Compensation Committee Charter

 

Purpose

The primary purpose of the Compensation Committee of the Board of Directors of Georgia-Pacific Corporation is to establish the compensation policy of the Company to ensure that the Company is able to attract and retain high quality leadership. The Committee is responsible for discharging the Board's responsibilities relating to compensation of the Company's executives, and producing an annual report on executive compensation for inclusion in the Company's proxy statement, in accordance with all applicable rules and regulations. The Committee also is responsible for determining the compensation of the Chief Executive Officer, based on an annual evaluation of his performance.

Authority

The Committee shall have the resources and authority appropriate to discharge its duties and responsibilities enumerated in this Charter, including the authority to retain counsel and other experts or consultants, and such other duties and responsibilities as it may be assigned upon the direction and approval of the Board. If the Committee uses third-party service providers in carrying out its duties, the Committee shall have the sole authority to select, retain and terminate any such third-party service provider and to approve the provider's fees and other retention terms.

Membership

The Committee shall be comprised of not less than three non-management members of the Board, each of whom is an "independent director" in accordance with the Company's Corporate Governance Guidelines. The members of the Committee shall be appointed annually by the Board, and the Board shall designate one member of the Committee as Chairperson. The Board may fill vacancies on the Committee, and may remove a Committee member at any time with or without cause.

In appointing members to the Committee, the Board shall consider whether the individual director has:

sufficient time to serve on the Committee;

experience with establishing and reviewing compensation policies, procedures and programs;

a strong understanding of financial performance measurement and modern financial theory; and

other skills and abilities that would enhance the Committee's ability to execute its duties and responsibilities.

 

Operations

The Compensation Committee shall meet at least quarterly and at such other times as the Chairman of the Committee shall designate, or at the request of a majority of Committee members, the Chairman of the Board or a majority of the Board, in each case in accordance with the Company's Bylaws. The Committee may, in its discretion, delegate all or a portion of its duties and responsibilities to a subcommittee of the Committee.

The Executive Vice President, Human Resources shall be the management liaison to the Committee. The Executive Vice President, Human Resources will prepare a preliminary agenda for regularly scheduled meetings. The Chairperson shall make the final decision regarding the agenda for regularly scheduled meetings, and shall develop the agenda for any special meetings based on the information provided as background for the meeting request.

Reports and Minutes

The Committee shall report to the Board periodically or as required by the nature of its duties on all of its activities and shall make such recommendations to the Board as the Committee decides are appropriate. The Committee shall record minutes for each meeting. The Committee shall review and approve the Committee minutes and they shall be filed with the Secretary of the Company for retention with the records of the Company.

Duties and Responsibilities

The duties and responsibilities of the Committee are to:

1.

Establish the Company's compensation philosophy and administer all aspects of the Company's compensation program for Executive Officers ("Executive Compensation Program"). For purposes of this Charter, "Executive Officers" shall mean those individuals holding the office of Senior Vice President and above. The Company's Executive Compensation Program consists of three principal elements: base salaries, annual incentive compensation opportunities and long-term incentive compensation opportunities.

2.

To the extent required by (i) the terms of the applicable plans, (ii) the Articles of Incorporation or Bylaws of the Company, or (iii) applicable laws or regulations requiring approval by a committee of independent directors, to approve the design of all equity-based compensation programs and any other compensation programs in which any elected officer of the Company participates ("Officer Plans"), including the review, approval and certification of the attainment of performance goals and establishment of award opportunities and, to the extent it deems it necessary or appropriate, make recommendations to the Board regarding these matters. For purposes of this Charter, "Officer Plans" do not include any employee benefit plans maintained by the Company in which officers and non-officers participate under the same generally-applicable terms and conditions unless the level of benefits available in such plans is governed in whole or part by the salary grade or salary band of the participant.

3.

With regard to Executive Compensation generally:

a.

Establish the philosophy for and oversee the Executive Compensation Program. This includes defining the appropriate market and the Company's competitive objective against that market.

b.

Approve all aspects of the design and administration of each Executive Officer's compensation, including base salary, bonus, long-term awards and benefits.

c.

To the extent required by the terms of the applicable plans, review and approve performance target goals for the Company's annual and long-term executive compensation plans applicable to Executive Officers, and award levels and payouts under such plans. The Committee shall evaluate performance results compared to goals, and certify goal attainment.

d.

Review and approve corporate goals and objectives relevant to CEO compensation, evaluate the performance of the CEO in the achievement of established goals and objectives and annually determine the CEO's compensation level based on this evaluation. In determining the long-term incentive component of CEO compensation, the Committee shall consider, among other factors, the Company's performance and relative shareholder return, the value of similar incentive awards to CEOs at comparable companies and the awards given to the Company's CEO in prior years.

e.

Prepare a report for inclusion in the Company's proxy statement disclosing the Committee's compensation policies applicable to executive officers (including the relationship of corporate performance to executive compensation), the bases for determination of the CEO's compensation and such other matters as are required to be addressed in the report under applicable law, rules and regulations.

4.

With regard to compensation of non-Executive Officers and the Company's incentive compensation plans:

a.

Review and establish at least annually the base salary levels of all elected officers of the Company. The Committee may delegate responsibility for establishing the base salaries of all other officers of the Company to the Chief Executive Officer of the Company.

b.

To the extent required by (i) the terms of the applicable plans, (ii) the Articles of Incorporation or Bylaws of the Company, or (iii) applicable laws, rules or regulations requiring approval by a committee of independent directors, review and approve the establishment and design of all equity-based compensation programs and Officer Plans, including approval of performance target goals and award opportunities under such plans. The Committee also shall make recommendations as appropriate to the Board regarding incentive compensation and equity-based plans.

5.

Review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval.

6.

Evaluate the performance of the Committee annually. This evaluation will be conducted in coordination with procedures established by the Executive and Governance Committee.

7.

Perform any other duties or responsibilities delegated to the Committee by the Board from time to time.