<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 sec. 240.14a-11(c) or sec. 240.14a-12
PIONEER COMPANIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) 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
PIONEER COMPANIES, INC.
700 LOUISIANA STREET, SUITE 4300
HOUSTON, TEXAS 77002
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 20, 1999
---------------------
To the Stockholders of
PIONEER COMPANIES, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Pioneer
Companies, Inc., a Delaware corporation (the "Company"), will be held at the
Stamford Marriott, Two Stamford Forum, Stamford, Connecticut, on Thursday, May
20, 1999, at 2:00 p.m. for the following purposes:
(1) To elect three directors to serve until their successors are duly
elected and qualified;
(2) To ratify the appointment of Deloitte & Touche LLP as independent
certified public accountants for the Company for the fiscal year ending
December 31, 1999; and
(3) To consider and act upon any other matters which may properly come
before the Annual Meeting or any adjournment thereof.
In accordance with the provisions of the Company's By-Laws, the Board of
Directors of the Company has fixed the close of business on April 14, 1999 as
the date for determining stockholders of record entitled to receive notice of,
and to vote at, the Annual Meeting.
As of April 14, 1999, Mr. William R. Berkley, Chairman of the Board of
Directors of the Company, owned approximately 59.8% of the Company's Class A
Common Stock (representing approximately 56.5% of the voting power of the
Company's outstanding capital stock) and thus has sufficient voting power to
determine the results of the matters to be considered at the Annual Meeting. Mr.
Berkley has advised the Company that he will vote FOR each of the proposals to
be considered at the Annual Meeting.
Your attention is directed to the accompanying Proxy Statement.
You are cordially invited to attend the Annual Meeting. If you do not
expect to attend the Annual Meeting in person, please vote, date and return the
enclosed proxy as promptly as possible in the enclosed reply envelope.
By Order of the Board of Directors,
Kent R. Stephenson
Vice President, General Counsel
and Secretary
Dated: April 21, 1999
<PAGE> 3
PIONEER COMPANIES, INC.
PROXY STATEMENT
---------------------
ANNUAL MEETING OF STOCKHOLDERS
MAY 20, 1999
---------------------
SOLICITATION AND REVOCATION OF PROXIES
The enclosed proxy is solicited by the Board of Directors of Pioneer
Companies, Inc. (referred to herein as the "Company") for use at the Annual
Meeting of Stockholders to be held at the Stamford Marriott, Two Stamford Forum,
Stamford, Connecticut on Thursday, May 20, 1999, at 2:00 p.m., and at any
adjournment thereof.
The giving of a proxy does not preclude a stockholder from voting in person
at the Annual Meeting. The proxy is revocable before its exercise by delivering
either written notice of such revocation or a later dated proxy to the Secretary
of the Company at its executive office at any time prior to voting of the shares
represented by the earlier proxy. In addition, stockholders attending the Annual
Meeting may revoke their proxies by voting at the Annual Meeting. If a returned
proxy does not specify a vote for, and does not withhold authority to vote for,
a nominee for election as a director, the proxy will be voted for such nominee.
If a returned proxy does not specify a vote for or against any of the other
proposals, it will be voted in favor thereof.
The expense of preparing, printing and mailing this Proxy Statement has
been paid by the Company. In addition to the use of the mails, proxies may be
solicited personally or by telephone by regular employees of the Company without
additional compensation. The Company will reimburse banks, brokers and other
custodians, nominees and fiduciaries for their costs in sending the proxy
materials to the beneficial owners of the Company's Class A Common Stock (the
"Class A Common Stock") and Class B Common Stock (the "Class B Common Stock"
and, together with the Class A Common Stock, the "Common Stock"). The Company's
Annual Report for the fiscal year ended December 31, 1998 is being mailed
simultaneously with this Proxy Statement. The approximate mailing date of the
Proxy Statement and the proxy is April 21, 1999.
OUTSTANDING STOCK AND VOTING RIGHTS
All stockholders of record at the close of business on April 14, 1999 are
entitled to notice of and to vote at the Annual Meeting. The number of shares of
voting stock of the Company outstanding on that date and entitled to vote was
(i) 9,959,015 shares of Class A Common Stock, (ii) 802,645 shares of Class B
Common Stock and (iii) 55,000 shares of Series A Preferred Stock, par value $.01
per share (the "Preferred Stock"). Each share of Class A Common Stock is
entitled to one vote, each share of Class B Common Stock is entitled to
one-tenth of one vote and each share of Preferred Stock is entitled to 9.16
votes. Class A Common Stock, Class B Common Stock and Preferred Stock will vote
together as a single class on all matters to be acted on at the Annual Meeting.
Class B Common Stock is fully convertible at any time into Class A Common Stock
on a share-for-share basis, and Preferred Stock is fully convertible at any time
into Class A Common Stock at a conversion rate of 9.16 shares of Class A Common
Stock for each share of Preferred Stock. Information as to persons beneficially
owning 5% or more of the Common Stock and the Preferred Stock may be found under
the heading "Security Ownership of Certain Beneficial Owners and Management"
herein.
Unless otherwise directed in the proxy, the persons named therein will vote
"FOR" the election of the director nominees listed below and "FOR" each of the
other proposals to be considered at the Annual Meeting.
All matters to be acted on at the Annual Meeting require the affirmative
vote of a majority of the voting power of the shares present in person or by
proxy at the Annual Meeting to constitute the action of the
<PAGE> 4
stockholders. In accordance with Delaware law, abstentions will, while broker
nonvotes will not, be treated as present for purposes of the preceding sentence.
A broker nonvote is a proxy submitted by a broker in which the broker fails to
vote on behalf of a client on a particular matter for lack of instruction when
such instruction is required.
PROPOSAL 1:
ELECTION OF DIRECTORS
As permitted by Delaware law, the Board of Directors of the Company is
divided into three classes, the classes being divided as equally as possible and
each class having a term of three years. Each year the term of office of one
class expires. This year the term of a class consisting of three directors
expires, and it is the intention of the Board of Directors that the shares
represented by proxy, unless otherwise indicated thereon, will be voted for the
reelection of Philip J. Ablove, Andrew M. Bursky and John R. Kennedy as
directors to hold office for a term of three years until the Annual Meeting of
Stockholders in 2002 and until their successors are duly chosen.
The persons designated as proxies reserve full discretion to cast votes for
other persons in the event the nominees, Messrs. Ablove, Bursky and Kennedy, are
unable to serve. However, the Board of Directors has no reason to believe that
the nominees will be unable to serve if elected. The proxies cannot be voted for
a greater number of persons than the three named nominees.
The following table sets forth information regarding the nominees and the
remaining directors who will continue in office after the Annual Meeting.
<TABLE>
<CAPTION>
SERVED AS
DIRECTOR OF
THE COMPANY BUSINESS EXPERIENCE
CONTINUOUSLY DURING PAST 5 YEARS
NAME SINCE AGE AND OTHER INFORMATION
- ---- ------------ -------------------------
<S> <C> <C>
Nominees to Hold Office Until 2002
Philip J. Ablove.......................... 1991 Mr. Ablove has been Vice President and Chief
Financial Officer of the Company since March
1996. He was a consultant and officer and
director specializing in financially
distressed companies from 1983 to 1996, and
in a consulting role he served as Acting
Chief Financial Officer of the Company from
October 1995 to March 1966. Mr. Ablove is 58
years of age.
Andrew M. Bursky(1)(2).................... 1994 Mr. Bursky has been a Managing Director of
Interlaken Capital, Inc., a private
investment and consulting firm, since May
1980. He has been Chairman of the Board of
Strategic Distribution, Inc., an industrial
service and distribution business, since
July 1988. Mr. Bursky is 42 years of age.
John R. Kennedy(3)........................ 1998 Mr. Kennedy retired as President and Chief
Officer of Federal Paper Board Company, Inc.
in 1996, after serving that company since
1975. Mr. Kennedy also serves as a director
of International Paper Company, Chase Brass
Industries, Inc., De Vlieg-Bullard, Inc.,
Holnam Inc., and Spartech Corp. Mr. Kennedy
is 68 years of age.
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
SERVED AS
DIRECTOR OF
THE COMPANY BUSINESS EXPERIENCE
CONTINUOUSLY DURING PAST 5 YEARS
NAME SINCE AGE AND OTHER INFORMATION
- ---- ------------ -------------------------
<S> <C> <C>
Directors to Continue in Office Until 2001
Donald J. Donahue(1)(2)(3)(4)............. 1988 Mr. Donahue has been a private investor
since February 1996, and he has served as
Vice Chairman of the Board of Directors of
the Company since May 1996. Mr. Donahue
served as Chairman of the Board of Magma
Copper Company from 1987 to 1996 and as
Chairman of Nacolah Holding Co., a life and
health insurance company, from 1990 to 1993.
From 1984 to 1985, Mr. Donahue served as
Chairman and was a director of KMI
Continental Group, Inc., a natural resource
conglomerate. From 1975 to 1984, he was Vice
Chairman and a director of Continental
Group, Inc. Mr. Donahue is a director of
Chase Brass Industries Inc. Mr. Donahue is
74 years of age.
Richard C. Kellogg, Jr.................... 1995 Mr. Kellogg has been a private investor
since January 1997. He served as President
of the Company from April 1995 to January
1997. Mr. Kellogg was a co-founder of
Pioneer Americas, Inc. and served as
Chairman of the Board and as a director of
Pioneer Americas, Inc. from its formation in
1988 until its acquisition by the Company in
1995. Mr. Kellogg is 47 years of age.
Jack H. Nusbaum(3)(4)..................... 1988 Mr. Nusbaum is Chairman of the New York law
firm of Willkie Farr & Gallagher, where he
has been a partner for more than twenty-five
years. Mr. Nusbaum is a director of W.R.
Berkley Corporation, a property and casualty
insurance holding company, Strategic
Distribution, Inc., an industrial service
and distribution business, Prime Hospitality
Corp., a national hotel company, Fine Host
Corporation, a contract food service
management company and The Topps Company,
Inc., a baseball card and collectibles
company. Mr. Nusbaum is 58 years of age.
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
SERVED AS
DIRECTOR OF
THE COMPANY BUSINESS EXPERIENCE
CONTINUOUSLY DURING PAST 5 YEARS
NAME SINCE AGE AND OTHER INFORMATION
- ---- ------------ -------------------------
<S> <C> <C>
Directors to Continue in Office Until 2000
William R. Berkley(1)(2)(4)............... 1988 Mr. Berkley has been Chairman of the Board
of the Company since 1987. He also serves as
Chairman of the Board of several companies
which he controls or founded. These include
W.R. Berkley Corporation, a property and
casualty insurance company, and Interlaken
Capital, Inc., a private investment and
consulting firm. Mr. Berkley is also a
director of Strategic Distribution, Inc., an
industrial service and distribution
business. Mr. Berkley is 53 years of age.
Michael J. Ferris(1)...................... 1997 Mr. Ferris has been President and Chief
Executive Officer of the Company since
January 1997. Prior to joining the Company
he was employed by Vulcan Materials Company,
a company engaged in the production of
industrial materials and commodities with
significant positions in two industries,
construction aggregates and chemicals, from
March 1974 to January 1997, where he served
as Executive Vice President, Chemicals from
1996 to 1997. Mr. Ferris is also a director
of ChemFirst, Inc., a specialty chemical
company. Mr. Ferris is 54 years of age.
Thomas H. Schnitzius...................... 1995 Mr. Schnitzius has been a principal in the
Houston investment banking firm of
Schnitzius & Vaughan since its formation in
October 1987. Prior to 1987 he was a
principal in the investment banking firm of
Schnitzius & Co., Ltd. Mr. Schnitzius was a
director of Pioneer Americas, Inc. from
April 1993 to April 1995. Mr. Schnitzius is
56 years of age.
</TABLE>
- ---------------
(1) Member of Executive Committee.
(2) Member of Compensation and Stock Option Committee.
(3) Member of Audit Committee.
(4) Member of Administrative Committee.
Mr. Kellogg and Mr. Berkley, the beneficial owner of approximately 59.8% of
the shares of outstanding Class A Common Stock of the Company, are parties to a
stockholders agreement providing that, so long as Mr. Kellogg's employment under
the agreement described below under "Executive Compensation" is in effect, Mr.
Berkley will vote the shares of Class A Common Stock which are owned of record
or beneficially by him or over which he exercises voting control for Mr.
Kellogg's election to the Company's Board of Directors, and that Mr. Kellogg
will vote the shares of Class A Common Stock which are owned of record or
beneficially by him or over which he exercises voting control for the election
of such persons as Mr. Berkley may nominate as directors of the Company.
IT IS THE INTENTION OF THE PERSONS NAMED ON THE ENCLOSED FORM OF PROXY TO VOTE
"FOR"
THE ELECTION OF THE NOMINEES FOR DIRECTOR NAMED ABOVE.
4
<PAGE> 7
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company met four times during 1998. Each of
the persons serving as a director in 1998 attended at least 75% of the total
number of meetings of the Board and meetings of the Committees of which the
director was a member during 1998. Action by written consent is also considered
by the Board and its Committees from time to time. The Board has four standing
committees: the Executive Committee, the Compensation and Stock Option
Committee, the Audit Committee and the Administrative Committee.
The Executive Committee, composed of Messrs. Berkley, Bursky, Donahue and
Ferris, is authorized to act on behalf of the Board during periods between Board
meetings. The Committee did not meet during 1998.
The Compensation and Stock Option Committee establishes the level of
compensation to be paid to the officers of the Company and administers the
Company's 1995 Stock Incentive Plan. The Committee met once during 1998. Messrs.
Berkley, Bursky and Donahue serve on the Committee.
The Audit Committee, composed of Messrs. Donahue, Kennedy and Nusbaum,
advises the Board as to the selection of the Company's independent public
accountants, monitors their performance, reviews all reports submitted by them
and consults with them with regard to the adequacy of internal controls. The
Committee met once during 1998.
The Administrative Committee, consisting of Messrs. Berkley, Donahue and
Nusbaum, was formed during 1997 to establish the qualifications for service as a
director and to seek suitable candidates for such service. The Committee did not
meet during 1998.
The Committee will consider individuals recommended by stockholders for
service on the Board of Directors. Such recommendations should be provided to
the Secretary of the Company.
BANKRUPTCY ACTION
Mr. Bursky was an executive officer of Blue Lustre Products, Inc., a
privately-owned company engaged in the sale and leasing of carpet cleaning
equipment and other carpet cleaning products. In October 1995, while he was an
executive officer, Blue Lustre filed a chapter 11 petition for reorganization
under federal bankruptcy law.
COMPENSATION OF DIRECTORS
In 1992, the Board of Directors established a policy under which each
director who is not also an employee of the Company receives an annual retainer
and a quarterly fee for attendance at meetings. The Board has established the
annual retainer at a level of $22,000, and the quarterly meeting fee at $2,000.
The Company granted each non-employee director who served throughout 1998 5,677
shares of Class A Common Stock under the Company's 1993 Non-Employee Director
Stock Plan in payment of the 1998 annual retainer, and Mr. Kennedy was granted
3,515 shares of Class A Common Stock in payment of the retainer as a result of
his service as a non-employee director during a portion of the year.
Each non-employee director was also paid a quarterly fee of $2,000 for
attendance at meetings of the Board of Directors in 1998.
5
<PAGE> 8
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the shares of
Common Stock and Preferred Stock owned on April 14, 1999 by each person who is
known by the Company to be the beneficial owner of more than five percent of any
class of stock as of such date. Except as otherwise indicated, all shares of
stock shown in the table are held with sole voting and investment power.
<TABLE>
<CAPTION>
SHARES
NAME AND ADDRESS OF BENEFICIALLY PERCENT
TITLE OF CLASS BENEFICIAL OWNER OWNED OF CLASS
- -------------- ------------------- ------------ --------
<S> <C> <C> <C>
Class A Common Stock William R. Berkley(1)................... 5,955,240 59.8
165 Mason Street
Greenwich, CT 06830
Richard C. Kellogg, Jr.(2).............. 589,642 5.9
2716 University Boulevard
Houston, Texas 77005
Frans G.J. Speets(2).................... 589,642 5.9
2400 Fountainview, #204
Houston, Texas 77057
Class B Common Stock Chemical Bank(3)........................ 802,645 100.0
Special Loan Group
270 Park Avenue
48th Floor
New York, NY 10017
Preferred Stock OCC Tacoma, Inc. ....................... 55,000 100.0
5005 LBJ Freeway
Dallas, Texas 75380-9050
</TABLE>
- ---------------
(1) Includes 3,480,234 shares held by Interlaken Investment Partners, L.P. Mr.
Berkley is the sole owner of a company that indirectly controls Interlaken
Investment Partners, L.P.; as such, he may be deemed to be the beneficial
owner of shares of Class A Common Stock held by such entity. Mr. Berkley's
holdings (including the shares owned by Interlaken Investment Partners,
L.P.) represent 56.5% of the voting power of the Company's outstanding
capital stock as of April 14, 1999.
(2) The holdings of each of Messrs. Kellogg and Speets represents 5.6% of the
voting power of the Company's outstanding capital stock as of April 14,
1999.
(3) Information obtained from a Schedule 13G, dated July 21, 1992, filed with
the Securities and Exchange Commission by Chemical Bank ("Chemical"). The
filing reported that Chemical had acquired 802,645 shares of Class B Common
Stock (as adjusted for the one-for-four reverse stock split on April 27,
1995, and the seven percent stock dividends paid to stockholders of record
on December 16, 1996, December 1, 1997, and December 28, 1998), of which it
was the beneficial owner with sole voting and dispositive power. The
holdings of Chemical represent 7.6% of the voting power of the outstanding
Common Stock as of April 14, 1999, and 8% of the number of shares of Common
Stock outstanding as of that date.
The following table sets forth information regarding beneficial ownership
of the Company's Class A Common Stock as of April 14, 1999, by each of the
Company's directors and the nominees for director named herein, each of the
executive officers of the Company named in the Summary Compensation Table under
the caption "Executive Compensation", and all directors and executive officers
of the Company as a group. Included within beneficial ownership are shares as to
which an individual has the right to acquire beneficial ownership within 60 days
of April 14, 1999 through the exercise of stock options. Percentages of Class A
6
<PAGE> 9
Common Stock are based on the shares outstanding as of April 14, 1999, together
with the shares that will be issued if such options are exercised.
<TABLE>
<CAPTION>
SHARES
NAME OF BENEFICIALLY PERCENT
TITLE OF CLASS BENEFICIAL OWNER OWNED OF CLASS
- -------------- ---------------- ------------ --------
<S> <C> <C> <C>
Class A Common Stock Philip J. Ablove........................ 13,429 *
William R. Berkley...................... 5,955,240 58.1
Andrew M. Bursky........................ 295,516 2.8
Donald J. Donahue**..................... 240,196 2.3
Michael J. Ferris....................... 310,839 3.0
Richard C. Kellogg, Jr.................. 627,334 6.1
John H. Kennedy......................... 4,585 *
Jack H. Nusbaum......................... 22,752 *
Thomas H. Schnitzius.................... 13,370 *
Norman E. Thogersen..................... -0- *
James E. Glattly........................ 99,224 *
Jerry B. Bradley........................ 20,664 *
All directors and executive officers as
a group (15 persons).................. 7,591,394 74.1
</TABLE>
- ---------------
* Less than one percent
** 91,877 of such shares are held by the Donahue Family Partnership, which Mr.
Donahue serves as the general partner.
The Company knows of no current arrangements, including any pledge by any
persons of securities of the Company, the operation of which may at a subsequent
date result in a change of control of the Company.
7
<PAGE> 10
EXECUTIVE COMPENSATION
The following tables provide information with respect to the compensation
of the Company's President and Chief Executive Officer and the four other most
highly paid executive officers. Where appropriate, share data reflects the one
for four reverse stock split of April 1995 and the seven percent stock dividends
paid to holders of record in December 1996, December 1997 and December 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS ALL OTHER
------------------------------ OTHER ANNUAL ------------- COMPEN-
NAME AND PRINCIPAL POSITION YEAR(1) SALARY($) BONUS($) COMPENSATION(2)($) OPTIONS(3)(#) SATION($)(4)
- --------------------------- ------- --------- -------- ------------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Michael J. Ferris......... 1998 $387,500 78,581 -- 26,750 4,200
President and Chief 1997 345,965 200,000 80,505 457,960 4,200
Executive Officer
James C. Glattly.......... 1998 234,004 -- -- 12,840 4,800
President, Pioneer Chlor 1997 218,753 119,902 -- 28,622 4,200
Alkali Company, Inc. 1996 193,336 50,000 -- -- 3,750
Norman E. Thogersen....... 1998 187,594 78,790 13,200 12,840 --
President, PCI Chemicals 1997 29,250 -- -- -- --
Canada Inc.
Philip J. Ablove.......... 1998 225,003 36,873 -- 8,560 4,125
Vice President and 1997 225,003 99,001 63,442 -- 2,406
Chief Financial Officer 1996 183,318 40,000 -- 61,252 1,406
Jerry B. Bradley.......... 1998 165,003 20,144 4,280 4,725
Vice President, Human 1997 165,002 58,501 40,683 11,449 4,063
Resources 1996 157,500 15,000 18,309 -- 2,583
</TABLE>
- ---------------
(1) Messrs. Ferris, Thogersen and Ablove were employed by the Company on January
4, 1997, October 31, 1997, and March 8, 1996, respectively. Mr. Glattly has
served in the indicated position since December 1, 1996.
(2) The amount for Mr. Thogersen relates to the personal use of a company car
and premiums related to a company-paid life insurance policy. Other
indicated amounts relate to reimbursement of relocation and moving expenses.
(3) Expressed in terms of the numbers of shares of the Company's Class A Common
Stock underlying options granted during the year. Option grants in 1998 were
under the Company's 1998 Stock Plan. All other option grants were under the
Company's 1995 Stock Incentive Plan, with the exception of 153,129 shares
granted to Mr. Ferris in 1997, which were granted pursuant to agreement
between the Company and Mr. Ferris.
(4) Represents amounts contributed to match a portion of the employee's
contributions under a 401(k) plan.
PENSION PLAN
Defined benefit retirement coverage is provided to U.S.-based executive
officers under the Pioneer Chlor Alkali Company, Inc. pension plan. At the
normal retirement age of 65, participants under the plan receive benefits based
on their credited service and their covered compensation for the average of
their highest five complete consecutive plan years out of their last ten
complete consecutive plan years. Covered compensation under the plan includes
base pay and annual performance and incentive programs, but excludes all other
items of compensation. However, the Internal Revenue Code limits remuneration
which may be taken into account (subject to certain grandfather rules) under the
pension plan for 1998 to $160,000. The benefits in the table set forth below are
computed as a straight life annuity at age 65. Benefits are not subject to any
deduction for social security since the basic benefit formula incorporates the
average social security breakpoint in calculating the benefit.
8
<PAGE> 11
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE(1)
-----------------------------------------------
REMUNERATION 15 20 25 30 35
- ------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$125,000..................................... $27,153 $36,204 $45,255 $54,306 $63,357
150,000..................................... 32,778 43,704 54,630 65,556 76,482
175,000..................................... 32,778 43,704 54,630 65,556 76,482
200,000..................................... 32,778 43,704 54,630 65,556 76,482
225,000..................................... 32,778 43,704 54,630 65,556 76,482
250,000..................................... 32,778 43,704 54,630 65,556 76,482
300,000..................................... 32,778 43,704 54,630 65,556 76,482
400,000..................................... 32,778 43,704 54,630 65,556 76,482
450,000..................................... 32,778 43,704 54,630 65,556 76,482
500,000..................................... 32,778 43,704 54,630 65,556 76,482
</TABLE>
- ---------------
(1) The estimated years of credited service for each of the named executive
officers of the Company as of December 31, 1998, were: Mr. Ferris -- 2
years; Mr. Glattly -- 10 years; Mr. Ablove -- 2 years; and Mr. Bradley -- 3
years.
The Company has adopted a Restoration Retirement Plan for the benefit of
certain employees of the Company and its subsidiaries. Under current law an
individual's annual compensation in excess of a certain level (currently
$160,000) is disregarded in determining the amount of retirement benefits to be
paid to the individual under the Pension Plan maintained for the benefit of the
employees of the Company and Pioneer Chlor Alkali Company, Inc., and the
Company's contributions are similarly limited under the 401(k) Savings Plan
which is maintained for the benefit of the same employees. The Restoration
Retirement Plan will provide unfunded benefits to those executives approved for
participation in the Plan, with the benefits with respect to the Pension Plan to
be equal in amount to the amount which would be paid under the Pension Plan but
for the salary limitation, and with the benefits with respect to the Savings
Plan to be equal to three percent of pay in excess of the salary limitation
amount. Each of the executives named in the Summary Compensation Table, with the
exception of Mr. Thogersen, participates in the Restoration Retirement Plan.
Defined benefit retirement coverage is provided to Mr. Thogersen under the
PCI Chemicals Canada Inc. pension plan. At the normal retirement age of 60, Mr.
Thogersen will be eligible to receive benefits equal to 61% of his covered
compensation for the average of his three highest-compensated years of service,
based on what will have been 37 years of credited service at that time. Assuming
a 20% increase in average compensation from his 1998 compensation level, Mr.
Thogersen's annual pension benefit would be $195,200. Covered compensation under
the plan includes base pay and annual performance and incentive programs and
commissions, but excludes all other items of compensation. While Revenue Canada
regulations limit pension benefits, pension benefits due to Mr. Thogersen in
excess of the limits will be provided under an unfunded, excess pension plan.
9
<PAGE> 12
OPTION GRANTS IN 1998
The following table provides information with respect to grants of stock
options during 1998 to the named executive officers:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------- POTENTIAL REALIZABLE
PERCENT VALUE AT ASSUMED
NUMBER OF OF TOTAL ANNUAL RATES OF STOCK
SHARES OPTIONS EXERCISE PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OR BASE OPTION TERM(1)
OPTIONS EMPLOYEES PRICE EXPIRATION ----------------------
NAME GRANTED (#) IN 1998 (PER SHARE) DATE 5%($) 10%($)
- ---- ----------- ---------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Michael J. Ferris................. 26,750 19.4 8.41 5/19/08 141,480 358,540
Norman E. Thogersen............... 12,840 9.3 8.41 5/19/08 67,911 172,099
James E. Glattly.................. 12,840 9.3 8.41 5/19/08 67,911 172,099
Philip J. Ablove.................. 8,560 6.2 8.41 5/19/08 45,274 114,733
Jerry B. Bradley.................. 4,280 3.1 8.41 5/19/08 22,637 57,366
</TABLE>
All of the options were granted under the Company's 1998 Stock Plan, with
exercise prices equal to the fair market value of the Common Stock on the date
of grant. The options granted to Mr. Ferris provide for the purchase of 11,502
shares on or after May 19, 2001, an additional 11,503 shares on or after May 19,
2002, and an additional 3,745 shares on or after May 19, 2003. The options
granted to Mr. Glattly provide for the purchase of 11,427 shares on or after May
19, 2001 and an additional 1,413 shares on or after May 19, 2002. The options
granted to Messrs. Thogersen, Ablove and Bradley are exercisable in full on or
after May 19, 2001.
The amounts indicated as potential realizable values reflect assumed rates
of appreciation in market value from the date of grant until the end of the
option term, at the rates set by the Securities and Exchange Commission, and
therefore are not intended to forecast possible future appreciation, if any, in
the Company's stock price. The Company did not use an alternative formula for a
grant date valuation, as it is not aware of any formula that will determine with
reasonable accuracy a present value based on future unknown or volatile factors.
AGGREGATED YEAR-END OPTION AMOUNTS
The following table shows with respect to the named executive officers the
number of shares covered by both exercisable and non-exercisable stock options
as of December 31, 1998, with respect to options to purchase Class A Common
Stock of Pioneer. None of such options were "in-the-money" options, with a
positive spread between the exercise price of any such existing stock options
and the year-end price of the Class A Common Stock, which was $4.00 per share.
None of the named executive officers exercised any stock options during the
year.
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING UNEXERCISED
OPTIONS AT DECEMBER 31, 1998 (#)
---------------------------------
NAME(1) EXERCISABLE UNEXERCISABLE
- ------- ------------ --------------
<S> <C> <C>
Michael J. Ferris........................................ 93,308 484,706
Norman E. Thogersen...................................... -- 29,906
James E. Glattly......................................... 18,987 83,723
Philip J. Ablove......................................... -- 69,809
Jerry B. Bradley......................................... 18,375 15,729
</TABLE>
EMPLOYMENT AGREEMENTS AND SEVERANCE AND CHANGE-IN-CONTROL ARRANGEMENTS
On January 4, 1997, the Company entered into a three-year employment with
Michael J. Ferris, pursuant to which Mr. Ferris serves as President and Chief
Executive Officer of the Company. The agreement provides for an annual salary of
not less than $350,000. Under the agreement, Mr. Ferris is entitled to receive
other
10
<PAGE> 13
benefits made available to executive officers and to receive bonus compensation
in accordance with any management incentive plan established by the Board of
Directors. The agreement provides that if employment is terminated by the
Company without "just cause" or by Mr. Ferris for "good reason" (as such terms
are defined in the employment agreement), Mr. Ferris shall continue to receive
his annual salary until the last date of the employment term or, if later, the
first anniversary of the termination date, subject to certain provisions for
offset, and will continue to receive certain other benefits provided for in the
agreement. Termination following a change in control does not constitute "just
cause" or "good reason", but "good reason" does include the failure of any
successor to the Company by operation of law to assume the employment agreement.
On March 8, 1996, Philip J. Ablove, who is a director of the Company, was
elected Vice President and Chief Financial Officer of the Company, after serving
as a management consultant to the Company since October 1995. The Company agreed
to pay Mr. Ablove an annual salary of $225,000. Following any change of control
during his employment by the Company, he is entitled to a severance payment
equal to at least twelve months' salary.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation for executives of the Company is made up of three components,
base salary, annual cash bonus, and long-term incentives. The Compensation and
Stock Option Committee of the Board of Directors reviews each of the components
on an annual basis to ensure that compensation is competitive within the
chemical industry and promotes the alignment of executive and stockholder
interests.
Salary levels are compared to industry survey data on an annual basis to
ensure that compensation levels allow the Company to attract and retain
highly-competent executives. However, given the current downturn in the
industry's business cycle and the anticipated effects on the Company's results,
it has been determined that the Company's executive officers will not be awarded
salary increases during 1999. Amounts to be paid as annual cash bonuses with
respect to each year are linked to the Company's financial performance through
the Company's Shared Earnings Plan, in which all of the Company's employees
participate. A specified return on a business unit's assets must be achieved
before cash bonuses are paid under that plan. Long-term incentives have been
provided in the form of stock option grants to executives upon the commencement
of service and additional grants on a periodic basis. Grants are based on the
perceived value that an executive will provide the Company.
Michael J. Ferris has served as the Company's President and Chief Executive
Officer since January 4, 1997, pursuant to an employment agreement that provides
for an annual salary of not less than $350,000. Mr. Ferris' salary for service
as the Company's chief executive officer during 1999 will be $400,000, an amount
which was determined on the same basis as the salaries of other executives of
the Company, and he will also participate in the Shared Earnings Plan.
William Berkley
Andrew M. Bursky
Donald J. Donahue
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
William R. Berkley, a member of the Compensation and Stock Option
Committee, is the Chairman of the Board of Directors of the Company and, as of
April 14, 1999, may be deemed to beneficially own approximately 59.8% of the
Class A Common Stock (representing approximately 56.5% of the voting power of
the Company).
11
<PAGE> 14
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
The graph set forth below compares the cumulative total stockholder return
on the Class A Common Stock for the period commencing December 31, 1993, and
ending December 31, 1998, to the cumulative total return on the Standard &
Poor's 500 Stock Index and the Standard & Poor's Midcap 4000 Chemicals Stock
Index (Airgas, Inc., Cabot Corporation, Calgon Carbon Corporation, Georgia Gulf
Corporation, IMC Global Inc., Lyondell Petrochemical Company and Solutia Inc.).
Dates are for fiscal years ending December 31 in each of the years indicated.
The graph assumes a $100 investment in the Company's Common Stock and in each
index on December 31, 1993, and that all dividends paid by companies included in
each index were reinvested.
[Performance Graph]
<TABLE>
<CAPTION>
Pioneer S&P Midcap
Measurement Period Companies, 400
(Fiscal Year Covered) Inc. S&P 500 Chemicals
<S> <C> <C> <C>
1993 100 100 100
1994 100 101.32 128.05
1995 419.75 139.40 154.86
1996 332.69 171.40 154.21
1997 934.44 228.58 160.47
1998 304.72 293.91 120.93
</TABLE>
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Pursuant to the 1995 agreement relating to the acquisition of Pioneer
Americas, Inc. by the Company (the "Acquisition Agreement"), certain assets not
necessary for the Company's chlor-alkali business are held by subsidiaries of
the Company for the benefit of the former owners of Pioneer Americas, Inc. (the
"Sellers"). Such assets include (i) real property (the "Excess Land") in St.
Gabriel, Louisiana, Henderson, Nevada and Mojave, California, and (ii) 32% of
the equity interest in Basic Investments, Inc. ("Basic") and directly or
indirectly, 37.22% of the partnership interest in Victory Valley Land Company,
L.P. Any proceeds from such assets are held in a separate account for the
benefit of the Sellers, subject to offset against any claims by the Company
under environmental and other warranties provided to the Company by the Sellers.
As of March 31, 1999, the account had a balance of approximately $6.3 million;
distributions to the Sellers of funds held in the account will not occur before
April 20, 2000. Included among the Sellers are Richard C. Kellogg, Jr., a
director of the Company, and James E. Glattly, an executive officer of the
Company, and Frans G. J. Speets, who beneficially owns 6.0% of the Company's
outstanding Class A Common Stock. Messrs. Kellogg, Glattly, and Speets have
interests in the account and in any liability of 39.4%, 0.7% and 29.4%,
respectively.
12
<PAGE> 15
A subsidiary of the Company is party to an agreement with Basic for the
delivery of water to the Company's Henderson production facility. The agreement
provides for the delivery of a minimum of eight million gallons of water per
day. The agreement expires on December 31, 2014, unless terminated earlier in
accordance with the provisions thereof. Basic also charges the Company and other
companies in the Henderson industrial complex for power distribution services.
Since January 1, 1998, the Company has paid Basic approximately $1.7 million for
the provision of such services. At March 31, 1999, the net amount owed to Basic
was approximately $200,000.
As Sellers under the Acquisition Agreement, Messrs. Kellogg, Glattly and
Speets each also hold promissory notes payable by the Company in the principal
amounts of $4,512,330, $77,718 and $3,366,062, respectively. Since January 1,
1998, the Company has paid such individuals interest on such Seller Notes in the
amounts of approximately $540,000, $9,000 and $402,000, respectively. The notes
are payable in five equal annual installments beginning on April 1, 2001.
On April 20, 1995, the Company entered into a five-year employment
agreement with Richard M. Kellogg, Jr. pursuant to which Mr. Kellogg served as
President of the Company. Mr. Kellogg resigned as President of the Company on
January 4, 1997. Mr. Kellogg continues to perform services for the Company, and
pursuant to the terms of the agreement, the Company will continue to pay Mr.
Kellogg's annual salary of $300,000 per year through April 20, 2000.
In connection with the Acquisition Agreement the Company entered into an
employment agreement with Mr. Speets, pursuant to which the Company agreed to
pay Mr. Speets an annual salary of $190,000 through April 20, 2000. The
agreement provides that following termination of the agreement by either party,
the Company will pay Mr. Speets an amount equal to the present value of the
remaining payments due Mr. Speets, discounted at 7%. The agreement has not been
terminated, and the Company continues to make the required salary payments to
Mr. Speets.
Jack H. Nusbaum, a director of the Company, is Chairman of the law firm of
Willkie Farr & Gallagher, which acts as counsel to the Company from time to
time.
Each transaction involving officers of the Company, its controlling persons
or affiliates was authorized at the time of the transaction or subsequently
ratified by a majority of the Company's disinterested directors. It is the
Company's practice not to enter into any transactions with affiliated parties
unless a majority of the disinterested and independent directors determines that
the terms of such transactions are at least as favorable to the Company as those
available in similar transactions made with non-affiliated parties.
PROPOSAL 2:
APPOINTMENT OF INDEPENDENT AUDITORS
Deloitte & Touche LLP has served as the independent accountants of the
Company for a number of years, and the firm has been appointed by the Board of
Directors as independent certified public accountants to audit the financial
statements of the Company for the fiscal year ending December 31, 1999. The
Board of Directors is submitting this matter to a vote of stockholders in order
to ascertain their views. If the appointment of Deloitte & Touche LLP is not
ratified at the Annual Meeting, the Board of Directors will reconsider its
action and will appoint auditors for the 1999 fiscal year without further
stockholder action. Further, even if the appointment of auditors is ratified by
stockholder action, the Board of Directors may at any time in the future in its
discretion reconsider the appointment of auditors without submitting the matter
to a vote of stockholders.
It is expected that representatives of Deloitte & Touche LLP will attend
the Annual Meeting, will have the opportunity to make a statement if they desire
to do so and will be available to respond to appropriate stockholder questions.
IT IS THE INTENTION OF THE PERSONS NAMED ON THE ENCLOSED FORM OF PROXY TO VOTE
"FOR"
RATIFICATION OF THE SELECTION OF DELOITTE & TOUCHE LLP UNLESS OTHERWISE
DIRECTED.
13
<PAGE> 16
OTHER MATTERS
NOTICE REQUIREMENTS
It is anticipated that the next Annual Meeting of Stockholders after the
one scheduled for May 20, 1999, will be held on or about May 18, 2000. All
stockholder proposals relating to a proper subject for action at the 2000 Annual
Meeting to be included in the Company's Proxy Statement and form of proxy
relating to that meeting must be received by the Company for its consideration
at its principal executive offices no later than January 19, 2000, all in
accordance with the provisions of Rule 14a-8 promulgated under the Securities
Exchange Act of 1934. Any such proposal should be submitted by certified mail,
return receipt requested.
COMPLIANCE WITH SEC.16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than ten percent of
the Company's Class A Common Stock or Class B Common Stock, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
During 1998 reports with respect to the issuance of shares of Class A Common
Stock by the Company to Messrs. Berkley, Bursky, Donahue, Nusbaum and Schnitzius
in payment of director's fees under the Company's 1993 Non-Employee Director
Stock Plan were not filed on behalf of such persons in a timely manner. Based
solely on its review of Section 16(a) reports furnished to the Company, the
Company has not identified any other instances of reports for the fiscal year
ended December 31, 1998, which were not filed in a timely manner.
As of the date hereof, the Board of Directors knows of no other business
that will be presented for consideration at the Annual Meeting. If other
business shall properly come before the Annual Meeting, the persons named in the
proxy will vote according to their best judgment.
By order of the Board of Directors,
WILLIAM R. BERKLEY
Chairman of the Board
April 21, 1999
14
<PAGE> 17
PIONEER COMPANIES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
FOR ANNUAL MEETING MAY 20, 1999
The undersigned hereby constitutes and appoints Philip J. Ablove and Kent R.
Stephenson, and each of them, his true and lawful agents and proxies with full
power of substitution in each, to represent the undersigned at the Annual
Meeting of Stockholders of Pioneer Companies, Inc. to be held at the Stamford
Marriott Hotel, Two Stamford Forum, Stamford, Connecticut on Thursday, May 20,
1999, at 2:00 p.m., and any adjournments thereof, on all matters coming before
said meeting.
DIRECTORS RECOMMEND A VOTE "FOR" ELECTION OF ALL NOMINEES AND "FOR" PROPOSAL 2.
1. ELECTION OF THREE DIRECTORS TO A CLASS EXPIRING IN 2002.
[ ] FOR nominees listed below [ ] WITHHOLD
AUTHORITY to vote for nominees
Philip J. Ablove, Andrew M. Bursky and John R. Kennedy
[ ] FOR, except vote withheld from the following nominee(s):
- --------------------------------------------------------------------------------
2. Proposal to ratify the Board of Directors' selection of Deloitte & Touche LLP
as independent public accountant of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting. You are encouraged to specify
your choices by marking the appropriate boxes, but you need not mark any boxes
if you wish to vote in accordance with the Board of Directors' recommendations.
The Proxy cannot vote your shares unless you sign and return this card in the
enclosed postage paid envelope.
<PAGE> 18
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES AND FOR ITEM
2.
DATE
-------------------------------
-------------------------------
(Signature)
-------------------------------
(Signature if held jointly)
NOTE: Please sign exactly as
name appears hereon. Joint
owners should each sign. When
signing as attorney, executor,
administrator, trustee or
guardian, please give full
title as such.
The signor hereby revokes all
proxies heretofore given by the
signer to vote at said meeting
or any adjournments thereof.
PLEASE MARK, SIGN, DATE AND
RETURN THIS PROXY CARD
PROMPTLY, USING THE ENCLOSED
ENVELOPE. THANK YOU.
