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The 2010 Customer Growth Incentive Plan by Lewis Paper aims to motivate and reward consistent purchasing behaviors, increase market share, and enhance demand predictability. Key program features include year-over-year (YOY) performance metrics, with no cap on earnings and two payment phases (July 2010 and January 2011). Eligible customers can earn incentives based on purchase performance and market share achievements, promoting mutual benefits and inventory management. Participation criteria ensure ongoing engagement and confidentiality of program parameters.
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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)
