BOARD AND COMMITTEE GOVERNANCE

Board of Directors and Standing Committees

Attendance by Directors at Board Meetings

The Board of Directors met 56 times in 2004.2005. Each director attended every meeting of the Board of Directors.

Attendance by Members of the Board of Directors at the Annual Meeting of Stockholders

The Corporation encourages members of the Board of Directors to attend each Annual Meeting of Stockholders and 7all of the 8 currentsitting directors attended the Annual Meeting of Stockholders held on April 29, 2004.28, 2005.

Lead Non-Management Director

On April 29, 2004,28, 2005, K.C. Caldabaugh was re-elected as the lead non-management director to preside at meetings of the non-management directors.

Standing Committees

The Audit Committee, the Compensation Committee and the Nominating & Governance Committee are the 3 Standing Committees of the Board of Directors. Each Standing Committee is composed entirely of independent directors.

Copies of the Corporation’s Corporate Governance Guidelines, Code of Business Conduct and the charters for each of the Standing Committees can be found on the Corporation’s website at http://www.schweitzer-mauduit.com. Copies of these documents may also be obtained by directing a written request to the Secretary and General Counsel at the Corporation’s headquarters address noted on the first page of this Proxy Statement.

Director Independence

The Board of Directors unanimously adopted the following standard for director independence at its December 2002 meeting:

An independent director is a person who is free from any relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Annually, the Board of Directors will assess the independence of each non-management director based on the existence or absence of a material relationship with the Company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company). The following persons shall not be considered independent:

a)                A director who is employed by the Company or any of its affiliates for the current year or any of the past five (5) years.

b)               A director who is, or in the past five (5) years has been, affiliated with or employed by a (present or former) auditor of the Company (or of an affiliate).

c)                A director who is, or in the past five (5) years has been, part of an interlocking directorate in which an executive officer of the Company serves on the compensation committee of another company that concurrently employs the director.

d)               A director who is, or in the past five (5) years has been, a Family Member of an individual who was employed by the Company or any of its affiliates as an executive officer. The term “Family Member” shall mean a person’s spouse, parents, children, siblings, mothers and

fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law, and anyone (other than household employees) who shares such person’s home.

e)                A director who, during the current fiscal year or any of the past five (5) fiscal years, personally provided services to the Company or its affiliates that had an annual value in excess of $60,000; or who was paid or accepted, or who has a non-employee Family Member who was paid or accepted, any payments from the Company or any of its affiliates in excess of $60,000 other than compensation for board service, benefits under a tax-qualified retirement plan, or non-discretionary compensation.

f)                  A director who is a partner in, or a controlling shareholder or an executive officer of, any organization (profit or non-profit) to which the Company made, or from which the Company received, payments (other than those arising solely from investments in the Company’s securities) that exceed one percent (1%) of the recipient’s annual consolidated gross revenues in the current year or any of the past five (5) fiscal years; unless, for provisions (e) and (f), the Board of Directors expressly determines in its business judgment that the relationship does not interfere with the director’s exercise of independent judgment.

Based on the foregoing standard and the standards for independence articulated by the New York Stock Exchange and the Securities and Exchange Commission, the Board affirmatively determined by resolution dated February 23, 200522, 2006 that the following directors, who collectively constitute 63%75% of the full Board and represent 100% of the membership of the Standing Committees, are independent:

Wayne H. Deitrich is a member of management and is not considered independent. Jean-Pierre Le Hétêt, are membersthe former Chief Operating Officer of management and are therefore not considered independent under the NYSE independence standards.Corporation retired from the Board of Directors effective January 31, 2006. Laurent G. Chambaz is not considered independent under the Corporation’s independence standards due to sums paid within the last 5 years by a subsidiary of the Corporation to law firms in which Mr. Chambaz was a partner.

Financial ExpertExperts

The Board of Directors affirmatively determined by resolution dated February 23, 200522, 2006 that K.C. Caldabaugh, Richard D. Jackson and all three members of the Audit Committee, K.C. Caldabaugh, Leonard J. Kujawa and Manuel J. Iraola, qualify as financial experts as such term is defined in Regulation S-K, Item 401(h), and each of these directors is a member of the Audit Committee..

810

The following table lists the current members, principal functions and meetings held in 20042005 for each of the Standing Committees, the non-management directors and the independent directors:

Compensation of Directors

A director who is an officer or an employee of the Corporation or any of its subsidiaries or affiliates does not receive any fees for service as a member of the Board of Directors, or any committee thereof, but is reimbursed for expenses incurred as a result of such service. Each director who is not an officer or employee of the Corporation or any of its subsidiaries or affiliates (a “non-employee director”) received the following compensation in 2004:2005 in addition to reimbursement of their actual and reasonable travel expenses:

(1)          In 2004,2005, each non-employee director received 864916 shares of Common Stock under the Directors’Outside Directors Stock Plan or a similar amount in stock unit equivalents pursuant to the Schweitzer-Mauduit International, Inc. Deferred Compensation Plan No. 2 for Non-Employee Directors for those directors who elected to participate in that plan.

(2)          The members of the Audit Committee receive no direct or indirect compensation from the Corporation other than the compensation paid for service as a Director.Director of the Corporation or its affiliated entities.

From 2000 to 2004, directors could annually elect to defer all or part of their compensation received from the Corporation pursuant to the Corporation’s Non-Employee Directors Deferred Compensation Plan for Non-Employee Directors (“Outside Director Deferral Plan”). Participation in this plan allowed a director to defer receipt of compensation and to thereby also defer certain state and federal income taxes until the deferred compensation is paid upon the director’s retirement from the Board of Directors or earlier death or disability. In connection with recent changes to regulations governing deferred compensation plans imposed by the American Jobs Creation Act of 2004, the Corporation adopted the Deferred Compensation Plan No. 2 for Non-Employee Directors. The Outside Director Deferral Plan shall bewas frozen as of December 31, 2004 to stop the accrual of additional unvested benefits. Participants will not accrue any additional benefits, other than market-based investment earningearnings or losses on their individual accounts underaccount balances, as of that plan.date. As of January 1, 2005, all directors who annually elect to defer all or part of their compensation received from the Corporation will participate in the Deferred Compensation Plan No. 2 for Non-Employee Directors. This plan is aThe Outside Director Deferral Plan and the Deferred Compensation Plan No. 2 for Non-Employee Directors are non-qualified, deferred compensation planplans that permitspermit participants to defer the receipt of their annual retainer or fees not otherwise eligiblefees. Deferred Compensation Plan No. 2 for deferral. This planNon-Employee Directors is intended to operate in a manner substantially similar to the existing Outside Director Deferral Plan, subject to thosecertain new requirements and changes mandated under Section 409A of the Internal Revenue Code of 1986, as amended. The Corporation provides no guaranty of repayment of the principal amount deferred or of any earnings on the participants’ account balances.

Audit Committee Report

The following report summarizes the Audit Committee’s actions during 2004.2005. This report shall not be deemed to be incorporated by reference by any general statement incorporating this Proxy Statement by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Corporation specifically incorporates this information by reference, and shall not otherwise be deemed filed under such acts.

In accordance with its written charter, the Audit Committee of the Board of Directors (“Audit Committee”) assists the Board of Directors by overseeing and monitoring:

(1)         the integrity of the Corporation’s financial statements,

(2)         the Corporation’s compliance with legal and regulatory requirements,

(3)         the outside auditor’s qualifications and independence and

(4)         the performance of the Corporation’s internal control function, its system of internal and disclosure controls and the outside auditor.

The members of the Audit Committee meet the applicable independence and experience requirements of the New York Stock Exchange and the standards for determining a director’s independence adopted by the Board of Directors.

During 2004,2005, the Audit Committee met 87 times, including discussion of the interim financial information and earnings guidance contained in each quarterly earnings announcement with the Chief Financial Officer, Controller and outside auditor prior to public release.

The following table summarizes the aggregate fees relating to amounts billed to the Corporation by its outside auditor, Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu and their respective affiliates, (collectively, “Deloitte”) for the fiscal years ended December 31, 20042005 and 2003:2004:

(1)          Includes fees billed for 2004 and 2003 for professional services rendered in connection with the audit of the annual financial statements, audit of the Corporation’s internal control over financial reporting and management’s assessment thereof, review of financial statements included in the Form 10-Q filings and for services provided for statutory and regulatory filings or engagements. Includes fees billed for 2004 for professional services rendered in connection with the audit of the Corporation’s internal control over financial reporting and management’s assessment thereof, which totaled $608,000.

(2)          Includes fees incurred for 2004 and 2003 for assurance and related services and consultation on regulatory matters or accounting standards. Includes fees incurred for 2004 and 2003 for consultation concerning Sarbanes-Oxley Act of 2002, Section 404 readiness. Includes fees incurred for 2003 for the audit of employee benefit plans.

(3)          Includes fees incurred for 2004 and 2003 for tax return preparation and compliance and tax advice and tax planning. Includes fees incurred for 2003 for tax consultation regarding a legal restructuring in the Corporation’s international operations to better align the legal structure with the business purposes and for tax due diligence of a potential acquisition.

(4)          Includes other fees not included in the above categories.

The above services performed by the outside auditor in 2004 were pre-approved in accordance with the pre-approval policy and procedures adopted by the Audit Committee at its December 5, 2002 meeting, as amended at the April 21, 2003 meeting.Committee. These procedures describe the permitted audit, audit-related, tax and other services (collectively, the “Disclosure Categories”) that the outside auditor may perform. The procedure requires that prior to the beginning of each fiscal year, a description of the services (the “Service

List”) expected to be performed by the outside auditor in each of the Disclosure Categories in the following fiscal year be presented to the Audit Committee for approval.

Services provided by the outside auditor during the following year that are included in the Service List are pre-approved following policies and procedure of the Audit Committee.

Any requests for audit, audit-related, tax, and other services not contemplated on the Service List must be submitted to the Audit Committee for specific pre-approval and cannot commence until such approval has been granted. Normally, pre-approval is provided at regularly scheduled meetings. However, the authority to grant specific pre-approval between meetings, as necessary, has been delegated to the

Chairman of the Audit Committee. The Chairman must update the Audit Committee at the next regularly scheduled meeting of any services that were granted specific pre-approval.

In addition, although not required by the rules and regulations of the Securities and Exchange Commission, the Audit Committee is provided a range of fees associated with each proposed service on the Service List and any services that were not originally included on the Service List. Providing a range of fees for a service incorporates appropriate oversight and control of the outside auditor relationship, while permitting the Corporation to receive immediate assistance from the outside auditor when time is of the essence. The policy does not contain a de minimis provision that would provide retroactive approval for permissible non-audit services under certain circumstances.

On a periodic basis, the Audit Committee reviews the status of services and fees incurred year-to-date against the Service List and the forecast of remaining services and fees for the fiscal year.

In discharging its oversight responsibility as to the audit process, the Audit Committee obtained from the outside auditor a formal written statement describing all relationships between the outside auditor and the Corporation that might bear on the outside auditor’s independence consistent with Independence Standards Board Standard No. 1, “Independence DiscussionsDiscussion with Audit Committees,” discussed with the outside auditor any relationships that may impact their objectivity and independence, including the services and amounts reflected in the above table, and satisfied itself as to the outside auditor’s independence.

The Committee reviewed with the outside auditor their audit plans, audit scope and identification of audit risks. The Audit Committee also discussed with management and the outside auditor the quality and adequacy of the Corporation’s internal control function and its system of internal and disclosure controls.

The Audit Committee discussed and reviewed with the outside auditor all communications required by Securities and Exchange Commission regulations and by generally accepted auditing standards, including those described in Statement on Auditing Standards No. 61, as amended, “Communication with Audit Committees” and, with and without management present, discussed and reviewed the results of the outside auditor’s examination of the financial statements.

The Audit Committee discussed, reviewed and monitored the Corporation’s plans and activities related to Sarbanes-Oxley Act Section 404 compliance on a regular basis. It is estimated that the Corporation incurred approximately $1.3an approximate total of $0.9 million and $1.6 million in Section 404 compliance costs in 2004.for 2005 and 2004, respectively.

The Audit Committee reviewed and discussed the audited financial statements of the Corporation as of and for the fiscal year ended December 31, 2004,2005, with management and the outside auditor. Management has the responsibility for the preparation of the Corporation’s financial statements and the outside auditor has the responsibility for conducting an audit of those statements.

Based on the above-mentioned review and discussions with management and the outside auditor, the Committee recommended to the Board of Directors that the Corporation’s audited financial statements be included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2004,2005, for filing with the Securities and Exchange Commission. The Audit Committee also recommended the reappointment of the outside auditor and the Board of Directors concurred in such recommendation.

13BOARD OF DIRECTORS

Leonard J. Kujawa (Chairman)

K.C. Caldabaugh

Manuel J. Iraola

14

EXECUTIVE COMPENSATION

Compensation Committee Report

The following report summarizes the Compensation Committee’s philosophy on executive compensation, the vehicles used to deliver executive compensation and the actions taken by the Compensation Committee during 2004.2005. This report shall not be deemed to be incorporated by reference by any general statement incorporating this Proxy Statement by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Corporation specifically incorporates this information by reference, and shall not otherwise be deemed filed under such acts.

Independence

The Compensation Committee was established by the Board of Directors on December 1, 1995 and is composed entirely of 3 independent directors. The Board of Directors elects the members and the chairperson of the committee.committee annually.

Duties of the Committee

The Compensation Committee is governed by the Corporation’s By-Laws and the Compensation Committee Charter, a copy of which can be viewed on the Corporation’s website. Pursuant to its charter, the Compensation Committee establishes the Corporation’s compensation and benefit policies and practices for directors, executive officers and key managerial employees. The Compensation Committee annually approves the base salary for all executive officers, including the Chief Executive Officer, and administers the Annual Incentive Plan, the Equity Participation Plan, pursuant to which stock options are granted, the Restricted Stock Plan and the Long-Term Incentive Plan, as well as approving any contributions by the Corporation to the account of any participant in the Corporation’s deferred compensation arrangements. The Compensation Committee approves the performance objectives and targets under the Annual Incentive Plan and the Long-Term Incentive Plans,Plan, except the Corporate unit objectives and targets under the Annual Incentive Plan, which are set by the entire Board of Directors. The Compensation Committee confirms actual performance against objectives and targets forauthorizes any associated payouts at the close of each award period under the Annual Incentive Plan and the Long-Term Incentive Plans.Plan. The Compensation Committee reviewsevaluates the Chief Executive Officer’s performance objectives and targets when establishedrecommends a performance rating for the Chief Executive Officer to the full Board of Directors for its action. The Compensation Committee establishes individual performance goals for the Chief Executive Officer under the Annual Incentive Plan and the actualevaluates his performance achieved against those targetsobjectives at the end of the performance period withperiod. The Compensation Committee reviews and authorizes the full Boardaward of Directors.restricted stock to any officer.

Use of Outside Expertise

The Compensation Committee has retained Towers Perrin to advise it on the design and structure of the Corporation’s executive compensation program and to conduct market analyses as to the specific levels and form of executive compensation paid by comparable manufacturing companies for like executive positions. In 2004,November 2005, the Compensation Committee undertook a competitive bid process following which it decided to retainrenewed the contract with Towers Perrin to act as itsthe Compensation Committee’s compensation consultant for 2005.2006. This decision was based, among other things, on Towers Perrin’s capabilities both domestically and in each of the geographic regions where the Corporation or its subsidiaries has operations, as well as Towers Perrin’s extensive databases and understanding of the Compensation Committee’s compensation philosophy and the Corporation’s financial drivers and market dynamics. Although Towers Perrin is also retained by the Corporation for actuarial and other services related to itsthe Corporation’s retirement and other benefit plans. Theplan, the Compensation Committee is satisfied that the objectivity of the services and information provided to the Compensation Committee by Towers Perrin are not compromised by the other business between Towers Perrin and the Corporation. Comparative compensation information was drawn from a broader range of companies than those included in the industry index used in the performance graph on page 27 of this Proxy Statement.

Executive Compensation Philosophy and Policies

The Corporation’s executive compensation policies are designed to attract and retain qualified executives, to appropriately reward individual achievement, and to enhance the financial performance of the Corporation, and thus stockholder value, by significantly aligning the financial interests of the Corporation’s executives with those of its stockholders.

The Compensation Committee generally targets both the annual and long-term components of executive compensation at the 50th percentile of such compensation paid to persons holding similar executive positions at comparable companies based on an annual competitive compensation survey. Comparative compensation information was drawn from a broader range of companies than those included in the industry index used in the performance graph on page 30 of this Proxy Statement. To accomplish these objectives, the executive compensation program as administered by the Compensation Committee consists primarily of:

(i)            annual cash compensation, the components of which are base salary and an annual variable cash incentive payable pursuant to the Corporation’s Annual Incentive Plan, which is performance based;

(ii)        long-term incentive compensation structured as 50% equity by grants of stock option awardsoptions pursuant to the Corporation’s Equity Participation Plan or restricted stock pursuant to the Corporation’s Restricted Stock Plan and 50% cash in the form of a long-term performance incentive award payable in cash pursuant to the Corporation’s Long-Term Incentive Plan;Plan, which is performance based;

(iii)  Special    special purpose or recognition grants of restricted stock pursuant to the Corporation’s Restricted Stock Plan;

(iv)      corporate contributions of cash to the Corporation’s deferred compensation arrangements as special purpose or recognition awards or to partially offset future tax liabilities associated with grants of restricted stock;

(v)          Corporation’s Executive Severance Plan, which provides selected executives with certain benefits in the event of a change of control or upon termination for other than cause or voluntary resignation; and

                           (iv)  Participation(vi)      participation in other benefit plans available to employees generally, includingwhich include the Corporation’s Retirement Plan, Retirement Savings Plan and a medical plan. The Named Executive Officers and certain other more highly compensated individuals also participate in a Supplemental Benefit Plan, a non-qualified retirement benefit plan, and may elect to participateplan.

Each of these components of executive compensation is discussed in a deferred compensation plan.further detail below.

Annual Salary and Incentive Bonuses

In determining the base salaries of executive officers, the Compensation Committee reviewedreviews salaries paid to similarly situated executives in the companies reflected in the above-described compensation study. In establishing base salary levels, the Compensation Committeestudy and considers additional factors such factors as job complexity, performance, level of responsibility, the relationship of the position to the Corporation’s long-term strategic goals, and the particular individual’s skills, experience and background. While no pre-established weightings are given to these factors, particular emphasis is placed on attractingdeveloping a competitive base salary that will attract and retainingretain quality individuals in order to develop and retainmaintain an effective executive team for the Corporation. In 2005, the Compensation Committee approved salary increases for the Corporation’s officers that were in line with the 50th percentile of compensation paid for like positions and responsibilities in comparable companies. The average base salary increase over the prior year was 4%, 4% and 9% for U.S., French and Brazilian based officers, respectively.

16

Incentive Bonuses under the Annual Incentive Plan

The purpose of the Corporation’s Annual Incentive Plan is to furtherfocus management on the achievement of short-term corporate goals that are to be accomplished in a fiscal year. The metrics used to set performance objectives under the Annual Incentive Plan have been approved by stockholders and are intended to unite the interests of the stockholders of the Corporation and its key employees throughemployees. Although not an exclusive list, the annual establishment of corporateCompensation Committee has focused on growth in operating profit and in diluted earnings per share in establishing performance objectives andunder the annual payment of cash incentive awards to key employees based on individual performance and the attainment of the Corporation’s objectives.Annual Incentive Plan.

Target incentive cash opportunities under the Annual Incentive Plan for executive officers, including the CEO, can range from 30% to 75% of a participant’s base salary with a maximum payout of up to 192.5% of the participant’s target incentive award percentage. The Compensation Committee determines actual annual cash bonuses by measuring performance at the end of the fiscal year against specific goals established at the beginning of each fiscal year. The goals take into account, depending on the responsibility of the individual, 2 or more of the following:

·       the individual’s performance;

·       the performance of the functional group or unit with which the individual is associated (primarily based upon the operating profit of such unit); and

·       the overall performance of the Corporation (primarily based upon diluted earnings per share).

Such goals may or may not be equally weighted and may vary from one executive officer to another. With the exception of individual performance goals, which do not constitute more than 30% of any executive officer’s total Annual Incentive Plan award opportunity, Annual Incentive Plan awards for the performance of the functional unit’sunit and the Corporation’s performanceCorporation comprise the majority of any award opportunity, .with individual goals not constituting more than 30% of any officer’s total Annual Incentive Plan award opportunity.

The Compensation Committee determined that the functional unit objectives and the Corporate unit objective were not met in 2005 and therefore no payout was made against the 2005 Annual Incentive Plan award opportunity to any officer. The Chief Executive Officer determined that no 2005 Annual Incentive Plan individual unit objective awards would be paid since diluted earnings per share failed to exceed the prior year diluted earnings per share.

Long-Term Incentive Compensation

The Corporation’s long-term incentive compensation for its key executives consists of:

(i)            grants of stock options pursuant to the Corporation’s Equity Participation Plan; or

(ii)        grants of restricted stock pursuant to the Restricted Stock Plan; and

(iii)    a cash opportunity payable based on achievement ofopportunity.

The objectives generally over a 3-year performance period pursuant tounder the Corporation’s Long-Term Incentive Plan.

Plan, stockholder approved, are established for multiple years at the beginning of an award cycle and are intended to focus management on longer-term strategic goals. The Equity Participationequity component of the Long-Term Incentive Plan is also intended to provide a means of encouraging an ownership interest in the Corporation by those employees who have contributed or are determined to be in a position to contribute materially to the success of the Corporation, thereby increasing their motivation for and interest in the achievement of the Corporation’s long-term success.

The Compensation Committee designates participants in the Long-Term Incentive Plan and determines a total award opportunity for each performance cycle, 50% of which is payable in cash and the other 50% by equity in the form of stock options or restricted stock. Award opportunities are generally granted and measured on the basis of a 3-year performance period. Performance is measured on a cumulative basis and a portion of each performance cycle’s overall cash and equity award opportunity may be earned, but not paid out, annually. A part of the award opportunity may still be earned in each year

even if the cumulative performance objectives are not met provided that pre-established stand-alone annual objectives are achieved. Payment of any earned award is made at the end of the performance period and is subject to the participant’s continued employment at the time of payment, except in the case of death, disability or an approved retirement. New award opportunities are not established until the current performance period is concluded thereby maintaining a clearer focus on the long-term performance objectives established by the Compensation Committee for each performance cycle. The Long-Term Incentive Plan award opportunities are based on a competitive market analysis of long-term incentive opportunities for executive management positions in comparable companies. Under the Long-Term Incentive Plan, a target cash award is established for each participant, which, taken together with a participant’s stock option and restricted stock grants, is structured to provide the participant with a total long-term incentive award commensurate with the participant’s responsibilities. A participant in the Long-Term Incentive Plan can earn cash and equity awards that range from 0% up to 200% of the target performance award opportunity allocated by the Compensation Committee.

The Compensation Committee evaluated performance against objectives established for year 2005 of the 2004-2005 performance cycle under the Long-Term Incentive Plan and determined that none of the objectives were met. Therefore, no award was earned in year 2005 for this performance cycle. The portion of the two-year award opportunity earned in year 2004 was paid in January 2006.

The Compensation Committee established a new Long-Term Incentive Plan award opportunity for 2006-2008 that sets performance objectives selected from among the performance metrics previously approved by stockholders. As in the past, the award opportunity is provided 50% in the form of cash and 50% in the form of equity, but the 2006-2008 award opportunity will use restricted stock grants under the Restricted Stock Plan instead of stock options to provide the equity component. At the beginning of each year in the 3-year award cycle, the total long-term compensation opportunity for that year will be determined by the Committee based on the Towers Perrin competitive compensation survey. This determination establishes the cash and equity award opportunity for that year; however, the performance metrics established at the beginning of the award cycle that must be met to earn an award do not change.

The portion of the total equity and cash awards earned in each year of the 3-year award cycle is determined by the Compensation Committee based on performance against objectives at the end of each year. The equity component earned each year will be provided in the form of restricted stock grants. The cash award earned in a given year will be banked. The restricted shares awarded will not vest and the cash award earned will not be paid to the participant until the completion of the full 3-year award cycle and, provided further, that the participant is still employed with the Corporation at the time of payment and vesting except for reasons of a change of control, death, retirement or total and permanent disability. The estimated award opportunities at the Target-Maximum performance levels provided to the Named Executive Officers in the 2006-2008 award cycle are set forth on page 25.

The Equity Participation Plan, stockholder approved, provides an opportunity for the award of stock options in amounts and to participants designated by the Compensation Committee. Because the value of a stock option bears a direct relationship to the price of shares of the Corporation’s Common Stock, stock options are viewed as a means of encouraging executives and other key management employees to increase long-term stockholder value. The Compensation Committee grants stock option awards based on such factors as the competitive target long-term incentive opportunity for executives with comparable responsibilities in similarly sized corporations, individual contributions to corporate performance and management recommendations. The Equity Participation Plan mandates that the strike price of any options awarded be set at no less than the fair market value of the Common Stock at the time of grant. The Compensation Committee awarded stock options to the officers of the Corporation in an amount equivalent to 50% of their respective total long-term incentive compensation opportunity for 2005 under the Corporation’s Long-Term Incentive Plan. The Equity Participation Plan expired in 2005. Stock options are not expected to be a component of the Long-Term Incentive Plan in the future and therefore the

Equity Participation Plan was not renewed. Options granted to the Named Executive Officers in 2005 are stated in the table captioned “2005 Option Grants” found on page 23.

The Restricted Stock Plan is intended to promote the long-term financial success of the Corporation by attracting to and retaining for the Corporation and its Affiliates outstanding executive personnel and to motivate such personnel by means of restricted stock grants to contribute to the Corporation’s success. The Compensation Committee designates the participants in the Restricted Stock Plan and establishes the terms on which grants of restricted stock are made. Awards of restricted stock are made from the Corporation’s treasury stock and constitute an immediate transfer of ownership to the participant of shares of the Corporation’s Common Stock, including the right to vote the shares and to receive dividends thereon, at a share price established by the Compensation Committee in its discretion. The Participant’s continued ownership of and right to freely transfer the restricted stock is subject to such conditions on transferability and to such risks of forfeiture as are established by the Compensation Committee at the time of the grant, which may include continued employment with the Corporation for a defined period, achievement of specified management performance objectives or other conditions. As with stock options, a portion of the value of restricted stock bears a direct relationship to the value of the Corporation’s Common Stock and, therefore, total stockholder return.

The Long-Term Incentive Plan is designed Commencing in January 2006, Restricted Stock will be used to enableprovide the Corporation to attract and retain key executives by providing a competitive and diversified total compensation package and to help focus executives’ attention on the long-term performanceequity component that comprises 50% of the Corporation. The Compensation Committee designates participants intotal award opportunity under the Long-Term Incentive Plan, determines cash award opportunities generally on the basis of a 3-year performance period and is otherwise responsible for administration of theCorporation’s Long-Term Incentive Plan. Performance is measured on a cumulative basis and a portion of each performance cycle’s overall cash award opportunity may be earned annually. A part of the award opportunity may still be earned in each year even if the cumulative performance objectives are not met provided that pre-established stand-alone annual objectives are achieved. Payment of any earned award is made at the end of

the performance period and is subject to the participant’s continued employment at the time of payment, except in the case of death, disability or an approved retirement. New award opportunities are not established until the current performance period is concluded thereby maintaining a clearer focus on the long-term performance objectives established byIn 2005, the Compensation Committee for each performance cycle. The Long-Term Incentive Plan award opportunities are based on a competitive market analysisapproved awards of long-term incentive opportunities for executive management positions in comparable companies. Under the Long-Term Incentive Plan, a target cash award is established for each participant, which, taken together with a participant’s stock option and restricted stock, grants, is structured to provide the participant with a total long-term incentive award commensurate with the participant’s responsibilities. The award opportunity is allocated 50% in cash and 50% in equity opportunity in the form of stock options granted under the Equity Participation Plan or restricted stock granted under the Restricted Stock Plan. A participant in the Long-Term Incentive Plan can earn cash awards that range from 0% up to 200% of the performance award opportunity allocated by the Compensation Committee.

The Compensation Committee established an award opportunity for the 2004-2005 performance cycle. This award opportunity is a 2-year period because the number of shares authorized for the grant of stock options under the Equity Participation Plan was insufficient to address a 3-year cycle. As each long-term incentive opportunity is a combination of cash and equity opportunities, this 2-year period was appropriate. The Corporation decided not to seek shareholder authorization for additional shares to be issued for stock option grants until an evaluation ofeffective January 2006, to the continued use of stock options in light of pending changes in their accounting treatment is completed.following Named Executive Officers:  Wayne H. Deitrich and Paul C. Roberts.

Deferred Compensation

As an adjunct to the annual salary and to the annual bonus and long-term incentive bonus that may be earned under the Annual Incentive and Long-Term Incentive Plans, respectively, by the Named Executive Officers and other key employees, the Corporation has a Deferred Compensation Plan. The Deferred Compensation Plan permits eligible employees who elect to participate to defer receipt and taxation of a portion of their annual salary and incentive bonuses. The amount of annual salary and incentive bonus awards that may be deferred is limited to 25% and 50%, respectively. Eligibility to participate in the Deferred Compensation Plan is limited to “management” and “highly compensated employees” as defined in the Employee Retirement Income Security Act of 1974, as amended. The Corporation may, with Compensation Committee approval, make cash contributions to a participant’s account in the Deferred Compensation Plan. In connection with the recent changes to the regulations governing deferred compensation plans imposed by the American Jobs Creation Act of 2004, contributions and deferrals into the Deferred Compensation Plan have been frozen to stop the accrual of additional unvested benefits in that plan as of December 31, 2004. Participants will not accrue any additional benefits other than market-based investment earningearnings or losses on their individual accounts in that plan. New deferrals and any future contributions will go into the Deferred Compensation Plan No. 2. This plan is also a non-qualified, deferred compensation plan. This plan is intended to operate in a manner substantially similar to the Deferred Compensation Plan, subject to those new requirements and changes mandated under Section 409A of the Internal Revenue Code of 1986, as amended.

Amounts deferred into the Deferred Compensation Plan by a participating officer, or contributed on the officer’s behalf by the Corporation, can be invested at the officer’s election in an account that tracks, but does not actually invest in, one or more of the fund elections available under the Corporation’s 401(k) savings plan. The participating officer bears the investment risk. The Corporation makes no guaranty as to the return of the principal amount of any funds deferred or of any income thereon. The funds remain subject to the Corporation’s creditors while in the Deferred Compensation Plan.

Certain amounts paid as retirement benefits have also been contributed to the accounts of certain officers in the Deferred Compensation Plan that received a retirement benefit under the Cash Balance Formula. These contributions are discussed in further detail under the caption Supplemental Retirement Arrangements on page 28.

Compensation of Chief Executive Officer

The Compensation Committee has traditionally used the same compensation policy for all executive officers described above to determine the compensation for Wayne H. Deitrich, the Chairman and Chief Executive Officer. In 2003, Mr. Deitrich proposed and the Compensation Committee agreed by Unanimous Written Consent to revise the basis on which Mr. Deitrich’s base salary would be determined. Under the revised compensation approach, Mr. Deitrich’s base salary will remain at $500,000 per annum (75% of the targeted 50^th percentile or 37.5% — the target level — of the base salary paid to the Chairman

and Chief Executive Officers of public companies comparable to the Corporation in 2003). Mr. Deitrich’s base salary will not be adjusted unless the 50^th percentile target level, as determined by an independent consultant’s competitive compensation analysis, is greater than $667,000, at which point his base salary will adjust to 75% of the new target level. Effective in 2003, annually,Annually, the Board of Directors evaluates Mr. Deitrich’sreceives a recommendation as to base salary, Annual Incentive Plan objectives for the upcoming year and a recommendation for the just completed year’s performance and,rating from the Compensation Committee. Through 2005, if the Board determines itMr. Deitrich’s performance to be satisfactory, the Board may award Mr. Deitrich up to 3,500 shares of Restricted Stock in recognition of his annual performance.performance in lieu of an increase in base salary. As a result, of these changes, an increased portion of Mr. Deitrich’s total compensation is tied to the value of the Corporation’s stock and thereby his interests are further aligned with the economic interest of the Corporation’s stockholders. Mr. Deitrich will continue to participatealso participates in the Annual Incentive Plan, Long-Term Incentive Plan, Restricted Stock Plan and the Equity Participation Plan on the same basis as the other officers of the Corporation.

Corporate Tax Deduction for Executive Compensation

Pursuant to the Omnibus Budget Reconciliation Act of 1993 (“OBRA”), annual compensation payable to the CEO and each of the 4 highest paid executive officers of a public corporation will not be deductible by the corporation for Federal Income Tax purposes to the extent any such officer’s overall compensation exceeds $1,000,000. Certain types of compensation, including qualifying performance-based incentive compensation that is stockholder approved, are deductible and excluded for purposes of calculating the $1,000,000 base under Code Section 162(m). OBRA recognizes stock option plans as performance-based if such plans meet certain requirements. The Compensation Committee will take advantage of qualifying compensation paid to the Named Executive Officers under OBRA to maintain the Corporation’s deduction for such expenses where it deems appropriate and advisable. The Board of Directors has determined that it is in the Corporation’s best interest to qualify the Annual Incentive Plan and the Long-Term Incentive Plan under Code Section 162(m) and therefore presented those plans for stockholder approval in 2004, which approval was granted. However, all executive compensation plans and compensation paid to the Named Executive Officers may not be so qualified, but itqualified. It is not currently expected that the Corporation will looselose the benefit of any tax deduction related to which it would otherwise be entitled but for the failure to obtain such qualification.executive compensation.

1820

The executive compensation information reported in the Summary Compensation Table set forth below is for services rendered to the Corporation and its subsidiaries, in accordance with the rules and regulations of the Securities and Exchange Commission, commencing on January 1, 20022003 and ending on December 31, 2004,2005, the last day of the Corporation’s 20042005 fiscal year. All salary, bonus and other compensation is reported notwithstanding that portions of such compensation may not have yet been paid by the Corporation or may have been deferred by the recipient and therefore not technically received by the recipient in the period reported. The compensation of the French-based executives, Mr. Bellanger and Mr. Le Hétêt, is calculated and paid in Euros. All 2005 Euro based numbers have been converted to U.S. dollars using an exchange rate of 1.35631.1837 Euro to the U.S. dollar.

Summary Compensation Table

(1)             This column shows the market value of restricted stock awards on the date of grant. The aggregate holdings of restricted stock granted prior to the timeframe covered by this proxy statement that have not yet vested, held on and valued at the closing price of $33.95$24.78 on December 31, 200430, 2005 by the individuals listed in this table, are:  Mr. Deitrich 7,000Roberts 2,500 shares/$237,650; Mr. Roberts 7,500 shares/$254,62561,950 and Mr. Thompson 7,5002,500 shares/$254,625. Mr. Deitrich’s restricted stock vests on March 19, 2005 and May 13, 2005.61,950. Dividends are payable on the restricted stock. In 2004,2005 dividends were paid on unvested restricted stock in the following amounts:  for Mr. Deitrich $3,825,$1,050, for Mr. Roberts $5,625$1,500 and for Mr. Thompson $5,625.$1,500.

(2)             Awarded January 3, 2005, January 2, 2004 and January 2, 2003, and, January 15, 2002, respectively.

(3)             Includes unused regular vacation earned in the following amounts:  for Mr. Deitrich $13,462 for 2005, $1,923 for 2004 and $3,846 for 2003, and $10,577 for 2002;2003; for Mr. Bellanger $15,876 for 2005, $31,991 for 2004 and $23,256 for 2003 and $12,712 for 2002;2003; for Mr. Le Hétêt $23,738 for 2005, $26,444 for 2004 and $40,449 for 2003 and $31,074 for 2002;2003; and for Mr. Roberts $11,742 for 2005, $11,077 for 2004 and $10,654 for 2003 and $10,269 for 2002.2003.

(4)Includes contributions by the Corporation to the Schweitzer-Mauduit International, Inc. Retirement Savings Plan of $6,300 for 2005, $6,150 for 2004 and $6,000 for 2003.

(5)             Includes amounts earned in the first year of the 2004-2005 performance cycle under the Corporation’s Long-Term Incentive Plan, payment of which is subject only to continued employment through the end of the performance cycle, in the following amounts:  for Mr. Deitrich $206,700, for Mr. Bellanger $50,933, for Mr. Le Hétêt $142,119; for Mr. Roberts $71,436; and for Mr. Thompson $29,468.

  (5)Includes contributions by the Corporation of $6,150 for 2004, $6,000 for 2003 and $5,500 for 2002 to the Schweitzer-Mauduit International, Inc. Retirement Savings Plan.

(6)             Includes amounts earned in the third year of the 2001-2003 performance cycle under the Corporation’s Long-Term Incentive Plan in the following amounts:  for Mr. Deitrich $297,675, for Mr. Bellanger $64,216; for Mr. Le Hétêt $170,615; for Mr. Roberts $92,948; and for Mr. Thompson $82,013.

(7)Includes amounts earned in the second year of the 2001-2003 performance cycle under the Corporation’s Long-Term Incentive Plan in the following amounts: for Mr. Deitrich $217,560; for Mr. Bellanger $28,224; for Mr. Le Hétêt $103,976; for Mr. Roberts $67,932; and for Mr. Thompson $59,940.

  (8)Mr. Bellanger became President — French Operations on November 1, 2002.

  (9)             Includes the amount accrued for hours credited to the employee under various French Laws. For Mr. Bellanger $17,860 for 2005, $8,886 for 2004 and $5,814 for 2003 and $12,712 for 2002 and for Mr. Le Hétêt $20,574 for 2005, $30,222 for 2004 and $13,482 for 2003 and $8,106 for 2002.2003.

(10)(8)             Includes the contribution to the Profit Sharing Plan (“Participation”) by certain of the Corporation’s French subsidiaries, on Mr. Bellanger’s behalf estimated to be in the amount of $11,064 for 2005, $16,124 for 2004 and $23,109 for 2003 and $18,655 for 2002;2003; on Mr. Le Hétêt’s behalf estimated to be in the amount of $26,827 for 2005, $26,296 for 2004 and $23,109 for 2003 and $18,655 for 2002.2003.

19

(11)(9)             Includes $88,061 that Mr. Bellanger electedThe aggregate incremental cost to take in the formcompany of a cash distribution from his Comp Epargne Temp (“CET”) in 2002. Under French law, salaried employees accumulate supplemental hours of paid leave that can be credited to an account, the CET, in accordance with specific regulations. This account grows over their career and the hours accumulated may be withdrawn upon retirement or under other special circumstances. The funds removed from the CET by Mr. Bellanger reflected a redemption of hours at his 2002 rate of pay that had been accumulating since 1988 under these legally mandated programs.car allowance.

(12)(10)       Mr. Le Hétêt was President-French Operations through October 31, 2002. He continues to serve in his capacity as Chief Operating Officer.received a meal allowance of $1,183 and health insurance of $107 for 2005, $1,367 and $109 for 2004 and $951 and $65 for 2003.

(13)(11)       Includes contributions by the Corporation pursuant to the Corporation’s Deferred Compensation Plandeferred compensation arrangements in the amount of $5,000 made on January 1, 2004,2005, January 1, 20032004 and January 1, 2002.2003. The contributions vestvested on January 1, 2006.

(14)(12)       Includes imputed income for group life insurance coverage in excess of $50,000 for: Messrs.$50,000. For Mr. Roberts in the amount of $596 for 2003 and $566 for 2002 andMr. Thompson in the amount of $221 for 2003 and $210 for 2002.2003. The Company’s contribution toward group life insurance was terminated as a benefit in 2004.

(15)(13)       Includes contributionsa contribution by the Corporation pursuant to the Corporation’s Deferred Compensation Plan in the amount of $10,000 made on January 1, 2003 and January 1, 2002.2003. The contributionscontribution vested on January 1, 2004.

(16)(14)       Includes a contribution by the Corporation to the Deferred Compensation Plan for Mr. Thompson in the amount of $5,304 for 2003 and $8,289 for 2002 representing the amount by which the cash balance formula pension plan contribution exceeded IRS limitations. Please see the discussion of the Cash Balance Plan on page 2427-28 for additional information.

22

20042005 Option Grants, Option Exercises and Option Values

The following table sets forth information concerning stock options granted during 20042005 to the Named Executive Officers of the Corporation.

20042005 Option Grants

(1)          Represents shares of Common Stock underlying options granted on January 2, 20043, 2005 pursuant to the Corporation’s Equity Participation Plan.

(2)          The Corporation granted options during fiscal year 20042005 to employees to purchase an aggregate of 187,900200,100 shares of Common Stock.

(3)          The exercise price of the options granted in 20042005 was based upon the mean of the high and low salestrading prices of the Corporation’s Common Stock on January 2, 2004,3, 2005, the date the options were granted.

(4)          The options granted in January 2004 are exercisable in increments of 30%, 30% and 40%2005 became 100% vested on or after January 2, 2005, January 2, 2006 and January 2, 2007, respectively.December 1, 2005.

(5)          Calculation is based on the Black-Scholes option-pricing model adapted for use in valuing stock options. The following assumptions were used for the 2004 grants:2005 grant: market value of the stock equal to the exercise price; ten-year option term; estimated volatility of 29.17%19.89%; risk-free rate of return of 4.58%4.50% based on the interest rate on 10-year government securities; and a yield of 2.54%2.12%. The resulting Black-Scholes option value was $9.25.$8.64.

The following table sets forth information concerning the pre-tax value of unexercised options held by the Corporation’s Named Executive Officers as of December 31, 2004.2005. As noted in the following table, Named Executive Officers exercised options in 2004.2005.

Aggregated OptionsOption Exercises in 20042005 and
20042005 Year-End Option Values