<PAGE>
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 (S)240.14a-11(c) or (S)240.14a-12
DELTIC TIMBER CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
DELTIC TIMBER CORPORATION
- --------------------------------------------------------------------------------
(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]
DELTIC TIMBER CORPORATION
NOTICE OF ANNUAL MEETING
_________________
To the Stockholders of
Deltic Timber Corporation:
The 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 Thursday, April 27, 2000 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 Board
of Directors in appointing KPMG LLP as the Company's independent auditors
for 2000.
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
10, 2000 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 20, 2000
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 April 27, 2000, in El Dorado, Arkansas. Only
stockholders of record at the close of business on March 10, 2000 (the "Record
Date") are entitled to notice of, and to vote at, the meeting. There were
12,313,135 shares of Deltic common stock outstanding and entitled to vote on
March 10, 2000. This amount does not include 500,744 shares of treasury stock.
Each share of outstanding Deltic common stock is entitled to one vote on each
matter properly brought before the meeting.
Commencing approximately on March 23, 2000, the Company is mailing its
annual report for the year ended December 31, 1999, together with this proxy
statement and the enclosed proxy card to holders of Deltic common stock on the
Record Date. A copy of the Company's Form 10-K for 1999 as filed with the
Securities and Exchange Commission ("SEC") may be obtained by writing the
Controller of the Company at the address provided above.
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 spaces 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 "FOR" the ratification of the selection of KPMG LLP
as the Company's independent auditors for 2000. 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 (c)
filing a notice of revocation with the inspectors of election in care of the
Secretary of the Company at the above address.
(1)
<PAGE>
VOTING SHARES HELD IN EMPLOYEE THRIFT PLAN
If you are a participant in the Deltic Stock Fund of the Deltic Timber
Corporation Thrift Plan or Fund C-1 of the Murphy Oil Corporation Thrift Plan,
the trustees of such plans will vote the number of shares allocated to your
account pursuant to the instructions you provide. Please sign and return the
instruction card to your trustee 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 voted with an abstention have the same
effect as a vote against the abstained proposal(s). 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 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 NOMINATIONS AND PROPOSALS
Under the Company's Amended and Restated Bylaws ("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 anniversary of the preceding
year's annual meeting.
The Bylaws also provide that except for stockholder proposals submitted in
a timely manner for annual stockholders' meetings, no business may be brought
before any stockholders' meeting unless specified in the notice of meeting or at
the direction of the Board of Directors. The Bylaws further set forth
procedures and requirements, including notice to the Company, for stockholders
to submit business for proper consideration at annual meetings. Any stockholder
who is a stockholder of record at the time of his notice, maintains his stock
ownership so that he is entitled to vote at the annual stockholders' meeting,
and adheres to the Bylaws' procedures and requirements, shall be
(2)
<PAGE>
entitled to present business for consideration at such meeting. In order to
present business for consideration at an annual stockholders' meeting, a
stockholder must submit a notice which sets forth a description of the nature of
the business to be considered, the stockholder's name and address as it appears
in the records of the Company, the class and number of shares beneficially owned
and any material interest of the stockholder in the business sought to be
included. In order to be timely, the notice must be received by the Company's
Secretary at the principal executive office of the Company at least ninety days
prior to the anniversary of the preceding annual meeting. 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 the Company's Amended and Restated Bylaws may be
obtained upon written request to the Secretary at the address provided above.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Stockholder proposals intended to be presented at Deltic's 2001 Annual
Meeting of Stockholders must be received by Deltic's Secretary no later than
January 28, 2001. Such proposals must meet the requirements set forth in the
Company's Bylaws as well as in the rules and regulations of the SEC in order to
be eligible for inclusion in the Company's 2001 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 were elected at the 1997 annual meeting to serve for a term
expiring at the Company's annual meeting in the year 2000 and will stand for
reelection at this year's meeting. The directors in Class II were elected at
the 1998 annual meeting to serve for a term expiring at the Company's annual
meeting in the year 2001. The directors in Class III were elected at the 1999
annual meeting to serve for a term expiring at the Company's annual meeting of
stockholders in the year 2002.
The Company was incorporated in Delaware on September 4, 1996 in
anticipation of the spin off by Murphy Oil Corporation ("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,
including Chairman Robert C. Nolan, to Deltic's board.
Deltic's Board of Directors has proposed the following nominees for
election as directors at the 2000 annual meeting:
(3)
<PAGE>
NOMINEES FOR CLASS I DIRECTORS
With Terms Expiring at the Annual Meeting in the Year 2003:
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 2003
Robert C. Nolan, 58, has been the Company's nonemployee Chairman of the
Board since December 17, 1996. For the past 28 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
27 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, 58, 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. Mr. Pearce is a member of the Board's Executive and
Nominating Committee.
Alex R. Lieblong, 49, has been a Director since December 17, 1996. In June
1997 Mr. Lieblong formed his own full service securities firm, Lieblong &
Associates, Inc., where he is President and owner. Prior to formation of
Lieblong & Associates, Inc., Mr. Lieblong was 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.
(4)
<PAGE>
DIRECTORS WHOSE TERM OF OFFICE CONTINUE
Class II -- Terms Expire in 2001
William L. Rosoff, 53, has been a Director since December 17, 1996.
Effective February 1, 2000, Mr. Rosoff rejoined the Davis Polk & Wardwell law
firm as a partner following a two-year stint as Senior Vice President and
General Counsel of RJR Nabisco Holdings Corp ("RJR Nabisco"). Prior to his
position at RJR Nabisco, Mr. Rosoff had been a partner of the Davis Polk &
Wardwell law firm for several years. Davis Polk & Wardwell has represented the
Company in various corporate matters, and the Company expects 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.
John C. Shealy, 71, 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.
R. Hunter Pierson, Jr., 48, has been a Director since December 16, 1999
when he was elected to fill the vacancy on the Board created by the death of
Eric M. Heiner. Following 10 years as a commercial lending officer at a large
bank, Mr. Pierson has been engaged since 1981 in private investments, including
real estate development. He also serves as manager of Deming Timberlands LLC.
Mr. Pierson serves as a member of the Board's Audit Committee and Executive
Compensation Committee.
Class III -- Terms Expire in 2002
O.H. Darling, Jr., 71, has been a Director since December 17, 1996. Mr.
Darling was Division Manager, Crossett Division, Georgia Pacific Corporation
from 1978 until his retirement in 1994. Mr. Darling serves as a member of the
Board's Audit Committee.
Rev. Christoph Keller, III, 45, has been a Director since December 17,
1996. Rev. Keller has been an Episcopal priest since 1982, and is currently
pursuing advanced study in theology. Rev. Keller is also a member of the Board
of Directors of Inglewood Land and Development Company of Alexandria, Louisiana
and one of the managers of Keller Enterprises, L.L.C. Rev. Keller serves as a
member of the Board's Audit Committee and Executive Compensation Committee.
R. Madison Murphy, 42, 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. 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.
(5)
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Messrs. Keller, Murphy and Nolan are first cousins and Mr. Pierson 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 26% of the outstanding stock of
the Company and may be considered the controlling persons of the Company. See
also "Certain Stock Ownership" on Pages 7 and 8 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 Pierson 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 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. The families own farmland, commonly referred to
as the Buckmeadow Plantation, which is managed and operated for the families'
account by the Company. During 1999, Buckmeadow Plantation paid to the Company
$20,814.14 for management fees and overhead reimbursement. Also during 1999,
Munoco Company, an Arkansas partnership, for whom Mr. Nolan is managing general
partner, received a distribution of proceeds totaling $121,875.00 from a farming
venture operated and owned 64.79167% 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
32,000 acres of timberland, a majority of which is managed by the Company. In
1999, Loutre Land and Timber Company paid to Deltic $137,904.71 for management
fees, special silvicultural services and timber sales commissions.
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. During 1999, Deltic's Board of Directors held six meetings. Also
during the year, the Board's Audit Committee, Executive Compensation Committee
and Executive and Nominating Committee held two, two and twelve meetings,
respectively. All of the Company's Directors attended at least 75% percent of
their Board and Committee meetings, except Mr. Rosoff.
COMMITTEES
Deltic's Board of Directors has established three principal committees: the
Audit Committee, the Executive Compensation Committee, and the Executive and
Nominating Committee. These committees are briefly described as follows:
(6)
<PAGE>
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 met twice during 1999 and is expected
to meet as necessary in 2000.
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 nonemployee
Chairman. During 1999, the committee consisted of five independent,
"nonemployee" directors and met twice. The committee will meet as necessary in
2000.
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. 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 met twelve times in 1999 and is expected to meet each month in 2000.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company are 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 nonemployee Chairman, Mr. Nolan, was paid
$60,000 during 1999.
CERTAIN STOCK OWNERSHIP
The following table and related text sets forth information, by the
categories listed, concerning beneficial ownership of Common Stock of the
Company at March 1, 2000 with respect to each director (including those
nominated for reelection), each of the named executives listed in the "Summary
Compensation Table" on Page 13 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.
(7)
<PAGE>
<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 Total than.9%)
---- ----------- ------------ ---------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
O. H. Darling.............. 1,000 --- --- --- --- 1,000 ---
Rev. Christoph Keller, III. 25,865 65,080 3,027 197,003 (3) --- 290,975 2.4%
Alex Lieblong.............. 40,000 --- --- --- --- 40,000 ---
R. Madison Murphy.......... 27,526 148,801 23,291 665,001 (4) --- 864,619 7.0%
Robert C. Nolan............ 100,214 45,370 (5) 1,500 208,337 --- 355,421 2.9%
Ron Pearce................. 24,700 (6) 344 --- --- 48,809 73,853 ---
R. Hunter Pierson, Jr...... 5,662 --- 139,665 --- --- 145,327 1.2%
William Rosoff............. 750 --- --- --- --- 750 ---
John Shealy................ 1,500 --- --- --- --- 1,500 ---
Clefton D. Vaughan......... 10,143 (6) 8,422 --- --- 32,422 50,987 ---
W. Bayless Rowe............ 6,646 (6) 2,055 300 --- 23,433 32,434 ---
Jack R. McCray............. 3,250 (6) 1,551 --- --- 9,000 13,801 ---
Richard H. Humphreys....... 2,736 (6)) 4,414 --- --- 11,375 18,525 ---
All directors together with
five named executives and
another officer
as a group 251,853 (7) 277,403 167,783 1,070,341 127,664 1,895,044 15.39%
</TABLE>
_________________________
/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 or
director as well as sole or shared investment power. Shares reported by First
United Bancshares, Inc., as described in numbered paragraph (3) below, are not
included in Messrs. Nolan's or Murphy's totals.
/3/ One of the trusts for which Reverend Keller shares investment power
owns an additional 38,375 shares of stock which were omitted from this column
since such shares were included in the column disclosing "Personal, as
beneficiary of trust(s)".
/4/ Included in this total are 176,872 shares for which Mr. Murphy serves
as Trustee for trusts whose beneficiaries are his siblings and their children
and 57,211 shares held by a charitable foundation which Mr. Murphy heads.
Beneficial ownership of such shares is expressly disclaimed. Also, included in
this total are 430,928 shares held by a partnership whose general partner is a
limited liability company for which Mr. Murphy is one of its members. Charles H.
Murphy, Jr., whose holdings are described below, is also a member of the limited
liability company, and accordingly, to this extent listing of the shares is
duplicated.
/5/ Mr. Nolan is a potential beneficiary by virtue of membership in a
class of beneficiaries, with the Trustee having sole authority to select class
members to receive distribution of trust assets.
(8)
<PAGE>
/6/ Included are shares of "restricted stock" awarded on February 18, 1998
and February 16, 2000 pursuant to the Company's 1996 Stock Incentive Plan. Such
shares are subject to vesting requirements, but the recipients are entitled to
vote such shares upon their issuance. The amount of restrictive stock for each
individual is: Pearce 10,000 shares; Vaughan 6,300 shares; Rowe 6,300 shares;
McCray 2,500 shares; and Humphreys 2,500 shares.
/7/ This total includes 28,100 shares of restricted stock as discussed in
note 6 above.
Persons or entities who have filed reports with the Company through
February 14, 2000 pursuant to applicable SEC rules disclosing ownership of as
much as 5% of the Company's common stock are as follows:
(1) On November 11, 1998, C.H. Murphy, Jr., Suite 400, Union Bldg., El
Dorado, Arkansas, filed a Schedule 13(G) report which disclosed that as of such
date Mr. Murphy has sole voting and dispositive power as to 141,505 shares of
the Company's common stock; and Mr. Murphy has shared voting and dispositive
power as to 899,708 shares of the Company's common stock. Combined, these
categories of shares represent 8.4% of the outstanding common stock of the
Company as of March 10, 2000. Mr. Murphy is the father of Director R. Madison
Murphy and the uncle of: Director Robert C. Nolan, Director Christoph Keller,
III, and Director R. Hunter Pierson's spouse.
(2) On February 8, 2000, First United Bancshares, Inc. filed Amendment No.
3 to its Schedule 13(G) report which disclosed that as of December 31, 1999 its
wholly owned subsidiaries, First United Trust Company, N.A., Main and Washington
Streets, El Dorado, Arkansas and FirstBank, 3000 New Boston Road, Texarkana,
Texas have sole or shared voting and dispositive power as to 666,357 shares of
the Company's common stock. These holdings represent 5.4% of the outstanding
common stock of the Company as of March 10, 2000.
(3) On February 4, 2000, Southeastern Asset Management, Inc., 6410 Poplar
Avenue, Memphis, Tennessee, filed Amendment No. 3 to its Schedule 13(G) report.
Such report disclosed that as of December 31, 1999 Southeastern Asset
Management, Inc. holds investment power as a result of acting as investment
advisor to various investment companies registered under Section 8 of the
Investment Company Act of 1940, as to 1,908,300 shares of the Company's stock.
These holdings represent 15.5% of the common stock of the Company as of March
10, 2000.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Under the securities laws and regulations promulgated thereunder, the
Company's directors and executive officers are required to report their
beneficial ownership (as defined in such laws and regulations) of the Company's
common stock and any changes in that ownership to the SEC and NYSE. Specific
due dates for the reports have been established and the Company is required to
report in this Proxy Statement any failure to file by said due dates. Based
solely upon a review of Form 4s and amendments thereto during fiscal year 1999
and Form 5s and amendments thereto with respect to such year, each of the
Company's directors and executive officers satisfied their filing requirements
for fiscal 1999.
(9)
<PAGE>
REPORT OF EXECUTIVE COMPENSATION COMMITTEE
The Executive Compensation Committee ("the 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. In addition, the Committee specifically reviews
the performance levels of Deltic's officers and determines base salaries and
incentive awards for such executive officers, and also the compensation of
Deltic's nonemployee Chairman. During 1999 the Committee was comprised of five
independent, nonemployee directors elected by the Board of Directors. In 1999,
the Committee met on February 17, 1999 and March 12, 1999. This report is
provided by the Committee to assist stockholders in understanding the philosophy
and objectives of the Committee and its actions during 1999.
A major objective of the Committee is to design compensation programs to
attract and retain individuals of outstanding ability for the Company, and to
provide incentives for such individuals to strive to enhance stockholder value.
Philosophically, the Committee believes its objectives can be met when the
compensation of the Company's executives is closely linked to the Company's
business performance and attainment of strategic objectives as established by
the Board. The Committee's compensation programs seek to: encourage stock
ownership by executives in order to directly align their interests with those of
all stockholders; maintain an appropriate balance between base salary and annual
and long-term incentive opportunities; and recognize and reward exceptional
individual contributions to the Company's success.
The three main elements of Deltic's compensation program are base salary,
annual bonus and long-term incentives. Base salary and bonus are keyed to
recognition of individual performance and achievement of business objectives
each year. The value of long-term incentives are directly linked to the
performance of Deltic's common stock and, therefore, to total stockholder
return. In evaluating the compensation programs, the Committee solicits the
services of independent compensation consultants and information on industry pay
practices gathered by Deltic's human resource department.
Generally for base salaries, Deltic maintains an administrative framework
of job levels into which positions are assigned based on internal comparability
and external market data. Base salaries are reviewed annually and adjusted as
appropriate to reward performance and maintain a competitive position. Annual
bonuses are awarded if the Company meets or exceeds certain performance measures
which are established each year by the Committee and/or an individual's
contributions are recognized as exceptional by the Committee. Participation in
the annual bonus program is based on job level and is intended to reward
individuals who are capable of having a significant impact on the Company's
performance. Communication of the applicable performance measure is promptly
made to each participant after it has been determined by the Committee.
The Company's 1996 Stock Incentive Plan ("1996 SIP") vests with the
Committee the authority to award incentive and nonqualified stock options, stock
appreciation rights and restricted stock. Such awards are intended under the
1996 SIP to foster and promote the long-term financial success of the Company
and materially increase stockholder value by motivating superior performance and
encouraging and providing for the acquisition of an ownership interest in the
Company by those employees upon whose judgement, interest, and special effort
the successful conduct of its operations is largely dependent. The 1996 SIP
establishes an aggregate and annual number of shares which may be issued, sets a
limit on the percentage of restricted stock which may
(10)
<PAGE>
be issued in total and to any individual, and provides for other terms and
conditions applicable to the different types of awards.
1999 Committee Actions
At its February meeting, the Committee acted in regard to each of the
Company's three main elements of compensation. First, the Committee determined
that a portion of the 1998 performance measure which had been established under
the Company's Annual Incentive Compensation Plan had not been met. This aspect
of the measure was earnings before net interest and taxes compared to the
Company's budget. The remaining portion of the measure established by the
Committee was its assessment of individual performance during the year. The
Committee noted that significant progress had been made on several important
strategic areas during the year, including growth to the Company's asset base
through additional timberland acquisitions, placement of long-term debt on
acceptable, if not favorable terms, and completion of the off balance sheet and
largely nonrecourse financing of Del-Tin Fiber L.L.C., the Company's 50% joint
venture to manufacture and market medium density fiberboard. The Committee also
recognized that the shortfall from the earnings target was contributed to by
conditions over which the Company's management and employees had no control,
such as adverse weather in the Company's farming operations and depressed North
American commodity prices for dimension lumber from the Company's lumber
manufacturing operations. The Committee accordingly determined to award cash
bonus awards to participants under the plan in reduced amounts ranging from 33%
of the target award to, in one instance, 76% of the target award. Most of the
awards made were at a 50% of target level, except where applicable business
segment performance merited consideration of an increase or decrease. Even
though the actual determination and the resulting payments were made in early
1999, the Committee recognized that the rewards were based on 1998 performance
and instructed the Company's Secretary to include such amounts as may be
applicable in the Summary Compensation Table of the Company's Proxy Statement
for last year's Annual Stockholders' Meeting. The Committee next considered an
appropriate performance measure to be applicable for 1999 under the Annual
Incentive Compensation Plan. After discussion, the Committee determined to defer
adoption of the measure in order to review alternatives. The Committee met again
the next month and decided that the measure for earning a bonus under the Annual
Incentive Compensation Plan for 1999 would be based 1/3 on improvement in the
return on capital employed ("ROCE") by the Company, 1/3 on earnings before net
interest and taxes measured against the Company's budget, and 1/3 on individual
performance and contributions. Such measure was made applicable for all plan
participants.
At the February meeting, the Committee also addressed the following
matters. Awards of stock options under the 1996 SIP were considered and made.
Each stock option under this category was priced at the fair market value on the
date of grant ($24.97 per share) and will become exercisable as to one-half of
its shares one year from the date of grant and exercisable as to the remaining
one-half, three years after the date of grant. Subject to various conditions,
each option has a term of ten years from the date of grant and will expire after
such time. To the extent allowed under applicable internal revenue code
provisions, each of the stock options awarded in 1999 was designated as
incentive stock options with any not qualifying for incentive stock option
treatment designated as nonqualified stock options. A representative of a
reputable compensation consulting firm prepared materials which were discussed
by the Committee on directions and trends of stock incentive awards among
publicly owned companies in the forest products industry and from the
consultant's much larger data base of other companies. The Committee considered
such information useful to its objective of attracting and retaining individuals
of outstanding ability for the Company, but also recognized that the Company has
unique characteristics including its size and the location,
(11)
<PAGE>
extent and nature of its operations. Based on these factors, as well as the
terms of and objectives of the 1996 SIP, the Committee awarded stock options
with terms as described.
The Committee noted an initial award of restrictive stock, which under the
Company's 1996 SIP is Common Stock, was made last year. The Committee's usual
practice is to consider awards of restrictive stock not more frequently than on
a biannual basis. As was the case in the Committee's meeting the prior year, the
Committee again discussed the concept of stock ownership guidelines for
participants in the 1996 SIP and determined it would be more appropriate to
consider establishment of minimum stock ownership levels after the 1996 SIP has
been in operation for a longer period.
The Committee also addressed 1999 base salary compensation for the
Company's executive officer. The base salary of Ron L. Pearce, the Company's
President and Chief Executive Officer, was increased 11.6% from $215,000 to
$240,000. The Committee acted after reviewing the Company's financial
performance in 1998 which included a difficult operating environment for two of
the Company's operating segments, the respective operating performance of each
of the Company's business segments, and progress toward achievement of strategic
objectives established by the Company's Board of Directors. Among the objectives
noted by the Committee were a successful timberland acquisition program which
added over 31,000 acres during 1998, and the financing projects for long-term
debt and Del-Tin Fiber L.L.C. mentioned above. The Committee believed that Mr.
Pearce's duties as the chief executive of a publicly owned company had been
performed well during 1998.
Respectfully submitted,
Executive Compensation Committee
R. Madison Murphy, Chairman Alex R. Lieblong Reverend Christoph Keller, III
Eric M. Heiner /(1)/ William L. Rosoff
/(1)/ Mr. Heiner voted in favor of each of the actions described. This report
was prepared subsequent to his death in October, 1999.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
There were no committee interlocks. Messrs. Murphy, Pierson, Keller and
Nolan are related by blood and/or marriage as described in the "Certain
Relationships and Related Transactions" section supra. Such section also
describes applicable related transactions.
EXECUTIVE COMPENSATION
The following table sets forth information with respect to compensation for
the Company's President and Chief Executive Officer and the four other most
highly compensated executives of the Company at the end of 1999:
(12)
<PAGE>
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation Awards All
---------------------
Restricted Securities Other
Stock Underlying Compen-
Salary Bonus Awards Options sation
Name and Principal Position Year ($) (1) ($) (2) ($) (3) (#) ($)(5)
- ----------------------------- ---- -------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Ron L. Pearce 1999 240,000 180,000 --- 17,500 9,624
President and Chief 1998 215,000 53,750 112,120 12,000 5,375
Executive Officer 1997 180,000 83,500 --- 34,140 (4) 6,624
Clefton D. Vaughan 1999 180,000 94,500 --- 11,000 9,624
Vice President, Finance 1998 162,000 27,000 70,075 8,000 3,773
and Administration and 1997 140,000 53,507 --- 29,171 (4) 4,080
Treasurer
W. Bayless Rowe 1999 170,000 89,250 --- 10,000 8,695
General Counsel and 1998 155,000 23,000 70,075 7,000 6,668
Secretary 1997 140,000 44,589 --- 15,500 (4) 7,537
Jack R. McCray 1999 124,400 33,900 --- 4,500 6,643
General Manager, Real 1998 118,086 18,000 28,030 3,500 4,094
Estate & Vice President, 1997 113,418 24,082 --- 5,000 (4) 4,865
Chenal Properties, Inc.
Richard H. Humphreys, 1999 106,700 31,550 --- 4,500 5,895
General Manager, Mills 1998 102,031 10,000 28,030 3,500 4,662
1997 94,380 21,108 --- 7,375 (4) 5,294
</TABLE>
/1/ Includes amounts of cash compensation earned and received by
executives as well as amounts earned but deferred at their election.
/2/ Bonuses were awarded and paid by Deltic after the end of the year in
which they are reported. Because these payments related to services rendered in
the year prior to payment, Deltic reports bonuses as a component of compensation
for the prior year.
/3/ The value of restricted stock awarded in 1998 is determined by
multiplying the number of shares times the fair market value on date of grant
($28.03 per share). Being the initial restricted stock award, there are no prior
awards to aggregate. Dividends on Common Stock will also be paid on restrictive
stock.
/4/ The stock options awarded by the Committee in 1997 included options
which were intended by the Committee to replace Murphy stock options and
restricted stock which were forfeited by the named executives as a result of the
spin off. The number of options in this
(13)
<PAGE>
unique category included in the totals listed in the table above for each of the
named executives is: Mr. Pearce - 20,390; Mr. Vaughan - 19,671; Mr. Rowe -6,500;
Mr. McCray - 2,000; and Mr. Humphreys - 4,375.
/5/ The total amounts shown in this column for 1999 consist of the
following: Mr. Pearce: $9,000 -- Company contributions to defined contribution
and excess thrift plan; $624--Benefit attributable to company paid term life
insurance policy. Mr. Vaughan: $9,000 -- Company contributions to defined
contribution and excess thrift plan; $624--Benefit attributable to company paid
term life insurance policy. Mr. Rowe: $8,071--Deltic contributions to defined
contribution and excess thrift plan; $624--Benefit attributable to company paid
term life insurance policy. Mr. McCray: $6,019--Company contribution to defined
contribution and excess thrift plan; $624--Benefit attributable to company paid
term life insurance policy. Mr. Humphreys: $5271--Company contribution to
defined contribution plan; $624--Benefit attributable to company paid term life
insurance policy.
OPTION GRANTS IN LAST FISCAL YEAR
The following table summarizes options granted during fiscal 1999 to the
named executives listed in the Summary Compensation Table, and the potential
value of the shares subject to such options if the options were exercised at
their expiration date.
<TABLE>
<CAPTION>
Potential realizable
value at assumed
annual rates of stock
price appreciation for
Individual Grants (1) option term
- -------------------------------------------------------------------------------------------------------
Number of Percent of
Securities Total Options
Underlying Granted In Exercise Expiration
Name Options Granted Fiscal Year Price ($) Date 5%($) 10%($)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ron L. Pearce 17,500 25.1% 24.97 02/17/09 274,811 696,426
Clefton D. Vaughan 11,000 15.8% 24.97 02/17/09 172,738 437,753
W. Bayless Rowe 10,000 14.3% 24.97 02/17/09 157,035 397,957
Jack R. McCray 4,500 6.4% 24.97 02/17/09 70,666 179,081
Richard H. Humphreys 4,500 6.4% 24.97 02/17/09 70,666 179,081
All Stockholders (2) 520,298,610 (5%) 828,488,581 (10%)
</TABLE>
/1/ These options were granted by the Board of Directors' Executive
Compensation Committee on February 17, 1999. The option price of $24.97 was
derived from the average of the high and low stock price on the date of grant.
One half of the option shares becomes exercisable one year from the date of
their grant, and the other one half becomes exercisable
(14)
<PAGE>
three years from the date of their grant. If a "change in control" of the
Company occurs, the options become exercisable in full. For this purpose,
"change in control" means: Deltic is no longer an independent publicly owned
corporation or sells or disposes of all or substantially all of its assets; one
third or more of the Company's incumbent Directors were not Directors three
years earlier, or elected or nominated with the approval of a majority of the
Directors who were in office three years earlier; or, a person becomes the
beneficial owner of 15% or more of Deltic's voting power through a tender offer.
The actual value, if any, of the stock options depends on whether the stock
price at exercise is greater than the option price, as well as the recipient's
continued employment through the three-year vesting period.
/2/ The potential realizable value for all Stockholders represents the
aggregate value at the end of 10 years of all Common Stock outstanding as of
February 17, 1999 (the date of awards of employee stock options) which then had
a value of $319,418,213 assuming the same rates of appreciation used to
calculate the potential realizable value of shares subject to stock options
summarized in the table. Such information is shown for comparison purposes only
and does not represent an estimate or prediction of future Common Stock price.
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUE TABLE
There were no stock option exercises during fiscal 1999. The following
table summarizes the value at December 31, 1999 of all the shares subject to
options granted to the named executives of the Company.
<TABLE>
<CAPTION>
Shares Underlying Value of Unexercised
Unexercised Options In-the-Money Options
Held at December 31, 1999 Held at December 31, 1999(1)
- -------------------------------------------------------------------------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ron L. Pearce 28,655 34,904 $102,219 -0-
Clefton D. Vaughan 16,336 25,585 16,581 -0-
W. Bayless Rowe 14,183 17,817 57,088 -0-
Jack R. McCray 5,250 7,750 18,950 -0-
Richard Humphreys 7,625 7,750 39,391 -0-
</TABLE>
1 Represents the closing price for Deltic common stock on December 31,
1999 of $21.875 less the exercise price for all outstanding exercisable and
unexercisable in-the-money stock options.
(15)
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total returns for Deltic's common
stock, the Standard & Poor's Small Cap 600 Index and the Standard & Poor's Paper
& Forest Products Index for the period January 2, 1997 (the first day of regular
public trading of Deltic's common stock) through December 31, 1999. The Company
believes because it does not own and operate paper manufacturing facilities and
its market capitalization is significantly smaller than most firms included
within the industry index, that it may in the future be able to determine a more
appropriate industry peer group as more timber focused companies become publicly
traded. The graph assumes an investment on January 2, 1997 of $100 in each of
Deltic's common stock, the stocks comprising the Standard & Poor's Small Cap 600
Index and the stocks of the Standard & Poor's Paper & Forest Products Index, and
that all paid dividends were reinvested.
Comparison of Cumulative Total Return
<TABLE>
<CAPTION>
1996 1997 1998 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Deltic Timber Corporation $ 100.00 $ 127.67 $ 96.09 $ 104.25
S&P Small Cap 600 100.00 125.58 123.95 139.32
S&P Paper & Forest Products 100.00 107.22 109.35 152.90
</TABLE>
Assumes $100 was invested on December 31, 1996.
Total return assumes quarterly reinvestment of dividends.
<TABLE>
<CAPTION>
01/02/97 12/31/97 12/31/98 12/31/99
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Deltic Timber Corporation $ 100.00 $ 127.67 $ 96.09 $ 104.25
S&P Small Cap 600 100.00 125.58 123.95 139.32
S&P Paper & Forest Products 100.00 107.22 109.35 152.90
</TABLE>
Assumes $100 was invested on December 31, 1996.
Total return assumes quarterly reinvestment of dividends.
(16)
<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 executive officers
to $1 million per individual, 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 1999 and is not
expected to have such in 2000. 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, if necessary, to maximize the amount of
compensation expense that is deductible to the Company.
RETIREMENT PLANS
Effective upon the spin off, the Company established its retirement plans
for its employees. The following table shows the estimated annual pension
benefit payable, at age 65, under Deltic Timber Corporation's Retirement Plan at
December 31, 1999 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
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 96,000 128,000 160,000(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 extent such benefits exceed legislative
limitations.
The credited years of service for Messrs. Pearce, Vaughan, Rowe, McCray,
and Humphreys are eight years, three years, twenty-two years, ten years and
twenty-eight years respectively.
(17)
<PAGE>
/1/ During 1999, the maximum compensation limit for qualified retirement
plans, as established by the Internal Revenue Service, was $160,000.
/2/ Exceeds presently allowable maximum legislative limits for annual
pension benefits under a defined benefit pension plan. In 1999, the maximum
benefit allowable was $130,000, and for 2000 the maximum benefit allowable is
$135,000.
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 action in appointing KPMG
LLP, Certified Public Accountants, as independent auditors of the Company for
the year 2000. KPMG LLP has been serving as the Company's independent auditors
for the past three years, and is familiar with the Company's accounts through
its many years of service as Murphy's independent auditors. 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 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 2000 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 2000 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
(18)
<PAGE>
PROXY
[DELTIC LOGO APPEARS HERE]
DELTIC TIMBER CORPORATION
PROXY SOLICITED BY BOARD OF DIRECTORS FOR ANNUAL MEETING, APRIL 27, 2000
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 April 27, 2000, 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>
DELTIC TIMBER CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
[ ]
The Board of Directors Recommends a Vote "FOR" Each of the Listed Items.
1. Election of Directors--
Nominees: 01-Alex R. Lieblong,
02-Robert C. Nolan and 03-Ron L. Pearce.
WITHHOLD
FOR ALL FOR ALL (Except Nominee(s) written below)
[_] [_] [_]
- --------------------------------------------------------------------------------
2. Ratify the appointment of KPMG LLP as auditors.
FOR AGAINST ABSTAIN
[_] [_] [_]
Dated: , 2000
---------------------------
----------------------------------
----------------------------------
Signature of stockholder(s)
Please sign exactly as your name
or names appear hereon. For joint
accounts, each owners should sign.
When signing as executor,
administrator, attorney, trustee
or guardian, etc., please give
full title. Please return
promptly.
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY
USING THE ENCLOSED POSTMARKED ENVELOPE.
