1
Exhibit 6
CONFIDENTIAL TREATMENT*/
SHOREWOOD PACKAGING CORPORATION
1995 PERFORMANCE BONUS PLAN
The 1995 Performance Bonus Plan (the "Plan") of Shorewood Packaging
Corporation (the "Company") authorizes the grant of annual performance bonuses
(each, a "Performance Bonus") to Marc P. Shore, the Company's President and
Vice Chairman of the Board (the "Executive"), upon the attainment of certain
performance objectives set forth below. The Plan is administered by the
Compensation and Stock Option Committee (the "Committee").
1. DEFINITIONS. Certain defined terms in the Plan shall have the meanings
ascribed to them below:
(a) "Award Year" means each fiscal year of the Company during the five
year period beginning on May 1, 1995.
(b) "Earnings from Operations" shall mean, with respect to any fiscal
year of the Company, the Company's consolidated earnings from operations plus
depreciation and amortization, determined in accordance with the Company's
audited financial statements for that fiscal year. For purposes of computing
Earnings from Operations, (i) if during any Award Year the Company or any of
its subsidiaries acquires, directly or indirectly, any material business, the
Company's Earnings from Operations in the immediately preceding fiscal year and
that portion of such Award Year preceding the date of the acquisition shall be
adjusted to include therein the earnings from operations plus depreciation and
amortization of the acquired business during the applicable periods; and (ii)
if during any Award Year the Company or any of its subsidiaries disposes or
divests itself, directly or indirectly, of any material business, the Company's
Earnings from Operations in the immediately preceding fiscal year and that
portion of such Award Year preceding the date of the disposition shall be
adjusted to exclude therefrom the earnings from operations plus depreciation
and amortization of the divested business during the applicable periods.
(c) "First Tier Bonus" shall mean, with respect to any Award Year of
the Company, an amount determined in accordance with the following formula:
$200,000 multiplied by Y = Bonus
---
[*]
As used above, "Y" means the numeral (without regard to its value as a
percentage) used in expressing the percentage increase in the Company's
Earnings from Operations in that fiscal year as compared with the Company's
Earnings from Operations in the immediately preceding fiscal year (i.e., if
the percentage increase is [*], Y would be [*]). Y shall in no event exceed
[*].
__________________________________
*/Portions of this document have been omitted pursuant to an Application for
Confidential Treatment which was previously filed. Such omissions were filed
separately with the Securities and Exchange Commission together with such
Application for Confidential Treatment.
2
By way of illustration, if the Company's Earnings from Operations in fiscal
year 1 is $[*] and its Earnings from Operations in fiscal year 2 is $[*], Y
would be [*] (representing the percentage increase in Earnings from Operations
from fiscal year 1 to fiscal year 2). In such case, Executive's First Tier
Bonus in respect of fiscal year 2 would be $[*].
(d) "Second Tier Bonus" shall mean, with respect to any Award Year of the
Company, an amount determined in accordance with the following formula:
$1,600,000 multiplied by Z = Bonus
---
[*]
As used above, "Z" means the numeral (without regard to its value as a
percentage) used in expressing the percentage increase in the Company's
Earnings from Operations in that fiscal year as compared with the Company's
Earnings from Operations in the immediately preceding fiscal year minus [*]
(i.e., if the percentage increase is [*], Z would be [*]). Z shall in no event
exceed [*] or be less than 0.
By way of illustration, if the Company's Earnings from Operations in fiscal
year 1 is $[*] and its Earnings from Operations in fiscal year 2 is $[*], Z
would be [*] (representing the percentage increase in Earnings from Operations
from fiscal year 1 to fiscal year 2 minus [*]). In such case, Executive's
Second Tier Bonus in respect of fiscal year 2 would be $[*].
___________________________
*/ Portions of this document have been omitted pursuant to an Application for
Confidential Treatment which was previously filed. Such omissions were filed
separately with the Securities and Exchange Commission together with such
Application for Confidential Treatment.
2
3
2. PERFORMANCE BONUS. With respect to each Award Year in which the
Company's Earnings from Operations equal or exceed [*] in the immediately
preceding fiscal year, Executive shall be entitled to a Performance Bonus in an
amount equal to the sum of (i) $200,000 plus (ii) if the Company's Earnings
from Operations in that fiscal year exceed [*] in the immediately preceding
fiscal year, the First Tier Bonus (determined in accordance with the Section
1(c) above) plus (iii) if the Company's Earnings from Operations in that fiscal
year exceed [*], the Second Tier Bonus (determined in accordance with Section
1(d) above). The Performance Bonus payable to Executive in respect of any
Award Year shall in no event exceed $2,000,000. No Performance Bonus shall be
payable in respect of any Award Year in which the Company's Earnings from
Operations do not equal or exceed [*] in the immediately preceding fiscal year.
The determination of the amount of the Performance Bonus (the "Bonus
Determination") payable to Executive in respect of any Award Year covered by
the Plan shall be made by the Compensation Committee based upon the audited
financial statements of the Company with respect to such Award Year. The Bonus
Determination shall be made by the Compensation Committee at its first
regularly scheduled meeting after the audited financial statements of the
Company are available to the Board of Directors. The Performance Bonus so
determined shall be payable to Executive in a single lump sum no later than
fifteen days after the Bonus Determination is made. The Bonus Determination
shall be final, conclusive and binding for all purposes.
3. PARTIAL YEARS. Executive's Performance Bonus shall be reduced
proportionately in respect of any fiscal year in which Executive is not
employed by the Company for the entire fiscal year, except that no Performance
Bonus shall be payable to Executive in respect of any fiscal year in which his
employment by the Company is terminated for cause. The provisions hereof
notwithstanding, the termination of Executive's employment by the Company for
any reason shall not affect the Performance Bonus otherwise payable to him
under the Plan in respect of any fiscal year preceding the fiscal year in which
such termination occurs. The Executive shall not be entitled to receive any
Performance Bonus in respect of any period after he ceases being employed by
the Company for any reason.
_______________________
*/ Portions of this document have been omitted pursuant to an Application for
Confidential Treatment which was previously filed. Such omissions were
filed separately with the Securities and Exchange Commission together with
such Application for Confidential Treatment.
3
4
4. ADMINISTRATION. (a) The Plan shall be administered and interpreted by
the Compensation Committee; provided, however, that, notwithstanding any other
provision of the Plan that might appear to provide to the contrary, the Plan
shall be operated in such manner that awards paid pursuant to the Plan shall be
fully tax-deductible by the Company pursuant to the exception for qualified
performance-based compensation provided for under Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"). All determinations of
the Compensation Committee in respect of the interpretation and administration
of the Plan shall be final, conclusive and binding for all purposes. In making
any such determinations, the Committee shall be entitled to rely on opinions,
reports or statements of officers or employees of the Company and of counsel,
public accountants and other professional experts and persons. The Committee
may adopt such rules as it may deem appropriate regarding the withholding of
taxes on payments to the Executive.
(b) The Plan shall be governed by the laws of the State of New York and
applicable Federal law.
5. EFFECTIVE DATE; APPLICATION. The Plan shall become effective as of May
1, 1995, subject to approval by the Company's stockholders entitled to vote
thereon. The Plan shall apply to each fiscal year of the Company during the
five year period beginning on the effective date of the Plan.
6. ADJUSTMENTS. In order to assure the incentive features of the Plan and
to avoid distortion in the operation of the Plan, the Committee may make
adjustments in the performance criteria in respect of any Award Year whether
before or after the end of such Award Year to compensate for or reflect any
extraordinary changes which may have occurred during the Award Year or the
immediately preceding fiscal year which alter the basis upon which performance
levels were determined or to comply with government regulations. Such changes
include the following: extraordinary operating results, accounting changes, and
the impact of material events that have been publicly disclosed.
Notwithstanding anything to the contrary, the Committee shall not make any
adjustment which would increase the award to the Executive if such adjustment
would render any amount payable to Executive nondeductible under Section 162(m)
of the Code.
7. NO RIGHT TO EMPLOYMENT. The Plan shall not confer upon the Executive
any right to continue in the employ of the Company or affect in any way the
right of the Company to terminate Executive's employment at any time.
8. CERTIFICATION BY COMMITTEE. The Committee must certify that performance
thresholds have been satisfied before any payments may be made under the Plan.
4