Exhibit 10.A
P. H. GLATFELTER COMPANY
MANAGEMENT INCENTIVE PLAN
AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1994
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P. H. GLATFELTER COMPANY
MANAGEMENT INCENTIVE PLAN
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AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1994
1. Purpose of the Plan
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The purpose of the Management Incentive Plan, hereinafter called the
"Plan", is to provide an incentive to greater efforts on the part of key
salaried employees to increase profits of P. H. Glatfelter Company,
hereinafter, together with its subsidiaries, called the "Company".
The underlying objectives of the Plan are as follows:
(a) Maximize the annual return on shareholders' equity.
(b) Promote and reward management teamwork at both corporate and mill
levels.
(c) Enable the Company to attract and retain a talented management team.
(d) Assure that Plan awards are at risk annually.
(e) Reward key mill management personnel on the basis of both mill and
corporate financial results.
(f) Provide above-average incentive award potential to key salaried
employees of the Company whose base salaries are generally below
average market rates.
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2. Profit Centers of the Plan
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In order to accomplish the objectives of the Plan, the Company and each of
its mills shall be treated as a separate profit center for the purpose of
rewarding those employees, who through the exercise of their
responsibilities, are in a position to have a significant bearing on the
success and profitability of their profit center, and therefore on the
profitability of the Company. In addition, a Glatfelter Paper Group profit
center shall represent a combination of the Spring Grove and Neenah mill
profit centers. The profit centers are identified as follows:
Corporate Profit Center
Glatfelter Paper Group Profit Center
Spring Grove Mill Profit Center
Neenah Mill Profit Center
Ecusta Mill Profit Center
3. Amendment or Termination of the Plan
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This Plan is an amendment and restatement of the P. H. Glatfelter Company
Management Incentive Plan and shall continue in force from year to year
until amended, modified or terminated. The Company reserves the right by
action of its Board of Directors or the Compensation Committee thereof,
hereinafter called the "Committee", at any time to amend or modify the Plan
in any respect or to terminate the Plan in its entirety, provided that, if
the
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Plan is in effect at the beginning of a fiscal year, it may not be
terminated or amended for such year.
4. Administration of the Plan
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The management of the Plan shall be vested in the Committee. The majority
of the members of the Committee at any time in office shall constitute a
quorum for the transaction of business at any meeting. Any determination
or action of the Committee may be made or taken by a majority of its
members present at any meeting at which a quorum is present or without a
meeting by unanimous written consent executed by all the members then in
office.
5. Participants in the Plan
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(a) The participants in the Plan and the profit center to which they are
assigned for each fiscal year shall be proposed by the Chief Executive
Officer and approved by the Committee on or before the December 31
immediately preceding such fiscal year. In this respect, the action of the
Committee shall be final. Participation is limited to selected management
and highly compensated salaried employees of the Company. Nothing herein
contained shall be construed as giving any salaried employee the right to
participate in the Plan, except after approval by the Committee, and then
his participation shall be subject to all the provisions of the Plan.
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(b) The criteria that will be considered by the Committee in approving a
participant shall include position responsibilities, organizational
reporting relationship, current salary grade and/or rate, individual
performance expectations, and competitive practices.
(c) If a participant shall transfer from one profit center to another
during the year, his incentive award shall be determined on the basis of
the financial results of each profit center for each fiscal year, prorated
based on service to each profit center during such fiscal year. The
participant's salary grade at the time he is approved by the Committee as a
participant in the Plan for such year shall be such participant's salary
grade for purposes of determining the maximum, target and minimum awards
for each profit center.
(d) If a participant's employment by the Company should terminate during
the fiscal year by reason of his death, retirement or permanent disability,
his incentive award shall be determined on the basis of the financial
results of his profit center for such fiscal year and his base salary
midpoint for such fiscal year, prorated to reflect his services prior to
his death, retirement or permanent disability, and shall be paid either to
him or as appropriate, his beneficiary as designated under the Company's
Group Life Insurance Plan. A participant who has been removed from the
payroll of the Company during the fiscal year for any reason, other than
his death, retirement, or permanent disability, shall not participate in
the Plan for such fiscal year, unless the
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Committee, in its sole discretion, determines that he shall so
participate. The decision of the Committee in this regard shall be final.
(e) In consideration of the payments to be made in accordance with the
provisions of the Plan, the participants may not be participants in the
Company's Conference Group award program.
6. Determination of Incentive Compensation Awards
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(a) The Plan shall provide incentive awards based on certain measurements
of profitability in each of the Company's profit centers. Such
profitability shall be measured by the return on average shareholders'
equity (ROSE) in the case of the Corporate Profit Center and by both the
return on average shareholders' equity (ROSE) of the Company and the return
on average capital employed (ROCE) for the applicable mill profit center.
In the case of the Glatfelter Paper Group, the financial results of the
Spring Grove and Neenah mill profit centers will be combined for purpose of
calculating return on average capital employed. The determination of
profit center profitability shall be based on the audited consolidated
financial statements of the Company and on the Company's internal financial
statements for each mill after the audit adjustments have been applied.
(b) The amount of an individual's award shall be based on a percentage of
such individual's base salary midpoint for the salary grade approved for
him by the Committee. If such salary midpoints are revised at any time in
a fiscal year, the Committee will revise the midpoints applicable to such
year.
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The incentive award as a percentage of base salary midpoint will vary based
on the applicable ROSE and ROCE levels achieved for the Plan year.
(c) The ROSE and ROCE factors are a measure of profitability and will be
established in the operating rules for each profit center, adopted annually
by the Committee in accordance with Paragraph 8. The incentive award shall
equal the base salary midpoint multiplied by the Incentive Award Factor
which will vary in relationship to the actual ROSE and ROCE levels achieved
for the year.
7. Payment of Individual Incentive Awards
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(a) Each year after the Committee has approved the participants in the
Plan for the following year in accordance with Paragraph 5(a), the
participants shall make an election by February 1 of such following year to
receive their incentive award in cash or to defer the receipt of 25%, 50%,
75% or 100% of the award to a future period, specifying irrevocably the
timing of the future payment(s) in accordance with the deferred options set
forth on Schedule A, hereto. The amount of deferred awards shall be
adjusted at the end of each calendar quarter by crediting the cumulative
deferred awards with interest for the quarter based on the prime rate of
interest on the last business day of the quarter at Morgan Guaranty Trust
Company of New York (or such comparable rate as is determined by the
Committee if such prime rate is unavailable or, if in the opinion of the
Committee it no longer reflects the rate of interest on such bank's demand
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loans to its most credit-worthy customers). The interest credit shall be
earned from the date when the award would have been paid if not deferred
and shall be compounded on the accumulated award and accrued interest.
Should a deferred award be paid during a quarter, interest on the amount of
such payment shall be accrued at the rate used for the immediately
preceding quarter.
(b) Cash incentive awards shall be paid annually as promptly as
practicable after the Company's certified public accountants have completed
their examination of the Company's year-end consolidated financial
statements.
(c) Deferred incentive awards shall be paid on the first Monday in April
of each year pursuant to a participant's election to defer receipt of his
award. In the event a participant who has deferred an award determines
that he has a financial hardship which necessitates the acceleration of the
payment of the deferred award, he shall submit his request to release the
funds to the Committee which shall consider the circumstances and, in its
sole discretion, determine whether the request shall be approved.
(d) If a participant separates from the Company before age 55, or after
age 55 without being vested by the terms of the Company's Pension Plans for
Salaried Employees, including the Supplemental Executive Retirement Plan
(collectively, the "Pension Plans"), such participant will receive the
unpaid amount of his cumulative deferred award(s) in a lump sum within 30
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days of his separation date or at the sole discretion and option of the
Committee, as stipulated on his election form. If such participant
separates after age 55 and is vested under the terms of the Company's
Pension Plans, his deferred award(s) will be paid as stipulated on his
election form(s). If a participant should die before his deferred award(s)
has been completely paid out, the unpaid amount will be paid in a lump sum
to his designated beneficiary, as designated under the Company's Group Life
Insurance Plan, on a timely basis after his death.
8. Management Incentive Plan Adjustment Supplement
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The Company will supplement the basic monthly pension payable under the
Company's Pension Plans, with respect to an employee who is a participant
in the Plan and elected to defer incentive awards in accordance with
Paragraph 7 of the Plan as provided in the Plan of Supplemental Retirement
Benefits for the Management Committee.
9. Management Incentive Plan Operating Rules
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On or prior to December 31 immediately preceding each fiscal year, the
Committee shall adopt preliminary operating rules for each of the profit
centers for such fiscal year, which operating rules shall be adjusted by
the Committee and become final promptly after the completion of the audit
of the Company's consolidated financial statements for the fiscal year
immediately preceding the fiscal year to which such operating rules relate.
These operating rules will establish maximum, target and minimum Incentive
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Award Factors for each salary grade and the corresponding maximum, target
and minimum rates of return on average shareholders' equity and rates of
return on average capital employed for each of the individual profit
centers, based on historical and anticipated rates of return for the profit
centers, (or alternative awards where there are unusual operating
circumstances) and such other administrative and procedural rules which the
Committee considers appropriate.
10. Definitions
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For the purpose of determining the incentive awards under the Plan, the
following definitions shall apply:
(a) Return on Average Shareholders' Equity (ROSE) shall mean Incentive
Income divided by Average Shareholders' Equity.
(b) Incentive income shall mean income before income taxes as reported for
the fiscal year in the Company's audited consolidated financial
statements...
(i) before provision is made for the amounts paid or payable under
the Plan, the Employees' Profit Sharing Plans, and the Spring
Grove Conference Group award program, and
(ii) after such adjustment, if any, as shall be made to exclude, to
the extent that the Committee in its sole discretion may
determine, the whole or any part of any item which is both
unusual in nature and infrequent in occurrence.
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(c) Average Shareholders' Equity shall mean the average of the
shareholders' equity as reported in each of the Company's monthly internal
financial statements during the fiscal year.
(d) The "Incentive Award Factor" shall be the percentage of base salary
midpoint for each salary grade corresponding to the maximum, target and
minimum rates of return established for the corporate, mill, and the paper
group profit centers in the operating rules.
(e) Return on Capital Employed (ROCE) shall mean Operating Profit divided
by Average Capital Employed. ROCE shall be based on the Company's internal
financial reports for each of the Spring Grove, Neenah, and Ecusta mills
after the year-end audit adjustments by the Company's independent certified
public accountants have been applied to the accounting records and related
reports. In the case of the Spring Grove mill profit center, the Return on
Capital Employed shall be based on the consolidated financial reports for
the Spring Grove mill and The Glatfelter Pulp Wood Company. In the case of
the Glatfelter Paper Group profit center, the Return on Capital Employed
shall be based on the consolidated financial reports for the Spring Grove
mill, The Glatfelter Pulp Wood Company, and the Neenah mill.
(f) Operating Profit shall mean operating profit as reported for the
fiscal year in the Company's internal financial statements by mill and for
The Glatfelter Pulp Wood Company...
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(i) before provision is made for the amounts paid or payable under
the Plan, the Employees' Profit Sharing Plans, and the Spring
Grove Conference Group award program, and
(ii) after such adjustment, if any, as shall be made to exclude, to
the extent that the Committee in its sole discretion may
determine, the whole or any part of any item which is both
unusual in nature and infrequent in occurrence.
(g) Average Capital Employed shall mean the sum of the average of
inventories and net property, plant, and equipment as shown in the
Company's monthly internal financial statements by mill and for the
Glatfelter Pulp Wood Company during the fiscal year.
(h) Retirement shall mean voluntary separation from service by a
participant who has achieved an age whereby he is eligible for and has
elected to receive early retirement under the Company's Pension Plans.
(i) Disability shall mean a disability due to any medically determinable
physical or mental impairment that prevents a participant from fulfilling
the duties that such participant was performing at the time of the
occurrence of such disability and which can be expected to result in death
or which has lasted or can be expected to last for a continuous period of
more than twelve months, as determined by the Committee in its sole
discretion.
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11. Rights Not Transferable
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Rights to incentive cash awards and deferred incentive awards are not
transferable by a participant except upon the death of the participant by
operation of will or the laws of intestacy.
12. Funding
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The Plan is not funded. All awards that are not received in cash shall
remain as part of the general assets of the Company and shall not be deemed
held in trust for the benefit of the participant.
13. Withholding of Applicable Taxes
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The Company shall have the right to withhold amounts from incentive cash
awards and deferred incentive awards as shall be required to be withheld by
the Company pursuant to any statute or other governmental regulation or
ruling.
14. Conclusion
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The interpretation of the Plan or any provision thereof or the operating
rules made by the Committee shall be binding upon both the Company and
every participant in the Plan. While it is the intention of the Company to
provide a fair and reasonable basis for the determination of incentive
compensation awards and the selection of the participants, the Plan is not
an employment contract between the Company and the salaried employees or
any participants and shall not constitute an agreement by the Company to
continue any participant in its employ for any period of time
notwithstanding
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that the termination of the employment of a participant during a fiscal
year will preclude an incentive award to such participant for such year.