<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
<TABLE>
<S> <C>
Filed by the Registrant / /
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 Section240.14a-11(c) or
Section240.14a-12
RAYONIER INC.
-----------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
----------------------------------------------------------
(2) Aggregate number of securities to which transaction
applies:
----------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
----------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------
</TABLE>
<PAGE>
CORPORATE HEADQUARTERS
[LOGO]
March 29, 2000
Dear Shareholder:
Enclosed are the Notice of Annual Meeting and Proxy Statement for the 2000
Annual Meeting of Rayonier Shareholders.
As has been the case with our previous Annual Meetings, this meeting is
intended to be business only. The one formal item on the agenda will be the
tabulation and report of proxies and ballots for the election of three
directors. We expect to have no other agenda items and will make no
presentations. The accompanying Notice of Annual Meeting and Proxy Statement
provides information required by applicable laws and regulations, including
pertinent information about each nominee for election as director.
We urge you to complete and return the enclosed proxy as promptly as
possible. Your vote is important.
Sincerely yours,
[LOGO]
W. L. NUTTER
CHAIRMAN, PRESIDENT AND CHIEF
EXECUTIVE OFFICER
Rayonier Inc. - 50 North Laura Street - Jacksonville, FL
32202
Telephone (904) 357-9100 - Fax (904) 357-9101
<PAGE>
CORPORATE HEADQUARTERS
[LOGO]
NOTICE OF ANNUAL MEETING
March 29, 2000
Notice is hereby given that the 2000 Annual Meeting of the Shareholders of
Rayonier Inc., a North Carolina corporation, will be held at the Omni
Jacksonville Hotel, 245 Water Street, Jacksonville, Florida on Thursday, May 18,
2000 at 4:00 P.M., local time, for the following purposes:
1. to elect three directors 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 20, 2000 will be
entitled to vote at the meeting.
[LOGO]
JOHN B. CANNING
CORPORATE SECRETARY
SHAREHOLDERS ARE URGED TO COMPLETE, SIGN, DATE, AND RETURN THE ENCLOSED PROXY
PROMPTLY IN THE SELF-ADDRESSED ENVELOPE (WHICH IS POSTAGE-PAID FOR SHAREHOLDERS
IN THE UNITED STATES, CANADA, AND UNITED KINGDOM) WHETHER OR NOT THEY EXPECT TO
ATTEND THE MEETING. A SHAREHOLDER MAY NEVERTHELESS VOTE IN PERSON IF HE OR SHE
DOES ATTEND.
Rayonier Inc. - 50 North Laura Street - Jacksonville, FL
32202
Telephone (904) 357-9100 - Fax (904) 357-9101
<PAGE>
[LOGO]
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
THURSDAY, MAY 18, 2000
This Proxy Statement and accompanying proxy are being mailed to shareholders
of Rayonier Inc. ("Rayonier" or the "Company") commencing March 29, 2000 in
connection with the solicitation of proxies by Rayonier for the 2000 Annual
Meeting of Shareholders to be held at the Omni Jacksonville Hotel, 245 Water
Street, Jacksonville, Florida on Thursday, May 18, 2000 at 4:00 P.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 properly 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 in person or by proxy by shareholders entitled to vote on the
matter. 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. Votes withheld, 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 a withheld vote, 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 27,358,763 outstanding Rayonier Common Shares ("Common Shares")
outstanding at the close of business on March 20, 2000 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, 1999 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>
Southeastern Asset Management, Inc.......................... 5,701,000(b) 20.8%
6075 Poplar Ave., Suite 900
Memphis TN 38119
The Prudential Insurance Company of America................. 2,506,654(c) 9.1%
751 Broad Street
Newark NJ 07102-3777
Tweedy, Browne Company LLC.................................. 1,705,100(d) 6.2%
TBK Partners, L.P.
Vanderbilt Partners, L.P.
52 Vanderbilt Avenue
New York, NY 10017
</TABLE>
- ---------
(a) Based on 27,407,094 total Common Shares outstanding at December 31, 1999.
(b) Holdings as of December 31, 1999 as reported to the Securities and Exchange
Commission ("SEC") on Schedule 13G dated February 4, 2000. This filing was
made by Southeastern Asset Management, Inc. ("Southeastern"), Longleaf
Partners Fund, Longleaf Partners Realty Fund and Mr. O. Mason Hawkins
("Hawkins"), Chairman of the Board and C.E.O. of Southeastern. According to
this filing, of the 5,701,000 shares referred to above, Southeastern has (i)
sole voting power as to 2,095,600 shares; (ii) no voting power as to 505,400
shares; (iii) sole dispositive power as to 2,601,000 shares; and (iv) shared
voting power and shared dispositive power as to 3,100,000 shares. The
3,100,000 shares referred to in (iv) consist of 2,900,000 shares
(representing 10.6 percent of Rayonier's total outstanding Common Shares at
December 31, 1999) owned by Longleaf Partners Fund and 200,000 shares owned
by Longleaf Partners Realty Fund, both of which funds are series of Longleaf
Partners Fund Trust, an open-end management investment company registered
under the Investment Company Act of 1940. The report indicates that all of
the securities covered thereby are owned legally by Southeastern's
investment advisory clients and that none are owned directly or indirectly
by Southeastern. The report also indicates that Hawkins is identified as a
filing person in the event he could be deemed to be a controlling person of
Southeastern as the result of his official positions with Southeastern or
ownership of its voting securities. The existence of such control is
expressly disclaimed. Both Southeastern and Hawkins disclaim beneficial
ownership of any of the securities covered by the filing pursuant to SEC
Rule 13d-4. Finally, the report indicates that the shares were acquired in
the ordinary course of business and not with the purpose or effect of
changing or
2
<PAGE>
influencing control of Rayonier and were not acquired in connection with or
as a participant in any transaction having such purpose or effect.
(c) Holdings as of December 31, 1999 as reported to the SEC on Schedule 13G
dated January 31, 2000. According to this filing, of the 2,506,654 shares
referred to above, The Prudential Insurance Company of America
("Prudential") has (i) sole voting power and sole dispositive power as to
17,500 shares and (ii) shared voting power and shared dispositive power as
to 2,489,154 shares. The report further indicates that all of the shares
covered by the filing are held by Prudential for the benefit of its clients
by its separate accounts, externally managed accounts, registered investment
companies, subsidiaries and/or other affiliates. The report states that
Prudential is reporting the combined holdings of these entities for the
purpose of administrative convenience and that the filing of the report
should not be construed as an admission that Prudential is, for the purposes
of Section 13 or 16 of the Securities Exchange Act of 1934, the beneficial
owner of these shares. Finally, the report indicates that the shares were
acquired in the ordinary course of business and not with the purpose or
effect of changing or influencing control of Rayonier and were not acquired
in connection with or as a participant in any transaction having such
purpose or effect.
(d) Holdings as of July 21, 1998 as reported to the SEC on Schedule 13D dated
such date. According to this filing, Tweedy, Browne Company LLC ("TBC"), a
broker-dealer and investment adviser registered with the Securities and
Exchange Commission, has sole voting power over 1,448,045 such shares and
shared dispositive power over 1,519,800 such shares, TBK Partners, L.P.
("TBK") has sole voting and dispositive power over 165,300 such shares, and
Vanderbilt Partners, L.P. ("Vanderbilt") has sole voting and dispositive
power over 20,000 such shares. TBC, TBK and Vanderbilt disclaim membership
in a "group" within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934, and each disclaims beneficial ownership of Common
Shares held by the others. The report states that the shares were acquired
for investment purposes and not one of the reasons enumerated in Item 4 of
Schedule 13D, except that from time to time TBC, TBK and Vanderbilt intend
to acquire additional Common Shares, depending upon price and market
conditions, evaluation of alternative investments and other factors, and may
dispose of all or some of their respective shares. A Schedule 13D must be
promptly amended if any material change occurs in the facts set forth,
including any increase or decrease of 1 percent of the class beneficially
owned.
The table set forth below gives information concerning Common Shares
beneficially owned as of March 3, 2000 by (a) each of the Company's directors,
(b) each of the individuals who was one of the Company's five highest paid
executive officers in 1999 and (c) all directors and executive officers as a
3
<PAGE>
group. All Common Shares in the table below are owned directly by the individual
concerned unless otherwise indicated:
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
----------------------------------------------------------------
(5) (6)
(3) SUM OF TOTAL
COLUMN (4) COLUMNS (2) STOCK
(1) (2) (2) AS EXERCIS- AND (4) AS BASED
NAME OF BENEFICIAL COMMON SHARES PERCENT ABLE STOCK PERCENT OF HOLDINGS
OWNER OWNED OF CLASS OPTIONS (A) CLASS (B) (C)
------------------ ------------- ------------ ----------- ------------ ---------
<S> <C> <C> <C> <C> <C>
W. Lee Nutter........... 118,782(d)(e) less than 1% 177,217 1.1% 375,491
Rand V. Araskog......... 105,451 " 0 less than 1% 105,451
Ronald M. Gross......... 120,330 " 310,841 1.6% 431,171
Paul G. Kirk Jr......... 2,641 " 0 less than 1% 2,641
Katherine D. Ortega..... 2,700 " 0 " 2,700
Burnell R. Roberts...... 3,000 " 0 " 3,000
Carl S. Sloane.......... 1,900 " 0 " 1,900
Nicholas L.
Trivisonno............ 2,500 " 0 " 2,500
Gordon I. Ulmer......... 4,000 " 0 " 4,000
William S. Berry........ 25,924(d) " 96,098 " 160,022
Gerald J. Pollack....... 14,367(d) " 44,005 " 96,039
John P. O'Grady......... 20,349(d) " 58,333 " 116,349
William A. Kindler...... 6,894(d) " 32,166 " 66,394
Directors and executive
officers as a group
(15 persons).......... 428,019(d)(e) 1.6% 731,160 4.2% 1,400,805
</TABLE>
- ---------
(a) Pursuant to regulations of the SEC, shares receivable by directors and
executive officers upon exercise of employee stock options exercisable
within 60 days after March 3, 2000 are deemed to be beneficially owned by
such directors and executive officers at said date.
(b) The calculation of percentage ownership for each individual and for all
directors and executive officers as a group in this column (i) includes in
such individual's and group's ownership both shares directly owned and
shares receivable upon exercise of employee stock options exercisable within
60 days after March 3, 2000 and (ii) reflects an increase in the number of
shares outstanding by the number of shares receivable upon exercise of such
options by such individual or such group, as the case may be.
(c) This column shows each individual's total stock-based holdings, including
stock options that become exercisable more than 60 days after March 3, 2000.
(d) All Common Shares are owned directly except as set forth in this Note (d).
The following amounts were allocated under the Rayonier Investment and
Savings Plan for Salaried Employees (the "Savings Plan") as of December 31,
1999 to the accounts of: Mr. Nutter, 18,421 Common Shares; Mr. Berry, 4,505
Common Shares; Mr. Pollack, 3,847 Common Shares; Mr. O'Grady, 3,812 Common
Shares;
4
<PAGE>
Mr. Kindler, 908 Common Shares and all directors and executive officers as a
group, 32,371 Common Shares.
(e) Includes a restricted stock award to Mr. Nutter of 5,000 Common Shares
effective January 2, 1999.
SECTION 16 REPORTS
The Federal securities laws require Rayonier's directors and executive
officers, and persons who own more than ten percent of a registered class of
Rayonier's equity securities, to file with the Securities and Exchange
Commission and the New York Stock Exchange, Inc. initial reports of ownership
and reports of changes in ownership of any equity securities of Rayonier. To
Rayonier's knowledge, based solely on representations that no other reports were
required, the required reports have been filed on a timely basis on behalf of
all persons subject to these requirements.
SHARE OWNERSHIP BY DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
The Board of Directors of Rayonier encourages share ownership by all
employees of Rayonier and 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.
Guidelines were adopted in 1995 and amended in 1999 by the Nominating
Committee of the Board of Directors encouraging Rayonier share ownership by
directors at a level equal to three times their annual retainer.
The Compensation and Management Development Committee also adopted
guidelines in 1995 for share ownership by officers at the level of Vice
President or above. The guidelines as currently in effect are as follows:
<TABLE>
<CAPTION>
SHARE OWNERSHIP GUIDELINES
POSITION/LEVEL 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. Ownership includes restricted shares
awarded under the Rayonier 1994 Incentive Stock Plan, options that have been
exercised and shares held, Savings Plan shares, Dividend Reinvestment Plan
shares and Common Shares purchased in the open market.
Target ownership levels for directors or officers at the level of Vice
President or above are to be achieved over a 3-year period, and all individuals
who had been Vice President or above for three or more years as of the end of
1999 have achieved their target levels of ownership.
5
<PAGE>
SHAREHOLDER RETURN
The table below represents a comparison of the performance in 1995, 1996,
1997, 1998 and 1999 of Common Shares (assuming reinvestment of dividends) with a
broad based market index (Standard & Poor's 500) and with a Custom Composite
Index. The Custom Composite Index contains 13 stocks of 12 forest products
companies which form the comparison group for purposes of the Contingent
Performance Share awards described below:
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
<S> <C> <C> <C>
Based on reinvestment of $100 beginning December
31, 1994
S&P
Rayonier Inc. 500(0) Custom Composite Index (13 Stocks)
12/31/94 $100 $100 $100
12/31/95 $113 $138 $109
12/31/96 $134 $169 $118
12/31/97 $152 $226 $129
12/31/98 $169 $290 $133
12/31/99 $183 $351 $181
SOURCE: GEORGESON SHAREHOLDER COMMUNICATIONS INC.
</TABLE>
<TABLE>
31-DEC-94 31-DEC-95 31-DEC-96 31-DEC-97 31-DEC-98 31-DEC-99
<S> <C> <C> <C> <C> <C> <C>
Rayonier Inc. $100 $113 $134 $152 $169 $183
S&P 500-Registered Trademark- $100 $138 $169 $226 $290 $351
Custom Composite Index (13
Stocks) $100 $109 $118 $129 $133 $181
</TABLE>
Notes:
(a) The Custom Composite Index contains stocks of the following 12 forest
products companies: Boise Cascade Corporation, Champion International
Corporation, Georgia-Pacific, International Paper Company, Longview Fibre
Company, The Mead Corporation, Potlatch Corporation. Plum Creek Timber
Company, L.P., The Timber Company (included since its issuance by
Georgia-Pacific on December 17, 1997), Union Camp Corporation (through May
3, 1999), Westvaco Corporation, Weyerhaeuser Company and Willamette
Industries Inc.
6
<PAGE>
ELECTION 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 Board is divided into three classes serving staggered terms. The terms
of the three directors of Class III, Rand V. Araskog, W. Lee Nutter and Nicholas
L. Trivisonno, will expire at the 2000 Annual Meeting and each has been
nominated for re-election for a term expiring in 2003. Unless there is a
contrary indication, the Common Shares represented by valid proxies will be
voted for the election of all three 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 Common Shares represented by valid
proxies will be voted for the election of such other person as the Board may
recommend.
The following pages present information about the persons who comprise
Rayonier's current Board of Directors, including the three nominees for
reelection.
During 1999, there were eight meetings of the Board of Directors. No
director missed more than one meeting.
INFORMATION AS TO NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
CLASS III, TERM EXPIRES IN 2003
RAND V. ARASKOG, 68, Retired Chairman and Chief Executive Officer of ITT
Corporation (a diversified global corporation engaged in the hospitality and
entertainment businesses and the information services businesses)--He served as
chief executive of ITT Corporation (including a predecessor corporation of the
same name) beginning in 1979 and chairman beginning in 1980 until he retired in
1998. He is a director of The Hartford Financial Services Group, Inc., ITT
Educational Services, Inc., ITT Industries, Inc., Dow Jones & Company, Inc., and
Shell Oil Company. Mr. Araskog is a graduate of the U.S. Military Academy at
West Point and attended the Harvard Graduate School of Arts and Sciences. He was
first elected a director of Rayonier in 1994.
W. LEE NUTTER, 56, Chairman, President and Chief Executive Officer,
Rayonier--He joined Rayonier in 1967 in the Northwest Forest Operations and was
named Vice President, Timber and Wood in 1984, Vice President, Forest Products
in 1985, Senior Vice President, Operations, in 1986 and Executive Vice President
in 1987. He was elected President and Chief Operating Officer and a director of
Rayonier on July 19, 1996 and was elected to his present position effective
January 1, 1999. Mr. Nutter is a member of the Board of Directors and the
Executive Committee of the American Forest and Paper Association and serves on
the Executive Committee of the National Council for Air and Stream Improvement.
He is a graduate of the University of Washington and the Harvard University
Graduate School of Business Administration Advanced Management Program.
NICHOLAS L. TRIVISONNO, 52, Chairman and Chief Executive Officer and a
director of ACNielsen Corporation (a global leader in market research)--He has
held this position since January 1996. He also served as Executive Vice
President and Chief Financial Officer of The Dun & Bradstreet Corporation
(marketer of information, software and services for business decision making)
from September 1995 until
7
<PAGE>
that corporation spun off ACNielsen in November 1996. From October 1993 until
July 1995, he served as Executive Vice President-Strategic Planning and Group
President of GTE Corporation, a telecommunications company, and served as Senior
Vice President-Finance from January 1989 until October 1993. He began his career
with Arthur Andersen & Co. in 1968, became a partner in 1979 and was appointed a
managing partner in 1986. He is a member of the American Institute of Certified
Public Accountants and the New York, Connecticut and Louisiana Societies of
Certified Public Accountants. He earned his BBA degree from St. Francis College.
He was first elected a director of Rayonier in 1994.
INFORMATION AS TO OTHER DIRECTORS
CLASS I, TERM EXPIRES IN 2001
RONALD M. GROSS, 66, Chairman Emeritus, Former Chairman of the Board and
Chief Executive Officer, Rayonier--He joined Rayonier in 1978 as President and
Chief Operating Officer and a director, and was given the additional
responsibilities of Chief Executive Officer in 1981 and Chairman in 1984. He
assumed the position of Chairman and Chief Executive Officer in 1996, served in
that capacity until his retirement effective December 31, 1998 and was named
Chairman Emeritus effective January 1, 1999. The Company has agreed to cause Mr.
Gross to be nominated for election as a Class I Director at each Annual Meeting
at which Class I Directors are elected in 2001 and 2004. He has agreed that if
reelected, he will continue to serve in his capacity as a Class I Director
through the Company's Annual Meeting in 2007. Mr. Gross also serves as a
director of Corn Products International, Inc. and The Pittston Company. He is a
graduate of Ohio State University and the Harvard University Graduate School of
Business Administration.
KATHERINE D. ORTEGA, 65, 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 on the Copyright Royalty Tribunal, and was a member of the
President's Advisory Committee on Small and Minority Business. Ms. Ortega
currently serves on the Boards of Directors of Ultramar Diamond Shamrock
Corporation, Ralston Purina Company and The Kroger Co. and is a member of the
United States Comptroller General's Consultant Panel and the Washington Mutual
Investors Fund Advisory Board. She is a graduate of Eastern New Mexico
University and holds three honorary Doctor of Law Degrees and one honorary
Doctor of Social Science Degree. She was first elected a director of Rayonier in
1994.
BURNELL R. ROBERTS, 72, Retired Chairman of the Board and director,
Sweetheart Holdings, Inc. and Sweetheart Cup Company (producer of plastic and
paper disposable food service and food packaging products)--He served in these
positions from August 1993 until his retirement in March 1998. He previously
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 The Mead Corporation
from October 1981 until May 1993. He serves as a director of DPL Inc. and VUTEK,
Inc., a Limited Partner of American Industrial Partners, L.P. and a trustee of
Granum Value Fund. He is a graduate of the University of Wisconsin and the
Harvard University Graduate School of Business Administration. He was first
elected a director of Rayonier in 1994.
8
<PAGE>
CLASS II, TERM EXPIRES IN 2002
PAUL G. KIRK, JR., 62, 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 &
Associates, Inc., of which he also is Chairman and Treasurer. He is also a
director of Bradley Real Estate, Inc., The Hartford Financial Services Group,
Inc. and Hartford Life, Inc. He is Co-Chairman of the Commission on Presidential
Debates. He is a graduate of Harvard College and Harvard Law School. He was
first elected a director of Rayonier in 1994.
CARL S. SLOANE, 63, Ernest L. Arbuckle Professor of Business Administration,
Harvard University Graduate School of Business Administration--Prior to joining
the Harvard faculty in 1991, he spent thirty years in management consulting, the
last twenty with the firm he co-founded, Temple, Barker & Sloane, Inc., and its
successor firm, Mercer Management Consulting, where he served as Chairman and
Chief Executive. He is also a director of Ionics, Inc., The Pittston Company and
Sapient Corporation. He is a graduate of Harvard College and the Harvard
University Graduate School of Business Administration. He was first elected a
director of Rayonier in 1997.
GORDON I. ULMER, 67, Former Chairman and Chief Executive Officer of the
former Connecticut Bank and Trust Company and Retired President of the 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), the holding company of
CBT. He retired as President of BNEC in December 1990. Mr. Ulmer also serves as
a director of The Hartford Financial Services Group, Inc. and Hartford Life,
Inc. He is a graduate of Middlebury College, the American Institute of Banking
and the Harvard University Graduate School of Business Administration Advanced
Management Program and attended New York University's Graduate School of
Engineering. He was first elected a director of Rayonier in 1994.
COMMITTEES OF THE BOARD
The standing committees of the Board are the Audit, Compensation and
Management Development, Nominating and Finance Committees.
THE AUDIT COMMITTEE, which is comprised entirely of non-employee directors,
supports the independence of the Company's external and internal auditors and
the objectivity of the Company's financial statements. The Committee is also
responsible for ensuring that the Company endeavors to comply with all laws
applicable to the conduct of its business and that it conducts its business in
an ethical and responsible manner. The Committee
(1) reviews the Company's principal policies for accounting, internal
control and financial reporting,
(2) reviews the independence of the external auditors and 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,
9
<PAGE>
(4) serves as a channel of communications between the senior internal
auditing executive and the Board,
(5) reviews reports of the external and internal auditors with
management,
(6) reviews the external auditors' fees,
(7) reviews the annual financial statements of the Company (before they
are published),
(8) reviews the adequacy of the Company's systems for internal
accounting control and for data security,
(9) reviews reports of the internal auditors, expense reports of the
Company's senior officers and fees paid to outside consultants, including
law firms,
(10) advises the Board on compliance, or material noncompliance, with
the Company's Code of Conduct and governmental and other legal compliance
programs,
(11) reviews and recommends to the Company's Board of Directors proposed
actions on environmental compliance and regulatory matters which could have
a significant impact on the business and strategic operating objectives of
the Company and its subsidiaries and
(12) reviews and considers material claims and litigation, and legal,
regulatory, patent and related governmental policy matters affecting the
Company and its subsidiaries.
The current members of the Audit Committee are Messrs. Ulmer (Chairman),
Araskog and Sloane and Ms. Ortega. The Committee held four meetings during 1999,
and no member missed more than one meeting.
THE COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE, which is comprised
entirely of non-employee directors, oversees the compensation and benefits of
employees, evaluates management performance, establishes executive compensation
and reviews management succession and development matters. The Committee
approves individual compensation actions for the Chairman, President and Chief
Executive Officer and all senior executives, including base salaries, annual
bonuses and long-term incentive awards. In the performance of its functions, the
Compensation and Management Development Committee has access to independent
legal and compensation counsel. The current members of the Compensation and
Management Development Committee are Messrs. Roberts (Chairman), Kirk, Sloane
and Trivisonno. The Committee held five meetings during 1999, and no member
missed more than one meeting.
THE NOMINATING COMMITTEE, which is comprised entirely of non-employee
directors, 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, performance and retirement of directors. This Committee will
consider shareholders' recommendations for nominees for membership on the Board
of Directors, provided such recommendations for nominees to be proposed at any
Annual Meeting are made in writing addressed to the Secretary of the Company
prior to the fifteenth of December preceding the date of such meeting. The
current members of the Nominating Committee are Messrs. Kirk (Chairman) and
Trivisonno and Ms. Ortega. The Committee held two meetings during 1999, which
all members attended.
10
<PAGE>
THE FINANCE COMMITTEE oversees management, and advises the Board, concerning
certain issues with respect to the financial structure of the Company, such as
the Company's financial and tax strategies, capital structure, financing, risk
management policies, dividend policies, investment policies and performance of
the pension and savings plans. The current members of the Finance Committee are
Messrs. Gross (Chairman), Araskog, Nutter, Roberts and Ulmer. The Committee held
seven meetings during 1999, which all members attended.
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 $15,000 in cash plus an award of 500 Common Shares; in addition,
they receive a fee of $1,000 for attendance at each Board meeting, $1,000 for
attendance at each meeting of a Committee on which they serve and $1,000 for
each trip taken to one of the Company's facilities for a purpose other than a
Board or Committee meeting.
Mr. Gross provides consulting services to the Board pursuant to a Consulting
Agreement entered into in connection with Mr. Gross' retirement on December 31,
1998. In such capacity, Mr. Gross is entitled to an annual retainer of $50,000,
apart from his compensation as a director. The term of this arrangement is for
the period from January 1, 1999 through the date of the Company's Annual Meeting
in 2007.
DIRECTORS' CHARITABLE AWARD PROGRAM
To recognize the interest of Rayonier and its directors in supporting worthy
educational institutions and other charitable organizations, Rayonier has
established the Director's Charitable Award Program which permits each director
to nominate up to five organizations to share a contribution of $1 million from
The Rayonier Foundation, a tax-exempt charitable foundation funded by Rayonier.
These contributions will be made by the Foundation in ten annual installments
after the death of a director. The Foundation will not make a donation on behalf
of any director unless he or she (1) completes sixty full months of service as a
director, (2) dies or becomes disabled while serving as a director or (3) is
actively serving as a director if and when a change in control occurs. There is
minimal cost to this program to Rayonier because Rayonier has acquired joint
life insurance contracts on the lives of its directors, and the proceeds from
these contracts will be adequate to fund Rayonier's contributions to the
Foundation related to the program and to fund the premium costs of the
contracts. Directors will receive no financial benefit from this program since
the charitable deduction and insurance proceeds accrue solely to Rayonier.
11
<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 uses outside compensation expertise and outside legal counsel.
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 also considers all other 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 the 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 structure for the Company's 60 executives. The
Committee regularly reviews each senior executive's base salary. Base salaries
are competitive and are targeted at market levels. The Committee authorizes base
salary adjustments in recognition of the executive's level of responsibilities,
performance, prior experience, breadth of knowledge, internal equity issues and
external pay practices.
The normal interval between salary reviews for most executives is 12 months,
however, senior executive salary reviews are conducted at 15- to 18-month
intervals. Executive salary actions, comprised of merit pay, equity adjustments
and promotional increases for 1999 averaged 5.3 percent on an annualized basis.
Merit increases averaged 4.5 percent. Mr. Nutter's base salary during 1999
remained at $420,000.
ANNUAL BONUS INCENTIVE
The Rayonier Annual Incentive Bonus Plan ("Annual Plan") provides eligible
executives and key managers with direct financial incentives in the form of cash
bonuses for achieving 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
12
<PAGE>
measure. Net income, ROTC and OFF performance are weighted 60 percent, 25
percent and 15 percent, respectively. The maximum bonus pool is 150 percent 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 during the year. Bonuses earned in the calendar
year are paid out in the first quarter of the subsequent year. After application
of a 30 percent Bonus Program discount, approved by the Committee in December
1998, based upon projected market weakness, 1999 corporate performance was at
112 percent of targeted financial goals and the bonus pool was set at that
level. All bonuses were awarded by February 18, 2000.
Under the Annual Plan, as reflected in the Summary Compensation Table on
page 15, Mr. Nutter was paid $400,000 in connection with 1999 Company and
individual performance. Mr. Nutter's bonus is competitive with annual incentive
compensation paid other executives at comparable forest products and general
industry sector companies.
LONG-TERM INCENTIVES
The Rayonier 1994 Incentive Stock Plan ("Stock Plan") provides for the award
of incentive stock options, non-qualified stock options, stock appreciation
rights, restricted stock, performance shares or any combination thereof to
executives and key employees as long-term compensation incentives.
In making awards under the Stock Plan, the Committee considers individual
performance criteria, levels of responsibility and prior experience, as well as
historical award data and compensation practices at comparable forest products
sector and general industry companies.
Long-term incentive grants for 1999 under the Stock Plan are reflective of
Rayonier's approach to total compensation, relative to market level pay
practices of comparable companies, with a greater emphasis on at-risk rewards
that closely align management performance with shareholder value.
STOCK OPTIONS. Non-qualified stock options to acquire Rayonier 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 1999, non-qualified stock
option awards totaling 255,500 shares were granted to 85 executives and key
employees.
On January 4, 1999, the Committee awarded to Mr. Nutter non-qualified
options to acquire 30,000 Company shares at an exercise price of $45.56 as
determined by the market price on that day. Mr. Nutter now owns 118,782 Common
Shares, as detailed in the table on page 4.
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 performance ("TSR"), as measured
against the average performance of a selection of 12 comparative forest products
peer group companies over a designated period. The awards are contingent upon
exceeding average peer group performance. The Share Award Valuation Formula
provides a 100 percent share award when Rayonier outperforms the peer group
companies by 20 percent. Failure to perform at 60 percent of the peer group
companies' average results in zero award.
13
<PAGE>
TSR is calculated by measuring the growth in value of a hypothetical $100
investment in each of the forest products peer group companies over the
performance period, assuming all dividends are reinvested quarterly. Award
payment is in the form of Rayonier Common Shares and may range from zero to a
maximum of 150 percent of the target awards based upon TSR performance. The TSR
goals reflect 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 award, competitive practices and
the level of responsibility of each senior executive.
Contingent Performance Share Awards granted on January 2, 1996 (1996 CLASS)
measured Rayonier's TSR performance against that of 12 forest products peer
group companies for the 36-month period from January 2, 1996, through January 1,
1999. Actual TSR performance translated into an award payment in January 1999 of
a number of Common Shares equal to 126.2 percent of the Contingent Performance
Shares awarded. A total of 38,596 Rayonier Common Shares were awarded to seven
senior executives at the 126.2 percent payout level from a reserve of 48,000
available shares, with a balance of 9,404 shares returned to the Plan. Under the
1996 Contingent Performance Share Award Program, Mr. Nutter received an award of
7,572 Rayonier Common Shares, partially offset in value to cover tax liabilities
associated with the award.
A total of 88,500 Contingent Performance Shares (1999 CLASS) were awarded to
seven senior executives in 1999. Grants were made for a 36-month performance
period commencing January 1, 1999 through December 31, 2001.
On January 4, 1999, the Committee awarded Mr. Nutter 15,000 Contingent
Performance Shares.
RESTRICTED SHARES. The Plan also provides for the grant by the Committee of
Restricted Common Shares. On January 4, 1999, the Committee awarded Mr. Nutter
5,000 Restricted Shares in conjunction with his January 1, 1999, promotion to
Chairman, President and Chief Executive Officer. Such shares will vest on
January 4, 2002, provided that Mr. Nutter remains continuously in the employ of
the company through the vesting date.
POLICY WITH RESPECT TO THE $1 MILLION DEDUCTION LIMIT
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. Compensation payable solely on
account of the attainment of performance goals is excluded from the $1 million
limitation. Based upon an analysis of total executive compensation for 1999,
there are no executives within the Company whose non-performance based
compensation exceeds the deduction limitation threshold.
This report is furnished by the members of the Compensation and Management
Development Committee.
Burnell R. Roberts
COMMITTEE CHAIRMAN
Paul G. Kirk, Jr.
Carl S. Sloane
Nicholas L. Trivisonno
14
<PAGE>
EXECUTIVE COMPENSATION DATA
The following table discloses compensation received by Rayonier's Chief
Executive Officer and four remaining most highly paid executive officers in 1999
for the three fiscal years ended December 31, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL ----------------------------------------
COMPENSATION AWARDS PAYOUTS
---------------------- ------------------------- ------------
SECURITIES
RESTRICTED UNDERLYING ALL OTHER
STOCK AWARDS OPTIONS LTIP PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) (1)($) (#) (2)($) (3)($)
--------------------------- -------- ---------- --------- ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
W. Lee Nutter 1999 419,769 400,000 $227,800 30,000 342,633 96,682
Chairman, President & Chief 1998 360,000 235,000 -- 28,000 687,885 58,824
Executive Officer 1997 334,616 264,000 -- 28,000 402,094 42,686
William S. Berry 1999 263,938 130,000 -- 12,000 256,975 51,746
Executive Vice President, 1998 255,962 105,000 -- 15,000 562,815 19,655
Forest Resources & 1997 254,423 110,000 -- 16,000 312,736 15,254
Wood Products
Gerald J. Pollack 1999 244,500 140,000 -- 12,000 228,422 46,926
Senior Vice President & 1998 235,500 88,000 -- 14,000 500,280 14,820
Chief Financial Officer 1997 228,462 95,000 -- 15,000 312,736 12,297
John P. O'Grady 1999 232,375 128,000 -- 12,000 171,317 36,398
Senior Vice President, 1998 220,000 95,000 -- 14,000 312,675 15,417
Administration 1997 207,692 92,500 -- 13,000 223,377 12,212
William A. Kindler 1999 223,385 80,000 -- 7,500 -- 17,635
Senior Vice President, 1998 215,000 45,000 -- 17,000 -- 15,399
Specialty Pulp 1997 209,019 80,000 -- 15,000 -- 8,570
</TABLE>
- ---------
(1) On January 4, 1999, Mr. Nutter received an award of 5,000 restricted shares.
Such shares will vest on January 4, 2002, provided that Mr. Nutter remains
continuously in the employ of the Company through the vesting date. All
dividends paid on such shares during the period prior to vesting are
withheld and accumulated by the Company until the recipient of the
restricted share grant became vested with respect thereto. Upon vesting, the
Company will pay Mr. Nutter an amount equal to all dividends paid solely or
partly in cash and accumulated with respect to the shares, together with
interest thereon at a rate equal to the prime rate as reported in THE WALL
STREET JOURNAL, adjusted and compounded annually. The total value as of
December 31, 1999 of these restricted stock holdings was $241,563.
(2) The amounts shown for 1999 represent the value on January 13, 1999 of award
payments made on that date pursuant to the vesting of Contingent Performance
Shares awarded on January 2, 1996. The performance period was for a period
of 36 months ending on December 31, 1998 with total
15
<PAGE>
shareholder return ("TSR") performance measured against 12 forest products
sector peer company grouping for the same period. Actual TSR performance by
Rayonier of 141.0 percent of the TSR performance by the peer group companies
translated into an award payment in January 1999 of a number of Common
Shares equal to 126.2 percent of the Performance Shares awarded. The gross
number of Common Shares paid were as follows: Mr. Nutter, 7,572 shares; Mr.
Berry, 5,679 shares; Mr. Pollack, 5,048 shares; and Mr. O'Grady, 3,786
shares. Each award was reduced by the number of shares having a value equal
to the amount necessary to cover tax liabilities associated with such award.
The amounts shown for 1998 represent the value on January 14, 1998 of award
payments made on that date pursuant to the vesting of Contingent Performance
Shares awarded on January 3, 1995. The performance period was for a period
of 36 months ending on December 31, 1997 with total shareholder return
("TSR") performance measured against 12 forest products sector peer company
grouping for the same period. Actual TSR performance by Rayonier of 197.04
percent of the TSR performance by the peer group companies translated into
an award payment in January 1998 of a number of Common Shares equal to 150
percent of the Performance Shares awarded. The gross number of Common Shares
paid were as follows: Mr. Nutter, 16,500 shares; Mr. Berry, 13,500 shares;
Mr. Pollack, 12,000 shares; and Mr. O'Grady, 7,500 shares. Each award was
reduced by the number of shares having a value equal to the amount necessary
to cover tax liabilities associated with such award.
The amounts shown for 1997 represent the value on January 15, 1997 of award
payments made on that date pursuant to the vesting of Contingent Performance
Shares awarded on May 20, 1994. The performance period was for a period of
31.4 months ending on December 31, 1996 with TSR performance measured
against 12 forest products sector peer company grouping for the same period.
Actual TSR performance by Rayonier of 132.83 percent of the TSR performance
by the peer group companies translated into an award payment in January 1997
of a number of Common Shares equal to 116.04 percent of the Performance
Shares awarded. The gross number of Common Shares paid were as follows:
Mr. Nutter, 10,444 shares; Mr. Berry, 8,123 shares; Mr. Pollack, 8,123
shares; and Mr. O'Grady, 5,802 shares. Each award was reduced by the number
of shares having a value equal to the amount necessary to cover tax
liabilities associated with such award.
Mr. Kindler was hired September 1, 1996 and therefore did not participate in
the awards which vested in 1999, 1998 or 1997.
(3) Included in each of these years are amounts paid to enable each of the
individuals named above to purchase an insurance policy to protect their
right to receive all deferred benefits provided by the Company or ITT
Industries Inc. (formerly ITT Corporation), including tax grossup, as
follows: Mr. Nutter, $79,471 (1999), $44,064 (1998), $28,967 (1997);
Mr. Berry, $40,924 (1999), $9,161 (1998), $4,822 (1997); Mr. Pollack,
$36,860 (1999), $5,164 (1998), $2,930 (1997); Mr. O'Grady, $26,870 (1999),
$6,397 (1998), $3,696 (1997); and Mr. Kindler, $8,476 (1999) and $6,584
(1998). The remainder of the amounts shown in this column are company
contributions under the Savings Plan and the Rayonier Excess Savings and
Deferred Compensation Plan, both of which are defined contribution plans.
Rayonier has made matching contributions to each of these plans in an amount
equal to 60 percent of an employee's contribution not to exceed 3.6 percent
of such employee's salary. Under these plans, Rayonier also makes a
non-matching contribution equal to one-half of one percent of an employee's
salary.
16
<PAGE>
OPTION GRANTS TO RAYONIER EXECUTIVES IN LAST FISCAL YEAR
The following tables provide information on fiscal year 1999 awards to
Rayonier executives of options to purchase Common Shares:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
----------------------------------- ANNUAL RATES
NUMBER OF OF STOCK PRICE
SECURITIES APPRECIATION FOR
UNDERLYING % OF TOTAL STOCK OPTION TERM (2)
OPTIONS OPTIONS GRANTED TO EXERCISE PRICE --------------------
NAME GRANTED (#) EMPLOYEES IN 1999 ($/SHARE)(1) EXPIRATION DATE 5%($) 10%($)
---- ----------- ------------------ -------------- --------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
W. Lee Nutter............ 30,000 11.74 45.56 1/6/2009 859,573 2,178,327
William S. Berry......... 12,000 4.70 45.56 1/6/2009 343,829 871,331
Gerald J. Pollack........ 12,000 4.70 45.56 1/6/2009 343,829 871,331
John P. O'Grady.......... 12,000 4.70 45.56 1/6/2009 343,829 871,331
William A. Kindler....... 7,500 2.94 45.56 1/6/2009 214,893 544,582
</TABLE>
- ---------
(1) The exercise price per share is 100 percent of the fair market value of
Common Shares on the date of grant, January 4, 1999. 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 Rayonier Incentive Stock Plan, upon the
occurrence of a Change of Control of Rayonier (as defined in the Rayonier
Salaried Employees Retirement 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 January 4, 1999, the
projected price of a Common Share would be $74.21 at an assumed annual
appreciation rate of five percent and $118.17 at an assumed annual
appreciation rate of ten percent. Gains to all shareholders at those assumed
annual appreciation rates would be approximately $785 million and $2.0
billion, respectively, over the term of the options.
17
<PAGE>
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table provides information on option exercises in 1999 by the
named Rayonier executives and the value of such executive's unexercised options
to acquire Common Shares at December 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS AT OPTIONS
OPTIONS EXERCISED DURING 1999 12/31/99 HELD AT 12/31/99(2)
------------------------------------ ---------------------- --------------------
SHARES ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED ($)(1) UNEXERCISABLE(#) UNEXERCISABLE($)
---- ------------------ --------------- ---------------------- --------------------
<S> <C> <C> <C> <C>
W. Lee Nutter............. 44,019 928,000 148,552/57,999 2,633,183/283,724
William S. Berry.......... -0- -0- 81,765/27,333 1,351,409/144,185
Gerald J. Pollack......... -0- -0- 45,275/25,500 665,902/128,515
John P. O'Grady........... 2,271 38,664 45,334/25,666 671,505/130,207
William A. Kindler........ -0- -0- 20,668/23,832 143,667/116,732
</TABLE>
- ---------
(1) Before taxes.
(2) The value reported in this column is based on the New York Stock Exchange
consolidated trading closing price of Common Shares of $48.3125 on December
31, 1999.
LONG-TERM INCENTIVE AWARDS TO RAYONIER EXECUTIVES IN LAST FISCAL YEAR
The following table provides information on fiscal year 1999 long-term
incentive awards to Rayonier executives:
AWARDS OF CONTINGENT PERFORMANCE SHARES IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS (3)
-------------------------------------
MAXIMUM
NUMBER PERFORMANCE THRESHOLD TARGET SHARES
NAME OF SHARES (1) PERIOD (2) SHARES (#)(4) SHARES (#) (#)
---- ------------- ----------- ------------- ---------- --------
<S> <C> <C> <C> <C> <C>
W. Lee Nutter........................ 15,000 36 months 7,500 15,000 22,500
William S. Berry..................... 5,000 36 months 2,500 5,000 7,500
Gerald J. Pollack.................... 5,000 36 months 2,500 5,000 7,500
John P. O'Grady...................... 5,000 36 months 2,500 5,000 7,500
William A. Kindler................... 3,000 36 months 1,500 3,000 4,500
</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).
18
<PAGE>
(2) The performance period is for 36 months with TSR performance measured
against 12 forest products sector peer company grouping for the same period.
The 12 forest products companies in the group are identified in the Notes to
the Total Shareholder Return chart on page 6 of this Proxy Statement.
(3) Award payout is in the form of Common Shares and may range from zero to a
maximum of 150 percent of the target award, based upon TSR performance. 100
percent of target is achieved when Rayonier TSR achieves 120 percent of the
TSR performance by peer group companies, and the maximum 150 percent of
target is achieved when Rayonier achieves 160 percent of peer group
performance. A minimum payment of 50 percent of target is paid if Rayonier
achieves 60 percent of peer group performance, and there is no payout if
Rayonier falls below that level. Award payments for performance that falls
between the 60 percent and 120 percent performance hurdles, or between the
120 percent and 160 percent performance hurdles, will be linearly
interpolated. The number of shares awarded is reduced by the number of
shares having a value equal to the amount necessary to cover tax liabilities
associated with the award.
(4) Award payout commences with 50 percent of target share award if Rayonier
achieves 60 percent of peer group performance.
RAYONIER SENIOR EXECUTIVE SEVERANCE PAY PLAN
The Rayonier Supplemental Senior Executive Severance Pay Plan (the "Plan")
provides for severance benefits for covered executives whose employment is
terminated under conditions specified in the Plan within two years after the
occurrence of a "Change in Control." The Plan provides two levels of benefits
for covered executives, who include senior executives identified by the
Compensation and Management Development Committee, based primarily on their
position within the Company.
Under the Plan, if any covered executive is terminated in a qualifying
termination within two years after the occurrence of a Change in Control, such
executive is entitled to receive severance benefits, based on his or her tenure
with the Company, equal to up to three times annual base salary, in the case of
Tier I executives, and up to two times annual base salary, in the case of Tier
II executives, respectively, in each case determined on the basis of base salary
immediately preceding the date of the qualifying termination. The Plan also
provides that the covered executive will be paid in a lump sum the actuarially
adjusted difference between: (a) the value of the covered executive's benefits
under the Company's retirement plans after granting an additional 36 months of
age and service, and including Company contributions that would have been made
for an additional 36 months had the covered executive continued to participate
in the plans at the level of compensation and rate of contribution in effect
immediately preceding the Change in Control; and (b) the benefits actually
payable to the executive under those retirement plans.
Covered executives who have so elected prior to a Change in Control may
receive the foregoing severance benefits over time in the form of salary
continuation benefits provided the covered executive is available to perform
advisory, consultative and similar services. The Plan also provides that covered
executives electing salary continuation will be eligible to continue to
participate in the Company retirement plans and certain welfare benefits of the
Company (excluding long-term and short-term disability and travel accident
plans), during the period of salary continuation. If the salary continuation
period
19
<PAGE>
terminates prior to 36 months, the balance that would have been payable as a
lump sum had salary continuation not been elected will be payable as a lump sum
at that time.
Without regard to whether the covered executive has elected salary
continuation, the Plan provides for payment to each covered executive of a lump
sum equal to three times the executive's target bonus award for the prior year,
in the case of Tier I executives, and two times the executive's target bonus
award for the prior year, in the case of Tier II executives, together with a
bonus award in respect of the year of termination prorated for the portion of
the year employed by the Executive. The target bonus award is based on the prior
year's bonus plan, assuming a 100 percent performance factor.
The Plan also provides for a gross-up for any excise taxes payable with
respect to payments under the Plan and income taxes payable on the gross-up
payment, reimbursement for outplacement services and the continuation of certain
perquisites. As of March 3, 2000, the Plan covers six Tier I executives,
including all executives named in the Summary Compensation Table, and twelve
Tier II executives.
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's 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>
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 of ITT Industries, Inc. (formerly known
as ITT Corporation) ("ITT"). 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
20
<PAGE>
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 (1) 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 (2) 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 Table on page 15,
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 that 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, 2000 are as follows: W. Lee Nutter,
32.7 years; William S. Berry, 19.8 years; Gerald J. Pollack, 17.8 years; John P.
O'Grady, 24.3 years; and William A. Kindler, 3.6 years.
21
<PAGE>
INDEPENDENT ACCOUNTANTS
In accordance with the recommendation of the Audit Committee, the Board of
Directors has reappointed Arthur Andersen LLP as independent auditors of the
Company for 2000. 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 2001 ANNUAL MEETING
Under Rayonier's Bylaws, for business proposed by a shareholder (other than
director nominations) to be a proper subject for action at an Annual
Shareholders meeting, in addition to any requirement of law, the shareholder
must timely request (by Certified Mail--Return Receipt Requested) that the
proposal be included in the Company's proxy statement for the meeting, and such
request must satisfy all of the provisions of Rule 14a-8 under the Securities
Exchange Act of 1934, as amended. Rayonier received no such request from any
shareholder with respect to the 2000 Annual Meeting during the time period
specified by Rule 14a-8.
In order to be included in Rayonier's proxy statement and form of proxy for
the 2001 Annual Meeting of Shareholders and in order to be a proper subject for
action at that meeting, proposals of shareholders intended to be presented to
that meeting must be received at Rayonier's principal executive offices by
November 27, 2000. Shareholder proposals should be directed to the Corporate
Secretary, Rayonier, 50 North Laura Street, Jacksonville, Florida 32202.
ANNUAL REPORTS
Shareholders of record on March 20, 2000 should have received a copy of
Rayonier's 1999 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, 1999 IS AVAILABLE TO EACH
RECORD AND BENEFICIAL OWNER OF RAYONIER'S COMMON SHARES WITHOUT CHARGE UPON
WRITTEN REQUEST TO THE CORPORATE SECRETARY, RAYONIER, 50 LAURA STREET,
JACKSONVILLE, FLORIDA 32202.
22
<PAGE>
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 others 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
[LOGO]
JOHN B. CANNING
Corporate Secretary
Dated: March 29, 2000
23
<PAGE>
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 18, 2000
By signing this card, I(we) hereby authorize W. LEE NUTTER, LISA M.
PALUMBO and JOHN B. CANNING, or any of them, each with full power to appoint his
or her substitute, to vote as Proxy for me(us) at the Annual Meeting of
Shareholders of Rayonier to be held at the Omni Jacksonville Hotel, 245 Water
Street, Jacksonville, Florida on Thursday, May 18, 2000 at 4:00 p.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. BY SIGNING THIS CARD, I (WE) INSTRUCT THE
PROXIES TO VOTE AS THE BOARD OF DIRECTORS RECOMMENDS WHERE I(WE) DO NOT SPECIFY
A CHOICE.
FOR PARTICIPANTS IN THE RAYONIER INVESTMENT AND SAVINGS PLAN FOR
SALARIED EMPLOYEES , THE RAYONIER SAVINGS PLAN FOR NON-BARGAINING HOURLY
EMPLOYEES AT CERTAIN LOCATIONS, THE RAYONIER-JESUP MILL SAVINGS PLAN FOR HOURLY
EMPLOYEES AND THE RAYONIER-FERNANDINA MILL SAVINGS PLAN FOR HOURLY EMPLOYEES: As
to those Common Shares of Rayonier, if any, that are held for me in any
aforementioned Plan, by signing this card, I instruct the Trustee of such Plan
to sign a proxy for me in substantially the form set forth on the reverse side.
THE TRUSTEE SHALL MARK THE PROXY AS I
SPECIFY. BY SIGNING THIS CARD, I
INSTRUCT THE TRUSTEE TO MARK THE PROXY RAYONIER
AS THE BOARD OF DIRECTORS RECOMMENDS P.O. BOX 11027
WHERE I DO NOT SPECIFY A CHOICE. NEW YORK, N.Y. 10203-0027
(Continued and to be dated and signed on the reverse side)
<PAGE>
RAYONIER VOTE BY TELEPHONE OR INTERNET
24 HOURS A DAY, 7 DAYS A WEEK
TELEPHONE INTERNET MAIL
1-800-575-6441 http://proxy.shareholder.com/ryn
Use any touch-tone Use the Internet to vote Mark, sign and date your
telephone to vote your your proxy. Have your proxy card and return it
proxy. Have your proxy proxy card in hand when in the postage-paid
card in hand when you you access the website. envelope we have provided.
call. You will be You will be prompted to
prompted to enter your enter your control
control number, located number, located in the
in the box below, and box below, to create an
then follow the simple electronic ballot.
directions.
Your telephone or Internet vote -------------------------------------
authorizes the named proxies to vote IF YOU HAVE SUBMITTED YOUR PROXY BY
your shares in the same manner as if you TELEPHONE OR THE INTERNET THERE IS NO
marked, signed and returned the proxy NEED FOR YOU TO MAIL BACK YOUR PROXY.
card. -------------------------------------
----------------------------
CALL TOLL-FREE TO VOTE o IT'S FAST AND CONVENIENT CONTROL NUMBER FOR
- ------------------------------------------------- TELEPHONE OR INTERNET VOTING
1-800-575-6441 ----------------------------
- -------------------------------------------------
DETACH PROXY CARD HERE IF YOU ARE NOT
VOTING BY TELEPHONE OR INTERNET
- --------------------------------------------------------------------------------
1. Election of Directors
FOR all nominees |X| WITHHOLD AUTHORITY to vote |X| *EXCEPTIONS |X|
listed below for all nominees listed below.
The Board of Directors recommends a vote "FOR" the nominees listed below:
Nominees: 01 - Rand V. Araskog, 02 - W. Lee Nutter, 03 - Nicholas L.
Trivisonno.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED
BELOW.)
*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 or
postponement thereof.
CHANGE OF ADDRESS AND
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_____________________
PLEASE SIGN, DATE AND RETURN THIS PROXY IN VOTES MUST BE INDICATED
THE ENCLOSED POSTAGE PREPAID ENVELOPE. (X) IN BLACK OR BLUE INK. |X|
- --------------------------------------------------------------------------------
^ PLEASE DETACH HERE ^
YOU MUST DETACH THIS PORTION OF THE PROXY CARD
BEFORE RETURNING IT IN THE ENCLOSED ENVELOPE
