Exhibit 10.1


AEP INDUSTRIES
INC.

2007 MANAGEMENT INCENTIVE PLAN


PLAN
OVERVIEW


Each participant
will have a target incentive opportunity, stated as a percentage of
salary.  Awards at, above, or below
target can be earned based on financial performance, using the following
approach:


·                                          Realization
of “MIP Earnings” from operations will determine the participant’s award.  This award can range down to zero and up to
200% of the individual’s target award.  “MIP
Earnings” will be defined as either:


(a)           Budgeted earnings before interest and
taxes, depreciation and amortization (EBITDA).


- OR -


(b)                                 An
amount of EBITDA agreed and appropriately documented between the participant
and either the CEO or the CFO of the company to be earned by the business unit.


DETERMINING PRELIMINARY INCENTIVE
AWARDS BASED ON EBITDA


The basis for
determining awards will be “MIP Earnings” as described above.  This measure of earnings reflects business
unit performance and excludes financing and tax considerations.


The following
procedures will be followed in measuring “MIP Earnings”:


·                                          Negative
“MIP Earnings” budgets will be treated on an absolute basis (i.e., if the
budget is to lose $100, then losing $90 would be treated as a 10% improvement).


·                                          Special
situations, such as a provision for the sale or closing of a piece of land, a
plant or business, may be proposed for exclusion.


·                                          “MIP
Earnings” will be calculated in the Business units primary currency.  In cases where “currency exchange rates” have
an impact on Business unit profits, the exchange rate used to calculate the
budget will be used in order to eliminate and effect of currency exchange
variations.


·                                          Accounting
policy changes dictated by U.S. Securities and Exchange Commission (SEC), the
U.S. Financial Accounting Standards Board (FASB) or the Chief Financial Officer
of AEP Industries Inc.


·                                          Inter-unit
management fees shall be included in “MIP Earnings”.


·                                          Inter-unit
royalty fees shall be excluded from “MIP Earnings”.









 



 


The relationship between
incentive awards relative to actual target and “MIP Earnings” as shown in the
following exhibit will be used:


PAY PERFORMANCE RELATIONSHIP

2007 ANNUAL INCENTIVE PLAN


Percent of


Target Award


Earned


 





 


Percent of “MIP
Earnings” Achieved


The target award
is paid for meeting budgeted “MIP Earnings”.


·                                          No
award is paid for achieving less than 80% of budgeted “MIP Earnings”.


·                                          50%
of the target award is paid for achieving 80% of budgeted “MIP Earnings”.


·                                          Maximum
award of 200% of target is paid for achieving 120% of budgeted “MIP Earnings”.


·                                          Increased
or decreased award percentages are used for “MIP Earnings” results between 80%
and 100%, and between 100% and 120%, based on the above graph.


As an example of
how the MIP award determination would work, assume that a participant has a
salary of $70,000, and an annual bonus target of 20%.  His business unit has an “MIP Earnings”
budget above $2.5 million, and the actual “MIP Earnings” is 110% of budget:


	
  Salary

  	
   

  	
  $70,000

  
	
  Annual Incentive Target

  	
   

  	
  20%, or $14,000

  
	
  MIP Earnings as a % of Budget

  	
   

  	
  110%

  
	
  % Award Earned

  	
   

  	
  150%

  
	
  Award

  	
   

  	
  $21,000

  	
   

  




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ADJUSTING PRELIMINARY AWARDS
BASED ON CRITICAL MEASUREMENT


In the past, you
may have experienced an MIP program that had a separate incentive component
resulting from subjective or critical measurements such as:


·                       Market
Share


·                       Number or
type of customers


·                       Quality


·                       Customer
satisfaction


·                       New product
introductions


·                       Sale of
assets at an attractive price


·                       Health and
safety improvements


·                       New
sales/promotion tracking system


·                       New
financial control system


·                       Improved distribution system


In 2007
AEP is taking the view that everyone in the company should be motivated to
perform in the best interests of the company. 
It is assumed that people in an MIP are the most committed of all,
therefore a separate, and subjective encouragement to perform one’s job well is
an insult to those who are, in fact, our best performers. Management does,
however, reserve the right to reduce an award to any individual within a
business unit whose activities during the period has been counterproductive to
the efforts of the business unit or who has not, for other reasons, added to
the profit making goals of this plan.


If you
have any questions concerning this incentive program, contact your manager or
your Human Resources Manager.


 



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AEP
INDUSTRIES INC. 2007 MANAGEMENT INCENTIVE PLAN ADMINISTRATIVE GUIDELINES


1. Base Salary
for Bonus Calculations.  October 31,
2007 Annual Base Salary will be used to calculate the incentive.


2. Eligibility.  To be eligible to receive an incentive award under
the program, you must be an active associate as of the end of the measurement
period (i.e., October 31, 2007).  The
only exceptions to this rule are detailed below under item number.


3. Pro-Rata
Eligibility.  Where incentives are to
be paid for partial periods, the incentive will be calculated on a pro-rata
basis. Eligibility for pro-rata payments is detailed in items number 4, 5, and
6 below.  Pro-rata calculations will be
done on completed quarters only.


4. New Hires,
Transfers or Promotions During the Incentive Period.


For New Hires or
participants added to the Plan in the first through third quarters, the bonus
will be calculated on a pro-rated basis from the date of hire, but only in
completed quarters.  Fourth quarter New
Hires will not be eligible for an award.


For Promotions and
Transfers, the bonus will be pro-rated from the date of promotion or transfer
in whole quarters.  This pro-ration will
apply to both changes in target incentive percentage and to changes in goals.


For all
pro-rations under this item, effective dates as of the first through the
fifteenth of the first month in the quarter will count the full quarter.  Effective dates after the sixteenth day of
the first month will not include that quarter in the pro-ration calculation.


5. Termination
During the Incentive Period.


If it is
a Voluntary Termination, no bonus will be earned.


If it is an
Involuntary Termination due to unsatisfactory performance or cause, no bonus
will be earned.  Note: Achieving business
results at the expense of violations of laws, regulations or business ethics or
allowing any individuals to behave in this manner will be considered cause for
termination.


If it is an
Involuntary Termination due to job elimination or reorganization, the bonus
will be paid on a pro-rated basis as of the termination date.  Terminations prior to the fifteenth of the
last month in the quarter will disqualify the termination quarter in the
pro-rata calculation.  Terminations
effective on the sixteenth through the last day of the last month of the
quarter will include the termination quarter in the pro-rata calculation.  Payments will be made at the same time as
they are made to participants who continue to work for the Company through the
end of the year.


6. Death or
Disability During the Incentive Period.


The incentive
earned as of the date of death will be paid, on a pro-rated basis, to the
estate of the participant at the same time payments are made to associates who
continue to work for the Company through the end of the year.


Disabilities of 30
days or less will not have an impact on the participant’s ability to continue
to be eligible for an incentive.


If a disability
lasts more than 30 days, then the incentive will be earned only in quarters in
which the participant works more than 60 days.


7. Adding
Participants to the Plan.  New
participants will be added to this program during the year as recommended by
the appropriate Vice President/Group Manager and with the approval of the CEO
and/or CFO of AEP Industries Inc.  The
criteria for participation will be based on both similar job classification as
the list of current participants in this program and a responsibility level
commensurate with the participant’s ability to influence goal outcomes.  Approval will be required for both the addition
of a participant to the program and the proposed participant’s target incentive
level.


8. Timing of
Payments.  Bonus awards will be paid
in local currency as quickly after the end of 2007 as possible.  Financial results will need to be finalized
as appropriate by the AEP Industries Inc. Vice President, Controller and the
independent auditors before bonuses can be calculated and paid.









 



 


9. Financial
Adjustments.  Actual financial
results as reported on a GAAP basis will be utilized for incentive award
calculation with the following exceptions:


·                  Special
situations, such as a provision for the sale of assets, the closing of a plant
or business or other extraordinary transactions which are not a part of normal
operations, may be proposed for inclusion/exclusion if the
proposal is presented when the charge is taken or when the budgets are
presented. 
Inclusions/Exclusions will need to be approved in writing by the CEO
and/or CFO of AEP Industries Inc.


·                  Accounting
policy changes dictated by the U.S. Securities and Exchange Commission (SEC),
the U.S. Financial Accounting Standards Board (FASB) or AEP Industries Inc.
Chief Financial Officer may be proposed for exclusion if the
proposal is presented when the change is made.  Inclusions/Exclusions will need to be
approved by AEP Industries Inc. Chief Financial Officer and/or the Chief
Executive Officer.


·                  If earnings were
achieved in ways that are considered undesirable (such as reducing budgeted
advertising expenditures where this would hurt the business), an adjustment may
be made at the discretion of the Chief Financial Officer or the Chief Executive
Officer of AEP Industries Inc.


10. All Plan Payments
Subject to Discretion. 
Notwithstanding the attainment of financial results, all awards under
the Plan are subject to the approval of the Chief Financial Officer and the
Chief Executive Officer of AEP Industries Inc.