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                                                                   EXHIBIT 10.16

              STOCK OPTION AND DIVIDEND EQUIVALENT AWARD AGREEMENT

         AGREEMENT made as of the ____ day of _______, 200___, between Plum
Creek Timber Company, Inc., a Delaware corporation (the "Company"), and
__________ ("Director"). Terms used herein, unless otherwise defined herein,
shall have the meanings ascribed to them in the Plum Creek Timber Company, Inc.
2000 Stock Incentive Plan (the "Plan"). To carry out the purposes of the Plan by
affording Director the opportunity to purchase shares of common stock, par value
$.01 per share, of the Company ("Stock") and to receive certain other benefits
under the Plan, and in consideration of the mutual agreements and other matters
set forth herein and in the Plan, the Company and Director hereby agree as
follows:

A.       Stock Option Award.

         1.       Grant of Option. The Company hereby grants to Director the
right and option (the "Option") to purchase all or any part of an aggregate of
__________shares of Stock, on the terms and conditions set forth herein and in
the Plan, which Plan is incorporated herein by reference as a part of this
Agreement. The Option shall NOT be treated as an incentive stock option within
the meaning of section 422(b) of the Internal Revenue Code of 1986, as amended
(the "Code").

         2.       Purchase Price. The purchase price of any Stock purchased
pursuant to the exercise of the Option shall be $________ per share, which was
the closing price of a share of Stock on the date hereof.

         3.       Exercise of Option. Subject to the earlier expiration of the
Option as herein provided, the Option may be exercised by written notice to the
Company at its principal executive office addressed to the attention of the
Stock Option Plan Administrator, but, except as otherwise provided below, the
Option shall not be exercisable for more than a percentage of the aggregate
number of shares offered by the Option determined by the number of full years
from the date of grant hereof to the date of such exercise, in accordance with
the following vesting schedule:

<TABLE>
<CAPTION>
Number of Full Years (Date)         Percentage of Shares
--------------------                --------------------
<S>                                 <C>
Less than 1 year                             0%
1 year  (Date)                              25%
2 years (Date)                              50%
3 years (Date)                              75%
4 years (Date)                             100%
</TABLE>

         The Option is not transferable otherwise than by will or the laws of
descent and distribution, or pursuant to a "qualified domestic relations order"
as defined by the Code, and may be exercised during Director's lifetime only by
Director, Director's guardian or legal representative or a transferee under a
qualified domestic relations order. Upon any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of the Option or of such rights
contrary to the provisions hereof or the Plan, or upon the levy of any
attachment or similar process upon the Option or such rights, the Option and
such rights shall immediately become null and void. The Option may be exercised
only while Director remains a Director of the Company, subject to the following
exceptions:

                  (a) If Director's term of office as a director of the Company
is terminated due to disability (disability being defined as being physically or
mentally incapable of performing either the Director's usual duties or any other
duties that the Company reasonably makes available and such condition is likely
to remain continuously and permanently, as determined by the Company), the
vested portion of the Option may be exercised by Director (or Director's estate
or the person

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who acquires the Option by will or the laws of descent and distribution or
otherwise by reason of the death of Director) at any time during the period of
three years following such termination.

                  (b) If Director's term of office as a director of the Company
terminates by reason of Director's death or for any reason other than as set
forth in subparagraph (a) above, the portion of the Option vested at the time of
such termination may be exercised by Director or, in the case of Director's
death, by Director's estate (or the person who acquires the Option by will or
the laws of descent and distribution or otherwise by reason of Director's death)
at any time during the period of one year following the date of such death or
termination.

         Notwithstanding any other provision of this Agreement, the Option shall
not be exercisable after the expiration of ten years from the date of grant
hereof (the "Expiration Date"). The purchase price of shares as to which the
Option is exercised shall be paid in full at the time of exercise (a) in cash
(including check, bank draft or money order payable to the order of the
Company), (b) by delivering to the Company shares of Stock having a fair market
value equal to the purchase price, or (c) by a combination of cash or Stock.
Payment may also be made by delivery (including by facsimile transmission) to
the Company of a properly executed and irrevocable Notice of Exercise form,
coupled with irrevocable instructions to a broker-dealer to simultaneously sell
a sufficient number of the shares as to which the Option is exercised and
deliver directly to the Company that portion of the sales proceeds representing
the exercise price and applicable minimum withholding taxes ("Cashless
Exercise") or by such other similar process approved by the Committee.

         No fraction of a share of Stock shall be issued by the Company upon
exercise of an Option or accepted by the Company in payment of the purchase
price thereof; rather, Director shall provide a cash payment for such amount as
is necessary to effect the issuance and acceptance of only whole shares of
Stock. Unless and until a certificate or certificates representing such shares
shall have been issued by the Company to Director, Director (or the person
permitted to exercise the Option in the event of Director's death) shall not be
or have any of the rights or privileges of a shareholder of the Company with
respect to shares acquirable upon an exercise of the Option.

         4.       Withholding of Tax. Except when using the Cashless Exercise
procedure, Director shall deliver to the Company at the time of such exercise or
disposition such amount of money or shares of Stock as the Company may require
to meet its withholding obligation under applicable tax laws or regulations,
and, if Director fails to do so, the Company is hereby authorized to withhold
from any cash or Stock remuneration then or thereafter payable to Director any
tax required to be withheld by reason of such resulting compensation income.
Upon exercise of all or a portion of the Option, the Company is further
authorized in its sole discretion to satisfy any such withholding requirement
out of any cash or shares of Stock to be distributed to Director upon such
exercise.

         5.       Status of Stock. Notwithstanding any other provision of this
Agreement, in the absence of an effective registration statement under the
Securities Act of 1933, as amended (the "Act"), for issuance of the Stock
acquirable upon exercise of the Option, or an available exemption from
registration under the Act, issuance of shares of Stock acquirable upon exercise
of the Option will be delayed until registration of such shares is effective or
an exemption from registration under the Act is available. The Company intends
to use its best efforts to ensure that no such delay will occur. In the event
exemption from registration under the Act is available upon an exercise of the
Option, Director (or the person permitted to exercise the Option in the event of
Director's death or incapacity), if requested by the Company to do so, will
execute and deliver to the Company in writing an agreement containing such
provisions as the Company may require to assure compliance with applicable
securities laws.

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         Director agrees that the shares of Stock that Director may acquire by
exercising the Option will not be sold or otherwise disposed of in any manner
that would constitute a violation of any applicable securities laws, whether
federal or state. Director also agrees (i) that the certificates representing
the shares of Stock purchased under the Option may bear such legend or legends
as the Company deems appropriate in order to assure compliance with applicable
securities laws, (ii) that the Company may refuse to register the transfer of
the shares of Stock purchased under the Option on the stock transfer records of
the Company if such proposed transfer would, in the opinion of counsel
satisfactory to the Company, constitute a violation of any applicable securities
law and (iii) that the Company may give related instructions to its transfer
agent, if any, to stop registration of the transfer of the shares of Stock
purchased under the Option.

B.       Dividend Equivalents.

         1.       Grant of Dividend Equivalents. The Company hereby grants to
Director in connection with the grant of the Option ___________ Dividend
Equivalents, defined in the Plan to mean a 5-year right to receive cash and
Stock equal in value to dividends paid with respect to the number of shares of
Stock underlying such Option, together with interest earned thereon, subject to
the attainment of Performance Goals.

         2.       Non-transferable. Director may not sell, transfer, pledge or
assign Dividend Equivalents.

         3.       Performance Goals. The Performance Goal for the Dividend
Equivalents granted hereby is __% Total Shareholder Return, based upon the
Company's Stock price and dividends paid, on an annualized basis. The
Performance Period for the Dividend Equivalents granted hereby shall commence on
January 1, 200__ and shall end on December 31, 200__. In order for the
Performance Goal to be met with respect to any current year, as well as
prior-period unearned Dividend Equivalents, Total Shareholder Return, on a
compounded basis, must be at or above the __% target for 15 trading days out of
any 30 trading day period in that year. Once the Performance Goal is met in any
given year, dividends for such year, and for prior years to the extent not yet
earned, shall be credited to a Memorandum Account on Director's behalf (at such
time as such dividends are determinable) and shall earn interest thereafter at a
market rate selected from time to time by the Committee.

         4.       Effect of Stock Option Exercise. Upon any exercise of the
Option, the Dividend Equivalents granted hereunder shall immediately terminate
with respect to the corresponding number of shares underlying the portion of the
Option so exercised, and the opportunity to earn additional dividends with
respect to such shares shall cease.

         5.       Payment with respect to Dividend Equivalents. Amounts credited
to Director's Memorandum Account, including any interest earned thereon, shall
be paid within a reasonable time following the end of the Performance Period set
forth in paragraph B.3 above, and shall be paid 50% in Stock and 50% in cash,
less any required tax withholding.

         6.       Termination. Within a reasonable period of time following
termination of Director's term as a director of the Company, Director shall
receive an amount in cash equal to the amount credited to Director's Memorandum
Account with respect to vested Stock Options. ALL AMOUNTS PREVIOUSLY CREDITED TO
DIRECTOR'S MEMORANDUM ACCOUNT IN CONNECTION WITH THE DIVIDEND EQUIVALENTS
GRANTED HEREBY RELATING TO NON-VESTED STOCK OPTIONS SHALL BE FORFEITED.

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C.       Miscellaneous.

         1.       Relationship. For purposes of this Agreement, Director shall
be considered to be a director of the Company as long as Director remains a
director of either the Company, a parent or subsidiary corporation (as defined
in section 424 of the Code) of the Company, or a corporation or a parent or
subsidiary of such corporation, assuming or substituting a new option for the
Option. Any question as to whether and when there has been a termination of
Director's role as a director, and the cause of any such termination, shall be
determined by the Committee in its sole discretion, and such determination shall
be final.

         2.       Binding Effect. This Agreement shall be binding upon and inure
to the benefit of any successors to the Company and all persons lawfully
claiming under Director.

         3.       Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Washington.

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                      STOCK OPTION AND DIVIDEND EQUIVALENT
                           AWARD AGREEMENT ACCEPTANCE

    You have been granted _______________________________________________ under
    the Plum Creek Timber Company, Inc. 2000 Stock Incentive Plan (the "Plan").
    Capitalized terms used but not defined herein have the meanings ascribed to
    them in the Plan.

    AWARD SUMMARY:

         Award Agreement Date: ____ day of _________ 200__

         Purchase Price per Section A(2) shall be $_______ per share

         Vesting schedule per Section A(3):

<TABLE>
<CAPTION>
Number of Full Years (Date)         Percentage of Shares
--------------------                --------------------
<S>                                 <C>
Less than 1 year                             0%
1 year  (Date)                              25%
2 years (Date)                              50%
3 years (Date)                              75%
4 years (Date)                             100%
</TABLE>

    GRANTS:

         You have been granted _________ Stock Options under the Plan.

         You have been granted _________ Dividend Equivalents of in connection
         with your Stock Options under the Plan.

         IN WITNESS WHEREOF, the Company has caused this Award Agreement to be
duly executed by its officer thereunto duly authorized, and Director has
executed this Agreement, all as of the day and year first above written.

Plum Creek Timber Company, Inc.

By:_____________________________
         Barbara L. Crowe
         Vice President, Human Resources

Director Signature ________________________________________