EXHIBIT 10(c)
WAUSAU PAPER MILLS COMPANY
CORPORATE MANAGEMENT INCENTIVE PLAN
SECTION 1. ESTABLISHMENT AND PURPOSE OF THE PLAN
1.1 ESTABLISHMENT OF THE PLAN. Wausau Paper Mills Company hereby
establishes the Corporate Management Incentive Plan effective for the fiscal
year beginning September 1, 1986 and ending August 31, 1987 and for each
fiscal year thereafter until the Plan is terminated.
1.2 PURPOSE OF THE PLAN. The purpose of the Plan is to reward
participating employees for efforts to increase the Company's return on
equity and for attaining management objectives established for each
Participant in accordance with the terms of the Plan.
SECTION 2. DEFINITIONS
2.1 DEFINITIONS. Whenever used in the Plan, the following terms shall
have the respective meanings set forth below, unless otherwise expressly
provided herein, and when the defined meaning is intended, the term is
capitalized:
(a) The term "ACHIEVED PERFORMANCE LEVEL" for a fiscal year shall mean
that percentage (rounded to the nearest .1%) obtained by dividing
actual ROE for the fiscal year by the Target Performance Level for
the year.
(b) The term "CEO" shall mean the Chief Executive Officer of the
Company.
(c) The term "COMPANY" shall mean Wausau Paper Mills Company and its
subsidiaries.
(d) The term "EXECUTIVE COMMITTEE" shall mean the Executive Committee
of the Board of Directors of the Company, as from time to time
constituted.
(e) The term "INDIVIDUAL PERFORMANCE OBJECTIVE" shall mean, with
respect to each Participant who is an executive officer of the
Company, each management objective established for such Participant
by the CEO pursuant to Section 5.
(f) The term "PARTICIPANT" shall mean each employee of the Company who
has been selected by the Executive Committee to participate in the
Plan.
(g) The term "PLAN" shall mean the Wausau Paper Mills Company Corporate
Management Incentive Plan as set forth herein.
(h) The term "ROE" shall mean, with respect to each fiscal year of the
Company, the Company's return on equity capital expressed as the
percentage determined by dividing the Company's consolidated net
earnings by the Company's average total shareholders' equity for
the fiscal year. Consolidated net earnings shall be defined as the
consolidated net earnings as reported in the Company's Form 10-K
Annual Report, but before the after-tax effect of all bonus
accruals, profits from LIFO decrements, and the gain and loss on
fixed assets. Average total shareholders' equity shall be computed
by taking the simple average of beginning and ending shareholders'
equity for the fiscal year. The calculation of consolidated net
earnings and average equity for bonus purposes may be adjusted for
unusual or non-recurring items at the sole discretion of the
Executive Committee. All such numbers shall be computed in
accordance with generally accepted accounting principles in a
manner consistent with the Company's audited financial statements.
(i) The term "TARGET PERFORMANCE LEVEL" shall mean, for each fiscal
year, the ROE for the year which is established by the Executive
Committee as the base ROE target against which ROE performance is
to be compared (and by which the Achieved Performance Level shall
be computed) in order to determine the existence or amount of
incentive awards to be paid to Participants.
(j) The term "THRESHOLD PERFORMANCE LEVEL" shall mean such percentage
of ROE as may, from time to time and at any time, be established by
the Executive Committee pursuant to Section 4.
SECTION 3. DETERMINATION OF TARGET PERFORMANCE LEVEL
3.1 DETERMINATION OF TARGET PERFORMANCE LEVEL. On or before October
1st of each fiscal year, the Executive Committee shall establish and
communicate to Participants the Target Performance Level for such year.
3.2 TARGET PERFORMANCE LEVEL FACTORS. In establishing the Target
Performance Level for any fiscal year the Executive Committee shall
consider, among other factors, the following:
(a) The ROE at budgeted future consolidated net earning levels;
(b) Changes from prior years in the size and the composition of the
Company's capital structure;
(c) The historical ROE for the Company;
(d) The historical ROE for companies of like size and operating
characteristics of the Company, as determined by the Executive
Committee; and
(e) The Company's cost of equity capital, as from time to time and at
any time determined by the Executive Committee, and the Executive
Committee's determination of appropriate returns in excess of the
Company's costs of equity capital.
The importance of any one or more of the factors described herein shall be
determined in the sole discretion of the Executive Committee which may
choose to emphasize or de-emphasize the importance of any one or more of
such factors or to consider additional factors if the Executive Committee
deems it appropriate and in the best interests of the Company and to carry
out the purposes of the Plan.
SECTION 4. THRESHOLD PERFORMANCE LEVEL
4.1 ADJUSTMENTS. From time to time and at any time, the Executive
Committee may evaluate and adjust the minimum ROE which constitutes the
Threshold Performance Level. In making such evaluations and adjustments,
the Executive Committee shall consider such factors as it deems appropriate,
including, but not limited to the following:
(a) The Company's cost of equity capital, as from time to time and at
any time determined by the Executive Committee; and
(b) the historical and expected future ROE of the Company.
SECTION 5. INDIVIDUAL PERFORMANCE OBJECTIVES
5.1 ESTABLISHMENT OF OBJECTIVES. Prior to October 1st of each fiscal
year, the CEO shall establish not less than three, nor more than five,
Individual Performance Objectives for each Participant who is an executive
officer, considering the Participant's job responsibilities and the manner
in which the Participant can and is expected to most directly and
significantly affect the Company's overall performance and ROE.
5.2 DOLLAR VALUE OF INDIVIDUAL PERFORMANCE OBJECTIVES. At the same
time as the CEO establishes an Individual Performance Objective, the CEO
shall determine the dollar amount which, if the Participant fully attains
such Individual Performance Objective, shall be paid as incentive
compensation to the Participant pursuant to Section 6; provided, however,
that the total amount attributable to full attainment of all Individual
Performance Objectives for any one Participant shall not exceed $15,000.
SECTION 6. INCENTIVE AWARDS
6.1 FISCAL YEAR PERFORMANCE. Each fiscal year, as soon as reasonably
possible following the availability to the Executive Committee of the
Company's audited financial statements for the fiscal year, the Executive
Committee shall determine:
(a) ROE for the fiscal year; and
(b) The Achieved Performance Level for the fiscal year.
6.2 DETERMINATION OF ROE INCENTIVE AWARD. Each Participant shall be
entitled to receive an ROE Incentive Award in an amount equal to (1) the
Participant's base salary for the period he was a Participant, as determined
prior to any award under this Plan, multiplied by (2) the percentage in
Column (2) of Attachment A which is set forth opposite the percentage in
Column (1) of Attachment A which corresponds to the Achieved Performance
Level for such fiscal year; provided, however, that:
(a) No ROE Incentive Award shall be payable in any fiscal year in which
ROE does not equal or exceed the Threshold Performance Level.
(b) If the Achieved Performance Level for the fiscal year is not
expressed as a whole integer (and therefore not specifically set
forth in Column (1) of Attachment A), the applicable percentage of
base salary used to determine a Participant's ROE Incentive Award
shall be determined by interpolation, based on the percentages set
forth in Column (2), of the percentage which would correspond to
the Achieved Performance Level set forth in Column (1) if Column
(1) specified Achieved Performance Levels at each .1% between 80%
and 120%.
(c) In the case of Participants other than executive officers of the
Company, the amount of ROE Incentive Award otherwise determined
above shall be multiplied by 15% or such other percentage, not
above 100%, as may be determined prior to the beginning of any
fiscal year by the President of the Company in order to determine
the amount of such Participants' ROE Incentive Award for such
fiscal year.
6.3 INDIVIDUAL PERFORMANCE INCENTIVE AWARDS. As soon as reasonably
possible following the determination of ROE Incentive Awards for the fiscal
year, the CEO will evaluate and determine the percentage attainment of each
Participant's Individual Performance Objectives. The Participant shall
receive, with respect to each Individual Performance Objective, an
Individual Performance Incentive Award in an amount equal to the aggregate
of (1) the dollar value payable for full attainment of the Individual
Performance Objective multiplied by (2) the percentage attainment of such
Individual Performance Objective as determined by the CEO.
6.4 PAYMENT OF AWARDS. Payment of ROE Incentive Awards and Individual
Performance Incentive Awards shall be made by the Company to the Participant
or his beneficiary (as provided for in Section 7) as soon as
administratively feasible following the determination of the amount of such
awards.
6.5 PARTICIPATION FOR LESS THAN ENTIRE FISCAL YEAR. A Participant who
(1) is a Participant on the last day of a fiscal year, but was not eligible
to participate in the Plan for the entire year, (2) transfers to a position
in the Company or any subsidiary thereof and is thereafter not eligible to
participate in the Plan or (3) incurs a termination of employment on or
before the last day of the fiscal year because of (A) normal, early or late
retirement (or prior to becoming eligible for a disability retirement
benefit) under the terms of any pension plan maintained by the Company or
any subsidiary thereof as part of a trust qualified under section 401(a) of
the Internal Revenue Code of 1986, as amended, or (B) death shall be
entitled to receive a prorated ROE Incentive Award for such fiscal year
based on the number of days in the fiscal year in which such Participant
participated in the Plan during such fiscal year. No Individual Performance
Incentive Award shall be payable to a Participant under the Plan for any
fiscal year in which such Participant was not eligible to receive an ROE
Incentive Award.
SECTION 7. BENEFICIARY DESIGNATION
7.1 BENEFICIARY DESIGNATION.
(a) Each Participant may from time to time and at any time designate,
upon such forms as may be provided or approved for that purpose by
the Executive Committee, a beneficiary or beneficiaries who are to
receive any incentive award which has been earned, but not paid to
such Participant at the time of his death, but the designation of a
beneficiary or beneficiaries shall not be effective for any purpose
unless and until it has been filed by the Participant with the
Company.
(b) In the event that a Participant shall not designate a beneficiary
or beneficiaries in accordance with the terms of the Plan, or if
for any reason the most recent such designation shall be legally
ineffective, or if such beneficiary or beneficiaries predecease the
Participant, then for all purposes of the Plan, any payment due a
Participant at the time of his death shall be made by the Company
to the personal representative of the Participant's estate.
SECTION 8. ADMINISTRATION
8.1 PLAN ADMINISTRATOR. The Executive Committee shall act as the plan
administrator of the Plan and shall have sole and complete authority to
interpret and implement the provisions of the Plan, including the sole
discretion as to matters of eligibility to participate and to matters
relating to the eligibility to receive any incentive awards, the
determination of Target Performance Levels and the determination of
Threshold Performance Levels.
SECTION 9. AMENDMENTS AND TERMINATION
9.1 AMENDMENTS AND TERMINATION. The Executive Committee or the Board
of Directors of the Company may, from time to time and at any time, amend or
terminate the Plan; provided, however, that such amendment or termination
may not result in the forfeiture of any incentive award earned with respect
to any fiscal year preceding the fiscal year in which such amendment or
termination is adopted. Any amendment or termination may be made effective
with respect to any fiscal year in which such action is adopted.
SECTION 10. EMPLOYMENT RIGHTS
10.1 EMPLOYMENT RIGHTS. Nothing contained in the Plan shall be
construed as conferring a right upon any employee to be continued in the
employment of the Company or to remain as a Participant in the Plan after
amendment or termination of the Plan.
SECTION 11. APPLICABLE LAW
11.1 APPLICABLE LAW. The Plan shall be construed, administered and
governed in all respects under and by the laws of the State of Wisconsin.
IN WITNESS WHEREOF, this Plan, as amended to incorporate all amendments
effective through September 18, 1996, has been executed as of the 18th day
of September, 1996, by and for the Company by its duly authorized officer.
WAUSAU PAPER MILLS COMPANY
By: DANIEL D. KING
Daniel D. King
President and Chief Executive
Officer
WAUSAU PAPER MILLS COMPANY
CORPORATE MANAGEMENT INCENTIVE PLAN
ATTACHMENT A
(1) (2)
ACHIEVED ROA INCENTIVE
PERFORMANCE AWARD AS PERCENTAGE
LEVEL OF SALARY
80.00% 15.00%
81.00% 16.75%
82.00% 18.50%
83.00% 20.25%
84.00% 22.00%
85.00% 23.75%
86.00% 25.50%
87.00% 27.25%
88.00% 29.00%
89.00% 30.75%
90.00% 32.50%
91.00% 34.25%
92.00% 36.00%
93.00% 37.75%
94.00% 39.50%
95.00% 41.25%
96.00% 43.00%
97.00% 44.75%
98.00% 46.50%
99.00% 48.25%
Target Target
100.00% 50.00%
101.00% 52.50%
102.00% 55.00%
103.00% 57.50%
104.00% 60.00%
105.00% 62.50%
106.00% 65.00%
107.00% 67.50%
108.00% 70.00%
109.00% 72.50%
110.00% 75.00%
111.00% 77.50%
112.00% 80.00%
113.00% 82.50%
114.00% 85.00%
115.00% 87.50%
116.00% 90.00%
117.00% 92.50%
118.00% 95.00%
119.00% 97.50%
120.00% 100.00%