA for Bonus
Payout $74.0 Million




	
  Adjusted EBITDA

  	
   

  	
   

  	
   

  	
  Bonus Payout

  
	
  ($ Million)

  	
   

  	
  % of Target

  	
   

  	
  (% of Salary)

  
	
  74.00

  	
   

  	
  85.00

  	
   

  	
  58.13

  
	
  78.30

  	
   

  	
  90.00

  	
   

  	
  63.75

  
	
  82.65

  	
   

  	
  95.00

  	
   

  	
  69.38

  
	
  87.00

  	
   

  	
  100.00

  	
   

  	
  75.00

  
	
  91.35

  	
   

  	
  105.00

  	
   

  	
  84.38

  
	
  95.70

  	
   

  	
  110.00

  	
   

  	
  125.00

  
	
  100.05

  	
   

  	
  115.00

  	
   

  	
  137.50

  






 


Note:


If Adjusted EBITDA falls short of Target Adjusted EBITDA,
Bonus shall be reduced by 1.5x the percentage shortfall.  If Adjusted EBITDA exceeds Target Adjusted
EBITDA, Bonus shall be increased by 2.5x the percentage exceeded.  If Adjusted EBITDA is 10 percent higher than
Target, Target Bonus percentage shall be increased to 100 percent of Base Salary.
 There is no Maximum Bonus Payout.


 

















 


TABLE 2



POOL 2



2007 REVISED BONUS PLAN


•      Target Adjusted EBITDA $87.0 Million


•      Minimum
Adjusted EBITDA for Bonus Payout $74.0 Million


 




	
   

  	
   

  	
  Adjusted

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EBITDA

  	
   

  	
   

  	
   

  	
  Bonus Payout

  
	
   

  	
   

  	
  ($Million)

  	
   

  	
  % of Target

  	
   

  	
  (% of Salary)

  
	
   

  	
   

  	
  74.00

  	
   

  	
  85.00

  	
   

  	
  31.00

  
	
   

  	
   

  	
  78.30

  	
   

  	
  90.00

  	
   

  	
  34.00

  
	
   

  	
   

  	
  82.65

  	
   

  	
  95.00

  	
   

  	
  37.00

  
	
  Target

  	
   

  	
  87.00

  	
   

  	
  100.00

  	
   

  	
  40.00

  
	
   

  	
   

  	
  91.35

  	
   

  	
  105.00

  	
   

  	
  45.00

  
	
   

  	
   

  	
  95.70

  	
   

  	
  110.00

  	
   

  	
  66.67

  
	
   

  	
   

  	
  100.05

  	
   

  	
  115.00

  	
   

  	
  73.33

  






 


 

















TABLE 3


2007 BONUS POOL PARTICIPANTS


 




	
   

  	
  POOL 1

  	
   

  	
  POOL 2

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  R. J. Muller, Jr.

  	
   

  	
   

  	
  S. Feuring

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  V. Miceli

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  J. Muller