<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
POPE & 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/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
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, 1997
------------------------
The Annual Meeting of Shareholders of Pope & Talbot, Inc. (the "Company"), a
Delaware corporation, will be held at the Riverplace Hotel, 1510 Southwest
Harbor Way, Portland, Oregon on Wednesday, April 30, 1997, 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 ratify the selection of independent public accountants for the year
1997; and
3. 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 3, 1997, 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 10, 1997
<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, 1997 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 3, 1997 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 1996 Annual Report, to its shareholders on March 10,
1997.
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 ratification of
Arthur Andersen LLP as the Company's independent public accountants for 1997 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 2000 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 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
1
<PAGE>
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 2000
GORDON P. ANDREWS, age 40, 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 62, 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.
BROOKS WALKER, JR., age 68, 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.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
TERM EXPIRING IN 1998
HAMILTON W. BUDGE, age 68, 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 58, 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. Mr. Crocker is also
a director of BEI Electronics, Inc., Fiduciary Trust Company International,
KeraVision, Inc. and Superconductor Technologies, Inc.
MICHAEL FLANNERY, age 52, 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 Division for the
Company.
2
<PAGE>
TERM EXPIRING IN 1999
WARREN E. MCCAIN, age 71, 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.
ROBERT STEVENS MILLER, JR., age 55, has been a director of the Company since
1993. Mr. Miller is also a member of the Board's Audit and Human Resources
Committees. Since September 1996, Mr. Miller has been the Vice Chairman of the
Board of Morrison Knudsen Corporation, an engineering and construction company,
and from April 1995 to September 1996 was Chairman of the Board of Morrison
Knudsen. 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 Corporation and Symantec, Inc.
HUGO G. L. POWELL, age 52, 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.
3
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information, as of January 30, 1997,
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 PERCENT OF
CURRENTLY WITHIN 60 DAYS OF OUTSTANDING
NAME OF INDIVIDUAL OR IDENTITY OF GROUP OWNED(1) JANUARY 30, 1997 TOTAL COMMON STOCK
- ---------------------------------------------------- ------------ ------------------- ---------- ---------------
<S> <C> <C> <C> <C>
Gordon P. Andrews................................... 245,815(3) 2,000 247,815 1.9%
Hamilton W. Budge................................... 20,000(4) 2,000 22,000 (2)
Charles Crocker..................................... 1,000 2,000 3,000 (2)
Michael Flannery.................................... 16,235(4) 57,430 73,665 (2)
Abram Friesen....................................... 500 12,416 12,916 (2)
William G. Frohnmayer............................... 5,456 43,640 49,096 (2)
Carlos M. Lamadrid.................................. 12,837(4) 45,770 58,607 (2)
Warren E. McCain.................................... 1,000 2,000 3,000 (2)
Robert Stevens Miller, Jr........................... 1,000(4) 2,000 3,000 (2)
Peter T. Pope....................................... 444,577(5) 235,020 679,597 5.1%
Hugo G. L. Powell................................... -- 2,000 2,000 (2)
Brooks Walker, Jr................................... 1,600 2,000 3,600 (2)
All directors and executive officers as a group (12
persons including persons listed above)........... 750,020 408,276 1,158,296 8.7%
</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) Includes 66,339 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 80,000 shares for which he shares investment and voting power and
disclaims beneficial ownership. Refer to Emily T. Andrews in table
disclosing Beneficial Ownership of Over 5% of Pope & Talbot Common Stock.
Also includes 29,158 shares owned by his wife as to which he disclaims
beneficial ownership.
4
<PAGE>
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 five meetings during 1996. The Audit Committee
held three meetings and the Human Resources Committee held three meetings. 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.
DIRECTOR REMUNERATION
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.
Under the automatic option grant program in effect under the Company's 1996
Non-Employee Director Stock Option Plan (Director Plan), an individual who first
becomes a non-employee member of the Board will receive an automatic option
grant for 2,000 shares of the Company's Common Stock upon commencement of Board
service, and each individual with six or more months of Board service will
receive an automatic option grant for an additional 1,000 shares at each Annual
Shareholders Meeting at which he continues to serve as a non-employee Board
member, whether or not he is standing for re-election at that particular
meeting. On April 30, 1996, the date of the 1996 Annual Shareholders Meeting,
each non-employee Board member received an automatic option grant under the
Director Plan for 2,000 shares of Common Stock with an exercise price of $15.250
per share, the fair market value per share of Common Stock on the grant date.
Each 2,000-share and 1,000-share option has a term of ten years and becomes
exercisable immediately upon grant.
No other compensation is paid to the non-employee members of the Board with
respect to their service on the Board.
5
<PAGE>
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, 1996.
<TABLE>
<CAPTION>
VOTING POWER INVESTMENT POWER
----------------------- ----------------------- PERCENT
SOLE SHARED SOLE SHARED TOTAL OF CLASS
--------- ------------ --------- ------------ --------- -------------
<S> <C> <C> <C> <C> <C> <C>
Emily T. Andrews(1).......................... 813,361 80,000(2) 813,361 80,000(2) 893,361 6.7%
600 Montgomery Street
San Francisco, CA 94111
National Rural Electric...................... 860,600 -- 860,600 -- 860,600 6.4%
Cooperative Association
4301 Wilson Blvd.
Arlington, VA 22203
Donald Smith & Co., Inc...................... 720,400 -- 720,400 -- 720,400 5.4%
East 80 Route 4
Paramus, NJ 07652
</TABLE>
- ------------------------
(1) Emily T. Andrews is the mother of Gordon P. Andrews. See Security Ownership
of Management table.
(2) Represents shares for which she shares voting and investing power and for
which she disclaims beneficial ownership. Refer to Peter T. Pope in table
disclosing Security Ownership of Management.
6
<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 1996 fiscal year was in excess of $100,000 for services
rendered in all capacities to the Company and its subsidiaries for the fiscal
years ended December 31, 1996, December 31, 1995 and December 31, 1994,
respectively. The individuals named in such table will be subsequently referred
to as the "Named Executive Officers." No executive officer who would have
otherwise been included in such table on the basis of salary and bonus earned
for the 1996 fiscal year has resigned or terminated employment during 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------------------- LONG-TERM COMPENSATION
OTHER ----------------------------
ANNUAL OPTIONS/ ALL OTHER
SALARY BONUS COMPENSATION SAR'S COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($)(1) ($)(1) ($) (#) ($)(2)
- ------------------------------------------ --------- --------- --------- ------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Peter T. Pope............................. 1996 428,820 -- -- 40,000 4,750
Chairman of the Board 1995 420,434 -- -- 43,700 4,500
and Chief Executive Officer 1994 407,872 141,047 -- 24,000 4,500
Michael Flannery.......................... 1996 277,049 -- -- 35,000 4,750
President(3) 1995 223,262 -- -- 24,600 4,500
1994 196,060 93,027 -- 5,500 4,500
Carlos M. Lamadrid........................ 1996 203,688 -- -- 14,000 4,750
Senior Vice President, Secretary 1995 197,756 -- -- 12,300 4,500
and Chief Financial Officer 1994 191,848 68,442 -- 5,500 4,500
Abram Friesen(4).......................... 1996 170,370(5) -- -- 14,000 --
Vice President-Division Mgr. 1995 -- -- -- -- --
Wood Products Division 1994 -- -- -- -- --
William G. Frohnmayer..................... 1996 187,698 -- -- 14,000 4,750
Vice President-Division Mgr. 1995 183,484 -- -- 12,300 4,500
Fiber Products Division 1994 177,994 32,902 -- 5,500 4,500
</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. Friesen was named Vice President-Division Manager, Wood Products
Division in February 1996. Prior to February 1996, Mr. Friesen did not hold
the office of an executive officer of the Company; however, Mr. Friesen did
serve as President of Pope & Talbot Ltd., a wholly-owned Canadian subsidiary
of the Company.
(5) Mr. Friesen is compensated in Canadian dollars. The compensation above
reflects the conversion to U.S. dollars at a year-end 1996 Canadian to U.S.
exchange rate of .7297.
7
<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 (Option Plan) for the 1996 fiscal year to the Named
Executive Officers:
OPTION/SAR GRANTS IN 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS
------------------------------------------------------------------ VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS/SARS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM(1)
OPTIONS/SARS EMPLOYEES BASE PRICE EXPIRATION ---------------------
GRANTED(2)(3) IN FISCAL YEAR ($/SHARE)(4) DATE 5%($) 10%($)
----------------- ------------------- ------------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Peter T. Pope................... 40,000 22.7 15.250 2/1/06 383,626 972,183
Michael Flannery................ 35,000 19.9 15.250 2/1/06 335,673 850,660
Carlos M. Lamadrid.............. 14,000 8.0 15.250 2/1/06 134,269 340,264
Abram Friesen................... 14,000 8.0 15.250 2/1/06 134,269 340,264
William G. Frohnmayer........... 14,000 8.0 15.250 2/1/06 134,269 340,264
</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 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 1996 included stock
appreciation rights.
(3) Options will become exercisable for the option shares in a series of 5 equal
and successive annual installments, beginning February 1, 1997. 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 acceleration of
8
<PAGE>
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.
OPTION/SAR EXERCISES AND HOLDINGS
The following table sets forth information with respect to the Named
Executive Officers concerning exercise of options during the 1996 fiscal year
and unexercised options held as of the end of that fiscal year. No SAR's were
exercised during the 1996 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>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
VALUE REALIZED UNDERLYING UNEXERCISED OPTIONS AT
(MARKET PRICE AT OPTIONS AT FY-END(#) FY-END($)(1)
SHARES ACQUIRED EXERCISE LESS -------------------------- --------------------------
NAME ON EXERCISE (#) EXERCISE PRICE)($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------- --------------- --------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Peter T. Pope.................... -- -- 193,682 121,158 34,560 33,740
Michael Flannery................. -- -- 38,480 67,910 6,690 26,795
Carlos M. Lamadrid............... -- -- 33,480 37,070 6,075 11,210
Abram Friesen.................... -- -- 6,504 20,952 1,160 9,470
William G. Frohnmayer............ -- -- 33,280 37,070 4,255 11,210
</TABLE>
- ------------------------
(1) Based upon the market price of $15.875 per share, which was the closing
selling price of the Company's common stock on the last day of the 1996
fiscal year, less the exercise price payable per share.
9
<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 plans which provide
benefits that would otherwise be denied participants by reason of certain
Internal Revenue Code and other applicable 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 and
are not subject to offsets for Social Security retirement benefits:
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, $435,156; Mr. Flannery, $283,260; Mr. Lamadrid,
$208,656; Mr. Friesen, $176,634; and Mr. Frohnmayer, $191,016. Mr. Friesen is
compensated in Canadian dollars and the estimated covered compensation shown has
been converted to U.S. dollars using the year-end 1996 exchange rate of .7297.
The estimated years of service for each Named Executive Officer is as follows:
Mr. Pope, 31 years; Mr. Flannery, 10 years; Mr. Lamadrid, 23 years; Mr. Friesen,
9 years; and Mr. Frohnmayer, 19 years. Refer to Employment Contracts, Change in
Control Arrangement and Retirement Arrangement for discussion of Mr. Lamadrid's
retirement benefits.
EMPLOYMENT CONTRACTS, CHANGE IN CONTROL ARRANGEMENT AND RETIREMENT 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. 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
10
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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 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,
1997 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, $1,456,203; Mr. Flannery, $889,162; Mr. Lamadrid,
$840,191; Mr. Friesen, $529,895; and Mr. Frohnmayer, $755,383. Mr. Friesen is
compensated in Canadian dollars and this maximum amount payable has been
converted to U.S. dollars using the year-end 1996 exchange rate of .7297.
The Human Resources Committee of the Company's Board of Directors has
approved a special early retirement arrangement for Mr. Lamadrid pursuant to
which he will retire from the company on August 31, 1997. Under the arrangement,
Mr. Lamadrid will be provided with the following benefits upon his retirement:
(i) pension benefits calculated under the Company's pension plans as if he had
continued in employment for an additional three years through age sixty-five and
his salary had increased at the rate of three percent per year over that
three-year period, (ii) continued health care coverage through age sixty-five,
(iii) a cash bonus equal to one hundred percent of base salary and (iv) a
one-year period following his retirement date in which to exercise his
outstanding options for any shares for which those options are exercisable on
his retirement date. Refer to Summary Compensation Table, Option/SAR Exercises
and Holdings and Pension Plans for related information.
11
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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.
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 officer's compensation package for the
1996 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 taken into account for
comparative compensation purposes at the Company's principal competitors,
both inside and outside the industry. Within the forest products industry
the peer group consists of 32 companies of which 17 are included in the
Value Line Paper and Forest Products Index which is included in the stock
price performance graph on page 15. 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.
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<PAGE>
- 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 1996
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 1996 and therefore, no cash incentive bonus payments were
made to any of the executive officers named in the Summary Compensation
Table.
- LONG-TERM INCENTIVE COMPENSATION. In February 1996, 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/SAR Grants in 1996" on page 8). 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 1996 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 in excess of $1 million paid to certain
of their executive officers. The total compensation paid to the Company's
executive officers during the 1996 fiscal year, whether paid in cash or through
the gain realized upon the exercise of outstanding stock options, did not
approach the $1 million limitation per covered executive officer, and the Human
Resources Committee expects that the total compensation to be paid to the
executive officers for the 1997 fiscal year will remain under the $1 million
limit. Accordingly, the Human Resources Committee has decided at this time not
to take any action to limit or restructure the elements of cash and equity
compensation payable to the Company's executive officers. The Human Resources
Committee will reconsider this decision should the individual compensation of
any executive officer approach the $1 million level.
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<PAGE>
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 1996 fiscal year, Mr. Pope's base salary was set at
the median level in effect for chief executive officers at the surveyed
companies. In February 1997, the Human Resources Committee conducted its annual
review of Mr. Pope's base salary level and increased his base salary by 4%
effective March 1, 1997. The increase was designed to maintain Mr. Pope's base
salary at approximately the mid-point of the base salary projections of surveyed
companies for the 1997 calendar year.
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 the 1996 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.
HUMAN RESOURCES COMMITTEE
Hamilton W. Budge Robert Stevens Miller, Jr.
Warren E. McCain Brooks Walker, Jr.
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 1996 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.
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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, 1996, 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, 1991 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 PRODUCTS
<S> <C> <C> <C>
1991 $100.00 $100.00 $100.00
1992 $108.95 $107.79 $110.61
1993 $202.43 $118.66 $125.84
1994 $115.85 $120.56 $126.00
1995 $101.64 $165.78 $137.18
1996 $127.96 $204.32 $150.79
</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.
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<PAGE>
SECTION 16(A)--BENEFICIAL OWNERSHIP COMPLIANCE
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.
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, 1996 with all Section 16(a) filing requirements applicable to the Company's
officers, directors and greater than ten-percent beneficial owners.
PROPOSAL NO. 2
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, 1997, 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 1998 Annual Meeting
of Shareholders must submit such proposal by November 10, 1997, for inclusion in
the Company's 1998 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.
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<PAGE>
OTHER MATTERS
The Board of Directors does not know of any other matters which will be
presented for action at the meeting. However, if other matters come before the
meeting, the persons named in each proxy intend to vote it in accordance with
their best judgment.
ANNUAL REPORT--FINANCIAL MATTERS
The annual report to shareholders covering the operations of the Company for
the year 1996, including financial statements is enclosed herewith.
By order of the Board of Directors
C. Lamadrid
SENIOR VICE PRESIDENT, SECRETARY
AND CHIEF FINANCIAL OFFICER
17
<PAGE>
POPE & TALBOT, INC.
PROXY
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS, APRIL 30, 1997
The undersigned hereby appoints Michael Flannery, Warren E. McCain and
Hugo G. L. Powell, 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, 1997, and at any adjournments
thereof:
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
Please mark your votes as indicated in this example /X/
WITH WITHOUT 1. Authority to vote for the following nominees to the
/ / / / Board of Directors to serve three-year terms, as
described in the accompanying Proxy Statement (THE
BOARD OF DIRECTORS FAVORS A VOTE WITH AUTHORITY):
Gordon P. Andrews, Peter T. Pope, Brooks Walker, Jr.
(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 ratify the selection of Arthur
/ / / / / / Andersen LLP to continue as independent
certified public accountants for the year
1997 (THE BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR): and
3. 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
AND 3.
PLEASE DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
_____________________________________________ Dated __________________, 1997
Please sign here exactly as name(s) appear(s)
hereon. (When signing as attorney,
administrator, trustee, guardian or corporate
officer, please so indicate.)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
