<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.
)
Filed by the Registrant / /
Filed by a Party other than the Registrant /x/
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
/x/ Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or Section
240.14a-12
Pope and Talbot, 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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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>
POPE & TALBOT, INC.
1500 S.W. FIRST AVENUE
PORTLAND, OREGON 97201
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 30, 1996
The Annual Meeting of Shareholders of Pope & Talbot, Inc. (the "Company"), a
Delaware corporation, will be held at the Riverplace Alexis Hotel, 1510
Southwest Harbor Way, Portland, Oregon on Tuesday, April 30, 1996, at 2:00 p.m.,
for the following purposes:
1. To elect three persons to the Board of Directors of the Company to serve
for a term of three years;
2. To approve the 1996 Non-Employee Director Stock Option Plan to permit
annual stock option grants to non-employee Board members from the
existing authorized share reserve under the Company's Stock Option and
Appreciation Plan.
3. To ratify the selection of independent public accountants for the year
1996; and
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only shareholders of record at the close of business on March 4, 1996, are
entitled to receive notice of and to vote at the Annual Meeting.
It is important that your shares be represented and voted at the Annual
Meeting. Whether or not you currently intend to be present personally at the
Annual Meeting, you are urged to complete, date, sign and return the
accompanying proxy in the enclosed, self-addressed envelope requiring no postage
if mailed in the United States. You may still vote in person if you do attend
the Annual Meeting.
By order of the Board of Directors
C. Lamadrid
SENIOR VICE PRESIDENT, SECRETARY
AND CHIEF FINANCIAL OFFICER
Portland, Oregon
March 8, 1996
<PAGE>
PROXY STATEMENT
GENERAL
The accompanying proxy is solicited by the Board of Directors of the Company
for use at the Annual Meeting to be held April 30, 1996 and at any adjournment
thereof. You may revoke it at any time prior to its use by a written
communication to C. Lamadrid, Secretary of the Company, or by a duly executed
proxy bearing a later date. Shareholders attending the Annual Meeting may vote
their shares in person even though they have already given a proxy. Properly
executed proxies not revoked will be voted in accordance with the specifications
thereon at the Annual Meeting and at any adjournment thereof.
Only shareholders of record at the close of business on March 4, 1996 are
entitled to vote at the Annual Meeting. On that date, the Company had
outstanding 13,363,779 shares of common stock entitled to vote. Each share is
entitled to one vote except that the election of directors will be conducted
pursuant to cumulative voting. Under cumulative voting, each share of common
stock is entitled to one vote multiplied by the number of directors to be
elected, and that number of votes may be cast for one director or may be
distributed among any number of directors as designated by the shareholder or
his or her proxy. The Company intends to mail this proxy statement and proxy
card, together with the 1995 Annual Report, to its shareholders on March 8,
1996.
Shares of common stock represented by proxies in the accompanying form which
are properly executed and returned to the Company will be voted at the Annual
Meeting of Shareholders in accordance with the shareholders' instructions
contained in such proxies. Where no such instructions are given, the shares will
be voted for the election of directors as described herein, for the approval of
the Non-Employee Director Stock Option Plan, for ratification of Arthur Andersen
LLP as the Company's independent public accountants for 1996 and at the
discretion of the proxy holders on such other matters as may come before the
Annual Meeting.
A majority of the shares of the Company's common stock, present in person or
represented by proxy, shall constitute a quorum for purposes of the Annual
Meeting. In all matters other than the election of directors, the affirmative
vote of a majority of the shares present in person or represented by proxy at
the Annual Meeting and entitled to vote on the subject matter shall be required.
Directors shall be elected by a plurality of the votes present in person or
represented by proxy at the Annual Meeting and entitled to vote on the election
of directors. Abstentions and broker non-votes are each included in the number
of shares present for quorum purposes. Abstentions, which may be specified on
all proposals other than the election of directors, are counted in tabulations
of the votes cast on proposals presented to shareholders; whereas broker
non-votes are not counted for purposes of determining whether a proposal has
been approved.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors presently consists of nine directors divided into
three classes serving staggered three-year terms. Three directors are to be
elected at the Annual Meeting, each to hold office until the 1999 Annual Meeting
of Shareholders and until a successor has been elected and qualified. All
nominees are presently directors. Six directors will continue to serve in
accordance with their prior elections. Unless otherwise instructed, the proxy
holders named on the enclosed proxy card intend to utilize the cumulative voting
right described above to distribute the votes represented by proxies in such
proportion as they shall determine between the three nominees or their
substitutes so
1
<PAGE>
as to elect the maximum number of such persons. The Board of Directors expects
that all of these nominees will be available for election, but in the event that
any of these nominees is not so available at the time of the Annual Meeting,
proxies received will be voted for a substitute nominee to be designated by the
Board of Directors. The Board of Directors unanimously recommends a vote for
election of all of the above-mentioned nominees as Directors.
CERTAIN INFORMATION REGARDING DIRECTORS AND OFFICERS
The names of the nominees and the directors continuing in office, their
ages, the year each first became a director, their principal occupations during
at least the last five years and other directorships held by each are set forth
below:
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
FOR A THREE-YEAR TERM EXPIRING IN 1999
WARREN E. MCCAIN, age 70, has been a director of the Company since 1989. Mr.
McCain is also a member of the Board's Human Resources Committee. Since 1991,
Mr. McCain has been Chairman of the Executive Committee of Albertson's, Inc., a
grocery store chain, and from 1976 to 1991 was Chairman of the Board and Chief
Executive Officer of Albertson's. Mr. McCain is also a director of Albertson's,
Inc., Portland General Corporation and West One Bancorp.
ROBERT STEVENS MILLER, JR., age 54, has been a director of the Company since
1993. Mr. Miller is also a member of the Board's Audit and Human Resources
Committees. Mr. Miller has been the Chairman of the Board of Morrison Knudsen
Corporation, a construction company, since April 1995. From February 1993 to
April 1995, Mr. Miller was retired. From 1992 to February 1993, he was a senior
partner with the investment banking firm of James D. Wolfensohn, Inc. Prior to
that time, he was with Chrysler Corporation, an automobile manufacturer, as the
Vice Chairman of the Board from 1990 to 1992 and as the Chief Financial Officer
from 1981 to 1990. Mr. Miller is also a director of Coleman Company,
Federal-Mogul Corporation, Fluke Corporation, Morrison Knudsen and Symantec,
Inc.
HUGO G. L. POWELL, age 51, has been a director of the Company since 1985.
Mr. Powell is also a member of the Board's Audit Committee. Since May 1994, Mr.
Powell has been Chief Operating Officer -- Americas of Labatt Brewing Company,
Ltd., beverage manufacturers and distributors. Prior to that time, he was
President of Labatt Breweries of Canada from 1992 to May 1994 and President of
Labatt's Ontario Breweries from 1990 to 1992.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
TERM EXPIRING IN 1997
GORDON P. ANDREWS, age 39, has been a director of the Company since 1994.
Mr. Andrews is also a member of the Board's Audit Committee. Since 1982, Mr.
Andrews has been associated with Andrews Associates, Inc., a management
consulting firm, as a director and in various management positions. He has been
the President of Andrews Associates, Inc. since 1993. Mr. Andrews was Vice
President of Institutional Sales for Shearson Lehman Brothers from 1990 to 1992.
PETER T. POPE, age 61, has been a director of the Company since 1962. Since
1971, Mr. Pope has been Chairman of the Board and Chief Executive Officer of the
Company. From 1990 to September 1995, he was also President of the Company. Mr.
Pope is also a director of the Newhall Land and Farming Company and Pope MGP,
Inc. and Pope EGP, Inc., General Partners of Pope Resources.
2
<PAGE>
BROOKS WALKER, JR., age 67, has been a director of the Company since 1981.
Mr. Walker is also a member of the Board's Audit and Human Resources Committees.
Since 1988, Mr. Walker has been General Partner of Walker Investors, a venture
capital investment partnership. Mr. Walker is also a director of AT&T Capital
Corporation, The Gap, Inc. and Greylock Management Corporation.
TERM EXPIRING IN 1998
HAMILTON W. BUDGE, age 67, has been a director of the Company since 1967.
Mr. Budge is also a member of the Board's Human Resources Committee. Prior to
his retirement in 1990, Mr. Budge was a partner in the law firm of Brobeck,
Phleger and Harrison LLP and has been of counsel to that firm since his
retirement. Brobeck, Phleger and Harrison LLP is outside general counsel to the
Company. Mr. Budge is also a director of TCI International, Inc.
CHARLES CROCKER, age 57, has been a director of the Company since 1986. Mr.
Crocker is also a member of the Board's Audit Committee. Since 1974, Mr. Crocker
has been Chairman of the Board of BEI Electronics, a diversified technology firm
specializing in military and medical applications. He has been President of
Crocker Capital, a private venture capital firm, since 1985 and was General
Partner of Crocker Associates, a private venture investment partnership, from
1970 to 1991. Mr. Crocker is also a director of BEI Electronics, Inc., Fiduciary
Trust Company International, KeraVision, Inc. and Superconductor Technologies,
Inc.
MICHAEL FLANNERY, age 51, has been a director of the Company since September
1995, when he was also elected President of the Company. From August 1987 to
September, 1995, he was Group Vice President -- Wood Products for the Company.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information, as of January 30, 1996,
regarding the number of shares of the common stock of the Company beneficially
owned by each director, by each of the executive officers named in the Summary
Compensation Table below, and by all directors and executive officers as a
group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
-----------------------------------------
OPTIONS
EXERCISABLE
WITHIN PERCENT OF
CURRENTLY 60 DAYS OF OUTSTANDING
NAME OF INDIVIDUAL OR IDENTITY OF GROUP OWNED (1) JANUARY 30, 1996 TOTAL COMMON STOCK
- ---------------------------------------- ---------- ---------------- --------- ------------
<S> <C> <C> <C> <C>
Gordon P. Andrews....................... 226,861(3) -- 226,861 1.7%
Hamilton W. Budge....................... 20,000(4) -- 20,000 (2)
Charles Crocker......................... 1,000 -- 1,000 (2)
Michael Flannery........................ 16,235(4) 38,480 54,715 (2)
William G. Frohnmayer................... 5,456 33,280 38,736 (2)
Carlos M. Lamadrid...................... 12,837(4) 33,480 46,317 (2)
Warren E. McCain........................ 1,000 -- 1,000 (2)
Robert Stevens Miller, Jr............... 1,000(4) -- 1,000 (2)
Peter T. Pope........................... 412,759(5) 193,682 606,441 4.5%
Hugo G. L. Powell....................... -- -- -- (2)
Robert L. Vanderselt (6)................ 3,000 27,790 30,790 (2)
Brooks Walker, Jr....................... 1,600 -- 1,600 (2)
All directors and executive officers as
a group
(12 persons including persons listed
above)................................. 701,748 326,712 1,028,460 7.7%
</TABLE>
- ------------------------
(1) Except as otherwise noted, the directors and named executive officers and
all directors and officers as a group have sole voting and investment power
with respect to the shares listed.
(2) Less than one percent of the outstanding common stock.
3
<PAGE>
(3) Includes 47,385 shares for which he is co-trustee for his children and his
sister's children, and 2,600 shares for which his wife is trustee for his
children. Mr. Andrews is Emily T. Andrews' son. See Beneficial Ownership of
over 5% of Pope & Talbot Common Stock below.
(4) Investment and voting power shared with his wife.
(5) Includes 40,000 shares for which he shares investment and voting power and
30,265 shares owned by his wife, as to which he disclaims beneficial
ownership.
(6) Mr. Vanderselt is no longer employed by the Company.
INFORMATION ON THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors has as its two standing committees the Audit
Committee and the Human Resources Committee. These committees are composed
entirely of non-employee directors. The Board does not have a nominating
committee, but the Board as a whole considers and makes nominations for
directors.
The Audit Committee is currently comprised of Brooks Walker, Jr., Chairman,
Gordon P. Andrews, Charles Crocker, Robert Stevens Miller, Jr. and Hugo G. L.
Powell. The Audit Committee monitors, on a periodic basis, the performance of
the independent public accountants and recommends their engagement or dismissal
to the Board of Directors. It also reviews with the independent public
accountants the scope and results of their audits and their independence with
respect thereto and the adequacy of the Company's accounting and financial
controls.
The Human Resources Committee is currently comprised of Hamilton W. Budge,
Chairman, Warren E. McCain, Robert Stevens Miller, Jr. and Brooks Walker, Jr.
The Human Resources Committee generally performs the functions of a compensation
committee and recommends salary, incentive compensation and bonus arrangements
for the Company's senior management. Its recommendations are acted upon by the
Board of Directors. The Human Resources Committee also has sole authority to
administer the Company's stock option and stock bonus plans and make grants or
awards thereunder.
The Board of Directors held seven meetings during 1995. The Audit Committee
held three meetings, and the Human Resources Committee held one meeting. Each
director attended at least 75 percent of the aggregate of (i) the total number
of meetings of the Board, and (ii) the total number of meetings held by all
committees of the Board on which he served.
Each director of the Company, except Messrs. Flannery and Pope, is paid
$18,000 per year. In addition, each director, except Messrs. Flannery and Pope,
is paid $1,000 for every Board meeting attended plus $700 for each meeting of a
standing committee of the Board attended if that meeting is held on the same day
as a Board meeting and $1,000 otherwise.
BENEFICIAL OWNERSHIP OF OVER 5% OF POPE & TALBOT COMMON STOCK
The following table lists beneficial owners of more than 5% of Pope &
Talbot, Inc. common stock as of December 31, 1995.
<TABLE>
<CAPTION>
VOTING POWER INVESTMENT POWER
---------------------- ---------------------- PERCENT OF
SOLE SHARED SOLE SHARED TOTAL CLASS
--------- ----------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Emily T. Andrews ................................. 832,315 -- 832,315 -- 832,315 6.2%
600 Montgomery Street
San Francisco, CA 94111
Stanford C. Bernstein & Co., Inc. ................ 536,500 9,400 683,069 -- 683,069 5.1%
One State Street Plaza
New York, NY 10004
</TABLE>
4
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth the compensation earned by the Company's
Chief Executive Officer and each of the Company's other executive officers whose
compensation for the 1995 fiscal year was in excess of $100,000 for services
rendered in all capacities to the Company and its subsidiaries for the fiscal
years ended December 31, 1995, December 31, 1994 and December 31, 1993,
respectively. Mr. Robert L. Vanderselt is also included in such table on the
basis of the salary and bonus he earned for the 1995 fiscal year although he
terminated employment with the Company prior to the end of such fiscal year. The
individuals named in such table will be subsequently referred to as the "Named
Executive Officers."
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------------------- ----------------------------
OTHER ALL OTHER
SALARY BONUS ANNUAL OPTIONS/ COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($)(1) ($)(1) COMPENSATION ($) SAR'S (#) ($)(2)
- ----------------------------------------------- --------- --------- --------- ----------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Peter T. Pope.................................. 1995 420,434 -- -- 43,700 4,500
Chairman of the Board 1994 407,872 141,047 -- 24,000 4,500
and Chief Executive Officer 1993 394,078 201,336 -- 60,000 4,497
Michael Flannery............................... 1995 223,262 -- -- 24,600 4,500
President (3) 1994 196,060 93,027 -- 5,500 4,500
1993 189,426 102,572 -- 20,000 4,497
Carlos M. Lamadrid............................. 1995 197,756 -- -- 12,300 4,500
Senior Vice President, Secretary 1994 191,848 68,442 -- 5,500 4,500
and Chief Financial Officer 1993 185,356 77,816 -- 20,000 4,497
William G. Frohnmayer.......................... 1995 183,484 -- -- 12,300 4,500
Vice President -- Division Manager 1994 177,994 32,902 -- 5,500 4,500
Fiber Division 1993 171,968 41,755 -- 20,000 4,497
Robert L. Vanderselt (4)....................... 1995 170,312 -- -- 12,300 4,500
Vice President -- Division Manager 1994 198,458 34,889 -- 6,600 4,491
Consumer Products Division 1993 191,740 39,614 53,022(5) 22,000 4,497
</TABLE>
- ------------------------
(1) Includes salary and bonus deferred under the Company's Tax Deferred Savings
Plan.
(2) Consists of contributions made by the Company to the Tax Deferred Savings
Plan on behalf of each named executive officer.
(3) Until September 1995, Mr. Flannery was Group Vice President, Wood Products
Division.
(4) Mr. Vanderselt terminated employment with the Company on October 26, 1995.
(5) Consists of relocation costs reimbursed to Mr. Vanderselt in connection with
his relocation to Portland, Oregon.
5
<PAGE>
STOCK OPTION AND STOCK APPRECIATION RIGHTS
The following table contains information concerning the grant of stock
options and stock appreciation rights (SARs) made under the Company's Stock
Option and Appreciation Plan for the 1995 fiscal year to the named executive
officers:
OPTION/SAR GRANTS IN 1995
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------------- POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED
SECURITIES % OF TOTAL ANNUAL RATES OF STOCK
UNDERLYING OPTIONS/SARS PRICE APPRECIATION FOR
OPTIONS/SARS GRANTED TO EXERCISE OR OPTION TERM (1)
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION ----------------------
(2)(3) FISCAL YEAR ($/SHARE) (4) DATE 5% ($) 10% ($)
------------- --------------- ------------ ------------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Peter T. Pope.................. 43,700 22.6 15.625 1/29/05 429,417 1,088,227
Michael Flannery............... 24,600 12.7 15.625 1/29/05 241,731 612,595
Carlos M. Lamadrid............. 12,300 6.4 15.625 1/29/05 120,866 306,297
William G. Frohnmayer.......... 12,300 6.4 15.625 1/29/05 120,866 306,297
Robert L. Vanderselt........... 12,300 6.4 15.625 10/26/95(5) 120,866 306,297
</TABLE>
- ------------------------
(1) The potential realizable value illustrates the value that might be realized
upon exercise of the options immediately prior to the expiration of their
maximum 10-year term, assuming the specified compounded rates of
appreciation on the Company's common stock over the option term. However,
there is no assurance provided to any executive officer or any other holder
of the Company's securities that the actual stock price appreciation over
the 10-year option term will be at the assumed 5% and 10% levels or at any
other defined level. Unless the market price of the common stock does in
fact appreciate over the option term, no value will be realized from the
option grants made to the executive officers. In addition, these assumed
values do not take into account option provisions which trigger the
termination of the option following cessation of employment, the
nontransferability of the options and the vesting schedule in effect for
each option which is contingent upon continuous service with the Company for
periods of up to five years.
(2) The Stock Option Plan permits the granting of two types of stock
appreciation rights: Tandem Stock Appreciation Rights and Independent Stock
Appreciation Rights. Tandem Stock Appreciation Rights allow the holder to
elect between the exercise of the underlying option for shares of common
stock or the surrender of such option for an appreciation distribution from
the Company, payable in cash or in shares of common stock. Independent Stock
Appreciation Rights may be exercised for an appreciation distribution
concurrently with (or within a period not to exceed 12 months following) the
exercise of the underlying option for shares of common stock and do not
require that option to be surrendered. None of the options granted in 1995
included stock appreciation rights.
(3) Options will become exercisable for the option shares in a series of 5 equal
and successive annual installments, beginning January 29, 1996. Each option
will become immediately exercisable for all of the option shares in the
event the Company is acquired by merger or sale of substantially all of the
Company's assets or outstanding common stock, unless the option is assumed
or otherwise replaced by the acquiring entity. Upon the termination of the
optionee's employment within 18 months after (i) an acquisition of the
Company which does not otherwise result in the immediate
6
<PAGE>
acceleration of the option or (ii) any hostile change in control of the
Company effected by tender offer for 25% or more of the outstanding common
stock or proxy contest for Board membership, the option will become
immediately exercisable for all of the option shares. Option acceleration
will, however, in all instances be limited so as to avoid excess parachute
payments under the federal tax laws. For further information concerning
these option acceleration provisions, please see the section below entitled
Employment Contracts and Change in Control Arrangements. Each option has a
maximum term of 10 years, subject to earlier termination in the event of the
optionee's cessation of service with the Company.
(4) The exercise price of each option may be paid in cash, in shares of common
stock valued at fair market value on the exercise date or through a cashless
exercise procedure involving a same-day sale of the purchased shares. The
Company may also finance the option exercise by loaning the optionee
sufficient funds to pay the exercise price for the purchased shares and the
federal and state tax liability incurred in connection with such exercise.
The optionee may be permitted, subject to the approval of the Plan
Administrator, to apply a portion of the shares purchased under the option
(or to deliver existing shares of common stock) in satisfaction of such tax
liability. The Plan Administrator also has the authority to reprice
outstanding options through the cancellation of those options and the grant
of replacement options with a exercise price equal to the lower fair market
value of the option shares on the regrant date.
(5) Mr. Vanderselt's 1995 stock grant expired upon his termination on October
26, 1995.
OPTION/SAR EXERCISES AND HOLDINGS
The following table sets forth information with respect to the Named
Executive Officers concerning exercise of options during the 1995 fiscal year
and unexercised options held as of the end of that fiscal year. No SAR's were
exercised during the 1995 fiscal year by the named executive officers, nor were
any SAR's outstanding at the end of such fiscal year.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
VALUE REALIZED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES (MARKET PRICE AT OPTIONS AT FY-END (#) AT FY-END ($) (1)
ACQUIRED ON EXERCISE LESS -------------------------- ------------------------------
NAME EXERCISE (#) EXERCISE PRICE) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------- ------------- ------------------- ----------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Peter T. Pope................ -- -- 148,144 126,696 -- --
Michael Flannery............. -- -- 24,450 46,940 -- --
Carlos M. Lamadrid........... -- -- 28,940 27,610 -- --
William G. Frohnmayer........ -- -- 22,810 33,540 -- --
Robert L. Vanderselt......... -- -- 27,790 37,160 -- --
</TABLE>
- ------------------------
(1) Based upon the market price of $13.25 per share, which was the closing
selling price of the Company's common stock on the last day of the 1995
fiscal year, less the exercise price payable per share.
7
<PAGE>
PENSION PLANS
The following table shows the estimated annual pension benefits payable in
the aggregate to a covered participant as a single life annuity beginning at
normal retirement age (age 65) under the Company's qualified defined benefit
pension plan and the nonqualified supplemental pension plan which provides
benefits that would otherwise be denied participants by reason of certain
Internal Revenue Code limitations on qualified plan benefits. The estimated
benefits are based upon the remuneration that is covered under the plans and
years of service with the Company and its subsidiaries:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
FINAL YEARS OF SERVICE
AVERAGE ---------------------------------------------------------------
SALARY 15 20 25 30 35
- ------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
$ 100,000 $ 25,871 $ 34,494 $ 43,118 $ 45,618 $ 48,118
125,000 33,371 44,494 55,618 58,743 61,868
150,000 40,871 54,494 68,118 71,868 75,618
175,000 48,371 64,494 80,618 84,993 89,368
200,000 55,871 74,494 93,118 98,118 103,118
225,000 63,371 84,494 105,618 111,243 116,868
250,000 70,871 94,494 118,118 124,368 130,618
300,000 85,871 114,494 143,118 150,618 158,118
350,000 100,871 134,494 168,118 176,868 185,618
400,000 115,871 154,494 193,118 203,118 213,118
450,000 130,871 174,494 218,118 229,368 240,618
500,000 145,871 194,494 243,118 255,618 268,118
</TABLE>
A participant's compensation covered by the Company's pension plan is his or
her average salary for the five consecutive calendar plan years within the last
ten years of the participant's career for which such average is the highest or,
in the case of a participant who has been employed for less than five full
calendar years, the period of his or her employment with the Company. Covered
compensation estimated for named executive officers as of the end of the last
calendar year is: Mr. Pope, $422,484; Mr. Flannery, $250,008; Mr. Lamadrid,
$198,720; Mr. Frohnmayer, $184,380. Mr. Vanderselt did not have any vested
pension benefits at the date of his termination. The estimated years of service
for each named executive officer is as follows: Mr. Pope, 30 years; Mr.
Flannery, 9 years; Mr. Lamadrid, 22 years; Mr. Frohnmayer, 18 years; and Mr.
Vanderselt, 4 years.
EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL ARRANGEMENT
The Company does not have any employment agreements with any of the
executive officers named in the Summary Compensation Table. However, the Company
has entered into special severance agreements with each of the Named Executive
Officers, except Mr. Vanderselt. Under these agreements, the executive officers
will be entitled to certain benefits in the event their employment is
involuntarily terminated (other than for cause) within 18 months following a
change in control of the Company. Involuntary termination is defined in each
severance agreement as the officer's involuntary discharge or dismissal (other
than for cause) by the Company or his/her voluntary termination of employment
following a material reduction in compensation or level of responsibilities.
The benefits to be provided upon such officer's involuntary termination
include (i) the acceleration of all unvested options and stock appreciation
rights held by the officer under the Company's
8
<PAGE>
Stock Option and Appreciation Plan and (ii) the vesting of all restricted shares
of the Company's common stock held in escrow for the officer under the Company's
Restricted Stock Bonus Plan. In addition, to the extent the spread on the
accelerated options and stock appreciation rights which exists at the time of
the officer's involuntary termination (i.e., the excess of the then current
market price of the Company's common stock subject to such options and stock
appreciation rights over the exercise price) and the then current market price
of the shares which vest under the Restricted Stock Bonus Plan do not in the
aggregate exceed two times the officer's base salary and bonuses for the fiscal
year preceding the fiscal year of involuntary termination, the officer will
receive a lump sum cash severance payment in an amount sufficient to bring the
total benefit package up to the two times salary-and-bonus amount. However, the
value of the total benefit package (option acceleration, share vesting and
severance payment) is limited to 2.99 times the officer's average W-2 wages from
the Company for the five calendar years immediately preceding the calendar year
in which the change in control occurs. This limitation is designed to prevent
the benefit package from becoming an excess parachute payment under the federal
tax laws.
Each severance agreement contains a detailed procedure for valuing the
officer's total benefit package and determining whether or not the total value
of the package exceeds the parachute payment limitation. In no event, however,
will benefits be reduced if they are found to represent reasonable compensation
for the officer's services with the Company prior to involuntary termination.
For purposes of each severance agreement, a change in control is defined as
(i) the successful acquisition of 25% or more of the Company's outstanding
voting stock pursuant to a third-party tender or exchange offer which the Board
of Directors does not recommend the Company's shareholders accept or (ii) a
change in the composition of the Company's Board of Directors which occurs
because the individuals nominated for election or re-election by majority vote
of those members of the Board elected at the last shareholder meetings at which
there were not contested elections for Board membership fail to be elected or
re-elected by the shareholders by reason of one or more contested elections for
Board membership.
In the event benefits were to become due in the year ending December 31,
1996 under the severance agreements currently in effect for the executive
officers listed in the Summary Compensation Table, the maximum amounts payable
would be as follows: Mr. Pope, $1,538,474; Mr. Flannery, $850,744; Mr. Lamadrid,
$843,428; Mr. Frohnmayer, $771,946; and Mr. Vanderselt, none.
HUMAN RESOURCES COMMITTEE
OF THE
BOARD OF DIRECTORS
EXECUTIVE COMPENSATION REPORT
The Human Resources Committee of the Board of Directors has furnished the
following report on executive compensation.
It is the duty of the Human Resources Committee to set the base salary of
the Company's executive officers and to administer the Company's Stock Option
and Appreciation Plan under which grants may be made to such officers and other
key employees. In addition, the Human Resources Committee administers the
Company's Executive Incentive Plan under which the Company's executive officers
and other key employees may earn additional bonus amounts each year based upon
individual performance and the Company's attainment of specified performance
goals.
9
<PAGE>
GENERAL COMPENSATION POLICY
The fundamental policy of the Human Resources Committee in compensation
matters is to offer the Company's executive officers competitive compensation
opportunities based upon their personal performance and their contribution to
the financial success of the Company. It is an objective of this policy to have
a substantial portion of each officer's total annual compensation contingent
upon the achievement of such financial and performance goals. Accordingly, each
executive officer's compensation package is comprised of three elements: (i)
base salary which is designed primarily to be competitive with base salary
levels in effect both at companies within the forest products industry which are
of comparable size to the Company and at companies outside of such industry with
which the Company competes for executive talent, (ii) annual variable
performance awards payable in cash and tied to the achievement of performance
goals, financial or otherwise, established by the Human Resources Committee, and
(iii) long-term stock-based incentive awards which strengthen the mutuality of
interests between the executive officers and the Company's shareholders. As an
employee's level of responsibility and accountability within the Company
increases over time, a greater portion of his or her total compensation is
intended to be dependent upon Company and personal performance and stock price
appreciation rather than upon base salary.
In order to facilitate the implementation of these policies, the Human
Resources Committee has in the past employed, and expects to continue to employ,
the services of a nationally recognized, independent compensation consulting
firm.
FACTORS. The principal factors considered by the Human Resources Committee
in establishing the components of each executive officer's compensation package
for the 1995 fiscal year are summarized below.
* BASE SALARY. The base salary for each executive officer is determined on
the basis of internal comparability considerations and the base salary levels in
effect for comparable positions at the Company's principal competitors, both
inside and outside the industry. Within the forest products industry the peer
group consists of 29 companies of which 20 are included in the Value Line Paper
and Forest Products Index which is included in the stock price performance graph
on page 13. The base salary level for executive officers is generally at the
median level determined for such individuals on the basis of the external salary
data provided the Committee by the independent compensation consulting firm.
Salaries are reviewed on an annual basis, and adjustments to each executive
officer's base salary are based upon individual performance and salary increases
paid by the Company's competitors.
* ANNUAL INCENTIVE COMPENSATION. An annual bonus may be earned by each
executive officer under the terms of the Executive Incentive Plan, provided the
Company's earnings for the fiscal year exceed 4% of shareholder equity, as
measured at the start of that year. For the 1995 fiscal year, bonuses under this
program were based on the following factors: (i) the extent to which the
company-wide performance objective was obtained, (ii) earnings achieved at the
division level, for those executives who are division leaders rather than
corporate officers, and (iii) personal performance. The target bonus for each
executive officer was established by the Human Resources Committee at the start
of the year, with the target bonus per executive officer set at 25% to 35% of
base salary (in accordance with his position at the Company) and the maximum
bonus limited to a range between 50% and 70% of base salary for the year. The
Company did not meet the minimum corporate performance thresholds established
for 1995 and therefore, no cash incentive bonus payments were made to any of the
executive officers named in the Summary Compensation Table.
10
<PAGE>
* LONG-TERM INCENTIVE COMPENSATION. In January 1995, the Human Resources
Committee approved the grants of stock options to each of the Company's
executive officers under the Company's Stock Option and Appreciation Plan (see
the table titled "Option Grants in Last Fiscal Year" on page 7). These grants
are designed to align the interests of each executive officer with those of the
Company's shareholders and provide each individual with a significant incentive
to manage the Company from the perspective of an owner with an equity stake in
the business. The option grant to each executive officer for the 1995 fiscal
year was based on maintaining the total number of option grants made to each
executive officer over the past five years to a competitive median level based
upon recommendations submitted by the independent compensation consulting firm
retained by the Company.
Each option grant allows the officer to acquire shares of the Company's
common stock at a fixed price per share (the market price on the date preceding
the grant date) over a specified period of time (up to 10 years). The
exercisability of these stock options generally vests in equal installments over
a five-year period, contingent upon the executive officer's continued employment
with the Company. Accordingly, the option will provide a return to the executive
officer only if the executive officer remains employed by the Company for one or
more years during which the option vests, and then only if the market price of
the underlying shares appreciates over the option term.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(m)
Section 162(m) of the Internal Revenue Code disallows a tax deduction to
publicly held companies for compensation exceeding $1 million paid to certain of
their executive officers. It is not expected that the compensation to be paid to
the Company's executive officers for fiscal 1996 will exceed the $1 million
limit per covered officer. Under the phase-in period in effect for this
limitation, any compensation deemed paid in fiscal 1996 upon the exercise of
outstanding options under the Company's Stock Option and Appreciation Plan will
qualify as performance based compensation that will not be subject to the $1
million limitation. Because it is very unlikely that the cash compensation
payable to any of the Company's executive officers in the foreseeable future
will approach the $1 million limit, the Committee has decided at this time not
to take any action to limit or restructure the elements of cash compensation
payable to the Company's executive officers. The Committee will reconsider this
decision should the individual compensation of any executive officer ever
approach the $1 million level.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
In setting the compensation payable to the Company's Chief Executive
Officer, Mr. Pope, the Human Resources Committee has sought to establish a
competitive rate of base salary, while at the same time tying a significant
percentage of his overall compensation package to individual and Company
performance and stock price appreciation.
Mr. Pope's base salary is established through an evaluation of salaries paid
to similarly situated chief executive officers both at companies in the forest
products industry which are of comparable size to the Company and at companies
in other industries with which the Company competes for executive personnel.
These same companies form the peer group for comparative compensation purposes
for all other executive officers of the Company. In setting Mr. Pope's base
salary, it is the intent of the Human Resources Committee to provide him with a
level of stability and certainty each year and not have this particular
component of compensation affected to any significant degree by Company
performance factors. For the 1995 fiscal year, Mr. Pope's base salary was set at
the median level in effect for chief
11
<PAGE>
executive officers at the surveyed companies. For the 1996 Fiscal year the Human
Resources Committee has postponed making any increase to Mr. Pope's base salary
until July 1, 1996, at which time the committee will conduct its annual review.
The Company did not meet the minimum corporate performance thresholds
established under the Executive Incentive Plan, therefore, no cash incentive
payments were made to Mr. Pope for 1995 fiscal year.
In February 1996, the Human Resources Committee granted Mr. Pope options to
purchase 40,000 shares of the Company's common stock under the Stock Option and
Appreciation Plan. The option was based upon an evaluation of competitive median
grant levels prepared and reported to the Human Resources Committee by the
independent compensation consulting firm retained by the Company.
The option grants made to Mr. Pope place a significant portion of his total
compensation for the year at risk, since the options will have no value unless
there is appreciation in the value of the Company's common stock over the option
term.
Human Resources Committee
<TABLE>
<S> <C>
Hamilton W. Budge Robert Stevens Miller,
Jr.
Warren E. McCain Brooks Walker, Jr.
</TABLE>
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Human Resources Committee serves as the Company's Compensation
Committee, and its members are as named above. No member of the Human Resources
Committee was at any time during the 1995 fiscal year or at any other time an
officer or employee of the Company. No executive officer of the Company serves
as a member of the board of directors or compensation committee of any entity
which has one or more executive officers serving as a member of the Company's
Board of Directors or Human Resources Committee.
Mr. Budge is of counsel to the law firm of Brobeck, Phleger & Harrison LLP
outside general counsel to the Company.
12
<PAGE>
STOCK PERFORMANCE CHART
The following chart compares the yearly percentage change in the cumulative
total shareholder return on the Company's common stock during the five
fiscal-year period ended December 31, 1995, with the cumulative total return on
the S&P 500 Index and the Value Line Paper and Forest Products Index for that
same period. The comparison assumes $100 was invested on December 31, 1990 in
the Company's common stock and in each of the foregoing indices and assumes
reinvestment of dividends.
COMPARATIVE FIVE-YEAR TOTAL RETURNS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
POPE & TALBOT INC STANDARD & POORS 500 PAPER/FOREST PROD.
<S> <C> <C> <C>
1990 100 100 100
1991 109.5 130.55 132.23
1992 119.3 140.72 145.96
1993 221.65 154.91 166.07
1994 126.85 157.39 167.62
1995 111.29 216.42 184.47
</TABLE>
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933 or the Exchange Act of 1934
that might incorporate future filings, including this Proxy Statement, in whole
or in part, the preceding Executive Compensation Report and the preceding Stock
Performance Graph shall not be incorporated by reference into any such filings;
nor shall such Report or Graph be incorporated by reference into any future
filings.
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of the Company's common stock and other equity securities.
Officers, directors and greater than ten-percent shareholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) reports
they file.
13
<PAGE>
Based solely upon review of the copies of such reports furnished to the
Company and written representations that no other reports were required, the
Company believes that there was compliance for the fiscal year ended December
31, 1995 with all Section 16(a) filing requirements applicable to the Company's
officers, directors and greater than ten-percent beneficial owners.
PROPOSAL 2
APPROVAL OF 1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
The shareholders are being asked to vote on a proposal to approve the
implementation of the 1996 Non-Employee Director Stock Option Plan (the
"Director Plan") pursuant to which eligible non-employee members of the
Company's Board of Directors will receive automatic option grants at designated
intervals over their period of continued service on the Board. The Director Plan
was adopted by the Board of Directors on February 2, 1996 and will become
effective immediately upon approval of the Company's shareholders at the Annual
Meeting, and the initial option grants under the Director Plan will be made at
that time.
The Director Plan is an equity incentive program designed to attract and
retain highly-qualified individuals to serve as non-employee members of the
Company's Board of Directors. The following is a summary of the principal
features of the Director Plan. The summary, however, does not purport to be a
complete description of all the provisions of the Director Plan. Any shareholder
who wishes to obtain a copy of the actual plan document may do so by written
request to the Corporate Secretary at the Company's executive offices.
ELIGIBILITY
Eligibility for automatic option grants under the Director Plan is limited
to (i) those individuals serving as non-employee Board members at the 1996
Annual Meeting and (ii) those individuals first elected or appointed as
non-employee Board members after such Annual Meeting.
As of January 31, 1996, there were seven (7) non-employee Board members
eligible to participate in the Director Plan.
ISSUABLE SHARES
Shares of the Company's common stock will be issuable under the Director
Plan and will be drawn from either the Company's authorized but unissued shares
of common stock or from reacquired shares of common stock, including shares
repurchased by the Company on the open market. The total number of shares of
common stock issuable in the aggregate under the Director Plan and the Company's
Stock Option and Appreciation Plan (the "Option Plan") may not exceed the
1,700,000 shares which have been reserved for issuance over the term of the
Option Plan, and as of January 31, 1996, only 1,177,919 shares of this reserve
remained available for issuance in the aggregate under the two plans.
Accordingly, the implementation of the new Director Plan will not effect any
increase in the number of shares of common stock already reserved for issuance
to officers, employees and non-employee Board members through the Option Plan
and will not result in any additional dilution of shareholder interests.
Should one or more outstanding options under the Director Plan or the Option
Plan expire or terminate for any reason prior to exercise in full, then the
shares of common stock subject to the portion of each option not so exercised
will be available for subsequent option grant under either the Director Plan or
the Option Plan.
14
<PAGE>
In the event any change is made to the common stock issuable under the
Director Plan by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding common stock as a class without the Company's receipt of
consideration, appropriate adjustments will be made to (i) the maximum number
and/or class of securities issuable in the aggregate under the Director Plan and
the Option Plan, (ii) the number and/or class of securities for which automatic
option grants are to be subsequently made under the Director Plan to
newly-elected or continuing non-employee Board members, and (iii) the number
and/or class of securities and price per share in effect under each option
outstanding under the Director Plan.
AUTOMATIC OPTION GRANTS
Each individual who is serving as an eligible non-employee Board member on
the date of the 1996 Annual Shareholders Meeting will automatically be granted
on that date an option to purchase 2,000 shares of common stock, provided the
Director Plan is approved by the shareholders at such Annual Meeting. Each
individual who first becomes an eligible non-employee Board member after the
date of the 1996 Annual Shareholders Meeting, whether through election by the
Company's shareholders or appointment by the Board, will automatically receive,
at the time of such initial election or appointment, a similar option grant to
purchase 2,000 shares of common stock. In no event, however, will any
non-employee Board member be eligible to receive such an initial 2,000-share
option grant if that individual has previously been in the Company's employ.
At each Annual Shareholders Meeting held after the 1996 Annual Meeting, each
individual who will continue to serve as a non-employee Board member, whether or
not that individual is actually standing for re-election to the Board at that
particular Annual Meeting, will automatically be granted an option to purchase
an additional 1,000 shares of common stock, provided such individual has served
as a Board member for at least six (6) months.
There will be no limit on the number of such 1,000-share option grants any
one non-employee Board member may receive over his or her period of Board
service, and non-employee Board members will be eligible to receive those annual
option grants, even if they have previously been in the Company's employ.
PRICE AND EXERCISABILITY
The exercise price per share of common stock subject to each automatic
option grant will be equal to one hundred percent (100%) of the fair market
value per share on the automatic grant date. For such purpose, the fair market
value per share will be deemed equal to the closing selling price per share of
the Company's common stock on the New York Stock Exchange on the date
immediately prior to the date in question. On January 31, 1996, the fair market
value per share determined on such basis was $15.375.
The exercise price will be payable in cash or in shares of common stock. The
exercise price may also be paid through a same-day sale program pursuant to
which a designated brokerage firm will effect an immediate sale of the shares
purchased under the option and pay over to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover the exercise price
of the purchased shares.
Each automatic grant will be immediately exercisable for any or all of the
option shares as fully vested shares.
15
<PAGE>
LIMITED TRANSFERABILITY
During the optionee's lifetime, each automatic option grant will generally
be exercisable only by the optionee and will not be assignable or transferable
other than by will or by the laws of descent and distribution following the
optionee's death or in connection with the optionee's divorce or other marital
separation proceedings.
TERMINATION OF BOARD SERVICE
Should the optionee cease to serve as a Board member for any reason while
holding one or more automatic option grants under the Director Plan, then such
individual will have a twelve (12)-month period following the date of such
cessation of Board service in which to exercise each such option for any or all
of the option shares at the time subject to that option.
In no event will any automatic grant under the Director Plan remain
exercisable after the expiration date of the ten (10)-year option term.
SHAREHOLDER RIGHTS
The holder of an automatic option grant will have no shareholder rights with
respect to any shares subject to such option until such individual exercises the
option and pays the exercise price for the purchased shares.
CORPORATE TRANSACTIONS
In the event of any of the following transactions (a "Corporate
Transaction"):
a. a merger or consolidation in which the Company is not the surviving
entity, except for a transaction the principal purpose of which is to change
the State in which the Company is incorporated,
b. the sale, transfer or other disposition of all or substantially all
of the Company's assets in complete liquidation or dissolution of the
Company, or
c. any reverse merger in which the Company is the surviving entity but
in which securities possessing more than fifty percent (50%) of the total
combined voting power of the Company's outstanding securities are
transferred to a person or persons different from the persons holding those
securities immediately prior to such merger,
each outstanding option will, immediately following the consummation of such
Corporate Transaction, terminate and cease to be outstanding, except to the
extent assumed by the successor entity.
The automatic option grants outstanding under the Director Plan will in no
way affect the right of the Company to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
PLAN AMENDMENTS
The Board has complete and exclusive power and authority to amend or modify
the Director Plan in any or all respects whatsoever. However, the Director Plan,
together with the option grants outstanding thereunder, may not in general be
amended at intervals more frequently than once every six (6) months. In
addition, the Board may not, without the approval of the Company's shareholders,
amend the Director Plan to (i) materially increase the maximum number of shares
issuable in the aggregate under the Director Plan and the Option Plan or the
number of shares for which an option is to be granted to each newly-elected or
continuing non-employee Board member, except for permissible
16
<PAGE>
adjustments in the event of certain changes in the Company's capital structure,
(ii) materially modify the eligibility requirements for plan participation or
(iii) materially increase the benefits accruing to plan participants.
EFFECTIVE DATE AND TERM OF DIRECTOR PLAN
The Director Plan will become effective immediately upon approval by the
shareholders at the 1996 Annual Meeting, and the initial automatic option grants
under the Director Plan will be made at that time. The Director Plan will
terminate upon the EARLIER of (i) December 31, 2005 or (ii) the date on which
all shares available for issuance in the aggregate under the Director Plan and
the Option Plan have been issued pursuant to the exercise of outstanding
options. If the date of plan termination is determined under clause (i) above,
then all option grants outstanding on such date will thereafter continue to have
force and effect in accordance with the provisions of the instruments evidencing
those grants.
ACCOUNTING TREATMENT
Under current accounting rules, option grants with exercise prices equal to
the fair market value of the option shares on the grant date will not result in
any direct charge to the Company's reported earnings. However, outstanding
options may have to be taken into account in the calculation of earnings per
share on a fully-diluted basis. In addition, new FASB 123 will require footnote
disclosure to the Company's financial statements indicating the impact which the
options granted under the Director Plan would have upon the Company's reported
earnings were the value of those options at the time of grant treated as
compensation expense.
TAX CONSEQUENCES
Options granted under the Director Plan will be nonstatutory options which
do not satisfy the requirements of Section 422 of the Internal Revenue Code. No
taxable income will be recognized by an optionee upon the grant of the
nonstatutory option, but the optionee will recognize ordinary income in the year
in which the option is exercised. The amount of such ordinary income will be
equal to the excess of the fair market value of the purchased shares on the
exercise date over the option exercise price paid for the shares.
The Company will be entitled to a business expense deduction equal to the
amount of ordinary income recognized by the optionee with respect to the
exercised nonstatutory option. The deduction will in general be allowed for the
taxable year of the Company in which such ordinary income is recognized by the
optionee.
SHAREHOLDER APPROVAL
The affirmative vote of the majority of shares of the Company's common stock
present or represented by proxy at the Annual Meeting and entitled to vote on
Proposal 2 is required for approval of the implementation of the Director Plan.
If such shareholder approval is not obtained, then the Director Plan will not be
implemented, and no automatic option grants to the non-employee Board members
will be made thereunder.
Because the Board believes that an equity incentive program is necessary to
attract and retain the services of highly-qualified non-employee Board members,
the Board recommends that the shareholders vote IN FAVOR of Proposal 2.
17
<PAGE>
NEW PLAN BENEFITS
If the Director Plan is approved by the shareholders at the 1996 Annual
Meeting, then each of the following non-employee Board members will receive an
automatic option grant at that time to purchase 2,000 shares of the Company's
common stock: Messrs. Andrews, Budge, Crocker, McCain, Miller, Powell and
Walker. Each such option will have an exercise price per share equal to the
closing selling price per share of the Company's common stock on the New York
Stock Exchange on the date immediately preceding the date of such Annual
Meeting.
PROPOSAL NO. 3
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon the recommendation of the Audit Committee of
the Board, appointed Arthur Andersen LLP as the Company's independent public
accountants for the fiscal year ending December 31, 1996, subject to
ratification by the shareholders at the Annual Meeting. A representative of
Arthur Andersen LLP is expected to be present at the Annual Meeting with the
opportunity to make a statement if he so desires, and to respond to appropriate
questions. The Board of Directors recommends that the shareholders approve this
appointment. Although this appointment is not required to be submitted to a vote
by the shareholders, the Company continues to believe it appropriate, as a
matter of policy, to request the shareholders' ratification. If the shareholders
do not ratify this appointment, the Board of Directors will reconsider such
selection.
SHAREHOLDER PROPOSALS
A shareholder who intends to present a proposal at the 1997 Annual Meeting
of Shareholders must submit such proposal by November 9, 1996, for inclusion in
the Company's 1997 proxy statement and form of proxy relating to such meeting.
The proposal must be mailed to Mr. C. Lamadrid, Senior Vice President, Secretary
and Chief Financial Officer, Pope & Talbot, Inc., 1500 S.W. First Avenue,
Portland, Oregon 97201. Such proposals will be included in next year's proxy
statement if they comply with certain rules and regulations promulgated by the
Securities and Exchange Commission.
SOLICITATION OF PROXIES
The cost of soliciting proxies in the enclosed form will be borne by the
Company. In addition to solicitation by mail, officers and other employees of
the Company may solicit proxies personally or by telephone. The Company may
request banks and brokers or other similar agents or fiduciaries to transmit the
proxy materials to the beneficial owners for their voting instructions and will
reimburse them for their expenses in so doing.
OTHER MATTERS
The Board of Directors does not know of any other business that may be
presented for consideration at the meeting other than two shareholder proposals
that have been omitted from this Proxy Statement because they do not comply with
the rules of the Securities and Exchange Commission. The first proposal resolves
that the shareholders recommend that the Company adopt a policy of confidential
shareholder voting, with exceptions solely for independent inspectors of
election to certify the results of the vote, for disclosure required by law, or
when shareholders address comments to management on their proxy cards. The
second proposal resolves that the shareholders recommend the
18
<PAGE>
Company end its policy of offering golden parachutes (severance benefits) to
executives who voluntarily quit after a change in control, unless and until such
a policy is approved by shareholder vote. If these shareholder proposals or any
other business should properly come before the meeting, the shares represented
by the proxies and voting instructions solicited hereby may be discretionarily
voted on such business in accordance with the judgment of the proxy holders to
the extent allowed by the rules of the Securities and Exchange Commission.
ANNUAL REPORT -- FINANCIAL MATTERS
The annual report to shareholders covering the operations of the Company for
the year 1995, including financial statements is enclosed herewith.
By order of the Board of Directors.
C. Lamadrid
SENIOR VICE PRESIDENT, SECRETARY
AND CHIEF FINANCIAL OFFICER
19
<PAGE>
POPE & TALBOT, INC.
1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
I. PURPOSE OF THE PLAN
This 1996 Non-Employee Director Stock Option Plan (the "Plan") is
intended to promote the interests of Pope & Talbot, Inc., a Delaware
corporation (the "Corporation"), by providing the non-employee members of the
Corporation's Board of Directors with the opportunity to acquire a proprietary
interest, or otherwise increase their proprietary interest, in the Corporation
as an incentive for them to remain in the service of the Corporation.
II. DEFINITIONS
For purposes of the Plan, the following definitions shall be in
effect:
BOARD: the Corporation's Board of Directors.
CODE: the Internal Revenue Code of 1986, as amended.
COMMON STOCK: shares of the Corporation's common stock.
CORPORATE TRANSACTION: any of the following stockholder-approved
transactions to which the Corporation is a party:
(i) a merger or consolidation in which the Corporation is
not the surviving entity, except for a transaction the principal
purpose of which is to change the State in which the Corporation is
incorporated,
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation
or dissolution of the Corporation, or
(iii) any reverse merger in which the Corporation is the
surviving entity but in which securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities are transferred to person or persons different
from the persons holding those securities immediately prior to such
merger.
DOMESTIC RELATIONS ORDER: any judgment, decree or order (including
approval of a property settlement agreement) which provides or otherwise
conveys, pursuant to applicable State domestic relations laws (including
community property laws), marital property rights to any spouse or former spouse
of an Optionee.
<PAGE>
EFFECTIVE DATE: The date of the 1996 Annual Stockholders Meeting,
provided the Plan is approved by the affirmative vote of a majority of the
outstanding shares of the Corporation's common stock present or represented and
entitled to vote at that Annual Meeting.
ELIGIBLE DIRECTORS: those individuals who are serving as non-employee
Board members on the Effective Date and those individuals who first become non-
employee Board members after such Effective Date, whether through appointment by
the Board or election by the Corporation's stockholders.
FAIR MARKET VALUE: the Fair Market Value per share of Common Stock
determined in accordance with the following provisions:
a. If the Common Stock is at the time listed or admitted
to trading on the New York Stock Exchange or on any other national
securities exchange, then the Fair Market Value shall be the closing
selling price per share on the date immediately prior to the date in
question on the exchange serving as the primary market for the Common
Stock, as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no reported sale of Common
Stock on such exchange on the date immediately prior to the date in
question, then the Fair Market Value shall be the closing selling
price on the exchange on the last preceding date for which such
quotation exists.
b. If the Common Stock is not at the time listed or
admitted to trading on any national securities exchange but is traded
on the Nasdaq National Market, the Fair Market Value shall be the
closing selling price per share on the date immediately prior to the
date in question, as such price is reported by the National
Association of Securities Dealers on the Nasdaq National Market or any
successor system. If there is no reported closing selling price for
the Common Stock on the date immediately prior to the date in
question, then the closing selling price on the last preceding date
for which such quotation exists shall be determinative of Fair Market
Value.
1934 ACT: the Securities Exchange Act of 1934, as amended.
1981 PLAN: the Corporation's 1981 Stock Option and Appreciation Plan,
as amended and restated from time to time.
OPTIONEE: any person to whom an option is granted under the Plan.
QUALIFIED DOMESTIC RELATIONS ORDER: a Domestic Relations Order which
substantially complies with the requirements of Code Section 414(p).
III. ADMINISTRATION OF THE PLAN
2.
<PAGE>
The terms and conditions of each automatic option grant (including the
timing and pricing of the option grant) shall be determined by the express terms
and conditions of the Plan, and neither the Board nor any committee of the Board
shall exercise any discretionary functions with respect to option grants made
pursuant to the Plan.
IV. STOCK SUBJECT TO THE PLAN
A. Shares of the Corporation's Common Stock shall be available for
issuance under the Plan and shall be drawn from either the Corporation's
authorized but unissued shares of Common Stock or from reacquired shares of
Common Stock, including shares repurchased by the Corporation on the open
market. The maximum number of shares of Common Stock issuable under this Plan
and the 1981 Plan shall not exceed 1,700,000 shares(1) in the aggregate, subject
to adjustment from time to time in accordance with the provisions of this
Article IV.
B. Should one or more outstanding options under this Plan or the
1981 Plan expire or terminate for any reason prior to exercise in full, then the
shares subject to the portion of each option not so exercised shall be available
for subsequent option grants under this Plan or the 1981 Plan. However, should
the exercise price of an outstanding option under the Plan be paid with shares
of Common Stock, then the number of shares of Common Stock available for
issuance under this Plan and the 1981 Plan shall be reduced by the gross number
of shares for which the option is exercised, and not by the net number of shares
of Common Stock actually issued to the holder of such option.
C. Should any change be made to the Common Stock issuable under the
Plan by reason of any stock split, stock dividend, recapitalization, combination
of shares, exchange of shares or other change affecting the outstanding Common
Stock as a class without the Corporation's receipt of consideration, then the
Board shall make appropriate adjustments to (i) the maximum number and/or class
of securities issuable in the aggregate under this Plan and the 1981 Plan, (ii)
the number and/or class of securities for which automatic option grants are to
be subsequently made per each newly-elected or continuing non-employee Board
member under the Plan, and (iii) the number and/or class of securities and price
per share in effect for each option outstanding under the Plan. Such
adjustments to the outstanding options are to be effected in a manner which
shall preclude the enlargement or dilution of rights and benefits under such
options. The adjustments determined by the Board shall be final, binding and
conclusive.
V. TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS
A. GRANT DATE. Option grants shall be made on the dates specified
below:
- --------------------
(1)The total number of shares of Common Stock available for issuance in the
aggregate under this Plan and the 1981 Plan after January 31, 1996 shall be
limited to __________________ shares, subject to periodic adjustment under
Section IV.C.
3.
<PAGE>
1. Each individual who is serving as an Eligible Director
on the Effective Date shall automatically be granted on that date a
non-statutory option to purchase 2,000 shares of Common Stock,
provided such individual has not previously been in the employ of the
Corporation (or any subsidiary).
2. Each individual who first becomes an Eligible Director
after the Effective Date, whether through election by the
Corporation's stockholders or appointment by the Board, shall
automatically be granted, at the time of such initial election or
appointment, a non-statutory option to purchase 2,000 shares of Common
Stock, provided such individual has not previously been in the employ
of the Corporation (or any subsidiary corporation).
3. At every Annual Stockholders Meeting, beginning with
the 1997 Annual Meeting, each individual who is to continue to serve
as a non-employee Board member, whether or not such individual is
standing for re-election as a Board member at that Annual Meeting,
shall automatically be granted a non-statutory option to purchase
1,000 shares of Common Stock, provided such individual has served as a
director for at least six (6) months. There shall be no limit on the
number of such 1,000-share option grants any one non-employee Board
member may receive over his or her period of Board service, and non-
employee Board members who have previously been in the employ of the
Corporation (or any subsidiary) shall be eligible to receive such
annual option grants.
B. EXERCISE PRICE. The exercise price per share of Common Stock
subject to each automatic option grant shall be equal to one hundred percent
(100%) of the Fair Market Value per share of Common Stock on the automatic grant
date.
C. PAYMENT.
The exercise price shall become immediately due upon exercise of
the option and shall be payable in one or more of the forms specified below:
(i) cash or check made payable to the Corporation's
order; or
(ii) shares of Common Stock held for the requisite
period necessary to avoid a charge to the Corporation's earnings for
financial-reporting purposes and valued at Fair Market Value on the
Exercise Date (as such term is defined below); or
(iii) payment through a broker-dealer sale and
remittance procedure pursuant to which the non-employee Board member
(I) shall provide irrevocable written instructions to a Corporation-
designated brokerage firm to
4.
<PAGE>
effect the immediate sale of the purchased shares and remit to the
Corporation, out of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate exercise price payable for the
purchased shares and (II) shall concurrently provide written directives to
the Corporation to deliver the certificates for the purchased shares
directly to such brokerage firm in order to complete the sale transaction.
For purposes of this Section V.C, the Exercise Date shall be the date
on which written notice of the option exercise is delivered to the Corporation.
Except to the extent the sale and remittance procedure specified above is
utilized in connection with the exercise of the option, payment of the option
exercise price for the purchased shares must accompany the exercise notice.
D. OPTION TERM. Each automatic grant under the Plan shall have a
maximum term of ten (10) years measured from the automatic grant date.
E. EXERCISABILITY. Each automatic grant shall be immediately
exercisable for any or all of the option shares as fully vested shares.
F. LIMITED TRANSFERABILITY OF OPTIONS. During Optionee's lifetime,
the option may be exercised only by the Optionee and shall not be assignable or
transferable other than by will or by the laws of descent and distribution
following the Optionee's death. However, an option may be assigned in whole or
in part pursuant to the terms of a Qualified Domestic Relations Order. The
assigned portion may only be exercised by the person or persons who acquire a
proprietary interest in the option pursuant to such order. The terms applicable
to the assigned portion shall be the same as those in effect for the option
immediately prior to such assignment and shall be set forth in such documents
issued to the assignee as the Corporation may deem appropriate.
G. EFFECT OF TERMINATION OF BOARD SERVICE.
1. Should the Optionee cease for any reason to serve as a Board
member while holding one or more automatic option grants under the Plan, then
such individual shall have a twelve (12)-month period following the date of such
cessation of Board service in which to exercise each such option for any or all
of the option shares at the time subject to that option.
2. Should the Optionee die while in Board service or within
twelve (12) months after cessation of Board service, then any automatic option
grant held by the Optionee at the time of death may subsequently be exercised,
for any or all of the option shares at the time subject to that option, by the
personal representative of the Optionee's estate or by the person or persons to
whom the option is transferred pursuant to the Optionee's will or in accordance
with the laws of descent and distribution. The right to exercise each such
option
5.
<PAGE>
shall lapse upon the expiration of the twelve (12)-month period measured from
the date of the Optionee's cessation of Board service.
3. In no event shall any automatic grant remain exercisable
after the expiration date of the ten (10)-year option term. Upon the expiration
of the applicable post-service exercise period under subparagraphs 1 through 3
above or (if earlier) upon the expiration of the ten (10)-year option term, the
automatic grant shall terminate and cease to be outstanding with respect to all
remaining option shares.
H. STOCKHOLDER RIGHTS. The holder of an automatic option grant
shall have no stockholder rights with respect to any shares subject to such
option until such individual shall have exercised the option and paid the
exercise price for the purchased shares.
I. REMAINING TERMS. The remaining terms and conditions of each
automatic option grant shall be as set forth in the form of Automatic Stock
Option Agreement attached as Exhibit A.
VI. CORPORATE TRANSACTION
A. Immediately following the consummation of any Corporate
Transaction, each automatic option grant under the Plan shall terminate and
cease to be outstanding, except to the extent such grant is assumed by the
successor entity or its parent corporation.
B. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in the consummation of such Corporate Transaction,
had the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to (i) the number and class of
securities available for issuance under the Plan following the consummation of
such Corporate Transaction and (ii) the exercise price payable per share under
each outstanding option, PROVIDED the aggregate exercise price payable for such
securities shall remain the same.
C. The automatic option grants outstanding under the Plan shall in
no way affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
VII. AMENDMENT OF THE PLAN AND AWARDS
The Board has complete and exclusive power and authority to amend or
modify the Plan in any or all respects whatsoever. However, (i) the Plan,
together with the option grants outstanding under the Plan, may not be amended
at intervals more frequently than once every six (6) months, other than to the
extent necessary to comply with applicable Federal income tax laws and
regulations, and (ii) no such amendment or modification shall adversely
6.
<PAGE>
affect rights and obligations with respect to options at the time outstanding
under the Plan, unless the affected Optionees consent to such amendment. In
addition, the Board may not, without the approval of the Corporation's
stockholders, amend the Plan to (i) materially increase the maximum number of
shares issuable in the aggregate under this Plan and the 1981 Plan or the number
of shares issuable per newly-elected or continuing non-employee Board member,
except for permissible adjustments under Section IV.B., (ii) materially modify
the eligibility requirements for plan participation or (iii) materially increase
the benefits accruing to plan participants.
VIII. EFFECTIVE DATE AND TERM OF PLAN
A. The Plan shall be effective on the date of the 1996 Annual
Stockholders Meeting, provided the Plan is approved by the affirmative vote of a
majority of the outstanding shares of the Corporation's common stock present or
represented and entitled to vote at such Annual Meeting, and the initial
automatic option grants under the Plan shall be made on such date. If such
stockholder approval is not obtained, then the Plan shall terminate and no
options shall be granted under the Plan.
B. If the Plan is approved by the stockholders at the 1996 Annual
Meeting, then the Plan shall remain in effect until the EARLIER of (i)
December 31, 2005 or (ii) the date on which all shares available for issuance
under this Plan and the 1981 Plan shall have been issued pursuant to the
exercise of outstanding options. If the date of plan termination is determined
under clause (i) above, then all option grants outstanding on such date shall
thereafter continue to have force and effect in accordance with the provisions
of the instruments evidencing those grants.
IX. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares
pursuant to option grants or share issuances under the Plan shall be used for
general corporate purposes
X. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any option under
the Plan and the issuance of Common Stock upon the exercise of the option grants
made hereunder shall be subject to the Corporation's procurement of all
approvals and permits required by regulatory authorities having jurisdiction
over the Plan, the options granted under it, and the Common Stock issued
pursuant to it.
B. No shares of Common Stock or other assets shall be issued or
delivered under this Plan unless and until there shall have been compliance with
all applicable requirements of Federal and state securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and
7.
<PAGE>
all applicable listing requirements of any securities exchange on which the
Common Stock is then listed for trading.
XI. NO IMPAIRMENT OF RIGHTS
Neither the action of the Corporation in establishing the Plan nor any
provision of the Plan shall be construed or interpreted so as to affect
adversely or otherwise impair the right of the Corporation or the stockholders
to remove any individual from the Board at any time in accordance with the
provisions of applicable law.
XII. MISCELLANEOUS PROVISIONS
A. The right to acquire Common Stock or other assets under the Plan
may not be assigned, encumbered or otherwise transferred by any Optionee.
B. The provisions of the Plan relating to the exercise of the
outstanding options shall be governed by the laws of the State of Oregon, as
such laws are applied to contracts entered into and performed in such State.
C. The provisions of the Plan shall inure to the benefit of, and be
binding upon, the Corporation and its successors or assigns, and the Optionees,
the legal representatives of their respective estates, their respective heirs or
legatees and their permitted assignees.
8.
<PAGE>
EXHIBIT A
FORM OF AUTOMATIC STOCK OPTION AGREEMENT
<PAGE>
POPE & TALBOT, INC.
NON-EMPLOYEE DIRECTOR
STOCK OPTION AGREEMENT
----------------------
RECITALS
A. The Board has adopted the Plan pursuant to which eligible non-employee
members of the Board will automatically receive special option grants at
periodic intervals over their period of Board service in order to provide such
individuals with a meaningful incentive to continue to serve as members of the
Board.
B. Optionee is an eligible non-employee Board member, and this Agreement
is executed pursuant to, and is intended to carry out the purposes of, the Plan
in connection with the automatic grant of an option to purchase shares of Common
Stock under the Plan.
C. All capitalized terms in this Agreement shall have the meaning
assigned to them in the attached Appendix.
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF OPTION. The Corporation hereby grants to Optionee, as
of the Grant Date, a Non-Statutory Option to purchase up to the number of Option
Shares specified in the Grant Notice. The Option Shares shall be purchasable
from time to time during the option term specified in Paragraph 2 at the
Exercise Price.
2. OPTION TERM. This option shall have a term of ten (10) years
measured from the Grant Date and shall accordingly expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
Paragraph 5 or 6.
3. LIMITED TRANSFERABILITY. This option shall be neither
transferable nor assignable by Optionee other than by will or by the laws of
descent and distribution following Optionee's death and may be exercised, during
Optionee's lifetime, only by Optionee. However, this option may also be
assigned in accordance with the terms of a Qualified Domestic Relations Order.
If so assigned, the assigned option shall be exercisable only by the person or
persons who acquire a proprietary interest in the option pursuant to such
Qualified Domestic Relations Order. The terms applicable to the assigned option
(or portion thereof) shall be the same as those in effect for this option
immediately prior to such assignment and shall be set forth in such documents
issued to the assignee as the Board may deem appropriate.
<PAGE>
4. EXERCISABILITY. This option shall be immediately exercisable for
any or all of the Option Shares as fully vested shares of Common Stock and shall
remain so exercisable until the Expiration Date or sooner termination of the
option term under Paragraph 5 or 6.
5. CESSATION OF BOARD SERVICE. Should Optionee's service as a Board
member cease while this option remains outstanding, then the option term
specified in Paragraph 2 shall terminate (and this option shall cease to be
outstanding) prior to the Expiration Date in accordance with the following
provisions:
(a) Should Optionee cease for any reason to serve as a Board
member while holding this option, then the period for exercising this option
shall be reduced to a twelve (12)-month period (commencing with the date of such
cessation of Board service), but in no event shall this option be exercisable at
any time after the Expiration Date. Upon the EARLIER of (i) the expiration of
such twelve (12)-month period or (ii) the specified Expiration Date, the option
shall terminate and cease to be exercisable with respect to any Option Shares
for which the option has not otherwise been exercised.
(b) Should Optionee die while this option remains outstanding,
then the personal representative of Optionee's estate or the person or persons
to whom the option is transferred pursuant to Optionee's will or in accordance
with the laws of descent and distribution shall have the right to exercise this
option for any or all of the Option Shares at that time subject to this option.
Such right of exercise shall terminate, and this option shall accordingly cease
to be exercisable for such Option Shares, upon the EARLIER of (i) the expiration
of the twelve (12)-month period measured from the date of Optionee's cessation
of Board service or (ii) the specified Expiration Date.
6. CORPORATE TRANSACTION.
(a) Immediately following the consummation of a Corporate
Transaction, this option shall terminate and cease to be exercisable except to
the extent assumed by the successor corporation (or parent thereof) in
connection with such Corporate Transaction.
(b) If this option is assumed in connection with a Corporate
Transaction, then this option shall be appropriately adjusted, immediately after
such Corporate Transaction, to apply to the number and class of securities which
would have been issuable to Optionee in consummation of such Corporate
Transaction had the option been exercised immediately prior to such Corporate
Transaction, and appropriate adjustments shall also be made to the Exercise
Price, PROVIDED the aggregate Exercise Price shall remain the same.
(c) This Agreement shall not in any way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital or
business
2.
<PAGE>
structure or to merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets.
7. ADJUSTMENT IN OPTION SHARES. Should any change be made to the
Common Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, appropriate adjustments shall be made to (i) the total number
and/or class of securities subject to this option and (ii) the Exercise Price in
order to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder.
8. STOCKHOLDER RIGHTS. The holder of this option shall not have any
stockholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become a holder of record
of the purchased shares.
9. MANNER OF EXERCISING OPTION.
(a) In order to exercise this option with respect to all or any
part of the Option Shares for which this option is at the time exercisable,
Optionee (or any other person or persons exercising the option) must take the
following actions:
(i) Execute and deliver to the Corporation a
Notice of Exercise for the Option Shares for which the option is
exercised.
(ii) Pay the aggregate Exercise Price for the
purchased shares in one or more of the following forms:
(A) cash or check made payable to the
Corporation,
(B) shares of Common Stock held by Optionee (or
any other person or persons exercising the option) for the
requisite period necessary to avoid a charge to the Corporation's
earnings for financial reporting purposes and valued at Fair
Market Value on the Exercise Date, or
(C) through a special sale and remittance
procedure pursuant to which Optionee (or any other person or
persons exercising the option) shall concurrently provide
irrevocable written instructions (a) to a Corporation-designated
brokerage firm to effect the immediate sale of the purchased
shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the
aggregate Exercise Price payable for the purchased shares and
(b) to the Corporation to deliver the certificates
3.
<PAGE>
for the purchased shares directly to such brokerage firm in order to
complete the sale.
Except to the extent the sale and remittance procedure is
utilized in connection with the option exercise, payment of the
Exercise Price must accompany the Notice of Exercise delivered to
the Corporation in connection with the option exercise.
(iii) Furnish to the Corporation appropriate
documentation that the person or persons exercising the option (if
other than Optionee) have the right to exercise this option.
(b) As soon after the Exercise Date as practical, the
Corporation shall issue to or on behalf of Optionee (or any other person or
persons exercising this option) a certificate for the purchased Option Shares,
with the appropriate legends affixed thereto.
(c) In no event may this option be exercised for any fractional
shares.
10. COMPLIANCE WITH LAWS AND REGULATIONS.
(a) The exercise of this option and the issuance of the Option
Shares upon such exercise shall be subject to compliance by the Corporation and
Optionee with all applicable requirements of law relating thereto and with all
applicable regulations of any stock exchange (or the Nasdaq National Market if
applicable) on which the Common Stock may be listed for trading at the time of
such exercise and issuance.
(b) The inability of the Corporation to obtain approval from any
regulatory body having authority deemed by the Corporation to be necessary to
the lawful issuance and sale of any Common Stock pursuant to this option shall
relieve the Corporation of any liability with respect to the non-issuance or
sale of the Common Stock as to which such approval shall not have been obtained.
The Corporation, however, shall use its best efforts to obtain all such
approvals.
11. SUCCESSORS AND ASSIGNS. Except to the extent otherwise provided
in Paragraph 3 or 6, the provisions of this Agreement shall inure to the benefit
of, and be binding upon, the Corporation and its successors and assigns and
Optionee, Optionee's assigns and the legal representatives, heirs and legatees
of Optionee's estate.
12. NOTICES. Any notice required to be given or delivered to the
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to
be given or delivered to Optionee shall be in writing and addressed to Optionee
at the address indicated below
4.
<PAGE>
Optionee's signature line on the Grant Notice. All notices shall be deemed
effective upon personal delivery or upon deposit in the U.S. mail, postage
prepaid and properly addressed to the party to be notified.
13. CONSTRUCTION. This Agreement and the option evidenced hereby are
made and granted pursuant to the Plan and are in all respects limited by and
subject to the terms of the Plan.
14. GOVERNING LAW. The interpretation, performance and enforcement
of this Agreement shall be governed by the laws of the State of Oregon without
resort to that State's conflict-of-laws rules.
5.
<PAGE>
EXHIBIT I
NOTICE OF EXERCISE
I hereby notify Pope & Talbot, Inc. (the "Corporation") that I elect
to purchase __________ shares of the Corporation's Common Stock (the "Purchased
Shares") at the option exercise price of $___________ per share (the "Exercise
Price") pursuant to that certain option (the "Option") granted to me under the
Corporation's 1996 Non-Employee Director Stock Option Plan on
____________________, 199___.
Concurrently with the delivery of this Exercise Notice to the
Corporation, I shall hereby pay to the Corporation the Exercise Price for the
Purchased Shares in accordance with the provisions of my agreement with the
Corporation (or other documents) evidencing the Option and shall deliver
whatever additional documents may be required by such agreement as a condition
for exercise. Alternatively, I may utilize the special broker-dealer sale and
remittance procedure specified in my agreement to effect payment of the Exercise
Price for the Purchased Shares.
____________________, 199___
Date
__________________________________________________
Optionee
Address: _________________________________________
__________________________________________________
Print name in exact manner
it is to appear on the
stock certificate: __________________________________________________
Address to which certificate
is to be sent, if different
from address above: __________________________________________________
__________________________________________________
Social Security Number: __________________________________________________
<PAGE>
APPENDIX
The following definitions shall be in effect under the Agreement:
A. AGREEMENT shall mean this Automatic Stock Option Agreement.
B. BOARD shall mean the Corporation's Board of Directors.
C. CODE shall mean the Internal Revenue Code of 1986, as amended.
D. COMMON STOCK shall mean the Corporation's common stock.
E. CORPORATE TRANSACTION shall mean either of the following stockholder-
approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing
more than fifty percent (50%) of the total combined voting power of
the Corporation's outstanding securities are transferred to a person
or persons different from the persons holding those securities
immediately prior to such transaction, or
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation
or dissolution of the Corporation.
F. CORPORATION shall mean Pope & Talbot, Inc., a Delaware corporation.
G. DOMESTIC RELATIONS ORDER shall mean any judgment, decree or order
(including approval of a property settlement agreement) which provides or
otherwise conveys, pursuant to applicable State domestic relations laws
(including community property laws), marital property rights to any spouse or
former spouse of Optionee.
H. EXERCISE DATE shall mean the date on which the option shall have been
exercised in accordance with Paragraph 9 of the Agreement.
I. EXERCISE PRICE shall mean the exercise price per share as specified
in the Grant Notice.
J. EXPIRATION DATE shall mean the date on which the option expires as
specified in the Grant Notice.
1.
<PAGE>
K. FAIR MARKET VALUE per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date immediately prior
to the date in question, as the price is reported by the National
Association of Securities Dealers on the Nasdaq National Market or
any successor system. If there is no closing selling price for the
Common Stock on the date immediately prior to the date in question,
then the Fair Market Value shall be the closing selling price on the
last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date immediately prior to the
date in question on the Stock Exchange which serves as the primary
market for the Common Stock, as such price is officially quoted in
the composite tape of transactions on such exchange. If there is no
closing selling price for the Common Stock on the date immediately
prior to the date in question, then the Fair Market Value shall be
the closing selling price on the last preceding date for which such
quotation exists.
L. GRANT DATE shall mean the date of grant of the option as specified in
the Grant Notice.
M. GRANT NOTICE shall mean the Notice of Grant of Automatic Stock Option
accompanying the Agreement, pursuant to which Optionee has been informed of the
basic terms of the option evidenced hereby.
N. 1934 ACT shall mean the Securities Exchange Act of 1934, as amended.
O. NON-STATUTORY OPTION shall mean an option not intended to satisfy the
requirements of Code Section 422.
P. NOTICE OF EXERCISE shall mean the notice of exercise in the form of
Exhibit I.
Q. OPTION SHARES shall mean the number of shares of Common Stock subject
to the option.
R. OPTIONEE shall mean the person to whom the option is granted as
specified in the Grant Notice.
S. PLAN shall mean the Corporation's 1996 Non-Employee Director Stock
Option Plan.
A-2.
<PAGE>
T. QUALIFIED DOMESTIC RELATIONS ORDER shall mean a Domestic Relations
Order which substantially complies with the requirements of Code Section 414(p).
The Corporation shall have the sole discretion to determine whether a Domestic
Relations Order is a Qualified Domestic Relations Order.
U. STOCK EXCHANGE shall mean the American Stock Exchange or the New York
Stock Exchange.
A-3.
<PAGE>
POPE & TALBOT, INC.
PROXY
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS, APRIL 30, 1996
The undersigned hereby appoints Michael Flannery, Peter T. Pope and Brooks
Walker, Jr., jointly and severally, with full power of substitution, proxies of
the undersigned, to vote the shares of Common Stock which the undersigned is
entitled to vote at the Annual Meeting of Shareholders of Pope & Talbot, Inc.,
to be held on April 30, 1996, and at any adjournments thereof:
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
Please mark your votes as indicated in this example /x/
(THE BOARD OF DIRECTORS FAVORS A VOTE WITH AUTHORITY)
1. Election of Directors. FOR WITHHOLD authority to vote for the
WARREN E.MCCAIN following nominees to the Board of
ROBERT STEVENS MILLER, JR. Directors to serve three-year terms,
HUGO G.L. POWELL as described in the accompanying
Proxy Statement
/ / / /
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
- -------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. The proposal to approve the 1996 Non-Employee / / / / / /
Director Stock Option Plan to permit annual stock
option grants to non-employee Board members from
the existing authorized share reserve under the
Company's Stock Option and Appreciation Plan (THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR);
3. The proposal to ratify the selection of / / / / / /
Arthur Andersen LLP to continue as independent
certified public accountants for the year 1996
(THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR); AND
4. In accordance with Regulation 14A under the Securities Exchange Act of
1934, in their discretion upon any such other matters as may properly come
before the meeting.
UNLESS OTHERWISE SPECIFIED, THE PROXIES ARE GRANTED THE AUTHORITY TO VOTE FOR
THE ELECTION OF ALL OR ANY OF THE NOMINEES FOR DIRECTOR AND FOR PROPOSALS 2, 3
AND 4.
PLEASE DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
Signatures(s) ___________________________________ Dated ______________, 1996
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
