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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 Section240.14a-11(c) or
Section240.14a-12
LOUISIANA-PACIFIC CORPORATION
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(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/ 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:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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:
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(4) Date Filed:
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Proxy Statement and
[LOGO] Notice to Stockholders of
ANNUAL MEETING
MAY 4, 1998
March 23, 1998
Dear Stockholder:
On behalf of the Board of Directors, I cordially invite you to attend the
Annual Meeting of Stockholders of Louisiana-Pacific Corporation. The meeting
will be held on Monday, May 4, 1998, at 9:30 a.m. at The Benson Hotel, 309 S.W.
Broadway, Portland, Oregon. Your Board of Directors and I look forward to
greeting personally those stockholders able to be present.
At this year's meeting, in addition to the election of four directors, you
will be asked to vote upon approval of an employee stock purchase plan. Your
Board of Directors unanimously recommends a vote FOR this proposal. Action will
also be taken on any other matters that are properly presented at the meeting,
including a stockholder proposal which the Board of Directors opposes for the
reasons stated in the proxy statement.
Regardless of the number of shares you own, it is important that they be
represented and voted at the meeting whether or not you plan to attend.
Accordingly, you are requested to sign, date, and mail the enclosed proxy at
your earliest convenience.
The accompanying proxy statement contains important information about the
annual meeting and your corporation. On behalf of the Board of Directors, thank
you for your continued interest and support.
Sincerely,
[SIG]
Mark A. Suwyn
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
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On written request, Louisiana-Pacific will provide, without charge, a copy
of the Corporation's Form 10-K Report for 1997 filed with the Securities and
Exchange Commission (including the financial statements and the schedules
thereto and a list briefly describing the exhibits thereto) to any record holder
or beneficial owner of the Corporation's common stock on March 12, 1998, the
record date for the 1998 Annual Meeting, or to any person who subsequently
becomes such a record holder or beneficial owner. The reports will be available
for mailing in April 1998. Requests should be sent to: Director of Corporate
Affairs, Louisiana-Pacific Corporation, 111 S.W. Fifth Avenue, Portland, Oregon
97204.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
Voting Procedure........................................................................................... 4
Item 1 -- Election of Directors............................................................................ 4
Nominees................................................................................................. 4
Continuing Directors..................................................................................... 5
Retiring Director........................................................................................ 6
Board and Committee Meetings............................................................................. 6
Executive Committee...................................................................................... 6
Audit Committee.......................................................................................... 7
Compensation Committee -- Interlocks and Insider Participation........................................... 7
Environmental Affairs Committee.......................................................................... 7
Nominating Committee; Nominations for Director........................................................... 7
Item 2 -- Approval of 1998 Employee Stock Purchase Plan.................................................... 8
Background............................................................................................... 8
Terms of the Purchase Plan............................................................................... 8
U.S. Federal Income Tax Aspects.......................................................................... 9
Stockholder Approval..................................................................................... 9
Item 3 -- Stockholder Proposal............................................................................. 10
Supporting Statement Submitted by Stockholder............................................................ 10
Recommendation of Board of Directors on Stockholder Proposal............................................. 10
Other Business............................................................................................. 11
Holders of Common Stock.................................................................................... 11
Five Percent Beneficial Owner............................................................................ 11
Directors and Executive Officers......................................................................... 11
Executive Compensation..................................................................................... 13
Compensation Committee Report............................................................................ 13
Performance Graph........................................................................................ 16
Compensation of Executive Officers....................................................................... 17
Retirement Benefits...................................................................................... 19
Management Transactions.................................................................................. 21
Directors' Compensation.................................................................................. 21
Agreements with Executive Officers....................................................................... 22
Stockholder Proposals...................................................................................... 23
Section 16(a) Beneficial Ownership Reporting Compliance.................................................... 23
Relationship with Independent Public Accountants........................................................... 24
General.................................................................................................... 24
Appendix A, 1998 Employee Stock Purchase Plan.............................................................. A-1
</TABLE>
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[LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 4, 1998
The Annual Meeting of Stockholders of Louisiana-Pacific Corporation ("L-P")
will be held at The Benson Hotel, 309 S.W. Broadway, Portland, Oregon, on
Monday, May 4, 1998, at 9:30 a.m., local time, to consider and vote upon the
following matters:
1. Election of four Class I directors.
2. Approval of the 1998 Employee Stock Purchase Plan.
3. A stockholder's proposal, NOT recommended by management, relating to
compensation of non-employee directors.
Only stockholders of record at the close of business on March 12, 1998, are
entitled to notice of and to vote at the meeting.
In accordance with the General Corporation Law of the State of Delaware, a
complete list of the holders of record of L-P Common Stock entitled to vote at
the meeting will be open to examination, during ordinary business hours at L-P's
headquarters located at 111 S.W. Fifth Avenue, Portland, Oregon, for the 10 days
preceding the meeting, by any L-P stockholder for any purpose germane to the
meeting.
Admission to the meeting will be by ticket only. If you are a stockholder of
record and plan to attend, please check the "Annual Meeting" box on the proxy
card. The Admission Ticket attached to the proxy card will admit you to the
meeting. If you are a stockholder whose shares are held through an intermediary
such as a bank or broker and you plan to attend, you may request an Admission
Ticket by writing to 111 S.W. Fifth Avenue, Portland, Oregon 97204. Evidence of
your ownership, such as a bank or brokerage firm account statement, must
accompany your request.
ANTON C. KIRCHHOF, SECRETARY
Portland, Oregon
March 23, 1998
Whether or not you expect to attend the meeting, please sign and date the
enclosed proxy and return it promptly in order that your stock may be voted in
accordance with the terms of the Proxy Statement. If you attend the meeting, you
may withdraw your proxy and vote in person.
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PROXY STATEMENT
Louisiana-Pacific Corporation, a Delaware corporation ("L-P"), is soliciting
proxies on behalf of its Board of Directors to be voted at the 1998 Annual
Meeting of Stockholders (including any adjournment of the meeting). This proxy
statement and the accompanying proxy card are first being sent to stockholders
on approximately March 23, 1998.
Voting Procedure
A proxy card is enclosed for your use. To vote by proxy, please sign, date,
and return the proxy card promptly. For your convenience, a return envelope is
enclosed, which requires no postage if mailed in the United States.
You may indicate your voting instructions on the proxy card in the spaces
provided. Properly completed proxies will be voted as instructed. If you return
a proxy without indicating voting instructions, your shares will be voted in
accordance with the recommendations of the Board of Directors -- FOR items 1 and
2 listed in the Notice of Annual Meeting of Stockholders and AGAINST the
stockholder proposal listed as item 3 in the Notice of Annual Meeting.
If you return a proxy card, you may revoke it (i) by filing either a written
notice of revocation or a properly signed proxy bearing a later date with the
Secretary of L-P at any time before the meeting, or (ii) by voting in person at
the annual meeting.
If you participate in the Automatic Dividend Reinvestment Plan offered by
First Chicago Trust Company of New York, all the shares held for your account in
the plan will be voted in the same manner as shares you vote by proxy. If you do
not vote by proxy, the shares held for your account under the plan will not be
voted.
Only stockholders of record at the close of business on March 12, 1998, are
entitled to receive notice of the annual meeting and to vote at the meeting. At
the record date, there were 109,780,858 shares of common stock, $1 par value
("Common Stock") outstanding. Each share of Common Stock is entitled to one vote
on each matter to be acted upon. A majority of the outstanding shares of Common
Stock represented at the meeting will constitute a quorum. Additional
information concerning holders of outstanding Common Stock may be found under
the heading "Holders of Common Stock" below.
The Board of Directors has adopted a confidential voting policy which
provides that the voting instructions of stockholders are not to be disclosed to
L-P except (i) in the case of communications intended for management, (ii) in
the event of certain contested matters, or (iii) as required by law. Votes will
be tabulated by independent tabulators and summaries of the tabulation will be
provided to management.
Item 1 -- Election of Directors
NOMINEES
Two of the nominees for the Class I director positions to be voted on at the
meeting are now members of the Board of Directors. Two additional nominees, John
W. Barter and Patrick F. McCartan, have been proposed to fill two Class I
vacancies, one occasioned by Gen. Yeager's retirement from the Board and the
other resulting from an increase in the number of Board positions. The term of
office for the positions to be voted on will expire at the Annual Meeting of
Stockholders in 2001. The nominees are:
John W. Barter Nominee for Term Expiring 2001
John W. Barter, age 51, has been Executive Vice President of AlliedSignal,
Inc., and President of AlliedSignal Automotive since October 1994. Mr. Barter
has held various management positions with AlliedSignal, Inc., and its
subsidiaries for more than 20 years.
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William C. Brooks Nominee for Term Expiring 2001
William C. Brooks, age 64, became a director of L-P in 1996. He is Vice
Chairman of Luftig & Warren International, a business performance technology
consulting firm. Mr. Brooks served as Vice President, Corporate Affairs of
General Motors Corporation for more than five years until his retirement in
1997. Mr. Brooks was Assistant Secretary of Labor for the Employment Standards
Administration from July 1989 to December 1990. He is also a director of DTE
Energy Company and Detroit Edison Co.
Patrick F. McCartan Nominee for Term Expiring 2001
Patrick F. McCartan, age 63, has been managing partner of the international
law firm of Jones, Day, Reavis & Pogue for more than five years. He is a Fellow
of the American College of Trial Lawyers and the International Academy of Trial
Lawyers.
Lee C. Simpson Nominee for Term Expiring 2001
Lee C. Simpson, age 63, became President and Chief Operating Officer of L-P
on an interim basis (a position he held until March 1996) and was elected to
fill a vacancy on the Board of Directors in July 1995. He was previously an
executive officer of L-P from 1972 until his retirement in 1991, and he served
as a director of L-P from 1972 until 1993.
Your shares represented by a properly completed and returned proxy card will
be voted FOR the election of the four nominees unless authority to vote is
withheld. If any of the nominees becomes unavailable to serve (which is not
anticipated), your proxy will be voted for a substitute nominee designated by
the Board of Directors.
The four nominees receiving the highest total number of votes will be
elected. Shares not voted for the election of directors, whether because
authority to vote is withheld, because the record holder fails to return a
proxy, because the broker holding the shares does not vote on such issue or
otherwise, will not count in determining the total number of votes for each
nominee.
CONTINUING DIRECTORS
The current members of the Board of Directors, whose terms of office will
continue beyond the 1998 Annual Meeting of Stockholders, are:
Pierre S. du Pont Current Term Expires 1999
Pierre S. du Pont, age 63, has been a director of L-P since August 1991. He
is a partner in the Wilmington, Delaware, law firm of Richards, Layton & Finger.
He is a former governor of Delaware and a former member of the United States
House of Representatives. Gov. du Pont is also a director of Northwestern Mutual
Life Insurance Co. and Whitman Corporation.
William E. Flaherty Current Term Expires 1999
William E. Flaherty, age 65, was nominated by the Board of Directors in
March 1996 to fill a vacancy on the Board. Mr. Flaherty is Chairman of the Board
and a director of Horsehead Resource Development Co., Inc., Horsehead
Industries, Inc., Great Lakes Labor Corporation, and Zina Corporation of
America.
Donald R. Kayser Current Term Expires 1999
Donald R. Kayser, age 67, a private investor, served as interim Chairman and
Chief Executive Officer of L-P from July 28, 1995, to January 1, 1996, and then
served as a consultant to L-P through April 1996. Mr. Kayser retired from his
former position as Executive Vice President and Chief Financial Officer of
Morrison Knudsen Corporation in 1990. He was Senior Vice President and Chief
Financial Officer of
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AlliedSignal, Inc., until July 1988. Mr. Kayser was an executive officer of L-P
until 1982 and has been a director of L-P since 1972. Mr. Kayser is also a
director of Guy F. Atkinson Company of California.
Archie W. Dunham Current Term Expires 2000
Archie W. Dunham, age 59, became a director of L-P in 1996. He is Chief
Executive Officer and President of Conoco, Inc., and an Executive Vice President
and a director of its parent, E. I. du Pont de Nemours and Company. He has
served in various senior executive positions with Conoco, Inc., and its parent
for more than five years.
Bonnie G. Hill Current Term Expires 2000
Bonnie G. Hill, age 56, has been a director of L-P since 1993. Ms. Hill is
President and Chief Executive Officer of the Times Mirror Foundation and Vice
President of Times Mirror Company. Previously, Ms. Hill was Dean of the McIntire
School of Commerce at the University of Virginia from July 1992 to January 1997.
From February 1991 to July 1992, she was Secretary of the California State and
Consumer Services Agency. Formerly, she served as Assistant Secretary for
Vocational and Adult Education in the United States Department of Education. Ms.
Hill is also a director of AK Steel Corporation, Crestar Financial Services,
Hershey Foods Corporation, and Niagara Mohawk Power Corporation.
Mark A. Suwyn Current Term Expires 2000
Mark A. Suwyn, age 55, became Chairman and Chief Executive Officer of L-P
and was elected to fill a vacancy on its Board of Directors effective January 2,
1996. Mr. Suwyn was Executive Vice President of International Paper Company from
1992 through 1995. Previously, he was Senior Vice President of E. I. du Pont de
Nemours and Company.
RETIRING DIRECTOR
The following director will retire at the 1998 annual meeting:
Charles E. Yeager Retiring Effective 1998
Charles E. Yeager, age 75, is a retired Brigadier General, United States Air
Force. Gen. Yeager has been a director of L-P since 1984.
BOARD AND COMMITTEE MEETINGS
During 1997, the Board of Directors held four regular quarterly meetings and
one special telephone conference meeting. Each director attended at least 75
percent of the total number of the meetings of the Board and the meetings held
by all committees of the Board on which he or she served during 1997 except Gen.
Yeager, who attended two-thirds of such meetings.
EXECUTIVE COMMITTEE
The Board of Directors has an Executive Committee of which Mr. Suwyn is
Chair, Ms. Hill and Gov. du Pont are members, and Mr. Dunham is designated as an
alternate member who may replace any absent or disqualified member at any
meeting of the Executive Committee. The Executive Committee held five meetings
in 1997, three of which were telephone conference meetings. The Executive
Committee may exercise all the powers and authority of the Board in the
management of L-P's business and affairs, except that the Executive Committee
may not (i) approve or adopt, or recommend to the stockholders, any action or
matter expressly required by the Delaware General Corporation Law to be
submitted to the stockholders for approval or (ii) adopt, amend or repeal L-P's
bylaws.
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AUDIT COMMITTEE
The Board of Directors has an Audit Committee currently consisting of Ms.
Hill, Chair, Mr. Brooks, Mr. Flaherty, Mr. Simpson, and Gen. Yeager. During
1997, the Audit Committee held three meetings, one of which was a telephone
conference meeting. The Audit Committee reviews and reports to the Board with
respect to various auditing and accounting matters, including the selection of
independent public accountants for L-P, the scope of audit procedures, the
services to be performed by and the fees to be paid to L-P's independent public
accountants, the performance of such accountants and of L-P's internal auditors,
and the accounting practices of L-P.
COMPENSATION COMMITTEE -- INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors has a Compensation Committee currently consisting of
the following directors: Mr. Flaherty, Chair, Mr. Brooks, Mr. Dunham, Ms. Hill,
and Gen. Yeager.
The Compensation Committee held four meetings during 1997, one of which was
a telephone conference meeting. The Compensation Committee's functions are (i)
to administer L-P's 1997 Incentive Stock Award Plan, (ii) to administer L-P's
Annual Cash Incentive Award Plan with respect to the participation therein of
the chief executive officer and other executive officers of L-P whose
compensation may be subject to the limits on deductibility under Section 162(m)
of the Internal Revenue Code of 1986, as amended, and as otherwise provided in
such plan, (iii) to administer each other compensation plan the administration
of which is delegated to the Compensation Committee by the terms of such plan or
by action of the Board of Directors, including, without limitation, the
participation in each of L-P's compensation plans by the chief executive officer
and other executive officers of L-P, and (iv) to exercise all authority of the
Board of Directors with respect to the compensation of the chief executive
officer and other executive officers of L-P, including, without limitation, the
determination of salaries and bonuses.
During 1997, L-P paid $207,000 to the law firm of Richards, Layton & Finger
(in which Gov. du Pont is a partner) for legal services, including an advance of
legal expenses incurred by the individual directors of L-P who were named as
defendants in derivative lawsuits filed by stockholders of L-P (including Gov.
du Pont, Ms. Hill, Mr. Kayser, and Gen. Yeager). Settlement of the lawsuits
without any admission of liability by any defendant received final court
approval in February 1997.
Beginning in October 1997, L-P has provided building materials to Gen.
Yeager with a fair market value of approximately $122,000 in connection with the
construction of two residences in exchange for Gen. Yeager's agreement to appear
in advertising to be developed by L-P during 1998.
Information concerning executive compensation is set forth below under the
caption "Executive Compensation."
ENVIRONMENTAL AFFAIRS COMMITTEE
The Board of Directors has an Environmental Affairs Committee, consisting of
Gov. du Pont, Chair, Mr. Dunham, Mr. Kayser, and Mr. Suwyn. The Environmental
Affairs Committee, which met twice during 1997, is responsible for reviewing the
effectiveness of L-P's environmental compliance program.
NOMINATING COMMITTEE; NOMINATIONS FOR DIRECTOR
The Board of Directors has a Nominating Committee consisting of Mr. Kayser,
Chair, Gov. du Pont, and Mr. Suwyn. The Nominating Committee met twice during
1997. The Nominating Committee is authorized to establish procedures for
selecting and evaluating potential nominees for director and to recommend to the
Board of Directors criteria for membership on the Board, policies on the size
and composition of the Board, candidates for director, and the composition of
Board committees. It will consider stockholders' recommendations concerning
nominees for director. Any such recommendation, including the name and
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qualifications of a nominee, may be submitted to L-P to the attention of the
Chair of the Nominating Committee.
L-P's bylaws provide that nominations for election to the Board of Directors
may be made by the Board or by any stockholder entitled to vote for the election
of directors. Notice of a stockholder's intent to make such a nomination must be
given in writing, by personal delivery or certified mail, postage prepaid, to
the Chairman of the corporation and must include the name and address of the
stockholder and each proposed nominee, a representation that the stockholder is
a record holder of Common Stock and intends to appear in person or by proxy at
the meeting to nominate the person or persons specified in the notice, a
description of any arrangements or understandings pursuant to which the
nominations are to be made, the consent of each proposed nominee to serve as a
director if elected, and such other information regarding each nominee as would
be required to be included in L-P's proxy statement had the person been
nominated by the Board of Directors. With respect to an election to be held at
an annual meeting of stockholders, such notice must be given at least 60 days in
advance of the meeting or, if the meeting is held on a date other than the first
Friday in May, within 10 days after the first public disclosure of the meeting
date.
Item 2 -- Approval of 1998 Employee Stock Purchase Plan
BACKGROUND
In March 1998, the Board of Directors adopted, subject to stockholder
approval, the Louisiana-Pacific Corporation 1998 Employee Stock Purchase Plan
(the "Purchase Plan"), covering a maximum of 1,500,000 shares of Common Stock.
The Purchase Plan allows all employees of L-P and certain of its subsidiaries
the opportunity to subscribe for shares of Common Stock on an installment basis
through payroll deductions. Approximately 12,000 employees are eligible to
participate in the Purchase Plan. L-P has offered similar plans to its employees
for many years.
The Purchase Plan provides for two separate offering and purchase periods.
It is anticipated that 750,000 shares will be offered for subscription during
each offering period. The first offering period will commence on October 1,
1998, and end on October 31, 1998. The first purchase period (the period during
which payroll deductions are made to pay for the shares subscribed for during
the first offering period) will end October 31, 2000. The second offering period
will commence on October 1, 1999, and end on October 31, 1999. The second
purchase period will end October 31, 2001.
TERMS OF THE PURCHASE PLAN
The subscription price per share for each purchase period is the lesser of
(i) 85 percent of the mean between the high and low sale prices for shares of
Common Stock reported on the New York Stock Exchange -- Composite Transactions
on the day before the offering period commences and (ii) the mean between the
high and low sale prices so reported on the date the purchase period ends, or on
any earlier date of purchase provided for in the Purchase Plan. The mean between
the high and low sale prices for Common Stock reported on the New York Stock
Exchange -- Composite Transactions on March 12, 1998, was $23.56 per share.
The number of shares that may be subscribed in each offering period is
limited in relation to the monthly compensation of each employee, up to a
maximum equal to the number of shares which can be purchased with $21,240. The
number of shares subscribed and the purchase price per share is subject to
adjustment in the event of future stock dividends, stock splits or certain other
capital adjustments.
An employee may terminate a subscription at any time before the full
purchase price for the subscribed shares has been paid and be refunded the full
amount withheld, plus interest, at the rate of 5 percent per annum. An employee
may also reduce the number of subscribed shares and (i) receive a refund of the
amount withheld which is in excess of the amount which would have been withheld
if his
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subscription had been for the reduced number of shares, plus interest on the
refund at the rate of 5 percent per annum or (ii) have the excess applied to
reduce the amount of future installments of the purchase price.
An employee whose employment is terminated for any reason other than
retirement, disability, or death (or the personal representative of any employee
who dies after such termination) may, at his election, be refunded the full
amount withheld, plus interest, at the rate of 5 percent per annum, or receive
the whole number of shares which could be purchased at the purchase price with
such amount, together with a cash refund of any balance. An employee who retires
or is permanently disabled (or the personal representative of any employee who
dies while employed, retired, or disabled) at any time before the full purchase
price of the subscribed shares has been paid has the rights described above and,
in addition, may prepay the entire unpaid balance for the subscribed shares and
receive such shares. Any such election must be made within three months
following any termination of employment and prior to the end of the respective
purchase period.
A copy of the Purchase Plan is attached as Appendix A and is incorporated
herein by reference.
U.S. FEDERAL INCOME TAX ASPECTS
For purposes of U.S. federal income taxation, an employee who is
continuously employed by L-P or a subsidiary during the period beginning on the
offering date and ending three months before the date on which the amount of his
payments is no longer subject to withdrawal, and who makes no disposition of the
shares within one year after the date of transfer of the shares to him or within
two years after the offering date, will not receive any taxable income upon his
subscription or when he completes payment for or receives delivery of the
shares. Under these circumstances, there will be no tax effect to L-P (it will
not be entitled to any deduction from income by reason of the employee's
subscription or purchase). Any gain which may be recognized by the employee on
the ultimate disposition of the shares will be treated as ordinary income in an
amount equal to the lesser of (i) the amount of the gain or (ii) the difference
between the maximum purchase price and the market price of Common Stock on the
day preceding commencement of the offering. Gain in excess of such amount or any
loss on disposition will be treated as capital gain or loss.
An earlier disposition of the shares will result in any excess of the fair
market value of the shares at the time of purchase over the purchase price being
treated as compensation taxable to the employee at ordinary income tax rates in
the year in which the disposition occurs, in which event L-P will be entitled to
a corresponding deduction from income.
STOCKHOLDER APPROVAL
In order to meet federal income tax requirements, the Purchase Plan must be
approved by stockholders within 12 months after the date of its adoption by the
Board of Directors. Approval of the Purchase Plan will require the affirmative
vote of the holders of a majority of the shares of Common Stock present, in
person or by proxy, and entitled to vote on such approval at the meeting. Shares
of Common Stock which are not voted on the item (whether by abstention, broker
non-vote, or otherwise) have the effect of a negative vote.
The Board of Directors recommends that stockholders vote FOR the Purchase
Plan.
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Item 3 -- Stockholder Proposal
The following proposal, NOT recommended by management, has been submitted
for inclusion in the proxy statement for action at the annual meeting by Lisa
Rossi-Wubbolding, Post Office Box 249, Boonville, California 95415, who has
indicated that she owns 1,500 shares of Common Stock:
"The Shareholders of Louisiana-Pacific request the Board of Directors
take the necessary steps to amend the company's governing instruments to
adopt the following:
"Beginning on the 1999 Louisiana-Pacific fiscal year all members of the
Board of the Director's total compensation will be solely in shares of
Louisiana-Pacific common stock each year. A significant portion of these
shares shall be held and not sold until their term as a director is up. No
other compensation of any kind will be paid. Including, the elimination of
retirement benefits to directors, excluding existing contracts with
directors."
SUPPORTING STATEMENT SUBMITTED BY STOCKHOLDER
"For many years the Rossi Family have been submitting for shareholder
vote, at this corporation as well as other corporations, proposals aimed at
putting management on the same playing field as the shareholders. This
proposal would do just that.
"Many corporations have seen the wisdom in paying directors primarily or
solely in stock. Ownership in the company is the American way. We feel that
this method of compensation should be welcomed by anyone who feels they have
the ability to direct a major corporation's fortunes. The directors would
receive shares each year and be required to hold a significant portion of
these shares. If the corporation does well, the directors will make more
money in the value of the stock they receive and the dividend that usually
rise with more profits. If things go bad, they will be much more inclined to
correct things, because it will be coming directly out of their pockets.
Instead of the way directors are paid now, where directors receive the same
compensation for good or bad performance."
RECOMMENDATION OF BOARD OF DIRECTORS ON STOCKHOLDER PROPOSAL
The Board of Directors recommends a vote AGAINST the stockholder proposal in
Item 3 for the reasons discussed below.
The Board of Directors and management of L-P support the view that
non-employee directors should have an economic interest in the Company. Share
ownership by L-P's directors is encouraged through grants of stock options under
its 1992 Non-Employee Director Stock Option Plan. The option grants, which
represent a significant element in L-P's compensation package for non-employee
directors, are described in greater detail below under "Executive Compensation
- -- Directors' Compensation." In addition, six of L-P's current non-employee
directors each beneficially owns at least 1,000 shares of L-P's Common Stock.
The ability to attract and retain individuals of exceptional caliber and
experience to serve as directors is essential to L-P's future. L-P's management
believes that a mandatory requirement that all director compensation be in the
form of stock would be viewed by many potential director candidates as a highly
unattractive remuneration package. Also, L-P would no longer have the needed
flexibility to adjust to changing trends in director compensation to remain
competitive with other companies with which L-P competes for the services of
directors. For example, the proposal includes an absolute prohibition on
retirement benefits for directors, which L-P does not currently offer, but may
find advantageous in the future.
In addition, the proposal's vague requirement that a "significant portion"
of the Common Stock paid to non-employee directors be "held and not sold until
their term as a director is up" would be difficult to interpret and apply in
practice. It is not clear what a "significant portion" is or whether "term"
refers to
10
<PAGE>
the three-year term for which a director is elected or extends until the
director resigns, retires, or otherwise ceases to be a director. Also, this
requirement may impose an undue burden on the financial affairs of individual
directors. Among other things, a director may be prohibited from selling a
sufficient number of shares to obtain the cash necessary to pay income taxes
currently due on the compensation income realized by the director.
In conclusion, the Board of Directors and management believe that adoption
of the above proposal would be a disservice to L-P and would significantly
impair its ability to attract and retain qualified candidates to serve as
directors.
For the foregoing reasons the Board of Directors recommends a vote AGAINST
the stockholder proposal in Item 3.
Approval of the stockholder proposal will require the affirmative vote of a
majority of the total votes cast on this item at the meeting. Shares that are
not represented at the meeting, shares that abstain from voting on this item,
and shares not voted on this item by brokers or nominees will not be counted for
purposes of computing a majority.
Other Business
At the time this proxy statement was printed, management knew of no matters
other than the items of business listed in the Notice of Annual Meeting of
Stockholders which might be presented for stockholder action at the meeting. If
any matters other than such listed items properly come before the meeting, the
proxies named in the accompanying form of proxy will vote or refrain from voting
thereon in accordance with their judgment.
Holders of Common Stock
FIVE PERCENT BENEFICIAL OWNER
The Capital Group Companies, Inc., and its wholly owned subsidiary, Capital
Research and Management Company, a registered investment adviser to various
registered investment companies, located at 333 South Hope Street, Los Angeles,
California 90071, have filed a Schedule 13G reporting beneficial ownership as of
December 31, 1997, of 12,191,000 shares (11.1 percent of outstanding shares) of
Common Stock as to which the latter has sole dispositive power. No other person
is known to L-P to own 5 percent or more of the outstanding Common Stock.
DIRECTORS AND EXECUTIVE OFFICERS
The following table summarizes the beneficial ownership of Common Stock of
the directors, nominees for director, current executive officers, and certain
former executive officers of L-P:
<TABLE>
<CAPTION>
Common Stock
Beneficially Owned Approximate
As of March 12, Percent of
Name 1998(1) Class
- ---------------------------------------------------------------------------- --------------------- ---------------
<S> <C> <C>
John W. Barter.............................................................. 1,000 --
William C. Brooks(2)........................................................ 9,100 --
Pierre S. du Pont(2)........................................................ 38,000 --
Archie W. Dunham(2)......................................................... 10,000 --
William R. Flaherty(2)...................................................... 68,200 0.1%
Richard W. Frost(2,3)....................................................... 19,266 --
Stephen R. Grant............................................................ 0 --
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Common Stock
Beneficially Owned Approximate
As of March 12, Percent of
Name 1998(1) Class
- ---------------------------------------------------------------------------- --------------------- ---------------
<S> <C> <C>
Michael D. Hanna(2,3)....................................................... 44,100 --
Bonnie G. Hill(2)........................................................... 45,300 --
Donald R. Kayser(2)......................................................... 78,797 0.1%
Karen D. Lundquist(2,3)..................................................... 20,266 --
J. Keith Matheney(2,3)...................................................... 32,995 --
Patrick F. McCartan......................................................... 0 --
Lee C. Simpson(2)........................................................... 39,243 --
Mark A. Suwyn(2,3,4)........................................................ 253,306 0.2%
Charles E. Yeager(2)........................................................ 28,400 --
All current directors and executive officers
as a group (19 persons)(2,3,4)............................................. 765,338 0.7%
</TABLE>
- ------------------------
(1) Shares are shown as beneficially owned if the person named in the table
has or shares the power to vote or direct the voting of, or the power to
dispose of, or direct the disposition of, such shares. Inclusion of shares
in the table does not necessarily mean that the persons named have any
economic beneficial interest in shares set forth opposite their respective
names.
(2) Includes shares reserved for issuance under immediately exercisable
options and options which will become exercisable within 60 days after March
12, 1998, as follows: Mr. Brooks, 9,000 shares; Gov. du Pont, 36,500 shares;
Mr. Dunham, 9,000 shares; Mr. Flaherty, 18,000 shares; Mr. Frost, 14,334
shares; Mr. Hanna, 30,334 shares; Ms. Hill, 45,000 shares; Mr. Kayser,
45,000 shares; Ms. Lundquist, 16,834 shares; Mr. Matheney, 18,467 shares;
Mr. Simpson, 18,000 shares; Mr. Suwyn, 118,500 shares; and Gen. Yeager,
27,000 shares; and all current directors and executive officers as a group,
476,070 shares.
(3) Includes shares held by the L-P Salaried Employee Stock Ownership Trust
(the "ESOT") and beneficially owned by the following officers: Mr. Frost,
1,232 shares; Mr. Hanna, 1,232 shares; Ms. Lundquist, 1,232 shares; Mr.
Matheney, 8,701 shares; and Mr. Suwyn, 2,356 shares; and all current
executive officers as a group, 21,542 shares.
(4) Includes 90,000 shares of unvested restricted stock which Mr. Suwyn has
the power to vote.
12
<PAGE>
Executive Compensation
COMPENSATION COMMITTEE REPORT
To the Stockholders of Louisiana-Pacific Corporation:
Overview
The goals of L-P's executive compensation program are to recruit and retain
qualified and talented executives who will provide effective leadership in
meeting the challenges facing the Company and to provide those executives with
competitive pay and incentives for performance while aligning their interests
with those of L-P's stockholders. During 1996, the Board of Directors, the
Compensation Committee, and management undertook a comprehensive review of L-P's
executive compensation practices. As part of the process, L-P retained two
outside consulting firms to provide information concerning competitive practices
and to make recommendations concerning compensation programs. The review process
culminated in adoption of a new overall compensation strategy in January 1997.
The principal objectives of the new compensation strategy are (i) to
reinforce L-P's business organization and strategic direction, (ii) to be
sufficiently competitive to attract and retain needed management talent, and
(iii) to provide compensation that is performance-based and aligned with
stockholder interests yet remains fair, reasonable, and simple. To accomplish
these objectives, the Compensation Committee approved a program with four
principal elements -- base salary, annual cash incentive opportunities, annual
stock option grants, and, for selected senior executives, annual awards of stock
contingent on performance. Cash incentive opportunities are awarded under the
L-P Annual Cash Incentive Award Plan, which became effective March 1, 1997.
Annual stock option grants and awards of performance shares are made under L-P's
1997 Incentive Stock Award Plan which became effective March 1, 1997, and was
approved by the stockholders at the 1997 annual meeting.
In general, base salary is intended to be competitive at the median with
other forest products companies. In addition, there will be annual opportunities
for cash incentive payments based on corporate performance, business unit
performance, and individual performance, which, if performance targets are met,
should permit an executive to receive total cash compensation at above median
levels for the forest products industry. Annual stock option grants in an amount
based on individual performance will recognize individual achievement while
aligning management interests with stockholder interests, reinforcing long-term
performance, and facilitating stock ownership. Annual performance-contingent
awards of stock will be based upon four-year total shareholder return measured
against a defined peer group, providing selected senior executives with
significant incentives to maximize stockholder value and increase their equity
participation in L-P.
In addition to the elements of the compensation strategy described above,
the Compensation Committee and Board of Directors approved the establishment of
a deferred compensation plan for executives and a supplemental retirement plan
for selected senior executives. The Executive Deferred Compensation Plan, which
became effective May 1, 1997, provides for elective pretax deferrals of up to 50
percent of base salary and up to 100 percent of cash bonuses. The Supplemental
Executive Retirement Plan ("SERP"), which became effective July 1, 1997, is
designed to provide competitive target retirement benefits when combined with
other company-paid retirement benefits and social security. L-P's chief
executive officer, Mark A. Suwyn, does not participate in the SERP because he
has a separate supplemental retirement benefit under his employment agreement,
which is described in detail under the caption "Retirement Benefits" below.
Determination of Base Salaries
In early 1997, the Compensation Committee established new base salaries for
executive officers based upon a review of salaries at 20 other forest products
industry companies (including all of the companies included in the Standard &
Poor's Paper & Forest Products Index). This review resulted in a
13
<PAGE>
13 percent increase in base salary for the chief executive officer for 1997.
This positioned Mr. Suwyn's base salary at the median (50th percentile) for
chief executive officers in the industry. Due to individual circumstances, the
salaries for certain executive officers for 1997 were below the median salary
for comparable positions at the other forest products companies reviewed.
Grants of Cash Incentive Awards
In the spring of 1997, the Compensation Committee approved annual cash
incentive award opportunities under L-P's Annual Cash Incentive Award Plan,
subject to achievement of specified performance goals, for Mr. Suwyn and certain
other executive officers. The target amounts of the awards were based on the
salary of each participant and ranged from approximately 40 to 70 percent of
base salary. In accordance with his employment agreement entered into in January
1996, Mr. Suwyn's target amount equaled 70 percent of his base salary.
Depending upon the extent to which performance goals are met, the actual
amount paid as a cash incentive award may range from zero to 150 percent of the
target amount. The performance goals for each participating executive for 1997
were based 50 percent on L-P's earnings per share and 50 percent on objective
individual and business unit goals unique to each of the participants.
The business criteria on which individual performance goals are based
include goals related to success in developing and implementing particular tasks
assigned to an individual executive. These goals, therefore, naturally vary
depending upon the responsibilities of individual executives and may include,
without limitation, goals related to success in developing and implementing
particular management plans or systems, reorganizing departments, establishing
business relationships, or resolving identified problems. For 1997, the
individual performance goals for Mr. Suwyn included goals related to the
improvement of the financial performance of specified business units, the
disposition of identified non-strategic assets, new product line development,
employee training and development levels, the implementation of new safety,
information and compensation systems, and the resolution of certain legal
issues.
The business criteria on which business unit performance goals are based
include a combination of financial goals and strategic goals related to the
performance of an identified business unit for which an executive has
responsibility. Strategic goals for a business unit may include one or a
combination of objective factors related to success in implementing strategic
plans or initiatives, introducing products, constructing facilities, or other
identifiable objectives. Financial goals for a business unit may include the
degree to which the business unit achieves one or more measures related to its
revenues, earnings, profitability, efficiency, operating profit, costs of
production, or other measures, whether expressed as absolute amounts or as
ratios or percentages, which may be measured against various standards,
including budget targets, improvement over prior years, and performance relative
to other companies or business units.
In January 1998, the Compensation Committee determined that the level of
attainment of the corporate goal relating to L-P's earnings per share was 0
percent. Therefore, 1997 cash incentive awards for all executives were based on
the remaining 50 percent of target awards relating to individual and business
unit goals. Based on the determination by the Compensation Committee of the
level of attainment of each of Mr. Suwyn's individual performance goals, his
actual cash incentive award for 1997 was set at 62.5 percent of the target
level. The Compensation Committee also approved, with Board concurrence, Mr.
Suwyn's determination of levels of achievement of the individual and business
unit performance goals assigned to other participating executives, resulting in
1997 cash incentive awards for executive officers other than Mr. Suwyn ranging
from 85 percent to 125 percent of target levels.
Grants of Stock Options
Another significant element in L-P's compensation program is annual grants
of nonstatutory stock options. In May 1997, the Compensation Committee granted
to each executive officer an option with a
14
<PAGE>
value at date of grant (using the Black-Scholes valuation model) equal to a
percentage of the executive's base salary. The options will become exercisable
in three equal annual installments beginning one year from the date of grant and
terminate 10 years after the date of grant. The value of the award for a given
executive officer was determined based upon competitive levels and the
individual's performance level, and ranged from 70 to 108 percent of 1997 base
salary, except for Mr. Suwyn, whose option grant had a value equal to 115
percent of his 1997 base salary.
Performance-Contingent Stock Awards
In March and July of 1997, the Compensation Committee granted
performance-contingent stock awards to selected senior executives. Each grant
entitles the participant to receive a number of shares of L-P Common Stock
determined by comparing L-P's total annualized stockholder return to the mean
annualized total stockholder return of five other forest products companies (all
of which are included in the Standard & Poor's Paper & Forest Products Index)
for the four-year period beginning on January 1 of the year of grant.
Targeted award levels ranging in amount from 40 to 60 percent (based on the
executive's position) of 1997 base salary are payable in shares to participating
executives if L-P's cumulative total stockholder return is a specified
percentage above the mean total stockholder return of the specified comparison
group. Mr. Suwyn's targeted award level was 60 percent of his 1997 base salary,
or 19,500 shares of L-P Common Stock.
Depending upon L-P's four-year total stockholder return for the four years
ending December 31, 2000, in comparison to the group, the actual number of
shares issued could range from zero to 200 percent of the targeted amount. Of
the shares earned, 50 percent would be paid at the end of the four-year period,
and 50 percent would remain subject to forfeiture for an additional two years if
the participant leaves L-P's employment within the two-year restriction period.
Deductibility of Compensation
To the extent consistent with its goal of maintaining a fair and competitive
compensation package, the Compensation Committee attempts to structure L-P's
executive compensation to be deductible for income tax purposes by complying
with applicable tax requirements, including limits on deductibility of certain
types of compensation. An example is last year's submission for approval by
stockholders of L-P's 1997 Incentive Stock Award Plan and performance goals for
use in connection with annual cash incentive awards.
Respectfully submitted,
William E. Flaherty, Chair
William C. Brooks
Archie W. Dunham
Bonnie G. Hill
Charles E. Yeager
15
<PAGE>
PERFORMANCE GRAPH
The following graph is required to be included in this proxy statement under
applicable rules of the Securities and Exchange Commission. The graph compares
the total cumulative return to investors, including dividends paid (assuming
reinvestment of dividends) and appreciation or depreciation in stock price, from
an investment in L-P Common Stock for the period January 1, 1993, through
December 31, 1997, to the total cumulative return to investors from the Standard
& Poor's 500 Stock Index and the Standard & Poor's Paper and Forest Products
Index for the same period, in each case assuming investment of $100 on December
31, 1992. Stockholders are cautioned that the graph shows the returns to
investors only as of the dates noted and may not be representative of the
returns for any other past or future period.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
Louisiana-Pacific Corporation, S&P 500, and S&P Paper and Forest Products
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Louisiana-Pacific Corporation S&P 500 S&P Paper & Forest Products
<S> <C> <C> <C>
1992 $ 100 $ 100 $ 100
1993 140 110 110
1994 94 112 115
1995 85 153 126
1996 76 189 140
1997 70 251 150
</TABLE>
16
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term Compensation
--------------------------
Awards
--------------------------
Annual Compensation Number of
Restricted Shares
---------------------- Stock Underlying All Other
Name and Principal Position Year Salary Bonus(1) Awards Options/SARs Compensation(2)
- --------------------------------------------- ---- -------- ---------- ---------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Mark A Suwyn 1997 $680,004 $ 150,000 115,500 $ 16,412
Chairman and Chief Executive Officer 1996 $600,000 $1,040,000(3) $3,825,000(4) 200,000 $251,438
Michael D. Hanna 1997 $280,000 $ 220,000 46,000 $110,998
Executive Vice President(5) 1996 $163,333 $ 145,822 45,000 $ 10,568
Stephen R. Grant 1997 $185,096 $ 750,000
Senior Vice President, Compliance(6) 1996 $375,000 $ 750,000 $ 37,500
1995 $156,250 30,000(7)
J. Keith Matheney 1997 $200,000 $ 52,500 23,000 $ 17,339
Vice President, Sales and Marketing(8) 1996 $150,003 $ 50,000 $ 16,339
1995 $125,000 $ 10,970 $ 15,787
Karen D. Lundquist 1997 $190,000 $ 50,000 50,500 $ 41,782
Vice President, Manufacturing(9)
Richard W. Frost 1997 $170,000 $ 70,000 19,000 $ 16,027
Vice President, Timberlands and Fiber 1996 $ 95,795 $ 70,000 24,000 $ 12,048
Procurement(10)
</TABLE>
- ------------------------------
(1) Amounts shown for 1997 (other than for Mr. Grant) represent settlement of
annual cash incentive opportunities awarded under L-P's Annual Cash
Incentive Award Plan based on satisfaction of performance goals established
in the spring of 1997.
(2) Amounts shown for 1997 include (i) the annual contribution to the ESOT as
follows: Mr. Suwyn, $16,000; Mr. Hanna, $16,000; Mr. Grant, $0; Mr.
Matheney, $16,000; Ms. Lundquist, $16,000; and Mr. Frost, $16,000; (ii)
interest accrued under L-P's Executive Deferred Compensation Plan (to the
extent that such interest exceeds amounts accrued at a rate equal to 120
percent of the applicable federal long-term rate), compounded monthly, as
follows: Mr. Suwyn, $412; Mr. Hanna, $1,077; Mr. Matheney, $0; Ms.
Lundquist, $0; and Mr. Frost, $27; (iii) profit sharing and vacation accrual
benefits payable to Mr. Hanna under the terms of benefit arrangements
provided by his prior employer that were assumed by L-P, $93,921; (iv)
premiums paid on behalf of Mr. Matheney for life insurance in excess of
group life insurance provided to salaried employees generally, $1,339; and
(v) relocation benefits provided to Ms. Lundquist, $25,782.
(3) Mr. Suwyn's 1996 bonus included $440,000 paid upon satisfaction of
performance goals, plus a $600,000 one-time contractual payment intended as
a replacement for an amount likely to have been paid by his previous
employer.
(4) At December 31, 1997, Mr. Suwyn held 120,000 shares of restricted stock
with a dollar value of $2,280,000, subject to future vesting or forfeiture.
The restricted stock award made in 1996 for a total of 150,000 shares vests
as to 30,000 shares on each of January 1, 1997, 1998 and 1999, and the
remaining 60,000 shares upon reaching age 62 while employed by L-P, subject
to acceleration of vesting as to all shares upon the occurrence of certain
specified events during Mr. Suwyn's term of employment, including a Change
in Control of L-P. See "Agreements with Executive Officers" below. Dividends
are payable on restricted stock at the same time as dividends on
unrestricted shares of Common Stock.
(5) Mr. Hanna became an officer of L-P following L-P's acquisition of his
previous employer on June 3, 1996. Amounts for 1996 represent compensation
from L-P only.
(6) Mr. Grant was employed by L-P from August 1, 1995, until May 31, 1997.
(7) The amount shown represents the number of phantom shares awarded pursuant
to an employment agreement with Mr. Grant. See "Agreements with Executive
Officers" below. One-half of the phantom shares represent the right to
receive a payment in cash on August 1, 1996, and the other half to receive a
cash payment on August 1, 1997, in each case, equal to the excess, if any,
of the market value of the Common Stock at the time (based on a 20 trading
day average) over $24.625, which was the market price of the Common Stock on
July 31, 1995. The phantom shares expired without payment.
17
<PAGE>
(8) At December 31, 1997, the number of restricted stock performance awards,
and the value thereof at such date assuming all shares were vested, held by
Mr. Matheney subject to the future satisfaction of performance criteria were
5,000 shares, with a value of $95,000.
(9) Ms. Lundquist became an officer of L-P in January 1997.
(10) Mr. Frost became an officer of L-P in May 1996.
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants(1) Potential Realizable
---------------------------------------------------------- Value at Assumed Annual
Number of Percent of Total Rates of Stock Price
Shares Options/SARs Exercise Appreciation for Option
Underlying Granted to or Base Term
Options/SARs Employees During Price Per Expiration -----------------------
Name Granted 1997 Share Date 5 Percent 10 Percent
- --------------------------------------------- ------------ ---------------- --------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Mark A. Suwyn................................ 115,500 14.6% $19.125 May 2007 $1,389,422 $3,521,046
Michael D. Hanna............................. 46,000 5.8% $19.125 May 2007 $ 553,380 $1,402,080
Stephen R. Grant............................. 0 -- -- -- 0 0
J. Keith Matheney............................ 23,000 2.9% $19.125 May 2007 $ 276,690 $ 701,040
Karen D. Lundquist........................... 30,000 3.8% $21.125 January 2007 $ 398,562 $1,010,034
20,500 2.6% $19.125 May 2007 $ 246,615 $ 624,840
Richard W. Frost............................. 19,000 2.4% $19.125 May 2007 $ 228,570 $ 579,120
</TABLE>
- ------------------------------
(1) No stock appreciation rights ("SARs") were granted to the named executive
officers during 1997. All options were granted for the number of shares
indicated at exercise prices equal to the fair market value of the Common
Stock on the date of grant. The options will vest in three equal annual
installments beginning one year following the date of grant, subject to
acceleration of exercisability in the event of a change in control of L-P.
If such acceleration of exercisability results in an "excess parachute
payment" within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), the amount of any excise tax imposed on a
participant by Section 4999(a) of the Code directly attributable to such
acceleration will be reimbursed by L-P, together with any income or excise
taxes imposed on such reimbursement. Ms. Lundquist's employment agreement
provides that her option for 30,000 shares will also become immediately
exercisable in full if her employment with L-P is terminated without cause
or due to death or disability, if her duties are substantially reduced or
curtailed, or if Mr. Suwyn ceases to be L-P's chief executive officer. See
"Agreements with Executive Officers."
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values(1)
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at December 31, In-the-Money Options at
1997 December 31, 1997
--------------------------- ---------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ------------------------------------ ----------- -------------- ----------- --------------
<S> <C> <C> <C> <C>
Mark A. Suwyn....................... 40,000 275,500 $ 0 $ 0
Michael D. Hanna.................... 15,000 76,000 18,900 37,800
Stephen R. Grant.................... 0 0 0 0
J. Keith Matheney................... 10,800 23,000 89,316 0
Karen D. Lundquist.................. 0 50,500 0 0
Richard W. Frost.................... 8,000 35,000 0 0
</TABLE>
- ------------------------
(1) The named executive officers did not exercise any options or SARs during
1997 and did not hold any SARs at December 31, 1997.
18
<PAGE>
Long-Term Incentive Plans-Awards in 1997(1)
<TABLE>
<CAPTION>
Performance Estimated Future Payouts Under Non- Stock
Number of Period Until Price-Based Plans(2)
Performance Maturation -------------------------------------------
Name Shares(1) or Payout Threshold(#) Target(#) Maximum(#)
- ----------------------------------------- ------------- ------------ --------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Mark A. Suwyn............................ 19,500 1/97-12/00 3,900 19,500 39,000
Michael D. Hanna......................... 6,171 1/97-12/00 1,234 6,171 12,342
Stephen R. Grant......................... 0 -- 0 0 0
J. Keith Matheney........................ 3,526 1/97-12/00 705 3,526 7,052
Karen D. Lundquist....................... 3,350 1/97-12/00 670 3,350 6,700
Richard W. Frost......................... 3,085 1/97-12/00 612 3,085 6,170
</TABLE>
- ------------------------
(1) Represents performance-contingent stock awards granted under L-P's 1997
Incentive Stock Award Plan in March and July of 1997. Each grant entitles
the participant to receive a number of shares of Common Stock determined by
comparing L-P's annualized total stockholder return ("L-P's TSR") to the
mean annualized total stockholder return of five other forest products
companies (the "Industry TSR") for the four-year performance period ending
December 31, 2000.
(2) The actual number of performance shares to be issued pursuant to an award,
expressed as a percentage of the award, will range from 20% if L-P's TSR is
3 percentage points below the Industry TSR to 200% if L-P's TSR is 13
percentage points above the Industry TSR, and will be equal to the target
amount if L-P's TSR is 3 percentage points above the Industry TSR. The
number of target performance shares will be automatically adjusted to
reflect a stock dividend or stock split and the deemed reinvestment of cash
dividends declared on the Common Stock during the performance period. Of the
performance shares earned, if any, 50% are payable at the end of the
four-year performance period, provided that the participant continues to be
an employee of L-P, and 50% will remain subject to forfeiture for an
additional two years if the participant leaves L-P's employment within the
two-year restriction period. Special provisions apply in case of the
participant's death or disability, retirement after age 60 with the approval
of L-P's chief executive officer, or a change in control of L-P.
RETIREMENT BENEFITS
Effective July 1, 1997, L-P adopted the L-P Supplemental Executive
Retirement Plan (the "SERP"), a defined benefit plan intended to provide
supplemental retirement benefits to key executives designated by the committee
appointed to administer the SERP. The following table shows the estimated annual
benefits
19
<PAGE>
payable to participants in the SERP upon retirement based on the indicated years
of credited service and compensation levels (without reduction for Social
Security or ESOT benefits):
Pension Plan Table
<TABLE>
<CAPTION>
Years of Credited Service
Final Average ----------------------------
Compensation 5 10 15
- --------------------------------------------- -------- -------- --------
<S> <C> <C> <C>
$ 150,000................................... $ 25,000 $ 50,000 $ 75,000
200,000................................... 33,333 66,667 100,000
300,000................................... 50,000 100,000 150,000
400,000................................... 66,667 133,333 200,000
500,000................................... 83,333 166,667 250,000
600,000................................... 100,000 200,000 300,000
700,000................................... 116,667 233,333 350,000
800,000................................... 133,333 266,667 400,000
1,000,000................................... 166,667 333,333 500,000
1,200,000................................... 200,000 400,000 600,000
1,400,000................................... 233,333 466,667 700,000
</TABLE>
Participants will become fully vested in their benefits under the SERP after
completing five years of participation in the SERP, beginning January 1, 1997.
Vesting will be accelerated in the event of the participant's death or
disability or a change in control of L-P.
The annual benefit payable under the SERP is equal to 50 percent of final
average compensation multiplied by a fraction the numerator of which is years of
credited service (up to a maximum of 15) and the denominator of which is 15.
Years of credited service are determined under the provisions of the ESOT, L-P's
tax-qualified employee stock ownership plan for salaried employees to which L-P
contributes a minimum of 10 percent of the total compensation of all
participants each year to be invested in Common Stock. If a participant's
employment is terminated within 36 months after a change in control of L-P
occurs, he or she will be credited with two additional years of service. The
years of service credited to the executive officers named in the Summary
Compensation Table above as of December 31, 1997, are as follows: Mr. Suwyn, 5.8
years; Mr. Hanna, 7.5 years; Mr. Grant, not applicable; Mr. Matheney, 27.75
years; Ms. Lundquist, 1 year; and Mr. Frost, 1.6 years.
Final average compensation is defined as a participant's compensation during
the 60 consecutive months out of the last 120 months of employment in which the
participant's compensation was highest, divided by five. Compensation includes
base pay and annual cash incentives (for the executive officers named in the
Summary Compensation Table above, salary plus annual bonus) paid to a
participant or deferred under L-P's Executive Deferred Compensation Plan, but
excludes all other benefits. If a participant's employment is terminated within
36 months after a change in control of L-P, benefits under the SERP will be
calculated based on the participant's base salary during the preceding 12 months
plus the average annual cash incentive paid in the preceding three years, if
higher than final average compensation.
Retirement benefits shown in the table above are expressed in terms of
single life annuities, are subject to reduction in the event of retirement
before age 62 and will be reduced by an amount equal to the sum of (i) 50
percent of the participant's primary Social Security benefit determined at age
62 and (ii) the participant's ESOT balance converted to a life annuity.
Pursuant to Mr. Suwyn's employment agreement with L-P, he is entitled to a
nonqualified supplemental executive retirement benefit in which he is
immediately vested to the extent accrued. The annual retirement benefit payable
to Mr. Suwyn under the agreement (calculated as a single life annuity reduced
on an actuarial basis for retirement prior to age 62) is equal to an amount
based on
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Mr. Suwyn's compensation (salary plus annual bonus) for the year during the
three consecutive calendar years prior to termination of employment in which he
had the highest compensation (including with his previous employer), with a
maximum annual benefit equal to 50 percent of such compensation (less a Social
Security offset) and a minimum annual benefit equal to 25 percent of such
compensation. The annual benefit so calculated will be reduced by an amount
equal to benefits payable to Mr. Suwyn pursuant to the ESOT and the retirement
plans maintained by his prior employer. In the event of a change in control of
L-P, Mr. Suwyn will be entitled to two additional years of service for purposes
of the foregoing benefit. If Mr. Suwyn were to retire on December 31, 1998, the
annual supplemental retirement benefit payable by L-P, without any reductions,
pursuant to the provisions of the agreement is estimated to be $300,000. See
"Agreements with Executive Officers."
MANAGEMENT TRANSACTIONS
The consulting firm of Rapid Change Technologies, Inc. ("RCT"), provided
consulting services to L-P and furnished training and decision-making skills to
L-P employees during 1997. Fees paid to RCT during 1997 totaled approximately
$2,374,000, including reimbursement of expenses, which represented approximately
85 percent of RCT's 1997 revenues. In February of 1998, L-P advanced RCT
$250,000 as a prepayment for future services. Karen Lundquist had a 40 percent
ownership interest in RCT and was, until her election as L-P's Vice President,
Manufacturing in January 1997, an officer of RCT. Ms. Lundquist resigned as an
officer of RCT on December 31, 1996, and has not received or been entitled to
receive any compensation from RCT since that date. She sold her ownership
interest to RCT on March 11, 1998.
During 1996, L-P acquired Associated Chemists, Inc. ("ACI"). Michael Hanna,
president and a shareholder of ACI, who subsequently became Executive Vice
President of L-P, received $5,700,000 for his ACI shares; $2,915,000 of such
amount is payable on a deferred basis. Mr. Hanna received approximately $255,000
in interest on the deferred balance in 1997.
During 1997 L-P used, and expects to continue to use during 1998, the legal
services of Jones, Day, Reavis & Pogue, of which Patrick F. McCartan is the
managing partner, in connection with the divestiture of certain assets. Mr.
McCartan has been nominated for election as a Class I director.
See "Item 1 -- Election of Directors; Compensation Committee -- Interlocks
and Insider Participation" for a description of two additional transactions. See
also "Agreements with Executive Officers."
DIRECTORS' COMPENSATION
Each director of L-P who is not an employee of L-P receives for all services
as a director fees at the rate of $20,000 per year, plus $1,750 for each board
meeting attended, $1,000 for each committee meeting attended ($1,250 for
committee chairpersons) and, for participation in each telephone conference
meeting, $750 for a board meeting and $500 for a committee meeting ($750 for
committee chairpersons).
Effective July 1, 1997, the Board of Directors adopted a new unfunded
deferred compensation plan for directors which permits outside directors to
elect to defer payment of any portion of their director fees and meeting fees,
provided that the minimum deferral amount is $2,400 per year. Such deferred
compensation, including amounts deferred under the prior plan, earns interest at
a rate equal to two percentage points above Moody's Average Corporate Bond Yield
Index, adjusted monthly. Payment of deferred amounts will generally be made, at
the director's option, in a lump sum or in substantially equal annual
installments over a 5-year, 10-year or 15-year period beginning either within 65
days or during the month of January after he or she ceases to be a director.
L-P's 1992 Non-Employee Director Stock Option Plan (the "Director Plan")
provides for the automatic granting every five years of options to purchase
shares of Common Stock to members of the Board of Directors who are not
employees of L-P or any of its subsidiaries. Each option under the Director Plan
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entitles the holder to purchase 45,000 shares of Common Stock at a price equal
to 85 percent of the fair market value (as defined) of a share of Common Stock
on the date of grant. Each option becomes exercisable as to 20 percent of the
shares covered by the option (i.e., 9,000 shares) on each of the first through
fifth anniversaries of the date of grant. Options become immediately exercisable
in full upon the death of the holder or upon the occurrence of a change in
control of L-P. Each option expires ten years after the date of grant, subject
to earlier termination if the holder ceases to be a member of the Board of
Directors. Upon a director's mandatory retirement as of the next annual meeting
of stockholders after reaching age 70, an additional 20 percent of his or her
option will immediately vest if not yet vested and the director will have two
years following retirement during which to exercise his or her options, after
which all such options will terminate.
AGREEMENTS WITH EXECUTIVE OFFICERS
L-P has entered into an employment agreement with Mark A. Suwyn with respect
to his employment as L-P's Chairman and Chief Executive Officer. The term of the
agreement expires on December 31, 1998, subject to automatic extension annually
thereafter unless 90 days' prior notice of intention to terminate is given by
either party.
The agreement provides that Mr. Suwyn is entitled to a minimum base salary
of $600,000, subject to annual review for increase by the Board of Directors
beginning in 1997, and an annual bonus, subject to satisfying reasonable annual
performance goals established by the Compensation Committee. The agreement also
provides for a nonqualified supplemental retirement benefit as described above
under "Retirement Benefits." In addition, Mr. Suwyn is entitled under the
agreement to participate in all L-P employee benefit arrangements at a level
commensurate with his position.
In the event Mr. Suwyn's employment is terminated by Mr. Suwyn for Good
Reason (as defined) or by L-P for any reason other than disability or Cause (as
defined), or if the agreement is not renewed pursuant to notice by L-P, Mr.
Suwyn will be entitled to receive an amount equal to his base salary, as then in
effect, for the remainder of the term of the agreement or 24 months, whichever
is longer, plus a PRO RATA cash incentive payment for the year of termination
and certain continued medical benefits. He will also be entitled to all other
amounts and benefits in which he is then or thereby becomes vested, including
all of the stock options and restricted shares referred to above.
If a Change in Control occurs and Mr. Suwyn's employment terminates
(including voluntarily by Mr. Suwyn) during the 13-month period following the
Change in Control other than for Cause or by death or disability, Mr. Suwyn will
be entitled to receive, in addition to all amounts and benefits in which he is
vested, an amount equal to his base salary, as then in effect, for the remainder
of the term of the agreement or 24 months, whichever is longer, together with
(i) a PRO RATA share of the targeted annual cash incentive award for the year in
which such termination occurs; (ii) a bonus equal to two times the targeted
annual cash incentive award, if any, for such year payable in 24 equal monthly
installments; and (iii) employee welfare benefits substantially similar to those
which he was receiving immediately prior to such termination.
For purposes of the agreement, a "Change in Control" of L-P includes
certain extraordinary corporate transactions pursuant to which less than a
majority of the combined voting power in L-P remains in the hands of the
holders immediately prior to such transactions, a person or group (other than
certain persons related to L-P) becoming the beneficial owner of 25 percent or
more of the combined voting power in L-P, or, with certain exceptions, the
existing directors of L-P ceasing to constitute a majority of the Board of
Directors. "Cause" includes continuing to fail to devote substantially all
one's business time to L-P's business and affairs, engaging in certain
activities competitive with L-P, or the commission of specified wrongful acts.
"Good Reason" includes failure to maintain Mr. Suwyn as Chairman and Chief
Executive Officer, a reduction in base salary or the termination or
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reduction of any employee benefits, certain extraordinary corporate
transactions, certain relocations of Mr. Suwyn's place of work, or any material
breach of the agreement by L-P.
If any payment under the agreement is determined to be subject to the
federal excise tax imposed on benefits that constitute excess parachute payments
under the Code, Mr. Suwyn will be entitled to reimbursement for such taxes on an
after-tax basis.
In connection with his employment as Senior Vice President, Compliance on
August 1, 1995, Stephen R. Grant entered into an employment agreement with L-P
providing for an annual base salary of $375,000, together with customary
employee benefits and a monthly $2,500 housing allowance. The agreement also
provided for an award of phantom shares as reflected in the Summary Compensation
Table above. Mr. Grant's employment with L-P terminated in accordance with the
terms of the agreement on May 31, 1997.
In connection with L-P's acquisition of Michael D. Hanna's former employer
in May 1996, L-P agreed to assume ACI's contractual obligations to Mr. Hanna,
including maintaining his salary and bonus as shown in the Summary Compensation
Table for 1997, for a period of three years. Under Mr. Hanna's agreement with
ACI, he is entitled to two years' notice of termination of employment, other
than for cause.
L-P entered into an employment agreement with Karen D. Lundquist effective
January 1, 1997, in connection with her employment as Vice President,
Manufacturing of L-P. The term of the agreement expires on December 31, 1999,
and will be automatically extended unless amended or superseded by a new
agreement. The agreement provides for an initial base salary and bonus for 1997
and relocation benefits as shown in the Summary Compensation Table. L-P may
terminate the agreement (i) for cause upon 30 days' written notice, (ii) without
cause upon 90 days' written notice, (iii) by reason of death or (iv) due to
disability upon 30 days' written notice. Upon termination pursuant to clauses
(ii), (iii) or (iv), Ms. Lundquist will be entitled to receive a severance
payment equal to nine months' base salary then in effect plus, if such
termination is after December 31, 1999, an amount equal to one month of base
salary for each full or partial year of employment with L-P up to a maximum of
18 months' salary, together with the greater of (a) the sum of the short-term
and long-term incentive payments made to Ms. Lundquist for the prior year
prorated to the date of termination and (b) the amount of short-term and
long-term incentive compensation owed to Ms. Lundquist at the date of
termination, if determinable.
Stockholder Proposals
Stockholder proposals intended to be considered for inclusion in the proxy
statement and proxy for the 1999 Annual Meeting of Stockholders of L-P must be
received by L-P no later than November 23, 1998.
L-P's bylaws permit business in addition to that included in its proxy
materials to be presented at an annual meeting of stockholders by a stockholder
of record, provided that such stockholder gives written notice thereof to the
Chairman in the manner and within the time periods described under "Item 1 --
Election of Directors; Nominating Committee; Nominations for Director" above
with respect to nominations for director. Such notice must include, as to each
matter the stockholder proposes to bring before the annual meeting, a brief
description of the business and the reason for presenting it, the name and
address of the stockholder as they appear on L-P's stock ledger, a
representation that the stockholder is a record holder and intends to appear at
the meeting in person or by proxy to propose such business, and any material
interest of the stockholder in such business. The meeting chairman shall, if the
facts warrant, determine that any such business was not properly brought before
the meeting and so declare to the meeting, whereupon such business shall not be
transacted.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16 of the Securities Exchange Act of 1934 ("Section 16") requires
that reports of beneficial ownership of Common Stock and changes in such
ownership be filed with the Securities and Exchange
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Commission (the "SEC") and the New York Stock Exchange by L-P's officers,
directors, and certain other "reporting persons." Based solely upon a review of
copies of Section 16 reports filed by L-P's reporting persons and written
representations by such persons, to L-P's knowledge, all Section 16 reporting
requirements applicable to such persons were complied with for the period
specified in the SEC's rules governing proxy statement disclosures, except
Richard W. Frost, who filed one amended report relating to one additional
transaction after the required due date.
Relationship with Independent Public Accountants
The Board of Directors has appointed Deloitte & Touche LLP, independent
public accountants, to examine the financial statements of L-P for 1998. L-P
expects representatives of Deloitte & Touche LLP to be present at the annual
meeting and to be available to respond to appropriate questions from
stockholders. The accountants will have the opportunity to make a statement at
the annual meeting if they desire to do so.
L-P engaged Deloitte & Touche LLP as its principal independent accountants
to audit L-P's financial statements effective October 26, 1997, upon the
recommendation and approval of the Audit Committee. Arthur Andersen LLP, the
independent accounting firm previously engaged as principal accountants to audit
L-P's financial statements, was concurrently dismissed effective October 26,
1997.
None of the reports of Arthur Andersen LLP for 1995 or 1996 contained any
adverse opinion or disclaimer of opinion or was qualified or modified as to
uncertainty, audit scope, or accounting principles. Also during 1995, 1996 and
the portion of 1997 preceding the dismissal of Arthur Andersen LLP, there were
no disagreements between L-P and Arthur Andersen LLP on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure which, if not resolved to the satisfaction of Arthur Andersen LLP,
would have caused Arthur Andersen LLP to make reference to the subject matter of
the disagreement or disagreements in its reports.
During 1995, 1996 and the portion of 1997 preceding the engagement of
Deloitte & Touche LLP, L-P did not, nor did anyone on L-P's behalf, consult
Deloitte & Touche LLP regarding either (i) the application of accounting
principles to a specified completed or proposed transaction or the type of
audit opinion that might be rendered on L-P's financial statements as to which
a written report or oral advice was provided to L-P that was an important
factor considered by L-P in reaching a decision as to such accounting, auditing
or financial reporting issue, or (ii) any matter that was the subject of a
disagreement between L-P and Arthur Andersen LLP or an event of the type
described in the preceding paragraph.
General
The cost of soliciting proxies will be borne by L-P. In addition to the
solicitation of proxies by the use of the mails, some of the officers and
regular employees of L-P, without extra compensation, may solicit proxies
personally or by other means such as telephone, telecopier, telegraph, or cable.
L-P will request brokers, dealers, banks, voting trustees, and their
nominees who hold Common Stock of record to forward soliciting material to the
beneficial owners of such stock and will reimburse such record holders for their
reasonable expenses in forwarding material. L-P has retained D.F. King & Co.,
Inc., to assist in such solicitation for an estimated fee of $9,500 plus
reimbursement for certain expenses.
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APPENDIX A
LOUISIANA-PACIFIC CORPORATION
1998 EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE OF THE PLAN. This Plan shall be known as the "Louisiana-Pacific
Corporation 1998 Employee Stock Purchase Plan." The purpose of the Plan is to
permit employees of Louisiana-Pacific Corporation ("the Company") and of its
Subsidiaries (as hereinafter defined) to obtain or increase a proprietary
interest in the Company by permitting them to make installment purchases of
shares of the Company's Common Stock (as hereinafter defined) through payroll
deductions. The Plan is intended to qualify as an "employee stock purchase plan"
within the meaning of Section 423 of the Internal Revenue Code of 1986 (the
"Code").
2. DEFINITIONS.
(a) COMMON STOCK. The Company's $1 par value common stock as presently
constituted and shares of common stock which may be issued by the Company in
exchange for or reclassification thereof.
(b) OFFERING DATES.
(i) FIRST OFFERING DATE. October 1, 1998.
(ii) SECOND OFFERING DATE. October 1, 1999.
(c) OFFERING PERIODS.
(i) FIRST OFFERING PERIOD. The period beginning on October 1, 1998,
and ending on October 31, 1998.
(ii) SECOND OFFERING PERIOD. The period beginning on October 1, 1999,
and ending on October 31, 1999.
(d) PURCHASE DATES.
(i) FIRST PURCHASE DATE. October 31, 2000, or any earlier date of
purchase pursuant to subscriptions entered into during the First Offering
Period.
(ii) SECOND PURCHASE DATE. October 31, 2001, or any earlier date of
purchase pursuant to subscriptions entered into during the Second
Offering Period.
(e) PURCHASE PERIODS.
(i) FIRST PURCHASE PERIOD. The period beginning on November 1, 1998,
and ending on October 31, 2000.
(ii) SECOND PURCHASE PERIOD. The period beginning on November 1,
1999, and ending on October 31, 2001.
(f) PURCHASE PRICE. The lesser of (i) the Maximum Purchase Price or (ii)
the mean between the reported high and low sale prices of Common Stock on
the New York Stock Exchange -- Composite Transactions on the applicable
Purchase Date or on the last day preceding such date on which such Exchange
shall have been open. The Purchase Price per share shall be subject to
adjustment in accordance with the provisions of Section 18 of this Plan.
(g) MAXIMUM PURCHASE PRICE. 85 percent of the mean between the reported
high and low sale prices of Common Stock on the New York Stock Exchange --
Composite Transactions on the last day preceding the applicable Offering
Date on which such Exchange shall have been open.
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(h) ELIGIBLE EMPLOYEES. Those persons who on the applicable Offering
Date are employees of the Company or a Subsidiary except those who,
immediately prior to the applicable Offering Date, would be deemed under
Section 423(b)(3) of the Code to own stock possessing 5 percent or more of
the total combined voting power or value of all classes of stock of the
Company or any other corporation that constitutes a parent or subsidiary
corporation of the Company within the meaning of that section.
(i) PARTICIPANT. An Eligible Employee who subscribes for the purchase of
shares of Common Stock under the Plan in accordance with the Plan.
(j) MONTHLY COMPENSATION. For an Eligible Employee on the payroll of the
Company or a Subsidiary for the entire calendar month preceding the
applicable Offering Date, the compensation paid or accrued to such Eligible
Employee for such month plus, in the case of such an Eligible Employee whose
compensation for such month was based wholly or partly on a bonus,
commission, profit sharing or similar arrangement for which no accrual was
made for such month, an amount equal to the portion attributable to one
month of the amount accrued to such Eligible Employee as of the day
preceding the applicable Offering Date, on the books of the Company or its
Subsidiaries in accordance with such arrangement. For all other Eligible
Employees, Monthly Compensation shall be the monthly rate of compensation in
effect immediately prior to the applicable Offering Date. For all purposes
of the Plan, Monthly Compensation shall include any amount which is
contributed by the Company or a Subsidiary pursuant to a salary reduction
agreement and which is not includable in the gross income of an Eligible
Employee under Code Sections 125 (relating to "cafeteria plans") or
402(a)(8) (relating to elective contributions under a "401(k)" plan).
(k) SUBSIDIARY. A corporation of which, on the applicable Offering Date,
the Company or a subsidiary of the Company owns at least 51 percent of the
total combined voting power of all classes of stock and whose employees are
authorized to participate in the Plan by the Board of Directors of the
Company.
3. THE OFFERING. The number of shares of Common Stock subject to the Plan
shall be 1,500,000, subject to adjustment as provided in Section 18 below.
During each Offering Period the Company may offer, at the applicable Purchase
Price, for subscription by Eligible Employees in accordance with the terms of
the Plan, such number of authorized and unissued or treasury shares of its
Common Stock subject to the Plan as may be determined by the Board of Directors
of the Company.
4. SUBSCRIPTIONS.
(a) SHARES SUBJECT TO SUBSCRIPTION. During each Offering Period, each
Eligible Employee shall be entitled to subscribe for the number of whole
shares of Common Stock offered during such Offering Period designated by him
in accordance with the terms of the Plan; provided, however, that the
minimum number of such shares that may be subscribed for shall be the number
of whole shares that can be purchased, at the Maximum Purchase Price for
such Offering Period, with $1,200, and the maximum number of such shares
that may be subscribed for shall be the number of whole shares that can be
purchased, at the Maximum Purchase Price for such Offering Period, with the
lesser of (i) $21,240 or (ii) 50 percent of the Eligible Employee's Monthly
Compensation multiplied by 24.
(b) FURTHER LIMITATION ON SUBSCRIPTIONS. Notwithstanding Section 4(a)
above, the maximum number of shares that may be subscribed for by an
Eligible Employee shall be further limited and reduced to the extent that
the number of shares owned by such Eligible Employee immediately after any
Offering Date for purposes of Section 423(b)(3) of the Code plus the maximum
number of shares set forth in Section 4(a) above would exceed 5 percent of
the total combined voting power or value of all classes of stock of the
Company or a parent or subsidiary corporation of the Company within the
meaning set forth in Section 423(b)(3) of the Code. Notwithstanding any
other provision in the Plan,
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the minimum number of shares that may be purchased by a Participant shall
not be less than 25 shares on any Purchase Date.
(c) SUBSCRIPTION AGREEMENTS. Subscriptions pursuant to the Plan shall be
evidenced by the completion and execution of subscription agreements in the
form provided by the Company and delivery of such agreements to the Company,
at the place designated by the Company, prior to the expiration of each
Offering Period. Except as provided in the Plan, no subscription agreement
shall be subject to termination or reduction during the Offering Period to
which it relates without written consent of the Company.
(d) OVER SUBSCRIPTION. In the event that the aggregate number of shares
subscribed pursuant to the Plan as of any Purchase Date shall exceed the
number of shares offered for sale during the Offering Period related to such
Purchase Date, then each subscription for such Offering Period pursuant to
which a purchase is effected shall be reduced to the number of shares that
such subscription would cover in the event of a proportionate reduction of
all subscriptions for such Offering Period outstanding on such Purchase Date
so that the aggregate number of shares subject to all such subscriptions
would not exceed the number of shares offered for sale during such Offering
Period. In making such reductions, fractions of shares shall be disregarded
and each subscription shall be for a whole number of shares.
5. APPROVAL OF STOCKHOLDERS. The Plan shall be submitted for approval by
stockholders of the Company prior to March 1, 1999. Subscriptions shall be
subject to the condition that, prior to such date, the Plan shall be approved by
the stockholders of the Company in the manner contemplated by Section 423(b)(2)
of the Code and Treasury Regulation Section 1.423-2(c). If not so approved prior
to such date, the Plan shall terminate, all subscriptions hereunder shall be
canceled and be of no further force and effect, and all Participants shall be
entitled to the prompt refund in cash of all sums withheld from and paid by them
pursuant to the Plan.
6. PAYMENT OF PURCHASE PRICE. Except as otherwise specifically provided in
the Plan, the Purchase Price of all shares purchased hereunder shall be paid in
equal installments (in the currency in which the Participant is paid) through
payroll deduction from the Participant's compensation during the applicable
Purchase Period, without the right of prepayment. Each installment shall be in
an amount (in the currency in which the Participant is paid) calculated as of
the Offering Date to be equal to the Maximum Purchase Price multiplied by the
number of shares subscribed for divided by twice the number of annual pay
periods for such Participant, with appropriate adjustment of future payroll
deductions for a Participant whose payroll period changes. A Participant shall
pay the amount of any difference between the Purchase Price and the amount so
withheld in cash not later than the applicable Purchase Date; there shall be an
appropriate reduction in the number of shares to be purchased by a Participant
who fails to make such a required payment.
7. APPLICATION OF FUNDS; PARTICIPANTS' ACCOUNTS. All amounts withheld from
and paid by Participants hereunder shall be deposited in the Company's general
corporate account to be used for any corporate purposes; provided, however, that
the Company shall maintain a separate bookkeeping account for each Participant
hereunder reflecting all amounts withheld from and paid by such Participant with
respect to each Purchase Period under the Plan. No interest shall be credited to
such separate accounts.
8. ISSUANCE OF SHARES. Shares purchased under the Plan shall, for all
purposes, be considered to have been issued, sold and purchased at the close of
business on the applicable Purchase Date. Prior to each applicable Purchase
Date, no Participant shall have any rights as a holder of any shares covered by
a subscription agreement. Promptly after each Purchase Date, the Company shall
issue and deliver to the Participant a stock certificate or certificates
representing the whole number of shares purchased by him during the Purchase
Period ending with such Purchase Date and refund to the Participant in cash any
excess amount in his account relating to such Purchase Period. Alternatively,
instead of paper stock certificates, the Company may distribute shares in
book-entry form, where the Participant is provided
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with a statement that reflects the number of shares registered electronically in
his name on the Company's books. No adjustment shall be made for dividends or
for other rights for which the record date is prior to the applicable Purchase
Date, except as may otherwise be provided in Section 18; provided, however, that
the number of shares to be issued and delivered to a Participant upon a Purchase
Date shall be reduced by the number of shares and fractions thereof equal in
value, determined as of said Purchase Date, to the amount of any required
withholding by the Company of U.S. federal and state taxes from the
Participant's income attributable to the purchase of said shares.
Notwithstanding the foregoing, shares to be otherwise delivered as aforesaid
following a Purchase Date may, at the option of the Company, be held in the
possession of the Company for the benefit of a Participant for up to one year
following a Purchase Date for the purpose of satisfying U.S. federal and state
income tax withholding and reporting obligations of the Company on the income of
the Participant attributable to the sale of the purchased shares within said
one-year period. In the event purchased shares are so held by the Company, such
shares shall be, upon written instruction from the Participant, sold or
transferred by gift in accordance with such instructions; provided, however,
that in the case of an instruction by the Participant to sell all or a portion
of said shares, the Company shall effect the sale for the Participant on the New
York Stock Exchange at a discount brokerage rate with the proceeds, less any
applicable tax withholding, promptly remitted to the Participant.
9. RIGHT TO TERMINATE SUBSCRIPTION. Each Participant shall have the right,
at any time after the expiration of each Offering Period and prior to the
applicable Purchase Date, to terminate his subscription relating to such
Offering Period by written notice to the Company and receive a prompt refund in
cash of the total amount in his account with respect to the applicable Purchase
Period.
10. RIGHT TO REDUCE NUMBER OF SHARES. Each Participant shall have the
right, at any time after the expiration of each Offering Period and prior to the
applicable Purchase Date, to make, by written notice to the Company, a
one-time-only reduction in the number of shares covered by his subscription
agreement relating to such Offering Period (but not below the minimum number of
shares provided in Section 4(b)). Upon such reduction of shares, an appropriate
reduction shall be made in the Participant's future payroll deductions during
the applicable Purchase Period and the excess amount in the Participant's
account with respect to such Purchase Period resulting from such reduction shall
be promptly refunded to the Participant in cash or, at the option of the
Participant, shall be applied in equal amounts against all future installment
payments of the Maximum Purchase Price of the reduced number of shares to be
purchased during the applicable Purchase Period.
11. TERMINATION OF EMPLOYMENT. Subject to Section 4(b), upon termination of
employment of a Participant for any reason other than retirement, disability or
death, including by reason of the sale of the Subsidiary by which the
Participant is employed such that the Company or a Subsidiary of the Company no
longer owns at least 51 percent of the total combined voting power of all
classes of stock of the Subsidiary, a Participant shall have, during the period
of three months following his termination date, but prior to the applicable
Purchase Date, the right with respect to each Purchase Period for which he has
an account under the Plan to elect to receive either a refund in cash of the
total amount of his account relating to such Purchase Period or the whole number
of shares that can be purchased at the applicable Purchase Price with such
amount together with any remaining cash in his account relating to such Purchase
Period. Each election must be in writing and delivered to the Company within the
aforementioned period. If the Participant elects to receive shares, the Purchase
Date shall be the date the Participant's election is delivered to the Company.
In the event the Participant does not make a timely election with respect to any
Purchase Period for which he has an account under the Plan, he shall be deemed
to have elected to receive a cash refund of the amount of his account relating
to such Purchase Period.
12. RETIREMENT; DISABILITY. A Participant who retires or whose employment
is terminated by reason of any injury or illness of such a serious nature as to
disable the Participant from resuming employment with the Company shall have all
of the rights described in Section 11 above and shall have the
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additional right to elect, in the manner described in Section 11, to prepay in
cash in a lump sum the entire unpaid balance of the Purchase Price of the shares
covered by his subscription agreement relating to each Purchase Period and to
receive such shares. The Purchase Date for this purpose shall be the date on
which both the Participant's election and the lump-sum cash payment shall have
been delivered to the Company. For purposes of the Plan, a termination of
employment at or after age 60 for any reason shall be considered retirement.
13. DEATH. In the event of the death of a Participant while in the employ
of the Company or a Subsidiary and prior to full payment of the Maximum Purchase
Price for the shares covered by his subscription with respect to each Purchase
Period, or the death of a retired or disabled Participant prior to the exercise
of his rights described in Section 12 above, his personal representative shall
have, during the period of three months following termination of the
Participant's employment, but prior to the applicable Purchase Date, the rights
described in Section 12. In the event of the death of a Participant who
previously terminated employment by reason other than retirement or disability
prior to full payment of the Maximum Purchase Price for the shares covered by
his subscription with respect to each Purchase Period and prior to the exercise
of his rights described in Section 11, his personal representative shall have
the rights described in Section 11.
14. TERMINATION, RETIREMENT OR DEATH PRIOR TO STOCKHOLDER
APPROVAL. Notwithstanding Sections 11, 12, and 13, if the Plan shall not have
been approved by stockholders of the Company as described in Section 5 prior to
the time for the exercise of any rights described in Sections 11, 12 or 13, the
Participant or his personal representative shall only have, under said Sections,
the right to receive a refund in cash of the total amount in his account with
respect to each Purchase Period.
15. TEMPORARY LAYOFF; LEAVES OF ABSENCE. A Participant's installment
payments with respect to each Purchase Period shall be suspended during any
period of absence from work due to temporary layoff or leave of absence without
pay. If such Participant returns to active employment within the applicable
Purchase Period, installment payments shall resume and the Participant shall be
entitled to elect either to make up the deficiency in his account with respect
to such Purchase Period immediately with a lump-sum cash payment, or to have
future installments with respect to such Purchase Period uniformly increased to
make up the deficiency, or to have an appropriate reduction made in the number
of shares covered by his subscription agreement with respect to such Purchase
Period to eliminate the deficiency. The election (together with the lump-sum
cash payment, if applicable) must be delivered to the Company within 10 days of
the Participant's return to active employment but prior to the applicable
Purchase Date. If the Participant fails to make a timely election, the
appropriate reduction of shares shall be made in accordance with the above. If
the Participant does not return to active employment within the applicable
Purchase Period, he shall have the right to elect to receive either a refund in
cash of the total amount of his account with respect to such Purchase Period or
the whole number of shares which can be purchased at the applicable Purchase
Price with such amount together with any remaining cash in his account with
respect to the Purchase Period. The election must be in writing and delivered to
the Company prior to, and shall be effective as of, the applicable Purchase
Date. In the event the Participant does not make a timely election with respect
to any Purchase Period, he shall be deemed to have elected to receive the cash
refund with respect to that Purchase Period.
16. INSUFFICIENCY OF COMPENSATION. In the event that for any payroll
period, for reasons other than termination of employment for any reason,
temporary layoff or leave of absence without pay, a Participant's compensation
(after all other proper deductions from his compensation) becomes insufficient
to permit the full withholding of his installment payment, the Participant may
pay the deficiency in cash when it becomes due. In the event that, in a
subsequent payroll period, the Participant's compensation becomes sufficient to
make the full installment payment and there still remains a deficiency in his
account, the deficiency must then be eliminated through the election of one of
the alternatives described in Section 15. The Participant must deliver his
election to the Company within 10 days of the end of such subsequent payroll
period but prior to the applicable Purchase Date. In the event that on the
applicable
A-5
<PAGE>
Purchase Date there remains a deficiency in such a Participant's account or, in
the event a Participant described above fails to make a timely election, the
appropriate reduction of shares shall be made in accordance with Section 15.
17. INTEREST. Any person who becomes entitled to receive any amount of cash
refund from any account maintained for him pursuant to any provision of the Plan
shall be entitled to receive in cash, at the same time, simple interest on the
amount of such refund at the rate of 5 percent per annum. Any refund shall be
deemed to be made from the most recent payment or payments made by the
Participant pursuant to the Plan.
18. EFFECT OF CERTAIN STOCK TRANSACTIONS. If at any time prior to the
second Purchase Date the Company shall effect a subdivision of shares of Common
Stock or other increase (by stock dividend or otherwise) of the number of shares
of Common Stock outstanding, without the receipt of consideration by the Company
or another corporation in which it is financially interested and otherwise than
in discharge of the Company's obligation to make further payment for assets
theretofore acquired by it or such other corporation or upon conversion of stock
or other securities issued for consideration, or shall reduce the number of
shares of Common Stock outstanding by a consolidation of shares, then (a) in the
event of such an increase in the number of such shares outstanding, the number
of shares then remaining subject to the Plan and the number of shares of Common
Stock then subject to Participants' subscription agreements shall be
proportionately increased and the Maximum Purchase Price and the Purchase Price
per share for each Purchase Period affected by such event shall be
proportionately reduced and (b) in the event of such a reduction in the number
of such shares outstanding, the number of shares then remaining subject to the
Plan and the number of shares of Common Stock then subject to subscription
agreements shall be proportionately reduced and the Maximum Purchase Price and
the Purchase Price per share for each Purchase Period affected by such event
shall be proportionately increased. Except as provided in this Section 18, no
adjustment shall be made under the Plan or any subscription agreement by reason
of any dividend or other distribution declared or paid by the Company.
19. MERGER, CONSOLIDATION, LIQUIDATION OR DISSOLUTION. In the event of any
merger or consolidation of which the Company is not to be the survivor (or in
which the Company is the survivor but becomes a subsidiary of another
corporation), or the liquidation or dissolution of the Company, each Participant
shall have the right immediately prior to such event to elect to receive the
number of whole shares that can be purchased at the Purchase Price applicable to
each Purchase Period with respect to which such Participant has subscribed for
purchase of Common Stock with the full amount that has been withheld from and
paid by him pursuant to the subscription agreement relating to such Purchase
Period, together with any remaining excess cash in his account relating to such
Purchase Period. If such election is not made with respect to the amount in a
Participant's account for any Purchase Period, the Participant's subscription
agreement shall terminate and he shall receive a prompt refund in cash of the
total amount in such account.
20. LIMITATION ON RIGHT TO PURCHASE. Notwithstanding any provision of the
Plan to the contrary, if at any time a Participant is entitled to purchase
shares of Common Stock on a Purchase Date, taking into account such
Participant's rights, if any, to purchase Common Stock under the Plan and all
other stock purchase plans of the Company and of other corporations that
constitute parent or subsidiary corporations of the Company within the meaning
of Sections 425(e) and (f) of the Code, the result would be that, during the
then current calendar year, such Participant would have first become entitled to
purchase under the Plan and all such other plans a number of shares of Common
Stock of the Company that would exceed the maximum number of shares permitted by
the provisions of Section 423(b)(8) of the Code, then the number of shares that
such Participant shall be entitled to purchase pursuant to the Plan on such
Purchase Date shall be reduced by the number that is one more than the number of
shares that represents the excess, and any excess amount in his account
resulting from such reduction shall be promptly refunded to him in cash.
A-6
<PAGE>
21. NON-ASSIGNABILITY. None of the rights of an Eligible Employee under the
Plan or any subscription agreement entered into pursuant hereto shall be
transferable by such Eligible Employee otherwise than by will or the laws of
descent and distribution, and during the lifetime of an Eligible Employee such
rights shall be exercisable only by him.
22. SHARES NOT PURCHASED. Shares of Common Stock subject to the Plan that
are not subscribed for during the First Offering Period and shares subscribed
for pursuant to the First Offering Period that thereafter cease to be subject to
any subscription agreement hereunder shall remain subject to and reserved for
use in connection with the Second Offering Period. Shares of Common Stock
subject to the Plan that are not subscribed for during the Second Offering
Period and shares subscribed for during the Second Offering Period that
thereafter cease to be subject to any subscription agreement hereunder shall be
free from reservation for use in connection with the Plan.
23. CONSTRUCTION; ADMINISTRATION. All questions with respect to the
construction and application of the Plan and subscription agreements thereunder
and the administration of the Plan shall be settled by the determination of the
Board of Directors or of one or more other persons designated by it, which
determinations shall be final, binding and conclusive on the Company and all
employees and other persons. All Eligible Employees shall have the same rights
and privileges under the Plan. The Purchase Price, the Maximum Purchase Price,
and the amount in each Participant's account shall be denominated in United
States dollars and amounts received from or paid to any Participant in any other
currency shall be converted into United States dollars at the exchange rate in
effect on the date of receipt or payment.
24. TERMINATION OR AMENDMENT. The Plan may be terminated or amended in any
way by the Board of Directors at any time prior to approval of the Plan by the
stockholders of the Company pursuant to Section 5. Subsequent to such approval
of the Plan by the stockholders of the Company, the Plan may be amended by the
Board of Directors, provided that no such amendment shall (a) adversely affect
the rights of employees under subscription agreements theretofore entered into
pursuant to the Plan or (b) increase the maximum number of shares of Common
Stock offered under the Plan or decrease the price per share, except pursuant to
Section 18.
A-7
<PAGE>
LOUISIANA-PACIFIC CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING MAY 4, 1998
The undersigned hereby constitutes and appoints Archie W. Dunham,
P Bonnie G. Hill, and Mark A. Suwyn, and each of them, his true and
R lawful agents and proxies, each with full power of substitution, to
O represent and vote the common stock of Louisiana-Pacific Corporation
X ("L-P"), which the undersigned may be entitled to vote at the Annual
Y Meeting of L-P stockholders to be held May 4, 1998, or at any
adjournment thereof.
Nominees for Election as Directors:
John W. Barter, William C. Brooks, Patrick F. McCartan, Lee C. Simpson
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES
ON THE REVERSE SIDE. YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. BY SIGNING ON THE
REVERSE, YOU ACKNOWLEDGE RECEIPT OF THE 1998 NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS AND ACCOMPANYING PROXY STATEMENT AND REVOKE ALL PROXIES
HERETOFORE GIVEN BY YOU TO VOTE AT SAID MEETING OR ANY ADJOURNMENT THEREOF.
----------------
SEE REVERSE SIDE
----------------
- --------------------------------------------------------------------------------
* DETACH AND RETURN PROXY CARD; RETAIN ADMISSION TICKET *
ADMISSION TICKET
[Logo]
LOUISIANA-PACIFIC CORPORATION
111 S.W. Fifth Avenue
Portland, Oregon 97204
(503) 221-0800
"We have a new, more responsive structure.
We have the right people in place.
We have exciting new products in the field.
Our six basic strategies are working.
Now it's up to us to execute them for profitable growth."
-- Mark A. Suwyn
Chairman and CEO
<PAGE>
/X/ PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
This proxy when properly executed will be voted in the manner directed herein.
If no direction is made, this proxy will be voted FOR the election of directors,
FOR proposal 2 and AGAINST proposal 3.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS AND FOR
PROPOSAL 2.
FOR WITHHELD
1. Election of Directors (see reverse) / / / /
FOR all nominees except as marked to the contrary below:
- --------------------------------------------------------
FOR AGAINST ABSTAIN
2. Approval of 1998 Employee Stock Purchase Plan. / / / / / /
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL 3.
FOR AGAINST ABSTAIN
3. Stockholder proposal, NOT recommended by
management, relating to director compensation. / / / / / /
If any other matters properly come before the meeting, this proxy will be voted
by the proxies named herein in accordance with their best judgment.
- ------------------------------------------------------------------
I/we plan to attend the Annual Meeting (Admission Ticket attached) / /
- ------------------------------------------------------------------
SIGNATURE(S) DATE
------------------------------------------ -------------------
NOTE: Please sign exactly as your name appears hereon. If signing for estates,
trusts, or corporations, title or capacity should be stated. If shares are
held jointly, each holder should sign.
- --------------------------------------------------------------------------------
* DETACH AND RETURN PROXY CARD; RETAIN ADMISSION TICKET *
[Logo]
LOUISIANA-PACIFIC CORPORATION
111 S.W. Fifth Avenue
Portland, Oregon 97204
(503) 221-0800
Annual Meeting of Stockholders
May 4, 1998
ADMISSION TICKET
The Annual Meeting of Stockholders of Louisiana-Pacific Corporation will be held
at 9:30 a.m. on May 4, 1998, at The Benson Hotel, 309 S.W. Broadway, Portland,
Oregon 97204. Public transportation to the hotel is available from the airport,
and there is ample public parking in the vicinity of the hotel.
Your voted proxy card should be detached and returned as soon as possible in the
enclosed postpaid envelope. If you plan to attend the Annual Meeting, please
mark the attendance box on the proxy card, and retain this Admission Ticket. The
use of admission tickets expedites registration of stockholders at the Annual
Meeting and is helpful to us in making arrangements for the meeting.
On May 4, 1998, please present this Admission Ticket to the Louisiana-Pacific
representative at the entrance to the Annual Meeting.
--Anton C. Kirchhof
Secretary
