##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K/A
 (Amendment No. 1)
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2007
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the transition period from  to
  
 WELLMAN, INC.
  Delaware
    
    04-1671740(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)1041 521 Corporate Center DriveFort Mill, South Carolina
    
    29707(Address of principal executive offices)
    
    (Zip Code)
 803) 835-2000
 
   Name of each exchangeTitle of each class
    
    on which registeredCommon Stock, $0.001 par value
    
    Over-the-Counter Bulletin BoardCommon Stock Purchase Rights
    
    Over-the-Counter Bulletin Board
 o þ
 o þ
 þ o
 þ
  Large accelerated filer o
    
    Accelerated filer þNon-accelerated filer o
    
    Smaller Reporting Company o
 o þ




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##### 



EXPLANATORY NOTE
   
 TABLE OF CONTENTS
 Item
    
    
    
    PagePart III
    
    10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    211.
    
    Executive Compensation
    
    
    512.
    
    Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
    
    
    2613.
    
    Certain Relationships and Related Transactions and
Director Independence
    
    
    2914.
    
    Principal Accountant Fees and Services
    
    
    29Part IV
    
    15.
    
    Exhibits and Financial Statements
    
    
    31Signatures
    
    
    
    
    
    
    32Exhibit IndexEx-23.1 Consent of Ernst & Young LLPEx-31.1 Section 302 Certification of CEOEx-31.2 Section 302 Certification of CFOEx-32.1 Section 906 Certification of CEOEx-32.2 Section 906 Certification of CFO
  1




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##### Table of Contents



PART III
 Item 10.
    
    Directors, Executive Officers and Corporate Governance
  Principal Occupation During
    
    DirectorName and Age
    
    The Past Five Years
    
    SinceThomas M. Duff, 60
    
    Chairman since 1999 and Chief Executive
Officer and Director of Wellman since
its inception in 1985. President from
1985 to 1999.
    
    August 1985James B. Baker, 62
    
    Managing Partner of River Associates
Investments, LLC (private equity
investment fund) since 2001 and partner
of River Associates Investments, LLC
from 1993 to 2001. Member of the Audit
Committee.
    
    August 1994Richard F. Heitmiller, 79
    
    President of Richard F. Heitmiller, Inc.
(consulting firm) since 1982. Chairman
of the Board of Radici Spandex
(manufacturer of elastane/spandex
fibers) from 2001 to March 31, 2002.
Chairman of the Governance Committee,
Lead Independent Director and member of
the Audit Committee of Wellman.
    
    November 1988Kevin Kruse, 38
    
    Member and Managing Director of Warburg
Pincus LLC (private equity investment
firm) since January 2006 and employed by
Warburg Pincus since February 2002.
Previously with AEA Investors Inc.,
focusing on private equity investment
opportunities in industrial and consumer
products companies and Bain & Co., a
management investment consulting firm.
Mr. Kruse is a Director of Polypore
International, Inc. (manufacturer of
membranes used in batteries and
filtration and Builders FirstSource,
Inc. (supplier and manufacturer of
building products for residential new
construction). Member of the Governance
Committee and the Compensation Committee
of Wellman.
    
    November 2005David J. McKittrick, 62
    
    Executive Vice President and Chief
Financial Officer of Ethanex Energy,
Inc. (a development stage company
engaged in the manufacturing of fuel
ethanol) from October 2006 to March 26,
2008, on which date Ethanex Energy, Inc.
filed for bankruptcy protection.
Principal of David J. McKittrick, LLC, a
firm providing executive level financial
and operating consulting services,
primarily to industrial companies from
2001 to October 2006. Chairman of the
Audit Committee and Audit Committee
Financial Expert. Member of the
Governance Committee of Wellman.
    
    March 2004
 2




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##### Table of Contents



Principal Occupation During
    
    DirectorName and Age
    
    The Past Five Years
    
    SinceJames E. Rogers, 62
    
    President of SCI Investors, Inc.
(investment company) since 1993. Mr.
Rogers is a Director of the Board of
Caraustar Industries (a packaging
manufacturer), lead Director of Owens &
Minor, Inc. (a medical and surgical
supplies distributor) and a Director of
NewMarket Corporation, (parent company
of Ethyl Corporation and Afton Chemical
Corporation, petroleum additives
manufacturers). Chairman of the
Compensation Committee and member of the
Governance Committee of Wellman.
    
    September 1993Roger A. Vandenberg, 60
    
    President of Cariad Capital, Inc.
(investment advisor) since its inception
in 1992. Mr. Vandenberg is also a
Director of Monaco Coach Corporation (a
manufacturer of motor homes). Member of
the Compensation Committee of Wellman.
    
    August 1985
  Election of our Directors
  Section 16(a) Beneficial Ownership Reporting Compliance
   Corporate Governance and Related Matters
   3




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##### Table of Contents




    
    A Governance Committee that directs and reviews our governance practices
    
    An annual evaluation of the performance of the Board, each of its Committees and each
of the Directors by the Governance Committee
    
    A policy that prohibits the Company from making loans to Directors or Executive Officer
 www.wellmaninc.com
 Audit Committee and Designated Audit Committee Financial Expert
  
    
    review our critical accounting policies, our annual and quarterly reports on Forms 10-K
and 10-Q, and our earnings releases before they are published;
    
    provide independent and objective oversight of our financial reporting functions,
disclosure, internal controls and procedures, major issues regarding accounting principles
and financial statement presentation, as well as monitoring the objectivity of our
financial statements; and
    
    engage, appoint, evaluate, compensate and replace (if appropriate) the independent
auditors, and review and approve in advance all audit, audit related and permitted
non-audit services performed by the independent auditors.
  
    
    each current member of the Audit Committee is financially literate and independent as
required by the rules of the SEC and the NYSE; and
    
    David McKittrick qualifies as an Audit Committee Financial Expert, as defined by the
rules of the SEC.
  Code of Conduct
  4




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##### Table of Contents



Item 11.
    
    Executive Compensation
 Compensation Discussion and Analysis
  
    
    The Role of Our Compensation Committee;
    
    Our Compensation Setting Process;
    
    Our Compensation Philosophy and Policies Regarding Executive Compensation;
    
    The Components of our Executive Compensation Program; and
    
    Our Compensation Decisions.
 The Role of Our Compensation Committee
  
    
    to adopt, review and refine an executive compensation philosophy and guiding principles
that reflect Wellmans mission, values and long-term strategic objectives;
    
    to administer Wellmans executive compensation programs in a manner that furthers
Wellmans strategic goals and serves the interests of our stakeholders;
    
    to establish appropriate objectives and targets for Wellmans Management Incentive Plan
(MIP);
    
    to evaluate the job performance of the Chief Executive Officer in light of Wellmans
goals and objectives;
    
    to determine the total compensation levels of the senior executive officers and to
allocate total compensation among the various components of executive pay;
    
    to administer Wellmans equity compensation plans;
    
    to administer Wellmans other compensation plans;
    
    to make recommendations to the Board of Directors relating to Wellmans compensation
plans; and
    
    to recommend to the Board of Directors the compensation arrangements with Wellmans
non-employee Directors.
 5




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##### Table of Contents



Committee Meetings
   
    
    financial reports including current, future and historical performance with comparisons
to budgets, forecasts and prior year performance when appropriate;
    
    calculations and reports on levels of achievement, corporate performance objectives and
its impact on executive compensation;
    
    reports on Wellmans five-year performance and current year performance relative to a
peer group of companies;
    
    information on Preset Diversification Plans (PDPs) which are Rule 10b5-1 plans;
    
    information on the Directors and Executive Officers ownership of Wellman stock;
    
    information regarding dilution resulting from Wellmans equity compensation plans;
    
    information on Wellmans restricted stock;
    
    information on Wellmans previously granted stock options;
    
    tally sheets setting forth the total compensation of the Named Executive Officers,
including base salary, cash incentives, equity awards, perquisites and other compensation
and any amounts payable to the executives upon voluntary or involuntary termination,
following a change-of-control of Wellman; and
    
    information regarding compensation programs and compensation levels at peer companies
which the Committee has selected in consultation with their compensation consultant.
 Our Compensation Setting Process
  Compensation of the Chief Executive Officer
  6




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
    
    the performance of the Chief Executive Officer;
    
    the effect of his actions on the price of our common stock;
    
    his recommendations and achievement of strategic objectives;
    
    the operating performance that is achieved under his direction; and
    
    the results of a compensation survey prepared by AON Consulting.
 Compensation of the Other Executive Officers
  
    
    the performance of the Executive Officer;
    
    the effect of the Executive Officers contributions on the price of our common stock;
    
    the effect of the Executive Officers performance and achievement of strategic
objectives;
    
    the operating performance that the Executive Officer supervises; and
    
    the results of a compensation survey prepared by AON Consulting.
 Compensation of the Remainder of the Organization
  
    
    establish performance standards, targets and objectives;
    
    evaluate employee performance; and
    
    recommend salary levels.
 Committee Advisors
   Annual Evaluation
  7




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##### Table of Contents



Performance Targets
  Benchmarking
  1 2
   Our Compensation Philosophy and Policies Regarding Executive Compensation
 Focus on Our Business Plan
  Compensation Philosophy
  
    
    We Believe in a Pay-for-Performance Culture. At the core of our compensation
philosophy is our guiding belief that pay should be directly linked to performance. This
philosophy has guided many compensation related decisions.
    
    A substantial portion of Executive Officer compensation is based on an overall
financial return.
    
    Our equity incentives provide that a significant portion of managements compensation
is based on the value of our common stock.
 8




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##### Table of Contents




    
    Compensation and incentive pay should reflect position and responsibility.Total compensation and accountability should generally increase with position and
responsibility. Consistent with this philosophy:
 
    
    Total compensation is higher for individuals with greater responsibility
and greater ability to influence our achievement of targeted results and strategic
initiatives.
    
    Executive Officers have a higher percentage of their total compensation
based on our financial performance.
    
    Equity-based compensation is higher for persons with higher levels of
responsibility, making a significant portion of their total compensation dependent
on long-term stock appreciation.
 
    
    Compensation Decisions Should be Based on Achieving Well Defined Targets
 
    
    The annual MIP program creates incentive for meeting annual financial and performance
targets.
    
    We believe that equity incentives create long-term incentives that align
managements interests with those of our long-term stakeholders.
 
    
    Compensation Should be Reasonable and Responsible
 It is essential that our overall compensation levels be sufficiently competitive to
retain talented leaders and motivate those leaders to achieve superior results. At the
same time, we believe that compensation should be set at responsible levels. Our
executive compensation programs are intended to be consistent with our focus on
controlling costs.
 
    
    Other Factors
  
    
    Compensation Disclosures should be Clear and Complete
  Committee Effectiveness
  9




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The Components of Our Executive Compensation Program
  Base Salary
  Management Incentive Plan
  Financial
   10




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Performance Targets
   Equity Ownership Plans
   11




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
    
    stock options are performance based  all value received by the recipient from a stock
option is based on the growth of the stock price above the option price;
    
    the term of the grant can be no longer than 11 years;
    
    After 1997, the grant price is the average of the highest and lowest sales prices of
the Common Stock upon the national securities exchange that the shares of Common Stock are
traded on each of the twenty (20) days that sales had been made prior to the grant. Prior
to 1997, the grant price was the fair market value of the option on the date of grant.
    
    grants do not include reload provisions;
    
    re-pricing of options is prohibited, unless approved by the stockholders; and
    
    options vest 20% per year over five years beginning with the first anniversary of the
date of grant.
  
    
    Restricted stock aligns the interests of executives with those of the stockholders,
supports a pay-for-performance culture, fosters employee stock ownership, and focuses the
management team on increasing value for the stakeholders.
    
    Restricted stock provides a balance to the overall compensation program. The MIP
rewards financial performance for the year just completed while the restricted stock
program, with multi-year vesting, creates incentives for the executives to increase
stockholder value over a longer term.
    
    The vesting period encourages executive retention and the preservation of stockholder
value.
  Additional Benefits
  The Tax Deductibility of Compensation Should be Maximized Where Appropriate
  12




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Financial Restatement
  Our Compensation Decisions
  Executive Summary
   
    
    We increased base salaries for the Named Executive Officers by 2.2%, on average,
for 2007. The Chief Executive Officer, the Chief Financial Officer and the Vice President
of Raw Material Procurement and Strategic Development did not receive an increase in 2007.
    
    In 2007, we did not achieve the financial targets for the MIP; however, we did achieve
certain performance targets and paid bonuses to our Named Executive Officers. Certain of
these bonuses were limited based on the order by the Bankruptcy Court.
    
    In 2007, we granted shares of restricted stock only to those Named Executive Officers
that assumed new responsibilities as part of our management reorganization described above.
    
    AONs compensation review concluded that, on average, the base salary and incentive
portion of the compensation of our Named Executive Officers, also referred to as total cash
compensation, was in the
fourth (bottom) quartile compared to our peer group. On average, our total compensation for
these executives, which is total cash compensation plus additional benefits plus equity
compensation, was in the fourth quartile compared to our peer group.
  13




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
    
    a pay-for-performance culture;
    
    compensation decisions should promote the interests of long-term stakeholders; and
    
    compensation should be reasonable and responsible.
 Base Salary
  Name and Title
    

Salary
in2006
    
    

Salary
in2007
    
    
    IncreaseThomas M. Duff
    
    $
    720,000
    
    
    $
    720,000
    
    
    $
    0Chairman, CEOKeith R. Phillips
    
    $
    336,050
    
    
    $
    336,050
    
    
    $
    0Vice President, Chief Financial OfficerJoseph C. Tucker
    
    $
    270,000
    
    
    $
    270,000
    
    
    $
    0Vice President, Raw Material
Procurement and Strategic DevelopmentIan K. Shaw,
    
    $
    153,700
    
    
    $
    174,200
    
    
    $
    20,500Vice President, Manufacturing and
Research & DevelopmentMark J. Ruday
    
    $
    165,000
    
    
    $
    180,000
    
    
    $
    15,000Vice President, Business Operations
  
    
    the compensation philosophy and guiding principles described above;
    
    the experience and industry knowledge of the Named Executive Officers and the quality
and effectiveness of their leadership;
    
    all of the components of executive compensation, including base salary, incentive
compensation under the MIP, restricted stock and additional benefits;
    
    the mix of performance pay to total compensation;
    
    internal pay equity among Wellman senior executives; and
    
    the base salary paid to the officers in comparable positions at companies in our peer
group, using the 50th percentile as our point of reference.
  14




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Management Incentive Plan
   Target
    
    BonusLevel in
    
    Earned inName and Title
    
    2007
    
    2007 (a)Thomas M. Duff
    
    65%
    
    $
    10,950Chairman, CEOKeith R. Phillips
    
    50%
    
    $
    10,950Vice President,
Chief Financial OfficerJoseph C. Tucker
    
    50%
    
    $
    10,950Vice President, Raw Material Procurement and Strategic
DevelopmentIan K. Shaw
    
    50%
    
    $
    9,399Vice President, Manufacturing and Research & DevelopmentMark J. Ruday
    
    50%
    
    $
    9,660Vice President, Business Operations
 
 (a)
    
    The CEO, the CFO and the Vice President, Raw Material
Procurement and Strategic Development earned bonuses of $44,877,
$17,548 and $14,099, respectively. On February 22, 2008, Wellman
and certain of its subsidiaries filed voluntary petitions in the
Bankruptcy Court seeking reorganization relief under the provisions
of Chapter 11 of the Title 11 of the United States Code.
Based on an Order issued by the Court, our payment to each of these
executives which would be made after the bankruptcy filing was
limited to $10,950; therefore, that is the amount reflected in the
table above.  Restricted Stock Awards
  15




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##### Table of Contents



Number of
    
    
    Number ofShares
    
    
    SharesGranted in
    
    
    Granted inName and Title
    
    2006
    
    
    2007Thomas M. Duff
    
    
    50,000
    
    
    
    0Chairman, CEOKeith R. Phillips
    
    
    27,000
    
    
    
    0Vice President, Chief Financial OfficerJoseph C. Tucker
    
    
    25,000
    
    
    
    0Vice President, Raw Material
Procurement and Strategic DevelopmentIan K. Shaw
    
    
    7,500
    
    
    
    14,500Vice President, Manufacturing and
Research & DevelopmentMark J. Ruday
    
    
    20,000
    
    
    
    12,500Vice President, Business Operations
  Employment Agreements
  Severance Arrangements
 1 2
 Change of Control Provisions
   16




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Base Salary
    
    
    AdditionalName and Title
    
    Plus Bonus
    
    
    Benefits
    
    
    TotalThomas M. Duff
    
    $
    2,233,316
    
    
    $
    237,268
    
    
    $
    2,470,584Chairman, CEOKeith R. Phillips
    
    $
    1,034,322
    
    
    $
    234,593
    
    
    $
    1,268,915Vice President,
Chief Financial OfficerJoseph C. Tucker
    
    $
    831,149
    
    
    $
    209,109
    
    
    $
    1,040,258Vice President, Raw
Material Procurement and
Strategic DevelopmentIan K. Shaw
    
    $
    383,399
    
    
    $
    133,437
    
    
    $
    516,836Vice President,
Manufacturing and Research
& DevelopmentMark J. Ruday
    
    $
    614,490
    
    
    $
    176,480
    
    
    $
    790,970Vice President,
Business Operations
 Vesting of Restricted Stock
 Value atNumber of Shares of
    
    
    December 31,Restricted Stock at
    
    
    2007 ClosingName and Title
    
    December 31, 2007
    
    
    Stock PriceThomas M. Duff
    
    
    100,000
    
    
    $
    12,000Chairman, CEOKeith R. Phillips
    
    
    51,600
    
    
    $
    6,192Vice President, Chief Financial OfficerJoseph C. Tucker
    
    
    44,000
    
    
    $
    5,280Vice President, Raw Material
Procurement and Strategic DevelopmentIan K. Shaw
    
    
    26,500
    
    
    $
    3,180Vice President, Manufacturing and
Research & DevelopmentMark J. Ruday
    
    
    46,500
    
    
    $
    5,580Vice President, Business Operations
   Reasonableness of Compensation
  
    
    Management has continued to focus on reducing controllable costs.
 17




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
    
    Management has minimized the impact of many adverse events in recent years including
the impacts of the Gulf Coast Hurricanes in 2005 and historically high volatility in raw
material prices.
    
    Based on a study conducted by AON the total compensation levels for the Named Executive
Officers is generally below the Committees target of the 50th percentile of compensation
levels at the companies in Wellmans peer group. The table below lists the major components
of each executives compensation compared to a peer group of comparable companies by an
independent compensation consultant. The results of the survey are quantified in quartiles
with the first quartile defined as above the 75th percentile, the second quartile being
above the 50th percentile but at or below the 75th percentile, the
third quartile being above the 25th percentile but at or below the
50th percentile and the 4th quartile being at or below the 25th
percentile. The following table contains the results of this survey:
 EquityName
    
    Base Salary
    
    MIP Plan
    
    Compensation
    
    OverallThomas M. Duff
    
    4th
    
    4th
    
    4th
    
    4thKeith R. Phillips
    
    3rd
    
    4th
    
    4th
    
    4thJoseph C. Tucker
    
    4th
    
    4th
    
    4th
    
    4thIan K. Shaw
    
    4th
    
    4th
    
    4th
    
    4thMark J. Ruday
    
    4th
    
    4th
    
    4th
    
    4th
 Executive Officer Ownership Guidelines
  Position
    

Multiple
ofSalaryChief Executive Officer
    
    5.0Chief Financial Officer
    
    2.0Other Executive Officers
    
    1.0-1.5
    
    
    The Committee will prospectively determine the grant date for all equity grants which
will be a date when all material information about Wellman is in the public domain.
    
    The exercise price of any options granted after 1997 is the average price of the high
and the low of the stock price for the 20 days preceding the grant date. The exercise price
of any options granted before 1997 is the fair market value of the underlying common stock
on the date of grant.
 18




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
    
    Directors and Executives Officers who receive equity grants must file the appropriate
forms with the SEC in a timely manner.
 COMPENSATION COMMITTEE REPORT
  
  SUMMARY OF EXECUTIVE COMPENSATION
 Summary Compensation Table
  19




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(h)Change
    
    
    (i)(e)
    
    
    in
    
    
    All(a)
    
    (b)
    
    
    (c)
    
    
    (d)
    
    
    Stock
    
    
    Pension
    
    
    Other
    
    
    (j)Name and Title
    
    Year
    
    
    Salary
    
    
    Bonus
    
    
    Awards
    
    
    Value
    
    
    Comp
    
    
    TotalThomas M. Duff
    
    
    2007
    
    
    $
    720,000
    
    
    $
    10,950
    
    
    $
    0
    
    
    $
    0
    
    
    $
    77,331
    
    
    $
    808,281Chairman, CEO
    
    
    2006
    
    
    $
    720,000
    
    
    $
    0
    
    
    $
    343,500
    
    
    $
    0
    
    
    $
    97,587
    
    
    $
    1,161,087Keith R. Phillips
    
    
    2007
    
    
    $
    336,050
    
    
    $
    10,950
    
    
    $
    0
    
    
    $
    0
    
    
    $
    61,439
    
    
    $
    408,439Vice President, Chief Financial Officer
    
    
    2006
    
    
    $
    336,050
    
    
    $
    0
    
    
    $
    185,490
    
    
    $
    0
    
    
    $
    60,976
    
    
    $
    582,516Joseph C. Tucker
    
    
    2007
    
    
    $
    270,000
    
    
    $
    10,950
    
    
    $
    0
    
    
    $
    2,233
    
    
    $
    54,528
    
    
    $
    337,711Vice President, Raw Material
Procurement and Strategic Development
    
    
    2006
    
    
    $
    270,000
    
    
    $
    0
    
    
    $
    171,750
    
    
    $
    609
    
    
    $
    58,797
    
    
    $
    501,156Ian K. Shaw (b)
    
    
    2007
    
    
    $
    174,200
    
    
    $
    9,399
    
    
    $
    52,235
    
    
    $
    12,608
    
    
    $
    40,858
    
    
    $
    289,300Vice President, Manufacturing and
Research & DevelopmentMark J. Ruday (a)
    
    
    2007
    
    
    $
    180,000
    
    
    $
    9,660
    
    
    $
    45,875
    
    
    $
    0
    
    
    $
    45,402
    
    
    $
    280,937Vice President, Business Operations
    
    
    2006
    
    
    $
    165,000
    
    
    $
    0
    
    
    $
    137,400
    
    
    $
    0
    
    
    $
    43,570
    
    
    $
    345,970Michael E. Dewsbury (c)
    
    
    2007
    
    
    $
    51,667
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    702,737
    
    
    $
    754,404Vice President, PET Resin
    
    
    2006
    
    
    $
    310,000
    
    
    $
    0
    
    
    $
    185,490
    
    
    $
    0
    
    
    $
    63,648
    
    
    $
    559,138Audrey L. Goodman (d)
    
    
    2007
    
    
    $
    67,188
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    415,196
    
    
    $
    482,384
 
 (a)
    
    Mr. Ruday was promoted to Vice President, Business Operations in April 2007. He previously
served as Vice President, Chief Accounting Officer.(b)
    
    Compensation data for Mr. Shaw is provided for only 2007 because he was not a named executive
in 2006.(c)
    
    Mr. Dewsburys position was eliminated on February 28, 2007, as part of our management reorganization.(d)
    
    Mr. Goodmans position was eliminated on May 31, 2007, as part of our management reorganization.   20




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RetirementLife
    
    
    
    
    
    
    PlanName and Title
    
    Year
    
    
    Insurance
    
    
    Auto
    
    
    Contributions
    
    
    Other
    
    
    TotalThomas M. Duff
    
    
    2007
    
    
    $
    35,155
    
    
    $
    936
    
    
    $
    26,240
    
    
    $
    15,000
    
    
    $
    77,331Chairman, CEO
    
    
    2006
    
    
    $
    55,724
    
    
    $
    773
    
    
    $
    26,090
    
    
    $
    15,000
    
    
    $
    97,587Keith R. Phillips
    
    
    2007
    
    
    $
    34,082
    
    
    $
    1,117
    
    
    $
    26,240
    
    
    $
    0
    
    
    $
    61,439Vice President, Chief Financial Officer
    
    
    2006
    
    
    $
    33,526
    
    
    $
    1,360
    
    
    $
    26,090
    
    
    $
    0
    
    
    $
    60,976Joseph C. Tucker
    
    
    2007
    
    
    $
    25,650
    
    
    $
    2,638
    
    
    $
    26,240
    
    
    $
    0
    
    
    $
    54,528Vice President, Raw Material
Procurement and Strategic Development
    
    
    2006
    
    
    $
    26,465
    
    
    $
    3,782
    
    
    $
    26,050
    
    
    $
    2,500
    
    
    $
    58,797Ian K. Shaw
    
    
    2007
    
    
    $
    16,267
    
    
    $
    3,745
    
    
    $
    20,846
    
    
    $
    0
    
    
    $
    40,858Vice President, Manufacturing and
Research & DevelopmentMark J. Ruday
    
    
    2007
    
    
    $
    16,942
    
    
    $
    4,670
    
    
    $
    23,790
    
    
    $
    0
    
    
    $
    45,402Vice President, Business Operations
    
    
    2006
    
    
    $
    14,606
    
    
    $
    4,274
    
    
    $
    24,690
    
    
    $
    0
    
    
    $
    43,570Michael E. Dewsbury
    
    
    2007
    
    
    $
    14,950
    
    
    $
    0
    
    
    $
    19,490
    
    
    $
    668,297
    
    
    $
    702,737Vice President, PET Resin
    
    
    2006
    
    
    $
    29,582
    
    
    $
    4,047
    
    
    $
    24,427
    
    
    $
    5,592
    
    
    $
    63,648Audrey L. Goodman
    
    
    2007
    
    
    $
    7,659
    
    
    $
    0
    
    
    $
    19,340
    
    
    $
    388,197
    
    
    $
    415,196
  GRANTS OF PLAN-BASED AWARDS
    21




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##### Table of Contents



Restricted StockGrant
    
    
    Estimated Future Payouts Under Non-
    
    
    Awards(Plan)
    
    
    Equity Incentive Plan      Awards
    
    
    
    
    
    
    NumberName
    
    Date
    
    
    Threshold
    
    
    Target
    
    
    Maximum
    
    
    Grant Date
    
    
    of Shares(a)
    
    (b)
    
    
    (c)
    
    
    (d)
    
    
    (e)
    
    
    (b)
    
    
    (i)Thomas M. Duff
    
    March 2005
    
    $
    0
    
    
    $
    468,000
    
    
    $
    1,093,950
    
    
    
    
    
    
    
    0Chairman, CEOKeith R. Phillips
    
    March 2005
    
    $
    0
    
    
    $
    168,000
    
    
    $
    392,700
    
    
    
    
    
    
    
    0Vice President,
Chief Financial OfficerJoseph C. Tucker
    
    March 2005
    
    $
    0
    
    
    $
    135,000
    
    
    $
    315,563
    
    
    
    
    
    
    
    0Vice President, Raw
Material Procurement
and Strategic
DevelopmentIan K. Shaw
    
    March 2005
    
    $
    0
    
    
    $
    93,500
    
    
    $
    218,556
    
    
    February, April 2007
    
    
    14,500Vice President,
Manufacturing and
Research & DevelopmentMark J. Ruday
    
    March 2005
    
    $
    0
    
    
    $
    100,000
    
    
    $
    233,750
    
    
    April 2007
    
    
    12,500Vice President,
Business OperationsMichael E.
Dewsbury (a)
    
    March 2005
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    
    
    
    0Vice President,
PET ResinAudrey L.
Goodman (a)
    
    March 2005
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    
    
    
    0Vice President,
Treasurer
 
 (a)
    
    Mr. Dewsburys and Ms. Goodmans positions were eliminated in
2007 as part of our management reorganization. Accordingly, they did
not receive any awards for these programs.  OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
  22




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##### Table of Contents



Option AwardsEquityIncentive PlanAwards:Number of
    
    
    Number of
    
    
    Number ofSecurities
    
    
    Securities
    
    
    SecuritiesUnderlying
    
    
    Underlying
    
    
    UnderlyingUnexercised
    
    
    Unexercised
    
    
    Unexercised
    
    
    OptionOptions
    
    
    Options
    
    
    Unearned
    
    
    Exercise
    
    
    OptionName
    
    Exercisable
    
    
    Unexercisable
    
    
    Options
    
    
    Price
    
    
    Expiration Date(a)
    
    (b)
    
    
    (c)
    
    
    (d)
    
    
    (e)
    
    
    (f)Thomas M. Duff
    
    
    50,000
    
    
    
    0
    
    
    
    0
    
    
    $
    18.81
    
    
    
    2/16/2009Chairman, CEO
    
    
    84,600
    
    
    
    0
    
    
    
    0
    
    
    $
    9.64
    
    
    
    2/23/201085,000
    
    
    
    0
    
    
    
    0
    
    
    $
    17.53
    
    
    
    3/6/201186,000
    
    
    
    0
    
    
    
    0
    
    
    $
    16.61
    
    
    
    2/14/201260,000
    
    
    
    0
    
    
    
    0
    
    
    $
    10.44
    
    
    
    8/4/2014Keith R. Phillips
    
    
    20,000
    
    
    
    0
    
    
    
    0
    
    
    $
    18.81
    
    
    
    2/16/2009Vice President,
    
    
    26,600
    
    
    
    0
    
    
    
    0
    
    
    $
    9.64
    
    
    
    2/23/2010Chief Financial Officer
    
    
    35,000
    
    
    
    0
    
    
    
    0
    
    
    $
    17.53
    
    
    
    3/6/201140,000
    
    
    
    0
    
    
    
    0
    
    
    $
    16.61
    
    
    
    2/14/201225,000
    
    
    
    0
    
    
    
    0
    
    
    $
    15.24
    
    
    
    3/20/201335,000
    
    
    
    0
    
    
    
    0
    
    
    $
    10.44
    
    
    
    8/4/2014Joseph C. Tucker
    
    
    20,000
    
    
    
    0
    
    
    
    0
    
    
    $
    18.81
    
    
    
    2/16/2009Vice President, Raw Material
    
    
    24,400
    
    
    
    0
    
    
    
    0
    
    
    $
    9.64
    
    
    
    2/23/2010Procurement and Strategic
    
    
    30,000
    
    
    
    0
    
    
    
    0
    
    
    $
    17.53
    
    
    
    3/6/2011Development
    
    
    35,000
    
    
    
    0
    
    
    
    0
    
    
    $
    16.61
    
    
    
    2/14/201220,000
    
    
    
    0
    
    
    
    0
    
    
    $
    15.24
    
    
    
    3/20/201325,000
    
    
    
    0
    
    
    
    0
    
    
    $
    10.44
    
    
    
    8/4/2014Ian K. Shaw
    
    
    7,000
    
    
    
    0
    
    
    
    0
    
    
    $
    18.81
    
    
    
    2/16/2009Vice President, Manufacturing
    
    
    7,600
    
    
    
    0
    
    
    
    0
    
    
    $
    9.64
    
    
    
    2/23/2010and Research & Development
    
    
    7,000
    
    
    
    0
    
    
    
    0
    
    
    $
    17.53
    
    
    
    3/6/20117,000
    
    
    
    0
    
    
    
    0
    
    
    $
    16.61
    
    
    
    2/14/20125,000
    
    
    
    0
    
    
    
    0
    
    
    $
    15.24
    
    
    
    3/20/20135,000
    
    
    
    0
    
    
    
    0
    
    
    $
    10.44
    
    
    
    8/4/2014Mark J. Ruday
    
    
    7,500
    
    
    
    0
    
    
    
    0
    
    
    $
    18.81
    
    
    
    2/16/2009Vice President,
    
    
    8,400
    
    
    
    0
    
    
    
    0
    
    
    $
    9.64
    
    
    
    2/23/2010Business Operations
    
    
    9,000
    
    
    
    0
    
    
    
    0
    
    
    $
    17.53
    
    
    
    3/6/20119,000
    
    
    
    0
    
    
    
    0
    
    
    $
    16.61
    
    
    
    2/14/20128,100
    
    
    
    0
    
    
    
    0
    
    
    $
    15.24
    
    
    
    3/20/201315,000
    
    
    
    0
    
    
    
    0
    
    
    $
    10.44
    
    
    
    8/4/2014Michael E.
Dewsbury
    
    
    15,000
    
    
    
    0
    
    
    
    0
    
    
    $
    18.81
    
    
    
    2/28/2008Vice
President,
    
    
    20,000
    
    
    
    0
    
    
    
    0
    
    
    $
    9.64
    
    
    
    2/28/2008PET Resin
    
    
    30,000
    
    
    
    0
    
    
    
    0
    
    
    $
    17.53
    
    
    
    2/28/200835,000
    
    
    
    0
    
    
    
    0
    
    
    $
    16.61
    
    
    
    2/28/200820,000
    
    
    
    0
    
    
    
    0
    
    
    $
    15.24
    
    
    
    2/28/200835,000
    
    
    
    0
    
    
    
    0
    
    
    $
    10.44
    
    
    
    2/28/2008Audrey L.
Goodman
    
    
    3,500
    
    
    
    0
    
    
    
    0
    
    
    $
    18.81
    
    
    
    5/30/2008Vice President,
    
    
    3,500
    
    
    
    0
    
    
    
    0
    
    
    $
    9.64
    
    
    
    5/30/2008Treasurer
    
    
    4,500
    
    
    
    0
    
    
    
    0
    
    
    $
    17.53
    
    
    
    5/30/20084,000
    
    
    
    0
    
    
    
    0
    
    
    $
    16.61
    
    
    
    5/30/200810,000
    
    
    
    0
    
    
    
    0
    
    
    $
    15.24
    
    
    
    5/30/200815,000
    
    
    
    0
    
    
    
    0
    
    
    $
    10.44
    
    
    
    5/30/2008
 23




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##### Table of Contents



OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END (Contd)
  Stock AwardsMarket ValueNumber of Shares
    
    
    of Shares orof Restricted
    
    
    Units of StockStock That Have
    
    
    That Have NotName
    
    Not Vested
    
    
    Vested(a)
    
    (g)
    
    
    (h)Thomas M. Duff
    
    
    100,000
    
    
    $
    12,000Chairman, CEOKeith R. Phillips
    
    
    51,600
    
    
    $
    6,192Vice President,
Chief Financial OfficerJoseph C. Tucker
    
    
    44,000
    
    
    $
    5,280Vice President, Raw Material
Procurement and Strategic
DevelopmentIan K. Shaw
    
    
    26,500
    
    
    $
    3,180Vice President, Manufacturing
and Research & DevelopmentMark J. Ruday
    
    
    46,500
    
    
    $
    5,580Vice President,
Business OperationsMichael E. Dewsbury
    
    
    0
    
    
    $
    Vice President,
PET ResinAudrey L. Goodman
    
    
    0
    
    
    $
    Vice President,
Treasurer
   24




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##### Table of Contents



OPTION EXERCISES AND STOCK VESTED
  Stock AwardsNumber ofShares
    
    
    ValueAcquired on
    
    
    Realized onName
    
    Vesting
    
    
    Vesting(a)
    
    (d)
    
    
    (e)Thomas M. Duff
    
    
    70,282
    
    
    $
    223,617Chairman, CEOKeith R. Phillips
    
    
    31,950
    
    
    $
    101,333Vice President, Chief Financial OfficerJoseph C. Tucker
    
    
    25,673
    
    
    $
    81,257Vice President, Raw Material
Procurement and Strategic DevelopmentIan K. Shaw
    
    
    5,856
    
    
    $
    18,422Vice President, Manufacturing and
Research & DevelopmentMark J. Ruday
    
    
    12,110
    
    
    $
    37,658Vice President, Business OperationsMicheal E. Dewsbury
    
    
    19,192
    
    
    $
    59,680Vice President, PET ResinAudrey L. Goodman
    
    
    28,285
    
    
    $
    74,446Vice President, Treasurer
   Pension Benefits at December 31, 2007
  (c)Number
    
    (d)
    
    (e)of Years
    
    Present
    
    Paymentsof
    
    Value of
    
    During(a)
    
    (b)
    
    Credited
    
    Accumulated
    
    Last FiscalName
    
    Plan Name
    
    Service
    
    Benefit
    
    YearFiber Industries, Inc.Joseph C. Tucker
    
    Retirement Income Plan
    
    11.33
    
    $51,518
    
    $0Fiber Industries, Inc.Ian K. Shaw
    
    Retirement Income Plan
    
    22.83
    
    $249,241
    
    $0
  Directors Compensation
  25




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##### Table of Contents



(b)
    
    
    (c)(a)
    
    Fees
    
    
    Stock
    
    
    (h)Name
    
    Earned
    
    
    Awards
    
    
    TotalJames Baker
    
    $
    71,750
    
    
    $
    6,160
    
    
    $
    77,910Richard Heitmiller
    
    $
    100,250
    
    
    $
    6,160
    
    
    $
    106,410Kevin Kruse
    
    $
    84,500
    
    
    $
    6,160
    
    
    $
    90,660David McKittrick
    
    $
    87,750
    
    
    $
    6,160
    
    
    $
    93,910James Rogers
    
    $
    79,500
    
    
    $
    6,160
    
    
    $
    85,660Roger Vandenberg
    
    $
    66,000
    
    
    $
    6,160
    
    
    $
    72,160
  Directors Stock Ownership Policy
  
 Item 12.
    
    Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
  26




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##### Table of Contents



Number of SharesBeneficiallyName and Address
    
    Owned (1)
    
    
    PercentWarburg Pincus Private Equity VIII, L.P.
    
    
    29,798,800
    (2)
    
    
    47.5
    %466
Lexington Avenue
New York, NY 10017Wells Fargo & Company
    
    
    5,345,338
    (3)
    
    
    16.3
    %420
Montgomery StreetSan Francisco, CA 94104Dimensional Fund Advisors LP
    
    
    2,487,660
    (4)
    
    
    7.6
    %1299 Ocean
AvenueSanta Monica, CA 90401Merrill Lynch Pierce Fenner & Smith Inc.
    
    
    2,449,100
    (5)
    
    
    7.5
    %4 World
Financial Center, 250 Vesey StreetNew York, NY 10080
 
 (1)
    
    Beneficial ownership is a technical term broadly defined by the SEC
to mean more than ownership in the usual sense. For example, a person
beneficially owns our common stock not only if they hold it
directly, but also if they hold it indirectly (through a relationship,
a position as a director or trustee, or a contract or understanding),
have or share the power to vote the stock, or to sell it, or have the
right to acquire it within 60 days (the Contractually Obligated
Shares). The beneficial ownership percentage for each person is
calculated for that person by dividing the number of shares that are
beneficially owned including any Contractually Obligated Shares by the
total number of shares outstanding plus Contractually Obligated Shares
only with respect to such person. Because the beneficial ownership
percentage is calculated using only the Contractually Obligated Shares
for that person, the sum of the beneficial ownership percentages for
all stockholders may be greater than 100%.(2)
    
    Warburg Pincus Private Equity VIII, L.P., including two affiliated
partnerships, (WP VIII) holds 11,202,143 shares of preferred stock,
which were issued on June 27, 2003 and are convertible into shares of
our common stock. WP VIII is managed by Warburg Pincus Partners LLC
(WP LLC), a subsidiary of Warburg Pincus & Co., (WP), which is the
sole general partner of WP VIII. Kevin Kruse, a Director of the
Company, is a partner of WP and Managing Director and Member of WP
LLC. All shares that have been granted to Kevin Kruse and any options
granted to a former director nominated by WP VIII have been included
in the WP VIII beneficial ownership because of the affiliation of
these individuals with Warburg Pincus entities. Charles R. Kaye and
Joseph P. Landy are Managing General Partners of WP and Managing
Members and Co-Presidents of WP LLC and may be deemed to control the
Warburg Pincus entities.WP VIII would have received 27,294,800 shares of our common stock if
its preferred stock had been converted into common stock at December
31, 2007, which is calculated by dividing their liquidation preference
of $184.2 million on that date (which is the amount of the initial
investment increased by 8.5% per year compounded quarterly) by the
conversion price at December 31, 2007, which is $6.75. WP VIII also
holds two warrants, each representing the right to purchase 1,250,000
shares of our common stock at $11.25 per share, which are currently
exercisable.(3)
    
    Wells Fargo & Company (Wells Fargo) is the parent holding company
for Wells Capital Management Incorporated and Wells Fargo Funds
Management, LLC, both of which are investment advisors. Wells Fargo
has sole voting power in respect of 5,222,318 shares and sole
dispositive power in respect of all shares listed above.(4)
    
    Dimensional Fund Advisors LP, (Dimensional Fund), a registered
investment advisor, which furnishes investment advice to four
investment companies, serves as investment advisor to certain other
investment companies, commingled group trusts and separate accounts.
It has sole voting and investment power in respect of all shares
listed above. 27




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##### Table of Contents



(5)
    
    Merrill Lynch, Pierce, Fenner & Smith Incorporated, a registered
investment advisor, has sole voting and investment power in respect of
all shares listed above.  Number of Shares
    
    Percentage ofBeneficially
    
    CommonName
    
    Owned(1)
    
    StockThomas M. Duff
    
    981,189
    
    3.0%James B. Baker
    
    41,539
    
    Richard F. Heitmiller
    
    28,016
    
    Kevin Kruse(3)
    
    0
    
    David J. McKittrick
    
    17,861
    
    James E. Rogers
    
    32,200
    
    Roger A. Vandenberg
    
    49,556
    
    Keith R. Phillips
    
    254,274
    
    Joseph C. Tucker
    
    236,456
    
    Ian K. Shaw
    
    77,131
    
    Mark J. Ruday
    
    118,765
    
    All Directors and Executive Officers as a Group (13 persons)
    
    1,845,425
    
    5.5%
 
 (1)
    
    Beneficial ownership is a technical term broadly defined by the SEC
to mean more than ownership in the usual sense. For example, a person
beneficially owns our common stock not only if they hold it
directly, but also if they hold it indirectly (through a relationship,
a position as a director or trustee, or a contract or understanding),
have or share the power to vote the stock, or to sell it, or have the
right to acquire it within 60 days.The number of shares shown for each non-employee Director includes the
following shares that may be acquired upon exercise of stock options
that were exercisable as of December 31, 2007: Mr. Baker, 7,000; Mr.
Heitmiller, 7,000; Mr. Kruse, 0; Mr. McKittrick, 0; Mr. Rogers, 7,000;
and Mr. Vandenberg, 7,000.The number of shares shown for each non-employee Director includes the
following shares that were awarded under the Deferred Compensation and
Restricted Stock Plan and remain restricted at December 31, 2007: Mr.
McKittrick, 1,111. The restriction on Mr. McKittricks stock lapsed in
January 2008.The number of shares shown for each non-employee Director includes the
following restricted shares that were awarded under the 2004
Restricted Stock Plan: Mr. Baker, 3,600; Mr. Heitmiller, 3,600; Mr.
Kruse, 0; Mr. McKittrick, 3,600; Mr. Rogers, 3,600; and Mr.
Vandenberg, 3,600.The number of shares shown for each Named Executive Officer includes
the following shares that may be acquired upon exercise of stock
options that were exercisable as of December 31, 2007: Mr. Duff,
365,600; Mr. Phillips, 181,600; Dr. Tucker, 154,400; Mr. Ruday,
57,000; and Mr. Shaw 38,600.The number of shares shown for each Named Executive Officer includes
the following shares that were acquired under the 2004 Restricted
Stock Plan and remain restricted: Mr. Duff, 100,000; Mr. Phillips, 28




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##### Table of Contents



51,600; Dr. Tucker, 44,000; Mr. Ruday, 46,500; and Mr. Shaw, 26,500.
The restrictions on these shares lapse between January 2008 and
January 2011.The number of shares shown for each Named Executive Officer includes
the following number of shares of our common stock in such officers
account in our Retirement Plan as of December 31, 2007: Mr. Duff,
45,241; Mr. Phillips, 1,074; Dr. Tucker, 18,738; Mr. Ruday, 3,546; and
Mr. Shaw, 5,296.(3)
    
    The shares beneficially owned by Mr. Kruse do not include 3,600 shares
of restricted common stock and 400 shares of unrestricted common stock
that he was granted in May 2006 and 2007. These shares are included in
the beneficial ownership of WP VIII in the table that contains
entities that have more than 5% beneficial ownership in Wellman. His
beneficial ownership also does not include the other 29,794,800 shares
that WP VIII beneficially owns. 
 Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
  Director Independence
   
 Item 14.
    
    Principal Accounting Fees and Services
 Engagement of the Independent Auditor
  Independent Auditor Information
  Audit Fees
  Audit-Related Fees
  29




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##### Table of Contents



Tax Fees
  All Other Fees
  30




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##### Table of Contents



PART IV
 Item 15.
    
    Exhibits, Financial Statement Schedules and Reports on Form 8-K
 Exhibits
 23.1
    
    Consent of Independent Registered Accounting Firm31.1
    
    Certification of the Chief Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 200231.2
    
    Certification of the Chief Financial Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 200232.1
    
    Certification of the Chief Executive Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 200232.2
    
    Certification of the Chief Financial Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
 31




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##### Table of Contents



SIGNATURES
  WELLMAN, INC./s/ Thomas M. Duff_Thomas M. DuffChief Executive Officer  Signatures
    
    Title/s/ Thomas M. Duff

Thomas M. Duff
    
    Chairman, Chief Executive Officer and Director
(Principal Executive Officer)/s/ Keith R. Phillips

Keith R. Phillips
    
    Vice President and Chief Financial Officer
(Principal Financial Officer)/s/ David R. Styka

David R. Styka
    
    Vice President, Chief Accounting Officer and
Controller (Principal Accounting Officer)/s/ James B. Baker

James B. Baker
    
    Director/s/ Richard F. Heitmiller

Richard F. Heitmiller
    
    Director/s/ Kevin Kruse

Kevin Kruse
    
    Director/s/ David J. McKittrick

David J. McKittrick
    
    Director/s/ James E. Rogers

James E. Rogers
    
    DirectorRoger A. Vandenberg
    
    Director
 32