WILLAMETTE INDUSTRIES INC, DEF 14A, 1996-03-07

WILLAMETTE INDUSTRIES INC
DEF 14A, 1996-03-07
PAPER MILLS

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<PAGE>
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

Filed by the Registrant [x]

Filed by a Party other than the Registrant [_]

Check the appropriate box:

[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))

[X] Definitive Proxy Statement

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to 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, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.

[_] $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:

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(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:

-------------------------------------------------------------------------

[X] 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.:

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(3) Filing Party:

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(4) Date Filed:

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Notes:
<PAGE>

WILLAMETTE INDUSTRIES, INC.
1300 S.W. FIFTH AVENUE, SUITE 3800
PORTLAND, OREGON 97201

----------------

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 25, 1996

----------------

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 25, 1996, at 10 a.m., for the following
purposes:

1. To elect four Class B directors.

2. To approve an amendment of the Company's Third Restated Articles of
Incorporation to increase the number of authorized shares of common stock,
$.50 par value ("Common Stock"), from 75,000,000 shares to 150,000,000
shares.

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 February 21, 1996,
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 11, 1996
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Introduction............................................................... 1
Holders of Common Stock.................................................... 1
Election of Directors...................................................... 3
Executive Compensation..................................................... 5
Compensation Committee Interlocks and Insider Participation................ 7
Report of the Compensation Committee....................................... 8
Performance Graph.......................................................... 11
Compensation of Directors.................................................. 11
Employment Agreements...................................................... 12
Approval of Amendment of Third Restated Articles of Incorporation.......... 14
Other Matters.............................................................. 14
Shareholder Proposals...................................................... 14
Solicitation of Proxies.................................................... 15
</TABLE>

This Proxy Statement has been printed on Pennlite Opaque(R) paper produced by
the Company.
<PAGE>

PROXY STATEMENT

----------------

INTRODUCTION

This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors (the "Board") 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 25, 1996. This Proxy
Statement and accompanying form of proxy were first sent or given to
shareholders on approximately March 11, 1996.

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. An abstention with respect
to item 2 will have no effect on the required vote for the item. Shares
represented by duly executed and returned proxies of brokers and other nominees
which are expressly not voted on any matter to be presented at the annual
meeting ("broker nonvotes") 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 February 21, 1996, 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 55,223,706
shares of 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, including proxies reflecting broker nonvotes or abstentions, will
constitute a quorum at the meeting.

The following table gives certain information concerning the holdings of
Common Stock as of January 31, 1996, 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.

1
<PAGE>

<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY NATURE OF PERCENT OF
OWNED AT BENEFICIAL OUTSTANDING
NAME JANUARY 31, 1996(1) OWNERSHIP(1) COMMON STOCK
---- ------------------- ------------ ------------
<S> <C> <C> <C>
William P. Kinnune(3) 43,984 Sole Voting and Disposition .08%
Sole Voting and Shared
1,832 Disposition --
15,617 Sole Disposition .03%
61,433 Total .11%
C. W. Knodell 63,866 Sole Voting and Disposition .12%
Paul N. McCracken 3,270 Sole Voting and Disposition .01%
Michael R. Onustock(3) 23,954 Sole Voting and Disposition .04%
Sole Voting and Shared
1,475 Disposition --
20,517 Sole Disposition .04%
45,946 Total .08%
J. A. Parsons(3) 28,414 Sole Voting and Disposition .05%
Sole Voting and Shared
1,461 Disposition --
12,483 Sole Disposition .03%
42,358 Total .08%
Steven R. Rogel(3) 27,062 Sole Voting and Disposition .05%
Sole Voting and Shared
2,258 Disposition --
60,240 Sole Disposition .11%
89,560 Total .16%
Stuart J. Shelk, Jr. 769,351 Sole Voting and Disposition 1.34%
Robert M. Smelick 2,000 Sole Voting and Disposition --
William Swindells(3)(4) 1,090,197 Sole Voting 1.97%
1,823,798 Shared Voting and Disposition 3.30%
1,217,387 Sole Disposition 2.21%
3,041,185 Total 5.51%
Floyd Vike(3) 19,064 Sole Voting and Disposition .03%
Sole Voting and Shared
604 Disposition --
15,530 Sole Disposition .03%
35,198 Total .06%
Samuel C. Wheeler 878,033 Sole Voting and Disposition 1.59%
Benjamin R. Whiteley 3,000 Shared Voting and Disposition .01%
All directors and execu- 2,959,571 Sole Voting 5.36%
tive officers as a group 1,826,798 Shared Voting 3.31%
(15 persons), including 3,205,518 Sole Disposition 5.80%
persons listed above(3) 1,836,428 Shared Disposition 3.33%
5,039,946 Total 9.13%
</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, 1996, under the Company's 1995 Long-Term Incentive Compensation Plan
("1995 Plan") and 1986 Stock Option and Stock Appreciation Rights Plan
("1986 Plan") as follows: Mr. Kinnune, 15,617 shares; Mr. Onustock, 20,517
shares; Mr. Parsons, 12,483 shares; Mr. Rogel, 60,240 shares; Mr.
Swindells, 127,190 shares; Mr. Vike, 15,530 shares; and all directors and
executive officers as a group, 251,577 shares.

(4) Mr. Swindells' address is 1300 S.W. Fifth Avenue, Portland, Oregon 97201.

2
<PAGE>

Under Section 16 of the Securities Exchange Act of 1934 (the "Exchange Act"),
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 Statements")
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 Statements and did not do so on a timely basis. Based solely on
a review of copies of Section 16 Statements 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 Statements on a timely basis except a Section 16 Statement was not filed on
a timely basis by Mr. Swindells to report two sales of Common Stock in
September 1995.

ELECTION OF DIRECTORS

The Board is divided into three classes serving staggered three-year terms.
The Board held four meetings during 1995. 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 B directors are members
of the Board. The nominees elected as Class B directors will serve until the
1999 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 does not anticipate), the proxy will be
voted for the election of such substitute nominee as may be designated by the
Board. 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, 1995.

CLASS A (DIRECTORS WHOSE TERMS OF OFFICE WILL EXPIRE IN 1998)

C. M. Bishop, Jr., age 70, 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.(3)

Robert M. Smelick, age 53, has been a director of the Company since 1990. Mr.
Smelick has been a principal of Sterling Payot Company, an investment company,
since 1989. Mr. Smelick is also a director of Metricom, Inc.(3)

Benjamin R. Whiteley, age 66, has been a director of the Company since 1990.
Mr. Whiteley has been chairman of the board of Standard Insurance Company, a
life insurance company, of which he is also a director, since August 1994. He
served as chairman and chief executive officer of Standard Insurance Company
from January 1993 until August 1994 and, prior to that time, as president and
chief executive officer for more than five years. Mr. Whiteley is also a
director of Northwest Natural Gas Company, U. S. Bancorp and The Greenbrier
Companies, Inc.(1)(2)

CLASS B (NOMINEES WHOSE TERMS OF OFFICE WILL EXPIRE IN 1999)

E. B. Hart, age 71, 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)

3
<PAGE>

C. W. Knodell, age 68, 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)

Steven R. Rogel, age 53, has been chief executive officer and a director of
the Company since October 1, 1995, and president of the Company since April
1991. He served as chief operating officer of the Company from April 1991 until
October 1995 and, prior to that time, as an executive and group vice president
for more than five years.(1)

William Swindells, age 65, has been a director of the Company since 1964. For
more than the past five years, Mr. Swindells served as chairman of the
Company's board of directors and, until his retirement in September 1995, as
chief executive officer of the Company. Mr. Swindells is also a director of
Standard Insurance Company, Oregon Steel Mills, Inc., and Airborne Freight
Corp.(1)

CLASS C (DIRECTORS WHOSE TERMS OF OFFICE WILL EXPIRE IN 1997)

Gerard K. Drummond, age 58, has been a director since 1991. Since July 1993,
Mr. Drummond has been of counsel to the law firm of Stoel Rives. 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 67, 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 51, 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 67, 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 the Company's executive committee.
(2) Member of the Company's compensation and nomination committee
("Compensation Committee"). The Compensation Committee, which held four
meetings during 1995, reviews the compensation of the Company's directors
and officers prior to consideration of such matters by the Board as a
whole. The Compensation Committee also administers the Company's 1995 Plan
and its 1986 Plan. In addition, the Compensation Committee 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 the Company's audit committee. The audit committee, which met
twice during 1995, is responsible for: (i) nominating and recommending
independent auditors for selection by the Board, (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.

4
<PAGE>

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth certain information concerning the
compensation of the Company's chief executive officers 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,
1995.
<TABLE>
<CAPTION>
ANNUAL LONG-TERM COMPENSATION
COMPENSATION AWARDS
------------ -----------------------
RESTRICTED NUMBER OF
NAME AND STOCK SECURITIES
PRINCIPAL AWARDS UNDERLYING ALL OTHER
POSITION(1) YEAR SALARY (3)(4) OPTIONS/SARS COMPENSATION(5)
----------- ---- ------------ ---------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Steven R. Rogel 1995 $622,917 $21,260 14,680 $14,922
President, Chief Execu-
tive Officer 1994 507,500 26,272 12,500 14,537
and Chief Operating
Officer(2) 1993 465,000 -- 12,800 14,150
William Swindells 1995 547,078 40,016 17,480 14,922
Chairman and Chief Ex-
ecutive 1994 615,000 31,263 15,740 14,537
Officer(2) 1993 588,000 -- 16,350 14,150
William P. Kinnune 1995 411,333 20,858 9,700 14,922
Executive Vice 1994 395,000 20,010 8,490 14,537
President 1993 380,000 -- 8,770 14,150
Michael R. Onustock 1995 340,000 17,252 8,000 14,922
Executive Vice 1994 325,000 16,517 6,950 14,537
President 1993 310,000 -- 7,110 14,150
J. A. Parsons 1995 333,333 16,892 7,860 14,922
Executive Vice Presi-
dent and 1994 319,500 16,199 6,850 14,537
Chief Financial Officer 1993 307,000 -- 7,110 14,150
Floyd Vike 1995 323,417 16,737 7,520 14,922
Executive Vice 1994 262,667 13,566 5,430 14,537
President 1993 242,000 -- 5,550 14,040
</TABLE>
- --------
(1) Includes principal capacities in which each officer served in 1995.

(2) Mr. Rogel was elected chief executive officer effective October 1, 1995, to
replace Mr. Swindells, who retired September 30, 1995.

(3) The value of a restricted stock award is calculated by multiplying the
closing sale price of the Common Stock on The Nasdaq Stock Market on the
date of grant by the number of restricted shares of Common Stock awarded.

(4) The aggregate number of restricted shares of Common Stock held by each
named executive officer and the value of such shares on December 29, 1995
(based on the closing sale price of the Common Stock, $56 1/4, reported on
The Nasdaq Stock Market), are as follows:

<TABLE>
<CAPTION>
NO. OF
NAME SHARES VALUE
---- ------ --------
<S> <C> <C>
Steven R. Rogel 2,258 $127,012
William Swindells -- --
William P. Kinnune 1,832 103,050
Michael R. Onustock 1,475 82,969
J. A. Parsons 1,461 82,181
Floyd Vike 604 33,975
</TABLE>

Dividends are paid on the restricted shares at the same rate as on other
shares of Common Stock.

(5) The amounts shown for 1995 are Company contributions to its Stock Purchase
Plan ("401(k) Plan"), a qualified plan under Section 401(a) of the Internal
Revenue Code of 1986, as amended (the "Internal Revenue Code"), for the
benefit of each of the named executive officers and to its 1993 Deferred
Compensation Plan for the benefit of such officers to the extent
contributions would have been made to the 401(k) Plan had compensation
subject to such plan included deferred compensation and had the Internal
Revenue Code limits not been applicable.

5
<PAGE>

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 1995 pursuant to the
Company's 1995 Plan. No SARs were granted during 1995.
<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>
Steven R. Rogel 14,680 4.89% $51.50 April 2005 $475,457 $1,204,901
William Swindells 17,480 5.83 51.50 April 2005 566,144 1,434,719
William P. Kinnune 9,700 3.23 51.50 April 2005 314,164 796,154
Michael R. Onustock 8,000 2.67 51.50 April 2005 259,105 656,622
J. A. Parsons 7,860 2.62 51.50 April 2005 254,570 645,131
Floyd Vike 7,520 2.51 51.50 April 2005 243,558 617,225
</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, which have terms of ten years and two days, become
exercisable as follows: 33 1/3 percent after one year, an additional 33 1/3
percent after two years, and the remainder after three years. Upon a change
in control, all options under the 1995 Plan become and remain exercisable
in full until the earlier of three years after the date the change in
control occurs or the expiration of the stated term of the option. For
purposes of the 1995 Plan, a change in control is defined to include (i) a
change in composition of the Board during any 24-month period such that the
directors in office at the beginning of the period and any additional
directors elected with the approval of two-thirds of the directors cease to
constitute at least 70 percent of the Board and (ii) unless approved by
two-thirds of the directors, excluding directors employed by the Company,
(A) a merger, or sale of substantially all the assets, of the Company, (B)
the acquisition by a person or group (other than certain affiliates of the
Company) of 20 percent or more of the combined voting power of the
Company's outstanding securities or (C) the approval by the shareholders of
the Company of a plan of liquidation or dissolution of the Company.

(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.

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 1995 and unexercised options and tandem SARs held by
them as of December 31, 1995, 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, 1995 AT DECEMBER 31, 1995(2)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Steven R. Rogel 4,200 $114,675 60,240 27,280 $1,576,877 $232,890
William Swindells 14,000 640,500 127,190 -- 2,797,602 --
William P. Kinnune 23,220 951,330 15,617 18,283 250,757 157,318
Michael R. Onustock 9,160 381,285 20,517 15,003 440,645 128,674
J. A. Parsons 9,160 416,780 12,483 14,797 200,276 127,291
Floyd Vike 6,200 196,062 15,530 12,990 355,806 106,538
</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, $56 1/4, reported on The Nasdaq Stock Market on December 29,
1995, 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.

6
<PAGE>

PENSION PLAN

The retirement plan ("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 Retirement Plan is
actuarially determined. The Company also maintains a supplemental retirement
plan ("Supplemental Plan") under which salaried employees (including officers)
receive retirement benefits substantially equal to those the Retirement Plan
would have provided but for certain limitations required by the Internal
Revenue Code.

The following table shows the aggregate estimated annual benefits payable
under the Retirement Plan and the Supplemental Plan 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 $ 72,182 $ 96,242 $120,303 $144,364 $168,424 $190,924
400,000 96,932 129,242 161,553 193,864 226,174 256,174
500,000 121,682 162,242 202,805 243,364 283,924 321,424
600,000 146,432 195,242 244,053 292,864 341,674 386,674
700,000 171,182 228,242 285,303 342,364 399,424 451,924
</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. Rogel, 23; Mr. Kinnune, 34; Mr. Onustock, 23; Mr. Parsons, 29; and
Mr. Vike, 34.

Mr. Swindells, who retired on September 30, 1995 after more than 41 years of
service to the Company, receives an annual retirement benefit of $303,895.

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 employee attaining age 65 in 1996. 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
Retirement 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.

COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION

COMPENSATION COMMITTEE

During 1995, 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.

7
<PAGE>

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 1995, such transactions amounted to
approximately $50,884,000.

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 1995, such transactions amounted
to less than $60,000. Mr. Wheeler served as a vice president of the Company
until his resignation in 1973.

Mr. Whiteley is chairman of the board and from January 1993 to August 1994
was chairman and chief executive officer of Standard Insurance Company. Mr.
Swindells is and during 1995 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 1995, such transactions
aggregated approximately $2,845,000.

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 1995, such
purchases amounted to approximately $327,000.

REPORT OF THE COMPENSATION COMMITTEE

It is the responsibility of the Compensation Committee to oversee the
administration of salary, stock options and restricted stock awards to all
officers (20 persons). The Compensation Committee's salary recommendations,
when approved by the Board, set the level of compensation for all of these
officers. The Compensation Committee is also responsible for selecting the key
employees, including officers, to receive awards under the 1995 Plan and for
determining the types, amounts, and terms of such awards. In addition, the
Compensation Committee hears reports from the Company's 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 the president and chief executive officer 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 ordinarily
compensate employees with bonuses or other forms of short-term incentive
compensation. The Company's policy is to pay salaried employees, including all
officers, base salaries only. However, because of the Company's exceptional
performance in 1995, the board approved an exception to the policy and awarded
bonuses of one week's salary or wages to all salaried and hourly employees
below the level of executive vice president.

From time to time, the Compensation Committee has received reports from
compensation consultants regarding competitive industry salaries. The Company
also participates in industrywide

8
<PAGE>

salary surveys and conducts its own annual review of compensation information
in proxy statements of competing companies. From these sources, the
Compensation Committee evaluates compensation
levels of a peer group of seven other forest products companies which the
Compensation Committee, based on its general knowledge of the forest products
industry, believes are comparable to the Company. The Company uses these
evaluations when reviewing and approving management's recommendations regarding
compensation. The seven companies constituting the peer group include five of
the fourteen companies in the Standard & Poor's Paper & Forest Products Index
referred to under "Performance Graph" below and two other forest products
companies. Each of the peer group companies has total annual sales within
approximately $1.5 billion of the Company's total annual sales and, as in the
case with the Company, its pulp and paper products sales typically account for
more than 50 percent of its total annual sales.

The 1995 salaries recommended by the Compensation Committee at its April 1995
meeting for the Company's executive officers 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. 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.

In past years, the Compensation Committee salary recommendation for Mr.
Swindells as chairman and chief executive officer was based on comparing his
duties and responsibility to those of other senior officers of the Company. In
arriving at the salary recommended for Mr. Swindells for 1995, the Compensation
Committee also took into account the cash compensation paid to the chief
executive officers of the peer group companies and Mr. Swindells' announced
intention to retire on September 30, 1995. The salary level recommended for Mr.
Swindells for 1995, $800,000, represented an increase of 28 percent over his
1994 salary. Mr. Swindells' 1995 salary was near the low end of the range of
cash compensation paid to the chief executive officers of the peer group
companies in 1994.

In August 1995, based on the recommendations of the Compensation Committee,
the Board appointed Mr. Rogel, the Company's president, as chief executive
officer effective October 1, 1995, to succeed Mr. Swindells and increased Mr.
Rogel's annual salary level by 20 percent to $750,000 effective October 1,
1995. In recommending the increase in Mr. Rogel's salary, the Compensation
Committee considered the additional responsibilities Mr. Rogel would assume and
Mr. Rogel's experience compared to that of Mr. Swindells.

As an incentive to stock ownership by employees and as a form of long-term
incentive compensation, the Compensation Committee 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 ("ROE").
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 100
percent to 150 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 ROE for its most recent fiscal year. No
adjustment is made if the Company's ROE exceeds by a specified margin the
composite ROE of 19 forest products companies, including the Company, as
reported by a nationally recognized financial publication (the "Composite
Group"). If the specified margin is not achieved, the options are reduced
proportionately by up to 30 percent of the target number. The Company's 1994
ROE did not exceed the published industry composite by

9
<PAGE>

more than the specified margin. Accordingly, option grants in 1995 were
adjusted. The formula does not take into account the number of stock options
previously granted to an executive officer.

The Composite Group includes five of the seven peer group companies and other
companies that are substantially larger than the Company in terms of sales. The
Compensation Committee believes that the broader Composite Group is more
appropriate for measuring performance based on ROE, which is not related to a
Company's size, and the peer group is more appropriate for comparing
compensation levels which typically depend in part on a company's size.

Restricted stock is awarded to executive officers based upon the Compensation
Committee's subjective evaluation of the Company's performance. No restricted
stock awards were made in 1993. In April 1995 restricted stock was awarded to
executive officers in an amount equal to 5 percent of the officer's salary
based on the market value of the Common Stock at the date of the award.

The Compensation Committee determined the stock options and restricted stock
awards to Mr. Swindells and Mr. Rogel using the same principles as it uses in
granting stock options and restricted stock awards to other executive officers.
Under the formula used by the Compensation Committee in granting stock options,
options for 18,210 shares were targeted for Mr. Swindells, options for 15,300
shares were targeted for Mr. Rogel and the targets were then adjusted downward
to arrive at the options awarded to them for 1995.

Section 162(m) of the Internal Revenue Code generally disallows a federal
income tax deduction to the Company for compensation over $1 million paid to
any of the Company's chief executive officer and four other most highly
compensated executive officers unless such compensation is payable only on
account of the attainment of one or more performance goals determined by a
Board committee comprised solely of two or more outside directors and otherwise
qualifies as performance based pursuant to Section 162(m).

Although the Company has the flexibility to qualify awards under the 1995
Plan as performance based pursuant to Section 162(m), some members of the
Compensation Committee are not outside directors within the meaning of Section
162(m). Accordingly, before any such qualifying performance based awards are
made, the Board must reconstitute the membership of the Compensation Committee
to include only outside directors.

The Company does not have a policy favoring awards to executive officers
which qualify as performance based pursuant to Section 162(m). However, the
Compensation Committee will consider the net cost to the Company of awards
under the 1995 Plan and whether to recommend that the Board reconstitute the
membership of the Compensation Committee so awards may be made under the 1995
Plan that qualify pursuant to Section 162(m).

COMPENSATION COMMITTEE

Gerard K. DrummondC. W. Knodell

Samuel C. WheelerBenjamin R.
Whiteley

Paul N. McCracken, Chairman

10
<PAGE>

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, 1990, and reinvestment of dividends.

<TABLE>
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG WILLAMETTE INDUSTRIES, INC., S&P 500 INDEX AND S&P PAPER & FOREST PRODUCTS

<CAPTION>
Measurement period Willamette S&P 500 S&P Paper &
(Fiscal year Covered) Industries, Inc. Index Forest Products
- --------------------- ---------------- ------- ---------------
<S> <C> <C> <C>
Measurement PT -
12/31/91 $143 $130 $127
12/31/92 $202 $140 $145
12/31/93 $248 $155 $160
12/31/94 $243 $157 $167
12/31/95 $293 $215 $183
</TABLE>

COMPENSATION OF DIRECTORS

FEES

Each director of the Company who is not also an employee of the Company or a
subsidiary (a "nonemployee director") receives a fee of $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. In addition,
each nonemployee director, other than Mr. Swindells, receives a retainer fee of
$20,000 per year.

RETIREMENT BENEFITS

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 a number of annual payments equal to

11
<PAGE>

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.

STOCK OPTIONS

Under the 1995 Plan, each person who was a nonemployee director at the date
of the 1995 annual meeting of shareholders was granted an option to purchase
1,000 shares of Common Stock (an "Initial Option") and each person who
subsequently becomes a nonemployee director, other than a former officer of the
Company or a subsidiary, will also be granted an Initial Option. In addition,
on the date of each annual meeting of shareholders, commencing with the 1996
annual meeting, an option for 600 shares of Common Stock will be granted to
each person who is then a nonemployee director, including former officers of
the Company or its subsidiaries, and who is to continue to serve as a director.

Options granted to nonemployee directors under the 1995 Plan are granted at
an exercise price equal to the fair market value of the Common Stock on the
date of grant, have terms of ten years and two days, and are exercisable as
specified in note (1) to the table under "Option/SAR Grants in Last Fiscal
Year" above. Accordingly, the Initial Options granted to the nonemployee
directors on the date of the 1995 annual meeting were granted at an exercise
price of $51.50 per share, the fair market value of the Common Stock on that
date.

CONSULTING AGREEMENT

The Company entered into a consulting agreement with Mr. Swindells effective
upon his retirement as chief executive officer of the Company under which Mr.
Swindells agreed to provide consulting services to the Company for a two-year
term expiring September 30, 1997. Thereafter, the consulting agreement will
continue on a month-to-month basis until terminated by either party. Under the
consulting agreement, Mr. Swindells receives consulting fees at the rate of
$10,000 a month, secretarial services and office space, and is reimbursed for
certain expenses including dues for a business club. The consulting agreement
provides that, while Mr. Swindells is receiving fees under the agreement, he
shall not receive the annual retainer fees payable to other nonemployee
directors of the Company.

EMPLOYMENT AGREEMENTS

GENERAL

The Company has entered into agreements ("CIC Agreements") with certain of
its key employees, including 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 CIC Agreements. Pursuant to
the CIC 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

12
<PAGE>

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 CIC 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 CIC 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 CIC 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 CIC Agreement shall not be extended. In the event of a Change
in Control while the CIC Agreements are in effect, the CIC Agreements are
automatically extended for 36 months from the date the Change in Control
occurs. The CIC Agreements terminate upon termination of employment prior to a
Change in Control.

CERTAIN DEFINITIONS

Lengthy definitions of Cause, Change in Control and Good Reason are included
in the CIC Agreements. Summaries of the definitions, which are necessarily
incomplete, are set forth below.

"Cause" with respect to the termination of an employee's employment by the
Company means termination because the employee committed an act of fraud,
embezzlement or theft constituting a felony, or an act intentionally against
the interest of the Company which causes it material harm, or because of his
repeated failure, after written notice, to perform his responsibilities under
the CIC Agreement.

"Change in Control" means (i) a change in control required to be disclosed
pursuant to Regulation 14A under the Exchange Act, (ii) subject to certain
exceptions, the acquisition by a person or group of beneficial ownership of 20
percent or more of the outstanding Common Stock, (iii) a change in the
composition of the Board such that the directors at the beginning of any two-
year period cease to constitute at least a majority of the Board unless the
election or nomination of each new director was approved by two-thirds of the
directors still in office who were directors at the beginning of such period,
(iv) subject to certain exceptions, any consolidation or merger of the Company
or any sale or other transfer of substantially all its assets or (v) approval
by the shareholders of the Company of a plan or proposal for its liquidation or
dissolution.

"Good Reason" with respect to the termination by an employee of his
employment with the Company means (i) subject to certain exceptions, any change
in the employee's status or position with the Company which in his reasonable
judgment does not represent a promotion, (ii) a reduction in the employee's
base salary, (iii) the failure by the Company to continue in effect for the
employee certain benefit plans and policies, (iv) the transfer of the employee
to a different location, (v) the failure of any successor to the Company to
expressly assume the Company's obligations under the CIC Agreement, (vi) a
purported termination by the Company of the employee's employment which is not
effected in accordance with the CIC Agreement or (vii) a refusal by the Company
to allow the employee to continue to engage in certain activities not related
to the Company's business.

13
<PAGE>

APPROVAL OF AMENDMENT OF THIRD
RESTATED ARTICLES OF INCORPORATION

GENERAL

In February 1996, the Board unanimously approved a proposed amendment to
Article III A of the Company's Third Restated Articles of Incorporation to
increase the authorized number of shares of Common Stock from 75,000,000 to
150,000,000.

At February 26, 1996, there were 55,223,706 shares of Common Stock
outstanding and 3,479,977 shares of Common Stock reserved for issuance under
the 1995 Plan and the 1986 Plan. The Board believes that the increase in the
number of authorized shares of Common Stock is desirable to enhance the
Company's flexibility in issuing shares in connection with possible future
acquisitions, stock dividends, financings and for other corporate purposes.

Approval of the proposed amendment will permit the Board to authorize the
issuance of additional shares of Common Stock without further action by the
shareholders under Oregon corporate law, although shareholder approval may be
required by regulatory authorities, under the listing agreement pursuant to
which the Common Stock is traded on The Nasdaq Stock Market or by the rules of
any stock exchange on which the Common Stock may be listed in the future. The
Company does not have any present plan, understanding or agreement to issue
additional shares of Common Stock except pursuant to the 1995 Plan and the 1986
Plan. Although the Company has no present intention to do so, shares of Common
Stock could be issued in the future with the effect of making an unsolicited
acquisition of control of the Company more difficult. The Board is not aware of
any proposal to acquire control of the Company.

The holders of Common Stock do not and will not have preemptive rights to
subscribe to any additional shares of Common Stock that may be issued in the
future.

RECOMMENDATION OF THE BOARD; VOTE REQUIRED

The Board recommends that shareholders vote FOR approval of the amendment to
the Third Restated Articles of Incorporation.

The affirmative vote of a majority of the votes cast on the proposed
amendment is required to approve the amendment. Abstentions and broker nonvotes
will have no effect on the required vote on the proposed amendment.

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.

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 11, 1996, in order to be included in the proxy statement and proxy
card for such meeting.

14
<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

15
<PAGE>

- -------------------------------------------------------------------------------

PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS

WILLAMETTE INDUSTRIES, INC.

PROXY FOR ANNUAL MEETING OF SHAREHOLDERS

The undersigned hereby appoints William Swindells, Steven R. Rogel and J. A.
Parsons, and each of them, proxies with power of substitution, 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 on April 25, 1996, or at any adjournment thereof with all powers
the undersigned would possess if personally present.

(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)

- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>

- -------------------------------------------------------------------------------
Please mark
your votes as
indicated in
this example
[X]

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. A
MAJORITY OF THE PROXIES PRESENT, OR IF ONLY ONE BE PRESENT THEN THAT ONE,
SHALL HAVE ALL POWERS GRANTED HEREIN.

Item 1-Election of directors: E. B. Hart, C. W. Knodell, Steven R. Rogel,
William Swindells

FOR [_] WITHHELD FOR ALL [_]

WITHHELD FOR: (Write that nominee's name in the space provided below).

- -------------------------------------------------------------------------------

Item 2-A proposal to amend the Third Restated Articles of Incorporation to
increase the number of authorized shares of common stock to 150,000,000

FOR [_] AGAINST [_] ABSTAIN [_]

Item 3-In the discretion of the proxies named herein upon any other business
which may properly come before the meeting.

The undersigned acknowledges receipt of the Notice of Annual Meeting of
Shareholders to be held April 25, 1996, and accompanying proxy statement, and
revokes all prior proxies for said meeting.

Signature(s) __________________________ Date _________________________, 1996

NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.

- FOLD AND DETACH HERE -