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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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
Westvaco Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(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):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] 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:
-------------------------------------------------------------------------
Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
[LOGO OF WESTVACO APPEARS HERE]
December 27, 1999
Dear Fellow Shareholders:
We cordially invite you to join us at the 2000 Annual Meeting of Shareholders
of Westvaco Corporation to be held at 10 o'clock in the morning on Tuesday,
February 22, 2000. The meeting will be held in the Astor Salon, on the third
floor of The Waldorf=Astoria Hotel, 301 Park Avenue (at 49th Street), New York,
New York. Whether or not you expect to attend the meeting, however, please
sign, date and promptly return the enclosed proxy.
This year our proxy material includes two proposals. We ask for your support in
voting FOR Proposal 1, the election of our directors; and FOR Proposal 2, the
appointment of our independent accountants.
Your interest in your company as demonstrated by the representation of your
shares at our annual meeting is a great source of strength for your company.
Your vote is very important to us and, accordingly, we ask that you sign, date
and return the enclosed proxy promptly.
Sincerely,
/s/ John A. Luke, Jr.
John A. Luke, Jr.
Chairman, President and
Chief Executive Officer
Westvaco Building
299 Park Avenue
New York, NY 10171
Telephone 212 688 5000
<PAGE>
[LOGO OF WESTVACO APPEARS HERE]
Paper, packaging and specialty chemicals
Notice of 2000 Annual Meeting of Shareholders
and Proxy Statement
The Annual Meeting of Shareholders of Westvaco Corporation will be held in the
Astor Salon, on the third floor of The Waldorf=Astoria Hotel, 301 Park Avenue
(at 49th Street), New York, New York, on Tuesday, February 22, 2000, at 10
o'clock in the morning for the following purposes:
1. To elect three directors for terms of three years each;
2. To consider and vote upon a proposal to ratify the action of the Board of
Directors in appointing PricewaterhouseCoopers LLP as independent
accountants for the corporation for the fiscal year 2000.
All holders of common stock of record at the close of business on December 27,
1999 will be entitled to receive notice of and to vote at the annual meeting.
Whether or not you expect to be at the meeting, please sign, date and promptly
return the enclosed proxy.
By Order of the Board of Directors
John W. Hetherington
Vice President, Assistant General Counsel
and Secretary
December 27, 1999
<PAGE>
Proxy Statement
Westvaco Corporation
Westvaco Building
299 Park Avenue
New York, New York 10171
Your Board of Directors is providing you with this Proxy Statement in
connection with the Board's solicitation of proxies for Westvaco's Annual
Meeting of Shareholders to be held on February 22, 2000. On or about January
17, 2000, we will mail the Proxy Statement, a proxy card, and the Annual Report
of Westvaco Corporation to shareholders of record of Westvaco common stock at
the close of business on December 27, 1999. Only those holders of record will
be entitled to vote, each share of stock being entitled to one vote. Although
the Annual Report and Proxy Statement are being mailed together, the Annual
Report should not be deemed to be part of the Proxy Statement.
A majority of the outstanding shares of common stock, represented in person or
by proxy at the meeting, will constitute a quorum. The three director nominees
receiving the highest number of all votes cast for directors will be elected.
Accordingly, abstentions and broker non-votes will not affect the outcome of
the election. All other matters to be voted on will be decided by a majority
vote of the shares represented at the meeting and entitled to vote. On any such
matter, an abstention will have the same effect as a negative vote but, because
shares held by brokers, even though represented, are not entitled to vote on
any matters as to which the brokers lack authority to vote, a broker non-vote
will have no effect on the vote.
On December 27, 1999 there were outstanding 100,384,303 shares of Westvaco
common stock. The following investment advisers are believed to have beneficial
ownership (as defined for certain purposes by the Securities and Exchange
Commission) of more than 5% of the company's common stock by virtue of having
investment authority and, to some extent, voting authority over the number of
shares indicated. The number of shares was obtained in each case from public
filings or directly from the adviser.
<TABLE>
<CAPTION>
Percent
Shares of Class
---------- --------
<S> <C> <C>
Sanford C. Bernstein & Co. 12,779,000 12.73%
757 Fifth Avenue
New York, NY 10153
Capital Research & Management 12,213,000 12.17%
333 South Hope Street
Los Angeles, CA 90071-1406
</TABLE>
The Westvaco savings and investment plans for salaried and hourly employees
held, as of October 29, 1999, a total of 13,490,136 shares, or 13%, for which
full voting rights are exercisable by members of the plans. As of that date,
there were 12,000 current or former employees of Westvaco and its subsidiaries
participating in these plans.
1
<PAGE>
OWNERSHIP BY OFFICERS AND DIRECTORS
<TABLE>
<CAPTION>
Shares Options
Beneficially Exercisable Percent of
Name Owned(1) Within 60 days Shares
- ---- ------------ -------------- ----------
<S> <C> <C> <C>
Directors
Samuel W. Bodman III .................... 15,000 7,500 *
W.L. Lyons Brown, Jr. ................... 4,500 7,500 *
Michael E. Campbell...................... 1,000 1,500 *
Dr. Thomas W. Cole, Jr. ................. 550 7,500 *
David L. Hopkins, Jr. (2)................ 319 7,500 *
Douglas S. Luke (3)...................... 22,975 4,500 *
William R. Miller........................ 6,000 3,000 *
Jane L. Warner........................... 600 3,000 *
Richard A. Zimmerman..................... 3,350 7,500 *
Named Executive Officers
Philip H. Emery, Jr.**................... 51,236 235,177 *
Jack A. Hammond***....................... 63,926 212,353 *
Rudolph G. Johnstone, Jr. ............... 87,006 292,740 *
John A. Luke, Jr. (4).................... 131,846 624,996 *
David E. McIntyre........................ 5,773 95,000 *
R. Scott Wallinger....................... 72,219 192,997 *
All Directors and Officers as a Group.... 1,238,905 3,491,495 4.6%
</TABLE>
*Less than 1% of Westvaco common stock.
**Retired December 1, 1999.
***Retired October 1, 1999.
- --------------------------------------------------------------------------------
(1) Information concerning beneficial ownership of shares is as of November 30,
1999, the most recent practicable date, except for equivalent shares in the
Westvaco Savings and Investment Plan for Salaried Employees which is as of
October 29, 1999.
(2) Co-Trustee of a trust which held a total of 40,600 shares of Westvaco
common stock.
(3) Co-Trustee of a trust which held a total of 23,998 shares of Westvaco
common stock.
(4) Co-Trustee of three trusts which held a total of 13,958 shares of Westvaco
common stock.
Attendance at the meeting will be limited to holders of record as of the record
date, or their authorized representatives (not to exceed one per shareholder),
and guests of management.
It is important that your stock be represented at the meeting. Whether or not
you plan to attend, please sign, date and return the enclosed proxy promptly in
order to be sure that your shares will be voted. You may revoke your proxy at
any time before it is voted at the meeting by submitting a written revocation
or a new proxy, or by attending and voting at the annual meeting.
In addition to solicitation by mail, officers and assistant officers of
Westvaco may solicit proxies by telephone or other electronic communication, or
by personal contact. The cost of solicitation of proxies will be borne by
Westvaco. Westvaco may engage the services of Orion Investor Relations for the
solicitation of proxies on a limited basis at a cost which is estimated not to
exceed $5,000 in fees, and somewhat more than half that amount in expenses.
2
<PAGE>
1. Election of directors
Three directors will be elected to hold office for the terms set forth below
and, in all cases, until their successors are elected and shall qualify. There
is no provision for cumulative voting in the election of directors. At the
meeting, one of the persons named in the enclosed proxy (or a substitute) will,
if authorized, vote the shares covered by such proxy for election of the three
nominees for directors listed on the following pages.
The present nominees, Samuel W. Bodman III, Dr. Thomas W. Cole, Jr., and
Rudolph G. Johnstone, Jr., if elected, will be elected for terms expiring at
the 2003 Annual Meeting of Shareholders. The Board of Directors unanimously
recommends a vote FOR the named nominees. Should any of these nominees become
unavailable for election for any reason presently unknown, a person named in
the enclosed proxy (or a substitute) will vote for the election of such other
person or persons as the Board of Directors may recommend.
W.L. Lyons Brown, Jr., Michael E. Campbell, John A. Luke, Jr., and William R.
Miller, will continue to serve for a term expiring at the 2002 Annual Meeting.
David L.Hopkins, Jr., Douglas S. Luke, Jane L. Warner, and Richard A.
Zimmerman,
will continue to serve for a term expiring at the 2001 Annual Meeting.
Nominees for election as directors
for a term of three years expiring in 2003
<TABLE>
<CAPTION>
Westvaco
Director
Name Age Since
---- --- --------
<S> <C> <C>
SAMUEL W. BODMAN III.................................. 61 1987
Chairman and CEO, Cabot Corporation, since 1988.
Director: Security Capital Group Incorporated, Thermo
Electron, Inc., John Hancock Mutual Life Insurance Co.
Trustee: Massachusetts Institute of Technology.
DR. THOMAS W. COLE, JR................................ 58 1994
President, Clark Atlanta University, since 1989.
Director: First Union Bank of Georgia, West Virginia
Wesleyan College.
RUDOLPH G. JOHNSTONE, JR.............................. 63 1995
Executive Vice President, Westvaco, since 1995; Senior
Vice President with responsibilities for Corporate
Data Processing, Marketing Services, Human Resources,
and Envelope Division, 1992-1995. Director: Foreign
Policy Association.
</TABLE>
3
<PAGE>
Directors Whose Terms Expire 2002
<TABLE>
<CAPTION>
Westvaco
Director
Name Age Since
---- --- --------
<S> <C> <C>
W. L. LYONS BROWN, JR................................. 63 1994
Retired after serving as Chairman of the Board and
CEO, Brown-Forman Corporation; CEO, 1975-1993;
Chairman of the Board 1983-1995. Former member of the
President's Advisory Committee for Trade Policy and
Negotiations. Director: Pennzoil-Quaker State Company.
MICHAEL E. CAMPBELL................................... 52 1998
Chairman and CEO, Arch Chemicals, Inc., since 1999.
Executive Vice President, Olin Corporation, 1996-1999;
Corporate Vice President and President,
Microelectronic Materials Division before becoming
Executive Vice President of Olin.
JOHN A. LUKE, JR...................................... 51 1989
Chairman, President and CEO, Westvaco, since 1996;
President and CEO, 1992-1996. Director: American
Forest and Paper Association, The Bank of New York,
The Timken Company, United Negro College Fund.
Trustee: Lawrence University, American Enterprise
Institute for Public Policy Research. Governor:
National Council of the Paper Industry for Air and
Stream Improvement, Inc.
WILLIAM R. MILLER..................................... 71 1992
Retired after serving as Vice Chairman of the Board,
Bristol-Myers Squibb Company, 1985-1990. Chairman of
the Board: Cold Spring Harbor Laboratory, Vion
Pharmaceuticals, Inc. Director: ISIS Pharmaceuticals,
Inc., ImClone Systems, Inc., Transkaryotic Therapies,
Inc. Chairman, English-Speaking Union of the United
States.
</TABLE>
Directors Whose Terms Expire 2001
<TABLE>
<CAPTION>
Westvaco
Director
Name Age Since
---- --- --------
<S> <C> <C>
DAVID L. HOPKINS, JR.................................. 71 1969
Chairman of the Board, Brown Investment Advisory &
Trust Co. Retired Managing Director, J.P. Morgan.
DOUGLAS S. LUKE....................................... 58 1996
President and CEO, HL Capital, Inc., since 1999, a
private investment company with diversified interests
in marketable securities and private equities.
President and CEO, WLD Enterprises, Inc. 1991-1998, a
private investment company with generally similar
interests. Director: Orbital Sciences Corporation;
Regency Realty Corporation.
JANE L. WARNER........................................ 52 1997
Served as President, Kautex Textron, North America,
1998-1999. Executive Vice President, Textron
Automotive Company, 1994-1999. Director: Kettering
University.
RICHARD A. ZIMMERMAN.................................. 67 1989
Retired after serving as Chairman and CEO, Hershey
Foods Corporation, 1985-1993. Director: Eastman Kodak
Corporation, Stabler Companies, Inc. Trustee: United
Theological Seminary, Pennsylvania State University.
</TABLE>
4
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires reporting by
directors and certain officers of the company concerning their holdings and
transactions in Westvaco common stock. A review of the company's records
indicates that all reports required under the Section 16(a) rules were filed in
a timely manner during the fiscal year, except for one report of a sale of 822
shares of stock by a co-trustee of a trust of which David L. Hopkins, Jr. is
also a co-trustee. A report has now been filed.
Certain Transactions
Samuel W. Bodman III, a director of Westvaco, is currently the Chairman and
Chief Executive Officer of Cabot Corporation. In fiscal year 1999, Westvaco
purchased approximately $65,342 in products from Cabot Corporation. Michael E.
Campbell, a director of Westvaco, was an Executive Vice President of Olin
Corporation during part of fiscal year 1999. During that time, Westvaco
purchased approximately $1,268,749 in products from Olin Corporation and sold
approximately $414 in products to Olin Corporation. The above transactions were
in the ordinary course of business, at competitive prices, and independent of
service on Westvaco's Board of Directors.
Director Compensation
<TABLE>
<S> <C>
Annual Board Retainer............................................ $30,000
Board Meeting Attendance Fee..................................... $ 1,000
Committee Meeting Attendance Fee ................................ $ 1,000
Annual Option Grant (Shares)..................................... 1,500
</TABLE>
- --------------------------------------------------------------------------------
Only directors who are not employees of the corporation receive a retainer and
meeting fees. A retirement plan for non-employee directors was terminated in
1997, preserving only benefits already accrued.
Board Committees
1999 Committee Membership
<TABLE>
<CAPTION>
Audit Board Membership
- ----- ----------------
<S> <C>
William R. Miller, Chairman W.L. Lyons Brown, Jr., Chairman
Michael E. Campbell Samuel W. Bodman III
Thomas W. Cole, Jr. David L. Hopkins, Jr.
David L. Hopkins, Jr. John A. Luke, Jr.
Jane L. Warner Richard A. Zimmerman
Richard A. Zimmerman
(all non-employee directors)
Compensation Environment, Safety and Health
- ------------ ------------------------------
Richard A. Zimmerman, Chairman Samuel W. Bodman III, Chairman
Samuel W. Bodman III Thomas W. Cole, Jr.
W.L. Lyons Brown, Jr. Douglas S. Luke
Thomas W. Cole, Jr. John A. Luke, Jr.
David L. Hopkins, Jr. William R. Miller
(all non-employee directors) Jane L. Warner
Finance International
- ------- -------------
David L. Hopkins, Jr., Chairman Douglas S. Luke, Chairman
W.L. Lyons Brown, Jr. Samuel W. Bodman III
Michael E. Campbell W.L. Lyons Brown, Jr.
Douglas S. Luke Michael E. Campbell
John A. Luke, Jr. John A. Luke, Jr.
William R. Miller William R. Miller
Jane L. Warner Richard A. Zimmerman
</TABLE>
5
<PAGE>
Board and Committee Meetings
The Board of Directors held ten meetings, one each month except December and
July, and 24 committee meetings during fiscal year 1999. Average attendance by
directors at meetings of the Board and its committees was 92.9%.
Audit Committee 3 meetings in fiscal 1999
Reviews the audit examination and annual financial reports of the corporation,
and meets with and remains accessible to the internal auditors and independent
accountants of the corporation. It reviews in advance the appointment of the
independent accountants, the scope of their work, and the fees for all services
provided. It also reviews annually with the General Counsel the status of the
company's legal compliance program, as well as significant issues in
litigation.
Compensation Committee 8 meetings in fiscal 1999
Receives regular reports on industrial relations, approves all compensation of
senior management, determines awards under the Annual Incentive Compensation
Plan, oversees matters relating to the corporation's stock option plans and
various issues related to the management of its savings and investment plans.
In addition, the Committee reviews the management of, and proposed changes to,
the corporation's various employee benefit plans.
Committee on Board Membership 1 meeting in fiscal 1999
Reviews and makes recommendations concerning the qualifications of all
directors, including those considered for re-election, and persons to fill
vacancies on the Board of Directors, as well as the levels of compensation paid
to non-salaried directors.
Finance Committee 8 meetings in fiscal 1999
Reviews the financial condition of the corporation and its requirement for
funds, studies its credit and financing policies, considers the dividend policy
of the corporation and makes recommendations concerning these matters, and
reviews funding recommendations for the salaried and hourly pension plans
together with the investment performance of such plans.
Committee on the Environment, Safety and Health 2 meetings in fiscal 1999
Oversees the stewardship of the corporation with respect to conservation of the
natural resources and its ability to protect the natural environment. It also
oversees implementation of the company's workplace safety and health program.
The Committee receives regular reports from management, reviews environmental,
safety and health matters with management, and makes recommendations as needed.
International Committee 2 meetings in fiscal 1999
Serves as a resource for management, sharing its knowledge and expertise on
opportunities outside of the United States which may be of interest to the
company.
Compensation Committee Interlocks and Insider Participation
No employee of the company served as a member of the Compensation Committee or
as a member of the compensation committee on the board of any company where an
executive officer of such company is a member of the Compensation Committee of
Westvaco's Board.
6
<PAGE>
Executive Compensation
Report of the Compensation Committee
The Committee
We are the members of the Compensation Committee, a Board committee composed
entirely of outside directors, none of whom is or has been at any time an
employee of the company or is receiving any compensation from the company other
than as a director. We administer the Westvaco Executive Compensation Program
which is designed to attract and retain distinctly capable and highly motivated
individuals who can create and execute programs that will produce sound long-
term rewards for shareholders. We also determine the compensation of all
employees, including executive officers, whose annual cash compensation exceeds
$275,000, and inform the Board of any action taken with respect to the
compensation of the CEO.
Performance Factors
A major Westvaco objective is to increase the value of the company for its
shareholders over the long term. Another major company objective is to minimize
the impact of the business cycle on its earnings through an extensive emphasis
on distinctive and differentiated products and services. The success of this
product strategy, as well as the company's cost containment and productivity
improvement strategies, is regularly monitored within the company and by the
Board. The contribution of an individual to the execution of corporate
strategies, and the pursuit of the foregoing objectives, remain the principal
basis on which we evaluate job performance and, therefore, is a significant
factor in our determining salaries, awards of bonuses to the most senior
executives, and grants of stock options.
Compensation for the Past Year
Westvaco's 1999 earnings reflect the extremely challenging business conditions
that persisted during the year. The company has performed well relative to its
industry peers over an extended period of difficult business conditions.
Earnings for 1999 in fact did meet the threshold for bonuses under the Westvaco
Annual Incentive Plan which relates variable compensation directly to corporate
performance, but targets for performance established by the Board were not met.
As a result, no bonuses were paid from the Plan for 1999. Also, there was no
increase in base salaries in 1999 for any executive officer identified in the
Summary Compensation Table, except in the case of one promotion.
We remain restless with the lack of recognition by the investment community as
reflected in the performance of Westvaco stock versus the peer group as shown
on page 10. At the same time, we believe that management initiatives that
include the reassessment of individual business unit strategies and
organization changes are all well focused on the overall objective of
increasing shareholder value.
Cash Compensation
The Westvaco Annual Incentive Compensation Plan, approved by shareholders in
1996, places a portion of a senior executive's compensation at risk and ties it
to company and personal performance. The Plan is administered by the
Compensation Committee. Funding for awards is based on a formula tied to the
overall performance of the company. The formula provides for a pool of money
amounting to 2% of net income in excess of 6% return on shareholders' equity
which will be available for use by the Committee to provide competitive annual
cash compensation for senior managers. The Plan is designed to meet IRS
requirements for tax deductibility. In determining awards, we carefully
appraise the performance of each individual and of the company, and also
consider current and anticipated competitive compensation in
7
<PAGE>
equivalent positions within the industry. Key criteria for individual
performance focus on improved shareholder value through financial and
operating performance, advancement of the company's strategy of product and
service differentiation, and organizational development. No one executive can
receive more than 20% of the available bonus pool. Under the challenging
market conditions which prevailed during fiscal year 1999, although the
funding formula did provide a pool available for incentive compensation
awards, the Board's targets for performance were not met, and, accordingly, no
payouts under the Plan were made for this fiscal year.
We believe it is important that total cash compensation for Westvaco's
executive officers be at a level that is competitive with that paid by
comparable companies. The competitiveness of the compensation of the CEO and
the other executive officers identified in the Summary Compensation Table is
evaluated through an assessment of total annual cash compensation paid by the
seven peer paper companies which, along with Westvaco, comprise the Dow Jones
Paper Index in the proxy performance graphs on pages 10 and 11 and by other
companies comparable in size to Westvaco. Such assessments are supported by
executive compensation surveys performed for the Committee each year. Using
this frame of reference as a general guideline, actual compensation levels are
determined by an annual evaluation of individual job performance, without
attempting to target a specific level within the competitive frame of
reference.
Salaries for the other executive officers are determined on a similar basis,
except that a salary range is established for each such officer based upon
total annual cash compensation, including any bonus, paid to comparable
officers of the companies in a somewhat broader group encompassing companies
comparable to Westvaco both within and without the paper industry. A midpoint
is determined with reference to the median of this group. Individual salaries
are reviewed annually under a formal performance appraisal program and
adjusted relative to the midpoint within the range, as appropriate, based on
individual job performance.
Equity-Based Compensation
Stock Options
Grants of stock options are made by the Committee to create a direct tie
between the interests of key employees and shareholders of the company. Such
options are usually granted each year, with an exercise price equal to the
market price of the related shares on the date of grant, so that individuals
receiving such grants benefit only if shareholders benefit through subsequent
appreciation in the value of Westvaco shares. Position responsibility, job
performance, and salary level are principal factors considered by the
Compensation Committee in determining the size of grants. Grants are also
compared with the grants of options and other long-term incentives within the
Dow Jones Paper Index, and by other companies comparable in revenues to
Westvaco in other industries. The Committee does not consider the number of
options already held by an individual in making additional grants.
The Savings and Investment Plans
The savings and investment plans for Westvaco employees, with company
matching, provide an attractive way for all employees, including executive
officers, to acquire and hold stock in the company by contributing a
percentage of their compensation. They reflect the company's long commitment
to equity ownership by employees and tying their interests to the interests of
the shareholders as a whole. For fiscal 1999 there was a regular company match
of 75 percent on employee contributions up to the limit set forth in the
plans.
Compensation for the Chief Executive Officer
Specific performance criteria are established against which the Committee
measures the performance of the Chief Executive Officer. These same criteria
are used by the Chief Executive Officer in evaluating the company's other
senior officers.
8
<PAGE>
The cash compensation of the company's Chairman, President and Chief Executive
Officer, John A. Luke, Jr., includes a base salary and variable compensation.
His base salary is above the median of the Dow Jones Paper Index Group, and,
consequently, no adjustment was made in this part of Mr. Luke's compensation in
1999. With regard to variable cash compensation, the Westvaco Annual Incentive
Plan reflects a disciplined focus on shareholder returns and directly relates
funding for variable compensation awards to company performance to the
exclusion of more generalized factors. In 1999, Westvaco did not achieve the
performance targeted by the Board for the award of bonuses to Mr. Luke or any
other executive officer under the company's Annual Incentive Compensation Plan.
Although the company has performed well relative to the peer group, the
deliberate linkage between variable cash compensation and company performance
has tended to make the Chief Executive Officer's total cash compensation below
the average when compared to the total cash compensation for similar positions
in the paper industry, during the recent period of challenging business
conditions.
In November 1998 the Committee granted stock options to John A. Luke, Jr. for
95,000 shares and simultaneously made grants to 428 other officers and salaried
employees, all of which were granted at market value on the date of grant. At
no time have any stock options been repriced. The value of the 1998 stock
option awards to John A. Luke, Jr. is above the median of the long-term
compensation awards for similar positions in the Dow Jones Paper Index
Companies.
Conclusion
We remain convinced that the caliber and motivation of the company's executives
and all of its employees are extremely important to the company's ability to
meet future challenges and to deliver long-term value to its shareholders.
While Westvaco's fiscal year 1999 performance continues to reflect the serious
challenges confronting the paper industry, we believe that the company's
Executive Compensation Program is sound and provides appropriate incentive to
key management personnel to meaningfully affect earnings and returns in future
years.
Richard A. Zimmerman, Chairman
Samuel W. Bodman III
W.L. Lyons Brown, Jr.
Dr. Thomas W. Cole, Jr.
David L. Hopkins, Jr.
9
<PAGE>
Total Return to Shareholder
(as of October 31, 1999)
Label A B C
- -------------------------------------------------------------------------------
Label Westvaco Corp S&P 500 Index Dow Jones Paper Index
- -------------------------------------------------------------------------------
1 1994\r 100 100 100
- -------------------------------------------------------------------------------
2 1995\r 122.36 126.44 120.39
- -------------------------------------------------------------------------------
3 1996\r 129.52 156.9 124.12
- -------------------------------------------------------------------------------
4 1997\r 153.56 207.3 139.98
- -------------------------------------------------------------------------------
5 1998\r 119.77 252.88 127.38
- -------------------------------------------------------------------------------
6 1999\r 148.36 317.79 168.54
- -------------------------------------------------------------------------------
Data Source: Dow Jones Paper Index data which comes from Dow Jones & Company,
Inc.
This graph compares the cumulative total return to shareholders on Westvaco
common stock for a five-year period ended October 31, 1999 with the return on
the Standard & Poor's 500 Stock Index (S&P 500) and the Dow Jones Paper Index.
10
<PAGE>
Long-Term Total Return to Shareholders
(as of October 31, 1999)
Label A B C
- -------------------------------------------------------------------------------
Label Westvaco Corp S&P 500 Index Dow Jones Paper Index*
-------------------------------------------------------------------------------
1 1967 100 100 100
- -------------------------------------------------------------------------------
2 1968 162.03 113.61 151.13
- -------------------------------------------------------------------------------
3 1969 149.72 110.27 165.53
- -------------------------------------------------------------------------------
4 1970 115.31 98.04 127.74
- -------------------------------------------------------------------------------
5 1971 99.16 114.53 112.16
- -------------------------------------------------------------------------------
6 1972 142.36 139.58 108.87
- -------------------------------------------------------------------------------
7 1973 220.2 139.52 149.87
- -------------------------------------------------------------------------------
8 1974 150.26 99.41 122.3
- -------------------------------------------------------------------------------
9 1975 208.96 125.33 175.73
- -------------------------------------------------------------------------------
10 1976 294.55 150.47 237.67
- -------------------------------------------------------------------------------
11 1977 301.82 141.17 184.41
- -------------------------------------------------------------------------------
12 1978 295.39 150.05 201.35
- -------------------------------------------------------------------------------
13 1979 376.36 173.02 223.18
- -------------------------------------------------------------------------------
14 1980 418.36 228.59 249.18
- -------------------------------------------------------------------------------
15 1981 448.61 229.85 243.18
- -------------------------------------------------------------------------------
16 1982 547.62 267.39 295.22
- -------------------------------------------------------------------------------
17 1983 716.2 341.93 366.93
- -------------------------------------------------------------------------------
18 1984 904.79 363.48 400.65
- -------------------------------------------------------------------------------
19 1985 898 433.77 415.67
- -------------------------------------------------------------------------------
20 1986 1436 577.57 633.02
- -------------------------------------------------------------------------------
21 1987 1645.51 614.53 651
- -------------------------------------------------------------------------------
22 1988 1752.8 705.48 806.22
- -------------------------------------------------------------------------------
23 1989 1739.83 891.73 924.15
- -------------------------------------------------------------------------------
24 1990 1547.58 825.03 787.13
- -------------------------------------------------------------------------------
25 1991 2581.2 1101.41 1197.65
- -------------------------------------------------------------------------------
26 1992 2482.08 1211 1145.31
- -------------------------------------------------------------------------------
27 1993 2309.58 1391.93 1122.08
- -------------------------------------------------------------------------------
28 1994 2511.9 1445.8 1381.24
- -------------------------------------------------------------------------------
29 1995 3073.56 1828.06 1662.91
- -------------------------------------------------------------------------------
30 1996 3253.05 2268.45 1714.36
- -------------------------------------------------------------------------------
31 1997 3856.82 2996.84 1933.54
- -------------------------------------------------------------------------------
32 1998 3008.32 3655.85 1759.33
- -------------------------------------------------------------------------------
33 1999 3726.41 4594.3 2327.95
- -------------------------------------------------------------------------------
* The Dow Jones Paper Index was not available prior to 1987. For the years prior
to 1987, the graph represents the total returns for the group of companies
that currently comprise the Dow Jones Paper Index.
Data source: Standard & Poor's Compustat Services, a division of McGraw-Hill
Companies, except for Dow Jones Paper Index data from 1987-1999 which comes
from Dow Jones & Company, Inc.
Creating long-term rewards for shareholders is a major Westvaco objective.
Accordingly, this graph, using the same method of measuring return as in the
five-year graph and using the same indices, is presented to show comparative
cumulative return over a long-term. Neither this graph, nor the graph for the
five-year period, should be taken to imply any assurance that past performance
is predictive of future performance.
11
<PAGE>
Summary Compensation Table
The following shows the compensation paid or accrued by Westvaco to or for each
of its six most highly compensated executive officers for all periods during
the fiscal year ended October 31, 1999.
<TABLE>
<CAPTION>
Long-term
Annual Compensation
Compensation Awards
Name and ----------------- Other ------------ All Other
Principal Position Year* Salary Bonus(1) Compensation(2) Options(#) Compensation(3)(4)
- ------------------ ----- -------- -------- --------------- ------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
John A. Luke, Jr. 1999 $875,000 -- -- 95,000 $39,375
Chairman, President and 1998 875,000 -- -- 95,000 39,375
Chief Executive Officer 1997 874,167 $90,000 -- 95,000 90,637
Rudolph G. Johnstone, Jr. 1999 625,000 -- -- 60,000 28,125
Executive Vice President 1998 625,000 -- -- 60,000 28,125
1997 620,000 60,000 -- 60,000 50,240
David E. McIntyre 1999 491,667 -- $71,086 45,000 22,125
Group Vice President 1998 388,333 -- 39,060 30,000 17,475
1997 304,167 25,000 27,180 20,000 14,713
Philip H. Emery, Jr.** 1999 450,000 -- -- 45,000 20,250
Senior Vice President 1998 450,000 -- -- 45,000 20,250
1997 449,167 35,000 -- 45,000 36,306
R. Scott Wallinger 1999 425,000 -- -- 25,000 19,125
Senior Vice President 1998 425,000 -- -- 25,000 19,125
1997 424,167 15,000 -- 25,000 36,031
Jack A. Hammond*** 1999 455,769 -- -- -- 18,563
Senior Vice President 1998 450,000 -- -- 40,000 20,250
1997 449,167 -- -- 45,000 37,448
</TABLE>
* Fiscal years ended October 31.
** Retired December 1, 1999.
*** Retired October 1, 1999.
- --------------------------------------------------------------------------------
(1) Represents the variable component of total annual compensation under the
Westvaco Annual Incentive Plan as discussed in the Report of the
Compensation Committee.
(2) Other Compensation includes perquisites paid to D.E. McIntyre during the
year for housing costs.
(3) Represents company contributions of $7,200 and $32,175 for John A. Luke,
Jr.; $7,200 and $20,925 for Rudolph G. Johnstone, Jr.; $5,625 and $16,500
for David E. McIntyre; $7,200 and $13,050 for Philip H. Emery, Jr.; $0 and
$19,125 for R. Scott Wallinger; and $7,200 and $11,363 for Jack A. Hammond,
to the Savings and Investment Plan and the unfunded Savings and Investment
Restoration Plan, respectively. The six executive officers named above hold
interests equivalent to a total of 241,959 shares under such plans.
(4) The 1997 amounts have been restated to include payments received for the
cancellation of SARs of $47,249 for John A. Luke, Jr.; $19,640 for Rudolph
G. Johnstone, Jr.; $2,000 for David E. McIntyre; $14,518 for Philip H.
Emery, Jr.; $16,268 for R. Scott Wallinger and $17,235 for Jack A. Hammond.
12
<PAGE>
Option/SAR Grants in the Fiscal Year Ended October 31, 1999
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed Annual
Rates of Stock Appreciation
Individual Grants for Option Term(1)
- ------------------------------------------------------------------------ -----------------------------
Number of % of Total
Securities Options
Underlying Granted to
Options Employees in Exercise Expiration
Name Granted Fiscal Year(2) Price($/Sh) Date 5% 10%
- ---- ---------- -------------- ----------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
John A. Luke, Jr. 95,000 9.65% $28.8438 11/24/2008 $ 1,723,260 $ 4,367,104
Rudolph G. Johnstone,
Jr. 60,000 6.10% $28.8438 11/24/2008 1,088,375 2,758,171
David E. McIntyre 45,000 4.57% $28.8438 11/24/2008 816,281 2,068,628
Philip H. Emery, Jr.* 45,000 4.57% $28.8438 11/24/2008 816,281 2,068,628
R. Scott Wallinger 25,000 2.54% $28.8438 11/24/2008 453,489 1,149,238
Jack A. Hammond ** 0 0 0
- ------------------------------------------------------------------------------------------------------
All Optionees(3) 984,155 100% $28.8438 11/24/2008 $ 17,815,011 $ 45,146,998
All shareholders(4) $1,819,269,787 $4,610,413,633
Optionees gain as % of
all shareholder gain 0.98% 0.98%
</TABLE>
* Retired December 1, 1999
** Retired October 1, 1999
(1) The dollar amounts under these columns are not intended to and may not
accurately forecast possible future appreciation, if any, of Westvaco's
common stock price. These are purely hypothetical amounts resulting from
calculations at the 5% and 10% rates required by the Securities and
Exchange Commission.
(2) All options are granted at market value on the date of grant and become
exercisable twelve months from the date of grant.
(3) Includes 30,000 options granted with an exercise price of $26.8750 and an
expiration date of 1/19/2009.
(4) As of October 31, 1999, there were 100,292,843 shares of common stock
outstanding. The calculations shown are based on the assumed rates of
appreciation, compounded annually, from the stock's fair market value of
$28.8438 on November 24, 1998, when the above options were granted.
13
<PAGE>
Aggregated Option Exercises in Last Fiscal Year
and October 31, 1999 Option Values
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Options At Options At
Shares October 31, 1999(2) October 31, 1999(2)
Acquired on Value Exercisable/ Exercisable/
Name Exercise Realized(1) Unexercisable Unexercisable
- ---- ----------- ----------- ------------------- -------------------
<S> <C> <C> <C> <C>
John A. Luke, Jr. 5,714 $153,704 529,996/95,000 $2,083,883/$62,339
Rudolph G. Johnstone,
Jr. 19,668 144,497 232,740/60,000 595,705/39,372
David E. McIntyre -- -- 50,000/45,000 41,250/29,529
Philip H. Emery, Jr.* -- -- 190,177/45,000 534,497/29,529
R. Scott Wallinger 8,804 140,996 167,997/25,000 715,455/16,405
Jack A. Hammond** -- -- 212,353/0 691,244/0
</TABLE>
* Retired December 1, 1999.
** Retired October 1, 1999.
(1) The value realized on stock option exercises represents the difference
between the grant price of the options and the market price of the shares
of underlying stock as of the date of exercise multiplied by the number of
options exercised. All grants are made at the fair market value of the
stock on the date of grant.
(2) The value of unexercised in-the-money options represents the difference
between the grant price of the options and the market price of $29.50 at
October 29, 1999, multiplied by the number of in-the-money options
outstanding.
Pension Plan Table
<TABLE>
<CAPTION>
Years of Service
--------------------------------------------------------------
Remuneration 10 15 25 30 35 40 45
- ------------ -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
500,000 $ 69,600 $104,400 $174,000 $208,800 $243,600 $279,100 $314,800
660,000 92,400 138,700 231,200 277,400 323,600 370,500 417,700
820,000 115,300 173,000 288,300 345,900 403,600 461,900 520,500
980,000 138,100 207,300 345,500 414,500 483,600 553,400 623,400
1,140,000 161,000 241,600 402,700 483,100 563,700 644,800 726,300
1,300,000 183,900 275,800 459,800 551,700 643,700 736,300 829,200
</TABLE>
The corporation's contributions to its Retirement Plan for Salaried Employees
are computed on an aggregate actuarial basis with no specific allocation of
contributions to individuals. The table above shows the approximate annual
retirement benefits net of social security benefits that would be received
under current plan provisions based upon the noted compensation levels and
years of service. As of December 31, 1999, the executive officers named in the
Summary Compensation Table set forth on page 12 will have the following years
of credited service: John A. Luke, Jr., 20.7; Rudolph G. Johnstone, Jr., 39.3;
David E. McIntyre, 7.7; Phillip H. Emery, Jr., 34; R. Scott Wallinger, 35; and
Jack A. Hammond, 38.5. The amounts of covered compensation under the Plan
during 1999 for each of the individuals named in the Summary Compensation Table
were approximately the same as set forth in the salary and bonus columns of
that table.
These approximated annual retirement benefits have been calculated under the
plan's 50% joint and survivor annuity form of pension and on the assumption of
retirement benefits beginning at age 62 through age 65. To the extent that an
employee's retirement benefit as computed in accordance with the plan exceeds
maximum amounts permitted under the Internal Revenue Code, the difference will
be paid by Westvaco under an unfunded benefit plan approved by the Board of
Directors.
14
<PAGE>
Benefit Assurance Trusts. The company has entered into four benefit assurance
trusts in connection with the company's unfunded benefit plans in order to
preserve the benefits earned under the plans in the event of a significant
change in corporate structure. Upon the occurrence of any potentially
significant change in corporate structure, the company will contribute
additional funds to the trusts which will be sufficient to pay, in accordance
with the terms of the plans, the benefits authorized under the plans. If the
funds in the trusts are insufficient to pay amounts due under the plans, the
company remains obligated to pay any deficiency.
Severance Pay Plans
Westvaco has formal severance pay plans for salaried employees who are
involuntarily terminated as a result of normal business occurrences (job
elimination and discharge) for reasons other than gross misconduct. The plans
provide severance pay ranging from 2 weeks to 104 weeks of an employee's salary
(including any incentive compensation) based on years of service. The maximum
benefit ranges from 26 weeks to 104 weeks. Terminated employees also receive
unused and vested vacation pay. An employee may continue medical, dental,
disability, accidental death and dismemberment and life insurance coverage for
a specified period of time. The individuals named in the Summary Compensation
Table set forth on page 12, would be eligible to participate in this plan
should they experience a job elimination or be discharged.
Executive Agreements
The Board of Directors has authorized employment agreements with the executive
officers named in the Summary Compensation Table and with other executive
officers. These agreements provide that in the event that a "Change-in-Control"
of Westvaco occurs during the term of an agreement, then the agreement becomes
operative for a fixed three-year period. Each agreement provides generally that
the executive's terms and conditions of employment (including position,
location, compensation and benefits) will not be adversely changed during the
three-year period after a Change-in-Control of the company. Generally, if the
company terminates the executive's employment (other than for cause, death or
disability), or if the executive terminates for good reason during such three-
year period, the executive is entitled to receive (i) three times (a) the
executive's annual base salary plus (b) the executive's annual bonus amount (as
determined pursuant to the agreement); (ii) accrued but unpaid compensation;
(iii) welfare benefits for three years; and (iv) a lump sum payment having an
actuarial present value equal to the additional pension benefits the executive
would have received if he or she had continued to be employed by the company
for an additional three years. In addition, the executive is entitled to
receive a payment in an amount sufficient to make the executive whole for any
excise tax on excess parachute payments imposed under Section 4999 of the
Internal Revenue Code of 1986, as amended.
2. Proposal to ratify appointment of independent accountants
The Board of Directors, pursuant to the recommendation of its Audit Committee,
has appointed PricewaterhouseCoopers LLP to serve as independent accountants
for the corporation for the 2000 fiscal year subject to approval by the
shareholders at the 2000 Annual Meeting. PricewaterhouseCoopers LLP currently
serves as the corporation's independent accountants and received $1,567,900 in
fees and expenses during fiscal year 1999 for audit-related services. The Audit
Committee has been advised by PricewaterhouseCoopers LLP that they are
independent accountants with respect to the corporation, within the meaning of
the Securities Acts administered by the Securities and Exchange Commission and
the requirements of the Independence Standard Board. Representatives of
PricewaterhouseCoopers LLP will attend the annual meeting, will have an
opportunity to make a statement if they desire and will be available to respond
to appropriate questions. If the shareholders do not ratify this appointment,
the appointment of other independent public accountants will be considered by
the Audit Committee.
15
<PAGE>
The Board of Directors unanimously recommends a vote FOR the ratification of
the appointment of PricewaterhouseCoopers LLP as independent accountants.
Shareholder proposals and nominations
Shareholder proposals intended for inclusion in next year's Proxy Statement
must be received by the Secretary of the company not later than August 30,
2000. In addition, Westvaco's bylaws outline procedures that a shareholder must
follow to nominate directors or to bring other business before shareholders'
meetings. For a shareholder to nominate a candidate for director at the 2001
Annual Meeting of Shareholders, notice of such nomination must be given to the
Secretary of the company not later than November 28, 2000. The notice must
describe various matters regarding the nominee and conform to requirements
specified in the company's bylaws. For a shareholder to bring other business
before the 2001 Annual Meeting of Shareholders, notice must be given to the
Secretary of the company between October 30, 2000, and November 27, 2000 and
must include a description of the proposed business, the reason for conducting
such business and other specified matters.
John W. Hetherington
Vice President,
Assistant General Counsel and Secretary
December 27, 1999
10-K available without charge
The corporation's annual report on Form 10-K filed with the Securities and
Exchange Commission may be obtained at no charge after January 31, 2000 by
writing to: Secretary, Westvaco Corporation, 299 Park Avenue, New York, New
York 10171. Exhibits to the Form 10-K are also available at a cost of twenty-
five cents per page. The Form 10-K is also available in the Investment Services
Section of Westvaco's internet site at www.westvaco.com.
16
<PAGE>
[LOGO OF WESTVACO APPEARS HERE]
Westvaco Corporation
Westvaco Building
299 Park Avenue
New York, New York 10171
212 688 5000
For shareholder information
outside of New York City, call toll free
1 800 432 9874
Westvaco on the World Wide Web
Earnings, corporate news releases,
product information, financial and
environmental reports and other
company information can be found
on Westvaco's Internet site:
http://www.westvaco.com
[LOGO APPEARS HERE]
50% recovered fiber
- -------------------
10% postconsumer fiber
The proxy statement is printed on American Eagle(R)
web dull paper manufactured at Westvaco's
Tyrone, PA, fine papers mill.
<PAGE>
WESTVACO CORPORATION
Proxy Solicited on behalf of the Board of Directors of Westvaco Corporation
The undersigned appoints John A. Luke, Jr., Rudolph G. Johnstone, Jr.,
and John W. Hetherington, successively, with full power of substitution, to
represent and to vote all common stock of Westvaco Corporation which the
undersigned would be entitled to vote at the Annual Meeting of Shareholders of
the corporation to be held on February 22, 2000 and at any adjournment of such
meeting.
(continued, and to be signed on the reverse side.)
<PAGE>
DETACH PROXY CARD HERE
- --------------------------------------------------------------------------------
- ------------------- -----------------------
Account Number Common
The Board of Directors recommends a vote "FOR" all nominees listed below and
- ----------------------------------------------------------------------------
"FOR" proposal 2.
----------------
<TABLE>
<S> <C> <C> <C>
(1) Election of Directors FOR all nominees [X] WHITHHOLD AUTHORITY to vote [X] *FOR ALL [X]
listed below for all nominees listed below EXCEPT
</TABLE>
Nominees: Samuel W. Bodman III, Dr. Thomas W. Cole, Jr., and Rudolph G.
Johnstone, Jr.
(INSTRUCTIONS: To withhold authority to vote for any individual nominee,
mark the "For All Except" box and strike a line through that nominee's name)
<TABLE>
<S> <C> <C> <C> <C>
(2) Appointment of PricewaterhouseCoopers LLP as FOR [X] AGAINST [X] ABSTAIN [X]
independent accountants for 2000.
</TABLE>
Change of Address and
or Comments Mark Here [X]
The proxies are directed to vote as specified
above and in their discretion on any matters
properly coming before the meeting and any
adjournment thereof. If no direction is made,
the proxies will vote FOR all nominees listed
above, and FOR Proposal 2. Please date, sign,
and return this proxy promptly. Please sign
exactly as your name appears on this proxy. If
signing for estates, trusts or corporations,
title or capacity should be stated.
Dated: ______________________________, 2000
------------------------------------------------
Signature(s)
------------------------------------------------
Signature(s)
