BOISE INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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Notice of
2010 Annual Shareholders’ Meeting
and Proxy Statement
| CONTENTS | Page No. | |
| CHAIR’S LETTER TO SHAREHOLDERS | ||
| SOLICITATION OF PROXIES AND VOTING | 1 | |
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Performance Plan to expand the measures and clarify how shares | 13 | |
Performance Plan to establish a | 19 | |
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Notice of2009 Annual Shareholders' Meetingand Proxy Statement
| CONTENTS | Page No. | |
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| 2009 Overall Meeting Attendance Rates | 22 | |||
| Board Leadership Structure | 22 | |||
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| Executive Sessions | 23 | |||
| Committees | 23 |
| Executive Committee | 23 | |||||
| Audit Committee | 24 | |||||
| Compensation Committee | 25 | |||||
| Nominating Committee | 26 | |||||
| Governance Committee | 27 | |||||
| Other Committees | 27 |
| Director Selection Process | 28 | |
| Board and Committee Evaluations | 29 | |
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| Director Compensation | 29 |
| 2009 Director Fees | 29 | |||
| 2009 Director Equity Awards | 30 | |||
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| 2010 Director Compensation | 30 |
| 2010 Director Fees | 31 | |||||
| 2010 Director Equity Awards | 31 |
| Director Compensation Table | 32 |
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| Base Salary | 41 | |||||
| Short-Term Incentive Compensation | ||||||
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Long-Term Incentive Compensation | ||||||
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| Retirement and Health Benefits | 44 | |||||
| Deferred Compensation Plan | 46 | |||||
| Supplemental Life Plan | 47 | |||||
| Financial Counseling Program for Officers | 47 | |||||
| Agreements With, and Potential Payments to, Named Executive Officers | 48 |
| Compensation Tables | ||
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| Alexander Toeldte | 62 | |||||
| Robert M. McNutt | 63 | |||||
| Jeffrey P. Lane | 64 | |||||
| Robert E. Strenge | 65 | |||||
| Robert A. Warren | 66 |
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| AUDIT COMMITTEE MATTERS | 70 | |
| Audit Committee Report | ||
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| Policies and Procedures for Preapproval of Audit and Nonaudit Services | ||
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| Auditor Fees and Services | ||
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| ii | |
CHAIR'SCHAIR’S LETTER TO SHAREHOLDERS
Dear Fellow Shareholders:
On February 22, 2008,The global economic recession dominated 2009 and touched nearly every company and industry, both domestic and abroad. Boise Inc. was formed followingand the Aldabra 2 Acquisition Corp. purchasepaper products industry were no exception. We faced some of the papermost challenging markets in decades. Despite this, we were very successful in 2009 as we demonstrated our ability to deliver results and packaging assetsimprove our competitiveness in a difficult environment.
Through the outstanding efforts of Boise Cascade, L.L.C. Boise Inc. is a new company with a talentedour management team strong cash-generating capability, and a strategic focus on growing the packaging side of the business.employees in 2009:
Early in the year, we faced significant and rapid cost inflation in many of the commodity raw material and energy inputs we use in our manufacturing processes. As the year progressed, the global financial crisis brought significant challenges to the economy, and we began to experience a softening of demand for some of our products.
| ¡ | We continued to execute on our strategy to shift production capacity to packaging demand-driven and office paper products. |
| ¡ | We lowered our structural costs through difficult, but necessary, asset restructurings and capacity closures at our mills in St. Helens, Oregon, and DeRidder, Louisiana. |
| ¡ | We continued to run our assets efficiently and safely, with no notices of violations and no environmental penalties, continuing the exceptional performance of 2008. |
Despite this challenging environment, I am pleased to report that management and the entire Boise Inc. team took many actions to make Boise Inc. a stronger and more competitive company.
•We completed the upgrade of our linerboard machine in DeRidder, Louisiana, which extended our linerboard production capability and reduced our fossil fuel consumption.•We continued to generate strong growth in our label and release, flexible packaging, and premium office papers, building on previous investments at our Wallula, Washington, mill.•We restructured our St. Helen's, Oregon, mill to reduce our exposure to declining printing and converting markets, lower our cost structure, and enhance margins.•Most importantly, we achieved all of this while delivering exceptional safety results, finishing the year with an incident rate (IR) of 1.3, compared with a target of 1.8, and we executed a "perfect game" in environmental performance in 2008 – no notices of violation and no environmental penalties.
There are many challenges ahead. As I write this letter, reports on the U.S. and global economy continue to be almost universally negativeThese accomplishments, combined with the ultimate impactalternative fuel mixture credits derived from our use of renewable biomass fuels, helped to our markets yet to be determined. drive solid financial results:
| ¡ | We delivered strong earnings, improved margins, and generated exceptional free cash flow. |
| ¡ | We strengthened our balance sheet and paid down debt, reducing our net total debt by $345 million during 2009, a 32% reduction from year-end 2008. |
Our share price like othersgrew more than 1,100% in 2009, reflecting these achievements. While we are pleased with our industry, has been very disappointing.
One thing has not changed:performance, we continue to look ahead to opportunities in 2010 and beyond. Our goal ofremains producing a superior return on capital and thus generating value for our shareholders. The actions we took
I would like to welcome Rudi Lenz to the board and the results we delivered in 2008 put us in a stronger position as we move into our second year as Boise Inc.
thank Stan Bell, Matt Norton, Tom Souleles, and Tom Stephens for their contributions. On behalf of the board of directors, I thank all Boise employees for their dedication and hard work, and I thank you, the shareholders, for your support.
Cordially,
Carl A. Albert
Chair of the Board of Directors
March 17, 200919, 2010
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NOTICE OF 20092010 ANNUAL SHAREHOLDERS'SHAREHOLDERS’ MEETING
To Boise Inc. Shareholders:
Boise Inc. will hold its 20092010 Annual Shareholders'Shareholders’ Meeting on Thursday, April 23, 2009,29, 2010, at 10:00 a.m. Mountain Daylight Time at the company'scompany’s headquarters in the Boise Plaza Building, 1111 West Jefferson Street, Suite 200, Boise, Idaho 83702-5388. The meeting will be held in the 1-West A.V. Conference Room. At the meeting, shareholders will be asked to:
1.Elect three directors;2.Approve an amendment to the Boise Inc. Incentive and Performance Plan to increase the number of shares authorized under the plan; and3.Transact other business properly presented at the meeting.
| 1. | Elect two directors; |
| 2. | Approve amendments to the Boise Inc. Incentive and Performance Plan to expand the list of available performance measures and clarify how shares withheld to pay the exercise price of an award or withholding taxes are administered; |
| 3. | Approve an amendment to the Boise Inc. Incentive and Performance Plan to establish a bonus pool for annual incentive awards under the plan; |
| 4. | Ratify the appointment of KPMG LLP as our independent registered public accounting firm for 2010; and |
| 5. | Transact other business properly presented at the meeting. |
Your board of directors recommends you vote FOR allthe election of both director nominees, and FOR the approval of the amendmentboth proposals to amend the Boise Inc. Incentive and Performance Plan.Plan, and FOR the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2010. Your vote is important.
Please consider the issues presented in this Proxy Statement, and vote your shares as promptly as possible.
Thank you,you.
By order of the board of directors,
Karen E. Gowland
Vice President, General Counsel,
and Corporate Secretary
Boise, Idaho
March 17, 200919, 2010
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SOLICITATION OF PROXIES AND VOTING
Internet Availability of Proxy Materials, Annual Reports on
Form 10-K, and Other Reports and Policies
You may view a complete copy of our Proxy Statement and 20082009 Annual Report on Form 10-K by visiting our website at www.BoiseInc.comwww.boiseinc.com and selectingInvestors and thenAnnual Meeting and Proxy Materials. We will begin mailing our Proxy Statement, 20082009 Annual Report on Form 10-K, and a proxy card to shareholders of record on or about March 17, 2009.22, 2010.
You may view complete copies of all of our filings with the Securities and Exchange Commission (SEC), including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, financial information, and other reports and policies, by visiting our website at www.BoiseInc.comwww.boiseinc.com and selectingInvestors and thenSEC Filings. You may also obtain copies of our SEC filings, free of charge, by calling (208) 384-7803 or by sending a written request to:
Boise Inc.Attention: Investor RelationsPO Box 990050Boise, ID 83799-0050
Record Date and Voting at Our 20092010 Annual Shareholders'Shareholders’ Meeting
Shareholders owning our common stock at the close of business on March 13, 200912, 2010 (the Record Date), may vote at our 20092010 Annual Shareholders'Shareholders’ Meeting. On the Record Date, 79,879,38884,414,449 shares of our common stock were outstanding. Each share is entitled to one vote on each matter to be voted upon at our 20092010 Annual Shareholders'Shareholders’ Meeting.
All valid proxies properly executed and received by us prior to our 20092010 Annual Shareholders'Shareholders’ Meeting will be voted as you direct. If you do not specify how you want your shares voted, they will be votedFOR the election of the threeboth director nominees andnominees;FOR the approval of the amendmentboth proposals to amend the Boise Inc. Incentive and Performance Plan to increase Plan; andFORthe numberratification of shares authorized under the plan.appointment of KPMG LLP as our independent registered public accounting firm for 2010. Your shares will also be voted on any other matters presented for a
vote at the meeting in accordance with the judgment of the persons acting under the proxies. You may revoke your proxy and change your vote at any time before our 20092010 Annual Shareholders'Shareholders’ Meeting by submitting a written notice to our corporate secretary, by mailing a later-dated and properly executed proxy, or by voting in person at our 20092010 Annual Shareholders'Shareholders’ Meeting.
We have appointed Continental Stock Transfer & Trust Company (Continental Stock) as our independent inspector of election. Continental Stock will tabulate all votes cast at our 20092010 Annual Shareholders'Shareholders’ Meeting and determine whether a quorum is present.
A quorum is necessary to hold a valid meeting. A quorum will exist if shareholders holding a majority of the shares of our stock issued and outstanding and entitled to vote at the meeting are present in person or by proxy. The inspector of election will treat abstentions and "broker nonvotes"“broker nonvotes” as shares of stock that are present and entitled to vote for purposes of determining the presence of a quorum. A "broker nonvote"“broker nonvote” occurs when a broker does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner. Brokers will not have discretionary power with respect to the proposalelection of the two director nominees or the two proposals to amend the Boise Inc. Incentive and Performance PlanPlan. Brokers will have discretionary power with respect to increase the numberproposal to ratify the appointment of shares of stock availableKPMG LLP as our independent registered public accounting firm for issuance under the plan.
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Table of Contents2010.
The threetwo director nominees who receive the greatest number of votes at the annual meeting will be elected as directors. Abstentions and broker nonvotes will have no effect on the outcome of this proposal.
The proposaltwo proposals to amend the Boise Inc. Incentive and Performance Plan to increase the number of shares of stock available for issuance under the plan will be approved if the numbera majority of votes castshares present at the
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meeting vote in favor of the proposal. Abstentions will have the same effect as voting against these proposals. Broker nonvotes will have no effect on the outcome of these proposals.
The proposal exceedsto appoint KPMG LLP as our independent registered public accounting firm for 2010 will be ratified if a majority of shares present at the numbermeeting vote in favor of votes cast against the proposal.ratification. Abstentions will have the same effect as voting against this proposal. Broker nonvotes will have no effect on the outcome of this proposal.
Our board of directors is soliciting your proxy. We will not retain a proxy solicitor; however, our employees and directors may solicit proxies by mail, telephone, facsimile, e-mail,email, or in person. Our employees and directors will not receive additional compensation for these activities and the entire cost of this solicitation will be borne by us.
Householding of Annual Meeting Materials
Some banks, brokers, and other record holders may be participating in the practice of "householding"“householding” proxy statements and annual reports. This means that only one copy of our Proxy Statement and 20082009 Annual Report on Form 10-K may have been sent for use byto multiple shareholders in your household. We will promptly deliver a separate copy of these documents to you if you write tocontact the Broadridge Householding Department at the following address:
Broadridge Householding Department
51 Mercedes Way
Edgewood, NY 11717 or call Broadridge toll free at 1-800-542-1061.
Toll-Free Number: 1-800-542-1061
If you want to receive separate copies of our proxy statements and annual reports on Form 10-K in the future, or if you are receiving multiple copies and would like to receive only one copy for your household, you should contact your bank, broker, or other record holder, or you may contact Broadridge at the address and phone number shown above.shown.
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Shareholder Communications With Our Board of Directors
You may contact our board of directors by writing to them in care of our corporate secretary at the address shown below, or by e-mailing them at directors@BoiseInc.com. All shareholder correspondence will be referred to the chair of our board, who is not a member of management. While we do not screen these communications, copies of all complaints or concerns will be forwarded to our general counsel and corporate secretary.
Boise Inc.Attention: Corporate SecretaryPO Box 990050Boise, ID 83799-0050
Shareholder Proposals for Inclusion in Next Year'sYear’s Proxy Statement
ToAccording to SEC rules, to be considered for inclusion in next year'syear’s Proxy Statement, according to SEC rules, our corporate secretary must receive shareholder proposals at the address shown abovebelow not later than November 16, 2009. In addition,19, 2010.
Boise Inc.
Attention: Corporate Secretary
PO Box 990050
Boise, ID 83799-0050
Additionally, our Bylaws require that our corporate secretary must receive notice of any nominations for director or other business a shareholder proposes to bring before our next annual meeting not less than 120 nor more than 150 days prior to April 23, 2010.our 2011 annual meeting of shareholders.
Please refer to Article II, Section 4 of our Bylaws for an outline of the information a shareholder'sshareholder’s notice must include regarding director nominees and other business to be brought before a shareholders'shareholders’ meeting.
You may view a complete copy of our Bylaws by visiting our website at www.BoiseInc.comwww.boiseinc.com and selectingInvestors,Corporate Governance, and thenBylaws.
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Directors
Our board of directors consists of three staggered classes of directors, designated as Class I, Class II, and Class III. The director members of, and the initial termination dates for, each class are:
| Class | Director Members | Termination | ||||||
| Date | ||||||||
II | Jonathan W. Berger | Date of | ||||||
Jack Goldman | 2010 Annual | |||||||
W. Thomas Stephens | Shareholders’ | |||||||
| Meeting | ||||||||
| III | Stanley R. Bell | Date of | ||||||
Nathan D. Leight | 2011 Annual | |||||||
Alexander Toeldte | Shareholders’ | |||||||
| Meeting | ||||||||
| I | Carl A. Albert | Date of | ||||||
Heinrich R. (Rudi) Lenz | 2012 Annual | |||||||
Jason G. Weiss | Shareholders’ | |||||||
Meeting | ||||||||
At each succeeding annual shareholders'shareholders’ meeting, successors to the class of directors whose term expires at that annual meeting will be elected for a three-year term. Each director will hold office for the term to which he or she is elected and until his or her successor is duly elected and qualified or until his or her earlier death, disqualification, resignation, or removal.
Nominees
ThreeTwo nominees, Messrs. Albert, Souleles,Berger and Weiss,Goldman, are standing for election as directors at our 20092010 Annual Shareholders'Shareholders’ Meeting to hold office for three-year terms expiring in 2012.2013.
On March 3, 2010, Boise Cascade Holdings, L.L.C. (Boise Cascade), our then-largest shareholder, sold all of its remaining shares of Boise Inc. common stock. Prior to this sale, Mr. Stephens was one of two Boise Board Representatives (as defined in the Investor Rights Agreement) designated by Boise Cascade.
Following the sale, Boise Cascade no longer has the ability to designate any Boise Board Representatives to our board. Accordingly, Mr. Stephens, who was to stand for election to our board at this year’s Annual Shareholders’ Meeting, will not stand for election. For further information about the Investor Rights Agreement, please refer to the section of this Proxy Statement entitledTRANSACTIONS WITH RELATED PERSONS, PROMOTERS, AND CERTAIN CONTROL PERSONS, Related-Person Transactions, Investor Rights Agreement.
Your shares will be voted according to your instructions. If you return your signed proxy card but do not provide voting instructions, your shares will be votedFOR the election of the threetwo director nominees. To be elected to our board of directors, the director nominees must receive a plurality of the votes cast by our shareholders present in person or by proxy and entitled to vote. If a director nominee who is a continuing director is not reelected, he will remain in office until a successor is elected or until his earlier resignation or removal.
All threeThe two director nominees have confirmed their availability for election. If anyeither of the director nominees becomebecomes unavailable to serve as a director for any reason prior to our 20092010 Annual Shareholders'Shareholders’ Meeting, our board of directors may substitute another person as a director nominee. In that case, your shares will be votedFOR the substitute director nominee.
BiographicalAdditional information follows for the threetwo director nominees and for the directors continuing in office.office, particularly concerning their business experience and qualifications, as well as attributes and skills that led our board to conclude that person should serve as a director for the company. During the past ten years, none of our directors have been a party to any legal or bankruptcy proceedings reportable under SEC rules.
Our board of directors recommends shareholders vote FOR all threethe two director nominees.
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 | Carl A. Albert, |  | ||
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Carl A. Albert, 67 –Nominee
Mr. Albert serves as our board chair. He has served as a director of the company since its inception in 2007.
Business Experience
Since April 2000, Mr. Albert has served as the chair of the board and chief executive officer of Fairchild Venture Capital Corporation, a private investment firm. From 1990 to 2000, he was the majority owner, chair of the board, and chief executive officer of Fairchild Aerospace Corporation and Fairchild Dornier Corporation and chair of the supervisory board of Dornier Luftfahrt, GmbH, all aircraft manufacturing companies. From 1989 to 1990, Mr. Albert was a private investor. After providing start-up venture capital, he served from 1981 to 1988 as chair of the board and chief executive officer of Wings West Airlines, a regional airline that was acquired by AMR Corporation, parent of American Airlines, in 1988. Following the acquisition, Mr. Albert served as president until 1989. Prior to this, he was an attorney practicing business, real estate, and corporate law.
Education
| ¡ | B.A., University of California at Los Angeles |
| ¡ | L.L.B., University of California at Los Angeles, School of Law |
Current public company directorships, other than Boise Inc.
None
Prior directorships held during past five years at any public company or registered investment company
None
Attributes and Skills
| ¡ | Extensive experience as a former chief executive officer and board chair of a capital intensive industry |
| ¡ | International business experience |
| ¡ | Legal expertise |
| 4 | |
 | Stanley R. Bell, 63 |
Mr. Albert is alsoBell has served as a memberdirector of the boardscompany since January 2010. On March 3, 2010, Boise Cascade sold all of directorsits remaining shares of TulipBoise Inc. common stock. Prior to this sale, Mr. Bell was one of two Boise Board Representatives (as defined in the Investor Rights Agreement) designated by Boise Cascade. Following the sale, Boise Cascade no longer has the ability to designate any Boise Board Representatives to our board. Accordingly, Mr. Bell will resign from our board effective April 29, 2010, the date of our 2010 Annual Shareholders’ Meeting.
Business Experience
Since February 2008, Mr. Bell has been the president, Building Materials Distribution, of Boise Cascade Holdings, L.L.C., a manufacturer of wood products and nationwide provider of building materials. From October 2004 to January 2008, he served as senior vice president of Boise Cascade Holdings, L.L.C., Building Materials Distribution. From 2000 to October 2004, Mr. Bell served as senior vice president and general manager, Boise Building Solutions Distribution, of Boise Cascade Corporation a privately(now OfficeMax Incorporated).
Education
| ¡ | B.A. (Economics) and M.B.A., University of Utah |
Current public company directorships, other than Boise Inc.
None
Prior directorships held manufacturingduring past five years at any public company and the National Asthma Campaign. Mr. Albert received a B.A. from the University of California at Los Angeles and an L.L.B. from the University of California at Los Angeles School of Law.or registered investment company
None
Jonathan W. Berger, 50Attributes and Skills
| ¡ | Extensive experience in a nationwide building materials distribution business |
| ¡ | Familiarity with assets and operations of Boise Inc. |
| 5 | |
 | Jonathan W. Berger, 51 Nominee |
Mr. Berger has served as a director of the company since its inception in 2007. Mr. Berger is the cousin of Nathan D. Leight, one of our directors.
Business Experience
Mr. Berger has been the managing partner of Tellurian Partners, LLC since August 2009. Tellurian Partners, LLC is a consulting and financial advisory business. From December 2001 to July 2009, Mr. Berger was associated with Navigant Consulting, Inc., an NYSE-listed consulting firm, since December 2001 and iswas the managing director and co-leader of that firm'sfirm’s corporate finance practice. He haswas also been president of Navigant Capital Advisors, L.L.C., Navigant Consulting, Inc.'s’s registered broker-dealer, sincefrom October 2003.2003 to July 2009. From 2000 to 2001, Mr. Berger was president of DotPlanet.com, an Internet services provider. From 1983 to 1999, Mr. Berger was employed by KPMG LLP, an independent public accounting firm, and served as a partner from 1991 to 1999, where he led the corporate finance practice for three of those years. Mr. Berger is also a member of the
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| ¡ | B.S., Cornell University |
| ¡ | M.B.A., Emory University |
Table of ContentsCurrent public company directorships, other than Boise Inc.
board of directors of Great Lakes Dredge & Dock Corporation and is chair of its audit committee. Mr. Berger received a B.S. from Cornell University and an M.B.A. from Emory University. Mr. Berger is a certified
| ¡ | Great Lakes Dredge & Dock Company – Global provider of dredging services (Mr. Berger serves as chair of Great Lakes’ Audit Committee) |
Prior directorships held during past five years at any public accountant. Mr. Berger is the cousin of Nathan D. Leight, one of our directors.company or registered investment company
None
Jack Goldman, 68Attributes and Skills
| ¡ | Extensive accounting background, with over 25 years of accounting experience |
| ¡ | Certified public accountant |
| ¡ | Holds a masters of business administration |
| 6 | |
 | Jack Goldman, 69 Nominee |
Mr. Goldman has served as a director of the company since February 2008. Since
Business Experience
From January 2006 he has beenthrough 2009, Mr. Goldman was a partnersenior attorney in the law firm of Theodora, Oringher, Miller & Richman PC in Los Angeles.Angeles and in January 2010 became of counsel to the firm. From May 2002 until January 2006, Mr. Goldman was of counsel to the law firm of Miller & Holguin, at which time it merged with his current firm. Mr. Goldman was a partner in the law firm of Arter & Hadden from 1994 through 2000 and thereafter was of counsel to that firm until 2002. PriorDuring the period of April 2001 through December 2007, Mr. Goldman also served as chair and chief executive officer of Business Protection Systems International, Inc., a privately held provider of proprietary software solutions for business continuity and risk management programs for business and public sector clients. He continued to this,serve as a director through March 2009 when he was elected again as board chair, the position he currently holds. From 1989 until 1994, he was a partner in the law firm of Keck, Mahin & CateCate. Mr. Goldman engaged in private practice through his own law firm from 1989 until 1994.1980 through 1989. Mr. Goldman was general counsel of Superscope, Inc., a multinational manufacturer and distributor of brand name consumer audio products from 1975 tothrough 1980. While at Superscope, he also served as treasurer and vice president of administration. Mr. Goldman was admitted to practice law in California in 1966 and engaged in private practice until 1975. He returned to private practice through his own law firm beginning in November 1980 through May 1989. From April 2001 until December 2007, Mr. Goldman served as chair
Education
| ¡ | B.A., Lafayette College |
| ¡ | J.D., University of California at Los Angeles, School of Law |
Current public company directorships, other than Boise Inc.
None
Prior directorships held during past five years at any public company or registered investment company
None
Attributes and chief executive officer of Business Protection Systems International, Inc. (BPSI), a privately held provider of proprietary software solutions for business continuity and risk management programs for business and public sector clients. Mr. Goldman continues to serve as a director of BPSI. Mr. Goldman received a B.A. from Lafayette College and a J.D. from the University of California at Los Angeles School of Law.Skills
Nathan D. Leight, 49
| ¡ | Expertise in business continuity and risk management programs |
| ¡ | Extensive experience with corporate governance matters |
| ¡ | Legal expertise |
| 7 | |
| Nathan D. Leight, 50 |
Mr. Leight has served as a director of the company since its inception in 2007. Prior to our acquisition of Boise Cascade Holdings, L.L.C.'s paper, packaging, and newsprint businesses on February 22, 2008, he was the chair of our board. Mr. Leight is the co-founder, chief investment officer, andcousin of Jonathan W. Berger, one of our directors. Mr. Leight serves on our board as a designee of the Aldabra Majority Holders (as defined in the Investor Rights Agreement).
Business Experience
Mr. Leight has been the senior managing member of Terrapin Partners, LLC since 1998 and the managing member and chief investment officer of Terrapin Asset Management, LLC bothsince 2002. Terrapin Partners, LLC is a private investment entities. From 2004 to 2006, hemanagement firm focused on private equity investing and recapitalization of public and private companies. Terrapin Asset Management, LLC focuses on the management of alternative investment vehicles, including hedge funds and multi-manager hedge fund portfolios. Mr. Leight was chair of the board of Aldabra Acquisition Corporation, a previously publicly traded blank check company. In December 2006, Aldabracompany, from its inception in 2004 until it merged with Great Lakes Dredge & Dock Corporation, and since that time, Mr. Leight has served as a director of that company.Company in 2006. From 2000 to 2002, heMr. Leight served as the interim chief executive officer of VastVideo, Inc., and from 1998 to 1999, he served as the interim chief executive officer of e-STEEL L.L.C. From 1995 to 1998, Mr. Leight was employed by hedge fund Gabriel Capital LP, where he served as chief investment officer. From 1991 to 1995, Mr. Leight served as a managing director of Dillon Read & Co., overseeing the firm'sfirm’s proprietary trading department. Mr. Leight received an A.B. from Harvard College (cum laude). Mr. Leight is the cousin of Jonathan W. Berger, one of our directors. Mr. Leight serves on our board as a designee of the Aldabra Majority Holders (as defined in the Investor Rights Agreement).
Matthew W. Norton, 30
Mr. Norton has served as a director of the company since January 2009. Mr. Norton has been employed by Madison Dearborn Partners since May 2008 and currently serves as a vice president. From August 2006 to May 2008, Mr. Norton attended The Wharton School of the University of Pennsylvania. From July 2004 to August 2006, he was employed by Madison Dearborn Partners as an associate. From 2001 to 2004, he was employed by Merrill Lynch. Mr. Norton is also a member of the boards of directors of Forest Products Holdings, L.L.C., and Boise Cascade Holdings, L.L.C. Mr. Norton received a B.S. and an M.B.A. from The Wharton School of the University of Pennsylvania. Mr. Norton serves on our board as a designee of the Boise Majority Holders (as defined in the Investor Rights Agreement).
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Thomas S. Souleles, 40 –NomineeEducation
| ¡ | A.B., Harvard College (cum laude) |
Current public company directorships, other than Boise Inc.
| ¡ | Great Lakes Dredge & Dock Company – Global provider of dredging services |
| ¡ | TradeStation Group, Inc. – Online brokerage firm serving active trader and certain institutional trader markets |
Prior directorships held during past five years at any public company or registered investment company
| ¡ | Aldabra Acquisition Corporation – Publicly traded blank check company (merged with Great Lakes Dredge and Dock Company in 2006) |
Attributes and Skills
| ¡ | Over 25 years of experience in asset and hedge fund management, venture capital, and private equity investing |
| ¡ | Expertise in capital markets |
| 8 | |
 | Heinrich R. (Rudi) Lenz, 54 |
Mr. SoulelesLenz has served as a director of the company since February 2010.
Business Experience
Mr. Lenz has served as president and chief executive officer of Sun Chemical Corporation, a producer of printing inks and pigments, since January 2008. He has beenFrom 2002 to 2007, Mr. Lenz served as Sun Chemical’s senior vice president and chief financial officer/president, Latin America. From 1997 to 2002, Mr. Lenz was employed by Madison Dearborn Partners since 1995Fairchild Aerospace, a manufacturer of corporate jets and currently servesaircraft for regional airlines, serving first as a managing director, concentratingexecutive vice president and chief financial officer and then as president and chief executive officer of Fairchild Aircraft Inc. From 1980 to 1997, Mr. Lenz was employed by Allied Signal Aerospace in its aerospace, automotive, specialty chemicals, plastics, and engineered materials businesses, ultimately being promoted to vice president, Finance. From 1976 to 1980, Mr. Lenz was employed by the basic industries sector. Mr. Souleles is also a member of the boards of directors of Forest Products Holdings, L.L.C., Boise Cascade Holdings, L.L.C., Great Lakes Dredge & Dock Corporation, US Power Generating Company, and The Children's Memorial Medical Center and of the board of trustees of the National Multiple Sclerosis Society, Greater Illinois Chapter. Mr. Souleles received an A.B. from Princeton University, a J.D. from Harvard Law School, and an M.B.A. from the Harvard Graduate School of Business Administration. Mr. Souleles serves on our board as a designee of the Boise Majority Holders (as defined in the Investor Rights Agreement).German Internal Revenue Service.
W. Thomas Stephens, 66Education
| ¡ | B.S. (Finance and Taxes), University of Edenkoben, Germany |
| ¡ | M.S. (Business and Administration), University of Wiesbaden, Germany |
Current public company directorships, other than Boise Inc.
None
Prior directorships held during past five years at any public company or registered investment company
None
Attributes and Skills
| ¡ | Extensive international business experience |
| ¡ | Extensive financial background, with over 30 years of accounting experience |
| ¡ | Experience as chief executive officer of a capital intensive, global company |
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 | W. Thomas Stephens, 67 |
Mr. Stephens has served as a director of the company since February 2008. On March 3, 2010, Boise Cascade sold all of its remaining shares of Boise Inc. common stock. Prior to this sale, Mr. Stephens was one of two Boise Board Representatives (as defined in the Investor Rights Agreement) designated by Boise Cascade. Following the sale, Boise Cascade no longer has the ability to designate any Boise Board Representatives to our board. Accordingly, Mr. Stephens, who was to stand for election to our board at this year’s Annual Shareholders’ Meeting, will not stand for election.
Business Experience
From October 2004 tountil his retirement in November 2008, heMr. Stephens served as Boise Cascade Holdings, L.L.C.'s chief executive officer and chairman and onea director of its directors.Boise Cascade Holdings, L.L.C., a manufacturer of wood products and nationwide provider of building materials. Mr. Stephens served as president and chief executive officer of MacMillan Bloedel, a Canadian forest products company, from 1997 until his retirement in 1999. From 1986 to 1996, Mr. Stephens served as the president and chief executive officer of Manville Corporation.Corporation, a fiberglass and forest products company. From 1982 to 1985, he served as the chief executive officer of Riverwood Corporation. Mr. Stephens is alsoCorporation, a member of the board of directors of TransCanada Pipelines Limited. Mr. Stephens received a forest products company.
Education
| ¡ | B.S. and M.S.I.E., University of Arkansas |
Current public company directorships, other than Boise Inc.
| ¡ | TransCanada Pipelines Limited – Publicly traded Canadian company providing natural gas transmission and power services |
| ¡ | Putnam Funds – Mr. Stephens rejoined the board of the Putnam Funds as a trustee in 2009 |
Prior directorships held during past five years at any public company or registered investment company
| ¡ | Putnam Funds – Mr. Stephens served as a trustee from 1997 to 2008 |
Attributes and an M.S.I.E. from the University of Arkansas. Mr. Stephens serves on our board as a designee of the Boise Majority Holders (as defined in the Investor Rights Agreement).Skills
Alexander Toeldte, 49
| ¡ | Extensive experience as a former chief executive officer in the capital intensive wood products industry |
| ¡ | Familiarity with assets and operations of Boise Inc. |
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| Alexander Toeldte, 50 |
Mr. Toeldte has served as the company'scompany’s president and chief executive officer and a director since February 2008.
Business Experience
Mr. Toeldte joined Boise Cascade Holdings, L.L.C., in early October 2005 as president of the company's packagingcompany’s Packaging and newsprintNewsprint segment and, in late October 2005, became its executive vice president, paperPaper and packagingPackaging and newsprintNewsprint segments. From 2004 to 2006, Mr. Toeldte was chair of Algonac Limited, a private management and consulting firm based in Auckland, New Zealand. From 2001 to 2003, Mr. Toeldte servedToeldte’s previous experience includes: serving as executive vice president of Fonterra Co-operative Group, Ltd., and chief executive officer of Fonterra Enterprises. Fonterra,Enterprises (Fonterra, based in New Zealand, is a global dairy company. From 1999 to 2001,company); previously, Mr. Toeldte served in various capacities with Fletcher Challenge Limited Group which was formerly(formerly one of the largest companies in New Zealand with holdings in paper, forestry, building materials, and energy. From 2000 to 2001, he wasenergy), including as chief executive officer of Fletcher Challenge Building and from 1999 to 2000, he wasas chief executive officer of Fletcher Challenge Paper, both of which were publicly traded units of the Fletcher Challenge Limited Group. Prior to 1999,Group; and Mr. Toeldte wasalso served as a partner at McKinsey & Company where he served since 1986 in Toronto, Brussels, Montreal, and Stockholm. Mr. Toeldte is a member of the board of directors of the American Forest & Paper Association (AF&PA). Mr. Toeldte studied economics at the Albert-Ludwigs-Universität in Freiburg, Germany, and received an M.B.A. from McGill University in Montreal.
Jason G. Weiss, 39 –NomineeEducation
| ¡ | Economics, Albert-Ludwigs-Universität, Freiburg, Germany |
| ¡ | M.B.A., McGill University, Montreal, Canada |
Current public company directorships, other than Boise Inc.
None
Prior directorships held during past five years at any public company or registered investment company
None
Attributes and Skills
| ¡ | Previous experience as chief executive officer of a publicly traded company |
| ¡ | Previous experience as board chair of a publicly traded company |
| ¡ | Extensive international business experience across a wide variety of industries |
| ¡ | Extensive experience in the capital intensive wood products industry |
| ¡ | Management consulting experience |
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| Jason G. Weiss, 40 |
Mr. Weiss has served as a director of the company since its inception in 2007. Prior to our acquisition of Boise Cascade Holdings, L.L.C.'s paper, packaging, and newsprint businessesMr. Weiss serves on February 22, 2008, he was our chief executive officer, secretary, and a member of our board as a designee of directors. the Aldabra Majority Holders (as defined in the Investor Rights Agreement).
Business Experience
Mr. Weiss ishas been the co-founder and a managing member and sole owner of Terrapin Palisades Ventures, LLC since June 2009. Terrapin Palisades Ventures, LLC is a private investment company and is also a general partner of the Terrapin-Fabbri Management Company LLC, which serves as the general partner of several almond farm-related investment partnerships. In June 2009, Mr. Weiss sold his interest in Terrapin Partners, LLC, Terrapin Asset Management, LLC, and TWF Management
7
Company. Company LLC, all private equity and asset management companies in which he had been a managing member and the co-founder since 1998. From 2004 to 2006, he was chief executive officer of Aldabra Acquisition Corporation, a previously publicly traded blank check company. Incompany (in December 2006, Aldabra merged with Great Lakes Dredge & Dock Corporation, and since that time,Company). During 2004, Mr. Weiss has served as a directormanaging member of that company.American Classic Sanitation LLC. From 1999 to 2000, Mr. Weisshe served as the chief executive officer and executive vice president of strategy of PaperExchange.com. During 1998 and 2000, Mr. Weiss served as a managing member of e-STEEL L.L.C.LLC.
Education
| ¡ | B.A., University of Michigan (with Highest Distinction) |
| ¡ | J.D., Harvard Law School (cum laude) |
Current public company directorships, other than Boise Inc.
| ¡ | Great Lakes Dredge & Dock Company – Global provider of dredging services (Mr. Weiss serves on Great Lakes’ Compensation Committee) |
Prior directorships held during past five years at any public company or registered investment company
None
Attributes and during 2004, served as a managing member of American Classic Sanitation LLC. Besides serving on the board of directors of Great Lakes Dredge & Dock Corporation, Mr. Weiss also serves on the boards of directors of Equipois, Inc., a privately held manufacturer of mechanical arms that reduce worker injuries from sustained work with heavy tools, and Underground Solutions, Inc., a publicly traded water infrastructure technology company focused on trenchless rehabilitation of water pipelines. Mr. Weiss received a B.A. from the University of Michigan (with Highest Distinction) and a J.D. (cum laude) from Harvard Law School. Mr. Weiss serves on our board of directors as a designee of the Aldabra Majority Holders (as defined in the Investor Rights Agreement).
8
| ¡ | Extensive experience with private equity and asset management companies |
| ¡ | Previous experience as chief executive officer in a variety of industries |
| ¡ | Legal expertise |
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Proposal No. 2 – Approval of Amendmentamendments to the Boise Inc. Incentive and Performance Plan to expand the list of available performance measures and clarify how shares withheld to pay the exercise price of an award or withholding taxes are administered
We ask you to consider and approve an amendmentamendments to the Boise Inc. Incentive and Performance Plan (the BIPP), which was approved by our board of directors in February 2009. This amendment,. These amendments, subject to your approval, increaseswould (1) expand the numberlist of shares approved for issuanceperformance measures available under the BIPP by 12,000,000and (2) clarify that shares bringingwithheld to pay the total numberexercise price of an award or withholding taxes are not considered “issued” and are to be returned to the pool of shares approved for issuanceavailable under the BIPP for future awards. A description of the BIPP, as proposed to 17,175,000.be amended, follows and a copy is attached to this Proxy Statement as Appendix A.
History and Operation of the BIPP
We use the BIPP to tie a portion of our key employees'employees’ total compensation to shareholder value. The BIPP also supports our ability to attract and retain highly qualified managers in key positions.
The BIPP permits grants of annual incentive awards, stock bonuses, restricted stock, restricted stock units, performance stock, performance units, stock appreciation rights (SARs), and stock options (including performance-based or indexed stock options) to our officers, key employees, and nonemployee directors who are selected as participants. The Compensation Committee of our board of directors will generally select BIPP participants.
On February 5, 2008, our shareholders approved the adoption of the BIPP in connection with our acquisition of Boise Cascade Holdings, L.L.C.'s paper, packaging, and newsprint assets (the Acquisition). At that time, a total of 5,175,000 shares of the company's common stock were reserved for issuance under the BIPP. Since the Acquisition and as of March 13, 2009, 13 officers, 43 other key employees, and 8 nonemployee directors had received restricted stock or restricted stock unit awards under the BIPP, totaling 3,113,700 shares, of which 2,436,966 shares of our common stock remain subject to these awards. As of March 13, 2009, 43,017 shares had been forfeited by award recipients. We have 2,104,317 shares currently available for future grants under the BIPP.
The Compensation Committee has approved additional awards of restricted stock and restricted stock units to our officers and other key employees, and our board of directors has approved awards of restricted stock and restricted stock units to our nonemployee directors. These awards, totaling 4,602,185 shares of restricted stock and 1,238,558 restricted stock units, were awarded on March 16, 2009, but are subject to your approval. Assuming your approval and the grant of these awards, the remaining shares available under the BIPP will be 8,263,574 shares.
Awards will become exercisable or otherwise vest at the times and upon the conditions that the Compensation Committee may determine at the time of grant, as reflected in the applicable award agreement. The Compensation Committee may also make any or all awards performance-based.performance based. This means the awards will be paid out based on the attainment of specified performance goals, in
addition to any other conditions the Compensation Committee may establish. Awards under the BIPP are discretionary.
The BIPP restricts the number of stock options, SARs, restricted stock shares, restricted stock units, and performance shares that can be granted during any fiscal year to any participant covered by Section 162(m) of the Internal Revenue Code. In addition, the BIPP also limits the amount that may be paid to such participants for both annual incentive awards and performance units granted in a single fiscal year.
Stock Options. Stock options entitle the holder to purchase shares of our common stock during a specified period at a purchase price set by the Compensation Committee (not less than 100% of the fair market value of our common stock on the grant date). Each option granted under the BIPP will be exercisable for a maximum period of ten years from the date of grant (or for a lesser period if the
9
Compensation Committee so determines). Participants exercising an option may pay the exercise price by any lawful method permitted by the Compensation Committee.
Stock Appreciation Rights (SARs). A SAR is the right, denominated in shares, to receive upon exercise, without payment to the company, an amount equal to the excess of the fair market value of a share of our common stock on the exercise date over the fair market value of a share of our common stock on the grant date, multiplied by the number of shares with respect to which the SAR is being exercised. Payment will be made in stock or cash, at the company'scompany’s option. The Compensation Committee may grant SARs to participants as either free-standing awards or awards related to stock options. For SARs related to an option, the terms and conditions of the grant will be substantially the same as the terms and conditions applicable to the related option, and exercise of either the SAR or the option will cause the cancellation of the other, unless otherwise determined by the Compensation Committee. The Compensation Committee will determine the terms and conditions applicable to awards of free-standing SARs or for awards related to stock options.
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Restricted Stock. Restricted stock is common stock the company transfers or sells to a participant whichthat is subject to a substantial risk of forfeiture and restrictions on sale or transfer for a period of time. The Compensation Committee will determine the amounts, terms, and conditions (including the attainment of performance goals) of any restricted stock grant. Except for restrictions on transfer (and any other restrictions the Compensation Committee may impose), participants will have all the rights of a shareholder with respect to the restricted stock. Unless the Compensation Committee determines otherwise, a participant'sparticipant’s termination of employment during the restricted period will result in forfeiture of all shares subject to restrictions.
Restricted Stock Units. Restricted stock units are similar to restricted stock, except (1) the shares of stock are not issued to the participant until after the end of the restriction period and any other applicable conditions are satisfied and (2) the participant does not have rights of a shareholder with respect to the restricted stock units. Restricted stock units may also be paid in cash rather than stock, or in a combination of cash and stock, at the Compensation Committee'sCommittee’s discretion.
Performance Units. The Compensation Committee may also award performance units, which are the right to receive a payment upon the attainment of specified performance goals. The Compensation Committee will establish the applicable performance goals at the time the units are awarded. Payment may be made in cash, stock, or a combination of cash and stock, at the Compensation Committee'sCommittee’s discretion.
Performance Shares. Performance shares represent the right to receive a payment at a future date based on the value of the common stock in accordance with the terms of the grant and upon the attainment of specified performance goals. The Compensation Committee will establish the performance goals and all other terms applicable to the grant. Payment may be made in cash, stock, or a combination of cash and stock, at the Compensation Committee'sCommittee’s discretion.
Annual Incentive Awards. Annual incentive awards are payments based on the attainment of performance goals specified by the Compensation Committee. Awards are calculated as a percentage of salary, based on the extent to which the performance goals are met during the year, as determined by the Compensation Committee. Awards are paid in cash, stock, or a combination of cash and stock, at the Compensation Committee'sCommittee’s discretion.
Stock Bonuses. Stock bonus awards, consisting of common stock, may be made at the Compensation Committee'sCommittee’s discretion upon the terms and conditions (if any) determined by the Compensation Committee.
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Performance Goals. Awards of restricted stock, performance units, performance shares, annual incentive awards, and other awards under the BIPP may be subject to the attainment of performance goals relating to one or more business criteria within the meaning of Section 162(m) of the Internal Revenue Code. These goals may include or be based upon, without limitation:
•Net earnings;¡ Net earnings;
¡ Sales or revenue;
¡ Income or net income;
¡ Operating income or net operating income;
¡ Operating profit or net operating profit;
¡ Cash flow;
¡ Economic profit;
¡ Return on assets, capital, investment, and/or operating revenue;
¡ Return on equity or average shareholders’ equity;
¡ Total shareholder return;
¡ Growth in sales or return on sales;
¡ Gross, operating, or net profit margin;
¡ Working capital;
¡ Earnings per share;
¡ Growth in earnings or earnings per share;
¡ Price per share of stock;
¡ Market share;
¡ Overhead or other expense reduction; and
¡ Growth in shareholder value relative to various indices.
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Performance goals may (1) be used to measure our performance as a whole or any Boise Inc. subsidiary, business unit, or segment, (2) be adjusted to include or exclude extraordinary items, and (3) reflect absolute entity performance or a relative comparison of entity performance to the performance of a peer group, index, or other external measure, in each case as determined by the Compensation Committee in its discretion.
The following sharesShares of common stock issued under the BIPP will again be available for issuance underin the BIPP:following instances:
•Shares subject to an incentive award that is canceled, expired, terminated, forfeited, surrendered, or otherwise settled without the issuance of any stock; and•Shares of stock related to an incentive award that is settled in cash in lieu of stock.
| ¡ | Shares subject to an incentive award that is canceled, expired, terminated, forfeited, surrendered, or otherwise settled without the issuance of any stock; |
| ¡ | Shares of stock related to an incentive award that is settled in cash in lieu of stock; and |
| ¡ | Shares withheld from an incentive award for payment of the exercise price or purchase price and shares withheld from an award for payment of applicable tax withholding obligations. |
Change in Control
The BIPP provides that in the event of a change in control (as defined in the BIPP), unless otherwise determined by the Compensation Committee, all then-outstanding stock options and SARs will become fully vested and exercisable, and all other then-outstanding awards that are subject to time-based vesting will vest in full and be free of restrictions, except to the extent another award meeting the requirements set forth in the BIPP is provided to the participant to replace such award. The BIPP provides that such a replacement award may take the form of a continuation of the award outstanding prior to the change in control.
11
Administration of the BIPP
The Compensation Committee administers the BIPP. The Compensation Committee (or any permitted delegee) has the discretion and responsibility to:
•Grant incentive awards;•Determine the participants to whom incentive awards will be granted; and•Establish and administer performance goals, among other things.
| ¡ | Grant incentive awards; |
| ¡ | Determine the participants to whom incentive awards will be granted; and |
| ¡ | Establish and administer performance goals, among other things. |
Our board of directors may amend the BIPP at any time and may make adjustments to the BIPP and outstanding options, without shareholder approval, to reflect a stock split, stock dividend, recapitalization, merger, consolidation, or other corporate events. Shareholders must approve amendments that:
•Increase the number of shares subject to the BIPP;•Decrease the grant or exercise price of any stock-based award to less than the fair market value of a share of Boise Inc. common stock on the grant date;•Materially increase the benefits to participants; or•Are required by applicable law to be approved by shareholders.
| ¡ | Increase the number of shares subject to the BIPP; |
| ¡ | Decrease the grant or exercise price of any stock-based award to less than the fair market value of a share of Boise Inc. common stock on the grant date; |
| ¡ | Materially increase the benefits to participants; or |
| ¡ | Are required by applicable law to be approved by shareholders. |
The BIPP became effective on February 22, 2008, upon the closing of the Acquisition. It will expire on February 22, 2018, unless terminated earlier. Our board of directors may terminate the BIPP at any time before that date. Awards outstanding at the expiration or termination of the BIPP shall remain in effect according to their terms and the provisions of the BIPP.
U.S. Federal Income Tax Consequences
The following is a brief description of the principal U.S. federal income tax consequences, based on current law, of awards under the BIPP.
Incentive Stock Options. An incentive stock option results in no taxable income to the optionee and no deduction to the company at the time it is granted or exercised. The excess of the fair market value of the shares acquired over the option price, however, is an item of adjustment in computing the alternative
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minimum taxable income of the optionee. If the optionee holds the stock received as a result of an exercise of an incentive stock option for at least two years from the date of the grant and one year from the date of exercise, then the gain realized on disposition of the stock is treated as a long-term capital gain. If the shares are disposed of during this period, however (i.e.(e.g., a "disqualifying disposition"“disqualifying disposition”), then the optionee will include in income, as compensation for the year of the disposition, an amount equal to the excess, if any, of the fair market value of the shares upon exercise of the option over the option price (or, if less, the excess of the amount realized upon disposition over the option price). The excess, if any, of the sale price over the fair market value on the date of exercise will be a short-term capital gain. In such a case, the company will be entitled to a deduction in the year of the disposition for the amount includible in the optionee'soptionee’s income as compensation. The optionee'soptionee’s basis in the shares acquired upon exercise of an incentive stock option is equal to the option price paid, plus any amount includible in his or her income as a result of a disqualifying disposition.
NonQualifiedNonqualified Stock Options.Options. A nonqualified stock option results in no taxable income to the optionee and no deduction to the company at the time it is granted. An optionee exercising such an option will, at that time, realize taxable compensation in the amount of the difference between the option exercise price and the then fair market value of the shares. Subject to the applicable provisions of the Internal Revenue Code, a deduction for federal income tax purposes will be allowable to the company in the year of exercise in an amount equal to the
12
taxable compensation recognized by the optionee.
The optionee'soptionee’s basis in such shares is equal to the sum of the option price plus the amount includible in his or her income as compensation upon exercise. Any gain (or loss) upon subsequent disposition of the shares will be a long-term or short-term gain (or loss), depending upon the holding period of the shares.
If a nonqualified option is exercised by tendering previously owned shares of the company'scompany’s common stock in payment of the option exercise price, then instead of the treatment described above, the following generally will apply: A number of new shares equal to the number of previously owned shares tendered will be considered to have been received in a tax-free exchange; the optionee'soptionee’s basis and holding period for such number of new shares will be equal to the basis and holding period of the previously owned shares exchanged. The optionee will have compensation income equal to the fair market value on the date of exercise of the number of new shares received in excess of the number of exchanged shares. The optionee'soptionee’s basis in the excess shares will be equal to the amount of the compensation income, and the holding period in the shares will begin on the date of exercise.
Stock Appreciation Rights (SARs). Generally, the recipient of a SAR will not recognize taxable income at the time the SAR is granted. If an employee receives the appreciation inherent in the SARs in cash, the cash will be taxed as ordinary income to the employee at the time it is received. If an employee receives the appreciation inherent in the SARs in stock, the value of the stock received will be taxed as ordinary income to the employee at the time it is received. In general, there will be no federal income tax deduction allowed to the company upon the grant or termination of SARs. Upon the settlement of a SAR, however, the company will be entitled to a deduction equal to the amount of ordinary income the recipient is required to recognize as a result of the settlement.
Restricted Stock. Restricted stock shares are generally subject to ordinary income tax at the time the restrictions lapse. The participant may, however, make an election to include in income, when the restricted stock is first transferred to him or her, an amount equal to the excess of the fair market value of the stock at that time over the amount, if any, paid for the stock. The result of this election is that appreciation in the value of the stock after the
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date of transfer is then taxable as a capital gain, rather than as ordinary income.
Restricted Stock Units. Provided the terms of the restricted stock units comply with the requirements of Internal Revenue Code Section 409A, the recipient will recognize taxable income and be subject to wage and employment tax withholding at the time a participant receives the shares or cash underlying the awards. The amount of ordinary income a participant will recognize will equal the fair market value of the shares and/or cash at the time it is received, less the amount, if any, a recipient paid for the restricted stock units.
Other Awards. Recipients of performance units and performance shares will not recognize taxable income at the time the performance unit or performance share is granted. They will, however, be subject to ordinary income tax at the time payment is made at the completion of the performance period, equal to the amount of cash or fair market value of stock received over the amount, if any, paid for the performance unit or performance share.
In each of the foregoing cases, the company will generally be entitled to a corresponding federal income tax deduction at the same time the participant recognizes ordinary income.
Tax Withholding. When a recipient realizes taxable compensation with respect to an award, a recipient must satisfy all applicable federal, state, or local taxes required by law to be withheld at that time. The company will, to the
13
extent permitted by law, have the right to deduct any of the taxes from any payment of any kind otherwise due to the participant. With respect to incentive stock options, no income or employment taxes are currently required to be withheld upon the exercise of the option or upon the disposition of stock acquired upon the exercise of such option. The Internal Revenue Service, however, has issued notices indicating the withholding rules applicable to incentive stock options may be changed in the future.
Capital Gains Tax. A recipient'srecipient’s sale of any Boise Inc. common stock acquired under the BIPP may result in the recognition of capital gains or losses for the recipient. Under current law, the federal income tax rates that apply to net capital gains will depend in part upon the length of time the shares are held by the recipient following an exercise, with different tax rates applying for shares held for one year or less, for more than one year, and for more than five years. Net capital gains rates are generally lower for individuals upon satisfaction of longer holding periods. Net capital losses may generally be deducted against net capital gains and against ordinary income to a limited extent.
Tax Treatment of Awards to Nonemployee Directors and Employees Outside the United States. The grant and exercise of options and awards under the BIPP to nonemployee directors and employees outside the United States may be taxed on a different basis.
Other Tax Considerations. Section 162(m) of the Internal Revenue Code places a $1,000,000$1 million annual limit on the compensation deductible by the company paid to covered employees. The limit, however, does not apply to "qualified“qualified performance-based compensation."” We believe awards of stock options, SARs, and other awards payable upon the attainment of performance goals under the BIPP will qualify as qualified performance-based compensation. Also, awards that are granted, accelerated, or enhanced upon the occurrence of a change in control may give rise, in whole or in part, to "excess“excess parachute payments"payments” within the meaning of Section 280G of the Internal Revenue Code and, to such extent, will be nondeductible by the company and subject to a 20% excise tax on the participant.
The foregoing summary of the income tax consequences with respect to the BIPP is for general information only. Interested parties should consult their own advisors as to specific tax consequences, including the application and effect of foreign, state, and local tax laws.
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IRS Circular 230 Disclosure.Disclosure. To ensure compliance with requirements imposed by the U.S. Internal Revenue Service, we inform you that any tax advice contained in this communication was not intended or written to be used, and cannot be used, by any taxpayer for the purpose of (1) avoiding tax-related penalties under the Internal Revenue Code or (2) promoting, marketing, or recommending to another party any tax-related matters addressed in this communication.
Proposed Plan Amendments
The following amendments (1) expand the list of performance measures available under the BIPP and (2) clarify that shares withheld to pay the exercise price of an award or withholding taxes are not considered “issued” and are to be returned to the pool of shares available under the BIPP for future awards.
Internal Revenue Code Section 162(m) limits the compensation deductible with respect to a company’s chief executive officer and other top officers to $1 million, subject to listed exceptions. One of the exceptions is performance-based compensation. To qualify as performance-based compensation, payment must be based on the achievement of goals related to performance measures approved by shareholders. The BIPP meets the requirement of having performance measures approved by shareholders by listing a number of performance measures in the plan, from which the Compensation Committee can then choose as it designs incentive programs. This amendment expands the list of performance measures available under the BIPP to give the
Compensation Committee greater flexibility to adjust to business needs and goals in designing incentive programs. The list of performance measures available under the BIPP is being expanded to include safety and measurable objectives related to strategic plan development and implementation, tactical plans, sales plans, operating budget, cost control, products or projects, acquisitions or divestitures, or personnel.
The amendment also clarifies that shares withheld to pay the exercise price of an award or to pay withholding taxes are not considered “issued” under the BIPP and are returned to the pool of shares available under the BIPP for future awards.
Our board of directors believes these amendments are essential for keeping performance measures in alignment with company objectives and maximizing the shares approved for issuance under the BIPP.
These amendments will be approved if a majority of shares present at the meeting vote in favor of the proposal. A copy of the BIPP is on file with the SEC.
Our board of directors recommends shareholders vote FOR the approval of the amendments to the Boise Inc. Incentive and Performance Plan to expand the list of available performance measures and clarify how shares withheld to pay the exercise price of an award or withholding taxes are administered.
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Proposal No. 3 – Approval of amendment to the Boise Inc. Incentive and Performance Plan to establish a bonus pool for annual incentive awards under the plan
We ask you to consider and approve an amendment to the Boise Inc. Incentive and Performance Plan (the BIPP). This amendment, subject to your approval, would establish a bonus pool feature under the BIPP for annual incentive awards to officers who are subject to (or who may become subject to) Internal Revenue Code Section 162(m). For a detailed description of the BIPP, please refer to the section of this Proxy Statement entitledPROPOSALS TO BE VOTED ON, Proposal No. 2. A description of the proposed amendment to the BIPP follows and a copy of the BIPP, as proposed to be amended, is attached to this Proxy Statement as Appendix A.
Proposed Plan Amendment
In addition to enhancing our ability to attract and retain highly qualified employees, the BIPP is intended to satisfy the requirements for “performance-based compensation” within the meaning of Section 162(m) of the Internal Revenue Code. Specifically, under Internal Revenue Code Section 162(m), compensation payable to our chief executive officer and other senior officers specified under Internal Revenue Code Section 162(m) in excess of $1 million is not deductible unless the compensation satisfies the Section 162(m) rules and regulations. There are several methods to comply with the Section 162(m) rules and regulations for performance-based compensation. This amendment increasesemploys the numberpool method, which allows the Compensation Committee to create an annual incentive pool each year, based on one or more performance measures specified in the BIPP, and to divide that pool among the officers subject to (or who may become subject to) Section 162(m). The
Compensation Committee retains negative discretion to reduce (but not increase) any officer’s award below the amount that would otherwise be paid, based on any factors the Compensation Committee deems appropriate or applicable in its sole discretion.
If this amendment is approved, the description of shares approved for issuanceannual incentive awards under the BIPP will change as follows:
Annual Incentive Awards. Annual incentive awards are payments based on the attainment of performance goals specified by 12,000,000 shares, bringing the total numberCompensation Committee. Awards are calculated as a percentage of shares approved for issuance undera bonus pool, based on the BIPPextent to 17,175,000.which the performance goals are met during the year, as determined by the Compensation Committee, subject to the Compensation Committee’s right to reduce or eliminate the amount of any Award. Awards are paid in cash, stock, or a combination of cash and stock, at the Compensation Committee’s discretion.
Our board of directors believes this amendment is essential to maintain a competitive total compensation program. Without this amendment, we will not have sufficient shares availablebecause it preserves the tax deductibility of annual incentive awards under the BIPP while allowing the Compensation Committee flexibility to provide for competitive grants in 2009create annual incentive awards that appropriately motivate and beyond, consistent with the purpose of the BIPP andencourage our compensation practices. In order to maintain the continuity and consistency of the program, our board recommends amending the BIPP to authorize additional shares.
This amendment will not be effective unless it is approved by our shareholders.
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Additional Information
As of the Record Date, the closing price of our common stock on the NYSE was $0.42 per share. For further information on awards grantedmanagement team under the BIPP, please refer to the following sections of this Proxy Statement:
Corporate Governance Principles and Board Matters, Director Compensation – 2008 Director Equity Grants, 2009 Director Compensation, and Director Compensation Table
Security Ownership, Beneficial Ownership of Our Directors and Executive Officersand Securities Authorized for Issuance Under Our Equity Compensation Plan as of December 31, 2008
Executive Compensation, Compensation Discussion and Analysis – Long-Term Incentive Compensation
Executive Compensation, Compensation Tables – Summary Compensation Table, Grants of Plan-Based Awards Table, Outstanding Equity Awards at Fiscal Year-End Table, Option Exercises and Stock Vested Table, and Severance Tables
The referenced sections describe the awards granted under the BIPP to our officers, key employees, and nonemployee directors in 2008 and 2009. The proposed amendment does not affect the 2008 awards; however, the 2009 awards are subject to shareholder approval. If shareholders do not approve the amendment to the BIPP, the 2009 awards will be reduced pro rata based on the shares available under the BIPP. A copy of the BIPP is on file with the SEC.changing business scenarios.
This amendment will be approved if a majority of shares present at the meeting vote in favor of the proposal. A copy of the BIPP is on file with the SEC.
Our board of directors recommends shareholders vote FOR the approval of the amendment to the Boise Inc. Incentive and Performance Plan.Plan to establish a bonus pool for annual incentive awards.
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Our Audit Committee is responsible for the engagement of the company’s independent auditor and appointed KPMG LLP (KPMG) in that capacity effective February 18, 2010.
Although ratification is not required by our Bylaws or otherwise, our board of directors is submitting the selection of KPMG to our shareholders for ratification because we value our shareholders’ views on our independent registered public accounting firm and as a matter of good corporate practice. Our Audit Committee will consider the outcome of this vote in its decision to appoint an independent registered public accounting firm but is not bound by our shareholders’ vote. Even if the selection of KPMG is ratified, our Audit Committee may change the appointment at any time during the year if it determines a change would be in the best interest of the company and our shareholders.
Representatives of KPMG will be present at the annual meeting to answer questions. They will also have the opportunity to make a statement if they desire to do so.
TableFor information on the services KPMG has provided for us, please refer to the section of Contentsthis Proxy Statement entitledAUDIT COMMITTEE MATTERS, Auditor Fees and Services.
KPMG will be ratified as our independent registered public accounting firm if a majority of shares present at the meeting vote in favor of ratification.
Our board of directors recommends shareholders vote FOR the ratification of KPMG LLP as our independent registered public accounting firm for 2010.
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CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS
Corporate Governance Guidelines
Our board of directors has adopted Corporate Governance Guidelines (the Guidelines) to assist the board in exercising its responsibilities. The Guidelines reflect our board'sboard’s commitment to monitor the effectiveness of policy and decision making, both at the board and management level.levels. Our board of directors believes the Guidelines will enhance our ability to achieve our goals and long-term success and will assist us in increasing shareholder value. The Guidelines are in addition to and are not intended to change or interpret any federal or state law or regulation, including the Delaware General Corporation Law, or our Certificate of Incorporation or Bylaws. Our board of directors may modify the Guidelines from time to time on the recommendation of the Governance Committee and as deemed appropriate by our board of directors.
You may view a complete copy of the Guidelines by visiting our website at www.BoiseInc.comwww.boiseinc.com and selectingInvestors,Corporate Governance, and thenGovernance Guidelines. You may also obtain a copy of the Guidelines, free of charge, by calling (208) 384-7803 or by sending a written request to:
Boise Inc.Attention: Investor RelationsPO Box 990050Boise, ID 83799-0050
Our directors believe board independence allows the board to provide appropriate oversight and maintain managerial accountability.
Since we list our common stock and other securities on the New York Stock Exchange (NYSE), the NYSE rules require that a majority of our board of directors must be composed of "independent“independent directors."” This is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship that, in the opinion of the company'scompany’s board of directors, would interfere with the director'sdirector’s exercise of independent judgment in carrying out the responsibilities of a director.
Our board has determined that Messrs. Albert, Berger, Goldman, Norton, Souleles,Leight, Lenz, Stephens, and StephensWeiss are independent directors as defined under the NYSE'sNYSE’s listing standards. These directors constitute a majority of our board of directors. In making their determination, our board considered the relationships disclosed in the section of this Proxy Statement entitledTRANSACTIONS WITH RELATED PERSONS, PROMOTERS, AND CERTAIN CONTROL PERSONS, Related-Person Transactions with Related Persons, Promoters, and Certain Control Persons. Specifically, our board considered the relationship that Messrs. Norton, Souleles, and Stephens have, or have had in the past, with our majority shareholder, Boise Cascade Holdings, L.L.C., as well as the rights that some of our directors have under the Investor Rights Agreement.
Our board of directors, as well as its committees, can retain independent financial, legal, compensation, or other advisors to represent the independent interests of our board of directors or its committees. The retention of independent advisors is at the boardboard’s or committee'scommittee’s sole discretion and is paid for by the company.
2008Communications With Our Board of Directors
You may contact our board of directors by writing to them in care of our corporate secretary at the address shown below, or by emailing them at the email address shown below. All correspondence will be referred to the chair of our board, who is not a member of management. While we do not screen these communications, copies of all complaints or concerns will be forwarded to our general counsel and corporate secretary.
Boise Inc.
Attention: Corporate Secretary
PO Box 990050
Boise, ID 83799-0050
Email:directors@BoiseInc.com
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2009 Overall Meeting Attendance Rates
During 2008,2009, our board of directors met ten times.nine times, which included attendance at our annual shareholders’ meeting. In addition to meetings of the full board and attendance at our annual shareholders’ meeting, our directors also attended 3117 meetings of board committees. Overall, ourOur directors had an overall attendance rate of 91%90%. All of our directors attended at least 75% of the meetings of the board and the committees on which they served, with the exception of Zaid F. Alsikafi,Messrs. Goldman and Norton, whose overall attendance raterates were 70% and 71%, respectively. Mr. Goldman’s ability to attend was 58%.
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limited by health issues. Mr. AlsikafiNorton resigned from our board of directors effective December 31, 2008.January 22, 2010.
While we do not have a formal policy requiring them to do so, we encourage our directors to attend our annual shareholders'shareholders’ meeting.
Since the company’s inception, our Corporate Governance Guidelines have provided that our chief executive officer may not serve concurrently as the chair of our board of directors. Accordingly, we separate our board chair and chief executive officer positions. Mr. Albert, a nonemployee director, serves as our independent board chair, and Mr. Toeldte serves as our chief executive officer. We believe separating the roles of board chair and chief executive officer improves the board’s oversight of the company’s management and risk.
Role of Board of Directors in Our Risk Management Processes
We have well-developed processes and structures in place to manage our key strategic, operational, financial, and compliance risks. While our entire board of directors is responsible for monitoring and evaluating the risks we face and our risk management processes, our board has delegated the oversight of this responsibility to our Audit Committee. We utilize the following risk management processes:
| ¡ | Enterprise Risk Management Dashboard – Our enterprise risk management effort includes a COSO-based framework for identifying and assessing key strategic, operational, financial, and compliance risks. We have assigned each key risk to an executive risk owner who is responsible for ongoing risk assessment and management. On a semi-annual basis, the management team completes a formal assessment of enterprise risk. This assessment includes identification of new risks facing the company, reassessment of known risks, and assessment of our risk response activities and controls. A product of this process is an enterprise risk management dashboard that is used to report the results to the board; |
| ¡ | Management of Major Risks – The most critical risk areas we face are reviewed in depth with our board; |
| ¡ | Strategic Planning Processes – Our annual strategic planning and budgeting process includes identification of risks and a sensitivity analysis, which is reviewed with our board; |
| ¡ | Derivative Risk Management – We maintain a derivative risk committee and processes, and we review derivative/hedging activity with our board several times each year; |
| ¡ | Compliance Risk – Risk factors required to be disclosed in our SEC filings are reviewed with our board; and |
| ¡ | Internal Audit – Our internal audit department annually develops a risk-based audit plan that is reviewed with our Audit Committee, along with the results of internal audit reviews and activities. The internal audit department maintains a high level assessment of risks and controls for key operations, functions, processes, applications, and systems within the company. Our Audit Committee meets a number of times each year with our senior internal auditing executive. |
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We also have in place a number of independent assurance activities responsible for assessing whether our risk response activities are in place and working effectively. These assurance activities include, but are not limited to, corporate legal audits, corporate security, environmental audits, and safety audits.
Our board of directors and each of our committees regularly meet in executive sessionsessions outside the presence of management. Mr. Albert, our board chair, presides over the executive sessions of our board of directors, and each committee chair presides over the executive sessions of their respective committee.
Our board of directors has established the following five standing committees:
Executive Committee
Audit Committee
Compensation CommitteeGovernance Committee
Nominating Committee
Governance Committee
The composition, duties, and responsibilities of these committees are outlined in written charters adopted by our board of directors.
You may view copies of our committee charters by visiting our website at www.BoiseInc.comwww.boiseinc.com and selectingInvestors,Corporate Governance, and thenCommittee Charters.
Current Committee Members:*
Carl A. Albert,Committee Chair
Jonathan W. Berger
Jack GoldmanThomas S. Souleles
Alexander Toeldte
| * | Mr. Souleles resigned from our board of directors and the Executive Committee effective February 18, 2010. |
Meetings in 2008:2009 Committee Meetings:None
2009 Committee Meeting Attendance Rate:N/A
The Executive Committee of our board of directors is responsible for:
•¡ Exercising all the powers and authority of our board of directors in the management of our business and affairs, subject to the direction of our board of directors and subject to the limitations under Section 141(c) of the Delaware General Corporation Law.
You may view a copy of our
board of directors in the management ofExecutive Committee charter by visiting ourbusinesswebsite at www.boiseinc.com andaffairs, subject to the direction of our board of directorsselectingInvestors,Corporate Governance, andsubject to the limitations under Section 141(c) of the Delaware General Corporation Law.
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Current Members (allCommittee Members:
Jonathan W. Berger,Committee Chair
Carl A. Albert
Jack Goldman
Heinrich R. (Rudi) Lenz
All members of the Audit Committee are independent as defined under the NYSE'sNYSE’s listing standards):
Jonathan W. Berger,Committee Chair*Carl A. AlbertJack GoldmanMatthew W. Norton*
*standards. Our board of directors has determined that Mr. Berger is an "Audit“Audit Committee Financial Expert"Expert” under the SEC'sSEC’s definition. Mr. Norton joined our board of directors and was appointed to our Audit
2009 Committee effective January 1, 2009.Meetings:4
2008 Meetings: 15
20082009 Committee Meeting Attendance Rate:
Jonathan W. Berger | 100% | |||
Carl A. Albert | 100% | |||
Jack Goldman | 75% | |||
Matthew W. | 75% | |||
Heinrich R. (Rudi) Lenz* | N/A |
| * | Mr. Norton resigned from our board of directors and the Audit Committee effective January 22, 2010. Mr. Lenz was elected to our board of directors and was appointed to the Audit Committee effective February 18, 2010. |
The Audit Committee of our board of directors is responsible for:
•Selecting the independent auditor;•Approving the overall scope of the audit;•Annually reviewing the independent auditor's formal written statement describing its internal quality-control procedures, any material issues raised by such review and steps taken to deal with such issues, all relationships between the auditors and the company, and the independence of the auditors;
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| ¡ | Selecting the independent auditor; |
| ¡ | Approving the overall scope of the audit; |
•Establishing clear hiring policies for employees or former employees of the external auditors;•Preapproving all audit services and nonaudit services to be performed for us by the independent auditors;•Annually obtaining from the independent auditors a formal written statement of fees billed for audit and nonaudit services rendered by the independent auditors for the most recent fiscal year;•¡ Annually reviewing the independent auditor’s formal written statement describing its internal quality-control procedures, any material issues raised by such review and steps taken to deal with such issues, all relationships between the auditors and the company, and the independence of the auditors;
¡ Establishing clear hiring policies for employees or former employees of the external auditors;
| ¡ | Preapproving all audit services and nonaudit services to be performed for us by the independent auditors; |
| ¡ | Annually obtaining from the independent auditors a formal written statement of fees billed for audit and nonaudit services rendered by the independent auditors for the most recent fiscal year; |
| ¡ | Providing oversight of our accounting and financial reporting principles, policies, controls, procedures, and practices and reviewing significant changes as suggested by the independent auditors or management; |
| ¡ | Discussing the annual audited financial statements and quarterly financial statements, including matters required to be reviewed under applicable legal and regulatory requirements, with management and the independent auditor; |
| ¡ | Recommending to our board of directors the inclusion of our audited financial statements in our Annual Report on Form 10-K and ensuring the independent auditors have fulfilled their responsibilities under AICPA SAS 61 “Communication with Audit Committees”; |
| ¡ | Annually preparing a report to be included in our proxy statement, as required by SEC rules, and submitting such report to our board of directors for approval; |
| ¡ | Discussing with management and the independent auditor, as appropriate, earnings press releases and other financial information provided to the public; |
| ¡ | Discussing with management and/or our general counsel any legal matters that may have a material impact on our financial statements or that might require disclosure in our financial statements and any material reports or inquiries from regulatory or governmental agencies; |
| ¡ | Reviewing with management the appointment and replacement of the senior internal auditing executive and annually evaluating his or her performance; |
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| ¡ | Reviewing with the senior internal auditing executive the significant reports to management prepared by the internal auditing department and management’s responses; |
| ¡ | Reviewing with the senior internal auditing executive, the independent auditor, and management the internal audit department responsibilities, budget, and staffing and the internal audit plan for the coming year; |
| ¡ | Establishing procedures for the receipt, retention, and treatment of complaints from our employees on accounting, internal controls, or auditing matters and for confidential, anonymous submissions by our employees of concerns regarding questionable accounting or reporting matters; |
| ¡ | Discussing with management our overall risk assessment and risk management policies and reviewing with our board of directors management’s effectiveness in identifying and managing key business risks facing the company; |
| ¡ | Meeting separately with management, the corporate audit staff, and the independent auditor; |
| ¡ | Handling such other matters that are specifically delegated to the Audit Committee by our board of directors from time to time; and |
| ¡ | Reporting regularly to the full board of directors. |
You may view a copy of our accounting and financial reporting principles, policies, controls, procedures, and practices and reviewing significant changes as suggested by the independent auditors or management;
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Current Members (allCommittee Members:
Jonathan W. Berger,Committee Chair
Carl A. Albert
Jack Goldman
W. Thomas Stephens
All members of the Compensation Committee are independent as defined under the NYSE'sNYSE’s listing standards):standards.
Thomas S. Souleles,2009 Committee ChairMeetings:Carl A. AlbertJack Goldman*W. Thomas Stephens*4
*Zaid F. Alsikafi resigned from our board of directors and the Compensation2009 Committee effective December 31, 2008. Messrs. Goldman and Stephens were appointed to the Compensation Committee effective January 1, 2009.
2008 Meetings: 8
2008 Meeting Attendance Rate:
Thomas S. | ||||
| 100% | |||
| ||||
| N/A | |||
| 100% | |||
Jack Goldman | 50% | |||
W. Thomas Stephens* | 100% |
| * | Mr. Souleles resigned from our board of directors and the Compensation Committee effective February 18, 2010. Mr. Berger was appointed as chair of the Compensation Committee effective February 18, 2010. Mr. Stephens is not standing for election at our 2010 Annual Shareholders’ Meeting. |
The Compensation Committee of our board of directors is responsible for:
•Reviewing and approving corporate goals and objectives relevant to the compensation of our chief executive officer and annually evaluating the chief executive officer's performance in light of those goals and objectives;¡ Reviewing and approving corporate goals and objectives relevant to the compensation of our chief executive officer and annually evaluating the chief executive officer’s performance in light of those goals and objectives;
¡ Reviewing and approving the compensation and incentive opportunities of our elected officers;
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| ¡ | Reviewing and approving employment agreements, severance arrangements, change-in-control arrangements, and other similar arrangements between the company and our elected officers; |
| ¡ | Annually reviewing our compensation programs as they affect all employees; |
| ¡ | Reviewing executive succession plans for business and staff organizations; |
| ¡ | Producing an annual report on executive compensation for inclusion in our proxy statement; and |
| ¡ | Handling such other matters that are specifically delegated to the Compensation Committee by our board of directors from time to time. |
You may view a copy of our Compensation Committee charter by visiting our website at www.boiseinc.com and selectingInvestors,Corporate Governance, and thenCommittee Charters.
Current Committee Members:
Carl A. Albert,Committee Chair
Jonathan W. Berger
Nathan D. Leight
All members of the Nominating Committee are independent as defined under the NYSE’s listing standards.
2009 Committee Meetings:3
2009 Committee Meeting Attendance Rate:
Carl A. Albert | 100% | |
Jonathan W. Berger | 100% | |
Matthew W. Norton* | 50% | |
Nathan D. Leight* | N/A |
| * | Mr. Norton served as a director for only two of the three Nominating Committee meetings held in 2009. Mr. Norton resigned from our board of directors and the Nominating Committee effective January 22, 2010. Mr. Leight was appointed to the Nominating Committee effective January 22, 2010. |
The Nominating Committee of our board of directors from time to time.is responsible for:
| ¡ | Identifying and recommending for election individuals who meet the criteria our board of directors has established for board membership; and |
| ¡ | Reviewing the committee structure of our board of directors and recommending for our board of directors’ approval the composition of each committee. |
You may view a copy of our Nominating Committee charter by visiting our website at www.boiseinc.com and selectingInvestors,Corporate Governance, and thenCommittee Charters.
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Current Members (allCommittee Members:
Jack Goldman,Committee Chair
Carl A. Albert
Jonathan W. Berger
Jason G. Weiss
All members of the Governance Committee are independent as defined under the NYSE'sNYSE’s listing standards):
Jack Goldman,Committee ChairCarl A. AlbertJonathan W. Berger*standards.
*Zaid F. Alsikafi resigned from our board of directors and the Governance2009 Committee effective December 31, 2008. Mr. Berger was appointed to the Governance Committee effective January 1, 2009.
2008 Meetings:5
20082009 Committee Meeting Attendance Rate:
Jack Goldman | 80% | |||
Carl A. Albert | 100% | |||
| 100% | |||
| ||||
| N/A |
| * | Mr. Weiss was appointed to the Governance Committee effective February 18, 2010. |
The Governance Committee of our board of directors is responsible for:
•Annually reviewing and recommending director compensation and benefits;•Recommending to our board of directors the response to any shareholder proposal we receive;•Developing and recommending to our board of directors for approval corporate governance guidelines and a code of ethics applicable to our directors, officers, and employees and reviewing the effectiveness of
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| ¡ | Annually reviewing and recommending director compensation and benefits; |
| ¡ | Recommending to our board of directors the response to any shareholder proposal we receive; |
| ¡ | Developing and recommending to our board of directors for approval corporate governance guidelines and a code of ethics applicable to our directors, officers, and employees and reviewing the effectiveness of such guidelines and code of ethics at least annually and recommending changes as necessary; |
such guidelines and code of ethics at least annually and recommending changes as necessary;
•¡ Developing and recommending to our board of directors for approval an annual self-evaluation process of our board of directors and its committees and annually overseeing the self-evaluations and reporting the findings to our board of directors; and
¡ Reviewing and evaluating our board of directors’ criteria for director eligibility and recommending to our board of directors guidelines for determining director independence.
You may view a copy of our
board of directorsGovernance Committee charter by visiting our website at www.boiseinc.com andits committeesselectingInvestors,Corporate Governance, andannually overseeing the self-evaluations and reporting the findings to our board of directors; andthenCommittee Charters.•Reviewing and evaluating our board of directors' criteria for director eligibility and recommending to our board of directors guidelines for determining director independence.
Nominating Committee
Current Members (all are independent as defined under the NYSE's listing standards):
Carl A. Albert,Committee ChairJonathan W. BergerMatthew W. Norton*
*Zaid F. Alsikafi resigned from our board of directors and the Nominating Committee effective December 31, 2008. Mr. Norton joined our board of directors and was appointed to the Nominating Committee effective January 1, 2009.
2008 Meetings: 3
2008 Meeting Attendance Rate:
| ||||
| ||||
| ||||
|
The Nominating Committee of our board of directors is responsible for:
•Identifying and recommending for election individuals who meet the criteria our board of directors has established for board membership; and•Reviewing the committee structure of our board of directors and recommending for our board of directors' approval the composition of each committee.
Our board of directors may establish other committees as it deems necessary or appropriate from time to time.
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Our board of directors is responsible for selecting the nominees for election to our board. The Nominating Committee, after consultation with the chair of our board chair and the receipt of any nominee recommendations from other directors and/or shareholders, is responsible for identifying and recommending to our board of directors qualified candidates to be nominated for election as directors at our annual shareholders'shareholders’ meeting or to be appointed by our board to fill vacancies occurring between annual shareholders'shareholders’ meetings. The invitation to join our board of directors is extended by our board of directors through the chairour board chair.
Suitability of our board.Candidates
In evaluating the suitability of candidates, our board of directors and Nominating Committee consider many factors, including a candidate's:candidate’s:
•General understanding of elements relevant to the success of a publicly traded company in the current business environment;•Understanding of our business; and•Educational and professional background.
| ¡ | General understanding of elements relevant to the success of a publicly traded company in the current business environment; |
| ¡ | Understanding of our business; and |
| ¡ | Educational and professional background. |
Our board of directors and Nominating Committee also consider a candidate'scandidate’s judgment, competence, anticipated participation in board activities, experience, geographic location, and special talents or personal attributes. The composition of our board of directors should encompass a broad range of skills, expertise, knowledge, and diversity. When evaluating the suitability of an incumbent director for nomination for
reelection, our board
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of directors and Nominating Committee also consider the director'sdirector’s past performance, including attendance at meetings and participation in and contributions to the activities of our board of directors, as well as the director'sdirector’s ability to make contributions after any significant change in circumstances (including changes in employment or professional status).
Consideration of Diversity in Nomination Process
Since the company’s inception, our board of directors has had limited opportunities to fill open board positions, given the rights of the Aldabra Majority Holders and Boise Majority Holders to designate members to our board. Our current board has a rich mixture of educational, professional, and experiential diversity. As opportunities to appoint new directors become available in the future, our board of directors will make gender, racial, ethnic, and global diversity a high priority for director recruitment.
Shareholder Nominations for Directors
Given our currentrecent ownership structure and the ability of others to designate members to our board, the Nominating Committee has not yet adopted a written policy regarding shareholder nominations for directors. In accordance with our Bylaws, however, ourthe Nominating Committee will consider shareholder nominations for directors (please refer to the section of this Proxy Statement entitledShareholder Communications,SOLICITATION OF PROXIES AND VOTING, Shareholder Proposals for Inclusion in Next Year'sYear’s Proxy Statement). We did not receive any shareholder nominations or recommendations for director in connection with our 20092010 Annual Shareholders'Shareholders’ Meeting.
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Board and Committee Evaluations
Our nonemployee directors perform an annual self-evaluation of our board of directors, its committees, and its committees. The assessment includes a review ofeach individual director. These evaluations assess the overall effectiveness of our board of directors and the areas in which the directors believe our board of directors can make an impact on the company.directors. The Governance Committee reviews the directors'directors’ responses and provides the full board with a summary. The purpose of the evaluation is to increase the effectiveness of our board, of directorsits committees, and its committees.directors.
Code of Ethics for Our Board of Directors
Our board of directors adopted a Code of Ethics that applies not only to our directors but also to all of our employees, including our chief executive officer, chief financial officer, and principal accounting officer. We have a toll-free reporting service available that permits employees to confidentially report violations of our Code of Ethics or other issues of significant concern.
If we amend or grant a waiver of one or more of the provisions of our Code of Ethics, we will disclose the amendment or waiver by posting the required information on our website.
AYou may view a copy of our Code of Ethics is available, free of charge, by visiting our website at www.BoiseInc.comwww.boiseinc.com and selectingInvestors,Corporate Governance, and thenCode of Ethics. You may also obtain a copy of our Code of Ethics, free of charge, by calling (208) 384-7803 or by sending a written request to:
Boise Inc.Attention: Investor RelationsPO Box 990050Boise, ID 83799-0050
If we amend or grant a waiver of one or more of the provisions of our Code of Ethics, we will disclose the amendment or waiver by posting the required information on our website.
Our directors must be free from any conflicts of interest that would interfere with their loyalty to us or to our shareholders in accordance with Delaware law and our Code of Ethics. If any potential conflict of interest arises for one of our directors, that director will promptly inform our general counsel. If a significant conflict issue arises that cannot be resolved, the director will resign. All directors will excuse themselves from any discussion affecting their personal, business, or professional interests and must familiarize themselves with our Code of Ethics.
Employee board members do not receive compensation for their service on our board of directors. Nonemployee board members are entitled to receive the following annual compensation for their board service:
•Cash retainer;•Committee membership fees;•Equity grant; and
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•Reimbursement for travel expenses incurred in connection with their duties.
| ¡ | Cash retainer; |
| ¡ | Committee membership fees; |
| ¡ | Equity award; and |
| ¡ | Reimbursement for travel expenses incurred in connection with their duties. |
The Governance Committee annually reviews our directors'directors’ compensation and recommends changes, if any, to our board of directors. The Compensation Committee oversees the administration of the directors'directors’ compensation plans.
In 2008,2009, our paid directors received the following compensation for their board service:
2009 | |||
Director Fees (Annual): | |||
Cash Retainer | $ | 50,000 | |
Equity Award | $ | 100,000 | |
Board Chair Equity Award (1) | $ | 250,000 | |
Committee Chair Fees (Annual): | |||
Audit | $ | 15,000 | |
Compensation | $ | 10,000 | |
Other Committees | $ | 8,000 | |
Nonchair Committee Membership Fees (Annual): | |||
Audit | $ | 10,000 | |
Compensation | $ | 8,000 | |
Other Committees | $ | 5,000 | |
| Director Fees | ||||
|---|---|---|---|---|
Cash Retainer | $ | 50,000 | ||
Equity Grant | $ | 150,000 | ||
2008 Special Equity Grant(1) | $ | 50,000 | ||
Board Chair Equity Grant(2) | $ | 250,000 | ||
| Committee Chair Fees | ||||
Audit | $ | 15,000 | ||
Compensation | $ | 10,000 | ||
Other Committees | $ | 8,000 | ||
Nonchair Committee Membership Fees | ||||
Audit | $ | 10,000 | ||
Compensation | $ | 8,000 | ||
Other Committees | $ | 5,000 | ||
| (1) | This equity award was in addition to the cash retainer, committee chair and membership fees, and the $100,000 regular equity award. |
(1)Messrs. Berger and Goldman received special equity grants in recognition of their service to the board during the initial year.
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20082009 Director Equity GrantsAwards
We believe our director compensation should encourage ownership of the company'scompany’s stock. In light of that goal, on May 2, 2008,March 16, 2009, our paid directors received time-vesting grantsservice-condition vesting awards of restricted stock (2008(2009 Director Restricted Stock) or restricted stock units (2008(2009 Director Restricted Stock Units) as shown in the following table. Directors who received 20082009 Director Restricted Stock were required by the terms of grantthe award to make an 83(b) election and include the value of the stock in their 20082009 income. Those directors who did not wantpreferred to make this electioninclude the value of their award in their 2010 income received 20082009 Director Restricted Stock Units.
| Name | 2009
| (#) | 2009
| |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
Carl A. Albert | ||||||||||||
| 813,953 | — | ||||||||||
Jonathan W. Berger (1) | — | |||||||||||
Jack Goldman (1) | — | |||||||||||
Nathan D. Leight (1) | 232,558 | — | ||||||||||
Matthew W. Norton | — | — | ||||||||||
Thomas S. Souleles (2) | — | — | ||||||||||
W. Thomas Stephens (3) | — | 232,558 | ||||||||||
Jason G. Weiss (1) | 232,558 | — | ||||||||||
| (1) | The2009 Director Restricted Stock awarded to Messrs. Albert, Berger, Goldman, Leight, and Weiss vested in full on March 15, 2010. |
(1)The 2008 Director Restricted Stock granted to Messrs. Albert, Leight, Souleles, and Weiss vested in full on March 2, 2009.
Mr. Alsikafi resigned from our board of directors on December 31, 2008. Pursuant to his Director Restricted Stock Award Agreement, we made a pro rata calculation to determine the number of Mr. Alsikafi's fully vested shares and those that were forfeited upon his resignation. This calculation was based on the number of full calendar months from the time of his grant until his resignation on December 31, 2008, divided by 12. Pursuant to this calculation, 30,083 shares were fully vested and 6,017 shares were forfeited on December 31, 2008.
(2)The 2008 Director Restricted Stock Units granted to Messrs. Berger, Goldman, and Stephens represented a contingent right to receive one share of Boise Inc. common stock for each unit. The 2008 Director Restricted Stock Units vested in full on March 2, 2009.(3)Mr. Norton joined our board of directors on January 1, 2009, and was not awarded a 2008 equity grant.
| (2) | Beginning in 2009, Messrs. Norton and Souleles declined to receive compensation (both cash and equity) for their service on our board of directors. Accordingly, Messrs. Norton and Souleles did not receive a 2009 equity award. Messrs. Norton and Souleles resigned from our board of directors effective January 22, 2010, and February 18, 2010, respectively. |
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| (3) | The2009 Director Restricted Stock Units awarded to Mr. Stephens represented a contingent right to receive one share of Boise Inc. common stock for each unit. The 2009 Director Restricted Stock Units vested in full on March 15, 2010. |
Directors Deferred Compensation Plan
On April 4, 2008, our board of directors approved the Boise Inc. DirectorsWe maintain a “nonqualified” Deferred Compensation Plan. The plan is a "nonqualified" planPlan offered to our paid directors. The plan is an unfunded plan intended to help participants supplement their retirement income while providing them an opportunity to reinvest a portion of their cash compensation in the company'scompany’s overall business performance.
Under the plan, each director who receives cash compensation for board service may elect to defer all or a portion of his or her cash compensation in a calendar year. Amounts deferred are credited with imputed interest at a rate equal to 130% of Moody'sMoody’s Composite Average of Yields on Corporate Bonds. Participants elect the form and timing of distributions of their deferred compensation balances. Participants may receive payment in cash in a lump sum or in annual installments following their service on our board of directors.
Mr. Berger was the only director who elected to participate in this plan in 2008, deferring 50% of his 2008 cash compensation. None of our directors have elected to defer any of their 2009 cash compensation in 2009 or 2010 under this plan.
No changes are expected to be made to our Directors Deferred Compensation Plan in 2009.
For further information on our Directors Deferred Compensation Plan, please refer to the section of this Proxy Statement entitledCorporate Governance Principles and Board Matters, Director Compensation – Director Compensation Table.2010.
20092010 Director Compensation
BeginningOur board of directors has approved the following compensation for board service in 2009, Messrs. Norton and Souleles have declined2010:
| ¡ | Cash retainer – The annual cash retainer fee remains unchanged; |
| ¡ | Committee membership fees – Chair and nonchair committee membership fees for the Audit and Compensation Committees were increased due to greater responsibilities of committee members in these areas; and |
| ¡ | Equity awards – Director equity awards for 2010 were approved in the same fixed amounts as were approved for 2009. |
| 30 | |
In 2010, our paid directors are entitled to receive the following compensation (both cash and equity) for their service on our board of directors.service:
Cash Retainer and Committee Membership Fees
2010 | |||
Director Fees (Annual): | |||
Cash Retainer | $ | 50,000 | |
Equity Award | $ | 100,000 | |
Board Chair Equity Award(1) | $ | 250,000 | |
Committee Chair Fees (Annual): | |||
Audit | $ | 25,000 | |
Compensation | $ | 20,000 | |
Other Committees | $ | 8,000 | |
Nonchair Committee Membership Fees (Annual): | |||
Audit | $ | 17,500 | |
Compensation | $ | 15,000 | |
Other Committees | $ | 5,000 | |
The Governance Committee recently reviewed our director compensation and determined no changes were necessary to our cash retainer and committee membership fees structure for 2009.
| (1) | This equity award is in addition to the cash retainer, committee chair and membership fees, and the $100,000 regular equity award. |
2010 Director Equity GrantsAwards
Upon recommendation of the Governance Committee, our board of directors recently approved 20092010 equity grantsawards in the form of restricted stock for each nonmanagementnonemployee director (other than Messrs. Norton and Souleles, who have declined 2009 compensation) valued at $100,000. This representsMr. Albert also received a $50,000 reduction from 2008 levels. These grants will be time-vesting restricted stock or restricted stock units, which will vest on March 15, 2010.$250,000 annual board chair equity award in addition to his $100,000 regular equity award. The number of restricted stock shares or units to be grantedawarded to each paid director will bewas determined by dividing the Total Value shown$100,000 ($350,000 in the following tablecase of Mr. Albert) by our closing stock price on March 16, 2009.15, 2010. These 2009 equity grantsrestricted stock awards are contingentservice-condition vesting awards, vesting in full on shareholder approvalMarch 15, 2011. Our paid directors are required by the terms of their award to include the value of the amendment to the Boise Inc. Incentive and Performance Plan to increase the number of shares authorized under the plan.restricted stock in their 2010 income.
Name | Total Value | |||
|---|---|---|---|---|
Carl A. Albert(1) | $ | 350,000 | ||
Jonathan W. Berger | 100,000 | |||
Jack Goldman | 100,000 | |||
Nathan D. Leight | 100,000 | |||
W. Thomas Stephens | 100,000 | |||
Jason G. Weiss | 100,000 | |||
(1)Mr. Albert's Total Value consists of $100,000 for his annual director fees equity grant and $250,000 for his annual board chair equity grant.
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| Name | 2010 Director (#) | |
Carl A. Albert | 64,103 | |
Stanley R. Bell | 18,315 | |
Jonathan W. Berger | 18,315 | |
Jack Goldman | 18,315 | |
Nathan D. Leight | 18,315 | |
Heinrich R. (Rudi) Lenz | 18,315 | |
W. Thomas Stephens | 18,315 | |
Jason G. Weiss | 18,315 | |
| 31 | |
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(2) | Total ($) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Carl A. Albert | $ | 75,650 | $ | 333,493 | $ | — | $ | 409,143 | |||||
Zaid F. Alsikafi | 57,800 | 125,147 | — | 182,947 | |||||||||
Jonathan W. Berger | 63,750 | 166,747 | 244 | 230,741 | |||||||||
Jack Goldman | 62,050 | 166,747 | — | 228,797 | |||||||||
Nathan D. Leight | 42,500 | 125,147 | — | 167,647 | |||||||||
Matthew W. Norton(3) | 0 | 0 | — | 0 | |||||||||
Thomas S. Souleles | 55,250 | 125,147 | — | 180,397 | |||||||||
W. Thomas Stephens | 42,500 | 125,147 | — | 167,647 | |||||||||
Jason G. Weiss | 42,500 | 125,147 | — | 167,647 | |||||||||
(1)On May 2, 2008, Mr. Albert was granted, at no cost, 96,200 shares of restricted stock, and Messrs. Alsikafi, Leight, Souleles, and Weiss were each granted, at no cost, 36,100 shares of restricted stock under the Boise Inc. Incentive and Performance Plan. Also on May 2, 2008, Messrs. Berger, Goldman, and Stephens were granted, at no cost, 48,100, 48,100, and 36,100 restricted stock units, respectively, under the Boise Inc. Incentive and Performance Plan. Mr. Alsikafi resigned from our board of directors on December 31, 2008. Pursuant to his Director Restricted Stock Award Agreement, we made a pro rata calculation to determine the number of Mr. Alsikafi's fully vested shares and those that were forfeited upon his resignation. This calculation was based on the number of full calendar months from the time of his grant until his resignation on December 31, 2008, divided by 12. Pursuant to this calculation, 30,083 shares were fully vested and 6,017 shares were forfeited on December 31, 2008.
(2)We do not provideour paid directorswith pension benefits. Mr. Berger was the only director whoelected to participate in our Directors Deferred Compensation Plan in2008, deferring 50% of his 2008 cash compensation.2009. The amount reported for Mr. Berger reflects the above-market portion of the interest he earned onhis 2008compensation he deferredcompensation.(3)Mr. Norton joined our board of directors on January 1, 2009. Accordingly, he did not receive any cash or equity compensationin 2008.(1)For purposes of this table, a person is considered to "beneficially own" any shares with respect to which they exercise sole or shared voting or investment power or as to which they have the right to acquire the beneficial ownership within 60 days of March 2, 2009.(2)"Percent of Class" is calculated by dividing the number of shares beneficially owned by the total number of outstanding shares of the company on March 2, 2009, plus the number of shares such person has the right to acquire within 60 days of March 2, 2009.(3)Pursuant to Schedule 13D Amendment No. 1 dated February 20, 2009, and filed with the SEC on March 2, 2009:(4)Pursuant to Schedule 13G Amendment No. 1 dated December 31, 2008, and filed with the SEC on January 15, 2009:(5)Pursuant to Schedule 13D Amendment No. 1 dated February 19, 2009, and filed with the SEC on February 27, 2009 (shares shown below include Messrs. Weiss's and Leight's 1,500,000 and 1,502,900 warrants, respectively, which are currently exercisable but had not been exercisedstock as of March2, 2009):•Each of our directors;•Each of our Named Executive Officers; and•All of our directors and executive officers as a group.Name and Address of Beneficial Owner
and Nature of Beneficial Ownership
Amount of
Beneficial Ownership
(#)(1)
Percent of
Class(%)(2)
Carl A. Albert (3)
1,128,056 1.3 % Stanley R. Bell (4)
18,315 * % Jonathan W. Berger (5)
353,973 * % Jack Goldman (6)
300,773 * % Nathan D. Leight (7)
4,954,662 5.8 % Heinrich R. Lenz (8)
18,315 * % W. Thomas Stephens (9)
286,973 * % Jason G. Weiss (10)
3,998,405 4.7 % Alexander Toeldte (11)
1,890,139 2.2 % Robert M. McNutt (12)
587,386 * % Jeffrey P. Lane (13)
614,000 * % Robert E. Strenge (14)
47,758 * % Robert A. Warren (15)
55,648 * % All directors and executive officers as a group
(15 persons)(16)
14,565,199 17.2 % *
- Less than 1%
(1)For purposes of this table, a person is considered to "beneficially own" any shares with respect to which they exercise sole or shared voting or investment power or as to which they have the right to acquire the beneficial ownership within 60 days of March 2, 2009.(2)"Percent of Class" is calculated by dividing the number of shares beneficially owned by the total number of outstanding shares of the company on March 2, 2009, plus the number of shares such person has the right to acquire within 60 days of March 2, 2009.(3)Mr. Albert's business address is 10940 Bellagio Road, Suite C, Los Angeles, California 90077. Mr. Albert's 261,000 shares are held as follows: 96,200 shares are held directly (these shares represent Mr. Albert's 2008 restricted stock award, which vested in full on March 2, 2009); 130,000 shares are held by the Carl A. Albert Trust; 23,800 shares are held by the Albert-Schaefer Trust; and 11,000 shares are held by the Elisa Tamar Albert Trust.(4)Mr. Berger's business address is c/o Navigant Capital Advisors, LLC, 1180 Peachtree Street, N.E., Atlanta, Georgia 30309. Mr. Berger's 103,600 shares are held as follows: 93,600 shares are held directly (48,100 of these shares represent Mr. Berger's 2008 restricted stock unit award, which vested in full on March 2, 2009); and 10,000 warrants, which are exercisable within 60 days of March 2, 2009.(5)Mr. Goldman's business address is c/o Theodora, Oringher, Miller & Richman, P.C., 2029 Century Park East, Sixth Floor, Los Angeles, California 90067. Mr. Goldman's 61,900 shares are held directly (48,100 of these shares represent Mr. Goldman's 2008 restricted stock unit award, which vested in full on March 2, 2009).(6)Mr. Leight's business address is c/o Terrapin Partners, LLC, 540 Madison Avenue, 17th Floor, New York, New York 10022. Mr. Leight's 6,428,732 shares are held as follows: 3,190,888 shares are held directly (36,100 of these shares represent Mr. Leight's 2008 restricted stock award, which vested in full on March 2, 2009); 10,000 shares are held by the Nathan Leight IRA; 1,724,944 shares are held by the Leight Family 1998 Irrevocable Trust; and 1,502,900 warrants, which are exercisable within 60 days of March 2, 2009.(7)Mr. Norton's business address is c/o Madison Dearborn Partners, LLC, Three First National Plaza, Suite 4600, Chicago, Illinois 60602. Boise Cascade Holdings, L.L.C. (BCH) is the record owner of 37,085,770 shares. The shares held by BCH may be deemed to be beneficially owned by:(8)Mr. Souleles' business address is c/o Madison Dearborn Partners, LLC, Three First National Plaza, Suite 4600, Chicago, Illinois 60602. Mr. Souleles' 36,100 shares are held directly (these shares represent Mr. Souleles' 2008 restricted stock award, which vested in full on March 2, 2009). Boise Cascade Holdings, L.L.C. (BCH) is the record owner of 37,085,770 shares. The shares held by BCH may be deemed to be beneficially owned by: (1) Forest Products Holdings, L.L.C. (FPH) as the controlling equityholder of BCH; (2) Madison Dearborn Capital Partners IV, L.P. (MDCP IV) as the controlling equityholder of FPH; and (3) Madison Dearborn Partners IV, L.P. (MDP IV) as the general partner of MDCP IV. Mr. Souleles is a managing director of MDP IV's general partner. Mr. Souleles expressly disclaims beneficial ownership of these shares except to the extent of his pecuniary interest therein.(9)Mr. Stephens' business address is 3333 E. Platte Avenue, Greenwood Village, Colorado 80121. Mr. Stephens' 36,100 shares are held directly (these shares represent Mr. Stephens' 2008 restricted stock unit award, which vested in full on March 2, 2009).(10)Mr. Weiss's business address is c/o Terrapin Partners, LLC, 540 Madison Avenue, 17th Floor, New York, New York 10022. Mr. Weiss's 6,502,532 shares are held as follows: 36,100 shares are held directly (these shares represent Mr. Weiss's 2008 restricted stock award, which vested in full on March 2, 2009); 2,824,066 shares are held by the Weiss Family Trust; 2,142,366 shares are held by the Jason G. Weiss Revocable Trust; and 1,500,000 warrants, which are exercisable within 60 days of March 2, 2009.(11)Mr. Toeldte's business address is c/o Boise Inc., 1111 West Jefferson Street, Suite 200, Boise, Idaho 83702-5388. Mr. Toeldte's 1,015,100 shares are held by the Toeldte Family Revocable Trust (975,100 of these shares represent Mr. Toeldte's 2008 restricted stock award).(12)Mr. McNutt's business address is c/o Boise Inc., 1111 West Jefferson Street, Suite 200, Boise, Idaho 83702-5388. Mr. McNutt's 223,400 shares are held as follows: 213,400 shares are held directly (these shares represent Mr. McNutt's 2008 restricted stock award); and 10,000 shares are held in Mr. McNutt's 401(k) account.(13)Mr. Lane's business address is c/o Boise Inc., 1111 West Jefferson Street, Suite 200, Boise, Idaho 83702-5388. Mr. Lane's 354,000 shares are held directly as follows: 254,000 shares represent Mr. Lane's 2008 restricted stock award; and 100,000 shares are held jointly with Mr. Lane's spouse, Margaret M. Lane.(14)Mr. Strenge's business address is c/o Boise Inc., 1111 West Jefferson Street, Suite 200, Boise, Idaho 83702-5388. Mr. Strenge's 10,566 shares are held directly (these shares represent one-third of the time-vesting portion of Mr. Strenge's 2008 restricted stock unit award, which vested on March 2, 2009).(15)Mr. Warren's business address is c/o Boise Inc., 1111 West Jefferson Street, Suite 200, Boise, Idaho 83702-5388. Mr. Warren's 10,566 shares are held directly (these shares represent one-third of the time-vesting portion of Mr. Warren's 2008 restricted stock unit award, which vested on March 2, 2009).(16)Included in this total amount are shares held by the company's two remaining executive officers – Samuel K. Cotterell, vice president and controller, and Judith M. Lassa, vice president, Packaging. Mr. Cotterell holds 5,433 shares directly (these shares represent one-third of the time-vesting portion of Mr. Cotterell's 2008 restricted stock unit award, which vested on March 2, 2009). Ms. Lassa holds 77,000 shares directly (these shares represent Ms. Lassa's 2008 restricted stock award).(1)Our shareholders approved the Boise Inc. Incentive and Performance Plan (BIPP) at a special shareholders' meeting held on February 5, 2008. At the time, a total of 5,175,000 shares of our common stock was reserved for issuance under the BIPP. Since the Acquisition, 13 officers, 43 other employees, and 8 nonemployee directors have received restricted stock or restricted stock unit awards under the BIPP. These awards are reflected in column (a) above.(2)Because there is no exercise price associated with the restricted stock and restricted stock units that were awarded under the BIPP, a weighted average exercise price calculation for the restricted stock and restricted stock units cannot be made.••Link each officer's compensation to his or her performance and the areas for which he or she was responsible;•Attract, motivate, reward, and retain the broad-based management talent critical to achieving the company's business goals; and•Encourage officers to own Boise Inc. stock.•AbitibiBowater Inc.•Domtar Corp.•Glatfelter•International Paper Co.•MeadWestvaco Inc.•Neenah Paper Inc.•Packaging Corp. of America•Sappi Fine Paper North America•Smurfit-Stone Container Corp.•Stora Enso Corp.•Temple-Inland Inc.•UPM-Kymmene Corp.•Verso Paper Corp.•Base salary;•Short-term incentive compensation under the Boise Inc. Incentive and Performance Plan;•Long-term incentive compensation under the Boise Inc. Incentive and Performance Plan; and•Other compensation and benefit plans, including supplemental pension plans, a deferred compensation plan, a supplemental life plan, a financial counseling program for officers, and formalized agreements covering potential severance benefits.•Are 55 years old or older, if elected by OfficeMax (formerly Boise Cascade Corporation) prior to June 1, 2004;•Are 58 years old or older, if elected on or after June 1, 2004, and prior to October 29, 2004 (the SERP was closed to new entrants as of October 29, 2004);•Have ten or more years of service;•Have served as an elected officer for at least five full years; and•Retire before age 65.•An employment termination date of May 2, 2008;•Payment of a lump sum severance equal to Mr. Hewitt's annual base salary and target annual incentive ($527,000);•Healthcare and insurance benefits continued for 12 months following termination (estimated company cost of $11,000);•Supplemental life insurance premiums continued for 12 months following termination (estimated company cost of $9,000);•Financial counseling allowance of up to $10,000 during the next 12 months;•Executive career counseling up to a maximum of $20,000;•Nonqualified pension under the company's Supplemental Early Retirement Plan beginning January 1, 2014;•Covenants of confidentiality, nonsolicitation of employees, and nondisparagement;•Compliance with the other provisions outlined in Mr. Hewitt's severance agreement; and•Mr. Hewitt was required to sign a release as a condition of receiving these benefits.•Jason G. Weiss– Compensation information for the fiscal years ended December 31, 2008 and 2007, for Mr. Weiss, who served as the company's chief executive officer and principal financial officer prior to the closing of the Acquisition on February 22, 2008. Mr. Weiss received no compensation, fees, or other payments from the company for his services in 2008 or 2007.•Alexander Toeldte– Compensation information for the fiscal year ended December 31, 2008, for Mr. Toeldte, who served as the company's president and chief executive officer following the closing of the Acquisition on February 22, 2008.•Robert M. McNutt– Compensation information for the fiscal year ended December 31, 2008, for Mr. McNutt, who served as the company's senior vice president and chief financial officer following the closing of the Acquisition on February 22, 2008.•Jeffrey P. Lane, Robert E. Strenge, and Robert A. Warren– Compensation information for the fiscal year ended December 31, 2008, for Messrs. Lane, Strenge, and Warren, the company's three most highly compensated executive officers other than Messrs. Toeldte and McNutt. Mr. Lane joined the company on April 30, 2008, and his compensation information is for the period of April 30 through December 31, 2008.•Miles A. Hewitt– Compensation information for the fiscal year ended December 31, 2008, for Mr. Hewitt, the company's former senior vice president, Paper. Mr. Hewitt's employment with the company was terminated effective May 2, 2008, and his compensation information is for the period of February 22 through May 2, 2008.(1)(1) 2009 Salary – The 2009 amounts reported for the named executive officers represent salaries paid from January 1, 2009, through December 31, 2009. 2008 Salary – The 2008 amounts reported for Messrs. Toeldte, McNutt, Strenge, and Warren represent salaries paid from the date of the closing of the Acquisition on February 22, 2008, through December 31, 2008. The 2008 amount reported for Mr. Lane represents salary paid from April 30, 2008 (the date he joined the company)
,through December 31, 2008.The amount reported for Mr. Hewitt represents salary paid from the date of the closing of the Acquisition on February 22, 2008, through May 2, 2008 (the date his employment with the company was terminated).These amounts include amounts deferred under the
company'scompany’s Savings Plan and Deferred Compensation Plan. Thecompany'scompany’s Savings Plan is a defined contribution plan intended to be qualified under Section 401(a) of the Internal Revenue Code that contains a cash or deferred arrangement meeting the requirements of Section 401(k) of the code. Thecompany'scompany’s Deferred Compensation Plan is a nonqualified savings plan offered to keyemployees.
employees, including the named executive officers.For further information on the
company'scompany’s Deferred Compensation Plan, please refer to the sections of this Proxy Statement entitledExecutive Compensation,EXECUTIVE COMPENSATION, Compensation Discussion and Analysis,– OtherExecutive Compensationand Benefit Plans,Program Elements, Deferred Compensation Plan andCompensation Tables,–Nonqualified Deferred Compensation Table.
The amounts reportedfollowingDirector Compensation Table presents compensation information for these 2008 director equity grants reflect the dollar amount recognized for financial statement reporting purposeseach of our nonemployee directors for the fiscal year ended December 31, 2008,2009:
| Name | Fees Earned ($) | Stock Awards ($)(1) | Change in Pension Value and Nonqualified ($)(2) | Total ($) | ||||||||
Carl A. Albert | $ | 89,000 | $ | 350,000 | $ | — | $ | 439,000 | ||||
Stanley R. Bell (3) | — | — | — | — | ||||||||
Jonathan W. Berger | 80,000 | 100,000 | 1,019 | 181,019 | ||||||||
Jack Goldman | 81,000 | 100,000 | — | 181,000 | ||||||||
Nathan D. Leight | 50,000 | 100,000 | — | 150,000 | ||||||||
Heinrich R. (Rudi) Lenz (3) | — | — | — | — | ||||||||
Matthew W. Norton (4) | — | — | — | — | ||||||||
Thomas S. Souleles (4) | — | — | — | — | ||||||||
W. Thomas Stephens | 58,000 | 100,000 | — | 158,000 | ||||||||
Jason G. Weiss | 50,000 | 100,000 | — | 150,000 | ||||||||
| (1) | 2009 Director Equity Awards – On March 16, 2009, Mr. Albert was awarded, at no cost, 813,953 shares of restricted stock, and Messrs. Berger, Goldman, Leight, and Weiss were each awarded, at no cost, 232,558 shares of restricted stock under the Boise Inc. Incentive and Performance Plan. Also on March 16, 2009, Mr. Stephens was awarded, at no cost, 232,558 restricted stock units under the Boise Inc. Incentive and Performance Plan. The amounts reported for these awards reflect the aggregate grant date fair value of the awards computed in accordance with FASB ASC Topic 718. These 2009 director equity awards were all service-condition vesting awards. For further information on these 2009 director equity awards, please refer to the section of this Proxy Statement entitledCORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS, Director Compensation, 2009 Director Equity Awards. |
| (2) | Change in Pension Value – We do not provide our directors with pension benefits. |
Nonqualified Deferred Compensation Earnings – None of Financial Accounting Standards (SFAS) No. 123(R),Share-Based Payment.
For further information on these 2008 director equity grants, please refer to the section of this Proxy Statement entitledCorporate Governance Principles and Board Matters, Director Compensation – 2008 Director Equity Grants.
24
| (3) | Messrs. Bell and Lenz joined our board of directors effective January 22, 2010, and February 18, 2010, respectively. Accordingly, they did not receive any compensation (cash or equity) in 2009. |
| (4) | Beginning in 2009, Messrs. Norton and Souleles declined to receive compensation (both cash and equity) for their service on our board of directors. Messrs. Norton and Souleles resigned from our board of directors effective January 22, 2010, and February 18, 2010, respectively. |
| 32 | |
Beneficial Ownership of Greater Than 5% of Our Outstanding Common Stock
As of March 15, 2010, we had 84,789,243 shares issued and outstanding. The following table sets forth information as of March 2, 2009, relating to the actual beneficial ownership of each person owning greater than 5% of our outstanding common stock:
| Name and Address of Beneficial Owner and Nature of Beneficial Ownership | Amount of Beneficial Ownership(1) | Percent of Class(2) | ||||||
|---|---|---|---|---|---|---|---|---|
Joint Filing By(3) | 37,085,770 | 46.43 | % | |||||
Boise Cascade Holdings, L.L.C. (BCH) | ||||||||
Joint Filing By(4) | ||||||||
Brian Taylor (B. Taylor) | 7,674,179 | 9.61 | % | |||||
Nisswa Acquisition Master Fund Ltd. (Nisswa) | 7,099,471 | 8.89 | % | |||||
c/o Pine River Capital Management L.P. | ||||||||
Joint Filing By(5) | ||||||||
Jason G. Weiss (J. Weiss) | 6,502,532 | 7.99 | % | |||||
Nathan D. Leight (N. Leight) | 6,428,732 | 7.90 | % | |||||
c/o Terrapin Partners, LLC | ||||||||
| | Voting Power | Investment Power | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Name | Sole | Shared | Sole | Shared | ||||||||||
BCH | 0 | 37,085,770 | 0 | 37,085,770 | ||||||||||
FPH | 0 | 37,085,770 | 0 | 37,085,770 | ||||||||||
MDCP IV | 0 | 37,085,770 | 0 | 37,085,770 | ||||||||||
MDP IV | 0 | 37,085,770 | 0 | 37,085,770 | ||||||||||
BCH is controlled by FPH, which is controlled by MDCP IV. MDP IV is the general partner of MDCP IV. John A. Canning, Jr., Paul J. Finnegan, and Samuel M. Mencoff are the sole members of a limited partner committee of MDP IV that has the power, acting by majority vote, to vote or dispose of the shares beneficially owned by MDCP IV. Each of MDCP IV and MDP IV and the members of the limited partner committee of MDP IV disclaim beneficial ownership of shares held by FPH, except to the extent of its or his respective pecuniary interests therein.
| | Voting Power | Investment Power | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Name | Sole | Shared | Sole | Shared | ||||||||||
B. Taylor | 0 | 7,674,179 | 0 | 7,674,179 | ||||||||||
PRCM | 0 | 7,674,179 | 0 | 7,674,179 | ||||||||||
Nisswa | 0 | 7,099,471 | 0 | 7,099,471 | ||||||||||
Name and Address of Beneficial Owner and Nature of Beneficial Ownership | Amount of Beneficial Ownership (#) (1) | Percent of (%) (2) | |||
Joint Filing By (3) | |||||
Brian Taylor (B. Taylor) | 6,944,598 | 8.2 | % | ||
Pine River Capital Management L.P. (PRCM) | |||||
c/o Pine River Capital Management L.P. 601 Carlson Parkway, Suite 330 Minnetonka, MN 55305 And | |||||
Nisswa Acquisition Master Fund Ltd. (Nisswa) | 6,385,332 | 7.5 | % | ||
c/o Pine River Capital Management L.P. 601 Carlson Parkway, Suite 330 Minnetonka, MN 55305
| |||||
Nathan D. Leight (N. Leight) (4) | 4,954,662 | 5.8 | % | ||
c/o Terrapin Partners, LLC 60 Edgewater Drive – Unit TSK Coral Gables, FL 33133
| |||||
Joint Filing By (5) | |||||
Katherine R. Hensel (K. Hensel) | 4,505,766 | 5.3 | % | ||
500 Fifth Avenue, Suite 930 New York, NY 10110 And | |||||
Barry G. Haimes (B. Haimes) | 3,446,845 | 4.1 | % | ||
500 Fifth Avenue, Suite 930 New York, NY 10110 And | |||||
Sage Master Investments Ltd. (Sage Master) | 3,326,745 | 3.9 | % | ||
c/o Appleby Corporate Services (Cayman) Ltd. Clifton House, 75 Fort Street PO Box 1350 Grand Cayman KY1-1108, Cayman Islands And | |||||
Sage Opportunity Fund (QP), L.P. (QP Fund) | |||||
Sage Asset Management, L.P. (SAM) | |||||
Sage Asset Inc. (Sage Inc.) | |||||
500 Fifth Avenue, Suite 930 New York, NY 10110
|
| | Voting Power | Investment Power | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Name | Sole | Shared | Sole | Shared | ||||||||||
J. Weiss | 6,502,532 | 0 | 6,502,532 | 0 | ||||||||||
N. Leight | 6,428,732 | 0 | 6,428,732 | 0 | ||||||||||
| (1) | For purposes of this table, a person is considered to “beneficially own” any shares with respect to which they exercise sole or shared voting or investment power or as to which they have the right to acquire the beneficial ownership within 60 days of March 15, 2010. |
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| (2) | “Percent of Class” is calculated by dividing the number of shares beneficially owned by the total number of outstanding shares of the company on March 15, 2010. This calculation includes the number of shares such person has the right to acquire within 60 days of March 15, 2010. |
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| (3) | Pursuant to Schedule 13G, Amendment No. 2, dated January 15, 2010, and filed with the SEC on January 15, 2010: |
| Voting Power | Investment Power | |||||||
| Name | Sole | Shared | Sole | Shared | ||||
B. Taylor | 0 | 6,944,598 | 0 | 6,944,598 | ||||
PRCM | 0 | 6,944,598 | 0 | 6,944,598 | ||||
Nisswa | 0 | 6,385,332 | 0 | 6,385,332 | ||||
| (4) | Pursuant to Schedule 13D, Amendment No. 2, dated December 29, 2009, and filed with the SEC on December 29, 2009, and Form 4 dated March 16, 2010, and filed with the SEC on March 16, 2010: |
| Voting Power | Investment Power | |||||||
| Name | Sole | Shared | Sole | Shared | ||||
N. Leight | 4,954,662 | 0 | 4,954,662 | 0 | ||||
| Shares include Mr. Leight’s 1,502,900 warrants, which are currently exercisable but had not been exercised as of March 15, 2010, and 18,315 shares of service-condition vesting restricted stock awarded to Mr. Leight on March 15, 2010, as his 2010 director equity award. |
| (5) | Pursuant to Schedule 13G dated March 5, 2010, and filed with the SEC on March 5, 2010: |
| Voting Power | Investment Power | |||||||
| Name | Sole | Shared | Sole | Shared | ||||
K. Hensel | 1,179,021 | 3,326,745 | 1,179,021 | 3,326,745 | ||||
B. Haimes | 120,100 | 3,326,745 | 120,100 | 3,326,745 | ||||
Sage Master | 0 | 3,326,745 | 0 | 3,326,745 | ||||
QP Fund | 0 | 3,326,745 | 0 | 3,326,745 | ||||
SAM | 0 | 3,326,745 | 0 | 3,326,745 | ||||
Sage Inc. | 0 | 3,326,745 | 0 | 3,326,745 | ||||
| Collectively, K. Hensel, B. Haimes, Sage Master, QP Fund, SAM, and Sage Inc. beneficially own 4,625,866 shares of the company’s common stock, which constitutes 5.5% of all of the issued and outstanding shares of the company’s common stock as of March 15, 2010. |
| K. Hensel beneficially owns 3,326,745 shares of the company’s common stock individually owned by Sage Master, solely in her capacity as a controlling person of Sage Inc., and an additional 1,179,021 shares of the company’s common stock that she individually beneficially owns personally (consisting of 483,621 shares of the company’s common stock and warrants exercisable for 695,400 shares of the company’s common stock). |
| B. Haimes beneficially owns 3,326,745 shares of the company’s common stock individually owned by Sage Master, solely in his capacity as a controlling person of Sage Inc., and an additional 120,100 shares of the company’s common stock that he individually beneficially owns personally (consisting of 62,800 shares of the company’s common stock and warrants exercisable for 57,300 shares of the company’s common stock). |
| Sage Master individually beneficially owns 3,326,745 shares of the company’s common stock, consisting of: (i) 1,590,945 shares of the company’s common stock and (ii) warrants exercisable for 1,735,800 shares of the company’s common stock. |
| QP Fund, solely in its capacity as the controlling shareholder of Sage Master, beneficially owns 3,326,745 shares of the company’s common stock individually beneficially owned by Sage Master. |
| SAM, solely in its capacity as investment manager of Sage Master, beneficially owns 3,326,745 shares of the company’s common stock individually beneficially owned by Sage Master. |
| Sage Inc., solely in its capacity as the general partner of SAM, beneficially owns 3,326,745 shares of the company’s common stock individually beneficially owned by Sage Master. |
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Beneficial Ownership of Our Directors and Executive Officers
As of March 15, 2010, we had 84,789,243 shares issued and outstanding. The following table sets forth, as of March 2, 2009,15, 2010, the actual beneficial ownership of our outstanding common stock by:
| ¡ | Each of our directors; |
| ¡ | Each of our named executive officers; and |
| ¡ | All of our directors and executive officers as a group. |
None of these shares are pledged as security for any obligation (such as pursuant to a loan arrangement or agreement or a margin account agreement).
| Name and Address of Beneficial Owner and Nature of Beneficial Ownership | Amount of Beneficial Ownership(1) | Percent of Class(2) | |||
|---|---|---|---|---|---|
| Carl A. Albert(3) | 261,000 | *% | |||
| Jonathan W. Berger(4) | 103,600 | *% | |||
| Jack Goldman(5) | 61,900 | *% | |||
| Nathan D. Leight(6) | 6,428,732 | 7.90% | |||
| Matthew W. Norton(7) | 0 | — | |||
| Thomas S. Souleles(8) | 36,100 | *% | |||
| W. Thomas Stephens(9) | 36,100 | *% | |||
| Jason G. Weiss(10) | 6,502,532 | 7.99% | |||
| Alexander Toeldte(11) | 1,015,100 | 1.27% | |||
| Robert M. McNutt(12) | 223,400 | *% | |||
| Jeffrey P. Lane(13) | 354,000 | *% | |||
| Robert E. Strenge(14) | 10,566 | *% | |||
| Robert A. Warren(15) | 10,566 | *% | |||
| Miles A. Hewitt | 0 | — | |||
| All directors and executive officers as a group (16 persons)(16) | 15,126,029 | 18.25% | |||
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| (1) | For purposes of this table, a person is considered to “beneficially own” any shares with respect to which they exercise sole or shared voting or investment power or as to which they have the right to acquire the beneficial ownership within 60 days of March 15, 2010. |
| (2) | “Percent of Class” is calculated by dividing the number of shares beneficially owned by the total number of outstanding shares of the company on March 15, 2010. This calculation includes the number of shares such person has the right to acquire within 60 days of March 15, 2010. |
| (3) | Mr. Albert’s business address is c/o Boise Inc., 1111 West Jefferson Street, Suite 200, Boise, ID 83702. Mr. Albert’s shares are held as follows: 974,256 shares held directly; 23,800 shares held indirectly by the Albert-Schaefer Trust; and 130,000 shares held indirectly by the Carl A. Albert Trust. |
| (4) | Mr. Bell’s business address is c/o Boise Cascade Holdings, L.L.C., 1111 West Jefferson Street, Suite 300, Boise, ID 83702. Mr. Bell’s shares are all held directly. |
| (5) | Mr. Berger’s business address is c/o Tellurian Partners, LLC, 1170 Peachtree Street, NE, Atlanta, GA 30309. Mr. Berger’s shares are held as follows: 343,973 shares held directly; and 10,000 warrants held directly, which are currently exercisable but had not been exercised as of March 15, 2010. |
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| (6) | Mr. Goldman’s business address is c/o Theodora, Oringher, Miller & Richman, P.C., 10880 Wilshire Boulevard, Suite 1700, Los Angeles, CA 90024. Mr. Goldman’s shares are held as follows: 286,973 shares held directly; and 13,800 shares held indirectly in an individual retirement account. |
| (7) | Mr. Leight’s business address is c/o Terrapin Partners, LLC, 60 Edgewater Drive – Unit TSK, Coral Gables, FL 33133. Mr. Leight’s shares are held as follows: 3,441,762 shares held directly; 10,000 shares held indirectly in an individual retirement account; and 1,502,900 warrants held directly, which are currently exercisable but had not been exercised as of March 15, 2010. |
| (8) | Mr. Lenz’s business address is c/o Sun Chemical Corporation, 35 Waterview Boulevard, Parsippany, NJ 07054. Mr. Lenz’s shares are all held directly. |
(1) Forest Products Holdings, L.L.C. (FPH) as the controlling equityholder of BCH; (2) Madison Dearborn Capital Partners IV, L.P. (MDCP IV) as the controlling equityholder of FPH; and (3) Madison Dearborn Partners IV, L.P. (MDP IV) as the general partner of MDCP IV. Mr. Norton is a vice president of MDP IV's general partner. Mr. Norton expressly disclaims beneficial ownership of these shares except to the extent of his pecuniary interest therein.
| (9) | Mr. Stephens’ business address is c/o Boise Inc., 1111 West Jefferson Street, Suite 200, Boise, ID 83702. Mr. Stephens’ shares are all held directly. |
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| (10) | Mr. Weiss’s business address is c/o Boise Inc., 1111 West Jefferson Street, Suite 200, Boise, ID 83702. Mr. Weiss’s shares are held as follows: 286,973 shares held directly; 1,130,699 shares held indirectly by the Jason G. Weiss Revocable Trust; 1,395,733 shares held indirectly by the Weiss Family Trust; and 1,185,000 warrants held indirectly by the Jason G. Weiss Revocable Trust, which are currently exercisable but had not been exercised as of March 15, 2010. |
| (11) | Mr. Toeldte’s business address is c/o Boise Inc., 1111 West Jefferson Street, Suite 200, Boise, ID 83702. Mr. Toeldte’s shares are held as follows: 1,850,139 shares held directly; and 40,000 shares held indirectly by the Toeldte Family Revocable Trust. |
| (12) | Mr. McNutt’s business address is c/o Boise Inc., 1111 West Jefferson Street, Suite 200, Boise, ID 83702. Mr. McNutt’s shares are held as follows: 577,386 shares held directly; and 10,000 shares held indirectly in Mr. McNutt’s 401(k) account. |
| (13) | Mr. Lane’s business address is c/o Boise Inc., 1111 West Jefferson Street, Suite 200, Boise, ID 83702. Mr. Lane’s shares are all held directly. |
| (14) | Mr. Strenge’s business address is c/o Boise Inc., 1111 West Jefferson Street, Suite 200, Boise, ID 83702. Mr. Strenge’s shares are all held directly. |
| (15) | Mr. Warren’s business address is c/o Boise Inc., 1111 West Jefferson Street, Suite 200, Boise, ID 83702. Mr. Warren’s shares are all held directly. |
| (16) | Included in this total amount are shares held by the company’s two remaining executive officers – Samuel K. Cotterell, vice president and controller, and Judith M. Lassa, vice president, Packaging. The business address for Mr. Cotterell and Ms. Lassa is c/o Boise Inc., 1111 West Jefferson Street, Suite 200, Boise, ID 83702. Mr. Cotterell holds 22,154 shares, all of which are held directly. Ms. Lassa holds 288,642 shares, all of which are held directly. |
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Securities Authorized for Issuance Under Our Equity Compensation Plan as
of December 31, 20082009
| Plan Category | Number of Securities to Rights (a) | Weighted Average Exercise Price of Outstanding Options, Warrants, and Rights (b) (2) | Number of Securities (c) | ||||
| Equity compensation plans approved by securityholders (1) | 8,214,843 | $ | N/A | 8,326,464 | |||
| Equity compensation plans not approved by securityholders | N/A | N/A | N/A | ||||
Total | 8,214,843 | $ | N/A | 8,326,464 | |||
| Plan Category | Number of Securities to Be Issued Upon Exercise of Outstanding Options, Warrants, and Rights (a) | Weighted Average Exercise Price of Outstanding Options, Warrants, and Rights (b)(2) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c) | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
Equity compensation plans approved by securityholders(1) | 3,059,100 | $ | N/A | 2,085,817 | ||||||
Equity compensation plans not approved by securityholders | N/A | N/A | N/A | |||||||
Total | 3,059,100 | $ | N/A | 2,085,817 | ||||||
| (1) | Our shareholders approved the Boise Inc. Incentive and Performance Plan (BIPP) at a special shareholders meeting held on February 5, 2008. We have 17,175,000 shares of the company’s common stock reserved for issuance under the BIPP. Thirteen officers, 51 other employees, and 6 nonemployee directors have received restricted stock or restricted stock unit awards under the BIPP. These awards are reflected in column (a) above. For further information on the BIPP, please refer to the section of this Proxy Statement entitledPROPOSALS TO BE VOTED ON, Proposal No. 2. |
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| (2) | Because there is no exercise price associated with the restricted stock and restricted stock units that were awarded under the BIPP, a weighted average exercise price calculation for the restricted stock and restricted stock units cannot be made. |
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Compensation Committee Interlocks and Insider Participation
Messrs. Albert, Alsikafi,Goldman, Souleles, and SoulelesStephens served on the Compensation Committee of the board of directors of Boise Inc. during the last completed fiscal year. Mr. Souleles resigned from our board of directors and the Compensation Committee effective February 18, 2010. Mr. Berger was appointed as chair of the Compensation Committee effective February 18, 2010.
None of the members of the Compensation Committee is now or was previously an officer or employee of the company. None of the company'scompany’s executive officers serves as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on the company'scompany’s board of directors or the Compensation Committee.
Dear Fellow Shareholders:
The Compensation Committee of the board of directors of Boise Inc. has reviewed and discussed the followingCompensation Discussion and Analysis with the company'scompany’s management. Based on this review and discussion, the Compensation Committee has recommended to the company'scompany’s board of directors that theCompensation Discussion and Analysis be included in this Proxy Statement and the company'scompany’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008.2009.
Respectfully submitted,
The Compensation Committee
Thomas S. Souleles,Past Committee Chair
Jonathan W. Berger,Current Committee Chair
Carl A. Albert
Jack Goldman
W. Thomas Stephens
Compensation Discussion and Analysis
On February 22, 2008, Aldabra 2 Acquisition Corp. acquiredThisCompensation Discussion and Analysis describes the paper, packaging, and newsprint assets of Boise Cascade, L.L.C. (the Acquisition). Following the closing of the Acquisition, Aldabra 2 Acquisition Corp. changed its name tocompensation practices at Boise Inc. As part ofThroughout this transaction, the company agreed to maintain for at least one year following the closing of the Acquisition for each of its elected officers executive compensation and benefits at levels that were substantially comparable, in the aggregate,section, we refer to the levels ofcompany’s named executive compensation and benefits that Boise Cascade had maintained for these individuals. The following discussion is based upon compensation decisions previously made by Boise Cascade, decisions the company made in 2008, and decisions the company has made to date in 2009.officers, who are as follows:
| ¡ | Alexander Toeldte,President and Chief Executive Officer |
| ¡ | Robert M. McNutt,Senior Vice President and Chief Financial Officer |
| ¡ | Jeffrey P. Lane,Senior Vice President and General Manager, Packaging |
| ¡ | Robert E. Strenge,Senior Vice President, Manufacturing |
| ¡ | Robert A. Warren,Senior Vice President and General Manager, Paper and Supply Chain |
Executive Compensation ProgramPhilosophy and Objectives
The company’s compensation programs are built around four primary objectives:
| ¡ | Closely align compensation with the company’s performance on both a short- and long-term basis; |
| ¡ | Link compensation to each officer’s individual performance; |
| ¡ | Attract, motivate, reward, and retain management talent critical to achieving the company’s business goals; and |
| ¡ | Encourage officers to own the company’s stock. |
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The company began operations on February 22, 2008, and since that time, two factors have had major influences on its compensation programs and decisions:
| ¡ | First, when the company acquired the paper, packaging, and newsprint assets of Boise Cascade, it agreed to maintain, for at least one year following the acquisition (Acquisition), executive compensation and benefits at levels substantially comparable to the levels of executive compensation and benefits maintained by Boise Cascade. Accordingly, the company based its executive compensation programs for 2008 and a portion of 2009 largely on those programs maintained by Boise Cascade. |
| ¡ | Second, in both 2008 and 2009, the company’s compensation programs have been challenged by the difficult economic conditions in North America and around the globe. Despite meeting significant operating challenges and many of the financial targets, the named executive officers received no short-term incentive pay in 2009 for 2008 performance, due to overall affordability considerations. Further, since the company’s stock became listed on the NYSE on February 25, 2008, its stock price has fallen from $7.95 per share to $0.24 per share at its lowest point. Although the company has seen dramatic increases in its stock price since mid 2009, the overall pricing levels have greatly diminished the value of the equity awards the company has granted to its named executive officers. Further, like most of the company’s other salaried employees, the named executive officers have seen other elements of compensation and benefits diminish, including the freezing of salaries for 2009 and the freezing of the defined benefit pension plan. These developments, while understandable given the ailing economy, make it more difficult to achieve the company’s compensation objectives. |
How the Company Designs Its Executive Compensation Committee's overallPrograms
The company’s board of directors has ultimate responsibility for approving the company’s executive compensation objectives applicableprograms. The Compensation Committee of the board assists the board in fulfilling these responsibilities.
The company’s executive compensation program has three key elements:
| ¡ | Base salary; |
| ¡ | Short-term incentive compensation under the Boise Inc. Incentive and Performance Plan; and |
| ¡ | Long-term incentive compensation under the Boise Inc. Incentive and Performance Plan. |
In addition, the company offers a number of other programs and benefits to its named executive officers, including retirement and health benefits and a deferred compensation plan.
The Compensation Committee believes a combination of these elements supports the company's electedcompany’s compensation objectives. The long-term nature of the company’s equity awards aligns the interests of its named executive officers were to providewith those of the company’s shareholders and promotes the retention of its named executive officers. The company also believes that as its named executive officers achieve higher levels of responsibility, a greater percentage of their pay should be at risk, with base salary representing a lower percentage of total compensation package intended to:as responsibility levels increase.
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Closely align compensation with the company's performance on both a short- and long-term basis;Benchmarking
The Compensation Committee regularly reviews compensation paid to executives in other comparable companies to make decisions regarding appropriate compensation levels. The
29
In the past, the Compensation Committee useshas used data primarily from Hewitt Associates and the Stanton Group's Forest Products Industry Compensation Association (FPICA) survey(Hewitt), a widely recognized compensation consulting firm, to make these decisions. Hewitt Associates
Because of last year’s unprecedented economic challenges, and the Stanton Group are both widely recognized compensation-consulting firms.general decision to freeze salaries, the company has not conducted executive compensation benchmarking since the company began operations in 2008. The Compensation Committee, however, will undertake an executive compensation review in 2010 based on a study begun in the fourth quarter of 2009.
For the 20082010 compensation analysis, the Compensation Committee has worked with the company’s management and Hewitt Associatesto develop a custom peer group to be used for comparison purposes. The peer group includes industry competitors, companies with whom it competes for executive talent, and those that share the company’s structural complexity or strategic focus. The company’s custom peer group is:
| ¡ | AptarGroup, Inc. |
| ¡ | Avery Dennison Corporation |
| ¡ | Bemis Company, Inc.* |
| ¡ | Buckeye Technologies Inc.* |
| ¡ | Cenveo, Inc. |
| ¡ | Domtar Corp.* |
| ¡ | Graphic Packaging Holding Company* |
| ¡ | Greif, Inc. |
| ¡ | MeadWestvaco Corporation* |
| ¡ | Micron Technology, Inc. |
| ¡ | Nalco Holding Company |
| ¡ | Neenah Paper, Inc.* |
| ¡ | Olin Corporation |
| ¡ | Packaging Corp. of America* |
| ¡ | P.H. Glatfelter Company* |
| ¡ | Rayonier Inc. |
| ¡ | Rock-Tenn Company* |
| ¡ | Schweitzer-Mauduit International, Inc.* |
| ¡ | Solutia Inc. |
| ¡ | Sonoco Products Company* |
| ¡ | Temple-Inland Inc.* |
| ¡ | Verso Paper Corp.* |
| ¡ | Wausau Paper Corp.* |
Since the company competes for executive talent with a broad range of companies and industries, the companies included in the custom peer group for compensation purposes are not necessarily the same as companies included in the peer group used in the company’s performance graph in its Annual Report on Form 10-K.
The Compensation Committee also requested that Hewitt develop a subset of the custom peer group that included only paper and packaging companies. This subset was created to compare the compensation within the subset of peer companies with the custom peer group as a whole. The subset data will be used, along with the entire peer group data, as a benchmark against which the company will make salary and short- and long-term incentive compensation recommendations for the named executive officers. The companies included in the subset peer group are indicated by an asterisk(*).
In addition to compensation data gathered through the peer group comparisons, the company will also use a broad Hewitt survey includedto benchmark compensation for a wide number of positions, including those of the named executive officers. This survey includes a general industry peer group consisting of approximately 350 manufacturing and services companies, excluding utilities and financial93 companies. The median annual revenue for this group is $2.6 billion. The survey uses a proprietary methodology for valuing compensation, and it measures, among other things, base salary, short-term cash incentives (actual and targets), and long-term incentives. Hewitt applies a regression analysis to its data to account for variations in company size. The Hewitt survey allows the company to benchmark compensation for a wide number of positions, including those of the company's officers.
The FPICA survey provides compensation data gathered from the 50 to 60 paper manufacturing and wood products companies belonging to the Forest Products Industry Compensation Association. The annual FPICA survey provides information on base salaries, short-term cash incentives (actual and targets), and annual total cash compensation paid by the surveyed companies for benchmarked positions, including those of our officers. Like the Hewitt survey, the FPICA survey applies a regression analysis to account for variations in company size. The FPICA survey allows the company insight into the compensation trends specific to the paper and wood products industry.
After receiving the compensation data provided by both Hewitt and FPICA, the company averages the data to provide market compensation information for each officer position. The company'scompany’s philosophy is to paytarget salary and short- and long-term incentive compensation, collectively, for each named executive officer at the 50th percentile of this averagedthe market data. However, theThe company, however, also takes into account each officer'snamed executive officer’s performance, level of experience, and contributions to the company'scompany’s goals and objectives when making final compensation decisions. The 50th percentile (median) of the market data for the peer groups is used because it represents a competitive target at which the company believes it can effectively recruit, reward, and retain executive talent.
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Executive Compensation Consultant
The Compensation Committee independently retains Hewitt to assist the Committee in its deliberations regarding executive compensation. The company also retains Hewitt to assist with various compensation and short- and long-term incentive plan matters. Hewitt does not provide any services such as health and welfare benefits consulting or 401(k) consulting. Payments made to Hewitt in 2009 are as follows:
| Services Provided | 2009 ($) | ||
Executive compensation consulting services provided to the Compensation Committee | $ | 11,079 | |
Executive compensation consulting services provided to management | $ | 47,379 | |
Neither the Compensation Committee nor the company rely on Hewitt to recommend specific levels of total pay or any specific element of compensation to the named executive officers. Those recommendations are developed by management and then presented to the Compensation Committee.Committee for consideration.
Of the companies providing compensation data to the Hewitt and/or FPICA surveys, 13 are among the 15 companies Boise considers to be in its peer group, as reflected in the performance graph in Boise's 2008 Annual Report on Form 10-K. Those surveyed companies are:
Executive Compensation Program Elements
The elements of the company's executive compensation program were:
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The company's compensation plans reflect the Compensation Committee's intent and general practice to pay compensation the company can deduct for purposes of federal income tax.
The Compensation Committee believes a greater percentage of the compensation of the company'snamed executive officers should be "at risk"“at risk” than other employees because of the officers'officers’ significant influence over the company'scompany’s ability to meet its goals and objectives. However,objectives; however, the Compensation Committee also believes the officers'named executive officers’ compensation should contain a stable, base salary component to attract, motivate, reward, and retain management talent.
The Compensation Committee reviews base salaries for electedthe named executive officers annually and at the time of promotions or other changes in responsibilities.
For 2008, the Compensation Committee considered each Named Executive Officer's role and level of responsibility in the new company. In addition, the Compensation Committee used data from the Hewitt Associates and FPICA compensation surveys described above as part of its analysis to assist in determining base salaries.
Generally, merit increases willwere not be awarded to the company'scompany’s employees in 2009 given the unprecedentedchallenging economic environment; however, limited exceptions will bewere made to provide salary increases for promotions and when critical inequities arewere identified. Mr. Warren, one of our Named Executive Officers, will receivethe company’s named executive officers, received a 2009 salary increase from $300,000 to $325,000 to reflect his increased responsibilities sincefor the Acquisition.performance of the company’s Paper segment and supply chain management, as well as his exceptional individual performance. Mr. Warren iswas the only Named Executive Officer that the company anticipates will receivenamed executive officer who received a salary increase in 2009.
For 2010, the Compensation Committee will again consider each named executive officer’s role and level of responsibility. In addition, the Compensation Committee will use the benchmarking data described previously as part of its analysis to assist in determining base salaries for the named executive officers.
Short-Term Incentive Compensation
The Compensation Committee establishes annual variable, or short-term, incentive compensation, in the form of a cash award, to tie a portion of annual compensation to the company'scompany’s annual financial and safety performance.performance objectives. Each year, the Compensation Committee establishes objective performance criteria the company must meet for cash awards to be paid (establishing minimum, target, and maximum payout levels for each type of performance criteria), a target incentive payout for each electednamed executive officer that is expressed as a percentage of salary, and other terms and conditions of awards. EachA description of each of these components is described below.follows. No short-term incentive awards are earned or paid unless the minimum performance criteria are achieved and the company meets the financial affordability standard. The Compensation Committee typically approves short-term
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incentive award criteria in February to comply with the provisions of Section 162(m) of the Internal Revenue Code of 1986, as amended, which requires that performance metrics be set within 90 days of the commencement of the performance period. Compliance with Section 162(m) enables the awards to qualify as "performance-based"“performance-based” compensation and allows the awards to be tax-deductible by the company.
20082009 Short-Term Incentive Awards
Because the company was not formed until late February 2008, the company's 2008 short-term incentive compensation program did not begin on January 1, 2008, but rather on April 1, 2008. On April 30, 2008, the Compensation Committee approved the award criteria for the Named Executive Officers pursuant to the Boise Inc. Incentive and Performance Plan.
The 20082009 short-term incentive awards were based on the attainment of financial goals and safety objectives. A financial goal was chosen as the key metric because it focused the company’s leaders on the primary driver of shareholder value. Safety was chosen as a goal to reinforce the company’s commitment to an incident-free workplace. While the company is proud of its locations that have achieved zero accidents and incidents, until the entire company reaches that goal, the company’s safety performance is not good enough. The company believes every employee, including its most senior leaders, must fully participate to keep its work environment safe.
The awards were to be calculated as a percentage of base salary, based on the extent to which the financial goals and safety objectives were met during the year. For the company's Named Executive Officers,named executive officers, the major performance target was corporate incentive cash flow. Incentive cash flowCash Flow (ICF) is
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the company'scompany’s earnings before interest, taxes, depreciation, depletion, and amortization (EBITDA), less a working capital charge of 15% per year, times the company'scompany’s average operating working capital balance. The 20082009 corporate ICF target was $207.3 million for the period of April 1 to December 31, 2008.$217 million. If this target was achieved, the anticipated payout would be one times target. The company'scompany’s corporate plan provided a payout only if ICF reached a minimum of $154.4$183 million, which would provide a payout of 0.30.55 times target. The company would have attained a maximum payout (2.25 times target) under the corporate plan if ICF reached $301.7$309 million. The company's 2008company’s 2009 corporate safety goal for a one times payout was a 1.8 recordable incident rate (RIR). There would be no payout on the safety goal if the company'scompany’s RIR was greater than 2.0. These 2008 financial goals
Corporate ICF for 2009 was $378 million and the company achieved a corporate safety objectives were weightedRIR of 1.33. A portion of the company’s ICF was comprised of earnings resulting from alternative fuel mixture credits, which permitted a refundable excise tax credit for the Named Executive Officers' awards as set forthproduction and use of alternative biofuel mixtures. Because the Compensation Committee believed these credits resulted in the following table:
Depending on the achievementcorporate ICF that was not entirely representative of these predetermined financial goals and safety objectives,operating performance, it reduced the awards forto the company's Named Executive Officers might have been less than or greater thannamed executive officers from a calculated award of 2.25 times target to an award of 1.65 times target.
The following table sets forth the 2009 short-term incentive objectives, as well as the target and actual incentive amounts.
No payments were made under the company's 2008 short-term incentive compensation plan, because the goals and objectives were not met. The majoritypayouts for each of the company's operations met their 2008 safety goals. The company's affordability cap, however, required a minimum of $190 million of EBITDA from April 1 through December 31, 2008, before any incentive award payouts would be made. The company generated $142.5 million of EBITDA from April 1 through December 31, 2008. As such, the company did not generate enough EBITDA overall to meet the affordability threshold, and no incentive award payouts were made.named executive officers:
| Name | 2009 Financial Goals and Safety | 2009 (% of | 2009 (% of | |||||
Alexander Toeldte | 90% corporate ICF 10% safety based on corporate RIR | 100 | % | 165.00 | % | |||
Robert M. McNutt | 90% corporate ICF 10% safety based on corporate RIR | 65 | % | 107.25 | % | |||
Jeffrey P. Lane | 90% corporate ICF 10% safety based on corporate RIR | 65 | % | 107.25 | % | |||
Robert E. Strenge | 90% corporate ICF 10% safety based on corporate RIR | 65 | % | 107.25 | % | |||
Robert A. Warren | 90% corporate ICF 10% safety based on corporate RIR | 65 | % | 107.25 | % |
20092010 Short-Term Incentive Awards
The 20092010 short-term incentive compensation program will be based on identicalsimilar financial goals and safety objectives as were in place for 2008. The actual targets will be developed when the 2009 awards are granted.2009.
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Long-Term Incentive Compensation
The Compensation Committee provides long-term incentives that can be in the form of various types of equity awards to serve part of its compensation objectives. The Compensation Committee believes equity awards encourage ownership of the company's commoncompany’s stock by electedthe named executive officers, which in turn aligns the interests of those officers with thosethe interests of the company'scompany’s shareholders. In addition, the vesting provisions applicable to the equity awards help retain eligiblethe named executive officers and reward the achievement of long-term business objectives that benefit the company'scompany’s shareholders. If it chooses to make an award, it is the Compensation Committee’s practice to award long-term equity incentives on March 15. If March 15 falls on a weekend or holiday, then the grant date is the next business day.
The Boise Inc. Incentive and Performance Plan permits grantsawards of restricted stock, restricted stock units, performance stock, performance units, stock appreciation rights (SARs), and
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stock options (including performance-based or indexed stock options) to the elected officers and key employees who are selected as participants.named executive officers. The plan gives the Compensation Committee flexibility in choosing among these awards to provide competitive long-term incentive compensation.
Please refer to the section of this Proxy Statement entitledProposals to Be Voted on, Proposal No. 2 – Approval of Amendment to the Boise Inc. Incentive and Performance Plan, which describes a proposed amendment to increase the number of shares available for issuance under the plan.
2008 Equity Awards
For 2008, the Compensation Committee, with input from management, developed and approved the plan design of the long-term incentive program, including the type of equity award to be granted and the size of the award for the company's elected officers. The grants were designed to comply with the provisions of Section 162(m) of the Internal Revenue Code of 1986, as amended, which requires that performance metrics be set within 90 days of the commencement of the performance period. Compliance with Section 162(m) enables the awards to qualify as "performance-based" compensation and allows the awards granted to the chief executive officer and the other Named Executive Officers to be tax-deductible by the company.
On April 30, 2008, the Compensation Committee approved equity awards of restricted stock or restricted stock units to a number of the company's managerial employees at no cost to the employee, including the Named Executive Officers shown in the following tables. These equity awards had a grant date of May 2, 2008. No other equity-based awards were made under the company's long-term incentive plan during 2008.
A portion of the restricted stock vests with the passage of time (Time-Vesting Restricted Stock). One-third of the Time-Vesting Restricted Stock vested in full on March 2, 2009. The second one-third will vest on February 28, 2010, and the third one-third will vest on February 28, 2011, subject to certain EBITDA goals for elected officers.
The remaining portion of the restricted stock vests only if the company achieves specific performance hurdles (Performance-Vesting Restricted Stock). A portion of the Performance-Vesting Restricted Stock will vest on February 28, 2011, if at some point before that date the company's stock price has closed at or above $10.00 on 20 of any consecutive 30 trading days. The other portion of the Performance-Vesting Restricted Stock will vest on February 28, 2011, if at some point before that date the company's stock price has closed at or above $12.50 on 20 of any consecutive 30 trading days.
All employees who are eligible for retirement on or before February 28, 2011, including Messrs. Strenge and Warren, received restricted stock units in lieu of restricted stock. The restricted stock units vest in the same manner as do the restricted stock shares (Time-Vesting Restricted Stock Units and Performance-Vesting Restricted Stock Units). Once vested, the restricted stock units are payable to the employee in stock. Any shares or units not vested on or before February 28, 2011, are forfeited by the employee.
In 2008, Messrs. Toeldte, McNutt, and Lane were granted 975,100; 213,400; and 254,000 shares of restricted stock, respectively. The following table reflects the number of these shares that are Time-Vesting Restricted Stock and Performance-Vesting Restricted Stock.
| | 2008 Restricted Stock | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Name | Time- Vesting | Performance- Vesting @ $10.00/Share | Performance- Vesting @ $12.50/Share | |||||||
| Alexander Toeldte | 288,500 | 262,300 | 424,300 | |||||||
Robert M. McNutt | 63,200 | 57,400 | 92,800 | |||||||
Jeffrey P. Lane | 75,200 | 68,300 | 110,500 | |||||||
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In 2008, Messrs. Strenge and Warren were each granted 107,000 restricted stock units. The following table reflects the number of these units that are Time-Vesting Restricted Stock Units and Performance-Vesting Restricted Stock Units.
| | 2008 Restricted Stock Units | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Name | Time- Vesting | Performance- Vesting @ $10.00/Share | Performance- Vesting @ $12.50/Share | |||||||
| Robert E. Strenge | 31,700 | 28,800 | 46,500 | |||||||
Robert A. Warren | 31,700 | 28,800 | 46,500 | |||||||
On March 2, 2009, the company's closing stock price was $0.25 per share. The company's stock price would have to increase 4,000% for the $10.00-per-share Performance-Vesting Restricted Stock and Performance-Vesting Restricted Stock Units to vest in 2011, and 5,000% for the $12.50-per-share Performance-Vesting Restricted Stock and Performance-Vesting Restricted Stock Units to vest in 2011.
2009 Equity Awards
The Compensation Committee recently approvedOn March 15, 2009, the named executive officers received long-term equity incentive awards to the company's elected officers and key employees, including the Named Executive Officersas shown in the following table. The 2009 equity awards will consistconsisted entirely of time-vestingservice-condition vesting restricted stock or restricted stock units. Twenty percent of the shares or units will vestvested on March 15, 2010,2010; 20% will vest on March 15, 2011,2011; and the remaining 60% will vest on March 15, 2012. The named executive officers who were eligible for retirement on or before March 15, 2012, received restricted stock units in lieu of restricted stock. In its decision to make theseall of the 2009 equity awards 100% time-vesting,service-condition vesting rather than market-condition vesting, the Compensation Committee took into accountconsidered the improbabilityreduced probability that the market-condition vesting restricted stock and restricted stock units awarded in 2008 Performance-Vesting Restricted Stockwould vest given that the company’s shares were trading near their historic low.
Determining equity award targets and Performance-Vesting Restricted Stock Units will vest. Thevalues was challenging in 2009 for two reasons:
| ¡ | First, as previously noted, the Compensation Committee did not conduct executive compensation benchmarking because of the year’s unprecedented economic challenges and the general decision to freeze salaries; and |
| ¡ | Second, the company’s share price was extremely depressed and, thus, trying to provide an equity award based on a market-competitive economic value would have resulted in substantial dilution. The Compensation Committee decided to provide an equity award to all officers and senior management participating in the long-term incentive program equal to 5% of the company’s outstanding shares in the aggregate, which equity award totaled 3,864,000 shares. The named executive officers received 54.6% of the total amount of these equity awards. Because the share price at the time of these equity awards was historically low, the Compensation Committee believed these awards would provide strong upside potential. |
| Name | 2009 Restricted Stock (#) | 2009 Restricted Stock Units (#) | ||
Alexander Toeldte | 960,000 | — | ||
Robert M. McNutt | 398,500 | — | ||
Jeffrey P. Lane | 230,000 | — | ||
Robert E. Strenge | — | 230,000 | ||
Robert A. Warren | — | 290,000 |
2010 Equity Awards
Given the large equity awards are contingent on shareholder approval ofgranted in 2009, after consideration, the amendmentCompensation Committee determined it would not grant any long-term incentive awards to the Boise Inc. Incentivenamed executive officers in 2010.
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Retirement and Performance PlanHealth Benefits
The company offers pension benefits to increasequalifying named executive officers. Those pension benefits include a salaried defined pension benefit plan (Salaried Pension Plan), a supplemental pension plan (SUPP), and a supplemental early retirement plan (SERP). The following table reflects the number of shares authorized under thenamed executive officers eligible to participate in each pension benefit plan.
| Name | Plan | |||||||||
SUPP | SERP | |||||||||
Alexander Toeldte | No | No | No | |||||||
Robert M. McNutt | Yes | Yes | No | |||||||
Jeffrey P. Lane | No | No | No | |||||||
Robert E. Strenge | Yes | Yes | Yes | |||||||
Robert Warren | ||||||||||
| No | ||||||||||
Other Compensation and Benefit PlansPension Plan Freeze
The company's elected officers also received additional compensationSalaried Pension Plan, SUPP, and SERP, each described in the form of payments, allocations, or accruals underfollowing sections, were frozen effective April 15, 2009. Messrs. McNutt, Strenge, and Warren will keep the following compensation and benefit plans. These plansbenefits they earned up to that point but no additional benefits are an important part of the company's executive compensation program. The company believes providing attractive benefits to its elected officers and key managers allows the company to remain competitive in the market for top talent.earned after April 14, 2009.
Pension Benefits
Salaried Pension Plan
Messrs. McNutt, Strenge, and Warren are eligible to participate in the company’s Salaried Pension Plan. The company maintainsSalaried Pension Plan is a defined benefit pension plan (Salaried Pension Plan) for all salaried employees who were former employees of OfficeMax Incorporated (formerly Boise Cascade Corporation) prior to November 1, 2003.
The Salaried Pension Plan entitles each vested employee to receive a pension benefit at normal retirement age equal to 1.25% of the average of the highest five consecutive years of compensation out of the last ten years of employment, calculated as of April 14, 2009, multiplied by the participant'semployee’s years of service through December 31, 2003, plus 1% of the average of the highest five consecutive years of compensation out of the last ten years of employment, calculated as of April 14, 2009, multiplied by the participant'semployee’s years of service after December 31, 2003.2003, through April 14, 2009. Under the Salaried Pension Plan, "compensation"“compensation” is defined as the employee'semployee’s base salary plus any amounts earned under the company'scompany’s variable incentive compensation programs. Benefits are computed
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on a straight-life annuity basis and are not offset by Social Security or other retirement-type benefits. An employee is 100% vested in his or her pension benefit after five years of service, except for breaks in service.
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Supplemental Pension Plan (SUPP)
Messrs. McNutt, Strenge, and Warren are eligible to participate in the company’s SUPP. The SUPP is a plan for salaried employees who were former employees of OfficeMax Incorporated (formerly Boise Cascade Corporation) prior to November 1, 2003.
If an employee is entitled to a greater benefit under the Salaried Pension Plan'sPlan’s formula than the Internal Revenue Code allows for tax-qualified plans, the excess benefits will be paid from the company'scompany’s general assets under the company'scompany’s unfunded Supplemental Pension Plan (SUPP).SUPP. The SUPP also provides payments to the extent that participation in the company'scompany’s deferred compensation plan has the effect of reducing an individual'sindividual’s pension benefit under the qualified plan. Salaried employees who were former employees of OfficeMax Incorporated (formerly Boise Cascade Corporation) prior to November 1, 2003, are eligible to participate in the SUPP.
Supplemental Early Retirement Plan (SERP)
Mr. Strenge is the only named executive officer eligible to participate in the company’s SERP. The Supplemental Early Retirement Plan (SERP)SERP entitles pension-eligible elected officers to receive an early retirement benefit equal to the benefit calculated at age 65 under the Salaried Pension Plan without reduction due to the officer'sofficer’s early retirement. This pension benefit is unfunded and is paid from the company’s general assets. Eligible elected officers are those who:
The following table reflects the Named Executive Officers' eligibility for participation in the Salaried Pension Plan, SUPP, and SERP:
| Are 55 years old or older, if elected by OfficeMax (formerly Boise Cascade Corporation) prior to June 1, 2004; | |||||
| ¡ | Are 58 years old or older, if elected on or after June 1, 2004, and prior to October 29, 2004 (the SERP was closed to new entrants as of October 29, 2004); |
| ¡ | Have ten or more years of service; |
Have served as an elected officer for at least five full years; and |
| ¡ | ||||||
| ||||||
| ||||||
| ||||||
| ||||||
|
Pension Plan Freeze
In December 2008, in an effort to address cost challenges and reduce risk volatility, the company amended the Salaried Pension Plan, freezing the accumulation of benefits and years of service for participants effective April 15, 2009. This amendment also freezes benefits in the SUPP and SERP.
For further information on the company'scompany’s Salaried Pension Plan, SUPP, and SERP, please refer to the sections of this Proxy Statement entitledExecutiveEXECUTIVE COMPENSATION, Compensation Compensation Tables, – Summary Compensation TableandPension Benefits Table.
Health Benefits
The company offers health benefits to all its employees. The company pays a significant portion of the benefit cost for all employees. Previously, highly compensated employees paid a greater portion than did employees at lower compensation levels. The provision requiring a higher payment by highly compensated employees was removed effective January 1, 2010. The company does not offer supplemental health benefits to its named executive officers.
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The company maintains a "nonqualified"named executive officers are eligible to participate in the company’s “nonqualified” Deferred Compensation Plan offered primarily for the purpose of providing deferred compensation to a select group of management and highly compensated employees.Plan. The plan is an unfunded plan intended to help participants supplement their retirement income while providing them an opportunity to reinvest a portion of their compensation in the company'scompany’s overall business performance.
Each year, officersparticipants may irrevocably elect to defer receipt of a portion of their base salary and incentive compensation. A participant'sparticipant’s account is credited with imputed interest at a rate equal to 130% of Moody'sMoody’s Composite
35
Average of Yields on Corporate Bonds. In addition, participants may elect to receive their company-matching contributioncompany contributions in the company'scompany’s Deferred Compensation Plan in lieu of any matching contributioncontributions in the company'scompany’s 401(k) Savings Plan. For Messrs. McNutt, Strenge, Warren, and Hewitt (who participate inPlan, as described below:
Through April 15, 2009, the company's Salaried Pension Plan),company’s contribution to the matching contribution is401(k) Savings Plan was:
| ¡ | A regular match equal to $0.70 on the dollar up to the first 6% of eligible compensation; plus |
| ¡ | For employees hired or rehired on or after November 1, 2003, a discretionary match that was announced annually and could vary from year to year but would be no more than $0.30 on the dollar up to the first 6% of eligible compensation. This match was provided only to those eligible employees who were employed by the company on the last day of the plan year (December 31). |
Effective April 16, 2009, the company’s contribution to the 401(k) Savings Plan is:
| ¡ | Base Company Contribution – The company contributes the equivalent of 3% of a participant’s eligible compensation to his or her account; plus |
| ¡ | Matching Company Contribution – The company matches $0.50 for each $1.00 a participant contributes up to the first 3% of his or per pay; plus |
| ¡ | Discretionary Matching Company Contribution– The company intends to provide a discretionary match of $0.50 for each $1.00 a participant contributes to the plan up to the first 3% of pay. The actual amount of the discretionary match may vary from year to year, depending on the company’s financial performance and, thus, the affordability of the match. The company will announce at the end of each year whether a discretionary match will be made and, if so, in what amount. |
Participants elect the form and timing of distributions of their deferred compensation balances. Participants may receive payment in cash in a lump sum or in monthlyannual installments over a specified period of years following the termination of their employment with the company.
Messrs. Toeldte and Lane were the only Named Executive Officers who elected to participate in this plan in 2008. None of the company's Named Executive Officers havenamed executive officers elected to defer any of their 2009 compensation under this plan. Mr. Warren is the only named executive officer who elected to participate in this plan in 2010, but he did not elect to have the company contribution put into the plan.
No changes are expected to be made to the company'scompany’s Deferred Compensation Plan in 2009.2010.
For further information on the company'scompany’s Deferred Compensation Plan, please refer to the sections of this Proxy Statement entitledExecutiveEXECUTIVE COMPENSATION, Compensation Compensation Tables, – Summary Compensation Table andNonqualified Deferred Compensation Table.
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The company maintains aMr. Strenge is the only named executive officer eligible to participate in the company’s Supplemental Life PlanPlan. The plan is for elected officers who were officers of OfficeMax Incorporated (formerly Boise Cascade Corporation) prior to July 31, 2003.
The plan provides these elected officersparticipants with an insured death benefit during employment and, in limited cases, after retirement. Messrs. Strenge and Hewitt were the only Named Executive Officers eligible to participate in the plan.
Officers who participateParticipants in the Supplemental Life Plan can purchase a life insurance policy from a designated insurance carrier, with policy premiums to be paid by the company as described in the plan. The plan provides the officerparticipant with a target death benefit equal to two times his or her base salary while employed by the company and a target postretirement death benefit equal to one times his or her final base salary, both of which are less any amount payable under the company'scompany’s group term life insurance policy.
No changes are expected to be made to the company'scompany’s Supplemental Life Plan in 2009.2010.
For further information on the company'scompany’s Supplemental Life Plan, please refer to the sectionthesection of this Proxy Statement entitledExecutiveEXECUTIVE COMPENSATION, Compensation Compensation Tables, – Summary Compensation Table.
Financial Counseling Program for Officers
The company maintains anamed executive officers are eligible to participate in the company’s Financial Counseling Program for its elected officers.Officers. The program provides elected officersparticipants up to $5,000 per calendar year for financial counseling services. A participantThe participants may carry over unused amounts, up to one year'syear’s allowance, from one year to the next. Under the program, an elected officera participant may spend his or her allowance on investment planning, tax preparation, tax planning and compliance, or estate planning. Since the expenses of these services are generally not deductible for federal income tax purposes, the elected officerparticipant receives a cash gross-up payment on reimbursed charges. The gross-up payment helps cover the tax on the payment for services and the tax on the tax payment. The current gross-up is 39% based on a 28% federal tax rate. The gross-up payment is also deducted from each participant'sthe participant’s annual allowance. Money paid on an elected officer'sa participant’s behalf by the company for these services and gross-up payments is taxable and is reported in his or her W-2 earnings on a monthly basis.
No changes are expected to be made to the Financial Counseling Program for Officers in 2009.
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Table of Contents2010.
For further information on the company'scompany’s Financial Counseling Program for Officers, please refer to the section of this Proxy Statement entitledExecutiveEXECUTIVE COMPENSATION, Compensation Compensation Tables, – Summary Compensation Table.
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Agreements With, and Potential Payments to, Named Executive Officers
The following summaries provide a description of the severance agreements the company has entered into with its electednamed executive officers. These agreements provide severance benefits and protect other benefits the named executive officers have already earned or reasonably expect to receive under the company'scompany’s employee benefit plans. The named executive officer will receive the benefits provided under the agreement if the officer'snamed executive officer’s employment is terminated other than for cause or disability (as defined in the agreement) or if the named executive officer terminates employment after the company takes actions (as specified in the agreement) that adversely affect the officer are taken.named executive officer.
Although changes are not anticipated at this time, theseThese severance agreements help to ensure the company will have the benefit of these officers'the named executive officers’ services without distraction in the face of future potential changes. The company'scompany’s board of directors believes the agreements are in the best interests of the company and its shareholders.
These agreements formerly provided that upon a qualifying termination, the officer would receive a multiple of his or her base salary plus target short-term incentive. Pursuant to a notice issued by the IRS, when an agreement (such as these severance agreements) provides for payment of an amount linked to a performance-based bonus without requiring achievement of the performance goals, the performance-based bonus itself may not qualify as performance-based compensation under Internal Revenue Code 162(m). To avoid this consequence, these agreements were recently amended to remove the reference to target short-term incentive and to provide instead for a multiple of base salary, without regard to target short-term incentive. These amendments did not change the economic benefit to the named executive officers.
For further information on the severance agreements the company has entered into with Messrs. Toeldte, McNutt, Lane, Strenge, and Warren,its named executive officers, please refer to the section of this Proxy Statement entitledExecutive Compensation,EXECUTIVE COMPENSATION, Compensation Tables, – Severance Tables.
| 48 | |
Alexander Toeldte
Pursuant to the terms of Mr. Toeldte'sToeldte’s severance agreement dated February 6, 2008, as amended February 18, 2010, if he voluntarily terminates employment with good reason or his employment is involuntarily terminated without cause, as defined in his severance agreement, and subject to his execution of a valid release of employment-relatedemployment- related claims, Mr. Toeldte will be entitled to severance pay equal to two4 times the sum of his annual base salary plus his target annual incentive forat the yearrate in whicheffect at the termination occurs.time he receives a notice of termination. To the extent not already paid, Mr. Toeldte will receive a lump-sum amount equal to the value of his unused and accrued time off, less any advanced time off. Mr. Toeldte will also receive a lump-sum payment equal to (a) 36 times the monthly group premium for healthcare, disability, and accident insurance plans, plus (b) three times the annual allowance for financial counseling services. The severance agreement also imposes confidentiality and nondisparagement provisions on Mr. Toeldte, as well as a nonsolicitation provision that will continue for one year after his employment terminates. Mr. Toeldte was not entitled to receive payment under his severance agreement as a result of the Acquisition; however, his severance agreement was assigned to the company as part of the Acquisition.
Robert M. McNutt, Jeffrey P. Lane, Robert E. Strenge, and Robert A. Warren
Pursuant to the terms of the severance agreements dated February 25, 2008, as amended February 18, 2010, with Messrs. McNutt, Strenge, and Warren and the severance agreement dated April 30, 2008, as amended February 18, 2010, with Mr. Lane, if these officers voluntarily terminate employment with good reason or their employment is involuntarily terminated without cause, as defined in their severance agreements, and subject to their execution of a valid release of employment-related claims, Mr. McNutt will be entitled to severance pay equal to two3 times the sum of his annual base salary plus his target annual incentive forat the yearrate in whicheffect at the time he receives a notice of termination, occurs, and Messrs. Lane, Strenge, and Warren will be entitled to severance pay equal to one1.65 times their annual base salary plus their target annual incentive forat the yearrate in which their termination occurs.effect at the time they receive a notice of termination. To the extent not already paid, they will receive a lump-sum amount equal to the value of their unused and accrued time off, less any advanced time off. The company will maintain group insurance coverage (healthcare, disability, term life, and accident) and financial
37
counseling services for 12 months following their date of termination, subject to the officer'sofficer’s payment of any applicable premium at the active employee rate. The company will also continue to pay the company-paid premium under the Supplemental Life Plan (if the officer was a participant in such plan) for 12 months.
Miles A. Hewitt
| 49 | |
On May 2, 2008, Mr. Hewitt stepped down from his position as senior vice president, Paper. In connection with his departure from the company, the Compensation Committee approved the entry into a severance arrangement with Mr. Hewitt that included the following material provisions:
For further information on the severance arrangement the company entered into with Mr. Hewitt, please refer to the sections of this Proxy Statement entitledExecutive Compensation, Compensation Tables – Summary Compensation Table andPension Benefits Table.
38
The followingSummary Compensation Table presents:
| ¡ | Alexander Toeldte – Compensation information for the fiscal years ended December 31, 2009 and 2008, for Mr. Toeldte, who has served as the company’s president and chief executive officer following the closing of the Acquisition on February 22, 2008. |
| ¡ | Robert M. McNutt – Compensation information for the fiscal years ended December 31, 2009 and 2008, for Mr. McNutt, who has served as the company’s senior vice president and chief financial officer following the closing of the Acquisition on February 22, 2008. |
| ¡ | Jeffrey P. Lane, Robert E. Strenge, and Robert A. Warren – Compensation information for the fiscal years ended December 31, 2009 and 2008, for Messrs. Lane, Strenge, and Warren, the company’s three most highly compensated executive officers other than Messrs. Toeldte and McNutt. |
These executive officers are referred to as Named Executive Officersnamed executive officers elsewhere in this Proxy Statement.
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| 50 | |
Name and Principal Position | Year | Salary ($) (1) | Bonus ($) (2) | Stock Awards ($) (3) | Non-Equity Incentive Plan Compen- sation ($) (4) | Change in Pension Value and Nonqualified Deferred Compen- sation Earnings ($) (5) | All Other Compen- sation ($) (6) | Total ($) (3) | |||||||||||||||||||||||
Alexander Toeldte | 2009 | $ | 793,940 | $ | — | $ | 412,800 | $ | 1,319,992 | $ | 2,737 | $ | 25,530 | $ | 2,554,999 | ||||||||||||||||
President and Chief Executive Officer | 2008 | 672,918 | — | 2,398,780 | — | 767 | 57,359 | 3,129,824 | |||||||||||||||||||||||
Robert M. McNutt | 2009 | 349,334 | — | 171,355 | 377,518 | 39,711 | 10,562 | 948,480 | |||||||||||||||||||||||
Senior Vice President and Chief Financial Officer | 2008 | 296,084 | — | 525,130 | — | 130,693 | 2,264 | 954,171 | |||||||||||||||||||||||
Jeffrey P. Lane | 2009 | 377,122 | — | 98,900 | 407,548 | 958 | 53,026 | 937,554 | |||||||||||||||||||||||
Senior Vice President and General Manager, Packaging | 2008 | 237,500 | 150,000 | 624,966 | — | 232 | 65,943 | 1,078,641 | |||||||||||||||||||||||
Robert E. Strenge | 2009 | 297,728 | — | 98,900 | 321,748 | 46,117 | 20,684 | 785,177 | |||||||||||||||||||||||
Senior Vice President, Manufacturing | 2008 | 250,000 | 50 | 263,341 | — | 629,165 | 117,539 | 1,260,095 | |||||||||||||||||||||||
Robert A. Warren | 2009 | 315,247 | — | 124,700 | 348,560 | 51,891 | 12,587 | 852,985 | |||||||||||||||||||||||
Senior Vice President and General Manager, Paper and Supply Chain | 2008 | 216,250 | — | 263,341 | — | 202,444 | 2,432 | 684,467 | |||||||||||||||||||||||
| Name and Principal Position | Year | Salary ($)(1) | Bonus ($)(2) | Stock Awards ($)(3) | Non-Equity Incentive Plan Compen- sation ($)(4) | Change in Pension Value and Nonqualified Deferred Compen- sation Earnings ($)(5) | All Other Compen- sation ($)(6) | Total ($) | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jason G. Weiss | 2008 | $ | 0 | $ | 0 | $ | — | $ | — | $ | — | $ | 0 | $ | 0 | |||||||||||
Former Chief Executive Officer and Principal Financial Officer | 2007 | 0 | 0 | — | — | — | 0 | 0 | ||||||||||||||||||
Alexander Toeldte | 2008 | 672,918 | 0 | 666,328 | 0 | 767 | 57,359 | 1,397,372 | ||||||||||||||||||
Robert M. McNutt | 2008 | 296,084 | 0 | 145,869 | 0 | 130,693 | 2,264 | 574,910 | ||||||||||||||||||
Jeffrey P. Lane | 2008 | 237,500 | 150,000 | 173,602 | 0 | 232 | 65,943 | 627,277 | ||||||||||||||||||
Robert E. Strenge | 2008 | 250,000 | 50 | 73,150 | 0 | 629,165 | 117,539 | 1,069,904 | ||||||||||||||||||
Robert A. Warren | 2008 | 216,250 | 0 | 73,150 | 0 | 202,444 | 2,432 | 494,276 | ||||||||||||||||||
Miles A. Hewitt | 2008 | 59,242 | 0 | — | — | 578,400 | 565,608 | 1,203,250 | ||||||||||||||||||
| 51 | |
| (2) | 2009 Bonus – None of the named executive officers received a discretionary bonus in 2009. |
40
(2)- 2008 Bonus – The 2008 amount reported for Mr. Lane represents a signing bonus he received when he joined the company on April 30, 2008. The 2008 amount reported for Mr. Strenge represents a safety award.
(3)
| (3) | 2009 Stock Awards – On March 16, 2009, Messrs. Toeldte, McNutt, and Lane were awarded, at no cost, 960,000; 398,500; and 230,000 restricted stock shares, respectively, under the Boise Inc. Incentive and Performance Plan. Also on March 16, 2009, Messrs. Strenge and Warren were awarded, at no cost, 230,000 and 290,000 restricted stock units, respectively, under the Boise Inc. Incentive and Performance Plan. The amounts reported for these awards reflect the aggregate grant date fair value of the awards computed in accordance with FASB ASC Topic 718. These 2009 stock awards were all service-condition vesting awards. |
2008 Stock Awards – On May 2, 2008, Messrs. Toeldte, McNutt, and Lane were granted,awarded, at no cost, 975,100; 213,400; and 254,000 restricted stock shares, respectively, under the Boise Inc. Incentive and Performance Plan. Also on May 2, 2008, Messrs. Strenge and Warren were each granted,awarded, at no cost, 107,000 restricted stock units under the Boise Inc. Incentive and Performance Plan. The amounts reported for these grantsawards reflect the dollar amount recognized for financial statement reporting purposes foraggregate grant date fair value of the fiscal year ended December 31, 2008,awards computed in accordance with SFAS No. 123(R),FASB ASC Topic 718. These 2008 stock awards and 2008Total compensation have been recomputed in accordance with FASB ASC Topic 718, as required by SEC rules, to facilitate a year-to-year comparison. These 2008 stock awards consisted of a combination of service- and market-condition vesting awards.Share-Based Payment.
For further information on these long-term incentive awards, please refer to the sections of this Proxy Statement entitledExecutive Compensation,EXECUTIVE COMPENSATION, Compensation Discussion and Analysis, –Executive Compensation Program Elements, Long-Term Incentive Compensation andCompensation Tables, – Grants of Plan-Based Awards Table, Outstanding Equity Awards at Fiscal Year-End Table, Option Exercises and Stock Vested Table, andSeverance Tables.
| (4) | 2009 Non-Equity Incentive Plan Compensation – On February 19, 2009, the Compensation Committee approved the 2009 short-term incentive award criteria for the named executive officers pursuant to the Boise Inc. Incentive and Performance Plan. Payments were made to the named executive officers under these 2009 awards because the company’s performance objectives were met. |
2008 Non-Equity Incentive Plan Compensation – On April 30, 2008, the Compensation Committee approved the 2008 short-term incentive award criteria for Messrs. Toeldte, McNutt, Lane, Strenge, and Warrenthe named executive officers pursuant to the Boise Inc. Incentive and Performance Plan. No payments were made to these Named Executive Officersthe named executive officers under these 2008 awards because the goals andcompany’s performance objectives were not met.
For further information on these 2008 short-term incentive awards, please refer to the sections of this Proxy Statement entitledExecutive Compensation,EXECUTIVE COMPENSATION, Compensation Discussion and Analysis, –Executive Compensation Program Elements, Short-Term Incentive CompensationandCompensation Tables, – Grants of Plan-Based Awards Table andSeverance Tables.
| 52 | |
| Name | Year | Change in Pension Value(a) | Nonqualified Deferred Compensation Earnings(b) | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
Jason G. Weiss | 2008 | $ | — | $ | — | ||||||
| 2007 | — | — | |||||||||
Alexander Toeldte | 2008 | — | 767 | ||||||||
Robert M. McNutt | 2008 | 130,693 | — | ||||||||
Jeffrey P. Lane | 2008 | — | 232 | ||||||||
Robert E. Strenge | 2008 | 629,165 | — | ||||||||
Robert A. Warren | 2008 | 202,444 | — | ||||||||
Miles A. Hewitt | 2008 | 578,400 | — | ||||||||
| (5) | Amounts disclosed in theChange in Pension Value and Nonqualified Deferred Compensation Earnings column include the following: |
(a)The amounts reported for Messrs. McNutt, Strenge, Warren, and Hewitt reflect the actuarial increase in the present value of their benefits under all of the company's pension plans using interest rate and mortality rate assumptions consistent with those used in the company's financial statements and include amounts such officers may not be currently entitled to receive because such amounts are not vested. For further information on the valuation method and all material assumptions applied in quantifying these amounts, please
| Name | Year | Change in Pension Value ($) (a) | Nonqualified ($) (b) | ||||
Alexander Toeldte | 2009 | $ — | $ | 2,737 | |||
| 2008 | — | 767 | |||||
Robert M. McNutt | 2009 | 39,711 | — | ||||
| 2008 | 130,693 | — | |||||
Jeffrey P. Lane | 2009 | — | 958 | ||||
| 2008 | — | 232 | |||||
Robert E. Strenge | 2009 | 46,117 | — | ||||
| 2008 | 629,165 | — | |||||
Robert A. Warren | 2009 | 51,891 | — | ||||
| 2008 | 202,444 | — | |||||
| (a) | The amounts reported for Messrs. McNutt, Strenge, and Warren reflect the actuarial increase in the present value of their benefits under all of the company’s pension plans using interest rate and mortality rate assumptions consistent with those used in the company’s financial statements and include amounts such officers may not be currently entitled to receive because such amounts are not vested. For further information on the valuation method and all material assumptions applied in quantifying these amounts, please refer to the company’s 2009 Annual Report on Form 10-K, Item 8. Notes to Consolidated Financial Statements, Footnote 14,Retirement and Benefit Plans. Messrs. Toeldte and Lane are not eligible to participate in the company’s pension plans. |
| Prior to the Acquisition, Mr. Strenge was a participant in the Boise Cascade Supplemental Early Retirement Plan for Executive Officers (the Boise Cascade SERP), which like the company’s SERP, provided unreduced early retirement benefits for eligible officers. The Boise Cascade SERP also provided an offset for amounts payable from a predecessor company’s plan so that only a portion of the benefit was payable from Boise Cascade. Upon the closing of the Acquisition, the Boise Cascade SERP obligations (and its predecessor company’s) were extinguished. Accordingly, Mr. Strenge’s SERP benefits became the company’s sole obligation, resulting in a substantial increase in the reportedChange in Pension Value for 2008 for Mr. Strenge. |
| For further information on the company’s pension plans, please refer to the sections of this Proxy Statement entitledEXECUTIVE COMPENSATION, Compensation Discussion and Analysis, Executive Compensation Program Elements, Retirement and Health BenefitsandCompensation Tables, Pension Benefits Table. |
| (b) | The amounts reported for Messrs. Toeldte and Lane reflect the above-market portion of the interest they earned on compensation they deferred in 2008. None of the named executive officers elected to defer any of their 2009 compensation under the company’s Deferred Compensation Plan. The above-market portion represents interest on deferred compensation that exceeds 120% of the applicable federal long-term rates, with compounding at the rate that corresponds most closely to the rate under the company’s plan (130% of Moody’s Composite Yields on Corporate Bonds). |
| For further information on the company’s Deferred Compensation Plan, please refer to the sections of this Proxy Statement entitledEXECUTIVE COMPENSATION, Compensation Discussion and Analysis, Executive Compensation Program Elements, Deferred Compensation Plan andCompensation Tables, Nonqualified Deferred Compensation Table. |
| 53 | |
| (6) | Amounts disclosed in theAll Other Compensationcolumn include the following: |
| Name | Year | Company- Contributions to Savings Plan ($) (a) | Company- Matching Contributions to Deferred ($) (a) | Company-Paid Portion of Executive Officer Life Insurance ($) (b) | Reportable Perquisites ($) (c) | |||||||||
Alexander Toeldte | 2009 | $ | 6,300 | $ | 17,718 | $ | 1,512 | $ | — | |||||
| 2008 | — | 42,918 | 300 | 14,141 | ||||||||||
Robert M. McNutt | 2009 | 9,242 | — | 1,320 | — | |||||||||
| 2008 | 1,964 | — | 300 | — | ||||||||||
Jeffrey P. Lane | 2009 | 9,155 | 4,132 | 1,512 | 38,227 | |||||||||
| 2008 | — | 13,775 | 354 | 51,814 | ||||||||||
Robert E. Strenge | 2009 | 10,763 | — | 9,921 | — | |||||||||
| 2008 | — | — | 8,771 | 108,768 | ||||||||||
Robert A. Warren | 2009 | 10,595 | — | 1,992 | — | |||||||||
| 2008 | 1,598 | — | 834 | — | ||||||||||
| (a) | The company’s Savings Plan is a defined contribution plan intended to be qualified under Section 401(a) of the Internal Revenue Code that contains a cash or deferred arrangement meeting the requirements of Section 401(k) of the Code. The company’s Deferred Compensation Plan is a nonqualified savings plan offered to key employees, including the named executive officers. Participants in the Deferred Compensation Plan may choose to have matching contributions made under the Deferred Compensation Plan in lieu of receiving matching contributions under the Savings Plan. |
| For further information on the company’s Deferred Compensation Plan, please refer to the sections of this Proxy Statement entitledEXECUTIVE COMPENSATION, Compensation Discussion and Analysis, Executive Compensation Program Elements, Deferred Compensation Plan andCompensation Tables, Nonqualified Deferred Compensation Table. |
| (b) | The company maintains two plans under which company paid life insurance is made available to its officers. Under its Salaried Employee Life Insurance Plan, the company provides, at its expense during each salaried employee’s period of employment, life insurance in an amount equal to the employee’s base salary. All of the company’s salaried employees, including its named executive officers, are covered by this plan. In addition, Mr. Strenge is eligible for and participated in the company’s Supplemental Life Plan, under which his company-paid life insurance benefit during employment is increased to two times his base salary. The plan also provides Mr. Strenge with a postretirement death benefit equal to one times his final base salary. |
| For further information on the company’s Supplemental Life Plan, please refer to the section of this Proxy Statement entitledEXECUTIVE COMPENSATION, Compensation Discussion and Analysis, Executive Compensation Program Elements, Supplemental Life Plan. |
| 54 | |
| (c) | 2009 Perquisites – The costs for 2009 perquisites the company provided to Messrs. Toeldte, McNutt, Strenge, and Warren are not reflected because the total amount for each officer did not exceed $10,000. Mr. Lane’s relocation expenses consisted of temporary living costs and return trips to his home in Atlanta, Georgia. None of the named executive officers had personal use of company-paid aircraft during 2009. |
| 2008 Perquisites– The costs for 2008 perquisites the company provided to Messrs. McNutt and Warren are not reflected because the total amount for each officer did not exceed $10,000. None of the named executive officers had personal use of company-paid aircraft during 2008. |
| The reportable perquisites for the named executive officers consisted of the following: |
| Name | Year | Nonbusiness ($) | Financial ($) | Legal Fees ($) | Relocation ($) | |||||||||
Alexander Toeldte | 2009 | $ | — | $ | — | $ | — | $ | — | |||||
| 2008 | 4,028 | 10,000 | 113 | — | ||||||||||
Robert M. McNutt | 2009 | — | — | — | — | |||||||||
| 2008 | — | — | — | — | ||||||||||
Jeffrey P. Lane | 2009 | 4,935 | 2,294 | — | 30,998 | |||||||||
| 2008 | 4,080 | 3,347 | — | 44,387 | ||||||||||
Robert E. Strenge | 2009 | — | — | — | — | |||||||||
| 2008 | — | 1,911 | — | 106,857 | ||||||||||
Robert A. Warren | 2009 | — | — | — | — | |||||||||
| 2008 | — | — | — | — | ||||||||||
| 55 | |
41
(b)The amounts reported for Messrs. Toeldte and Lane reflect the above-market portion of the interest they earned on their deferred compensation. Messrs. McNutt, Strenge, Warren, and Hewitt elected not to participate in the company's Deferred Compensation Plan during 2008. Mr. Weiss was not eligible to participate in the company's Deferred Compensation Plan.For further information on the company's Deferred Compensation Plan, please refer to the sections of this Proxy Statement entitledExecutive Compensation, Compensation Discussion and Analysis – Other Compensation and Benefit Plans, Deferred Compensation PlanandCompensation Tables – Nonqualified Deferred Compensation Table.
refer to the company's 2008 Annual Report on Form 10-K, Item 8. Notes to Consolidated Financial Statements, Footnote 14,Retirement and Benefit Plans. Messrs. Weiss, Toeldte, and Lane were not eligible to participate in the company's pension plans.
Prior to the Acquisition, Messrs. Strenge and Hewitt were participants in the Boise Cascade Supplemental Early Retirement Plan for Executive Officers (the Boise Cascade SERP) which, like the company's SERP, provided unreduced early retirement benefits for eligible officers. The Boise Cascade SERP also provided an offset for amounts payable from a predecessor company's plan so that only a portion of the benefit was payable from Boise Cascade. Upon the closing of the Acquisition, the Boise Cascade SERP obligations (and its predecessor company's) were extinguished. Accordingly, Messrs. Strenge and Hewitt's SERP benefits became the company's sole obligation, resulting in a substantial increase in the reportedChange in Pension Value for 2008 for these two Named Executive Officers.
For further information on the company's pension plans, please refer to the sections of this Proxy Statement entitledExecutive Compensation, Compensation Discussion and Analysis – Other Compensation and Benefit Plans, Pension Benefits andCompensation Tables – Pension Benefits Table.
(6)Amounts disclosed in theAll Other Compensationcolumn include the following:
| Name | Year | Company- Matching Contributions to Savings Plan(a) | Company-Matching Contributions to Deferred Compensation Plan(a) | Company-Paid Portion of Executive Officer Life Insurance(b) | Reportable Perquisites(c) | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jason G. Weiss | 2008 | $ | — | $ | — | $ | — | $ | 0 | ||||||||
| 2007 | — | — | — | 0 | |||||||||||||
Alexander Toeldte | 2008 | 0 | 42,918 | 300 | 14,141 | ||||||||||||
Robert M. McNutt | 2008 | 1,964 | 0 | 300 | — | ||||||||||||
Jeffrey P. Lane | 2008 | 0 | 13,775 | 354 | 51,814 | ||||||||||||
Robert E. Strenge | 2008 | 0 | 0 | 8,771 | 108,768 | ||||||||||||
Robert A. Warren | 2008 | 1,598 | 0 | 834 | — | ||||||||||||
Miles A. Hewitt | 2008 | 0 | 0 | 8,849 | 556,759 | ||||||||||||
(a)The company's Savings Plan is a defined contribution plan intended to be qualified under Section 401(a) of the Internal Revenue Code that contains a cash or deferred arrangement meeting the requirements of Section 401(k) of the Code. The company's Deferred Compensation Plan is a nonqualified savings plan offered to key employees. Participants in the Deferred Compensation Plan may choose to have matching contributions made under
42
(b)Mr. Weiss was not eligible to participate in the company's elected officer life insurance plans.(c)The company did not provide Mr. Weiss with any perquisites in 2008 or 2007. The only perquisites provided to Messrs. McNutt and Warren in 2008 were financial counseling services, which costs are not reflected because the total amount for each officer did not exceed $10,000.On May 2, 2008, Mr. Hewitt stepped down from his position as senior vice president, Paper. The severance payment of $544,695 paid to Mr. Hewitt consisted of $527,000 (an amount equal to Mr. Hewitt's annual base salary and his target annual incentive award) and $17,695 (the value of Mr. Hewitt's unused and accrued time off). For further information on additional benefits Mr. Hewitt received upon his termination of employment, please refer to the section of this Proxy Statement entitledExecutive Compensation, Compensation Discussion and Analysis – Other Compensation and Benefit Plans, Agreements With, and Potential Payments to, Named Executive Officers.None of the Named Executive Officers had personal use of company-paid aircraft during 2008.The reportable perquisites for our Named Executive Officers consisted of the following:
the Deferred Compensation Plan in lieu of receiving matching contributions under the Savings Plan. Mr. Weiss was not eligible to participate in the company's Savings Plan or Deferred Compensation Plan.
For further information on the company's Deferred Compensation Plan, please refer to the sections of this Proxy Statement entitledExecutive Compensation, Compensation Discussion and Analysis – Other Compensation and Benefit Plans, Deferred Compensation Plan andCompensation Tables – Nonqualified Deferred Compensation Table.
| Name | Year | Nonbusiness Memberships | Financial Counseling | Legal Fees | Relocation Expenses | Severance Payments | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jason G. Weiss | 2008 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||
| 2007 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Alexander Toeldte | 2008 | 4,028 | 10,000 | 113 | 0 | 0 | ||||||||||||||
Robert M. McNutt | 2008 | 0 | — | 0 | 0 | 0 | ||||||||||||||
Jeffrey P. Lane | 2008 | 4,080 | 3,347 | 0 | 44,387 | 0 | ||||||||||||||
Robert E. Strenge | 2008 | 0 | 1,911 | 0 | 106,857 | 0 | ||||||||||||||
Robert A. Warren | 2008 | 0 | — | 0 | 0 | 0 | ||||||||||||||
Miles A. Hewitt | 2008 | 0 | 9,522 | 2,542 | 0 | 544,695 | ||||||||||||||
43
Grants of Plan-Based Awards Table
The following table presents information concerning each grant of a non-equity and equity award made to Messrs. Toeldte, McNutt, Lane, Strenge, and Warrenthe named executive officers in 20082009 under the Boise Inc. Incentive and Performance Plan. No payouts were made to these Named Executive Officers under the 2008 non-equity incentive plan awards, because the goals
Name
| Grant
| Compen-
| Estimated Future Payouts Under Non-Equity Incentive | Estimated Future Payouts Under Equity Incentive Plan Awards (3) | Grant Date ($) (4)
| |||||||||||||||||
Threshold ($)
| Target ($)
| Maximum ($)
| Threshold (#)
| Target (#)
| Maximum (#)
| |||||||||||||||||
Alexander Toeldte | ||||||||||||||||||||||
2009 Non-Equity Award | — | 2/19/09 | $ | 440,000 | $ | 800,000 | $ | 1,800,000 | — | — | — | $ | — | |||||||||
2009 Equity Award | 3/16/09 | 2/19/09 | — | — | — | — | 960,000 | — | 412,800 | |||||||||||||
Robert M. McNutt | ||||||||||||||||||||||
2009 Non-Equity Award | — | 2/19/09 | 125,840 | 228,800 | 514,800 | — | — | — | — | |||||||||||||
2009 Equity Award | 3/16/09 | 2/19/09 | — | — | — | — | 398,500 | — | 171,355 | |||||||||||||
Jeffrey P. Lane | ||||||||||||||||||||||
2009 Non-Equity Award | — | 2/19/09 | 135,850 | 247,000 | 555,750 | — | — | — | — | |||||||||||||
2009 Equity Award | 3/16/09 | 2/19/09 | — | — | — | — | 230,000 | — | 98,900 | |||||||||||||
Robert E. Strenge | ||||||||||||||||||||||
2009 Non-Equity Award | — | 2/19/09 | 107,250 | 195,000 | 438,750 | — | — | — | — | |||||||||||||
2009 Equity Award | 3/16/09 | 2/19/09 | — | — | — | — | 230,000 | — | 98,900 | |||||||||||||
Robert A. Warren | ||||||||||||||||||||||
2009 Non-Equity Award | — | 2/19/09 | 116,188 | 211,250 | 475,313 | — | — | — | — | |||||||||||||
2009 Equity Award | 3/16/09 | 2/19/09 | — | — | — | — | 290,000 | — | 124,700 | |||||||||||||
| (1) | It is the Compensation Committee’s practice to award long-term equity incentives to the company’s named executive officers with a March 15 grant date. If March 15 falls on a weekend or holiday, then the grant date is the next business day. |
| (2) | Reflects possible 2009 non-equity incentive plan award payouts for the named executive officers under the Boise Inc. Incentive and Performance Plan.Threshold,Target, andMaximum payouts reported are calculated based on the named executive officer’s annual pay rate in effect at the end of the 2009 calendar year. It is possible to have a zero payout if the award criteria are not met. |
| For further information on the terms of these 2009 non-equity incentive plan awards, please refer to the sections of this Proxy Statement entitledEXECUTIVE COMPENSATION, Compensation Discussion and Analysis, Executive Compensation Program Elements, Short-Term Incentive Compensation andCompensation Tables, Summary Compensation Table. |
| (3) | The 2009 equity incentive plan awards consisted of 100% service-condition vesting restricted stock or restricted stock units. Twenty percent of the shares or units vested on March 15, 2010; 20% will vest on March 15, 2011; and the remaining 60% will vest on March 15, 2012. TheTarget amounts reported are 100% of the 2009 equity incentive plan awards and assume the named executive officers remain employed with the company until they fully vest on March 15, 2012. |
| (4) | Values reported for the 2009 equity incentive plan awards reflect the grant date fair value of each equity award computed in accordance with FASB ASC Topic 718. |
| 56 | |
Outstanding Equity Awards at Fiscal Year-End Table Option Exercises and Stock Vested Table, andSeverance Tables.
(3)Values reported for the 2008 equity incentive plan awards reflect the grant date fair value of each equity award computed in accordance with SFAS No. 123(R),Share-Based Payment.
Outstanding Equity Awards at Fiscal Year-End Table
The following table presents information concerning the 2009 and 2008 restricted stock and restricted stock unitequity incentive plan awards made to Messrs. Toeldte, McNutt, Lane, Strenge, and Warrenthe named executive officers under the Boise Inc. Incentive and Performance Plan that had not vested as of December 31, 2008.2009.
| Stock Awards | ||||||
| Name | Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights That Have Not Vested (#) (1) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested ($) (2) | ||||
Alexander Toeldte | ||||||
2009 Equity Award | 960,000 | $ | 5,097,600 | |||
2008 Equity Award | 878,933 | 4,667,134 | ||||
Robert M. McNutt | ||||||
2009 Equity Award | 398,500 | 2,116,035 | ||||
2008 Equity Award | 192,333 | 1,021,288 | ||||
Jeffrey P. Lane | ||||||
2009 Equity Award | 230,000 | 1,221,300 | ||||
2008 Equity Award | 228,933 | 1,215,634 | ||||
Robert E. Strenge | ||||||
2009 Equity Award | 230,000 | 1,221,300 | ||||
2008 Equity Award | 96,433 | 512,059 | ||||
Robert A. Warren | ||||||
2009 Equity Award | 290,000 | 1,539,900 | ||||
2008 Equity Award | 96,433 | 512,059 | ||||
| | Stock Awards | ||||||
|---|---|---|---|---|---|---|---|
| Name | Equity Incentive Plan Awards: Number of Unearned Shares, Units, Or Other Rights That Have Not Vested (#)(1) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested ($)(2) | |||||
Jason G. Weiss | — | $ | — | ||||
Alexander Toeldte | 975,100 | 419,293 | |||||
Robert M. McNutt | 213,400 | 91,762 | |||||
Jeffrey P. Lane | 254,000 | 109,220 | |||||
Robert E. Strenge | 107,000 | 46,010 | |||||
Robert A. Warren | 107,000 | 46,010 | |||||
Miles A. Hewitt | — | — | |||||
| (1) | 2009 Equity Awards – No portion of the 2009 equity incentive plan awards vested during 2009. For further information on the vesting terms of the 2009 equity incentive plan awards, please refer to the section of this Proxy Statement entitledEXECUTIVE COMPENSATION, Compensation Discussion and Analysis, Executive Compensation Program Elements, Long-Term Incentive Compensation. |
| 2008 Equity Awards – A portion of the 2008 equity incentive plan awards vests with the passage of time (service-condition vesting) and the remaining portion vests only if the company achieves specific performance hurdles (market-condition vesting). The first 1/3 of the service-condition vesting restricted stock and restricted stock units vested in full on March 2, 2009; the second 1/3 vested in full on March 1, 2010; and the third 1/3 will vest on February 28, 2011. This vesting schedule results in fractional shares and the company repurchases the fractional shares as they vest. A portion of the market-condition vesting restricted stock and restricted stock units will vest on February 28, 2011, if at some point before that date the company’s stock price has closed at or above $10.00 on 20 of any consecutive 30 trading days. The other portion of the market-condition vesting restricted stock and restricted stock units will vest on February 28, 2011, if at some point before that date the company’s stock price has closed at or above $12.50 on 20 of any consecutive 30 trading days. |
(1)For further information on the vesting terms of these 2008 equity incentive plan awards, please refer to the section of this Proxy Statement entitledExecutive Compensation, Compensation Discussion and Analysis – Long-Term Incentive Compensation.(2)The values reported reflect the number of unvested shares or units held by each of the Named Executive Officers as of December 31, 2008, multiplied by the company's closing stock price on December 31, 2008 ($0.43 per share).
| (2) | The values reported reflect the number of unvested shares or units held by each of the named executive officers as of December 31, 2009, multiplied by the company’s closing stock price on December 31, 2009 ($5.31/share). On March 15, 2010, the company’s closing stock price was $5.46 per share. The company’s stock price would have to increase 83% for the 2008 $10.00-per-share market-condition vesting restricted stock and restricted stock units to vest in 2011 and 129% for the 2008 $12.50-per-share market-condition vesting restricted stock and restricted stock units to vest in 2011. |
| 57 | |
Option Exercises and Stock Vested Table
NoneNo portion of the 2008 restricted stock and restricted stock unit2009 equity incentive plan awards made to Messrs. Toeldte, McNutt, Lane, Strenge, and Warrenthe named executive officers under the Boise Inc. Incentive and Performance Plan vested during 2008.2009. The following table presents information concerning the 2008 equity incentive plan awards made to the named executive officers under the Boise Inc. Incentive and Performance Plan that had vested as of December 31, 2009.
45
| Stock Awards | ||||
| Name | Number of Shares on Vesting (#) (1) | Value Realized on Vesting ($) (2) | ||
Alexander Toeldte | ||||
2008 Equity Award | 96,166 | $ 24,042 | ||
Robert M. McNutt | ||||
2008 Equity Award | 21,066 | 5,267 | ||
Jeffrey P. Lane | ||||
2008 Equity Award | 25,066 | 6,267 | ||
Robert E. Strenge | ||||
2008 Equity Award | 10,566 | 2,642 | ||
Robert A. Warren | ||||
2008 Equity Award | 10,566 | 2,642 | ||
| (1) | A portion of the 2008 equity incentive plan awards vests with the passage of time (service-condition vesting) and the remaining portion vests only if the company achieves specific performance hurdles (market-condition vesting). The first 1/3 of the service-condition vesting restricted stock and restricted stock units vested in full on March 2, 2009; the second 1/3 vested in full on March 1, 2010; and the third 1/3 will vest on February 28, 2011. This vesting schedule results in fractional shares and the company repurchases the fractional shares as they vest. A portion of the market-condition vesting restricted stock and restricted stock units will vest on February 28, 2011, if at some point before that date the company’s stock price has closed at or above $10.00 on 20 of any consecutive 30 trading days. The other portion of the market-condition vesting restricted stock and restricted stock units will vest on February 28, 2011, if at some point before that date the company’s stock price has closed at or above $12.50 on 20 of any consecutive 30 trading days. |
| (2) | The values reported reflect the number of vested shares or units held by each of the named executive officers that vested during the year ending on December 31, 2009, multiplied by the company’s closing stock price on March 2, 2009, which was the vesting date ($0.25/share). |
| 58 | |
The following table presents the actuarial present value of accumulated benefits payable to Messrs. McNutt, Strenge, Warren, and Hewitt, includingWarren, the number of years of service credited to each of them, and payments made during 2009 under the company'scompany’s Salaried Pension Plan, SUPP, and SERP.SERP, and related obligations. For further information on the valuation method and all material assumptions applied in quantifying these amounts, please refer to the company's 2008company’s 2009 Annual Report on Form 10-K, Item 8. Notes to Consolidated Financial Statements, Footnote 14,Retirement and Benefit Plans. Messrs. McNutt, Strenge, Warren, and Hewitt did not receive any payments under any of the company's pension plans during 2008. Messrs. Weiss, Toeldte and Lane wereare not eligible to participate in the company'scompany’s pension plans.
For further information on the company'scompany’s pension plans, please refer to the sections of this Proxy Statement entitledExecutive Compensation,EXECUTIVE COMPENSATION, Compensation Discussion and Analysis, – OtherExecutive Compensation Program Elements, Retirement and Benefit Plans, PensionHealth Benefits andCompensation Tables, – Summary Compensation Table.
| Name | Plan Name | Number of Years (#)(1) | Present Value of ($) | Payments During Last Fiscal Year ($)(2) | ||||||
Robert M. McNutt | Salaried Pension Plan | 24.3 | $ | 342,062 | $ | — | ||||
| SUPP | 24.3 | 82,914 | 84,192 | |||||||
| SERP (3) | — | — | — | |||||||
Robert E. Strenge | Salaried Pension Plan | 21.3 | 358,836 | — | ||||||
| SUPP | 21.3 | 306,064 | — | |||||||
| SERP (3) | 21.3 | 682,096 | — | |||||||
Robert A. Warren | Salaried Pension Plan | 26.6 | 575,262 | — | ||||||
| SUPP | 26.6 | 77,011 | — | |||||||
| SERP (3) | — | — | — | |||||||
| Name | Plan Name | Number of Years Credited Service (#)(1) | Present Value of Accumulated Benefit ($) | ||||||
|---|---|---|---|---|---|---|---|---|---|
Jason G. Weiss | Salaried Pension Plan | — | $ | — | |||||
| SUPP | — | — | |||||||
| SERP | — | — | |||||||
Alexander Toeldte | Salaried Pension Plan | — | — | ||||||
| SUPP | — | — | |||||||
| SERP | — | — | |||||||
Robert M. McNutt | Salaried Pension Plan | 24.0 | 313,817 | ||||||
| SUPP | 24.0 | 155,640 | |||||||
| SERP(2) | — | — | |||||||
Jeffrey P. Lane | Salaried Pension Plan | — | — | ||||||
| SUPP | — | — | |||||||
| SERP | — | — | |||||||
Robert E. Strenge | Salaried Pension Plan | 21.0 | 328,000 | ||||||
| SUPP | 21.0 | 247,447 | |||||||
| SERP(2) | 21.0 | 725,432 | |||||||
Robert A. Warren | Salaried Pension Plan | 26.3 | 531,548 | ||||||
| SUPP | 26.3 | 68,834 | |||||||
| SERP(2) | — | — | |||||||
Miles A. Hewitt | Salaried Pension Plan | 26.3 | 337,139 | ||||||
| SUPP | 26.3 | 262,570 | |||||||
| SERP(2) | 26.3 | 695,139 | |||||||
| (1) | Number of years credited service for Messrs. McNutt, Strenge, and Warren include amounts attributable to their employment with OfficeMax Incorporated (formerly Boise Cascade Corporation) prior to Madison Dearborn Partners’ acquisition of the forest products assets from OfficeMax on October 29, 2004, and their employment with Boise Cascade, L.L.C. |
(1)Number of years credited service for Messrs. McNutt, Strenge, Warren, and Hewitt include amounts attributable to their employment with OfficeMax Incorporated (formerly Boise Cascade Corporation) prior to Madison Dearborn Partners' acquisition of the forest products assets from OfficeMax on October 29, 2004, and their employment with Boise Cascade, L.L.C.(2)Messrs. McNutt and Warren were not eligible to participate in the SERP. The value reported for Mr. Strenge assumes he remains employed with the company until age 55 and becomes vested in the SERP. On May 2, 2008, Mr. Hewitt stepped down from his position as senior vice president, Paper. In connection with his departure from the company, the Compensation Committee approved the entry into a severance arrangement with Mr. Hewitt that included, among other things, a nonqualified pension under the SERP beginning January 1, 2014.
| (2) | The 2009 SUPP payment made to Mr. McNutt occurred as a result of his termination of employment from Boise Cascade, L.L.C. in 2008. The payment was made according to Mr. McNutt’s existing election under the Boise Cascade SUPP. Boise Inc. assumed the responsibility to make payments under the Boise Cascade SUPP as part of the Acquisition. Because these benefits are the contractual responsibility of Boise Inc., Mr. McNutt’s payment is reported here even though the SUPP continues to be sponsored by Boise Cascade. |
| (3) | Messrs. McNutt and Warren are not eligible to participate in the SERP. Mr. Strenge became vested in the SERP as of December 31, 2009. |
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Nonqualified Deferred Compensation Table
Messrs. Toeldte and Lane wereNone of the only Named Executive Officers whonamed executive officers elected to participate indefer any of their 2009 compensation under the company'scompany’s Deferred Compensation Plan in 2008.Plan. Messrs. Toeldte and Lane did not have any withdrawals or distributions under the plan during 2008. Mr. Weiss was not eligible to participate in the company's Deferred Compensation Plan.2009.
For further information on the company'scompany’s Deferred Compensation Plan, please refer to the sections of this Proxy Statement entitledExecutive Compensation,EXECUTIVE COMPENSATION, Compensation Discussion and Analysis, – OtherExecutive Compensation and Benefit Plans,Program Elements, Deferred Compensation Plan andCompensation Tables, – Summary Compensation Table.
| Name | Executive ($) | Registrant ($) (1) | Aggregate in Last FY ($) (2) | Aggregate at Last FYE ($) | ||||||||
Alexander Toeldte | $ | — | $ | 17,718 | $ | 6,509 | $ | 87,336 | ||||
Jeffrey P. Lane | — | 4,132 | 2,279 | 30,393 | ||||||||
| Name | Executive Contributions in Last FY ($)(1) | Registrant Contributions in Last FY ($)(2) | Aggregate Earnings in Last FY ($)(3) | Aggregate Balance at Last FYE ($) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jason G. Weiss | $ | — | $ | — | $ | — | $ | — | |||||
Alexander Toeldte | 36,000 | 25,200 | 1,910 | 63,110 | |||||||||
Robert M. McNutt | — | — | — | — | |||||||||
Jeffrey P. Lane | 13,775 | 9,643 | 563 | 23,981 | |||||||||
Robert E. Strenge | — | — | — | — | |||||||||
Robert A. Warren | — | — | — | — | |||||||||
Miles A. Hewitt | — | — | — | — | |||||||||
| (1) | The amounts reported for Messrs. Toeldte and Lane reflect a discretionary match made by the company in early 2009 for amounts deferred in 2008. These amounts are included in the 2009All Other Compensationcolumn of theSummary Compensation Table. |
(1)These amounts are included in the 2008Salarycolumn of theSummary Compensation Table.(2)These amounts are included in the 2008All Other Compensationcolumn of theSummary Compensation Table.(3)The above-market portions of these amounts are included in the 2008Change in Pension Value and Nonqualified Deferred Compensation Earningscolumn of theSummary Compensation Table.
| (2) | The above-market portion of these amounts are included in the 2009Change in Pension Value and Nonqualified Deferred Compensation Earnings column of theSummary Compensation Table. |
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47
The following tables present an estimate of the compensation the company would have been required to pay Messrs. Toeldte, McNutt, Lane, Strenge, and Warrenthe named executive officers in the event of termination of these employees with the company due to:
•Voluntary termination with good reason or involuntary termination without cause;•Involuntary termination due to change in control;•Involuntary termination due to restructuring;•For-cause termination or voluntary termination without good reason; or•Disability or death.
| ¡ | Voluntary termination with good reason or involuntary termination without cause; |
| ¡ | Involuntary termination due to change in control; |
| ¡ | Involuntary termination due to restructuring; |
| ¡ | For-cause termination or voluntary termination without good reason; or |
| ¡ | Disability or death. |
The compensation shown assumes termination was effective as of December 31, 2008.2009, and pursuant to the severance agreements in place with the named executive officers as of that date. The compensation the company would actually be required to pay thesethe named executive officers would only be determinable at the time of separation.
For further information on the severance agreements the company entered into with Messrs. Toeldte, McNutt, Lane, Strenge, and Warren,the named executive officers, please refer to the section of this Proxy Statement entitledExecutive Compensation,EXECUTIVE COMPENSATION, Compensation Discussion and Analysis, – OtherExecutive Compensation and Benefit Plans,Program Elements, Agreements With, and Potential Payments to, Named Executive Officers.
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For information on the compensation the company paid Mr. Hewitt upon his termination of employment on May 2, 2008, please refer to the section of this Proxy Statement entitledExecutive Compensation, Compensation Discussion and Analysis – Other Compensation and Benefit Plans, Agreements With, and Potential Payments to, Named Executive Officers andCompensation Tables – Summary Compensation Table andPension Benefits Table.Alexander Toeldte
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Alexander Toeldte
President and Chief Executive Officer
| Benefits | Voluntary Termination With Good Reason or Involuntary Termination Without Cause(1) | Involuntary Termination Due to Change in Control(1) | Involuntary Termination Due to Restructuring(1) | For-Cause Termination or Voluntary Termination Without Good Reason(1) | Disability or Death(1) | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Base Salary (2 × Base Salary of $800,000) | $ | 1,600,000 | $ | 1,600,000 | $ | 1,600,000 | $ | 0 | $ | 0 | ||||||
Incentive and Performance Plan (2 × Target 100% Award) | 1,600,000 | 1,600,000 | 1,600,000 | 0 | 0 | |||||||||||
Value of Accelerated Vesting of Restricted Stock(2) | 57,848 | 419,293 | 127,316 | 0 | 127,316 | |||||||||||
Insurance – Healthcare, Disability, and Accident (For 36 Months) | 34,142 | 34,142 | 34,142 | 0 | 0 | |||||||||||
Financial Counseling (3 × $5,000 Annual Allowance) | 15,000 | 15,000 | 15,000 | 0 | 0 | |||||||||||
Unused Vacation (166 Hours) | 63,846 | 63,846 | 63,846 | 63,846 | 63,846 | |||||||||||
TOTAL(3) | $ | 3,370,836 | $ | 3,732,281 | $ | 3,440,304 | $ | 63,846 | $ | 191,162 | ||||||
(1)Amounts shown assume Mr. Toeldte's termination was effective as of December 31, 2008. Mr. Toeldte would have received his base salary through the date of termination.(2)Amounts shown are based on various vesting scenarios as set forth in Mr. Toeldte's Restricted Stock Award Agreement.(3)Total amounts shown are in addition to payments Mr. Toeldte would have received under the company's Savings Plan and Deferred Compensation Plan. Mr. Toeldte's Deferred Compensation Plan balance would have been distributed in accordance with his distribution election.
For information on Mr. Toeldte's Deferred Compensation Plan balance, please refer to the section of this Proxy Statement entitledExecutive Compensation, Compensation Tables – Nonqualified Deferred Compensation Table.
49
| Benefits | Voluntary Good Reason or Involuntary ($) (1) | Involuntary ($) (1) | Involuntary ($) (1) | For-Cause or Voluntary Good Reason ($) (1) | Disability or Death ($) (1) | ||||||||||
Severance Payment (2) | $ | 3,200,000 | $ | 3,200,000 | $ | 3,200,000 | $ | — | $ | — | |||||
Value of Accelerated Vesting of Restricted Stock (3) | 2,795,917 | 9,764,736 | 4,940,533 | — | 4,940,533 | ||||||||||
Insurance – Healthcare, Disability, and Accident (For 36 Months) | 37,742 | 37,742 | 37,742 | — | — | ||||||||||
Financial Counseling (3 x $5,000 Annual Allowance) | 15,000 | 15,000 | 15,000 | — | — | ||||||||||
Unused Vacation (156 Hours) | 60,000 | 60,000 | 60,000 | 60,000 | 60,000 | ||||||||||
TOTAL (4) | $ | 6,108,659 | $ | 13,077,478 | $ | 8,253,275 | $ | 60,000 | $ | 5,000,533 | |||||
| (1) | Amounts shown assume a termination of Mr. Toeldte’s employment was effective as of December 31, 2009. Mr. Toeldte would have received his base salary through the date of termination. |
| (2) | Amounts shown assume a termination of Mr. Toeldte’s employment was effective as of December 31, 2009, and subject to the terms of his severance agreement in place at that time, which provided for a severance payment equal to two times his base salary plus two times his target 100% short-term incentive award. Mr. Toeldte’s severance agreement was recently amended to remove the reference to target short-term incentive and to provide instead for a severance payment equal to 4 times his annual base salary at the rate in effect at the time he receives a notice of termination. |
| (3) | Amounts shown are based on various vesting scenarios as set forth in Mr. Toeldte’s Restricted Stock Award Agreements. |
| (4) | Total amounts shown are in addition to payments Mr. Toeldte would have received under the company’s Savings Plan and Deferred Compensation Plan. Mr. Toeldte’s Deferred Compensation Plan balance would have been distributed in accordance with his distribution election. For information on Mr. Toeldte’s Deferred Compensation Plan balance, please refer to the section of this Proxy Statement entitledEXECUTIVE COMPENSATION, Compensation Tables, Nonqualified Deferred Compensation Table. |
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Senior Vice President and Chief Financial Officer
| Benefits | Voluntary Termination With Good Reason or Involuntary Termination Without Cause(1) | Involuntary Termination Due to Change in Control(1) | Involuntary Termination Due to Restructuring(1) | For-Cause Termination or Voluntary Termination Without Good Reason(1) | Disability or Death(1) | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Base Salary (2 × Base Salary of $352,000) | $ | 704,000 | $ | 704,000 | $ | 704,000 | $ | 0 | $ | 0 | ||||||
Incentive and Performance Plan (2 × Target 65% Award) | 457,600 | 457,600 | 457,600 | 0 | 0 | |||||||||||
Value of Accelerated Vesting of Restricted Stock(2) | 12,672 | 91,762 | 27,869 | 0 | 27,869 | |||||||||||
Insurance – Healthcare, Disability, and Accident (For 12 Months) | 11,381 | 11,381 | 11,381 | 0 | 0 | |||||||||||
Financial Counseling (1 × $5,000 Annual Allowance) | 5,000 | 5,000 | 5,000 | 0 | 0 | |||||||||||
Unused Vacation (260 Hours) | 44,000 | 44,000 | 44,000 | 44,000 | 44,000 | |||||||||||
TOTAL(3) | $ | 1,234,653 | $ | 1,313,743 | $ | 1,249,850 | $ | 44,000 | $ | 71,869 | ||||||
(1)Amounts shown assume Mr. McNutt's termination was effective as of December 31, 2008. Mr. McNutt would have received his base salary through the date of termination.(2)Amounts shown are based on various vesting scenarios as set forth in Mr. McNutt's Restricted Stock Award Agreement.(3)Total amounts shown are in addition to payments Mr. McNutt would have received under the company's Savings Plan.
50
| Benefits | Voluntary Good Reason or Involuntary ($)(1) | Involuntary ($)(1) | Involuntary ($)(1) | For-Cause or Voluntary Good Reason ($)(1) | Disability or Death ($)(1) | ||||||||||
| Severance Payment (2) | $ | 1,161,600 | $ | 1,161,600 | $ | 1,161,600 | $ | — | $ | — | |||||
Value of Accelerated Vesting of Restricted Stock (3) | 1,010,704 | 3,137,325 | 1,479,858 | — | 1,479,858 | ||||||||||
Insurance – Healthcare, Disability, and Accident (For 12 Months) | 12,389 | 12,389 | 12,389 | — | — | ||||||||||
Financial Counseling (1 x $5,000 Annual Allowance) | 5,000 | 5,000 | 5,000 | — | — | ||||||||||
Unused Vacation (96 Hours) | 16,246 | 16,246 | 16,246 | 16,246 | 16,246 | ||||||||||
TOTAL(4) | $ | 2,205,939 | $ | 4,332,560 | $ | 2,675,093 | $ | 16,246 | $ | 1,496,104 | |||||
| (1) | Amounts shown assume a termination of Mr. McNutt’s employment was effective as of December 31, 2009. Mr. McNutt would have received his base salary through the date of termination. |
| (2) | Amounts shown assume a termination of Mr. McNutt’s employment was effective as of December 31, 2009, and subject to the terms of his severance agreement in place at that time, which provided for a severance payment equal to two times his base salary plus two times his target 65% short-term incentive award. Mr. McNutt’s severance agreement was recently amended to remove the reference to target short-term incentive and to provide instead for a severance payment equal to 3 times his annual base salary at the rate in effect at the time he receives a notice of termination. |
| (3) | Amounts shown are based on various vesting scenarios as set forth in Mr. McNutt’s Restricted Stock Award Agreements. |
| (4) | Total amounts shown are in addition to payments Mr. McNutt would have received under the company’s Savings Plan, Salaried Pension Plan, and SUPP. For information on Mr. McNutt’s Salaried Pension Plan and SUPP balances, please refer to the section of this Proxy Statement entitledEXECUTIVE COMPENSATION, Compensation Tables, Pension Benefits Table. |
| 63 | |
Senior Vice President and General Manager, Packaging
| Benefits | Voluntary Termination With Good Reason or Involuntary Termination Without Cause(1) | Involuntary Termination Due to Change in Control(1) | Involuntary Termination Due to Restructuring(1) | For-Cause Termination or Voluntary Termination Without Good Reason(1) | Disability or Death(1) | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Base Salary (1 × Base Salary of $380,000) | $ | 380,000 | $ | 380,000 | $ | 380,000 | $ | 0 | $ | 0 | ||||||
Incentive and Performance Plan (1 × Target 65% Award) | 247,000 | 247,000 | 247,000 | 0 | 0 | |||||||||||
Value of Accelerated Vesting of Restricted Stock(2) | 15,079 | 109,220 | 33,169 | 0 | 33,169 | |||||||||||
Insurance – Healthcare, Disability, and Accident (For 12 Months) | 10,481 | 10,481 | 10,481 | 0 | 0 | |||||||||||
Financial Counseling (1 × $5,000 Annual Allowance) | 5,000 | 5,000 | 5,000 | 0 | 0 | |||||||||||
Unused Vacation (7 Hours) | 1,279 | 1,279 | 1,279 | 1,279 | 1,279 | |||||||||||
TOTAL(3) | $ | 658,839 | $ | 752,980 | $ | 676,929 | $ | 1,279 | $ | 34,448 | ||||||
(1)Amounts shown assume Mr. Lane's termination was effective as of December 31, 2008. Mr. Lane would have received his base salary through the date of termination.(2)Amounts shown are based on various vesting scenarios as set forth in Mr. Lane's Restricted Stock Award Agreement.(3)Total amounts shown are in addition to payments Mr. Lane would have received under the company's Savings Plan and Deferred Compensation Plan. Mr. Lane's Deferred Compensation Plan balance would have been distributed in accordance with his distribution election.
For information on Mr. Lane's Deferred Compensation Plan balance, please refer to the section of this Proxy Statement entitledExecutive Compensation, Compensation Tables – Nonqualified Deferred Compensation Table.
51
| Benefits | Voluntary Good Reason or Involuntary ($)(1) | Involuntary ($)(1) | Involuntary ($)(1) | For-Cause or Voluntary Good Reason ($)(1) | Disability or Death ($)(1) | ||||||||||
Severance Payment (2) | $ | 627,000 | $ | 627,000 | $ | 627,000 | $ | — | $ | — | |||||
Value of Accelerated Vesting of Restricted Stock (3) | 685,969 | 2,436,936 | 1,244,456 | — | 1,244,456 | ||||||||||
Insurance – Healthcare, Disability, and Accident (For 12 Months) | 12,581 | 12,581 | 12,581 | — | — | ||||||||||
Financial Counseling (1 x $5,000 Annual Allowance) | 5,000 | 5,000 | 5,000 | — | — | ||||||||||
Unused Vacation (12 Hours) | 2,192 | 2,192 | 2,192 | 2,192 | 2,192 | ||||||||||
TOTAL(4) | $ | 1,332,742 | $ | 3,083,709 | $ | 1,891,229 | $ | 2,192 | $ | 1,246,648 | |||||
| (1) | Amounts shown assume a termination of Mr. Lane’s employment was effective as of December 31, 2009. Mr. Lane would have received his base salary through the date of termination. |
| (2) | Amounts shown assume a termination of Mr. Lane’s employment was effective as of December 31, 2009, and subject to the terms of his severance agreement in place at that time, which provided for a severance payment equal to one times his base salary plus one times his target 65% short-term incentive award. Mr. Lane’s severance agreement was recently amended to remove the reference to target short-term incentive and to provide instead for a severance payment equal to 1.65 times his annual base salary at the rate in effect at the time he receives a notice of termination. |
| (3) | Amounts shown are based on various vesting scenarios as set forth in Mr. Lane’s Restricted Stock Award Agreements. |
| (4) | Total amounts shown are in addition to payments Mr. Lane would have received under the company’s Savings Plan and Deferred Compensation Plan. Mr. Lane’s Deferred Compensation Plan balance would have been distributed in accordance with his distribution election. For information on Mr. Lane’s Deferred Compensation Plan balance, please refer to the section of this Proxy Statement entitledEXECUTIVE COMPENSATION, Compensation Tables, Nonqualified Deferred Compensation Table. |
| 64 | |
Senior Vice President, Manufacturing
| Benefits | Voluntary Good Reason or Involuntary ($)(1) | Involuntary ($)(1) | Involuntary ($)(1) | For-Cause or Voluntary Good Reason ($)(1) | Disability or Death ($)(1) | ||||||||||
Severance Payment (2) | $ | 495,000 | $ | 495,000 | $ | 495,000 | $ | — | $ | — | |||||
Value of Accelerated Vesting of Restricted Stock Units (3) | 570,683 | 1,733,361 | 805,885 | — | 805,885 | ||||||||||
Life Insurance Premiums (For 12 Months) | 9,729 | 9,729 | 9,729 | — | — | ||||||||||
Insurance – Healthcare, Disability, and Accident (For 12 Months) | 8,453 | 8,453 | 8,453 | — | — | ||||||||||
Financial Counseling (1 x $5,000 Annual Allowance) | 5,000 | 5,000 | 5,000 | — | — | ||||||||||
Unused Vacation (104 Hours) | 15,000 | 15,000 | 15,000 | 15,000 | 15,000 | ||||||||||
TOTAL (4) | $ | 1,103,865 | $ | 2,266,543 | $ | 1,339,067 | $ | 15,000 | $ | 820,885 | |||||
| Benefits | Voluntary Termination With Good Reason or Involuntary Termination Without Cause(1) | Involuntary Termination Due to Change in Control(1) | Involuntary Termination Due to Restructuring(1) | For-Cause Termination or Voluntary Termination Without Good Reason(1) | Disability or Death(1) | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Base Salary (1 × Base Salary of $300,000) | $ | 300,000 | $ | 300,000 | $ | 300,000 | $ | 0 | $ | 0 | ||||||
Incentive and Performance Plan (1 × Target 65% Award) | 195,000 | 195,000 | 195,000 | 0 | 0 | |||||||||||
Value of Accelerated Vesting of Restricted Stock Units(2) | 6,356 | 46,010 | 13,975 | 0 | 13,975 | |||||||||||
Life Insurance Premiums (For 12 Months) | 8,771 | 8,771 | 8,771 | 0 | 0 | |||||||||||
Insurance – Healthcare, Disability, and Accident (For 12 Months) | 7,445 | 7,445 | 7,445 | 0 | 0 | |||||||||||
Financial Counseling (1 × $5,000 Annual Allowance) | 5,000 | 5,000 | 5,000 | 0 | 0 | |||||||||||
Unused Vacation (94 Hours) | 13,558 | 13,558 | 13,558 | 13,558 | 13,558 | |||||||||||
TOTAL(3) | $ | 536,130 | $ | 575,784 | $ | 543,749 | $ | 13,558 | $ | 27,533 | ||||||
(1)Amounts shown assume Mr. Strenge's termination was effective as of December 31, 2008.(1) Amounts shown assume a termination of Mr. Strenge’s employment was effective as of December 31, 2009. Mr. Strenge would have received his base salary through the date of termination.
(2)Amounts shown are based on various vesting scenarios as set forth in Mr. Strenge's Restricted Stock Unit Award Agreement.(3)Total amounts shown are in addition to payments Mr. Strenge would have received under the company's Savings Plan.
PLEASE FOLD AND DETACH HERE AND READ THE REVERSE SIDE 