<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Willamette Industries, Inc.
.............................................................................
(Name of Registrant as Specified In Its Charter)
..............................................................................
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] 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: /1/
.......................................................................
4) Proposed maximum aggregate value of transaction:
.......................................................................
/1/ Set forth the amount on which the filing fee is calculated and state how
it was determined.
[ ] 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>
WILLAMETTE INDUSTRIES, INC.
3800 FIRST INTERSTATE TOWER
1300 S.W. FIFTH AVENUE
PORTLAND, OREGON 97201
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 28, 1994
----------------
The annual meeting of shareholders of Willamette Industries, Inc.
("Company"), will be held at the RiverPlace Alexis Hotel, 1510 S.W. Harbor Way,
Portland, Oregon, on Thursday, April 28, 1994, at 10 a.m., for the following
purposes:
1. To elect four Class C directors.
2. To approve the appointment of KPMG Peat Marwick, independent certified
public accountants, to examine the financial statements of the Company for
the year 1994.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only shareholders of record as of the close of business on March 2, 1994,
will be entitled to notice of and to vote at the meeting.
You are cordially invited to attend the meeting in person. Whether or not you
plan to attend, please date, sign and mail the enclosed proxy to avoid the
expense of further solicitation. A majority of the outstanding shares must be
represented at the meeting in order to transact business, and whether you own
few or many shares, your proxy is important in fulfilling this requirement.
If you attend the meeting, you may withdraw your proxy and vote in person.
By Order of the Board of Directors
J. A. Parsons
Secretary
Portland, Oregon
March 14, 1994
<PAGE>
This Proxy Statement has been printed on Pennlite Opaque(R) paper produced by
the Company.
<PAGE>
PROXY STATEMENT
----------------
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Willamette Industries, Inc., an Oregon corporation
("Company"), of proxies in the accompanying form for use at the annual meeting
of shareholders to be held on April 28, 1994. This Proxy Statement and
accompanying form of proxy were first sent or given to shareholders on
approximately March 14, 1994.
When a proxy in the enclosed form is properly executed and returned, the
shares represented thereby will be voted at the meeting in accordance with the
instructions specified in the spaces provided in the proxy. If no instructions
are specified, the shares will be voted for items 1 and 2 of the accompanying
Notice of Annual Meeting of Shareholders. Shareholders may expressly abstain
from voting on item 2 by so indicating on the proxy. Abstentions and shares
represented by duly executed and returned proxies of brokers and other nominees
which are expressly not voted on a matter to be presented at the annual meeting
will have no effect on the required vote on the matter.
A proxy given pursuant to this solicitation may be revoked by the person
giving the proxy at any time prior to its exercise (i) by delivering written
notice of revocation to the secretary of the Company, (ii) by executing a
subsequent proxy relating to the same shares which is delivered to the
secretary or (iii) by attending the annual meeting and voting in person
(although attendance at the meeting in itself will not constitute revocation of
a proxy).
HOLDERS OF COMMON STOCK
The close of business on March 2, 1994, has been fixed as the record date for
the determination of shareholders entitled to notice of and to vote at the
annual meeting. On the record date, the Company had outstanding 55,019,378
shares of $.50 par value common stock ("Common Stock"), each share of which is
entitled to one vote at the meeting. A majority of the shares entitled to vote,
represented in person or by proxy, will constitute a quorum at the meeting.
The following table gives certain information concerning the holdings of
Common Stock as of January 31, 1994, of each person known to the Company to be
the beneficial owner of more than 5 percent of the outstanding Common Stock, of
each of the directors and nominees, of each of the named executive officers
referred to in the Summary Compensation Table below and of the Company's
directors and executive officers as a group. The information as to beneficial
stock ownership is based on data furnished by the persons concerning whom such
information is given.
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY NATURE OF PERCENT OF
OWNED AT BENEFICIAL OUTSTANDING
NAME JANUARY 31, 1994(1) OWNERSHIP(1) COMMON STOCK
- ---- ------------------- ------------ ------------
<S> <C> <C> <C>
C. M. Bishop, Jr. 2,000 Shared Voting and Disposition --
Maurie D. Clark(2) 4,134,922 Sole Voting and Disposition 7.53%
Gerard K. Drummond 2,000 Sole Voting and Disposition --
E. B. Hart 746 Sole Voting and Disposition --
William P. Kinnune(3) 38,385 Sole Voting and Disposition .07%
Sole Voting and Shared
4,617 Disposition .01%
39,566 Sole Disposition .07%
82,568 Total .15%
C. W. Knodell 63,866 Sole Voting and Disposition .12%
Paul N. McCracken 3,040 Sole Voting and Disposition .01%
230 Shared Voting and Disposition --
3,270 Total .01%
</TABLE>
(Table continued on following page)
1
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY NATURE OF PERCENT OF
OWNED AT BENEFICIAL OUTSTANDING
NAME JANUARY 31, 1994(1) OWNERSHIP(1) COMMON STOCK
---- ------------------- ------------ ------------
<S> <C> <C> <C>
Michael R. Onustock(3) 21,602 Sole Voting and Disposition .03%
Sole Voting and Shared
3,602 Disposition .01%
15,927 Sole Disposition .03%
41,131 Total .07%
J. A. Parsons(3) 24,275 Sole Voting and Disposition .04%
Sole Voting and Shared
3,602 Disposition .01%
25,277 Sole Disposition .05%
53,154 Total .10%
Steven R. Rogel(3) 23,725 Sole Voting and Disposition .04%
Sole Voting and Shared
4,808 Disposition .01%
44,100 Sole Disposition .08%
72,633 Total .13%
Stuart J. Shelk, Jr. 502,998 Sole Voting and Disposition .92%
Robert M. Smelick 2,000 Sole Voting and Disposition --
William Swindells(3)(4) 1,316,131 Sole Voting 2.40%
1,845,312 Shared Voting 3.36%
1,378,770 Sole Disposition 2.51%
1,853,130 Shared Disposition 3.37%
3,235,463 Total 5.89%
Samuel C. Wheeler 1,038,520 Sole Voting and Disposition 1.89%
Benjamin R. Whiteley 2,000 Shared Voting and Disposition --
All directors and execu- 3,140,329 Sole Voting 5.72%
tive officers as a group 1,849,542 Shared Voting 3.37%
(16 persons), including 3,271,470 Sole Disposition 5.95%
persons listed above(3) 1,876,317 Shared Disposition 3.41%
5,237,762 Total 9.53%
</TABLE>
- --------
(1) Shares are included in the table as "beneficially owned" if the person
named has or shares the right to vote or direct the voting of or the right
to dispose or direct the disposition of such shares. Inclusion of shares in
the table does not necessarily imply that the persons named receive the
economic benefits of the shares so listed.
(2) Mr. Clark's address is Suite 600, 1211 S.W. Fifth Avenue, Portland, Oregon
97204.
(3) Includes shares subject to options exercisable within 60 days after January
31, 1994, under the Company's 1986 Stock Option and Stock Appreciation
Rights Plan ("Stock Option Plan") as follows: Mr. Kinnune, 39,566 shares;
Mr. Onustock, 15,927 shares; Mr. Parsons, 25,277 shares; Mr. Rogel, 44,100
shares; Mr. Swindells, 74,020 shares; and all executive officers as a
group, 251,743 shares.
(4) Mr. Swindells' address is 1300 S.W. Fifth Avenue, Portland, Oregon 97201.
Under Section 16 of the Securities Exchange Act of 1934, holders of more than
10 percent of the Common Stock and directors and certain officers of the
Company are required to file reports ("Section 16 Reports") of beneficial
ownership of Common Stock and changes in such ownership with the Securities and
Exchange Commission. The Company is required to identify in its proxy
statements those persons who to the Company's knowledge were required to file
Section 16 Reports and did not do so on a timely basis. Based solely on a
review of copies of Section 16 Reports furnished to the Company during and with
respect to its most recent fiscal year and on written representations from
reporting persons, the Company believes that each person who at any time during
the most recent fiscal year was a reporting person filed all required Section
16 Reports on a timely basis, except that Mr. Kinnune filed one Section 16
Report after its due date reporting two transactions in Common Stock.
2
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes serving staggered three-
year terms. The Board held four meetings during 1993. Each director attended at
least 75 percent of the total of (i) the meetings of the Board and (ii) the
meetings held by all committees of the Board on which he served.
The four nominees named below for election as Class C directors are members
of the Board of Directors. The nominees elected as Class C directors will serve
until the 1997 annual meeting of shareholders. The accompanying proxy when
properly executed and returned to the Company will be voted for the nominees
named below unless authority to vote is withheld. If a quorum is present, a
nominee will be elected if the nominee receives a plurality of the votes cast
by the shares entitled to vote in the election.
Under the Company's bylaws, a shareholder desiring to nominate a candidate
for election as a director must give written notice to the Company with
specified information not less than 90 days prior to any annual meeting and not
less than seven days after the giving of notice to the shareholders of any
special meeting at which directors are to be elected.
If for any reason any of the nominees named below should become unavailable
for election (an event that the Board of Directors does not anticipate), the
proxy will be voted for the election of such substitute nominee as may be
designated by the Board of Directors. Information with respect to each person
nominated for election as a director and each other person whose term of office
as a director will continue after the meeting is set forth below. Ages shown
are as of December 31, 1993.
CLASS A (DIRECTORS WHOSE TERMS OF OFFICE WILL EXPIRE IN 1995)
C. M. Bishop, Jr., age 69, has been a director of the Company since 1981. Mr.
Bishop has been vice chairman of Pendleton Woolen Mills, a fabric manufacturer,
since January 1993. Prior to that time he was president of Pendleton Woolen
Mills for more than five years. Mr. Bishop is also a director of First
Interstate Bank of Oregon, N.A., and PacifiCorp.(3)
Robert M. Smelick, age 51, has been a director of the Company since 1990. Mr.
Smelick has been a principal of Sterling Payot Company, an investment company,
since 1989. Prior to that time he was a managing director of The First Boston
Corporation, an investment banking company, for more than five years. Mr.
Smelick is also a director of Metricom, Inc.(3)
Benjamin R. Whiteley, age 64, has been a director of the Company since 1990.
Since December 1992, Mr. Whiteley has been chairman and chief executive officer
of Standard Insurance Company, a life insurance company, of which he is also a
director. Prior to that time he was president and chief executive officer of
Standard Insurance Company for more than five years. Mr. Whiteley is also a
director of Northwest Natural Gas Company and United States National Bank of
Oregon.(1)(2)
CLASS B (DIRECTORS WHOSE TERMS OF OFFICE WILL EXPIRE IN 1996)
E. B. Hart, age 69, has been a director of the Company since 1978. Prior to
his retirement in 1989, Mr. Hart had been chairman and chief executive officer
of Pay Less Drug Stores Northwest, Inc., a retail chain, for more than five
years. Prior to 1987, he was also president of that company.(3)
C. W. Knodell, age 66, has been a director of the Company since 1988. Prior
to his retirement from the Company in April 1989, Mr. Knodell was executive
vice president, chief financial officer, secretary and treasurer of the Company
for more than five years. Mr. Knodell is also a director of David Evans and
Associates, Inc.(1)(2)
William Swindells, age 63, has been a director of the Company since 1964. For
more than the past five years, Mr. Swindells has been chairman of the board and
chief executive officer of the Company. Prior to April 1991 he was also
president of the Company. Mr. Swindells is also a director of Standard
Insurance Company.(1)
3
<PAGE>
CLASS C (NOMINEES WHOSE TERMS OF OFFICE WILL EXPIRE IN 1997)
Gerard K. Drummond, age 56, has been a director since 1991. Since July 1993,
Mr. Drummond has been of counsel to the law firm of Stoel Rives Boley Jones &
Grey. For more than the prior five years, he was chairman of the board of
NERCO, Inc., a natural resources company, its chief executive officer (except
during the period February 1992 to November 1992), and an executive vice
president of PacifiCorp, a public utility holding company.(2)
Paul N. McCracken, age 65, has been a director of the Company since 1986. Mr.
McCracken has been chairman and chief executive officer of Tumac Lumber Co.,
Inc., a wood products broker, for more than the past five years.(1)(2)
Stuart J. Shelk, Jr., age 49, has been a director of the Company since 1983.
Mr. Shelk has been managing general partner of Ochoco Lumber Co., a lumber
manufacturer, for more than the past five years. Mr. Shelk is also a director
of United States National Bank of Oregon.(3)
Samuel C. Wheeler, age 65, has been a director of the Company since 1972. Mr.
Wheeler has been president of Wheeler Management Co., Inc., a wood products
manufacturer, for more than the past five years. Mr. Wheeler is also vice
president of Barclay Logging Company, a logging contractor.(1)(2)
- --------
(1) Member of executive committee.
(2) Member of compensation and nomination committee ("Compensation Committee").
The Compensation Committee, which held two meetings during 1993, reviews
the compensation of the Company's directors and officers prior to
consideration of such matters by the Board of Directors as a whole. The
committee also administers the Company's Stock Option Plan. In addition,
the committee also makes recommendations to the Board concerning
nominations of directors and selection of executive personnel. The
Compensation Committee will consider shareholder suggestions as to nominees
for directors; such suggestions should be addressed to the secretary of the
Company at its principal executive offices. In order to be considered prior
to next year's annual meeting, such suggestions should be received by
December 31 of this year.
(3) Member of audit committee. The audit committee, which met twice during
1993, is responsible for: (i) nominating and recommending independent
auditors for selection by the Board of Directors, (ii) reviewing the scope
of audit proposed to be performed, (iii) reviewing the results of the past
year's audit with the auditors and (iv) reviewing the independent auditors'
suggestions and comments with respect to internal financial and operational
controls, including monitoring the steps taken to implement suggestions by
the independent auditors. J. A. Parsons, executive vice president and chief
financial officer, secretary and treasurer of the Company, is an ex officio
member of the audit committee.
APPROVAL OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has reappointed KPMG Peat Marwick, independent
certified public accountants, to examine the financial statements of the
Company for the year 1994. Although the selection and appointment of
independent public accountants is not required to be submitted to a vote of the
shareholders, the Board has decided to ask the shareholders to approve the
appointment. If the shares voted against approval exceed the shares voted in
favor of approval, the Board will reconsider the appointment. The members of
the audit committee of the Board are indicated in the table set forth under the
caption "Election of Directors."
4
<PAGE>
The Company expects representatives of KPMG Peat Marwick to be present at the
annual meeting and to be available to respond to appropriate questions from
shareholders. The accountants will have the opportunity to make a statement at
the annual meeting if they desire to do so.
OTHER MATTERS
Management knows of no matters to be brought before the meeting other than
those described above. However, should any other matters properly come before
the meeting, the persons named in the accompanying form of proxy will vote or
refrain from voting thereon in accordance with their judgment.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning the
compensation of the Company's chief executive officer and each of its four
other most highly compensated executive officers (the "named executive
officers") during each of the years in the three-year period ended December 31,
1993.
<TABLE>
<CAPTION>
ANNUAL LONG-TERM COMPENSATION
COMPENSATION AWARDS
------------ -----------------------
RESTRICTED NUMBER OF
NAME AND STOCK SECURITIES
PRINCIPAL AWARDS UNDERLYING ALL OTHER
POSITION YEAR SALARY (1)(2) OPTIONS/SARS COMPENSATION(3)
--------- ---- ------------ ---------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
William Swindells 1993 $588,000 $ -- 16,350 $14,150
Chairman and Chief 1992 575,000 -- 13,680 13,731
Executive Officer 1991 568,833 114,959 25,440 --
Steven R. Rogel 1993 465,000 -- 12,800 14,150
President and Chief 1992 426,667 -- 9,040 13,731
Operating Officer 1991 353,333 75,978 11,440 --
William P. Kinnune 1993 380,000 -- 8,770 14,150
Executive Vice 1992 363,333 -- 6,940 13,731
President 1991 337,333 69,977 11,900 --
Michael R. Onustock 1993 310,000 -- 7,110 14,150
Executive Vice 1992 291,667 -- 5,460 13,731
President 1991 263,333 54,999 9,160 --
J. A. Parsons 1993 307,000 -- 7,110 14,150
Executive Vice 1992 291,667 -- 5,460 13,731
President and Chief 1991 263,333 54,999 9,160 --
Financial Officer
</TABLE>
- --------
(1) The value of a restricted stock award is calculated by multiplying the
closing sale price of the Common Stock on the NASDAQ National Market System
on the date of grant by the number of restricted shares of Common Stock
awarded.
(2) The aggregate number of restricted shares of Common Stock held by each
named executive officer and the value of such shares on December 31, 1993
(based on the closing sale price of the Common Stock, $49 1/2, reported on
the NASDAQ National Market System), are as follows:
<TABLE>
<CAPTION>
NO. OF
NAME SHARES VALUE
---- ------ --------
<S> <C> <C>
William Swindells 7,818 $386,991
Steven R. Rogel 4,808 237,996
William P. Kinnune 4,617 228,542
Michael R. Onustock 3,602 178,299
J. A. Parsons 3,602 178,299
</TABLE>
Dividends are paid on the restricted shares at the same rate as on other
shares of Common Stock.
5
<PAGE>
(3) The amounts shown for 1993 are Company contributions to its Stock Purchase
Plan, a qualified plan under Section 401(k) of the Internal Revenue Code of
1986 ("401(k) Plan"), for the benefit of the named executive officers.
Amounts for 1991 are not shown in accordance with applicable rules of the
Securities and Exchange Commission.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table provides information as to options to purchase Common
Stock granted to the named executive officers during 1993 pursuant to the
Company's Stock Option Plan. No SARs were granted during 1993.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(3)
-------------------------------------- -------------------
NUMBER OF PERCENTAGE OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES PRICE EXPIRATION
NAME GRANTED(1) IN FISCAL YEAR PER SHARE(2) DATE 5% 10%
- ---- ---------- -------------- ------------ ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
William Swindells 16,350 6.31% $39.25 April 2003 $403,585 $1,022,764
Steven R. Rogel 12,800 4.94 39.25 April 2003 315,957 800,696
William P. Kinnune 8,770 3.38 39.25 April 2003 216,480 548,602
Michael R. Onustock 7,110 2.74 39.25 April 2003 175,504 444,762
J. A. Parsons 7,110 2.74 39.25 April 2003 175,504 444,762
</TABLE>
- --------
(1) Options were granted for the numbers of shares indicated at an exercise
price equal to the fair market value of the Common Stock on the date of
grant. The options become exercisable cumulatively as follows: 33 1/3
percent after one year, an additional 33 1/3 percent after two years, and
the remainder after three years. However, the options become immediately
exercisable in full upon a change in control of the Company and remain
exercisable in full until the earlier of three years after the date the
change in control occurs or the expiration of the options. In addition,
upon termination of the named executive officer's employment by reason of
death, disability or retirement or, if a change in control of the Company
occurs, upon termination of the officer's employment for any other reason
(other than on account of conduct that constitutes a felony) within the
two-year period following the change in control, the officer's options may
be exercised in full generally until the earlier of three years following
termination or the expiration of the option term. If the officer's
employment terminates for a reason other than death, disability or
retirement and not following a change in control, the options held by the
officer expire upon the earlier of the expiration of the option term or 30
days from the date of termination of employment. During the 45-day period
following a change in control, the officer may elect to surrender his
options for cash in an amount equal to the excess of the fair market value
of the shares of Common Stock covered by the options on the date of
surrender over the exercise price of the options.
(2) Subject to certain conditions, the exercise price and tax withholding
obligations related to exercise may be paid by delivery of previously
acquired shares of Common Stock.
(3) The amounts shown are hypothetical gains based on the indicated assumed
rates of appreciation of the Common Stock compounded annually over the full
term of the options. There can be no assurance that the Common Stock will
appreciate at any particular rate or at all.
6
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR
VALUES
Information regarding exercises of stock options and tandem SARs by the named
executive officers during 1993 and unexercised options and tandem SARs held by
them as of December 31, 1993, is summarized in the table set forth below.
<TABLE>
<CAPTION>
NUMBER OF
UNEXERCISED VALUE OF UNEXERCISED
NUMBER OF OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS
SHARES DECEMBER 31, 1993 AT DECEMBER 31, 1993(2)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William Swindells 15,000 $270,000 80,200 33,950 $2,028,940 $483,908
Steven R. Rogel -- -- 44,100 22,640 1,090,257 293,899
William P. Kinnune 13,380 351,225 39,566 17,364 911,180 241,700
Michael R. Onustock 7,540 194,155 15,427 13,803 363,357 190,549
J. A. Parsons -- -- 25,277 13,803 363,357 190,549
</TABLE>
- --------
(1) Represents the difference between the fair market value of shares of the
Common Stock received on exercise of stock options or SARs at the date of
exercise and the option exercise price.
(2) Calculated based on the difference between the closing sale price of the
Common Stock, $49 1/2, reported on the NASDAQ National Market System on
December 31, 1993, and the aggregate exercise price of the unexercised
options. All options reflected in the table were granted at an exercise
price equal to the fair market value of a share of Common Stock on the date
of grant.
PENSION PLAN
The retirement plan that the Company maintains for its salaried and office
employees (including officers) provides for payment of retirement benefits
generally based upon an employee's years of service with the Company and
compensation level. Funding of the plan is actuarially determined. The
following table shows the estimated annual benefits payable upon retirement
(assuming normal retirement at age 65) for unmarried employees at specified
compensation levels (based upon the highest average of five consecutive years)
with various years of service (assuming continuous full-time employment with
the Company from date of hire to date of retirement):
<TABLE>
<CAPTION>
YEARS OF SERVICE
-----------------------------------------------------
REMUNERATION 15 20 25 30 35 40
------------ -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$300,000 $ 72,427 $ 96,569 $120,711 $144,853 $168,995 $191,495
400,000 97,177 129,569 161,961 194,353 226,745 256,745
500,000 121,927 162,569 203,211 243,853 284,495 321,995
600,000 146,677 195,569 244,461 293,353 342,245 387,245
700,000 171,427 228,569 285,711 342,853 399,995 452,495
</TABLE>
Compensation used in determining retirement benefits consists of the
employee's regular fixed salary including amounts deferred at the election of
the employee and contributed to the Company's 401(k) Plan. With respect to the
named executive officers, such compensation is the amount shown for the
officers under "Salary" in the Summary Compensation Table above.
The credited years of service for each of the named executive officers is as
follows: Mr. Swindells, 40; Mr. Rogel, 21; Mr. Kinnune, 32; Mr. Onustock, 21;
and Mr. Parsons, 27.
The benefits payable upon retirement are single-life annuity amounts and are
not subject to any deduction for Social Security or other offset amounts. The
level of benefits is based in part upon the average of the Social Security wage
bases for the 35 years ending with Social Security retirement age. Amounts
shown in the table are based upon the Social Security covered compensation for
an
7
<PAGE>
employee attaining age 65 in 1994. Retirement benefits may be reduced from the
amounts shown in the case of early retirement (or other early termination of
employment), in the case of a married employee whose benefits are paid in the
form of a joint and survivor annuity and in the case of an employee whose
employment with the Company has not been continuous. Special provisions in the
plan may apply in the case of death or disability; there are also provisions
relating to the computation of years of service for vesting or benefit purposes
in the case of service with certain employers acquired by the Company at
various times in the past.
The Company has agreed that, to the extent a retirement benefit under its
retirement plan may not be paid because of limitations required by the Internal
Revenue Code of 1986, the Company will pay such benefit from a trust account
which has been funded by the Company as soon as the employee ceases employment
and is at least age 55 or on becoming totally and permanently disabled. The
amounts shown include amounts proposed to be paid under the agreement. Benefits
to be paid under the agreement are not funded by contributions to the plan.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
COMPENSATION COMMITTEE
During 1993, Messrs. Drummond, Knodell (who served as an executive officer of
the Company until his retirement in 1989), McCracken, Wheeler and Whiteley
served on the Company's Compensation Committee.
Mr. McCracken is chairman and chief executive officer of Tumac Lumber Co.,
Inc., a wood products broker, which purchases building materials products from,
and sells such products to, the Company in the ordinary course of business at
prevailing market prices. During 1993, such transactions amounted to
approximately $50,336,000.
Mr. Wheeler is vice president of Barclay Logging Company and president of
Wheeler Management Co., Inc., which perform contract logging services for, and
purchase building materials from, the Company in the ordinary course of
business at prevailing market prices. During 1993, such transactions amounted
to approximately $548,000. Mr. Wheeler served as a vice president of the
Company until his resignation in 1973.
Mr. Whiteley is chairman and chief executive officer and in 1992 was
president and chief executive officer of Standard Insurance Company. Mr.
Swindells is and during 1993 was a member of the board of directors of Standard
Insurance Company.
OTHER TRANSACTIONS
Ochoco Lumber Co., of which Mr. Shelk is managing general partner, sells wood
products to, and purchases such products from, the Company in the ordinary
course of business at prevailing market prices. During 1993, such transactions
aggregated approximately $4,270,000.
The Company purchases equipment in the ordinary course of business at
prevailing market prices from Rogers Machinery Co., Inc., in which members of
Mr. Parsons' immediate family own a majority interest. During 1993, such
purchases amounted to approximately $294,000.
8
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REPORT OF THE COMPENSATION COMMITTEE
It is the responsibility of the compensation and nominating committee of the
Board of Directors ("Compensation Committee") to oversee the administration of
salary, stock options, and restricted stock awards to all officers (22
persons). The committee's salary recommendations, when approved by the Board of
Directors, set the level of compensation for all of these officers. The
committee is also responsible for selecting the key employees, including
officers, to receive awards under the Company's Stock Option Plan and for
determining the types, amounts, and terms of such awards. In addition, the
committee hears reports from Mr. Swindells, the Company's chairman and chief
executive officer, and considers the performance of individual officers,
planned succession, and related matters.
The compensation policy of the Company recognizes that the Company's business
is the conversion of timber and wood fiber into products which are largely of a
commodity nature and that the Company is integrated "from the stump to the
customer" with only Mr. Swindells, as chief executive officer, and Mr. Rogel,
as president, responsible for all operations. For these two reasons--little
control of sales prices in commodity markets and little individual control over
material costs and transfer prices of specific business segments--the Company
does not compensate employees with bonuses or other forms of short-term
incentive compensation. All salaried employees, including all officers, are
paid base salaries only.
From time to time, the Compensation Committee has received reports from
compensation consultants regarding competitive industry salaries. The Company
also participates annually in industrywide salary surveys and conducts its own
review of compensation information in proxy statements of competing companies.
From these sources, the committee evaluates compensation levels of a peer group
of other forest products companies with comparable sales and product mix and
uses these evaluations when reviewing and approving management's
recommendations and when setting Mr. Swindells' salary. In arriving at its
salary recommendations for 1993, the Compensation Committee considered the
remuneration paid by a peer group which included five of the companies in the
Standard & Poor's Paper & Forest Products Index used in the graph shown under
the caption "Performance Graph" below.
The 1993 salaries recommended by the Compensation Committee for the Company's
executive officers, other than Mr. Swindells, were determined after comparison
with the cash compensation paid by the peer group to officers in comparable
positions and taking into account available information concerning comparable
levels of responsibility. In arriving at salary recommendations for individual
officers, the committee also compared their duties to the duties of other
officers and employees in the Company. Each recommended salary was within the
range of the cash compensation paid to the comparable peer group officers. Some
of the recommended salaries were near the high end of the range and others were
closer to the low end of the range. The salary recommended for Mr. Swindells
was based on comparing his duties and responsibilities to those of other senior
officers in the Company. In formulating its salary recommendations, the
Compensation Committee did not consider stock options and other noncash
compensation programs of the peer group companies or the stock options granted
to Company officers.
As an incentive to stock ownership by employees and as a form of long-term
incentive compensation, the Company annually grants stock options and
occasionally awards shares of restricted Common Stock to selected key
employees.
Stock options are granted by the Compensation Committee based on a formula
relating to base salary and the Company's return on shareholder equity. Under
the formula, a target number of options for each executive officer is
determined by dividing a percentage of the officer's salary (ranging from 80
percent to 120 percent based on level of responsibility) by the market price of
the Common Stock at the date of grant. The target number is subject to downward
adjustment based on the Company's return on shareholder equity for its most
recent fiscal year. No adjustment is made if
9
<PAGE>
the Company's return on shareholder equity exceeds by a specified margin the
composite return on shareholder equity of forest products companies as reported
by a nationally recognized financial publication. If the specified margin is
not achieved, the options are reduced proportionately by up to 30 percent of
the target number. The Company's 1992 return on shareholder equity exceeded the
reported industry composite by less than the specified margin. Accordingly,
option grants in 1993 were lower than the targets. The formula does not take
into account the number of stock options previously granted to an executive
officer.
Restricted stock is awarded to executive officers based upon the Compensation
Committee's subjective evaluation of the Company's performance. No restricted
stock awards have been made since 1991.
The Compensation Committee determines Mr. Swindells' stock options and
restricted stock awards using the same principles as it uses in granting stock
options and restricted stock awards to other executive officers.
Section 162(m) was recently added to the Internal Revenue Code of 1986, as
amended, to limit the deductibility of compensation paid to a covered employee
in a taxable year to $1,000,000 plus performance-based and other qualifying
compensation. The Compensation Committee has not adopted any policy under
Section 162(m) with respect to compensation paid to its executive officers. The
salary currently paid to each executive officer is substantially less than
$1,000,000 and, under the transition provisions of the proposed regulations
relating to Section 162(m), compensation attributable to options granted under
the Company's Stock Option Plan through at least 1997 will qualify as
performance based.
COMPENSATION COMMITTEE
Gerard K. Drummond C. W. Knodell
Samuel C. Wheeler Benjamin R. Whiteley
Paul N. McCracken, Chairman
10
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PERFORMANCE GRAPH
The following graph compares the annual percentage change in the cumulative
total shareholder return on the Common Stock with the cumulative total return
of the Standard & Poor's 500 Stock Index and the cumulative total return of the
Standard & Poor's Paper & Forest Products Index, in each case assuming
investment of $100 on December 31, 1988, and reinvestment of dividends.
<TABLE>
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG WILLAMETTE INDUSTRIES,INC.,
S&P PAPER & FOREST PRODUCTS INDEX AND S&P 500 INDEX
<CAPTION>
WILLAMETTE S&P PAPER
Measurement Period INDUSTRIES, & FOREST
(Fiscal Year Covered) INC. PRODUCTS S&P 500
- ------------------- ---------- --------- ----------
<S> <C> <C> <C>
Measurement Pt-
12/31/88 $100 $100 $100
FYE 12/31/89 $128 $121 $132
FYE 12/31/90 $104 $110 $128
FYE 12/31/91 $149 $139 $166
FYE 12/31/92 $211 $159 $179
FYE 12/31/93 $259 $175 $197
</TABLE>
COMPENSATION OF DIRECTORS
Directors of the Company, other than directors who are also officers of the
Company or a subsidiary, receive a retainer fee of $15,000 per year, plus
$1,200 for each Board meeting attended and $1,000 for each committee meeting
attended, except that the chairman of a committee receives an attendance fee of
$1,500. A director may elect to have these fees paid into a tax-deferred
account.
The Company maintains a retirement plan for nonemployee directors who serve
on the Board on or after September 1, 1989, and who complete five years of
service as nonemployee directors after January 31, 1980. Upon retirement, a
former director receives annual payments for a number of years equal to the
number of years he or she served as a nonemployee director after January 31,
1980. Payments terminate on death. The amount of each annual payment equals the
annual retainer fee for directors at the time the director retires. Benefits
under the plan are not funded.
11
<PAGE>
EMPLOYMENT AGREEMENTS
The Company has entered into agreements with certain of its key employees,
including each of the named executive officers, that provide for severance
compensation for the employees in the event their employment with the Company
is terminated subsequent to a change in control (as defined) of the Company
under the circumstances set forth in the agreements. Pursuant to the
agreements, each employee has agreed to remain in the Company's employ
following a tender offer or exchange offer for more than 30 percent of the
combined voting power of the Company's voting securities until such offer has
been abandoned or terminated or a change in control has occurred and unless the
Company reduces the employee's compensation.
If, within 36 months following a change in control, the employee's employment
with the Company is terminated by the Company without cause (as defined) or by
the employee with good reason (as defined), then the Company shall pay to the
employee, upon demand, his full base salary through the date of termination at
the rate in effect on the date the change in control occurred, plus severance
compensation in an amount equal to 2.99 times the sum of (a) his annual base
salary at the above-specified rate and (b) the average annual incentive
compensation (if any) paid or accrued for his benefit in respect of the two
fiscal years prior to the fiscal year in which the change in control occurs.
The agreements further provide for the continuation of all noncash employee
benefit plans and arrangements, with certain exceptions, for a period of one
year following termination of employment after a change in control except by
death, by the Company for cause or disability or by the employee other than for
good reason. The employee is also entitled to be reimbursed for any reasonable
legal fees and expenses he may incur in enforcing his rights under the
agreement.
In the event it is determined that any payment by the Company to or for the
benefit of the employee in connection with a change in control is not
deductible by the Company for federal income tax purposes, then amounts
otherwise payable or distributable under the agreement are reduced to the
maximum deductible amount.
The agreements are for one-year terms which extend annually for an additional
one-year term, unless either the Company or the employee gives notice that the
agreement shall not be extended. In the event of a change in control while the
agreements are in effect, the agreements are automatically extended for 36
months from the date the change in control occurs. The agreements terminate
upon termination of employment prior to a change in control of the Company.
In addition, upon a change in control, stock options and tandem SARs then
outstanding become immediately exercisable in full and remain exercisable in
full until the earlier of three years after the date the change in control
occurs or the expiration of the option.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the next annual meeting of
shareholders of the Company must be received by the Company no later than
November 14, 1994, in order to be included in the proxy statement and proxy
card for such meeting.
12
<PAGE>
SOLICITATION OF PROXIES
The cost of soliciting proxies will be borne by the Company. In addition to
the use of the mails, proxies may be solicited personally, by telegram and by
telephone by regular employees of the Company without extra compensation for
their services. The Company will reimburse brokers and other persons holding
shares in their names, or in the names of nominees, for their reasonable
expenses in forwarding soliciting materials to their principals and obtaining
authorization for the execution of proxies.
By Order of the Board of Directors
J. A. Parsons
Secretary
Portland, Oregon
13
<PAGE>
WILLAMETTE INDUSTRIES, INC.
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
William Swindells and J. A. Parsons, each with power of substitution, are
hereby authorized to represent and vote the common stock of Willamette
Industries, Inc. ("Company"), which the undersigned may be entitled to vote at
the annual meeting of the Company's shareholders to be held April 28, 1994, or
at any adjournment thereof:
1. Election of Directors Gerard K. Drummond, Paul N. McCracken, Stuart J. Shelk,
Jr., Samuel C. Wheeler
[_] FOR all nominees listed (except as indicated to the contrary below)
[_] WITHHOLD AUTHORITY to vote for all nominees
Instruction: to withhold authority to vote for any individual nominee, print
that nominee's name in the space provided:
------------------------------------------------------------------------------
2. A proposal to approve KPMG Peat Marwick to examine the Company's financial
statements for 1994. [_] FOR [_] AGAINST [_] ABSTAIN
3. In the discretion of the proxies named herein upon any other business which
may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN ACCORDANCE WITH THE CHOICES
SPECIFIED OR, IF NO CHOICE IS SPECIFIED, WILL BE VOTED FOR ITEMS 1 AND 2. Both
proxies named herein, or if only one be present then that one, shall have all
powers granted herein.
(Continued and to be signed on the other side)
<PAGE>
(Continued from other side)
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Shareholders to be held April 28, 1994, and accompanying proxy statement, and
revokes all prior proxies for said meeting.
Dated..., 1994 ..................................................
..................................................
..................................................
..................................................
Signature(s) of Shareholder(s)
Please sign exactly as name appears hereon. In
case of joint ownership, each joint owner must
sign. Executors, administrators, trustees, etc.,
should give full title. PLEASE MARK, SIGN, DATE
AND RETURN THIS PROXY PROMPTLY.
