Document:

ip-20141231exhibit1032015mip

Exhibit 10.3
INTERNATIONAL PAPER COMPANY
2015 MANAGEMENT INCENTIVE PLAN (MIP)
Amended and Restated as of January 1, 2015
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.
Cash Flow from Operations
“Cash Flow from Operations” includes cash flow from discontinued and continuing operations as well as cash flow from special items, and is shown in the Company’s Statement of Cash Flow as “Cash Provided by (Used for) Operations.”  Cash flow as a result of pension contributions or other unanticipated, highly unusual items may, at the Committee’s discretion, be excluded in the calculation of “Cash Flow from Operations” for purposes of determining achievement of this cash flow metric.  
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

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“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.
Employee
“Employee” means a regular, active, full-time employee of the Company employed on a non-temporary basis.
		
	•
	Executive Officer

An Employee in a position designated as Senior Vice President or above.
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, 2015.

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Plan Year
“Plan Year” means the twelve month period corresponding to the Company’s fiscal year (January 1 through December 31).
Retirement Eligible
“Retirement Eligible” means an employee is at least age 55 with 10 years of service or age 65
Return on Invested Capital or ROIC
“Return on Invested Capital” or “ROIC” means operating earnings before interest, including both earnings from continuing and discontinued operations (up through the date of sale), and before the impact of special or other unanticipated, highly unusual items and non-operating pension expense, divided by average invested capital.  Invested capital is total equity (adjusted for pension) plus interest bearing liabilities.  The numerator in the Company’s ROIC metric excludes the impact of special items (such as gains or losses associated with asset sales, restructuring costs,  and significant out-of-period or “one-off” items) and non-operating pension expense.  
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 (a) for each Executive Officer, the percentage of base salary approved for such officer by the Committee or, for the  CEO, by the independent members of the Company’s Board of Directors, and (b) for each other Participant, the percentage of salary range midpoint applicable to the actual position level of such 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.
III.        CEO Special Award Pool
The CEO may approve the payment of CEO Special Awards to Employees for extraordinary individual performance.  The CEO may designate a portion of the Total MIP Award Pool to fund CEO Special Awards (regardless of whether the 

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recipients are otherwise eligible to participate in the Plan), or CEO Special Awards may be funded separately from the Plan without any impact to the Total MIP Award Pool.  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.
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 awards made to the CEO or any other Executive Officer.
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 limited to Executive Officers and 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 position level or becomes an Executive Officer 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

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The Company must achieve at least a minimum level of performance, as pre-established and approved by the Committee, in order to fund the Total MIP Award Pool.  
The Total MIP Award Pool will be determined based on achievement of the Performance Objectives listed below during the Plan Year. 
 The maximum level of performance achievement that may be applied to calculate the Total MIP Award Pool for the Plan Year is 200%.

Ù 50% Weight:  Cash Flow from Operations
	
		
	Performance
	Award %

	Greater than $3,200 MM and
up to $3,800 MM
	0.1667% for each $1MM improvement greater than 
$3,200 MM up to $3,800 MM

	$3,200 MM
	100%

	From $2,400 MM to 
less than $3,200 MM
	0.0625% for each $1MM 
drop below 
$3,200 MM down to $2,400 MM

 50% Weight:  Absolute Return on Invested Capital
	
		
	Performance
	Award %

	Greater than 11.2% and up to 14.6%
	2.941% for each 0.1% 
improvement greater than 
11.2% up to 14.6%

	11.2%
	100%

	From 8.4% to less than 11.2%
	1.786% for each 0.1% 
drop below 
11.2% down to 8.4%

		
	Ù
	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.  

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The Company’s determination of performance achievement will be presented to the Committee for its review and approval at the February meeting following the end of the Plan Year. 
		
	B.
	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 in 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 200%. 
The Company shall make every effort to provide projected performance achievement to the Committee by the December meeting with the intent of understanding the Committee’s desire whether to exercise its discretion with regard to increasing or decreasing 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

Following the end of the Plan Year, the CEO (in consultation with the Senior Vice President, Human Resources) will recommend to the Committee the individual MIP awards for awards made to any Executive Officer (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.
These recommendations will be presented to the Committee, and in the case of the CEO to the Board, for its review and approval at the February meeting following the end of the Plan Year.
		
	B.
	Payout of Individual Awards

Participants each have a Target Award expressed as (a) for each Executive Officer, a percentage of base salary approved for such officer by the Committee 

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or, for the CEO, by the independent members of the Company’s Board of Directors, and (b) for each other Participant, 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 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, which may or may not include business unit, facility or mill performance, as determined by his or her manager against pre-established performance objectives. A Participant’s individual award is capped at 200% of his or her Target Award.
A Participant may be eligible to receive a CEO Special Award in addition to his or her Final Award, which may cause the Participant’s actual award to be paid to exceed 200%, provided, however, that if CEO Special Awards are funded through the Plan the sum of all Final Awards plus CEO Special Awards may not exceed the Total MIP Award Pool.
The following is an example of an award payout calculation for a Participant. 

		
	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 

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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.
	Impact of Leave of Absence for Salaried Employees

A Participant’s Target Award will not be prorated for the number of months on a leave of absence during the Plan Year.  The Participant’s final award is based on the Participant’s individual performance achievement, which may include business unit, facility or mill performance, as determined by his or her manager against pre-established performance objectives.
		
	E.
	Cancellation of Award Upon Certain Events Prior to Payout

An award not yet paid (prior to actual payment, see Note below) will cancel as of the date of the Participant’s termination of employment in the following events:
		
	•
	Voluntary resignation before retirement eligibility;

		
	•
	Termination for Cause;

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

		
	•
	Failure by the 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; and

		
	•
	Misconduct. The determination of whether a Participant has engaged in Misconduct shall be made by the Senior Vice President, Human Resources, or by the Management Development and Compensation Committee with regard to employees of the Company in a position designated as Senior Vice President or 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 physically 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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	F.
	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 the target amount in connection with a termination scenario during the Plan Year are not deemed an MIP Award and accordingly are not paid from the Total MIP Award Pool, but instead are charged to the appropriate cost center, as part of the termination allowance.
	
				
	TERMINATION SCENARIO
	DATE OF TERMINATION
	AMOUNT 
TO BE PAID
	TIME OF PAYMENT

	For All MIP-eligible Employees other than Senior Vice Presidents & CEO

	DURING PLAN YEAR

	•    Death
•    Long-Term Disability
•    Eligible for Termination Allowance under Company Salaried Employee Severance Plan* (see Note)
•    Divestiture of Participant’s Business
	1/1 through 12/31
	Pro rata Target Award
	As soon as practical following termination

	•    Retirement eligible

	1/1 through 11/30
	Pro rata Target Award 
	As soon as practical following termination

	Month of December
	Full Calculated Award based on Actual performance
	At time of normal MIP payout

	

AFTER PLAN YEAR BUT BEFORE MIP PAYOUT

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	•    Death
•    Long-Term Disability
•    Eligible for Termination Allowance under Company Salaried Employee Severance Plan* (see Note)
•    Divestiture of Participant’s Business
•    Retirement eligible 
	1/1 (of year following plan 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 as soon as practical following termination

	For Senior Vice Presidents and CEO

	•    Death
•    Long-Term Disability

	1/1 through 12/31
	Pro rata Target Award
	As soon as practical following termination

	•    Retirement eligible 
•    Eligible for Termination Allowance under Company Salaried Employee Severance Plan* (see Note)
•    Divestiture of Participant’s Business
	1/1 through 12/31
	Pro rata Calculated Award based on Actual performance
	At time of normal MIP payout

*NOTE:  A Participant who does not sign the Company’s Termination Agreement and Release in connection with the payment of a termination allowance will forfeit his or her MIP award, unless retirement eligible.
		
	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, reduced by the CEO Special Award Pool, based on the 

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Company’s performance achievement of the Performance Objectives.  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 Incentive Compensation Plan in shares of Company stock.
		
	B.
	Time of Payment

Awards may be paid in one or 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 

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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.
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.    IP Political Action Committee (“PAC”) Contributions
A Participant who makes a valid election in accordance with the Company’s procedures may deduct a specified amount or percentage from his or her MIP award for the purpose of contributing to the IP-PAC. The amount of the contribution may not exceed the federal limit for individual contributions to a political action committee. In no event shall a Participant’s election to contribute or not contribute to the IP-PAC have any impact on a Participant’s eligibility for, or amount of, his or her MIP award. 
XVI.    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.  
XVII.    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). 

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XVIII.    Effective Date
This Plan is effective as of January 1, 2015 and continues until terminated, suspended, modified, or amended by the Committee.

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Appendix A
Management Incentive Plan (MIP)
2015 Target Awards
	
				
	Position Level
	Target Award
(% of Midpoint)*
	Target Award
(Value)*

	33
	65
	%
	$323,800

	32
	65
	%
	$296,100

	31
	60
	%
	$250,300

	30
	55
	%
	$216,300

	29
	50
	%
	$178,100

	28
	50
	%
	$165,000

	27
	45
	%
	$135,900

	26
	45
	%
	$124,200

	25
	40
	%
	$101,000

	24
	40
	%
	$94,500

	23
	35
	%
	$75,600

	22
	30
	%
	$59,300

	21
	30
	%
	$54,200

	20
	25
	%
	$41,400

	19
	25
	%
	$38,500

	18
	20
	%
	$28,600

	17
	20
	%
	$26,700

	16
	20
	%
	$24,700

	15
	15
	%
	$17,100

	14
	15
	%
	$15,900

*Target Award % of Base Salary midpoint and value for non-U.S. participants may vary based on local market practice. The 2015 U.S. Core Salary Structure was not increased over 2014, for PLs 14 and above.

15ip-20141231exhibit104execmip

Exhibit 10.4

INTERNATIONAL PAPER COMPANY
AMENDED AND RESTATED
EXECUTIVE MANAGEMENT INCENTIVE PLAN

TABLE OF CONTENTS

ARTICLE 1  ESTABLISHMENT OF PLAN1
1.1Background    1
1.2Purpose    1
1.3Effective Date    1
ARTICLE 2  DEFINITIONS1
2.1Definitions    1
ARTICLE 3  ADMINISTRATION2
3.1Committee    2
3.2Authority of Committee    2
3.3Decisions Binding    3
ARTICLE 4  ELIGIBILITY3
4.1Designation of Participants    3
4.2Partial Year Participation    3
4.3Demotions    3
ARTICLE 5  OPERATION OF THE PLAN3
5.1Company Business Objectives    3
5.2Individual Award Limit    3
5.3Intermediate Performance Objectives    4
5.4Establishment of Target Bonuses    4
5.5Payout Form and Timing    4
ARTICLE 6  AMENDMENT, MODIFICATION AND TERMINATION4
6.1Amendment, Modification and Termination    4

    

II-i

INTERNATIONAL PAPER COMPANY
AMENDED AND RESTATED
EXECUTIVE MANAGEMENT INCENTIVE PLAN

ARTICLE 1  
ESTABLISHMENT OF PLAN

1.1    Background.  This Amended and Restated Executive Management Incentive Plan (the “Executive MIP” or the “Plan”) is a subplan of the International Paper Company Amended and Restated 2009 Incentive Compensation Plan (the “2009 Incentive Plan”), consisting of a program for the grant of annual performance-based cash awards under Article 10 of the 2009 Incentive Plan.  This Plan has been established and approved, and will be administered by, the Committee pursuant to the terms of the 2009 Incentive Plan, including without limitation, Article 11 thereof.  It is intended that the Performance Bonuses earned under this Plan shall be Qualified Performance-Based Awards with respect to Participants who are Covered Employees, with the intent that the Performance Bonuses will be fully deductible by the Company without regard to the limitations of Internal Revenue Code Section 162(m).  The applicable Award limits of Section 5.4 of the 2009 Incentive Plan shall apply with respect to this Plan.  As of the Effective Date, Section 5.4 of the 2009 Incentive Plan provides that the maximum aggregate amount that may be paid with respect to cash-based Awards under the 2009 Incentive Plan to any one Participant in any fiscal year of the Company is $10,000,000. In the event of any actual or alleged conflict between the provisions of the 2009 Incentive Plan and the provisions of this Plan, the provisions of the 2009 Incentive Plan shall be controlling and determinative.

1.2    Purpose.  The purpose of this Plan is to provide for the payment of a cash bonus to eligible employees of the Company, the payment of which will be based on the achievement of Company Business Objectives during a Plan Year.  Company Business Objectives are designed to focus on overall corporate financial results that drive shareowner value.

1.3    Effective Date.  This Plan was approved by the Committee on February 9, 2009, to be effective as of the beginning of Plan Year 2009, contingent on shareowner approval of the 2009 Incentive Compensation Plan, and was amended and restated by the Committee effective January 1, 2015.

ARTICLE 2
DEFINITIONS

2.1    Definitions.  Capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the 2009 Incentive Plan.  In addition, the following terms shall have the following meanings for purposes of this Plan, unless the context in which they are used clearly indicates that some other meaning is intended.

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Company Business Objectives.  The Company Business Objectives established by the Committee for a Plan Year, as provided in Article 5. 

Effective Date.  January 1, 2009.

Executive Management Incentive Plan or Plan.  The International Paper Company Executive Management Incentive Plan, a subplan of the 2009 Incentive Plan, as set forth in this document together with any subsequent amendments hereto.

GAAP.  Generally accepted accounting principles for U.S. companies.

Individual Award Limit.  Has the meaning described in Section 5.2.

Performance Bonus.  The bonus payable to a Participant under this Plan calculated by reference to the achievement of applicable Company Business Objectives, as determined in accordance with Article 5.

Plan Year.  January 1 to December 31 of each year.

Schedule.  Means a document setting forth Company Business Objectives for a Plan Year, and the relative weightings of such measures and such other information as the Committee determines is appropriate.

ARTICLE 3
ADMINISTRATION

3.1    Committee.  This Plan shall be administered by the Committee.  

3.2    Authority of Committee.  Without limiting its authority under Article 4 of the 2009 Incentive Plan, the Committee has the exclusive power, authority and discretion to:
(a)    Designate Participants for each Plan Year;
(b)    Establish and review Company Business Objectives and weightings for different Company Business Objectives for each Plan Year;
(c)    Establish Target Bonuses for Participants for each Plan Year;
(d)    Determine whether and to what extent Company Business Objectives were achieved for each Plan Year;
(e)    Increase (subject to the Individual Award Limit) or decrease the Performance Bonus otherwise payable to any Participant resulting from the achievement of performance objectives in any Plan Year, based on such subjective factors as the Committee shall deem relevant;
(f)    Establish, adopt or revise any rules and regulations as it may deem necessary or advisable to administer this Plan; 
(g)    Make all other decisions and determinations that may be required under this Plan or as the Committee deems necessary or advisable to administer this Plan; and

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(h)    Amend this Plan as provided herein.

3.3    Decisions Binding.  The Committee’s interpretation of this Plan and all decisions and determinations by the Committee with respect to this Plan are final, binding, and conclusive on all parties.

ARTICLE 4
ELIGIBILITY

4.1    Designation of Participants.  Officers of the Company who hold the title Senior Vice President or higher are eligible to participate in the Plan.  Exhibit A sets forth the eligible participants as of January 1, 2015.  On or before March 31 of each Plan Year, the Committee shall approve and substitute a new Exhibit A indicating the Participants for that Plan Year.  

4.2    Partial Year Participation.  If a Participant begins employment or is promoted to an eligible position after the beginning of a Plan Year, the Committee, in its discretion, may determine whether such person may participate in this Plan and if so, the terms of such participation, which will be prorated based on the number of days such person participated in this Plan during the Plan Year, unless the Committee determines otherwise.  If a Participant takes a leave of absence during the Plan Year for any reason the Participant will receive a pro rata share of a Performance Bonus, if any, for such Plan Year, unless the Committee decides otherwise.

4.3    Demotions.  If a Participant is demoted during the Plan Year, the Committee will determine whether Plan participation ends at that time, or is continued, perhaps at a reduced level.  If participation ends, any Performance Bonus earned during the time of participation will be prorated for the Plan Year.

ARTICLE 5
OPERATION OF THE PLAN

5.1    Company Business Objectives.  On or before March 31 of each Plan Year, the Committee will approve and substitute a new Schedule 1 indicating the Company Business Objectives for that Plan Year, which shall be based on one or more of the Qualified Business Criteria approved by shareowners under Section 11.2 of the 2009 Incentive Compensation Plan.  Unless waived by the Committee in the case of death or Disability of a Participant, or the occurrence of a Change in Control, no Performance Bonuses shall be payable under the Plan for any Plan Year unless the Company Business Objectives have been achieved.  The maximum aggregate payout of awards under the Plan based on the Company Business Objective shall also be set forth on Schedule 1, which shall not exceed the Individual Award Limit times the number of Participants for that Plan Year. 

5.2    Individual Award Limit.  In any Plan Year in which the Company Business Objectives are achieved, the Performance Bonus payable to each Participant under the Plan for such Plan Year shall be $10,000,000 (the “Individual Award Limit”) or any lesser amount 

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determined by the Committee based on criteria determined by the Committee.  As described herein, it is anticipated that the Committee will exercise discretion, as contemplated in Section 11.3 of the 2009 Incentive Compensation Plan, to determine that the Performance Bonus payable to any Participant for a Plan Year is less than the Individual Award Limit for such Participant.  In exercising such discretion, the Committee may establish or approve intermediate performance objectives and their respective weightings, and intermediate incentive opportunity ranges, as it deems appropriate to encourage and reward particular areas of performance, with regard to Company or individual performance.  Such intermediate objectives and opportunity ranges may, but are not required to, be identical to the Company’s Management Incentive Plan.  

5.3    Intermediate Performance Objectives.  On or before March 31 of each Plan Year, it is anticipated that the Committee will approve intermediate performance objectives for that Plan Year in addition to Company Business Objectives, and shall set forth such intermediate performance objectives on Schedule 1.  These intermediate performance objectives shall provide the formula that the Committee will use as a guide for determining a Participant’s Performance Bonus at a level below the Individual Award Limit.  

5.4    Establishment of Target Bonuses.  The Committee intends to establish Target Bonuses (other than the Individual Award Limit) for each Plan Year that will be awarded to the Participant for that Plan Year if Company Business Objectives are achieved and if the pre-established intermediate performance objectives are achieved at the targeted level of performance (the “Target Bonus”).  The Target Bonus shall be based on a percentage of each Participant’s annual base salary.  The actual Performance Bonus paid to a Participant may be greater or less than his or her Target Bonus, depending on the level of achievement of the pre-established performance objectives (but in no event shall the bonus exceed the Individual Award Limit).  In any Plan Year in which the Committee fails to set a Target Bonus for a Participant, the Performance Bonus for that Participant shall be zero for that year unless the Committee determines otherwise (but in no event shall the bonus exceed the Individual Award Limit).

5.5    Payout Form and Timing.  Performance Bonuses will be paid within the first two and one-half months of the year next following the end of the Plan Year for which the Performance Bonuses, if any, were earned.

ARTICLE 6
AMENDMENT, MODIFICATION AND TERMINATION

6.1    Amendment, Modification and Termination.  The Committee may, at any time and from time to time, amend, modify or terminate this Plan.  The Committee may condition any amendment or modification on the approval of shareowners of the Company if such approval is necessary or deemed advisable with respect to tax, securities or other applicable laws, policies or regulations, including without limitation Internal Revenue Code Section 162(m).

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The foregoing is hereby acknowledged as being the International Paper Company Executive Management Incentive Plan as adopted by the Committee on February 9, 2009, to be effective as of January 1, 2009, contingent on shareowner approval of the 2009 Incentive Compensation Plan, and as amended and restated by the Committee effective January 1, 2015.

INTERNATIONAL PAPER COMPANY
By:
/s/ Thomas G. Kadien
Senior Vice President, Human Resources, Communications & Global Government Relations

ARTICLE 1
ESTABLISHMENT OF PLAN

1.1    BACKGROUND    .  This Amended and Restated Executive Management Incentive Plan (the “Executive MIP” or the “Plan”) is a subplan of the International Paper Company Amended and Restated 2009 Incentive Compensation Plan (the “2009 Incentive Plan”), consisting of a program for the grant of annual performance-based cash awards under Article 10 of the 2009 Incentive Plan.  This Plan has been established and approved, and will be administered by, the Committee pursuant to the terms of the 2009 Incentive Plan, including without limitation, Article 11 thereof.  It is intended that the Performance Bonuses earned under this Plan shall be Qualified Performance-Based Awards with respect to Participants who are Covered Employees, with the intent that the Performance Bonuses will be fully deductible by the Company without regard to the limitations of Internal Revenue Code Section 162(m).  The applicable Award limits of Section 5.4 of the 2009 Incentive Plan shall apply with respect to this Plan.  As of the Effective Date, Section 5.4 of the 2009 Incentive Plan provides that the maximum aggregate amount that may be paid with respect to cash-based Awards under the 2009 Incentive Plan to any one Participant in any fiscal year of the Company is $10,000,000. In the event of any actual or alleged conflict between the provisions of the 2009 Incentive Plan and the provisions of this Plan, the provisions of the 2009 Incentive Plan shall be controlling and determinative.

1.2.    PURPOSE    .  The purpose of this Plan is to provide for the payment of a cash bonus to eligible employees of the Company, the payment of which will be based on the achievement of Company Business Objectives during a Plan Year.  Company Business Objectives are designed to focus on overall corporate financial results that drive shareowner value.

1.3.    EFFECTIVE DATE    .  This Plan was approved by the Committee on February 9, 2009, to be effective as of the beginning of Plan Year 2009, contingent on shareowner approval of the 2009 Incentive Compensation Plan, and was amended and restated by the Committee effective January 1, 2015.

ARTICLE 2
DEFINITIONS

2.1.    DEFINITIONS    .  Capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the 2009 Incentive Plan.  In addition, the following terms shall have the following meanings for purposes of this Plan, unless the context in which they are used clearly indicates that some other meaning is intended.

Company Business Objectives.  The Company Business Objectives established by the Committee for a Plan Year, as provided in Article 5. 

Effective Date.  January 1, 2009.

Executive Management Incentive Plan or Plan.  The International Paper Company Executive Management Incentive Plan, a subplan of the 2009 Incentive Plan, as set forth in this document together with any subsequent amendments hereto.

GAAP.  Generally accepted accounting principles for U.S. companies.

Individual Award Limit.  Has the meaning described in Section 5.2.

Performance Bonus.  The bonus payable to a Participant under this Plan calculated by reference to the achievement of applicable Company Business Objectives, as determined in accordance with Article 5.

Plan Year.  January 1 to December 31 of each year.

Schedule.  Means a document setting forth Company Business Objectives for a Plan Year, and the relative weightings of such measures and such other information as the Committee determines is appropriate.

ARTICLE 3
ADMINISTRATION

3.1.    COMMITTEE    .  This Plan shall be administered by the Committee.  

3.2.    AUTHORITY OF COMMITTEE    .  Without limiting its authority under Article 4 of the 2009 Incentive Plan, the Committee has the exclusive power, authority and discretion to:
(a)    Designate Participants for each Plan Year;
(b)    Establish and review Company Business Objectives and weightings for different Company Business Objectives for each Plan Year;
(c)    Establish Target Bonuses for Participants for each Plan Year;
(d)    Determine whether and to what extent Company Business Objectives were achieved for each Plan Year;
(e)    Increase (subject to the Individual Award Limit) or decrease the Performance Bonus otherwise payable to any Participant resulting from the achievement of performance objectives in any Plan Year, based on such subjective factors as the Committee shall deem relevant;
(f)    Establish, adopt or revise any rules and regulations as it may deem necessary or advisable to administer this Plan; 
(g)    Make all other decisions and determinations that may be required under this Plan or as the Committee deems necessary or advisable to administer this Plan; and
(h)    Amend this Plan as provided herein.

3.3.    DECISIONS BINDING    .  The Committee’s interpretation of this Plan and all decisions and determinations by the Committee with respect to this Plan are final, binding, and conclusive on all parties.

ARTICLE 4
ELIGIBILITY

4.1.    DESIGNATION OF PARTICIPANTS    .  Officers of the Company who hold the title Senior Vice President or higher are eligible to participate in the Plan.  Exhibit A sets forth the eligible participants as of January 1, 2015.  On or before March 31 of each Plan Year, the Committee shall approve and substitute a new Exhibit A indicating the Participants for that Plan Year.  

4.2.    PARTIAL YEAR PARTICIPATION    .  If a Participant begins employment or is promoted to an eligible position after the beginning of a Plan Year, the Committee, in its discretion, may determine whether such person may participate in this Plan and if so, the terms of such participation, which will be prorated based on the number of days such person participated in this Plan during the Plan Year, unless the Committee determines otherwise.  If a Participant takes a leave of absence during the Plan Year for any reason the Participant will receive a pro rata share of a Performance Bonus, if any, for such Plan Year, unless the Committee decides otherwise.

4.3.    DEMOTIONS    .  If a Participant is demoted during the Plan Year, the Committee will determine whether Plan participation ends at that time, or is continued, perhaps at a reduced level.  If participation ends, any Performance Bonus earned during the time of participation will be prorated for the Plan Year.

ARTICLE 5
OPERATION OF THE PLAN

5.1.    COMPANY BUSINESS OBJECTIVES.  On or before March 31 of each Plan Year, the Committee will approve and substitute a new Schedule 1 indicating the Company Business Objectives for that Plan Year, which shall be based on one or more of the Qualified Business Criteria approved by shareowners under Section 11.2 of the 2009 Incentive Compensation Plan.  Unless waived by the Committee in the case of death or Disability of a Participant, or the occurrence of a Change in Control, no Performance Bonuses shall be payable under the Plan for any Plan Year unless the Company Business Objectives have been achieved.  The maximum aggregate payout of awards under the Plan based on the Company Business Objective shall also be set forth on Schedule 1, which shall not exceed the Individual Award Limit times the number of Participants for that Plan Year. 

5.2.    INDIVIDUAL AWARD LIMIT.  In any Plan Year in which the Company Business Objectives are achieved, the Performance Bonus payable to each Participant under the Plan for such Plan Year shall be $10,000,000 (the “Individual Award Limit”) or any lesser amount determined by the Committee based on criteria determined by the Committee.  As described herein, it is anticipated that the Committee will exercise discretion, as contemplated in Section 11.3 of the 2009 Incentive Compensation Plan, to determine that the Performance Bonus payable to any Participant for a Plan Year is less than the Individual Award Limit for such Participant.  In exercising such discretion, the Committee may establish or approve intermediate performance objectives and their respective weightings, and intermediate incentive opportunity ranges, as it deems appropriate to encourage and reward particular areas of performance, with regard to Company or individual performance.  Such intermediate objectives and opportunity ranges may, but are not required to, be identical to the Company’s Management Incentive Plan.  

5.3.    INTERMEDIATE PERFORMANCE OBJECTIVES    .  On or before March 31 of each Plan Year, it is anticipated that the Committee will approve intermediate performance objectives for that Plan Year in addition to Company Business Objectives, and shall set forth such intermediate performance objectives on Schedule 1.  These intermediate performance objectives shall provide the formula that the Committee will use as a guide for determining a Participant’s Performance Bonus at a level below the Individual Award Limit.  

5.4.    ESTABLISHMENT OF TARGET BONUSES    .  The Committee intends to establish Target Bonuses (other than the Individual Award Limit) for each Plan Year that will be awarded to the Participant for that Plan Year if Company Business Objectives are achieved and if the pre-established intermediate performance objectives are achieved at the targeted level of performance (the “Target Bonus”).  The Target Bonus shall be based on a percentage of each Participant’s annual base salary.  The actual Performance Bonus paid to a Participant may be greater or less than his or her Target Bonus, depending on the level of achievement of the pre-established performance objectives (but in no event shall the bonus exceed the Individual Award Limit).  In any Plan Year in which the Committee fails to set a Target Bonus for a Participant, the Performance Bonus for that Participant shall be zero for that year unless the Committee determines otherwise (but in no event shall the bonus exceed the Individual Award Limit).

5.5.    PAYOUT FORM AND TIMING    .  Performance Bonuses will be paid within the first two and one-half months of the year next following the end of the Plan Year for which the Performance Bonuses, if any, were earned.

ARTICLE 6
AMENDMENT, MODIFICATION AND TERMINATION

6.1.    AMENDMENT, MODIFICATION AND TERMINATION    .  The Committee may, at any time and from time to time, amend, modify or terminate this Plan.  The Committee may condition any amendment or modification on the approval of shareowners of the Company if such approval is necessary or deemed advisable with respect to tax, securities or other applicable laws, policies or regulations, including without limitation Internal Revenue Code Section 162(m).

The foregoing is hereby acknowledged as being the International Paper Company Executive Management Incentive Plan as adopted by the Committee on February 9, 2009, to be effective as of January 1, 2009, contingent on shareowner approval of the 2009 Incentive Compensation Plan, and as amended and restated by the Committee effective January 1, 2015.

INTERNATIONAL PAPER COMPANY
By:
/s/ Thomas G. Kadien

Senior Vice President, Human Resources, Communications & Global Government Relations

- 5 -

EXHIBIT A

PARTICIPANTS AS OF JANUARY 1, 2015
UNDER THE EXECUTIVE MANAGEMENT INCENTIVE PLAN

	
		
	Mark S. Sutton
	Chairman and Chief Executive Officer

	 
	 

	W. Michael Amick, Jr.
	SVP – North American Papers, Pulp &

	 
	Consumer Packaging

	 
	 

	C, Cato Ealy
	SVP – Corporate Development

	 
	 

	William P. Hoel
	SVP – Container The Americas

	 
	 

	Tommy S. Joseph
	SVP – Manufacturing, Technology, EHS&S

	 
	& Global Sourcing

	 
	 

	Thomas G. Kadien
	SVP – Human Resources, Communications &

	 
	Global Government Relations

	 
	 

	Glenn R. Landau
	SVP – President, IP Latin America

	 
	 

	Tim S. Nicholls
	SVP – Industrial Packaging

	 
	 

	Jean-Michel Ribieras
	SVP – President, IP Europe, Middle East,

	 
	Africa & Russia

	 
	 

	Carol L. Roberts
	SVP – Chief Financial Officer

	 
	 

	Sharon R. Ryan
	SVP – General Counsel & Corporate

	 
	Secretary

A-1

Schedule 1

EXECUTIVE MANAGEMENT INCENTIVE PLAN
2015 COMPANY BUSINESS OBJECTIVE AND INTERMEDIATE PERFORMANCE OBJECTIVES 

	
		
	Plan Element
	162(m) Limit Approved by Committee

	

Company Business Objective:
	

•    Positive EBITDA Before Special Items

	

Intermediate Performance Objectives:
	

•    Same as 2015 Management Incentive Plan objectives

S-1

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