<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Rule 240.14a-11(c) or
Rule 240.14a-12
Temple-Inland Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
(LOGO)
303 SOUTH TEMPLE DRIVE
DIBOLL, TEXAS 75941
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FRIDAY, MAY 3, 1996
To the Stockholders of Temple-Inland Inc.
NOTICE IS HEREBY GIVEN that the 1996 Annual Meeting of Stockholders of
Temple-Inland Inc., a Delaware corporation (the "Company"), will be held at the
principal executive offices of the Company, 303 S. Temple Dr., Diboll, Texas
75941, on Friday, May 3, 1996, at 9:00 a.m., local time, for the following
purposes:
1. To elect three (3) directors to the Board of Directors of the
Company to hold office until the expiration of their terms or until their
respective successors have been duly elected and have qualified;
2. To ratify the appointment by the Board of Directors of Ernst &
Young LLP as independent auditors for the Company for the fiscal year
ending December 28, 1996; and
3. To transact such other business as may properly come before the
Annual Meeting or any adjournment(s) thereof.
The Board of Directors has fixed the close of business on March 8, 1996 as
the record date (the "Record Date") for the determination of stockholders
entitled to notice of and to vote at the Annual Meeting or any adjournment(s)
thereof. Only stockholders of record on the Record Date will be entitled to
notice of and to vote at the Annual Meeting.
By Order of the Board of Directors
M. RICHARD WARNER
Secretary
Diboll, Texas
March 22, 1996
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. HOWEVER, WHETHER OR NOT YOU
PLAN TO BE PRESENT AT THE MEETING, YOU ARE URGED TO MARK, SIGN, DATE AND RETURN
THE ACCOMPANYING PROXY IN THE ENCLOSED, SELF-ADDRESSED, STAMPED ENVELOPE
PROMPTLY SO THAT YOUR SHARES OF COMMON STOCK MAY BE VOTED IN ACCORDANCE WITH
YOUR WISHES AND IN ORDER THAT THE PRESENCE OF A QUORUM MAY BE ASSURED AT THE
MEETING. YOUR PROXY WILL BE RETURNED TO YOU IF YOU SHOULD REQUEST SUCH RETURN IN
THE MANNER PROVIDED FOR REVOCATION OF PROXIES ON THE INITIAL PAGE OF THE
ENCLOSED PROXY STATEMENT.
<PAGE> 3
(LOGO)
303 SOUTH TEMPLE DRIVE
DIBOLL, TEXAS 75941
---------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
SOLICITATION AND REVOCABILITY OF PROXIES
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Temple-Inland Inc. (the "Company") for use
at the 1996 Annual Meeting of Stockholders to be held on Friday, May 3, 1996, at
the time and place and for the purposes set forth in the accompanying Notice of
Annual Meeting of Stockholders, and at any adjournment(s) thereof. This Proxy
Statement and form of proxy are first being sent to the stockholders of the
Company on or about March 22, 1996.
The accompanying form of proxy is designed to permit each stockholder
entitled to vote at the Annual Meeting to vote for or withhold voting for any or
all nominees for election as director, to vote for or against or to abstain from
voting on proposal 2, and in the discretion of the proxies with respect to any
other proposal brought before the Annual Meeting. When a stockholder's proxy
card specifies a choice with respect to a voting matter, the shares will be
voted and will be voted as specified. If no such specifications are made, the
accompanying form of proxy will be voted at the Annual Meeting: For the election
of the nominees under the caption "Election of Directors;" and For ratification
of the selection of Ernst & Young LLP as independent auditors for the Company
for the fiscal year ending December 28, 1996.
Execution of the accompanying proxy will not affect a stockholder's right
to attend the Annual Meeting and vote in person. Any stockholder giving a proxy
has the right to revoke it by giving written notice of revocation to the
Secretary of the Company at its principal executive offices at any time before
the proxy is voted or by executing and delivering a later-dated proxy or by
attending the Annual Meeting and voting his or her shares in person. No such
notice of revocation or later-dated proxy, however, will be effective until
received by the Company at or prior to the Annual Meeting.
The Company has retained D.F. King & Co., Inc., a professional proxy
solicitation firm ("D.F. King"), to assist in the solicitation of proxies. In
addition to the solicitation of proxies by use of the mail, employees of D.F.
King and officers and regular employees of the Company may solicit the return of
proxies by personal interview, mail, telephone and telegraph. Officers and
employees of the Company will not receive additional compensation, but will be
reimbursed for out-of-pocket expenses. D.F. King will be reimbursed for its
expenses in soliciting proxies and, in addition, will receive a proxy
solicitation fee not to exceed $11,500. Brokerage houses and other custodians,
nominees and fiduciaries will be requested to forward solicitation material to
the beneficial owners of stock. All costs of solicitation are to be borne by the
Company.
The Annual Report to Shareholders, covering the Company's fiscal year ended
December 30, 1995 and including audited financial statements, is enclosed
herewith. The Annual Report does not form any part of the material for the
solicitation of proxies.
<PAGE> 4
PURPOSES OF THE MEETING
At the Annual Meeting, the stockholders of the Company will consider and
vote upon the following matters:
1. The election of three (3) directors to the Board of Directors of
the Company to hold office until the expiration of their terms or until
their respective successors have been duly elected and have qualified;
2. The ratification of the appointment by the Board of Directors of
Ernst & Young LLP as independent auditors for the Company for the fiscal
year ending December 28, 1996; and
3. Such other business as may properly come before the Annual Meeting
or any adjournment(s) thereof.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS
GENERAL
The Board of Directors of the Company has fixed the close of business on
March 8, 1996 as the record date (the "Record Date") for the determination of
stockholders entitled to notice of and to vote at the Annual Meeting. On the
Record Date, there were 55,560,184 shares of Common Stock of the Company issued
and outstanding. The Common Stock is the only class of stock outstanding and
entitled to vote at the Annual Meeting. Each share of Common Stock is entitled
to one vote on all matters to be acted on at the Annual Meeting. The attendance,
in person or by proxy, of the holders of a majority of the issued and
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum to transact business.
CONFIDENTIAL VOTING POLICY
On February 5, 1993, the Board of Directors of the Company adopted a
confidential voting policy. The policy provides that stockholder proxies,
ballots, and voting tabulations that identify the vote of the specific
stockholder will not be disclosed to the Company, its directors, officers, or
employees except in certain limited situations such as when legally necessary or
when expressly requested by a stockholder.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table and notes thereto indicate the name, address and stock
ownership of each person or group of persons known by the Company to own
beneficially more than five percent (5%) of the outstanding shares of Common
Stock as of February 8, 1996.
<TABLE>
<CAPTION>
AMOUNT
AND NATURE
NAME AND ADDRESS OF BENEFICIAL PERCENT OF
OF BENEFICIAL OWNER OWNERSHIP CLASS
------------------- ------------- ----------
<S> <C> <C>
Oppenheimer Group, Inc.................................... 6,590,300(1) 11.75%(2)
Oppenheimer Tower
World Financial Center
New York, New York 10281
Wellington Management Company............................. 3,255,170(3) 5.80%(4)
75 State Street
Boston, Massachusetts 02109
</TABLE>
- ---------------
(1) Based on a statement on Schedule 13G dated February 9, 1990 and Amendments
No. 1 through 9 thereto dated November 8, 1990, February 11, 1991, February
6, 1992, February 1, 1993, July 6, 1993, February 1, 1994, February 1,
1995, June 15, 1995 and February 1, 1996, respectively, (the "Oppenheimer
Group 13G") filed with the Securities and Exchange Commission, Oppenheimer
Group, Inc. disclaims beneficial ownership or shared voting power with
regard to such shares, which shares are
2
<PAGE> 5
collectively owned by Oppenheimer Capital, a registered investment advisor;
Oppenheimer & Co., LP; Oppenheimer Group, Inc.'s subsidiaries; or certain
investment advisory clients.
(2) Based upon the calculation in the Oppenheimer Group 13G, which assumes
56,087,660 shares of Common Stock outstanding.
(3) Based on a statement on Schedule 13G dated February 10, 1994 and Amendments
No. 1 and 2 thereto dated January 30, 1995 and February 1, 1996,
respectively, (the "Wellington 13G") filed with the Securities and Exchange
Commission, Wellington Management Company, in its capacity as investment
advisor, may be deemed beneficial owner of these shares which are owned by
numerous investment counseling clients.
(4) Based upon the calculation in the Wellington 13G, which assumes 56,123,621
shares of Common Stock outstanding.
SECURITY OWNERSHIP OF MANAGEMENT
The following table and notes thereto set forth certain information
regarding the beneficial ownership of the Common Stock as of February 2, 1996 by
(i) each of the Company's directors and nominees for director, (ii) the Chief
Executive Officer and the four other most highly compensated executive officers,
and (iii) all directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT
AND NATURE
OF
BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP(1) OF CLASS(2)
---------------- ------------ -----------
<S> <C> <C>
Paul M. Anderson......................... 13,000(3)(4) *
David L. Ashcraft........................ 77,813(3)(4)(6) *
Robert Cizik............................. 26,540(3)(4) *
Anthony M. Frank......................... 12,500(4) *
Clifford J. Grum......................... 419,584(3)(4)(5)(6) *
William B. Howes......................... 54,472(3)(4)(6) *
Bobby R. Inman........................... 10,500(3) *
Kenneth M. Jastrow, II................... 38,498(3)(4)(6) *
Harold C. Maxwell........................ 80,176(3)(4)(6) *
Herbert A. Sklenar....................... 15,000(3)(4) *
Walter P. Stern.......................... 44,880(3)(4)(5) *
Arthur Temple III........................ 315,804(3)(5)(7) *
Charlotte Temple......................... 236,698(3)(4)(8) *
Larry E. Temple.......................... 11,000(4) *
All directors and executive officers
(17 persons) as a group................ 1,403,808(3)(4)(5)(6)(7)(8)(9) 2.53%
</TABLE>
- ---------------
* Represents less than one percent.
(1) Beneficial ownership as reported in the above table has been determined in
accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as
amended ("Rule 13d-3"), with additional information included as set forth
in footnote (4) below. Unless otherwise indicated, beneficial ownership
includes both sole voting and sole dispositive power. Unless otherwise
indicated, the above table does not include any shares that may be held by
pension and profit-sharing plans of the corporations or endowment funds of
educational and charitable institutions for which various directors and
officers serve as directors or trustees.
(2) Based upon a total of 55,537,088 shares of Common Stock issued and
outstanding on January 31, 1996.
(3) Includes the following number of shares of Common Stock issuable upon the
exercise of options exercisable within a period of 60 days from February 2,
1996: Mr. Anderson -- 3,000; Mr. Ashcraft -- 21,727; Mr. Cizik -- 24,000;
Mr. Grum -- 28,883; Mr. Howes -- 33,039; Mr. Inman -- 10,000;
3
<PAGE> 6
Mr. Jastrow -- 22,553; Mr. Maxwell -- 21,727; Mr. Sklenar -- 3,000; Mr.
Stern -- 2,000; Mr. Temple III -- 10,000; Ms. C. Temple -- 1,000; Mr. L.
Temple -- 2,500; and all directors and executive officers (17 persons) as a
group -- 214,389.
(4) Also includes the following number of shares of Common Stock issuable upon
the exercise of options with exercise dates ranging from approximately six
months to fifteen years from February 2, 1996: Mr. Anderson -- 9,000; Mr.
Ashcraft -- 15,233; Mr. Cizik -- 2,000; Mr. Frank -- 12,000; Mr. Grum --
44,257; Mr. Howes -- 17,205; Mr. Jastrow -- 14,995; Mr. Maxwell -- 15,233;
Mr. Sklenar -- 11,000; Mr. Stern -- 2,000; Ms. C. Temple -- 9,000; and Mr.
L. Temple -- 7,500; and all directors and executive officers (17 persons)
as a group -- 186,904. These options are not required to be reported under
Rule 13d-3 and the shares underlying these options are not considered
"beneficially owned" under Rule 13d-3.
(5) Includes 57,052, 2,680, 2,000, and 3,512 shares of Common Stock owned by
certain relatives of Messrs. Grum, Stern, Temple III, and Ms. C. Temple,
respectively. Also includes, with respect to Mr. Grum, 3,550 shares of
Common Stock held by a corporation controlled by a relative of Mr. Grum and
4,000 shares held by a family foundation. All of these shares are
considered by the Securities and Exchange Commission to be beneficially
owned for purposes of this Proxy Statement. Certain of the named
individuals disclaim any beneficial interest in such shares.
(6) Includes 2,590, 3,355, 242, 950, and 1,187 shares of Common Stock held for
Messrs. Ashcraft, Grum, Howes, Jastrow, and Maxwell respectively, and
10,925 shares of Common Stock held for all directors and executive officers
(17 persons) as a group by trusts under three (3) employee stock plans of
the Company's subsidiaries. These shares are considered by the Securities
and Exchange Commission to be beneficially owned for purposes of this Proxy
Statement.
(7) Includes 134,460 shares of Common Stock held in a trust over which Mr.
Temple III is trustee. Mr. Temple III has a future income interest with
respect to 33,615 of these shares and a remainder interest with respect to
33,615 of these shares. Also includes 26,828 shares held by various trusts
and custodial accounts, with respect to which Mr. Temple III has sole
voting and dispositive power. Mr. Temple III disclaims any beneficial
ownership with respect to these 26,828 shares. Includes 137,190 shares held
in two trusts for Mr. Temple III and certain of his relatives with respect
to which he has a present income interest but no voting or dispositive
power. Mr. Temple III has a remainder interest with respect to 58,500 of
the shares held in one of these trusts. Does not include 10,536 shares held
by various trusts and custodial accounts, with respect to which Mr. Temple
III has sole voting and dispositive power. Mr. Temple III disclaims any
beneficial ownership with respect to these 10,536 shares. Does not include
1,260,626 shares of Common Stock held by the T.L.L. Temple Foundation, a
charitable trust, of which Mr. Temple III is one of five trustees and
shares voting and dispositive power. Mr. Temple III disclaims any
beneficial ownership with respect to such shares.
(8) Includes 67,230 shares of Common Stock held in a trust. Ms. C. Temple has a
future income interest with respect to 33,615 of these shares and a
remainder interest with respect to 33,615 of these shares. Also includes
137,190 shares held in two trusts for Ms. C. Temple and certain of her
relatives with respect to which she has a present income interest but no
voting or dispositive power. Ms. C. Temple has a remainder interest with
respect to 58,500 of the shares held in one of these trusts.
(9) Certain of the directors and executive officers disclaim beneficial
ownership with respect to certain of these shares.
4
<PAGE> 7
ELECTION OF DIRECTORS
The By-laws of the Company provide that the number of directors that
constitutes the Board of Directors shall be established by vote of the Board of
Directors and that the directors shall be classified with respect to the time
for which they severally hold office into three classes, which classes shall as
nearly as possible be equal in size. The Board of Directors has set the number
of directors at ten (10), with two classes of three (3) directors each and one
class of four (4) directors.
Directors are elected by a plurality of the votes cast by the holders of
the Company's Common Stock at a meeting at which a quorum is present.
"Plurality" means that the individuals who receive the largest number of votes
cast are elected as directors up to the maximum number of directors to be chosen
at the meeting. Consequently, any shares not voted (whether by abstention,
broker nonvote or otherwise) have no impact in the election of directors except
to the extent the failure to vote for an individual results in another
individual receiving a larger number of votes.
NOMINEES
Unless otherwise indicated in the enclosed form of proxy, the persons named
in such proxy intend to nominate and vote for the election of the following
nominees for the office of director of the Company, to serve as directors for
three (3) years or until their respective successors have been duly elected and
have qualified. All nominees are presently serving as directors.
NOMINEES FOR DIRECTOR TO BE ELECTED AT THE 1996 ANNUAL MEETING OF STOCKHOLDERS
<TABLE>
<CAPTION>
NAME AND YEAR FIRST PRINCIPAL OCCUPATION
ELECTED DIRECTOR AND OTHER INFORMATION
------------------- ---------------------
<S> <C>
Anthony M. Frank................... Chairman of Belvedere Partners. Mr. Frank, 64, served as
1992 Postmaster General of the United States from 1988
until 1992. Prior to his appointment as Postmaster
General, Mr. Frank served as Chairman of the Board and
Chief Executive Officer of the San Francisco-based
First Nationwide Bank. He has also served as Chairman
of the Federal Home Loan Bank of San Francisco and
Chairman of the California Housing Finance Agency, and
was the first Chairman of the Federal Home Loan
Mortgage Corporation Advisory Board. Mr. Frank is also
a director of The Charles Schwab Corporation, General
American Investors Company, Inc., Bedford Properties,
Inc., Crescent Real Estate Equities, Irvine Apartment
Communities, Living Centers of America, and Financial
Security Assurance.
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
NAME AND YEAR FIRST PRINCIPAL OCCUPATION
ELECTED DIRECTOR AND OTHER INFORMATION
------------------- ---------------------
<S> <C>
Walter P. Stern.................... Chairman of the Board of Capital Group International,
1984 Inc. ("CGII"), a wholly-owned subsidiary of The Capital
Group Companies, Inc., since March 1988. Mr. Stern,
67, has been serving as Chairman of Capital
International, Inc., a registered investment advisor
with the U.S. Securities and Exchange Commission and
wholly-owned subsidiary of CGII, since 1988. Mr. Stern
is the Vice Chairman of the Board of Capital Research
International, a partially-owned subsidiary (also
owned by subsidiaries of The Capital Group Companies,
Inc.) of Capital Research and Management Company, an
investment management organization that serves as an
investment advisor to over thirty mutual investment
funds, including The American Balanced Fund, The
Growth Fund of America, The AMCAP Fund, The Income
Fund of America, Inc., Fundamental Investors, Inc.,
EuroPacific Growth Fund and New Perspective Fund,
Inc., of each of which Mr. Stern is Chairman of the
Board. Mr. Stern is also Chairman and a director of
the Emerging Markets Growth Fund, Inc., and a director
of Birla Capital International AMC Ltd. (Bombay).
Charlotte Temple................... Investor. During the past five years, Ms. Temple, 56,
1994 has been associated with various civic organizations
while pursuing private interests. Prior to that time,
her experience was in the commercial real estate
investment area. Ms. Temple is also a director of
Exeter Investment Company.
</TABLE>
Although the Company does not anticipate that any of the above-named
nominees will refuse or be unable to accept or serve as a director of the
Company, the persons named in the enclosed form of proxy intend, if any nominee
becomes unavailable, to vote the shares represented by the proxy for the
election of such other person or persons as may be nominated or designated by
management, unless they are directed by the proxy to do otherwise.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF MR. FRANK,
MR. STERN AND MS. TEMPLE AS DIRECTORS OF THE COMPANY.
CONTINUING DIRECTORS
The following information is provided with respect to directors who will
continue to serve as directors of the Company until the expiration of their
terms at the times indicated.
DIRECTORS TO SERVE UNTIL THE 1997 ANNUAL MEETING OF STOCKHOLDERS
<TABLE>
<CAPTION>
NAME AND YEAR FIRST PRINCIPAL OCCUPATION
ELECTED DIRECTOR AND OTHER INFORMATION
------------------- ---------------------
<S> <C>
Paul M. Anderson................... President, Chief Executive Officer, and director of
1994 PanEnergy Corp. Mr. Anderson, 50, has served as
President of PanEnergy Corp since 1993, as Group Vice
President from 1991 through 1993, and as President of
its subsidiary Panhandle Eastern Pipe Line Company
since 1991. From February 1990 until 1991, he served
as Vice President, Finance and Chief Financial Officer
of Inland Steel Industries, Inc. Mr. Anderson served
in a number of management positions with Texas Eastern
Corporation beginning in 1977 and was Senior Vice
President when that company was acquired by Panhandle
Eastern Corporation (now known as PanEnergy Corp) in
1989. He serves on the board of TEPPCO Partners, L.P.
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
NAME AND YEAR FIRST PRINCIPAL OCCUPATION
ELECTED DIRECTOR AND OTHER INFORMATION
------------------- ---------------------
<S> <C>
Robert Cizik....................... Chairman of the Board of Cooper Industries, Inc. Mr.
1984 Cizik, 64, served as President of Cooper Industries,
Inc., a diversified manufacturing company, from April
1973 until September 1992, as its Chief Executive
Officer from April 1973 until September 1995, and as
its Chairman of the Board since April 1983. Mr. Cizik
is also the non-officer Chairman of Cooper Cameron
Corporation, a director of Harris Corporation,
PanEnergy Corp, and Air Products and Chemicals, Inc.,
and an advisory director of Wingate Partners, L.P.
Arthur Temple III.................. Chairman of the Board and Chief Executive Officer of
1984 Exeter Investment Company. Mr. Temple III, 54, has
served as Chairman of the Board of Exeter Investment
Company from 1975 to early 1982 and since March 1986.
From January 1981 until March 1986 he served as a
member of the Railroad Commission of Texas, which
regulates mineral resources and for-hire highway
transportation in Texas.
Larry E. Temple.................... Mr. Temple, 60, is an attorney and during the last five
1991 years has been in private practice. He has served as
Chairman of the Texas Select Committee on Higher
Education, as Chairman of the Texas Higher Education
Coordinating Board, and as a member of the Texas
Guaranteed Student Loan Corporation. Mr. Temple has
also served on several boards of the University of
Texas and is a member of the Board of the Lyndon B.
Johnson Foundation. Mr. Temple formerly served as
Special Counsel to President Lyndon B. Johnson and as
an Executive Assistant to Texas Governor John
Connally.
</TABLE>
DIRECTORS TO SERVE UNTIL THE 1998 ANNUAL MEETING OF STOCKHOLDERS
<TABLE>
<CAPTION>
NAME AND YEAR FIRST PRINCIPAL OCCUPATION
ELECTED DIRECTOR AND OTHER INFORMATION
------------------- ---------------------
<S> <C>
Clifford J. Grum................... Chairman and Chief Executive Officer of the Company. Mr.
1983 Grum, 61, served as President and Chief Executive
Officer of the Company from October 1983 until his
election as Chairman in 1991. Mr. Grum is also a
director of Cooper Industries, Inc., Premark
International, and Trinity Industries, Inc.
Bobby R. Inman..................... Admiral Inman, 64, served as Chairman of the Board of
1987 Westmark Systems, Inc., a Texas-based electronics
industry holding company, from September 1986, and as
its Chief Executive Officer from December 31, 1986,
until December 31, 1989. From January 1983 until
December 1986, Admiral Inman was President and Chief
Executive Officer of the Microelectronics and Computer
Technology Corp. in Austin, Texas. Admiral Inman
retired from active duty with the United States Navy
with permanent four star rank on July 1, 1982. Admiral
Inman served as Chairman of the Federal Reserve Bank
of Dallas from January 1987 to December 1990. He is a
director of Fluor Corporation, SBC Communications
Inc., Science Applications International Corp. and
Xerox Corporation.
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
NAME AND YEAR FIRST PRINCIPAL OCCUPATION
ELECTED DIRECTOR AND OTHER INFORMATION
------------------- ---------------------
<S> <C>
Herbert A. Sklenar................. Chairman of the Board and Chief Executive Officer of
1993 Vulcan Materials Company, a producer of construction
materials and chemicals. Mr. Sklenar, 64, served as
President of Vulcan Materials Company from 1983 until
his election as Chairman in 1992 and has served as its
Chief Executive Officer since 1986. In addition to
being a director of Vulcan Materials Company, he is
also a director of AmSouth Bancorporation and
Protective Life Corporation.
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There is no family relationship between any of the nominees, continuing
directors and executive officers of the Company other than Mr. Temple III and
Ms. C. Temple, who are brother and sister.
Mr. Temple III is a director, officer and 66 2/3% stockholder of Demco
Manufacturing Company ("Demco"). During 1995, Demco performed machinery repair
services for Temple-Inland Forest Products Corporation, a wholly-owned
subsidiary of the Company, in the ordinary course of business at an aggregate
cost to Temple-Inland Forest Products Corporation of $95,509. It is expected
that Demco will continue to perform services for subsidiaries of the Company in
the future.
Mr. Temple III is also a director of Contractor's Supplies, Inc.
("Contractor's"). A corporation effectively controlled by the family of Mr.
Temple III and Ms. C. Temple owns approximately 37% of Contractor's outstanding
capital stock. During 1995, subsidiaries of the Company purchased concrete from
Contractor's at an aggregate price of $109,354 in the ordinary course of
business. It is expected that subsidiaries of the Company will continue to
purchase concrete from Contractor's and its subsidiaries in the future.
In 1995, Temple-Inland Forest Products Corporation purchased several tracts
of timber from Mr. Arthur Temple as follows: all merchantable pine timber on
approximately 91 acres of land for $141,000, certain pine and hardwood timber on
approximately 152 acres of land for approximately $136,945, and all merchantable
timber on approximately 112 acres of land for approximately $239,037. Mr. Temple
is the father of Mr. Temple III and Ms. C. Temple. Temple-Inland Forest Products
Corporation also purchased all merchantable pine timber on approximately 10
acres of land for approximately $62,393 from a partnership, one of whose
partners is Exeter Investment Company. Mr. Temple III is the Chairman of Exeter
Investment Company and the family of Mr. Temple III and Ms. C. Temple owns a
controlling interest in Exeter Investment Company. All together, Mr. Arthur
Temple was paid $335,299 in 1995 for the timber purchases described above.
Payment for certain of this timber will be made as the timber is cut, which may
take place in 1996. In all cases, the value of the timber was determined by an
appraisal conducted by the Company's foresters.
In 1995, Guaranty Federal Bank, F.S.B., a consumer savings bank that is an
indirect, wholly-owned subsidiary of the Company, renewed a loan made during
1994 to a limited partnership, one of whose limited partners is Harold C.
Maxwell, a Group Vice President of the Company. The loan, which was paid off in
1995, was made in the ordinary course of business, was made on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons, and did not involve more
than the normal risk of collectibility or present other unfavorable features.
Mr. Cizik is Chairman of the Board of Cooper Industries, Inc. ("Cooper").
During 1995, Inland Container Corporation, a wholly-owned subsidiary of the
Company, purchased air compressors, parts, and servicing from Cooper at an
aggregate price of $193,182 in the ordinary course of business. In some cases,
Cooper is the only source for such air compressors, parts, or servicing. It is
expected that Inland Container Corporation may make similar purchases in the
future.
8
<PAGE> 11
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Company pursuant to Rule 16a-3(e) during its most recent fiscal
year and Forms 5 and amendments thereto or written representations in lieu of
Form 5 furnished to the Company with respect to its most recent fiscal year, the
Company has not identified any person who failed to file on a timely basis, as
disclosed in the above forms, reports required by Section 16(a) of the Exchange
Act during the most recent fiscal year or prior fiscal years.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has six standing committees of the Board. Set forth below is a
description of the functions of those committees and the members of the Board
serving on such committees.
Audit Committee. The primary responsibility of the Audit Committee is to
provide the Board of Directors assistance in fulfilling its fiduciary
responsibility to the stockholders, and the investment community, relating to
the accounting and reporting practices of the Company, the adequacy of corporate
financial controls, and the quality and integrity of the financial statements of
the Company and all of its wholly and majority owned subsidiaries, except for
Guaranty Federal Bank, F.S.B., which has its own board of directors and audit
committee. The functions of the Audit Committee include the review of the
professional services and independence of the Company's independent auditors;
the review, in consultation with the independent and internal auditors, of the
plan and results of the annual audit, the adequacy of the Company's internal
control systems and the results of the Company's internal audits; and the
review, with management and the independent auditors, of the Company's annual
report to stockholders and financial reporting practices. The Audit Committee
annually considers the qualifications of the Company's independent auditors and
makes recommendations to the Board as to their selection. The members of the
Audit Committee are Messrs. Sklenar (Chairman), Frank, L. Temple and Ms. C.
Temple. During 1995, the Audit Committee met three (3) times.
Executive Committee. The Executive Committee may exercise all the authority
of the Board of Directors in the management of the business and affairs of the
Company, except for matters related to the composition of the Board, changes in
the By-laws and certain other significant corporate matters. The members of the
Executive Committee are the Chairman of the Board, who will serve as Chairman of
the Executive Committee, and the Chairman of each standing committee of the
Board. The Executive Committee did not meet in 1995.
Finance Committee. The Finance Committee reviews the Company's financial
planning, structure, condition and requirements for funds; makes recommendations
to the Board of Directors concerning all forms of major financing, including the
issuance of securities, corporate borrowings, and investments; monitors the
Company's relationship with its lenders, compliance with financing agreements,
and financial disclosure policies; reviews capital expenditures and makes
recommendations to the Board concerning the financing thereof; makes
recommendations to the Board concerning the Company's dividend policy; makes
recommendations to the Board concerning the stock repurchase program; and
oversees the Company's employee benefit plan investment committee and policies.
The members of the Finance Committee are Messrs. Cizik (Chairman), Anderson,
Stern, and Temple III. The Chairman of the Board is a nonvoting ex-officio
member. The Finance Committee met three (3) times during 1995.
Management Development and Executive Compensation Committee. The Management
Development and Executive Compensation Committee ("Compensation Committee") is
responsible for ensuring that a proper system of short and long-term
compensation is in place to provide performance-oriented incentives to
management; overseeing management succession and development programs; making
recommendations concerning compensation programs, retirement plans and other
employee benefit programs; approving the salaries and bonuses of all officers of
the Company and certain other personnel; and making recommendations with respect
to bonus, stock option, restricted stock, phantom stock, stock performance,
stock appreciation right or other current or proposed incentive plans. The
members of the Compensation Committee are Messrs. Frank (Chairman), Inman,
Sklenar, Stern, and Temple III. The Chairman of the Board is a nonvoting
ex-officio member. During 1995, the Compensation Committee met two (2) times.
9
<PAGE> 12
Nominating Committee. The Nominating Committee periodically reviews the
structure of the Board to assure that the proper skills and experience are
represented on the Board, recommends nominees to serve on the Board of
Directors, reviews potential conflicts of prospective Board members, recommends
the size of the Board, recommends the membership of the committees, and reviews
outside directorships in other publicly held companies by senior officers of the
Company. Nominees to serve on the Board of Directors are selected on the basis
of recognized achievements and their ability to bring various skills and
experience to the deliberations of the Board. In carrying out its
responsibilities, the Nominating Committee considers candidates recommended by
other directors and employees of the Company. The members of the Nominating
Committee are Messrs. Inman (Chairman), Cizik, and Sklenar. The Chairman of the
Board is a nonvoting ex-officio member. The Nominating Committee met three (3)
times during 1995.
Pursuant to the Company's By-laws, notice of a stockholder's intent to make
a nomination for the Board of Directors must contain certain specified
information regarding the nominating stockholder and the nominee and must be
received by the Secretary of the Company not less than 75 days nor more than 100
days prior to the anniversary date of the immediately preceding annual meeting
of stockholders (or in the case of an annual meeting called for a date more than
50 days prior to such anniversary date or in the case of a special meeting of
stockholders, not later than the close of business on the 10th day following the
date on which notice of such annual meeting or special meeting is first mailed
to stockholders or made public, whichever occurs first.)
Public Policy/Environmental Committee. The Public Policy/Environmental
Committee acts in an advisory and consulting capacity to the Board of Directors
regarding the Company's activities that relate to matters of public policy and
the environment. In fulfilling its responsibilities, the committee considers and
reviews from time to time the Company's policies and practices that address
issues of social and public concern, as well as significant legislative,
regulatory and social trends. The members of the Public Policy/Environmental
Committee are Messrs. L. Temple (Chairman), Anderson, Cizik and Ms. C. Temple.
The Chairman of the Board is a nonvoting ex-officio member. The Public
Policy/Environmental Committee met two (2) times during 1995.
BOARD MEETINGS
During 1995, the Board of Directors held four (4) meetings. Each director
attended at least 75% of the aggregate of the total number of meetings of the
Board of Directors and the total number of meetings held by all committees of
the Board on which he served.
DIRECTOR COMPENSATION
Directors who are not employees of the Company will receive in 1996 an
annual retainer of $35,000 and a $2,000 fee for attendance at regular and
special Board meetings. Directors who serve on committees of the Board receive
$1,000 for each committee meeting held in conjunction with a Board meeting and
$2,000 for each other committee meeting. The chairmen of committees of the Board
receive an additional annual retainer of $2,500. Directors are reimbursed for
expenses incurred in attending Board and committee meetings, including those for
travel, food and lodging. Directors and members of committees of the Board who
are employees of the Company are not compensated for their Board and committee
activities.
Under the Company's Stock Option Plan, each person who is first elected a
non-employee director is automatically granted upon such election a nonqualified
stock option covering 10,000 shares of Common Stock at an exercise price per
share equal to the fair market value of the stock on the date the option is
granted. Any non-employee director may also, pursuant to the terms of the
Company's Stock Option Plan, make an election to receive nonqualified stock
options in lieu of his annual retainer fees.
Under the Retirement and Deferred Compensation Plan for Directors of
Temple-Inland Inc. (the "Directors' Retirement Plan"), a non-employee director
who remains a member of the Board until retirement age or who retires earlier
after serving on the Board for a period of at least ten (10) years is entitled
to receive an annual retirement benefit equal to the then current annual
retainer fee. The benefit will be paid for a number of years equal to the
greater of (i) the number of years the director served as a member of the Board,
10
<PAGE> 13
or (ii) five (5) years. In the event of the director's death, the remainder of
the benefit will be paid to his spouse if living.
In lieu of the retirement benefits previously described, if a non-employee
director ceases to be a member of the Board at any time within two (2) years
after the occurrence of a change in control of the Company for any reason other
than the director's retirement or death, the director will be paid a lump-sum
retirement benefit equal to the product of (A) and (B), where (A) is the greater
of five (5) or the number of years the director served as a member of the Board,
and (B) is the greater of the annual retainer fee being paid to directors at the
time the director ceases to be a member of the Board or the annual retainer fee
in effect immediately prior to the change in control. In the event that the
retirement benefit payable to a director is subject to the 20% excise tax
imposed under the Internal Revenue Code of 1986 with respect to certain payments
made in connection with a change in control, the Directors' Retirement Plan
provides for an additional payment to be made to the director such that he
retains on an after-tax basis the same amount as he would have if no excise tax
had been imposed.
Under the Directors' Retirement Plan, a non-employee director may also
elect to defer his Board fees until the earlier of retirement, death, or, in
certain circumstances, termination of membership on the Board. Any Board fees
that are deferred accrue interest at the prime commercial lending rate.
EXECUTIVE COMPENSATION
Report of the Management Development and Executive Compensation Committee on
Executive Compensation
The Company's executive compensation program is designed to align
compensation with business strategy, performance, and stockholder values. The
program includes salary, short term cash incentives, and a long term program
based on stock options. The Committee considers all elements of the compensation
package in total, rather than any one element in isolation. In 1995, for
example, salaries were increased for the first time since 1993, while incentive
bonuses were used to reward performance and long term incentive awards were made
as motivation for future performance. In making compensation decisions, the
Committee uses a general process and exercises its business judgment to
determine the amounts.
It is the Company's policy to obtain the maximum deduction on its tax
return for compensation paid to its executive officers consistent with the
Company's compensation goals. In 1995, the Committee adopted a policy requiring
the deferral of any compensation that exceeds the permissible deduction under
Section 162(m) of the Internal Revenue Code until such time as the maximum
deduction under Section 162(m) may be taken. All compensation paid in 1995
should qualify for a deduction under Section 162(m).
Since its inception in 1984, Temple-Inland's compensation philosophy has
been to ensure that shareholder returns are a top priority in evaluating the
effectiveness of the compensation program. The following paragraphs outline the
Compensation Committee's objectives.
Base Salary. Base salaries are maintained at competitive levels considering
the performance and longevity of the employee. To ensure that the Company's
compensation remains competitive, the Committee from time to time reviews
information from several independent surveys of comparably-sized companies.
Since the market for executive talent extends beyond any particular industry,
the survey data includes both companies in the industry as well as companies
outside the industrial classification represented in the Paper Industry Index
referred to below under "Performance Graph." While the Committee does not target
salary levels to the high, median or low end of the ranges or to any particular
percentile, surveys indicate base salaries for the Company's named executive
officers are currently below the 50th percentile for the average of similar
companies. Base salaries are usually reviewed every two years and were increased
in 1995. In making its salary decisions, the Committee places its emphasis on
the particular executive's experience, responsibilities, and performance. No
specific formula is applied to determine the weight of each factor. However, the
Company has historically followed a policy of using the incentive bonus rather
than base salary to reward outstanding performance.
11
<PAGE> 14
Incentive Bonus. Short term cash incentive awards are largely based on
individual performance and on the performance of the group or business segment
in which the individual is a key employee. Included in the evaluation of an
employee are the current earnings of the group, personal performance, and the
degree to which the employee's actions have laid the groundwork for future
earnings. Financial performance of the business segment is given greater weight
than other business accomplishments in determining bonus payments. The types and
relative importance of specific financial and other business factors vary among
the Company's executives depending on their positions and the particular
operations or functions for which they are responsible. The evaluation of the
CEO is based on the consolidated results of the Company.
The Committee does not establish targeted award levels or goals at the
beginning of the year. Instead, the Committee reviews actual earnings and
performance (including comparisons to competitors where appropriate) after the
end of the year and determines in its business judgment the size of each
executive's award. The Corrugated Container Group had earnings of $344 million
in 1995 compared to $102 million in 1994, and the Group Vice President of this
segment received a bonus of $400,000 in 1995 compared to $175,000 in 1994. The
Financial Services Group had earnings of $98.1 million in 1995 compared to $56.3
million in 1994, and the Group Vice President of this segment received a bonus
of $400,000 in 1995 compared to $250,000 in 1994. The Building Products Group
had earnings of $61 million in 1995 compared to $132.6 million in 1994, and the
Group Vice President of this segment received a bonus of $225,000 in 1995
compared to $275,000 in 1994. The Bleached Paperboard Group had earnings of
$18.6 million in 1995 compared to a loss of $22.1 million for 1994, and the
Group Vice President of this segment received a bonus of $125,000 in 1995
compared to $75,000 in 1994. No specific weightings have been assigned under the
bonus program to the factors considered by the Committee in the exercise of its
business judgment.
Long Term Incentive Awards. In 1995, the key executives listed in the proxy
statement received an annual tandem grant of stock options and performance units
under a long term incentive program that had been in effect since 1984. As noted
below, this program will be modified for future awards. There is no other long
term incentive program. The primary emphasis of the program is the stock option
grant, which is a dollar value of options based on the executive's position and
importance to the Company's long range performance. These options are granted at
market. Options granted in 1995 and prior years expire in five (5) years. Option
awards are basically set at a percentage of targeted compensation. However,
within these guidelines, the Committee also considers previous option grants,
tenure, and responsibilities of the executive. In the case of a new key
executive, an initial grant may be made above targeted levels.
Since the tandem Performance Unit Plan was adopted, the Committee has held
the belief that the cash award should have less potential than the tandem stock
option award as an additional incentive for the executive to attempt to increase
shareholder value. The potential cash award under the Performance Unit Plan was
not only reduced to 50% of the option value, but was also capped at 150% of the
initial grant value. The tandem performance unit grant expires in four (4)
years. The performance unit is terminated by an exercise of the option granted
at the same time. If the performance unit is paid, the related stock option is
canceled.
The performance unit has certain hurdles to ensure that the Company's
performance in the next four (4) years exceeds its performance in the past four
(4) years as well as inflation. Reference is made to page 15 for a more complete
explanation of the potential payouts under the Performance Unit Plan. The
Committee has determined that the formula previously used to measure the
Company's earnings per share growth rate in comparison to an industry peer group
no longer provides mathematically meaningful results due to the negative
earnings of certain of the peer companies during the measurement period. The
Committee will therefore eliminate this criteria from the calculation of payouts
for performance unit shares. The payouts will be determined based on the
Company's performance under the return on equity formula in the test. Although
annual awards have been made since 1984, the specified formulas have only
generated one (1) cash payment which occurred in 1991. In all other years, the
performance unit awards have been terminated without payment, although the
related stock option awards continued for another year. Likewise, on February 1,
1996, the Committee determined that the performance units awarded on February 7,
1992 did not meet the performance hurdles over the award period from 1992
through 1995 and terminated the performance units without payment. The related
stock option award granted in 1992 continues until February 1997.
12
<PAGE> 15
With the exception of an initial award to Mr. Howes upon his employment in
1990 to replace awards from his former employer that were forfeited, the key
executives included in the proxy statement do not receive restricted stock
awards. The Company maintains a policy of having this alternative available to
attract new executives.
The Committee has recently completed a review of the Company's long term
compensation practices with the help of Sibson & Company, a compensation
consultant. The Committee has decided to rely exclusively on stock options in
future years and will not grant any further awards under the Performance Unit
Plan. To bring the Company's stock option awards in line with competitive
practices and to compensate executives for the loss of the performance unit
awards, the Committee is lengthening the term of the stock options to ten years.
A comparable adjustment will be made to the vesting schedule for these options,
which will vest 15% per year on the second, third, fourth, and fifth
anniversaries and 40% on the sixth anniversary following the date of grant. The
Committee believes these changes to its long term compensation program will
further align executives' interests with those of the Company's shareholders.
The Chief Executive Officer. In reviewing Mr. Grum's performance, the
Committee considers all of the factors set forth in the above paragraphs.
However, the Committee focuses primarily on the Company's performance, measured
in large part by its net earnings. The Company's 1995 earnings per share were
$5.01, up 113% from the prior year's $2.35 (net of accounting changes), and Mr.
Grum received a bonus of $500,000 in 1995 compared to his bonus of $300,000 in
1994. Mr. Grum received a $97,000 increase in base salary in February 1995. A
comparison of Mr. Grum's cash compensation for the last three (3) years with the
Company's net earnings during that period is set forth in the following table:
<TABLE>
<CAPTION>
INCENTIVE NET EARNINGS
YEAR SALARY COMPENSATION TOTAL OF THE COMPANY
- ---- -------- ------------ --------- --------------
<S> <C> <C> <C> <C> <C>
1995................................ $588,808 $500,000 $1,088,808 $281.0 Million
1994................................ $503,000 $300,000 $ 803,000 $131.4 Million
1993................................ $495,250 $100,000 $ 595,250 $117.3 Million
</TABLE>
As noted above, the size of long term incentive awards is set in accordance
with the individual executive's responsibilities, other awards, and performance.
Mr. Grum's awards were determined in this same manner. He received 7,912 options
in 1993, 11,428 in 1994, and 12,800 in 1995. The difference in the number of
options granted from year to year is due to variations in the stock price on the
date of award ($50.56 in 1993, $52.50 in 1994 and $46.88 in 1995), as well as
adjustments made by the Committee in consideration of previous grants. The grant
in 1994 reflected an increase due to the Committee's determination that the
number of units granted should be revised upward to reflect competitive
incentive program practices for other companies within the competitive universe.
In each case, Mr. Grum received a tandem performance unit award equal to
one-half ( 1/2) the number of options.
Other Information. Reference is made to the following charts and tables for
actual compensation grants and awards to key executives, as well as the
Company's performance for the last five (5) years, and to pages 1 and 27 of the
Company's Annual Report to Shareholders for information concerning the Company's
profitability.
Anthony M. Frank, Chairman
Bobby R. Inman
Herbert A. Sklenar
Walter P. Stern
Arthur Temple III
13
<PAGE> 16
The following table summarizes all compensation earned or paid with respect
to the Company's last fiscal year to the Chief Executive Officer and the four
other most highly compensated executive officers who were serving as executive
officers at the end of the last completed fiscal year:
TABLE 1: SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION -------------------------------------
-------------------------------- AWARDS PAYOUTS
OTHER ----------------------- -----------
ANNUAL RESTRICTED SECURITIES
COMPEN- STOCK UNDERLYING LTIP ALL OTHER
NAME AND SATION AWARD(S) OPTIONS/ PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($)(1) ($) SARS (#) ($) ($)(2)
- ---------------------------- ----- ---------- --------- ------- ---------- ---------- ----------- ------------
(A) (B) (C) (D) (E) (F) (G) (H) (I)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Clifford J. Grum, 1995 $588,808 $500,000 N/A $0 12,800 $ 0 $3,000
Chairman and Chief 1994 $503,000 300,000 N/A 0 11,428 0 2,500
Executive Officer 1993 495,250 100,000 N/A 0 7,912 0 2,500
William B. Howes, 1995 $361,722 $400,000 N/A $0 9,600 $ 0 $3,000
Group Vice President 1994 325,620 175,000 N/A 0 7,620 0 2,500
1993 299,370 70,000 N/A 0 7,912 0 2,500
Kenneth M. Jastrow, II, 1995 $288,462 $400,000 N/A $0 8,532 $ 0 $3,000
Group Vice President and 1994 200,000 250,000 N/A 0 5,716 0 2,500
Chief Financial Officer 1993 196,154 250,000 N/A 0 5,936 0 2,500
Harold C. Maxwell, 1995 $274,577 $225,000 N/A $0 8,532 $ 0 $3,000
Group Vice President 1994 233,000 275,000 N/A 0 6,668 0 2,500
1993 230,635 200,000 N/A 0 6,924 0 2,500
David L. Ashcraft, 1995 $275,731 $125,000 N/A $0 8,532 $ 0 $3,000
Group Vice President 1994 243,000 75,000 N/A 0 6,668 0 2,500
1993 240,635 0 N/A 0 6,924 0 2,500
</TABLE>
- ---------------
(1) Not applicable. The dollar value of perquisites and other personal
benefits, or securities or property paid or earned during the fiscal year
other than pursuant to a plan, does not exceed the lesser of $50,000 or 10%
of the annual salary and bonus reported for each officer and is therefore
not reported.
(2) Amounts shown are annual contributions or other allocations to defined
contribution plans.
None of the five (5) executive officers named above has an employment
contract with the Company or an agreement providing for severance payments in
the event his employment is terminated.
During 1995, the Company had a stock option plan in place under which
options were granted to employees. Employees also exercised options granted
under a prior plan. Each of the plans was approved by the stockholders and
administered by non-employee members of the Board of Directors. The options were
granted at full market value on the date of the grant, and these exercise prices
have never been reduced. Options have been granted to approximately 325 current
middle and upper level company employees who have direct responsibilities to
improve the profitability of the Company.
14
<PAGE> 17
The following table summarizes the stock options granted to the five (5)
named executive officers in the last fiscal year:
TABLE 2: OPTION/SAR GRANTS IN LAST FISCAL YEAR (1)
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION FOR OPTION
INDIVIDUAL GRANTS TERM
- -------------------------------------------------------------------------------------------------- -------------------------
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS/
UNDERLYING SARS EXERCISE
OPTIONS/ GRANTED TO OR BASE
SARS GRANTED EMPLOYEES IN PRICE EXPIRATION
NAME (#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ---------------------------------- ------------- ---------------- -------- ---------- ---------- ----------
(A) (B) (C) (D) (E) (F) (G)
- ---------------------------------- ------------- ---------------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Clifford J. Grum.................. 12,800 4.0% $46.88 02/02/00 $ 166,000 $ 366,000
William B. Howes.................. 9,600 3.0% $46.88 02/02/00 124,000 275,000
Kenneth M. Jastrow, II............ 8,532 2.7% $46.88 02/02/00 111,000 244,000
Harold C. Maxwell................. 8,532 2.7% $46.88 02/02/00 111,000 244,000
David L. Ashcraft................. 8,532 2.7% $46.88 02/02/00 111,000 244,000
</TABLE>
- ---------------
(1) Options to purchase Temple-Inland Inc. common stock. The exercise price is
the average of the high and low sales price of a share of Company Common
Stock on the New York Stock Exchange on the date of grant. Exercise prices
have never been repriced. Withholding taxes may be paid with exercised
shares. No general or freestanding stock appreciation rights ("SARs") were
granted. All grants to the named executive officers under the Stock Option
Plan include a provision for acceleration of vesting in certain change of
control situations. Options become exercisable in 25% increments on
08/02/95, 02/02/96, 02/02/97, and 02/02/98.
Each of the named executives was granted one (1) tandem performance unit
valued at $46.88, the fair market value of a share of the Company's Common
Stock on the date of grant, for every two (2) options granted. The
performance goals for this award will be measured over the four (4) year
period from 1995 through 1998.
Under the terms of the performance unit award, a cash payment is possible
only if (i) the Company's average earnings per share during the four (4)
year grant period exceeds the average earnings per share for the four (4)
years prior to the date of grant, and (ii) the Company's average return on
equity exceeds 9%, which will be adjusted upward if that rate does not
exceed the average rate of inflation plus 3%.
These standards would yield a threshold award of $12,500 on a $100,000
grant. To the extent the threshold levels are exceeded, it is possible to
receive a maximum award of 150% of the initial value. The maximum award on
a $100,000 grant would be $150,000.
Performance units are canceled if the related stock options are exercised,
and the stock options are canceled if the performance units are paid.
15
<PAGE> 18
The following table summarizes the stock option exercises and value of
options held at year-end of the five (5) named executive officers:
TABLE 3: AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL
YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
SHARES AT FISCAL YEAR-END (#)(2) AT FISCAL YEAR-END ($)(3)
ACQUIRED ON VALUE -------------------------- --------------------------
NAME EXERCISE (#) REALIZED ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ --------------- ----------- ------------- ----------- -------------
(A) (B) (C) (D) (E)
---- ------------ --------------- -------------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C>
Clifford J. Grum.............. 0 0 40,358 17,292 $ 149,837 0
William B. Howes.............. 6,968 $ 67,450 26,756 12,988 $ 103,100 0
Kenneth M. Jastrow, II........ 0 0 17,507 10,741 0 0
Harold C. Maxwell............. 8,360 $ 76,243 16,196 11,464 0 0
David L. Ashcraft............. 8,360 $ 76,243 16,196 11,464 0 0
</TABLE>
- ---------------
(1) Value based on the average of the high and low sales prices of a share of
Temple-Inland Inc. Common Stock on the New York Stock Exchange on the date
of exercise, which is the valuation used in the Stock Option Plan.
(2) Some of the options listed in the chart include an equal number of tandem
limited SARs, which can only be exercised in certain change of control
situations. The number of options with tandem limited SARs held by Messrs.
Grum, Howes, Jastrow, Maxwell, and Ashcraft is 33,422, 12,524, 14,000,
12,460, and 12,460, respectively. Since there have been no change of
control situations, none of these SARs have ever been exercised. Tandem
limited SARs are not granted under the Company's current Stock Option Plan.
(3) Value based on the average of the high and low sales prices of a share of
Temple-Inland Inc. Common Stock on the New York Stock Exchange on December
29, 1995.
16
<PAGE> 19
PERFORMANCE GRAPH
During the five preceding fiscal years, the Company's cumulative total
stockholder return compared to the Standard & Poor's 500 Stock Index and to the
Standard & Poor's Paper Industry Index was as shown in the following Table 4:
TABLE 4:
TEMPLE-INLAND INC.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
[GRAPH]
<TABLE>
<CAPTION>
MEASUREMENT PERIOD TEMPLE-INLAND
(FISCAL YEAR COVERED) INC. S&P 500 S&P PAPER
<S> <C> <C> <C>
1990 100.00 100.00 100.00
1991 165.55 130.47 126.84
1992 168.72 140.41 145.03
1993 168.57 154.56 159.84
1994 154.10 156.60 166.55
1995 153.49 214.86 183.38
</TABLE>
ASSUMES $100 INVESTED ON DECEMBER 31, 1990
*TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS
The five (5) named executive officers also participate in defined benefit
pension plans of the Company's subsidiaries, with estimated benefits shown
below.
TABLE 5: PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
-----------------------------------------------------------------------
REMUNERATION 10 15 20 25 30 35
- ---------------------------- --------- --------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
$ 350,000................... $ 54,000 $ 81,000 $ 108,000 $ 135,000 $ 162,000 $ 189,000
400,000.................. 62,000 93,000 124,000 155,000 186,000 217,000
450,000.................. 70,000 105,000 140,000 175,000 210,000 245,000
500,000.................. 78,000 117,000 156,000 195,000 234,000 273,000
550,000.................. 86,000 129,000 172,000 215,000 258,000 301,000
600,000.................. 94,000 141,000 188,000 235,000 282,000 329,000
700,000.................. 110,000 165,000 220,000 275,000 330,000 385,000
750,000.................. 118,000 177,000 236,000 295,000 354,000 413,000
800,000.................. 126,000 189,000 252,000 315,000 378,000 441,000
900,000.................. 142,000 213,000 284,000 355,000 426,000 497,000
1,000,000.................. 158,000 237,000 316,000 395,000 474,000 553,000
1,100,000.................. 174,000 261,000 348,000 435,000 522,000 609,000
1,150,000.................. 182,000 273,000 364,000 455,000 546,000 637,000
1,200,000.................. 190,000 285,000 380,000 475,000 570,000 665,000
1,250,000.................. 198,000 297,000 396,000 495,000 594,000 693,000
1,300,000.................. 206,000 309,000 412,000 515,000 618,000 721,000
1,350,000.................. 214,000 321,000 428,000 535,000 642,000 749,000
</TABLE>
The above table shows the estimated annual pension payable upon retirement
to employees in specified remuneration and years-of-service classifications.
Retirement benefits are calculated using final average pay
17
<PAGE> 20
based on the highest five (5) of the employee's last ten (10) years of service.
Compensation covered by the Company's retirement plans includes salaries and
bonuses, but excludes all other forms of compensation shown in the foregoing
tables such as stock options and performance units. Messrs. Ashcraft, Grum,
Howes, Jastrow and Maxwell are currently credited with approximately 27, 27, 5,
17 and 32 years of service, respectively. If such officers continue in the
employ of the Company until their respective retirement dates, at such time they
would be credited with approximately 42, 31, 11, 33 and 42 years of service,
respectively. The estimated amounts are based on the assumption that payments
under the Company's retirement plans will commence upon normal retirement (age
65), that the Company's retirement plans will continue in force and that the
benefit payment will be in the form of a life annuity. Amounts shown in the
table above are not subject to any deduction for Social Security or other offset
amounts.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Temple III is a director, officer and 66 2/3% stockholder of Demco
Manufacturing Company ("Demco"). During 1995, Demco performed machinery repair
services for Temple-Inland Forest Products Corporation, a wholly-owned
subsidiary of the Company, in the ordinary course of business at an aggregate
cost to Temple-Inland Forest Products Corporation of $95,509. It is expected
that Demco will continue to perform services for subsidiaries of the Company in
the future.
Mr. Temple III is also a director of Contractor's Supplies, Inc.
("Contractor's"). A corporation effectively controlled by the family of Mr.
Temple III and Ms. C. Temple owns approximately 37% of Contractor's outstanding
capital stock. During 1995, subsidiaries of the Company purchased concrete from
Contractor's at an aggregate price of $109,354 in the ordinary course of
business. It is expected that subsidiaries of the Company will continue to
purchase concrete from Contractor's and its subsidiaries in the future.
In 1995, Temple-Inland Forest Products Corporation purchased several tracts
of timber from Mr. Arthur Temple as follows: all merchantable pine timber on
approximately 91 acres of land for $141,000, certain pine and hardwood timber on
approximately 152 acres of land for approximately $136,945, and all merchantable
timber on approximately 112 acres of land for approximately $239,037. Mr. Temple
is the father of Mr. Temple III and Ms. C. Temple. Temple-Inland Forest Products
Corporation also purchased all merchantable pine timber on approximately 10
acres of land for approximately $62,393 from a partnership, one of whose
partners is Exeter Investment Company. Mr. Temple III is the Chairman of Exeter
Investment Company and the family of Mr. Temple III and Ms. C. Temple owns a
controlling interest in Exeter Investment Company. All together, Mr. Arthur
Temple was paid $335,299 in 1995 for the timber purchases described above.
Payment for certain of this timber will be made as the timber is cut, which may
take place in 1996. In all cases, the value of the timber was determined by an
appraisal conducted by the Company's foresters.
PROPOSAL TO RATIFY THE SELECTION OF ERNST & YOUNG LLP AS
INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR
ENDING DECEMBER 28, 1996
Upon the recommendation of the Audit Committee of the Board of Directors,
none of whose members is an officer of the Company, the Board of Directors has
selected Ernst & Young LLP as independent auditors for the Company to examine
its consolidated financial statements for the fiscal year ending December 28,
1996 and has determined that it would be desirable to request that the
stockholders ratify such selection. Ernst & Young LLP currently serves the
Company and its subsidiaries as independent auditors. Representatives of Ernst &
Young LLP will be present at the Annual Meeting with the opportunity to make a
statement if they desire to do so and will be available to respond to
appropriate questions from stockholders.
18
<PAGE> 21
Stockholder ratification is not required for the selection of Ernst & Young
LLP, since the Board of Directors has the responsibility for selecting the
Company's independent auditors. The selection, however, is being submitted for
ratification at the Annual Meeting. No determination has been made as to what
action the Board of Directors would take if stockholders do not ratify the
selection.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF ERNST &
YOUNG LLP AS INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING
DECEMBER 28, 1996.
OTHER BUSINESS
The Board of Directors knows of no other business that may properly be, or
which is likely to be, brought before the Annual Meeting. If, however, any other
business should properly be presented to the Annual Meeting, the persons named
in the accompanying proxy will vote the proxy as in their discretion they may
deem appropriate.
DATE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as
amended, stockholders may present proper proposals for inclusion in the
Company's proxy statement and for consideration at its Annual Meeting of
Stockholders by submitting their proposals to the Company in a timely manner. In
order to be so included for the 1997 Annual Meeting, stockholder proposals must
be received by the Company by November 22, 1996 and must otherwise comply with
the requirements of Rule 14a-8.
The Company's By-laws contain an advance notice procedure with regard to
items of business to be brought before an Annual Meeting of Stockholders by a
stockholder. These procedures require that notice be made in writing to the
Secretary of the Company and that such notice be received at the executive
offices of the Company not less than 75 days nor more than 100 days prior to the
anniversary date of the immediately preceding Annual Meeting of Stockholders (or
in the case of an annual meeting called for a date more than 50 days prior to
such anniversary date, not later than the close of business on the 10th day
following the date on which notice of such annual meeting is first mailed to
stockholders or made public, whichever occurs first). The By-laws require that
the notice of the proposal contain certain information concerning the proposing
stockholder and the proposal. The Company's By-laws also contain an advance
notice procedure for the nomination of candidates for election to the Board of
Directors by stockholders. For a brief description of such procedures, see
"Committees of the Board of Directors -- Nominating Committee." A copy of the
By-law advance notice provision may be obtained, without charge, upon written
request to the Secretary of the Company at the address set forth on page 1 of
this Proxy Statement.
By Order of the Board of Directors
M. RICHARD WARNER
Secretary
Diboll, Texas
March 22, 1996
19
<PAGE> 22
TEMPLE-INLAND INC.
303 SOUTH TEMPLE DRIVE
DIBOLL, TEXAS 75941
P PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR THE ANNUAL MEETING ON MAY 3, 1996
R
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
O
The undersigned hereby acknowledges receipt of the Notice of the Annual
X Meeting of Stockholders and proxy statement each dated March 22, 1996 and
does hereby appoint Clifford J. Grum, David H. Dolben, and M. Richard
Y Warner, and each of them as Proxies, each with the power to appoint his
substitute and hereby authorizes each of them to represent and vote, as
designated below, all the shares of Common Stock, par value $1.00 per
share, of Temple-Inland Inc. held of record by the undersigned on March 8,
1996 at the annual meeting of stockholders to be held on Friday, May 3,
1996, and any adjournment(s) thereof:
---------------
CONTINUED AND TO BE SIGNED ON REVERSE SIDE OF THIS CARD. SEE REVERSE
DO NOT FOLD. PLEASE VOTE. SIDE
---------------
PLEASE MARK YOUR
X VOTES AS IN THIS
EXAMPLE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE THIS PROXY
WILL BE VOTED FOR PROPOSALS 1 AND 2.
<TABLE>
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<S> <C> <C> <C> <C> <C> <C> <C>
WITHHOLD
FOR AUTHORITY FOR AGAINST ABSTAIN
1. Proposal to elect as Directors of 2. Proposal to ratify the
Temple-Inland Inc. the following selection of Ernst &
persons to hold office until the Young LLP as independent
expiration of their terms or until auditors of Temple-Inland
their successors have been duly Inc. for the fiscal year
elected and have qualified. Nominees ending December 28, 1996
for Director: Anthony M. Frank,
Walter P. Stern, and Charlotte Temple
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR INDIVIDUAL NOMINEES 3. In their discretion the proxies are authorized to vote
WRITE THE NAMES OF SUCH NOMINEES IN THE SPACE PROVIDED BELOW.) upon such other business as may properly come before
the meeting
- ---------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Please sign exactly as name appears hereon. Joint owners
should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full
title as such.
---------------------------------------------------------
---------------------------------------------------------
SIGNATURE(S) DATE
</TABLE>
