<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 under Rule 14a-12
Gaylord Container Corporation
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(Name of Registrant as Specified in Its Charter)
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] 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:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
GAYLORD LOGO
GAYLORD CONTAINER CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
FEBRUARY 7, 2001
We cordially invite you to attend the 2001 Annual Meeting of Stockholders
("Annual Meeting") of Gaylord Container Corporation ("Company"), which will be
held on Wednesday, February 7, 2001 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 20, 2000 was 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 headquarters, 500 Lake Cook Road,
Suite 400, Deerfield, Illinois 60015, beginning on January 29, 2001.
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 requires no
postage if mailed in the United States. You may also vote by telephone or via
the Internet by following instructions on the proxy card. 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
January 9, 2001
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 7, 2001
TIME AND LOCATION OF ANNUAL MEETING
The 2001 Annual Meeting of Stockholders ("Annual Meeting") of Gaylord
Container Corporation, a Delaware corporation ("Company"), will be held at 10:00
a.m. Chicago time on Wednesday, February 7, 2001 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 20,
2000 ("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 January 9, 2001 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 a 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 a properly executed
subsequent proxy delivered at or before the Annual Meeting.
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 approximately eight percent and the Company's executive officers and
directors, as a group, including the shares owned by MAG, beneficially own or
control less than 15% 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. 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.
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<PAGE> 4
As of the Record Date, there were outstanding 55,579,516 shares of Common
Stock, including 830,735 shares of Trust Stock held by the Warrant Trustee and
830,735 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 11 directors, all of whom, with the
exception of Daniel P. Casey, have served as directors since the 2000 Annual
Meeting of Stockholders. Mr. Casey was elected to the Board in April 2000. One
of the Company's directors, Thomas H. Stoner, will retire from the Board and not
stand for election at the Annual Meeting. Beginning with the Annual Meeting, 10
members will serve on the Board.
If elected, each nominee ("Director Nominee") will hold office until the
next annual meeting of stockholders, and until a successor has 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 at the discretion of the proxy
holders.
DIRECTOR NOMINEES FOR ELECTION AT THE 2001 ANNUAL MEETING
DANIEL P. CASEY. Mr. Casey has served as director of the Company since
April 2000 when he was elected Vice Chairman and Chief Financial Officer. He
served as Executive Vice President and Chief Financial Officer of the Company
from 1990 to April 2000 and from 1988 to 1990 as Senior Vice President-Financial
and Legal Affairs. Mr. Casey joined the Company in 1987 as Vice President-
Financial and Legal Affairs. Age 58.
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 on the Board of Trustees of
Grinnell (Iowa) College. Member, Audit Committee and Nominating and
Organizational Planning Committee. Age 57.
HARVE A. FERRILL. Mr. Ferrill has served as a director of the Company since
November 1992. From 1990 until his retirement in 2000, he served as Chairman or
President and Chief Executive Officer of Advance Ross Corporation ("Advance
Ross"), a wholly owned subsidiary of Cendant, Inc., a membership services
company. Advance Ross operates PPC Industries, which designs, manufacturers and
installs electrostatic precipitators for industrial pollution control
applications. He is also a director of Century Business Services, Inc., a
provider of business services to small-and medium-sized companies. Chairman,
Audit Committee; member, Compensation and Stock Option Committee. Age 67.
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. Member, Audit Committee and Compensation and Stock Option Committee.
Age 64.
DAVID B. HAWKINS. Mr. Hawkins has served as a director of the Company since
November 1986. He served as Vice Chairman, President or Executive Vice President
and a director of MAG, a real
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<PAGE> 5
estate investment company, from 1977 until his retirement in 2000. Member,
Nominating and Organizational Planning Committee. Age 66.
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 August 1988 until his retirement
as Vice Chairman in 1992. From 1989 until his retirement in 1999, Mr. Hayford
served as Chairman and Chief Executive Officer or Vice Chairman and a director
of BWAY Corporation (formerly Brockway, Inc.), a manufacturer of metal
containers. He continues to serve as a director of both the Company and BWAY. He
also serves as Non-Executive Vice Chairman of BWAY. Mr. Hayford 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 71.
CHARLES S. JOHNSON. Mr. Johnson has served as a director of the Company
since August 1997. From 1999 until his retirement in 2000, he served as
Executive Vice President of E.I. DuPont de Nemours and Co. He is the former
Chairman, President and Chief Executive Officer of Pioneer Hi-Bred
International, Inc., an agricultural biotech company, where he 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 Compensation and Stock
Option Committee. Age 62.
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. Since 1998, Mr. Kolb has been
a member of the Supervisory Board of Directors and the Compensation and Stock
Option Committee of New Skies Satellites, N.V., a commercial satellite
communications company incorporated in the Netherlands. Member, Audit Committee
and Compensation and Stock Option Committee. Age 65.
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 58.
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.
From 1980 to 1982, he served as President of the Diversified Group, and later as
Executive Vice President of Navistar International Corp., a truck manufacturer.
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
1998, Wells Fargo Bank Iowa, N.A. since 1975, and Berkley, Inc., a sporting
goods manufacturer, since 1976. He also serves on the Board of Directors of the
American Forest & Paper Association and as Chairman of the Board of Trustees of
the Institute of Paper Sciences and Technology. Age 70.
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<PAGE> 6
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.
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors held seven meetings during fiscal 2000 and the
committees of the Board held a total of eight meetings. During fiscal 2000, 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.
Directors who are not current employees of the Company ("Outside
Directors") receive an annual fee of $35,000 and $5,000 for each committee
chaired. In June 2000, each Outside Director also received an option under the
Company's 1997 Long-Term Equity Incentive Plan ("1997 Plan") to purchase 7,000
shares of Common Stock at an exercise price of $3.81 per share, the then fair
market value. The option vests ratably over three years. During fiscal 2000, no
director fees were paid to Mr. Pomerantz or Mr. Casey. 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, Kolb and
MacDonald have elected to defer fees, all under Option B.
The Board has the following committees: 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 1997 Plan. The
Compensation Committee met four times in fiscal 2000.
The Audit Committee, among its duties, recommends to the 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. Under the Audit Committee's
charter, a copy of which is attached as Appendix A to this Proxy Statement, the
Audit Committee provides for effective oversight of the financial reporting
process, the business risk process and adequacy of internal controls,
relationships with external and internal auditors and financial compliance
issues. The Audit Committee held three meetings in fiscal 2000.
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 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. The Nominating Committee met once in fiscal 2000.
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PROPOSAL 2
INDEPENDENT AUDITORS
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 2000 fiscal year. Representatives of
Deloitte & Touche LLP will attend the 2001 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.
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 20, 2000 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 OF PERCENT OF
OF SHARES OUTSTANDING* WARRANTS OUTSTANDING*
--------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Marvin A. Pomerantz and MAG(1)................... 4,629,942 8.2 0 --
4700 Westown Parkway
West Des Moines, IA 50625
M. D. Sass Investors Services, Inc.(2)........... 4,529,413 8.0 0 --
1185 Avenue of the Americas
New York, NY 10036
Mellon Bank Corporation(3)....................... 4,049,817 7.2 0 --
One Mellon Bank Center
Pittsburgh, PA 15258
Warren J. Hayford(4)............................. 1,182,683 2.1 0 --
Daniel P. Casey(5)............................... 338,110 -- 0 --
Mary Sue Coleman................................. 10,009 -- 0 --
Harve A. Ferrill................................. 32,001 -- 0 --
John E. Goodenow(6).............................. 49,501 -- 0 --
David B. Hawkins................................. 9,001 -- 0 --
Charles S. Johnson............................... 7,001 -- 0 --
Jerry W. Kolb.................................... 12,334 -- 0 --
Ralph L. MacDonald Jr............................ 47,001 -- 0 --
Thomas H. Stoner................................. 23,201 -- 0 --
</TABLE>
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<TABLE>
<CAPTION>
WARRANTS TO OBTAIN
COMMON STOCK COMMON STOCK
------------------------ --------------------------
NUMBER PERCENT OF NUMBER OF PERCENT OF
OF SHARES OUTSTANDING* WARRANTS OUTSTANDING*
--------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Michael J. Keough................................ 505,570 -- 0 --
Lawrence G. Rogna(7)............................. 332,000 -- 0 --
All officers and directors as a group
(20 persons)(8).................................. 8,058,548 14.3 0 --
</TABLE>
---------------
* Percentages less than 1 percent have been omitted.
(1) Mr. Pomerantz, his wife and trusts for the benefit of their children own
MAG. 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.
(2) Shares shown as beneficially owned by M. D. Sass Investors Services, Inc.
are based on a Schedule 13F filed on November 14, 2000.
(3) Shares shown as beneficially owned by Mellon Bank Corporation ("Mellon
Bank") are based on a Schedule 13F filed on October 20, 2000. Mellon Bank
has sole power to vote or direct the vote of 3,659,117 shares and shared
power to vote or direct the vote of 311,700 shares.
(4) Shares shown as beneficially owned by Mr. Hayford include 218,496 owned
directly by his wife and 74,000 owned directly by a charitable family
foundation. Mr. Hayford disclaims beneficial ownership of such shares.
(5) 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.
(6) 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.
(7) 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.
(8) The number and percentage of shares owned by the named individuals and group
include 771,308 shares subject to stock options exercisable currently or
within 60 days of December 20, 2000.
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<PAGE> 9
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, 2000, 1999 and 1998:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
RESTRICTED
OTHER ANNUAL STOCK LTIP ALL OTHER
NAME AND FISCAL SALARY BONUS COMPENSATION AWARDS OPTIONS/ PAYOUTS COMPENSATION
PRINCIPAL POSITION (1) YEAR ($) ($)(2) ($) ($)(3) SARS (#) ($) ($)(4)(5)
---------------------- ------ ------ ------ ------------ ---------- -------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Marvin A. Pomerantz.... 2000 806,300 0 0 0 0 0 38,000
(Chairman and Chief 1999 750,000 0 0 0 0 0 25,700
Executive Officer) 1998 750,000 0 0 0 300,000 0 21,600
Daniel P. Casey........ 2000 410,300 200,000 0 117,500 0 0 28,800
(Vice Chairman and 1999 393,300 0 0 0 0 0 14,200
Chief Financial
Officer) 1998 375,600 182,500 0 0 333,400 0 10,500
Michael J. Keough,..... 2000 304,600 200,000 0 58,750 0 0 16,300
(President and Chief
Operating Officer)
Dale E. Stahl.......... 2000 260,100 0 0 117,500 0 0 450,600(6)
(former President and 1999 429,400 0 0 0 0 0 15,200
Chief Operating
Officer) 1998 409,400 200,000 0 0 333,400 0 11,400
Lawrence G. Rogna...... 2000 278,700 120,000 0 58,750 0 0 18,100
(Senior Vice President) 1999 266,900 0 0 0 0 0 10,500
1998 253,400 96,800 0 0 166,700 0 6,900
</TABLE>
---------------
(1) In April 2000 Mr. Casey, previously Executive Vice President, was elected
Vice Chairman, Mr. Stahl resigned and Mr. Keough, previously Vice President
and General Manager, Container Operations, was elected President and Chief
Operating Officer.
(2) Fiscal 1998 payments were deferred to fiscal 2000.
(3) Restricted shares granted on November 9, 1999 (20,000 to each of Messrs.
Casey and Stahl and 10,000 to each of Messrs. Keough and Rogna) all vest on
January 2, 2002. The Company does not currently pay dividends on its Common
Stock.
(4) Includes for 2000, 1999 and 1998 employer contributions to the Company's
401(k) Plan on behalf of Messrs. Pomerantz, Casey, Keough, Stahl, and Rogna,
of $8,500 ($7,300 for Mr. Stahl), $8,000 and $4,800, respectively.
(5) Includes for the applicable years cash payments in lieu of Company
contributions which could not be made because of Internal Revenue Code
limitations to Mr. Pomerantz of $29,500, $17,700 and $16,800; Mr. Casey of
$20,300, $6,200 and $5,700; Mr. Keough of $7,800; Mr. Stahl of $23,000,
$7,200 and $6,600; and Mr. Rogna of $9,600, $2,500 and $2,100, respectively.
(6) Includes severance and unused vacation payments of $420,300.
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OPTION GRANTS IN LAST FISCAL YEAR
No stock options or SARs were granted to any of the named executive
officers in fiscal 2000 under any stock option plan sponsored by the Company.
The following table shows exercise of options by the named executive
officers in fiscal 2000 and the value of options held by the named executive
officers at the end of fiscal 2000:
OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FY-END(#) FY-END($)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE(1)(2) UNEXERCISABLE(3)
---- --------------- ------------ ------------------- ----------------
<S> <C> <C> <C> <C>
Marvin A. Pomerantz................. 0 0 200,000/100,000 0/0
Daniel P. Casey..................... 0 0 373,400/ 40,000 0/0
Michael J. Keough................... 0 0 82,000/ 15,000 0/0
Lawrence G. Rogna................... 0 0 196,700/ 20,000 0/0
</TABLE>
---------------
(1) Options only are included. No SAR grants have been made.
(2) On November 2, 2000, Messrs. Pomerantz, Casey and Rogna each voluntarily
cancelled and relinquished stock options covering 300,000, 213,400 and
106,700 shares, respectively. The 10-year options, which are included in
this table, were granted on January 15, 1998 at an exercise price of $8.85.
(3) The closing price of the Common Stock on September 29, 2000 was $1.69.
EXECUTIVE OFFICERS
MARVIN A. POMERANTZ. See Director Nominees for Election at the 2001 Annual
Meeting.
DANIEL P. CASEY. See Director Nominees for Election at the 2001 Annual
Meeting.
MICHAEL J. KEOUGH. Mr. Keough has served as President and Chief Operating
Officer of the Company since April 2000. From 1993 to April 2000, he served as
the Company's Vice President and General Manager--Container Operations and from
1991 to 1993 as Vice President and General Manager--Bag Operations. He also
served as a general manager and subsequently regional manager in the Container
Division from 1986 to 1991. Age 49.
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 54.
EMPLOYMENT AGREEMENTS
The Company had an employment agreement with Mr. Pomerantz for the period
June 1, 1997 through December 31, 2000. It provided 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 did not
participate in the Company's Management Incentive Plan. The employment agreement
provided for supplemental retirement
8
<PAGE> 11
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. Mr. Pomerantz and the Company have reached an
agreement in principle to extend the term of the employment agreement, except
for the Shareholder Value Plan, until December 31, 2001.
The Company has an employment letter agreement for an indefinite term with
each of Mr. Casey, at an annual salary of $420,000 effective January 2001, Mr.
Keough an annual salary of $385,000 effective January 2001 and Mr. Rogna, at an
annual salary of $280,000 effective January 2001.
If any of Messrs. Casey, Keough 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. Mr. Casey and Mr.
Rogna participated in the Shareholder Value Plan until December 31, 1997 and
each of Messrs. Casey, Keough and Rogna participates in the Company's salaried
employee benefit plans.
Each of Messrs. Casey, Keough and Rogna has a severance agreement with the
Company. Under the severance agreement currently in effect, if he is terminated
within 24 months after a change in control of the Company, the executive will
receive a severance payment of three times the sum of his base salary plus his
target bonus under the Company's Management Incentive Plan. Target bonus amounts
for Messrs. Casey, Keough and Rogna currently are 50 percent, 50 percent and 40
percent, respectively, of base salary.
Each of Messrs. Casey, Keough 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 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. In a change in
control of the Company, the present value of the supplemental benefits is
payable in a lump sum. The Company also reimburses any excise tax imposed on
severance payments and SERP benefits.
CERTAIN TRANSACTIONS
MAG and certain of its subsidiaries provided office space and professional,
administrative, aviation and clerical services to the Company during fiscal 2000
at a cost of approximately $166,000. 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 that was
due to expire in March 1998. Interest on the loan, at
9
<PAGE> 12
the applicable Federal rate of interest, was forgiven when Mr. Stahl left the
Company. Mr. Stahl repaid the principal amount in December 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,
Casey, Keough 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 15 20 25 30 35
-------- -- -- -- -- --
<S> <C> <C> <C> <C> <C>
$100,000............................. $ 18,750 $ 25,000 $ 31,250 $ 37,500 $ 43,750
150,000............................. 28,125 37,500 46,875 56,250 65,625
200,000............................. 37,500 50,000 62,500 75,000 87,500
250,000............................. 46,875 62,500 78,125 93,750 109,375
300,000............................. 56,250 75,000 93,750 112,500 131,250
350,000............................. 65,625 87,500 109,375 131,250 153,125
400,000............................. 75,000 100,000 125,000 150,000 175,000
450,000............................. 84,375 112,500 140,625 168,750 196,875
500,000............................. 93,750 125,000 156,250 187,500 218,750
550,000............................. 103,125 137,500 171,875 206,250 240,625
600,000............................. 112,500 150,000 187,500 225,000 262,500
650,000............................. 121,875 162,500 203,125 243,750 284,375
700,000............................. 131,250 175,000 218,750 262,500 306,250
750,000............................. 140,625 187,500 234,375 281,250 328,125
</TABLE>
---------------
(1) Final average earnings 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, 2000, the named executive officers had been credited
with the following years of service: Mr. Pomerantz, 12 years; Mr. Casey, 13
years; Mr. Keough, 15 years; and Mr. Rogna, 11 years.
(3) For the 2000 Pension Plan year, the amount of compensation in the
calculation of retirement benefits for any participant is limited to
$170,000 subject to future increases based on cost-of-living adjustments
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,
Casey, Keough 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,
Casey, Keough and Rogna will be approximately $713,000, $324,000, $168,000
and $187,000 respectively.
10
<PAGE> 13
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN
COMPENSATION DECISIONS
During fiscal 2000, the members of the Company's Compensation Committee
were Messrs. Ferrill, Goodenow, Johnson, Kolb, 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 Compensation Committee of the Board of Directors has submitted the
following:
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.
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
11
<PAGE> 14
officer's salary in the salary range for his or her position. Salaries for
Messrs. Casey, Keough and Rogna were increased in fiscal 2000 to reflect their
individual responsibilities and 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. Messrs. Casey, Keough and Rogna received payouts under this plan
for fiscal 2000. Mr. Pomerantz does not participate in the Management Incentive
Plan. Targets have been established for fiscal 2001 based on the Company's
earnings before interest, income taxes, depreciation and amortization.
During fiscal year 1998, 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. Casey,
Keough and Rogna participated in this program.
Long-Term Incentive
The Company currently maintains one stock-based plan pursuant to which
non-qualified stock options may be granted: the 1997 Plan. The 1997 Plan also
permits 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. Mr. Keough did not participate in the Shareholder Value Plan,
and none of Messrs. Pomerantz, Casey or Rogna has received an award under this
Plan based on Year-End Share Value since calendar 1995.
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. The Board and the shareholders approved this
recommendation in May 1997 and February 1998, respectively.
The Shareholder Value Plan was not extended for Messrs. Casey or Rogna
beyond December 31, 1997. The Compensation Committee determined that extending
the Shareholder Value Plan for these participants was not the most practical
alternative, and in order to provide an equitable replacement authorized a
onetime grant of stock options in amounts which were 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 amounts of these grants were 213,400 and 106,700 shares, respectively, for
Messrs. Casey and Rogna. These grants subsequently were voluntarily relinquished
in November 2000.
Messrs. Casey, Keough and Rogna will be provided future competitive
opportunity for long-term incentives based on share price appreciation through
additional stock grants.
12
<PAGE> 15
Deductibility of Compensation under Section 162 (m) of the Internal Revenue
Service 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 amount of compensation
income received by each of the Company's named executive officers, excluding
income received pursuant to the Shareholder Value Plan, did not exceed $1
million in fiscal 2000. 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 expired on December 31, 2000 concurrent with the
expiration of Mr. Pomerantz's employment agreement.
Extension of the Shareholder Value Plan provided 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 at an exercise price
of $8.85 per share. Mr. Pomerantz voluntarily relinquished that grant in
November 2000, but he remains eligible for future grants.
The Company and Mr. Pomerantz have reached an agreement in principle to
extend the employment agreement until December 31, 2001. The Shareholder Value
Plan was not extended and terminated by its terms on December 31, 2000.
In recognition of continued leadership and after a review of competitive
data for similar positions and total compensation packages, the Compensation
Committee recommended and the Board approved an increase in base salary for Mr.
Pomerantz to $900,000 effective January 1, 2001.
Ralph L. MacDonald, Jr., Chairman
Harve A. Ferrill, member
John E. Goodenow, member
Charles S. Johnson, member
Jerry W. Kolb, member
Thomas H. Stoner, member
13
<PAGE> 16
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, 1995 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 (through the date it was acquired), Consolidated Papers, Federal
PaperBoard (through the date it was acquired), P.H.Glatfelter, International
Paper, Mead and Westvaco.
FIVE YEAR CUMULATIVE TOTAL STOCKHOLDER RETURNS
<TABLE>
<CAPTION>
GAYLORD CONTAINER S&P 500 PEER GROUP
----------------- ------- ----------
<S> <C> <C> <C>
9/96 78.67 120.33 96.14
9/97 90.67 169 124.24
9/98 34.67 184.29 95.1
9/99 76 235.53 113.46
9/00 18.01 266.82 79.05
</TABLE>
FINANCIAL STATEMENTS
The Company's 2000 Annual Report accompanies this Proxy Statement. You may
receive without charge a copy of the Company's 2000 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
14
<PAGE> 17
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 representations from the
Company's executive officers and directors, the Company believes that during
fiscal 2000 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
The Company must receive stockholder proposals intended for inclusion in
the proxy statement for the 2002 Annual Meeting no later than September 11,
2001.
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
15
<PAGE> 18
APPENDIX A
GAYLORD CONTAINER CORPORATION
AUDIT COMMITTEE CHARTER
The Audit Committee shall be comprised of at least three directors, all of
whom shall be independent of the Company and its management, as defined in the
requirements of the stock exchange(s) on which the Company's common shares are
listed. An Independent Director appointed by the Board shall chair the Audit
Committee.
The function of the Audit Committee shall be to provide for effective
oversight of the financial reporting process, the business risk process and
adequacy of internal controls, relationships with external and internal
auditors, financial compliance issues, and to exercise the following powers and
duties with respect to the following matters involving Gaylord Container
Corporation and, unless otherwise specified, any of its direct or indirect
subsidiaries (together, "the Corporation"):
1. Review and approve the Corporation's annual financial statements
and annual reports, registration statements, and material amendments to any
of them, as filed with the U.S. Securities and Exchange Commission, and
recommend to the Board regarding the Board's execution of them;
2. Review the annual financial statements, annual reports and
registration statements of the Corporation's direct or indirect
subsidiaries as in the Audit Committee's judgment is appropriate in order
to fulfill its responsibilities;
3. The Chairman of the Audit Committee will review with the
Corporation's management and the independent auditors the quarterly
financial results prior to the issuance of the earnings press release and
filing of the Form 10Q;
4. Review the Corporation's programs for compliance with applicable
financial disclosure requirements;
5. Review the scope, fees and results of the audit of the Company's
financial statements by the independent auditors;
6. Obtain annually from the independent auditors a written statement
describing all relationships between them and the Company, consistent with
Independence Standards Board Standard Number 1;
7. Evaluate the performance of the independent auditors and make an
annual recommendation to the Board regarding the engagement of independent
auditors;
8. Review the Corporation's processes to maintain an adequate system
of internal controls;
9. Review the scope and results of the Corporation's internal audit
plans and procedures;
10. Review the Corporation's private aircraft travel policies;
11. Review travel and entertainment expenses reported by the executive
officers of the Corporation;
12. Direct and supervise investigations into matters within the scope
of the Audit Committee's duties;
13. Recommendation to the Board regarding any proposal received from
any stockholder concerning any of the foregoing matters which the
stockholder proposes to present for action by the Corporation's
stockholders;
14. Such other duties and responsibilities as may be assigned to the
Audit Committee by the Board; and
15. Review annually the Audit Committee Charter and recommend any
proposed changes to the Board;
<PAGE> 19
In carrying out these responsibilities the Committee shall have full access
to the independent auditors, the internal auditors, the general counsel, any of
the Corporation's non-employee attorneys and advisors, and executive and
financial management in scheduled joint sessions or private meetings as in its
judgment it deems appropriate. Similarly, the Corporation's independent
auditors, internal auditors, general counsel and executive and financial
management will have full access to the Committee and to the Board of Directors
and each is responsible for bringing before this Committee or its Chair in a
timely manner any matter he/she feels appropriate to the discharge of the
Committee's responsibility.
While the Audit Committee has the functions set forth in this Charter, it
is not the duty of the Audit Committee to plan or conduct audits or to determine
that the Company's financial statements are complete and accurate or are in
accordance with generally accepted accounting principles. The Company's
management is principally responsible for Company accounting policies, the
preparation of the financial statements and ensuring that the financial
statements are prepared in accordance with generally accepted accounting
principles. The Company's independent auditors are responsible for auditing and
attesting to the Company's financial statements and understanding the Company's
system of internal controls sufficient to plan and to determine the nature,
timing and extent of audit procedures to be performed. The responsibility to
plan and conduct audits is that of the Company's independent auditors.
In its oversight capacity, the Audit Committee is neither intended nor
equipped to guarantee with certainty to the full Board and stockholders the
accuracy and quality of the Company's financial statements and accounting
practices. Nor is it the duty of the Audit Committee to assure the Company's
compliance with laws and regulations. The primary responsibility for these
matters also rests with the Company's management. The Audit Committee can do no
more than rely upon information it receives, questions and assesses in
fulfilling its functions.
<PAGE> 20
GAYLORD CONTAINER CORPORATION / PROXY
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 7, 2001
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 7, 2001 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.
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.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
-------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
<PAGE> 21
GAYLORD CONTAINER CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
<TABLE>
<CAPTION>
For Withhold For All
All All Except For Against Abstain
<S> <C> <C> <C> <C> <C> <C> <C>
1. Election of Directors: 2. Ratify the appointment of Deloitte
01 Daniel P. Casey, 02 Mary Sue Coleman, [ ] [ ] [ ] & Touche LLP as the Company's [ ] [ ] [ ]
03 Harve A. Ferrill, 04 John E. Goodenow, independent auditors.
05 David B. Hawkins, 06 Warren J. Hayford,
07 Charles S. Johnson, 08 Jerry W. Kolb,
09 Ralph L. MacDonald, Jr. and 10 Marvin A.
Pomerantz
Instruction: To withhold authority to vote for any individual Dated: ,2001
nominee, write that nominee's name here: ---------------------------
------------------------------------------------------------- ---------------------------------------
(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
OR CAST YOUR VOTE BY TELEPHONE OR
VIA THE INTERNET
</TABLE>
-------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
CONTROL NUMBER
VOTE YOUR SHARES BY TELEPHONE OR INTERNET!
QUICK * EASY * IMMEDIATE * AVAILABLE 24 HOURS A DAY * 7 DAYS A WEEK
Gaylord Container Corporation encourages you to take advantage of convenient
ways to vote your shares. If voting by proxy, you may vote by mail, or choose
one of the two methods described below. Your tele- phone or Internet vote
authorizes the named proxies to vote your shares in the same manner as if you
marked, signed, and returned your proxy card. To vote by telephone or Internet,
read the accompanying proxy statement and then follow these easy steps:
---------------------------------------------------------
TO VOTE BY PHONE Call toll free 1-877-550-2728 any time on a touch tone
telephone. There is NO CHARGE to you for the call.
Enter your 6-digit CONTROL NUMBER located above.
Option #1: To vote as the Board of Directors recommends
on ALL proposals: Press 1
When asked, please confirm your vote by
pressing 1
Option #2: If you choose to vote on each proposal
separately, press 0 and follow the simple
recorded instructions.
---------------------------------------------------------
---------------------------------------------------------
TO VOTE BY INTERNET Go to the following website:
WWW.COMPUTERSHARE.COM/US/PROXY
Enter the information requested on your computer screen,
including your 6-digit CONTROL NUMBER located above.
Follow the simple instructions on the screen.
---------------------------------------------------------
IF YOU VOTE BY TELEPHONE OR THE INTERNET, DO NOT MAIL BACK THE PROXY CARD.
THANK YOU FOR VOTING!
