| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On December 9, 2024, the International Paper Company (the “Company”) Management Development and Compensation Committee (the “Committee”) approved the 2025 Long-Term Incentive Compensation Plan (the “2025 LTIP”) pursuant to the Company’s shareowner-approved 2024 Long-Term Incentive Compensation Plan. The 2025 LTIP will provide long-term incentive opportunity to participants, including the Company’s executive officers, through the grant of equity awards based upon achievement of pre-established performance objectives as described below.
As approved by the Committee, the 2025 LTIP contemplates that equity awards for executive officers will be as follows:
| | • | | Equity-based long-term incentive awards for executive officers will be comprised of 100% performance stock units (“PSUs”) and |
| | • | | Sole performance metric for these PSUs will be 100% relative total shareowner return (“TSR”) utilizing an expanded TSR peer group for these PSUs. |
These PSUs reflects a change from the prior year, in which the Company’s executive officers received long-term equity awards comprised of 80% performance stock units and 20% restricted stock units.
The new approach will be effective with the Company’s annual equity grants which will be granted on January 1, 2025. In connection with these annual equity grants, the award values set forth in the chart below were approved for the Company’s principal executive officer, principal financial officer, and other named executive officers (as reflected in the Company’s proxy statement for its 2024 annual meeting of shareowners) who continue to be employed by the Company:
| | | | |
| Executive Officer | | January 1,
2025 Total
Target LTIP
Award Value | |
Andrew K. Silvernail, Chairman and Chief Executive Officer | | $ | 12,500,000 | |
Timothy S. Nicholls, Senior Vice President and Chief Financial Officer | | $ | 3,500,000 | |
W. Thomas Hamic, Executive Vice President and President – North American Packaging Solutions | | $ | 2,800,000 | |
Joseph R. Saab, Senior Vice President, General Counsel and Corporate Secretary | | $ | 2,000,000 | |
The 2025 LTIP sole performance metric (100%) will be relative TSR for all participants who receive PSUs. TSR reflects share appreciation price and dividends paid and is used to compare the performance of companies’ stocks over time. The Company will measure its TSR position over a three-year period against its TSR peer group. Also, the Company’s TSR peer group for these PSUs shall consist of the forty (40) constituents of the S&P Composite 1500 Materials Index with the highest 3-year stock price correlation with the Company.
These PSUs will vest following a three-year performance period. In addition, the performance range for the goal remains 0% – 200%.
The Committee also approved an increase in the total direct compensation for Mr. Nicholls and Mr. Saab based on position to market.
The Committee believes these changes are in the best interests of shareowners and will provide further incentive to motivate and retain key executives and will continue to align pay with performance for a longer period of time.
