Exhibit 10.17
GRAPHIC PACKAGING
EXECUTIVE INCENTIVE PLAN
Amended and Restated
Effective May 15, 2001
GRAPHIC PACKAGING INTERNATIONAL CORPORATION
Executive Incentive Plan
Effective January 1, 1996
(as amended through May 15, 2001)
The name of this plan shall be the Graphic Packaging
International Corporation Executive Incentive Plan. This plan
replaces any previous annual and long-term cash incentive plans
used by Graphic Packing International Corporation (f/k/a
ACX Technologies, Inc.) (the "Company") and it subsidiaries
listed below in Section II. Eligible Participants. This
plan is effective for fiscal years commencing on and after
January 1, 1996.
I. PLAN INCLUDES:
A. Cash bonuses based upon predetermined financial goals;
and
B. Annual grants of stock options.
II. ELIGIBLE PARTICIPANTS:
The Company's executive officers, division presidents and
select officers.
III. CASH BONUS OPPORTUNITY:
A. Goals:
1. Financial goals are approved at the beginning of
each year by the Company's Compensation Committee
(the "Committee") of the Board of Directors. Goal
achievement determines the bonus amount.
2. The Committee may select from one or more of the
following financial measures in determining the
financial goals for each year: operating income,
earnings before interest and taxes, return on net
assets employed, return on equity, return on
capital, return on invested capital, ratio of debt
to EBITDA, earnings per share or cash flow of the
Company or of the applicable Business as appro-
priate. Definitions are in Section E below.
3. The financial goals are set at "target," the
expected performance level, with a minimum
performance level ("threshold") and the level at
which maximum of salary could be earned ("maximum"
level) also set each year.
B. Bonus Awards:
1. Potential bonus awards, as a percent of annual
salary, are the same for all participants (except
for the Chief Executive Officer & President) as
follows:
Officers
Threshold performance - 25%
Target performance - 50%
Maximum level performance - 100%
Chief Executive Officer
Threshold performance - 27.5%
Target performance - 55%
Maximum level performance - 110%
2. Potential bonus awards are uncapped except for the
Section 162(m) limitation in C.2. below.
3. The Committee has the authority to reduce a bonus
amount unilaterally and retroactively, if needed,
to adjust for an unintended benefit or to address
a specific transaction, which occurs after the
beginning of the year.
4. The Compensation Committee of the Board of Directors
has the authority to set long term incentive awards
based on an individuals level in the organization.
The awards are based on DEBT/EBITDA and are awarded
in the form of cash and stock options.
C. Bonus Payments:
1. All bonuses are paid net of applicable withholding
taxes.
2. To comply with Section 162(m) of the Internal
Revenue Code, the maximum bonus which may be earned
by any participant in any year is limited as
follows:
Office of the President - $1.5 million
Officers - $1.0 million
D. Unusual Items:
1. For purposes of measuring the extent to which an
incentive goal is achieved, the following unusual
items shall generally be excluded unless the
Committee, in its sole judgment, determines the
items shall be included:
a) restructuring charges as defined by
authoritative accounting literature;
b) income or loss, including shares issued,
related to acquisitions and dispositions of
businesses, business segments or substantial
assets in the year of the transaction;
c) the current year effective of adopting
accounting pronouncements under generally
accepted accounting principles;
d) legal settlements, judgments, and/or tax
audit claims;
e) tax effect of statutory tax rate changes;
f) environmental remediation costs incurred as a
result of law changes affecting prior years;
g) accounting changes, extraordinary items, gain
or loss on disposal of a discontinued
operation and/or unusual items as reported
under Accounting Principles Board Opinion
No. 30;
h) gains or losses from the issuance or
retirement of financial instruments;
i) other unusual items which are required to be
shown as a separate line item on the income
statement; and
j) current year impact of share repurchase
programs.
E. Definitions:
1. Cash flow means one or more of the cash flow
components in the Statement of Cash Flows.
2. Earnings per share means "primary earnings per
share."
3. Earnings before interest and taxes (EBIT) means
operating income plus other income and expense
except for interest.
4. Return on capital is defined as net income for
the year divided by the average of total capital
at the beginning and end of the year. Total
capital is the sum of equity and long-term debt.
5. Return on equity is defined as net income for the
year divided by the average of equity at the
beginning and end of the year.
6. Return on net assets employed is defined as EBIT
divided by a 5-quarter average of total assets
less current liabilities.
7. Return on invested capital is defined as divisional
net income divided by a 5-quarter average of
invested capital.
8. Ratio of debt to EBITDA is defined as total company
debt divided by EBITDA (earnings before interest
and taxes plus depreciation and amortization). The
program uses a simple average of the four quarterly
results annualized.
IV. STOCK OPTION GRANTS:
Grants of stock options shall be made pursuant to the terms
of the Company's Equity Incentive Plan.
V. ADMINISTRATIVE PROVISIONS:
A. Participation for Newly Promoted or Newly Hired Officers:
Annual cash bonus is prorated based upon number of days
in the eligible position unless an exception is made at
the time of promotion or hire. The exception for a
participant at the Company is made by Office of the
President and for a Business participant by the
president of the Business.
B. Impact of Employment Termination on Bonus Payouts:
Participant must be employed on last day of calendar
year to earn a bonus except for the following
terminations, which may result in a prorated bonus
based upon number of days of participation during the
year. Any exceptions and a prorated bonus must be
approved by the Office of the President for a Company
participant and by the president of a Business for a
Business participant.
1. retirement, including early retirement;
2. death;
3. long-term disability;
4. transfer to another business within the Company; or
5. elimination of position or demotion for reasons
other than poor performance.
C. Bonuses:
1. Bonus amounts must be self-funded, i.e., they must
be accrued before determining whether a bonus is
earned.
2. Bonuses are subject to annual review/audit and
approval by the Committee.
3. Bonuses will be paid, net of withholding taxes,
after the Company releases its annual earnings for
the bonus year.
4. Bonuses may be denied in whole or in part by the
Committee, if in its judgment, the participant
took any actions, which were deemed to be
detrimental to the Business, to the Company or to
one of its subsidiaries.
D. Plan Administration and Termination:
1. The incentive plan is administered by the company
at the direction of the Committee, which reserves
the right to interpret, modify or terminate the
incentive plan. Changes to the plan will not
apply to bonuses, which have been earned but not
paid.
2. Participation in the incentive plan does not in
any way constitute a contract of employment and
does not guarantee continued employment with the
Company or any of its subsidiaries.
3. In the event of a change of control, the incentive
plan will normally end and prorated bonuses will
be calculated and paid, if any are earned. Change
in control at the Company shall be defined as in
the Company's Equity Incentive Plan.
4. Potential bonus awards may not be pledged,
encumbered, assigned, alienated, anticipated or
commuted in any manner by the participant.
5. The Committee reserves the right to offset any
earned bonus against any debts owed by the
participant to the Business, to the Company or to
any of the Company's subsidiaries.
ATTEST: GRAPHIC PACKAGING INTERNATIONAL
CORPORATION
___________________________ __________________________________
Marsha C. Williams
Vice President Human Resources
Dated: ____________________