EXHIBIT 10.24


 


SCHWEITZER-MAUDUIT
INTERNATIONAL, INC.


ANNUAL
INCENTIVE PLAN


SECOND
AMENDMENT AND RESTATEMENT


Effective as of January 1,
2009


 


RECITALS:


 


WHEREAS, the Corporation adopted an Annual Incentive Compensation
Plan (AIP) in 1995 that was subsequently amended by the First Amendment and
Restatement effective as of February 25, 1999;


 


WHEREAS, the AIP 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 AIP that is also a Covered Person, as
hereinafter defined, and therefore amends and restates the plan as follows.


 


1.               PURPOSE


 


The purpose of this
Annual Incentive Plan (the “Plan”) of Schweitzer-Mauduit International, Inc.
(the “Company”) is to further unite the interests of the stockholders of the
Company and its key executives through:


 


(a)   the annual establishment of Company
objectives which are deemed by the Company’s Board to be in the best short- and
long-range interests of the Company, and


 


(b)  the annual payment of incentive awards to each
Participant in the form of a cash award, provided his or her performance has
meaningfully contributed to the attainment of the Company’s objectives.


 


2.               EFFECTIVE DATE


 


The Plan is effective as
of January 1, 1996.


 


3.               DEFINITIONS


 


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


 


“Performance Percentage” means the respective percentages
applicable to achievement of the following benchmark Performance Levels for a
given Objective as follows:  Threshold
50%, Target 100%, Outstanding 150%, Maximum 200%; and, if actual performance of
such Objective falls between any two of such benchmark Performance Levels, the
percentage amount applicable to the performance level actually achieved will be
prorated.


 


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


 


“CEO” means the Chief Executive Officer 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 Securities 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.


 


“Committee” means the Compensation Committee of the
Board.


 


“Control Measures” shall have the meaning as set forth in Section 8
of this Plan.


 


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


 


“Incentive Award” means the cash award payable to a
Participant as determined in accordance with Section 10 of this Plan and
is the sum of the Objective Awards for each Objective Area.


 


“Measurement Period” means the fiscal year of the Company.


 


“Objective Areas” means the general areas for which
Objectives may be established and shall include the Company Objective Area,
Unit Objective Area and Individual/Function Objective Area.


 


“Objective(s)” means the objective(s) established
for each Participant.


 


“Participant” shall have the meaning set forth in Section 5
of this Plan.


 


“Percentage Weighting” shall have the meaning set forth in Section 7
of this Plan.


 


“Performance Levels” shall have the meaning set forth in Section 6
of this Plan.


 


“Objective Award” shall mean the amount determined by
multiplying a Participant’s base salary at the beginning of the Measurement
Period, by the Percentage Weighting applicable for the Objective Area, by the
Performance Percentage for the Performance Level achieved, and by the Target
Incentive Award Percentage.


 


“Target Incentive Award
Percentage” means
the target percentage of a Participant’s base salary designated by the
Committee in its sole discretion at the beginning of the Measurement Period,
which percentage need not be the same for each Participant.


 


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
hereunder.  Any action by the Committee
shall be final and conclusive as to all individuals affected thereby.


 


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


 


5.               ELIGIBILITY


 


The CEO, or the Committee
in the case of the CEO and all officer employees, shall, in his/its sole
discretion, specify in writing for each Measurement Period those officers and
employees of the Company or any Affiliate who shall be eligible to participate
in the Plan (the “Participants”) for such Measurement Period based upon such
Participants’ opportunity to have a substantial impact on the Company’s
operating results.  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.  Notwithstanding the foregoing and without
otherwise limiting the Committee’s or the CEO’s discretion to designate the
officers and employees eligible to participate in the Plan, if a Change of
Control occurs in a Measurement Period prior to the date the Objectives,
Objective Areas, Performance Levels, Percentage Weightings, Control Measures
and Target Incentive Award Percentages are established for such Measurement
Period, the Objectives, Objective Areas, Performance Levels, Percentage
Weightings and Target Incentive Award Percentages shall be established by 


 

















 


the Committee for such
Measurement Period for those officers and employees who were Participants in
the Plan in the immediately preceding Measurement Period and such Objectives,
Objective Areas, Performance Levels, Percentage Weightings, Target Incentive
Award Percentages and any Control Measures established for such Participants
shall be no less favorable than those established for each such Participant in
the immediately preceding Measurement Period.


 


6.               OBJECTIVE AREAS AND PERFORMANCE LEVELS


 


Prior to the beginning of
each Measurement Period, or as soon thereafter as reasonably practicable,
Objective(s) shall be established for each Participant in one or more
Objective Areas.


 


The Board shall establish
the Objective(s) and any Control Measures in the Company Objective
Area.  The CEO, or the Committee in the
case of the CEO, shall establish the Individual/Function Objective(s) and
any Control Measures for all other Objective Areas, unless otherwise determined
by the Committee.


 


For each Objective there
shall be established performance levels (“Performance Levels”) which, whenever
possible, shall consist of successively better standards or ranges, taking into
consideration actual progress in the Measurement Period, in accomplishing the
objective(s).  These Performance Levels shall
be defined as “Threshold”, “Target”, “Outstanding”, and “Maximum”.  Performance below the “Threshold” level shall
not result in the payment of an award.


 


From time to time, it may
be desirable to establish Objective(s) in such a manner that specific
Performance Levels cannot be defined.  In
such cases, Performance Levels will be determined pursuant to Section 9 of
this Plan.


 


The Objective(s) in
the Individual Objective Area for a Participant may be defined to include
specific target areas on which such Participant should focus during the year.


 


The original definition
of any and all Objectives, Objective Areas, Performance Levels, Percentage
Weightings and Control Measures shall not be changed during the Measurement
Period, except by the approval of the person(s) who originally approved
the same.  When changes in the Company’s
accounting or internal reporting policies have the effect of making the
financial results between two periods not fairly comparable for the purpose of
properly measuring performance where Objectives are stated in financial terms,
such results may be adjusted in such manner as shall be deemed fair and
appropriate by the person(s) who originally approved the Objective.


 


If during a Measurement
Period, the Company, or any of its Affiliates, purchases substantially all of
the assets or shares of a business owned by any other person or entity (“Business”),
the earnings attributable to such Business, which are included in the Company’s
consolidated income statement for the Measurement Period, shall be taken into
account in calculating achievement of any earnings Objective for the
Measurement Period.


 


7.               OBJECTIVE AREA WEIGHTINGS


 


Coincident with the
establishment of Objective Areas, Objectives and Performance Levels, the CEO,
or the Committee in the case of the CEO and all employees who are officers of
the Company, shall establish a percentage weighting (“Percentage Weighting”)
applicable to each Objective Area, or, where applicable, to each Objective
within an Objective Area.  The total of
all Percentage Weightings in all Objectives and/or Objective Areas for each
Participant shall be 100 percent.


 


8.               CONTROL MEASURES


 


At the time the
Objectives are established, there may also be established certain conditions
known as control measures (“Control Measures”) which are either personal as to
one individual, or general as to a group of individuals.  Failure to fulfill a Control Measure may
partially or totally deprive the individual to whom the Control Measure applies
of the right to receive an award, notwithstanding the level of performance
attained on any or all Objectives, or in any or all Objective Areas.


 

















 


9.               ASCERTAINMENT OF PERFORMANCE LEVELS


 


The Performance Level
actually attained with respect to any Objective or Control Measure stated in
financial terms, and the payment with respect thereto, shall be determined upon
the completion of audited results of the Company and its subsidiaries by the
person(s) who originally approved or defined such Objective or Control
Measure, or the Committee if such person is no longer employed by or a director
of the Company.


 


When specific Performance
Levels have not been defined in the Company Objective Area under Section 6
of this Plan, the Committee will determine the Performance Level attained
following the end of the Measurement Period.


 


The Performance Level
attained with respect to any other Objective Area or Control Measure shall be
determined and approved by the person(s) who originally approved or
defined such Objective or Control Measure (or the Committee if such person is
no longer employed by or a director of the Company) following the end of the
Measurement Period.


 


Notwithstanding the
above, the Committee may, in its sole discretion, authorize that such
determination of the Performance Levels attained be made prior to the end of
the Measurement Period, and that the payment of awards be made pursuant to Section 12
of this Plan.


 


10.         AMOUNT OF INCENTIVE AWARD


 


Except as otherwise
hereinafter provided, the Incentive Award a Participant is eligible to receive
is the sum of the values attributable to performance actually attained for each
Objective or Objective Area (“Objective Award”),
as determined by the following paragraphs.


 


The
amount of Objective Award a Participant is eligible to receive depends upon:


 


(a)          Participant’s base salary,


 


(b)         the Percentage Weighting
applicable to that Objective or Objective Area,


 


(c)          the Performance
Percentage which applies as a consequence of the Performance Level attained in
that area, and


 


(d)         the Target Incentive
Award Percentage established for the Participant.


 


The
amount of the Objective Award for each Objective or Objective Area shall be
determined by multiplying (a) times (b) times (c) times (d).


 


11.         ADJUSTMENT OF INCENTIVE
AWARD


 


Except
as otherwise determined by the Committee, in its sole and absolute discretion,
the amount of any Incentive Award may be adjusted by the CEO, or the Committee
in the case of the CEO and employees who are officers of the Company, in his or
its sole discretion, to more accurately reflect an individual Participants’s
performance during the Measurement Period.


 


In the
event of transfers to, from or between eligible positions, the amount of the
Incentive Award may be reviewed, and may be adjusted or prorated, on such basis
as shall be determined fair and appropriate by the Committee.


 


With
respect to Participants that are not Covered Employees, termination of
employment for any reason other than Change of Control, death,  retirement, or total and permanent disability
during the Measurement Period shall result in a forfeiture of any Incentive
Award attributable to performance during the Measurement Period in which
termination occurred.  Termination of
employment because of a Participant’s death or total and permanent disability
during the Measurement Period shall result in the pro rata or other adjustment
to the amount of the Incentive Award on such basis as shall be determined to be
fair and appropriate by the Committee. 
Termination of employment within two years following a Change of Control
shall result in the payment of a pro rata portion of the Incentive Award at the
Target Performance Percentage, without regard to achievement or preestablished
Objectives; however, the Committee shall have the right to increase the
Incentive Award payable upon such termination as the Committee deems fair and
appropriate.


 

















 


With
respect to Participant who are also Covered Employees, termination of
employment for any reason other than Change of Control, death,  or total and permanent disability during the
Measurement Period shall result in a forfeiture of any Incentive Award
attributable to performance during the Measurement Period in which termination
occurred.  Termination of employment
because of a Participant’s death or total and permanent disability during the
Measurement Period shall result in the pro rata or other adjustment to the
amount of the Incentive Award on such basis as shall be determined to be fair
and appropriate by the Committee. 
Termination of employment within two years following a Change of Control
shall result in the payment of a pro rata portion of the Incentive Award at the
Target Performance Percentage, without regard to achievement or preestablished
Objectives; however, the Committee shall have the right to increase the
Incentive Award payable upon such termination as the Committee deems fair and
appropriate.


 


Notwithstanding
any provision of this Plan, no Incentive Award shall be paid to any Participant
who, in any Measurement Period other than a Measurement Period occurring within
two years following a Change of Control, has discharged the principal
responsibilities of his or her position in an unsatisfactory manner.


 


12.         PAYMENT OF INCENTIVE
AWARDS


 


Incentive
Awards shall be paid in one lump sum in cash in the first calendar quarter
following the Measurement Period for which the Objectives were
established.  Notwithstanding the above,
the Committee may make payments at such earlier times as it may, in its sole
discretion, determine, and the Committee, or the CEO, in their sole discretion,
will make such determinations as to performance, and establish procedures
(including repayment of any overpayment which is determined after the
completion of the final audit), implementing such early payment.  The Company shall have the right to deduct
from the payment any taxes required by law to be withheld thereon.


 


13.         MISCELLANEOUS


 


(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 an Incentive
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 an Incentive 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 vested hereunder.  Notwithstanding the foregoing, this Plan may
not be amended, suspended or terminated within the two-year period following a
Change of Control.


 


(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.