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 27, 1998
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 27, 1998, for the following purposes:
1. To elect thirteen directors to serve until the next annual meeting of
shareholders.
2. To consider the proposed 1998 Incentive Compensation Plan as described in
the Proxy Statement.
3. To transact any other business properly brought before the meeting.
Only shareholders of record at the close of business on March 10, 1998 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 17, 1998
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 27, 1998. This proxy statement and the enclosed form of
proxy are scheduled to be mailed to shareholders on March 17, 1998, together
with the Company's Annual Report to Shareholders which contains financial
statements for the fiscal year ended December 31, 1997. 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
Consolidated Papers, Inc. The Company has retained Georgeson & Company Inc.
to assist in the solicitation of proxies at an estimated cost to the Company
of $6,500, plus out-of-pocket expenses. The Chairman and the Senior Vice
President, Finance of the Company may also solicit proxies in person or by
telephone without extra compensation. 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 10, 1998 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 (thirteen).
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 10, 1998, there were 44,949,487 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 26, 1999 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 the meeting. The regulations provide that
the shareholder proposals must be submitted to the Secretary of the Company by
November 17, 1998.
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 17,139,226 shares (38.19% of
the outstanding stock).
Set forth in the following table are the beneficial holdings as of January 31,
1998 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 78,680 16,072,5773 16,151,257 36.0%
Chairman (Director)
P.O. Box 8050
Wisconsin Rapids, WI
54495-8050
Robert McKay 20,000 16,072,5773 16,092,577 35.9%
30 Oenoke Lane
New Canaan, CT 06840
Cynthia M. Sargent 90,608 16,072,5773 16,163,185 36.0%
14 Bridlewood Road
Northbrook, IL 60062
(B) Other directors
Ruth Baldwin Barker 147,469 26,000 26,000 173,469 *
Wiley N. Caldwell 6,200 6,200 *
James D. Ericson 1,108 1,108 *
Gorton M. Evans 18,778 18,778 *
Sally M. Hands 94,508 94,508 *
J. Joseph King 1,100 1,100 *
Bernard S. Kubale 6,700 6,700 *
D. Richard Mead Jr. 33,500 289,576 289,576 323,076 *
Gilbert D. Mead 21,157 21,157 *
Lawrence R. Nash 61,855 61,855 *
Glenn N. Rupp 4,200 4,200 *
John S. Shiely 2,200 2,200 *
(C) Other Executive Officers
William P. Orcutt 30,901 30,901 *
Richard J. Kenney 18,290 18,290 *
Ronald E. Swanson 9,713 9,713 *
(D) Directors and Executive
Officers as a Group 640,465 16,388,153 37.9%4
(24 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 Mr. McKay, 189,793 shares; for Mr. D.
Richard Mead Jr., 2,500 shares; for Mr. George W. Mead, 41,764 shares; for
Mr. Gilbert D. Mead, 2,260 shares; for Mr. Nash, 23,335 shares; for Mrs.
Sargent, 5,160 shares; and for all directors and executive officers as a
group, 315,923 shares. Beneficial ownership is disclaimed as to these
shares and as to all other shares over which the named person does not have
all 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. Caldwell, 5,000 shares; for Mr. Evans, 7,356 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, 3,000 shares; for Mr. Shiely, 1,000
shares; for Mr. Orcutt, 10,843 shares; for Mr. Kenney, 10,375 shares; for
Mr. Swanson, 4,679 shares; and for all directors and executive officers as
a group, 129,874 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
1,386,020 units of beneficial interest, or 8.6% 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 1,763,983
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, thirteen 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. Patrick F. Brennan has
indicated that he will not be standing for re-election to the Board of
Directors at the annual meeting of shareholders to be held April 27, 1998.
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> <C>
Ruth Baldwin Barker1 68 1991 Investor.
Wiley N. Caldwell 70 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 62 1996 President and Chief Executive Officer2,
and Director, Northwestern Mutual Life
Insurance Company, Milwaukee,
Wisconsin. Also director of MGIC
Investment Corporation and Kohl's
Corporation (operates family-oriented
specialty department stores).
Gorton M. Evans 59 1996 President and Chief Executive Officer3
Consolidated Papers, Inc.
Sally M. Hands1 71 1991 Investor.
J. Joseph King 53 1996 Executive Vice President4 Molex
Incorporated, Lisle, Illinois.
(Manufacturer of electronic, electrical
and fiber optic inter-connection
systems; ribbon cable; switches; and
application tooling).
Bernard S. Kubale 69 1988 Partner, Foley & Lardner, Attorneys at
Law, Milwaukee, Wisconsin.5 Also
director of Banta Corporation (Printing
and graphic arts), Schultz Sav-O
Stores, Inc. (Wholesale and retail food
distributor), and the Green Bay
Packers.
D. Richard Mead Jr. 67 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 70 1963 Chairman of the Board,6 Consolidated
Papers, Inc. Also director of Snap-on
Incorporated (Manufacturer and
distributor of hand tools and related
items).
Gilbert D. Mead1 67 1974 Attorney, Washington, D.C.
Lawrence R. Nash 68 1981 Lawyer, of counsel, Nash, Podvin,
Tuchscherer, Huttenberg, Weymouth &
Kryshak, S.C., Wisconsin Rapids,
Wisconsin.
Glenn N. Rupp 53 1994 Chairman and Chief Executive Officer7
and Director, Converse Inc., North
Reading, Massachusetts. (Manufacturer
of athletic footwear). Also director
of Johnson Worldwide Associates, Inc.
(Manufacturer and marketer of outdoor
recreational equipment and sporting
goods).
John S. Shiely 45 1996 President and Chief Operating Officer8
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 and M&I Data
Services, subsidiaries of M&I
Corporation.
<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 since October, 1993;
previously served as President and Chief Operating Officer (1990 to 1993)
of Northwestern Mutual Life Insurance Company.
3 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.
4 Served as Executive Vice President since July, 1996; previously served as
Corporate Vice President (1988 to 1996) of Molex Incorporated.
5 The Company retains the firm of Foley & Lardner on a regular basis.
6 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).
7 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.
8 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, 1997, 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
1997. 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.
COMPENSATION COMMITTEE
At December 31, 1997, 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 four meetings during 1997.
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, 1997, the Nominating Committee consisted of Bernard S. Kubale,
Chairman, Gilbert D. Mead and Wiley N. Caldwell. The committee held two
meetings during 1997. 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
At December 31, 1997, the Management Succession Committee consisted of Bernard
S. Kubale, Chairman, Patrick F. Brennan, Wiley N. Caldwell, James D. Ericson
and Glenn N. Rupp. The committee held three meetings during 1997. 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. Glenn N. Rupp was
unable to attend two of the three meetings.
The Board of Directors held seven meetings during 1997. Glenn N. Rupp was
unable to attend three of the seven meetings.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Awards
Securities All
Annual Underlying Other
Name and Compensation Options/ Compen-
Principal Position Year Salary ($) Bonus ($) SARs(#) sation ($)(2)
<S> <C> <C> <C> <C> <C>
G.M. Evans 1997 480,585(1) 103,951 15,000 17,296
President and Chief 1996 290,102(1) 15,001 3,000 12,063
Executive Officer 1995 193,374(1) 52,917 3,000 6,276
G.W. Mead 1997 376,936(1) - - 2,375
Chairman (Director) 1996 376,936(1) - - 2,375
1995 376,936(1) - - 2,310
W.P. Orcutt 1997 265,207 56,375 3,000 11,335
Senior Vice President 1996 261,146(1) 12,501 3,000 13,856
1995 224,698(1) 60,904 3,000 6,915
R.J. Kenney 1997 256,006(1) 51,253 3,000 9,375
Senior Vice President, 1996 232,322(1) 8,800 3,000 9,893
Finance 1995 192,837(1) 49,507 3,000 6,673
R.E. Swanson 1997 234,112(1) 51,253 3,000 8,440
Senior Vice President 1996 206,883(1) 10,351 3,000 8,553
1995 165,204(1) 46,754 2,000 5,556
<FN>
(1) Includes banked vacation (dollar amount) and vacation taken in cash: for
G.M. Evans, $34,616 for 1997, $17,308 for 1996 and $10,386 for 1995; for
G.W. Mead, $26,924 for 1997, $26,924 for 1996 and $26,924 for 1995; for
W.P. Orcutt, $14,424 for 1996, $4,259 for 1995; for R.J. Kenney, $19,232
for 1997, $16,924 for 1996 and $13,848 for 1995; and for R.E. Swanson,
$4,808 for 1997, $4,140 for 1996 and $3,269 for 1995.
(2) Includes contributions on behalf of each named executive officer to the
Consolidated Employees' Tax-saver & Investment Plan (401(k)), and payroll
taxes attributable to retirement benefits accrued in excess of limits
imposed by the Omnibus Budget Reconciliation Act of 1993.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
% Of
Total
Options/ Potential
Number of SARs Realizable Value
Securities Granted Exercise At Assumed Annual
Underlying to Or Base Rates of Stock
Options/ Employees Price Price Appreciation
SARs In Fiscal ($/sh.) Expiration for Option Term (2)
Name Granted # Year (1) Date 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
G.M. Evans 15,000 6.31% 49.125 02/13/2007 $477,161 $1,196,274
G.W. Mead 0 0% N/A N/A N/A N/A
W.P. Orcutt 3,000 1.26% 49.125 02/13/2007 95,432 239,255
R.J. Kenney 3,000 1.26% 49.125 02/13/2007 95,432 239,255
R.E. Swanson 3,000 1.26% 49.125 02/13/2007 95,432 239,255
<FN>
(1) The options reflected in the table, all of which are nonqualified options
for purposes of the Internal Revenue Code, were granted at an exercise
price equal to the fair market value of the Company's common stock on the
date of the grant. The options expire ten years from the date of grant,
or five years after termination of employment with the Company, whichever
is earlier. The options vest over a three-year period following the date
of grant.
(2) Potential gains are net of exercise price, but before taxes associated
with exercise. These amounts represent certain assumed rates of
appreciation only, based on Securities and Exchange Commission rules, and
do not represent the Company's estimate or projection of the price of the
Company's stock in the future. Actual gains, if any, on stock option
exercises depend upon the actual future performance of the Company's
common stock and the continued employment of the option holders
throughout the vesting period. Accordingly, the potential realizable
values set forth in this table may not be achieved.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End(#) at FY-End($)(1)
Shares Acquired Value Exercisable/ Exercisable/
Name On Exercise (#) Realized ($)(1) Unexercisable Unexercisable
<S> <C> <C> <C> <C>
G.M. Evans 500 12,234 7,356/18,000 78,709/64,125
G.W. Mead - - 4,163/ - 74,023/ -
W.P. Orcutt 2,000 32,250 10,843/ 6,000 134,413/18,750
R.J. Kenney 800 13,675 10,375/ 6,000 127,928/18,750
R.E. Swanson 800 9,975 4,679/ 5,666 42,483/16,270
<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 Associated Service
Final
Average
Earnings* 10 15 20 25 30 35 40 45 50
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$150,000 22,200 33,300 44,300 55,400 66,500 77,600 88,800 100,100 111,300
$200,000 29,700 44,500 59,300 74,200 89,000 103,800 118,800 133,800 148,800
$250,000 37,200 55,800 74,300 92,900 111,500 130,100 148,800 167,600 186,300
$300,000 44,700 67,000 89,300 111,700 134,000 156,300 178,800 201,300 223,800
$350,000 52,200 78,300 104,300 130,400 156,500 182,600 208,800 235,100 261,300
$400,000 59,700 89,500 119,300 149,200 179,000 208,800 238,800 268,800 298,800
$450,000 67,200 100,800 134,300 167,900 201,500 235,100 268,800 302,600 336,300
$500,000 74,700 112,000 149,300 186,700 224,000 261,300 298,800 336,300 373,800
$550,000 82,200 123,300 164,300 205,400 246,500 287,600 328,800 370,100 411,300
$600,000 89,700 134,500 179,300 224,200 269,000 313,800 358,800 403,800 448,800
<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, 1997, for the five individuals named in the
Summary Compensation Table are as follows: G.M. Evans - 25; G.W. Mead -
46; W.P. Orcutt - 42, R.J. Kenney - 30; R.E. Swanson - 9. Under sections
401(a)(17) and 415 of the Internal Revenue Code, considered earnings are
limited to $160,000 (prior to 1994, $200,000 adjusted for cost of living)
and benefits under the plan are limited to $130,000 per year. Earnings in
excess of the limits are recognized and benefits in excess of $130,000 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 1933 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-92 Dec-93 Dec-94 Dec-95 Dec-96 Dec-97
<S> <C> <C> <C> <C> <C> <C>
Consolidated Papers, Inc. $100 $111 $118 $152 $137 $154
S&P 500 $100 $110 $112 $153 $189 $252
Dow Jones Paper Products Index $100 $108 $120 $137 $145 $157
<FN>
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, stock option grants, 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 five of the seven 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 and
management, the Compensation Committee has helped develop and implement
incentive compensation plans intended to provide Company executives with the
incentive and opportunity to earn compensation at levels which approach
competitive norms in the paper industry depending upon individual and Company
performance. The 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 forty key
executives at the Company, including the executive officers named in the
Summary Compensation Table other than George W. Mead.
The bonus plan in 1997 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, 1997 bonuses, if any,
could range from a minimum of 3% to a maximum of 57.5% of base salary. The
Company-wide target for the 1997 bonus was based on the Company's operating
income as a percentage of average operating assets (OI/AOA). Minimum and
maximum awards for corporate performance in 1997 were tied to threshold and
maximum OI/AOA targets of 10.0% to 15.0%. Actual OI/AOA for 1997 (before
acquisition of Repap USA, Inc., which was not included in this calculation)
was 10.1%. Accordingly, awards, ranging from 5% to 18.0% of base salary were
made for corporate performance. In addition, awards of up to 5% of base
salary were made to executives based on individual performance in 1997.
For 1998, the corporate performance portion of the incentive plan for the key
executive group utilizes a matrix combining several corporate targets, giving
the most weight to the Company's return on capital employed (ROCE). No
payment will be made based on the ROCE measure unless the Company's 1998 ROCE
exceeds a targeted weighted average cost of capital. The matrix also includes
manufacturing and sales objectives. Executives will again be eligible for
awards based on their individual performance in 1998.
The Compensation Committee also makes stock option grants to provide
incentives 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 1997 depended on the executive's relative position
with the Company. During 1997, the Compensation Committee granted options to
purchase an aggregate of 74,000 shares to the executives other than 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 increase shareholder value by better aligning the
interests of these executives with those of the shareholders through
significant stock ownership, and to give this group of executives long-term
incentives to remain with the Company.
Compensation Award Program - 1997. The Company's 1997 Compensation Award
Program for nonunion personnel provided for a modest bonus payment 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
1997 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. Gorton M. Evans was named President
and Chief Executive Officer effective January 1, 1997. The Compensation
Committee increased Mr. Evans' base salary to $450,000 at that time. Mr.
Evans' base salary was set with reference to comparative information regarding
compensation of other chief executive officers of similar companies in the
paper industry. Mr. Evans' salary is in the lower range of this group,
reflecting his recent promotion to the position. Most other members of the
comparison group also provide significantly greater incentive compensation in
the form of bonuses, stock options and other benefits for their chief
executive officers. Mr. Evans received a bonus of $103,951 for 1997, which
reflects the Compensation Committee's evaluation of Mr. Evans' individual
performance during 1997, as well as a payment based on corporate performance
under the executive incentive plan described above.
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. If the
shareholders approve the 1998 Incentive Compensation Plan, nonemployee
directors will also receive options to purchase Company common stock under
Section 12 of the plan. The plan provides 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. 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"). 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 forms received by it, or written representations
from certain reporting persons, the Company believes that during fiscal 1997
all Section 16(a) filing requirements applicable to its officers, directors
and more than 10% shareholders were complied with, except for late filings for
Mr. Ericson, Mrs. Hands, and Mr. Gilbert D. Mead.
PROPOSAL TO APPROVE THE CONSOLIDATED PAPERS, INC.
1998 INCENTIVE COMPENSATION PLAN
BACKGROUND
The Board of Directors recommends shareholder approval of the 1998 Incentive
Compensation Plan (the "Plan"). The Plan will provide incentives to the
Company's nonunion employees and directors to improve operations and increase
profits, and will strengthen the mutuality of interests between employees,
directors and shareholders. Exhibit A contains a complete statement of the
provisions of the Plan which are summarized below.
In structuring the Plan, the Board of Directors sought to provide for a
variety of awards that could be flexibly administered to carry out the
purposes of the Plan. This flexibility will permit the Company to keep pace
with changing developments in management compensation and make the Company
competitive with those companies that offer creative incentives to attract and
keep key employees and directors. Flexibility will also allow the Company to
respond to changes in tax laws, accounting rules, securities regulations and
other rules regarding benefit plans. The Plan grants the administrators broad
discretion in establishing appropriate terms and restrictions for particular
awards.
SHARES AVAILABLE
The Plan reserves 2,500,000 shares of common stock for awards, plus all shares
remaining under the Company's 1989 Stock Option Plan. All available shares
may, but need not, be issued pursuant to the exercise of incentive stock
options. The maximum number of shares which may be awarded to any participant
in any year during the term of the Plan is 100,000 shares. If there is a
lapse, expiration, termination or cancellation of any option or right prior to
the issuance of shares (or payment of a cash equivalent), or if shares are
issued and thereafter are reacquired by the Company pursuant to reserved
rights, those shares may again be used for new awards under the Plan.
ADMINISTRATION
The Plan will be administered by the Compensation Committee of the Board of
Directors (the "Committee"). The Committee has the authority to interpret the
Plan, establish rules for its operation, select officers and other employees
of the Company and its subsidiaries to receive awards, and determine the form,
amount and other terms and conditions of awards.
PARTICIPANTS
All nonunion employees of the Company and its subsidiaries and affiliates, and
all nonemployee directors of the Company are eligible to participate in the
Plan. The Committee will select participants.
TYPES OF BENEFITS
The Committee may grant any one or a combination of: stock options, including
incentive stock options and nonqualified stock options; stock appreciation
rights; stock awards, including performance stock and restricted stock;
performance units; and other stock or cash awards.
STOCK OPTIONS
Under the Plan, the Committee may grant awards in the form of options to
purchase shares of common stock. The Committee will determine the number of
shares subject to each option, the manner and time of the option's exercise
and vesting, and the exercise price per share of stock subject to the option.
The exercise price of a stock option will not be less than 100% of the fair
market value of the common stock on the date the option is granted. The
option price may, at the discretion of the Committee, be paid by a participant
in cash, shares of common stock owned by the participant, or other appropriate
consideration. The Committee may also provide that a stock option include the
right to acquire a replacement option upon exercise of the original option
through payment of the exercise price in shares of common stock.
STOCK APPRECIATION RIGHTS (SARs)
The Committee may grant an SAR either in tandem with a stock option or on a
free-standing basis. An SAR is a right to receive a payment equal to the
appreciation in market value of a stated number of shares of common stock from
the grant price (equal to the fair market value on the date of grant in the
case of a free-standing SAR or the option price in the case of a tandem SAR)
to the market value on the date of exercise.
STOCK AWARDS
The Plan authorizes the Committee to grant awards in the form of restricted
stock or performance stock. These awards may be subject to conditions or
restrictions, such as restrictions on transferability, continued employment
and performance goals specified by the Committee.
PERFORMANCE UNITS
The Committee may award performance units under the Plan. Each performance
unit award will entitle the participant to a payment in cash equal to the fair
market value of a designated number of shares of common stock upon attainment
of performance goals. Performance units may, in the discretion of the
Committee, be settled for shares of common stock.
OTHER STOCK OR CASH AWARDS
The Committee may grant other cash or stock awards which it believes are in
the best interests of the Company on terms and conditions determined by the
Committee.
NONEMPLOYEE DIRECTORS
The Plan provides that each nonemployee director of the Company (including
members of the Committee) who has served as a director for at least one year
and is a director on the date of each annual meeting of the shareholders of
the Company which takes place while the Plan is in effect shall automatically
receive on each meeting date a nonqualified stock option for the purchase of
1,000 shares of the Company's common stock at a purchase price equal to 100%
of the fair market value of the shares on the day the option is granted.
Nonemployee directors may receive other benefits under the Plan in the
discretion of the Committee.
OTHER TERMS OF AWARDS
Awards are not transferable except by will or the laws of descent and
distribution. The Committee may permit the transfer of a participant's award
to members of his or her immediate family or to trusts or family partnerships
for their benefit.
The Committee will determine the treatment of awards in the event of
termination of employment for any reason including death, disability or
retirement.
The Plan contains provisions for equitable adjustment of awards in the event
of a merger, consolidation, or reorganization, or upon a stock split, stock
dividend or other issuance of shares by the Company without new consideration.
The Plan also provides for accelerated vesting of awards in the event of a
change of control of the Company.
FEDERAL TAX TREATMENT
Under current law, the following are U.S. federal income tax consequences
generally arising with respect to awards under the Plan.
A participant who is granted an incentive stock option does not recognize any
taxable income at the time of the grant or at the time of exercise.
Similarly, the Company is not entitled to any deduction at the time of grant
or at the time of exercise. If the participant makes no disposition of the
shares acquired pursuant to an incentive stock option before the later of two
years from the date of grant and one year from the date of exercise, any gain
or loss realized on a subsequent disposition of the shares will be treated as
a capital gain or loss. Under such circumstances, the Company will not be
entitled to any deduction for federal income tax purposes.
A participant who is granted a nonqualified stock option will not have taxable
income at the time of grant, but will have taxable income at the time of
exercise equal to the difference between the exercise price of the shares and
the market value of the shares on the date of exercise. The Company is
entitled to a tax deduction for the same amount.
The grant of an SAR will produce no U.S. federal tax consequences for the
participant or the Company. The exercise of an SAR results in taxable income
to the participant equal to the difference between the exercise price of the
shares and the market price of the shares on the date of exercise, and a
corresponding tax deduction to the Company.
A participant who has been granted an award of restricted shares of common
stock will not realize taxable income at the time of the grant, and the
Company will not be entitled to a tax deduction at the time of the grant,
unless the participant makes an election to be taxed at the time of the award.
When the restrictions lapse, the participant will recognize taxable income in
an amount equal to the excess of the fair market value of the shares at such
time over the amount, if any, paid for such shares. The Company will be
entitled to a corresponding tax deduction.
The grant of an unrestricted stock award will produce immediate tax
consequences for both the participant and the Company. The participant will
be treated as having received taxable compensation in an amount equal to the
then fair market value of the common stock awarded. The Company will receive
a corresponding tax deduction.
OTHER INFORMATION
No award shall be made under the Plan more than ten years after the date of
its adoption. The Board of Directors reserves the right to amend or terminate
the Plan at any time subject to the rights of participants with respect to any
outstanding awards.
The affirmative vote of holders of a majority of the shares present and voting
at the meeting is required for approval of the Plan. Abstentions will count
as a vote against the proposal, but broker nonvotes will have no effect.
The Board of Directors recommends a vote FOR approval of the 1988 Incentive
Compensation Plan.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP audited the accounts of Consolidated Papers, Inc. and
subsidiaries for fiscal 1997 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 17, 1998 Secretary
EXHIBIT A
CONSOLIDATED PAPERS, INC.
1988 INCENTIVE COMPENSATION PLAN
1. Purpose. The purposes of the Consolidated Papers, Inc. 1998 Incentive
Compensation Plan (the "Plan") are (i) to encourage outstanding
individuals to accept or continue employment with Consolidated Papers,
Inc. (the "Corporation") and its subsidiaries and affiliates or to serve
as directors of the Corporation, and (ii) to furnish maximum incentive to
those persons to improve operations and increase profits and to
strengthen the mutuality of interest between those persons and the
Corporation's shareholders by providing them stock options and other
stock and cash incentives.
2. Administration. The Plan will be administered by a Committee (the
"Committee") of the Board of Directors of the Corporation consisting of
two or more directors as the Board may designate from time to time, each
of whom shall qualify as a "Nonemployee Director" within the meaning set
forth in Rule 16b-3 promulgated under the Securities Exhange Act of 1934,
as amended (the "Exchange Act"). The Committee shall have the authority
to construe and interpret the Plan and any benefits granted thereunder,to
establish and amend rules for Plan administration, to change the terms
and conditions of options and other benefits at or after grant, and to
make all other determinations which it deems necessary or advisable for
the administration of the Plan. The determinations of the Committee
shall be made in accordance with their judgment as to the best interests
of the Corporation and its shareholders and in accordance with the
purposes of the Plan. A majority of the members of the Committee shall
constitute a quorum, and all determinations of the Committee shall be
made by a majority of its members. Any determination of the Committee
under the Plan may be made without notice or meeting of the Committee, in
writing signed by all the Committee members.
3. Participants. Participants will consist of all Nonemployee Directors of
the Corporation and all nonunion employees of the Corporation and its
Subsidaries. Designation of a participant in any year shall not require
the Committee to designate that person to receive a benefit in any other
year or to receive the same type or amount of benefit as granted to the
participant in any other year or is granted to any other participant in
any year. The Committee shall consider all factors which it deems
relevant in selecting participants and in determining the type and amount
of their respective benefits.
4. Share Reserved Under the Plan. There is hereby reserved for issuance
under the Plan an aggregate of 2,500,000 shares of common stock of the
Corporation, which may be newly issued or treasury shares. Any remaining
shares of common stock reserved for issuance under the 1989 Stock Option
Plan (the "1989 Plan") on the date of shareholder approval of this Plan
shall be added to the shares available for issuance hereunder. If there
is a lapse, expiration, termination or cancellation of any stock option
issued under this Plan or the 1989 Plan prior to the issuance of shares
thereunder, of if shares are issued under the Plan and thereafter are
reacquired by the Corporation, those shares may again be used for new
benefits under this Plan. All of the reserved shares may, but need not,
be issued pursuant to the exercise of Incentive Stock Options. The
maximum number of shares which may be subject to an option or other award
under the Plan to any participant during any fiscal year during the term
of the Plan is 100,000 shares. The maximum number of shares of common
stock which may be granted in the form of Restricted Stock during the
term of the Plan shall be 200,000 shares.
5. Types of Benefits. Benefits under the Plan shall consist of Stock
Options, Stock Appreciation Rights, Restricted Stock, Performance Stock,
Performance Units and Other Stock or Cash Awards.
6. Stock Options. Subject to the terms of the Plan, Stock Options may be
granted to participants, at any time as determined by the Committee. The
Committee shall determine the number of shares subject to each option and
whether the option is an Incentive Stock Option. The option price for
each option shall be determined by the Committee but shall not be less
than 100% of the fair market value of the Corporation's common stock on
the date the option is granted. Each option shall expire at such time as
the Committee shall determine at the time of grant; provided, however,
that no option shall be exercisable later than the tenth anniversary of
its grant. Options shall be exercisable at such time and subject to such
terms and conditions as the Committee shall determine. The option price,
upon exercise of any option, shall be payable to the Corporation in full
by (a) cash payment or its equivalent, (b) tendering previously acquired
shares having a fair market value at the time of exercise equal to the
option price, (c) certification of ownership of such previously-acquired
shares, (d) delivery of a properly executed exercise notice, together
with irrevocable instructions to a broker to promptly deliver to the
Corporation the amount of sale proceeds from the option shares or loan
proceeds to pay the exercise price and any withholding taxes due to the
Corporation, (e) reducing the number of shares deliverable upon exercise
of the option by a number of shares having a fair market value at the
time of exercise equal to the option price, and (f) such other methods of
payment as the Committee, at its discretion, deems appropriate. The
Committee may provide, either at the time of grant or subsequently, that
a Stock Option include the right to acquire a replacement option upon
exercise of the original option through the payment of the exercise price
in shares of common stock. The terms and conditions of each replacement
option shall be determined by the Committee, in its sole discretion.
7. Stock Appreciation Rights. Subject to the terms of the Plan, Stock
Appreciation Rights ("SARs") may be granted to participants at any time
as determined by the Committee. An SAR may be granted in tandem with a
Stock Option granted under this Plan or the 1989 Plan or on a free-
standing basis. The grant price of a tandem SAR shall be equal to the
option price of the related option. The grant price of a free-standing
SAR shall be equal to the fair market value of the Corporation's common
stock on the date of its grant. An SAR may be exercised upon such terms
and conditions and for the term as the Committee in its sole discretion
determines; provided, however, that the term shall not exceed the option
term in the case of a tandem SAR or ten years in the case of a free-
standing SAR. Upon exercise of an SAR, the participant shall be entitled
to receive payment from the Corporation in cash or in stock in an amount
determined by multiplying the excess of the fair market value of a share
of common stock on the date of exercise over the grant price of the SAR
by the number of shares with respect to which the SAR is exercised.
8. Restricted Stock. Subject to the terms of the Plan, Restricted Stock may
be awarded or sold to participants under such terms and conditions as
shall be established by the Committee. Restricted Stock shall be subject
to such restrictions as the Committee determines, including, without
limitation, any of the following:
(a) A prohibition against sale, assignment, transfer, pledge,
hypothecation or other encumbrance of the shares of Restricted Stock
for a specified period;
(b) A requirement that the holder of Restricted Stock forfeit (or in the
case of shares sold to the participant resell to the Corporation at
cost) such shares in the event of termination of employment during
the period of restriction; or
(c) A prohibition against employment of the holder by any competitor of
the Corporation or against such holder's dissemination of any
confidential information belonging to the Corporation.
All restrictions shall expire at such times as the Committee shall
specify.
9. Performance Stock. Subject to the terms of the Plan, the Committee shall
designate the participants to whom Performance Stock is to be awarded and
determine the number of shares and terms and conditions of each such
award. Each award of Performance Stock shall entitle the participant to
a payment in the form of shares of common stock upon the attainment of
performance goals and other terms and conditions specified by the
Committee. The Committee may, in its discretion, make a cash payment
equal to the fair market value of shares of common stock otherwise
required to be issued to a participant pursuant to a Performance Stock
award.
10. Performance Units. Subject to the terms of the Plan, the Committee shall
designate the participants to whom Performance Units are to be awarded
and determine the number of units and the terms and conditions of each
such award. Each Performance Unit award shall entitle the participant to
a payment in cash equal to the fair market value of a designated number
of shares of common stock upon the attainment of performance goals and
other terms and conditions specified by the Committee. The Committee
may, in its discretion, substitute actual shares of common stock for the
cash payment otherwise required to be made to a participant pursuant to a
Performance Unit award.
11. Other Stock or Cash Awards. In addition to the incentives described in
Sections 6 through 10 above, and subject to the terms of the Plan, the
Committee may grant other incentives payable in cash or in common stock
under the Plan as it determines to be in the best interests of the
Corporation and subject to such other terms and conditions as it deems
appropriate.
12. Nonemployee Directors. Each director of the Corporation who (i) is not
also an employee of the Corporation (including members of the Committee),
(ii) has served as a director for at least one year, and (iii) is a
director on the date of each annual meeting of shareholders of the
Corporation while this Plan is in effect, shall automatically receive on
each of those meeting dates a Nonqualified Stock Option for the purchase
of 1,000 shares of the Corporation's common stock at a purchase price
equal to 100% of the fair market value of the shares on the date each
option is granted. Nonqualified Stock Options issued to nonemployee
directors shall expire ten years from the date of grant, whether or not
the director continues to serve the Corporation in that capacity.
Nonemployee directors may receive other benefits under the Plan in the
discretion of the Committee.
13. Performance Goals. Awards of Restricted Stock, Performance Stock,
Performance Units and other incentives under the Plan may be made subject
to the attainment of performance goals relating to one or more business
criteria within the meaning of Section 162(m) of the Internal Revenue
Code of 1986, as amended, including, but not limited to, earnings per
share, return on assets or equity, economic value added, market share,
cash flow, operating costs, and stock price, as determined by the
Committee from time to time. However, the Committee may not in any event
increase the amount of compensation payable to a "covered employee"
within the meaning of Section 162(m) of the Code upon the attainment of a
performance goal.
14. Change in Control. Except as otherwise determined by the Committee at
the time of grant of an award, upon a change in control of the
Corporation, all outstanding Stock Options and SARs shall become
exercisable; all performance goals shall be deemed fully achieved and all
other terms and conditions met; and all Performance Stock delivered, all
Performance Units paid out, and all Other Stock or Cash Awards delivered
or paid. A "Change in Control" shall be deemed to have occurred on the
first date on which either:
(a) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) but excluding (i) the Mead Voting Trust established
pursuant to the agreement dated December 20, 1986, (ii) the Mead
descendants as defined in the Mead Voting Trust or any group of them,
(iii) any voting trustee of the Mead Voting Trust acting in his or
her capacity as such, or (iv) a person who would be deemed to be an
owner of 20% or more of the combined voting power of the
Corporation's securities then outstanding solely as a result of being
a participant in the Mead Voting Trust, is or becomes the beneficial
owner (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly of securities of the Corporation representing at least 20
percent of the combined voting power of the Corporation's then
outstanding securities, or
(b) a majority of the individuals comprising the Corporation's Board of
Directors are not Continuing Directors, or
(c) the Corporation is involved in any merger, consolidation, share
exchange or any other transaction if, after the consummation thereof,
the holders of the voting securities of the Corporation immediately
prior thereto do not own at least a majority of the combined voting
power of the surviving or resulting corporation, or
(d) all or substantially all of the assets of the Corporation are sold or
otherwise transferred, or
(e) a change occurs of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A, promulgated
under the Exchange Act, or any other successor disclosure item.
A "Continuing Director" means an individual who was a member of the Board
of Directors of the Corporation immediately prior to the transaction or
election or other event which resulted in a change of control or who was
designated (before his initial election or appointment as a director) as
a Continuing Director by a majority of the whole Board of Directors but
only if the majority of the whole Board of Directors then consisted of
Continuing Directors or, if a majority of the whole Board of Directors
shall not then consist of Continuing Directors, by a majority of the then
Continuing Directors.
15. Adjustment Provisions.
(a) If the Corporation shall at any time change the number of issued
shares of common stock without new consideration to the Corporation
(such as by stock dividend or stock split), the total number of
shares reserved for issuance under the Plan, the number of shares
which may be made subject to Incentive Stock Options, the maximum
number of shares which may be made subject to an award in any 12
months during the term of the Plan, the maximum number of shares that
may be issued as Restricted Stock during the term of the Plan, and
the number of shares covered by each outstanding award shall be
equitably adjusted so that the aggregate consideration payable to the
Corporation, if any, shall not be changed.
(b) Notwithstanding any other provision of this Plan, without affecting
the number of shares reserved or available hereunder, the Board of
Directors may authorize the issuance or assumption of benefits in
connection with any merger, consolidation, acquisition of property or
stock, or reorganization upon such terms and conditions as it may
deem appropriate.
(c) In the event of any merger, consolidation or reorganization of the
Corporation with or into another corporation other than a merger,
consolidation or reorganization in which the Corporation is the
continuing corporation and which does not result in the outstanding
common stock being converted into or exchanged for different
securities, cash or other property, or any combination thereof, there
shall be substituted, on an equitable basis as determined by the
Committee, for each share of common stock than subject to a benefit
granted under the Plan, the number and kind of shares of stock, other
securities, cash or other property to which holders of common stock
of the Corporation will be entitled purusuant to the transaction.
16. Nontransferability. Each benefit granted under the Plan shall not be
transferable otherwise than by will or the laws of descent and
distribution and each Stock Option and SAR shall be exercisable during
the participant's lifetime only by the participant or, in the event of
disability, by the participant's personal representative. In the event
of the death of a participant, exercise of any benefit or payment with
respect to any benefit shall be made only by or to the executor or
administrator of the estate of the deceased participant or the person or
persons to whom the deceased participant's rights under the benefit shall
pass by will or the laws of descent and distribution. Nothwithstanding
the foregoing, at the discretion of the Committee, a grant of a Stock
Option may permit the transfer of the option by the participant solely to
members of the participant's immediate family or trusts or family
partnerships for the benefit of such persons, subject to such terms and
conditions as may be established by the Committee.
17. Taxes. The Corporation shall be entitled to withhold the amount of any
tax attributable to any amounts payable or shares deliverable under the
Plan, after giving the person entitled to receive such payment or
delivery notice as far in advance as practicable and the Corporation may
defer making payment or delivery as to any award, if any such tax is
payable until indemnified to its satisfaction. The Committee may, in its
discretion, subject to such rules as it may adopt, permit a participant
to pay all or a portion of any withholding taxes arising in connection
with the exercise of a Stock Option or SAR or the receipt or vesting of
shares hereunder by electing to have the Corporation withhold shares of
common stock, having a fair market value equal to the amount to be
withheld.
18. Duration, Amendment and Termination. No Stock Option or other benefit
shall be granted more than ten years after the date of adoption of this
Plan; provided, however, that the terms and conditions applicable to any
benefit granted on or before such date may thereafter be amended or
modified by mutual agreement between the Corporation and the participant,
or such other person as may then have an interest therein. The Board of
Directors may amend the Plan from time to time or terminate the Plan at
any time. However, no such action shall reduce the amount of any
existing award or change the terms and conditions thereof without the
paticipant's consent. No amendment of the Plan shall be made without
shareholder approval if such amendment materially increases the number of
shares of common stock reserved for issuance under the Plan or the
maximum number of shares which may be awarded to any participant in any
12-month period, or if shareholder approval is required by law,
regulation, or stock exchange rule.
19. Fair Market Value. The fair market value of the Corporation's common
stock at any time shall be determined in such manner as the Committee may
deem equitable, or as required by applicable law or regulation.
20. Other Provisions. The award of any benefit under the Plan may also be
subject to other provisions (whether or not applicable to the benefit
awarded to any other participant) as the Committee determines
appropriate, including provisions intended to comply with federal or
state securities laws and stock exchange requirements, understandings or
conditions as to the participant's employment, requirements or
inducements for continued ownership of common stock after exercise or
vesting of benefits, or forfeiture of awards in the event of termination
of employment shortly after exercise or vesting, or breach of
noncompetition or confidentiality agreements following termination of
employment.
21. Shareholder Approval. The Plan was adopted by the Board of Directors on
February 13, 1998, subject to shareholder approval. The Plan and any
benefits granted thereunder shall be null and void if shareholder
approval is not obtained at the next annual meeting of shareholders.
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 27, 1998, 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 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, 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. Proposed 1998 Incentive Compensation 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 , 1998
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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