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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
PLUM CREEK TIMBER COMPANY, INC.
-------------------------------
(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.
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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[ ] 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.
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[PLUM CREEK LOGO]
PLUM CREEK TIMBER COMPANY, INC.
999 THIRD AVENUE, SUITE 2300
SEATTLE, WASHINGTON 98104-4096
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Dear Stockholder:
It is a pleasure to invite you to our Company's first Annual Meeting of
Stockholders on Wednesday, May 10, beginning at 9:00 a.m., at Grouse Mountain
Lodge in Whitefish, Montana.
Your vote is important. Whether or not you plan to attend the Annual
Meeting in person, I urge you to vote your proxy as soon as possible. You can
vote over the Internet, as well as by telephone or by mailing back a traditional
proxy card. Voting over the Internet, by telephone or by written proxy will
ensure your representation at the Annual Meeting if you do not attend in person.
Please review the instructions on the proxy card regarding each of these
options. If you do attend in person you will have the opportunity, if you
desire, to change your vote at the meeting.
The agenda for the Annual Meeting includes the election of three directors
to serve until the 2003 Annual Meeting and a proposal to adopt the Plum Creek
2000 Stock Incentive Plan. The Board of Directors recommends that you vote FOR
the slate of director nominees and FOR adoption of the Plum Creek 2000 Stock
Incentive Plan.
If you have any questions concerning the Annual Meeting or the proposals,
please contact our Director of Investor Relations, Emilio Ruocco, at (800)
858-5347 (within the U.S. and Canada) or (206) 467-3600 (outside the U.S. and
Canada, call collect). I look forward to seeing you on May 10 in Whitefish.
Sincerely yours,
/s/ RICK R. HOLLEY
Rick R. Holley
President and Chief Executive Officer
<PAGE> 3
[PLUM CREEK LOGO]
PLUM CREEK TIMBER COMPANY, INC.
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 10, 2000
NOTICE is hereby given that the Annual Meeting of Stockholders of Plum
Creek Timber Company, Inc., a Delaware corporation (the "Company"), will be held
at 9:00 a.m., on May 10, 2000, at the Grouse Mountain Lodge located at 1205
Highway 93 West, Whitefish, Montana, for the following purposes:
1. To elect three (3) persons to serve on the Board of Directors for
three-year terms expiring at the Annual Meeting of Stockholders to be
held in 2003;
2. To approve the adoption of the Plum Creek 2000 Stock Incentive Plan; and
3. To transact such other business as may properly come before such meeting
or any adjournments thereof.
RECORD DATE You are entitled to vote if you were a stockholder of record
at the close of business on March 17, 2000.
ADMISSION If your Plum Creek stock is held in a brokerage account or
by a bank or other nominee, you are considered the
beneficial owner of shares held in street name and these
proxy materials are being forwarded to you by your broker or
nominee. In such case, your name does not appear on the list
of stockholders and (i) in order to be admitted to the
meeting, you must bring a letter or account statement
showing that you were the beneficial owner of Plum Creek
stock on the record date, and (ii) if you wish to vote in
person at the meeting, you must also obtain a proxy executed
in your favor from your broker or other holder of record.
PROXY VOTING Please submit a proxy as soon as possible so that your
shares can be voted at the meeting. Submitting the enclosed
form of proxy will appoint Rick R. Holley, William R. Brown
and James A. Kraft as your proxies. You may submit your
proxy (1) over the Internet, (2) by telephone, or (3) by
mail. For instructions, please refer to the proxy card.
By Order of the Board of Directors
/s/ JAMES A. KRAFT
James A. Kraft
Vice President, General Counsel and Secretary
March 20, 2000
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PLUM CREEK TIMBER COMPANY, INC.
999 THIRD AVENUE, SUITE 2300
SEATTLE, WASHINGTON 98104-4096
------------------------
PROXY STATEMENT FOR THE 2000 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 10, 2000
The Date of this Proxy Statement is March 20, 2000.
SOLICITATION OF PROXY AND REVOCABILITY
This Proxy Statement is furnished to stockholders of Plum Creek Timber
Company, Inc. (the "Company") in connection with the Board of Directors'
solicitation of proxies to be used at the Annual Meeting of Stockholders of the
Company on May 10, 2000, or any adjournments thereof (the "Annual Meeting").
Proxies in the form enclosed, which are properly executed by stockholders and
returned to management, or voted by telephone or Internet and not later revoked,
will be voted at such meeting and, where specification is made on the ballot,
will be so voted. Proxies received without specification, unless revoked, will
be voted for management's proposals.
Any person giving a proxy may revoke it at any time prior to its exercise.
A proxy may be revoked by filing with the Secretary of the Company an instrument
of revocation, by voting by telephone or Internet at a later date, or by signing
and submitting another proxy card with a later date. It may also be revoked by
attending the meeting and voting in person. If your shares of Plum Creek Common
Stock are held in the name of a bank, broker or other holder of record, you must
obtain a proxy, executed in your favor, from the holder of record, to be able to
vote in person at the Annual Meeting.
The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing and mailing of this Proxy Statement, the
proxies, and any additional material which may be furnished to stockholders. In
accordance with the regulations of the SEC and the New York Stock Exchange (the
"NYSE"), the Company will also reimburse brokerage firms and other custodians,
nominees and fiduciaries for their expenses incurred in sending proxies and
proxy materials to the beneficial owners of shares of Plum Creek's Common Stock.
Proxies may be solicited by directors, officers, or regular employees of the
Company in person or by telephone.
VOTE REQUIRED AND METHOD OF COUNTING VOTES
Under Delaware law and the Company's Amended and Restated Bylaws, the
presence at the Annual Meeting, in person or by duly authorized proxy, of the
holders of a majority of the outstanding shares of stock entitled to vote
constitutes a quorum for the transaction of business. Abstentions and broker
"non-votes" are counted as present and entitled to vote for purposes of
determining a quorum. A broker "non-vote" occurs when a nominee holding shares
of Common Stock for a beneficial owner votes on at least one proposal but not on
another because the nominee does not have discretionary voting power with
respect to that item and has not received instructions from the beneficial
owner.
Each share of Plum Creek Common Stock and Plum Creek Special Voting Stock
entitles the holder to one vote on each of the two proposals to be presented at
the Annual Meeting.
With respect to the election of directors, stockholders may vote in favor
of all nominees, or withhold their votes as to all nominees, or withhold their
votes as to specific nominees. Checking the box that withholds authority to vote
for a nominee is the equivalent of abstaining. The three nominees who receive
the greatest number of votes cast for the election of directors by shares
entitled to vote and present in person or by proxy at the Annual Meeting will be
elected directors. In an uncontested plurality election, such as this,
abstentions and broker non-votes have no effect, since approval by a percentage
of the shares present or outstanding is not required.
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With respect to Proposal No. 2, approval of the Plum Creek 2000 Stock
Incentive Plan (the "Plan"), the affirmative vote of the majority of shares
present in person or by proxy and entitled to vote at the Annual Meeting is
required. A stockholder who signs and submits a ballot or proxy is "present," so
an abstention will have the same effect as a vote against the proposal. Shares
not voted (by broker non-vote, or otherwise) are not considered present and are
not counted as votes against the proposal.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL
Pursuant to the Delaware General Corporation Law and the Company's Amended
and Restated Bylaws, the business, property and affairs of Plum Creek are
managed under the direction of the Board of Directors. Members of the Board are
kept informed of Plum Creek's business through discussions with Plum Creek's
officers, by reviewing materials provided to them and by participating in
meetings of the Board and its committees.
The current nine-member Board of Directors is divided into three classes,
with a class of directors elected each year for a three-year term and until
successors of such directors are elected. The three directors whose terms are
expiring in 2000 are Charles P. Grenier, Hamid R. Moghadam and John H. Scully,
and each has been nominated for re-election as a director at the Annual Meeting.
The remaining six directors will continue to serve as set forth below. In
the absence of instructions to the contrary, the proxy holders will vote the
proxies received by them for the election of Messrs. Grenier, Moghadam and
Scully. Discretionary authority is reserved to cast votes for the election of a
substitute should any of the nominees be unable or unwilling to serve as a
director. Each of the nominees has agreed to serve as a director if elected and
the Company believes that each of them will be available to serve.
The names and ages of the nominees and the other directors and their
principal occupations or employment during the past five years are set forth
below.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS, FOR TERMS EXPIRING IN 2003:
Charles P. Grenier
Mr. Grenier, 50, served as the Executive Vice President of Plum Creek
Management Company, L.P. ("Management Company"), the former general partner of
Plum Creek Timber Company, L.P., from January 1994 through our conversion to a
Real Estate Investment Trust ("REIT") on July 1, 1999, and continues in the same
position with the Company. Mr. Grenier served as a Director of PC Advisory Corp
I ("Corp I"), the general partner of Management Company, from April 1995 through
our conversion to a REIT, and was elected a Director of the Company on July 1,
1999. Mr. Grenier also serves as a Director of Winter Sports, Inc.
Hamid R. Moghadam
Mr. Moghadam, 43, was elected a Director of the Company on July 1, 1999. He
is the Chief Executive Officer of AMB Property Corporation and Chairman of its
Board of Directors. Mr. Moghadam is also one of the founders of AMB (in 1983),
which is one of the largest public REITs in the country focusing on high
through-put industrial properties.
John H. Scully
Mr. Scully, 55, served as a Director of Corp I from November 1992 through
our conversion to a REIT, and was elected a Director of the Company on July 1,
1999. Since 1991, Mr. Scully's principal occupation has been as a Managing
Director of SPO Partners & Co., a private investment firm that is an affiliate
of the former general partner. Mr. Scully also serves as a Director for Bell &
Howell Company, Inc.
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DIRECTORS WHOSE TERMS WILL EXPIRE IN 2001:
David D. Leland
Mr. Leland, 64, served as a Director and Chairman of the Board of Corp I
from December 1992 through our conversion to a REIT, and was elected a Director
and the Chairman of the Board of the Company on July 1, 1999. Mr. Leland served
as the President and Chief Executive Officer of Management Company from December
1992 to December 1993.
John G. McDonald
Professor McDonald, 62, was elected a Director of the Company on July 1,
1999. Professor McDonald is the IBJ Professor of Finance in the Graduate School
of Business at Stanford University, where he has been a faculty member since
1968. He serves as a Director of Varian, Inc.; Scholastic Corp.; Starwood
Financial, Inc.; and eight mutual funds managed by Capital Research and
Management Company and affiliates.
William E. Oberndorf
Mr. Oberndorf, 46, served as a Director of Corp I from November 1992
through our conversion to a REIT, and was elected a Director of the Company on
July 1, 1999. Since 1991, Mr. Oberndorf's principal occupation has been as a
Managing Director of SPO Partners & Co., a private investment firm that is an
affiliate of the former general partner. Mr. Oberndorf also serves as a Director
for Bell & Howell Company, Inc.
DIRECTORS WHOSE TERMS WILL EXPIRE IN 2002:
Rick R. Holley
Mr. Holley, 48, served as the President and Chief Executive Officer of
Management Company from January 1994 through our conversion to a REIT, and
continues in the same position with the Company. Mr. Holley served as a Director
of Corp I from January 1994 through our conversion to a REIT, and was elected a
Director of the Company on July 1, 1999.
Ian B. Davidson
Mr. Davidson, 68, served as a Director of Corp I from December 1992 through
our conversion to a REIT, and was elected a Director of the Company on July 1,
1999. Mr. Davidson is the Chairman of DADCO, the holding company that owns the
brokerage firm D.A. Davidson & Co. Mr. Davidson also serves as a Director of
Energy West and the DADCO Companies.
William J. Patterson
Mr. Patterson, 38, served as a Director of Corp I from November 1992
through our conversion to a REIT, and was elected a Director of the Company on
July 1, 1999. Since 1991, Mr. Patterson's principal occupation has been as a
Managing Director of SPO Partners & Co., a private investment firm that is an
affiliate of the former general partner.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors held four regularly scheduled meetings and no
special meetings in 1999. During 1999, all directors, except for Professor
McDonald, attended 100% of the meetings of the Board of Directors and the
standing Committees on which they served. Professor McDonald, elected to the
Board on July 1, 1999, missed one Board meeting and one Audit and Compliance
Committee meeting.
Audit and Compliance Committee
During fiscal year 1999, the Audit and Compliance Committee of the Board
met two times. This committee has the responsibility to review and approve the
scope of the annual audit, to recommend to the
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Board the appointment of the independent public accountants, to interview the
independent public accountants for review and analysis of the Company's
financial systems and controls, and to review the independence of, and any
non-audit services by, the independent public accountants. The Audit and
Compliance Committee is also charged with reviewing the Company's Environmental
Management Program and other compliance programs. Current members of the Audit
and Compliance Committee are Messrs. Davidson (Chairman), Leland and McDonald.
Compensation Committee
The Compensation Committee of the Board, which held two meetings during
fiscal year 1999, is responsible for reviewing and evaluating compensation
policies and plans and recommending such plans for Board approval, including the
compensation policies and plans for the Company's executive officers. The
Compensation Committee is also responsible for making recommendations to the
Board concerning amendments to the compensation plans and, in certain instances,
making amendments to such plans. The current members of this committee are
Messrs. Oberndorf (Chairman), Moghadam and Patterson.
Nominating Committee
The Nominating Committee of the Board was created at the time of the
Company's conversion to a REIT and held no meetings during fiscal year 1999. The
Nominating Committee is responsible for making recommendations to the Board on
nominees to be designated by the Board for election as Directors. The current
members of this committee are Messrs. Leland (Chairman), Scully and Holley.
The Nominating Committee will consider nominee recommendations from
stockholders. Stockholder recommendations must be in writing and addressed to
the Chairman of the Nominating Committee, c/o Corporate Secretary, Plum Creek
Timber Company, Inc., 999 Third Avenue, Suite 2300, Seattle, Washington, 98104.
If a stockholder intends to make a nomination at any Annual Meeting, the Bylaws
of the Company require that the stockholder deliver written notice to the
Company not more than 90 days nor less than 60 days prior to the anniversary
date of the Company's previous year's annual meeting of stockholders, setting
forth, among other things: (i) the name and address of the stockholder who
intends to make the nomination; (ii) the name, age, address and principal
occupation of the proposed nominee or nominees; (iii) a representation that the
stockholder is entitled to vote at such meeting and intends to appear in person
or by proxy at the meeting to nominate the person or persons specified in the
notice; (iv) the consent of each proposed nominee to serve as a director of the
Company if so elected; and (v) the number of shares of Common Stock of the
Company owned by the notifying stockholder and by the proposed nominee or
nominees. These Bylaw provisions afford the Board of Directors the opportunity
to consider the qualifications of the proposed nominees and, to the extent
deemed necessary or desirable by the Board, to inform stockholders about such
qualifications.
Messrs. Scully, Patterson and Oberndorf are principals of the former
general partner. Under the terms of the Company's conversion in 1999 to a REIT,
so long as they continue to own, directly and indirectly, at least five million
shares of the Company's Common or Special Voting Stock, they are entitled to
designate, for nomination purposes only, a sufficient number of the Company's
nominees for the Board that, in addition to previously elected designees, would
constitute a majority of the Board. If their ownership drops below five million
shares but is greater than three million shares, they are entitled to designate
the number of nominees that, in addition to previously elected designees, would
equal two members of the Board.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee do not have any compensation
committee interlocks or other insider participation to report.
DIRECTOR COMPENSATION
During fiscal year 1999, each non-employee Director received an annual fee
of $30,000 and $1,000 for each Board and committee meeting attended. The
Chairman of the Board and committee chairmen each received an additional annual
fee of $5,000 for serving in such capacities. In addition, each Director was
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reimbursed for expenses incurred in connection with these meetings. For fiscal
year 2000, each non-employee Director will receive an annual fee of $40,000 and
no per-meeting compensation. The Chairman of the Board and committee chairmen
will continue to receive an additional annual fee of $5,000. Directors may also
elect to take their Board fees in Company stock and may defer all or part of
their compensation.
Certain incidental expenses are paid on behalf of the Chairman of the
Board, Mr. Leland, which totaled $40,348 for 1999.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The members of the Board of Directors, the executive officers of the
Company and persons who hold more than 10 percent of the Company's Common Stock
are subject to the reporting requirements of Section 16(a) of the Securities
Exchange Act of 1934 (the "Exchange Act"), which require them to file reports
with respect to their ownership of and transactions in the Company's securities,
and furnish the Company copies of all such reports they file. Based upon the
copies of those reports furnished to the Company, and written representations
that no other reports were required to be filed, the Company believes that all
reporting requirements under Section 16(a) for the fiscal year ended December
31, 1999 were met in a timely manner by its executive officers, Board members
and greater than 10 percent stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION AS DIRECTORS OF
THE NOMINEES NAMED HEREIN. UNLESS INDICATED OTHERWISE ON THE PROXY, THE SHARES
WILL BE VOTED FOR THE ELECTION OF SUCH NOMINEES.
PROPOSAL NO. 2
ADOPTION OF THE PLUM CREEK 2000 STOCK INCENTIVE PLAN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL
The affirmative vote of the majority of shares present in person or by
proxy and entitled to vote at the Annual Meeting is required for approval of
Proposal No. 2. A stockholder who signs and submits a ballot or proxy is
"present," so an abstention will have the same effect as a vote against the
proposal. Shares not voted (by broker non-vote, or otherwise) are not considered
present and are not counted as votes against the proposal.
The principal features of the Plum Creek 2000 Stock Incentive Plan (the
"Plan") are summarized below, but the summary is qualified in its entirety by
reference to the full text of the Plan. A copy of the Plan is attached as
Appendix A to this Proxy Statement.
PURPOSE AND GENERAL DESCRIPTION OF THE STOCK INCENTIVE PLAN
The purpose of the Plan is to enable the Company to attract and retain
highly qualified personnel who will contribute to the Company's success and to
provide incentives to eligible participants that are linked directly to
increases in stockholder value and will therefore inure to the benefit of all
stockholders of the Company. The total number of shares of Common Stock reserved
and eligible for issuance under the Plan shall be 3,425,000. The Plan provides
for the award of non-qualified stock options, dividend equivalents, restricted
stock and value management awards.
ADMINISTRATION OF THE STOCK INCENTIVE PLAN
The Plan is administered by the Company's Board of Directors and/or a
Compensation Committee (the "Committee") appointed by the Board of Directors
consisting solely of two or more non-employee directors of the Company who
qualify as "outside directors" for purposes of Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code") and "Non-Employee Directors" for
purposes of Rule 16b-3 under the Exchange Act. The Committee has the authority
to interpret the Plan and the agreements pursuant to which awards are granted,
to adopt rules for the administration, interpretation and application of the
Plan that are consistent with the Plan, and to interpret, amend or revoke any of
those rules. In its discretion, the Board
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of Directors may at any time and from time to time exercise any and all rights
and duties of the Committee under the Plan except with respect to matters which
under Rule 16b-3 or Section 162(m) of the Code, or any regulations or rules
issued thereunder, are required to be determined in the sole discretion of the
Committee. The Plan provides that the Committee may delegate from time to time
to a sub-committee or to a senior executive officer to the extent such
delegation is appropriate under Section 162(m) of the Code and Rule 16b-3 under
the Exchange Act.
AWARDS AND ELIGIBILITY
The Plan provides for grants of (a) non-qualified stock options (stock
options not intended to qualify as "incentive stock options" within the meaning
of Section 422 of the Code ("options"), (b) awards of restricted stock, (c)
dividend equivalents, and (d) value management awards to officers, directors,
employees, consultants and advisors of the Company and its subsidiaries.
Stock Options
Options will provide for the right to purchase Common Stock at the fair
market value of the Common Stock on the date of grant, except that the Committee
may determine otherwise with respect to the initial grants under the Plan. No
individual may be granted options during any calendar year for shares of Common
Stock exceeding 5% of the shares reserved for issuance under the Plan, subject
to adjustment for stock splits, mergers and other corporate restructurings.
Unless otherwise provided in a particular award agreement, options will
vest over a four year period at a rate of 25% per year and will be exercisable
after vesting, subject to such terms and conditions as will be determined by the
Committee at or after the time of grant; provided, however, that the Committee
may not grant an option with a term of more than 10 years from the date of
grant. At any time after grant of an option, the Committee may, in its
discretion, accelerate the period during which an option vests.
Options are exercisable in whole or in part by written notice to the
Company, specifying the number of shares being purchased and accompanied by
payment of the purchase price for such shares. The option price may be paid: (1)
in cash or its equivalent, as determined by the Committee, (2) by means of any
cashless procedure approved by the Committee, (3) by delivery of restricted or
unrestricted shares of Common Stock already owned by, and in the possession of,
the optionee or (4) if authorized by the Board of Directors or the Committee, or
if specified in the option agreement for the option being exercised, by a
promissory note made by the optionee in favor of the Company. On the date the
option price is to be paid, the optionee must make full payment to the Company
of all amounts that must be withheld by the Company for Federal, state or local
tax purposes or make arrangements satisfactory to the Committee regarding the
payment of Federal, state or local taxes required by law to be withheld with
respect to such award.
If a participant's employment with or service as a director, consultant or
advisor to the Company terminates by reason of his or her death, disability or
for any other reason, vested options may thereafter be exercised as provided in
the participant's award agreement, or as otherwise determined by the Committee.
The Committee, in its absolute discretion, may impose such limitations and
restrictions on the exercise of options as it deems appropriate. Any such
limitations will be set forth in the respective award agreement. An optionee may
not exercise an option if in the sole and absolute discretion of the Committee
the exercise of the option would likely result in the optionee's or any other
person's ownership of capital stock being in violation of the ownership limit
contained in the Company's Articles of Incorporation.
Restricted Stock
A restricted stock award is an award of Common Stock that the recipient may
not sell, assign, transfer, pledge, hypothecate or otherwise dispose of for a
period of time from the date on which the award was granted and that is subject
to such other limitations and restrictions as may be determined by the
Committee. Officers of the Company are not eligible to receive shares of
Restricted Stock under the Plan.
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Awards of restricted stock may be granted either alone or in addition to
other awards under the Plan. The Committee will determine the eligible
recipients; the timing and number of shares to be awarded; the price, if any, to
be paid by each participant for the acquisition of restricted stock; the
restricted period applicable to awards; and all other conditions. The recipient
of restricted stock will generally have the rights of a stockholder of the
Company with respect to voting and receipt of dividends during the restricted
period.
Terms governing forfeiture of restricted stock upon termination of
employment or service as a director, consultant or advisor to the Company or to
any Subsidiary for any reason during the restricted period will be set forth in
the award agreement governing the awards.
Dividend Equivalents
Dividend equivalents represent a 5-year right, granted in connection with
an option granted under the Plan, to receive cash and Common Stock equal in
value to (x) the per-share dividends paid by the Company during that period,
times (y) the number of shares of Common Stock underlying the option. Dividend
equivalents are subject to the attainment of performance goals, which unless
otherwise provided in a particular award agreement, will be 13% total
shareholder return on an annualized basis. For the performance goal to be met in
any current year, and in order to earn prior-period unearned dividend
equivalents, total shareholder return must be at or above the target for 15
trading days out of any 30 trading day period. Once the goal is met, dividends
for such year(s) will be credited to the participant and will earn interest at a
market rate selected from time to time by the Committee. The performance goals
are intended to comply with Section 162(m) and will be subject to equitable
adjustment by the Committee to the extent permitted by Section 162(m).
Should a participant's employment terminate prior to the end of the 5-year
performance period, dividend equivalents credited to the participant will be
paid out in cash, except for dividend equivalents relating to non-vested
options, which will be forfeited.
The maximum payment with respect to dividend equivalents granted in any one
calendar year to a participant who is a "Covered Employee" for purposes of
Section 162(m)(3) of the Code may not exceed an amount calculated by multiplying
(x) the maximum number of options permitted to be granted to a single individual
times (y) the dividend paid per share of Common Stock over the 5-year
performance period, plus (z) any interest credited thereon.
Value Management Awards
A value management award is an incentive compensation award that is
contingent upon the attainment of performance goals during a specified 3-year
performance period. These performance goals will be tied directly to total
shareholder return, are intended to comply with Section 162(m) of the Code, and
are subject to equitable adjustment by the Committee to the extent permitted by
Section 162(m). The Committee will specify the performance goals applicable to,
and the face value of, each value management award granted to a participant, and
the amounts that the participant is eligible to earn upon achievement of the
performance goals. Unless otherwise provided in a particular award agreement,
the performance goals will constitute a measure of total shareholder return,
relative to a peer group of companies selected by the Committee, as set forth
below:
<TABLE>
<CAPTION>
TOTAL SHAREHOLDER RETURN VALUE MANAGEMENT AWARD EARNED
------------------------ -----------------------------
<S> <C>
At or above the 75th percentile 200% of face value
Between the 50th and 75th percentiles Sliding scale between 0 and 200%
Below the 50th percentile 0% of face value
</TABLE>
Upon a determination by the Committee that the performance goals have been
achieved under the Plan, appropriate amounts will be credited to each
participant and will earn interest at a market rate selected from time to time
by the Committee. Unless otherwise determined by the Committee, amounts credited
to a participant will be paid out 50% at the beginning of the 4th year following
grant of the award and 50% at the beginning of the 5th year following grant of
the award, with each installment paid 50% in cash and 50% in Common Stock. In
the case of participants who are Covered Employees for purposes of Section
162(m)(3) of
7
<PAGE> 11
the Code, unless otherwise determined by the Committee, such payments will be
made only after achievement of the performance goals has been certified by the
Committee.
No payment in respect of a value management award granted for a performance
period may be made to a participant in an amount that exceeds $3.6 million.
Unless otherwise provided by the Committee in connection with specified
terminations of employment or a "Change in Control" as defined in the Plan, if a
participant's employment terminates for any reason (other than death or
disability), including termination for cause, prior to the payment of a value
management award with respect to a performance period, no value management award
will be paid to that participant for that performance period, and all amounts
credited to such participant will be forfeited. However, should a participant
die or become disabled at any time during a Performance Period, a pro rata award
may be paid based upon the participant's number of full months of active service
during the performance period.
NON-TRANSFERABILITY
Except as may be otherwise provided by the Committee, options awarded under
the Plan may be transferred only pursuant to a qualified domestic relations
order or by will, by the laws of descent and distribution, by an instrument to
an inter vivos or testamentary trust, or by gift to immediate family members,
unless and until such awards have been exercised or the shares underlying such
awards have been issued and all restrictions applicable to such shares have
lapsed. During a participant's lifetime, options are exercisable only by the
participant. Participants are not permitted under the Plan to sell, transfer,
pledge or assign restricted stock, dividend equivalents or value management
awards.
NO REPRICING OF OPTIONS
Once granted, the exercise price of an option granted under the Plan may
not be reduced.
ADJUSTMENTS
If the Committee determines that any dividend, reclassification, stock
split, reorganization, merger, consolidation or other similar change in
corporate structure affects the Common Stock such that the Committee or the
Board of Directors determines an adjustment is appropriate in order to prevent
dilution, then the Committee or the Board will make appropriate adjustments to
the maximum number and class of shares issuable under the Plan and the number
and/or class of shares and price per share in effect under each outstanding
award.
AMENDMENT, SUSPENSION OR TERMINATION OF THE STOCK INCENTIVE PLAN
The Board of Directors may at any time suspend or terminate the Plan. The
Board of Directors or Committee may also at any time amend the Plan. However, no
such amendment or revision may, unless appropriate stockholder approval of such
amendment or revision is obtained, (1) increase the maximum number of shares
which may be acquired pursuant to awards granted under the Plan (except for
adjustments described in the foregoing paragraph) or (2) increase the maximum
number of shares of Common Stock (5% of the shares reserved for issuance under
the Plan) for which awards may be issued during any fiscal year to any
participant. No amendment of the Plan may alter or impair any rights or
obligations under any awards already granted unless the holder of the award
consents or the award otherwise provides. No awards may be granted or awarded
during any period of suspension or after termination of the Plan.
CHANGE OF CONTROL
If a Participant's employment is terminated by the Company within one year
following a Change in Control as defined in the Plan other than for cause as
defined in the Plan (but not by reason of death or disability) or by the
participant with good reason as defined in the Plan, any options held by the
participant under the Plan not previously exercisable and vested will become
fully exercisable and vested; any restrictions or conditions applicable to any
restricted stock awards held by the participant under the Plan will lapse and
8
<PAGE> 12
certificates representing shares of unrestricted stock will be issued to such
participant within a reasonable period of time; with respect to dividend
equivalents held by the participant under the Plan, all amounts credited to the
participant at the time of termination will be paid in cash to the participant
within ten business days; and with respect to value management awards, the
maximum level of performance set forth under the respective performance goals
will be deemed to have been attained and a pro rata portion (based on the number
of full and partial months that have elapsed with respect to each performance
period) of each outstanding value management award granted to the participant,
along with all amounts credited to the participant, will become payable in cash
to the Participant within ten business days.
SECURITIES LAWS AND FEDERAL INCOME TAXES
Securities Laws
The Plan is intended to conform to the extent necessary with all provisions
of the Securities Act of 1933 and the Exchange Act and any and all regulations
and rules promulgated by the SEC thereunder, including without limitation Rule
16b-3. The Plan will be administered, and options will be granted and may be
exercised, only in such a manner as to conform to such laws, rules and
regulations. To the extent permitted by applicable law, the Plan and options
granted thereunder will be deemed amended to the extent necessary to conform to
such laws, rules and regulations.
General Federal Tax Consequences
Under current Federal laws, in general, recipients of awards and grants of
nonqualified options, restricted stock, and dividend equivalents under the Plan
are taxable under Section 61 or 83 of the Code upon their receipt of Common
Stock or cash with respect to such awards or grants and, subject to Section
162(m) of the Code, the Company will be entitled to an income tax deduction with
respect to the amounts taxable to such recipients.
Section 162(m) Limitation
In general, under Section 162(m) of the Code, income tax deductions of
publicly-held corporations may be limited to the extent total compensation
(including base salary, annual bonus, option exercises, transfers of property
and benefits paid under non-qualified plans) for certain executive officers
exceeds $1,000,000 (less the amount of any "excess parachute payments" as
defined in Section 280G of the Code) in any one year. However, under Section
162(m), the deduction limit does not apply to certain "performance-based
compensation."
Under Section 162(m), options will satisfy the "performance-based
compensation" exception if the award of the options is made by a Board of
Directors committee consisting solely of 2 or more "outside directors," the Plan
sets the maximum number of shares that can be granted to any person within a
specified period and the compensation is based solely on an increase in the
stock price after the grant date (i.e., the option exercise price is equal to or
greater than the fair market value of the stock subject to the award on the
grant date). Other types of awards may only qualify as "performance-based
compensation" if such awards are only granted or payable to the recipients based
upon the attainment of objectively determinable and pre-established performance
goals which are established by a qualifying committee and which relate to
performance targets which are approved by the corporation's stockholders.
The Plan has been designed to permit the Committee to grant options that
will qualify as "performance-based compensation." The Committee may grant awards
to Section 162(m) participants that vest or become exercisable upon the
attainment of performance goals determined by the Committee in its sole
discretion. The specific performance goals to be determined by the Board or the
Committee for dividend equivalents and value management awards are intended to
comply with Section 162(m) of the Code, will be administered by the Board of
Directors or the Committee and will be based upon total shareholder return. The
performance goals will be subject to equitable adjustment by the Committee to
the extent permitted by Section 162(m). The performance goals relate to any
period the Committee designates as a performance period.
9
<PAGE> 13
NEW PLAN BENEFITS TABLE
Due to the discretionary nature of awards under the Plan and the fact that
no awards have yet been granted, the amount of awards that may be granted under
the Plan to any individual is not determinable. Therefore, a "New Plan Benefits
Table" has not been provided.
THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF THE STOCK INCENTIVE PLAN. AN
AFFIRMATIVE VOTE OF AT LEAST A MAJORITY OF THE SHARES PRESENT AND ENTITLED TO
VOTE IS NECESSARY FOR APPROVAL.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Company's
Common Stock (including 634,566 shares of Special Voting Stock convertible into
Common Stock) as of March 20, 2000 held by each director and officer, all
directors and officers as a group, and any person or entity known to the Company
to beneficially own more than 5% of the Company's Common Stock:
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT
NAME OF INDIVIDUAL OR IDENTITY OF GROUP BENEFICIALLY OWNED OF CLASS
--------------------------------------- ------------------ --------
<S> <C> <C>
Beneficial Owners of more than 5%
PC Advisory Partners I, L.P............................ 17,133,275(a) 24.75%
PC Intermediate Holdings, L.P.......................... 17,133,275(a) 24.75%
Directors
Ian B. Davidson........................................ 26,976(b) *
Charles P. Grenier..................................... 210,794(c) *
Rick R. Holley......................................... 687,894(d)(e) *
David D. Leland........................................ 112,625(f) *
John G. McDonald....................................... 2,000 *
Hamid R. Moghadam...................................... 862 *
William E. Oberndorf................................... 17,136,881(g) 24.76%
William J. Patterson................................... 17,136,630(g) 24.76%
John H. Scully......................................... 17,141,401(g)(h) 24.77%
Executive Officers
William R. Brown....................................... 44,604(i) *
James A. Kraft......................................... 120,748(j) *
Michael J. Covey....................................... 15,157(k) *
Barbara L. Crowe....................................... 9,892(l) *
All 13 Executive Officers and Directors as a Group....... 18,379,914 26.56%
</TABLE>
- ---------------
* Represents less than 1.0% of the outstanding shares of Common Stock, based
on 69,206,575 shares of Common Stock outstanding as of March 20, 2000.
Unless otherwise indicated, the address of each person is c/o Plum Creek
Timber Company, Inc., 999 Third Avenue, Suite 2300, Seattle, Washington,
98104-4096.
(a) PC Advisory Partners I, L.P. and PC Intermediate Holdings, L.P. are deemed
to be under common control. Each is deemed, therefore, to beneficially own
shares of Common Stock held by the other. PC Advisory Partners I, L.P.
directly owns 164,987 shares of Common Stock and 6,346 shares of Special
Voting Stock, which is convertible into Common Stock. PC Intermediate
Holdings, L.P. directly owns 16,333,722 shares of Common Stock and 628,220
shares of Special Voting Stock.
(b) Includes 300 shares of Common Stock owned by Mr. Davidson's wife.
(c) Includes 60,048 shares of Common Stock receipt of which has been deferred
pursuant to an election under an employee benefits plan. Also includes
5,750 shares of Common Stock owned by Mr. Grenier's children.
10
<PAGE> 14
(d) Includes 103,352 shares of Common Stock receipt of which has been deferred
pursuant to an election under an employee benefits plan. Also includes
6,800 shares of Common Stock owned by Mr. Holley's children.
(e) Includes 387,745 shares of Common Stock owned by an employee benefits trust
as to which Mr. Holley, as President and Chief Executive Officer, has
voting and dispositive power. Mr. Holley disclaims beneficial ownership of
the shares of Common Stock held by the trust.
(f) Includes 32,000 shares of Common Stock held by Mr. Leland's wife.
(g) Includes 164,987 shares of Common Stock and 6,346 shares of Special Voting
Stock held by PC Advisory Partners I, L.P. Also includes 16,333,722 shares
of Common Stock and 628,220 shares of Special Voting Stock held by PC
Intermediate Holdings, L.P. Messrs. Oberndorf, Patterson and Scully have
shared control of, and have an indirect pecuniary interest in, PC Advisory
Partners I, L.P. and PC Intermediate Holdings, L.P.
(h) Includes 5,000 shares of Common Stock held in a trust over which Mr. Scully
has voting and dispositive power.
(i) Includes 15,234 shares of Common Stock receipt of which has been deferred
pursuant to an election under an employee benefits plan.
(j) Includes 43,294 shares of Common Stock receipt of which has been deferred
pursuant to an election under an employee benefits plan. Also includes
3,220 shares of Common Stock held by Mr. Kraft's children.
(k) Includes 5,155 shares of Common Stock receipt of which has been deferred
pursuant to an election under an employee benefits plan.
(l) Includes 3,556 shares of Common Stock receipt of which has been deferred
pursuant to an election under an employee benefits plan.
11
<PAGE> 15
EXECUTIVE COMPENSATION
The following table sets forth a summary of compensation for the three
fiscal years ended December 31, 1999 for the President and Chief Executive
Officer and the Company's four other most highly compensated executive officers
for services rendered in all capacities. Compensation amounts are on an accrual
basis and include amounts deferred at the officer's election.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
-----------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
---------------------------------- ---------- ----------
(A) (B) (C)
OTHER RESTRICTED (D) (E)
ANNUAL STOCK LTIP ALL OTHER
SALARY BONUS COMPENSATION AWARDS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) ($) ($)
- --------------------------- ---- -------- -------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Rick R. Holley 1999 $470,000 $470,000 $128,990
President and Chief 1998 $456,000 $114,000 $2,994 $114,000 $8,450,148 $ 53,840
Executive Officer 1997 $434,000 $217,000 $217,000 $ 51,240
Charles P. Grenier 1999 $363,000 $320,000 $ 88,375
Executive Vice President 1998 $356,000 $ 75,000 $2,723 $ 75,000 $6,035,820 $ 42,200
1997 $343,000 $171,500 $171,500 $ 40,640
James A. Kraft 1999 $238,500 $238,500 $ 60,243
Vice President, General 1998 $232,000 $ 55,000 $1,559 $ 55,000 $3,621,491 $ 27,503
Counsel and Secretary 1997 $223,600 $111,800 $111,800 $ 26,488
William R. Brown 1999 $215,625 $225,000 $ 36,413
Executive Vice President 1998 $175,000 $ 50,000 $1,088 $ 50,000 $1,245,868 $ 15,450
and Chief Financial
Officer 1997 $165,000 $ 82,500 $ 82,500 $ 14,400
Michael J. Covey 1999 $174,375 $180,000 $ 17,159
Vice President, Resources 1998 $148,830 $ 37,500 $ 37,500 $ 518,167 $ 20,007
1997 $125,500 $ 80,089 $ 9,104
</TABLE>
- ---------------
(a) Amounts in the bonus column represent cash payments under the Management
Incentive Plan ("MIP"). Under the terms of the MIP, one half of any MIP
award was paid in cash and the remaining half in shadow stock (defined
below). The shadow stock portion of the awards is reflected under the
Restricted Stock Awards column of the Summary Compensation Table. For the
plan year 1999, the Board approved the payment of the MIP awards entirely
in cash. For the years 2000 forward, the MIP has been replaced by the Plum
Creek Annual Incentive Plan.
(b) Other Annual Compensation represents reimbursement for certain taxes
related to the 1997 MIP award.
(c) The amounts under the Restricted Stock Awards column of the Summary
Compensation Table represent shares of shadow stock awarded under the MIP.
The number of shares of shadow stock credited to each participant's account
was determined by subtracting certain taxes from the dollar amount of the
stock portion of each participant's MIP award and then dividing the
remainder by the average price of a share of stock, as defined in the MIP.
Once shares of shadow stock have been credited to a participant's account,
additional shares of shadow stock are credited to the participant's account
with respect to subsequent cash distributions made by the Company until the
shares of shadow stock convert to shares of Common Stock. The number of
additional shares of shadow stock that are so credited is equal to the per
share distribution amount multiplied by the number of shares of shadow
stock currently credited to the participant's account divided by the
average price of a share of stock, as defined in the Plan.
Each share of shadow stock credited to a participant's account represents
the participant's right to receive an actual share of Plum Creek stock
upon the occurrence of a realization event which is defined as the
earliest of the expiration of the performance period (three years
subsequent to the plan year for which the bonus is awarded), a change in
control or the participant's termination of employment as a result of
permanent disability or the participant's death. If the participant's
employment is terminated
12
<PAGE> 16
involuntarily for cause prior to the occurrence of a realization event,
the participant forfeits any shares of shadow stock credited to his or her
account.
On December 31, 1999, Messrs. Holley, Grenier, Kraft, Brown and Covey held
shares of shadow stock (which converts into one share of Common Stock)
awarded under the MIP that vest as set forth below. Messrs. Holley,
Grenier, Kraft, and Brown held 8,926, 7,132, 4,647, and 3,242 shares of
shadow stock, respectively, that vested on December 31, 1999. Messrs.
Holley, Grenier, Kraft, and Brown held 7,668, 6,025, 3,951, and 2,916
shares of shadow stock, respectively, that will vest on December 31, 2000
or earlier under certain circumstances, as described in the preceding
paragraph. In addition, Messrs. Holley, Grenier, Kraft, Brown and Covey
held 4,472, 2,937, 2,158, 1,962 and 1,469 shares of shadow stock,
respectively, that will vest on December 31, 2001 or earlier under certain
circumstances, as described in the preceding paragraph. The market value
of the total shares of shadow stock awarded under the MIP held by Messrs.
Holley, Grenier, Kraft, Brown and Covey, based on the share closing price
on December 31, 1999, was $526,632, $402,326, $268,857, $202,974, and
$36,705, respectively.
(d) The amounts under the LTIP Payouts column of the Summary Compensation Table
represent Shadow Stock earned over a five year period under the 1994
Long-term incentive plan ("1994 LTIP"). The performance period under the
1994 LTIP ended December 31, 1998, at which time all shares of shadow stock
credited to participants' accounts vested. As of December 31, 1998, Messrs.
Holley, Grenier, Kraft, Brown and Covey had earned 314,424, 224,589,
134,753, 46,358 and 19,281 shares of shadow stock, respectively, under the
1994 LTIP. Each share of shadow stock credited to a participant's account
represented the participant's right to receive an actual share of stock on
the distribution date (a date within 30 business days of the end of the
performance period) except to the extent that the receipt of stock is
deferred until after termination of employment. The distribution date for
non-deferred stock was February 1, 1999.
In accordance with the terms of the 1994 LTIP, Messrs. Holley, Grenier,
Kraft, Brown and Covey elected to defer 92,677, 53,845, 39,719, 13,664 and
4,623 shares of shadow stock, respectively. Participants' deferred shadow
stock will be credited with additional shares of shadow stock with respect
to subsequent cash distributions made by the Company. The number of
additional shares of shadow stock credited is equal to the per share
distribution amount multiplied by the number of shares of shadow stock
currently credited to the participant's account divided by the market
price of Plum Creek stock on the distribution date.
(e) All Other Compensation includes matching thrift contributions in the Plum
Creek Thrift and Profit Sharing Plan for Messrs. Holley, Grenier, Kraft,
Brown and Covey totaling $9,600 each and includes matching thrift
contributions in the Plum Creek Supplemental Benefits Plan for Messrs.
Holley, Grenier, Kraft, Brown and Covey totaling $119,390, $78,775,
$50,643, $26,813 and $7,559, respectively.
PENSION PLAN
Estimated annual benefit levels under the supplemental, non-qualified
pension plan of the Company ("Pension Plan"), based on earnings and years of
credited service at age 65, are as follows:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
FINAL AVERAGE -----------------------------------------
EARNINGS 15 20 25 30
- ------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
$ 100,000 $ 22,095 $ 29,460 $ 36,825 $ 44,190
$ 300,000 $ 70,095 $ 93,460 $116,825 $140,190
$ 500,000 $118,095 $157,460 $196,825 $236,190
$ 700,000 $166,095 $221,460 $276,825 $332,190
$ 900,000 $214,095 $285,460 $356,825 $428,190
$1,100,000 $262,095 $349,460 $436,825 $524,190
$1,300,000 $310,095 $413,460 $516,825 $620,190
$1,500,000 $358,095 $477,460 $596,825 $716,190
</TABLE>
13
<PAGE> 17
Benefit accruals under the Pension Plan are based on the gross amount of
salary and incentive bonuses, including bonuses awarded in shares under the MIP
plan included in the Restricted Stock Column of the Summary Compensation Table,
but excluding all commissions and other extra or added compensation or benefits
of any kind or nature. Benefit amounts in the table above are shown as a single
life annuity.
The Pension Plan formula for retirement at age 65 is 1.1% of the highest
five-year average earnings, plus 0.5% of the highest five-year average earnings
in excess of one-third of the FICA taxable wage base in effect during the year
of termination, times the number of years of credited service up to a maximum of
30 years. An early retirement supplement equal to 1% of the highest five-year
average earnings up to one-third of the FICA taxable wage base in effect in the
year of termination, times the number of years of credited service up to a
maximum of 30 years, is payable until age 62. Both the basic benefit and the
supplement are reduced by 2% for each year the employee's actual retirement date
precedes the date the employee would have attained age 65, or the date the
employee could have retired after attaining age 60 with 30 years of credited
service, if earlier. In addition, the basic benefit and the supplemental benefit
will be reduced by any previously accrued and distributed benefits, increased
for an assumed interest factor, under the Burlington Resources Inc. Pension
Plan, under which participation was terminated on December 31, 1992 for the
officers of the former General Partner of the Company. Years of service under
the Pension Plan at age 65 for Messrs. Holley, Grenier, Kraft, Brown and Covey
would be 30, 27, 30, 26 and 30, respectively. Years of service under the Pension
Plan as of December 31, 1999 for Messrs. Holley, Grenier, Kraft, Brown and Covey
were 17, 13, 16, 9 and 17, respectively.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") of the Board of Directors,
consisting entirely of non-employee directors, has furnished the following
report on executive compensation:
Compensation Philosophy
The philosophy of the Company's compensation programs is to enhance the
Company's performance and stockholder value by aligning the financial interests
of the Company's executives and senior managers with those of its stockholders,
while keeping the overall compensation package competitive. This philosophy is
implemented by providing competitive base salaries and linking incentive
compensation to absolute and relative stock performance measures (with relative
performance compared to our peer group). The compensation package for officers
includes a number of components that are designed to align individual
compensation with the short-term and long-term performance of the Company.
The compensation package for each of the officers in 1999 consisted of four
elements: (1) base salary, (2) annual incentive based bonus (3) long-term
incentive plan and (4) various other benefits.
Base Salary
It is the Company's objective to pay base salaries at levels that are
competitive (at or near the median) with those paid to senior executives of
similar companies in the forest products industry. The Company believes that
this is necessary to attract and retain the executive management required to
lead the Company. Salaries are reviewed annually in connection with performance
reviews. Mr. Holley, President and Chief Executive Officer, reviews the other
executives' performance on an annual basis and makes salary recommendations to
the Committee. The Committee independently reviews these recommendations and
approves, with any modifications it deems appropriate, the annual salary for
each executive. In addition to job performance, industry, peer group and
national survey results are also considered in making salary determinations.
Annual Incentive Compensation
Through fiscal year 1999, the Company maintained an incentive program that
provided an opportunity for officers and key employees to earn an annual
incentive bonus based upon the performance of both the Company and the
individual. The incentive for executive officers was awarded under the
Management Incentive Plan ("MIP"). Under the MIP, the incentive potential was
100% of the officer's base salary and,
14
<PAGE> 18
except for plan year 1999 as described below, was paid 50% in cash and 50% in
shadow stock which converts into Plum Creek stock three years after the award.
The MIP bonus was calculated at year-end based on financial and other
performance goals established by the Committee at the beginning of the fiscal
year. The financial goals set for the 1999 fiscal year were based on operating
income and free cash flow, and all MIP participants had the same financial
goals, which accounted for 50% of the goal weighting. Other goals and weightings
for each participant varied, depending on the participant's position and areas
of responsibility. At the end of the fiscal year, the Committee reviewed the
performance of each officer against the goals, and the results of this review
process were used to determine the total MIP performance score for each officer.
Long Term Incentive Plan
In 1998, the Company adopted the Plum Creek 1998 Long Term Incentive Plan
("LTIP"), following the final pay out under the 1994 LTIP. As discussed below,
the proposed Plum Creek 2000 Stock Incentive Plan is intended to replace the
LTIP. The LTIP provides for the award of unit appreciation rights convertible
into shadow stock based on the achievement of a series of five dividend and
stock price targets over a five-year performance period. Following the LTIP's
five-year performance period, any accrued shares of shadow stock convert into
actual shares of Plum Creek stock. No targets were achieved during fiscal year
1999, and thus, no shares of shadow stock were credited under the plan.
New Annual Incentive, Stock Option and Performance Based Plans
Following Plum Creek's 1999 REIT conversion, the Committee engaged William
M. Mercer, Inc., a nationally recognized consulting firm, to review the
Company's compensation plans and to recommend appropriate changes. As a result
of that review, the Committee recommended, and the Board approved, adoption of a
new annual incentive plan to replace the MIP. The new annual incentive plan is
substantially similar to the MIP except that awards are paid entirely in cash.
The Board also adopted the Plum Creek 2000 Stock Incentive Plan to replace the
LTIP. As described in proposal 2 of this Proxy Statement, the primary reason for
these changes was to ensure the Company's ability to attract and retain key
employees. Consistent with this new compensation structure, the Board approved
the payment of 1999 MIP bonuses entirely in cash.
Other Benefits
Executives participate in the Company's Thrift and Profit Sharing Plan,
medical, dental, life, disability and other miscellaneous benefit programs that
are made available to salaried employees. Officers are provided a vehicle for
their business and personal use and also have the opportunity to participate in
non-qualified supplemental thrift and pension plans entitling them to receive
larger allocations than are permitted by the Internal Revenue Code for qualified
plans.
CEO Compensation
The Company adheres to the same general compensation principles described
above to determine Mr. Holley's compensation as President and Chief Executive
Officer. Mr. Holley's base salary was set at $470,000 for fiscal year 1999, and
for fiscal year 2000 his base salary was increased by approximately 11% to
$520,000. The salary adjustment reflects the Committee's assessment of Mr.
Holley's performance and the results of competitive compensation surveys for
persons with comparable experience in the forest products industry. For purposes
of this review, the Committee considers the same surveys as are used for all
executive staff members as described above.
For 1999, Mr. Holley's potential MIP incentive bonus was 100% of his base
salary. Mr. Holley was awarded an incentive for fiscal 1999 equaling 100% of his
base salary, reflecting the Committee's assessment of Mr. Holley's performance
with respect to the Company's financial as well as strategic and management
goals, which were a composite of the goals set for all members of the executive
staff.
15
<PAGE> 19
Limitation on Deductibility of Certain Compensation for Federal Income Tax
Purposes
The Internal Revenue Code (the "Code") precludes the Company from taking a
deduction for compensation in excess of $1 million for the officers named in the
Summary Compensation table. Certain performance-based compensation is
specifically exempt from the deduction limit. The Company's policy is to
qualify, to the extent reasonable, the compensation of executive officers for
deductibility under the Code. However, the Committee believes that its primary
responsibility is to provide a compensation program that will attract, retain
and reward the executive talent necessary to further the Company's success.
Consequently, the Committee recognizes that the loss of a tax deduction may be
necessary in some circumstances.
The former partnership, Plum Creek Timber Company, L.P., was not subject to
the above Code limitations. The new Stock Incentive Plan is designed to qualify
as a performance-based plan within the meaning of the Code so as to preserve the
deductibility of compensation.
William E. Oberndorf -- Chairman
Hamid R. Moghadam and William J. Patterson
16
<PAGE> 20
COMPANY STOCK PRICE PERFORMANCE
The following graph shows a five-year comparison of cumulative total
stockholder returns for the Company, the Standard & Poor's Midcap 400 Index and
the Standard & Poor's Paper and Forest Product Stock Index for the five years
ending December 31, 1999. The total stockholder return assumes $100 invested at
the beginning of the period in the Company's Common Stock, the Standard & Poor's
Midcap 400 Index and the Standard & Poor's Paper and Forest Product Stock Index.
It also assumes reinvestment of all dividends.
<TABLE>
<CAPTION>
S&P PAPER AND FOREST
PLUM CREEK PRODUCT STOCK INDEX S&P MIDCAP 400 INDEX
---------- -------------------- --------------------
<S> <C> <C> <C>
12/31/94 100.00 100.00 100.00
12/31/95 128.35 110.13 130.92
12/31/96 151.54 121.83 156.05
12/31/97 188.05 130.63 206.38
12/31/98 175.24 133.22 245.82
12/31/99 182.90 186.27 282.00
</TABLE>
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933 or the Securities Exchange Act
of 1934 that might incorporate future filings, including this Proxy Statement,
in whole or in part, the preceding Committee Report on Executive Compensation
and the preceding Company Stock Price Performance Graph shall not be
incorporated by reference into any such filings; nor shall such Report or Graph
be incorporated by reference into any future filings.
RELATED PARTY TRANSACTIONS
On July 1, 1999, the Company converted from a master limited partnership to
a corporation. In order to qualify as a REIT, substantially all assets and
associated liabilities related to manufacturing operations and harvesting
activities, and some higher and better use lands, were transferred to several
unconsolidated corporate subsidiaries. The Company is entitled to approximately
99% of the economic value of the unconsolidated subsidiaries through a
combination of preferred stock and nonvoting Common Stock. The remaining 1% of
the economic value and 100% of the voting control of the manufacturing and
harvesting subsidiaries are owned by four individuals who are also officers of
the corporation. See Indebtedness of Management below. In addition, in order to
meet REIT income qualification tests under the Internal Revenue Code, the
Company has entered into timber cutting contracts with the unconsolidated
subsidiaries, as well as a cost sharing and administrative service agreement.
The cost sharing and administrative service agreement covers accounting,
transaction processing, human resources, information technology, legal,
environmental, treasury, corporate affairs, and other day-to-day operational
activities.
Prior to the REIT conversion, the former general partner had overall
responsibility for management of the operations. Under the terms of the former
partnership agreement, Plum Creek Timber Company, L.P. reimbursed the general
partner for salaries and other expenses incurred in operating the business.
These reimbursements totaled $4.4 million for the six months ended June 30,
1999.
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Prior to the REIT conversion, the Company was required under the
partnership agreement to reimburse the general partner for costs under the Long
Term Incentive Plan. During January 1999, a final reimbursement of $6.2 million
was paid to the general partner.
INDEBTEDNESS OF MANAGEMENT
In order for the Company to qualify as a REIT, four officers of the Company
purchased all of the voting Common Stock of the Company's corporate subsidiaries
that generate non-REIT-qualified income. The voting stock represents 1% of the
economic value of these corporate subsidiaries. The Company's operating
partnership loaned these officers a total of $1.9 million in order to fund
acquisition of the voting stock, in individual amounts as follows: $646,000 to
Rick R. Holley; $418,000 to Charles P. Grenier; $418,000 to William R. Brown;
and $418,000 to Michael J. Covey. The interest rate on each of these loans is 9%
and the shares of voting stock are pledged as collateral for the loans. Loan
payments are required to be made in July of each year, with the first such
payments occurring in July 2000.
OUTSTANDING CAPITAL STOCK
The Common Stock and the Special Voting Stock of the Company are its only
classes of voting Capital Stock. The Company's Common Stock is traded on the New
York Stock Exchange and the Pacific Exchange. The record date for stockholders
entitled to vote at the meeting is the close of business on March 17, 2000. At
the close of business on that date, the Company had issued and outstanding
634,566 shares of Special Voting Stock, convertible into Common Stock, and
68,572,009 shares of Common Stock, $.01 par value. The closing price of the
Company's Common Stock on that date was $24.1875.
INDEPENDENT AUDITORS
The Board has selected the accounting firm of PricewaterhouseCoopers LLP to
continue to serve as the Company's independent auditors for the fiscal year
ending December 31, 2000. A representative of PricewaterhouseCoopers LLP is
expected to attend the meeting, will be available to respond to appropriate
questions, and will have the opportunity to make a statement if he or she
desires to do so.
Audit services provided by PricewaterhouseCoopers LLP in fiscal year 1999
included the examination of the Company's consolidated financial statements for
the year ended December 31, 1999 and the review of various filings with the
Securities and Exchange Commission. The audit services provided to the Company
by PricewaterhouseCoopers LLP were approved by the Audit and Compliance
Committee of the Board prior to being rendered. Other specific services,
including tax consulting and review of the Company's compliance with the
Objectives of the Sustainable Forestry Initiative, were approved by the Audit
and Compliance Committee after a determination that none of such services would
affect PricewaterhouseCoopers LLP's independence as auditors of the Company's
financial statements.
STOCKHOLDER PROPOSALS
The Company anticipates that the next Annual Meeting of Stockholders will
be held in May of 2001. Any stockholder of record who desires to submit a
proposal for inclusion in the proxy material related to the next Annual Meeting
of Stockholders must do so in writing and it must be received at the Company's
principal executive offices on or before November 24, 2000. The proponent must
own 1% or more of the outstanding shares or $2,000.00 in market value of the
Company's Common Stock, must have owned such shares for one year, and must
comply with all other requirements of Rule 14a-8 under the Securities Exchange
Act of 1934.
If a stockholder intends to present a proposal at the 2001 Annual Meeting
of Stockholders that is not included in the Company's proxy statement, and the
stockholder fails to properly notify the Company of such proposal in writing
prior to February 9, 2001, then the proxies appointed by the Company's
management would be allowed to use their discretionary voting authority when the
proposal is raised at the annual meeting, without any discussion of the matter
in the proxy statement. Article III, Section 5 of the Company's bylaws governs
submission of matters for presentation at stockholder meetings.
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ANNUAL REPORT
This Proxy Statement has been preceded or accompanied by the Annual Report
for the fiscal year ended December 31, 1999. Stockholders are referred to such
report for financial and other information about the activities of the Company.
Except for those pages specifically incorporated in this Proxy Statement, such
report is not to be deemed a part of the proxy soliciting material.
FORM 10-K
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM A COPY OF
THIS PROXY STATEMENT IS DELIVERED, ON THE WRITTEN REQUEST OF ANY SUCH PERSON, A
COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION (NOT INCLUDING EXHIBITS TO THE FORM 10-K). WRITTEN REQUESTS
FOR SUCH COPIES SHOULD BE DIRECTED TO PLUM CREEK TIMBER COMPANY, INC., INVESTOR
RELATIONS, 999 THIRD AVENUE, SUITE 2300, SEATTLE, WASHINGTON, 98104-4096.
INCORPORATION BY REFERENCE
According to the provisions of Schedule 14A under the Securities Exchange
Act of 1934, the following document or portion thereof is incorporated by
reference: "Executive Officers of the Registrant" from Part I of the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1999.
OTHER MATTERS
In the event that any matter not described herein may properly come before
the meeting, or any adjournment thereof, the persons named in the form of proxy
will vote in accordance with their best judgment. At the time this proxy
statement went to press, the Company knew of no other matters that might be
presented for stockholder action at the meeting.
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APPENDIX A
PLUM CREEK TIMBER COMPANY, INC.
2000 STOCK INCENTIVE PLAN
Section 1. General Purpose of Plan; Definitions.
The name of this plan is the Plum Creek Timber Company, Inc. 2000 Stock
Incentive Plan (the "Plan"). The Plan was adopted by the Board (defined below)
on March 17, 2000, subject to the approval of the stockholders of the Company
(defined below). The purpose of the Plan is to enable the Company to attract and
retain highly qualified personnel who will contribute to the Company's success
and to provide incentives to Participants (defined below) that are linked
directly to increases in stockholder value and will therefore inure to the
benefit of all stockholders of the Company.
For purposes of the Plan, the following terms shall be defined as set forth
below:
(1) "Administrator" means the Board, or if and to the extent the Board
does not administer the Plan, the Committee in accordance with Section 2 below.
(2) "Award Agreement" shall mean, as the context requires, an agreement
entered into with a Participant in connection with a Stock Option Award under
Section 5 hereof, a Restricted Stock Award under Section 6 hereof, a Dividend
Equivalent award under Section 7 hereof, or a Value Management Award under
Section 8 hereof.
(3) "Board" means the Board of Directors of the Company.
(4) "Cause" shall mean (i) a Participant's conviction of or guilty plea
to the commission of an act or acts constituting a felony under the laws of the
United States or any state thereof, (ii) action by a Participant involving
personal dishonesty, theft or fraud in connection with the Participant's duties
as an employee of the Company or a Subsidiary, or (iii) if applicable, a breach
of any one or more material terms of a Participant's employment agreement with
the Company.
(5) "Change in Control" means the occurrence of any of the following
events:
(a) any "person," as such term is used in Sections 13(d) and 14(d)
of the Exchange Act (other than the Company; any trustee or other fiduciary
holding securities under an employee benefit plan of the Company; or any company
owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of Stock of the Company)
is or becomes after the Effective Date (as defined in Section 14(2)) the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company (not including in the securities
beneficially owned by such person any securities acquired directly from the
Company or its affiliates) representing 50% or more of the combined voting power
of the Company's then outstanding securities; or
(b) during any period of two consecutive years (not including any
period prior to the Effective Date), individuals who at the beginning of such
period constitute the Board, and any new director (other than a director
designated by a person who has entered into an agreement with the Company to
effect a transaction described in clause (a), (c) or (d) of this Section 1(5))
whose election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds ( 2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority thereof; or
(c) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (i) a merger
or consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity), in combination with the ownership of any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, at
least 50% of the combined voting power of the voting securities of the Company
or such surviving entity outstanding immediately after such merger or
consolidation or (ii) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no person
acquires more than 50% of the combined voting power of the Company's then
outstanding securities; or
<PAGE> 24
(d) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
(6) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, or any successor thereto.
(7) "Committee" means the Compensation Committee of the Board or such
other committee of the Board as the Board may from time to time designate to
administer the Plan. To the extent necessary and desirable, the Committee shall
be composed entirely of individuals who meet the qualifications referred to in
Section 162(m) of the Code and Rule 16b-3 under the Exchange Act. The Committee
may delegate its authority under the Plan to a sub-committee or to a senior
executive officer of the Company to the extent such delegation is appropriate
under Section 162(m) of the Code and Rule 16b-3 under the Exchange Act. If at
any time or to any extent the Board shall not administer the Plan, then the
functions of the Board specified in the Plan shall be exercised by the
Committee.
(8) "Company" means Plum Creek Timber Company, Inc., a Delaware
corporation (or any successor corporation).
(9) "Covered Employee" shall have the meaning set forth in Section
162(m)(3) of the Code.
(10) "Disability" or "Disabled" means the inability of a Participant to
perform substantially his or her duties and responsibilities to the Company or
to any Subsidiary by reason of a physical or mental disability or infirmity (i)
for a continuous period of six months, or (ii) at such earlier time as the
Participant submits medical evidence satisfactory to the Administrator that the
Participant has a physical or mental disability or infirmity that will likely
prevent the Participant from returning to the performance of the Participant's
work duties for six months or longer. The date of such Disability shall be the
last day of such six-month period or the day on which the Participant submits
such satisfactory medical evidence, as the case may be.
(11) "Dividend Equivalent" means a 5-year right, granted in connection
with the grant of a Stock Option, pursuant to Section 7 below, to receive cash
and Stock equal in value to dividends paid with respect to the number of shares
of Stock underlying such Stock Option, subject to the attainment of Performance
Goals.
(12) "Eligible Recipient" means an officer, director, employee,
consultant or advisor of the Company or of any Subsidiary; provided, however,
that with respect to Value Management Awards, "Eligible Recipient" means an
officer or other key employee of the Company or of any Subsidiary.
(13) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
(14) "Fair Market Value" means, as of any given date, with respect to
any awards granted hereunder, (A) if the Stock is publicly traded, the closing
sale price of a share of Stock, (B) the fair market value of a share of Stock as
determined in accordance with a method prescribed in the agreement evidencing
any award hereunder or (C) the fair market value of a share of Stock as
otherwise determined by the Administrator in the good faith exercise of its
discretion.
(15) "Good Reason" means, without a Participant's written consent, (i) a
reduction in the Participant's titles, positions, duties and responsibilities as
in effect immediately prior to a Change in Control, (ii) a reduction in the
Participant's annual base salary or aggregate compensation and benefits
opportunities as in effect immediately prior to a Change in Control or (iii)
relocation of the Participant's principal place of employment to a location more
than 35 miles from the Participant's principal place of employment immediately
prior to a Change in Control.
(16) "Immediate Family" means any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law or sister-in-law, and shall include
adoptive relationships of the Participant.
(17) "Memorandum Account" means an account established by the Committee
in the name and for the benefit of a Participant, to record accruals of cash
and/or stock under the Plan that remain subject to time restrictions. Accrued
amounts of cash and/or stock shall earn interest at a market rate of interest,
as periodically determined in the reasonable discretion of the Committee.
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(18) "Participant" means any Eligible Recipient selected by the
Administrator, pursuant to the Administrator's authority in Section 2 below, to
receive grants of Stock Options, awards of Restricted Stock or Dividend
Equivalents, Value Management Awards or any combination of the foregoing.
(19) "Performance Goals" shall mean performance goals set forth herein,
or as determined by the Committee in its sole discretion. Such goals will be
based on attaining specified levels of Total Shareholder Return and may be
applied to the performance of the Company relative to a market index, a group of
other companies or a combination thereof, all as determined by the Committee.
The Performance Goals may include a threshold level of performance below which
no vesting will occur, levels of performance at which specified vesting will
occur, and a maximum level of performance at which full vesting will occur.
Performance Goals shall be subject to certification by the Committee; provided
that, the Committee shall have the authority to make equitable adjustments to
the Performance Goals, to the extent permitted by Section 162(m) of the Code,
where applicable, in recognition of unusual or non-recurring events affecting
the Company or any Subsidiary or affiliate or the financial statements of the
Company or any Subsidiary or affiliate in response to changes in applicable laws
or regulations, or to account for items of gain, loss or expense determined to
be extraordinary or unusual in nature or infrequent in occurrence or related to
the disposal of a segment of a business or related to a change in accounting
principles.
(20) "Performance Period" shall mean: (i) as to any Value Management
Award, the three-year period commencing on January 1, 2000, each three-year
period commencing on the second January 1 following the commencement of the then
current Performance Period and such other periods as the Committee may
determine, and (ii) as to any Dividend Equivalents, five years after the date of
grant or such other period selected by the Committee.
(21) "Restricted Stock" means shares of Stock subject to certain
restrictions granted pursuant to Section 6 below.
(22) "Stock" means the common stock, par value $.01 per share, of the
Company.
(23) "Stock Option" means an option to purchase shares of Stock granted
pursuant to Section 5 below that is not an "incentive stock option" within the
meaning of Section 422 of the Code.
(24) "Subsidiary" means (A) any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company, if each of the
corporations (other than the last corporation) in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain or (B) any partnership in
which the Company and/or any Subsidiary owns more than fifty percent (50%) of
the capital or profits interests.
(25) "Total Shareholder Return" shall mean a computation consisting of
Stock price appreciation (or depreciation) plus dividends paid, as calculated by
the Committee in its reasonable discretion.
(26) "Value Management Award" shall mean an incentive compensation
award, granted pursuant to Section 8 below, which is contingent upon the
attainment of Performance Goals with respect to a Performance Period.
Section 2. Administration.
The Plan shall be administered in accordance with the requirements of
Section 162(m) of the Code (but only to the extent necessary and desirable to
maintain qualification of awards under the Plan under Section 162(m) of the
Code) and, to the extent applicable, Rule 16b-3 under the Exchange Act ("Rule
16b-3") by the Board or, at the Board's sole discretion, by the Committee.
Pursuant to the terms of the Plan, the Administrator shall have the power
and authority to grant to Eligible Recipients pursuant to the terms of the Plan:
(a) Stock Options, (b) awards of Restricted Stock,
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<PAGE> 26
(c) Dividend Equivalents, (d) Value Management Awards or (e) any combination of
the foregoing. In particular, the Administrator shall have the authority:
(a) to select those Eligible Recipients who shall be Participants;
(b) to determine whether and to what extent Stock Options, awards of
Restricted Stock, Dividend Equivalents, Value Management Awards or a combination
of any of the foregoing, are to be granted hereunder to Participants;
(c) to determine the number of shares of Stock to be covered by each
award granted hereunder;
(d) to determine the terms and conditions, not inconsistent with the
terms of the Plan, of each award granted hereunder, including, but not limited
to, (x) the restrictions applicable to awards of Restricted Stock or Dividend
Equivalents and the conditions under which restrictions applicable to such
awards of Restricted Stock or Dividend Equivalents shall lapse, and (y) the
Performance Goals and Performance Periods applicable to Dividend Equivalents and
Value Management Awards; and
(e) to determine the terms and conditions, not inconsistent with the
terms of the Plan, which shall govern all written instruments evidencing Stock
Options, awards of Restricted Stock, Dividend Equivalents, Value Management
Awards or any combination of the foregoing granted hereunder.
The Administrator shall have the authority, in its sole discretion, to
adopt, alter and repeal such administrative rules, guidelines and practices
governing the Plan as it shall from time to time deem advisable; to interpret
the terms and provisions of the Plan and any award issued under the Plan (and
any Award Agreements relating thereto); and to otherwise supervise the
administration of the Plan.
All decisions made by the Administrator pursuant to the provisions of the
Plan shall be final, conclusive and binding on all persons, including, but not
limited to the Company and the Participants.
Section 3. Stock Subject to Plan.
The total number of shares of Stock reserved and available for issuance
under the Plan shall be 3,425,000 shares. Such shares may consist, in whole or
in part, of authorized and unissued shares or treasury shares. The aggregate
number of shares of Stock as to which Stock Options may be granted to any
individual during any calendar year may not, subject to adjustment as provided
in this Section 3, exceed 5% of the shares of Stock reserved for the purposes of
the Plan in accordance with the provisions of this Section 3.
Consistent with the provisions of Section 162(m) of the Code, as from time
to time applicable, to the extent that (i) a Stock Option expires or is
otherwise terminated without being exercised or (ii) any shares of Stock subject
to any award of Restricted Stock or Dividend Equivalents granted hereunder are
forfeited or cancelled, such shares of Stock shall again be available for
issuance in connection with future awards granted under the Plan. To the extent
shares of Stock are not delivered because the award is settled in cash or used
to satisfy the applicable tax withholding obligation, such shares will not be
deemed to have been delivered for purposes of determining the maximum number of
shares of Stock available for delivery under the Plan. As to awards of Dividend
Equivalents, only the actual number of shares of Stock actually issued to
Participants shall be considered in calculating the maximum number of shares of
Stock available for delivery under the Plan. If the option price of any Stock
Option granted under the Plan is satisfied by tendering shares of Stock to the
Company (by actual delivery or by attestation), only the number of shares of
Stock issued net of the shares of Stock tendered shall be deemed delivered for
purposes of determining the maximum number of shares of Stock available for
delivery under the Plan. If any shares of Stock have been pledged as collateral
for indebtedness incurred by a Participant in connection with the exercise of a
Stock Option and such shares of Stock are returned to the Company in
satisfaction of such indebtedness, such shares of Stock shall again be available
for issuance in connection with future awards granted under the Plan.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend or other change in corporate structure
affecting the Stock, an equitable substitution or proportionate adjustment shall
be made in (i) the aggregate number of shares of Stock reserved for issuance
under the Plan, (ii) the kind, number and
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<PAGE> 27
option price of shares of Stock subject to outstanding Stock Options granted
under the Plan, and (iii) the kind, number and purchase price of shares of Stock
subject to outstanding awards of Restricted Stock and Dividend Equivalents and
granted under the Plan, in each case as may be determined by the Administrator,
in its sole discretion. Such other substitutions or adjustments shall be made as
may be determined by the Administrator, in its sole discretion. In connection
with any event described in this paragraph, the Administrator may provide, in
its sole discretion, for the cancellation of any outstanding awards and payment
in cash or other property therefor.
Section 4. Eligibility.
Eligible Recipients shall be eligible to be granted Stock Options, awards
of Restricted Stock, Dividend Equivalents, Value Management Awards or any
combination of the foregoing hereunder. The Participants under the Plan shall be
selected from time to time by the Administrator, in its sole discretion, from
among the Eligible Recipients, and the Administrator shall determine, in its
sole discretion, the number of shares of Stock covered by each such award.
Section 5. Stock Options.
Stock Options may be granted alone or in addition to other awards granted
under the Plan. Unless a particular Award Agreement provides differently, each
Participant shall be granted under Section 7 hereof one Dividend Equivalent for
each Stock Option granted under this Section 5. The Administrator shall
determine the Eligible Recipients to whom, and the time or times at which,
grants of Stock Options shall be made. Any Stock Option granted under the Plan
shall be in such form as the Administrator may from time to time approve, and
the provisions of Stock Option awards need not be the same with respect to each
Participant. Participants who are granted Stock Options shall enter into an
Award Agreement with the Company, in such form as the Administrator shall
determine, which Award Agreement shall set forth, among other things, the option
price of the Stock Option, the term of the Stock Option and provisions regarding
exercisability of the Stock Option granted thereunder. More than one award of
Stock Options may be granted to the same Participant and be outstanding
concurrently hereunder.
Stock Options granted under the Plan shall be subject to the following
terms and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Administrator shall deem
desirable:
(1) Option Price. The option price per share of Stock purchasable under
a Stock Option shall be determined by the Administrator in its sole discretion
at the time of grant but shall not be less than the par value of the Stock on
such date.
(2) Option Term. The term of each Stock Option shall be fixed by the
Administrator, but no Stock Option shall be exercisable more than ten years
after the date such Stock Option is granted.
(3) Exercisability. Unless provided for otherwise in a particular Award
Agreement, Stock Options shall vest over a four year period at a rate of 25% per
year and shall be exercisable after vesting, subject to such terms and
conditions as shall be determined by the Administrator at or after the time of
grant; provided, however, that no Stock Option shall be exercisable if the
exercise of such Stock Option would result in a violation of the stock ownership
limitations set forth in the Company's Charter. The Administrator may provide at
the time of grant, in its sole discretion, that any Stock Option shall be
exercisable only in installments, and the Administrator may waive such
installment exercise provisions at any time, in whole or in part, based on such
factors as the Administrator may determine, in its sole discretion, including
but not limited to in connection with any Change in Control of the Company.
(4) Method of Exercise. Subject to paragraph (3) of this Section 5,
Stock Options may be exercised in whole or in part after vesting at any time
during the option period, by giving written notice of exercise to the Company
specifying the number of shares of Stock to be purchased, accompanied by payment
in full of the purchase price in cash or its equivalent, as determined by the
Administrator. As determined by the Administrator, in its sole discretion,
payment in whole or in part may also be made (i) by means of any cashless
exercise procedure approved by the Administrator, (ii) in the form of
unrestricted Stock already
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owned by the Participant which, (x) in the case of unrestricted Stock acquired
upon exercise of an option, has been owned by the Participant for more than six
months on the date of surrender, and (y) has a Fair Market Value on the date of
surrender equal to the aggregate option price of the Stock as to which such
Stock Option shall be exercised, or (iii) in the form of Restricted Stock
subject to an award hereunder (based on the Fair Market Value of the Stock on
the date the Stock Option is exercised). If payment of the option price is made
in whole or in part in the form of Restricted Stock, the shares of Stock
received upon the exercise of such Stock Option shall be restricted in
accordance with the original terms of the Restricted Stock award in question,
except that the Administrator may direct that such restrictions shall apply only
to that number of shares of Stock equal to the number of shares surrendered upon
the exercise of such Stock Option. A Participant shall generally have the rights
to dividends and any other rights of a stockholder with respect to the Stock
subject to the Stock Option only after the Participant has given written notice
of exercise, has paid in full for such shares, and, if requested, has given the
representation described in paragraph (2) of Section 12 below.
The Administrator may require the surrender of all or a portion of any
Stock Option (and any associated Dividend Equivalents) granted under the Plan as
a condition precedent to the grant of a new Stock Option. Subject to the
provisions of the Plan, such new Stock Option shall be exercisable at the price,
during such period and on such other terms and conditions as are specified by
the Administrator at the time the new Stock Option is granted. Consistent with
the provisions of Section 162(m) of the Code, to the extent applicable, upon
their surrender, Stock Options shall be canceled and the shares of Stock
previously subject to such canceled Stock Options shall again be available for
future grants of Stock Options and other awards hereunder.
(5) Loans. The Company or any Subsidiary may make loans available to
Stock Option holders in connection with the exercise of outstanding Stock
Options, as the Administrator, in its sole discretion, may determine. Such loans
shall (i) be evidenced by promissory notes entered into by the Stock Option
holders in favor of the Company or any Subsidiary, (ii) be subject to the terms
and conditions set forth in this Section 5(5) and such other terms and
conditions, not inconsistent with the Plan, as the Administrator shall
determine, (iii) bear interest at the applicable Federal interest rate or such
other rate as the Administrator shall determine, and (iv) be subject to Board
approval (or to approval by the Administrator to the extent the Board may
delegate such authority). In no event may the principal amount of any such loan
exceed the sum of (x) the aggregate option price less the par value (if any) of
the shares of Stock covered by the Stock Option, or portion thereof, exercised
by the holder and (y) any Federal, state, and local income tax attributable to
such exercise. The initial term of the loan, the schedule of payments of
principal and interest under the loan, the extent to which the loan is to be
with or without recourse against the holder with respect to principal and/or
interest and the conditions upon which the loan will become payable in the event
of the holder's termination of service to the Company or to any Subsidiary shall
be determined by the Administrator. Unless the Administrator determines
otherwise, when a loan is made, shares of Stock having a Fair Market Value at
least equal to the principal amount of the loan shall be pledged by the holder
to the Company as security for payment of the unpaid balance of the loan, and
such pledge shall be evidenced by a pledge agreement, the terms of which shall
be determined by the Administrator, in its sole discretion; provided, however,
that each loan shall comply with all applicable laws, regulations and rules of
the Board of Governors of the Federal Reserve System and any other governmental
agency having jurisdiction.
(6) Non-Transferability of Options. Except as otherwise provided by the
Administrator, Stock Options may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than pursuant to a qualified
domestic relations order, by will, by the laws of descent or distribution, by
instrument to an inter vivos or testamentary trust in which the Stock Options
are to be passed to beneficiaries upon the death of the trustor (settlor), or by
gift to Immediate Family, and may be exercised, during the lifetime of the
Participant, only by the Participant.
(7) Termination of Employment or Service. If a Participant's employment
with or service as a director, consultant or advisor to the Company or to any
Subsidiary terminates by reason of his or her death, Disability or for any other
reason, vested Stock Options may thereafter be exercised to the extent provided
in the Award Agreement evidencing such Stock Options, or as otherwise determined
by the Administrator, but
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<PAGE> 29
in no event shall the exercise period be less than thirty (30) days (or six (6)
months in the event of termination by reason of death or Disability) following
termination of employment.
Section 6. Restricted Stock.
Awards of Restricted Stock may be issued either alone or in addition to
other awards granted under the Plan. The Administrator shall determine the
Eligible Recipients to whom, and the time or times at which, awards of
Restricted Stock shall be made; the number of shares to be awarded; the price,
if any, to be paid by the Participant for the acquisition of Restricted Stock;
the Restricted Period (as defined in paragraph (2) of this Section 6 applicable
to awards of Restricted Stock ; and all other conditions of the awards of
Restricted Stock. Subject to the requirements of Section 162(m) of the Code, as
applicable, the Administrator may also condition the grant of the award of
Restricted Stock upon the exercise of Stock Options, or upon such other criteria
as the Administrator may determine, in its sole discretion.
The provisions of the awards of Restricted Stock need not be the same with
respect to each Participant. In the sole discretion of the Administrator, loans
may be made to Participants in connection with the purchase of Restricted Stock
under substantially the same terms and conditions as provided in paragraph (5)
of Section 5 of the Plan with respect to the exercise of Stock Options.
(1) Awards and Certificates. The prospective recipient of awards of
Restricted Stock shall not have any rights with respect to any such award,
unless and until such recipient has executed an Award Agreement evidencing the
award and delivered a fully executed copy thereof to the Company, within a
period of sixty days (or such other period as the Administrator may specify)
after the award date. Except as otherwise provided below in Section 6(2), (i)
each Participant who is granted an award of Restricted Stock shall be issued a
stock certificate in respect of such shares of Restricted Stock; and (ii) such
certificate shall be registered in the name of the Participant, and shall bear
an appropriate legend referring to the terms, conditions, and restrictions
applicable to any such award.
The Company may require that the stock certificates evidencing Restricted
Stock granted hereunder be held in the custody of the Company until the
restrictions thereon shall have lapsed, and that, as a condition of any award of
Restricted Stock, the Participant shall have delivered a stock power, endorsed
in blank, relating to the Stock covered by such award.
Notwithstanding anything to the contrary contained in this Section 6, in no
event shall awards of Restricted Stock be granted to a Covered Employee.
(2) Restrictions and Conditions. The awards of Restricted Stock granted
pursuant to this Section 6 shall be subject to the following restrictions and
conditions:
(a) Subject to the provisions of the Plan and the Award Agreement
governing any such award, during such period as may be set by the Administrator
commencing on the date of grant (the "Restricted Period"), the Participant shall
not be permitted to sell, transfer, pledge or assign shares of Restricted Stock
awarded under the Plan; provided, however, that the Administrator may, in its
sole discretion, provide for the lapse of such restrictions in installments and
may accelerate or waive such restrictions in whole or in part based on such
factors and such circumstances as the Administrator may determine, in its sole
discretion, including, but not limited to, the Participant's termination of
employment or service as a director, consultant or advisor to the Company or any
Subsidiary, the Participant's death or Disability.
(b) Except as provided in paragraph (2)(a) of this Section 6, the
Participant shall generally have the rights of a stockholder of the Company with
respect to Restricted Stock during the Restricted Period. Certificates for
shares of unrestricted Stock shall be delivered to the Participant promptly
after, and only after, the Restricted Period shall expire without forfeiture in
respect of such awards of Restricted Stock except as the Administrator, in its
sole discretion, shall otherwise determine.
(c) The rights of Participants granted awards of Restricted Stock
upon termination of employment or service as a director, consultant or advisor
to the Company or to any Subsidiary terminates for any reason during the
Restricted Period shall be set forth in the Award Agreement governing such
awards.
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<PAGE> 30
Section 7. Dividend Equivalents.
The Administrator is authorized to grant awards of Dividend Equivalents to
Eligible Participants, subject to such terms and conditions as the Administrator
shall determine, including the attainment of Performance Goals.
(1) The prospective recipient of awards of Dividend Equivalents shall
not have any rights with respect to any such award, unless and until such
recipient has executed an Award Agreement evidencing the award and delivered a
fully executed copy thereof to the Company, within a period of sixty days (or
such other period as the Administrator may specify) after the award date.
(2) Notwithstanding anything to the contrary contained in this Section
7, in no event shall the pay out with respect to Dividend Equivalents granted in
any one calendar year to a Participant who is a Covered Employee exceed an
amount calculated by multiplying the maximum number of Stock Options permitted
to be granted to a single individual pursuant to Section 3 hereof times the
dividend paid per share of Stock over the 5-year Performance Period of such
Dividend Equivalents, plus any interest credited thereon. Participants shall not
be permitted to sell, transfer, pledge or assign Dividend Equivalents.
(3) Dividend Equivalents shall be subject to the attainment of
Performance Goals set by the Administrator, which unless provided for
differently in the Award Agreement, shall be 13% Total Shareholder Return on an
annualized basis. In order for the Performance Goal to be met with respect to
any current year, as well as prior-period unearned Dividend Equivalents, the
Total Shareholder Return, on a compounded basis, must be at or above the target
for 15 trading days out of any 30 trading day period in any one year. Once the
goal is met, dividends for such year(s) shall be credited to the Participant's
Memorandum Account and shall earn interest at a market rate selected from time
to time by the Committee.
(4) Dividend Equivalents granted with respect to specified Stock Options
shall terminate with respect to the opportunity to earn additional dividends if
and to the extent that the associated Stock Option is exercised.
(5) Unless otherwise provided in a particular Award Agreement, amounts
credited to a Participant's Memorandum Account, including any interest credited
thereon, shall be paid within a reasonable time following the end of the 5th
year after grant of the Dividend Equivalent, and shall be paid 50% in Stock and
50% in cash.
(6) Within a reasonable period of time following termination of
employment, a Participant shall receive an amount in cash equal to the amount
credited to such Participant's Memorandum Account with respect to vested Stock
Options. All Dividend Equivalents relating to non-vested Stock Options shall be
forfeited.
Section 8. Value Management Awards.
The Administrator is authorized to grant Value Management Awards to
Eligible Recipients. Subject to Section 8(2) below, in determining the persons
to whom Value Management Awards shall be granted and the face value of each
Value Management Award, the Administrator shall take into account such factors
as the Administrator shall deem relevant in connection with accomplishing the
purposes of the Plan. Value Management Awards granted pursuant to the Plan shall
be evidenced by an Award Agreement in such form as the Administrator shall from
time to time approve.
(1) In General. The Administrator shall specify with respect to each
3-year Performance Period, the Performance Goals applicable to each Value
Management Award, the face value of the Value Management Award granted to a
Participant, and the amounts that the Participant is eligible to earn upon
achievement of the Performance Goals for such Performance Period. Unless
otherwise provided in a particular
8
<PAGE> 31
Award Agreement, the Performance Goals shall constitute a measure of Total
Shareholder Return, relative to a peer group of companies selected by the
Committee, as set forth below:
<TABLE>
<S> <C>
TOTAL SHAREHOLDER RETURN VALUE MANAGEMENT AWARD EARNED
At or above the 75th percentile 200% of face value
Between the 50th and 75th percentiles Sliding scale between 0 and 200%
Below the 50th percentile 0% of face value
</TABLE>
(2) Special Provisions Regarding Value Management Awards.
Notwithstanding anything to the contrary contained in this Section 8, in no
event shall payment in respect of Value Management Awards granted for a
Performance Period be made to a Participant who is a Covered Employee in an
amount that exceeds $3.6 million.
(3) Memorandum Accounts. Upon a determination by the Committee that
Performance Goals have been achieved under the Plan, amounts will be credited to
each Participant's Memorandum Account in accordance with the terms of each such
Participant's Award Agreement.
(4) Time and Form of Payment. Unless otherwise determined by the
Administrator, all payments of amounts credited to a Participant in his or her
Memorandum Account in respect of Value Management Awards granted under this Plan
shall be made 50% at the beginning of the 4th year following the grant of such
Award and 50% at the beginning of the 5th year following the grant of such
award, with each such payment to be paid out 50% in cash and 50% in Stock. In
the case of Participants who are Covered Employees, unless otherwise determined
by the Administrator, such payments shall be made only after achievement of the
Performance Goals has been certified by the Administrator.
(5) Termination of Employment. Unless otherwise provided by the
Administrator in connection with specified terminations of employment and except
as otherwise provided in Section 9 below, if a Participant's employment
terminates for any reason (other than death or Disability), including
termination for Cause, prior to the payment of a Value Management Award with
respect to a Performance Period, no Value Management Award shall be payable to
such Participant for that Performance Period, and all amounts credited to such
Participant's Memorandum Account shall be forfeited. However, should a
Participant die or become Disabled at any time during a Performance Period, a
pro rata award may be paid based upon the Participant's number of full months of
active service during the Performance Period. The Administrator shall have the
authority to specify the manner, if any, in which Value Management Awards will
be deemed earned in the event of specified terminations of employment during a
Performance Period.
Section 9. Acceleration of Awards.
If a Participant's employment is terminated within one year following a
Change in Control (A) by the Company or a Subsidiary other than for Cause (but
not by reason of death or Disability) or (B) by the Participant with Good
Reason, then, in any such case, as of the date the Participant's employment with
the Company is terminated:
(1) any Stock Options held by the Participant under the Plan not
previously exercisable and vested shall become fully exercisable and vested;
(2) any restrictions or conditions applicable to any Restricted Stock
awards held by the Participant under the Plan shall lapse and certificates
representing shares of unrestricted Stock shall be issued to such Participant
within a reasonable period of time, bearing only such legends and other
restrictions as are necessary, in the Committee's reasonable discretion, under
the Securities Act of 1933 ("Securities Act") or the Code;
(3) with respect to Dividend Equivalents held by the Participant under
the Plan, all amounts credited to the Participant's Memorandum Account at the
time of termination shall be paid in cash to the Participant within ten business
days;
9
<PAGE> 32
(4) with respect to Value Management Awards, the maximum level of
performance set forth under the respective Performance Goals shall be deemed to
have been attained and a pro rata portion (based on the number of full and
partial months that have elapsed with respect to each Performance Period) of
each outstanding Value Management Award granted to the Participant, along with
all amounts credited to the Participant's Memorandum Account, shall become
payable in cash to the Participant within ten business days.
Section 10. Amendment and Termination.
The Board or the Committee may amend, alter or discontinue the Plan, but no
amendment, alteration, or discontinuation shall be made that would impair the
rights of a Participant under any award theretofore granted without such
Participant's consent, or that, without the approval of the stockholders (as
described below), would:
(1) except as provided in Section 3 of the Plan, increase the total
number of shares of Stock reserved for issuance under the Plan;
(2) change the class of officers, directors, employees, consultants and
advisors eligible to participate in the Plan; or
(3) extend the maximum option period under paragraph (2) of Section 5 of
the Plan.
Notwithstanding the foregoing, stockholder approval under this Section 10
shall only be required at such time and under such circumstances as stockholder
approval would be required under Section 162(m) of the Code or other applicable
law, rule or regulation with respect to any material amendment to an employee
benefit plan of the Company.
The Administrator may amend the terms of any award theretofore granted,
prospectively or retroactively, but, except as otherwise specifically provided
herein, no such amendment shall impair the rights of any Participant without his
or her consent.
To the extent that the Committee determines that the restrictions imposed
by the Plan preclude achievement of the Plan's material purposes in
jurisdictions outside the United States, the Committee will have the authority
and discretion to modify those restrictions as the Committee determines to be
necessary or appropriate to conform to applicable requirements or practices
outside of the United States.
Section 11. Unfunded Status of Plan.
The Plan is intended to constitute an "unfunded" plan for incentive
compensation. With respect to any payments not yet made to a Participant by the
Company, nothing contained herein shall give any such Participant any rights
that are greater than those of a general creditor of the Company.
Section 12. General Provisions.
(1) Shares of Stock shall not be issued pursuant to the exercise of any
award granted hereunder unless the exercise of such award and the issuance and
delivery of such shares of Stock pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act, as
amended, the Exchange Act and the requirements of any stock exchange upon which
the Stock may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
(2) The Administrator may require each person acquiring shares of Stock
hereunder to represent to and agree with the Company in writing that such person
is acquiring the shares of Stock without a view to distribution thereof. The
certificates for such shares of Stock may include any legend that the
Administrator deems appropriate to reflect any restrictions on transfer.
All certificates for shares of Stock delivered under the Plan shall be
subject to such stock-transfer orders and other restrictions as the
Administrator may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Stock is then listed, and any applicable Federal or state securities
law, and the Administrator may cause a legend or legends to be placed on any
such certificates to make appropriate reference to such restrictions.
10
<PAGE> 33
(3) Nothing contained in the Plan shall prevent the Board from adopting
other or additional compensation arrangements, subject to stockholder approval,
if such approval is required; and such arrangements may be either generally
applicable or applicable only in specific cases. The adoption of the Plan shall
not confer upon any Eligible Recipient any right to continued employment or
service with the Company or any Subsidiary, as the case may be, nor shall it
interfere in any way with the right of the Company or any Subsidiary to
terminate the employment or service of any of its Eligible Recipients at any
time.
(4) Each Participant shall, no later than the date as of which the value
of an award first becomes includible in the gross income of the Participant for
Federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Administrator regarding payment of, any Federal, state, or
local taxes of any kind required by law to be withheld with respect to such
award. The obligations of the Company under the Plan shall be conditional on the
making of such payments or arrangements, and the Company shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment of
any kind otherwise due to the Participant. The Company may, to the extent
permitted by law, in lieu of the payment of cash by the Participant, satisfy its
tax withholding obligation by withholding Stock due and payable to the
Participant pursuant to an award.
(5) No member of the Board or the Administrator, nor any officer or
employee of the Company acting on behalf of the Board or the Administrator,
shall be personally liable for any action, determination, or interpretation
taken or made in good faith with respect to the Plan, and all members of the
Board or the Administrator and each and any officer or employee of the Company
acting on their behalf shall, to the extent permitted by law, be fully
indemnified and protected by the Company in respect of any such action,
determination or interpretation.
Section 13. Governing Law.
The Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of the State of Washington without giving effect
to the conflict of laws principles thereof.
Section 14. Stockholder Approval; Effective Date of Plan.
(1) The grant of any award hereunder shall be contingent upon
stockholder approval of the Plan being obtained within twelve (12) months before
or after the date the Board adopts the Plan.
(2) Subject to the approval of the Plan by the stockholders of the
Company within twelve (12) months before or after the date the Plan is adopted
by the Board, the Plan shall be effective as of (the "Effective
Date").
Section 15. Term of Plan.
No Stock Option or awards of Restricted Stock, Dividend Equivalents or
Value Management Awards shall be granted pursuant to the Plan on or after the
tenth anniversary of the Effective Date, but awards theretofore granted may
extend beyond that date.
11
<PAGE> 34
PROXY
PLUM CREEK TIMBER COMPANY, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
THE 2000 ANNUAL MEETING OF STOCKHOLDERS, MAY 10, 2000
The undersigned acknowledges receipt of (a) Notice of 2000 Annual Meeting
of the Stockholders of Plum Creek Timber Company, Inc. (the "Company") to be
held on May 10, 2000, at the Grouse Mountain Lodge, located at 1205 Highway 93
West, Whitefish, Montana (the "Annual Meeting"), (b) accompanying Proxy
Statement, and (c) Annual Report of the Company for its fiscal year ended
December 31, 1999. Rick R. Holley, William R. Brown and James A. Kraft, or any
one of them, with power of substitution and revocation, are hereby appointed
Proxies of the undersigned to vote all stock of the Company which the
undersigned is entitled to vote at the Annual Meeting or any adjournment
thereof, with all powers which the undersigned would possess if personally
present, upon such business as may properly come before the meeting of any
adjournment thereof.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A "FOR" VOTE ON EACH ITEM AND
SHARES WILL BE SO VOTED UNLESS OTHERWISE DIRECTED.
YOU MAY ALSO VOTE VIA TELEPHONE OR INTERNET. SEE INSTRUCTIONS ON REVERSE SIDE.
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
<PAGE> 35
VOTE BY TELEPHONE VOTE BY INTERNET
- ----------------- ----------------
It's fast, convenient, and immediate! Its fast, convenient, and your
Call Toll-Free on a Touch-Tone Phone vote is immediately confirmed
1-877-PRX-VOTE (1-877-779-8683). and posted.
Follow these four easy steps. Follow these four easy steps.
1. Read the accompanying Proxy Statement 1. Read the accompanying Proxy
and Proxy Card Statement and Proxy Card.
2. Call the toll-free number 2. Go to the Website
1-877-PRX-VOTE (1-877-779-8683) http://www.eproxyvote.com/pcl
3. Enter your 14-digit Voter Control 3. Enter your 14-digit Voter
Number located on your Proxy Card Control Number located on your
above your name. Proxy Card above your name.
4. Follow the recorded instructions. 4. Follow the instructions
provided.
Your vote is important! Your vote is important!
Call 1-877-PRX-VOTE anytime! Go to http://www.eproxyvote.com/pcl
anytime!
Do not return your Proxy Card if you are voting by Telephone or Internet
DETACH HERE
[X] Please mark
votes as in
this example.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED IN FAVOR OF EACH PROPOSAL.
FOR AGAINST ABSTAIN
1. ELECTION OF DIRECTORS. 2. To approve the [ ] [ ] [ ]
adoption of the
Plum Creek 2000
NOMINEES: (01) Charles P. Grenier, Stock Incentive
(02) Hamid R. Moghadam Plan.
and (03) John H. Scully
FOR [ ] [ ] WITHHELD
[ ] __________________________
For all nominees except as
noted above
MARK HERE IF YOU PLAN TO ATTEND [ ]
THE MEETING
MARK HERE FOR ADDRESS CHANGE AND [ ]
NOTE AT LEFT
In their discretion the Proxies are
authorized to vote on such other
matters as may properly come before
the Annual Meeting or any adjournment
thereof.
PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS. IF ACTING AS ATTORNEY,
EXECUTOR, TRUSTEE, OR IN
REPRESENTATIVE CAPACITY,
SIGN NAME AND TITLE.
Signature________________Date_________ Signature________________Date_________
