<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.142-12
STONE CONTAINER CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
STONE CONTAINER CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / 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>
[LOGO]
STONE CONTAINER CORPORATION
150 North Michigan Avenue
Chicago, IL 60601-7568
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, MAY 10, 1994
To the Stockholders of
Stone Container Corporation:
The Annual Meeting of Stockholders of Stone Container Corporation (the
"Company") will be held on Tuesday, May 10, 1994 on the Fifty-Seventh Floor, The
First National Bank of Chicago, One First National Plaza, Clark and Madison
Streets, Chicago, Illinois, at 10:30 a.m. (C.D.S.T.) for the following purposes:
1. To elect twelve directors to serve until the next succeeding Annual
Meeting of Stockholders or until their respective successors are elected
and qualified; and
2. To transact such other business as may properly come before the meeting.
Even though you may now plan to attend the Annual Meeting in person, please
complete, date, sign and promptly return the enclosed Proxy in the envelope
enclosed for that purpose, which requires no postage if mailed in the United
States. If you attend the Annual Meeting and desire to withdraw your Proxy and
vote in person, you may do so.
Only stockholders of record at the close of business on April 6, 1994 will
be entitled to vote at the Annual Meeting.
By order of the Board of Directors.
LESLIE T. LEDERER,
SECRETARY
Chicago, Illinois, April 14, 1994
<PAGE>
STONE CONTAINER CORPORATION
150 N. Michigan Avenue
Chicago, Illinois 60601-7568
----------
P R O X Y S T A T E M E N T
I. VOTING AND PROXY
The Annual Meeting of Stockholders of Stone Container Corporation (the
"Company") will be held on Tuesday, May 10, 1994, pursuant to the By-Laws, for
the purposes set forth in the accompanying notice. The only matters which the
Company's management intends to present are those set forth in such notice.
Management knows of no matters which will be presented by others. Should any
other matters properly come before the Annual Meeting, it is the intention of
the persons named in the enclosed Proxy to act upon them according to their best
judgment.
The close of business on April 6, 1994 has been fixed as the record date for
determining stockholders entitled to notice of and to vote at the Annual
Meeting. On that day, the issued and outstanding voting securities of the
Company consisted of 90,388,091 shares of Common Stock, $.01 par value (the
"Common Stock"). The Company first sent this Proxy Statement and enclosed Proxy
to stockholders entitled to notice and to vote at the Annual Meeting on or about
April 14, 1994. Each stockholder has one vote for each share of Common Stock
held, except in the case of the election of directors, and the holders of a
majority of the shares of Common Stock of the Company issued and outstanding and
entitled to vote at the Annual Meeting, present in person or by proxy, will
constitute a quorum for the transaction of business.
At the Annual Meeting, twelve directors are to be elected with each
stockholder being entitled to cumulate his or her votes. Under cumulative
voting, each stockholder entitled to vote is entitled to vote as many votes as
shall equal the number of shares of Common Stock owned multiplied by the number
of directors to be elected (12). Each stockholder may cast all of such votes for
a single candidate or distribute them among the number of director positions to
be voted for or any two or more of them as such stockholder may see fit. Except
as otherwise instructed by a stockholder, each properly executed and returned
Proxy that grants authority to vote for one or more of the nominees named below
will authorize the proxies to cumulate all votes which the stockholder is
entitled to cast and to allocate such votes among such nominees as such proxies
determine, in their sole and absolute discretion. If individuals other than the
nominees named below are nominated for director of the Company, the proxies
intend to distribute the number of votes as to which they have discretionary
authority with respect to cumulative voting in such manner as will assure the
election of all nominees named below or, if they shall have insufficient votes
for such purpose, the election of as many of such nominees as is possible.
If a quorum is present at the Annual Meeting, the twelve candidates for
director receiving the greatest number of votes will be elected. Except as
otherwise instructed by a stockholder, each properly executed and returned Proxy
will be voted FOR the election of the nominees named below. The
1
<PAGE>
enclosed Proxy permits each stockholder to withhold authority to vote for one or
more of such nominees, but withholding authority to vote for a director nominee
will not prevent such nominee from being elected.
The enclosed Proxy is solicited by the Board of Directors. If the Proxy in
such form is properly executed and returned, the shares of Common Stock
represented thereby will be voted in accordance with the instructions thereon at
the Annual Meeting. Such Proxy, if given, may be revoked by the stockholder
executing it any time prior to its being voted by giving written notice of such
revocation to the Secretary of the Company or by attending the Annual Meeting
and requesting its revocation at the beginning of the Annual Meeting.
II. DIRECTORS
NOMINEES FOR DIRECTORS
Directors are to be elected to serve until the next succeeding Annual
Meeting of Stockholders or until their successors are elected and qualified. All
of the nominees were elected directors at the last Annual Meeting. It is
intended that the Proxy, if given, and unless otherwise specified thereon, will
be voted for the persons named below. In case any of the named nominees is not a
candidate at the Annual Meeting, an event which management does not anticipate,
it is intended that the enclosed Proxy, if given, and unless it is otherwise
specified thereon, may be voted for a substitute nominee and will be voted for
the other nominees named.
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
COMMON PERCENT OF
YEAR FIRST STOCK COMMON
ELECTED A BENEFICIALLY STOCK
NAME PRINCIPAL OCCUPATION DIRECTOR OWNED(C) OUTSTANDING
- ------------------------------ ---------------------------------------- ---------- ------------ --------------
<S> <C> <C> <C> <C>
Richard A. Giesen* ++ Chairman of the Board & Chief Executive 1974 12,717 (a)
Officer of Continere Corporation
James J. Glasser+ ++ Chairman of the Board, President and 1986 10,200 (a)
Chief Executive Officer of GATX
Corporation
George D. Kennedy+# Chairman of the Board of Mallinckrodt 1989 1,020 (a)
Group Inc. (formerly IMCERA Group
Inc.)
Howard C. Miller, Jr.*+ Consultant 1981 2,066 (a)
John D. Nichols+# Chairman of the Board and Chief 1989 2,040 (a)
Executive Officer of Illinois Tool
Works Inc.
Jerry K. Pearlman*+ ++ Chairman of the Board and Chief 1984 3,672 (a)
Executive Officer of Zenith
Electronics Corporation
Richard J. Raskin Attorney 1983 575,448 (a)(b)
Alan Stone* Senior Vice President 1969 1,062,143 1.2%(b)
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
COMMON PERCENT OF
YEAR FIRST STOCK COMMON
ELECTED A BENEFICIALLY STOCK
NAME PRINCIPAL OCCUPATION DIRECTOR OWNED(C) OUTSTANDING
- ------------------------------ ---------------------------------------- ---------- ------------ --------------
<S> <C> <C> <C> <C>
Avery J. Stone President of IDC Management 1969 906,415 1.0%(b)
Ira N. Stone Senior Vice President 1969 1,004,296 1.1%(b)
James H. Stone* President of Stone Management 1969 563,377 (a)(b)
Corporation
Roger W. Stone* Chairman of the Board, President and 1969 1,715,127 1.9%(b)
Chief Executive Officer
<FN>
- --------------
*Member of the Executive Committee ++Member of the Compensation Committee
+Member of the Audit Committee #Member of the Nominating Committee
(a) Does not exceed one percent (1%) of the outstanding stock.
(b) There is included in the stock beneficially owned in the foregoing table,
Common Stock owned by spouses and associates, except those associates
separately listed in the table, beneficial ownership of which is
disclaimed. See footnote (b) under "Security Ownership by Management".
(c) Each person has sole voting and investment power with respect to the shares
listed.
</TABLE>
INFORMATION AS TO DIRECTORS AND EXECUTIVE OFFICERS
The following information indicates the principal occupation and employment
for the named Directors and Executive Officers for the last five years, unless
otherwise indicated.
DIRECTORS:
RICHARD A. GIESEN, born October 7, 1929, is Chairman of the Board and Chief
Executive Officer of Continere Corporation, a glass and plastic packaging
distribution company. Mr. Giesen is a director of GATX Corporation and Continere
Corporation.
JAMES J. GLASSER, born June 5, 1934, is Chairman of the Board, President and
Chief Executive Officer of GATX Corporation, a leasing and financial services
company. Mr. Glasser is a director of General American Transportation
Corporation, GATX Leasing Corporation, The B.F. Goodrich Company, Harris
Bankcorp, Inc., Harris Trust & Savings Bank, and Bank of Montreal.
GEORGE D. KENNEDY, born May 30, 1926, is Chairman of the Board of
Mallinckrodt Group Inc. (formerly IMCERA Group Inc.), a diversified health care
company. Mr. Kennedy is a director of Illinois Tool Works Inc., Kemper
Corporation, Kemper National Insurance Co., Brunswick Corporation, American
National Can Corporation, Scottsman Industries, Inc., and Medical Care America,
Inc.
HOWARD C. MILLER, JR., born September 2, 1926, is a consultant in private
practice, consulting in general business matters. Mr. Miller is a director of
Automobile Protection Corporation.
JOHN D. NICHOLS, born September 20, 1930, is Chairman of the Board and Chief
Executive Officer of Illinois Tool Works Inc., a diversified manufacturing
company. Mr. Nichols is a director of Philip Morris Companies, Inc., Household
International, Inc. and Rockwell International Corporation.
3
<PAGE>
JERRY K. PEARLMAN, born March 27, 1939, is Chairman of the Board and Chief
Executive Officer of Zenith Electronics Corporation, a manufacturer of consumer
electronics and cable television products. Mr. Pearlman is a director of First
Chicago Corporation and The First National Bank of Chicago.
RICHARD J. RASKIN, born April 4, 1945, is an attorney in private practice
with the law firm of Richard J. Raskin, Attorney at Law. See Footnote (b) under
"Security Ownership by Management".
ALAN STONE, born February 5, 1928, Senior Vice President, Purchasing and
Transportation; is responsible for corporate purchasing and transportation. See
Footnote (b) under "Security Ownership by Management".
AVERY J. STONE, born November 7, 1932, is President of IDC Management Co., a
management and investment company. See Footnote (b) under "Security Ownership by
Management".
IRA N. STONE, born February 4, 1932, Senior Vice President since 1989 is
responsible for Corporate Marketing, Communication and Public Affairs. See
Footnote (b) under "Security Ownership by Management".
JAMES H. STONE, born March 4, 1939, is President of Stone Management
Corporation, a management consulting firm (not affiliated with the Company). Mr.
Stone is a director of Fullerton Metals Company. See Footnote (b) under
"Security Ownership by Management".
ROGER W. STONE, born February 16, 1935, is Chairman of the Board, President
and Chief Executive Officer. Mr. Stone is a director of First Chicago
Corporation, The First National Bank of Chicago, McDonald's Corporation, Morton
International, Inc., Stone-Consolidated Corporation, Option Care, Inc. and
Continere Corporation. See Footnote (b) under "Security Ownership by
Management".
OTHER EXECUTIVE OFFICERS:
ARNOLD F. BROOKSTONE, born April 8, 1930, Executive Vice President, Chief
Financial and Planning Officer since 1991. Previously, Mr. Brookstone was Senior
Vice President, Chief Financial and Planning Officer. Mr. Brookstone is a
director of Stone-Consolidated Corporation, Donnelly Corporation, MFRI, Inc.,
Rembrandt Funds and Continere Corporation.
JAMES DOUGHAN, born November 9, 1933, President and Chief Executive Officer
of Stone-Consolidated Corporation since 1993. Previously, Mr. Doughan was
Executive Vice President, Containerboard and Paper and Pulp Marketing and Sales.
Mr. Doughan is a director of Stone-Consolidated Corporation.
MORTY ROSENKRANZ, born February 21, 1928, Executive Vice President,
Administration since 1993. Previously, Mr. Rosenkranz was Executive Vice
President North American Integrated Packaging.
JOHN D. BENCE, born June 18, 1932, Senior Vice President, European Packaging
Operations, joined the Company in December 1988 and was elected Vice President
in March 1989 and Senior Vice President in January 1991.
THOMAS W. CADDEN, SR., born September 4, 1933, Senior Vice President and
General Manager Industrial and Retail Packaging since 1993. Previously, Mr.
Cadden was Senior Vice President and General Manager of the Corrugated Container
Division.
THOMAS P. CUTILLETTA, born July 5, 1943, Senior Vice President and Corporate
Controller, is the Company's Chief Accounting Officer. Mr. Cutilletta was
elected Senior Vice President in January 1991.
HAROLD E. GREGG, born May 17, 1929, Senior Vice President since 1993 working
on special projects for the Chairman of the Board. Previously Mr. Gregg was
Senior Vice President Marketing and Corporate Sales.
4
<PAGE>
GERALD M. FREEMAN, born April 18, 1937, Senior Vice President and General
Manager, Forest Products Division since 1987, is responsible for the operations
of that division.
JAMES B. HEIDER, born July 27, 1943, Senior Vice President and General
Manager, Containerboard and Paper Division since December, 1988.
MATTHEW S. KAPLAN, born March 13, 1957, Senior Vice President and General
Manager, Corrugated Container Division, since June, 1993. Previously, Mr. Kaplan
was Vice President and General Manager, Retail Bag Division. Mr. Kaplan is the
son-in-law of Roger W. Stone.
WILLIAM J. KLAISLE, born September 13, 1941, Vice President Corporate
Development since April 1993. Previously, Mr. Klaisle was Vice President,
Corporate Marketing and Communications.
LESLIE T. LEDERER, born July 20, 1948, Vice President, Secretary and Counsel
since 1987.
MICHAEL B. WHEELER, born February 15, 1945, Vice President since 1984 and
Treasurer and Assistant Secretary since 1981.
MEETINGS AND COMMITTEES OF DIRECTORS
During 1993, the Board of Directors met nine times. As to meetings of the
Committees of the Board, the Audit Committee met four times; the Compensation
Committee met three times; the Executive Committee met once and the Nominating
Committee did not meet. Each of the incumbent directors attended at least 75% of
the aggregate of the meetings of the Board and the Committees of which he was a
member.
The Audit Committee of the Board meets, as necessary, to receive and review
the results of the audits of the Company's books and records performed by the
independent auditors, to review matters relating to internal auditing,
accounting policies, procedures and adjustments, and to participate in the
selection of independent auditors for the following year.
The Compensation Committee of the Board meets, as necessary, to review the
Company's programs for the development of management personnel and to consider
recommendations and proposals to be made to the Board on directors' fees and
management compensation.
The Nominating Committee of the Board meets, as necessary, to seek out,
review the qualifications of, and propose to the Board, nominees for election as
directors. The Company's By-Laws provide, in general, that any stockholder
entitled to vote in the election of directors generally may nominate one or more
persons for election as directors at a meeting of stockholders at which
directors are to be elected only if written notice of such stockholder's intent
to make such nomination has been received by the Secretary of the Company not
less than 60 nor more than 90 days prior to such meeting. The By-Laws further
specify the requirements of such notice. Stockholders wishing to suggest
nominees for the Board may address their suggestions in writing to the Secretary
of the Company, Stone Container Corporation, 150 N. Michigan Avenue, Chicago, IL
60601.
The Executive Committee of the Board exercises the power and authority of
the Board of Directors as may be necessary during intervals between meetings of
the Board of Directors, subject to such limitations as are provided by law, the
Company's By-Laws or resolutions of the Board of Directors.
The members of the Audit, Compensation and Nominating Committees, none of
whom is an employee of the Company, and members of the Executive Committee, are
indicated under "Nominees for Directors".
5
<PAGE>
CERTAIN TRANSACTIONS
During 1984, the Company loaned to Mr. James Doughan, President & Chief
Executive Officer of Stone-Consolidated Corporation the amount of $347,250 in
connection with Mr. Doughan's relocation to Chicago upon his assuming his duties
with the Company. Mr. Doughan subsequently repaid a portion of such loan; the
outstanding balance as of March 1, 1994 was $275,000. During 1988, the Company
made a loan to Mr. James B. Heider, Senior Vice President and General Manager,
Containerboard and Paper Division, in the amount of $320,000 in connection with
his move to Chicago. Mr. Heider has subsequently repaid a portion of such loan;
the outstanding balance as of March 1, 1994 was $250,000. Such loans bear no
interest and are repayable on demand by the Company. The interest rate imputed
on such loans was 4.98% during 1993.
SECURITY OWNERSHIP BY CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS
As of February 14, 1994, the following persons were known to the Company to
own beneficially more than 5% of the outstanding Common Stock of the Company:
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK PERCENT OF
BENEFICIALLY COMMON STOCK
NAME AND ADDRESS OWNED(1) OUTSTANDING
- ---------------------------------------------- ----------------- --------------
<S> <C> <C>
FMR Corp...................................... 10,184,373(2) 11.58%
82 Devonshire Street
Boston, MA 02109-3614
Sanford C. Bernstein & Co., Inc............... 6,337,584 7.2%
767 Fifth Avenue
New York, NY 10153
Reliance Financial Services Corp.............. 4,761,904(3) 5.4%
Park Avenue Plaza
55 East 52nd Street
New York, NY 10055
<FN>
- --------------
(1) Information with respect to beneficial ownership is based upon information
furnished by each owner.
(2) Includes (i) 5,350,817 shares resulting from the assumed conversion of
$61,802,000 principal amount of the Company's 8 7/8% Convertible Senior
Subordinated Notes due 2000, (ii) 7,949 shares resulting from the assumed
conversion of shares of the Company's $1.75 Series E Cumulative
Convertible Exchangeable Preferred Stock and (iii) 60,694 shares resulting
from the assumed conversion of $2,060,000 principal amount of the
Company's 6.75% Convertible Subordinated Debentures.
(3) All 4,761,904 shares are based upon the assumed conversion of the
Company's 8 7/8% Convertible Senior Subordinated Notes due 2000.
</TABLE>
6
<PAGE>
SECURITY OWNERSHIP BY MANAGEMENT
As of March 1, 1994, each of the executive officers named in the Summary
Compensation Table, individually, and all directors and executive officers as a
group, beneficially owned the following shares of Common Stock of the Company:
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
COMMON STOCK
BENEFICIALLY PERCENT OF COMMON
NAME OWNED STOCK OUTSTANDING
- ---------------------------------------------- ------------ -------------------
<S> <C> <C>
Arnold F. Brookstone.......................... 112,400 (a)
James Doughan................................. 49,296 (a)
James B. Heider............................... 44,795 (a)
Morty Rosenkranz.............................. 68,168 (a)
Roger W. Stone................................ 1,715,127 1.9%(b)
All directors and executive officers as a 11,203,767 12.4%(b)
group........................................
<FN>
- --------------
(a) Does not exceed one percent (1%) of the outstanding stock.
(b) The shares of Common Stock owned by all directors and executive officers
as a group include those of Jerome H. Stone and Marvin N. Stone, each of
whom is a Founding Director and as such is, pursuant to the Company's
By-Laws, entitled to attend and participate at meetings of directors but
have no vote. Jerome H. Stone, Marvin N. Stone and Norman H. Stone
(deceased) are brothers. Alan Stone and Ira N. Stone are sons of Norman H.
Stone. Avery J. Stone and Roger W. Stone are sons of Marvin N. Stone.
James H. Stone is the son and Richard J. Raskin is the son-in-law of
Jerome H. Stone. Matthew S. Kaplan is the son-in-law of Roger W. Stone.
The members of the Stone family own an aggregate (but not as a group) of
approximately 13,000,000 shares of Common Stock (approximately 15% of the
outstanding shares).
</TABLE>
III. COMPENSATION
The following table sets forth the compensation paid to, as well as the
value of stock awards earned by, the Company's Chief Executive Officer and the
Company's four other most highly compensated executive officers during the past
three fiscal years.
7
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------------
AWARDS PAYOUTS
------------ --------------
ANNUAL COMPENSATION RESTRICTED LONG-TERM
--------------------------------- STOCK INCENTIVE PLAN
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AWARDS(1)(2) PAYOUTS(3)
- ------------------------------- --------- ----------- --------- ------------ --------------
<S> <C> <C> <C> <C> <C>
Roger W. Stone 1993 $ 730,000 -- $ 395,604 $ -0-
Chairman, President 1992 730,000 -- 389,360 172,150
Chief Executive Officer 1991 730,000 -- 381,547 177,000
Morty Rosenkranz 1993 410,000 -- 156,545 -0-
Executive Vice President 1992 391,250 -- 154,836 65,340
1991 363,250 -- 150,121 69,000
James Doughan 1993 373,000 -- 131,000 -0-
Executive Vice President 1992 358,000 -- 118,856 65,340
1991 341,750 -- 114,276 69,000
Arnold F. Brookstone 1993 310,000 -- 113,004 -0-
Executive Vice President 1992 295,000 -- 104,295 61,270
1991 280,250 -- 99,774 69,000
James B. Heider 1993 275,000 -- 87,770 -0-
Senior Vice President 1992 253,250 -- 87,210 25,300
1991 225,500 -- 76,751 29,850
<FN>
- --------------
(1) Stock awards made under the Long-Term Incentive Plan do not vest until the
fifth anniversary of the award.
(2) Dividends on shares of restricted stock are paid at the same time and at
the same rate as dividends on all other shares of the Company's Common
Stock. The aggregate number and value of each named executive's restricted
stock holdings as of December 31, 1993 are as follows: Mr. Stone, 119,081
shares, $1,145,962.13; Mr. Rosenkranz, 36,550 shares, $351,793.75; Mr.
Doughan, 29,120 shares $280,280; Mr. Brookstone, 24,671 shares,
$237,458.38; Mr. Heider, 20,458 shares, $196,908.25.
(3) Cash payouts under the Long-Term Incentive Plan reflected in this column
are on account of awards made and earned over the preceding five year
period.
</TABLE>
8
<PAGE>
LONG TERM INCENTIVE PLAN -- AWARDS IN LAST FISCAL YEAR
The following table sets forth the long-term incentive plan performance unit
awards made to each of the named executives in 1993.
<TABLE>
<CAPTION>
PERFORMANCE OR ESTIMATED FUTURE PAYOUTS UNDER
OTHER PERIOD NON-STOCK PRICE BASED PLANS(1)
UNTIL -------------------------------
NUMBER OF MATURATION OR THRESHOLD TARGET MAXIMUM
NAME UNITS PAYOUT ($) ($) ($)
- ------------------------------------------------- ----------- -------------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Roger W. Stone................................... 3956 5 years 197,800 395,600 593,400
Morty Rosenkranz................................. 1566 5 years 78,300 156,600 234,900
James Doughan.................................... 1197 5 years 59,850 119,700 179,550
Arnold F. Brookstone............................. 1048 5 years 52,400 104,800 157,200
James B. Heider.................................. 878 5 years 43,900 87,800 131,700
<FN>
- --------------
(1) Cash payout under the Company's Long-Term Incentive Plan.
</TABLE>
In addition to the restricted stock awards reflected in the Summary
Compensation Table, the Company's Long-Term Incentive Plan provides for
incentive awards to each named executive officer, in the form of performance
units, based upon the long-term performance of the Company. Such awards may be
earned upon the expiration of the five year period after the date of award to
the extent that the Company has achieved the designated performance goals for
such five-year performance cycle. Awards are granted each year based upon each
participant's level of responsibility and average salary mid-point level
projected as of the end of each five year performance cycle with awards ranging
from 40% to 100% of such salary mid-point. Performance unit awards are payable
in cash, if earned, upon the completion of each five year performance cycle. The
targeted performance goal for each performance cycle is realization by the
Company of a designated average corporate return on beginning equity. Cash
payments (from 0% to 150% of the performance unit award) are then determined by
the degree to which the Company attains or exceeds the targeted goal, ranging
from a minimum of 88% to a maximum of 133% of such goal. No cash payments will
be made if the Company does not achieve at least 88% of such goal. For example,
the cash payment, if any, to be paid to a participant under the plan will be in
an amount equal to (i) 100% of the value of the performance unit at the time of
its award if the Company attains the targeted goal at the end of the performance
cycle; (ii) 150% of such value if the Company attains 133% of such targeted
goal; (iii) 50% of such value if the Company attains 88% of such targeted goal,
or (iv) nothing, if the Company does not attain 88% of its targeted goal.
SALARIED EMPLOYEES RETIREMENT PLAN:
The Stone Container Corporation Salaried Employees Retirement Plan provides
for the payment of a monthly pension to retiring salaried employees equal to the
larger of (a) 1.67% of his or her average monthly compensation based on the
highest 60 consecutive months compensation (within the last 180 months) for each
year of service to a maximum of 30 years service, reduced by 3/4 of 1% of the
employee's covered compensation under social security or (b) 1% of such average
monthly compensation (not greater than $900) for each year of service. This
benefit is then reduced, if applicable, by the monthly retirement income that
could be provided on an actuarial equivalent basis from the employee's
participation in certain previously sponsored retirement plans of the Company.
Employees become
9
<PAGE>
vested for retirement income benefits after completion of 5 years of service or
if earlier upon reaching age 65. The payment or accrual in respect of any
specified person is not and cannot readily be separately or individually
calculated by the actuaries for this defined benefit plan. Upon the
recommendation of the independent actuaries, the Company did not make a cash
contribution to the Plan for the year 1993. The following table shows the
estimated annual benefits payable upon retirement to persons in specified
remuneration and years-of-service classifications.
PENSION PLAN TABLE
ILLUSTRATIVE PROJECTED ANNUAL RETIREMENT BENEFIT
FOR SELECTED REMUNERATION AND YEARS OF SERVICE CLASSIFICATIONS(A)
<TABLE>
<CAPTION>
YEARS OF SERVICE AT RETIREMENT
---------------------------------------------------------------
REMUNERATION(B) 15 20 25 30 35
- ------------------------------------------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
$ 100,000....................................... $ 25,050 $ 33,400 $ 41,750 $ 50,100 $ 50,100
150,000....................................... 37,575 50,100 62,625 75,150 75,150
200,000....................................... 50,100 66,800 83,500 100,200 100,200
250,000....................................... 62,625 83,500 104,375 125,250 125,250
300,000....................................... 75,150 100,200 125,250 150,300 150,300
400,000....................................... 100,200 133,600 167,000 200,400 200,400
600,000....................................... 150,300 200,400 250,500 300,600 300,600
800,000....................................... 200,400 267,200 334,000 400,800 400,800
1,000,000...................................... 250,500 334,000 417,500 501,000 501,000
<FN>
- --------------
(a) Benefit shown would be reduced by 3/4 of 1% of the retiree's covered
compensation under social security while employed by the Company, as
defined in the Plan, and would be limited to the extent required by the
provisions of the Internal Revenue Code of 1986. Under federal law, an
employee's benefits under a qualified pension plan such as the Stone
Container Corporation Salaried Employees Retirement Plan are limited to
certain maximum amounts. The Company maintains the Stone Container
Corporation Excess Benefit Plan, which supplements the benefits of any
participant in the qualified pension plan by direct payment of a lump sum
or by an annuity, on an unfunded basis, of the amount by which any
participant's benefits under the pension plan are limited by law. The
table illustrates the amount of annual pension without regard to such
limitations for an employee retiring in 1994 calculated on a single life
annuity basis.
(b) In estimating the annual benefit it is assumed that the five year average
monthly compensation is equal to 1993 earnings.
</TABLE>
The base compensation covered by the Plan includes salary and any bonus
earned. Since no bonuses were paid to the individuals named in the summary
compensation table for the years 1991, 1992 and 1993, the base compensation
covered by the Plan for those years is equal to the amounts set forth in the
Salary column of that table. The years of service as of January 1, 1994 for such
individuals are: 37.4 for Mr. Stone, 29.9 for Mr. Rosenkranz, 9.9 for Mr.
Doughan, 28.7 for Mr. Brookstone and 13.2 for Mr. Heider.
Mr. James Doughan, Executive Vice President of the Company, has entered into
an agreement with the Company whereby the Company has agreed to pay Mr. Doughan
a supplemental retirement benefit
10
<PAGE>
commencing when Mr. Doughan attains age 65. The supplemental retirement benefit
is computed by taking the difference between $12,500 per month and the amount
Mr. Doughan will receive from the Stone Container Corporation Salaried Employees
Retirement Plan and, if applicable, the Stone Container Corporation Excess
Benefit Plan at age 65. Such supplemental monthly benefit will be payable to Mr.
Doughan only in the event Mr. Doughan is either an employee of the Company at
age 65 or becomes disabled while employed. In the event Mr. Doughan dies either
while an employee of Stone or after commencement of such supplemental monthly
benefit, his surviving spouse will receive 50% of such supplemental monthly
benefit for the remainder of her life.
COMPENSATION OF DIRECTORS
Non-employee directors receive an annual retainer of $25,000 for their
services plus $1,000 per meeting for attendance at Board and Board Committee
meetings. In addition, the Chairman of the Audit Committee and the Chairman of
the Compensation Committee receive an additional $3,000 per year retainer. Under
the Company's unfunded deferred director fee plans, a director may elect to
defer payment of his director's fees so that payment would be made in ten equal
annual installments commencing in the year following the director's retirement
from the Board of Directors plus earnings on the deferred amounts. In addition,
it is the policy of the Company to appoint a director with ten or more years
service as a director to be a consultant to the Company for a period of five
years after retirement from the Board, at an annual fee based upon the
director's retainer in effect at the date of retirement.
EMPLOYMENT CONTRACTS AND TERMINATION
OF EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
The Board of Directors has authorized management to execute continuity
contracts for corporate and divisional officers (other than Roger W. Stone) who,
with certain exceptions, have been employed by the Company for at least five
years, providing for continuation of salary, bonus (based upon the average bonus
for the last three calendar years) and certain fringe benefits, in the event of
involuntary termination of employment after a change in control, as defined in
such continuity contracts, of the Company. Payments under these contracts would
continue until the earliest of three years from the date of such officer's
involuntary termination, age 70, death, disability or an offer of comparable
employment. The Company has entered into such contracts with each of the
individuals named in the cash compensation table other than Mr. Stone. The
amount of such payments to be received by the individuals named in the Summary
Compensation Table is dependent upon whether such individual obtains employment
elsewhere. Any amounts received by such individual from other employment will
offset the payment made pursuant to these contracts.
The Company entered into consulting agreements in 1974 with each of Messrs.
Jerome H. Stone, Marvin N. Stone and Norman H. Stone (deceased), under which
each serves or was to serve as a consultant to the Company for a fee of $80,000
per annum during his lifetime and, should he die leaving a widow, $40,000 per
annum to such widow during her lifetime. Mr. Norman H. Stone died during 1985
and his widow receives the specified payments. The consulting fees are in
addition to the retirement benefits previously noted.
11
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Roger W. Stone, Chairman of the Board, President and Chief Executive Officer
of the Company, serves as a director of Continere Corporation, whose Chairman
and Chief Executive Officer, Richard A. Giesen, serves on the Compensation
Committee of the Company.
COMPENSATION COMMITTEE REPORT
The Compensation Committee, consisting of Mr. Giesen, Mr. Glasser and Mr.
Pearlman, has provided the following Board Compensation Committee Report.
COMPENSATION POLICY
Under the direction of the Compensation Committee of the Board of Directors,
the Company's executive compensation program is based upon a "pay for
performance" philosophy and is designed to attract and retain highly qualified,
key executives by offering competitive base compensation supplemented with
performance based incentives linked to corporate performance factors and
position within the Company. The three components of the Company's total
compensation program for executive officers are (i) base salary, (ii) annual
(short-term) incentive compensation awards and (iii) long-term incentive
compensation awards. The total compensation package is designed to be
competitive with compensation programs offered to comparable executive officers
in a hybrid model group consisting of a pool of executive officers who are
currently employed in similar positions in comparable paper companies with sales
in excess of $1 billion (the "Peer Group").
BASE SALARIES
All executive officer base salaries are reviewed and adjustments, if any,
are approved annually by the Compensation Committee. The Company's executive
officers' base salaries are targeted to be in the 75th percentile of the average
base salaries of similarly situated executive officers within the Peer Group,
and a salary range is established for each position with the midpoint of the
range being set at such 75th percentile level. Any adjustment in an executive
officer's base salary is made each year based upon an evaluation of individual
performance subject to corporate salary budget guidelines and the relationship
of current salary level to the midpoint of the applicable salary range. In
addition, the Compensation Committee retains the right to take into account
factors such as the overall corporate performance in establishing any
adjustments.
In September, 1993 the Compensation Committee met to review executive
officer salaries and to consider adjustments thereto. Based upon the Company's
current performance and economic conditions, the Committee determined that no
adjustments should be made to current salary levels of the CEO and the executive
officers named in the summary compensation table.
SHORT-TERM INCENTIVE AWARDS
The short-term incentive award component of the Company's executive
compensation program is based on the Company's consolidated operating division
profits and the Company's consolidated net income for the fiscal year just
completed. The program provides for the payment of cash incentive awards to
participants to the extent that actual consolidated operating division profits
and the Company's consolidated net income meet or exceed certain target levels.
Early in the calendar year the
12
<PAGE>
Committee establishes targeted consolidated operating division profit at four
distinct levels which trigger incentive payouts ranging from 0% to 100%. The
target levels are established based upon budgeted consolidated operating
division profits for the fiscal year. To the extent that the Company attains a
targeted performance level, each participant is entitled to receive a cash
incentive award. Such cash awards are based upon the performance level attained
and each participant's level of responsibility within the Company, ranging from
40% to 100% of the participant's base salary multiplied by the incentive payout
percentage established for the targeted performance level attained. The four
levels of targeted profit are competent, commendable, excellent, and
distinguished. A participant will earn anywhere from 0% to 100% dependent on the
target level attained. In the event, however, that the Company does not have
positive net consolidated income for the relevant year, the executive officers
named in the summary compensation table will receive no incentive payout
regardless of the level of operating division profits. In addition, all other
participants will be limited to 2/3 of the maximum payout regardless of the
consolidated operating division profits if the Company does not achieve a
positive consolidated net income. For purposes of the foregoing, consolidated
operating division profits is defined as profit prior to interest expense,
corporate expenses, non-recurring charges and income taxes.
No short-term incentive awards were paid out in 1993 to the CEO or any of
the executive officers named in the summary compensation table because the
Company failed to attain the minimum target objective.
LONG-TERM INCENTIVE COMPENSATION
The long-term incentive element of the executive compensation program
provides for incentive awards based upon the long-term performance of the
Company. Such awards consist of a combination of shares of Common Stock,
restricted to preclude sale or transfer for a five year period, and cash
compensation which may be earned upon the expiration of the five year period to
the extent that the Company has achieved the designated performance goals for
such performance cycle. Awards are granted based upon each participant's level
of responsibility and average salary mid-point level projected through the end
of the five year performance cycle with awards ranging from 40% to 100% of such
salary mid-point. One-half of each award is made in restricted stock and
one-half is made in performance units payable in cash, if earned, upon the
completion of the five year performance cycle. The targeted performance goal for
each performance cycle is realization by the Company of a designated average
corporate return on beginning equity. The restricted stock portion of the award
is not subject to the attainment of these goals. Cash payments (from 0% to 150%
of the performance unit award) are then determined by the degree to which the
Company attains or exceeds the targeted goal, ranging from a minimum of 88% to a
maximum of 133% of such goal. The current target goal for the participants is a
15% return on equity. No cash payments will be made if the Company does not
achieve at least 88% of such goal. For example, the cash payment, if any, to be
paid to a participant under the plan will be in an amount equal to (i) 100% of
the value of the performance unit at the time of its award if the Company
attains the targeted goal at the end of the performance cycle; (ii) 150% of such
value if the Company attains 133% of such targeted goal; (iii) 50% of such value
if the Company attains 88% of such targeted goal, or (iv) nothing, if the
Company does not attain 88% of its targeted goal.
There were no performance unit payouts in 1993 to the CEO or any of the
executive officers named in the summary compensation table for the five year
period ended December 31, 1992 because the
13
<PAGE>
Company did not attain the return on equity target for the five year cycle. In
1993, the CEO was awarded 24,159 shares of restricted stock for the January 1993
- -- December 1998 performance cycle pursuant to the terms of the plan described
above.
The recently enacted limitation on the tax deductibility of executive
compensation in excess of $1 million under the Omnibus Budget Reconciliation Act
of 1993 may impact the Company. Accordingly, if the taxable compensation of any
named individual during any year is reasonably anticipated to exceed $1 million,
the short-term incentive award payment or restricted stock portion of the
Long-Term Incentive Plan (or incremental portion thereof anticipated to exceed
the $1 million threshold) otherwise payable to that individual in that year,
will be deferred until the earlier of (i) the first year in which the payment of
the deferred amount (or any portion thereof) would be deductible by the Company
or (ii) the year following the individual's retirement.
COMPENSATION COMMITTEE
Richard A. Giesen -- Chairman
James J. Glasser
Jerry K. Pearlman
IV. PERFORMANCE GRAPH
The following performance graph compares the yearly percentage change in the
Company's cumulative total stockholder return on its Common Stock (on a dividend
reinvested basis utilizing the closing price on December 31, 1988 as the base)
with the cumulative total return of the S & P Composite 500 Stock Index and the
S & P Paper and Forest Products Composite Index for the period of five years
commencing January 1, 1989 and ended December 31, 1993.
14
<PAGE>
[GRAPHIC--PERFORMANCE GRAPH FILED UNDER COVER OF FORM SE]
V. INDEPENDENT AUDITORS
The Board of Directors, upon recommendation of its Audit Committee, has
selected the certified public accounting firm of Price Waterhouse as independent
auditors of the accounts of the Company for the year ending December 31, 1994.
Price Waterhouse served as independent auditors of the Company
15
<PAGE>
during the past fiscal year. Price Waterhouse has advised the Company that
neither it, nor any of its partners, has or has had any direct or indirect
financial interest in the Company or any of its subsidiaries. It is expected
that a representative of Price Waterhouse will be present at the Annual Meeting
of Stockholders. Such representative may make a statement if he or she desires
to do so, and is expected to be available to respond to appropriate questions.
VI. DISCRETIONARY AUTHORITY
While the notice of the Annual Meeting of Stockholders calls for the
transaction of such other business as may properly come before the meeting,
management is not aware of any matters to be presented for action by the
stockholders at the meeting other than as set forth in this Proxy Statement. The
enclosed Proxy gives discretionary authority, however, in the event that any
additional matters should be presented.
VII. COST OF SOLICITATION; STOCKHOLDER PROPOSALS
The Company will bear the costs of its solicitation of proxies. In addition
to the use of the mails, proxies may be solicited by personal interview,
telephone, telegram and telefax by the directors, officers and employees of the
Company. Arrangements will also be made with brokerage houses and other
custodians, nominees and fiduciaries for the forwarding of solicitation material
to the beneficial owners of stock held of record by such persons, and the
Company may reimburse such custodians, nominees and fiduciaries for reasonable
out-of-pocket expenses incurred by them in connection therewith.
Stockholders are referred to the Company's Annual Report for the fiscal year
ended December 31, 1993 which has been mailed to stockholders, for financial and
other information about the activities of the Company for such fiscal year. The
Annual Report is not to be deemed incorporated in the Proxy Statement nor is it
to be deemed a part of the proxy solicitation material.
Under the rules of the Securities and Exchange Commission (the "SEC"), in
order to be considered for inclusion in the Company's Proxy Statement for the
1995 Annual Meeting of Stockholders (to be held May 9, 1995), a stockholder
proposal must be received by the Secretary of the Company at the offices of the
Company at 150 N. Michigan Avenue, Chicago, IL 60601-7568 no later than the
close of business on December 10, 1994, as well as meet other SEC requirements.
In addition, the Company's By-Laws provide, in general, that any stockholder who
proposes to bring any item of business before an annual meeting of stockholders
must be a stockholder entitled to vote at such meeting and written notice of
such business must have been received by the Secretary of the Company, not less
than 60 nor more than 90 days prior to such annual meeting, except as provided
by the By-Laws.
By order of the Board of Directors.
Leslie T. Lederer
Chicago, Illinois -- April 14, 1994
16
<PAGE>
STONE CONTAINER CORPORATION
150 North Michigan Avenue
Chicago, Illinois 60601-7568
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Stone Container Corporation (the "Company")
hereby appoints Arnold F. Brookstone and Leslie T. Lederer, or either of them,
with full power of substitution and revocation, to be attorneys and proxies to
vote, as designated below, all the shares of Common Stock of the Company which
the undersigned would be entitled to vote at the Annual Meeting of Stockholders
to be held on Tuesday, May 10, 1994, at 10:30 a.m. (C.D.S.T.) on the
Fifty-Seventh Floor, The First National Bank of Chicago, One First National
Plaza, Chicago, Illinois, or any adjournment thereof, upon all subjects that may
properly come before the meeting.
(Continued and to be signed on other side)
<PAGE>
PLEASE MARK IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
<TABLE>
<S> <C> <C> <C>
1. Election of Directors FOR all nominees WITHHOLD (NOTE: If authority is granted to vote for one
listed below (except AUTHORITY or more nominees, unless otherwise specified
THE BOARD OF DIRECTORS RECOMMENDS THAT as may be marked to to vote for all below this proxy will authorize the Proxies to
STOCKHOLDERS VOTE FOR ALL OF THE the contrary below) nominees listed below cumulate all votes represented hereby and to
NOMINEES LISTED BELOW. allocate such votes among such nominees as the
Proxies shall determine, in their sole and
Richard A. Giesen, James J. Glasser, absolute discretion, in order to maximize the
George G. Kennedy, Howard C. Miller, Jr., number of such nominees elected. To specify
John D. Nichols, Jerry K. Pearlman, a different manner of cumulative voting, write
Richard J. Raskin, Alan Stone, Avery J. "Cumulative For", the name(s) of the nominee(s)
Stone, Ira N. Stone, James H. Stone and and the number of votes on the space that
Roger W. Stone. follows. See "Voting and Proxy" in the
accompanying proxy statement for further
information.)
(INSTRUCTION: To withhold authority to vote ______________________________________________
for any individual nominee, mark the "FOR" box
and write that nominee's name on the space 2. In their discretion, the Proxies are
that follows.) authorized to vote upon such other business
as may properly come before the meeting.
______________________________________________ This Proxy, when properly executed, will be
voted in the manner indicated herein by the
undersigned stockholder. If no direction is
made, this Proxy will be voted FOR the election
of all directors.
Dated:__________________, 1994
______________________________
______________________________
Signature(s) of Stockholder(s)
Please date and sign exactly as your name(s)
appear on the left side of this Proxy. If
shares are held jointly by two or more persons,
each stockholder named should sign. When
signing as executor, administrator, trustee or
guardian, please give full title as such. If a
corporation, please sign in full corporate name
by President or other authorized officer. If a
partnership, please sign in full partnership
name by authorized person.
</TABLE>
<PAGE>
STONE CONTAINER CORPORATION PROXY/VOTING INSTRUCTION CARD
CHICAGO, ILLINOIS
- -------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING ON MAY 10, 1994.
The undersigned stockholder of Stone Container Corporation (the
"Company") hereby appoints Arnold F. Brookstone and Leslie T. Lederer, or
either of them, with full power of substitution and revocation, to be
attorneys and proxies to vote, as designated below, all of the shares of
Common Stock of the Company which the undersigned would be entitled to
vote at the Annual Meeting of Stockholders to be held on Tuesday, May 10,
1994, at 10:30 a.m., (C.D.S.T.) on the Fifty-Seventh Floor, The First
National Bank of Chicago, One First National Plaza, Chicago, Illinois, or
any adjournment thereof, upon all subjects that may properly come before
the meeting. IF NO DIRECTION AS TO THE MANNER OF VOTING THE PROXY IS
MADE, THE PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS, AS INDICATED
ON THE REVERSE SIDE HEREOF.
Election of Directors:
Nominees: Richard A. Giesen, James J. Glasser, George D. Kennedy,
Howard C. Miller, Jr., John D. Nichols, Jerry K. Pearlman,
Richard J. Raskin, Alan Stone, Avery J. Stone, Ira N. Stone,
James H. Stone and Roger W. Stone.
(NOTE: If authority is granted to vote for one or more nominees, unless
otherwise specified below this proxy will authorize the Proxies to cumulate
all votes represented hereby and to allocate such votes among such nominees
as the Proxies shall determine, in their sole and absolute discretion, in
order to maximize the number of such nominees elected. To specify a different
manner of cumulative voting, write "Cumulate For", the name(s) of the
nominee(s) and the number of votes on the space that follows. See "Voting
and Proxy" in the accompanying proxy statement for further information.)
___________________________________________________________________________
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES
(SEE REVERSE SIDE) BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS.
SEE REVERSE
SIDE
<PAGE>
PLEASE MARK YOUR 3002
/X/ VOTE AS IN THIS
EXAMPLE.
<TABLE>
<S> <C>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER(S).
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1.
- ---------------------------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1.
- ---------------------------------------------------------------------------------------------------------------------------------
FOR WITHHELD AS TO ALL NOMINEES
1. Election of / / / / To withhold authority to vote for 2. In their discretion, the Proxies are
Directors. any individual nominee(s), mark the "FOR" authorized to vote upon such other business
box and write the name of each as may properly come before the meeting
such nominee on line provided below
-----------------------------------------------
SIGNATURE(S)__________________________________ / ________________________________________ DATE ____________________________1994
NOTE: Please date and sign as name appears hereon. If shares are held jointly or by two or more persons, each stockholder named
should sign.
</TABLE>
