SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
( ) Filed by the Registrant
( ) Filed by a Party other than the Registrant
Check the appropriate box:
( ) Preliminary Proxy Statement
(xx) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to (section mark)240.14a-11(c) or
(section mark)240.14a-12
Bowater Incorporated
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (Check the appropriate box):
(xx) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
( ) $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.
( ) 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:
( ) Filing Fee of $ was previously paid on , 199 ,
the date the Preliminary Proxy Statement was filed.
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(Bowater logo appears here)
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Bowater Incorporated
55 East Camperdown Way
Post Office Box 1028
Greenville, SC 29602
April 4, 1994
</TABLE>
To All Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of
Bowater Incorporated (the "Company"), which will be held at the Omni Hotel, 222
East Third Street, Charlotte, North Carolina, on Wednesday, May 25, 1994, at ten
thirty in the morning. All holders of the Company's outstanding Common Stock and
Depository Shares, each representing a one-fourth interest in the Company's 7%
PRIDES, Series B Convertible Preferred Stock, of record at the close of business
on March 28, 1994, are entitled to notice of and to vote at the Annual Meeting.
Time will be set aside for discussion of each item of business described in
the accompanying Notice of Annual Meeting and Proxy Statement. A current report
on the business operations of the Company will be presented at the Annual
Meeting and shareholders will have an opportunity to ask questions.
Upon adjournment of the Annual Meeting, a number of the directors and
officers will be available to confer informally with shareholders.
We hope that you will be at the Annual Meeting. Whether or not you plan to
attend, please sign, date and return your proxy promptly in the envelope
provided in order to make certain that your shares will be represented at the
Annual Meeting.
The Company's Annual Report for 1993 is included in this package, and we
urge you to read it carefully.
Sincerely yours,
(Signature of A. P. Gammie)
A. P. GAMMIE
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
The attached proxy statement is printed on
recycled paper manufactured by the Company.
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BOWATER INCORPORATED
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 25, 1994
The 1994 Annual Meeting of Shareholders of BOWATER INCORPORATED (the
"Company") will be held at the Omni Hotel, 222 East Third Street, Charlotte,
North Carolina, on Wednesday, May 25, 1994, at ten thirty a.m. for the following
purposes:
(1) To elect four directors, each for a term of three years;
(2) To ratify the appointment of KPMG Peat Marwick as the Company's
independent auditors for the year ending December 31, 1994; and
(3) To transact such other business as may properly come before the
Annual Meeting or any adjournment(s) thereof.
Holders of Common Stock and Depository Shares, each representing a
one-fourth interest in the Company's 7% PRIDES, Series B Convertible Preferred
Stock, of record at the close of business on March 28, 1994, are entitled to
notice of and to vote at the Annual Meeting.
By order of the Board of Directors,
(Signature of Wendy C. Shiba)
WENDY C. SHIBA
SECRETARY
Greenville, South Carolina
April 4, 1994
SHAREHOLDERS ARE URGED TO EXECUTE AND RETURN THE PROXY PROMPTLY IN THE ENVELOPE
PROVIDED.
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BOWATER INCORPORATED
P. O. BOX 1028
55 EAST CAMPERDOWN WAY
GREENVILLE, SOUTH CAROLINA 29602
PROXY STATEMENT
DATED APRIL 4, 1994
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AT 10:30 A.M. ON MAY 25, 1994
OMNI HOTEL
222 EAST THIRD STREET
CHARLOTTE, NORTH CAROLINA
The only securities of Bowater Incorporated (the "Company") eligible to
vote at the Annual Meeting are the shares of its common stock, par value $1 per
share (the "Common Stock"), and 7% PRIDES, Series B Convertible Preferred Stock,
par value $1 per share ("Series B Stock"). 36,473,069 shares of Common Stock and
1,223,404 shares of Series B Stock were outstanding on March 28, 1994, the
record date for the Annual Meeting. Each share of Series B Stock is deposited
with Trust Company Bank, as depositary, and is represented by four depositary
shares (each a "Depositary Share"). Each share of Common Stock outstanding on
the record date will be entitled to one vote at the Annual Meeting and each
share of Series B Stock outstanding on the record date will be entitled to 3 1/5
votes at the Annual Meeting (this equates to 4/5 of a vote at the Annual Meeting
for each Depositary Share outstanding on the record date). Only holders of
record at the close of business on March 28, 1994, will be eligible to vote at
the Annual Meeting. The enclosed form of proxy is solicited on behalf of the
Company and has been approved by the Board of Directors. The approximate date of
mailing of this Proxy Statement and the accompanying Notice of Annual Meeting
and proxy card is April 4, 1994.
Shares represented by proxies in the accompanying form will be voted in
accordance with instructions indicated thereon. If no contrary instruction is
indicated, shares represented by the proxies will be voted FOR the election of
the four nominees named below to serve as directors for the three-year term
indicated, and FOR ratification of the appointment of KPMG Peat Marwick as
independent auditors for the Company for the year ending December 31, 1994.
Should any nominee named herein for the office of director become unable or
unwilling to accept nomination or election, and if the size of the Board of
Directors is not thereupon reduced, it is intended that the persons acting under
the proxy will vote for the election of another person recommended by the
Nominating Committee and nominated by the Board of Directors. The Company has no
reason to believe that any of the four nominees will be unable or unwilling to
serve if elected to office.
Aside from the election of four directors and ratification of the selection
of the Company's independent auditors, the Company does not know of any other
matters that will be presented at the Annual Meeting. However, if any other
matters properly come before the Annual Meeting, or any of adjournments thereof,
the person or persons voting the proxies will vote them in accordance with their
best judgment on those matters.
Execution of the enclosed proxy will not affect a shareholder's right to
attend the Annual Meeting and vote in person. Any shareholder giving a proxy has
the right to revoke it by giving written notice of revocation to the Secretary
of the Company 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 (although attendance at the Annual Meeting will not,
in and of itself, constitute revocation of a proxy). No such notice of
revocation or later-dated proxy, however, will be effective until received by
the Secretary of the Company at or prior to the Annual Meeting. Directors are
elected by a plurality of votes. The affirmative vote of the holders of a
majority of the shares that are present in person or represented by proxy at the
Annual Meeting is required to approve the ratification of independent auditors,
and to act on any other matters properly brought before the Annual Meeting.
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In certain circumstances, a shareholder will be considered to be present at the
Annual Meeting for quorum purposes, but will not be deemed to have voted in the
election of directors or in connection with other matters presented for approval
at the Annual Meeting. Such circumstances will exist when (1) a shareholder
abstains from voting, or (2) shares are represented at the Annual Meeting by a
proxy conferring authority to vote on certain matters but not on other matters
to be voted on at the Annual Meeting. Under Delaware Law, abstentions from
voting will be included for purposes of determining whether the requisite number
of affirmative votes are received on any matters submitted to the shareholders
for vote and, accordingly, will have the same effect as a vote withheld on the
election of directors or a vote against other matters submitted to the
shareholders for vote. Shares not voted on one or more but less than all such
matters on proxies returned by brokers or others will be treated as not
represented at the Annual Meeting as to such matter or matters not voted upon
and, therefore, have no effect upon the vote.
ITEM NO. 1
ELECTION OF DIRECTORS
INFORMATION ON NOMINEES AND DIRECTORS
The Board of Directors of the Company is divided into three classes: Class
I, Class II and Class III. Each class consists as nearly as possible of
one-third of the total number of directors, and one class is elected each year
for a three-year term. The term of the Class I directors expires this year and
the successors are to be elected at the Annual Meeting for a three-year term
expiring in 1997. The terms of the Class II and Class III directors do not
expire until 1995 and 1996, respectively.
The following information is provided for the four nominees comprising the
Class I directors, and also for the Class II and Class III directors.
NOMINEES FOR DIRECTOR TO BE ELECTED AT THE 1994 ANNUAL MEETING
(CLASS I)
<TABLE>
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ANTHONY P. GAMMIE............................ CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER OF THE
Age: 59 COMPANY -- Mr. Gammie became Chairman of the Board in January
Director since 1979 1985, and has been Chief Executive Officer of the Company since
January 1983. He was President from January 1983 to July 1, 1992.
He was President of the Company's Pulp and Paper Group from August
1981 to December 1982, and Executive Vice President of the Company
from 1979 to 1982. He was a director of Bowater plc* until July
1984, and prior to being transferred to the United States at the
end of 1978, he was Chairman and Managing Director of Bowater
United Kingdom Limited. He is also a director of Alumax Inc. and
The Bank of New York.
H. GORDON MACNEILL........................... CHAIRMAN OF JANNOCK LIMITED -- Mr. MacNeill has been
Age: 68 Chairman of Jannock Limited, a diversified manufacturing company,
Director since 1986 since 1990, prior to which he had served as President and Chief
Executive Officer since 1976. Mr. MacNeill is also a director of
Home Oil Company Limited and Interprovincial Pipe Lines System,
Inc.
RICHARD BARTH................................ CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER OF
Age: 62 CIBA-GEIGY CORPORATION -- Mr. Barth became Chairman of Ciba-Geigy
Director since 1991 Corporation, a diversified chemical products company, in July
1990. He has been President and Chief Executive Officer of
Ciba-Geigy Corporation since 1986, Chief Financial Officer from
1979 to 1986 and Secretary and General Counsel from 1974 to 1986
and from 1970 to 1986, respectively. He is a director of The Bank
of New York.
</TABLE>
2
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JAMES WHITE.................................. CHAIRMAN OF AEROSPACE COMPOSITE TECHNOLOGIES LTD. --
Age: 56 Mr. White became Chairman of Aerospace Composite Technologies
Director since 1993 Ltd., an aerospace components company, in August 1993. He was
Chairman of Ashley Group plc from July 1988 to February 1994.
Prior to that he was Chairman and Chief Executive Officer of Bunzl
plc from 1988 to 1990 and was its Chief Executive Officer from
1982 to 1988. He is a director of the following U.K. companies:
SmithKline Beecham plc, Redland plc, Lucas Industries plc, Perry
Group plc, and Miller Insurance Group.
</TABLE>
DIRECTORS SERVING UNTIL THE 1995 ANNUAL MEETING OF SHAREHOLDERS
(CLASS II)
<TABLE>
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HUGH D. AYCOCK............................... RETIRED PRESIDENT, CHIEF OPERATING OFFICER OF NUCOR
Age: 63 CORPORATION -- Mr. Aycock was President, Chief Operating Officer
Director since 1987 and a director of Nucor Corporation, a steel and steel products
company, from 1984 to 1991. He previously held various management
positions, including that of General Manager, at Nucor Corporation
operating units. Mr. Aycock serves as a director of Nucor
Corporation.
DONALD R. MELVILLE........................... RETIRED CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF NORTON
Age: 67 COMPANY -- Mr. Melville was Chief Executive Officer of Norton
Director since 1984 Company, a diversified manufacturing company, from 1980 until his
retirement at the end of 1987. He was Chairman from 1985 to 1987,
President from 1979 to 1986 and Executive Vice President from 1971
to 1979. He is a director of The Perkin-Elmer Corporation and
Acme-Cleveland Corporation.
RICHARD LASTER............................... CHAIRMAN AND DIRECTOR OF DNA PLANT TECHNOLOGY
Age: 70 CORPORATION -- Mr. Laster became Chairman of DNA Plant Technology
Director since 1984 Corporation, an agricultural biotechnology company, in 1988 and
was its President from 1982 to 1991 and its Chief Executive
Officer from 1982 to 1992. From 1974 to 1982, he was Executive
Vice President and a director of General Foods Corp.
RICHARD D. MCDONOUGH......................... VICE CHAIRMAN OF THE BOARD OF THE COMPANY --
Age: 62 Mr. McDonough has served as Vice Chairman of the Company since
Director since 1979** July 1992. Mr. McDonough served as Chief Financial Officer of the
Company from March 1979 to June 1993 and as Senior Vice
President-Finance of the Company from March 1979 to June 1992. He
was formerly a Vice President of Singer Company, where he was
employed from 1963 to 1979. Mr. McDonough also serves as a
director of Geo International, Inc.
</TABLE>
DIRECTORS SERVING UNTIL THE 1996 ANNUAL MEETING OF SHAREHOLDERS
(CLASS III)
<TABLE>
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FRANCIS J. AGUILAR........................... PROFESSOR, HARVARD UNIVERSITY GRADUATE SCHOOL OF
Age: 61 BUSINESS -- Professor Aguilar has been a faculty member at the
Director since 1984 Harvard University Graduate School of Business since 1967. Dr.
Aguilar is a director of Dynamics Research Corporation and
Burr-Brown Corporation, and also acts as an independent business
consultant.
</TABLE>
3
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JOHN A. ROLLS................................ PRESIDENT AND CHIEF EXECUTIVE OFFICER OF DEUTSCHE BANK
Age: 52 NORTH AMERICA -- Mr. Rolls joined Deutsche Bank North America, an
Director since 1990 international banking company, in his current position on November
9, 1992. Prior to that time, Mr. Rolls had been Executive Vice
President and Chief Financial Officer of United Technologies
Corporation, an aerospace and climate control systems company,
since July 1986. Prior to that he was Senior Vice President and
Chief Financial Officer with RCA Corporation.
KENNETH M. CURTIS............................ PRESIDENT OF MAINE MARITIME ACADEMY -- Mr. Curtis has held
Age: 63 this position at Maine Maritime Academy, a college, since 1986.
Director since 1993 Since 1975 he has been a partner in the Portland, Maine, law firm
of Curtis Thaxter Stevens Broder & Micoleau. He was formerly
Secretary of State of Maine from 1965 to 1966, Governor of Maine
from 1966 to 1974, and U.S. Ambassador to Canada from 1979 to
1981. Mr. Curtis is a director of New England Telephone and Key
Corp.
</TABLE>
* Bowater plc is the former parent company of the Company, but since 1984 the
two companies have not been affiliated.
** Served on the Board of Directors of the Company from date indicated to March
1981, as well as from January 1983 to date.
BOARD AND COMMITTEE MEETINGS
The Board of Directors met nine times during 1993. The Board has an Audit
Committee consisting of Messrs. Rolls, Curtis, and White, a Nominating Committee
consisting of Messrs. Aguilar, Aycock, and Melville, a Human Resources and
Compensation Committee consisting of Messrs. Melville, Barth, and Laster, a
Pension Plan Committee consisting of Messrs. Laster, Aycock, MacNeill, and
McDonough, a Finance Committee consisting of Messrs. Barth, MacNeill, Rolls, and
McDonough, and an Executive Committee consisting of Messrs. Gammie and
McDonough.
The Audit Committee, which met three times in 1993, reviews the scope and
results of the annual audit of the Company, approves the non-audit services
rendered by the independent auditors to the Company and considers the effect of
such services on the independence of such auditors, recommends to the Board
independent auditors for the ensuing year (subject to ratification by the
shareholders), and reviews the accounting policies of the Company and the
Company's systems of internal controls and internal auditing procedures.
The Nominating Committee, which met twice in 1993, considers candidates for
membership on the Board of Directors and recommends to the Board nominees for
election as directors. Recommendations from shareholders will be considered by
the Nominating Committee. Shareholders desiring to make a recommendation to the
Nominating Committee should submit the name and business background of each
proposed nominee to the attention of the Secretary of the Company at the
Company's principal office no later than November 28, 1994.
The Human Resources and Compensation Committee, which met five times in
1993, recommends to the Board proposals for adoption, amendment, or termination
of the Company's employee benefits programs, administers executive bonus plans
and awards and stock option plans and grants thereunder, reviews programs
followed by management in developing executive resources for current and future
operations, and reviews and approves the compensation of officers and certain
other executives of the Company.
The Pension Plan Committee, which met four times in 1993, provides
oversight and direction of the Company's pension plans, savings plans, and other
benefit plans. It recommends to the Board the selection of trustees and the
amount of contributions to be made by the Company under the plans. This
committee also reviews and approves the adoption of actuarial or accounting
methods or assumptions under the plans, and reviews the action of management in
establishing investment policy, approving investment managers, and administering
the plans.
4
<PAGE>
The Finance Committee, which met three times in 1993, reviews and oversees
the financial affairs of the Company.
The Executive Committee meets from time to time to make decisions between
meetings of the Board pursuant to authority delegated by the Board of Directors.
All directors attended at least 75% of the aggregate of the meetings of the
Board of Directors and of Board committees on which they served in 1993.
DIRECTOR COMPENSATION
Each director who is not an employee of the Company received in 1993 an
annual retainer of $20,000, a fee of $1,000 for each Board meeting attended, and
$800 for each Board committee meeting attended. Each director was reimbursed for
reasonable expenses, including but not limited to, transportation and lodging,
incurred in attending meetings.
DIRECTORS' DEFERRED COMPENSATION PLAN
In February 1989, the Company adopted a Directors' Deferred Compensation
Plan (the "Deferred Plan"), which permits members of the Board of Directors of
the Company who are not employees of the Company ("Outside Directors") to elect
irrevocably to defer receipt of all or a part of their annual retainer and
meeting fees. A participating Director will have his Deferred Plan account
credited with the number of shares of Common Stock, including fractional shares,
having a value (with a 5% discount) equivalent to the amount of compensation
deferred on that date. Whenever dividends are paid on shares of Common Stock,
each participant's account will be credited with additional shares having an
undiscounted value equal to the amount of the dividend paid on a single share of
such stock, multiplied by the number of shares of Common Stock, including
fractional shares, credited to the participant's account on the dividend record
date.
A participant in the Deferred Plan may elect at the time of deferral to
have the balance of his Deferred Plan Account distributed to him (i) as soon as
possible, or (ii) in a stated number of years, after he ceases to be an Outside
Director.
Although a participant's account will be credited with shares of stock,
there is no requirement that the Company acquire, hold, or identify shares of
Common Stock or any other specific asset, nor will amounts credited to a
participant's account under the Deferred Plan be segregated or be deemed to be
in any form of trust. Distribution to a participant shall consist of the number
of whole shares of Common Stock credited to the participant's account on the
date of distribution, and cash in the amount of the value of fractional shares
(if any) credited to the account on that date. The Deferred Plan is administered
by the Executive Committee of the Board of Directors.
RETIREMENT PLAN FOR OUTSIDE DIRECTORS
The Company has adopted a Retirement Plan for Outside Directors, effective
July 1, 1988 (the "Outside Directors Retirement Plan", or "Plan"). All of the
Company's current Outside Directors participate in the Plan. The Plan provides
for normal retirement benefits equal to 10% of the participant's annualized
retainer at the termination of service multiplied by the participant's years of
service as an Outside Director of the Company up to a maximum of ten years.
Normal retirement benefits may begin at age 65 after the completion of five or
more years of service, although early retirement is permitted in certain cases.
Participants who elect early commencement of benefit payments after early
retirement receive a reduced benefit.
The Outside Directors Retirement Plan is not a qualified plan that must be
funded under ERISA. The Plan provides that a participant who was an Outside
Director immediately prior to a change in control of the Company who is removed
from or not renominated to his directorship following such change in control
shall be entitled to early retirement benefits under the Plan regardless of age
or years of service.
5
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CERTAIN INFORMATION CONCERNING STOCK OWNERSHIP
The Company knows of no person who, or group that, owns beneficially more
than 5% of the outstanding shares of Series B Stock of the Company as of March
10, 1994. The Company knows of no person who, or group that, owns beneficially
more than 5% of the outstanding shares of Common Stock of the Company as of
March 10, 1994, except as set forth below:
<TABLE>
<CAPTION>
NAME AND ADDRESS TITLE OF AMOUNT AND NATURE OF PERCENT OF
OF BENEFICIAL OWNER CLASS BENEFICIAL OWNERSHIP CLASS
<S> <C> <C> <C>
FMR Corp.(1) Common 3,347,400(1) 9.2%
82 Devonshire Street
Boston, Massachusetts 02109
J. P. Morgan & Co.(2) Common 4,959,100(2) 13.6%
60 Wall Street
New York, New York 10260
Wisconsin Investment Board Common 2,106,329(3) 5.8%
121 East Wilson Street
Madison, Wisconsin 53703
Franklin Resources, Inc.(4) Common 1,932,300(4) 5.3%
777 Mariners Island Boulevard
San Mateo, California 94404
</TABLE>
(1) In an Amendment No. 2 to a Schedule 13G dated February 11, 1994, FMR Corp.
reported that: (i) Fidelity Management & Research Company ("Fidelity"), 82
Devonshire Street, Boston, MA 02109, a wholly-owned subsidiary of FMR Corp.,
is the beneficial owner of 3,116,100 of the shares shown, as a result of
acting as investment adviser to several investment companies registered
under Section 8 of the Investment Company Act of 1940; (ii) Fidelity Capital
Appreciation Fund, an investment company, 82 Devonshire Street, Boston, MA
02109, owns 2,250,000 of the shares shown; (iii) Edward C. Johnson, III,
Chairman of FMR Corp. and owner of 34% of its outstanding voting common
stock, has sole power to dispose of 3,116,100 of the shares shown; (iv) the
power to direct the voting with respect to these 3,116,100 shares resides in
the investment companies which own such shares; (v) Fidelity Management
Trust Company ("Trust"), 82 Devonshire Street, Boston, MA 02109, a bank
which is a wholly-owned subsidiary of FMR Corp., is the beneficial owner of
231,300 of the shares shown, as the result of its serving as investment
manager of institutional accounts; (vi) FMR Corp., through its control of
Trust, has sole dispositive power with respect to 231,300 of the shares and
sole voting power with respect to 220,800 shares owned by the institutional
accounts as described above.
(2) J. P. Morgan & Co., in its capacity as investment manager, reported in an
Amendment No. 2 to a Schedule 13G dated December 31, 1993, that it has sole
voting power as to 3,020,700 of these shares, shared voting power as to
2,200 of these shares, and sole dispositive power as to 4,958,500 of these
shares. According to the Amendment No. 2 to a Schedule 13G, these shares may
be held by subsidiaries of J.P. Morgan & Co., including Morgan Guaranty
Trust Company of New York and J.P. Morgan Investment Management, Inc.
(3) State of Wisconsin Investment Board, an independent agency in the Executive
Branch of Wisconsin State government responsible for management of
retirement funds under the Wisconsin Retirement System, reported in an
Amendment No. 6 to a Schedule 13G dated February 8, 1994, that it had sole
voting and dispositive power as to all of the shares reported.
(4) Franklin Resources, Inc., reported in a Schedule 13G dated January 28, 1994,
that it had sole voting power with respect to 1,909,000 of these shares,
shared voting power with respect to 23,300 of these shares, and shared
dispositive power with respect to 1,932,300 of these shares. The Schedule
13G reported that these shares are held by Franklin Resources, Inc., its
subsidiaries, and companies under control with them with respect to the
exercise of investment discretion.
6
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No director or officer owns any Series B Stock. As of March 10, 1994,
ownership of Common Stock by each of the directors and nominees for director, by
each of the executive officers named in the Summary Compensation Table, and by
all directors and executive officers of the Company, as a group, was as follows:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME OF TITLE OF BENEFICIAL PERCENT OF
BENEFICIAL OWNER CLASS OWNERSHIP(1) CLASS(2)
<S> <C> <C> <C>
A. P. Gammie Common 415,568.69(3) 1.1%
D. G. McMaster Common 217,341.44(4) *
R. D. McDonough Common 184,715.08(5) *
D. E. Mclntyre Common 77,783.14(6) *
R. J. Pascal Common 70,042.85(7) *
R. C. Lancaster Common 63,227.99(8) *
F. J. Aguilar Common 19,937.58(9) *
H. D. Aycock Common 7,259.54(10) *
R. Barth Common 4,161.12(11) *
K. M. Curtis Common 1,000.00(12) *
R. Laster Common 8,069.87(13) *
H. G. MacNeill Common 8,597.01(14) *
D. R. Melville Common 7,998.86(15) *
J. A. Rolls Common 5,407.46(16) *
J. White Common 1,505.69(17) *
Directors and Executive Common 1,429,932.05(18) 3.8%
Officers as a Group
(26 persons)
</TABLE>
* Represents holdings of less than 1%.
(1) In addition, amounts may have accrued to the accounts of the officers and
directors under the Company's Salaried Employees Savings Plan (the "Savings
Plan") since the date of the last Savings Plan statement.
(2) Pursuant to Rule 13d-3 promulgated under the Securities Exchange Act of
1934, as amended, percentages of total outstanding shares have been
computed on the assumption that shares that can be acquired within 60 days
upon the exercise of options by a given person are outstanding, but no
other shares similarly subject to acquisition by other persons are
outstanding.
(3) Includes 22,856.4062 shares owned in the Savings Plan and 368,825 shares
that may be acquired under options exercisable within 60 days.
(4) Includes 804.4429 shares owned in the Savings Plan and 212,000 shares that
may be acquired under options exercisable within 60 days.
(5) Mr. McDonough reported on a Form 5 following the close of the Company's
1993 fiscal year a transaction that should earlier have been reported on a
Form 4. The number shown in the table includes 6,016.8699 shares owned in
the Savings Plan and 178,000 shares that may be acquired under options
exercisable within 60 days.
(6) Includes 4,438.1444 shares owned in the Savings Plan and 73,345 shares that
may be acquired under options exercisable within 60 days.
(7) Includes 1,467.8464 shares owned in the Savings Plan and 68,275 shares that
may be acquired under options exercisable within 60 days.
(8) Includes 3,061.3872 shares owned in the Savings Plan, 57,550 shares that
may be acquired under options exercisable within 60 days, and 115 shares
owned by Mr. Lancaster's daughter.
7
<PAGE>
(9) Includes 1,418.65 and 1,487.65 shares, respectively, held by Dr. Aguilar's
daughters, Kim Aguilar and Anne-Marie Aguilar, as to which shares Dr.
Aguilar disclaims beneficial ownership. Also includes 4,759.54 shares owned
in the Directors' Deferred Compensation Plan.
(10) Includes 6,759.54 shares owned in the Directors' Deferred Compensation
Plan.
(11) These shares are owned in the Directors' Deferred Compensation Plan.
(12) These shares are held in an individual retirement account.
(13) Includes 7,469.87 shares owned in the Directors' Deferred Compensation
Plan.
(14) Mr. MacNeill reported a transaction late on a Form 4 during 1993. Includes
3,286.89 shares owned in the Directors' Deferred Compensation Plan.
(15) Includes 7,498.86 shares owned in the Directors' Deferred Compensation
Plan.
(16) These shares are owned in the Directors' Deferred Compensation Plan.
(17) These shares are owned in the Directors' Deferred Compensation Plan.
(18) This total includes 56,263.1849 shares allocated to the account of those
who are executive officers under the Savings Plan, 40,848.97 shares
allocated under the Directors' Deferred Compensation Plan, and 782,369
shares that executive officers have the right to acquire within 60 days of
March 10, 1994, upon the exercise of stock options. The beneficial
ownership stated above represents sole voting and investment power, except
as indicated in footnotes above. There are no arrangements known to the
Company that may result at a subsequent date in a change of control of the
Company.
EXECUTIVE COMPENSATION
The following table sets forth information concerning all compensation paid
by the Company and its subsidiaries, during the last three fiscal years ended
December 31, 1993, to the Chief Executive Officer and to each of the five most
highly compensated executive officers other than the CEO (such officers are
referred to collectively as the "Named Executive Officers") for services
rendered in all capacities to the Company and its subsidiaries during these
fiscal years.
8
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
NAME AND ANNUAL COMPENSATION SECURITIES
PRINCIPAL POSITION BONUS UNDERLYING ALL OTHER
DURING 1993 YEAR SALARY ($) ($)(1) OPTIONS (#) COMPENSATION ($)
<S> <C> <C> <C> <C> <C>
A. P. Gammie: Chairman of 1993 575,000 0 0 22,437(2)
the Board and Chief 1992 550,000 0 135,000 21,937(2)
Executive Officer 1991 550,000 70,000 48,000 *
D. G. McMaster: President 1993(3) 335,000 0 0 1,134,900(4)
and Chief Operating Officer 1992 335,000 0 75,000 14,197(4)
1991 309,000 35,000 29,000 *
R. D. McDonough: Vice 1993 315,000 0 0 12,532(5)
Chairman 1992 305,000 0 60,000 13,117(5)
1991 292,000 35,000 24,000 *
D. E. McIntyre: Vice 1993 217,000 0 0 8,647(6)
President-Pulp & Paper 1992 207,000 19,872 39,000 8,968(6)
Manufacturing 1991 189,300 30,288 14,000 *
R. J. Pascal: Corporate Vice 1993 213,000 0 0 9,166(7)
President and President- 1992 206,000 12,360 39,000 9,553(7)
Communication Papers Group 1991 198,000 75,082 14,000 *
R. C. Lancaster: Senior Vice 1993 210,000 0 0 8,437(8)
President and Chief 1992 176,000 16,016 27,000 9,529(8)
Financial Officer 1991 160,000 28,000 8,000 *
</TABLE>
* Under SEC transition rules, no disclosure is required.
(1) The amounts shown in this column include sums the receipt of which has
been deferred pursuant to the Savings Plan or the Company's deferred
compensation plan. Perquisites and other personal benefits did not
exceed the lesser of $50,000 or 10% of the total salary and bonus for
any Named Executive Officer.
(2) Amounts included under "All Other Compensation" for Mr. Gammie for 1993
consist of Company contributions of $20,300 under the Compensatory
Benefits Plan (a Savings Plan excess benefits plan), and $2,137 in
premiums paid for medical plan coverage to maintain a level of coverage
not otherwise available under the Company's standard health plan;
amounts included under this heading for 1992 consist of Company
contributions of $19,800 under the Compensatory Benefits Plan and
$2,137 in premiums paid for the medical plan coverage.
(3) Dr. McMaster was President and Chief Operating Officer of the Company
until December 31, 1993.
(4) Pursuant to the terms of Dr. McMaster's employment agreement with the
Company, upon his retirement he received: a severance payment in the
amount of $1,065,000 and a car valued at $51,313.88. "All Other
Compensation" for Dr. McMaster for 1993 also includes the Company's
contribution of $8,994.00 under the Savings Plan, $2,137 in premiums to
maintain a level of coverage not otherwise available under the
Company's standard health plan, and Company contributions of $7,455
under the Compensatory Benefits Plan; amounts included under this
heading for 1992 consist of Company contributions of $5,025 under the
Savings Plan, $7,035 under the Compensatory Benefits Plan, and $2,137
in premiums paid for the medical plan coverage.
(5) Amounts included under "All Other Compensation" for Mr. McDonough for
1993 consist of Company contributions of $3,855 under the Savings Plan,
$6,540 under the Compensatory Benefits Plan, and
9
<PAGE>
$2,137 in premiums paid for medical plan coverage to maintain a level
of coverage not otherwise available under the Company's standard health
plan; amounts included under this heading for 1992 consist of Company
contributions of $5,490 under the Savings Plan, $5,490 under the
Compensatory Benefits Plan and $2,137 in premiums paid for the medical
plan coverage.
(6) Amounts included under "All Other Compensation" for Mr. McIntyre for
1993 consist of Company contributions of $6,510 under the Savings Plan
and $2,137 in premiums paid for medical plan coverage to maintain a
level of coverage not otherwise available under the Company's standard
health plan; amounts included under this heading for 1992 consist of
Company contributions of $6,831 under the Savings Plan and $2,137 in
premiums paid for the medical plan coverage.
(7) Amounts included under "All Other Compensation" for Mr. Pascal for 1993
consist of Company contributions of $4,473 under the Savings Plan,
$2,556 under the Compensatory Benefits Plan, and $2,137 in premiums
paid for medical plan coverage to maintain a level of coverage not
otherwise available under the Company's standard health plan; amounts
included under this heading for 1992 consist of Company contributions
of $4,944 under the Savings Plan, $2,472 under the Compensatory
Benefits Plan and $2,137 in premiums paid for the medical plan
coverage.
(8) Amounts included under "All Other Compensation" for Mr. Lancaster for
1993 consist of Company contributions of $6,300 under the Savings Plan
and $2,137 in premiums paid for medical plan coverage to maintain a
level of coverage not otherwise available under the Company's standard
health plan; amounts included under this heading for 1992 consist of
Company contributions of $7,392 under the Savings Plan and $2,137 in
premiums paid for the medical plan coverage.
STOCK OPTIONS
The following table sets forth information concerning the value at the end
of 1993 of unexercised options held by the Named Executive Officers to purchase
the Company's Common Stock pursuant to options previously granted under the
Company's stock option plans. None of the Named Executive Officers were granted
or exercised any stock options during 1993.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS* OPTIONS*
AT 12/31/1993 AT 12/31/1993 ($)(1)
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
<S> <C> <C>
A. P. Gammie........................................................ 341,825/98,175 156,601.88/97,865.63
D. G. McMaster...................................................... 197,000/54,000 91,525.00/53,625.00
R. D. McDonough..................................................... 166,900/43,600 114,162.50/44,687.50
D. E. Mclntyre...................................................... 73,345/21,255 45,689.88/29,225.62
R. J. Pascal........................................................ 68,275/21,125 45,655.63/29,046.88
R. C. Lancaster..................................................... 57,550/14,950 28,308.75/20,556.25
</TABLE>
* All SARs previously held by the above executives were cancelled without
consideration in April 1992.
(1) Based on the difference between the option exercise price and the
closing price of the Company's Common Stock on the New York Stock
Exchange on December 31, 1993, of $23.00.
EMPLOYMENT AND SEVERANCE AGREEMENTS
Each of the Named Executive Officers (except Dr. McMaster, whose employment
agreement terminated on December 31, 1993) is a party to an employment agreement
with the Company (the agreements as amended, except for that of Mr. McDonough,
are referred to collectively as the "Employment Agreements"). The Employment
Agreements continue in effect until either party gives thirty days' written
notice of termination or until the
10
<PAGE>
death, disability, or retirement of the executive. In the event of a change in
control (as defined in the Severance Agreements, as defined below), the term of
the Employment Agreements continues for a period of not less than three years
thereafter unless the termination is at the executive's election for other than
"Good Reason" (as that term is defined in the Severance Agreements). Each
Employment Agreement provides for payment of an annual base salary (see Summary
Compensation Table) and for the executive's participation in the Company's
various bonus and benefit plans as in effect from time to time while the
Employment Agreements are in effect. Each of the Employment Agreements provides
for lump sum severance payments equal to two or three years of the executive's
base salary, as well as a pro rata share of the most recent bonus paid to the
executive, in the event the executive's employment is involuntarily terminated
for reasons other than death, disability, retirement, or "cause", as defined in
the Employment Agreement.
In addition, each of the Named Executive Officers is a party to a severance
agreement with the Company (the agreements as amended, except for that of Mr.
McDonough, are referred to collectively as the "Severance Agreements"). The
Severance Agreements provide for certain termination benefits in the event of a
change in control (as defined in the Severance Agreements). The Severance
Agreements generally have a three year term which, at the end of each year of
the term, is automatically extended for an additional year unless either party
has notified the other of a contrary intent or that the executive's employment
agreement has terminated. Upon a change in control (if the executive's
employment shall not have been terminated prior to the change in control under
the provisions of an Employment Agreement), the term of the Severance Agreement
is extended for a period of not less than three years from the date of the
change in control. In the event the executive's employment is terminated
following a change in control while the Severance Agreement is in effect (except
for a termination due to death, disability, or retirement, or for "cause" as
defined in the Severance Agreements) or the executive elects to terminate his
employment under certain specified circumstances, the executive may elect to
receive, in lieu of any severance payments provided in his Employment Agreement,
an amount that varies from two to three times: (i) the executive's annual base
salary on the effective date of the termination (or, if higher, on the date
immediately prior to the change in control); plus (ii) the largest annual bonus
awarded to the executive during the five fiscal years immediately preceding the
year in which the change in control occurred or, if higher, the amount the
executive would have been awarded under the bonus plan in effect immediately
prior to the change in control for the fiscal year in which the change in
control occurred had he continued in the Company's employ at the same salary
level and position as immediately before the change in control; plus (iii) the
largest annual contribution made by the Company to the Company's Savings Plan on
the executive's behalf during the five fiscal years immediately preceding the
year in which the change in control occurred or, if higher, the amount of the
contribution the Company would have made to such plan on the executive's behalf
for the fiscal year in which the change in control occurred had he continued in
the Company's employ at the same base salary level as immediately prior to the
change in control had he elected to contribute to the plan the same percentage
of his base salary as he was contributing on such date. In addition, the
executive will be entitled to an amount that varies from twenty percent to
thirty percent of the executive's annual base salary on the effective date of
the termination or, if higher, on the date immediately prior to the change in
control, as compensation for medical, life insurance, and other benefits lost as
a result of the termination of employment. In addition, the executive will be
entitled to a pro rata portion of an annual bonus computed in the manner
specified in (ii) above. If the number of years from termination of employment
to the executive's Normal Retirement Date under the Company's Retirement Plan is
less than the multiplier specified in his Severance Agreement, the payments are
reduced. The foregoing amounts are payable in a lump sum within ten days after
termination of employment unless the executive has elected to receive such
payments in a specified number of equal annual installments. The Severance
Agreements also provide a terminated executive with out-placement assistance,
and a gross-up reimbursement of excise taxes which may become due under Section
4999 of the Internal Revenue Code of 1986 (the "Code"), based on the
determination of an independent auditor. In addition, the Severance Agreements
provide that Company will pay or provide to certain of the executives, or their
widows or children, as the case may be, the amounts and benefits, at the times
and in the manner that would have been received, assuming certain conditions,
under the Company's Retirement Plan and Supplemental Benefit Plan in effect
immediately prior to the change in control and assuming the executive had
continued in the employ of the Company for the term of the Severance Agreement.
The Code denies an income tax deduction to a company for payments that are
contingent upon a change in control if and to the extent
11
<PAGE>
that the payments have a present value equal to or greater than 300% of the
employee's average annual taxable compensation for the preceding five years.
In connection with Mr. McDonough's anticipated retirement, his employment
and severance agreements were modified for the purposes of, among other matters,
setting the term of his employment and severance agreements, fixing his
entitlement to benefits under the Company's retirement plans and fixing his
entitlement to exercise rights granted under the Company's stock incentive
plans.
EMPLOYEES RETIREMENT PLAN
The Bowater Incorporated Salaried Employees' Retirement Plan (the
"Retirement Plan") provides defined retirement benefits for covered salaried
employees and is qualified under the Code. In order to participate in the
Retirement Plan, an employee must be at least 21 years old and have completed at
least one year of service with the Company. Participants become 100% vested
after completion of five years of service or attainment of age 65. The
Retirement Plan provides for normal retirement benefits beginning at age 65,
while permitting early retirement in certain cases. Normal annual retirement
benefits are equal to .015 of the participant's average annual earnings (defined
as the average annual earnings for the best 60 consecutive months in the 120
months preceding retirement or termination of employment) multiplied by the
participant's years of service up to a maximum of 35 years, less 1/70 of the
participant's annual primary Social Security benefit computed as of the normal
retirement date multiplied by the participant's years of service up to a maximum
of 35 years. Participants receive a reduced benefit if they elect early
retirement. The definition of earnings includes base salary, overtime pay and
bonuses awarded under the Annual Bonus Plan. Under current law, the maximum
annual benefit payable to a participant under the Retirement Plan is $115,641
(applicable in 1993), subject to future cost of living adjustments to be set
forth in governmental regulations.
The Retirement Plan provides that, unless the Board of Directors determines
otherwise, on the tenth day following the public announcement of a change in
control, as defined in the Retirement Plan, (i) each participant will become
100% vested in his or her accrued benefits and (ii) the amounts payable to
participants shall be automatically increased by percentages which are set
annually by the Board of Directors, but not to exceed the available surplus in
the Retirement Plan. The Retirement Plan also provides that the Board of
Directors may revise or repeal this provision at any time prior to ten days
following the public announcement of a change of control, or terminate the
Retirement Plan, as the interests of the holders of the Company's Common Stock
may require.
The following table illustrates the total annual normal retirement benefits
that would be provided under the benefit formula in the Retirement Plan in
specified remuneration and years of service classifications, on a life annuity
basis with five years guaranteed. The amounts in the table have not been reduced
by any Social Security benefit or to reflect the $115,641 annual limit on Plan
benefits under the Code. The table assumes retirement at the end of 1993. At
that time, the individuals named in the Summary Compensation Table above will
have had the following final average compensation* and number of years of
service: Mr. Gammie, $609,552, 39 years; Dr. McMaster, $353,489, 13 years; Mr.
McDonough, $339,680, 15 years; Mr. Mclntyre, $228,008, 7 years; Mr. Pascal,
$242,753, 7 years; and Mr. Lancaster, $194,327, 9 years.
12
<PAGE>
RETIREMENT PLAN BENEFITS
<TABLE>
<CAPTION>
FINAL AVERAGE 5 YEARS 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
COMPENSATION* SERVICE SERVICE SERVICE SERVICE SERVICE SERVICE SERVICE
<S> <C> <C> <C> <C> <C> <C> <C>
$100,000 $ 7,500 $ 15,000 $ 22,500 $ 30,000 $ 37,500 $ 45,000 $ 52,500
125,000 9,375 18,750 28,125 37,500 46,875 56,250 65,625
150,000 11,250 22,500 33,750 45,000 56,250 67,500 78,750
175,000 13,125 26,250 39,375 52,500 65,625 78,750 91,875
200,000 15,000 30,000 45,000 60,000 75,000 90,000 105,000
225,000 16,875 33,750 50,625 67,500 84,375 101,250 118,125
250,000 18,750 37,500 56,250 75,000 93,750 112,500 131,250
300,000 22,500 45,000 67,500 90,000 112,500 135,000 157,500
350,000 26,250 52,500 78,750 105,000 131,250 157,500 183,750
400,000 30,000 60,000 90,000 120,000 150,000 180,000 210,000
450,000 33,750 67,500 101,250 135,000 168,750 202,500 236,250
500,000 37,500 75,000 112,500 150,000 187,500 225,000 262,500
600,000 45,000 90,000 135,000 180,000 225,000 270,000 315,000
700,000 52,500 105,000 157,500 210,000 262,500 315,000 367,500
800,000 60,000 120,000 180,000 240,000 300,000 360,000 420,000
</TABLE>
* Average annual earnings for best 60 consecutive months in the 120 months
preceding retirement.
SUPPLEMENTAL BENEFIT PLAN
The Supplemental Benefit Plan (as amended and restated to date, referred to
as the "Supplemental Benefit Plan"), benefits key employees designated by the
Executive Committee of the Board of Directors. The Supplemental Benefit Plan
provides for retirement benefits beginning at age 60 after 20 or less years of
continuous service calculated at 50% of an employee's average earnings (defined
as the average annual earnings for the best 36 consecutive months in the 60
months preceding retirement or termination of employment) subject to a reduction
of 5/24 of 1% of those earnings for each month less than 20 years of continuous
service by which the employee shall have been in the employ of the Company or an
affiliate. This benefit is payable in monthly installments reduced each month by
any amount which may be payable in such month to the employee under the
Retirement Plan and the Bowater Incorporated Benefits Equalization Plan
("Benefits Equalization Plan") of the Company or any affiliate's pension plan,
but is not reduced by amounts payable under Social Security. The term "earnings"
is defined as base salary, overtime pay and bonuses awarded under the Annual
Bonus Plan. Benefits for employees retiring after more than 20 years of
continuous service are calculated under the same formula but using 60% of the
employee's average earnings (as defined) subject to a reduction of 2/24 of 1% of
such earnings for each month less than 30 years of continuous service. Those who
elect to retire between the ages 50 and 60 receive a pension benefit reduced by
1/2 of 1% for each month that the retirement age is less than age 60. The
Supplemental Benefit Plan provides for vesting of accrued benefits in the event
of a change in control, termination or modification of the plan, or termination
of employment of a covered employee not for cause, provided that benefits are
vested under the Retirement Plan.
The following table illustrates the total annual retirement benefits which
would be provided under the Supplemental Benefit Plan in specified remuneration
and years of service classifications, on a straight life annuity basis. The
amounts in the table have not been reduced by any benefits payable under the
Company's Retirement Plan or Benefits Equalization Plan, which is the practice
as noted in the preceding paragraph. This table assumes retirement in 1993. At
such time, the individuals listed in the Summary Compensation Table above had
the following final average earnings and number of years of service: Mr. Gammie,
$598,467, 39 years; Dr. McMaster, $349,718, 13 years; Mr. McDonough, $332,645,
15 years; Mr. McIntyre, $227,066, 7 years; Mr. Pascal, $255,889, 7 years; and
Mr. Lancaster, $196,672, 9 years.
13
<PAGE>
SUPPLEMENTAL BENEFIT PLAN BENEFITS
<TABLE>
<CAPTION>
FINAL AVERAGE 5 YEARS 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 OR MORE
EARNINGS* SERVICE SERVICE SERVICE SERVICE SERVICE YEARS SERVICE
<S> <C> <C> <C> <C> <C> <C>
$100,000 $ 12,500 $ 25,000 $ 37,500 $ 50,000 $ 55,000 $ 60,000
125,000 15,625 31,250 46,875 62,500 78,125 93,750
150,000 18,750 37,500 56,250 75,000 82,500 90,000
175,000 21,875 43,750 65,625 87,500 109,375 131,250
200,000 25,000 50,000 75,000 100,000 110,000 120,000
225,000 28,125 56,250 84,375 112,500 140,625 168,750
250,000 31,250 62,500 93,750 125,000 137,500 150,000
300,000 37,500 75,000 112,500 150,000 165,000 180,000
350,000 43,750 87,500 131,250 175,000 192,500 210,000
400,000 50,000 100,000 150,000 200,000 220,000 240,000
450,000 56,250 112,500 168,750 225,000 281,250 337,500
500,000 62,500 125,000 187,500 250,000 275,000 300,000
600,000 75,000 150,000 225,000 300,000 330,000 360,000
700,000 87,500 175,000 262,500 350,000 385,000 420,000
800,000 100,000 200,000 300,000 400,000 440,000 480,000
900,000 112,500 225,000 337,500 450,000 495,000 540,000
</TABLE>
* Average annual earnings for best 36 consecutive months in the 60 months
preceding retirement.
The Supplemental Benefit Plan also provides certain additional disability
and death benefits and for the continuation, after retirement, of certain
amounts of life insurance and medical insurance coverage.
In November 1990, the Company entered into a Benefits Conversion Agreement
with Mr. Gammie. The Agreement converts benefits payable under the Supplemental
Benefit Plan and the Benefits Equalization Plan from a series of monthly
payments for the life of Mr. Gammie and his spouse to an actuarially equivalent
single sum payment determined at the time of his retirement by reference to his
actuarial life expectancy, calculated pursuant to tables then in use under the
Retirement Plan, and a then-current rate of interest, as specified in the
Agreement.
HUMAN RESOURCES AND COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
POLICIES FOR COMPENSATION OF EXECUTIVE OFFICERS
The basic policy underlying the Company's compensation program for
executive officers is that their compensation should vary depending on the
Company's success in meeting its financial and strategic objectives and in
creating value for shareholders. In addition to salary, the compensation program
consists of the Annual Bonus Plan, stock option plans, and the Long-Term Cash
Incentive Plan.
For 1993, the Committee considered the following factors in determining the
compensation program design, the performance measures, and the goals:
(Bullet) FINANCIAL PERFORMANCE: The measure of financial success used in
both the Annual Bonus Plan and the Long-Term Cash Incentive Plan
was Return on Capital Employed. The capital intensive nature of
the Company's business means that it is critical to evaluate
earnings in the context of the resources required to generate
them. In addition, there has been a strong historical relationship
between Return on Capital and market valuation for companies in
the paper products industry.
(Bullet) VALUE CREATION: Direct linkage between the executives'
compensation and the creation of value for shareholders is
provided by stock option plans, in which executives' gains equal
the stock appreciation from the date of grant to the date of
exercise, times the number of options granted.
14
<PAGE>
(Bullet) INDUSTRY CYCLICALITY: The paper products industry is cyclical,
with broad price swings influencing all market participants. As a
result, the Committee believes it is important to evaluate the
Company's financial performance in a competitive context to adjust
for market-driven results (both positive and negative) that are
beyond the Company's control. Therefore, the Company's performance
relative to a group of comparison companies is considered in
determining executive officers' awards under both the Annual Bonus
Plan and the Long-Term Cash Incentive Plan. The comparison group
used includes the companies in the Dow Jones Paper Products Group
used in the Total Shareholder Return graph on page 17, with the
exception of Mead Corporation, as well as three additional
companies in the paper industry: Abitibi-Price, Inc., Chesapeake
Corp., and Stone Container Corporation.
(Bullet) ATTAINMENT OF STRATEGIC OBJECTIVES: The Committee believes that
the compensation program should provide incentives for the
attainment of the Company's strategic objectives such as the
Company's rigorous cost control program. The Committee believes
that a resulting lower cost structure should help improve the
Company's financial performance during all phases of the paper
industry cycle, and is expected to promote particularly strong
performance during positive phases of the cycle.
In light of these factors, the 1993 compensation program for the Company's
executive officers included base salary and the following additional components:
(Bullet) Large stock option grants, equivalent to what would have been
granted in 1992, 1993, and 1994 combined, were made to the
Company's senior executives in 1992. These large grants were
intended to provide additional incentives to promote
shareholder interests over the middle term and to maintain
and continue to improve the Company's favorable cost
positioning. Because recipients of these awards are not
eligible for additional stock option grants until 1995, no
additional grants were made in 1993.
(Bullet) The Long-Term Cash Incentive Plan, introduced in 1992, will
pay out only if the Company's financial results relative to
peer companies are better during the 1992-1994 period than
they were during the preceding three years. The formula used
for computing awards is based upon the Company's rank
positioning on average Return on Capital Employed for the
three year measurement period compared to its rank
positioning on average Return of Capital Employed during the
three preceding years. The level of payout will depend on the
Company's level of improvement. This provides incentives to
improve financial performance.
(Bullet) The Annual Bonus Plan bases rewards in part on the Company's
Return on Capital Employed and in part on each executive
officer's individual and business unit performance relative
to objectives set in the context of the corporate strategy.
This allows executives to be rewarded for actions that
enhance the Company's long term success, even though they may
not have a favorable impact on current financial performance.
The cyclical nature of the paper products industry, combined with the major
new strategic initiatives undertaken by the Company in recent years, argue for a
heavy weighing of performance measured over more than a one-year period. As a
result, the executive officers' target and maximum compensation opportunities
under the two long-term incentive programs combined are greater than their
annual incentive opportunities.
At target incentive levels, executive officers would be paid close to, or
slightly below, the median of comparable executives in comparison companies in
the paper products industry. Actual compensation could range from well below to
well above this level, depending on the Company's performance. Both analysis of
surveys of competitive pay practices and proxy statement disclosures of
comparable companies are used to assess the Company's pay positioning.
Commencing in 1994, the Omnibus Budget Reconciliation Act of 1993 denies
publicly traded companies the ability to deduct for federal income tax purposes
certain compensation paid to top executive officers in excess of $1 million per
person. The Compensation Committee and the Stock Option Committee intend in 1994
to examine the new rules and determine whether the Company may provide
non-deductible executive compensation.
15
<PAGE>
COMPENSATION OF THE CEO AND EXECUTIVE OFFICERS DURING 1993
Within the context of the compensation policy described above, 1993
decisions regarding compensation of the Chief Executive Officer and the other
executive officers listed in the Summary Compensation Table were as follows:
(Bullet) SALARY: The Committee concluded that a small increase in the CEO's
salary was appropriate given competitive practices, and the CEO's
strategic initiatives that the Committee believes will help the
Company's long term performance. Therefore, his salary was
increased by 4.6% in 1993, from $550,000 to $575,000, following
two years of no change. Salary increases for the other executive
officers were based upon considerations of competitive practices,
individual performance, and scope of responsibilities.
(Bullet) ANNUAL BONUS AWARD: The Company's financial performance, measured
by Return on Capital Employed, did not meet the criteria required
for earning an award on this component of the annual plan. In
light of the financial results, the Committee concluded that no
award was merited for the individual performance component either,
and, accordingly, no annual bonus awards were paid for 1993 to the
CEO or the other executive officers.
(Bullet) STOCK OPTION GRANTS: The CEO and other executive officers
participated in the three-year option grant program described
above. As a result, they did not receive option grants in 1993,
and their next option grant will occur no earlier than 1995.
(Bullet) LONG-TERM CASH INCENTIVE PLAN: The CEO and other executive
officers are also participants in the Long-Term Cash Incentive
Plan described above. Their annualized target award opportunities
under this plan are slightly below their annual bonus targets.
They will receive payouts under this plan only if the Company's
financial positioning relative to a group of comparison companies
improves during the three year performance measurement period.
All members of the Human Resources and Compensation Committee concur in
this Report.
D. R. Melville (Chairman)
R. Barth
R. Laster
16
<PAGE>
TOTAL SHAREHOLDER RETURN
THE COMPANY VS. DOW JONES PAPER PRODUCTS GROUP* AND S&P 500
1988-1993
The table below compares the cumulative shareholder return of the Common
Stock for the last five years with the cumulative total return of the Dow Jones
Paper Products Group and the S&P 500, assuming a $100 investment on December 31,
1988.
(Performance Graph appears here--see appendix)
* Companies include: Boise Cascade Corporation, Champion International
Corporation, Consolidated Papers, Inc., Federal Paper Board Company, Inc.,
P.H. Glatfelter Company, International Paper Company, Mead Corporation, Union
Camp Corporation, and Westvaco Corporation
ITEM NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Upon recommendation of the Audit Committee of the Board of Directors, the
Board of Directors has appointed KPMG Peat Marwick as independent auditors for
the Company to audit its consolidated financial statements for the year ended
December 31, 1994, and has requested that the shareholders ratify the
appointment. KPMG Peat Marwick currently serves the Company and its subsidiaries
as independent auditors. Representatives of KPMG Peat Marwick 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 shareholders.
PROPOSALS BY SHAREHOLDERS
A shareholder who wishes to present a proposal for inclusion in the proxy
materials relating to the Annual Meeting of Shareholders to be held in 1995
should submit his or her proposal to the Secretary of the Company, 55 East
Camperdown Way, Post Office Box 1028, Greenville, South Carolina 29602. Any
proposal must be received on or before November 28, 1994, and the proponent must
comply with the proxy rules under the Securities Exchange Act of 1934, as
amended.
17
<PAGE>
EXPENSES OF SOLICITATION
The Company will bear the cost of soliciting proxies. In addition to
soliciting proxies by mail, it is expected that some of the Company's officers
and regular employees may solicit, without additional compensation, proxies by
telephone, telegraph, or oral communication. The Company may reimburse persons
holding shares in their names or those of their nominees for their reasonable
expenses in sending proxy materials to principals. Further, the firm of Morrow &
Co., Inc., has been retained to assist in the soliciting of proxies for a fee of
$5,500, plus expenses.
BOWATER INCORPORATED
Greenville, South Carolina
April 4, 1994
18
<PAGE>
NOTICE OF
ANNUAL MEETING
AND
PROXY STATEMENT
(Bowater logo)
DATE AND TIME
WEDNESDAY, MAY 25, 1994
AT 10:30 A.M.
PLACE
OMNI HOTEL
222 EAST THIRD STREET
CHARLOTTE, NORTH CAROLINA
PLEASE SIGN YOUR PROXY AND RETURN IT IN THE
ENCLOSED POSTAGE-PAID ENVELOPE SO THAT YOU MAY
BE REPRESENTED AT THE MEETING IF YOU DO NOT PLAN
TO ATTEND PERSONALLY.
19
<PAGE>
BOWATER INCORPORATED
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
P
OF THE COMPANY FOR ANNUAL MEETING MAY 25, 1934
R
The undersigned hereby appoints Robert C. Lancaster, Ecton R. Manning
and Wendy C. Shiba, or any one or more of them, each with full power of
substitution, as proxies for the undersigned, to vote, as designated below,
all the shares of 7% PRIDES Series B Convertible Preferred Stock, par value
$1 per share, of Bowater Incorporated held of record by the undersigned on
March 28, 1994, at the annual meeting of shareholders to be held May 25,
O 1994, or any adjournment(s) thereof and in their discretion,
to vote upon any other matters which may properly come before the meeting.
Election of Directors, Nominees:
X
Anthony P. Gammie, H. Gordon MacNeill,
Richard Barth, James White
Y
COMMENTS (change of address) [ ]
(If you have written in the above
space, mark the corresponding box on
the reverse side of this card.)
You are encouraged to specify your choices by marking the
appropriate boxes, SEE REVERSE SIDE, but you need not mark any boxes if
you wish to vote in accordance with the Board of Directors'
recommendations. The Proxy Committee cannot vote your shares unless you
sign and return this card.
SEE REVERSE
SIDE
<PAGE>
*
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THE PROXY WILL
BE VOTED FOR PROPOSALS 1 AND 2.
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS FOR ALL NOMINEES [ ] WITHHOLD AUTHORITY (to [ ]
LISTED BELOW vote for all nominees below)
<CAPTION>
1. ELECTION OF DIRECTORS EXCEPTIONS* (as indicated M
<CAPTION>
to the contrary below)
</TABLE>
Anthony P. Gammie, H. Gordon MacNeill, Richard Barth, James White
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE MARK THE
"EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
Exceptions
2. Proposal to ratify the appointment of independent
auditors. FOR [ ] AGAINST [ ] ABSTAIN [ ]
PROXY DEPARTMENT
NEW YORK, N.Y. 10203 0468 Address Change
Mark Here [ ]
Change of address comments on reverse
side.
(Signature should conform exactly as
name shown on this proxy. Executors,
administrators, guardians, trustees,
attorneys and officers signing for
corporations should give full title.)
Dated , 1994
(Please be sure to insert date)
Signed
Votes MUST be indicated
Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope.
(x) in Black or Blue ink. [ ]
<PAGE>
BOWATER INCORPORATED
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
P
OF THE COMPANY FOR ANNUAL MEETING MAY 25, 1934
R
The undersigned hereby appoints Robert C. Lancaster, Ecton R. Manning
and Wendy C. Shiba, or any one or more of them, each with full power of
substitution, as proxies for the undersigned, to vote, as designated below,
all the shares of Common Stock, par value
$1 per share, of Bowater Incorporated held of record by the undersigned on
March 28, 1994, at the annual meeting of shareholders to be held May 25,
O 1994, or any adjournment(s) thereof and in their discretion,
to vote upon any other matters which may properly come before the meeting.
Election of Directors, Nominees:
X
Anthony P. Gammie, H. Gordon MacNeill,
Richard Barth, James White
Y
COMMENTS (change of address) [ ]
(If you have written in the above
space, mark the corresponding box on
the reverse side of this card.)
You are encouraged to specify your choices by marking the
appropriate boxes, SEE REVERSE SIDE, but you need not mark any boxes if
you wish to vote in accordance with the Board of Directors'
recommendations. The Proxy Committee cannot vote your shares unless you
sign and return this card.
SEE REVERSE
SIDE
<PAGE>
*
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THE PROXY WILL
BE VOTED FOR PROPOSALS 1 AND 2.
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS FOR ALL NOMINEES [ ] WITHHOLD AUTHORITY (to [ ]
LISTED BELOW vote for all nominees below)
<CAPTION>
1. ELECTION OF DIRECTORS EXCEPTIONS* (as indicated [ ]
<CAPTION>
to the contrary below)
</TABLE>
Anthony P. Gammie, H. Gordon MacNeill, Richard Barth, James White
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE MARK THE
"EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
Exceptions
2. Proposal to ratify the appointment of independent
auditors. FOR [ ] AGAINST [ ] ABSTAIN [ ]
PROXY DEPARTMENT
NEW YORK, N.Y. 10203 0468 Address Change
Mark Here [ ]
Change of address comments on reverse
side.
(Signature should conform exactly as
name shown on this proxy. Executors,
administrators, guardians, trustees,
attorneys and officers signing for
corporations should give full title.)
Dated , 1994
(Please be sure to insert date)
Signed
Votes MUST be indicated
Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope.
(x) in Black or Blue ink. [ ]
****************************************************************************
APPENDIX
On the Shareholders Letter page, the Bowater logo and signature of A. P.
Gammie appears where indicated.
On the Notice page the signature of Wendy C. Shiba appears where indicated.
On Page 17 the Performance Graph appears where noted. Plot points are as
listed as follows:
1988 1989 1990 1991 1992 1993
Bowater Inc. 100 104.8 84.92 93.02 108.62 107.36
S&P 500 100 131.23 127.11 165.29 177.57 195.23
Peer Total 100 111.47 97.87 126.98 129.69 141.07
On the Back Cover the Bowater logo appears where indicated.
