<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
FEDERAL PAPER BOARD COMPANY, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
FEDERAL PAPER BOARD COMPANY, INC.
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- - --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- - --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
- - --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- - --------------------------------------------------------------------------------
/ / 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 registrations 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:
- - --------------------------------------------------------------------------------
- - ---------------
(1)Set forth the amount on which the filing fee is calculated and state
how it was determined.
<PAGE> 2
[FEDERAL PAPER BOARD COMPANY, INC. LOGO AND ADDRESS]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 19, 1994
TO THE COMMON AND $1.20 CONVERTIBLE PREFERRED STOCKHOLDERS OF FEDERAL PAPER
BOARD COMPANY, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Federal
Paper Board Company, Inc. (the "Company") will be held on Tuesday, April 19,
1994 at 10 A.M., local time, at Chemical Bank, 11th Floor, 270 Park Avenue, New
York, N.Y., for the following purposes:
1. To elect three directors;
2. To consider and vote upon a proposal to approve the 1992 Key Employees
Long Term Compensation Plan;
3. To ratify the designation of Deloitte & Touche as independent auditors
of the Company for fiscal year 1994;
4. To act upon the stockholder proposal described in the attached Proxy
Statement.
5. To transact such other business as may properly come before said
meeting, or any adjournment thereof.
Only holders of Common and $1.20 Convertible Preferred Stock of record at
the close of business on March 1, 1994 will be entitled to notice of and to vote
at said meeting or any adjournment thereof.
Stockholders who do not expect to be present are requested to fill in and
sign the accompanying proxy and return it to the Company.
By Order of the Board of Directors
JOHN T. FLYNN, JR.
Assistant Secretary
March 15, 1994
<PAGE> 3
FEDERAL PAPER BOARD COMPANY, INC.
75 CHESTNUT RIDGE ROAD
MONTVALE, NEW JERSEY 07645
MARCH 15, 1994
PROXY STATEMENT
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
This proxy statement and the accompanying Notice of Annual Meeting and form
of proxy are being furnished to the holders of the Common and $1.20 Convertible
Preferred Stock of the Company in connection with the solicitation by the Board
of Directors of the Company of proxies to be used at the Annual Meeting of
Stockholders to be held on April 19, 1994 at 10 A.M., local time, at Chemical
Bank, 11th Floor, 270 Park Avenue, New York, N.Y., and at any adjournments
thereof. The close of business March 1, 1994, is the record date for the
determination of stockholders entitled to notice of and to vote at the Annual
Meeting.
These proxy materials are being mailed on or about March 15, 1994 to such
stockholders. On February 17, 1994, the Company had outstanding 42,175,326
shares of Common Stock and 57,527 shares of $1.20 Convertible Preferred Stock.
Each share of Common Stock is entitled to one vote and each share of $1.20
Convertible Preferred Stock is entitled to 5.02 votes. Any stockholder giving a
proxy for the meeting may revoke it prior to the voting thereof on any matter
(without affecting, however, any vote taken prior to revocation) by written
notice to the Secretary of the Company, by submission of another proxy bearing a
later date, or by appearing and voting in person at the Annual Meeting. You may
also be represented by another person present at the meeting through executing a
form of proxy designating such person to act on your behalf. Each unrevoked
proxy card properly executed and received prior to the close of the meeting will
be voted as indicated. Where specific instructions are not indicated, the proxy
will be voted FOR the election of all directors as nominated, FOR the 1992 Key
Employees Long Term Compensation Plan, FOR the approval of the selection of
Deloitte & Touche as independent auditors, and AGAINST the stockholder proposal.
A majority of the shares represented at the meeting and entitled to vote is
required for approval of each of the proposals. Abstentions and broker nonvotes
are not voted in favor of or against any matter that may come before the Annual
Meeting. Such abstentions and broker nonvotes will, however, have the effect of
a negative vote if an item requires the approval of a specified percentage of
all issued and outstanding shares of the Company's common stock.
The cost of soliciting proxies will be borne by the Company. In addition,
the Company will reimburse its transfer agent for charges and expenses in
connection with the distribution of proxy material to brokers or other persons
holding stock in their names or in the names of their nominees. The Company will
reimburse banks, brokers and other custodians, nominees and fiduciaries for
their costs in sending the proxy material to the beneficial owners of the Common
and $1.20 Convertible Preferred Stock.
Following the original mailing of the proxy material, solicitation of
proxies may be made by certain officers and regular employees of the Company by
mail, telephone, telegraph or personal interview. The Company has also retained
Georgeson & Co. to aid in the solicitation of proxies. It is anticipated that
the amount the Company will pay for Georgeson & Co.'s services will not exceed
$7,500 plus reimbursement of expenses.
The Company will file its Annual Report on Form 10-K with the Securities
and Exchange Commission in March, 1994. A copy of the Report, including the
financial statements and schedules thereto, and a list describing any exhibits
not contained therein, may be obtained without charge by written request to
Federal Paper Board Company, Inc., 75 Chestnut Ridge Road, Montvale, New Jersey
07645, Attention: Secretary. Copies of any such exhibits will be furnished upon
written request at a cost of twenty-five cents per page.
The Board of Directors knows of no matters, other than those stated above,
to be presented for consideration at the Annual Meeting. If, however, any other
matters properly come before the Annual
<PAGE> 4
Meeting or any adjournments thereof, it is the intention of the persons named in
the enclosed proxy to vote such proxy in accordance with their judgment on any
such matters. The persons named in the enclosed proxy may also, if a quorum is
not present, vote such proxy to adjourn the Annual Meeting from time to time.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth certain information concerning the ownership
of shares of Common Stock by (i) each person who is known by the Company to own
beneficially more than five percent (5%) of the issued and outstanding Common
Stock, (ii) each director and nominee for director of the Company, (iii) each
named executive officer described in the section of this Proxy Statement
captioned "Executive Compensation", and (iv) all directors and executive
officers as a group. Except as otherwise indicated, each individual named has
sole investment and voting power with respect to the securities shown as of
February 17, 1994, or such other date indicated below. To the knowledge of the
Company, no one owns beneficially more than 5% of the Company's $1.20
Convertible Preferred Stock.
<TABLE>
<CAPTION>
AMOUNT &
NATURE OF PERCENT
BENEFICIAL OF
NAME OF BENEFICIAL OWNER OWNERSHIP CLASS
- - --------------------------------------------------------------- --------- ---------
<S> <C> <C>
Merrill Lynch & Co., Inc....................................... 2,295,769(a) 5.5
World Financial Center, North Tower
250 Vessey Street
New York, New York 10281
Federal Paper Board Company, Inc. Savings and Stock Ownership
Plans........................................................ 1,881,170(b) 4.4
John R. Kennedy................................................ 1,127,566(c)(d)(e) 2.7
Quentin J. Kennedy............................................. 893,254(c)(d)(e) 2.1
Robert D. Baldwin.............................................. 84,692(c)
W. Mark Massey, Jr............................................. 92,968(c)
John L. Kelsey................................................. 34,500(f) each less
Thomas L. Cassidy.............................................. 32,908(f) than 1%
W. Ran Clerihue................................................ 22,500(f)
Edmund J. Kelly................................................ 6,500(f)
James T. Flynn................................................. 4,500(f)
All Directors and Officers as a group, 26
persons(c)(d)(e)(f)(g)....................................... 2,953,957 7.0
</TABLE>
- - ---------------
(a) Based on information set forth in a Schedule 13G mailed to the Company on
February 16, 1994 by Merrill Lynch & Co., Inc., on behalf of itself, Merrill
Lynch Group, Inc., Princeton Services, Inc. and Merrill Lynch Asset
Management, L.P. In Item 4 thereof, the parties disclaim beneficial
ownership of Company common stock except for stock held in proprietary
accounts of Merrill Lynch's broker-dealer subsidiary.
(b) The Federal Paper Board Company, Inc. Savings and Stock Ownership Plans, 75
Chestnut Ridge Road, Montvale, New Jersey 07645 advised that as of January
1, 1994 4.4% of the Common Stock of the Company is held by the Trustee.
Under the terms of the Plans, stock shall be voted by the Trustee as
directed by the participant to whose account such stock is credited. If
instructions from the participants are not timely received by the Trustee
with respect to any such stock in the savings portion of the Plans, the
Trustee shall vote the uninstructed stock in the same proportions as the
Trustee was instructed to vote with respect to the shares for which it
received instructions. The Trustee may not vote shares in the employee stock
ownership portion of the Plans for which voting instructions have not been
received.
(c) Includes shares of Common Stock held as of January 1, 1994, in the Company
Savings and Stock Ownership Plan for Salaried Employees, as follows: for
John R. Kennedy, 70,258; for Quentin J.
2
<PAGE> 5
Kennedy, 64,364; for Robert D. Baldwin, 9,029; for W. Mark Massey, Jr.,
8,460 and for all officers and directors as a group, 305,625. Also includes
shares of Common Stock under the 1989 and 1992 Key Employee Stock Option
Plans as to which officers have the right to acquire beneficial ownership
through the exercise of options which are vested or will become vested
within 60 days of February 17, 1994, as follows: for John R. Kennedy,
67,500; for Quentin J. Kennedy, 33,750; for Robert D. Baldwin, 27,000; for
W. Mark Massey, Jr., 27,000; and for all officers and directors as a group,
299,000.
(d) Includes 98,300 shares of Common Stock held by The John R. Kennedy
Foundation Incorporated, and 36,500 shares of Common Stock held by The Jack
Kennedy Foundation. Mr. John R. Kennedy is President of both Foundations.
Includes 226,920 shares of Common Stock held equally in three trusts of
which John R. Kennedy is co-trustee with Quentin J. Kennedy. Under one of
such trusts John R. Kennedy is also beneficiary.
Includes 47,912 shares of Common Stock held under the Uniform Gift to Minors
Act. Includes 21,120 shares of Common Stock held in a trust of which John R.
Kennedy is co-trustee.
(e) Includes 194,800 shares of Common Stock held by the Quentin J. Kennedy
Foundation, of which Quentin J. Kennedy is President and Treasurer.
Includes 226,920 shares of Common Stock held equally in three trusts of
which Quentin J. Kennedy is co-trustee with John R. Kennedy. Under one of
such trusts Quentin J. Kennedy is also beneficiary.
(f) Includes shares of Common Stock under the 1992 Stock Option Plan for
Non-Employee Directors as to which Messrs. Cassidy, Clerihue, Flynn, Kelly
and Kelsey each have the right to acquire 2,500 shares of Common Stock
through the exercise of options which are vested or will become vested
within 60 days of February 17, 1994.
(g) Quentin J. Kennedy, Director, Executive Vice President and Secretary of the
Company, and John R. Kennedy, Director and President of the Company, are
brothers.
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
At the Annual Meeting three (3) Directors are to be elected in Class II,
with Messrs. Clerihue, Flynn and Q. J. Kennedy each to hold office for four
years or until their respective successors are elected and qualified. The
remaining Directors will continue to serve as set forth below. It is intended
that the shares represented by the enclosed proxy will be voted for the election
of the three nominees named below.
Should any such nominee be unable or unwilling to accept nomination or
election, it is intended that the accompanying proxy will be voted for such
other person or persons as may be nominated by the Board of Directors. All of
the nominees have been previously elected by stockholders. This year Mr. Flynn,
a director in Class I, has consented to be nominated in Class II. If elected to
Class II, Mr. Flynn will cease to be a Director in Class I. The Board of
Directors has no reason to believe that any of the nominees will be unavailable
to serve if elected.
The following sets forth certain information furnished to the Company by
each nominee and each Director continuing to serve.
CLASS I DIRECTORS CONTINUING IN OFFICE WHOSE TERMS EXPIRE
AT THE 1997 ANNUAL MEETING
<TABLE>
<CAPTION>
DIRECTOR, YEAR FIRST
ELECTED AS DIRECTOR AGE PRINCIPAL OCCUPATIONS, BUSINESS AND DIRECTORSHIPS
- - --------------------- --- --------------------------------------------------------------
<S> <C> <C>
Thomas L. Cassidy 65 Managing Director, Trust Company of the West, an investment
1981 management firm; and Senior Partner, TCW Capital (an
affiliate).
Director of: Spartech Corporation; DeVlieg-Bullard, Inc.;
Holnam, Inc.
W. Mark Massey, Jr. 55 Senior Vice President of the Company.
1990
</TABLE>
3
<PAGE> 6
NOMINEES FOR ELECTION AS
CLASS II DIRECTORS FOR A FOUR YEAR TERM EXPIRING
AT THE 1998 ANNUAL MEETING
<TABLE>
<CAPTION>
DIRECTOR, YEAR FIRST
ELECTED AS DIRECTOR AGE PRINCIPAL OCCUPATIONS, BUSINESS AND DIRECTORSHIPS
- - --------------------- --- --------------------------------------------------------------
<S> <C> <C>
W. Ran Clerihue 70 Consultant. Formerly President and Chief Executive Officer,
1977 Wabasso, Inc., a textile manufacturer. Chairman of the Board
and Director of Spartech Corporation.
James T. Flynn 54 Chief Financial Officer, J.P. Morgan & Co., Incorporated,
1991 October, 1990 to date; formerly Executive Vice President of
J.P. Morgan, March, 1985 to October, 1990.
Quentin J. Kennedy 60 Executive Vice President and Secretary of the Company.
1980 Director of: Hooper Holmes, Inc.
</TABLE>
CLASS III DIRECTORS CONTINUING IN OFFICE WHOSE TERMS EXPIRE
AT THE 1995 ANNUAL MEETING
<TABLE>
<CAPTION>
DIRECTOR, YEAR FIRST
ELECTED AS DIRECTOR AGE PRINCIPAL OCCUPATIONS, BUSINESS AND DIRECTORSHIPS
- - --------------------- --- --------------------------------------------------------------
<S> <C> <C>
John R. Kennedy 63 President and Chief Executive Officer of the Company.
1961 Director of: First Fidelity Bancorporation;
Magma Copper Company; DeVlieg-Bullard, Inc.
Robert D. Baldwin 56 Senior Vice President of the Company.
1987
</TABLE>
CLASS IV DIRECTORS CONTINUING IN OFFICE WHOSE TERMS EXPIRE
AT THE 1996 ANNUAL MEETING
<TABLE>
<CAPTION>
DIRECTOR, YEAR FIRST
ELECTED AS DIRECTOR AGE PRINCIPAL OCCUPATIONS, BUSINESS AND DIRECTORSHIPS
- - --------------------- --- --------------------------------------------------------------
<S> <C> <C>
Edmund J. Kelly 56 Vice Chairman, Eighteen Seventy Corporation, a private
1981 investment firm.
John L. Kelsey 68 Consultant. Formerly Managing Director of PaineWebber
1976 Incorporated.
Director of: Standard Motor Products Company; Box Energy
Corporation.
</TABLE>
ADDITIONAL INFORMATION RELATING TO THE BOARD OF DIRECTORS
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
During fiscal year 1993, the Board of Directors held twelve (12) meetings,
one (1) of which was a telephone meeting. During that fiscal year, each director
attended 75% or more of the aggregate of (i) the meetings of the Board of
Directors and (ii) the meetings of the committees on which such director served
that were held during the period in which he was a director.
COMMITTEES OF THE BOARD
The Company has a standing Executive Committee (which until March 15, 1994
also served as the Compensation Committee), Audit Committee and Stock Option
Committee. The responsibilities of the standing committees of the Company's
Board of Directors are described as follows.
Executive Committee. The Executive Committee during fiscal year 1993
consisted of Messrs. John R. Kennedy, Thomas L. Cassidy, W. Ran Clerihue, John
L. Kelsey, and Quentin J. Kennedy. Between meetings of the Board of Directors,
the Executive Committee has all powers which may be lawfully delegated to it
under New York law. In general, the Executive Committee may supervise the
management of all business of the Company except matters which by law
specifically require the action of the full Board of Directors or of the
stockholders. During fiscal year 1993, the Executive Committee met on eleven
(11) occasions. Actions taken by the Executive Committee are subsequently
presented for ratification at the next regular meeting of the Board of
Directors.
4
<PAGE> 7
Compensation Committee. The Executive Committee acts from time to time as
the Compensation Committee with respect to compensation paid to officers and
certain key employees. On March 15, 1994, the Board of Directors appointed a
Compensation Committee consisting of three directors, each of whom is an
independent director. Such Committee will in the future determine the
compensation of the President, Executive Vice President and other members of the
Key Executive Group, and will administer the 1992 Key Employees Long Term
Compensation Plan.
Audit Committee. The Audit Committee during fiscal year 1993 consisted of
Messrs. Kelsey, Flynn, Cassidy and Clerihue. The Audit Committee held two (2)
meetings during fiscal year 1993. This Committee reviews and makes inquiries, as
it deems appropriate, with respect to the scope and results of the audit by the
Company's independent auditors, the actions of the Company's internal audit
department, and the adequacy of the Company's system of internal accounting
controls and procedures, participates in the selection and the fee paid for
services rendered by the Company's independent auditors.
Stock Option Committee. The Stock Option Committee consists of Messrs.
Flynn, Cassidy and Kelsey. It met on three occasions during fiscal year 1993.
The Committee administers the Company's 1989 and 1992 Key Employee Stock Option
Plans.
Compensation Committee Interlocks and Insider Participation.
1. Messrs. John R. Kennedy and Quentin J. Kennedy, respectively the
President and Executive Vice President of the Company, serve on the Compensation
Committee.
2. As of January 1, 1994, the Company had outstanding loans from Morgan
Guaranty Trust Company of New York and Morgan Bank, Delaware, each a subsidiary
of J.P. Morgan & Co., in the amount of $80 million. During 1993, Morgan Guaranty
received fees from the Company for a variety of financial services. The Company
believes the fees it paid were comparable to fees charged by other banks for
similar banking services. Mr. Flynn, a Director, is Chief Financial Officer of
J.P. Morgan & Co.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table sets forth a summary for the last three (3) fiscal
years of the cash and non-cash compensation awarded to, earned by, or paid to,
the Chief Executive Officer of the Company and each of the four most highly
compensated executive officers whose individual remuneration exceeded $100,000.
SUMMARY COMPENSATION TABLE
FISCAL YEARS 1993, 1992 AND 1991
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------------------- LONG TERM COMPENSATION
(E) --------------------------------
OTHER (H) (I)
(B) ANNUAL (F) (G) PAYOUTS ALL OTHER
(A) FISCAL (C) (D) COMPEN- RESTRICTED AWARDS LTIP COMPEN-
NAME POSITION YEAR SALARY($) BONUS($) SATION($) STOCK OPTIONS PAYOUTS($) SATION($)
- - -------------------- ---------------- ------ --------- --------- --------- ---------- ------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
John R. Kennedy..... President and 1993 $946,154 $ -0- $124,381 None 174,000 $ -0-(1) $24,013
Chief Executive 1992 907,692 130,000 152,664 None 50,000 -0- 34,616
Officer 1991 800,000 -0- 203,622 None -0- 508,006 42,759
Quentin J. Executive Vice 1993 462,211 -0- 25,072 None 87,000 -0-(1) 33,768
Kennedy........... President 1992 428,846 61,750 23,990 None 25,000 -0- 15,767
1991 375,000 -0- 23,041 None -0- 214,918 19,040
Robert D. Baldwin... Senior Vice 1993 437,884 -0- 23,498 None 70,000 -0-(1) 10,742
President 1992 403,846 58,500 22,915 None 20,000 -0- 14,525
1991 350,000 -0- 21,328 None -0- 195,375 17,341
W. Mark Massey, Senior Vice 1993 437,884 -0- 23,498 None 50,000 -0-(1) 10,647
Jr................ President 1992 403,846 58,500 18,562 None 20,000 -0- 14,446
1991 350,000 -0- 14,465 None -0- 155,505 16,082
John E. Abodeely.... Vice President 1993 225,000 -0- 11,748 None 35,000 -0-(1) 5,468
1992 201,923 29,250 11,465 None 10,000 -0- 7,075
1991 175,000 -0- 11,799 None -0- 131,296 9,518
</TABLE>
- - ---------------
(1) 1989 plan year award
5
<PAGE> 8
(e) Phantom share dividends and, for John R. Kennedy, use of Company plane in
sums of $67,190, $97,584, and $149,044 for 1993, 1992, and 1991,
respectively.
(g) Includes re-issued options cancelled under the 1989 and 1992 Stock Option
Plans, as follows, for John R. Kennedy 150,000 shares; for Quentin J.
Kennedy 75,000 shares; for Robert D. Baldwin 60,000 shares, for W. Mark
Massey, Jr. 40,000 shares; and for John E. Abodeely 30,000 shares.
(i) Includes Company contributions to the Savings Plan & Supplemental Savings
Plan as follows, for John R. Kennedy $20,596, $31,382, and $39,702 for
1993, 1992 and 1991, respectively; for Quentin J. Kennedy $9,961, $14,311,
and $17,697 for 1993, 1992 and 1991, respectively; for Robert D. Baldwin
$9,613, $13,474, and $16,361 for 1993, 1992 and 1991, respectively; for W.
Mark Massey, Jr. $9,613, $13,474, and $15,165 for 1993, 1992 and 1991,
respectively; and for John E. Abodeely $5,063, $6,686, and $9,189 for 1993,
1992 and 1991, respectively. Split dollar insurance values are for John R.
Kennedy, $3,417, $3,234, and $3,057 for 1993, 1992 and 1991, respectively;
for Quentin J. Kennedy, $23,807, $1,456, and $1,343 for 1993, 1992 and
1991, respectively; for Robert D. Baldwin $1,129, $1,051, and $980 for
1993, 1992 and 1991, respectively; for W. Mark Massey, Jr., $1,034, $972,
and $917 for 1993, 1992 and 1991, respectively; and for John E. Abodeely
$405, $389, and $329 for 1993, 1992 and 1991, respectively.
The following table sets forth information concerning each exercise of
stock options during fiscal year 1993 by each of the named executive officers
and the fiscal year-end value of unexercised options.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND 1/1/94 OPTION VALUES
<TABLE>
<CAPTION>
(E)
VALUE OF
(D) UNEXERCISED
NUMBER OF IN-THE-MONEY
OPTIONS AT OPTIONS
(B) (C) 1/1/94(#) AT 1/1/94($)
(A) SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- - ---------------------------- --------------- ----------- --------------- -----------------
<S> <C> <C> <C> <C>
John R. Kennedy............. None None 67,500/196,500 $210,938/$116,813
Quentin J. Kennedy.......... None None 33,750/ 98,250 105,468/58,406
Robert D. Baldwin........... None None 27,000/ 79,000 84,375/46,875
W. Mark Massey, Jr.......... None None 27,000/ 59,000 84,375/39,375
John E. Abodeely............ None None 13,500/ 39,500 42,188/23,438
</TABLE>
6
<PAGE> 9
The following table sets forth information concerning individual grants of
stock options made during fiscal year 1993 to each of the named executive
officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
GRANT DATE VALUE
-----------------------
INDIVIDUAL GRANTS (F)
- - -----------------------------------------------------------------------------
(C) POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
OPTIONS ANNUAL RATES OF
GRANTED (D) STOCK PRICE
(B) TO EXERCISE APPRECIATION FOR
OPTIONS EMPLOYEES OR BASE (E) OPTION TERMS
(A) GRANTED IN FISCAL PRICE EXPIRATION -----------------------
NAME (#) YEAR ($/SH) DATE 5% $ 10% $
- - ------------------------- ------- ---------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
1989 STOCK OPTION PLAN
John R. Kennedy.......... 100,000 5.0 $ 20.875 12/21/98 $576,738 $1,274,440
Quentin J. Kennedy....... 50,000 2.5 20.875 12/21/98 288,369 637,220
Robert D. Baldwin........ 40,000 2.0 20.875 12/21/98 230,695 509,776
W. Mark Massey, Jr....... 20,000 1.0 20.875 12/21/98 115,347 254,888
John E. Abodeely......... 20,000 1.0 20.875 12/21/98 115,347 254,888
1992 STOCK OPTION PLAN
John R. Kennedy.......... 24,000 1.2 $ 20.875 12/21/98 138,417 305,865
Quentin J. Kennedy....... 12,000 .6 20.875 12/21/98 69,208 152,933
Robert D. Baldwin........ 10,000 .5 20.875 12/21/98 57,673 127,444
W. Mark Massey, Jr....... 10,000 .5 20.875 12/21/98 57,673 127,444
John E. Abodeely......... 5,000 .3 20.875 12/21/98 28,837 63,722
1992 STOCK OPTION PLAN
John R. Kennedy.......... 50,000 2.5 $ 22.375 5/18/98 309,090 683,008
Quentin J. Kennedy....... 25,000 1.2 22.375 5/18/98 154,545 341,504
Robert D. Baldwin........ 20,000 1.0 22.375 5/18/98 123,636 273,203
W. Mark Massey, Jr....... 20,000 1.0 22.375 5/18/98 123,636 273,203
John E. Abodeely......... 10,000 .5 22.375 5/18/98 61,818 136,602
</TABLE>
- - ---------------
(1) Options described in this table were issued under the Company's 1989 and
1992 Key Employee Stock Option Plan, and consist primarily of options other
than incentive stock options, as permitted by such Plan. The options extend
for a period of five years from the date of grant, were issued at the fair
market value of the option at time of grant, and permit exercise of one
fourth of the shares on the first, second, third and fourth anniversaries of
the date of grant. The purchase price upon exercise of an option may be paid
either in cash or, if the option permits, in shares of Company common stock
already owned, or a combination thereof. If the employment of a member of
the Key Management Group, which includes the five individuals described in
this table, terminates by reason of early retirement, his option may
thereafter be exercised in full if permitted by the Stock Option Committee,
or otherwise only to the extent it was exercisable at time of early
retirement for three years from the date of termination or the stated period
of the option, whichever is shorter. On death of an optionee, the option is
immediately exercisable in full for six months from the date of death, or
the expiration of the option period, whichever is shorter. In the event of a
merger or other reorganization in which the shareholders of the Company
receive cash or stock (other than stock in the Company) or in certain tender
offer situations the Committee has the duty to accelerate the exercisability
of all outstanding options. Options may, at the discretion of the Committee,
also contain limited stock appreciation rights enabling optionees to cash
out the options in certain tender offer, merger, reorganizations and similar
events.
7
<PAGE> 10
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF SHARES AND UNITS
AWARDED PERFORMANCE ESTIMATED FUTURE PAYOUTS
------------------------------- PERIOD OF CASH UNITS
BASE-YEAR PHANTOM CASH UNTIL -------------------------------
NAME SALARY SHARES UNITS PAYOUT THRESHOLD TARGET MAXIMUM
- - ---------------------- ---------- ------- -------- ----------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
John R. Kennedy....... $1,000,000 19,641 $750,000 3 years $25,000 $500,000 $750,000
Quentin J. Kennedy.... 475,000 9,329 356,250 3 years 11,875 237,500 356,250
Robert D. Baldwin..... 450,000 8,838 337,500 3 years 11,250 225,000 337,500
W. Mark Massey,
Jr. ................ 450,000 8,838 337,500 3 years 11,250 225,000 337,500
John E. Abodeely...... 225,000 4,419 168,750 3 years 5,625 112,500 168,750
</TABLE>
- - ---------------
The number of phantom shares are established at 50% of base year salary, cash
units are established at 75%. Payouts of awards are tied to achieving specified
levels of return on equity (ROE) and/or growth in fully diluted earnings per
share (EPS) over the three year plan cycle. No payout of phantom shares or cash
units is made if ROE and EPS growth fall below minimum targets. Combinations of
ROE and EPS growth resulting in awards of 50% or less of base year salary are
paid from the phantom shares. Phantom shares are valued at the average closing
market price for the twenty consecutive trading days prior to the end of the
three year cycle and will be included, if earned, in the Summary Compensation
Table for the payout year. Combinations of ROE and EPS growth resulting in
awards of more than 50% of base year salary are paid from the established cash
units. No combination of ROE and EPS growth can result in award of more than the
established phantom shares and cash units.
During fiscal year 1993 stock options granted under the Company's 1989 and
1992 Key Employee Stock Option Plans were cancelled and reissued, as further
described in the table below, and as further discussed in the Compensation
Committee Report appearing on page 12 of this Proxy Statement.
<TABLE>
<CAPTION>
TEN-YEAR OPTION REPRICINGS
----------------------------------------------------------------------------------
(D)
MARKET (G)
(C) PRICE (E) LENGTH OF
NUMBER OF OF STOCK EXERCISE ORIGINAL
SECURITIES AT TIME OF PRICE AT OPTION TERM
UNDERLYING REPRICING TIME OF (F) REMAINING
OPTIONS/SARS OR REPRICING OR NEW AT DATE OF
(A) (B) REPRICED OR AMENDMENT AMENDMENT EXERCISE REPRICING OR
NAME DATE AMENDED(#) ($) ($) PRICE($) AMENDMENT
- - --------------------------- --------- ------------- ----------- ------------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
John R. Kennedy
President and Chief
Executive Officer........ 12/21/93 100,000 $20.875 $24.625 $ 20.875 5 mos.
5/18/93 50,000 22.375 30.25 22.375 4 yrs. 2 mos.
Quentin J. Kennedy
Executive Vice
President................ 12/21/93 50,000 20.875 24.625 20.875 5 mos.
5/18/93 25,000 22.375 30.25 22.375 4 yrs. 2 mos.
Robert D. Baldwin
Senior Vice President.... 12/21/93 40,000 20.875 24.625 20.875 5 mos.
5/18/93 20,000 22.375 30.25 22.375 4 yrs. 2 mos.
W. Mark Massey, Jr.
Senior Vice President.... 12/21/93 20,000 20.875 24.625 20.875 5 mos.
5/18/93 20,000 22.375 30.25 22.375 4 yrs. 2 mos.
John E. Abodeely
Vice President........... 12/21/93 20,000 20.875 24.625 20.875 5 mos
5/18/93 10,000 22.375 30.25 22.375 4 yrs. 2 mos.
</TABLE>
8
<PAGE> 11
SUMMARY OF COMPENSATION PLANS
Summarized below is a brief description of each of the compensation plans
indicated.
(A) EMPLOYEE RETIREMENT PLANS
The Company has a defined benefit pension plan which covers substantially
all salaried employees with at least one year of service. The Plan is funded
annually using the projected unit credit method and is designed to provide a
monthly pension, commencing at age 65, equal to a percentage of the employee's
average compensation for his or her five highest consecutive years within the
last ten years of employment. Assuming a continuation of employment with the
Company until normal retirement at age 65, the following table sets forth the
estimated annual pension benefits payable for specified levels of compensation
and years of service. The Company also maintains a non-qualified benefit
equalization plan designed to provide benefits to certain salaried employees in
excess of limitations required by the Internal Revenue Code of 1986, as amended
(the "Code").
In addition, the Company has established a Supplemental Executive
Retirement Plan ("SERP"), available only to certain executives, with benefits
payable out of general funds of the Company either directly or through a trust
established for such purpose. The normal retirement benefit payable annually
under the SERP to certain executives of the Company, including its five most
highly compensated executives, who retire at or after age 65, is equal to 50% of
the employee's average compensation for the 3 years immediately preceding his
retirement less amounts payable to him under the Company's pension plan and the
benefit equalization plan. Benefits under the SERP shall not be less than 10% or
exceed 20% of the average compensation. The SERP and the benefit equalization
plan described above permit the employee, at his option, to receive the benefits
in a lump sum of equivalent actuarial value at the time of retirement. The
annual estimated amounts that would be payable under the SERP assuming
retirement at age 65 with increases of 6% per year on pensionable compensation
would be, for John R. Kennedy, $202,053; for Quentin J. Kennedy, $56,490; for
Robert D. Baldwin, $135,128; for W. Mark Massey, Jr., $71,967; and for John E.
Abodeely, $73,091. These amounts are payable in addition to the pension plan
payment illustrated in the Pension Plan Table.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
HIGHEST
CONSECUTIVE
FIVE-YEAR ANNUAL PENSION FOR REPRESENTATIVE YEARS OF CREDITED SERVICE
AVERAGE --------------------------------------------------------------------------------------
COMPENSATION 10 15 20 25 30 35 40
- - ------------ -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 250,000 $ 37,275 $ 55,912 $ 74,550 $ 93,187 $111,825 $130,462* $149,100*
500,000 74,775 112,162 149,550* 186,937* 224,325* 261,712* 299,100*
900,000 134,775* 202,162* 269,550* 336,937* 404,325* 471,712* 539,100*
1,000,000 149,775* 224,662* 299,550* 374,437* 449,325* 524,212* 599,100*
1,500,000 224,775* 337,162* 449,550* 561,937* 674,325* 786,712* 899,100*
</TABLE>
- - ---------------
* Amounts indicated by an asterisk are subject to reduction because of the
annual pension limitations imposed under the Code; however, the extent of any
reduction will vary in individual cases according to circumstances existing at
the time pension payments are made.
Compensation covered by the Plan includes amounts shown under columns (c),
(d) and (h) of the Summary Compensation Table. Covered compensation provided by
the Plan for Executive Officers does not differ by more than 10% from the
amounts set forth in the Summary Compensation Table.
The amounts in the table are not subject to deduction for social security
or other offset amounts. As of January 1, 1994, the number of years of service
credited for the five previously described most highly compensated executive
officers was as follows: for John R. Kennedy, 41; for Quentin J. Kennedy, 33;
for Robert D. Baldwin, 10; for W. Mark Massey, Jr., 25; and for John E.
Abodeely, 10. Amounts payable in excess of the Code limitations are paid under a
benefit equalization plan of the Company.
9
<PAGE> 12
(B) SAVINGS AND STOCK OWNERSHIP PLANS
The Company Savings and Stock Ownership Plan was approved by the
stockholders in 1976. The Plan has no specified termination date but may be
terminated at any time by the Board of Directors of the Company. Under the terms
of the Plan a Savings and Stock Ownership Plan Committee, appointed by the Board
of Directors, has primary responsibility and authority for the administration of
the Plan. The Plan was originally comprised of two programs: The Savings Program
and the Stock Ownership Program. As a result of changes to the Federal income
tax laws in 1986, contributions under the Stock Ownership Program were
discontinued in 1987.
The Stock Ownership Program provides for issuance of Common Stock of the
Company to a trust fund for the benefit of eligible employees. The Company made
its last contribution to the program in 1986 and does not anticipate further
contributions. The contributions were generally based upon tax credits available
to the Company under the Code, which have expired, and were allocated to
eligible employees based upon compensation paid.
The Savings Program provides for pre-tax or after tax voluntary savings
contributions by each eligible employee of the Company to a trust fund in
amounts from 2% to 6% of his compensation, and for matching savings
contributions by the Company in amounts as may be established for the Plan as a
whole from time to time by the Board of Directors equal to from 20% to 60% of
such employee savings contributions. The Company's current contribution equals
25% of such employee savings contributions. The Plan permits each eligible
employee to make employee savings contributions by electing to reduce his
taxable compensation. Each eligible employee who elects to contribute 6% of his
compensation to the trust fund by such compensation reduction, which amounts
continue to be eligible for matching Company contributions, may also elect to
contribute additional amounts not eligible for matching Company contributions
from 1% to 9%, or such lesser amounts as may be permitted by the Code, of his
compensation. Amounts in excess of the Code limitations may be eligible for
contributions under the benefit equalization plan of the Company.
Employee contributions under the Savings Program of the Plan vest
immediately. The amount of the credit to a participant's account which is
attributable to the Company's savings contributions become fully vested upon
completion of three years of employment with the Company and is subject to
forfeiture prior to the expiration of such period. The Company's contributions
under the Stock Ownership Program are fully vested. Directors who are not
employees of the Company are not eligible to participate in this Plan.
Effective January 1, 1992, the Plan was renamed the Federal Paper Board
Company Savings and Stock Ownership Plan for Salaried Employees, and assets
associated with the non-union hourly employees were transferred from this Plan
to a new Plan, the Federal Paper Board Company Savings and Stock Ownership Plan
for Non-Union Hourly Employees.
(C) 1989 KEY EMPLOYEE STOCK OPTION PLAN.
The Company's 1989 Key Employee Stock Option Plan (the "1989 Plan") was
approved by the stockholders on April 18, 1989, and will terminate on April 19,
1999, after which date no further options may be granted under the Plan,
although outstanding options will continue to be exercisable in accordance with
their terms thereafter. Under the terms of the Plan, a Stock Option Committee,
appointed by the Board of Directors, may grant options from time to time to
officers and certain key employees of the Company to purchase, in the aggregate,
up to 1,500,000 shares of Common Stock of the Company. Options for substantially
all of the shares available under this Plan have been granted.
The 1989 Plan is designed to provide for the grant of options that qualify
as "incentive stock options" under the Code, as amended, as well as options that
are other than "incentive stock options". Each option granted under the 1989
Plan may provide for stock appreciation rights, i.e., the right to either
exercise such option, in whole or in part, without payment of the option price
or to request that the Committee permit such exercise without payment of the
option price. If an option is exercised without payment, the optionee shall be
entitled to receive the excess of the fair market value of the stock covered by
the option over the option price. Such amount is payable in stock or may be
payable in cash if the option so permits or if the Committee so decides. Each
option may also provide that the optionee may exercise the option without
payment of the option price by his delivery to the Company of an exercise notice
and irrevocable instruction to deliver the
10
<PAGE> 13
shares subject to the option directly to a stock broker named in the notice in
exchange for payment of the option price by such broker. With certain
exceptions, no option shall be exercisable within one year from the date of
grant.
The stock option tables in this proxy statement contain information about
individual exercises and grants.
(D) 1992 KEY EMPLOYEE STOCK OPTION PLAN.
The Company's 1992 Key Employee Stock Option Plan (the "1992 Plan") was
approved by the stockholders on April 21, 1992, and will terminate on April 20,
2002, after which date no further options may be granted under the Plan,
although outstanding options will continue to be exercisable in accordance with
their terms thereafter. Under the terms of the Plan, a Stock Option Committee,
appointed by the Board of Directors, may grant options from time to time to
officers and certain key employees of the Company to purchase, in the aggregate,
up to 1,500,000 shares of Common Stock of the Company. Options for shares
available under this Plan have been granted, as set forth in the stock option
tables in this proxy statement.
The 1992 Plan is designed to provide for the grant of options that qualify
as "incentive stock options" under the Code, as amended, as well as options that
are other than "incentive stock options". Each option granted under the 1992
Plan may provide for stock appreciation rights, i.e., the right to either
exercise such option, in whole or in part, without payment of the option price
or to request that the Committee permit such exercise without payment of the
option price. If an option is exercised without payment, the optionee shall be
entitled to receive the excess of the fair market value of the stock covered by
the option over the option price. Such amount is payable in stock or may be
payable in cash if the option so permits or if the Committee so decides. Each
option may also provide that the optionee may exercise the option without
payment of the option price by his delivery to the Company of an exercise notice
and irrevocable instruction to deliver the shares subject to the option directly
to a stock broker named in the notice in exchange for payment of the option
price by such broker. With certain exceptions, no option shall be exercisable
within one year from the date of grant.
(E) 1992 KEY EMPLOYEES LONG TERM COMPENSATION PLAN
The 1992 Key Employees Long Term Compensation Plan provides for the
granting of Contingent Incentive Awards ("Awards") consisting of a combination
of awards calculated as if restricted shares of Common Stock of the Company were
issued and cash units. Key employees, including officers of the Company, are
eligible to be granted Awards under the Plan. At the time of a grant,
performance goals are established to be met over a three (3) year period. Such
goals specify graduated levels of attainment which, after designated minimums
are met, result in graduated vesting of any Award. No payments were made under
this Plan for the 1993 fiscal year.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Messrs. John R. Kennedy, Quentin J. Kennedy, Robert D. Baldwin and W. Mark
Massey, Jr. have Employment Agreements with the Company by the terms of which
Mr. John R. Kennedy will act as President, Mr. Quentin J. Kennedy will act as
Executive Vice President, and Messrs. Baldwin and Massey, Jr. will act as Senior
Vice Presidents of the Company, or in such other capacities as the Board of
Directors shall determine. Pursuant to these contracts, the Compensation
Committee has approved annual salaries as follows: John R. Kennedy, $900,000;
Quentin J. Kennedy, $451,250; Robert D. Baldwin, $427,500; and W. Mark Massey,
Jr., $427,500. The Agreement with Mr. Massey, Jr. extends through 1996, the
Agreement with Mr. Baldwin extends through 1997, and the Agreements with Messrs.
John R. Kennedy and Quentin J. Kennedy extend through 1995 and 1998,
respectively. The Agreements with Messrs. John R. Kennedy and Quentin J. Kennedy
provide, respectively, among other items, that should he be removed from his
position or his duties be diminished or changed in any respect (including a
change not material), he may resign and be deemed to have applied for early
retirement, or he may elect early retirement at any time after December 31,
1993. In such case, he will receive a pension not reduced as provided in the
Company pension plan but rather calculated as if he had continued as an employee
in the pension plan through his 65th birthday, at a salary (plus bonus) equal to
his salary at time of resignation (and last bonus received), increased annually
thereafter at an 8% compounded rate, but in no event calculated on final average
salaries of less than
11
<PAGE> 14
$1,878,264 with respect to the pension plan and $2,020,525 with respect to the
SERP (defined in paragraph (a) above, entitled Employee Retirement Plans) for
John R. Kennedy, and $1,090,154 with respect to the pension plan and $1,172,734
with respect to the SERP for Quentin J. Kennedy. The additional annual amount
above the amounts payable under the Company's pension plans, assuming a
resignation and deemed early retirement under such Agreements would be, for John
R. Kennedy, $372,118, and for Quentin J. Kennedy, $368,219.
COMPENSATION COMMITTEE REPORT
During the year 1993 the Executive Committee, consisting of the President,
the Executive Vice President, and three outside Directors, acted as the
Compensation Committee for the Company.
This committee reviews salaries and bonuses for the officers and key
employees of the Company who are designated as members of the Key Executive
Group and which presently numbers 27 persons. This Group includes the President
and the next four highest paid officers of the Company. The President
recommends, except for himself, salary changes with respect to this group to the
Executive Committee for its review and approval. The Executive Vice President
removes himself from the meeting when his compensation is being discussed.
Neither the President or Executive Vice President is present when the
President's compensation is discussed.
The Company's executive compensation program is based upon business
performance, including the performance of the individual with respect to the
particular function for which such individual is responsible and the overall
performance of the Company. These factors are considered in determining the
compensation for the members of the Key Executive Group, including the Company's
President. No one factor is determinative of any individual's compensation.
Rather, the effectiveness of the executive in the conduct of his assigned
duties, including the profitability of his function considered as a whole, is
taken into account. The committee did not approve salary increases for the
President or any of the four highest paid officers for fiscal year 1993.
For the year 1993, the Company did not set any specified targets for sales
or earnings but estimated these figures in its 1993 budget developed at the
beginning of the year. The budget was revised during the year to reflect actual
business conditions.
Fiscal year 1993 sales and earnings were lower than the prior year due to
continuing poor market conditions. Return on Shareholders Equity (ROE) was 2.3%.
In a year when industry and the Company's results were generally poor due to the
economy, the Company reduced its total debt by about $30 million while
maintaining the dividend on its common stock and spending $161 million on
capital projects. All of these factors were taken into account in determining
the 1994 President's and other executive salaries.
Since 1980 an increasing amount of an executive's yearly compensation has
been dependent upon the Company's performance over a three year performance
cycle. The three outside directors of the Executive Committee administer the Key
Employee Long Term Compensation Plan, which provides bonuses to members of the
Key Executive Group. The Plan, described in detail elsewhere in this Proxy
Statement, provides bonuses in various percentages of salary based on meeting
certain goals over a three year period. No bonuses were paid under this Plan in
fiscal year 1993.
At the March 15, 1994 meeting of the Board of Directors, a separate
Compensation Committee was appointed, consisting of Messrs. Cassidy, Clerihue
and Kelsey, each of whom is an independent director. The Committee will in the
future determine the compensation of the President, Executive Vice President and
other members of the Key Executive Group and will administer the 1992 Key
Employees Long Term Compensation Plan, which is being submitted to the
stockholders for approval at the Company's Annual Meeting.
The Company has long maintained Stock Option Plans intended to encourage
and enable key employees to acquire an ownership interest in the Company through
stock ownership. The number of stock options granted to each individual is based
on his or her salary range and responsibility. All grants are made at an
exercise price equal to the fair market value of the Company common stock on the
date of grant. In making its determinations, the Stock Option Committee
considers the number of options granted in prior years. In
12
<PAGE> 15
furtherance of this policy, during 1993, stock options were granted to the
Company's five most highly compensated executive officers including Mr. John R.
Kennedy and 324 other participating employees. The details for the five most
highly compensated executive officers appear in the stock option tables set
forth elsewhere in this proxy statement.
Under the terms of the Company's 1989 and 1992 Key Employee Stock Opion
Plans, each of which was approved by the shareholders, the Stock Option
Committee may, with the approval of an optionee, amend or cancel an outstanding
stock option. In May, 1993, the Stock Option Committee reviewed outstanding
grants under the 1992 Key Employee Stock Option Plan (the "1992 Plan") and
determined that the option price was significantly below the market price due to
poor market conditions, not employee performance. To further the goals of the
Stock Option Plans and encourage its managerial employees, the Committee, noting
that the options has been outstanding for only eight months, elected to cancel
and reissue options under such 1992 Plan to 319 employees holding same,
including the five most highly compensated officers of the Company. Essentially,
each such optionee was given the choice of surrendering his options in return
for a reissuance of options at the fair market value on the date of reissue. All
affected employees accepted such offer.
In December, 1993, the Stock Option Committee reviewed all outstanding
grants issued on May 16, 1989, September 17, 1991 and February 3, 1992 under the
1989 Key Employee Stock Option Plan (the "1989 Plan"). The Commitee noted that
the May 16, 1989 grant in particular had the prospect of expiring without value
despite the fact that such had been held over four years, and the options issued
thereunder were substantially unexercised. As with the 1992 Plan, the Committee
elected to propose to each such optionee a choice of cancellation and reissue. A
total of 41 employees accepted such proposal, and each received a new option
grant at the fair market value of the Company's common stock on the date of such
reissue. Essentially, Company employees holding such options were granted an
opportunity to accept a new five year option in place of the outstanding option.
The proceeds from the sale of shares pursuant to such options granted will, as
provided in the Stock Option Plans, constitute general funds of the Company. The
details of such actions with respect to the five most highly compensated
officers of the Company are set forth in the Ten-Year Option Repricings table
appearing on page 8 of this Proxy Statement.
Thomas L. Cassidy
W. Ran Clerihue
John L. Kelsey
John R. Kennedy
Quentin J. Kennedy
James T. Flynn*
- - ---------------
* Member of Stock Option Committee, not Compensation Committee.
13
<PAGE> 16
TRANSACTIONS WITH MANAGEMENT
1. The Company maintains a program to assist employees, including
officers, who are relocated to and from different company locations, and wish to
purchase homes. Under this program, loans were made to employees, including
officers of the Company, on a shared appreciation basis. In fiscal year 1992,
all such loans were revised in various respects, including the elimination of
the shared appreciation feature, and reissued. As revised, the loans are
secured, and will extend for a period up to twenty years from October 1, 1992.
During the first ten year period, no interest is charged, but 15% of any bonus
paid must be applied to reduce the outstanding principal. Thereafter, the loans
bear interest at the long-term Federal Government Rate, and the principal is
amortized over such term. Set forth below is a listing of the officers of the
Company who presently participate in the program, and the current sums
outstanding.
(a) Thomas L. Cox, Vice President and Treasurer -- $383,565.
(b) Louis O. Grissom, Vice President, Riegelwood Operations -- $293,296.
(c) Roger L. Sanders, II, Controller -- $137,000.
(d) Leon K. Semke, Vice President, Manufacturing Technology -- $102,500.
(e) Michael G. Culbreth, Vice President, Employee Relations -- $294,336.
(f) William R. Snellings, Vice President, Paperboard Sales -- $245,547.
(g) Carl L. Bumgardner, Vice President, Printing Paper Sales -- $177,331.
COMPENSATION OF DIRECTORS
Compensation for covered directors in 1993 amounted to $25,000 plus $1,000
for each meeting of the Board or a committee of the Board attended. Directors of
the Company who are not actively engaged as officers or employees of the Company
are covered by a deferred compensation plan under which they may elect to defer
compensation until retired from the Board. The deferred compensation is equal to
annual compensation (1) determined as if the sum were invested in the Common
Stock of the Company at the average of the closing prices for the 20 trading
days preceding the last day of such year, and such shares were sold at the
average of the closing prices for the 20 trading days preceding the last
business day prior to the day that the deferred compensation becomes due; plus
an amount equal to an amount that would be realized if such stock had been
purchased and the dividends thereon had been invested, at the closing price on
the dividend payment dates, in the Common Stock of the Company and sold at the
average of the closing prices for the 20 trading days preceding the last
business day prior to the day that the deferred compensation becomes due, or (2)
with interest from the last day of the year to which the compensation applies to
the date of payment. Directors covered by the plan may elect to receive their
compensation on a current basis.
The Company also maintains a retirement plan (the "Plan") for certain
Directors of the Company. Eligible for benefits under the Plan are Directors of
the Company who (i) cease to be a Director of the Company for any reason, (ii)
have completed at least five years of service as a Director of the Company,
(iii) have reached at least 60 years of age or have become disabled, and (iv)
are not receiving a retirement benefit from one of the Company's qualified
pension plans. Eligible Directors shall receive a monthly benefit equal to the
greater of (i) $1,417, (ii) the monthly retainer being paid to Directors of the
Company at the time such Director becomes eligible under the Plan, or (iii) the
monthly retainer being paid to Directors of the Company or any successor company
at the time of payment. Benefits under the Plan will continue for the lesser of
10 years or the number of years the Director served as a Director of the
Company. In the event of the death of the Director either while serving as a
Director of the Company or while receiving benefits under the Plan, the benefit
provided under the Plan shall then be paid on a monthly basis to the Director's
named beneficiary or if no beneficiary has been named, shall be paid to his or
her estate.
14
<PAGE> 17
On April 20, 1993, the stockholders approved the adoption of the Company's
1992 Stock Option Plan for Non-Employee Directors (the "Directors Plan"). The
Directors Plan is designed to provide for the granting of options that are other
than "incentive stock options" under the Code. The purpose of adopting the
Directors Plan is to have available a stock compensation plan that will
encourage and enable non-employee directors of the Company to acquire a
proprietary interest in the Company through stock ownership and will assist the
Company in attracting and retaining experienced and highly qualified directors.
The Directors Plan is administered by the Board of Directors.
Subject to adjustments for certain stock splits and other
recapitalizations, the total number of shares that may be optioned under the
Directors Plan is 150,000 shares of Company Common Stock. Any shares subject to
an option which for any reason cease to be subject to the option may again be
optioned under the Directors Plan. Proceeds from the sale of shares pursuant to
options granted under the Directors Plan shall constitute general funds of the
Company.
Directors of the Company who are not and have never been officers or
employees of the Company or its subsidiaries are eligible to participate in the
Directors Plan. Any person who becomes a director of the Company subsequent to
October 20, 1992 and is an eligible director, provided there are sufficient
shares available under the Directors Plan, shall be granted an option to
purchase 10,000 shares of the Common Stock of the Company on the date of
election or appointment as a Director. If there are insufficient shares
available to make all grants specified on the applicable date, then all those
who become entitled on that date shall share ratably in the then available
shares.
The option price per share shall not be less than 100% of the fair market
value at the time the option is granted. Fair market value shall be the average
of the high and low sales price of the Common Stock on the date of grant as
reported on the New York Stock Exchange Composite transactions tape. Options
granted under the Directors Plan will expire 10 years from the date of grant.
With certain exceptions, no option shall be exercisable within one year from the
date of grant.
Messrs. Cassidy, Clerihue, Flynn, Kelly and Kelsey each was granted an
option under the Directors Plan on October 20, 1992, to purchase 10,000 shares
of the Common Stock of the Company at $26.25 per share. There were no option
grants under the Directors Plan in fiscal year 1993.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors to file initial reports of ownership and
reports of changes in ownership of stock in the Company with the Securities and
Exchange Commission (the "SEC") and the New York Stock Exchange. Officers and
directors are required by SEC regulations to furnish the Company with copies of
all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that during fiscal year 1993
all filing requirements applicable to its executive officers and directors were
met, except that Stewart Monroe, Jr., Vice President, Pulp Sales was unable to
timely file a Form 4 while overseas on company business. The Form 4 was promptly
filed upon his return to the United States.
15
<PAGE> 18
PERFORMANCE GRAPH
The following Performance Graph shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
The graph compares the yearly percentage change in the cumulative total
shareholder return on the Company's Common Stock (as measured by dividing; (i)
the sum of: (A) the cumulative amount of dividends for the measurement period,
assuming dividend reinvestment and (B) the difference between the Company's
share price at the end and the beginning of the measurement period; by (ii) the
share price at the beginning of the measurement period) with the cumulative
total return assuming reinvestment of dividends of (1) the S&P 500 Index and (2)
the S&P Paper/Forest.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, S&P 500 INDEX,
AND S&P PAPER/FOREST BEGINNING DECEMBER 31, 1988
<TABLE>
<CAPTION>
FEDERAL PA- S&P PA-
MEASUREMENT PERIOD PER BOARD PER/FOREST
(FISCAL YEAR COVERED) COMPANY, INC. S&P 500 INDEX
<S> <C> <C> <C>
1988 100 100 100
1989 132 132 121
1990 99 128 110
1991 160 166 139
1992 143 179 159
1993 129 197 175
</TABLE>
SOURCE: GEORGESON CO. INC.
PROPOSALS TO BE ACTED ON
In addition to the election of three directors, the following matters will
be acted on:
PROPOSAL NO. 2 -- APPROVAL OF THE 1992 KEY EMPLOYEES LONG TERM
COMPENSATION PLAN
The Board of Directors of the Company at its meeting on March 15, 1994,
authorized that the Federal Paper Board Company 1992 Key Employees Long Term
Compensation Plan (the "Plan") be submitted to the shareholders for approval.
The Plan was originally adopted by the Board of Directors in 1991 as the
Federal Paper Board Company, Inc. 1991 Key Employees Long Term Compensation
Plan, and Contingent Incentive Awards (as hereinafter defined) were issued
thereunder for fiscal years 1992, 1993, and 1994, and are presently outstanding.
This Plan
16
<PAGE> 19
was amended, restated and renamed the Federal Paper Board Company 1992 Key
Employees Long Term Compensation Plan earlier this year.
Under the 1993 Omnibus Budget Reconciliation Act ("OBRA"), Congress limits
to $1 million per year the tax deduction available to public companies for
certain compensation paid to designated executive officers. Compensation paid
under the Plan is subject to such limitation. However, OBRA provides an
exception from this limitation for certain "performance based" compensation, if
various requirements, including shareholder approval of the compensation plan,
is satisfied. The Company believes that the Plan, if approved by the
shareholders for Contingent Incentive Awards presently outstanding or hereafter
issued under the Plan, would permit the Company to deduct an amount equal to the
taxable income reportable by the recipient thereof.
The Plan is performance based, and is designed to provide incentive and
reward to a limited group of key executive and managerial employees of the
Company and its subsidiaries whose contributions, services and decisions have a
long term impact on the operations of the Company.
The Committee has granted awards to a total of 27 employees for each of the
Award Cycles commencing in fiscal years 1992, 1993, and 1994, respectively.
Officers of the Company participating in the Plan in fiscal years 1992, 1993,
and 1994 totalled 20, 21, and 21, respectively, while participants in the Plan
who were not officers of the Company in fiscal years 1992, 1993, and 1994
totalled 7, 6, and 6, respectively.
The affirmative vote of a majority of the votes cast by the holders of the
outstanding shares of Common and $1.20 Convertible Preferred Stock entitled to
vote, voting together as one class, is required for the adoption of the Plan.
The full text of the Plan may be obtained without charge by Stockholders by
written request to Federal Paper Board Company, Inc., 75 Chestnut Ridge Road,
Montvale, New Jersey 07645, Attention: Secretary.
The Plan is summarized below:
1. GENERAL:
The Plan, as amended and restated, provides for the granting of Contingent
Incentive Awards consisting of a combination of an assumed issuance of Common
Stock of the Company ("Phantom Stock") and cash units. The retention or payment
of Contingent Incentive Awards will depend on the extent to which the Company
has met the Performance Goals established for each Contingent Incentive Award
over an Award Cycle consisting of three fiscal years of the Company.
2. ELIGIBILITY:
Key employees, including officers of the Company and its subsidiaries (but
excluding members of the Committee), who are from time to time responsible for
the management, growth and protection of the business of the Company and its
subsidiaries are eligible to be granted awards under the Plan. The employees who
shall receive awards under the Plan shall be selected from time to time by the
Committee, in its sole discretion, from among those eligible.
3. DESCRIPTION OF AWARDS:
Each Contingent Incentive Award granted to a participant under the Plan
shall consist of (a) Phantom Stock having a fair market value on the date of the
grant approximately equal to 50% of such participant's basic annual salary as of
the beginning of the applicable Award Cycle and (b) cash units equal in amount
to approximately 75% of such basic annual salary. The fair market value of such
Phantom Stock shall be the average closing prices on the New York Stock Exchange
for the 20 consecutive trading days immediately preceding the date of grant. In
the event a participant is compensated in whole or in part on a commission
basis, his basic annual salary shall be deemed to be his total salary and
commissions for the year immediately preceding the applicable Award Cycle. The
amount of cash units awarded to each participant under the Plan shall be
credited to a memorandum account maintained by the Company for such participant
and the participant shall have no rights thereto until and unless such units
become payable under the terms of the Plan.
17
<PAGE> 20
Participants credited with Phantom Stock shall receive cash dividend
equivalents on such Stock as and when dividends are paid on Common Stock of the
Company.
The following table shows the Contingent Incentive Awards granted under the
Plan for the 1992, 1993 and 1994 fiscal year Award Cycles, respectively, to each
of the named executive officers, to all directors and officers as a group, and
to employees not officers or directors as a group.
NEW PLAN BENEFITS
1992 KEY EMPLOYEES LONG TERM COMPENSATION PLAN
<TABLE>
<CAPTION>
PHANTOM CASH
NAME YEAR SHARES UNITS
--------------------------------------------- ----- -------- ---------
<S> <C> <C> <C>
John R. Kennedy
President and Chief Executive Officer...... 1994 20,875 $ 675,000
1993 19,641 750,000
1992 15,736 600,000
Quentin J. Kennedy
Executive Vice President................... 1994 10,466 338,437
1993 9,329 356,250
1992 7,376 281,250
Robert D. Baldwin
Senior Vice President...................... 1994 9,915 320,625
1993 8,838 337,500
1992 6,884 262,500
W. Mark Massey, Jr.
Senior Vice President...................... 1994 9,915 320,625
1993 8,838 337,500
1992 6,884 262,500
John E. Abodeely
Vice President............................. 1994 5,218 168,750
1993 4,419 168,750
1992 3,442 131,250
All Directors and Officers
as a Group................................. 1994 115,074 3,721,095
1993 96,741 3,696,410
1992 82,944 3,162,888
All employees (other than officers
and directors)............................. 1994 17,672 571,500
1993 14,767 564,000
1992 13,315 507,750
</TABLE>
4. TERMS AND CONDITIONS OF CONTINGENT INCENTIVE AWARDS:
All Contingent Incentive Awards shall be subject to the following terms and
conditions:
a) The applicable Award Cycle for the initial grant of Contingent Incentive
Awards under the Plan shall be the Company's three fiscal years commencing with
the 1992 fiscal year. The applicable Award Cycle for later grants of Contingent
Incentive Awards under the Plan shall be the Company's three fiscal years
commencing with the fiscal year in which or as to which the grant is made. The
Performance Goals to be established by the Committee for each Award Cycle shall
include attaining certain levels of return on shareholder's equity or growth in
earnings per share over the Award Cycle, or such other financial objectives of
the Company during or over the Award Cycle as the Committee may determine for
each grant or any single such financial objective or any combination of same.
The Performance Goals shall specify graduated levels of attainment thereof
which, after the designated minimums have been met, will result in graduated
vesting of the Contingent Incentive Awards relating thereto. Failure of the
Company to meet the designated minimum Performance Goals for any Award Cycle
will result in the complete cancellation and forfeiture of all Contingent
Incentive Awards relating thereto; whereas the attainment by the Company of the
uppermost
18
<PAGE> 21
Performance Goals designated by the Committee will result in the full payment of
the related Contingent Incentive Awards, except to the extent such Awards have
been forfeited as hereinafter provided.
b) At the expiration of each Award Cycle the Committee shall determine as
soon as practicable thereafter the extent to which the Contingent Incentive
Awards related to such Award Cycle have become vested and the extent to which
such Contingent Incentive Awards have become forfeited. Forfeited Contingent
Incentive Awards shall first reduce the cash unit portion of such awards and any
forfeiture in excess of such cash unit portion shall then reduce the Phantom
Stock portion of such Award. Holders of Contingent Incentive Awards which have
become vested will thereupon receive from the Company the cash value of the
Phantom Stock which has become vested. The cash value of each share of Phantom
Stock shall be the average closing price for the Common Stock of the Company on
the New York Stock Exchange for the twenty consecutive trading days immediately
preceding the end of the Award Cycle. The Company shall also pay in cash to the
holders of such Contingent Incentive Awards the amount of any cash units which
have become vested and the balance, if any, which has not become vested shall be
forfeited. The maximum Contingent Incentive Award payable to a participant shall
in no event exceed 175% of such participant's basic annual salary as of the
beginning of the applicable Award Cycle.
c) Notwithstanding the foregoing, if a holder of any Contingent Incentive
Award ceases to be an employee of the Company and its subsidiaries prior to the
expiration of any Award Cycle to which such Award or Awards relate for any
reason other than death, disability or retirement under the Company's Retirement
Plan, then his interest in any such Contingent Incentive Award shall thereupon
become forfeited. If a holder of any Contingent Incentive Award ceases to be an
employee of the Company and its subsidiaries prior to the expiration of any
Award Cycle to which such Award or Awards relate by reason of death, disability
or retirement under the Company's Retirement Plan, then his interest in any such
Contingent Incentive Award to the extent such becomes vested at the close of the
Award Cycle shall be prorated based on the period of his employment during the
applicable Award Cycle divided by three years. Death, disability and retirement
under the Company's Retirement Plan after the expiration of an Award Cycle shall
not cause any forfeiture of rights to Contingent Incentive Awards relating to
such Award Cycle to the extent same become vested. Any amounts which become
payable to a deceased participant shall be paid to the beneficiary designated by
him in a writing filed with the Company, or if no such beneficiary is designated
or survives the participant, to the legal representative of the participant's
estate.
5. CHANGES IN CAPITALIZATION, CONSOLIDATIONS OR MERGERS:
In the event there is a change in, reclassification, subdivision or
combination of, stock dividend on, or exchange of stock of the Company for the
outstanding Common Stock of the Company, the number of shares of Phantom Stock
subject to outstanding awards shall be appropriately adjusted by the Committee
whose determination shall be conclusive.
If the Company shall be consolidated with or merged into another
corporation, each employee who has a Contingent Incentive Award shall be
entitled to become vested therein to the extent the Performance Goals have been
achieved as of the date of such consolidation or merger but only in the ratio
that the period of the applicable Award Cycle which has been completed as of
such date bears to three years.
6. ADMINISTRATION:
The Board of Directors of the Company shall appoint a Committee (the
"Committee") consisting of two or more members of the Board of Directors, who
shall administer the Plan and serve at the pleasure of the Board of Directors.
The members of the Committee shall not be eligible to participate in the Plan
while serving on the Committee and shall be Independent Directors of the
Company. The Committee shall have full power and authority, subject to the
provisions of the Plan, to designate participants in the Plan, to determine the
terms of such participation, to interpret the provisions of the Plan, to
supervise the administration of the Plan, to promulgate rules and regulations,
and to take all action in connection with or relating to the Plan as it deems
necessary. Decisions and designations of the Committee shall be by a majority of
its members and shall be final. Any decision reduced to writing and signed by
all of the members of the Committee shall be fully effective as if it had been
made at a meeting duly held.
19
<PAGE> 22
7. TERM OF THE PLAN:
The Plan shall become effective as to Contingent Incentive Awards granted
since January 1, 1992, and presently outstanding, or hereafter granted, and
shall terminate on December 31, 2004, unless sooner terminated by the Board of
Directors of the Company. The termination of the Plan shall not affect
Contingent Incentive Awards granted pursuant to the Plan prior to such
termination date, but no Contingent Incentive Award shall be granted under the
Plan after such termination date.
8. AMENDMENT OF THE PLAN AND TERMS AND CONDITIONS OF
OPTIONS AND AWARDS:
The Board of Directors may discontinue the Plan, provided that such
discontinuance shall not adversely affect any employee with respect to awards
then held by him.
The Board of Directors recommends a vote FOR the approval of the 1992 Key
Employees Long Term Compensation Plan.
PROPOSAL NO. 3 -- INDEPENDENT PUBLIC ACCOUNTANTS
The stockholders will also be asked to vote upon the selection of auditors
for the Company. Deloitte & Touche has acted as auditors to the Company since
1937, and the Board of Directors has selected this firm as auditors for the
Company for fiscal year 1994, subject to ratification of the selection by the
stockholders. Representatives of Deloitte & Touche are expected to be present at
the stockholders' meeting and will have an opportunity to make a statement, if
they desire, and are expected to be available to respond to appropriate
questions. The Board recommends that the stockholders vote FOR ratification of
the appointment.
PROPOSAL NO. 4 -- SHAREHOLDER PROPOSAL
The Company has been informed that the New York City Employees Retirement
System intends to offer the following proposal for the consideration and
approval of the stockholders at this Annual Meeting.
CREATION OF AN INDEPENDENT COMPENSATION COMMITTEE
SHAREHOLDER PROPOSAL
WHEREAS, the board of directors is meant to be an independent body elected
by shareholders and charged by law and shareholders with the duty, authority and
responsibility to formulate and direct corporate policies, and
WHEREAS, this company has provided that the board may designate from among
its members one or more committees, each of which to the extent allowed, shall
have certain designated authority, and
WHEREAS, we believe that there must be a link between corporate performance
and executive compensation, and that it is important that our company's
executive compensation structure become more closely tied to performance, and
WHEREAS, we believe that directors independent of management are best
qualified to act in the interests of shareholders and can take steps necessary
to evaluate management performance, establish executive compensation and
establish a better relationship between company performance and executive pay,
NOW THEREFORE BE IT
RESOLVED, that the shareholders request the company establish a
Compensation Committee to evaluate and establish executive compensation. The
Committee shall be composed solely of independent directors and shall have
access to outside advice, such as, but not restricted to, compensation
consultants.
For these purposes, an independent director is one who: (1) has not been
employed by the Company or an affiliate in an executive capacity within the last
five years; (2) is not a member of a company that is one of the company's paid
advisors or consultants; (3) is not employed by a significant customer or
supplier; (4) does not have a personal services contract with the company; (5)
is not employed by a tax-exempt organization that receives significant
contributions from the company; (6) is not a relative of the management of the
company; (7) has not had any business relationship that would be required to be
disclosed under Regulation S-K. Also,
20
<PAGE> 23
to the extent possible within the standards stated above, no individual shall
serve on the Committee in the year preceding the expiration of that individual's
term as a director.
STATEMENT OF SUPPORT
As long-term shareholders we are concerned about our company's prospects
for profitable growth. This is intended to address the issue of pay vs.
performance and to provide shareholders with an independent committee which will
represent their interests. We urge you to vote FOR this proposal.
MANAGEMENT STATEMENT
The Company's Executive Committee has acted as a Compensation Committee of
the Company for more than ten years. During that time the President and
Executive Vice President, who are members of the Executive Committee, did not
take part in discussions with other members of the Committee in discussing their
own compensation. At the March 15, 1994 meeting of the Board of Directors a
Compensation Committee was appointed, consisting of Messrs. Cassidy, Clerihue
and Kelsey, each of whom is an independent director, meaning that they are not
officers of the Company, are not related to any Company officer, and are, in the
view of the Board of Directors, free of any relationship that would interfere
with the exercise of independent judgment. The Compensation Committee, as
presently constituted, achieves the goals sought by the shareholder proposal
without implementing a rigid formula defining independence and therefore
membership on the Committee. Management urges a vote AGAINST the shareholder
proposal.
Other Business
The Management knows of no business to come before the meeting other than
as stated in the notice of the meeting, except that the minutes of the Annual
Meeting of Stockholders held April 20, 1993 will be presented for approval as to
form, but such action is not to constitute approval or disapproval of any of the
matters referred to in such minutes. Should any unexpected business properly
come before the meeting, it is the intention of the persons named in the
enclosed proxy to vote such proxy in accordance with their judgment on such
matters.
STOCKHOLDER PROPOSALS -- 1995 ANNUAL MEETING
Stockholders intending to present proposals at the 1995 Annual Meeting of
Stockholders must submit such proposals to the Company at the address specified
immediately above not later than November 15, 1994, in order for this material
to be included in the Proxy Statement and Proxy relating to such meeting.
By Order of the Board of Directors,
JOHN T. FLYNN, JR.
Assistant Secretary
March 15, 1994
21
<PAGE> 24
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FEDERAL PAPER BOARD COMPANY, INC.
Proxy for the Annual Meeting of Stockholders April 19, 1994
$1.20 CONVERTIBLE
PREFERRED STOCK
The undersigned hereby appoints John R. Kennedy, John L. Kelsey and
Quentin J. Kennedy, or any one of more of them, proxies of the undersigned with
power of substitution, to vote all of $1.20 Convertible Preferred Stock of
Federal Paper Board Company, Inc. which the undersigned would be entitled to
vote if then present in person at the Annual Meeting of Stockholders to be held
at Chemical Bank, (11th Floor), 270 Park Avenue, New York, New York, at 10:00
A.M., on April 19, 1994, and at any adjournments thereof, with all the power
the undersigned would possess if personally present, with respect to the
following matters as more fully set forth in the accompanying proxy statement.
1. Election of Directors, Nominees:
<TABLE>
<S> <C>
/ / FOR all nominees listed below (except / / WITHHOLD AUTHORITY to vote for all nominees
as marked to the contrary below) listed below
</TABLE>
Class II: W. Ran Clerihue, Quentin J. Kennedy, and James T. Flynn
INSTRUCTIONS: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name above. The Company recommends a
vote "For" items 2 and 3, and "Against" item 4.
2. Adoption of the 1992 Key Employees Long Term Compensation Plan.
/ / FOR / / AGAINST / /ABSTAIN
3. To consider and vote upon a proposal to ratify the action of the Board of
Directors in appointing the firm of Deloitte and Touche as auditors of the
Company for fiscal year 1994.
/ / FOR / / AGAINST / /ABSTAIN
4. Adoption of the Shareholder Proposal.
/ / FOR / / AGAINST / /ABSTAIN
5. To transact such other business as may properly come before the meeting or
any adjournment thereof.
The signer hereby revokes all proxies heretofore given by the signer to vote
at said meeting or any adjournment thereof.
/ / Check here for address change and write new address on reverse side.
<PAGE> 25
This proxy will be voted as specified. If no direction is given, this proxy
will be voted "against" proposal 4, and "for" proposals 1, 2, 3 and 5.
PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY IN THE ENCLOSED ENVELOPE.
Dated: 1994
------------------------,
----------------------------------- L.S.
----------------------------------- L.S.
(Note: Please sign name exactly as it
appears on stock certificate. Joint owners
should each sign personally, give full
title when signing as attorney, director,
administrator, trustee or guardian, etc.
The signatory hereby acknowledges receipt
of Notice of Annual Meeting of
Stockholders, and Proxy Statement dated
March 15, 1994.)
<PAGE> 26
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FEDERAL PAPER BOARD COMPANY, INC.
Proxy for the Annual Meeting of Stockholders April 19, 1994
COMMON STOCK
The undersigned hereby appoints John R. Kennedy, John L. Kelsey and
Quentin J. Kennedy, or any one of more of them, proxies of the undersigned with
power of substitution, to vote all of The Common Stock of Federal Paper Board
Company, Inc. which the undersigned would be entitled to vote if then present
in person at the Annual Meeting of Stockholders to be held at Chemical Bank,
(11th Floor), 270 Park Avenue, New York, New York, at 10:00 A.M., on April 19,
1994, and at any adjournments thereof, with all the power the undersigned would
possess if personally present, with respect to the following matters as more
fully set forth in the accompanying proxy statement.
1. Election of Directors, Nominees:
<TABLE>
<S> <C>
/ / FOR all nominees listed below (except / / WITHHOLD AUTHORITY to vote for all nominees
as marked to the contrary below) listed below
</TABLE>
Class II: W. Ran Clerihue, Quentin J. Kennedy, and James T. Flynn
INSTRUCTIONS: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name above. The Company recommends a
vote "For" items 2 and 3, and "Against" item 4.
2. Adoption of the 1992 Key Employees Long Term Compensation Plan.
/ / FOR / / AGAINST / /ABSTAIN
3. To consider and vote upon a proposal to ratify the action of the Board of
Directors in appointing the firm of Deloitte and Touche as auditors of the
Company for fiscal year 1994.
/ / FOR / / AGAINST / /ABSTAIN
4. Adoption of the Shareholder Proposal.
/ / FOR / / AGAINST / /ABSTAIN
5. To transact such other business as may properly come before the meeting or
any adjournment thereof.
The signer hereby revokes all proxies heretofore given by the signer to vote
at said meeting or any adjournment thereof.
/ / Check here for address change and write new address on reverse side.
<PAGE> 27
This proxy will be voted as specified. If no direction is given, this proxy
will be voted "against" proposal 4, and "for" proposals 1, 2, 3 and 5.
PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY IN THE ENCLOSED ENVELOPE.
Dated: 1994
------------------------,
----------------------------------- L.S.
----------------------------------- L.S.
(Note: Please sign name exactly as it
appears on stock certificate. Joint owners
should each sign personally, give full
title when signing as attorney, director,
administrator, trustee or guardian, etc.
The signatory hereby acknowledges receipt
of Notice of Annual Meeting of
Stockholders, and Proxy Statement dated
March 15, 1994.)
