<PAGE>
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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):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO OF WILLAMETTE INDUSTRIES, INC.]
WILLAMETTE INDUSTRIES, INC.
1300 S.W. Fifth Avenue, Suite 3800
Portland, Oregon 97201
----------------
Notice of Annual Meeting of Shareholders
April 18, 2000
----------------
The annual meeting of shareholders of Willamette Industries, Inc. (the
"Company"), will be held at the RiverPlace Alexis Hotel, 1510 S.W. Harbor Way,
Portland, Oregon, on Tuesday, April 18, 2000, at 10 a.m., to consider and vote
on the following matters:
1. The election of four Class C directors.
2. 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 28, 2000
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
/s/ G. W. Hawley
G. W. Hawley
Secretary
Portland, Oregon
March 8, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Introduction............................................................... 1
Holders of Common Stock.................................................... 1
Election of Directors...................................................... 3
Other Matters.............................................................. 5
Executive Compensation..................................................... 6
Compensation Committee Interlocks and Insider Participation................ 9
Report of the Compensation Committee....................................... 9
Performance Graph.......................................................... 11
Compensation of Directors.................................................. 12
Employment Agreements...................................................... 13
Section 16(a) Beneficial Ownership Reporting Compliance.................... 14
Relationship with Independent Public Accountants........................... 14
Shareholder Proposals for Annual Meeting in 2001........................... 14
Solicitation of Proxies.................................................... 14
</TABLE>
Printed on Willamette's 40# Clearfield Opaque/(R)/ Recycled, Vellum Finish
i
<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 (the "Company"), of proxies in the accompanying form for use at
the annual meeting of shareholders to be held on April 18, 2000. This Proxy
Statement and accompanying form of proxy were first sent or given to
shareholders on approximately March 8, 2000.
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 the election of the nominees named
below except to the extent authority to vote for any or all of the nominees is
withheld. If a quorum is present, the four nominees who receive the greatest
number of votes cast for the election of directors by shares entitled to vote
and present in person or by proxy at the annual meeting will be elected
directors. In an uncontested plurality election, such as this, abstentions and
broker non-votes have no effect, as approval by a percentage of shares present
or outstanding is not required.
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 28, 2000 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 111,299,146
shares of common stock, $.50 par value ("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
non-votes or abstentions, will constitute a quorum at the meeting.
1
<PAGE>
The following tables give certain information concerning the holdings of
Common Stock of (i) each person known to the Company to be the beneficial
owner of more than 5 percent of the outstanding Common Stock and (ii) each of
the directors and nominees, each of the named executive officers referred to
in the Summary Compensation Table below, and the Company's current 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.
Five Percent Beneficial Owners
<TABLE>
<CAPTION>
Shares of
Common Stock Nature of Percent of
Beneficially Beneficial Outstanding
Name and Address Owned Ownership (a) Common Stock
---------------- ------------ ------------ ------------
<S> <C> <C> <C>
Maurie D. Clark*........ 3,387,110 Sole Voting and Disposition 3.03%
Suite 600 4,737,307 Shared Voting and Disposition 4.24%
1211 S.W. Fifth Avenue 8,124,417 Total 7.28%
Portland, Oregon 97204
William Swindells*...... 2,299,104 Sole Voting and Disposition (d) 2.06%
1300 S.W. Fifth Avenue 3,596,456 Shared Voting and Disposition 3.22%
Portland, Oregon 97201 5,895,560 Total 5.28%
The Prudential
Insurance............... 203,432 Sole Voting and Disposition 0.18%
Company of America** 5,532,876 Shared Voting 4.96%
751 Broad Street 5,583,830 Shared Disposition 5.00%
Newark, New Jersey
07102-3777 5,787,262 Total 5.19%
Wells Fargo &
Company**............... 3,434,009 Sole Voting 3.08%
420 Montgomery Street 6,321,284 Shared Voting 5.66%
San Francisco,
California 94104 22,980 Sole Disposition 0.02%
15,109,412 Shared Disposition 13.54%
15,148,317 Total 13.58%
</TABLE>
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* As of January 31, 2000
** As of December 31, 1999
Directors and Executive Officers
<TABLE>
<CAPTION>
Shares of Common Stock Percent of
Beneficially Owned Outstanding
Name at January 31, 2000(a) Common Stock
---- ---------------------- ------------
<S> <C> <C>
Winslow H. Buxton..................... 1,999 (b)(d) 0.00%
Marvin D. Cooper...................... 79,544 (b)(c) 0.07%
Gerard K. Drummond.................... 8,400 (d) 0.01%
Kenneth W. Hergenhan.................. 4,972 (b)(d) 0.00%
William P. Kinnune.................... 205,923 (c)(e) 0.18%
Paul N. McCracken..................... 18,940 (d) 0.02%
Duane C. McDougall.................... 62,663 (b)(c) 0.06%
Michael R. Onustock................... 103,851 (c)(e) 0.09%
J. A. Parsons......................... 149,955 (b)(c) 0.13%
G. Joseph Prendergast................. 5,700 (d) 0.01%
Stuart J. Shelk, Jr................... 1,671,738 (b)(d) 1.50%
Robert M. Smelick..................... 8,400 (d) 0.01%
William Swindells..................... 5,895,560 (b)(d) 5.28%
Michael G. Thorne..................... -- 0.00%
Benjamin R. Whiteley.................. 10,900 (d) 0.01%
All directors and executive officers
as a group (16 persons).............. 8,137,678 (b)(c)(d)(e) 7.29%
</TABLE>
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2
<PAGE>
(a) 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.
(b) Includes shares as to which the individual shares voting and dispositive
power as follows: Mr. Buxton, 13 shares; Mr. Cooper, 400 shares; Mr.
Hergenhan, 1,772 shares; Mr. McDougall, 32 shares; Mr. Parsons, 400
shares; Mr. Shelk, 18,120 shares; and Mr. Swindells, 3,596,456 shares.
(c) Includes shares subject to employee stock options exercisable within 60
days after January 31, 2000, under the Company's 1995 Long-Term Incentive
Compensation Plan (the "1995 Plan") and its 1986 Stock Option and Stock
Appreciation Rights Plan (the "1986 Plan") as follows: Mr. Cooper, 49,813
shares; Mr. Kinnune, 63,174 shares; Mr. McDougall, 41,243 shares; Mr.
Onustock, 52,867 shares; Mr. Parsons, 103,450 shares; and all current
executive officers as a group, 232,936 shares.
(d) Includes shares subject to options exercisable within 60 days after
January 31, 2000, under the non-employee director provisions of the 1995
Plan as follows: Mr. Buxton, 667 shares; Messrs. Drummond, McCracken,
Shelk, Smelick, and Whiteley, 4,400 shares each; Messrs. Hergenhan and
Prendergast, 3,200 shares each; Mr. Swindells, 2,000 shares; and all
directors as a group, 31,067 shares.
(e) Includes restricted shares of Common Stock awarded pursuant to the 1995
Plan, as to which the individual has sole voting and shared dispositive
power, as follows: Mr. Kinnune, 1,680 shares; Mr. Onustock, 1,394 shares;
and all executive officers as a group, 3,074 shares.
Election of Directors
The Board is divided into three classes serving staggered three-year terms.
The Board held four meetings during 1999. 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 nominees named below for election as directors are the four Class C
directors. The terms of the directors to be elected at the 2000 annual meeting
will expire at the annual meeting in 2003.
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, 1999.
Class C (Nominees whose terms of office will expire in 2003)
Gerard K. Drummond, age 62, has been a director of the Company since 1991.
From July 1993 to June 1998, Mr. Drummond was of counsel to the law firm of
Stoel Rives LLP. Previously, 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 executive vice president of
PacifiCorp, a public utility company.(1)(2)
Paul N. McCracken, age 71, has been a director of the Company since 1986.
Mr. McCracken has been chairman of the board of directors and chief executive
officer of Tumac Lumber Co., Inc., a wood products broker, for more than the
past five years.(1)(2)
3
<PAGE>
Stuart J. Shelk, Jr., age 55, has been a director of the Company since 1983.
Mr. Shelk is managing director of Ochoco Management, Inc., which is the
managing general partner of Ochoco Lumber Company, a lumber manufacturer. Mr.
Shelk has been responsible for managing Ochoco Lumber Company for more than
five years.(3)
Michael G. Thorne, age 59, has been a director of the Company since February
2000. Since 1991, Mr. Thorne has been executive director of the Port of
Portland, Oregon, a public corporation whose primary purpose is providing
facilities and services to move cargo and people. Mr. Thorne is also a
director of StanCorp Financial Group, Inc.(2)
Class A (Directors whose terms of office will expire in 2001)
Kenneth W. Hergenhan, age 68, has been a director of the Company since 1997.
Mr. Hergenhan was a partner in the law firm of Miller Nash LLP for more than
five years prior to his retirement in December 1996.(1)(2)
Robert M. Smelick, age 57, has been a director of the Company since 1990.
Mr. Smelick has been the managing principal of Sterling Payot Company, an
investment company, since 1989.(3)
Benjamin R. Whiteley, age 70, has been a director of the Company since 1990.
Mr. Whiteley retired as chairman of the board of Standard Insurance Company, a
life insurance company, of which he is also a director, in March 1998. 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. Mr. Whiteley is also a director of Northwest Natural
Gas Company, The Greenbrier Companies, Inc., and StanCorp Financial Group,
Inc.(1)(2)
Class B (Directors whose terms of office will expire in 2002)
Winslow H. Buxton, age 60, has been a director of the Company since February
1999. Mr. Buxton is chairman and chief executive officer and a director of
Pentair, Inc., a diversified manufacturing company which sells general
industrial equipment and specialty products, in which position he has served
for more than five years. He is also a director of Bemis Company, Inc. and The
Toro Company.(3)
G. Joseph Prendergast, age 54, has been a director of the Company since
1996. Mr. Prendergast is president and chief operating officer of Wachovia
Corporation, a bank holding company, in which position he has served since
April 1999. Previously, he was senior executive vice president of Wachovia
Corporation from October 1997 until April 1999 and executive vice president
from October 1988 until October 1997. Mr. Prendergast has also been chairman
of Wachovia Bank of Georgia and Wachovia Bank of South Carolina since April
1994. Mr. Prendergast is also a director of The Georgia Power Company.(3)
William Swindells, age 69, has been a director of the Company since 1964.
For more than the past five years, Mr. Swindells has served as chairman of the
Board. He served as chief executive officer of the Company from November 1997
until December 1998, as well as for more than five years prior to September
1995. Mr. Swindells is also a director of Oregon Steel Mills, Inc., StanCorp
Financial Group, Inc., and Airborne Freight Corporation.(1)
- --------
(1) Member of the Company's executive committee.
(2) Member of the Company's compensation and nomination committee
("Compensation Committee"). The Compensation Committee, which met three
times during 1999, reviews the compensation of the Company's directors
and officers prior to consideration of such matters by the Board as a
whole and administers the Company's 1986 Plan. A subcommittee of the
Compensation Committee consisting of Messrs. Drummond and Whiteley is
responsible for administration of the 1995 Plan and met once during 1999.
In addition, the Compensation Committee makes recommendations to the
Board concerning nominations of directors and
4
<PAGE>
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 1999, 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.
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.
5
<PAGE>
Executive Compensation
Summary Compensation Table
The following table sets forth certain information concerning the
compensation of the Company's chief executive officer during 1999 and each of
its four other most highly compensated executive officers (the "named
executive officers") for each of the years in the three-year period ended
December 31, 1999.
<TABLE>
<CAPTION>
Long-Term
Compensation Awards
---------------------
Annual Number of
Compensation Restricted Securities
------------ Stock Underlying All Other
Name and Principal Position(1) Year Salary Awards(2) Options(#) Compensation(3)
------------------------------ ---- ------------ ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Duane C. McDougall....... 1999 $866,667 $ 0 50,800 $26,936
President and Chief
Executive Officer 1998 525,000 0 23,690 18,142
1997 293,334 0 19,240 18,749
William P. Kinnune....... 1999 498,333 0 20,620 32,401
Executive Vice President 1998 481,333 0 22,840 29,180
1997 458,333 0 27,900 31,890
Michael R. Onustock...... 1999 497,667 0 20,530 24,607
Executive Vice President 1998 465,000 0 20,660 22,115
1997 403,667 0 23,160 23,627
J. A. Parsons(4)......... 1999 445,000 0 17,570 23,140
Executive Vice President
and 1998 410,000 0 19,440 21,783
Chief Financial Officer 1997 385,000 0 22,780 23,146
Marvin D. Cooper(4)...... 1999 383,333 0 14,820 22,728
Executive Vice President 1998 333,333 0 14,580 20,373
</TABLE>
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(1) Includes principal capacities in which each officer served during 1999.
(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, 1999
(based on the closing sale price of the Common Stock, $46.4375, reported
on the New York Stock Exchange), are as follows:
<TABLE>
<CAPTION>
Name No. of Shares Value
---- ------------- -------
<S> <C> <C>
Duane C. McDougall.................................. 0 $ 0
William P. Kinnune.................................. 1,680 78,049
Michael R. Onustock................................. 1,394 64,762
J. A. Parsons....................................... 0 0
Marvin D. Cooper.................................... 0 0
</TABLE>
Dividends are paid on the restricted shares at the same rate as on other
shares of Common Stock.
(3) The amounts shown for 1999 represent (i) 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 and (ii) the
imputed value to the named executives of a portion of the premiums paid
for life insurance policies under which they are to receive an interest
in the cash surrender value. The amounts attributable to (i) 401(k) Plan
and 1993 Deferred Compensation Plan contributions and (ii) the imputed
value of premiums, respectively, for each of the named executives for
1999 are as follows: Mr. McDougall, $15,000, $11,936; Mr. Kinnune,
$15,000, $17,401; Mr. Onustock, $15,000, $9,607; Mr. Parsons, $15,000,
$8,140; and Mr. Cooper, $15,000, $7,728.
6
<PAGE>
(4) Mr. Cooper became an executive officer of the Company on April 21, 1998;
the table reflects his compensation for all of 1998. Mr. Parsons retired
from the Company on December 31, 1999.
Option Grants in Last Fiscal Year
The following table provides information as to options to purchase Common
Stock granted to the named executive officers during 1999 pursuant to the
Company's 1995 Plan. No stock appreciation rights ("SARs") were granted to any
named executive officers during 1999.
<TABLE>
<CAPTION>
Individual Grants Potential Realizable
--------------------------------------------- Value at Assumed
Number of Percent of Annual Rates of Stock
Securities Total Options Exercise Price Appreciation
Underlying Granted to Price for Option Term (3)
Options Employees Per Expiration ---------------------
Name Granted(1) in Fiscal Year Share(2) Date 5% 10%
---- ---------- -------------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Duane C. McDougall...... 50,800 9.14% $47.25 April 2009 $1,509,536 $3,825,460
William P. Kinnune...... 20,620 3.71% 47.25 April 2009 612,729 1,552,775
Michael R. Onustock..... 20,530 3.69% 47.25 April 2009 610,055 1,545,998
J. A. Parsons........... 17,570 3.16% 47.25 April 2009 522,097 1,323,097
Marvin D. Cooper........ 14,820 2.67% 47.25 April 2009 440,380 1,116,010
</TABLE>
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(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;
provided that the options will become exercisable in full upon the
officer's death, disability or retirement. 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.
7
<PAGE>
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
Information regarding exercises of stock options by the named executive
officers during 1999 and unexercised options held by them as of December 31,
1999, is summarized in the table set forth below. The named executives did not
exercise any SARs during 1999 and did not hold any in-the-money SARs at year-
end.
<TABLE>
<CAPTION>
Number of Shares Value of Unexercised
Underlying Unexercised In-the-Money
Number of Options at Options at
Shares December 31, 1999 December 31, 1999(2)
Acquired on Value ------------------------- -------------------------
Name Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Duane C. McDougall...... 14,020 $ 425,653 41,243 73,007 $ 672,407 $224,206
William P. Kinnune...... 48,400 1,204,152 63,174 45,146 1,028,902 265,635
Michael R. Onustock..... 13,900 325,350 52,867 42,023 855,767 229,291
J. A. Parsons........... 0 0 103,450 0 1,384,485 0
Marvin D. Cooper........ 7,800 290,063 49,813 29,267 983,735 150,362
</TABLE>
- --------
(1) Represents the difference between the fair market value of the shares of
Common Stock received on exercise of stock options 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, $46.4375, reported on the New York Stock Exchange on
December 31, 1999, 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 ("Retirement Plan") that the Company maintains for its
salaried 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.......... $ 71,618 $ 95,490 $119,363 $143,235 $167,108 $189,608
400,000.......... 96,368 128,490 160,613 192,735 224,858 254,858
500,000.......... 121,118 161,490 201,863 242,235 282,608 320,108
600,000.......... 145,868 194,490 243,113 291,735 340,358 385,358
700,000.......... 170,618 227,490 284,363 341,235 398,108 450,608
800,000.......... 195,368 260,490 325,613 390,735 455,858 515,858
900,000.......... 220,118 293,490 366,863 440,235 513,608 581,108
1,000,000.......... 244,868 326,490 408,113 489,735 571,358 646,358
</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.
8
<PAGE>
The credited years of service for each of the named executive officers is as
follows: Mr. McDougall, 20; Mr. Kinnune, 38; Mr. Onustock, 27; Mr. Parsons,
34; and Mr. Cooper, 20.
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 1999. 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 1999, Messrs. Drummond, Hergenhan, McCracken, Wheeler and Whiteley
served on the Company's Compensation Committee.
Paul N. McCracken is chairman 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 1999, such transactions amounted to approximately
$6,087,000.
Samuel C. Wheeler is vice president of Barclay Logging Company, which
performs contract logging services for the Company in the ordinary course of
business at prevailing market prices. During 1999, such transactions amounted
to approximately $643,000. Mr. Wheeler served as a vice president of the
Company until his resignation in 1973.
Other Transactions and Relationships
Ochoco Lumber Co. sells wood products to, and purchases such products from,
the Company in the ordinary course of business at prevailing market prices.
During 1999, such transactions amounted to approximately $2,033,000. Mr. Shelk
is managing director of the managing general partner of Ochoco Lumber Co.
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 1999, such
purchases amounted to approximately $354,000.
In the ordinary course of business at prevailing market prices, the Company
has sold paper products to, and obtained credit and other banking and
financial services from, Wachovia Corporation, of which Mr. Prendergast is the
president and chief operating officer. During 1999, such paper sales amounted
to approximately $860,000, and the financial services amounted to
approximately $256,000.
Report of the Compensation Committee
It is the responsibility of the Compensation Committee to oversee the
compensation of officers of the Company (24 persons). The Compensation
Committee's salary recommendations, when approved by the Board, set the levels
of compensation for all officers. 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. In
1996, responsibility for the administration of the 1995 Plan, including
selecting the officers and other key employees to receive awards and for
determining types, amounts and terms of such awards, was assigned to the Long-
Term Incentive Compensation Committee (the "Awards Committee"), a subcommittee
of the Compensation Committee consisting of Messrs. Drummond and Whiteley.
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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 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.
From time to time, the Compensation Committee receives reports from
compensation consultants regarding competitive industry salaries. The Company
also participates in industry-wide 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 twelve 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 twelve companies constituting the peer group
include seven of the other nine companies in the Standard & Poor's Paper &
Forest Products Index referred to under "Performance Graph" below and five
other forest products companies.
In arriving at salary recommendations to the Board for individual officers
effective May 1, 1999, the Compensation Committee considered cash compensation
paid by the peer group to officers in comparable positions and taking into
account available information concerning comparable levels of responsibility,
recommendations by the Company's chief executive officer, relative
responsibilities compared to other officers and employees in the Company, and
various other factors including experience and performance. Each recommended
salary was intended to be within the range of and competitive with the cash
compensation paid to positions within the comparable industry. In formulating
its salary recommendations, the Compensation Committee did not consider stock
options and other non-cash compensation programs of the peer group companies
or the stock options granted to Company officers.
In April 1999, based on the recommendation of the Compensation Committee,
the Board increased Mr. McDougall's annual salary level by 12.5 percent to
$900,000. In recommending the increase in Mr. McDougall's salary, the
Compensation Committee considered the additional responsibilities Mr.
McDougall assumed when he was appointed chief executive officer in November
1998.
As an incentive to stock ownership by employees and as a form of long-term
incentive compensation, annual grants of stock options are awarded to selected
key employees. During 1999, stock options were granted by the Awards Committee
based on a formula relating to base salary and the Company's return on
shareholders' equity ("ROE"). The formula does not take into account the
number of stock options previously granted to an officer. Under the formula, a
target number of options for each officer is determined by dividing a
percentage of the officer's salary (ranging, based on level of responsibility,
from 110 percent for vice presidents to 300 percent for the chief executive
officer) 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 the weighted-average ROE of 16 forest products companies by 5
percentage points as determined from published financial reports. If the
specified margin is not achieved, the options are reduced proportionately by
up to 30 percent of the target number. The Company's 1998 ROE exceeded the
published industry composite by more than the specified margin. Accordingly,
option grants in 1999 were not adjusted.
Restricted stock has been awarded in past years to executive officers based
upon the Compensation Committee's subjective evaluation of the Company's
performance. No restricted stock awards were granted during 1999.
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
the Company's chief executive officer or any of its four other
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most highly compensated executive officers unless such compensation is payable
only on account of the attainment of one or more performance goals as
determined by a Board committee comprised solely of two or more outside
directors and otherwise qualifies as performance based pursuant to Section
162(m). The Company does not have a policy favoring awards to executive
officers that qualify as performance based pursuant to Section 162(m).
However, responsibility for the administration of the 1995 Plan was assigned
to the Awards Committee, which is comprised solely of outside directors, so
that awards under the 1995 Plan may qualify as performance based within the
meaning of Section 162(m). Stock options granted by the Awards Committee, as
well as awards of restricted stock that vest based upon the attainment of
performance goals established by the Awards Committee, will qualify as
performance based pursuant to Section 162(m).
Compensation Committee
Kenneth W. Hergenhan
Samuel C. Wheeler
Paul N. McCracken
Benjamin R. Whiteley
Gerard K. Drummond, Chairman
Performance Graph
The following graph compares the annual 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, 1994, and reinvestment of dividends.
<TABLE>
<CAPTION>
Cumulative Total Return
----------------------------------------------
12/94 12/95 12/96 12/97 12/98 12/99
<S> <C> <C> <C> <C> <C> <C>
WILLAMETTE INDUSTRIES, INC. 100 121 153 144 152 215
S&P 500 100 138 169 226 290 351
S&P PAPER & FOREST PRODUCTS 100 110 122 131 133 186
</TABLE>
11
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Compensation of Directors
Fees
Each director of the Company who is not also an employee of the Company or a
subsidiary (a "non-employee 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 non-employee director receives a retainer fee of $24,000 per year.
In November 1999, the Company adopted the 1999 Deferred Compensation Plan
for non-employee directors pursuant to which they may elect to defer
directors' fees. The 1999 plan, which is unfunded, replaces a prior deferred
compensation plan; amounts deferred under the prior plan have been transferred
to accounts under the new plan. Deferred amounts accrue increases or decreases
as if they were invested in one or more of the investment funds available
under the Company's 401(k) Plan as specified by a participating director.
In conjunction with adoption of the 1999 Deferred Compensation Plan, the
Company terminated its retirement plan for non-employee directors. For active
directors, effective January 1, 2000, the present value of the benefits
accrued under the prior retirement plan was transferred to accounts under the
deferred compensation plan and are treated as invested as described above. For
retired directors, under the retirement plan, a retired director received a
number of annual payments equal to the number of years he or she served as a
non-employee director after January 31, 1980, provided that the director
served for a minimum of five years. The amount of each annual payment equaled
the annual retainer fee for directors at the time the director retired.
Stock Options
Under the 1995 Plan, each person who was a non-employee director at the date
of the 1995 annual meeting of shareholders was granted an option to purchase
2,000 shares of Common Stock (an "Initial Option") and each person who
subsequently becomes a non-employee 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 1,200 shares of Common Stock (an
"Annual Option") is granted to each person who is then a non-employee director
and who is to continue to serve as a director, including former officers of
the Company or its subsidiaries.
Options granted to non-employee 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 Grants in Last Fiscal Year"
above. Accordingly, the Annual Options granted to the non-employee directors
on the date of the 1999 annual meeting were granted at an exercise price of
$47.25 per share, the fair market value of the Common Stock on that date. The
Initial Options granted to Messrs. Buxton and Thorne in February 1999 and
February 2000, were granted at exercise prices of $32.8125 and $38.125,
respectively, the fair market value of the Common Stock on the date of grant.
Consulting Agreement
The Company entered into a consulting agreement with Mr. Swindells effective
upon his ceasing to be chief executive officer of the Company under which Mr.
Swindells agreed to provide consulting services to the Company for a one-year
term commencing December 1, 1998. Under the consulting agreement, Mr.
Swindells received consulting fees equal to $120,000 during 1999 as well as
certain secretarial services and office space, and was reimbursed for certain
expenses including dues for a business club. The consulting agreement provides
that, while Mr. Swindells receives fees under the agreement, he will not
receive the annual retainer fees payable to other non-employee directors of
the Company. The consulting agreement was renewed in December 1999 and is
renewable for three additional one-year periods unless terminated by either
party upon 30 days' notice prior to renewal.
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Employment Agreements
General
The Company has agreements ("CIC Agreements") with certain of its key
employees, including the named executive officers (other than Mr. Parsons, who
has retired), 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 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 non-cash
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 that 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 Securities Exchange Act of 1934 (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.
13
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"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.
Section 16(a) Beneficial Ownership Reporting Compliance
Under Section 16 of 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 and
the New York Stock Exchange. 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.
Relationship With Independent Public Accountants
The firm of KPMG LLP, independent public accountants, has audited the
accounts of the Company for a number of years and has been selected to do so
for 2000. Representatives of KPMG LLP are expected to be present at the annual
shareholders meeting with the opportunity to make a statement if they desire
to do so and to be available to respond to appropriate questions.
Shareholder Proposals for Annual Meeting in 2001
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 8, 2000, in order to be included in the proxy statement and proxy
card for such meeting.
For any proposal that is not submitted for inclusion in next year's proxy
materials, but instead is sought to be presented directly at the 2001 annual
meeting, management will be able to vote proxies in its discretion if the
Company: (1) receives notice of the proposal before the close of business on
January 22, 2001, and advises shareholders in the 2001 proxy materials about
the nature of the matter and how management intends to vote on such matter; or
(2) has not received notice of the proposal by the close of business on
January 22, 2001.
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 in person or by telephone or
other means of communication by certain directors, officers, and other
employees of the Company without extra compensation for their services. The
Company has retained D.F. King & Co., Inc., to assist in the solicitation of
proxies at a fee of $6,000 plus expenses. 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
G. W. Hawley
/s/ G. W. Hawley
Secretary
Portland, Oregon
March 8, 2000
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About This Paper
This notice and proxy statement is printed on Willamette's 40 lb. Clearfield
Opaque/(R)/ Recycled, Vellum Finish.
Clearfield Opaque/(R)/ is a multi-purpose product that is ideal for a variety
of end uses, including financial documents, catalogs, inserts, manuals,
brochures and books.
Its basis weight range is 27 - 70 lb., in both smooth and vellum finishes.
Clearfield Opaque/(R)/ features 87 brightness and an attractive blue-white shade
that has a consistent appearance in both fluorescent and natural light. It is
known for its outstanding print surface and excellent performance in the
bindery.
Please contact us for samples or additional information:
<TABLE>
<S> <C>
. Sample Department (800) 446-3847
[email protected]
. Printing & Publishing Sales Service (800) 458-4640
</TABLE>
15
<PAGE>
[LOGO OF WILLAMETTE INDUSTRIES, INC.]
Willamette Industries, Inc.
[RECYCLE LOGO]
This notice and proxy statement is printed on 40# Clearfield
Opaque/(R)/ Recycled, Vellum Finish produced by
Willamette at its Johnsonburg, Pennsylvania, mill.
<PAGE>
WILLAMETTE INDUSTRIES, INC.
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
FOR ANNUAL MEETING ON APRIL 18, 2000
The undersigned hereby appoints William Swindells, Duane C. McDougall and
G.W. Hawley, 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 18, 2000, or at any adjournment thereof, with all powers
the undersigned would possess if personally present. The proxies, or if only one
proxy is present, then that one, shall have all the powers granted herein.
By signing on the reverse, the undersigned acknowledges receipt of the
Notice of Annual Meeting to be held April 18, 2000, and accompanying proxy
statement, and revokes all prior proxies for said meeting.
(Continued, and to be marked, dated and signed, on the other side)
_______________________________________________________________________________
. FOLD AND DETACH HERE .
<PAGE>
<TABLE>
<S> <C>
This proxy when properly executed will be voted in accordance with the choice Please mark
specified, or, if no choice is specified, will be voted FOR Item 1. If any other your vote as X
business properly comes before the meeting, this proxy will be voted thereon in indicated in
the discretion of the proxies named herein. this example
WITHHELD
FOR FOR ALL
The Board of Directors recommends a vote FOR
Item 1. Election of directors:
Gerard K. Drummond
Paul N. McCracken
Stuart J. Shelk, Jr.
Michael G. Thorne
WITHHELD FOR: (Write that nominee's name in the space provided below)
- -------------------------------------------------------------------------
Signature(s)________________________________________________________________Date______________________, 2000
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 .
</TABLE>
