6, 2013xξ¨Preliminary Proxy Statement¨ Preliminary Proxy Statement ¨ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6 (e)(2)) x Definitive Proxy Statement ¨ Definitive Additional Materials ¨ Soliciting Material Pursuant to § 240.14a-12 xξ No fee required. ¨¨ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. 1) Title of each class of securities to which transaction applies: 2) Aggregate number of securities to which transaction applies: 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): 4) Proposed maximum aggregate value of transaction: 5) Total fee paid ¨¨ Fee paid previously with preliminary materials. ¨¨ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. 1) Amount Previously Paid: 2) Form, Schedule or Registration Statement No.: 3) Filing Party: 4) Date Filed: 2, 2011Potlatch Corporation601 West First Ave., Suite 1600Spokane, Washington 99201April 1, 2011NOTICE OF ANNUAL MEETING OF STOCKHOLDERSThe Annual Meeting of Stockholders of Potlatch Corporation will be held at The Spokane Club (Downtown), 1002 W. Riverside Avenue, Spokane, Washington 99201, on Monday, May 2, 2011, at 9:00 a.m. local time.We are holding this meeting to:elect three directors to the Potlatch Corporation Board of Directors;ratify the appointment of KPMG LLP as our independent auditors for 2011;approve the material terms of the performance goals in the Potlatch Corporation 2005 Stock Incentive Plan pursuant to Section 162(m) of the Internal Revenue Code;conduct an advisory vote on executive compensation;conduct an advisory vote on the frequency of holding future advisory votes on executive compensation; andtransact any other business that properly comes before the meeting.Your Board of Directors has selected March 21, 2011, as the record date for determining stockholders entitled to notice of the meeting and to vote at the meeting and at any adjournment or postponement.Potlatch’s proxy statement, Notice of Meeting, proxy card, and 2010 Annual Report, are being distributed to stockholders on or about April 1, 2011. Your vote is important, so please vote your shares promptly.To vote your shares, please refer to the instructions on the enclosed proxy card or voting instruction form, or review the section titled “Voting” beginning on the first page of the accompanying proxy statement.By Order of the Board of Directors,LORRIE D. SCOTTVice President, General Counsel &Corporate Secretary
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2013. The inspector of election will tabulate affirmative and negative votes, abstentions and broker non-votes. Abstentions will have the same effect as negative votes. Broker non-votes (described below under the heading "Shares" held in On March : Go to www.envisionreports.com/PCH and follow the instructions. You will need to enter the Holder Account Number and Proxy Access Number printed on the enclosed proxy card. : If you are a participant in the Potlatch Hourly 401(k) Plan or the Potlatch Salaried 401(k) Plan, go to www.envisionreports.com/PCH and follow the instructions. You will need to enter the Control Number printed on the enclosed voting instruction form. You may receive a separate voting instruction form with this proxy statement from your bank, broker or nominee, or you may need to contact your bank, broker or nominee to determine whether you will be able to vote electronically using the Internet or telephone. To vote in person at the Annual Meeting, you must obtain a proxy, executed in your favor, from the holder of record. If you are the beneficial owner of shares held in “street name” by a broker, then the broker must vote those shares in accordance with your instructions. If you do not give specific voting instructions to the broker, under Nasdaq rules your broker cannot vote your shares on “non-discretionary” items. On “non-discretionary” items for which you do not give voting instructions, the votes will be considered “broker non-votes.” The The ratification of the appointment of KPMG LLP as our independent auditors for Policy and our Corporate Governance Guidelines. 2016 2006 roles. oversight experience. the domestic forestry and wood products industries. As our President, Chief Operating Officer and Chief active or retired chief executive officers and senior members of boards of directors of other public individuals with forest products industry experience, individuals with substantial individuals with the name and address of the stockholder; the shares of Potlatch common stock owned by the stockholder or the prospective nominee, and a description of any derivative or short positions or similar hedging transactions with respect to Potlatch’s common stock held by the stockholder or the prospective nominee;20112013 Annual Meeting of Stockholders, which is described below. We expect to mail this proxy statement, the Notice of Meeting, and the form of proxy enclosed, on or about April 1, 2011.20112013 Annual Meeting of Stockholders will be held on Monday, May 2, 2011,6, 2013, at 9:00 a.m., local time, at The Spokane Club (Downtown), 1002 W. Riverside Avenue,the Potlatch Corporation Corporate Offices, 601 West First Ave, Suite 1600, Spokane Washington 99201.fivethree proposals. These proposals and the vote required for approval of each proposal are as follows:2011.2013. The affirmative vote of a majority of the common stock present in person or by proxy at the Annual Meeting and entitled to vote is required to ratify the appointment of our independent auditors.Performance MeasuresExecutive Compensation. The third proposal requests approval of the material terms of performance goals in the Potlatch Corporation 2005 Stock Incentive Plan pursuant to Section 162(m) of the Internal Revenue Code. The affirmative vote of a majority of the common stock present in person or by proxy at the Annual Meeting and entitled to vote is required to approve the material terms of the performance goals.Executive Compensation. The fourth proposal requests a non-binding, advisory vote to approve executive compensation. The affirmative vote of a majority of the common stock present in person or by proxy at the Annual Meeting and entitled to vote is required to approve, by an advisory vote, executive compensation.Frequency of Voting. The fifth proposal requests a non-binding, advisory vote regarding the frequency of holding future advisory votes on executive compensation. The frequency (every one, two or three years) receiving the greatest number of votes will be considered the frequency recommended by stockholders.“street”"street" or “nominee”"nominee" name) will not be counted in determining the number of votes necessary for approval.20112013 approval of the material terms of the performance goals in the Potlatch Corporation 2005 Stock Incentive Plan pursuant to Section 162(m) of the Internal Revenue CodeFOR advisory approval of our executive compensationFOR votes on executive compensation every three years21, 2011,15, 2013, the record date for the Annual Meeting, may vote at the meeting. For each share of common stock held, stockholders are entitled to one vote for as many separate nominees as there are directors to be elected and one vote on any other matter presented.Quorum21, 2011,15, 2013, the record date, we had 40,132,405 40,489,526shares of common stock outstanding. Voting can take place at the Annual Meeting only if stockholders owning a majority of the total number of shares outstanding on the record date are present either in person or by proxy. Abstentions and broker non-votes will both be treated as present for purposes of determining the existence of a quorum.BNY Mellon StockholderComputershare Shareowner Services LLC, will act as the inspector of election at the Annual Meeting and we will reimburse reasonable charges and expenses related to the tabulation of votes.•Via Internet: Go to www.proxyvoting.com/pch and follow the instructions. You will need to enter the Holder Account Number and Proxy Access Number printed on the enclosed proxy card.•By Telephone: Call toll-free 1-866-540-5760 and follow the instructions. You will need to enter the Holder Account Number and Proxy Access Number printed on the enclosed proxy card.•In Writing: Complete, sign, date and return the enclosed proxy card in the envelope provided, or provide it or a ballot distributed at the Annual Meeting directly to the inspector of election at the Annual Meeting when instructed.•Via Internet: If you are a participant in the Potlatch Hourly 401(k) Plan or the Potlatch Salaried 401(k) Plan, go to www.proxyvoting.com/pch and follow the instructions. You will need to enter the Control Number printed on the enclosed voting instruction form.•By Telephone: Call toll free 1-866-540-5760 and follow the instructions. You will need to enter the Control Number printed on the enclosed voting instruction form.•In Writing: Complete, sign, date and return the enclosed proxy card in the envelope provided. To vote in person at the Annual Meeting, you must obtain a proxy, executed in your favor, from the holder of record.approval of the material terms of the performance measures and the advisory votes onvote to approve executive compensation and the frequency of holding future advisory votes on executive compensation areis also a “non-discretionary” itemsitem and may not be voted upon by your broker if you do not give voting instructions for the shares held on your behalf.20112013 is a “discretionary” item. This means that this proposal may be voted upon by your broker if you do not give voting instructions for the shares held on your behalf.2011,2013 and FOR approval of the material terms of the performance goals in the Potlatch Corporation 2005 Stock Incentive Plan pursuant to Section 162(m) of the Internal Revenue Code,FOR advisory approval of our executive compensation, andFOR votes on executive compensation every three years.compensation. If you have any questions or need assistance in voting your shares, please contact D.F. King & Co., toll-free at 1-800-697-6975.1-866-540-57601-800-652-8683 (VOTE) and following the instructions or via the Internet by going to www.proxyvoting.com/pchwww.envisionreports.com/PCH and following the instructions.1-866-540-57601-800-652-8683 (VOTE) and following the instructions or via the Internet by going to www.proxyvoting.com/pchwww.envisionreports.com/PCH and following the instructions. If you are a stockholder whose shares are held in “street” or “nominee” name, you may revoke your voting instructions by informing the bank, broker or other nominee in accordance with that entity’s procedures for revoking your voting instructions.20112013 Annual Meeting. If other matters are presented, the individuals named as proxies on the enclosed proxy card will have discretionary authority to vote your shares on such matters.2, 2011.6, 2013. This proxy statement and the 20102012 Annual Report are available at http://bnymellon.mobular.net/bnymellon/pch.www.envisionreports.com/PCH.Policy.EachMr. Covey and Mr. Quesnel are now members of the nomineesBoard. Mr. Grenier is now a member of the Board.new director nominee, as further described under "Corporate Governance - Nominees for Director." If any nominee becomes unable to serve as a director before the meeting (or decides not to serve), the individuals named as proxies may vote for a substitute nominee proposed by the Board or we may reduce the number of members of the Board. We recommend a vote FOR each nominee listed below.2014Jerome C. KnollAge 68, a director since December 2001.John S. MoodyAge 62, a director since September 2006.Lawrence S. Peiros2003.20142016 Annual Meeting. See“Proposal No. 1—Election of Directors.” Our Bylaws require our directors to be elected by a majority vote of the shares of common stock present or represented by proxy and entitled to vote at the Annual Meeting in uncontested elections.Meeting.nineeight directors as of the date of this proxy statement and our new director nominee, the year each of them became or will become a director, their principal occupation or employment for at least the past five years, and certain of their other directorships. In addition, set forth below for each director and our new director nominee is a description of the particular experience, qualifications, attributes or skills that led the Board to conclude that the directorperson should serve as a director for the company. If you do not select a voting preference, the persons named as proxies in the accompanying proxy will vote for the election of the nominees listed below. We have no reason to believe that any of these nominees will be unable to serve as a director. If any of the nominees becomes unable to serve, however, the persons named as proxies will have discretionary authority to vote for a substitute nominee.68)70) has been a director since December 2001. Mr. Knoll has been Chairman of the Board and Chief Executive Officer of Marathon Industries, Inc., a distributor of polyurethane and pneumatic tires and other products, since January 2000. He also served as Vice President of Genie Industries, Inc., a manufacturer of aerial work platforms, from 1989 through December 2007 and served as its Chief Financial Officer from 1989 through April 2001.the chief executive officer and board memberVice President of a large polyurethane distributorheavy equipment manufacturing company and Chief Executive Officer of a manufacturing and distribution company provides him significant executive-level management and oversight skills and experience. Mr. Knoll has experience managing and overseeing numerous customer and distributor relationships, as well as manufacturing, supply-chainsupply chain and sales logistics. Mr. Knoll also has experience with accounting and auditing matters.62)64) has been a director since September 2006. Mr. Moody is President of Parkside Capital, LLC in Houston, which is the general partner and manager of Proterra RealtyParkside Capital Land Fund, LTD, a Texas real estate private equity firm. From 2004 through 2005, he served as President and Chief Executive Officer of HRO Asset Management, LLC, a real estate advisory business. Prior to that, fromFrom 2001 to 2004, Mr. Moody was President of Marsh & McLennan Real Estate Advisors, Inc., a business that directed real estate projects and transactions for Marsh & McLennan. From 1995 to 2000, Mr. Moody was President and Chief Executive Officer of Cornerstone Properties, Inc., a publicly traded real estate investment trust, or REIT. He also serves as a director of Huron Consulting Group (NASDAQ: HURN), a publicly held integrated strategic services provider, and Hines Global REIT, Inc., a commercial real estate REIT. From 2000 to 2005, Mr. Moody served on the board of directors of Equity Office Properties Trust, and from 2004 to 2006, he served on the board of directors of CRIIMI MAE, Inc., both of which were publicly traded REITs.roles at REITs.55)57) has been a director since February 2003. Mr. Peiros isserved as Executive Vice President and Chief Operating Officer of The Clorox Company (NYSE: CLX), a household consumer products company.company, from 2011 until his retirement on April 1, 2013. Previously, he served as Executive Vice President and Chief Operating Officer for North America of The Clorox Company,from 2007 to 2011, and as Group Vice President of The Clorox Company, a position he held from February 1999. Mr. Peiros serves as a director of Ross Stores, Inc. (NASDAQ: ROST), a clothing retailer, and Annie's, Inc. (NYSE: BNNY), a natural food company. corporate communications, product supply and research and development experience. In his positionHaving served as a senior executive at a major consumer products company, Mr. Peiros also has experience overseeing major sales programs inglobal operatingUnited Statesboards of two other public companies provides him additional corporate governance, leadership and Canada and managing various operating divisions.20122015 (Class I)66)68) has been a director since July 2000. Until his retirement in 2001, Mr. Dickey was the President, Chief Operating Officer and a director of SAFECO Corporation, an insurance and financial services company. He also serves as Vice Chairman of the Board and a director of Clearwater Paper Corporation (NYSE: CLW).48)50) has been a director since January 2004. He is currently a partner with Pointe Group Management Company, a private commercial real estate and management company. In March 2008, Mr. Driscoll was recalled to active duty in the United States Marine Corps Reserve as a Civil Affairs officer and deployed to Afghanistan through November 2008. Mr. Driscoll also spent approximately nine months in 2006 serving in Iraq with the United States Marine Corps. Prior to that time, he was a marketing and business consultant for ID Micro, a radio frequency technology company with which he had been associated sincebeginning in January 2005. Mr. Driscoll was Vice President of Strategic Accounts for PACCESS, a packaging solutions company, from December 2002 to December 2004. Mr. Driscoll serves as a directoris on the board of directors of Greenwood Resources, Inc. Greenwood Resources, a company that invests in and manages high yield, short rotation, sustainable tree farms in the United States, Asia, Europe and South America.Judith M. RunstadEric J. Cremers (age 66)49) has been a director since March 1999. Ms. Runstad2013. Mr. Cremers is an attorney who has served Of Counsel to Foster Pepper PLLC, a law firm, since January 1998. She was a partner of Foster Pepper PLLC from 1978 through 1997 and former Co-Managing Partner. She also serves as a director of Wells Fargo & Co. (NYSE: WFC), a bank holding company, and from 1990 through 2008 served as a director of SAFECO Corporation, an insurance and financial services company. She also serves on the board of Wright Runstad & Company, a private real estate development company.As a senior lawyer at a major U.S. law firm, Ms. Runstad has considerable experience in land use, environmental and real estate law. In addition, Ms. Runstad has valuable oversight and corporate governance experience gained from serving on two other public company boards.Directors Continuing in Office until 2013 (Class II)Michael J. Covey (age 53) has been a director since February 2006. Our President, Chief Operating Officer and Chief ExecutiveFinancial Officer sinceof the company. From February 2006,2012 until March 2013, Mr. Covey has been Chairman since January 1, 2007. Prior to joining Potlatch in February 2006, he was employed for 23 years by Plum Creek Timber Company, Inc., a publicly traded REIT, where heCremers served as Executive Vice President and Chief Financial Officer, with additional responsibilities for management of the company's Idaho Resource division. Mr. Cremers joined the company in 2007 as Vice President and Chief Financial Officer. Prior to joining the company, Mr. Cremers was Senior Vice President, Corporate Strategy and Business Development for Albertsons, Inc., a retail grocery chain from August 2001 until shortly before joining Potlatch2002 to 2006.February 2006.ExecutiveFinancial Officer, Mr. CoveyCremers has a deep understanding of all aspects of our business and operations. Mr. Covey has a strong background in timberland real estate and forest products, with extensive executive-level experience in financial and operational management of timberlands and wood products and other manufacturing facilities. In addition, Mr. Covey alsoCremers has experience managing a REIT, with an operational understanding of the requirements associated with maintaining REIT status. We believe Mr. Covey’s extensive knowledge of our industry and his deep understanding of our business and operations enables him to facilitate the Board’s oversight role.Ruth Ann M. Gillis (age 56) has been a director since November 2003. Ms. Gillis is Executive Vice President and Chief Administrative and Diversity Officer of Exelon Corporation (NYSE: EXC), a publicly held energy company, a position she has held since June 2009. From January 2008 to June 2009, she was Executive Vice President of Exelon, and from October 2005 to January 2008, she was Senior Vice President of Exelon Corporation. Ms. Gillis is also President of Exelon Business Services Company, a subsidiary of Exelon Corporation, a position she has held since October 2005. From August 2004 to October 2005, she served as Executive Vice President of Commonwealth Edison, another subsidiary of Exelon Corporation, and was President of Exelon Business Services Company from November 2002 to August 2004. Ms. Gillis also serves as a director of KeyCorp (NYSE: KEY), a financial services company, and was a director of Archstone-Smith, a real estate REIT that was previously publicly traded, from 2004 until 2007.Ms. Gillis has extensive experience with accounting and auditing matters, financing activities, cash management, financial risk management and treasury functions, having previously served as chief financial officer of Exelon Corporation. As a senior executive of a publicly held energy company, Ms. Gillis brings operational and oversight experience with respect to a variety of transactional and corporate services, including information technology, supply chain and human resources.Gregory L. Quesnel (age 62) has been a director since September 2000. In 2004, Mr. Quesnel retired as President, Chief Executive Officer and a director of CNF, Inc. (NYSE: CNW), a supply chain logistics management company, positions he had held since May 1998. He also serves as a director of Synnex Corporation (NYSE: SNX), a business process services company, and Ross Stores, Inc. (NASDAQ: ROST), a clothing retailer.Having served for seven years as chief executive officer and a member of the board of directors, and seven years as chief financial officer, of a global supply chain management company, Mr. Quesnel has extensive operational and oversight experience with regard to corporate strategic planning, mergers and acquisitions, risk management, finance, accounting, administration, technology, investor relations and procurement. Mr. Quesnel’s service on the boards of two other public companies provides him additional corporate governance, leadership and oversight experience.thatwhich we believe enable us to manage our business in accordance with sound principles of corporate governance and high ethical standards and in the best interests of our stockholders. Copies of our corporate governance documents and policies are available for downloading or printing by going to our public web site atwww.potlatchcorp.com, and selecting “Investor Resources,” then “Corporate Governance,” and then selecting the appropriate link. You may also obtain a printed copy of any of the materials referred to below by contacting us at the following address:sets forthprovides ethical standards and policies that apply to all of our directors, officers and employees. Our Ethics Code requires that our directors, officers and employees avoid conflicts of interest, comply with laws and other legal requirements, conduct business honestly and ethically, provide full and accurate reporting to us, and otherwise act with integrity and in our best interests. We have also established procedures so that complaints regarding our accounting and auditing matters, conflicts of interests, securities violations and other matters can be submitted confidentially and anonymously. See“Communications with Directors” below.“Conduct and Ethics Code” or“Corporate Governance Guidelines,” as appropriate. the appropriate link.Bylaws,bylaws, an “uncontested election” is one in which the number of nominees equals the number of directors to be elected in such election. The Board may nominate or elect as a director only persons who agree to tender, promptly following his or her election or re-election to the Board, an irrevocable resignation that will be effective upon (i) the failure of the candidate to receive the required vote at the next annual meeting at which he or she faces re-election and (ii) the acceptance by the Board of such resignation. If an incumbent director fails to receive the required vote for re-election in an uncontested election, the Nominating and Corporate Governance Committee determines whether such director’s resignation should be accepted and makes a recommendation to the Board, which makes the final determination whether to accept the resignation. The Board must publicly disclose its decision within 90 days from the date of certification of the election results. If a director’s resignation is accepted by the Board, then the Board may fill the resulting vacancy or may decrease the size of the Board.executives;companies;experience;experience,finance, operational, accounting, legalcompliance, financial reporting, audit, tax or marketing experience;compensation andexecutive-level experience with manufacturing companies.Our Bylaws require that eachEach notice must include the following information about the stockholder and the prospective nominee, which must be updated as necessary:necessary, as would be required if the stockholder were nominating a person to the Board under our Bylaws, including the following information:
a description of any arrangements to which the stockholder is a party with respect to the nomination of the prospective nominee;
the name, age, business address and residence address of the prospective nominee;
the principal occupation of the prospective nominee;
a statement whether the prospective nominee, if elected, intends to tender an irrevocable resignation effective upon (i) his or her failure to receive the required vote for re-election and (ii) acceptance of such resignation by the Board;
a description of all compensation and other relationships during the past three years between the stockholder and the prospective nominee;
any other information relating to the prospective nominee or stockholder required to be disclosed pursuant to Section 14 of the Securities and Exchange Act of 1934, as amended, or Exchange Act; and
the prospective nominee’s written consent to serve as a director if elected.
presides at all meetings of the Board at which the Chairman is not present;
presides at executive sessions of the independent directors;
may call special meetings of the Board;
consults with the Chairman in the development of meeting agendas;
acts as a facilitator in effectively communicating director concerns, agenda items and issues to management;
coordinates communications between the independent directors and stockholders and other interested parties;
works with the Chairman of the Board and the committeeCommittee chairs in developing and monitoring the Board’s overall approach to governance issues; and
coordinates the annual performance evaluation of the Board.
We have
In accordance with Nasdaq requirements and pursuant to its charter, the Audit Committee provides oversight on matters relating to accounting, financial reporting, internal controls, auditing, risk management, and legal and regulatory compliance activities, including monitoring our compliance with the tax and other rules pertaining to REITs, and other matters as the Board deems appropriate. In carrying out its responsibilities, the Audit Committee oversees the appointment or replacement and compensation of personnel involved in the internal
of the foregoing persons, or in which any of the foregoing persons is a general partner, principal or 10% or greater beneficial owner. Transactions covered by this policy are those in which (a) we or any of our subsidiaries participate, (b) the amount involved exceeds $120,000, and (c) any related person had, has or will have a direct or indirect material interest, as defined in the policy.
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Audit Committee | Executive
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Michael J. Covey | ||||||||||||||||
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Ruth Ann M. Gillis* | X | X(Chair) | X | |||||||||||||
Jerome C. Knoll | X | X | ||||||||||||||
John S. Moody | X | X | X | |||||||||||||
Lawrence S. Peiros | X | X(Chair) | ||||||||||||||
Gregory L. Quesnel | X | X(Chair) | X |
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The Audit Committee has sole authority to retain, compensate and terminate our independent registered public accounting firm and our Internal Audit Director. In addition, the Audit Committee oversees and administers our Related Person Transactions Policy described above under the heading “Transactions with Related Persons.” The Committee has appointed KPMG LLP as our independent registered public accounting firm and pre-approves its audit fees and non-audit services and fees in accordance with criteria adopted by the Committee. In issues. The See 2012. 2012. 2012. as a director. Name Boh A. Dickey William L. Driscoll Ruth Ann M. Gillis Jerome C. Knoll John S. Moody Lawrence S. Peiros Gregory L. Quesnel Judith M. RunstadThe Audit Committee also:establishes procedures for the receipt, retention and treatment of complaints received by the company regarding accounting, internal accounting controls or auditing matters;establishes procedures for the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters;discusses with the company’s General Counsel any significant legal, compliance or regulatory matters that may have a material effect on the financial statements or the company’s business, internal controls or compliance policies, including material notices to or inquiries received from governmental agencies;reviews the company’s major financial risk exposures and the steps management has taken to monitor and control such exposures, including reviewing the guidelines and policies to govern the process by which management assesses and manages the company’s exposure to risk; anddiscusses with the Board any issues that arise with respect to the quality or integrity of the company’s financial statements, the company’s compliance with legal or regulatory requirements, the performance and independence of the company’s independent auditors, or the performance of the internal audit function.In addition, the Audit Committee oversees and administers our Related Person Transactions Policy described above under the heading“Transactions with Related Persons.”The Audit Committee meets at least quarterly with the Internal Audit Director and other members of management.seveneight times in 2010.2012. See“Audit Committee Report” in this proxy statement for a description of the Committee’s activities during 2010.2012.consistsis composed entirely of six outside (non-employee) directors. Our Board has determined thatdirectors, all members of our Compensation Committeewhom are independent within the meaning of the Nasdaq listing standards and our Director Independence Policy. The Compensation Committee oversees our executive compensation and benefits programs and general personnel policies and practices for our executives. It also helps determine our management succession planning, and annually reviews the performance of our Chief Executive Officer.accordance with authority granted toaddition, the Compensation Committee pursuantreviews the “the Committee has engaged Deloitte Consulting LLP, or Deloitte to serve as its outside compensation consultant to advise the Committeeit on executive compensation matters. The Committee has also directed that Deloitte interact with management, when appropriate, on Committee’s behalf. Deloitte also advises the Nominating Committee with respect to determining non-employee director compensation. Deloitte does not advise any of our executive officers as to their individual compensation, and does not perform other services for the company.company other than advising the Nominating and Corporate Governance Committee with respect to non-employee director compensation. The company has engaged Mercer (U.S.) Inc., or Mercer, to advise company management and make recommendations to the Compensation Committee on specific executive compensation designcompany’scompany's Chief Executive Officer makes recommendations to the Committee annually regarding base salaries and target amounts for annual cash bonuses and equity awards for each executive officer other than himself.For more information on the responsibilities and activities of the Committee, including the processes for determining executive compensation, and the role of consultants and management in recommending executive compensation, see“Compensation Discussion and Analysis” in this proxy statement for a discussion of the Committee’s role in setting executive compensation.the Compensation Committee’s charter. The Committee reviews the “Compensation Discussion and Analysis” contained in this proxy statement and recommends its inclusion in the proxy statement to the full Board for approval.Our CompensationPersonnel Policies Committee met fivefour times in 2010.approves actionsacts based on the Board’s delegation of authority with respect to specific financing transactions. The Committee consists of six directors—five outside (non-employee) directors and our Chairman, Michael J. Covey, who is the President and Chief Executive Officer of the company.two timesone time in 2010.which consistsor Nominating Committee, is composed entirely of four outside (non-employee) directors, and is responsible for identifying, evaluating, recruiting and recommending to the Board nominees for election as directors, and for developing and recommending to the Board a set of corporate governance principles and related policies. The CommitteeIt also oversees our compensation and benefits paid to our directors. four members of our Nominating Committee are independent within the meaning of the Nasdaq listing standards and our Director Independence Policy.2010.RunstadRunstad* served as members of our Compensation Committee during 2010.2012. None of the members of the Compensation Committee is or has ever been an officer or employee of the company or its subsidiaries. In addition, during 2010,During 2012, none of ourthe members of the Compensation Committee was an executive officersofficer of a business entity for which an executive officer of the company served as a director or as a member of athe compensation committee of any other business entity that has one or more executive officers serving on our Board or Compensation Committee.* Ms. Runstad served on our Compensation Committee until her retirement from the Board at our annual meeting of stockholders on May 7, 2012. Email:non-managementdirectors@potlatchcorp.comMail: Email: non-managementdirectors@potlatchcorp.com Mail: Lead Director or Non-Management Directors c/o Corporate Secretary Potlatch Corporation 601 West First Ave., Suite 1600 Spokane, WA 99201 Lead Directorlead independent director of the Board of Directors is responsible for facilitating an appropriate response. These procedures can also be viewed by going to our public web site atwww.potlatchcorp.com, and selecting “Investor Resources,” then “Corporate Governance,” and then“Board “Board of Directors.”COMPENSATIONdirectors’directors' compensation is to provide our directors a fair compensation package that is tied to the services they perform and is comparable to director compensation programs of companies of our size. We target our non-employee director compensation levels to be at, or near, the median compensation paid by other companies of comparable size both in our industry and generally. Our key objectives are to recruit and retain the best directors that we can and to align our directors’directors' interests with those of our stockholders.20102012 compensation for each of the company’scompany's non-employee directors. Fees Earned
or Paid in
Cash
($)(1) Stock
Awards
($)(2) Option
Awards
($)(3) All Other
Compensation
($)(4) Total
($) $ 74,000 $ 65,000 — $ 1636 $ 140,636 53,000 65,000 — 136 118,136 71,500 (5) 65,000 — 1636 135,136 63,500 65,000 — 136 128,636 73,000 65,000 — 136 138,136 57,500 65,000 — 1636 124,136 77,500 65,000 — 136 142,636 56,500 65,000 — 136 121,636
or Paid in
Cash
($)(1)
Awards
($)(2) Option Awards ($)(3)
Compensation
($)(4)
($) Boh A. Dickey 69,500 65,000 — 152 134,652 William L. Driscoll 48,500 65,000 — 152 113,652 Ruth Ann M. Gillis* 64,000 (5) 65,000 — 1,652 130,652 Jerome C. Knoll 59,000 65,000 — 152 124,152 John S. Moody 73,000 65,000 — 152 138,152 Lawrence S. Peiros 55,500 65,000 — 1,652 122,152 Gregory L. Quesnel 71,500 65,000 — 152 136,652 Judith M. Runstad 24,500 — — 485,692 (6) 510,192 (1)* Ms. Gillis is retiring from our Board of Directors when her current term expires at our May 6, 2013 annual meeting of stockholders. (1) Represents annual retainer fee, as well as any amounts earned for service as Lead Director or Committee Chair and meeting attendance fees. (2)(2) This column shows the aggregate grant date fair value, computed in accordance with FASB Topic 718, of stock units granted in 2010.2012. In accordance with FASB Topic 718, the grant date fair value reported for all stock units was computed by multiplying the number of stock units by the closing price of our stock on the grant date. As of December 31, 2010,2012, each non-employee director had accumulated 13,93119,092 stock units in his or her account, with the exception of Mr. Driscoll, who had 15,20620,487 stock units, and Mr. Moody, who had 11,36716,289 units. The aggregate number for each director includes stock units that have been credited to the director over the years for service as a director and stock units credited as a result of reinvestment of dividend equivalents (including dividend equivalents credited in connection with spin-off of Clearwater Paper).(3)(3) The award of stock options as an element of non-employee director compensation was discontinued after December 31, 2003.2004. As of December 31, 2010,2012, directors held vested, unexercised stock options to purchase the following number of shares of our common stock: Ms. Gillis-1,680; Mr. Peiros-8,616; Mr. Quesnel-12,924;Quesnel-4,308; and Ms. Runstad-2,154.(4) Other compensation consistsConsists of premiums paid for accidental death and dismemberment insurance and charitable contributions under the company’scompany's matching gift program ($1500 each for Mr. Dickey, Mr. Peiros and Ms. Gillis).program.(5)(5) The amounts shown include fees deferred in 20102012 pursuant to our Deferred Compensation Plan for Directors II.II, or Directors Plan. In connection with these deferrals, we credited 2,0982,165 stock units to Ms. Gillis’Gillis' account for fees deferred in 2010.2012. Such amounts were determined separately for each fee payment, which include meeting fees and quarterly pro-rata payments of the director’sdirector's annual retainer fee, by dividing the fee amount due by the appropriate per share closing stock price pursuant to the plan. In addition to these common stock award units, Ms. Gillis had an aggregate of 28,50220,006 common stock units in(6) compensation account asinto cash in connection with her retirement. See "Compensation of December 31, 2010. The foregoing common stock unit amounts reflect dividend equivalents.Non-employee Directors - Long-Term Incentive Awards."
Annual retainer fee | $ | 35,000 | ||
Supplemental annual retainer fee (Lead Director only) | $ | 20,000 | ||
Annual retainer fee for Chair of the Audit Committee | $ | 15,000 | ||
Annual retainer fee for Chair of each other Committee | $ | 5,000 | ||
Attendance fee for each Board meeting | $ | 1,500 | ||
Attendance fee for each Committee meeting | $ | 1,500 |
Annual retainer fee | $ | 35,000 | |
Supplemental annual retainer fee (Lead Director only) | 20,000 | ||
Annual retainer fee for Chair of the Audit Committee | 15,000 | ||
Annual retainer fee for Chair of each other Committee | 5,000 | ||
Attendance fee for each Board meeting | 1,500 | ||
Attendance fee for each Committee meeting | 1,500 |
Amount and Nature of Common Stock Beneficially Owned | Common Stock Units(2) | |||||||||||||||||||
Number of Shares Beneficially Owned | Right to Acquire(1) | Total Shares Beneficially Owned | Percent of Class | |||||||||||||||||
Stockholders Owning More than 5% | ||||||||||||||||||||
BlackRock, Inc. | 4,051,318 | (3) | n/a | 4,051,318 | 10.1 | % | n/a | |||||||||||||
40 East 52nd Street | ||||||||||||||||||||
New York, NY 10022 | ||||||||||||||||||||
Janus Capital Management LLC | 4,952,854 | (4) | n/a | 2,727,094 | 12.3 | % | n/a | |||||||||||||
151 Detroit Street | ||||||||||||||||||||
Denver Colorado 80206 | ||||||||||||||||||||
Longleaf Partners Small-Cap Fund | 2,727,094 | (5) | n/a | 2,727,094 | 6.8 | % | n/a | |||||||||||||
Southeastern Asset Management, Inc. | ||||||||||||||||||||
c/o Southeastern Asset Management, Inc. | ||||||||||||||||||||
6410 Poplar Avenue, Suite 900 | ||||||||||||||||||||
Memphis, TN 38119 | ||||||||||||||||||||
T. Rowe Price Associates, Inc. | 2,052,685 | (6) | n/a | 2,052,685 | 5.1 | % | n/a | |||||||||||||
100 E. Pratt Street | ||||||||||||||||||||
Baltimore, MD | ||||||||||||||||||||
Directors and Named Executive Officers | ||||||||||||||||||||
Michael J. Covey | 145,500 | (7) | 51,265 | 196,765 | * | 30,030 | ||||||||||||||
Boh A. Dickey | 15,000 | (8) | — | 15,000 | * | 13,931 | ||||||||||||||
William L. Driscoll | 346,828 | (9) | — | 346,828 | * | 15,206 | ||||||||||||||
Ruth Ann M. Gillis | 3,038 | 1,680 | 4,718 | * | 42,433 | |||||||||||||||
Jerome C. Knoll | 34,519 | (10) | — | 34,519 | * | 13,931 | ||||||||||||||
John S. Moody | 5,000 | — | 5,000 | * | 11,367 | |||||||||||||||
Lawrence S. Peiros | 3,750 | (11) | 8,616 | 12,366 | * | 13,931 | ||||||||||||||
Gregory L. Quesnel | 2,888 | 4,308 | 7,196 | * | 13,931 | |||||||||||||||
Judith M. Runstad | 12,161 | (12) | 2,154 | 14,315 | * | 13,931 | ||||||||||||||
Eric J. Cremers | 44,573 | (13) | — | 44,573 | * | — | ||||||||||||||
William R. DeReu | 20,810 | (14) | — | 20,810 | * | — | ||||||||||||||
Brent Stinnett | 17,149 | (15) | — | 17,149 | * | 2,102 | ||||||||||||||
Thomas J. Temple | 5,917 | (16) | 1,405 | 7,322 | * | — | ||||||||||||||
Directors and Executive Officers as a group (14 persons) | 657,133 | (17) | 69,428 | 726,561 | 1.81 | % | 170,793 |
Amount and Nature of Common Stock Beneficially Owned | Common Stock Units(2) | ||||||||
Number of Shares Beneficially Owned | Right to Acquire(1) | Total Shares Beneficially Owned | Percent of Class | ||||||
Stockholders Owning More than 5% | |||||||||
BlackRock, Inc 40 East 52nd Street New York, NY 10022 | 4,983,000(3) | n/a | 4,983,000 | 12.34 | % | n/a | |||
Janus Capital Management LLC 151 Detroit Street Denver, CO 80206 | 2,702,640(4) | n/a | 2,702,640 | 6.7 | % | n/a | |||
The Vanguard Group 100 Vanguard Blvd Malvern, PA 19355 | 2,129,923(5) | n/a | 2,129,923 | 5.27 | % | n/a | |||
Directors and Named Executive Officers | |||||||||
Michael J. Covey | 61,503(6) | 56,094 | 117,597 | * | 30,030 | ||||
Boh A. Dickey | 15,000(7) | — | 15,000 | * | 19,092 | ||||
William L. Driscoll | 210,350(8) | — | 210,350 | * | 20,486 | ||||
Ruth Ann M. Gillis (A) | 3,038 | 1,680 | 4,718 | * | 39,286 | ||||
Jerome C. Knoll | 34,519(9) | — | 34,519 | * | 19,092 | ||||
John S. Moody | 5,000 | — | 5,000 | * | 16,289 | ||||
Lawrence S. Peiros | 3,750(10) | — | 3,750 | * | 19,343 | ||||
Gregory L. Quesnel | 2,888(11) | — | 2,888 | * | 19,092 | ||||
Judith M. Runstad (B) | 12,161(12) | 2,154 | 14,315 | * | — | ||||
Eric J. Cremers | 48,340 | — | 48,340 | * | — | ||||
Lorrie D. Scott | 6,569(13) | 451 | 7,020 | * | — | ||||
Brent L. Stinnett (C) | 22,885(14) | — | 22,885 | * | 2,102 | ||||
Thomas J. Temple | 19,874(15) | — | 19,874 | * | — | ||||
Directors and Executive Officers as a group (15 persons) | 500,217(16) | 60,379 | 560,596 | 1.38 | % | 184,812 |
* | Less than 1% |
(A) | Ms. Gillis is retiring from our Board of Directors when her current term expires at our May 6, 2013 annual meeting of stockholders. |
(B) | Ms. Runstad retired from our Board of Directors at our May 7, 2012 annual meeting of stockholders. |
(C) | Mr. Stinnett retired from the company on January 31, 2013. |
(1) | Amounts for |
(2) | Represents common stock units as of March 1, |
(3) | Based upon the Schedule 13G/A filed with the SEC on |
(4) | Based upon the Schedule 13G/A filed with the SEC on February 14, |
(5) | Based |
(6) | Comprised of the following: (i) |
(7) | These shares are held in the name of Mr. Dickey and his spouse with whom Mr. Dickey shares voting and investment |
(8) | Includes |
of which Mr. Driscoll is a trustee and shares voting and investment power and 2,335 shares of common stock of which Mr. Driscoll is a trustee and has sole voting and investment power. Also includes 4,900 shares held by a limited liability company of which Mr. Driscoll is manager with both voting and dispositive powers. Mr. Driscoll disclaims beneficial ownership of all shares except those held directly by him. |
(9) |
(10) | These shares are held in a trust under which Mr. Peiros shares voting and investment power with his spouse. |
(11) | These shares are held in a trust under which Mr. Quesnel shares voting and investment power with his spouse. |
(12) | Includes 5,986 shares owned by Ms. |
(13) | Includes |
(14) | Includes |
(15) | Includes |
(16) | Includes an aggregate of |
2012, except for William L. Driscoll who filed one late report on Form 4 relating to a sale of 20 shares and Ruth Ann M. Gillis for whom one report on Form 4 relating to 188 common stock units credited to her deferred compensation account was filed late by the company. 2011 2010 2009 2013 2013. stockholders. 2013. Compensation Philosophy and Objectives vested, based on achievement of relative total shareholder return (TSR) over a three-year period. For 2013, both the Chief Executive Officer and the President and Chief Operating Officer will receive 100% of their long-term incentive awards as performance vested awards. Performance Annual incentive awards are contingent on achieving targets that are established and approved by the Compensation Committee at the beginning of the year, are subject to thresholds that require a minimum level of achievement for awards to be earned, and are also capped at 200% of target. The Committee has discretionary authority to director compensation. base salary increases, if any, for our named executive officers and certain other officers; target and actual awards under our annual and long-term incentive plans for our executive officers and certain senior employees; performance measures under our annual and long-term incentive plans; the aggregate amount of grants made under the long-term incentive plans for other key employees; and the peer group of companies used for purposes of measuring relative market data, and surveys from Mercer, Economic the balance between annual and long-term incentives; the existence of caps on annual and long-term incentive awards; the use of different metrics for annual and long-term incentive awards; stock ownership guidelines that are reasonable and align our the the base salary; annual cash incentives; and long-term equity incentives. performance results. awards. performance shares, which reward employees for company performance over a three-year period that exceeds the applicable peer group, encourage employees to focus on the creation of long-term stockholder value creation and align the interests of employees with those of our stockholders; and restricted stock units, which vest Long-Term Equity Incentive Awards - Peer Group." performance measures should be subject to thresholds so that an executive performance measures at which 100% of target amounts are earned should be established at median levels, consistent with our philosophy of compensating executives at or near the median compensation paid by companies of comparable size; and performance-based compensation should be capped at 200% of target amounts in order to maintain fiscal Peer Group Company Weyerhaeuser Universal Forest Products Rayonier Plum Creek Timber Deltic Timber St. Joe Potlatch Corporation Funds from operations, or FFO, measured at the corporate level against a pre-defined target; and Earnings before interest, taxes, depreciation, depletion and amortization, or EBITDDA, measured at each operating division against pre-defined targets.requirements filed the required reports on time in 2010.2010,2012, the Committee met seveneight times.audit committeeAudit Committee concerning independence, and has discussed with KPMG its independence. The Committee also discussed the quality and adequacy of Potlatch’s internal controls with management, the Internal Audit Director and the independent registered public accounting firm. The Committee reviewed with KPMG and the Internal Audit Director their respective audit plans, audit scope and identification of audit risks, and reviewed and discussed the results of the internal audit examinations with the Internal Audit Director.2010,2012, with management and with KPMG outside the presence of management. The Committee also discussed with KPMG the matters required to be discussed by the Statement on Auditing Standards No. 61, as amended (AICPA,Professional Standards, Vol. 1. AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T.2010,2012, for filing with the Securities and Exchange Commission.20102012 and 200920102012 are compatible with the auditor independence requirements. The following table shows fees for professional services rendered by KPMG for audit services for the years ended December 31, 20102012 and 2009,2011, and fees billed for other services rendered by KPMG during each of these years. Audit Fees(1) Audit-Related
Fees(2) Tax Fees All Other Fees $ 708,131 — — — $ 739,834 $ 40,000 — — Audit-Related
Fees2012 $510,000 — — — 2011 $649,308 — — — (1)(1) Audit fees represent fees for the audit of our annual financial statements, the audit of internal control over financial reporting and reviews of the quarterly financial statements. The 2009 fees also include a comfort letter issued in connection with our senior note offering that was completed in 2009.(2)Audit-related fees represent fees for the audit of our defined benefit plans and the audit of the Annual Reports on Form 11-K in 2009.20102012 were pre-approved by our Audit Committee. The Audit Committee Pre-Approval Policy for Pre-approval of Independent Auditor Services and Fees provides for pre-approval of audit, audit-related, tax and other services specifically described by the Policy on an annual basis. A copy of the policy can be found on our public web site by going towww.potlatchcorp.com, and selecting “Investor Resources,” then “Corporate Governance,” and then“Audit “Audit Committee Pre-Approval Policy.” Under the terms of the Policy, unless a type of service to be provided by the independent registered public accounting firm has received general pre-approval, it will require specific pre-approval by the Audit Committee. In addition, any proposed services anticipated to exceed pre-approved cost levels must be separately approved. The policy authorizes the Audit Committee to delegate to one or more of its members pre-approval authority with respect to permitted services. The member or members to whom such authority has been delegated must report any pre-approval decisions to our Audit Committee at its next scheduled meeting.
INDEPENDENT AUDITORS FOR 20112010.2012. A summary of the fees paid by us to KPMG in connection with its audits for 20102012 and 20092011 can be found in the section titled,“Fees Paid to Independent Registered Public Accounting Firm in 20102012 and 2009”2011” in this proxy statement.2011.NasdaqThe listing standards of the Nasdaq Global Select Market provide that the Audit Committee is solely responsible for the appointment, compensation, evaluation and oversight of our independent registered public accounting firm. However, as a matter of good corporate governance, the Audit Committee is asking our stockholders to ratifysubmitting its appointment of KPMG as independent registered public accounting firm for 20112013 for ratification by the stockholders by voting “FOR” the following advisory resolution at the Annual Meeting:RESOLVED, that the selection by the Audit Committee of the Board of Directors of the firm of KPMG LLP, as independent registered public accounting firm for the company for the year 2011 is hereby ratified.2011.OverviewOurThe key objectives of our compensation objectivesprogram are aimed at helping us to recruit, motivate and retain talented and experienced executives, ensure our incentive compensation is aligned with short-term and long-term company performance and to align our employees’employees' interests with those of our stockholders.officer’sofficer's pay grade, approximately 60 –60% to 70% of such officer’sthe officer's compensation is composed of a combination of short-termannual cash incentive awards or annual cash incentive awards,based on operational performance goals, and long-term equity incentive grants. See “Analysis of 2010 Compensation-Comparison of 2010 Target and Actual Compensation.” The table below showsIn 2012, for the past 5 years, the total compensation of the company’s chief executive officer compared to the company’s total shareholder return (TSR) and the median TSR of the peer group of forest products companies that the company uses to benchmark TSR. As a specialized REIT, we consider our peer companies to consist of “pure play” timber REITs and other forest product companies. See “Compensation Components-Long-Term Equity Incentive Awards-Peer Group” below.CEO Compensation vs. TSR PerformanceAlthough economic conditions remained difficult in 2010, our 2010 financial results were strong relative to our 2009 results. The company generated $40.3 million of earnings from continuing operations and closed large sales of non-strategic properties in the third and fourth quarters. The company’s improved operating results allowed the company to end the year with $95.8 million of working capital and no borrowings outstanding under its bank facility. As a result of this performance, funds from operations (FFO), which is the basis upon which annual incentive compensation is awarded, was $120.1 million in 2010, yielding an incentive pool modifier of 200%. However, under the terms of our annual incentive plan, the Compensation Committee, or Committee, has discretionary authority to limit the amount and alter the time and form of payment of annual awards if the aggregate amount of awards to be paid exceeds 6% of our pre-tax income or we did not declare a cash dividend for the year. In 2010, although we made dividend distributions to our stockholders, the aggregate annual awards payable based upon an incentive pool modifier of 200% would exceed 6% of our pre-tax income for the year. Therefore, for 2010, as it did in 2009, the Committee exercised its discretionary authority to reduce the annual incentive awards to all eligible employees as a group and reduced the incentive pool modifier to 150%. See“Analysis of 2010 Compensation—Annual Cash Incentive Awards.”Compensation Policies and ProceduresThe Compensation Committee, working with company management, has adopted compensation policies and procedures that are designed to implement our compensation philosophy of providing our executives fair and competitive incentive-based compensation packages tied to performance of both the individual and the company, and to ensure that our compensation programs do not encourage employees to take unnecessary or excessive risk that could have a material adverse effect on the company. Key elements of our compensation program include the following:Variable compensation is heavily weighted toward long-term incentives to align compensation with sustained stockholder returns. In 2010, one hundred percent of long-term incentive awards for the company’s Chief Executive Officer are performance based and 75% of our long-term incentive awards, 100% of our Chief Executive Officer's awards are performance vested, and 75% of the awards for the other named executive officers are performance based.sharevested awards are earned based upon the achievement of targets that are established by the Compensation Committee at the beginning of a three-year performance period, are subject to thresholds that require a minimum level of achievement for awards to be earned, and are capped at 200% of target.limitdecrease (but not increase) the amount and alter the timetiming and form of payment of annual awards ifawards.aggregate amountother named executive officers the portion of awards2012 compensation granted that was fixed and the portion that was performance-based.be paid exceeds 6%show signs of company pre-tax income or ifrecovery, and despite sales of fewer acres of nonstrategic properties and a lower harvest volume the company does not declare a cash dividendgenerated $42.6 million of net income from continuing operations, comparable to 2011. All of our operating divisions exceeded their targets for 2012. Operating results in our Wood Products Division were the highest they have been in the past eight years. Our Resource Division began to see improved pricing throughout the year. Our Real Estate Division sold fewer acres of low-basis nonstrategic land during the year, yet still contributed $28.1 million of operating income for the year. The company's operating results allowed the company to end the year with $80.1 million of cash and short-term investments and no borrowings outstanding under its bank facility. As a result of this performance, funds from operations (FFO), which is the basis upon which annual incentive compensation is awarded, was $74 million, or 175% of the budgeted target of $42.2 million, which resulted in a calculated multiplier of 200% in accordance with the caps set forth in the annual incentive plan. However, in view of the harvest deferrals and reduction of the company's dividend rate commencing in December 2011, the Compensation Committee capped the annual incentive pool modifier for named executive officers at 100% of the target pool, subject to the application of individual performance modifiers. Based upon the strong performance by the company and our Chief Executive Officer, our Chief Executive Officer received an individual performance modifier of 2.0 for 2012, which resulted in an annual cash incentive award to the Chief Executive Officer at 200% of target. See Analysis of 2012Compensation - Individual Compensation.andwithin the meaning of Nasdaq listing standards relating to compensation committees.Compensation Committee regularly requests that its independent consultant conduct a review of the company’sCompany seeks an annual stockholder advisory vote to approve executive compensation, program to evaluate whether it is comparable to compensation programsthe results of companies of similar size.which are considered by the Committee in determining executive compensation.company’scompany's executive compensation programs annually to evaluate whether they are designed and administered in a manner that discourages undue risk-taking by employees. The company's assessment is reviewed by the Compensation Committee.discourages undue risk-taking by employees. The company’s assessment is reviewed by the Compensation Committee. or club memberships, with the exception of payment of premiums for accidental death and dismemberment insurance. The company has a relocation program that is the same for all salaried employees. Pursuant to the program, reimbursement of an employee’s loss on sale of his or her home is capped and the relocating employee’s home is only purchased if not sold within 90 days and then only at a purchase price equal to the average of two independent appraisals of fair market value. The company’scompany's health care and other medical insurance programs, as well as its salaried employee 401(k) Plan and its limited relocation program are the same for all salaried employees, including officers.company’scompany's Chief Executive Officer isand President and Chief Operating Officer are required to achieve minimum stock ownership that is five times histheir respective base salarysalaries and the other named executive officers are required to achieve minimum stock ownership that is two times their respective base salaries.“claw back”“clawback” policy to recover compensation earned as a result of fraudulent or illegal conduct. We expect to modify the policy upon the issuance of final regulations by the SEC under the applicable provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act).company’scompany's insider trading policy, directors, officers and employees are prohibited from speculating in company securities or engaging in transactions designed to hedge their ownership interests.The sections that follow provide more detailed information regarding the company’s executive compensation program, as well as more information regarding the compensation of our named executive officers.. The Compensation Committee, composed entirely of independent directors within the meaning of Nasdaq listing standards, periodically reviews the components of our executive compensation program to ensure the program continually meets our objectives as well as improves or evolves as necessary. The Committee reviews and approves compensation packages for each named executive officer annually.. Each year, the company’scompany's Chief Executive Officer and Vice President, Human Resources, recommendsrecommend to the Compensation Committee changes to base salaries and target amounts for annual cash bonusesincentive awards and equity awards for each named executive officer, except the Chief Executive Officer. These recommendations are based on the principal duties and responsibilities of each executive officer, competitor pay levels within our industry, pay levels for comparable companies of similar size within regional and national markets, internal pay equity, and individual performance. In addition, each year our Vice President, Human Resources and our Controller and Treasurer provide the Committee with a detailed review of the actual results of the company’scompany's corporate and operating divisions compared to the performance goals established at the beginning of the year under our annual incentive plan, and the resulting awards proposed to be made to the named executive officers. Our Chief Executive Officer presents evaluations of executives who report to him and makes recommendations to the Committee regarding executive base salary and annual cash incentive compensation and long-term equity compensation for executive officers, and compensation packages for executives being hired or promoted. Our Chief Executive Officer also recommends performance targets for the upcoming year.Officer’sOfficer's performance and advice from itsthe Committee's independent compensation consultant.Consultant. Deloitte Consulting LLP advisesConsultants Pursuant to its charter, the Compensation Committee may retain, at the company's expense, independent advisers to assist it in its ongoing development and evaluation of company compensation policies and practices and the Committee's determination of compensation awards. For 2012, the Committee continued to engage Deloitte as its independent compensation consultant. Deloitte reports directly to the Compensation Committee and not to management. Deloitte is independent from our company, has not provided any services to our company in 2012 other than to the Compensation Committee, and receives compensation from our company only for services provided to the Committee. The Compensation Committee has assessed the independence of Deloitte pursuant to SEC rules and has concluded that the work of Deloitte has not raised any conflict of interest. Deloitte:matters. Basedand executive compensation plan designs;part uponthese materials, including the consistency of proposals with the Committee's compensation philosophy, risks inherent in proposals and comparisons to programs at other companies;prepared by Deloitte,of the company's compensation programs, including positioning of the programs in the competitive market, to assist the Committee analyzesin its analysis of each component of each of our executive officers’officers' compensation packages every one or two years to assess the proper balance and competitiveness of the components and the compensation tools used to accomplish the objective of each component. Additionally, Deloitte assistscompensation component;CommitteeCompensation Discussion and Analysis; andan annual basis in reviewing the compensation packages of each of our named executive officers.orand form of executive compensation under our compensation programprograms are ultimately made by the Committee and may reflect factors and considerations other than the information and advice provided by Deloitte.TSR performance.. In connection with the Compensation Committee’sCommittee's annual review and approval of compensation packages for the company’scompany's named executive officers, the Committee analyzes tally sheets prepared by Deloitte for each named executive officer that assign dollar amounts to all components of such officer’sofficer's compensation, including the value of benefits received under several different scenarios using different assumed company stock prices.termination scenarios. The tally sheets show, for each named executive officer:officer, the value of: (i) actual base salary for the current year and the previous year, (ii) targeted and actual annual incentive bonuses for the current year and the previous year, (iii) equity award target and actual equity awardsvalues for the current year and the previous year; (iv) actual realized value forequity award values on the current yearday vested, (v) health and the previous year of vested equity awards and benefits; (v) the amount of unrealized value fromwelfare benefit premiums; (vi) unvested equity grants andgrants; (vii) accumulated deferred compensation; (viii) the value of pension accruals based on data provided by Milliman, Inc., the company's pension actuary; and (vi) the amount(ix) benefits the executive could realize upon voluntary resignation, severance,a non-change of control termination, a change of control retirement,termination, and termination as a result of disability and death. The Committee reviews tally sheets to understand the total compensation received by executives over time. The Committee may make changes to an executive officer’sofficer's compensation package based upon its review of tally sheets. There were no changes to the named executive officers’officers' compensation and benefits based on the Committee’sCommittee's review of the 20102012 tally sheets.. The 20102012 tally sheets prepared by Deloitte for the Compensation Committee include a wealth accumulation analysis that assesses the potential future value of current and anticipated future equity holdings for each of our named executive officers based onassuming a voluntary resignation, severance,a non-change of control termination, a change of control retirement,termination, and termination as a result of disability and death andusing multiple company stock price assumptions over a five-year period.and ten-year periods. The purpose of the analysis is to identify the potential wealth that may be created as a result of our executive compensation program and assist the Committee in determining if that wealth creation is appropriate given our performance. The wealth accumulation analysis also helps the Committee identify pay inequities among different executives. There were no changes to the named executive officers' compensation and benefits based on the Committee's review of the 2012 wealth accumulation analysis.. The Compensation Committee also analyzes competitive data provided by Deloitte in connection with itsthe Committee's review and approval of each of our named executive officer’sofficer's compensation packages. Compensation levels are targeted to be at, or near, the median compensation paid by other companies of comparable size both in our industry and generally. Every two years Deloitte provides the Committee with a market assessment that utilizes blended market data from the most relevant compensation surveys available, including the NAREIT Compensation Survey and the Forest Products Industry Compensation Association Survey for industry-specificResourceResearch Institute and Towers Watson for general industry market data on general industry companiesrepresenting similarly-sized companies. In 2012, data that Deloitte compiled to assess 2011 compensation was updated or 2012 using an annual update factor of similar size.2.6% to account for salary inflation. The surveys used include compensation data from companies within our peer group and other companies outside of our peer group. Competitive compensation survey data gathered by Deloitte from the surveys is statistically regressed to yield comparable data for comparison with the company’scompany's compensation data for each corporate and operating division, using a formula that takes into consideration executive pay levels for positions similar in scope to those of our named executive officers based on annual corporate and annualdivision revenues.. The compensation of individual named executive officers is adjusted fromcompared to the median level of compensation received by comparably sized companies and adjusted, as appropriate, to recognize variables such as job performance, long-term potential and tenure. Total compensation earned by our named executive officers may vary from the market median as a result of annual and long-term incentive compensation awards that are determined based on actual performance of the company and its divisions against target performance levels.. company’scompany's executive compensation programsprogram along with recommended modifications, if any. Among the attributes of our executive compensation program that management and the Committee take into consideration in assessing the risks arising from our compensation policies and procedures are:executives’executives' interests with those of our stockholders;company’s Securities Law Compliance and Insider Trading Policycompany's insider trading policy that prohibits employees from speculating in company securities or engaging in transactions designed to hedge their ownership interests; andcompany’s Financial Restatementcompany's financial restatement and Claw Back Policy.executives’executives' compensation packages among three components:company’scompany's overall long-term business objectives. We compensate executives with higher levels of responsibility with a higher proportion of at-risk incentive compensation and equity compensation, so their interests are closely aligned with those of our stockholders. See“Analysis of 2010 Compensation—2012 Compensation - Comparison of 20102012 Target and Actual Compensation”below for each named executive officer’sofficer's specific compensation mix for 2010.2012.fallsresults fall below threshold levels, and we set caps on the aggregate amount of incentive compensation that we pay, regardless of actual performance.. The Compensation Committee targets executive base salaries to be at the median of companies of comparable size, both in our industry and generally, with such adjustments as management and the Committee deem necessary based upon the individual executive’sexecutive's job performance, long-term potential and tenure. Base salary ranges are established for each pay grade of salaried employees, including our Chief Executive Officer. We determine an executive’sexecutive's rate of pay within the salary range for his or her position based upon the executive’sexecutive's level of experience and performance relative to his or her individual written performance plan. Each executive’sexecutive's individual performance plan contains operational and financial objectives determined by the executive together with his or her supervisor. Our Chief Executive Officer’sOfficer's base salary is set by the Committee in its sole discretion after consultation with Deloitte.. Our annual incentive program links compensation to annual company performance by awarding cash bonuses for achieving pre-defined performance goals.. Target annual bonuses for our executive officers are establisheddefined as a set percentage of base salary, based on the pay grade of each officer’sofficer's position. These targets are set forth below under“Analysis of 2010 Compensation-Comparison2012 Compensation - Comparison of 20102012 Target and Actual Compensation.” The Committee periodically reviews these target percentages for our executive officers and approves modifications to the target percentages when appropriate, based in part on the recommendations of management and Deloitte after a review of the compensation practices of companies of comparable size both in our industry and generally. Although any target award to be made to our Chief Executive Officer is initially calculated as a percentage of his base salary based in part on the compensation practices of companies of comparable size, ultimately, his actual award is determined by the Committee in its sole discretion.. Annual bonuses are subject to adjustment based on corporate and operating division financial performance modifiers. At the beginning of each year the Committee, with input from the Chief Executive Officer, approves a scale of modifiers based on a range of possible financial performance outcomes. At the end of the year, actual financial performance is compared to the Committee’sCommittee's pre-approved performance scale to determine the modifiers to apply to the target awards. Awards are further adjusted based on individual performance modifiers that are determined based on the individual employee’semployee's annual performance review. not changed. However, upon completion of the calculations for all eligible corporate and operating division employees, the Committee is provided discretion under our annual incentive plan to modify individual annual incentive awards, or awards to all eligible employees as a group, after considering an individual’sindividual's performance, operating division’sdivision's performance, the company’scompany's overall performance or unusual, extraordinary or infrequently occurring items. The Committee also considers safety performance, environmental performance and other factors when approving awards. In addition, under the terms of our annual incentive plan, the Committee has discretionary authority to limitdecrease the amount and alter the time and form of payment of annual awards if the aggregate amount of awards to be paid exceeds 6% of our pre-tax income or we did not declare a cash dividend for the year. In 2010, although we made dividend distributions to our stockholders, the aggregate annual awards payable based upon company performance exceeded 6% of our pre-tax income for the year. Therefore, for 2010, as it did in 2009, the Committee exercised its discretionary authority to reduce the annual incentive awards to all eligible employees as a group. By reducing the aggregate awards the Committee also recognized that the company’s performance in 2010 resulted in part from one-time sales of non-strategic timberlands that were not anticipated at the time target performance measures were established. See “Analysis of 2010 Compensation—Annual Cash Incentive Awards” below.. Our long-term incentive program is intended to link compensation to long-term company performance. Under our long-term incentive program we grant two types of equity awards:over timeon the third anniversary of the award, and aid in the recruitment and retention of key employees.company’scompany's Chief Executive Officer isand President and Chief Operating Officer are only awarded only performance shares.Shares. SharesPerformance shares are granted to named executive officers based upon “guideline” long-term incentive values, and are earned based on the company’scompany's TSR over a three-year performance period relative to the median TSR of six forest product companies (weighted 50%) and the company’scompany's TSR percentile ranking relative to all companies within the Standard and Poor’sPoor's Midcap 400 Index (of which we are a member) (weighted 50%) over such performance period. TSR is calculated based on stock price appreciation plus cash and share distributions. See "Units. UnitsRestricted stock units are awarded to executive officers other than the Chief Executive Officer to aid in the retention of key employees. Restricted stock units comprise 25% of each officer’sofficer's long-term incentive award and vest on the third anniversary of the award. We have also granted restricted stock units to newly hired executives to replace the value of equity awards that were forfeited when they left their prior employer and to align the interests of new executives to those of our stockholders.. The Compensation Committee has approved “guideline” long-term incentive values for each executive pay grade eligible for long-term incentive awards other than the Chief Executive Officer. These guideline values initially were established at the median of competitive practice, based on an assessment of compensation programs of comparably sized companies by Deloitte. The 2012 assessment completed by Deloitte shows that our guidelines are currently more closely aligned with the 75th percentile. Guideline values are converted to equity awards in a given year by dividing the values by an amount equal to the average closing price of company common stock during the first 10 business days of the year. The actual number of equity awards granted to eligible employees is further subject to an increase or decrease from the guideline value at the Committee’sCommittee's discretion, based upon management’smanagement's assessment of an individual employee’semployee's past contributions and potential future contributions to the company. In the case of the company’scompany's Chief Executive Officer, the Committee determines in its sole discretion the number of performance shares to be awarded based on a review by Deloitte of competitive practice and the Committee’sCommittee's evaluation of the Chief Executive Officer’sOfficer's performance.. The Compensation Committee believes that for purposes of measuring company performance for awarding annual cash incentive awards and long-term equity incentive awards:officer’sofficer's compensation should be at risk if minimal performance is not achieved;discipline.The following table summarizes the range of measures typically used by the Compensation Committee in establishing threshold, targetdiscipline and maximum performance levels for annual cash incentive and long-term equity incentive awards:. As a specialized REIT, we consider our peer companies to consist of “pure play” timber REITs and other forest product companies. The six forest product companies used for benchmarking our TSR in 20092010, 2011 and 20102012 are as follows: Previous
Peer Annual
Revenue($)(1) Market
Capitalization($)(2) GICS Sub Industry X $ 6,552 $ 13,250 Specialized REITs X 1,891 706 Building Products X 1,315 4,880 Specialized REITs X 1,190 6,810 Specialized REITs X 142 714 Forest Products X 100 2,400 Real Estate Mgmt. & Dev. 539 1,530 Specialized REITs Company GICS Sub Industry Weyerhaeuser 7,059 16,039 Specialized REITs Universal Forest Products 2,055 820 Building Products Rayonier 1,571 6,907 Specialized REITs Plum Creek Timber 1,339 7,888 Specialized REITs Deltic Timber 141 915 Forest Products St. Joe 139 1,992 Real Estate Mgmt. & Dev. Potlatch Corporation 525 1,787 Specialized REITs (1)(1) In millions, for the 20102012 fiscal year, based on publicly available information.(2) AsIn millions as of March 15, 2011.1, 2013.modifiedsupplemented our peer group to addwith the S&P Midcap 400 Index in 20092010, 2011 and 20102012 (weighted 50-50 with the forest product companies) in order to provide a broader measure of performance for comparison purposes and to offset any volatility in the stock prices of the six forest product companies.Awards. AwardsThe Compensation Committee reserves the right to reduce or eliminate any performance share award to an executive, or to all executives as a group, if it determines that the company’scompany's relative TSR performance or financial or operational performance has been inadequate. The Committee did not exercise this authority for 2010.2012.20102012 Compensation. Subsequent to our tax-free spin-off on December 16, 2008, of Clearwater Paper Corporation, which owns and operates our former pulp-based manufacturing businesses, our executive compensation levels exceeded the median compensation paid by other companies of comparable size both in our industry and generally. As a result, since the spin-off we have limited base salary increases for our executives with the intent of bringing compensation levels back to the median for our new size. In addition, based upon economic conditions and competitive data, the CompensationThe Committee did not approve any base salary increases for named executive officers in 2009 and 2010.2010, and approved lump sum payments in lieu of base salary increases in 2011, in order to continue bringing base salaries back to the median for our company's size. In 2012, the Compensation Committee did not approve any increase in the base salary of our Chief Executive Officer or any lump sum payment in lieu thereof, and approved a 3% lump sum payment in lieu of a base salary increase for Mr. Stinnett. In recognition of the expansion of his responsibilities in 2012 to include management of the Idaho Resource segment, the Committee approved a 9% increase in base salary for Mr. Cremers, and in recognition of the expansion of his responsibilities in 2012 to include management of the Arkansas Resource segment, the Committee approved a 5% increase in base salary for Mr. Temple. The Committee approved a 5% increase in base salary for Ms. Scott based upon competitive market data.. In order to reflect both our REIT structure and our wood products operations, we used the following performance measures for purposes of the 20102012 annual cash incentive awards:
Performance Level |
|
| ||
Threshold | 80% of | or $33.8 million FFO | 0.25 x Target Pool | |
Target | 100% of | 1.00 x Target Pool | ||
Maximum | 126.7% of | or $53.5 million FFO | 2.00 x Target Pool |
At the end of 2010, the company’s
Our 2010 At the end of 2012, the company's actual corporate FFO included $23.6was $74 million, relating toor 175% of the salebudgeted target of nonstrategic Wisconsin and Arkansas timberlands. The sale significantly improved the company’s liquidity and financial position as the company ended the year with approximately $91$42.2 million, in cash and short-term investments. As a result, the Committee determined that the proceeds were appropriately included in the calculation of corporate FFO, resultingwhich resulted in a calculated incentive pool multiplier of 200%. However, as a result of this multiplier, in accordance with the aggregatecaps set forth in the annual incentive awards payableplan. However, in view of the harvest deferrals and reduction of the company's dividend rate commencing in December 2011, the annual incentive pool modifier for named executive officers was capped at 100% of the target pool, subject to company employees exceeded 6%the application of our pre-tax income for the year. Therefore, for 2010, as it did in 2009, the Committee exercised its discretionary authority to reduce the multiplier to 150%. By reducing the multiplier and resulting aggregate awards the Committee also recognized that the company’sindividual performance in 2010 resulted in part from one-time sales of non-strategic timberlands that were not anticipated at the time target performance measures were established.
modifiers.
Corporate: corporate FFO performance, modified based on the achievement of measurable strategic objectives; and
Operating Divisions: operating division EBITDDA performance (weighted 75%) and corporate FFO performance (weighted 25%).
market downturn), division EBITDDA goals cannot be met. The Chief Executive Officer has discretion to adjust the corporate and operating division incentive pools, subject to the maximum company-wide funded incentive
appropriate, and to reduce awards.
Operating Division | Actual 2010 EBITDDA(1) ($ in millions) | Target 2010 EBITDDA ($ in millions) | ||||||
Real Estate | $ | 79.1 | $ | 49.3 | ||||
Resource | 82.6 | 71.0 | ||||||
Wood Products | 15.3 | 9.5 |
Operating Division | Actual 2012 EBITDDA(1) ($ in millions) | Target 2012 EBITDDA ($ in millions) | Percent of Target Achieved (%) |
Real Estate | 33.5 | 31.4 | 107 |
Resource | 66 | 52 | 127 |
Wood Products | 52 | 11.6 | 448 |
(1) | Each of our operating |
Awards Median TSR of Six Forest TSR Percentile Ranking S&P Midcap 400 Index Below Threshold Threshold (Median – 5%) Target (Median) Maximum (Median + 10%) COMPARISON continues to believe that no performance shares should be earned with respect to a performance factor for performance below the applicable threshold performance level. In consideration of all these factors, the Committee assigned an individual performance modifier of 2.0 to Mr. Covey. these objectives. other medical insurance programs, as well as our 401(k) Plan, are the same for all salaried employees, including officers. Section 162(m) of the Internal Revenue Code of 1986, as amended, (the “Code”) generally disallows The company intends annual cash incentive compensation awards and performance share awards issued pursuant to stockholder-approved plans to qualify as "performance-based" compensation under Section 162(m). payment was predicated upon the achievement of specific financial results that were subsequently the subject of a material financial restatement; in the lower payment, settlement, grant or vesting would have occurred based upon the restated financial results. Chief Executive Officer President and Chief Operating Officer served on our Executive Compensation and Personnel Policies Committee until her retirement from the Board at our annual meeting of stockholders on May 7, 2012. Summary Compensation Table Name and Principal Position Michael J. Covey Chairman, President and Chief Executive Officer Eric J. Cremers Vice President, Finance and Chief Financial Officer William R. DeReu Vice President, Real Estate Division Brent L. Stinnett Vice President, Resource Management Division Thomas J. Temple Vice President, Wood Products Division This column shows the aggregate grant date fair value, computed in accordance with FASB Topic 718, of performance shares (at target) and restricted stock units granted in Awards.2010,2012, the Compensation Committee approved long-term incentive awards for the Chief Executive Officer comprised entirely of performance shares, and for all other eligible employees consisting of performance shares (75%), and restricted stock units (25%) which vest 100% of which vest on the third anniversary of the grant.2012.2014. For the 2010-20122012-2014 performance period based upon the analysis of, and in consultation with, Mercer, who advises company management on compensation design issues, and in consultation with its independent consultant, Deloitte, the Compensation Committee determined to continue to measure company performance based on two factors, each of which is weighted 50%: (i) company TSR, relative to the median TSR of six forest product companies and (ii) the company’scompany's TSR percentile ranking relative to all companies within the Standard and Poor’sS&P Midcap 400 Index. The following table sets forth the relative TSR performance scale and the corresponding number of shares earned as a percentage of the weighted targets that were set by the Committee. The percentage of performance shares earned is the sum of the percentage multiple in each column divided by two.Potlatch CorporationComparison
Products Companies Percent of Shares
Issued Percent of Shares
Issued (weighted 50%) (weighted 50%) 0 % Below Threshold 0 % 25 % Threshold (33rd percentile) 25 % 100 % Target (50th percentile) 100 % 200 % Maximum (85th percentile) 200 % (weighted 50%) (weighted 50%) Below Threshold — % Below Threshold — % Threshold (Median - 5%) 25 % 25 % Target (Median) 100 % 100 % Maximum (Median + 10%) 200 % 200 % / - 50% weighted approach to performance share TSR measurement, in 2009, the probable outcome of a maximum payout was estimated to occur approximately 3% of the time and the probable outcome of no payout was estimated to occur approximately 19% of the time.. The Compensation Committee made individual modifications to the compensation of named executive officers, including the Chief Executive Officer, based on recommendations from the Chief Executive Officer, competitive data provided by Deloitte and individual performance reviews. Individual performance modifiers could range from zero to 2.0 times the target award. The threshold individual modifier is 0.5, below which no annual or long-term incentive award was granted. The range of individual modifiers for our named executive officers for 20102012 was from 1.12.57 to 1.50.2.0.Officer’sOfficer's individual performance modifier, the Committee considered its evaluation of Mr. Covey’sCovey's performance against his financial, operational and strategic goals for 2010.2012. The Committee discussed this evaluation in executive session without Mr. Covey being present. The Committee noted that under Mr. Covey’sCovey's leadership, in 2010, despite sales of fewer acres of lower-basis nonstrategic properties and a difficult economic environment,lower harvest volume, the company generated $120.1$42.6 million of FFO comparednet income from continuing operations, comparable to 2011. Operating results in the company's Wood Products Division were the highest they have been in the past eight years. The Resource Division exceeded its operating targets and acquired additional timberland in Arkansas. Working with conservation advocates, the Real Estate Division completed the $11 million sale of 2,000 acres of the Mississippi River Northwoods HBU property in Northern Minnesota to the budgeted targetState of $89.4 million, resulting in $40.3Minnesota and even though fewer acres of lower-basis nonstrategic land was sold during the year, the Real Estate Division contributed $28.1 million of earnings from continuing operations.operating income. The company also closed large sales of non-strategic properties in the third and fourth quarters. The company’s improved operating results allowed the company to endended the year with $95.8$80.1 million of working capitalcash and short-term investments and no borrowings outstanding under its bank facility.Officer’sOfficer's recommendations to the Committee concerning the individual performance modifiers of each of the other named executive officers were based on the individual performance evaluations of those officers. These evaluations took into account objective criteria in the form of operating results against budget, and subjective criteria such as performance against strategic goals which involve the exercise of discretion and judgment in assessing performance attainment.Cremers’Cremers' individual performance modifier, the Committee noted that during 2010, under2012, Mr. Cremers’Cremers assumed responsibility for Idaho Resource operations, in addition to his duties as Chief Financial Officer. Under Mr. Cremers' leadership, the company in addition to improvingmaintained its liquidity position and entered into interest rate swap agreements which resulted in a reduction of interest expense in 2010 of $0.5 million. Mr. Cremers also was instrumental in changing the company’s listingnew $250 million unsecured revolving credit agreement to Nasdaq from NYSE, and led the successful replacement of our general ledger and accounting systems.Thereplace its $150 million secured revolving credit agreement.modifiersmodifier, the Committee noted her skill and leadership in risk management and compliance, her management of operating division vice presidentsthe company's legal affairs and budget and her continued work in bringing the Avery Landing matter to a conclusion.each operating divisionthe Wood Products Division not only exceeded its budgeted operating results for the year. Eachyear, but performed better than any other year in the past eight years. The Wood Products Division generated $45.5 million of operating division generatedincome in 2012 compared to $7.3 million in 2011 and EBITDDA in 2010 that greatly exceeded EBITDDA targets forwas more than ten times the year.segment's 2012 target. See "Analysis of 2010 Compensation-Annual2012 Compensation - Annual CashIncentive Awards-Comparison of Operating Division Actual and Target EBITDDA”above for a comparison of each operating division’sdivision's actual 20102012 EBITDDA and target EBITDDA.Each operating division vice president’s individual performance modifier also reflects performance against subjective strategic goals. Under Mr. Stinnett’s leadership In addition, as part of a restructuring of the Resource division, the harvest level of sawlogs increased 19%Division in 2010 over 2009early 2012, Mr. Templetotal harvest levels increased 8% over 2009. Under Mr. Temple’sunder his leadership, the Wood Products division produced $15.3 million of EBITDDAcompany closed two transactions expanding its timberland holdings in 2010, an improvement of $26.1 million over 2009Arkansas.division recognized operating incomeChief Executive Officer subjectively evaluated performance based on qualitative and quantitative information specific to each of $7.1 million in 2010 compared to an operating loss of $20.5 million in 2009. Mr. DeReu negotiated sales of non-strategic properties totaling 42,772 and 47,702 acres in the third and fourth quarters of 2010.20102012 Target and Actual Compensation20102012 percentage of total direct compensation represented by the amount of each component (i.e., the mix of pay). Michael J. Covey 715,020 500,514 1,017,600 715,020 1,001,000 1,017,600 32% 22.4% 45.6% 26.2% 36.6% 37.2% Eric J. Cremers 450,000 225,000 309,200 442,558 450,000 351,300 45.7% 22.9% 31.4% 35.6% 36.2% 28.2% Lorrie D. Scott 262,500 118,125 201,900 260,100 236,300 201,900 45% 20.3% 34.7% 37.2% 33.8% 29% Brent L. Stinnett 305,040 137,268 247,200 314,190 137,300 247,200 44% 20% 36% 45% 19.6% 35.4% Thomas J. Temple 277,074 124,683 201,900 274,537 249,400 201,900 45.9% 20.7% 33.4% 37.8% 34.4% 27.8% TARGET 2010 TOTAL DIRECTCOMPENSATION(1)ACTUAL 2010 TOTAL DIRECTCOMPENSATION(1)NameSalary(% of Total)Targetannualincentiveaward(cash)(% of Total)Guidelinelong-termincentivegrant value(equity)(2)(% of Total)Salary(3)(% of Total)Actualannualincentiveaward (cash)(% of Total)Actuallong-termincentivegrant value(equity)(4)(% of Total)Michael J. Covey$715,02032.4%$500,50022.7%$992,40044.9%$692,10323.0%$1,126,20037.4%$1,190,80039.6%Eric J. Cremers$411,30044.7%$205,70022.4%$303,20032.9%$398,11732.8%$450,00037.1%$363,90030.0%William R. DeReu$200,04048.6%$80,00019.4%$131,30031.9%$193,62936.9%$180,00034.3%$151,10028.8%Brent L. Stinnett$305,04044.5%$137,30020.0%$243,20035.5%$295,26337.4%$250,00031.7%$243,20030.8%Thomas J. Temple$263,88045.5%$118,70020.5%$197,80034.1%$255,42239.1%$200,00030.6%$197,80030.3%(1) Total direct compensation is the sum of base salary, annual cash incentives and long-term equity incentives. (2)(2) These amounts represent the dollar value of the 20102012 long-term equity incentive guideline computed by multiplying the guideline number of shares for each named executive’s pay gradeexecutive's paygrade by the ten-day average closing stock price for the first ten business days in January, 20102012 of $32.43$31.94 per share.(3)(3) This column includes salary paid for the full or partial year the employee worked. There were no adjustments to the2012 target and actual salary includes a lump sum bonus in lieu of base salariessalary increase of named executive officers in 2010. However, pay cycles changed from semi-monthly to biweekly in August 2010, so the last week or two weeks of salary was paid in January 2011.$9,150 for Mr. Stinnett.(4) 2010,2012, and performance shares granted in February, 20102012 for the performance period 2010-2012,2012-2014, in each case computed by multiplying the guideline value by the individual performance modifier. Such amounts may or may not be paid out depending on the company’scompany's performance or the executive’sexecutive's continued employment, as applicable, over the three-year vesting and performance period. See “Analysis of 2010 Compensation-Long-Term2012 Compensation - Long-Term Incentive Awards-Potlatch Corporation TSR Comparison” for a description of performance measures and threshold, target and maximum goals for performance share awards. or club memberships, with the exception of payment of insurance premiums for accidental death and dismemberment insurance. The company reimburses named executive officers for certain relocation expenses pursuant to a relocation program that is the same for all salaried employees. Pursuant to the company’scompany's relocation program, reimbursement of the employee’semployee's loss on sale of his or her home is capped and the relocating employee’semployee's home is only purchased if not sold within 90 days and then only at a purchase price equal to the average of two independent appraisals of fair market value. Our health care and. Our Salaried Supplemental Benefit Plan II provides retirement benefits to our eligible salaried employees who were participants in the plan before January 1, 2011, including our named executive officers, based upon the benefit formulae of our Salaried Retirement Plan and our Salaried 401(k) Plan but without regard to the IRS compensation and benefit limitations applicable to these tax-qualified plans. We believe this plan is competitive with our peers and companies of comparable size, and is intended to provide a retirement benefit commensurate with participant compensation, as we do for other employees. This plan is discussed in detail on pages 45-48.Salaried Retirement Plan. Our Salaried Retirement Plan provides a pension47 to our salaried and certain other eligible employees who were participants in the Plan before January 1, 2011, including our named executive officers. This plan is discussed in detail on pages 46-47.48. Effective January 1, 2011 our Salaried RetirementSupplemental Benefit Plan II was closed to new entrants.. Our Salaried 401(k) Plan permits our salaried and certain other eligible employees, including our named executive officers, to make voluntary pre-tax and after-tax contributions to the plan, subject to applicable tax limitations. We match $0.70 for every $1.00 that a participant contributes to our Salaried 401(k) Plan, up to the first 6% of his or her eligible compensation, subject to applicable tax limitations. Eligible employees who elect to participate in the plan are 100% vested in the matching contributions upon completion of two years of service. In February 2011, in connection with the closure of our salaried retirement planSalaried Retirement Plan to new employees, we amended our Salaried 401(k) Plan to provide for annual company contributions equal to 3% of base salaryeligible compensation for employees hired after January 1, 2011.2011 in addition to the company match.. All full-time employees, including our named executive officers, may participate in our health and welfare benefit programs, including medical, dental and vision care coverage, disability insurance and life insurance.. The effective grant date for equity awards is the day of the Compensation Committee meeting at which the awards are approved, typically in February of each year. These meetings are scheduled well in advance of the actual meeting date and are not coordinated with the release of any material, non-public information. Equity grants to executive officers who are hired during the year are effective upon the executive’sexecutive's start date.aan income tax deduction to public companies for annual compensation in excess of $1 million paid to the chief executive officer and the three other most highly compensated named executive officers (excluding the chief financial officer). Compensation that qualifies as “performance-based” is excluded for purposes of calculating the amount of compensation subject to the $1 million limit. While the Compensation Committee considers the effect of this rule in developing and implementing our compensation program, in order to preserve the Committee’sCommittee's flexibility to adjust short-term incentives for individual performance, we have not adopted a policy that all compensation must qualify as “performance-based” under Section 162(m).Claw BackClawback Policy. In 2009, the Compensation Committee approved a financial restatement “claw back”“clawback” policy. The policy provides that all incentive awards granted to executive officers after December 31, 2009 will provide the Board the discretion to require that the executive officer reimburse the company if:Board’sBoard's view, a company employee engaged in fraud or misconduct that caused or partially caused the need for such material financial restatement by the company; andFinancial Restatement Claw Back Policyfinancial restatement clawback policy is available by going to our public web site atwww.potlatchcorp.com, and selecting “Investor Resources,” then “Corporate Governance,” and “Financial“Financial Restatement Claw BackClawback Policy.”. The company’scompany's insider trading policy prohibits directors, officers and employees from speculating in company securities or engaging in transactions designed to hedge their ownership interests.“Securities“Securities Law Compliance and Insider Trading Policy.”. In the interest of promoting and increasing equity ownership by our senior executives and to further align our executives’executives' long-term interests with those of our stockholders, we have adopted the following stock ownership guidelines:Value of Shares = 5 x Base Salary Value of Shares = 5 x Base Salary Chief Financial Officer Value of Shares = 2 x Base Salary Vice President Value of Shares = 2 x Base Salary 20102012 all of our named executive officers met their incremental stock ownership requirements. See“Security Ownership of Certain Beneficial Owners and Management.”officers’officers' stock ownership guidelines is available by going to our public web site atwww.potlatchcorp.com, and selecting “Investor Resources,” then “Corporate Governance,” and “Officer“Officer Stock Ownership Guidelines.”20102012 Annual Report on Form 10-K.2010 Compensationyear 2010years 2012, 2011 and where applicable, the years 2009 and 2008.2010. The information contained in the Summary Compensation Table should be viewed together with the “2012 Grants of Plan-Based Awards for 2010” table, which includes target levels for annual incentive awards and long-term performance share awards, to obtain the most accurate representation of annual and long-term incentive compensation elements and the total compensation provided to our named executive officers. Year Salary
($)(1) Bonus
($)(2) Stock
Awards
($)(3) Non-Equity
Incentive Plan
Compensation
($)(4) Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)(5) All Other
Compensation
($)(6) Total
($) 2010 $ 692,103 — $ 1,663,416 $ 1,126,200 $ 543,245 $ 43,994 $ 4,068,957 2009 715,020 — 1,619,352 500,500 562,333 45,602 3,442,807 2008 708,350 — 1,443,240 366,900 437,720 71,091 3,027,301 2010 398,117 — 471,689 450,000 63,420 31,419 1,414,645 2009 411,300 — 460,383 350,600 50,691 24,315 1,297,289 2008 409,420 — 374,306 163,800 37,124 25,919 1,010,569 2010 193,629 — 195,829 180,000 24,392 13,808 607,657 2009 200,040 — 167,751 136,000 25,318 13,189 542,298 2008 200,040 — 282,390 102,000 18,748 14,001 617,179 2010 295,263 — 315,300 250,000 61,298 11,072 932,933 2009 305,040 — 261,410 85,800 98,172 20,323 770,745 2008 305,040 $ 10,000 244,584 175,000 82,057 25,034 841,715 2010 255,422 — 256,444 200,000 37,808 13,659 763,334 2009 263,880 89,200 (7) 251,627 — 27,689 340,592 972,988 Name and Principal Position Year Michael J. Covey 2012 715,020 1,090,886 1,001,000 964,025 60,003 3,830,934 Chairman and 2011 736,471 — 1,693,627 715,000 829,210 78,962 4,053,270 Chief Executive Officer 2010 692,103 — 1,663,416 1,126,200 543,245 43,994 4,068,958 Eric J. Cremers President, Chief Operating Officer 2012 442,558 — 368,280 450,000 199,023 37,779 1,497,640 and Chief Financial 2011 423,639 — 478,302 450,000 120,894 36,895 1,509,730 Officer 2010 398,117 — 471,689 450,000 63,420 31,419 1,414,645 Lorrie D. Scott Vice President, General 2012 260,100 — 211,594 236,300 97,692 20,875 826,561 Counsel and Corporate 2011 253,770 25,000 312,506 232,200 54,211 236,960 1,114,647 Secretary 2010 114,272 45,000 — 100,000 13,706 51,450 324,428 Brent L. Stinnett 2012 314,190 — 259,135(8) 137,300 148,807 23,303 882,735 Vice President, Resource 2011 314,191 — 382,753(7) 233,700 123,683 26,908 1,081,235 Management Division 2010 295,263 — 315,300 250,000 61,298 11,072 932,933 Thomas J. Temple Vice President, Wood 2012 274,537 — 211,594 249,400 92,089 18,045 845,665 Products and Arkansas 2011 271,796 — 312,506 152,900 74,042 20,119 831,363 Resource 2010 255,422 — 256,444 200,000 37,808 13,659 763,333 (1)(1) This column includes salary paid for the full or partial year the employee worked. There were no adjustments to the base salaries of named executive officers in 2010. However, payPay cycles changed from semi-monthly to biweekly in August 2010, so the last week or two weeks of salary in 2010 was paid in January 2011. 2011 salary includes lump sum bonuses in lieu of base salary increases of $21,451 for Mr. Covey, $12,339 for Mr. Cremers, $3,750 for Ms. Scott, $9,151 for Mr. Stinnett and $7,916 for Mr. Temple. Mr. Stinnett's 2012 salary includes a lump sum bonus of $9,150 in lieu of a base salary increase.(2) No2010 and 2011 include hiring and relocation bonuses were paid in 2010.to Ms. Scott.(3) 2008, 20092010, 2011 and 2010.2012. In accordance with FASB Topic 718, the grant date fair value reported for all restricted stock units was computed by multiplying the number of shares subject to the restricted stock unit award by the closing price of our stock on the grant date. The grant date fair values reported for performance shares were based upon the probable outcome of the TSR condition, which amounts were determined consistent with the estimate of the aggregate compensation cost to be recognized over the performance period determined as of the grant date under FASB Topic 718, excluding the effect of estimated forfeitures. The estimate of the aggregate
|
Name | Grant Date Fair Value Assuming Highest Level of Performance (Based on Grant Date Stock Price)($) | |||
Michael J. Covey | ||||
2010 Performance Shares | $ | 2,369,174 | ||
2009 Performance Shares | 2,361,960 | |||
2008 Performance Shares | 2,264,314 | |||
Eric J. Cremers | ||||
2010 Performance Shares | 542,936 | |||
2009 Performance Shares | 540,189 | |||
2008 Performance Shares | 465,525 | |||
William R. DeReu | ||||
2010 Performance Shares | 225,433 | |||
2009 Performance Shares | 196,830 | |||
2008 Performance Shares | 248,280 | |||
Brent L. Stinnett | ||||
2010 Performance Shares | 362,925 | |||
2009 Performance Shares | 306,715 | |||
2008 Performance Shares | 279,315 | |||
Thomas J. Temple | ||||
2010 Performance Shares | 295,179 | |||
2009 Performance Shares | 295,245 |
(4) | This column includes the cash awards under our annual incentive plan. Annual awards relating to performance in |
(5) | Amounts shown represent the aggregate annual change in the actuarial present value of accumulated pension benefits under all of our defined benefit and actuarial plans. No portion of the amounts shown in this column is attributable to above market or preferential earnings on deferred compensation. |
(6) |
(7) | Mr. Stinnett retired on January 31, 2013. He is entitled to a |
(8) | Mr. Stinnett is entitled to a pro-rata share equal to 36% of the settled award of these shares. See "Potential Payments Upon Termination in Connection with Retirement, Death or Disability." |
Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock or Units(3)(#) | Grant Date Fair Value(4)($) | |||||||||||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||||
Michael J. Covey | 2/16/2010 | $ | 62,563 | $ | 500,500 | $ | 2,002,000 | 9,180 | 36,720 | 73,440 | $ | 1,663,416 | ||||||||||||||||||||||||
Eric J. Cremers | 2/16/2010 | 25,713 | 205,700 | 822,800 | 2,104 | 8,415 | 16,830 | 381,200 | ||||||||||||||||||||||||||||
2/16/2010 | 2,805 | 90,489 | ||||||||||||||||||||||||||||||||||
William R. DeReu | 2/16/2010 | 10,000 | 80,000 | 320,000 | 874 | 3,494 | 6,988 | 158,278 | ||||||||||||||||||||||||||||
2/16/2010 | 1,164 | 37,551 | ||||||||||||||||||||||||||||||||||
Brent L. Stinnett | 2/16/2010 | 17,163 | 137,300 | 549,200 | 1,406 | 5,625 | 11,250 | 254,813 | ||||||||||||||||||||||||||||
2/16/2010 | 1,875 | 60,488 | ||||||||||||||||||||||||||||||||||
Thomas J. Temple | 2/16/2010 | 14,838 | 118,700 | 474,800 | 1,144 | 4,575 | 9,150 | 207,248 | ||||||||||||||||||||||||||||
2/16/2010 | 1,525 | 49,197 |
Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock or Units(3)(#) | Grant Date Fair Value ($)(4) | ||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||
Michael J. Covey | 2/16/2012 | 7,965 | 31,860 | 63,720 | 1,090,886 | ||||||||||||
2/16/2012 | 62,564 | 500,514 | 2,002,056 | ||||||||||||||
Eric J. Cremers | 2/16/2012 | 2,063 | 8,250 | 16,500 | 282,480 | ||||||||||||
2/16/2012 | 2,750 | 85,800 | |||||||||||||||
2/16/2012 | 28,125 | 225,000 | 900,000 | ||||||||||||||
Lorrie D. Scott | 2/16/2012 | 1,185 | 4,740 | 9,480 | 162,298 | ||||||||||||
2/16/2012 | 1,580 | 49,296 | |||||||||||||||
2/16/2012 | 14,766 | 118,125 | 472,500 | ||||||||||||||
Brent L. Stinnett (5) | 2/16/2012 | 1,451 | 5,805 | 11,610 | 198,763 | ||||||||||||
(6) | 2/16/2012 | 1,935 | 60,372 | ||||||||||||||
2/16/2012 | 17,159 | 137,268 | 549,072 | ||||||||||||||
Thomas J. Temple | 2/16/2012 | 1,185 | 4,740 | 9,480 | 162,298 | ||||||||||||
2/16/2012 | 1,580 | 49,296 | |||||||||||||||
2/16/2012 | 15,585 | 124,683 | 498,733 |
(1) | Actual amounts paid under our annual incentive plan for performance in |
(2) | Amounts shown represent the threshold, target and maximum performance shares for the |
(3) | Amounts shown represent restricted stock units granted in |
(4) | The grant date fair value of the restricted stock units has been calculated using the closing price of our common stock on the grant date (February 16, |
Name Covey, Michael J Performance Share Grant (2009-2011) Performance Share Grant (2010-2012) Cremers, Eric J Performance Share Grant (2009-2011) Performance Share Grant (2010-2012) RSU Grant (2009-2011) RSU Grant (2010-2012) DeReu, William R Restricted Stock Units (2008) Performance Share Grant (2009-2011) Performance Share Grant (2010-2012) RSU Grant (2009-2011) RSU Grant (2010-2012) Stinnett, Brent L Performance Share Grant (2009-2011) Performance Share Grant (2010-2012) RSU Grant (2009-2011) RSU Grant (2010-2012) Temple, Thomas J Restricted Stock Units (2008) Performance Share Grant (2009-2011) Performance Share Grant (2010-2012) RSU Grant (2009-2011) RSU Grant (2010-2012) This column shows performance shares granted, plus dividend equivalents accrued through December 31, (5) (6) 20102010.2012. The market value of unvested stock awards is based on the closing stock price of company common stock of $32.55$39.15 on December 31, 2010,2012, the last trading day of the year. Stock Awards Number of
Shares or
Units of
Stock
That
Have
Not
Vested
(#)(1) Market
Value of
Shares or
Units of
Stock
That
Have
Not
Vested
($)(2) Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#)(3) Equity
Incentive
Plan
Awards:
Market or
Payout
Value
of Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
($)(4) 111,019 $ 3,613,673 38,906 1,266,393 25,428 827,666 8,916 290,215 4,134 (5) $ 134,573 2,972 (6) 96,738 2,905 (7) 94,562 9,265 301,579 3,702 120,500 1,506 (5) 49,034 1,233 (6) 40,144 14,438 469,942 5,960 193,994 2,348 (5) 76,421 1,987 (6) 64,665 3,513 (8) 114,359 13,898 452,368 4,847 157,782 2,260 (5) 73,552 1,616 (6) 52,594 Stock Awards Name Number of Shares or Units of Stock That Have Not Vested (#)(1) Market Value of Shares or Units of Stock That Have Not Vested ($)(2) Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(3) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(4) Michael J. Covey Performance Share Grant (2011-2013) 66,374 2,598,524 Performance Share Grant (2012-2014) 66,089 2,587,387 Eric J. Cremers Performance Share Grant (2011-2013) 15,198 595,013 Performance Share Grant (2012-2014) 17,113 669,992 RSU Grant (2011-2013) (5) 2,533 99,169 RSU Grant (2012-2014) (6) 2,852 111,665 Lorrie D. Scott Performance Share Grant (2011-2013) 9,931 388,793 Performance Share Grant (2012-2014) 9,832 384,941 Restricted Stock Units (2010) (7) 677 26,494 RSU Grant (2011-2013) (5) 1,654 64,770 RSU Grant (2012-2014) (6) 1,639 64,157 Brent L. Stinnett Performance Share Grant (2011-2013) (8) 12,163 476,182 Performance Share Grant (2012-2014) (9) 12,042 471,431 RSU Grant (2011-2013) (10) 2,026 79,335 RSU Grant (2012-2014) (11) 2,007 78,572 Thomas J. Temple Performance Share Grant (2011-2013) 9,931 388,793 Performance Share Grant (2012-2014) 9,832 384,941 RSU Grant (2011-2013) (5) 1,654 64,770 RSU Grant (2012-2014) (6) 1,639 64,157 (1)(1) Number of restricted stock units granted, plus dividend equivalents through December 31, 2010.2012. Dividend equivalents were calculated using the closing price of our common stock on the dividend payment dates.(2)(2) Value of restricted stock units calculated using the $32.55$39.15 per share closing price of our common stock on December 31, 2010.2012.(3) 2010.2012. Dividend equivalents were calculated using the closing price of our common stock on the dividend
payment |
(4) | Value of performance shares calculated using the |
(5) | 100% of the shares listed will vest on December 31, |
(6) | 100% of the shares listed will vest on December 31, |
(7) |
(8) | Mr. Stinnett retired on January 31, 2013. He is entitled to a pro-rata equal to 69% of the settled award of these shares. See "Potential Payment Upon Termination in Connection with Retirement, Death or Disability." |
(9) | Mr. Stinnett is entitled to a pro-rata share equal to 36% of the settled award of these shares. See "Potential Payment Upon Termination in Connection with Retirement, Death or Disability." |
(10) | Mr. Stinnett is entitled to a pro-rata share of 69% of the shares listed |
Name Michael J. Covey Eric J. Cremers William R. DeReu Brent L. Stinnett Thomas J. Temple Except for 2010(11) 2010,2012, the table below provides, for each of our named executive officers, the number of stock awards vested and the value realized due to the vesting. Stock Awards Number of
Shares
Acquired
on
Vesting
(#)(1) Value
Realized
on
Vesting
($)(2) 54,050 $ 2,112,795 18,728 710,706 9,122 346,021 8,301 324,503 703 24,095 Michael J. Covey 43,848 1,986,741 Eric J. Cremers 13,300 602,639 Lorrie D. Scott 226 7,557 Brent L. Stinnett 8,891 402,834 Thomas J. Temple 7,231 327,638 (1) Mr. Temple,Ms. Scott, this column shows the gross number of performance shares earned for the performance period 2008-2010,2010-2012, plus dividends accrued during the performance period. During the performance period, the company’scompany's TSR placed us between 5th3rd and 6th4th of our forest products peer group and the 57th percentile of the S & P 400 mid cap companies and resulted in a multiplier of 136%103% being applied to the target grant of performance shares. The Compensation Committee approved settlement of these performance shares in February 20112013 and actual settlement occurred in the same month, which included withholding for tax purposes and the resulting receipt of fewer shares by each named executive officer than shown in the table. Additionally, this column includes restricted stock units that vested in 2010. These vested restricted stock units are not settled upon the vesting date but rather on the date that is three years after the grant, subject to earlier settlement on a pro-rated basis in the event of retirement, death or disability, or acceleration on termination of employment following a change of control.(2)(2) The value of the performance shares was calculated using the $39.09$45.31 per share closing price of company common stock on February 17, 201114, 2013 (the date the Compensation Committee approved payment of the awards). The dividend equivalents were calculated using the closing stock price on the dividend payment dates. Restricted stock units are calculated using the market value of the underlying shares on the vesting date, including the market value of any dividend equivalents that have accrued on the underlying shares as of the vesting date. Dividend equivalents for restricted stock units are calculated using the closing price of our common stock on the dividend payment dates.
Name Michael J. Covey Eric J. Cremers William R. DeReu Brent L. Stinnett Thomas J. Temple Effective January 1, 2011, the company closed the Retirement Plan and the Supplemental Plan to employees hired on or after that date. Discount rate of Zero percent future salary growth; Normal retirement age of 62 or current age, if greater (age 55 is assumed for Mr. Covey under the Supplemental Plan); Service as of the fiscal year-end; RP2000 Mortality with projection to IRS limitations and Social Security covered compensation as of the measurement date.officer’sofficer's accumulated benefit payable on retirement under our tax-qualified Salaried Retirement Plan, or Retirement Plan, and under the Retirement Plan Supplemental Benefit portion of our non-qualified Salaried Supplemental Benefit Plan II, or Supplemental Plan. Plan name Number of
years credited
service
(#) Present value of
accumulated
benefit
($) Payments
during last
fiscal year
($) Supplemental Plan 4.90 $ 2,075,316 $ 0 Salaried Plan 4.90 114,581 0 Supplemental Plan 3.46 100,861 0 Salaried Plan 3.46 59,364 0 Supplemental Plan 4.63 19,423 0 Salaried Plan 4.63 64,604 0 Supplemental Plan 4.42 173,095 0 Salaried Plan 4.42 138,646 0 Supplemental Plan 2.16 14,334 0 Salaried Plan 2.16 54,925 0 Name Plan name Number of years credited service (#) Present value of accumulated benefit($)(1) Payments during last fiscal year($) Michael J. Covey Supplemental Plan II 6.90 3,745,146 — Retirement Plan 6.90 237,986 — Eric J. Cremers Supplemental Plan II 5.46 331,526 — Retirement Plan 5.46 148,616 — Lorrie D. Scott Supplemental Plan II 2.49 80,098 — Retirement Plan 2.49 84,511 — Brent L. Stinnett Supplemental Plan II 6.42 312,361 — Retirement Plan 6.42 271,870 — Thomas J. Temple Supplemental Plan II 4.16 86,377 — Retirement Plan 4.16 149,013 — following assumptions were made in calculating the present value of accumulated benefits:benefits was computed by Milliman, Inc., the company's pension actuary, utilizing the following assumptions:5.65%4.15%;20182020 for 2010;2012; and
Benefit | Benefit Available If: | Benefit Amount | ||
Normal Retirement | Employment with company terminates after eligible employee attains age 65 | Normal monthly benefit calculation
Final average monthly earnings (highest consecutive 60 months of final 120 months earnings divided by 60)
Plus
Base
Multiplied by years of credited service up to 35 | ||
Early Retirement | Employment with company terminates after eligible employee turns 55 and has ten or more years of vesting service | Calculate the monthly normal retirement benefit (as described above), then reduce that amount by each month the retirement age is less than age 62 |
the limitations imposed by the Internal Revenue Code on maximum eligible annual earnings ($245,000250,000 in 2010)2012) and maximum annual retirement benefits ($195,000200,000 in 2010)2012) did not apply; and
any deferred bonus awards were paid to the eligible employee in the year deferred.
Mr. Stinnett was eligible for early retirement, as of December 31, 2008, under the Retirement Plan and the Supplemental Plan.
Effective January 1, 2011,
have a minimum number of years under the Supplemental Plan, Retirement Plan and 401(k) Plan. Pursuant to this provision, Ms. Scott began accruing nonforfeitable benefits as if she were fully vested under company plans immediately upon joining us and was placed in a similar vesting position to what she would have been in had she remained with her previous employer. No other benefit enhancement is provided to Ms. Scott under the Supplemental Plan, the Retirement Plan and 401(k) Plan.
Name | Registrant Contributions in Last FY ($)(1) | Aggregate Earnings in Last FY ($)(2) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE (12/31/10) ($)(3) | ||||||||||||
Michael J. Covey | $ | 39,799 | $ | 236,392 | 0.00 | $ | 3,054,418 | |||||||||
Eric J. Cremers | 21,156 | 4,602 | 0.00 | 59,747 | ||||||||||||
William R DeReu | 3,554 | 712 | 0.00 | 12,968 | ||||||||||||
Brent L. Stinnett | 5,715 | 7,113 | 0.00 | 111,876 | ||||||||||||
Thomas J. Temple | 3,554 | 249 | 0.00 | 4,659 |
Name | Registrant Contributions in Last FY ($)(1) | Aggregate Earnings in Last FY ($)(2) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE (12/31/12) ($)(3) | |||
Michael J. Covey | 49,561 | 847,620 | — | 4,066,173 | |||
Eric J. Cremers | 26,987 | 23,084 | — | 130,109 | |||
Lorrie D. Scott | 10,177 | 183 | — | 14,954 | |||
Brent L. Stinnett | 12,511 | 20,972 | — | 161,379 | |||
Thomas J. Temple | 7,458 | 1,546 | — | 23,409 |
(1) |
(2) | None of the Aggregate Earnings reported in this table are included in the |
(3) | The following amounts of registrant contributions in 2011 and 2010 included in the Aggregate Balance column above have been reported as compensation to the named executive officers in the Summary Compensation Tables for |
Michael J. Covey | $ | 159,729 | ||
Eric J. Cremers | $ | 29,208 | ||
William R. DeReu | $ | 8,504 | ||
Brent L. Stinnett | $ | 27,326 | ||
Thomas J. Temple | $ | 856 |
Name | 2011 | 2010 | ||
Michael J. Covey | 67,942 | 39,799 | ||
Eric J. Cremers | 26,786 | 21,156 | ||
Lorrie D. Scott | 4,568 | — | ||
Brent L. Stinnett | 13,406 | 5,715 | ||
Thomas J. Temple | 9,525 | 3,554 |
Cash Severance Benefit ($)(1) | Pro-Rata Annual Bonus ($)(2) | Value of Equity Acceleration ($) | Benefit Continuation ($)(3) | Total ($) | ||||||||||||||||
Michael Covey | $ | 357,510 | — | — | $ | 8,871 | $ | 366,381 | ||||||||||||
Eric Cremers | 205,650 | — | — | 7,569 | 213,219 | |||||||||||||||
Brent Stinnett | 152,520 | — | — | 6,993 | 159,513 | |||||||||||||||
William DeReu | 100,020 | — | — | 7,162 | 107,182 | |||||||||||||||
Thomas Temple | 131,940 | — | — | 7,647 | 139,587 |
Cash Severance Benefit($)(1) | Pro-Rata Annual Bonus (2) | Value of Equity Acceleration ($)(3) | Benefit Continuation ($)(4) | Total ($) | ||||
Michael J. Covey | 357,510 | — | — | 9,126 | 366,636 | |||
Eric J. Cremers | 225,000 | — | — | 7,877 | 232,877 | |||
Lorrie D. Scott | 131,250 | — | — | 5,990 | 137,240 | |||
Brent L. Stinnett | 152,520 | — | — | 7,294 | 159,814 | |||
Thomas J. Temple | 138,537 | — | — | 8,136 | 146,673 |
(1) | The executive officers receive severance benefits pursuant to the Severance |
(2) | Under the |
(3) | Unvested performance shares and restricted stock units will be forfeited outside of a change in control, death or disability termination. |
(4) | The executive officers receive benefit continuation (i.e., medical, dental and basic life insurance) pursuant to the Severance |
involuntary termination of the employee’semployee's employment for any reason other than death, disability or misconduct;
the subsidiary employing the employee ceases to be a participating company in the Severance Program due to a sale to a third party or a spin-off of the subsidiary, in a transaction that is also a change in ownership or effective control of Potlatch Corporation or a change in ownership of a substantial portion of Potlatch Corporation’sCorporation's assets (but no benefits are payable if the employee continues employment with or is offered the same or better employment terms by the purchaser or spun-off company, and the purchaser or spun-off company maintains a severance plan that is equivalent in all material respects to the Severance Program);
election by the employee to terminate employment upon being required to relocate his or her principal place of business to a place that is 50 miles or more further from the employee’semployee's primary residence than the prior principal place of business; or
separation from service by the employee within 24 months
▪ | of a material reduction in his or her authority or responsibility, |
▪ | any reduction in his or her base salary, annual bonus opportunity, or long-term incentive opportunity, or |
▪ | a 15% or greater reduction in his or her aggregate benefits as compared to all other similarly situated employees unless the reduction applies to all similarly situated employees. |
Upon the occurrence of any of the events described above, (which expressly excludes a material reductiontermination by the employee outside of the reasons noted above) the following basic severance benefits are payable to the named executive officers:
retirement) will result in the automatic termination of any reduction in his or her base salary, annual bonus opportunity, or long-term incentive opportunity, or
a 15% or greater reduction in his or her aggregate benefits as compared to all other similarly situated employees unless the reduction applies to all similarly situated employees.
No basic severance benefits are payable under the Severance Program in connection with an eligible employee’semployee's termination generally if (1) the employee separates from service on or after his or her normal retirement date, (2) during the two-year period immediately before retirement, the employee is an eligible employee under the Severance Program, and (3) the employee is entitled to benefits under the Retirement Plan, the 401(k) Plan (excluding benefits representing employee contributions) and the Supplemental Plan which, when converted into a straight life annuity, equal to at least $44,000 in the aggregate.
Upon the occurrence of any of the events described above, the following The Severance Plan document also states that no severance benefits arewill be payable toif the eligible executive officer:
|
|
|
|
Termination of an executive’s employment (for reasons other than in connection with a change of controlemployee is receiving long-term or upon death,permanent disability or retirement) will result inbenefits under the automatic termination of any unvested performance shares and restricted stock units.
Company's disability income plan.
Cash Severance Benefit ($)(1) | Pro-Rata Annual Bonus ($)(2) | Value of Equity Acceleration ($)(3) | Benefit Continuation ($) | Enhancement of Retirement Benefits ($)(4) | Excise Tax Gross-Up Payment ($)(5) | Total ($) | ||||||||||||||||||||||
Michael Covey | $ | 3,646,560 | $ | 1,126,200 | $ | 1,628,446 | $ | 53,223 | $ | 2,583,408 | $ | 2,592,907 | $ | 11,630,744 | ||||||||||||||
Eric Cremers | 1,542,500 | 450,000 | 603,927 | 37,843 | 134,768 | — | 2,769,038 | |||||||||||||||||||||
Brent Stinnett | 1,105,850 | 250,000 | 362,416 | 34,963 | — | — | 1,753,229 | |||||||||||||||||||||
William DeReu | 700,100 | 180,000 | 286,585 | 35,810 | 73,157 | — | 1,275,652 | |||||||||||||||||||||
Thomas Temple | 956,450 | 200,000 | 398,163 | 38,235 | 54,410 | 453,132 | 2,100,390 |
Cash Severance Benefit ($)(1) | Pro-Rata Annual Bonus ($)(2) | Value of Equity Acceleration ($)(3) | Benefit Continuation ($)(4) | Enhancement of Retirement Benefits ($)(5) | Excise Tax Gross-Up Payment ($)(6) | Total ($) | ||||||||
Michael J. Covey | 3,646,602 | 500,514 | 1,297,392 | 54,755 | — | — | 5,499,263 | |||||||
Eric J. Cremers | 1,687,500 | 225,000 | 648,128 | 39,385 | — | — | 2,600,013 | |||||||
Lorrie D. Scott | 951,563 | 118,125 | 349,179 | 29,950 | — | 399,957 | 1,848,774 | |||||||
Brent L. Stinnett | 36,859 | 137,268 | 480,292 | 1,216 | 11,355 | — | 666,990 | |||||||
Thomas J. Temple | 1,004,393 | 124,683 | 391,892 | 40,682 | 145,718 | 491,055 | 2,198,423 |
(1) | Mr. Covey receives a severance benefit equal to 3 times the sum of his base salary and target annual |
(2) | All executive officers would be entitled to a payment of the pro-rata portion of their annual |
(3) | The Equity Acceleration column is comprised of the realizable value (i) upon acceleration of unearned performance share awards, which only require a |
(4) | The executive officers receive benefit continuation pursuant to the Severance Program. The benefit continuation period is equal to the severance benefit period. |
(5) | In the case of Mr. Temple, this amount reflects the immediate vesting of the unvested portion of his Defined Benefit and Defined Contribution Plan Accounts. In the |
(6) | This amount represents the excise tax gross-up to be paid by the |
involuntary termination of the employee’semployee's employment for any reason other than death, disability or misconduct;
the company employing the employee ceases to be a participating company in the Severance Program due to a sale to a third party or a spin-off of the company, in a transaction that is also a change in ownership or effective control of Potlatch Corporation or a change in ownership of a substantial portion of Potlatch Corporation’sCorporation's assets (but no benefits are payable if the employee continues employment with or is offered the same or better employment terms by the purchaser or spun-off company, and the purchaser or spun-off company maintains a severance plan that is equivalent in all material respects to the Severance Program);
election by the employee to terminate employment upon being required to relocate his or her principal place of business to a place that is 50 miles or more further from the employee’semployee's primary residence than the prior principal place of business; or
▪ | separation from service by the employee within 24 months of a material reduction in his or her authority or responsibility, |
▪ | any reduction in his or her base salary, standard bonus opportunity or long-term incentive opportunity, or |
▪ | a 15% or greater reduction in his or her aggregate benefits as compared to all other similarly situated employees unless the reduction applies to all similarly situated employees. |
separation from service by the employee within 24 months of a material reduction in his or her authority or responsibility,
any reduction in his or her base salary, standard bonus opportunity or long-term incentive opportunity, or
a 15% or greater reduction in his or her aggregate benefits as compared to all other similarly situated employees unless the reduction applies to all similarly situated employees.
Upon the occurrence of any of the events described above within two years following a change of control, the following change of control severance benefits are payable to our named executive officers:
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Directors; the Deferred Compensation Plan for Directors II; the Directors' Retirement Plan; the Severance Program; Mr. Covey’sCovey's letter agreement relating to retirement benefits; certain nonforfeitable benefits provided to Mr. Stinnett; and certain agreements between us and certain of our former employees. At least annually after the initial funding of the Trust, an actuary will be retained to re-determine the benefit commitments and expected fees. If the Trust assets do not equal or exceed 110% of the re-determined amount, then we are, or our successor is, obligated to deposit additional assets into the Trust.
Pro-Rata Annual Bonus($) (1) | Prorated Number of Shares Issued at End of Performance Period(#) (2) | Value of Performance Shares as of December 31, 2010($) (3) | Accelerated numbers of RSUs(#) (4) | Value of RSUs as of December 31, 2010($) (3) | Total ($) | |||||||||||||||||||
Michael Covey | $ | 1,126,200 | 50,029 | $ | 1,628,446 | — | — | $ | 2,754,646 | |||||||||||||||
Eric Cremers | 450,000 | 11,448 | 372,627 | 3,747 | $ | 121,954 | 944,581 | |||||||||||||||||
Brent Stinnett | 250,000 | 6,799 | 221,312 | 2,228 | 72,511 | 543,822 | ||||||||||||||||||
William DeReu | 180,000 | 4,322 | 140,693 | 3,158 | 102,796 | 423,489 | ||||||||||||||||||
Thomas Temple | 200,000 | 6,248 | 203,383 | 4,153 | 135,191 | 538,575 |
Pro-Rata Annual Bonus ($)(1) | Prorated Number of Shares Issued at End of Performance Period (2) | Value of Performance Shares as of December 31, 2012 ($)(3) | Accelerate Number of RSU(#)(4) | Value of RSUs as of December 31, 2012 ($)(3) | Total ($) | |||||||
Michael J. Covey | 500,514 | 33,139 | 1,297,392 | — | — | 1,797,906 | ||||||
Eric J. Cremers | 225,000 | 7,918 | 309,990 | 5,891 | 230,633 | 765,623 | ||||||
Lorrie D. Scott | 118,125 | 4,949 | 193,753 | 2,326 | 91,063 | 402,941 | ||||||
Brent L. Stinnett | 137,268 | 6,061 | 237,288 | 4,194 | 164,195 | 538,751 | ||||||
Thomas J. Temple | 124,683 | 4,949 | 193,753 | 3,417 | 133,776 | 452,212 |
(1) | All executive officers are entitled to a payment of the pro-rata portion of their annual |
(2) | Performance share awards for the |
(3) | The amounts shown in this column were calculated using the |
(4) | The number of restricted stock units, or RSUs, shown in this column reflects the accelerated vesting |
completed calendar months the employee is employed during the performance period to the total number of months in the performance period. The prorated number of performance shares, plus dividend equivalents equal to the cash distributions that would have been paid on the shares earned had the employee owned the shares during the three-year period, are paid at the end of the applicable performance period. With respect to restricted stock units, if the employee’semployee's employment terminates because of retirement, disability or death, and the vesting of the employee’semployee's restricted stock units is to occur in its entirety as of a single date, the employee, or his or her beneficiary, will be entitled to a pro rata portion of the restricted stock units. If the vesting is to occur ratably, such as 20%, 20% and 60% over a three-year period, the employee, or his or her beneficiary, will receive the already vested restricted stock units as well as the next tranche of restricted stock units scheduled to vest.
Stockholders are being asked to consider and reapprove the material terms of the performance goals used for determining awards to certain executive officers under the Potlatch Corporation 2005 Stock Incentive Plan, as amended, or 2005 Plan. The material terms of the performance goals were previously approved by stockholders at our 2005 Annual Meeting.
Under Section 162(m) of the Code or Section 162(m), the company is generally prohibited from deducting compensation paid to “covered employees” in excess of $1 million per person in any year. “Covered employees” are defined as the chief executive officer and the three other most highly compensated named executive officers (excluding the chief financial officer). Compensation that qualifies as “performance-based” is excluded for purposes of calculating the amount of compensation subject to the $1 million limit. In general, one of the requirements that must be satisfied to qualify as “performance-based” compensation under Section 162(m) is that the material terms of the performance goals under which compensation may be paid must be disclosed to and approved by a majority vote of the company’s stockholders. The company is submitting the material terms of the performance goals in the 2005 Plan for stockholder approval to provide flexibility to grant awards under the 2005 Plan that qualify as “performance-based” compensation under Section 162(m). If approved, and unless the material terms of the performance goals are subsequently changed, the material terms of the performance goals in the 2005 Plan will satisfy the stockholder approval requirements under Section 162(m) until termination of the 2005 Plan in accordance with its terms.
We are asking our shareholders to reapprove the material terms of the performance goals used for determining awards to certain executive officers under the 2005 Plan as described in this proxy statement by voting “FOR” the following resolution at the Annual Meeting:
RESOLVED, that the company’s stockholders reapprove the material terms of the performance goals used for determining awards under the Potlatch Corporation 2005 Stock Incentive Plan, as amended, as disclosed in the company’s Proxy Statement for the 2011 Annual Meeting of Stockholders.
The following summary of the material terms of the performance goals in the 2005 Plan and the other material terms of the 2005 Plan is qualified in its entirety by reference to the full text of the 2005 Plan, a copy of which is attached to this Proxy Statement as Appendix A and is incorporated herein by reference. Please refer to the complete copy of the 2005 Plan in Appendix A for more detailed information.
Summary of Material Terms of the Performance Goals in the 2005 Plan
For purposes of Section 162(m), the material terms of the performance goals under which compensation may be paid generally include (i) the individuals eligible to receive compensation, (ii) a description of the business criteria on which the performance goal is based and (iii) the maximum amount of compensation that can be paid to an individual under the performance goal. Stockholder approval of Proposal 3 constitutes approval of each of these aspects of the 2005 Plan for purposes of the stockholder approval requirements under Section 162(m).
Eligible Participants. Awards under the 2005 Plan may be granted to directors of the company and employees of the company and its affiliates (as defined in the 2005 Plan). Approximately 23 employees currently qualify to participate in the 2005 Plan.
Business Criteria. Awards made pursuant to the 2005 Plan may be made subject to the attainment of performance objectives, which may be specifically defined by the Administrator of the 2005 Plan. The performance objectives may be expressed in terms of one or more of the following:
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To the extent that the vesting or receipt of awards are subject to the attainment of one or more of the performance objectives listed above, it is intended that such awards may qualify as performance-based compensation under Section 162(m).
Award Limitations. As described below, awards under the 2005 Plan may be in the form of incentive stock options, nonqualified stock options, restricted stock, restricted stock units, performance shares and other share-based awards that may be granted from time to time. Subject to certain capitalization adjustments, the maximum aggregate number of common shares or common share equivalents that may be subject to awards granted to any one participant under the 2005 Plan in any one year is 250,000 shares. In the event of any increase or decrease in the number of the company’s issued shares of common stock, a cash dividend that has a material effect on the price of the company’s common stock, a recapitalization, merger, consolidation or other change in the capitalization of the company or similar corporate transaction or event affecting the company’s shares, the Administrator will, in such manner as it deems equitable, adjust the 250,000 share or share equivalent maximum limitation on awards made to any one participant in any one year.
Summary of Other Material Terms of the 2005 Plan
Administration. With respect to awards granted to non-employee Directors, the 2005 Plan is administered by the Nominating and Corporate Governance Committee of the Board of Directors provided, that the full Board of Directors must approve any award granted to the members of the Nominating and Corporate Governance Committee. With respect to awards granted to Potlatch employees, including the Chief Executive Officer and the named executive officers in this proxy statement, the 2005 Plan is administered by the Executive Compensation and Personnel Policies Committee of the Board of Directors. For purposes of this description of the 2005 Plan, the administering Committees shall be referred to as the “Administrator.” The members of both committees are independent, non-employee Directors. Each administrator has the authority to interpret and construe the 2005 Plan and determine:
who will be granted awards,
the number of shares of common stock or common stock equivalents that are subject to the awards,
the vesting of awards,
the designation of stock options as nonqualified stock options or incentive stock options, and
other conditions of awards granted to employees and Directors.
Types of Awards. Awards under the 2005 Plan may be in the form of incentive stock options, nonqualified stock options, restricted stock, restricted stock units, performance shares and other share-based awards that may be granted from time to time. At the present time, only grants of performance shares and restricted stock unit awards are being made.
Shares Available for Awards. As of March 21, 2011, 354,869 shares were available for awards under the 2005 Plan, subject to the capitalization adjustments described below. As of March 21, 2011, the closing price of a share of the common stock on Nasdaq was $38.22.
Capitalization Adjustments. In the event of any increase or decrease in the number of the company’s issued shares of common stock, a cash dividend that has a material effect on the price of the company’s common stock, a recapitalization, merger, consolidation or other change in the capitalization of the company or similar corporate transaction or event affecting the company’s shares, the Administrator will, in such manner as it deems equitable, adjust the limitation of 1,600,000 shares that may be issued under the 2005 Plan.
Change in Control. The 2005 Plan provides that in the event that a 2005 Plan participant’s employment or service is involuntarily terminated without cause or voluntarily terminated with good reason within one month prior to or 24 months following a change in control (as defined in the 2005 Plan), all stock options granted at least six months prior to the change in control event will become fully vested and immediately exercisable. The Administrator also may accelerate the vesting of any restricted stock, restricted stock units, performance shares or other share-based awards in the event of a change in control. In addition, if any payments to a 2005 Plan participant are deemed excess parachute payments under Code Section 280G and such participant is subject to the excise tax imposed under Code Section 4999, the company will pay to the participant an additional amount so that the total amount paid to the participant is equal to the payment to which the participant would have been entitled net of all applicable taxes except the excise tax.
Transferability. Awards granted under the 2005 Plan are nontransferable, except in the event of the participant’s death.
Forfeiture. In the event that a 2005 Plan participant engages in misconduct (as defined in the 2005 Plan) prior to or during the twelve months following the exercise of any option or the vesting of any award, the Administrator may:
rescind the exercise of any option that was exercised during the period beginning twelve months prior to through 24 months following the participant’s termination of employment or service and cancel all of the participant’s outstanding awards within 24 months after the participant’s termination of employment or service, and
demand that the participant pay over to the company the proceeds (less the purchase price, if any) received by the participant upon the sale of the shares of common stock acquired upon the exercise of any option exercised during the period beginning twelve months prior to through 24 months following the participant’s termination of employment or service or upon the vesting of any award within 24 months following the participant’s termination of employment or service.
Repricing. Without the consent of the stockholders, except as provided in the 2005 Plan, the Administrator has no authority to reprice any options granted thereunder.
Amendment. The Administrator has the authority to amend outstanding awards, including the authority to accelerate the vesting of an award. The Board of Directors may amend, suspend or discontinue the 2005 Plan or any portion of the 2005 Plan at any time and in such respects as it shall deem advisable; however, without stockholder consent, the Board of Directors may not:
increase the number of shares available for issuance under the 2005 Plan,
change the class of employees eligible to receive awards,
decrease the exercise price of incentive stock options below 100% of fair market value, or
amend the 2005 Plan to increase the Board of Director’s authority to amend the 2005 Plan.
Term. The 2005 Plan became effective on May 2, 2005 when it was approved by the stockholders of the company. The 2005 Plan terminates on December 1, 2014 unless sooner terminated by the Board of Directors.
A vote in favor of this proposal will be treated as a vote to approve each of the material terms of the performance goals used for determining awards to certain executive officers under the 2005 Plan described above for purposes of the exemption from the limitations of Code Section 162(m).
Federal Income Tax Information
The following is a brief summary of the U.S. federal income tax consequences of the 2005 Plan generally applicable to the company and to participants in the 2005 Plan who are subject to U.S. federal taxation. The summary is based on the Code, applicable Treasury Regulations and administrative and judicial interpretations thereof, each as in effect on the date of this proxy statement and is, therefore, subject to future changes in the law, possibly with retroactive effect. The summary is general in nature and does not purport to address issues relating to the tax circumstances of any individual participant or provide legal or tax advice. Furthermore, the summary does not address issues relating to any gift or estate tax consequences or the consequences of any state, local or foreign tax laws.
Stock Options
Nonqualified Stock Options. A participant generally will not recognize taxable income upon the grant or vesting of a nonqualified stock option with an exercise price at least equal to the fair market value of the company’s common stock on the date of grant and no additional deferral feature. Upon the exercise of a nonqualified stock option, a participant generally will recognize compensation taxable as ordinary income in an amount equal to the difference between the fair market value of the shares underlying the option on the date of exercise and the option exercise price. When a participant sells the shares, the participant will have short-term or long-term capital gain or loss, as the case may be, equal to the difference between the amount the participant received from the sale and the tax basis of the shares sold. The tax basis of the shares generally will be equal to the greater of the fair market value of the shares on the exercise date or the option exercise price.
Incentive Stock Options. A participant generally will not recognize taxable income upon the grant of an incentive stock option. If a participant exercises an incentive stock option during employment as an employee or within three months after his or her employment ends (12 months in the case of permanent and total disability), the participant will not recognize taxable income at the time of exercise for regular U.S. federal income tax purposes (although the participant generally will have taxable income for alternative minimum tax purposes at that time as if the option were a nonqualified stock option). If a participant sells or otherwise disposes of the shares acquired upon exercise of an incentive stock option after the later of (a) one year from the date the participant exercised the option and (b) two years from the grant date of the option, the participant generally will recognize long-term capital gain or loss equal to the difference between the amount the participant received in the disposition and the option exercise price. If a participant sells or otherwise disposes of shares acquired upon exercise of an incentive stock option before these holding period requirements are satisfied, the disposition will constitute a “disqualifying disposition,” and the participant generally will recognize taxable ordinary income in the year of disposition equal to the excess of the fair market value of the shares on the date of exercise over the option exercise price (or, if less, the excess of the amount realized on the disposition of the shares over the option exercise price). The balance of the participant’s gain on a disqualifying disposition, if any, will be taxed as short-term or long-term capital gain, as the case may be.
With respect to both nonqualified stock options and incentive stock options, special rules apply if a participant uses shares of company’s common stock already held by the participant to pay the exercise price or if the shares received upon exercise of the option are subject to a substantial risk of forfeiture by the participant.
Stock Appreciation Rights
A participant generally will not recognize taxable income upon the grant or vesting of a SAR with a grant price at least equal to the fair market value of the company’s common stock on the date of grant and no additional deferral feature. Upon the exercise of a SAR, a participant generally will recognize compensation taxable as ordinary income in an amount equal to the difference between the fair market value of the shares underlying the SAR on the date of exercise and the grant price of the SAR.
Unrestricted Stock Awards
Upon receipt of an unrestricted stock award, a participant generally will recognize compensation taxable as ordinary income in an amount equal to the excess of the fair market value of the shares at such time over the amount, if any, paid by the participant with respect to the shares. When a participant sells the shares, the participant generally will have short-term or long-term capital gain or loss, as the case may be, equal to the difference between the amount the participant received from the sale and the tax basis of the shares sold. The tax basis of the shares generally will be equal to the amount, if any, paid by the participant with respect to the shares plus the amount of taxable ordinary income recognized by the participant upon receipt of the shares.
Restricted Stock Awards
A recipient of a restricted stock award generally will recognize compensation taxable as ordinary income when the shares cease to be subject to restrictions in an amount equal to the excess of the fair market value of the shares on the date the restrictions lapse over the amount, if any, paid by the participant with respect to the shares. However, no later than 30 days after a participant receives the restricted stock award, the participant may elect to recognize compensation taxable as ordinary income in an amount equal to the fair market value of the shares at the time of receipt. Provided the election is properly made in a timely manner, when the restrictions on the shares lapse, the participant will not recognize any additional income. If the participant forfeits the shares to the company (e.g., upon the participant’s termination prior to expiration of the restriction period), the participant may not claim a deduction with respect to the income recognized as a result of making the election. Any dividends paid with respect to shares of restricted stock generally will be taxable as ordinary income to the participant at the time the dividends are received.
Restricted Stock Units
A participant generally will not recognize income at the time a restricted stock unit is granted. When any part of a stock unit is issued or paid, the participant generally will recognize compensation taxable as ordinary income at the time of such issuance or payment in an amount equal to the then fair market value of any shares the participant receives.
Performance Awards and Other Stock Unit Awards
A participant generally will not recognize taxable income upon the grant of a performance award. Upon the distribution of cash, shares or other property to a participant pursuant to the terms of a performance award, the participant generally will recognize compensation taxable as ordinary income equal to the excess of (a) the amount of cash or the fair market value of any other property issued or paid to the participant pursuant to the terms of the award over (b) any amount paid by the participant with respect to the award. The U.S. federal income tax consequences of other stock unit awards will depend upon the specific terms of each award.
Tax Consequences to the Company
In the foregoing cases, the company generally will be entitled to a deduction at the same time and in the same amount as a participant recognizes ordinary income, subject to certain limitations imposed under the Code.
Tax Withholding
In general, to the extent required by applicable law, the recipient of any payment or distribution under the 2005 Plan must make arrangements satisfactory to the company for the satisfaction of any withholding tax obligations that arise by reason of such payment or distribution. The company will not be required to make any payment or distribution under the 2005 Plan until such obligations are satisfied.
Plan Benefits
All awards to employees and directors under the 2005 Plan are made at the discretion of the Administrator. Therefore, the benefits and amounts that will be received or allocated under the 2005 Plan are not determinable at this time. However, please refer to “Grants of Plan-Based Awards for 2010” table on page 42 for information on the grants made to the named executive officers in the last fiscal year.
Equity Compensation Plan Information
The following table provides certain information as of December 31, 2010, with respect to our equity compensation plans:
PLAN CATEGORY | NUMBER OF SECURITIES TO BE ISSUED UPON EXERCISE OF OUTSTANDING OPTIONS, WARRANTS OR RIGHTS (1) | WEIGHTED AVERAGE EXERCISE PRICE OF OUTSTANDING OPTIONS, WARRANTS OR RIGHTS (2) | NUMBER OF SECURITIES REMAINING AVAILABLE FOR FUTURE ISSUANCE UNDER EQUITY COMPENSATION PLANS | |||||||||
Equity compensation plans approved by security holders | 760,176 | $ | 21.64 | 524,319 | ||||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
Total | 760,176 | $ | 21.64 | 524,319 | ||||||||
PROPOSAL 4 – ADVISORY VOTE ON EXECUTIVE COMPENSATION
We recommend a voteFOR this proposal.
The Dodd-Frank Wall Street Reform and Consumer Protection Act enacted in July,of 2010, requires that we provideor the Dodd-Frank Act, enables our shareholders with the opportunitystockholders to vote to approve, on a nonbinding,an advisory (nonbinding) basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with the compensation disclosure rules of the Securities and Exchange Commission.
statement.
PROPOSAL 5 – ADVISORY VOTE ON THE FREQUENCY OF HOLDING FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION
We recommend a voteFOR “Three Years”.
The Dodd-Frank Wall Street Reform and Consumer Protection Act also provides that shareholders must be given the opportunity to vote, on a non-binding, advisory basis, for their preference as to how frequently we should seek future advisory votes on the compensation of our named executive officers as disclosed in accordance with the compensation disclosure rules of the Securities and Exchange Commission, which we refer to as an advisory vote on executive compensation. This non-binding “frequency” vote is required at least once every six years beginning with our Annual Meeting.
After careful consideration of the frequency alternatives, our Board has determined that an advisory vote on executive compensation every three years is appropriate for the company and its stockholders at this time. As described in the “Compensation Discussion and Analysis” beginning on page 25, one of the core objectives of our executive compensation program is the alignment of management’s interests with our stockholders’ interests to support long-term value creation. Accordingly, we grant awards with multi-year performance and service periods to encourage our named executive officers to focus on long-term performance. A triennial vote would allow our executive compensation programs to be evaluated over a similar time-frame and in relation to our long-term performance.
Stockholders may cast a vote on the preferred voting frequency by selecting the option of one year, two years, or three years (or abstain) when voting in response to the resolution set forth below:
RESOLVED, that the option of once every one year, two years, or three years that receives the highest number of votes cast for this resolution will be determined to be the preferred frequency with which the company is to hold a stockholder vote to approve the compensation of the named executive officers, as disclosed pursuant to the Securities and Exchange Commission’s compensation disclosure rules (which disclosure shall include theCompensation Discussion and Analysis, theSummary Compensation Table, and the other related tables and disclosures).
The proxy card provides stockholders with the opportunity to choose among the four options described above and, therefore, stockholders will not be voting to approve or disapprove the Board’s recommendation that the advisory vote on executive compensation be held every three years.
The frequency vote is advisory, and therefore not binding on the company, the Compensation Committee or our
2014
2, 2013.
Annual Reports on Form 10-K
Quarterly Reports on Form 10-Q
Current Reports on Form 8-K
Registration Statements
Amended and Restated Bylaws Second Restated Certificate of Incorporation Audit Committee Charter Executive Compensation and Personnel Policies Committee Charter Finance Committee Charter Nominating and Corporate Governance Committee Charter Conduct and Ethics Code Corporate Governance Guidelines Audit Committee Officer Stock Ownership Guidelines Related Person Transactions Policy Audit Committee Hiring Policy Audit Committee Independence and Financial Expert Policy Securities Law Compliance and Insider Trading Policy Director Independence Policy Director Stock Ownership Guidelines Corporation Financial Restatement Pre-ApprovalPre-approval PolicyClaw BackClawback PolicyAPPENDIX A
POTLATCH CORPORATION
2005 STOCK INCENTIVE PLAN
As Amended and Restated September 16, 2006
This Potlatch Corporation 2005 Stock Incentive Plan is intended to provide incentive to Employees and Directors of Potlatch Corporation (the “Corporation”) and its eligible Affiliates, to encourage proprietary interest in the Corporation and to encourage Employees and Directors to remain in the service of the Corporation or its Affiliates.
(a) “Administrator” means the Board or either of the Committees appointed to administer the Plan.
(b) “Affiliate” means any entity, whether a corporation, partnership, joint venture or other organization that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with the Corporation.
(c) “Award” means any award of an Option, Restricted Stock, Restricted Stock Units, Performance Shares or an Other Share-Based Award under the Plan.
(d) “Beneficiary” means a person designated as such by a Participant or a Beneficiary for purposes of the Plan or determined with reference to Section 18.
(e) “Board” means the Board of Directors of the Corporation.
(f) “Cause” means the occurrence of any one or more of the following: (i) the Participant’s conviction of any felony or crime involving fraud, dishonesty or moral turpitude; (ii) the Participant’s participation in a fraud or act of dishonesty against the Corporation, its Affiliates or any successor to the Corporation that result in material harm to the business of the Corporation, its Affiliates or any successor to the Corporation; or (iii) the Participant’s intentional, material violation of any contract between the Corporation, its Affiliates or any successor to the Corporation and the Participant or any statutory duty the Participant owes to the Corporation, its Affiliates or any successor to the Corporation that the Participant does not correct within 30 days after written notice thereof has been provided to the Participant.
(g) “Code” means the Internal Revenue Code of 1986, as amended.
(h) “Committee” means the Executive Compensation and Personnel Policies Committee of the Board and the Nominating and Corporate Governance Committee of the Board.
(i) “Common Stock” means the $1 par value common stock of the Corporation.
(j) “Corporation” means Potlatch Corporation, a Delaware corporation.
(k) “Covered Employee” means the chief executive officer or any Employee whose total compensation for the taxable year is required to be reported to stockholders under the Exchange Act by reason of such Employee being among the four highest compensated officers for the taxable year (other than the chief executive officer).
(l) “Director” means a director of the Corporation.
(m) “Disability” means the condition of a Participant who is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of at least 12 months.
(n) “Employee” means an individual employed by the Corporation or an Affiliate (within the meaning of Code section 3401 and the regulations thereunder).
(o) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(p) “Exercise Price” means the price per Share of Common Stock at which an option may be exercised.
(q) “Fair Market Value” of a Share as of a specified date means the closing price at which Shares are traded at the close of business on such date as reported in the New York Stock Exchange composite transactions published in the Wall Street Journal, or if no trading of Shares is reported for that day, on the next preceding day on which trading was reported.
(r) “Good Reason” means that one or more of the following are undertaken by the Corporation, its Affiliates or any successor to the Corporation without the Participant’s express written consent: (i) the assignment to the Participant of any duties or responsibilities that results in a diminution in the Participant’s position or function as in effect immediately prior to the effective date of a Change in Control (as defined in Section 7(e) below); provided, however, that a change in the Participant’s title or reporting relationships shall not provide the basis for a voluntary termination with Good Reason; (ii) a reduction by the Corporation, its Affiliates or any successor to the Corporation in the Participant’s annual base salary, as in effect on the effective date of the Change in Control or as increased thereafter; (iii) any failure by the Corporation, its Affiliates or any successor to the Corporation to continue in effect any benefit plan or program, including incentive plans or plans with respect to the receipt of securities of the Corporation, its Affiliates or any successor to the Corporation, in which the Participant was participating immediately prior to the effective date of the Change in Control (hereinafter referred to as “Benefit Plans”), or the taking of any action by the Corporation, its Affiliates or any successor to the Corporation that would adversely affect the Participant’s participation in or reduce the Participant’s benefits under the Benefit Plan or deprive the Participant of any fringe benefit that the Participant enjoyed immediately prior to the effective date of the Change in Control; provided, however, that no voluntary termination with Good Reason shall be deemed to have occurred if the Corporation, its Affiliates or any successor to the Corporation provide for the Participant’s participation in benefit plans and programs, that, taken as a whole, are comparable to the Benefit Plans; (iv) a relocation of the Participant’s business office to a location more than 50 miles from the location at which the Participant performs duties as of the effective date of the Change in Control, except for required travel by the Participant on the Corporation’s, its Affiliates’ or any successor to the Corporation’s business to an extent substantially consistent with the Participant’s business travel obligations prior to the effective date of the Change in Control; or (v) a material breach by the Corporation, its Affiliates or any successor to the Corporation of any provision of the Plan or the Option Agreement or any material agreement between the Participant and the Corporation, its Affiliates or any successor to the Corporation concerning the terms and conditions of the Participant’s employment.
(s) “Incentive Stock Option” means an Option described in Code section 422(b).
(t) “Misconduct” means that the Administrator (or its delegate) has determined in its sole discretion that a Participant has (i) engaged in competition with the Corporation or an Affiliate, including, but not limited to, the rendering of services for any organization or engaging directly or indirectly in any business that is or may be (in the reasonable discretion of the Administrator) directly or indirectly competitive with the Corporation or an Affiliate, (ii) induced any customer of the Corporation or an Affiliate to breach any contract with the Corporation or an Affiliate or induced any employee of the Corporation or an Affiliate to be employed or perform services elsewhere, (iii) made any unauthorized disclosure of any of the secrets or confidential information of the Corporation or an Affiliate, (iv) committed an act of embezzlement, fraud or theft with respect to the property of
the Corporation or an Affiliate, or (v) engaged in conduct which is not in good faith and which directly results in material loss, damage or injury to the business, reputation or employees of the Corporation or an Affiliate.
(u) “Nonqualified Stock Option” means an Option not described in Code section 422(b) or 423(b).
(v) “Option” means a stock option granted pursuant to Section 7. “Option Agreement” means the agreement between the Corporation and the Participant which contains the terms and conditions pertaining to such Option.
(w) “Other Share-Based Award” means an Award granted pursuant to Section 11. “Other Share-Based Award Agreement” means the agreement between the Corporation and the recipient of an Other Share-Based Award which contains the terms and conditions pertaining to the Other Share-Based Award.
(x) “Outside Director” means a Director who is not an Employee.
(y) “Participant” means an Employee or Director who has received an Award.
(z) “Performance Shares” means an Award denominated in Shares granted pursuant to Section 10 that may be earned in whole or in part based upon attainment of performance objectives established by the Administrator pursuant to Section 13. “Performance Share Agreement” means the agreement between the Corporation and the recipient of the Performance Shares which contains the terms and conditions pertaining to the Performance Shares.
(aa) “Plan” means this Potlatch Corporation 2005 Stock Incentive Plan.
(bb) “Purchase Price” means the Exercise Price times the number of whole Shares with respect to which an Option is exercised.
(cc) “Restricted Stock” means Shares granted pursuant to Section 8. “Restricted Stock Agreement” means the agreement between the Corporation and the recipient of Restricted Stock which contains the terms, conditions and restrictions pertaining to the Restricted Stock.
(dd) “Restricted Stock Unit” means an Award denominated in Shares granted pursuant to Section 9 in which the Participant has the right to receive a specified number of Shares over a specified period of time. “Restricted Stock Unit Agreement” means the agreement between the Corporation and the recipient of the Restricted Stock Unit Award which contains the terms and conditions pertaining to the Restricted Stock Unit Award.
(ee) “Share” means one share of Common Stock, adjusted in accordance with Section 16 (if applicable).
(ff) “Share Equivalent” means a bookkeeping entry representing a right to the equivalent of one Share.
(gg) “Stock Right” means a right to receive an amount equal to the value of a specified number of Shares which will be payable in Shares or cash as established by the Administrator.
(hh) “Subsidiary” means any corporation in an unbroken chain of corporations beginning with the Corporation if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
This Plan was adopted by the Board on December 2, 2004, to be effective immediately, subject to approval by the Corporation’s stockholders.
(a)Administration with respect to Outside Directors.
With respect to Awards to Outside Directors, the Plan shall be administered by (A) the Board or (B) the Nominating and Corporate Governance Committee of the Board. Notwithstanding the foregoing, all Awards made to members of the Nominating and Corporate Governance Committee shall be approved by the Board.
(b)Administration with respect to Employees.
With respect to Awards to Employees, the Plan shall be administered by (A) the Board or (B) the Executive Compensation and Personnel Policies Committee of the Board.
(i) If any member of the Executive Compensation and Personnel Policies Committee does not qualify as an “outside director” for purposes of Code section 162(m), Awards under the Plan for the Covered Employees shall be administered by a subcommittee consisting of each Executive Compensation and Personnel Policies Committee member who qualifies as an “outside director.” If fewer than two Executive Compensation and Personnel Policies Committee members qualify as “outside directors,” the Board shall appoint one or more other Board members to such subcommittee who do qualify as “outside directors,” so that the subcommittee will at all times consist of two or more members all of whom qualify as “outside directors” for purposes of Code section 162(m).
(ii) If any member of the Executive Compensation and Personnel Policies Committee does not qualify as a “non-employee director” for purposes of Rule 16b-3 promulgated under the Exchange Act, then Awards under the Plan for the executive officers of the Corporation and Directors shall be administered by a subcommittee consisting of each Executive Compensation and Personnel Policies Committee member who qualifies as a “non-employee director.” If fewer than two Executive Compensation and Personnel Policies Committee members qualify as “non-employee directors,” then the Board shall appoint one or more other Board members to such subcommittee who do qualify as “non-employee directors,” so that the subcommittee will at all times consist of two or more members all of whom qualify as “non-employee directors” for purposes of Rule 16b-3 promulgated under the Exchange Act.
(c)Grants with respect to Certain Employees. The Board may delegate to the Chief Executive Officer of the Corporation the authority to grant Awards under the Plan to Employees who are not Covered Employees or executive officers of the Corporation subject to the reporting requirements of Section 16 of the Exchange Act. Except as provided below, the Chief Executive Officer shall not grant to any continuing Employee an Award covering more than 1,000 Shares in a calendar year or to any newly-hired Employee an Award covering more than 2,500 Shares in connection with the Employee’s first becoming an Employee of the Corporation. Any grant of an Award to a continuing Employee in excess of 1,000 Shares or to a newly-hired Employee in excess of 2,500 Shares shall be made jointly by the Chief Executive Officer and the Chairman of the Executive Compensation and Personnel Policies Committee. Any Award granted pursuant to this Section 4(c) shall be administered in accordance with Section 4(b).
(d)Powers of the Administrator.
The Administrator shall from time to time at its discretion make determinations with respect to Employees and Directors who shall be granted Awards, the number of Shares or Share Equivalents to be subject to each Award, the vesting of Awards, the designation of Options as Incentive Stock Options or Nonqualified Stock Options and other conditions of Awards to Employees and Directors.
The interpretation and construction by the Administrator of any provisions of the Plan or of any Award shall be final. No member of a Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Award.
(e)Claims Administration.
Notwithstanding the foregoing, within 30 days after an event described in Section 7(e)(i) through (iv), the Committee shall appoint an independent committee consisting of at least three current (as of the effective date of such event) or former officers and Directors of the Corporation, which shall thereafter administer all claims for benefits under the Plan. Upon such appointment the Administrator shall cease to have any responsibility for claims administration under the Plan but shall continue to administer the Plan.
Subject to the terms and conditions set forth below, Awards may be granted to Employees and Directors. Notwithstanding the foregoing, only employees of the Corporation and its Subsidiaries may be granted Incentive Stock Options.
(a)Ten Percent Stockholders.
An Employee who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Corporation, its parent or any of its Subsidiaries is not eligible to receive an Incentive Stock Option pursuant to this Plan. For purposes of this Section 5(a) the stock ownership of an Employee shall be determined pursuant to Code section 424(d).
(b)Number of Awards.
A Participant may receive more than one Award, including Awards of the same type, but only on the terms and subject to the restrictions set forth in the Plan. Subject to adjustment as provided in Section 16, the maximum aggregate number of Shares or Share Equivalents that may be subject to Awards to a Participant in any calendar year is 250,000 Shares.
The stock subject to Options, Restricted Stock, or Other Share-Based Awards granted under the Plan shall be Shares of the Corporation’s authorized but unissued or reacquired Common Stock. The aggregate number of Shares subject to Options, Restricted Stock or Other Share-Based Awards issued under this Plan shall not exceed 1,600,000 Shares. If any outstanding Option under the Plan for any reason expires or is terminated or any Restricted Stock or Other Share-Based Award is forfeited and under the terms of the expired or terminated Award the Participant received no benefits of ownership during the period the Award was outstanding, then the Shares allocable to the unexercised portion of such Option or the forfeited Restricted Stock or Other Share-Based Award may again be subjected to Options, Restricted Stock or Other Share-Based Awards under the Plan. However, if one Award is granted in tandem with another Award, so that the exercise of one causes the other to expire, then the number of Shares subject to the expired Award shall not be restored to the pool available for Awards.
The limitations established by this Section 6 shall be subject to adjustment as provided in Section 16.
Options granted to Employees and Directors pursuant to the Plan shall be evidenced by written Option Agreements in such form as the Administrator shall determine, subject to the following terms and conditions:
(a)Number of Shares.
Each Option shall state the number of Shares to which it pertains, which shall be subject to adjustment in accordance with Section 16.
(b)Exercise Price.
Each Option shall state the Exercise Price, determined by the Administrator, which shall not be less than the Fair Market Value of a Share on the date of grant, except as provided in Section 16.
(c)Medium and Time of Payment.
The Purchase Price shall be payable in full in United States dollars upon the exercise of the Option; provided that with the consent of the Administrator and in accordance with its rules and regulations, the Purchase Price may be paid by the surrender of Shares in good form for transfer, owned by the person exercising the Option and having a Fair Market Value on the date of exercise equal to the Purchase Price, or in any combination of cash and Shares, so long as the total of the cash and the Fair Market Value of the Shares surrendered equals the Purchase Price. No Share shall be issued until full payment has been made.
(d)Term and Exercise of Options: Nontransferability of Options.
Each Option shall state the time or times when it becomes exercisable. No Option shall be exercisable after the expiration of 10 years from the date it is granted. During the lifetime of the Participant, the Option shall be exercisable only by the Participant and shall not be assignable or transferable. In the event of the Participant’s death, any Option shall be transferred to the Beneficiary designated by the Participant for this purpose.
(e)Change in Control.
Subject to Section 7(d), in the event that a Participant’s employment or service with the Corporation is involuntarily terminated without Cause or voluntarily terminated for Good Reason within one month prior to or 24 months following the effective date of a Change in Control (defined below) that is at least six months following the date of grant of the Option, the Participant shall have the right to exercise the Option (or to call the related stock appreciation right as described in Section 7(j)) in whole or in part. For purposes of the Plan, a “Change in Control” means the occurrence of one or more of the following:
(i) The consummation of a reorganization, merger or consolidation involving the Corporation (a “Business Combination”), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the then outstanding shares of Common Stock (the “Outstanding Common Stock”) and then outstanding voting securities of the Corporation entitled to vote generally in the election of Directors (the “Outstanding Voting Securities”) immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Corporation either directly or through one or more subsidiaries), (B) no Person (as defined in subparagraph (iii) below) (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) sponsored or maintained by the Corporation or such other corporation resulting from such Business Combination beneficially owns, directly or indirectly, 30% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership is based on the beneficial ownership, directly or indirectly, of Outstanding Common Stock or Outstanding Voting Securities immediately prior to the Business Combination and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or
(ii) That individuals who, as of May 19, 2006 constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a Director subsequent to May 19, 2006 whose election, or nomination for election by the Corporations
stockholders, was approved by a vote of at least a majority of the Directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of Directors, an actual or threatened solicitation of proxies or consents or any other actual or threatened action by, or on behalf of any Person other than the Board; or
(iii) The acquisition after May 19, 2006 by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either (A) the then Outstanding Common Stock or (B) the combined voting power of the Outstanding Voting Securities; provided, however, that the following acquisitions shall not be deemed to be covered by this subsection (iii): (x) any acquisition of Outstanding Common Stock or Outstanding Voting Securities by the Corporation, (y) any acquisition of Outstanding Common Stock or Outstanding Voting Securities by any employee benefit plan (or related trust) sponsored or maintained by the Corporation, (z) any acquisition of Outstanding Common Stock or Outstanding Voting Securities by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (i) of this Section 7(e); or
(iv) The consummation of the sale of all or substantially all of the assets of the Corporation or approval by the stockholders of the Corporation of a complete liquidation or dissolution of the Corporation.
(f)Termination of Employment Except Death.
(i) In the event that a Participant who is an Employee ceases to be employed by the Corporation or any of its Affiliates for any reason other than death, such Participant shall have the right (subject to the limitations of Section 7(d) above) to exercise the Option either:
to the extent that, at the date of termination of employment, the Option had vested pursuant to the terms of the Option Agreement with respect to which such Option was granted and had not previously been exercised. However, in addition to the rights and obligations established in Section 14 below, if the employment of a Participant is terminated by the Corporation or an Affiliate by reason of Misconduct, such Option shall cease to be exercisable at the time of the Participant’s termination of employment. The Administrator (or its delegate) shall determine whether a Participant’s employment is terminated by reason of Misconduct. In making such determination the Administrator (or its delegate) shall act fairly and shall give the Participant an opportunity to be heard and present evidence on his or her behalf. If a Participant’s employment terminates for reasons other than Misconduct, but Misconduct is discovered after the termination and is determined to have occurred by the Administrator (or its delegate), all outstanding Options shall cease to be exercisable upon such determination.
For purposes of this Section, the employment relationship will be treated as continuing while the Participant is on military leave, sick leave (including short term disability) or other bona fide leave of absence (to be determined in the sole discretion of the Administrator, in accordance with rules and regulations construing Code section 422(a)(2)). Notwithstanding the foregoing, in the case of an Incentive Stock Option, employment shall not be deemed to continue beyond three months after the Participant ceased active employment, unless the Participant’s reemployment rights are guaranteed by statute or by contract.
(ii) In the event an Outside Director terminates services as a Director for any reason other than death, the former Director shall have the right (subject to the limitations of Section 7(d) above) to exercise the Option either:
to the extent that, at the date of termination the Option had vested pursuant to the terms of the Option Agreement and had not previously been exercised. However, if the services of the Outside Director are terminated by the Board for cause in accordance with the Corporation’s Restated Certificate of Incorporation, such Option shall cease to be exercisable at the time of the Outside Director’s termination of services.
(g)Death of Participant.
(i) If a Participant who is an Employee dies while in the employ of the Corporation or an Affiliate, the Option may be exercised at any time before the end of the option period as specified in the Option Agreement by the Participant’s designated Beneficiary, to the extent that, at the date of the Participant’s death, the Option had vested pursuant to the terms of the Option Agreement and had not previously been exercised.
(ii) In the event the Outside Director’s services terminate by reason of death, the Option may be exercised at any time before the end of the option period specified in the Option Agreement by the Director’s designated Beneficiary, to the extent that, at the date of the Director’s death, the Option had vested pursuant to the terms of the Option Agreement and had not previously been exercised.
(h)Rights as a Stockholder.
A Participant or a transferee of a Participant shall have no rights as a stockholder with respect to any Shares covered by his or her Option until the date of issuance of such Shares. No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date such Shares are issued, except as provided in Section 16.
(i)Modification, Extension and Renewal of Options.
Subject to the terms and conditions and within the limitations of the Plan, including the limitations of Section 20, and, effective January 1, 2005, within the limitations of Code section 409A and the regulations promulgated thereunder, the Administrator may modify, extend or renew outstanding Options granted to Employees and Directors under the Plan. Notwithstanding the foregoing, however, no modification of an Option shall, without the consent of the Participant, alter or impair any rights or obligations under any Option previously granted under the Plan.
(j)Stock Appreciation Rights.
Each Option granted under the Plan may include a stock appreciation right that may be exercised only following the applicable Change in Control and termination events described in Section 7(e). Following such events, the Participant shall have the right to surrender all or part of the Option and to exercise the stock appreciation right (the “call”) to obtain payment from the Corporation of an amount equal to the difference obtained by subtracting the aggregate Exercise Price of the Shares subject to the Option (or the portion of such Option) surrendered from the Fair Market Value of such Shares on the date of such surrender. In the case of a stock appreciation right called after the applicable Change in Control and termination events described in Section 7(e) above, “Fair Market Value” for purposes of this Subsection (j) shall be the greater of (A) the Fair Market Value of such Shares as of the date immediately prior to the events described in Section 7(e) above, or (B) the value of such Shares determined as of the date of the call in good faith by the Administrator (as composed on the day preceding the date of the described in Section 7(e) above), taking into consideration all relevant facts and circumstances. The call of such stock appreciation right shall be subject to such limitations (including, but not limited to, limitations as to time and amount) as the Administrator shall deem appropriate. The payment may be made in
shares of Common Stock (determined with reference to its Fair Market Value on the date of call), or in cash, or partly in cash and in shares of Common Stock, at the discretion of the Administrator, provided that the Administrator determines that such settlement is consistent with the purpose set forth in Section 1. For all purposes under the Plan, the terms “exercise” or “exercisable” shall be deemed to include the terms “call” or “callable” as such terms may apply to a stock appreciation right, and in the event of the call of a stock appreciation right, the underlying Option will be deemed to have been exercised for all purposes under the Plan.
(k)Limitation of Incentive Stock Option Awards.
If and to the extent that the aggregate Fair Market Value (determined as of the date the Option is granted) of the Shares with respect to which any Incentive Stock Options are exercisable for the first time by a Participant during any calendar year under this Plan and all other plans maintained by the Corporation, its parent or its Subsidiaries exceeds $100,000, the excess (taking into account the order in which they were granted) shall be treated as nonqualified stock options.
(l)Other Provisions.
The Option Agreement shall contain such other provisions that are consistent with the terms of the Plan, including, without limitation, restrictions upon the exercise of the Option, as the Administrator shall deem advisable.
(a)Grants.
Subject to the provisions of the Plan, the Administrator shall have sole and complete authority to determine the Employees and Directors to whom, and the time or times at which, grants of Restricted Stock will be made, the number of shares of Restricted Stock to be awarded, the price (if any) to be paid by the recipient of Restricted Stock, the time or times within which such Awards may be subject to forfeiture, and all other terms and conditions of the Awards. The Administrator may condition the grant of Restricted Stock upon the attainment of specified performance objectives established by the Administrator pursuant to Section 13 or such other factors as the Administrator may determine, in its sole discretion.
The terms of each Restricted Stock Award shall be set forth in a Restricted Stock Agreement between the Corporation and the Participant, which Agreement shall contain such provisions as the Administrator determines to be necessary or appropriate to carry out the intent of the Plan. Each Participant receiving a Restricted Stock Award shall be issued Shares in respect of such Restricted Stock Award. The Shares shall be registered in the name of such Participant, and shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Award. The Administrator shall require that the Shares issued in respect of the Restricted Stock Award be held by the Corporation until the restrictions lapse and that, as a condition of any Restricted Stock Award, the Participant shall deliver to the Corporation a stock power relating to the Shares covered by such Award.
(b)Restrictions and Conditions.
The shares of Restricted Stock awarded pursuant to this Section 8 shall be subject to the following restrictions and conditions:
(i) During a period set by the Administrator commencing with the date of such Award (the “Restriction Period”), the Participant shall not be permitted to sell, transfer, pledge, assign or encumber shares of Restricted Stock awarded under the Plan. Within these limits, the Administrator, in its sole discretion, may provide for the lapse of such restrictions in installments and may accelerate or waive such restrictions in whole or in part, based on service, performance, a change of control of the Corporation or such other factors or criteria as the Administrator may determine in its sole discretion.
(ii) Except as provided in this paragraph (ii) and paragraph (i) above, the Participant shall have, with respect to the shares of Restricted Stock, all of the rights of a stockholder of the Corporation, including the right to vote the shares and the right to receive any cash dividends. The Administrator, in its sole discretion, as determined at the time of Award, may provide that the payment of cash dividends shall or may be deferred and, if the Administrator so determines, invested in additional shares of Restricted Stock to the extent available under Section 6, or otherwise invested. Stock dividends issued with respect to Restricted Stock shall be treated as additional shares of Restricted Stock that are subject to the same restrictions and other terms and conditions that apply to the shares with respect to which such dividends are issued.
(iii) The Administrator shall specify the conditions under which shares of Restricted Stock shall vest or be forfeited and such conditions shall be set forth in the Restricted Stock Agreement.
(iv) If and when the Restriction Period applicable to shares of Restricted Stock expires without a prior forfeiture of the Restricted Stock, the unrestricted Shares shall be delivered promptly to the Participant.
(a)Grants.
Subject to the provisions of the Plan, the Administrator shall have sole and complete authority to determine the Employees and Directors to whom, and the time or times at which, grants of Restricted Stock Units will be made, the number of Restricted Stock Units to be awarded, the price (if any) to be paid by the recipient of the Restricted Stock Units, the time or times within which such Restricted Stock Units may be subject to forfeiture, and all other terms and conditions of the Restricted Stock Unit Awards. The Administrator may condition the grant of Restricted Stock Unit Awards upon the attainment of specified performance objectives established by the Administrator pursuant to Section 13 or such other factors as the Administrator may determine, in its sole discretion.
The terms of each Restricted Stock Unit Award shall be set forth in a Restricted Stock Unit Award Agreement between the Corporation and the Participant, which Agreement shall contain such provisions as the Administrator determines to be necessary or appropriate to carry out the intent of the Plan. With respect to a Restricted Stock Unit Award, no Shares shall be issued at the time the grant is made (nor shall any book entry be made in the records of the Corporation) and the Participant shall have no right to or interest in any Shares as a result of the grant of Restricted Stock Units.
(b)Restrictions and Conditions.
The Restricted Stock Units awarded pursuant to this Section 9 shall be subject to the following restrictions and conditions:
(i) At the time of grant of a Restricted Stock Unit Award, the Administrator may impose such restrictions or conditions on the vesting of the Restricted Stock Units, as the Administrator deems appropriate. Within these limits, the Administrator, in its sole discretion, may provide for the lapse of such restrictions in installments and may accelerate or waive such restrictions in whole or in part, based on service, performance, a change of control of the Corporation or such other factors or criteria as the Administrator may determine in its sole discretion.
(ii) Dividend equivalents may be credited in respect of Restricted Stock Units, as the Administrator deems appropriate. Such dividend equivalents may be converted into additional Restricted Stock Units by dividing (1) the aggregate amount or value of the dividends paid with respect to that number of Shares equal to the number of Restricted Stock Units then credited by (2) the Fair Market Value per Share on the payment date for such dividend. The additional Restricted Stock Units credited by reason of such dividend equivalents will be subject to all of the terms and conditions of the underlying Restricted Stock Unit Award to which they relate.
(iii) The Administrator shall specify the conditions under which Restricted Stock Units shall vest or be forfeited and such conditions shall be set forth in the Restricted Stock Unit Agreement.
(c)Deferral Election.
Each recipient of a Restricted Stock Unit Award shall be entitled to elect to defer all or a percentage of any Shares he or she may be entitled to receive upon the lapse of any restrictions or vesting period to which the Award is subject. This election shall be made by giving notice in a manner and within the time prescribed by the Administrator and, effective January 1, 2005, in compliance with Code section 409A. Each Participant must indicate the percentage (expressed in whole percentages) he or she elects to defer of any Shares he or she may be entitled to receive. If no notice is given, the Participant shall be deemed to have made no deferral election. Each deferral election filed with the Administrator shall become irrevocable on and after the prescribed deadline.
(a)Grants.
Subject to the provisions of the Plan, the Administrator shall have sole and complete authority to determine the Employees and Directors to whom, and the time or times at which, grants of Performance Shares will be made, the number of Performance Shares to be awarded, the price (if any) to be paid by the recipient of the Performance Shares, the time or times within which such Performance Shares may be subject to forfeiture, and all other terms and conditions of the Performance Share Awards. The Administrator may condition the grant of Performance Share Awards upon the attainment of specified performance objectives established by the Administrator pursuant to Section 13 or such other factors as the Administrator may determine, in its sole discretion.
The terms of each Performance Share Award shall be set forth in a Performance Share Award Agreement between the Corporation and the Participant, which Agreement shall contain such provisions as the Administrator determines to be necessary or appropriate to carry out the intent of the Plan. With respect to a Performance Share Award, no Shares shall be issued at the time the grant is made (nor shall any book entry be made in the records of the Corporation) and the Participant shall have no right to or interest in any Shares as a result of the grant of Performance Shares.
(b)Restrictions and Conditions.
The Performance Shares awarded pursuant to this Section 10 shall be subject to the following restrictions and conditions: At the time of grant of a Performance Share Award, the Administrator may set performance objectives in its discretion which, depending on the extent to which they are met, will determined the number of Performance Shares that will be paid out to the Participant. The time period during which the performance objectives must be met will be called the “Performance Period.” After the applicable Performance Period has ended, the recipient of the Performance Shares will be entitled to receive the number of Performance Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance objectives have been achieved. After the grant of a Performance Share Award, the Administrator, in its sole discretion, may reduce or waive any performance objective for such Performance Share Award.
(a)Grants.
Other Awards of Shares and other Awards that are valued in whole or in part by reference to, or are otherwise based on, Shares (“Other Share-Based Awards”), may be granted either alone or in addition to or in conjunction with other Awards under this Plan. Awards under this Section 11 may include (without limitation) Stock Rights, the grant of Shares conditioned upon some specified event, the payment of cash based upon the performance of the Shares or the grant of securities convertible into Shares.
Subject to the provisions of the Plan, the Administrator shall have sole and complete authority to determine the Employees and Directors to whom and the time or times at which Other Share-Based Awards shall be made, the number of Shares or other securities, if any, to be granted pursuant to Other Share-Based Awards, and all other conditions of the Other Share-Based Awards. The Administrator may condition the grant of an Other Share-Based Award upon the attainment of specified performance goals or such other factors as the Administrator shall determine, in its sole discretion. In granting an Other Share-Based Award, the Administrator may determine that the recipient of an Other Share-Based Award shall be entitled to receive, currently or on a deferred basis, interest or dividends or dividend equivalents with respect to the Shares or other securities covered by the Award, and the Administrator may provide that such amounts (if any) shall be deemed to have been reinvested in additional Shares or otherwise reinvested. The terms of any Other Share-Based Award shall be set forth in an Other Share-Based Award Agreement between the Corporation and the Participant, which Agreement shall contain such provisions as the Administrator determines to be necessary or appropriate to carry out the intent of the Plan.
(b)Terms and Conditions.
In addition to the terms and conditions specified in the Other Share-Based Award Agreement, Other Share-Based Awards shall be subject to the following:
(i) Any Other Share-Based Award may not be sold, assigned, transferred, pledged or otherwise encumbered prior to the date on which the Shares are issued or the Award becomes payable, or, if later, the date on which any applicable restriction, performance or deferral period lapses.
(ii) The Other Share-Based Award Agreement shall contain provisions dealing with the disposition of such Award in the event of termination of the Employee’s employment or the Director’s service prior to the exercise, realization or payment of such Award, and the Administrator in its sole discretion may provide for payment of the Award in the event of the Participant’s retirement, Disability or death or the change of control of the Corporation, with such provisions to take account of the specific nature and purpose of the Award.
Shares may be issued under this Plan to satisfy the payment of all or part of an award pursuant to the Potlatch Corporation Management Performance Award Plan or any successor plan thereto. In addition, all or part of any Director’s fees may be paid in Shares issued under this Plan. Any Shares issued pursuant to this Section 12 shall reduce the number of Shares authorized for Options, Restricted Stock or Other Share-Based Awards under Section 6 but shall not be considered an Award for purposes of the maximum grant limitation in Section 5(b).
The Administrator shall determine the terms and conditions of Awards at the date of grant or thereafter; provided that performance objectives for each year, if any, shall be established by the Administrator not later than the latest date permissible under Code section 162(m). To the extent that such Awards are paid to Employees the performance objectives to be used, if any, shall be expressed in terms of one or more of the following: total shareholder return; earnings per share; stock price; return on equity; net earnings; related return ratios; cash flow; net earnings growth; earnings before interest, taxes, depreciation and amortization (EBITDA); return on assets; increase in revenues; decrease in expenses; increase in funds from operations (FFO); and increase in FFO per share. Performance objectives, if any, established by the Administrator may be (but need not be) different from year-to-year, and different performance objectives may be applicable to different Participants.
Notwithstanding any other provision of this Plan to the contrary, if the Participant engages in Misconduct prior to, or during the twelve month period following, the exercise of the Option or the vesting of the Award without the Administrator’s (or its delegate’s) express written consent, the Administrator (or its delegate) may
(a) rescind the exercise of any Option exercised during the period beginning twelve months prior to through 24 months after the Participant’s termination of employment or service with the Corporation or its Affiliates and cancel all outstanding Awards within 24 months after the Participant’s termination of employment or service with the Corporation or its Affiliates, and
(b) demand that the Participant pay over to the Corporation the proceeds (less the Participant’s purchase price, if any) received by the Participant upon the sale, transfer or other transaction involving the Shares acquired upon the exercise of any Option exercised during the period beginning twelve months prior to through 24 months after the Participant’s termination of employment or service with the Corporation or its Affiliates or the vesting of any Award within 24 months after the Participant’s termination of employment or service with the Corporation or its Affiliates, in such manner and on such terms and conditions as may be required, and, without limiting any other remedy the Corporation or its Affiliates may have, the Corporation shall be entitled to set-off against the amount of any such proceeds any amount owed the Participant by the Corporation or its Affiliates to the fullest extent permitted by law.
Awards may be granted pursuant to the Plan until the termination of the Plan on December 1, 2014.
Subject to any required action by the stockholders, the number of Shares covered by this Plan as provided in Section 6, the maximum grant limitation in Section 5(b), the number of Shares or Share Equivalents covered by or referenced in each outstanding Award, and the Exercise Price of each outstanding Option and any price required to be paid for Restricted Stock or Other Share-Based Award shall be proportionately adjusted for any increase or decrease in the number of issued Shares resulting from a subdivision or consolidation of Shares, the payment of a stock dividend (but only of Common Stock) or any other increase or decrease in the number of such Shares effected without receipt of consideration by the Corporation or the declaration of a dividend payable in cash that has a material effect on the price of issued Shares.
Subject to any required action by the stockholders, if the Corporation shall be a party to any merger, consolidation or other reorganization, each outstanding Award shall pertain and apply to the securities to which a holder of the number of Shares or Share Equivalents subject to the Award would have been entitled. In the event of a change in the Common Stock as presently constituted, which is limited to a change of all of its authorized shares with par value into the same number of shares with a different par value or without par value, the shares resulting from any such change shall be deemed to be the Common Stock within the meaning of the Plan.
To the extent that the foregoing adjustments relate to stock or securities of the Corporation, such adjustments shall be made by the Administrator, whose determination in that respect shall be final, binding and conclusive, provided that each Incentive Stock Option granted pursuant to this Plan shall not be adjusted in a manner that causes the Option to fail to continue to qualify as an incentive stock option within the meaning of Code section 422.
Except as expressly provided in this Section 16, a Participant shall have no rights by reason of any subdivision or consolidation of shares of stock of any class or the payment of any stock dividend or any other increase or decrease in the number of shares of stock of any class or by reason of any dissolution, liquidation, merger or
consolidation or spin-off of assets or stock of another corporation, and any issue by the Corporation of shares of stock of any class or securities convertible into shares of stock of any class, shall not affect the number or price of Shares subject to the Option.
The grant of an Award pursuant to the Plan shall not affect in any way the right or power of the Corporation to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge or consolidate or to dissolve, liquidate, sell or transfer all or any part of its business assets.
(a)Securities Law.
No Shares shall be issued pursuant to the Plan unless and until the Corporation has determined that: (i) it and the Participant have taken all actions required to register the Shares under the Securities Act of 1933 or perfect an exemption from registration; (ii) any applicable listing requirement of any stock exchange on which the Common Stock is listed has been satisfied; and (iii) any other applicable provision of state or federal law has been satisfied.
(b)Employment Rights.
Neither the Plan nor any Award granted under the Plan shall be deemed to give any individual a right to remain employed by the Corporation or an Affiliate or to remain a Director. The Corporation and its Affiliates reserve the right to terminate the employment of any employee at any time, with or without cause or for no cause, subject only to a written employment contract (if any), and the Board reserves the right to terminate a Director’s membership on the Board for cause in accordance with the Corporation’s Restated Certificate of Incorporation.
(c)Stockholders’ Rights.
A Participant shall have no dividend rights, voting rights or other rights as a stockholder with respect to any Shares covered by his or her Award prior to the issuance of the Shares. No adjustment shall be made for cash dividends or other rights for which the record date is prior to the date when such Shares are issued.
(d)Creditors’ Rights.
A holder of an Other Share-Based Award shall have no rights other than those of a general creditor of the Corporation. An Other Share-Based Award shall represent an unfunded and unsecured obligation of the Corporation, subject to the terms and conditions of the applicable Other Share-Based Award Agreement. An Other Share-Based Award shall not be deemed to create a trust for the benefit of any individual.
Participants and their Beneficiaries may designate on the prescribed form one or more Beneficiaries to whom distribution shall be made of any Award outstanding at the time of the Participant’s or Beneficiary’s death. A Participant or Beneficiary may change such designation at any time by filing the prescribed form with the Administrator. If a Beneficiary has not been designated or if no designated Beneficiary survives the Participant or Beneficiary, distribution will be made to the residuary beneficiary under the terms of the Participant’s or Beneficiary’s last will and testament or, in the absence of a last will and testament, to the Participant’s or Beneficiary’s estate as Beneficiary.
The Board may suspend or discontinue the Plan or revise or amend it with respect to any Shares at the time not subject to Awards except that, without approval of the stockholders of the Corporation, no such revision or amendment shall:
(a) Increase the number of Shares subject to the Plan;
(b) Change the designation in Section 5 of the class of Employees eligible to receive Awards;
(c) Decrease the price at which Incentive Stock Options may be granted;
(d) Remove the administration of the Plan from the Administrator; or
(e) Amend this Section 19 to defeat its purpose.
The foregoing notwithstanding, the Plan may not be amended (including any amendment of this Section 19) or terminated by the Board during the three-year period following an event described in Section 7(e)(i) through (iv) if such amendment or termination would alter the provision of this Section 19 or impair any outstanding rights under any Awards previously granted under the Plan.
Without the consent of the stockholders of the Corporation, except as provided in Section 16, the Administrator shall have no authority to effect either (i) the repricing of any outstanding Options under the Plan or (ii) the cancellation of any outstanding Options under the Plan and the grant in substitution therefor of new Options under the Plan covering the same or different numbers of shares of Common Stock.
The granting of an Option shall impose no obligation upon the Participant to exercise such Option.
This Plan and any amendments requiring stockholder approval pursuant to Section 19 shall be subject to approval by affirmative vote of the stockholders. Such vote shall be taken at the first annual meeting of stockholders of the Corporation following the adoption of the Plan or of any such amendments, or any adjournment of such meeting.
If any payments or transfers to or for the benefit of a Participant are deemed an “excess parachute payment” as defined in Code section 280G subject to the excise tax imposed by Code section 4999, the Corporation shall pay to the Participant an additional amount such that the total amount of all such payments and benefits (including payments made pursuant to this Section) to the Participant shall equal the total amount of all such payments and benefits to which the Participant would have been entitled (but for this Section) net of all applicable federal, state and local taxes except the excise tax. For purposes of this Section, the Participant shall be deemed to pay federal, state and local taxes at the highest marginal rate of taxation for the applicable calendar year. The amount of the payment to the Participant shall be estimated by a firm of independent certified public accountants, as of the date of the applicable Change in Control or termination events as described in Section 7(e).
(a)General.
To the extent required by applicable law, the recipient of any payment or distribution under the Plan shall make arrangements satisfactory to the Corporation for the satisfaction of any withholding tax obligations that arise by reason of such payment or distribution. The Corporation shall not be required to make such payment or distribution until such obligations are satisfied.
(b)Other Awards.
The Administrator may permit a Participant who exercises Nonqualified Stock Options or who vests in Restricted Stock Awards to satisfy all or part of his or her withholding tax obligations by having the Corporation withhold a portion of the Shares that otherwise would be issued to him or her under such Nonqualified Stock Options or Restricted Stock Awards. Such Shares shall be valued at the Fair Market Value on the date when taxes otherwise would be withheld in cash. The payment of withholding taxes by surrendering Shares to the Corporation, if permitted by the Administrator, shall be subject to such restrictions as the Administrator may impose, including any restrictions required by rules of the Securities and Exchange Commission.
The Plan shall be binding upon the Corporation, its successors and assigns, and any parent corporation of the Corporation’s successors or assigns. Notwithstanding that the Plan may be binding upon a successor or assign by operation of law, the Corporation shall require any successor or assign to expressly assume and agree to be bound by the Plan in the same manner and to the same extent that the Corporation would be if no succession or assignment had taken place.
To record the amendment and restatement of the Plan effective September 16, 2006, the Corporation has caused its authorized officer to execute the same.
|
YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY.
We encourage you to take advantage of Internet or telephone voting. Both are available 24 hours a day, 7 days a week.
Internet and telephone voting is available through 11:
POTLATCH CORPORATION
INTERNET http://www.proxyvoting.com/pch
Use the Internet to vote your proxy. Have your proxy card in hand when you access the web site.
OR
TELEPHONE 1-866-540-5760
Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when you call.
If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy card.
To vote by mail, mark, sign and date your proxy card and return it in the enclosed postage-paid envelope.
Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card.
95132
FOLD AND DETACH HERE
THIS PROXY WILL BE VOTED AS DIRECTED BUT IF NOT OTHERWISE DIRECTED, FOR EACH DIRECTOR NOMINEE AND FOR PROPOSALS 2, 3 AND 4 AND “3 YEARS” ON PROPOSAL 5.
The Board of Directors recommends a vote FOR the election of three Directors to serve until the 2014 Annual Meeting of Stockholders.
Proposal 1 – Election of Directors Nominees:
1.1. Jerome C. Knoll 1.2. John S. Moody 1.3. Lawrence S. Peiros
FOR AGAINST ABSTAIN
Please mark your votes as indicated in this example
The Board of Directors recommends a vote FOR Proposals 2, 3 and 4.
Proposal 2 – Ratification of the appointment of KPMG LLP as our independent auditors for 2011.
Proposal 3 – Approval of the material terms of performance goals in the Potlatch Corporation 2005 Stock Incentive Plan.
Proposal 4 – Approval, by non-binding vote, of 2010 compensation paid to the company’s named executive officers.
Management recommends a vote for Shareholder approval every 3 years.
FOR AGAINST ABSTAIN
1 year 2 years 3 years Abstain
Proposal 5 – Recommendation, by non-binding vote, of the frequency of future advisory votes on executive compensation.
WILL ATTEND
If you plan to attend the Annual Meeting, please mark the WILL ATTEND box.
Mark Here for Address Change or Comments
SEE REVERSE
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such.
Signature Signature Date
You can now access your Potlatch Corporation account online.
Access your Potlatch Corporation account online via Investor ServiceDirect® (ISD).
BNY Mellon Shareowner Services, the transfer agent for Potlatch Corporation, now makes it easy and convenient to get current information on your shareholder account.
• View account status • View payment history for dividends
• View certificate history • Make address changes
• View book-entry information • Obtain a duplicate 1099 tax form
Visit us on the web at http://www.bnymellon.com/shareowner/equityaccess For Technical Assistance Call 1-877-978-7778 between 9am-7pm Monday-Friday Eastern Time
Investor ServiceDirect®
Available 24 hours per day, 7 days per week
TOLL FREE NUMBER: 1-800-370-1163
Choose MLinkSM for fast, easy and secure 24/7 online access to your future proxy materials, investment plan statements, tax documents and more. Simply log on to Investor ServiceDirect® at www.bnymellon.com/shareowner/equityaccess where step-by-step instructions will prompt you through enrollment.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON MAY 2, 2011. The Proxy Statement and the 2010 Annual Report are available at: http://bnymellon.mobular.net/bnymellon/pch
FOLD AND DETACH HERE
PROXY
Proxy for Annual Meeting of Stockholders to be Held May 2, 2011 at 9:00 a.m. local time (Pacific)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF POTLATCH CORPORATION
The undersigned hereby appoints Michael J. Covey, Eric J. Cremers and Lorrie D. Scott, as proxies with full power in each to act without the others and with the power of substitution in each, to represent and to vote all the shares of stock the undersigned is entitled to vote at the Annual Meeting of Stockholders of Potlatch Corporation to be held on May 2, 2011, or at any adjournment thereof.
THIS PROXY WILL BE VOTED AS DIRECTED BUT IF NOT OTHERWISE DIRECTED, FOR EACH DIRECTOR NOMINEE AND FOR PROPOSAL 2, 3 AND 4, AND “3 YEARS” ON PROPOSAL 5.
YOUR VOTE IS IMPORTANT. This proxy must be signed and dated on the reverse side.
(PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.)
Address Change/Comments
(Mark the corresponding box on the reverse side)
BNY MELLON SHAREOWNER SERVICES P.O. BOX 3550 SOUTH HACKENSACK, NJ 07606-9250
(Continued and to be marked, dated and signed, on the other side) 95132
YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY.
We encourage you to take advantage of Internet or telephone voting. Both are available 24 hours a day, 7 days a week.
Internet and telephone voting is available through 11:59 PM Eastern Time on April 27, 2011.
POTLATCH CORPORATION
INTERNET http://www.proxyvoting.com/pch
Use the Internet to vote your proxy. Have your proxy card in hand when you access the web site.
OR
TELEPHONE 1-866-540-5760
Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when you call.
If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy card.
To vote by mail, mark, sign and date your proxy card and return it in the enclosed postage-paid envelope.
Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card.
95132-bl
FOLD AND DETACH HERE
THIS PROXY WILL BE VOTED AS DIRECTED BUT IF NOT OTHERWISE DIRECTED, FOR EACH DIRECTOR NOMINEE AND FOR PROPOSALS 2, 3 AND 4 AND “3 YEARS” ON PROPOSAL 5.
The Board of Directors recommends a vote FOR the election of three Directors to serve until the 2014 Annual Meeting of Stockholders.
Proposal 1 – Election of Directors Nominees:
1.1. Jerome C. Knoll 1.2. John S. Moody 1.3. Lawrence S. Peiros
FOR AGAINST ABSTAIN
Please mark your votes as indicated in this example
The Board of Directors recommends a vote FOR Proposals 2, 3 and 4.
Proposal 2 – Ratification of the appointment of KPMG LLP as our independent auditors for 2011.
Proposal 3 – Approval of the material terms of performance goals in the Potlatch Corporation 2005 Stock Incentive Plan.
Proposal 4 – Approval, by non-binding vote, of 2010 compensation paid to the company’s named executive officers.
Management recommends a vote for Shareholder approval every 3 years.
FOR AGAINST ABSTAIN
1 year 2 years 3 years Abstain
Proposal 5 – Recommendation, by non-binding vote, of the frequency of future advisory votes on executive compensation.
WILL ATTEND
If you plan to attend the Annual Meeting, please mark the WILL ATTEND box.
Mark Here for Address Change or Comments
SEE REVERSE
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such.
Signature Signature Date
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON MAY 2, 2011. The Proxy Statement and the 2010 Annual Report are available at: http://bnymellon.mobular.net/bnymellon/pch
FOLD AND DETACH HERE
PROXY
Proxy for Annual Meeting of Stockholders to be Held May 2, 2011 at 9:00 a.m. local time (Pacific)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF POTLATCH CORPORATION
On behalf of The Board of Directors of Potlatch Corporation, this proxy is solicited from participants in the Potlatch Salaried 401(k) Plan. Your shares will be voted as directed by you, but if not otherwise directed, FOR each director nominee and, FOR Proposal 2, 3 and 4 and “3 years” on Proposal 5. If you do not return this voting instruction form or vote by telephone or internet, the Trustee (Mercer Trust Company) must vote your Plan shares in the same proportion as voted by other Plan participants.
YOUR VOTE IS IMPORTANT. This proxy must be signed and dated on the reverse side.
(PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.)
Address Change/Comments
(Mark the corresponding box on the reverse side)
BNY MELLON SHAREOWNER SERVICES P.O. BOX 3550 SOUTH HACKENSACK, NJ 07606-9250
(Continued and to be marked, dated and signed, on the other side) 95132-bl
YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY.
We encourage you to take advantage of Internet or telephone voting.
Both are available 24 hours a day, 7 days a week.
Internet and telephone voting is available through 11:59 PM Eastern Time on April 27, 2011.
POTLATCH CORPORATION
INTERNET
http://www.proxyvoting.com/pch
Use the Internet to vote your proxy.
Have your proxy card in hand when you access the web site.
OR
TELEPHONE
1-866-540-5760
Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when you call.
If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy card.
To vote by mail, mark, sign and date your proxy card and return it in the enclosed postage-paid envelope.
Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card.
95132-gr
FOLD AND DETACH HERE
THIS PROXY WILL BE VOTED AS DIRECTED BUT IF NOT OTHERWISE DIRECTED, FOR EACH DIRECTOR NOMINEE AND FOR PROPOSALS 2, 3 AND 4 AND “3 YEARS” ON PROPOSAL 5.
The Board of Directors recommends a vote FOR the election of three Directors to serve until the 2014 Annual Meeting of Stockholders.
Proposal 1 – Election of Directors
FOR
AGAINST
ABSTAIN
Nominees:
1.1. Jerome C. Knoll
1.2. John S. Moody
1.3. Lawrence S. Peiros
Please mark your votes as indicated in this example
The Board of Directors recommends a vote FOR Proposals 2, 3 and 4.
Proposal 2 – Ratification of the appointment of KPMG LLP as our independent auditors for 2011.
Proposal 3 – Approval of the material terms of performance goals in the Potlatch Corporation 2005 Stock Incentive Plan.
Proposal 4 – Approval, by non-binding vote, of 2010 compensation paid to the company’s named executive officers.
Management recommends a vote for Shareholder approval every 3 years.
FOR AGAINST ABSTAIN
1 year
2 years
3 years
Abstain
Proposal 5 – Recommendation, by non-binding vote, of the frequency of future advisory votes on executive compensation.
WILL ATTEND
If you plan to attend the Annual Meeting, please mark the WILL ATTEND box.
Mark Here for Address Change or Comments
SEE REVERSE
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such.
Signature
Signature
Date
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON MAY 2, 2011. The Proxy Statement and the 2010 Annual Report are available at: http://bnymellon.mobular.net/bnymellon/pch
FOLD AND DETACH HERE
PROXY
Proxy for Annual Meeting of Stockholders to be Held May 2, 2011 at 9:00 a.m. local time (Pacific)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF POTLATCH CORPORATION
On behalf of The Board of Directors of Potlatch Corporation, this proxy is solicited from participants in the Potlatch Hourly 401(k) Plan. Your shares will be voted as directed by you, but if not otherwise directed, FOR each director nominee and, FOR Proposal 2, 3 and 4 and “3 years” on Proposal 5. If you do not return this voting instruction form or vote by telephone or internet, the Trustee (Mercer Trust Company) must vote your Plan shares in the same proportion as voted by other Plan participants.
YOUR VOTE IS IMPORTANT. This proxy must be signed and dated on the reverse side.
(PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.)
Address Change/Comments
(Mark the corresponding box on the reverse side)
BNY MELLON SHAREOWNER SERVICES
P.O. BOX 3550
SOUTH HACKENSACK, NJ 07606-9250
(Continued and to be marked, dated and signed, on the other side)
95132-gr
YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY.
We encourage you to take advantage of Internet or telephone voting. Both are available 24 hours a day, 7 days a week.
Internet and telephone voting is available through 11:59 PM Eastern Time on April 27, 2011.
POTLATCH CORPORATION
INTERNET http://www.proxyvoting.com/pch
Use the Internet to vote your proxy. Have your proxy card in hand when you access the web site.
OR
TELEPHONE 1-866-540-5760
Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when you call.
If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy card.
To vote by mail, mark, sign and date your proxy card and return it in the enclosed postage-paid envelope.
Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card.
95132-red
FOLD AND DETACH HERE
THIS PROXY WILL BE VOTED AS DIRECTED BUT IF NOT OTHERWISE DIRECTED, FOR EACH DIRECTOR NOMINEE AND FOR PROPOSALS 2, 3 AND 4 AND “3 YEARS” ON PROPOSAL 5.
The Board of Directors recommends a vote FOR the election of three Directors to serve until the 2014 Annual Meeting of Stockholders.
Proposal 1 – Election of Directors FOR AGAINST ABSTAIN
Nominees:
1.1. Jerome C. Knoll
1.2. John S. Moody
1.3. Lawrence S. Peiros
Please mark your votes as indicated in this example
The Board of Directors recommends a vote FOR Proposals 2, 3 and 4.
FOR AGAINST ABSTAIN
Proposal 2 – Ratification of the appointment of KPMG LLP as our independent auditors for 2011.
Proposal 3 – Approval of the material terms of performance goals in the Potlatch Corporation 2005 Stock Incentive Plan.
Proposal 4 – Approval, by non-binding vote, of 2010 compensation paid to the company’s named executive officers.
Management recommends a vote for Shareholder approval every 3 years.
1 year 2 years 3 years Abstain
Proposal 5 – Recommendation, by non-binding vote, of the frequency of future advisory votes on executive compensation.
WILL ATTEND
If you plan to attend the Annual Meeting, please mark the WILL ATTEND box.
Mark Here for Address Change or Comments
SEE REVERSE
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such.
Signature Signature Date
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON MAY 2, 2011. The Proxy Statement and the 2010 Annual Report are available at: http://bnymellon.mobular.net/bnymellon/pch
FOLD AND DETACH HERE
PROXY
Proxy for Annual Meeting of Stockholders to be Held May 2, 2011 at 9:00 a.m. local time (Pacific)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF POTLATCH CORPORATION
On behalf of The Board of Directors of Potlatch Corporation, this proxy is solicited from participants in the Clearwater Paper Salaried 401(k) Plan. Your shares will be voted as directed by you, but if not otherwise directed, FOR each director nominee and, FOR Proposal 2, 3 and 4 and “3 years” on Proposal 5. If you do not return this voting instruction form or vote by telephone or internet, the Trustee (Mercer Trust Company) must vote your Plan shares in the same proportion as voted by other Plan participants.
YOUR VOTE IS IMPORTANT. This proxy must be signed and dated on the reverse side.
(PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.)
Address Change/Comments
(Mark the corresponding box on the reverse side)
BNY MELLON SHAREOWNER SERVICES
P.O. BOX 3550 SOUTH HACKENSACK, NJ 07606-9250
(Continued and to be marked, dated and signed, on the other side) 95132-red
YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY.
We encourage you to take advantage of Internet or telephone voting. Both are available 24 hours a day, 7 days a week.
Internet and telephone voting is available through 11:59 PM Eastern Time on April 27, 2011.
POTLATCH CORPORATION
INTERNET http://www.proxyvoting.com/pch
Use the Internet to vote your proxy. Have your proxy card in hand when you access the web site.
OR
TELEPHONE 1-866-540-5760
Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when you call.
If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy card.
To vote by mail, mark, sign and date your proxy card and return it in the enclosed postage-paid envelope.
Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card.
95132-ylw
FOLD AND DETACH HERE
THIS PROXY WILL BE VOTED AS DIRECTED BUT IF NOT OTHERWISE DIRECTED, FOR EACH DIRECTOR NOMINEE AND FOR PROPOSALS 2, 3 AND 4 AND “3 YEARS” ON PROPOSAL 5.
The Board of Directors recommends a vote FOR the election of three Directors to serve until the 2014 Annual Meeting of Stockholders.
Proposal 1 – Election of Directors FOR AGAINST ABSTAIN
Nominees:
1.1. Jerome C. Knoll 1.2. John S. Moody 1.3. Lawrence S. Peiros
Please mark your votes as indicated in this example
The Board of Directors recommends a vote FOR Proposals 2, 3 and 4.
Proposal 2 – Ratification of the appointment of KPMG LLP as our independent auditors for 2011.
Proposal 3 – Approval of the material terms of performance goals in the Potlatch Corporation 2005 Stock Incentive Plan.
Proposal 4 – Approval, by non-binding vote, of 2010 compensation paid to the company’s named executive officers.
Management recommends a vote for Shareholder approval every 3 years.
FOR AGAINST ABSTAIN
1 year 2 years 3 years Abstain
Proposal 5 – Recommendation, by non-binding vote, of the frequency of future advisory votes on executive compensation.
WILL ATTEND
If you plan to attend the Annual Meeting, please mark the WILL ATTEND box.
Mark Here for Address Change or Comments
SEE REVERSE
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such.
Signature Signature Date
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON MAY 2, 2011. The Proxy Statement and the 2010 Annual Report are available at: http://bnymellon.mobular.net/bnymellon/pch
FOLD AND DETACH HERE
PROXY
Proxy for Annual Meeting of Stockholders to be Held May 2, 2011 at 9:00 a.m. local time (Pacific)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF POTLATCH CORPORATION
On behalf of The Board of Directors of Potlatch Corporation, this proxy is solicited from participants in the Clearwater Paper Hourly 401(k) Plan. Your shares will be voted as directed by you, but if not otherwise directed, FOR each director nominee and, FOR Proposal 2, 3 and 4 and “3 years” on Proposal 5. If you do not return this voting instruction form or vote by telephone or internet, the Trustee (Mercer Trust Company) must vote your Plan shares in the same proportion as voted by other Plan participants.
YOUR VOTE IS IMPORTANT. This proxy must be signed and dated on the reverse side.
(PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.)
Address Change/Comments
(Mark the corresponding box on the reverse side)
BNY MELLON SHAREOWNER SERVICES P.O. BOX 3550
SOUTH HACKENSACK, NJ 07606-9250
(Continued and to be marked, dated and signed, on the other side) 95132-ylw