Incentive Plans (Note)

12 Months Ended

Dec. 31, 2024

Share-Based Payment Arrangement, Additional Disclosure [Abstract]

On February 13, 2024, the Company's Board of Directors, upon recommendation of the Management Development and Compensation Committee (the "MDCC"), authorized adoption of a 2024 Long-Term Incentive Compensation Plan (the "2024 LTICP") to replace the 2009 Amended and Restated Incentive Compensation Plan (the "2009 Plan"), subject to shareholder approval at the Company's annual meeting of shareholders held on May 13, 2024. The 2024 LTICP became effective following approval by shareholders at the May 13, 2024 annual meeting and replaced the 2009 Plan. The 2024 LTICP authorized up to 9,250,000 shares of our Class A common stock, par value $1.00 per share, available for future grants in the form of restricted stock,

restricted or deferred stock units, performance awards payable in cash or stock upon the attainment of specified performance goals, dividend equivalents, options, stock appreciation rights, other stock-based awards and cash-based awards at the discretion of the Committee. The LTICP is administered by the Committee.

Additionally, restricted stock, which may be deferred into RSUs, may be awarded under a Restricted Stock and Deferred Compensation Plan for Non-Employee Directors.

LONG-TERM INCENTIVE PLAN

Effective January 1, 2023, the MDCC renamed the Performance Share Plan ("PSP") to the Long-Term Incentive Plan ("LTIP") and began incorporating RSUs into its annual grant process as a complement to PSUs to better align with market and aid in our recruitment and retention efforts. Under the LTIP, contingent awards of International Paper common stock are granted by the MDCC.

The maximum aggregate number of shares of the Company’s common stock that may be issued pursuant to awards under the LTICP shall not exceed 9,250,000 shares. Shares for which payment is in cash, including the shares withheld to cover associate payroll taxes, as well as shares that expire, terminate, or are canceled or forfeited, may be awarded or granted again under the LTICP.

Performance Stock Units

PSU awards are earned over a three-year period based on the achievement of pre-established performance goals of Return on Invested Capital ("ROIC") measured against our internal benchmark and our relative performance in Total Shareholder Return ("TSR") compared to the TSR peer group. The 2022-2024, 2023-2025 and 2024-2026 Awards are weighted 50% ROIC and 50% TSR for all participants. The ROIC component of the PSU awards is valued at the 20-trading day average closing price immediately prior to the grant date. As the ROIC component contains a performance condition, compensation expense, net of estimated forfeitures, is recorded over the requisite service period based on the most probable number of awards expected to vest. The TSR component of the PSU awards is valued using the same methodology as the RSUs but then adjusted using a factor derived from a Monte Carlo simulation as the TSR component contains a market condition. The Monte Carlo simulation estimates the fair value of the TSR component based on the expected term of the award, a risk-free rate, expected dividends, and the expected volatility for the Company and its competitors. The

expected term is estimated based on the vesting period of the awards, the risk-free rate is based on the yield on U.S. Treasury securities matching the vesting period, and the volatility is based on the Company’s historical volatility over the expected term. PSUs are payable in cash or shares at the Company's discretion.

Restricted Stock Units

Time-based RSU awards granted under the LTIP are expected to vest in three equal installments commencing on February 1st following the first anniversary of the grant date over a 3-year service period, subject to forfeiture and transfer restrictions. RSUs are payable in cash or shares at the Company’s discretion.

Generally, the requisite service period is the vesting period. In the case of retirement (eligibility for which is based on the associate's age and years of service as provided in the relevant award agreement), awards vest pro-rata based on length of service during the award period, subject to continued employment and paid upon termination.

Dividend equivalents are generally accrued on PSUs and RSUs outstanding as of the record date. These dividend equivalents are paid only on PSUs and RSUs that ultimately vest.

The following table sets forth the assumptions used to determine compensation cost for the market condition component of the LTIP plan:


			Twelve Months Ended December 31, 2024
Expected volatility			27.09% - 37.11%
Risk-free interest rate			0.97% - 4.79%

The following summarizes LTIP activity for the three years ended December 31, 2024:


	Share/Units	Weighted Average Grant Date Fair Value
Outstanding at December 31, 2021	5,926,142	$35.43
Granted	1,899,211	50.32
Shares issued	(1,130,236)	40.23
Forfeited	(1,382,637)	42.03
Outstanding at December 31, 2022	5,312,480	38.01
Granted - LTIP PSU	1,619,481	37.78
Granted - LTIP RSU	1,411,042	34.63
Shares issued - LTIP PSU	(972,563)	40.44
Shares issued - LTIP RSU	(15,161)	34.63
Forfeited	(1,234,328)	45.38
Outstanding at December 31, 2023	6,120,951	35.31
Granted - LTIP PSU	2,039,725	35.28
Granted - LTIP RSU	1,414,316	36.15
Shares issued - LTIP PSU	(851,962)	53.32
Shares issued - LTIP RSU	(446,582)	34.63
Shares issued - LTIP RSU	(8,060)	36.15
Forfeited	(1,350,063)	45.58
Outstanding at December 31, 2024	6,918,325	$31.29

RECOGNITION AWARD PROGRAM

The Recognition Award Program ("RA Program") is service-based and designed for recruitment, retention and special recognition purposes. It provides for awards of RSUs to key employees.

The following summarizes the activity of the RA Program for the three years ended December 31, 2024:


	Shares	Weighted Average Grant Date Fair Value
Outstanding at December 31, 2021	103,769	$49.03
Granted	132,200	43.38
Shares issued	(104,177)	44.53
Forfeited	(5,400)	47.78
Outstanding at December 31, 2022	126,392	46.88
Granted	123,454	35.51
Shares issued	(81,629)	45.40
Forfeited	(11,643)	39.77
Outstanding at December 31, 2023	156,574	39.22
Granted	115,200	43.26
Shares issued	(85,236)	37.53
Forfeited	(6,700)	38.30
Outstanding at December 31, 2024	179,838	$42.64

At December 31, 2024, 2023 and 2022 a total of 9.1 million, 5.5 million and 7.3 million shares, respectively, were available for grant under the LTICP.

Stock-based compensation expense and related income tax benefits were as follows:


In millions	2024		2023		2022
Total stock-based compensation expense (included in selling and administrative expense)	$	82	$	58	$	124
Income tax benefits related to stock-based compensation	14		12		13

At December 31, 2024, $72 million of compensation cost, net of estimated forfeitures, related to unvested restricted stock unit awards, performance stock unit awards and restricted stock attributable to future performance had not yet been recognized. This amount will be recognized in expense over a weighted-average period of 1.7 years.