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 Rule 240.14a-11(c) or Rule 240.14a-12
Consolidated Papers, 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):
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:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
CONSOLIDATED PAPERS, INC.
P.O. BOX 8050
WISCONSIN RAPIDS, WISCONSIN 54495-8050
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 28, 1997
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 28, 1997, for the following purposes:
1. To elect fourteen 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 11, 1997 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 18, 1997
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 28, 1997. This proxy statement and the enclosed form of
proxy are scheduled to be mailed to shareholders on March 18, 1997, together
with the Company's Annual Report to Shareholders which contains financial
statements for the fiscal year ended December 31, 1996. 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 in accordance
with the discretionary authority of 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 11, 1997 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" or "Against", as well as abstentions and directions
to withhold authority, will be counted. Directors will be 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 (fourteen).
A broker or nominee holding shares registered in its name, or in the name of
its nominee, which are beneficially owned by another person and for which it
has not received instructions as to voting from the beneficial owner, has the
discretion to vote the beneficial owner's shares with respect to the election
of directors.
As of March 11, 1997, there were 44,779,946 shares of common stock of the
Company outstanding and entitled to vote at the 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 potential
nominees 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 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 27, 1998 may, if the shareholders have complied
with the requirements of the regulations, be included in the proxy statement
and on the proxy card relating to that meeting. The regulations provide that
the shareholder proposals must be submitted to the Secretary of the Company by
November 20, 1997.
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 17,184,076 shares (38.4% of
the outstanding stock).
Set forth in the following table are the beneficial holdings as of January 31,
1997 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 Power 1,2 Power Power Ownership Class
<S> <C> <C> <C> <C> <C> <C>
(A) George W. Mead 78,098 16,072,5773 16,150,675 36.1%
Chairman (Director)
P.O. Box 8050
Wisconsin Rapids, WI
54495-8050
Robert McKay 20,000 16,072,5773 16,092,577 36.0%
46 Benedict Hill Road
New Canaan, CT 06840
Cynthia M. Sargent 90,608 16,072,5773 16,163,185 36.1%
14 Bridlewood Road
Northbrook, IL 60062
(B) Other directors
Ruth Baldwin Barker 147,369 26,000 26,000 173,369 *
Patrick F. Brennan 79,831 79,831 *
Wiley N. Caldwell 5,100 5,100 *
James D. Ericson - - *
Gorton M. Evans 15,103 15,103 *
Sally M. Hands 94,408 94,408 *
J. Joseph King - - *
Bernard S. Kubale 6,600 6,600 *
D. Richard Mead Jr. 33,100 289,576 289,576 322,676 *
Gilbert D. Mead 21,057 21,057 *
Lawrence R. Nash 65,165 65,165 *
Glenn N. Rupp 3,100 3,100 *
John S. Shiely 1,100 1,100 *
(C) Other Executive Officers
William P. Orcutt 27,423 27,423 *
Richard J. Kenney 14,948 14,948 *
(D) Directors and Executive
Officers as a Group 685,315 16,388,153 38.2%4
(23 persons)
<FN>
*Less than 1%
1 Does not include shares held by spouses or children of the following: for
Mrs. Barker, 51,000 shares, for Mrs. Hands, 400 shares; for Mr. McKay,
189,793 shares; for Mr. D. Richard Mead Jr., 2,500 shares; for Mr. George
W. Mead, 41,726 shares; for Mr. Gilbert D. Mead, 2,260 shares; for Mr.
Nash, 23,335 shares; for Mrs. Sargent, 10,160 shares; and for all directors
and executive officers as a group, 321,281 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, 4,163 shares; for Mrs. Barker, 5,000
shares; for Mr. Brennan, 61,116 shares; for Mr. Caldwell, 4,000 shares; for
Mr. Evans, 4,856 shares; for Mrs. Hands, 5,000 shares; for Mr. Kubale,
5,000 shares; for Mr. D. Richard Mead Jr., 8,000 shares; for Mr. Gilbert D.
Mead, 5,000 shares; for Mr. Nash, 5,000 shares; for Mr. Rupp, 2,000 shares;
for Mr. Orcutt, 9,843 shares; for Mr. Kenney, 8,175 shares; and for all
directors and executive officers as a group, 161,568 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 for 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
1,396,020 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, fourteen directors, constituting the
entire Board of Directors of the Company, are to be elected to hold office
until the next annual meeting of shareholders and 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 be 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 as of the date of this proxy statement, 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 67 1991 Investor.
Patrick F. Brennan 65 1987 Retired President and Chief Executive
Officer2, Consolidated Papers, Inc.
Also director of Northland Cranberries,
Inc. (A grower and marketer of
cranberries and cranberry products),
and BetzDearborn Inc. (Manufacturer of
specialty chemicals).
Wiley N. Caldwell 69 1991 Retired President, W.W. Grainger, Inc.,
Skokie, Illinois, (National distributor
of industrial and commercial supplies
and equipment). Also director of
Kewaunee Scientific Corporation
(Manufacturer of laboratory furniture),
and APS Holding, Inc. (Distributor of
automotive parts and supplies).
James D. Ericson 61 1996 President and Chief Executive Officer3,
Northwestern Mutual Life Insurance
Company, Milwaukee, Wisconsin. Also
director of MGIC Investment
Corporation.
Gorton M. Evans 58 1996 President and Chief Executive Officer4,
Consolidated Papers, Inc.
Sally M. Hands1 70 1991 Investor.
J. Joseph King 52 1996 Executive Vice President5, Molex
Incorporated, Lisle, Illinois.
(Manufacturer of electronic, electrical
and fiber optic inter-connection
systems; ribbon cable; switches; and
application tooling).
Bernard S. Kubale 68 1988 Partner, Foley & Lardner, Attorneys at
Law, Milwaukee, Wisconsin.6 Also
director of Banta Corporation (Printing
and graphic arts), and Schultz Sav-O
Stores, Inc. (Wholesale and retail food
distributor), and the Green Bay
Packers.
D. Richard Mead Jr. 66 1974 Retired Chief Executive Officer,
Southeast Mortgage Company (Mortgage
bankers), and Retired Senior Vice
President of Southeast Bank, N.A.,
Miami, Florida.
George W. Mead1 69 1963 Chairman of the Board,7 Consolidated
Papers, Inc. Also director of Snap-on
Incorporated (Manufacturer and
distributor of hand tools and related
items), and Firstar Corporation (Bank
holding company).
Gilbert D. Mead1 66 1974 Attorney, Washington, D.C.
Lawrence R. Nash 67 1981 Lawyer, of counsel, Nash, Podvin,
Tuchscherer, Huttenberg, Weymouth &
Kryshak, S.C., Wisconsin Rapids,
Wisconsin.
Glenn N. Rupp 52 1994 Chairman and Chief Executive Officer8,
and Director, Converse Inc., North
Reading, Massachusetts. (Manufacturer
of athletic footwear).
John S. Shiely 44 1996 President and Chief Operating Officer9,
and Director, Briggs & Stratton
Corporation, Wauwatosa, Wisconsin
(Producer of air-cooled gasoline
engines for the outdoor power equipment
industry). Also director of M&I
Marshall & Ilsley Bank.
<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 the Company from
October, 1993 to December, 1996; previously served as President and Chief
Operating Officer of the Company (1988 to 1993).
3 Served as President and Chief Executive Officer since October, 1993;
previously served as President and Chief Operating Officer (1990 to 1993)
of Northwestern Mutual Life Insurance Company.
4 Served as President and Chief Executive Officer of the Company since
January, 1997; previously served as Executive Vice President (April, 1996
to December, 1996), Vice President (September, 1995 to April, 1996) and
Vice President, Marketing, Enamel Printing Papers (February, 1989 to
September, 1995) of the Company.
5 Served as Executive Vice President since July, 1996; previously served as
Corporate Vice President (1988 to 1996) of Molex Incorporated.
6 The Company retains the firm of Foley & Lardner on a regular basis.
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 (1979 to 1993).
8 Served as Chairman and Chief Executive Officer since April, 1996;
previously served as Consultant (1994 to 1996), and as President and Chief
Executive Officer of Simmons Upholstered Furniture Inc. (1991-1994).
Simmons Upholstered Furniture Inc., a privately held company, made a
voluntary filing for reorganization under Chapter 11 of the Bankruptcy Code
in 1994.
9 Served as President and Chief Operating Officer since August, 1994;
previously served as Executive Vice President-Administration (1991 to 1994
of Briggs & Stratton Corporation.
AUDIT COMMITTEE
At December 31, 1996, the Company's Audit Committee consisted of D. Richard
Mead, Jr., Chairman, Ruth Baldwin Barker, J. Joseph King, Bernard S. Kubale,
Glenn N. Rupp and John S. Shiely. The committee held two meetings during
1996. 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 auditors; and approves the appointment
or removal of the internal audit manager. John S. Shiely was unable to attend
the meeting held during the period that he was a member in 1996.
COMPENSATION COMMITTEE
At December 31, 1996, the Compensation Committee consisted of Wiley N.
Caldwell, Chairman, James D. Ericson, Sally M. Hands, J. Joseph King, Lawrence
R. Nash and John S. Shiely. The committee held three meetings during 1996.
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 and compensation matters
under the heading "Compensation Committee Report on Executive Compensation" on
Page 10.
NOMINATING COMMITTEE
At December 31, 1996, the Nominating Committee consisted of Bernard S. Kubale,
Chairman, Gilbert D. Mead and Wiley N. Caldwell. The committee held five
meetings during 1996. 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 Conpany's bylaws
relating to nominations by shareholders. These procedures are described under
"Proposals of Security Holders" on Page 2.
MANAGEMENT SUCCESSION COMMITTEE
At December 31, 1996, the Management Succession Committee consisted of Bernard
S. Kubale, Chairman, Wiley N. Caldwell, James D. Ericson and Glenn N. Rupp.
The committee held five meetings during 1996. 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.
The Board of Directors held seven meetings during 1996.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Awards
Securities All
Annual Underlying Other
Name and Compensation Options/ Compen-
Principal Position Year Salary ($) Bonus ($) SARs(#) sation ($)
<S> <C> <C> <C> <C> <C>
P.F. Brennan 1996 634,618(1) 30,000 - 19,169(2)
President (Chief Executive 1995 523,083(1) 184,887 - 7,397
Officer and Director) 1994 473,087(1) 8,942 60,000 6,058
G.W. Mead 1996 376,936(1) - - 2,375(2)
Chairman (Director) 1995 376,936(1) - - 2,310
1994 376,936(1) - - 2,310
G.M. Evans 1996 290,102(1) 15,000 3,000 3,879(2)
Vice President 1995 193,374(1) 56,577 3,000 2,616
1994 181,212(1) 3,426 3,000 2,552
W.P. Orcutt 1996 261,146(1) - 3,000 6,454(2)
Senior Vice President 1995 224,698(1) 65,313 3,000 2,506
1994 215,536(1) 4,229 3,000 4,112
R.J. Kenney 1996 232,322(1) - 3,000 3,431(2)
Vice President, 1995 192,837(1) 53,087 3,000 3,093
Finance 1994 176,694(1) 3,402 3,000 2,651
<FN>
(1) Includes banked vacation (dollar amount) and vacation taken in cash: for
P.F. Brennan, $46,154 for 1996, $28,846 for 1995 and $25,962 for 1994;
for G.W. Mead, $26,924 for 1996, $26,924 for 1995 and $26,924 for 1994;
for G.M. Evans, $17,308 for 1996, $10,386 for 1995 and $9,936 for 1994;
for W.P. Orcutt, $14,424 for 1996, $4,259 for 1995 and $4,087 for 1994;
and for R.J. Kenney, $16,924 for 1996, $13,848 for 1995 and $6,579 for
1994.
(2) Includes contributions of $2,375 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, $16,794; for G.M. Evans, $1,504; for W.P. Orcutt,
$4,079; and for R.J. Kenney, $1,056.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
% Of
Total
Options/ Potential
Number of SARs Realizable Value
Securities Granted Exercise At Assumed Annual
Underlying to Or Base Rates of Stock
Options/ Employees Price Price Appreciation
SARs In Fiscal ($/sh.) Expiration for Option Term (2)
Name Granted # Year (1) Date 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
P.F. Brennan - 0% N/A N/A N/A N/A
G.W. Mead - 0% N/A N/A N/A N/A
G.M. Evans 3,000 1.44% 53.00 02/08/2006 99,993 253,404
W.P. Orcutt 3,000 1.44% 53.00 02/08/2006 99,993 253,404
R.J. Kenney 3,000 1.44% 53.00 02/08/2006 99,993 253,404
<FN>
(1) The options reflected in the table, all of which are nonqualified options
for purposes of the Internal Revenue Code, were granted at an exercise
price equal to the 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. The options vest over a three-year period following the date
of grant.
(2) 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.
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 5,361 74,841 61,116/15,000 550,552/152,812
G.W. Mead 4,461 61,149 4,163/ - 58,021/ -
G.M. Evans - - 4,856/ 6,000 47,496/ 17,312
W.P. Orcutt - - 9,843/ 6,000 110,703/ 17,312
R.J. Kenney - - 8,175/ 6,000 89,291/ 17,312
<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-year period 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
$700,000 157,000 209,300 261,700 314,000 366,300 418,800 471,300
$750,000 168,300 224,300 280,400 336,500 392,600 448,800 505,100
$800,000 179,500 239,300 299,200 359,000 418,800 478,800 538,800
<FN>
* Compensation for purposes of computing retirement benefits means total cash
compensation, including cash withdrawals of accrued vacation but, exclusive
of discretionary bonuses. For the individuals named in the Summary
Compensation Table, the compensation covered by the plan is that reflected
as salary in the Summary Compensation Table. The annual benefits shown
above are not subject to offset for Social Security benefits. Years of
service, as of December 31, 1996, for the five individuals named in the
Summary Compensation Table are as follows: P.F. Brennan - 34; G.W. Mead -
45; G.M. Evans - 24; W.P. Orcutt - 41, R.J. Kenney - 29. Under sections
401(a)(17) and 415 of the Internal Revenue Code, considered earnings are
limited to $150,000 (prior to 1994, $200,000 adjusted for cost of living)
and benefits under the plan are limited to $120,000 per year. Earnings in
excess of the limits are recognized and benefits in excess of $120,000 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-91 Dec-92 Dec-93 Dec-94 Dec-95 Dec-96
Consolidated Papers, Inc. $100 $113 $125 $134 $171 $155
S&P 500 $100 $108 $118 $120 $165 $203
Dow Jones Paper Products Index $100 $ 99 $107 $119 $136 $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
ten 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). Executives of
Consolidated typically receive base salaries in the mid-range of the base
salaries offered by these peer companies for comparable positions.
Incentive Compensation. In consultation with Hewitt Associates LLC, the
Compensation Committee has developed and implemented an incentive compensation
plan intended to provide Company 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 stock option grants. This approach avoids increases in fixed
costs, such as increases in base salary and, in the view of the Committee,
appropriately blends short and long-term incentive compensation. The plan
covers 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 in 1996 tied potential payments to achievement of Company-wide
financial targets and individual performance goals. Targets and goals are
reviewed and approved by the Compensation Committee on an annual basis.
Depending upon the executive's position and performance, 1996 bonuses, if
awarded, could range from a minimum of 3% to a maximum of 62.5% of base
salary. The Company-wide target for the 1996 bonus was the Company's
operating income as a percentage of average operating assets (OI/AOA), as set
forth in the 1996 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 for corporate performance under the bonus plan for 1996 were
tied to threshold and maximum targets of 80% to 120%, respectively, of the
OI/AOA in the 1996 profit plan. The 1996 OI/AOA target was 26.6%; actual
OI/AOA for 1996 was 15.6%. Because the threshold target was not achieved in
1996, no awards were made for corporate performance. Awards of up to 5% of
base salary were made to executives based on individual performance in 1996.
The Compensation Committee also makes stock option grants under the 1989 Stock
Option Plan to provide an incentive for the same group of executives. The
size and frequency of the awards are determined with reference to Hewitt
Associates LLC's analysis of competitive practices in the paper industry. The
grant program adopted by the Compensation Committee represents award levels at
approximately one-half of competitive long-term incentive norms. The size of
the individual awards to the Company's executives in 1996 depended on the
executive's relative position with the Company. During 1996, the Compensation
Committee granted options to purchase an aggregate of 61,000 shares to the
executives other than Mr. Brennan and Mr. Mead. All 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 continue to provide stock option grants for executives
other than Mr. Mead on an annual basis.
Compensation Award Program - 1996. The Company's 1996 Compensation Award
Program for nonunion personnel provided for a bonus payment of approximately
3% of base salary in the event specified reductions were achieved in
"controllable" costs such as material usage and energy consumption. Staff
areas were also given departmental goals to achieve in order to earn the
incentive payment. The goals set for 1996 were achieved by most of the
Company's operations and awards were made. The 1996 awards took the form of
Company contributions of Company stock under the Company's Tax-saver and
Investment Plan (401(k)).
Compensation of Chief Executive Officer. Patrick F. Brennan's base salary was
$600,000 in 1996. Mr. Brennan's 1996 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 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
also received a bonus of $30,000, which reflects the Compensation Committee's
evaluation of Mr. Brennan's individual performance during 1996.
Gorton M. Evans was named Chief Executive Officer effective January 1, 1997.
The Compensation Commmittee increased Mr. Evans' base salary to $450,000 at
that time.
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 D. Ericson
Sally M. Hands
J. Joseph King
Lawrence R. Nash
John S. Shiely
COMPENSATION OF DIRECTORS
Nonemployee directors receive an annual retainer of $18,000, plus a grant of
100 shares of common stock which is distributed on the date of the annual
meeting of shareholders. All nonemployee directors receive a meeting fee of
$1,000 for each Board and committee meeting attended. Nonemployee committee
chairmen receive an annual retainer of $2,000 each. 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
(not including the value of the stock grant) 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 for a term of ten
years from the date of grant and 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
more than 10% shareholders 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 1996 all Section 16(a) filing requirements applicable to its
officers, directors and more than 10% shareholders were complied with.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP audited the accounts of Consolidated Papers, Inc. and
subsidiaries for fiscal 1996 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 18, 1997 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 GORTON M. EVANS 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 28, 1997, 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, P.F. Brennan, W.N. Caldwell, J.D. Ericson, G.M. Evans,
S.M. Hands, J.J. King, B.S. Kubale, D.R. Mead, Jr., G.W. Mead, G.D. Mead,
L.R. Nash, G.N. Rupp, and J.S. Shiely
For Withhold For All
All All (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 , 1997
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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