<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 Section 240.14a-11(c) or Section
240.14a-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, 1998
------------------------
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 Thursday, April 30, 1998, 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 an amendment to the Stock Option and Appreciation Plan to (i)
increase the number of shares of common stock authorized for issuance
thereunder by an additional 300,000 shares and (ii) impose a
200,000-share limit on the maximum number of shares of common stock for
which any one participant in such Plan may be granted stock options and
stock appreciation rights in the aggregate per calendar year, beginning
with the 1998 calendar year;
3. To ratify the selection of independent public accountants for the year
1998; 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 16, 1998, 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
Maria M. Pope
TREASURER AND SECRETARY
Portland, Oregon
March 26, 1998
<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, 1998 and at any adjournment
thereof. You may revoke it at any time prior to its use by a written
communication to Maria M. Pope, 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 16, 1998 are
entitled to vote at the Annual Meeting. On that date, the Company had
outstanding 13,481,441 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 1997 Annual Report, to its shareholders on March 26,
1998.
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 approval of the
amendment to the Stock Option and Appreciation Plan, for ratification of Arthur
Andersen LLP as the Company's independent public accountants for 1998 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 and will have the same
effect as negative votes; 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 2001 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
1
<PAGE>
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 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 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 2001
HAMILTON W. BUDGE, age 69, has been a director of the Company since 1967.
Mr. Budge is also a member of the Board's Human Resources and Nominating
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 59, has been a director of the Company since 1986. Mr.
Crocker is also a member of the Board's Audit Committee. Since September 1997,
Mr. Crocker has served as Chairman of the Board, President and Chief Executive
Officer of BEI Technologies, Inc., a diversified electronics company
specializing in electronic sensors and motion control products, and as Chairman
of the Board of BEI Medical Systems Company, a medical device company
specializing in diagnostic and therapeutic products for the women's health care
market. From 1974 until September 1997, Mr. Crocker served as Chairman of the
Board of BEI Electronics, Inc., a diversified technology firm. He has been
President of Crocker Capital, a private venture capital firm, since 1985. Mr.
Crocker is also a director of BEI Technologies, Inc., BEI Medical Systems
Company, Fiduciary Trust Company International and Keravision, Inc.
MICHAEL FLANNERY, age 54, 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.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
TERM EXPIRING IN 1999
WARREN E. MCCAIN, age 72, has been a director of the Company since 1989. Mr.
McCain is also a member of the Board's Human Resources and Nominating Committee.
From 1991 until his retirement in February 1996, Mr. McCain was 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. and Ameristar Casinos Inc.
ROBERT STEVENS MILLER, JR., age 56, has been a director of the Company since
1993. Mr. Miller is also a member of the Board's Audit and Human Resources and
Nominating Committees. Since October 1997, Mr. Miller has been the Chairman of
the Board and Chief Executive Officer of Waste Management, Inc., an
international provider of waste management services. Since September 1996, Mr.
Miller has been the
2
<PAGE>
Vice Chairman of the Board of Morrison Knudsen Corporation, an engineering and
construction company, and from April 1995 to September 1996 he was the 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 Federal-Mogul Corporation,
Fluke Corporation, Morrison Knudsen Corporation, Symantec, Inc. and Waste
Management, Inc.
HUGO G. L. POWELL, age 53, has been a director of the Company since 1985.
Mr. Powell is also a member of the Board's Audit Committee. Since September
1997, Mr. Powell has been Chief Executive Officer-- Americas of Labatt Brewing
Company, Ltd., beverage manufacturers and distributors. Prior to that time, he
was Chief Operating Officer--Americas of Labatt Brewing Company, Ltd. from 1994
to September 1997 and was President of Labatt Breweries of Canada from 1992 to
1994.
TERM EXPIRING IN 2000
GORDON P. ANDREWS, age 41, 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 63, 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 69, has been a director of the Company since 1981.
Mr. Walker is also a member of the Board's Audit and Human Resources and
Nominating 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.
3
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information, as of January 30, 1998,
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, 1998 TOTAL COMMON STOCK
- ---------------------------------------------------- ------------ ------------------- ---------- ---------------
<S> <C> <C> <C> <C>
Gordon P. Andrews................................... 217,384(3) 3,000 220,384 1.6%
Hamilton W. Budge................................... 20,000(4) 3,000 23,000 (2)
Charles Crocker..................................... 1,000 3,000 4,000 (2)
Robert J. Day....................................... -- -- -- (2)
Michael Flannery.................................... 16,235(4) 51,370 67,605 (2)
Abram Friesen....................................... 1,700 11,816 13,516 (2)
William G. Frohnmayer............................... 323 55,930 56,253 (2)
Carlos M. Lamadrid(6)............................... 12,837(4) 31,810 44,647 (2)
Warren E. McCain.................................... 1,000 3,000 4,000 (2)
Robert Stevens Miller, Jr........................... 1,000(4) 3,000 4,000 (2)
Peter T. Pope....................................... 434,536(5) 254,560 689,096 5.1%
Hugo G. L. Powell................................... -- 3,000 3,000 (2)
Brooks Walker, Jr................................... 1,600 3,000 4,600 (2)
All directors and executive officers as a group (13
persons including persons listed above)........... 707,615 426,486 1,134,101 8.4%
</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 37,908 shares for which he is co-trustee for his 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 with
Emily T. Andrews and for which he disclaims beneficial ownership. Refer to
Emily T. Andrews in table disclosing Beneficial Ownership of Over 5% of Pope
& Talbot Common Stock. Also includes 27,317 shares owned by his wife as to
which he disclaims beneficial ownership.
(6) Mr. Lamadrid retired from the Company on August 31, 1997.
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 and Nominating Committee. These committees are
composed entirely of non-employee 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 and Nominating Committee is currently comprised of
Hamilton W. Budge, Chairman, Warren E. McCain, Robert Stevens Miller, Jr. and
Brooks Walker, Jr. The Human Resources and Nominating 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 and Nominating Committee also has sole authority to administer
the Company's stock option and stock bonus plans and make grants or awards
thereunder. It also has the responsibility to make recommendations to the Board
of Directors on the Board's compensation and on additions or deletions of Board
members.
The Board of Directors held eight meetings during 1997. The Audit Committee
held three meetings and the Human Resources and Nominating Committee held four
meetings. Each director, except for Hugo G.L. Powell, 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. Mr. Powell attended 73 percent of the aggregate number of the
meetings of the Board and Audit Committee (eight out of eleven possible
meetings).
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 $15.25
per share, the fair market value per share of common stock on the grant date. On
April 30, 1997, the date of the 1997 Annual Shareholder Meeting, each non-
employee Board member received an automatic option grant under the Director Plan
for 1,000 shares of common stock with an exercise price of $14.375 per share,
the fair market value per share of common
5
<PAGE>
stock on the grant date. Each 2,000-share and 1,000-share option has a term of
ten years and is 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.
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, 1997.
<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 6.6%
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
</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 with Peter
T. Pope 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 1997 fiscal year was in excess of $100,000, for
services rendered in all capacities to the Company and its subsidiaries for the
fiscal years ended December 31, 1997, December 31, 1996 and December 31, 1995,
respectively. The individuals named in such table will be subsequently referred
to as the "Named Executive Officers." Mr. Carlos Lamadrid is also included in
such table on the basis of the salary and bonus he earned for the 1997 fiscal
year although he retired from the Company prior to the end of such fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION
-------------------------------------- -----------------------
OTHER
ANNUAL OPTIONS/ ALL OTHER
SALARY BONUS COMPENSATION SARS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($)(1) ($)(1) ($) (#) ($)(2)
- -------------------------------------------------- ---- ---------- ---------- ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Peter T. Pope .................................... 1997 449,666 162,359 -- -- 4,750
Chairman of the Board 1996 428,820 -- -- 40,000 4,750
and Chief Executive Officer 1995 420,434 -- -- 43,700 4,500
Michael Flannery(3) .............................. 1997 292,700 90,586 -- 30,000 4,750
President and 1996 277,049 -- -- 35,000 4,750
Chief Operating Officer 1995 223,262 -- -- 24,600 4,500
Robert J. Day(4) ................................. 1997 85,420 30,751 17,483(5) 30,000 2,050
Senior Vice President and 1996 -- -- -- -- --
Chief Financial Officer 1995 -- -- -- -- --
Carlos M. Lamadrid(6) ............................ 1997 143,280 -- 37,559(7) -- 497,766(8)
Senior Vice President, 1996 203,688 -- -- 14,000 4,750
Secretary and 1995 197,756 -- -- 12,300 4,500
Chief Financial Officer
Abram Friesen(9) ................................. 1997 177,711(10) 82,480(10) -- 15,000 --
Vice President-Division Mgr. 1996 170,370(10) -- -- 14,000 --
Wood Products Division 1995 -- -- -- -- --
William G. Frohnmayer ............................ 1997 197,386 33,226 -- -- 4,750
Vice President-Division Mgr. 1996 187,698 -- -- 14,000 4,750
Fiber Products Division 1995 183,484 -- -- 12,300 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. Day was hired as Senior Vice President and Chief Financial Officer in
August 1997.
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<PAGE>
(5) Consists of reimbursement by the Company of certain moving expenses
incurred by Mr. Day in relocating to Portland, Oregon.
(6) Mr. Lamadrid retired from the Company on August 31, 1997.
(7) Consists of payment by the Company to Mr. Lamadrid of earned vacation
benefits upon his retirement.
(8) In addition to contributions of $4,750 made by the Company to the Tax
Deferred Savings Plan, this amount consists of (i) the actuarial present
value of the additional pension benefits to which he became entitled in
connection with his retirement totaling $266,658, (ii) a retirement cash
bonus equal to one hundred percent of base salary, or $217,008, and (iii) a
retirement gift valued at $9,350.
(9) Mr. Friesen was named Vice President-Division Manager, Wood Products
Division in February 1996. Prior to February 1996, Mr. Friesen did not hold
the office of an executive officer of the Company; however, Mr. Friesen did
serve as President of Pope & Talbot Ltd., a wholly-owned Canadian
subsidiary of the Company.
(10) Mr. Friesen is compensated in Canadian dollars. The compensation above
reflects the conversion to U.S. dollars using year-end 1997 and 1996
Canadian to U.S. exchange rates of .6992 and .7297, respectively.
STOCK OPTION AND STOCK APPRECIATION RIGHTS
The following table contains information concerning the grant of stock
options and stock appreciation rights ("SARs") made under the Company's Stock
Option and Appreciation Plan ("Stock Option Plan") for the 1997 fiscal year to
the Named Executive Officers:
OPTION/SAR GRANTS IN 1997
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
-------------------------------------------------------- ANNUAL
% OF TOTAL RATES OF STOCK
NUMBER OF OPTIONS/SARS PRICE
SECURITIES GRANTED TO APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OR OPTION TERM(4)
OPTIONS/SARS IN FISCAL BASE PRICE EXPIRATION ----------------
GRANTED(1)(2) YEAR ($/SHARE)(3) DATE 5%($) 10%($)
------------- ------------ ------------ ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Peter T. Pope..................................... -- -- -- -- -- --
Michael Flannery.................................. 30,000 29.4 14.375 4/29/07 271,211 687,301
Robert J. Day..................................... 30,000 29.4 20.125 7/23/07 379,695 962,222
Carlos M. Lamadrid................................ -- -- -- -- -- --
Abram Friesen..................................... 15,000 14.7 14.375 4/29/07 135,605 343,651
William G. Frohnmayer............................. -- -- -- -- -- --
</TABLE>
- ------------------------
(1) Options become exercisable for the option shares in a series of 5 equal and
successive annual installments, beginning April 30, 1998 for Michael
Flannery and Abram Friesen and July 24, 1998 for Robert J. Day. Each option
becomes 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
8
<PAGE>
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 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.
(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 1997
included stock appreciation rights.
(3) 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.
(4) 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.
OPTION/SAR EXERCISES AND HOLDINGS
The following table sets forth information with respect to the Named
Executive Officers concerning exercise of options during the 1997 fiscal year
and unexercised options held as of the end of that fiscal year. No SARs were
exercised during the 1997 fiscal year by the Named Executive Officers, nor were
any SARs outstanding at the end of such fiscal year.
9
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE REALIZED VALUE OF UNEXERCISED
(MARKET PRICE NUMBER OF SECURITIES IN-THE-MONEY
SHARES AT UNDERLYING UNEXERCISED OPTIONS AT
ACQUIRED EXERCISE LESS OPTIONS AT FY-END(#) FY-END($)(1)
ON EXERCISE EXERCISE -------------------------- ----------------------------
NAME (#) PRICE)($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------- ----------- --------------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Peter T. Pope........................ 14,000 31,500 221,020 79,820 2,313 --
Michael Flannery..................... 23,080 110,385 34,350 78,960 -- 20,625
Robert J. Day........................ -- -- -- 30,000 -- --
Carlos M. Lamadrid................... 13,960 58,179 31,810 24,780 -- --
Abram Friesen........................ 5,360 25,200 6,816 30,280 -- 10,313
William G. Frohnmayer................ -- -- 45,570 24,780 260 --
</TABLE>
- ------------------------
(1) Based upon the market price of $15.0625 per share, which was the closing
selling price of the Company's common stock on the last day of the 1997
fiscal year, less the exercise price payable per share.
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
10
<PAGE>
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, $452,568; Mr. Flannery,
$294,588; Mr. Day, $205,008; Mr. Lamadrid, $217,008; Mr. Friesen, $179,404; and
Mr. Frohnmayer, $198,660. Mr. Friesen is compensated in Canadian dollars and the
estimated covered compensation shown has been converted to U.S. dollars using
the year-end 1997 exchange rate of .6992. The estimated years of service for
each Named Executive Officer is as follows: Mr. Pope, 32 years; Mr. Flannery, 11
years; Mr. Day, 1 year; Mr. Lamadrid, 24 years; Mr. Friesen, 10 years; and Mr.
Frohnmayer, 20 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, on February
5, 1998, the Company entered into new severance agreements with each of the
Named Executive Officers which replaced their existing severance agreements.
Under the new 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 dismissal (other than for cause) by the Company or his resignation
in connection with a material reduction in his duties, a reduction in his level
of compensation by more than 20% or a relocation of his principal place of
employment by more than 50 miles.
Upon such an involuntary termination, the officer will be entitled to the
following severance benefits: (i) a cash severance payment equal to two times
his annual rate of base salary plus one times his target bonus for the year in
which such termination occurs, (ii) accelerated vesting of all of his
outstanding stock options and (iii) continued health care coverage for himself
and his eligible dependents for up to 18 months at the Company's expense.
However, the total benefit package (as valued under the federal parachute tax
laws and regulations) will be limited to 2.99 times the officer's average W-2
wages from the Company for the 5 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 will be deemed
to occur upon: (i) the successful acquisition of securities possessing more than
twenty-five percent (25%) of the total combined voting power of the Company's
outstanding securities pursuant to a transaction or series of related
transactions which the Board does not at any time recommend the Company's
shareholders to accept, (ii) a change in the composition of the Board over a
period of thirty-six (36) consecutive months or less such that a majority of the
Board ceases, by reason of one or more contested elections for Board membership,
to be comprised of individuals who either (A) have been members of the Board
continuously since the beginning of such period or (B) have been elected or
nominated for election as Board members during such period by at least a
majority of the Board members described in clause (A) who were still in office
at the time such election or nomination was approved by the Board, (iii) the
sale, transfer or other disposition of all or
11
<PAGE>
substantially all of the assets of the Company in complete liquidation or
dissolution of the Company, or (iv) any merger or consolidation in which
securities possessing more than fifty percent (50%) of the total combined voting
power of the Company's outstanding securities are transferred to person or
persons different from the persons holding those securities immediately prior to
such transaction.
In the event benefits were to become due in the year ending December 31,
1998 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, $1,527,950; Mr. Flannery, $1,017,717; Mr. Day,
$612,950; Mr. Friesen, $565,654; and Mr. Frohnmayer, $782,102. Mr. Friesen is
compensated in Canadian dollars and this maximum amount payable has been
converted to U.S. dollars using the year-end 1997 exchange rate of .6992.
The Human Resources and Nominating Committee of the Company's Board of
Directors approved a special early retirement arrangement for Mr. Lamadrid
pursuant to which he retired from the Company on August 31, 1998. Under the
arrangement, Mr. Lamadrid was provided 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.
12
<PAGE>
HUMAN RESOURCES AND NOMINATING COMMITTEE OF THE
BOARD OF DIRECTORS
EXECUTIVE COMPENSATION REPORT
The Human Resources and Nominating Committee of the Board of Directors has
furnished the following report on executive compensation.
It is the duty of the Human Resources and Nominating 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 and
Nominating 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 and Nominating 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 financial objectives 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
and Nominating 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 and Nominating 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 and
Nominating Committee in establishing the components of each officer's
compensation package for the 1997 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 34 companies of which 21 are
included in the Value Line Paper and Forest Products Index which is
included in the stock price performance graph on page 16. 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 to
the Committee by the independent compensation consulting firm. Salaries
are reviewed on an annual basis, and adjustments to each
13
<PAGE>
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 1997
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 and Nominating 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 after-tax earnings for the 1997 fiscal year exceeded the
company-wide threshold (which is the minimum amount under the Plan before
any bonus awards can be made) by approximately 34%, and the bonuses paid
for that year to each of the executive officers named in the Summary
Compensation Table are indicated in the bonus column.
- LONG-TERM INCENTIVE COMPENSATION. In April 1997, the Human Resources and
Nominating Committee approved the grants of stock options to certain
executive officers under the Company's Stock Option and Appreciation Plan
(see the table titled "Option/SAR Grants in 1997" 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 1997 fiscal year was based on maintaining the
total number of option grants made to each executive officer over the past
ten 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 1998 will exceed the $1 million
limit per covered officer. If the stockholders approve the proposal to amend the
Company's Stock Option and Appreciation Plan at the 1998 annual meeting, then
any compensation deemed paid in connection with 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
14
<PAGE>
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 and Nominating 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 and Nominating 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 1997 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 1998, the Human Resources and Nominating
Committee conducted its annual review of Mr. Pope's base salary level and
increased his base salary by 5% effective March 1, 1998. The increase was
designed to maintain Mr. Pope's base salary at approximately the mid-point for
the 1998 calendar year.
On the basis of (i) the Company's success in exceeding the after-tax
earnings threshold (which is the minimum amount under the Plan before any bonus
awards can be made) for the 1997 fiscal year by more than 34% and (ii) Mr.
Pope's individual performance during that year, the Human Resources and
Nominating Committee awarded him a cash bonus under the Executive Incentive Plan
in the amount of $162,359.
The Human Resources and Nominating Committee did not grant stock options to
Mr. Pope for 1997.
HUMAN RESOURCES AND NOMINATING COMMITTEE
Hamilton W. Budge Robert Stevens Miller, Jr.
Warren E. McCain Brooks Walker, Jr.
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Human Resources and Nominating Committee serves as the Company's
Compensation Committee, and its members are as named above. No member of the
Human Resources and Nominating Committee was at any time during the 1997 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 and
Nominating Committee.
Mr. Budge is of counsel to the law firm of Brobeck, Phleger & Harrison LLP,
outside general counsel to the Company.
15
<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, 1997, 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, 1992 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>
1992 $100.00 $100.00 $100.00
1993 $185.80 $110.09 $120.86
1994 $106.33 $111.85 $124.06
1995 $93.29 $153.80 $147.07
1996 $117.44 $189.56 $171.91
1997 $116.65 $252.82 $199.91
</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.
16
<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, 1997 with all Section 16(a) filing requirements applicable to the Company's
officers, directors and greater than ten-percent beneficial owners except that
(i) each of the Company's non-employee directors did not report on a
timely-filed Form 5 the receipt of an option grant for 2,000 shares of the
Company's Common Stock during 1996 and (ii) Mr. Day did not report on a timely-
filed Form 3 his initial employment as an executive officer of the Company
during 1997.
PROPOSAL NO. 2
APPROVAL OF AMENDMENTS TO STOCK OPTION AND APPRECIATION PLAN
Shareholders are being asked to approve an amendment to the Company's Stock
Option and Appreciation Plan ("Stock Option Plan") which would (i) increase the
number of shares of common stock authorized for issuance under the Stock Option
Plan by an additional 300,000 shares and (ii) impose a 200,000-share limit on
the total number of shares for which any one participant may be granted stock
options and separately exercisable stock appreciation rights in the aggregate
per year, beginning with the 1998 calendar year.
The amendment was adopted by the Board on February 4, 1998 and is intended
to assure that the Company will have a sufficient share reserve under the Stock
Option Plan to continue to utilize equity incentives to attract and retain the
services of individuals essential to the long-term growth and financial success
of the Company. In addition, the limitation on the maximum number of shares for
which any one individual may be granted stock options and stock appreciation
rights per calendar year will assure that any compensation deemed paid to the
Company's executive officers upon their exercise of such stock options and stock
appreciation rights with exercise prices equal to the fair market value per
share on the grant date will qualify as tax-deductible performance-based
compensation under the federal tax laws and will not otherwise be subject to the
$1 million limitation per covered individual on the tax deductibility of
compensation paid to certain executive officers of the Company.
If the amendment to the Stock Option Plan is approved, the number of shares
of common stock issuable in the aggregate under both the Stock Option Plan and
the Company's Restricted Stock Bonus Plan will increase from 1,700,000 shares to
2,000,000 shares. However, the 300,000-share increase will affect only the
number of shares of common stock available for issuance under the Stock Option
Plan, and none of the additional 300,000 shares will be available for issuance
under the Restricted Plan.
The following is a summary of the principal features of the Stock Option
Plan as most recently amended. This summary, however, does not purport to be a
complete description of all the provisions of the Stock Option 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 in
Portland, Oregon.
17
<PAGE>
TERMS AND PROVISIONS OF OPTIONS
Under the Stock Option Plan, both stock options and stock appreciation
rights may be granted to eligible employees. The Company is authorized to issue
up to 2,000,000 shares of common stock over the term of the Stock Option Plan
pursuant to the exercise of stock options or stock appreciation rights granted
thereunder, and such shares may be made available either from authorized but
unissued shares of common stock or from shares reacquired by the Company,
including shares purchased in the open market.
Independent Stock Appreciation Rights (as defined below) may not be granted
for more than 1,500,000 shares of common stock, and Tandem Stock Appreciation
Rights (as defined below) may not be granted for more than 1,700,000 shares of
common stock, over the term of the Stock Option Plan. In addition, Independent
Stock Appreciation Rights and Tandem Stock Appreciation Rights may not be
granted for more than 200,000 shares of common stock each in any one calendar
year. In no event may more than 1,360,182 shares be issued under the Stock
Option Plan after February 28, 1998 assuming shareholder approval of this
proposal. As of February 28, 1998, options covering 960,154 shares of common
stock were outstanding under the Stock Option Plan, and options for 400,028
shares remained available for future grant.
During the period from January 1, 1997 to February 28, 1998, stock options
were granted to the following individuals and groups under the Stock Option
Plan: Mr. Pope, no options; Mr. Flannery, options for 30,000 shares; Mr. Day,
options for 30,000 shares; Mr. Lamadrid, no options; Mr. Friesen, options for
15,000 shares; Mr. Frohnmayer, no options; the current non-employee Board
members as a group, no options; the nominees for election as Board members at
the Annual Meeting as a group, no options; all executive officers as a group,
options for 75,000 shares; and all current employees (other than executive
officers) as a group, options for 51,700 shares. No stock appreciation rights
were granted under the Stock Option Plan during such period.
In no event may any one individual participating in the Stock Option Plan be
granted stock options or separately exercisable stock appreciation rights for
more than 200,000 shares in the aggregate per calendar year, beginning with the
1998 calendar year.
In the event that any outstanding stock option or stock appreciation right
expires or terminates, then any unissued shares subject to the unexercised
portion of such stock option or stock appreciation right may again become the
subject of a subsequent grant under the Stock Option Plan.
In the event that any change is made to the common stock issuable under the
Stock Option Plan (whether by reason of (A) any merger, consolidation or other
reorganization or (B) any stock dividend, stock split, recapitalization or other
change in corporate structure effected without the Company's receipt of
consideration), appropriate adjustments will be made to (1) the maximum number
and/or class of securities issuable under the Stock Option Plan, (2) the maximum
number and/or class of securities for which Independent and Tandem Stock
Appreciation Rights may each be issued over the term of the Stock Option Plan,
(3) the maximum number and/or class of securities for which Independent Stock
Appreciation Rights and Tandem Stock Appreciation Rights may each be granted in
any one calendar year, (4) the maximum number and/or class of securities which
may in the aggregate be issued under the Stock Option Plan and the Restricted
Plan, (5) the maximum number and/or class of securities for which stock options
and separately exercisable stock appreciation rights may be granted to any one
participant per calendar year, beginning with the 1998 calendar year, and (6)
the number and/or class of securities and price per share in effect under each
outstanding stock option and stock appreciation right.
18
<PAGE>
ADMINISTRATION AND ELIGIBILITY
The Stock Option Plan is administered by the Human Resources and Nominating
Committee ("Committee") of the Board. The members of the Committee serve at the
pleasure of the Board and may be removed at any time. The Committee has full
authority to administer the Stock Option Plan, including authority to select the
eligible employees to whom grants are to be made, to determine the nature and
size of each such grant and to decide whether any granted options are to be
incentive stock options ("ISOs") under Section 422 of the Internal Revenue Code
("Code") or non-statutory stock options.
The class of persons eligible to participate in the Stock Option Plan is
limited to key employees of the Company (including officers, whether or not they
are Board members). As of February 28, 1998, approximately 31 employees,
including 5 executive officers, were eligible for selection as participants in
the Stock Option Plan.
OPTION GRANTS
The option price per share for option grants made under the Stock Option
Plan may not be less than 85% of the fair market value per share of common stock
on the grant date. The Committee will have full authority to determine the
number of shares subject to each option grant, the time or times when the
granted option is to become exercisable and the maximum term for which the
option is to remain outstanding. However, no option may have an expiration date
which is more than ten years after the grant date.
EXERCISE OF OPTIONS
The granted options may either be immediately exercisable for the full
number of shares purchasable thereunder or may become exercisable in cumulative
increments over a period of months or years as determined by the Committee. The
option price is payable upon exercise of the option and may be paid either in
cash or in shares of common stock. The option may also be exercised through a
same-day sale program without any cash outlay on the optionee's part.
VALUATION
For all valuation purposes under the Stock Option Plan, the fair market
value per share of common stock will be deemed to be equal to the closing
selling price per share on the day immediately prior to the date such value is
to be determined, as such price is quoted on the New York Stock Exchange
Composite-Tape (or any similar successor quotation system). If there is no
quotation available for such day, then the closing selling price on the next
preceding day for which such quotation is available will be determinative of
fair market value. On the basis of such valuation method, the fair market value
per share of common stock was $13.75 on February 28, 1998.
STOCK APPRECIATION RIGHTS
The Committee has the authority to grant stock appreciation rights to one or
more optionees under the Stock Option Plan. Two types of stock appreciation
rights are authorized for such issuance:
(i) Tandem Stock Appreciation rights ("Tandem Rights") which require 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 equal to the excess of the fair market value
19
<PAGE>
of the shares of common stock subject to the surrendered option over the
aggregate option price payable for those shares. Such rights may be tied to
either ISOs or non-statutory options granted under the Stock Option Plan.
The appreciation distribution will be made in the form of common stock
(valued at fair market value on the surrender date) and cash in accordance
with the relative percentages specified by the optionee. However, not less
than 70% of the distribution must be made in common stock.
(ii) Independent Stock Appreciation Rights ("Independent Rights") which
are to be exercisable concurrently with (or within a period not to exceed
twelve (12) months following) the exercise of the underlying stock option
and without the surrender of that option. Accordingly, the optionee will be
issued all the shares of common stock purchased under the exercised option,
together with an appreciation distribution from the Company with respect to
the exercised Independent Right. Such appreciation distribution will be in a
dollar amount equal to a specified percentage (not to exceed 100%) of the
product of (1) the number of shares of common stock covered by the exercised
right and (2) the lower of (A) the excess of the fair market value per share
of common stock on the exercise date over the base price per share in effect
under the exercised right or (B) the ordinary income per share recognized by
the holder in connection with the exercise of the underlying option for the
same number of shares. Such rights may be granted only in connection with
non-statutory option grants made under the Stock Option Plan.
The base price in effect for each Independent Right will be determined
by the Committee at the time of grant, but may not be less than 85% of the
fair market value per share of common stock on the grant date.
The appreciation distribution on the Independent Right will be paid in
cash or in shares of common stock (valued as of the exercise date) or in a
combination of cash and shares of common stock, as the Committee in its sole
discretion deems appropriate.
(iii) Cash/Stock Payments. No limitation exists on the aggregate amount
of cash payments the Company may make in connection with the exercise of
stock appreciation rights under the Stock Option Plan. However, to the
extent the appreciation distribution on an exercised Independent Right is
paid in shares of common stock, the number of shares remaining available for
future issuance under the Stock Option Plan will be decreased. In addition,
the shares of common stock subject to any option surrendered in connection
with the exercise of a Tandem Right will not be available for subsequent
grant under the Stock Option Plan.
TERMINATION AND TRANSFERABILITY
If an optionee terminates employment with the Company other than by reason
of death, then any stock options or stock appreciation rights held by such
individual will not be exercisable for more than a twelve-month period following
such termination of employment (but in no event later than the specified
expiration date). However, the Committee does have the authority, exercisable at
any time while the option or right remains outstanding, to extend the period of
time for which such option or right is to remain exercisable following the
optionee's termination of employment from the twelve-month (or shorter) period
in effect for such option or right to such longer period of time as the
Committee deems appropriate, but in no event later than the specified expiration
date for the term of such option or right.
During the period of exercisability following cessation of employment, the
stock option or stock appreciation right may not be exercised for more than the
number of shares of common stock for which
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such option or right is exercisable at the time of the optionee's cessation of
employment. However, the Committee has complete discretion, exercisable at any
time while the option or right remains outstanding, to permit the exercise of
such option or right not only with respect to the number of shares for which
such option or right is exercisable at the time of the optionee's termination of
employment, but also with respect to one or more subsequent installments of
purchasable shares for which the option or right would otherwise have become
exercisable had such termination of employment not occurred.
If an optionee dies while holding a stock option or stock appreciation right
under the Stock Option Plan, then such option or right may, to the extent it is
exercisable at the time of the optionee's death, be exercised by the personal
representative of the optionee's estate or by the person inheriting such option
or right. Such exercise may be effected at any time prior to the expiration date
of the option or right or the first anniversary of the optionee's death,
whichever occurs first.
ACCELERATION
In the event that the Company or its shareholders agree to dispose of all or
substantially all of the Company's assets or capital stock by means of a sale,
merger, reorganization or liquidation, each option outstanding under the Stock
Option Plan will become immediately exercisable with respect to the total number
of shares at the time subject to such option.
However, no such option acceleration will occur if the sale, merger,
reorganization or liquidation requires either (i) the replacement of such option
with a comparable option (as determined by the Company's Board of Directors) to
purchase shares of stock of the successor corporation or its parent or (ii) the
assumption of such option by the successor corporation or its parent.
Immediately after the consummation of the sale, merger, reorganization or
liquidation, all unexercised and unassumed options will expire.
SHAREHOLDER RIGHTS/ASSIGNABILITY
No person will have any rights as a shareholder with respect to the shares
of common stock subject to any stock option granted under the Stock Option Plan
until such person has exercised the option and paid the exercise price for the
purchased shares.
Stock options and stock appreciation rights granted under the Stock Option
Plan are, during the optionee's lifetime, exercisable only by such individual
and may not be transferred except by will or by the laws of inheritance
following the optionee's death.
SPECIAL TAX ELECTION
The Committee may provide one or more holders of non-statutory options under
the Stock Option Plan with the right to have the Company withhold a portion of
the shares of common stock otherwise issuable to such individuals in
satisfaction of the federal and state income and employment tax withholding
liability incurred by such individuals in connection with the exercise of their
options. Alternatively, the Committee may allow such individuals to deliver
already existing shares of the Company's common stock in payment of such tax
liability.
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CANCELLATION AND RE-GRANT
The Committee has the authority to effect, at any time and from time to
time, with the consent of the affected optionees, the cancellation of any or all
options and stock appreciation rights outstanding under the Stock Option Plan
and to grant in substitution therefor new options or stock appreciation rights
covering the same or different numbers of shares of common stock but with an
option price or base price per share not less than 85% of the fair market value
of the common stock on the new grant date.
AMENDMENT AND TERMINATION
The Board may amend, suspend or discontinue the Stock Option Plan in whole
or in part at any time, except that such action may not adversely affect rights
and obligations with respect to stock options and stock appreciation rights
outstanding at the time. Furthermore, the Board may not, without shareholder
approval, modify the Stock Option Plan in a manner which would materially
increase the number of shares of common stock which may be issued over the term
of the Stock Option Plan, the number of shares of common stock for which stock
appreciation rights may be granted over the term of the Stock Option Plan, the
number of shares of common stock for which stock appreciation rights may be
granted in any one calendar year, the aggregate number of shares of common stock
which may be issued under the Stock Option Plan and the Restricted Plan or the
maximum number of shares for which any one participant may be granted stock
options or stock appreciation rights per calendar year (unless necessary, in any
such instance, to effect the adjustments described above in the event of certain
changes in the Company's capital structure).
Unless sooner terminated by action of the Board, the Stock Option Plan will
terminate upon the earlier of (i) December 31, 2002, or (ii) the issuance of all
the shares of common stock available for issuance under the Stock Option Plan.
Any stock options or stock appreciation rights outstanding at the time of a
clause (i) termination will continue in force and effect in accordance with the
provisions of the instruments evidencing such options or rights.
FEDERAL INCOME TAX CONSEQUENCES
The following is a general description of the Federal income tax
consequences of stock options and stock appreciation rights granted under the
Stock Option Plan:
A. INCENTIVE STOCK OPTIONS
GRANT AND EXERCISE. No taxable income is recognized by the optionee at the
time of the ISO grant, and no taxable income is generally recognized at the time
the ISO is exercised.
DISPOSITION. For Federal tax purposes, dispositions of ISO shares are
divided into two categories: (i) qualifying and (ii) disqualifying. The optionee
will make a qualifying disposition of shares purchased under an ISO if the sale
or other disposition is made after the optionee has held the shares for more
than two (2) years after the date the option is granted and more than one (1)
year after the date the option is exercised for the particular shares involved
in the disposition. If the optionee fails to satisfy either of these two holding
periods prior to the sale or other disposition of the purchased shares, then a
disqualifying disposition will result.
Upon a qualifying disposition of the purchased shares, the optionee will
recognize a long-term capital gain equal to the excess of (i) the amount
realized upon the sale or disposition over (ii) the exercise price
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<PAGE>
paid for such shares. If there is a disqualifying disposition of the shares,
then the optionee will recognize ordinary income in the year of disposition in
an amount equal to the excess of (i) the fair market value of such shares on the
ISO exercise date over (ii) the exercise price paid for the shares. Any
additional gain recognized upon the disposition will be a capital gain, which
will be long-term if the shares have been held for more than one year following
the exercise date.
EMPLOYER DEDUCTION. If the optionee makes a disqualifying disposition, then
the Company will be entitled to an income tax deduction, for the taxable year in
which such disposition occurs, equal to the amount of ordinary income recognized
by optionee as a result of such disposition. Unless the optionee makes a
disqualifying disposition, no business expense deduction may be taken by the
Company. The Company anticipates that any compensation deemed paid by the
Company upon the disqualifying disposition of shares acquired under ISOs granted
after December 31, 1997 will be deductible by the Company and will not have to
be taken into account for purposes of the $1 million limitation per covered
individual on the deductibility of the compensation paid to certain executive
officers of the Company.
B. NON-STATUTORY OPTIONS
GRANT. No taxable income is recognized by an optionee upon the grant of a
non-statutory option.
EXERCISE. The optionee will in general recognize ordinary income in the
year in which the non-statutory option is exercised equal to the excess of the
fair market value of the purchased shares on the exercise date over the exercise
price, and the optionee will be required to satisfy the tax withholding
requirements applicable to such income.
EMPLOYER DEDUCTION. The Company will be entitled to an income tax deduction
equal to the amount of ordinary income recognized by the optionee in connection
with the exercise of the non-statutory option. The deduction will, in general,
be allowed for the same taxable year in which the ordinary income is recognized
by the optionee. The Company anticipates that any compensation deemed paid by
the Company upon the exercise of non-statutory stock options granted after
December 31, 1997 with an exercise price equal to the fair market value of the
option shares on the grant date will be deductible by the Company and will not
have to be taken into account for purposes of the $1 million limitation per
covered individual on the deductibility of the compensation paid to certain
executive officers of the Company.
C. STOCK APPRECIATION RIGHT
If any stock appreciation rights under the Stock Option Plan are exercised
for cash or common stock, the optionee will recognize ordinary income equal to
the cash plus the fair market value of any shares of common stock received. The
Company will be entitled to a corresponding tax deduction equal to the amount of
ordinary income recognized by the optionee.
ACCOUNTING TREATMENT
Under present accounting rules, neither the grant nor exercise of options
with an exercise price equal to the fair market value of the option shares on
the grant date will result in a direct charge to the Company's reported
earnings. However, the Company must disclose, in footnotes and pro-forma
statements to the Company's financial statements, the impact those options would
have upon the Company's reported earnings were the value of those options at the
time of grant treated as a compensation expense. Option grants made at a
discount from the fair market value of the common stock on the grant date will
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give rise to a direct compensation expense equal to the amount of the discount.
This expense will generally be deferred and amortized over the period during
which the option vests. In addition, the number of outstanding options, whether
granted at or below the fair market value of the option shares on the grant date
will be a factor in determining the Company's earnings per share on a
fully-diluted basis.
Should one or more optionees be granted Tandem or Independent Rights, then
compensation expense will arise as a direct charge to the Company's reported
earnings. Accordingly, at the end of each fiscal quarter, the amount (if any) by
which the fair market value of the common stock subject to outstanding Tandem
Rights has increased from prior quarter-end will be accrued as compensation
expense, to the extent such amount is in excess of the aggregate exercise price
payable for the shares. For Independent Rights, only a specified percentage (not
to exceed 100%) of such increase (depending upon the percentage of the
appreciation payable under such rights) will be accrued as a compensation
expense.
RECOMMENDATION
The affirmative vote of a majority of the outstanding shares of the
Company's common stock present or represented and entitled to vote at the 1998
Annual Meeting is required for approval of the amendment to the Stock Option
Plan. If such approval is obtained, the amendment will become effective
immediately. Should such shareholder approval not be obtained, then no stock
options or stock appreciation rights will be granted on the basis of the
300,000-share increase which forms part of this Proposal. However, the Stock
Option Plan shall continue in effect, and stock options and stock appreciation
rights may continued to be granted until the share reserve as last approved by
the shareholders is issued.
The Board of Directors believes that the amendment to the Stock Option Plan
is necessary to assure that the Company will continue to have the opportunity to
utilize equity incentives in order to attract and retain the valuable services
of key employees. For this reason, the Board of Directors unanimously recommends
a vote FOR this proposal.
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, 1998, 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 1999 Annual Meeting
of Shareholders must submit such proposal by November 26, 1998, for inclusion in
the Company's 1999 proxy statement and form of proxy relating to such meeting.
The proposal must be mailed to Ms. Maria M. Pope, Treasurer and Secretary, Pope
& Talbot, Inc., 1500 S.W. First Avenue, Portland, Oregon 97201. Such proposals
will be
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<PAGE>
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 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 1997, including financial statements is enclosed herewith.
By order of the Board of Directors
Maria M. Pope
TREASURER AND SECRETARY
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<PAGE>
POPE & TALBOT, INC.
PROXY
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS, APRIL 30, 1998
The undersigned hereby appoints Peter T. Pope, Hugo G. L. Powell 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, 1998, and at any adjournments thereof:
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE>
<TABLE>
<S><C>
Please mark
your votes as / X /
indicated in
this example
WITH WITHOUT FOR AGAINST ABSTAIN
/ / / / 1. Authority to vote for the following 2. The proposal to approve an amendment to / / / / / /
nominees to the Board of Directors to the Stock Option and Appreciation Plan
serve three-year terms, as described to (i) increase the number of shares of
in the accompanying Proxy Statement common stock authorized for issuance
(THE BOARD OF DIRECTORS FAVORS A VOTE thereunder by an additional 300,000
WITH AUTHORITY): shares and (ii) impose a 200,000-share
limit on the maximum number of shares
HAMILTON W. BUDGE, CHARLES CROCKER, of common stock for which any one
MICHAEL FLANNERY participant in such Plan may be granted
stock options and stock appreciation
(INSTRUCTION: To withhold authority to vote for any rights in the aggregate per calendar
individual nominee, write that nominee's name in the space year, beginning with the 1998 calendar
provided below.) year (THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR):
- -------------------------------------------------------- 3. The proposal to ratify the selection of FOR AGAINST ABSTAIN
Arthur Andersen LLP to continue as / / / / / /
independent certified public accountants
for the year 1998 (THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR): AND
4. 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.
Dated , 1998
- --------------------------------------------------------------------------------- ------------------------------------
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 -
</TABLE>
<PAGE>
POPE & TALBOT, INC.
STOCK OPTION AND APPRECIATION PLAN
PLAN AMENDMENT
THE POPE & TALBOT STOCK OPTION AND APPRECIATION PLAN, as amended and
restated effective March 1, 1993 (the "Plan"), is hereby further amended and
modified, effective as of February 4, 1998.
1. Section III(a) of the Plan is hereby amended in its entirety to
read as follows:
(a) The stock which is to be made the subject of the options or
stock appreciation rights granted under the Plan shall be the Corporation's
authorized but unissued or reacquired common stock ("Common Stock"). In
connection with the issuance of shares under the Plan, the Corporation may
repurchase shares of Common Stock on the open market or otherwise. The total
number of shares issuable in the aggregate under the Plan and the Corporation's
Restricted Stock Bonus Plan (the "Restricted Plan") shall not exceed 2,000,000
shares. However, from and after February 28, 1998, not more than 1,360,182
shares may be issued under the Plan, and none of the shares attributable to the
400,000-share increase approved by the stockholders at the 1993 Annual Meeting
or the 300,000-share increase effected by this Plan Amendment shall be issuable
under the Restricted Plan. In addition, the Committee may issue (i) Independent
Stock Appreciation Rights (as defined in Section VI) covering up to a total of
1,500,000 shares of Common Stock over the term of the Plan and (ii) Tandem Stock
Appreciation Rights (as defined in Section VI) covering up to a total of
1,700,000 shares of Common Stock over the term of the Plan.
2. Section III(c) of the Plan is hereby redesignated as Section
III(d), and new Section III(c) is hereby added to the Plan to read as follows:
(c) In no event shall any one participant in the Plan receive
stock options and separately exercisable stock appreciation rights for more than
200,000 shares of Common Stock in the aggregate per calendar year, beginning
with the 1998 calendar year.
3. Redesignated Section III(d) is hereby amended to read as follows:
<PAGE>
(d) In the event that any change is made to the Common Stock
issuable under the Plan or subject to any outstanding stock option or stock
appreciation right granted under the Plan (whether by reason of (I) any merger,
consolidation or other reorganization or (II) any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or other change in
corporate structure effected without the Corporation's receipt of
consideration), appropriate adjustments shall be made to (i) the maximum number
and/or class of securities issuable under the Plan, (ii) the maximum number
and/or class of securities for which Independent and Tandem Stock Appreciation
Rights may each be granted over the term of the Stock Option Plan, (iii) the
maximum number and/or class of securities for which Independent Stock
Appreciation Rights and Tandem Stock Appreciation Rights may each be granted in
any one calendar year, (iv) the maximum number and/or class of securities which
may in the aggregate be issued under the Plan and the Restricted Plan, (v) the
maximum number and/or class of securities for which stock options and separately
exercisable stock appreciation rights may be granted under the Plan to any one
participant per calendar year, beginning with the 1998 calendar year, and (vi)
the number and/or class of securities and price per share in effect under each
outstanding stock option and stock appreciation right.
4. There is hereby added to Article VIII of the Plan new section (f)
to read as follows:
(f) No option or stock appreciation right shall be granted on
the basis of the 300,000-share increase which forms part of this Plan Amendment,
unless and until this Plan Amendment is approved by the stockholders at the 1998
Annual Meeting. Should such stockholder approval not be obtained, then the
300,000-share increase shall not be implemented; however, the Plan shall
continue in effect until the share reserve as last approved by the stockholders
has been issued pursuant to the exercise of stock options and stock appreciation
rights granted under this Plan.
5. Except as modified by this Plan Amendment, all the terms and
provisions of the Plan (as amended and restated effective March 1, 1993) shall
continue in full force and effect.
IN WITNESS WHEREOF, POPE & TALBOT, INC. has caused this Plan Amendment
to be executed on its behalf by its duly authorized officer as of the effective
date indicated above.
POPE & TALBOT, INC.
BY: /S/ ROBERT J. DAY
----------------------------
TITLE: SENIOR VICE PRESIDENT AND CFO
-------------------------------
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