Exhibit 10(1)
CORPORATE ANNUAL INCENTIVE PLAN
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1996
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OBJECTIVE
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The objective of the Corporate Annual Incentive Plan is to recognize and
reward Mead's key executive officers and division leaders for achieving
and sustaining superior business results.
PARTICIPATION ELIGIBILITY
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All Members of the Chairman's Co-ordinating Committee, the Treasurer, the
Controller and Division Presidents are participants in this plan.
PAYOUT ELIGIBILITY
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Participants must be employees of the company, an affiliate or 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 TARGET
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The Incentive Target for each grade is the difference between Mead's
policy total cash compensation target and the midpoint. This Target will
be adjusted annually, based on market total cash compensation data. In
addition, the Compensation Committee may increase the incentive targets in
any plan year, to reflect Mead's competitive base salary position. For
the 1996 plan year, incentive targets for all grades have been increased
by 3%. The current year incentive targets are shown in Attachment 1.
TOTAL PAYOUT DETERMINATION
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Payout under this Plan for all Participants will be determined by an
assessment of:
1. Business Contract - the degree to which the Division or
Corporate functional unit has achieved its operational goals and produced
the expected financial results, and
2. Stretch Goals - the establishment and progress of management
objectives that demonstrate the executive's leadership through innovation,
and
3. Corporate Perspective - the contribution of the executive to
the synergy of the corporation, in balance to his or her division or
functional priorities, and
4. Mead Values - the climate that executive fosters within his
or her management team to encourage and reward others for high
performance: taking risks, develop innovative ideas, make hard management
decisions.
This assessment for each Participant shall be determined by the CEO.
PAYOUT THRESHOLD
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Senior Executives in grades 26 and above will not be eligible 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
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The Plan is administered by the Compensation Committee of the Board. The
Compensation Committee has delegated administration to the Corporate Vice
President, Human Resources.
RECOMMENDATIONS AND APPROVAL
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The Compensation Committee reviews and approves total 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, replaced with stock options, or a combination thereof.
The CEO recommends all individual payouts to the Compensation Committee of the
Board of Directors for approval. Payout for the CEO and the COO is recommended
to the Board of Directors by the Compensation Committee.
RESERVED RIGHTS
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The Mead Corporation reserves the right to alter, amend, suspend or terminate
any or all provisions of this Corporate Annual 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.
Attachment 1
CORPORATE ANNUAL INCENTIVE PLAN
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PAYOUT TARGETS
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1996
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1996 Policy Policy *Annual
Grade Midpoint Annual Target TCC Target Incentive Target
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33 $708,240 $538,300 $1,246,500 $559,500
32 623,784 451,100 1,074,900 469,800
31 543,792 382,200 926,000 398,500
30 476,184 312,400 788,600 326,700
29 416,832 260,000 676,800 272,500
28 364,752 217,400 582,200 228,400
27 319,368 181,100 500,500 190,700
26 279,888 149,400 429,300 157,800
25 245,472 123,600 369,100 131,000
24 215,112 100,100 315,200 106,500
23 188,448 79,500 267,900 85,100
22 168,288 60,810 229,100 65,860
*For 1996 the above Incentive Targets include an addition of 3% of Midpoint.