INTERNATIONAL PAPER
Two Manhattanville Road
Purchase, New York 10577
JOHN A. GEORGES
Chairman
March 31, 1994
Dear Fellow Shareholders:
The annual meeting of International Paper will be held this year at the
Hotel Crescent Court, 400 Crescent Court, Dallas, Texas. The meeting will start
at 9:30 a.m., on Tuesday, May 10, 1994. You are cordially invited to attend this
meeting and we look forward to seeing you there.
The following Proxy Statement outlines the business to be conducted at the
meeting, which includes the election of one class of directors and three
directors to the remaining term of their designated class; approval of the
appointment of Arthur Andersen & Co. as independent auditors for 1994; and
approve amendments to the Long-Term Incentive Compensation Plan.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOUR REPRESENTATION AND VOTE
ARE IMPORTANT. WE URGE YOU TO VOTE, DATE, SIGN AND RETURN THE ENCLOSED PROXY
CARD.
Attendance at the meeting will be limited to shareholders of record as of
the close of business March 22, 1994, or their duly appointed proxy holder (not
to exceed one proxy per shareholder), and to guests of management. If you or
your proxy holder plan to attend this meeting, please complete, sign, detach and
return the enclosed Request for Admittance card.
Thank you for your continued support.
Sincerely,
/s/ JOHN A. GEORGES
JOHN A. GEORGES
<PAGE>
INTERNATIONAL PAPER
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE OWNERS OF COMMON STOCK OF
INTERNATIONAL PAPER COMPANY:
The annual meeting of shareholders of International Paper Company will be held
Tuesday, May 10, 1994, at 9:30 a.m. at the Hotel Crescent Court, 400 Crescent
Court, Dallas, Texas, to:
1. Elect one class of directors comprised of three members to the Board of
Directors and three directors to the remaining term of their designated class;
2. Approve the appointment of Arthur Andersen & Co. as independent auditors for
1994;
3. Approve amendments to the Long-Term Incentive Compensation Plan; and
4. Transact such other business as may properly come before the meeting or any
adjournments thereof.
YOUR BOARD OF DIRECTORS URGES SHAREHOLDERS TO VOTE FOR ITEMS: 1, 2 AND 3.
Shareholders of record at the close of business on March 22, 1994, will be
entitled to vote at the meeting or any adjournments thereof.
By order of the Board of Directors
JAMES W. GUEDRY
Secretary
March 31, 1994
<PAGE>
INTERNATIONAL PAPER COMPANY PROXY STATEMENT
TWO MANHATTANVILLE ROAD
PURCHASE, NEW YORK 10577
(914) 397-1500
------------------------
GENERAL INFORMATION
This statement is furnished by the Board of Directors of International
Paper Company (the "Company") in connection with the solicitation of proxies to
be voted at the annual meeting of shareholders to be held on May 10, 1994.
Owners of shares of common stock outstanding are entitled to one vote for each
share of common stock held of record at the close of business on March 22, 1994.
As of that date, there were 124,587,410 shares of common stock outstanding.
The annual report, including the audited financial statements of the
Company for the fiscal year ended December 31, 1993, has been mailed to
shareholders separately from this Proxy Statement and should be read carefully
in conjunction with this Proxy Statement before voting on any proposals
contained herein, as it contains details of the Company's operations and other
relevant disclosures.
PROXY PROCEDURE
Shares eligible to be voted and for which a proxy is properly signed and
returned, will be voted in accordance with the instructions specified thereon.
Where no instruction is received, eligible shares will be voted as recommended
by the Board of Directors in this Proxy Statement. If any other matters come
before the meeting, including any proposal submitted by a shareholder which was
omitted from this Proxy Statement in accordance with the applicable provisions
of the federal securities laws, the persons voting the proxies will vote them in
accordance with their best judgment. As of the time this Proxy Statement was
printed, management was not aware of any other matters to be voted upon. Any
proxy may be revoked at any time before its exercise by submitting a written
revocation or a new proxy, or by the shareholder's attendance and vote at the
annual meeting.
Solicitation of proxies from the Company's shareholders may be undertaken
by directors, officers and employees, as well as by Georgeson & Company Inc.
Payments to that firm as compensation are estimated at approximately $15,000
plus reimbursable expenses. This solicitation may be carried out either by mail,
telephone, telegraph, other electronic communication, or personal interview. The
cost of any such solicitation will be borne by the Company.
The Company has adopted a policy of confidentiality in the voting of
shareholder proxies generally and uses the services of its registrar and
transfer agent, Chemical Bank, as independent inspectors of election to receive
and tabulate proxy votes.
This Proxy Statement and the form of Proxy were sent to shareholders,
commencing on or about March 31, 1994.
MEETING ADMITTANCE PROCEDURES
Shareholders of record as of the close of business on March 22, 1994 (or
their duly appointed proxy holder upon verification--not to exceed one proxy per
shareholder) will be entitled to vote and attend the meeting. The following
procedures have been adopted to insure that no inconvenience or delays are
caused to the Company's shareholders or their proxy holders when entering the
meeting.
If you plan to attend the annual meeting in person or will appoint a proxy
to attend the meeting (other than the proxies set forth on the proxy card),
please complete (including the name of the appointed proxy, if any), sign,
detach and return the enclosed Request for Admittance promptly so that an
admittance card can be reserved for you or your proxy in advance of the meeting.
These admittance cards will be delivered to you or your proxy holder upon
verification of identification at the shareholders' admittance counter at the
meeting.
<PAGE>
Record shareholders who do not have admittance cards reserved for them at
the meeting will be admitted upon verification of ownership at the shareholders'
admittance counter. If you have not appointed a proxy in advance or have changed
the appointed proxy on the Request for Admittance, your duly appointed proxy who
will attend the meeting will be required to present evidence of your signature
on the proxy (a copy of your driver's license or employment identification card
or other identification with your signature) in order to determine that only
valid proxies are admitted and voted.
Beneficial owners of record on March 22, 1994 (or their duly appointed
proxy holder upon verification--not to exceed one proxy per shareholder) can
obtain admittance cards only at the shareholders' admittance counter by
presenting evidence of common stock ownership in the Company. This evidence
could be a proxy from the institution that is the record holder of the stock or
your most recent bank or brokerage firm account statement, along with proper
identification. If you are a beneficial shareholder who will appoint a proxy to
attend the meeting on your behalf, your duly appointed proxy will be required to
comply with the procedures in this paragraph, as well as the admittance
procedures described above for duly appointed proxies not designated in advance
on the Request for Admittance.
CORPORATE GOVERNANCE
BOARD OF DIRECTORS
The Board is classified into three classes of directors: Class I directors,
of which there are currently five, were elected at the 1992 annual meeting to
serve until the 1995 annual meeting; Class II directors, of which there are
currently five, were elected at the 1993 annual meeting to serve until the 1996
annual meeting; and Class III directors, of which there are currently four, were
elected at the 1991 annual meeting to serve until the 1994 annual meeting. Each
class is elected for a three-year term.
Eleven regular meetings and seven special meetings of the Board of
Directors were held in 1993. In addition, there were 28 Committee meetings. Each
director attended at least 80% of the meetings of the Board and the Committees
on which he or she serves. All of the directors attended an average of 96% of
such meetings of the Board and the Committees on which he or she serves.
With respect to the Company's director, Samuel R. Pierce, Jr., former
Secretary of Housing and Urban Development of the United States, an independent
counsel was appointed on March 1, 1990 to inquire into whether the Secretary or
other HUD employees engaged in a conspiracy to defraud the United States by
directing housing grants to political associates.
As mentioned in the Company's 1992 annual report, in December 1992, the
Company announced the donation of a 15,000 acre tract of forestlands, in the
Adirondack Park in New York, to The Conservation Fund, in recognition of the
100th anniversary of that Park. Following an independent appraisal which valued
the donation at $3,977,000, the transaction was finalized last year. Mr. Noonan,
who is chairman and chief executive officer of The Conservation Fund, joined the
Board in December 1993.
Beneficial ownership of current directors in equity securities of the
Company is shown in the table on page 5.
AUDIT COMMITTEE
The functions of the Audit Committee of the Board are to assist the Board
in carrying out its responsibilities for monitoring management's accounting for
the Company's financial results and for the timeliness and adequacy of the
reporting of those results; to discuss and make inquiry into the audits of the
Company's books made internally and by outside independent auditors, the
Company's financial and accounting policies, its internal controls and its
financial reporting; and to investigate and make a recommendation to the Board
each year with respect to the appointment of independent auditors for the
following year.
2
<PAGE>
Current members of the Committee, none of whom is an employee of the
Company, are W.M. Ellinghaus (Chairman), F.B. Dent, A.G. Hansen, W.G. Kuhns and
J.C. Pfeiffer.
Four meetings of the Committee were held in 1993.
MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE
The functions of the Management Development and Compensation Committee are
to review Company policies and programs for the development of management
personnel; to make recommendations to the Board with respect to any proposals
for compensation or compensation adjustments of officers who are also directors
of the Company; to authorize compensation or compensation adjustments for other
elected officers of the Company; to administer the Company's executive bonus and
Long-Term Incentive Compensation Plan; to review and endorse changes in Company
employee retirement and benefits plans; to review officer candidates and endorse
nominees for election as officers; and to make recommendations to the Board with
respect to directors' compensation.
Current members of the Committee, none of whom is an employee of the
Company, are S.C. Gault (Chairman), W.C. Butcher, T.C. Graham, S.R. Pierce, Jr.
and E.T. Pratt, Jr.
Eight meetings of the Committee were held in 1993.
NOMINATING COMMITTEE
The functions of the Nominating Committee are to review the size and
composition of the Board; to review possible director candidates and director
nominations properly presented by shareholders; to recommend to the Board
individuals suitable for election as directors; and to review and recommend
annually to the full Board the slate of nominees for election by the Company's
shareholders.
Current members of the Committee, none of whom is an employee of the
Company, are J.C. Pfeiffer (Chairman), W.C. Butcher, F.B. Dent, W.M. Ellinghaus,
D.F. McHenry and E.T. Pratt, Jr.
Three meetings of the Committee were held in 1993.
ENVIRONMENT, HEALTH AND TECHNOLOGY COMMITTEE
The functions of the Environment, Health & Technology Committee are to
discuss and make inquiries into the environmental and safety audits performed by
the Company's internal auditors; to review environmental, safety and health and
technological policies and programs throughout the Company, to assure that they
are appropriate to the short and long-term objectives of the Company in terms of
industry leadership, compliance with federal and state laws and regulations and
social responsibility; and to advise the Board of the effectiveness of these
policies and programs.
Current members of the Committee are T.C. Graham (Chairman), F.B. Dent,
J.T. Dillon, S.C. Gault, A.G. Hansen, P.F. Noonan and S.R. Pierce, Jr.
Four meetings of the Committee were held in 1993.
OTHER COMMITTEES
Membership of the other regular Committees of the Board of Directors is
shown on page 58 of the Company's annual report.
FUTURE SHAREHOLDER PROPOSALS AND NOMINATIONS
Any shareholder proposal intended to be presented at the 1995 annual
meeting must be made in writing and received by the Secretary of the Company at
the Company's principal executive offices by December 1, 1994, for inclusion in
the 1995 Proxy Statement and form of proxy relating to the meeting.
3
<PAGE>
Nomination by shareholders for directors, at a meeting called for the purpose of
electing directors, shall be made in accordance with Article II, Section 9 of
the Company's By-laws, as set forth below:
"Nominations for election to the Board of Directors of the Corporation
at a meeting of the Stockholders may be made by the Board, or on behalf of
the Board by any nominating committee appointed by the Board, or by any
Stockholder of the Corporation entitled to vote for the election of
Directors at such meeting. Such nominations, other than those made by or on
behalf of the Board, shall be made by notice in writing delivered or mailed
by first class United States mail, postage prepaid, to the Secretary of the
Corporation, and received by him not less than thirty (30) days nor more
than sixty (60) days prior to any meeting of the Stockholders called for
the election of Directors; provided, however, that if less than thirty-five
(35) days notice of the meeting is given to the Stockholders, such
nomination shall have been mailed or delivered to the Secretary of the
Corporation not later than the close of business on the seventh (7th) day
following the day on which the notice of meeting was mailed. Such notice
shall set forth as to each proposed nominee who is not an incumbent
Director (i) the name, age, business address and, if known, residence
address of each nominee proposed in such notice, (ii) the principal
occupation or employment of each such nominee, (iii) the number of shares
of stock of the Corporation which are beneficially owned by each such
nominee and by the nominating Stockholder, and (iv) any other information
concerning the nominee that must be disclosed of nominees in proxy
solicitations pursuant to Rule 14(a) of the Securities Exchange Act of
1934. Such notice shall be accompanied by the written consent of each
proposed nominee to serve as a Director of the Corporation. No person shall
be eligible for election as a Director of the Corporation unless nominated
in accordance with the procedures set forth herein.
"The Presiding Officer of the meeting may, if the facts warrant,
determine and declare to the meeting that a nomination was not made in
accordance with the foregoing procedure, and if he should so determine, he
shall so declare to the meeting and the defective nomination shall be
disregarded."
The effect of this By-law is that shareholder nominations for the 1995
election of directors must be received by the Secretary of the Company not
earlier than March 11, 1995, or later than April 11, 1995, if the annual meeting
is held on the second Tuesday of May, 1995.
4
<PAGE>
COMMON STOCK OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table shows, as of March 22, 1994, the number of shares of
Company common stock beneficially owned (as defined by the Securities and
Exchange Commission) or otherwise claimed by each current director and each
nominee for director and by all directors and executive officers of the Company
as a group. To the best knowledge of the Company, no person or group
beneficially owns more than 5% of the Company's common stock outstanding, except
as set forth below in the table.
<TABLE><CAPTION>
SHARES PERCENT OF TOTAL
NAME OF INDIVIDUAL BENEFICIALLY COMMON STOCK
OR GROUP OWNED(1) OUTSTANDING
- -------------------------------------------------------------------- ------------- ----------------------------
<S> <C> <C>
W.C. Butcher........................................................ 2,592
F. B. Dent.......................................................... 2,920
J.T. Dillon......................................................... 89,016
W. M. Ellinghaus.................................................... 1,970
S.C. Gault.......................................................... 7,963
J.A. Georges........................................................ 210,630
T.C. Graham......................................................... 6,580
A.G. Hansen......................................................... 2,308
No director or executive
W.G. Kuhns.......................................................... 3,960 officer owns as much
D.F. McHenry........................................................ 2,627 as 1/5th of 1%
P.F. Noonan......................................................... 125
J.C. Pfeiffer....................................................... 2,369
S.R. Pierce, Jr..................................................... 1,880
E.T. Pratt, Jr...................................................... 2,580
R.B. Smith.......................................................... 2,300
J.P. Melican........................................................ 55,082
C.W. Smith.......................................................... 59,464
M.A. Suwyn.......................................................... 35,832
All directors and executive officers as a group..................... 599,803 0.48%
Bank trustee under Company and subsidiary employee benefit plans
(2)................................................................. 10,213,760 8.26%
</TABLE>
- ---------------
(1) Ownership shown includes securities over which the individual has or shares,
directly or indirectly, voting or investment powers, including shares held
in the Restricted Stock Plan for Non-Employee Directors, shares owned by a
spouse or certain relatives and ownership by trusts for the benefit of such
relatives, as required to be reported by the Securities and Exchange
Commission. Certain individuals may disclaim beneficial ownership of some of
these shares, but they are included for the purpose of computing the
holdings and the percentages of common stock owned. Interests in shares
resulting from participation in the Company's Salaried Savings Plan,
Performance Share Awards, and Executive Continuity Awards, are included
above. The above table does not include 384,284 shares represented by stock
options granted executive officers under the Long-Term Incentive
Compensation Plan, including options for 146,700 shares for Mr. Georges,
59,300 shares for Mr. Dillon, 54,684 shares for Mr. Melican, 25,700 shares
for Mr. Smith and 12,950 shares for Mr. Suwyn. In addition, under the
Nonfunded Deferred Compensation Plan for Directors or the Supplemental
Unfunded Savings Plan for Senior Managers, the Directors and executive
officers listed below own the non-voting stock-equivalent Units set forth in
the following chart:
(Footnotes continued on following page)
5
<PAGE>
(Footnotes continued from preceding page)
DIRECTORS AND EXECUTIVE OFFICERS
<TABLE><CAPTION>
STOCK STOCK
UNITS UNITS
--------- ---------
<S> <C> <C> <C>
W.C. Butcher........................... 4,314 D.F. McHenry........................... 2,072
F. B. Dent............................. 4,423 P.F. Noonan............................ 45
J.T. Dillon............................ 8,239 E.T. Pratt............................. 13,184
W. M. Ellinghaus....................... 3,487 R.B. Smith............................. 3,823
J.A. Georges........................... 33,824 J.P. Melican........................... 6,467
T.C. Graham............................ 6,191 C.W. Smith............................. 4,159
A.G. Hansen............................ 3,980 M.A. Suwyn............................. 1,347
</TABLE>
(2) As of December 31, 1993, State Street Bank & Trust Co., N.A. holds such
shares as the independent trustee in trust funds for employee savings,
thrift, and similar employee benefit plans of the Company and its
subsidiaries ("Company Trust Funds"). In addition, State Street Bank & Trust
Co., N.A. is trustee for various third party trusts and employee benefits
plans and is an Investment Advisor. As a result of its holdings in all
capacities, State Street Bank & Trust Co., N.A. is the record holder of
11,031,412 shares of common stock of the Company. The trustee disclaims
beneficial ownership of 10,213,760 shares of common stock it holds as
trustee. The common stock held by the Company Trust Funds is allocated to
participants' accounts and such stock or the cash equivalent will be
distributed to participants upon termination of employment or pursuant to
withdrawal rights. The trustee votes the shares of common stock held in the
Company Trust Funds in accordance with the instructions of the participants;
shares for which no instructions are received are voted proportionately to
those shares voted by participants.
MATTERS TO BE CONSIDERED AT THE MEETING
ITEM NO. 1--ELECTION OF DIRECTORS
Three directors, Mr. Frederick B. Dent (Class III director), Mr. William M.
Ellinghaus (Class III director) and Mr. William G. Kuhns (Class I director),
after many years of outstanding service to the Company, will not stand for
election at the annual meeting since they have reached the mandatory retirement
age. The three classes of directors will therefore be reorganized as set forth
below.
Three (3) directors are to be elected as Class III directors for three-year
terms expiring in 1997. Two (2) directors are to be elected as Class I directors
and one (1) is to be elected a Class II director for terms expiring in 1995 and
1996, respectively. Each nominee is currently a director of the Company.
Election requires the affirmative vote by the holders of a plurality of
outstanding common stock voting at the annual meeting of shareholders. A
plurality means that the six (6) nominees receiving the largest number of votes
cast will be elected. Votes which are withheld from any nominee, as well as
broker non-votes, will not be counted in such nominee's favor. Shareholders
voting at the meeting may not vote for more than the number of nominees listed
in the Proxy Statement. Proxies given to management to vote will be voted
according to instructions given, but only for nominees listed in the Proxy
Statement.
The term of the present Class III directors expires at the adjournment of
the 1994 annual meeting. The three nominees for election at that meeting as
Class III directors are listed below:
CLASS III NOMINEES--TERM EXPIRING IN 1997
PHOTO JOHN A. GEORGES, 63, Chairman and Chief Executive Officer. He
was elected president in 1981, chief executive officer in 1984
and became chairman and chief executive officer in 1985. He
has been a director and chairman of the board of IP Forest
Resources Company (the managing general partner of IP
Timberlands, Ltd.) since 1985. He is a director of Ryder
Systems, Inc., Scitex Corporation Ltd. and Warner-Lambert
Company. He is a member of The Business Council and the
Planning and Policy Committees of the Business Roundtable. He
is a board member of the Business Council of New York State, a
member of The Trilateral Commission, the President's Advisory
Committee for Trade Policy and Negotiations and a trustee of
Drexel University.
Director since February 1, 1980
6
<PAGE>
PHOTO DONALD F. MCHENRY, 57, University Research Professor of
Diplomacy and International Affairs at Georgetown University
since 1981. He is president of the IRC Group, Inc. and a
director of American Telephone and Telegraph Company, The
Coca-Cola Company, Bank of Boston Corporation, the First
National Bank of Boston, SmithKline Beecham plc and the
Institute for International Economics. He is also a director
of the Council on Foreign Relations. He is a trustee of the
Johnson Foundation, The Brookings Institution, and chairman of
the board of Africare.
Director since April 14, 1981
PHOTO PATRICK F. NOONAN, 51, Chairman and Chief Executive Officer
since 1993 of The Conservation Fund (a nonprofit organization
dedicated to conserving America's land and water resources).
Previously, he was president of the Fund and has been with the
Fund since 1985. Prior to that he was president of The Nature
Conservancy. He is a trustee of The National Geographic
Society, the American Farmland Trust and the American
Conservation Association. He is also a director of Ashland
Oil, Inc., the Fund for Government Investors, Saul Centers
(REIT) and the American Gas Association Index Fund. He is a
member of the Board of Visitors of Duke University School of
the Environment.
Director since December 14, 1993
The following nominees for election to Class I and Class II directors are
currently Class III directors and a Class I director, respectively. The three
nominees for election as Class I and Class II directors are listed below:
CLASS I NOMINEES--TERM EXPIRING IN 1995
PHOTO STANLEY C. GAULT, 68, Chairman and Chief Executive Officer of
The Goodyear Tire & Rubber Company since June 1991. Previously
thereto, he was chairman and chief executive officer of
Rubbermaid Incorporated (1980-1991). He is a director of Avon
Products, Inc., PPG Industries, Inc., The New York Stock
Exchange, Inc., Rubbermaid Incorporated and The Timken
Company. He is a trustee and chairman of the board of The
College of Wooster, a director of the National Association of
Manufacturers, and a member of the President's Advisory
Committee for Trade Policy and Negotiations.
Director since January 8, 1980
PHOTO ROGER B. SMITH, 68, former Chairman and Chief Executive
Officer of General Motors Corporation from 1981 to 1990, when
he retired. He is a director of Citicorp, Johnson & Johnson
and PepsiCo, Inc. He is a member of The Business Council and
is a trustee of the Michigan Colleges Foundation, Inc. and the
Sloan Foundation.
Director since December 1, 1989
7
<PAGE>
CLASS II NOMINEE--TERM EXPIRING IN 1996
PHOTO JANE C. PFEIFFER, 61, management consultant. She is a director
of Ashland Oil, Inc., IP Forest Resources Company (the
managing general partner of IP Timberlands, Ltd.), J.C. Penney
Company, Inc. and The Mutual Life Insurance Company of New
York. She is a trustee of the Conference Board, The University
of Notre Dame and the Overseas Development Council and a
member of The Council on Foreign Relations.
Director since June 14, 1977
Other directors who will continue to serve are listed below under their
respective classes. None of these directors is being elected at the 1993 annual
meeting.
CLASS I DIRECTORS--TERM EXPIRING IN 1995
PHOTO JOHN T. DILLON, 54, Executive Vice President-- packaging since
1987. He was elected a senior vice president--land and timber,
liquid packaging and folding carton and label in 1986 and was
vice president and group executive--land and timber from 1982,
assuming in 1985 the additional responsibility of the wood
products group. He is a director of Carter Holt Harvey
Limited, (a New Zealand forest products and paper company). He
is a member of the Board of Trustees of the Executive
Committee of The Joint Council on Economic Education. He is
the chairman of the Forest Industries Committee on Timber
Valuation and Taxation.
Director since March 1, 1991
PHOTO ARTHUR G. HANSEN, 69, educational consultant. He was director
of research of the Hudson Institute from 1987 to 1988,
chancellor of the Texas A&M University System from 1982 to
1986, president of Purdue University from 1971 to 1982 and
president of Georgia Institute of Technology from 1969 to
1971. He is a director of American Electric Power Company,
Inc., The Interlake Corporation, IP Forest Resources Company
(the managing general partner of IP Timberlands, Ltd.) and
Navistar International Corporation. He is a member of the
National Academy of Engineering, chairman of the Corporation
for Educational Technology and a fellow of the American
Association for the Advancement of Science.
Director since February 10, 1976
PHOTO SAMUEL R. PIERCE, JR., 71, attorney-at-law; former Secretary
of Housing and Urban Development of the United States from
1981 to 1989. Prior to his cabinet appointment, he was a
senior partner in the New York law firm of Battle, Fowler,
Jaffin, Pierce & Kheel. He also served on the board of
directors of the Company from 1973--1981. He is a consultant
to The Turner Corporation. He is a former judge of the New
York Court of General Sessions and former General Counsel of
the US Treasury Department.
Director 1973-1981 and since February 14, 1989
8
<PAGE>
CLASS II DIRECTORS--TERM EXPIRING IN 1996
PHOTO WILLARD C. BUTCHER, 67, former Chairman and Chief Executive
Officer of The Chase Manhattan Bank, N.A. He is a director of
ASARCO, Incorporated, Celgene Corporation, Olympia & York
Companies (U.S.A.) and Texaco Inc. He is a member of The
Business Council, the Advisory Committee for Daimler-Benz of
North America and vice chairman of the Lincoln Center for the
Performing Arts, Inc. He is a trustee emeritus of the American
Enterprise Institute for Public Policy Research, a fellow
emeritus of Brown University and a trustee of Business
Committee for the Arts, Inc.
Director since August 1, 1989
PHOTO THOMAS C. GRAHAM, 67, President and Chief Executive Officer of
Armco Steel Company L.P. He was formerly chairman and chief
executive officer of Washington Steel Corporation until he
assumed his current position in 1992. He was formerly vice
chairman-steel and diversified group and executive director of
USX Corporation from 1986 to 1991. He joined the former U.S.
Steel Corporation as vice chairman and chief operating
officer--steel and related resources in 1983. Prior to that
time he served as president and chief executive officer of
Jones & Laughlin Steel Corporation. He is a director of
Hershey Foods Corporation. He is a trustee of The Carnegie and
the Committee for Economic Development. He also serves as a
director of the American Iron & Steel Institute.
Director since October 14, 1986
PHOTO EDMUND T. PRATT, JR., 67, former Chairman of the Board (from
1972 to 1992) and Chief Executive Officer from (1972 to 1991)
of Pfizer, Inc. He is chairman emeritus and a director of
Pfizer, Inc., a director of Celgene Corporation, Minerals
Technologies, Inc., The Chase Manhattan Corporation, The Chase
Manhattan Bank, N.A. and General Motors Corporation. He is a
member of the Board of Trustees of Logistics Management
Institute.
Director since September 9, 1975
9
<PAGE>
ITEM NO. 2--APPROVAL OF THE APPOINTMENT OF ARTHUR ANDERSEN & CO. AS INDEPENDENT
AUDITORS FOR 1994
The Audit Committee has considered the qualifications of Arthur Andersen &
Co. and recommended that the Board of Directors appoint them as independent
auditors of the consolidated financial statements of the Company for the year
1994. This included a review of their performance in prior years, as well as
their reputation for integrity and competence in the fields of accounting and
auditing. The Committee has expressed its satisfaction with Arthur Andersen in
all of these respects. The Committee's review also included inquiry concerning
litigation involving Arthur Andersen and the existence of any investigations by
the Securities and Exchange Commission into the financial reporting practices of
the companies audited by them. In this respect, the Committee concluded that the
ability of Arthur Andersen to perform services for the Company is not in any way
adversely affected by any such investigation or litigation.
The Board of Directors desires to obtain shareholders' approval of the
Board's action in appointing Arthur Andersen & Co., as independent auditors of
the consolidated financial statements of the Company for the year 1994.
A representative of Arthur Andersen & Co. will be present at the annual
meeting to respond to appropriate questions and to make a statement if he or she
desires and answer appropriate questions.
APPROVAL OF ITEM NO. 2 REQUIRES THE AFFIRMATIVE VOTE OF THE HOLDERS OF A
MAJORITY OF THE SHARES VOTING ON THIS PROPOSAL. ABSTENTIONS AND BROKER NON-VOTES
WILL NOT BE COUNTED AS HAVING VOTED ON THIS ITEM NO. 2.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE APPOINTMENT OF ARTHUR ANDERSEN & CO. AS
INDEPENDENT AUDITORS OF THE CONSOLIDATED
FINANCIAL STATEMENTS OF THE COMPANY FOR
1994.
10
<PAGE>
ITEM NO. 3--APPROVAL OF 1989 LONG-TERM INCENTIVE COMPENSATION PLAN AMENDMENTS
The 1989 Long-Term Incentive Compensation Plan (the "Plan") was adopted by
the Board of Directors and approved by shareholders at the 1989 annual meeting.
The Plan is administered by the Management Development and Compensation
Committee of the Board (the "Committee") which is composed solely of
non-employee directors.
The Board of Directors believes that the Plan has promoted the Company's
interests and those of shareholders by providing opportunities to attract,
retain, and motivate key employees through awards of stock options and
restricted stock and that the Company should continue to utilize such awards as
part of a competitive compensation program and as a means of encouraging its
executives to own stock in the Company. Accordingly, the Board of Directors
proposes to amend the Plan in the following principal respects:
. To increase the number of shares available for future Plan awards by
5,000,000 shares thus providing an aggregate of said 5,000,000 shares
together with the approximately 2,300,000 shares remaining for awards under
the Plan prior to this amendment;
. To provide that stock option exercise proceeds may be used to
purchase Company stock in the open market for future issuance as options or
awards; and
. To allow the Company to maximize the deductibility for federal
income tax purposes of the compensation of its executives.
The complete text of the amended Plan is set forth in Appendix A to this
Proxy Statement which is incorporated herein by reference. The following
summarizes the material features of the Plan, as amended, but it does not
purport to be complete and is qualified in its entirety by reference to Appendix
A.
EXPLANATION OF PLAN CHANGES
The changes to the Plan are recommended by the Board to ensure that the
Company continues to be properly positioned to compete for executive talent with
forest products companies and other enterprises. At the same time, the Board
believes that awards made under the Plan should minimize ownership dilution to
existing shareholders when shares are issued under the Plan.
The number of shares which the amended Plan may use in the future is the
aggregate of the following: 5,000,000 shares to be newly authorized for use
under the amended Plan; 2,300,000 unused shares carried forward from the earlier
7,000,000 share authorization originally approved by shareholders in 1989;
shares forfeited, exchanged or not delivered as explained below; and the shares
to be purchased in the open market with stock option exercise proceeds.
Currently, the Plan provides that the following shares covered by Plan
awards may be utilized for subsequent awards under the Plan: shares that are
forfeited; shares not earned; shares exchanged or delivered to the Company in
exercising stock options; shares covered by Plan awards that are distributed in
cash; and any shares that are used to settle tax withholding payment obligations
triggered by Plan awards.
The amended Plan will expand the share replenishment provisions by
permitting amounts equal to cash proceeds received by the Company since January
1, 1989, upon the exercise of stock options granted under the Plan and the
predecessor 1983 Plans, to be used to reacquire shares of Company stock on the
open market. The number of shares so reacquired under this provision cannot
exceed the number of shares exercised which generated the cash proceeds. By way
of illustration, between January 1, 1989 and February 28, 1994, the Company
received approximately $80,000,000 in cash proceeds from the exercise of stock
options. Based on a stock price of $70.80 per share (the average closing price
of a share of Company stock trading on the New York Stock Exchange from March 1
through March 20, 1994), 1,129,944 shares could be acquired from time to time
in the open market and made available for future awards under the amended Plan.
11
<PAGE>
Shares reacquired would be held in the form of segregated treasury shares,
i.e., they would be held in a separate treasury account and would not be
outstanding until issued as future Plan awards. Shares issued in settlement of
Plan awards result in some dilution to shareholders, since more shares are
subsequently outstanding. This dilutive effect is minimized by reacquiring
outstanding shares with stock option exercise proceeds and using these shares
for Plan purposes.
Other Plan changes are proposed in order to help ensure that compensation
paid to participants under the Plan is deductible by the Company for federal
income tax purposes in view of recent federal tax law changes.
As amended, the Plan will (1) limit the number of shares that can be
covered by stock options and stock appreciation rights ("SARs") to any one
person to 900,000 over any consecutive three-year period; (2) limit the number
of shares that can be covered by a Performance Share award made to any one
person for any Award Period to 50,000; and (3) limit the total number of shares
available under the amended Plan for all awards, options and SARs to executive
officers of the Company subject to Section 16 of the 1934 Act to 7,300,000.
The Performance Share portion of the Plan (see "Performance Share Awards"
below) is being amended to set forth the measurement criteria to be used by the
Committee in presetting the goals for determining the number of Performance
Shares earned by participants during a Award Period.
The Plan will be changed so that a Continuity Award will consist solely of
a stock option. Under the tax law change, this will preserve the deductibility
for the Company of compensation realized under a Continuity Award.
Additional changes have been made to provide the Committee with the
necessary authority and flexibility to determine the terms and conditions
governing awards made under the Plan, and to allow participants to make such
transfers or assignments of Plan awards as may be permitted by law. The Plan is
also being amended to give the Committee increased flexibility over the terms
and conditions, including forfeiture restrictions, contained in award agreements
which participants must sign. The amended Plan removes certain specific terms
and conditions from the text of the Plan and allows the Committee to place such
items in the award agreements. It is anticipated that terms and conditions at
least as restrictive as those removed from the text of the Plan will be included
by the Committee in award agreements under the Plan. Finally, changes have been
made to consolidate certain common terms and to clarify wording.
PLAN DESCRIPTION--GENERAL
Participation in the Plan is determined solely by the Committee and is
limited to senior managers of the Company and its subsidiaries. In 1993,
approximately 670 employees participated in the stock option portion of the
Plan; approximately 80 employees participated in the Performance Share portion;
and fewer than 20 employees participated in the Continuity Award portion. These
numbers should not be affected by the proposed amendment to the Plan.
The Board of Directors may amend the Plan to take into account or comply
with any changes in applicable securities or tax laws and regulations, and may
otherwise modify the Plan, without shareholder approval, except that no
modification shall increase the total number of shares for which awards and
stock options may be granted under the Plan without shareholder approval.
STOCK OPTION AWARDS
The stock option features of the Plan are essentially unchanged, except as
noted above. Stock options may be in the form of Incentive Stock Options (within
the meaning of Section 422 of the Code)
12
<PAGE>
or options which do not qualify for favorable federal tax treatment
("nonqualified stock options") or combinations of both. The Committee determines
the recipients of stock options, the number of shares covered by each award, and
the other terms and conditions of the option, except that the exercise price
cannot be less than the fair market value of a share of the Company's common
stock at the time of award grant. An Incentive Stock Option may not extend
beyond ten years from the date of grant. Other options may be for longer terms.
Restrictions, as determined by the Committee, on the exercise of the option
and on the stock acquired under an option are contained in stock option award
agreements. Such award agreements to date have provided that if the option is
exercised within four years of the date of grant, the Company will have the
right to repurchase the acquired stock at the exercise price for the balance of
the four-year period. These restrictions lapse upon a change of control of the
Company, or upon death, retirement after age 62 or permanent disability. The
Committee may continue to grant stock options with this restriction provision or
it may grant options with other provisions. As noted above, several provisions
in the Plan text containing restrictive terms and conditions are being
eliminated by the amendment; however, it is anticipated that the Committee will
determine to include terms and conditions at least as restrictive in future
award agreements. All conditions and terms regarding the disposition of stock
options upon termination of employment with the Company shall be made by the
Committee.
Options may be exercised by payment of the option price in cash or, at the
discretion of the Committee, by delivering stock of the Company, including
restricted stock awarded under the Plan. If an option is exercised by delivery
of Performance Shares, the participant will receive an equal number of
identically restricted shares, and the remaining option exercise shares will
contain any applicable restrictions which are included in the stock option
agreement. At the discretion of the Committee, a plan participant who exercises
an option may receive a replacement option for the same number of shares that
the participant purchases in exercising the original option. The exercise price
of the replacement option will be equal to the current fair market value at the
time the replacement option is issued, and the term of the replacement option
will be the same as the remaining balance of the term of the original option.
PERFORMANCE SHARE AWARDS
Performance Share Awards have been granted to senior management as
described below under "Plan Benefits." These contingent awards have been in the
form of shares of restricted stock ("Performance Shares"). The awards are earned
by a participant over a specified award period commencing with the year of award
("Award Period"). The length of the Award Period will be determined by the
Committee and is presently five years.
During an Award Period, the participant is the beneficial owner of the
Performance Shares and is entitled to vote the shares. Certificates are issued
in the participant's name with restrictive legends and are retained by the
Company. Dividends are reinvested in additional shares of restricted stock. A
new Performance Share Award can be made each year by the Committee, with a new
Award Period commencing at the beginning of each calendar year.
Performance Share Awards are earned over the Award Period as determined by
the Committee, presently based on a comparison of the Company's earnings per
share and return on equity with similar financial tests of a representative
group of forest products companies. At the end of an Award Period, the Committee
measures the degree to which the established performance goals have been met.
The contingent award is reduced if the goal is not met, or supplemented if the
goal is exceeded. At such time, restrictions are removed on 50% of the award so
earned (the "earned award").
The remaining 50% of the earned award remains restricted for three years
from the date of determination of the earned award. Performance Share Awards are
subject to forfeiture and cancellation by the Committee in the event a
participant terminates employment, other than by reason of death, disability or
retirement after age 62. Dividends on earned awards are paid in cash.
13
<PAGE>
In the event of a participant's death, disability, or retirement after age
62, the restrictions may be removed on earned restricted shares and on a portion
of the outstanding Performance Shares equal to the pro-rata portion of each
award that would have been earned if Company performance reached the established
goals for those Award Periods.
The Plan is being amended to specify the measurement criteria to be used by
the Committee in determining whether the Company has achieved performance goals
preset by the Committee. Thus, the Committee may in the future use any one or
more of the following measurements of performance including: earnings per share,
return on equity, return on assets, growth in earnings, growth in sales revenue
or shareholder returns. These can be measured in comparison to the performance
of a group of peer companies selected by the Committee or based on the Company's
results. In applying any of these criteria, the Committee may calculate earnings
excluding discontinued operations and extraordinary items.
The specific Plan provisions regarding earning of Performance Share Awards
and removing restrictions, as described in the foregoing paragraphs, are being
removed from the text of the Plan. It is the present intention of the Committee
to continue to include these provisions in the award agreements which
participants are required to execute upon receipt of awards.
In the event of a "change of control" of the Company, all restrictions will
be removed on earned awards and on a pro rata portion of the contingent awards
for each uncompleted award period based on the number of months completed prior
to the change of control. As used in this Proxy Statement and in the Plan, a
change of control is defined as the acquisition by any person (other than
Company employee-benefit plans) of beneficial ownership of 20% or more of the
Company's outstanding stock, or a change of more than 50% of the members of the
Board over a period of two years or less (except for changes approved by
two-thirds of the directors who were in office at the beginning of the period).
A Performance Share Award may be denominated in share units, as well as
actual restricted shares, or a combination of both. Under the amended Plan , the
maximum number of Performance Shares that can be earned by any individual for
any one Award Period is 50,000 shares.
CONTINUITY AWARDS
Continuity Awards may consist of a contingent grant of restricted stock, or
a tandem grant of restricted stock together with a related nonqualified stock
option, in such amount and upon such terms and conditions as determined by the
Committee. The amended Plan will provide that a Continuity Award may also
consist solely of a nonqualified stock option. Under the Plan, at the discretion
of the Committee, SARs may be awarded separately or in combination with other
awards or grants.
Generally, the amendments to the Plan will not change the operation of the
Continuity Award provisions of the Plan. The participant is entitled to vote the
restricted shares included in the award. Dividends are reinvested in additional
shares of restricted stock, subject to the same restrictions, terms and
conditions. Upon attainment of age 65, or the permanent disability or death of
the executive, or upon a change of control of the Company, the restrictions on
the award are removed and the award will vest in the following manner: (a) if
the current realizable gain on the tandem stock option is greater than the
current fair market value of the related shares of restricted stock (including
reinvested dividends), then all such shares of restricted stock will be
cancelled and the stock option will continue for its remaining term; (b) if the
current fair market value of the shares of restricted stock (including
reinvested dividends) is greater than the current realizable gain on the related
tandem stock option, then the option will be cancelled and the restrictions will
be removed from all of the related shares of restricted stock.
If the option is exercised prior to age 65, then the related shares of
restricted stock will be cancelled, and the additional shares issued upon the
exercise of the option will be restricted and subject to forfeiture or
repurchase by the Company at the option exercise price for a period ranging up
to twelve
14
<PAGE>
years, or longer, from the date of the award as set forth in the award
agreement. If there is a change of control of the Company, all restrictions on
the Continuity Award will be removed.
The exercise price of each option will not be less than the fair market
value of the underlying stock at the time the option is granted. The option may
be exercised by full payment of the option price in cash or, at the discretion
of the Committee, by delivering stock of the Company including Performance
Shares awarded under the Plan.
At the discretion of the Committee, a participant who exercises an option
may receive a replacement option for the same number of shares that the
participant purchases in exercising the original option. The exercise price of
the replacement option will be equal to the fair market value at the time the
replacement option is issued, and the term of the replacement option will be the
same as the remaining balance of the term of the original option. Shares
received upon exercise of an option will be subject to the restrictions included
in the award agreement.
PLAN BENEFITS
Because the Committee makes all determinations regarding the selection of
participants and the size of each award made to a participant, it is impossible
to estimate or predict the benefits or amounts that any person or persons will
receive in the future (except that they will not exceed the maximums set forth
above). Information regarding past awards made to persons named in the Summary
Compensation Table under the Plan is provided elsewhere in this Proxy Statement
as part of the disclosure of the executive compensation program for management.
The following summarizes the awards made in 1993 under the Plan to all current
executive officers of the Company and all other employees:
<TABLE><CAPTION>
NUMBER OF SHARES COVERED
BY 1993 AWARDS
--------------------------
ALL EXECUTIVE ALL OTHER
OFFICERS EMPLOYEES
------------- -----------
<S> <C> <C>
Stock Options(1)................................................. 64,000 877,900
Performance Shares(2)............................................ 26,373 48,558
Continuity Award Shares(3)....................................... 20,000 12,000
</TABLE>
- ---------------
(1) Includes replacement options granted in 1993. These figures do not include
the tandem option awards made as part of the Continuity Awards of
stock/options, insofar as these are characterized as contingent restricted
stock awards.
(2) Includes the total number of shares contingently awarded in 1993 under the
Plan to be earned over five years by participants.
(3) Includes the total number of shares contingently awarded in 1993 under the
Plan as Continuity Awards of stock/options, to be fully vested upon reaching
certain ages unless the options are exercised.
APPROVAL OF ITEM NO. 3 REQUIRES THE AFFIRMATIVE VOTE OF THE HOLDERS OF RECORD OF
A MAJORITY OF OUTSTANDING SHARES OF COMMON STOCK ENTITLED TO VOTE. ABSTENTIONS
AND BROKER NON-VOTES WILL NOT BE COUNTED AS HAVING VOTED FOR THE ITEM NO. 3 AND,
ACCORDINGLY, WILL HAVE THE EFFECT OF A VOTE AGAINST ITEM NO. 3.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
ADOPTION OF THE AMENDED LONG-TERM INCENTIVE
COMPENSATION PLAN AS SET FORTH
IN APPENDIX A
15
<PAGE>
STATEMENT ON THE COMPANY'S
SOUTH AFRICAN AFFILIATE'S OPERATIONS
The Company strives to uphold responsible business practices in its
operations around the world. Its commitment to human rights and equality is
evidenced by company policies such as those on equal employment opportunity,
community responsibility and ethical business conduct.
In South Africa, its affiliate, Masonite (Africa) Limited, has done
business in a highly responsible manner that it believes has been a positive
example in that country. In that regard, Masonite (Africa) Limited's facilities
in South Africa have a totally integrated workforce and wage policies are
identical for whites and non-whites. It provides its employees with benefit
programs, which include medical benefits, financial aid and in-kind support for
schools and adult training programs. Masonite (Africa) Limited believes its
policies and practices are consonant with the Code of Conduct for Business
Operating in South Africa endorsed by the South African Council of Churches
(SACC), Southern African Catholic Bishops Conference and Jewish Board of
Deputies. Masonite (Africa) Limited intends to continue to implement its
policies concerning human rights and equality in South Africa, which it believes
will cause it to maintain the ethical standards promoted by the SACC Code of
Business Conduct. Masonite (Africa) Limited also intends, through continued
example of responsible operations, to promote responsible practices by all
companies operating in South Africa.
16
<PAGE>
REPORT OF THE MANAGEMENT DEVELOPMENT
AND COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
The Management Development and Compensation Committee ("the Committee")
consists of five outside directors: Willard C. Butcher, Stanley C. Gault, Thomas
C. Graham, Samuel R. Pierce, Jr. and Edmund T. Pratt, Jr. Mr. Gault is chairman.
No member of this Committee is an executive officer of a company on whose board
an executive officer of International Paper serves as a director.
The Committee met eight times in 1993 with a 98% attendance record. The
chairman and chief executive officer of the Company was not present during any
discussion of his compensation.
GENERAL
Total compensation received by the named executive officers consists of
salary, cash bonus, stock options and restricted stock. The cash bonus and
long-term incentives introduce considerable risk in the total executive
compensation package, since the value of these components may vary significantly
from year to year based on Company performance, individual performance and
Company stock price.
The Committee periodically reviews each component of the Company's
executive compensation program to ensure that pay levels and incentive
opportunities are competitive and that incentive opportunities are linked to
Company performance. The companies used to measure competitiveness include the
fifteen largest forest products companies (including the "Peer Paper Group" of
eight companies which comprise the peer line of the performance graph on page
19) and which are surveyed annually by Management Compensation Services, a
subsidiary of the independent compensation consulting firm, Hewitt Associates.
In 1993, the Company also used the Hay Associates and F.W. Cook executive
compensation surveys which cover similar positions in companies similar in size
and complexity to International Paper across all industries. In 1993, the
Company's compensation levels were targeted to the median of the competitive
surveys, and competitiveness was determined by evaluating total cash
compensation and long-term incentive compensation.
The Company's Management Incentive Plan (MIP) links payment of an annual
cash bonus directly to achievement of a specified level of net earnings, which
accounts for 80% of target bonus funds available, and predetermined targets for
qualitative nonfinancial performance factors, which were quality, safety and
female and minority employee development, which account for the remainder. In
1993, the Company achieved a level of net earnings and performance compared to
predetermined nonfinancial targets which generated a bonus fund. Performance
against the financial target was above threshold but did not achieve 100% of
goal, thus generating a smaller bonus fund in 1993 than in 1992 or 1991.
Performance compared to the nonfinancial targets met or exceeded the goals for
1993.
The Company's Long-Term Incentive Compensation Plan, which was approved by
the shareholders in 1989, provides for awards of stock options and restricted
stock in the form of performance shares which are made in amounts which the
Committee determines to be competitive based on the surveys described above.
Stock options are granted at fair market value at the time of the award and are
restricted for four years. Contingent awards of performance shares are made in
December of the year preceding a five-year Award Period. At the end of the
five-year Award Period, the number of shares earned is determined by financial
performance which the Committee measures by comparing and weighing equally the
Company's and Peer Paper Group's five-year average return on equity and earnings
per share. If the threshold level of performance is not attained, no shares are
earned. Above the threshold, the contingent award is reduced if the target goal
is not met or supplemented if the target goal is exceeded. Payouts of earned
performance shares are made in Company stock at the end of the five-year Award
Period. One half of the shares earned is mandatorily deferred for an additional
three years, and payout is subject to the executive's continued employment
throughout that period.
From time to time executive continuity awards are made which are designed
to encourage retention of a small number of executives designated by the
Committee. The size of an award, and any
17
<PAGE>
adjustments is determined by the Committee to reflect an executive's level of
responsibility and individual performance. As provided by the Company's
Long-Term Incentive Compensation Plan, a continuity award may consist of
restricted stock or a tandem grant of restricted stock together with a related
non-qualified stock option which is granted at fair market value and restricted
until a specified age. If the stock option is exercised, then the related
restricted shares are cancelled; if the stock option is not exercised by age 65,
then the less valuable component of the tandem award is cancelled.
The Committee has considered the provisions of the Omnibus Budget
Reconciliation Act of 1993 which limit deductibility of compensation paid to
named executive officers which exceeds $1,000,000. The Committee has endorsed
amendments to the Company's Long-Term Incentive Compensation Plan to make
certain sections of the plan compatible with those provisions, while maintaining
the Committee's flexibility to exercise business judgment in determining awards
to take account of business conditions or the performance of individual
executives. In that regard, the Committee will retain discretion to make awards
which may not be fully deductible in certain cases.
1993 EXECUTIVE OFFICERS' COMPENSATION
The Committee approved promotional and merit salary increases for the named
executive officers based on competitiveness of the executives' pay and personal
performance. In June 1993, Mr. Georges received an 8.3% merit salary increase,
covering the eighteen-month time period since his last salary adjustment (5.5%
annualized). Promotional increases were awarded to two of the named executive
officers. Salaries paid to the named executive officers in 1993, including Mr.
Georges's salary, were slightly below the median of the survey companies.
MIP awards for the named executive officers in 1993 were determined by the
Committee after review of respective levels of responsibility, personal
performance and Company performance compared to the predetermined 1993 financial
and nonfinancial goals. Actual awards to all named executive officers
represented 10.6% of the bonus fund. Mr. Georges's MIP award and the awards of
two other named executive officers decreased compared to 1992. The 1993 MIP
award of one named executive officer increased compared to 1992 insofar as 1992
represented only a partial year award for that individual.
The performance share guidelines described above were used by the Committee
to determine contingent performance share awards in December 1993 to the named
executive officers for the 1994-1998 Award Period and the payout in 1993 of
earned shares for the 1988-1992 Award Period. As shown in the Summary
Compensation Table, the pretax values of Mr. Georges's performance share awards
in 1993 were: $546,448 in contingent restricted stock for the 1994-1998 Award
Period; $198,803 in deferred restricted stock for the 1988-1992 Award Period;
and $198,803 in earned shares (long-term incentive payout) for the 1988-1992
Award Period. The shares earned for the 1988-1992 Award Period reflect Company
performance which exceeded performance of the Peer Paper Group.
The Committee granted stock options in 1993 based on competitive surveys
described earlier, without consideration of the amount of stock options already
held by named executive officers. Mr. Georges's 1993 stock option award was
19,000 shares, the same as his awards in 1992 and 1991.
In 1993, previously granted continuity awards of restricted stock and a
related option to two named executive officers were increased based on
promotions.
The Management Development and
Compensation
Committee of the Board of Directors
Willard C. Butcher
Stanley A. Gault, chairman
Thomas C. Graham
Samuel R. Pierce, Jr.
Edmund T. Pratt, Jr.
18
<PAGE>
PERFORMANCE GRAPH
The following chart compares a $100 investment in International Paper stock
with a similar investment in a peer group of eight key competitor companies and
the S&P 500. The charts portray total nominal return, 1988-1993, assuming
reinvestment of dividends.
[PERFORMANCE GRAPH]
<TABLE><CAPTION>
COMPARISON OF FIVE YEAR CUMULATIVE RETURN*
DECEMBER 31,
1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C>
International Paper 100 126 123 167 161 168
S&P 500 Index 100 132 127 166 179 197
Peer Group** 100 110 89 121 135 153
</TABLE>
Assumes $100 Invested on December 31, 1988.
* Total return assumes reinvestment of Dividends.
** Includes Boise Cascade, Champion, Georgia Pacific, Mead,
Stone Container, Union Camp, Westvaco, and Weyerhaeuser.
19
<PAGE>
ADDITIONAL INFORMATION
REGARDING EXECUTIVE COMPENSATION
The compensation of the Company's executive officers is approved by the
Committee except for the compensation of the officer-directors, which is
recommended by the Committee and approved by the Board of Directors.
The following tables set forth information with respect to the Chairman and
Chief Executive Officer and the four most highly compensated executive officers
of the Company for the years 1991-1993.
SUMMARY COMPENSATION TABLE
<TABLE><CAPTION>
LONG-TERM COMPENSATION
-----------------------
ANNUAL COMPENSATION CONTINGENT AWARDS
---------------------- -----------------------
(A) (B) (C) (D) (E) (F) (G)
RESTRICTED ALL OTHER
SALARY BONUS STOCK AWARD OPTIONS COMPENSATION
NAME AND POSITION YEAR ($)(1) ($)(2) ($)(3) (#)(4) ($)(5)
- ---------------------------------------------------- --------- ---------- ---------- ------------ --------- ------------
<S> <C> <C> <C> <C> <C> <C>
John A. Georges..................................... 1993 $ 880,833 $ 525,000 $ 819,672 19,000 $ 136,571
as Chief Executive Officer 1992 $ 840,000 $ 555,000 $ 794,195 112,632 $ 85,304
1991 $ 775,833 $ 580,721 $ 770,385 41,618 $ 85,718
John T. Dillon...................................... 1993 $ 396,667 $ 230,000 $ 332,316 8,000 $ 77,234
as Executive Vice President 1992 $ 367,500 $ 240,000 $ 322,040 54,900 $ 33,397
1991 $ 327,333 $ 250,000 $ 311,190 7,000 $ 32,554
James P. Melican.................................... 1993 $ 386,667 $ 215,000 $ 302,430 7,700 $ 69,747
as Executive Vice President 1992 $ 357,917 $ 225,000 $ 293,084 16,238 $ 20,578
1991 $ 322,333 $ 235,000 $ 284,056 6,800 $ 31,148
Mark A. Suwyn....................................... 1993 $ 323,333 $ 210,000 $ 1,193,205 6,800 $ 53,528
as Executive Vice President 1992 $ 250,000 $ 175,000 $ 2,612,669 6,150 $ 24,546
1991 $ 0 $ 0 $ 0 0 $ 0
C. Wesley Smith..................................... 1993 $ 283,333 $ 190,000 $ 944,705 6,800 $ 55,390
as Executive Vice President 1992 $ 238,000 $ 190,000 $ 786,035 4,300 $ 132,037
1991 $ 200,000 $ 120,000 $ 177,986 10,300 $ 52,433
</TABLE>
- ---------------
(1) Salary paid in 1993 including amounts deferred pursuant to Section 401(k) of
the Internal Revenue Code or pursuant to unfunded deferral arrangements.
(2) Management Incentive Plan awards paid in 1994, 1993 and 1992 attributable to
1993, 1992 and 1991 respectively, including amounts deferred pursuant to
Section 401(k) of the Internal Revenue Code or pursuant to unfunded deferral
arrangements reported in the year earned.
(3) Represents (a) 150% of the value of gross target restricted performance
shares contingently awarded in 1993 for the 1994-1998 award period, in 1992
for the 1993-1997 award period and in 1991 for the 1992-1996 award period,
which is the maximum achievable for those award periods; only 100% of the
target restricted performance shares are earned if the target goal is met
for an award period, with the awards being reduced if the goal is not met or
entirely forfeited if a predetermined threshold goal is not met; (b) 150% of
the value of incremental maximum awards for prior award periods made upon
promotion, subject to the same contingencies; and (c) the value of
continuity awards of $745,500 and $591,000 in 1993 and 1992 respectively for
Mr. Suwyn and $497,000 in 1993 for Mr. Smith. The number and dollar value of
restricted stock holdings at December 31, 1993 are as follows:
106,136/$7,190,714 for Mr. Georges; 46,373/$3,141,771 for Mr. Dillon;
42,153/$2,855,866 for Mr. Melican; 34,067/$2,308,039 for Mr. Suwyn; and
39,594/$2,682,494 for Mr. Smith. These numbers include the restricted stock
portion of the tandem awards of restricted stock/options made to the
respective individuals under continuity awards. Dividends are paid on
restricted shares.
(4) Includes replacement options if applicable; only new ten-year stock options
were awarded to the named officers in 1993. These figures do not include the
tandem option awards made as part of the continuity awards referred to in
footnote (3) above insofar as the awards are characterized as restricted
stock awards. Such tandem options were for 60,000 and 40,000 shares for Mr.
Suwyn in 1992 and 1993, respectively, and for 40,000 shares for Mr. Smith in
1993 and are restricted as to exercise prior to age 62.
(5) 1993 totals represent Company contributions to the Salaried Savings Plan and
Unfunded Savings Plan, premium payments grossed up for taxes for the
Executive Supplemental Insurance Plan (ESIP) and accruals for ESIP lump sum
dividend payments as follows: $68,920, $57,820 and $9,831 for Mr. Georges;
$30,560, $43,200 and $3,474 for Mr. Dillon; $29,360, $37,000 and $3,387 for
Mr. Melican; $23,920, $29,608 and $0 for Mr. Suwyn; and $22,720, $29,800 and
$2,870 for Mr. Smith.
20
<PAGE>
The table below sets out information on the option grants made in 1993 to
the named executive officers:
OPTION GRANTS IN 1993
<TABLE><CAPTION>
POTENTIAL REALIZABLE VALUE AT ASSUMED COMPOUND
ANNUAL GROWTH RATES OF STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM (2)
---------------------------------------------------- ------------------------------------------------
(A) (B) (C) (D) (E) (F) (G) (H)
% OF TOTAL
OPTIONS
OPTIONS GRANTED TO EXERCISE OR
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION
NAME AND POSITION (#) (1) 1993 ($/SH) DATE 0% 5% 10%
- ---------------------- --------- ------------- ----------- ------------- ----------- ---------------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
John A. Georges....... 19,000 2.02% $ 63.000 01/11/2003 $ 0 $659,940 $1,625,463
as Chief Executive
Officer...............
John T. Dillon........ 8,000 0.85% $ 63.000 01/11/2003 $ 0 $277,869 $684,406
as Executive Vice
President.............
James P. Melican...... 7,700 0.82% $ 63.000 01/11/2003 $ 0 $267,449 $658,740
as Executive Vice
President.............
Mark A. Suwyn......... 6,800 0.72% $ 63.000 01/11/2003 $ 0 $236,189 $581,745
as Executive Vice
President.............
C. Wesley Smith....... 6,800 0.72% $ 63.000 01/11/2003 $ 0 $236,189 $581,745
as Executive Vice
President.............
Executive Officer 64,000 6.79% (3) (3) $ 0 $2,208,615 $5,433,534
Group.................
All shareholders...... N/A N/A N/A N/A $ 0 (4) $4,955,037,864(4) $12,557,038,808
</TABLE>
- ---------------
(1) Each option granted may be replaced upon exercise. This means that a new
option is granted for the same number of shares as is exercised, with the
then current market value becoming the new exercise price. The replacement
option does not extend the term of the original option. Options may not be
replaced more than three times. These numbers do not include any options
granted as part of the tandem awards of restricted stock/options made as
continuity awards in 1993; the restricted stock is reported as part of the
total holdings of the respective individuals under footnote 3 to the Summary
Compensation Table.
(2) The dollar amounts under these columns are the result of calculations at 0%,
and at the 5% and 10% rates set by the SEC and therefore are not intended to
forecast possible future appreciation, if any, of the stock price. The
Company did not use an alternative formula for a grant date valuation, as it
is not aware of any formula which will determine with reasonable accuracy a
present value based on future unknown or volatile factors.
(3) Other than replacement grants, all stock option grants in 1993 were at an
exercise price of $63.00 per share, expiring January 11, 2003. No
replacement grants were awarded to the named executives.
(4) No gain to the optionee is possible without an increase in stock price,
which will benefit all shareholders commensurately. A zero percent gain in
stock price will result in zero dollars for the optionee.
21
<PAGE>
The table below sets out information on options exercised and options
outstanding.
AGGREGATED OPTION EXERCISES IN 1993
AND DECEMBER 31, 1993 OPTION VALUES
<TABLE><CAPTION>
(A) (B) (C) (D) (E) (F) (G)
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS AT 12/31/93 OPTIONS AT 12/31/93
(#)(3) ($)(3)
VALUE ------------------------- -------------------------
SHARES ACQUIRED REALIZED UNRESTRICTED RESTRICTED UNRESTRICTED RESTRICTED
NAME AND POSITION ON EXERCISE (#) ($) (1) (1) (2) (2)
- --------------------------- ----------------- ----------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
John A. Georges............ No Exercises N/A 70,700 76,000 $ 204,279 $ 175,750
as Chief Executive Officer
John T. Dillon............. No Exercises N/A 29,300 30,000 $ 69,588 $ 71,250
as Executive Vice President
James P. Melican........... No Exercises N/A 26,334 28,350 $ 381,686 $ 204,606
as Executive Vice President
Mark A. Suwyn.............. No Exercises N/A 0 12,950 $ 0 $ 32,300
as Executive Vice President
C. Wesley Smith............ No Exercises N/A 6,000 19,700 $ 16,500 $ 143,025
as Executive Vice President
</TABLE>
- ---------------
(1) All options are exercisable under the plan upon grant; however, columns (e)
and (g) indicate the number and value of options, the underlying shares of
which, while exercisable, cannot be sold or are otherwise restricted.
(2) Total value of options (market value minus exercise price) based on fair
market value of Company stock of $67.75, as of December 31, 1993.
(3) Options granted as part of the tandem awards of restricted stock/options
made as continuity awards are not included; these awards are counted as
restricted stock awards and holdings.
RETIREMENT BENEFITS
The following table shows the total estimated annual pension benefits
payable under the Company's qualified and supplementary retirement plans upon
retirement at age 65, calculated on a straight life annuity basis and reduced by
a Social Security offset:
COMBINED RETIREMENT PLANS TABLE OF ESTIMATED BENEFITS
<TABLE><CAPTION>
CREDITABLE YEARS OF SERVICE
----------------------------------------------------------------------------
PENSIONABLE REMUNERATION 5 10 15 20 25 30
- ----------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
$400,000........................... $ 100,000 $ 125,601 $ 188,401 $ 193,232 $ 193,232 $ 193,632
$600,000........................... $ 150,000 $ 190,601 $ 285,901 $ 293,232 $ 293,232 $ 293,832
$800,000........................... $ 200,000 $ 255,601 $ 383,401 $ 393,232 $ 393,232 $ 394,032
$1,000,000......................... $ 250,000 $ 320,601 $ 480,901 $ 493,232 $ 493,232 $ 494,232
$1,500,000......................... $ 375,000 $ 483,101 $ 724,651 $ 743,232 $ 743,232 $ 744,732
</TABLE>
- ---------------
"Pensionable Remuneration" for purposes of the table above means salary, bonus
and compensation deferred under the Unfunded Savings Plan or awards deferred
under the MIP.
Retirement benefits are payable under one or more of the following plans: a
qualified plan covering all salaried employees which provides pension benefits
based on final average earnings; a supplementary plan which provides a make-up
of qualified plan benefits limited by the imposition of statutory Code
22
<PAGE>
limitations; and a supplementary plan covering designated senior managers which
provides supplemental benefits to the qualified plan. At December 31, 1993, the
number of creditable years of service and the currently applicable average
pensionable remuneration under the retirement plans for Mr. Georges were 14.58
years and $1,405,833; for Mr. Dillon, 26.92 years and $626,667; for Mr. Melican,
9.92 years and $601,667; for Mr. Smith, 13.33 years and $473,333; and for Mr.
Suwyn, 1.83 years and $533,333.
COMPENSATION OF DIRECTORS
The compensation of each non-employee director of the Company is a retainer
fee of $36,000 per year plus fees of $1,100 for each board and committee or
other meeting attended. Directors may elect to defer receipt of all or part of
their remuneration until a later date under a deferred compensation plan, at
which time the director will be paid in cash equal to (1) the cash amount
deferred plus interest at the higher of 6% per annum or the yield of U.S.
Treasury bills or (2) the value at the time of payment of units equivalent to
the value of Company common stock credited to the director's account at the time
of each deferral, plus dividend equivalents. Employees of the Company who are
also directors receive no compensation for services as a director or for
attendance at board or committee meetings.
The Company has established a Retirement Plan for Non-Employee Directors
which provides that directors who retire from service when they attain the
mandatory retirement age of 72 and have ten years of service, will receive an
annual retirement benefit equal to 100% of the annual retainer fee. The Plan
also provides for early retirement after attaining age 65 with at least five
years of service. If early retirement is taken, the retirement benefit is
reduced by increments of 10% for each year less than ten years of service, and
is further reduced by increments of 4% for each year prior to age 72 that the
early retirement payments begin.
In addition, under the Non-Employee Directors Restricted Stock Plan, awards
of 900 shares of common stock are made upon the election or re-election of a
director to a full three-year term, or the appointment of a non-employee
director to fill an unexpired term (in which latter event the number of shares
to be awarded will be a pro-rata portion of the number issued to non-employee
directors elected to serve for a full term at the most recent annual meeting of
shareholders). Awards made in 1993 were 900 shares each for Class II directors
and a pro-rata award of 125 shares for a newly elected director. Directors
receive dividend payments represented by the shares awarded under the Restricted
Stock Plan, currently at $0.42 per share per quarter.
Further, four of the non-employee directors of the Company serve as
directors of IP Forest Resources Company ("IPFR"), a wholly-owned subsidiary
which acts as the managing general partner of IP Timberlands, Ltd., a New York
Stock Exchange-listed limited partnership. As such, each of the four
non-employee directors receives a retainer fee of $7,000 per year plus a fee of
$1,100 for each IPFR board meeting attended. These fees are paid by IPFR. There
were five meetings of the board in 1993.
INDEMNIFICATION INSURANCE AND CONTRACTS
The Company provides liability insurance for the company's directors and
all elected officers, as well as contractual arrangements with directors and
certain officers of the Company, agreeing to compensate them for costs and
liabilities incurred in actions brought against them while acting as directors
or officers. On June 15, 1993, the Company amended the aforementioned policies
with Federal Insurance Company at a current annual premium cost aggregating
$584,250, such policies expiring on June 15, 1994. No monies have been paid
under such policies by the carrier or by the Company under the contractual
arrangements.
23
<PAGE>
TERMINATION AGREEMENTS
The Company has agreements with members of the executive officer group,
providing for payments and other benefits if there is a change of control of the
Company and the officer's employment is terminated (i) by the Company or its
successor, other than for cause, disability or retirement, or (ii) by the
officer if the chief executive officer of the Company ceases to hold that
position for reasons other than cause, retirement or disability, or if the
officer determines that by reason of adverse changes in, among other things, the
officer's authority, compensation, duties, office location or responsibilities,
the officer is unable to perform the duties and responsibilities of the position
the officer held immediately prior to the change in control. These agreements
provide that if the officer's employment terminates under the circumstances
described above, the officer will receive: (a) continuation of medical and
dental insurance coverage until age 65 or eligibility to join a comparable plan
sponsored by another employer; (b) retiree medical coverage comparable to the
Company's pre-change of control retiree medical plan; (c) a lump-sum payment
equal to (i) his annual salary at termination together with his most recent
short-term annual incentive compensation payment during the year preceding
termination, multiplied by the smaller of the number "three" or the number of
years between the termination date and the date he reaches age 65 and (ii) an
amount necessary to offset any special federal excise tax on all payments
received under the termination agreement. In addition to the foregoing
provisions Mr. Georges' agreement can be triggered by a voluntary termination at
any time within 18 months of the change in control. The agreement provides him
with the above benefits as well as (a) payment of vested benefits under the
pension plan which entitlement shall include payments made under the agreement
which constitute "compensation" under the pension plan; (b) a lump-sum payment
equal to the difference between (i) the actuarial value on termination date of
accrued vested pension benefits and (ii) the actuarial value on termination date
of what accrued pension benefits would have been if the period and payments set
out in (c)(i) and (c)(ii) below were recognized under the pension plan; (c) a
lump-sum payment equal to (i) his annual salary at termination, (ii) the average
of his short-term incentive compensation award for three years preceding
termination and (iii) the value of his average earned award under the PSP for
three years preceding termination, multiplied by the number of years between the
termination date and the date he reaches age 65; (d) a lump-sum payment equal to
the value of any deferred incentive compensation or PSP awards and unvested
Company matching contributions under the SSP; (e) stock options equal to the
average number of options awarded during the three years preceding termination,
multiplied by the number of years between the termination date and the date he
reaches age 65, plus the extension of each option held until the end of the
normal term of such option if he had not left the Company.
In addition to the foregoing, the Long-Term Incentive Compensation Plan
contains provisions that release restrictions from stock awards and stock
options for all members of the group if there is a change of control of the
company. Also, the Supplemental Retirement Plan for senior managers provides
that if a change of control of the Company occurs, pension benefits will vest
immediately and the minimum benefit will be increased from 25% to 50% of
pensionable remuneration.
The Company has authorized a grantor trust under Sections 671 through 677
of the Code in connection with the Company's benefit plans and termination
agreements. Under the grantor trust, the trustee will pay the beneficiaries of
the trust the amounts to which they are entitled under such plans and agreements
subject to claims of the Company's creditors.
24
<PAGE>
APPENDIX A
INTERNATIONAL PAPER COMPANY
LONG-TERM INCENTIVE COMPENSATION PLAN
The International Paper Company Long-Term Incentive Compensation Plan is
hereby amended to delete the words and phrases indicated by brackets, e.g.
[omit] and to add the words and phrases indicated by italics, e.g. add.
1. PURPOSE AND EFFECTIVE DATE
This plan shall be known as the International Paper Company Long-Term
Incentive Compensation Plan (the "Plan"). The purpose of this Plan is to provide
incentive for senior management officers and employees of the Company and its
subsidiaries (the "Company") to improve the performance of the Company on a
long-term basis, and to attract and retain in the employ of the Company persons
of outstanding competence. The terms "subsidiary" and "subsidiaries" as used
herein shall mean corporations which are owned or controlled by International
Paper Company, directly or indirectly.
The effective date of this Plan is [shall be] January 1, 1989. S[s]ubject
to approval of this Plan by a majority of shareholders of the Company entitled
to vote on the matter at the 1994 [89] annual meeting of shareholders certain
amendments to the Plan will also be effective. [Upon share owner approval of
this] The Plan [it will] supersedes and replaces the International Paper Company
Performance Share Plan and the International Paper Company Stock Option Plan
which were approved by shareholders in 1983 (the "1983 Plans"). No further
contingent awards or grants of options will be made under the 1983 Plans, and
outstanding contingent awards and deferred awards under the 1983 Plans and
earlier plans will be converted to comparable awards under the provisions of
this Plan with the consent of the award holders.
2. ADMINISTRATION OF THE PLAN
(a) The Plan shall be administered by a committee (the "Committee") which
shall be composed of members of the Board of Directors of the Company and which
shall be constituted so as to permit the Plan to comply with the provisions of
Rule 16b-3 under the Securities Exchange Act of 1934, as amended ("1934 Act")
(or any successor rule) and Section 162(m) of the Internal Revenue Code of 1986,
as amended (the "Code"). The Committee is authorized to administer and interpret
the Plan, to authorize, change, and waive the restrictions and conditions
imposed on awards and stock options under the Plan, and to adopt such rules and
regulations for carrying out the Plan as it may deem appropriate. Decisions of
the Committee on all matters relating to the Plan shall be in the Committee's
sole discretion and shall be conclusive and binding on all parties, including
the Company, the shareholders and the participants.
(b) No member of the Committee or any employee acting on its behalf shall
incur any liability for any action or failure to act in connection with this
Plan. The Company shall indemnify each member of the Committee and any employee
acting on its behalf against any and all claims, losses, damages, expenses and
liabilities arising from any action or failure to act.
3. PARTICIPANTS
(a) Participation in this Plan shall be limited to senior managers and
other key employees of the Company as determined by the Committee. Awards of
stock and stock appreciation rights and grants of stock options may be made to
such [members of senior management] employees and for such respective numbers of
Shares, as the Committee in its absolute discretion shall determine (all such
individuals to whom awards and options shall be granted being herein called
"participants").
A-1
<PAGE>
(b) Members of the Board of Directors who are also employees of the Company
shall be eligible to participate in the Plan. However, members of the Board of
Directors who are not also employees of the Company shall be ineligible for
awards under this Plan. Notwithstanding the foregoing, any members of the Board
of Directors who are also retired employees of the Company shall be entitled to
the portions of their awards which are [is] earned or vested pursuant to the
provisions of the Plan.
(c) A person who is compensated on the basis of a fee or retainer, as
distinguished from salary, shall not be eligible for participation in the Plan.
(d) Participation in this Plan, or receipt of an award or option under this
Plan, shall not give a participant any right to a subsequent award or option,
nor any right to continued employment by the Company for any period, nor shall
the granting of an award or option give the Company any right to continued
services of the participant for any period. Likewise, participation in the Plan
will not in any way affect the Company's right to terminate the employment of
the participant at any time with or without cause.
4. DEFINITIONS
(a) "Stock" or "Share" shall mean a share of the common stock of $1.00 par
value of International Paper Company.
(b) "Performance Shares" shall mean Shares contingently awarded with
respect to an Award Period and issued with the restriction that the holder may
not sell, transfer, pledge, or assign such Shares, and with such other
restrictions as the Committee in its sole discretion may determine (including,
without limitation, restrictions with respect to forfeiture of the Shares and
with respect to reinvestment of dividends in additional restricted Shares),
which restrictions may lapse separately or in combination at such time or times
(in installments or otherwise) as the Committee may determine.
(c) "Stock Appreciation Right" or "SAR" shall mean a right included in an
award under this Plan to receive upon exercise of the SAR a payment equal to the
amount of the appreciation in the fair market value of a Share over the exercise
price which is set forth in the SAR provided that the exercise price is not less
than the fair market value of a Share on the date the SAR is granted. Payment
upon exercise of an SAR may be in the form of cash, or restricted stock, or
unrestricted stock, or a combination, as determined by the Committee in its sole
discretion. SARs may be awarded separately or in combination with other awards
and stock options under this Plan pursuant to terms and conditions contained in
an award agreement as determined by the Committee.
(d) "Change of Control of the Company" shall mean a change in control of a
nature that would be required to be reported in response to Item 5(f) of
Schedule 14A of Regulation 14A promulgated under the [Securities Exchange] 1934
Act [of 1934, as amended ("Exchange Act")]; provided that, without limitation,
such a change in control shall be deemed to have occurred if (i) any "person" as
such term is used in Sections 13(d) and 14(d)(2) of the [Exchange] 1934 Act
(other than employee benefit plans sponsored by the Company) is or becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company's then
outstanding securities, or (ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors of the Company, cease for any reason to constitute at least a majority
thereof unless the election, or the nomination for election, by the Company's
shareholders of each new director was approved by a vote of at least two-thirds
of the directors still in office who were directors at the beginning of the
period.
5. STOCK AVAILABLE FOR THE PLAN
An aggregate of [seven] five million Shares shall be available under the
Plan as amended by the shareholders at the 1994 Annual Meeting for delivery
pursuant to the future awards, and options granted pursuant to the [this] Plan,
together with any Shares previously authorized by shareholders
A-2
<PAGE>
under the 1983 Plans or the Plan which are not yet issued to, or are reacquired
from, participants in the 1983 Plans or the Plan. Such Shares shall be either
previously unissued Shares or reacquired Shares. Shares covered by awards which
are not earned, or which are settled in cash, or which are forfeited or
terminated for any reason, and options which expire unexercised or which are
exchanged for other awards, shall again be available for other awards and stock
options under the Plan. Shares received by the Company in connection with the
exercise of stock options by delivery of other Shares, and received in
connection with payment of withholding taxes, shall again be available for
delivery under the Plan. Shares reacquired by the Company on the open market
using the cash proceeds received by the Company from the exercise of stock
options granted under the Plan and the 1983 Plans shall be available for awards
and options up to the number of Shares issued upon option exercises which
generated such proceeds, provided any such exercise occurred on or after January
1, 1989. Notwithstanding the foregoing, the maximum number of Shares available
for delivery pursuant to future awards, options and SARs to executive officers
of the Company who, at the time of grant, are subject to the provisions of
Section 16 of the 1934 Act shall not exceed 7,300,000 Shares, subject to the
adjustments permitted by Section 6 of the Plan. Notwithstanding any other
provision of this Plan, subject, however, to the adjustments permitted by
Section 6 of the Plan, the aggregate number of Shares that can be covered by
future stock options or SARs granted to any individual in any period of three
consecutive fiscal years shall be 900,000.
6. CHANGES IN STOCK AND EXERCISE PRICE OF STOCK OPTIONS AND SARS
In the event of any stock dividend, split-up, reclassification or other
analogous change in capitalization or any distribution (other than regular cash
dividends) to holders of the Company's common stock, the Committee shall make
such adjustments, if any, as it deems to be equitable in the exercise price of
outstanding options and SARs, and in the number of Performance Shares awarded
and earned, and in the number of Shares covered by any outstanding stock options
and SARs, granted under this Plan, and in the aggregate number of Shares covered
by this Plan.
7. TIME OF GRANTING AWARDS AND STOCK OPTIONS
Nothing contained in this Plan, or in any resolution adopted or to be
adopted by the Board of Directors or the shareholders of the Company, shall
constitute the granting of an award or stock option under this Plan. The
granting of an award or stock option pursuant to the Plan shall take place only
when authorized by the Committee. [No award and no rights thereunder shall be
transferable or assignable except at death pursuant to Section 8.]
8. DEATH OR DISABILITY OF A PARTICIPANT
In the event of the death of a participant, a stock option or an SAR may be
exercised within one year of the participant's death by the participant's
designated beneficiary or beneficiaries (or if no beneficiary has been
designated or survives the participant, by the person or persons who have
acquired the rights of the participant by will or under the laws of descent and
distribution). If a participant becomes disabled, the participant may exercise a
stock option or an SAR within one year after the date of the disability.
[Disability shall cause Incentive Stock Options to be treated for federal
income tax purposes as Non-qualified Stock Options on a date which is one year
after the date of the disability.] For purposes of this Plan, the term
"disabled" shall refer to the condition of [permanent] total disability defined
in the Company's long-term disability plan.
A participant may file with the Committee a designation of a beneficiary or
beneficiaries on a form approved by the Committee, which designation may be
changed or revoked by the participant's sole action, provided that the change or
revocation is filed with the Committee on a form approved by it. In case of the
death of the participant, before termination of employment or after retirement
or disability,
A-3
<PAGE>
any portions of the participant's award to which the participant's designated
beneficiary or estate is entitled under the Plan and the award agreement, shall
be paid to the beneficiary or beneficiaries so designated or, if no beneficiary
has been designated or survives such participant, shall be delivered as directed
by the executor or administrator of the participant's estate.
9. RETIREMENT OF HOLDER OF STOCK OPTION OR SAR
If a participant retires under a Company pension plan, the participant may
exercise a stock option or an SAR within its remaining term unless otherwise
provided in the award agreement. Retirement under any of the Company's pension
plans shall cause incentive stock options to be treated for federal income tax
purposes as non-qualified stock options on a date which is three months after
the date of retirement. For purposes of this section, retirement shall be given
the meaning used under the Company's pension plan for salaried employees.
10. NON-TRANSFERABILITY OF AWARDS
No award, [or] stock option or SAR under this Plan, and no rights or
interests therein, shall be assignable or transferable by a participant (or
legal representative), except at death by will or by the laws of descent and
distribution unless otherwise permitted by the Committee and by law and, in the
case of incentive stock options, to the extent consistent with Section 422 of
the Code. [During the lifetime of a participant, stock options, SARs and rights
under the Plan may be exercised only by the participant (or legal
representative), and payments and distributions under the Plan will be made only
to the participant (or legal representative).]
11. MODIFICATION OF THE PLAN
The Board of Directors, without further approval of the shareholders, may
at any time amend the Plan to take into account and comply with any changes in
applicable securities or federal income tax laws and regulations, or other
applicable laws and regulations, including without limitation, any modifications
to Rule 16b-3 under the [Exchange] 1934 Act or Section 162(m) of the Code (or
any successor rule, provision or regulation), terminate or modify or suspend
(and if suspended, may reinstate) any or all of the provisions of this Plan,
except that no modification of this Plan shall without the approval of the
Company's shareholders increase the total number of Shares for which awards,
[and] stock options and SARs may be granted under the Plan (except pursuant to
Section 6).
RESTRICTED PERFORMANCE SHARE AWARDS
12. TERMS AND CONDITIONS OF AWARDS OF PERFORMANCE SHARES
(a) Each award of Performance Shares under this Plan shall be contingently
awarded with respect to a period of consecutive calendar years as determined by
the Committee (herein called an "Award Period") and shall be made from
reacquired Shares. Outstanding contingent awards and deferred awards under the
1983 Performance Share Plan shall be converted to comparable awards under this
Plan with the consent of the award holders. The first complete Award Period
under this Plan shall begin with the year 1989. A new Award Period shall
commence at the beginning of each calendar year.
(b) The Performance Shares awarded under this Plan will be earned by a
participant on the basis of the Company's financial performance over the Award
Period for which it was awarded, [as] on the basis of pre-established
performance goals determined by the Committee in its sole discretion. [The
restrictions on the Shares constituting the portion of the award which has been
earned as determined by the Committee shall be removed as described in Section
13, and all unearned Performance Shares relating to that Award Period shall be
forfeited to the Company and shall again be available for other awards under the
Plan. Additional Shares and Performance Shares may be issued at the end of the
Award Period if the Committee determines that the Company's performance exceeded
the goal established by the Committee for such Award Period.] The Performance
measurement criteria used for
A-4
<PAGE>
Performance Shares shall be limited to one or more of: earnings per share,
return on stockholders equity, return on assets, growth in earnings, growth in
sales revenue, and shareholder returns. Such criteria may be measured based on
the Company's results or on the Company's performance as measured against a
group of peer companies selected by the Committee. In applying such criteria,
earnings may be calculated based on the exclusion of discontinued operations and
extraordinary items. Subject to the adjustments permitted by Section 6 of the
Plan, the maximum number of Performance Shares that can be earned for any one
individual for any future Award Period commencing after the effective date of
the amendment to the Plan is 50,000. Subject to such maximum number of Shares,
the amount, if any, that may be earned by a participant receiving Performance
Shares may vary in accordance with the level of achievement of the performance
goal or goals established by the Committee.
(c) A participant's rights with respect to all unearned Performance Shares
shall terminate at the end of each Award Period.
(d) The number of Shares determined by the Committee to have been earned
with respect to any Award Period shall be final, conclusive and binding upon all
parties, including the Company, the shareholders and the participants.
(e) All dividend[s] [paid] equivalents credited on Performance Shares
during an Award Period shall be reinvested in additional Performance Shares
(which shall be allocated to the same Award Period, and shall be subject to
being earned by the participant on the same basis as the original award).
(f) All dividends paid on earned restricted Shares under this part of the
Plan shall be paid in cash.
(g) As a condition of any award of Performance Shares under this Plan, each
participant shall enter into an award agreement authorized by the Committee.
[and may be required to file an election pursuant to Section 83(b) of the
Internal Revenue Code (or comparable provisions of the Code as amended from time
to time) electing to treat the award as taxable income in the year of the award,
and the number of Performance Shares delivered shall be appropriately reduced
for payment of the applicable withholding taxes due with respect to the award.
The Committee may, in its discretion, include additional conditions and
restrictions in the award agreements.] The Committee may in its sole discretion,
include additional conditions and restrictions in the award agreement entered
into under this Plan. Settlements in Shares may be subject to forfeiture and
other contingencies as the Committee may determine.
(h) At the discretion of the Committee, SARs may be awarded separately or
in combination with other awards or grants under this portion of the Plan.
[13. METHOD OF EARNING AWARD AND REMOVAL OF RESTRICTIONS]
[(a) As soon as practicable after each Award Period, fifty percent (50%) of
the number of Performance Shares determined by the Committee to have been earned
by each participant during such Award Period shall become unrestricted Shares.
The remaining fifty (50%) of the number of Performance Shares earned by each
participant during such Award Period shall continue to be restricted Shares
until the earlier of death, becoming disabled, retirement after attaining age
62, or the third anniversary of the date of determination of the number of
Shares earned by such participant. In the event of any other termination of
employment, earned Performance Shares shall be subject to forfeiture and
cancellation at the discretion of the Committee.]
[(b) All Performance Shares shall be subject to being forfeited and
cancelled by the Committee, in the Committee's discretion, if the participant
terminates employment, other than by reason of death or becoming disabled or
retirement after attaining age 62.]
[(c) In the event of a participant's death during an Award Period, the
participant's beneficiary shall receive Shares which are free of restrictions in
an amount equal to the pro rata portion of each
A-5
<PAGE>
award that would have been earned were Company performance to reach the goals
established by the Committee for the Award Periods currently underway. In the
event of a participant's retirement after attaining age 62 or upon becoming
disabled, the participant shall receive Shares which are free of restrictions in
an amount equal to the pro rata portion of each award that would have been
earned were Company performance to reach the goals established by the Committee
for the Award Periods currently underway.]
(i)[(d)] In the event a Change of Control of the Company occurs, then
(i) all restrictions shall be immediately removed with respect to all
earned Performance Shares and
(ii) a pro rata portion of each outstanding Award that would have been
earned were Company performance to reach the goals established by the
Committee for each uncompleted Award Period shall be deemed earned (based
on the number of months of the total Award Period which have been completed
prior to the Change of Control), and all restrictions shall be immediately
removed with respect to that number of shares; the remaining portion of
each Award shall remain outstanding as Performance Shares subject to the
provisions of this Plan and the participant's award agreements.
STOCK OPTION AWARDS
13.[14.] TERMS AND CONDITIONS OF STOCK OPTIONS]
[(a) The Committee shall have the sole authority to grant stock options
under this Plan. Such grants may consist of n[N]on-qualified s[S]tock
o[O]ptions, or Incentive Stock Options, or any combination thereof, as the
Committee shall decide from time to time. The aggregate fair market value
(determined at the time the option is granted) of the Stock with respect to
which Incentive Stock Options are exercisable for the first time by an
individual during a calendar year shall not exceed $100,000 as determined under
Section 422A of the Internal Revenue Code or comparable legislation. The maximum
number of Shares for which stock options can be awarded to any one individual
over any consecutive three-year period commencing on the effective date of the
amendment to the Plan is 900,000 Shares.
(b) The term of each option granted under the Plan shall be set by the
Committee, but in no event shall an Incentive Stock Option be exercised after
ten years following the date of its grant under this Plan.
(c) The exercise price of each option granted under the Plan shall be no
less than the fair market value of the underlying Stock at the time the option
is granted as determined by the Committee.
(d) Prior to the exercise of the option and delivery of the Stock
represented thereby, the participant shall have no rights to any dividends nor
be entitled to any voting rights on any Stock represented by outstanding
options.
(e) As a condition of any grant of a stock option under this Plan, each
participant shall enter into an award agreement authorized by the Committee. The
Committee may, in its sole discretion, include additional conditions and
restrictions in the award agreement entered into under this Plan.
(f) At the discretion of the Committee, SARs may be awarded separately or
in combination with other awards or grants under this part of the Plan.
14.[15.] EXERCISE OF STOCK OPTIONS
(a) Each stock option granted under this Plan shall be exercisable as
provided in accordance with the document evidencing the option by full payment
of the option price in cash or at the discretion of the Committee in Stock owned
by the participant (including Performance Shares and other restricted Shares
awarded under this Plan). Unless otherwise provided herein, a participant may
exercise a stock
A-6
<PAGE>
option only if he or she is an employee of the Company and has continuously been
an employee of the Company since the date the option was granted.
[(b) If a participant terminates employment with the Company other than by
reason of retirement after attaining age 62, death, or disability, any and all
outstanding stock options granted under this Plan shall be terminated unless the
Committee in its absolute discretion determines that, because of unusual
circumstances, all or any portion of the outstanding option shall remain
exercisable by such participant for such period as the Committee determines. If
the Committee determines to extend all or any portion of the outstanding stock
option, the option so extended shall then be treated, for federal income tax
purposes, as a Non-qualified Stock Option.]
(b)[c] If a stock option under the 1983 Plan or this Plan is exercised by a
participant, then, at the discretion of the Committee, the participant may
receive a replacement option under this part of the Plan to purchase a number of
Shares equal to the number of Shares which the participant purchased on the
exercise of the option, with an exercise price equal to the current fair market
value, and with a term extending to the expiration date of the original stock
option. If a stock option is exercised by delivery of restricted Shares, then
the participant shall receive an equal number of identically restricted Shares;
the remaining option exercise Shares shall contain any applicable restrictions
which are set forth in the participant's award agreement and shall otherwise be
unrestricted.
[(d) Any tax withholding obligation in connection with an exercise of a
stock option under the 1983 Plan or this Plan will be satisfied by authorizing
the Company to withhold an appropriate number of Shares deliverable (subject to
compliance with applicable securities laws and regulation).]
(c)[e] In the event a Change of Control of the Company occurs, all stock
options granted under this part of the Plan shall be immediately exercisable,
and all restrictions on Shares issued under this plan pursuant to the exercise
of stock option shall be immediately removed.
EXECUTIVE CONTINUITY AWARDS
15.[16]. TERMS AND CONDITIONS OF EXECUTIVE CONTINUITY AWARDS
(a) Executive continuity awards may be made from time to time under this
Plan at the discretion of the Committee, in such amounts and upon such terms and
conditions as are established by the Committee under this portion of the Plan.
(b) An executive continuity award shall consist of a stock option or grant
of restricted Shares, or a tandem grant of restricted Shares together with a
related n[N]on-qualified s[S]tock o[O]ption (options to be granted in accordance
with the provisions of sections 13-14 [14-15] of this Plan) to purchase a
specified number of Shares, in such amounts as may be determined by the
Committee. All dividends paid on the restricted Shares shall be reinvested in
additional shares of restricted Shares (subject to the same restrictions, terms
and conditions). Upon attainment of age 65, (or death or the executive's
becoming disabled as such condition is determined in the sole discretion of the
Committee, if earlier) or upon a Change of Control of the Company (as limited
under subsection (h) below), the restrictions on the award will be removed, and
the award will vest in the following manner:
(i) If the current realizable gain on a tandem stock option is greater
than the current market value of the related restricted Shares (including
re-invested dividends), then all such shares of restricted Shares shall be
cancelled and the term of the stock option shall continue for the term set
forth in the award agreement.
(ii) If the current market value of the restricted Shares (including
re-invested dividends) is greater than the current realizable gain on any
related tandem stock option, then the option shall be cancelled and the
restrictions shall be removed from all of the related restricted Shares.
(c) If a stock option granted under this portion of the Plan is exercised
prior to the executive's attainment of age 65, the related shares of restricted
Shares shall be cancelled, and the additional
A-7
<PAGE>
Shares issued upon the exercise of the stock option shall be restricted and
subject to either forfeiture or repurchase by the Company at the option exercise
price for a period ranging up to 12 years from the date of the grant of the
option, or longer, as determined by the Committee and set forth in the award
agreement.
(d) A stock option granted under this portion of the Plan shall be
exercisable as provided in accordance with the document evidencing the option by
full payment of the option price in cash or, at the discretion of the Committee,
in Stock owned by the participant (including Performance Shares awarded under
this Plan). At the discretion of the Committee, the participant may receive a
replacement stock option to purchase a number of shares equal to the number of
shares purchased by the participant in exercising the option, with an exercise
price equal to the current market value, and with a term extending to the
expiration date of the original stock option. If an option is exercised by
delivery of restricted Shares, then the participant shall receive an equal
number of identically restricted Shares; the remaining option exercise Shares
shall be subject to the Company's right to impose restrictions on such Shares as
described in subsection (c) above.
[(e) Tax withholding obligations in connection with the vesting of
restricted Shares will be satisfied by withholding Shares (subject to compliance
with applicable securities laws and regulations) equal in value to the required
withholding amount.]
(e)[(f)] As a condition of any executive continuity award under this Plan,
each participant shall enter into an award agreement authorized by the
Committee. The Committee may, in its sole discretion, include additional
conditions and restrictions in the award agreement.
(f)[(g)] At the discretion of the Committee, SARs may be awarded separately
or in combination with other awards or grants under this portion of the Plan.
(g)[(h)] In the event a Change of Control of the Company occurs, all
restrictions shall be immediately removed with respect to the exercise of stock
options under this part of the Plan and with respect to Shares issued upon the
exercise of any stock option. A Change of Control, for these purposes, shall not
include a transaction initiated by management such as a management led buyout or
recapitalization except where such transaction (i) is in response to the
acquisition of 10% or more of the Company's stock or the announcement of a
tender offer for 20% or more of the Company's stock (other than by employee
benefit plans sponsored by the Company); or (ii) is approved by the Board in
accordance with the standards set forth in Section 717 of the New York Business
Corporation Law or any successor provision.
MISCELLANEOUS
16. PRIOR AWARDS
Awards of stock options and Performance Shares made under the Plan prior to
the amendments approved by shareholders at the 1994 annual meeting shall
continue to be subject to the terms of the Plan and the instruments evidencing
such awards prior to such amendments becoming effective.
17. TAX WITHHOLDING
The Company shall have the right to deduct from any settlement of an award
made under the Plan, including the delivery or vesting of Shares, a sufficient
amount to cover withholding of any federal, state, local or foreign jurisdiction
taxes required by law, or to take such other action as may be necessary to
satisfy any such withholding obligations. The Committee may permit or require
Shares to be used to satisfy required tax withholding and such Shares shall be
valued at the fair market value as of the settlement date of the applicable
award.
A-8
<PAGE>
INTERNATIONAL PAPER
TWO MANHATTANVILLE ROAD
PURCHASE, NEW YORK 10577
PRINTED ON HAMMERMILL PAPERS ACCENT OPAQUE 40 LBS.
HAMMERMILL PAPERS IS A DIVISION OF INTERNATIONAL PAPER.
<PAGE>
INTERNATIONAL PAPER
TWO MANHATTANVILLE ROAD, PURCHASE, N.Y. 10577
- -----------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND
WILL BE VOTED FOR ITEM 1, THE ELECTION OF CLASS III, CLASS I AND
CLASS II DIRECTORS AND FOR ITEMS 2 AND 3, IF NO INSTRUCTIONS TO
THE CONTRARY ARE INDICATED.
The undersigned hereby appoints John A. Georges, Donald F.
McHenry and Jane C. Pfeiffer, jointly or individually, proxies with
power of substitution to vote all shares the undersigned is entitled
to vote at the Annual Meeting of Shareholders on May 10, 1994 or
adjournments thereof. The proxies are instructed as indicated on
the reverse side. This proxy revokes all prior proxies given by the
undersigned.
Please sign on the reverse side exactly as name or names appear
there. If stock is held in name of joint holders, each should sign. If
you are signing as a trustee, executor, etc., please so indicate.
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES IN ITEM 1 AND
"FOR" ITEMS 2 AND 3.
WITHHELD
FOR FOR ALL
The Board of Directors Recommends a vote For Item 1.-Election [ ] [ ]
of the following nominees as Directors: Class III (3 year terms)
John A. Georges, Donald F. McHenry and Patrick F. Noonan.
Class I (1 year terms) Stanley C. Gault and Roger B. Smith.
Class II (2 year term) Jane C. Pfeiffer.
WITHHELD FOR: (Write that nominee's name in the
space provided below)
- ------------------------------------------------------------------
FOR AGAINST ABSTAIN
The Board of Directors
Recommends a vote FOR [ ] [ ] [ ]
Item 2.-Appointment of
Independent Auditors.
FOR AGAINST ABSTAIN
The Board of Directors
Recommends a vote FOR [ ] [ ] [ ]
Item 3.-Amendment to
the Long-Term Incentive
Compensation Plan.
In their discretion, the proxies are authorized to
vote upon such other business as may properly come
before the meeting.
Signature(s)____________________________________________________ Date__________
Note: Please sign as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
<PAGE>
NO POSTAGE
NECESSARY
IF MAILED
IN THE
UNITED STATES
BUSINESS REPLY CARD
FIRST CLASS PERMIT NO. 7 PURCHASE, N.Y.
POSTAGE WILL BE PAID BY ADDRESSEE
SECRETARY'S DEPARTMENT
INTERNATIONAL PAPER COMPANY
TWO MANHATTANVILLE ROAD
PURCHASE, NEW YORK 10577-9985
<PAGE>
INTERNATIONAL PAPER
REQUEST FOR ADMITTANCE Please Print
To the Secretary: Shareholder Name_______________________
Please reserve an Admittance Card for Proxy Holder (if any)__________________
me or my duly appointed proxy
named herein to attend the Annual Address________________________________
Meeting of Shareholders of
International Paper Company to be City________ State__________ Zip_______
held May 10, 1994 at the Hotel
Crescent Court, 400 Crescent Court,
Dallas, Texas at 9:30 a.m. Central ----------------------------
Daylight Time. Shareholder Signature
(Admittance Cards may be picked up at
the pre-registration desk.)
NOTE: ATTENDANCE WILL BE LIMITED TO SHAREHOLDERS OF RECORD AS OF THE CLOSE OF
BUSINESS ON MARCH 22, 1994, OR THEIR PROXY HOLDER NAMED HEREIN (NOT TO EXCEED
ONE PROXY PER SHAREHOLDER), AND TO GUESTS OF MANAGEMENT.
<PAGE>
INTERNATIONAL PAPER
TWO MANHATTANVILLE ROAD
PURCHASE, NEW YORK 10577
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE VOTED
FOR THE ELECTION OF CLASS III, CLASS I AND CLASS II DIRECTORS, AND FOR ITEMS
2 AND 3 IF NO INSTRUCTIONS TO THE CONTRARY ARE INDICATED.
The undersigned hereby appoints John A. Georges, Donald F. McHenry and Jane
C. Pfeiffer, jointly or individually, proxies with the power of
substitution to vote all shares the undersigned is entitled to vote at the
Annual Meeting of Shareholders on May 10, 1994 or adjournments thereof:
The Board of Directors Recommends a vote FOR Item 1.-Election of the following
nominees as Directors:
<TABLE>
<S> <C> <C> <C> <C>
Class III (3 year terms) Class I (1 year terms) Class II (2 year term)
- ------------------------ ---------------------- -----------------------
John A. Georges Stanley C. Gault Jane C. Pfeiffer For all Withheld for
Donald F. McHenry Roger B. Smith Nominees all Nominees
Patrick F. Noonan
[ ] [ ]
Withheld for the following only:
</TABLE>
The Board of Directors Recommends a vote FOR
Item 2.-Appointment of Independent Auditors.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
The Board of Directors Recommends a vote FOR
Item 3.-Amendment to the Long-Term Incentive
Compensation Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
PLEASE SIGN YOUR NAME(S) ON THE REVERSE SIDE.
<PAGE>
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
Please sign exactly as name appears on this card. If stock is held in name of
joint holders, each should sign. If you are signing as a trustee, executor,
etc., please so indicate.
DATED:_______________________________, 1994 _______________________________
Signature
Please mark, sign, date and mail this card _______________________________
promptly in the postage prepaid return Signature if held jointly
envelope provided.
<PAGE>
INTERNATIONAL PAPER
TO PARTICIPANTS IN THE SALARIED SAVINGS PLAN AND RETIREMENT SAVINGS PLAN OF
INTERNATIONAL PAPER COMPANY:
As a participant in the Plan(s), with full shares of the Company's common stock
allocated to your account as of December 31, 1993, you may instruct the Trustee
how to vote such shares at the Annual Meeting of Shareholders to be held
May 10, 1994. You have previously been sent the 1993 Annual Report and the
Board of Directors proxy statement is enclosed.
Your instructions to the Trustee will be held in strict confidence and will be
made available only to the inspectors of election, none of whom is an employee
of the Company. Under the terms of the Plan(s), you have the right to give
voting instructions for all shares allocated to your account, whether or not
you have a vested interest in those shares. Please use the voting instruction
card on the reverse to give your instructions.
Any shares held by the Trustee as to which it has not received voting
instructions by May 6, 1994 will be voted in the same manner, proportionately,
as the shares as to which voting instructions have been received. Any shares
held by the Trustee as to which it has been instructed to sign the Board of
Directors proxy, with no additional instructions to the contrary indicated,
will be voted, FOR Item 1, the election of Class III, Class I and Class II
Directors and FOR Items 2 and 3.
STATE STREET BANK & TRUST CO., N.A.,
Trustee
<PAGE>
To State Street Bank & Trust Co., N.A., Trustee of the Salaried Savings Plan and
Retirement Savings Plan of International Paper Company:
I understand that the Board of Directors proxy referred to on the reverse
authorizes the proxy holders to vote FOR or WITHHOLD AUTHORITY on the election
of Class III, Class I and Class II Directors, vote FOR, AGAINST or ABSTAIN on
Items 2 and 3 and, in their discretion, on any other business that may properly
come before the meeting.
[ X ] PLEASE MARK
YOUR VOTES
AS THIS
You are hereby instructed to sign the Board of Directors proxy. You are
further instructed to direct the proxy holders to vote as follows:
WITHHELD
FOR FOR ALL
The Board of Directors Recommends a vote [ ] [ ]
FOR Item 1. - Election of the following nominees as
Directors:
Class III (3 year terms)
John A. Georges, Donald F. McHenry and Patrick F. Noonan.
Class I (1 year terms) Stanley C. Gault and Roger B. Smith
Class II (2 year term) Jane C. Pfeiffer.
WITHHELD FOR: (Write that nominee's name in the
space provided below)
___________________________________________________________
FOR AGAINST ABSTAIN
The Board of Directors
Recommends a vote FOR [ ] [ ] [ ]
Item 2. - Appointment of
Independent Auditors.
FOR AGAINST ABSTAIN
The Board of Directors
Recommends a vote FOR [ ] [ ] [ ]
Item 3. - Amendment to
the Long-Term Incentive
Compensation Plan.
TRUSTEE AUTHORIZATION
I hereby authorize State Street Bank & Trust Co., N.A. as
Trustee under the Salaried Savings Plan and the Retirement
Savings Plan to vote the shares of Common Stock held for
my account under said Plan(s) at the Annual Meeting in
accordance with the instructions given above. State Street
Bank & Trust Co., N.A., Trustee, has appointed Chemical
Bank as Agent to tally the votes.
Signature(s) ____________________________________ Date _____________________
Note: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
INTERNATIONAL PAPER
TWO MANHATTANVILLE ROAD, PURCHASE, N.Y. 10577
<PAGE>
INTERNATIONAL PAPER
TO PARTICIPANTS IN THE LESLIE PAPER PLAN:
As a participant in the Plan, with full shares of International Paper Company's
(the "Company") common stock allocated to your account as of December 31, 1993,
you may instruct the Trustees how to vote such shares at the Annual Meeting of
Shareholders to be held May 10, 1994. You have previously been sent the 1993
Annual Report and the Board of Directors proxy statement is enclosed.
Your instructions to the Trustees will be held in strict confidence and will be
made available only to the inspectors of election, none of whom is an employee
of the Company. Under the terms of the Plan, you have the right to give
voting instructions for all shares allocated to your account, whether or not
you have a vested interest in those shares. Please use the voting instruction
card on the reverse to give your instructions.
Any shares held by the Trustees under the Leslie Plan as to which it has not
received voting instructions twenty-four (24) hours prior to the Annual Meeting
will be voted in the same manner, proportionately, as the shares as to which
voting instructions have been received. Any shares held by the Trustees as to
which it has been instructed, pursuant to the return of this proxy, to sign the
Board of Directors proxy, with no additional instructions to the contrary
indicated, will be voted, FOR Item 1, the election of Class III, Class I and
Class II Directors and FOR Items 2 and 3.
STATE STREET BANK & TRUST CO., N.A., and NORWEST, Trustees
<PAGE>
To State Street Bank & Trust Co., N.A., and Norwest, Trustees of the Leslie
Paper Plan: I understand that the Board of Directors proxy referred to on the
reverse authorizes the proxy holders to vote FOR or WITHHOLD AUTHORITY on the
election of Class III, Class I and Class II Directors, vote FOR, AGAINST or
ABSTAIN on Items 2 and 3 and, in their discretion, on any other business that
may properly come before the meeting.
[ X ] PLEASE MARK
YOUR VOTES
AS THIS
You are hereby instructed to sign the Board of Directors proxy. You are
further instructed to direct the proxy holders to vote as follows:
WITHHELD
FOR FOR ALL
The Board of Directors Recommends a vote [ ] [ ]
FOR Item 1. - Election of the following nominees as
Directors:
Class III (3 year terms)
John A. Georges, Donald F. McHenry and Patrick F. Noonan.
Class I (1 year terms) Stanley C. Gault and Roger B. Smith
Class II (2 year term) Jane C. Pfeifer.
WITHHELD FOR: (Write that nominees's name in the
space provided below)
___________________________________________________________
FOR AGAINST ABSTAIN
The Board of Directors
Recommends a vote FOR [ ] [ ] [ ]
Item 2. - Appointment of
Independent Auditors.
FOR AGAINST ABSTAIN
The Board of Directors
Recommends a vote FOR [ ] [ ] [ ]
Item 3. - Amendment to
the Long-Term Incentive
Compensation Plan.
TRUSTEE AUTHORIZATION
I hereby authorize State Street Bank & Trust Co., N.A. and
Norwest, as Trustees under the Leslie Plan to vote the
shares of Common Stock held for my account under said Plan
at the Annual Meeting in accordance with the instructions
given above. State Street Bank & Trust Co., N.A. and Norwest,
Trustees, has appointed Chemical Bank as Agent to tally the
votes.
Signature(s) ____________________________________ Date _____________________
Note: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
INTERNATIONAL PAPER
TWO MANHATTANVILLE ROAD, PURCHASE, N.Y. 10577
<PAGE>
REMINDER
IF YOU HAVE ALREADY FORWARDED YOUR PROXY,
PLEASE DISREGARD THIS COMMUNICATION.
INTERNATIONAL PAPER
TWO MANHATTANVILLE ROAD
PURCHASE, NY 10577
To Owners of Our Common Stock:
Have you sent in your proxy to vote your shares at the Annual Meeting on
May 10, 1994?
We would like to have every shareholder record their vote FOR Item 1, the
election of Class III Directors, Class I Directors and the Class II Director,
and FOR Item 2, the approval of Independent Auditors, and FOR Item 3, the
amendment of the Long-Term Incentive Compensation Plan, as fully described
in the Proxy Statement dated March 31, 1994, and mailed to each record
holder of common stock.
We are sending another proxy with this reminder in case you have lost or
misplaced the one sent earlier. It would be most helpful if you would complete
it, sign it and mail it back to us in the enclosed business reply envelope -
TODAY, IF POSSIBLE.
Yours very truly,
JAMES W. GUEDRY, Secretary April 13, 1994
<PAGE>
INTERNATIONAL PAPER
JOHN A. GEORGES TWO MANHATTANVILLE ROAD
CHAIRMAN PURCHASE NY 10577
AND CHIEF EXECUTIVE OFFICER
Dear Shareholder,
I am pleased to provide you with the enclosed proxy statement in connection
with International Paper's upcoming annual meeting.
Of particular importance are some recommended changes in our Long Term
Incentive Compensation Plan. I am writing to explain why these changes benefit
both employees and shareholders, and to request that you approve that 5 million
additional shares be available for issuance under the amended plan. This
represents about 4% of the outstanding shares.
International Paper has in place a Long Term Incentive Compensation Plan,
approved by shareholders in 1989, that allows us to attract and retain talented
managers who enhance the operating performance of our Company. Because we
believe that equity ownership aligns managers' interests very closely with those
of shareholders, part of their compensation is in International Paper common
stock and options. This year, we are asking shareholders to approve changes in
our Long Term Incentive Compensation Plan. The details of the proposed
amendments to the Plan are in Item 3 and Appendix A of the Proxy Statement and
should be read for fuller understanding.
One feature of the amended plan is designed to minimize dilution for
existing shareholders. Cash proceeds received from the exercise of stock options
can be used to purchase shares in the open market providing a specific source of
funds for the acquisition of Company common stock. Options exercised since
January 1, 1989, currently provide about $80 million for such stock repurchases.
Moreover, I would point out that only treasury or repurchased shares are used
in our Long Term Incentive Compensation Plan.
We are also amending the Plan to insure that, in view of tax law changes
enacted last year, International Paper may continue to take a full tax deduction
for executive compensation.
The Board of Directors of International Paper, advised by its independent
Management Development and Compensation Committee, unanimously recommends a vote
for the amendments. We believe strongly that our performance-based,
equity-oriented compensation program adds significant value to International
Paper.
Please contact Carol Tutundgy, Vice President Investor Relations, at (914)
397-1632 if you have any questions or comments.
Sincerely,
/s/ JOHN A. GEORGES
JOHN A. GEORGES
Chairman and Chief Executive Officer
March 31, 1994
