<PAGE>
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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
DELTIC TIMBER CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO OF DELTIC TIMBER CORPORATION APPEARS HERE]
DELTIC TIMBER CORPORATION
NOTICE OF ANNUAL MEETING
_________________
To the Stockholders of
Deltic Timber Corporation:
The first Annual Meeting of Stockholders of Deltic Timber Corporation
("Deltic" or "the Company") will be held at the South Arkansas Arts Center, 110
East 5th Street, El Dorado, Arkansas, on Wednesday, May 21, 1997 at 10:00 a.m.,
Central Daylight Time, for the following purposes:
Item 1: To elect three Class I directors to hold office for a three
year term;
Item 2: To express approval or disapproval of the action of the
Executive Committee of the Board of Directors in appointing KPMG Peat
Marwick LLP as the Company's independent auditors for 1997.
To transact such other business as may properly come before the
meeting and any adjournment thereof.
Holders of record of Deltic common stock at the close of business on March
24, 1997 will be entitled to vote with respect to this solicitation.
Stockholders are reminded that your shares of Deltic common stock cannot be
voted unless you properly execute and return the enclosed proxy card or make
other arrangements to have your shares represented at the meeting.
By order of the Board of Directors,
W. Bayless Rowe
Secretary
El Dorado, Arkansas
March 27, 1997
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING,
PLEASE COMPLETE AND RETURN THE PROXY CARD IN THE ENVELOPE PROVIDED, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
DELTIC TIMBER CORPORATION
P.O. BOX 7200
EL DORADO, ARKANSAS 71731-7200
--------------------
PROXY STATEMENT
--------------------
GENERAL
This proxy statement and the accompanying proxy card are being furnished in
connection with the solicitation of proxies on behalf of the Board of Directors
of Deltic Timber Corporation ("Deltic" or "the Company") for the Annual Meeting
of Stockholders to be held on May 21, 1997, in El Dorado, Arkansas. Only
stockholders of record at the close of business on March 24, 1997 (the "Record
Date") are entitled to notice of, and to vote at, the meeting. There were
12,798,323 shares of Deltic common stock outstanding and entitled to vote on
February 28, 1997. Each share of Deltic common stock is entitled to one vote on
each matter properly brought before the meeting.
Commencing approximately on April 3, 1997, the Company is mailing its
annual report for the year ended December 31, 1996, together with this proxy
statement and the enclosed proxy card to holders of Deltic common stock on the
Record Date. If you have Deltic common stock in multiple accounts, you may
receive more than one annual report. If you like, you may reduce the number of
reports that you receive and save the Company the cost of producing and mailing
the extra reports. To authorize Deltic to discontinue mailing extra reports,
please mark the appropriate box on the proxy card for selected accounts, making
sure that at least one account continues to receive an annual report.
Eliminating these duplicate mailings will not affect receipt of future proxy
statements or proxy cards.
If you own Deltic common stock beneficially and receive more than one
Deltic annual report, please consider giving permission to your nominee to
eliminate duplicate mailings.
As a new public company, this is Deltic's first solicitation of proxies for
its Annual Meeting of Stockholders. On December 31, 1996 (the "Distribution
Date"), Murphy Oil Corporation ("Murphy") distributed to Murphy stockholders of
record as of December 2, 1996, all of the outstanding shares of Deltic common
stock (the "spin off"). As a result of the spin off, Murphy fully divested its
ownership of the Company and Deltic became a publicly owned company.
VOTING OF PROXIES
Your vote is important. Shares can be voted at the annual meeting only if
you are present in person or represented by proxy. Even if you plan to attend
the meeting, you are urged to sign, date and return the accompanying proxy card.
When the enclosed proxy card is properly signed, dated, and returned, stock
represented by the proxy will be voted in accordance with your directions. You
can specify your voting instructions by marking the appropriate boxes on the
proxy card. If your proxy card is signed and returned without specific voting
instructions, your shares of Deltic common stock will be voted as recommended by
the Board of Directors: "FOR" the election of the three nominees for director
named in the proxy card, and
(1)
<PAGE>
"FOR" the ratification of the selection of KPMG Peat Marwick LLP as the
Company's independent auditors for 1997. Abstentions marked on the proxy card
are voted "against" the proposals but are counted in determination of a quorum.
You may revoke your proxy at any time before it is voted at the meeting by
(a) executing a later-dated proxy, (b) voting by ballot at the meeting, or
filing a notice of revocation with the inspectors of election in care of the
Secretary of the Company at the above address.
VOTING SHARES HELD IN EMPLOYEE THRIFT PLAN
If you are a participant in Fund C of the Deltic Thrift Plan or Fund C-1 of
the Murphy Thrift Plan, the trustees of such plans will vote the number of
shares allocated to your account pursuant to the instructions you provide, so
please sign and return your card promptly.
VOTES REQUIRED
The presence, in person or by proxy, of the holders of at least a majority
of the shares of Deltic common stock outstanding on the Record Date is necessary
to have a quorum for the annual meeting. Abstentions and broker "no-votes" are
counted as present for purposes of determining a quorum. A broker "no-vote"
occurs when a nominee holding shares of Deltic common stock for a beneficial
owner does not vote on a particular proposal because the nominee does not have
discretionary voting power with respect to that item and has not received
instructions from the beneficial owner.
The affirmative vote of a majority of the shares present in person or by
proxy at the meeting is required for the passage of the Board of Directors'
proposals (Items 1 and 2). Any shares not voted by abstention have the same
effect as a vote against the proposals and broker "no-votes" have no effect on
the outcome of the vote.
SOLICITATION OF PROXIES
Solicitation of proxies may be made by directors, officers or employees of
the Company through the mail, in person and by telecommunications. The cost of
soliciting proxies will be borne by the Company. In accordance with the
regulations of the Securities and Exchange Commission ("SEC") and the New York
Stock Exchange ("NYSE"), the Company will also reimburse brokerage houses and
other custodians, nominees and fiduciaries for their expenses incurred in
sending proxies and proxy materials to the beneficial owners of Deltic common
stock.
PROCEDURES FOR STOCKHOLDER PROPOSALS AND NOMINATIONS
Under the Company's Amended and Restated Bylaws, nominations for director
may be made only by the Board of Directors (or a committee of the Board), or by
a stockholder entitled to vote who has delivered notice to the Company not less
than ninety (90) days before the first anniversary of the preceding year's
annual meeting. For purposes of the 1997 Annual Meeting of Stockholders, May
21, 1997 is deemed the first anniversary of the previous year's meeting.
(2)
<PAGE>
The Bylaws also provide that no business may be brought before an annual
meeting except as specified in the notice of meeting (which includes
stockholder's proposals that the Company is required to set forth in its proxy
statement under applicable SEC rules) or as otherwise brought before the meeting
by or at the direction of the Board or by a stockholder entitled to vote who has
delivered notice to the Company (containing certain information specified in the
Bylaws) within the time limits described above for a nomination for the election
of director. These requirements are separate and apart from, and in addition to
the SEC's requirements that a stockholder must comply with in order to have a
stockholder proposal included in the Company's proxy statement under SEC rules.
A copy of the full text of Company's Amended and Restated Bylaws may be
obtained upon written request to the Secretary at the address provided above.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Stockholder proposals intended to be presented at Deltic's 1998 Annual
Meeting of Stockholders must be received by Deltic's Secretary no later than
February 20, 1998. Such proposals must meet the requirements set forth in the
rules and regulations of the SEC in order to be eligible for inclusion in the
Company's 1998 proxy materials.
ELECTION OF CLASS I DIRECTORS
(ITEM 1 ON PROXY CARD)
The Board of Directors currently consists of three classes of directors,
equal in number. Directors hold office for staggered terms of three years (or
less if they are filling a vacancy) and until their successors are elected and
qualified. One of the three classes, comprising one third of the directors, is
elected each year to succeed the directors whose terms are expiring. The
directors in Class I will be elected at the 1997 annual meeting to serve for a
term expiring at the Company's annual meeting in the year 2000. The directors
in Classes II and III are serving terms expiring at the Company's Annual Meeting
of Stockholders in 1998 and 1999, respectively.
The Company was incorporated in Delaware on September 4, 1996 in
anticipation of the spin off by Murphy of its farm, timber and real estate
business, then conducted by Deltic Farm & Timber Co., Inc., an Arkansas
corporation ("Deltic Farm & Timber"). Effective December 17, 1996, Deltic Farm
& Timber was merged with and into the Company. From the date of its
incorporation until December 17, 1996, the Board of Directors of the Company
consisted of three employees of Murphy, Messrs. Walter K. Compton, Clefton D.
Vaughan and W. Bayless Rowe. (The latter two individuals became employees of
Deltic effective January 1, 1997.) Effective on December 17, 1996, Murphy,
acting as Deltic's sole stockholder, elected nine new directors to Deltic's
board, including its Chairman, Robert C. Nolan, and the two other nominees for
election at the 1997 annual meeting. These nine directors have served
continuously on the Board since their election.
Deltic's Board of Directors has proposed the following nominees for
election as directors at the 1997 annual meeting:
NOMINEES FOR CLASS I DIRECTORS
WITH TERMS EXPIRING AT THE ANNUAL MEETING IN THE YEAR 2000:
(3)
<PAGE>
Robert C. Nolan
Ron L. Pearce
Alex R. Lieblong
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE ABOVE-
NAMED NOMINEES AS DIRECTORS FOR A TERM OF THREE YEARS. Proxies solicited by the
Board of Directors will be voted "FOR" the election of the nominees, unless
otherwise instructed on the proxy card.
Information is provided below with respect to each nominee for election and
for each director whose term expires in subsequent years. Should one or more of
these nominees be unavailable to accept nomination or election as a director,
the individuals named as proxies on the enclosed proxy card will vote the shares
that they represent for the election of such other persons as the Board may
recommend unless the Board reduces the number of directors. The Board of
Directors knows of no reason why any of the nominees will be unavailable or
unable to serve if elected.
NOMINEES FOR ELECTION AS DIRECTORS
CLASS I -- NOMINEES FOR TERMS EXPIRING IN 2000
ROBERT C. NOLAN, 55, has been the Company's non-employee Chairman of the
Board since December 17, 1996. For the past 25 years, Mr. Nolan has been
Managing Partner of Munoco Company, an Arkansas partnership engaged in the
exploration for and production of oil and gas. In addition, Mr. Nolan has over
25 years experience in timberland management. Mr. Nolan is a director of First
United Bancshares, Inc. and First National Bank of El Dorado. Mr. Nolan is
Chairman of the Board's Executive and Nominating Committee, and by virtue of his
office serves as an "ex officio" member of all other Committees of the Board,
except the Audit Committee.
RON L. PEARCE, 55, has been President and Chief Executive Officer and a
Director of the Company since December 17, 1996. From June 1993, Mr. Pearce was
President of Deltic Farm & Timber, which was merged with and into the Company on
December 17, 1996. Prior to such time, Mr. Pearce was Manager of Operations and
Planning for Deltic Farm & Timber, a position he held beginning in February
1991. Mr. Pearce is a member of the Board's Executive and Nominating Committee.
ALEX R. LIEBLONG, 46, has been a Director since December 17, 1996. Since
1987, Mr. Lieblong has been Branch Manager, Corporate Vice President of
PaineWebber, Inc. Mr. Lieblong serves as a member of the Board's Executive and
Nominating Committee and Executive Compensation Committee.
DIRECTORS WHOSE TERM OF OFFICE CONTINUE
CLASS II -- TERMS EXPIRE IN 1998
ERIC M. HEINER, 52, has been a Director since December 17, 1996. Since
1975, Mr. Heiner has been engaged in real estate development and investments.
Mr. Heiner serves as a member of the Board's Audit Committee and Executive
Compensation Committee.
(4)
<PAGE>
WILLIAM L. ROSOFF, 50, has been a Director since December 17, 1996. Since
1985, Mr. Rosoff has been a partner of Davis Polk & Wardwell, a law firm which
has represented Murphy and the Company in various corporate matters. Davis Polk
& Wardwell advised Murphy and the Company in connection with the spin off.
Deltic expects to continue to retain the services of Davis Polk & Wardwell in
the future. Mr. Rosoff serves as a member of the Board's Audit Committee and
Executive Compensation Committee (except as to certain matters).
JOHN C. SHEALY, 68, has been a Director since December 17, 1996. Mr.
Shealy was Vice President and General Manager, Southern Region of Willamette
Industries, Inc. from 1981 until his retirement in 1994. Mr. Shealy is also
Chairman of American Bank of Ruston, Louisiana. Mr. Shealy serves as Chairman
of the Board's Audit Committee.
CLASS III -- TERMS EXPIRE IN 1999
O.H. DARLING, JR., 68, has been a Director since December 17, 1996. Mr.
Darling was Division Manager, Crossett Division, Georgia Pacific Corporation
from 1978 until his retirement in April 1994. Mr. Darling serves as a member of
the Board's Audit Committee.
REV. CHRISTOPH KELLER, III, 42, has been a Director since December 17,
1996. Rev. Keller has been a clergyman since 1982 and the Vicar of St.
Margaret's Episcopal Church in Little Rock, Arkansas since June 1990. Rev.
Keller is also Chairman of Inglewood Land and Development Company of Alexandria,
Louisiana. Rev. Keller serves as a member of the Board's Audit Committee and
Executive Compensation Committee.
R. MADISON MURPHY, 39, has been a Director since December 17, 1996. Since
October 1994, Mr. Murphy has been Chairman of the Board of Murphy. Prior to
such time, Mr. Murphy served as Executive Vice President and Chief Financial and
Administrative Officer of Murphy (from March 1992 to October 1994, with the
Chief Administrative position added in February 1993), Vice President of
Planning of Murphy (February 1988 to March 1992) and Treasurer of Murphy (July
1990 to August 1991). Mr. Murphy is also a director of First United Bancshares,
Inc. Mr. Murphy serves as Chairman of the Board's Executive Compensation
Committee and as a member of its Executive and Nominating Committee.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Messrs. Keller, Murphy and Nolan are first cousins and Mr. Heiner is the
spouse of a first cousin of Messrs. Keller, Murphy and Nolan. These four
nominees, their spouses, and members of their immediate families directly or
indirectly own in the aggregate approximately 25% of the outstanding stock of
the Company and may be considered the controlling persons of the Company. See
also "Certain Stock Ownerships" on Page 7 of this Proxy Statement.
The Company owns undivided interests in numerous tracts of timberland and
several tracts of farmland that it operates and manages on behalf of itself and
co-owners. In addition, the Company manages under contract timberland and
farmland in which it does not own an interest for third parties. Messrs. Nolan,
Murphy, Keller and Heiner and members of their respective families (the
"families") own certain undivided interests in timberland and farmland managed
by the Company. In addition, the families are parties to management contracts
with the Company for timberland and farmland which they or entities for which
they are officers, directors, stockholders, trustees and /or partners own. The
Company's standard
(5)
<PAGE>
terms and conditions are utilized in all arrangements with the families, as well
as with other third parties. For timberland, these terms and conditions include
an annual per acre fee, cost plus 15% for special silvicultural projects and a
5% commission from the proceeds of timber sales. For farmland, the principal
term and condition is a fee of 25% of operating income realized from crop
sales. During 1996, Munoco Company, an Arkansas partnership, for whom Mr. Nolan
is managing general partner, received a distribution of proceeds totaling
$60,937.50 from a farming venture operated and owned 61.875% by the Company.
The families own approximately 96% of the outstanding shares of Loutre Land and
Timber Company, an Arkansas corporation. Loutre Land and Timber Company owns
approximately 30,000 acres of timberland, most of which is managed by the
Company. In 1996, Loutre Land and Timber Company paid to Deltic $159,647.24 for
management fees, special silvicultural services and timber sales commissions.
The families also own approximately 16% of the outstanding stock of First Land
and Timber Corporation, an Arkansas corporation. The Company manages
approximately 9,700 acres of timberland owned by First Land and Timber
Corporation and in 1996 received management fees, special silvicultural project
expense and timber sale commissions totaling $132,540.42.
THE BOARD OF DIRECTORS
The responsibility and authority for managing the business of the Company
rests with its Board of Directors, who are elected by its stockholders. The
Board of Directors sets strategic policy, approves business plans and delegates
authority to execute its policies and plans to the President and Chief Executive
Officer. In 1997, Deltic's Board of Directors is scheduled to meet at least six
times.
During 1996, Deltic's current Board of Directors did not hold any meetings.
Prior to December 17, 1996 the Murphy employees who constituted the Company's
Board of Directors acted by unanimous written consent on several matters related
to the spin off and merger with Deltic Farm & Timber. During 1996, matters
concerning compensation of the Company's executive officers were determined by
Murphy.
COMMITTEES
At the first meeting of Deltic's Board of Directors held on January 22,
1997, the Board established three committees: the Audit Committee, the
Executive Compensation Committee, and the Executive and Nominating Committee.
These committees are briefly described below:
The Audit Committee meets regularly with the Company's independent auditors
and internal auditors to review the adequacy of the Company's internal controls
as well as the scope and reports of audits performed by them. In addition, the
committee is the principal agent of the Board of Directors in assuring the
adequacy of the Company's financial and accounting reporting control processes.
The Audit Committee is also responsible for recommending to the Board of
Directors the appointment of the Company's independent auditors. The committee
consists of five independent directors and is expected to meet as necessary in
1997.
The Executive Compensation Committee reviews and approves the Company's
total compensation philosophy and programs covering executive officers and key
management employees as well as the competitiveness of Deltic's total
compensation practices. The committee also reviews the performance levels of
Deltic's executive officers and determines base salaries and incentive awards
for such executive officers and also the compensation of Deltic's non-employee
chairman. The committee, which consists of five independent (including four
"non-employee") directors, has met once in 1997 and is expected to
(6)
<PAGE>
meet again as necessary.
The Executive and Nominating Committee acts as surrogate for the Board by
maintaining surveillance over operations and exercising the general powers of
the Board when the Board is not in session, except that the Committee does not
have the power, among other things to: declare dividends, issue stock, amend
the Bylaws, or approve any merger or share exchange. This committee also
constitutes the Board's Nominating Committee and in such capacity it proposes
and considers suggestions as to candidates for membership on the Board,
including a slate of directors for submission to the stockholders at the annual
meeting. The Committee has met twice thus far in 1997 and is expected to meet
each month during which the Board does not meet.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company will be paid an annual
retainer of $16,000, a $1,000 fee for each meeting attended of the Board and a
$500 fee for each meeting attended of any committee thereof. Retainer and
meeting fees are paid quarterly in arrears. Directors are also reimbursed their
travel, meal and lodging expenses for attending meetings. In addition to the
regular retainer and meeting fees, the Company's non-employee chairman, Mr.
Nolan, is paid $50,000 per annum.
CERTAIN STOCK OWNERSHIP
The following table and related text sets forth information, by the
categories listed, concerning ownership of Common Stock of the Company at
February 28, 1997 with respect to each director (including those nominated for
re-election), each of the named executive officers listed in the "Summary
Compensation Table" on Page 9 of this Proxy Statement, directors and officers
as a group, and each person or entity who has filed reports with the Company
pursuant to applicable SEC rules disclosing ownership of as much as 5% of the
Company's Common Stock.
<TABLE>
<CAPTION>
TYPE OF OWNERSHIP
---------------------------------------------------------
VOTING AND
INVESTMENT
PERSONAL, POWER ONLY, SUBJECT TO
WITH FULL SPOUSE AND NOT OPTIONS PERCENT OF
VOTING AND PERSONAL, AS AND OTHER INCLUDED IN EXERCISABLE OUTSTANDING
INVESTING BENEFICIARY HOUSEHOLD OTHER WITHIN (IF GREATER
NAME POWER OF TRUST(S) MEMBERS (/1/) COLUMNS (/2/) 60 DAYS (/3/) TOTAL THAN .09)
- ----------------------------- ------------ ------------- ------------- ------------- ------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
O.H. Darling................. 1,000 --- --- --- --- 1,000 ---
Eric Heiner.................. 5,654 --- 134,942 13,738 --- 154,334 1.2%
Rev. Christoph Keller, III... 22,454 65,079 4,656 5,128 --- 97,317 ---
Alex Lieblong................ 5,000 --- --- --- --- 5,000 ---
R. Madison Murphy............ 30,875 174,531 23,295 174,390 --- 403,091 3.1%
Robert C. Nolan.............. 30,214 7,670 --- 158,337 --- 196,221 1.5%
Ron Pearce................... 3,823 123 --- --- 3,750 7,696 ---
William Rosoff............... --- --- --- --- --- --- ---
John Shealy.................. 1,500 --- --- --- --- 1,500 ---
Clefton D. Vaughan........... 1,787 1,600 --- --- 2,750 6,137 ---
W. Bayless Rowe.............. --- 876 71 --- 1,500 2,447 ---
Jack R. McCray............... 18 --- --- --- --- 18 ---
All directors together with
five officers
as a group............... 102,679 249,879 162,964 351,593 8,000 875,115 6.8%
</TABLE>
(7)
<PAGE>
_________________________
/1/ Includes shares directly owned and shares owned as beneficiary
of trust(s).
/2/ Includes shares held as a trustee for others and shares owned by a
corporation or other organization of which the named person is an officer.
/3/ See note 5 to the "Summary Compensation Table" on Page 9 of this
Proxy Statement for additional details of these options.
Persons or entities who have filed reports with the Company through
February 28, 1997 pursuant to applicable SEC rules disclosing ownership of as
much as 5% of the Company's common stock are as follows:
(1) On January 10, 1997, C.H. Murphy, Jr., Suite 400, Union Bldg., El
Dorado, Arkansas, filed a Schedule 13(d) report which disclosed that as of
December 31, 1996 and as a result of the spin off: Mr. Murphy has sole voting
and dispositive power as to 339,531 shares of the Company's common stock; the
spouse and other household members of Mr. Murphy own 876 shares of the Company's
common stock; and Mr. Murphy has shared voting and dispositive power as to
856,374 shares of the Company's common stock. Combined, these categories of
shares represent 9.3% of the outstanding common stock of the Company. Mr.
Murphy is the father of Director R. Madison Murphy and the uncle of: Director
Robert C. Nolan, Director Christoph Keller, III, and Director Eric M. Heiner's
spouse.
(2) On February 10, 1997, First United Bancshares, Inc. filed a Schedule
13(g) report which disclosed that as of December 31, 1996 and a result of the
spin off, its wholly owned subsidiary, First United Trust Company, N.A., Main
and Washington Streets, El Dorado, Arkansas has sole or shared voting and
dispositive power as to 726,823 shares of the Company's common stock,
representing 5.7% of the outstanding common stock of the Company.
(3) On February 12, 1997, The Capitol Group Companies, Inc. filed a
Schedule 13(g) report which disclosed that as of December 31, 1996 and as a
result of the spin off, its wholly owned subsidiary, Capitol Research and
Management Company, 333 South Hope Street, Los Angeles, California, holds
investment power, as a result of acting as investment adviser to various
investment companies registered under Section 8 of the Investment Company Act of
1940, as to 1,186,050 shares of the Company's common stock, representing 9.3% of
the outstanding common stock of the Company.
Under the Securities laws of the United States, the Company's directors
and its executive officers are required to report their ownership of the
Company's common stock and any changes in that ownership to the Securities and
Exchange Commission and the New York Stock Exchange. Specific due dates for
these reports have been established and the Company is required to report in
this Proxy Statement any failure to file by these dates. To date, each of the
directors and officers satisfied their filing requirements.
EXECUTIVE COMPENSATION
As a wholly owned subsidiary until the December 31, 1996 distribution of
the Company's common stock by Murphy, matters involving the compensation of the
Company's executive officers for fiscal year 1996 were determined by Murphy.
The following table sets forth information with respect to compensation for the
Company's President and Chief Executive Officer and the three other most highly
compensated
(8)
<PAGE>
executive officers of the Company at the end of 1996:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------------------------------- LONG-TERM
COMPENSATION AWARDS
OTHER --------------------- ALL
ANNUAL RESTRICTED SECURITIES OTHER
COMPEN- STOCK UNDERLYING COMPEN-
SALARY BONUS SATION AWARDS OPTIONS SATION
NAME AND PRINCIPAL POSITION YEAR ($) (/1/) ($) (/2/) ($) (/3/) ($) (/4/) (#) (/5/) ($) (/6/)
- ----------------------------- ----- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Ron L. Pearce 1996 141,250 55,000 --- 53,594 5,000 8,965
President and Chief 1995 126,250 --- --- --- 5,000 5,384
Executive Officer 1994 115,002 30,000 --- 50,625 2,500 4,717
Clefton D. Vaughan 1996 204,006 60,000 24,336 75,031 3,500 14,299
Vice President, Finance 1995 196,458 --- --- --- 3,500 12,024
and Administration and 1994 190,172 21,000 --- 50,625 2,000 11,618
Treasurer [Prior to 1/1/97
Vaughan was employed by
Murphy as Vice President.]
W. Bayless Rowe 1996 127,834 40,000 --- --- 3,500 6,976
General Counsel and 1995 121,350 --- --- --- 3,000 6,672
Secretary [Prior to 1/1/97 1994 104,997 12,000 --- --- --- 5,877
Rowe was employed by
Murphy as General Attorney
and Secretary]
Jack R. McCray 1996 108,573 24,500 --- --- 2,000 4,524
Manager, Real Estate 1995 104,466 --- --- --- --- 3,774
Vice President, Chenal 1994 100,112 8,500 --- --- --- 3,689
Properties, Inc.
</TABLE>
____________________________
/1/ Includes amounts of cash compensation earned and received by
executive officers as well as amounts earned but deferred at the election of
those officers.
/2/ Bonuses were awarded and paid by Murphy after the end of the year
in which they are reported. Because these payments related to services rendered
in the year prior to payment, Murphy reported bonuses as a component of
compensation expense in the prior year.
/3/ Represents the amount of income tax payments made by Murphy for
restricted Murphy stock awards that vested in 1996.
/4/ Represents the closing stock price of unrestricted Murphy stock on
date of grant ($42.875 on February 6, 1996 and $40.50 on March 2, 1994) times
the number of restricted Murphy shares granted. Dividends are being paid on
restricted stock at the same rate paid to all Murphy stockholders. On December
31, 1996 Mr. Pearce held a total of 2,500 restricted shares having a then
current value of $104,219. Mr. Pearce was deemed to have retired as of January
1, 1997 for purposes of Murphy's restricted stock program and forfeited 1,500 of
these shares. Mr. Vaughan held a total of 3,875 restricted shares having a then
current value of $215,547. Mr. Vaughan retired from Murphy on January 1, 1997
and forfeited 1,900 of these shares.
(9)
<PAGE>
/5/ These options are "non qualified" stock options for Murphy common
stock. The options vest as to one-half of the shares two years after date of
grant, and as to the other one-half, three years after date of grant. Options
that have not vested as of the date of retirement or other termination of
employment with Murphy are canceled. Mr. Vaughan retired from Murphy as of
January 1, 1997, and Messrs. Pearce, Rowe and McCray were deemed for purposes of
Murphy's stock option program to have retired as of January 1, 1997.
Consequently, all of the options awarded in 1996 and 1995 to the named executive
officers were canceled, and one-half of the options awarded in 1994 were
canceled. In January, 1997, the Company's Board of Directors appointed its
Executive Compensation Committee. The Executive Compensation Committee
determined to replace Murphy stock options that had been canceled with stock
options for shares of Company common stock. Such replacement options reflected
the pertinent terms and conditions (such as vesting date) as the canceled Murphy
options and were priced to maintain the same value as existed on December 31,
1996 in the canceled Murphy options. Replacement options which are exercisable
within 60 days are included in the table showing "Certain Stock Ownership" on
Page 7 of this Proxy Statement.
/6/ The total amounts shown in this column for 1996 consist of the
following: Mr. Pearce: $3,250--Dividends on restricted stock; $5,091--Company
contributions to defined contribution plan; $624--Benefit attributable to
Murphy-owned term life insurance policy. Mr. Vaughan: $6,175--Dividends on
restricted stock; $7,500--Murphy contributions to defined contribution plan;
$624--Benefit attributable to Murphy-owned term life insurance policy. Mr.
Rowe: $6,352--Murphy contributions to defined contribution plan; $624--Benefit
attributable to Murphy-owned term life insurance policy. Mr. McCray: $3,900--
Company contribution to defined contribution plan; $624--Benefit attributable to
Murphy-owned term life insurance policy.
OPTION GRANTS, EXERCISES AND FISCAL YEAR END VALUES
As a wholly owned subsidiary of Murphy for the last fiscal year, there
were no options for the common stock or other security of the Company granted or
exercised during 1996. Since the beginning of 1997, the Company's Board of
Directors has appointed its Executive Compensation Committee which has met once
thus far. At its meeting, the Executive Compensation Committee made awards of
incentive and non qualified stock options for common stock of the Company
(including awards intended to replace similar Murphy awards forfeited as a
result of the spin off), subject to proper registration of such common stock, to
key employees of the Company. These awards were made pursuant to the Company's
1996 Stock Incentive Plan (the "1996 SIP") which was adopted by the Company and
approved by its sole stockholder in December 1996. The specifics of such awards
and the 1996 SIP will be addressed in reports applicable to fiscal year 1997.
EXECUTIVE COMPENSATION COMMITTEE REPORT
As a wholly owned subsidiary of Murphy prior to the spin off, all of the
compensation decisions and actions pertaining to the executive officers of the
Company for 1996 were made and taken by Murphy. The current members of the
Company's Executive Compensation Committee were appointed on January 22, 1997.
During 1997 the Executive Compensation Committee intends to develop its long
range compensation philosophy and objectives. It will report on these as well
as its base salary practices, annual and long term incentive compensation
programs and compensation of the Company's President and Chief Executive Officer
in reports applicable to decisions and actions for 1997 and subsequent periods.
(10)
<PAGE>
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Internal Revenue Code generally limits the
corporate tax deduction for compensation paid during a year to a public
company's chief executive officer and its four other most highly compensated
executed officers to $1 million, unless specified conditions are met. Certain
performance-based compensation is not subject to the deduction limitation. The
Company did not have nondeductible compensation expense during 1996 and is not
expected to have such in 1997. Nevertheless, the Executive Compensation
Committee intends to review this matter from time to time and, if appropriate
and consistent with the Company's compensation philosophy, may recommend in the
future that actions be taken to maximize the amount of compensation expense that
is deductible to the Company.
RETIREMENT PLANS
Prior to and effective upon the spin off, the Company established its
retirement plans for its employees. The plans are virtually identical to
Murphy's. The following table shows the estimated annual pension benefit
payable, at age 65, under Deltic Timber Corporation's Retirement Plan at
December 31, 1996 for the salary and length of service indicated. The amounts
shown are subject to reduction for social security benefits.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
-----------------------------------------------------------------------------------
REMUNERATION (/1/) 15 20 25 30 35 40
- -------------------- -------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
$100,000 $ 24,000 $ 32,000 $ 40,000 $ 48,000 $ 56,000 $ 64,000
150,000 36,000 48,000 60,000 72,000 84,000 96,000
200,000 48,000 64,000 80,000 96,000 112,000 128,000(/2/)
250,000 60,000 80,000 100,000 120,000 140,000(/2/) 160,000(/2/)
300,000 72,000 96,000 120,000 144,000(/2/) 168,000(/2/) 192,000(/2/)
350,000 84,000 112,000 140,000(/2/) 168,000(/2/) 196,000(/2/) 224,000(/2/)
400,000 96,000 128,000(/2/) 160,000(/2/) 192,000(/2/) 224,000(/2/) 256,000(/2/)
450,000 108,000 144,000(/2/) 180,000(/2/) 216,000(/2/) 252,000(/2/) 288,000(/2/)
500,000 120,000 160,000(/2/) 200,000(/2/) 240,000(/2/) 280,000(/2/) 320,000(/2/)
</TABLE>
A portion of the benefits shown above would be paid under the Company's
Supplemental Benefit Plan to the extend such benefits exceed legislative
limitations.
The credited years of service for Messrs. Pearce, Vaughan, Rowe and McCray
are five years, zero years, nineteen years and seven years, respectively.
- ------------------------
/1/ During 1996, the maximum compensation limit for qualified retirement
plans, as established by the Internal Revenue Service, was $150,000 ($160,000
effective January 1, 1997).
/2/ Exceeds presently allowable maximum legislative limits for annual
pension benefits under a defined benefit pension plan. In 1996, the maximum
benefit allowable was $120,000 ($125,000 effective January 1, 1997).
(11)
<PAGE>
APPROVAL OF APPOINTMENT OF INDEPENDENT AUDITORS
(ITEM 2 ON PROXY CARD)
The Board of Directors desires to obtain from the stockholders an
indication of their approval or disapproval of its Executive Committee's action
in appointing KPMG Peat Marwick LLP, Certified Public Accountants, as
independent auditors of the Company for the year 1997. KPMG Peat Marwick LLP has
been serving Murphy and its subsidiaries as independent auditors for many years.
The firm has advised the Company that its members have no direct or indirect
financial interest in the Company or any of its subsidiaries. Members of the
firm are expected to be present at the Annual Meeting for the purpose of
responding to inquiries by stockholders and such representatives will have an
opportunity to make a statement if they desire to do so.
In the event a majority of the stockholders voting should indicate they
disapprove the appointment of KPMG Peat Marwick LLP the adverse vote will be
considered as a directive to the Board of Directors to select other auditors for
the following year. Because of the difficulty and expense of making any
substitution of auditors during a year, it is contemplated that the appointment
for 1997 will be permitted to stand unless the Board finds other good reason for
making a change.
OTHER MATTERS TO COME BEFORE THE MEETING
The Board of Directors does not know of any matters which will be brought
before the 1997 annual meeting other than those specifically set forth in the
notice of meeting. If any other matters are properly introduced at the meeting
for consideration, including, among other things, consideration of a motion to
adjourn the meeting to another time or place, the individuals named on the
enclosed proxy card will have discretion to vote in accordance with their best
judgment.
The above Notice and Proxy Statement are sent by order of the Board of
Directors.
W. Bayless Rowe
Secretary
(12)
<PAGE>
[LOGO OF DELTIC TIMBER CORPORATION APPEARS HERE]
DELTIC TIMBER CORPORATION
PROXY SOLICITED BY BOARD OF DIRECTORS FOR ANNUAL MEETING, MAY 21, 1997
The stockholder(s) whose name(s) appears on the reverse side hereby appoints
Robert C. Nolan and Ron L. Pearce, or each of them, as the stockholder's proxy
or proxies, with full power of substitution, to vote all shares of Common Stock
of Deltic Timber Corporation which the stockholder is entitled to vote at the
Annual Meeting of Stockholders to be held at the South Arkansas Arts Center, 110
East 5th Street, El Dorado, Arkansas, on May 21, 1997, at 10:00 a.m., local
time, and any adjournments thereof, as fully as the stockholder could if
personally present.
IMPORTANT -- THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE ON THE
REVERSE SIDE, BUT IF NONE ARE INDICATED, THIS PROXY WILL BE VOTED FOR ALL
---
NOMINEES LISTED ON THE REVERSE SIDE, AND FOR ITEM 2.
---
(continued on reverse side)
<PAGE>
PLEASE MARK VOTE IN OVAL USING DARK INK ONLY.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED ITEMS.
1. ELECTION OF DIRECTORS-- For Withhold For All (Except Nominees(s)
Robert C. Nolan [ ] [ ] [ ] written below)
Ron L. Pearce
Alex R. Lieblong -------------------
-------------------
2. RATIFY THE APPOINTMENT OF For Against Abstain
KPMG PEAT MARWICK LLP [ ] [ ] [ ]
AS AUDITORS.
By checking this oval [ ]
the undersigned authorizes the Company
to discontinue annual and quarterly report mailing to
this account only.
Dated , 1997
-----------------
- -------------------------------------------
- -------------------------------------------
Please sign exactly as your name or names
appear hereon. For joint accounts, each
owner should sign. When signing as executor,
administrator, attorney, trustee or guardian,
etc., please give your full title. Please
return promptly.
