SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934 (Amendment No. )
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Check the appropriate box:
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14a-6(j)(2).
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14a-6(i)(3)
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:1
4) Proposed maximum aggregate value of transaction:
1Set forth the amount on which the filing fee is calculated and state how it
was determined.
Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
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4) Date Filed:
<PAGE>
CONSOLIDATED PAPERS, INC.
P.O. BOX 8050
WISCONSIN RAPIDS, WISCONSIN 54495-8050
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 25, 1994
To the Shareholders of
Consolidated Papers, Inc.
The annual meeting of shareholders of Consolidated Papers, Inc. will be held
at the Mead Inn, 451 East Grand Avenue, Wisconsin Rapids, Wisconsin, at
2:00 p.m., Monday, April 25, 1994, for the following purposes:
1. To elect eleven directors to serve until the next annual meeting of
shareholders.
2. To consider a proposed amendment to the Company's 1989 Stock Option Plan.
3. To transact any other business properly brought before the meeting.
Only shareholders of record at the close of business on March 8, 1994 are
entitled to notice of and to vote at the meeting.
We cordially invite you to attend. Whether or not you can be present, please
date, sign, and return the enclosed proxy as soon as possible. If you attend
the meeting, you may revoke your proxy and vote in person.
CONSOLIDATED PAPERS, INC.
Carl H. Wartman, Secretary
March 15, 1994
<PAGE>
PROXY STATEMENT
CONSOLIDATED PAPERS, INC.
P.O. BOX 8050
WISCONSIN RAPIDS, WISCONSIN 54495-8050
ANNUAL MEETING OF SHAREHOLDERS
This proxy statement is furnished by the Board of Directors in connection with
the solicitation of proxies to be used at the annual meeting of shareholders
of Consolidated Papers, Inc. ("Consolidated" or the "Company") to be held at
the Mead Inn, 451 East Grand Avenue, Wisconsin Rapids, Wisconsin, at
2:00 p.m., Monday, April 25, 1994. This proxy statement and the enclosed form
of proxy are scheduled to be mailed to shareholders on March 15, 1994,
together with the Company's Annual Report to Shareholders which contains
financial statements for the fiscal year ended December 31, 1993. When proxy
cards are returned properly signed and received in time, the shares
represented will be voted in accordance with shareholders' directions. If the
proxy card is signed and returned without directions, the shares will be voted
by the persons named in the enclosed form of proxy.
REVOCABILITY OF PROXY
Any shareholder giving a proxy may revoke it at any time before it is voted at
the annual meeting. A proxy may be revoked in person at the meeting, by
providing a proxy bearing a later date, or by delivering a signed notice of
revocation to the Secretary of the Company.
SOLICITATION
The enclosed form of proxy is solicited on behalf of the Board of Directors of
the Company. The expense of solicitation will be borne by the Company.
Reasonable out-of-pocket expenses will be paid by the Company to brokers,
nominees, and other persons who request solicitation materials for their
principals.
VOTING SECURITIES
Only shareholders of record as of the close of business March 8, 1994 will be
eligible to vote at the meeting. Each shareholder is entitled to one vote for
each share held. In determining whether a quorum exists at the annual
meeting, all votes "For", as well as votes to withhold authority, will be
counted. Directors are elected by a plurality of the votes cast by the shares
entitled to vote at the annual meeting. A plurality means that the
individuals with the largest number of votes are elected as directors up to
the maximum number of directors to be chosen at the meeting (eleven).
A shareholder may, with respect to the proposed amendment to the Company's
1989 Stock Option Plan, (i) vote "FOR", (ii) vote "AGAINST" or (iii) "ABSTAIN"
from voting. A vote to abstain from voting has the legal effect of voting
against this proposal.
A proxy may indicate that all or a portion of the shares represented by such
proxy are not being voted with respect to the proposal to amend the 1989 Stock
Option Plan. This could occur, for example, when a broker is not permitted to
vote stock held in street name on certain matters in the absence of
instructions from the beneficial owner of the stock. These "nonvoted shares"
will be considered shares not present and entitled to vote on such matter,
although such shares may be considered present and entitled to vote for other
purposes and will count for purposes of determining the presence of a quorum.
Assuming the existence of a quorum, any shares of common stock not voted at
the meeting on the proposal to amend the 1989 Stock Option Plan will have no
impact regarding the outcome of this matter.
As of March 8, 1994, there were 44,056,666 shares of common stock of the
Company outstanding and entitled to vote at this annual meeting.
PROPOSALS OF SECURITY HOLDERS
In accordance with the Company's bylaws, shareholders may recommend persons as
potential nominees for director only by complying with the following
procedure: shareholders must submit the names of such persons in writing to
the Secretary of the Company not less than 60 days or more than 90 days prior
to the date of the annual meeting. These recommendations must be accompanied
by a statement setting forth the name, age, business address, residence
address, principal occupation, qualifications, and number of shares of the
Company owned by the potential nominee and the name, record address, and the
number of shares of stock of the Company owned by the shareholder making the
recommendation.
Also, in accordance with the Company's bylaws, a shareholder may properly
bring business before the annual meeting only by complying with the following
procedure: the shareholder must submit to the Secretary of the Company, not
less than 60 days or more than 90 days prior to the date of the annual
meeting, a written statement describing the business to be discussed, the
name, principal occupation, address, and number of shares of the Company owned
by the shareholder making the submission, and a description of any material
interest of the shareholder in the business of the Company.
Copies of Article II, Section 2.2 of the Company's bylaws are available on
request to the Secretary.
Under regulations of the Securities and Exchange Commission, proposals of
shareholders intended to be presented at the annual meeting of shareholders
anticipated to be held April 24, 1995 may, if such shareholders have complied
with the requirements of the regulations, be included in the proxy statement
and form of proxy relating to that meeting. The regulations provide that the
shareholder proposals must be submitted to the Secretary of the Company by
November 15, 1994.
SECURITIES BENEFICIALLY OWNED BY PRINCIPAL
SHAREHOLDERS AND MANAGEMENT
Under regulations of the Securities and Exchange Commission, persons who have
power to vote or dispose of shares of the Company, either alone or jointly
with others, are deemed to be beneficial owners of such shares. Because the
voting or dispositive power of certain stock listed in the following table is
shared, the same securities in such cases are listed opposite more than one
name in the table. The total number of shares of the Company listed in the
table, after elimination of such duplication, is 17,091,887 shares (38.8% of
the outstanding stock).
Set forth in the following table are the beneficial holdings as of January 31,
1994 on the basis described above of: (A) each person known by the Company to
own beneficially more than 5% of its outstanding stock; (B) directors not
listed in (A); (C) the executive officers named in the Summary Compensation
Table on Page 7 and not listed in (A) or (B); and (D) directors and executive
officers as a group:
<TABLE>
<CAPTION>
Shares Owned
Sole Beneficially
Voting Or Shared Shared Total
Investment Voting Investment Beneficial % Of
Name Power1,2 Power Power Ownership Class
<S> <C> <C> <C> <C> <C>
(A) George W. Mead 78,547 16,072,5773 16,151,124 36.7%
Chairman (Director)
P.O. Box 8050
Wisconsin Rapids, WI 54495-8050
Robert McKay 20,000 16,072,5773 16,092,577 36.5%
46 Benedict Hill Road
New Canaan, CT 06840
Cynthia M. Sargent 90,608 16,072,5773 16,163,185 36.7%
14 Bridlewood Road
Northbrook, IL 60062
(B) Other directors
Ruth Baldwin Barker 144,269 20,000 20,000 164,269 *
James R. Bostic 0 0 *
Patrick F. Brennan 37,289 37,289 *
Wiley N. Caldwell 2,000 2,000 *
Sally M. Hands 91,308 91,308 *
Bernard S. Kubale 4,500 4,500 *
D. Richard Mead Jr. 26,660 290,616 290,616 317,276 *
Gilbert D. Mead 18,957 18,957 *
Lawrence R. Nash 74,045 74,045 *
Glenn N. Rupp 0 0 *
(C) Other Executive Officers
William P. Orcutt 22,400 22,400 *
Roy E. Schulz 19,571 19,571 *
Donald L. Stein 21,622 21,622 *
(D) Directors and Executive
Officers as a Group 598,086 16,383,193 38.6%4
(20 persons)
<FN>
*Less than 1%
1Does not include shares held by spouses or children of the following: for Mrs. Barker, 50,700
shares, for Mrs. Hands, 400 shares; for Mr. McKay, 189,793 shares; for Mr. D. Richard Mead Jr.,
1,800 shares; for Mr. George W. Mead, 30,778 shares; for Mr. Gilbert D. Mead, 2,260 shares; for
Mr. Nash, 23,335 shares; for Mrs. Sargent, 10,160 shares; for Mr. Schulz, 174 shares, for
Mr. Stein, 2,400 shares; and for all directors and executive officers as a group, 312,298
shares. Beneficial ownership is disclaimed as to such shares and as to all other shares over
which the named person does not have full beneficial rights.
2Includes shares which may be acquired within sixty (60) days upon exercise of options: for
Mr. George W. Mead, 8,624 shares; for Mrs. Barker, 2,000 shares; for Mr. Brennan, 21,477
shares; for Mr. Caldwell, 1,000 shares; for Mrs. Hands, 2,000 shares; for Mr. Kubale, 3,000
shares; for Mr. D. Richard Mead Jr., 3,000 shares; for Mr. Gilbert D. Mead, 3,000 shares; for
Mr. Nash, 3,000 shares; for Mr. Orcutt, 6,843 shares; for Mr. Schulz, 6,011 shares; for Mr.
Stein, 4,580 shares; and for all directors and executive officers as a group, 85,223 shares.
3George W. Mead, Robert McKay and Cynthia M. Sargent are voting trustees of the Mead Voting
Trust, a voting trust organized under Wisconsin law to hold shares of the Company. The Mead
Voting Trust, which expires by its terms on December 20, 2011 unless extended prior to that
date, holds 16,072,577 shares of stock. The voting trustees generally have the right to
determine the voting (but not the disposition) of the shares of the Company. However, in
voting on (i) any proposed merger or consolidation of the Company with another person, (ii) any
sale, lease or exchange of all or substantially all of the Company's assets, or (iii) a
proposed dissolution of the Company, the voting trustees must follow the directions of the
holders of a majority of the units of beneficial interest. The three voting trustees each own
units of beneficial interest in the Mead Voting Trust. George W. Mead beneficially owns
1,406,020 units of beneficial interest, or 8.7% of the Mead Voting Trust. Robert McKay
beneficially owns 14,190 units of beneficial interest, or .09% of the Mead Voting Trust.
Cynthia M. Sargent beneficially owns 1,768,547 units of beneficial interest, or 11.0% of the
Mead Voting Trust. Each unit of beneficial interest represents one share of the Company's
common stock.
4After eliminating duplications in the table.
<PAGE>
DIRECTORS
At the annual meeting of shareholders, eleven directors, constituting the
entire Board of Directors of the Company, are to be elected to hold office
until the next annual meeting of shareholders or until their successors are
duly elected and qualified. Directors will be elected by a plurality of the
shares present and voting at the meeting. Unless contrary instructions are
given, the proxies will voted for the nominees listed below. It is expected
these nominees will serve but, if for any unforeseen cause any of them should
decline or be unable to serve, the proxies will be voted to fill any vacancy
so arising in accordance with the discretionary authority of the persons named
in the proxy, unless contrary instructions are given.
The nominees, their ages, the years in which they began serving as directors,
and business experience are set forth below; except as indicated in footnotes,
the principal occupations of the nominees have not changed in the past five
years.
Director Principal Occupation
Name Age Since And Other Directorships
<S> <C> <C> <S>
Ruth Baldwin Barker1 64 1991 Investor
James R. Bostic 53 1994 President and Chief Operating Officer,2
NordicTrack, Inc., Chaska, Minnesota.
(Manufacturer and distributor of cross-
country ski exercise machines and other
exercise equipment).
Patrick F. Brennan 62 1987 President and Chief Executive Officer,3
Consolidated Papers, Inc. Also director
of Northland Cranberries, Inc. and Betz
Laboratories, Inc. (Manufacturer of
specialty chemicals).
Wiley N. Caldwell 66 1991 Retired President, W.W. Grainger, Inc.,
Skokie, Illinois, (National distributor
of industrial and commercial supplies
and equipment). Also director of CBI
Industries, Inc. (Design and
construction of metal structures and
manufacturer of industrial gases),
Kewaunee Scientific Corporation
(Manufacturer of laboratory furniture),
and APS Holding, Inc. (Distributor of
automotive parts and supplies).
Sally M. Hands1 67 1991 Investor.
Bernard S. Kubale 65 1988 Chief Executive and Partner, Foley &
Lardner, Attorneys at Law, Milwaukee,
Wisconsin.4 Also director of Banta
Corporation (Printing and graphic arts),
and Schultz Sav-O Stores, Inc.
(Wholesale and retail food distributor).
D. Richard Mead Jr. 63 1974 Retired Chief Executive Officer,
Southeast Mortgage Company (Mortgage
bankers), and Retired Senior Vice
President of Southeast Bank, N.A.,
Miami, Florida.5
George W. Mead1 66 1963 Chairman of the Board,6 Consolidated
Papers, Inc. Also director of Snap-on
Tools Corporation (Manufacturer and
distributor of hand tools and related
items), and Firstar Corporation (Bank
holding company).
Gilbert D. Mead1 63 1974 Attorney, Washington, D.C.
Lawrence R. Nash 64 1981 Employee of Nash, Podvin, Tuchscherer,
Huttenberg, Weymouth & Kryshak, S.C.,
Lawyers, Wisconsin Rapids, Wisconsin.
Glenn N.Rupp 49 1994 President and Chief Executive Officer,7
and Director, Simmons Upholstered
Furniture Inc., Northbrook, Illinois,
(Manufacturer of upholstered furniture).
Also director of SLM International, Inc.
(Manufacturer of sporting goods and
toys).
<FN>
1Family relationships: Ruth Baldwin Barker and Sally M. Hands are cousins.
George W. Mead and Gilbert D. Mead are brothers. Ruth Baldwin Barker and
Sally M. Hands are cousins of George W. Mead and Gilbert D. Mead.
2Served as President and Chief Executive Officer of NordicTrack, Inc. since
1990; previously served as President and Chief Operating Officer of
NordicTrack, Inc.
3Served as President and Chief Executive Officer of the Company since
October, 1993; previously served as President and Chief Operating Officer of
the Company.
4The Company retains the firm of Foley & Lardner on a regular basis.
5Southeast Bank, N.A. was placed under the receivership of the Federal
Deposit Insurance Company in September, 1991. Mr. Mead retired in June,
1991.
6Served as Chairman of the Board of the Company since October, 1993;
previously served as Chairman of the Board and Chief Executive Officer of
the Company.
7Served as President and Chief Executive Officer of Simmons Upholstered
Furniture Inc. since 1991; previously served as President and Chief
Executive Officer of Wilson Sporting Goods Co., Chicago, Illinois.
Audit Committee
For fiscal 1993, the Company's Audit Committee consisted of Gilbert D. Mead,
Chairman, Ruth Baldwin Barker, Wiley N. Caldwell, Bernard S. Kubale, and
D. Richard Mead, Jr. The committee held two meetings during 1993. The Audit
Committee recommends the Company's independent accountants; reviews the scope
of the audit; reviews the compensation of the independent accountants; reviews
the annual financial statements and the results of the audit with management,
the internal auditors, and the independent accountants; reviews the
independent accountants' recommendations with respect to changes in accounting
procedures and internal accounting controls; reviews the activities of the
internal auditors; and approves the appointment or removal of the internal
audit manager.
Compensation Committee
For fiscal 1993, the Compensation Committee consisted of Wiley N. Caldwell,
Chairman, Sally M. Hands, Bernard S. Kubale, and Lawrence R. Nash. The
committee held three meetings during 1993. This committee reviews the
performance and remuneration arrangements for salaried employees generally and
sets compensation for a defined group of key executives. This Committee also
administers the 1989 Stock Option Plan. The Compensation Committee has
reported on management compensation matters under the heading "Compensation
Committee Report on Executive Compensation" on Page 10.
Nominating Committee
For fiscal 1993, the Nominating Committee consisted of Bernard S. Kubale,
Chairman, Gilbert D. Mead, and Wiley N. Caldwell. The committee held four
meetings during 1993. The Nominating Committee recommends nominees for
election to the Board of Directors and other committees of the Board. It also
makes recommendations to the Board with respect to qualifications and
compensation of directors as well as Board organization. The committee will
consider an individual nominated by a shareholder if the shareholder submits
the nomination in accordance with the requirements of the Company's bylaws
relating to nominations by shareholders. These procedures are described under
"Proposals of Security Holders" on Page 2.
The Board of Directors held five meetings during 1993.
<PAGE>
Executive Compensation
Summary Compensation Table
Long-Term
Annual Compen-
Compensation sation
Securities Other
Name and Underlying Compen-
Principal Position Year Salary ($) Bonus ($) Options(#) sation ($)
<S> <C> <C> <C> <C> <C>
G.W. Mead 1993 453,018(1) - - 6,126(3)
Chairman (Director) 1992 483,885 11,154 - 6,206
1991 442,543 - 6,692(2) 5,536
P.F. Brennan 1993 390,244(1) - 10,000 6,126(3)
President (Chief Executive 1992 374,770(1) 8,658 - 6,206
Officer and Director) 1991 342,886(1) - 5,192(2) 5,937
W.P. Orcutt 1993 202,045(1) 2,087 - 5,850(3)
Vice President, 1992 200,833(1) 4,277 - 5,715
Manufacturing 1991 184,360(1) - 2,792(2) 5,470
R.E. Schulz 1993 177,576 1,989 - 5,514(3)
Vice President, 1992 176,067(1) 3,783 - 5,098
Manufacturing 1991 161,028(1) - 2,318(2) 4,898
D.L. Stein 1993 171,272(1) 1,840 - 5,192(3)
Vice President 1992 170,144(1) 3,601 - 4,996
1991 155,364(1) - 2,259(2) 5,937
<FN>
(1)Does not include banked vacation (dollar amount) and vacation taken in cash: for G.W. Mead,
$27,567 for 1993; for P.F. Brennan, $31,929 for 1993, $20,302 for 1992, and $19,668 for
1991; for W.P. Orcutt, $7,808 for 1993, $7,158 for 1992, and $10,737 for 1991; for R.E.
Schultz, $13,236 for 1992 and $3,164 for 1991; for D.L. Stein, $13,436 for 1993, $3,079 for
1992, and $2,896 for 1991.
(2)Includes options that were cancelled due to failure of Company to satisfy Company
performance objectives: for G.W. Mead, 2,231 shares; for P.F. Brennan, 1,731 shares; for
W.P. Orcutt, 931 shares; for R.E. Schulz, 773 shares; for D.L. Stein, 753 shares.
(3)Includes Company contributions of $2,248 on behalf of each named executive officer to the
Consolidated Employees' Tax-saver & Investment Plan (401(k)) and the fair market value of
shares of Company stock awarded during 1993 under the Consolidated Employees' Stock
Ownership Plan (ESOP): for G.W. Mead, $3,878; for P.F. Brennan, $3,878; for W.P. Orcutt,
$3,602; for R.E. Schulz, $3,266; for D.L. Stein, $2,944.
Option/SAR Grants in Last Fiscal Year
Individual Grants
Potential
Number Of % Of Total Realizable Value
Securities Options/SARs At Assumed Annual
Underlying Granted To Rates of Stock
Options/ Employees Exercise Or Price Appreciation
SARs In Fiscal Base Price Expiration for Option Term (1)
Name Granted (#) Year ($/sh.)(2) Date 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
G.W. Mead - - N/A N/A N/A N/A
P.F. Brennan 10,000 100% 40.25 10/19/2003 253,100 641,500
W.P. Orcutt - - N/A N/A N/A N/A
R.E. Schulz - - N/A N/A N/A N/A
D.L. Stein - - N/A N/A N/A N/A
<FN>
(1)Potential gains are net of exercise price, but before taxes associated with exercise. These
amounts represent certain assumed rates of appreciation only, based on Securities and
Exchange Commission rules, and do not represent the Company's estimate or projection of the
price of the Company's stock in the future. Actual gains, if any, on stock option exercises
depend upon the actual future performance of the Company's common stock and the continued
employment of the option holders throughout the vesting period. Accordingly, the potential
realizable values set forth in this table may not be achieved.
(2)All options were granted at an exercise price equal to fair market value of the Company's
common stock on the date of the grant. Mr. Brennan's option expires ten years from the date
of grant, or six months after his termination of employment with the Company, whichever is
earlier.
<PAGE>
Aggregated Option/SAR Exercises in Last Fiscal Year
And FY-End Option/SAR Values
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End(#) at FY-End($)(1)
Shares Acquired Value Exercisable/ Exercisable/
Name On Exercise (#) Realized ($)(1) Unexercisable Unexercisable
<S> <C> <C> <C> <C>
G.W. Mead - - 16,949/ - 74,319/ -
P.F. Brennan - - 21,477/ - 112,653/ -
W.P. Orcutt - - 6,843/ - 48,728/ -
R.E. Schulz - - 6,011/ - 43,219/ -
D.L. Stein 600 2,400 4,580/ - 31,408/ -
<FN>
(1)Dollar values are calculated by determining the difference between the fair market value of
the underlying common stock and the exercise price of the options at exercise or FY-end,
respectively.
Consolidated Salaried Employees' Retirement Plan
The Consolidated Salaried Employees' Retirement Plan (the "Plan") is a defined
benefit plan applicable to employees of the Company and its subsidiaries who
are not in a collective bargaining unit, and is a qualified plan under the
Internal Revenue Code. In recent years benefits have been based on average
earnings for the latest five years and years of service, with benefits
normally beginning at age 65. Officers participate in the Plan on the same
basis as other salaried employees. The following table shows the estimated
annual normal benefit payable upon retirement under the Plan for selected
compensation and years of service classification:
Pension Plan Table
Estimated Annual Benefit For Participants With Years of Service As Indicated*
Final
Average
Earnings 15 20 25 30 35 40 45
<C> <C> <C> <C> <C> <C> <C> <C>
$150,000 33,300 44,300 55,400 66,500 77,600 88,800 100,100
$200,000 44,500 59,300 74,200 89,000 103,800 118,800 133,800
$250,000 55,800 74,300 92,900 111,500 130,100 148,800 167,600
$300,000 67,000 89,300 111,700 134,000 156,300 178,800 201,300
$350,000 78,300 104,300 130,400 156,500 182,600 208,800 235,100
$400,000 89,500 119,300 149,200 179,000 208,800 238,800 268,800
$450,000 100,800 134,300 167,900 201,500 235,100 268,800 302,600
$500,000 112,000 149,300 186,700 224,000 261,300 298,800 336,300
$550,000 123,300 164,300 205,400 246,500 287,600 328,800 370,100
$600,000 134,500 179,300 224,200 269,000 313,800 358,800 403,800
$650,000 145,800 194,300 242,900 291,500 340,100 388,800 437,600
<FN>
* Compensation for purposes of computing retirement benefits means total cash
compensation, including cash withdrawals of accrued vacation but, exclusive
of discretionary bonuses, for service rendered to the employers. The annual
benefits shown above are not subject to offset for Social Security benefits.
Years of service, as of December 31, 1993, for the five individuals named in
the Summary Compensation Table are as follows: G.W. Mead - 42;
P.F. Brennan - 31; W.P. Orcutt - 38; R.E. Schulz - 28; D.L. Stein - 26.
Under Section 415 of the Internal Revenue Code, benefits under the Plan are
limited to $115,641 per year. The excess over $115,641 is to be provided
under individual supplemental retirement benefit agreements.
Five-Year Performance Chart is omitted; paper format of the Five-Year
Performance Chart is filed under cover of Form SE.
COMPENSATION COMMITTEE
Report On Executive Compensation
The Compensation Committee of the Board of Directors is responsible for the
Company's compensation program covering its executive officers, including the
five officers named in the Summary Compensation Table. The following report
on executive compensation was prepared by the members of the Compensation
Committee.
Compensation Policies. The Company's executive compensation program is based
on the principle that compensation levels must be aligned with the Company's
overall business strategy and the goal of maintaining and, where possible,
enhancing profitability as a means of maximizing long-term shareholder value.
The executive compensation program is intended to reflect the Company's
overall corporate philosophy, which emphasizes the achievement of long-term
objectives--for example, holding or increasing market share in the lightweight
coated paper business through capital expenditures, continuous quality
programs and attention to customer relationships; or maintaining a leadership
position in coating technology through the Company's research and development
activities.
The Company's emphasis on long-term objectives is intended to avoid
unwarranted emphasis on the short-term swings experienced by the paper
industry, which is highly cyclical. While Consolidated's performance has
historically been somewhat less cyclical due to the Company's products,
Consolidated has not been immune to the paper industry's business cycles. The
Company's compensation strategy also recognizes that many people in many parts
of the organization are vital contributors to the success or failure of any
given business element, such as marketing or manufacturing. Finally, results
of the Company's investments in tangible and intangible business assets--
ranging from capital expenditures to individual customer relations--are spread
over an extremely long time frame, and several individuals may serve in a
single position before results are fully realized.
Given the cyclical nature of the paper industry, the often extremely long time
frame for return on investments and the contributions of many to overall
results, the Compensation Committee believes that it is generally
inappropriate to challenge individuals to meet only short-term, narrowly
defined goals in order to be rewarded with compensation incentives. Instead,
the Compensation Committee endeavors to work with management toward achieving
the following objectives:
- Reward long-term performance not only as it relates to achievement of
Company-specific performance goals but also peer group performance
levels.
- Reward executives for long-term strategic management and the
enhancement of shareholder value by allowing executives, through stock
options and other benefit plans, to participate in the appreciation of
the market value of the Company's stock.
- Align compensation programs with annual and long-term strategic
planning, goals and objectives.
- Attract and retain key executives essential to the Company's long-term
success.
The Company's salary policies, awards made under the 1989 Stock Option
Plan, and other employee benefit plans are intended to encourage the
achievement of the Company's long-term goals. The following discussion
describes the specific components of executive compensation, how these
components relate to the Company's compensation policies, and the
relationship of corporate performance to executive compensation.
Executive Salaries. Because the Company does not emphasize awards of
incentive compensation in response to achievement of short-term goals,
base salaries are the most important element of compensation at
Consolidated. In setting executive salaries, including the salaries of
the individuals listed in the Summary Compensation Table, the Compensation
Committee reviews salary practices and data reported by a selected group
of companies in the paper industry, focusing particularly on eleven
companies which have significant coated paper production. These companies
include six of the nine companies (in addition to Consolidated) which make
up the Dow Jones Paper Group Index (see chart on Page 9). In accordance
with the policy of attracting and retaining key executives described
above, executives of Consolidated typically receive base salaries in the
mid-range of this peer group. Year-to-year increases in base salary are
generally set in February of each year and are dependent upon the
Company's relative performance during the prior year relative to its
peers. Increases in base salary also depend in part upon the Company's
financial prospects for the following year. Percentage increases for
executives are generally in line with overall planned merit budget
increases for all salaried employees of the Company. Increases are also
influenced by changes in an individual's responsibilities through
promotion or transfer and the individual's potential for further
advancement in the Company. In the case of executives other than the
Chairman of the Board and the President and Chief Executive Officer, the
Compensation Committee's evaluation is based upon the evaluations and
recommendations of the Chairman and of the President and Chief Executive
Officer. Given the cyclical nature of the Company's business, increases
are larger in more successful years and smaller in less successful years,
although they still remain within a relatively narrow range. The
executive salaries established in February 1993 reflected the Company's
disappointing performance in 1992. At the same time, 1993 salary levels
took into account the Company's continued strong performance relative to
its peers in the industry as well as those peers' announced compensation
plans for 1993. Data reflecting the Company's performance versus a
selected peer group is set forth under the caption "Comparison of Five-
Year Cumulative Total Return" on Page 9.
Compensation of Chief Executive Officer. George W. Mead, Chairman and,
until October 1993, Chief Executive Officer of the Company, received total
compensation of $459,144 (not including cash withdrawals of banked
vacation) for 1993. In determining Mr. Mead's 1993 compensation, the
Compensation Committee considered the comparative salary information
referred to above and, in particular, information regarding compensation
of other chief executive officers of similar companies in the paper
industry. The Compensation Committee reviewed the Company's 1992
performance overall and in relation to other paper companies. The
Compensation Committee also considered Mr. Mead's performance in leading
the Company and its business. Mr. Mead's base annual salary was lowered
in October 1993 to $350,000 reflecting his reduced responsibilities.
Patrick F. Brennan became Chief Executive Officer of the Company in
October, 1993. At that time, Mr. Brennan's annual salary was increased to
$425,000 per year, reflecting his increased responsibilities. As with Mr.
Mead, Mr. Brennan's salary was set with reference to comparative
information regarding compensation of other chief executive officers of
similar companies in the paper industry. Mr. Brennan's base salary is in
the lower middle range of this group, although most other members of the
group provide significantly greater incentive compensation for their chief
executive officers in the form of bonuses, stock options and other
benefits. Mr. Brennan was also granted a nonqualified option at the time
of his promotion to purchase 10,000 shares of common stock at the then
current market value. This option grant was designed to give Mr. Brennan
an immediate substantial increase in his equity position in the Company
(taking into account the amount and terms of existing options held by
Mr. Brennan), so as to more closely align Mr. Brennan's interests with
those of the Company stockholders.
Bonus Payments. In view of the Company's focus on group performance
rather than the specific contributions of individuals, the Company has
traditionally not awarded significant bonuses to any of its salaried
employees. During 1992, in response to difficult business conditions, the
Company initiated a modest incentive program for all nonunion personnel
which called for a one-time bonus payment of approximately 2% of base
salary in the event specified reductions were achieved in "controllable"
costs such as material usage and energy consumption. These reductions
were achieved and the incentive payments were made in 1992. The program
was continued in 1993, when the incentive payment was dependent upon
increased savings beyond those achieved in 1992 and on inventory
reductions in certain areas. In 1993, staff areas were also given
departmental goals to achieve in order to earn the incentive payment. The
goals set for 1993 were achieved in part, and payments were made equal to
roughly 1% of base salary. George W. Mead and Patrick F. Brennan did not
receive bonus payments in 1993 because conditions established by the
Compensation Committee with respect to their awards were not met.
Stock Options. The Company's executive compensation program also includes
grants of options under the 1989 Stock Option Plan. The purpose of the
1989 Stock Option Plan is to encourage outstanding individuals to accept
or continue employment with the Company and to furnish maximum incentive
to these persons to improve the operations and increase profits by
providing them with the opportunity to acquire Company stock. With the
exception of the 1993 grant to Mr. Brennan, described above, the
Compensation Committee's policy is to make two separate types of awards
under the 1989 Stock Option Plan: (a) broad-based grants to all salaried
employees, including the executive officers, based on each employee's
annual compensation and designed, in part, to encourage stock ownership by
a broad range of employees, and (b) performance based grants to specified
senior executives (including the five named officers) which are tied to
the achievement of certain goals. In 1989 and 1991, performance-based
grants were made to the senior executives contingent upon the Company's
achievement of its net income targets for those years. This goal was met
in 1989 and the option grants vested. The goal was not met in 1991 and
the options granted in that year lapsed. Options under the Plan are
granted at 100% of fair market on the date of grant and, accordingly, the
ultimate value of the options will depend on the market value of the
Company's stock in the future. It has been the general policy of the
Compensation Committee that options granted under the 1989 Stock Option
Plan vest and become exercisable no less than one year after grant. By
tying a portion of each executive's overall compensation to stock price
through the option grants, the Company continues to provide an incentive
to its executive officers and others to maximize long-term shareholder
value.
Other Employee Benefit Plans. The Company's policy with respect to other
employee benefit plans is to provide competitive benefits to its
employees, including executive officers, to encourage their continued
service with the Company. These plans include the Consolidated Employees'
Tax-saver and Investment Plan (401(k)); the Consolidated Employees' Stock
Ownership Plan (ESOP); the Consolidated Salaried Employees' Retirement
Plan and the Consolidated Employees' Benefit Plan (medical coverage). By
allocating shares of Company stock to employees under the ESOP, the
Company more closely aligns employees' and shareholders' long-term
financial interests. The Company believes that its employee benefit plans
are generally comparable to similar plans in the paper industry.
Compensation Committee:
Wiley N. Caldwell, Chairman
Sally M. Hands
Bernard S. Kubale
Lawrence R. Nash
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Kubale served on the Compensation Committee for the past fiscal year. Mr.
Kubale is Chief Executive and Partner of Foley & Lardner, a Milwaukee,
Wisconsin-based law firm which represents the Company and its subsidiaries on
a regular basis.
1989 STOCK OPTION PLAN AMENDMENT
Shareholders are asked to approve an amendment to the Company's 1989 Stock
Option Plan (the "Plan") which would (a) allow the Compensation Committee, in
its discretion, to award stock options with extended limits on exercise after
retirement, (b) place a limit on the number of shares subject to a stock
option award that may be granted to any one participant during any fiscal year
of the Company, and (c) increase the automatic option grants to outside
directors provided for in the plan from 3,000 to 5,000 shares. The changes
are intended to increase the Plan's flexibility and to preserve the Company's
tax deduction for stock options granted under the Plan in 1994 and subsequent
years.
Currently, the Plan requires that incentive stock options and nonqualified
stock options must be exercised, if at all, within six months of an employee's
retirement. This amendment, if approved by the shareholders, would allow the
Compensation Committee to grant nonqualified stock options which could be
exercised for up to five years after the employee's retirement (but not more
than ten years from the date of grant). The Board of Directors believes that
this change will allow the Compensation Committee to grant or modify stock
option awards in order to more appropriately challenge senior executives who
are near the close of their careers with the Company. With extended exercise
rights, these executives will be encouraged to make long-term decisions in the
best interests of the Company's shareholders.
The Omnibus Budget Reconciliation Act of 1993 added Section 162(m) to the
Internal Revenue Code ("Code"). Section 162(m) generally limits the deduction
that may be claimed for compensation paid to the Chief Executive Officer and
the four other highest paid executives at the end of a given year to
$1,000,000, subject to certain exceptions. The rule applies to all types of
compensation, including amounts realized on exercise of stock options and
stock appreciation rights, unless the awards and plan under which they are
made qualify as "performance based" under the terms of the Code and related
regulations. The Company has been advised by counsel that approval of the
proposed amendment will permit future grants of stock options and stock
appreciation rights under the Plan to meet the requirements for performance-
based compensation and thus qualify for a tax deduction.
As originally adopted, the Plan provided that nonemployee directors who have
completed at least one full year of service be granted options to purchase
1,000 shares of common stock on the date of the annual meeting of
shareholders, up to a maximum of 3,000. In view of the trend toward
encouraging ownership of stock by outside directors, the Board of Directors
recommends that this maximum be increased to 5,000. Outside directors who
have already received options to purchase 3,000 shares would receive
additional option awards of 1,000 shares commencing with the 1994 annual
meeting (subject to shareholder approval of the proposed amendment). All
options are priced at fair market value on the date of grant.
The Plan was approved by shareholders at the 1989 Annual Meeting. It
authorizes the grant of stock options on up to 2,500,000 shares of common
stock. For 1994, 1,012,629 shares are available for new awards under the
Plan.
The Board of Directors on February 10, 1994, adopted the following amendment
to Section 4 of the Plan subject to shareholder approval:
"Notwithstanding Section 6(c) or Section 7(c) of this Plan, the
Compensation Committee of the Board of Directors may, in its
discretion, grant nonqualified options under this Plan which may be
exercised for up to five years following a participant's termination
of employment by retirement. The Compensation Committee may also
modify outstanding options to extend permitted exercise dates for up
to five years after the holder's retirement (but in no event more than
ten years from the date of the original grant). In addition, subject
to the adjustment provisions of Section 9 hereof, the maximum number
of shares of common stock available for awards under this Plan to any
participant in any fiscal year of the Company shall not exceed 100,000
shares."
The Board of Directors also adopted the following amendment to Section 8 of
the Plan subject to shareholder approval:
"Effective February 10, 1994, Section 8 is amended to provide that
directors who are eligible to receive options under Section 8 may not
receive options under this Plan for more than 5,000 shares of the
Company's common stock. Awards for the purchase of 1,000 shares of
common stock shall be made automatically on the date of the first five
annual meetings of shareholders held after the director has completed
one year of service on the board during the term of the Plan; or, if a
director has received options to purchase 3,000 shares of common stock
prior to February 10, 1994, awards for the purchase of 1,000 shares of
common stock shall be made automatically on the date of the first two
annual meeting of shareholders held after February 10, 1994."
Approval of the proposal to amend the Plan requires the affirmative vote of a
majority of the votes of all shares present and voting on the matter.
The Board of Directors recommends a vote FOR approval of the proposal to amend
the 1989 Stock Option Plan (Proposal 2).
COMPENSATION OF DIRECTORS
Nonemployee directors receive an annual retainer of $18,000. All nonemployee
directors receive a meeting fee of $1,000 for each Board meeting attended.
All nonemployee members of each committee also receive a meeting fee of $1,000
for each committee meeting attended. Nonemployee committee chairmen receive
an annual retainer of $1,000. Each director who has completed at least three
years of service as a nonemployee director participates in the Consolidated
Directors' Retirement Plan. Under this plan, a retired director receives an
annual payment equal to the annual retainer fee in effect at the time of the
director's retirement. The retired director is entitled to receive this
annual payment for that number of years that is equal to the number of years
served as a nonemployee director, up to a maximum of ten years. Nonemployee
directors also receive options to purchase Company common stock under certain
nondiscretionary provisions of the 1989 Stock Option Plan. These provide that
each nonemployee director who has completed at least one full year of service
is granted options to purchase 1,000 shares on the date of the annual meeting
of shareholders, up to a maximum of 3,000. The proposed amendment to the 1989
Stock Option Plan, discussed above, would (if approved by the shareholders)
increase these grants to a maximum of 5,000. All options are priced at fair
market value on the date of grant.
The Company believes that all 1993 filings required by the Securities and
Exchange Commission regarding ownership of Company common stock by officers,
directors and beneficial owners of more than 10% of the Company's common stock
were made on a timely basis.
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen & Co. audited the accounts of Consolidated Papers, Inc. and
subsidiaries for fiscal 1993 and has been selected to audit the accounts for
the current year. A representative of that firm is expected to be present at
the annual meeting of shareholders and will be available to respond to
appropriate questions, and he will be given the opportunity to make a
statement if he desires to do so.
OTHER MATTERS
Management is not aware of any other matters to be considered at this annual
meeting. However, if any other matters properly come before the meeting, the
persons named in the enclosed form of proxy will have discretionary authority
to vote all proxies with respect to such matters in accordance with their
judgment.
Wisconsin Rapids, Wisconsin 54495-8050 Carl H. Wartman
March 15, 1994 Secretary
<PAGE>
CONSOLIDATED PAPERS, INC.
P.O. Box 8050
Wisconsin Rapids, Wisconsin 54495-8050 This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints GEORGE W. MEAD and PATRICK F. BRENNAN as proxies, with full power of
substitution, to represent the undersigned and to vote, as designated below, all shares of Common
Stock of Consolidated Papers, Inc. which the undersigned is entitled to vote at the annual meeting
to be held on April 25, 1994, and any adjournment thereof.
This proxy when properly executed will be voted in the manner directed herein by the shareholder.
If no direction is made, this proxy will be voted "FOR" Proposals 1 and 2.
The proxies appointed herein may act by one of said proxies at the meeting.
(Please date and sign on reverse side.)
CONSOLIDATED PAPERS, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY X
1. ELECTION OF DIRECTORS: Nominees:
R.B. Barker, J.R. Bostic, P.F. Brennan, W.N. Caldwell, S.M. Hands, B.S. Kubale,
D.R. Mead, Jr., G.W. Mead, G.D. Mead, L.R. Nash, and G.N. Rupp
For All
For Withheld Except those names written on the space provided below.
2. Proposal to amend the Company's 1989 Stock Option Plan.
For Against Abstain
3. In their discretion, the proxies are authorized to vote upon such other business as may
properly come before the meeting.
Dated , 1994
Signature of Shareholder
For Joint Account Each Owner Should Sign
Please sign proxy as name appears. Joint owners should each sign personally. Trustees and others
signing in a representative capacity should indicate the capacity in which they sign.
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