<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
GAYLORD CONTAINER CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
GAYLORD CONTAINER CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(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
[GAYLORD LOGO]
GAYLORD CONTAINER CORPORATION
PROXY STATEMENT
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
FEBRUARY 10, 1999
We cordially invite you to attend the 1999 annual meeting of stockholders
("Annual Meeting") of Gaylord Container Corporation ("Company") which will be
held on Wednesday, February 10, 1999 at 10:00 a.m. Chicago time at 520 Lake Cook
Road, Deerfield, Illinois 60015 to:
1. Elect 10 directors of the Company to serve for terms commencing with the
Annual Meeting;
2. Ratify the appointment of Deloitte & Touche LLP as the Company's
independent auditors; and
3. Transact such other business as may properly come before the meeting.
December 14, 1998 is the record date for determining the stockholders
entitled to notice of, and to vote at, the Annual Meeting. Any stockholder may
examine a list of the record holders for any purpose germane to the meeting
during normal business hours at the Company's corporate headquarters, 500 Lake
Cook Road, Suite 400, Deerfield, Illinois 60015, beginning on January 31, 1999.
We want your shares to be represented at the meeting regardless of the size
of your holdings. Whether or not you plan to attend the Annual Meeting, please
mark, date and sign the enclosed proxy card. The enclosed envelope, if mailed in
the United States, requires no postage. You may also vote by telephone or via
the Internet by following the enclosed instructions. Your proxy is revocable at
any time before it is voted. If you are present at the meeting you may withdraw
your proxy and vote in person, if you so desire.
David F. Tanaka
Secretary
Deerfield, Illinois
December 30, 1998
PLEASE MARK, DATE AND SIGN THE ENCLOSED PROXY CARD
AND RETURN IT PROMPTLY. THE PROXY IS REVOCABLE AT ANY
TIME BEFORE IT IS VOTED.
<PAGE> 3
GAYLORD CONTAINER CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 10, 1999
TIME AND LOCATION OF ANNUAL MEETING
The 1999 annual meeting of stockholders (the "Annual Meeting") of Gaylord
Container Corporation, a Delaware corporation (the "Company"), will be held at
10:00 a.m. Chicago time on Wednesday, February 10, 1999 at 520 Lake Cook Road,
Deerfield, Illinois 60015.
RECORD DATE; PURPOSE AND SOLICITATION OF PROXIES
Only stockholders of record as of the close of business on December 14,
1998 (the "Record Date") will be entitled to notice of, and to vote at, the
Annual Meeting. This proxy statement ("Proxy Statement") and the enclosed proxy
card are being mailed on December 30, 1998 to the holders of Class A Common
Stock ("Common Stock"). The Board of Directors ("Board of Directors" or "Board")
is soliciting your proxy for use at the Annual Meeting and at any adjournment of
the meeting. This solicitation is for election of directors to serve on the
Board and ratification of the appointment of the Company's independent auditors.
The details of each of these proposals are described below.
VOTING AND REVOCATION OF PROXIES
Proxies properly executed and returned will be voted at the Annual Meeting
in accordance with the directions noted. If there is no direction, proxies will
be voted in favor of each of the proposals outlined below and at the discretion
of the proxy holders on all other business as may properly be brought before the
Annual Meeting or any adjournment. A stockholder may revoke his or her proxy
before it is voted either in person at the Annual Meeting, by written notice to
the Company's Secretary delivered before the Annual Meeting or by delivery to
the Company's Secretary before the Annual Meeting of a properly executed
subsequent proxy.
Under Delaware law, abstentions are treated as present and entitled to vote
and thus have the effect of a vote against a matter. Shares registered in the
names of brokers or other "street name" nominees for whom proxies are voted on
some but not all matters will be considered voted only on those matters actually
voted. They will not be considered for any purpose on the matters for which a
beneficial holder has not provided specific voting instructions. The latter are
commonly called "broker non-votes".
OUTSTANDING SHARES AND VOTING RIGHTS
Each holder of the Company's Common Stock outstanding represented in person
or by proxy has one vote per share. Mid-America Group, Ltd. ("MAG") beneficially
owns less than nine percent and the Company's executive officers and directors,
as a group, including the shares owned by MAG, beneficially own or control less
than 16% percent of the Common Stock.
In connection with the Company's November 1992 financial restructuring, the
Company issued warrants to obtain Common Stock ("Warrants") and shares of Common
Stock ("Trust Stock") that may be obtained when the Warrants are exercised. A
trustee ("Warrant Trustee") holds the Trust Stock for the benefit of the holders
of the warrants, pending any exercise, or for the benefit of the Company,
pending any redemption or exchange of the warrants.
In connection with this proxy solicitation, the Warrant Trustee has
appointed the Secretary of the Company as its proxy to vote all shares of Trust
Stock held by the Warrant Trustee in proportion to all other votes by holders of
Common Stock.
1
<PAGE> 4
As of the Record Date, there were outstanding 53,339,282 shares of Common
Stock, including 1,758,139 shares of Trust Stock held by the Warrant Trustee,
and 1,758,139 Warrants to obtain shares of Common Stock. See "Information With
Respect To Certain Stockholders" below.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board is currently composed of 10 directors, all of whom, with the
exception of Jerry W. Kolb, have served as directors since the 1998 Annual
Meeting of Stockholders. Mr. Kolb was elected to the Board in August 1998. If
elected, each of the 10 directors will hold office until the next annual meeting
of stockholders, and until a successor shall have been duly elected and
qualified. All of the Director Nominees were recommended to the Board of
Directors by the Nominating and Organizational Planning Committee. Unless
otherwise instructed, signed proxies that are returned will be voted for
election of all of the Director Nominees. If any Director Nominee becomes unable
or unwilling to serve, the proxies will be voted in the discretion of the proxy
holders.
DIRECTOR NOMINEES FOR ELECTION AT THE 1999 ANNUAL MEETING
MARY SUE COLEMAN. Ms. Coleman has served as a director of the Company since
August 1996. Since 1995, she has served as President and Professor of
Biochemistry and Biological Sciences at the University of Iowa. She served from
1993 to 1995 as Provost and Vice President for Academic Affairs and Professor of
Biochemistry at the University of New Mexico and from 1992 to 1993 as Vice
Chancellor for Graduate Studies and Research at the University of North Carolina
at Chapel Hill. She serves on the board of directors of Meredith Corporation, a
publishing and television broadcasting company, and Norwest Bank Iowa, N.A. and
on the Board of Trustees of Grinnell (Iowa) College. Member, Audit Committee and
Nominating and Organizational Planning Committee. Age 55.
HARVE A. FERRILL. Mr. Ferrill has served as a director of the Company since
November 1992. He has served as Chief Executive Officer of Advance Ross
Corporation ("Advance Ross"), a wholly owned subsidiary of CUC International,
Inc., a membership services company, since 1996. He previously served as
Chairman or President and Chief Executive Officer of Advance Ross since 1990.
Advance Ross' primary business is Europe Tax-Free Shopping AB, the world's
largest refunder of value-added taxes. Advance Ross also operates PPC
Industries, which designs, manufacturers and installs electrostatic
precipitators for industrial pollution control applications. He has served as
Chairman of the board of directors of GeoWaste Incorporated, a publicly traded
waste management company, since 1991 and as President of Ferrill-Plauche Co.,
Inc., a private investment company, since 1982. Chairman, Audit Committee;
member, Compensation and Stock Option Committee. Age 65.
JOHN E. GOODENOW. Mr. Goodenow has served as a director of the Company
since November 1992. He is Chairman of the Board of Goodenow Bancorporation
where he served from 1979 to 1995 as President, Chief Executive Officer and a
director. Mr. Goodenow also serves as a director of Bank Midwest (Okoboji, Iowa)
and Bank Midwest (Fairmont, Minnesota), each a private banking corporation.
Member, Audit Committee and Compensation and Stock Option Committee. Age 63.
DAVID B. HAWKINS. Mr. Hawkins has served as a director of the Company since
November 1986. He currently serves as President of Coldwell Banker/Mid-America
Group Realtors and Vice Chairman and a director of MAG, a real estate investment
company. He served as President or Executive Vice President and a director of
MAG from 1977 to 1993. Member, Nominating and Organizational Planning Committee.
Age 64.
WARREN J. HAYFORD. Mr. Hayford served as President, Chief Operating Officer
and a director of the Company from its organization in 1986 through August 1988
and served as Vice Chairman and a director from that time until his retirement
as Vice Chairman effective December 31, 1992. He continues to serve as a
director. Mr. Hayford has served as Chairman, Chief Executive Officer and a
director of BWAY Corporation (formerly Brockway, Inc.), a manufacturer of metal
containers, since its formation in 1989. Mr. Hayford
2
<PAGE> 5
served from 1989 to 1996 as a director of System Software Associates, Inc., a
developer and marketer of business application software packages. Chairman,
Nominating and Organizational Planning Committee. Age 69.
CHARLES S. JOHNSON. Mr. Johnson has served as a director of the Company
since August 1997. He is Chairman, President and Chief Executive Officer of
Pioneer Hi-Bred International, Inc., an agricultural biotech company, where he
has held increasingly responsible positions since 1965. He serves on the board
of directors of the National Association of Manufacturers, the Progressive
Policy Institute, the National Policy Association and the Principal Financial
Group. He also serves as Chairman of Grand View (Iowa) College and is the former
Chairman of the Des Moines Chamber of Commerce. Member, Audit Committee and
Nominating and Organizational Planning Committee. Age 60.
JERRY W. KOLB. Mr. Kolb has served as a director of the Company since
August 1998. Until his retirement in May 1998, he was Vice Chairman of Deloitte
& Touche LLP, an international public accounting and consulting firm. He joined
the accounting firm in 1957 and served as managing partner of the Chicago office
and as Chief Financial and Administrative Officer, as well as Vice Chairman. Mr.
Kolb has been a member of the supervisory board of directors of New Skies
Satellites, N.V., a commercial satellite communications company incorporated in
the Netherlands, since 1998. Age 63.
RALPH L. MacDONALD JR. Mr. MacDonald has served as a director of the
Company since May 1994. Mr. MacDonald is a principal of Amelia Investment Corp.,
a private investment company. Prior thereto, he was a principal of Island
Capital Corporation ("Island Capital"), a private investment company. He was
formerly Managing Director-Corporate Finance and a member of the Management
Committee of Bankers Trust Company and its parent, Bankers Trust New York
Corporation, which he joined in 1964 and served in various capacities until his
resignation in March 1992 to co-found Island Capital. Mr. MacDonald also serves
as a director of Hercules, Inc., a specialty chemical concern. Chairman,
Compensation and Stock Option Committee; member, Audit Committee. Age 56.
MARVIN A. POMERANTZ. Mr. Pomerantz has served as Chairman, Chief Executive
Officer and a director of the Company since its organization in 1986. Since
1980, Mr. Pomerantz has served as Chairman or President and a director of MAG.
Mr. Pomerantz formerly served as President of the Board of Regents for the state
universities in Iowa and formerly served on the board of directors of Stone
Container Corporation, a manufacturer of packaging products. He has served on
the board of directors of Wellmark Blue Cross and Blue Shield of Iowa since May
1998 and Norwest Bank Iowa, N.A. since January 1975. He currently serves on the
board of directors of the American Forest & Paper Association. Age 68.
THOMAS H. STONER. Mr. Stoner has served as a director of the Company since
February 1993. He is a director and Chairman of the Executive Committee of
American Tower Corporation, owner and operator of broadcast and wireless
communications towers. He served from 1993 to 1998 as Chairman of the Executive
Committee of American Radio Systems and from 1965 to 1993 as Chairman and Chief
Executive Officer of Stoner Broadcasting Systems, Inc., a private broadcast
communications company that merged with American Radio Systems in 1993. From
1994 to 1998, he was Chairman of Chesapeake Bay Foundation, a charitable
foundation, where he continues to serve on the Board of Trustees. From 1965 to
1991 he served as Chairman of the Stoner McCray Systems, Inc., a privately owned
real estate development company, and from 1985 to 1989 he served as director of
Annapolis Banking and Trust Company, an affiliate of Mercantile Bankshares
Corporation, a publicly traded banking company. Member, Nominating and
Organizational Planning Committee. Age 63.
REQUIRED VOTE
Election of each Director Nominee requires the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock present and
entitled to vote at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH DIRECTOR NOMINEE.
3
<PAGE> 6
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors held five meetings during fiscal 1998 and the
various committees of the Board held a total of eight meetings. During fiscal
1998, each Board member attended at least 75 percent of the meetings of the
Board and meetings of the committees of which he or she is a member, except for
Mr. Ferrill, who attended seven of 10 meetings.
Directors who are not current employees of the Company ("Outside
Directors") receive an annual fee of $35,000 ($26,000, prior to April 1998) and
an annual fee of $5,000 for each committee chaired. An attendance fee of $1,000
for each meeting of the Board or committee was discontinued in April 1998. In
April 1998, each Outside Director also received an option under the 1997 Long
Term Equity Incentive Plan ("1997 Plan") to purchase 7,000 shares of Common
Stock at an exercise price of $9.06, the then fair market value. The option
vests ratably over three years. During fiscal 1998, no director fees were paid
to Mr. Pomerantz. All directors are reimbursed for expenses incurred as a
director.
Outside Directors may elect to defer all cash fees payable for service on
the Board until they cease to be directors or file written revocation of their
election. Deferred fees may accrue (i) interest at 300 basis points over the
six-month U.S. Treasury bill rate in effect at the beginning of each fiscal year
("Option A"); or (ii) gain or loss as if deferred fees were used to acquire
Common Stock at a 15 percent discount from the closing price at the beginning of
each fiscal year ("Option B"). Messrs. Ferrill, Goodenow, Hawkins and MacDonald
have elected to defer fees, all under Option B.
The Board has formed certain committees, including a Compensation and Stock
Option Committee ("Compensation Committee"), an Audit Committee and a Nominating
and Organizational Planning Committee ("Nominating Committee").
The Compensation Committee establishes and maintains employee benefit
programs, plans and trusts, including incentive compensation programs. It also
administers and approves grants of stock-based awards under the Company's 1989
Long Term Incentive Plan ("1989 Plan") and the 1997 Plan. The Compensation
Committee met three times in fiscal 1998.
The Audit Committee recommends to the full Board selection of the Company's
independent auditors, reviews the scope of the independent auditors' work and
meets with the independent auditors, internal auditors, and certain officers and
employees of the Company to review the adequacy of internal controls. The Audit
Committee held two meetings in fiscal 1998.
The Nominating Committee recommends candidates for election to the Board or
to fill vacancies on the Board, reviews the performance of Board members and
establishes and reviews a plan of succession for the Company's Chief Executive
Officer and other senior managers. The Nominating Committee met three times in
fiscal 1998. The Nominating Committee will consider a director nominee
recommended by a stockholder, if written notice of recommendation is delivered
by registered mail to the Secretary of the Company not less than 90 days nor
more than 120 days before a meeting of stockholders at which directors are to be
elected. A recommendation must be accompanied by a comprehensive written resume
of the recommended nominee's business experience and background and a signed,
written consent by the recommended nominee, showing his or her interest in
serving as a director. Such a recommendation by a stockholder does not guarantee
that the Nominating Committee will propose any such nominee to the Board.
PROPOSAL 2
INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee has recommended and the Board has selected Deloitte &
Touche LLP to act as the Company's independent auditors. Deloitte & Touche LLP
served as the Company's auditors for the 1998 fiscal year. Representatives of
Deloitte & Touche LLP will attend the 1999 Annual Meeting. They will have the
opportunity to make a statement, if they desire to do so, and will be available
to respond to appropriate questions.
4
<PAGE> 7
REQUIRED VOTE
Ratification of the selection of Deloitte & Touche LLP requires the
affirmative vote of the holders of a majority of the outstanding shares of
Common Stock present and entitled to vote at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2.
STOCK OWNERSHIP
The following table shows beneficial ownership of the Company's Common
Stock and warrants to obtain Common Stock as of December 14, 1998 by (i) each
holder known by the Company to own beneficially more than 5 percent of the
outstanding Common Stock, (ii) each director and executive officer of the
Company and (iii) all officers and directors of the Company as a group. The
numbers and percentages of Common Stock include Trust Stock held by the Warrant
Trustee. To the knowledge of the Company, each stockholder has sole voting and
investment power as to the shares owned unless otherwise noted. The address of
all directors and executive officers is the address of the Company.
<TABLE>
<CAPTION>
WARRANTS TO OBTAIN
COMMON STOCK COMMON STOCK
------------------------ --------------------------
NUMBER PERCENT OF NUMBER PERCENT OF
OF SHARES OUTSTANDING* OF WARRANTS OUTSTANDING*
--------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Schneider Capital Management(1).................. 6,339,800 11.6 0 --
460 E. Swedesford Rd., Suite 1080
Wayne, PA 19087
Marvin A. Pomerantz and MAG(2)................... 4,629,942 8.5 0 --
4700 Westown Parkway
West Des Moines, IA 50625
M. D. Sass Associates and........................ 3,076,113 5.6 0 --
M. D. Sass Investors Services, Inc.(3)
1185 Avenue of the Americas
New York, NY 10036
Warren J. Hayford(4)............................. 1,797,868 3.3 0 --
Mary Sue Coleman................................. 3,008 -- 0 --
Harve A. Ferrill................................. 25,000 -- 0 --
John E. Goodenow(5).............................. 44,000 -- 0 --
David B. Hawkins(6).............................. 26,200 -- 0 --
Charles S. Johnson............................... 0 -- 0 --
Jerry W. Kolb.................................... 10,000 -- 0
Ralph L. MacDonald Jr............................ 40,000 -- 0 --
Thomas H. Stoner................................. 16,200 -- 0 --
Dale E. Stahl.................................... 550,048 1.0 0 --
Daniel P. Casey(7)............................... 401,510 -- 0 --
Lawrence G. Rogna(8)............................. 263,700 -- 0 --
All officers and directors as a group (20
persons)(9).................................... 8,217,363 15.1 0 --
</TABLE>
- ---------------
* Percentages less than 1 percent have been omitted.
(1) The shares shown as beneficially owned by Schneider Capital Management
Corporation ("Schneider Capital") are based on a Schedule 13G filed on
September 30, 1998. Schneider Capital has sole power to vote or direct the
vote of 1,315,300 and sole power to dispose or direct the disposition of
6,339,800 shares.
(2) MAG is owned by Mr. Pomerantz, his wife and trusts for the benefit of their
children. Mr. Pomerantz does not own directly any of these shares except for
40,000 shares held in his own name. Mr. Pomerantz disclaims beneficial
ownership of shares held by MAG and attributable to his wife and the trusts.
5
<PAGE> 8
(3) The shares shown as beneficially owned by M. D. Sass Associates, Inc. and M.
D. Sass Investors Services, Inc. (collectively "M. D. Sass") are based on a
Schedule 13G filed on February 3, 1997.
(4) The shares shown as beneficially owned by Mr. Hayford include 305,686 shares
owned directly by trusts for the benefit of his children and grandchildren,
218,496 owned directly by his wife and 50,000 owned directly by a charitable
family foundation. Mr. Hayford disclaims beneficial ownership of shares held
by the trusts, his wife and the foundation.
(5) The shares shown as beneficially owned by Mr. Goodenow include 1,000 owned
directly by his wife and 20,000 owned directly by Goodenow Bancorporation, a
family-owned corporation. Mr. Goodenow disclaims beneficial ownership of
such shares.
(6) Mr. Hawkins owns options to purchase 24,200 shares of the Company's Common
Stock granted under the Company's Outside Director Stock Option Plan.
Although none of the options have been exercised, the shares shown as
beneficially owned by Mr. Hawkins include all such options, because they all
are currently exercisable.
(7) The shares shown as beneficially owned by Mr. Casey include 12,360 owned
directly by his wife and 28,500 owned directly by his children. Mr. Casey
disclaims beneficial ownership of such shares.
(8) The shares shown as beneficially owned by Mr. Rogna include 3,000 owned
directly by his wife and 40,000 owned directly by a trust. Mr. Rogna
disclaims beneficial ownership of such shares.
(9) The number and percentage of shares owned by the named individuals and group
include 1,187,669 shares subject to stock options exercisable currently or
within 60 days of December 14, 1998.
The following table shows compensation of the Company's chief executive
officer and the Company's other executive officers (the "named executive
officers") earned for the fiscal years ended September 30, 1998, 1997 and 1996:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
RESTRICTED
OTHER ANNUAL STOCK LTIP ALL OTHER
NAME AND FISCAL SALARY BONUS COMPENSATION AWARDS OPTIONS/ PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) ($) SARS(#) ($) ($)(1)(2)
------------------ ------ ------- ------- ------------ ---------- -------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Marvin A. Pomerantz....... 1998 764,400 0 0 0 300,000 0 21,600
(Chairman and Chief 1997 712,500 0 0 0 0 0 53,500
Executive Officer) 1996 600,000 0 0 0 0 0 202,600
Dale E. Stahl............. 1998 409,400 0 0 0 333,400 0 11,400
(President and Chief 1997 389,400 0 0 0 0 0 40,100
Operating Officer) 1996 368,100 208,000 0 0 0 0 115,700
Daniel P. Casey........... 1998 375,600 0 0 0 333,400 10,500
(Executive Vice 1997 360,600 0 0 0 0 0 38,400
President) 1996 344,400 208,000 0 0 0 0 112,400
Lawrence G. Rogna(3)...... 1998 253,400 0 0 0 166,700 0 6,900
(Senior Vice President) 1997 241,900 0 0 0 0 0 74,400
1996 230,900 125,000 0 0 0 0 114,000
</TABLE>
- ---------------
(1) Includes for each of 1996, 1997 and 1998 employer contributions to the
Company's 401(k) Plan on behalf of Messrs. Pomerantz, Stahl, Casey and
Rogna, of $4,500, $4,500 and $4,800, respectively.
(2) Includes for 1996, 1997 and 1998 cash payments in lieu of Company
contributions which could not be made because of Internal Revenue Code
limitations to Messrs. Pomerantz, Stahl, Casey and Rogna of $198,100,
$49,000 and $16,800; $111,200, $35,600 and $6,600; $107,900, $33,900 and
$5,700; and $53,700, $16,900 and $2,100, respectively. Beginning in 1995,
calculation of the payment was made on a calendar rather than fiscal year
basis. Amounts paid for calendar 1995 are included in fiscal 1996
compensation.
(3) Includes for 1996 and 1997 principal and interest on a relocation loan that
was forgiven of $55,800 and $53,000, respectively.
6
<PAGE> 9
The following table shows stock options granted to the named executive
officers in fiscal 1998:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- ----------------------------------------------------------------------------------------
PERCENT OF POTENTIAL REALIZABLE
NUMBER OF TOTAL VALUE AT ASSUMED ANNUAL
SECURITIES OPTIONS RATES OF STOCK PRICE
UNDERLYING GRANTED TO EXERCISE OR APPRECIATION FOR OPTION
OPTIONS EMPLOYEES BASE PRICE TERM
GRANTED IN FISCAL ($/SHARE) EXPIRATION ------------------------
NAME (#)(1) YEAR (2) DATE 5%($) 10%($)
---- ---------- ---------- ----------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Marvin A. Pomerantz............ 300,000 18.55 8.85 01/14/08 1,671,000 4,230,000
Dale E. Stahl.................. 213,400 13.20 8.85 01/14/08 1,188,600 3,008,900
Dale E. Stahl.................. 120,000 7.42 7.00 11/10/07 528,000 1,339,200
Daniel P. Casey................ 213,400 13.20 8.85 01/14/08 1,188,600 3,008,900
Daniel P. Casey................ 120,000 7.42 7.00 11/10/07 528,000 1,339,200
Lawrence G. Rogna.............. 106,700 6.60 8.85 01/14/08 594,300 1,504,400
Lawrence G. Rogna.............. 60,000 3.71 7.00 11/10/07 264,000 669,600
</TABLE>
- ---------------
(1) All options have ten-year terms.
(2) Options granted to Messrs. Stahl, Casey and Rogna at an exercise price of
$8.85 are immediately exercisable. All other options become exercisable at
the rate of 33 1/3% per year.
The following table shows exercise of options by the named executive
officers in fiscal 1998 and the value of options held by the named executive
officers at the end of fiscal 1998:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS
FISCAL YEAR-END(#) AT FISCAL YEAR-END($)
--------------------- ---------------------
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE VALUE REALIZED($) UNEXERCISABLE(1) UNEXERCISABLE(2)
---- --------------- ----------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Marvin A. Pomerantz..... 0 0 0/300,000 0/0
Dale E. Stahl........... 97,148 328,700 293,400/120,000 20,600/0
Daniel P. Casey......... 0 0 293,400/120,000 20,600/0
Lawrence G. Rogna....... 0 0 156,700/60,000 10,300/0
</TABLE>
- ---------------
(1) Options only are included. No SAR grants have been made.
(2) The closing price of the Common Stock on September 30, 1998 was $3.25 per
share.
EXECUTIVE OFFICERS
MARVIN A. POMERANTZ. See Director Nominees for Election at the 1999 Annual
Meeting.
DALE E. STAHL. Mr. Stahl has served as President and Chief Operating
Officer of the Company since August 1988. From March 1988 through August 1988,
Mr. Stahl served as Vice President of the Company. From 1978 to 1988, he was
employed by Union Camp Corporation, an integrated paper packaging manufacturer,
starting in sales and ultimately being promoted to Vice President-General
Manager of the container division. He is currently a director and member of the
Compensation Committee of AMCOL International Corporation, a diversified
specialty mineral, chemical and environmental company. Age 51.
DANIEL P. CASEY. Mr. Casey has served as Executive Vice President and Chief
Financial Officer of the Company since February 1990. From July 1988 through
February 1990, Mr. Casey served as Senior Vice President - Financial and Legal
Affairs of the Company and from January 1988 through June 1988 in the
7
<PAGE> 10
same position for each of the Company and Mid-America Packaging, Inc., which
merged with the Company in June 1988. From March 1987 through January 1988, Mr.
Casey served as Vice President - Financial and Legal Affairs for each of the
Company and Mid-America. Age 56.
LAWRENCE G. ROGNA. Mr. Rogna has served as Senior Vice President of the
Company since February 1990. From December 1988 through February 1990, Mr. Rogna
served as Vice President - Human Resources of the Company. From 1981 to 1988, he
was employed by Rohr Industries, Inc., a manufacturer of components for aircraft
and space vehicles, where he served as Vice President, Human Resources from 1983
to 1988. Age 52.
EMPLOYMENT AGREEMENTS
The Company has an employment agreement with Mr. Pomerantz for the period
June 1, 1997 through December 31, 2000. It provides for an annual base salary of
no less than $750,000 and participation in the Shareholder Value Plan, a
long-term incentive plan designed to tie Mr. Pomerantz's compensation to
increases in shareholder value, and in all of the Company's salaried employee
benefit plans. Under the agreement, Mr. Pomerantz became eligible to receive
stock option or restricted stock grants beginning January 1, 1998, but does not
participate in the Company's Management Incentive Plan. The employment agreement
provides for supplemental retirement payments commencing on the date of
retirement equal to 50 percent of average base salary and bonus for the four
highest years of service with the Company, less primary Social Security benefits
and any amounts payable under the Company's pension plan. If Mr. Pomerantz's
employment terminates because of his disability, he will receive his base salary
for 12 months. If Mr. Pomerantz's employment terminates because of his death,
his estate will receive his then accrued and unpaid base salary. If Mr.
Pomerantz's employment is terminated by the Company for any other reason other
than Serious Misconduct (as defined below) or by Mr. Pomerantz for Good Reason
(as defined below), he will receive his full compensation for the balance of the
term of the employment agreement. "Serious Misconduct" means misappropriation of
Company funds, commission of a felony, willful disregard for duties, violation
of any duty of loyalty, repeated acts causing public disgrace to the Company,
disclosure of the Company's confidential information, or engaging in competition
with the Company at any time before December 31, 2001. "Good Reason" means Mr.
Pomerantz's resignation due to substantial diminution of his duties, a reduction
of his perquisites, a change in principal office location or a material uncured
breach by the Company of the employment agreement.
The Company has an employment letter agreement for an indefinite term with
each of Mr. Stahl at an annual salary of $420,000 effective January 1999, Mr.
Casey at an annual salary of $383,500 effective January 1999 and Mr. Rogna at an
annual salary of $256,000 effective January 1999.
If any of Messrs. Stahl, Casey or Rogna becomes disabled and the Company
terminates his employment, he will receive his full base salary and benefits for
12 months. If the Company terminates employment for any other reason, the
executive will be entitled to his full base salary and benefits for the 24
months following such termination, except that the final 12 months of payments
will be reduced by any amount received from other employment. Each of Messrs.
Stahl, Casey and Rogna participated in the Shareholder Value Plan until December
31, 1997 and participates in the Company's salaried employee benefit plans.
Each of Messrs. Stahl, Casey and Rogna has a severance agreement with the
Company. Under the severance agreement, if he is terminated within 24 months
after a change in control of the Company, the executive will receive a severance
payment of two times the sum of his base salary plus his target bonus under the
Company's Management Incentive Plan. Target bonus amounts for Messrs. Stahl,
Casey and Rogna currently are 50 percent, 50 percent and 40 percent,
respectively, of base salary. The Company also reimburses any excise tax imposed
on severance payments.
Each of Messrs. Stahl, Casey and Rogna participates in the Supplemental
Executive Retirement Plan ("SERP"). The SERP provides supplemental annual
retirement payments commencing the later of age 55 or the date of retirement of
up to 60 percent of average base salary and bonus, excluding awards under the
Shareholder Value Plan, for the four highest of the 10 years prior to
retirement, less primary Social Security
8
<PAGE> 11
benefits and any amounts payable under the Company's pension plan. Supplemental
payments range from 35 percent (at age 55) to 60 percent (at age 65) of average
base salary and bonus.
CERTAIN TRANSACTIONS
MAG and certain of its subsidiaries provided office space and professional,
administrative, aviation and clerical services to the Company during fiscal 1998
at a cost of approximately $174,000. Fees for these services are determined on
the basis of costs incurred and the fair market value of the office space. The
Company expects MAG and such subsidiaries to provide office space and such
services to the Company in the future. In February 1998, the Company loaned Mr.
Stahl $505,200 to pay the exercise price and taxes on a stock option. The option
would have expired in March 1998. The loan bears interest at the Applicable
Federal Rate and is payable on December 31, 2000.
The Company has entered into agreements with certain of its stockholders,
which provide such stockholders with the right in certain circumstances to
require the Company to register, at the Company's expense, the shares of Common
Stock owned by them under the Securities Act of 1933, as amended.
The Company has entered into employment agreements with Messrs. Pomerantz,
Stahl, Casey and Rogna. See "Employment Agreements."
PENSION PLAN
The Gaylord Container Retirement Plan ("Pension Plan") is a qualified,
non-contributory defined-benefit plan which covers substantially all employees
of the Company, including both salaried and hourly employees. The following
table shows estimated annual benefits payable to salaried employees under the
Pension Plan on a straight-life annuity basis upon normal retirement with
indicated years of credited service and final average annual compensation:
<TABLE>
<CAPTION>
FINAL YEARS OF SERVICE(2)
AVERAGE ----------------------------------------------------------------
EARNINGS(1) 15 20 25 30 35
----------- -- -- -- -- --
<S> <C> <C> <C> <C> <C>
$100,000(3)(4)....................... $ 16,750 $ 23,250 $ 29,750 $ 35,000 $ 40,500
150,000............................. 25,125 34,875 44,625 52,500 60,750
200,000............................. 33,500 46,500 59,500 70,000 81,000
250,000............................. 41,875 58,125 74,375 87,500 101,250
300,000............................. 50,250 69,750 89,250 105,000 121,500
350,000............................. 58,625 81,375 104,125 122,500 141,750
400,000............................. 67,000 93,000 119,000 140,000 162,000
450,000............................. 75,375 104,625 133,875 157,500 182,250
500,000............................. 83,750 116,250 148,750 175,000 202,500
550,000............................. 92,125 127,875 163,625 192,500 222,750
600,000............................. 100,500 139,500 178,500 210,000 243,000
650,000............................. 108,875 151,125 193,375 227,500 263,250
700,000............................. 117,250 162,750 208,250 245,000 283,500
750,000............................. 125,625 174,375 223,125 262,500 303,750
</TABLE>
- ---------------
(1) Compensation covered by the Pension Plan includes all cash compensation,
including amounts received under the Shareholder Value Plan, but does not
include compensation related to stock options, non-cash compensation or
deferred compensation. The amounts reflected in the table do not reflect the
Social Security offset in accordance with the Pension Plan benefit formula.
(2) As of September 30, 1998, the named executive officers had been credited
with the following years of service: Mr. Pomerantz, 10 years; Mr. Stahl, 10
years; Mr. Casey, 11 years; and Mr. Rogna, nine years.
(3) For the 1998 Pension Plan year, the amount of compensation in the
calculation of retirement benefits for any participant is limited to
$160,000 subject to future increases based on cost-of-living adjustments
9
<PAGE> 12
implemented by the Department of the Treasury. The maximum estimated annual
benefits listed in this table do not include projected cost-of-living increases.
(4) In addition to amounts payable under the Pension Plan, Messrs. Pomerantz,
Stahl, Casey and Rogna will receive supplemental retirement income. See
"Employment Agreements." Based on current and historical compensation, the
maximum annual supplemental retirement income payable to Messrs. Pomerantz,
Stahl, Casey and Rogna will be approximately $725,000, $330,000, $309,000
and $180,000, respectively.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
The members of the Company's Compensation Committee are Messrs. Ferrill,
Goodenow, Johnson, MacDonald and Stoner. No officers or former officers of the
Company serve on the Compensation Committee.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This Compensation Committee report shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
The following has been submitted by the Compensation Committee of the Board
of Directors:
The Compensation Committee of the Board of Directors makes recommendations
to the Board regarding compensation of the Company's executive officers. The
philosophy of the Compensation Committee is to design an executive compensation
program to attract, motivate and retain the executive talent critical to the
Company's achievement of its objectives to increase shareholder value and
maximize returns to shareholders.
Key to the program are incentives which vary rewards with individual and
Company performance. Two compensation approaches are used to implement the
variable pay initiative: an annual cash incentive opportunity focused on Company
operating and financial performance for officers and key managers, and a
long-term incentive based on share price appreciation through grants of
restricted stock, grants of stock options or payments under the Shareholder
Value Plan.
General Executive Compensation Program Policies
To achieve its objectives, the Company has developed a series of executive
compensation policies:
- The Company will provide levels of executive compensation that are
competitive with those provided by the relevant marketplace (as defined
below).
- The Company will provide annual cash incentive compensation for
executives that varies in a consistent and predictable manner with the
operating and financial performance of the Company.
- The Company will provide programs that enable executives to achieve
rewards based on increased shareholder value to reinforce the link
between executive and shareholder interests.
Competitive Executive Compensation, Base Salary and Annual Incentive
Compensation
The Company seeks to provide levels of executive compensation that are
competitive at expected levels of individual and Company performance.
Competitiveness is defined as in keeping with the compensation of executives in
comparable positions and who have similar qualifications. The comparison group
for those executives is companies similar to the Company in industry and size.
Competitiveness is measured using data from a number of sources, including
published information, proxies, forest products industry surveys, which includes
data from the Dow Jones paper products peer group, and surveys by consulting
firms.
10
<PAGE> 13
A salary range is established for each salaried position in the Company,
including each executive officer position. The midpoint of each salary range is
based on the average salary of equivalent positions at the other companies,
which the Company uses for comparison purposes. The salary range is from 80
percent to 120 percent of the midpoint. An individual's base salary is
determined by reviewing his or her sustained performance over time and
correspondingly positioning the executive officer's salary in the salary range
for his or her position. Salaries for Messrs. Stahl, Casey and Rogna were
increased in fiscal 1998 to reflect their individual contributions and provide
salaries in line with competitive practices.
The Management Incentive Plan is designed to ensure that incentive
compensation varies in a consistent and predictable manner with the Company's
operating and financial performance. Performance targets and related amounts to
be paid to plan participants if the targets are achieved are determined annually
by the Board. While performance targets were not met for fiscal 1998, the
Compensation Committee, in consideration of the continuing challenges created by
the industry and overall progress on many factors, recommended and the Board
approved discretionary incentive awards to 43 participants. Messrs. Stahl, Casey
and Rogna received no payouts under this plan for fiscal 1998. Mr. Pomerantz
does not participate in the Management Incentive Plan. Targets have been
established for fiscal 1999 based on the Company's earnings before interest,
income taxes, depreciation and amortization.
Based on the same goals and targets, the Company also maintains a Deferred
Profit Sharing Plan, which provides for contributions to participants'
individual 401(k) accounts. Based on the results achieved in fiscal 1998, the
Company made no contributions to this plan. The Company's executive officers
participate in this plan.
The Compensation Committee considered a series of factors contributing to
the possibility of increased turnover of critical executive talent. In
recognizing the overall performance of the industry, the very high demand for
executive talent and the cost to replace key leaders, the Compensation Committee
recommended, and the Board approved, a program designed to retain key senior
managers that will compensate each participant two times his or her target
incentive if the individual remains with the Company as of December 31, 2000 and
is performing in an acceptable manner. Messrs. Stahl, Casey and Rogna are
participants in this program.
Long-Term Incentive
The Company currently maintains two stock-based plans pursuant to which
non-qualified stock options may be granted: the 1989 Plan and the 1997 Plan.
Both Plans also permit the grant of incentive stock options, stock appreciation
rights, stock indemnification rights, restricted stock and performance awards.
Only non-qualified options and restricted stock have been granted to date.
The Shareholder Value Plan, as approved by the Company's stockholders on
February 2, 1994 ("Shareholder Value Plan"), directly tied the long-term
incentive compensation of the Company's four executive officers to the creation
of shareholder value.
The Shareholder Value Plan commenced January 1, 1993 and expired on
December 31, 1997. None of Messrs. Pomerantz, Stahl, Casey or Rogna received an
award under this Plan based on Year End Share Value for calendar 1997, the last
year for which awards were determinable.
As discussed below under "Chief Executive Officer Compensation", during
fiscal 1997 the Compensation Committee, over the course of several meetings,
considered alternatives for the extension of Mr. Pomerantz's employment
agreement, which was due to expire December 31, 1997 and alternatives for
extension of the Shareholder Value Plan for all participants upon expiration on
December 31, 1997. In extending Mr. Pomerantz's employment agreement to December
31, 2000, the Compensation Committee recommended that, subject to shareholder
approval, the Shareholder Value Plan be amended to run through December 31, 2000
for Mr. Pomerantz alone. This recommendation was approved by the Board in May
1997 and by the shareholders in February 1998.
The Shareholder Value Plan was not extended for Messrs. Stahl, Casey or
Rogna beyond December 31, 1997. The Compensation Committee determined that
extending the Shareholder Value Plan for these
11
<PAGE> 14
participants is not the most practical alternative, and in order to provide an
equitable replacement authorized a onetime grant of stock options in amounts
which was directly equivalent to each individual's degree of participation in
the Shareholder Value Plan. These grants, effective January 15, 1998, had an
exercise price of $8.85 per share. The amount of these grants were 213,400,
213,400 and 106,700 shares respectively for Messrs. Stahl, Casey and Rogna.
Messrs. Stahl, Casey and Rogna will be provided future competitive
opportunity for long-term incentives based on share price appreciation through
additional stock grants.
Deductibility of Compensation under Section 162 (m) of the Code
Section 162(m) of the Code imposes a $1 million deduction limit on
compensation paid to the named executive officers of the Company. Compensation
is exempt from the $1 million deduction limit, however, if the compensation
qualifies for an exception, including an exception for certain performance-based
compensation. Compensation paid under the Shareholder Value Plan should qualify
for the performance-based compensation exception, and therefore compensation
paid pursuant to the Shareholder Value Plan should not be applied toward the $1
million deduction limit of Code Section 162(m). The Company anticipates that the
amount of compensation income received by each of the Company's named executive
officers, excluding income received pursuant to the Shareholder Value Plan, will
not exceed $1 million in 1998 or 1999. Therefore, Code Section 162(m) should not
cause the Company to be denied a deduction for any compensation income paid to
the Company's named executive officers.
Chief Executive Officer Compensation
After extensive review of competitive data and all other pertinent factors,
the Compensation Committee recommended and the Board approved in May 1997 a new
employment agreement with Mr. Pomerantz effective June 1, 1997 through December
31, 2000.
In structuring the new agreement, the Compensation Committee placed
continued emphasis on the creation of shareholder value. By providing a program
that consists primarily of base salary and long-term incentive directly tied to
the creation of shareholder value, the Compensation Committee believes it has
created a significant and proper focus. The program utilizes wholly objective
criteria for the long-term variable pay opportunity and Mr. Pomerantz is not
eligible to participate in the Management Incentive Plan.
As discussed previously, the Compensation Committee recommended, and the
Board as well as Shareholders approved, the extension of the Shareholder Value
Plan, so that as amended it will expire on December 31, 2000, concurrent with
the expiration of Mr. Pomerantz's new employment agreement.
Extension of the Shareholder Value Plan provides a competitive opportunity
for Mr. Pomerantz in lieu of stock options for the period 1993 through 1997. In
order to provide a competitive opportunity for the remainder of the new
employment agreement, the Compensation Committee authorized a grant of 300,000
stock options to Mr. Pomerantz effective January 15, 1998. The exercise price
was $8.85 per share.
Mr. Pomerantz's base salary continues at the $750,000 level established
January 1, 1997.
Ralph L. MacDonald, Jr., Chairman
Harve A. Ferrill, member
John E. Goodenow, member
Charles S. Johnson, member
Thomas H. Stoner, member
12
<PAGE> 15
STOCK PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder return of the
Company's Common Stock, the S&P 500 Composite Stock Index ("S&P 500") and an
index of a peer group of paper companies ("Peer Group") for the past five years.
The graph assumes an investment in the Company's Common Stock and each index of
$100 on October 1, 1993 and that all dividends are reinvested. The Peer Group
index is comprised of nine companies whose primary business is the manufacture
and sale of paper products. Peer Group returns are weighted each year based on
each company's market capitalization at the beginning of the year. The Peer
Group comprises the common stocks of: Boise Cascade, Bowater, Champion
International, Consolidated Papers, Federal PaperBoard (through the date it was
acquired), P.H.Glatfelter, International Paper, Mead and Westvaco.
FIVE YEAR CUMULATIVE TOTAL STOCKHOLDER RETURNS
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
GAYLORD CONTAINER S & P 500 PEER GROUP
----------------- --------- ----------
<S> <C> <C> <C>
'9/94' 388.66 103.69 131.29
'9/95' 428.67 134.53 158.98
'9/96' 337.22 161.88 152.84
'9/97' 388.66 227.36 197.52
'9/98' 148.61 247.92 151.19
</TABLE>
FINANCIAL STATEMENTS
The Company's 1998 Annual Report accompanies this Proxy Statement. You may
receive without charge a copy of the Company's 1998 Annual Report on Form 10-K
by writing to the Company, 500 Lake Cook Road, Suite 400, Deerfield, IL 60015,
Attention: Investor Relations. You may also request financial information by
visiting the Company's web site: www.gaylordcontainer.com.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors to file initial reports of ownership and
reports of changes in ownership with the Securities and Exchange Commission (the
"Commission") and the American Stock Exchange. Executive officers and directors
are required by Commission regulations to furnish the Company with copies of all
section 16(a) forms they file. Based solely on a review of the copies of such
forms furnished to the Company and written
13
<PAGE> 16
representations from the Company's executive officers and directors, the Company
believes that during fiscal 1998 all filing requirements applicable to executive
officers and directors were met.
OTHER BUSINESS
The Board does not intend to present, and does not have any reason to
believe that others will present, any item of business at the Annual Meeting
other than those specifically set forth in the notice of the Annual Meeting. If
other matters are presented for a vote, the proxies will be voted on such
matters in accordance with the judgment of the proxy holders.
PROPOSALS BY STOCKHOLDERS
Stockholder proposals intended for inclusion in the proxy statement for the
2000 Annual Meeting must be received by the Company no later than September 1,
1999.
We encourage you to vote and to attend the Annual Meeting. Directors,
officers and a small number of Company employees may solicit proxies personally
or by mail, telephone or otherwise, but they will not receive separate
compensation for their services. Brokerage firms, banks, fiduciaries, voting
trustees or other nominees will be asked to forward the soliciting materials to
beneficial owners. The entire cost of the Board's solicitation will be borne by
the Company.
By Order of the Board of Directors
David F. Tanaka
Secretary
14
<PAGE> 17
GAYLORD CONTAINER CORPORATION / PROXY
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR
ANNUAL MEETING OF STOCKHOLDERS FEBRUARY 10, 1999
The undersigned hereby appoints Marvin A. Pomerantz, Daniel P. Casey and David
F. Tanaka and each of them the undersigned's true and lawful attorneys and
proxies (with full power of substitution in each) to vote all Common Stock of
Gaylord Container Corporation, standing in the undersigned's name, at the Annual
Meeting of Stockholders of said corporation to be held at 520 Lake Cook Road,
Deerfield, Illinois 60015, on February 10, 1999 at 10:00 a.m. Chicago time, upon
those matters as described in the Proxy Statement for the Annual Meeting and
such other matters as may properly come before such meeting or any adjournment
or adjournments thereof.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE> 18
This proxy when properly executed will be voted in the manner directed by the
undersigned stockholder. If not otherwise specified, this proxy will be voted
FOR proposals 1 and 2.
The Board recommends a vote FOR the following proposals described in the Proxy
Statement for the meeting.
If any other business is transacted at the Annual Meeting of Stockholders, this
Proxy shall be voted in accordance with the best judgment of the appointed
attorneys and proxies.
<TABLE>
<CAPTION>
FOR WITHHOLD FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C> <C> <C>
1. Election of Directors: Mary Sue Coleman, [ ] [ ] 2. Ratify the appointment [ ] [ ] [ ]
Harve A. Ferrill, John E. Goodenow, of Deloitte & Touche LLP
David B. Hawkins, Warren J. Hayford, as the Company's independent
Charles S. Johnson, Jerry W. Kolb, auditors.
Ralph L. MacDonald, Jr., Marvin A. Pomerantz,
and Thomas H. Stoner
Instruction: To withhold authority to vote for
any individual nominee, write that nominee's
name here:
-----------------------------------------------
</TABLE>
Dated: , 199
------------------------ -------------
--------------------------------------------------
(Signature of Stockholder)
--------------------------------------------------
(Signature of Stockholder)
Please sign your name exactly as it appears on this
card. If acting as attorney, executor, trustee,
or in other representative capacity, please
sign name and title. If stock is held jointly, each
joint owner should sign.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE
