SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
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[ ] Definitive Additional Materials permitted by
[ ] Soliciting Material Pursuant to Rule 14a-6(e)(2))
Section 240.14a-11(c)
or Section 240.14a-12
Louisiana-Pacific Corporation
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(Name of Registrant as Specified In Its Charter)
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[LOGO] Louisiana-Pacific Corporation Proxy Statement and
805 S.W. Broadway Notice to Stockholders of
Portland, Oregon 97205 ANNUAL MEETINGAnnual Meeting
(503) 821-5100 MAY 7, 2001May 6, 2002
March 26, 200125, 2002
Dear Stockholder:
On behalf of the Board of Directors, I cordially invite you to attend
the Annual Meeting of Stockholders of Louisiana-Pacific Corporation. The meeting
will be held on Monday, May 7, 2001,6, 2002, at 9:30 a.m. at the Portland Marriott City
Center, 520 S.W. Broadway, Portland, Oregon. I look forward to personally
greeting
personally those stockholders able to be present.
At this year's meeting, in addition to the election of three directors,
you will be asked to vote forupon LP's 1997 incentive stock award plan as amended
and the electionapproval of four
directors.performance goals under LP's annual cash incentive award
plan. Action will also be taken on any other matters that are properly presented
at the meeting, including a stockholder proposal which the Board of
Directors opposes for the reasons stated in the proxy statement.meeting.
Regardless of the number of shares you own, it is important that they
be represented and voted at the meeting whether or not you plan to attend.
Accordingly, you are requested to sign, date, and mail the enclosed proxy at
your earliest convenience.
The accompanying proxy statement contains important information about
the annual meeting and your corporation. On behalf of the Board of Directors,
thank you for your continued interest and support.
Sincerely,
[SIGNATURE]/s/ Mark A. Suwyn
Mark A. Suwyn
Chairman and Chief Executive Officer
TABLE OF CONTENTS
On written request, Louisiana-PacificLP will provide, without charge, a copy of the Corporation'sits Form
10-K Annual Report for 20002001 filed with the Securities and Exchange Commission
(including the financial statements and a list briefly describing the exhibits
thereto) to any record holder or beneficial owner of the
Corporation'sLP's common stock on March
9, 2001,8, 2002, the record date for the 20012002 Annual Meeting, or to any person who
subsequently becomes such a record holder or beneficial owner. The reports will
be available for mailing in April 2001.2002. Requests should be sent to: Director of
Corporate Affairs, Louisiana-Pacific Corporation, 805 S.W. Broadway, Portland,
Oregon 97205.
Page
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Voting Procedure.............................................................2Procedure...............................................................2
Item 1--Election of Directors................................................2
Nominees...............................................................2Directors..................................................2
Nominees..............................................................2
Continuing Directors...................................................3
Retiring Director......................................................4Directors..................................................3
Board and Committee Meetings...........................................4Meetings..........................................4
Executive Committee....................................................4Committee...................................................4
Finance and Audit Committee............................................5Committee...........................................4
Compensation Committee--Interlocks and Insider Participation...........5Participation..........5
Environmental Affairs Committee........................................6Committee.......................................5
Nominating and Corporate Governance Committee; Nominations
for Director...............................................................6Director..........................................................5
Item 2 - Amendment of the 1997 Incentive Stock Award Plan......................6
Background............................................................6
Description of the Stock Award Plan...................................7
Administration........................................................7
Types of Awards Permitted.............................................7
Certain Adjustments; Tax Consequences.................................9
Awards................................................................9
Stockholder Proposal Concerning Compensation Committee..............6
RecommendationApproval.................................................10
Item 3 - Reapproval of BoardPerformance Goals Under Annual Cash Incentive
Award Plan...........................................................11
Background...........................................................11
Description of Directors onPerformance Goals.....................................11
Awards...............................................................11
Stockholder Proposal...........7Approval.................................................12
Other Business...............................................................9Business................................................................13
Finance and Audit Committee Report...........................................9Report............................................13
Holders of Common Stock.....................................................10Stock.......................................................14
Five Percent Beneficial Owners........................................10Owners.......................................14
Directors and Executive Officers......................................11Officers.....................................14
Section 16(a) Beneficial Ownership Reporting Compliance.....................12Compliance.......................15
Executive Compensation......................................................12Compensation........................................................15
Compensation Committee Report.........................................12Report........................................15
Performance Graph.....................................................15Graph....................................................19
Compensation of Executive Officers....................................16Officers...................................20
Retirement Benefits...................................................18Benefits..................................................22
Management Loans and Other Transactions...............................20Transactions..............................24
Directors' Compensation...............................................21Compensation..............................................25
Agreements with Executive Officers....................................22Officers...................................26
Stockholder Proposals.......................................................24Proposals.........................................................28
Relationship with Independent Public Accountants............................24
TABLE OF CONTENTS
(continued)
Audit Fees............................................................24
Financial Information Systems Design and Implementation Fees..........24
All Other Fees........................................................24
General.....................................................................24Accountants..............................28
General .....................................................................29
1997 INCENTIVE STOCK AWARD PLAN AS AMENDED...................................A-1
FINANCE AND AUDIT COMMITTEE CHARTER........................................A-1CHARTER..........................................B-1
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[LOGO] LOUISIANA-PACIFIC CORPORATION
805 S.W. Broadway
Portland, Oregon 97205
(503) 821-5100
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 7, 20016, 2002
The Annual Meeting of Stockholders of Louisiana-Pacific Corporation
("LP") will be held at the Portland Marriott City Center, 520 S.W. Broadway,
Portland, Oregon, on Monday, May 7, 2001,6, 2002, at 9:30 a.m., local time, to consider
and vote upon the following matters:
1. Election of fourthree Class III directors.
2. If properly presented at the meeting, a stockholder's proposal, not
recommended by management, relating to the Compensation CommitteeApproval of the Board1997 Incentive Stock Award Plan as amended.
3. Reapproval of Directors.performance goals under LP's Annual Cash Incentive
Award Plan.
Only stockholders of record at the close of business on March 9, 2001,8, 2002,
are entitled to notice of and to vote at the meeting.
In accordance with the General Corporation Law of the State of
Delaware, a complete list of the holders of record of LPLP's Common Stock entitled
to vote at the meeting will be open to examination, during ordinary business
hours, at LP's headquarters located at 805 S.W. Broadway, Portland, Oregon, for
the 10 days preceding the meeting, by any LP stockholder for any purpose germane
to the meeting.
Admission to the meeting will be by ticket only. If you are a
stockholder of record and plan to attend, the Admission Ticket attached to the
proxy card will admit you to the meeting. If you are a stockholder whose shares
are held through an intermediary such as a bank or broker and you plan to
attend, you may request an Admission Ticket by sending a written request, along
with proof of ownership, such as a bank or brokerage account statement, to
Stockholder Relations, 805 S.W. Broadway, Portland, Oregon 97205.
ANTON C. KIRCHHOF, Secretary
Portland, Oregon
March 26, 2001
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN AND DATE THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN ORDER THAT YOUR STOCK MAY BE VOTED
IN ACCORDANCE WITH THE TERMS OF THE PROXY STATEMENT. IF YOU ATTEND THE
MEETING, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON.25, 2002
Whether or not you expect to attend the meeting, please sign and date the
enclosed proxy and return it promptly in order that your stock may be voted in
accordance with the terms of the Proxy Statement. If you attend the meeting,
you may withdraw your proxy and vote in person.
PROXY STATEMENT
Louisiana-Pacific Corporation, a Delaware corporation ("LP"), is
soliciting proxies on behalf of its Board of Directors to be voted at the 20012002
Annual Meeting of Stockholders (including any adjournment of the meeting). This
proxy statement and the accompanying proxy card are first being sent to
stockholders on approximately March 26, 2001.25, 2002.
VOTING PROCEDURE
A proxy card is enclosed for your use. To vote by proxy, please sign,
date, and return the proxy card promptly. For your convenience, a return
envelope is enclosed, which requires no postage if mailed in the United States.
You may indicate your voting instructions on the proxy card in the
spaces provided. Properly completed proxies will be voted as instructed. If you
return a proxy without indicating voting instructions, your shares will be voted
in accordance with the recommendations of the Board of Directors--FOR ItemItems 1,
2, and 3 listed in the Notice of Annual Meeting of Stockholders and AGAINST the stockholder
proposal listed as Item 2 in the Notice of Annual Meeting.Stockholders.
If you return a proxy card, you may revoke it (1) by filing either a
written notice of revocation or a properly signed proxy bearing a later date
with the Secretary of LP at any time before the meeting, or (2) by voting in
person at the annual meeting.
If you participate in the Automatic Dividend Reinvestment Plan offered
by First ChicagoEquiServe Trust Company, of New York,N.A., all the shares held for your account in the
plan will be voted in the same manner as shares you vote by proxy. If you do not
vote by proxy, the shares held for your account under the plan will not be
voted.
Only stockholders of record at the close of business on March 9, 2001,8, 2002,
are entitled to receive notice of the annual meeting and to vote at the meeting.
At the record date, there were 104,411,125104,568,415 shares of common stock, $1 par value
("Common Stock") outstanding. Each share of Common Stock is entitled to one vote
on each matter to be acted upon. A majority of the outstanding shares of Common
Stock represented at the meeting will constitute a quorum. Additional
information concerning holders of outstanding Common Stock may be found under
the heading "Holders of Common Stock" below.
The Board of Directors has adopted a confidential voting policy which
provides that the voting instructions of stockholders are not to be disclosed to
LP except (a) in the case of communications intended for management, (b) in the
event of certain contested matters, or (c) as required by law. Votes will be
tabulated by independent tabulators and summaries of the tabulation will be
provided to management.
ITEM 1--ELECTION OF DIRECTORS
Nominees
The fourthree nominees for the Class III director positions to be voted on
at the meeting are presently members of the Board of Directors. The term of
office for the positions to be voted on will expire at the Annual Meeting of
Stockholders in 2004.2005. The nominees are:
WILLIAM C. BROOKSE. GARY COOK NOMINEE FOR TERM EXPIRING 2004
William C. Brooks, age 67, became a director of LP in 1996. Mr. Brooks has
been Chairman of The Brooks Group International, Ltd., a private holding company
involved in human resources and economic development, since 1998. Prior to that,
he was Vice Chairman of Luftig & Warren International, a business performance
technology consulting firm. Mr. Brooks previously served as Vice President of
General Motors Corporation until his retirement in 1997. He was Assistant
Secretary of Labor for the Employment
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Standards Administration from July 1989 to December 1990. Mr. Brooks is Chairman
of the Board of United American Healthcare Corporation and of Lason, Inc., and a
director of Covansys (Complete Business Solutions, Inc.), DTE Energy Company and
Detroit Edison Co., and Sigma Associates, Inc.
PATRICK F. MCCARTAN NOMINEE FOR TERM EXPIRING 2004
Patrick F. McCartan, age 66, became a director of LP in 1998. He is
managing partner of the international law firm of Jones, Day, Reavis & Pogue, a
position that he has held since 1993. He is a Fellow of the American College of
Trial Lawyers and the International Academy of Trial Lawyers.
LEE C. SIMPSON NOMINEE FOR TERM EXPIRING 2004
Lee C. Simpson, age 66, served as President and Chief Operating Officer of
LP on an interim basis from July 1995 until March 1996. He also was elected to
fill a vacancy on the Board of Directors in July 1995. He was an executive
officer of LP from 1972 until his retirement in 1991 and previously served as a
director of LP from 1972 until 1993.
COLIN D. WATSON NOMINEE FOR TERM EXPIRING 2004
Colin D. Watson, age 59, became a director of LP in June 2000. Mr. Watson
has been Vice Chairman of the Board of Spar Aerospace Limited, an aviation
services company with headquarters in Toronto, Ontario, Canada, since December
1999. He also served as Chief Executive Officer of Spar Aerospace from December
1999 to December 2000, and President and Chief Executive Officer from 1996 to
November 1999. From 1979 to 1996, Mr. Watson was President and Chief Executive
Officer of Rogers Cable TV, Ltd. Mr. Watson is also a director of B-Split II
Corp., Call-Net Enterprises Inc. (a Canadian subsidiary of Sprint Corp.), Cygnal
Technologies Corp., Kasten Chase Applied Research Limited, OnX Inc., Pelmorex
Inc., and Rogers Cable TV, Ltd.
YOUR SHARES REPRESENTED BY A PROPERLY COMPLETED AND RETURNED PROXY CARD
WILL BE VOTED FOR THE ELECTION OF THE FOUR NOMINEES UNLESS AUTHORITY TO VOTE IS
WITHHELD. If any of the nominees becomes unavailable to serve (which is not
anticipated), your proxy will be voted for a substitute nominee designated by
the Board of Directors.
The four nominees receiving the highest total number of votes will be
elected. Shares not voted for the election of directors, whether because
authority to vote is withheld, because the record holder fails to return a
proxy, because the broker holding the shares does not vote on such issue or
otherwise, will not count in determining the total number of votes for each
nominee.
Continuing Directors
The current members of the Board of Directors whose terms of office will
continue beyond the 2001 Annual Meeting of Stockholders are as follows:
E. GARY COOK CURRENT TERM EXPIRES 20022005
E. Gary Cook, age 56,57, became a director of LP in June 2000. Mr. Cook
was Chairman, President and Chief Executive Officer of Witco Corporation, a
global specialty chemicals company, until his retirement in 1999. Until 1996, he
was President, Chief Operating Officer, and a director of Albemarle Corporation,
a global specialty chemicals company spun off from Ethyl Corporation in 1994,
where Mr. Cook had been a Senior Vice President and director since 1992.
Previously, Mr. Cook was a Vice President of E. I. du Pont de Nemours and
Company. He is also a director of Trimeris Corporation, a biopharmaceutical
company.
-3--2-
PAUL W. HANSEN CURRENTNOMINEE FOR TERM EXPIRES 2002EXPIRING 2005
Paul W. Hansen, age 49,50, has been a director of LP since February 1999.
Mr. Hansen has been Executive Director of the Izaak Walton League of America
(the "IWLA"), a nationally-recognized conservation organization, since February
1995. Mr. Hansen began his employment with the IWLA in 1982 as an Acid Rain
Project Coordinator and served in various positions thereafter, becoming
Associate Executive Director in 1994.
BRENDA J. LAUDERBACK CURRENTNOMINEE FOR TERM EXPIRES 2002EXPIRING 2005
Brenda J. Lauderback, age 50,51, was elected as a director of LP in
September 1999. She was Group President, Wholesale and Retail, of Nine West
Group Inc., a designer and marketer of quality, fashionable women's footwear and
accessories, from May 1995 until her retirement in January 1998. Ms. Lauderback
previously served as President of the Wholesale Division at U.S. Shoe Corp. from
1993 to 1995. She is also a director of Consolidated Stores Corporation and
Irwin Financial Corporation.
YOUR SHARES REPRESENTED BY A PROPERLY COMPLETED AND RETURNED PROXY CARD
WILL BE VOTED FOR THE ELECTION OF THE THREE NOMINEES UNLESS AUTHORITY TO VOTE IS
WITHHELD. If any of the nominees becomes unavailable to serve (which is not
anticipated), your proxy will be voted for a substitute nominee designated by
the Board of Directors.
The three nominees receiving the highest total number of votes will be
elected. Shares not voted for the election of directors, whether because
authority to vote is withheld, because the record holder fails to return a
proxy, because the broker holding the shares does not vote on such issue or
otherwise, will not count in determining the total number of votes for each
nominee.
Continuing Directors
The current members of the Board of Directors whose terms of office
will continue beyond the 2002 Annual Meeting of Stockholders are as follows:
ARCHIE W. DUNHAM CURRENT TERM EXPIRES 2003
Archie W. Dunham, age 62,63, became a director of LP in 1996. He is
Chairman, President and Chief Executive Officer of Conoco Inc., an integrated
global energy company. He has served in various senior executive positions with
Conoco Inc. for more than five years. Mr. Dunham is also a director of Union
Pacific Corporation Chase Bank of Texas, and Phelps Dodge Corporation.
MARK A. SUWYN CURRENT TERM EXPIRES 2003
Mark A. Suwyn, age 58,59, became Chairman and Chief Executive Officer of
LP and was elected to its Board of Directors in January 1996. Mr. Suwyn was
Executive Vice President of International Paper Company from 1992 through 1995.
Previously, he was Senior Vice President of E. I. du Pont de Nemours and
Company.
Retiring Director
The followingWILLIAM C. BROOKS CURRENT TERM EXPIRES 2004
William C. Brooks, age 68, became a director will retire at the 2001 Annual Meeting:
DONALD R. KAYSER RETIRING EFFECTIVE MAY 7, 2001
Donald R. Kayser, age 70,of LP in 1996. Mr. Brooks
has been Chairman of United American Healthcare Corporation, a private investor,healthcare
management company, since 1998. He served as interim ChairmanVice President of General Motors
Corporation until his retirement in 1997. He was Assistant Secretary of Labor
for the Employment Standards Administration from July 1989 to December 1990. He
served as a member of the Social Security Advisory Board from February 1996 to
January 1998. Mr. Brooks is also a director of Lason, Inc., and Covansys
Corporation.
-3-
PATRICK F. MCCARTAN CURRENT TERM EXPIRES 2004
Patrick F. McCartan, age 67, became a director of LP in 1998. He is
managing partner of the international law firm of Jones, Day, Reavis & Pogue, a
position that he has held since 1993. He is a Fellow of the American College of
Trial Lawyers and the International Academy of Trial Lawyers.
LEE C. SIMPSON CURRENT TERM EXPIRES 2004
Lee C. Simpson, age 67, served as President and Chief ExecutiveOperating Officer
of LP on an interim basis from July 1995 until March 1996. He also was elected
to January 1, 1996, and then
served asfill a consultant to LP through April 1996. Mr. Kayser retired from his
former position as Executive Vice President and Chief Financial Officervacancy on the Board of Morrison Knudsen CorporationDirectors in 1990.July 1995. He was Senior Vice President and Chief
Financial Officer of AlliedSignal, Inc., from 1985 until July 1988. Mr. Kayser was an executive
officer of LP from 1972 until 1982his retirement in 1991 and has beenpreviously served as a
director of LP since
1972.from 1972 until 1993.
COLIN D. WATSON CURRENT TERM EXPIRES 2004
Colin D. Watson, age 60, became a director of LP in June 2000. Mr.
Watson was Vice Chairman of the Board of Spar Aerospace Limited, an aviation
services company with headquarters in Toronto, Ontario, Canada, from December
1999 until his retirement from the Spar Aerospace board in January 2002. He also
served as Chief Executive Officer of Spar Aerospace from December 1999 to
December 2000, and President and Chief Executive Officer from 1996 to November
1999. From 1979 to 1996, Mr. Watson was President and Chief Executive Officer of
Rogers Cable TV, Ltd. Mr. Watson is also a director of B-Split II Corp.,
Call-Net Enterprises Inc. (a Canadian subsidiary of Sprint Corp.), Cygnal
Technologies Corp., Derlan Industries Ltd., Kasten Chase Applied Research
Limited, OnX Inc., Pelmorex Inc., and Rogers Cable TV, Ltd.
Board and Committee Meetings
During 2000,2001, the Board of Directors held four regular quarterly
meetings. Each director attended at least 75% of the total number of the
meetings of the Board and the meetings held by all committees of the Board on
which he or she served during 2000.2001.
Executive Committee
The Board of Directors has an Executive Committee of which Mr. Suwyn is
Chair and Mr. Dunham and Mr. McCartan are members. Prior to July 2000, John W.
Barter, a director during the first half of 2000, also served on the Executive
Committee. The Executive Committee did
not meet during 2000.2001. The Executive Committee may exercise all the powers and
authority of the Board in the management of LP's business
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and affairs, except
that the Executive Committee may not (i) approve or adopt, or recommend to the
stockholders, any action or matter expressly required by the Delaware General
Corporation Law to be submitted to the stockholders for approval or (ii) adopt,
amend or repeal LP's bylaws.
Finance and Audit Committee
The Board of Directors has a Finance and Audit Committee (the "Audit
Committee") currently consisting of Mr. Dunham, Chair, Mr. Brooks, Mr. Cook, Ms.
Lauderback, and
Mr. Watson. Prior to July 2000, John W. Barter, a director
during the first half of 2000, also served on the Finance and Audit Committee.
During 2000,2001, the Audit Committee held seven meetings, fourfive of which
were telephone conference meetings.
The Audit Committee reviews and, as appropriate, makes recommendations
to the Board on matters relating to the financial affairs and policies of LP,
including (1) capital structure issues, (2) dividend policy, (3) treasury stock purchases,
(4) acquisitions and divestitures, (5)external financing, complex financial
transactions, the status and potential financial implications of significant
legal and tax matters, (6) the effectiveness of LP's
internal legal compliance programs, (7) external financing, (8) complex
financial transactions, (9) proposed changes in accounting and financial
reporting principles and policies, and (10) investment and debt policies. The Audit Committee
also reviews the significant accounting principles employed in LP's financial
reporting and LP's financial results included in LP's annual report to
stockholders, press releases, and filings with the Securities and Exchange
Commission ("SEC").
-4-
The Audit Committee also has responsibility for various auditing and
accounting matters, including (1) reviewrecommending to the Board of LP's audit plan, annual audit, and
reports or recommendationsDirectors the
selection of LP's independent public accountants and (2) reviewing LP's
financial, accounting, auditing, and internal control systems, annual audit
plans of the selectionoutside accountants, including the compensation to be paid to the
accountants, the opinions to be rendered by the outside accountants in
connection with their audits, the independence and objectivity of the outside
accountants, the effect of proposed or implemented changes in accounting and
financial reporting policies on LP's financial statements, the scope, coverage
and objectivity of the audits performed by LP's internal auditors and their
annual internal audit plans, and the effectiveness of LP's outside accountants and approval of their compensation.internal legal
compliance programs. The Audit Committee meets with both LP's internal auditors
and its independent
publicoutside accountants to assess the adequacy of LP's internal financial controls.address these issues.
Compensation Committee--Interlocks and Insider Participation
The Board of Directors has a Compensation Committee currently
consisting of the following directors: Mr. Brooks, Chair, Mr. Cook, Mr. Dunham,
Ms.
Lauderback, and Mr. Watson. Prior to July 2000, John W. Barter, a director
during the first half of 2000, and Patrick F. McCartanMay 2001, Ms. Lauderback also served on the
Compensation Committee.
The Compensation Committee held fourtwo meetings during 2000, two of which
were telephone conference meetings.2001. The
Compensation Committee's functions are (1) to administer LP's 1997 Incentive
Stock Award Plan, (2) to administer LP's Annual Cash Incentive Award Plan with
respect to the participation of the chief executive officer and other executive
officers of LP as provided in the plan, (3) to administer each other
compensation plan the administration of which is delegated to the Compensation
Committee by the terms of the plan or by action of the Board of Directors,
including the participation in each of LP's compensation plans by the chief
executive officer and other executive officers of LP, and (4) to exercise all
authority of the Board of Directors with respect to the compensation of the
chief executive officer and other executive officers of LP, including the
determination of salaries and bonuses.
Compensation decisions with respect to LP's chief executive officer and
other executive officers are made by a special subcommittee of the Compensation
Committee to comply with special rules affecting executive compensation under
the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code") and
the short-swing profit liability provisions of the federal securities laws.
Presently, all of the members of the Compensation Committee are members of the
subcommittee.
During 2000, LP used, and is continuing to use during 2001, the legal
services of Jones, Day, Reavis & Pogue, of which Mr. McCartan is the managing
partner.
Information concerning executive compensation is set forth below under
the caption "Executive Compensation."
-5-
Environmental Affairs Committee
The Board of Directors has an Environmental Affairs Committee,
consisting of Mr. Simpson, Chair, Mr. Hansen, Mr. Kayser,Ms. Lauderback, Mr. McCartan and
Mr. Suwyn. The Environmental Affairs Committee, which met twice during 2000,2001, is
responsible for reviewing the effectiveness of LP's environmental compliance
program.
Nominating and Corporate Governance Committee; Nominations for Director
The Board of Directors has a Nominating and Corporate Governance
Committee (the "Nominating Committee") consisting of Mr. McCartan, Chair, Mr.
Hansen, Mr.
Kayser,Ms. Lauderback, and Mr. Simpson. The Nominating Committee met three
times during 2000,
one of which was a telephone conference meeting.2001.
The Nominating Committee is authorized to establish (1) procedures for
selecting and evaluating potential nominees for director and to recommend to the
Board of Directors criteria for membership on the Board, (2) policies on the
size and composition of the Board, the selection of candidates for director, the
compensation of directors, and the composition of Board committees, and (3)
procedures and policies for all other matters of corporate governance that may
arise, including director independence, filling a
-5-
vacancy in the office of chief executive officer, staggered terms for the Board
of Directors, the roles of the directors, management and stockholders, responses
to stockholder proposals, and changes in LP's bylaws. The Nominating Committee
will consider stockholders' recommendations concerning nominees for director.
Any such recommendation, including the name and qualifications of a nominee, may
be submitted to LP to the attention of the Chair of the Nominating Committee.
LP's bylaws provide that nominations for election to the Board of
Directors may be made by the Board or by any stockholder of record entitled to
vote for the election of directors. Notice of a stockholder's intent to make
such a nomination must be given in writing, by personal delivery or certified
mail, postage prepaid, to the Chairman of LP and must include the following:
o the name and address of the stockholder and each proposed nominee,
o a representation that the stockholder is a record holder of Common
Stock and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice,
o a description of any arrangements or understandings pursuant to which
the nominations are to be made,
o the signed consent of each proposed nominee to serve as a director if
elected, and
o such other information regarding each nominee as would be required to
be included in LP's proxy statement if the person had been nominated
by the Board of Directors.
The notice must be delivered at least 45 days prior to the first
anniversary of the initial mailing date of LP's proxy materials for the
preceding year's annual meeting. For next year's annual meeting, this notice
must be received by LP no later than February 9, 2002.8, 2003.
ITEM 2 - STOCKHOLDER PROPOSAL CONCERNING COMPENSATION COMMITTEEAMENDMENT OF THE 1997 INCENTIVE STOCK AWARD PLAN
Background
The following proposal, NOT recommended1997 Incentive Stock Award Plan (the "Stock Award Plan") was
approved by management, together with a
statementthe LP stockholders at their annual meeting in support ofMay 1997. At this
year's annual meeting, the proposal for which LP andstockholders are being asked to approve the Stock
Award Plan as amended by three recent amendments adopted by the Board of
Directors take no responsibility, has been submitted for inclusion insubject to stockholder approval. The first amendment, approved
effective May 6, 2001, increased the proxy statement
for action at the 2001 Annual Meeting by the Boardnumber of Trustees of the
International Brotherhood of Electrical Workers' Pension Benefit Fund, 1125
Fifteenth St. N.W., Washington, D.C. 20005, which has indicated that it held
4,230 shares of Common Stock at November 20, 2000, and intendsavailable
for issuance under the Stock Award Plan from 5,000,000 to hold10,000,000 shares. The
second amendment, approved effective February 2, 2001, increased the requiredannual
limitation on the maximum number of shares throughsubject to options and stock
appreciation rights that may be granted to an individual participant during a
calendar year from 300,000 to 600,000 shares. The third amendment increased the
datemaximum total number of shares that may be made subject to restricted stock
awards under the Stock Award Plan from 1,000,000 to 2,000,000 shares and was
approved effective February 25, 2002. At the 2002 Annual Meeting:
"RESOLVED, thatMeeting, a proposal
will be presented to the shareholders of Louisiana-Pacific Corporation (the
"Company") hereby request thatstockholders to approve the Company's Board of Directors takeStock Award Plan as
amended. If the necessary steps to ensure thatproposal is not approved, the Board's
-6-
Compensation Committee is composed entirely of "independent" directors.
For purposes of this resolution, a director wouldStock Award Plan will continue in
effect as if the three amendments described above had not be considered
independent if he or she is currently or duringbeen made.
Over the past five years, has
been:
o Employed by the Company or an affiliate in an executive capacity;
o Employed by a firm that is one of the Company's paid advisors or
consultants;
o Employed by a significant customer or supplier;
o Employed by a tax-exempt organization that receives significant
contributions from the Company;
o Paid by the Company pursuant to any personal services contract with the
Company;
o Serving in an executive capacity or as a director of a corporation on
which the Company's chairman or chief executive officer is a board
member; or
o Related to a member of management of the Company.
SUPPORTING STATEMENT:
The role of a board of director's executive compensation committee is
critically important to the long-term success of the corporation. The
executive compensation committee establishes compensation policies and
practices that focus senior management on the development and
implementation of corporate strategies designed to maximize long-term
corporate value.
Unfortunately, in recent years corporate executive compensation practices
and policies have drawn considerable public and shareholder attention for
all the wrong reasons. Excessive executive compensation levels highlight
the tendency of most compensation programs to provide handsome rewards for
ordinary or less than ordinary performance. Current executive compensation
plans often present a system of pay for performance, but they lack
challenging performance benchmarks by which executives' performance can be
judged.
In order to ensure the integrity of the executive compensation process and
the effectiveness of a corporation's executive compensation policies and
practices, the Board's Compensation Committee should be composed entirely
of directors independent of management. The definition of "independent"
director advanced in this resolution will ensure that those members of the
Compensation Committee will be totally independent of management and best
able to undertake their responsibilities to develop fair and
understandable compensation policies and practices that focus management
on achieving long-term corporate success.
At present, the Company's Compensation Committee includes directors that
do not meet the "independent" director standard outlined in the
resolution. Patrick F. McCartan is a director of the Company and serves on
its Compensation Committee. Mr. McCartan is managing partner of the law
firm of Jones, Day, Reavis & Pogue. According to the Company's most recent
proxy statement, during 1999 the Company used the legal services of Jones,
Day, Reavis & Pogue, and expects to continue to use those legal services
during 2000.
As long-term shareholders, we urge your support of this important
corporate governance reform that we believe will contribute to the
Company's long-term success."
RECOMMENDATION OF BOARD OF DIRECTORS ON STOCKHOLDER PROPOSAL
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE STOCKHOLDER PROPOSAL IN
ITEM 2 FOR THE REASONS DISCUSSED BELOW.
-7-
In recent years, executive compensation has been the subject of intense
public attention and debate. The Board of Directors recognizes the significance
of the Compensation Committee, but it believes that the foregoing stockholder
proposal will not ensure that this role is performed properly. While the members
of a compensation committee must be free from undue pressures and influences,
they must also have the background and business expertise necessary to address
compensation issues and analyze executive performance on an informed basis.
Only outside directors are eligible to be members of LP's Compensation
Committee. Accordingly, candidates must have the necessary skills to perform
their role as directors of LP as well as serve on the Compensation Committee. To
have an effective Board of Directors, LP must recruit leaders with a variety of
talents, experience, knowledge and professional skills. Once LP has selectedgranted increasing numbers of options
and other stock incentive awards under the most suitable candidates from this limited poolStock Award Plan as an incentive to
attract, retain, and reward key employees, and to strengthen the mutuality of
people, the Board must staff
several committees, each with uniqueinterests between its employees and important tasks to fulfill on LP's
behalf. Two of these committees, the Finance and Audit Committee and the
Compensation Committee, must meet independence criteria set forth in laws and
regulations established by the SEC, the IRS, and/or the New York Stock Exchange.
LP is in full compliance with these legal and regulatory requirements. In
addition, Patrick McCartan, the Board member on which the proponent's supporting
statement focuses, is no longer a member of the Compensation Committee.stockholders. The selection criteria in the stockholder proposal places restrictions on
membership of the Compensation Committee that go far beyond the limitations
established by existing laws and regulations. For example, in furtherance of its
goal to eliminate all potential favoritism, no matter how unlikely, the proposal
excludes individuals with any links with LP, even a director whose employer may
be one of LP's minor customers or suppliers. The SEC, on the other hand,
excludes only those individuals whose relationship with LP is associated with
transactions that exceed $60,000 per year or, with respect to legal or
investment banking services, where the firm's fees exceed five percent of its
annual revenues.
Unlike existing regulations that only examine candidates' recent links to
the corporation (within one year of the proposed appointment), the proposal
includes a five-year lookback period. This five-year period raises a number of
interpretive questions, such as, would an individual be prohibited from serving
on the Compensation Committee if he or she is employed by a firm that was a
major supplier five years ago, but no longer supplies LP, or if he or she was
employed five years ago by a firm that is now one of LP's major customers, but
he or she stopped working for the firm before it became one of LP's customers?
Such questions can be asked about virtually every restriction listed in the
proposal. The proposal also uses a number of undefined terms that make it
difficult to apply to real-life situations with any degree of certainty,
including "significant" and "management."
The Board of Directors concurs with the proponent that members of the
Compensation Committee should be able to exercise their unfettered, independent
judgment in making executive compensation decisions. The proposal, however,
would make it practically impossible to include as members of the Compensation
Committee people whose very connections and leadership positions have enabled
them to gain sufficient knowledge about LP's businesses and the industry in
which it operates to make informed decisions and realistic assessments of the
performance of its executives. The proposal would even prohibit a person from
serving on the Compensation Committee if he or she served on another corporate
board with LP's chairman or chief executive officer!
In summary, the Board of Directors
believes that its ability to make grants of stock-based incentive awards is
essential to enable LP to continue to attract, retain, and reward officers and
other key employees. As of December 31, 2001, LP and its subsidiaries employed
approximately 206 individuals eligible to participate in the stockholder proposalStock Award Plan.
Also at that date, options for 32,453 shares of Common Stock granted under the
Stock Award Plan had been exercised, options to purchase a total of 4,114,089
shares were outstanding, performance share awards for a total of 144,848 shares
were outstanding, restricted stock (incentive share) awards for a total of
199,250 shares were outstanding, and 509,360 shares of Common Stock were
available for future
-6-
awards under the Stock Award Plan. More than 99 percent of the options
outstanding under the Stock Award Plan at December 31, 2001, were granted at
exercise prices higher than $8.44 per share, the closing price for the Common
Stock on that date, and over 41 percent of the outstanding options were granted
at exercise prices of over $18.00 per share.
Description of the Stock Award Plan
The summary set forth below outlines the material features of the Stock
Award Plan. The summary, however, is simply unworkable and would exacerbatequalified in its entirety by reference to
the challenges that LP facesStock Award Plan as amended, which is attached as Appendix A.
Administration
The Stock Award Plan is administered by the Compensation Committee,
which has full authority to administer the Stock Award Plan in recruiting directorsits sole
discretion. The Compensation Committee, or its designee with respect to
employees who are talentednot officers and knowledgeable leaderswithin specified limits, selects the
participants in the Stock Award Plan, determines the types of awards to be
granted to participants, determines the number of shares or share units subject
to such awards and determines the terms and conditions of individual award
agreements. The Compensation Committee has the authority to interpret the Stock
Award Plan, to establish, amend, and revoke any rules and regulations relating
to it, and to make all other determinations necessary or advisable for its
administration. The Stock Award Plan became effective March 1, 1997, and will
remain in effect until awards have been granted covering all available shares
and all outstanding awards under the Stock Award Plan have been exercised,
settled, or terminated, or until the Stock Award Plan is otherwise terminated by
the Board of Directors.
Types of Awards Permitted
As determined by the Compensation Committee, awards under the Stock
Award Plan may consist of (1) stock options (either incentive stock options
("ISOs") or non-statutory stock options), (2) stock appreciation rights, (3)
performance shares, (4) restricted stock grants, and (5) other stock-based
awards. Each award under the Stock Award Plan is non-transferable, other than by
will or the laws of descent and distribution, provided that the Compensation
Committee, in its discretion, may include in any award agreement a provision
that the award is transferable to immediate family members or to a trust for the
benefit of or a partnership composed solely of such family members. Also, the
Compensation Committee may, in its discretion, include in any award agreement a
provision that upon the effective date of a change in control of LP, as that
term may be defined in the award agreement, all or a specified portion of the
award will become fully vested, will be terminated, or may be converted into
shares of an acquiror.
Stock Options. In the case of stock options granted under the Stock
Award Plan, each option must be granted at or above 100 percent of fair market
value (defined as the closing price on the principal exchange on which the
Common Stock is traded) of the shares of Common Stock subject to such option on
the date of grant. The exercise price of an outstanding option is not permitted
to be changed during the period of its exercisability except in connection with
adjustments for stock dividends, stock splits or other changes in
capitalization. On March 8, 2002, the closing price for a share of Common Stock
on the New York Stock Exchange was $11.22. Stock options will be exercisable for
such period as may be specified by the Compensation Committee, not in excess of
ten years after the date of grant. The Compensation Committee may, in its
discretion, provide in an award agreement that, if previously acquired shares of
Common Stock are used by the participant in payment of either the option
exercise price or tax withholding obligations, the participant will
automatically be granted a replacement or reload option for a number of shares
equal to all or a portion of the shares surrendered. The maximum number of
shares subject to options and SARs granted under the Stock Award Plan to any
individual participant during any calendar year may not exceed 600,000 shares of
Common Stock (300,000 shares if amendment of the Stock Award Plan is not
approved at the 2002 Annual Meeting).
-7-
Stock Appreciation Rights ("SARs"). A recipient of SARs is entitled to
receive upon exercise an amount equal to the increase in the fair market value
of a share of Common Stock on the date of exercise over the grant price,
multiplied by the number of shares as to which the rights are exercised. Payment
may be in cash, in shares of Common Stock, or a combination of cash and shares
as determined by the Compensation Committee. No SAR may be exercised earlier
than six months after grant, except in the event of the holder's death or
disability. SARs may be granted in connection with options or may be granted as
independent awards.
Performance Shares. Performance shares are authorized to be granted in
the form of actual shares of Common Stock, or in share units having a value
equal to shares of Common Stock. Performance shares may be granted subject to
such terms and conditions set forth in the award agreement as the Compensation
Committee deems appropriate including, without limitation, the condition that
the performance shares will vest only in the event that specified performance
goals are met within a specified performance period. The maximum number of
shares issuable to any individual participant with respect to performance share
awards in any calendar year may not exceed 100,000 shares of Common Stock.
In the case of performance share awards granted to executive officers,
the performance goals may relate to corporate performance, business unit
performance, or a combination of both. Corporate performance goals may be based
on financial performance goals related to the performance of LP as a whole, and
may include one or more measures related to earnings, profitability, efficiency,
or return to stockholders, such as earnings per share, operating profits, stock
price, costs of production, or other walksmeasures. Business unit performance goals
will be based on a combination of lifefinancial goals and strategic goals related to
serve the interestsperformance of you,an identified business unit for which a participant has
responsibility. Strategic goals for a business unit may include one or a
combination of objective factors relating to success in implementing strategic
plans or initiatives, introducing products, constructing facilities, or other
identifiable objectives. Financial goals for a business unit may include the
degree to which the business unit achieves one or more objective measures
related to its revenues, earnings, profitability, efficiency, operating profit,
costs of production, or other measures. Any corporate or business unit goals may
be expressed as absolute amounts or as ratios or percentages. Success in
achieving such goals may be measured against various standards, including budget
targets, improvement over prior periods, and performance relative to other
companies, business units, or industry groups.
The performance goals established for performance shares awarded in
1997 and 1998 were not reached and no payouts were made; performance shares
awarded in 1999 and 2000 remain outstanding. Performance shares were not granted
under the Stock Award Plan in 2001.
Restricted Stock. Restricted stock awards may be granted in the form of
actual shares of Common Stock, share units having a value equal to shares of
Common Stock, or other rights to receive shares of Common Stock in the future.
Restricted stock awards will be subject to such terms and conditions as the
Compensation Committee deems appropriate, including provisions that such
restricted stock, stock units or other rights be forfeited upon termination of a
participant's employment for specified reasons within a specified period of time
or upon other conditions as set forth in the award agreement. Awards of
restricted stock are subject to the further limitation that the aggregate number
of shares of Common Stock that may be issued pursuant to restricted stock awards
under the Stock Award Plan may not exceed 2,000,000 shares (1,000,000 shares if
amendment of the Stock Award Plan is not approved at the 2002 Annual Meeting).
Other Stock-Based Awards. The Compensation Committee may also grant
other awards under the Stock Award Plan pursuant to which shares are or may in
the future be acquired, or awards may be denominated and measured by share
equivalent units, including awards valued using measures other than market
value. For any stock-based awards granted to executive officers that condition
vesting of such awards in whole or in part on attaining performance goals, the
performance goals shall be the same as described above with respect to
performance share awards.
-8-
Certain Adjustments; Tax Consequences
In the event of any change in capitalization affecting LP's Common
Stock, such as a stock dividend, stock split, recapitalization, merger,
consolidation, split-up, spin-off, combination or exchange of shares, or other
form of reorganization, or other distribution in respect of Common Stock other
than regular cash dividends, the Compensation Committee may make such
substitution or adjustment, if any, that it deems to be equitable as to the
number and kind of shares or other securities issued or reserved for issuance
pursuant to the Stock Award Plan, to the limits on awards to individual
participants, and to outstanding awards under the Stock Award Plan.
The federal income tax consequences of the Stock Award Plan for LP and
participants will depend upon the types of awards that are granted from time to
time. In the case of non-statutory stock options, in general, a participant will
recognize ordinary compensation income at the time of exercise in an amount
equal to the difference between the value of the shares subject to the option at
the date of exercise and the exercise price. Any gain upon sale of the shares in
excess of the fair market value of the shares on the date of exercise will be
capital gain and any loss will be a capital loss. To date, only non-statutory
stock options have been granted under the Stock Award Plan.
In the case of ISOs which meet the requirements of Section 422 of the
Internal Revenue Code, a participant does not realize taxable income upon the
grant of an ISO or upon the issuance of shares when the option is exercised. The
amount realized on the sale or taxable exchange of such shares in excess of the
exercise price will be a capital gain and any loss will be a capital loss,
except that if the sale or exchange occurs within one year after exercise of the
option or two years after grant of the option, the participant will recognize
compensation taxable at ordinary income tax rates measured by the amount by
which the lesser of (i) the fair market value on the date of exercise or (ii)
the amount realized on the sale of the shares, exceeds the exercise price. For
purposes of determining alternative minimum taxable income, an ISO is treated as
a non-statutory stock option.
The grant of a SAR to a participant will not cause the recognition of
income by the participant. Upon exercise of a SAR, the participant will
recognize ordinary income equal to the amount of cash payable to the participant
plus the fair market value of any shares delivered to the participant.
In the case of performance-contingent awards and restricted stock
awards, in general, a participant will not recognize any income upon issuance of
an award. Generally, the participant will be required to recognize ordinary
compensation income at the date or dates, if any, that shares vest in an amount
equal to the value of such shares plus any cash received at the date of vesting.
To the extent participants qualify for capital gains treatment with
respect to the sale of shares acquired pursuant to exercise of an ISO, LP will
not be entitled to any tax deduction in connection with ISOs. In all other
cases, LP will be entitled to receive a federal income tax deduction at the same
time and in the same amount as the amount which is taxable to participants as
ordinary income with respect to awards.
The information in this proxy statement concerning federal income tax
consequences is intended only for the general information of stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE STOCKHOLDER PROPOSAL IN
ITEM 2.Participants in the Stock Award Plan should consult their own tax advisors as
federal income tax consequences may depend upon the particular terms of
individual awards and the specific circumstances of individual participants.
Awards
At December 31, 2001, options had been granted under the Stock Award
Plan since its adoption in 1997 as follows: Mark A. Suwyn, Chairman and Chief
Executive Officer, 1,016,810 shares; Curtis M. Stevens, Vice President,
Treasurer and Chief Financial Officer, 287,750 shares; J. Keith Matheney, Vice
President, OSB and Engineered Wood Products, 187,000 shares; Michael J. Tull,
Vice President, Human Resources, 160,050 shares; Walter M. Wirfs, Vice
President, Lumber and Plywood, 106,950 shares; all
-9-
executive officers as a group (including Messrs. Suwyn, Stevens, Matheney, Tull
and Wirfs), 2,242,600 shares; and all non-executive employees as a group,
3,004,285 shares. Non-employee directors do not participate in the Stock Award
Plan. See also "Executive Compensation--Compensation of Executive
Officers--Option/SAR Grants in Last Fiscal Year" for more information about
option grants to the executive officers named above during 2001 and "--Summary
Compensation Table" for more information regarding performance share and
incentive share awards to the executive officers named above.
In January 2002, the Compensation Committee approved awards of
non-statutory stock options and incentive shares to officers and employees of
LP, subject to stockholder approval of the Stock Award Plan as amended at the
2002 Annual Meeting. The table below provides information regarding awards under
the Stock Award Plan from January 1, 2002, through March 1, 2002. The options
shown in the table will vest in three equal annual installments beginning in
January 2003, subject to acceleration of exercisability in the event of a change
in control of LP. The incentive share awards reflected in the table vest in full
at the end of five years, provided that the individual remains an employee of LP
or one of its subsidiaries through the end of that period and subject to
acceleration if the individual dies or becomes disabled, a change in control of
LP occurs, or certain market price targets for the Common Stock are met.
NEW PLAN BENEFITS
1997 Incentive Stock Award Plan
Number of Shares
Name and Title Subject to Options Incentive Shares(1)
-------------- ------------------ -------------------
Mark A. Suwyn 486,400 $821,745
Chairman and Chief Executive Officer
Curtis M. Stevens 100,300 $169,290
Vice President, Treasurer and Chief
Financial Officer
J. Keith Matheney 77,800 $131,625
Vice President, OSB and Engineered
Wood Products
Michael J. Tull 70,600 $119,070
Vice President, Human Resources
Walter M. Wirfs 50,700 $85,455
Vice President, Lumber and Plywood
All executive officers as a group 1,000,900 $1,690,470
Non-executive officer employees as a 815,400 $786,915
group
-------------------
(1) Represents the value of shares subject to awards based on the closing price
of the Common Stock, $8.10 per share, on the date of grant.
Stockholder Approval
Approval of the stockholder proposalStock Award Plan as amended will require the
affirmative vote of the holders of a majority of the total votes cast on this item at the meeting. Shares that are
notshares of Common Stock
present or represented at the meeting, sharesin person or by proxy, and entitled to
vote on such approval. If a broker or nominee submits a proxy on behalf of a
beneficial holder of Common Stock that abstain from
-8-
votingexpressly does not cast a vote on this
item, and shares not voted on this item by brokers or nomineesproposal, the proxy will not be counted and, as a result, will have no effect on
the outcome of the vote on this proposal. Abstentions will be treated as if the
holder voted against this proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF
APPROVAL OF THE STOCK AWARD PLAN AS AMENDED.
-10-
ITEM 3 - REAPPROVAL OF PERFORMANCE GOALS UNDER ANNUAL CASH INCENTIVE AWARD PLAN
Background
In 1997, LP's stockholders approved performance goals under LP's Annual
Cash Incentive Award Plan (the "Cash Incentive Plan") insofar as they relate to
incentive awards to executive officers of LP. The Cash Incentive Plan provides
for purposesannual cash incentive opportunities based upon meeting or exceeding
performance goals.
Under Section 162(m) of computingthe Internal Revenue Code, performance-based
compensation which meets specified criteria and is approved by stockholders is
not subject to the $1,000,000 limit per executive officer on deductibility
applicable to certain other types of compensation. The Board of Directors has
determined that it is in the best interest of LP that awards paid under the Cash
Incentive Plan continue to qualify as performance-based compensation under
Section 162(m). To qualify, cash awards must be conditioned on performance goals
that have been approved by stockholders within the last five years. The Board of
Directors has therefore decided to request the stockholders to reapprove the
performance goals under the Cash Incentive Plan insofar as they relate to
incentive awards for persons who are executive officers of LP. LP is not seeking
approval of any amendments to the Cash Incentive Plan.
Description of Performance Goals
Performance goals for cash incentive awards may relate to (1) corporate
performance, (2) business unit performance, and/or (3) individual performance.
The business criteria on which corporate performance is based may include
various financial performance goals related to the performance of LP as a majority.whole.
These may include one or more objective measures related to earnings,
profitability, efficiency, or return to stockholders, and may include earnings,
earnings per share, operating profit, stock price, costs of production, or other
measures, whether expressed as absolute amounts, as ratios, or percentages of
other amounts. Success may be measured against various standards, including
budget targets, improvement over prior years, and performance relative to other
companies or industry groups.
The business criteria on which individual performance goals are based
may include a combination of financial goals and strategic goals related to the
performance of an identified business unit for which an executive has
responsibility. Strategic goals for a business unit may include one or a
combination of objective factors related to success in implementing strategic
plans or initiatives, introducing products, constructing facilities, or other
identifiable objectives. Financial goals for a business unit may include the
degree to which the business unit achieves one or more measures related to its
revenues, earnings, profitability, efficiency, operating profit, cost of
production, or other measures, whether expressed as absolute amounts or as
ratios or percentages, which may be measured against various standards,
including budget targets, improvement over prior years, and performance relative
to other companies or business units.
Performance goals and formulas are established annually relating to
performance for the current year. The persons eligible to receive cash incentive
award opportunities granted by the Compensation Committee are the executive
officers of LP. Other management personnel may also be eligible for cash
incentive award opportunities as determined by their supervisors. The total cash
incentive payout for any person may not exceed $1,250,000 in any one year. See
"Executive Compensation--Compensation Committee Report" below for a description
of the performance goals established for cash incentive award opportunities
granted in 2001.
Awards
In January 2002, the Compensation Committee established the target
amounts of cash incentive award opportunities for 2002 based upon the salary of
each of the participants, ranging from approximately 20 to 55 percent of base
salary for participants other than the chief executive officer, as to
-11-
whom the target amount is set at 70 percent of his base salary pursuant to his
employment agreement. See "Executive Compensation--Agreements with Executive
Officers." Depending upon the extent to which performance goals are met, the
actual amount paid may range from zero to 150 percent of the target amount.
The performance goals for each executive will be based 60 percent on LP's
earnings per share and 40 percent on objective individual and business unit
goals that are unique to each of the participants. Satisfaction of the
performance goals will be determined by the Compensation Committee following the
end of 2002 and cash payments, if any, will be made within 30 days after the
determination of the amount of the award. The targeted amounts of award
opportunities for 2002 that have been approved are as follows:
NEW PLAN BENEFITS
Annual Cash Incentive Award Plan
Name and Title Target Amount(1)
-------------- ----------------
Mark A. Suwyn $525,000
Chairman and Chief Executive Officer
Curtis M. Stevens $170,665
Vice President, Treasurer and Chief Financial Officer
J. Keith Matheney $138,424
Vice President, OSB and Engineered Wood Products
Michael J. Tull $131,560
Vice President, Human Resources
Walter M. Wirfs $124,025
Vice President, Lumber and Plywood
All executive officers as a group $1,495,543
All non-executive officer employees as a group $4,319,717
- ------------------
(1) Depending on satisfaction of performance goals, the amount paid may range
from zero to 150 percent of the amount shown.
Stockholder Approval
In order for amounts which may be paid to executive officers pursuant
to the Cash Incentive Plan to continue to qualify as performance-based
compensation under Section 162(m) of the Internal Revenue Code, the Board of
Directors is asking stockholders to reapprove the terms of the performance goals
as outlined above, which will be used by the Compensation Committee as a basis
for specific cash incentive award opportunities for executive officers. In the
event stockholders do not reapprove the terms of the performance goals, no
further awards will be made to executive officers under the Cash Incentive Plan
in the future and the Compensation Committee will consider other methods of
providing appropriate compensation to executive officers.
Reapproval of the terms of the performance goals will require the
affirmative vote of the holders of a majority of the shares of Common Stock
present or represented at the meeting, in person or by proxy, and entitled to
vote on such approval. If a broker or nominee submits a proxy on behalf of a
beneficial holder of shares of Common Stock that expressly does not cast a vote
on this proposal, the proxy will not be counted and, as a result, will have no
effect on the outcome of the vote on this proposal. Abstentions will be treated
as if the holder voted against this proposal.
-12-
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF
REAPPROVAL OF THE TERMS OF THE PERFORMANCE GOALS UNDER THE ANNUAL CASH INCENTIVE
AWARD PLAN.
OTHER BUSINESS
At the time this proxy statement was printed, management knew of no
matters to be presented at the annual meeting other than the items of business
listed in the Notice of Annual Meeting of Stockholders. If any matters other
than the listed items properly come before the meeting, the proxies named in the
accompanying form of proxy will vote or refrain from voting on such matters in
accordance with their judgment.
FINANCE AND AUDIT COMMITTEE REPORT
The Finance and Audit Committee of the Board of Directors (the "Audit
Committee") assists the Board of Directors in the discharge of its fiduciary
obligations to LP's stockholders relating to the quality and integrity of LP's
financial statements, its accounting and reporting practices, and the
independence and performance of LP's outside auditor and performance of its
internal accounting staff. The Audit Committee is comprised of fivefour directors,
each of whom has been determined by the Board of Directors to meet the financial
literacy and independence requirements set forth in the corporate governance
listing standards of the New York Stock Exchange, on which LP's Common Stock is
listed. The Audit Committee's activities are governed by a written charter, a
copy of which is attached to this Proxy Statement as Appendix A.B.
In discharging its responsibilities, the Audit Committee and its
individual members have met with management and LP's outside auditor, Deloitte &
Touche LLP, to review LP's accounting functions and the audit process and to
discuss the Company's audited financial statements for the year ended December
31, 2000.2001. The Audit Committee discussed and reviewed with its outside auditing
firm all matters that the firm was required to communicate and discuss with the
Audit Committee under applicable auditing standards, including those described
in Statement on Auditing Standards No. 61, as amended, regarding communications
with audit committees. The Audit Committee has also received from its outside
auditor a formal written statement relating to independence consistent with
Independence Standards Board Standard No. 1, "Independence Discussions with
Audit Committees," and discussed with the outside auditor any relationships that
may adversely affect its objectivity and independence.
Based on its review and discussions with management and LP's outside
auditor, the Audit Committee recommended to the Board of Directors that LP's
audited financial statements for the year ended December 31, 2000,2001, be included
in LP's Annual Report on Form 10-K filed with the Securities and Exchange
Commission ("SEC").SEC.
Respectfully submitted,
Archie W. Dunham, Chair
William C. Brooks
E. Gary Cook
Brenda J. Lauderback
Colin D. Watson
-9--13-
HOLDERS OF COMMON STOCK
Five Percent Beneficial Owners
The following table provides information concerning the beneficial
ownership of Common Stock by the persons known to LP to beneficially own 5% or
more of the outstanding Common Stock:
COMMON STOCK
BENEFICIALLY OWNED APPROXIMATE
NAME AND ADDRESS AS OF DEC. 29, 2000 PERCENT OF CLASS
- ---------------- ------------------- ----------------
Capital Research and 9,225,000(1) 8.8%
Management Company
333 South Hope Street
Los Angeles, CA 90071
Louisiana-Pacific Hourly 5,982,539(2) 5.7%
401(k) and Profit Sharing Plan
805 S.W. Broadway
Portland, Oregon 97205
Louisiana-Pacific Salaried 3,705,580(2) 3.5%
Common Stock
Beneficially Owned Approximate
Name and Address As of Dec. 31, 2001 Percent of Class
- ---------------- ------------------- ----------------
Louisiana-Pacific Hourly 4,994,913(1) 4.8%
401(k) and Profit Sharing Plan
805 S.W. Broadway
Portland, Oregon 97205
Louisiana-Pacific Salaried 3,307,284(1) 3.2%
401(k) and Profit Sharing Plan
805 S.W. Broadway
Portland, Oregon 97205 ----------- -----
TOTAL 8,302,197 8.0%
- -----------------------
(1) Based on Amendment No. 3 to Schedule 13G filed on February 12, 2001, by
Capital Research and Management Company, a registered investment company,
reporting sole dispositive power of the indicated shares.
(2) Shares held by the Plans are voted by the trustee at the direction of the
Administrative Committee for the Plans, which is comprised of LP management
employees. The trusts asmay be deemed to whichbe a "group" under the trustees have sole voting power.
-10-
stock beneficial
ownership rules of the SEC.
Directors and Executive Officers
The following table summarizes the beneficial ownership of Common Stock
of the directors, nominees for director, and current executive officers of LP:
COMMON STOCK APPROXIMATE
BENEFICIALLY OWNED PERCENT OF
NAME AS OF MARCH 9, 2001(1) CLASSCommon Stock Approximate
Beneficially Owned Percent of
Name As of March 8, 2002(1)(2) Class
- ---- ---------------------- ----------------------------------- -----------
William C. Brooks(2)(6) 30,361Brooks(5) 35,561 *
E. Gary Cook(2)(6) 4,549Cook(5) 10,823 *
Archie W. Dunham(2)(6) 38,461Dunham(5) 50,957 *
Paul W. Hansen(2)(6) 11,961Hansen(5) 17,161 *
Donald R. Kayser(2)(5)(6) 107,108 0.1%
Brenda J. Lauderback(6) 10,461Lauderback(5) 21,157 *
Patrick F. McCartan(2)(6) 12,261McCartan(5) 19,261 *
J. Keith Matheney(2)(3)(6) 182,073Matheney(3) 219,685 0.2%
Lee C. Simpson(2)(6) 69,704Simpson(5) 74,904 *
Curtis M. Stevens (2)(3) 219,123 0.2%Stevens(3) 295,657 0.3%
Mark A. Suwyn(2)(3)Suwyn(3)(4) 980,040 0.9%1,246,423 1.2%
Michael J. Tull(2)(3) 181,186Tull(3) 219,853 0.2%
Colin D. Watson(2)(6) 4,549Watson(5) 10,823 *
Gary C. Wilkerson(2)(3) 157,940 0.2%Walter M. Wirfs(3) 122,441 0.1%
All current directors and 2,816,7982,928,812 2.7%
executive officers as a
group (21(18 persons)(2)(3)(4)(5)(6)
- --------------------
* Percentages under 0.1% are not shown.
(1)Shares are shown as beneficially owned if the person named in the table has
or shares the power to vote or direct the voting of, or the power to
dispose of, or direct the disposition of, such shares.
-14-
Inclusion of shares in the table does not necessarily mean that the persons
named have any economic beneficial interest in shares set forth opposite
their respective names.
(2)Includes shares reserved for issuance under immediately exercisable options
and options which will become exercisable within 60 days after March 9, 2001,8,
2002, as follows: Mr. Brooks, 28,80032,400 shares; Mr. Cook, 2,7007,200 shares; Mr.
Dunham, 36,00046,800 shares; Mr. Hansen, 9,000 shares; Mr. Kayser, 72,00012,600 shares; Ms. Lauderback, 9,00018,000
shares; Mr. McCartan, 10,80016,200 shares; Mr. Matheney, 97,467134,667 shares; Mr.
Simpson, 45,00048,600 shares; Mr. Stevens, 147,334222,917 shares; Mr. Suwyn, 667,120928,724
shares; Mr. Tull, 119,000157,350 shares; Mr. Watson, 2,7007,200 shares; Mr. Wilkerson, 79,334Wirfs,
62,983 shares; and all current directors and executive officers as a group,
1,790,7222,075,086 shares.
(3)Includes shares held by the LP Salaried 401(k) and Profit Sharing Plan (the
"401(k) Plan") and beneficially owned by the following officers: Mr.
Matheney, 12,30012,712 shares; Mr. Stevens, 2,3152,636 shares; Mr. Suwyn, 5,0255,371
shares; Mr. Tull, 3,7304,047 shares; Mr. Wilkerson, 2,315Wirfs, 228 shares; and all current
executive officers as a group, 44,36439,221 shares.
(4)Includes 60,000 shares of unvested restricted stock which Mr. Suwyn has the
power to vote.
(5)Includes 1,100 shares donated to The Kayser Family Foundation and as to
which Mr. Kayser shares voting and dispositive power.
(6)Includes restricted shares granted under the 2000 Non-Employee Director
Restricted Stock Plan as to which the following directors have the power to
vote: Mr. Brooks, Mr. Dunham, Mr. Hansen, Mr. Kayser, Ms. Lauderback, Mr. McCartan, and
Mr. Simpson, 1,4613,061 shares each; and Mr. Cook and Mr. Watson, 1,8493,623 shares
each.
-11-
SECTION 16(A)16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Securities Exchange Act of 1934 ("Section 16")
requires that reports of beneficial ownership of Common Stock and changes in
such ownership be filed with the SEC and the New York Stock Exchange by LP's
officers, directors, and certain other "reporting persons." Based solely upon a
review of copies of Section 16 reportsForms 3, 4, and 5 (and amendments thereto) filed by LP's
reporting persons and written representations by such persons, to LP's
knowledge, all Section 16 reporting requirements applicable to such persons were
complied with for the period specified in the SEC's rules governing proxy
statement disclosures.disclosures, except that E. Gary Cook and Archie W. Dunham each
reported an acquisition of phantom shares pursuant to the director deferred
compensation plan after the report was due.
EXECUTIVE COMPENSATION
Compensation Committee Report
To the Stockholders of Louisiana-Pacific Corporation:
OVERVIEW
The goals of LP's executive compensation program are to recruit and
retain qualified and talented executives who will provide effective leadership
in meeting the challenges facing the company and to provide those executives
with competitive pay and incentives for performance while aligning their
interests with those of LP's stockholders. The principal objectives of LP's
compensation strategy are (1) to reinforce LP's business organization and
strategic direction, (2) to be sufficiently competitive to attract and retain
needed management talent, and (3) to provide compensation that is
performance-based and aligned with stockholder interests yet remains fair,
reasonable, and simple. To accomplish these objectives during 2000,2001, the
Compensation Committee awarded compensation in accordance with a
previously-approved program with four principal elements--base salary, annual
cash incentive opportunities, annual stock option grants and, for selected
senior executives, annual awards of stock
contingent on performance.incentive shares. Cash incentive
opportunities are awarded under the LP Annual Cash Incentive Award Plan. Stock
option grants and awards of performanceincentive shares are made under LP's 1997 Incentive
Stock Award Plan.
-15-
Decisions as to awards under the 1997 Incentive Stock Award Plan and certain
other matters are made by a subcommittee of the Compensation Committee. Mr. McCartanMs.
Lauderback was a member of the Compensation Committee until June 2000, but did not participate in the
deliberations of the subcommittee of the Compensation Committee.February 2001.
In general, base salary is intended to be competitive at the median
with other forest and building products companies. In addition, there are annual
opportunities for cash incentive payments based on corporate performance,
business unit performance, and individual performance which, if performance
targets are met, should permit an executive to receive total cash compensation
at above median levels for forest and building products companies. Annual stock
option grants in an amount based on individual performance recognize individual
achievement while aligning management interests with stockholder interests,
reinforcing long-term performance, and facilitating stock ownership. Annual
performance-contingentincentive share awards of stock are based on four-year total stockholder
return measured against a defined peer group, providingprovide selected senior executives with significant
incentives to maximize stockholder value and increase their equity participationownership in
LP.
In addition to the elements of the compensation strategy described
above, LP haspreviously had a deferred compensation plan for executives and a supplemental retirement
plan for selected senior executives. The
Executive Deferred Compensation Plan providesprovided for elective pretax deferrals of
up to 90 percent of base salary and up to 100 percent of cash bonuses. Deferred
amounts up to 7 percent of base salary arewere matched by contributions to
participants' plan accounts at LP's expense. The Executive Deferred Compensation
Plan was terminated effective December 1, 2001, and all previously deferred
amounts were distributed to participants by January 31, 2002.
LP also has a Supplemental Executive Retirement Plan ("SERP"), which is
designed to provide competitive target retirement benefits when combined with
other company-paid retirement benefits and Social Security. LP's chief executive
officer, Mark A. Suwyn, does not participate in the SERP because he has a
separate supplemental retirement benefit
-12-
under his employment agreement, which
is described in detail under the caption "Retirement Benefits" below.
In November 1999, the subcommittee of the Compensation Committee
approved an Executive Loan Program to encourage LP's executive officers and
selected key management personnel to acquire an increased equity interest in LP
stock and to provide additional incentives to remain employed by LP. In November
2000, the subcommittee of the Compensation Committee authorized additional loans
under the program during a 60-day period ending January 23, 2001. In November
2001, the subcommittee amended the Executive Loan Program to provide for
forgiveness of loans in whole or in part following termination of employment in
specified circumstances. The program is described under "Management Loans and
Other Transactions" below. In adopting and reinstituting the program in 1999 and offering it to
additional officers in 2000, the subcommittee considered how it would fit in
with LP's other executive compensation programs, including annual stock option
grants and executive severance agreements relating to a potential change in
control.
DETERMINATION OF BASE SALARIES
In February 2000,2001, the Compensation Committee established new base
salaries for executive officers based upon a reviewcomparison of salaries at 35 other
forest and building products companies (including all of the companies included in the
Standard & Poor's Paper & Forest Products Index). and individual performance
during 2000. As a result of this review, the Compensation Committee increased the chief executive officer's 20002001 base
salary by 5 percent to $750,000, which was approximately the median (50th
percentile) for chief executive officers in this industry.remained unchanged from 2000. Due to individual circumstances, the
salaries for other executive officers for 20002001 varied from slightly above to
slightly below the median salary for comparable positions at the other forest
and building products companies reviewed and for existing
executive officers, increased by an averagea range of approximately 70 percent
to 10 percent over 19992000 levels.
GRANTS OF CASH INCENTIVE AWARDS
The Compensation Committee approved annual cash incentive award
opportunities in February 20002001 under LP's Annual Cash Incentive Award Plan for
Mr. Suwyn and certain other executive officers, subject to achievement of
specified performance goals. The target amounts of the awards were based on the
-16-
salary of each participant and ranged from approximately 45 toequaled 55 percent of base salary for LP's
executive officers, except for Mr. Suwyn, whose target amount equaled 70 percent
of his base salary, as required by his employment agreement.
Depending upon the extent to which performance goals are met, the
actual amount paid as a cash incentive award may range from zero to 150 percent
of the target amount. The performance goals for each participating executive for
20002001 were based 5060 percent on LP's earnings per share and 5040 percent on
objective individual and business unit goals unique to each of the participants, except
that no amount of a 2000 award would be paid unless a minimum earnings per share
threshold was reached. With respect to Mr. Suwyn, the Compensation Committee
approved an additional cash incentive payment of (a) $98,438 if the attainment
of his individual performance goals reached 70 percent or (b) $131,250 for
attaining 90 percent of his goals.participants.
The business criteria on which individual performance goals are based
include goals related to success in developing and implementing particular tasks
assigned to an individual executive. These goals, therefore, naturally vary
depending upon the responsibilities of individual executives and may include,
without limitation, goals related to success in developing and implementing
particular management plans or systems, reorganizing departments, establishing
business relationships, or resolving identified problems. For 2000,2001, the
individual performance goals for Mr. Suwyn included goals related to increasingnew product
introductions and sales in LP's corelevels, cash flow levels, safety, cost reductions,
dispositions of unprofitable businesses, succession planning, and its specialty products, achieving
commercialization of three new products with net sales of more than $1 million
each, reducing production costs, improving or selling certain under-performingother
strategic business units, implementing new financial and information systems, completing
strategic builder experiments and recommending action based on results of the
experiments, and developing a succession plan for LP's executive officer
positions.
-13-
initiatives.
The business criteria on which business unit performance goals are
based include a combination of financial goals and strategic goals related to
the performance of an identified business unit for which an executive has
responsibility. Strategic goals for a business unit may include one or a
combination of objective factors related to success in implementing strategic
plans or initiatives, introducing products, constructing facilities, or other
identifiable objectives. Financial goals for a business unit may include the
degree to which the business unit achieves one or more measures related to its
revenues, earnings, profitability, efficiency, operating profit, costs of
production, or other measures, whether expressed as absolute amounts or as
ratios or percentages, which may be measured against various standards,
including budget targets, improvement over prior years, and performance relative
to other companies or business units.
In FebruaryOctober 2001, management determined that circumstances did not
warrant the payment of cash incentive awards for 2001. In January 2002, the
Compensation Committee determinedconfirmed that no cash incentive awards would be paid to
any LP employees for 2001 under the Annual Cash Incentive Award Plan because of
management's decision and because the corporate goal relating to LP's earnings
per share washad not met and, accordingly, no cash
incentive awards were paid to any LP employees for 2000 under the Annual Cash
Incentive Award Plan.been met.
GRANTS OF STOCK OPTIONS
Another significant element in LP's compensation program is annual
grants of nonstatutory stock options. In February 2000,2001, the subcommittee of the
Compensation Committee considered proposed option grants to executive officers.
Preliminary target values (using the Black-Scholes valuation model) were based
on competitive levels equal to a percentage of the executive's base salary.
These target values equaled 7087 percent of each executive officer's 20002001 base
salary, except for Mr. Suwyn, whose target value equaled 115180 percent of his 20002001
base salary. The subcommittee approved option grants at levels up to 120 percent
greater than theIndividual target values are subject to increase or decrease based
on individual performance during 1999. As a
resultfor the prior year. Option grants to certain of the foregoing factors, the Compensation Committee approved an option
award to Mr. Suwyn of 189,360 shares.LP's executive
officers are shown under "Option/SAR Grants in Last Fiscal Year" below. All
options granted in 20002001 will become exercisable in three equal annual
installments beginning one year from the date of grant and will terminate 10
years after the date of grant.
PERFORMANCE-CONTINGENT STOCKINCENTIVE SHARE AWARDS
In February 2000,2001, after reviewing a market analysis of compensation
levels in the forest and building products industry, the subcommittee of the
Compensation Committee granted
performance-contingent stockconcluded that the award of performance shares under the
1997 Incentive Stock Award Plan was not aligned with LP's philosophy of
providing variable incentive compensation at the 60th percentile of the market
and decided to discontinue
-17-
such awards. Instead, the subcommittee decided to grant incentive share awards
to selected senior executives. Each grant
entitles the participantIncentive shares are rights to receive a number of shares of
LP Common Stock determined by comparing LP's total annualized stockholder return to the mean
annualized total stockholder return of five other forest and building products
companies (all of which are includedthat vest in the Standard & Poor's Paper & Forest
Products Index) for the four-year period beginning on January 1 of the year of
grant.
Targeted award levels in the amount of 40 percent of 2000 base salary
(except for Mr. Suwyn) will be payable in shares to participating executive
officers if LP's cumulative total stockholder return is a specified percentage
above the mean total stockholder return of the specified comparison group. Mr.
Suwyn's targeted award level is 60 percent of his 2000 base salary, or 36,364
shares of LP Common Stock.
Depending upon LP's four-year total stockholder return for the four years
ending December 31, 2003, in comparison to the group, the actual number of
shares issued could range from zero to 200 percent of the targeted amount. Of
the shares earned, 50 percent would be paidfull at the end of five years, provided that the
four-year period,individual remains an employee of LP or one of its subsidiaries through the end
of that period. An award will vest in full immediately if the recipient dies or
becomes disabled, a change in control of LP occurs, or certain share price
targets are met before the end of the required service period. The incentive
share awards made in February 2001 were based on target values (using the
Black-Scholes valuation model) based on a percentage of 2001 base salary equal
to 60 percent for Mr. Suwyn and 5043 percent would remainfor each other executive officer,
subject to forfeiture upon a participant leaving
LP's employment within two years thereafter.adjustment for individual performance in 2000.
DEDUCTIBILITY OF COMPENSATION
To the extent consistent with its goal of maintaining a fair and
competitive compensation package, the Compensation Committee attempts to
structure LP's executive compensation to be deductible for -14-
income tax purposes
by complying with tax requirements applicable to the deductibility of certain
types of compensation.
Respectfully submitted,
William C. Brooks, Chair
E. Gary Cook
Archie W. Dunham
Brenda J. Lauderback
Colin D. Watson
-18-
Performance Graph
The following graph is required to be included in this proxy statement
under applicable rules of the SEC. The graph compares the total cumulative
return to investors, including dividends paid (assuming reinvestment of
dividends) and appreciation or depreciation in stock price, from an investment
in LP Common Stock for the period January 1, 1996,1997, through December 31, 2000,2001, to
the total cumulative return to investors from the Standard & Poor's 500 Stock
Index and the Standard & Poor's Paper and Forest Products Index for the same
period. Stockholders are cautioned that the graph shows the returns to investors
only as of the dates noted and may not be representative of the returns for any
other past or future period.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
Louisiana-Pacific Corporation, S&P 500, and S&P Paper and Forest Products
December 31, 19951996 to December 31, 20002001
[Graphic Omitted]
Dec-95 Dec-96 Dec-97 Dec-98 Dec-99 Dec-00
------ ------ ------ ------ ------ ------
Louisiana-Pacific Corporation $ 100 89.26 82.47 81.82 64.96 49.52
S&P 500 $ 100 122.96 163.98 210.85 255.21 231.98
S&P Paper & Forest Products $ 100 110.62 118.61 120.96 169.13 138.50
-15-omitted]
Dec-96 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01
------ ------ ------ ------ ------ ------
LOUISIANA-PACIFIC CORPORATION $100 92.40 91.67 72.79 55.48 47.28
S&P 500 INDEX $100 133.36 171.48 207.56 188.66 166.24
PAPER & FOREST PRODUCTS $100 107.22 109.35 152.90 125.21 128.22
-19-
Compensation of Executive Officers
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
------------
AWARDS
--------
ANNUAL COMPENSATION
-------------------
NAME OTHER NUMBER OF
AND ANNUAL SHARES ALL OTHER
PRINCIPAL COMPEN- UNDERLYING COMPEN-
POSITION YEAR SALARY BONUS(1) SATION(2) OPTIONS/SARS SATION(3)
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation Awards
---------------------------------- ---------------------------
Name Other Number of
and Annual Restricted Shares All Other
Principal Compen- Stock Underlying Compen-
Position Year Salary Bonus(1) sation(2) Awards(3) Options/SARs sation(4)
-------- ---- ------ -------- --------- ------------------------ ------------ ---------
Mark A. Suwyn(4) 2000Suwyn(5) 2001 $750,000 $ -0- $--- $657,165 337,450 $61,136
Chairman and Chief 2000 750,000 -0- --- --- 189,360 $63,860
Chairman and63,860
Executive Officer 1999 703,015 668,750 --- --- 258,000 25,489
Chief Executive 1998 714,000 322,500 --- 116,500 21,740
Officer
Gary C. 2000 297,404Curtis M. Stevens 2001 $306,787 $ -0- --- 27,000 23,902
Wilkerson 1999 280,615 190,451 --- 35,000 16,205$151,523 77,750 $23,986
Vice President, 1998 277,917 134,000 --- 27,000 16,000
and General Counsel
Curtis M. 2000 281,346 -0- --- --- 39,000 24,038
StevensTreasurer and Chief 1999 234,731 180,180 --- --- 55,000 17,191
Vice President, 1998 216,668 141,900 --- 80,000 16,769
Treasurer and
Chief
Financial Officer
J. Keith Matheney 2001 $250,005 $ -0- --- $114,635 59,000 $18,699
Vice President, 2000 239,837 -0- --- --- 39,000 19,720
MatheneyOSB and 1999 224,235 167,248 --- --- 46,000 31,045
Vice President, 1998 208,687 104,000 --- 20,000 17,339
Core BusinessesEngineered
Wood Products
Michael J. Tull 2001 $237,608 $ -0- --- $81,720 42,050 $26,995
Vice President, 2000 228,183 -0- --- --- 32,000 26,296
Vice President,Human Resources 1999 215,177 135,816 --- --- 41,000 22,203
Human Resources 1998 198,942 77,100 31,807 22,000 19,024
Walter M. Wirfs 2001 $221,952 $ -0- --- $97,610 49,950 $19,942
Vice President, 2000 202,404 -0- $20,383 --- 32,000 16,480
Lumber and 1999 157,116 111,150 --- --- 25,000 ---
Plywood
- -------------------------
(1)Represents amounts paid under LP's Annual Cash Incentive Award Plan upon
satisfaction of performance goals.
(2)Represents primarily reimbursement for financial planning services. Other
amounts of personal benefits have been excluded as being below the minimum
thresholds included in the proxy disclosure rules of the SEC.
(3) Represents the value of incentive shares on the grant date, February 3,
2001. Incentive shares are rights to receive shares of Common Stock that
vest in full at the end of five years, provided that the individual
remains an employee of LP or one of its subsidiaries through the end of
that period. Participants do not have rights to vote or receive cash
dividends, if any, until the shares vest. An award will vest in full
immediately if the recipient dies or becomes disabled, a change in control
of LP occurs, or certain share price targets for the Common Stock are met
before the end of the required service period. Change in control has
substantially the same meaning as described with respect to certain change
in control employment agreements under "Agreements with Executive
Officers" below. Incentive share awards provide for reimbursement for any
excise tax imposed as a result of accelerated vesting upon a change in
control deemed to constitute excess parachute payments plus any related
federal, state and local income taxes. In accordance with SEC proxy rules,
the value of the incentive shares is based on the closing sale price of
the Common Stock on February 2, 2001, which was $11.35 per share. The
following table shows (a) the total number of incentive shares credited to
each of the named executive officers and (b) the value of those incentive
shares based on
-20-
the closing sale price of the Common Stock on December 31, 2001. No
incentive shares were granted prior to 2001.
Incentive Shares Value at 12/31/01
---------------- -----------------
Mark A. Suwyn 57,900 $418,676
Curtis M. Stevens 13,350 112,674
J. Keith Matheney 10,100 85,244
Michael J. Tull 7,200 60,768
Walter M. Wirfs 8,600 72,584
(4) Amounts shown for 20002001 include (i) an annual profit sharingmatching contribution to LP's
401(k) Planmedical savings plan of $2,312$100 for each named executive officer; (ii) an
annual matching contribution under LP's Executive Deferred Compensation
Plan equal to the amount deferred up to 7 percent of salary, as follows:
Mr. Suwyn, $52,500;
Mr. Wilkerson, $20,818;$48,462; Mr. Stevens, $19,694;$19,804; Mr. Matheney, $16,789; Mr. Tull,
$15,345; and Mr. Tull, $15,973; andWirfs, $14,168; (iii) interest accrued under the
Executive Deferred Compensation Plan (to the extent that such interest
exceeds amounts accrued at a rate equal to 120 percent of the applicable
federal long-term rate), compounded monthly, as follows: Mr. Suwyn,
$9,048; Mr. Wilkerson, $772;$11,654; Mr. Stevens, $2,032;$2,829; Mr. Matheney, $619;$1,132; Mr. Tull, $10,584; and
Mr. Wirfs, $5,067; and (iv) an annual matching contribution under LP's
401(k) Plan as follows: Mr. Suwyn, $1,010; Mr. Stevens, $1,253; Mr.
Matheney, $678; Mr. Tull, $8,011.
(4)$966; and Mr. Wirfs, $607.
(5) At December 31, 2000,2001, Mr. Suwyn held 60,000 shares of restricted stock
with a dollar value of $607,500,$506,400, subject to future vesting or forfeiture.
The shares will vest upon Mr. Suwyn's reaching age 62 while employed by
LP, subject to acceleration of vesting as to all shares upon the
occurrence of certain specified events during Mr. Suwyn's term of
employment, including a change in control of LP. See "Agreements with
Executive Officers" below. DividendsCash dividends, if any, are payable on his
restricted stock at the same time as dividends on unrestricted shares of
Common Stock.
-16-
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS(1)
--------------------------------
NUMBER OF PERCENT OF
SHARES TOTAL OPTIONS EXERCISE
UNDERLYING GRANTED OR BASE
OPTIONS TO EMPLOYEES PRICE PER EXPIRATION GRANT DATE
NAME GRANTED DURING 2000 SHARE DATE PRESENT VALUE(2)
-
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants(1)
------------------------------------------------------------------
Number of Percent of
Shares Total Options
Underlying Granted to Exercise or
Options Employees Base Price Expiration Grant Date
Name Granted During 2001 Per Share Date Present Value(2)
---- ---------- ------------ -------------------- ------------- ----------- ---------- ----------------
Mark A. Suwyn 189,360 19.5% $12.38337,450 20.3% $11.35 2/5/10 $922,183
Gary C. Wilkerson 27,000 2.8 12.38 2/5/10 131,4903/11 $1,201,322
Curtis M. Stevens 39,000 4.0 12.3877,750 4.7 11.35 2/5/10 189,9303/11 276,790
J. Keith Matheney 39,000 4.0 12.3859,000 3.5 11.35 2/5/10 189,9303/11 210,040
Michael J. Tull 32,000 3.3 12.3842,050 2.5 11.35 2/5/10 155,8403/11 149,698
Walter M. Wirfs 49,950 3.0 11.35 2/3/11 177,822
--------------------
- --------------------
(1)No stock appreciation rights ("SARs") were granted to the named executive
officers during 2000.2001. All options were granted for the number of shares
indicated at exercise prices equal to the fair market value of the Common
Stock on the date of grant. The options will vest in three equal annual
installments beginning one year following the date of grant, subject to
acceleration of exercisability in the event of a change in control of LP.
If such acceleration of exercisability results in an "excess parachute
payment" within the meaning of Section 280G of the Internal Revenue Code,
of 1986, as amended (the "Code"), the amount of any excise tax imposed on a participant by Section 4999(a)
of the Internal Revenue Code directly attributable to such acceleration
will be reimbursed by LP, together with any income or excise taxes imposed
on such reimbursement.
-21-
(2)The values shown have been calculated based on the Black-Scholes option
pricing model and do not reflect the effect of restrictions on
transferability or vesting. The values were calculated based on the
following assumptions: (i) expectations regarding volatility of 34.34%42.35%
were based on monthly stock price data for LP for the 36 months preceding
the grant date, (ii) the risk-free rate of return (6.80%(5.29%) was assumed to
be the Treasury Bond rate whose maturity corresponds to the expected term
(10.0 years) of the options granted; and (iii) a dividend yield of 2.88%3.91%.
The values which may ultimately be realized will depend on the market
value of the Common Stock during the periods during which the options are
exercisable, which may vary significantly from the assumptions underlying
the Black-Scholes model.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES(1)
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT DECEMBER 31, 2000 AT DECEMBER 31, 2000(2)
--------------------- -------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES(1)
Number of Securities Underlying Value of Unexercised
Unexercised Options In-the-Money Options
Shares at December 31, 2001 at December 31, 2001(3)
Acquired on ------------------------------- -----------------------
Exercise Value
During 2001 Realized Exercisable Unexercisable Exercisable Unexercisable
Name ----------- -------- ----------- ------------- ----------- -------------
Mark A. Suwyn 439,167 440,193 $ 0 $ 0
Gary C. Wilkerson 49,668 59,333 0 0
Curtis M. Stevens 107,668 102,332 0 0
J. Keith Matheney 62,467 76,333 0 0
Michael J. Tull 87,334 66,666 0 0
- -----------------
(1)The named executive officers did not exercise any options or SARs during 2000
and did not hold any SARs at December 31, 2000.
(2)Based on the difference between the market value per share of the Common
Stock on December 31, 2000, $10.125, and the option exercise price, if lower.
-17-
LONG-TERM INCENTIVE PLANS-AWARDS IN 2000
ESTIMATED FUTURE PAYOUTS
UNDER NON-STOCK
PRICE-BASED PLANS(2)
------------------------------------
PERFORMANCE
NUMBER OF PERIOD
PERFORMANCE UNTIL MATURATION
NAME SHARES(1) OR PAYOUT THRESHOLD (#) TARGET (#) MAXIMUM (#)
- ---- ----------- ---------------- ------------- ---------- -----------
Mark A. Suwyn 36,364 1/00 - 12/03 7,273 36,364 72,728
Gary C. Wilkerson 9,212 1/00 - 12/03 1,842 9,212 18,424-- -- 667,120 549,690 $ 0 $ 0
Curtis M. Stevens 7,758 1/00 - 12/03 1,552 7,758 15,516-- -- 165,667 122,083 0 0
J. Keith Matheney 7,402 1/00 - 12/03 1,480 7,402 14,80410,800 $13,716(2) 86,667 100,333 0 0
Michael J. Tull 7,079 1/00-- -- 119,000 77,050 0 0
Walter M. Wirfs -- -- 27,334 79,616 0 0
- 12/03 1,416 7,079 14,158-----------------
- ----------------------------
(1) The named executive officers did not exercise any SARs during 2001 or hold
any SARs at year-end.
(2) Represents performance-contingent stock awards granted under LP's 1997
Incentive Stock Award Plan in February 2000. Each grant entitles the participant
to receive a numberamount by which the fair market value of the shares of
Common Stock determined by comparing LP's
annualized total stockholder return ("LP's TSR") tounderlying the mean annualized total
stockholder returnoptions at the date of five other forest products companies (the "Industry TSR")
forexercise exceeded the
four-year performance period ending December 31, 2003.
(2)The actual numberexercise price.
(3) Based on the difference between the closing price of performance shares to be issued pursuant to an award,
expressed as a percentage of the award, will range from 20% if LP's TSR is three
percentage points below the Industry TSR to 200% if LP's TSR is 13 percentage
points above the Industry TSR, and will be equal to the target amount if LP's
TSR is 3 percentage points above the Industry TSR. The number of target
performance shares will be automatically adjusted to reflect a stock dividend or
stock split and the deemed reinvestment of cash dividends declared on the Common Stock duringon
December 31, 2001, $8.44 per share, and the performance period. Of the performance shares earned,option exercise price, if
any,
50% is payable at the end of the four-year performance period, provided that the
participant continues to be an employee of LP, and 50% will remain subject to
forfeiture for an additional two years if the participant leaves LP's employment
within the two-year restriction period. Special provisions apply in case of the
participant's death or disability, retirement after age 60 with the approval of
LP's chief executive officer, or a change in control of LP.lower.
Retirement Benefits
LP's Supplemental Executive Retirement Plan (the "SERP") is a defined
benefit plan intended to provide supplemental retirement benefits to key
executives designated by the committee appointed to administer the SERP. The
following table shows the estimated annual benefits payable to participants in
the SERP upon retirement based on the indicated years of credited service and
compensation levels (without reduction for Social Security or the value of
benefits under LP's other retirement plans):.
-22-
PENSION PLAN TABLE
FINAL AVERAGE
COMPENSATION YEARS OF CREDITED SERVICE
------------- -------------------------Years of Credited Service
Final Average -------------------------------------
Compensation 5 10 15
------------ - -- --
$ 150,000....150,000.......... $ 25,000 $50,000 $75,000
200,000....200,000.......... 33,333 66,667 100,000
300,000....300,000.......... 50,000 100,000 150,000
400,000....400,000.......... 66,667 133,333 200,000
500,000....500,000.......... 83,333 166,667 250,000
600,000....600,000.......... 100,000 200,000 300,000
700,000....700,000.......... 116,667 233,333 350,000
800,000....800,000.......... 133,333 266,667 400,000
1,000,000....1,000,000.......... 166,667 333,333 500,000
1,200,000....1,200,000.......... 200,000 400,000 600,000
1,500,000....1,500,000.......... 250,000 500,000 750,000
-18-
Participants will become fully vested in their benefits under the SERP
after completing five years of participation in the SERP, beginning January 1,
1997. Vesting will be accelerated in the event of the participant's death or
disability or a change in control of LP.
The annual benefit payable under the SERP is equal to 50% of final
average compensation multiplied by a fraction the numerator of which is years of
credited service (up to a maximum of 15) and the denominator of which is 15.
Years of credited service are determined under the provisions of the 401(k)
Plan. If a participant's employment is involuntarily terminated within 36 months
after a change in control of LP occurs, he or she will be credited with two
additional years of service. The years of service credited to the executive
officers named in the Summary Compensation Table above as of December 31, 2000,2001,
are as follows: Mr. Suwyn, 8 years; Mr. Wilkerson, 3 years; Mr. Stevens, 34.3 years; Mr. Matheney, 3031.8 years; Mr. Tull, 5.4
years, and Mr. Tull, 4Wirfs, 2.8 years. Mr. Suwyn does not participate in the SERP.
Final average compensation on an annual basis is defined as a
participant's compensation during the 60 consecutive months out of the last 120
months of employment in which the participant's compensation was highest,
divided by five. Compensation includes base pay and annual cash incentives (for
the executive officers named in the Summary Compensation Table above, salary
plus annual bonus) paid to a participant or deferred under LP's Executive
Deferred Compensation Plan, but excludes all other benefits. If a participant's
employment is involuntarily terminated within 36 months after a change in
control of LP, benefits under the SERP will be calculated based on the
participant's base salary during the preceding 12 months plus the average annual
cash incentive paid in the preceding three years, if higher than final average
compensation.
Retirement benefits shown in the table above are expressed in terms of
single life annuities, are subject to reduction in the event of retirement
before age 62 and will be reduced by an amount equal to the sum of (1) 50% of
the participant's primary Social Security benefit determined at age 62 and (2)
the value of the participant's benefits under LP's other retirement plans.
During 2000, LP amended an existing frozen defined benefit plan into
the Retirement Account Plan, in which certain employees, including executive
officers, participate. The Retirement Account Plan is a cash balance plan under
which there is an account for each participating employee to which there is an annual
contribution credit is made equal to five percent of compensation (with certain
exclusions) up to a maximum earnings limit imposed by the federal tax laws. Each
of the named executive officers was credited with theThe
maximum of $8,500annual contribution credit for 2000.2002 is $10,000. In addition, interest is
credited daily on the cash balance in each participant's account. Once vested,
generally after five years of service, a participant is entitled to the amounts
in his or her account when he or she leaves LP. The estimated annual retirement
income payable as a single life annuity at normal retirement at age 65, assuming
no change in the maximum earnings limit and an
-23-
interest crediting rate of 5.785.12 percent, would be as
follows for the executive officers named in the
Summary Compensation Table above:above as of December 31, 2001, is as follows: Mr.
Suwyn, $7,992; Mr. Wilkerson, $13,560,$693; Mr. Stevens, $24,420;$2,076; Mr. Matheney, $16,848;$1,448; Mr. Tull, $1,098; and
Mr. Tull, $13,056.Wirfs, $1,288. Payment may also be in a lump sum or pursuant to other
arrangements. The Retirement Account Plan does not provide for an offset for
Social Security benefits.
Pursuant to Mr. Suwyn's employment agreement with LP, he is entitled to
a nonqualified supplemental executive retirement benefit in which he is
immediately vested to the extent accrued.accrued in lieu of participating in the SERP.
The annual retirement benefit payable to Mr. Suwyn under the agreement
(calculated as a single life annuity reduced on an actuarial basis for
retirement prior to age 62) is equal to an amount based on Mr. Suwyn's
compensation (salary plus annual bonus) for the year during the three
consecutive calendar years prior to termination of employment in which he had
the highest compensation (including with his previous employer), with a maximum
annual benefit equal to 50% of such compensation (less a Social Security offset)
and a minimum annual benefit equal to 25% of such compensation. The annual
benefit so calculated will be reduced by an amount equal to the value of the
benefits payable to Mr. Suwyn pursuant to the retirement plans maintained by his
prior employer and LP. In the event of a change in control of LP, -19-
Mr. Suwyn will
be entitled to two additional years of service for purposes of the foregoing
benefit. If Mr. Suwyn were to retire on December 31, 2001,2002, the annual
supplemental retirement benefit payable by LP, without any reductions, pursuant
to the provisions of the agreement is estimated to be $457,000.$376,000. See "Agreements
with Executive Officers."
Management Loans and Other Transactions
In November 1999, the subcommittee of the Compensation Committee
approved an Executive Loan Program under which up to 1,700,000 shares of the
Common Stock were offered by LP for purchase prior to January 23, 2000, by LP's
executive officers, Business Team Leaders, and other executives designated by
its chief executive officer. In November 2000, thisthe subcommittee of the
Compensation Committee authorized additional loans under the Executive Loan
Program during the 60-day period which ended January 23, 2001. Participants were
permitted to borrow up to 100 percent of the purchase price of the shares to be
purchased, which was equal to the closing price of the Common Stock on the New
York Stock Exchange (NYSE) on the date of delivery of an election to participate
to LP. The maximum amount an individual was permitted to borrow was three times
his or her annual base pay. The loans bear interest at the annual rate of 6.02
percent.
Interest and principal are due and payable at the earlier of January 23,
2006, or 30 days following the executive's resignation or involuntary
termination of employment. The loans are unsecured. With respect to loans
outstanding on or entered into after November 24, 2000, if the executive remains
continuously employed by LP through the following dates, the loan balance at
that date will be forgiven in the following percentages: January 23, 2004, 50
percent of the original principal; January 23, 2005, an additional 25 percent of
the principal plus 50 percent of the accrued interest; and January 23, 2006, all
remaining principal and accrued interest. If an executive's employment
terminates due to death, disability, or termination by LP without cause, or a
change in control of LP occurs, his or
her loan will beis forgiven in a prorated amount of the percentages specified above
based on the amount of time elapsed since January 23, 2001. If an executive's
employment is terminated after November 2, 2001, by reason of death, disability,
involuntary termination by LP without cause or termination by the executive for
good reason following a change in control of LP, an amount of original loan
principal equal to the excess of the executive's cost basis in shares of Common
Stock purchased under the program over the fair market value of such shares on
the employment termination date (to the extent such amount exceeds loan
forgiveness amounts under the program's other provisions plus any amounts paid
as severance based on losses under the program), together with 100 percent of
the executive's accrued loan interest, will be forgiven. In addition, if the
Common Stock has traded on the NYSE for at least five consecutive trading days
at specified price levels or above during the 12-month period immediately
preceding January 23, 2004 or 2005 and the executive remains employed by LP, the
following additional percentages of the loan balance will be forgiven: January
23, 2004, 25 percent of the
-24-
principal and 50 percent of the accrued interest at a price level of $16.00 per
share or 50 percent of the principal and 100 percent of the accrued interest at
a price level of $20.00 per share; and January 23, 2006,2005, all remaining principal
and accrued interest at a price level of $18.00 per share. No amount of a loan
will be forgiven if the executive does not still own, as of the applicable date,
all shares purchased under the Executive Loan Program.
A total of 238,705 shares of Common Stock were purchased by five
executives during the period from January 1, 2000 to January 23, 2001, for a
total purchase price of $2,230,478. The following table provides information regarding loans made under the
Executive Loan Program to persons who were executive officers of LP during the period from January 1, 2000, to January 23,
2001.
The loan amounts shown
-20-
include the original principal amount and the amount
outstanding (including accrued interest) at March 15, 2001,8, 2002, which is the highest
amount outstanding since January 1, 2000.
ORIGINAL LOAN SHARE NO. OF BALANCE
NAME AMOUNT PRICE SHARES AT 3/15/01
---- ------------- ----- ------ ----------2001.
Original Loan Share No. of Balance
Name Amount Price Shares at 3/8/02
---- -------- ----- ------ ---------
J. Ray Barbee..... $ 599,991 $13.625 44,036 $ 0(1)
F. Jeff Duncan.... 542,191 13.000 41,707 614,253
Warren C. Easley.. 349,994 11.625 30,107 0(1)
Richard W. Frost.. 599,990 11.625 51,612 685,454
M. Ward Hubbell... 416,803 11.625 35,854 476,173
Joseph B. Kastelic 399,989 13.625 29,357 456,665
J. Keith Matheney. 688,491 11.625 59,225 786,561
Elizabeth T. Smith 399,993 8.625 46,376 0(1)
Curtis M. Stevens. 719,994 11.625 61,935 822,552
Mark A. Suwyn..... 2,141,999 11.625 184,258 2,447,112
Michael J. Tull... 656,999 11.625 56,516 750,583
Gary C. Wilkerson. 854,996 11.625 73,548 0(1)
Walter M. Wirfs... 569,997 11.625 49,032 651,189
- -----------------
(1) The highest amounts outstanding during 2001 prior to repayment of any
unforgiven amounts of the loans following termination of employment were
as follows: Mr. Barbee, $ 599,991 $13.625 44,036 $ 646,847
F. Jeff Duncan 542,191 13.000 41,707 580,036
Warren C.$652,644; Mr. Easley, 349,994 11.625 30,107 377,575
Richard W. Frost 599,990 11.625 51,612 647,271
M. Ward Hubbell 416,803 11.625 35,854 449,648
Joseph B. Kastelic 399,989 13.625 29,357 431,226
J. Keith Matheney 688,491 11.625 59,225 742,746
Elizabeth T.$395,478; Ms. Smith,
399,993 8.625 46,376 405,943
Curtis M. Stevens 719,994 11.625 61,935 776,732
Mark A. Suwyn 2,141,999 11.625 184,258 2,310,796
Michael J. Tull 656,999 11.625 56,516 708,772
Gary C.$408,325; and Mr. Wilkerson, 854,996 11.625 73,548 922,372
Walter M. Wirfs 569,997 11.625 49,032 614,915$966,108.
Terry Simpson, the son of one of LP's directors, Lee C. Simpson, is an
employee of LP and received compensation totaling $202,525$150,955 during 2000.
See "Item 1 - Election2001.
During 2001, LP used, and is continuing to use during 2002, the legal
services of Directors; Compensation Committee - Interlocks
and Insider Participation" for a descriptionJones, Day, Reavis & Pogue, of one additional transaction. See
also "Agreements with Executive Officers."which Mr. McCartan is the managing
partner.
Directors' Compensation
Each director of LP who is not an employee of LP receives for all
services as a director fees at the rate of $24,000 per year, plus $1,750 for
each board meeting and $1,000 for each committee meeting attended, including
telephone conference meetings.
LP maintainspreviously maintained an unfunded deferred compensation plan for
directors which permitsallowed outside directors to elect to defer payment of any
portion of their director fees and meeting fees, provided that thesubject to a minimum deferral
amount isof $2,400 per year. Such deferred compensation including amounts deferred under
the prior plan, maycould be allocated at a
participating director's election in a fund which earnsearned interest at a rate
equal to two percentage points above Moody's Average Corporate Bond Yield Index,
adjusted monthly, or in a fund invested in phantom units of Common Stock. Payment of deferredThe
plan was terminated effective December 1, 2001, and all amounts will generally be
made, atheld in the director's option, in a lump sum or in substantially equal annual
installments over a 5-year, 10-year or 15-year period beginning either within 65
days or duringplan
were distributed to the month of January after he or she ceases to be a director.participating directors.
LP's 1992 Non-Employee Director Stock Option Plan (the "Director Plan")
provides for the automatic grant every year (with certain exceptions) of options
to purchase shares of Common Stock to members of the Board of Directors who are
not employees of LP or any of its subsidiaries. Each option granted under
-25-
the Director Plan beginning May 1, 2000, entitles the holder to purchase 9,000
shares of Common Stock at a price equal to 100% of the fair market value (as
defined) of a share of Common Stock on the date of grant. Each option becomes
exercisable as to 10% of the shares covered by the option (i.e., 900 shares)
every three months following the date of grant until vested in full. Options
become immediately exercisable in full upon the death of the holder or upon the
occurrence of a change in control of LP. Effective May 1, 2000, the Board of
Directors adopted the 2000 Non-Employee Director Restricted Stock Plan, which
provides for annual grants of restricted shares of Common Stock with a market
value on the grant date of $20,000 to each non-employee director of L-P. The
restricted shares vest in full on the earliest to occur of five years following
the grant date, upon the director's death, disability or retirement (as
defined), or a change in control of L-P. If the director ceases to be a director
before the restrictions lapse,
-21-
the restricted shares are forfeited. Prior to vesting, the director has the
right to vote the shares and to receive dividends. To the extent not fully vested, an
option will become exercisable as to an additional 20% of shares upon the
director's retirement as of the first annual meeting of stockholders after the
director attains age 70. Each option expires 10 years after the date of grant,
subject to earlier termination if the holder ceases to be a member of the Board
of Directors.
Effective May 1, 2000, the Board of Directors adopted the 2000
Non-Employee Director Restricted Stock Plan, which provides for annual grants of
restricted shares of Common Stock with a market value on the grant date of
$20,000 to each non-employee director of LP. The restricted shares vest in full
on the earliest to occur of five years following the grant date, upon the
director's death, disability or retirement (as defined), or a change in control
of LP. If the director ceases to be a director before the restrictions lapse,
the restricted shares are forfeited. Prior to vesting, the director has the
right to vote the shares and to receive cash dividends, if any.
Agreements with Executive Officers
LP entered into an employment agreement with Mark A. Suwyn with respect
to his employment as LP's Chairman and Chief Executive Officer in January 1996.
The term of the agreement presently will expire on December 31, 2001,2002, subject to
automatic extension annually unless 90 days' prior notice of intention to
terminate is given by either party.
The agreement provides that Mr. Suwyn is entitled to a minimum base
salary of $600,000, subject to annual review for increase by the Board of
Directors beginning in 1997, and an annual bonus, subject to satisfying
reasonable annual performance goals established by the Compensation Committee.
The agreement also provides for a nonqualified supplemental retirement benefit
as described above under "Retirement Benefits." In addition, Mr. Suwyn is
entitled under the agreement to participate in all LP employee benefit
arrangements at a level commensurate with his position.
In the event Mr. Suwyn's employment is terminated by Mr. Suwyn for Good
Reason (as defined) or by LP for any reason other than disability or Cause (as
defined), or if the agreement is not renewed pursuant to notice by LP, Mr. Suwyn
will be entitled to receive an amount equal to his base salary, as then in
effect, for the remainder of the term of the agreement or 24 months, whichever
is longer, plus a pro rata cash incentive payment for the year of termination
and certain continued medical benefits. He will also be entitled to all other
amounts and benefits in which he is then or thereby becomes vested.
If a Change in Control occurs (as defined) and Mr. Suwyn's employment
terminates (including voluntarily by Mr. Suwyn) during the 13-month period
following the Change in Control other than for Cause or by death or disability,
Mr. Suwyn will be entitled to receive, in addition to all amounts and benefits
in which he is vested, an amount equal to his base salary, as then in effect,
for the remainder of the term of the agreement or 24 months, whichever is
longer, together with (i) a pro rata share of the targeted annual cash incentive
award for the year in which such termination occurs; (ii) a bonus equal to two
times the targeted annual cash incentive award, if any, for such year payable in
24 equal monthly installments; and (iii) employee welfare benefits substantially
similar to those which he was receiving immediately prior to such termination.
For purposes of the agreement, a "Change in Control" of LP includes
certain extraordinary corporate transactions pursuant to which less than a
majority of the combined voting power in LP remains in the hands of the holders
immediately prior to such transactions, a person or group (other than certain
persons related to LP) becomes the beneficial owner of 25% or more of the
combined voting power in LP, or, with certain exceptions, the existing directors
of LP cease to constitute a majority of the Board of
-26-
Directors. "Cause" includes continuing to fail to devote substantially all one's
business time to LP's business and affairs, engaging in certain activities
competitive with LP, or the commission of specified wrongful acts. "Good Reason"
includes failure to maintain Mr. Suwyn as Chairman and Chief Executive Officer,
a reduction in base salary or the termination or reduction of any employee
benefits, certain extraordinary corporate transactions, certain relocations of
Mr. Suwyn's place of work, or any material breach of the agreement by LP.
If any payment under the agreement is determined to be subject to the
federal excise tax imposed on benefits that constitute excess parachute payments
under the Internal Revenue Code, Mr. Suwyn will be entitled to reimbursement for
such taxes on an after-tax basis.
LP has entered into Change of Control Employment Agreements (the
"Employment Agreements") with all of its current executive officers, including
each of the executive officers named in the Summary
-22-
Compensation Table above.
The Employment Agreements provide for severance compensation in the event of
termination of employment following a change of control of LP. Each Employment
Agreement has a term of three years subject to automatic extension annually for
one additional year unless notice of nonrenewal is given by November 26 of the
current year. Also, if a change of control of LP occurs during the term of the
Employment Agreements, the term will be extended automatically for three
additional calendar years beyond the date on which the change of control occurs.
The Employment Agreements further provide that if, within three years
following the occurrence of a change of control, an executive's employment with
LP is terminated by LP other than for cause or by the executive for good reason,
the executive will be entitled to receive (i) his or her full base salary
through the date of termination (which must be at least equal to the highest
rate in effect during the 12 months prior to the date the change of control
occurred) plus a pro rata amount of the executive's target bonus for the fiscal
year in which the change of control occurred (the "Target Bonus"), (ii) an
amount equal to three times the sum of (x) his or her annual base salary at such
rate plus (y) his or her Target Bonus, and (iii) the difference, calculated on
an actuarial present value basis, between the retirement benefits that would
have accrued if the executive's employment continued for an additional three
years and the actual vested benefit, if any, at the date of termination. Special
payment provisions apply in the event of the executive's death or disability
following a change of control.
The Employment Agreements also provide for reimbursement of legal fees
and expenses and for outplacement services and for the continuation of health,
disability and life insurance benefits for three years following termination of
employment voluntarily for good reason or involuntarily other than for cause or
disability. Each Employment Agreement also provides for reimbursement for any
excise tax imposed on benefits that constitute excess parachute payments plus
any related federal, state and local income taxes, subject to a "cut back"
provision providing for a reduction in the payments under the Employment
Agreement if the amount that would be treated as excess parachute payments is
not greater than 110% of the maximum amount that could be paid to the executive
without imposition of any excise tax.
LengthyComplete definitions of cause, change of control and good reason are
included in the Employment Agreements. Brief summaries of the definitions are
set forth below.
"Cause" means (i) the willful and continued failure of the executive to
perform substantially his or her duties after delivery of a written demand for
substantial performance or (ii) the willful engaging by the executive in illegal
conduct or gross misconduct that is materially and demonstrably injurious to LP,
in each case pursuant to a resolution adopted by the affirmative vote of at
least three-fourths of the entire membership of the Board of Directors.
"Change of control" means (i) the acquisition by a person or group of
beneficial ownership of 20% of LP's outstanding Common Stock or voting
securities, with certain exceptions, (ii) a change in the composition of the
Board of Directors such that the incumbent directors cease to constitute at
least a
-27-
majority of the Board (including, for purposes of computing a majority, those
persons nominated for election by a majority of the then incumbent directors who
had been similarly nominated), (iii) consummation of certain reorganizations,
mergers, consolidations or sale of substantially all the assets of LP, or (iv)
approval by LP's stockholders of a complete liquidation or dissolution of LP.
"Good reason" with respect to the termination by an employee of his or
her employment with LP means (i) subject to certain exceptions, the assignment
of duties inconsistent with the executive's position, (ii) any failure by LP to
comply with the compensation provisions of the Employment Agreement, (iii)
transfer of the executive to a location more than 25 miles from the present
location, or (iv) any purported termination by LP of the executive's employment
otherwise than as expressly permitted by the Employment Agreement. A termination
of employment by the executive during the 30-day period immediately following
the first anniversary of the change of control is deemed to be for good reason
for purposes of the Employment Agreements.
-23-
A management restructuring severance package for senior management in
which the executive officers named in the Summary Compensation Table are
eligible to participate was in place during 2001 and will continue in effect for
2002. Under the severance arrangement, in the event an executive officer's
position is eliminated as a result of management restructuring, the executive
will be entitled to receive a lump sum cash payment equal to the sum of (1) 15
months of current base pay, (2) an amount equal to the actuarial present value
of the executive's accrued benefit under the SERP computed as if the executive
had completed five years of participation in the SERP, and (3) an amount equal
to the present value of 15 months of COBRA health insurance continuation
premiums. Outplacement services will also be made available for a six-month
period following termination.
STOCKHOLDER PROPOSALS
Any stockholder who intends to present a proposal at the Annual Meeting
of Stockholders of LP in 2002,2003, and who wishes to have the proposal included in
LP's proxy materials for that meeting, must deliver the proposal to the
Corporate Secretary of LP no later than November 26, 2001.25, 2002. Any such proposal
must meet the informational and other requirements set forth in the rules and
regulations of the SEC in order to be eligible for inclusion in the proxy
materials for that meeting.
LP's bylaws also provide that no business may be brought before an
annual meeting except as specified in the notice of the meeting or as otherwise
brought before the meeting by or at the direction of the Board of Directors or
by a stockholder of record who has delivered written notice thereof to the
Chairman by the deadline specified in the bylaws. In the case of next year's
annual meeting, this notice must be received by LP no later than February 9, 2002.8,
2003. Such notice must include the information required by the SEC's rules for
stockholder proposals presented for inclusion in LP's proxy materials. The
meeting chairman may, if the facts warrant, determine that any such business was
not properly brought before the meeting and so declare to the meeting, in which
case such business shall not be transacted.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Deloitte & Touche LLP, independent
public accountants, to examine the financial statements of LP for 2001.2002. LP
expects representatives of Deloitte & Touche LLPthe accounting firm to be present at the annual
meeting and to be available to respond to appropriate questions from
stockholders. The accountants will have the opportunity to make a statement at
the annual meeting if they desire to do so.
Audit Fees-28-
The aggregate fees, including out-of-pocket expenses, billed by Deloitte & Touche
LLP, the member firms of Deloitte Touche Tohmatsu, and their respective
affiliates (collectively, "Deloitte & Touche"), for services during 2001 were as
follows:
Audit Fees $758,790(1)
=======
Financial Information Systems Design and Implementation Fees -0-
All Other Fees:
Audit-Related Services 108,924(2)
Non-Audit Services 269,159(3)
-------
Total of All Other Fees $378,083(4)
=======
- ---------------
(1) Audit fees represent aggregate fees billed to LP by Deloitte & Touche for
professional services rendered for the audit of LP's annual financial
statements for the year ended December 31, 2000, and2001, their review of the
financial statements included in LP's quarterly reports on Form 10-Q for
that fiscal year, were $622,300.
Financial Information Systems Design and Implementation Fees
During 2000, Deloitte & Touche LLP did not provide any professionalconsultation on issues regarding U.S. generally accepted
accounting principles related to items included in the financial statements
for that year.
(2) Audit-related services primarily include issuance of comfort letters to
LP with regard to financial information systems design and
implementation.
All Other Fees
Fees billed forunderwriters.
(3) Non-audit services including out-of-pocket expenses, provided to LP
by Deloitte & Touche LLP during 2000, other than the services described above
under "Audit Fees," were $144,761.primarily include tax services.
(4) The Audit Committee has considered whetherand concluded that the provision of
these services to LP is compatible with maintaining Deloitte & Touche LLP'sTouche's
independence.
GENERAL
The cost of soliciting proxies will be borne by LP. In addition to the
solicitation of proxies by the use of the mails, some of the officers and
regular employees of LP, without extra compensation, may solicit proxies
personally or by other means such as telephone, telecopier, telegraph, or cable.e-mail.
LP will request brokers, dealers, banks, voting trustees, and their
nominees who hold Common Stock of record to forward soliciting material to the
beneficial owners of such stock and will reimburse such record holders for their
reasonable expenses in forwarding material. LP has retained D.F. King & Co.,
Inc., to assist in such solicitation for an estimated fee of $9,500 plus
reimbursement for certain expenses.
-24--29-
APPENDIX A
LOUISIANA-PACIFIC CORPORATION
1997 INCENTIVE STOCK AWARD PLAN
ARTICLE 1. ESTABLISHMENT AND PURPOSE
1.1 ESTABLISHMENT. LOUISIANA-PACIFIC CORPORATION ("Corporation"), hereby
establishes the Louisiana-Pacific Corporation 1997 Incentive Stock Award Plan
(the "Plan"), effective as of March 1, 1997, subject to stockholder approval as
provided in Article 15.
1.2 PURPOSE. The purpose of the Plan is to promote the long-term interests
of Corporation and its stockholders by enabling Corporation to attract, retain,
and reward key employees of Corporation and its subsidiaries and to strengthen
the mutuality of interests between such employees and Corporation's
stockholders. The Plan is designed to serve this purpose by offering stock
options and other equity-based incentive awards and encourage key employees to
acquire an ownership in Corporation.
ARTICLE 2. DEFINITIONS
2.1 DEFINED TERMS. The following definitions are applicable to the Plan:
"AWARD" means an award or grant made to a Participant pursuant to the Plan.
"AWARD AGREEMENT" means an agreement as described in Section 6.2 of the
Plan.
"BOARD" means the Board of Directors of Corporation.
"CODE" means the Internal Revenue Code of 1986, as amended and in effect
from time to time, or any successor thereto, together with rules, regulations,
and interpretations promulgated thereunder. Where the context so requires, any
reference to a particular Code section will be construed to refer to the
successor provision to such Code section.
"COMMITTEE" means the Compensation Committee of the Board.
"COMMON STOCK" means the common stock, $1 par value, of Corporation or any
security of Corporation issued in substitution, exchange, or lieu thereof.
"CORPORATION" means Louisiana-Pacific Corporation, a Delaware corporation,
or any successor corporation thereto.
"EXCHANGE ACT" means the Securities Exchange Act of 1934.
"FAIR MARKET VALUE" means on any given date, the closing price per share of
Common Stock as reported for such day by the principal exchange or trading
market on which Common Stock is traded (as determined by the Committee) or, if
Common Stock was not traded on such date, on the next preceding day on which
Common Stock was traded. If the Common Stock is not listed on a stock exchange
or if trading activities for Common Stock are not reported, the Fair Market
Value will be determined by the Committee.
"PARTICIPANT" means an employee of Corporation or a Subsidiary who is
granted an Award under the Plan.
"PLAN" means this Louisiana-Pacific Corporation 1997 Incentive Stock Award
Plan, as set forth herein and as it may be hereafter amended from time to time.
"SHARE" means a share of Common Stock.
"SUBSIDIARY" means any corporation in which Corporation directly or
indirectly controls 50 percent or more of the total combined voting power of all
classes of stock having voting power.
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"VEST" or "VESTED" means:
(a) In the case of an Award that requires exercise, to be or to become
immediately and fully exercisable and free of all restrictions;
(b) In the case of an Award that is subject to forfeiture, to be or to
become nonforfeitable, freely transferable, and free of all restrictions;
(c) In the case of an Award that is required to be earned by attaining
specified performance goals, to be or to become earned and nonforfeitable,
freely transferable, and free of all restrictions; or
(d) In the case of any other Award as to which payment is not dependent
solely upon the exercise of a right, election, exercise, or option, to be or to
become immediately payable and free of all restrictions.
ARTICLE 3. ADMINISTRATION
3.1 GENERAL. The Plan will be administered by the Committee. The Committee
will have full power and authority to administer the Plan in its sole
discretion. A majority of the members of the Committee will constitute a quorum
and action approved by a majority will be the act of the Committee.
3.2 AUTHORITY OF THE COMMITTEE. Subject to the terms of the Plan, the
Committee:
(a) Will select the Participants, determine the types of Awards to be
granted to Participants, determine the shares or share units subject to Awards,
and determine the terms and conditions of individual Award Agreements;
(b) Has the authority to interpret the Plan, to establish, amend, and
revoke any rules and regulations relating to the Plan, to make all other
determinations necessary or advisable for the administration of the Plan; and
(c) May correct any deficit, supply any omission, or reconcile any
inconsistency in the Plan or in any Award Agreement in the manner and to the
extent the Committee deems desirable to carry out the purposes of the Plan.
Decisions of the Committee, or any delegate as permitted by the Plan, will be
final, conclusive, and binding on all Participants.
3.3 LIABILITY OF COMMITTEE MEMBERS. No member of the Committee will be
liable for any action or determination made in good faith with respect to the
Plan, any Award, or any Participant.
ARTICLE 4. DURATION OF THE PLAN AND SHARES SUBJECT TO THE PLAN
4.1 DURATION OF THE PLAN. The Plan is effective March 1, 1997, subject to
approval by Corporation's stockholders as provided in Article 15. The Plan will
remain in effect until Awards have been granted covering all the available
Shares and all outstanding Awards have been exercised, settled, or terminated in
accordance with the terms of the applicable Award Agreement, or the Plan is
otherwise terminated by the Board. Termination of the Plan will not affect
outstanding Awards.
4.2 OTHER STOCK PLANS. The Plan is separate from the following existing
plans (the "Prior Plans"):
Louisiana-Pacific Corporation 1991 Employee Stock Option Plan;
Louisiana-Pacific Corporation 1984 Employee Stock Option Plan; and
Louisiana-Pacific Corporation Key Employee Restricted Stock Plan.
The Plan will neither affect the operation of the Prior Plans nor be affected by
the Prior Plans, except that no further stock options or restricted stock awards
will be granted under any of the Prior Plans after the date the Plan is approved
by Corporation's stockholders as described in Article 15.
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4.3 GENERAL LIMITATION ON AWARDS. Subject to adjustment pursuant to
Article 12 of the Plan, the maximum number of Shares for which Awards may be
granted under the Plan may not exceed 10,000,000 Shares.
4.4 CANCELLATION OR EXPIRATION OF AWARDS. If an Award under the Plan
is canceled or expires for any reason prior to having been fully vested or
exercised by a Participant or is settled in cash in lieu of Shares or is
exchanged for other Awards, all Shares covered by such Awards will again
become available for additional Awards under the Plan.
ARTICLE 5. ELIGIBILITY
Officers and other key employees of Corporation and its Subsidiaries
(including employees who may also be directors of Corporation or a Subsidiary)
who, in the Committee's judgment, are or will be contributors to the long-term
success of Corporation will be eligible to receive Awards under the Plan.
ARTICLE 6. AWARDS
6.1 TYPES OF AWARDS. Awards under the Plan may consist of: stock options
(either incentive stock options, within the meaning of Section 422 of the Code,
or nonstatutory stock options), stock appreciation rights, performance shares,
restricted stock grants, and other stock-based awards (as described in Article
11 of the Plan). Awards of performance shares and restricted stock may provide
the Participant with dividends or dividend equivalents and voting rights prior
to vesting.
6.2 AWARD AGREEMENTS. Each Award will be evidenced by a written Award
Agreement between Corporation and the Participant. Award Agreements may, subject
to the provisions of the Plan, contain any provision approved by the Committee.
Any Award Agreement may make provision for any matter that is within the
discretion of the Committee or may retain the Committee's discretion to approve
or authorize any action with respect to the Award during the term of the Award
Agreement.
6.3 NONUNIFORM DETERMINATIONS. The Committee's determinations under the
Plan or under one or more Award Agreements, including without limitation, (a)
the selection of Participants to receive Awards, (b) the type, form, amount, and
timing of Awards, (c) the terms of specific Award Agreements, and (d) elections
and determinations made by the Committee with respect to exercise or payments of
Awards, need not be uniform and may be made by the Committee selectively among
Participants and Awards, whether or not Participants are similarly situated.
6.4 PROVISIONS GOVERNING ALL AWARDS. All Awards will be subject to the
following provisions:
(a) TRANSFERABILITY. Except as otherwise provided in this Section 6.4(a),
each Award (but not Shares issued following Vesting or exercise of an Award)
will not be transferable other than by will or the laws of descent and
distribution and Awards requiring exercise will be exercisable during the
lifetime of the Participant only by the Participant or, in the event the
Participant becomes legally incompetent, by the Participant's guardian or legal
representative. Notwithstanding the foregoing, the Committee, in its discretion,
may include in any Award Agreement a provision that the Award is transferable,
without payment of consideration, to immediate family members of the Participant
or to a trust for the benefit of or a partnership composed solely of such family
members.
(b) EMPLOYMENT RIGHTS. Neither the adoption of the Plan nor the
granting of any Award will confer on any person the right to continued
employment with Corporation or any Subsidiary, nor will it interfere in any
way with the right of
Corporation or a Subsidiary to terminate such person's employment at any time
for any reason, with or without cause.
(c) EFFECT OF CHANGE IN CONTROL. The Committee may, in its discretion,
include in any Award Agreement a provision that upon the effective date of a
change in control of Corporation (as that term may be defined in the Award
Agreement), all or a specified portion of the Award (i) will become fully
A-3
Vested, (ii) will terminate, or (iii) may be converted into shares of an
acquiror. In any such change in control provision, the Committee may provide
whether or to what extent such acceleration in the Vesting of an Award will be
conditioned to avoid resulting in an "excess parachute payment" within the
meaning of Section 280G(b) of the Code.
ARTICLE 7. STOCK OPTIONS
The option price for each stock option may not be less than 100 percent of
the Fair Market Value of the Common Stock on the date of grant. Stock options
will be exercisable for such period as specified by the Committee in the
applicable Award Agreement, but in no event may options be exercisable for a
period of more than ten years after their date of grant. The option price of
each Share as to which a stock option is exercised must be paid in full at the
time of exercise. The Committee may, in its discretion, provide in any Award
Agreement for a stock option that payment of the option price may be made in
cash, by tender of Shares owned by the Participant valued at Fair Market Value
as of the date of exercise, subject to such guidelines for the tender of Shares
as the Committee may establish, in such other consideration as the Committee
deems appropriate, or a combination of cash, shares of Common Stock, and such
other consideration. The number of Shares subject to options and stock
appreciation rights granted under the Plan to any individual Participant during
any one calendar year may not exceed 600,000 Shares. Except for adjustments in
price pursuant to Article 12 hereof, at no time shall the option price of a
stock option granted hereunder be subsequently repriced during the period of its
exercisability.
In the case of an Option designated as an incentive stock option, the
terms of the option and the Award Agreement must conform with the statutory and
regulatory requirements specified pursuant to Section 422 of the Code, as in
effect on the date such incentive stock option is granted.
The Committee may, in its discretion, include in an Award Agreement for
any option a provision that in the event previously acquired Shares are
surrendered by a Participant in payment of all or a portion of either (a) the
option exercise price or (b) the Participant's federal, state, or local tax
withholding obligation with respect to such exercise, the Participant will
automatically be granted a replacement or reload option (with an option price
equal to the Fair Market Value of a Share on the date of such exercise) for a
number of Shares equal to all or a portion of the number of Shares surrendered.
Such replacement option will be subject to such terms and conditions as the
Committee determines.
ARTICLE 8. STOCK APPRECIATION RIGHTS
Stock appreciation rights may be granted in tandem with a stock option, in
addition to a stock option, or may be freestanding and unrelated to a stock
option. Stock appreciation rights granted in tandem or in addition to a stock
option may be granted either at the same time as the stock option or at a later
time. No stock appreciation right may be exercisable earlier than six months
after grant, except in the event of the Participant's death or disability. A
stock appreciation right will entitle the Participant to receive from
Corporation an amount equal to the increase in the Fair Market Value of a Share
on the exercise of the stock appreciation right over the grant price. The
Committee may determine in its discretion whether the stock appreciation right
may be settled in cash, shares, or a combination of cash and shares.
ARTICLE 9. PERFORMANCE SHARES
9.1 GENERAL. Performance shares may be granted in the form of actual Shares
or Share units having a value equal to Shares. An Award of performance shares
will be granted to a Participant subject to such terms and conditions set forth
in the Award Agreement as the Committee deems appropriate, including, without
limitation, the condition that the performance shares or a portion thereof will
Vest only in the event specified performance goals are met within a specified
performance period, as set forth in the Award Agreement. An Award Agreement for
a performance share Award may also, in addition to specifying performance goals,
condition Vesting of such Award on continued employment for a period
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specified in the Award Agreement. In the event that a stock certificate is
issued in respect of performance shares, the certificate will be registered in
the name of the Participant but will be held by Corporation until the time the
performance shares become Vested. The performance conditions and the length of
the performance period will be determined by the Committee. The Committee may,
in its discretion, reduce or eliminate the Vesting of performance shares if, in
the Committee's judgment, it determines that the Vesting of the performance
share Award is not appropriate given actual performance over the applicable
performance period. The maximum number of Shares issuable to any individual
Participant with respect to performance share Awards during any one calendar
year may not exceed 100,000 Shares. The Committee, in its sole discretion, may
provide in an Award Agreement whether performance shares granted in the form of
share units will be paid in cash, shares, or a combination of cash and shares.
9.2 PERFORMANCE GOALS FOR EXECUTIVE OFFICERS. The performance goals for
performance share awards granted to executive officers of Corporation may relate
to corporate performance, business unit performance, or a combination of both.
Corporate performance goals will be based on financial performance goals
related to the performance of Corporation as a whole and may include one or more
measures related to earnings, profitability, efficiency, or return to
stockholders such as earnings per share, operating profit, stock price, costs of
production, or other measures.
Business unit performance goals will be based on a combination of financial
goals and strategic goals related to the performance of an identified business
unit for which a Participant has responsibility. Strategic goals for a business
unit may include one or a combination of objective factors relating to success
in implementing strategic plans or initiatives, introductory products,
constructing facilities, or other identifiable objectives. Financial goals for a
business unit may include the degree to which the business unit achieves one or
more objective measures related to its revenues, earnings, profitability,
efficiency, operating profit, costs of production, or other measures.
Any corporate or business unit goals may be expressed as absolute amounts
or as ratios or percentages. Success may be measured against various standards,
including budget targets, improvement over prior periods, and performance
relative to other companies, business units, or industry groups.
ARTICLE 10. RESTRICTED STOCK
Restricted stock may be granted in the form of actual Shares, Share units
having a value equal to Shares, or other rights to receive Shares in the future.
A restricted stock Award will be subject to such terms and conditions set forth
in the Award Agreement as the Committee deems appropriate, including, without
limitation, restrictions on the sale, assignment, transfer, or other disposition
of such restricted stock and provisions that such restricted stock, stock units
or other rights to receive Shares be forfeited upon termination of the
Participant's employment for specified reasons within a specified period of time
or upon other conditions, as set forth in the Award Agreement. The Award
Agreement for a restricted stock Award may also, in addition to conditioning
Vesting of the Award on continued employment, further condition Vesting on
attainment of performance goals. In the event that a stock certificate is issued
in respect of restricted stock, such certificate will be registered in the name
of the Participant but will be held by the Corporation until the end of the
restricted period. The employment conditions and the length of the period for
vesting of restricted stock Awards will be established by the Committee at the
time of grant and set forth in the Award Agreement. The Committee, in its sole
discretion, may provide in an Award Agreement whether restricted stock granted
in the form of Share units will be paid in cash, Shares, or a combination of
cash and Shares. The aggregate number of shares or share units that may be
subject to restricted stock Awards may not exceed 2,000,000 Shares.
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ARTICLE 11. OTHER STOCK-BASED AND COMBINATION AWARDS
The Committee may grant other Awards under the Plan pursuant to which
Shares are or may in the future be acquired, or Awards denominated in or
measured by Share equivalent units, including Awards valued using measures other
than the market value of Shares. For such other stock-based awards that are
granted to executive officers of Corporation and that condition Vesting of such
Awards, in whole or in part, on attaining performance goals, such Awards will be
subject to the same limitations on types of performance goals and the same
limitation on the maximum number of Shares issuable to any individual
Participant as provided in Article 9 of the Plan. The Committee may also grant
Awards under the Plan in tandem or combination with other Awards or in exchange
for Awards, or in tandem or combination with, or as alternatives to, grants or
rights under any other employee plan of Corporation.
ARTICLE 12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event of any change in capitalization affecting the Common Stock of
Corporation, such as a stock dividend, stock split, recapitalization, merger,
consolidation, split-up, spinoff, combination or exchange of shares, or other
form of reorganization, or corporate change, or any distribution with respect to
Common Stock other than regular cash dividends, the Committee may make such
substitution or adjustment, if any, that it deems to be equitable as to the
number and kind of Shares or other securities issued or reserved for issuance
pursuant to the Plan, to the limits on Awards to Participants, and to
outstanding Awards.
ARTICLE 13. AMENDMENT AND TERMINATION
The Board may amend, suspend, or terminate the Plan or any portion of the
Plan at any time, provided no amendment may be made without stockholder approval
if such approval is required by applicable law or the requirements of an
applicable stock exchange.
ARTICLE 14. MISCELLANEOUS
14.1 TAX WITHHOLDING. Corporation will have the right to deduct from any
settlement of any Award under the Plan, including the delivery or vesting of
Shares, any federal, state, or local taxes of any kind required by law to be
withheld with respect to such payments or to take such other action as may be
necessary in the opinion of Corporation to satisfy all obligations for the
payment of such taxes. The recipient of any payment or distribution under the
Plan must make arrangements satisfactory to Corporation for the satisfaction of
any such withholding tax obligations. Corporation will not be required to make
any such payment or distribution under the Plan until such obligations are
satisfied. The Committee, in its discretion, may permit a Participant to satisfy
the Participant's federal, state, or local tax, or tax withholding obligations
with respect to an Award by having Corporation retain the number of Shares
having a Fair Market Value equal to the amount of taxes or withholding taxes.
14.2 SECURITIES LAW RESTRICTIONS. No Shares will be issued under the Plan
unless counsel for Corporation is satisfied that such issuance will be in
compliance with applicable federal and state securities laws. Certificates for
Shares delivered under the Plan may be subject to such stop-transfer orders and
other restrictions as the Committee may deem advisable under the rules,
regulations, and other requirements of the Securities and Exchange Commission,
any stock exchange upon which the Common Stock is then listed, and any
applicable federal or state securities law. The Committee may cause a legend or
legends to be put on any such certificates to make appropriate reference to such
restrictions.
14.3 GOVERNING LAW. Except with respect to references to the Code or
federal securities laws, the Plan and all actions taken thereunder will be
governed by and construed in accordance with the laws of the state of Oregon.
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ARTICLE 15. STOCKHOLDER APPROVAL
The adoption of the Plan and the grant of Awards under the Plan are
expressly subject to the approval of the Plan by the affirmative vote of at
least a majority of the stockholders of Corporation present, or represented by
proxy, and entitled to vote at Corporation's 1997 annual meeting of
stockholders.
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APPENDIX B
LOUISIANA-PACIFIC CORPORATION
FINANCE AND AUDIT COMMITTEE
CHARTER
I. COMPOSITION OF COMMITTEE
A. NUMBER OF MEMBERS. The Finance and Audit Committee (the "Committee") of
the Board of Directors (the "Board") of Louisiana-Pacific Corporation ("LP")
shall consist of not less than three directors appointed by the Board. The Board
may also appoint an alternate member to act in the place of any absent or
disqualified member, provided that the Committee as constituted with the
alternate acting in place of such absent or disqualified member satisfies the
requirements of 1.B below. The Board shall appoint a Chairman of the Committee.
B. QUALIFICATION.
1. Subject to 1.B.5 below, no Committee member may be a current or former
officer or employee of LP or any of its subsidiaries and affiliates
(collectively, the "Company").
2. Each member of the Committee must be independent of management and the
Company and be free from any relationship that may interfere with the exercise
of independent judgment as a Committee member. In determining independence, the
Board will observe the requirements of Paragraphs 303.01 and 303.02 of the New
York Stock Exchange Listed Company Manual.
3. Each member of the Committee must be financially literate or must
become financially literate within a reasonable period of time after appointment
to the Committee. The Board will determine, in its business judgment, whether a
director meets the financial literacy requirement.
4. The Committee shall include at least one member with accounting or
related financial management experience and expertise, and each member must be
able to read and understand financial statements. The Board will determine, in
its business judgment, whether a director meets the foregoing requirements.
5. One director who was formerly an officer or employee of the Company may
serve on the Committee, but only if the standards set forth in I.B.2, 3 and 4
above are met and the Board determines in its business judgment that membership
on the Committee by the individual is required by the best interests of the
Company and its shareholders.
II. MEETINGS OF THE COMMITTEE
A. REGULAR MEETINGS. The Committee shall hold at least two face-to-face
meetings per year. The Chairman of the Committee will, in consultation with the
other members of the Committee, LP's independent auditors and the appropriate
officers of LP, be responsible for calling such meetings, establishing agenda
therefor and supervising the conduct thereof.
B. TELEPHONE MEETINGS. The Committee will hold a regular telephone meeting
each year to review the Company's year-end financial results. The Chairman of
the Committee will be responsible for calling such meeting and supervising the
conduct thereof.
C. SPECIAL MEETINGS. Special face-to-face or telephone meetings may be
called at any time by the Chairman of the Committee or any two members of the
Committee. The person or persons calling any such meeting shall establish the
agenda therefor, and the Chairman of the Committee shall supervise the conduct
thereof.
A-1
D.C. MINUTES. The Committee shall keep minutes of all of its meetings
showing all matters considered by it and the actions taken thereon, and shall
submit a report of such meetings at the next regular meeting of the Board.
B-1
III. RESPONSIBILITIES AND FUNCTIONS OF THE COMMITTEE
A. RESPONSIBILITIES. The Committee shall be responsible to assist the
Board in fulfilling its oversight responsibilities relating to internal and
external audit functions and its financial reporting, accounting and internal
control systems. The Committee shall annually review and reassess the adequacy
of the Committee's charter. While the Committee has the powers and
responsibilities set forth in this charter, it is not the responsibility of the
Committee to plan or conduct audits or to determine that LP's financial
statements are complete and accurate or are in compliance with generally
accepted accounting principles, which is the responsibility of management and
the independent auditor. Likewise, it is not the responsibility of the Committee
to resolve disputes, if any, between management and the independent auditor.
B. FUNCTIONS - AUDIT MATTERS. With respect to matters relating to LP's
independent auditor and LP's internal audit function, the Committee shall:
1. Approve, and recommend to the Board for its approval, the selection of
the independent auditor to be employed to perform the annual audits of LP's
financial statements and reviews of LP's financial, accounting, auditing and
internal control systems. The independent auditor shall be ultimately
accountable to the Committee and the Board and shall have unrestricted access to
the Committee and the Board. The Committee and the Board shall have the ultimate
authority and responsibility to select, evaluate and, where appropriate, replace
the independent auditor (or to nominate the independent auditor to be proposed
for shareholder approval in any proxy statement of LP).
2. Ensure that the independent auditor submits on a periodic basis to the
Committee a formal written statement delineating all relationships between the
auditor and the Company. The Committee shall discuss with the independent
auditor any disclosed relationships or services that may impact the objectivity
and independence of the auditor and shall be responsible for recommending that
the Board take appropriate action in response to the independent auditor's
report to satisfy itself of the auditor's independence.
3. Periodically meet with the independent auditor to review and discuss
the results of its audits and reviews described in III.B.1 above, to discuss any
disputes with management that may have arisen in connection with the annual
audit process, and to review and approve in advance annual audit plans of the
independent auditor for LP including the compensation to be paid therefor.
4. Prepare an annual report of the Committee, for inclusion in LP's annual
proxy statement, stating whether the Committee has:
o reviewed and discussed the audited financial statements with management
o discussed with the independent auditor the matters required to be
discussed by Statement on Auditing Standards No. 61, and discussed with
the independent auditor the independent auditor's independence
o received the written disclosures and the letter from the independent
auditor required by Independence Standards Board Standard No. 1
o based upon the foregoing, recommended to the Board that the audited
financial statements be included in LP's Annual Report on Form 10-K for
the last fiscal year
5. Require that the independent auditor review the financial information
in LP's Quarterly Reports on Form 10-Q prior to filing such reports with the
Securities and Exchange Commission.
A-2
6. Require that appropriate reconciliations and descriptions of any
adjustments to the quarterly information previously reported on a Form 10-Q for
any quarter be made and be reviewed by the independent auditor.
B-2
7. Request LP's subsidiary and affiliated companies to employ such
independent auditors (all of which shall be accountable to the Committee and the
Board) as the Committee deems appropriate to audit the respective financial
statements of such subsidiary and affiliated companies.
8. Periodically meet with management, which meetings may include the
independent auditor, to discuss the matters described in III.B.3 above.
9. Review the opinions to be rendered by the independent auditor in
connection with its audits of LP's financial statements.
10. Review the effects, if any, of proposed or implemented changes in
accounting and financial reporting policies on LP's financial statements.
11. Review the scope, coverage and objectivity of the audits performed by
LP's Internal Audit Department and its annual internal audit plans, and ensure
that internal auditors have unrestricted access to the Committee.
12. Review the effectiveness of LP's internal legal compliance programs.
13. Perform such other functions as may be required by law or any legal
settlement agreement or as may be assigned to the Committee by the Board.
C. FUNCTIONS - FINANCIAL MATTERS. With respect to financial matters, the
Committee shall:
1. Make recommendations to the Board on matters relating to the financial
affairs and policies of the Company including, without limitation, capital
structure issues, dividend policy, treasury stock purchases, acquisitions and
divestitures, external financing, complex financial transactions and investment
and debt policies.
2. Review the status of significant legal and tax matters and the
potential financial implications thereof.
3. Review the significant accounting principles employed in LP's financial
reporting.
4. Review in advance the financial results to be included in LP's Annual
Report to Stockholders and in filings with the Securities and Exchange
Commission.
5. Review, prior to public release, LP's quarterly financial results.
6. Perform such other functions as may be assigned to the Committee by the
Board.
A-3B-3
PROXY
LOUISIANA-PACIFIC CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING MAY 7, 20016, 2002
The undersigned hereby constitutes and appoints Archie W. Dunham and Mark A.
Suwyn,William C. Brooks, Patrick F.
McCartan, Lee C. Simpson, Colin D. Watson, and each of them, his true and lawful
agents and proxies, each with full power of substitution, to represent and vote
the common stock of Louisiana-Pacific Corporation ("LP"), which the undersigned
may be entitled to vote at the Annual Meeting of LP stockholders to be held May
7, 2001,6, 2002, or at any adjournment thereof.
Nominees for Election as Directors:
William C. Brooks, Patrick F. McCartan, Lee C. Simpson, Colin D. WatsonE. Gary Cook, Paul W. Hansen, Brenda J. Lauderback
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES ON
THE REVERSE SIDE. YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. BY SIGNING ON THE REVERSE, YOU
ACKNOWLEDGE RECEIPT OF THE 20012002 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS AND
ACCOMPANYING PROXY STATEMENT AND REVOKE ALL PROXIES HERETOFORE GIVEN BY YOU TO
VOTE AT SAID MEETING OR ANY ADJOURNMENT THEREOF.
SEE REVERSE
SIDE
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DETACH AND RETURN PROXY CARD; RETAIN ADMISSION TICKET
X Please mark your
votes as in this
example.
This proxy when properly executed will be voted in the manner directed herein.
If no direction is made, this proxy will be voted FOR the election of directors
and AGAINST proposal 2.FOR proposals 2 and 3.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS.DIRECTORS AND FOR
PROPOSALS 2 AND 3.
FOR WITHHELD
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1. Election of
Directors // //
(see reverse)
FOR all nominees except as marked to the contrary below:
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL 2.
Stockholder proposal, NOT FOR AGAINST ABSTAIN
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recommended by management,
relating to the composition2. Approval of the Board's Compensation1997 Incentive Stock // // //
Committee.Award Plan, as amended.
FOR AGAINST ABSTAIN
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3. Reapproval of performance goals // // //
under Annual Cash Incentive Award Plan.
If any other matters properly come
before the meeting, this proxy will be
voted by the proxies named herein in
accordance with their best judgment.
SIGNATURE(S)---------------------------- DATE----------------
Note: Please sign exactly as your name appears hereon. If signing for
estates, trusts, or corporations, title or capacity should be stated.
If shares are held jointly, each holder should sign.
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DETACH AND RETURN PROXY CARD; RETAIN ADMISSION TICKET
[LOGO] LOUISIANA-PACIFIC CORPORATION
805 S.W. Broadway
Portland, Oregon 97205
(503) 821-5100
Annual Meeting of Stockholders
May 7, 20016, 2002
ADMISSION TICKET
The Annual Meeting of Stockholders of Louisiana-Pacific Corporation will be held
at 9:30 a.m. on May 7, 2001,6, 2002, at the Portland Marriott City Center, 520 S.W.
Broadway, Portland, Oregon 97201.Oregon. Public transportation to the hotel is available from
the airport, and there is ample public parking in the vicinity of the hotel.
Your voted proxy card should be detached and returned as soon as possible in the
enclosed postpaid envelope. If you plan to attend the Annual Meeting, please
retain this Admission Ticket, and, on May 7, 2001,6, 2002, present it to the LP
representative for admission to the meeting.
-- Anton C. Kirchhof
Secretary
LOUISIANA-PACIFIC CORPORATION
ANNUAL CASH INCENTIVE AWARD PLAN
Amended and Restated as of January 1, 2001
THIS ANNUAL CASH INCENTIVE AWARD PLAN (the "Plan") was adopted by
Louisiana-Pacific Corporation, a Delaware corporation ("Corporation"), effective
March 1, 1997 and was amended as of July 31, 1999 and January 1, 2001.
Capitalized terms that are not otherwise defined herein have the meanings set
forth in Section 4.
SECTION 1. INCENTIVE AWARDS
1.1 TARGET AWARD. Each Award opportunity will specify a targeted
incentive opportunity (the "Target Award") expressed either as a dollar amount
or as a percentage of a Participant's regular annualized base salary.
1.2 INCENTIVE AWARDS. The amount paid for each Award will be equal to
the product of:
(a) The Total Success Percentage for the Participant for the Plan
Year; multiplied by
(b) The Participant's Target Award for the Plan Year.
However, in no event may a Participant's Award payment for a Plan Year exceed
the lesser of (i)150 percent of the Participant's Target Award, or
(ii)$1,250,000.
1.3 PERFORMANCE GOALS. The Goals that will be used to measure a
Participant's Award will consist of one or more of the following:
(a) Corporate Goals measuring financial performance related to the
Corporation as a whole. Corporate Goals may include one or more measures
related to earnings, profitability, efficiency, or return to stockholders
and may include earnings, earnings per share, operating profit, stock
price, costs of production, or other measures, whether expressed as
absolute amounts, as ratios, or percentages of other amounts. Success may
be measured against various standards, including budget targets,
improvement over prior years, and performance relative to other companies
or industry groups.
(b) Business Unit Goals measuring financial or strategic performance
of an identified business unit for which a Participant has responsibility.
Strategic Business Unit Goals may include one or a combination of
objective factors related to success in implementing strategic plans or
initiatives, introducing products, constructing facilities, or other
identifiable objectives. Financial Business Unit Goals may include
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the degree to which the business unit achieves one or more measures
related to its revenues, earnings, profitability, efficiency, operating
profit, costs of production, or other measures, whether expressed as
absolute amounts or as ratios or percentages, which may be measured
against various standards, including budget targets, improvement over
prior years, and performance relative to other companies or business
units.
(c) Individual Goals measuring success in developing and
implementing particular tasks assigned to an individual Participant.
Individual Goals will naturally vary depending upon the responsibilities
of individual Participants and may include, without limitation, goals
related to success in developing and implementing particular management
plans or systems, reorganizing departments, establishing business
relationships, or resolving identified problems.
1.4 WEIGHTING OF GOALS. Each Goal will be weighted with a Weighting
Percentage so that the total Weighting Percentages for all Goals used to
determine a Participant's Award is 100 percent.
1.5 ACHIEVEMENT PERCENTAGE. Each Goal will also specify the Achievement
Percentages (ranging from 0 to 150 percent) to be used in computing the payment
of an Award based upon the extent to which the particular Goal is achieved.
Achievement Percentages for a particular Goal may be based on:
o An "all or nothing" measure that provides for a specified
Achievement Percentage if the Goal is met, and a zero Achievement
Percentage if the Goal is not met;
o Several levels of performance or achievement (such as a Threshold
Level, a Target Level, and a Maximum Level) that each correspond to a
specified Achievement Percentage; or
o Continuous or numerical measures that define a sliding scale of
Achievement Percentages.
1.6 COMPUTATION OF AWARDS. As soon as possible after the completion of
each Plan Year, a computation will be made for each Participant of:
o The extent to which Goals were achieved and the corresponding
Achievement Percentages for each Goal:
o A Weighted Achievement Percentage for each Goal equal to the
product of the Achievement Percentage and the Weighting Percentage for
that Goal;
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o The Total Success Percentage equal to the sum of all the Weighted
Achievement Percentages for all the Participant's Goals; and
o An Award amount equal to the product of the Total Success
Percentage and the Participant's Target Award.
1.7 RIGHT TO RECEIVE AWARD. A Participant must continue Employment with
Corporation until the end of a Plan Year in order to be entitled to receive an
Award for that Plan Year. Awards may be subject to such additional requirements
regarding length of employment as may be specifically approved by the Committee.
If a Participant terminates Employment with Corporation before the end of the
Plan Year for a reason other than death, Disability, or Approved Retirement, the
Participant will not be entitled to any Award for that Plan Year. If a
Participant terminates Employment with Corporation before the end of the Plan
Year due to death or Disability, the Participant or the Participant's
beneficiary or estate will be entitled to an Award equal to 100 percent of the
Participant's Target Award. If a Participant terminates Employment with
Corporation by reason of Approved Retirement prior to the expiration of the Plan
year, the Participant will be entitled to an Award computed as follows:
o The Total Success Percentage will be determined after the end of
the Plan Year as if the Participant had remained an Employee for the
entire Plan Year; and
o The Participant's Award computed pursuant to Section 1.6 will be
prorated based on the number of days before and the number of days after
the effective date of the Approved Retirement.
1.8 PAYMENT OF AWARDS. Each Participant's Award will be paid in cash in
a lump sum within 30 days after the amount of the Award has been determined.
Payment of any Award may be made subject to such additional restrictions or
limitations, in addition to those related to the attainment of performance
goals, as may be expressly provided for under the Louisiana-Pacific Corporation
Management Incentive Plan and made applicable to such Award.
SECTION 2. ADMINISTRATION
For each Plan Year, the Committee will approve the Target Awards for
all Participants and will approve Corporate Goals and Achievement Percentages
for the Corporate Goals. After the end of each Plan Year, the Committee will
certify the extent to which the Corporate Goals have been achieved. In addition,
the Committee will have exclusive authority to establish Goals, Weighting
Percentages, and Achievement Percentages, to certify achievement, and to take
all other actions with respect to Awards for Corporation's Chief Executive
Officer and any other Participants that the Committee determines may be subject
to Section 162(m) of the Internal Revenue Code of 1986.
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SECTION 3. MISCELLANEOUS
3.1 NONASSIGNABILITY OF BENEFITS. A Participant's benefits under the
Plan cannot be sold, transferred, anticipated, assigned, pledged, hypothecated,
seized by legal process, subjected to claims of creditors in any way, or
otherwise disposed of.
3.2 NO RIGHT OF CONTINUED EMPLOYMENT. Nothing in the Plan will confer
upon any Participant the right to continued Employment with Corporation or
interfere in any way with the right of Corporation to terminate the person's
Employment at any time.
3.3 AMENDMENTS AND TERMINATION. The Committee has the power to
terminate this Plan at any time or to amend this Plan at any time and in any
manner that it may deem advisable.
SECTION 4. DEFINITIONS
For purposes of this Plan, the following terms have the meanings set
forth in this Section 4:
"ACHIEVEMENT PERCENTAGE" means a percentage (from 0 to 150 percent)
corresponding to a specified level of achievement or performance of a particular
Goal.
"APPROVED RETIREMENT" means termination of employment with an Employer
after Participant attains age 60, but only if such retirement is approved by
Corporation's Chief Executive Officer, in his sole discretion.
"AWARD" means an incentive award under the Plan.
"CORPORATION" means Louisiana-Pacific Corporation, a Delaware
corporation.
"COMMITTEE" means the Compensation Committee of the Board.
"DISABILITY" means the condition of being permanently unable to perform
Participant's duties for an Employer by reason of a medically determinable
physical or mental impairment that can be expected to result in death or that
has lasted or can be expected to last for a continuous period of at least 12
months.
"EMPLOYEE AND EMPLOYMENT" both refer to service by Participant as a
full-time or part-time employee of Corporation, and include periods of illness
or other leaves of absence authorized by Corporation.
"GOAL" means one of the elements of performance used to determine
Awards under the Plan as described in Section 1.3.
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"PARTICIPANT" means an eligible employee selected to participate in the
Plan for all or a portion of a Plan Year.
"PLAN YEAR" means a calendar year.
"TARGET AWARD" means the targeted incentive award for a Participant for
a Plan Year as provided in Section 1.1.
"TOTAL SUCCESS PERCENTAGE" means the sum of the Weighted Achievement
Percentages for each Goal for a Participant.
"WEIGHTED ACHIEVEMENT PERCENTAGE" means the product of the Achievement
Percentage and the Weighting Percentage for a Goal as provided in Section 1.6.
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