<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
[X] Definitive Proxy Statement Rule 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
GEORGIA-PACIFIC
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No Filing Fee Required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
--------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------------
(5) Total fee paid:
--------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
--------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
--------------------------------------------------------------------------
(3) Filing Party:
--------------------------------------------------------------------------
(4) Date Filed:
--------------------------------------------------------------------------
Notes:
<PAGE>
LOGO
[Letterhead of Georgia-Pacific Corporation appears here]
March 23, 1998
Dear Shareholder:
The Annual Meeting of Shareholders of Georgia-Pacific Corporation will be
held on May 5, 1998, at the Radisson Riverfront Hotel, 2 Tenth Street, in
Augusta, Georgia. The meeting will begin promptly at 11:00 A.M., local time,
and we hope that it will be possible for you to attend.
The following Notice of Annual Meeting lists the business to be conducted at
the meeting, which includes the election of directors.
To expedite the admissions process for the Annual Meeting, please let us know
if you will be attending by marking the appropriate box on the enclosed proxy
card and returning it to our transfer agent, First Chicago Trust Company of New
York. If you will be attending, please also detach the enclosed admission card
and bring it with you to the Annual Meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AND VOTED AT THE ANNUAL
MEETING REGARDLESS OF THE NUMBER OF SHARES YOU OWN, AND WHETHER OR NOT YOU PLAN
TO ATTEND. THEREFORE, WE URGE YOU TO COMPLETE, SIGN AND RETURN YOUR PROXY CARD
IN THE ENVELOPE PROVIDED AT YOUR EARLIEST CONVENIENCE.
Sincerely,
/s/ A. D. Correll
-------------------------------
A. D. Correll
Chairman, Chief Executive
Officer and President
<PAGE>
GEORGIA-PACIFIC CORPORATION
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 5, 1998
----------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Georgia-
Pacific Corporation will be held at the Radisson Riverfront Hotel, 2 Tenth
Street, Augusta, Georgia, on Tuesday, May 5, 1998, at 11:00 A.M., local time,
for the purposes of:
(1) electing four directors; and
(2) transacting such other business as may properly come before the meeting
or any adjournment thereof.
Information relating to matter (1) above is contained in the attached Proxy
Statement.
Only the holders of record at the close of business on March 11, 1998 of
shares of either Georgia-Pacific Group common stock or Timber Group common
stock are entitled to notice of, and to vote at, the meeting.
By order of the Board of Directors,
/s/ Kenneth F. Khoury
-------------------------------------
Kenneth F. Khoury
Vice President, Deputy General Counsel
and Secretary
133 Peachtree Street, N.E.
Atlanta, Georgia 30303
March 23, 1998
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN AND
DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE POSTAGE-PAID ENVELOPE.
IF YOU ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE YOUR SHARES IN
PERSON.
<PAGE>
GEORGIA-PACIFIC CORPORATION
133 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30303
----------------
PROXY STATEMENT
This Proxy Statement is provided in connection with the 1998 Annual Meeting
of Shareholders of Georgia-Pacific Corporation ("Georgia-Pacific" or the
"Corporation"), which will be held on May 5, 1998, for the purposes set forth
in the Notice of Annual Meeting of Shareholders. The solicitation of proxies
with respect to matters to be voted upon by the shareholders at the Annual
Meeting is made by the Board of Directors of the Corporation (the "Board").
The Corporation commenced mailing this Proxy Statement and the enclosed form
of proxy to holders of Georgia-Pacific Corporation -- Georgia-Pacific Group
common stock ("Georgia-Pacific Group Stock") and Georgia-Pacific Corporation
- -- Timber Group common stock ("The Timber Company Stock") on or about March
23, 1998. Georgia-Pacific Group Stock and The Timber Company Stock are
sometimes referred to collectively in this Proxy Statement as "Common Stock".
ACTION TO BE TAKEN UNDER THE PROXIES
Shares of Common Stock represented by a properly executed proxy will be
voted in accordance with the instructions thereon. If no instructions are
given with respect to the matters to be acted on, the persons acting under the
proxies will vote the shares represented thereby for the election of four
nominees for director in Class II, and at their discretion as to such other
business as may properly come before the meeting or any adjournment thereof.
At this time, the Board does not know of any other business to be brought
before the meeting. It is not anticipated that any nominee for election as a
director will become unable to accept nomination, but if such an event should
occur the person or persons acting under the proxies will vote for any
substitute nominee who may be designated by the Governance Committee of the
Board or by the Board itself.
VOTING PROCEDURES
The presence in person or by proxy of holders of a majority of the votes
entitled to be cast by the outstanding shares of Common Stock, voting together
as a single class, constitutes a quorum for the transaction of business at the
Annual Meeting of Shareholders. Whether held of record or held beneficially in
street name, shares are counted for quorum purposes if such shares are
represented, either in person or by proxy, at the meeting. Abstentions with
respect to a proposal are counted for purposes of establishing a quorum.
However, if a quorum is present, abstentions have no effect on the outcome of
voting for directors. The vote required to elect directors is set forth under
"Election of Directors" below.
EXECUTION AND REVOCATION OF PROXY
If stock is registered in the name of more than one person, each such person
should sign the proxy. If the proxy is signed by an attorney, executor,
administrator, trustee, guardian or by any other person in a representative
capacity, the full title of the person signing the proxy should be given and
(if not previously furnished with a prior proxy) a certificate should be
furnished showing evidence of appointment. The giving of a proxy does not
affect your right to vote in person should you be able to attend the meeting.
Your proxy may be revoked at any time before it is exercised, in which event
written notice of revocation should be filed with the Secretary of the
Corporation.
<PAGE>
CONFIDENTIAL VOTING POLICY
The Board has adopted a policy to ensure the confidentiality of the
individual votes of the Corporation's shareholders, with certain limited
exceptions. The policy provides that all shareholder proxies, ballots and
voting materials that identify the votes of specific shareholders will be kept
confidential and will not be disclosed to the Corporation, its affiliates,
directors, officers and employees or to any third parties except where (i)
disclosure is required by applicable law, (ii) a shareholder expressly
requests disclosure with respect to his or her vote, or (iii) the Corporation
concludes in good faith that a bona fide dispute exists as to the authenticity
of one or more proxies, ballots or votes, or as to the accuracy of any
tabulation of such proxies, ballots or votes. In addition, aggregate vote
totals may be disclosed to the Corporation from time to time and publicly
announced at the meeting of shareholders to which such vote totals relate.
Signed proxy cards will be returned to, and all proxy votes will be tabulated
by, an independent third party. The Corporation is not required to comply with
this confidential voting policy in the event of a proxy contest unless the
other person soliciting proxies in the contest agrees to comply with the
policy.
This confidential voting policy does not prohibit shareholders from
disclosing the nature of their votes to the Corporation or to the Board if
they wish to do so. The policy is intended to enhance shareholder rights and
to encourage free and voluntary communication between the Corporation and its
shareholders.
OUTSTANDING VOTING SECURITIES OF THE CORPORATION
Holders of record of Common Stock at the close of business on March 11,
1998, are entitled to one vote for each share of Georgia-Pacific Group Stock
held and 0.403 votes for each share of The Timber Company Stock held, on all
matters properly brought before the Annual Meeting. The relative voting power
of Georgia-Pacific Group Stock and The Timber Company Stock is determined,
prior to each shareholder meeting, pursuant to a formula set forth in the
Corporation's Restated Articles of Incorporation. The formula provides that
each outstanding share of Georgia-Pacific Group Stock will have one vote and
each outstanding share of The Timber Company Stock will have a variable number
of votes equal to the ratio of the time-weighted average market value of one
share of The Timber Company Stock to the corresponding value of one share of
Georgia-Pacific Group Stock, calculated over a period of 20 trading days on
the New York Stock Exchange ending on the 10th trading day prior to the record
date for the subject shareholder meeting. For this Annual Meeting, the 20
trading day period began January 28, 1998 and ended February 25, 1998. As of
March 11, 1998, 92,181,807 shares of Georgia-Pacific Group Stock and
92,626,631 shares of The Timber Company Stock were outstanding.
PROPOSAL I--ELECTION OF DIRECTORS
CORPORATE GOVERNANCE MATTERS
The Board of Directors has adopted a set of Policies and Procedures
governing the composition and operation of the Board and its Committees. These
Policies and Procedures address, among other things, qualifications and tenure
of directors, responsibilities and operation of committees, review of capital
expenditure plans, capital appropriations and allocations, succession planning
and performance reviews of the Chief Executive Officer and the Board itself.
Some of the most significant of these policies are further described below.
Pursuant to the Policies and Procedures, when the Chief Executive Officer
resigns or retires, he must simultaneously offer to resign from the Board. All
other directors may continue to serve until the annual meeting nearest to the
date they attain the age of 72 years, even if their term of office would
otherwise extend beyond such date, except that any director should offer to
resign in the event of prolonged ill health or if the principal employment or
similar responsibility he or she had when elected to the Board changes.
2
<PAGE>
The Policies and Procedures also require the Corporation to maintain a
majority of "independent" directors, and that all directors serving on the
Audit and Compensation Committees be independent. An "independent" director is
one who is not an officer or former officer of the Corporation and is not
related to any such person, is not an officer of a significant customer or
supplier to the Corporation, does not have a significant personal services
contract with the Corporation, is not a significant adviser (other than as a
director) or consultant to the Corporation, and is not affiliated with a tax-
exempt entity that receives significant contributions from the Corporation.
Pursuant to the Policies and Procedures, the outside directors, acting as a
group, annually evaluate the performance of the Chief Executive Officer based
on objective criteria such as the overall performance of the Corporation, the
accomplishment of long-term strategic objectives, the development of
management, and performance against specific targets. The Chief Executive
Officer reports regularly to the Board on the overall process of management
development and succession planning for the Corporation. The Governance
Committee of the Board, which is composed entirely of independent directors,
makes an annual assessment of the Board's overall performance and reports its
findings to the full Board. Each Committee of the Board also assesses annually
its performance in carrying out its duties.
As part of its review and approval of the letter stock recapitalization
approved by the shareholders at a special meeting held December 16, 1997 (the
"Letter Stock Recapitalization"), the Board adopted certain governance
policies and directives addressing issues specific to the creation of two
classes of Common Stock separately reflecting the performance of the
Corporation's two operating groups, the Georgia-Pacific Group and The Timber
Company, and recognizing its equal fiduciary obligations to the holders of
Georgia-Pacific Group Stock and The Timber Company Stock. These policies and
directives include revised procedures for Board review of matters affecting
The Timber Company's business and operations, intracorporate transactions and
allocations involving The Timber Company, and provide that directors should
continue to hold a substantially equal number of shares of each class of
Common Stock. In addition, the Board directed the Chief Executive Officer to
establish operating policies providing, among other things: (1) that Georgia-
Pacific Group will be able to acquire specified volumes of timber and wood
fiber from The Timber Company and that The Timber Company will be able to sell
specified volumes of timber and wood fiber to third parties; (2) that debt,
interest, taxes, corporate overheads and other intracorporate charges will be
allocated between the groups on as objective a basis as possible; (3) that
earnings and cash flow of one group will not be invested in the other group
and will only be used for reinvestment in the business of the group generating
such earnings and cash flow, or to reduce the debt of such group, or will be
returned to shareholders of the class of stock reflecting the performance of
such group; and (4) that the groups will not compete in each other's principal
businesses.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors currently appoints an Audit Committee, Compensation
Committee, Executive Committee, Finance Committee and Governance Committee.
Audit Committee. Mr. Robert Carswell, Mr. Harvey C. Fruehauf, Jr., Mr.
Francis Jungers and Dr. Louis W. Sullivan, all of whom are independent
directors as defined above, are members of the Audit Committee, and Mr.
Jungers is Chairman of the Committee. The primary responsibilities of the
Audit Committee are to provide assurance to the Board that the Corporation's
financial reports fairly present its financial condition, cash flows and
results of operations, that the Corporation is in reasonable compliance with
pertinent laws and regulations, is conducting its affairs ethically and is
maintaining effective controls to prevent and detect employee conflicts of
interest, misconduct and fraud; to review the planning and results of the
audit of the Corporation's financial statements with the Corporation's
independent public accountants; to review the adequacy of the system of
internal
3
<PAGE>
controls; and to review the planned scope of and fees charged by the
independent public accountants for examinations of the Corporation's financial
statements. In addition, the Audit Committee reviews the results of certain
examinations performed by the Internal Audit Department of the Corporation.
This Committee held five meetings in 1997.
Compensation Committee. Mr. Donald V. Fites, Mr. Richard V. Giordano, Mr.
David R. Goode, Mr. M. Douglas Ivester and Mr. James B. Williams, all of whom
are independent directors as defined above, are members of the Compensation
Committee, and Mr. Giordano is Chairman of the Committee. This Committee is
responsible for administering the compensation programs of the Corporation.
The Committee approves the design of, is administrator of, and makes grants
and awards and sets performance targets under the compensation plans of the
Corporation in which officers are eligible to participate, and certain other
plans. The members of the Committee are not eligible to participate in any of
these plans. The Committee evaluates the performance of the Chairman and Chief
Executive Officer and reviews all aspects of his compensation, and determines
all officers' salaries. The Committee also studies and makes determinations
regarding other forms of compensation for officers and employees of the
Corporation, including incentive compensation, retirement plans and other
similar plans. From time to time the Committee meets privately with a
compensation consultant to discuss executive compensation matters. This
Committee held six meetings in 1997.
Executive Committee. Mr. Alston D. Correll, Mr. T. Marshall Hahn, Jr. and
Messrs. Fites, Fruehauf, Giordano and Jungers are members of the Executive
Committee, and Mr. Correll is Chairman of the Committee. The Executive
Committee is authorized to exercise the powers of the full Board between
meetings, except that its authority does not extend to certain fundamental
matters of corporate governance or to certain fundamental corporate
transactions. The Committee does not hold regularly scheduled meetings but
meets when necessary. This Committee did not meet in 1997.
Finance Committee. Ms. Jane Evans and Messrs. Carswell, Goode, Ivester and
Williams are members of the Finance Committee, and Mr. Williams is Chairman of
the Committee. This Committee is primarily responsible for reviewing and
recommending all forms of major financing, including the issuance of
securities, all financial planning for the Corporation, including payment of
dividends, and all policies to be implemented by management in the areas of
corporate borrowing, major real property and equipment leases, acquisitions
and dispositions of business operations and capital assets. This Committee
held five meetings in 1997.
Governance Committee. Ms. Evans, Dr. Sullivan and Messrs. Fites and Fruehauf
are members of the Governance Committee, and Mr. Fruehauf is Chairman of the
Committee. This Committee reviews and makes recommendations to the Board as to
the composition, organization, work and compensation of the Board and its
Committees, and conducts an annual evaluation of the Board as a whole. In
making its assessment of the performance of the Board from May 1996 through
April 1997, the Committee concluded that the Board functions well as a whole
and has the background, experience and diversity to meet its fiduciary
obligations to shareholders, to adequately oversee the Corporation's business
and operations, and to provide appropriate advice to management. The Committee
also determined that the Board had complied with its Policies and Procedures.
This Committee also reviews all persons recommended to serve on the Board and
makes recommendations to the Board regarding persons to be proposed by the
Board as nominees for election as directors. The Committee will consider
persons recommended for membership on the Board when suggested in good faith
by a shareholder (with the consent of the nominee). The procedure shareholders
must follow in order to nominate an individual for election to the Board is
set forth under "Shareholder Nominations for Election of Directors" on page
11. This Committee held six meetings in 1997.
4
<PAGE>
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors is scheduled to hold six regular meetings in 1998 and
will hold special meetings when the business of the Corporation requires.
During 1997 the Board held six regular meetings and one special meeting (on
April 23, 1997), and members of the Board attended, on average, 85% of all
Board meetings and meetings of Committees of which they were members. All
members of the Board attended at least 75% of all Board and Committee meetings
in 1997.
DIRECTORS AND NOMINEES
The Bylaws of the Corporation provide for the division of the Board into
three classes, with the directors in each class serving for a term of three
years. At the Annual Meeting of Shareholders on May 5, 1998, four nominees for
director in Class II are to be elected to serve until the Annual Meeting of
Shareholders in 2001, or until their successors are elected and qualified.
Directors are elected by a plurality of the votes cast by the holders of
Common Stock at a meeting at which a quorum is present, in person or by proxy.
The Board of Directors recommends that the shareholders vote FOR the election
of the four nominees named below.
- -------------------------------------------------------------------------------
Nominees for Election in Class II on May 5, 1998
- -------------------------------------------------------------------------------
DONALD V. FITES, 64, Chairman and Chief Executive Officer of
Caterpillar Inc. (manufacture of construction, mining and
agricultural machinery and engines), Peoria, Illinois since
1990, has been a director of the Corporation since 1992.
Mr. Fites is also a director of Caterpillar Inc., AT&T
Corporation and Mobil Corporation.
[Photo appears here]
- -------------------------------------------------------------------------------
HARVEY C. FRUEHAUF, JR., 68, President of HCF Enterprises,
Inc. (private investment management company), St. Clair Shores,
Michigan since 1969, has been a director of Georgia-Pacific
since 1968.
Mr. Fruehauf is also a director of Sentinel Trust Company,
LBA.
[Photo appears here]
- -------------------------------------------------------------------------------
DAVID R. GOODE, 57, Chairman, President and Chief Executive
Officer of Norfolk Southern Corporation (transportation holding
company), Norfolk, Virginia since September 1992, has been a
director of Georgia-Pacific since 1992.
Mr. Goode is also a director of Norfolk Southern Corporation,
Aeroquip-Vickers, Inc., Caterpillar Inc. and Texas Instruments
Incorporated.
[Photo appears here]
- -------------------------------------------------------------------------------
JAMES B. WILLIAMS, 65, Chairman of the Executive Committee of
SunTrust Banks, Inc. (bank holding company), Atlanta, Georgia
since March 21, 1998, has been a director of Georgia-Pacific
since 1989. Mr. Williams held the positions of Chairman and
Chief Executive Officer of SunTrust Banks, Inc. from April 1991
and April 1990, respectively, until March 21, 1998.
Mr. Williams is also a director of SunTrust Banks, Inc., The
Coca-Cola Company, Genuine Parts Company, Rollins, Inc., RPC,
Inc., and Sonat Inc.
[Photo appears here]
5
<PAGE>
- -------------------------------------------------------------------------------
Continuing Directors
- -------------------------------------------------------------------------------
ROBERT CARSWELL, 69, Of Counsel to the law firm of Shearman &
Sterling, New York, New York since January 1994, has been a
director of Georgia-Pacific since 1987, and his current term as
director will expire in 1999. Mr. Carswell was a partner of
Shearman & Sterling from 1981 through 1993. He also served as
Chairman of the Private Export Funding Corporation, New York,
New York (finance company affiliated with the Export-Import Bank
of the United States ) from 1993 until December 1996.
[Photo appears here]
- -------------------------------------------------------------------------------
ALSTON D. CORRELL, 56, Chief Executive Officer of Georgia-
Pacific since May 1993, Chairman of the Corporation since
December 1993, and President since May 1996, has been a director
of the Corporation since 1992, and his current term as director
will expire in 1999. Mr. Correll served as President and Chief
Operating Officer of the Corporation from August 1991 until May
1993, and as President and Chief Executive Officer from May 1993
until December 1993.
Mr. Correll is also a director of Sears, Roebuck and Co., The
Southern Company and SunTrust Banks, Inc.
[Photo appears here]
- -------------------------------------------------------------------------------
JANE EVANS, 53, Chief Executive Officer of SmartTV (inter-
active television/smart cards), Burbank, California since August
1995, has been a director of Georgia-Pacific since 1994, and her
current term as director will expire in 2000. From April 1991
until March 1995, she was Vice President and General Manager of
the Home and Personal Services Market Unit of US West
Communications, Inc. (telecommunications company), Denver,
Colorado.
Ms. Evans is also a director of Banc-One--Arizona, Kaufman &
Broad Home Corp., and Philip Morris Companies, Inc.
[Photo appears here]
- -------------------------------------------------------------------------------
RICHARD V. GIORDANO, 63, Chairman of BG plc (purchase,
distribution and sale of gas and gas supported services),
London, England since January 1994, has been a director of
Georgia-Pacific since 1984, and his current term as director
will expire in 2000. Mr. Giordano served as Chairman of The BOC
Group plc (manufacture of industrial gases and other products)
from 1985 until January 1992, and from January 1994 until
January 1996.
Mr. Giordano is also a director of Rio Tinto plc.
[Photo appears here]
6
<PAGE>
T. MARSHALL HAHN, JR., 71, Honorary Chairman of the Board of
Georgia-Pacific since December 1993, has been a director of the
Corporation since 1973, and his current term as director will
expire in 1999. Mr. Hahn served as Chief Executive Officer of
the Corporation from 1983 until May 1993, and as Chairman from
1984 until December 1993.
Mr. Hahn is also a director of Norfolk Southern Corporation.
[Photo appears here]
- -------------------------------------------------------------------------------
M. DOUGLAS IVESTER, 50, Chairman of the Board and Chief
Executive Officer of The Coca-Cola Company (manufacture,
marketing and distribution of soft drink syrups, concentrates
and soft drink products, and juice and juice drink products),
Atlanta, Georgia since October 23, 1997, has been a director of
Georgia-Pacific since 1993, and his current term as director
will expire in 2000. Mr. Ivester was Executive Vice President
and Principal Operating Officer/North America of The Coca-Cola
Company from April 1993 until July 1994, and served as President
and Chief Operating Officer of The Coca-Cola Company from July
1994 until assuming his present duties.
Mr. Ivester is also a director of The Coca-Cola Company.
- -------------------------------------------------------------------------------
FRANCIS JUNGERS, 71, a private investor and business
consultant in Portland, Oregon, has been a director of Georgia-
Pacific since 1978, and his current term as director will expire
in 1999. Mr. Jungers has been a consultant since January 1978,
when he retired as Chairman and Chief Executive Officer of
Arabian American Oil Company (an oil and gas producer).
Mr. Jungers is also a director of The AES Corporation,
Donaldson, Lufkin & Jenrette, Inc., Statia Terminals Group N.V.,
Thermo Ecotek Corporation, Thermo Electron Corporation, and
Thermo Quest Corporation.
[Photo appears here]
- -------------------------------------------------------------------------------
LOUIS W. SULLIVAN, M.D., 64, President of Morehouse School of
Medicine, Atlanta, Georgia since January 1993, has been a
director of Georgia-Pacific since 1993, and his current term as
director will expire in 2000. Dr. Sullivan served as Secretary
of the United States Department of Health and Human Services
from March 1989 until January 1993.
Dr. Sullivan is also a director of Bristol-Myers Squibb
Company, CIGNA Corporation, Equifax Inc., General Motors
Corporation, Household International, Inc., and Minnesota Mining
& Manufacturing Company.
[Photo appears here]
7
<PAGE>
OWNERSHIP OF COMMON STOCK OF THE CORPORATION
Set forth below is the number of shares beneficially owned, as of December
31, 1997, by persons known to the Corporation, based on data furnished by such
persons, to be beneficial owners of more than five percent of the outstanding
shares of any class of Common Stock. Also set forth below is the number of
shares of each class of Common Stock beneficially owned on March 1, 1998 by
all directors and nominees for director, by each of the executive officers
named in the Summary Compensation Table on page 17, and by all directors and
executive officers as a group, based on data furnished by such directors,
nominees and executive officers. Unless otherwise specifically stated, all
such persons have sole voting and investment power with respect to shares
listed.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SHARES OWNED AND CLASS OF
CLASS OF NATURE OF COMMON
NAME COMMON STOCK BENEFICIAL OWNERSHIP STOCK
- ---- --------------------- -------------------- ----------
<S> <C> <C> <C>
GREATER THAN 5%
BENEFICIAL OWNERS:
Wellington Management
Company, LLP.......... Georgia-Pacific Group 6,885,075(1) 7.43%
75 State Street,
Boston, MA 02109 The Timber Company 10,562,675(1) 11.55%
Vanguard/Windsor Fund,
Inc. (2)..............
100 Vanguard Boulevard
Malvern, PA 19355
The Capital Group
Companies, Inc. and
Capital Research and
Management Company..... Georgia-Pacific Group 6,775,000(3) 7.30%
333 South Hope Street The Timber Company 6,675,000(3) 7.20%
Los Angeles, CA 90071
DIRECTORS AND EXECUTIVE
OFFICERS:
Robert Carswell........ Georgia-Pacific Group 4,615(4)(5) *
The Timber Company 4,615(4)(5)
Alston D. Correll...... Georgia-Pacific Group 96,000(6) *
The Timber Company 97,000(6)
Jane Evans............. Georgia-Pacific Group 1,194(5) *
The Timber Company 1,194(5)
Donald V. Fites........ Georgia-Pacific Group 3,611(4)(5) *
The Timber Company 3,633(4)(5)
Harvey C. Fruehauf,
Jr.................... Georgia-Pacific Group 628,629(5)(7) *
The Timber Company 633,699(5)(7)
Richard V. Giordano.... Georgia-Pacific Group 3,891(5) *
The Timber Company 3,891(5)
David R. Goode......... Georgia-Pacific Group 1,894(4)(5) *
The Timber Company 1,894(4)(5)
T. Marshall Hahn, Jr... Georgia-Pacific Group 31,191(5) *
The Timber Company 31,191(5)
M. Douglas Ivester..... Georgia-Pacific Group 2,140(4)(5) *
The Timber Company 2,140(4)(5)
Francis Jungers........ Georgia-Pacific Group 8,447(5) *
The Timber Company 8,447(5)
Louis W. Sullivan...... Georgia-Pacific Group 1,726(5) *
The Timber Company 1,734(5)
James B. Williams...... Georgia-Pacific Group 12,623(4)(5) *
The Timber Company 12,623(4)(5)
John F. McGovern....... Georgia-Pacific Group 28,852(6) *
The Timber Company 28,868(6)
Donald L. Glass........ Georgia-Pacific Group 37,279(6) *
The Timber Company 38,879(6)
Lee M. Thomas.......... Georgia-Pacific Group 5,000(6) *
The Timber Company 5,000(6)
James F. Kelley........ Georgia-Pacific Group 547 *
The Timber Company 548
All Directors and
Executive Officers as
a Group............... Georgia-Pacific Group 940,897(8) 1.02%
The Timber Company 948,691(8) 1.02%
</TABLE>
8
<PAGE>
- --------
* Less than 1 percent.
(1) Information regarding the ownership of Common Stock by Wellington
Management Company, LLP ("WMC") was obtained from Schedule 13Gs, dated
January 20, 1998 and January 18, 1998, filed by WMC with the Securities
and Exchange Commission. WMC, in its capacity as investment advisor, may
be deemed to be the beneficial owner of these shares which are held of
record by clients of WMC. Those clients have the right to receive, or the
power to direct the receipt of, dividends from, or the proceeds from the
sale of, such securities. With the exception of Vanguard/Windsor Funds,
Inc., no such client of WMC is known to have an interest with respect to
more than 5% of the outstanding shares of any class of Common Stock. WMC
shares dispositive power as to all 6,885,075 shares of Georgia-Pacific
Group Stock, and shares voting power as to 341,655 of such shares. WMC
shares dispositive power as to all 10,562,675 shares of The Timber Company
Stock, and shares voting power as to 731,455 of such shares.
(2) Information regarding the ownership of Common Stock by Vanguard/Windsor
Fund, Inc. ("Vanguard/Windsor") was obtained from Schedule 13Gs, dated
February 9, 1998, filed by Vanguard/Windsor with the Securities and
Exchange Commission. Vanguard/Windsor shares dispositive power and has
sole voting power as to 6,462,700 shares of Georgia-Pacific Group Stock
and 9,139,900 shares of The Timber Company Stock. As mentioned in footnote
1 above, these shares are included within the shares reported as
beneficially owned by WMC.
(3) Information regarding the ownership of Common Stock by The Capital Group
Companies, Inc. ("Capital Group") and Capital Research and Management
Company ("Capital Research") was obtained from Schedule 13Gs, dated
February 10, 1998, filed by Capital Group with the Securities and Exchange
Commission. Capital Research, an investment advisor and wholly owned
subsidiary of Capital Group, has sole dispositive power as to all
6,775,000 shares of Georgia-Pacific Group Stock and all 6,675,000 shares
of The Timber Company Stock.
(4) In addition to the shares beneficially owned by such person, this director
has elected to defer payment of a portion of the directors' fees paid or
payable to him, with such amounts to earn a return to be determined as if
they had been invested in Common Stock of the Corporation. As of March 1,
1998, the deferred compensation account of the directors listed below
included amounts equivalent to the number and class of shares of Common
Stock listed opposite their names:
<TABLE>
<CAPTION>
GEORGIA-PACIFIC GROUP THE TIMBER COMPANY
STOCK STOCK
--------------------- ------------------
<S> <C> <C>
Mr. Carswell........................ 9,001 9,057
Mr. Fites........................... 121 121
Mr. Goode .......................... 3,796 3,820
Mr. Ivester......................... 3,138 3,157
Mr. Williams........................ 5,091 5,123
</TABLE>
(5) Includes restricted shares of Common Stock received under the Outside
Directors Stock Plan (the "Directors Stock Plan"), including shares
granted in the conversion of accrued benefits under the Directors
Retirement Program, all as further described on page 10 under
"Compensation of Directors". As of March 1, 1998, the current directors'
holdings of restricted shares granted under the Directors Stock Plan were
as follows:
<TABLE>
<CAPTION>
GEORGIA-PACIFIC GROUP THE TIMBER COMPANY
STOCK STOCK
--------------------- ------------------
<S> <C> <C>
Mr. Carswell........................ 3,615 3,615
Ms. Evans........................... 1,194 1,194
Mr. Fites........................... 1,761 1,761
Mr. Fruehauf........................ 3,789 3,789
Mr. Giordano........................ 2,891 2,891
Mr. Goode........................... 1,394 1,394
Mr. Hahn............................ 875 875
Mr. Ivester......................... 1,140 1,140
Mr. Jungers......................... 4,447 4,447
Dr. Sullivan........................ 1,598 1,598
Mr. Williams........................ 2,623 2,623
</TABLE>
9
<PAGE>
(6) Includes the following numbers of restricted shares of Common Stock
awarded under the 1990 Long-Term Incentive Plan to the following persons
in their capacity as executive officers of the Corporation:
<TABLE>
<CAPTION>
GEORGIA-PACIFIC THE TIMBER
GROUP STOCK COMPANY STOCK
--------------- -------------
<S> <C> <C>
Mr. Correll.................................... 25,000 25,000
Mr. McGovern................................... 5,000 5,000
Mr. Glass...................................... 5,800 5,800
Mr. Thomas..................................... 5,000 5,000
</TABLE>
(7) With respect to these shares, Mr. Fruehauf has: (i) sole voting and
investment power as to 159,285 shares of Georgia-Pacific Group Stock and
159,285 shares of The Timber Company Stock; (ii) sole voting power and
shared investment power as to 251,649 shares of Georgia-Pacific Group
Stock and 251,649 shares of The Timber Company Stock; (iii) shared voting
and investment power as to 170,845 shares of Georgia-Pacific Group Stock
and 175,915 shares of The Timber Company Stock; and (iv) shared investment
power but no voting power as to 36,223 shares of Georgia-Pacific Group
Stock and 36,223 shares of The Timber Company Stock.
(8) Includes an aggregate of 59,400 restricted shares of Georgia-Pacific Group
Stock and 59,400 restricted shares of The Timber Company Stock awarded to
executive officers under the 1990 Long-Term Incentive Plan.
COMPENSATION OF DIRECTORS
At the 1997 Annual Meeting, shareholders approved a restructuring of the
Corporation's overall outside director compensation and benefits program. The
purpose of the restructuring was to align the interests of directors more
directly with those of the Corporation's shareholders by providing that
approximately half of director's compensation be paid in shares of Common
Stock.
As a result of such restructuring, the total annual compensation payable to
each non-employee director for 1997 was $40,000 in cash and a grant of
restricted stock under the Directors Stock Plan having a value of $40,000 on
the date of grant (May 15, 1997). The Board has been advised by its
compensation consultant that the total of cash and stock-based compensation of
$80,000 per year is approximately equal to the median compensation of
directors of similarly-sized corporations. While attendance fees for both
Board and Committee meetings were eliminated effective May 6, 1997, each
Committee chairman continues to receive an additional $5,000 annual fee. The
Board believes that this compensation package continues to allow the
Corporation to attract and retain qualified directors, while evidencing the
Board's commitment to insure that a significant portion of director's
compensation be stock-based.
All shares granted under the Directors Stock Plan are "restricted" and may
not be sold or otherwise transferred except upon the director's death,
expiration of six months after the director's retirement pursuant to the
Board's retirement policy, or in the event continued service is prohibited by
law or by the policies of a governmental, charitable or educational
institution with which the director accepts a position. If the director's
service on the Board terminates for any other reason, all shares issued to him
or her under the Plan will be forfeited. Following the Letter Stock
Recapitalization, the Directors Stock Plan was interpreted by the Compensation
Committee to provide that all future grants under the Plan would be for
substantially equal numbers of shares of Georgia-Pacific Group Stock and The
Timber Company Stock. Accordingly, on May 15, 1998, each non-employee director
will receive a grant of substantially equal numbers of shares of each class of
Common Stock, with an aggregate value of $40,000 (subject to immaterial
rounding differences).
As part of the restructuring of the directors' compensation and benefits
program, accrual of additional retirement benefits under the Directors
Retirement Program ceased effective May 6, 1997. Accrued benefits under the
Program for former directors were preserved, while the accrued benefits of
10
<PAGE>
each of the ten current non-employee directors who participated in the
Directors Retirement Program (the present value of which totalled $1,303,889
in the aggregate as of May 6, 1997) were converted into a grant of an
equivalent number of shares of restricted stock under the Directors Stock Plan
effective May 15, 1997. The Corporation also provides $50,000 of group term
life insurance for each director who is not an officer of the Corporation.
Directors have the option to defer all or a part of the cash compensation
payable to them provided at least $10,000 is deferred in each calendar year.
Directors electing to defer all or a part of their fees have the further
option of having (a) the return on such deferred fees determined as if such
funds had been invested (i) in Common Stock of the Corporation or (ii) at a
floating interest rate equal to 3/4% over the six-month Treasury Bill rate,
and (b) the deferred fees (adjusted for investment gains or losses) paid upon
retirement in a single payment or in annual cash payments. Effective December
17, 1997, the deferred compensation plan was interpreted by the Compensation
Committee to provide that, as to deferred fees earning a return as if invested
in Common Stock, such return would be calculated assuming investment in an
equal number of shares of Georgia-Pacific Group Stock and The Timber Company
Stock.
TRANSACTIONS WITH DIRECTORS
Mr. Carswell is Of Counsel to and was a partner in the law firm of Shearman
& Sterling, New York, New York. Shearman & Sterling performed legal services
for the Corporation in 1997, and it is anticipated that such firm will perform
legal services for the Corporation in 1998.
SHAREHOLDER NOMINATIONS FOR ELECTION OF DIRECTORS
The Bylaws of the Corporation provide that any shareholder of record
entitled to vote generally in the election of directors may nominate persons
for election as directors at a meeting if written notice of such shareholder's
intent to make such nomination has been given, either by personal delivery or
by first class United States mail, postage prepaid, to the Secretary of the
Corporation not less than 60 days nor more than 75 days prior to the meeting.
In the event that less than 70 days' notice or prior public disclosure of the
date of the meeting is given or made to shareholders, notice by the
shareholder of his or her intent to nominate must be so received by the
Secretary of the Corporation by the close of business on the 10th day
following the day on which such notice of the date of meeting was mailed or
such public disclosure was made, whichever first occurs.
Each such shareholder's notice to the Secretary of an intent to nominate
must set forth: (i) the name and address of record of the shareholder who
intends to make the nomination; (ii) a representation that the shareholder is
a holder of record of shares of the Corporation's capital stock entitled to
vote at such meeting and intends to appear in person or by proxy at the
meeting to nominate the persons specified in the notice; (iii) the class and
number of shares of Common Stock held of record, owned beneficially, and
represented by proxy, by the shareholder, and each proposed nominee, as of the
date of the notice; (iv) the name, age, business and residence addresses, and
principal occupation or employment of each proposed nominee; (v) a description
of all arrangements or understandings between the shareholder and each
proposed nominee and any other person or persons (naming such person or
persons) pursuant to which the nomination or nominations are to be made by the
shareholder; (vi) such other information regarding each proposed nominee as
would be required to be included in a proxy statement filed pursuant to the
proxy rules of the Securities and Exchange Commission; and (vii) the written
consent of each proposed nominee to serve as a director of the Corporation if
so elected. The Corporation may require any proposed nominee to furnish such
other information as may reasonably be required by the Corporation to
determine the eligibility of such proposed nominee to serve as a director of
the Corporation.
11
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for
administering executive compensation. The duties of this Committee are set
forth on page 4 under the heading "Compensation Committee". This report
describes the compensation policies established by the Committee for the
executive officers of the Corporation.
The Corporation's executive compensation program consists of three elements:
base salaries, annual cash incentive compensation opportunities, and long-term
equity incentive compensation opportunities. The Corporation's annual and
long-term incentive plans, approved by the Corporation's shareholders in 1995
and 1997, have been designed to tie executive compensation to enhancement of
shareholder returns and achievement of the Corporation's business objectives.
Targeted levels of each component of executive compensation are set at
levels that the Committee believes, based on a regular review of survey data
provided by two nationally recognized compensation consulting firms,
approximate the 50th percentile of prevailing practice. Because the Committee
believes that the competitive environment for qualified executives extends
beyond the paper and forest products industry, this survey data covers a
cross-section of U.S. industrial companies, representing a range of
industries, which are similar to the Corporation in terms of size and
complexity of operations (the "Comparison Group"). The overall Comparison
Group includes 7 of the 10 companies in the Standard & Poor's Paper and Forest
Products Index included in the Comparison of Cumulative Five-Year Shareholder
Return (the "Performance Graph") on page 16.
The Internal Revenue Code generally provides that corporate deductions will
be disallowed for annual compensation in excess of $1,000,000 paid to certain
executive officers. The Compensation Committee's policy is to design and
administer the Corporation's executive compensation program to minimize any
loss of tax deductibility, while at the same time ensuring that the
Corporation's compensation program remains competitive. The Corporation's
annual and long-term incentive plans are intended to qualify payments under
those plans as "performance-based compensation", which is not subject to the
$1,000,000 cap on deductibility.
Base Salary. Executive officers' base salaries are reviewed and approved
annually by the Compensation Committee. Initial salaries and subsequent
increases in such salaries are based on individual qualifications, experience
and performance, the nature of job responsibilities and competitive
marketplace data. Salaries of executive officers are established by reference
to the median base salary of their counterparts in the Comparison Group. In
determining 1997 base salaries, the Compensation Committee focused on base
salaries paid to bonus-eligible executives in the Comparison Group. For 1997,
executive officer salaries, including those of the officers included in the
Summary Compensation Table on page 17, on average approximated the median
(50th) percentile of prevailing comparative salary practices among the
Comparison Group, based on surveys available as of the beginning of 1997. Mr.
Correll's annual base salary in 1997 was $1,050,000, which is approximately
102% of the median of salaries for such position paid by the Comparison Group.
Economic Value Incentive Plan ("EVIP"). The EVIP is designed to align annual
cash incentive compensation opportunities with the Corporation's financial
strategy. Georgia-Pacific has established Economic Value Added ("EVA(R)") as
its principal financial metric to evaluate its progress. EVA, which measures
the Corporation's ability to generate net after-tax operating profits in
excess of its cost of capital (both equity and debt), determines the "annual"
portion of the cash bonus incentives under the EVIP. The remainder of
participants' bonuses under the EVIP (the "long-term" portion) is based on
assessments of each business unit's efforts during a given year to achieve
identified EVA "drivers" and to increase the EVA of the Corporation in
succeeding years.
12
<PAGE>
Bonuses could be earned for 1997 under the annual portion of the EVIP at
three different levels. For any amount to be earned a threshold EVA level had
to be achieved; intermediate and maximum EVA levels also were established. The
Committee set EVA targets for the Corporation as a whole, and Mr. Correll, as
Chief Executive Officer, established EVA goals for each business segment and
division consistent with these corporate goals. Participants could earn a
predetermined percentage of their base salary grade midpoint upon achievement
of corporate, segment and/or division EVA targets applicable to them, with
higher bonus percentages being assigned to participants in positions of
greater responsibility within the Corporation.
The Committee set the corporate intermediate EVA level and the corresponding
bonus percentages such that the total bonus opportunity under the EVIP would
lie at the median (50th percentile) of competitive practice if this
intermediate EVA goal were achieved. The corporate threshold EVA level, on the
one hand, and maximum EVA, on the other (and the corresponding bonus
percentages), were set at levels designed to afford participants below- and
above-average bonus opportunities, respectively. The Corporation, with
Compensation Committee oversight, structured the EVIP based on the median
practices of Comparison Group companies included in one of the two surveys
used in the determination of base salaries. The total (annual and long-term)
bonus payable to each participant was limited to 100% of base salary.
The Corporation as a whole did not meet its threshold EVA level in 1997.
However, certain business segments and divisions within the Corporation did
achieve EVA levels at or exceeding their threshold, and the executive officers
and other EVIP participants in those segments and divisions received a bonus
payment under the annual portion of the EVIP. The precise amount paid to
participants was based on percentages set by the Committee of the salary grade
midpoint of each participant and the degree to which each participant's
assigned business segment or division achieved the EVA goals set for it.
Executive officers and EVIP participants outside these segments and divisions
did not receive any bonus payment under the annual portion of the EVIP.
The EVIP permits the payment of a bonus to the Chief Executive Officer only
if the Corporation's annual EVA targets are met. Because the Corporation
failed to achieve threshold EVA in 1997, under the terms of the EVIP Mr.
Correll was not entitled to and did not receive a bonus for 1997.
Bonuses were awarded by Mr. Correll to all other participants in the EVIP
under its long-term portion based on his assessment of actions taken during
1997 by each operating division and corporate staff department to achieve
their EVA drivers and to increase EVA in future years. Based on competitive
data used by the Corporation in developing annual cash incentive compensation
opportunities under the EVIP, total bonuses paid to the executive officers
(other than Mr. Correll) included in the Summary Compensation Table on page 17
ranged between 37% and 66% of the median bonuses paid to executives in
comparable positions at Comparison Group companies.
Shareholder Value Incentive Plan ("SVIP"). The SVIP is a performance option
plan designed to provide an incentive to participants to maximize total
shareholder return. Under the SVIP, both grant levels and the vesting schedule
are determined by Georgia-Pacific's total shareholder return performance
relative to the companies in the Standard & Poor's Paper and Forest Products
Index, other than Georgia-Pacific (the "S&P Peer Group").
Effective February 3, 1997, all executive officers and other key employees
designated by the Compensation Committee as participants in the SVIP were
granted options to purchase the Corporation's then-existing common stock (the
"Former Common Stock"). Mr. Correll was awarded options to purchase 94,500
shares. As required by the SVIP, the exercise price of the options granted in
1997 was $74.25, the fair market value of the Former Common Stock on the date
of grant. The number of options granted to each participant in 1997 was that
number of options, based on the participant's base salary grade, which would
provide such participant with an expected long-term compensation opportunity
equivalent to the median (50th percentile) amount of long-term incentive
awards provided by the Comparison Group companies.
13
<PAGE>
Because of the SVIP's performance-based vesting feature, the ultimate value
of options to participants is subject to significant risk. Except in limited
situations involving an optionee's death, disability, retirement or a change
in control of the Corporation, unless specified performance targets are met
vesting of options will not occur until nine and one-half years from their
grant date, and such options will then remain exercisable for only six months
prior to their expiration. Performance vesting may occur at the end of three,
four or five years from the grant date only if, at any such date, the
Corporation's "Total Shareholder Return" over the immediately preceding three,
four or five full fiscal years, as the case may be, exceeds the weighted
average Total Shareholder Return of the S&P Peer Group for the same period.
"Total Shareholder Return" for the Corporation and each S&P Peer Group
company is determined in the same manner as such return is determined for
purposes of the Performance Graph, and is defined in the SVIP as (i) the sum
of (A) the aggregate value, based on the issuer's share price at the end of
the measurement period and assuming reinvestment of all dividends, of an
investment in such issuer's stock assumed to have been made at the beginning
of the measurement period at the then-current share price, less (B) the value
of such investment at the beginning of the measurement period, divided by (ii)
the value of the investment at the beginning of the measurement period.
In addition, effective February 3, 1997 the Board approved an amendment to
the SVIP to permit special discretionary grants by the Committee as an
additional performance incentive to selected recipients. Such discretionary
grants have a five and one-half year life and will vest, if at all, only at
the end of three, four or five years from the grant date if the Corporation
meets the criteria for performance-based vesting of options under the SVIP as
set forth above. After reviewing Mr. Correll's total compensation package for
1997, the Committee awarded Mr. Correll a discretionary option grant to
purchase 40,000 shares of the Former Common Stock effective February 3, 1997.
As required by the SVIP, the exercise price of the option was $74.25, the fair
market value of the Former Common Stock on the date of grant. The Committee
determined that this discretionary grant, which emphasizes payment only upon
the Corporation's achievement of superior shareholder returns, was appropriate
in order to provide Mr. Correll with a total compensation package for 1997 in
line with chief executive officers of the Comparison Group.
Changes in Long-Term Equity Incentive Compensation Plans to Reflect the
Letter Stock Recapitalization. In conjunction with the Letter Stock
Recapitalization, on December 16, 1997 the shareholders approved an amendment
and restatement of the SVIP (the "Restated SVIP") and adopted two new equity
incentive plans, the Georgia-Pacific Corporation/Georgia-Pacific Group 1997
Long-Term Incentive Plan (the "Georgia-Pacific Group LTIP") and the Georgia-
Pacific Corporation/Timber Group 1997 Long-Term Incentive Plan ("The Timber
Company LTIP"), as further described below.
Restated SVIP. In light of the two new 1997 equity incentive plans, the
Restated SVIP eliminated future grants of options under that Plan. In
addition, it provided for the conversion, effective December 17, 1997, of each
previously granted unexercised option to purchase Former Common Stock under
the SVIP into two separate options (each independently exercisable), one to
purchase shares of Georgia-Pacific Group Stock and the other to purchase
shares of The Timber Company Stock, in each case for a number of shares equal
to the number of shares of Former Common Stock specified in the original
unexercised option. The exercise prices for the resulting Georgia-Pacific
Group Stock options and The Timber Company Stock options were calculated by
multiplying the exercise price under the original SVIP option from which they
were converted by a fraction, the numerator of which is the average of the
high and low price of Georgia-Pacific Group Stock or The Timber Company Stock,
as the case may be, on December 17, 1997 and the denominator of which is the
sum of such Georgia-Pacific Group Stock and The Timber Company Stock prices.
This was intended to ensure that the aggregate intrinsic value of the options
was preserved and the ratio of the exercise price per option to the market
value per share was not reduced. Following the conversion, the vesting
provisions and option periods of the resulting Georgia-Pacific Group Stock
options and The Timber Company Stock options remain the same as for the
original SVIP option from which they were converted.
14
<PAGE>
1997 Long-Term Incentive Plans. The Georgia-Pacific Group LTIP and The
Timber Company LTIP (collectively, the "1997 Incentive Plans") are designed to
increase the Corporation's ability, given two classes of common stock
separately reflecting the performance of distinct operating groups, to focus
the management of those respective operating groups on maximizing the returns
from such businesses by structuring incentives for employees of each group
that are tied directly to the share price performance of that group. The
Georgia-Pacific Group LTIP authorizes grants of stock options, restricted
stock and performance awards with respect to Georgia-Pacific Group Stock. The
Timber Company LTIP authorizes grants of stock options, restricted stock and
performance awards with respect to The Timber Company Stock. The Committee has
the authority under the 1997 Incentive Plans to set the terms and conditions
of any grants and awards, provided that the exercise price of any incentive
stock option cannot be less than 100% of the fair market value of the
underlying stock on the date of grant of the award.
The Corporation does not currently intend to grant awards under the Georgia-
Pacific Group LTIP to managers of The Timber Company. However, it is intended
that certain officers and employees of the Corporation with responsibilities
involving both operating groups may be granted options, restricted stock or
performance awards under both 1997 Incentive Plans. Consistent with that
intention, on December 17, 1997 seven executive officers of the Corporation,
along with key managers of The Timber Company, were granted stock options
pursuant to The Timber Company LTIP. Mr. Correll was awarded options to
purchase 345,400 shares of The Timber Company Stock. These options will expire
December 16, 2007 and will become exercisable over four years with 25% of each
grant vesting on each of the first four anniversaries of the grant date. In
the event of a change in control of the Corporation, these options become
immediately exercisable for the remainder of their term. The exercise price of
these options is $25.13, the fair market value of The Timber Company Stock on
the grant date.
The intent of these December 17 grants under The Timber Company LTIP was to
align executive and shareholder interests from the outset of trading in The
Timber Company Stock. In order to maximize these executives' incentive to
increase shareholder value, the December 17 grants represented their total
stock option awards under The Timber Company LTIP for fiscal years 1998 and
1999. At the current time, the Committee does not intend to award further
grants under The Timber Company LTIP to these executives, including Mr.
Correll, until the year 2000.
In addition, on December 17, 1997 certain key managers of The Timber
Company received an award of performance units under The Timber Company LTIP
pursuant to which cash awards may be earned on the basis of actual cumulative
earnings before interest, taxes, depreciation, depletion and amortization
("EBITDDA") of The Timber Company over a three-year period compared to a
targeted level of EBITDDA. Recipients can earn 0% to 200% of a targeted cash
value of $3.00 per unit depending on The Timber Company's performance in
generating EBITDDA over this period.
The Committee believes that the combination of stock options and long-term
performance cash awards will provide strong incentive for management to focus
on shareholder returns for The Timber Company Stock and to produce strong cash
flows to fund investment in The Timber Company and dividends on, and
repurchases of, The Timber Company Stock.
The foregoing report has been furnished by the following members of the
Compensation Committee of the Company's Board of Directors:
Richard V. Giordano, Chairman
Donald V. Fites
David R. Goode
M. Douglas Ivester
James B. Williams
15
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
During 1997, Mr. Williams was Chairman and Chief Executive Officer of
SunTrust Banks, Inc., and served on the Compensation Committee of the Board of
Directors of the Corporation. Mr. Correll, Chairman, Chief Executive Officer
and President of the Corporation, served as a director of SunTrust Banks, Inc.
during 1997.
FIVE-YEAR SHAREHOLDER RETURN COMPARISON
As required by the rules of the Securities and Exchange Commission, set
forth below is a line-graph presentation comparing cumulative, five-year
shareholder returns for the Corporation, the S&P 500 Stock Index and the
Standard & Poor's Paper and Forest Products Index.
COMPARISON OF CUMULATIVE FIVE-YEAR SHAREHOLDER RETURN*
LOGO
[Graph appears here]
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
1992 1993 1994 1995 1996 1997
- -------------------------------------------------------------------------
Georgia-Pacific Corporation $100 $112.89 $120.10 $118.03 $127.40 $151.15
- -------------------------------------------------------------------------
S&P 500 P&FP Stock Index** $100 $110.21 $114.84 $126.44 $139.86 $149.97
- -------------------------------------------------------------------------
S&P 500 Stock Index** $100 $110.08 $111.53 $153.45 $188.68 $251.63
</TABLE>
- --------
* Assumes that the value of the investment in Georgia-Pacific common stock
and each index was $100 on December 31, 1992 and that all dividends were
reinvested. On December 17, 1997, the Corporation recapitalized its Former
Common Stock into Georgia-Pacific Group Stock and The Timber Company Stock,
and after that time the graph reflects a composite return for the two new
classes of stock.
**Provided by Standard & Poor's Compustat, a division of The McGraw-Hill
Companies.
16
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information concerning the compensation of
the Corporation's Chief Executive Officer and each of the other four most
highly compensated executive officers of the Corporation at the end of 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS(3)
---------------------------------- ------------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND BONUS COMPENSATION OPTIONS/SARS COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) ($)(1) ($)(2) (#)(4) ($)(5)
- ------------------ ---- ---------- ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Alston D. Correll...... 1997 $1,050,000 $ -0- $1,087,522 614,600 $ 6,000
Chairman, Chief 1996 1,050,000 -0- 209,153 227,000 6,000
Executive Officer 1995 962,000 1,300,000 205,120 166,000 6,000
and President
John F. McGovern....... 1997 440,000 233,300 190,731 155,900 11,000
Executive Vice 1996 420,000 120,500 25,971 84,000 10,800
President-Finance 1995 350,370 348,000 36,709 27,200 10,650
and Chief
Financial Officer
Donald L. Glass........ 1997 383,315 251,000 365,023 299,600 8,905
Executive Vice 1996 347,000 108,600 30,271 46,800 8,972
President-Timber 1995 330,000 179,900 29,038 24,000 10,650
Chief Executive
Officer-The Timber
Company
Lee M. Thomas.......... 1997 404,388 196,000 7,011 50,200 9,684
Executive Vice 1996 357,100 82,600 8,307 39,600 9,777
President-Paper 1995 345,000 241,300 8,516 24,000 11,624
and Chemicals
James F. Kelley........ 1997 389,500 145,800 6,035 79,300 11,350
Senior Vice President-
Law 1996 378,000 77,200 15,088 39,600 11,625
and General Counsel 1995 365,000 263,300 162,402 24,000 11,625
</TABLE>
- --------
(1) Reflects bonuses paid under the EVIP, the terms of which are further
described on page 12 under "Economic Value Incentive Plan".
(2) Other Annual Compensation is composed of annual compensation not properly
categorized as salary or bonus. It includes payments made by the
Corporation on behalf of Mr. Correll, Mr. McGovern and Mr. Glass pursuant
to the 1990 Long-Term Incentive Plan (the "1990 LTIP"). Under the 1990
LTIP, at the time restricted shares of Common Stock awarded under the Plan
become vested, the Corporation will pay to the appropriate taxing
authorities a cash amount designed to approximate the amount of federal
and state income taxes which would be incurred by the participant as a
result of the vesting of the awarded shares and as a result of such cash
payment, as if the participant were subject to such taxes at the highest
statutory marginal federal and Georgia income tax rates on personal
service income for the calendar year in which the award vests. The amount
of the cash payment may not exceed 100% of the market value of the vested
shares on the date of vesting. Pursuant to the normal vesting provisions
of the 1990 LTIP, shares
17
<PAGE>
awarded to Mr. Correll, Mr. McGovern and Mr. Glass in January and February,
1992 vested in January and February, 1997. Accordingly, cash payments in
the following amounts were made on behalf of the following individuals in
connection with such vesting: Mr. Correll, $1,061,815; Mr. McGovern,
$184,823; and Mr. Glass, $357,325.
(3) At December 31, 1997, the class, number and value of the aggregate shares
of restricted Common Stock awarded to and beneficially held by each of the
persons named above pursuant to the 1990 LTIP were as follows: Mr.
Correll, 25,000 shares of Georgia-Pacific Group Stock and 25,000 shares of
The Timber Company Stock with an aggregate value of $2,085,937;
Mr. McGovern, 5,000 shares of Georgia-Pacific Group Stock and 5,000 shares
of The Timber Company Stock with an aggregate value of $417,187; Mr.
Glass, 5,800 shares of Georgia-Pacific Group and 5,800 shares of The
Timber Company Stock with an aggregate value of $483,937; and Mr. Thomas,
5,000 shares of Georgia-Pacific Group Stock and 5,000 shares of The Timber
Company Stock with an aggregate value of $417,187. Mr. Kelley did not
participate in the 1990 LTIP.
(4) Reflects the conversion of options for Former Common Stock granted under
the SVIP into independently exercisable options for Georgia-Pacific Group
Stock and The Timber Company Stock as further described on page 14 under
"Restated SVIP", and the December 17, 1997 grants of The Timber Company
Stock pursuant to The Timber Company LTIP, the terms of which are further
described on page 15 under "1997 Long-Term Incentive Plans". A breakdown
of the options set forth in the table, by class, is as follows:
<TABLE>
<CAPTION>
YEAR GEORGIA-PACIFIC GROUP STOCK THE TIMBER COMPANY STOCK
---- --------------------------- ------------------------
<S> <C> <C> <C>
Mr. Correll....... 1997 134,600 480,000
1996 113,500 113,500
1995 83,000 83,000
Mr. McGovern...... 1997 35,000 120,900
1996 42,000 42,000
1995 13,600 13,600
Mr. Glass......... 1997 25,100 274,500
1996 23,400 23,400
1995 12,000 12,000
Mr. Thomas........ 1997 25,100 25,100
1996 19,800 19,800
1995 12,000 12,000
Mr. Kelley........ 1997 16,500 62,800
1996 19,800 19,800
1995 12,000 12,000
</TABLE>
(5) Includes contributions by the Corporation to the Georgia-Pacific
Corporation Savings and Capital Growth Plan on behalf of the named
individuals in the following amounts for 1997: Mr. Correll, $3,000; Mr.
McGovern, $8,300; Mr. Glass, $6,581; Mr. Thomas, $6,684; and Mr. Kelley,
$8,950. Also includes premiums for term life insurance for the benefit of
the named individuals paid by the Corporation in the following amounts for
1997: Mr. Correll, $3,000; Mr. McGovern $2,700; Mr. Glass, $2,325; Mr.
Thomas, $3,000; and Mr. Kelley, $2,400.
18
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR (1)
SVIP STOCK OPTIONS (2)
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------------
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE
UNDERLYING GRANTED TO OR BASE GRANT DATE
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED(#)(3) FISCAL YEAR ($/SH) DATE VALUE($)(4)
- ---- ------------- ------------ -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Alston D. Correll....... 94,600 5.42% 74.25 2/2/07 1,795,064
40,000 2.29 74.25 8/4/02 576,798
John F. McGovern........ 35,000 2.00 74.25 2/2/07 664,136
Donald L. Glass......... 25,100 1.44 74.25 2/2/07 476,280
Lee M. Thomas........... 25,100 1.44 74.25 2/2/07 476,280
James F. Kelley......... 16,500 0.95 74.25 2/2/07 313,093
</TABLE>
THE TIMBER COMPANY LTIP STOCK OPTIONS(5)
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------
PERCENT OF
TOTAL
NUMBER OF OPTIONS/SARS
SECURITIES GRANTED TO EXERCISE
UNDERLYING EMPLOYEES IN OR BASE GRANT DATE
OPTIONS/SARS FISCAL PRICE EXPIRATION PRESENT
NAME GRANTED(#) YEAR(6) ($/SH) DATE VALUE($)(4)
- ---- ------------ ------------ -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Alston D. Correll....... 345,400 34.18% 25.13 12/16/07 2,140,660
John F. McGovern........ 85,900 8.50 25.13 12/16/07 532,376
Donald L. Glass......... 249,400 24.68 25.13 12/16/07 1,545,688
Lee M. Thomas........... -- -- -- -- --
James F. Kelley......... 46,300 4.58 25.13 12/16/07 286,950
</TABLE>
- --------
(1) There were no SAR grants in 1997.
(2) As discussed under "Restated SVIP" on page 14, these options to purchase
shares of Former Common Stock were converted following the Letter Stock
Recapitalization into two separate options, one to purchase shares of
Georgia-Pacific Group Stock and one to purchase shares of The Timber
Company Stock, in each case for a number of shares equal to the original
unexercised SVIP option shown above. The exercise price for the listed
options of $74.25 per share was allocated between the converted options
based on the proportionate market values of Georgia-Pacific Group Stock
and The Timber Company Stock on December 17, 1997, resulting in an
exercise price of $52.84 per share for the Georgia-Pacific Group Stock
options and $21.41 per share for The Timber Company Stock options.
(3) With the exception of the discretionary grant expiring August 4, 2002,
these options become exercisable six months prior to their expiration, but
may become exercisable earlier if certain performance goals based on Total
Shareholder Return (the "Performance Goals") are achieved. See
"Shareholder Value Incentive Plan" on page 13. In addition, if an optionee
retires, becomes disabled or dies and performance-based vesting is not
achieved, between 50% and 100% of such person's options, determined
according to the number of years elapsed in the option term, will become
exercisable for no more than six months. In the event of a change in
control of the Corporation, these options become exercisable for the
remainder of their term if the Corporation's Total Shareholder Return over
the immediately preceding three, four or five years exceeded the Total
Shareholder Return of companies included in the Standard & Poor's Paper
and Forest Products Index over the same period. Options under Mr.
Correll's discretionary grant will vest, if at all, only at the end of
three, four or five years from the grant date if the Performance Goals are
met.
19
<PAGE>
(4) Based on the Black-Scholes option pricing model. The actual value, if any,
an executive officer may realize ultimately depends on the market value of
the subject class of Common Stock at a future date. This valuation is
provided pursuant to Securities and Exchange Commission disclosure rules.
There is no assurance that the value realized will be at or near the value
estimated by the Black-Scholes model. Assumptions used to calculate this
value for SVIP stock options expiring on 2/2/07 are as follows: (i) an
estimated volatility of 24.71%; (ii) an estimated dividend yield of 2.47%;
(iii) a risk-free rate of 6.25%; (iv) an expected life of the option of 10
years; and (v) an option forfeiture rate of 3% per year over the vesting
period. Assumptions used to calculate this value for SVIP stock options
expiring on 8/4/02 are as follows: (i) an estimated volatility of 24.71%;
(ii) an estimated dividend yield of 2.47%; (iii) a risk-free rate of
5.25%; (iv) an expected life of the option of 5.5 years; and (v) an option
forfeiture rate of 7% per year over the vesting period. Assumptions used
to calculate this value for The Timber Company stock options expiring on
12/16/07 are as follows: (i) an estimated volatility of 25.00%; (ii) an
estimated dividend yield of 3.98%; (iii) a risk-free rate of 6.5%; (iv) an
expected life of the option of 10 years; and (v) an option forfeiture rate
of 3% per year over the vesting period.
(5) On December 17, 1997, options were granted under The Timber Company LTIP
to a total of 42 participants. As discussed under "1997 Long-Term
Incentive Plans" on page 15, the grants listed above represent the named
executives' awards under The Timber Company LTIP for 1998 and 1999. These
options become exercisable over four years from the date of grant with 25%
of each grant vesting on each of the first four anniversaries of the grant
date. In the event of a change in control of the Corporation, these
options become immediately exercisable for the remainder of their term.
(6) Represents only the December 17, 1997 grants under The Timber Company
LTIP. The percentage of the aggregate number of outstanding options to
purchase The Timber Company Stock held by the named executives at December
31, 1997 was as follows: Mr. Correll, 11.44%; Mr. Glass, 5.24%; Mr.
McGovern, 2.98%; Mr. Thomas, 0.96%; and Mr. Kelley, 1.60%.
AGGREGATED OPTION/SAR EXERCISES IN LAST
FISCAL YEAR AND FY-END OPTION/SAR VALUES(1)
GEORGIA-PACIFIC GROUP STOCK OPTIONS
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT FISCAL IN-THE-MONEY
YEAR-END(#) OPTIONS/SARS($)
------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE(2) UNEXERCISABLE
- ---- ----------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Alston D. Correll........ -0- 331,100 -0- $2,381,311
John F. McGovern......... -0- 90,600 -0- 704,846
Donald L. Glass.......... -0- 60,500 -0- 452,299
Lee M. Thomas............ -0- 56,900 -0- 419,647
James F. Kelley.......... -0- 48,300 -0- 351,621
</TABLE>
THE TIMBER COMPANY STOCK OPTIONS
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT FISCAL IN-THE-MONEY
YEAR-END(#) OPTIONS/SARS($)
------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE(2) UNEXERCISABLE
- ---- ----------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Alston D. Correll........ -0- 676,500 -0- $369,158
John F. McGovern......... -0- 176,500 -0- 117,687
Donald L. Glass.......... -0- 309,900 -0- 72,722
Lee M. Thomas............ -0- 56,900 -0- 66,468
James F. Kelley.......... -0- 94,600 -0- 55,481
</TABLE>
20
<PAGE>
- --------
(1) There were no SAR or stock option exercises by any of the named executives
in 1997, and no unexercised SARs were held by any of the named executives
at December 31, 1997.
(2) Except in circumstances involving a change in control of the Corporation,
options granted under the SVIP in 1995 will be exercisable beginning April
1, 1998, options granted under the SVIP in 1996 will be exercisable no
earlier than February 1, 1999, and options granted under the SVIP in 1997
will be exercisable no earlier than February 3, 2000. Except in
circumstances involving a change in control of the Corporation, 25% of the
options granted under The Timber Company LTIP in 1997 will become
exercisable on each of December 17, 1998, 1999, 2000 and 2001.
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR*
<TABLE>
<CAPTION>
PERFORMANCE ESTIMATED FUTURE PAYOUTS
NUMBER OF OR OTHER UNDER NON-STOCK PRICE-
SHARES, PERIOD BASED PLANS
UNITS OR UNTIL -------------------------
OTHER MATURATION THRESHOLD TARGET MAXIMUM
NAME RIGHTS(#) OR PAYOUT ($) ($) ($)
- ---- --------- ----------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
Alston D. Correll............... -- -- -- -- --
John F. McGovern................ -- -- -- -- --
Donald L. Glass................. 146,500 1998-2000 219,750 439,500 549,375
Lee M. Thomas................... -- -- -- -- --
James F. Kelley................. -- -- -- -- --
</TABLE>
- --------
*This table represents potential payouts of cash awards under The Timber
Company LTIP, if earned, upon completion of the performance period. These
awards are tied to EBITDDA goals. Target amounts will be earned if 100% of the
EBITDDA goal is achieved; threshold amounts will be earned if 85% of the goal
is achieved; and maximum amounts will be earned if 115% of the goal is
achieved. See "1997 Long-Term Incentive Plans" on page 15.
Officers' Retirement Plan ("Retirement Plan"). The Retirement Plan is
represented by separate but substantially similar agreements with each
officer. Subject to certain offsets, the Retirement Plan provides that
Georgia-Pacific will make post-retirement monthly payments to each officer for
life, based on an aggregate annual amount equal to 50% of the officer's
average annual compensation (including bonuses under management incentive
plans) during the officer's last four years of employment and, at the
officer's death, will continue to pay to the officer's surviving spouse, for
the remainder of such spouse's life, 50% of the amount that had been payable
to the officer. Full benefits are payable upon retirement after attaining age
55 with 15 years of service (commencing at age 62) or age 65. Benefits
generally are available to an officer who terminates employment with the
Corporation before age 65 with at least three years of service but are not
payable until age 62. Such termination benefits are reduced proportionately if
total service at termination of employment is less than 15 years. Disability
and death benefits are also provided.
Retirement Plan benefits are subject to offset. Such offsets include the
amounts which would become payable to the officer and to the officer's
surviving spouse under the Georgia-Pacific Salaried Employees Retirement Plan
("SERP") and the value of the Corporation's contributions to the Georgia-
Pacific Savings and Capital Growth Plan (the "Savings Plan"), in which
virtually all salaried employees of the Corporation or its participating
subsidiaries are eligible to participate. In the case of both the Savings Plan
and the SERP, the officer's interest is converted to an actuarially equivalent
joint and 50% survivor annuity for offset purposes. If an officer engages in
certain competitive activity after retirement, benefits under the Retirement
Plan terminate.
The table below sets forth certain information relating to benefits under
the Retirement Plan with respect to the named individuals (a) assuming
retirement as of January 1, 1998, and (b) assuming retirement at age 65, using
projected years of credited service at age 65 and final average compensation
as of December 31, 1997. The benefits disclosed in the table represent the
maximum
21
<PAGE>
estimated annual benefits under the Retirement Plan, without reduction for
offsets provided for in such Plan. Because such amounts exceed the total of
such offsetting payments, the amounts disclosed in the table below represent
the estimated maximum aggregate benefit payable to the named executive
officers under all pension and other defined benefit or actuarial plans.
ANNUAL BENEFIT BASED ON 50% OF FINAL
AVERAGE COMPENSATION(1)
<TABLE>
<CAPTION>
RETIREMENT AT
RETIREMENT ON JANUARY 1, 1998 AGE 65
----------------------------- -------------
ANNUAL YEARS OF ANNUAL
BENEFITS CREDITED SERVICE BENEFIT(2)
----------------- ------------------ -------------
<S> <C> <C> <C>
Mr. Correll.................. $ 441,525 9 $735,875
Mr. McGovern................. 289,972 16 289,972
Mr. Glass.................... 252,969 25 252,969
Mr. Thomas................... 68,850 4 258,188
Mr. Kelley................... 69,493 4 260,600
</TABLE>
- --------
(1) "Compensation" for these purposes means only base salary (including salary
deferred as before-tax contributions to the Savings Plan) and annual
incentive bonuses, if any, and excludes any other cash or non-cash
compensation items.
(2) Represents the formula benefit at the normal retirement age of 65 under
the Retirement Plan, based on average annual compensation during the
period 1994-1997.
OTHER MATTERS
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP has audited the accounts of the Corporation and its
subsidiaries since 1948 and will continue in that capacity during 1998. A
representative of Arthur Andersen LLP will be present at the Annual Meeting of
Shareholders with the opportunity to make a statement and will be available to
respond to appropriate questions.
SOLICITATION OF PROXIES
Georgeson & Company Inc. has been engaged by the Corporation to assist in
the solicitation of proxies at a cost not to exceed approximately $9,000. In
addition to the solicitation of proxies by mail through Georgeson & Company
Inc., other means of communication such as telephone, facsimile and personal
interview may be employed by the officers, directors and regular employees of
the Corporation. All costs of the solicitation of proxies will be borne by the
Corporation. The Corporation will reimburse brokerage firms and other
custodians, nominees and fiduciaries for reasonable expenses incurred by them
in sending proxy material and annual reports to the beneficial owners of stock
in accordance with the schedule of charges approved by the New York Stock
Exchange.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors and executive officers to file with the Securities and
Exchange Commission and the New York Stock Exchange reports of changes in
ownership of Common Stock. Securities and Exchange Commission regulations
require that such directors and executive officers furnish to the Corporation
copies of all Section 16(a) reports they file. To the Corporation's knowledge,
based solely on review of the copies of such reports furnished to the
Corporation and written representations that no other reports were required,
during the fiscal year ended December 31, 1997, all of its officers and
directors complied with applicable Section 16(a) filing requirements, except
as follows. Ronald L. Paul, Executive Vice President--Wood Products and
Distribution, was late in filing a Form 3 following his promotion to an
executive officer position on September 17, 1997. Mr. Paul subsequently filed
a Form 3 on December 3, 1997.
22
<PAGE>
SHAREHOLDER PROPOSALS
Shareholder proposals (other than director nominations discussed under
"Shareholder Nominations for Election of Directors" on page 11) for the Annual
Meeting of Shareholders to be held on May 4, 1999, will not be included in the
Corporation's Proxy Statement for that meeting unless received by the
Corporation at its executive office in Atlanta, Georgia, on or prior to
November 25, 1998. Such proposals must also meet the other requirements of the
rules of the Securities and Exchange Commission relating to shareholder
proposals.
By order of the Board of Directors,
/s/Kenneth F. Khoury
--------------------------------------------
Kenneth F. Khoury
Vice President, Deputy General
Counsel and Secretary
Atlanta, Georgia
March 23, 1998
23
<PAGE>
THE CORPORATION'S 1997 ANNUAL REPORT TO SHAREHOLDERS, WHICH INCLUDES AUDITED
FINANCIAL STATEMENTS, HAS BEEN MAILED TO SHAREHOLDERS OF THE CORPORATION. THE
1997 ANNUAL REPORT DOES NOT FORM ANY PART OF THE MATERIAL FOR THE SOLICITATION
OF PROXIES.
A COPY OF GEORGIA-PACIFIC CORPORATION'S 1997 ANNUAL REPORT TO THE SECURITIES
AND EXCHANGE COMMISSION ON FORM 10-K WILL BE SUPPLIED WITHOUT CHARGE UPON
REQUEST. ANNUAL STATISTICAL UPDATES ARE ALSO AVAILABLE. REQUESTS FOR SUCH
INFORMATION SHOULD BE DIRECTED TO:
INVESTOR RELATIONS
GEORGIA-PACIFIC CORPORATION
P. O. BOX 105605
ATLANTA, GEORGIA 30348
(404) 652-5555
EVA IS A REGISTERED TRADEMARK OF STERN STEWART & CO.
PRINTED ON GEORGIA-PACIFIC FINANCIAL OPAQUE 27 LB. BOOK.
24
<PAGE>
[Letterhead of Georgia-Pacific Corporation appears here]
March 23, 1998
To Participants in either the Georgia-Pacific Group Stock Fund or Georgia-
Pacific Timber Stock Fund of the Georgia-Pacific Corporation Savings and
Capital Growth Plan and the Georgia-Pacific Hourly 401(k) Savings Plan (the
"Plans"):
In connection with the Georgia-Pacific Corporation 1998 Annual Meeting of
Shareholders (the "Annual Meeting") to be held on May 5, 1998, enclosed are
proxy materials relative to shares allocated to you with respect to your
interest in either the Georgia-Pacific Group Stock Fund or Georgia-Pacific
Timber Stock Fund of one or both of the Plans mentioned above.
We wish to call your attention to the fact that pursuant to the provisions of
both Plans, Vanguard Fiduciary Trust Company, the Trustee under the Plans,
cannot vote your allocable shares of either Georgia-Pacific Group Common Stock
or Timber Group Common Stock on the matters to be acted on at the Annual
Meeting without your specific voting instructions.
Accordingly, in order for your allocable shares to be voted at the Annual
Meeting, please give your voting instructions over your signature on the
enclosed card and return it to First Chicago Trust Company of New York, who
will tabulate the votes for the Trustee, promptly in the enclosed, self-
addressed, postage-paid envelope. It is understood that if you sign without
otherwise marking the card, you wish the Trustee to vote your shares FOR the
election of directors, as recommended by the Board of Directors of Georgia-
Pacific Corporation.
We urge you to send in the enclosed card promptly so that the Trustee may
vote the shares allocable to you under the Plans in accordance with your
wishes.
Very truly yours,
/s/ Kenneth F. Khoury
---------------------------
Kenneth F. Khoury
Vice President, Deputy
General Counsel
and Secretary
<PAGE>
- --------------------------------------------------------------------------------
CONFIDENTIAL VOTING INSTRUCTIONS
GEORGIA-PACIFIC CORPORATION
ANNUAL MEETING MAY 5, 1998
The undersigned hereby directs Vanguard Fiduciary Trust Company, as Trustee
under the Georgia-Pacific Corporation Savings and Capital Growth Plan and the
Georgia-Pacific Corporation Hourly 401(k) Savings Plan (the "Plans"), to vote
in person or by proxy all shares of both Georgia-Pacific Group common stock and
Timber Group common stock of Georgia-Pacific Corporation allocated to any ac-
counts of the undersigned under the Plans in the manner indicated on the re-
verse hereof with respect to Item 1, as described in the Georgia-Pacific Corpo-
ration Notice of 1998 Annual Meeting of Shareholders and Proxy Statement, in
connection with the Georgia-Pacific Corporation Annual Meeting of Shareholders
to be held on May 5, 1998.
Election of Directors:
Nominees in Class II: Donald V. Fites, Harvey C. Fruehauf, Jr., David R. Goode
and James B. Williams
P R O X Y
SEE REVERSE
SIDE
FOLD AND DETACH HERE
<PAGE>
- --------------------------------------------------------------------------------
|6358
----
Please mark your
[X] votes as in this
example.
WHEN THIS CARD IS PROPERLY EXECUTED, YOUR INTEREST WILL BE VOTED IN THE MANNER
DIRECTED HEREIN. IF NO DIRECTION IS MADE BY MARKING THE APPROPRIATE BOXES
BELOW, THE TRUSTEE WILL VOTE YOUR INTERESTS FOR ITEM 1.
1. Election of Directors FOR WITHHELD
[ ] [ ]
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------------------------------
SIGNATURE(S) ___________________________________________________ DATE
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
FOLD AND DETACH HERE
<PAGE>
- --------------------------------------------------------------------------------
GEORGIA-PACIFIC CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR ANNUAL MEETING MAY 5, 1998
The undersigned hereby appoints A.D. Correll, James F. Kelley and Kenneth F.
Khoury, jointly and severally, proxies with full power of substitution, to vote
all shares of both Georgia-Pacific Group common stock and Timber Group common
stock of GEORGIA-PACIFIC CORPORATION owned of record by the undersigned, and
which the undersigned is entitled to vote on all matters which may come before
the 1998 Annual Meeting of Shareholders to be held at the Radisson Riverfront
Hotel, 2 Tenth Street, Augusta, Georgia, on May 5, 1998 at 11:00 a.m., local
time, and any adjournments thereof, unless otherwise specified herein.
Election of Directors:
Nominees in Class II: Donald V. Fites,
Harvey C. Fruehauf, Jr.,
David R. Goode and James B. Williams
P R O X Y
Change of Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(If you have written in the above space, please mark the corresponding box on
the reverse side of this card.)
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES,
SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOX IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT
VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
SEE REVERSE
SIDE
FOLD AND DETACH HERE
[LOGO OF ADMISSION TICKET
GEORGIA-PACIFIC
APPEARS HERE] ANNUAL MEETING OF SHAREHOLDERS
If you plan to attend the 1998 Annual Meeting of Shareholders, please mark the
appropriate box on the reverse of the attached Proxy Card. The meeting will be
held on Tuesday, May 5, 1998, at the Radisson Riverfront Hotel, 2 Tenth Street,
Augusta, Georgia. The meeting will begin promptly at 11:00 a.m. local time.
TO AVOID DELAY AT THE ENTRANCE, PLEASE PRESENT THIS TICKET
AGENDA
ELECTION OF FOUR DIRECTORS
TRANSACTION OF OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THIS MEETING, WHETHER OR
NOT YOU ATTEND THE MEETING IN PERSON. TO MAKE SURE YOUR SHARES ARE REPRESENTED,
WE URGE YOU TO COMPLETE AND MAIL THE PROXY CARD ABOVE.
<PAGE>
- --------------------------------------------------------------------------------
7654
----
Please mark your votes as in this example.
X
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ELECTION OF
DIRECTORS.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1.
- --------------------------------------------------------------------------------
FOR
WITHHELD
1. Election of Directors
I PLAN TO ATTEND THE ANNUAL MEETING
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------------------------------
CHANGE OF ADDRESS ON REVERSE SIDE
SIGNATURE(S) ________________________________________ DATE ____________________
NOTE: Please sign exactly as name appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator, trustee
or guardian, please give full title as such.
FOLD AND DETACH HERE
