Document:

2012 AbitibiBowater Inc. Short-Term Incentive Plan

 Exhibit 10.1 

 

			
	2012 Short-Term Incentive Plan	  	

 

  

			
	 Purpose
	  	As a means of rewarding employees for their contribution toward the success of the Company, a 2012 Short-Term Incentive Plan (STIP) has been instituted. The STIP is designed to
link a portion of employees’ total compensation to the attainment of specific, measurable, and bottom-line oriented key company performance indicators.
		
	Eligibility	  	The Plan applies to all non-unionized, regular, salaried, employees of the Company. Eligibility for or receipt of incentive pay should not be considered as automatic, retroactive
or precedent based.
		
	Performance Period	  	The STIP relates to the achievement of performance goals over the period from January 1, 2012 to December 31, 2012.
		
	Plan Design	  	The STIP is designed to reflect the different employee accountabilities and diversity of positions. In order to tie incentive payouts to employee performance and the achievement
of key performance indicators, the STIP’s design is adapted to all groups of employees: Operations, Sales and Corporate.
		
		  	The amount of award a participant is eligible to receive is expressed as a certain percentage of the employee’s base salary as determined by his grade level. Base salary is
the rate in effect at December 31, 2012. The Company determines the threshold, target and maximum incentive payouts to participants, which payout levels vary per grade level. Supervisors are responsible to inform their employees of their respective
threshold, target and maximum incentive award payouts.
		
	Discretionary Plan and Plan Administration	  	 •      Incentive payouts are within the complete and sole
discretion of the Company.
  

•      The Company will approve actual achievement of performance measures and
individual awards based on actual achievement before awards are granted and paid, subject to the overall maximum incentive payout described below under “Maximum and Minimum Payout.”

		
		  	 •      The Company has the right to adjust any or all awards; this includes the right to
eliminate any or all awards for any year despite achievement of performance measures, even if such decision is made after the end of the performance period.

		
		  	 •      The Company may modify, suspend, amend or terminate the STIP at any
time.

		
		  	 •      With respect to any employee, the Company reserves the right to reduce or even
cancel incentive awards in the event an employee has demonstrated a lower level of performance than expected, whether or not the Company or group performance levels have been met.

		
		  	 •      Each business unit needs to complete a performance review assessment for each
employee to justify an award under the STIP.

		
		  	 •      Adjustments may be made to the financial metrics for closure costs, impairment
charges and other related charges, severance costs, net loss or gain on the disposition of assets, and similar items.

		
		  	 •      Adjustments may be made to the cost metrics for specific reasons such as market
downtime, major variation in grade mix, major changes in input price, restructuring or reorganization costs, and similar items.

		
		  	 •      Any adjustment to the performance metrics has to
be formally approved before implementation.
  
 •      Awards under the STIP are anticipated to be paid in a lump sum no later than March 15, 2013.

  

					
		
	 This plan text replaces and supercedes any and all prior versions and summary fact sheet. April 10,
2012
	  	 	1	  

			
	2012 Short-Term Incentive Plan	  	

 

  

											
	Performance Metrics	  	Performance Metrics – Weighting	  		  	
					
		  	Performance Metrics	  		  		  	

											
		  		  		  		  	
		 	 	 	 
		  	Criteria	  	
Threshold
	  	 Target
	  	Maximum
		  	Income from operations (RFP)	  	
80% of Budget
	  	
Budget
	  	 120% of Budget

		  	Manufacturing costs1	  	 2% > Budget
	  	 Budget
	  	2% < 
Budget
		  	SG&A cost2	  	 2% > Budget 
	  	 Budget 
	  	 2% < Budget 

		  	Profit per metric ton 3	  	 80% of Budget
	  	 Budget
	  	120% of 
Budget
		  	Safety –OSHA rate4	  	 1.4 points
	  	 1.2 points
	  	£
1 point
		  	Safety – Severity5	  	 36
	  	 32
	  	£
 28
			
		  	 1    Targets based on cost of goods sold are set for the Recycling division. 
	  	
		  	 2    Excluding equity compensation costs.
	  	
		  	 3    Sales targets shown are for combined paper and pulp sales. Specific targets are set for paper, pulp and wood products
sales.
	  	
		  	 4    The calculation methodology for the mills/divisions varies from the calculation methodology for
corporate.
	  	
		  	 5    Targets based on vehicle incident rate are set for the Recycling division.
	  	

											
			
		  	% of STIP	  	

											
		  		  	
		 	 	 	 	 
		  	Weighting	  	 Pulp/paper

mills
	  	 Wood

products

division
	  	 Sales
	  	
Corporate

functions

		  	Income from operations
(RFP)	  	
40%
	  	
40%
	  	
50%
	  	50%
		  	Manufacturing costs
(mill)	  	
40%
	  	
40%
	  	 	  	 
		  	SG&A cost or profit/
metric ton	  	 	  	 	  	
30%
	  	30%
		  	Safety – OSHA (mill/
division) (RFP)	  	
15%
	  	
15%
	  	
15% (RFP)
	  	15% (RFP)
		  	Safety – Severity
 (mill/division) (RFP)
	  	
5%
	  	
5%
	  	
5% (RFP)
	  	5% (RFP)

  

					
		
	 This plan text replaces and supercedes any and all prior versions and summary fact sheet. April 10,
2012
	  	 	2	  

			
	2012 Short-Term Incentive Plan	  	

 

  

			
	Maximum and Minimum Payout	  	 The overall maximum incentive payout under the STIP cannot exceed 7% of the free cash flow (FCF) generated by the Company in 2012
(maximum available envelope). If the total payout determined based on actual achievement of performance metrics exceeds the maximum available envelope, all incentive awards are reduced on a prorata basis. If the total payout determined based on
actual achievement of performance metrics is lower than the maximum available envelope, the excess envelope is not distributed to participants.
  

There is no minimum payout under the STIP.

		
	Cash Flow Measure	  	 For purpose of the STIP, free cash flow is defined as net cash provided by operating activities, less maintenance capital
expenditures, adjusted for:
  

•    Cash reorganization and restructuring costs

•    Accelerated and additional voluntary pension contributions towards past
service
 •    Other special items

		
	Administrative Guidelines	  	 New Hires
  

An employee hired into a regular position on or before September 30, 2012 is eligible to participate on a prorated basis, effective upon his date of hire.
An employee hired into a regular position on or after October 1, 2012 is not eligible for participation in the STIP.

		
		  	Promotion or Status Changes
		
		  	 •      If an employee is promoted or demoted to a position covered by a different incentive
payout level, any incentive payout calculation will be prorated for time spent in respective positions. In either case, the base salary rate used to determine the prorated incentive payout will be the base salary rate in effect at December 31,
2012.

		
		  	 •      If an employee is transferred internally, any incentive payout calculation will be
prorated for time spent in respective locations or groups. The base salary rate used to determine the prorated incentive payout will be the base salary rate in effect at December 31, 2012.

		
		  	 •      If an employee’s status changes from temporary salaried, unionized salaried or
hourly to regular non-unionized salaried during the performance period, the employee will be eligible to participate for time spent as a regular non-unionized salaried employee, and any incentive payout calculation will be prorated for time spent as
a regular non-unionized salaried employee. The base salary rate used to determine the prorated incentive payout will be the base salary rate in effect at December 31, 2012.

		
		  	Termination
		
		  	 •      An employee who retires or who dies during the performance period will be entitled
to receive a prorated incentive payout, based on actual achievement for time as an active eligible employee, if and when the Board approves the incentive payouts and does not otherwise cancel payment. For the purpose of this plan, an employee is
deemed to retire if he is age 55 or above on his last day of active work.

		
		  	 •      An employee who is involuntarily terminated and whose last day of active work is on
or before June 30, 2012 will not be entitled to receive an incentive payout.

		
		  	 •      An employee who is involuntarily terminated and whose last day of active work is on
or after July 1, 2012 will be entitled to receive a prorata amount of an incentive payout, based on actual achievement for time as an active eligible employee, if and when the Board approves the incentive payouts and does not otherwise cancel
payment.

		
		  	 •      An employee who voluntarily resigns from the Company before payment is made will not
be eligible to receive an award.

  

					
		
	 This plan text replaces and supercedes any and all prior versions and summary fact sheet. April 10,
2012
	  	 	3	  

			
	2012 Short-Term Incentive Plan	  	

 

  

			
		  	 •      An employee who is terminated for cause, as determined by the Company or his
specific employer, in their discretion, whether during the performance period or after the performance period and before actual payouts, will not receive an award.

		
	Administrative Guidelines	  	Other leaves
		  	 •      Maternity/parental/adoption leave: The length of the leave is not included in the
calculation of any incentive payout.

		
		  	 •      Leave without pay: The length of the leave is not included in the calculation of any
incentive payout.

		
		  	 •      Short-term absence due to illness: The length of the absence is included in the
calculation of the incentive payout if it is a bona fide absence pursuant to the disability medical leave procedure.

		
		  	 •      Long-term absence due to illness (time on long-term disability): The length of the
absence is not included in the calculation of the incentive payout.

		  	

  

					
		 		 	 Approved by:
  

/s/ Richard
Garneau                                        
    
  
 Richard Garneau

President and Chief Executive Officer

  

					
		
	 This plan text replaces and supercedes any and all prior versions and summary fact sheet. April 10,
2012
	  	 	4Offer Letter between Jacques Vachon and AbitibiBowater Inc

 Exhibit 10.2 

 

			
	 

	  	 111 Duke Street, Suite 5000

Montréal, Québec, H3C 2M1 Canada
 T
514-875-2160 resolutefp.com

 March 19, 2012 
 Mr. Jacques Vachon 
 484 Wood Avenue 
 Westmount, Quebec 
 H3Y 3J2 

 

	Re:	Terms and Conditions of Employment between Jacques Vachon and AbitibiBowater Inc. 

Dear Jacques, 
 I am pleased to confirm our
offer of employment regarding the position of Senior Vice President, Corporate Affairs and Chief Legal Officer in Resolute Forest Products, effective March 1, 2012. 
 The terms and conditions, as it applies to your compensation package, are described below: 

Annual Base Salary 
 Your base
salary has been increased, effective February 3, 2012, to an annual rate of CDN$325,000, payable in semi-monthly installments less applicable deductions. The semi-monthly installments will be deposited directly into your personal bank account.

 Position Classification 
 Your position of Senior Vice President, Corporate Affairs and Chief Legal Officer, will be classified in Grade 43 under Resolute Forest Products’ Job/Salary Structure. 

Short Term Incentive 
 You are
eligible to incentive awards pursuant to short term incentive plans adopted by the Company from time to time. For 2012, any payout under the 2012 Short Term Incentive Plan will be calculated using an incentive target of 100% of your annual base
salary, provided that the overall maximum incentive payout pursuant to this Plan may not exceed 7% of the free cash flow generated by the Company in 2012. 
 Long Term Incentive 
 You are eligible to receive grants under the AbitibiBowater
Inc. 2010 Equity Incentive Plan, as determined by the Board of Directors from time to time, at its discretion. The target award for your job grade is current set at 125% of your annual base salary. Note that the Company has adopted Stock Ownership
Guidelines. Pursuant to these guidelines, you are required to hold the equivalent of 2.5 times your annual base salary in Company stock. Please refer to the attached for more details. 

			
	 

	  	 111 Duke Street, Suite 5000

Montréal, Québec, H3C 2M1 Canada
 T
514-875-2160 resolutefp.com

 Pension Plan 
 Your participation in the AbiBow DC Pension Plan and DC Make Up Program remains unchanged. As previously communicated, the AbitibiBowater 2010 DC Supplemental Executive Retirement Plan will be liquidated
in the coming months and you are covered by the Security Protocol with respect to your benefits accrued under the AbitibiBowater 2010 Canadian DB Supplemental Executive Retirement Plan. 
 Health and Insurance Benefits 
 Your participation under the Company’s Health
and Insurance Benefits through our Canadian FlexBenefits program remains unchanged. 
 Vacation 

Effective January 1, 2012, you will be eligible to take 5 weeks of paid vacation per year, in accordance with the Company’s 2012 Vacation
Policy. 
 Other Benefits 

You will continue to be eligible to a company-paid parking and to receive a perquisite allowance of CDN$12,000 per year. Also, you and your spouse are
eligible for an annual medical examination, up to $1,500 each. In addition, medical referral, including vaccination, for yourself, your spouse or a dependent child, is covered up to $1,000 per calendar year. 

I look forward to your formal acceptance of this offer. 
  

	
	 /s/ Richard Garneau

	 Richard Garneau

	 President and Chief Executive Officer

 I have read the herein letter and hereby accept these terms and conditions. 

 

					
	 /s/ Jacques Vachon
	 		  	March 29, 2012
	 Jacques Vachon
	 		  	Date

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