POTLATCH CORPORATION MANAGEMENT DEFERRED COMPENSATION PLAN

Exhibit 10.2

POTLATCH CORPORATION

MANAGEMENT DEFERRED COMPENSATION PLAN

Effective June 1, 2008

Amended and Restated as of December 5, 2008

(a) The Potlatch Corporation Management Deferred Compensation Plan was adopted on May 16, 2008, by the Board of Directors of Potlatch Corporation to provide an opportunity for senior management who have made the maximum elective contributions permitted under the 401(k) Plan to elect to defer additional compensation and to invest and accumulate such compensation on a tax-deferred basis.

(b) This Plan is also intended to provide the rules and regulations for deferral of awards under the Potlatch Corporation Management Performance Award Plan II (“MPAP II”) for the 2008 performance period and under the Potlatch Corporation Annual Incentive Plan (the “AIP”) beginning with the 2009 performance period.

(c) Effective as of October 1, 2008, this Plan also provides the rules and regulations for the administration of deferrals previously made under the MPAP II. For avoidance of doubt, deferrals made under the Potlatch Corporation Management Performance Award Plan, which are not subject to Section 409A of the Code, continue to be subject to the rules of that plan and the administrative rules and regulations applicable thereto.

(d) Pursuant to the Employee Matters Agreement by and between Potlatch Corporation and Clearwater Paper Corporation (the “EMA”), all deferred compensation liabilities with respect to “Clearwater Employees” (as defined in the EMA) under this Plan, the MPAP II and the Potlatch Corporation Management Performance Award Plan have been transferred to and assumed by the Clearwater Paper Corporation Management Deferred Compensation Plan (the “Clearwater Plan”). Deferral and payment elections made by Clearwater Employees under this Plan and the MPAP II shall be given effect under the Clearwater Plan.

(e) The provisions of this Plan for elections to defer base salary are effective for base salary earned on or after January 1, 2009.

(f) The Plan is intended to comply with the requirements of Section 409A of the Code. The Plan is intended to constitute an unfunded program for the benefit of a select group of management or highly compensated employees of ERISA, and, as such, to be exempt from all of the provisions of Parts 2, 3, and 4 of Title I of ERISA.

(a) “Affiliate” means any other entity which would be treated as a single employer with the Corporation under Section 414(b) or (c) of the Code, provided that in applying such Sections and in accordance with the rules of Treasury Regulations Section 1.409A-1(h)(3), the language “at least 50 percent” shall be used instead of “at least 80 percent.”

(b) “AIP” means the Potlatch Corporation Annual Incentive Plan and any successor plan thereto.

(c) “Beneficiary” means the person or persons designated by the Employee to receive payment of the Employee’s Deferred Compensation Account in the event of the death of the Employee.

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(d) “Board” and “Board of Directors” means the board of directors of the Corporation.

(e) “Code” means the Internal Revenue Code of 1986, as amended.

(f) “Committee” means the Executive Compensation and Personnel Policies Committee of the Board.

(g) “Compensation” means the amount of compensation due by the Corporation to an Employee for his or her services as an Employee as either (i) annual base salary or (ii) an award under the MPAP II or AIP.

(h) “Corporation” means Potlatch Corporation, a Delaware corporation.

(i) “Deferred Compensation Account” means the bookkeeping account established pursuant to Section 6 on behalf of each Employee who elects to participate in the Plan. Within an Employee’s Deferred Compensation Account, a Directed Investment Account, Stock Unit Account, Cash Account, and appropriate sub-accounts, shall be maintained as are necessary for the proper administration of a Participant’s Deferred Compensation Account. An Employee who has made a deferral under the MPAP II shall be deemed to have elected to participate in this Plan.

(j) “Disabled” means an Employee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve months.

(k) “Distribution” means the distribution by the Corporation to its stockholders of all of the outstanding shares of the common stock of Clearwater Paper Corporation then owned by the Corporation, pursuant to the Separation and Distribution Agreement between the Corporation and Clearwater Paper Corporation.

(l) “Dividend Equivalent” means an amount equal to the cash distribution paid on an outstanding share of the Corporation’s common stock. Dividend Equivalents shall be credited to Stock Units as if each Stock Unit were an outstanding share of the Corporation’s common stock, except that Dividend Equivalents shall also be credited to fractional Stock Units.

(m) “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

(n) “Employee” means a full-time salaried employee of the Corporation or any subsidiary thereof.

(o) “401(k) Plan” means the Potlatch Salaried 401(k) Plan, as amended.

(p) “MPAP II” means the Potlatch Corporation Management Performance Award Plan II, as amended.

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(q) “Performance-Based Compensation” means compensation the amount of which, or the entitlement to which, is contingent on the satisfaction of preestablished organizational or individual performance criteria relating to a performance period of at least twelve (12) consecutive months. Organizational or individual performance criteria are considered preestablished if established in writing by not later than ninety (90) days after the commencement of the period of service to which the criteria relates, provided that the outcome is substantially uncertain at the time the criteria are established. Performance-Based Compensation does not include any amount or portion of any amount that will be paid either regardless of performance, or based upon a level of performance that is substantially certain to be met at the time the criteria is established. Compensation may be Performance-Based Compensation where the amount will be paid regardless of satisfaction of the performance criteria due to the Employee’s death, disability, or a Change in Control Event (as defined in Treasury Regulation Section l .409A-3(i)(5)), provided that a payment made under such circumstances without regard to the satisfaction of the performance criteria will not constitute performance-based compensation. For this purpose, a disability refers to any medically determinable physical or mental impairment resulting in the Participant’s inability to perform the duties of his or her position or any substantially similar position, where such impairment can be expected to result in death or can be expected to last for a continuous period of not less than six months. Performance-Based Compensation may include payments based upon subjective performance criteria, provided that: (i) the subjective performance criteria are bona fide and relate to the performance of the Participant, a group of service providers that includes the Participant, or a business unit for which the Participant provides services (which may include the entire organization); and (ii) the determination that any subjective performance criteria have been met is not made by the Participant or a family member of the Participant (as defined in Section Code 267(c)(4) applied as if the family of an individual includes the spouse of any member of the family), or a person under the effective control of the Participant or such a family member, and no amount of the compensation of the person making such determination is effectively controlled in whole or in part by the Participant or such a family member.

(r) “Plan” means the Potlatch Corporation Management Deferred Compensation Plan.

(s) “Plan Year” means the 12-month period beginning January 1 and ending December 31.

(t) “Separation from Service” means termination of an Employee’s service as an Employee consistent with Section 409A of the Code and the regulations promulgated thereunder. For purposes of the Plan, “Separation from Service” generally means termination of an Employee’s employment as a common-law employee of the Corporation and each Affiliate of the Corporation. A Separation from Service will not be deemed to have occurred if an Employee continues to provide services to the Corporation or an Affiliate in a capacity other than as an employee and if the former employee is providing a level of bona fide services that is fifty percent (50%) or more of the average level of services rendered, during the immediately preceding thirty-six (36) months of employment with the Corporation or Affiliate; provided, however, that a Separation from Service will be deemed to have occurred if it is reasonably anticipated that an Employee’s service with the Corporation and its Affiliates will terminate after a certain date or the level of bona fide services that the Employee will perform after such date

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(whether as an employee or another capacity) will permanently reduce to a rate that is less than twenty percent (20%) of the bona fide level of services rendered, on average, during the immediately preceding thirty-six (36) months (or if employed by the Corporation and its Affiliates less than thirty-six (36) months, such lesser period). However, the employment relationship is treated as continuing intact while the individual is on military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the individual’s right to reemployment with the service recipient is provided either by statute or by contract. If the period of leave exceeds six months and the individual’s right to reemployment is not provided either by statute or by contract, the employment relationship is deemed to terminate on the first date immediately following such six-month period.

(u) “Stock Units” means the deferred portion of Compensation, which is converted into a unit denominated in shares of the Corporation’s common stock.

(v) “Value” means the closing price of the Corporation’s common stock as reported in the New York Stock Exchange, Inc., composite transactions reports for the relevant date.

(w) “Variable Fractions Method” is a distribution method for amounts payable in installments. The amount of the first installment is determined by dividing the Participant’s account balance by the total number of installments due. Each subsequent annual installment is equal to the Participant’s account balance as adjusted for earnings or losses since the last distribution date divided by a denominator equal to the total number of installments due minus the number of installments previously paid.

(x) “Year” shall mean the calendar year.

(a) Each Employee who is in a position that is eligible for Long-Term Incentive awards (an “Eligible Employee”) and who has made the maximum elective deferrals under Section 402(g) of the Code or the maximum elective contributions permitted under the terms of the 401(k) Plan shall be eligible to elect to defer base salary under the Plan.

(b) Each Eligible Employee who is eligible to receive an award under the MPAP II or AIP (other than an award under an AIP Special Awards Fund) shall be eligible to defer such award under the Plan; provided that, an Employee who is required to defer his or her award shall automatically become a participant in this Plan.

(a) Each Employee who is eligible to participate in the Plan pursuant to Section 3 above shall, prior to the beginning of each Year and in accordance with the applicable deadline established by the Committee, have the option to make an irrevocable election to defer a percentage of his or her Compensation earned during the following Year before the beginning of each such Year. Compensation paid after December 31 of a Plan Year for services performed by the Employee during the final payroll period of the calendar year and which payroll period

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includes the last day of such calendar year shall be treated as earned for services performed in the year paid.

(b) Notwithstanding the foregoing, an Employee may make an irrevocable election to participate during a Year with respect to Compensation earned during that Year and subsequent to the filing of such election, provided such election is made within thirty (30) days of the Employee’s initial eligibility to participate in this Plan and any other nonqualified deferred compensation plans treated as a single plan with this Plan under Section 409A of the Code. Any such initial election shall apply only to Compensation earned for services performed after the date of the election. If compensation is due for services performed over a period of time which includes the period both before and the period after the date of the election, the election will apply to an amount equal to the total amount of the compensation paid for such performance period multiplied by the ratio of the number of days remaining in the performance period after the election over the total number of days in the performance period.

(c) Notwithstanding the preceding rules, a deferral election for an award of Compensation under the MPAP II or AIP, which constitutes Performance-Based Compensation, may be made no later than six months before the end of such performance period. This special election rule is available only (i) if the Employee performs services for the Company or its Affiliate continuously from the later of the beginning of the performance period or the date the performance criteria are established through the date an Election is made with respect to such payment, (ii) the Election is made before the amount of the Performance-Based Compensation to be received becomes reasonably ascertainable or, if the Performance-Based Compensation is a specified or calculable amount, when the amount is substantially certain to be paid, and (iii) the performance period is at least twelve (12) months in duration.

(d) The Committee may also adopt such additional or alternative election rules provided that such rules comply with the rules of Section 409A of the Code and applicable regulatory authority.

(a) An Employee who elects to participate in the Plan with respect to annual base salary or an award under the MPAP II or AIP for a Year shall file a deferral election with respect to each type of Compensation on such form as the Committee shall prescribe, which shall indicate:

(i) The amount or percentage of each type of Compensation that such Employee elects to defer pursuant to the terms of the Plan. The percentage must be in increments of ten percent (10%) and may not exceed fifty percent (50%) in the case of annual base salary. An election to voluntarily defer an award under the MPAP II or AIP shall be for not less than fifty percent (50%) of such award. Notwithstanding the foregoing, an election to defer compensation may not reduce the Employee’s remaining compensation below the amount necessary to satisfy applicable employment tax withholding, income tax withholding, and benefit plan withholding. This election shall be irrevocable with respect to each type of Compensation for that Year to which it applies after the applicable deadline for making such election as provided in Section 4 for that Year.

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(ii) The percentage of the Compensation deferred pursuant to the election that is to be converted into Stock Units or deemed invested in any other investment account available under Section 7.

(b) An Employee who elects to Participate in the Plan shall have only one form of payment election in effect for all amounts deferred under the Plan. Subject to Section 5(c), below, at the time of an Employee’s initial election to defer base salary or an award under the MPAP II or AIP, the Employee shall file an election and shall indicate:

(i) Whether the deferred Compensation shall be paid in a lump sum or paid in five (5), ten (10), or fifteen (15) annual installments. For purposes of the Plan, installment payments shall be treated as a single distribution for purposes of Section 409A of the Code. Deferred Compensation shall be paid in fifteen (15) annual installments unless the Employee elects otherwise.

(ii) Whether benefit payments shall commence immediately upon Separation from Service or attainment of a specified age, if later.

(c) A Participant’s election as to the time and form of payment of deferred Compensation shall be irrevocable and binding on all deferred Compensation under the Plan. For avoidance of doubt it is intended that a Participant shall have only one method of payment in effect. Notwithstanding any provision herein to the contrary, an Employee or former Employee may revoke a previous election and make a new election as to the time and form of distribution under the Plan. Such new election shall take effect twelve (12) months after it is filed with the Committee and shall apply only to that portion of the Employee’s or former Employee’s Deferred Compensation Account and/or Stock Units scheduled to be paid more than twelve (12) months after the date the election is filed with the Committee; provided, however, that the newly scheduled distribution date must be at least five years later than the originally scheduled distribution date.

(d) For purposes of determining the payment election in effect for a participant with existing deferrals under MPAP II as of the date this Plan is effective, such existing payment election shall remain in effect for all existing and future deferrals under the Plan unless the Employee elects and becomes subject to a new payment election in accordance with the rules of this paragraph. Notwithstanding the limitations on changes in the time or form of payment under this Section, a Participant may, not later than the date permitted by the Committee, which shall in no event be later than December 31, 2008, change his or her election with respect to the time or form of payment for his or her Deferred Compensation Account, provided that such election shall not be effective if it would defer payment of an amount otherwise payable in the year the election to change payment is made or would accelerate any payment into the year the election to change the payment date is made.

(a) For each Employee who has defe