<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement. [ ] Confidential, for use of the
Commission only (as permitted by
Rule 14a-6(e)(2).
[X] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12.
IVEX PACKAGING CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
IVEX PACKAGING CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[IVEX LOGO]
IVEX PACKAGING CORPORATION
NOTICE OF 2000 ANNUAL MEETING OF STOCKHOLDERS
AND PROXY STATEMENT
March 27, 2000
Dear Stockholders:
It is a pleasure to invite you to attend the 2000 Annual Meeting of
Stockholders of Ivex Packaging Corporation to be held at the Deer Path Inn, 255
East Illinois Road, Lake Forest, Illinois 60045, on Wednesday, April 26, 2000,
at 9:00 a.m. (Central time).
Each item of business described in the accompanying Notice of Annual
Meeting of Stockholders and Proxy Statement will be discussed during the meeting
and stockholders will have an opportunity to ask questions.
IT IS IMPORTANT THAT YOU VOTE YOUR SHARES WHETHER OR NOT YOU PLAN TO ATTEND
THE MEETING. We urge you to carefully review the Proxy Statement and to complete
the enclosed proxy card. Please sign, date and return your proxy card in the
envelope provided as soon as possible. If you do attend the meeting, your proxy
can be revoked at your request in the event you wish to vote in person.
I look forward to seeing you at the meeting.
Sincerely,
George V. Bayly
Chairman of the Board of Directors,
President and Chief Executive Officer
<PAGE> 3
[IVEX LOGO]
IVEX PACKAGING CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Ivex Packaging Corporation (the "Company") will hold its 2000 Annual
Meeting of Stockholders (the "Annual Meeting") on Wednesday, April 26, 2000 at
9:00 a.m. (Central time) at the Deer Path Inn, 255 East Illinois Road, Lake
Forest, Illinois 60045, for the following purposes:
1. To elect two directors to serve until the 2003 Annual Meeting of
Stockholders.
2. To ratify the appointment of PricewaterhouseCoopers LLP as the Company's
independent public accountants.
3. To approve the Company's Employee Stock Purchase Plan.
4. To act upon any other matters that may properly come before the meeting.
The Board of Directors has fixed March 1, 2000 as the record date for the
determination of the stockholders entitled to notice of, and to vote at, the
Annual Meeting or any adjournment or postponement of the Annual Meeting.
At the Annual Meeting, each share of Common Stock, par value $.01 per
share, of the Company represented at the Annual Meeting will be entitled to one
vote on each matter properly brought before the Annual Meeting.
By Order of the Board of Directors,
G. Douglas Patterson
Secretary
March 27, 2000
YOUR VOTE IS IMPORTANT
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING.
HOWEVER, TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, PLEASE MARK, SIGN,
DATE AND RETURN THE ENCLOSED PROXY AS SOON AS POSSIBLE IN THE ENCLOSED
SELF-ADDRESSED, POSTAGE-PAID ENVELOPE. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY
VOTE IN PERSON EVEN IF YOU HAVE RETURNED A PROXY.
<PAGE> 4
[IVEX LOGO]
IVEX PACKAGING CORPORATION
PROXY STATEMENT
GENERAL
The accompanying proxy is solicited by the Board of Directors of Ivex
Packaging Corporation (the "Company" or "Ivex") for use at the 2000 Annual
Meeting of Stockholders of the Company (the "Annual Meeting") to be held on
Wednesday, April 26, 2000 at 9:00 a.m. (Central time) at the Deer Path Inn, 255
East Illinois Road, Lake Forest, Illinois 60045, and at any adjournments or
postponements thereof. This Proxy Statement and accompanying proxy card will be
mailed beginning on or about March 27, 2000 to give the holders of the Company's
Common Stock, par value $.01 per share ("Common Stock"), of record on March 1,
2000 (the "Record Date") an opportunity to vote at the Annual Meeting. Ivex
Packaging Corporation's 1999 Annual Report to Stockholders accompanies this
Proxy Statement.
Each share of Common Stock represented at the Annual Meeting is entitled to
one vote on each matter properly brought before the Annual Meeting. The
Company's Amended and Restated By-Laws (the "By-Laws") require that the holders
of a majority of the total number of shares entitled to vote be present in
person or by proxy in order for the presence of a quorum for the transaction of
business at the Annual Meeting.
In voting, please specify your choices by marking the appropriate spaces on
the enclosed proxy card, signing and dating the card and returning it in the
accompanying envelope. If no directions are given and the signed card is
returned, then the proxy holders will vote the shares FOR the election of all
listed nominees, FOR the proposal set forth in Item 2 in the Notice of Meeting,
FOR the proposal set forth in Item 3 in the Notice of Meeting, in accordance
with the directors' recommendations on the other subjects listed on the proxy
card and at their discretion on any other matters that may properly come before
the meeting and any adjournments or postponements thereof. Abstentions may be
specified on all proposals other than the election of directors.
Pursuant to Delaware law, abstentions are treated as present for purposes
of determining the presence or absence of a quorum and, therefore, will have the
effect of a vote against a proposal that requires the vote of a majority of the
votes cast by the holders of Common Stock present in person or by proxy and
entitled to vote thereon. In situations where brokers are prohibited from
exercising discretionary authority for beneficial owners who have not returned
proxies to the brokers (so-called "broker non-votes"), the affected shares will
be counted for purposes of determining the presence or absence of a quorum for
the transaction of business at the Annual Meeting but will not be included in
the vote totals and, therefore, will have no effect on the outcome of the votes.
REVOCABILITY OF PROXIES
Any stockholder giving a proxy has the power to revoke it at any time
before the proxy is voted. Proxies may be revoked by filing with the Secretary
of the Company written notice of revocation bearing a later date than the proxy,
by duly executing a subsequently dated proxy relating to the same shares of
Common Stock and delivering it to the Secretary of the Company or by attending
the Annual Meeting and voting in person. Attendance at the Annual Meeting will
not in and of itself constitute revocation of a proxy. Any subsequently dated
proxy or written notice revoking a proxy should be sent to the Secretary of Ivex
Packaging Corporation, at its executive offices at 100 Tri-State Drive, Suite
200, Lincolnshire, Illinois 60069.
1
<PAGE> 5
SHARES OUTSTANDING
Only holders of record of Common Stock at the close of business on the
Record Date are entitled to vote at the Annual Meeting. As of the Record Date,
the Company had outstanding 20,947,269 shares of Common Stock (including
treasury shares). Each share of Common Stock is entitled to one vote.
SOLICITATION
The Company will bear the entire cost of the solicitation of proxies,
including preparation, assembly and mailing of this Proxy Statement, the proxy
and any additional materials furnished to stockholders. Proxies may be solicited
by directors, officers and a small number of regular employees of the Company
personally or by mail, telephone or telegraph, but such persons will not be
specially compensated for such service. Copies of solicitation material will be
furnished to brokerage houses, fiduciaries and custodians that hold shares of
Common Stock of record for beneficial owners for forwarding to such beneficial
owners. The Company has also engaged Innisfree M&A Incorporated to assist in the
solicitation of proxies. This firm will be paid a fee of approximately $5,000
and will be reimbursed for expenses incurred in connection with such engagement.
The Company may also reimburse persons representing beneficial owners for their
costs of forwarding the solicitation material to such owners.
Your vote is important. Please return your marked proxy card promptly so
your shares can be represented, even if you plan to attend the Annual Meeting in
person.
NOMINATION AND ELECTION OF DIRECTORS
The Company's Amended and Restated Certificate of Incorporation (the
"Certificate") provides that the Board of Directors will consist of not less
than three nor more than fifteen members, the exact number to be determined in
accordance with the By-Laws.
The Certificate provides for the Board of Directors to be divided into
three classes, each class to serve for staggered three-year terms, with each
class consisting, as nearly as possible, of one-third of the directors.
The Board of Directors of the Company currently consists of six persons,
divided into three classes with two directors designated in each of Class I,
Class II and Class III. At the Annual Meeting, stockholders will elect two
directors for Class III.
The Board of Directors' Class III nominees are George V. Bayly and Anthony
P. Scotto. At the 2000 Annual Meeting, each Class III director will be elected
for a three-year term and will hold office until the 2003 Annual Meeting of
Stockholders. In each case, the elected director will continue in office until
such director's successor is elected and has been qualified, or until such
director's earlier death, resignation or removal.
The Class III nominees were designated for election, pursuant to the
By-Laws, by the Board of Directors of the Company.
Each of the Class III nominees has consented to serve as a director if
elected.
The By-Laws of the Company provide that directors will be elected at the
Annual Meeting by a plurality of the votes cast at the meeting by the holders of
the shares represented in person or by proxy and entitled to vote thereon. With
regard to the election of directors, votes may be cast for or withheld for each
nominee. Votes that are withheld will have no effect on the outcome of the
election because directors will be elected by a plurality of the votes cast.
Stockholders eligible to vote at the Annual Meeting do not have cumulative
voting rights with respect to the election of directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE ABOVE TWO NAMED
NOMINEES AS A DIRECTOR OF THE COMPANY.
2
<PAGE> 6
INFORMATION CONCERNING NOMINEES AND CONTINUING DIRECTORS
The following table sets forth the name and age of, and the recent business
experience and certain other information with respect to the Class III nominees
as well as the other directors in Class I and Class II whose terms continue
after the Annual Meeting:
<TABLE>
<CAPTION>
TERM TO
NAME PRINCIPAL OCCUPATION OR EMPLOYMENT AGE EXPIRE
- ---- ---------------------------------- --- -------
<S> <C> <C> <C>
NOMINEES
CLASS III
George V. Bayly...................... Mr. Bayly has served as Chairman of the Board, 57 2003
Director, President and Chief Executive Officer
of the Company since January 1991. Mr. Bayly is
also a director of General Binding Corporation.
Anthony P. Scotto.................... Mr. Scotto has served as a Director of the 52 2003
Company since August 1995. Mr. Scotto has been
a Managing Director of Oak Hill Partners, Inc.
and its predecessor since March 1988. Since
November 1998, Mr. Scotto has been a consultant
to Oak Hill Capital Management, Inc. Mr. Scotto
is also a director of Specialty Foods
Corporation.
CONTINUING DIRECTORS
CLASS I
Glenn R. August...................... Mr. August has served as a Director of the 38 2001
Company since March 1993. Mr. August has served
as a Managing Director of Oak Hill Partners,
Inc. and its predecessor since 1987. Since
August 1996, Mr. August has served as President
of Oak Hill Advisors, Inc., the exclusive
advisor to the Oak Hill Securities Fund, L.P.
and the Oak Hill Securities Fund II, L.P.
Frank V. Tannura..................... Mr. Tannura has served as a Director of the 43 2001
Company since August 1995, Executive Vice
President and Chief Financial Officer of the
Company since February 1999 and Vice President
and Chief Financial Officer of the Company
since October 1989.
CLASS II
R. James Comeaux..................... Mr. Comeaux has served as a Director of the 62 2002
Company since December 1, 1997. Mr. Comeaux has
served as President of Petrochemical Management
Inc. since 1993 and as President and Chief
Executive Officer of Arcadian Corporation from
1989 to 1993. Mr. Comeaux is also a director of
Energy BioSystems Corporation.
</TABLE>
3
<PAGE> 7
<TABLE>
<CAPTION>
TERM TO
NAME PRINCIPAL OCCUPATION OR EMPLOYMENT AGE EXPIRE
- ---- ---------------------------------- --- -------
<S> <C> <C> <C>
William J. White..................... Mr. White has served as a Director of the 61 2002
Company since December 1, 1997. Mr. White has
been a professor at Northwestern University
since January 1998. Mr. White served as
Chairman of the Board and Chief Executive
Officer of Bell & Howell Company from February
1993 to December 1997 and of Bell & Howell
Operating Company from February 1990 to
December 1997. He is also a director of Bell &
Howell Company, Readers Digest Association,
Inc., the Chicago Stock Exchange and TJ
International, Inc.
</TABLE>
MEETINGS OF THE BOARD OF DIRECTORS
During the 1999 calendar year, the Company's Board of Directors held 7
meetings. Each member of the Board of Directors was present for all of the
meetings of the Board of Directors and all of the meetings held by all
committees of the Board of Directors on which he served.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company's Board of Directors maintains an Audit Committee and a
Compensation Committee. The members of such committees are directors who are
neither officers nor employees of the Company. During the 1999 calendar year,
the Audit Committee held two meetings and the Compensation Committee held four
meetings. Because of the size of the Company's Board of Directors, the Board of
Directors has not established a nominating committee.
Audit Committee. The Audit Committee of the Board of Directors of the
Company currently consists of Messrs. Comeaux (Chairman) and White, each of whom
is a non-employee director. This committee is directed to review the scope, cost
and results of the independent audit of the Company's books and records, the
results of the annual audit with management and the adequacy of the Company's
accounting, financial and operating controls; to recommend annually to the Board
of Directors the selection of the independent auditors; to consider proposals
made by the Company's independent auditors for consulting work; and to report to
the Board of Directors, when so requested, on any accounting or financial
matters.
Compensation Committee. The Compensation Committee of the Board of
Directors of the Company currently consists of Messrs. White (Chairman) and
Scotto, each of whom is a "non-employee director" of the Company as such term is
defined in Rule 16b-3 adopted under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). In addition, each is an "outside director" as such
term is defined in Section 162(m) of the Code. The principal responsibilities of
the Compensation Committee are (a) to review and approve the compensation,
including salary, bonus, stock options or other appropriate incentive plans, and
perquisites, if any, of the President and Chief Executive Officer and the other
executive officers of the Company, including the named executive officers; (b)
to monitor the Company's management resources, organizational structure,
succession planning and the selection process and performance of key executives;
(c) to administer and implement the Company's stock option or other stock-based
and equity-based benefit plans, including the Ivex Packaging Corporation 1997
Long-Term Stock Incentive Plan (collectively, the "Plans"), including the review
and approval of all grants thereunder; (d) to fulfill the purposes of the Plans
including, without limitation, through the grants of options and other benefits
under the Plans; (e) to recommend to the Board of Directors any revisions or
additions to the Plans; and (f) to review and report to the Board of Directors,
when so requested, on any management resources, compensation, succession
planning or other similar matters.
4
<PAGE> 8
DIRECTORS' COMPENSATION FOR 1999
During 1999, an annual retainer of $25,000 was paid to each of Messrs.
August, Comeaux, Scotto and White.
In addition, for services rendered during 1999 and pursuant to the
Company's 1999 Stock Option Plan for Non-Employee Directors (the "1999 Director
Plan"), each of the Company's non-employee directors (Messrs. August, Comeaux,
Scotto and White) received on the day following the 1999 Annual Meeting options
to purchase 2,000 shares of the Company's Common Stock at an exercise price
equal to the fair market value of the Company's Common Stock on such date. The
1999 Director Plan provides for grants of nonqualified stock options to the
Company's non-employee directors to purchase shares of Common Stock at an
exercise price equal to the fair market value of Common Stock on the date of
grant. Under the 1999 Director Plan, each grant will vest as to 33 1/3% of the
shares on the first three anniversary dates of the grant. Under the 1999
Director Plan, 100,000 shares of Common Stock are reserved for grant.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Upon recommendation of the Audit Committee, the Board of Directors of the
Company has selected PricewaterhouseCoopers LLP to audit the consolidated
financial statements of the Company and its subsidiaries for the fiscal year
ending December 31, 2000. PricewaterhouseCoopers LLP has served in this capacity
since December 1989. Representatives of PricewaterhouseCoopers LLP are expected
to be present at the Annual Meeting and will be available to respond to
appropriate questions of stockholders and to make a statement if they desire.
The affirmative vote of a majority of the votes cast on this proposal will
constitute ratification of the appointment of PricewaterhouseCoopers LLP to
serve in this capacity.
The Board of Directors is submitting the approval of PricewaterhouseCoopers
LLP to stockholders as a matter of good corporate practice, although it is not
required to do so. Should the stockholders fail to provide such ratification,
the Board of Directors will reconsider its approval of PricewaterhouseCoopers
LLP as the Company's independent public accountants for the year ended December
31, 2000. Even if the selection is ratified, the Board of Directors, in its
discretion, may direct the appointment of a new independent accounting firm at
any time during the fiscal year if the Board of Directors feels that such a
change would be in the best interests of the Company and its stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2
TO RATIFY THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS.
1999 EMPLOYEE STOCK PURCHASE PLAN
Subject to stockholder approval, the Board of Directors has adopted the
Employee Stock Purchase Plan pursuant to which 300,000 shares of Common Stock of
the Company per year will be available to be sold to the employees of the
Company at a discount. Stockholders are requested in this Proposal 3 to approve
the Employee Stock Purchase Plan. The affirmative vote of a majority of votes
cast on this proposal will be required to approve the Employee Stock Purchase
Plan. The text of the Employee Stock Purchase Plan is set forth as Annex "A" to
this Proxy Statement. The following is a summary of the principal features of
the Employee Stock Purchase Plan and does not purport to be complete.
Stockholders are urged to read the Employee Stock Purchase Plan in its entirety.
This summary is subject to and qualified in its entirety by reference to Annex
"A".
The essential features of the Employee Stock Purchase Plan are described
below:
On August 10, 1999, the Board of Directors of the Company adopted the Ivex
Packaging Corporation 1999 Employee Stock Purchase Plan (the "Purchase Plan"),
subject to the approval of the stockholders of the Company. The Purchase Plan
provides for eligible employees of the Company and certain designated
5
<PAGE> 9
subsidiaries to purchase Common Stock at a discount from fair market value
through automatic payroll deductions. A total of 300,000 shares of Common Stock
has been reserved for issuance under the Purchase Plan for each fiscal year
occurring during the term of such plan.
The Purchase Plan will be administered by the Company's board of directors,
or a specifically designated committee of the board of directors, which group is
sometimes referred to as the plan administrator. The plan administrator may
interpret the Purchase Plan and may prescribe, amend and rescind rules and make
all other determinations necessary or desirable for the administration of the
Purchase Plan, subject to the provisions of such plan.
The Purchase Plan contains offering periods that commence on the first
trading day on or after January 1 (beginning in 2001), April 1 (beginning 2001),
July 1 (beginning in 2000) and October 1 (beginning in 2000) of each year, and
ending on the last trading day on or before March 31, June 30, September 30 and
December 31, respectively. Notwithstanding anything to the contrary, the first
offering period under the Purchase Plan commenced on October 1, 1999 and will
end on the first trading day on or before June 30, 2000.
Employees are eligible to participate if they are employed the Company or
any participating subsidiary for at least 20 hours per week and more than five
months in any calendar year. However, an employee may not be granted the right
to purchase stock under the Purchase Plan if the employee (i) immediately after
the grant would own stock possessing 5% or more of the total combined voting
power or value of all classes of the Company's capital stock, or (ii) holds
rights to purchase stock under any employee stock purchase plans of the Company
that together accrue at a rate which exceeds $25,000 worth of stock for each
calendar year. As of the Record Date, a total of approximately 460 employees
(including eight executive officers) have elected to participate in the first
offering period of the Purchase Plan.
The Purchase Plan permits each employee to contribute up to 10% of the
employee's compensation through automatic payroll deductions. The maximum number
of shares an employee may purchase during a single offering period is 2,500
shares. Subject to approval by the stockholders, amounts deducted and
accumulated by the employee will be used to purchase shares of Common Stock at
the end of each offering period. As of the Record Date, no shares of Common
Stock have been issued pursuant to the Purchase Plan.
The price of the Common Stock offered under the Purchase Plan is an amount
equal to 85% of the lower of the fair market value of the Common Stock at the
beginning or at the end of each offering period. Employees may end their
participation in the Purchase Plan at any time during an offering period. In
that event, any amounts withheld through payroll deductions and not otherwise
used to purchase shares will be returned to them. Participation ends
automatically upon termination of employment with the Company.
Shares purchased pursuant to the Purchase Plan may not be sold by the
participant for a period of one-year following the purchase date. These
restrictions will lapse earlier if a participant terminates employment with the
Company or a designated subsidiary or if a participant's hardship application is
approved by the plan administrator.
Rights granted under the Purchase Plan are not transferable by an employee
other than by will or the laws of descent and distribution. The Purchase Plan
provides that, in the event of a merger, consolidation, reorganization,
recapitalization, stock dividend or other change in corporate structure
affecting the number of issued shares of the Common Stock, the plan
administrator will conclusively determine the appropriate equitable adjustments.
The Purchase Plan will terminate in 2004. The Board of Directors has the
authority to amend or terminate the Purchase Plan, except that no amendment or
termination may adversely affect any outstanding rights under such plan.
CERTAIN FEDERAL INCOME TAX EFFECTS
U.S. FEDERAL INCOME TAX EFFECTS
The following discussion is for general information only and is based on
the U.S. Federal income tax laws now in effect, which are subject to change,
possibly retroactively. This summary does not discuss all aspects of the U.S.
Federal income taxation which may be important to individual plan participants.
Moreover, this
6
<PAGE> 10
summary does not address specific state, local or foreign tax consequences. This
summary assumes that Common Stock acquired under the Purchase Plan will be held
as a "capital asset" (generally, property held for investment) under the Code.
The Purchase Plan, and the right of participants to make purchases
thereunder, is intended to qualify under the provisions of Sections 421 and 423
of the Internal Revenue Code of 1986, as amended. Under these provisions, no
income will be taxable to a participant until the shares purchased under the
Purchase Plan are sold or otherwise disposed of. Upon sale or other disposition
of the shares, the participant will generally be subject to tax and the amount
of the tax will depend upon the holding period. If the shares are sold or
otherwise disposed of more than two (2) years from the first day of the offering
period and more than one (1) year from the date of transfer of the stock to the
participant, then the participant will recognize ordinary income measured as the
lesser of (i) the excess of the fair market value of the shares at the time of
such sale or disposition over the purchase price, or (ii) an amount equal to 15%
of the fair market value of the shares as of the first day of the offering
period. Any additional gain will be treated as long-term capital gain. If the
shares are sold or otherwise disposed of before the expiration of both of these
holding periods, the participant will recognize ordinary income generally
measured as the excess of the fair market value of the shares on the date the
shares are purchased over the purchase price. Any additional gain or loss on
such sale or disposition will be long-term or short-term capital gain or loss,
depending on the holding period. The Company is not entitled to a deduction for
amounts taxed as ordinary income or capital gain to a participant except to the
extent of ordinary income is recognized by participants upon a sale or
disposition of shares prior to the expiration of the holding period(s) described
above.
NEW PLAN BENEFITS
It is not possible to determine at this time the future awards that will be
granted under the Purchase Plan if it is approved by stockholders. Prior to the
date of the Annual Meeting, grants of options to purchase approximately 185,000
shares of Common Stock are expected to be made to employees (including executive
officers) under the Purchase Plan, subject to such stockholder approval.
VOTE REQUIRED
The affirmative vote of a majority of the votes cast is required for
approval of this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
PROPOSAL 3 TO APPROVE THE
1999 EMPLOYEE STOCK PURCHASE PLAN
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock by each person known by the Company to be the
beneficial owner of more than 5% of the Common Stock, and as of December 31,
1999, by (i) each of the directors of the Company, (ii) each of the named
executive officers of the Company, and (iii) all executive officers and
directors of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF THE COMPANY'S
NAME AND ADDRESS COMMON PERCENTAGE
OF BENEFICIAL OWNER STOCK(1) OF CLASS
------------------- ---------------- ----------
<S> <C> <C>
Massachusetts Financial Services Company(2)................. 2,525,768 11.5%
Lord, Abbett & Co.(3)....................................... 2,321,170 11.0%
T. Rowe Price Associates, Inc.(4)........................... 1,813,400 8.2%
Wellington Management Company, LLP(5)....................... 1,500,700 6.8%
Keystone, Inc.(6)........................................... 1,251,050 5.7%
George V. Bayly............................................. 898,113(8) 4.1%
Frank V. Tannura............................................ 513,033(8) 2.3%
</TABLE>
7
<PAGE> 11
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF THE COMPANY'S
NAME AND ADDRESS COMMON PERCENTAGE
OF BENEFICIAL OWNER STOCK(1) OF CLASS
------------------- ---------------- ----------
<S> <C> <C>
Thomas S. Ellsworth......................................... 252,926(8) 1.1%
Gordon B. Bonfield.......................................... 20,800(8) *
Roger A. Kurinsky........................................... 78,695(8) *
Glenn R. August(7).......................................... 130,150 *
Anthony P. Scotto(7)........................................ 55,178 *
R. James Comeaux............................................ 7,334 *
William J. White............................................ 4,334 *
All directors and officers as a group....................... 2,500,644(9) 11.4%
</TABLE>
- -------------------------
* Represents less than 1% of such Common Stock.
(1) To the knowledge of the Company, each stockholder has sole voting and
investment power as to the shares shown unless otherwise noted.
(2) The shares shown as beneficially owned by Massachusetts Financial Services
are based upon a Schedule 13G filed on February 11, 2000. The address of
this entity is 500 Boylston Street, Boston, Massachusetts 02116.
(3) The shares shown as beneficially owned by Lord, Abbett & Co. are based upon
a Schedule 13G/A filed on or about March 8, 2000. The address of this entity
is 90 Hudson Street, Jersey City, New Jersey 07302.
(4) The shares shown as beneficially owned by T. Rowe Price Associates, Inc. are
based upon a Schedule 13G filed on February 14, 2000. The address of this
entity is 100 East Pratt Street, Baltimore, Maryland 21202. The Schedule 13G
provides that these securities are owned by various individual and
institutional investors for which T. Rowe Price Associates, Inc. ("Price
Associates") serves as investment advisor with power to direct investments
and/or sole power to vote the securities and that for purposes of the
reporting requirements of the Securities Exchange Act of 1934, Price
Associates is deemed to be a beneficial owner of such securities; however,
Price Associates expressly disclaims that it is, in fact, the beneficial
owner of such securities.
(5) The shares shown as beneficially owned by Wellington Management Company, LLP
are based upon a Schedule 13G filed on February 9, 2000. The address for
this entity is 75 State Street, Boston, Massachusetts 02109.
(6) The shares shown as beneficially owned by Keystone, Inc. are based upon a
Schedule 13D filed on June 25, 1998 and includes 266,944 shares beneficially
owned by Robert M. Bass who owns all of the outstanding voting stock of
Keystone, Inc. The address of Keystone, Inc. is 3100 Texas Commerce Tower,
201 Main Street, Fort Worth, Texas 76102.
(7) The address of such individuals is c/o Oak Hill Partners, Inc., 65 East 55th
Street, New York, New York 10022-3219.
(8) Represents shares of outstanding Common Stock in the amounts of 498,089,
356,782, 151,017, 20,800 and 41,652 that are owned by Messrs. Bayly,
Tannura, Ellsworth, Bonfield and Kurinsky, respectively, and vested and
earned options that are currently exercisable in the amounts of 400,024,
156,251, 101,909 and 37,043 that are owned by Messrs. Bayly, Tannura,
Ellsworth and Kurinsky, respectively.
(9) All directors and officers as a group hold shares of outstanding Common
Stock in the aggregate amount of 1,632,796 and vested and earned options
that are currently exercisable for 867,848 shares of Common Stock.
8
<PAGE> 12
EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth the compensation
paid by the Company to the Company's chief executive officer and each of the
four most highly compensated officers of the Company whose aggregate cash
compensation exceeds $100,000, in each case for all services rendered during the
fiscal years 1999, 1998 and 1997:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION(4),(6)
--------------------------
ANNUAL COMPENSATION AWARDS AWARDS
------------------------------------ ----------
NUMBER OF
SECURITIES
UNDERLYING
OTHER ANNUAL OPTIONS/ ALL OTHER
SALARY BONUS COMPENSATION SARS COMPENSATION
NAME YEAR ($)(1) ($)(2) ($)(3) ($)(5) ($)(7)
---- ---- ------ ------ ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
George V. Bayly................. 1999 541,327 -- -- -- 633,654
President and Chief 1998 515,550 465,000 -- 40,000 709,794
Executive Officer 1997 457,667 700,000 206,930 123,575 13,239,290
Frank V. Tannura................ 1999 336,422 -- -- 20,000 341,003
Executive Vice President 1998 282,541 175,000 -- 20,000 316,655
and Chief Financial Officer 1997 263,200 300,000 70,857 34,335 5,266,519
Thomas S. Ellsworth............. 1999 282,500 80,000 -- 10,000 170,286
Vice President and 1998 250,000 115,000 -- 10,000 186,205
General Manager 1997 250,000 50,000 -- 17,500 3,653,047
Roger A. Kurinsky............... 1999 262,917 -- -- 25,000 91,396
Executive Vice President and 1998 196,887 100,000 -- 15,000 79,767
Chief Operating Officer/ 1997 183,303 75,000 -- 17,500 859,308
Technical Packaging
Gordon B. Bonfield.............. 1999 181,458(8) 100,000(8) -- 90,000 172,389
President and Chief Operating
Officer/Consumer Packaging
</TABLE>
- -------------------------
(1) Includes amounts deferred pursuant to the Company's Retirement Plan and
Trust and under the Company's Executive Deferred Compensation Plan.
(2) Includes (i) annual bonus awards for services rendered in 1999, 1998 and
1997 that were paid under the Company's Executive Incentive Bonus Plan and
(ii) special one-time bonuses of $250,000 and $150,000 which were paid to
Messrs. Bayly and Tannura, respectively, in 1997 in connection with the
Company's completion of the Company's initial public offering of common
stock which was consummated during October 1997 (the "1997 Common Stock
Offering"). The Executive Incentive Compensation Plan provides the executive
officers of the Company with annual awards for outstanding individual
performance contributing to the present and future success of the Company.
Awards are based upon the Company's achievement of, among other things,
certain predetermined financial objectives such as minimum EBITDA and
earnings per share targets as well as the attainment of key individual
strategic and operational goals.
(3) The 1997 Other Annual Compensation column includes payments made to Messrs.
Bayly and Tannura to reimburse them (on an after tax basis) for initiation
fees and dues associated with certain country club memberships.
(4) The column designated by the Commission pursuant to the applicable
regulations for the reporting of "Restricted Stock Awards" has been deleted
because no restricted stock of the Company was awarded to
9
<PAGE> 13
any of the named executive officers in any of the reported calendar years.
See "Executive Compensation and Other Information -- Summary Compensation
Table" (footnote 5) for a description of the shares of Common Stock which
were received by the named executive officers in connection with the 1997
Common Stock Offering in exchange for such named executive officer's stock
options exercisable for common stock of IPC, Inc. ("IPC"). All of such
shares of Common Stock have been registered on a Form S-8 which was filed
with the Securities and Exchange Commission on March 5, 1998.
(5) The options reported for 1999 reflect 20,000, 10,000, 25,000 and 90,000
granted to Messrs. Tannura, Ellsworth, Kurinsky and Bonfield, respectively,
and the options reported for 1998 reflect 40,000, 20,000, 10,000 and 15,000
options granted to Messrs. Bayly, Tannura, Ellsworth and Kurinsky,
respectively, under the 1997 Ivex Packaging Corporation Long-Term Stock
Incentive Plan (the "1997 Stock Option Plan").
A portion of the options reported for 1997 were originally granted under
IPC's Stock Option and Purchase Agreement, dated as of January 1, 1993, as
amended and restated as of January 1, 1996 (the "1993 Stock Option Plan"),
pursuant to which options exercisable into shares of IPC's common stock were
originally granted to certain executive officers, including the named
executive officers (the "IPC Options"). In connection with the 1997 Common
Stock Offering, the named executive officers, exchanged all of the IPC
Options for shares of the Company's Common Stock and options exercisable for
shares of the Company's Common Stock. Consequently, the options reported for
1997 reflect each named executive officer's portion of the Company's options
attributable to grants to Messrs. Bayly, Tannura, Ellsworth and Kurinsky
under the 1993 Stock Option Plan and the 1997 Stock Option Plan. In
addition, in connection with the exchange of their IPC Options, Messrs.
Bayly, Tannura, Ellsworth and Kurinsky received 805,663, 324,095, 224,872
and 52,722, respectively, shares of the Company's Common Stock.
(6) The column designated by the Commission pursuant to applicable regulations
for the reporting of "LTIP Payouts" has been deleted because no long-term
incentive payouts were awarded to any of the named executive officers in any
of the reported calendar years.
(7) The 1999 All Other Compensation column includes (i) the Company's
contributions (excluding employee earnings reduction contributions) under
the Company's Retirement Plan and Trust and under the Company's Executive
Deferred Compensation Plan during fiscal 1999 as follows: $8,000 to Mr.
Bayly; $8,000 to Mr. Tannura; $8,000 to Mr. Ellsworth; and $8,000 to Mr.
Kurinsky; (ii) insurance premiums with respect to the Company's Executive
Disability Income Coverage paid by the Company during 1999 as follows:
$7,221 for Mr. Bayly; $2,323 for Mr. Tannura; $4,775 for Mr. Ellsworth; and
$3,914 for Mr. Kurinsky; (iii) the Company's payment during 1999 of $150,000
of nonqualified retirement benefits and life insurance premiums to Mr. Bayly
pursuant to the terms of his Amended and Restated Employment Agreement,
dated as of May 30, 1996; (iv) the Company's payment during 1999 of $42,316,
$68,654, $37,257, $46,084 and $18,146 to Messrs. Bayly, Tannura, Ellsworth,
Kurinsky and Bonfield, respectively, under the Company's Executive Deferred
Compensation Plan; (v) the Company's payment to the named executive officers
of the following amounts to enable them to make (on an after tax basis) the
1999 interest payments on their respective promissory notes (the "Stock
Loans") payable to the Company: Mr. Bayly -- $426,117; Mr.
Tannura -- $262,026; Mr. Ellsworth -- $120,254; and Mr. Kurinsky -- $33,398.
See "Certain Relationships and Related Transactions"; and (vi) the Company's
payment of $154,243 to Mr. Bonfield as reimbursement for certain moving and
relocation expenses and the taxes relating thereto.
(8) Includes Mr. Bonfield's salary and guaranteed bonus since June 30, 1999, the
date on which his employment with the Company commenced.
10
<PAGE> 14
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------- POTENTIAL REALIZABLE VALUE
% OF TOTAL AT ASSUMED ANNUAL RATE
NUMBER OF OPTIONS/SARS OF STOCK PRICE
SECURITIES GRANTED TO EXERCISE APPRECIATION FOR
UNDERLYING EMPLOYEES IN OR BASE OPTION TERM(3)
OPTIONS/SARS FISCAL PRICE EXPIRATION --------------------------
NAME GRANTED(#)(1) YEAR(2) ($/SH) DATE 5%($) 10%($)
---- ------------- ------------ -------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Frank V. Tannura.......... 20,000 3.8% 19.50 2/10/09 $245,268 $ 621,559
Executive Vice President
and Chief Financial
Officer
Gordon B. Bonfield........ 40,000 7.5% 10.00 12/31/09 866,616 2,196,177
President and Chief 50,000 9.4% 19.56 5/04/09
Operating Officer/
Consumer Packaging
Thomas S. Ellsworth....... 10,000 1.9% 10.00 12/31/09 62,889 159,374
Vice President and
General Manager
Roger A. Kurinsky......... 25,000 4.7% 10.00 12/31/09 157,223 398,435
Executive Vice President
and Chief Operating
Officer/Technical
Packaging
</TABLE>
- -------------------------
(1) The options specified in this column reflect each named executive officer's
portion of the Company's stock options issued during 1999 under the 1997
Stock Option Plan. These options vest 33 1/3% over the first three years of
the ten-year option term.
(2) Reflects the percentage of all options granted to all employees during the
calendar year ended on December 31, 1999.
(3) The potential realized dollar values shown above represent the potential
gains based upon annual compound price appreciation of 5% and 10% from the
date of grant through the full option term. The dollar amounts under these
columns are the result of calculations at the 5% and 10% rates established
by the Commission and therefore are not intended to forecast possible future
appreciation, if any, of the stock price of the Company.
11
<PAGE> 15
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS OPTIONS/SARS
ACQUIRED ON VALUE AT FY-END AT FY-END
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE(1)
---- ----------- -------- ------------- ----------------
<S> <C> <C> <C> <C>
George V. Bayly............................ -- -- 400,024/57,832 $0/$0
President and Chief Executive Officer
Frank V. Tannura........................... -- -- 156,251/43,333 $0/$0
Executive Vice President and Chief
Financial Officer
Gordon B. Bonfield......................... -- -- 0/90,000 $0/$0
President and Chief Operating
Officer/Consumer Packaging
Thomas S. Ellsworth........................ -- -- 101,909/22,499 $0/$0
Vice President and General Manager
Roger A. Kurinsky.......................... -- -- 37,043/40,833 $0/$0
Executive Vice President and Chief
Operating Officer/Technical Packaging
</TABLE>
- -------------------------
(1) The value of the unexercised options is based upon the difference between
the closing price of $10.00 per share of Common Stock on the New York Stock
Exchange on December 31, 1999 (the last trading day in 1999) and the option
exercise price.
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAY-OUTS UNDER NON-STOCK
PRICE-BASED PLANS
NUMBER OF SHARES, PERFORMANCE OR OTHER -----------------------------------------
UNITS OR OTHER PERIOD UNTIL THRESHOLD TARGET MAXIMUM
NAME RIGHTS (#)(1) MATURATION OR PAY-OUT ($ OR #) ($ OR #) ($ OR #)
---- ----------------- --------------------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
George V. Bayly...... $750,000 per year Each December 31 $1,125,000 $2,250,000 $3,375,000
President & Chief during three year
Executive Officer Period Ending
12/31/02
Frank V. Tannura..... $375,000 per year Each December 31 $ 562,500 $1,125,000 $1,687,500
Executive Vice during three year
President & Chief Period Ending
Financial Officer 12/31/02
</TABLE>
- -------------------------
(1) Under the 1999 Long-Term Incentive Plan (the "1999 LTIP"), the participants
have been awarded the opportunity to earn during each year of the three-year
period ending on December 31, 2002 (the "Performance Period") a reduction of
their Stock Loans in amounts equal to the after-tax equivalent of their
respective annual Targets under the Plan. On an annual basis, the Company
will forgive a portion of each executive's Stock Loan in an amount equal to
the after-tax equivalent of the vested and earned Target amounts. One-half
of the annual Target amounts ($375,000 per year for Mr. Bayly and $187,500
per year for Mr. Tannura) (the "Base Amounts") will vest one-third in the
year of the award and one-third in each of the two succeeding years. The
other one-half of the annual Target amounts ($375,000 per year for Mr. Bayly
and $187,500 per year for Mr. Tannura) (the "Performance
12
<PAGE> 16
Amounts") will become earned only upon the Company's achievement of certain
earnings-per-share targets for each such year and will vest one-third in the
year earned and one-third in each of the two succeeding years. Over the
three-year Performance Period, 0% to 200% of the Performance Amounts will be
earned if the Company achieves certain earnings-per-share growth during each
year of the Performance Period. The Company's Compensation Committee has
retained the right to adjust the earnings targets as necessary to reasonably
and fairly administer this Plan. All earned and unvested amounts shall be
vested upon a change of control or an executive's termination of employment
without cause or for good reason.
CERTAIN EMPLOYMENT ARRANGEMENTS
Mr. Bayly has an amended and restated employment agreement with the
Company, pursuant to which (i) the Company agrees to employ Mr. Bayly through
December 31, 2000 (provided that beginning on January 1, 1998, the term thereof
is automatically extended for one additional day for each day which has then
elapsed since December 31, 1997 unless on or after December 31, 1997 either the
Company's Board of Directors or Mr. Bayly gives notice that the automatic
extension shall cease) as Chairman, President and Chief Executive Officer of the
Company, (ii) Mr. Bayly receives a base salary of $491,000 during 1997, $515,550
during 1998, $541,327 during 1999 and $568,393 during 2000 (subject to increase
at the discretion of the Board of Directors), (iii) Mr. Bayly is entitled to an
aggregate of $150,000 per year for life insurance, disability insurance and
nonqualified retirement benefits, (iv) Mr. Bayly is eligible for an annual
performance bonus based upon the achievement of predetermined financial
objectives, and (v) Mr. Bayly will receive certain severance benefits if his
employment is terminated without cause (as therein defined) or if Mr. Bayly
terminates the agreement for good reason (as therein defined). These severance
benefits include the payment of a lump sum equal to four times the sum of (x)
the annual salary then in effect and (y) the target amount of the annual
performance bonus for the year in which the termination occurs, plus the
continuation of all benefits and supplemental benefits for four years after the
date of termination. The agreement restricts Mr. Bayly from competing with the
Company during his employment and, in certain circumstances, for an additional
one-year period after the termination of Mr. Bayly's employment. In addition,
the Company has agreed to gross-up payments to Mr. Bayly for certain taxes,
interest and penalties that may be imposed by certain sections of the Code.
Mr. Tannura has an amended and restated employment agreement with the
Company, pursuant to which (i) the Company agrees to employ Mr. Tannura through
October 31, 2002 (provided that beginning on November 1, 1999, the term thereof
is automatically extended for one additional day for each day which has then
elapsed since October 31, 1999 unless either the Board of Directors of the
Company or Mr. Tannura gives notice that the automatic extension shall cease) as
Executive Vice President and Chief Financial Officer, (ii) Mr. Tannura is
entitled to receive a base salary of $344,000 per year (subject to increase at
the discretion of the Board of Directors), (iii) Mr. Tannura is eligible to
receive an annual performance bonus based upon the achievement of predetermined
financial objectives, and (iv) Mr. Tannura will receive certain severance
benefits if his employment is terminated without cause (as therein defined) or
if Mr. Tannura terminates the agreement for good reason (as therein defined) in
an amount equal to a lump sum equal to three times the sum of (x) his annual
salary then in effect and (y) the target amount of his performance bonus for the
year in which his termination of employment occurs, plus a pro-rata portion of
his performance bonus for the year in which his employment is terminated. Under
this Agreement, Mr. Tannura will also receive the continuation of all benefits
for the three year period after the date of termination and the acceleration of
vesting of all stock options exercisable for the Company's Common Stock. In
addition, the Company has agreed to gross-up payments to Mr. Tannura for certain
taxes, interest and penalties that may be imposed by certain sections of the
Code.
The Company has entered into severance agreements with certain other
executive officers pursuant to which such officers will receive a lump sum
severance payment equal to one times the sum of (x) the executive's annual
salary then in effect and (y) the target amount of the executive's annual
performance bonus for the year in which his termination of employment occurs if
such executive's employment is terminated other than for death, disability or
cause, and two times such amounts if such executive's
13
<PAGE> 17
employment is terminated for any reason within a specified period of time after
a change of control (as therein defined). Under these agreements, the executive
will also receive the continuation of all benefits for such one or two year
period plus the acceleration of vesting of all stock options exercisable for the
Company's Common Stock.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee consists of Messrs. William J. White
(Chairman) and Anthony P. Scotto. No executive officer of the Company served as
a member of the compensation committee (or other board committee performing
equivalent functions) or as a member of the Board of another entity, one of
whose executive officers served on the Compensation Committee or the Board of
Directors of the Company.
REPORT OF THE COMPENSATION COMMITTEE ON
EXECUTIVE COMPENSATION FOR FISCAL YEAR 1999
INTRODUCTION AND BACKGROUND
The following report is provided in accordance with the rules of the
Securities and Exchange Commission and covers compensation policies applicable
to the Company's executive officers, including the named executive officers,
during 1999. The report has been approved by the members of the Compensation
Committee.
The Company's Compensation Committee is comprised of Messrs. White
(Chairman) and Scotto, each of whom is an "outside director" within the meaning
of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
The Compensation Committee held four meetings during 1999 and one on
January 3, 2000. In connection with the January 3(rd) meeting, the Company's
Chief Executive Officer submitted recommendations to the Committee with respect
to the issuance of stock options for the executive officers for 1999. Following
a review of such recommendations, the Committee approved the 1999 stock option
allocations for the executive officers.
COMPENSATION PHILOSOPHY
The Company's executive compensation program has been designed to attract,
motivate, reward and retain the Company's executive officers by providing them
with a competitive total compensation opportunity based upon performance, team
work and the creation of stockholder value.
The key elements of the Company's executive officer compensation program
are designed to:
- Create a direct link between executive officer compensation and the
Company's financial and stock performance.
- Provide a competitive base salary with an annual cash bonus opportunity
directly linked to the Company's annual financial performance (the annual
cash bonus awards vary significantly in correlation with the Company's
financial performance and compensate the executive officers with superior
cash compensation for superior financial results and below median level
cash compensation for below average financial results). Cash bonus
awards, at target levels of performance, are designed to be competitive
with those companies which the Company believes are most likely to
compete with the Company for the services of its executive officers.
- Create a meaningful long-term cash incentive and/or stock option
incentive directly linked to the Company's long term growth, financial
success and stockholder return.
14
<PAGE> 18
PROGRAM COMPONENTS
From time to time during the past several years, the Company has contracted
with independent compensation consulting firms to review the Company's executive
officer compensation philosophy and programs. As part of such reviews, such
consultants have presented to the Company from time to time and have
periodically updated information on the base salaries, cash bonuses and
equity-based compensation programs of senior executives at various companies
identified by the Company.
Over the past several years, the Company has designed its executive officer
compensation to include three basic components: base salary, annual cash bonuses
and stock option grants. Recently, based upon the recommendations of an
independent consulting firm, the Company adopted a long-term incentive plan (the
"1999 LTIP") for certain of the Company's executive officers pursuant to which
such officers will be eligible to receive an economic award (in the form of a
reduction of the executive officer's Stock Loan to the Company) based upon the
Company's achievement of certain earnings-per-share targets.
The Company has established executive officer salaries to be competitive
with the salary levels for the executives at other companies identified by the
Company, and has desired to provide an opportunity for total cash compensation
(base salary plus annual cash bonus) to significantly exceed such levels upon
the Company's achievement of certain predetermined, budgeted financial
objectives such as earnings-per-share and cash flow targets. In this way, the
Company sought to have a significant portion of each executive's annual cash
compensation at risk.
Under the 1997 Stock Option Plan, the Company established a stock option
plan for its executive officers pursuant to which a meaningful number of stock
options have been granted with the specific intent to directly align each
executive's long-term financial interests with the financial interests of the
Company's stockholders. To date, all of these stock options had exercise prices
equal to the fair market value of the underlying shares on the date of grant so
that compensation is earned only through long-term appreciation in the fair
market value of the underlying shares. In addition, the Company recently adopted
the 1999 LTIP in order to continue to motivate certain of the Company's
executive officers based upon the Company's achievement of certain
earnings-per-share targets. Generally, the Company expects to grant stock
options and/or cash long-term incentive awards on an annual basis (if warranted
by the Company's growth and profitability) and individual grants are expected to
be based on, among other things, the executive officer's responsibilities,
individual performance and potential to contribute to the Company. To encourage
an executive officer's long-term performance, stock options and/or cash
long-term incentive awards generally will vest over three years and the stock
options will terminate ten years after the date of grant. The opportunity to own
stock is considered an important component in an executive officer's
compensation package.
The Compensation Committee intends to continue this basic compensation
philosophy by continuing to place a significant portion of each year's cash
compensation at risk and by using stock option and cash long-term incentive
grants as the primary element of long-term incentive compensation.
The following is a discussion of the elements of the Company's 1999
executive officer compensation program, along with a description of the
decisions and actions taken by the Committee with regard to 1999 compensation.
Also included is a specific discussion of the decisions regarding Mr. Bayly's
1999 compensation for performing the duties of Chairman, President and Chief
Executive Officer. The tables and accompanying narrative and footnotes included
in "Executive Compensation and Other Information" which precede this Committee
report reflect the decisions covered by the discussions below.
BASE SALARY
During 1999, the base salary levels of Mr. Bayly and Mr. Tannura were
governed by their respective employment agreements and the base salaries of the
other executive officers, including the named executive officers, were
determined by Mr. Bayly in consultation with the Compensation Committee. Salary
payments in 1999 were made to compensate the executive officers for their
on-going performance through the year. The Company's salary ranges and resulting
salaries are based on a relative valuing of the duties and responsibilities
15
<PAGE> 19
of each executive officer position. Salary increases during 1999 were based upon
consideration of each executive officer's performance and position.
ANNUAL CASH AND BONUS INCENTIVES
The Executive Incentive Bonus Plan provides the executive officers of the
Company with annual cash bonuses for outstanding individual performance
contributing to the present and future success of the Company. The purpose of
this plan is to link a significant portion of executive pay to both the
Company's financial performance and to the attainment of certain defined key
initiatives. No awards were made during 1999 to the named executive officers
(other than to Mr. Bonfield whose bonus was guaranteed at the commencement of
his employment with the Company and to Mr. Ellsworth whose division achieved its
earnings goals) based upon the Company's failure to achieve certain
predetermined financial objectives such as earnings-per-share growth.
STOCK COMPENSATION
The grant of stock options is designed to align the financial interests of
the executive officers with the financial interests of the Company's
stockholders. Under the 1993 Stock Option Plan, the Company's executive officers
accumulated stock options which, in connection with the 1997 Common Stock
Offering, were converted into shares of the Company's common stock, thereby
directly aligning their financial interests with the financial interests of the
Company's stockholders. The stock options granted to the executive officers
under the 1993 Stock Option Plan and the 1997 Stock Incentive Plan had exercise
prices equal to the fair market value of the underlying common stock on the date
of grant so that compensation will be earned only through long-term appreciation
in the fair market value of the underlying common stock. During 1999, the
individual grants of stock options reflected in the "Option/SAR Grants in Last
Fiscal Year" table were based upon, among other things, each executive officer's
responsibilities, individual performance and potential to contribute to the
Company, and in order to encourage such executive officers' long-term
performance, such stock options will vest over three years and terminate ten
years after the date of grant.
BASIS FOR CHIEF EXECUTIVE OFFICER COMPENSATION
During 1999, Mr. Bayly's base salary was governed by his employment
agreement with the Company and was intended to provide him with a competitive
salary to compensate him for his on-going performance throughout the year.
Mr. Bayly received no bonus under the Company's Executive Incentive Bonus
Plan during 1999. During 1999, Mr. Bayly received no stock options under the
1997 Option Plan, however, Mr. Bayly received a performance-based long-term cash
incentive award under the 1999 LTIP which is intended to motivate him to help
create additional stockholder value.
COMPENSATION DEDUCTIBILITY POLICY
The Board's policy with respect to the tax deductibility of compensation in
excess of $1 million payable to each of the named executive officers is intended
to comply with the requirements of Section 162(m) of the Code applicable to
qualified performance-based compensation to the extent such compliance is
practicable and in the best interest of the Company and its stockholders;
however, there can be no assurances that executive officer compensation will
comply with these requirements.
William J. White, Chairman
Anthony P. Scotto
Dated: March 27, 2000
16
<PAGE> 20
STOCK PERFORMANCE GRAPH
The following graph compares the performance of the Company's Common Stock
with the performance of the Standard & Poor's 500 Composite Stock Price Index
(the "S&P 500 Index"), the Dow Jones Containers & Packaging Index (the "Dow
Jones Packaging Index") and the Russell 2000 Index from the market close on
October 1, 1997 to the market close on December 31, 1999. The graphs assume that
$100 was invested on October 1, 1997 in each of the Company's common stock, the
S&P 500 Index, the Dow Jones Packaging Index and the Russell 2000 Index, and
that all dividends were reinvested.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG IVEX PACKAGING CORPORATION, THE
S&P 500 INDEX, THE DOW JONES PACKAGING INDEX AND THE RUSSELL 2000 INDEX
FROM OCTOBER 1, 1997 TO DECEMBER 31, 1999
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
IVEX PACKAGING DOW JONES PACKAGING
CORPORATION S&P 500 INDEX INDEX RUSSELL 2000
-------------- ------------- ------------------- ------------
<S> <C> <C> <C> <C>
10/1/97 100.00 100.00 100.00 100.00
12/31/97 112.94 101.57 100.07 96.11
12/31/98 109.41 128.66 86.17 92.80
12/31/99 47.06 153.78 79.19 111.01
</TABLE>
17
<PAGE> 21
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the 1997 Common Stock Offering and pursuant to the 1993
Stock Option Plan, certain executive officers, including the named executive
officers, exchanged all of their IPC Options for (a) 2,114,133 shares of the
Company's Common Stock and (b) vested and earned options exercisable at any time
on or prior to September 30, 2007 into an aggregate of 817,067 shares of the
Company's Common Stock at an exercise price of $16.00 per share, the initial
public offering price per share of Common Stock in the 1997 Common Stock
Offering. See "Executive Compensation -- Summary Compensation Table" (footnote
5) and "Principal Stockholders."
In accordance with the terms of the 1993 Stock Option Plan and concurrently
with the closing of the 1997 Common Stock Offering, the Company extended the
Stock Loans to certain executive officers (including the named executive
officers) in an amount equal to the aggregate tax liability incurred by each of
them as a result of their receipt of the shares of the Company's common stock in
exchange for their respective IPC Options. Each such loan is evidenced by a
non-recourse promissory note (recourse only to each such officer's exchanged
shares) which bears interest at the minimum permissible rate per annum allowable
under the Internal Revenue Code without imputation of income (which such rates
ranged from 5.91% to 6.68% during 1999), payable in arrears on each December 31,
and is payable in full upon the sale of such shares or upon the earlier to occur
of (i) September 30, 2007 and (ii) the termination of the executive officer's
employment with the Company for any reason. As a consequence of these loans, as
of December 31, 1999, Messrs. Bayly, Tannura, Ellsworth and Kurinsky are
indebted to the Company in the following respective amounts: $4,016,637,
$2,271,900, $1,058,619 and $291,972. The promissory notes obligate the Company
to gross-up the executive officers' compensation to enable them to make (on an
after-tax basis) the required interest payments on their promissory notes.
Messrs. Bayly, Tannura, Ellsworth and Kurinsky made the following respective
interest payments to the Company during 1999: $239,425, $147,226, $67,568 and
$18,766.
Mr. Bayly has an employment agreement with the Company. See "Executive
Compensation and Other Information -- Certain Employment Arrangements."
Mr. Tannura has an employment agreement with the Company. See "Executive
Compensation and Other Information -- Certain Employment Arrangements."
The Company has entered into severance agreements with certain other
executive officers pursuant to which such officers will receive a lump sum
severance payment equal to one times the sum of (x) the executive's annual
salary then in effect and (y) the target amount of the executive's annual
performance bonus if such executive's employment is terminated other than for
death, disability or cause, and two times such amounts if such executive's
employment is terminated for any reason within a specified period of time after
a change of control (as therein defined). Under these agreements, the executive
will also receive the continuation of all benefits for such one or two year
period plus the acceleration of vesting of all of his stock options exercisable
for the Company's Common Stock.
Pursuant to a consulting agreement, dated October 29, 1996, Valentine Paper
Inc. (f/k/a Nicolaus Paper Inc.) ("Valentine") paid to the Company a
performance-based consulting fee in an annual amount equal to $250,000 for
certain services rendered to Valentine by the Company during 1999. Certain
executive officers and directors of the Company (including Messrs. Bayly,
Tannura, Ellsworth, August and Scotto) together with certain officers of
Nicolaus and certain members of management of Oak Hill Partners, Inc. indirectly
own all of the outstanding common stock of Valentine. During 1999, the Company
purchased a small amount of paper from Valentine, at market prices, for use in
the Company's paper converting operations.
On November 20, 1998, the Company formed Packaging Holdings, L.L.C.
("Packaging Holdings"), a 48.2% non-consolidated joint venture of the Company,
and Packaging Holdings acquired (i) the assets of the Company's paper mill
located in Detroit, Michigan and (ii) the assets of Bagcraft Corporation of
America (including certain non-compete covenants). The remaining 51.8% equity
interest in Packaging Holdings is indirectly owned by certain financial
investors, certain executive officers and directors of the Company (including
Messrs. Tannura, Ellsworth, Bonfield, Kurinsky, August and Scotto) and certain
executive officers of Packaging Holdings. Pursuant to a consulting agreement,
dated November 20, 1998, between the Company
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and Packaging Dynamics, L.L.C., a wholly-owned subsidiary of Packaging Holdings
("Packaging Dynamics"), Packaging Dynamics pays the Company a consulting fee in
an amount equal to $750,000 per year for certain services rendered to Packaging
Dynamics by the Company. Also, pursuant to a Supply Agreement, dated November
20, 1998, the Company will purchase certain grades of paper from the Detroit
paper mill (which was sold to Packaging Dynamics), at market prices, in amounts
similar to the Company's purchases from the Detroit mill prior to the formation
of the joint venture.
COMPLIANCE WITH SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the Exchange Act, the Company's directors, certain executive and
other officers, and any person holding more than ten percent of the Company's
Common Stock are required to report their ownership and any changes in that
ownership to the Securities and Exchange Commission (the "SEC") and any exchange
or quotation system on which the Common Stock is listed or quoted. Specific due
dates for these reports have been established and the Company is required to
report in this Proxy Statement any failure by directors, officers and ten
percent holders to file such reports on a timely basis. Based solely on a review
of the copies of reports furnished to the Company as filed with the SEC, the
Company believes that its executive officers and directors have complied with
the filing requirements applicable to them for the year ended December 31, 1999.
ANNUAL REPORT TO STOCKHOLDERS
The annual report of the Company for the year ended December 31, 1999,
including audited financial statements, accompanies this Proxy Statement.
ANNUAL REPORT ON FORM 10-K
The Company will provide without charge, at the written request of any
beneficial stockholder of record on March 1, 2000, a copy of the Company's
Annual Report on Form 10-K, including the financial statements and financial
statement schedules, as filed with the Securities and Exchange Commission,
except exhibits thereto. The Company will provide copies of the exhibits, should
they be requested by eligible stockholders, and the Company may impose a
reasonable fee for providing such exhibits. Requests for copies of the Company's
Annual Report on Form 10-K should be mailed to:
Ivex Packaging Corporation
100 Tri-State Drive, Suite 200
Lincolnshire, IL 60069
Attention: Investor Relations
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REQUIREMENTS AND PROCEDURES FOR SUBMISSION OF PROXY PROPOSALS
AND NOMINATIONS OF DIRECTORS BY STOCKHOLDERS
Stockholders who intend to have a proposal considered for inclusion in the
proxy materials for the 2001 Annual Meeting of Stockholders must submit their
proposal in writing to the Company no later than December 1, 2000 if the
proposal is submitted for inclusion in our proxy materials pursuant to Rule
14a-8 under the Securities Exchange Act of 1934. In addition, under the
Company's By-laws, stockholders who intend to present a proposal at the 2001
Annual Meeting of Stockholders are required to provide written notice to the
Company of such proposal between January 26, 2001 and February 23, 2001.
The Chairman of the Annual Meeting may decline to allow the transaction of
any business or the consideration of any nomination which was not properly
presented in accordance with these requirements.
OTHER MATTERS
The Board of Directors knows of no other business that will be presented
for consideration at the Annual Meeting. If other matters are properly brought
before the meeting, however, it is the intention of the persons named in the
accompanying proxy to vote the shares represented thereby on such matters in
accordance with their best judgment.
By Order of the Board of Directors,
G. Douglas Patterson
Secretary
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<PAGE> 24
IVEX PACKAGING CORPORATION
1999 EMPLOYEE STOCK PURCHASE PLAN
SECTION 1. GENERAL PURPOSE OF PLAN; DEFINITIONS.
The name of this plan is the Ivex Packaging Corporation 1999 Employee Stock
Purchase Plan (the "Plan"). The Plan was adopted by the Board (defined below) on
August 10, 1999, subject to the approval of the stockholders of the Company
(defined below), which approval is expected to be obtained at the Company's
annual meeting of stockholders in 2000. The purpose of the Plan is to provide
Employees (defined below) of the Company (defined below), its Parent (defined
below) and any Designated Subsidiary (defined below) with the opportunity to
purchase Common Stock (defined below) through accumulated payroll deductions. It
is the intention of the Company that the Plan qualify as an "employee stock
purchase plan" within the meaning of Section 423 of the Code (defined below),
and that the provisions of the Plan be construed in a manner consistent with the
requirements of such Section of the Code.
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 12
below.
(2) "Board" shall mean the Board of Directors of the Company.
(3) "Change in Capitalization" shall mean any increase, reduction,
change or exchange of Shares for a different number of shares and/or kind
of shares or other securities of the Company by reason of a
reclassification, recapitalization, merger, consolidation, reorganization,
issuance of warrants or rights, stock dividend, stock split or reverse
stock split, combination or exchange of Shares, repurchase of Shares,
change in corporate structure or otherwise.
(4) "Code" shall mean the United States Internal Revenue Code of 1986,
as amended from time to time, or any successor thereto.
(5) "Committee" shall mean a committee appointed by the Board to
administer the Plan and to perform the functions set forth herein.
(6) "Common Stock" shall mean the common stock, $0.01 par value, of
the Company.
(7) "Company" shall mean Ivex Packaging Corporation, a Delaware
corporation.
(8) "Compensation" shall mean the sum of a Participant's taxable
income as reported on his or her Form W-2 by the Company (or on any
equivalent tax forms by the Participant's employer in a jurisdiction other
than the United States) and salary reductions, if any, pursuant to Code
sections 125, 402(e)(3), 402(h), 403(b), 414(h)(2) or 457 (or any analogous
provision in any jurisdiction to which the Plan may be extended), but
excluding the following: (i) reimbursements or other expense allowances,
cash and non-cash fringe benefits, moving expenses, welfare benefits; (ii)
Company contributions, other than salary reduction contributions referred
to above, to a plan of deferred compensation to the extent contributions
are not included in gross income of the Participant for the taxable year in
which contributed, or on behalf of a Participant to a Simplified Employee
Pension plan to the extent such contribution are deductible under Code
section 219, and any distributions from a plan of deferred compensation
whether or not includible in the gross income of a Participant when
distributed; (iii) amounts realized from the exercise of a non-qualified
stock option, or when restricted stock (or property) held by a Participant
becomes freely transferable or is no longer subject to a substantial risk
of forfeiture; (iv) amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option; and (v) any
incentive bonus or other compensation paid to a key Employee in connection
with the sale of the Company of its assets.
(9) "Continuous Status as an Employee" shall mean the absence of any
interruption or termination of service as an Employee. Continuous Status as
an Employee shall not be considered interrupted in the case of a leave of
absence agreed to in writing by the Company, its Parent or a Designated
Subsidiary, as
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appropriate, provided that (x) such leave is for a period of not more than
90 days or (y) reemployment with the Company, its Parent or a Designated
Subsidiary, as appropriate, is guaranteed by contract or statute upon
expiration of such leave.
(10) "Designated Subsidiary" shall mean a Subsidiary that has been
designated by the Administrator from time to time in its sole discretion as
eligible to participate in the Plan.
(11) "Employee" shall mean any person who is customarily employed for
at least twenty (20) hours per week and more than five (5) months in a
calendar year by the Company, its Parent or a Designated Subsidiary.
(12) "Enrollment Date" shall mean the first Trading Day of each
Offering Period.
(13) "Fair Market Value" as of a particular date shall mean the fair
market value of the Shares as determined by the Administrator in its sole
discretion; provided, however, that (i) if the Shares are admitted to
trading on a national securities exchange, fair market value of the Shares
on any date shall be the closing sale price reported for the Shares on such
exchange on such date or, if no sale was reported on such date, on the last
date preceding such date on which a sale was reported, (ii) if the Shares
are admitted to quotation on the National Association of Securities Dealers
Automated Quotation ("Nasdaq") System or other comparable quotation system
and have been designated as a National Market System ("NMS") security, fair
market value of the Shares on any date shall be the closing sale price
reported for the Shares on such system on such date or, if no sale was
reported on such date, on the last date preceding such date on which a sale
was reported, or (iii) if the Shares are admitted to quotation on the
Nasdaq System and have not been designated as an NMS security, fair market
value of the Shares on any date shall be the average of the highest bid and
lowest asked prices of the Shares on such system on such date or, if no bid
and ask prices were reported on such date, on the last date preceding such
date on which both bid and ask prices were reported.
(14) "Hardship" shall mean any of the following that the Administrator
determines is sufficient reason to approve a hardship withdrawal or sale of
Shares pursuant to Section 8(c) hereof: (i) expenses directly relating to
the purchase of a Participant's principal residence (excluding mortgage
payments); (ii) prevention of eviction or foreclosure on a Participant's
principal residence; (iii) tuition and related educational expenses for the
next twelve months for post-secondary education for a Participant or a
Participant's spouse or dependents; or (iv) expenses incurred (prior to a
Participant's requesting approval for the relevant hardship withdrawal or
sale of Shares) by the Participant, the Participant's spouse or the
Participant's dependents for medical care for the Participant, the
Participant's spouse or the Participant's dependents.
(15) "Investment Account" shall mean a Plan account at a brokerage
firm or transfer agent, selected by the Company, that is established for
each Participant and in which all Shares purchased by the Participant
pursuant to the Plan and any dividends or Share splits credited to such
Participant's Investment Account are held until withdrawn, sold or
delivered pursuant to Section 7 hereof.
(16) "Offering Period" shall mean a period as described in Section 3
hereof.
(17) "Parent" shall mean any corporation (other than the Company) in
an unbroken chain of corporations ending with the Company if, at the time
of the granting of an option and at the time of purchase of Shares pursuant
to an option granted hereunder, each of the corporations other than the
Company owns Shares possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other
corporations in such chain, whether or not such corporation now exists or
hereafter acquires the Company.
(18) "Participant" shall mean an Employee who elects to participate in
the Plan pursuant to Section 4 hereof.
(19) "Purchase Date" shall mean the last Trading Day of each Offering
Period.
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(20) "Purchase Price" shall mean an amount equal to the lesser of (i)
85% of the Fair Market Value of a Share on the Enrollment Date or (ii) 85%
of the Fair Market Value of Share on the Purchase Date.
(21) "Restricted Period" shall have the meaning given in Section 8
hereof.
(22) "Share" shall mean a share of Common Stock.
(23) "Subsidiary" shall mean any corporation (other than the Company)
in an unbroken chain of corporations, beginning with the Company, if, at
the time of the granting of an option and at the time of purchase of Shares
pursuant to an option granted hereunder, 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 such chain, whether or not such corporation
now exists or is hereafter organized or acquired by the Company or a
Subsidiary.
(24) "Trading Day" shall mean a day on which national stock exchanges
and the Nasdaq System are open for trading.
SECTION 2. ELIGIBILITY.
(a) Subject to the limitations set forth in Section 2(b) hereof, any person
who is an Employee as of an Enrollment Date shall be eligible to participate in
the Plan in accordance with Section 4 hereof and shall be granted an option for
the Offering Period commencing on such Enrollment Date.
(b) Notwithstanding any provision of the Plan to the contrary, no Employee
shall be granted an option under the Plan (i) if such Employee (or any other
person whose stock would be attributed to such Employee pursuant to Section
424(d) of the Code) would own stock and/or hold outstanding options to purchase
stock possessing five percent (5%) or more of the total combined voting power or
value of all classes of stock of the Company, its Parent or of any Subsidiary or
(ii) if such grant would permit such Employee's right to purchase stock under
all employee stock purchase plans (described in Section 423 of the Code) of the
Company, its Parent and of any Subsidiary to accrue at a rate that exceeds
twenty-five thousand dollars ($25,000) of Fair Market Value of such stock
(determined at the time such option is granted) for any calendar year in which
such option would be outstanding. Any amounts received from an Employee that
cannot be used to purchase Shares as a result of this limitation shall be
returned as soon as reasonably practicable to the Employee without interest.
SECTION 3. OFFERING PERIODS.
The Plan shall be implemented by a series of consecutive three-month
Offering Periods, with a new Offering Period commencing on the first Trading Day
on or after January 1 (beginning in 2001), April 1 (beginning in 2001), July 1
(beginning in 2000), and October 1 (beginning in 2000) of each year, or at such
other time or times as may be determined by the Administrator, and ending on the
last Trading Day on or before March 31, June 30, September 30 and December 31,
respectively, or at such other time or times as may be determined by the
Administrator; provided, however, that the first Offering Period under the Plan
shall be for a period of approximately nine (9) months commencing on the first
Trading Day on or after October 1, 1999 and ending on the last Trading Day on or
before June 30, 2000. The Plan shall continue until terminated in accordance
with Section 18 hereof. Subject to Section 18 hereof, the Administrator shall
have the power to change the duration and/or the frequency of Offering Periods
with respect to future offerings and shall use its best efforts to notify
Employees of any such change at least fifteen (15) days prior to the scheduled
beginning of the first Offering Period to be affected. In no event shall any
option granted hereunder be exercisable more than twenty-seven (27) months from
its date of grant.
SECTION 4. ENROLLMENT; PARTICIPATION.
(a) On each Enrollment Date, the Company shall commence an offering by
granting each eligible Employee who has elected to participate in such Offering
Period pursuant to Section 4(b) hereof an option to purchase on the Purchase
Date of such Offering Period up to a number of Shares determined by dividing
each
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<PAGE> 27
Employee's payroll deductions accumulated prior to such Purchase Date and
retained in the Participant's account as of such Purchase Date by the applicable
Purchase Price; provided that in no event shall a Participant be permitted to
purchase during each Offering Period more than 2,500 Shares (subject to any
adjustment pursuant to Section 17 hereof), provided, further, that such purchase
shall be subject to the limitations set forth in Sections 2(b) and 11 hereof.
Exercise of the option shall occur as provided in Section 6 hereof, unless the
Participant has withdrawn pursuant to Section 9 hereof. The option with respect
to an Offering Period shall expire on the Purchase Date with respect to such
Offering Period or the withdrawal date, if earlier.
(b) Subject to the limitations set forth in Section 2(b) hereof, an
Employee may elect to become a Participant in the Plan by completing and filing
a subscription agreement authorizing the Company to make payroll deductions (as
set forth in Section 5 hereof) at least ten (10) business days prior to the
applicable Enrollment Date unless a later time for filing the subscription
agreement is set by the Administrator for all Employees. Unless a Participant,
by giving written notice (or such other notice as may from time to time be
prescribed by the Administrator), elects not to participate with respect to any
subsequent Offering Period, the Participant shall be deemed to have accepted
each new offer and to have authorized payroll deductions in respect thereof
during each subsequent Offering Period.
SECTION 5. PAYROLL DEDUCTIONS.
(a) An Employee may, in accordance with rules and procedures adopted by the
Administrator and subject to the limitation set forth in Section 2(b) hereof,
authorize payroll deductions in amounts which are not less than one percent (1%)
and not more than ten percent (10%) of such Employee's Compensation on each
payday during the Offering Period. Payroll deductions shall commence on the
first payroll paid following the Enrollment Date, and shall end on the last
payroll paid prior to the Purchase Date of the Offering Period to which the
subscription agreement is applicable, unless sooner terminated by the
Participant's withdrawal from the Plan or termination of the Participant's
Continuous Status as an Employee as provided in Section 9 hereof. A Participant
may increase or decrease his or her rate of payroll deductions at any time
during an Offering Period, but not more frequently than once during each
Offering Period, or as may be determined by the Administrator prior to the
commencement of an Offering Period, by giving written notice (or such other
notice as may from time to time be prescribed by the Administrator). The change
in rate shall be effective the first full payroll period following five (5)
business days after the Company's receipt of the new subscription agreement
unless the Company elects to process a given change in rate of payroll
deductions more quickly.
(b) All payroll deductions made by a Participant shall be credited to such
Participant's account under the Plan and shall be withheld in whole percentages
only. A Participant may not make any additional payments into such account.
(c) Notwithstanding the foregoing, to the extent necessary to comply with
Section 423(b)(8) of the Code and Section 2(b) hereof, a Participant's rate of
payroll deductions may be decreased by the Company to zero percent (0%) at any
time during an Offering Period. Payroll deductions shall recommence at the rate
provided for in such Participant's subscription agreement at the beginning of
the first Offering Period which is scheduled to end the following calendar year,
unless a Participant increases or decreases the rate of his or her payroll
deductions as provided in Section 5(a) hereof, or terminates his or her
participation in the Plan as provided in Section 9 hereof.
SECTION 6. PURCHASE OF SHARES.
Subject to the limitations set forth hereunder, unless a Participant
withdraws from the Plan as provided in Section 9 hereof, such Participant's
election to purchase Shares shall be exercised automatically on each Purchase
Date, and the maximum number of whole and partial Shares subject to option shall
be purchased for each Participant at the applicable Purchase Price with the
accumulated payroll deductions in each Participant's account as of the Purchase
Date. Any payroll deductions remaining in a Participant's account following the
purchase of Shares on any Purchase Date shall be returned to the Participant as
soon as
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<PAGE> 28
reasonably practicable following the Purchase Date. During a Participant's
lifetime, a Participant's option to purchase Shares hereunder is exercisable
only by the Participant.
SECTION 7. DELIVERY OF SHARES; WITHDRAWAL OR SALE OF SHARES.
(a) As promptly as reasonably practicable after each Purchase Date, the
Company shall arrange the delivery of the Shares purchased on such date by each
Participant to each Participant's Investment Account.
(b) At any time after the Restricted Period with respect to any or all of a
Participant's Shares held in his or her Investment Account has ended, the
Participant (or, in the event of the Participant's death, the designated
beneficiary, if any, or other appropriate person as set forth in accordance with
Section 13 hereof) may submit a written request to the Company for withdrawal of
such Shares from the Investment Account, or, in the alternative (with the
consent of the brokerage firm or transfer agent at which the Participant's
Investment Account is located), the Participant (or another person in accordance
with Section 13 hereof) may direct the sale of such Shares by such brokerage
firm or transfer agent. As promptly as practicable after receipt by the Company
(or the brokerage firm or transfer agent) of such written request for withdrawal
of such shares, the Company or the brokerage firm or transfer agent shall
arrange the delivery to the Participant of a share certificate representing such
Shares.
SECTION 8. RESTRICTIONS ON SALE OF STOCK.
(a) Shares purchased pursuant to a Participant's exercise of an option
under the Plan may not be sold by the Participant or withdrawn from the
Participant's Investment Account during the Restricted Period with respect to
such Shares. Subject to Sections 8(b) and 8(c) hereof, the Restricted Period
with respect to any option Shares so purchased shall be the one year period
immediately following the Purchase Date on which such Shares were purchased. For
purposes of determining their Restricted Period, Shares received in Share
dividends or Share splits on such option Shares shall be deemed to have been
purchased on the same Purchase Date as such option Shares.
(b) Notwithstanding the above, the Restricted Period with respect to all
Shares held in a Participant's Investment Account shall end upon the termination
of the Participant's Continuous Status as an Employee.
(c) If the Administrator approves a written request by a Participant for a
Hardship withdrawal or sale of Shares, the Restricted Period shall end upon a
date determined by the Administrator with respect to such number of Shares held
in a Participant's Investment Account as the Administrator shall determine. Any
such determination or approval shall be made by and in the sole discretion of
the Administrator. A Participant may request approval for a Hardship withdrawal
or sale of Shares by filing a form with the Company which certifies that (i) the
Hardship is of a type recognized by the Plan, and (ii) that the Hardship sale of
such Shares will not generate proceeds in excess of the amount of the
Participant's immediate and heavy financial need. Upon approval of a Hardship
withdrawal or sale of Shares, the Participant must also withdraw from the Plan
for the current Offering Period. A Participant who is then an Employee may
rejoin the Plan for any subsequent Offering Period by complying with enrollment
the procedures set forth in Section 4 hereof.
SECTION 9. WITHDRAWAL; TERMINATION OF EMPLOYMENT.
(a) A Participant may withdraw all, but not less than all, of the payroll
deductions credited to such Participant's account (that have not been used to
purchase Shares) under the Plan by giving written notice to the Company at least
five (5) business days prior to the Purchase Date of the Offering Period in
which the withdrawal occurs. Withdrawal of payroll deductions shall be deemed to
be a withdrawal from the Plan. All of the payroll deductions credited to such
Participant's account (that have not been used to purchase Shares) shall be paid
to such Participant promptly after receipt of such Participant's notice of
withdrawal, and such Participant's eligibility to participate in the Plan for
the Offering Period in which the withdrawal occurs shall be automatically
terminated. No further payroll deductions for the purchase of Shares shall be
made for such Participant during such Offering Period. If a Participant
withdraws from an Offering Period, payroll deductions for such Participant shall
not resume at the beginning of the succeeding Offering Period unless the
Participant timely delivers to the Company a new subscription agreement in
accordance with the provisions of
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Section 4 hereof. A Participant's withdrawal from an Offering Period shall not
have any effect upon a Participant's eligibility to participate in any similar
plan which may hereafter be adopted by the Company or in succeeding Offering
Periods which commence after termination of the Offering Period from which the
Participant withdraws.
(b) Upon termination of a Participant's Continuous Status as an Employee
during the Offering Period for any reason, including Participant's voluntary
termination, retirement or death, all the payroll deductions credited to such
Participant's account (that have not been used to purchase Shares) shall be
returned to such Participant or, in the case of such Participant's death, to the
person or persons entitled thereto under Section 13 hereof, and such
Participant's option shall be automatically terminated. Such termination shall
be deemed a withdrawal from the Plan.
SECTION 10. DIVIDENDS; SHARE SPLITS; INTEREST.
Cash dividends paid on Shares held in a Participant's Investment Account
shall be paid to the Participant as soon as practicable. Share splits of, or
dividends paid in Shares on, the Shares held in the Participant's Investment
Account shall be held in the Participant's Investment Account until withdrawn or
sold in accordance with Section 9 hereof. Dividends paid in property other than
cash or Shares shall be distributed to the Participant as soon as practicable.
No interest shall accrue on or be payable by the Company with respect to the
payroll deductions of a Participant in the Plan.
SECTION 11. STOCK SUBJECT TO PLAN.
(a) Subject to adjustment upon Changes in Capitalization of the Company as
provided in Section 17 hereof, the maximum aggregate number of Shares which
shall be reserved for sale under the Plan for all Offering Periods that commence
during each fiscal year of the Company occurring during the term of the Plan
shall be 300,000 Shares. Such Shares shall be available as of the first day of
the first Offering Period that commences in each such fiscal year. The Shares
may consist, in whole or in part, of authorized and unissued Shares or treasury
Shares. If the total number of Shares which would otherwise be subject to
options granted pursuant to Section 2(a) hereof on an Enrollment Date exceeds
the number of Shares then available under the Plan (after deduction of all
Shares for which options have been exercised or are then outstanding), the
Administrator shall make a pro rata allocation of the Shares remaining available
for option grant in as uniform a manner as shall be practicable and as it shall
determine to be equitable. In such event, the Administrator shall give written
notice to each Participant of such reduction of the number of option Shares
affected thereby and shall similarly reduce the rate of payroll deductions, if
necessary.
(b) No Participant shall have rights as a stockholder with respect to any
option granted hereunder until the date on which such Shares shall be deemed to
have been purchased by the Participant in accordance with Section 6 hereof.
(c) Shares purchased on behalf of a Participant under the Plan shall be
registered in the name of the Participant or, if requested in writing by the
Participant, in the names of the Participant and the Participant's spouse.
SECTION 12. ADMINISTRATION.
The Plan shall be administered by the Board or a Committee. The Board or
the Committee shall have full power and authority, subject to the provisions of
the Plan, to promulgate such rules and regulations as it deems necessary for the
proper administration of the Plan, to interpret the provisions and supervise the
administration of the Plan, and to take all action in connection therewith or in
relation thereto as it deems necessary or advisable. Any decision reduced to
writing and signed by a majority of the members of the Committee shall be fully
effective as if it had been made at a meeting duly held. The Company shall pay
all expenses incurred in the administration of the Plan. No member of the Board
or Committee shall be personally liable for any action, determination, or
interpretation made in good faith with respect to the Plan, and all members of
the Board or Committee shall be fully indemnified by the Company with respect to
any such action, determination or interpretation.
6
<PAGE> 30
All decisions, determinations and interpretations of the Board or Committee
shall be final and binding on all persons, including the Company, its Parent,
any Subsidiary, the Employee (or any person claiming any rights under the Plan
through any Employee) and any stockholder of the Company, its Parent or any
Subsidiary.
SECTION 13. DESIGNATION OF BENEFICIARY.
(a) A Participant may file, on forms supplied by and delivered to the
Company, a written designation of a beneficiary who is to receive Shares and/or
cash, if any, remaining in such Participant's cash account or Investment Account
under the Plan in the event of the Participant's death.
(b) Subject to applicable law, such designation of beneficiary may be
changed by the Participant at any time by written notice. In the event of the
death of a Participant and in the absence of a beneficiary validly designated
under the Plan who is living at the time of such Participant's death, the
Company shall deliver the balance of the Shares and/or cash credited to
Participant's account to the executor or administrator of the estate of the
Participant or, if no such executor or administrator has been appointed (to the
knowledge of the Company), the Company, in its discretion, may deliver such
Shares and/or cash to the spouse or to any one or more dependents or relatives
of the Participant, or if no spouse, dependent or relative is known to the
Company, then to such other person as the Company may designate.
SECTION 14. TRANSFERABILITY.
Neither payroll deductions credited to a Participant's account nor any
rights with regard to the exercise of an option or any rights to receive Shares
under the Plan may be assigned, transferred, pledged or otherwise disposed of in
any way (other than by the laws of descent and distribution or as provided in
Section 13 hereof) by the Participant. Any such attempt at assignment, transfer,
pledge or other disposition shall be without effect, except that the Company may
treat such act as an election to withdraw funds in accordance with Section 9
hereof.
SECTION 15. USE OF FUNDS.
All payroll deductions received or held by the Company under the Plan may
be used by the Company for any corporate purpose, and the Company shall not be
obligated to segregate such payroll deductions.
SECTION 16. REPORTS.
Individual accounts shall be maintained by the Company for each Participant
in the Plan which account shall be separate from the Investment Accounts.
Statements of account shall be given to each Participant at least annually which
statements shall set forth the amounts of payroll deductions, the Purchase
Price, the number of Shares purchased and the remaining cash balance, if any.
SECTION 17. EFFECT OF CERTAIN CHANGES.
In the event of a Change in Capitalization or the distribution of an
extraordinary dividend, the Administrator shall conclusively determine the
appropriate equitable adjustments, if any, to be made under the Plan, including
without limitation adjustments to the number of Shares which have been
authorized for issuance under the Plan, but have not yet been placed under
option, as well as the Purchase Price of each option under the Plan which has
not yet been exercised. In the event of a change in control of the Company, the
Offering Period shall terminate unless otherwise provided by the Administrator.
SECTION 18. AMENDMENT OR TERMINATION.
The Board may at any time terminate or amend the Plan. Except as provided
in Section 17 hereof, no such termination may adversely affect options
previously granted and no amendment may make any change in any option
theretofore granted which adversely affects the rights of any Participant. To
the extent necessary to comply with Section 423 of the Code (or any successor
rule or provision or any other applicable law,
7
<PAGE> 31
regulation or stock exchange rule), the Company shall obtain stockholder
approval in such a manner and to such a degree as required.
SECTION 19. NOTICES.
All notices or other communications by a Participant to the Company under
or in connection with the Plan shall be deemed to have been duly given when they
are received in a timely manner in the form specified by the Company at the
location, or by the person, designated by the Company for the receipt thereof.
SECTION 20. REGULATIONS AND OTHER APPROVALS; GOVERNING LAW.
(a) This Plan and the rights of all persons claiming hereunder shall be
construed and determined in accordance with the laws of the State of Illinois
without giving effect to the choice of law principles thereof, except to the
extent that such law is preempted by Federal law.
(b) The obligation of the Company to sell or deliver Shares with respect to
options granted under the Plan shall be subject to all applicable laws, rules
and regulations, including all applicable federal and state securities laws, and
the obtaining of all such approvals by governmental agencies as may be deemed
necessary or appropriate by the Administrator.
SECTION 21. WITHHOLDING OF TAXES.
If the Participant makes a disposition, within the meaning of Section
424(c) of the Code of any Share or Shares issued to Participant pursuant to
Participant's exercise of an option, and such disposition occurs within the
two-year period commencing on the day after the Enrollment Date or within the
one-year period commencing on the day after the Purchase Date, Participant
shall, within ten (10) days of such disposition, notify the Company thereof and
thereafter immediately deliver to the Company any amount of Federal, state or
local income taxes and other amounts which the Company informs the Participant
the Company may be required to withhold.
SECTION 22. EFFECTIVE DATE.
The Plan shall be effective as of October 1, 1999 (the "Effective Date"),
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.
SECTION 23. TERM OF PLAN.
No option shall be granted pursuant to the Plan and no Offering Period
shall commence on or after the fifth anniversary of the Effective Date, but
options theretofore granted may extend beyond that date.
8
<PAGE> 32
IVEX PACKAGING CORPORATION PROXY
LINCOLNSHIRE, ILLINOIS
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PROXY PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS - APRIL 26, 2000
The undersigned hereby appoints Frank V. Tannura or G. Douglas Patterson, or
either of them acting in the absence of the other, with power of substitution,
attorneys and proxies, for and in the name and place of the undersigned, to vote
the number of shares of Common Stock that the undersigned would be entitled to
vote if then personally present at the Annual Meeting of the Stockholders of
Ivex Packaging Corporation, to be held at the Deer Path Inn, 255 East Illinois
Road, Lake Forest, Illinois 60045 on Wednesday, April 26, 2000, at 9:00 a.m.,
Chicago time, or any adjournments or postponements, thereof, upon the matters
set forth in the Notice of Annual Meeting and Proxy Statement (receipt of which
is hereby acknowledged) as designated on the reverse side, and in their
discretion, the proxies are authorized to vote upon such other business as may
come before the meeting.
ADDRESS CHANGE: PLEASE NOTE CHANGE HERE AND MARK ON REVERSE SIDE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE PROXY WILL BE VOTED AS SPECIFIED. IF NO CHOICES ARE SPECIFIED, THIS PROXY
WILL BE VOTED FOR THE PROPOSALS.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
- --------------------------------------------------------------------------------
/\FOLD AND DETACH HERE/\
<PAGE> 33
[X] PLEASE MARK YOUR
VOTE AS IN THIS
EXAMPLE
THIS PROXY WHEN EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE NOMINEES IN PROPOSAL 1,
FOR PROPOSAL 2 AND FOR PROPOSAL 3.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSALS:
- ------------------------------------------------------------------------------------------------------------------------------------
FOR ALL NOMINEES WITHHELD AUTHORITY TO VOTE For Against Abstain
<S> <C> <C> <C> <C> <C> <C>
1. Election of [ ] [ ] George V. Bayly 2. Ratification of appointment of [ ] [ ] [ ]
Directions Anthony P. Scotto PricewaterhouseCoopers LLP as
auditors for the Corporation
(For, except vote withheld from the following nominee(s):) for 2000.
3. Approval of Employee Stock [ ] [ ] [ ]
Purchase Plan.
- -------------------------------------------
Check here if you plan to [ ]
attend the Meeting.
Change of Address on Reverse [ ]
Side.
Please date and sign exactly as name appears hereon.
Joint owners should each sign. When signing as attorney,
executor, administrator, trustee or guardian, please
give full title as such.
---------------------------------------------------------
2000
---------------------------------------------------------
SIGNATURE(S) DATE
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</TABLE>
/\FOLD AND DETACH HERE/\
