SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [ ]
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 ss. 240.14a-11(c) or ss. 240.14a-12
BUCKEYE CELLULOSE CORPORATION
(Name of Registrant as Specified in its Charter)
_____________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
<PAGE>
BUCKEYE CELLULOSE CORPORATION
P.O. BOX 80407
1001 TILLMAN STREET
MEMPHIS, TENNESSEE 38108-0407
September 19, 1997
TO THE STOCKHOLDERS OF BUCKEYE CELLULOSE CORPORATION
You are cordially invited to attend the 1997 Annual Meeting of
Stockholders of Buckeye Cellulose Corporation (the "Company") which will be held
at the Dixon Gallery & Gardens, 4339 Park Avenue, Memphis, Tennessee, on
Tuesday, October 21, 1997, at 5:00 p.m., Central Daylight Time.
We have enclosed a Notice of Annual Meeting of Stockholders, a Proxy
Statement, and a Proxy. The matters listed in the Notice of Meeting are more
fully described in the Proxy Statement.
Detailed information relating to the Company's activities and operating
performance during fiscal 1997 is contained in the Annual Report to Stockholders
of the Company, which is being mailed to you with this Proxy Statement, but is
not a part of the proxy solicitation material. If you do not receive or have
access to the Proxy and Proxy Statement or the 1997 Annual Report, please notify
Mimi Hall, Buckeye Cellulose Corporation, 5395 Estate Office Drive, Suite 1,
Memphis, Tennessee 38119-3636, telephone (901) 682-1360.
It is important that your shares are represented and voted at the Annual
Meeting, regardless of the size of your holdings. Accordingly, we would
appreciate your completing the enclosed Proxy so that your shares can be voted
in the event you are unable to attend the meeting. If you are present at the
meeting and desire to vote your shares personally, your Proxy can be revoked
upon your request prior to balloting. If you wish to personally vote at the
meeting, but your shares are held in the name of a broker, trust, bank or other
nominee, you should bring with you a proxy or letter from the broker, trustee,
bank or nominee confirming your beneficial ownership of the shares.
We urge you to return your Proxy by mailing it in the enclosed
postage-paid envelope to be received no later than Tuesday, October 21, 1997, or
by sending it to the Company through a courier or by personal delivery no later
than 12:00 noon, Tuesday, October 21, 1997.
Sincerely yours,
/s/ R. E. CANNON
Robert E. Cannon
Chairman and Chief Executive Officer
<PAGE>
BUCKEYE CELLULOSE CORPORATION
P.O. Box 80407
1001 Tillman Street
Memphis, TN 38108-0407
NOTICE OF 1997 ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 21, 1997
Notice is hereby given that the 1997 Annual Meeting of Stockholders of
Buckeye Cellulose Corporation (the "Company") will be held October 21, 1997, at
5:00 P.M., Central Daylight Time, at the Dixon Gallery & Gardens, 4339 Park
Avenue, Memphis, Tennessee, for the following purposes:
1. To elect two Class II directors to serve a three-year term, or until
their successors have been duly elected and qualified.
2. To ratify the appointment of Ernst & Young LLP as the Company's
independent accountants and auditors for fiscal 1998.
3. To approve an amendment to the Amended and Restated Certificate of
Incorporation to change the name of the Company to "Buckeye Technologies Inc."
4. To approve an amendment to the Amended and Restated Certificate of
Incorporation to delete the provision requiring cumulative voting in the
election of directors of the Company.
5. To approve an amendment to the Amended and Restated Certificate of
Incorporation to require the affirmative vote of the holders of at least 75% of
the outstanding shares of common stock of the Company, voting as a single class,
to approve the merger or consolidation of the Company with or into any other
entity other than a subsidiary of the Company or the sale, lease, exchange or
disposition of all or substantially all of the assets of the Company and its
subsidiaries.
6. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Stockholders of record at the close of business on September 12, 1997, are
entitled to notice of and to vote on all matters presented at the 1997 Annual
Meeting of Stockholders.
By Order of the Board of Directors
Sheila Jordan Cunningham
Secretary and Associate General Counsel
IMPORTANT
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING AND REGARDLESS OF THE NUMBER OF
SHARES YOU OWN, PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY AS
PROMPTLY AS POSSIBLE IN THE ENCLOSED ENVELOPE. YOU MAY NEVERTHELESS VOTE IN
PERSON IF YOU ATTEND THE ANNUAL MEETING.
<PAGE>
PROXY STATEMENT
BUCKEYE CELLULOSE CORPORATION
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON OCTOBER 21, 1997
INFORMATION CONCERNING THE SOLICITATION
This statement is furnished in connection with the solicitation of proxies
to be used at the 1997 Annual Meeting of Stockholders (the "Annual Meeting") of
Buckeye Cellulose Corporation (the "Company") to be held on October 21, 1997 at
5:00 P.M., Central Daylight Time, at Dixon Gallery & Gardens, 4339 Park Avenue,
Memphis, Tennessee, and at any adjournment thereof.
At the Annual Meeting, the Company's stockholders will vote to elect two
Class II directors and to ratify the appointment of Ernst & Young LLP as the
Company's independent accountants and auditors for fiscal 1998. Additionally,
the stockholders will vote to amend the Amended and Restated Certificate of
Incorporation (the "Charter") to (i) change the name of the Company to "Buckeye
Technologies Inc."; (ii) delete the provision requiring cumulative voting in the
election of directors of the Company; and (iii) add a new provision requiring
the affirmative vote of the holders of at least 75% of the outstanding shares of
common stock of the Company (the "Common Stock"), voting as a single class, to
approve the merger or consolidation of the Company with or into any other entity
other than a subsidiary of the Company or the sale, lease, exchange or
disposition of all or substantially all of the assets of the Company and its
subsidiaries. The affirmative vote of a plurality of the shares present or
represented at the meeting, if a quorum exists, is required to elect the
directors. The affirmative vote of a majority of the shares present or
represented at the meeting, if a quorum exists, is required to ratify the
appointment of Ernst & Young LLP as the Company's independent accountants and
auditors for fiscal 1998. The affirmative vote of a majority of the outstanding
shares of Common Stock of the Company is required to approve each of the
amendments to the Company's Charter described herein.
Except with respect to cumulative voting for the election of directors,
the holder of each share of Common Stock is entitled to one vote on all matters
submitted before the Annual Meeting and at any adjournment thereof.
Presently, the Company's Charter provides for cumulative voting in the
election of directors. Each holder of the Common Stock (i) is entitled to the
number of votes equal to the product of the number of shares of Common Stock
held by such holder multiplied by the number of directors to be elected and (ii)
may cast all of such votes for a single director or may distribute them among
any number of the directors to be voted for as such holder may see fit. The
presence in person or by proxy of the holders of a majority of the issued and
outstanding shares of the Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum.
Stockholders are urged to sign the enclosed proxy and return it promptly
in the envelope enclosed for that purpose. Proxies will be voted in accordance
with each stockholder's directions. If no directions are given, proxies will be
voted FOR the election of the nominees named herein as directors, FOR the
ratification of the appointment of Ernst & Young LLP as the Company's
independent accountants and auditors for fiscal 1998 and FOR each of the
amendments to the Company's Charter described herein.
The Board of Directors knows of no other business to be presented at the
Annual Meeting. If any other business is properly presented, the persons named
in the enclosed proxy will use their discretion in voting the shares. The proxy
may be revoked at any time prior to the voting thereof by written request to the
Company at P.O. Box 80407, 1001 Tillman Street, Memphis, Tennessee 38108-0407,
Attention: Sheila Jordan Cunningham, Corporate Secretary and Associate General
Counsel. The proxy may also be revoked by submission to the Company of a
subsequently dated proxy. The giving of the proxy will not affect the right of a
stockholder to attend the Annual Meeting and vote in person.
The solicitation of proxies in the enclosed form is made on behalf of the
Board of Directors of the Company. The entire cost of soliciting these proxies
will be borne by the Company. In addition to being solicited through the mails,
proxies may be solicited personally or by telephone, facsimile or telegraph by
officers, directors and employees of the Company who will receive no additional
compensation for such activities. Arrangements will also be made with brokerage
houses and other custodians, nominees and fiduciaries to forward solicitation
materials to the beneficial owners of record of shares held by such persons, who
will be reimbursed for their reasonable expenses incurred in such connection. It
is expected that this Proxy Statement will first be sent to stockholders on or
about September 19, 1997.
1
<PAGE>
OUTSTANDING VOTING SECURITIES
Only stockholders of record on September 12, 1997, are entitled to notice
of and to vote at the Annual Meeting. On that date there were 18,680,193 shares
of Common Stock issued and outstanding. Except with respect to cumulative voting
for the election of directors, the holder of each share of Common Stock is
entitled to one vote on all matters submitted before the Annual Meeting and at
any adjournments thereof. Under Delaware law, stockholders who abstain from
voting on a proposal are treated as present and entitled to vote at the Annual
Meeting and therefore have the effect of a vote against the proposal. If shares
of Common Stock are held in the name of a broker, the failure of the broker to
vote the shares is treated as if the beneficial owner of such shares failed to
vote such shares. A list of stockholders entitled to vote on matters at the
Annual Meeting will be available at the Company's headquarters beginning October
6, 1997.
PROPOSAL 1. ELECTION OF DIRECTORS
The Board of Directors is divided into three classes, each class to be
elected for three-year terms. At the Annual Meeting two directors in Class II
are nominees for election to hold office for a three-year term or until their
successors are elected and qualified. If any nominee should be unable to accept
nomination or election as a director, which is not expected, the proxies may be
voted with discretionary authority for a substitute designated by the Board of
Directors. The election of a director requires the affirmative vote of a
plurality of shares present or represented at the meeting by proxy. Presently,
the Company's Charter provides for cumulative voting. Each holder of Common
Stock (i) is entitled to the number of votes equal to the product of the number
of shares of Common Stock held by such holder multiplied by the number of
directors to be elected and (ii) may cast all of such votes for a single
director or may distribute them among any number of the directors to be voted
for as such holder may see fit.
The Board of Directors of the Company recommends voting FOR the election
of the following nominees:
NOMINEES FOR ELECTION AS
CLASS II DIRECTORS FOR A THREE-YEAR
TERM EXPIRING AT THE ANNUAL MEETING IN 2000
DIRECTOR, YEAR FIRST PRINCIPAL OCCUPATION,
ELECTED AS DIRECTOR AGE BUSINESS AND DIRECTORSHIPS
Red Cavaney 54 President, Chief Executive Officer and a
1996 director of the American Plastics Council
since October 1994; former President of the
American Forest & Paper Association
("AF&PA") and former President of the
AF&PA's predecessor, the American Paper
Institute; a director of The National
Plastics Center & Museum, the American
Society of Association Executives and the
Institute for Research on the Economics of
Taxation.
David B. Ferraro 59 President and Chief Operating Officer of the
1993 Company since March 1993; Manager of
Strategic Planning of The Procter & Gamble
Company ("Procter & Gamble") from 1991
through 1992; President, Buckeye Cellulose
Corporation, a subsidiary of Procter &
Gamble ("Buckeye") from 1989 through 1991;
Executive Vice President and Manager of
Commercial Operations of Buckeye from 1987
through 1989; Comptroller of Buckeye from
1973 through 1986; joined Procter & Gamble
in 1964.
2
<PAGE>
CLASS I DIRECTORS CONTINUING IN OFFICE
WHOSE TERMS EXPIRE AT THE ANNUAL MEETING IN 1999
DIRECTOR, YEAR FIRST PRINCIPAL OCCUPATION,
ELECTED AS DIRECTOR AGE BUSINESS AND DIRECTORSHIPS
- -------------------- --- --------------------------
R. Howard Cannon 35 President of Dryve, Inc., a company
1996 consisting of 27 dry cleaning operations,
since 1987; Trustee of both the Robert E.
Cannon and the Kathryn G. Cannon Grantor
Retained Annuity Trusts. R. Howard Cannon is
the son of Robert E. Cannon.
Harry J. Phillips, Sr. 67 Chairman of the Executive Committee of the
1996 Board of Directors of Browning-Ferris
Industries, Inc. since 1988; former Chairman
and Chief Executive Officer of
Browning-Ferris Industries, Inc; a director
of National Commerce Bancorporation, RFS
Hotel Investors, Inc., Buckman Laboratories,
Inc. and Morgan Keegan and Company, Inc.
CLASS III DIRECTORS CONTINUING IN OFFICE
WHOSE TERMS EXPIRE AT THE ANNUAL MEETING IN 1998
DIRECTOR, YEAR FIRST PRINCIPAL OCCUPATION,
ELECTED AS DIRECTOR AGE BUSINESS AND DIRECTORSHIPS
- -------------------- --- --------------------------
Robert E. Cannon 67 Chairman and Chief Executive Officer of the
1993 Company since March 1993; Dean of the
College of Management, Policy and
International Affairs at Georgia Tech from
1991 through 1992; Senior Vice President,
Procter & Gamble from 1989 to 1991; Group
Vice President - Industrial Products of
Procter & Gamble, which included the
operations of Buckeye from 1981 to 1989;
President of Buckeye from 1971 through 1981.
Henry F. Frigon 62 Private investor since 1995; Executive Vice
1996 President - Corporate Development and
Strategy and Chief Financial Officer of
Hallmark Cards, Inc. from 1991 to 1995;
President and Chief Executive Officer of
BATUS Inc. from 1983 to 1991; a director of
H&R Block Inc., CompuServe, Inc., Dimon
International Inc. and Group Technologies
Corp.
Samuel M. Mencoff 40 Vice President of Madison Dearborn Partners,
1993 Inc. since January 1993; Vice President of
First Chicago Venture Capital from 1987 to
1993; member of the operating committees of
the general partners of Huntway Partners,
L.P. and Golden Oak Mining Company, L.P.,
respectively; a director of Bay State Paper
Holding Company and Riverwood International
Corporation.
3
<PAGE>
MEETINGS AND COMMITTEES
The Board of Directors of the Company conducted seven meetings (exclusive
of committee meetings) during fiscal 1997, and no director attended less than
75% of the meetings held during the period. The Board of Directors has an Audit
Committee and a Compensation Committee.
The Audit Committee of the Board is composed of Messrs. Samuel M. Mencoff,
Chairman, Red Cavaney and Harry J. Phillips, Sr., all of whom are non-employee
directors of the Company. The Audit Committee met two times during fiscal year
1997, with representatives of Ernst & Young LLP, the Company's independent
auditors, as well as the persons within the Company responsible for reviewing
accounting, control, auditing and financial reporting matters. The Audit
Committee is responsible, among other things, for recommending to the Board the
firm of independent accountants and auditors to be retained by the Company,
approving the services rendered by the professional accounting and auditing firm
and reviewing the scope of the annual audit and reports and recommendations
submitted by the independent auditing firm.
The Compensation Committee of the Board is composed of Messrs. Harry J.
Phillips, Sr., Chairman, Samuel M. Mencoff and Henry F. Frigon, all of whom are
non-employee directors of the Company. The Compensation Committee met three
times during fiscal year 1997. The Compensation Committee is responsible for
establishing and administering the Company's executive compensation plan and
developing policies and guidelines for administering the plan.
COMPENSATION OF DIRECTORS
Directors who are employees of the Company are not entitled to receive any
fees for serving as directors. However, non-employee directors receive
director's fees in the amount of $20,000 per annum payable quarterly, in cash or
an equivalent amount of the Company's Common Stock, with the option provided to
each director to defer receipt of his or her fees and receive in lieu thereof
upon the expiration of his tenure as a member of the board, a cash payment equal
to the number of shares of Common Stock which could have been purchased on the
open market at the time of the deferral multiplied by the fair market value of
the Common Stock at the time of expiration of such director's tenure.
Additionally, pursuant to the Company's Stock Option Plan for Non-Employee
Directors, each of Messrs. R. H. Cannon, Cavaney, Frigon, Mencoff and Phillips,
as non-employee directors, received a grant of options to acquire 25,000 shares
of Common Stock at the prevailing market price at the time of the grant, with
Messrs. Cavaney, Frigon and Phillips receiving their stock option grants on May
20, 1996, Mr. Mencoff receiving his stock option grant on September 4, 1996, and
Mr. R.H. Cannon receiving his stock option grant on July 1, 1997. Options to
acquire 5,000 of the 25,000 shares vested on the date of the grant and the
remaining options vest equally over the next four anniversary dates of the
grant, provided the optionee remains a director of the Company during such
period. Mr. Mencoff has contractually agreed to assign to Madison Dearborn
Partners, L.P., an entity for which Mr. Mencoff's employer serves as general
partner, all rights to director's fees and options to which he may be entitled
as a director of the Company. All directors are reimbursed for out-of-pocket
expenses related to their services as directors.
4
<PAGE>
REPORT ON EXECUTIVE COMPENSATION OF THE
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors is comprised of three
directors who are not employees of the Company. The Committee is responsible for
establishing and administering the Company's executive compensation plan,
including making recommendations to the Board of Directors regarding salaries,
compensation and benefits of executive officers of the Company. The Compensation
Committee has engaged the consulting firm of William M. Mercer, Inc., Atlanta,
Georgia, to conduct appropriate surveys of executive compensation plans and to
compile data for comparable companies for committee comparison and review.
This report of the Compensation Committee describes the components of the
Company's executive officer compensation programs and describes the basis upon
which compensation is awarded to the executive officers of the Company.
This Compensation Committee report shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
COMPENSATION PHILOSOPHY AND STRUCTURE
Total compensation levels are designed to attract, retain and reward
executives who contribute to the long-term success of the Company. Compensation
for Company executives is comprised of three principal components: salary and
benefits, annual incentive bonus compensation and long-term, equity-based
incentive compensation. The Compensation Committee believes that executive
compensation should be materially influenced by the Company's financial
performance and, as such, the Committee has approved an executive compensation
structure which places a significant portion of executive compensation "at risk"
dependent upon the Company's and each individual's performance against clearly
established criteria.
The Company seeks to provide salary and benefit levels that are comparable
to those of companies that perform similarly. Salary targets are established for
various officer positions based on surveys of relevant industries conducted by
an outside compensation consultant. Utilizing these targets, individual salaries
are established to reflect the officer's performance in meeting Company
objectives.
During 1997, the Company paid bonuses averaging 8.8% of base salary to
eligible employees, including officers, under a broad-based profit sharing plan
for Company employees. Under this plan, bonuses of up to 15% of base salary are
achievable dependent upon the Company's business performance measured against
specific annual financial targets.
The Company also made payments under its annual incentive bonus plan to
officers and certain other employees for the fiscal year 1997 based on
information determined from the compensation surveys conducted by the Company's
outside consultant, the Company's business performance and the individual's role
in contributing to the success of the Company. Future annual incentive bonus
compensation awards to officers and designated employees will be determined
within a percentage range of base salary, with the payment of approximately
one-third of the award being subject to the Company's achieving certain earnings
per share targets for the fiscal year; one-third being subject to the
accomplishment of criteria established by the Chief Executive Officer and the
Chief Operating Officer that are related to each individual's specific
responsibilities; and one-third being based on an assessment of the individual's
overall performance and his or her contribution to the Company during the fiscal
year.
In addition, from time-to-time, the Company makes long-term incentive
awards to officers and certain other employees of (i) incentive and
non-qualified stock options from stock option plans previously approved by the
Stockholders and (ii) restricted stock from treasury shares of Common Stock set
aside by the Company pursuant to a plan approved by the Board of Directors (the
"Restricted Stock Plan"). The purpose of these awards is to focus the
recipient's attention on the long-term performance of the business and to
strengthen the alignment of stockholder and
5
<PAGE>
employee interests in share price appreciation. Restricted stock has been issued
to certain Company officers under the Restricted Stock Plan, at the fair market
value of the Company's stock on the date the plan was approved by the Board of
Directors, as a supplemental retirement benefit to partially offset the loss of
benefits under the Company's defined contribution plans resulting from the cap
on wages required by applicable rules and regulations.
CHIEF EXECUTIVE OFFICER AND CHIEF OPERATING OFFICER
Policies with respect to the compensation of the Chief Executive Officer
and the Chief Operating Officer are essentially the same as those for other
officers, except that their compensation, including the criteria used for
determining their incentive bonus, is directly established by the Compensation
Committee. The annual compensation and incentive bonuses of the Chief Executive
Officer and the Chief Operating Officer for the fiscal year 1997 reflect the
Company's overall excellent performance during the period.
The consulting firm engaged by the Committee has conducted compensation
and benefit surveys which include both an assessment of the Company's financial
performance compared to a group of comparable companies as well as comparisons
with the compensation paid to the chief executive officers and the chief
operating officers of other companies.
The Compensation Committee believes that the compensation levels of the
Company's executive officers are competitive and reasonably comparable with the
compensation and benefits paid to executive officers of companies that generate
similar financial results.
COMPENSATION COMMITTEE
HARRY J. PHILLIPS, SR., CHAIRMAN
HENRY F. FRIGON
SAMUEL M. MENCOFF
6
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SUMMARY COMPENSATION TABLE
The following summary compensation table sets forth the annual salary,
bonus compensation and long-term incentive awards paid or accrued by the Company
for each of fiscal years 1997, 1996, and 1995 to or for the account of the Chief
Executive Officer and the four other highest compensated executive officers of
the Company (the "executive officers") for the fiscal year 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
ANNUAL LONG TERM
COMPENSATION COMPENSATION AWARDS
- ----------------------------------------------------------------------------------------------------------------
RESTRICTED SECURITIES
FISCAL STOCK UNDERLYING ALL OTHER
NAME AND POSITION YEAR SALARY($) BONUS($)(1) AWARDS($)(1) OPTIONS/SARS(#)(2) COMPENSATION($)(3)
- ----------------- ------ -------- ----------- ------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
Robert E. Cannon 1997 512,500 457,600 59,745 --- 22,500
Chairman and Chief 1996 475,000 320,625 55,855 65,000 22,500
Executive Officer 1995 428,625 275,149 --- --- 67,681
David B. Ferraro 1997 414,423 353,950 43,899 --- 22,500
President and Chief 1996 389,423 253,125 41,507 50,000 22,500
Operating Officer 1995 355,451 215,057 --- --- 57,086
Henry P. Doggrell Sr. 1997 230,000 80,240 13,741 --- 8,246
Vice President, 1996 19,167 51,438 --- 220,000 1,725
Corporate Affairs
and General Counsel
George B. Ellis Sr. 1997 259,615 82,000 19,023 --- 22,500
Vice President, 1996 237,821 67,188 16,524 25,000 22,500
Manufacturing 1995 222,275 70,106 --- --- 35,366
-Specialty Cellulose
Division
Herman P. van 1997 377,778 180,871 --- --- ---
Eck(3)(4) Vice 1996 410,522 80,115 --- 25,000 71,733
President, Special 1995 385,986 82,985 --- --- 75,927
Projects
</TABLE>
- -----------------------------
(1) Pursuant to the Company's Restricted Stock Plan, restricted shares of
stock were accrued for the executive officers for fiscal years 1997 and 1996
in the following amounts: (i) in the case of Mr. Cannon, 1,674 and 1,565,
respectively; (ii) in the case of Mr. Ferraro, 1,230 and 1,163, respectively;
(iii) in the case of Mr. Doggrell, 385 shares for fiscal year 1997 only; and
(iv) in the case of Mr. Ellis, 533 and 463, respectively. The price per share
of $35.69 was based on the price of the Company's stock on the day that the
plan was approved by the Board of Directors. Although the shares may be voted
by the recipient, the shares may not be sold, pledged or otherwise
transferred before the recipient's approved retirement from the Company, and
if the recipient should violate the restrictions or otherwise leave the
Company before an approved retirement date, the shares are subject to
forfeiture. The aggregate value of all restricted stock holdings at the end
of fiscal year 1997 for Messrs. Cannon, Ferraro, Doggrell, Ellis and van Eck
was $115,600, $85,406, $13,741, $35,547 and $0, respectively. If dividends
are paid to holders of Common Stock, holders of restricted stock similarly
will be eligible to receive dividends.
(2) There were no options granted during fiscal year 1997 to executive
officers. The options in fiscal year 1996 were granted pursuant to the 1995
Incentive and Nonqualified Stock Option Plan for Management Employees (the
"1995 Option Plan"). The exercise price of options granted to Messrs. Cannon,
Ferraro, Ellis and van Eck is $18.50 per share, the fair market value of the
Company's stock on the date of the Company's initial public offering on
November 28, 1995, except that 10,810 of the options granted to Mr. Cannon
were issued at the exercise price of $20.35 per share to properly qualify
them as incentive stock options. An option for the purchase of 20,000 shares
of the Company's stock was granted to Mr. Doggrell under the 1995 Option Plan
at an exercise price of $25.50 per share, the fair market value of the
Company's stock on June 1, 1996, the date Mr. Doggrell joined the Company.
Upon joining the Company, Mr. Doggrell also received an option grant of
200,000 shares of Company stock at an exercise price of $15.19 per share
pursuant to the Company's 1995 Management Stock Option Plan (the "Management
Option Plan"), a limited stock option plan established by the Company to
attract and retain key managers of the Company. All outstanding options vest
periodically over a period of five years, except that Optionees who were over
the age of 60 at the time of the option grant have shorter vesting periods,
and may be exercised within a period of ten years from the date of grant or
such shorter periods as are defined in the subscription agreements executed
between the Company and the optionees pursuant to the 1995 Option Plan and
the Management Option Plan (collectively, the "Option Plans").
(3) Amounts consist of accruals under the Buckeye Retirement Plan (the
"Retirement Plan") and the Buckeye Retirement Plus Savings Plan (the
"Retirement Plus Plan"), both of which are defined contribution retirement
plans covering substantially all employees. The Company contributed 1% of the
employee's gross compensation plus 1/2% for each year of service up to a
maximum of 11% of the employee's gross compensation under the Retirement
Plan. The Retirement Plus Plan provides for contributions by the Company of
shares of Common Stock equal to an additional 4% of the employee's gross
compensation during years when the Company has been financially successful
based on a predetermined financial threshold approved by the Board. Amounts
received by Mr. van Eck consist of accruals under the Company's retirement
plan in effect pursuant to Swiss statutory requirements, except in fiscal
year 1997, in lieu of making a payment under the Company's retirement plan,
the Company paid to Mr. van Eck additional bonus compensation in an amount
equal to the payment which would have normally been made in accordance with
the Swiss statutory requirements.
(4) Mr. van Eck's compensation (other than that paid in options) is paid in
Swiss francs. Amounts have been translated to U.S. dollars at the rate of
$1.00 to SF 1.3398 for 1997, $1.00 to SF 1.1889 for 1996 and $1.00 to SF
1.2489 for 1995.
7
<PAGE>
OPTIONS/SARS GRANTED IN LAST FISCAL YEAR
No options or stock appreciation rights were granted in fiscal year 1997
to any of the executive officers.
OPTIONS HELD OR OTHERWISE EXERCISED AS OF FISCAL YEAR-END 1997
The following table discloses information regarding stock options held at
the end of or exercised in fiscal 1997 for each of the executive officers listed
below as of June 30, 1997, pursuant to the Option Plans.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
- -----------------------------------------------------------------------------------------------
SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-
SHARES ACQUIRED VALUE UNEXERCISED OPTIONS THE-MONEY OPTIONS AT
NAME ON EXERCISE(1) REALIZED(1) AT JUNE 30, 1997 (2) JUNE 30, 1997 ($)(3)
- ---------------- --------------- ----------- --------------------- ------------------------
<S> <C> <C> <C> <C>
Robert E. Cannon --- --- 65,000 $ 971,252
David B. Ferraro --- --- 50,000 762,500
Henry P. Doggrell --- --- 220,000 3,877,000
George B. Ellis --- --- 25,000 381,250
Herman P. van Eck --- --- 25,000 381,250
</TABLE>
- ------------
(1) As of June 30, 1997, no Options have been exercised by the executive
officers under the Option Plans.
(2) All options issued to Messrs. Cannon, Ferraro, Ellis and van Eck were
granted under the 1995 Option Plan as of the date of the Company's initial
public offering on November 28, 1995, at an exercise price of $18.50 per
share, except that 10,810 of the options granted to Mr. Cannon were issued
at the exercise price of $20.35 per share to properly qualify them as
incentive stock options. An option for 20,000 shares of Company stock was
granted to Mr. Doggrell pursuant to the 1995 Option Plan at $25.50 per
share, the fair market value of the Company's stock on the day Mr. Doggrell
joined the Company. Additionally, Mr. Doggrell was granted options for
200,000 shares of stock at an exercise price of $15.19 per share pursuant
to the Management Option Plan.
(3) Based on $33.75 per share, the closing price on the New York Stock Exchange
as of June 30, 1997.
8
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder returns
through June 30, 1997, since the Company's common stock began trading on
November 22, 1995, pursuant to the Company's initial public offering, with
returns based on the New York Stock Exchange (SIC 2600-2699 U.S. companies)
index and the S&P 500 Composite Stock Price Index. The graph assumes $100
invested on November 22, 1995, and the reinvestment of any dividends paid on
account of the investments.
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
<TABLE>
<CAPTION>
TOTAL RETURNS INDEX FOR: 11/22/95 12/29/95 06/28/96 12/31/96 6/30/97
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Buckeye Cellulose Corporation ................. 100 113.5 141.9 137.4 174.2
S&P 500 Stocks ................................ 100 103.1 113.7 127.1 153.3
NYSE Stocks (SIC 2600-2699 US Companies)
Paper and allied products .................. 100 102.4 105.0 122.5 141.2
</TABLE>
9
<PAGE>
SECURITY OWNERSHIP OF COMPANY'S DIRECTORS AND EXECUTIVE OFFICERS AND CERTAIN
OTHER BENEFICIAL OWNERS
As of August 31, 1997, the Company's records indicated that the following
number of shares were beneficially owned by (i) each person known by the Company
to beneficially own more than 5% of the Company's shares; (ii) each Director of
the Company, including those persons nominated to serve as Class II Directors
and each of the executive officers named in the Summary Compensation Table; and
(iii) all Directors and executive officers of the Company as a group. Unless
otherwise indicated, beneficial ownership is direct and the person indicated has
sole voting and investment power.
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) CLASS(1)
------------------- ------------------------ ----------
(i) R. Howard Cannon,
Trustee(3)(7).............. 4,488,771 24.0%
432 East Racquet Club Place
Memphis, Tennessee 38117
David B. Ferraro(4).......... 1,249,732 6.7%
1001 Tillman Street
Memphis, Tennessee 38108
NewSouth Capital Management,
Inc.(5).................... 1,288,532 6.9%
1000 Ridgeway Loop Road
Suite 233
Memphis, Tennessee
38120-4023
Gilchrist Berg (6)........... 972,778 5.2%
Robin Bradbury
Water Street Capital, Inc.
225 Water Street, Suite 1987
Jacksonville, Florida 32202
(ii) Robert E. Cannon(2).......... 580,386 3.1%
R. Howard Cannon(3)(7)...... 4,488,771 24.0%
Red Cavaney(8)............... 12,100 *
David B. Ferraro(4).......... 1,249,732 6.7%
Henry F. Frigon(8)........... 12,000 *
Samuel M. Mencoff(8)......... 75,682 *
Harry J. Phillips, Sr.(8).... 24,500 *
Henry P. Doggrell(9)......... 132,283 *
George B. Ellis(10).......... 378,596 2.0%
Herman P. van Eck(11)........ 98,864 *
All Directors and Executive
Officers as a group (12)
(15 persons)............... 7,791,451 41.1%
- ---------------
* Less than 1% of the issued and outstanding shares of Common Stock of the
Company.
(1) Unless otherwise indicated, beneficial ownership consists of sole voting
and investing power based on 18,680,193 shares issued and outstanding as of
August 31, 1997. Options to purchase an aggregate of 278,500 shares are
exercisable or become exercisable within 60 days of August 31, 1997. Such
shares are deemed to be outstanding for the purpose of computing the
percentage of outstanding shares owned by each person to whom a portion of
such options relate but are not deemed to be outstanding for the purpose of
computing the percentage owned by any other person.
10
<PAGE>
(2) Includes 37,508 shares held by Kathryn Gracey Cannon, wife of Robert E.
Cannon, as to which Mr. Cannon disclaims beneficial ownership; 5,219 shares
held in the Company's 401(k) and retirement plans; 3,239 shares of
restricted stock issued pursuant to the Company's Restricted Stock Plan;
and 32,500 shares issuable upon the exercise of options, which options
become exercisable within 60 days of August 31, 1997.
(3) Includes 2,280,234 shares held by the Robert E. Cannon Grantor Retained
Annuity Trust, R. Howard Cannon, Trustee; 2,280,676 shares held by the
Kathryn Gracey Cannon Grantor Retained Annuity Trust, R. Howard Cannon,
Trustee; and 5,000 shares issuable upon the exercise of options granted
under the Company's stock option plan for non-employee directors (the
"Formula Plan").
(4) Includes 482,912 shares held by the David B. Ferraro Grantor Retained
Annuity Trust, Barbara A. Ferraro, Trustee; 4,430 shares held in the
Company's 401(k) and retirement plans; 2,393 shares of restricted stock
issued pursuant to the Company's Restricted Stock Plan; and 10,000 shares
issuable upon the exercise of options, which options become exercisable
within 60 days of August 31, 1997. Barbara A. Ferraro is the wife of David
B. Ferraro.
(5) In February 1997, NewSouth Capital Management, Inc. filed a Schedule 13G
with the Securities and Exchange Commission ("SEC") as of December 31,
1996, stating that as an investment advisor, it had sole dispositive power
of the shares set forth herein, which constitute more than 5% of the
Company's Common Stock.
(6) In August 1997, Gilcrest Berg and Robin Bradbury, affiliates of Water
Street Capital, Inc., filed a Schedule 13D with the SEC stating they have
sole dispositive power of the shares set forth herein, which constitute
more than 5% of the Company's Common Stock.
(7) Includes 5,000 shares issuable upon the exercise of options granted under
the Company's Formula Plan, which options become exercisable within 60
days.
(8) Includes 10,000 shares issuable upon the exercise of options granted under
the Company's Formula Plan, which options become exercisable within 60
days.
(9) Includes 385 shares of restricted stock issued pursuant to the Company's
Restricted Stock Plan and 84,000 shares issuable upon the exercise of
options, which options become exercisable within 60 days.
(10) Includes 2,142 shares held in the Company's 401(k) and retirement plans;
996 shares of restricted stock issued pursuant to the Company's Restricted
Stock Plan; and 5,000 shares issuable upon the exercise of options, which
options become exercisable within 60 days.
(11) Includes 25,000 shares issuable upon the exercise of options, which options
become exercisable within 60 days.
(12) Includes an aggregate of 278,500 shares issuable upon exercise of options
granted under the Formula Plan and the Option Plans and 7,353 shares held
in the Company's 401(k) and retirement plans.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The federal securities laws require the Company's directors and executive
officers, and persons who beneficially own more than 10% of a registered class
of the Company's equity securities, to file with the SEC initial reports of
ownership and reports of changes in ownership of any securities of the Company.
To the Company's knowledge, based solely on review of the copies of such reports
furnished to the Company and representations by certain reporting persons, all
of the Company's officers, directors and greater than ten-percent beneficial
owners made all filings required in a timely manner, except: (i) Form 4,
Statement of Change in Beneficial Ownership, reflecting two separate purchases
of 400 shares and 500 shares of Common Stock respectively, was inadvertently
filed late by Mr. Cavaney during fiscal year 1997, and (ii) Form 3, Initial
Statement of Beneficial Ownership, for newly elected Senior Vice Presidents
Doggrell, Eppinger, Horne, Huff, Matula and Whitcomb were each inadvertently
filed 8 days late.
11
<PAGE>
TRANSACTIONS WITH EXECUTIVE OFFICERS, DIRECTORS AND OTHERS
On July 2, 1996, BKI Investment Corporation, a wholly owned subsidiary of
the Company, purchased 2,259,887 shares of Common Stock held by Madison Dearborn
Capital Partners, L.P. for $22.125 per share.
Messrs. Cannon and Ferraro have each executed Master Promissory Notes with
Union Planters National Bank (the "Bank"), as of March 21, 1994, in the amounts
of approximately $2.3 million and $0.6 million, respectively. Each of the notes
is secured by Bank certificates of deposit in the name of the Company in the
amounts of approximately $2.3 million and $0.6 million, respectively, pursuant
to two security agreements between the Bank and the Company. Both of the notes,
which mature on July 1, 1998, bear interest at a per annum rate equal to 200
basis points in excess of the respective amounts paid by the Bank on the
certificates of deposit used as collateral for the notes. The interest rates are
automatically adjusted every six months to correspond with the adjustments made
to the interest rates payable on the certificates of deposit. As security for
the Company having provided these certificates of deposit as collateral for the
notes, the Company has entered into Pledge and Security Agreements with each of
Messrs. Cannon and Ferraro for the pledge by both Messrs. Cannon and Ferraro of
a specified numbers of shares of Common Stock, together with subsequently
acquired shares, dividends and other rights with respect thereto, to the
Company.
PROPOSAL 2. RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE
COMPANY'S INDEPENDENT ACCOUNTANTS AND AUDITORS FOR FISCAL 1998
The Board of Directors has confirmed the appointment by the Audit
Committee of Ernst & Young LLP as the Company's independent accountants and
auditors for fiscal 1998. Ernst & Young LLP served as independent accountants
and auditors of the Company for the year ended June 30, 1997. Representatives of
the firm will be present at the Annual Meeting, will have an opportunity to make
a statement if they so desire and are expected to be available to respond to
appropriate questions by stockholders.
The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock present or represented at the Annual Meeting, if a quorum
exists, entitled to vote at the Annual Meeting is required to ratify the
appointment of Ernst & Young LLP as the Company's independent accountants and
auditors for fiscal 1998. If the stockholders do not ratify this appointment,
other independent auditors will be considered by the Board of Directors upon
recommendation by the Audit Committee.
The Board of Directors recommends voting FOR ratification of the
appointment of Ernst & Young LLP as the Company's independent accountants and
auditors for fiscal 1998.
PROPOSAL 3. APPROVAL OF AN AMENDMENT TO THE COMPANY'S CHARTER TO CHANGE THE NAME
OF THE COMPANY TO "BUCKEYE TECHNOLOGIES INC."
The Board of Directors has approved an amendment to the Company's Charter
to change the name of the Company to "Buckeye Technologies Inc." The Board
believes that the new name will more accurately reflect the breadth of the
Company's product offerings and depth of its technological innovations.
The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock entitled to vote at the Annual Meeting is required to
approve the amendment to the Charter to change the name of the Company to
"Buckeye Technologies Inc."
The Board of Directors recommends voting FOR the proposed amendment to the
Company's Charter to change the name of the Company to "Buckeye Technologies
Inc."
12
<PAGE>
INTRODUCTION TO PROPOSALS 4 AND 5
Proposal 4 (the "Voting Amendment") and Proposal 5 (the "Transfer
Amendment") contain certain proposed amendments to the Company's Charter which
may be characterized in the view of the Securities and Exchange Commission as
"anti-takeover" provisions. The Company's Charter and Amended and Restated
By-laws (the "By-laws") currently contain certain other provisions which could
have an anti-takeover effect, including (i) a classified Board of Directors,
(ii) limitations on actions by written consent of the stockholders, (iii)
limitations on the ability to call special meetings of the stockholders and
procedural requirements of business properly brought before such meetings, and
(iv) a supermajority approval requirement to amend certain of the aforementioned
provisions of the Charter and By-laws (such provisions collectively referred to
hereafter as the "Anti-Takeover Provisions").
The Company also maintains a Shareholder Rights Plan with Union Planters
National Bank which entitles each holder of Common Stock to one Preferred Share
Purchase Right (a "Right") per share of Common Stock. Upon the accumulation of
Common Stock over a certain percentage threshold by any party other than certain
exempt persons (an "Acquiring Party"), the Rights Plan triggers the issuance of
a fractional interest in a series of Junior Participating Preferred Stock to all
stockholders other than the Acquiring Party which, under certain circumstances,
are convertible in such a manner as to have a dilutive effect upon the Acquiring
Party's interest. This dilutive effect may discourage a party interested in
acquiring substantial positions in the Company's stock or in effecting a change
of control of the Company from doing so without first negotiating with the Board
of Directors (which is empowered to redeem the Rights at any time before they
are triggered). The Board of Directors believes that the Anti-Takeover
Provisions, along with the Shareholder Rights Plan, are desirable to help
discourage hostile attempts to take control of the Company.
Existing federal and state laws provide some protection to shareholders in
connection with attempts to acquire control of a corporation. Federal securities
laws and regulations generally govern disclosure required to be made to
shareholders in the process of a solicitation for proxies in a proxy contest as
well as in connection with business combinations. The Company is incorporated
under the General Corporation Law of the State of Delaware (the "Delaware law"),
which contains certain "business combination" provisions, including Section 203
of the Delaware law. Section 203 limits stock acquisitions and business
combinations with certain parties for a period of three years after such party
has acquired greater than 15% of the outstanding common stock of the
corporation, unless (i) the transaction has been approved in advance by a
majority of the Board of Directors, (ii) the affected party acquires greater
than 85% of the outstanding common stock in the same transaction, or (iii) at or
after the time at which the proposed business combination is approved by the
Board of Directors, the transaction is approved by two-thirds of the remaining
stockholders other than the party proposing the transaction.
The Board believes that, while federal and state disclosure and procedural
law requirements may help defend against hostile takeover attempts, they may not
apply or be adequate in all cases. Without additional structural protection
devices to ensure that takeover attempts are negotiated with the Board of
Directors, hostile suitors may employ coercive tactics which the Board believes
could seriously disrupt the business and management of the Company and could
result in substantial inequities for some or all of the Company's stockholders.
In addition, where proposals are presented to the Board of Directors, there is a
greater opportunity for the Board to analyze each proposal thoroughly, to
develop and evaluate alternatives, to negotiate for improved terms and to
present its recommendations to the stockholders in the most effective manner.
Neither the Voting Amendment nor the Transfer Amendment are recommended in
response to any specific effort of which the Company is aware to accumulate the
Company's Common Stock or to obtain control of the Company or its Board of
Directors by means of a solicitation in opposition to management or otherwise.
In addition, the Board's recommendation of the Voting Amendment and Transfer
Amendment is not part of a plan by management to adopt a series of such
amendments. The Board is proposing the Voting Amendment and Transfer Amendment
at this time in order to structure and position the Company to address future
transactions, if any, in a manner that the Board believes best serves the
interests of stockholders. Although the Board may review other possible
anti-takeover programs in the future, the Board has no present intention of
proposing additional amendments to the Charter or the Bylaws that would affect
the ability of a third party to effect a change of control of the Company.
Stockholders should be aware that the overall effect of certain
anti-takeover provisions is to make it more difficult for holders of a majority
of the outstanding shares of Common Stock to change the composition of the Board
of Directors and to remove existing management in circumstances where a majority
of the shareholders may be dissatisfied
13
<PAGE>
with the performance of incumbent directors or otherwise desire to make changes.
In addition, the Board of Directors recognizes that hostile attempts do not
always have the unfavorable circumstances or effects described above and may
sometimes be beneficial to stockholders, providing all stockholders with
considerable value for their shares. Nevertheless, the Board believes that the
Anti-Takeover Provisions provide beneficial protection that helps to ensure that
the Company's stockholders will be treated fairly and be afforded the
opportunity to realize the maximum return on their investment. The Board
believes that the Voting Amendment and Transfer Amendment will supplement the
Anti-Takeover Provisions for the benefit of the Company and all of its
stockholders.
Both the Voting Amendment and the Transfer Amendment are permitted by the
Delaware law and are consistent with the rules of the New York Stock Exchange on
which the Company's Common Stock is traded.
The Board of Directors has carefully considered both the potential
benefits and the potential adverse effects of the proposed Voting Amendment and
Transfer Amendment and has unanimously concluded that any potential adverse
effect is substantially outweighed by the benefits the amendments would afford
the Company and its stockholders.
PROPOSAL 4. APPROVAL OF AN AMENDMENT TO THE COMPANY'S CHARTER TO DELETE THE
PROVISION REQUIRING CUMULATIVE VOTING IN THE ELECTION OF DIRECTORS FOR THE
COMPANY
The Board of Directors has unanimously approved the Voting Amendment to
the Company's Charter which eliminates the provision requiring cumulative voting
in the election of directors. The provision is currently found in Article Four,
Section (d) of the Company's Charter.
Cumulative voting permits the holder of each share of stock entitled to
vote in the election of directors to cast that number of votes represented by a
share to a single nominee or the holder may allocate those votes among as many
of the nominees for director as he or she chooses. Thus, a stockholder with a
significant minority percentage of the outstanding shares may be able to elect
one or more directors if voting is cumulative. In contrast, the holder or
holders of a majority of the shares entitled to vote in an election of directors
are able to elect all the directors in the absence of cumulative voting.
Under Delaware law, the stockholders of a corporation do not have
cumulative voting rights unless specifically provided in a corporation's
certificate of incorporation. The Board of Directors has proposed to eliminate
the cumulative voting provision contained in the Company's Charter by adopting
the Voting Amendment. The Board believes that the Voting Amendment reduces the
risk that one or more persons would seek to acquire a minority ownership in the
Company with a view toward obtaining a seat on the Board of Directors to
represent specific interests. The Board believes that such an effort, if
successful, could negatively affect the Board's ability to effectively conduct
the affairs of the Company's business. Additionally, the Board believes that the
elimination of cumulative voting is advantageous to the Company and its
stockholders because each director of a publicly held corporation has the duty
to represent the interests of all stockholders, rather than any specific
stockholder or group of stockholders. It is also conceivable, however, that the
absence of cumulative voting might deter efforts by one or more investors to
seek control of the Company on a basis which some stockholders might deem
favorable.
The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock is required for approval of this proposal. In the event
that this proposal is not approved by the requisite vote of stockholders, the
Charter will continue to provide for cumulative voting in the election of
directors.
The Board believes that the proposed Voting Amendment eliminating the
provision for cumulative voting in the Charter is in the best interest of the
Company and all of its stockholders for the reasons stated above and unanimously
recommends a vote FOR the adoption of such proposal.
14
<PAGE>
PROPOSAL 5. APPROVAL OF AN AMENDMENT TO THE COMPANY'S CHARTER TO REQUIRE THE
AFFIRMATIVE VOTE OF THE HOLDERS OF AT LEAST 75% OF THE OUTSTANDING SHARES OF
COMMON STOCK OF THE COMPANY, VOTING AS A SINGLE CLASS, TO APPROVE THE MERGER OR
CONSOLIDATION OF THE COMPANY WITH OR INTO ANY OTHER ENTITY OTHER THAN A
SUBSIDIARY OF THE COMPANY OR THE SALE, LEASE, EXCHANGE OR DISPOSITION OF ALL OR
SUBSTANTIALLY ALL OF THE ASSETS OF THE COMPANY AND ITS SUBSIDIARIES.
The Board of Directors has also unanimously approved the Transfer
Amendment to the Company's Charter which increases the percentage of shareholder
vote required for the Company to engage in certain transactions. The proposed
amendment will require the affirmative vote of the holders of at least 75% of
the outstanding shares of Common Stock of the Company, voting as a single class,
to approve the merger or consolidation of the Company with or into any other
entity other than a subsidiary of the Company or the sale, lease, exchange or
disposition of all or substantially all of the assets of the Company and its
subsidiaries.
The purpose of the Transfer Amendment is to provide greater assurance that
the stockholders of the Company are in agreement with respect to transactions
that will substantially alter the nature of the stockholders' investment. In
light of increasing industry consolidation and the frequency of transactions
involving hostile and/or coercive offers to stockholders, the Board believes
that the Transfer Amendment will help to ensure that stockholders are treated
fairly and ultimately will assist in maximizing the return on their investment.
Under Section 251 of the Delaware law, the merger of the Company with or
into another entity requires the approval of the holders of at least a majority
of securities entitled to vote thereon. In addition, the sale, lease, exchange
or disposition of all or substantially all of the assets of the Company requires
a similar vote pursuant to Section 271 of the Delaware law. Under the proposed
Transfer Amendment, the vote required to take these actions would be increased
to 75% of the holders of all outstanding shares of Common Stock. The subsequent
amendment or repeal by the Company's stockholders of the provisions contained in
the Transfer Amendment also would require the affirmative vote of the holders of
75% of the outstanding shares of Common Stock.
It is recognized that the adoption of the Transfer Amendment may affect
the ability of a third party to acquire the Company by rendering more difficult
a merger or sale of substantially all of the Company's assets, even under
circumstances in which a significant portion, but less than 75%, of the
stockholders of the Company favor such a transaction. Thus, the holders of
greater than 25% of the total shares outstanding could have veto power over a
merger or sale of assets which management and/or a majority of the shareholders
believe may be desirable and beneficial. The Company's directors, officers and
principal shareholders collectively beneficially own approximately 53% of the
outstanding shares of Common Stock of the Company. If the Transfer Amendment is
approved, the Company's directors, officers and principal stockholders would
continue to have the ability to exercise veto power over a proposed merger or
sale of assets.
The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock is required for approval of the Transfer Amendment. In
the event that this proposal is not approved by the requisite vote of
stockholders, Delaware law will continue to determine the required vote with
respect to such transactions.
The Board believes that the proposed Transfer Amendment requiring the
affirmative vote of the holders of at least 75% of the Common Stock of the
Company, voting as a single class, to approve the merger or consolidation of the
Company with or into another entity other than a subsidiary of the Company or
the sale, lease, exchange or disposition of all or substantially all of the
Company's assets to another entity is in the best interest of the Company and
all of its stockholders for the reasons stated above and unanimously recommends
a vote FOR the adoption of such provision.
15
<PAGE>
STOCKHOLDERS' PROPOSALS FOR 1998 ANNUAL MEETING
In accordance with the Company's By-laws, stockholders' proposals intended
to be presented at the 1998 Annual Meeting of Stockholders must be received in
writing by the Secretary of the Company not less than 60 days nor more than 90
days prior to the 1998 Annual Meeting in the form set forth in the By-laws for
inclusion in the Company's proxy statement and form of proxy relating to that
meeting.
OTHER MATTERS
The Board of Directors, at the time of the preparation of this Proxy
Statement, knows of no business to come before the meeting other than that
referred to herein. If any other business should come before the meeting, the
persons named in the enclosed proxy will have discretionary authority to vote
all proxies in accordance with their best judgment.
UPON THE WRITTEN REQUEST OF ANY RECORD HOLDER OR BENEFICIAL OWNER OF
COMMON STOCK ENTITLED TO VOTE AT THE ANNUAL MEETING, THE COMPANY, WITHOUT
CHARGE, WILL PROVIDE A COPY OF ITS ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
JUNE 30, 1997, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION OR A COPY OF
THE PROPOSED SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION. REQUESTS
SHOULD BE DIRECTED TO MIMI HALL, BUCKEYE CELLULOSE CORPORATION, 5395 ESTATE
OFFICE DRIVE, SUITE 1, MEMPHIS, TENNESSEE 38119-3636, TELEPHONE (901) 682-1360.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ SHEILA JORDAN CUNNINGHAM
Memphis, Tennessee Sheila Jordan Cunningham
September 19, 1997 Secretary and Associate
General Counsel
16
<PAGE>
PROXY
Buckeye Cellulose Corporation
P.O. Box 80407
1001 Tillman Street, Memphis, Tennessee 38108-0407
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
1997 ANNUAL MEETING OF STOCKHOLDERS
The undersigned appoints Henry P. Doggrell, R. Neil O'Brien and David H.
Whitcomb, or any of them, with full power of substitution and revocation as
Proxy to vote all shares of stock standing in my name on the books of Buckeye
Cellulose Corporation (the "Company") at the close of business on September 12,
1997, which the undersigned would be entitled to vote if personally present at
the Annual Meeting of Stockholders of the Company to be held at Dixon Gallery &
Gardens, 4339 Park Avenue, Memphis, Tennessee, on October 21, 1997, at 5:00
P.M., local time, and at any and all adjournments, upon the matters set forth in
the Notice of said meeting. The Proxy is further authorized to vote in his
discretion as to any other matters which may come before the meeting. At the
time of preparation of the Proxy Statement, the Board of Directors knows of no
business to come before the meeting other than that referred to in the Proxy
Statement.
THE SHARES COVERED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
INSTRUCTIONS GIVEN BELOW AND WHEN NO INSTRUCTIONS ARE GIVEN WILL BE VOTED FOR
ALL NOMINEES AND FOR THE PROPOSALS DESCRIBED IN THE ACCOMPANYING NOTICE OF
ANNUAL MEETING AND PROXY STATEMENT AND ON THIS PROXY.
(1) Election of two (2) Class II Directors. The Board of Directors recommends a
vote FOR the election of the nominees.
[ ] For all nominees listed below: [ ] Withhold Authority to vote or
Cumulate Votes for nominees listed
below (See instructions on the
reverse side)
CLASS II RED CAVANEY
DAVID B. FERRARO
(2) To ratify the selection of Ernst & Young LLP as the Company's independent
accountants and auditors for the fiscal year 1998. The Board of Directors
recommends a vote FOR the proposal.
[ ] For [ ]Against [ ]Abstain
(3) To approve an amendment to the Company's Amended and Restated Certificate
of Incorporation to change the name of the Company to "Buckeye Technologies
Inc." The Board of Directors recommends a vote FOR the proposal.
[ ] For [ ]Against [ ]Abstain
(4) To approve an amendment to the Company's Amended and Restated Certificate
of Incorporation to delete the provision requiring cumulative voting in the
election of directors for the Company. The Board of Directors recommends a
vote FOR the proposal.
[ ] For [ ]Against [ ]Abstain
(5) To approve an amendment to the Company's Amended and Restated Certificate
of Incorporation to require the affirmative vote of the holders of at least
75% of the outstanding shares of Common Stock of the Company, voting as a
single class, to approve the merger or consolidation of the Company with or
into any other entity other than a subsidiary of the Company or the sale,
lease, exchange or disposition of all or substantially all of the assets of
the Company and its subsidiaries. The Board of Directors recommends a vote
FOR the proposal.
[ ] For [ ]Against [ ]Abstain
(6) Such other business as may properly come before the meeting or any
adjournment thereof.
********************************************************************************
The undersigned hereby acknowledges receipt of the Notice of the 1997 Annual
Meeting and the related Proxy Statement.
Dated: _________, 1997 Signed:__________________________________
[Label to be placed here] Signed:__________________________________
Shareholder should sign here exactly as
shown on the label affixed hereto.
Administrator, Trustee, or Guardian,
please give full title. If more than one
Trustee, all should sign. All Joint
Owners should sign.
Please indicate if you plan to attend the Stockholders' Meeting. [ ] Yes [ ] No
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY
PROMPTLY IN THE ENCLOSED ENVELOPE.
Ms. Portia Zerilla, Corporate Trust Department
Union Planters National Bank
6200 Poplar Avenue, 3rd Floor
Memphis, Tennessee 38118
<PAGE>
********************************************************************************
This portion should be completed only if you choose to withhold authority or
cumulate votes with regard to the election of directors.
[ ] To withhold authority to vote for any individual nominee, write such
nominee's name in the space provided below:
________________________________________________________________________
[ ] Cumulative Voting: You are entitled to cast a number of votes
("Cumulative Votes") equal to the product of the number of shares you are
entitled to vote times two (the number of directors to be elected). You may
cast all or any portion of your Cumulative Votes for either nominee or may
allocate all or any portion of your Cumulative Votes between the two
nominees in such proportions as you choose by specifying in the spaces
provided below the number of your Cumulative Votes to be voted in favor of
each nominee. Please make sure that the total number of votes for all
nominees specified in the spaces provided below does not exceed your total
number of Cumulative Votes.
_____ votes for Red Cavaney
_____ votes for David B. Ferraro
If you mark both boxes in Item (1) on the reverse side of this Proxy, your vote
will be considered a vote FOR both nominees.
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