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2010 Customer Growth Incentive Plan Lewis Paper. Objectives of Growth Incentive Program. NP Objectives Motivate and reward consistent , predictable purchase behavior Increase share of category purchases Align with focus on supply chain improvements and predictability of demand
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Objectives of Growth Incentive Program NP Objectives • Motivate and reward consistent , predictable purchase behavior • Increase share of category purchases • Align with focus on supply chain improvements and predictability of demand • Drive mutual benefits; program is not a “one-way” street for either party • Influence category consolidation Customer Benefits • Incremental earning opportunity • Empowerment to influence outcome • Reflect the value in size/scale • Focus on inventory management while growing our share • Provide a revenue stream to assist with necessary product consolidation costs
2010 Plan Highlights • Two ways to earn funds: • YOY Performance • Market Share at or above average. • Payment threshold of 95% of PY. Pay from dollar one. • No cap on earnings. • The program is for calendar year 2010, with payments in July 2010 and January 2011. • Plan applies to Writing, Text and Cover (WTC) grades only. • You will receive monthly scorecards to track your progress.
Customer Participation Criteria • Incentive plan customers must maintain current payment performance to remain eligible for the program. • Participating customers will be required to provide Neenah Paper WTC purchase share information, similar to 2009 program request to be eligible for the share component. • Participating customers will not disclose or discuss NPI’s incentive program parameters with other suppliers within our category.
2010 Program Outline –Element 1– WTC YOY Purchase $$ Performance Applied to all Writing, Text and Cover Purchases (excludes non WTC product, such as premium opaque, color copy,…) • 1st and 2nd Half program based on YOY revenue performance (1H2010 vs 1H2009, 2H2010 vs. 2H2009) • Range of payout opportunities based on purchases (dollar-based) • Threshold = (-5%) versus prior year = .5% on net sales dollars • For every 1% better than a (-5%), incentive % increases by 0.1% • No cap on the payout percentage. • Payments made in July 2010 and January 2011.
YOY Performance Chart YOY Purchase $$ Example:5% growth vs. 2009 results in a 1.5% payout from dollar one. Payout Earned
Incentive Program – Element 2 Share of Purchases • For purchase share of W/T/C higher than NP’s avg. 40% market volume share, earn 0.01% per share percentage on purchases. • Opportunity for up to 1% (applied to net sales dollars). • Documentation/information provided to substantiate (similar to 2009). • Payment in July and January, based on availability of customer provided data. • Share payout is not tied to YOY purchase threshold of 95% if share is maintained or grows YOY. If share declines vs. 2009, then payout on the share component is predicated on achieving threshold purchase performance.
Share Performance Chart Example:A shipment share of 65% would result in an incentive payout of 0.65% (net sales)
Example of Potential Opportunity Progressive (linear) • Combined, the two elements of the program provide an opportunity for a 3.0% incentive (as applied to net sales of purchases) at 10% growth and 100% share • Increased options for achievement; naturally complement each other. Progressive (linear)
