SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934 (Amendment No. )
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CONSOLIDATED PAPERS, INC.
P.O. BOX 8050
WISCONSIN RAPIDS, WISCONSIN 54495-8050
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 24, 1995
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 24, 1995, for the following purposes:
1. To elect eleven directors to serve until the next annual meeting of
shareholders.
2. To transact any other business properly brought before the meeting.
Only shareholders of record at the close of business on March 7, 1995 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 14, 1995
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 24, 1995. This proxy statement and the enclosed form of
proxy are scheduled to be mailed to shareholders on March 14, 1995, together
with the Company's Annual Report to Shareholders which contains financial
statements for the fiscal year ended December 31, 1994. 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 7, 1995 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).
As of March 7, 1995, there were 44,259,833 shares of common stock of the
Company outstanding and entitled to vote at this annual meeting.
PROPOSALS OF SECURITY HOLDERS
In accordance with Section 2.2 of 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 occupations or employment for the past five
years, number of shares of the Company beneficially owned by the potential
nominee, and all other information required by the proxy rules, and the name,
record address, and number of shares of stock of the Company owned by the
shareholder making the recommendation.
Also, in accordance with Section 2.2 of 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
beneficially owned by the shareholder making the submission, and a description
of any material interest of the shareholder in the business of the Company
other than as a shareholder.
Copies of 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 22, 1996 may, if the 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, 1995.
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 17,104,095 shares (38.7% of
the outstanding stock).
Set forth in the following table are the beneficial holdings as of January 31,
1995 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 79,119 16,072,5773 16,151,696 36.5%
Chairman (Director)
P.O. Box 8050
Wisconsin Rapids, WI 54495-8050
Robert McKay 20,000 16,072,5773 16,092,577 36.4%
46 Benedict Hill Road
New Canaan, CT 06840
Cynthia M. Sargent 90,608 16,072,5773 16,163,185 36.6%
14 Bridlewood Road
Northbrook, IL 60062
(B) Other directors
Ruth Baldwin Barker 145,269 23,000 23,000 168,269 *
James R. Bostic 1,000 1,000 *
Patrick F. Brennan 52,312 52,312 *
Wiley N. Caldwell 3,000 3,000 *
Sally M. Hands 92,308 92,308 *
Bernard S. Kubale 5,500 5,500 *
D. Richard Mead Jr. 27,960 290,616 290,616 318,576 *
Gilbert D. Mead 19,957 19,957 *
Lawrence R. Nash 71,085 71,085 *
Glenn N. Rupp 1,000 1,000 *
(C) Other Executive Officers
William P. Orcutt 22,795 22,795 *
Roy E. Schulz 19,466 19,466 *
Gorton M. Evans Jr. 10,757 10,757 *
(D) Directors and Executive
Officers as a Group 607,294 16,386,193 38.4%4
(20 persons)
<FN>
*Less than 1%
1 Does 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.,
2,400 shares; for Mr. George W. Mead, 35,863 shares; for Mr. Gilbert D. Mead, 2,260 shares; for
Mr. Nash, 23,335 shares; for Mrs. Sargent, 10,160 shares; for Mr. Schulz, 124 shares; and for all
directors and executive officers as a group, 315,136 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.
2 Includes shares which may be acquired within sixty (60) days upon exercise of options: for Mr.
George W. Mead, 8,624 shares; for Mrs. Barker, 3,000 shares; for Mr. Brennan, 36,477 shares; for
Mr. Caldwell, 2,000 shares; for Mrs. Hands, 3,000 shares; for Mr. Kubale, 4,000 shares; for Mr.
D. Richard Mead Jr., 4,000 shares; for Mr. Gilbert D. Mead, 4,000 shares; for Mr. Nash, 4,000
shares; for Mr. Orcutt, 6,843 shares; for Mr. Schulz, 6,011 shares; for Mr. Evans, 4,832 shares;
and for all directors and executive officers as a group, 105,687 shares.
3 George 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, 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.
4 After eliminating duplications in the table.
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.
The Board of Directors recommends that the shareholders vote for the election
of the directors listed in the table below.
Director Principal Occupation
Name Age Since And Other Directorships
<S> <C> <C> <S>
Ruth Baldwin Barker1 65 1991 Investor.
James R. Bostic 54 1994 President and Chief Executive Officer,2
NordicTrack, Inc., Chaska, Minnesota. (Manufacturer and distributor of cross-
country ski exercise machines and other exercise equipment).
Patrick F. Brennan 63 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 67 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 68 1991 Investor.
Bernard S. Kubale 66 1988 Partner,4 Foley & Lardner, Attorneys at
Law, Milwaukee, Wisconsin.5 Also director of Banta Corporation (Printing and
graphic arts), and Schultz Sav-O Stores, Inc. (Wholesale and retail food
distributor).
D. Richard Mead Jr. 64 1974 Retired Chief Executive Officer,
Southeast Mortgage Company (Mortgage bankers), and Retired Senior Vice
President of Southeast Bank, N.A., Miami, Florida.6
George W. Mead1 67 1963 Chairman of the Board,7 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 64 1974 Attorney, Washington, D.C.
Lawrence R. Nash 65 1981 Lawyer, of counsel, Podvin, Tuchscherer,
Huttenberg, Weymouth & Kryshak, S.C., Wisconsin Rapids, Wisconsin.
Glenn N.Rupp 50 1994 Consultant.8
<FN>
1 Family 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.
2 Served as President and Chief Executive Officer of NordicTrack, Inc. since
1990; previously served as President and Chief Operating Officer of
NordicTrack, Inc.
3 Served as President and Chief Executive Officer of the Company since
October, 1993; previously served as President and Chief Operating Officer of
the Company.
4 Served as Partner of Foley & Lardner since February, 1994; previously served
as Chief Executive and Partner of Foley & Lardner.
5 The Company retains the firm of Foley & Lardner on a regular basis.
6 Southeast Bank, N.A. was placed under the receivership of the Federal
Deposit Insurance Company in September, 1991. Mr. Mead retired in June, 1991.
7 Served 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.
8 Served as Consultant since July, 1994; previously served as President and
Chief Executive Officer of Simmons Upholstered Furniture Inc., and as
President and Chief Executive Officer of Wilson Sporting Goods Co., Chicago,
Illinois. Simmons Upholstered Furniture Inc., a privately held company, made
a voluntary filing for reorganization under Chapter 11 of the Bankruptcy Code
in 1994.
Audit Committee
At December 31, 1994, the Company's Audit Committee consisted of Bernard S.
Kubale, Chairman, Ruth Baldwin Barker, Wiley N. Caldwell, D. Richard Mead,
Jr., and Glenn N. Rupp. Gilbert D. Mead was a member and Chairman of the
Audit Committee until April, 1994. The committee held two meetings during
1994. 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. Wiley N. Caldwell was unable to attend one of
the two meetings held during 1994.
Compensation Committee
For fiscal 1994, the Compensation Committee consisted of Wiley N. Caldwell,
Chairman, Sally M. Hands, Bernard S. Kubale, Lawrence R. Nash and James R.
Bostic. The committee held four meetings during 1994. 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. James R. Bostic was
unable to attend one of the three meetings held during the period that he was
a member in 1994.
Nominating Committee
For fiscal 1994, the Nominating Committee consisted of Bernard S. Kubale,
Chairman, Gilbert D. Mead, and Wiley N. Caldwell. The committee held two
meetings during 1994. 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.
Management Succession Committee
For fiscal 1994, the Management Succession Committee consisted of Bernard S.
Kubale, Chairman, Wiley N. Caldwell, Glenn N. Rupp and James R. Bostic. The
committee held one meeting during 1994. The Management Succession Committee
monitors the development and performance of the Company's executive officers
and reviews qualifications and recommends candidates for executive offices.
It also oversees the Company's programs for training and preparing candidates
for executive offices. James R. Bostic was unable to attend the meeting held
during 1994.
The Board of Directors held six meetings during 1994.
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>
P.F. Brennan 1994 473,087(1) 8,942 60,000 6,058(2)
President (Chief Executive 1993 422,173(1) - 10,000 6,126
Officer and Director) 1992 395,072(1) 8,658 - 6,206
G.W. Mead 1994 376,936(1) - - 2,310(2)
Chairman (Director) 1993 480,585(1) - - 6,126
1992 483,885 11,154 - 6,206
W.P. Orcutt 1994 215,536(1) 4,229 3,000 4,112(2)
Vice President, 1993 209,853(1) 2,086 - 5,850
Manufacturing 1992 207,991(1) 4,277 - 5,715
R.E. Schulz 1994 198,372(1) 3,750 3,000 3,378(2)
Vice President, 1993 177,576 1,989 - 5,514
Manufacturing 1992 189,303(1) 3,783 - 5,098
G.M. Evans Jr. 1994 181,212(1) 3,426 3,000 2,552(2)
Vice President 1993 169,508(1) 1,839 - 4,996
1992 170,915(1) 3,302 - 4,806
<FN>
(1) Includes banked vacation (dollar amount) and vacation taken in cash: for P.F. Brennan,
$25,962 for 1994, $31,929 for 1993, and $20,302 for 1992; for G.W. Mead, $26,924 for 1994 and
$27,567 for 1993; for W.P. Orcutt, $4,087 for 1994, $7,808 for 1993, and $7,158 for 1992; for
R.E. Schultz, $10,873 for 1994 and $13,236 for 1992; for G.M. Evans Jr., $9,936 for 1994, $9,462
for 1993, and $12,050 for 1992.
(2) Includes contributions of $2,310 on behalf of each named executive officer to the
Consolidated Employees' Tax-saver & Investment Plan (401(k)), and payroll taxes attributable to
retirement benefits accrued in excess of limits imposed by the Omnibus Budget Reconciliation Act
of 1993: for P.F. Brennan, $3,748; for W.P. Orcutt, $1,802; for R.E. Schulz, $1,068; for G.M.
Evans Jr., $242.
Option/SAR Grants in Last Fiscal Year
Individual Grants
Potential
Number Of % Of Total Realizable Value
Securities Options/SARs At Assumed Annual
Underlying Granted To Rates of Stock
Options/ Employees Exercise Or Price Appreciation
SARs In Fiscal Base Price Expiration for Option Term (1)
Name Granted (#) Year ($/sh.)(2) Date 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
P.F. Brennan 15,000 13% 44.00 02/10/2004 415,070 1,051,870
P.F. Brennan 45,000 39% 38.875 04/25/2004 1,100,173 2,788,053
G.W. Mead - - N/A N/A N/A N/A
W.P. Orcutt 3,000 3% 38.875 04/25/2004 73,345 185,870
R.E. Schulz 3,000 3% 38.875 04/25/2004 73,345 185,870
G.M. Evans Jr. 3,000 3% 38.875 04/25/2004 73,345 185,870
<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. The options expire ten years from the date of grant, or
five years after termination of employment with the Company, whichever is earlier.
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>
P.F. Brennan - - 36,477/45,000 166,718/283,950
G.W. Mead 8,325 57,109 8,624/ - 48,393/ -
W.P. Orcutt - - 6,843/ 3,000 60,243/ 18,930
R.E. Schulz - - 6,011/ 3,000 53,333/ 18,930
G.M. Evans Jr. 650 7,963 4,832/ 3,000 42,086/ 18,930
<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, 1994, for the five individuals named in
the Summary Compensation Table are as follows: P.F. Brennan - 32; G.W. Mead -
43; W.P. Orcutt - 39; R.E. Schulz - 29; G.M. Evans Jr. - 22. Under sections
401(a)(17) and 415 of the Internal Revenue Code, considered earnings are
limited to $150,000 and benefits under the Plan are limited to $118,800 per
year. Earnings in excess of $150,000 are recognized and benefits in excess of
$118,800 are provided under a separate nonqualified supplemental retirement
plan sponsored by the Company.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
Among Consolidated Papers, Inc., S&P 500 Index, & Dow Jones Paper Products
Index
The Comparison of Five-Year Cumulative Total Return below shall not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1993 or under
the Securities Exchange Act of 1934, except to the extent Consolidated
specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts. Total return includes reinvestment
of dividends.
Dec-89 Dec-90 Dec-91 Dec-92 Dec-93 Dec-94
Consolidated Papers, Inc. $100 $90 $ 89 $101 $111 $119
S&P 500 $100 $97 $126 $136 $150 $152
Dow Jones Paper Products Index $100 $95 $120 $120 $129 $144
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 shareholder value. The
Compensation Committee endeavors to work with management toward achieving the
following objectives:
- - 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 by providing competitive compensation opportunities.
The Company's salary and bonus policies, awards made under the 1989 Stock
Option Plan, and other employee benefit plans are intended to encourage the
achievement of the Company's 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 Base Salaries. In setting executive base 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 Products 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 the base salaries offered by these peer companies for
comparable positions. Increases in base salary depend in part on this peer
group analysis as well as the Company's results for the prior year and
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 in
part upon the evaluations and recommendations of the President and Chief
Executive Officer. The executive salaries established in February 1994
reflected the continued difficult business environment for the paper industry
generally and the Company in particular during 1993. Base salaries for
executive officers of the Company were increased an average of 4.5% for 1994.
The Company's performance versus a selected peer group appears under the
caption "Comparison of Five-Year Cumulative Total Return" on Page 9.
Incentive Compensation. In late 1993, the Compensation Committee began to
study possible changes in the Company's compensation practices for senior
executives. The purpose of the study was to develop a comprehensive plan for
the senior members of management which appropriately blended forms of short
and long-term incentive compensation for these persons, taking into account
the nature of the Company and its goals. Hewitt Associates was retained to
assist the Committee in this study. Upon completion of a review of the
Company's then current compensation practices, Hewitt Associates advised the
Committee that the Company's total executive compensation levels (base salary
plus incentive compensation ) were well below competitive norms in the paper
industry. In consultation with Hewitt Associates, the Committee developed an
incentive compensation plan intended to provide senior executives with the
opportunity to earn compensation at levels which approach competitive norms in
the paper industry depending upon Company performance. The Committee's plan
consists of a bonus plan (payable in cash and Company stock) tied to
individual and corporate performance and a plan for increased stock option
grants. This approach avoided increases in fixed costs, such as increases in
base salary. The plan will cover approximately thirty key executives at the
Company, including the executive officers named in the Summary Compensation
Table other than George W. Mead.
The bonus plan adopted by the Committee is effective starting in calendar year
1995. Payments under the bonus plan will be tied to achievement of Company-
wide financial targets and individual performance goals in each applicable
period. Targets and goals will be reviewed and approved by the Compensation
Committee on an annual basis. Depending upon the executive's position, these
bonuses will range from a minimum of 7.5% (at the threshold target level) to a
maximum of 35% (at the maximum target level) of the executive's base salary.
The Company-wide target for the 1995 bonus is the Company's operating income
as a percentage of average operating assets (OI/AOA), as set forth in the 1995
profit plan. The Company's profit plan for each year is initially prepared
late in the preceding year and is finalized and reviewed by the Board of
Directors in February, incorporating management's best estimate of the
Company's likely performance for the upcoming year. Minimum and maximum
awards under the bonus plan for 1995 are tied to threshold and maximum targets
of 80% to 120%, respectively, of the OI/AOA in the 1995 profit plan. The
first awards, if any, under the bonus plan will be made in early 1996. Half
of the value of any award will be in cash, and half will be in Company common
stock. The Compensation Committee currently expects to continue the bonus
arrangement, with updated targets, for 1996 and later years.
Hewitt Associates also recommended increased use of stock option grants under
the 1989 Stock Option Plan for the same group of senior executives. The size
and frequency of the awards made in 1994 was determined with reference to
Hewitt Associates' analysis of competitive practices in the paper industry.
The grant program adopted by the Compensation Committee for 1994 represented
award levels at approximately one-half of competitive long-term incentive
norms. The size of the individual awards to the Company's senior executives
depended on the executive's relative position with the Company. During 1994,
the Compensation Committee granted options to purchase an aggregate of 54,000
shares to the senior executives other than Mr. Brennan and Mr. Mead. In
accordance with the terms of the 1989 Stock Option Plan, all of these options
have an exercise price equal to 100% of the fair market value of the Company's
common stock on the date of grant. The options have a term of ten years from
the date of grant and vest over a period of three years. The grants are
intended to give this group of executives long-term incentives to remain with
the Company and to encourage significant stock ownership by members of this
group. The latter goal is intended to better align the interests of these
executives with those of the shareholders. Based upon similar criteria, the
Compensation Committee presently intends to provide stock option grants for
senior executives other than Mr. Brennan and Mr. Mead on an annual basis.
Compensation Award Program - 1994. The Company initiated a modest incentive
program in 1992 for all non-union personnel which provided for a 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. Staff areas are also given departmental goals to achieve in
order to earn the incentive payment. The goals set for 1994 were achieved,
and awards were made to all nonunion personnel, including the named executive
officers. The 1994 awards took the form of Company contributions for purchase
of Company common stock to the accounts maintained by the employees under the
Company's Tax-saver and Investment Plan (401(k)).
Compensation of Chief Executive Officer. 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. Mr. Brennan's base salary was increased to
$450,000 in 1994. Mr. Brennan's 1994 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 greater incentive compensation in the form of bonuses,
stock options and other benefits for their chief executive officers. Mr.
Brennan was granted a nonqualified option at the time of his promotion to
purchase 10,000 shares of common stock, and options to purchase an aggregate
of 60,000 shares of common stock in February and April, 1994. All grants were
made at fair market value on the date of the grant. These option grants were
designed to give Mr. Brennan an immediate substantial increase in his equity
position in the Company, so as to more closely align Mr. Brennan's interests
with those of Company shareholders. The size of the option granted to Mr.
Brennan was determined with reference to competitive practices in the paper
industry. The options granted to Mr. Brennan in 1994 vest over a three-year
period. All Mr. Brennan's options are exercisable for a period of five years
following his retirement. This extension after retirement is intended to
encourage Mr. Brennan to continue to emphasize the long-term best interests of
the Company and its shareholders by awarding him options which will extend
beyond his anticipated retirement in 1996 at age 65.
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 Salaried Employees' Retirement Plan
and the Consolidated Employees' Benefit Plan (medical coverage). The Company
believes that its employee benefit plans are generally comparable to similar
plans in the paper industry.
Section 162(m) Compliance. Under Section 162(m) of the Internal Revenue Code,
the tax deduction of corporate taxpayers is limited with respect to the
compensation of certain executive officers unless the compensation is based
upon performance objectives meeting certain regulatory criteria or is
otherwise excluded from the limitation. Based upon the Compensation
Committee's commitment to link compensation with performance as described in
this report, the Compensation Committee currently intends to qualify
compensation paid to the Company's executive officers for deductibility by the
Company under Section 162(m) of the Internal Revenue Code.
Compensation Committee:
Wiley N. Caldwell, Chairman
James R. Bostic
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 a Partner of Foley & Lardner, a Milwaukee, Wisconsin-based law firm
which represents the Company and its subsidiaries on a regular basis.
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 5,000. All options are priced at fair
market value on the date of grant.
COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company officers and directors and persons who own more than 10% of a
registered class of the Company's equity securities, to file certain reports
regarding ownership of, and transactions in, the Company's securities with the
Securities and Exchange Commission (the "SEC"). Such officers, directors and
10% stockholders are also required by SEC rules to furnish the Company with
copies of all Section 16(a) forms that they file.
Based solely on its review of such forms received by it, or written
representations from certain reporting persons, the Company believes that
during fiscal 1994 all Section 16(a) filing requirements applicable to its
officers, directors and 10% stockholders were complied with, except that D.
Richard Mead Jr., a director of the Company, filed one such report 60 days
after the required filing date.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP audited the accounts of Consolidated Papers, Inc. and
subsidiaries for fiscal 1994 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 14, 1995 Secretary
PROXY
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 24, 1995, 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" Proposal 1.
The proxies appointed herein may act by one of said proxies at the meeting.
Please mark, sign, date and mail the proxy card promptly using the enclosed envelope.
(Continued and to be signed on the 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 Withhold (Except Nominee(s) written below)
2. In their discretion, the proxies are authorized to vote upon such other business as may
properly come before the meeting.
Dated , 1995
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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