MeadWestvaco Corporation
Exhibit 10.31
MeadWestvaco Corporation
Description of Executive Officer Compensation
For 2005
Annual Cash Compensation
Base Salary- Set forth below are the 2005 base salaries of the Chief Executive Officer and each of the four most highly compensated executive officers (the named executive officers).
| John A. Luke, Jr. | $ | 985,000 | |
| James A. Buzzard | $ | 654,000 | |
| E. Mark Rajkowski | $ | 550,008 | |
| Wendell L. Willkie, II | $ | 441,000 | |
| Mark T. Watkins | $ | 433,850 |
Annual Incentive Compensation- The named executive officers are eligible for annual performance-based awards under the company’s Annual and Long-Term Incentive Plan (the “Incentive Plan”). For 2005, goals will be weighted as follows:
| 1. Financial | |||
| A. Earnings Before Interest and Taxes (EBIT) | 60 | % | |
| B. Working Capital as a percent of sales | 35 | % | |
| 2. Safety (measured by total case incident rate) | 5 | % |
The minimum payout under the Annual portion of the Incentive Plan for the 2005 calendar year is determined by plan formula and could be 0% of the participant’s target payout. The maximum award possible under the Annual portion of the Incentive Plan is 200% of the participant’s target payout. The individual annual target amount for each of our senior executive officers ranges from 55-110% of salary, which amount is payable in a lump sum.
Long-Term Incentive Compensation- The named executive officers also are eligible for long-term performance awards under the Incentive Plan and the company’s Restricted Stock Plan. Under the Long-Term portion of the Incentive Plan and the Restricted Stock Plan, the Committee established a three year performance period beginning January 1, 2005 and ending December 31, 2007 (the “Performance Period”), with the following performance objectives and assigned the weightings set forth below.
| 1. Return on Invested Capital (ROIC) | 40 | % | |
| 2. Key Performance Objectives | |||
| Reduction in Selling, General and Administrative Expenses as a percent of sales | 20 | % | |
| Total procurement savings (net of inflation) | 20 | % | |
| Revenue from New Products (with increased product margins) | 20 | % | |
This Long-Term Award, including restricted stock, is subject to (i) a three-year vesting restriction expiring on the third anniversary of the grant date (February 22, 2005) and (ii) the satisfaction of the performance objectives during the Performance Period. The minimum long-term payout under the plans is zero. If threshold criteria are achieved, payment can be 50% of the participant’s target. The maximum long-term award possible under the plans is 150% of the participant’s target payout. The total potential Long-Term Award would be payable one-third in cash (under the Long-Term portion of the Incentive Plan) and two-thirds in restricted stock. The individual aggregate long-term target amounts for our named executive officers range from 150-450% of salary. Long-Term Awards (including cash and stock portions) are subject to Committee review and exercise of negative discretion. Long-Term Awards would be payable in 2008.
