EXHIBIT 10(h)

WELLMAN, INC.

Second Amended and Restated

Management Incentive Compensation Plan for the Executive Group

ARTICLE I

NAME

1.1 The Plan shall be known as the "Wellman, Inc. Management Incentive Compensation Plan for the Executive Group."

ARTICLE II

STATEMENT OF PURPOSE

2.1 The purpose of the Plan is to provide a system of incentive compensation that will promote the maximization of shareholder value over the long-term. In order to align management incentives with shareholder interests, this Plan will tie incentivecompensation to economic value added and thereby reward management for increasing shareholder value.

ARTICLE III

DEFINITIONS

3.1 Plan Year means the fiscal year of the Company which is the calendar year.

3.2 Effective Date means (a) January 1, 1992 with respect to the original Plan, (b) January 1, 1999 with respect to the amended and restated Plan, and (c) January 1, 2001 with respect to the second amended and restated Plan.

3.3 Committee means the Compensation Committee of the Board of Directors of Wellman, Inc. or any successor committee.

3.4 Cause in the context of a termination of employment means only one or more of the following: (i) the commission in the course of employment of any dishonest or fraudulent act; (ii) a conviction of a felony (from which, through lapse of time orotherwise, no successful appeal shall have been made) whether or not committed in the course of employment; (iii) the willful refusal to carry out reasonable instructions of the Board of Directors of Wellman, Inc. which has a material adverse effect uponthe Company or any of its subsidiaries; and (iv) the willful disclosure of any trade secrets or material confidential corporate information to persons not authorized to know same.

3.5 Change of Control shall be deemed to have occurred when (i) any "person" or "group" (as such terms are used in Sections 13(d)(3) and 14 (d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), other than the Company, any ofits subsidiaries, or any employee benefit plan of the Company or of any subsidiary, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more ofthe combined voting power of the Company's then outstanding Securities; or (ii) during any period of two consecutive years (not including any period prior to the Effective Date), individuals who at the beginning of such period constitute the Board ceasefor any reason to constitute at least a majority thereof unless the election, or the nomination for election by the Company's stockholders, of each new director was approved by a vote of at least two-thirds of the directors of the Company then still inoffice who were directors of the Company at the beginning of the period.

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3.6 Company means Wellman, Inc., a Delaware corporation.

ARTICLE IV

PLAN ADMINISTRATION

4.1 The Plan shall be administered by the Committee which shall have exclusive and absolute authority and discretion to interpret the Plan, to establish and modify rules for the administration of the Plan, to impose such conditions and restrictions asit determines appropriate with respect to the Plan and to take such other actions and make such other determinations as it may deem necessary or advisable for the implementation and administration of the Plan. All actions taken and all interpretations anddeterminations made by the Committee in good faith shall be final and binding upon the participants, the Company and all other interested persons. The Committee may delegate certain responsibilities to the Chief Executive Officer or Chief OperatingOfficer including the responsibility to assign objectives, targets, target percentages or other administrative responsibilities, as the Committee so designates. No member of the Committee shall be personally liable for any action, determination orinterpretation made in good faith with respect to the Plan.

4.2 This Plan may be amended, suspended or terminated any time at the sole discretion of the Board of Directors of Wellman, Inc., provided, however, that no such change in the Plan shall be effective to eliminate or diminish the distribution of anyaward earned by a Plan participant before the date of such amendment, suspension or termination. Notice of any such amendment, suspension or termination shall be given promptly to each Plan participant.

ARTICLE V

PARTICIPATION

5.1 The participants in the Plan consist of those employees who are executives identified by the Committee.

ARTICLE VI

DESCRIPTION OF PLAN OPERATION

6.1 Each Plan Year the Committee will assign to each Plan participant bonus targets directly related to corporate and, for operating executives, their operating unit's profit and individual strategic objectives. Profit will be based on an appropriatemeasurement of earnings as shall be determined by the Committee. 

A target percentage will also be assigned to each Plan participant by the Committee annually (the "target percentage"). The target percentage will be the percentage of salary a Plan participant will be eligible to earn in bonus if the Planparticipant's targets are met.

The amount of the bonus payable hereunder to each Plan participant will be determined by the Committee in its sole discretion.

Bonuses hereunder will be paid on or before March 15 following the Plan Year. Bonus earnings over the target percentage amount must be deferred as mandatory deferred compensation for the purchase of restricted stock for eligible participants in theWellman, Inc. Deferred Compensation and Restricted Stock Plan.

 

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ARTICLE VII

CHANGE IN STATUS DURING THE PLAN YEAR

7.1 Disability. A participant shall be deemed "permanently disabled" if, because of physical or mental condition, the participant is unable for a period of at least one year to perform the principal duties of his/her occupation as determined by aCompany-approved physician. A participant shall receive a pro rata bonus based on the number of full months worked for the year in which the disability started. The payment shall be made at the regular time for making bonus payments.

7.2 Death. A participant's beneficiary, as designated for the life insurance program, shall receive a pro rata bonus based on the number of full months worked for the Plan Year in which they die. The payment will be made at the regular time for makingbonus payments.

7.3 Retirement. A participant who retires from the Company upon or after reaching age 55 shall receive a pro rata bonus based on the number of full months worked for the Plan Year in which he/she retires. The payment will be made at the regular timefor making bonus payments.

7.4 Resignation or Termination for Cause. Termination of employment for Cause or voluntary termination by a participant results in the forfeiture of any award for the Plan Year in which employment terminates.

7.5 Termination without Cause. A participant who is terminated for reasons other than those described above will receive a pro rata portion of that Plan Year's award. The payment will be made at the regular time for making bonus payments or asmutually agreed by the Committee and the terminated participant.

7.6 No Guarantee. Participation in the Plan provides no guarantee that a bonus under the Plan will be paid in any Plan Year. Similarly, the payment of a bonus under the Plan in one Plan Year or selection as a participant is no guarantee that a bonusunder the Plan will be paid in any subsequent Plan Year.

ARTICLE VIII

GENERAL PROVISIONS

8.1 Withholding of Taxes. The Company shall have the right to withhold the amount of taxes which, in the determination of the Company, are required to be withheld under law with respect to any amount due or paid under the Plan.

8.2 Expenses. All expenses and costs in connection with the adoption and administration of the Plan shall be borne by the Company.

8.3 No Prior Right or Offer. Except and until expressly granted pursuant to the Plan, nothing in the Plan shall be deemed to give any employee any contractual or other right to participate in the benefits of the Plan.

8.4 Disputed Claims for Benefits. In the event a participant (a "claimant") has a dispute with respect to any of the benefits provided hereunder, the claimant shall submit evidence satisfactory to the Committee of facts establishing his entitlement toa payment under the Plan. Any claim with respect to any of the benefits provided under the Plan shall be made in writing within ninety (90) days of the annual Plan payment date. Failure by

 

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the claimant to submit his or her claim within such ninety (90) day period 

shall bar the claimant from any claim for benefits under the Plan. In reaching its decision, the Committee shall have complete discretionary authority to determine all questions arising in the interpretation and administration of the Plan, to construethe terms of the Plan, including any doubtful or disputed terms and the eligibility of a participant for benefits.

8.5 Rights Personal to Employee. Any rights provided to an employee under the Plan shall be personal to such employee, shall not be transferable (except by will or pursuant to the laws of descent or distribution), and shall be exercisable, during hisor her lifetime, only by such employee.

8.6 Confidentiality. Specific details of any calculations under the Plan must remain confidential and because of the individuality of the awards, participants should not share information with each other.

8.7 Wellman, Inc. Profit Sharing Plan. Participants in the Wellman, Inc. Management Incentive Compensation Plan are not eligible to participate in the Wellman, Inc. Profit Sharing Plan.

8.8 Change of Control. Upon any Change of Control, unless the Committee in its sole discretion determines otherwise prior to the Change of Control, the benefits of the Plan will be paid to all participants within 45 days of the Change of Control date.Plan payments will be based on the full Plan Year's forecasted results as defined in the most recent financial forecast presented to the Board prior to the Change of Control date using the most recent annual base salary of each participant.

8.9 No Continued Employment. Neither the establishment of the Plan, the assignment of targets nor the grant of an award hereunder shall be deemed to constitute an express or implied contract of employment for any period of time or in any way abridgethe rights of the Company to determine the terms and conditions of employment or to terminate the employment of any employee with or without cause at any time.

8.10 No Vested Rights. Except as otherwise provided herein, no employee or other person shall have any claim or right (legal, equitable, or otherwise) to any award, allocation, or distribution and no officer or employee of the Company or any otherperson shall have any authority to make representations or agreements to the contrary. No interest conferred herein to a participant shall be assignable or subject to claim by a participant's creditors.

8.11 Not Part of Other Benefits. The benefits provided in this Plan shall not be deemed a part of any other benefit provided by the Company to its employees. The Company assumes no obligation to Plan participants except as specified herein. This is acomplete statement of the terms and conditions of the Plan.

 

 

 

 

 

 

 

 

 

 

 

 

 

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