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M anagement
 I ncentive
 P lan




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Section #
    
    Subject
    
    Page #I
    
    Plan Purpose
    
    
    3II
    
    Financial Performance
    
    
    3-4III
    
    Award Determination and Approval
    
    
    4IV
    
    Individual Performance Factors
    
    
    4-5V
    
    Currency
    
    
    5VI
    
    Participation Level and New Participants
    
    
    5VII
    
    Revisions to Plan
    
    
    5-6VIII
    
    Form and Timing of Awards
    
    
    6IX
    
    Employees on Leave
    
    
    6X
    
    Termination, Death or Disability
    
    
    6-7XI
    
    Other Plan Design Considerations
    
    
    7-8




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I.
    
    PLAN PURPOSE:The purpose of the Management Incentive Plan (the Plan) is to offer a meaningful
short-term incentive award opportunity for key managers (Participants) who can make
significant contributions to the growth and profitability of Graphic Packaging
International, Inc. (the Company). The Plan is designed to emphasize managements
commitment to financial success and to the Companys ultimate purpose of delivering a
superior return on the investment of its shareholders. Each Plan Year for the Plan is
January 1st to December 31st.II.
    
    FINANCIAL PERFORMANCE:Awards under the Plan are financially-driven and will be based on the
results of the Company as a whole and/or any subsidiary, affiliate or
business unit of the Company, or a combination of these results. One or a
combination of the following performance measures will be used to measure
such results:
 
    
    Net earnings or net income (before or after taxes)
    
    Earnings per share
    
    Net sales growth
    
    Net operating profit
    
    Return measures (including, but not limited to, return on assets, capital, equity
or sales)
    
    Cash flow (including, but not limited to, operating cash flow, free cash flow,
and cash flow return on capital)
    
    Earnings before or after taxes, interest, depreciation and/or amortization
    
    Gross or operating margins
    
    Productivity ratios
    
    Share price (including, but not limited to, growth measures and total shareholder
return)
    
    Expense targets
    
    Margins
    
    Operating efficiency
    
    Customer satisfaction
    
    Working capital targets
    
    EVA® (Economic Value Added).
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Focusing on these financial results reinforces managements essential obligation to the
shareholders to do everything possible to achieve the best result in Company performance.
It
also promotes cooperation and teamwork across Graphic Packagings global business operations
and support functions.Each Participants incentive award opportunity for any given Plan Year is based on the
specific corporate performance measures established during the annual operating plan
approval process, and approved by the Companys Compensation and Benefits Committee and the
Board of Directors, for that Plan Year.III.
    
    AWARD DETERMINATION AND APPROVAL:The Plan is specifically designed to create substantial incentive
opportunity for the achievement of Graphic Packagings most important
financial goals. After the conclusion of a Plan Year, the President
and CEO will make a recommendation to the Companys Compensation and
Benefits Committee and Board of Directors regarding the payout under
the Plan. This recommendation will be based upon the President and
CEOs assessment of the degree to which the Company achieved the
performance measures applicable to that Plan Year and the degree to
which each Participant contributed to that achievement. The Companys
Compensation and Benefits Committee and full Board of Directors must
approve any such payments under the Plan.IV.
    
    INDIVIDUAL PERFORMANCE FACTORS:Award opportunities (before individual performance factors) range
from 0% to 200% of an individuals target award. The individual
performance factors can adjust a Participants target award by up to
25%, either up or down. Individual performance factors may include
actual contributions to the corporate EBITDA goal. All adjustments
to calculated awards based on individual performance factors are
determined by the President and CEO.All awards are calculated by corporate human resources and ultimately
approved by the President and CEO of the Company. Awards must also
be approved by the
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Compensation and Benefits Committee of the Board
of Directors and by the full Board of Directors.V.
    
    CURRENCY:All financial results will be stated on a U.S. dollar reporting basis for purposes of
determining actual performance against the applicable performance measures for any given
Plan Year.VI.
    
    PARTICIPATION LEVEL AND NEW PARTICIPANTS:Participation level is defined as the target incentive award
opportunity provided to Participants under the Plan. Each
Participants approved participation level is determined and
communicated annually. The target incentive award opportunity is
expressed as a percentage of a Participants base salary actually
earned during any given Plan Year.For Participants whose participation level changes during the
1st quarter of a Plan Year, the change will become
effective retroactive to the first day of that Plan Year. If the
change occurs in the 4th quarter of a Plan Year, it will
take effect on January 1st of the following Plan Year.
Changes occurring in the 2nd or 3rd quarters
of a Plan Year will result in any awards earned calculated on a
strictly prorated basis for the number of days assigned to each
participation level during that Plan Year.New Participants shall have any awards earned strictly prorated by
the number of days of participation in their first Plan Year, except
if hired during the 4th Quarter. In this event, their participation
will become effective the following Plan Year.VII.
    
    REVISIONS TO PLAN:Revisions to applicable performance goals and results for any given
Plan Year may be considered to recognize circumstances beyond the
control of Participants. Such revisions will be rare in practice
and only respond to extraordinary and unforeseeable events. It is
understood that revisions may adjust for positive windfalls as well
as negative shortfalls. Revisions must be approved by the President
and CEO of the Company, the Compensation and Benefits Committee of
the Board of Directors and
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the full Board of Directors.VIII.
    
    FORM AND TIMING OF AWARDS:All awards under the Plan will be paid in cash and in local
currency. Awards will be subject to all applicable social
insurance, income tax and other withholding requirements effective
at the time of payment.Awards paid to Participants in hyper-inflationary countries may be
monetarily corrected to adjust for currency devaluation between the
close of the plan year and the award payment date.All earned awards will be paid during the 1st quarter of the
calendar year following the close of each Plan Year.IX.
    
    EMPLOYEES ON LEAVE:Awards for employees on approved leave will be prorated to exclude the time away from work.
Approved leaves include: sick, personal, family medical, and military leaves of absence.X.
    
    TERMINATION, DEATH, OR DISABILITY:Awards for a given Plan Year will be paid to Participants who are actually employed and on
the payroll on the last day of that Plan Year. A Participant whose employment terminates
prior to the last day of a Plan Year shall forfeit any and all rights to an award from the
Plan for that Plan Year, except for Participants (1) who terminate employment due to death
or disability, or retirement; or (2) who are eligible for benefits under the Graphic
Packaging International, Inc. Severance Pay Plan, and who sign and return (and do not
revoke) a Release under that Plan (Special Circumstance Participants). Under this
provision, Special Circumstance Participants may be paid a pro rata portion of any award
earned based on their date of termination, and all such prorated payments, if any, will be
made at the time and in the form received by all other Participants. Any executive who is
entitled to a payment in lieu of incentive compensation upon termination of employment under
an employment agreement shall
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not also be entitled to an award under the Plan for the year
in which termination takes place.XI.
    
    OTHER PLAN DESIGN CONSIDERATIONS:The Plan will be managed by each business unit executive and
administered by corporate compensation. All reported financial
results will be confirmed by the Companys Chief Financial Officer
upon completion of the annual report of independent accountants.
Communication of all awards will be provided by the business units
senior management only upon written confirmation of all required
approvals.No Participant shall have the right to anticipate, alienate, sell,
transfer, assign, pledge, or encumber his or her right to receive any
award payable under the Plan.No Participant shall have any lien on any assets of the Company by
reason of any award payable under the Plan.The Company specifically reserves the right to amend, modify, or
terminate the Plan at any time for any reason. Neither the Plan nor
any award under the Plan shall create any employment contract or imply
any relationship between the Company and any Participant, other than
employment terminable by either party at will.No one may participate in the Plan, or have any components of it
changed after initial notification of participation, without the
expressed written notice of approval by the Plan Administrators.
Every Plan position and proposed additional positions are reviewed for
eligibility on an annual basis.Participants must maintain at least a successful performance rating
throughout a Plan Year to be eligible for payment of an award
regardless of corporate performance. Sustained performance problems
may result in permanent disqualification of participation in the Plan.
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The terms of the Plan are governed by the laws of the State of Georgia
without regard to conflict of laws principles.The Plan design is dynamic and is reviewed annually by executive
management and the Companys Compensation and Benefits Committee to
insure that performance measures, their relative weighting and award
parameters address Graphic Packagings business strategy and its
annual financial objectives.Notwithstanding any language to the contrary elsewhere in this plan
document, the President and Chief Executive Officer reserves the right
to increase, decrease, or eliminate any and all Plan awards, including
but not limited to any individual award, if, in the exercise of his
business judgment, such modifications would be in the best interest of
the Company.
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