Exhibit 10.3
INTERNATIONAL PAPER
COMPANY
RESTRICTED STOCK
AND
DEFERRED COMPENSATION
PLAN
FOR NON-EMPLOYEE
DIRECTORS
Effective May 11,
2009
INTERNATIONAL PAPER
COMPANY
RESTRICTED STOCK AND DEFERRED
COMPENSATION PLAN
FOR NON-EMPLOYEE
DIRECTORS
1. Purpose and Effective Date of
Plan
This plan shall be known as the
International Paper Company Restricted Stock and Deferred
Compensation Plan for Non-Employee Directors (the
“Plan”). The purpose of the Plan is to enable
International Paper Company (“International Paper”) to
attract and retain persons of outstanding competence to serve as
non-employee directors of International Paper, and to permit such
non-employee directors to defer receipt of all or a portion of
their annual retainer and committee fees, payable in cash or
restricted shares of International Paper common stock, for services
in 2005 and thereafter.
Prior to January 1, 2007,
equity compensation to non-employee directors was governed by the
International Paper Company Restricted Stock Plan for Non-Employee
Directors, originally effective January 1, 1988; and,
deferrals of cash and equity compensation by non-employee directors
were governed by the International Paper Company Nonfunded Deferred
Compensation Plan for Directors, originally effective
December 11, 1973. Effective January 1, 2007, these two
plans were combined into this Plan and renamed the International
Paper Company Restricted Stock and Deferred Compensation Plan for
Non-Employee Directors.
The Plan was amended, effective
January 1, 2008, to conform the date used to determine the
number of shares awarded for the fixed dollar value of compensation
to the last business day immediately preceding the first day of the
Performance Year. This was intended to conform the date used to
determine the number of shares for the equity retainer under
Section 3 with the date that has been used to determine the
number of shares for the cash retainer under
Section 4.
Effective May 11, 2009, this
plan became a subplan of the International Paper Company 2009
Incentive Compensation Plan (“ICP”), consisting of a
program for the grant of restricted stock under Article 9 of the
ICP and referenced under Section 4.3 of the ICP.
This Plan is a non-funded,
non-qualified deferred compensation plan that is intended to comply
with Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”). The Plan is not subject to full
protection under the Employee Retirement Income Security Act of
1974, as amended (“ERISA”).
2. Eligibility
Participation in this Plan is
limited to persons who serve as members of the Board of Directors
(the “Board”) of International Paper and who are not
employees of International Paper or its subsidiaries
(“Participants”). An employee-director who retires from
employment with International Paper (and its subsidiaries) shall
become eligible to participate in this Plan upon his or her
re-election as a non-employee director.
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3. Equity Compensation
(a) Awards of restricted common
stock of International Paper are made to each Participant on an
annual basis on the day of the Annual Meeting of Shareowners of
International Paper in an amount equal to: (i) a fixed dollar
value determined by the independent members of the Board based on a
review of competitive market practices of International
Paper’s comparator peer group of companies for compensation
analysis (the “Compensation Comparator Group”), divided
by (ii) the closing market price of common stock of
International Paper as reported for the New York Stock Exchange
Composite Transactions on the last business day immediately
preceding the first day of the Performance Year. The fixed dollar
value for the annual restricted stock awards shall be set forth on
Exhibit A hereto, as approved and changed from time to time
by the independent members of the Board.
(b) For purposes of this Plan, a
“Performance Year” shall mean the approximately
one-year period beginning on the date of the Annual Meeting of
Shareowners of International Paper for a given year and ending on
the last business day immediately preceding the next Annual Meeting
of Shareowners of International Paper.
(c) A Participant who is elected by
the Board to fill a vacancy during a Performance Year shall receive
a number of shares of restricted common stock representing a pro
rata portion of the number of shares of restricted common stock
awarded to non-employee directors for the Performance Year in which
such Participant is elected, determined by dividing the number of
full months of eligible service during the Performance Year by the
number twelve (12).
(d) Each award of restricted shares
under this Plan shall be immediately registered in book entry form
in the name of the Participant but shall be expressly subject to
all of the restrictions, service provisions, and all other terms
and conditions set forth in Section 6 of this Plan and the
terms and conditions of the ICP, of which this Plan is a subplan.
In the event of any actual or alleged conflict between the
provisions of the ICP and the provisions of this Plan as it relates
to restricted shares, the provisions of the ICP shall be
controlling and determinative.
4. Cash
Compensation
(a) Each non-employee director of
the Board shall receive an annual cash retainer (“Cash
Retainer Fee”) in an amount determined by the independent
members of the Board. Each non-employee director who serves as
Chair of a standing committee of the Board, or as a member of a
committee designated by the Board to have member fees, shall
receive an additional annual cash retainer (“Committee
Fee”, which together with the Cash Retainer Fee shall be
referred to as “Cash Compensation”). The amount of the
Cash Compensation shall be determined by the independent members of
the Board based on a review of competitive market practices of the
International Paper’s Compensation Comparator Group. The Cash
Retainer Fee and Committee Fees shall be set forth on Exhibit
A hereto, as approved and changed from time to time by the
independent members of the Board,
(b) Each non-employee director of
the Board may elect, in the form and manner prescribed by
International Paper, to receive shares of restricted stock of
International Paper in lieu of all or a portion of his or her Cash
Compensation. A non-employee director who elects to
receive
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shares of restricted stock in lieu of Cash
Compensation will receive a number of shares of restricted stock
determined by dividing (A) the sum of (i) the portion of
Cash Compensation elected to be received in the form of restricted
stock, plus (ii) an additional 20% of the Cash Retainer Fee,
by (B) the closing market price of common stock of
International Paper as reported for the New York Stock Exchange
Composite Transactions on the last business day immediately
preceding the first day of the Performance Year.
5. Deferral
Elections
(a) Prior to the first day of a
calendar year, non-employee directors may elect to defer in the
form of restricted stock units (“RSUs”) receipt of all
or a portion of shares of restricted stock or Cash Compensation for
services on the Board in the following Performance Year by filing
an initial deferral election notice in the manner and form
prescribed by International Paper (the “Initial Deferral
Election Notice”).
(b) Non-employee
directors newly elected to the Board may submit an Initial Deferral
Election Notice by the 30 th day after becoming eligible to
participate in the Plan; but such deferral election shall be
applicable only with respect to compensation earned after the
filing of such Initial Deferral Election Notice.
(c) Notwithstanding the foregoing,
an Initial Deferral Election Notice may not be completed during a
period when directors and officers of International Paper are
restricted from trading in shares of International Paper common
stock, referred to as a “Black-out Period.”
(d) Deferral elections are effective
for one Performance Year only and do not carry over from year to
year. Participants must submit a new Initial Deferral Election
Notice prior to the first day of each calendar year in order to
defer compensation to be earned in the next Performance
Year.
(e) An Initial Deferral Election
Notice may change the percentage to be deferred only with respect
to compensation payable on a prospective basis, and may not change
the percentage to be deferred with respect to a prior year’s
election.
6. Restrictions, Removal of
Restrictions, and Terms and Conditions of Awards of Restricted
Shares
(a) A Participant shall have the
right to receive all dividends and other distributions made with
respect to restricted shares registered in his or her name, and
shall have the right to vote or execute proxies with respect to
such registered restricted shares, unless and until such shares are
forfeited pursuant to the provisions of this Plan.
(b) A Participant shall have the
right to elect, in the form and manner prescribed by International
Paper, the manner in which dividends on shares of restricted stock
shall be paid to the Participant (i.e., in cash or reinvested in
additional shares of restricted stock).
(c) As indicated above, restricted
stock awards under the Plan will normally be issued in book-entry
form until the provisions of the Plan relating to removal of the
restrictions have been satisfied. If stock certificates are issued
for shares of restricted stock, such certificates shall
be
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endorsed with a legend referring to the
restrictions imposed by this Plan. Possession of the certificates
of shares shall be retained by the Corporate Secretary of
International Paper until the provisions of the Plan relating to
removal of the restrictions have been satisfied. After the
expiration of the restricted period, stock certificates without
such legend shall be delivered to the Participant or his or her
designee upon request.
(d) Shares of restricted stock may
not be sold, assigned, pledged or otherwise transferred by the
Participant unless and until all of the restrictions
