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 Sections 240.14a-11(c) or Section 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):
[ X] 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:
[ ] Fee paid previously with preliminary materials
[ ] 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:
<PAGE>
CONSOLIDATED
CONSOLIDATED PAPERS, INC.
P.O. BOX 8050
WISCONSIN RAPIDS, WISCONSIN 54495-8050
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JUNE 14, 2000
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., Wednesday, June 14, 2000, for the following purposes:
1. To elect twelve 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 May 5, 2000 are entitled
to notice of and to vote at the meeting.
We cordially invite you to attend. If you plan to attend the meeting, please
mark the box on the form of proxy. 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.
THIS MEETING WILL NOT CONSIDER THE PROPOSED MERGER OF CONSOLIDATED PAPERS, INC.
WITH STORA ENSO OYJ. WE EXPECT THAT A SPECIAL MEETING OF SHAREHOLDERS WILL BE
HELD LATER THIS SUMMER TO DECIDE UPON THE PROPOSED MERGER.
CONSOLIDATED PAPERS, INC.
May 12, 2000 Carl H. Wartman, Secretary
<PAGE>
PROXY STATEMENT
CONSOLIDATED PAPERS, INC.
P.O. BOX 8050
WISCONSIN RAPIDS, WISCONSIN 54495-8050
ANNUAL MEETING OF SHAREHOLDERS
This proxy statement is furnished by the Board of Directors in connection with
the solicitation of proxies to be used at the annual meeting of shareholders of
Consolidated Papers, Inc. ("Consolidated" or the "Company") to be held at the
Hotel Mead, 451 East Grand Avenue, Wisconsin Rapids, Wisconsin, at 2:00 p.m.,
Wednesday, June 14, 2000. This proxy statement and the enclosed form of proxy
are scheduled to be mailed to shareholders on May 12, 2000. 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 principals.
VOTING SECURITIES
Only shareholders of record as of the close of business May 5, 2000 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 (twelve).
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 May 5, 2000, there were 91,201,965 shares of common stock of the Company
outstanding and entitled to vote at the annual meeting.
-1-
<PAGE>
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
scheduled for April 23, 2001 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 January 12, 2001.
Shareholders should note that, if the proposed merger with Stora Enso Oyj occurs
in 2000, there will be no further shareholder meetings of Consolidated Papers,
Inc.
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 42,572,462 shares (46.8% of the outstanding
stock).
Set forth in the following table are the beneficial holdings as of January 31,
2000 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:
-2-
<PAGE>
<TABLE>
Shares Owned Beneficially
-------------------------------------------
Sole Voting
Or Shared Total
Investment Shared Investment Beneficial
Name Power(1,2) Voting Power Power Ownership % Of Class
- ------- ----------------------------------------- ------------- ------------- --------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
(A) George W. Mead 168,573 32,145,154(3) 32,313,727 35.6%
Chairman (Director)
P.O. Box 8050
Wisconsin Rapids, WI 54495-8050
Robert McKay 40,000 32,145,154(3) 32,185,154 35.4%
30 Oenoke Lane
New Canaan, CT 06840
Sally M. Hands 192,466 32,145,154(3) 32,337,620 35.6%
1500 Sheridan Road-1I
Wilmette, IL 60091
Sanford C. Bernstein & Co., Inc. (4) 1,028,613 8,202,604 9.0%
767 Fifth Avenue
New York, NY 10153
(B) Other Directors
Ruth Baldwin Barker 298,388 52,000 52,000 350,388 *
James D. Ericson 5,826 5,826 *
Gorton M. Evans 80,274 80,274 *
J. Joseph King 5,844 5,844 *
Bernard S. Kubale 15,850 15,850 *
D. Richard Mead Jr. 68,450 566,052 566,052 634,502 *
Gilbert D. Mead 45,764 45,764 *
Lawrence R. Nash 111,660 111,660 *
Glenn R. Rupp 11,850 11,850 *
Cynthia M. Sargent 181,466 181,466 *
John S. Shiely 7,850 7,850 *
(C) Other Executive Officers
Richard J. Kenney 51,404 51,404 *
Ronald E. Swanson 34,027 34,027 *
James E. Shewchuk 40,205 40,205 *
(D) Directors and Executive
Officers as a Group 1,374,186 32,763,206 37.6%(5)
(28) persons
*Less than 1%
1 Does not include shares held by spouses or children of the following:
for Mrs. Barker, 103,000 shares; for Mr. McKay, 379,586 shares; for Mr.
D. Richard Mead Jr., 6,000 shares; for Mr. George W. Mead, 100,340
shares; for Mr. Gilbert D. Mead, 9,620 shares; for Mr. Nash, 46,670
shares; for Mrs. Sargent, 320 shares; and for all directors and
executive officers as a group, 645,536 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, 13,000 shares; for Mr. Ericson,
3,000 shares; for Mr. Evans, 48,000 shares; for Mr. King, 3,000 shares;
for Mr. Kubale, 11,000 shares; for Mr. D. Richard Mead Jr., 15,000
shares; for Mr. Gilbert D. Mead, 11,000 shares; for Mr. Nash, 11,000
shares; for Mr. Rupp, 9,000 shares; for Mr. Shiely, 5,000 shares; for
Mr. Kenney, 28,262 shares; for Mr. Swanson, 22,024 shares; for Mr.
Shewchuk, 19,051 shares; and for all directors and executive officers
as a group, 334,547 shares.
-3-
<PAGE>
3 George W. Mead, Robert McKay and Sally M. Hands are voting trustees of
the Mead Voting Trust, a voting trust organized under Wisconsin law to
hold shares of the Company. The Mead Voting Trust, which expires by its
terms on December 20, 2011, holds 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. Sally
M. Hands beneficially owns 2,629,274 units of beneficial interest, or
8.2% 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, as reported on Schedule 13G/A, dated February 8, 2000, is the
beneficial owner of 8,202,604 shares representing approximately 9.0% of
the total shares outstanding. It reports that it has sole power to vote
or direct the vote covering 3,877,019 shares, that it has shared power
to vote 1,028,613 shares, that it has no power to vote the remaining
shares, and that it has sole power to dispose of 8,202,604 shares.
5 After eliminating duplications in the table.
</TABLE>
DIRECTORS
At the annual meeting of shareholders, twelve 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. Wiley N. Caldwell 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 June 14, 2000.
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.
-4-
<PAGE>
<TABLE>
Director
Name Age Since Principal Occupation And Other Directorships
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Ruth Baldwin Barker(1) 71 1991 Investor.
James D. Ericson 64 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 61 1996 President and Chief Executive Officer(2), Consolidated Papers, Inc.
J. Joseph King 55 1996 President and Chief Operating Officer, and Director(3), Molex
Incorporated, Lisle, Illinois. (Manufacturer of electronic,
electrical and fiber optic inter-connection systems; ribbon
cable; switches; and application tooling.)
Bernard S. Kubale 71 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. 69 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. Mead(1) 72 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. Mead(1) 69 1974 Attorney, Washington D.C.
Lawrence R. Nash 70 1981 Lawyer, of counsel, Nash, Podvin, Tuchscherer, Huttenburg,
Weymouth & Kryshak, S.C., Wisconsin Rapids, Wisconsin.
Glenn N. Rupp 55 1994 Chairman and Chief Executive Officer,(5) 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. Sargent(1) 61 1999 Investor.
John S. Shiely 47 1996 President and Chief Operating Officer, and Director, Briggs &
Stratton Corporation, Wauwatosa, Wisconsin (Producer of
air-cooled gasoline engines for the outdoor power equipment
industry). Also director of Marshall & Ilsley Corporation.
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 President and Chief Operating Officer, and Director since
July 1, 1999; previously served as Executive Vice President (1996 to
1999) and Corporate Vice President (1988 to 1996) of Molex
Incorporated.
4 The Company retains the firm of Foley & Lardner on a regular basis.
-5-
<PAGE>
5 Served as Chairman and Chief Executive Officer since April, 1996;
previously served as Consultant (1994 to 1996).
</TABLE>
AUDIT COMMITTEE
At December 31, 1999, the Company's Audit Committee consisted of D. Richard
Mead, Jr., Chairman, J. Joseph King, Bernard S. Kubale, Lawrence R. Nash and
John S. Shiely. The committee held two meetings during 1999. 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, 1999, the Compensation Committee consisted of John S. Shiely,
Chairman, Ruth Baldwin Barker, Wiley N. Caldwell, James D. Ericson, J. Joseph
King, Glenn N. Rupp and Cynthia M. Sargent. The committee held two meetings
during 1999. 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 12. James D. Ericson was unable to
attend one of the two meetings.
NOMINATING AND BOARD AFFAIRS COMMITTEE
At December 31, 1999, 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 1999.
James D. Ericson was unable to attend one of the three meetings. 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 six meetings during 1999. James D. Ericson was
unable to attend two of the six meetings.
-6-
<PAGE>
<TABLE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
Securities
Underlying All Other
Name and Principal Position Year Salary ($) Bonus ($) Options/SARs (#) Compensation($)(2)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
G.M. Evans 1999 575,970(1) 77,004 30,000 11,452
President and Chief 1998 523,083(1) 150,926 30,000 14,715
Executive Officer (Director) 1997 480,585(1) 103,951 30,000 17,296
G.W. Mead 1999 376,936(1) - 0 - 1,587 2,500
Chairman (Director) 1998 376,936(1) - 0 - 1,578 2,500
1997 376,936(1) - 0 - - 0 - 2,375
R.J. Kenney 1999 291,422(1) 27,173 10,000 5,942
Senior Vice President, 1998 280,073(1) 71,506 10,000 9,341
Finance 1997 256,006(1) 51,253 6,000 9,375
R.E. Swanson 1999 282,438(1) 38,260 10,000 2,937
Senior Vice President 1998 270,240(1) 71,313 10,000 8,040
1997 234,112(1) 51,253 6,000 8,440
J.E. Shewchuk 1999 239,060(1) 31,311 10,000 4,469
Senior Vice President, 1998 209,666(1) 48,066 6,000 8,680
Administration 1997 184,910(1) 33,118 4,000 8,043
(1) Includes banked vacation (dollar amount) and vacation taken in cash:
for G.M. Evans, $31,732 for 1999, $28,846 for 1998, and $34,616 for
1997; for G.W. Mead, $26,924 for 1999, $26,924 for 1998, and $26,924
for 1997; for R.J. Kenney, $20,902 for 1999, $20,098 for 1998, and
$19,232 for 1997; for R.E. Swanson, $10,511 for 1999, $10,058 for 1998,
and $4,808 for 1997; and for J.E. Shewchuk, $17,204 for 1999, $16,462
for 1998 and $10,674 for 1997.
(2) Includes contributions on behalf of each named executive officer to the
Consolidated Employee's Tax-saver & Investment Plan (401(k)), and
payroll taxes attributable to retirement benefits accrued in excess of
limits imposed by the Omnibus Budget Reconciliation Act of 1993.
</TABLE>
<TABLE>
Option/SAR Grants in Last Fiscal Year
Individual Grants
-----------------
<CAPTION>
Number of Percent of Total
Securities Options/SARs
Underlying Granted to
Options/SARs Employees in Exercise or Base Grant Date
Name Granted (#) Fiscal Year Price ($/sh.) (1) Expiration Date Present Value (2)
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
<S> <C> <C> <C> <C> <C>
G.M. Evans 30,000 4.68% 22.0625 02/11/2009 $ 469,890
G.W. Mead 1,587 .25% 22.0625 02/11/2009 $ 24,857
R.J. Kenney 10,000 1.56% 22.0625 02/11/2009 $ 156,630
R.E. Swanson 10,000 1.56% 22.0625 02/11/2009 $ 156,630
J.E. Shewchuk 10,000 1.56% 22.0625 02/11/2009 $ 156,630
(1) The options reflected in the table, which include both qualified and
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
-7-
<PAGE>
from the date of the 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 2/11/09 are as follows: (i) an
estimated volatility of 106%; (ii) a risk-free rate of 6.68%; (iii) an
estimated dividend yield of 2.8%; and (iv) an expected life of the
option of 10 years.
</TABLE>
<TABLE>
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
VALUE UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS
SHARES ACQUIRED REALIZED OPTION/SARS AT FY-END (#) AT FY-END ($)(1)
------------------------- --------------------------
NAME ON EXERCISE (#) ($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
G. M. Evans 998 9,668 48,000 / 60,000 297,000 / 375,000
G. W. Mead -0- -0- 526 / 2,639 4,668 / 23,620
R. J. Kenney 4,148 20,549 28,262 / 18,666 212,425 / 116,332
R. E. Swanson -0- -0- 22,024 / 18,666 147,512 / 116,332
J. E. Shewchuk -0- -0- 19,051 / 15,333 146,006 / 106,664
(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.
</TABLE>
-8-
<PAGE>
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 classifications:
<TABLE>
PENSION PLAN TABLE
ESTIMATED ANNUAL BENEFIT FOR PARTICIPANTS WITH YEARS OF ASSOCIATED SERVICE
--------------------------------------------------------------------------
<CAPTION>
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 89,700 134,500 179,300 224,200 269,000 313,800 358,800 406,800 448,800
$650,000 97,200 145,800 194,300 242,900 291,500 340,100 388,800 437,600 486,300
$700,000 104,700 157,000 209,300 261,700 314,000 366,300 418,800 471,300 523,800
*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, 1999,
for the five individuals named in the Summary Compensation Table are as follows:
G. M. Evans - 27; G. W. Mead - 48; R. J. Kenney - 32; R. E. Swanson - 11; J.E.
Shewchuk - 28. 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.
</TABLE>
-9-
<PAGE>
TERMINATION ARRANGEMENTS
General Severance Program. The Company has a company-wide severance program for
its salaried employees who are involuntarily terminated (unless the termination
is for cause). The basic program provides severance pay equal to two weeks'
salary for each full year of service. Medical and dental insurance coverages
will be provided for a period of time equal to the number of weeks of severance,
provided certain conditions are met. The maximum period for severance pay is
limited to 52 weeks. Based on current compensation, if the individuals named in
the Summary Compensation Table had been terminated on December 31, 1999, the
amounts payable to each of them would have been as follows: Gorton M. Evans,
$550,030 ; George W. Mead, $350,012; Richard J. Kenney, $271,726; Ronald E.
Swanson, $199,709; and James E. Shewchuk, $233,652.
Severance Agreements. The Company has in place severance agreements with its
executive officers other than Mr. Mead. The severance agreements provide for the
payment of certain benefits to the executive (in lieu of amounts payable under
the general severance program) if employment is terminated by the Company other
than for "cause" within two years after a "change in control" of the Company, or
if employment is terminated by the executive for "good reason" within the
two-year period. In general, under such circumstances, the executive is entitled
to a cash payment of two times the sum of (i) the executive's then current
annual base salary, and (ii) the executive's average annual award under the
Company's incentive plans for the prior three years. Mr. Evans would receive
three times those amounts. Based on levels of compensation as of December 31,
1999, if the individuals named in the Summary Compensation Table had been
terminated on that date, the amounts payable to each of them would have been as
follows: Gorton M. Evans, $1,908,293; Richard J. Kenney, $629,471; Ronald E.
Swanson, $633,667; and James E. Shewchuk, $358,733.
The severance agreements also provide for continuation of benefits under the
Company's life insurance, medical and dental plans (or substantially similar
benefits); and outplacement counseling. If the aggregate severance benefits to
any executive would be subject to an excise tax under the Internal Revenue Code,
the actual benefits will be reduced to the extent necessary to avoid the
imposition of the excise tax, unless the executive chooses to incur the tax. If
the executive chooses to incur the excise tax, a portion of the payment to the
executive would not be deductible by the Company.
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<PAGE>
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.
CUMULATIVE TOTAL RETURN
Based upon an initial investment of $100 on December 31, 1994
with dividends reinvested
[Graph Omitted]
<TABLE>
- ------------------------------------------------------------------------------------------------------------------
Dec-94 Dec-95 Dec-96 Dec-97 Dec-98 Dec-99
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Consolidated Papers, Inc. $100 $128 $116 $130 $138 $165
- ------------------------------------------------------------------------------------------------------------------
S&P 500(R) $100 $138 $169 $226 $290 $351
- ------------------------------------------------------------------------------------------------------------------
Dow Jones Paper Products Index $100 $114 $121 $131 $136 $181
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE>
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.
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 enhancing profitability as a means of
maximizing shareholder value. The Compensation Committee works with management
toward achieving the following objectives:
o Reward executives for long-term strategic management and the enhancement
of shareholder value by allowing executives to participate in the
appreciation of the market value of the Company's stock through stock
options and other benefit plans.
o Align compensation programs with annual and long-term strategic
planning, goals and objectives.
o Attract and retain key executives essential to the Company's long-term
success by providing competitive compensation.
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, 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
six companies (in addition to Consolidated) which make up the Dow Jones Paper
Products Index (see chart on Page 11). Most Consolidated executives' base
salaries are in the mid-range of the base salaries offered by these peer
companies for comparable positions.
INCENTIVE COMPENSATION. The Compensation Committee tries to design incentive
compensation plans which provide Company executives with the incentive and
opportunity to earn compensation at levels approaching 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 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.
In 1999, the Committee adopted a corporate performance measure for the key
executive group using Consolidated Value Added ("CVA"), which measures the
difference between the Company's net operating profit after taxes less a capital
charge. 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 for corporate performance was
premised upon increases in CVA over actual 1998 results. A minimum payout would
have required an improvement in 1999 CVA over 1998's CVA, which was a negative
$25.6 million. The target CVA was a positive $24.4 million. Actual 1999 CVA was
lower than the threshold amount. As a result, no payments were made with respect
to the
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<PAGE>
1999 CVA objective. Executives did receive awards averaging just under ten
percent of base salary for individual performance. 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 size of the individual awards to the Company's executives in 1999
depended on the executive's relative position with the Company. During 1999, the
Compensation Committee granted options to purchase approximately 210,000 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' base salary was
$500,000 in 1998. The Compensation Committee increased Mr. Evans' base salary to
$550,000 in February 1999. The Compensation Committee sets Mr. Evans' base
salary based on their evaluation of his individual performance and by 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. 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 $77,004 for 1999, which reflects the
Compensation Committee's evaluation of Mr. Evans' individual performance during
1999.
OTHER EMPLOYEE BENEFIT PLANS. The Company provides other competitive benefits to
its employees to encourage their continued service with the Company, including
medical coverage, retirement benefits, and a 401(k) plan. 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:
John S. Shiely, Chairman
Ruth Baldwin Barker
Wiley N. Caldwell
James D. Ericson
J. Joseph King
Glenn N. Rupp
Cynthia M. Sargent
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<PAGE>
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's 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 1999 all
Section 16(a) filing requirements applicable to its officers, directors and more
than 10% shareholders were complied with.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP audited the accounts of Consolidated Papers, Inc. and
subsidiaries for fiscal 1999 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
May 12, 2000 Secretary
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<PAGE>
PROXY PROXY
CONSOLIDATED PAPERS, INC.
P. 0. BOX 8050
WISCONSIN RAPIDS, WISCONSIN 54495-8050
THIS PROXY 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 June 14,
2000, 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 reverse side.)
<PAGE>
CONSOLIDATED PAPERS, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. 0
1. ELECTION OF DIRECTORS: Nominees: FOR WITHHOLD FOR
01 R.B. Barker, 02 J.D. Ericson, ALL ALL ALL (Except Nominees(s)
03 G.M. Evans, 04 J.J. King, written below.)
05 B.S. Kubale, 06 D.R. Mead, Jr., 0 0 0 ___________________
07 G.W. Mead, 08 G.D. Mead,
09 L.R. Nash, 10 G.N. Rupp,
11 C.M. Sargent and 12 J.S. Shiely. 2. In their discretion, the proxies
are authorized to vote upon such
other business as may properly
come before the meeting.
Place "X" here if you plan to attend meeting.
- ----------------------------------- Date: ______________________, 2000
THIS SPACE RESERVED FOR ADDRESSING ----------------------------------------
(key lines do not print) 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.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY FORM PROMPTLY
USING THE ENCLOSED ENVELOPE.
