EXHIBIT 10.26


 


SCHWEITZER-MAUDUIT INTERNATIONAL,
INC.


LONG-TERM INCENTIVE PLAN


First Amendment and Restatement


Effective as of January 1,
2009


 


RECITALS:


 


WHEREAS, the Corporation adopted a Long-Term Incentive Plan (LTIP)
in 2001to provide a long-term incentive opportunity to its participants;


 


WHEREAS,
the LTIP is intended to provide incentive compensation that is qualified as
exempt from the limitation on tax deductibility when paid to a participant that
is covered by Section 162(m) of the Internal Revenue Code;


 


WHEREAS,
Revenue Ruling 2008-13 issued new guidance from the Internal Revenue Service on
its revised interpretation of the performance based compensation exemption from
Code Section 162(m) limits on deductible compensation;


 


WHEREAS,
the Company desires to maintain the exempt performance based compensation
status of any awards issued to a participant in the LTIP that is also a Covered
Person, as hereinafter defined, and therefore amends and restates the plan as
follows.


 


1.            PURPOSE


 


The
purpose of this Long-Term Incentive Plan (the “Plan”) of Schweitzer-Mauduit
International, Inc. (the “Company”) is to promote the long-term financial
success of the Company by:


 


(a) attracting and retaining executive personnel of outstanding
ability;


 


(b) strengthening the Company’s capability to develop, maintain
and direct a competent management team; and


 


(c) motivating executive personnel by means of
performance-related incentives to achieve longer-range performance goals.


 


2.            EFFECTIVE DATE


 


The
Plan is adopted effective as of January 1, 2001.


 


3.            DEFINITIONS


 


“Affiliate”
means any company in which the Company owns 20% or more of the equity interest
(collectively, the “Affiliates”).


 


“Board” means
the Board of Directors of the Company.


 


“Change of Control” shall mean the date as of which: (a) a third person, including a “group”
as defined in Section 13(d)(3) of the Exchange Act of 1934, acquires
actual or beneficial ownership of shares of the Company having 15% or more of
the total number of votes that may be cast for the election of Directors of the
Company; or (b) as the result of any cash tender or exchange offer, merger
or other business combination, sale of assets or contested election, or any
combination of the foregoing transactions (a “Transaction”), the persons who
were directors of the Company before the Transaction shall cease to constitute
a majority of the Board of Directors of the Company or any successor to the
Company.


 

















 


“Code” means
the Internal Revenue Code of 1986, as amended, and the regulations thereunder,
as amended from time to time.


 


“Committee”
means the Compensation Committee of the Board. 
The Committee shall administer the Plan.


 


“Covered Employee” shall have the meaning given to such term by
Internal Revenue Code Section 162(m)(3), and any
successor provision.


 


“Exchange Act”
means the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder, as amended from time to time.


 


“Participant”
means an officer or employee who the Committee selects to participate in this
Plan (collectively, the “Participants”) in accordance with Section 5 of
this Plan. Participants shall be listed on Addendum A hereto, as it may be
amended from time to time.


 


“Potential Change of Control” shall mean the date as of which: (a) the Company enters into an
agreement the consummation of which, or the approval by shareholders of which,
would constitute a Change of Control; (b) proxies for the election of
Directors of the Company are solicited by anyone other than the Company; (c) any
person (including, but not limited to, any individual, partnership, joint
venture, corporation, association or trust) publicly announces an intention to
take or to consider taking actions which, if consummated, would constitute a
Change of Control; or (d) any other event occurs which is deemed to be a
Potential Change of Control by the Board and the Board adopts a resolution to
the effect that a Potential Change of Control has occurred.


 


“Performance Cycle” or “Cycle” means each three-year period, as determined by the
Committee, during which the performance of the Company is measured for the
purposes of determining the extent to which the Performance Awards which have
been contingently allotted for such Cycle may be earned. The term shall include
any year within a Cycle when the Committee has established Performance Goals
and the related Performance Award opportunities for the individual years that
comprise a Cycle.


 


“Performance Goals” means the objectives for the Company established by the Committee for
a Performance Cycle, for the purpose of determining the extent to which
Performance Awards which have been contingently allotted for such Cycle are
earned.


 


“Performance Award” means the units contingently earned during a Performance Cycle by
Participants under this Plan.


 


“Retirement”
and “Retire” means the termination of employment on or after the date
the Participant is entitled to receive immediate payments under a qualified
retirement plan of the Company or an Affiliate; provided, however, if the
Participant is not eligible to participate under a qualified retirement plan of
the Company or its Affiliates then such Participant shall be deemed to have
retired if his termination of employment is on or after the date such
Participant has attained age 55.


 


“Threshold” means
the minimum level of performance in relation to the Performance Goals for which
any Performance Award may be earned.


 


“Total and Permanent
Disability” means a condition arising out of injury or
disease which the Schweitzer-Mauduit International, Inc. Human Resources
Committee determines is permanent and prevents a Participant from engaging in
any occupation with his Employer commensurate with his education, training and
experience, excluding (i) any condition incurred in military service
(other than temporary absence on military leave) if the Participant’s service
is not resumed at the end of his military service, (ii) any condition
incurred as a result of or incidental to a felonious act perpetrated by the
Participant, and (iii) any condition resulting from excessive use of drugs
or narcotics or use of illegal drugs or  (iv) from
willful self-inflicted injury.


 


4.            ADMINISTRATION


 


The
Plan shall be administered by the Committee, which in its absolute discretion,
shall have the power to interpret and construe the Plan and to resolve all
questions arising thereunder. Any action by the Committee shall be final and
conclusive as to all individuals affected thereby.


 

















 


The
Committee shall have sole and complete authority to determine the employees to
whom Performance Award opportunities shall be allotted for each Performance
Cycle, to determine the basis for measuring the value of such Performance
Awards, and to determine the value of such Performance Award opportunities, if
any, to be allotted to each Participant. 
Performance Awards may be based on such unit of value as the Committee
may in its sole discretion designate.


 


The
Committee may delegate to any director, officer, or employee such ministerial
or administrative duties relating to the Plan as deemed appropriate by the
Committee.  No member of the Board or of
the Committee shall be liable for any act done or omitted to be done by such
member or by any other member in connection with the Plan, except for such
member’s own willful misconduct or as expressly provided by statute.


 


5.            ELIGIBILITY


 


The
Committee shall, in its sole discretion, specify in writing for each
Performance Cycle those officers and employees of the Company or any Affiliate
who shall be eligible to participate in the Plan for such Performance Cycle
based upon such Participants’ ability to have a substantial impact on the
Company’s longer-term results.  Only
employees of the Company and its Affiliates are eligible to participate in the
Plan.  Nothing contained in the Plan
shall be construed as or be evidence of any contract of employment with any
Participant for a term of any length, or as a limitation on the right of the
Company to discharge any Participant with or without cause.


 


6.            PERFORMANCE AWARDS
AND PERFORMANCE GOALS


 


Any
Performance Award earned by a Participant shall be credited to a bookkeeping
account to be maintained by the Company for such Participant.  At the start of each Cycle, the Committee
shall establish the value of each Performance Award opportunity to be allotted
for the Cycle.


 


The
Committee shall establish Performance Goals for each Cycle to accomplish such
objectives as the Committee may from time to time determine. Performance Goals
may be described in terms of Company-wide objectives or objectives that are
related to the performance of the individual Participant, or of an Affiliate,
division, operating unit, department, region, function, or other organizational
unit within the Company or an Affiliate in which the Participant is employed.
The Performance Goals may be made relative to the performance of other
corporations or business units of other corporations provided they are
Affiliates of the Company.  The
Performance Goals applicable at the discretion of the Committee to any award to
a Participant shall be based on specified and pre-established levels of or
growth in one or more of the following criteria:


 


  1. the price of
common stock;


  2. market share;


  3. sales;


  4. unit sales
volume;


  5. return on equity,
assets, capital or sales;


  6. economic profit;


  7. total shareholder
return;


  8. costs;


  9. margins;


10.
earnings or earnings per share;


11.
cash flow;


12.
customer satisfaction;


13.
pre-tax profit;


14.
operating profit;


15.
earnings before interest and taxes;


16.
earnings before interest, taxes, depreciation and
amortization;


17.
debt/capital ratio;


18.
revenues from new product development;


19.
percentage of revenues derived from designated lines
of business; and


20.
any combination of the foregoing.


 


If the Committee determines that a change in the business,
operations, corporate structure or capital structure of the Company or an
Affiliate, or the manner in which it conducts its business, or other events or 


 

















 


circumstances
render the Performance Goals unsuitable, the Committee may in its discretion
modify such Performance Goals or the related pre-established level of
achievement, in whole or in part, as the Committee deems appropriate and
equitable, except in the case of a Covered Employee where such action would
result in the loss of an exemption of the award or a portion thereof under Section 162(m) of
the Code that would otherwise have been available and would have been
applicable to exempt all or a portion of the 
Covered Employee’s  compensation
from the Section 162(m) limits for the relevant tax year. In such
case, the Committee shall not make any modification of the Performance Goals or
the pre-established level of achievement applicable to the Covered Employee for
the impacted portion of the Performance Cycle.


 


To
recognize a range of Company performance, Participants may earn from 25% to
200% of the Performance Awards allocated to them as specified by the Committee,
based upon actual Company performance compared to the specified Performance
Goals.  At Threshold, 25% of the
Performance Award will be earned.  No
Performance Awards will be earned for performance below Threshold.  Target performance will result in a
Participant earning 100% of the Performance Award. Outstanding performance will
result in a Participant earning 150% of the allocated Performance Award and
Maximum performance will result in a Participant earning 200% of the allocated
Performance Award.


 


7.            DETERMINATION AND
PAYMENT OF PERFORMANCE AWARDS


 


(a) The
Committee shall determine the number of Performance Awards that have been
earned by each Participant for the Cycle on the basis of the Company’s
performance in relation to the established Performance Goals during the period
of performance that has been completed and is being measured.


 


(b) Performance
Awards, if any, earned by a Participant shall be determined independently for
each year of a Performance Cycle where the Committee has established
Performance Objectives and related Performance Unit opportunities for each year
within a Performance Cycle. Performance Awards shall be awarded to the
Participant at the end of the year in which they are earned, if an opportunity
is established to earn Performance Awards on other than a full Performance
Cycle basis, or at the end of the Performance Cycle if the Committee has
established Performance Objectives that are to be determined only at the
completion of the Performance Cycle. A Performance Award earned in any one year
of the Performance Cycle, where such an opportunity has been established by the
Committee, shall not be lost or revoked because Performance Objectives are not
achieved in any other year during such Performance Cycle or because an
additional Performance Objective established for the entire Performance Cycle
is not met.


 


As
to Participants that are not also Covered Employees:


 


(c) Payment
in respect of the Performance Awards which are earned by a Participant shall be
made in one lump sum in cash in the first calendar quarter following the end of
the Performance Cycle for which the Performance Awards were earned or within 60
days following termination of employment in the event of a termination within
two years following a Change of Control or due to death or Retirement or
following a determination of Total and Permanent Disability by the Company’s
Human Resources Committee. The Company shall have the right to deduct from the
payment any taxes required by law to be withheld thereon.


 


(d) Termination of employment for any reason other than Change of
Control, death, Retirement or Total and Permanent Disability during a Performance
Cycle will result in a forfeiture of any award attributable to performance
during the Performance Cycle in which termination occurred.  Termination of employment due to death,
Retirement  or Total and Permanent Disability
shall result in the payment of a pro rata portion of the Performance Awards
allotted to the Participant that the Participant would have earned if the
Participant had remained employed until the end of each Performance Cycle
during which such termination occurred. 
Termination of employment within two years following a Change of Control
will result in the payment of a pro rata portion of the Performance Awards
allotted to the Participant based upon Target performance.  Notwithstanding anything herein to the
contrary, in the event a Participant’s employment is involuntarily terminated
by the Company or an Affiliate or the Participant is constructively discharged
from his employment with the Company or an Affiliate within two years following
a Potential Change of Control, such Participant shall be entitled to payment of
a pro rata portion of the Performance Awards allotted to the Participant based
upon Target performance.   For purposes
of this Plan, a constructive discharge shall include, but not be limited to,
any of the following actions taken by the Company or an Affiliate without the
Participant’s written consent following a Potential Change of Control:  (a) the assignment of duties
inconsistent with, or the reduction of the powers, duties, responsibilities,
and prerogatives associated with, the Participant’s position, office, and
status with the Company or an Affiliate; (b) a demotion of the Participant
or any 


 

















 


removal of the Participant from or failure to re-elect or reappoint the
Participant to any title or office; (c) a reduction in the Participant’s
base salary or bonus potential or the Company’s or an Affiliate’s failure to
increase the Participant’s base salary (within 12 months of the Participant’s
last increase in base salary); and (d) any other similar actions or
inactions by the Company or an Affiliate.


 


As
to Participants that are also Covered Employees:


 


(e) Payment
in respect of the Performance Awards which are earned by a Participant shall be
made in one lump sum in cash in the first calendar quarter following the end of
the Performance Cycle for which the Performance Awards were earned or within 60
days following termination of employment in the event of a termination within
two years following a Change of Control or due to death or following a
determination of Total and Permanent Disability by the Company’s Human
Resources Committee. The Company shall have the right to deduct from the
payment any taxes required by law to be withheld thereon.


 


(f) Termination of employment for any reason other than Change of
Control, death or Total and Permanent Disability during a Performance Cycle
will result in a forfeiture of any award attributable to performance during the
Performance Cycle in which termination occurred.  Termination of employment due to death  or Total and Permanent Disability shall result in the
payment of a pro rata portion of the Performance Awards allotted to the
Participant that the Participant would have earned if the Participant had
remained employed until the end of each Performance Cycle during which such
termination occurred.  Termination of
employment within two years following a Change of Control will result in the
payment of a pro rata portion of the Performance Awards allotted to the
Participant based upon Target performance.


 


8.            TAX TREATMENT OF
AWARDS


 


               The Company may,
but shall not be required to, seek to qualify this Plan under Code Section 162(m) and
for such purpose, the Company’s Human Resources Committee is delegated the
authority to amend this Plan to add a Maximum Award provision limiting the cash
award payable to any Participant in the plan who is a Covered Employee to the
maximum amount permitted by Section 162(m) or any successor
section.  The Board may in its sole
discretion direct the payment of all or any portion of the Performance Awards
attributable to a Covered Employee be made in the form of a Company
Contribution to the Schweitzer – Mauduit International, Inc. Deferred
Compensation Plan.  In such event, the
Company Contribution shall be deferred until the first tax year in which the
Participant is not a Covered Employee.


 


               Participants may
elect to defer any Performance Unit payout in accordance with the terms of the
Deferred Compensation Plan.


 


9.            MISCELLANEOUS
PROVISIONS


 


(a) Except
as provided in this Plan, no right of any Participant shall be subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, charge, attachment, garnishment, execution, levy, bankruptcy, or
any other disposition of any kind, whether voluntary or involuntary, prior to
actual payment of a Performance Unit award. 
No Participant or any other person shall have any interest in any fund,
or in any specific asset or assets of the Company, by reason of a Performance
Unit award that has been made but has not been paid or distributed.


 


(b) The
Board may, at any time, amend this Plan, order the temporary suspension of its
application, or terminate it in its entirety, provided, however, that no such
action  shall adversely affect the rights or
interests of Participants theretofore earned hereunder.


 


(c) The
terms of the Plan shall be governed, construed, administered, and regulated by
the laws of the state of Georgia and applicable federal law.  In the event that any provision of the Plan
shall be determined to be illegal or invalid for any reason, the other
provisions shall continue in full force and effect as if such illegal or
invalid provision had never been included herein.