<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) Of The Securities Exchange Act of 1934
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
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
POTLATCH CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(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
Potlatch
POTLATCH CORPORATION
ONE MARITIME PLAZA
SAN FRANCISCO, CALIFORNIA 94111
ANNUAL MEETING OF STOCKHOLDERS
MAY 15, 1997
------------------------
NOTICE AND PROXY STATEMENT
<PAGE> 3
POTLATCH CORPORATION
ONE MARITIME PLAZA
SAN FRANCISCO, CALIFORNIA 94111
March 26, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
which will be held on Thursday, May 15, 1997 at 11:00 A.M. at the Park Hyatt San
Francisco, 333 Battery Street, San Francisco, California.
The formal notice of the Annual Meeting and the Proxy Statement have been
made a part of this invitation.
After reading the statement, PLEASE MARK, DATE, SIGN AND RETURN, AT AN
EARLY DATE, THE ENCLOSED PROXY in the prepaid envelope to Harris Trust and
Savings Bank, our agent, to ensure that your shares will be represented.
The Board of Directors and Management look forward to seeing you at the
meeting.
Sincerely,
/s/ JOHN M. RICHARDS
JOHN M. RICHARDS
Chairman of the Board and
Chief Executive Officer
------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 15, 1997
The Annual Meeting of the Stockholders of Potlatch Corporation (the
"Company") will be held at the Park Hyatt San Francisco, 333 Battery Street, San
Francisco, California, on Thursday, May 15, 1997 at 11:00 A.M. for the following
purposes:
1. To elect five Directors to serve until the 2000 Annual Meeting of
Stockholders.
2. If properly presented at the meeting, to act upon two proposals
submitted by stockholders of the Company which are described in the
Proxy Statement.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 19, 1997 as
the record date for determining the stockholders entitled to notice of and to
vote at the Annual Meeting or at any adjournment thereof. A complete list of
stockholders entitled to vote will be available at the Company's offices for ten
days prior to the meeting.
/s/ BETTY R. FLESHMAN
BETTY R. FLESHMAN
Secretary
March 26, 1997
<PAGE> 4
March 26, 1997
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Potlatch Corporation, a Delaware corporation (the
"Company"), One Maritime Plaza, San Francisco, California 94111, of proxies in
the accompanying form to be used at the Annual Meeting of Stockholders to be
held on May 15, 1997, or at any adjournment thereof. The shares represented by
the proxies received pursuant to this solicitation and not revoked will be voted
at the Annual Meeting. A stockholder who has given a proxy may revoke it by
voting in person at the Annual Meeting, by giving written notice of revocation
to the Secretary of the Company or by giving a later dated proxy at any time
before voting. On the matters coming before the Annual Meeting as to which a
choice has been specified by a stockholder by means of the ballot on the proxy,
the shares will be voted accordingly. If no choice is so specified, the shares
will be voted FOR the election of the nominees for Director listed in this Proxy
Statement and AGAINST the stockholder proposals described in this Proxy
Statement.
The close of business on March 19, 1997 has been fixed as the record date
for determining the holders of the Common Stock entitled to notice of and to
vote at the Annual Meeting. On such date the Company had 28,895,712 shares of
Common Stock outstanding and entitled to vote. As provided in the Company's
Restated Certificate of Incorporation (the "Charter"), a holder of Common Stock
will be entitled to four votes on each matter submitted to a vote of
stockholders for each share of Common Stock beneficially owned on March 19, 1997
which (i) has been beneficially owned continuously from and including March 1,
1993 or (ii) has been acquired pursuant to tax-qualified employee benefit plans
of the Company or the Company's dividend reinvestment plan. A stockholder will
be entitled to one vote per share for each share of Common Stock beneficially
owned on March 19, 1997 which does not meet one of the above criteria.
Stockholders who became beneficial owners of Common Stock within the last 48
calendar months (subsequent to March 1, 1993) will become entitled to four votes
per share with respect to each share held for at least 48 consecutive calendar
months (dating from the first day of the first full month on or after the date
the holder acquired beneficial ownership of such share) prior to the record date
for a stockholders' meeting. In addition, all stockholders are entitled to only
one vote per share on certain matters as specified in the Charter. It is not
anticipated that any such matters will be brought before this Annual Meeting.
Stockholders who own shares of Common Stock in "street" or "nominee" name
are presumed to be entitled to exercise one vote per share and must submit proof
of continued beneficial ownership in order to be entitled to four votes per
share. Such proof must consist of a written certification by the holder that
there has been no change in beneficial ownership of his or her shares for a
period of at least 48 consecutive calendar months as of the record date. The
required form for this certification is provided on the proxy card given to
stockholders who own shares of Common Stock in "street" or "nominee" name. The
Company reserves the right, however, to require additional evidence to determine
whether any such stockholder is entitled to four votes per share.
To transact business at the Annual Meeting, a quorum consisting of a
majority of the voting power of the Company's outstanding shares of Common Stock
and one-third of the total number of shares of Common Stock entitled to vote at
the Annual Meeting must be represented. Under Delaware law and the Company's
Charter and By-Laws, the aggregate number of votes entitled to be cast by all
stockholders represented at the Annual Meeting is counted for the purpose of
1
<PAGE> 5
determining whether there is a sufficient quorum. A stockholder is deemed to be
represented at the Annual Meeting if the stockholder is present at the Annual
Meeting in person or by proxy and has authority to vote on at least one item.
The affirmative vote of a majority of the voting power present and entitled
to vote at this Annual Meeting is required for approval of any matter voted
upon. Abstentions have the same effect as negative votes. Votes withheld by a
stockholder and broker non-votes are not counted for purposes of determining
whether the item is approved.
A copy of the Company's 1996 Annual Report to Stockholders containing
financial statements for the year ended December 31, 1996 accompanies this Proxy
Statement.
The expense of printing and mailing proxy material will be borne by the
Company. In addition to the solicitation of proxies by mail, solicitation may be
made by certain Directors, officers and other employees of the Company in person
or by telephone or facsimile; no additional compensation will be paid for such
solicitation.
Arrangements will also be made with brokerage firms and other custodians,
nominees and fiduciaries to forward proxy solicitation material to certain
beneficial owners of the Company's Common Stock, and the Company will reimburse
such brokerage firms, custodians, nominees and fiduciaries for reasonable
out-of-pocket expenses incurred by them in connection therewith. The Company has
retained D.F. King & Co., Inc., to aid in the solicitation of proxies for a fee
estimated at $7,500 plus out-of-pocket expenses.
2
<PAGE> 6
ELECTION OF DIRECTORS
(PROPOSAL ONE ON THE PROXY CARD)
The Board of Directors unanimously recommends a vote FOR this proposal.
The Board of Directors is divided into three classes serving staggered
three-year terms. At the 1997 Annual Meeting of Stockholders, five Directors are
to be elected to serve until the 2000 Annual Meeting of Stockholders and until
their respective successors are duly elected and qualified or until the end of
the calendar year in which the Director attains the age of 72 as required by the
Company's By-Laws. It is anticipated that Mr. Morrow will retire on December 31,
1998. Upon his retirement the Board of Directors may elect a new Director to
complete his term or may reduce the number of Directors. All nominees for
election are presently members of the Board of Directors.
Directors are elected by a majority of the votes cast in the election. The
Board of Directors knows of no reason why any of the nominees for Director will
be unable to serve. In the event any of the nominees becomes unable or declines
to serve, the proxies may be voted for the balance of those named and for such
other nominee as the Board may select, or the Board may be reduced accordingly.
INFORMATION WITH RESPECT TO NOMINEES FOR ELECTION AND DIRECTORS CONTINUING IN
OFFICE
Following are the names and ages of the nominees for Director and of the
Directors continuing in office, their principal occupations or employment at
present and for the past five years, certain directorships held by each and the
year in which each became a Director of the Company:
Nominees for Election for a Three-Year Term Ending in 2000
Richard B. Madden(1)(2)......Mr. Madden, age 67, became a Director of the
Company in 1971. He served as Chairman of the Board
and Chief Executive Officer of the Company until he
retired in May 1994. Mr. Madden is also a director
of CNF Transportation Inc., PG&E Corporation and
URS Corporation.
Richard M. Morrow(3).........Mr. Morrow, age 71, became a Director of the
Company in 1990. He served as Chairman of the Board
and Chief Executive Officer of Amoco Corporation
(petroleum and chemical products), Chicago,
Illinois, from September 1983 through February
1991. Mr. Morrow served as Chairman of the Board of
Westinghouse Electric Corporation (electrical
equipment), Pittsburgh, Pennsylvania, from January
1993 through June 1993. He is also a director of
Marsh and McLennan Companies, Inc., and Seagull
Energy Corporation.
John M. Richards(4)..........Mr. Richards, age 59, became a Director of the
Company in 1991. He is Chairman of the Board and
Chief Executive Officer of the Company and has
served in that capacity since May 1994. He served
as the Company's President and Chief Operating
Officer from May 1989 to May 1994.
(Notes are on page 5)
3
<PAGE> 7
Reuben F. Richards(3)(4).....Mr. Richards, age 67, became a Director of the
Company in 1974. He served as Chairman of the Board
of Terra Industries Inc. (agriculture), New York,
New York from May 1983 through April 1996. He also
served as Chairman of the Board of Minorco (U.S.A.)
Inc. (natural resources), Denver, Colorado from May
1990 through March 1996 and as its President and
Chief Executive Officer from February 1994 through
March 1996. He is also a director of Ecolab Inc.,
Engelhard Corporation, Minorco and Santa Fe Energy
Resources, Inc.
Frederick T.
Weyerhaeuser(3)..............Mr. Weyerhaeuser, age 65, became a Director of the
Company in 1960. He is Chairman of the Board and
Treasurer of Clearwater Investment Trust (financial
management company), St. Paul, Minnesota.
Directors Continuing in Office Until the 1998 Annual Meeting of Stockholders
Richard A. Clarke(2).........Mr. Clarke, age 66, became a Director of the
Company in 1985. He served as Chairman of the Board
of Pacific Gas and Electric Company (public
utility), San Francisco, California, from July 1994
through June 1995. He also served as its Chief
Executive Officer from May 1986 through June 1994.
Mr. Clarke is also a director of BankAmerica
Corporation, Bank of America NT&SA, CNF
Transportation Inc. and PG&E Corporation.
Allen F. Jacobson(2)(4)......Mr. Jacobson, age 70, became a Director of the
Company in 1990. He served as Chairman of the Board
and Chief Executive Officer of Minnesota Mining and
Manufacturing Company (diversified manufacturing
company), St. Paul, Minnesota, from March 1986
through October 1991. Mr. Jacobson is also a
director of Abbott Laboratories, Deluxe
Corporation, Minnesota Mining and Manufacturing
Company, Mobil Corporation, Northern States Power
Company, The Prudential Insurance Company of
America, Sara Lee Corporation, Silicon Graphics,
Inc., U S WEST, Inc. and Valmont Industries, Inc.
George F. Jewett,
Jr.(1)(2)....................Mr. Jewett, age 69, became a Director of the
Company in 1957. He is Vice Chairman of the Board
of the Company.
Vivian W. Piasecki(1)........Mrs. Piasecki, age 66, became a Director of the
Company in 1992. She is a Trustee of the University
of Pennsylvania (educational institution),
Philadelphia, Pennsylvania. She is also Chairman of
the Board of Overseers for the University of
Pennsylvania School of Nursing and a Board Member
of the University of Pennsylvania Medical Center.
Mrs. Piasecki is also a director of First Fidelity
Bank, NA Pennsylvania Regional Board.
(Notes are on page 5)
4
<PAGE> 8
Robert G. Schwartz(2)(3).....Mr. Schwartz, age 68, became a Director of the
Company in 1973. He served as Chairman of the Board
of Metropolitan Life Insurance Company (life
insurance), New York, New York from February 1983
through March 1993 and was also its President and
Chief Executive Officer from September 1989 through
March 1993. Mr. Schwartz is also a director of
Ascent Entertainment Group, Inc., COMSAT Corp.,
Consolidated Edison of New York, Inc., Lone Star
Industries, Inc., Lowe's Companies, Inc.,
Metropolitan Life Insurance Company, Mobil
Corporation and Reader's Digest Association, Inc.
Directors Continuing in Office Until the 1999 Annual Meeting of Stockholders
Kenneth T. Derr(1)...........Mr. Derr, age 60, became a Director of the Company
in 1994. He is Chairman of the Board and Chief
Executive Officer of Chevron Corporation
(international oil company), San Francisco,
California. Mr. Derr is also a director of AT&T and
Citicorp.
Toni Rembe(2)(4).............Ms. Rembe, age 60, became a Director of the Company
in 1975. She is a Partner of Pillsbury Madison &
Sutro LLP (law firm), San Francisco, California.
Ms. Rembe is also a director of APL Limited,
Pacific Telesis Group and Transamerica Corporation.
Richard M. Rosenberg(1)(4)...Mr. Rosenberg, age 66, became a Director of the
Company in 1992. He served as Chairman of the Board
of BankAmerica Corporation (bank holding company)
and Bank of America NT&SA (banking institution),
San Francisco, California from October 1992 through
May 1996. He also served as Chief Executive Officer
of both companies from May 1990 to December 1995.
He also served as President of both companies from
May 1990 to April 1992 and from October 1992 to
August 1995. Mr. Rosenberg is also a director of
Airborne Express, K2, Inc., Northrop Corporation
and Pacific Telesis Group.
Charles R. Weaver(3).........Mr. Weaver, age 68, became a Director of the
Company in 1987. He served as Chairman of the Board
and Chief Executive Officer of The Clorox Company
(household consumer products), Oakland, California,
from April 1986 through June 1992. Mr. Weaver is
also a director of Unocal Corporation.
William T. Weyerhaeuser(3)...Dr. Weyerhaeuser, age 53, became a Director of the
Company in 1990. He is a Clinical Psychologist in
Tacoma, Washington. He is also owner and Chairman
of the Board of Yelm Telephone Company, Yelm,
Washington. Dr. Weyerhaeuser is also a director of
Clearwater Management Company, Inc.
- ---------------
(1) Member of the Audit Committee
(2) Member of the Nominating Committee
(3) Member of the Executive Compensation and Personnel Policies Committee
(4) Member of the Finance Committee
5
<PAGE> 9
CERTAIN COMMITTEES OF THE BOARD OF DIRECTORS; MEETINGS
The Company has standing audit, compensation and nominating committees of
the Board of Directors.
Members of the Audit Committee are: Kenneth T. Derr, George F. Jewett, Jr.,
Richard B. Madden, Vivian W. Piasecki and Richard M. Rosenberg. The functions of
this Committee are to: receive from and review with the Company's independent
auditors the annual report of such auditors; review with the independent
auditors the scope of the succeeding annual examination; nominate the
independent auditors to be selected each year by the Company's Board of
Directors; review consulting services, if applicable, provided by the Company's
auditors and evaluate the possible effect on the auditors' independence of
performing such services; ascertain the existence of adequate internal
accounting and control systems; and review with management and the auditors
current and emerging accounting and financial reporting requirements and
practices affecting the Company. This Committee held two meetings during the
fiscal year ended December 31, 1996.
Members of the Executive Compensation and Personnel Policies Committee are:
Richard M. Morrow, Reuben F. Richards, Robert G. Schwartz, Charles R. Weaver,
Frederick T. Weyerhaeuser and William T. Weyerhaeuser. The functions of this
Committee are to: review annually and recommend to the Board of Directors the
level of total compensation of the Chairman of the Board; review annually the
recommendations of the Chairman of the Board concerning the salaries and
incentive awards of certain senior officers; administer the Company's stock
option plans and Management Performance Award Plan; and review and make
recommendations to the Board of Directors for changes in the Company's
compensation and benefit plans and practices. This Committee held four meetings
during the fiscal year ended December 31, 1996.
Members of the Nominating Committee are: Richard A. Clarke, Allen F.
Jacobson, George F. Jewett, Jr., Richard B. Madden, Toni Rembe and Robert G.
Schwartz. The functions of this Committee are to make recommendations with
respect to: the size of the Board; nominees for election as Directors; nominees
to serve on Committees of the Board; changes in compensation and retirement
policy for Directors; and the Company's Corporate Governance Guidelines and
other corporate governance issues. This Committee held four meetings during the
fiscal year ended December 31, 1996. Any stockholder may recommend nominees for
Director to the Nominating Committee by providing to the Secretary of the
Company a written notice by the February 1 preceding the annual meeting of
stockholders for which such nominee is to be considered for nomination. The
notice must include the full name, age, business and residence addresses,
principal occupation or employment of the nominee, the number of shares of
Company stock beneficially owned by the nominee, any other information
concerning the nominee that must be disclosed in proxy solicitations pursuant to
Rule 14(a) of the Securities Exchange Act of 1934 and a written consent of the
nominee to the nomination and to serve, if elected.
The Board of Directors held seven meetings during the fiscal year ended
December 31, 1996. Each of the Directors (except Reuben F. Richards and Robert
G. Schwartz) attended 75% or more of the aggregate number of meetings of the
Board and of the Committees on which such Director served in 1996.
6
<PAGE> 10
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth as of January 1, 1997 the number of shares
of Common Stock beneficially owned by each Director, by the executive officers
listed in the Summary Compensation Table and by all Directors and executive
officers as a group, as reported by each person. Except as otherwise indicated,
each person has sole investment and voting power with respect to the shares
shown. Shares amounting to less than 1% of the class outstanding are noted by an
asterisk. The table also sets forth as of January 1, 1997 common stock units
credited to accounts of Directors who deferred all or a portion of their
Directors' fees under the stock units method and common stock units credited to
accounts of Directors on termination of the Directors' Retirement Plan.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP OF
COMMON STOCK
----------------------------
NUMBER OF PERCENT OF COMMON
SHARES(1)(2) CLASS STOCK UNITS(3)
------------ ---------- --------------
<S> <C> <C> <C>
DIRECTORS
Richard A. Clarke................................ 4,269 * 4,570
Kenneth T. Derr.................................. 1,000 * 1,600
Allen F. Jacobson................................ 1,500 * 8,352
George F. Jewett, Jr............................. 808,814(4) 2.8% 4,570
Richard B. Madden................................ 92,891 * 1,091
Richard M. Morrow................................ 1,000 * 8,626
Vivian W. Piasecki............................... 116,756(5) * 3,787
Toni Rembe....................................... 3,611 * 5,514
John M. Richards................................. 147,364(6) * --
Reuben F. Richards............................... 1,700 * 4,570
Richard M. Rosenberg............................. 1,500 * 3,519
Robert G. Schwartz............................... 2,500 * 9,697
Charles R. Weaver................................ 1,500 * 4,570
Frederick T. Weyerhaeuser........................ 1,400,936(7) 4.9% 4,570
William T. Weyerhaeuser.......................... 1,017,193(8)(9) 3.5% 8,700
OTHER NAMED EXECUTIVE OFFICERS
George E. Pfautsch............................... 45,062 * --
Charles R. Pottenger............................. 58,696 * --
L. Pendleton Siegel.............................. 88,188 * --
Thomas J. Smrekar................................ 44,513 * --
Directors and executive officers as a group (21
persons including those named above)........... 3,031,840(10) 10.4% 73,736
</TABLE>
- ---------------
(1) Includes shares which may be acquired within 60 days pursuant to the
exercise of options, as follows: each Director other than Mr. Madden and
Mr. J.M. Richards, 500 shares; Mr. Madden, 67,175 shares; Mr. J.M.
Richards, 123,400 shares; Mr. Pfautsch, 32,100 shares; Mr. Pottenger,
48,400 shares; Mr. Siegel, 70,800 shares; Mr. Smrekar, 30,650 shares; and
all Directors and executive officers as a group, 401,000 shares.
(Notes continued on next page)
7
<PAGE> 11
(2) Includes shares owned by Directors and executive officers together with
their respective spouses as follows: Mr. Clarke, 3,769 shares; Mr. Madden,
10,456 shares; Mr. Pfautsch, 2,200 shares; and all Directors and executive
officers as a group, 16,425 shares.
(3) Represents common stock units into which deferred Directors' fees have been
converted and vested common stock units received upon termination of the
Potlatch Corporation Directors' Retirement Plan. See "Compensation of
Directors." These units are converted to cash based on advance elections
made by the Directors and, as they are not actual shares of Common Stock,
have no voting power.
(4) Includes 601,400 shares held by a trust of which Mr. Jewett is the trustee
and as to which he shares voting and investment power. Includes 129,864
shares held by a foundation of which Mr. Jewett is a trustee and as to
which he shares voting and investment power but disclaims beneficial
ownership. Includes 40,954 shares held by a revocable trust for the benefit
of Mr. Jewett and his wife and as to which he shares voting and investment
power. Includes 36,096 shares held by a revocable trust for the benefit of
Mr. Jewett's wife and as to which he shares voting and investment power but
disclaims beneficial ownership.
(5) Does not include 4,220 shares held directly by Mrs. Piasecki's husband.
Also does not include 17,020 shares held by trusts of which Mrs. Piasecki's
husband is a trustee and as to which he shares voting and investment power.
Mrs. Piasecki disclaims beneficial ownership of all shares described in
this footnote.
(6) Does not include 200 shares held by Mr. J.M. Richards' wife as custodian
for his minor child.
(7) Includes a total of 1,345,772 shares held by trusts of which Mr. F.T.
Weyerhaeuser is a trustee, as to 1,237,972 of which he shares voting and
investment power. Also includes 164 shares of which he shares investment
power only. Does not include 8,032 shares held directly by Mr. F.T.
Weyerhaeuser's wife. Mr. F.T. Weyerhaeuser disclaims beneficial ownership
of all shares described in this footnote.
(8) Includes 119,616 shares held by a holding company of which Dr. W.T.
Weyerhaeuser is Chairman of the Board and Chief Executive Officer and as to
which he has been authorized to exercise sole voting power and indirectly
shares investment power with others. Dr. W.T. Weyerhaeuser disclaims
beneficial ownership of these shares, except for his proportionate
beneficial interest of 569 shares.
(9) Includes a total of 857,411 shares held by trusts of which Dr. W.T.
Weyerhaeuser is a trustee, as to 37,300 shares of which he shares voting
power only, and as to 766,179 shares of which he shares voting and
investment power. Also includes 164 shares of which he shares investment
power only. Does not include 2,700 shares held directly by Dr. W.T.
Weyerhaeuser's wife. Dr. W.T. Weyerhaeuser disclaims beneficial ownership
of all shares described in this footnote.
(10) Includes the shares set forth in the table for each individual Director and
named executive officer without duplication of 601,400 shares attributable
to both Mr. Jewett and Mr. F.T. Weyerhaeuser and 232,708 shares
attributable to both Mr. F.T. Weyerhaeuser and Dr. W.T. Weyerhaeuser.
8
<PAGE> 12
COMPENSATION OF DIRECTORS AND THE NAMED EXECUTIVE OFFICERS
Information is set forth on the following pages as to the compensation paid
or to be paid to, or deferred for the account of, the Directors and the Chief
Executive Officer and each of the four other most highly compensated executive
officers of the Company for services rendered to the Company and its
subsidiaries during 1996.
COMPENSATION OF DIRECTORS
Each Director of the Company who is not also an employee of the Company
receives an annual fee of $24,000. In addition, the Company pays each such
Director a fee of $1,200 for each meeting of the Board of Directors or a
committee of the Board attended in person or by telephone. Each committee
chairman receives an additional annual fee of $3,000. By making an advance
election, a Director may defer receipt of any or all of the Director's fees
payable. At the election of a Director, deferred amounts are credited with
interest or converted into common stock units which are credited with amounts
equal to dividends paid on the Company's Common Stock during the deferral
period. During 1996 an aggregate amount of $514,800 in fees was paid to
Directors or deferred on their behalf. Directors are also reimbursed for
reasonable out-of-pocket expenses incurred in attending Board and committee
meetings.
Under the Potlatch Corporation 1995 Stock Incentive Plan, Directors who are
not employees of the Company ("outside Directors") each receive a nonqualified
stock option to purchase 1,000 shares of Common Stock in December of his or her
first year as a Director (or, in the case of Directors serving at the time of
the 1995 Plan's adoption, in December 1995). Each December thereafter, each
outside Director will also receive an additional nonqualified option grant to
purchase 500 shares. In December 1996, options to purchase 500 shares of Common
Stock at an exercise price of $44.375 per share were granted to each outside
Director. Such options will vest in two equal annual installments commencing on
the first anniversary of the grant date. Such options will expire ten years from
the date of grant unless earlier terminated or exercised.
The Potlatch Corporation Directors' Retirement Plan (the "Directors'
Retirement Plan"), which formerly provided an annual benefit equal to the
Directors' retainer fee, $24,000 in 1996, was terminated effective December 31,
1996. Upon termination of the Directors' Retirement Plan, the present value of
benefits accrued by each outside Director under the plan was converted into
common stock units based on the closing price of the Company's Common Stock on
December 31, 1996. Accrued Directors' Retirement Plan benefits were converted
into 4,570 units for each Director, except in the cases of Mr. Jacobson, Mr.
Madden and Mr. Morrow who received 3,817, 3,414 and 3,817 units, respectively,
as they will not complete ten years of service as outside Directors prior to
retirement. The present value of accrued benefits was calculated using an
assumed interest rate of 4.75% and ten years of service. For any Director who
had less than ten years of service as an outside Director at December 31, 1996,
the present value was calculated using the lesser of ten years or actual years
of service to the mandatory retirement age. For a Director with less than ten
years of service, the portion of the units not attributable to accrued service
on December 31, 1996 will vest in equal annual installments until such Director
completes ten years of service or reaches mandatory retirement age. For those
Directors with less than ten years of service at December 31, 1996, the vested
portion of these units are: Mr. Derr, 1,600; Mr. Jacobson, 2,991; Mr. Madden,
1,091; Mr. Morrow, 2,991; Mrs. Piasecki, 2,085; Mr. Rosenberg, 2,085; and Dr. W.
T. Weyerhaeuser, 2,991. Unvested units will be forfeited upon termination of
service as a Director. Payouts of vested
9
<PAGE> 13
units will be made in cash, based on the price of the Company's Common Stock, at
the time(s) specified in an advance election by the Director. Dividend
equivalents in the form of additional stock units will be credited to each
Director's stock unit account on the same basis as dividends paid on the
Company's Common Stock.
COMPENSATION OF THE NAMED EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES ALL
------------------- UNDERLYING OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) OPTIONS/SARS COMPENSATION(2)
- ---------------------------------- ----- -------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
John M. Richards.................. 1996 $524,200 $284,700 39,350 $31,676
Chairman of the Board and 1995 508,850 230,000 38,000 21,372
Chief Executive Officer 1994 453,975 98,500 34,600 19,067
L. Pendleton Siegel............... 1996 377,275 170,800 21,050 21,726
President and Chief Operating 1995 366,300 140,000 20,000 15,385
Officer 1994 335,000 65,000 22,000 14,070
Charles R. Pottenger.............. 1996 283,820 89,900 11,650 15,360
Group Vice President, Pulp and 1995 275,420 81,900 10,600 37,465
Paperboard 1994 267,300 42,100 11,000 11,228
Thomas J. Smrekar................. 1996 242,500 76,800 9,850 12,915
Group Vice President, Wood 1995 230,000 65,000 8,800 9,660
Products 1994 205,200 32,300 8,450 8,618
George E. Pfautsch................ 1996 221,550 73,700 7,100 11,989
Senior Vice President, Finance
and 1995 214,950 63,900 7,000 9,028
Chief Financial Officer 1994 205,395 35,600 6,600 8,627
</TABLE>
- ---------------
(1) Payable in cash, except with respect to 1996 for which 20% of the bonus was
payable in Common Stock with the number of shares determined based on the
closing price in the New York Stock Exchange Composite Transactions of
$42.875 on March 6, 1997. Bonuses may also be deferred. Beginning in 1996,
a person deferring such bonus compensation is treated as electing to
receive a minimum of 20% of such deferred compensation in the form of
common stock units although each may elect a greater percentage.
(2) This column represents matching Company contributions under the Salaried
Employees' Savings Plan. For Mr. Pottenger, it also includes $25,897 for
moving expenses reimbursed in 1995.
10
<PAGE> 14
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
---------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED FISCAL YEAR PER SHARE DATE VALUE(2)
- ------------------------------- ------------ ------------ ---------- -------- ----------
<S> <C> <C> <C> <C> <C>
John M. Richards............... 39,350 11% $ 44.375 12/05/06 $340,000
L. Pendleton Siegel............ 21,050 6% 44.375 12/05/06 182,000
Charles R. Pottenger........... 11,650 3% 44.375 12/05/06 101,000
Thomas J. Smrekar.............. 9,850 3% 44.375 12/05/06 85,000
George E. Pfautsch............. 7,100 2% 44.375 12/05/06 61,000
</TABLE>
- ---------------
(1) All of these options were granted on December 5, 1996 with 50% of such grant
first becoming exercisable on December 5, 1997 and the remaining 50%
becoming exercisable on December 5, 1998. In the event of a "change in
control" of the Company, as defined in the option plans, the options granted
would become immediately exercisable in full and would include stock
appreciation rights. In general, a "change in control" occurs for purposes
of the option plans when (i) the Company ceases to be an independent
publicly owned corporation or sells or disposes of all or substantially all
of the assets of the Company, (ii) more than one-third of the incumbent
Directors of the Company neither were Directors three years earlier nor were
elected or nominated with the approval of a majority of the Directors then
in office who were Directors three years earlier, (iii) a person becomes the
beneficial owner of 20% or more of the Company's voting power pursuant to a
tender offer, or (iv) the Company dissolves, liquidates, or does not survive
a merger or consolidation.
(2) This column has been calculated using the Black-Scholes option pricing
model, which utilizes six different market-related factors to estimate the
value of stock options. These factors are stock price at date of grant,
option exercise price, option term, risk-free rate of return, stock
volatility and dividend yield. The Black-Scholes model generates an estimate
of the value of the right to purchase a share of stock at a fixed price over
a fixed period of time. The actual value, if any, an executive may realize
will depend on the excess of the stock price on the date the option is
exercised over the grant price, as well as the executive's continued
employment through the two-year vesting period and the 10-year option term.
The following assumptions were used to calculate the Black-Scholes value:
<TABLE>
<S> <C> <C>
Stock price at date of grant = $44.375
Option exercise price = $44.375
Option term = 10 years
Risk-free rate of return = Based on rate for 10-year U.S. Treasury note
Company stock volatility = Based on prior three-year monthly stock prices
Company dividend yield = 3.83%
Calculated Black-Scholes
Value = $8.65 per option
</TABLE>
If the Black-Scholes option pricing model were applied to all outstanding
shares of the Company as of December 5, 1996, the date of grant, the
assumed increased present value for all stockholders would be approximately
$250 million. There is no assurance that the value
(Notes continued on next page)
11
<PAGE> 15
received by the named executive officers or the Company's stockholders will
be at or near the estimated value derived by the Black-Scholes model.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
SHARES AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
ACQUIRED ON VALUE -------------------------- -----------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------- ----------- -------- ----------- ------------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
John M. Richards.......... -- -- 123,400 58,350 $ 384,850 $33,250
L. Pendleton Siegel....... 5,500 $ 40,563 70,800 31,050 222,100 17,500
Charles R. Pottenger...... -- -- 48,400 16,950 210,663 9,275
Thomas J. Smrekar......... -- -- 30,650 14,250 102,051 7,701
George E. Pfautsch........ -- -- 32,100 10,600 151,775 6,125
</TABLE>
- ---------------
(1) Based on the closing stock price in The New York Stock Exchange Composite
Transactions of the Company's Common Stock at December 31, 1996 of $43.00
per share.
EXECUTIVE COMPENSATION AND PERSONNEL POLICIES COMMITTEE REPORT ON EXECUTIVE
COMPENSATION
COMPENSATION POLICY
In order to attract, retain and reward a highly competent and productive
employee group, it is the policy of the Company that a total compensation
package will be provided that is competitive within the forest and paper
products industry, general industry and the geographic areas in which the
Company operates. This compensation package includes a mix of base salary,
short-term and long-term incentive opportunities and other employee benefits.
Changes in compensation are based on individual performance, the Company's
profit performance and the competitive marketplace. The Company intends to
qualify all compensation paid to its executive officers for deductibility under
the Internal Revenue Code's $1 million limitation. The Company believes the
compensation paid under the stock incentive plans and the Management Performance
Award Plan qualify for deductibility because a participant must defer any
Management Performance Award Plan payment that would cause the participant's
compensation to exceed $1 million.
Executives receive a base salary and are eligible for awards under two
incentive plans, the Management Performance Award Plan (short-term) and the
stock incentive plans (long-term). Executive compensation is administered by the
Executive Compensation and Personnel Policies Committee of the Board of
Directors (the "Committee"). The Committee consists of the six outside Directors
named at the conclusion of this report.
COMPENSATION COMMITTEE RESPONSIBILITIES
The responsibilities of the Committee are:
- to review and recommend annually to the Board of Directors the level of
total compensation of the Chief Executive Officer. Factors evaluated in
the review are the Chief Executive Officer's individual performance, as
measured against written short-term and long-term objectives previously
approved by the Committee, Company performance compared to the forest
products industry and the competitive compensation levels for comparable
positions in the forest products industry and general industry;
12
<PAGE> 16
- to review annually with the Chief Executive Officer the individual
performance, base salaries and incentive awards of the four other most
highly compensated executive officers and certain other senior officers;
- to review and make recommendations on any new stock incentive plan for
the Board of Directors' approval prior to submission to stockholders for
their approval and to review and approve all grants made under stock
incentive plans;
- to establish the rules and regulations for the Management Performance
Award Plan, which is the Company's annual incentive plan ("bonus"), and
to administer the plan in accordance with such rules and regulations; and
- to review and make recommendations to the Board of Directors regarding
the adoption of or any material changes in the Company's compensation and
benefit plans.
The Committee periodically reviews the entire executive pay structure by
examining surveys of general industry and forest and paper products industry
information on base salaries and short-term and long-term incentives prepared by
an independent compensation consulting firm. These surveys include data from a
broad base of general industry companies and from a base of forest and paper
products companies. This latter base is broader than the S&P Forest Products
Index. General industry surveys are included in the review because the Committee
believes that the Company competes for executive talent against companies other
than those in the forest and paper products industry. The primary purpose of the
review is to insure that the Company's target and actual cash and incentive
compensation programs are consistent with competitive practice. The Committee
considers the median level of the market as competitive.
1996 COMPANY PERFORMANCE
During 1996, the Company earned $2.01 per share after extraordinary
expenses or a return on common stockholders' equity ("ROE") of 6.2%. This
compared to $3.72 per share and an ROE of 12.0% in 1995. The Company's ROE of
6.2% was above the industry's ROE performance of 5.4% in 1996, as measured by a
sample of 17 major forest products companies.(1)
1996 EXECUTIVE COMPENSATION
The Company's executive annual and long-term compensation consisted of base
salary, a cash and Common Stock payment under the Management Performance Award
Plan and stock option grants under the 1989 Stock Incentive Plan and the 1995
Stock Incentive Plan.
BASE SALARY
The base salary structure is set at competitive levels. Competitive levels
are determined by analyzing independent, job-specific compensation surveys
which, depending on participation and on the position under review, cover
between 15 and 30 forest and paper products companies, many of which are in the
S&P Forest Products Index, and over 300 general industry companies. The
- ---------------
(1) The forest products industry base for ROE comparison purposes is comprised
of 17 major forest products industry companies. This base is larger and has in
the past created a more challenging ROE comparison than the S&P Forest
Products Index as it includes some additional companies, which on average have
exceeded the ROEs of the companies included in the S&P's 11-company Forest
Products Index.
13
<PAGE> 17
Committee considers the median level of the market as competitive. Any increase
in an executive's base salary is designed to recognize individual performance
against a written performance plan and is expected to fall within annually
established merit increase guidelines which are applicable to all salaried
employees and which are set vis-a-vis competitive practice. The written
performance plans of the executive officers contain specific measures, both
quantitative and qualitative, related to increased earnings, increased
productivity, improved safety performance, and compliance with environmental
requirements.
MANAGEMENT PERFORMANCE AWARD PLAN
The purpose of the plan is to provide an incentive to key employees
including the Chief Executive Officer and President who are in a position to
contribute to and therefore influence the Company's profit performance as
measured annually on an ROE basis. Payments for 1996 under the Management
Performance Award Plan were based on the Company's ROE measured against the ROE
of the forest products industry(1). Awards can be modified based on individual
performance. No bonuses are recommended by the Committee unless a specified
return on common equity is achieved, and the Board may limit the amount or
change the time and form of payment should the actual bonus fund exceed 4% of
pre-tax earnings. For 1996, the bonuses were reduced by the 4% limit. Awards are
paid in a combination of cash and Common Stock as determined by the Committee.
For 1996, a minimum of 20% of each participant's award was paid in Common Stock
or deferred as common stock units.
STOCK INCENTIVE PLANS
The purpose of the stock incentive plans is to further align employees'
interests with the long-term performance of the business and thus, the long-term
interests of the stockholders. Grants are made to employees who have the
capacity to influence the business results. The target grant is based on
specific gain objectives by responsibility level as recommended by the Company's
independent compensation consulting firm. The objective is to provide a gain
potential at the median level of competitive practice as measured by a survey of
long-term incentive grant practices among major industrial companies. The number
of options actually granted is affected by individual performance against
performance plans and potential. As stock options are granted at 100% of the
fair market value of the Company's Common Stock on the grant date, the options
have no value unless the stock price appreciates in the future. Grants vest in
50% increments and are fully vested two years after the grant date. Vested
options may be exercised for cash or with shares of the Company's Common Stock.
Prior to December 1995, executive officers were granted stock appreciation
rights ("SARs") in conjunction with stock option grants.
In arriving at each individual's 1996 award, the Committee took into
consideration actual individual performance against the annual performance plans
previously described and forecast of potential.
- ---------------
(1) See note (1) on page 13.
14
<PAGE> 18
1996 CHIEF EXECUTIVE COMPENSATION
The compensation package of Mr. J.M. Richards consists of the same elements
as for the other officers named in the Summary Compensation Table, specifically
an annual base salary, participation in the annual incentive plan and
participation in the long-term incentive plan. In determining Mr. Richards' base
salary rate as Chairman and Chief Executive Officer, the Committee considered
chief executive officer pay information for approximately 25 forest and paper
products companies and over 200 general industry companies and the Company's
guidelines for all salaried employees, which resulted in a 3% increase to his
previous base salary rate. For 1996, Mr. Richards received an incentive award
under the Management Performance Award Plan of $284,700. This award reflected
the Company's ROE performance against the forest products industry,(1) as well
as Mr. Richards' performance against his performance plan. Although the
Company's ROE was above the average of the forest products industry, Mr.
Richards' award was reduced, as were the awards of all other participants, to
comply with the 4% pre-tax earnings limitation. During 1996, Mr. Richards was
awarded a grant of 39,350 stock options. In arriving at this award, the
Committee considered Mr. Richards' performance against his performance plan and
his potential.
THE EXECUTIVE COMPENSATION AND PERSONNEL POLICIES COMMITTEE MEMBERS
F.T. Weyerhaeuser, Chairman
R.M. Morrow
R.F. Richards
R.G. Schwartz
C.R. Weaver
W.T. Weyerhaeuser
- ---------------
(1) See note (1) on page 13.
15
<PAGE> 19
PERFORMANCE GRAPHS
FIVE-YEAR GRAPH
The following five-year graph shows the yearly change in the total return
on the Company's Common Stock as compared with the indicated indices for the
periods set forth. The total returns are determined based on the changes in the
prices of the common stocks and assume quarterly reinvestment of all dividends
based on an original investment of $100.
Cumulative Dollar Return
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Potlatch Corporation.......................... $ 100 $ 124 $ 131 $ 108 $ 121 $ 135
S&P Forest Products........................... 100 118 131 136 151 167
S&P 500 Composite............................. 100 108 119 121 168 206
</TABLE>
16
<PAGE> 20
TWENTY-SIX YEAR GRAPH
The Company believes long-term performance is also important to
stockholders. Accordingly, the following graph covering the past 26 years is
presented. The method of measuring performance is the same as that used in the
five-year graph except dividends are assumed to be reinvested annually instead
of quarterly. The Company selected the base period of 1970 because the S&P 500
return, the S&P Forest Products return and the Company's Common Stock return for
the first four years following that year were comparatively close. Therefore,
the base period selected has a smaller impact on the long-range returns.
Cumulative Dollar Return
COMPARISON OF TWENTY-SIX YEAR CUMULATIVE RETURN
AMONG POTLATCH CORPORATION, S&P FOREST PRODUCTS INDEX, AND S&P 500 INDEX
MEASUREMENT PERIOD POTLATCH S&P FOREST S&P 500
(FISCAL YEAR COVERED) CORPORATION PRODUCTS INDEX INDEX
1970 $ 100 $ 100 $ 100
1971 92 102 111
1972 99 118 134
1973 105 135 114
1974 103 100 83
1975 213 165 116
1976 307 216 144
1977 264 167 133
1978 281 166 141
1979 296 189 169
1980 386 237 225
1981 319 225 212
1982 410 263 222
1983 440 370 320
1984 352 389 340
1985 479 487 449
1986 750 650 533
1987 760 695 569
1988 859 750 656
1989 1,048 917 860
1990 862 837 833
1991 1,177 1,016 1,083
1992 1,460 1,198 1,163
1993 1,543 1,318 1,279
1994 1,271 1,374 1,295
1995 1,420 1,515 1,775
1996 1,586 1,673 2,178
17
<PAGE> 21
OTHER EMPLOYEE BENEFIT PLANS
Pension Plan Table
The table which follows shows a schedule of estimated annual pension
benefits to be payable under the Company's Salaried Employees' Retirement Plan
(the "Retirement Plan") and Supplemental Benefit Plan at normal retirement date
to a person having the average annual earnings and years of credited service
shown.
<TABLE>
<CAPTION>
AVERAGE YEARS OF CREDITED SERVICE
ANNUAL --------------------------------------------------------
EARNINGS 15 20 25 30 35
- ---------------------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 200,000............................... $ 42,802 $ 57,070 $ 71,337 $ 85,604 $ 99,872
400,000.............................. 87,802 117,070 146,337 175,604 204,872
600,000.............................. 132,802 177,070 221,337 265,604 309,872
800,000.............................. 177,802 237,070 296,337 355,604 414,872
1,000,000.............................. 222,802 297,070 371,337 445,604 519,872
1,200,000.............................. 267,802 357,070 446,337 535,604 624,872
</TABLE>
Under the Retirement Plan and the Supplemental Benefit Plan, final average
earnings are calculated using the highest 60 consecutive months of earnings
including overtime, bonuses under the Management Performance Award Plan and
other incentive payments (excluding stock option gains) paid or deferred after
1987, as reflected in the Summary Compensation Table for the last three years.
Bonuses are recognized in the year in which they are paid. The benefits of
participants who are required to retire at age 65 are calculated as if they
received a standard bonus under the Management Performance Award Plan during
each year after 1991 in their period of average annual earnings.
The years of service used in calculating retirement benefits for Messrs.
Richards, Siegel, Pottenger, Smrekar and Pfautsch are 32, 18, 29, 23 and 34,
respectively. The 1996 compensation (including an assumed standard bonus)
covered by the Retirement Plan and Supplemental Benefit Plan was: Mr. Richards
$809,156; Mr. Siegel $551,268; Mr. Pottenger $380,217; Mr. Smrekar $323,000; and
Mr. Pfautsch $296,783. Benefits under the plans are computed as straight-life
annuity amounts and are not subject to reduction by Social Security or other
benefits.
Severance Program for Executive Employees. Under the Severance Program for
Executive Employees, participants who are terminated for reasons other than
misconduct, resign within two years after a material change in compensation,
benefits, assigned duties, responsibilities, privileges or perquisites, or
resign rather than relocate at the Company's request, are entitled to receive
severance pay of up to 12 months' base salary and benefits for the same period
of time under the Company's medical, dental, accidental death and dismemberment
and life insurance plans. They also receive unused and accrued vacation pay.
Participants who are terminated or resign in the foregoing circumstances
following a change in control of the Company are entitled to receive severance
pay of up to 2 1/2 times their base salary plus standard bonus, benefits for up
to 2 1/2 years under the Company's medical, dental, disability, accidental death
and dismemberment and life insurance plans, unused and accrued vacation pay, and
the value of their unvested benefits, if any, in the Savings Plan, Retirement
Plan and Supplemental Benefit Plan; provided that the total amount of all
benefits governed by the excess parachute payment provisions of the Internal
Revenue Code is limited if the participant would thereby receive a higher net
after-tax benefit.
18
<PAGE> 22
A change in control of the Company occurs when the Company ceases to be an
independent publicly owned corporation, disposes of substantially all its
assets, ceases to survive because of a dissolution, liquidation, merger or
consolidation, undergoes a substantial change in the composition of its Board of
Directors, or has 20% or more of its Common Stock acquired pursuant to a tender
offer. All principal officers, appointed vice presidents and certain other
designated employees are eligible to participate in the program.
CERTAIN TRANSACTIONS
Pillsbury Madison & Sutro LLP, of which Ms. Rembe is a Partner, provides
legal services to the Company.
The Company purchases products from and has from time to time sold products
to Idaho Forest Industries, Inc., a corporation in which Mr. J.M. Richards has
an equity interest and of which Mr. Richards' brother, W. Thomas Richards, is
President and a director. In 1996 purchases by the Company from and sales to
Idaho Forest Industries, Inc. were approximately $6.1 million and $4.5 million,
respectively.
The Company and its subsidiaries engage in transactions from time to time
with several companies in which one of the Company's executive officers or
Directors or a member of his or her immediate family may have a direct or
indirect interest. All such transactions, including those described above, are
in the ordinary course of business and at competitive rates and prices.
Mr. F.T. Weyerhaeuser and Dr. W.T. Weyerhaeuser are first cousins.
STOCKHOLDER PROPOSAL (CUMULATIVE VOTING)
(PROPOSAL TWO ON THE PROXY CARD)
The Company has been notified that John H. Bradbury, 729 Preston Avenue,
Lewiston, ID 83501, who was the owner on January 1, 1997 of 663 shares of Common
Stock, intends to present the following proposal at the Annual Meeting:
Be it resolved that the Board of Directors ("Board") is hereby
requested to initiate amendments to the Restated Certificate of
Incorporation of Potlatch Corporation ("Company") to provide that in all
elections for directors each shareholder eligible to vote shall be entitled
to as many votes as shall equal the number of votes which the shareholder
would be entitled to cast for the election of directors with respect to the
shareholder's shares of stock, multiplied by the number of directors to be
elected, and each shareholder may cast all of such votes for a single
director or may distribute them among any two or more candidates for
director as the shareholder may see fit.
STOCKHOLDER'S SUPPORTING STATEMENT
This proposal would establish cumulative voting in the election of
directors. The Board of Directors of our Company has been dominated by insiders
for many years with mixed results. For example, shareholder return has been
subject to frequent ups and downs, and in 1994 dropped sharply to well below the
industry average.
The Company is soon to go through a major transition because seven of the
15 Board members will reach the age of 72 within the next five years, after
which our by-laws mandate they may no
19
<PAGE> 23
longer continue to serve as Board members after the end of that calendar year.
There is a danger that an insider-controlled process to replace the retiring
Board members would lead to stagnation of the corporate culture. I believe our
Company needs a new, forward-looking direction for the 21st century.
The election of directors is virtually the only opportunity shareholders
have to influence the management of their Company. I believe that cumulative
voting would provide shareholders with a greater voice in the election process.
This may result in a more diverse, more responsive, and more accountable Board,
and will allow the Company to optimize its performance in the coming century. I
urge your support for this proposal.
BOARD OF DIRECTORS' STATEMENT OPPOSING STOCKHOLDER PROPOSAL
The Board consists of a diverse group of individuals with varied
backgrounds. Contrary to the statement set forth in the proposal, during the
last 20 years, the Board has never had more than two employee Directors at any
one time.
Each Director has a fiduciary duty to serve all stockholders and not any
particular group. The Board of Directors believes that each Director should be
chosen for his or her qualifications to serve the Company and all of its
stockholders. Cumulative voting can enable, and in fact may encourage, a
relatively small special interest group to elect one or more Directors.
Directors so elected might be principally concerned with representing the
interests of the small faction of stockholders that elected them. Partisanship
among Directors and voting on behalf of special interests would interfere with
the effectiveness of the Board of Directors and would be contrary to the
interests of the Company and its stockholders as a whole.
The Board of Directors unanimously recommends a vote AGAINST this proposal.
Approval of Proposal Two does not require implementation of cumulative
voting. Under Delaware law, a proposed amendment of the Charter requires that it
be first approved by the Board of Directors and then approved by the
stockholders.
STOCKHOLDER PROPOSAL (CLASSIFIED BOARD)
(PROPOSAL THREE ON THE PROXY CARD)
The Company has been notified that Kenneth G. Zelinske, 2438 County Rd. 25
NE, Brainerd, MN 56401-7319, who was the owner on January 1, 1997 of 1,641
shares of Common Stock, intends to present the following proposal at the Annual
Meeting:
The Potlatch shareholders hereby resolve that the company's board of
directors is requested to initiate amendments to the Restated Certificate
of Incorporation to declassify the board so that all directors of the
company stand for election every year.
STOCKHOLDER'S SUPPORTING STATEMENT
Our company's board of directors is divided into three classes of directors
who serve staggered three-year terms. Only one-third of the board is elected at
each annual meeting.
I do not believe this system serves the shareholders well. If we eliminate
this staggered board, the shareholders would have the right to voice their
opinions on every director each year.
20
<PAGE> 24
If we as shareholders do not approve of the conduct of the board of
directors, we should have the right to replace the entire board every year.
Obviously, if the directors are doing a good job, we wouldn't vote them out.
I believe the current "classified" board just protects directors from the
shareholders, and does nothing to improve the company's profitability. It just
makes management less accountable to the company's owners -- the shareholders.
Please vote for this resolution.
BOARD OF DIRECTORS' STATEMENT OPPOSING STOCKHOLDER PROPOSAL
The Board of Directors believes that the election of Directors by classes
for three-year staggered terms encourages long-term versus short-term focus and
helps to assure continuity and stability of the Board and corporate policies.
When Directors are elected by classes, a change in the composition of a majority
of the Board normally requires at least two stockholder meetings, rather than
one. A classified Board serves to ensure that a majority of the Directors will
have prior experience with and in-depth knowledge of the Company, facilitating
planning for the Company's business. Board classification is further intended to
give the Company valuable protection against an unsolicited takeover unfavorable
to stockholders by giving incumbent Directors the time and leverage necessary to
negotiate a more favorable and fair result or to consider appropriate
alternative strategies.
The Board of Directors unanimously recommends a vote AGAINST this proposal.
Approval of Proposal Three does not require declassification of the Board.
Under Delaware law, a proposed amendment of the Charter requires that it be
first approved by the Board of Directors and then approved by the stockholders.
STOCKHOLDER PROPOSALS
To be considered for presentation at the 1998 Annual Meeting of the
Company's Stockholders, a stockholder proposal must be received at the offices
of the Company no later than November 28, 1997.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's Directors,
certain executive officers and any persons holding more than 10% of the Common
Stock are required to report their initial ownership of the Common Stock and any
subsequent changes in that ownership to the Securities and Exchange Commission.
Specific due dates for these reports have been established and the Company is
required to identify in this Proxy Statement those persons who failed to file
these reports when due. All of the filing requirements were satisfied in 1996.
In making this disclosure, the Company has relied solely on copies of the
reports that have been filed with the Securities and Exchange Commission and
written representations of its Directors and executive officers.
21
<PAGE> 25
OTHER MATTERS
The Company's By-Laws limit the business that may be brought before an
annual meeting of stockholders to matters included in the notice of meeting,
matters otherwise properly brought before the meeting by the Board of Directors
and matters brought before the meeting by a stockholder provided that notice of
such matter has been received by the Secretary of the Company not less than 30
days nor more than 60 days prior to the meeting. Management knows of no other
business which will be presented to this Annual Meeting. If any other business
is properly brought before this Annual Meeting, it is intended that proxies in
the enclosed form will be voted in respect thereof in accordance with the
judgment of the persons voting the proxies.
Whether you intend to be present at this Annual Meeting or not, you are
urged to return your proxy promptly.
By order of the Board of Directors
/s/ Betty R. Fleshman
BETTY R. FLESHMAN
Secretary
22
<PAGE> 26
SAN FRANCISCO, CALIFORNIA
DOWNTOWN MAP
PARK HYATT LOCATION
<PAGE> 27
LOGO
POTLATCH CORPORATION
One Maritime Plaza
PO Box 193591
San Francisco,
California 94119-3591
Telephone (415)
576-8800
March 26, 1997
Dear Bank, Broker or Nominee:
Under the Charter of Potlatch Corporation, stockholders who were the
beneficial owners of shares of Common Stock on the record date for the upcoming
meeting of stockholders and who have owned such shares continuously from and
including March 1, 1993 will be entitled to exercise four (4) votes per share
for each such share upon submitting acceptable evidence of beneficial ownership
to the Company. Also under the Charter, stockholders who own shares of Common
Stock in "street" or "nominee" name or through a broker, clearing agency, voting
trustee, bank, trust company or other nominee are presumed to be entitled to
exercise one (1) vote per share for each such share. To become entitled to four
(4) votes per share, a stockholder must provide written proof that there has
been no change in the beneficial ownership of his or her shares from and
including March 1, 1993. Such proof must consist of a written certification in
the form provided on the proxy card.
In certain circumstances, the Company may rely on your representation with
respect to the beneficial owners of shares of Common Stock of Potlatch
Corporation held in your name who are entitled to exercise four (4) votes per
share, provided that such beneficial owners have completed and returned to you
for your records written certifications in the form provided on the proxy card
as to their beneficial ownership and you have forwarded a summary of such voting
information on the summary proxy card on the reverse side of this letter to
Potlatch Corporation or its agent. HOWEVER, THE COMPANY UNCONDITIONALLY RESERVES
THE RIGHT TO REVIEW EACH AND EVERY WRITTEN CERTIFICATION ON ANY PROXY CARD
COMPLETED BY A BENEFICIAL OWNER OF SHARES OF COMMON STOCK OF POTLATCH
CORPORATION TO DETERMINE WHETHER SUCH BENEFICIAL OWNER IS ENTITLED TO EXERCISE
THE CLAIMED FOUR (4) VOTES PER SHARE.
Very truly yours,
/s/ Betty R. Fleshman
---------------------------
BETTY R. FLESHMAN
Secretary
<PAGE> 28
PROXY POTLATCH CORPORATION PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby authorizes JOHN M. RICHARDS, L. PENDLETON SIEGEL and
BETTY R. FLESHMAN, as Proxies with full power in each to act without the other
and with the power of substitution in each, to represent and to vote all the
shares of stock the undersigned is entitled to vote at the Annual Meeting of
Stockholders of Potlatch Corporation to be held on May 15, 1997, or at any
adjournment thereof.
<TABLE>
<CAPTION>
SHARES AS TO WHICH THERE SHARES AS TO WHICH THERE
HAS BEEN NO CHANGE IN HAS BEEN A CHANGE IN
BENEFICIAL OWNERSHIP SINCE MARCH 1, BENEFICIAL OWNERSHIP SINCE MARCH 1,
1993 1993
----------------------------------- -----------------------------------
(POST NUMBER OF SHARES (POST NUMBER OF SHARES
NOT NUMBER OF VOTES) NOT NUMBER OF VOTES)
FOR WITHHOLD FOR WITHHOLD
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
1. ELECTION OF FIVE DIRECTORS TO SERVE UNTIL
THE 2000 ANNUAL MEETING OF STOCKHOLDERS:
R.B. Madden
---------- shs. ---------- shs. ---------- shs. ---------- shs.
R.M. Morrow
---------- shs. ---------- shs. ---------- shs. ---------- shs.
J.M. Richards
---------- shs. ---------- shs. ---------- shs. ---------- shs.
R.F. Richards
---------- shs. ---------- shs. ---------- shs. ---------- shs.
F.T. Weyerhaeuser
---------- shs. ---------- shs. ---------- shs. ---------- shs.
</TABLE>
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
2. STOCKHOLDER PROPOSAL REQUESTING
ADOPTION OF CUMULATIVE VOTING.
------ shs. ------ shs. ------ shs. ------ shs. ------ shs. ------ shs.
3. STOCKHOLDER PROPOSAL REQUESTING
ELIMINATION OF CLASSIFIED BOARD OF
DIRECTORS.
------ shs. ------ shs. ------ shs. ------ shs. ------ shs. ------ shs.
Post only record position. Do not tabulate votes.
</TABLE>
4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF THE
FIVE DIRECTORS AND AGAINST PROPOSALS 2 AND 3.
THIS PROXY WILL BE VOTED AS DIRECTED BUT IF NOT OTHERWISE DIRECTED, FOR THE
ELECTION OF THE FIVE DIRECTORS AND AGAINST PROPOSALS 2 AND 3.
If the summary voting table above is not completed, it will be deemed for
purposes of this proxy that there has been a change in the beneficial ownership
of all Common Shares covered hereby subsequent to March 1, 1993.
Dated: , 1997
--------------------------------
--------------------------------
--------------------------------
(Sign name exactly as imprinted
hereon. In signing as attorney,
executor, administrator, trustee
or guardian, give full title as
such. If signer is a
corporation, give full corporate
name and sign by duly authorized
officer, showing the officer's
title.)
PLEASE DATE, SIGN AND RETURN
<PAGE> 29
PROXY POTLATCH CORPORATION PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby authorizes JOHN M. RICHARDS, L. PENDLETON SIEGEL and
BETTY R. FLESHMAN, as Proxies with full power in each to act without the other
and with the power of substitution in each, to represent and to vote all the
shares of stock the undersigned is entitled to vote at the Annual Meeting of
Stockholders of Potlatch Corporation to be held on May 15, 1997, or at any
adjournment thereof.
1. ELECTION OF FIVE DIRECTORS TO SERVE UNTIL THE 2000 ANNUAL MEETING OF
STOCKHOLDERS:
<TABLE>
<S> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote
(except as marked to the contrary below) for all nominees listed below
</TABLE>
Richard B. Madden, Richard M. Morrow, John M. Richards, Reuben F. Richards,
Frederick T. Weyerhaeuser
(INSTRUCTION:To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
-------------------------------------------------------------------
2. STOCKHOLDER PROPOSAL REQUESTING ADOPTION OF CUMULATIVE VOTING:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. STOCKHOLDER PROPOSAL REQUESTING ELIMINATION OF CLASSIFIED BOARD OF
DIRECTORS:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF
THE FIVE DIRECTORS AND AGAINST PROPOSALS 2 AND 3.
(Continued and to be signed on other side)
<PAGE> 30
(Continued from other side)
THIS PROXY WILL BE VOTED AS DIRECTED BUT IF NOT OTHERWISE DIRECTED, FOR THE
ELECTION OF THE FIVE DIRECTORS AND AGAINST PROPOSALS 2 AND 3.
By signing below, the undersigned certifies that:
(i) there has been NO change in the beneficial ownership of shares
of Common Stock covered hereby from and including March 1, 1993; and
(ii) there has been a change in the beneficial ownership (such as a
purchase) of shares of Common Stock since that date.
If no certification is made, it will be deemed for purposes of this proxy that
there has been a change in the beneficial ownership of all shares of Common
Stock covered hereby subsequent to March 1, 1993.
<TABLE>
<C> <S>
DATED: ,1997
=============================================
(SIGN NAME EXACTLY AS IMPRINTED HEREON. FOR
JOINT ACCOUNTS, BOTH OWNERS SHOULD SIGN. IN
SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, GIVE FULL TITLE AS SUCH.
IF SIGNER IS A CORPORATION, GIVE FULL
CORPORATE NAME AND SIGN BY DULY AUTHORIZED
PLEASE DATE, SIGN AND RETURN OFFICER, SHOWING THE OFFICER'S TITLE.)
</TABLE>
<PAGE> 31
PUTNAM FIDUCIARY TRUST COMPANY, TRUSTEE:
POTLATCH CORPORATION
SALARIED EMPLOYEES' SAVINGS PLAN
CONFIDENTIAL VOTING INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
You are authorized and instructed to vote all stock in my Accounts under the
Potlatch Corporation Salaried Employees' Savings Plan at the Annual Meeting of
Stockholders of Potlatch Corporation to be held on May 15, 1997, or at any
adjournment thereof.
1. ELECTION OF FIVE DIRECTORS TO SERVE UNTIL THE 2000 ANNUAL MEETING OF
STOCKHOLDERS:
<TABLE>
<S> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote
(except as marked to the contrary below) for all nominees listed below
</TABLE>
Richard B. Madden, Richard M. Morrow, John M. Richards, Reuben F. Richards,
Frederick T. Weyerhaeuser
(INSTRUCTION:To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
-------------------------------------------------------------------
2. STOCKHOLDER PROPOSAL REQUESTING ADOPTION OF CUMULATIVE VOTING:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. STOCKHOLDER PROPOSAL REQUESTING ELIMINATION OF CLASSIFIED BOARD OF
DIRECTORS:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. ON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE SAID MEETING.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF THE
FIVE DIRECTORS AND AGAINST PROPOSALS 2 AND 3.
(Continued and to be signed on other side)
<PAGE> 32
POTLATCH CORPORATION
SALARIED EMPLOYEES' SAVINGS PLAN
CONFIDENTIAL VOTING INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PLEASE MARK YOUR VOTING INSTRUCTIONS ON THE REVERSE SIDE OF THIS CARD. YOUR
SHARES WILL BE VOTED AS DIRECTED, BUT IF NOT OTHERWISE DIRECTED, FOR THE
ELECTION OF THE FIVE DIRECTORS AND AGAINST PROPOSALS 2 AND 3. IF YOU DO NOT
RETURN THIS CARD, THE TRUSTEE MUST VOTE YOUR PLAN SHARES IN THE SAME PROPORTION
AS VOTED BY OTHER PLAN PARTICIPANTS.
------------------------------------
(PLEASE SIGN EXACTLY AS NAME APPEARS
TO THE LEFT)
Dated: ________, 1997
<PAGE> 33
PUTNAM FIDUCIARY TRUST COMPANY, TRUSTEE:
POTLATCH CORPORATION
SAVINGS PLAN FOR HOURLY EMPLOYEES
CONFIDENTIAL VOTING INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
You are authorized and instructed to vote all stock in my Accounts under the
Potlatch Corporation Savings Plan for Hourly Employees at the Annual Meeting of
Stockholders of Potlatch Corporation to be held on May 15, 1997, or at any
adjournment thereof.
1. ELECTION OF FIVE DIRECTORS TO SERVE UNTIL THE 2000 ANNUAL MEETING OF
STOCKHOLDERS:
<TABLE>
<S> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote
(except as marked to the contrary below) for all nominees listed below
</TABLE>
Richard B. Madden, Richard M. Morrow, John M. Richards, Reuben F. Richards,
Frederick T. Weyerhaeuser
(INSTRUCTION:To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
-------------------------------------------------------------------
2. STOCKHOLDER PROPOSAL REQUESTING ADOPTION OF CUMULATIVE VOTING:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. STOCKHOLDER PROPOSAL REQUESTING ELIMINATION OF CLASSIFIED BOARD OF
DIRECTORS:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. ON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE SAID MEETING.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF
THE FIVE DIRECTORS AND AGAINST PROPOSALS 2 AND 3.
(Continued and to be signed on other side)
<PAGE> 34
POTLATCH CORPORATION
SAVINGS PLAN FOR HOURLY EMPLOYEES
CONFIDENTIAL VOTING INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PLEASE MARK YOUR VOTING INSTRUCTIONS ON THE REVERSE SIDE OF THIS CARD. YOUR
SHARES WILL BE VOTED AS DIRECTED, BUT IF NOT OTHERWISE DIRECTED, FOR THE
ELECTION OF THE FIVE DIRECTORS AND AGAINST PROPOSALS 2 AND 3. IF YOU DO NOT
RETURN THIS CARD, THE TRUSTEE MUST VOTE YOUR PLAN SHARES IN THE SAME PROPORTION
AS VOTED BY OTHER PLAN PARTICIPANTS.
------------------------------------
(PLEASE SIGN EXACTLY AS NAME APPEARS
TO THE LEFT)
Dated: ______, 1997
<PAGE> 35
PROXY PROXY
POTLATCH CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 15, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby authorizes JOHN M. RICHARDS, L. PENDLETON SIEGEL
and BETTY R. FLESHMAN as Proxies with full power in each to act without the
other and with the power of substitution in each, to represent and to vote all
the shares of stock the undersigned is entitled to vote at the Annual Meeting
of Stockholders of Potlatch Corporation to be held on May 15, 1997, or at any
adjournment thereof.
IMPORTANT -- THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.
<PAGE> 36
POTLATCH CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [x]
[ ]
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF THE
FIVE DIRECTORS AND AGAINST PROPOSALS 2 AND 3.
1. Election of five Directors to serve until the 2000 Annual Meeting of
Stockholders -- Nominees: Richard B. Madden, Richard M. Morrow, John M.
Richards, Reuben F. Richards, Frederick T. Weyerhaeuser.
FOR ALL WITHHOLD ALL FOR ALL (Except as written below)
[ ] [ ] [ ]
-----------------------------------------------------------
2. Stockholder Proposal Requesting Adoption of Cumulative Voting.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Stockholder Proposal Requesting Elimination of Classified Board of
Directors.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WILL BE VOTED AS DIRECTED BUT IF NOT OTHERWISE DIRECTED, FOR THE
ELECTION OF THE FIVE DIRECTORS AND AGAINST PROPOSALS 2 AND 3.
Dated: , 1997
------------------------------
------------------------------------------
Signature
------------------------------------------
Signature
(Sign name exactly as imprinted hereon. For
joint accounts, both owners should sign. In
signing as attorney, executor, administrator,
trustee or guardian, give full title as such. If
signer is a corporation, give full corporate
name and sign by duly authorized officer,
showing the officer's title.)
<PAGE> 37
[PUTNAM INVESTMENTS LETTERHEAD]
March 31, 1997
Dear Participant of the Potlatch Savings Plan:
The Board of Directors of Potlatch Corporation is soliciting proxies to be used
at the Annual Meeting of Stockholders to be held on May 15, 1997 and any
adjournment thereof. Enclosed are Potlatch Corporation's Proxy Statement for
its 1997 Annual Meeting of Stockholders and a card on which you can indicate
your voting instructions.
The stock in your account under the Savings Plan is held by us as Trustee.
Please see the enclosed Confidential Voting Card for details on how your shares
will be voted. In accordance with the time-phased voting provision of Potlatch
Corporation's Restated Certificate of Incorporation, you are entitled to four
votes for each share in your account on the matters to be voted upon at this
year's Annual Meeting. The matters to be presented at the meeting are described
in detail in the attached Notice of Meeting and Proxy Statement.
Please mark your voting instructions on the enclosed card and date, sign and
return this card in the enclosed envelope. Your vote will be held in confidence.
Very Truly Yours,
Putnam Fiduciary Trust Company
