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EXHIBIT 10.53
THE PACIFIC LUMBER AND
BRITT LUMBER COMPANIES
MANAGEMENT
INCENTIVE COMPENSATION PLAN
1996
A. PURPOSE
1. The intent of the plan is to encourage outstanding performance
by key executives related to successful and profitable
operations of The Pacific Lumber Company and Britt Lumber
Company (the "Company") for calendar year 1996.
2. The plan is designed to act as a major motivating force in
influencing a significantly higher level of sales and income
and to provide an equitable means of reward for individual
contributions to such improvement.
B. PARTICIPANTS
Participants are selected and approved from among The Pacific Lumber
and Britt Lumber management group (excluding the lumber sales group)
by the president of The Pacific Lumber Company. The plan has two
levels of participation (i) Tier I with a target range for payout from
five percent to 80 percent of base salary and (ii) Tier II with a
target range for payout from three percent to 45 percent of base
salary.
C. INCENTIVE COMPENSATION
There are two components to the total award:
1. The first component of the total award will be based upon
achieving the Company's 1996 operating income before
depletion, depreciation, amortization and corporate
administration charges ("adjusted Company operating income")
of $106.3 million. No incentive
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compensation based on adjusted Company operating income will be earned
unless 75 percent of the target is achieved. Incentive compensation
will be calculated as a percentage of the annual base salary of
eligible participants as of January 1, 1996, adjusted for months
worked during the year, based on the following table (interpolated as
necessary):
Actual adjusted 1996
annual operating Percent of 1-01-96
income annual salary
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% of plan ($ millions) Tier I Tier II
--------- ------------ ------ -------
75 79.7 16.5 3.0
80 85.0 18.0 4.0
85 90.3 19.0 5.0
90 95.6 21.0 6.0
95 101.0 23.0 7.0
100 106.3 (1996 plan) 25.0 8.0
105 111.6 40.0 15.0
110 116.9 55.0 (max.) 25.0
2. The second component of the total award will be based upon
achieving critical performance objectives during the year. The
award for each participant will be determined by the president
on a discretionary basis, based upon his evaluation of
relative contributions. For 1996, the following objectives are
targeted:
a. Development and implementation of a THP management
plan such that THP submissions for 1996 total at
least _______ gross MMBF and unlitigated THP
approvals at year end 1996 constitute a balance equal
to 100 percent of the 1997 requirements for logs to
mill.
b. Attainment of net lumber production goal of 367.8
MMBF (PALCO/Britt).
c. Net lumber sales of $228.0 million for 1996.
d. Implementation of the 1996 capital budget at less
than 110 percent of approved expenditures.
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e. Continue downward trend in lost-time injuries.
f. Development and implementation of a
marketing/distribution plan as outlined in the Sales
Incentive Compensation Plan (paragraph C.2.b-h)
These Company goals will be individualized for each participant as appropriate
and outlined in an attached memorandum.
Incentive compensation will be paid in accordance with achieving the above
objectives as follows:
Percent of 1-01-96
annual salary
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Achievement of objectives Tier I Tier II
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15% 5.0 3.0
30% 10.0 7.0
45% 15.0 8.5
60% 20.0 15.0
75% 21.0 16.0
80% 22.0 16.5
85% 23.0 17.0
90% 24.0 18.0
95% 24.5 19.0
100% 25.0 (max.) 20.0
105% 25.0 20.0
110% 25.0 20.0
D. PAYMENT PROVISIONS
1. The allocation of the incentive compensation must be approved
by the president of The Pacific Lumber Company and the
Compensation Committee of MAXXAM Inc.
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2. As soon as practicable after December 31, 1996, the amount of
incentive compensation will be calculated by the vice
president-finance and administration. The final number will be
available in January.
3. Incentive compensation will be paid in cash as soon as
practicable after December 31, 1996.
4. A participant whose employment is discontinued, for any reason
other than normal retirement, total disability, or death
before the end of the plan period, shall automatically forfeit
any claim to incentive compensation for the period. There are
no rights vested in any employee during the plan period.
5. A participant who retires, suffers total disability, or dies
during the course of 1996 will receive incentive compensation
prorated through the date of retirement, total disability, or
death. The incentive payment will be issued after the close
of the year along with all other payments from the plan.
6. In the event of the death of a participant following the end
of the plan year but before payment of any incentive
compensation which may be due, 100 percent of the applicable
incentive compensation shall be paid to the participant's
designated beneficiary, if one has been named, or else to the
participant's estate as outlined in the plan.
E. ADMINISTRATION
1. All provisions of the plan shall be subject to the approval of
the president of The Pacific Lumber Company.
2. The vice president-finance and administration of The Pacific
Lumber Company shall be responsible for general administration
of the plan.
3. Final decisions on all questions of computations, policy, or
interpretations of provisions of the plan shall be made by the
president of The Pacific Lumber Company.
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