<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
International Paper Company
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Registrant
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2)
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
PROXY RULES
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO]
TWO MANHATTANVILLE ROAD
PURCHASE, NEW YORK 10577
JOHN A. GEORGES
CHAIRMAN
March 31, 1995
Dear Fellow Shareholders:
The annual meeting of International Paper will be held this year at the
Windsor Court Hotel, 300 Gravier Street, New Orleans, Louisiana. The meeting
will start at 9:30 a.m., on Tuesday, May 9, 1995. 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 two directors
to the remaining term of their designated class and approval of the appointment
of Arthur Andersen LLP as independent auditors for 1995.
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 on March 24, 1995, 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 and
return the enclosed Request for Admittance card.
Thank you for your continued support.
Sincerely,
[LOGO]
JOHN A. GEORGES
<PAGE>
[LOGO]
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 9, 1995, at 9:30 a.m. at the Windsor Court Hotel, 300 Gravier
Street, New Orleans, Louisiana to:
1. Elect one class of directors comprised of four members to the Board of
Directors and two directors to the remaining term of their designated class;
2. Approve the appointment of Arthur Andersen LLP as independent auditors for
1995; and
3. 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 AND 2.
Shareholders of record at the close of business on March 24, 1995, 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, 1995
<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 9, 1995. 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 24, 1995. As of
that date, there were 126,677,141 shares of common stock outstanding.
The annual report, including the audited financial statements of the Company for
the fiscal year ended December 31, 1994, has been mailed to shareholders with
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 $14,500
plus reimbursable expenses. This solicitation may be carried out either by mail,
telephone, telegraph, or personal interview. The cost of any such solicitation
will be borne by the Company.
The Company has 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 the proxy
vote.
This Proxy Statement and the form of Proxy were sent to shareholders commencing
March 31, 1995.
MEETING ADMITTANCE PROCEDURES
Shareholders of record as of the close of business on March 24, 1995 (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 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.
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
2
<PAGE>
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 24, 1995 (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 four, were elected at the 1992 and 1994 annual
meetings to serve until the 1995 annual meeting; Class II directors, of which
there are currently four, were elected at the 1993 and 1994 annual meetings to
serve until the 1996 annual meeting; and Class III directors, of which there are
currently three, were elected at the 1994 annual meeting to serve until the 1997
annual meeting. Each class is elected for a three-year term.
Eleven regular meetings and three special meetings of the Board of Directors
were held in 1994. In addition, there were 25 Committee meetings. Each director
attended at least 89% of the meetings of the Board and the Committees on which
he or she serves. All of the directors attended an average of 97% of such
meetings of the Board and the Committees on which he or she serves.
In December 1994, a Company affiliate sold 4,639 acres of property in Vermont to
The Conservation Fund, a not-for-profit natural resources conservation entity,
for $967,600, which price approximates the fair market value as determined by
the Company's land utilization department based upon an MAI independent
appraisal. Mr. Noonan, a director of the Company, is chairman and chief
executive officer of The Conservation Fund but did not participate in the sale
negotiations.
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.
Current members of the Committee, none of whom is an employee of the Company,
are J. C. Pfeiffer (Chairman), W. C. Butcher, A.G. Hansen, P. F. Noonan and R.
B. Smith.
Four meetings of the Committee were held in 1994.
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.
3
<PAGE>
Current members of the Committee, none of whom is an employee of the Company,
are S.C. Gault (Chairman), W.C. Butcher, R. J. Eaton, T.C. Graham, E.T. Pratt,
Jr. and C. R. Shoemate.
Eight meetings of the Committee were held in 1994.
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 W.C. Butcher (Chairman), D.F. McHenry, J. C. Pfeiffer, E.T. Pratt, Jr. and
C. R. Shoemate.
Three meetings of the Committee were held in 1994.
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), J.T. Dillon, R. J.
Eaton, S.C. Gault, A.G. Hansen and P. F. Noonan.
Three meetings of the Committee were held in 1994.
OTHER COMMITTEES
Membership of the other regular Committees of the Board of Directors is shown on
page 61 of the Company's annual report which accompanies this Proxy Statement.
FUTURE SHAREHOLDER PROPOSALS AND NOMINATIONS
Any shareholder proposals intended to be presented at the 1996 annual meeting
must be made in writing and received by the Secretary of the Company at the
Company's principal executive offices by the close of business on December 2,
1995, for inclusion in the 1996 Proxy Statement and form of proxy relating to
the meeting. 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
4
<PAGE>
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 1996 election
of directors must be received by the Secretary of the Company not earlier than
March 13, 1996, or later than April 10, 1996, if the annual meeting is held on
the second Tuesday of May 1996.
COMMON STOCK OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table shows, as of March 24, 1995, 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
J.T. Dillon 95,005
R. J. Eaton 1,100
S.C. Gault 8,454 No director or executive
J.A. Georges 224,933 officer owns as much as
T.C. Graham 6,580 1/5th of 1%
A.G. Hansen 2,308
D.F. McHenry 2,933
P.F. Noonan 1,025
J.C. Pfeiffer 2,725
E.T. Pratt 2,580
C.R. Shoemate 450
R.B. Smith 2,600
J.P Melican 65,197
C.W. Smith 65,174
M.A. Suwyn 40,928
All directors and
executive officers
as a group 524,584 0.41%
Bank trustee under
Company and subsidiary
employee benefit plans
(2) 10,514,604 8.30%
----------------------------------------------------------------
</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
5
<PAGE>
Continuity Awards, are included above. The above table does not include
424,100 shares represented by stock options granted executive officers under
the Long-Term Incentive Compensation Plan, including options for 167,500
shares for Mr. Georges, 68,600 shares for Mr. Dillon, 54,550 shares for Mr.
Melican, 41,100 shares for Mr. C.W. Smith and 20,650 shares for Mr. Suwyn.
In addition, under the Nonfunded Deferred Compensation Plan for Non-Employee
Directors or the Unfunded Savings Plan, the Directors and executive officers
listed below own the non-voting stock-equivalent Units set forth in the
following chart:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
STOCK STOCK
DIRECTOR/NAMED OFFICER UNITS DIRECTOR/NAMED OFFICER UNITS
----------------------------------------------------------------------------------
<S> <C> <C> <C>
W.C. Butcher 5,448 E.T. Pratt 14,596
J.T. Dillon 9,716 C.R. Shoemate 134
J.A. Georges 37,711 R.B. Smith 5,317
T.C. Graham 7,389 J.P. Melican 7,615
A.G. Hansen 4,073 C.W. Smith 5,001
D.F. McHenry 2,520 M.A. Suwyn 2,346
P.F. Noonan 573
----------------------------------------------------------------------------------
</TABLE>
(2) As of December 31, 1994, 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 benefit
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
11,528,650 shares of common stock of the Company. The trustee disclaims
beneficial ownership of all such shares except 1,011,736 shares of which it
has sole power to dispose or to direct the disposition of. 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
Four (4) directors are to be elected as Class I directors for three-year terms
expiring in 1998. Two (2) directors who joined the Board since the last annual
meeting are to be elected as Class III directors, for terms expiring in 1997.
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
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<PAGE>
for nominees listed in the Proxy Statement. The term of the present Class I
directors expires at the adjournment of the 1995 annual meeting. The four
nominees for election at that meeting as Class I directors are listed below:
<TABLE>
<S> <C>
CLASS I NOMINEES--TERM EXPIRING IN 1998
[PHOTO] JOHN T. DILLON, 56, Executive Vice President--packaging since 1987. He
was elected 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] STANLEY C. GAULT, 69, 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 and a director of the National Association of Manufacturers.
Director since January 8, 1980
[Photo] ARTHUR G. HANSEN, 70, 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, a Commissioner of the Indiana Commission for
Higher Education and a fellow of the American Association for the
Advancement of Science.
Director since February 10, 1976
[Photo] ROGER B. SMITH, 69, former Chairman and Chief Executive Officer of
General Motors Corporation from 1981 to 1990, when he retired. He is a
director of Citicorp, IP Forest Resources Company (the managing general
partner of IP Timberlands, Ltd.), 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
</TABLE>
7
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The two nominees for election as Class III directors are listed below.
<TABLE>
<S> <C>
CLASS III NOMINEES--TERM EXPIRING IN 1997
[PHOTO] ROBERT J. EATON, 55, Chairman and Chief Executive Officer of the
Chrysler Corporation. He joined Chrysler in 1992, as vice chairman and
chief operating officer and a member of the Board. Prior to joining
Chrysler, his 29-year career with General Motors included various
management positions, the most recent being president of General Motors
Europe (1988-1992). He is a fellow of both the Society of Automotive
Engineers and the Engineering Society of Detroit and a member of the
National Academy of Engineering. He is a director of the American
Automobile Manufacturers Association and is a member of The Business
Council, The Business Roundtable, and the U.S./Japan Business Council.
He also is a member of the President's Advisory Committee on Trade
Policy and Negotiations and serves as a director of Detroit Renaissance,
United Way of Southeastern Michigan, Economic Club of Detroit, Detroit
Symphony Orchestra and the Michigan Leaders Health Care Group.
Director since January 10, 1995
[Photo] CHARLES R. SHOEMATE, 55, Chairman, President and Chief Executive Officer
of CPC International Inc. He was elected president and a member of its
board of directors in 1988, chief executive officer in August 1990 and
chairman in September 1990. He joined CPC International in 1962 and
progressed through a variety of positions in manufacturing, finance and
business management within the consumer foods and corn refining
businesses. In 1981, he was named president of Canada Starch Company,
CPC's Canadian subsidiary. He was elected vice president of the
corporation in 1983, and in 1986 became president of the Corn Refining
Division. He is a director of CIGNA Corporation; the Grocery
Manufacturers of America, Inc.; and the Americas Society. He is a member
of the Business Roundtable and part of its Education Task Force; a
trustee of the Committee for Economic Development; and a trustee of The
Conference Board.
Director since November 1, 1994
</TABLE>
Other directors who will continue to serve are listed below under their
respective classes. None of these directors are to be elected at the 1995 annual
meeting.
<TABLE>
<S> <C>
CLASS II DIRECTORS--TERM EXPIRING IN 1996
[PHOTO] WILLARD C. BUTCHER, 68, former Chairman and Chief Executive Officer of
The Chase Manhattan Bank, N.A. He is a director of ASARCO, Incorporated,
M.I.M. Holdings, Ltd. (Australia), 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 and a
fellow emeritus of Brown University and a trustee of Business Committee
for the Arts, Inc.
Director since August 1, 1989
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
[Photo] THOMAS C. GRAHAM, 68, Chairman and Chief Executive Officer of AK Steel
Holding Corporation and AK Steel Corporation. He was elected to the
posts concurrent with the formation of AK Steel Holding Corporation, a
publicly held corporation which emerged from the privately-held Armco
Steel Company, L.P. in April of 1994. He had been named president and
chief executive officer of Armco Steel in June 1992. He was formerly
chairman and chief executive officer of Washington Steel Corporation
until he assumed his current position in 1992. He was vice
chairman-steel and diversified group and executive director of USX
Corporation from 1986 to 1991. He was named vice chairman and chief
operating officer -- steel and related resources, U.S. Steel
Corporation, 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 and IP Forest Resources Company
(the managing general partner of IP Timberlands, Ltd.).
Director since October 14, 1986
[Photo] JANE C. PFEIFFER, 62, 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
[Photo] EDMUND T. PRATT, JR., 68, 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
Minerals Technologies, Inc., The Chase Manhattan Corporation, The Chase
Manhattan Bank, N.A., General Motors Corporation and chairman of the
board of WCD Investors Inc. He is a director and member of the Executive
Committee of AEA Investors, Inc. and a member of the Board of Trustees
of Logistics Management Institute.
Director since September 9, 1975
CLASS III DIRECTORS--TERM EXPIRING IN 1997
[PHOTO] JOHN A. GEORGES, 64, 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
AK Steel Holding Corporation, Ryder Systems, Inc., Scitex Corporation
Ltd. and Warner-Lambert Company. He is a member of The Business Council
and the Policy Committee of the Business Roundtable. He is a board
member of the Business Council of New York State, a member of The
Trilateral Commission and the President's Advisory Committee for Trade
Policy and Negotiations.
Director since February 1, 1980
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
[Photo] DONALD F. MCHENRY, 58, University Research Professor of Diplomacy and
International Affairs at Georgetown University since 1981. He is
president of the IRC Group 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 a trustee of the Johnson
Foundation, The Brookings Institution, The Mayo Foundation and Columbia
University; and chairman of the board of Africare.
Director since April 14, 1981
[Photo] PATRICK F. NOONAN, 52, Chairman and Chief Executive Officer of The
Conservation Fund (a nonprofit organization dedicated to conserving
America's land and water resources) since 1985. Prior to that he was
president of The Nature Conservancy. He is a trustee of The National
Geographic Society and the American Farmland Trust. He is also a
director of Ashland Oil, Inc., the Fund for Government Investors, Saul
Centers 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
</TABLE>
ITEM NO. 2--APPROVAL OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT
AUDITORS FOR 1995
The Audit Committee has considered the qualifications of Arthur Andersen LLP and
recommended that the Board of Directors appoint them as independent auditors of
the consolidated financial statements of the Company for the year 1995. 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 LLP
in all of these respects. The Committee's review also included inquiry
concerning litigation involving Arthur Andersen LLP 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 LLP 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 LLP, as independent auditors of the
consolidated financial statements of the Company for the year 1995.
A representative of Arthur Andersen LLP 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 LLP AS
INDEPENDENT AUDITORS OF THE CONSOLIDATED
FINANCIAL STATEMENTS OF THE COMPANY FOR 1995
10
<PAGE>
REPORT OF THE MANAGEMENT DEVELOPMENT
AND COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
As of December 31, 1994, the Management Development and Compensation Committee
(the "Committee") consisted of five outside directors: Willard C. Butcher,
Stanley C. Gault, Thomas C. Graham, Edmund T. Pratt, Jr. and Charles R.
Shoemate. Mr. Gault is chairman. The Committee met eight times in 1994 with a
96% 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 Committee relates total compensation levels for the Company's executives to
the compensation paid at a select group of comparator companies. In 1994, these
companies were surveyed by the independent compensation consulting firms, Hewitt
Associates and The Hay Group, and included a cross section of approximately 40
manufacturing companies in industries that are close in size ($15 billion sales)
and manufacturing complexity to International Paper and compete directly with
International Paper for executive talent. The Committee reviews and approves the
selection of companies used for compensation comparisons. International Paper
also uses the independent compensation consulting firms of F. W. Cook and
Company, and Hewitt Associates to advise the Committee. In 1994, the Company's
compensation levels for each component of pay were targeted to the median of the
comparator group's competitive pay levels.
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
employee development, which account for the remainder. In 1994, 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 for 1994 was exceeded. Performance compared to the nonfinancial
targets for 1994 was attained or exceeded.
The Company's Long-Term Incentive Compensation Plan and amendments, which were
approved by the shareholders in 1989 and 1994, respectively, 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
the Company's and Peer Paper Group's (eight companies which comprise the Peer
Line of the Performance Graphs on page 13) and weighing equally, the 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 with long-term vesting
requirements which are designed to encourage retention of a small number of
senior executives designated by the Committee. The size of an award, and any
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
11
<PAGE>
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 any portion of the stock option is
not exercised by the date the continuity award terminates, 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 million. The Committee endorsed amendments to the
Company's Long-Term Incentive Compensation Plan in 1994 to make certain sections
of the plan compatible with those provisions, while maintaining the Committee's
flexibility in the Company's Management Incentive Plan to exercise business
judgment in determining awards to take account of business conditions or the
performance of individual executives. In 1994, the Committee recognized that a
portion of Mr. Georges's total current cash compensation is above $1 million.
1994 EXECUTIVE OFFICERS' COMPENSATION
The Committee approved merit salary increases for the named executive officers
based on competitiveness of the executives' pay and personal performance. In
June 1994, Mr. Georges' salary was increased to $985,000, with the increase
covering the twelve month period since his last salary adjustment and
approximating the median increase awarded CEOs in the group of surveyed
companies referred to above. Salaries paid to the named executive officers in
1994, including Mr. Georges' salary, were competitively positioned from slightly
above to below the median of the survey companies.
MIP awards for the named executive officers in 1994 were determined by the
Committee after review of respective levels of responsibility, personal
performance and Company performance compared to the predetermined 1994 financial
and nonfinancial goals. Actual awards to all named executive officers
represented 11.9% of the bonus fund. All named executive officers' MIP awards
increased compared to 1993 in recognition of the 33% improvement in earnings
before special charges and implementation of cost reduction and organization
redesign programs that are expected to achieve sustained improvement in earnings
through 1995.
The performance share guidelines described above were used by the Committee to
determine contingent performance share awards in December 1994 to the named
executive officers for the 1995-1999 Award Period and the payout in 1994 of
earned shares for the 1989-1993 Award Period. The pretax values of Mr. Georges'
performance share awards in 1994 were: $701,238 in contingent restricted stock
for the 1995-1999 Award Period; $183,288 in deferred restricted stock for the
Award Period 1989-1993; and $183,288 in earned shares (long-term incentive
payout) for the 1989-1993 Award Period. The shares earned for the 1989-1993
Award Period reflect Company performance which exceeded performance of the Peer
Paper Group.
The Committee granted stock options in 1994 based on competitive surveys
described earlier, without consideration of the amount of stock options already
held by named executive officers. Mr. Georges' 1994 stock option award was
19,000 shares, the same as his award in 1992 and 1993.
No executive continuity awards were granted or adjusted for any of the named
executive officers in 1994.
THE MANAGEMENT DEVELOPMENT AND COMPENSATION
COMMITTEE OF THE BOARD OF DIRECTORS
Willard C. Butcher
Stanley C. Gault, chairman
Thomas C. Graham
Edmund T. Pratt, Jr.
Charles R. Shoemate
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No executive officer or other employee of the Company served as a member of the
Committee or as a member of the compensation committee on the board of any
company where an executive officer of such company is a member of the Committee.
Mr. Graham, a member of the Committee, is the chairman and chief executive
officer of AK Steel Holding Corporation; Mr. Georges, chairman and chief
executive officer of the Company, was elected to the board of AK Steel Holding
Corporation in 1994.
12
<PAGE>
PERFORMANCE GRAPHS
The following charts compare 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, 1989-1994 and 1984-1994,
assuming reinvestment of dividends. The Company has presented information
pertaining to total shareholder return over two different time periods since all
holders of the common stock did not acquire their investment in International
Paper on the same date. The Company believes a presentation in this format more
accurately reflects the financial return provided to the holders of its Common
Stock which may not be evident if only one time period was highlighted.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
International Paper 100 98 133 128 134 152
S&P 500 Index 100 97 126 136 150 152
Peer Group 100 81 110 123 140 144
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INTERNATIONAL PAPER S&P 500 INDEX PEER GROUP
<S> <C> <C> <C>
1984 100 100 100
1985 99 132 115
1986 151 157 154
1987 175 165 167
1988 198 192 178
1989 249 253 195
1990 243 245 157
1991 330 320 214
1992 318 344 239
1993 332 379 272
1994 378 384 281
</TABLE>
* Total return assumes reinvestment of dividends.
** Includes Boise Cascade, Champion, Georgia Pacific, Mead,
Stone Container, Union Camp, Westvaco, and Weyerhauser.
13
<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 1992-1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
LONG-TERM COMPENSATION
ANNUAL COMPENSATION CONTINGENT AWARDS
---------------------------------- --------------------------
(A) (B) (C) (D) (E) (F) (G) (H)
OTHER RESTRICTED
ANNUAL STOCK ALL OTHER
SALARY BONUS COMPENSATION AWARD OPTIONS COMPENSATION
NAME AND POSITION YEAR ($)(1) ($)(2) ($)(3) ($)(4) (#)(5) ($)(6)
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
John A. Georges as 1994 $ 953,750 $1,115,000 $ 0 $1,051,857 19,000 $ 198,548
Chief Executive Officer 1993 $ 880,833 $ 525,000 $ 0 $ 819,672 19,000 $ 136,571
1992 $ 840,000 $ 555,000 $ 0 $ 794,195 112,632 $ 85,304
John T. Dillon as 1994 $ 430,000 $ 370,000 $ 0 $ 398,690 8,000 $ 96,681
Executive Vice 1993 $ 396,667 $ 230,000 $ 0 $ 332,316 8,000 $ 77,234
President 1992 $ 367,500 $ 240,000 $ 0 $ 322,040 54,900 $ 33,397
James P. Melican as 1994 $ 420,000 $ 345,000 $ 0 $ 362,664 32,296 $ 88,763
Executive Vice 1993 $ 386,667 $ 215,000 $ 0 $ 302,430 7,700 $ 69,747
President 1992 $ 357,917 $ 225,000 $ 0 $ 293,084 16,238 $ 20,578
Mark A. Suwyn as 1994 $ 363,500 $ 345,000 $ 0 $ 362,664 7,700 $ 58,617
Executive Vice 1993 $ 323,333 $ 210,000 $ 0 $1,193,205 6,800 $ 53,528
President 1992 $ 250,000 $ 175,000 $ 0 $2,612,669 6,150 $ 24,546
C. Wesley Smith as 1994 $ 333,750 $ 335,000 $ 357,784 $ 362,664 7,700 $ 78,922
Executive Vice 1993 $ 283,333 $ 190,000 $ 0 $ 944,705 6,800 $ 55,390
President 1992 $ 238,000 $ 190,000 $ 0 $ 786,035 4,300 $ 132,037
-----------------------------------------------------------------------------------------------------------------
<FN>
(1) Salary paid in 1994 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 1995, 1994 and 1993 attributable
to 1994, 1993 and 1992, respectively, including amounts deferred pursuant
to Section 401(k) of the Internal Revenue Code or pursuant to deferral
arrangements reported in the year earned.
(3) Represents settlement of tax equalization with respect to Mr. Smith's
expatriate assignment from 1989 to 1992.
(4) Represents (a) 150% of the value of gross target restricted performance
shares contingently awarded in 1994 for the 1995-1999 award period, in 1993
for the 1994-1998 award period and in 1992 for the 1993-1997 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, 1994 are as follows:
104,673/$7,889,727 for Mr. Georges; 46,048/$3,470,868 for Mr. Dillon;
44,925/$3,386,222 for Mr. Melican; 37,382/$2,817,668 for Mr. Suwyn and
40,673/$3,065,727 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.
(5) Includes replacement options if applicable. These figures do not include
the tandem option awards made as part of the continuity awards referred to
in footnote (4) above insofar as the awards are characterized as restricted
stock awards. Such tandem options were for 40,000 and 60,000 shares for Mr.
Suwyn in 1993 and 1992, respectively, and for 40,000 shares for Mr. Smith
in 1993 and are restricted as to exercise prior to age 62. In 1994, there
were no new continuity awards made to the named executive officers.
(6) 1994 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: $71,112, $68,452 and $58,984 for Mr. Georges;
$32,478, $43,358 and $20,845 for Mr. Dillon; $31,290, $37,150 and $20,323
for Mr. Melican; $28,561, $30,056 and $0 for Mr. Suwyn; and $26,589,
$35,112 and $17,221 for Mr. Smith.
</TABLE>
14
<PAGE>
The table below sets out information on the option grants made in 1994 to the
named executive officers:
OPTION GRANTS IN 1994
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE VALUE AT
ASSUMED COMPOUND ANNUAL GROWTH RATES
OF STOCK PRICE APPRECIATION FOR OPTION TERM (2)
INDIVIDUAL GRANTS
---------------------------------------------------- ------------------------------------------------
(A) (B) (C) (D) (E) (F) (G) (H)
% OF TOTAL
OPTIONS OPTIONS GRANTED EXERCISE OR
GRANTED TO EMPLOYEES IN BASE PRICE EXPIRATION
NAME AND POSITION (#)(1) 1994 ($/SH) DATE 0% 5% 10%
------------------------------------------------------------------------ ------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
John A. Georges as 19,000 1.42% $ 73.625 01/11/04 $ 0 $771,239 $1,899,599
Chief Executive
Officer
John T. Dillon as 8,000 0.60 % $ 73.625 01/11/04 $ 0 $324,732 $ 799,831
Executive Vice
President
James P. Melican 3,746 0.28 % $ 77.125 02/10/96 $ 0 $ 15,681 $ 31,425
as Executive Vice 2,126 0.16 % $ 77.125 02/09/97 $ 0 $ 17,543 $ 36,015
President 2,324 0.17 % $ 76.125 02/09/97 $ 0 $ 18,897 $ 38,791
2,285 0.17 % $ 76.125 01/12/98 $ 0 $ 27,418 $ 57,576
2,515 0.19 % $ 77.125 01/12/98 $ 0 $ 30,574 $ 64,204
4,800 0.36 % $ 77.125 01/10/99 $ 0 $ 79,780 $ 171,810
6,800 0.51 % $ 77.125 01/08/01 $ 0 $178,363 $ 404,645
7,700 0.58 % $ 73.625 01/11/04 $ 0 $312,555 $ 769,838
Mark A. Suwyn as 7,700 0.58 % $ 73.625 01/11/04 $ 0 $312,555 $ 769,838
Executive Vice
President
C. Wesley Smith as 7,700 0.58 % $ 73.625 01/11/04 $ 0 $312,555 $ 769,838
Executive Vice
President
--------------------------------------------------------------------------------------------------------------------------
Executive Officer 103,996 7.79 % (3) (3) $ 0 $3,203,336 $7,693,312
Group
All shareholders N/A N/A N/A N/A $ 0 $5,859,995,413 $14,850,378,915
--------------------------------------------------------------------------------------------------------------------------
<FN>
(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.
(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. 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.
(3) Other than replacement grants, all stock option grants in 1994 were at an
exercise price of $73.625 per share, expiring January 11, 2004.
</TABLE>
15
<PAGE>
The table below sets out information on options exercised and options
outstanding.
AGGREGATED OPTION EXERCISES IN 1994
AND DECEMBER 31, 1994 OPTION VALUES
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
(A) (B) (C) (D) (E) (F) (G)
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS AT 12/31/94
SHARES VALUE REALIZED ($) OPTIONS AT 12/31/94 (#)(5) ($)(5)
ACQUIRED ON ---------------------- -------------------------- ------------------------
EXERCISE AGGREGATE ANNUALIZED RESTRICTED UNRESTRICTED RESTRICTED
NAME AND POSITION (1) (#)(1) (1) (2) UNRESTRICTED (3) (4) (3)(4)
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
John A. Georges as 11,322 $ 159,924 $ 54,831 82,150 76,000 $ 785,221 $ 577,125
Chief Executive Officer
John T. Dillon as 7,200 $ 31,500 $ 27,000 32,700 31,000 $ 311,250 $ 234,000
Executive Vice
President
James P. Melican as 24,596 $ 690,266 $ 138,192 28,650 29,900 $ 160,815 $ 157,850
Executive Vice
President
Mark A. Suwyn as No Exercises N/A N/A 0 20,650 $ 0 $ 106,850
Executive Vice
President
C. Wesley Smith as No Exercises N/A N/A 10,300 23,100 $ 141,800 $ 221,788
Executive Vice
President
---------------------------------------------------------------------------------------------------------------------
<FN>
(1) The number of incremental shares retained on exercises is as follows: 282
for Mr. Dillon and 5,602 for Mr. Melican.
(2) Represents the aggregate incremental value realized divided by the number
of years the option was held prior to exercise.
(3) 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.
(4) Total value of options (market value minus exercise price) based on fair
market value of company stock of $75.375, as of December 31, 1994.
(5) 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.
</TABLE>
16
<PAGE>
RETIREMENT BENEFITS
The following table shows the total estimated annual pension benefits payable
for the named executive officers 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>
-----------------------------------------------------------------------------
PENSIONABLE
REMUNERATION CREDITABLE YEARS OF SERVICE
-----------------------------------------------------------------------------
5 10 15 20 25 30
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
$ 600,000 $ 150,000 $ 190,527 $ 285,790 $ 293,118 $ 293,118 $ 293,718
$ 800,000 $ 200,000 $ 255,527 $ 383,290 $ 393,118 $ 393,118 $ 393,918
$1,000,000 $ 250,000 $ 320,527 $ 480,790 $ 493,118 $ 493,118 $ 494,118
$1,500,000 $ 375,000 $ 483,027 $ 724,540 $ 743,118 $ 743,118 $ 744,618
$2,000,000 $ 500,000 $ 645,527 $ 968,290 $ 993,118 $ 993,118 $ 995,118
$2,500,000 $ 625,000 $ 808,027 $1,212,040 $1,243,118 $1,243,118 $1,245,618
-----------------------------------------------------------------------------
</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
limitations; and a supplementary plan covering designated senior managers which
provides supplemental benefits to the qualified plan. At December 31, 1994, the
number of creditable years of service and the currently applicable average
pensionable remuneration under the retirement plans for Mr. Georges were 15.58
years and $2,068,750; for Mr. Dillon, 27.92 years and $800,000; for Mr. Melican,
10.92 years and $765,000; for Mr. Suwyn, 2.83 years and $708,500; and for Mr.
Smith, 14.33 years and $668,750.
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 $1,200 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
17
<PAGE>
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 1994 were 900 shares each for Class III directors,
pro-rata awards of 300 shares for two directors reclassified as Class I
directors and 600 shares for one director reclassified as a Class II director,
and a pro-rata award of 150 shares for one 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 $1,200 for each IPFR board meeting attended. These fees
are paid by IPFR. There were four meetings of the board in 1994.
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, 1994, the Company amended the aforementioned policies with Federal
Insurance Company at a current annual premium cost aggregating $525,825, such
policies expiring on June 15, 1995. No monies have been paid under such policies
by the carrier or by the Company under the contractual arrangements.
TERMINATION AGREEMENTS
The Company has agreements with members of the executive officer group,
providing for payments and other benefits if there is a change in 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 in 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
18
<PAGE>
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 in control of the Company. Also, the
Supplemental Retirement Plan for senior managers provides that if a change in
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.
19
<PAGE>
NOTES
<PAGE>
NOTES
<PAGE>
NOTES
<PAGE>
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TWO MANHATTANVILLE ROAD
PURCHASE, NEW YORK 10577
Printed on Hammermill Papers, Accent Opaque 40 lbs.
Hammermill Papers is a division of International Paper.
<PAGE>
PROXY
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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 I AND CLASS III DIRECTORS AND FOR ITEM 2, 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 9, 1995 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.
----------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
Please mark
/X/ your choices
like this
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES IN ITEM 1 AND
"FOR" ITEM 2.
The Board of Directors Recommends a vote
FOR Item 1. -- Election of the following nominees as Directors:
WITHHELD
FOR FOR ALL
/ / / /
Class I (3 year terms)
John T. Dillon, Stanley C. Gault, Arthur G. Hansen and Roger B. Smith.
Class III (2 year terms)
Robert J. Eaton and Charles R. Shoemate
The Board of Directors Recommends a vote FOR
Item 2. -- Appointment of Independent
Auditors.
FOR AGAINST ABSTAIN
/ / / / / /
WITHHELD FOR: (Write that nominee's name in the space provided below).
____________________________________________________________________________
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.
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
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TWO MANHATTANVILLE ROAD, PURCHASE, N.Y. 10577
<PAGE>
[LOGO]
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, 1994, you may instruct the Trustee
how to vote such shares at the Annual Meeting of Shareholders to be held May 9,
1995. The 1994 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 5, 1995 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 I and Class III Directors
and FOR Item 2.
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 PLEASE MARK
Board of Directors proxy referred to on the reverse /X/ YOUR CHOICES
authorizes the proxy holders to vote FOR or WITHHOLD LIKE THIS
AUTHORITY on the election of Class I and Class III
Directors, vote FOR, AGAINST or ABSTAIN on Item 2, in
their discretion, on any other business that may properly
come before the meeting.
You are hereby instructed to sign the Board of Directors proxy. You
are further instructed to direct the proxy holders to vote as follows:
The Board of Directors Recommends a vote
FOR Item 1. -- Election of the following nominees as Directors:
WITHHELD
FOR FOR ALL
/ / / /
Class I (3 year terms)
John T. Dillon, Stanley C. Gault, Arthur G. Hansen and Roger B. Smith.
Class III (2 year terms)
Robert J. Eaton and Charles R. Shoemate
WITHHELD FOR: (Write that nominee's name in the space provided below).
__________________________________________________________________________
The Board of Directors Recommends a vote FOR
Item 2. -- Appointment of Independent Auditors.
FOR AGAINST ABSTAIN
/ / / / / /
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
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TWO MANHATTANVILLE ROAD, PURCHASE, N.Y. 10577
<PAGE>
[LOGO]
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 I AND III DIRECTORS, AND FOR ITEM 2 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 9, 1995 or adjournments thereof:
<TABLE>
<S> <C> <C>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1.--Election of THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM
the following nominees as Directors: 2.--Appointment of Independent Auditors.
CLASS I (3 YEAR TERMS) CLASS III (2 YEAR TERMS) FOR AGAINST ABSTAIN
John T. Dillon Robert J. Eaton / / / / / /
Stanley C. Gault Charles R. Shoemate
Arthur G. Hansen
Roger B. Smith
For all Withhold for
Nominees all Nominees
/ / / /
Withheld for the following
only:
</TABLE>
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.
<TABLE>
<S> <C>
DATED:__________________________________ , 1995 Signature ______________________________
Please mark, sign, date and mail the card promptly in the
postage prepaid return envelope provided. _______________________________
Signature if held jointly
</TABLE>
<PAGE>
<TABLE>
<S> <C>
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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 9, 1995?
We would like to have every shareholder record their vote FOR Item 1,
the election of Class I Directors and the two Class III Directors, and FOR
Item 2, the approval of Independent Auditors, as fully described in the
Proxy Statement dated March 31, 1995 and mailed to each record holder
REMINDER 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.
IF YOU HAVE ALREADY FORWARDED YOUR PROXY, Yours very truly,
PLEASE DISREGARD THIS COMMUNICATION. JAMES W. GUEDRY, SECRETARY April 12, 1995
</TABLE>
