SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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
WAUSAU-MOSINEE PAPER 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)(1) and
0-11.
__ 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: ___________________________
(2) Form, Schedule or Registration Statement No:______________
(3) Filing Party: ___________________________
(4) Date Filed: ___________________________
<PAGE>
WAUSAU-MOSINEE PAPER CORPORATION
1244 KRONENWETTER DRIVE
MOSINEE, WISCONSIN 54455-9099
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
_____________________
The annual meeting of shareholders of Wausau-Mosinee Paper
Corporation will be held at the Westwood Conference Center, 1800 West
Bridge Street, Wausau, Wisconsin, on Thursday, April 22, 1999, at 2:00
p.m., local time, for the following purposes:
1. To elect two Class III directors;
2. To approve the appointment of Wipfli Ullrich Bertelson LLP as
independent auditors of the company for the fiscal year ending
December 31, 1999; and
3. To transact such other business as may properly come before
the meeting.
The record date for determining the holders of common stock
entitled to vote at the annual meeting or any adjournment thereof is
the close of business on February 26, 1999.
PLEASE PROMPTLY VOTE, SIGN, DATE AND RETURN THE ENCLOSED PROXY IN
THE ENCLOSED ENVELOPE.
March 17, 1999
BY ORDER OF
THE BOARD OF DIRECTORS
GARY P. PETERSON
Gary P. Peterson
Secretary
____________________
<PAGE>
MARCH 17, 1999
WAUSAU-MOSINEE PAPER CORPORATION
1244 KRONENWETTER DRIVE
MOSINEE, WISCONSIN 54455-9099
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 22, 1999
SOLICITATION OF PROXIES
The enclosed proxy is solicited by the Board of Directors (the
"Board") of Wausau-Mosinee Paper Corporation (the "Company") for use at
the annual meeting of shareholders to be held at 2:00 p.m., at the
Westwood Conference Center, 1800 West Bridge Street, Wausau, Wisconsin
on April 22, 1999, and at any adjournment thereof (the "Annual
Meeting").
In addition to solicitation by mail, officers, directors and
employees of the Company and its subsidiaries, none of whom will be
compensated for such services, may solicit proxies in person or by
telephone, facsimile, electronic mail or other forms of communication.
Expenses in connection with the solicitation of proxies, including the
reasonable expenses of brokers, fiduciaries and other nominees in
forwarding proxy material to beneficial owners of the Company's common
stock, will be borne by the Company.
VOTING OF PROXIES
Each holder of the Company's common stock is entitled to one vote
in person or by proxy for each share held of record on the record date,
February 26, 1999 (the "Record Date"), on all matters to be voted upon
at the Annual Meeting. Votes cast by proxy or in person at the Annual
Meeting will be tabulated by an inspector of elections appointed by the
Board of Directors.
If a shareholder is a participant in the Company's Dividend
Reinvestment and Stock Purchase Plan (the "DRP"), the participant's
proxy will also serve to direct the administrator of the DRP with
respect to the voting of any shares of common stock held for the
participant under the DRP at the close of business on the Record Date.
Shares beneficially owned by participants in the DRP for which no proxy
or other voting directions are received will not be voted.
-2-
Brokers who are the holders of record of Company common stock for
customers generally have discretionary authority to vote on certain
routine matters. However, such brokers generally will not have
authority to vote on other matters if they have not received
instructions from their customers. In determining the vote of a
shareholder on matters for which the broker does not have the authority
to vote shares held of record by the broker, the shares will be
recorded as a "broker non-vote."
<PAGE>
Although there is no controlling Wisconsin precedent regarding the
treatment of broker non-votes, the Company believes Wisconsin law
provides for, and the Company intends to apply, the following
principles with respect to broker non-votes and the other voting
requirements for the matters to be presented to the Annual Meeting.
The discussion of voting requirements assumes, with respect to each
matter to be presented to shareholders, that a quorum is present.
QUORUM. For purposes of determining a quorum, shareholders who
are present in person or are represented by proxy, but who abstain from
voting, are considered present and count toward the determination of
the quorum. Shares reported as broker non-votes are also considered to
be shares present for purposes of determining whether a quorum is
present.
ELECTION OF DIRECTORS. Directors are elected by a plurality of the
votes cast by the shares entitled to vote. For this purpose, a
"plurality" means that the individuals receiving the largest number of
votes are elected as directors, up to the maximum of two directors to
be chosen at the Annual Meeting. Shareholders may vote in favor of the
nominees specified on the accompanying form of proxy or may withhold
their vote as to one or more of such nominees. Shares withheld or not
otherwise voted in the election of directors (because of abstention,
broker non-vote, or otherwise) will have no effect on the election of
directors.
APPROVAL OF AUDITORS. The appointment of auditors will be approved
if more shares are voted in favor of approval than are voted against
approval. Shares not voted (because of abstention, broker non-vote, or
otherwise) will have no effect on the approval of auditors.
A shareholder who executes a proxy may revoke it at any time before
it is voted by giving written notice to the Secretary of the Company at
the Company's principal office, by filing another duly executed proxy
bearing a later date with the Secretary, or by giving oral notice to
the presiding officer at the Annual Meeting.
The persons named in the accompanying form of proxy will vote the
shares subject to each proxy. The proxy in the accompanying form will
be voted as specified by each shareholder, but if no specification is
made, each proxy will be voted:
(1) TO ELECT Daniel R. Olvey and Gary W. Freels for terms of
office as Class III directors which will expire at the annual
meeting of shareholders to be held in 2002 (see "Election of
Directors");
-3-
(2) TO APPROVE the appointment of Wipfli Ullrich Bertelson LLP as
the Company's independent auditors for the fiscal year ending
December 31, 1999 (see "Approval of the Appointment of
Independent Auditors"); and
(3) IN THE BEST JUDGMENT of those named as proxies on the
accompanying form of proxy on any other matters to properly
come before the Annual Meeting (see summary of bylaw
requirements under "Shareholder Proposals").
<PAGE>
ELECTION OF DIRECTORS
The Company's restated articles of incorporation, as amended,
provide that the number of directors shall be determined pursuant to
the Company's bylaws and resolutions of the Board, but there shall be
not less than three nor more than nine directors. Directors are to be
divided into three classes so that each class has, to the extent
possible, an equal number of directors. One class of directors is to
be elected at each annual meeting of shareholders to serve a three-year
term. A director appointed by the Board to fill a vacancy created by
an increase in the number of directors must stand for reelection for
the balance of his term at the next subsequent annual meeting. No
person may be elected a director if that person has attained age 70 as
of the date of the election. The Board is now composed of three
classes consisting of three Class I and Class II directors,
respectively, and two Class III directors.
The Nominating Committee of the Board will consider nominating for
directors individuals whose names are submitted by shareholders. See
"Committees and Compensation of Board of Directors."
At the Annual Meeting, the nominees listed below will be candidates
for reelection to the classes indicated. Each of the candidates has
consented to serve if elected, but in the event one or both of the
nominees is not a candidate at the Annual Meeting, it is the intention
of the proxies to vote for such substitute or substitutes as may be
designated by the Nominating Committee.
<PAGE>
<TABLE>
The following information is furnished with respect to the nominees
and all continuing directors:
<CAPTION>
PRINCIPAL OCCUPATION CLASS AND YEAR
AND OTHER WHICH TERM DIRECTOR
NAME AND AGE DIRECTORSHIPS WILL EXPIRE SINCE
NOMINEES
<S> <C> <C> <C>
Daniel R. Olvey, 50 President and Chief Executive Class III 1997
Officer of the Company since 2002
December, 1997; formerly,
President and Chief
-4-
Executive Officer and a
director of Mosinee
(1993 - 1997)
Gary W. Freels, 50 President, Alexander Class III 1996
Properties, Inc. 2002
(investment management);
formerly President, M&I
First American Bank
(1992 - 1995)
CONTINUING DIRECTORS
Walter Alexander, 64 President of Alexander Lumber Class I 1997
Co.; also a director of 2000
Old Second Bancorp, Inc.;
formerly a director of Mosinee
(1987 - 1997)
San W. Orr, Jr., 57 Chairman of the Board of the Class I 1970
Company and Advisor, Estates 2000
of A.P. Woodson and Family;
Chief Executive Officer of
the Company (1994 - 1995);
formerly Chairman of the
Board (1987 - 1997) and a
director (1972 - 1997) of
Mosinee; also a director of
MDU Resources Group, Inc. and
Marshall & Ilsley Corporation
David B. Smith, 60 Consultant; formerly Vice Class I 1972
Jr. President, Labor Relations, 2000
Weyerhaeuser Company
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Harry R. Baker, 66 Former President and Chief Class II 1992
Executive Officer, Marathon 2001
Electric Manufacturing
Corporation (1989 - 1998);
formerly a director of Mosinee
(1995 - 1997)
Richard G. Jacobus, 69 Chairman and CEO, Jacobus Class II 1997
Wealth Management, Inc. 2001
(multiple client
family office); formerly,
President and Chief
Executive Officer, Johnson
International, Inc.
(1988 - 1995); formerly
a director of Mosinee
(1985 - 1997)
Richard L. Radt, 67 Vice Chairman of the Board Class II 1997
of the Company; President 2001
and Chief Executive
Officer and a director of the
Company (1977 - 1987); formerly
Vice Chairman (1993 - 1997) and
President and Chief Executive Officer
(1988 - 1993) of Mosinee
-5-
</TABLE>
COMMITTEES AND COMPENSATION OF BOARD OF DIRECTORS
COMMITTEES AND MEETINGS
The Board appointed audit, compensation, and nominating committees
for the last fiscal year.
The Audit Committee, consisting of Messrs. Jacobus, Alexander,
Baker and Freels, met four times during the last fiscal year. The
Audit Committee reviews the scope of the audit engagement and the audit
fees and nature of consulting fees.
The Executive Compensation & Bonus Committee consists of Messrs.
Orr, Baker, Jacobus, and Smith. The Committee met twice during the
last fiscal year to review management compensation matters. The
Board's Option and SAR Committee reviews and grants, as it deems
appropriate, options, stock appreciation rights, and dividend
equivalents. See "Committees' Report on Compensation Policies."
The Nominating Committee consists of Messrs. Orr, Alexander, Freels
and Radt. The Nominating Committee met once in 1998 to consider and
recommend to the Board nominees for election as directors. Inquiries
concerning nominations with pertinent background information should be
directed to the Chairman of the Nominating Committee in care of the
Company. Pursuant to the Company's bylaws, shareholders entitled to
vote at the annual meeting of shareholders to be held in 2000 may make
<PAGE>
nominations from the floor only if proper notice of the proposed
nomination has been provided to the Secretary of the Company not
earlier than January 23, 2000 and not later than February 22, 2000.
The precise requirements, including the information required to be
provided in the notice and the procedures for notice in the event the
date of the annual meeting is changed, are set forth in the Company's
bylaws which may be obtained from the Secretary of the Company.
During the last fiscal year the Board met nine times. Each of the
directors attended at least 75% of the aggregate number of the meetings
of the Board and the committees on which they served during the last
fiscal year.
DIRECTOR COMPENSATION
Directors are paid a retainer of $2,000 per month and $1,000 for
each meeting of the Board attended. Mr. Smith participates in the
Company's health insurance plan and the other directors who are
officers of the Company receive salaries and benefits related to their
duties as officers of the Company or its subsidiaries. No other
director received more than the standard arrangements described above.
The Directors' Deferred Compensation Plan provides that directors
may elect each year to defer fees otherwise payable in cash during the
year. Amounts deferred become payable in a lump sum after the
director's
-6-
termination of service as a director or, if the participant elects
(with the approval of the Company), in quarterly installments over a
period not in excess of ten years. In the event a director's service
terminates because of a change of control of the Company, as defined in
the plan, payment of all deferred amounts will be made in a lump sum.
During the period of deferral, a director may elect that the deferred
fees be credited with interest at the prime rate in effect as of each
calendar quarter at The Chase Manhattan Bank of New York or be
converted into Company common stock equivalent units. If stock
equivalent units are elected, the director's account is also credited
with stock equivalent units representing the common stock which could,
hypothetically, have been purchased with the hypothetical cash
dividends which would have been paid on the accumulated stock
equivalent units had they been actual common stock. Upon distribution,
stock equivalent units are converted to cash based upon the fair market
value of the common stock at the time of distribution. During 1998,
Messrs. Olvey, Alexander, Baker, Jacobus, and Freels participated in
the plan and deferred all or a portion of the retainer or meeting fees
otherwise payable to them.
The Company's retirement policy for directors provides for the
payment of specified retirement benefits for directors who have served
on the Board for at least five years prior to their termination of
service. A retired director's monthly benefit is equal to the monthly
retainer and meeting fees (based on the amount of such retainer or
meeting fee in effect at his termination of service) and is paid for a
period of time equal to the retired director's period of service on the
Board or on the Board of Directors of Mosinee Paper Corporation
<PAGE>
("Mosinee") prior to December 17, 1997. Retirement benefits terminate
at death and are accelerated in the event of a change of control of the
Company, as defined in the policy.
BENEFICIAL OWNERSHIP OF COMMON STOCK
As of the Record Date, there were 53,165,639 shares of common stock
outstanding. The following table sets forth, based on statements filed
with the SEC or information otherwise known to the Company, the number
of shares of common stock which may be deemed beneficially owned as of
February 22, 1999, by each person known to the Company to be the
beneficial owner of more than 5% of the outstanding common stock.
<TABLE>
<CAPTION>
COMMON SHARES PERCENT OF
NAME AND ADDRESS BENEFICIALLY OWNED CLASS
<S> <C> <C>
Wilmington Trust Company ...............10,523,213 {(1)} 19.79%
Rodney Square North
1100 N. Market Street
Wilmington, DE 19890-0001
-7-
Trustees of David B. Smith Family Trust.3,333,889 {(2)} 6.27%
1206 E. Sixth Street
Merrill, WI 54452
</TABLE>
The following table sets forth the number of shares of common stock
beneficially owned as of the Record Date, by each of the directors,
each person nominated to become a director, each of the executive
officers of the Company named in the summary compensation table and all
directors and executive officers as a group.
<PAGE>
<TABLE>
DIRECTORS AND OFFICERS
<CAPTION>
COMMON STOCK PERCENT OF
NAME BENEFICIALLY OWNED CLASS
<S> <C> <C>
San W. Orr, Jr. ........................1,046,670 {(3)} 1.97%
Daniel R. Olvey ..........................301,078 {(4)} *
Richard L. Radt ...........................30,546 {(4)} *
Walter Alexander ..........................16,212 *
Harry R. Baker ............................7,827 *
Gary W. Freels .........................836,372 {(5)} 1.57%
Richard G. Jacobus ........................15,398 *
David B. Smith, Jr. ....................2,452,487 {(6)} 4.61%
Gary P. Peterson .........................104,514 {(4)} *
Larry A. Baker<dagger> ...................61,087 {(4)} *
Stuart R. Carlson ........................104,265 {(4)} *
Thomas J. Howatt ......................131,905 {(4)} *
David L. Canavera ........................136,556 {(4)} *
All directors and executive officers as a
group (15 persons) 5,333,367 {(7)} 9.90%
________________
<FN>
*Less than 1%
<dagger>Mr. Baker retired from the Company on January 31, 1999.
{(1)}Held in a fiduciary capacity as trustee, including 10,437,785
shares held for the benefit of the descendants of A.P. Woodson
and family.
{(2)}David B. Smith, Jr., Thomas P. Smith, Margaret S. Mumma and
Sarah S. Miller are the co-trustees of the David B. Smith
Family Trust (the "Trust") which owns 2,368,372 shares of
common stock.
Including common stock which is beneficially owned by the
trustees on an individual basis and common stock owned by the
Trust, each of the trustees has sole or shared investment
authority with respect to the following percentages of common
stock: David B. Smith, Jr., 4.61%; Thomas P. Smith, 4.63%;
Margaret S. Mumma, 5.15%; and Sarah S. Miller, 5.01%.
-8-
{(3)}Includes 681,211 shares as to which Mr. Orr exercises shared
voting and investment power (and as to which beneficial
ownership is disclaimed) and shares which may be acquired
through the exercise of options on or before 60 days.
{(4)}Includes shares which may be acquired through the exercise of
options on or before 60 days.
{(5)}Includes 831,352 shares of common stock held by a charitable
foundation of which Mr. Freels serves as President and a
director.
{(6)}David B. Smith, Jr. is a co-trustee of the David B. Smith
Family Trust which holds 2,368,372 shares of common stock.
See note (2).
{(7)}Includes shares described in notes (3), (4), (5) and (6).
</TABLE>
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires the Company's directors and officers and persons who own
more than 10% of the common stock outstanding ("Reporting Persons") to
file reports of ownership and changes in ownership with the SEC.
Reporting Persons are also required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms filed by them with the
SEC. Two reports for Mr. Freels, indicating the automatic acquisition
of common stock equivalent units payable solely in cash under the
Deferred Compensation Plan for Directors reportable on Form 5 and due
February 15, 1998, were filed on April 21, 1998. Based solely on its
review of the copies of the Section 16(a) forms received by it or upon
written representations from certain of these Reporting Persons as to
compliance with the Section 16(a) regulations, the Company is of the
opinion that during the most recent fiscal year all other filing
requirements applicable under Section 16(a) to Reporting Persons were
satisfied.
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The table below sets forth compensation earned by, or awarded or
paid by the Company to, the Company's CEO as of December 31, 1998, and
to each of the five most highly compensated executive officers of the
Company as of December 31, 1998, whose salary and bonus exceeded
$100,000 for the last fiscal year. On December 17, 1997, the Company
changed its fiscal year-end to December 31 from August 31. The
compensation disclosed with respect to Messrs. Baker and Howatt
includes amounts earned by, or awarded or paid to, them during the four
months ended December 31, 1997 and the fiscal years of the Company
ended August 31, 1997 and 1996.
-9-
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation Long Term
Compensation
Awards
Other All Other
Annual Compen-
Compen- Options/ sation
Name and Principal Position Year(1) Salary(2) Bonus sation($) SARS(#) (2)
<S> <C> <C> <C> <C> <C> <C>
Daniel R. Olvey; President 1998 $ 402,277 $ 113,346 - 58,000* $ 39,816{(3)}
and CEO of the Company 1997 $ 311,361 $ 304,361 - - $ 42,020
1996 $ 282,600 $ 282,500 - - $ 41,091
Gary P. Peterson, Senior Vice 1998 $ 215,496 $ 99,413 - 29,600* $ 6,816
President, Finance, Secretary 1997 $ 176,590 $ 173,635 - - $ 20,020
and Treasurer 1996 $ 162,025 $ 161,925 - - $ 22,091
Larry A. Baker; Senior Vice 1998 $ 216,226 $ 99,413 - 101,683* $ 6,816
President, Administration 1997{(4)} $ 62,256 $ 25,787 - - $ 651
<double-dagger> 1997{(5)} $ 184,814 $ 179,500 - 7,500<dagger>$ 3,014
1996{(5)} $ 173,762 $ 171,000 - 18,750<dagger>$ 2,848
Thomas J. Howatt; Senior Vice 1998 $ 231,377 $ 104,506 - 86,205* $ 6,816{(7)}
President, Printing and 1997{(4)} $ 58,869 $ 27,085 - - $ 707
Writing Group 1997{(5)} $ 176,889 $ 162,196 $ 117,567{(6)} 7,500<dagger>$ 8,397{(7)}
1996{(5)} $ 163,950 $ 157,500 $ 105,017{(6)} 25,000<dagger>$ 137,352{(7)}
Stuart R. Carlson, Senior Vice1998 $ 230,607 $ 121,073 - 29,600* $ 6,816
President, Speciality Papers 1997 $ 186,437 $ 123,210 - - $ 20,020
Group 1996 $ 166,800 $ 166,700 - - $ 22,091
David L. Canavera, Senior Vice1998 $ 195,000 - - 31,840* $ 6,816
President, Towel and Tissue 1997 $ 170,226 $ 105,090 - - $ 20,020
Group 1996 $ 149,600 $ 124,339 - 67,760<dagger>$ 22,091
<FN>
* Stock appreciation rights (expired on January 22, 1999).
<dagger> Options to acquire common stock.
<double-dagger> Mr. Baker retired on January 31, 1999.
(1) Includes compensation deferred by participants under 401(k)
plans.
(2) Except with respect to Messrs. Olvey and Howatt, contributions
under 401(k) plans.
(3) Includes 401(k) contribution of $6,816 and directors' fees of
$33,000. Mr. Olvey's fees were deferred under the Deferred
Compensation Plan for Directors described under the caption
"Committees and Compensation of the Board of Directors."
(4) Amounts indicated with respect to the four months ended December
31, 1997.
(5) Amounts indicated with respect to the fiscal years ended August
31, 1997 and 1996.
(6) Reimbursement for taxes under relocation policy.
(7) Includes contributions of $6,816 in 1998 under 401(k) plan and
reimbursements of $5,460 in 1997{(5)} and $134,452 in 1996{(5)}
under the Company's relocation policy.
</TABLE>
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<PAGE>
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
GRANTS. The Company and its subsidiary, Mosinee, maintain stock
appreciation rights ("SAR") and stock option plans pursuant to which
grants may be made to key employees. The following SARs were granted
in 1998 to executive officers named in the summary compensation table.
<TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<CAPTION>
Individual Grants Alternative
Grant Date
Value
% of total
Options/SARs
Granted to Exercise or Market Price Grant Date
Options/SARs Employees in Base Price of Stock on Expiration Present
Name Granted(#) Fiscal Year ($/Sh) Date of Grant Date Value $(2)
<S> <C> <C> <C> <C> <C> <C>
Mr. Olvey 58,000(1) 13.9% $19.06 $19.06 1/22/99 $161,820
Mr. Peterson 29,600(1) 7.1% $19.06 $19.06 1/22/99 $ 82,584
Mr. Baker 101,683(1) 24.4% $19.06 $19.06 1/22/99 $283,696
Mr. Howatt 86,205(1) 20.7% $19.06 $19.06 1/22/99 $240,512
Mr. Carlson 29,600(1) 7.1% $19.06 $19.06 1/22/99 $ 82,584
Mr. Canavera 31,840(1) 7.7% $19.06 $19.06 1/22/99 $ 88,834
<FN>
(1) Stock appreciation rights ("SARs") exercisable only in cash (all
SARs expired without being exercised on January 22, 1999).
(2) Determined pursuant to Black-Scholes option pricing model. The
material assumptions and adjustments incorporated into the Black-
Scholes model in estimating the value of the SARs reflected in the
above table include (a) a term of 1 year; (b) an interest rate of
5.24% that represents the interest rate on long-term U.S. Treasury
securities with maturity date corresponding to the term on the
grant date; (c) volatility of 34% calculated using daily stock
prices of the underlying common stock for the one-year period prior
to the grant dates; (d) dividends at the rate of $0.28 per share,
representing the annualized dividend paid with respect to the
underlying common stock and a corresponding dividend yield of 1.5%;
and (e) reductions of approximately 3% to reflect the probability
of a shortened term due to termination of employment prior to the
expiration date. The actual value, if any, a grantee will realize
upon exercise of an SAR will depend on the excess of the market
value of the common stock over the exercise price on the date the
SAR is exercised. On January 22, 1999, the SARs expired without
being exercised. See "Committees' Report on Compensation--Stock
Based Compensation."
</TABLE>
EXERCISE AND YEAR-END VALUE. The following table sets forth
information regarding the exercise of stock options or SARs in calendar
year 1998 by each of the executive officers named in the summary
compensation table and the December 31, 1998 value of unexercised, in-the-
money stock options or SARs held by each such person.
-11-
<PAGE>
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR
VALUES
<CAPTION>
Number of Unexercised Value of Unexercised In-the-
Shares Options/SARSs at FY-End(#) Money Options/SARs at FY-End
Acquired Value ($)
On Exercise Realized
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Mr. Olvey - - 238,000* - $1,694,891* -
212,000<dagger> - $1,762,701<dagger> -
Mr. Peterson - - 74,200* - $ 533,159* -
75,800<dagger> - $ 453,986<dagger> -
Mr. Baker - - 33,528* - $ 72,066* -
116,472<dagger> - $ 229,117<dagger> -
Mr. Howatt - - 41,612* - $ 38,458* -
108,388<dagger> - $ 343,697<dagger> -
Mr. Carlson - - 74,200* - $ 533,159* -
75,800<dagger> - $ 459,276<dagger> -
Mr. Canavera - - 87,360* - $ 511,728* -
62,640<dagger> $ 296,536<dagger> -
<FN>
* Options. Value of options include the value of hypothetical shares
credited to certain grantees under the Dividend Equivalent Plan which
assumes cash dividends are paid on underlying shares and invested in
hypothetical common stock.
<dagger> SARs exercisable only for cash. In cases of SAR valuations,
includes, in cases where the grant so provides, the value of hypothetical
shares credited to grantee under provision in SAR grant which assumes
cash dividends are paid on underlying shares and invested in hypothetical
common stock.
</TABLE>
PENSION PLAN AND OTHER BENEFITS
RETIREMENT PLANS
During the last fiscal year, the Company maintained two qualified
defined benefit plans under which executive officers were entitled to
benefits on the same basis as all other participating salaried
employees. Effective January 1, 1999, the Company consolidated its
retirement plans for salaried employees into one cash balance plan.
The defined benefit plans and the new cash balance plan are referred to
as the Company's "qualified plans." Executive officers also
participate in a nonqualified supplemental retirement plan (the
"supplemental plan") under which benefits are determined by
compensation without regard to limitations contained in the qualified
plans. The supplemental plan will provide an executive officer with a
retirement benefit equal to 50% of his average salary and bonus upon
retirement at age 62 after 10 years of service as an executive officer.
Under the qualified plans, benefits are proportionately reduced for
less than 30 years of service. The supplemental plan provides for an
offset of certain benefits payable under the
-12-
<PAGE>
qualified plans. Accrued benefits under the supplemental plans will
be paid in a lump sum in the event of a change of control of the
Company, as defined in the supplemental plan. As of December 31,
1998, no current executive officer of the Company other than Mr. Baker
had acquired a vested right to an early or normal retirement benefit in
the supplemental plan.
At December 31, 1998, years of service credited under the qualified
and supplemental plans, respectively, were as follows: Mr. Olvey: 9,9;
Mr. Peterson: 7,7; Mr. Baker: 21,10; Mr. Howatt 19,6; Mr. Carlson: 7,7;
and Mr. Canavera: 7,7. Based on average covered compensation as of
December 31, 1998, the following single life annual benefits would be
payable from the qualified and supplemental retirement plans upon
retirement at age 62 to the following executive officers:
<TABLE>
<CAPTION>
Additional Total Average
Qualified Supplemental Retirement Covered
EXECUTIVE OFFICER PLAN BENEFIT PLAN BENEFIT BENEFIT REMUNERATION
<S> <C> <C> <C> <C>
Daniel R. Olvey $30,000 $217,000 $247,000 $493,000
Gary P. Peterson $25,000 $123,000 $148,000 $295,000
Larry A. Baker $52,000 $105,000 $157,000 $314,000
Thomas J. Howatt $61,000 $ 94,000 $155,000 $310,000
Stuart R. Carlson $21,000 $125,000 $146,000 $292,000
David L. Canavera $24,000 $ 89,000 $112,000 $224,000
</TABLE>
COMMITTEES' REPORT ON COMPENSATION POLICIES
The Executive Compensation & Bonus Committee (the "Compensation
Committee") establishes and reviews base salaries of executive officers
and is responsible for the establishment and implementation of
executive bonus and incentive programs and general compensation
policies. The Company's compensation program for executive officers
may include various grants under the Company's stock option, SAR and
dividend equivalent plans. The Company's plans are administered by the
Board's Option and SAR Committee which generally considers
recommendations of the Compensation Committee with respect to grants,
but has full discretion and control over whether a grant will be made
and the amount and terms of any such grant. Insofar as this report
includes a description of the compensation policies relating to the
stock option, SAR and dividend equivalent plans, this report is a joint
report of the Compensation Committee and the Option and SAR Committee.
Executive officers who served on the Compensation Committee do not
participate in the Committee's determination of their own compensation.
This report describes the policies of the foregoing committees and
the Company as in effect for the 1998 fiscal year. As circumstances
change and one or more of the committees deem it appropriate, policies
in effect from time to time for years after 1998 may change.
-13-
GENERAL
The Company's executive compensation policies are designed to
attract and retain individuals who have experience in the paper
<PAGE>
industry or who otherwise have particular training or skills which will
satisfy particular requirements of the Company. These policies are
also intended to reward job performance which the Compensation
Committee believes to be at or above the level expected of the
Company's executive officers. The total compensation paid to executive
officers and the retirement and other fringe benefits provided by the
Company are designed to offer a level of compensation which is
competitive with other companies in the paper industry. Some, but not
all, of the companies used for purposes of compensation comparisons are
included in the fifty-two companies which, in addition to the Company,
comprise the Media General index of paper companies' stock performance
under the heading "Stock Price Performance Graph." The Compensation
Committee makes compensation comparisons only with those companies
whose operations are similar to the Company or which have operating
units which are similar to the Company. Given the disparity in size
between companies which operate in the paper industry and the
difficulty in determining the precise duties of executive officers of
other companies, it is difficult to draw exact comparisons with the
compensation policies of other companies. The determination of
executive compensation is, therefore, subjective.
The Company's overall compensation policy is designed so that a
significant portion of each executive officer's compensation package is
directly related to the annual performance of the Company and the
performance of the Company's common stock. Executive officers
participate in incentive bonus plans which are based primarily on the
Company's financial performance during the fiscal year, but also
include incentives for individual performance. Executive officers also
participate in stock based incentive programs, the value of which
increases as the performance of the Company's common stock increases
shareholder value as a whole.
The Company may not deduct as a business expense compensation paid
to the CEO and each of the four most highly paid executive officers
named in the summary compensation table who are officers on the last
day of the year to the extent the compensation paid to the individual
officer exceeds $1 million annually. This limitation is subject to
certain exceptions for compensation paid pursuant to performance-based
plans and amounts received through the exercise of stock options and
SARs, provided certain requirements are met. No compensation paid in
1998 exceeded the deductible limit. The Compensation Committee will
continue to review this limit and its application to the Company's
compensation policies.
BASE COMPENSATION
The Compensation Committee does not rely on specific salary and
benefit comparisons, but does consider and periodically review a
general survey of paper industry compensation prepared by an
independent compensation and benefit consultant in order to gauge the
relationship of its executive officers' base salary and benefit levels
to the levels of comparable operating units of larger paper companies.
Annual increases in the base salary of each
-14-
of the Company's executive officers are determined in accordance with
<PAGE>
the Compensation Committee's policy of maintaining competitive salary
levels with other paper industry companies (as discussed above), more
general factors such as the rate of inflation, and individual job
performance. Individual job performance in the prior fiscal year is
the most important factor considered by the Compensation Committee in
annual reviews and in determining appropriate increases in base salary.
The CEO annually assesses the job performance of executive officers who
report to him. The CEO's base salary is determined by the Compensation
Committee on the same basis as that of the Company's other executive
officers, except that the Compensation Committee annually establishes
performance criteria for the CEO and reviews his performance.
INCENTIVE COMPENSATION BASED ON FINANCIAL PERFORMANCE OF THE
COMPANY AND INDIVIDUAL PERFORMANCE
The Company maintains incentive reward plans for executive officers
which provide for the payment of annual cash bonuses to participants if
the Company's annual financial and/or individual performance objectives
are met. The criteria by which incentive awards are determined are
based on the Compensation Committee's assessment of the total cash
compensation available to executive officers as base salary and under
the incentive plans and are designed to provide total annual cash
compensation which is comparable to amounts paid to officers in
comparable positions in the paper industry. The Compensation Committee
can modify performance objectives during a fiscal year under any of the
plans if an unusual or nonrecurring event occurs which would
have a significant effect on the stated performance goals.
During 1998, Mr. Olvey participated in an incentive compensation
plan which provided for a bonus opportunity based on the earnings per
share of the Company. Mr. Olvey's bonus opportunity ranged from 0% of
base salary if 1998 earnings per share were at or below $1.02 to 100%
if 1998 earnings per share were at least $1.51. Mr. Peterson and Mr.
Baker participated in a similar plan which provided for a maximum bonus
equal to 75% of base salary based upon the same $1.02 to $1.51 range of
earnings per share. Mr. Peterson and Mr. Baker also participated in a
plan which provided for a maximum bonus of 25% of base salary upon
satisfaction of individual performance objectives established at the
beginning of the year by the CEO. Messrs. Carlson, Howatt, and
Canavera participated in plans which provided for a maximum bonus equal
to 100% of their base salaries; each officer's bonus was determined by
the operating profit of the group managed by him (75%) and satisfaction
of individual performance objectives established by the CEO (25%). In
all cases, earnings per share were adjusted for accruals on SARs, bonus
expense and extraordinary items such as the expenses recognized in
connection with the Company's plan to reduce its workforce and certain
costs associated with the merger with Mosinee.
STOCK BASED COMPENSATION
Executive officers of the Company participate in stock option, SAR
and dividend equivalent plans at various levels. The Option and SAR
Committee may impose restrictions as to exercise or vesting of grants.
-15-
The Option and SAR Committee has not established formal criteria by
<PAGE>
which the size of plan grants are determined, but the Committee
considers the amount and terms of each grant already held by an
executive officer in determining the size and terms of any
new grant. The value of these grants are principally related to the
long-term performance of the Company's common stock and, therefore,
provide an identity of interests between the Company's executive
officers and its shareholders.
Grantees of certain SARs and dividend equivalents may benefit from
the increase in value of the underlying common stock and from the value
of the hypothetical reinvested cash dividends which would be paid with
respect to a share of stock to which the SAR or dividend equivalent
relates. Therefore, executive officers who receive grants of options
with an exercise price of less than current fair market value at the
time of grant or who exercise SARs or who receive dividend equivalents
will benefit from such grants even if there is no increase in the price
of the Company's common stock. The value of any such grant will be
enhanced by increases in the price of the Company's common stock and
will be of maximum value to the executive officer only if such an
increase occurs. It is the intention of the Option and SAR Committee
that the hypothetical dividend features of the SARs and the dividend
equivalents will place the executive officers in the same position as
shareholders of the Company, thereby enhancing the officer's long-term
incentive and increasing the officer's identity with the shareholders.
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Orr is Chairman of the Board and served on the Compensation
Committee in 1998. None of the members of the Option and SAR Committee
is an officer of the Company.
<TABLE>
<CAPTION>
Executive Compensation
OPTION AND SAR COMMITTEE & BONUS COMMITTEE
<S> <C>
Walter Alexander San W. Orr, Jr.
Harry R. Baker Harry R. Baker
Gary W. Freels Richard G. Jacobus
David B. Smith, Jr. David B. Smith, Jr.
</TABLE>
STOCK PRICE PERFORMANCE GRAPH
The following graph and table compare the yearly percentage change
in the cumulative total shareholder return on the Company's common
stock for the period beginning December 31, 1993 and ending December
31, 1998 with the Media General Financial Services' Russell 2000, Paper
and Paper Products, and Nasdaq Market Indices, and the value of an
original investment in Mosinee common stock for the same periods. In
March, 1998 the Company's stock was listed for trading on the New York
Stock Exchange, thereby rendering the comparison to the Nasdaq Market
inappropriate after 1998. In place of the Nasdaq Market Index, the
Company has chosen the Russell 2000 Index. The Russell 2000 Index
includes the 2000 smallest companies in the Russell 3000 Index (which
-16-
<PAGE>
consists of the 3,000 largest companies whose stock is traded in U.S.
markets, based on market capitalization). As of January 29, 1999, the
average market capitalization of the Russell 2000 companies was
approximately $1 billion. The market capitalization of the Russell
2000 Index companies on that date ranged from approximately $3.5
million to $6.3 billion. The Company's market capitalization as of
such date was approximately $847.8 million. The Media General MG Paper
and Paper Products Index indicates the performance of fifty-two paper
industry stocks (including the Company's common stock).
The graph and table assume that the value of the investment in the
Company's common stock and each index on December 31, 1993 was $100 and
that all dividends were reinvested. The information presented for
"Mosinee" represents the value of Company stock attributable to an
investment of $100 in Mosinee common stock on December 31, 1993 after
giving effect to the exchange for Company common stock in the 1997
merger with the Company and the reinvestment of applicable dividends.
-17-
[Stock Price Performance Graph deleted pursuant to Rule 304(d) of
Regulation S-T. Data reported in the graph is also reported in the
following tabular form in the proxy statement delivered to
shareholders.]
<TABLE>
December 31
<CAPTION>
1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
Wausau-Mosinee
Paper Corporation $100.00 $ 84.75 $102.60 $ 88.04 $ 96.95 $ 86.47
MG Paper & Paper
Products $100.00 $111.74 $138.86 $159.51 $169.41 $169.60
Nasdaq Market Index $100.00 $104.99 $136.18 $169.23 $207.00 $291.96
Russell 2000 Index $100.00 $ 98.19 $126.11 $147.05 $179.90 $174.86
Mosinee Paper
Corporation (pro $100.00 $ 88.77 $ 98.64 $183.43 $220.97 $197.04
forma*)
<FN>
*Represents value of Company common stock derived from an
investment of $100 in Mosinee common stock on December 31, 1993,
after giving effect, on and after December 17, 1997, to the
exchange, at a ratio of 1.4 to 1, of Company common stock for each
share of Mosinee common stock, and the reinvestment through
December 31, 1998 of all Mosinee or Company dividends, as
applicable.
</TABLE>
APPROVAL OF THE APPOINTMENT OF INDEPENDENT AUDITORS
The Board will present to the Annual Meeting a resolution that the
shareholders approve the appointment of the firm of Wipfli Ullrich
Bertelson LLP as independent auditors to audit the books, records and
accounts of the Company for the fiscal year ending December 31, 1999.
Representatives of Wipfli Ullrich Bertelson LLP will be present at the
Annual Meeting and will have an opportunity to make a statement or
respond to appropriate questions.
<PAGE>
SHAREHOLDER PROPOSALS
If any shareholder desires to submit a proposal for inclusion in
the proxy statement to be used in connection with the annual meeting of
shareholders to be held in 2000, the proposal must be in proper form
and be received by the Company no later than November 17, 1999.
Pursuant to the Company's bylaws, shareholders entitled to vote at
the annual meeting of shareholders to be held in 2000 may bring
business before the 2000 annual meeting for consideration only if
proper notice of the proposed business has been provided to the
Secretary of the Company not earlier than January 23, 2000 and not
later than February 22, 2000. The precise requirements, including the
information required to be provided in the shareholder notice and the
procedures for notice in the event the date of the annual meeting is
changed, are set forth in the Company's bylaws which may be
-18-
obtained from the Secretary of the Company. See "Committees and
Compensation of Board of Directors" regarding bylaw requirements
relating to nominations from the floor at the annual meeting of
shareholders to be held in 2000.
OTHER MATTERS
At this date, there are no other matters the Board of Directors
intends to present or has reason to believe others will present to the
Annual Meeting. If other matters now unknown to the Board of Directors
are properly presented at the Annual Meeting, those named as proxies
will vote in accordance with their judgment.
DATED: March 17, 1999.
BY ORDER OF THE BOARD OF DIRECTORS
GARY P. PETERSON
Gary P. Peterson
Secretary
PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY.
-19-
<PAGE>
FORM OF PROXY
WAUSAU-MOSINEE PAPER CORPORATION
PROXY SOLICITED BY BOARD OF DIRECTORS FOR ANNUAL MEETING
TO BE HELD APRIL 22, 1999
THE UNDERSIGNED HEREBY APPOINT(S) SAN W. ORR, JR., DANIEL R. OLVEY AND
RICHARD L. RADT AND EACH OF THEM, PROXIES OF THE UNDERSIGNED, WITH FULL
POWER OF SUBSTITUTION, TO VOTE ALL SHARES OF COMMON STOCK OF
WAUSAU-MOSINEE PAPER CORPORATION THAT THE UNDERSIGNED IS ENTITLED TO
VOTE AT THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 22, 1999
AND AT ANY ADJOURNMENT THEREOF (THE "ANNUAL MEETING"). THE PROXIES
HAVE THE AUTHORITY TO VOTE SUCH STOCK AS DIRECTED ON THE REVERSE SIDE
HEREOF WITH RESPECT TO THE PROPOSALS SET FORTH IN THE PROXY STATEMENT
WITH THE SAME EFFECT AS THOUGH THE UNDERSIGNED WERE PRESENT IN PERSON
AND VOTING SUCH SHARES. FOR PARTICIPANTS IN THE DIVIDEND REINVESTMENT
AND STOCK PURCHASE PLAN, THE PROXY ALSO SERVES AS VOTING INSTRUCTIONS
TO THE PLAN ADMINISTRATOR OF SUCH PLAN TO VOTE THE SHARES OF COMMON
STOCK BENEFICIALLY OWNED BY THE PARTICIPANT IN THE PLAN. THE
UNDERSIGNED HEREBY REVOKES ALL PROXIES HERETOFORE GIVEN TO VOTE AT THE
ANNUAL MEETING AND ANY ADJOURNMENT THEREOF.
PLEASE INDICATE ON THE REVERSE SIDE OF THIS CARD HOW YOUR STOCK IS TO
BE VOTED. UNLESS AUTHORITY IS WITHHELD OR UNLESS OTHERWISE SPECIFIED,
THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES FOR DIRECTOR,
FOR APPROVAL OF THE 1999 STOCK OPTION PLAN, AND FOR THE APPOINTMENT OF
INDEPENDENT AUDITORS AT THE ANNUAL MEETING OF SHAREHOLDERS AND AT ANY
ADJOURNMENT THEREOF.
(Continued and to be signed on reverse side.)
<PAGE>
WAUSAU-MOSINEE PAPER CORPORATION
PLEASE MARK YOUR VOTE IN THE FOLLOWING
MANNER USING DARK INK ONLY <square>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE
NOMINEES, FOR THE APPROVAL OF THE 1999 STOCK OPTION PLAN, AND FOR
THE APPROVAL OF INDEPENDENT AUDITORS.
1. Election of Directors:
For all except the
For All Withhold All nominees written below
DANIEL R. OLVEY AND
GARY W. FREELS <square> <square> ______________________
For Against Abstain
2. Approval of 1999 <square> <square> <square>
Stock Option Plan
3. Approval of <square> <square> <square>
appointment of
independent auditors.
In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the Annual Meeting.
Please sign exactly as name appears at left.
Dated ______________________________, 1999
_________________________________________
Signature
__________________________________________
Signature if held jointly
When shares are held by joint tenants, both
should sign. When signing as attorney,
executor, administrator, trustee or guardian,
please give full title. If a corporation,
please sign in full corporate name by
president or other authorized officer.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY IN THE
ENCLOSED ENVELOPE.
