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 26, 1999
To the Shareholders of
Consolidated Papers, Inc.
The annual meeting of shareholders of Consolidated Papers, Inc. will be held
at the Hotel Mead, 451 East Grand Avenue, Wisconsin Rapids, Wisconsin, at 2:00
p.m., Monday, April 26, 1999, for the following purposes:
1. To elect thirteen 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 9, 1999 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 16, 1999
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 Hotel Mead, 451 East Grand Avenue, Wisconsin Rapids, Wisconsin, at 2:00
p.m., Monday, April 26, 1999. This proxy statement and the enclosed form of
proxy are scheduled to be mailed to shareholders on March 16, 1999, together
with the Company's Annual Report to Shareholders which contains financial
statements for the fiscal year ended December 31, 1998. 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 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 principles.
VOTING SECURITIES
Only shareholders of record as of the close of business March 9,1999 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 9, 1999, there were 90,480,444 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 24, 2000 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, 1999.
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 42,205,808 shares (46.7% of
the outstanding stock).
Set forth in the following table are the beneficial holdings as of January 31,
1999 on the basis described above of: (A) each person known by the Company to
own beneficially more than 5% of its outstanding stock; (B) directors not
listed in (A); (C) the executive officers named in the Summary Compensation
Table on Page 7 and not listed in (A) or (B); and (D) directors and executive
officers as a group:
<TABLE>
<CAPTION>
Shares Owned
Sole Beneficially
Voting Or Shared Shared Total
Investment Voting Investment Beneficial % Of
Name Power1,2 Power Power Ownership Class
<S> <C> <C> <C> <C> <C> <C>
(A) George W. Mead 153,883 32,145,1543 32,299,037 35.7%
Chairman (Director)
P.O. Box 8050
Wisconsin Rapids, WI
54495-8050
Robert McKay 40,000 32,145,1543 32,185,154 35.6%
30 Oenoke Lane
New Canaan, CT 06840
Cynthia M. Sargent 181,216 32,145,1543 32,326,370 35.8%
14 Bridlewood Road
Northbrook, IL 60062
Sanford C.
Bernstein &
Co., Inc. 4 946,906 8,047,645 8.9%
767 Fifth Avenue
New York, NY 10153
(B) Other directors
Ruth Baldwin Barker 297,138 52,000 52,000 349,138 *
Wiley N. Caldwell 14,600 14,600 *
James D. Ericson 4,491 4,491 *
Gorton M. Evans 54,057 54,057 *
J. Joseph King 4,400 4,400 *
Bernard S. Kubale 15,600 15,600 *
D. Richard Mead Jr. 69,200 579,152 579,152 648,352 *
Gilbert D. Mead 44,514 44,514 *
Lawrence R. Nash 118,910 118,910 *
Glenn N. Rupp 10,600 10,600 *
John S. Shiely 6,600 6,600 *
(C) Other Executive Officers
William P. Orcutt 64,742 64,742 *
Richard J. Kenney 43,663 43,663 *
Ronald E. Swanson 25,858 25,858 *
(D) Directors and
Executive Officers
as a Group 1,160,641 32,776,306 37.6%5
(23 persons)
<FN>
*Less than 1%
1 Does not include shares held by spouses or children of the following: for
Mrs. Barker, 102,000 shares; for Mr. McKay, 379,586 shares; for Mr. D.
Richard Mead Jr., 6,000 shares; for Mr. George W. Mead, 87,715 shares; for
Mr. Gilbert D. Mead, 4,520 shares; for Mr. Nash, 46,670 shares; for Mrs.
Sargent, 320 shares; and for all directors and executive officers as a
group, 627,033 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 Mrs. Barker, 12,000 shares; for Mr. Caldwell, 12,000
shares; for Mr. Erickson, 2,000 shares; for Mr. Evans, 26,998 shares; for
Mr. King, 2,000 shares; for Mr. Kubale, 12,000 shares; for Mr. D. Richard
Mead, Jr., 18,000 shares; for Mr. Gilbert D. Mead, 12,000 shares; for Mr.
Nash, 12,000 shares; for Mr. Rupp, 8,000 shares; for Mr. Shiely, 4,000
shares; for Mr. Orcutt, 21,722 shares; for Mr. Kenney, 23,402 shares; for
Mr. Swanson, 14,690 shares; and for all directors and executive officers as
a group, 292,081 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 32,145,154 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 4.3% of the Mead Voting Trust.
Robert McKay beneficially owns 28,380 units of beneficial interest, or .09%
of the Mead Voting Trust. Cynthia M. Sargent beneficially owns 3,366,238
units of beneficial interest, or 10.5% of the Mead Voting Trust. Each unit
of beneficial interest represents one share of the Company's common stock.
4 Sanford C. Bernstein & Co., Inc., an Investment Advisor and Broker Dealer
registered under Section 203 of the Investment Advisors Act of 1940, is the
beneficial owner of 8,047,645 shares representing approximately 8.9% of the
total shares outstanding. It reports that it has sole power to vote or
direct the vote covering 3,921,462 shares, that it has shared power to vote
946,906 shares, that it has no power to vote the remaining shares, and that
it has sole power to dispose of 8,047,645 shares.
5 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. All nominees other
than Cynthia M. Sargent are now members of the Board of Directors whose
current terms of office expire simultaneously with the election of successor
directors at the annual meeting April 26, 1999. 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. Sally M. Hands has indicated that she
will not be standing for re-election to the Board of Directors at the annual
meeting of shareholders to be held April 26, 1999.
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 69 1991 Investor.
Wiley N. Caldwell 71 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 63 1996 President and Chief Executive Officer,
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 60 1996 President and Chief Executive Officer2
Consolidated Papers, Inc.
J. Joseph King 54 1996 Executive Vice President3 Molex
Incorporated, Lisle, Illinois
(manufacturer of electronic, electrical
and fiber optic inter-connection
systems; ribbon cable; switches; and
application tooling).
Bernard S. Kubale 70 1988 Retired Partner, Foley & Lardner,
Attorneys at Law, Milwaukee,
Wisconsin.4 Also director of Banta
Corporation (Printing and graphic
arts), and the Green Bay Packers.
D. Richard Mead Jr. 68 1974 Retired Chief Executive Officer,
Southeast Mortgage Company (mortgage
bankers), and retired Senior Vice
President of Southeast Bank, N.A.,
Miami, Florida. Also director of
Pointe Financial Corporation.
George W. Mead1 71 1963 Chairman of the Board, Consolidated
Papers, Inc. Also director of Snap-on
Incorporated (manufacturer and
distributor of hand tools and related
items).
Gilbert D. Mead1 68 1974 Attorney, Washington, D.C.
Lawrence R. Nash 69 1981 Lawyer, of counsel, Nash, Podvin,
Tuchscherer, Huttenberg, Weymouth &
Kryshak, S.C., Wisconsin Rapids,
Wisconsin.
Glenn N. Rupp 54 1994 Chairman and Chief Executive Officer5
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).
Cynthia M. Sargent1 60 - Investor.
John S. Shiely 46 1996 President and Chief Operating Officer6
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.
<FN>
1 Family relationships: Ruth Baldwin Barker and Cynthia M. Sargent are
cousins. George W. Mead and Gilbert D. Mead are brothers. Ruth Baldwin
Barker and Cynthia M. Sargent are cousins of George W. Mead and Gilbert D.
Mead.
2 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.
3 Served as Executive Vice President since July, 1996; previously served as
Corporate Vice President (1988 to 1996) of Molex Incorporated.
4 The Company retains the firm of Foley & Lardner on a regular basis.
5 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.
6 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, 1998, the Company's Audit Committee consisted of D. Richard
Mead, Jr., Chairman, Ruth Baldwin Barker, J. Joseph King, Bernard S. Kubale,
Lawrence R. Nash and John S. Shiely. The committee held two meetings during
1998. 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, 1998, the Compensation Committee consisted of Wiley N.
Caldwell, Chairman, James D. Ericson, Sally M. Hands, J. Joseph King, Glenn N.
Rupp and John S. Shiely. The committee held two meetings during 1998. 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 1998 Incentive Compensation
Plan. The Compensation Committee has reported on management and compensation
matters under the heading "Compensation Committee Report on Executive
Compensation" on Page 10.
NOMINATING AND BOARD AFFAIRS COMMITTEE
At December 31, 1998, the Nominating and Board Affairs Committee consisted of
Bernard S. Kubale, Chairman, James D. Ericson, Gilbert D. Mead, Wiley N.
Caldwell and John S. Shiely. The committee held three meetings during 1998.
The Nominating and Board Affairs Committee recommends nominees for election to
the Board of Directors and other committees of the Board, and makes
recommendations to the Board with respect to qualifications and compensation
of directors as well as Board organization. The committee is also responsible
for corporate governance matters and for review of Board performance. The
committee will consider an individual nominated by a shareholder if the
shareholder submits the nomination in accordance with the requirements of the
Company's bylaws relating to nominations by shareholders. These procedures
are described under "Proposals of Security Holders" on Page 2.
The Board of Directors held four meetings during 1998.
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 1998 523,083(1) 150,926 30,000 14,715
President and Chief 1997 480,585(1) 103,951 30,000 17,296
Executive Officer 1996 290,102(1) 15,001 6,000 12,063
G.W. Mead 1998 376,936(1) - 1,578 2,500
Chairman (Director) 1997 376,936(1) - - 2,375
1996 376,936(1) - - 2,375
W.P. Orcutt 1998 301,231(1) 78,971 10,000 14,475
Senior Vice President 1997 265,207 56,375 6,000 11,335
1996 261,146(1) 12,501 6,000 13,856
R.J. Kenney 1998 280,073(1) 71,506 10,000 9,341
Senior Vice President, 1997 256,006(1) 51,253 6,000 9,375
Finance 1996 232,322(1) 8,800 6,000 9,893
R.E. Swanson 1998 270,240(1) 71,313 10,000 8,040
Senior Vice President 1997 234,112(1) 51,253 6,000 8,440
1996 206,883(1) 10,351 6,000 8,553
<FN>
(1) Includes banked vacation (dollar amount) and vacation taken in cash: for
G.M. Evans, $28,846 for 1998, $34,616 for 1997 and $17,308 for 1996; for
G.W. Mead, $26,924 for 1998, $26,924 for 1997 and $26,924 for 1996; for
W.P. Orcutt, $16,500 for 1998 and $14,424 for 1996; for R.J. Kenney,
$20,098 for 1998, $19,232 for 1997 and $16,924 for 1996; and for R.E.
Swanson, $10,058 for 1998, $4,808 for 1997, and $4,140 for 1996.
(2) Includes contributions on behalf of each named executive officer to the
Consolidated Employees' Tax-saver & Investment Plan (401(k)), and payroll
taxes attributable to retirement benefits accrued in excess of limits
imposed by the Omnibus Budget Reconciliation Act of 1993.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
% Of
Total
Options/
Number of SARs
Securities Granted
Underlying to Exercise
Options/ Employees Or Base Grant Date
SARs In Fiscal Price Expiration Present
Name Granted # Year ($/sh.)(1) Date Value(2)
<S> <C> <C> <C> <C> <C>
G.M. Evans 30,000 5.61% 29.0625 02/12/2008 $238,200
G.W. Mead 1,578 .30% 22.1875 10/20/2008 6,691
W.P. Orcutt 10,000 1.87% 29.0625 02/12/2008 79,400
R.J. Kenney 10,000 1.87% 29.0625 02/12/2008 79,400
R.E. Swanson 10,000 1.87% 29.0625 02/12/2008 79,400
<FN>
(1) The options reflected in the table, all of which are nonqualified options
for purposes of the Internal Revenue Code, were granted at an exercise
price equal to the fair market value of the Company's common stock on the
date of the grant. The options expire ten years from the date of grant,
or five years after termination of employment with the Company, whichever
is earlier. The options vest over a three-year period following the date
of grant.
(2) Based on the Black-Scholes option pricing model. The actual value, if
any, an executive officer may realize ultimately depends on the market
value of the Common Stock at a future date. This valuation is provided
pursuant to Securities and Exchange Commission disclosure rules. There
is no assurance that the value realized will be at or near the value
estimated by the Black-Scholes model. Assumptions used to calculate this
value for options expiring on 2/12/08 are as follows: (i) an estimated
volatility of 21.4%; (ii) a risk-free rate of 5.71%; (iii) an estimated
dividend yield of 2.9%; and (iv) an expected life of the option of 10
years. Assumptions used to calculate this value for options expiring
10/20/08 are as follows: (i) an estimated volatility of 20.8%; (ii) a
risk-free rate of 4.97%; (iii) an estimated dividend yield of 4.0%; and
(iv) an expected life of the option of 10 years.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End(#) at FY-End($)(1)
Shares Acquired Value Exercisable/ Exercisable/
Name On Exercise (#) Realized ($)(1) Unexercisable Unexercisable
<S> <C> <C> <C> <C>
G.M. Evans 1,714 19,154 26,998/52,000 82,237/31,250
G.W. Mead 8,326 97,050 - / 1,578 - / 6,213
W.P. Orcutt 5,964 40,326 21,722/16,000 86,762/ 6,250
R.J. Kenney 1,674 9,834 25,076/16,000 117,317/ 6,250
R.E. Swanson - - 14,690/16,000 47,687/ 6,250
<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>
$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
$650,000 97,200 145,800 194,300 242,900 291,500 340,100 388,800 437,600 486,300
<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, 1998 for the five individuals named in the
Summary Compensation Table are as follows: G.M. Evans - 26; G.W. Mead -
47; W.P. Orcutt - 43, R.J. Kenney - 31; R.E. Swanson - 10. 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-93 Dec-94 Dec-95 Dec-96 Dec-97 Dec-98
<S> <C> <C> <C> <C> <C> <C>
Consolidated Papers, Inc. $100 $107 $137 $124 $139 $148
S&P 500 $100 $101 $139 $171 $229 $294
Dow Jones Paper Products Index $100 $111 $127 $134 $146 $152
<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. The Compensation Committee seeks to develop and
implement incentive compensation plans which 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 plans consist of bonuses (payable in cash and Company stock)
tied to individual and corporate performance, and stock option grants. This
approach 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 1998 tied potential payments to achievement of several
corporate targets, giving the most weight to the Company's Return on Capital
Employed (ROCE). Other targets included manufacturing and sales objectives,
and individual performance goals. The Company did not achieve the minimum
targeted 1998 ROCE of eight percent, and no payments were made with respect to
this objective. Manufacturing and sales objectives were partially met and
awards were also made based on individual performance. Overall, bonuses
attributable to corporate performance of from four percent to 13 percent of
executives' base salaries were awarded. In addition, executives received
awards of up to 15 percent of base salary for individual performance.
For 1999, the Committee has adopted a corporate performance measure for the
key executive group using Consolidated Value Added ("CVA"), which measures the
excess of the Company's net operating profit after taxes less a capital charge
of eight percent. The capital charge represents the Company's weighted
average cost of equity and debt, using a target of debt-to-equity ratio of 40
percent. The executive group's 1999 incentive compensation will be based upon
increases in CVA over actual 1998 results. For 2000 and beyond, the Committee
intends to continue to link management compensation to improvement or
deterioration in CVA.
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 an 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 1998 depended on the executive's relative position with the
Company. During 1998, the Compensation Committee granted options to purchase
approximately 190,000 shares to the executives. 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 of Chief Executive Officer. Gorton M. Evans received a base
salary of $450,000 in 1997. The Compensation Committee increased Mr. Evans'
base salary to $500,000 in February 1998. The Compensation Committee sets Mr.
Evans' base salary with reference to comparative information regarding
compensation of other chief executive officers of similar companies in the
paper and forest products industries. Mr. Evans' salary is in the lower range
of this group, reflecting his promotion to the position in 1997. 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 $141,501 for
1998, which reflects the Compensation Committee's evaluation of Mr. Evans'
individual performance during 1998, 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
Glenn N. Rupp
John S. Shiely
COMPENSATION OF DIRECTORS
Nonemployee directors receive an annual retainer of $18,000, plus a grant of
250 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 Section
12 of the 1998 Incentive Compensation 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 1998
all Section 16(a) filing requirements applicable to its officers, directors
and more than 10% shareholders were complied with, except for a late filing
for Mrs. Hands.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP audited the accounts of Consolidated Papers, Inc. and
subsidiaries for fiscal 1998 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 16, 1999 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 26, 1999, 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, W.N. Caldwell, J.D. Ericson, G.M. Evans, J.J. King, B.S.
Kubale, D.R. Mead, Jr., G.W. Mead, G.D. Mead, L.R. Nash, G.N. Rupp, C.M.
Sargent, 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 , 1999
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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