<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
The Mead Corporation
- --------------------------------------------------------------------------------
(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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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:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
The Mead Corporation
Mead World Headquarters
Courthouse Plaza Northeast
Dayton, Ohio 45463
March 12, 1997
To the Holders of Common Shares:
The Annual Meeting of Shareholders of The Mead Corporation will be held at
the Blair Auditorium, Sinclair Community College, 444 West Third Street, Dayton,
Ohio, on Thursday, April 24, 1997 at 4:00 p.m. Formal Notice of the Meeting and
Proxy Statement accompany this letter.
A prompt execution and return of your proxy will both assure the presence
of a quorum at the meeting and minimize the cost of the proxy solicitation. A
postage paid envelope is enclosed for your convenience in replying.
Very truly yours,
Steven C. Mason
Chairman of the Board
<PAGE>
Notice of Annual
Meeting Of Shareholders
The Mead Corporation Dayton, Ohio
Mead World Headquarters March 12, 1997
Courthouse Plaza Northeast
Dayton, Ohio 45463
To the Holders of Common Shares of
THE MEAD CORPORATION
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of The Mead
Corporation will be held at the Blair Auditorium, Sinclair Community College,
444 West Third Street, Dayton, Ohio, on Thursday, April 24, 1997 at 4:00 p.m.,
for the following purposes:
1. To elect nine directors for a term of one year;
2. To transact such other business as may properly come before the
meeting or any adjournment.
The close of business on February 25, 1997 has been fixed as the record
date for the determination of the shareholders entitled to notice of and to vote
at the Annual Meeting and any adjournment. The stock transfer books will not be
closed.
Please complete, sign, date and return the enclosed proxy promptly so that
we may have the fullest expression possible of the wishes of the shareholders.
By order of the Board of Directors
Thomas E. Palmer
Secretary
<PAGE>
Proxy Statement
For 1997 Annual Meeting
The Mead Corporation
Mead World Headquarters
Courthouse Plaza Northeast
Dayton, Ohio 45463
March 12, 1997
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of The Mead Corporation ("Mead") of proxies to be used at
the Annual Meeting of Shareholders to be held on April 24, 1997 and any
adjournment. The close of business on February 25, 1997 has been fixed as the
record date for the determination of the holders of Common Shares entitled to
notice and to vote. There were outstanding on the record date 52,236,180 Common
Shares.
The holders of Common Shares are entitled to one vote per share upon all
matters set forth in the Notice of the Annual Meeting.
A shareholder signing and returning a proxy has the power to revoke it at
any time prior to its exercise by giving notice to Mead in writing or in open
meeting, but without affecting any vote previously taken. Unless revoked, the
shares represented by the proxy will be voted as stated thereon.
<PAGE>
Election of Directors
Mead's Regulations provide for the annual election of directors in a manner
not affecting the unexpired terms of directors previously elected as members of
a class. At the 1997 Annual Meeting, the terms of John C. Bogle, William E.
Hoglund, John A. Krol, Susan J. Kropf, Steven C. Mason, Paul F. Miller, Jr., Lee
J. Styslinger, Jr. and Jerome F. Tatar expire, and in accordance with a
recommendation of the Board of Directors and its Nominating & Organization
Committee, each of them will stand for re-election to a new one-year term
expiring at the Annual Meeting in 1998. Also, upon recommendation of the Board
and the Committee, J. Lawrence Wilson is proposed for election as a director to
a one-year term expiring at the Annual Meeting in 1998.
Jerome F. Tatar was elected to the Board of Directors on April 25, 1996 for
a term expiring at the 1997 Annual Meeting.
Thomas B. Stanley, Jr., a member of the Board of Directors for 27 years,
has reached retirement age for members of the Board and will retire from the
Board on the date of the Annual Meeting.
The business experience and other information concerning the nominees for
director, and the directors continuing in office after the Annual Meeting, are
set forth on pages 3 through 6.
Directors are elected by a plurality of the votes cast. Abstentions and
nonvotes are not considered. It is the intention of the persons named in the
accompanying form of proxy, unless authorization to do so is withheld, to vote
for the election of the nine nominees. The holders of the proxies may, in their
discretion, vote for a substitute nominee(s) designated by the directors in the
event that any nominee becomes unable to serve for any reason presently unknown.
Under Ohio law, if a shareholder gives written notice to the President, a Vice
President or the Secretary, not less than 48 hours before the time fixed for the
Annual Meeting, that such shareholder desires the voting at the election of
directors to be cumulative, and if an announcement of the giving of such notice
is made upon the convening of the meeting by or on behalf of the shareholder
giving such notice, then the directors will be elected by cumulative voting. In
such event, each shareholder has the right to give one candidate a number of
votes equal to the number of directors then being elected multiplied by the
number of such shareholder's shares, or to distribute such shareholder's votes
on the same principle among two or more candidates. In the event of cumulative
voting for directors, unless otherwise indicated by the shareholder, a vote for
the nominees of the Board of Directors will give the proxyholders discretionary
authority to cumulate all votes to which the shareholder is entitled and to
allocate them in favor of any one or more of such nominees as the persons named
in the enclosed proxy determine. If a shareholder desires specifically to
allocate votes among one or more nominees, the shareholder should so specify on
the proxy card.
<PAGE>
Nominees for Director for a one-year term expiring in 1998
Picture of John C. Bogle
John C. Bogle
Mr. Bogle is Chairman of the Board of The Vanguard Group of Investment
Companies, and Chairman of the mutual funds in The Vanguard Group since 1974.
Age: 67
Director Since: 1978
Committees:
Compensation
Corporate Objectives
Finance
Nominating & Organization
Other Directorships:
The General Accident
Group of Insurance
Companies
Chris-Craft Industries, Inc.
National Constitution Center
Picture of William E. Hoglund
William E. Hoglund
Mr. Hoglund retired as Director and Executive Vice President, Corporate Affairs
and Staff Support Group of General Motors Corporation in January 1995. He was
Executive Vice President and Chief Financial Officer of GM from April 1992
through November 1992, and Executive Vice President, Automotive Components
Group, from 1988 through 1992.
Age: 62
Director Since: 1993
Committees:
Compensation
Corporate Objectives
Corporate Responsibility
Executive
Finance
Nominating &
Organization
Other Directorships:
Standard Federal Bank
Detroit Diesel Corporation
Picture of John A. Krol
John A. Krol
Mr. Krol has been a Director and Vice Chairman of E. I. du Pont de Nemours and
Company since April 1992. In 1995 he was elected President and Chief Executive
Officer. He was Senior Vice President - DuPont Fibers from November 1990
through March 1992.
Age: 60
Director Since: 1994
Committees:
Corporate Objectives
Corporate Responsibility
Finance
Nominating & Organization
3
<PAGE>
Nominees for Director for a one-year term expiring in 1998
Picture of Susan J. Kropf
Susan J. Kropf
Ms. Kropf has been Senior Vice President of Avon Products, Inc. and President,
New and Emerging Markets since July 1996. Prior to that, she was Senior Vice
President - Global Product and Business Development since 1994 to July 1996.
Prior to that, she was Group Vice President, U.S. Product Marketing Group from
1992 to 1994.
Age: 48
Director Since: 1996
Committees:
Audit
Compensation
Corporate Objectives
Nominating & Organization
Other Directorships:
Green Point Financial
Corporation
Picture of Steven C. Mason
STEVEN C. MASON
Mr. Mason was elected Chairman of the Board and Chief Executive Officer in May
1992. Prior to that he was elected Vice Chairman in April 1991. He also was
elected and served as President from December 1994 to April 1996.
Age: 61
Director Since: 1982
Committees:
Executive and ex-officio
member of the other
Committees of the Board
Other Directorships:
PPG Industries, Inc.
Picture of Paul F. Miller, Jr.
PAUL F. MILLER, JR.
Mr. Miller was a founding partner of Miller, Anderson & Sherrerd, an investment
management firm. He retired as a general partner in 1991, and was a limited
partner with the firm through 1995. He is now sole proprietor of Miller
Associates and engages in private investing.
Age: 69
Director Since: 1963
Committees:
Audit
Corporate Objectives
Corporate Responsibility
Executive
Finance
Nominating & Organization
Other Directorships:
Hewlett-Packard Company
Rohm and Haas Company
LTCB-MAS, Inc.
World Wildlife Fund
4
<PAGE>
Nominees for Director for a one-year term expiring in 1998
Picture of Lee J. Styslinger, Jr.
LEE J. STYSLINGER, JR.
Mr. Styslinger is Chairman and a Director of ALTEC Industries, Inc.
Age: 63
Director Since: 1992
Committees:
Audit
Compensation
Corporate Objectives
Executive
Nominating & Organization
Other Directorships:
Global Rental Company
Jemison Investment Company
Regions Financial
Corporation
Southern Research
Technology
Picture of Jerome F. Tatar
JEROME F. TATAR
Mr. Tatar was elected President and Chief Operating Officer in April 1996.
Prior to that he served as Vice President-Operating Officer since July 1994.
Prior to that he was President of Mead Fine Paper Division since 1987.
Age: 50
Director Since: 1996
Other Directorships:
Robbins & Myers Corporation
Picture of J. Lawrence Wilson
J. LAWRENCE WILSON
Mr. Wilson is Chairman of the Board, Chief Executive Officer and a Director of
Rohm and Haas Company since 1988.
Age: 60
Other Directorships:
Cummins Engine Company
Vanderbilt University
The Vanguard Group of Mutual Funds
5
<PAGE>
Directors whose terms expire in 1998
Picture of John G. Breen
JOHN G. BREEN
Mr. Breen is Chairman, Chief Executive Officer and a Director of The Sherwin-
Williams Company.
Age: 62
Director Since: 1986
Committees:
Audit
Compensation
Corporate Objectives
Executive
Finance
Nominating & Organization
Other Directorships:
National City Corporation
Parker-Hannifin Corporation
The Goodyear Tire &
Rubber Company
Picture of James G. Kaiser
JAMES G. KAISER
Mr. Kaiser retired as President and Chief Executive Officer of Quanterra
Incorporated in 1996. Prior to that he was President and CEO of Enseco
Incorporated from 1992 to 1994. Prior to that he was Senior Vice President and
General Manager of the Technical Products Division and Latin America and Asia
Pacific Exports of Corning Incorporated.
Age: 54
Director Since: 1995
Committees:
Corporate Objectives
Corporate Responsibility
Finance
Nominating & Organization
Other Directorships:
The Stanley Works
The Sun Company
Picture of Charles S. Mechem, Jr.
CHARLES S. MECHEM, JR.
Mr. Mechem is Chairman of Cincinnati Bell, Inc. Prior to that he was
Commissioner of the LPGA from 1991 through 1995. He retired as Chairman of
United States Shoe Corporation in 1993.
Age: 66
Director Since: 1976
Committees:
Compensation; Corporate
Objectives; Finance;
Nominating & Organization
Other Directorships:
AGCO Corporation
Cincinnati Bell
Ohio National Life
Insurance Company
J.M. Smucker Company
Star Banc Corporation
Star Bank, N.A.
Myers Y. Cooper Company
Picture of Thomas B. Stanley, Jr.
THOMAS B. STANLEY, JR.
Mr. Stanley is a private investor.
Age: 70
Director Since: 1970
Committees:
Audit
Corporate Objectives
Executive
Finance
Nominating & Organization
Other Directorships:
MainStreet BankGroup
Incorporated
6
<PAGE>
Certain Information Concerning the Board of Directors
There were eight meetings of the Board of Directors during 1996. The seven
standing committees of the Board and the number of meetings of each committee
during 1996 follow:
<TABLE>
<CAPTION>
<S> <C>
Number of
Committee Meetings
--------- ---------
Audit.............................................................. 2
Compensation....................................................... 4
Corporate Objectives............................................... 3
Corporate Responsibility........................................... 2
Executive.......................................................... 0
Finance............................................................ 3
Nominating & Organization.......................................... 3
</TABLE>
The Chairman of the Board and Chief Executive Officer serves as an ex-officio,
nonvoting member of all standing committees, other than the Executive Committee.
Duties and Members
Each standing committee of the Board of Directors is composed of directors who
are not employed by Mead, except the Executive Committee. The duties and
membership of each committee are as follows:
The Audit Committee recommends annually to the Board for its approval the
engagement of the independent certified public accountants, verifies and assures
their independence, reviews the professional services they provide, reviews the
fees charged for audit and non-audit services, reviews the broad scope of the
internal and external audit programs, and reviews with the independent certified
public accountants, at the completion of their audit, Mead's financial
statements and matters relating to the audit.
Members:
- --------
Styslinger (chairman)
Breen
Kropf
Miller
Stanley
7
<PAGE>
The Compensation Committee is charged with the broad responsibility for assuring
that officers and key management personnel are effectively compensated in terms
which are internally equitable and externally competitive. The Committee
authorizes the compensation of officers and senior management and recommends to
the Board the compensation of the Chairman of the Board and the President and
reviews the salaries of other key executives, reviews executive compensation
policies and recommends modifications in existing retirement or benefit plans.
The Committee also approves grants under and administers Mead's stock option and
restricted stock plans.
Members:
- -------
Breen (chairman)
Bogle
Hoglund
Kropf
Mechem
Styslinger
The Corporate Objectives Committee is charged with reviewing Mead's objectives
and strategies and evaluating management's recommendations for long-term growth
and profitability. Further, the Committee makes appropriate recommendations to
the full Board with regard to specific proposals by management of major
strategic importance, including acquisitions. The Committee also monitors growth
programs to measure progress, reviews the potential impact of economic trends on
operations and reviews technological trends with the view toward allocating
resources to areas offering greatest potential growth.
Members:
- -------
Hoglund (chairman)
Bogle
Breen
Kaiser
Krol
Kropf
Mechem
Miller
Stanley
Styslinger
The Corporate Responsibility Committee is charged with questioning and
evaluating Mead's plans and responses relating to changing needs and concerns of
those major constituencies (both internal and external) which can be expected to
judge Mead's behavior and social performance.
Members:
- -------
Krol (chairman)
Hoglund
Kaiser
Miller
8
<PAGE>
The Executive Committee is empowered under Ohio law to exercise the full
authority of the Board, except as to matters not delegable. However, in
practice, there are no scheduled meetings of this Committee and such powers
would be exercised only in special situations.
Members:
- -------
Mason (chairman)
Miller (vice chairman)
Breen
Hoglund
Stanley
Styslinger
The Finance Committee is charged with overseeing Mead's financial affairs and
recommending such financial actions and policies as are most appropriate to
accommodate Mead's strategic and operating strategies while maintaining its
sound financial condition. The Committee reviews programs designed to inform and
to maintain and improve shareholder and financial community relations.
Members:
- -------
Stanley (chairman)
Bogle
Breen
Hoglund
Kaiser
Krol
Mechem
Miller
The Nominating & Organization Committee has as its principal concerns the
nomination of candidates to the Board, evaluation of the performance of the
Chief Executive Officer, organizational development, and review of shareholder
proposals and suggestions. The Committee develops criteria and evaluates the
performance of the Chief Executive Officer. The Committee also furnishes its
evaluation to the Compensation Committee and reviews the compensation set by the
Compensation Committee to ensure it appropriately relates to shareholder value.
Members:
- -------
Miller (chairman)
Bogle
Breen
Hoglund
Kaiser
Krol
Kropf
Mechem
Stanley
Styslinger
Mead's Regulations require nominations for the Board from any shareholder to be
delivered not less than 50 nor more than 75 days prior to the meeting of the
shareholders to which the nomination relates, and to contain specified
information about the nominee and the shareholder making such nomination. In
addition to any nominations made pursuant to Mead's Regulations, the Nominating
& Organization Committee will consider such suggestions for nominations to the
Board as may be offered by shareholders. Such suggestions for nominations should
be submitted to Thomas E. Palmer, Secretary. Directors are selected on the basis
of recognized achievements and their ability to bring essential skills and
experience to the deliberations of the Board.
Directors who are not employees receive $20,500 annually for services as a
director and $1,200 per meeting for attendance at meetings of the Board and its
committees. Directors who are Mead employees are not compensated for their
services as directors. In 1996, each director other than Mr. John C. Bogle and
Ms. Susan J. Kropf attended 75% or more of the Board and committee meetings.
Mead has a deferred compensation plan for non-employee directors pursuant to
which receipt of compensation for Board service, together with a credited return
thereon, may be deferred until after termination of service.
9
<PAGE>
In 1987, Mead adopted a Restricted Stock Plan ("Plan") under which directors who
were not employees or officers of Mead received grants of Common Shares with a
market value of $37,500 at five-year intervals. Grants were made in January
1988 and January 1993. A pro rata portion of $37,500 was granted to such
directors who were elected during the five-year period. The shares were subject
to forfeiture if the director left Mead within five years, unless the director
left as a result of death, disability or normal retirement (in which event, all
restrictions lapsed with respect to a pro rata portion of the restricted
shares). Additionally, all rights to the shares would vest upon the occurrence
of certain "change in control" events. The Plan was amended in 1996 to eliminate
future multi-year grants and provide for annual grants of $7,500 commencing in
1998. The Plan was also amended by shareholders in 1996 to provide for an
automatic grant to non-employee directors in the amount of $5,000, with
subsequent annual grants to be calculated pursuant to a formula. The Plan also
permits directors under certain conditions to defer a portion of their cash
retainer in the form of restricted shares.
Securities Ownership
Set forth in the following table is information as of January 24, 1997 with
respect to the number of Common Shares beneficially owned by each nominee and
director, each of the named executive officers, and by all nominees, directors
and executive officers as a group.
A person is considered to "beneficially own" any shares: (i) over which such
person exercises sole or shared voting or investment power or (ii) of which such
person has the right to acquire beneficial ownership at any time within 60 days
(e.g., through the exercise of stock options).
Unless otherwise indicated, voting and investment power is exercised solely by
the beneficial owner or is shared by such owner and such owner's spouse or
children.
<TABLE>
<CAPTION>
Ownership of Mead Common Shares
-------------------------------
as of January 24, 1997/(1)/
Number Beneficially
Owned Including
Option Shares
Which May
Name of be Acquired
Beneficial Owner Option Shares Within 60 Days/(1)/
- ---------------- ------------- -------------------
<S> <C> <C>
John C. Bogle............................. 610 4,185
John G. Breen............................. 610 4,185
William R. Graber......................... 47,900 50,235
William E. Hoglund........................ 610 3,211
James G. Kaiser........................... 610 1,172
Elias M. Karter........................... 99,750 97,863
John A. Krol.............................. 610 1,032
Susan J. Kropf............................ 610 473
Raymond W. Lane........................... 72,000 77,776
Steven C. Mason........................... 354,250 421,289
Charles S. Mechem, Jr..................... 610 5,236
Paul F. Miller, Jr........................ 610 15,635
Thomas E. Palmer.......................... 50,506 56,816
Thomas B. Stanley, Jr..................... 610 729,685/(2)/
Lee J. Styslinger, Jr..................... 610 21,694
Jerome F. Tatar........................... 92,335 86,856
- ------------------------
All directors, nominees
and executive officers as
a group (19 persons)..................... 867,291 1,738,858
- -----------------------
</TABLE>
(1) Includes restricted shares granted under Mead's Restricted Stock Plan, and
shares held in the named executive's common stock account as of December 31,
1996, in the Mead Salaried Savings Plan. The named executives may vote and
direct the disposition of shares in their account, except to the extent such
shares constitute Mead matching shares.
(2) Includes 471,980 shares held in family trusts with respect to which Mr.
Stanley is one of three co-trustees who share the voting and investment power.
10
<PAGE>
As of January 24, 1997, the number of shares beneficially owned (excluding
option shares which may be acquired within 60 days) (i) by the directors and
executive officers as a group was approximately 1.80% of outstanding, (ii) by
Mr. Stanley, 1.40% and (iii) by all other directors individually, less than 1%.
The following table sets forth certain information with respect to persons known
to Mead to be beneficial owners of more than five percent of the outstanding
Common Shares:
<TABLE>
<CAPTION>
Percent of Common
Number of Common Shares Shares Outstanding
Name and Address of Beneficial Owners Beneficially Owned as of January 24, 1997
- -------------------------------------- ----------------------- ----------------------
<S> <C> <C>
The Prudential Insurance Company of America, 2,642,362/(1)/ 5.06%/(1)/
751 Broad Street, Newark, New Jersey 07102-3777
</TABLE>
- ------------------------
(1) Source: Schedule 13G dated January 30, 1997, filed by beneficial owner
with SEC.
Report of Compensation Committee on Executive Compensation
The Compensation Committee is comprised of six Directors of the Board who are
not employees of the Company. This Committee is responsible for setting
competitive compensation structures and approving payout levels for officers and
senior management.
Mr. Mason, Chairman of the Board and Chief Executive Officer, serves as an ex-
officio, nonvoting member of the Board's standing committees, including the
Compensation Committee. He was not present during any discussion of his
compensation.
Mead's executive compensation structure is based on competitiveness within
Mead's business environment. The actual compensation levels delivered to
executives are designed to directly link to the financial performance of the
Company; align the interests of the executives with Company performance, thus
increasing shareholder value; to attract, retain and motivate executive talent;
and, to provide a balanced total compensation package that recognizes the
individual contributions of the executive and the business results of the
Company.
Base Pay
- --------
Salary range midpoints are set to approximate those midpoints of industrial
companies of similar size to Mead, as annually reported in the Hay Industrial
Management USA survey, representing 451 parent organizations and 731 independent
operating units of all types of industrial employers in the United States (the
"Hay Competition"). Around these midpoints for each salary grade is an
established salary range, characterized by a defined minimum and maximum.
Actual salaries paid to executives are targeted to be competitive with the
average salaries for that same survey group, with a particular comparison to a
selected group of Forest Product company competitive peers. These peers (the
"FP Peers") are Boise Cascade Corporation, Champion International Corporation,
Georgia-Pacific Corporation, International Paper Company, James River
Corporation, Potlatch Corporation, Riverwood International Corporation, Stone
Container Corporation, Temple-Inland Inc., Union Camp Corporation, Westvaco
Corporation, Weyerhaeuser Company, and Willamette Industries, Inc.
Salary increases for the executive group as a whole are determined primarily by
a review of Mead's competitive position relative to the Hay Competition, and an
assessment of competitive salary increase movement for the upcoming
11
<PAGE>
year. The salary increase for each named executive officer is determined by
individual performance, influenced to a minor degree by that individual's
position in the salary range. A fundamental basis of Mead's compensation
philosophy is to deliver moderate salary increases, in favor of incentive
payouts that reward for the performance of the Company and the contribution of
the executive.
Mr. Mason's 1996 salary shows significant increase over the 1995 level,
exceeding the moderate movement in CEO pay of the Hay Competition, on the basis
of an assessment by the Board of his strength in leadership of the Corporation.
His salary remains below the salary midpoint for his position, but the gap below
the Hay Competition is negligible.
The salaries of the other named executives remain well below the Mead midpoint
for their respective grades, and also lag the Hay Competition.
Annual Incentives
- -----------------
Annual incentive targets are set at levels that achieve a combined salary
midpoint plus incentive target that equals actual competitive average base
salaries plus annual bonuses, as determined by an analysis of the total cash
compensation paid by the Hay Competition.
Actual incentive payouts are determined under Mead's Corporate Annual Incentive
Plan which is funded by a comparison of Mead Return on Total Capital ("ROTC") to
both the FP Peers (as measured in the Value Line Report) and also to the Value
Line Industrial Composite (the "Industrial Composite"), representing
approximately 750 major industrial, retail and transportation companies that
account for about 80% of the income earned by all U.S. nonfinancial
corporations. The Mead ROTC comparison to the ROTC of each of the FP Peers and
the Industrial Composite is weighted equally.
Mead's financial performance for 1996 declined from record levels attained in
1995, adversely affected by poor market prices but reflecting strong operations
reliability. For incentive purposes, Mead's 1996 operating ROTC of 7.9%
excludes the effect of the acquisition of the coated paper facility at Rumford,
Maine near the end of 1996. As a result of the lower financial results, annual
incentives for all named executives, including Mr. Mason, were below target
levels.
Long-Term Incentives
- --------------------
The Compensation Committee believes that a significant portion of senior
executive compensation must reflect the desire for sustained operational
excellence, reward competitive long-term financial results, and be linked to the
returns realized by shareholders. Thus, a major portion of the compensation
package reflects awards for long-term results. Mead's long-term compensation is
delivered in three plans:
1. Performance Unit Plan
2. Restricted Stock Plan
3. Stock Option Plan
The Corporate Long-Term Incentive Plan (the "LTIP") is a performance unit plan
that provides incentive awards for attaining acceptable ROTC while growing
productive capital. The plan provides significant financial reward when the
return to shareowners exceeds Mead's cost of capital, particularly when
management is growing Mead's business.
The payout is based on these two components, further adjusted by the Competitive
Industry Factor: the formula involving competitive ROTC performance including
the FP Peers and the Industrial Composite.
The current plan measured business results over a 2-year period: capital growth
over the period 1995 through 1996, and the ROTC achieved in 1996. The resulting
payout to executives determined by the plan was below target payout. For all
participants other than Mr. Mason, the payout was delivered as 50% cash and 50%
restricted stock. The Board of Directors used their discretion to deliver all
Mr. Mason's long term payment as cash, with a mandatory deferral until
retirement.
Restricted stock with a minimum of six-month restrictions may be granted to
encourage retention of key executives, or in lieu of payment of cash incentives,
or for any other reason consistent with the purposes of Mead's Restricted
12
<PAGE>
Stock Plan. Restricted shares are granted at market prices. As indicated
previously, 50% of the long term incentive payout was delivered as restricted
stock to all named executives, other than Mr. Mason.
Stock option grants are based on competitive practices of the Hay Competition
(rather than Mead's past corporate performance), are granted at market price and
cannot be exercised for one year. The objective of stock option grants is to
incent future Company performance, rather than to reward for past contribution.
Mead also believes that granting stock options to senior management further
aligns their interests with shareholders.
The size of annual option grants is based on the grade level of each recipient.
Generally, the number of options granted increases approximately 30% with each
grade level increase. Minor adjustments ((plus and/or minus)10%) are made to
grants to recognize the future potential of the individual.
For 1996, Mr. Mason received grants of 51,605 stock options, which the
Compensation Committee believed appropriate with respect to the size of
competitive grants for Mr. Mason's grade level. Mr. Mason also received a grant
of 25,000 stock options made in acknowledgment of an adjustment downward of the
LTIP payout covering fiscal years 1994 through 1995.
Stock Ownership Guidelines
- --------------------------
It is felt that executives are more significant contributors to the success of
the business if they have a significant ownership position in the organization.
The Compensation Committee feels that the design of Mead's executive
compensation plans deliver adequate opportunity for each executive to acquire
Mead shares. For the named executive officers, the Company has established
guidelines that define a level of stock ownership that each executive is
expected to achieve and maintain.
The 1996 Stock Option Plan includes a strategic feature that will enhance
executive stock ownership: a provision of the new plan provides Reload Stock
Options, to be granted only to each executive who, upon exercising Incentive
Stock Options, purchased and held shares. The Reload Stock Option is exercisable
if the underlying shares from the Incentive Stock Option exercise are held for a
minimum of three years.
Compensation Deferral Opportunities
- -----------------------------------
Mead maintains the Executive Capital Accumulation Plan (the "ExCAP") to provide
executives with the opportunity to elect deferrals of earned compensation: base
salary, annual incentive payout and long-term incentive payout (cash portions
only). In addition, the plan provides for 401(k) contributions above the
qualified plan limit to be placed in the same non-qualified account, along with
a Company match that is determined by the 401(k) formula.
Funds deferred are credited at a rate set by one of several market-driven
investment indices offered by the Company. Payment of those amounts deferred
commence in accordance with the executive's deferral election, and generally
start at retirement or termination, or on a fixed date.
For 1996, all named executives elected to participate through compensation
deferrals and/or the 401(k) Top-Up. In addition, the Board of Directors
mandated that 100% of Mr. Mason's long term payout be deferred until retirement,
in order to plan for the maximum tax deduction in 1997.
Deductibility of Executive Compensation
- ---------------------------------------
Section 162(m) of the Internal Revenue Code generally disallows a tax deduction
to public companies for individual compensation over one million dollars paid to
the Company's Chief Executive Officer and to the four other most highly
compensated executive officers. For 1996, Mr. Mason's compensation did not
exceed one million dollars, due to a voluntary deferral election. To manage
executive compensation in the best interests of the Company's shareowners, the
Compensation Committee further recommended and the Board of Directors has
approved a mandatory deferral of the balance of Mr. Mason's long term incentive
payments to avoid 1997 compensation levels that would place Mr. Mason over the
Section 162(m) limit.
SUMMARY
- -------
The Mead compensation program delivered as the mix of compensation elements
(base pay, annual incentives, long term incentives and deferral opportunities)
is an effective tool in supporting executive excellence. Mead's financial
results decreased in 1996; resulting in Mead's 1996 returns that surpass the
return of the FP Peers, but lag the Industrial Composite return. Appropriate
with the design of the executive program, 1996 compensation levels for all named
executives were also lower than in 1995.
The Compensation Committee remains confident that these elements of the
executive compensation program are key in rewarding executives who contribute to
the success of the Company and in the demonstrated increase in shareholder
value.
Compensation Committee members:
John G. Breen (chairman)
John C. Bogle
William E. Hoglund
Susan J. Kropf
Charles S. Mechem, Jr.
Lee J. Styslinger, Jr.
Steven C. Mason (ex-officio, nonvoting member)
13
<PAGE>
Compensation Tables
The compensation for services performed during the fiscal years ended December
31, 1994, 1995 and 1996 for Mr. Mason and each of the other five most highly
compensated executive officers is as follows. No stock appreciation rights were
issued to the named executives during 1994-1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
----------------------------------------
Annual Compensation Awards Payouts
---------------------------------------- ------------------------- ----------
Other
Name Annual Restricted Securities All Other
and Compen- Stock Underlying LTIP Compen-
Principal sation Award(s) Options/ Payouts sation
Position Year Salary($) Bonus($)/(1)/ ($)/(2)/ ($)/(3)/ SARs(#) ($)/(4)/ ($)/(5)/
- ----------- ---- -------- ------------- -------- --------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Steven C. 1996 $680,834 $475,000 $ 206,942 $ 0 51,605/(6)/ $ 301,400 $ 47,721
Mason, 1995 635,004 875,000 85,123 0 70,000 498,400 46,564
Chairman, 1994 566,672 782,800 61,876 227,813 60,000 0 7,505
and CEO
Jerome F. 1996 $382,529 $285,000 $ 2,571 $ 67,300 36,785 $ 67,300 $ 21,321
Tatar, 1995 261,344 219,700 0 0 10,700 296,100 12,760
President 1994 222,675 171,900 0 27,775 20,000 0 4,620
and COO
Eli M. 1996 $331,997 $200,000 $ 55,434 $ 51,900 24,850 $ 51,900 $ 20,932
Karter, 1995 292,980 219,700 64,743 0 10,700 296,100 16,871
Exec. VP 1994 268,648 182,100 26,125 30,580 20,700 0 4,620
Raymond 1996 $309,690 $200,000 $ 4,683 $ 51,900 22,237 $ 51,900 $ 18,007
W. Lane, 1995 252,504 219,700 641 0 10,700 296,100 13,722
Exec. VP 1994 212,999 212,800 357 27,775 20,000 0 4,620
Thomas E. 1996 $280,140 $150,000 $ 531 $ 41,850 13,996 $ 41,850 $ 18,399
Palmer, VP/ 1995 259,256 198,300 0 0 10,700 266,700 5,392
General 1994 234,096 195,100 0 258,393 13,000 0 4,620
Counsel/
Secretary
William R. 1996 $253,488 $150,000 $ 29,416 $ 41,850 14,000 $ 41,850 $ 16,073
Graber, 1995 230,760 198,300 13,462 0 10,700 266,700 12,176
VP/CFO 1994 212,100 182,100 0 76,143 11,000 0 4,620
- ----------------------
</TABLE>
(footnotes on following page)
14
<PAGE>
(1) Bonuses are earned in the year specified and paid in the following year.
Cash bonuses for 1996 consist of payments under the Corporate Annual
Incentive Plan.
(2) Consists solely of interest on deferred compensation in excess of the
applicable federal rate. Mead owns life insurance on the lives of employees
participating in this deferred compensation program which supports the
interest rates used.
(3) Restricted stock holdings at December 31, 1996 (excluding restricted stock
awarded in February 1997 under the LTIP): Mr. Mason, 5,665 shares
($329,278.13 value); Mr. Tatar, 656 shares ($38,130.00 value); Mr. Karter,
shares 744 ($43,245.00 value); Mr. Lane, 656 shares ($38,130.00 value);
Mr. Palmer 5,744 shares ($333,870.00 value) and Mr. Graber, 1,659 shares
($96,429.38 value). Dividends are paid on restricted stock in the same
manner and amount as paid on Mead's common shares. The value of the
restricted stock for purposes of the table is based on closing market
prices on the date of the grant; however, for purposes of this footnote
(3), it is based on closing market prices at December 31, 1996.
(4) The LTIP is a performance unit plan that measured business results over a
2-year period: capital growth over the period including 1995 through 1996,
and the ROTC achieved for full year 1996. The payout was delivered as 50%
restricted stock and 50% cash, other than to Mr. Mason. Restricted stock
payouts are reported under "Restricted Stock Award(s)" and carry a
restriction period of six months. Mr. Mason deferred the LTIP payout until
after the completion of his Mead employment service.
(5) Amounts consist solely of executive life insurance premiums paid by Mead
and matching contributions by Mead to qualified and non-qualified savings
plans.
(6) Excludes a stock option grant in February 1996 made in acknowledgment of an
adjustment downward of the LTIP payment covering fiscal years 1994 through
1995 and included in 1995 total.
15
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table shows, for the named executive officers, additional
information about option grants during the fiscal year ended December 31, 1996.
No stock appreciation rights were granted in 1996.
<TABLE>
<CAPTION>
Individual Grants
- -------------------------------------------------------------------
Potential
Percent of Realizable Value at
Number of Total Assumed Annual
Securities Options/ Rates of Stock Price
Underlying SARs Appreciation
Options/ Granted to Exercise for Option Term/(2)/
SARs Employees or Base Expira- ---------------------------------------
Granted in Fiscal Price tion
Name (#) /(1)/ Year ($/Sh) Date 0% ($) 5% ($) 10% ($)
- ---- --------- ---------- ------ ----- ------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Steven C. Mason 70,000/(3)/ 8.0% $53.0625 02/21/06 $0 $2,339,925 $5,998,125
6,605 0.8% 56.4375 11/08/06 0 234,890 592,749
Jerome F. Tatar 16,000 1.8% 53.0625 02/21/06 0 534,840 1,371,000
15,000 1.7% 56.3125 04/25/06 0 532,163 1,343,063
5,785 0.6% 51.4375 06/27/06 0 187,506 473,170
Eli M. Karter 14,000 1.6% 53.0625 02/21/06 0 467,985 1,199,625
6,000 0.7% 56.3125 04/25/06 0 212,865 537,225
2,850 0.3% 51.4375 06/27/06 0 92,376 233,109
2,000 0.2% 56.4375 11/08/06 0 71,125 179,485
Raymond W. Lane 15,000 1.7% 53.0625 02/21/06 0 501,413 1,285,313
5,000 0.6% 56.3125 04/25/06 0 177,388 447,688
2,237 0.2% 51.4375 06/27/06 0 72,507 182,970
Thomas E. Palmer 11,000 1.3% 53.0625 02/21/06 0 367,703 942,563
1,846 0.2% 51.4375 06/27/06 0 59,833 150,989
1,150 0.1% 56.4375 11/08/06 0 40,897 103,204
William R. Graber 11,000 1.3% 53.0625 02/21/06 0 367,703 942,563
3,000 0.3% 51.4375 06/27/06 0 97,238 245,378
- ------------------------------------------------------------------------------------------------------------------
0%/(4)/ 5%/(4)/ 10%/(4)/
------- ---------- ----------
Assumed Stock Price $53.0625 $86.49 $137.43
Market Value of All Shareholdings $2.76 billion $4.51 billion $7.16 billion
Named Executives Percentage 0.36% 0.36%
</TABLE>
16
<PAGE>
(1) Options are granted with terms of ten years and may be exercised beginning
one year or three years after date of grant, depending on the terms of the
option. Limited Rights (described on page 22) have been granted to each of the
named executive officers in an amount equal to the stock options granted. In
addition, the holders of stock options may under certain conditions pay
withholding taxes due upon the exercise of stock options using shares issued
upon such exercise.
(2) The dollar amounts under the 5% and 10% columns are set by the Securities
and Exchange Commission and are not intended to forecast possible future
appreciation of Mead's stock.
(3) Includes stock options granted in February, 1996 made in acknowledgement of
an adjustment downward of the LTIP payment covering fiscal years 1994 through
1995.
(4) At an assumed 5% stock price appreciation over a ten-year period, Mead's
stock price would increase from $53.0625 per share (the market price on the
grant date) to $86.49 per share, and the aggregate market value of all
shareholder holdings as of the grant date would increase from $2.76 billion to
$4.51 billion. At an assumed 10% stock price appreciation over a ten-year
period, Mead's stock price would increase from $53.0625 per share to $137.43 per
share, and the aggregate market value of all shareholder holdings as of the
grant date would increase to $7.16 billion. The named executives would receive
only 0.36% of any such increase in market value.
17
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
The following table shows information about stock option exercises during 1996
and unexercised stock options at year end 1996 for the named executive officers.
No stock appreciation rights were granted or exercised in 1996.
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
FY-End (#) FY-End ($)/(2)/
Shares
Acquired Exercisable/ Exercisable/
Name on Exercise(#) Value Realized ($)/(1)/ Unexercisable Unexercisable
- ---- -------------- ----------------------- ------------- -------------
<S> <C> <C> <C> <C>
Steven C. Mason 2,850 $ 65,015.63 277,645/76,605 $4,665,616/$394,248
3,755 117,109.06
10,750 245,234.38
Jerome F. Tatar 2,755 81,789.06 60,445/36,785 949,559/160,669
3,030 70,636.88
Eli M. Karter 2,000 52,875.00 74,900/24,850 1,342,806/113,503
2,550 58,171.88
2,850 57,178.13
Raymond W. Lane 2,237 14,400.69 49,763/22,257 696,801/250,610
800 16,250.00
2,500 48,750.00
Thomas E. Palmer 1,846 34,958.63 36,510/13,996 448,149/75,222
1,150 14,806.25
William R. Graber 3,000 70,875.00 33,900/14,000 436,544/81,000
</TABLE>
- ----------------------
(1) Based upon the difference between the fair market value (the average of the
high and the low prices) of Mead common shares on the date of exercise and
the grant price of the stock option.
(2) Based upon the difference between the fair market value (the average of the
high and the low prices) of Mead common shares on the last trading day of
1996 and the grant price of the stock option.
18
<PAGE>
LONG-TERM INCENTIVE PLANS - AWARDS
IN LAST FISCAL YEAR
The following table shows, for the named executive officers, additional
information about the LTIP plan eligibility for the performance period that
commenced in 1996.
<TABLE>
<CAPTION>
Performance or Estimated Future Payouts
Number of Other Period Under Non-Stock
Shares, Until Price - Based Plans
Units or Maturation ---------------------------------------------------------
Name Other Rights(#) or Payout/(1)/ Threshold($) Target($) Maximum($)
- ---- ------------------ --------------------- --------------- ------------------ --------------------
<S> <C> <C> <C> <C> <C>
Steven C. Mason 663,000 1/1/96 to 12/31/97 $0 $663,000 $1,326,000
Jerome F. Tatar 403,900 1/1/96 to 12/31/97 0 403,900 807,800
Eli M. Karter 250,300 1/1/96 to 12/31/97 0 250,300 500,600
Raymond W. Lane 250,300 1/1/96 to 12/31/97 0 250,300 500,600
Thomas E. Palmer 178,000 1/1/96 to 12/31/97 0 178,000 356,000
William R. Graber 178,000 1/1/96 to 12/31/97 0 178,000 356,000
</TABLE>
- ----------------------
(1) The Company's LTIP is a performance unit plan that provides incentive awards
for attaining acceptable ROTC while growing productive capital. The plan is
based on compound capital growth achieved over the period from December 31, 1995
to December 31, 1997, and Company ROTC achieved for full year 1997. The payout
factor produced is further multiplied by Mead's Competitive Industry Factor
derived from the FP Peers and the Industrial Composite.
19
<PAGE>
PERFORMANCE GRAPH
The following performance graph compares Mead's cumulative total shareholder
return over a five year period, assuming $100 invested at December 31, 1991 in
Mead common stock, in the S&P 500 Index and in the S&P Paper and Forest Products
Composite Index. The information on these indices has been provided by Standard
& Poor's Corporation. Shareholder return is based on increases in share price
and dividends paid, assuming reinvestment of dividends.
THE MEAD CORPORATION
CUMULATIVE TOTAL RETURN: 1991-1996
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Mead Corporation S&P 500 Index S&P Paper & F. P.
<S> <C> <C> <C>
Measurement Pd -
FYE 12/31/91 $100.00 $100.00 $100.00
FYE 12/31/92 113.80 107.62 114.34
FYE 12/31/93 136.90 118.46 126.01
FYE 12/31/94 151.17 120.03 131.30
FYE 12/31/95 165.65 165.13 144.57
FYE 12/31/96 188.27 203.05 159.91
</TABLE>
<TABLE>
<CAPTION>
YEAR
1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
Mead 100.00 113.80 136.90 151.17 165.65 188.27
S&P 500 100.00 107.62 118.46 120.03 165.13 203.05
S&P Paper & F.P. 100.00 114.34 126.01 131.30 144.57 159.91
</TABLE>
Assumes $100 invested on December 31, 1991 in Mead common stock, S&P index, and
S&P Forest Products Index. Assumes reinvestment of dividends.
20
<PAGE>
Retirement Plans
- ----------------
All salaried employees of Mead are participants in Mead's non-contributory
retirement plan which provides retirement income based upon years of employment
and average annual earnings for the five highest years during the last eleven
years of employment. Benefits under the retirement plan become vested after five
years.
The named executives have the years of credited service indicated: Mr. Mason,
38; Mr. Tatar, 22; Mr. Karter, 14; Mr. Lane, 21; Mr. Palmer, 4; Mr. Graber, 4.
Earnings used for calculation of retirement income for the named executives are
salary, bonus and incentive compensation (other than long-term incentive
payments) paid as described in the Summary Compensation Table. The benefits
payable under Mead's plan are reduced by one-half of the primary Social Security
benefit.
Under the Employee Retirement Income Security Act, an individual's normal annual
benefit from a qualified retirement plan such as Mead's may not exceed specified
limits. To the extent that the amounts calculated under Mead's non-contributory
retirement plan exceed such limits, Mead pays the excess under an unfunded
excess benefit plan.
Mead also maintains an unfunded supplemental retirement plan for senior level
management personnel who become eligible to participate in the plan after they
have completed three years of employment in a qualified job classification. The
plan provides annual retirement benefits for 55% of a participant's final
average earnings (earnings include bonuses and incentive compensation other than
long-term incentive payments, but may not exceed two times base compensation for
any year) for the three highest years during the last eleven years of
employment, less benefits received from other retirement plans of Mead and from
retirement plans of previous employers. Benefits are also reduced by one-half of
a participant's primary Social Security Benefit. A participant may receive full
benefits under this plan after he attains age 62. Messrs. Mason, Tatar, Karter,
Lane, Palmer and Graber are currently eligible to participate in this plan.
The approximate annual benefits, on a straight life annuity basis, payable to
the named executive officers under the retirement plan and the excess and
supplemental retirement plans, based on compensation levels to date and assuming
retirement at age 62, calculated prior to the offsets described above, are as
follows: Mr. Mason, $648,588; Mr. Tatar, $229,648; Mr. Karter, $246,639; Mr.
Lane, $238,174; Mr. Palmer, $225,360 and Mr. Graber, $205,706.
Benefit Trust
- -------------
A Benefit Trust, restated in 1996, was established to preserve the benefits
earned under Mead's unfunded supplemental retirement plan, incentive
compensation election plan, the deferred compensation plan for directors, the
former directors retirement plan, and excess benefit plan (the "Plans") in the
event of a change in control. Upon the occurrence of any potential change in
control, as defined in the Benefit Trust, Mead will be obligated to contribute
an amount of cash and other property to the Benefit Trust which is intended to
be sufficient to pay, in accordance with the terms of the Plans, the benefits
authorized under such Plans and certain related expenses. If the funds in the
Benefit Trust are insufficient for any reason to pay amounts due under the
Plans, Mead will remain obligated to pay any such deficiency.
Termination Arrangements
- ------------------------
General Severance Program. Mead has formalized a company-wide severance program
for its salaried employees who are involuntarily terminated. The basic program
provides severance pay in a lump sum equal to one week's salary for each full
year of service plus an additional week for each $20,000 of base salary (or
increment thereof) subject to enhancement following a change in control.
Medical, dental and life insurance coverages will be provided for a period of
time equal to the number of weeks of severance, provided certain conditions are
met. The maximum period for severance pay, depending on the salary level of the
employee, will be limited to either 52 or 26 weeks. Based on current
compensation, if the individuals named in the Summary Compensation Table had
been terminated on December 31, 1996, the amounts payable to each of them would
have been as follows: Mr. Mason, $690,000; Mr. Tatar, $368,107; Mr. Karter,
$212,987; Mr. Lane, $241,153; Mr. Palmer, $102,920 and Mr. Graber, $84,718.
21
<PAGE>
Severance Agreements. Mead has in place severance agreements with executive
officers and other key executives (collectively, the "Key Executives"). The
severance agreements provide for the payment of certain benefits to a Key
Executive (in lieu of amounts payable under the general severance program) if
employment is terminated by Mead other than for "cause", or on account of death,
disability or normal retirement, within two years after a "change in control" of
Mead, or if employment is terminated by the Key Executive for "good reason"
within such period, as such terms are defined in the respective severance
agreements. In general, under such circumstances, the Key Executive is entitled
to a cash payment of two times (three times, in the case of the Chairman) the
sum of (i) the Key Executive's then current annual base salary, and (ii) the
greater of the Key Executive's current target incentive under Mead's incentive
plans or his most recent annual award thereunder. Based on levels of
compensation as of December 31, 1996, if the individuals named in the Summary
Compensation Table had been terminated on such date, the amounts payable to each
of them would have been as follows: Mr. Mason, $5,483,635; Mr. Tatar,
$2,491,529; Mr. Karter, $1,646,926; Mr. Lane, $1,608,890; Mr. Palmer, $1,235,022
and Mr. Graber, $1,185,960.
The severance agreements also provide for (i) the cancellation of all
outstanding stock options granted to the Key Executive under any stock option
plan of Mead in consideration for a cash payment equal to the number of shares
covered by the option multiplied by the difference between the exercise price
per share and the higher of (a) the reported closing price per share on the date
of the Key Executive's termination or (b) the highest price paid per share in
connection with any change in control; (ii) a continuation of benefits under
Mead's life insurance, medical and dental plans (or substantially similar
benefits); and (iii) out placement counseling. If the aggregate severance
benefits to any executive would be subject to an excise tax under the Internal
Revenue Code, the actual benefits will be reduced to the extent necessary to
avoid the imposition of the excise tax.
Limited Stock Appreciation Rights
- ---------------------------------
Mead's stock option plans authorize the Compensation Committee to grant limited
stock appreciation rights ("Limited Rights") with respect to all or any portion
of the shares covered by options. The Committee may grant Limited Rights
simultaneously with the grant of an option or at any time during their
respective terms. Limited Rights have been granted to all named executive
officers in an amount equal to stock options granted. In general, Limited Rights
are exercisable only after certain events which constitute a change in control
of Mead. Upon the exercise of a Limited Right, an optionee will receive an
amount in cash equal to the difference between (1) the exercise price per share
of the option to which the Limited Right relates, and (2) a price which in
general represents the value placed upon a Common Share in the change in control
situation. When Limited Rights are exercised, the options to which they relate
will cease to be exercisable.
Certain Transactions
- --------------------
Mr. Mason has the power to direct distributions from a charitable trust he
established in 1988 to hold his shares of a corporation in which he has a
minority interest. Mead paid this corporation approximately $2.3 million in the
ordinary course of business during 1996 for the purchase of paper machine
supplies and equipment. Such purchases did not constitute a material portion of
such corporation's business and were made in accordance with Mead's normal
purchasing policy.
Section 16(a) Beneficial Ownership Reporting Compliance
- -------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who beneficially own more than ten
percent of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership of such securities with the
Securities Exchange Commission and the New York Stock Exchange. Copies of these
reports must also be furnished to the Company. Based solely upon a review of the
copies of the forms filed under Section 16(a) and furnished to the Company, or
written representations from reporting persons after inquiry, the Company
believes that all filing requirements applicable to its executive officers and
directors were complied with during 1996.
22
<PAGE>
Compensation Committee Interlocks and Insider Participation
The members of the Board's Compensation Committee are Messrs. Bogle, Breen,
Hoglund, Mechem, Styslinger and Ms. Kropf. In addition, Mr. Mason, Mead's
Chairman and Chief Executive Officer, is an ex-officio nonvoting member of the
Board's standing committees, including the Compensation Committee (although Mr.
Mason did not participate in any Compensation Committee discussions regarding
his compensation). Mr. Palmer, Mead's Vice President, General Counsel and
Secretary, is the nonvoting Secretary of the Committee, but is not a member of
the Committee.
Except as described above, none of the members of the Compensation Committee are
or were an officer or employee of Mead, or have any relationship requiring
disclosure under the federal securities rules.
Other Business
The Board of Directors does not intend to present, and has no knowledge that
others will present, any other business at the meeting. However, if any other
matters are properly brought before the meeting it is intended that the holders
of proxies will vote thereon in their discretion.
Independent Public Accountants
The independent certified public accounting firm of Deloitte & Touche LLP has
been appointed by the Board of Directors to serve as independent public
accountants for Mead and its subsidiaries for the fiscal year ending December
31, 1997. Deloitte & Touche LLP served in such capacity for the fiscal year
ended December 31, 1996. Representatives of Deloitte & Touche LLP will be
present at the Annual Meeting, will have an opportunity to make a statement if
they desire to do so, and will be available to respond to appropriate questions
from shareholders.
Shareholder Proposals
Any proposal by a shareholder intended for inclusion in Mead's proxy statement
and form of proxy for the 1998 Annual Meeting of Shareholders must be received
by Mead at Courthouse Plaza Northeast, Dayton, Ohio 45463, Attention: Thomas E.
Palmer, Secretary, on or before November 12, 1997 in order to be eligible for
such inclusion.
Solicitation of Proxies
The entire cost of solicitation will be borne by Mead. In addition to the use of
the mails, proxy solicitations may be made by officers and employees of Mead,
personally or by telephone and telegram. It is also anticipated that banks,
brokerage houses and other custodians, nominees and fiduciaries will be
requested to forward soliciting material to their principals and to obtain
authorization for the execution of proxies. Mead has retained Kissel-Blake Inc.
to aid in the solicitation of proxies, for which Mead will pay an estimated
$12,500. In addition, Mead will reimburse Kissel-Blake Inc., banks, brokerage
houses and other custodians, nominees and fiduciaries for their out-of-pocket
expenses.
By order of the Board of Directors
Steven C. Mason
Chairman of the Board
Printed on [50# New Era Matte]
23
<PAGE>
DETACH HERE MEA F
- --------------------------------------------------------------------------------
PROXY
THE MEAD CORPORATION
Annual Meeting of Shareholders, April 24, 1997
The undersigned holder(s) of Common Shares of THE MEAD CORPORATION, an Ohio
corporation (hereinafter referred to as the "Company"), hereby appoints William
E. Hoglund, Steven C. Mason and Thomas E. Palmer, and each of them, attorneys of
the undersigned, with power of substitution, to vote all of the Common Shares of
the undersigned entitled to vote at the Annual Meeting of the Company to be held
at the Blair Auditorium, Sinclair Community College, 444 West Third Street,
Dayton, Ohio on Thursday, April 24, 1997 at 4:00 p.m. and at any and all
adjournments of such meeting, upon the matters set forth on the reverse side
hereof, and in their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO INSTRUCTION IS INDICATED, THE SHARES WILL BE
VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE DIRECTORS. IN THE EVENT OF
CUMULATIVE VOTING FOR DIRECTORS, EXCEPT AS OTHERWISE INDICATED BY THE
UNDERSIGNED, A VOTE FOR THE NOMINEES LISTED HEREIN WILL GIVE THE PROXYHOLDERS
DISCRETIONARY AUTHORITY TO CUMULATE ALL VOTES TO WHICH THE UNDERSIGNED IS
ENTITLED AND TO ALLOCATE THEM IN FAVOR OF ANY ONE OR MORE OF THE NOMINEES, AS
THE PROXYHOLDERS DETERMINE.
----------------
SEE REVERSE SIDE
----------------
CONTINUED AND TO BE VOTED AND SIGNED ON REVERSE SIDE
<PAGE>
DETACH HERE MEA, ME2, ME3 F
- --------------------------------------------------------------------------------
[X] Please mark
votes as in
this example
- ------------------------------------------------------
The Board recommends a vote FOR the following proposal
- ------------------------------------------------------
1. Election of Directors to serve until the Annual Meeting in the year 1998.
Nominees: John C. Bogle, William E. Hoglund, John A. Krol, Susan J. Kropf,
Steven C. Mason, Paul F. Miller, Jr., Lee J. Styslinger, Jr.,
Jerome F. Tatar and J. Lawrence Wilson
FOR WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
[_] [_]
[_]
--------------------------------------
For all nominees except as noted above
MARK HERE
FOR ADDRESS [_]
CHANGE AND
NOTE AT LEFT
Receipt is acknowledged of Notice of the Annual Meeting and Proxy Statement
relating thereto.
Shareholders should mark, date this proxy and sign exactly as name(s) appears
hereon and return in the enclosed envelope. If stock is held jointly, both
owners should sign this proxy. Executors, administrators, trustees, guardians
and others signing in a representative capacity should indicate the capacity in
which they sign.
Signature: Date: Signature: Date:
----------------- ----- ---------------- -----
<PAGE>
DETACH HERE ME2 F
- --------------------------------------------------------------------------------
PROXY
CONFIDENTIAL VOTING INSTRUCTIONS
TO: FIDELITY MANAGEMENT TRUST COMPANY AS TRUSTEE
UNDER THE MEAD SALARIED SAVINGS PLAN
Annual Meeting of Shareholders: April 24, 1997
As a participant in the Mead Salaried Savings Plan, I hereby instruct the
Trustee to vote (in person or by proxy) all Common Shares of THE MEAD
CORPORATION which are credited to my account at the Annual Meeting of Mead to be
held at the Blair Auditorium, Sinclair Community College, 444 West Third Street,
Dayton, Ohio, on Thursday, April 24, 1997, at 4:00 p.m. and at any and all
adjournments thereof, on the matters set forth herein, and, in the Trustee's
discretion, on such other business as may properly come before the meeting.
THIS DIRECTION IS BEING SOLICITED BY FIDELITY MANAGEMENT TRUST COMPANY, AS
TRUSTEE UNDER THE MEAD SALARIED SAVINGS PLAN. THIS DIRECTION WHEN PROPERLY
EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
PARTICIPANT. IF NO INSTRUCTION IS INDICATED, THE TRUSTEE SHALL VOTE SUCH WHOLE
SHARES IN THE SAME PORTION AS THE SHARES FOR WHICH INSTRUCTIONS ARE RECEIVED
FROM OTHER PARTICIPANTS.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
----------------
SEE REVERSE SIDE
----------------
<PAGE>
DETACH HERE MEA, ME2, ME3 F
- --------------------------------------------------------------------------------
[X] Please mark
votes as in
this example
- ------------------------------------------------------
The Board recommends a vote FOR the following proposal
- ------------------------------------------------------
1. Election of Directors to serve until the Annual Meeting in the year 1998.
Nominees: John C. Bogle, William E. Hoglund, John A. Krol, Susan J. Kropf,
Steven C. Mason, Paul F. Miller, Jr., Lee J. Styslinger, Jr.,
Jerome F. Tatar and J. Lawrence Wilson
FOR WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
[_] [_]
[_]
--------------------------------------
For all nominees except as noted above
MARK HERE
FOR ADDRESS [_]
CHANGE AND
NOTE AT LEFT
Receipt is acknowledged of Notice of the Annual Meeting and Proxy Statement
relating thereto.
Shareholders should mark, date this proxy and sign exactly as name(s) appears
hereon and return in the enclosed envelope. If stock is held jointly, both
owners should sign this proxy. Executors, administrators, trustees, guardians
and others signing in a representative capacity should indicate the capacity in
which they sign.
Signature: Date: Signature: Date:
----------------- ----- ---------------- -----
<PAGE>
DETACH HERE ME3 F
- --------------------------------------------------------------------------------
PROXY
CONFIDENTIAL VOTING INSTRUCTIONS
TO: FIDELITY MANAGEMENT TRUST COMPANY AS TRUSTEE
UNDER THE MEAD SAVINGS PLAN FOR BARGAINING UNIT EMPLOYEES
Annual Meeting of Shareholders: April 24, 1997
As a participant in the Mead Savings Plan for Bargaining Unit Employees, I
hereby instruct the Trustee to vote (in person or by proxy) all Common Shares of
THE MEAD CORPORATION which are credited to my account at the Annual Meeting of
Mead to be held at the Blair Auditorium, Sinclair Community College, 444 West
Third Street, Dayton, Ohio, on Thursday, April 24, 1997, at 4:00 p.m. and at any
and all adjournments thereof, on the matters set forth herein, and, in the
Trustee's discretion, on such other business as may properly come before the
meeting.
THIS DIRECTION IS BEING SOLICITED BY FIDELITY MANAGEMENT TRUST COMPANY, AS
TRUSTEE UNDER THE MEAD SAVINGS PLAN FOR BARGAINING UNIT EMPLOYEES. THIS
DIRECTION WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED PARTICIPANT. IF NO INSTRUCTION IS INDICATED, THE TRUSTEE SHALL
VOTE SUCH WHOLE SHARES IN THE SAME PORTION AS THE SHARES FOR WHICH INSTRUCTIONS
ARE RECEIVED FROM OTHER PARTICIPANTS.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
----------------
SEE REVERSE SIDE
----------------
<PAGE>
DETACH HERE MEA, ME2, ME3 F
- --------------------------------------------------------------------------------
[X] Please mark
votes as in
this example
- ------------------------------------------------------
The Board recommends a vote FOR the following proposal
- ------------------------------------------------------
1. Election of Directors to serve until the Annual Meeting in the year 1998.
Nominees: John C. Bogle, William E. Hoglund, John A. Krol, Susan J. Kropf,
Steven C. Mason, Paul F. Miller, Jr., Lee J. Styslinger, Jr.,
Jerome F. Tatar and J. Lawrence Wilson
FOR WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
[_] [_]
[_]
--------------------------------------
For all nominees except as noted above
MARK HERE
FOR ADDRESS [_]
CHANGE AND
NOTE AT LEFT
Receipt is acknowledged of Notice of the Annual Meeting and Proxy Statement
relating thereto.
Shareholders should mark, date this proxy and sign exactly as name(s) appears
hereon and return in the enclosed envelope. If stock is held jointly, both
owners should sign this proxy. Executors, administrators, trustees, guardians
and others signing in a representative capacity should indicate the capacity in
which they sign.
Signature: Date: Signature: Date:
----------------- ----- ---------------- -----
