2011 Management Incentive Plan



 Exhibit 10.1 
 INTERNATIONAL PAPER COMPANY 
 MANAGEMENT INCENTIVE PLAN (MIP)

 Amended and Restated as of January 1, 2011 

 

	I.	Purposes of the Plan and Plan Description 

 The purposes of this Plan are to: (a) provide an incentive to reward Participants for results in improving the financial performance of the Company; (b) attract and retain the best talent
available; and (c) further align the interests of the Participants and the Company’s shareowners. 
 The Plan is an
annual cash incentive plan developed around the achievement of pre-established Performance Objectives and funded based on the Company’s achievement level against those Performance Objectives. 

 

	II.	Definitions 

  

	 	•	 	 Award Scale 



“Award Scale” means the conversion of the Performance Objective Rating to a percent of Target Award earned. 

 

	 	•	 	 Cause 



“Cause” includes but is not limited to misconduct or other activity detrimental to the business interest or reputation of the
Company or continued unsatisfactory job performance without making reasonable efforts to improve. Examples include insubordination, protracted or repeated absence from work without permission, illegal activity, disorderly conduct, etc. 

 

	 	•	 	 CEO Special Award Pool 


 “CEO Special Award Pool” means the amount payable for CEO Special Awards as determined in Section III. 
  

	 	•	 	 Committee 



“Committee” means the Management Development and Compensation Committee of the Company’s Board of Directors. 

 

	 	•	 	 Company 



“Company” means International Paper Company, a New York corporation, together with its Subsidiaries. 

 

	 	•	 	 Cost of Capital Goal 


 “Cost of Capital Goal” for incentive plan purposes is the absolute ROI goal specified annually and approved by the Committee that is meant to serve as a proxy for the Company’s long-term
weighted average of the cost of equity and the cost of debt. 
  

	 	•	 	 Employee 



“Employee” means a regular, active, full-time salaried employee employed on a non-temporary basis. 

 

	 	•	 	 Free Cash Flow 


 “Free Cash Flow” means Cash Flow before Dividends (but including special items and discontinued operations) as shown in the Company’s Statement of Cash Flow as “Cash provided by
operations” less “Invested in capital projects.” Cash as a result of 

  
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Alternative Fuel Mixture Tax Credits or other unanticipated, extraordinary items may, at the Committee’s discretion, be excluded in the calculation of Cash Flow for purposes of determining
achievement of the Cash Flow metric. 
  

	 	•	 	 Misconduct 



“Misconduct” includes but is not limited to, an act detrimental to the business interest or reputation of the Company or any
act determined to be a deliberate disregard of the Company’s rules, or violation of the Employee’s Non-Competition or Non-Solicitation Agreement. 
  

	 	•	 	 Participant 



“Participant” means a person who has been designated as a participant in the Plan, according to Section V. 

 

	 	•	 	 Performance Objective Rating 


 “Performance Objective Rating” means the percentage amount assigned to a Performance Objective for a level of performance achievement. 

 

	 	•	 	 Performance Objectives 


 “Performance Objectives” mean the measures identified by the Company and approved by the Committee identified in Section VI. 

 

	 	•	 	 Plan or MIP 



“Plan” or “MIP” means this Management Incentive Plan, amended and restated as of January 1, 2011.

  

	 	•	 	 Plan Year 



“Plan Year” means the twelve month period corresponding to the Company’s fiscal year (January 1 through December 31).

  

	 	•	 	 Return on Investment or ROI 


 “Return on Investment” or “ROI” means after-tax operating earnings, including both earnings from continuing and discontinued operations (up through the date of sale), and before the
impact of special items divided by average capital employed. Capital employed is total assets, less short-term, non-interest-bearing liabilities. The Company’s ROI metric excludes the impact of special items, such as gains or losses associated
with asset sales, restructuring costs, changes in pension funding, significant out-of-period or “one-off” items. 
  

	 	•	 	 Subsidiary 



“Subsidiary” means any company that is owned (50% or more) or controlled by the Company, directly or indirectly. 

 

	 	•	 	 Target Award 


 “Target Award” means an amount equal to the percentage of salary range midpoint applicable to the actual position level of each Participant, shown in Appendix A. 

 

	 	•	 	 Total MIP Award Pool 


 “Total MIP Award Pool” means an amount generated by the sum of eligible Participants’ Target Awards multiplied by the Company’s percentage achievement of its Performance Objectives.


  
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	III.	CEO Special Award Pool 

 The CEO may designate a portion of the Total MIP Award Pool to fund CEO Special Awards for extraordinary individual performance to award to Employees, regardless of whether such Employees are otherwise
eligible to participate in the Plan. The CEO Special Award Pool, if any, has historically been in the range of 1.5% to 3.0% of the Total MIP Award Pool. The CEO Special Awards are funded out of the Total MIP Award Pool. 

 

	IV.	Administration of the Plan 

 The Plan operates at the discretion of the Committee. The Committee may exercise considerable discretion and judgment in interpreting the Plan, and adopting, from time to time, rules and regulations that
govern the administration of the Plan. 
 The Committee has delegated authority to the CEO or his designee for the day-to-day
administration of the Plan, except with respect to the CEO’s award or any award to a Senior Vice President of the Company or above. 
 Decisions of the Committee are final, conclusive and binding on all parties, including the Company, its shareowners, and employees. 

 

	V.	Participation in the Plan 

 Participation in the Plan is generally limited to individuals who meet the definition of Employee set forth in Section II whose position level is 14 or higher. Except as set forth in
Section VII, a Participant must be an Employee as of September 30 of the Plan Year and on the date of the award payout in order to be eligible to receive a payout. 

Employees who are eligible for participation in any other short-term, cash-based incentive compensation plan of the Company are not
eligible for participation in this Plan. 
 An Employee who becomes eligible to participate in the Plan during the Plan Year or
who moves from one eligible position level to another will be eligible for a prorated award. An Employee who moves from an eligible position to a non-eligible position during the Plan Year will be eligible for a prorated award based on the number of
months the employee was eligible during the Plan Year. 
 Participation in this Plan, or receipt of an award under this Plan,
does not give a Participant or Employee any right to a subsequent award, or any right to continued employment by the Company for any period. 
  

	VI.	Award Pool and Award Scale  

 A. Performance Objectives - Funding the Total MIP Award Pool 
 The
Company must achieve at least a minimum level of performance in order to fund the Total MIP Award Pool. 
 The Total MIP Award
Pool will be determined based on achievement of the following Performance Objectives during the Plan Year. 

  
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	 	•	 	 50% Weight: Achieve Free Cash Flow Objectives 



 

			
	 Performance
	  	 Award %

		
	 Greater than $1,600 MM and
 up to $2,200 MM
	  	 + .142% for Each $1MM Improvement

Greater than $1,600 MM
 up to $2,200 MM

		
	$1,600 MM	  	100%
		
	 From $1,200 MM to
 less than $1,600 MM
	  	 -.125% for Each $1MM Drop Below

$1,600 MM Down to $1,200 MM


  

	*	Free Cash Flow calculation excludes Cash Flow from Forest Resources 


 

	 	•	 	 50% Weight: Absolute Return on Investment 



 

			
	 Performance
	  	 Award %

		
	Greater than 8.0% and up to 10.0%	  	 + 4.25% for Each 0.1% Improvement

Greater than 8.0%
 up to 10.0%

		
	8.0%	  	100%
		
	From 6.8% to less than 8.0%	  	 -4.17% for Each 0.1% Drop Below 8.0%

Down to 6.8%


  

	*	Absolute ROI calculation excludes Earnings from Forest Resources 

  

	 	•	 	 Cost of Capital Goal: An additional 30 percentage points will be added to the Company’s actual performance achievement if the Company
achieves its Cost of Capital Goal for the 2011 Plan Year. 


  

	 	•	 	 Maximum Award Pool: The maximum performance achievement that may be applied to calculate the Total MIP Award Pool is 185% if the Cost of Capital
Goal is not achieved and 215% if the Cost of Capital Goal is achieved. 



  
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 B. Performance Objective Rating 

The Company’s achievement of each Performance Objective will be evaluated by the Company as of the end of the Plan Year, and reviewed
and verified by the Company’s external auditors. 
 The Company’s determination of performance achievement will be
presented to the Committee for its review and approval in February following the end of the Plan Year. 
 C. Approval by
the Committee of the Total MIP Award Pool 
 The Committee approves the Total MIP Award Pool based on the Company’s
performance achievement against the Performance Objectives described above. 
 The Committee may determine in its sole discretion
to reduce or eliminate the Total MIP Award Pool based upon any objective or subjective criteria it deems appropriate. 
 The
Committee may determine it its sole discretion to increase the Total MIP Award Pool above the calculated amount by no more than 25% based upon any objective or subjective criteria it deems appropriate. In no event shall the Total MIP Award Pool
exceed the Maximum Award Pool of 185% if the Cost of Capital Goal is not achieved, or 215% if the Cost of Capital Goal is achieved. 
 The Company shall make every effort to provide projected performance achievement to the Committee by the December meeting of the Board of Directors with the intent of understanding the Committee’s
desire to exercise discretion with regard to the Total MIP Award Pool. 
 The amount allocated for payment of awards under the
Plan and for the CEO Special Award Pool may not exceed the Total MIP Award Pool. 
  

	VII.	Individual Participant Awards 

 A. Individual Award Recommendations 
 In February following
the end of the Plan Year, the CEO (in consultation with the Senior Vice President, Human Resources and Communications) will recommend to the Committee the individual MIP awards for Senior Vice Presidents of the Company and above (other than the CEO)
and an aggregate award amount for all other Participants. 
 The Committee will recommend to the independent members of the Board
the amount of the MIP award for the CEO and any other employee-director, if any. 
 B. Payout of Individual
Awards 
 Participants each have a Target Award expressed as a percentage of the midpoint of a defined salary
range based on position level as set forth on the attached Appendix A. 
 A Participant’s Calculated Award is
equal to the Participant’s Target Award multiplied by the Company’s actual performance percentage achieved as reduced by the percentage designated for the CEO Special Award Pool. 

A Participant’s Final Award is equal to the Participant’s Calculated Award adjusted by the Participant’s individual
performance achievement as determined by his or her manager against pre-established performance objectives. A Participant’s individual award 

  
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is capped at 185% of his or her Target Award if the Cost of Capital Goal is not achieved, and 215% of his or her Target Award if the Cost of Capital Goal is achieved. 

A Participant may be eligible to receive a CEO Special Award in addition to his or her Final Award. 

The following is an example of an award payout calculation for a Participant. 

 

									
	 	  	Weight	  	Achieve	  	Payout
(COC Not
Achieved)	  	 Payout
 (COC Achieved)

					
	 Company Performance

(as reduced by CEO Special Award Pool)
	  	100%	  	106.79%	  	106.79%	  	136.79%  
 (COC  =  +30%)

					
	 PL15 Target
	  		  		  	$16,400	  	$16,400
					
	 Calculated Award
	  		  		  	$17,500  
 (106.79% x $16,400)
	  	$22,400  
 (136.79% x $16,400)

					
	 Individual Performance Modifier
	  		  		  	115%	  	115%
					
	 Final Award
	  		  		  	$20,100  
 (115% x $17,500)
	  	$25,800  
 (115% x $22,400)


 C. Impact of Temporary Layoff
for Salaried Employees 
 The MIP award of a Participant who is involuntarily, temporarily laid off by the Company will
be determined as follows: 
  

	 	•	 	 Layoff of three months or less followed by return to active employment for Company: The Participant will be eligible for his or her Calculated
Award payable under the terms of the Plan. The Calculated Award will not be reduced for the period of temporary layoff. 


  

	 	•	 	 Layoff of three months or less followed by termination of employment: The Participant will be eligible for his or her Calculated Award payable
under the terms of the Plan. The Participant’s eligibility for an award will be determined under Section VII(E) and (F). The award payable, if any, will not be reduced for the period of temporary layoff. 



D. Cancellation of Award Upon Certain Events Prior to Payout 

An award not yet paid will cancel as of the Participant’s termination of employment date in the following events that occur prior to
actual payment: 
  

	 	•	 	 Voluntary resignation before retirement eligibility 


  

	 	•	 	 Termination for Cause 



  
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	 	•	 	 Violation of a Non-Compete, Non-Solicitation or Confidentiality Agreement, as applicable 



 

	 	•	 	 Failure by any participant in the Company’s Unfunded Supplemental Retirement Plan for Senior Managers (“SERP”) to submit notice of
retirement one year in advance of the effective date of his or her retirement, except in the event of death, Disability or waiver by the Management Development and Compensation Committee 



 

	 	•	 	 Misconduct. The determination of whether a Participant has engaged in Misconduct shall be made by the Senior Vice President, Human Resources and
Communications, or by the Management Development and Compensation Committee for Senior Vice Presidents and above, or by the Board of Directors for a determination with regard to the Chief Executive Officer. 



Note: Awards will be cancelled in the situations listed above even if time and performance have been met but the award has not yet
been paid at the time of termination. Any dispute as to whether any of the events described in this paragraph have occurred will be resolved by the Committee in its sole discretion in accordance with Section IV. 

  
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 E. Proration Upon Certain Events 

An award not yet paid will be prorated based upon the number of months of employment during the Plan Year in which the Participant worked
15 days or more. Awards paid at target as severance payments during the Plan Year are not paid from the Total MIP Award Pool, but rather are charged accordingly to the appropriate cost center. 

 

									
	 EMPLOYEE
	  	 TERMINATION

SCENARIO
	  	 DATE OF

TERMINATION
	  	 AMOUNT TO BE

PAID
	  	 TIME OF PAYMENT

	 NON-SVP
	  	DURING PLAN YEAR	  		  		  	
					
		  	 •    Death

•    Disability

•    Approved Leave of Absence

•    Severance*
	  	1/1 through 12/31	  	Pro rata Target Award	  	At termination or as soon as practical
	  	 •    Retirement eligible

(including early retirement)
	  	1/1 through 11/30	  	Pro rata Target Award	  	At termination or as soon as practical
	  	  	  
 Month of December
	  	  
 Full Calculated Award based on Actual
performance
	  	  
 At time of normal MIP payout

	 NON-SVP
	  	AFTER PLAN YEAR BUT BEFORE MIP PAYOUT	  		  		  	
					
		  	 •    Death

•    Disability

•    Approved Leave of Absence

•    Severance*

•    Retirement eligible
 (including early retirement)
	  	1/1 (following year) through MIP payout date	  	 Full prior year Calculated Award based on Actual performance

 
 AND
  

Pro rata Target Award for year of termination
	  	 Calculated Award is paid at time of normal MIP payout
  

AND
  
 Pro-rata Target Award is paid at termination or as soon as practical

	 SVPs and CEO
	  		  		  		  	
		  	 •    Death

•    Disability
	  	1/1 through 12/31	  	Pro rata Target Award	  	At termination or as soon as practical
					
		  	 •    Retirement eligible

(including early retirement)
 •    Severance
	  	1/1 through 12/31	  	Pro rata Calculated Award based on Actual performance	  	At time of normal MIP payout

  

	*	NOTE: the above may not apply in the event the Participant does not sign a Severance Agreement. 


  
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	VIII.	Allocation of MIP Award Pool among Business Units and Corporate Staff Organizations 


Each Business Unit and Corporate Staff Organization is allocated a portion of the Total MIP Award Pool as reduced by the CEO Special Award
Pool based on the Company’s performance achievement of the Performance Objectives, however, such allocations may be further adjusted by the CEO based upon any objective or subjective criteria the CEO deems appropriate. 

 

	IX.	Payment of Awards 


A. Type of Payment 
 MIP awards are paid in cash unless deferred by the Participant. Alternatively, the Committee may, in its sole discretion, authorize payment of all or a portion of earned MIP awards to all or certain
groups of Participants under the Company’s 2009 Incentive Compensation Plan in shares of Company stock. 
 B. Time of
Payment 
 Awards may be paid in up to two installments, as determined by the Committee. Each such installment will be
deemed to be a separate payment for purposes of Section 409A of the Internal Revenue Code and Treas. Reg. §1.409A-2(b)(2)(iii). In the event an award is paid in one installment, it will be made no later than March 15 following the
Plan Year. In the event an award is paid in more than one installment, the first such payment will be made no later than March 15 following the Plan Year and the second such payment will be made no later than December 31 following the Plan
Year. In no event will an award or any portion thereof be paid in the current Plan Year. 
 C. Payment to Beneficiaries

 If a Participant dies prior to receipt of an approved award under the Plan, the award will be paid in accordance with the
chart under Section VII(F) in a lump sum to the Participant’s estate as soon as practicable but in no event later than 90 days after the date of death. 
 D. Deferral of Payment 
 Any Participant who is eligible for and has
elected to participate in the Company’s Deferred Compensation Savings Plan (“DCSP”) may elect to defer payment, not to exceed 85%, of any award under this Plan by filing an irrevocable MIP Deferral Election by the last business day in
December of the year prior to the year in which such award would be earned. Awards or portions elected to be deferred will be credited with investment earnings or losses in accordance with provisions of, and the Participant’s elections under,
the DCSP. MIP awards that are deferred will be paid in accordance with the payment terms of the DCSP. 

  
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	X.	Recoupment or Forfeiture of Awards 

 If the Company reasonably believes that a Participant has committed an act of Misconduct either during employment or within 90 days after such employment terminates, the Company may terminate the
Participant’s participation in the Plan or seek recoupment of an Award paid under this Plan. Recoupment may be effectuated by a notice of recapture (“Recapture Notice”) sent to such Participant within the 90-day period following the
termination of employment. The Participant will be required to deliver to the Company an amount in cash equal to the gross cash payment of the Award to which such Recapture Notice relates within 30 days after receiving such Recapture Notice from the
Company. 
 The Company has sole and absolute discretion to take action or not to take action pursuant to this Section X
upon discovery of Misconduct, and its determination not to take action in any particular instance does not in any way limit its authority to terminate the participation of a Participant in the Plan and/or send a Recapture Notice in any other
instance. 
 If any provision of this Section X is determined to be unenforceable or invalid under any applicable law,
such provision will be applied to the maximum extent permitted by applicable law, and shall automatically be deemed amended in a manner consistent with its objectives to the extent necessary to conform to any limitations required under applicable
law. 
  

	XI.	Impact of Restatement of Financial Statements Upon Previous Awards. 

 If any of the Company’s financial statements are required to be restated, resulting from errors, omissions, or fraud, the Committee may (in its sole discretion, but acting in good faith) direct that
the Company recover all or a portion of any such Award made to any, all or any class of Participants with respect to any fiscal year of the Company the financial results of which are negatively affected by such restatement. The amount to be
recovered from any Participant shall be the amount by which the affected Award(s) exceeded the amount that would have been payable to such Participant had the financial statements been initially filed as restated, or any greater or lesser amount
(including, but not limited to, the entire award) that the Committee shall determine. The Committee may determine to recover different amounts from different Participants or different classes of Participants on such bases as it shall deem
appropriate. In no event shall the amount to be recovered by the Company be less than the amount required to be repaid or recovered as a matter of law. The Committee shall determine whether the Company shall effect any such recovery (i) by
seeking repayment from the Participant, (ii) by reducing (subject to applicable law and the terms and conditions of the applicable plan, program or arrangement) the amount that would otherwise be payable to the Participant under any
compensatory plan, program or arrangement maintained by the Company or any of its affiliates, (iii) by withholding payment of future increases in compensation (including the payment of any discretionary bonus amount) or grants of compensatory
awards that would otherwise have been made in accordance with the Company’s otherwise applicable compensation practices, or (iv) by any combination of the foregoing. 

  
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	XII.	Modification, Suspension or Termination of Plan 

 The Committee may at any time suspend, terminate, modify or amend any or all of the provisions of this Plan. 
  

	XIII.	Governing Law 

 The
Plan is governed by the laws of the State of New York. 
  

	XIV.	Tax Withholding 


The Company has the right to make such provisions as it deems necessary or appropriate to satisfy any obligations it may have under law to
withhold federal, state or local income or other taxes incurred by reason of payments pursuant to the Plan. 
  

	XV.	Section 409A 

 The
Plan is intended to comply with the applicable requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and will be limited, construed and interpreted in accordance with such intent. 

 

	XVI.	Non-Transferability of Award 

 No award under this Plan, and no rights or interests therein, will be assignable or transferable by a Participant (or legal representative). 

 

	XVII.	Effective Date 


This Plan is effective as of January 1, 2011 and continues until terminated, suspended, modified, or amended by the Committee.


  
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 Appendix A 

Management Incentive Plan (MIP) 
 2011 Target Awards 
  

					
	 Position Level
	  	Target Award (% of Midpoint)	 
	 43
	  	 	125	% 
	 42
	  	 	90	% 
	 41
	  	 	85	% 
	 40
	  	 	85	% 
	 39
	  	 	80	% 
	 38
	  	 	80	% 
	 37
	  	 	75	% 
	 36
	  	 	75	% 
	 35
	  	 	70	% 
	 34
	  	 	70	% 
	 33
	  	 	65	% 
	 32
	  	 	65	% 
	 31
	  	 	60	% 
	 30
	  	 	55	% 
	 29
	  	 	50	% 
	 28
	  	 	50	% 
	 27
	  	 	45	% 
	 26
	  	 	45	% 
	 25
	  	 	40	% 
	 24
	  	 	40	% 
	 23
	  	 	35	% 
	 22
	  	 	30	% 
	 21
	  	 	30	% 
	 20
	  	 	25	% 
	 19
	  	 	25	% 
	 18
	  	 	20	% 
	 17
	  	 	20	% 
	 16
	  	 	20	% 
	 15
	  	 	15	% 
	 14
	  	 	15	% 


  
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