Annual Incentive Plan, January 1, 2019

ESTABLISHMENT AND PURPOSE

The Potlatch Corporation Annual Incentive Plan (the “Plan”) was originally adopted effective January 1, 2009.  The Plan was most recently restated effective January 1, 2014.  This restatement incorporates additional changes to the Plan since the 2014 restatement and reflects the Company’s name change to PotlatchDeltic Corporation.  This restatement of the Plan is effective January 1, 2019 and governs Awards made on or after that date.  

The Plan is intended to comply with the requirements of Section 409A, to the extent applicable.

DEFINITIONS

“Actual Funded Bonus Pool” has the meaning set forth in Section 6(b).

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

“Award” means an award under the Plan.

“Award Year” means a Year with respect to which Awards are made.

“Beneficiary” means the person or persons who become entitled to receive payment as a result of the death of a Participant. The Participant may designate a beneficiary under the Plan in a form provided by the Committee.

“Board of Directors” or “Board” means the Board of Directors of the Company.

“Cause” means dishonesty, fraud, serious, or willful misconduct, conduct prohibited by law (except minor violations), or the Eligible Employee’s material breach of any of his or her obligations regarding noncompetition, nonsolicitation or the protection of confidential or proprietary information and trade secrets, as those obligations are set forth in any written agreement executed between the Employee and the

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Company, in each case as determined by the CEO or, for participating Officers and individuals who are subject to Section 16 of the Exchange Act, by the Committee.

“CEO” means the Chief Executive Officer of the Company.

“Change in Control,” unless the Committee determines otherwise with respect to an Award at the time the Award is granted or unless otherwise defined for purposes of an Award in a written employment, services or other agreement between the Participant and the Company, means the occurrence of any of the following events:

The consummation of a merger or consolidation involving the Company (a “Business Combination”), in each case, unless, following such Business Combination,

all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the then outstanding shares of common stock of the Company (the “Outstanding Common Stock”) and the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Voting Securities”) immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation or other entity resulting from such Business Combination (including, without limitation, a corporation or other entity which as a result of such transaction owns the Company either directly or through one or more subsidiaries),

no individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a “Person”) (excluding any corporation or other entity resulting from such Business Combination or any employee benefit plan (or related trust) sponsored or maintained by the Company or any subsidiaries or such other corporation or other entity resulting from such Business Combination) beneficially owns, directly or indirectly, 30% or more of, respectively, the then outstanding shares of common stock or common equity of the corporation or other entity resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation or other entity except to the extent that such ownership is based on the beneficial ownership, directly or indirectly, of Outstanding Common Stock or Outstanding Voting Securities immediately prior to the Business Combination, or

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at least a majority of the members of the board of directors or similar governing body of the corporation or other entity resulting from such Business Combination were members of the Board at the time of the execution of the initial agreement providing for, or of the action of the Board to approve, such Business Combination; or

Individuals who, as of May 9, 2018 constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director of the Company subsequent to May 9, 2018 whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors of the Company then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors of the Company, an actual or threatened solicitation of proxies or consents or any other actual or threatened action by, or on behalf of any Person other than the Board; or

The acquisition by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either:

the then Outstanding Common Stock, or

any acquisition of Outstanding Common Stock or Outstanding Voting Securities by the Company;

any acquisition of Outstanding Common Stock or Outstanding Voting Securities by any employee benefit plan (or related trust) sponsored or maintained by the Company; and

any acquisition of Outstanding Common Stock or Outstanding Voting Securities by any corporation pursuant to a transaction that complies with clauses (A), (B) and (C) of paragraph (i) of this definition; or

The consummation of the sale, lease or exchange of all or substantially all of the assets of the Company.

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

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“Committee” means the committee which shall administer the Plan in accordance with Section 3.

“Company” means PotlatchDeltic Corporation, a Delaware corporation.

“Corporate Performance Modifier” means a modifier percentage amount based on the Company’s performance during the Award Year against an increase in funds from operations equal to net income plus non-cash charges for depletion, depreciation and amortization and the cost basis in real property sold (“FFO”).  The Committee shall determine the FFO target, in writing, at the beginning of the Award Year based on the Company’s internal financial plan and forecasts and a review of industry and stockholder expectations.  Performance against the FFO target shall determine the Corporate Performance Modifier as follows:

“Disability” means an Employee’s inability 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 (12) months, in each case as determined by the Vice President, Human Resources, of the Company or, for any such participating Officer or individual who is subject to Section 16 of the Exchange Act, the Committee, whose determination shall be conclusive and binding.

“Employee” means a full-time salaried employee (including any Officer) of the Company or any of its subsidiaries.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Guidelines” means the PotlatchDeltic Corporation Officer Stock Ownership Guidelines.

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“Officer” means any Employee who is an elected officer of the Company or any of its subsidiaries and who is the chief manager of an Organization Unit.

“Organization Unit” means a major organizational component or profit center of the Company or any of its subsidiaries as determined under Section 4.

“Participant” means any Officer and any Employee actively employed by the Company or any of its subsidiaries during an Award Year in an Organization Unit in a position designated as a participating position under Section 4.

“Plan” means this PotlatchDeltic Corporation Annual Incentive Plan.

“Section 409A” means Section 409A of the Code, including regulations and guidance promulgated thereunder.

“Section 409A Change in Control” has the meaning set forth in Section 17.

“Separates from Service” means termination of a Participant’s service as an Employee consistent with the requirements of Section 409A.  For purposes of the Plan, “Separation from Service” generally means termination of a Participant’s employment as a common-law Employee of the Company and each Affiliate.  

“Special Awards Fund” has the meaning set forth in Section 10(a).

“Target Bonus” has the meaning set forth in Section 6(a).

“Target Bonus Pool” has the meaning set forth in Section 6(a).

“Year” means the calendar year.

ADMINISTRATION OF THE PLAN

The Plan shall be administered by the Executive Compensation and Personnel Policies Committee of the Board of Directors, or such other committee as may be designated and appointed by the Board of Directors, which shall consist of at least three (3) members of the Board of Directors.  No member of the Committee shall be eligible to participate and receive Awards under the Plan while serving as a member of the Committee.

In addition to the powers and duties otherwise set forth in the Plan, the Committee shall have full power and authority to administer and interpret the Plan, to establish procedures for administering the Plan, to adopt and periodically review such rules consistent with the terms of the Plan as the Committee deems necessary or advisable in order to properly carry out the provisions of the Plan, and to take any and all necessary action in connection therewith.  The Committee’s interpretation and construction of the Plan and its determination of eligibility for and the amount of any Award hereunder shall be conclusive and binding on all persons.

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ELIGIBILITY AND PARTICIPATION

AWARDS

DETERMINING THE ACTUAL FUNDED BONUS POOL

The Target Bonus Pool for an Award Year shall be the sum of the Target Bonuses for all Participants for the Award Year.  A Participant’s “Target Bonus” shall be an amount equal to a percentage of the Participant’s base salary, based on the position to which the Participant is assigned, as determined by the CEO or, for participating Officers and individuals who are subject to Section 16 of the Exchange Act, by the Committee.  If a Participant does not qualify as a Participant for the entire period of an Award Year, the Target Bonus will be prorated to reflect the portion of the Award Year that the Employee was a Participant. If a Participant is in more than one bonus-eligible salary grade during an Award Year, the total Target Bonus in that Award Year will be the sum of the Target Bonuses applicable to each position in each Organization Unit.

The “Actual Funded Bonus Pool” for each Award Year shall equal the product of the Target Bonus Pool for an Award Year and the Corporate Performance Modifier.  The Actual Funded Bonus Pool shall be represented by a bookkeeping entry only and no Employee shall have any vested right therein.  

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ALLOCATING THE ACTUAL FUNDED BONUS POOL AMONG ORGANIZATION UNITS

DETERMINING INDIVIDUAL AWARDS

FORM AND TIME OF PAYMENT OF AWARDS

All Awards under the Plan shall be paid in cash to all Participants other than those subject to the Guidelines.  For a Participant subject to the Guidelines, the Award shall be paid in a combination of 50% cash and 50% common stock of the Company if the Participant has not incrementally reached the required ownership level at the end of each of his or her first five years under the Guidelines or has not maintained 100% of the applicable guideline amount in subsequent years.  The number of shares of common stock shall be determined by dividing the dollar value of the portion of the Award allocated as stock by the closing price of the Company’s common stock on the date of the Committee meeting at which the Award payments are approved.  Award amounts shall be prorated for the portion of the Award Year the Employee was an eligible Participant.  A Participant whose employment is terminated before the payment of an Award for any reason other than death; Disability; Separation from Service after having attained at least age 65 or having attained at least age 55 and accrued at least 10 years of service with the Company and its Affiliates, as determined by the Committee in its discretion, shall not be entitled to payment of an Award.

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Upon the death of a Participant, any payment then due to the Participant shall be paid to the Beneficiary in full in cash no later than March 15 following the close of the Award Year. If no designated Beneficiary survives the Participant or the Beneficiary dies before receiving payment, payment shall be made to the estate of the last to die of the Participant or the designated Beneficiary.

Notwithstanding any other provision of the Plan to the contrary and to the maximum extent allowed by law, Awards paid under the Plan shall be subject to (i) the requirements of the PotlatchDeltic Corporation Incentive Compensation Recovery Policy as it may be amended from time to time, and (ii) any other compensation recovery policies as may be adopted from time to time by the Company to comply with applicable law and/or stock exchange requirements, or otherwise, to the extent determined by the CEO or, for participating Officers and individuals who are subject to Section 16 of the Exchange Act, by the Committee to be applicable to a Participant.

SPECIAL AWARDS FUND

A “Special Awards Fund” shall be established with respect to each Award Year in an amount determined by the Committee but not to exceed ten percent (10%) of the Target Bonus Pool for such Award Year.  The Special Awards Fund shall be represented by a bookkeeping entry only and no Employee of the Company shall have any vested right therein.  The Special Awards Fund shall be in addition to the Actual Funded Bonus Pool.

Awards may be made in a total amount equal to the Special Awards Fund to those Employees of the Company who are not Participants with respect to such Award Year but who in the judgment of an Officer have made outstanding contributions to the success of the Company.

After the close of the Award Year, recipients of Awards under the Special Awards Fund shall be selected by the CEO upon the recommendation of an Officer.  The amount of each individual’s Award under the Special Awards Fund shall be determined by the CEO upon the recommendation of an Officer and shall fall within a range set forth in rules adopted by the Committee, expressed as minimum and maximum percentages of annualized salary at the end of the year.  Awards under the Special Awards Fund shall be announced by March 1 following the close of the Award Year.

Awards under the Special Awards Fund shall be paid in full in cash no later than March 15 following the close of the Award Year.

NO ASSIGNMENT OF INTEREST

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EMPLOYMENT RIGHTS

AMENDMENT OR TERMINATION OF THE PLAN

SUCCESSORS AND ASSIGNS

CHANGE OF CONTROL

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CHOICE OF LAW AND VENUE

SECTION 409A

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