EXECUTIVE INCENTIVE COMPENSATION PLAN

Exhibit 10.1

POPE & TALBOT, INC.

EXECUTIVE INCENTIVE COMPENSATION PLAN

Section 1. Purposes

The purposes of the Pope & Talbot, Inc. Executive Incentive Compensation Plan (the “ Plan ”) are (i) to provide greater motivation for select management employees of Pope & Talbot, Inc. (the “ Company ”) and (ii) to direct the energies of employees toward the achievement of specific business goals established for the Company and its Subsidiaries (as defined in Section 7 below).

The Plan shall be effective as of October 1, 2007 (the “ Effective Date ”).

Section 2. Administration and Interpretation

(a) The Plan shall be administered by the Compensation Committee (the “ Committee ”) of the Board of Directors of the Company (the “ Board ”), which shall consist of at least two individuals who are not and have never been employees of the Company and who shall serve at the pleasure of the Board.

(b) The Committee is authorized to interpret the Plan and may from time to time adopt such rules and regulations for carrying out the Plan as it may deem necessary or advisable. Decisions of the Committee shall be final, conclusive and binding upon all parties, including, without limitation, the Company and the employees who participate in the Plan.

Section 3. Participation

(a) The eligibility of employees to participate in the Plan shall be determined by the Committee in its discretion (“ Participants ”). As of the Effective Date, Participants shall at a minimum include the following executives of the Company:

(b) If an employee first becomes eligible to participate in the Plan after the beginning of a calendar quarter, then such employee shall become a Participant in the Plan and shall be eligible for quarterly bonus awards beginning with the calendar quarter next following the date on which the Participant first becomes eligible to participate in the Plan. Unless

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otherwise determined by the Committee, such Participant shall also be entitled to a pro rata quarterly bonus award for initial calendar quarter of participation. Such pro rata quarterly bonus award shall be equal to the EBITDAR (as defined in Section 7 below) portion of the quarterly bonus award the Participant would have been entitled to receive under the Plan had he or she been a Participant for the entire calendar quarter, multiplied by a fraction, the numerator of which is the number of calendar days remaining in such calendar quarter, determined from the date the Participant commenced participation in the Plan, and the denominator of which is the total number of calendar days in such calendar quarter.

Section 4. Q uarterly Bonus Awards

(a) Subject to a Participant’s continued employment in good standing with the Company, Participants shall vest in the right to payment of a quarterly bonus award on each of January 1, 2008, April 1, 2008, July 1, 2008, October 1, 2008, January 1, 2009 and April 1, 2009 (each, a “ Vesting Date ”) with respect to the calendar quarter ending immediately prior to such Vesting Date. The amount of each quarterly bonus award shall be equal to a specified percentage of the Participant’s annual base salary in effect as of the beginning of the calendar quarter for which the bonus award is being paid (“ Base Salary ”).

(b) The Committee shall determine the percentage of Base Salary used to calculate the amount of quarterly bonus awards in accordance with Section 5.

(c) Quarterly bonus awards shall be paid to Participants in cash in a single lump sum on the thirtieth (30 ^th ) day of the calendar month containing the Vesting Date (each, a “ Payment Date ”). If a Participant dies before such bonus is paid, the cash amount shall be paid to the Participant’s surviving spouse or, if the Participant is not married at the time of his or her death, the Participant’s estate.

Section 5. Determination of Quarterly Bonus Awards

(a) Target Award . The Committee shall establish a target level award, expressed as a percentage of Base Salary (the “ Target Award ”), for each Participant. The actual amount of the quarterly bonus awards paid to a Participant under the Plan may be higher or lower than the Target Award for such Participant depending on the actual performance results achieved for the applicable calendar quarter. Unless otherwise determined by the Committee, the Target Awards for Participants shall be as follows:

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Unless otherwise determined by the Committee, the Target Award for Participants other than those executive officers listed above shall be 16.67% of Base Salary.

(b) Actual Award . (i) The Committee shall determine the actual amount of the quarterly bonus award to be paid to each Participant under the Plan. In making such determination, the Committee shall multiply the Target Award by a percentage (the “ Performance Percentage ”). The amount of the Performance Percentage shall be dependent 50% upon EBITDAR (as defined in Section 7 below) and 50% upon individual performance targets for the applicable calendar quarter.

(ii) Within 15 days after the Effective Date, the Committee shall establish EBITDAR targets for the first three calendar quarters for which quarterly bonus awards are payable under the Plan, and shall establish EBITDAR targets for the final three calendar quarters for which quarterly bonus awards are payable under the Plan not later than March 1, 2008. The Committee shall notify Participants in writing of the applicable EBITDAR target prior to the beginning of each calendar quarter for which a quarterly bonus award is payable; provided , however , that Participants shall be notified in writing of the EBITDAR target for the fourth calendar quarter of 2007 not later than 15 days after the Effective Date.

(iii) Within 15 days after the Effective Date, the Committee shall establish individual performance objectives for the fourth calendar quarter of 2007, and shall notify Participants in writing of such objectives not later than 15 days after the Effective Date. The Committee shall establish individual performance objectives for the remaining calendar quarters for which quarterly bonus awards are payable under the Plan, and shall notify Participants in writing of the applicable individual performance objectives, prior to the beginning of each such calendar quarter.

(iv) The Performance Percentage for a calendar quarter shall equal the sum of the EBITDAR Percentage and Individual Percentage.

(v) The EBITDAR Percentage for a calendar quarter shall be determined using the following chart: