EX-10.41 2006 MANAGEMENT INCENTIVE PLAN



 









Exhibit 10.41




2006




Management

Incentive

Plan




PLAN DOCUMENT













 









 








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.




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	 	 	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.




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	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.





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	 	 	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.




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	 	 	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




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	 	 	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.






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