<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
RAYONIER INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
LOGO Corporate Headquarters
NOTICE OF ANNUAL MEETING
March 31, 1995
Notice is hereby given that the 1995 Annual Meeting of the Shareholders of
Rayonier Inc., a North Carolina corporation ("Rayonier"), will be held at the
Sheraton Stamford, One First Stamford Place, Stamford, Connecticut on Friday,
May 19, 1995 at 9:00 A.M., local time, for the following purposes:
1. to elect three directors of Class I and one director of Class III; and
2. to act upon such other matters as may properly come before this
meeting.
Shareholders of record at the close of business on March 24, 1995 will be
entitled to vote at the meeting.
As a participant in either the Rayonier Investment and Savings Plan for
Salaried Employees or the Rayonier Investment and Savings Plan for Non-
Bargaining Hourly Employees, you are entitled to instruct the Trustee of the
Plan in which you participate, who is the record holder of shares credited to
your accounts in such Plan, as to how to vote such shares by filling out the
enclosed instruction card. The Trustee shall vote all Common Shares of Rayonier
for which voting instructions have not been received in the same proportions as
those shares for which it has received instructions.
/s/ John B. Canning
JOHN B. CANNING
Corporate Secretary
YOU ARE URGED TO COMPLETE, SIGN, DATE, AND RETURN THE ENCLOSED INSTRUCTION CARD
PROMPTLY IN THE SELF-ADDRESSED ENVELOPE WHETHER OR NOT YOU EXPECT TO ATTEND THE
MEETING. YOU MAY NEVERTHELESS VOTE IN PERSON IF YOU DO ATTEND.
Rayonier Inc. . 1177 Summer Street . Stamford, CT 06905-5529
Telephone (203) 348-7000 . Fax (203) 964-4528
<PAGE>
LOGO Corporate Headquarters
NOTICE OF ANNUAL MEETING
March 31, 1995
Notice is hereby given that the 1995 Annual Meeting of the Shareholders of
Rayonier Inc., a North Carolina corporation ("Rayonier"), will be held at the
Sheraton Stamford, One First Stamford Place, Stamford, Connecticut on Friday,
May 19, 1995 at 9:00 A.M., local time, for the following purposes:
1. to elect three directors of Class I and one director of Class III; and
2. to act upon such other matters as may properly come before the
meeting.
Shareholders of record at the close of business on March 24, 1995 will be
entitled to vote at the meeting.
You are entitled to instruct your broker, who is the record holder for your
shares, as to how to vote your shares by filling out the enclosed instruction
card.
/s/ John B. Canning
JOHN B. CANNING
Corporate Secretary
YOU ARE URGED TO COMPLETE, SIGN, DATE, AND RETURN THE ENCLOSED INSTRUCTION CARD
PROMPTLY IN THE SELF-ADDRESSED ENVELOPE WHETHER OR NOT YOU EXPECT TO ATTEND THE
MEETING. YOU MAY NEVERTHELESS VOTE IN PERSON IF YOU DO ATTEND.
Rayonier Inc. . 1177 Summer Street . Stamford, CT 06905-5529
Telephone (203) 348-7000 . Fax (203) 964-4528
<PAGE>
LOGO Corporate Headquarters
March 31, 1995
Dear Shareholder:
Enclosed are the Notice of Annual Meeting and Proxy Statement for the 1995
Annual Meeting of Shareholders of Rayonier, which will be Rayonier's first
Annual Meeting since it became a publicly held company again last year.
The Annual Meeting is intended to be a business only meeting with the one
item on the agenda being the tabulation and report of proxies and ballots for
the election of four directors. The accompanying Notice of Annual Meeting and
Proxy Statement provide information required by applicable laws and
regulations, including pertinent information about each nominee for election as
director. Aside from dealing with this agenda item, we plan to have only a
brief presentation summarizing information that is in our Annual Report for
1994 and will be in the Report to Shareholders for the first quarter of 1995.
We urge you to complete and return the enclosed proxy as promptly as
possible. Your vote is important.
Sincerely yours,
/s/ Ronald M. Gross
RONALD M. GROSS
Chairman, President
and Chief Executive Officer
Rayonier Inc. . 1177 Summer Street . Stamford, CT 06905-5529
Telephone (203) 348-7000 . Fax (203) 964-4528
<PAGE>
LOGO
PROXY STATEMENT
Annual Meeting of Shareholders
Friday, May 19, 1995
This Proxy Statement and accompanying proxy are being mailed to shareholders
of Rayonier Inc. ("Rayonier" or the "Company") commencing March 31, 1995 in
connection with the solicitation of proxies by Rayonier for the 1995 Annual
Meeting of Shareholders to be held at the Sheraton Stamford, One First Stamford
Place, Stamford, Connecticut on Friday, May 19, 1995 at 9:00 A.M. or at any
adjournment thereof (the "Annual Meeting"). The enclosed proxy is solicited on
behalf of the Board of Directors of Rayonier.
When your proxy is returned properly executed, the shares it represents will
be voted in accordance with your specifications. If you sign and return your
proxy but do not specify any choices you will thereby confer discretionary
authority for your shares to be voted as recommended by the Board of Directors.
The proxy also confers discretionary authority on the individuals named therein
to vote the shares on any matter that was not known by the Board of Directors
on the date of this Proxy Statement but is presented at the Annual Meeting.
Your vote is important and the Board of Directors urges you to exercise your
right to vote.
The directors shall be elected by a plurality of the votes cast at the Annual
Meeting. Other matters voted on at the Annual Meeting shall be determined by a
majority of votes cast at the Annual Meeting in person or by proxy by
shareholders entitled to vote on the matter. Abstentions and broker non-votes
on returned proxies and ballots are not considered votes cast and shall be
counted as neither for nor against a matter or nominee but the shares
represented by such an abstention or broker non-vote shall be considered
present at the Annual Meeting for quorum purposes.
Whether or not you plan to attend the meeting, you can assure that your
shares are voted by completing, signing, dating and returning the enclosed
proxy. You may revoke your proxy at any time before it is exercised by giving
written notice to John B. Canning, Corporate Secretary of Rayonier, by
submitting a subsequently dated proxy or by attending the meeting, withdrawing
the proxy, and voting in person.
Each of the 29,615,969 outstanding Rayonier Common Shares ("Common Shares")
outstanding at the close of business on March 24, 1995 is entitled to one vote
at the Annual Meeting. The presence in person or by proxy of shareholders
holding a majority of the outstanding Common Shares will constitute a quorum
for the transaction of business at the Annual Meeting.
<PAGE>
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table shows as of December 31, 1994 the beneficial ownership of
persons known to Rayonier to be the beneficial owners of more than five percent
of the Common Shares, the only outstanding voting securities.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP % OF CLASS(a)
- ------------------------------------ ----------------- -------------
<S> <C> <C>
MacKay-Shields Financial Corporation........... 1,773,144(b) 6.0%
9 West 57th Street
New York, NY 10019
Ark Asset Management Co., Inc. ................ 1,693,400(c) 5.7%
One New York Plaza
New York, NY 10004
</TABLE>
- --------
(a) Based on 29,574,807 total Common Shares outstanding at December 31, 1994.
(b) Holdings as of December 31, 1994 as reported to the Securities and Exchange
Commission on Form 13G dated February 10, 1995. According to this filing,
MacKay Shields Financial Corporation had shared voting power and shared
dispositive power as to these shares.
(c) Holdings as of December 31, 1994 as reported to the Securities and Exchange
Commission on Form 13G dated March 2, 1995. According to this filing, Ark
Asset Management Co., Inc. had sole voting power as to 1,286,200 shares and
sole dispositive power as to 1,628,600 shares.
2
<PAGE>
SHARE OWNERSHIP BY DIRECTORS AND SENIOR MANAGEMENT
The following table sets forth information concerning Common Shares
beneficially owned as of March 3, 1995 by (a) each of the Company's directors,
(b) each of the Company's five highest paid executive officers and (c) all
directors and executive officers as a group. All the directors and executive
officers as a group beneficially own approximately one percent of the
outstanding Common Shares, but none of the directors or executive officers,
individually, beneficially owns as much as one percent of the outstanding
Common Shares. All Common Shares are owned directly by the individual unless
otherwise indicated.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME OF BENEFICIAL OWNER TITLE OF CLASS OF BENEFICIAL OWNERSHIP
- ------------------------ -------------- -----------------------
<S> <C> <C>
Ronald M. Gross........................ Common Shares 81,069(a)
Stock Options 0(b)
William J. Alley....................... Common Shares 1,000
Rand V. Araskog........................ Common Shares 178,709(c)
Donald W. Griffin...................... Common Shares 1,000
Paul G. Kirk, Jr....................... Common Shares 1,602
Katherine D. Ortega.................... Common Shares 1,300
Burnell R. Roberts..................... Common Shares 2,000
Nicholas L. Trivisonno................. Common Shares 1,500
Gordon I. Ulmer........................ Common Shares 3,000
Wallace L. Nutter...................... Common Shares 15,622(a)(d)
Stock Options 91,374(b)
William S. Berry....................... Common Shares 4,812(a)
Stock Options 9,294(b)
Gerald J. Pollack...................... Common Shares 2,870(a)
Stock Options 4,402(b)
Kevin S. O'Brien....................... Common Shares 1,000
Stock Options 1,956(b)
Directors and executive officers as a Common Shares 296,068(a)(c)(d)
group (15 persons).................... Stock Options 110,450(b)
</TABLE>
- --------
(a) All Common Shares are owned directly except that the following amounts were
allocated under the Rayonier Investment and Savings Plan for Salaried
Employees as of December 31, 1994 to the accounts of: Mr. Gross, 17,153
Common Shares; Mr. Nutter, 10,167 Common Shares; Mr. Berry, 3,443 Common
Shares; and Mr. Pollack, 1,412 Common Shares; and all present directors and
executive officers as a group, 32,545 Common Shares.
(b) Pursuant to regulations of the Securities and Exchange Commission, shares
receivable by directors and executive officers upon exercise of employee
stock options exercisable within 60 days after March 3, 1995 are deemed to
be beneficially owned by such directors and executive officers at said
date.
(c) All Common Shares are owned directly except for 21,614 Common Shares held
by Mr. Araskog's wife and 50,000 Common Shares held by each of Mr.
Araskog's two daughters (beneficial ownership is disclaimed as to all
121,614 Common Shares) and 4,258 Common Shares distributed with respect to
shares of Common Stock of ITT Corporation held under the ITT Investment and
Savings Plan for Salaried Employees and allocated to Mr. Araskog's account
in such Plan.
(d) Also includes 5,271 Common Shares owned by a corporation of which Mr.
Nutter and his spouse are the sole stockholders.
3
<PAGE>
The Board of Directors of Rayonier believes that it is important for
directors and senior management to acquire a substantial ownership position in
Rayonier. Such share ownership is characteristic of successful public companies
and underscores the level of commitment that Rayonier's management team has to
the future success of the business.
Accordingly at a meeting on February 17, 1995, the Nominating Committee of
the Board of Directors adopted a guideline that encourages Rayonier share
ownership by directors at a market value level equal to two times their annual
retainer. The Management Development and Compensation Committee at a meeting on
the same date adopted the following guidelines for share ownership by senior
management:
<TABLE>
<CAPTION>
SHARE OWNERSHIP GUIDELINES:
POSITION/LEVEL MARKET VALUE AS MULTIPLE OF BASE SALARY
-------------- ---------------------------------------
<S> <C>
Chairman, President and Chief
Executive Officer............... 4X
Executive Vice President......... 3X
Senior Vice Presidents........... 2X
Vice Presidents.................. 1X
</TABLE>
Participation in the guidelines program is voluntary, with a strong company
preference on achieving ownership goals.
Target ownership levels are to be achieved over a 3-year period, ending
December 31, 1997. Ownership includes Rayonier 1994 Incentive Stock Plan
awards, such as vested restricted shares, performance shares and options that
have been exercised and shares held, awards of restricted shares to directors,
Rayonier Investment and Savings Plan shares and private purchase of Common
Shares.
4
<PAGE>
TOTAL SHAREHOLDER RETURN
The table below represents a comparison of the performance of Common Shares
(assuming reinvestment of dividends) with a broad based market index (Standard
& Poor's 500) and with the group of 12 comparative forest products companies
which form the comparison group for purposes of the Contingent Performance
Share awards described on pages 13 and 19:
COMPARISON OF 10 MONTH CUMULATIVE TOTAL RETURN*
AMONG RAYONIER INC., THE S & P 500 INDEX AND A PEER GROUP
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Measurement period Peer Group S & P 500
(Fiscal year Covered) Rayonier Inc. Index Index
- --------------------- ------------- ---------- ---------
<S> <C> <C> <C>
Measurement PT -
2/1994 $ 100 $ 100 $ 100
FYE 12/31/94 $ 102 $ 97 $ 101
</TABLE>
* $100 INVESTED ON 02/18/94 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
Notes: (a) The 12 comparative forest products companies are Boise Cascade
Corporation, Champion International Corporation, Georgia-Pacific
Corporation, International Paper Company, James River Corporation of
Virginia, The Mead Corporation, Mosinee Paper Corporation, Plum
Creek Timber Company, L.P., Union Camp Corporation, Westvaco
Corporation, Weyerhaeuser Company and Willamette Industries Inc.
(b) February 18, 1994 was the first trading day for Rayonier Common
Shares on a when-issued basis. Regular way trading commenced on
March 2, 1994.
5
<PAGE>
MATTERS TO BE CONSIDERED AT ANNUAL MEETING
ITEM 1: ELECTION OF DIRECTORS
Four directors are to be elected. Rayonier's Board of Directors is divided
into three classes serving staggered terms. The terms of the three directors of
Class I, Ronald M. Gross, Katherine D. Ortega and Burnell R. Roberts, will
expire at the 1995 Annual Meeting and each has been nominated for reelection
for a three-year term expiring at the Annual Meeting of Shareholders in 1998.
In addition, one director of Class III, Nicholas L. Trivisonno, was elected to
the Board by the directors effective June 1, 1994 and, in accordance with
Rayonier's Articles of Incorporation and the North Carolina Business
Corporation Act, must be elected by the shareholders for the remainder of his
term until the Annual Meeting of Shareholders in 1997. Biographical data on
these nominees and the other members of the Board of Directors is presented
under the caption "Board of Directors" in this Proxy Statement.
Unless there is a contrary indication, the shares represented by valid
proxies will be voted for the election of all four nominees. The Board has no
reason to believe that any nominee will be unable to serve as a director. If
for any reason a nominee should become unable to serve, the shares represented
by valid proxies will be voted for the election of such other person as the
Board may recommend.
ITEM 2: OTHER BUSINESS
As of March 31, 1995, Rayonier knew of no other business that will be
presented for action at the Annual Meeting. If any other business calling for a
vote of shareholders is properly presented at the meeting, the proxy holders
will vote shares in accordance with their best judgment.
BOARD OF DIRECTORS
The Board of Directors is responsible for establishing broad corporate
policies and for overseeing the overall performance of Rayonier. The Board
reviews significant developments affecting Rayonier and acts on matters
requiring Board approval. The following pages present information about the
persons who comprise Rayonier's current Board of Directors, including the four
nominees for reelection. All of the directors other than Mr. Trivisonno were
elected to the Board effective February 28, 1994 by ITT Corporation ("ITT") as
the Company's sole shareholder immediately prior to the spinoff by ITT of the
Company's Common Shares to ITT's public stockholders. Mr. Trivisonno was
elected to the Board by the directors effective June 1, 1994.
During 1994, there were five meetings of the Board of Directors. The average
attendance at Board meetings was 98%.
6
<PAGE>
INFORMATION AS TO NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
CLASS I, TERM EXPIRES IN 1998
RONALD M. GROSS, 61, Chairman of the Board, President and Chief Executive
Officer, Rayonier--He joined Rayonier in March 1978 as President and Chief
Operating Officer and a director. He was elected Chief Executive Officer in
1981 and Chairman in 1984. Mr. Gross serves as President and director of
Rayonier Forest Resources Company ("RFR"), the managing general partner of
Rayonier Timberlands, L.P., a publicly traded master limited partnership
affiliated with the Company. Mr. Gross is also currently a director of Lukens
Inc. He serves as a member of the Executive Committee of the Board of Directors
of the American Forest and Paper Association. Mr. Gross is a graduate of Ohio
State University and the Harvard Graduate School of Business Administration.
KATHERINE D. ORTEGA, 60, Former Treasurer of the United States--She served as
the 38th Treasurer of the United States from September 1983 through June 1989
and as Alternate Representative of the United States to the United Nations
General Assembly during 1990 to 1991. Prior to these appointments, she served
as a Commissioner of the Copyright Royalty Tribunal and as a member of the
President's Advisory Committee on Small and Minority Business. Ms. Ortega
currently serves on the Boards of Directors of Diamond Shamrock, Inc., Ralston
Purina Company, The Kroger Co., Long Island Lighting Company, and The Paul
Revere Corporation and is a member of the Comptroller General's Consultant
Panel. She is a graduate of Eastern New Mexico University, holds three honorary
Doctor of Law Degrees and one honorary Doctor of Social Science Degree.
BURNELL R. ROBERTS, 67, Chairman, Sweetheart Holdings, Inc. and Sweetheart
Cup Company (producer of plastic and paper disposable food service and food
packaging products)--He served as Chairman of the Board and Chief Executive
Officer of The Mead Corporation (an integrated manufacturer of paper and forest
products) from April 1982 until his retirement in May 1992 and was a director
of Mead from October 1981 until May 1993. He continues to serve as a director
of National City Corporation; Armco Inc.; The Perkin-Elmer Corporation; DPL
Inc.; and Universal Protective Packaging, Inc. He also serves as a director of
the Japan Society, New York. He is a graduate of the University of Wisconsin
and the Harvard Graduate School of Business Administration.
CLASS III, TERM EXPIRES IN 1997
NICHOLAS L. TRIVISONNO, 47, Executive Vice President, Strategic Planning, and
Group President of GTE Corporation, a telecommunications company--Prior to
assuming his current position in November 1993, Mr. Trivisonno had been Senior
Vice President, Finance of GTE since January 1989 and Vice President and
Controller from November 1988 to January 1989. From 1968 to 1988, he was
associated with Arthur Andersen & Co and served as the managing partner of its
Stamford, Connecticut office from April 1986 to November 1988. Mr. Trivisonno
is also a director of Contel Cellular Inc., Yankee Energy Systems, Inc.,
Allendale Mutual Insurance Company and St. Josephs Hospital and a trustee of
Babson College. He is a graduate of St. Francis College, Brooklyn, New York.
7
<PAGE>
INFORMATION AS TO OTHER DIRECTORS
CLASS II, TERM EXPIRES IN 1996
WILLIAM J. ALLEY, 65, Chairman of the Executive Committee and director of
American Brands, Inc. (global consumer products holding company)--He has been a
director of American Brands since 1979 and was Chairman of the Board and Chief
Executive Officer of that corporation from 1987 to 1994. He is also a director
of RFR, CIPSCO Incorporated, Central Illinois Public Service Company, and Olin
Corporation as well as two private companies, Bunn-O-Matic Corporation and
Amsted Industries Incorporated. He is a senior member of The Conference Board.
He is a graduate of Northeastern Oklahoma A&M College, the University of
Oklahoma School of Business and the University of Oklahoma School of Law.
PAUL G. KIRK, JR., 57, of Counsel to Sullivan & Worcester (law firm)--He
became a partner in the law firm of Sullivan & Worcester in 1977 and is
presently of Counsel to the firm. He served as Chairman of the Democratic
National Committee from 1985 to 1989. Mr. Kirk is a director of Kirk-Sheppard &
Co., Inc., of which he also is Chairman and Treasurer. He is a trustee of the
Bradley Real Estate Trust and a director of ITT and of Hartford Fire Insurance
Company, a subsidiary of ITT. He is co-chairman of the Commission on
Presidential Debates, Chairman of the John F. Kennedy Library Foundation Board
of Directors, Chairman of the Board of the National Democratic Institute for
International Affairs, and a trustee of Stonehill College and St. Sebastian's
School. He is a graduate of Harvard College and Harvard Law School.
GORDON I. ULMER, 62, Former Chairman and Chief Executive Officer of
Connecticut Bank and Trust Company and Retired President of Bank of New England
Corporation--He joined Connecticut Bank and Trust Company (CBT) in 1957 and
held numerous positions before being elected President and director in 1980 and
Chairman and Chief Executive Officer in 1985. In 1988 he was elected President
of the Bank of New England Corporation (BNEC), holding company of CBT. He
retired as President of BNEC in December 1990. In January 1991, CBT was
declared insolvent and placed in F.D.I.C. receivership, and BNEC filed a
petition under Chapter 7 of the Bankruptcy Code. Mr. Ulmer also serves as a
director of Hartford Fire Insurance Company, a subsidiary of ITT, and the Old
State House Association and is a trustee of the Connecticut Historical Society.
He is a graduate of Middlebury College, the American Institute of Banking and
the Harvard Graduate School of Business Administration Advanced Management
Program and attended New York University's Graduate School of Engineering.
CLASS III, TERM EXPIRES IN 1997
RAND V. ARASKOG, 63, Chairman, President and Chief Executive Officer of ITT
(a diversified global corporation engaged in financial and business services,
manufactured products, and hotels and entertainment)-- He joined ITT in 1966
and has been Chief Executive of ITT since 1979 and Chairman since 1980. In
March 1991, he assumed the title of President. Mr. Araskog is a director of ITT
and of Hartford Fire Insurance Company and ITT Sheraton Corporation,
subsidiaries of ITT. He is also a director of Dow Jones & Company, Inc.;
Dayton-Hudson Corporation; Shell Oil Company; Alcatel Alsthom; and ITT
Educational Services, Inc. He is a member of The Business Council, The Business
Roundtable, the Council on Foreign Relations and the Trilateral Commission. He
is a trustee of the New York Zoological Society and of the Salk Institute. Mr.
Araskog is a graduate of the U.S. Military Academy at West Point and attended
the Harvard Graduate School of Arts and Sciences.
8
<PAGE>
DONALD W. GRIFFIN, 58, President and Chief Operating Officer, Olin
Corporation (diversified manufacturing corporation)--He joined Olin in 1961 and
was elected an Executive Vice President of Olin in 1987. He became a director
of Olin in 1990, was elected Vice Chairman of the Board for Operations in 1993
and President and Chief Operating Officer in 1994. He is also a director of
RFR, River Bend Bancshares, Inc. and Illinois State Bank and Trust. He is a
trustee of the Buffalo Bill Historical Center, the Olin Charitable Trust and
the National Security Industrial Association. He is a member of the American
Society of Metals, the Association of the U.S. Army and the American Defense
Preparedness Association. He is a life member of the Navy League of the United
States and the Surface Navy Association. He is a graduate of the University of
Evansville, Evansville, Indiana, and has completed the Graduate School for
Sales and Marketing Managers at Syracuse University, Syracuse, N.Y.
COMMITTEES OF THE BOARD
The standing committees of the Board are the Audit, Compensation and
Management Development, Environmental and Legal Affairs and Nominating
Committees.
The Audit Committee supports the independence of the Company's external and
internal auditors and the objectivity of the Company's financial statements.
The Audit Committee (1) reviews the Company's principal policies for
accounting, internal control and financial reporting, (2) recommends to the
Company's Board of Directors the engagement or discharge of the external
auditors, (3) reviews with the external auditors the plan, scope and timing of
their audit and (4) reviews the auditors' fees and, after completion of the
audit, reviews with management the external auditors' report.
The Audit Committee also reviews, before publication, the annual financial
statements of the Company, the independence of the external auditors, the
adequacy of the Company's internal accounting control system, and the Company's
policies on business integrity and ethics and conflicts of interest. The Audit
Committee also performs a number of other review functions related to auditing
the financial statements and internal controls. The Audit Committee held three
meetings during 1994. The current members are Messrs. Roberts (Chairman), Kirk
and Ulmer. All members attended all meetings.
The Compensation and Management Development Committee (1) reviews and makes
recommendations to the Company's Board of Directors with respect to the direct
and indirect compensation and employee benefits of the Chairman of the Board,
President and Chief Executive Officer and other elected officers of the
Company, (2) reviews, administers and makes recommendations to the Company's
Board of Directors with respect to any incentive plans and bonus plans that
include elected officers and (3) reviews the Company's policies relating to the
compensation of senior management and, generally, other employees. In addition,
the Committee reviews management's long-range planning for executive
development and succession, establishes and periodically reviews policies on
management perquisites and performs certain other review functions relating to
management compensation and employee relations policies. The Compensation and
Management Development Committee held five meetings during 1994. The current
members are Messrs. Alley (Chairman) and Roberts and Ms. Ortega. All members
attended all meetings.
The Environmental and Legal Affairs Committee (1) reviews and recommends to
the Company's Board of Directors proposed actions on major environmental
compliance and regulatory matters which could have a significant impact on the
Company's business and strategic operating objectives and (2) reviews and
9
<PAGE>
considers major claims and litigation, and legal, regulatory, patent and
related governmental policy matters affecting the Company. In addition, the
Committee reviews and approves management policies and programs relating to
compliance with environmental matters, legal and regulatory requirements and
business ethics. The Environmental and Legal Affairs Committee held three
meetings during 1994. The current members are Messrs. Kirk (Chairman), Griffin,
Trivisonno and Ulmer. All members attended all meetings.
The Nominating Committee makes recommendations concerning the organization,
size and composition of the Board of Directors and its Committees, proposes
nominees for election to the Board and its Committees and considers the
qualifications, compensation and retirement of directors. The Nominating
Committee held no meetings during 1994. The current members are Ms. Ortega
(Chairman) and Messrs. Alley, Griffin and Trivisonno.
DIRECTORS' COMPENSATION
Members of the Board who are employees of Rayonier are not compensated for
service on the Board or its Committees. Non-employee directors receive an
annual retainer of $20,000, a fee of $1,000 for attendance at each meeting of
the Board and each field trip to a Rayonier location and a fee of $750 for
attendance at each meeting of the Committees on which such directors serve. The
non-employee directors of Rayonier who serve on the Board of Directors of
Rayonier Forest Resources Company, managing general partner of Rayonier
Timberlands, L.P., receive no additional retainer but receive $750 for
attendance at each meeting of such board.
The Board of Directors has adopted a retirement policy which provides (i)
that no person may be nominated for election or reelection as a non-employee
director after reaching age 72, and (ii) that no employee of Rayonier or of any
of its subsidiaries (other than an employee who has served as chief executive
of Rayonier) may be nominated for election or reelection as a director after
reaching age 65, unless there has been a specific waiver by the Board of
Directors of these age requirements.
At a meeting immediately following the Annual Meeting, it is expected that
the Board will consider a recommendation by the Nominating Committee at its
February 1995 meeting that the retainer be increased from $20,000 to $23,000
with the $3,000 increase to be funded by an award of Common Shares.
10
<PAGE>
EXECUTIVE COMPENSATION
----------------
REPORT OF THE RAYONIER
COMPENSATION AND MANAGEMENT
DEVELOPMENT COMMITTEE
To Our Shareholders:
The Compensation and Management Development Committee (the "Committee")
oversees the compensation and benefits of Rayonier employees. The Committee
must approve individual compensation actions for the Chairman, President and
Chief Executive Officer and all senior executives. Specifically, the Committee
must approve base salaries, annual bonuses and long-term incentive awards. The
Committee has access to outside compensation expertise and outside legal
counsel.
The Committee is dedicated to implementing an executive compensation program
that emphasizes the following compensation policies:
Executives' total compensation programs should strike a balance between
salary and performance by emphasizing variable, at-risk compensation dependent
upon meeting specific corporate and individual performance goals.
Executive compensation programs should include bonus incentives and share
ownership opportunities to encourage a close alignment of the executive's
interests with those of shareholders.
Compensation packages should enhance the Company's ability to attract, retain
and encourage the development of exceptional, experienced executives by
providing compensation levels reflecting a blend of forest products and general
industry pay standards.
Components of Compensation
The key elements of the Company's executive compensation program are base
salary, annual bonus incentives and long-term compensation. These key elements
are addressed separately below. In determining each component of compensation,
the Committee considers all elements of an executive's total compensation
package, including insurance and other benefits.
The Committee believes that the Company's direct competitors for executive
talent, especially at senior levels, are to be found not only in the forest
products sector but also in broader-based general industry. Therefore, the
Committee relates total compensation levels for the Company's senior executives
to the median compensation paid to executives of comparative companies within
the forest products and general industry sectors.
Base Salary
The Committee has oversight of the general administration of base salaries,
salary grades and salary range structures for all Company executives. The
Committee regularly reviews each senior executive's base
11
<PAGE>
salary. Base salaries are targeted at market levels and are adjusted by the
Committee in light of level of responsibility, performance, prior experience,
breadth of knowledge, internal equity issues and external pay practices.
Executive salary merit increases during 1994 averaged 3.8% on an annualized
basis for the Company's 52 executives. This was in relation to a 1994 merit
increase guideline of 4.0% developed from competitive salary survey data. The
normal interval between salary reviews for senior executives is 15 to 18
months. Overall, executive salaries were increased at rates below or comparable
to the increases provided at other forest products and general industry
companies and are near market levels.
As reflected in the Summary Compensation Table on page 16, and following an
18-month interval since his last salary review, Mr. Gross' base salary, as
Chairman, President and Chief Executive Officer, was increased effective
October 1, 1994 by $40,600, bringing his current annual base salary to
$470,600. The 6.3% annualized merit increase was approved by the Committee in
recognition of Mr. Gross' individual performance and leadership and after
comparison of his base salary with the base salaries of chief executive
officers at the comparative forest product and general industry sector
companies. Notwithstanding this consideration, Mr. Gross' base salary is
currently 19% behind the comparative group median, which is consistent with the
Company's philosophy of emphasizing incentive pay over base pay fixed
compensation.
ANNUAL BONUS INCENTIVE
The Rayonier Annual Incentive Bonus Plan ("Annual Plan") provides executives
and key managers with direct financial incentives in the form of cash bonuses
to achieve specific annual company, business unit and individual performance
goals.
The current Annual Plan formula measures actual net income, return on total
capital ("ROTC") and operating funds flow ("OFF") against the approved budgeted
amounts for the year for each performance measure. Net income, ROTC and OFF
performance are weighted 60%, 25% and 15%, respectively. The maximum bonus pool
is 150% of the aggregate standard bonus pool. Individual bonus amounts within
the authorized pool are determined on a discretionary basis, taking into
account specific personal contributions made during the year. Bonuses earned in
the calendar year are paid out in the first quarter of the subsequent year.
Corporate performance in 1994 exceeded financial goals by 25%, and bonuses were
awarded accordingly on February 17, 1995.
For 1994, Mr. Gross' annual bonus payment represented 82.4% of his base
salary as reflected in the Summary Compensation Table on page 16. Under the
Annual Plan, Mr. Gross was paid $388,000 in connection with 1994 Company and
individual performance. Mr. Gross' bonus is competitive with annual incentive
compensation paid other executives at comparative forest products and general
industry sector companies.
LONG-TERM INCENTIVES
The 1994 Rayonier Incentive Stock Plan (the "Plan") provides incentive stock
options, non-qualified stock options, stock appreciation rights, restricted
stock, performance shares or any combination thereof to executives and key
employees in the form of long-term incentives.
12
<PAGE>
In making awards under the Plan, the Committee considers individual
performance criteria, levels of responsibility and prior experience, as well as
historical award data and compensation practices at comparable companies.
Stock Options. Non-qualified stock options to acquire Common Shares are
granted at an option price that is not less than the fair market value of a
Common Share on the date of grant. The size of the non-qualified option grant
is based primarily on competitive practice and is generally targeted to be at
the median of option values granted by comparative forest products and general
industry sector companies and adjusted based upon individual factors and
historical award data. In 1994, non-qualified stock option awards totaling
348,000 shares were granted to 67 executives and key employees.
On May 20, 1994, the Committee awarded to Mr. Gross non-qualified stock
options to acquire 40,000 Common Shares at an exercise price of $28.875, as
determined by the market price on that day. Mr. Gross also owns 81,069 Common
Shares, as detailed in the Table on page 3. The Committee believes this equity
interest provides an appropriate link to the interests of shareholders.
Performance Shares. In addition to traditional non-qualified stock options,
the Committee has used the flexibility provided under the Plan to grant long-
term incentives in the form of Contingent Performance Shares.
Contingent Performance Shares are awarded to senior executives responsible
for sustained Company Total Shareholder Return ("TSR") performance, as measured
against a selection of 12 comparative forest product peer group companies
(specified in the Notes to the Total Shareholder Return chart on page 5 in this
Proxy Statement) over a designated period. The awards are contingent upon
exceeding peer group performance. The Share Award Valuation Formula provides a
100% Performance Share award when Rayonier outperforms the peer group companies
by 20%.
TSR is calculated by measuring the growth in value of a hypothetical $100
investment in each of the forest sector peer companies over the performance
period, assuming all dividends are reinvested quarterly. Award payment is in
the form of Common Shares, with a cash offset for tax purposes, and may range
from zero to a maximum of 150% of the target award, based upon TSR performance.
The TSR goal reflects the emphasis on creation of long-term shareholder value.
In determining the size of Contingent Performance Share grants, the Committee
considers the contingent value of the awards, competitive practices and the
level of responsibility of each senior executive. A total of 59,000 Contingent
Performance Shares were awarded to ten senior executives in 1994. Grants were
made for a 31.4-month performance period, from May 20, 1994 through December
31, 1996.
On May 20, 1994, the Committee awarded Mr. Gross 15,000 Contingent
Performance Shares.
Restricted Shares. The Plan also provides for the grant by the Committee of
Restricted Common Shares. The Committee determined on July 21, 1994 to apply
this feature of the Plan to grant Mr. Gross 12,000 Restricted Shares, over a
period of three years, in recognition of his successful management of the
Company's transition to a stand-alone, publicly-traded company and in order to
have his total equity stake in the Company be in keeping with the average of
Chief Executive Officers in the forest products industry.
13
<PAGE>
The Committee awarded 6,000 Restricted Shares effective January 3, 1995 and
intends to award an additional 4,000 and 2,000 Restricted Shares in January of
1996 and 1997, respectively, with all of the Shares vesting on December 31,
1998.
CARRYOVER LONG-TERM PERFORMANCE PROGRAM
The Committee is responsible for the administration of the Rayonier Long-Term
Performance Program (the "Program"), which is a carryover of the ITT Long-Term
Performance Plan "1992 Class Awards" granted by the former parent company, ITT.
Because this is a carryover Program, the Committee has no authority to make
additional awards but may make such other adjustments as it deems appropriate
in performance goals and/or target values in order to limit or avoid distortion
in the operation of the Program.
The Program provides for Contingent Target Cash Award payments, based upon
Rayonier's return on equity ("ROE") performance over the 3-year period, 1993
through 1995, as measured against predetermined ROE goals. Each year of the
performance period has been assigned a specific weighting 15%, 35% and 50% for
1993, 1994 and 1995, respectively. If the actual weighted average ROE
performance is less than 90% of the 3-year targeted ROE goal, no payment is
earned. Cash award payments, if any, for the 1993 through 1995 period will be
payable in the first quarter of 1996. The Program terminates on December 31,
1995 and will not be continued after that date.
SUBSTITUTE STOCK OPTIONS
On March 21, 1994, the Committee approved the Rayonier Substitute Stock
Option Plan (the "Plan"), which provides for the issuance to Rayonier
executives of stock options to acquire Common Shares in substitution for
unexercised stock options previously granted by ITT ("ITT Options"). The
Substitute Stock Options granted pursuant to the Plan maintain the economic
value of each unexercised ITT Option, so that the aggregate spread between the
exercise price and the fair market value with respect to the Rayonier
Substitute Stock Options equals the aggregate spread relative to the ITT
Options, effective as of the March 1, 1994 spin-off of Rayonier from ITT.
As of March 1, 1994, a total of 382,434 Rayonier Substitute Stock Options
were substituted for 130,318 outstanding ITT Options at various exercise
prices, ranging from $16.57 to $31.35 per Common Share. A total of 35 Rayonier
executives participated in the Rayonier Substitute Stock Option Plan in 1994.
No option may be granted under the Rayonier Substitute Stock Option Plan
after the Plan's termination date of December 31, 1994. The Plan will continue
in effect for existing options as long as such options are outstanding.
INFORMATION WITH RESPECT TO THE $1 MILLION DEDUCTION LIMIT
Recently enacted Section 162(m) of the Internal Revenue Code generally limits
the corporate deduction for compensation paid to executive officers named in
the proxy to $1 million, unless certain requirements are met. Based upon an
analysis of total executive compensation for 1994, there are no executives
within the Company who approach the $1 million threshold.
14
<PAGE>
CONCLUSION
The Compensation and Management Development Committee believes these
executive compensation policies and programs serve the interests of
shareholders and the Company effectively. The various pay vehicles offered are
appropriately balanced to provide increased motivation for executives to
contribute to Rayonier's overall future successes, thereby enhancing the value
of the Company for the shareholders' benefit.
The Compensation and Management
Development Committee
William J. Alley
Chairman
Katherine D. Ortega
Burnell R. Roberts
15
<PAGE>
EXECUTIVE COMPENSATION DATA
The following table discloses compensation received by Rayonier's Chief
Executive Officer and four additional most highly paid executive officers for
the two fiscal years ended December 31, 1994.
SUMMARY COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------- ---------------------
SECURITIES UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(2)(#) COMPENSATION(3)($)
- --------------------------- ---- --------- -------- --------------------- ------------------
<S> <C> <C> <C> <C> <C>
Ronald M. Gross......... 1994 439,057 388,000 40,000 20,370
Chairman, President and 1993 421,920 185,000 14,767
Chief Executive Officer
Wallace L. Nutter....... 1994 242,199 125,000 24,000 8,611
Executive Vice 1993 235,631 90,000 8,247
President
William S. Berry........ 1994 187,511 85,000 15,000 6,480
Senior Vice President, 1993 180,000 60,000 6,300
Forest Resources and
Corporate Development
Kevin S. O'Brien........ 1994 182,971 55,000 8,000 6,027
Senior Vice President, 1993 178,962 35,000 6,264
Pulp Marketing
Gerald J. Pollack....... 1994 174,000 75,000 15,000 6,154
Senior Vice President 1993 167,042 60,000 5,846
and Chief Financial
Officer
</TABLE>
- --------
(1) This table does not include a column for Other Annual Compensation because
such compensation did not rise to levels requiring disclosure under
applicable regulations of the Securities and Exchange Commission. This
table also does not include columns for Restricted Stock Awards or Long
Term Incentive Plan Payouts since Rayonier had no such amounts to report
for the years indicated.
(2) Does not include Stock Options granted on March 21, 1994 under the Rayonier
Substitute Stock Option Plan in substitution for ITT Options previously
granted. The Substitute Stock Options granted pursuant to the Plan maintain
the economic value of each unexercised ITT Option, so that the aggregate
spread between the exercise price and the fair market value with respect to
the Rayonier Substitute Stock Options equals the aggregate spread relative
to the ITT Options, effective as of the March 1, 1994 spinoff of Rayonier
from ITT. The exercise dates and expiration dates of the Substitute Stock
Options are identical to those on the ITT Options for which they
substitute. See Table on page 17.
(3) The amount shown in this column for Mr. Gross in 1994 includes $5,003
representing the term insurance portion of the premium paid by Rayonier in
1994 for the non-qualified, split-dollar life insurance coverage for him
described on page 21. The remainder of the amount shown in this column for
Mr. Gross in 1994, all of the amount shown for him in 1993 and all of the
amounts shown in this column for the other executives in both years are
company contributions under the ITT Investment and Savings Plan and the ITT
Excess Savings Plan, which are defined contribution plans, for 1993 and the
first two months of 1994 and under the Rayonier Investment and Savings Plan
and Rayonier Excess Savings Plan, which are also defined contribution
plans, for the last ten months of 1994. Rayonier has made matching
contributions to each of these plans in an amount equal to 50% of an
employee's contribution not to exceed three percent of such employee's
salary. Under these plans, Rayonier also makes a non-matching contribution
equal to one-half of one percent of an employee's salary.
16
<PAGE>
OPTION GRANTS TO RAYONIER EXECUTIVES IN LAST FISCAL YEAR
The following tables provide information on fiscal year 1994 awards to
Rayonier executives of options to purchase Common Shares:
OPTION GRANTS IN LAST FISCAL YEAR (1994)
I. SUBSTITUTE STOCK OPTIONS(1)
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE
APPRECIATION FOR OPTION
INDIVIDUAL GRANTS TERM(3)
---------------------------------------------------------- ---------------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING SUBSTITUTE STOCK EXERCISE
OPTIONS OPTIONS GRANTED TO PRICE
NAME GRANTED(#) EMPLOYEES IN 1994 ($/SHARE)(2) EXPIRATION DATE 5%($) 10%($)
---- ---------- ------------------ ------------ --------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ronald M. Gross......... 35,215 9.2% 16.57 12/13/2000 775,436 1,200,515
96,841 25.3% 31.35 10/16/2003 1,661,138 4,106,983
Wallace L. Nutter....... 44,019 11.5% 19.72 11/9/1999 891,979 1,358,430
29,346 7.7% 16.57 12/13/2000 753,134 1,165,988
22,009 5.8% 17.38 12/14/2001 593,487 980,560
20,542 5.4% 31.35 10/16/2003 352,362 871,177
William S. Berry........ 4,892 1.3% 16.57 12/13/2000 125,548 194,371
13,206 3.5% 31.35 10/16/2003 226,526 560,061
Kevin S. O'Brien........ 5,869 1.5% 31.35 10/16/2003 100,672 248,902
Gerald J. Pollack....... 13,206 3.5% 31.35 10/16/2003 226,526 560,061
</TABLE>
- --------
(1) The Substitute Stock Options were granted on March 21, 1994 under the
Rayonier Substitute Stock Option Plan in substitution for ITT Options
previously granted. The Substitute Stock Options granted pursuant to the
Plan maintain the economic value of each unexercised ITT Option, so that
the aggregate spread between the exercise price and the fair market value
with respect to the Rayonier Substitute Stock Options equals the aggregate
spread relative to the ITT Options, effective as of the March 1, 1994
spinoff of Rayonier from ITT. The exercise dates and expiration dates of
the Substitute Stock Options are identical to those on the ITT Options for
which they substitute.
(2) The exercise price was determined as set forth in Note (1) above and may be
paid in cash or in Common Shares valued at their fair market value on the
date of exercise. Options granted to the named officers are exercisable as
to one-third on the first anniversary, two-thirds on the second anniversary
and in full on the third anniversary of the original ITT date of grant. The
options for 96,841 Common Shares granted to Mr. Gross and for 20,542 Common
Shares granted to Mr. Nutter are not exercisable until the trading price of
a Common Share equals or exceeds $39.19 per share for 10 consecutive
trading days at which time two-thirds of the option will be exercisable;
when the trading price equals or exceeds $43.89 per share for 10
consecutive trading days, the options will be fully exercisable.
Notwithstanding the foregoing, the options will be fully exercisable on
October 16, 2002.
17
<PAGE>
(3) At the end of the terms of the Substitute Stock Options, the projected
price of a Common Share at assumed annual appreciation rates of 5% and 10%,
and the gains to all Common Shareholders at those assumed annual
appreciation rates over the terms of these options, would be as set forth
below:
<TABLE>
<CAPTION>
PROJECTED PRICE OF COMMON SHARE AT GAINS TO ALL COMMON SHAREHOLDERS AT ASSUMED
ASSUMED ANNUAL RATES OF STOCK PRICE ANNUAL RATES OF STOCK PRICE APPRECIATION FOR
APPRECIATION FOR OPTION TERM($) OPTION TERM($)
----------------------------------- ---------------------------------------------
EXPIRATION DATE 5% 10% 5% 10%
- --------------- ----------------- ----------------- --------------------- -----------------------
<S> <C> <C> <C> <C>
11/9/1999............... 39.98 50.58 258 million 572 million
12/13/2000.............. 42.23 56.30 325 million 741 million
12/14/2001.............. 44.35 61.93 387 million 907 million
10/16/2003.............. 48.50 73.76 510 million 1,257 million
</TABLE>
II. NON-QUALIFIED STOCK OPTIONS GRANTED UNDER 1994 INCENTIVE STOCK PLAN
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE
APPRECIATION FOR OPTION
INDIVIDUAL GRANTS TERM(2)
------------------------------------------------------------ ---------------------------
% OF TOTAL STOCK
NUMBER OF OPTIONS GRANTED TO
SECURITIES EMPLOYEES IN 1994
UNDERLYING UNDER 1994
OPTIONS INCENTIVE STOCK EXERCISE PRICE
NAME GRANTED(#) PLAN ($/SHARE)(1) EXPIRATION DATE 5%($) 10%($)
- ---- ---------- ------------------ -------------- --------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Ronald M. Gross......... 40,000 11.5% 28.875 5/22/2004 726,499 1,841,091
Wallace L. Nutter....... 24,000 6.9% 28.875 5/22/2004 435,589 1,104,655
William S. Berry........ 15,000 4.3% 28.875 5/22/2004 272,437 690,409
Kevin S. O'Brien........ 8,000 2.3% 28.875 5/22/2004 145,300 368,218
Gerald J. Pollack....... 15,000 4.3% 28.875 5/22/2004 272,437 690,409
</TABLE>
- --------
(1) The exercise price per share is 100% of the fair market value of Common
Shares on the date of grant, May 20, 1994. The exercise price may be paid
in cash or in Common Shares valued at their fair market value on the date
of exercise. Options granted to the named officers are exercisable as to
one-third on the first anniversary, two-thirds on the second anniversary
and in full on the third anniversary of the date of grant. Notwithstanding
any other provisions of the 1994 Incentive Stock Plan (the "Plan"), upon
the occurrence of an change of control of Rayonier (i.e. upon the
occurrence of an Acceleration Event as defined in the Plan), (a) all
options will generally become immediately exercisable for a period of 60
calendar days and (b) options will continue to be exercisable for a period
of seven months in the case of an employee whose employment is terminated
other than for cause or who voluntarily terminates employment because of a
good faith belief that such employee will not be able to discharge his or
her duties.
(2) At the end of the term of the options granted on May 20, 1994, the
projected price of a Common Share would be $47.04 at an assumed annual
appreciation rate of 5% and $74.91 at an assumed annual appreciation rate
of 10%. Gains to all Common Shareholders at those assumed annual
appreciation rates would be approximately $537 million and $1,361 million,
respectively, over the term of the options.
18
<PAGE>
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table provides information on option exercises in 1994 by the
named Rayonier executives and the value of such executives' unexercised options
to acquire Common Shares at December 31, 1994.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
OPTIONS EXERCISED DURING 1994 12/31/94 HELD AT 12/31/94(2)
--------------------------------- ---------------------- --------------------
SHARES ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($)(1) UNEXERCISABLE(#) UNEXERCISABLE($)
---- ------------------ -------------- ---------------------- --------------------
<S> <C> <C> <C> <C>
Ronald M. Gross......... 5,000 69,337.50 30,215/136,841 420,895/65,000
Wallace L. Nutter....... 0 0 95,374/44,542 1,172,073/39,000
William S. Berry........ 0 0 9,294/23,804 68,146/24,375
Kevin S. O'Brien........ 0 0 1,956/11,913 --/13,000
Gerald J. Pollack....... 0 0 4,402/23,804 --/24,375
</TABLE>
- --------
(1) Before taxes.
(2) The value reported in this column is based on the New York Stock Exchange
consolidated trading closing price of a Common Share of $30.50 at December
31, 1994.
LONG-TERM INCENTIVE AWARDS TO RAYONIER EXECUTIVES IN LAST FISCAL YEAR
The following table provides information on fiscal year 1994 long-term
incentive awards to the following Rayonier executives:
AWARDS OF CONTINGENT PERFORMANCE SHARES IN LAST FISCAL YEAR (1994)
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS(3)
--------------------------------
NUMBER PERFORMANCE THRESHOLD TARGET MAXIMUM
NAME OF SHARES(1) PERIOD(2) SHARES(#)(4) SHARES(#) SHARES(#)
- ---- ------------ ----------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
Ronald M. Gross...... 15,000 31.4 months 7,500 15,000 22,500
Wallace L. Nutter.... 9,000 31.4 months 4,500 9,000 13,500
William S. Berry..... 7,000 31.4 months 3,500 7,000 10,500
Kevin S. O'Brien..... 4,000 31.4 months 2,000 4,000 6,000
Gerald J. Pollack.... 7,000 31.4 months 3,500 7,000 10,500
</TABLE>
- --------
(1) The numbers in this column represent the awards of Common Shares granted
under Total Shareholder Return ("TSR") based Contingent Performance Share
guidelines (forest products sector peer group performance which measures
stock appreciation price, plus dividends reinvested quarterly, during the
performance period). A total of 59,000 Contingent Performance Share awards
were granted to ten Rayonier executives on the date of grant, May 20, 1994.
(2) The performance period is for 31.4 months with TSR performance measured
against 12 forest products sector peer company grouping for the same
period.
(3) Award payout is in the form of Common Shares, with a cash offset for tax
purposes, and may range from zero to a maximum of 150% of the target award,
based upon TSR performance. The awards are contingent upon exceeding forest
products sector peer group performance. Payouts are linearly interpolated.
100% of target is achieved when Rayonier outperforms peer group companies
by 20%. There is no payout below 60% of peer group performance.
(4) Award payout commences with 50% of target share award if Rayonier achieves
60% of peer group performance.
19
<PAGE>
RAYONIER SENIOR EXECUTIVE SEVERANCE PAY PLAN
The Rayonier Senior Executive Severance Pay Plan (the "Plan") applies to
Rayonier senior executives, including the executives named in the Summary
Compensation Table, who are United States citizens or who are employed in the
United States. Under the Plan, if a participant's employment is terminated by
Rayonier, other than for cause or as a result of other occurrences specified in
the Plan, the participant is entitled to severance pay in an amount up to 24
months' base salary, depending upon his or her length of service, but in no
event more than the amount of base salary for the number of months remaining
between the termination of employment and the participant's normal retirement
date or two times the participant's total base salary annual compensation
during the year immediately preceding such termination.
Based upon their length of service, each of the aforementioned executive
officers is entitled to severance pay under the Plan in an amount up to 24
months' base salary, subject to the above mentioned limitation in the event of
an earlier retirement date. The Plan includes offset provisions for other
compensation from Rayonier and requirements on the part of executives with
respect to competition and compliance with the Rayonier Code of Corporate
Conduct. While under the Plan, severance payments would ordinarily be made
monthly over the scheduled term of such payments, Rayonier has the option to
make such payments in the form of a single lump-sum payment discounted to
present value. If within two years after a change in corporate control (as
defined in the Plan), a participant terminates employment or is terminated, he
or she will have the option to receive severance pay in a single discounted
lump-sum payment. The current aggregate amount of the annual base salaries of
such eight senior officers is approximately $1.8 million. The annual base
salaries of Messrs. Gross, Nutter, Berry, O'Brien and Pollack as of December
31, 1994 were $470,600; $249,000; $189,000; $187,500 and $174,000,
respectively.
RETIREMENT PROGRAM
The following table illustrates the estimated annual benefits payable from
the Rayonier Salaried Employees Retirement Plan, a tax qualified retirement
plan, (the "Plan") and the Rayonier Excess Benefit Plan, a non-qualified
retirement plan, (the "Excess Plan") at retirement at age 65 based on the
assumptions set forth below. Calculation of benefits is uniform for all
participants in the Plan and the Excess Plan, including the five named
officers. The Plan covers substantially all eligible salaried employees of the
Company, including senior executive officers and other Rayonier executives, and
the cost of the Plan and the Excess Plan is borne entirely by the Company:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
AVERAGE FINAL --------------------------------------------
COMPENSATION 20 25 30 35 40
- ------------- -- -- -- -- --
<S> <C> <C> <C> <C> <C>
$ 50,000........................ $ 20,000 $ 25,000 $ 28,750 $ 32,000 $ 36,250
100,000........................ 40,000 50,000 57,500 65,000 72,500
300,000........................ 120,000 150,000 172,500 195,000 217,500
500,000........................ 200,000 250,000 287,500 325,000 362,500
750,000........................ 300,000 375,000 431,250 487,500 543,750
1,000,000........................ 400,000 500,000 575,000 650,000 725,000
</TABLE>
20
<PAGE>
The Plan "mirror images" retirement benefits provided previously to eligible
Rayonier salaried employees and executives under the provisions of the ITT
Retirement Plan for Salaried Employees. Retirement benefits earned under the
former ITT plan continue on a dynamic credit basis under arrangements with ITT
for eligibility and benefit service prior to March 1, 1994.
The annual pension amounts to two percent of a member's average final
compensation for each of the first 25 years of benefit service, plus one and
one-half percent of a member's average final compensation for each of the next
15 years of benefit service, reduced by one and one-quarter percent of the
member's primary Social Security benefit for each year of benefit services to a
maximum of 40 years; provided that no more than one-half of the member's
primary Social Security benefit is used for such reduction. A member's average
final compensation (including salary plus approved bonus payments) is defined
under the Plan as the total of (i) a member's average annual base salary for
the five calendar years of the last 120 consecutive calendar months of
eligibility service affording the highest such average plus (ii) a member's
average annual compensation not including base salary for the five calendar
years of the member's last 120 consecutive calendar months of eligibility
service affording the highest such average. For the executives named in the
Summary Compensation Table on page 16, final compensation for purposes of
pension calculations consists of salary and bonus payments as set forth in such
Table. The Plan also provides for undiscounted early retirement pensions for
members who retire at or after age 60 following completion of 15 years of
eligibility service. A member is vested in benefits accrued under the Plan upon
completion of five years of eligibility service.
Applicable Federal legislation limits the amount of benefits that can be paid
and the compensation which may be recognized under a tax-qualified retirement
plan. In order to provide benefits at retirement that cannot be paid from the
qualified Retirement Plan, Rayonier has adopted the Excess Plan to meet the
retirement needs of this small segment of its salaried employee population
affected by the limiting Federal legislation. Where applicable, retirement
benefits earned under the former ITT excess plan have been carried forward to
Rayonier and have been incorporated in the Excess Plan. The practical effect of
the Excess Plan is to continue calculation of benefits after retirement to all
employees on a uniform basis.
Credited years of service as of March 3, 1995 are as follows: Ronald M.
Gross, 17.0 years;Wallace L. Nutter, 27.7 years; William S. Berry, 14.8 years;
Kevin S. O'Brien, 35.5 years; and Gerald J. Pollack, 12.8 years.
SUPPLEMENTAL BENEFITS
Effective April 1, 1994, the Compensation and Management Development
Committee of the Rayonier Board of Directors approved non-qualified, split-
dollar life insurance coverage for Mr. Gross to age 65 and a deferred, post-age
65 supplemental retirement benefit to provide competitive retirement
compensation on par with that of other chief executive officers in the forest
products industry. The combination of retirement benefits earned during Mr.
Gross' career with Rayonier and the supplemental retirement benefit is
competitive, on a post-age 65 retirement basis, as compared to the industry
practice of retirement income at 60% to 65% of the average last five years'
cash compensation for chief executive officers. Post-age 65 retirement benefits
for Mr. Gross under this arrangement are $132,000 of annual retirement income
through age 80. The arrangement makes use of split-dollar life insurance, which
has a 10-year premium cost of$1.7 million, which cost is offset by a death
benefit payment to the Company upon Mr. Gross' death.
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<PAGE>
In addition to the coverage available generally to salaried employees under
the various Rayonier benefit plans, Mr. Gross also has company-provided long-
term disability coverage, which provides for a monthly benefit of $19,100 in
the event of total disability, and death benefits equal to his annual salary
during active employment and reduced coverage after retirement.
INDEPENDENT ACCOUNTANTS
In accordance with the recommendation of the Audit Committee, the Board of
Directors has reappointed Arthur Andersen LLP as independent auditors of
Rayonier for 1995. No ratification by the shareholders of the appointment of
such auditors is required by the North Carolina Business Corporation Act or by
the Articles of Incorporation or Bylaws of Rayonier.
Arthur Andersen LLP has served as independent auditors of Rayonier and its
subsidiaries for many years, and its long-term knowledge of Rayonier has
enabled it to carry out its audits with effectiveness and efficiency. In
keeping with the established policy of Arthur Andersen LLP, partners and
employees of the firm engaged in auditing Rayonier are periodically rotated,
thus giving Rayonier the benefit of new expertise and experience. Arthur
Andersen LLP personnel regularly attend meetings of the Audit Committee.
Representatives of Arthur Andersen LLP will attend the Annual Meeting, will
have the opportunity to make a statement if they desire to do so, and will be
available to respond to appropriate questions.
SHAREHOLDER PROPOSALS FOR THE 1996 ANNUAL MEETING
Proposals of shareholders intended to be presented to Rayonier's 1996 Annual
Meeting of Shareholders must be received at Rayonier's principal executive
offices by December 4, 1995 for inclusion in Rayonier's proxy statement and
form of proxy for that meeting. Shareholder proposals should be directed to the
Corporate Secretary, Rayonier, 1177 Summer Street, Stamford CT 06905-5529.
ANNUAL REPORTS
Shareholders of record on March 24, 1995 should have received a copy of
Rayonier's 1994 Annual Report to Shareholders either with this Proxy Statement
or prior to its receipt. If, upon receipt of this proxy material, you have not
received the Annual Report to Shareholders, please write to the Corporate
Secretary at the address below and a copy will be sent to you.
IN ADDITION, A COPY OF RAYONIER'S ANNUAL REPORT ON FORM 10-K (WITHOUT
EXHIBITS) FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994 IS AVAILABLE TO EACH
RECORD AND BENEFICIAL OWNER OF RAYONIER'S COMMON SHARES WITHOUT CHARGE UPON
WRITTEN REQUEST TO THE CORPORATE SECRETARY, RAYONIER, 1177 SUMMER STREET,
STAMFORD CT 06905-5529.
22
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COST OF PROXY SOLICITATION
The entire cost of soliciting proxies will be borne by Rayonier including the
expense of preparing, printing and mailing this Proxy Statement. Solicitation
costs include payments to brokerage firms and other for forwarding solicitation
materials to beneficial owners of Common Shares and reimbursement of out- of-
pocket costs incurred by Rayonier's transfer agent for any follow up mailings.
Rayonier also has engaged Georgeson & Co., Inc. to assist in the solicitation
of proxies from shareholders at a fee of $6,500 plus reimbursement of out-of-
pocket expenses. In addition to use of the mail, proxies may be solicited
personally or by telephone by present and former officers, directors and other
employees of Rayonier without additional compensation, as well as by employees
of Georgeson & Co., Inc.
By Order of the Board of Directors
JOHN B. CANNING
Corporate Secretary
Dated: March 31, 1995
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Rayonier
PROXY/VOTING INSTRUCTION CARD
This proxy is solicited on behalf of the Board of Directors of Rayonier Inc.
for the Annual Meeting on May 19, 1995
I(we) hereby authorize RONALD M. GROSS, ROGER H. WATTS and JOHN B.
CANNING, or any of them, each with full power to appoint his substitute, to vote
as proxy for me(us) at the Annual Meeting of Shareholders of Rayonier to be held
at the Sheraton Stamford, One First Stamford Place, Stamford, Connecticut on
Friday, May 19, 1995 at 9:00 A.M., or at any adjournment thereof, the number of
shares which I(we) would be entitled to vote if personally present. The proxies
shall vote subject to the directions indicated on the reverse side of this card
and proxies are authorized to vote in their discretion upon such other business
as may properly come before the meeting and any adjournments thereof. The
proxies will vote as the Board of Directors recommends where I(we) do not
specify a choice.
(Continued and to be dated and signed on the reverse side)
RAYONIER INC.
P.O. BOX 11509
NEW YORK, N.Y. 10203-0509
<PAGE>
Rayonier
Notice of Annual Meeting
March 31, 1995
Notice is hereby given that the 1995 Annual Meeting of the Shareholders of
Rayonier Inc., a North Carolina corporation, will be held at the Sheraton
Stamford, One First Stamford Place, Stamford, Connecticut on Friday, May 19,
1995 at 9:00 A.M., local time, for the following purposes:
1. to elect three directors of Class I and one director of Class III; and
2. to act upon such other matters as may properly come before the meeting.
Shareholders of record at the close of business on March 24, 1995 will be
entitled to vote at the meeting.
/s/ John B. Canning
John B. Canning, Secretary
Detach Proxy Card Here
- --------------------------------------------------------------------------------
[_]
1. Election of Directors For [X] Withhold [X] Exceptions* [X]
The Board of Directors recommends a vote "FOR" the nominees listed below:
Class I: Ronald M. Gross, Katherine D. Ortega and Burnell R. Roberts
Class II: Nicholas L. Trivisonao
*Exceptions
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To vote your shares for all Director nominees, mark the "For" box on Item 1. To
withhold your votes from all nominees, mark the "Withhold" box. If you do not
wish your shares voted for a particular nominee, mark the "Exceptions" box and
enter the name(s) of the exception(s) in the space provided. Such a mark will be
deemed a vote "FOR" all nominees other than those listed as exceptions.
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof.
Change of Address or
Comments Mark Here [X]
Please sign name exactly as it appears
on this card. Joint owners should each
sign. Attorneys, trustees, executors,
administrators, conservators, custodians,
guardians, or corporate officers should
give full title.
DATE:
------------------------------------
SIGNATURE
--------------------------------
SIGNATURE
--------------------------------
Votes must be indicated
(x) in Black or Blue ink. [X]
Please sign, date and return this proxy in the enclosed postage prepaid
envelope.
