Exhibit (10.1)
MEAD MANAGEMENT INCENTIVE PLAN
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1994
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OBJECTIVE The objective of the Mead Management Incentive Plan is to
- --------- recognize and reward key managers for achieving and sustaining
superior corporate performance compared to other industrial
companies.
PARTICIPATION All elected officers of the Corporation will participate in
ELIGIBILITY this plan.
- -----------
PAYOUT Participants must be employees of the company, an affiliate or
ELIGIBILITY a subsidiary at the end of the plan year to receive payout from
- ----------- this plan. An appropriate proration of earned awards may be
made in case of death, disability, retirement, hire or transfer
during the plan year. In such cases, the incentive target will
be pro-rated to reflect the months of service.
INCENTIVE The Incentive Target for each grade is the difference between
TARGET Mead's policy total cash compensation target and the midpoint.
- ------ This Target will be adjusted annually, based on competitive
data. The current year incentive targets are shown in
Attachment 1.
TOTAL PAYOUT Payout under the Mead Management Incentive Plan is the sum of
DETERMINATION target payout to individual participants, factored by Mead's
- ------------- Annual ROTC performance versus peers:
Payout = Target X Mead ROTC X Mead ROTC
------------------ ---------
Payout All Industry ROTC Forest Products ROTC
ROTC = (EAT+((1-Tax Rate) X Current Interest Expense) X 100
----------------------------------------------------
(Ending Equity + Ending Long-Term Debt)
The above calculated payout will be further adjusted by the
manager's assessment of individual performance.
For selected MMIP participants, the payout determination will
constitute 75% relative ROTC Formula (above) and 25% Cash Flow
Component. Payout of this component is the sum of:
o 60% of actual 1994 cash flow, and
o 40% of 1995 expected cash flow
The incentive potential of the Cash Flow Component is
illustrated in Attachment 2. The selected MMIP participants
with Cash Flow Impact are shown in Attachment 3.
PAYOUT Senior Executives in grades 26 and above will not be eligible
THRESHOLD for payout unless Mead's annual ROTC is 5% or higher.
- ---------
Other participants will not be eligible for payout unless
there are corporate earnings for the year.
ADMINISTRATION Payout will be estimated periodically and required accrual of
- -------------- payout will be booked against earnings during the year.
Approved incentive checks will be prepared and expensed to
earnings at the time of payout. Corporate Compensation will
assist senior management in the administration of this plan.
RECOMMENDATIONS The Compensation Committee reviews and approves total
AND APPROVAL funding and individual payouts under the plan, and the
- ------------ amount, use and replenishment of any reserve funds.
The Compensation Committee may also determine if payout will
be in cash, restricted stock, or a combination thereof.
The CEO and COO recommend all individual payouts to the
Compensation Committee of the Board of Directors for approval.
Payout for the CEO and COO is recommended to the Board of
Directors by the Compensation Committee.
RESERVED RIGHTS The Mead Corporation reserves the right to alter, amend,
- --------------- suspend or terminate any or all provisions of the Mead
Management Incentive Plan, except such actions shall neither
inhibit nor hinder the rights of any individual with respect
to earned and credited awards which have been deferred.
Designation of a position as eligible for participation
neither guarantees the individual a right to an incentive
payment nor a right to continued employment.
S. C. Mason
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Approved
May 3, 1994
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Date
Attachment 1
MEAD MANAGEMENT INCENTIVE PLAN
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PAYOUT TARGETS
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1994
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1994 Policy Policy *Annual
Grade Midpoint Annual Target TCC Target Incentive Target
- ----- -------- ------------- ---------- ----------------
33 $637,944 $510,400 $1,148,300 $529,500
32 558,768 422,400 981,200 439,200
31 489,864 348,700 838,600 363,400
30 427,200 289,600 716,800 302,400
29 372,792 243,800 616,600 255,000
28 325,392 201,700 527,100 211,500
27 284,184 166,500 450,700 175,000
26 247,344 136,600 383,900 144,000
25 215,376 113,700 329,100 120,200
24 188,616 91,300 279,900 96,900
23 166,032 71,400 237,400 76,300
22 155,520 52,900 208,400 57,500
*For 1994 the above Incentive Targets include an addition of 3% of Midpoint.
Attachment 2
CASH FLOW COMPONENT
-------------------
Incentive Potential
-------------------
1994 1994 1995 1995
Cash Flow Component Cash Flow Component
Actual Payout Expected Payout
----- ------ -------- ------
130.0 180% Maximum 126.0 120%
121.9 165% 118.1 110%
113.8 150% 110.3 100%
105.7 135% 102.4 90%
97.5 120% 94.5 80%
89.4 105% 86.6 70%
81.3 90% 78.8 60%
73.2 75% 70.9 50%
65.1 60% Contract 63.0 40%
57.0 45% 55.1 30%
48.8 30% 47.3 20%
40.7 15% 39.4 10%
32.5 0% 31.5 0%
24.4 -15% 23.6 -10%
16.3 -30% 15.8 -20%
8.1 -45% 7.9 -30%
0.0 -60% Threshold 0.0 -40%
Attachment 3
MMIP PARTICIPANTS WITH CASH FLOW COMPONENT
------------------------------------------
S. C. Mason Chairman & CEO
S. S. Benedict President & COO
W. R. Graber VP & CFO
E. M. Karter VP Mfg & Technology
T. E. Palmer VP & General Counsel
C. J. Mazza VP Human Resources
W. O. Nugent VP Purchasing & Logistics
P. B. Robinson VP Strategy & Planning
G. T. Geswein Treasurer
J. D. Fuller Controller
QUARTERLY\EX-10(1).WP
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