SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant x
Filed by a Party other than the Registrant ¨
Check the appropriate box:
¨ | Preliminary Proxy Statement | ¨ | 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-11(c) or §240.14a-12 |
WEYERHAEUSER COMPANY
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
Notes:
NOTICE OF THE 2013
ANNUAL MEETING
AND THE 2013
PROXY STATEMENT
WEYERHAEUSER COMPANY
DEAR SHAREHOLDER:
I am pleased to invite you to attend your company’s annual meeting of shareholders at 9:00 a.m., Thursday, April 11, 2013, at the Corporate Headquarters Building, 33663 Weyerhaeuser Way South, Federal Way, Washington. A map and directions to the building are on the back cover.
A notice of the annual meeting and the proxy statement follow. Your vote is important. Whether or not you plan to attend the annual meeting in person, I urge you to vote your shares by telephone, the internet, smartphone, tablet or other Web-connected mobile device or by signing, dating and returning the enclosed proxy card promptly.
Sincerely,
Charles R. Williamson
Chairman of the Board
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NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS
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Agenda
The Company’s Annual Meeting of Shareholders will be held April 11, 2013 to:
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Admission
All shareholders are invited to attend the annual meeting. You will need an admission ticket or proof of ownership of Weyerhaeuser common stock, as well as a form of personal photo identification, to be admitted to the annual meeting.
The annual meeting will be held at the Weyerhaeuser Company Corporate Headquarters Building in Federal Way, Washington. Seating will be limited and on a first come basis. Please refer to page 3 of this Proxy Statement for information about attending the meeting.
Voting
Shareholders owning Weyerhaeuser common stock on the Record Date, or their legal proxy holders, are entitled to vote at the annual meeting. For information on how to vote your shares, please refer to the instructions on the enclosed proxy card or review the section titled “Proxy and Voting Information” on pages 2 and 3 of this Proxy Statement.
This Proxy Statement, form of proxy and Weyerhaeuser Company 2012 Annual Report are being distributed to shareholders on or about March 8, 2013.
The 2012 Annual Report and this Proxy Statement can be viewed atwww.edocumentview.com/WY in accordance with Securities and Exchange Commission rules.
Claire S. Grace
Vice President and Corporate Secretary
Federal Way, Washington
WEYERHAEUSER COMPANY
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
x | No fee required. |
¨ | Fee computed on table below per Exchange Act Rules 14a(6)(i)(4) and 0-11. |
(1) | Title of each class of securities to which transaction applies: |
(2) | Aggregate number of securities to which transaction applies: |
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (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: |
Notes:
NOTICE OF THE 2015
ANNUAL MEETING
AND PROXY STATEMENT
WEYERHAEUSER COMPANY
DEAR SHAREHOLDER:
I am pleased to invite you to attend your company’s annual meeting of shareholders at 9:00 a.m. on Friday, May 22, 2015 at the Corporate Headquarters building, 33663 Weyerhaeuser Way South, Federal Way, Washington. A map and directions to the Corporate Headquarters building are on the back cover of the proxy statement.
This year we have decided to deliver our proxy materials to the majority of our shareholders using the “notice-and-access” method permitted by U.S. Securities and Exchange Commission rules. Under notice-and-access, instead of a paper copy of the proxy materials, we are sending to our shareholders a Notice Regarding the Availability of Proxy Materials (the “Notice”). We first mailed the Notice to the majority of our shareholders on April 8, 2015.
The Notice contains instructions on how to:
Ÿ | electronically access our proxy statement for our 2015 annual meeting and our 2014 Annual Report to Shareholders and Form 10-K; |
Ÿ | vote via the internet, by telephone or by mail; and |
Ÿ | receive a paper copy of our proxy materials by mail, if desired. |
Electronic delivery of our proxy materials will allow us to provide shareholders with the information they need, while at the same time lowering the cost of delivery for the company.
The Notice will serve as an admission ticket to the 2015 annual meeting of shareholders.
On April 8, 2015, we also first mailed the proxy statement and a proxy card to certain shareholders.If you receive a paper copy of the proxy materials in the mail, the proxy statement includes an admission ticket to the annual meeting of shareholders.
Each attendee must present a government-issued photo identification (such as a driver’s license) and either the Notice or admission ticket to be admitted to the annual meeting. More information can be found in the proxy statement under “Information About the Meeting.”
Your vote is important. Whether or not you plan to attend the annual meeting in person, I urge you to please vote as soon as possible via the internet, by telephone or by mail.
Sincerely,
Charles R. Williamson
Chairman of the Board
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NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS
Meeting Date: | May 22, 2015 | |
Meeting Time: | 9:00 a.m. (Pacific) | |
Location: | Weyerhaeuser Company Corporate Headquarters Building 33663 Weyerhaeuser Way South Federal Way, Washington 98003 | |
Record Date: | March 27, 2015 |
Agenda
Weyerhaeuser Company’s Annual Meeting of Shareholders will be held May 22, 2015 to:
Ÿ | elect as directors the 10 nominees named in the attached proxy statement; |
Ÿ | approve an advisory resolution on the compensation of our named executive officers; |
Ÿ | ratify the selection of KPMG LLP as the company’s independent registered public accounting firm for 2015; and |
Ÿ | transact any other business that may be properly brought before the annual meeting. |
Admission
All common shareholders are invited to attend the annual meeting. You will need an admission ticket or proof of ownership of Weyerhaeuser common stock, as well as a form of personal photo identification, to be admitted. Your admission ticket is either the Notice Regarding the Availability of Proxy Materials or, if you received a paper copy of the proxy materials, the admission ticket that was included with the proxy statement. Seating will be limited and on a first come basis. Please refer to “Information About the Meeting” on page 6 of the proxy statement for more information about attending the meeting.
Voting
Your vote is important. Shareholders owning Weyerhaeuser common stock at the close of business on March 27, 2015, the record date, or their legal proxy holders, are entitled to vote at the annual meeting. Whether or not you expect to attend the annual meeting in person, we urge you to vote as soon as possible by one of these methods:
Ÿ | via the internet: go to www.envisionreports.com/WY, |
Ÿ | by toll-free telephone: call 1-800-652-VOTE (8683), or |
Ÿ | by mail (if you received a paper copy of the proxy materials): mark, sign, date and return the enclosed proxy card as soon as possible in advance of the meeting to ensure that your vote is recorded. |
Shareholders may also vote in person at the annual meeting. For more information on how to vote your shares, please refer to “Proxy and Voting Information” beginning on page 5 of the proxy statement.
Devin W. Stockfish
Senior Vice President, General Counsel and Corporate Secretary
Federal Way, Washington
Important Notice Regarding the Availability of Proxy Materials
for the Annual Meeting of Shareholders to be Held on May 22, 2015
This Notice of the Annual Meeting of Shareholders, our Proxy Statement and our Annual Report to Shareholders and Form 10-K are available free of charge atwww.edocumentview.com/WY.
This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information you should consider. Please read this entire proxy statement carefully before voting.
2015 ANNUAL MEETING INFORMATION (page 6)
Date: | May 22, 2015 | Record Date: | March 27, 2015 | |||
Time: | 9:00 a.m. (Pacific) | |||||
Place: | Weyerhaeuser Company Corporate Headquarters Building 33663 Weyerhaeuser Way South Federal Way, Washington 98003 | |||||
Voting: | All common shareholders of record as of March 27, 2015 may vote. Each outstanding share of common stock is entitled to one vote on each matter to be voted upon at the annual meeting. | |||||
Admission: | You will need an admission ticket or proof of ownership of Weyerhaeuser common stock, as well as a form of personal photo identification, to be admitted to the annual meeting. Your admission ticket is either the Notice Regarding the Availability of Proxy Materials (“Notice”) or, if you received a paper copy of the proxy materials, the admission ticket that was included with the proxy statement. Please refer to “Information About the Meeting” on page 6 of the proxy statement for more information about attending the meeting. A map and directions to the Corporate Headquarters building are on the back cover of the proxy statement. |
ADVANCE VOTING METHODS (page 6)
Even if you plan to attend the 2015 annual meeting of shareholders in person, we urge you to vote in advance of the meeting using one of these advance voting methods.
MEETING AGENDA AND VOTING RECOMMENDATIONS
The Weyerhaeuser Company board of directors is asking shareholders to vote on these matters:
Items of Business | Board Recommendation | Page Number | ||
1. Election of the 10 directors named as nominees in the proxy statement | FOR | 8 | ||
2. Approve an advisory resolution on the compensation of our named executive officers | FOR | 58 | ||
3. Ratification of selection of independent registered public accounting firm | FOR | 58 |
In addition to the above matters, we will transact any other business that is properly brought before the shareholders at the annual meeting.
DIRECTOR NOMINEES (page 8)
We have included summary information about each director nominee in the table below. Each director is elected annually by a majority of votes cast. See “Nominees for Election” and “Board of Directors and Committee Information” beginning on page 8 of the proxy statement for more information regarding our directors and our process for nominating directors.
Board Committee Composition | ||||||||||||||||||||||||||||||||||
Name | Age | Director Since | Primary Occupation | Independent | EC | AC | CC | GCRC | FC | |||||||||||||||||||||||||
David P. Bozeman | 46 | 2015 | Senior Vice President, Caterpillar Inc. | ü | ||||||||||||||||||||||||||||||
Debra A. Cafaro | 57 | 2007 | Chairman and Chief Executive Officer of Ventas, Inc. | ü | ü | C | ||||||||||||||||||||||||||||
Mark A. Emmert | 62 | 2008 | President, National Collegiate Athletic Association | ü | ü | ü | ||||||||||||||||||||||||||||
John I. Kieckhefer | 70 | 1990 | President, Kieckhefer Associates, Inc. | ü | ü | ü | ü | |||||||||||||||||||||||||||
Wayne W. Murdy | 70 | 2009 | Retired Chairman and CEO, Newmont Mining Corporation | ü | C | |||||||||||||||||||||||||||||
Nicole W. Piasecki | 52 | 2003 | Vice President and General Manager, Propulsion Division, Boeing Commercial Airplanes | ü | ü | ü | ||||||||||||||||||||||||||||
Doyle R. Simons | 51 | 2012 | President and Chief Executive Officer, Weyerhaeuser Company | ü | ||||||||||||||||||||||||||||||
D. Michael Steuert | 66 | 2004 | Retired CFO, Fluor Corporation | ü | C, FE | ü | ||||||||||||||||||||||||||||
Kim Williams | 59 | 2006 | Retired Partner and SVP, Wellington Management Company, LLP | ü | ü | ü | ü | |||||||||||||||||||||||||||
Charles R. Williamson | 66 | 2004 | Retired EVP, Chevron Corporation and CEO, Unocal Corporation | ü | C | |||||||||||||||||||||||||||||
AC = Audit Committee CC = Compensation Committee EC = Executive Committee FC = Finance Committee |
| GCRC = Governance and Corporate Responsibility Committee C = Committee Chair FE = Financial Expert |
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2014 BUSINESS HIGHLIGHTS (page 20)
Ÿ | Increased net sales from continuing operations to $7.40 billion in 2014, up from $7.25 billion in 2013 |
Ÿ | Increased net earnings from continuing operations in 2014 to $828 million, up 69% compared to 2013 |
Ÿ | Increased net earnings from continuing operations before special items in 2014 to $700 million, up 22% compared to 2013 |
Ÿ | Increased cash from operations to $1.09 billion, up 8% over 2013 |
Ÿ | Completed the divestiture of our homebuilding and real estate development business, which resulted in the retirement of over $1.95 billion of our common stock, or approximately 58.8 million shares, and the receipt of approximately $700 million in cash |
Ÿ | Achieved our 2014 operational excellence targets, including exceeding our one-year target to capture synergies from our Longview Timber acquisition, improving the performance of our Engineered Products & Distribution (“EP&D”) businesses, and reducing SG&A expenses |
Ÿ | Increased our quarterly dividend to $0.29 per common share, an increase of 32% in 2014 |
Ÿ | Returned $607 million to shareholders through dividends |
Ÿ | Repurchased $203 million of common shares as of December 31, 2014 as part of a $700 million share repurchase program authorized in August 2014 |
Ÿ | Our annualized three-year and five-year total shareholder return (“TSR”) was 28% and 20%, respectively. Our performance ranked at the 71st percentile and at the 64th percentile, respectively, compared to the TSR of the S&P 500 for the same periods. |
CORPORATE GOVERNANCE HIGHLIGHTS (page 21)
Our corporate governance policies promote the long-term interests of shareholders, accountability and trust in the company. Below is a summary of some of the highlights of our corporate governance framework.
ü Annual election of all directors | ü Regular executive sessions of independent directors | |
ü Majority voting | ü Risk oversight by the board and committees | |
ü Independent chairman | ü Annual board and committee self-assessments | |
ü 9 of 10 directors are independent | ü No supermajority voting | |
ü Clawback policy | ü No shareholder rights plan | |
ü Anti-hedging and anti-pledging policy | ü Independent committee chairs and members | |
ü Executive stock ownership guidelines | ü Shareholder engagement | |
ü Director stock ownership guidelines | ü Annual say-on-pay advisory votes |
EXECUTIVE COMPENSATION HIGHLIGHTS (page 21)
Ÿ | Our executive compensation programs are designed to align the interests of our executive officers with those of our shareholders. We do this by targeting base pay at the competitive median and tying incentive pay to performance. |
Ÿ | At our 2014 annual meeting, we received more than 96% support for our executive compensation program. |
2015 PROXY STATEMENT
WEYERHAEUSER COMPANY
P.O. Box 9777
Federal Way, Washington 98063-9777
(253) 924-2345
MarchApril 8, 20132015
Weyerhaeuser Company (the(“Weyerhaeuser” or the “Company”) will hold its annual meeting of shareholders at its Corporate Headquarters Building,building in Federal Way, Washington on Thursday, April 11, 2013Friday, May 22, 2015 at 99:00 a.m. (Pacific) to consider the items on the attached notice of shareholder meeting. All items on the attached notice are more fully described in this proxy statement. The enclosed form of proxy is solicited by the board of directors of the Company.
The only securities eligible to vote at the annual meeting are the Company’s common shares. Proxy cards are enclosed for shareholders who hold common shares.SHAREHOLDERS ENTITLED TO VOTE AT THE ANNUAL MEETING
Only common shareholders of record at the close of business on February 15, 2013 will beMarch 27, 2015 are eligible to vote at the annual meeting. On that date, 545,293,988518,726,524 common shares were outstanding. Each common share entitles the holder to one vote at the annual meeting. The enclosed form of proxy is solicited by the board of directorsHolders of the Company.Company’s 6.375% Mandatory Convertible Preference Shares, Series A proxy may be revoked by notice in writing to the Corporate Secretary at any time before it is voted. Ifare not revoked, the proxy will be voted as directed by the shareholder.
Under Washington law, shareholders may act at a meeting only if a quorum exists with respect to that action. A majority of the common stock entitled to vote at the Annual Meeting, present eitherannual meeting.
VOTE REQUIRED
The presence, in person or by proxy, willof holders of a majority of Weyerhaeuser’s outstanding common shares is required to constitute a quorum. Shareholders who abstain from voting on any or all proposals will be included inquorum for the numbertransaction of shareholders presentbusiness at the meetingannual meeting. Abstentions and “broker non-votes” are counted for purposes of determining the presence or absence of a quorum. Under Washington law and the Company’s Articles of Incorporation and Bylaws, if a quorum is present at the meeting:
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Ÿ | Item 3—ratification of the selection of KPMG LLP as our independent registered public accounting firm will be approved if the votes cast in favor of the proposal exceed the votes cast against the proposal. |
It is important to understand the effect that your decision to vote for or against a proposal, to withhold your vote or to send in a proxy card on which you have left the direction blankEFFECT OF ABSTENTIONS AND BROKER NON-VOTES
The following will have on the vote needed to approve a matter.
Innot be considered votes cast and will not count towards the election of directors and management’s proposals regarding theany director nominee or approval of the Weyerhaeuser Company 2013 Long-Term Incentive Plan and executive compensation, certain shares present at the meeting are counted as not voted and do not affect the matter being considered. These include any shares represented by ballots:other proposals:
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a share otherwise present at the annual meeting as to which a shareholder gives no authority or direction. If your shares are held in street name on your behalf It is important to understand that if you hold your shares through a broker, you must give your broker specific instructions on how to vote your shares or they will not be counted as votes cast on the matters being considered at the meeting and they will not affect the outcome of those votes.Ÿ (you(that is, you own shares in the name of a bank, broker or other holder of record), the broker or other registered holder must receive explicit voting instructions from you to be able to vote on the election of directors and on management’s
proposals regardingexecutive compensation, each of which is considered to be non-routine under the Weyerhaeuser Company 2013 Long-Term Incentive Plan and executive compensation.applicable rules of the New York Stock Exchange. Brokers do not have discretion to vote on thesenon-routine matters unless the beneficial owner of the shares has given explicit voting instructions. Consequently, if you do not give your broker explicit instructions, your shares will not be voted on these matters.the election of directors or the advisory vote on executive compensation and will be considered “broker non-votes” on such proposals. The ratification of the selection of KPMG LLP as our
The Company’s annual report to shareholders for 2012
independent registered public accounting firm is being mailed with this proxy statement to shareholdersconsidered a routine matter and, as such, your broker is entitled to vote at the 2013 annual meeting.your shares on such proposal even if you do not provide voting instructions on that item.
You may vote your shares in one of several ways, depending upon how you own your common shares.
ShareholdersIf you are a shareholder of record (you own(that is, if your shares are registered in your own name)name with our transfer agent), you can vote by telephone, on the Internet or by mail as described below. Street name shareholders (you own shares in the nameany one of a bank, broker or other holder of record) should refer to the proxy form or the information you receive from the record holder to see which voting methods are available to you.four ways:
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Voting on the |
Ÿ | Voting by |
Ÿ | Voting by |
Ÿ | Voting at the |
If you are a beneficial owner of shares held in street name shareholder,(that is, if you must obtainhold your shares through a proxy, executed in your favor,broker, bank or other holder of record), you should follow the voting instructions you receive from your broker or the holder of record to be ablevote your shares.
REVOCATION OF PROXIES
Shareholders who execute proxies retain the right to voterevoke them at any time before the shares are voted by proxy at the meeting. A shareholder may revoke a proxy by delivering a signed statement to our Corporate Secretary at or prior to the annual meeting or by timely executing and delivering, by internet, telephone, mail or in person at the annual meeting.meeting, another proxy dated as of a later date.
Attendance at the annual meeting is limited to shareholders.holders of the Company’s common shares. The meeting will be held at Weyerhaeuser’s Corporate Headquarters Building,building located at 33663 Weyerhaeuser Way South, Federal Way, Washington. A map and directions to the Corporate Headquarters building are on the back cover of the proxy statement.
This year, instead of a paper copy of our proxy materials, we are sending to the majority of our shareholders a Notice Regarding the Availability of Proxy Materials (the “Notice”). The Notice contains instructions on how to:
Ÿ | electronically access our proxy statement and our 2014 Annual Report to Shareholders and Form 10-K; |
Ÿ | vote via the internet, by telephone or by mail; and |
Ÿ | receive a paper copy of our proxy materials by mail, if desired. |
The Notice will serve as your admission ticket to attend the meeting. If you arereceived a shareholderpaper copy of record,the proxy materials in the mail, the proxy materials will include an admission ticket is attached to your proxy card.ticket. You must present thisthe Notice or the admission ticket, together with a government-issued photo identification (such as driver’s license), at the registration desk to be allowed into the annual meeting. If you plan to attend the annual meeting in person, please vote your proxy, but keep the Notice or admission ticket and bring it with you to the annual meeting along with your photo identification. If you arrive at the meeting without your Notice or admission ticket, we will admit you only if you have photo identification and we are able to verify that you arewere a shareholder of record.record as of March 27, 2015.
If you are a street name shareholder and you plan to attend the annual meeting, you must present proof of your ownership of Weyerhaeuser common shares as of the March 27, 2015 record date, February 15, 2013.date. Acceptable proof would be an original bank or brokerage account statement as of that date. You also must present photo identification to be admitted. If you arrive at the meeting without proof of your ownership of common shares as of the record date or photo identification, you will not be admitted to the meeting.
If you are a street name shareholder and intend to designate a proxy holder, the designee must present:
Ÿ | your original signed form of |
Ÿ | proof of your ownership of common shares (such as a bank or brokerage statement) as of the March 27, 2015 record date, |
Ÿ | photo identification. |
If we cannot verify that you are a shareholder, your designee will not be admitted to the meeting.
If you are hearing impaired or require other special accommodations due to disability, please contact theour Corporate Secretary prior to the meeting to indicate the accommodations that you will need.
No banners, placards, signs, literature for distribution, cameras, recording equipment, electronic devices, including cell phones, large bags, briefcases or packages will be permitted in the annual meeting.
We “incorporate by reference” into this proxy statement information that we file with the SEC. This means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be an important part of this proxy statement. The Company’s Annual Report on Form 10-K for the year ended December 31, 2012 (except for information in this document that is deemed not to be filed) is incorporated by reference.
This proxy statement incorporates important business and financial information about the Company from other documents that are not included in or delivered with this document. The information relating to us contained in this proxy
statement is not complete and should be read together with the information contained in the documents incorporated by reference. To receive a copy of any of the documents incorporated by reference in this proxy statement, other than exhibits unless they are specifically incorporated by reference in this proxy statement, call or write to our Vice President of Investor Relations at Weyerhaeuser Company, P.O. Box 9777, Federal Way, Washington 98063-9777, telephone (253) 924-2058. You may read and copy any document we file at the SEC’s public reference rooms at 100 F Street N.E., Washington, D.C. 20549. You may obtain information on the operation of the SEC’s public reference rooms by calling the SEC at 1-800-SEC-0330. Our SEC filings also are available to the public at the SEC’s web site athttp://www.sec.gov.
All directors elected at this meeting will be elected for a term of one year. TheOur board of directors currently has 11 members. Pursuant to Weyerhaeuser’s Corporate Governance Guidelines, Richard H. Sinkfield will retire effective after the annual meeting because he is age 72 and therefore is not standing for re-election. Under our Bylaws, the board of directors is authorized to fix the number of directors within the range of 9 to 13 members, and has fixed the number at 11.members. The 1110 persons identified below are nominated to be elected as directors at the 20132015 annual meeting for one-year terms expiring at the 20142016 annual meeting. All of the nominees currently are directors of the Companywere elected by shareholders as directors at the shareholders,2014 annual meeting, except Mr. Simons,David P. Bozeman who was appointed as a director by the board of directors in 2012 to fill a vacancy.effective February 12, 2015. Under the terms of the Washington Business Corporation Actlaw and the Company’s Bylaws, Mr. SimonsBozeman is required to stand for election at the shareholders’ meeting.2015 annual meeting of shareholders.
Unless a shareholder instructs otherwise on the proxy card, it is intended that the shares represented by properly signed proxies in the accompanying form will be voted for the persons nominated by the board of directors. The board of directors anticipates that the listed nominees will be able to serve, but if at the time of the meeting any nominee is unable or unwilling to serve, the proxy holders may vote such shares at their discretion for a substitute nominee.
The biography of each of the nominees below contains information regarding the person’sindividual’s service as a director, business experience, director positions held currently or at any time during the last five years, information regarding involvement in certain legal or administrative proceedings, if applicable, and the experiences, qualifications, attributes or skills that caused the Governance and Corporate Responsibility Committee and the board of directors to determine that the person should serve as a director for the Company beginning in 2013.2015.
The board of directors recommends that shareholders vote “FOR” the election of each of the following directors.
TERMS EXPIRES IN 2014David P. Bozeman, 46, a director of the Company since February 12, 2015, is senior vice president of Caterpillar Inc. (manufacturer of construction, mining and other industrial equipment) with responsibility for the Caterpillar Enterprise System Group. Prior to his current role, he served as vice president of the Integrated Manufacturing Operations Division from 2010 to 2013, vice president of the Core Components Business Unit from 2009 to 2010 and general manager for the Specialty Products Business Unit. He joined Caterpillar in October 2008 from Harley-Davidson Motor Company, where he was vice president of Advanced Manufacturing responsible for developing and overseeing the implementation of advanced manufacturing technology. Mr. Bozeman is a member of the Society of Manufacturing Engineers Education Foundation Board of Directors and the Bradley University Board of Trustees. He also serves on Bradley University’s Manufacturing and Industrial Engineering Advisory Board and the Board of Trustees of the Manufacturers Alliance for Productivity and Innovation (MAPI). He has extensive executive experience in capital intensive industries and global manufacturing operations in large, international organizations.
Debra A. Cafaro, 55,57, a director of the Company since 2007, has been chairman andserved as chief executive officer and a director of Ventas, Inc. (health(an S&P 500 health care real estate investment trust) since 2010.1999. She served as its chairman president and chief executive officer from 2003 to 2010; its president and chief executive officer from 1999, when she joined the company, until 2003; and has been a director of the company since 1999. She served as president and director of Ambassador Apartments, Inc. (real estate investment trust) from 1997 until 1998 when it merged with AIMCO. She was a director of GGP, Inc. (real estate investment trust) from March 2010 to November 2010.2003. She is a former chair of NAREIT (National Association of Real Estate Investment Trusts) and. She is a directordirector/trustee of the University of Chicago, Real Estate Roundtable, World Business Chicago, (not-for-profit economic development corporation)Economic Club of Chicago and a TrusteeExecutives’ Club of the Ravinia Festival Association in Chicago. She has extensive REIT executive experience, with strong skills in real estate, mergers and acquisitions, corporate finance, strategic planning and public company executive compensation.
Mark A. Emmert, 60,62, a director of the Company since 2008, has been the president of the National Collegiate Athletic Association since 2010. He served as president of the University of Washington in Seattle, Washington, from 2004 to 2010; as chancellor of Louisiana State University from 1999 to 2004; and chancellor and provost of the University of Connecticut from 1994 to 1999. Prior to 1994, he was provost and vice president for Academic Affairs at Montana State University and held faculty and administrative positions at the University of Colorado. He also is a director of Expeditors International of Washington, Inc. (global logistics services) and Omnicare, Inc. (healthcare services). He is a Life Member of the Council on Foreign Relations and is a Fellow of the National Academy of Public Administration. He has also been a FullbrightFulbright Fellow, a Fellow of the American Council on Education and served on many non-profit boards. He is an experienced leader of major organizations, with strong skills in government and international relations and strategic planning.
Daniel S. Fulton, 64, was elected chief executive officer and a member of the board of directors in 2008. He has been president of Weyerhaeuser Company since 2008. From 2001 until 2008 he was president and chief executive officer of Weyerhaeuser Real Estate Company, a wholly owned subsidiary of Weyerhaeuser Company. In 2004 he was named to Weyerhaeuser Company’s senior management team. Mr. Fulton is the past chair of the Policy Advisory Board of the Joint Center for Housing Studies at Harvard University. He is on the board of NAREIT (the National Association of Real Estate Investment Trusts). He is chair of the Washington Roundtable, a member of the Business Roundtable (BRT) and chair of the BRT Housing Subcommittee. He is a member of the Advisory Board for the Foster School of Business at the University of Washington. He has a strong executive background in real estate and corporate finance, with extensive experience managing capital intensive operations, international operations and strategic planning.
JohnJohn I. Kieckhefer, 68, 70, a director of the Company since 1990, has been president of Kieckhefer Associates, Inc. (investment and trust management) since 1989, and was senior vice president prior to that time. He has been engaged in commercial cattle operations since 1967 and is a trustee of J.W. Kieckhefer Foundation, an Arizona charitable trust. He has a strong background in business and finance, with extensive experience in public company executive compensation.
Wayne W. Murdy, 68, 70, a director of the Company since 2009, held various management positions with Newmont Mining Corporation (international mining) from 1992 until his retirement in 2007, including Chairmanchairman of the Boardboard from 2002 to 2007 and Chief Executive Officerchief executive officer from 2001 to 2007. Before joining Newmont Mining, Mr. Murdy spent 15 years serving in senior financial positions in the oil and gas industry, including positions with Apache Corporation and Getty Oil Company. He also is a director of BHP Billiton Limited and BHP Billiton Plc. (global resources). He is a trustee of the Denver Art Museum and The Papal Foundation, and is a member of the Advisory Councils for the College of Engineering at the University of Notre Dame and the Daniels Business School at the University of Denver.Dame. He has extensive executive experience in leading natural resources companies and managing capital-intensive industry operations, with strong skills in corporate finance and accounting, international operations, strategic planning and public company executive compensation.
Nicole W. Piasecki 50,, 52, a director of the Company since 2003, is executivehas been vice president and general manager of the Propulsion Systems Division of Boeing Commercial Airplanes since March 2013. Previously she served as vice president of Business Development and Strategic Integration for Boeing Commercial Airlines. Previously, she served asAirplanes from 2010 to March 2013; president of Boeing Japan from 2006 to 2010; executive vice president of Business Strategy & Marketing for Boeing Commercial Airplanes, The Boeing Company, from 2003 to 2006; was vice president of Commercial Airplanes Sales, Leasing Companies for Boeing Commercial Airplanes from 2000 until January 2003; and served in various positions in engineering, sales, marketing, and business strategy for the Commercial Aircraft Group from 1991.1992. She is a Directordirector on the Seattle Branch Board of Directors for the Federal Reserve Bank, Trustee of Seattle University in Seattle, Washington, and a former member of the Board of Governors, Tokyo, of the American Chamber of Commerce of Japan, and the Federal Aviation’s ManagementAdministration Advisory Council. She has extensive executive experience in capital intensive industries, sales and marketing, strategic planning and international operations and relations.
Doyle R. Simons 49, was appointed, 51, has been president and chief executive officer of the Company since August 1, 2013 and a director of the Company insince June 2012. He had been previously appointed chief executive officer-elect and an executive officer of the company on June 17, 2013. He served as chairman and chief executive officer of Temple-Inland, Inc. (forest products) from 2008 until February of 2012 when it was acquired by International Paper Company. Previously, he held various management positions with Temple-Inland, including executive vice president from 2005 through 2007 and chief administrative officer from 2003 to 2005. Prior to joining the company in 1992, he practiced real estate and banking law with Hutcheson and Grundy, L.L.P. He also serves on the board of directors for Fiserv, Inc.; and is a member of the board of visitors for the University of Texas M. D. Anderson Cancer Center, and the Baylor University Hankamer School of Business Advisory Board; and serves on the Advisory Councils of the College of Natural Sciences and the Texas Memorial Museum at The University of Texas at Austin. (financial services technology). He has extensive experience in managing forest products companies and capital intensive industries, with strong skills in real estate development, corporate finance, executive compensation and strategic planning.
Richard H. Sinkfield,70, a director of the Company since 1993, is a senior partner in the law firm of Rogers & Hardin in Atlanta, Georgia, and has been a partner in the firm since 1976. He is a Trustee of Vanderbilt University and a member of the Advisory Board of the Georgia Appleseed Center for Law and Justice. He was a director of United Auto Group, Inc. (automobile retailer) from 1993 to 1999 and its executive vice president and chief administrative officer from 1997 to 1999. He was a director of Central Parking Corporation from 2000 to February 2005. He is a former director of the Metropolitan Atlanta Community Foundation, Inc. and the Atlanta College of Art, a former member of the executive board of the Atlanta Area Council of the Boy Scouts of America; and was a member of the board of governors of the State Bar of Georgia from 1990 to 1998. He has extensive experience in corporate and securities laws and corporate governance matters.
D. Michael Steuert64,, 66, a director of the Company since 2004, was senior vice president and chief financial officer for Fluor Corporation (engineering and construction) from 2001 until his retirement in 2012. He served as senior vice president and chief financial officer at Litton Industries Inc. (defense electronics, ship construction and electronic technologies) from 1999 to 2001 and as a senior officer and chief financial officer of GenCorp Inc. (aerospace, propulsion systems, vehicle sealing systems, chemicals and real estate) from 1990 to 1999. He also serves as Trustee of Prologis, is a director of Prologis, Inc. (industrial real estate), Kurion, Inc. (hazardous waste management) and LNG Ltd. (owner and developer of liquefied natural gas projects), and was formerly a member of the National Financial Executives Institute and the Carnegie Mellon Council on finance. He has extensive executive experience in corporate finance and accounting, managing capital intensive industry operations, natural resources development and strategic planning.
Kim Williams 57,, 59, a director of the Company since 2006, was senior vice president and associate director of global industry research for Wellington Management Company LLP (investment management) from 2001 to 2005, was elected a partner effective in 1995 and held various management positions with Wellington from 1986 to 2001. Prior to joining Wellington, she served as vice president, industry analyst for Loomis, Sayles & Co., Inc (investment management) from 1982 to 1986. She is also a director of E.W. Scripps Company MicroVest and(diverse media), Xcel Energy Inc. (utilities), MicroVest (asset management firm) and Oxfam America (global antipoverty agency). She is a member of the Overseer Committee of Brigham and Women’s Hospital in Boston, Massachusetts and a Trustee of Concord Academy, Concord, Massachusetts. She has extensive experience in corporate finance, strategic planning and international operations.
Charles R. Williamson 64,, 66, a director of the companyCompany since 2004 and chairman of the Boardboard since 2009, was the executive vice president of Chevron Corporation (international oil company)and gas) from mid 2005mid-2005 until his retirement in December 2005. He was chairman and chief executive officer of Unocal Corporation (oil and natural gas) until its acquisition by Chevron Corporation in 2005. He served as Unocal Corporation’s executive vice president, International Energy Operations, from 1999 to 2000; group vice president, Asia Operations, from 1998 to 1999; group vice president, International Operations from 1996 to 1997; and held numerous management jobs including positions in the United Kingdom, Thailand and the Netherlands after joining Unocal in 1977. He was a director of Unocal Corporation and former Chairman of the US-ASEAN Business Council.1997. He is also a director and chairman of the board of Talisman Energy Inc. (oil and agas) and lead director of PACCAR Inc. (manufacturer of high-quality trucks). He has extensive executive experience in corporate finance, management of capital intensive operations, development of natural resources, technology, international operations, strategic planning and public company executive compensation.
BOARD OF DIRECTORS AND COMMITTEE INFORMATION
DIRECTOR INDEPENDENCE; BOARD OPERATION AND LEADERSHIP
The Company’s board of directors of the Company has determined that each of the Company’s directors, with the exception of the Company’s president and chief executive officer, is independent within the meaning of the listing requirements established by the New York Stock Exchange. The independent directors meet during every board meeting in separate executive session without members of Company management present. The chairman of the board who is an independent director and presides over these meetings.
The board of directors has determined that having an independent director serve as chairman of the board is in the best interest of shareholders at this time. This structure has been particularly useful as the board has considered significant changes in the Company’s portfolio and strategic direction. Thedirection over the past several years. This structure ensures a greater role for the independent directors in the oversight of the Company and active participation of the independent directors in setting agendas and establishing priorities and procedures for the work of the board. It also allows the board to draw on the leadership skills and business experience of two persons. In addition, thispersons, the chairman of the board and the president and chief executive officer. This leadership structure is preferred by a significant numbermany of the Company’s shareholders. The board believes its administration of its risk oversight function has not affected the board’s leadership structure.
The board is actively involved in the oversight of risks that could affect the Company. This oversight is conducted primarily through committees of the board, as disclosed in the descriptions of each of the committees below, and in the charters of each of the committees, but thecommittees. The full board has retained responsibility for general oversight of risks. The board satisfies this responsibility through full reports by each committee chair regarding the committee’s considerations and actions, as well as through regular reports directly from officers responsible for oversight of particular risks within the Company. The board believes its administration of its risk oversight function has not affected the board’s leadership structure.
The Company employs robust strategic planning and enterprise risk management processes. The Company has an integrated risk management process, and conducts a review of risk every year and reports to the board of directors on the results of the review. This review includes an identification of specific risks, ranking of the likelihood and magnitude of effect of those risks, scenario analysis, review of risk appetite, and a review of mitigation plans. The Company analyzes risk areas that have the potential to materially affect its businesses over the long term and integrates this information into its planning and its report to the board of directors.
COMMITTEE MEMBERSMEMBERS; BOARD AND COMMITTEE MEETINGS
The board of directors has a number of committees that perform certain functions for the board. The current committees are the Executive Committee, Audit Committee, Compensation Committee, Governance and Corporate Responsibility Committee and Finance Committee. The board of
directors met on nine9 occasions in 2012. Each2014. In 2014, each of the directors attended at least 75% of the total meetings of the board and the committees on
which he or she served in 2012.served. The following table providessummarizes membership and meeting information for each of the board committees.committees in 2014.
Name | Executive | Audit Committee | Compensation Committee | Governance and Corporate Responsibility Committee | Finance Committee | Executive | Audit | Compensation | Governance and Corporate Responsibility | Finance | ||||||||||
David P. Bozeman (1) | ||||||||||||||||||||
Debra A. Cafaro | X | X* | ü | ü* | ||||||||||||||||
Mark A. Emmert | X | X | ü | ü | ||||||||||||||||
Daniel S. Fulton | X | |||||||||||||||||||
John I. Kieckhefer | X | X | X | ü | ü | ü | ||||||||||||||
Wayne W. Murdy | X* | ü* | ||||||||||||||||||
Nicole W. Piasecki | X | X | ü | ü | ||||||||||||||||
Richard H. Sinkfield | X* | X | ü* | ü | ||||||||||||||||
Doyle R. Simons | X | X | ü | |||||||||||||||||
D. Michael Steuert | X* | X | ü* | ü | ||||||||||||||||
Kim Williams | X | X | X | ü | ü | ü | ||||||||||||||
Charles R. Williamson | X | ü* | ||||||||||||||||||
Total meetings in fiscal year 2012 | 0 | 5 | 4 | 3 | 10 | |||||||||||||||
Total meetings in 2014 | 0 | 6 | 6 | 3 | 4 |
* | Committee chairman |
(1) | Mr. Bozeman was appointed as a director by the board of directors effective February 12, 2015. Mr. Bozeman’s committee appointment has not yet been determined. |
(2) | Pursuant to the company’s retirement policy for directors, Mr. Sinkfield is retiring as a director as of the 2015 annual meeting and is not standing for re-election. |
Each committee of the board of directors is described below. Each of the committeescommittee has adopted a charter, and the current charter for each committeewhich you can be foundfind on the Company’s website atwww.weyerhaeuser.com under “Company” by clicking on the tab“Company” at the top of the page, then “Investors,” then “Governance,” and then under the “Governance” link.“Committee Charters and Composition.” If you would like to receive a paper copy of any committee charter, you may request one by writing to Claire S. Grace, Vice President andWeyerhaeuser Company, Attention: Corporate Secretary, Weyerhaeuser Company, P.O. Box 9777, Federal Way, WA 98063-9777 or by sending an email toCorporateSecretary@Weyerhaeuser.comCorporateSecretary@weyerhaeuser.com.
Executive Committee
The board of directors has given the Executive Committee the power and authority to act for the board in the interval between board meetings, except to the extent limited by law.law and the Company’s Articles of Incorporation. The chairman of the board, who is an independent director, also serves as the chairman of the Executive Committee.
Audit Committee
The Audit Committee providesis responsible for assisting the board of directors in fulfilling its responsibility for oversight of the quality and integrity of the accounting, auditing, and
financial reporting practices of the Company. It also is responsible for the oversight ofCompany, including the Company’s compliance with legal and regulatory requirements, and forsuch other duties thatas directed by the board orof directors. The committee has sole authority for the Audit Committee chair deems appropriate. appointment, compensation, and oversight of the Company’s independent auditors, including the approval of any significant non-audit relationship. The board of directors has determined that Mr. Steuert is an audit committee financial expert (as such term is defined under applicable rules of the Securities and Exchange Commission).
Independence:The board of directors has determined that each member of the Audit Committee is independent within the meaning of the listing requirements of the New York Stock Exchange.
Risk Oversight:The Audit Committee is responsible for oversight of Company risks relating to accounting matters, financial reporting and legal and regulatory compliance. To satisfy these oversight responsibilities, the committee separately meets regularly with the Company’s chief accounting officer, director of internal audit, general counsel, KPMG LLP and management. The committee chair regularly meets between formal committee meetings with the Company’s
chief accounting officer, director of internal audit and KPMG LLP. The committee also receives regular reports regarding issues such as the status and findings of audits being conducted by the internal and independent auditors, the status of material litigation, accounting changes that could affect the Company’s financial statements and proposed audit adjustments.
Compensation Committee
The Compensation Committee is responsible forfor:
Ÿ | reviewing and approving the strategy and design of the Company’s compensation and benefits |
Ÿ | making recommendations to the board for incentive compensation and equity-based |
Ÿ | making recommendations to the board regarding the compensation of the Company’s directors and chief executive |
Ÿ | reviewing and approving salaries and incentive compensation of |
Ÿ | administering the Company’s |
Ÿ | selecting and regularly reviewing the peer group used for benchmarking compensation for executive |
Ÿ | annually determining the independence of the Compensation Committee’s compensation consultant and whether the consultant’s work raised any conflicts of interest. |
Independence:The board of directors has determined that each member of the Compensation Committee is independent within the meaning of the listing requirements of the New York Stock Exchange.
Risk Oversight:The Compensation Committee is responsible for oversight of risks relating to employment policies and the Company’s compensation and benefits systems and for annually reviewing these policies and practices to
determine whether they are reasonably likely to have a material adverse effect on the Company. To assist it in satisfying these oversight responsibilities, the Committeecommittee has retained its own compensation consultant and meets regularly with management to understand the financial, human resources and shareholder implications of compensation decisions being made. The Compensation Committee analyzed each design element and potential risk areas for each of the Company’s compensation plans and the Company’s compensation policies and practices generally. The Committee has determined that such policies and practices are well-designed overall not to encourage behaviors that would create material risks for the Company. The committee chair also regularly meets between formal committee meetings with management and the committee’s consultant.
Governance and Corporate Responsibility Committee
The Governance and Corporate Responsibility Committee takes a leadership role in shaping the governance of the Company. It provides oversight and direction regarding the functioning and operation of the board. It also recommends to the board candidates for nomination and election as directors and director candidates for election as the chairman of the board. The committee manages the processes used by the board in its self-assessment and its evaluation of the chief executive officer. The committee also provides oversight of:
Ÿ | senior management succession |
Ÿ | the Company’s sustainability strategy and |
Ÿ | environmental and safety issues at the |
Ÿ | ethics and business conduct of the |
Ÿ | political activities and governmental |
Ÿ | human resources practices. |
Independence:The board of directors has determined that each member of the Governance and Corporate Responsibility Committee is independent within the meaning of the listing requirements of the New York Stock Exchange.
Risk Oversight:The Governance and Corporate Responsibility Committee is responsible for oversight of risks relating to management and board succession planning, the Company’s sustainability and environmental practices and policies, stakeholder responses to the Company’s ethics and business practices, the Company’s political activities and governmental policy development that could affect Company operations and strategic decisions, and employee and investor responses to the Company’s human resources practices. To satisfy these oversight responsibilities, the committee receives regular
reports from officers of the Company responsible for each of these risk areas on matters such as progress against succession planning programs and goals, trends in risk levels, the employee climate, risk management activities, and non-governmental and governmental policies or proposals that could affect Company operations. Because many of these risks could have financial and reporting implications for the Company, the board and the Governance and Corporate Responsibility Committee have determined that at least one member of the committee must serve concurrently on the Audit Committee.
Finance Committee
The Finance Committee monitors and oversees the Company’s financial resources and strategies, with emphasis on those issues that are long-term in nature. The committee:
Ÿ | provides guidance to the board regarding major financial policies of the Company; |
Ÿ | oversees financial matters of importance to the Company; |
Ÿ | reviews |
Ÿ | reviews and |
Ÿ | reviews and makes recommendations |
Ÿ | reviews and makes recommendations regarding the Company’s debt and equity |
Ÿ | reviews and makes recommendations |
Independence:The board of directors has determined that each member of the Finance Committee is independent within the meaning of the listing requirements of the New York Stock Exchange.
Risk Oversight:The Finance Committee is responsible for the oversight of risks related to the Company’s financial policies, material financial decisions, credit policies and ratings, compliance with the REIT asset and income rules, cash management and investment strategies, debt and equity structures, and significant business
decisions. The committee satisfies this oversight responsibility through regular reports from officers of the Company responsible for each of these risk areas on matters such as the Company’s capital structure, debt levels, discussions with credit rating agencies, pension fund returns, insurance policies, cash flows and expected sources and uses of cash, and major business transactions or strategic decisions being considered. The committee also consults periodically with outside financial advisors.
Board CharterGovernance Guidelines
The board of directors has documented the governance practices followed by the Company by adopting Corporate Governance Guidelines. The Corporate Governance Guidelines establish the practices the board of directors followfollows with respect to board function and operation, Company operations, board organization and composition and
board conduct. The Governance Guidelines are available on the Company’s website atwww.weyerhaeuser.com underby clicking on “Company” at the top of the page, then “Investors,” then “Governance,” and then under the “Governance” link.“Governance Guidelines.” If you would like to receive a paper copy, you may request one by writing to Claire S. Grace, Vice President andWeyerhaeuser Company, Attention: Corporate Secretary, Weyerhaeuser Company, P.O. Box 9777, Federal Way, WA 98063-9777 or by sending an email toCorporateSecretary@Weyerhaeuser.comCorporateSecretary@weyerhaeuser.com.
CONSIDERATION OF DIRECTOR NOMINEES
Director Qualifications
The board has codified standards for directors in the board’s Corporate Governance Guidelines. TheseThe Governance Guidelines provide that the board should encompass a diverse range of talent, skill and expertise sufficient to provide sound and prudent guidance with respect to the Company’s operations and interests. The Corporate Governance Guidelines also provide that at all times a majority of the board must be “independent directors” as defined from time to time by the listing requirements of the New York Stock Exchange and any specific requirements established by the board. Each director also is expected to:
Ÿ | exhibit high standards of integrity, commitment and independence of thought and judgment; |
Ÿ | use his or her skills and experiences to provide independent oversight to the business of the Company; |
Ÿ | participate in a constructive and collegial manner; |
Ÿ | be willing to devote sufficient time to carrying out the duties and responsibilities of a |
Ÿ | devote the time and effort necessary to learn the business of the Company and the board; and |
Ÿ | represent the long-term interests of all shareholders. |
In addition, the board of directors has determined that the board as a whole must have the right diversity, mix of characteristics and skills for the optimal functioning of the board in its oversight of the Company. The board believes it should be comprised of persons with skills in areas such as:
Ÿ | finance; |
Ÿ | sales and |
Ÿ | strategic planning; |
Ÿ | development of strategies for sustainability; |
Ÿ | human resources and diversity; |
Ÿ | safety; |
Ÿ | relevant industries, especially natural resource companies; |
Ÿ | leadership of large, complex organizations; |
Ÿ | legal; |
Ÿ | manufacturing; |
Ÿ | banking; |
Ÿ | government and governmental relationships; |
Ÿ | international business and international cultures; and |
Ÿ | information technology. |
In addition to the targeted skill areas, the Governance and Corporate Responsibility Committee looks for a strong record of achievement in key knowledge areas that it believes are critical for directors to add value to a board, including:
Ÿ | Strategy – |
Ÿ | Leadership – skills in coaching senior executives and the ability to assist the CEO in his or her development; |
Ÿ | Organizational Issues – understanding of strategy implementation, change management processes, group effectiveness and organizational design; |
Relationships – understanding how to interact with governments, investors, financial analysts, and communities in which the Company operates; |
|
Ÿ | Ethics – the ability to identify and raise key ethical issues concerning the activities of the Company and senior management as they affect the business community and society. |
As part of its self-assessment process, the board annually determines the diversity of specific skills and characteristics necessary for the optimal functioning of the board in its oversight of the Company over both the short- and longer-term. long-term.
The Governance and Corporate Responsibility Committee has adopted a policy regarding the director selection process. The policy requires the Committeecommittee to assess the skill areas currently represented on the board and those skill areas represented by directors expected to retire or leave the board in the near future against the target skill areas established annually by the board, as well as recommendations of directors regarding skills that
could improve the overall quality and ability of the board to carry out its function. The Governance and Corporate Responsibility Committee then establishes the specific target skill areas or experiences that are to be the focus of a director search, if necessary. Specific qualities or experiences could include matters such as experience in the Company’s industry, financial or technological expertise, experience in situations comparable to the Company’s (e.g., growth companies, companies that have grown through acquisitions, or companies that have restructured their asset portfolios successfully), leadership experience and relevant geographical experience. The effectiveness of the board’s diverse mix of skills and experiences is considered as part of each board self-assessment.
Identifying and Evaluating Nominees for Directors
The Governance and Corporate Responsibility Committee uses a variety of methods for identifying and evaluating nominees for director. The committee regularly assesses the mix of skills and industries currently represented on the board, whether any vacancies on the board are expected due to retirement or otherwise, the skills represented by retiring directors, and additional skills highlighted during the board self-assessment process that could improve the overall quality and ability of the board to carry out its responsibilities. In the event vacancies are anticipated, or arise, the Governance and Corporate Responsibility
Committee considers various potential candidates for director. Candidates may come to the attention of the committee through current board members, professional search firms, shareholders or other persons. The committee or a subcommittee may interview potential candidates to further assess the qualifications possessed by the candidates and their ability to serve as a director. The committee then determines the best qualified candidates based on the established criteria and recommends those candidates to the board for election at the next annual meeting of shareholders.
Shareholder Nominees
The Governance and Corporate Responsibility Committee will consider nominees for the board of directors recommended by shareholders. If a shareholder wishes to recommend a nominee, he or she should write to the Governance and Corporate Responsibility Committee, care of Claire
S. Grace, Vice President andthe Corporate Secretary, Weyerhaeuser Company, P. O.P.O. Box 9777, Federal Way, WA 98063-9777, specifying the name of the nominee and the nominee’s qualifications for membership on the board of directors. All recommendationsRecommendations will be brought to the attention of and be considered by the Committee.committee.
The Company’s Bylaws establish procedures that must be followed for shareholder nominations of directors. See “Future Shareholder Proposals and Nominations” below for more information.
SHAREHOLDER/INTERESTED PARTY COMMUNICATIONS
Communications to the board of directors may be addressedsent to Claire S. Grace, Vice President andWeyerhaeuser Company, Attention: Corporate Secretary, Weyerhaeuser Company, P. O.P.O. Box 9777, Federal Way, WA 98063-9777 and marked to the attention of the board or any of its committees, the independent directors or individual directors. Communications also may be sent by email toCorporateSecretary@Weyerhaeuser.comCorporateSecretary@weyerhaeuser.com.
The directors are expected to attend the Company’s annual meetings, if possible. All of the sitting directors attended the 20122014 annual meeting.
The following table shows the annual compensation of our non-employee directors for 2012,2014, which consisted of annual retainer fees paid in cash, including the amounts associated with chairingfor serving as chair of a board committees,committee, and restricted stock unit awards (“RSUs”).awards. All values are reported in U.S. dollars.
Name | Fees Earned or Paid in Cash ($) (1) | Stock Awards ($) (2) | Total ($) | |||||||||
Debra A. Cafaro (4) | 80,000 | 90,000 | 170,000 | |||||||||
Mark A. Emmert | 70,000 | 90,000 | 160,000 | |||||||||
Richard H. Sinkfield (3)(4) | 80,000 | 90,000 | 170,000 | |||||||||
John I. Kieckhefer (3) | 70,000 | 90,000 | 160,000 | |||||||||
Wayne W. Murdy (4) | 80,000 | 90,000 | 170,000 | |||||||||
Nicole W. Piasecki (3) | 70,000 | 90,000 | 160,000 | |||||||||
Doyle R. Simons (3) | 58,333 | 75,000 | 133,333 | |||||||||
D. Michael Steuert (3)(4) | 80,000 | 90,000 | 170,000 | |||||||||
Kim Williams | 70,000 | 90,000 | 160,000 | |||||||||
Charles R. Williamson | 150,000 | 150,000 | 300,000 |
Name | Fees Earned (1)(3) ($) | Stock Awards (2)(3) ($) | Total ($) | |||||||||
Debra A. Cafaro | 110,000 | 100,015 | 210,015 | |||||||||
Mark A. Emmert | 100,000 | 100,015 | 200,015 | |||||||||
John I. Kieckhefer | 100,000 | 100,015 | 200,015 | |||||||||
Wayne W. Murdy | 115,000 | 100,015 | 215,015 | |||||||||
Nicole W. Piasecki | 100,000 | 100,015 | 200,015 | |||||||||
Richard H. Sinkfield | 110,000 | 100,015 | 210,015 | |||||||||
D. Michael Steuert | 115,000 | 100,015 | 215,015 | |||||||||
Kim Williams | 100,000 | 100,015 | 200,015 | |||||||||
Charles R. Williamson | 160,000 | 160,001 | 320,001 |
(1) | The amounts in this column reflect director compensation earned and paid in cash. The amounts for each of Mr. Steuert (Audit) and Mr. Murdy (Compensation) include cash |
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(2) | The amounts in this column reflect the grant date fair value of director compensation earned and paid in the form of |
Non-Employee Director Compensation Program for 20122014
The board believes that the level of non-employee director compensation should be based on board and committee responsibilities and be competitive with comparable companies. In addition, the board believes that a significant portion of non-employee director compensation should align director interests with the long-term interests of shareholders. As a result, in 2012,2014 continuing non-employee directors, other than the chairman of the board, were compensated by:
Ÿ | a base annual retainer fee of |
Ÿ | an additional cash annual retainer fee of $15,000 for the chair of the Audit Committee and Compensation Committee and $10,000 for each other committee chair. |
The independent director serving as chairman of the board received an annual retainer of $300,000$320,000 of which $150,000$160,000 (subject to share rounding) was paid in RSUs and $150,000$160,000 was paid in cash.
Directors who are appointed to fill a vacancy on the board are paid a pro rata amount of the annual retainer immediately following the effective date of the director’s appointment. Mr. Simons,Directors who was appointed toalso are employees of the Company do not receive compensation for their service on the board effective June 29, 2012, received a pro rata amount of $133,333, of which $75,000 was paid in the form of RSUs and $58,333 was paid in cash.or any committees.
Annual Board Retainer Cash Fees
In 2012, eachEach non-employee director that was elected to the board at the April2014 shareholders’ meeting received a cash annual board retainer fee of $70,000 per year.$100,000. Non-employee directors who serve as chairschair of committeesthe Finance Committee and Governance and Corporate Responsibility Committee received an additional cash retainer fee of $10,000. Non-employee directors who served as chair of the Audit
Committee and Compensation Committee received an additional cash retainer fee of $15,000. No additional fees are paid for attending board or committee meetings. All retainer fees are paid annually, immediately following the annual shareholders’ meeting. Directors who are appointed to fill a vacancy on the board are paid a pro rata amount of the annual retainer immediately following the effective date of the director’s appointment. Mr. Simons, who was appointed to the board effective June 29, 2012, received a pro rata amount of $58,333 for the year. The Company reimburses non-employee directors for actual travel and out-of-pocket expenses incurred in connection with their services. Compensation also is available for extended travel on board business at the request of the board or a committee of the board at the rate of $2,000 per day, including travel days and work days. Directors who also are employees of the Company do not receive compensation for their service on the board or any committees.service.
Retainer Equity Awards
In 2012, eachEach non-employee director that was elected to the board at the April2014 shareholders’ meeting received $90,000$100,000 (subject to share rounding) of the annual board retainer fee in the form of RSU’s,RSUs, with the exception of the chairman of the board who received $160,000 (subject to share rounding). The number of RSU’sRSUs was determined by dividing the dollar amount of the retainer equity award by the average of the high and the low price of Weyerhaeuser Company’sCompany common stock on the date of grant as reported byThe Wall Street Journal for the New York Stock Exchange Composite Transactions. For April 20122014 awards,
the average of the high and low price of the Company’s common stock on the date of grant was $20.795,$28.47, which resulted in a grant of 4,3285,620 RSUs for the chairman of the board and 3,513 RSUs for each of the directors and 7,213 for the chairman of the board. Mr. Simons, who was appointed to the board effective June 29, 2012 received a pro rata amount of $75,000 and was granted 3,388other directors. The RSUs at an average price of $22.14. These RSU’s vest over one year and will be settled in shares of the Company’s common stock at the one-year anniversary of the date of grant. The RSU’sRSUs are forfeitable during thatthe one-year vesting period, though Directors whoperiod; however, directors that leave the Boardboard during the yearone-year period receive a pro-rata number of shares on the settlement date. RSU’sRSUs granted to the Directorsdirectors are credited with dividends during the one-year vesting period. As the RSU’sRSUs vest, dividends credited to the RSUs similarly vest. If any RSU’sRSUs are forfeited, dividends related to the forfeited shares also are forfeited.
The amount reported in the Stock Awards column for each directorof the Directors’ Compensation table is the dollar value of the RSUs awarded in 2012,2014, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. See Note 17 of “NotesNotes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K.”10-K for the year ended December 31, 2014.
Deferral Option for Cash Retainer
Directors also may chooseelect to defer someall or alla portion of the annual cash retainer. A Directordirector who chooseselects to defer someall or alla portion of the cash retainer has the option of deferring the designated amount into thecommon stock equivalent units account or into thean interest-bearing account, in each case under the Fee Deferral Plan for Directors. The number of common stock equivalent units credited to a Director’sdirector’s account will be determined by dividing any cash being deferred into common stock equivalent units by the average of the high and the low price of the Company’s common stock on the date of grant.such fees would have been paid in cash. Deferred stock equivalent units will be paid in the form of shares of the Company’s common stock at the end of the deferral period, but no earlier than the Director’sdirector’s separation from service,service. During the deferral period, stock equivalent units are credited with dividends, which are paid along with the deferred shares at the end of the deferral period in the form of shares of the Company’s common stock. Amounts deferred into the interest-bearing account will be paid in cash at the end of the deferral period, but no earlier than the Director’sdirector’s separation from service, in cash.service.
Deferral Option for Retainer Equity Awards
Directors may chooseelect to further defer receipt of someall or alla portion of their vested RSUs by completing a deferral election form by the end of the year before
the grant would be made – that is, by the end of 2011 for 2012 grants.RSUs. Any deferred RSU’sRSUs are deferred into common stock equivalent units under the Fee Deferral Plan for Directors. RSU’sRSUs deferred into common stock equivalent units are paid in the form of shares of the Company’s common stock at the end of the deferral period, but no earlier than
the Director’sdirector’s separation from service, in the form of shares of the Company’s common stock.service. During the deferral period, stock equivalent units are credited with dividends, which are paid along with the deferred shares at the end of the deferral period in the form of shares of the Company’s common stock.
Share Ownership Guidelines for Directors
The board of directors has adopted share ownership guidelines under which directors are obligatedrequired to own shares of Weyerhaeuser Company common stock valued at five times their cash compensation. Until thatthe ownership requirement has been
satisfied, a Directordirector may sell RSU’s that vestshares issuable upon vesting of RSUs to pay the taxes due upon vesting, but must otherwise hold 100% of the net shares granted to him or her. SharesRSUs or cash retainer fees deferred into common stock equivalent units under the Fee Deferral Plan for Directors are countedincluded for purposes of determining whether a director has satisfied the share ownership requirement. The Compensation Committee annually reviews the compliance of the directors with the share ownership guidelines.
Director Compensation Review Practices
The Compensation Committee is responsible for annually reviewing the Company’s non-employee director compensation practices in relation to comparable companies. Any changes to be made to non-employee director compensation practices must be recommended by the Compensation Committee for approval by the board.board of directors.
BENEFICIAL OWNERSHIP OF COMMON SHARES
DIRECTORS AND NAMED EXECUTIVE OFFICERS
The following table shows, as of January 3, 2013February 20, 2015, the number of common shares of the Company that
beneficially owned by each director eachand named executive officer, and theby all directors and all executive officers as a group, haveas well as the power to votenumber of common stock
equivalent units owned by each director and named executive officer and by all directors and all executive officers as a group under the Company’s deferred compensation plans. No directors or cause dispositionexecutive officers beneficially owned shares of the shares.Company’s 6.375% Mandatory Convertible Preference Shares, Series A as of February 20, 2015. Percentages of total beneficial ownership have been calculated based upon 523,983,103 shares, which was the total number of common shares outstanding as of December 31, 2012.February 20, 2015.
Name of Individual or Identify of Group | Voting and or Dispositive (1)(2)(3)(4)(5)(6) | Percent of Class (common shares) | Common (7) | |||||||||||||||||||||
Name of Individual or Identity of Group | Voting and or Dispositive (1)(2)(3)(4)(5) | Percent of Class (common shares) | Common (6) | |||||||||||||||||||||
Patricia M. Bedient | 653,693 | * | 75,743 | 773,805 | * | 80,301 | ||||||||||||||||||
Adrian M. Blocker | 14,921 | * | — | |||||||||||||||||||||
David P. Bozeman | 470 | * | — | |||||||||||||||||||||
Debra A. Cafaro | 4,413 | * | 44,095 | 4,357 | * | 53,675 | ||||||||||||||||||
Lawrence B. Burrows | 216,229 | * | — | |||||||||||||||||||||
Srinivasan Chandrasekaran | 472,242 | * | 19,522 | |||||||||||||||||||||
Mark A. Emmert | 4,818 | * | 18,983 | 11,560 | * | 20,125 | ||||||||||||||||||
Daniel S. Fulton | 2,358,750 | * | 76,843 | |||||||||||||||||||||
Thomas F. Gideon | 576,886 | * | 15,927 | 243,303 | * | 103 | ||||||||||||||||||
Rhonda D. Hunter | 58,395 | * | — | |||||||||||||||||||||
John I. Kieckhefer | 7,937,918 | 1.5 | 131,557 | 6,480,323 | 1.2 | 152,660 | ||||||||||||||||||
Sandy D. McDade | 85,455 | * | — | |||||||||||||||||||||
Wayne W. Murdy | 13,274 | * | 17,054 | 20,856 | * | 18,080 | ||||||||||||||||||
Peter M. Orser | 89,746 | * | — | |||||||||||||||||||||
Nicole W. Piasecki | 249,355 | * | 41,507 | 206,135 | * | 50,931 | ||||||||||||||||||
Doyle R. Simons | 328 | * | 6,093 | 135,300 | * | 12,450 | ||||||||||||||||||
Richard H. Sinkfield | 1,351 | * | 58,519 | 1,351 | * | 68,967 | ||||||||||||||||||
D. Michael Steuert | — | * | 54,072 | 6,798 | * | 57,326 | ||||||||||||||||||
Kim Williams | 4,413 | * | 43,616 | 11,155 | * | 52,502 | ||||||||||||||||||
Charles R. Williamson | 7,354 | * | 101,643 | 17,819 | * | 118,509 | ||||||||||||||||||
* | ||||||||||||||||||||||||
* | ||||||||||||||||||||||||
* | ||||||||||||||||||||||||
Directors and executive officers as a group (20 persons) | 12,971,804 | 2.4 | 717,316 | |||||||||||||||||||||
Directors and executive officers as a group (21 persons) | 8,815,736 | 1.7 | 739,060 |
* | Denotes amount is less than 1% |
(1) | Includes the number of shares that could be acquired within 60 days of |
(2) | Includes the number of |
(3) |
Includes shares for which certain of the directors and nominees share voting and dispositive powers with one or more other persons as follows: Mr. Kieckhefer, |
Beneficial ownership |
Includes RSUs granted to the directors April |
Common stock equivalent units held as of |
OWNERS OF MORE THAN 5% OF THE COMPANY’S COMMON SHARES
The following table shows the number of common shares held by persons known to the Company to beneficially own more than five percent of its outstanding common shares.
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class (common shares) | ||||||
Capital World Investors (1) | 43,272,501 | 8.0 | % | |||||
333 South Hope Street Los Angeles CA 90071 | ||||||||
T. Rowe Price Associates, Inc. (2) | 29,609,197 | 5.4 | % | |||||
100 E. Pratt street Baltimore MD 21202 | ||||||||
BlackRock, Inc. (3) | 40,611,328 | 7.5 | % | |||||
40 East 52nd Street New York NY 10022 |
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class (common shares) | ||||||
BlackRock, Inc. | 43,297,811(1 | ) | 8.2 | % | ||||
55 East 52nd Street New York, NY 10022 | ||||||||
T. Rowe Price Associates, Inc. | 40,855,683(2 | ) | 7.7 | % | ||||
100 E. Pratt Street Baltimore, MD 21202 | ||||||||
Capital World Investors | 40,287,090(3 | ) | 7.6 | % | ||||
333 South Hope Street Los Angeles, CA 90071 | ||||||||
The Vanguard Group | 27,973,060(4 | ) | 5.3 | % | ||||
100 Vanguard Blvd. Malvern, PA 19355 |
(1) | Based on a Schedule |
(2) | Based on a Schedule |
(3) | Based on a Schedule 13G/A dated February |
(4) | Based on a Schedule 13G/A dated February 9, 2015 in which The Vanguard Group reported that as of December 31, 2014 it had sole voting power over 898,742 shares, sole dispositive power over 27,117,623 shares and shared dispositive power over 855,437 shares. |
SECTION 16(a)BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s directors and certain of its officers to sendfile reports of their ownership of WeyerhaeuserCompany stock, and of changes in such ownership, towith the Securities and Exchange Commission (the “SEC”) and the New York Stock Exchange. Based solely on the Company’s review of the copies of such reports it has received,in its possession and written representations from
reporting persons, the Company believes that all of its directors and officers filed all such reports on a timely basis with respect to transactions during 2012.2014, except that a Form 4 was inadvertently filed late on behalf of the Company’s chief accounting officer relating to an acquisition of share equivalent units in February 2014 resulting from an earlier deferral of compensation (bonus) into share equivalent units.
AND ANALYSIS (CD&A)(“CD&A”)
MajorWeyerhaeuser’s executive compensation programs are designed to align the interests of our executive officers with those of our shareholders. Our compensation philosophy is to provide market-competitive programs that ensure we attract and retain world-class talent, with pay directly linked to the achievement of short- and long-term business compensation and corporate governance practices of the Company discussed in this CD&A are highlighted below.results. The Compensation Committee continues to refine the Company’sreviews executive compensation structureprogram components, targets and processes, consistent with evolving governance practices and shareholder views. Compensation and governance practices implemented in recent years includepayouts on an annual basis to ensure the following:strength of our pay-for-performance alignment.
Business Highlights
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Compensation HighlightsShareholder Value Creation
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Governance Highlights
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Ÿ | Directors are elected annually and must receive a majority of votes cast. |
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Ÿ | The board of directors has an independent director as chairman. |
Ÿ | Shareholders owning at least 25% of the outstanding common shares have the right to call special shareholder meetings. |
Ÿ | Our executive compensation program is designed to mitigate undue risk. |
Ÿ | We have a “clawback” policy. |
Ÿ | We have a policy prohibiting hedging and pledging of company stock by directors and officers. |
Ÿ | The Compensation Committee has engaged Frederic W. Cook & Co., Inc. (“Cook & Co.”), an independent consultant who does no other work for the Company. |
Ÿ | Severance and equity accelerated vesting occur only on a “double trigger” basis in a change in control. |
Ÿ | We have minimal executive perquisites. |
Compensation Philosophy andHighlights
Approach
Weyerhaeuser uses a compensation approach for its named executive officers that is designed to achieve several key objectives, including:
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Timberlands | 1.40 | |||
Lumber | 1.89 | |||
Engineered Products & Distribution (EP&D) | 0.49 | |||
Cellulose Fibers | 1.29 | |||
Corporate Staff | 1.25 |
Ÿ | As a result of our improved performance in 2014, the executive officers named in the compensation tables received payments under our annual incentive plan ranging from 125% to 208% of target levels for 2014. |
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their 2013 target grants. Fifty percent of the earned shares vested and were payable to the |
Ÿ | With respect to the PSUs granted to the chief executive officer in June 2013 (at the time of his appointment as CEO-elect), the Company exceeded the cash flow target for such grant and ranked at the 58th percentile with regard to total shareholder return for the relevant 18-month performance period. As a result, the chief executive officer earned 137.8% of his 2013 target grant. Fifty percent of the earned shares will vest and be payable to the chief executive officer in June 2015 and the remaining 50% will vest and be payable in two equal annual installments in June 2016 and 2017. |
Ÿ | At our 2014 annual meeting, more than 96% of the votes cast supported our executive compensation program. |
To achieve these objectives, Weyerhaeuser uses a mixShareholder Engagement
Shareholder Communication.
We believe that maintaining an active dialogue with our shareholders is important to our long-term success. We value the opinions of base pay, incentive opportunities (short and long-term),our shareholders and other benefitsstakeholders and rewards intended to be competitivewelcome their views throughout the year on key issues, such as portfolio strategy, capital allocation, corporate governance, transparent public disclosure, sustainability, corporate social responsibility and compensation.
How the Compensation Committee Considered the 2014 Advisory Vote on Our Compensation Program.
We received a 96% level of support in the market, while concentrating a majority of the executives’ reward opportunities in at-risk incentive pay. The design of the compensation program is intended to support the Company’s overall business objectives and to increase long-term shareholder value.
The Company considered the most recent2014 for our shareholder advisory vote on executive compensation required by the proxy rules“say-on-pay” and a 97% level of support in reassessing these compensation policies and its compensation decisions and believes2013. In general, we believe our shareholders support our overall compensation philosophy, programs and practices. Our Compensation Committee and board of directors value the Company’s approachopinions of our shareholders and actions. The Company intendsconsider those opinions when making compensation decisions. To the extent we receive a significant vote against the compensation of our named executive officers, we will consider our shareholders’ concerns and the Compensation Committee will evaluate whether any actions are necessary to continue to seek shareholder guidance onaddress those concerns.
Our named executive compensation through an annual say-on-pay vote.officers (“NEOs”) for 2014 are:
Executive Officer | Title | |
Doyle R. Simons | President and Chief Executive Officer | |
Patricia M. Bedient | Executive Vice President and Chief Financial Officer | |
Adrian M. Blocker (1) | Senior Vice President, Wood Products | |
Srinivasan Chandrasekaran (2) | Senior Vice President, Cellulose Fibers | |
Rhonda D. Hunter | Senior Vice President, Timberlands | |
Thomas F. Gideon | former Executive Vice President, Timberlands | |
Sandy D. McDade | former Senior Vice President and General Counsel |
(1) | Mr. Blocker was named Senior Vice President, Wood Products effective January 1, 2015. Mr. Blocker previously served as Senior Vice President, Lumber. |
(2) | Mr. Chandrasekaran stepped down as Senior Vice President, Cellulose Fibers as of December 31, 2014 and officially retired from the Company effective February 14, 2015. |
COMPENSATION PHILOSOPHY AND PRINCIPLES
Weyerhaeuser’sOur compensation philosophy is to motivate and reward employees for performance that will result in superior financial results and create long-term value for shareholders. We do this by generally targeting base pay at the competitive median and tying incentive pay to performance. We tie pay to performance by:
Ÿ | measuring individual, business and company performance; |
Ÿ | using performance to differentiate the amount of incentive compensation; and |
Ÿ | allocating more reward dollars to higher performers. |
Our goal is to ensure Weyerhaeuser’s executive compensation programs are competitive and support key financial, strategic and human resources objectives. These include:
Ÿ | attracting and retaining highly skilled executives; |
Ÿ | tying total compensation opportunities to the achievement of the Company’s short- and long-term financial and strategic goals; and |
Ÿ | enhancing the commonality of interests between management and shareholders by encouraging executives to think and behave like owners. |
The following key compensation principles guide the design and administration of the Company’s overall compensation program:
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Ÿ | maintain total compensation opportunities at |
Ÿ | clearly communicate desired behavior and use incentive pay to reward the achievement of performance goals; |
Ÿ | provide a broad range of payout opportunities based on performance; and |
Ÿ | design simple pay programs to |
Total Compensation
To provide a competitive overall compensation and benefits package that is tied to creating shareholder value and that supports the execution of itsour business strategies, Weyerhaeuser useswe use a range of compensation components. The combination and the amount of each iscomponent are influenced by the role of the personexecutive in the Company, market surveys,data, and the total value of all the compensation and benefits and perquisites available to the person. Theexecutive. Our compensation program for executive officers is comprised of:
Element | Objectives and Basis | Form | ||
Base salary | Provide a minimum fixed level of compensation that is competitive for each role | Cash | ||
Annual cash incentives | Annual incentive to drive company, business unit and individual performance | Cash | ||
Long-term incentives | Long-term incentive to drive company performance, align executives’ interests with shareholders’ interests, and retain executives through long-term vesting and potential wealth accumulation | PSUs, stock options and RSUs | ||
Special bonuses | Reward extraordinary performance and attract and retain top talent for key roles within the organization | Cash or equity | ||
Retirement benefits | Provide means to save for retirement | Eligibility to participate in a tax-qualified defined benefit pension plan, a tax-qualified defined contribution 401(k) plan, and a non-qualified supplemental retirement plan | ||
Deferred compensation benefits | Allow executives to defer compensation on a tax-efficient basis | Eligibility to participate in a deferred compensation plan | ||
Medical and other benefits | Provide competitive benefits package that generally includes benefits offered to all employees | Health and welfare plans, and other broad-based employee benefits |
Compensation Mix
We seek to accomplish our executive compensation goals through an appropriate mix of short-term and long-term compensation, by providing a larger percentage of our executive officers’ total
compensation opportunity in the form of equity compensation, and by ensuring that a significant portion of our executive officers’ total pay opportunity is in the form of performance-based compensation.
The following charts illustrate 2014 target compensation for Mr. Simons and on average for all other NEOs by type of compensation. A significant portion (approximately 70% and 60%, respectively) of the total compensation of our CEO and our NEOs is performance-based. In the chart below, Mr. Gideon was not included in the calculation for all NEOs because his separation from service occurred February 14, 2014 and he did not receive an AIP bonus or equity award in 2014.
Ÿ | Fixed vs. performance-based compensation. We believe our mix of fixed (primarily base |
Ÿ | Short-term vs. long-term compensation. We believe our mix of short-term (primarily base salary and annual |
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Performance Management
Weyerhaeuser’sOur policy is to provide rewards for thereward achievement of specific financial, strategic and individual performance goals. The Company usesWe use an annual Performance Management Process (“PMP”) for itsour employees to assess individual performance. In the PMP process, each employee, including each of the named executive officers,our NEOs, establishes his or her performance goals at the beginning of the year in consultation with the employee’s manager. The CEO’s performance goals are approved by the board of directors. TheseWe assess the employee’s performance against these performance goals against which performance is assessed multiple times during the year,and we include a broad spectrum of metrics, such as safety results, for the business or function,workforce effectiveness, financial and operating results, strategy, competitive performance, diversity accomplishments, talentpeople development, governance and corporate responsibility, environment and sustainability, and customer value delivery. At the
end of the year, the employee’s performance is assessed against these multiple goals, which results in an aggregate ranking of “exceeds,” “achieves” or “below.” The employee’s individual performance ranking is one important factor in decisions regarding compensation. The Compensation Committee and the board of directors review the CEO’s performance against his goals at least twice
a year. The overall ranking is one factor in decisions regarding compensation.annually.
Key performance goals for 2012our NEOs in 2014 were principally in the areas of: cash flow generation, total shareholder returns, manufacturingoperational excellence, relative competitive performance, capital effectiveness, strategic priorities, safety, workforce effectiveness, and people development. The CEO’s keyMr. Simons’ principal individual performance goals for 20122014 were in the areas of senior leader succession, implementation ofbased on Company financial performance (RONA), developing key strategic priorities, Company growth, earnings improvement, and safety.driving improved performance through operational excellence and people development. For 20122014 compensation decisions, each of the named executive officersour NEOs was deemeddetermined to have performed at the level of “achieves” or above in relation to his or her goals.
Variable Pay at Risk
The percentage of an employee’s compensation opportunity that is fixed instead of variable is based primarily on the employee’s role in the Company. In general, employees with more ability to directly influence overall Company performance have a greater portion of pay at risk through short- and long-term incentive programs. Executive officers with more responsibility for strategic and operating decisions have a greater percentage of their compensation opportunity allocated to long-term incentives. Typically, approximately 51% of target total compensation opportunity for these executive officers is in the form of long-term incentives. In 2012, 64% of target total compensation for the named executive officers was at risk. 82% of the aggregate target incentive compensation was at risk based on the performance of the business or the Company and the executive officer (see chart below).
Variable Pay at Risk
Forms of Long-Term Incentive Compensation
During 2010, the board of directors completed its analysis of the Company’s strategy and structure and determined that electing to be taxed as a REIT would be in the best interest of shareholders. The Company began operating as a REIT and elected to be taxed as a REIT in 2011 when it filed its federal tax return for fiscal 2010. During 2010, the Compensation Committee reviewed and redesigned the Company’s long-term incentive program to be more consistent with a REIT structure and to provide a stronger linkage of pay for performance. ForIn 2014, grants made in 2012, theunder our long-term incentive program for senior officers, including the named executive officers,our NEOs, included a mix of forms of equity, with 50% of the value of the award granted as performance share units,PSUs, 25% of the value granted as stock options and 25% of the value granted as time-vested restricted stock units.RSUs. This mix puts more compensation at risk for senior executives and provides for greater rewards if superior performance is generated. To recognize the differences between the forest products business and the homebuilding subsidiaries, senior management of WRECO, including a named executive officer, also participated in a cash long-term incentive plan more aligned with the direct financial results of the homebuilding subsidiaries.
Market Positioning
The Company establishes competitive compensation levels based on market reviews of peer company compensation and then designs its pay program to focus executive officers on meeting Company performance objectives. Weyerhaeuser’s strategyOur objective is to set total target compensation and benefit levels atwithin the median range of market pay and benefit levels. Each component of total compensation and other benefits is intended to be consistent with market practices as established by the peer group outlined below to help the Company attract and retain talented executives with the skills needed in Weyerhaeuser’s businesses.and incent them to produce superior long-term shareholder returns.
Weyerhaeuser regularly reviewsWe review market compensation levels to determine whether total target compensation for itsour employees remains in the targeted median pay range and makesmake adjustments when needed. This assessment
includes evaluation of base salary, annual incentive opportunities and long-term incentives. In addition, we review other rewards such as health benefits and retirement programs regularly are assessed relative to the market. The CompanyWe also reviewsreview the competitive performance of its
our peers to help establish performance targets for incentive plans and to assess appropriate payout levels for performance. For 2012,2014, total target compensation for the named executive officers other than the CEO was in the market median range forour NEOs relative to similarly situated executive officers in the competitive market. Actual cash compensation received wasmarket was: Mr. Simons, slightly below the competitive market range for the CEO, and in the market median range formedian; Ms. Bedient and Messrs. Burrows,Mr. Gideon, above median; Mr. Chandrasekaran and Orser. For 2012, Mr. Fulton’s base salary, target annual cash compensation,McDade, at median; and actual cash compensation wereMr. Blocker and Ms. Hunter, below the market median range. The grant-date fair value of long-term incentives to Mr. Fulton was at the median range, resulting in target and actual total direct compensation below the median range. (Seemedian. See “Compensation Components” below for details.)
Peer Group
For compensation decisions made in 2012,When establishing target pay opportunities for our NEOs for 2014, the Compensation Committee used areviewed competitive market data in 2013 for the following group of comparator companies, for comparison of executive officer compensation comprised the following broad group of basic materials and manufacturing companies and REITs:
Company | Revenue(1) ($MM) | Market Cap(2) ($MM) | ||||||
Air Products & Chemicals, Inc. | $ | 9,703 | $ | 17,934 | ||||
Allegheny Technologies Incorporated | $ | 5,183 | $ | 5,084 | ||||
Ashland, Inc. | $ | 6,999 | $ | 4,465 | ||||
AvalonBay Communities, Inc. | $ | 974 | $ | 12,418 | ||||
Boston Properties, Inc. | $ | 1,850 | $ | 14,726 | ||||
Celanese Corporation | $ | 6,763 | $ | 6,911 | ||||
CF Industries Holding, Inc. | $ | 6,098 | $ | 9,616 | ||||
Cliffs Natural Resources Inc. | $ | 6,794 | $ | 8,917 | ||||
Domtar Corporation | $ | 5,612 | $ | 3,025 | ||||
Eastman Chemical Company | $ | 7,178 | $ | 5,374 | ||||
Equity Residential | $ | 1,997 | $ | 16,917 | ||||
Huntsman Corporation | $ | 11,221 | $ | 2,378 | ||||
International Paper Company | $ | 26,034 | $ | 12,938 | ||||
MeadWestvaco Corporation | $ | 6,060 | $ | 5,114 | ||||
Nucor Corporation | $ | 20,024 | $ | 12,532 | ||||
Plum Creek Timber Company, Inc. | $ | 1,223 | $ | 5,908 | ||||
Potlatch Corporation | $ | 497 | $ | 1,250 | ||||
PPG Industries, Inc. | $ | 14,885 | $ | 12,893 | ||||
Rayonier Inc. | $ | 1,489 | $ | 5,437 | ||||
Rock-Tenn Company | $ | 6,906 | $ | 4,109 | ||||
United States Steel Corporation | $ | 19,884 | $ | 3,810 | ||||
Vornado Realty Trust | $ | 3,208 | $ | 14,180 | ||||
75th Percentile | $ | 9,072 | $ | 12,803 | ||||
50th Percentile | $ | 6, 430 | $ | 6,409 | ||||
25th Percentile | $ | 2,299 | $ | 4,620 | ||||
Weyerhaeuser | $ | 6,216 | $ | 10,030 |
Company | Revenue(1) ($MM) | Market Cap(2) ($MM) | ||||||
Air Products & Chemicals, Inc. (APD) | $ | 10,180 | $ | 23,640 | ||||
Ashland, Inc. (ASH) | $ | 7,813 | $ | 7,543 | ||||
AvalonBay Communities, Inc. (AVB) | $ | 1,384 | $ | 15,300 | ||||
Boston Properties, Inc. (BXP) | $ | 2,142 | $ | 15,344 | ||||
Celanese Corporation (CE) | $ | 6,395 | $ | 8,722 | ||||
CF Industries Holdings, Inc. (CF) | $ | 5,630 | $ | 13,356 | ||||
Cliffs Natural Resources Inc. (CLF) | $ | 5,711 | $ | 4,013 | ||||
Domtar Corporation (UFS) | $ | 5,359 | $ | 3,056 | ||||
Eastman Chemical Company (EMN) | $ | 9,254 | $ | 12,421 | ||||
Equity Residential (EQR) | $ | 2,303 | $ | 18,695 | ||||
Huntsman Corporation (HUN) | $ | 10,993 | $ | 5,939 | ||||
International Paper Company (IP) | $ | 28,906 | $ | 21,862 | ||||
MeadWestvaco Corporation (MWV) | $ | 5,540 | $ | 6,569 | ||||
Nucor Corporation (NUE) | $ | 18,609 | $ | 16,986 | ||||
Plum Creek Timber Company, Inc. (PCL) | $ | 1,363 | $ | 8,228 | ||||
PPG Industries, Inc. (PPG) | $ | 15,054 | $ | 26,936 | ||||
Rayonier Inc. (RYN) | $ | 1,622 | $ | 5,315 | ||||
Rock-Tenn Company (RKT) | $ | 9,545 | $ | 7,563 | ||||
United States Steel | $ | 17,642 | $ | 4,268 | ||||
Vornado Realty Trust (VNO) | $ | 2,839 | $ | 16,608 | ||||
75th Percentile | $ | 10,384 | $ | 16,703 | ||||
50th Percentile | $ | 6,053 | $ | 10,572 | ||||
25th Percentile | $ | 2,705 | $ | 6,412 | ||||
Weyerhaeuser Company (WY) | $ | 8,068 | $ | 18,398 |
(1) | 4Qs of revenue closest to |
(2) | As of 12/31/ |
In addition to reviewing the current pay practices of these peers,peer companies, the Compensation Committee reviews various pay surveys, including surveys of pay practices of forest products companies and comparably-sized manufacturing companies andas well as general industry data for similar sizesimilarly-sized companies. The peer group and survey data are generally are weighted into a market composite based on equal weighting between the data sources, though the Compensation Committee may review the datareviewed separately to understand pay differences, if any, by industry or business segment and to assess whether any changes in pay data from year to year reflect true market trends.
For purposes of this Compensation Discussion and Analysis, the Company’s named executive officers are the following persons:
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COMPENSATION COMPONENTS—DETERMINATION OF COMPENSATION
Base Salary
Salaries are providedBase salary is the principal fixed element of executive compensation. In setting base salaries for executives, our Compensation Committee generally targets base salary to employees as compensationbe at or near the median level for basic servicesthe applicable role among the peer group companies described above. We also consider other factors to the Company andallow us to meet theour objective of attracting and retaining critical talent, such as the talent needed to runCompany’s performance, the business. Salaries provide a consistent cash flow to employees assuming acceptable levels ofexecutive’s individual performance, and ongoing employment. To control fixed costs while still enabling the Companyhis or her experience and potential to attract critical talent, Weyerhaeuser targets baseassume roles with greater responsibility. The Compensation Committee reviews executive salaries at the median level among the companies described above.on an annual basis. Increases in salaries generally are based on the market level salary for the role in which the executive serves, individual PMP assessments (performance), overall Company budgets and specific talent needs. Base salaries forIn 2014, Mr. Simons’ base salary, unchanged from 2013, was below median to reflect the named executive officers in
2012 are listed in the following table. BecauseCompany’s general philosophy to have a greater portion of the Company’s continued challenges and despite the fact that the Compensation Committee viewed Mr. Fulton’s performance as very strong, Mr. Fulton asked the Compensation Committee to not recommend an increase in hisCEO’s pay at risk through short-and long-term incentive programs versus base pay. Base salary to the board. The Compensation Committee and the board agreed. Messrs. Burrows and Orser received increases in base salary to bring their pay levels up to the median range.for Ms. Bedient and Mr. Gideon, did not receive increases because their base salaries were already slightlyeach unchanged from 2013, was above median. Base salary for Mr. Chandrasekaran and Mr. McDade was within the median range.
Executive Officers in | Percent Increase | New Base Salary | ||||||
D.S. Fulton | 0.0 | % | $ | 900,000 | ||||
P.M. Bedient | 0.0 | % | $ | 600,000 | ||||
L.B. Burrows | 2.5 | % | $ | 538,000 | ||||
T. F. Gideon | 0.0 | % | $ | 600,000 | ||||
P.M. Orser | 4.0 | % | $ | 520,000 |
These pay levels generally positioned the executive officers at or slightly above Base salary for each of Mr. Blocker and Ms. Hunter was below the median range of the marketbecause they were new in their respective roles.
Base salaries for 2012, except for Mr. Fulton whose compensation is below market median. The above-market positioning is due to the reductionour NEOs in the size of the Company following recent portfolio changes and a change in the peer group. However compensation has been structured to generally position the executive officers at median for total compensation.2014 were:
Named Executive Officer | Percentage Increase Over 2013 | 2014 Base Salary | ||||
Doyle R. Simons | 0.0% | $ | 950,000 | |||
Patricia M. Bedient | 0.0% | $ | 610,000 | |||
Adrian M. Blocker (1) | 12.5% | $ | 450,000 | |||
Srinivasan Chandrasekaran | 5.6% | $ | 570,000 | |||
Rhonda D. Hunter (2) | 57.9% | $ | 500,000 | |||
Thomas F. Gideon (3) | 0.0% | $ | 608,000 | |||
Sandy D. McDade (4) | 2.3% | $ | 530,000 |
(1) | Mr. Blocker was named Senior Vice President, Wood Products effective January 1, 2015. Mr. Blocker previously served as Senior Vice President, Lumber. |
(2) | Ms. Hunter was named Senior Vice President, Timberlands effective January 1, 2014. Ms. Hunter previously served as Vice President, Southern Timberlands. |
(3) | Mr. Gideon’s separation from service with the Company was effective February 14, 2014. His annualized base salary was $608,000. |
(4) | Mr. McDade’s separation from service with the Company was effective July 10, 2014. His annualized base salary was $530,000. |
Short-Term Incentive PlansPlan
The Company has two short-term incentive plans, both of which are cash bonus incentive plans designed to focus executive officers and other participants on maximizing efficiency and generating strong financial performance. Salaried employees of the corporate and forest products segments, including executive officers, participate in theOur Annual Incentive Plan (“AIP”). Employees of the Company’s real estate development subsidiaries, including the WRECO president, participate in the WRECO Short-Term Incentive Plan (“STIP”). is an annual cash bonus plan designed to:
Ÿ | motivate our executive officers, including our NEOs, and other participants to generate strong financial performance and achieve our strategic goals; |
Ÿ | link pay to performance; and |
Ÿ | attract and retain top talent employees. |
Each position in the CompanyAIP participant is assigned a target bonus opportunity under the employee’s respective short-term incentive plan reflectingthat reflects competitive practices in the market for similar positions. Both the AIP and the STIP are funded based on achieving pre-established financial performance targets, though the principal financial performance metric used in each plan is different because each plan uses the
standard performance metric typically used by each of the industries. The AIP is funded based on achieving the Company’s return on net asset (“RONA”) performance. Funding for the STIP is based on return on investment (“ROI”).pre-established financial performance and business scorecard metrics described below. The plans are funded based partly on the performance of each business against the RONA or ROI targets and partly against targets set annually by the Compensation Committee. Bonuses areactual bonus amounts awarded to individual employees are based on the level of plan funding and the person’sindividual employee’s performance against his or her PMP goals. In general, executive officersExecutives with a PMP rating of “achieves” will generally receive an award at or near their funding-adjusted individualthe target level.bonus level funded by financial and business performance.
AIP Performance MeasureMeasures and Plan Mechanics
The AIP is an annual cash bonus plan focusedfocuses on the performance of the businesses in the Company’s business segments, including Timberlands, Wood Products (consisting of the Lumber and the OSB, Engineered Products & Distribution (“EP&D”) businesses) and Cellulose Fibers segments (the “Forest Products” segments).Fibers. The Company’s businesses tend to be cyclical and influenced by separate factors, highlighting the need to view each of the Company’s businesses separately. The AIP is designed to be easy for employees to understand and give them a clear view of the effect of their business improvement efforts on their compensation.
FundingAIP funding is calculated using financial performance metrics and business scorecard metrics, with the financial performance metrics weighted 80% and the business scorecard metrics weighted 20%.
Financial performance metrics.
The financial performance metrics for the AIP is primarily (80%) based on the absolute RONA of the businesses for the fiscal year.funding in 2014:
Ÿ | for the Timberlands business, were based 80% on the funds from operations (“FFO”) achieved by the business; |
Ÿ | for the Wood Products and Cellulose Fibers businesses, were based 80% on the return on net assets (“RONA”) achieved by the respective business; and |
Ÿ | for the CEO, were based 80% on the achievement of Company RONA targets. |
FFO is defined as earnings before interest and taxes (“EBIT”), less Section 1031 exchanges and gains on large asset sales, plus depletion, depreciation and amortization, plus the net book value of cash from sales of land, and less fertilizer spending. We use FFO as a performance measure for the Timberlands business because it is a commonly used metric by real estate investment trusts (REITs) to measure operating performance. FFO is intended to focus participants on generating cash flow, which supports the Company’s focus on a growing and sustainable dividend for shareholders.
RONA is defined as EBIT divided by average net assets. For purposes of determining RONA,We define net assets equalsas total assets less cash and short-term investments, deferred tax assets, consolidated assets from special purpose entities, accounts payable,capitalized interest, and accrued liabilities other than income taxes payable.current liabilities. We use RONA is used as the principal performance measure givenfor our CEO and the Wood Products and Cellulose Fibers businesses because of its strong link over time to total shareholder return in the basic materials sector and for Weyerhaeuser. The use of this measure is intended to focus participants on generating profitability, both through increasing revenues and controlling costs. In addition, use of this measure reinforces the importance of making capital investments that will improve the Company’s overall returns.
The Compensation Committee has discretion to adjust the earnings used in theFFO or RONA calculationcalculations for special items as appropriate. In 2012,For AIP purposes in 2014, we excluded gains fromon changes to our retirement plans and sales of non-strategic assets and on post-
retirement plan amendments, as well asproperty, charges for impairments and restructurings, were excluded.
Partand income and expenses relating to the disposition of the fundingWRECO business.
While we report our financial results in accordance with U.S. GAAP, for the reasons described above we base our incentive programs’ financial targets, including the AIP, on non-GAAP financial measures such as FFO and RONA.
AIP Performance Target Setting
Financial performance metrics. Targets for the financial performance metrics required to be met by the businesses to fund 80% of their AIP are established by the Compensation Committee at the beginning of each plan year and are not subject to adjustment by management. The Compensation Committee determines the level of FFO and RONA performance necessary for funding the threshold, target and maximum levels, which represent funding at 20%, 100% and 200% of target levels, respectively. If the applicable FFO result (for Timberlands) or RONA result (for Wood Products, Cellulose Fibers and the CEO) is below the threshold, the funding level for this portion of the AIP is 0%.
The targets for the AIP’s financial performance metrics are established based on a variety of factors:
Ÿ | The near-term outlook, prior year performance as well as competitive position influences the performance goal set for target funding for the Timberlands business. |
Ÿ | The cost of capital as well as competitive position influences the performance goal set for target funding for each of the manufacturing businesses. |
Ÿ | Internal benchmarks of outstanding performance influence the performance goal set for maximum funding. |
For 2014, the Compensation Committee set RONA and FFO funding targets for the businesses and the Company at the following levels:
Metric | Threshold (20% Target Funding) | Target (100% Target Funding) | Maximum (200% Target Funding) | |||||||||||||
Timberlands | FFO | $ | 553M | $ | 692M | $ | 865M | |||||||||
Wood Products (Lumber and EP&D) | RONA | 6% | 12% | 20% | ||||||||||||
Cellulose Fibers | RONA | 6% | 12% | 20% | ||||||||||||
Overall Company (for CEO) | RONA | 6% | 10% | 17% |
Business scorecard metrics. The remainder of the AIP funding (20%) is based on the performance of each business against certain business metrics approved in advance by the Compensation Committee (the “business scorecard”). The business scorecard metrics are in areas such as financial and competitive performance, cost competitiveness, cash generation and performance against strategic goals and safety. Funding for performance against the business scorecard metrics is capped at target or below by various factors, such as the failure to achieve profitability,operational excellence and may be modified by the safety performance of the business.people development.
Employees of businesses in the Forest Products segments,each business segment, including the executive officer leading a segment, and any staff function employee who works only in that business’s facilities or substantially in support of that business, receive bonuses based on the performance of the business against its FFO (for Timberlands) and RONA (for Wood Products and Cellulose Fibers) targets and business scorecard metrics, modified by the performance of the individual employee against his or her performance goals. Other staff
Staff function employees receive annual bonuses based on the actual funding of the AIP for the three businesses—Timberlands, Wood Products and Cellulose Fibers and WRECO segments (based one-third on each business segment’s funding)—modified by the performance of the individual employee against his or her performance goals. This funding mechanism is designed to focus support staff efforts on helping all the businesses to be successful.
AIP RONA Target Setting
Business performance targets required to be met by the businesses to fund 80% of their AIP are established by the Compensation Committee at the beginning of each plan year and are not subject to adjustment by Company management. The Compensation Committee determines the level of RONA performance necessary for funding the threshold, target and maximum levels, which represent 20%, 100% and 200% of target funding levels. If the segment’s RONA performance is below the threshold, the funding level for this portion of the AIP is 0%.
These targets are established based on a variety of factors.
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AIP funding:
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For 2012, the Compensation Committee set RONA funding levels for the businesses and the Company at the following levels:
RONA Performance for AIP Funding
Threshold (20% Target Funding) | Target (100% Target Funding) | Above Target (150% Target Funding) | Maximum (200% Target Funding) | |||||||||||||
Timberlands | 6 | % | 9 | % | 12 | % | 17 | % | ||||||||
Wood Products | 6 | % | 10 | % | 15 | % | 20 | % | ||||||||
Cellulose Fibers | 6 | % | 10 | % | 15 | % | 20 | % | ||||||||
Overall Company (for CEO’s AIP) | 6 | % | 10 | % | 15 | % | 17 | % |
Different levels were used for funding at target or above for the Timberlands sector because of the long-term nature of the Timberlands asset, the nature of its returns and a difference in its cost of capital.
AIP Funding for the Business and Staff Plans
For 2012, based 80% on the RONA achieved by the businesses and 20% on their performance against their business scorecard metrics, the AIP funding for the businesses and non-embedded staff was as follows:
AIP Plan Funding
RONA | Business Scorecard Metrics | AIP Funding Multiple | ||||||||
Timberlands | 7.1 | % | High Achieves | 0.69 | ||||||
Wood Products | 10.0 | % | High Achieves | 1.10 | ||||||
Cellulose Fibers | 10.1 | % | Achieves | 1.06 | ||||||
WRECO | 8.5 | % | High Achieves | 0.93 | ||||||
Staff – Non-embedded | n/a | n/a | 0.94 |
The total Company RONA was 7.5%, so the RONA portion of the AIP funded at 50% for the CEO.
WRECO STIP
Employees of the Company’s homebuilding subsidiaries, including the WRECO president, participate in the STIP and are not eligible to participate in any other annual incentive plan offered by the Company. Funding for the STIP is based 60% on WRECO’s absolute ROI, 20% on the competitive ROI ranking and 20% based on performance against a set of business metrics. ROI, which is the financial performance metric typically used in the homebuilding industry, is defined as WRECO annual earnings before interest expense, capitalized interest amortized to cost of sales and taxes, divided by a five-quarter average of Invested Capital. Invested Capital is defined as total assets, less non-interest bearing liabilities and capitalized interest. ROI is used as the measure to focus participants on achieving top quartile competitive performance.
The ROI targets established for each plan year are approved by the Company’s CEO and the Compensation Committee. The minimum ROI threshold to fund the absolute and relative competitive ranking components of the STIP in 2012 was 6%. The amount required to fund the Company’s dividend is an important factor in establishing the threshold level. This level also aligns with the minimum RONA funding levels in the AIP. Target funding was set at 14%, which approximates WRECO’s cost of capital. The threshold competitive ROI ranking required to fund that component of the STIP in 2012 was a median competitive ranking. The business metrics used for 2012 funding focused on unit sales, single-family net margin, competitive ranking, and cash generation. The resulting funding multiple from all components of the plan may not exceed 460% of target.
WRECO STIP Performance Target Setting and Plan Mechanics
At the beginning of the year, STIP participants are assigned a target bonus that reflects competitive practices in the market for similar positions. Bonus opportunities range from 0% to 460% of the target incentive value based on the participant’s performance against the performance metrics with final awards approved by the Company CEO and the Compensation Committee. Award amounts in excess of 300% of target are automatically deferred for a minimum of two years. The Compensation Committee may recover reasonable amounts from this holdback amount if appropriate due to a restatement of income for the plan period or a material adjustment to income for the plan period in subsequent years. For 2012, the absolute ROI was above the threshold, competitive ROI ranking was near maximum and performance against business metrics was above target performance levels. As a result, the STIP funded at 1.13 times target for the WRECO President.
Bonus Opportunities Under the AIP and STIP
At the beginning of the year, each position in the Company,AIP participant, including executive positions,each of our NEOs, was assigned a target
bonus opportunity that reflected competitive practices in the market for similar positions. TargetsTarget bonus opportunities for the named executive officersour NEOs in 2014 ranged from 75%65% to 125%130% of base pay. Payment of targetsalary. Under the AIP, the bonus amounts was not guaranteed, but had to be earned based on the funding processes described for each plan above. The opportunity for each executive officer rangedcan range from 0% to 300% of
the target incentive value. Funding based on the financial performance and business scorecard metrics ranges from 0% to 200% of target. Based on individual performance, such funded amounts may be decreased by up to 100% (i.e., to 0% of target) or increased up to a maximum of 300% of target value. Targets set for the CEO and the named executive officersother NEOs were based on competitive market practices and designed to focus the executive on the goal of improved operating performance.financial performance, operational excellence and people development.
AIP Bonus Allocation Process
AtAfter the end of each plan year, the Compensation Committee approves the funding for the bonusAIP based on the performance of each business against its pre-determined financial targetsperformance metrics and business scorecard metrics. The bonus opportunities for executive officers are adjusted up or down from each officer’s target opportunity based on the level of funding achieved (e.g., 50% funding would reduce an officer’s target opportunity by half). Funded awards are allocated to executive officers based on each officer’s PMP rating. These ratings are establishedrating, or individual performance against his or her pre-established performance goals, based on a qualitative and quantitative assessment of performance against the officer’s pre-established goals (see “Compensation Philosophy Principles and Processes –
Principles—Performance Management”) and other individual performance criteria. In general, an executive officer with a PMP rating of “achieves” receives an annual incentive award at or near his or her funding-adjusted individual target level. Similarly, an executive officer with an “exceeds” rating receivesmay receive an annual incentive award greater than his or her individual funding-adjusted target level. Thoselevel and an executive officer with a “below” rating will typically receive less than the individual funding-adjusted target incentive opportunity. For 2012, each of the named executive officers was deemed to have performed at the level of achieves or above in relation to his or her goals.
Funding and Allocation Illustration
The board of directors determines the bonus to be paid to the Company’s CEO based on the recommendation of the Compensation Committee. The Compensation Committee determines the bonuses to be paid to executive officers based on recommendations by the chief executive officer,CEO and chief human resources officer.
resource officer.
AIP Funding and Allocation Illustration
Individual AIP awards are calculated as follows (the bracketed items correlate to Mr. Simons’ 2014 AIP funding calculations):
For 2012,2014, AIP and STIP targets and bonus awardsfunding multiples were as follows:
Executive Officer | Target Bonus | 2012 Bonus Earned (Percent of Target) | 2012 Bonus Earned ($) | |||||||||
D.S. Fulton | 125 | % | 76 | % | $ | 855,000 | ||||||
P.M. Bedient | 85 | % | 113 | % | $ | 575,000 | ||||||
L.B. Burrows | 85 | % | 164 | % | $ | 750,000 | ||||||
T. F. Gideon | 85 | % | 79 | % | $ | 405,000 | ||||||
P.M. Orser | 85 | % | 115 | % | $ | 509,449 |
Business (Financial Measure) | Financial Performance Metrics | Business Scorecard Metrics | ||||||||||||||||
2014 Financial Results | Funding Multiple [A] | 2014 Results | Funding Multiple [B] | 2014 Total Funding Multiple [A+B] | ||||||||||||||
Chief Executive Officer | 11.7%(1) | 0.94 | High Achieves | 0.32 | 1.26 | |||||||||||||
Timberlands | $ 779MM(2) | 1.05 | Exceeds | 0.35 | 1.40 | |||||||||||||
Wood Products – Lumber | 57.8%(3) | 1.60 | Achieves/High Achieves | 0.29 | 1.89 | |||||||||||||
Wood Products – EP&D | 6.4%(3) | 0.20 | Achieves/High Achieves | 0.29 | 0.49 | |||||||||||||
Cellulose Fibers | 14.1%(3) | 0.97 | High Achieves | 0.32 | 1.29 | |||||||||||||
Staff functions (4) | n/a | 0.93 | n/a | 0.32 | 1.25 |
(1) | Based on Company RONA. |
(2) | Based on segment FFO. |
(3) | Based on segment/business RONA. |
(4) | Based on performance of Timberlands, Wood Products and Cellulose Fibers (one-third for each business segment). |
AIP bonus targets and actual payout amounts for 2014 were:
Executive Officer | Target Bonus (% of Base Salary) | Target Bonus Amount ($) [A] | Total Funding Multiple [B] | Adjustment Based on Performance Rating ($) [C](1) | 2014 Bonus Earned ($) | 2014 Bonus (% of Target) | ||||||||||||||||||
Doyle R. Simons | 130 | % | $ | 1,235,000 | 1.26 | $ | 155,900 | $ | 1,712,000 | 138.6 | % | |||||||||||||
Patricia M. Bedient | 85 | % | $ | 518,500 | 1.25 | $ | 162,875 | $ | 811,000 | 156.4 | % | |||||||||||||
Adrian M. Blocker | 65 | % | $ | 292,500 | 1.89 | $ | 56,175 | $ | 609,000 | 208.2 | % | |||||||||||||
Srinivasan Chandrasekaran | 85 | % | $ | 484,500 | 1.29 | $ | 125,995 | $ | 751,000 | 155.0 | % | |||||||||||||
Rhonda D. Hunter | 75 | % | $ | 375,000 | 1.40 | $ | 53,000 | $ | 578,000 | 154.1 | % | |||||||||||||
Thomas F. Gideon (2) | 85 | % | $ | n/a | n/a | $ | n/a | $ | n/a | n/a | ||||||||||||||
Sandy D. McDade (3) | 75 | % | $ | 397,500 | 1.25 | $ | n/a | $ | 260,000 | n/a |
(1) | See “Compensation Philosophy and Principles–Performance Management” and “–Short-Term Incentive Plan–AIP Bonus Allocation Process” above for more information on how this adjustment is made. |
(2) | Mr. Gideon’s separation from service with the Company was effective February 14, 2014 and he did not receive an AIP bonus for 2014. |
(3) | Mr. McDade’s separation from service with the Company was effective July 10, 2014. His actual bonus amount was $260,000 in 2014 when prorated for his time in service during the year. |
Mr. Fulton’sSimons’ bonus was below target because the RONA portion ofunder the AIP was belowabove target butbecause Company RONA was above target and was further increased because the board considered his performance against his goals as an “exceeds” based onin recognition of his strong leadership ofin driving operational excellence throughout the company during the continued difficult business conditionsorganization and to bring his compensation closer to market median.on people development. Ms. Bedient’s bonus was above target because the pool for staff positions under the AIP funded at less than one timesabove target butand was further increased because of herbased on Ms. Bedient’s outstanding leadership of the Company’s growth strategy, strong participation on the Wood Products improvement team, leadership development work, successful transitiondivestiture of the pension management group, community leadership, external recognition as one ofCompany’s homebuilding business through a tax-efficient Reverse Morris Trust transaction and the top 25 CFOs, and participation on the executive officer succession teams.associated split-off transaction. Mr. BurrowsBlocker’s bonus was above target because the Wood Productsbonus pool underfor the AIPLumber business funded well above target and because ofwas further increased due to Mr. Blocker’s work on achieving operational excellence goals in 2014 as well as his strong leadership in returning Wood Products to profitability, leadership of the Company’s volunteer program, and strong community involvement.performance on people development matters. Mr. Gideon’s bonus was below target because the Timberlands pool under the AIP funded below target, but increased in recognition of his leadership of the Timberlands segment, leadership of the Timberlands growth strategy, participation on Company joint venture and subsidiary boards, industry leadership through forestry associations, and participation on the executive officer succession teams. Mr. Orser’sChandrasekaran’s bonus was above target because the WRECObonus pool underfor the WRECO STIPCellulose Fibers business funded above target and was further increased due to his continued leadership in delivering on operational excellence objectives as well as strengthening customer relationships both domestically and internationally. Ms. Hunter’s bonus was above target because the bonus pool for the Timberlands business funded well above target and was further increased as a result of his leadership of WRECO, strong engagement on the Company’s senior management team, community and industry leadership, participation on the Company’s leadership development team, and workher role in the Company’s diversity network.integration of the Longview Timber acquisition and capturing the targeted synergies as well as Timberlands’ performance against operational
excellence targets. Mr. Gideon, whose separation from service with the Company was effective February 14, 2014, did not receive an AIP bonus in 2014. Mr. McDade’s bonus was prorated for his time in service during the year.
Long-Term Incentive Compensation
Each year, target long-term incentive award opportunities are set for each of the Company’s senior officers,executives, including the named executive officers.our NEOs. Target award opportunities generally are set at the median of peer companies. Grants of long-term incentives are not guaranteed and must be earned each year.guaranteed. These opportunities may be increased or decreased based on the executive officer’s PMP rating, using the criteria described in “Compensation Philosophy Principles and Processes – Principles—Performance Management.” Participants do not receive an equity grant if performance against their PMP performance goals does not meet minimum standards. In general, a
PMP rating of “achieves objectives” will result in long-term incentive award at or near the target level opportunity. A rating of “exceeds objectives” may result in awards of up to 150% of an officer’s target opportunity. A rating of “below objectives” will result in below-target awards. For 2012, each of the named executive officers was deemed to have performed at the level of achieves or above in relation to his or her goals. The Compensation Committee also considers competitive market pressures,conditions, expected future contributions to the Company and retention concerns in determining the final grants to executive officers.
To fund the Company’s long-term compensation programs, the Compensation Committee establishes an equity pool available for grant in any given year. The pool level is set at the median level of competitive practices. For grants in 2012, the Compensation Committee established a pool of 3,048,220 shares or 0.562% of outstanding common shares to be available for grants of performance share units, options and restricted stock units to all participants. This assumes that performance share units will pay out at target. The Compensation Committee targets an annual share dilution rate of less than 2%. In addition, the Compensation Committee considers the accounting costs reflected in the Company’s financial statements when establishing the forms of equity to be granted and the size of the overall pool. The forms of equity selected are intended to be cost-efficient, and the overall cost must be within the acceptable levels for internal budgets.
Weyerhaeuser makes its annual long-term incentive grants to employees in February of each year at the regular meeting of the Compensation Committee, of the board, which typically is within one to two weeks after the Company publicly has released a report of itsreleases earnings. The Compensation Committee meeting date iswas the effective grant date for the annual equity grants to
all participants.participants in 2014, other than grants made to the CEO which were granted the following day at the meeting of the full board of directors. For executive officers who are hired or promoted during the year, the Compensation Committee recommendsconsiders compensation levels to the board in connection with the board’s appointment of the executive and approvesmay approve equity grants for the executive that are effective upon the later of (i) the officer’s start date or the effective date of the promotion.promotion or (ii) the date the grant is approved by the Compensation Committee.
Total Long-Term Incentive Compensation Grants
The Compensation Committee established a target level of long-term incentives for each executive
officer position based on the median of competitive market long-term incentive levels. For 2012,2014, the target long-term incentive values (as a percent of base salary) for the named executive officersNEOs were:
Executive Officer | 2014 Target Long-Term | |||
Doyle R. Simons | $ | 5,315,000 | ||
Patricia M. Bedient | $ | 1,592,000 | ||
Adrian M. Blocker | $ | 756,000 | ||
Srinivasan Chandrasekaran | $ | 1,326,000 | ||
Rhonda D. Hunter | $ | 826,000 | ||
Thomas F. Gideon | n/a | |||
Sandy D. McDade | $ | 847,000 |
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The long-term incentive awards were granted in the form of performance share units,PSUs, stock options, and restricted stock units,time-vested RSUs, with approximately 50% of the value of the award granted in the form of performance share units,PSUs, approximately 25% of the value in the form of stock options, and approximately 25% of the value in the form of restricted stock units. To recognize the differences between the forest products business and the homebuilding subsidiaries, senior management of WRECO, including Mr. Orser, also participated in a cashRSUs.
The target values for long-term incentive plan more aligned with the direct financial results of the homebuilding subsidiaries, with approximately 25% of the value of his award granted in the form of company performance shares, approximately 25% of the value in the form of WRECO long-term incentive units, approximately 25% of the value in the form of stock options and approximately 25% of the value in the form of restricted stock units.
Long-term incentive awards granted to the named executive officers were generallyour NEOs in 2014 (measured at or above target for the respective position. Mr. Fulton’s long-term incentive grant was above target to bring his total compensation closerperformance with respect to the marketPSUs) were: Mr. Simons, slightly above median and in recognition of his leadership in bringing the Company back to profitability, successful implementationdriving operational excellence performance and achievement of strategic priorities,initiatives throughout the organization; Ms. Bedient, above median due to her leadership on two major corporate transactions, the acquisition of Longview Timber and the Company’s reorganization,divestiture of our homebuilding and strong performance against his performance goals. Ms. Bedient’s long-term incentive grant wasreal estate development business; Mr. Chandrasekaran, slightly above target in recognition of her support for the Wood Products profit improvement work, leadership of the Timberlands growth strategy, management of the Company’s finances and cash, successful replacement of the Company’s credit line, reorganization of the Company’s IT organization, strong relationships with investors and performancemedian due to
against herhis operational excellence performance goals.and increased responsibilities for research and development; Mr. Burrows long-term incentive grant was above target based on his strong leadership of the Wood Products businesses, leadership of the profit improvement work in the businesses, successful team building efforts, and his performance against his performance goals. Mr. Gideon’s long-term incentive grant was above targetMcDade, at median in recognition of his leadership of thesupport on two major corporate transactions; Mr. Blocker, somewhat below median, having been appointed as senior vice president, Lumber effective January 1, 2014; and Ms. Hunter, slightly below median, having been appointed as senior vice president, Timberlands growth strategy, successful implementation of strategic priorities for the Timberlands segment, safety leadership for Timberlands and the International businesses, and talent management.effective January 1, 2014. Mr. Orser’sGideon did not receive a long-term incentive grant was slightly above target in recognition of his safety leadership, customer satisfaction, work to reduce WRECO’s SG&A, citizenship, work to improve financial returns and WRECO’s performance against its peers.for 2014.
Performance Share Unit Awards
Weyerhaeuser granted performance share unitsPSUs to executive officers in 20122014 to focus participants onincent their achievement of strategic business goals and the effectproduction of operational decisions onsuperior long-term shareholder returns.returns, as well as continue to align pay and performance. A target number of performance share unitsPSUs were granted to the named executive officersNEOs in 2012.2014. The initial number of performance share unitsPSUs actually earned was based on the Company’s performance against cash flow metrics during 2012.for 2014. Cash flow is defined as Companythe Company’s net change in cash and cash equivalents excluding payments for dividends, share repurchases and debt including any use of cash for early prepayment of debt; cash received from the exercise of stock options, debt issuance and share repurchases; reduced by cash collected for stock option exercises;issuance of stock; acquisitions and dispositions beyond those identified as non-strategic in the annual plan; and adjusted for changes in book overdrafts and collateral posted for letters of credit. In 2014, the cash flow excluded transaction costs and expenses associated with the disposition of the WRECO business as well as the cash proceeds from the disposition.
The initial number of performance share unitsPSUs earned, calculated as described above, will be adjusted up or down by up to 20% based on the Company’s two-year total shareholder return (“TSR”)TSR relative to the S&P 500 during 20122014 and 2013.2015. This mix focusesof performance measures aligns with shareholder interests by focusing the executive officer on the Company’s strategic business goal of cash generation as well as the Company’s shareholder return performance compared to a broad index of companies. Use of these measures balances operational and market performance and ensures that performance against each measure has a significant effect on earned compensation. At the end of the two-year performance period, 50% of the performance share unitsearned PSUs will be vested and payable to the participant, with the remaining share unitsearned PSUs vesting 25% a year over the subsequent two-year period to further align management’s and shareholders’ interests.
For grants in 2012,2014, the cash flow target was $325$750 to $350$800 million. Although thisThis target was lowersubstantially higher than the target used for 2011 grants, the Committee thought this level was appropriate, as the cash flows achieved for the 2011 grants were largely generated by asset sales, while cash flows in 2012 were substantially generated by operations.2013. Achievement of the cash flow target would determinedetermines the initial number of performance sharesPSUs earned as shown below.
Cash Flow | ||||||||
Performance $ Mil. | % of Target Award | |||||||
<$ | 250 | 0 | % | |||||
$ | 250 | 25 | % | |||||
$ | 275 | 50 | % | |||||
$ | 300 | 75 | % | |||||
Target performance | $ | 325-$350 | 100 | % | ||||
$ | 400 | 125 | % | |||||
$ | 425 | 150 | % |
2014 grants | Cash Flow | |||||||
Performance $ Mil. | % of Target Award | |||||||
<$ | 550 | 0 | % | |||||
$ | 600 | 25 | % | |||||
$ | 650 | 50 | % | |||||
$ | 700 | 75 | % | |||||
Target performance | $ | 750-800 | 100 | % | ||||
$ | 875 | 125 | % | |||||
$ | 925 | 150 | % |
2012Full year 2014 cash flow (calculated for purposes of the PSUs) was $394$843 million, resulting in an initial number of sharesPSUs earned equal to 122%114% of target. These sharesPSUs will be adjusted based on the Company’s TSR relative to the S&P 500 during 2014 and 2015. PSUs will be decreased by 20% if the Company’s relative TSR ranking over the two-year period is in the 25th25th percentile or lower. No modification will occur if the Company’s relative TSR ranking is in the 50th50th percentile. The number of sharesPSUs earned will be increased by 20% if the Company’s relative TSR ranking is in the 75th75th percentile or greater. Payout for performance between points will be linearly interpolated. The maximum number of sharesPSUs that can be earned is capped at 150% of the target number of shares.
If the Company declares and pays dividends on the Company’s common stock during the time period when performance share unitsPSUs are outstanding, the performance share unitsPSUs will be credited with the dividends.dividends, which will be reinvested in additional units to be paid out in shares if and when the PSUs vest. To the extent the performance share unitsPSUs vest and are paid to participants, the dividends credited to the performance share unitsPSUs will also vest.
In the event of a retirement at age 62 or older or involuntary termination without cause, performance share units granted in 2012 continue to vest based on the following termination schedule:
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Upon termination for other reasons, unvested shares cease to vest and are forfeited.be paid.
The following table shows the target number of performance share awardsPSUs granted to each of the named executive officersNEOs and the initial number of performance share unitsPSUs earned based on the Company’s performance against the cash flow target for 2012.2014. The initial number of performance share unitsPSUs earned will be adjusted up or down by up to 20% at the end of 20132015 based on the Company’s two-year TSR ranking relative to the S&P 500 during 20122014 and 2013.2015 (subject to the 150% cap described above).
Executive Officer | Target 2012 Performance Share Units | Initial Number of Performance Share Units Earned | ||||||
D.S. Fulton | 110,813 | 135,192 | ||||||
P.M. Bedient | 25,050 | 30,561 | ||||||
L.B. Burrows | 26,250 | 32,025 | ||||||
T. F. Gideon | 27,000 | 32,940 | ||||||
P.M. Orser | 12,000 | 14,640 |
Executive Officer | Target 2014 Performance Share Units | Initial Number of Performance Share Units Earned | ||||||
Doyle R. Simons | 85,837 | 97,854 | ||||||
Patricia M. Bedient | 25,806 | 29,418 | ||||||
Adrian M. Blocker | 12,255 | 13,970 | ||||||
Srinivasan Chandrasekaran | 21,494 | 24,503 | ||||||
Rhonda D. Hunter | 13,389 | 15,263 | ||||||
Thomas F. Gideon (1) | n/a | n/a | ||||||
Sandy D. McDade (2) | 13,730 | 15,652 |
(1) | Mr. Gideon did not receive a PSU grant for 2014. |
(2) | Mr. McDade’s target PSU grant was prorated to 6,865 per the Terms and Conditions of the grant (under the applicable separation from service provision). Initial earned PSUs under the 2014 grant, based on 2014 cash flow, were 7,826. |
For 20112013 grants of PSUs, the cash flow targets were the following:
Cash Flow | ||||||||
Performance $ Mil. | % of Target Award | |||||||
<$ | 320 | 0 | % | |||||
$ | 320 | 50 | % | |||||
$ | 360 | 75 | % | |||||
Target performance | $ | 380-$400 | 100 | % | ||||
$ | 440 | 125 | % | |||||
$ | 480 | 150 | % |
2013 Grants | Cash Flow | |||||||
Performance $ Mil. | % of Target Award | |||||||
<$ | 400 | 0 | % | |||||
$ | 400 | 25 | % | |||||
$ | 450 | 50 | % | |||||
$ | 500 | 75 | % | |||||
Target performance | $ | 535-565 | 100 | % | ||||
$ | 600 | 125 | % | |||||
$ | 635 | 150 | % |
For 2011 grants, theThe Company’s cash flow (calculated for purposes of the PSUs) was $408$737 million for 2013, resulting in an initial number of sharesPSUs from the 2013 grant being earned equal to 105%at 150% of target. Because theThe Company’s two-year TSR ranking for 2013-2014 was aboveat the 75th31st percentile, which resulted in the initial number of sharesPSUs earned increasedunder such grants being decreased by 20%15%.
Executive Officer | Initial of 2013 | Final 2013 2-Year TSR | ||||||
Doyle R. Simons (1) | 54,973 | 58,271 | ||||||
Patricia M. Bedient | 39,228 | 33,343 | ||||||
Adrian M. Blocker (2) | n/a | n/a | ||||||
Srinivasan Chandrasekaran | 25,457 | 21,638 | ||||||
Rhonda D. Hunter | 6,263 | 5,323 | ||||||
Thomas F. Gideon | 41,387 | 35,178 | ||||||
Sandy D. McDade | 20,874 | 17,742 |
Executive Officer | Initial Number of 2011 Performance Share Units Earned in 2011 | Final Number of 2011 Performance | ||||||
D.S. Fulton | 100,800 | 120,960 | ||||||
P.M. Bedient | 25,200 | 30,240 | ||||||
L.B. Burrows | 23,625 | 28,350 | ||||||
T. F. Gideon | 27,591 | 33,109 | ||||||
P.M. Orser | 11,442 | 13,730 |
(1) | Mr. Simons’ PSU grant was made on June 17, 2013 at the time he was appointed CEO-elect and was prorated for his time in service during 2013. Mr. Simons’ initial performance goal for this grant was based on cash flow targets for the third and fourth quarters of 2013 (selected to equal the full year projected cash flow amount at the time of Mr. Simons’ grant less actual cash flow achieved during the first and second quarters of 2013). The relative TSR was measured over the period June 17, 2013 to December 31, 2014, and was at the 58th percentile, resulting in the initial number of PSUs earned being increased by 6%. |
As of December 31, 2012,
(2) | Mr. Blocker joined the Company after the 2013 annual equity grants were made and therefore did not receive a PSU grant for 2013. |
The end of the two-year performance period for the 20112013 grant 50%was December 31, 2014. Fifty percent of the earned 2011 performance share units2013 PSUs were vested and payable to the participants as of the second anniversary of the grant date. Of the remaining 2011 performance share units,2013 PSUs, half will vest and be payable to the participant as of the third anniversary of the grant date and half will vest and be payable as of the fourth anniversary of the grant date, assuming the participant remains an employee of the Company.
The vesting provisions for PSUs granted in 2013, to the extent earned, were as follows:
Ÿ | PSUs vest 50%, 25% and 25% on the second, third and fourth anniversaries of the grant date, respectively, as long as the individual remains employed by the Company; |
Ÿ | PSUs fully vest in the event of disability or death while employed; |
Ÿ | PSUs continue to vest upon retirement at an age of at least 62, but a portion of the grant is forfeited if retirement occurs before the one-year anniversary of the grant, depending on the number of months employed after grant date; |
Ÿ | PSUs continue vesting for one year in the event of involuntary termination due to job elimination when the retirement criteria have not been met; and |
Ÿ | PSUs will be forfeited upon termination of employment in all other situations including early retirement prior to age 62. |
Stock Options
We grant stock options to reward executives only when the Company’s stock price increases. Stock options are issued athave an exercise price equal to 100% of the fair market value (calculated using a Black-Scholes option valuation model as described in Note 17 of Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K) to reward executives only when the stock price increases. Awards granted in 2012 to executive officers, including the named executive officers, generally vest 25% a year over four years, and, if not exercised, expire after 10 years (or earlier in the case of termination of employment for certain reasons). In the event of retirement at age 62 or older, outstanding 2012 awards continue to vest and vested awards may be exercised during the remaining term of the grant. In 2012, the following awardsone share of stock options were granted toon the named executive officers:
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grant date. The value of the stock options granted to our NEOs in 2012 to the named executive officers2014 was approximately
25% of the value of the long-term incentive grant, with the specific value of the long-term incentive grant based on the factors described above under “Long-Term Incentive Grants.” The number of stock options granted to each executive is calculated by dividing the intended grant value of the stock options by the Black-Scholes option value (as described in Note 17 of Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K). In 2014, the following awards of stock options were granted to the NEOs:
Executive Officer | Stock Options | |||
Doyle R. Simons | 199,578 | |||
Patricia M. Bedient | 59,987 | |||
Adrian M. Blocker | 28,486 | |||
Srinivasan Chandrasekaran | 49,964 | |||
Rhonda D. Hunter | 31,124 | |||
Thomas F. Gideon (1) | n/a | |||
Sandy D. McDade (2) | 31,915 |
(1) | Mr. Gideon did not receive a stock option grant for 2014. |
(2) | Mr. McDade’s 2014 stock option grant was prorated to 15,958 per the Terms and Conditions of the grant (under the applicable separation from service provision). |
The vesting and post-termination vesting terms for stock options granted in 2014 were as follows:
Ÿ | stock options vest ratably over 4 years with 25% vesting on each of the first, second, third and fourth anniversaries of the grant date; |
Ÿ | stock options vest immediately in the event of disability or death while employed; |
Ÿ | stock options continue to vest upon retirement at an age of at least 62, but a portion of the grant is forfeited if retirement occurs before the one-year anniversary of the grant depending on the number of months employed after grant date; |
Ÿ | stock options continue vesting for one year in the event of involuntary termination due to job elimination when the retirement criterion has not been met; and |
Ÿ | stock options stop vesting and are forfeited for all other situations including early retirement prior to age 62. |
Stock options generally have a term of 10 years from the date of grant.
Restricted Stock Unit Awards
The Company grants restricted stockRSU awards to align the interests of executive officers with those of our shareholders by creating a strong incentive to create and preserve long-term shareholder value. Through restricted stock,RSUs, executives officers, like our shareholders, share both the risks and rewards of stock ownership. In addition, restricted stock rewardsRSUs reward total shareholder return, whether delivered through share price appreciation or dividends. The Company believes this is appropriate since, as a REIT, our dividend distribution requirements lead to a significant portion of our total shareholder return being delivered through dividends. Through multi-year vesting, the restricted stockRSU grants also serve as a strong retention device.vehicle.
In the event of a retirement at age 62 or older or involuntary termination without cause, restricted stock units granted in 2012 continue to vest based on the following termination schedule:
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Upon termination for other reasons, unvested shares cease to vest and are forfeited.
In 2012, the following awards were granted to the named executive officers.
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The value of the restricted stock unitsRSUs granted in 20122014 to the named executive officersNEOs was approximately 25% of the value of the long-term incentive grant, with the specific value of the long-term incentive grant based on the factors described above under “Long-Term Incentive Grants.”
WRECO Cash LTIP
WRECO managers, including the named executive officer who is the president of WRECO, are eligible to participate in the LTIP. Funding for the LTIP is based on WRECO’s performance and the performance of each of its subsidiaries over a three-year period. For the 2010 through 2012 grant, performance was measured in part by the absolute pre-tax economic profit (“PTEP”) of WRECO (40%), in part by the absolute PTEP of the subsidiary in which the participant was employed (40%), and in part by WRECO’s three-year competitive ROI ranking versus public home builders (20%). For the 2012 through In 2014, grant, performance for the president of WRECO will be measured in part by the absolute PTEP of WRECO (60%), and in part by WRECO’s three-year competitive ROI ranking versus public home builders (40%). PTEP is defined as earnings before interest and taxes, minus overhead costs charged by the Company, minus a cost of capital charge. The measures are used to focus participants on achieving sustained top quartile competitive performance.
The ROI targets are approved for each plan year by the Company’s CEO and the Compensation Committee, based on historic long-term averages for the home-building industry and long-term achievement goals for WRECO, and were 14% for both the 2010 to 2012 plan period and the 2012 to 2014 plan period. The minimum ROI threshold to fund the relative competitive ranking components of the LTIP in both the 2010 to 2012 plan period and the 2012 to 2014 plan period was 6%. This level was chosen to ensure that the LTIP would fund only if performance was above threshold Weyerhaeuser performance expectations. Funding for the 2010 grant was capped If the competitive ROI was 14% or below. For the 2012 grant, funding is capped if the competitive ROI is 10% or below.
Each participant in the LTIP is assigned a target number of units, the value of which is determined by the achievement of cumulative WRECO PTEP, plus the subsidiary PTEP in which the participant is employed, plus the competitive ROI ranking of the subsidiary. The target value of the units for grants
in 2010 was set at $1,240 per unit. 2010 target LTIP opportunity for Mr. Orser was set at $235,600 based on a grant of 190 units. During the performance cycle ending in 2012, WRECO achieved an ROI ranking in the top quartile, but because its ROI was less than 14%, the LTIP was capped at $250 per share. As a result, Mr. Orser received a payment described in the following table.RSU awards were granted to the NEOs.
Executive Officer | Target LTIP Shares | 2012 LTIP Amount Per Share ($) | 2012 LTIP Earned ($) | |||||||||
P.M. Orser | 190 | $ | 250 | $ | 47,500 |
Executive Officer | Restricted Stock Units | |||
Doyle R. Simons | 43,902 | |||
Patricia M. Bedient | 13,198 | |||
Adrian M. Blocker | 6,267 | |||
Srinivasan Chandrasekaran | 10,993 | |||
Rhonda D. Hunter | 6,848 | |||
Thomas F. Gideon (1) | n/a | |||
Sandy D. McDade (2) | 7,022 |
For the 2012 grant, the target value of the units was set at $1,240 per unit. 2012 target LTIP opportunity
(1) | Mr. Gideon did not receive a RSU grant for 2014. |
(2) | Mr. McDade’s RSU grant was prorated to 3,511 per the Terms and Conditions of the grant (under the applicable separation from service provision). |
The vesting provisions for Mr. Orser was set at $186,000 based on a grant of 150 units. If the WRECO ROI is 10% or below for the 2012 toRSUs granted in 2014 plan period, the competitive ranking cap is $800 per share.were as follows:
Ÿ | RSUs vest ratably over 4 years with 25% vesting on each of the first, second, third and fourth anniversaries of the grant date; |
Ÿ | RSUs vest immediately in the event of disability or death while employed; |
Ÿ | RSUs continue to vest upon retirement at an age of at least 62, but a portion of the grant is forfeited if retirement occurs before the one year anniversary of the grant depending on the number of months employed after grant date; |
Ÿ | RSUs continue vesting for one year in the event of involuntary termination due to job elimination when the retirement criteria has not been met; and |
Ÿ | RSUs will be forfeited upon termination of employment in all other situations including early retirement prior to age 62. |
Other Benefits
All U.S. and Canadian salaried employees, including executive officers, are eligible for:
Ÿ | a tax-qualified defined benefit |
Ÿ | in lieu of participation in a defined benefit pension plan, if hired on or after January 1, 2014 a non-elective employer contribution in a tax-qualified defined contribution 401(k) or savings plan; |
Ÿ | a tax-qualified defined contribution |
Ÿ | health and dental coverage, |
Ÿ | Company-paid term life insurance, |
Ÿ | disability insurance, |
Ÿ | paid time off, and |
Ÿ | paid holidays. |
These rewards are designed to be competitive with overall market practices and are in place to attract and retain the talent needed in the business.high-level talent. In addition, officers may be eligible to participate in a non-qualified supplemental retirement plan andif hired before January 1, 2014, or a supplemental defined contribution retirement plan if hired on or after January 1, 2014, a deferred compensation plan, and to receive other benefits described below.
Supplemental Retirement Plan
Executives and other highly-paid officers in the U.S. are eligible to participate in the Supplemental Retirement Plan (the “Supplemental Plan”)., if hired before January 1, 2014. The Supplemental Plan provides the benefits that would otherwise be provided under the qualified defined benefit plan but are not as a result ofdue to compensation limits imposed by the Internal Revenue Code. TheWe provide the Supplemental Plan is providedto our executives because it iswas a competitive practice within the basic materials industry.industry and the Compensation Committee believed that the Company should provide competitive retirement benefits linked to overall Company performance through the Supplemental Plan. Supplemental Plan benefits are
paid outside the tax-qualified Weyerhaeuser Pension Plan (the “Plan”“Pension Plan”) from the general funds of the Company. Consistent with general market practices, these benefits are determined based on compensation paid in the five consecutive years when the officer was paid the highest total compensation during the 10 calendar years before his or her retirement. Total compensation means base salary plus any award under the Company’s eligible annual incentive compensation plans, limited to one times base pay. This amount is multiplied by the formula for determining salaried plan benefits under the Pension Plan. The Compensation Committee believes that the Company should provide competitive retirement benefits linked to overall Company performance through the Supplemental Plan funding mechanism. Details of the Supplemental Plan benefits and the amounts accrued to each named executive officerNEO are found in the Pension Benefits Table. Executives and other highly-paid employees hired on or after January 1, 2014 are eligible to participate in the Weyerhaeuser Supplemental Defined Contribution Plan (the
“Supplemental DC Plan”). The Supplemental DC Plan provides for inclusion of eligible bonuses and deferred compensation in the definition of pay and provides for non-elective contributions that would otherwise be provided under the qualified defined contribution 401(k) plan but are not due to compensation limits imposed by the Internal Revenue Code.
Deferred Compensation
Selected high-level employees, including executive officers, also are eligible to participate in a deferraldeferred compensation plan. TheThis deferral plan provides the opportunity to defer up to 50% of base salary and up to 100% of cash bonuses into an interest-bearing account for payment at a future date. This plan is provided to be competitive in the market for executive talent, and to provide executives with a tax-efficient alternative for receiving earningstax planning flexibility at a nominal cost to the Company. The interest earned for deferred compensation is determined each year by the Compensation Committee. The current interest rate formula is the average of 90-day Treasury bill rates over the prior year plus 3%. The 20122014 rate of 3.04%3.05% is not considered to be a preferential return when compared to the applicable long-term federal rate.
In addition, under the deferral program,deferred compensation plan, eligible participants, including executive officers, can choose to defer all or a portion of any cash bonus into a deferral account denominated in Weyerhaeuser common stock equivalent units. The Company applies a 15% premium to the deferred amounts if payment is delayed for at least five years. The value of the deferred account grows or declines based on the performance of Weyerhaeuser stock (plus dividends). The purpose of the program is to further align executive interests with those of shareholders by providing an incentive linked to the performance of Weyerhaeuser common stock. Contributions during 20122014 and year-end account balances can be found in the Non QualifiedNon-Qualified Deferred Compensation table.
Additional Benefits
Another benefit available to certain Company officers,Certain employees, including our executive officers, isare eligible to receive additional company-paid life insurance. The Company doesThere are no additional significant benefits, as we provide limited perquisites. We do not provide vehicles for personal use, or personal travel for executives on Company aircraft.aircraft or significant tax-gross ups.
SUPPLEMENTARY COMPENSATION POLICIESChanges for 2015
Weyerhaeuser uses additional policiesAt its December 2014 meeting, the Compensation Committee approved certain changes to ensure that the overall compensation structure is responsiveCompany’s Annual Incentive Plan, the terms of PSU awards and the Deferred Compensation Plan. These changes will be effective and apply to shareholder interests and competitiveawards starting in 2015. For more information on these changes, see the Company’s Current Report on Form 8-K filed with the market, including a claw back policy, a policy prohibiting hedging by DirectorsSecurities and officers and stock ownership requirements.
Claw Back Policy
The Company has adopted an incentive compensation claw back policy to ensure that incentive compensation is paid basedExchange Commission on accurate financial and operating data, and the correct calculation of performance against incentive targets. It provides that in the event of a restatement of the financial or operating results of the Company or one of its segments, the Company may seek recovery of incentive compensation that would not otherwise have been paid if the correct performance data had been used to determine the amount payable. The Committee may make the determination that incentive compensation had been overpaid at any time through the end of the third fiscal year following the year for which the inaccurate performance criteria were measured. For purposes of this Policy, “incentive compensation” means performance bonuses and incentive awards (including stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares or other stock-based awards) paid, granted, vested or accrued under any Company plan or agreement, in the form of cash or Company common stock.
Anti-Hedging Policy
The Company believes that particular types of hedging or monetization transactions, suchDecember 22, 2014. These changes are summarized as zero-cost collars, prepaid variable forward sale contracts, equity swaps and exchange funds, allow a person to lock in much of the value of his or her stock holdings, often in exchange for all or part of the potential for upside appreciation in the stock. These transactions allow the person to continue to own the covered securities, but without the full risks and rewards of ownership. When that occurs,follows:
the person may no longer have the same objectives as the Company's other shareholders. Therefore, the Company has adopted a policy that prohibits Directors and officers from engaging in such transactions. The policy prohibits short sales; transactions in publicly traded options, such as puts, calls and other derivatives; and pledges of Company shares.
Stock Ownership Requirements
Stock ownership requirements for executive officers have been in place since 1996, and were amended in 2011. Under the current requirements, each executive officer must acquire and hold a multiple of his or her base salary in shares of Weyerhaeuser stock. Minimum ownership levels are based on the executive’s salary grade and range from one to five times base salary as follows.
Annual Incentive Plan – revised to (i) base 70% of AIP funding on achievement of financial performance metrics (from 80% in 2014) and 30% on performance against business scorecard metrics (from 20% in 2014) and (ii) conform the CEO’s financial performance metrics to other corporate staff, i.e, based on the combined performance of each of the Company’s business segments. |
PSU terms – revised to provide that PSU awards (i) will be earned only if the Company achieves specified TSR targets relative to both the S&P 500 and an industry peer group over a defined 3-year period, and (ii) will be earned and vest on the third anniversary of the grant date (provided the Compensation Committee certifies achievement of the specified business targets). |
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Until the required ownership levels are achieved, executives must retain 75% of the net profit shares acquired when restricted stock and performance share awards vest. Net profit shares are shares remaining after payment of taxes upon vesting.
OTHER FACTORS AFFECTING COMPENSATION
Limitations on Deductibility of Compensation
Section 162(m) of the Internal Revenue Code generally limits the tax deductibility ofour ability to deduct compensation paid by a public company to its CEO and certain other highly compensated executive officersof our NEOs (the covered employees) for tax purposes to $1 million inannually. Covered employees include our CEO and our next three highest paid executive officers, other than our chief financial officer. However, the year the compensation becomes taxableSection 162(m) limitation does not apply to the executive. There is an exception to the limit on deductibility for performance-based compensation that meetsprovided certain requirements.requirements are met.
In establishing total compensation for the CEO and the named executive officers,NEOs, the Compensation Committee consideredconsiders the effect of Section 162(m) of the Internal Revenue Code. However,. Because the Company believes that it is important to preserve flexibility in administering compensation programs in a manner designed to attract, retain and reward
high-performing executives or promote varying corporate goals. Accordingly, the Company hasgoals, we did not adoptedadopt a policy for 2014 that all compensation must qualify as deductible under Section 162(m). AmountsTherefore, certain amounts paid for 2014 under any of the Company’s compensation programs, including salaries, AIP bonuses and annuallong-term incentive plan bonusesgrants, may not qualify under the IRS rules as compensation excluded from the limitation on
deductibility. For such compensation to be deductible the various requirements of Section 162(m) must be satisfied. The Compensation Committee will have discretion to award compensation that may not qualify as tax-deductible. Weyerhaeuser has a salary and bonus deferral plan that permits compensation deferred under the plan to be exempt from the limit on tax deductibility.
For individual tax purposes, the Company typically withholds shares to cover taxes resulting from vesting of performance share awards and restricted stock awards.
Change in Control Agreements
The Company has entered into change in control agreements with each of its executive officers. The Compensation Committee believes that change in control policies are an important element of the executive compensation program, support shareholder value creation and are necessary to attract and retain senior talent in a competitive market. Because the agreements give the executive officers reasonable assurance of transitional employment support, the Compensation Committee believes executive officers are able to maintain a more balanced, shareholder-focused approach to change in control situations. The Compensation Committee believes it is appropriate to have such agreements provided the agreements are subject to renewal and accordingly, each of the severance agreements generally expires after three years.periodic review. The Compensation Committee periodically reviews the benefits provided under the agreements to ensure that they serve the Company’s interests in retaining these key executives, are consistent with market practice and are reasonable.
These agreements effective during 2012 providedprovide for specified payments and other benefits if the officer’s employment was terminated by the Company or its successor during the period beginning on the effective date of a change in control of the Company and ending 24 months after a change in control. Change in control payments are not made if the termination is for cause, retirement, disability or death. Change in control payments also may be required if the officer leaves voluntarily because of significant changes in the officer’s circumstances following the change in control. See the description of the specific factors
that would result in a change in control payment and the amounts that can be received in connection with a change in control in “Potential Payments Upon Termination or Change in Control” below. The changes triggering a change in control payment and the amounts paid are intended to give theenable executive officers reasonable assurance of a long-term employment opportunity, enable them to have a balanced perspective in making overall business decisions and to be competitive within overall market practices.
In addition, the Company’s long-term incentive plans provide that in the event the officer is terminated, other than for cause, during the period beginning the effective date of a change in control and ending 24 months after a change in control of the Company, all outstanding options held by the officer become exercisable, restricted stock unitsRSUs are vested and released for sale and performance sharesPSUs will vest and pay out at target. The accelerated vesting and payout of equity grants in the event of a change in control are intended to allow the executives to recognize the value of their contributions to the Company and not affect managementencourage executive officers to take a balanced perspective in making overall business decisions following termination.in the context of a change in control scenario. The agreements do not provide for payment of “golden parachute” excise taxes, if any.
Severance Agreements
The Company has severance agreements with each of its executive officers. Under these agreements, the executive receives severance benefits upon termination unless the termination is for cause, is a result of the Company’s mandatory retirement policy, is because of the death or disability of the executive or is because the executive leaves or retires voluntarily. The specific amounts that executive officers would receive as severance payments are described in “Potential Payments Upon Termination or Change in Control” below. The
Compensation Committee believes that severance policies are an essential component of the executive compensation program and are necessary to attract and retain senior talent in a competitive market. The Compensation Committee believes it is appropriate to have such agreements provided the agreements are subject to renewal and accordingly, each of the severance agreements expires after a limited term.periodic review. The Compensation Committee periodically reviews the benefits provided under the agreements to ensure that they serve the Company’s interests in retaining these key executives, are consistent with market practice and are reasonable.
The Compensation Committee of the board of directors is comprised entirely of directors who are not employees of the Company and who are independent within the meaning of the listing requirements of the New York Stock Exchange. The Compensation Committee is responsible for reviewing and approving:
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The Compensation Committee’s compensation decisions are based on these factors:
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In addition, the Compensation Committee reviews and recommends to the board compensation for serving as a director.
Effective as of September of 2011, the Compensation Committee retained Frederic W. Cook & Co., Inc. (“Cook & Co.”) to act as its compensation consultant and to advise the Committee on compensation strategy, plan design and executive compensation levels. Cook & Co. also advised the Committee on compensation practices for directors. Weyerhaeuser’s human resources organization serves as the management liaison to the Committee and provides additional counsel, data and analysis as requested by the Committee.
The Compensation Committee formulates an annual agenda for its activity and reviews it periodically. The agenda is designed to cover necessary regular approvals as well as special topics. As part of its agenda, the Committee regularly reviews market trends, changes in competitive practices, and alignment of the Company’s compensation programs with the strategy and needs of the business.
The Compensation Committee Charter includes an overview of the membership, purpose, goals and responsibilities, structure and operations of the Committee, and can be found on the Company’s website at www.weyerhaeuser.com under “Company” at the top of the page, “Investors,” and then under the “Governance” link. Paper copies may be obtained by written request to Claire S. Grace, Vice President and Corporate Secretary, Weyerhaeuser Company, P.O. Box 9777, Federal Way, WA 98063-9777 or by email atCorporateSecretary@Weyerhaeuser.com
RELATIONSHIPSRELATIONSHIP WITH COMPENSATION COMMITTEE CONSULTANT
Effective as of September 1, 2011,Cook & Co. has been engaged by the Compensation Committee retained Frederic W. Cook & Co., Inc. (“Cook & Co.”) to act as its compensation consultant and to assist the Committeecommittee with its responsibilities related to the Company’s executive and board of director compensation programs. A representative of
Cook & Co. attends Compensation Committee meetings, as requested, and communicates with the Chair of the Compensation Committee between meetings. However, the Compensation Committee makes all decisions regarding the compensation of Weyerhaeuser’s executive officers.
The Compensation Committee has the sole authority from the board of directors for the appointment, compensation and oversight of the Company’s independent compensation consultant.
Cook & Co. reports directly to the Compensation Committee and all work conducted by Cook & Co. for Weyerhaeuser is on behalf of the Committee.committee. Cook & Co. provides no services to the Company other than these executive and board of director compensation consulting services, and has no other direct or indirect business relationships with the Company or any of its affiliates. All executive compensation services provided by Cook & Co. are conducted under the direction and authority of the Compensation Committee.
In addition, in its consultingengagement agreement with the Committee,committee, Cook & Co. agrees to advise the Chair of the Compensation Committee if any potential conflicts of interest arise that could cause Cook & Co.’s independence to be questioned, and to undertake no projects for Weyerhaeuser management except at the request of the Compensation Committee Chair and as agent for the Compensation Committee. The Compensation Committee has reviewed the independence of Cook & Co. and has concluded that Cook & Co.’s work has not raised any conflict of interest.
MANAGEMENT’S ROLE IN THE EXECUTIVE COMPENSATION PROCESS
The Company’s CEO and chief human resources officer each played an important role in the Compensation Committee’s executive compensation process for 2014 and regularly attended committee meetings. The CEO provided his opinions to the committee regarding executive
compensation matters generally and the performance of the executives reporting to him. The chief human resources officer presented recommendations to the committee on the full range of annual executive compensation decisions. At the committee’s February 2014 meeting, human resources executives presented the committee with specific compensation recommendations for all executives other than the CEO. These recommendations were developed in consultation with the CEO and accompanied by market data provided by the Compensation Committee’s compensation consultant. The committee exercised its independent discretion whether to accept management’s recommendations and made final decisions about each executive officer’s compensation. Decisions related to the CEO’s compensation were made independently by the committee, in consultation with its consultant, and recommended to the full board of directors. Wayne Murdy, the committee’s chair, also met periodically with human resources executives to confer on current and upcoming topics likely to be brought before the committee.
The Compensation Committee acts on behalf of the board of directors to establish and oversee the Company’s executive compensation program in a manner that serves the interests of Weyerhaeuser and its shareholders. For a discussion of the Compensation Committee’s policies and procedures, see “Compensation“Committees of the Board—Compensation Committee” above.
Management of the CompanyThe Company’s management has prepared the Compensation Discussion and Analysis of the compensation programCD&A for the named executive officersNEOs set forth in the Summary Compensation Table. The Compensation Committee has reviewed and
discussed with management the Compensation Discussion and AnalysisCD&A included in this proxy statement. Based on this review and discussions, the Committeecommittee recommended to the board of directors that the Compensation Discussion and AnalysisCD&A be included in the proxy statement for the Company’s 20122015 annual meeting of shareholders.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Ms. Cafaro, Mr. Kieckhefer, Mr. Murdy Mr. Simons and Ms. Williams served as members of the Compensation Committee during 2012.2014. None of the members of the Compensation Committee was an officer of the Company or any of its subsidiaries during 20122014 or any prior period. No executive officer of the Company served as a member of the compensation committeeCompensation Committee or as a director of any company where an executive officer of such company is a member of the Compensation Committee or is a director of the Company.
The Audit Committee is comprised of independent directors as defined by the rules of the New York Stock Exchange and acts under a written charter. The current charter for the Committee can be found on the Company’s website at www.weyerhaeuser.comunder “Company” at the top of the page, “Investors,” and then under the “Governance” link. If you would like a paper copy, you may request one by writing to Claire S. Grace, Vice President and Corporate Secretary, Weyerhaeuser Company, P.O. Box 9777, Federal Way, WA 98063-9777 or by sending an email toCorporateSecretary@Weyerhaeuser.com.
Management is responsible for the Company’s internal controls and the financial reporting process. KPMG LLP is the Company’s independent registered public accounting firm and is responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with generally accepted auditing
standards and for issuing audit reports on the consolidated financial statements and the assessment of the effectiveness of internal controls over financial reporting. The Committee’s responsibility is to monitor and oversee these processes on behalf of the board of directors.
In this context, the Committee has discussed with KPMG LLP the matters required to be discussed by Statement on Auditing Standards No. 61, Communications with Audit Committees, as amended. In addition, the Committee has received the written disclosures and the letter from the independent auditors required by Rule 3526, Communication with Audit Committee Concerning Independence, and has reviewed, evaluated and discussed with that firm the written report and its independence from the Company.
The Committee discussed with the Company’s internal and independent auditors the overall scope and plans for their respective audits. The Committee meets with the internal and independent auditors, with and without management present, to discuss the results of their examinations, the evaluations of the Company’s internal controls and the overall quality of the Company’s financial reporting. The Committee also has reviewed and discussed the audited financial statements with management. Based on the reviews and discussions described above, the Committee recommended to the board of directors that the audited financial statements and assessment of internal controls over financial reporting be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012. The Committee has selected KPMG LLP as the Company’s independent registered public accounting firm for 2013.
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REVIEW, APPROVAL OR RATIFICATION OF TRANSACTIONS WITH RELATED PERSONS
POLICY
The board of directors recognizes that related party transactions can present a heightened risk of potential or actual conflicts of interest and may
create the appearance that Company decisions are based on considerations other than the best interests of the Company and its shareholders. As a result, the board prefers to avoid related party transactions. However, the board recognizes that there are situations where related party transactions may be in, or may not be inconsistent with, the best interests of the Company and its shareholders. For example, this would be true if the Company would be able to obtain products or services of a nature, quality or quantity on terms that are not readily available from other sources, or when the Company provides products or services to related persons on an arm’s-length basis and on the same kind of terms provided to unrelated third parties. As a result, the board has delegated to the Audit Committee the responsibility to review related party transactions. The committee has the authority to approve a related party transaction if the committee determines that the transaction is on terms that are not inconsistent with the best interest of the Company and its shareholders.
RELATED PARTY TRANSACTIONS
The board has defined related party transactions as any arrangement or relationship with the Company when the amount of the transaction or the amount of combined similar transactions is greater than $120,000 and when a related person has a material interest. A related person is anyone who is:
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APPROVAL AND CONTINUING REVIEW
The director or executive who is a related person or has a family member who is a related person must tell the Company’s Corporate Secretary about any proposed related party transaction and give the Corporate Secretary all the facts and circumstances of the proposed transaction. If the Corporate Secretary investigates and decides the transaction would be a related party transaction, the transaction is brought to the Audit Committee for review. The committee reviews all the facts and
circumstances, including the potential effect on a director’s independence if the Company enters into the transaction. The committee approves the transaction only if it decides that the transaction is not inconsistent with the best interests of the Company and its shareholders. The chair of the Audit Committee has the authority to approve transactions on behalf of the committee in between committee meetings if it is not practical to wait until the next committee meeting for a review.
Whenever a member of the Audit Committee is a related person, the transaction is reviewed only by the disinterested members of the committee. If multiple members of the committee, including the chair of the committee, are related persons, the disinterested members of the board of directors review the transaction rather than the committee. Any related party transaction approved by the chair of the committee between meetings must be reported to the committee. Material related party transactions that are approved by the committee must be reported to the board of directors.
The Audit Committee also reviews any related party transactions of which the Company becomes aware that were not approved by the committee in advance. The committee evaluates the transaction using the same process and standards it would use to approve a transaction before it is entered into. The committee decides whether to ratify the transaction or require an amendment of the terms of the transaction or to terminate the transaction. At its first meeting each year, the committee reviews any ongoing related party transaction in which the amount of the transaction is still greater than $120,000. The committee decides if the transaction is still in the best interests of the Company or if the transaction should be modified or terminated.
The Company’s first Code of Ethics was issuedfirst adopted in 1976. The Code of Ethics currently is in its eighth edition and is issued to all directors and employees. It also is available to customers, contractors, suppliers and the public. The current edition of the Code of Ethics is available on the Company’s web site atwww.weyerhaeuser.com under “Company” at the top of the page, “Investors,” then “Operating Ethically,” and then underby clicking the “Governance” link. If you would like“Code of Ethics” icon. Paper copies may be obtained by written request to receive a paper copy, you may
request one by writing to Claire S. Grace, Vice President andWeyerhaeuser Company, Attention: Corporate Secretary, Weyerhaeuser Company, P.O. Box 9777, Federal Way, WA 98063-9777 or by sending an email toCorporateSecretary@Weyerhaeuser.com. If a listed company’s board of directors or a board committee grants a waiver under the Code of Ethics for an executive officer or director, NYSE rules require that the waiver be disclosed to shareholders. If we grant such a waiver, we will provide notice of the waiver on the Company’s website atwww.weyerhaeuser.com. We did not grant any such waivers for executive officers or directors in 2014.
PROHIBITION AGAINST HEDGINGANTI-HEDGING POLICY AND TRADING RESTRICTIONS
The board of directorsCompany has approved a policy that prohibits our directors and executive officers from hedging their ownership of the Company’s stock, including trading in options, puts, calls, or other derivative instruments related to Company stock or debt. The policy also prohibits directors and executive officers from pledging Company stock and trading Company stock on margin. A copy of the Company’s hedging policy is available on the Company’s web sitewebsite atwww.weyerhaeuser.com under “Company” at the top of the page, “Investors,” then under the “Governance” link, and then under “Governance Guidelines.”. If you would like Paper copies may be obtained by written request to receive a paper copy, you may request one by writing to Claire S. Grace, Vice President andWeyerhaeuser Company, Attention: Corporate Secretary, Weyerhaeuser Company, P.O. Box 9777, Federal Way, WA 98063- 977798063-9777 or by sending an email toCorporateSecretary@Weyerhaeuser.com.
The board of directorsCompany has approved an incentive compensation claw backclawback policy to ensure that incentive compensation is paid based on accurate financial and operating data, and the correct calculation of performance against incentive targets. It provides that in the event of a restatement of the financial or operating results of the Company or one of its business segments, the Company may seek recovery of incentive compensation that would not otherwise have been paid if the correct performance data had been used to determine the amount payable. A copy of the Company’s claw backclawback policy is available on the Company’s web sitewebsite atwww.weyerhaeuser.com under “Company” at the top of the page, “Investors,” then under the “Governance” link, and then under “Governance Guidelines.” If you would likePaper copies may be obtained by written request to receive a paper copy, you may request one by writing to Claire S. Grace, Vice President andWeyerhaeuser Company, Attention: Corporate Secretary, Weyerhaeuser Company, P.O. Box 9777, Federal Way, WA 98063- 977798063-9777 or by sending an email toCorporateSecretary@Weyerhaeuser.com.
Stock ownership requirements for executive officers have been in place since 1996, and were most recently amended in 2014. Under the current requirements, each executive officer must acquire
and hold a multiple of his or her base salary in shares of Weyerhaeuser stock. Minimum ownership levels are based on the executive’s salary grade and range from one to five times base salary as follows:
Position | Holding Requirement | Sources Included | ||
CEO | 6X base salary value | Ÿ direct ownership of common shares Ÿ the value of amounts deferred into a stock equivalent account (through the voluntary deferral program described above) Ÿ shares of Company stock held in the Company’s 401(k) plan | ||
EVPs | 3X base salary value | |||
SVPs | 1.5 – 2X base salary value | |||
Sr. Officers | 1X base salary value | |||
Until the required ownership levels are achieved, executives must retain 75% of the net profit shares acquired when RSUs and PSUs vest. Net profit shares are shares remaining after payment of taxes upon vesting.
The Company annually seeks a shareholder vote on a proposal to approve on an advisory basis the compensation of our NEOs. This proposal, commonly known as a “say-on-pay” proposal, was supported by more than 96% of the votes cast at last year’s annual meeting. Our board of directors and our Compensation Committee value the opinions of our shareholders and consider the results of the say-on-pay vote. To the extent there are significant votes against our NEO compensation as disclosed in this proxy statement we will consider our shareholders’ concerns and the Compensation Committee will evaluate whether any actions are necessary to address those concerns in making future compensation decisions.
RISK ANALYSIS OF OUR COMPENSATION PROGRAMS
The Compensation Committee reviews our compensation plans and policies to ensure that
they do not encourage unnecessary risk taking and instead encourage behaviors that support sustainable value creation. In 2014, the committee, with the assistance of Cook & Co., reviewed the Company’s compensation policies and practices for employees, including NEOs, and believes that our compensation programs are not reasonably likely to have a material adverse effect on the Company. We believe the following factors reduce the likelihood of excessive risk-taking:
Ÿ | the program design provides a balanced mix of cash and equity, short-term and long-term incentives, fixed and performance-based pay, and performance metrics; |
Ÿ | maximum payout levels for bonuses are capped; |
Ÿ | the Compensation Committee has downward discretion over incentive program payouts; |
Ÿ | executive officers are subject to share ownership guidelines; |
Ÿ | compliance and ethical behaviors are integral factors considered in all performance assessments; |
Ÿ | the Company has adopted policies prohibiting hedging and pledging by executives and directors; and |
Ÿ | the Company has adopted a “clawback” policy. |
Name and Principal Position | Year | Salary (1)($) | Stock Awards (2)($) | Option Awards (3)($) | Non-Equity Incentive Plan Comp (4)($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings (5)($) | All Other Comp (6)($) | Total ($) | ||||||||||||||||||||||||
D.S. Fulton President and Chief Executive Officer |
| 2012 2011 2010 |
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| 900,000 875,000 800,000 |
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| 3,539,377 3,598,800 1,712,880 |
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| 1,056,421 1,198,860 2,102,068 |
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| 855,000 425,000 600,000 |
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| 709,483 –27,963 675,943 |
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| 8,616 7,998 907 |
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| 7,068,898 6,077,695 5,891,798 |
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P.M. Bedient Executive Vice President and Chief Financial Officer |
| 2012 2011 2010 |
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| 600,000 592,500 563,000 |
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| 800,097 899,700 460,059 |
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| 238,810 301,600 925,536 |
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| 575,000 400,000 418,608 |
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| 346,652 293,734 156,419 |
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| 68,616 70,789 5,246 |
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| 2,629,175 2,558,323 2,528,868 |
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L.B. Burrows Senior Vice President, Wood Products |
| 2012 2011 2010 |
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| 534,750 525,000 512,500 |
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| 838,425 843,469 75,000 |
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| 250,250 282,750 584,308 |
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| 750,000 0 461,423 |
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| 670,759 755,266 493,572 |
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| 8,616 7,998 6,283 |
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| 3,052,800 2,414,483 2,133,086 |
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T. F. Gideon Executive Vice President, Timberlands |
| 2012 2011 2010 |
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| 600,000 598,750 587,500 |
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| 862,380 985,071 510,296 |
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| 257,400 330,214 1,267,126 |
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| 405,000 400,000 303,450 |
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| 1,078,255 885,644 459,828 |
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| 8,616 7,998 4,956 |
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| 3,211,651 3,207,677 3,133,156 |
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P.M. Orser President, WRECO | | 2012 | | | 515,000 | | | 505,800 | | | 228,777 | | | 556,949 | | | 479,933 | | | 8,616 | | | 2,295,075 | |
Name and Principal Position | Year | Salary (1)($) | Stock Awards (2)($) | Option Awards (3)($) | Non-Equity Incentive Plan Comp (4)($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings (5)($) | All Other | Total ($) | ||||||||||||||||||||||||
Doyle R. Simons President and Chief Executive Officer |
| 2014 2013 |
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| 950,000 493,269 |
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| 3,957,023 1,874,688 |
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| 1,321,206 624,997 |
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| 1,712,000 918,508 |
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| 149,103 — |
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| 55,102 275,335 |
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| 8,144,434 4,186,797 |
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Patricia M. Bedient Executive Vice President and Chief Financial Officer |
| 2014 2013 2012 |
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| 610,000 607,500 600,000 |
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| 1,188,231 1,225,483 800,097 |
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| 397,114 366,131 238,810 |
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| 811,000 650,000 575,000 |
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| 600,971 209,934 346,652 |
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| 8,808 8,766 68,616 |
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| 3,616,124 3,067,814 2,629,175 |
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Adrian M. Blocker Senior Vice President, Wood Products | 2014 | 437,500 | 564,261 | 188,577 | 609,000 | 96,563 | 37,986 | 1,933,887 | ||||||||||||||||||||||||
Srinivasan Chandrasekaran Senior Vice President, Cellulose Fibers |
| 2014 2013 2012 |
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| 562,500 528,942 511,250 |
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| 989,695 795,246 646,785 |
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| 330,762 237,586 193,050 |
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| 751,000 460,000 440,000 |
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| 717,949 263,300 557,705 |
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| 21,597 11,358 22,592 |
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| 3,373,503 2,296,432 2,371,382 |
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Rhonda D. Hunter Senior Vice President, Timberlands | 2014 | 477,308 | 616,507 | 206,041 | 578,000 | 664,435 | 48,671 | 2,590,962 | ||||||||||||||||||||||||
Thomas F. Gideon* Former Executive Vice President, Timberlands |
| 2014 2013 2012 |
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| 93,538 606,000 600,000 |
| | — 1,292,899 | | | — 386,274 | |
| — 750,000 405,000 |
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| 935,355 448,743 1,078,255 |
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| 1,836,216 8,766 8,616 |
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| 2,865,109 3,492,682 3,211,651 |
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Sandy D. McDade* Former Senior Vice President and General Counsel | 2014 | 290,539 | 632,196 | 211,277 | 260,000 | 824,677 | 1,502,670 | 3,721,359 |
* | Mr. Gideon’s last day with the Company was February 14, 2014 and Mr. McDade’s last day with the Company was July 10, 2014. |
(1) | The amount reported in this column for each executive officer reflects the dollar amount paid in cash of base salary in the fiscal year. |
(2) | Amounts in this column for all grants of |
(3) | Amounts in this column for all grants of stock options to all officers included in the table and for all periods reflect the grant date fair value of awards granted under the |
(4) | Amounts for Mr. |
(5) | Amounts represent annual changes in the actuarial present value of accumulated pension benefits. There were no preferential earnings on nonqualified deferred compensation in |
(6) | Amounts reported for |
ALL OTHER COMPENSATION
Name | Year | Company Contribution Contribution ($) | Executive Term Life Insurance Premium ($) | Premium Contribution to Deferred Compensation ($) | Total ($) | |||||||||||||||
D. S. Fulton |
| 2012 2011 2010 |
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| 7,500 7,350 0 |
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| 1,116 648 648 |
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| 0 0 0 |
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| 8,616 7,998 907 |
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P. M. Bedient |
| 2012 2011 2010 |
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| 7,500 7,350 4,598 |
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| 1,116 648 648 |
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| 60,000 62,791 0 |
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| 68,616 70,789 5,246 |
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L.B. Burrows |
| 2012 2011 2010 |
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| 7,500 7,350 5,635 |
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| 1,116 648 648 |
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| 0 0 0 |
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| 8,616 7,998 6,283 |
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T. F. Gideon |
| 2012 2011 2010 |
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| 7,500 7,350 4,308 |
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| 1,116 648 648 |
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| 0 0 0 |
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| 8,616 7,998 4,956 |
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P.M. Orser | 2012 | 7,500 | 1,116 | 0 | 8,616 |
Name | Year | Company Contribution Contribution ($) | Executive Term Life Insurance Premium ($) | Premium Contribution to Deferred Compensation ($) | Other ($) | Total ($) | ||||||||||||||||||
Doyle R. Simons |
| 2014 2013 |
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| 7,800 7,650 |
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| 1,008 472 |
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| — — |
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| 46,294(1 267,213 | )
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| 55,102 275,335 |
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Patricia M. Bedient |
| 2014 2013 2012 |
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| 7,800 7,650 7,500 |
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| 1,008 1,116 1,116 |
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| — — 60,000 |
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| — — — |
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| 8,808 8,766 68,616 |
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Adrian M. Blocker | 2014 | 7,800 | 1,008 | — | 29,178(2 | ) | 37,986 | |||||||||||||||||
Srinivasan Chandrasekaran |
| 2014 2013 2012 |
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| 4,029 4,302 4,601 |
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| 1,008 1,116 1,116 |
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| 16,560 5,940 16,875 |
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| — — — |
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| 21,597 11,358 22,592 |
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Rhonda D. Hunter | 2014 | 7,800 | 1,008 | — | 39,863(3 | ) | 48,671 | |||||||||||||||||
Thomas F. Gideon |
| 2014 2013 2012 |
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| 2,572 7,650 7,500 |
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| 155 1,116 1,116 |
|
| — — — |
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| 1,833,490(4 — — | )
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| 1,836,217 8,766 8,616 |
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Sandy D. McDade | 2014 | 7,264 | 504 | — | 1,494,903(5 | ) | 1,502,671 |
(1) | Amount includes: (i) temporary living expenses in the amount of $25,087, which were paid by the Company in connection with Mr. Simons’ relocation from Texas to Washington and were treated as compensation, and a related gross-up payment to cover taxes in the amount of $19,420; and (ii) $1,787 paid to Mr. Simons in relation to the purchase of a new home. |
(2) | Amount includes: (i) temporary living expenses in the amount of $5,166, which were paid by the Company in connection with Mr. Blocker’s relocation from Tennessee to Washington and were treated as compensation, and a related gross-up payment to cover taxes in the amount of $9,418; and (ii) $9,266 paid to Mr. Blocker in relation to the purchase of a new home and $5,328 in relation to the storage and delivery of household goods. |
(3) | Amount includes: (i) temporary living expenses in the amount of $13,583, which were paid by the Company in connection with Ms. Hunter’s relocation from Arkansas to Washington and were treated as compensation, and a related gross-up payment to cover taxes in the amount of $10,430; and (ii) $15,000 allowance and $850 for en-route costs paid to Ms. Hunter in relation to her relocation. |
(4) | Amount relates to Mr. Gideon’s separation from service and includes $1,704,427 in severance and $129,063 in unused vacation payout. |
(5) | Amount relates to Mr. McDade’s separation from service and includes $1,408,477 in severance and $86,426 in unused vacation payout. |
GRANTS OF PLAN-BASED AWARDS FOR FISCAL 20122014
Name | Type of Award | Grant Date(1) | Estimated Future Payout Under NonEquity Plan Awards | Estimated Future Payouts Under Equity Plan Awards | Stock Units (#) | Option Options | Exercise or Base Price of Option Awards ($/Sh) (3) | Grant Date Closing Price ($/Sh) | Grant Date Fair Awards ($) | |||||||||||||||||||||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||||||||||||||||||
D. S. Fulton | PSU RSU Option | | 2/8/2012 2/8/2012 2/8/2012 | | 27,703 | 110,813 | 166,220 | 55,407 | 184,689 | 20.415 | 20.56 |
| 2,407,966 1,131,411 1,056,421 |
| ||||||||||||||||||||||||||||||||||||
P. M. Bedient | PSU RSU Option | | 2/8/2012 2/8/2012 2/8/2012 | | 6,263 | 25,050 | 37,575 | 12,525 | 41,750 | 20.415 | 20.56 |
| 544,337 255,761 238,810 |
| ||||||||||||||||||||||||||||||||||||
L. B. Burrows | PSU RSU Option | | 2/8/2012 2/8/2012 2/8/2012 | | 6,563 | 26,250 | 39,375 | 13,125 | 43,750 | 20.415 | 20.56 |
| 570,413 268,013 250,250 |
| ||||||||||||||||||||||||||||||||||||
T. F. Gideon | PSU RSU Option | | 2/8/2012 2/8/2012 2/8/2012 | | 6,750 | 27,000 | 40,500 | 13,500 | 45,000 | 20.415 | 20.56 |
| 586,710 275,670 257,400 |
| ||||||||||||||||||||||||||||||||||||
P.M. Orser | PSU RSU Option LTIP | | 2/8/2012 2/8/2012 2/8/2012 2/8/2012 | | 15,000 | 186,000 | (2 | ) | 3,000 | 12,000 | 18,000 | 12,000 | | 39,996 | | | 20.415 | | | 20.56 | |
| 260,760 245,040 228,777 |
|
Name | Type of Award | Grant Date(1) | Estimated Future Payout Under Non-Equity Plan Awards | Estimated Future Payouts Under Equity Plan Awards | Stock Units (#) | Option Options | Exercise or Base Price of Option Awards ($/Sh) (2) | Grant Date Closing Price ($/Sh) | Grant Date Fair Awards ($) | |||||||||||||||||||||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||||||||||||||||||
Doyle R. Simons | AIP | 2/13/2014 | 247,000 | 1,235,000 | 3,705,000 | |||||||||||||||||||||||||||||||||||||||||||||
PSU | 2/13/2014 | 21,459 | 85,837 | 128,755 | 2,628,329 | |||||||||||||||||||||||||||||||||||||||||||||
RSU | 2/13/2014 | 43,902 | 1,328,694 | |||||||||||||||||||||||||||||||||||||||||||||||
Option | 2/13/2014 | 199,578 | 30.265 | 30.390 | 1,321,206 | |||||||||||||||||||||||||||||||||||||||||||||
Patricia M. Bedient | AIP | 2/12/2014 | 103,700 | 518,500 | 1,555,500 | |||||||||||||||||||||||||||||||||||||||||||||
PSU | 2/12/2014 | 6,451 | 25,806 | 38,709 | 790,180 | |||||||||||||||||||||||||||||||||||||||||||||
RSU | 2/12/2014 | 13,198 | 398,052 | |||||||||||||||||||||||||||||||||||||||||||||||
Option | 2/12/2014 | 59,987 | 30.160 | 30.280 | 397,114 | |||||||||||||||||||||||||||||||||||||||||||||
Adrian M. Blocker | STIP | 2/12/2014 | 58,500 | 292,500 | 877,500 | |||||||||||||||||||||||||||||||||||||||||||||
PSU | 2/12/2014 | 3,063 | 12,255 | 18,382 | 375,248 | |||||||||||||||||||||||||||||||||||||||||||||
RSU | 2/12/2014 | 6,267 | 189,013 | |||||||||||||||||||||||||||||||||||||||||||||||
Option | 2/12/2014 | 28,486 | 30.160 | 30.280 | 188,577 | |||||||||||||||||||||||||||||||||||||||||||||
Srinivasan Chandrasekaran | AIP | 2/12/2014 | 96,900 | 484,500 | 1,453,500 | |||||||||||||||||||||||||||||||||||||||||||||
PSU | 2/12/2014 | 5,373 | 21,494 | 32,241 | 658,146 | |||||||||||||||||||||||||||||||||||||||||||||
RSU | 2/12/2014 | 10,993 | 331,549 | |||||||||||||||||||||||||||||||||||||||||||||||
Option | 2/12/2014 | 49,964 | 30.160 | 30.280 | 330,762 | |||||||||||||||||||||||||||||||||||||||||||||
Rhonda D. Hunter | AIP | 2/12/2014 | 75,000 | 375,000 | 1,125,000 | |||||||||||||||||||||||||||||||||||||||||||||
PSU | 2/12/2014 | 3,347 | 13,389 | 20,083 | 409,971 | |||||||||||||||||||||||||||||||||||||||||||||
RSU | 2/12/2014 | 6,848 | 206,536 | |||||||||||||||||||||||||||||||||||||||||||||||
Option | 2/12/2014 | 31,124 | 30.160 | 30.280 | 206,041 | |||||||||||||||||||||||||||||||||||||||||||||
Thomas F. Gideon (3) | AIP | 2/12/2014 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
PSU | 2/12/2014 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
RSU | 2/12/2014 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Option | 2/12/2014 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
Sandy D. McDade | AIP | 2/12/2014 | 79,500 | 397,500 | 1,192,500(4 | ) | ||||||||||||||||||||||||||||||||||||||||||||
PSU | 2/12/2014 | 3,433 | 13,730 | 20,595(5 | ) | 420,413 | ||||||||||||||||||||||||||||||||||||||||||||
RSU | 2/12/2014 | 7,022 | 211,784 | |||||||||||||||||||||||||||||||||||||||||||||||
Option | 2/12/2014 | 31,915 | 30.160 | 30.280 | 211,277 |
(1) | The Compensation Committee approves Weyerhaeuser long-term incentive grants and grants under its annual incentive plans to executive officers at its regular meetings. The Compensation Committee meeting date is the effective grant date for equity grants and grants under the annual incentive plans to named executive officers other than the CEO. Compensation for the CEO is approved by the board of directors based on recommendation by the Compensation Committee. The date of approval by the board of directors is the effective grant date for |
(2) |
Stock options are granted under the Company’s |
(3) | Mr. Gideon’s separation from service was effective February 14, 2014 and he did not receive an AIP award, PSU award, RSU award or award of stock options for 2014. |
(4) | Mr. McDade’s Threshold, Target, and Maximum values for the Annual Incentive Plan are $41,602, $208,008, and $624,023, respectively, when prorated to his July 10, 2014 separation date. |
(5) | Mr. McDade’s Threshold, Target, and Maximum values for PSUs are 1,716, 6,865, and 10,297, respectively, when prorated to his July 10, 2014 separation date per the Terms and Conditions of the grant. |
NON-EQUITY INCENTIVE PLAN COMPENSATION
Amounts for non-equity incentive plan compensation set out in the Summary Compensation Table and Grants of Plan-Based Awards are annual cash incentives under the Company’s AIP. In 2014, the AIP except for amounts in 2012 to Mr. Orser, which represent his earnings under the WRECO cash Long-Term Incentive Plan (“WRECO LTIP”) described below and under the WRECO Short-Term Incentive Plan (“STIP”) described below, and amounts in 2010 to Mr. Burrows, which represent his earnings under the WRECO STIP. The terms of Mr. Orser’s 2012 grant under the WRECO LTIP shown in the Grants of Plan-Based Awards for Fiscal 2012 are described below.
AIP
The AIP iswas funded based 80% on theFFO performance (for our Timberlands business) and RONA performance (defined in “Compensation Discussion(for our Wood Products (Lumber and Analysis—Compensation Components—Determination of Compensation—AIP Performance MeasuresEP&D) and Plan Mechanics” above) of each of the Company’s segmentsCellulose Fibers businesses and for our CEO), and 20% based on the performance of each business segment businesses against theits business scorecard metrics approved in advance by the Compensation Committee, such as competitive performance, financial measures and performance against strategic goals. Funding forFFO and RONA are defined in “Compensation Discussion and Analysis—Compensation Components—Determination of Compensation—Short-Term Incentive Plan—AIP Performance Measures and Plan Mechanics” above. For staff functions, including the chief financial officer, AIP is funded based on the performance againstof each of the business scorecard metrics is capped at target if thesegments (weighted one-third for each business fails to achieve profitability and may be modified by the safety performance of the business.segment). For each year a threshold, target and maximum goal is established by the Compensation Committee that represents 20%, 100% and 200% target funding levels for that portion of the funding.
For 2012,2014, the Compensation Committee set the threshold, performance goal to fund the RONA portion of the AIP was 6% RONA for the AIP in general. For Timberlands, target funding was set at 9% and maximum was set at 17% RONA. For the Wood Products and Cellulose Fibers businesses, target funding was set at 10% and maximum was set at 20%. Funding under the AIP for the CEO is based 80% on achievement of Company RONA and 20% on his performance against his PMP goals approved by the board of directors. The Company RONA threshold for funding for the CEO was set at 6%, target funding level was 10% and maximum funding level was 17% RONA. as follows:
Ÿ | for the Timberlands business, the FFO threshold for funding was set at $553 million, target funding was set at $692 million and maximum was set at $865 million; |
Ÿ | for the Wood Products (Lumber and EP&D) and Cellulose Fibers businesses, the RONA threshold for funding was set at 6%, target funding was set at 12% and maximum was set at 20%; and |
Ÿ | for the CEO, the Company RONA threshold for funding was set at 6%, target funding level was 10% and maximum funding level was 17% RONA. |
At the end of 2012,2014, the committeeCompensation Committee approved funding for the incentive pool based on performance
against the pre-determined FFO and RONA targets and the business scorecard metrics.
Funding for the WRECO LTIP is based on WRECO’s performance and the performance of each of its subsidiaries over a three-year period. For Mr. Orser’s 2012 grant, his performance will be measured in part by the absolute PTEP (defined in “Compensation Discussion and Analysis—Compensation Components—Determination of Compensation—Long-Term Incentive Compensation—WRECO LTIP”) of WRECO (60%) and in part by WRECO’s three-year competitive ROI ranking versus public home builders (40%). For the 2010 grant, performance for Mr. Orser was measured in part by the absolute PTEP of WRECO (40%), in part by the absolute PTEP of the subsidiary for which he was president (40%), and in part by WRECO’s three-year competitive ROI ranking versus public home builders (20%). The ROI targets are approved for each plan year by the Company’s CEO and the Compensation Committee, based on historic long-term averages for the home-building industry and long-term achievement goals for WRECO, and were 14% for both the 2012 to 2014 plan period and the 2010 to 2012 plan period. The minimum ROI threshold to fund the relative competitive ranking components of the LTIP in both the 2012 to 2014 plan period and the 2010 to 2012 plan period was 6%. For Mr. Orser’s 2012 grant, funding will be capped at $800 per share if the competitive ROI rank is 10% or below. For Mr. Orser’s 2010 grant, funding was capped at $250 per share because the competitive ROI rank was 14% or below. At the end of 2012, the committee approved funding for the WRECO LTIP based on performance against the pre-determined targets.
WRECO STIP
Funding for the WRECO STIP was based in part on WRECO’s absolute ROI, in part based on its competitive ROI ranking and in part based on performance against a set of business metrics. ROI is defined in “Compensation Discussion and Analysis—Compensation Components—Determination of Compensation—Long-Term Incentive Compensation—WRECO STIP.” The ROI targets are established for each plan year by the WRECO President and approved by the Company’s CEO and the Compensation Committee. The
minimum ROI threshold to fund the absolute and relative competitive ranking components of the STIP for Mr. Orser’s award in 2012 was 6% and, for Mr. Burrow’s award in 2010 was 5.5%. For the absolute ROI component, target funding in both years was set at 14%, and maximum funding of three times target would be achieved for an ROI of 40% or more. The threshold competitive ROI ranking required to fund that component of the STIP in 2012 and 2010 was a median competitive ranking, with a maximum possible funding of level of target for a competitive position of first place, provided that absolute ROI exceed 14%. The business metrics used for 2012 funding focused on unit sales, single-family net margin, competitive ranking, and cash generation. The business metrics used for 2010 funding focused on cash generation and pre-tax earnings. WRECO achieved an ROI of 8.5% for 2012 and an ROI of 7% in 2010. In 2012, WRECO generated sales, margins and cash generation in excess of the threshold business metrics, and funded the award for Mr. Orser as described in the Summary Compensation Table. In 2010, WRECO generated cash flow and pre-tax earnings in excess of threshold business metrics, and funded the award for Mr. Burrows as described in the Summary Compensation Table. In 2012, the absolute ROI was above threshold, competitive ROI was near maximum and performance against business metrics was above target performance levels and funded the award for Mr. Orser as described in the Summary Compensation Table.
EQUITY AWARDS
Values for performance share units, stock grants and options grantsEquity awards in the summary compensation table and numbers included in the grants of plan-based awards table relate to performance share units, restricted
PSUs, RSUs and stock units or options granted to the named executive officersNEOs under the Company’s 2004 Long-Term Incentive Plan (the “Plan”“2004 Plan”). The and the Weyerhaeuser Company 2013 Long-Term Incentive Plan provides(the “2013 Plan”), which was approved by our shareholders at the 2013 annual meeting. Each of the 2004 Plan and 2013 Plan provide for the award of stock options, stock appreciation rights, restricted stock and restricted stock units,RSUs, and performance shares and performance share units.PSUs. The 2004 Plan providesand 2013 Plan provide that stock options must be granted at fair market value and it prohibitsprohibit the repricing of outstanding options without shareholder approval. TheEach of the 2004 Plan has been filed with Securities and Exchange Commission and is available at www.sec.gov. The2013 Plan is administered by the Compensation Committee, which has retained the exclusive authority to make
awards under the Plan.plans. After adoption of the 2013 Plan, no further awards have been granted under the 2004 Plan (or any other prior equity incentive plan). The committeeCompensation Committee approves all long-term incentive grants to executive officers other than the CEO, whose grants are approved by the board.board of directors. The committee also approves the overall grant pool and individual grants for all other participants. The primary purpose of the Planour long-term incentive plans is to link compensation with the long-term interests of shareholders.shareholders and align pay with performance by focusing NEOs on long-term total shareholder return (TSR) achievements.
February 8, 20122014 Performance Share Unit Awards
Performance share unitsPSUs granted to each of the named executive officers on February 8, 2012NEOs in 2014 are earned based on the Company’s performance against cash flow targets during 2012,2014 and adjusted based on the Company’s relative total shareholder returnTSR during 20122014 and 2013.2015. A target number of performance share unitsPSUs were granted to the named executive officersNEOs in 2012.2014. The initial number of performance share unitsPSUs actually earned was based on the Company’s performance against cash flow metrics during 2012.2014. This number will be adjusted up or down by up to 20% based on the Company’s two-year total shareholder return (“TSR”)TSR relative to the S&P 500 during 20122014 and 2013.2015. On the second anniversary of the grant, 50% of the final number of performance share unitsPSUs earned will be vested and released to the participant, with an additional 25% vesting and being released on the third anniversary of the grant date. Full vesting occurs onand the fourth anniversary of the grant date. During the vesting period, nonvestedunvested awards earn the equivalent of dividends, which are credited as additional performance share units,with dividend equivalents, which are subject to the same vesting and release schedule as the original PSU awards. In the event of a retirement at age 62 or older or involuntary termination without cause, performance share units granted in 2012 will be released based on the following termination schedule: upon termination at least six months from the grant date, but earlier than the one-year anniversary, 25% of the share units actually earned as of the end of 2012 will be available for release on the second anniversary of the grant date and the remaining 75% of the earned award will be forfeit; upon termination on or after the first anniversary of the grant, but earlier than the second anniversary, 50% of the share units actually earned as of the end of 2012 will continue to vest and the remaining 50% will be forfeit; upon termination on or after the second anniversary of the grant, 100% of the awarded share units will continue to vest. Upon
termination for other reason, unvested performance share units cease to vest and are forfeited.
February 8, 2012 Option Grant2014 Stock Options
OptionsStock options granted to each of the named executive officers on February 8, 2012NEOs in 2014 as long-term incentive compensation are exercisable beginning 12 months after the grant date, with 25% of the shares in the grant becoming exercisable at that time and with an additional 25% of the shares becoming exercisable on each successive anniversary of the grant date. Full vesting occurs on the fourth anniversary of the grant date. The options were granted for a term of 10 years and may be subject to earlier termination if the executive terminates employment for reasons other than retirement. In the event of a retirement at age 62 or older, these options continue to vest and remain outstanding until the expiration of the 10-year term.years.
February 8, 20122014 Restricted Stock Unit Awards
Restricted stock unitsRSUs granted to each of the named executive officers on February 8, 2012NEOs in 2014 vest over four years beginning 12 months following the grant date, with 25% of the shares becoming vested and available for release at that time, and an additional 25% vesting and becoming available for release on each successive anniversary of the grant date. Full vesting occurs on the fourth anniversary of the grant date. During the vesting period, nonvestedunvested awards earn the equivalent of dividends, which are credited as additional restricted stock units,with dividend equivalents, which are subject to the same vesting and release schedule as the original RSU awards. In the
event of a retirement at age 62 or older or involuntary termination without cause, restricted stock units granted in 2012 continue to vest based on the following termination schedule: upon termination between six months from the grant date and the one-year anniversary, 25% of the awarded stock units will continue to vest; upon termination between the first and second anniversary of the grant, 50% of the awarded stock units will continue to vest; upon termination between the second and third anniversary of the grant, 75% of the awarded stock units will continue to vest; and upon termination after the third anniversary of the grant, 100% of the awarded stock units will continue to vest. Upon termination for other reason, unvested restricted stock units cease to vest and are forfeited.
COMPENSATION COMPONENTS IN PROPORTION TO TOTAL COMPENSATION
The combination of the compensation components granted to an executive officer and the amount of each component is influenced by the role of the person in the Company, market surveys, the total value of all the compensation, and benefits and perquisites available to the person. In general, the Company positions itself at the median for each of the different components of total pay so total compensation for the CEO and the named executive officers is comparable to the Company’s peers. The Compensation Committee reviews a tally sheet of all compensation, benefits and perquisites provided to the CEO and the named executive officers, primarily to confirm that the aggregate compensation recommended for the executive officer complies with this principle.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
Name | Grant Date (1) | Number of (#) | Number of (#) | Option Exercise Price ($) | Option Date | Number of Not | Market or Units of Stock That Have Not Vested (5) ($) | Equity or Other Rights | Equity Incentive Plan Awards: Payout Value Unearned | |||||||||||||||||||||||||||
D. S. Fulton | 02/11/2004 | 119,445 | 0 | 23.6660 | 02/11/2014 | — | — | — | — | |||||||||||||||||||||||||||
02/16/2005 | 119,447 | 0 | 23.9220 | 02/16/2015 | — | — | — | — | ||||||||||||||||||||||||||||
02/15/2006 | 75,651 | 0 | 26.2690 | 02/15/2016 | — | — | — | — | ||||||||||||||||||||||||||||
02/14/2007 | 76,440 | 0 | 30.3890 | 02/14/2017 | — | — | — | — | ||||||||||||||||||||||||||||
02/20/2008 | 238,881 | 0 | 23.5570 | 02/20/2018 | — | — | — | — | ||||||||||||||||||||||||||||
06/19/2008 | 345,090 | 0 | 20.8720 | 06/19/2018 | — | — | — | — | ||||||||||||||||||||||||||||
02/18/2009 | 248,816 | 82,939 | 9.5280 | 02/18/2019 | 9,375 | 260,813 | — | — | ||||||||||||||||||||||||||||
02/18/2009(3 | ) | 0 | 331,755 | 9.5280 | 02/18/2019 | — | — | — | — | |||||||||||||||||||||||||||
02/10/2010 | 199,059 | 199,059 | 14.8030 | 02/10/2020 | 21,600 | 600,912 | — | — | ||||||||||||||||||||||||||||
02/09/2011 | 39,750 | 119,250 | 24.160 | 02/09/2021 | 36,000 | 1,001,520 | 120,960 | 3,365,107 | ||||||||||||||||||||||||||||
02/08/2012 | 0 | 184,689 | 20.415 | 02/08/2022 | 55,407 | 1,541,423 | 135,192 | 3,761,038 | ||||||||||||||||||||||||||||
P. M. Bedient | 02/11/2004 | 26,544 | 0 | 23.6660 | 02/11/2014 | — | — | — | — | |||||||||||||||||||||||||||
02/16/2005 | 29,199 | 0 | 23.9220 | 02/16/2015 | — | — | — | — | ||||||||||||||||||||||||||||
02/15/2006 | 18,581 | 0 | 26.2690 | 02/15/2016 | — | — | — | — | ||||||||||||||||||||||||||||
02/14/2007 | 25,217 | 0 | 30.3890 | 02/14/2017 | — | — | — | — | ||||||||||||||||||||||||||||
04/19/2007 | 53,087 | 0 | 28.9310 | 04/19/2017 | — | — | — | — | ||||||||||||||||||||||||||||
02/20/2008 | 67,683 | 0 | 23.5570 | 02/20/2018 | — | — | — | — | ||||||||||||||||||||||||||||
02/18/2009 | 47,374 | 15,792 | 9.5280 | 02/18/2019 | 1,785 | 49,659 | — | — | ||||||||||||||||||||||||||||
02/18/2009(3 | ) | 0 | 126,332 | 9.5280 | 02/18/2019 | — | — | — | — | |||||||||||||||||||||||||||
02/10/2010 | 51,324 | 51,324 | 14.8030 | 02/10/2020 | 5,802 | 161,412 | — | — | ||||||||||||||||||||||||||||
02/10/2010 | 36,321 | 36,322 | 14.8030 | 02/10/2020 | — | — | — | — | ||||||||||||||||||||||||||||
02/09/2011 | 10,000 | 30,000 | 24.1600 | 02/09/2021 | 9,000 | 250,380 | 30,240 | 841,277 | ||||||||||||||||||||||||||||
02/08/2012 | 0 | 41,750 | 20.4150 | 02/08/2022 | 12,525 | 348,446 | 30,561 | 850,207 | ||||||||||||||||||||||||||||
L.B. Burrows | 02/11/2004 | 26,544 | 0 | 23.6660 | 02/11/2014 | — | — | — | — | |||||||||||||||||||||||||||
02/16/2005 | 23,094 | 0 | 23.9220 | 02/16/2015 | — | — | — | — | ||||||||||||||||||||||||||||
02/15/2006 | 24,421 | 0 | 26.2690 | 02/15/2016 | — | — | — | — | ||||||||||||||||||||||||||||
02/14/2007 | 22,828 | 0 | 30.3890 | 02/14/2017 | — | — | — | — | ||||||||||||||||||||||||||||
02/20/2008 | 26,543 | 0 | 23.5570 | 02/20/2018 | — | — | — | — | ||||||||||||||||||||||||||||
03/31/2008 | 26,543 | 0 | 24.2050 | 03/31/2018 | — | — | — | — | ||||||||||||||||||||||||||||
02/18/2009 | 23,886 | 23,887 | 9.5280 | 02/18/2019 | — | — | — | — | ||||||||||||||||||||||||||||
02/10/2010 | 23,887 | 47,774 | 14.8030 | 02/10/2020 | — | — | �� | — | — | |||||||||||||||||||||||||||
10/14/2010 | 7,825 | 7,825 | 15,7800 | 10/14/2020 | 2,348 | 65,321 | — | — | ||||||||||||||||||||||||||||
02/09/2011 | 9,375 | 28,125 | 24.160 | 02/09/2021 | 8,438 | 234,745 | 28,350 | 788,697 | ||||||||||||||||||||||||||||
02/08/2012 | 0 | 43,750 | 20.4150 | 02/08/2022 | 13,125 | 365,138 | 32,025 | 890,936 | ||||||||||||||||||||||||||||
T. F. Gideon | 02/11/2004 | 7,698 | 0 | 23.6660 | 02/11/2014 | — | — | — | — | |||||||||||||||||||||||||||
02/16/2005 | 38,091 | 0 | 23.9220 | 02/16/2015 | — | — | — | — | ||||||||||||||||||||||||||||
02/15/2006 | 41,409 | 0 | 26.2690 | 02/15/2016 | — | — | — | — | ||||||||||||||||||||||||||||
02/14/2007 | 50,433 | 0 | 30.3890 | 02/14/2017 | — | — | — | — | ||||||||||||||||||||||||||||
02/20/2008 | 13,272 | 0 | 23.5570 | 02/20/2018 | — | — | — | — | ||||||||||||||||||||||||||||
02/20/2008 | 49,369 | 0 | 23.5570 | 02/20/2018 | — | — | — | — | ||||||||||||||||||||||||||||
02/18/2009 | 25,687 | 21,896 | 9.5280 | 02/18/2019 | 2,475 | 68,855 | — | — | ||||||||||||||||||||||||||||
02/18/2009(3 | ) | 0 | 175,166 | 9.5280 | 02/18/2019 | — | — | — | ||||||||||||||||||||||||||||
02/10/2010 | 56,931 | 56,931 | 14.8030 | 02/10/2020 | 6,435 | 179,022 | — | — | ||||||||||||||||||||||||||||
02/10/2010 | 63,062 | 63,062 | 14.8030 | 02/10/2020 | — | — | — | — | ||||||||||||||||||||||||||||
02/09/2011 | 10,948 | 32,847 | 24.1600 | 02/09/2021 | 9,855 | 274,166 | 33,109 | 921,093 | ||||||||||||||||||||||||||||
02/08/2012 | 0 | 45,000 | 20.4150 | 02/08/2022 | 13,500 | 375,570 | 32,940 | 916,391 | ||||||||||||||||||||||||||||
P.M. Orser | 02/11/2004 | 5,575 | 0 | 23.6600 | 02/11/2014 | — | — | — | — | |||||||||||||||||||||||||||
02/16/2005 | 16,723 | 0 | 23.9220 | 02/16/2015 | — | — | — | — | ||||||||||||||||||||||||||||
02/15/2006 | 22,297 | 0 | 26.2690 | 02/15/2016 | — | — | — | — | ||||||||||||||||||||||||||||
02/14/2007 | 22,828 | 0 | 30.3890 | 02/14/2017 | — | — | — | — | ||||||||||||||||||||||||||||
02/20/2008 | 22,296 | 0 | 23.5570 | 02/20/2018 | — | — | — | — | ||||||||||||||||||||||||||||
02/18/2009 | 12,540 | 4,180 | 9.5280 | 02/18/2019 | — | — | — | — | ||||||||||||||||||||||||||||
02/10/2010 | 14,995 | 14,996 | 14.8030 | 02/10/2020 | — | — | — | — | ||||||||||||||||||||||||||||
02/09/2011 | 9,080 | 27,240 | 24.1600 | 02/09/2021 | 8,173 | 227,373 | 13,730 | 381,975 | ||||||||||||||||||||||||||||
02/08/2012 | 0 | 39,996 | 20.4150 | 02/08/2022 | 12,000 | 333,840 | 14,640 | 407,285 |
Name | Grant Date (1) | Number of (#) | Number of (#) | Option Exercise Price ($) | Option Date | Number of Not | Market or Units of Stock That Have Not Vested (5)($) | Equity or Other Rights Have Not (#) | Equity Incentive Plan Awards: Payout Value Unearned | |||||||||||||||||||||||||||
Doyle R. Simons |
| 06/17/2013 02/13/2014 |
|
| 21,029 — |
|
| 63,089 199,578 |
|
| 29.0050 30.2650 |
|
| 06/17/2023 02/13/2024 |
|
| 16,161 43,902 |
|
| 580,018 1,575,643 |
|
| 54,973 97,854 |
|
| 1,972,981 3,511,980 |
| |||||||||
Patricia M. Bedient | 02/15/2006 | 18,581 | — | 26.2690 | 02/15/2016 | — | — | — | — | |||||||||||||||||||||||||||
02/14/2007 | 25,217 | — | 30.3890 | 02/14/2017 | — | — | — | — | ||||||||||||||||||||||||||||
04/19/2007 | 53,087 | — | 28.9310 | 04/19/2017 | — | — | — | — | ||||||||||||||||||||||||||||
02/20/2008 | 67,683 | — | 23.5570 | 02/20/2018 | — | — | — | — | ||||||||||||||||||||||||||||
02/18/2009 | 63,166 | — | 9.5280 | 02/18/2019 | — | — | — | — | ||||||||||||||||||||||||||||
02/18/2009(3 | ) | 126,332 | — | 9.5280 | 02/18/2019 | — | — | — | — | |||||||||||||||||||||||||||
02/10/2010 | 102,648 | — | 14.8030 | 02/10/2020 | — | — | — | — | ||||||||||||||||||||||||||||
02/10/2010 | 72,643 | — | 14.8030 | 02/10/2020 | — | — | — | — | ||||||||||||||||||||||||||||
02/09/2011 | 30,000 | 10,000 | 24.1600 | 02/09/2021 | 3,000 | 107,670 | 7,560 | 271,328 | ||||||||||||||||||||||||||||
02/08/2012 | 20,875 | 20,875 | 20.4150 | 02/08/2022 | 6,263 | 224,779 | 17,910 | 642,790 | ||||||||||||||||||||||||||||
02/13/2013 | 10,896 | 32,691 | 30.5400 | 02/13/2023 | 9,807 | 351,973 | 39,228 | 1,407,893 | ||||||||||||||||||||||||||||
02/12/2014 | — | 59,987 | 30.1600 | 02/12/2024 | 13,198 | 473,676 | 29,418 | 1,055,812 | ||||||||||||||||||||||||||||
Adrian M. Blocker | 02/12/2014 | — | 28,486 | 30.1600 | 02/12/2024 | 6,267 | 224,923 | 13,970 | 501,383 | |||||||||||||||||||||||||||
Srinivasan Chandrasekaran | 02/16/2005 | 7,433 | — | 23.9220 | 02/16/2015 | — | — | — | — | |||||||||||||||||||||||||||
02/15/2006 | 8,455 | — | 26.2690 | 02/15/2016 | — | — | — | — | ||||||||||||||||||||||||||||
02/14/2007 | 37,161 | — | 30.3890 | 02/14/2017 | — | — | — | — | ||||||||||||||||||||||||||||
02/20/2008 | 51,758 | — | 23.5570 | 02/20/2018 | — | — | — | — | ||||||||||||||||||||||||||||
02/18/2009 | 34,502 | — | 9.5280 | 02/18/2019 | — | — | — | — | ||||||||||||||||||||||||||||
02/18/2009(3 | ) | 69,005 | — | 9.5280 | 02/18/2019 | — | — | — | — | |||||||||||||||||||||||||||
02/10/2010 | 41,404 | — | 14.8030 | 02/10/2020 | — | — | — | — | ||||||||||||||||||||||||||||
02/10/2010 | 62,106 | — | 14.8030 | 02/10/2020 | — | — | — | — | ||||||||||||||||||||||||||||
02/09/2011 | 18,750 | 6,250 | 24.1600 | 02/09/2021 | 1,875 | 67,294 | 4,725 | 169,580 | ||||||||||||||||||||||||||||
02/08/2012 | 16,875 | 16,875 | 20.4150 | 02/08/2022 | 5,063 | 181,711 | 14,478 | 519,615 | ||||||||||||||||||||||||||||
02/13/2013 | 7,071 | 21,213 | 30.5400 | 02/13/2023 | 6,364 | 228,404 | 25,456 | 913,616 | ||||||||||||||||||||||||||||
02/12/2014 | — | 49,964 | 30.1600 | 02/12/2024 | 10,993 | 394,539 | 24,503 | 879,413 | ||||||||||||||||||||||||||||
Rhonda D. Hunter | 02/16/2005 | 1,859 | — | 23.9220 | 02/16/2015 | — | — | — | — | |||||||||||||||||||||||||||
02/15/2006 | 1,859 | — | 26.2690 | 02/15/2016 | — | — | — | — | ||||||||||||||||||||||||||||
02/14/2007 | 2,190 | — | 30.3890 | 02/14/2017 | — | — | — | — | ||||||||||||||||||||||||||||
02/20/2008 | 3,318 | — | 23.5570 | 02/20/2018 | — | — | — | — | ||||||||||||||||||||||||||||
02/09/2011 | 10,574 | 3,525 | 24.1600 | 02/09/2021 | 1,058 | 37,972 | 1,333 | 47,841 | ||||||||||||||||||||||||||||
02/08/2012 | 6,582 | 6,583 | 20.4150 | 02/08/2022 | 1,975 | 70,883 | 2,824 | 101,353 | ||||||||||||||||||||||||||||
02/13/2013 | 3,478 | 10,437 | 30.5400 | 02/13/2023 | 3,132 | 112,407 | 6,262 | 224,743 | ||||||||||||||||||||||||||||
02/12/2014 | — | 31,124 | 30.1600 | 02/12/2024 | 6,848 | 245,775 | 15,263 | 547,789 | ||||||||||||||||||||||||||||
Thomas F. Gideon | 02/15/2006 | 41,409 | — | 26.2690 | 02/15/2016 | — | — | — | — | |||||||||||||||||||||||||||
02/14/2007 | 50,433 | — | 30.3890 | 02/14/2017 | — | — | — | — | ||||||||||||||||||||||||||||
02/20/2008 | 13,272 | — | 23.5570 | 02/20/2018 | — | — | — | — | ||||||||||||||||||||||||||||
02/20/2008 | 24,369 | — | 23.5570 | 02/20/2018 | — | — | — | — | ||||||||||||||||||||||||||||
02/09/2011 | 32,846 | 10,949 | 24.1600 | 02/09/2021 | 3,285 | 117,899 | 8,278 | 297,097 | ||||||||||||||||||||||||||||
02/08/2012 | 22,500 | 22,500 | 20.4150 | 02/08/2022 | 3,375 | 121,129 | 19,305 | 692,856 | ||||||||||||||||||||||||||||
02/13/2013 | 11,496 | 34,489 | 30.5400 | 02/13/2023 | 10,347 | 371,354 | 41,386 | 1,485,344 | ||||||||||||||||||||||||||||
Sandy D McDade | 02/14/2007 | 43,797 | — | 30.3890 | 02/14/2017 | — | — | — | — | |||||||||||||||||||||||||||
06/13/2007 | 13,272 | — | 30.5890 | 06/13/2017 | — | — | — | — | ||||||||||||||||||||||||||||
02/09/2011 | 5,875 | 5,875 | 24.1600 | 02/09/2021 | 1,763 | 63,274 | 4,441 | 159,387 | ||||||||||||||||||||||||||||
02/08/2012 | 5,688 | 11,375 | 20.4150 | 02/08/2022 | 1,706 | 61,228 | 9,759 | 350,251 | ||||||||||||||||||||||||||||
02/13/2013 | 5,798 | 17,395 | 30.5400 | 02/13/2023 | 5,219 | 187,310 | 20,874 | 749,168 | ||||||||||||||||||||||||||||
02/12/2014 | — | 15,957 | 30.1600 | 02/12/2024 | 3,511 | 126,010 | 7,826 | 280,875 |
Note: Grants awarded in 20122014 are also reported in the Summary Compensation Table and the Grants of Plan BasedPlan-Based Awards Table.table.
(1) | For a better understanding of the equity awards included in this table, we have provided the grant date. |
(2) | With the exception of |
(3) | Retention options granted on February 18, 2009 to |
(4) | Stock awards granted |
(5) | Values for |
OPTION EXERCISES AND STOCK VESTED IN FISCAL 20122014
Name | Option Awards | Stock Awards | ||||||||||||||
Number of (#) | Value Realized ($) | Number of (#) | Value Realized ($) | |||||||||||||
D. S. Fulton | 0 | 0 | 82,503 | 1,682,703 | ||||||||||||
P. M. Bedient | 0 | 0 | 21,936 | 447,389 | ||||||||||||
L.B. Burrows | 0 | 0 | 4,138 | 91,707 | ||||||||||||
T. F. Gideon | 20,000 | 222,908 | 23,522 | 479,583 | ||||||||||||
P.M. Orser | 0 | 0 | 2,809 | 57,345 |
Name | Option Awards | Stock Awards | ||||||||||||||
Number of (#) | Value Realized ($) | Number of (#) | Value Realized ($) | |||||||||||||
Doyle R. Simons | n/a | n/a | 5,387 | $ | 166,243 | |||||||||||
Patricia M. Bedient | 29,199 | $ | 308,868 | 30,212 | $ | 904,419 | ||||||||||
Adrian M. Blocker | n/a | n/a | n/a | n/a | ||||||||||||
Srinivasan Chandrasekaran | 4,446 | $ | 30,385 | 22,761 | $ | 681,175 | ||||||||||
Rhonda D. Hunter | 13,097 | $ | 243,094 | 6,456 | $ | 193,393 | ||||||||||
Thomas F. Gideon | 84,997 | $ | 1,215,867 | 32,631 | $ | 976,812 | ||||||||||
Sandy D. McDade | 15,427 | $ | 233,144 | 16,711 | $ | 500,247 |
Name | Plan Name | Years of (#) (1) | Present ($) (2) | Years of (#) (3) | Present Value of Accumulated Benefit earned under Formula B ($) (4) | �� | Total Years of Credited Service (#) | Total Present Value of Accumulated Benefit ($) | Payments During Last Fiscal Year ($) | |||||||||||||||||||||
| Pension Plan – Title B Supplemental |
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| Pension Plan – Title B Supplemental |
| 7
7 |
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| Pension Plan – Title B Supplemental |
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| Pension Plan – Title B Supplemental | 15 15 | 721,790 1,892,930 | 5 5 | 175,571 457,992 | 20 20 | 897,361 2,350,922 | 0 0 | ||||||||||||||||||||||
Rhonda D. Hunter | Pension Plan – Title B Supplemental | 23 23 | 835,622 744,610 | 5 5 | 109,431 96,388 | 28 28 | 945,053 840,998 | 0 0 | ||||||||||||||||||||||
Thomas F. Gideon (5) | Pension Plan – Title B Supplemental |
| 32
32 |
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| 36 36 | 97,513 4,220,239 | 1,544,293 703,373 | |||||||||||||||
Sandy D. McDade (6) | Pension Plan – Title B Supplemental | 30 30 | 0 3,294,400 | 5 5 | 111,086 298,320 |
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| 35
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(1) | Number of years of credited service as of December 31, 2009 rounded to the nearest whole year of credited service. These years of service are used for calculating Formula A accrued benefit only. |
(2) | Actuarial present value of accumulated benefit computed as of the same pension plan measurement date used for financial reporting purposes under Financial Accounting Standards Board Accounting Standards Codification Topic 715 with respect to the Company’s audited financial statements for fiscal year |
Number of years of credited service computed beginning on January |
(4) | Actuarial present value of accumulated benefit computed as of the same pension plan measurement date used for financial reporting purposes under Financial Accounting Standards Board Accounting Standards Codification Topic 715 with respect to the Company’s audited financial statements for fiscal year |
(5) | Mr. Gideon’s separation from service was effective February 14, 2014. The benefits shown here are valued as of the first of the month following separation from service, or March 2014. He received a portion of the benefit as a one-time lump sum payment and will receive a portion of the benefit as annual installments payable over 7 years. He received the one-time payment and the first installment on May 1, 2014. He began receiving benefits from the Supplemental Retirement Plan on September 1, 2014. |
(6) | Mr. McDade’s separation from service was effective July 10, 2014. The benefits shown here are valued as of the first of the month following retirement, or August 2014. He received a portion of the benefit as a one-time lump sum payment and will receive a portion of the benefit as annual installments payable over 7 years. He received the one-time payment and the first installment on September 1, 2014. He began receiving benefits from the Supplemental Retirement Plan on February 1, 2015. |
The Weyerhaeuser Pension Plan (the “Pension Plan”) is a noncontributory, defined benefit pension plan. Title B, for salaried employees, provides normal retirement at age 65 and early65. Early retirement may be elected by any participant who has reached age 55 and has at least 10 years of vesting service. Each of the named executive officersOf our NEOs only Ms. Bedient is eligible for early retirement. Mr. Simons who joined the Company in 2013 and is under age 55, Mr. Blocker who joined the Company in 2013, and Ms. Hunter who is under age 55, are not eligible for early retirement. Mr. Simons and Mr. Blocker are not yet vested in benefits from the Pension Plan, but will become vested once they have 5 years of vesting service. Messrs. Chandrasekaran, Gideon and McDade separated from service with the Company and were eligible for Pension Plan benefits. Title B of the Pension Plan consists of two separate Formulas. Service accrued prior to January 1, 2010 was earned under Formula A and service accrued on and after January 1, 2010 is earned under Formula B. The annual retirement
benefit payable upon normal retirement under Formula A is equal to (i) 1.1% of the participant’s average annual salary for the highest five consecutive years during the 10 calendar years before retirement, multiplied by the years of credited service accrued through December 31, 2009, plus (ii) 0.45% of such highest average annual salary in excess of the participant’s Social Security integration levelIntegration Level (as such term is defined in the Pension Plan), multiplied by the number of years of credited service accrued through December 31, 2009. The annual retirement benefit payable upon normal
retirement under Formula B is equal to (i) 0.8% of the participant’s average annual salary for the highest five consecutive years during the 10 calendar years before retirement, multiplied by the years of credited service accrued on orand after January 1, 2010, plus (ii) 0.3% of such highest average annual salary in excess of the participant’s Social Security integration levelIntegration Level (as such term is defined in the Pension Plan), multiplied by the number of years of credited service accrued on and after January 1, 2010. The benefit payable upon early retirement under Formula A is a percentage of
the benefit that would be payable upon normal retirement and ranges from 72% at age 55 to 100% at age 62. The benefit payable upon early retirement under Formula B is a percentage of the benefit that would be payable upon normal retirement and ranges from approximately 47% at age 55 to 100% at age 65. The Pension Plan is closed to new hires and rehires effective January 1, 2014. A participant in a defined benefit pension plan
generally is limited under the Internal Revenue Code to an annual benefit at Social Security normal retirement age of the lesser of (i) $200,000$210,000 (in 2012,2014), but subject to adjustment) or (ii) 100% of the participant’s average annual compensation during the consecutive three-year period in which he or she received the highest compensation. Further reduction of this limitation may be required for retirement prior to the Social Security normal retirement age. The compensation used in determining benefits under this Pension Plan is limited by Internal Revenue Code Section 401(a)(17) ($250,000260,000 in 2012,2014, but subject to adjustment). Supplemental Retirement Plan benefits are paid from the general funds of the Company and are determined by applying the formula under the Pension Plan – Title B – for salaried employees but including benefits and compensation that exceed the Internal Revenue Code limitations described above. The Supplemental Retirement Plan is also closed to new hires and rehires effective January 1, 2014. Employees hired or rehired on or after January 1, 2014 are eligible for a non-elective employer contribution in the defined contribution 401(k) plan in lieu of participation in the Pension Plan. Certain highly-paid employees hired on or after January 1, 2014 are eligible to participate in the Supplemental DC Plan. The Supplemental DC Plan provides for inclusion of eligible bonuses and deferred compensation in the definition of pay and provides for non-elective employer contributions that would otherwise be provided under the qualified defined contribution 401(k) plan but are not due to compensation limits imposed by the Internal Revenue Code.
NONQUALIFIED DEFERRED COMPENSATION
Name | Executive Contributions in Last FY ($) (1) | Registrant Contributions in Last FY ($) (2) | Aggregate Earnings in Last FY ($) (3) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($) (4) | |||||||||||||||
D. S. Fulton | 0 | 0 | 740,244 | 0 | 2,137,777 | |||||||||||||||
P. M. Bedient | 400,000 | 60,000 | 700,809 | 0 | 2,381,729 | |||||||||||||||
L.B. Burrows | 0 | 0 | 106,416 | 0 | 3,607,185 | |||||||||||||||
T. F. Gideon | 0 | 0 | 154,192 | 0 | 468,890 | |||||||||||||||
P.M. Orser | 0 | 0 | 46,107 | 0 | 1,562,870 |
Name | Executive Contributions in Last FY ($) (1) | Registrant Contributions in Last FY ($) (2) | Aggregate Earnings in Last FY ($) (3) | Aggregate Withdrawals/ Distributions ($) | Aggregate ($) (4) | |||||||||||||||
Doyle R. Simons | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||
Patricia M. Bedient | $ | 0 | $ | 0 | $ | 433,686 | $ | 0 | $ | 3,173,642 | ||||||||||
Adrian M. Blocker | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||
Srinivasan Chandrasekaran | $ | 388,500 | $ | 16,560 | $ | 107,032 | $ | 0 | $ | 1,315,457 | ||||||||||
Rhonda D. Hunter | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||
Thomas F. Gideon | $ | 0 | $ | 0 | $ | 16,240 | $ | 0 | $ | 531,494 | ||||||||||
Sandy D. McDade | $ | 0 | $ | 0 | $ | 29,332 | $ | 0 | $ | 991,087 |
(1) | The amount deferred and reported in this column is included in the Summary Compensation Table as salary earned and paid in |
(2) | Employer paid premium on amounts deferred by the executive into the common stock equivalents account in the deferral plan, which are included in “All Other Compensation” in the Summary Compensation Table. |
(3) | Fiscal |
(4) | Amounts deferred and reported in this column include amounts that were reported as compensation in the Company’s Summary Compensation Table for previous years, interest earned on amounts deferred into the fixed-interest account of the deferral plan, any premium for amounts deferred into the common stock equivalents account in the deferral plan, and appreciation or depreciation in the price of common stock equivalent units, plus dividend equivalents for amounts deferred into the common stock equivalents account in the deferral plan. |
Executive officers in the United States are eligible for a deferral program. Thedeferred compensation plan. This deferral plan provides the opportunity to defer base salary and cash incentives for payment at a future date. The executive may defer between 10% and 50% of his or her base salary and up to 100% of his or her cash bonus. The interest earned for deferred compensation is determined each year by the Compensation Committee. The current interest rate formula is the average of the 90-day Treasury bill rate over the prior year, plus 3%.
Under the deferraldeferred compensation plan, executive officers can choose to defer all or a portion of any cash incentives into a deferral account denominated in Weyerhaeuser common stock equivalent units, with a 15% premium applied if payment is delayed for at least five years. The amount designated to be deferred in the form of common stock equivalent units and any premium is divided by the median price per share of Company stock for the last 11 trading days of January to determine the number of deferred stock equivalent units credited to executive’s account. Deferred stock units earn the equivalent of dividends, which are credited as additional deferred stock units. The value of the deferred account grows or declines based on the performance of Weyerhaeuser stock (plus dividends). The purpose of
the program is to further
align executive interests with those of shareholders by providing an incentive linked to the performance of Weyerhaeuser stock.
For deferrals in years prior to 2005, deferred amounts are paid in the year specified or upon the event specified by the executive. Beginning in 2005, amounts deferred may be paid to the executive beginning the year after the executive’s separation from service, up to five years following his or her separation from service. Payments may be made in a lump sum or up to 20 equal annual payments or for a maximum of five annual payments if the executive left the Company for reasons other than death, disability or retirement. For deferrals made prior to 2011, payments from the stock equivalents accounts are in cash, and are determined by multiplying the number of common stock equivalent units in the executive’s account by the median price per share of Company stock for the last 11 trading days of January of the payment year. Beginning in 2011, payments from the stock equivalents accounts are in cash, and are determined by multiplying the number of common stock equivalent units in the executive’s account by the closing price per share of Company stock on the transfer. No withdrawals or other distributions are permitted under the terms of the deferral plan before the executive’s specified payment date.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
CHANGE IN CONTROL
The Company has agreements with each of its executive officers providing for specified payments and other benefits if, within the period from the effective date of a change in control and 24 calendar months following the effective date of a change in control of the Company, the officer’sexecutive’s employment is terminated by the Company or its successor for reasons other than cause, mandatory retirement, early retirement, disability or death. Cause is defined as a participant’s:
Ÿ | willful and continued failure to perform substantially the officer’s duties after the Company delivers to the participant written demand for substantial performance specifically identifying the manner in which the officer has not substantially performed his or her duties; |
Ÿ | conviction of a felony; or |
Ÿ | willfully engaging in illegal conduct or gross misconduct that is materially and demonstrably injurious to the Company. |
Mandatory retirement is defined as age 65. Disability is defined byin the Weyerhaeuser Pension Plan, or in any successor to such plan.
These payments and benefits also would be paid if the officerexecutive terminates his or her employment for “Good Reason.” The officerexecutive would be considered to have left for Good Reason if there has been:
Ÿ | a material reduction in the officer’s position, title or reporting responsibilities existing prior to the change in control; |
Ÿ | a requirement that the officer be based in a location that is at least 50 miles farther from the Company’s headquarters than the officer’s primary residence was located immediately prior to the change in control; |
Ÿ | a material reduction by the Company in the officer’s base salary as of the effective date; |
Ÿ | a material reduction in the officer’s benefits unless the overall benefits provided are substantially consistent with the average level of benefits of the other officers holding similar positions; or |
Ÿ | a material reduction in the officer’s level of participation in any of the Company’s short- or long-term incentive compensation plans. |
If an officerexecutive is terminated without cause or leaves for Good Reason during the period described above following a change in control, the officer will receive:
Ÿ | an amount equal to three times the highest rate of the |
Ÿ | three times the officer’s target annual bonus established for the bonus plan year in which the |
Ÿ | an amount equal to the |
Ÿ | the |
Ÿ |
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Ÿ | full vesting of the |
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In addition, in accordance with the terms of the Company’s long-term incentive plans, following a change in control, outstanding stock options and restricted stockRSUs held by executive officers would vest and become exercisable, unearned performance sharesPSUs would be deemed to have been earned at target, and earned performance sharesPSUs would vest and be released only if the officer were terminated within the period beginning as of the change in control and ending 24 months after the change in control.
SEVERANCE
Agreements with each of the Company’s executive officers provide for severance benefits if the executive’s employment is terminated by the Company when there is no change in control unless the termination is for cause, or is the result of the Company’s mandatory retirement policy, death, disability or voluntary
termination of employment by the executive.death. The severance benefit payable is an amount equal to:
Ÿ | one and one-half times the highest base salary rate paid to the executive prior to termination; |
Ÿ | one and one-half times the target annual bonus established for the bonus plan year in which the termination occurs; |
Ÿ | the amount of the executive’s unpaid base salary and accrued vacation pay through the date of the termination; |
Ÿ | the |
Ÿ | a payment of |
The severance benefit payable to Mr. FultonSimons is the same as described above except that the amount paid for base salary is two times his highest base salary rate and the amount for target bonus is two times his target annual bonus.
POTENTIAL PAYMENT AMOUNTS
The following tables describe potential payments to the named executive officersNEOs that could be made upon termination or a change in control. All amounts assume the named executive officerNEOs terminated employment as of December 31, 2012.2014, other than Mr. Gideon who separated from service with the Company on February 14, 2014 and Mr. McDade who separated from service with the Company on July 10, 2014. Messrs. Gideon and McDade, like all other executive officers, had severance agreements with the Company. Upon their respective separation from service in 2014, each executive received payments in accordance with the terms of his respective agreement. Those amounts are set forth in the table below and in the Summary Compensation Table. The forms of the severance agreements for all NEOs are included as exhibits to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 24, 2014.
Executive Benefits and Payments Upon Termination of D. S. Fulton | Early Retirement | Disability | Severance (1) | For Cause Termination | Change in Control (CIC) Involuntary or Good Reason Termination | Death | ||||||||||||||||||
Executive Benefits and Payments Upon Termination of Doyle R. Simons | Early Retirement | Disability | Severance (1) | For Cause Termination | Change in Control (CIC) Involuntary or Good Reason Termination | Death | ||||||||||||||||||
Compensation: | ||||||||||||||||||||||||
Salary (including payout of vacation) | $207,692 | $207,692 | $2,007,692 | $207,692 | $2,907,692 | $207,692 | n/a | $0 | $1,900,000 | $0 | $2,850,000 | $0 | ||||||||||||
Annual Incentive Plan (AIP) | $855,000(a) | $855,000(a) | $3,105,000(b) | $0 | $4,230,000(d) | $855,000(a) | n/a | $1,712,000(a) | $4,182,000(b) | $0 | $5,417,000(d) | $1,712,000(a) | ||||||||||||
Stock Options (2) | $5,912,348(e) | $11,980,811(g) | $11,781,300(i) | $0 | $11,980,811(l) | $11,980,811(s) | n/a | $1,556,994(h) | $425,446(k) | $0 | $1,556,994(l) | $1,556,994(s) | ||||||||||||
Restricted Stock (3) | $748,991(m) | $4,368,908(o) | $1,612,162(p) | $0 | $5,126,391(l) | $4,368,908(t) | n/a | $2,233,231(o) | $608,930(p) | $0 | $2,233,231(l) | $2,233,231(t) | ||||||||||||
Performance Share Units (4) | $2,746,359(q) | $7,423,197(r) | $2,746,359(q) | $0 | $7,423,197(l) | $7,423,197(r) | n/a | $5,089,213(r) | $1,819,866(u) | $0 | $5,089,213(l) | $5,089,213(r) | ||||||||||||
Nonqualified Deferred Compensation (5) | $0 | $0 | $0 | $0 | $0 | $0 | n/a | $0 | $0 | $0 | $0 | $0 | ||||||||||||
Gross Up Payment (6) | $0 | $0 | $0 | $0 | $0 | $0 | n/a | $0 | $0 | $0 | $0 | $0 | ||||||||||||
Benefits and Perquisites: | ||||||||||||||||||||||||
Increase to Pension (7) | $0 | $0 | $0 | $0 | $479,787 | $0 | n/a | $0 | $0 | $0 | $349,342 | $0 | ||||||||||||
Life and Health Care Insurance (8) | $0 | $0 | $15,736 | $0 | $118,017 | $0 | n/a | $0 | $17,277 | $0 | $129,199 | $0 | ||||||||||||
Life Insurance Proceeds (9) | $0 | $0 | $0 | $0 | $0 | $500,000 | n/a | $0 | $0 | $0 | $0 | $500,000 | ||||||||||||
Outplacement Services (10) | $0 | $0 | $20,000 | $0 | $20,000 | $0 | n/a | $0 | $20,000 | $0 | $20,000 | $0 |
* | Mr. |
Executive Benefits and Payments Upon Termination of P. M. Bedient | Early Retirement | Disability | Severance (1) | For Cause Termination | Change in Control (CIC) Involuntary or Good Reason Termination | Death | ||||||||||||||||||
Executive Benefits and Payments Upon Termination of Patricia M. Bedient | Early Retirement | Disability | Severance (1) | For Cause Termination | Change in Control (CIC) Involuntary or Good Reason Termination | Death | ||||||||||||||||||
Compensation: | ||||||||||||||||||||||||
Salary (including payout of vacation) | $0 | $0 | $900,000 | $0 | $1,800,000 | $0 | $0 | $0 | $915,000 | $0 | $1,830,000 | $0 | ||||||||||||
Annual Incentive Plan (AIP) | $575,000(a) | $575,000(a) | $1,340,000(c) | $0 | $2,105,000(d) | $575,000(a) | $811,000(a) | $811,000(a) | $1,588,750(c) | $0 | $2,366,500(d) | $811,000(a) | ||||||||||||
Stock Options (2) | $288,867(f) | $4,159,579(h) | $3,130,803(j) | $0 | $4,159,579(l) | $4,159,579(s) | $0(f) | $958,963(g) | $423,051(j) | $0 | $958,963(l) | $958,963(s) | ||||||||||||
Restricted Stock (3) | $0(n) | $1,086,482(o) | $409,640(p) | $0 | $1,231,104(l) | $1,086,482(t) | $0(n) | $1,227,458(o) | $489,779(p) | $0 | $1,227,458(l) | $1,227,458(t) | ||||||||||||
Performance Share Units (4) | $0(q) | $1,763,355(r) | $0(q) | $0 | $1,763,355(l) | $1,763,355(r) | $0(q) | $3,144,358(r) | $889,859(u) | $0 | $3,144,358(l) | $3,144,358(r) | ||||||||||||
Nonqualified Deferred Compensation (5) | $0 | $0 | $0 | $0 | $75,206 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | ||||||||||||
Gross Up Payment (6) | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | ||||||||||||
Benefits and Perquisites: | ||||||||||||||||||||||||
Increase to Pension (7) | $0 | $0 | $0 | $0 | $442,663 | $0 | $0 | $0 | $0 | $0 | $609,127 | $0 | ||||||||||||
Life and Health Care Insurance (8) | $0 | $0 | $ | $0 | $ | $0 | $0 | $0 | $17,227 | $0 | $129,199 | $0 | ||||||||||||
Life Insurance Proceeds (9) | $0 | $0 | $0 | $0 | $0 | $500,000 | $0 | $0 | $0 | $0 | $0 | $500,000 | ||||||||||||
Outplacement Services (10) | $0 | $0 | $20,000 | $0 | $20,000 | $0 | $0 | $0 | $20,000 | $0 | $20,000 | $0D | ||||||||||||
* Ms. Bedient is eligible for early retirement, but is not eligible for normal retirement based on her age.
|
* Ms. Bedient is eligible for early retirement, but is not eligible for normal retirement based on her age.
| |||||||||||||||||||||||
Executive Benefits and Payments Upon Termination of Adrian M. Blocker | Early Retirement | Disability | Severance (1) | For Cause Termination | Change in Control (CIC) Involuntary or Good Reason Termination | Death | ||||||||||||||||||
Compensation: | ||||||||||||||||||||||||
Salary (including payout of vacation) | n/a | $0 | $675,000 | $0 | $1,350,000 | $0 | ||||||||||||||||||
Annual Incentive Plan (AIP) | n/a | $609,000(a) | $1,047,750(c) | $0 | $1,486,500(d) | $609,000(a) | ||||||||||||||||||
Stock Options (2) | n/a | $163,225(h) | $40,806(k) | $0 | $163,225(l) | $163,225(s) | ||||||||||||||||||
Restricted Stock (3) | n/a | $232,077(o) | $58,019(p) | $0 | $232,077(l) | $232,077(t) | ||||||||||||||||||
Performance Share Units (4) | n/a | $413,887(r) | $103,472(u) | $0 | $413,887(l) | $413,887(r) | ||||||||||||||||||
Nonqualified Deferred Compensation (5) | n/a | $0 | $0 | $0 | $0 | $0 | ||||||||||||||||||
Gross Up Payment (6) | n/a | $0 | $0 | $0 | $0 | $0 | ||||||||||||||||||
Benefits and Perquisites: | ||||||||||||||||||||||||
Increase to Pension (7) | n/a | $0 | $0 | $0 | $207,960 | $0 | ||||||||||||||||||
Life and Health Care Insurance (8) | n/a | $0 | $13,765 | $0 | $103,235 | $0 | ||||||||||||||||||
Life Insurance Proceeds (9) | n/a | $0 | $0 | $0 | $0 | $500,000 | ||||||||||||||||||
Outplacement Services (10) | n/a | $0 | $20,000 | $0 | $20,000 | $0 | ||||||||||||||||||
* Mr. Blocker is not eligible for early retirement or normal retirement based on his age and service criteria.
|
* Mr. Blocker is not eligible for early retirement or normal retirement based on his age and service criteria.
|
Executive Benefits and Payments Upon Termination of Srinivasan Chandrasekaran Compensation: Salary (including payout of vacation) Annual Incentive Plan (AIP) Stock Options (2) Restricted Stock (3) Performance Share Units (4) Nonqualified Deferred Compensation (5) Gross Up Payment (6) Benefits and Perquisites: Increase to Pension (7) Life and Health Care Insurance (8) Life Insurance Proceeds (9) Outplacement Services (10) * Mr. Chandrasekaran is eligible for normal retirement based on his age. Executive Benefits and Payments Upon Termination of Rhonda D. Hunter Compensation: Salary (including payout of vacation) Annual Incentive Plan (AIP) Stock Options (2) Restricted Stock (3) Performance Share Units (4) Nonqualified Deferred Compensation (5) Gross Up Payment (6) Benefits and Perquisites: Increase to Pension (7) Life and Health Care Insurance (8) Life Insurance Proceeds (9) Outplacement Services (10) * Ms. Hunter is not eligible for early retirement or normal retirement based on her age and service criteria. Retirement Disability Severance (1) For Cause
Termination Change in
Control (CIC)
Involuntary
or Good
Reason
Termination Death $43,846 $43,846 $898,846 $43,846 $1,753,846 $43,846 $751,000(a) $751,000(a) $1,477,750(c) $0 $2,204,500(d) $751,000(a) $710,379(e) $734,236(g) $710,379(i) $0 $734,236(l) $734,236(s) $789,792(m) $922,615(o) $789,792(m) $0 $922,615(l) $922,615(t) $2,244,576(q) $2,305,069(r) $2,244,576(q) $0 $2,305,069(l) $2,305,069(r) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $356,260 $0 $0 $0 $17,227 $0 $129,199 $0 $0 $0 $0 $0 $0 $500,000 $0 $0 $20,000 $0 $20,000 $0 Early
Retirement Disability Severance (1) For Cause
Termination Change in
Control (CIC)
Involuntary
or Good
Reason
Termination Death $9,615 $9,615 $759,615 $9,615 $1,509,615 $9,615 n/a $578,000(a) $1,140,500(c) $0 $1,703,000(d) $578,000(a) n/a $377,399(g) $155,482(k) $0 $377,399(l) $377,399(s) n/a $492,587(o) $184,349(p) $0 $492,587(l) $492,587(t) n/a $818,739(r) $323,176(u) $0 $818,739(l) $818,739(r) n/a $0 $0 $0 $0 $0 n/a $0 $0 $0 $0 $0 n/a $0 $0 $0 929,082 $0 n/a $0 $13,765 $0 $103,235 $0 n/a $0 $0 $0 $0 $500,000 n/a $0 $20,000 $0 $20,000 $0
Executive Benefits and Payments Upon Termination of Thomas F. Gideon | ||
Compensation: | ||
Salary (including payout of vacation) | $222,600 | |
Annual Incentive Plan (AIP) | $0(a) | |
Stock Options (2) | $661,135(e) | |
Restricted Stock (3) | $657,910(m) | |
Performance Share Units (4) | $2,426,092(q) | |
Nonqualified Deferred Compensation (5) | $0 | |
Gross Up Payment (6) | $0 | |
Benefits and Perquisites: | ||
Increase to Pension (7) | $0 | |
Life and Health Care Insurance (8) | $17,227 | |
Life Insurance Proceeds (9) | $0 | |
Outplacement Services (10) | $0 |
Executive Benefits and Payments Upon Termination of L.B. Burrows | Early Retirement | Disability | Severance (1) | For Cause Termination | Change in Control (CIC) Involuntary or Good Reason Termination | Death | ||||||
Compensation: | ||||||||||||
Salary (including payout of vacation) | $10,346 | $10,346 | $817,346 | $10,346 | $1,624,346 | $10,346 | ||||||
Annual Incentive Plan | $750,000(a) | $750,000(a) | $1,435,950(c) | $0 | $2,121,900(d) | $750,000(a) | ||||||
Stock Options (2) | $436,941(f) | $1,579,934(g) | $725,651(j) | $0 | $1,579,934(l) | $1,579,934(s) | ||||||
Restricted Stock (3) | $0(n) | $692,718(o) | $211,233(p) | $0 | $692,718(l) | $692,718(t) | ||||||
Performance Share Units (4) | $0(q) | $1,749,505(r) | $0(q) | $0 | $1,749,505(l) | $1,749,505(r) | ||||||
Nonqualified Deferred Compensation (5) | $0 | $0 | $0 | $0 | $0 | $0 | ||||||
Gross Up Payment (6) | $0 | $0 | $0 | $0 | $0 | $0 | ||||||
Benefits and Perquisites: | ||||||||||||
Increase to Pension (7) | $0 | $0 | $0 | $0 | $501,380 | $0 | ||||||
Life and Health Care Insurance (8) | $0 | $0 | $13,596 | $0 | $101,971 | $0 | ||||||
Life Insurance Proceeds (9) | $0 | $0 | $0 | $0 | $0 | $500,000 | ||||||
Outplacement Services (10) | $0 | $0 | $20,000 | $0 | $20,000 | $0 |
* | Mr. |
Executive Benefits and Payments Upon Termination of T. F. Gideon Compensation: Salary (including payout of vacation) Annual Incentive Plan (AIP) Stock Options (2) Restricted Stock (3) Performance Share Units (4) Nonqualified Deferred Compensation (5) Gross Up Payment (6) Benefits and Perquisites: Increase to Pension (7) Life and Health Care Insurance (8) Life Insurance Proceeds (9) Outplacement Services (10) Early
Retirement Disability Severance (1) For Cause
Termination Change in
Control (CIC)
Involuntary
or Good
Reason
Termination Death $80,769 $80,769 $980,769 $80,769 $1,880,769 $80,769 $405,000(a) $405,000(a) $1,170,000(c) $0 $1,935,000(d) $405,000(a) $400,522(f) $5,620,052(g) $4,320,364(j) $0 $5,620,052(l) $5,620,052(s) $0(n) $1,190,084(o) $450,283(p) $0 $1,390,611(I) $1,190,084(t) $0(q) $1,915,788(r) $0(q) $0 $1,915,788(l) $1,915,788(r) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $553,800 $0 $0 $0 $15,735 $0 $118,017 $0 $0 $0 $0 $0 $0 $500,000 $0 $0 $20,000 $0 $20,000 $0
Executive Benefits and Payments Upon Termination of Sandy M. McDade | Severance* | |
Compensation: | ||
Salary (including payout of vacation) | $376,964 | |
Annual Incentive Plan (AIP) | $260,000(a) | |
Stock Options (2) | $429,439(e) | |
Restricted Stock (3) | $466,304(m) | |
Performance Share Units (4) | $1,467,081(q) | |
Nonqualified Deferred Compensation (5) | $0 | |
Gross Up Payment (6) | $0 | |
Benefits and Perquisites: | ||
Increase to Pension (7) | $0 | |
Life and Health Care Insurance (8) | $17,227 | |
Life Insurance Proceeds (9) | $0 | |
Outplacement Services (10) | $0 |
* | Mr. |
Executive Benefits and Payments Upon Termination of P.M. Orser | Early Retirement | Disability | Severance (1) | For Cause Termination | Change in Control (CIC) Involuntary or Good Reason Termination | Death | ||||||
Compensation: | ||||||||||||
Salary (including payout of vacation) | $0 | $0 | $780,000 | $0 | $1,560,000 | $0 | ||||||
Annual Incentive Plan (AIP) | $509,449(a) | $509,449(a) | $1,172,449(c) | $0 | $1,835,449(d) | $509,449(a) | ||||||
Stock Options (2) | $76,461(f) | $667,532(g) | $281,337(j) | $0 | $667,532(l) | $667,532(s) | ||||||
Restricted Stock (3) | $0(n) | $583,413(o) | $165,912(p) | $0 | $583,413(I) | $583,413(t) | ||||||
Performance Share Units (4) | $0(q) | $823,727(r) | $0(q) | $0 | $823,727(l) | $823,727(r) | ||||||
Nonqualified Deferred Compensation (5) | $0 | $0 | $0 | $0 | $0 | $0 | ||||||
Gross Up Payment (6) | $0 | $0 | $0 | $0 | $0 | $0 | ||||||
Benefits and Perquisites: | ||||||||||||
Increase to Pension (7) | $0 | $0 | $0 | $0 | $408,382 | $0 | ||||||
Life and Health Care Insurance (8) | $0 | $0 | $13,596 | $0 | $101,971 | $0 | ||||||
Life Insurance Proceeds (9) | $0 | $0 | $0 | $0 | $0 | $500,000 | ||||||
Outplacement Services (10) | $0 | $0 | $20,000 | $0 | $20,000 | $0 |
(1) | Severance benefits payable when there is no change in control, unless the termination is for cause, meets the requirements of the Company’s mandatory retirement policy, death, disability or voluntary termination of employment by the executive. |
(2) | Stock option values reflect the intrinsic value of unvested options that would accelerate or continue to vest upon termination, as of December 31, |
(3) | Restricted stock values reflect the intrinsic value of unvested RSUs that would accelerate or continue to vest upon termination, as of December 31, |
(4) | Performance share unit values reflect the intrinsic value of unvested PSUs that would accelerate or continue to vest upon termination as of December 31, |
(5) | The amount equal to the value of any premiums on share equivalents under the Deferred Compensation Plan that would be forfeited in connection with the officer’s termination. |
(6) | The Company does not provide tax gross up payments for change in control or severance benefits. |
(7) | This is an estimated present value of annual increase in pension payments required pursuant to the executive officer’s Change in Control Agreement with the Company. The annual incremental increase assumes credit for three additional years of service applied to benefits earned under Formula B and three additional years of age applied to benefits earned under Formula A and Formula B following termination of employment. |
(8) |
(9) | Amounts for group supplemental executive term life insurance are two and one half times base salary, with a maximum coverage of |
(10) | Outplacement services with a value of up to $20,000 are available following termination. If the services are used by the executive officer, the fees are paid directly to the outplacement service provider. |
(a) | Payment of annual incentive for terminations due to early retirement, disability or death is based on performance and prorated for days of employment during the performance period. |
(b) | Payment of the annual incentive is calculated as two times the target annual bonus established for the bonus plan year in which the termination occurs, plus the earned annual bonus prorated for the number of days in the fiscal year through the date of termination. |
(c) | Payment of the annual incentive amount is calculated as one and one half times the target annual bonus established for the bonus plan year in which the termination occurs, plus the earned annual bonus prorated for the number of days in the fiscal year through the date of termination. |
(d) | Payment of the annual incentive is calculated as three times the target annual bonus established for the bonus plan year in which the termination occurs, plus the earned annual bonus prorated for the number of days in the fiscal year through the date of termination. |
(e) | Upon early retirement at or after age 62, but before age 65, with at least 10 years of |
(f) | Upon early retirement at or after age 55, but before age 62 with at least 10 years of |
(g) | Upon termination due to disability when executive has at least 10 years of service: vesting accelerates for annual options granted in 2014, 2013, 2012, |
(h) | Upon termination due to disability when executive has |
(i) | Upon termination without cause on or after age 62, but before age 65, with at least 10 years of service: for |
(j) | Upon termination without cause at or after age 55, but before age 62 with at least 10 years of service: for annual options granted in 2014, 2013, 2012 and 2011, vesting continues for one year and vested options remain exercisable for the lesser of three years or the original |
(k) | Upon termination without cause before |
(l) | In the event of a change in control of the Company, all outstanding stock options held by the officer become vested and may be exercised for the remaining term of the grant, vesting of all unvested RSUs accelerates; and vesting of PSUs accelerates assuming target performance. |
(m) | Upon early retirement on or after age 62, |
(n) | Upon early retirement on or after age 55, but before age 62, with at least 10 years of service, all unvested RSUs are forfeited. |
(o) | Upon termination due to disability, vesting of RSUs granted in |
(p) | Upon termination without cause: |
(q) | Upon early retirement on or after age 62, but before age 65, with at least 10 years of service or retirement at age 65; for PSUs granted in |
(r) | Upon termination due to death or disability, the actual number of shares earned based on achievement of performance goals would be released on the later of the end of the performance period or the date of termination. Values shown in the table represent performance to date; actual shares earned will depend on actual performance at end of the two-year performance period. |
(s) | Upon termination due to death, unvested stock options are vested. For options granted in 2014, 2013, 2012 and 2011, vested options remain exercisable for lesser of three years or the original term. |
(t) | Upon termination due to death, vesting of unvested RSUs accelerates for grants made in 2014, 2013, 2012, |
(u) | Upon termination without cause: For PSUs granted in 2014, vesting continued for |
INFORMATION ABOUT SECURITIES AUTHORIZED FOR ISSUANCE UNDER OUR EQUITY COMPENSATION PLANS
The following table describes as of December 31, 2012,2014, the number of shares subject to outstanding equity awards under the company’sCompany’s 2013 Long-Term Incentive Plan (the “2013 Plan”), 2004 Long-Term Incentive Plan (the “2004 Plan”) and 1998 Long-Term Incentive Compensation Plan (the “1998 Plan”), the weighted average exercise price of outstanding stock options and stock appreciation rights,rights. Weyerhaeuser’s shareholders adopted the 2013 Plan at the 2013 annual meeting of shareholders. The 2013 Plan replaced the 2004 Plan and 1998 Plan and no further awards will be granted under either the 2004 Plan or 1998 Plan. The following table shows the number of shares available for future issuance under the 20042013 Plan.
NUMBER OF SECURITIES TO BE ISSUED UPON EXERCISE OF OUTSTANDING OPTIONS, WARRANTS AND RIGHTS (A) | WEIGHTED AVERAGE EXERCISE PRICE OF OUTSTANDING OPTIONS, WARRANTS AND RIGHTS (B) | NUMBER OF SECURITIES REMAINING AVAILABLE FOR FUTURE ISSUANCE UNDER EQUITY COMPENSATION PLANS (EXCLUDING SECURITIES REFLECTED IN COLUMN (A) (C) | NUMBER OF SECURITIES TO BE ISSUED UPON EXERCISE OF OUTSTANDING OPTIONS, WARRANTS AND RIGHTS (A) | WEIGHTED AVERAGE EXERCISE PRICE OF OUTSTANDING OPTIONS, WARRANTS AND RIGHTS (B) | NUMBER OF SECURITIES REMAINING AVAILABLE FOR FUTURE ISSUANCE UNDER EQUITY COMPENSATION PLANS (EXCLUDING SECURITIES REFLECTED IN COLUMN (A)) (C) | |||||||||||||||||||
Equity compensation plans approved by security holders(1) | 26,423,028 | $ | 22.38 | 11,848,635 | 14,818,428 | $ | 20.70 | 19,466,670 | ||||||||||||||||
Equity compensation plans not approved by security holders | N/A | N/A | N/A | n/a | n/a | n/a | ||||||||||||||||||
Total | 26,423,028 | $ | 22.38 | 11,848.635 | 14,818,428 | $ | 20.70 | 19,466,670 |
(1) | Includes |
The following table describes as of the record date, February 15, 2013, the number of shares subject to outstanding equity awards under the 2004 Plan and the 1998 Plan, the weighted average exercise price of outstanding stock options and stock appreciation rights, and the number of shares available for future issuance under the 2004 Plan.
NUMBER OF SECURITIES TO BE ISSUED UPON EXERCISE OF OUTSTANDING OPTIONS, WARRANTS AND RIGHTS (A) | WEIGHTED AVERAGE EXERCISE PRICE OF OUTSTANDING OPTIONS, WARRANTS AND RIGHTS (B) | NUMBER OF SECURITIES REMAINING AVAILABLE FOR FUTURE ISSUANCE UNDER EQUITY COMPENSATION PLANS (EXCLUDING SECURITIES REFLECTED IN COLUMN (A) (C) | ||||||||||
Equity compensation plans approved by security holders(1) | 26,298,728 | $ | 22.97 | 8,943,473 | ||||||||
Equity compensation plans not approved by security holders | N/A | N/A | N/A | |||||||||
Total | 26,298,728 | $ | 22.97 | 8,943,473 |
The weighted average time to expiration of outstanding stock options as of February 15, 2013 was 4.95 years.
ITEM 2—MANAGEMENT PROPOSAL TO APPROVE THE WEYERHAEUSER COMPANY 2013 LONG-TERM INCENTIVE PLAN
The Company’s board believes that the effective use of stock-based long-term incentive compensation is vital to its ability to recruit, hire and retain the persons required to successfully execute the Company’s business plans and achieve strong performance in the future by providing a direct link between compensation and long-term value creation. The Company’s current long-term incentive plan will terminate as of April 13, 2013. Accordingly, the board is seeking shareholder approval of the Weyerhaeuser Company 2013 Long-Term Incentive Plan (the “2013 Plan”). The board approved the 2013 Plan on February 14, 2013, subject to shareholder approval at the annual meeting. The board recommends that shareholders vote for approval of the 2013 Plan.
If the 2013 Plan is approved by shareholders, it will replace the Company’s 2004 Long-Term Incentive Plan (the “2004 Plan”) and 1998 Long-Term Incentive Compensation Plan (the “1998 Plan” and collectively with the 2004 Plan, the “Prior Plans”), which will be terminated as to new awards subject to the approval of the 2013 Plan. Outstanding awards under the Prior Plans will continue to be governed by the terms of the Prior Plans until exercised, expired or otherwise terminated or canceled. As of February 15, 2013, 8,943,473 shares of common
stock were available for issuance under the 2004 Plan and an aggregate of 26,298,728 shares of common stock were subject to outstanding awards under the 2004 Plan and the 1998 Plan.
The 2013 Plan authorizes the issuance of 10,000,000 shares of common stock. In addition, shares authorized for issuance under the Prior Plans may become available for issuance under the 2013 Plan to the extent such shares, as of the date of shareholder approval of the 2013 Plan (a) have not been issued under the 2004 Plan and are not subject to outstanding awards under the 2004 Plan, or (b) are subject to outstanding awards under the Prior Plans, but subsequently cease to be subject to such awards (other than by reason of exercise or settlement of the awards in shares).
Under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), we generally are prohibited from deducting compensation paid to “covered employees” in excess of $1 million per person in any year. “Covered employees” are defined as the principal executive officer and the three other most highly compensated named executive officers (excluding the principal financial officer). Compensation that qualified 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) of the Code is that the material terms of the performance goals under which compensation may be paid must be disclosed to and approved by our shareholders. The material terms include a description of the employees eligible to receive the awards, a description of the business criteria on which the performance goals may be based, and the maximum amount of compensation that could be paid to an employee. Shareholder approval of the 2013 Plan also will provide flexibility to grant awards under the 2013 Plan that qualify as “performance-based” compensation under Section 162(m) of the Code.
The following description of the 2013 Plan is a summary, does not purport to be a complete description of the 2013 Plan and is qualified in its entirety by the full text of the 2013 Plan. A copy of the 2013 Plan is attached to this Proxy Statement as Exhibit A and is incorporated herein by reference.
DESCRIPTION OF THE 2013 PLAN
Purpose
The purpose of the 2013 Plan is to attract, retain and motivate employees, officers, and directors key to the growth and success of the Company and to align their interests and efforts to the long-term interests of the Company’s stockholders.
Administration
The 2013 Plan will be administered by the Compensation Committee of the Board, which must be composed of two or more directors, each of whom is a “non-employee director” within the meaning of Rule 16b-3(b)(3) under the Exchange Act, and an “outside director” within the meaning of Section 162(m) of the Code. The Board may delegate concurrent administration of the 2013 Plan to different committees consisting of two or more members of the Board in accordance with the 2013 Plan’s terms, except with respect to benefits to non-employee directors and to officers subject to Section 16 of the Securities Exchange Act of 1934, as amended, or subject to Section 15 of the 2013 Plan relating to Section 162(m). In addition, the Board or the Compensation Committee may delegate granting authority to one or more officers of the Company in accordance with the terms of the 2013 Plan. References to the “Committee” in this plan description are, as applicable, to the Board or
the Compensation Committee, or other committee or officers authorized to administer the 2013 Plan.
The Committee is authorized to select the persons to be granted awards, the types of awards to be granted, the number of shares to be subject to awards, and the other terms, conditions and provisions of such awards, as well as to interpret and administer the 2013 Plan and any award or agreement entered into under the 2013 Plan.
Eligibility
Awards may be granted under the 2013 Plan to employees, officers, or directors of the Company and its related companies selected by the Committee. As of the record date, February 15, 2013, approximately 12,480 persons were eligible to receive grants under the 2013 Plan. However, under the Company’s existing equity compensation guidelines, approximately 870 persons were eligible to receive grants under the 2013 Plan as of the same date.
Number of Shares
The number of shares of common stock initially authorized for issuance under the 2013 Plan is 10,000,000 shares. In addition, if the 2013 Plan is approved by shareholders, as of the record date, February 15, 2013, the 8,943,473 shares not issued or subject to outstanding awards under the 2004 Plan, plus the 26,298,728 shares subject to outstanding awards under the Prior Plans that subsequently cease to be subject to such awards (other than by reason of exercise or settlement of the awards in shares), will automatically become available for issuance under the 2013 Plan. The shares of common stock issuable under the 2013 Plan will consist of authorized and unissued shares or shares now held or subsequently acquired by the Company as treasury shares.
If any award lapses, expires, terminates or is canceled prior to the issuance of shares or if shares are issued under the 2013 Plan and thereafter are forfeited to the Company, the shares subject to such awards and the forfeited shares will again be available for issuance under the 2013 Plan. In addition, the following shares will become available for issuance under the 2013 Plan:
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Awards granted in assumption of or in substitution for awards previously granted by an acquired company will not reduce the number of shares authorized for issuance under the 2013 Plan.
If certain changes in our common stock occur by reason of a stock dividend, stock split, spin-off, recapitalization, merger, consolidation, combination or exchange of shares, distribution to shareholders other than a normal cash dividend or other change in our corporate or capital structure, the Committee will make proportional adjustments to (a) the maximum number and kind of securities available for issuance under the 2013 Plan, (b) the maximum number and kind of securities issuable as incentive stock options, (c) the maximum number and kind of securities issuable as “performance-based” compensation under Section 162(m) of the Code and (d) the number and kind of securities subject to any outstanding awards and the per share price of such securities.
The closing price of our common stock as reported byThe Wall Street Journal for the New York Stock Exchange Composite Transactions on February 15, 2013 was $30.65 per share.
Types of Awards
The 2013 Plan permits the granting of any or all of the following types of awards:
Stock Options
Stock options entitle the holder to purchase a specified number of shares of common stock at a specified price, which is called the exercise price, subject to the terms and conditions of the stock option grant. The Committee may grant either incentive stock options, which must comply with Section 422 of the Code, or nonqualified stock options. The Committee sets exercise prices and terms, except that stock options must be granted with an exercise price not less than 100% of the fair market value of our common stock on the date
of grant (excluding stock options granted in connection with assuming or substituting stock options in acquisition transactions). Fair market value means, as of a given date, the average of the high and low price of our common stock. At the time of grant, the Committee determines when stock options are exercisable and what the term of the stock options will be, except that the term cannot exceed 10 years. If the stock option grant does not provide otherwise, stock options will typically vest over a four-year period, with 25% of the grant vesting on the first anniversary of the grant date and 25% vesting on each three subsequent anniversaries of the grant date.
In the event of termination of service with the Company or a related company, a participant will be able to exercise his or her stock option for the period of time and on the terms and conditions determined by the Committee and stated in the stock option grant. In case a participant’s termination of service occurs for cause, all options granted to the participant automatically expire upon first notification to the participant of such termination, unless the Committee determines otherwise.
Stock Appreciation Rights (SARs)
The Committee may grant SARs as a right in tandem with the number of shares underlying stock options granted under the 2013 Plan or as a freestanding award. Upon exercise, SARs entitle the holder to receive payment per share in stock or cash, or in a combination of stock and cash, equal to the excess of the share’s fair market value on the date of exercise over the grant price of the SAR. The grant price of a tandem SAR is equal to the exercise price of the related stock option and the grant price for a freestanding SAR is determined by the Committee in accordance with the procedures described above for stock options. Exercise of an SAR issued in tandem with a stock option will reduce the number of shares underlying the related stock option to the extent of the SAR exercised. The term of a freestanding SAR cannot be more than 10 years, and the term of a tandem SAR cannot exceed the term of the related stock option.
Stock Awards, Restricted Stock and Stock Units
The Committee may grant awards of shares of common stock or awards designated in units of common stock. These awards may be made subject to repurchase or forfeiture restrictions at the Committee’s discretion. The restrictions may be
based on continuous service with the Company or the achievement of specified performance criteria, as determined by the Committee. Stock units may be paid in stock or cash or a combination of stock and cash, as determined by the Committee.
Performance Awards
The Committee may grant performance awards in the form of performance shares or performance units. Performance shares are units valued by reference to a designated number of shares of common stock. Performance units are units valued by reference to a designated amount of property other than shares of common stock. Performance shares and performance units may be payable upon the attainment of performance criteria and other terms and conditions as established by the Committee. Performance awards may be payable in stock, cash or other property, or a combination thereof.
Other Stock or Cash-Based Awards
The Committee may grant other incentives payable in cash or in shares of common stock, subject to the terms of the 2013 Plan and any other terms and conditions determined by the Committee.
No Repricing
Without shareholder approval, the Committee is not authorized to (a) lower the exercise or grant price of an option or SAR after it is granted, except in connection with certain adjustments to our corporate or capital structure permitted by the 2013 Plan, such as stock splits, (b) cancel a stock option or SAR at a time when its exercise or grant price exceeds the fair market value of the underlying stock, in exchange for cash, another stock option or stock appreciation right, restricted stock or other equity award, unless the cancellation and exchange occur in connection with a merger, acquisition, spin-off or similar corporate transaction or (c) take any other action that is treated as a repricing under generally accepted accounting principles.
Performance-Based Compensation under Section 162(m)
Performance Goals and Criteria
Under Section 162(m) of the Code, we generally are prohibited from deducting compensation paid to our principal executive officer and our three other most highly compensated executive officers (other than our principal financial officer) in excess of $1 million
per person in any year. These officers are known as “covered employees.” However, compensation that qualifies as “performance-based” is excluded for purposes of calculating the amount of compensation subject to the $1 million limit.
Stock options and SARs are considered “performance-based” compensation under Section 162(m) as long as they are granted by the Committee under a shareholder-approved plan that states the maximum number of shares or rights that may be granted during a specified period to any employee. Consequently, stock options and SARs granted under the 2013 Plan are not intended to be subject to the performance-based provisions of the Plan. For other Plan awards intended to qualify as “performance-based” compensation under Section 162(m) of the Code, performance goals may be based on the attainment of specified levels of one, or any combination, of the following performance criteria for the Company as a whole or any affiliate or business unit, as reported or calculated by the Company: cash flows (including, but not limited to, operating cash flow, free cash flow or cash flow return on capital); working capital; earnings per share; book value per share; operating income (including or excluding depreciation, amortization, extraordinary items, restructuring charges or other expenses); funds from operations and funds from operation per share; revenues; operating margins; return on assets; return on equity; return on net assets; debt; debt plus equity; market or economic value added; stock price appreciation; total shareholder return; cost control; strategic initiatives; market share; net income; return on invested capital; improvements in capital structure; or customer satisfaction, employee satisfaction, services performance, subscriber, cash management, or asset management metrics.
The performance goals also may be based on the achievement of specified levels of performance for the Company as a whole (or of any affiliate or business unit) under one or more of the performance criteria described above relative to the performance of other corporations.
The measurements used to evaluate performance, which are set out in the grant may include or exclude any of the following events that occur during a performance period: asset write-downs; litigation or claim judgments or settlements; the effect of changes in tax laws, accounting principles,
or other laws or provisions affecting reported results; any reorganization and restructuring programs; extraordinary nonrecurring items as described in Accounting Standards Codification 225-20 and/or in Management’s Discussion and Analysis of Financial Condition and Results of Operations appearing in our annual report to shareholders for the applicable year; acquisitions or divestitures; foreign exchange gains and losses; gains and losses on asset sales; and impairments.
Adjustments
Awards that are intended to qualify as “performance-based” compensation under Section 162(m) of the Code may be adjusted downwards but not upwards. In addition, achievement of the applicable performance goals related to an award may not be waived, except in the case of the participant’s death or disability or a change in control of the Company. Section 162(m) of the Code requires that a qualifying committee certify that performance goals were achieved before the payment of the “performance-based” compensation. In the event awards subject to performance goals are credited with dividends, the dividends are not paid unless the performance goals are satisfied and the Awards become vested and payable.
Limitations
Subject to certain adjustments for changes in our corporate or capital structure, no participant in the 2013 Plan may be granted in any 12-month period options or SARS for more than 2,000,000 shares, or awards intended to qualify as “performance-based” compensation under which more than 1,000,000 shares of common stock may be earned for each 12 months in the performance period. In any calendar year, no participant may be granted other awards denominated in cash under which more than $10,000,000 may be earned for each 12 months in the performance period. In any However, newly hired persons may be granted up to two times those limits during the first year of the person’s employment with the Company.
Assignability
No award or interest in an award may be sold, assigned, pledged or transferred by a participant in the 2013 Plan except by will or to a designated beneficiary in the case of the participant’s death. The Committee may, however, permit a participant to transfer stock options or SARs without consideration to the extent permitted by Section 422 of the Code.
Change of Control
Effect of Change of Control
Under the 2013 Plan, unless the Committee determines otherwise in the instrument evidencing an award or, if not provided in such instrument, in a written employment, services or other agreement between a participant and the Company or a related company, in the event of a change of control:
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Definition of Change of Control and Business Combination
Unless otherwise defined in the instrument evidencing an award or, if not provided in such instrument, in a written employment, services or other agreement between a participant and the Company or a related company, a change of control of the Company generally means the occurrence of any of the following events:
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(a) after such transaction the beneficial owners of common stock and voting securities immediately prior to the transaction retain at least 60% of such common stock and voting securities of the company resulting from such transaction,
(b) no person beneficially owns 30% or more of the then outstanding common stock or voting securities of the company resulting from such transaction, and
(c) at least a majority of the board of directors of the company resulting from such transaction were incumbent directors of the Company prior to such transaction.
If we dissolve or liquidate, unless the Committee determines otherwise, outstanding awards will terminate immediately prior to such dissolution or liquidation.
Term, Termination and Amendment
Unless earlier terminated by the board or the Committee, the 2013 Plan will terminate, and no further awards may be granted, 10 years after the date on which it is approved by shareholders. The board or the Committee may amend, suspend or terminate the 2013 Plan at any time, except that, if required by applicable law, regulation or stock exchange rule, other than Section 162(m) of the Code, shareholder approval will be required for any amendment, and only the board may amend the 2013 Plan if shareholder approval of the amendment is required. The amendment, suspension or termination of the 2013 Plan or the amendment of an outstanding award generally may not, without a participant’s consent, materially adversely affect any rights under an outstanding award.
Federal Income Tax Information
The following is a brief summary of the U.S. federal income tax consequences of the 2013 Plan generally applicable to the Company and to participants in the 2013 Plan who are subject to U.S. federal taxes. 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 be legal or tax advice. Furthermore, the summary does not address issues relating to any U.S. gift or estate tax consequences or the consequences of any state, local or foreign tax laws.
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 our 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 stock option on the date of exercise and the exercise price of the stock option. 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 exercise price of the stock option.
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 stock 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 stock 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 exercise price of the stock option. 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 exercise price of the stock option (or, if less, the excess of the amount realized on the disposition of the shares over the exercise price of the stock option). 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 common stock already
held by the participant to pay the exercise price or if the shares received upon exercise of the stock 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 an SAR with a grant price at least equal to the fair market value of our common stock on the date of grant and no additional deferral feature. Upon the exercise of an 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
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.
Other Stock or Cash-Based Awards
The U.S. federal income tax consequences of other stock or cash-based awards will depend upon the specific terms of each award.
Tax Consequences to the Company
In the foregoing cases, we 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.
Section 409A of the Code
We intend that awards granted under the 2013 Plan comply with, or otherwise be exempt from, Section 409A of the Code, but make no representation or warranty to that effect.
Tax Withholding
We are authorized to deduct or withhold from any award granted or payment due under the 2013 Plan, or require a participant to remit to us, the amount of any withholding taxes due in respect of the award or payment and to take such other action as may be necessary to satisfy all obligations for the payment of applicable withholding taxes. We
are not required to issue any shares of common stock or otherwise settle an award under the 2013 Plan until all tax withholding obligations are satisfied.
NEW PLAN BENEFITS
A new plan benefits table for the 2013 Plan and the benefits or amounts that would have been received by or allocated to participants for the last completed fiscal year under the 2013 Plan if the 2013 Plan was then in effect, as described in the federal proxy rules, are not provided because all awards made under the 2013 Plan will be made at the Compensation Committee’s discretion. Therefore, the benefits and amounts that will be received or allocated under the 2013 Plan are not determinable at this time. However, please refer to the Summary Compensation Table, which includes certain information regarding awards granted to our named executive officers during the fiscal year ended December 31, 2012. Equity grants to our non-employee directors are described under “Director Compensation.”
THE BOARD RECOMMENDS A VOTE FOR THIS PROPOSAL
ITEM 3—MANAGEMENT PROPOSAL TO APPROVE, ON AN ADVISORY BASIS, THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, enables our shareholders to vote to approve, on an advisory or nonbinding basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with the SEC’s rules. The Compensation Committee continues to refine the Company’s executive compensation structure and processes, consistent with evolving governance practices and shareholder views. Compensation and governance practices implemented in recent years include the following:
BUSINESS HIGHLIGHTS
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COMPENSATION HIGHLIGHTS
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GOVERNANCE HIGHLIGHTS
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COMPENSATION PHILOSOPHY AND APPROACH
Weyerhaeuser uses a compensation approach for its named executive officers that is designed to achieve several key objectives, including:
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To achieve these objectives, Weyerhaeuser uses a mix of base pay, incentive opportunities (short and long-term), and other benefits and rewards intended to be competitive in the market, while concentrating a majority of the executives’ reward opportunities in at-risk incentive pay. The design of the compensation program is intended to support the Company’s overall business objectives and to increase long-term shareholder value.
The Company considered the most recent shareholder advisory vote on executive compensation required by the proxy rules in reassessing these compensation policies and its compensation decisions and believes shareholders support the Company’s approach and actions. The Company intends to continue to seek shareholder guidance on executive compensation through an annual say-on-pay vote.
We are asking our shareholders to indicate their support for our named executive officerNEOs’ compensation as described in this proxy statement. This proposal, commonly known as a “say-on-pay” proposal, gives our shareholders the opportunity to express their views on our namedNEOs’ compensation.
Our executives, including our NEOs, are critical to our success. That is why we design our executive officers’ compensation. compensation program to attract, retain and motivate superior executive talent. At the same time, we design our executive compensation program to focus on shareholders’ interests and sustainable long-term performance. We do this by making a significant portion of our NEOs’ compensation contingent on reaching specific short- and long-term performance measures.
This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officersNEOs and the philosophy, policies and practices described in this proxy statement. Accordingly, we ask our shareholders to vote “FOR” the following resolution at the 2015 Annual Meeting:
“RESOLVED, that the Company’s shareholders approve, on an advisory basis, the compensation of the named executive officers as disclosed in the Company’s Proxy Statement for the 20132015 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the 20122014 Summary Compensation Table and the other related tables and disclosure.disclosures.”
TheThis say-on-pay vote is advisory and therefore will not be binding on the Company, the Compensation Committee or our board of directors. OurHowever, our board of directors and our Compensation Committee value the opinions of our shareholders and to the extent there is any significant vote against the named executive officerNEOs’ compensation as disclosed in this
proxy statement, we will consider our shareholders’ concerns and the Compensation Committee will evaluate whether any actions are necessary to address those concerns.
THE BOARD RECOMMENDS A VOTE FOR THIS PROPOSALThe board of directors recommends that shareholders vote “FOR” this proposal.
ITEM 4—PROPOSAL TO APPROVE, ON AN ADVISORY BASIS, THE APPOINTMENT3—RATIFICATION OF AUDITORS
KPMG LLP currently serves as the Company’s independent registered public accounting firm, and that firm conducted the audit of the Company’s consolidated financial statements for fiscal year 2012. The Audit Committee has appointed KPMG LLP to serve as its independent registered public accounting firm to conduct an audit of the Company’s consolidated financial statements for fiscal year 2013 and the Company’s system of internal controls over financial reporting.
Selection of the Company’s independent registered public accounting firm is not required to be submitted to a vote of the shareholders of the Company for ratification. In addition, the Sarbanes-Oxley Act of 2002 requires the Audit Committee to be directly responsible for the appointment, compensation and oversight of the audit work of the independent auditors. However, the board of directors is submitting this matter to the shareholders as a matter of good corporate practice. If the shareholders fail to vote on an advisory basis in favor of the selection, the Audit Committee will reconsider whether to retain KPMG LLP, and may retain that firm or another without re-submitting the matter to the Company’s shareholders. Even if shareholders vote on an advisory basis in favor of the appointment, the Audit Committee may, in its discretion, direct the appointment of different independent auditors at any time during the year if it determines that such a change would be in the best interests of the Company and the shareholders.
THE BOARD RECOMMENDS A VOTE FOR THIS PROPOSAL
SHAREHOLDER RIGHTS PLAN POLICY
In 2004, the board of directors adopted a shareholder rights plan policy. The policy provides that the board must obtain shareholder approval
prior to adopting any shareholder rights plan. However, the board may act on its own to adopt a shareholder rights plan if a majority of the independent directors, exercising their fiduciary duties under Washington law, determine that such submission to shareholders would not be in the best interests of shareholders under the circumstances.
In 1991, the board of directors adopted a confidential voting policy to protect our shareholders’ voting privacy. The policy provides that ballots, proxy forms and voting instructions returned to banks, brokerage firms and other holders of record must be kept confidential. Only the proxy solicitor, the proxy tabulator and the inspector of election have access to the ballots, proxy forms and voting instructions. The proxy solicitor and the proxy tabulator will disclose information taken from the ballots, proxy forms, and voting instructions only if:
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In the event the Company receives notice of a proxy contest, the Company will request that the proponent and all agents and other persons engaged by the proponent agree to this voting policy. The Company will not be bound to comply with this policy during a proxy contest if the proponent is not willing to be bound by the policy as well.
RELATIONSHIPS WITHSELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The firm of KPMG LLP, independent registered public accounting firm, audited the financial statements and internal control over financial reporting of the Company and its subsidiaries for 20122014 and has been selected to do so for 2013.2015. Representatives of KPMG LLP are expected to be present at the annual meeting, and will be able to make a statement or speak if they wish to do so, and will be available to answer appropriate questions.questions from shareholders.
The Company was billed for professional services provided during fiscal years 20122014 and 20112013 by KPMG LLP in the amounts set out in the following table. The Audit Committee of the board of directors
has considered the services rendered by KPMG LLP for services other than the audit of the Company’s financial statements and has determined that the provision of these services is compatible with maintaining the firm’s independence.table:
Services Provided | Fee Amount 2012 | Fee Amount 2011 | Fee Amount 2014 | Fee Amount 2013 | ||||||||||||
Audit Fees (1) (2) | $ | 4,653,900 | $ | 4,674,450 | ||||||||||||
Audit Fees (1) | $ | 5,017,000 | $ | 6,321,400 | ||||||||||||
Audit Related Fees (2) | $ | 377,500 | $ | 469,000 | $ | 1,113,900 | $ | 1,889,700 | ||||||||
Tax Fees (3) | $ | 4,200 | $ | 9,200 | $ | 78,000 | $ | 49,400 | ||||||||
All Other Fees | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||
Total | $ | 5,035,600 | $ | 5,152,650 | $ | 6,208,900 | $ | 8,260,500 |
(1) | Audit Fees, including those for statutory audits and audits of the Company’s joint ventures, include the aggregate fees for the fiscal years ended December 31, |
(2) | Fees for services rendered in support of employee benefit plan |
(3) | Fees for tax return preparation and related services principally relating to services rendered |
The Audit Committee of the board of directors is directly responsible for the selection, appointment, compensation, retention, oversight and termination of our independent registered public accountants. The Audit Committee has adopted a policy that it is required to approve the audit and non-audit services to be performed by the independent registered public accounting firm in order to assure that the provision of such services does not impair the auditor’s independence. All services, engagement terms, conditions and fees, as well as changes in such terms, conditions and fees must be approved by the
committee in advance. The Audit Committee will annually review and approve services that may be provided by the independent auditor during the next year and will revise the list of approved services from time to time based on subsequent determinations. The committee believes that the independent auditor can provide tax services to the Company such as tax compliance, tax planning and tax advice without impairing the auditor’s independence, but the committee will not permit the retention of the independent auditor in connection with a transaction initially recommended by the auditor. The authority to approve services may be delegated by the committee to one or more of its members and the committee may delegate to management the authority to approve certain specified audit related services up to a limited amount of fees. If authority to approve services has been delegated
to a committee member or management, any such approval of services must be reported to the committee at its next scheduled meeting.meeting and approved by the committee (or by one or more members of the committee, if authorized). During fiscal 20122014 and 2011, 0.08%2013, 1.26% and 0.18%0.60%, respectively, of total fees paid to KPMG LLP related to non-audit services (tax and all other fees). The Audit Committee has considered the services rendered by KPMG LLP for services other than the audit of the Company’s financial statements in 2014 and has determined that the provision of these services is compatible with maintaining the firm’s independence.
Selection of the Company’s independent registered public accounting firm is not required to be submitted to a vote of the shareholders of the Company for ratification. However, the board of directors is submitting this matter to the shareholders as a matter of good corporate governance. If the shareholders fail to vote on an advisory basis in favor of the selection, the Audit Committee will reconsider whether to retain KPMG LLP, and may retain that firm or another without re-submitting the matter to the Company’s shareholders. Even if shareholders vote on an advisory basis in favor of the appointment, the Audit Committee may, in its discretion, direct the appointment of different independent auditors at any time during the year if it determines that such a change would be in the best interests of the Company and the shareholders.
The board of directors recommends that shareholders vote “FOR” the ratification of the appointment of KPMG LLP as Weyerhaeuser’s independent registered public accounting firm for 2015.
REVIEW, APPROVAL OR RATIFICATION OF TRANSACTIONS WITH RELATED PERSONS
POLICY
The board of directors recognizes that related party transactions can present a heightened risk of potential or actual conflicts of interest and may create the appearance that Company decisions are based on considerations other than the best interests of the Company and its shareholders. As a result, the board prefers to avoid related party transactions. However, the board recognizes that there are situations where related party transactions may be in, or may not be inconsistent with, the best interests of the Company and its shareholders. For example, this would be true if the Company would be able to obtain products or services of a nature, quality or quantity on terms that are not readily available from other sources, or when the Company provides products or services to related persons on an arm’s-length basis and on the same kind of terms provided to unrelated third parties. As a result, the board has delegated to the Audit Committee the responsibility to review related party transactions. The committee has the authority to approve a related party transaction if the committee determines that the transaction is on terms that are not inconsistent with the best interest of the Company and its shareholders.
RELATED PARTY TRANSACTIONS
The board has defined related party transactions as any arrangement or relationship with the Company when the amount of the transaction or the amount of combined similar transactions is greater than $120,000 and when a related person has a direct or indirect material interest. A related person is anyone who is:
Ÿ | a director or executive officer of the Company; |
Ÿ | a shareholder who beneficially owns more than 5% of the Company’s stock; |
Ÿ | an immediate family member of any of the Company’s directors or executive officers; or |
Ÿ | a company or charitable organization or entity in which any of these persons has a role similar to that of an officer or general partner or beneficially owns 10% or more of the entity. |
APPROVAL AND CONTINUING REVIEW
A director or executive officer who is a related person or has a family member who is a related person must inform the Company’s Corporate Secretary about any proposed related party transaction and give the Corporate Secretary all the facts and circumstances of the proposed transaction. If the Corporate Secretary investigates and determines the transaction would be a related party transaction, the transaction is brought to the Audit Committee for review.
The committee reviews all the facts and circumstances of each related party transaction, including the potential effect on a director’s independence if the Company enters into a transaction where a director has an interest. The committee approves the transaction only if it decides that the transaction is not inconsistent with the best interests of the Company and its shareholders.
If a member of the Audit Committee is a related person in connection with a proposed related party transaction, the transaction is reviewed only by the disinterested members of the committee. If multiple members of the committee, including the chair of the committee, are relevant related persons, the disinterested members of the board of directors review the transaction rather than the committee.
If the Company or any related person becomes aware of a related party transaction that has not been previously approved or ratified under the Company’s related party transaction policies and procedures, it should promptly submit the transaction to the Audit Committee for consideration. The committee evaluates the transaction using the same process and standards it would use to approve a transaction before it is entered into. The committee decides whether to ratify the transaction or require an amendment of the terms of the transaction or to terminate the transaction.
At its first meeting each year, the committee also reviews any ongoing related party transaction in which the amount of the transaction is still greater than $120,000. The committee decides if the transaction is still in the best interests of the Company or if the transaction should be modified or terminated.
The chair of the Audit Committee has the authority to approve transactions on behalf of the committee in between committee meetings if it is not practical to wait until the next committee meeting for a review. Any related party transaction approved by the chair of the committee between meetings must be reported to the committee at the next meeting. Material related party transactions that are approved by the committee must be reported to the board of directors at the next meeting of the board.
The Audit Committee is comprised of independent directors as defined by the rules of the New York Stock Exchange (“NYSE”). The board of directors has determined that all Audit Committee members are financially literate in accordance with NYSE listing standards. D. Michael Steuert is an “audit committee financial expert” within the meaning of SEC regulations and NYSE listing standards. No Audit Committee member received any payments in 2014 from the Company other than compensation for service as a director.
The Audit Committee acts under a written charter. The current charter for the Audit Committee can be found on the Company’s website at www.weyerhaeuser.comunder “Company” at the top of the page, “Investors,” and then under the “Governance” link and then under “Committee Charters and Composition.” If you would like a paper copy, you may request one by writing Weyerhaeuser Company, Attention: Corporate Secretary, P.O. Box 9777, Federal Way, WA98063-9777 or by sending an email toCorporateSecretary@Weyerhaeuser.com.
Management is responsible for the Company’s internal controls and the financial reporting process. KPMG LLP is responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with generally accepted auditing standards and for issuing audit reports on the consolidated financial statements and the assessment of the effectiveness of internal control over financial reporting. The committee’s responsibility is to monitor and oversee these processes on behalf of the board of directors.
In this context, the committee has discussed with KPMG LLP the matters required to be discussed by Auditing Standard No. 16, Communications with Audit Committees, as amended. In addition, the committee has received the written disclosures and the letter from the independent auditors required by Rule 3526, Communication with Audit Committee Concerning Independence, and has reviewed, evaluated and discussed with that firm the written report and its independence from the Company.
The committee discusses with the Company’s internal and independent auditors the overall scope and plans for their respective audits. The committee meets with the internal and independent auditors, with and without management present, to discuss the results of their examinations, the evaluations of the Company’s internal controls and the overall quality of the Company’s financial reporting. The committee also has reviewed and discussed the audited financial statements with management. Based on the reviews and discussions described above, the committee recommended to the board of directors that the audited financial statements and assessment of internal control over financial reporting be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014. The committee has selected KPMG LLP as the Company’s independent registered public accounting firm for 2015.
Ÿ D. Michael Steuert, Chairman | Ÿ John I. Kieckhefer Ÿ Kim Williams | |
Ÿ Mark A. Emmert |
All expenses of soliciting proxies, including clerical work, printing and postage, will be paid by the Company. Proxies may be solicited personally, or by telephone, mail, email, or the Internet, by employees or directors of the Company, but the Company will not pay any compensation for such solicitations. The Company expects to pay fees of approximately $15,000 for assistance by Innisfree M&A Incorporated in the solicitation of proxies. In addition, the Company will reimburse brokers,
banks and other persons holding shares in their names or in the names of nominees for their expenses for sending material to principals and obtaining their proxies.
SHAREHOLDER RIGHTS PLAN POLICY
In 2004, the board of directors adopted a shareholder rights plan policy. The policy provides that the board must obtain shareholder approval prior to adopting any shareholder rights plan. However, the board may act on its own to adopt a shareholder rights plan if a majority of the independent directors, exercising their fiduciary duties under Washington law, determine that such submission to shareholders would not be in the best interests of shareholders under the circumstances.
In 1991, the board of directors adopted a confidential voting policy to protect our shareholders’ voting privacy. The policy provides that ballots, proxy forms and voting instructions returned to banks, brokerage firms and other holders of record must be kept confidential. Only the proxy solicitor, the proxy tabulator and the inspector of election have access to the ballots, proxy forms and voting instructions. Other than aggregate vote totals, the proxy solicitor and the proxy tabulator will disclose information taken from the ballots, proxy forms, and voting instructions only if:
Ÿ | disclosure is required by applicable law, |
Ÿ | a shareholder requests disclosure or |
Ÿ | to resolve legal claims or disputes regarding ballots, proxy forms or votes, or the accuracy of any vote tabulation. |
In the event the Company receives notice of a proxy contest, the Company will request that the proponent and all agents and other persons engaged by the proponent agree to this voting policy. The Company will not be bound to comply with this policy during a proxy contest if the proponent is not willing to be bound by the policy as well.
The board of directors knows of no other matters to be presented at the meeting. If any other matters comeare properly brought before the shareholders at the annual meeting, it is the intention of the persons named on the proxy holders intend to vote the shares represented thereby on such matters in accordance with their best judgment.
FUTURE SHAREHOLDER PROPOSALS AND NOMINATIONS
We anticipate that our 2016 annual meeting of shareholders will be held May 20, 2016.
Shareholders who wish to present proposals in accordance with the SEC Rule 14a-8 for inclusion in the Company’s proxy materials to be distributed in connection with next year’sour 2016 annual meeting proxy statement must submit their proposals so they are received by the Corporate Secretary at the Company’s executive offices no later than the close of business on October 25, 2013. As the rulesDecember 9, 2015. To be in proper form, a shareholder proposal must meet all applicable requirements of the SEC make clear, simplyRule 14a-8. Simply submitting a proposal does not guarantee that it will be included.
The Company’s Bylaws provide that a shareholder may bring business before our annual meeting if it is appropriate for consideration at an annual meeting and is properly presented properly for consideration. If a shareholder wishes to bring business toat a meeting for consideration under the Bylaws rather than under the SEC rules, the shareholder must give the Corporate Secretary
written notice of the shareholder’s intent to do so. The notice must be delivered to the Corporate Secretary no later than 90 days and no earlier than 120 days before the meeting.meeting date. However, if the Company sends notice or discloses the date of the meeting fewer than 100 days before the date of the meeting, the shareholder must deliver the notice to the Corporate Secretary no later than the close of business on the tenth day following the day on which the notice of meeting date was mailed or publicly disclosed, whichever occurs first. To be in proper form, the notice must include specific information as described in our Bylaws.
The Company’s Bylaws also establish procedures for shareholder nominations for elections of
directors of the Company. Any shareholder entitled to vote in the election of directors may nominate one or more persons for election as directors. The nomination will be effective only if the shareholder delivers written notice of the shareholder’s intent to make a nomination to the Corporate Secretary no later than 90 days or earlier than 120 days prior to the meeting. However, if the Company sends notice or discloses the date of the meeting fewer than 100 days before the date of the meeting, the shareholder must deliver the notice to the Corporate Secretary no later than the close of business on the tenth day following the day on which the notice of meeting date was mailed or publicly disclosed, whichever occurs first.
To be in proper form, a shareholder’s notice must include specific information concerning the proposal or the nominee as described in our Bylaws and in
SEC rules. In addition, to be eligible to be a nominee for director, the person must be able to make certain agreements with the Company as described in our Bylaws. A shareholder who wishes to submit a proposal or a nomination is encouraged to consult independent counsel about our BylawBylaws and SEC requirements. The Company reserves the right to reject, rule out of order, or take other appropriate action with respect to any proposal that does not comply with the Bylaw,our Bylaws or SEC andor other applicable requirements for submitting a proposal or nomination.
Notices of intention to present proposals at the 2013 annual meeting should be addressed to Claire S. Grace,Devin W. Stockfish, Senior Vice President, General Counsel and Corporate Secretary, Weyerhaeuser Company, P.O. Box 9777, Federal Way, WA 98063-9777.
Public disclosure Shareholders may obtain a copy of our Bylaws from our Corporate Secretary at the same address. Our Bylaws are also available on our web site atwww.weyerhaeuser.com under “Company” at the top of the date ofpage, “Investors,” and then under the 2013 annual meeting was made in the Notice of 2012 Annual Meeting of Shareholders and Proxy Statement. The date of the next annual meeting of shareholders of Weyerhaeuser Company after the 2013 annual meeting is April 10, 2014.“Governance” link.
For the Boardboard of Directorsdirectors
CLAIRE S. GRACEDevin W. Stockfish
Senior Vice President,
General Counsel and Corporate Secretary
Federal Way, Washington
MarchApril 8, 20132015
Exhibit A
WEYERHAEUSER COMPANY
2013 LONG-TERM
INCENTIVE PLAN
WEYERHAEUSER COMPANY
2013 LONG-TERM INCENTIVE PLAN
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A-ii
WEYERHAEUSER COMPANY 2013 LONG-TERM INCENTIVE PLAN
SECTION 1. PURPOSE AND ESTABLISHMENT
1.1 Purpose
The purposes of this 2013 Long-Term Incentive Plan (the“Plan”) is to promote the interests of Weyerhaeuser Company (the“Company”) and its shareholders by attracting, retaining and motivating employees, officers and directors key to the growth and success of the Company by providing them the opportunity to acquire a proprietary interest in the Company and to link their interests and efforts to the long-term interests of the Company’s shareholders.
1.2 Replacement Plan
This Plan replaces the Company’s 2004 Long-Term Incentive Plan and 1998 Long-Term Incentive Compensation Plan (collectively, the“Prior Plans”). No further awards may be made under the Prior Plans after the Effective Date (as defined in Section 18).
SECTION 2. DEFINITIONS
As used in the Plan, the following definitions apply to the terms indicated below:
“Acquired Entity” means any entity acquired by the Company or a Related Company or with which the Company or a Related Company merges or combines.
“Award” means any Option, Stock Appreciation Right, Stock Award, Restricted Stock, Stock Unit, Performance Share, Performance Unit, dividend equivalent, cash-based award or other incentive payable in cash or in shares of Common Stock as may be designated by the Committee from time to time.
“Board” means the Board of Directors of the Company.
“Business Combination” has the meaning set forth in the definition of “Change of Control.”
“Cause,”unless otherwise defined in the instrument evidencing an Award or, if not provided in such instrument, in a written employment, services or other agreement between the Participant and the Company or a Related Company, means dishonesty, fraud, serious or willful misconduct, unauthorized use or disclosure of confidential information or trade secrets, violation of a state or federal criminal law involving the commission of a crime against the Company or a felony, current use of illegal substances, or any act or omission that substantially impairs the Company’s business, good will or reputation, in each case as determined by the Company’s chief human resources officer or other person performing that function or, in the case of directors and executive officers, the Compensation Committee, whose determination shall be conclusive and binding.
“Change in Control” or“CIC” unless otherwise defined in the instrument evidencing an Award or, if not provided in such instrument, in a written employment, services or other agreement between the Participant and the Company or a Related Company, means the occurrence of any of the following events:
(a) an acquisition by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either (A) the number of then outstanding shares of common stock of the Company (the“Outstanding Company Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the“Outstanding Company Voting Securities”); provided, however, that the following acquisitions shall not constitute a Change of Control: (1) any acquisition directly from the Company, other than an acquisition by virtue of the exercise of a conversion privilege where the security being so converted was not
acquired directly from the Company by the party exercising the conversion privilege, (2) any acquisition by the Company, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Related Company, or (4) an acquisition by any Person pursuant to a transaction that meets the conditions of clauses (i), (ii) and (iii) set forth in subsection (d) of this definition of Change in Control;
(b) a change in the composition of the Board during any 24-consecutive month period such that the individuals who, as of the beginning of such period, constitute the Board (the“Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that for purposes of this definition, any individual who becomes a member of the Board during the period, whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of those individuals who are members of the Board and who were also members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such individual were a member of the Incumbent Board; and provided further, however, that any such individual whose initial assumption of office occurs as a result of or in connection with an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of an Entity other than the Board shall not be considered a member of the Incumbent Board; or
(c) consummation of a complete liquidation or dissolution of the Company; or
(d) consummation in one transaction or a series of transactions undertaken with a common purpose of a reorganization, merger or consolidation, sale of at least 60% of the Company’s outstanding securities, or sale or other disposition of all or substantially all of the assets of the Company ( a“Business Combination”); excluding however, such a Business Combination pursuant to which:
(i) all or substantially all of the Persons who are the beneficial owners of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination will beneficially own, directly or indirectly, at least 60% of the 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 Successor Company (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company's assets or stock either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Outstanding Company Common Stock and Outstanding Company Voting Securities;
(ii) no Person (other than the Company, any employee benefit plan (or related trust) of the Company, a Related Company or such Successor Company) will beneficially own, directly or indirectly, 30% or more of, respectively, the outstanding shares of common stock of the Successor Company or the combined voting power of the outstanding voting securities of the Successor Company entitled to vote generally in the election of directors unless such ownership resulted solely from ownership of securities of the Company prior to the Business Combination; and
(iii) individuals who were members of the Incumbent Board will immediately after the consummation of the Business Combination constitute at least a majority of the members of the board of directors of the Successor Company.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Committee” has the meaning set forth in Section 3.1.
“Common Stock” means the common stock, par value $1.25 per share, of the Company.
“Company” means Weyerhaeuser Company, a Washington corporation.
“Compensation Committee”means the Compensation Committee of the Board.
“Covered Employee” means a “covered employee” as that term is defined in Section 162(m)(3) of the Code or any successor provision.
“Disability” means “Disability” as defined in the instrument evidencing an Award or, if not provided in such instrument, by the Committee or the Company’s senior vice president of human resources for purposes of the Plan or an Award, or in a written employment or services agreement. Notwithstanding the foregoing, with respect to Incentive Stock Options,“Disability” shall have the meaning attributed to that term for purposes of Section 422 of the Code.
“Effective Date” has the meaning set forth in Section 18.
“Eligible Person” means any person eligible to receive an Award as set forth in Section 5.
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.
“Fair Market Value” means the closing price for the Common Stock on any given date during regular trading, or if not trading on that date, such price on the last preceding date on which the Common Stock was traded, unless determined otherwise by the Committee using such methods or procedures as it may establish.
“Grant Date” means the latter of (a) date on which the Committee completes the corporate action authorizing the grant of an Award or such later date specified by the Committee and (b) the date on which all conditions precedent to an Award have been satisfied, provided that conditions to the exercisability or vesting of Awards shall not defer the Grant Date.
“Incentive Stock Option” means an Option granted with the intention that it qualify as an “incentive stock option” as that term is defined in Section 422 of the Code or any successor provision.
“Incumbent Board” has the meaning set forth in the definition of“Change of Control.”
“Layoff” means “Layoff” as defined in the instrument evidencing an Award or, if not provided in such instrument, by the Committee or the Company’s senior vice president of human resources for purposes of the Plan or an Award, or in a written employment or services agreement.
“Non-qualified Stock Option” means an Option other than an Incentive Stock Option.
“Option” means a right to purchase Common Stock granted under Section 7.
“Option Expiration Date” means the last day of the maximum term of an Option.
“Outstanding Company Common Stock” has the meaning set forth in the definition of“Change of Control.”
“Outstanding Company Voting Securities” has the meaning set forth in the definition of“Change of Control.”
“Parent Company” means a company or other entity that, as a result of a Company Transaction, owns the Company or all or substantially all of the Company’s assets, either directly or through one or more subsidiaries.
“Participant” means any Eligible Person to whom an Award is granted.
“Performance Award” means an Award of Performance Shares or Performance Units granted under Section 10.
“Performance Criteria” has the meaning set forth in Section 15.2.
“Performance Share” means an Award of units denominated in shares of Common Stock granted under Section 10.1.
“Performance Unit” means an Award of units denominated in cash or property other than shares of Common Stock granted under Section 10.2.
“Person”means any individual, entity or group (within the meaning of Section 13(d)(3) and 14(d)(2) of the Exchange Act.
“Plan” means the Weyerhaeuser Company 2013 Long-Term Incentive Plan.
“Prior Plans”has the meaning set forth in Section 1.2.
“Related Company” means any entity that is directly or indirectly controlled by or under common control with the Company.
“Restricted Stock” means an Award of shares of Common Stock granted under Section 9, the rights of ownership of which may be subject to restrictions prescribed by the Committee.
“Retirement,” shall mean Retirement as defined in the instrument evidencing the Award or, if not provided in such instrument, by the Committee or the Company’s senior vice president of human resources or other person performing that function or in a written employment, services or other agreement between the Participant and the Company or a Related Company.
“Securities Act” means the Securities Act of 1933, as amended from time to time.
“Section 409A” means Section 409A of the Code.
“Stock Appreciation Right” or“SAR”means the right granted under Section 8.1 to receive the excess of the Fair Market Value of a specified number of shares of Common Stock over the grant price.
“Stock Award” means an Award of shares of Common Stock granted under Section 9, the rights of ownership of which are not subject to restrictions prescribed by the Committee.
“Stock Unit” means an Award granted under Section 9 denominated in units of Common Stock.
“Substitute Awards” means Awards granted or shares of Common Stock issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, by an Acquired Entity or with which the Company combines.
“Successor Company” means the surviving company, the successor company or Parent Company, as applicable, in connection with a Business Combination.
“Termination of Service,” means a termination of employment or service relationship with the Company or a Related Company for any reason, whether voluntary or involuntary, including by reason of death, Disability, Retirement, or Layoff. Any question as to whether and when there has been a Termination of Service for the purposes of an Award and the cause of such Termination of Service shall be determined by the Company’s senior vice president of human resources or other person performing that function or, with respect to directors and executive officers, by the Committee, whose determination shall be final and binding. Transfer of a Participant’s employment or service relationship between the Company and any Related Company shall not be considered a Termination of Service for purposes of an Award. Unless the Committee determines
otherwise, a Termination of Service shall be deemed to occur if the Participant’s employment or service relationship is with an entity that has ceased to be a Related Company. A Participant’s change in status from an employee of the Company or a Related Company to a nonemployee director, consultant, advisor or independent contractor of the Company or a Related Company or a change in status from a nonemployee director, consultant, advisor or independent contractor of the Company or a Related Company to an employee of the Company or a Related Company, shall not be considered a Termination of Service.
“Vesting Commencement Date” means the Grant Date or such other date selected by the Committee as the date from which an Award begins to vest.
SECTION 3. ADMINISTRATION
3.1 Administration of the Plan
The Plan shall be administered by the Compensation Committee, which shall be composed of two or more directors, each of whom shall qualify as a“non-employee director” within the meaning of Rule 16b-3(b)(3) promulgated under the Exchange Act (or any successor definition adopted by the Securities and Exchange Commission), an“outside director” within the meaning of Section 162(m), and an“independent director” as defined under the New York Stock Exchange listing standards. Notwithstanding the foregoing, the Board or the Compensation Committee may delegate responsibility for administering the Plan with respect to designated classes of Eligible Persons to different committees consisting of two or more members of the Board, subject to such limitations as the Board or the Compensation Committee deems appropriate, except with respect to benefits to non-employee directors and to officers subject to Section 16 of the Exchange Act or awards subject to Section 15 of the Plan. Members of any committee shall serve for such term as the Board may determine, subject to removal by the Board at any time. To the extent consistent with applicable law, the Board or the Compensation Committee may authorize one or more officers of the Company to grant Awards to designated classes of Eligible Persons, within limits specifically prescribed by the Board or the committee; provided, however, that no such officer shall have or obtain authority to grant Awards to himself or herself or to any person subject to Section 16 of the Exchange Act. All references in the Plan to the“Committee” shall be, as applicable, to the Compensation Committee, or any other committee or any officer to whom the Board or the Compensation Committee has delegated authority to administer the Plan.
3.2 Administration and Interpretation by Committee
(a) Except for the terms and conditions explicitly set forth in the Plan, and to the extent permitted by applicable law, the Committee shall have full power and exclusive authority, subject to such orders or resolutions not inconsistent with the provisions of the Plan as may from time to time be adopted by the Board or a Committee composed of members of the Board, to (i) select the Eligible Persons to whom Awards may from time to time be granted under the Plan; (ii) determine the type or types of Award to be granted to each Participant under the Plan; (iii) determine the number of shares of Common Stock to be covered by each Award granted under the Plan; (iv) determine the terms and conditions of any Award granted under the Plan; (v) approve the forms of notice or agreement for use under the Plan; (vi) determine whether, to what extent, and under what circumstances Awards may be settled in cash, shares of Common Stock or other property or canceled or suspended; (vii) determine whether, to what extent, and under what circumstances cash, shares of Common Stock, other property and other amounts payable with respect to an Award shall be deferred either automatically or at the election of the Participant, subject to Section 409A and in accordance with Section 6.3 of the Plan; (viii) interpret and administer the Plan and any instrument evidencing an Award, notice or agreement executed or entered into under the Plan; (ix) establish such rules and regulations as it shall deem appropriate for the proper administration of the Plan; (x) delegate ministerial duties to such of the Company’s employees as it so determines; (xi) waive any terms, conditions or restrictions on any Award under such circumstances and subject to such terms and conditions as the Committee shall deem appropriate; and (xii) make any other determination and take any other action that the Committee deems necessary or desirable for administration of the Plan.
(b) In no event, however, shall the Board or the Committee have the right, without shareholder approval, to (i) lower the exercise or grant price of an Option or SAR after it is granted, except in connection
with adjustments provided in Section 14, (ii) cancel an Option or SAR at a time when its exercise or grant price exceeds the Fair Market Value of the underlying stock, in exchange for cash, another option or stock appreciation right, restricted stock or other equity award, unless the cancellation and exchange occurs in connection with a merger, acquisition, spin-off or other similar corporate transaction or (iii) take any other action that is treated as a repricing under generally accepted accounting principles.
(c) Decisions of the Committee shall be final, conclusive and binding on all persons, including the Company, any Participant, any shareholder and any Eligible Person. A majority of the members of the Committee may determine its actions.
SECTION 4. SHARES SUBJECT TO THE PLAN
4.1 Authorized Number of Shares
Subject to adjustment from time to time as provided in Section 14.1, the maximum number of shares of Common Stock available for issuance under the Plan shall be:
(a) 10,000,000 shares reduced by the aggregate number of shares of Common Stock that become subject to Awards and less one share for every one share that was subject to an award granted after February 28, 2013 under the Prior Plans; plus
(b) (i) any authorized shares not issued or subject to outstanding awards under the Company’s Prior Plan as of the Effective Date and (ii) any shares subject to outstanding awards under the Prior Plan as of the Effective Date that subsequently cease to be subject to such Awards (other than by reason of exercise or settlement of the Awards to the extent they are exercised for or settled in vested and non-forfeitable shares), which shares of Common Stock shall cease, as of such date, to be available for grant and issuance under the Prior Plan, but shall be available for issuance under the Plan.
Shares issued under the Plan shall be drawn from authorized and unissued shares or shares now held or subsequently acquired by the Company as treasury shares.
4.2 Share Usage
(a) If (i) any Award based on shares lapses, expires, terminates or is canceled prior to the issuance of shares thereunder, or if shares of Common Stock are issued under the Plan to a Participant and thereafter are forfeited to the Company, or if an Award is settled for cash (in whole or in part) or otherwise does not result in the issuance of all or a portion of the shares of Common Stock subject to such Award, or (ii) after February 28, 2013 any award under the Prior Plans based on shares lapses, expires, terminates, or is canceled prior to the issuance of shares thereunder, or if shares of Common Stock issued under the Prior Plans to a Participant are thereafter forfeited to the Company, or if an award under the Prior Plans is settled for cash (in whole or in part), or otherwise does not result in the issuance of all or a portion of the shares of Common Stock subject to such award under the Prior Plans, then the shares subject to such Awards or awards under the Prior Plan shall again be available for issuance under the Plan.
(b) In the event that (i) any Option, or after February 28, 2013 an option under the Prior Plans, is exercised through the tendering of shares of Common Stock (either actually or by attestation) or by the withholding of shares of Common Stock by the Company, or (ii) withholding tax liabilities arising from an Award, or after February 28, 2013 an award under the Prior Plans, are satisfied by the tendering of shares of Common Stock (either actually or by attestation) or by the withholding of shares of Common Stock by the Company, then in each such case the Shares so tendered or withheld shall again be available for issuance under the Plan, on a one-for-one basis.
(c) The number of shares of Common Stock available for issuance under the Plan shall not be reduced to reflect any dividends or dividend equivalents that are reinvested into additional shares of Common Stock or credited as additional shares of Common Stock subject or paid with respect to an Award.
(d) The Committee shall also, without limitation, have the authority to grant Awards as an alternative to or as the form of payment for grants or rights earned or due under other compensation plans or arrangements of the Company.
(e) Notwithstanding any other provision of the Plan to the contrary, the Committee may grant Substitute Awards under the Plan. Substitute Awards shall not reduce the number of shares authorized for issuance under the Plan. In the event that an Acquired Entity has shares available for awards or grants under one or more preexisting plans not adopted in contemplation of such acquisition or combination, then, to the extent determined by the Board or the Compensation Committee, the shares available for grant pursuant to the terms of such preexisting plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to holders of common stock of the entities that are parties to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the number of shares of Common Stock authorized for issuance under the Plan; provided, however, that Awards using such available shares shall not be made after the date awards or grants could have been made under the terms of such preexisting plans, absent the acquisition or combination, and shall be made only to persons who were not employees or directors of the Company or a Related Company prior to such acquisition or combination. In the event that a written agreement between the Company and an Acquired Entity pursuant to which a merger or consolidation is completed is approved by the Board and that agreement sets forth the terms and conditions of the substitution for or assumption of outstanding awards of the Acquired Entity, those terms and conditions shall be deemed to be the action of the Committee without any further action by the Committee, except as may be required for compliance with Rule 16b-3 under the Exchange Act, and the persons holding such awards shall be deemed to be Participants.
(f) Notwithstanding the foregoing, the maximum number of shares that may be issued upon the exercise of Incentive Stock Options shall equal the share number stated in Section 4.1(a), subject to adjustment as provided in Section 14.1.
SECTION 5. ELIGIBILITY
An Award may be granted to any employee, officer or director of the Company or a Related Company whom the Committee from time to time selects. The above are“Eligible Persons.”
SECTION 6. AWARDS
6.1 Form and Grant of Awards
The Committee shall have the authority, in its sole discretion, to determine the type or types of Awards to be granted under the Plan. Such Awards may be granted either alone, in addition to or in tandem with any other type of Award. Any Award settlement may be subject to such conditions, restrictions and contingencies as the Committee shall determine.
6.2 Evidence of Awards
Awards granted under the Plan shall be evidenced by a written or electronic instrument that shall contain such terms, conditions, limitations and restrictions as the Committee shall deem advisable and that are not inconsistent with the Plan.
6.3 Deferrals
The Committee may permit or require a Participant to defer receipt of the payment of any Award if and to the extent set forth in the instrument evidencing the Award at the time of grant. If any such deferral election is permitted or required, the Committee, in its sole discretion, shall establish rules and procedures for such payment deferrals, which may include the grant of additional Awards or provisions for the payment or crediting of interest or dividend equivalents, including converting such credits to deferred stock unit equivalents; provided, however, that the terms of any deferrals under this Section 6.3 shall comply with all applicable law, rules and regulations, including, without limitation, Section 409A of the Code.
6.4 Dividends and Distributions
Participants may, if the Committee so determines, be credited with dividends paid with respect to shares of Common Stock underlying an Award in a manner determined by the Committee in its sole discretion. The Committee may apply any restrictions to the dividends or dividend equivalents that the Committee deems appropriate. The Committee, in its sole discretion, may determine the form of payment of dividends or dividend equivalents, including cash, shares of Common Stock, Restricted Stock or Stock Units. Notwithstanding the foregoing, if any Award for which dividends or dividend equivalents have been granted has its vesting, payment or grant dependent upon the achievement of one or more performance goals, then the dividends or dividend equivalents shall accrue and be paid only to the extent the Award becomes vested or payable. Also notwithstanding the foregoing, the crediting of dividends or dividend equivalents must comply with or qualify for an exemption under Section 409A.
SECTION 7. OPTIONS
7.1 Grant of Options
The Committee may grant Options designated as Incentive Stock Options or Non-qualified Stock Options.
7.2 Option Exercise Price
The exercise price for shares purchased under an Option shall be the average of the high and low price of the Common Stock for the Grant Date (and not less than the minimum exercise price required by Section 422 of the Code with respect to Incentive Stock Options), except in the case of Substitute Awards.
7.3 Terms of Options
Subject to earlier termination in accordance with the terms of the Plan and the instrument evidencing the Option, the maximum term of an Option shall be 10 years from the Grant Date. For Incentive Stock Options, the maximum term shall comply with Section 422 of the Code.
7.4 Exercise of Options
(a) The Committee shall establish and set forth in each instrument that evidences an Option the time at which, or the installments in which, the Option shall vest and become exercisable.
(b) To the extent an Option has vested and become exercisable, the Option may be exercised in whole or from time to time in part by delivery as directed by the Company to the Company or a brokerage firm designated or approved by the Company of a stock option exercise agreement or notice, in a form and in accordance with procedures established by the Committee, setting forth the number of shares with respect to which the Option is being exercised, the restrictions imposed on the shares purchased under such exercise agreement or notice, if any, and such representations and agreements as may be required by the Committee, accompanied by payment in full as described in Section 7.5. An Option may be exercised only for whole shares and may not be exercised for less than a reasonable number of shares at any one time, as determined by the Committee.
7.5 Payment of Exercise Price
The exercise price for shares purchased under an Option shall be paid in full as directed by the Company to the Company or a brokerage firm designated or approved by the Company by delivery of consideration equal to the product of the Option exercise price and the number of shares purchased. Such consideration must be paid before the Company will issue the shares being purchased and must be in a form or a combination of forms acceptable to the Committee for that purchase, which forms may include:
(a) cash;
(b) check or wire transfer;
(c) having the Company withhold shares of Common Stock that otherwise would be issued on exercise of the Option that have an aggregate Fair Market Value equal to the aggregate exercise price of the shares being purchased under the Option;
(d) tendering (either actually or, so long as the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act, by attestation) shares of Common Stock already owned by the Participant that on the day prior to the exercise date have a Fair Market Value equal to the aggregate exercise price of the shares being purchased under the Option;
(e) so long as the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act, and to the extent permitted by applicable law, delivery of a properly executed exercise agreement or notice, together with irrevocable instructions to a brokerage firm designated or approved by the Company to deliver promptly to the Company the aggregate amount of sale or loan proceeds to pay the Option exercise price and any tax withholding obligations that may arise in connection with the exercise, all in accordance with the regulations of the Federal Reserve Board; or
(f) such other consideration as the Committee may permit.
7.6 Post-Termination Exercise
(a) The Committee shall establish and set forth in each instrument that evidences an Option whether the Option shall continue to be exercisable, and the terms and conditions of such exercise, after a Termination of Service.
(b) Also notwithstanding the foregoing, in case a Participant’s Termination of Service occurs for Cause, all Options granted to the Participant shall automatically expire upon first notification to the Participant of such termination, unless the Committee determines otherwise. If a Participant’s employment or service relationship with the Company is suspended pending an investigation of whether the Participant shall be terminated for Cause, all the Participant’s rights under any Option shall likewise be suspended during the period of investigation; provided, however, that any such suspension shall not extend the expiration date of any Option. If any facts that would constitute termination for Cause are discovered after a Participant’s Termination of Service, any Option then held by the Participant may be immediately terminated by the Committee, in its sole discretion.
(c) If the exercise of the Option following a Participant’s Termination of Service, but while the Option is otherwise exercisable, would be prohibited solely because the issuance of Common Stock would violate either the registration requirements under the Securities Act or the Company’s insider trading policy, then the Option shall remain exercisable until the earlier of (i)the Option Expiration Date and (ii) the expiration of a period of three months (or such longer period of time as determined by the Committee in its sole discretion) after the Participant’s Termination of Service during which the exercise of the Option would not be in violation of such Securities Act or insider trading policy requirements.
7.7 Incentive Stock Option Limitations
Notwithstanding any other provisions of the Plan, the terms of any Incentive Stock Options shall in addition comply in all respects with Section 422 of the Code, or any successor provision, and any applicable regulations thereunder. Persons who are not employees of the Company or one of its parent or subsidiary corporations (as such terms are defined for purposes of Section 422 of the Code) may not be granted Incentive Stock Options. To the extent that the aggregate Fair Market Value of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by a Participant during any calendar year exceeds $100,000 (or, if different, the maximum limitation in effect at the time of grant under the Code), such portion in excess of $100,000 shall be treated as Nonqualified Stock Options. If any Participant shall make any disposition of shares of Common Stock issued pursuant to the exercise of an Incentive Stock Option under any circumstances described in Section 421(b) of the Code (relating to certain disqualifying dispositions), such Participant shall notify the Company of such disposition.
SECTION 8. STOCK APPRECIATION RIGHTS
8.1 Grant of Stock Appreciation Rights
The Committee may grant stock appreciation rights (“Stock Appreciation Rights” or“SARs”) to Participants at any time and on such terms and conditions as the Committee shall determine in its sole discretion. A SAR may be granted in tandem with an Option (“tandem SAR”) or alone (“freestanding SAR”). The grant price of a tandem SAR shall be equal to the exercise price of the related Option. The grant price of a freestanding SAR shall be established in accordance with procedures for Options set out in Section 7.2. A SAR may be exercised upon such terms and conditions and for the term as the Committee determines in its sole discretion; provided, however, that, subject to earlier termination in accordance with the terms of the Plan and the instrument evidencing the SAR, the maximum term of a freestanding SAR shall be 10 years, and in the case of a tandem SAR, (a) the term shall not exceed the term of the related Option and (b) the tandem SAR may be exercised for all or part of the shares subject to the related Option upon the surrender of the right to exercise the equivalent portion of the related Option, except that the tandem SAR may be exercised only with respect to the shares for which its related Option is then exercisable.
8.2 Payment of SAR Amount
Upon the exercise of a SAR, a Participant shall be entitled to receive payment from the Company in an amount determined by multiplying: (a) the difference between the Fair Market Value of the Common Stock on the date of exercise over the grant price of the SAR by (b) the number of shares with respect to which the SAR is exercised. At the discretion of the Committee as set out in the instrument evidencing the Award, the payment upon exercise of a SAR may be in cash, in shares of equivalent value, in some combination thereof or in any other manner approved by the Committee in its sole discretion.
SECTION 9. STOCK AWARDS, RESTRICTED STOCK AND STOCK UNITS
9.1 Grant of Stock Awards, Restricted Stock and Stock Units
The Committee may grant Stock Awards, Restricted Stock and Stock Units on such terms and conditions and subject to such repurchase or forfeiture restrictions, if any, which may be based on continuous service with the Company or a Related Company or the achievement of any performance goals, as the Committee shall determine in its sole discretion, which terms, conditions and restrictions shall be set forth in the instrument evidencing the Award.
9.2 Vesting of Restricted Stock and Stock Units
Upon the satisfaction of any terms, conditions and restrictions prescribed with respect to Restricted Stock or Stock Units, or upon a Participant’s release from any terms, conditions and restrictions of Restricted Stock or Stock Units, as determined by the Committee, and subject to the provisions of Section 12, (a) the shares of Restricted Stock covered by each Award of Restricted Stock shall become freely transferable by the Participant, and (b) Stock Units shall be paid in shares of Common Stock or, if set out in the instrument evidencing the Awards, in cash or a combination of cash and shares of Common Stock. Any fractional shares subject to such Awards shall be paid to the Participant in cash.
SECTION 10. PERFORMANCE SHARES AND PERFORMANCE UNITS
10.1 Grant of Performance Shares
The Committee may grant Awards of performance shares (“Performance Shares”), designate the Participants to whom Performance Shares are to be awarded, and determine the number of Performance Shares and the terms and conditions of each such Award. Performance Shares shall consist of a unit valued by reference to a designated number of shares of Common Stock, the value of which may be paid to the Participant by delivery of shares of Common Stock or, if set out in the instrument evidencing the Award, of such property as the Committee shall determine, including without limitation, cash, shares of Common Stock, or other
property, or any combination thereof, upon the attainment of performance goals, as established by the Committee, and other terms and conditions specified by the Committee. The amount to be paid under an Award of Performance Shares may be adjusted on the basis of such further consideration as the Committee shall determine in its sole discretion.
10.2 Grant of Performance Units
The Committee may grant Awards of performance units (“Performance Units”), designate the Participants to whom Performance Units are to be awarded, and determine the number of Performance Units and the terms and conditions of each such Award. Performance Units shall consist of a unit valued by reference to a designated amount of cash or property other than shares of Common Stock, which value may be paid to the Participant by delivery of the cash or such property as the Committee shall determine, including, without limitation, cash, shares of Common Stock, other property, or any combination thereof, upon the attainment of performance goals, as established by the Committee, and other terms and conditions specified by the Committee. The Amount to be paid under an Award of Performance Units may be adjusted on the basis of such further consideration as the Committee shall determine in its sole discretion.
SECTION 11. OTHER STOCK OR CASH BASED AWARDS
Subject to the terms of the Plan and such other terms and conditions as the Committee deems appropriate, the Committee may grant other incentives payable in cash or in shares of Common Stock under the Plan.
SECTION 12. WITHHOLDING
12.1 Withholding for Taxes or Other Obligations
The Company may require the Participant to pay to the Company the amount of (a) any taxes that the Company is required by applicable federal, state, local or foreign law to withhold with respect to the grant, vesting or exercise of an Award (“tax withholding obligations”) and (b) any amounts due from the Participant to the Company or to any Related Company (“other obligations”). Notwithstanding any other provision of the Plan to the contrary, the Company shall not be required to issue any shares of Common Stock or otherwise settle an Award under the Plan until such tax withholding obligations and other obligations are satisfied and shall not be required to issue any shares of Common Stock or otherwise settle an Award under the Plan; provided, however, such payment or satisfaction of tax withholding or other obligations may not be delayed in such a way as to cause such issuance or settlement to not be in compliance with Section 409A of the Code.
12.2 Payment of Withholding Obligations
The Committee may permit or require a Participant to satisfy all or part of his or her tax withholding obligations and other obligations by (a) paying cash to the Company, (b) having the Company withhold an amount from any cash amounts otherwise due or to become due from the Company to the Participant, (c) having the Company withhold a number of shares of Common Stock that would otherwise be issued to the Participant (or become vested in the case of Restricted Stock) having a Fair Market Value equal to the tax withholding obligations and other obligations, or (d) surrendering a number of shares of Common Stock the Participant already owns having a value equal to the tax withholding obligations and other obligations. The value of the shares so withheld or tendered may not exceed the employee’s minimum required tax withholding rate.
SECTION 13. ASSIGNABILITY
No Award or interest in an Award may be sold, assigned, pledged (as collateral for a loan or as security for the performance of an obligation or for any other purpose) or transferred by the Participant or made subject to attachment or similar proceedings otherwise than by will or by the applicable laws of descent and distribution, except that to the extent the Participant designates one or more beneficiaries on a Company-approved form who may exercise the Award or receive payment under an Award after the Participant’s death.
During a Participant’s lifetime, an Award may be exercised only by the Participant. Notwithstanding the foregoing and to the extent permitted by Section 422 of the Code with respect to Stock Options, the Committee, in its sole discretion, may permit a Participant to assign or transfer an Award without consideration, subject to such terms and conditions as the Committee shall specify.
SECTION 14. ADJUSTMENTS
14.1 Adjustment of Shares
(a) In the event, at any time or from time to time, a stock dividend, stock split, spin-off, combination or exchange of shares, recapitalization, merger, consolidation, extraordinary cash dividend, distribution to shareholders other than a normal cash dividend, or other change in the Company’s corporate or capital structure results in (i) the outstanding shares of Common Stock, or any securities exchanged therefore or received in their place, being exchanged for a different number or kind of securities of the Company or (ii) new, different or additional securities of the Company or of any other company being received by the holders of shares of Common Stock, then the Committee shall make proportional adjustments, taking into consideration the accounting and tax consequences, in (A) the maximum number and kind of securities available for issuance under the Plan; (B) the maximum number and kind of securities issuable as Incentive Stock Options as set forth in Section 4.2; (C) the maximum number and kind of securities set forth in Section 15.4; (D) the number and kind of securities that are subject to any outstanding Awards and the per share exercise or grant price of such securities, without any change in the aggregate price to be paid therefor. The determination by the Committee as to the terms of any of the foregoing adjustments shall be conclusive and binding.
(b) Notwithstanding the foregoing, the issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, for cash or property, or for labor or services rendered, either upon direct sale or upon the exercise of rights or warrants to subscribe therefore, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, outstanding Awards. Also notwithstanding the foregoing, a dissolution or liquidation of the Company or a Business Combination shall not be governed by this Section 14.1, but shall be governed by Sections 14.2 and 14.3, respectively.
14.2 Dissolution or Liquidation
To the extent not previously exercised or settled, and unless otherwise determined by the Committee in its sole discretion, Awards shall terminate immediately prior to the dissolution or liquidation of the Company. To the extent a vesting condition, forfeiture provision or repurchase right applicable to an Award has not been waived by the Committee, the Award shall be forfeited immediately prior to the consummation of the dissolution or liquidation.
14.3 Change of Control
Notwithstanding any other provision of the Plan to the contrary, unless the Committee shall determine otherwise in the instrument evidencing the Award or, if not provided for in such instrument, in a written employment, services or other agreement between the Participant and the Company or a Related Company, in the event of a Change of Control:
(a) If the Change of Control is a Business Combination in which Awards, other than Performance Shares and Performance Units, could be converted, assumed, substituted for or replaced by the Successor Company, then, if and to the extent that the Successor Company converts, assumes, substitutes or replaces an Award, the vesting restrictions or forfeiture provisions applicable to such Award shall not be accelerated or lapse, and all such vesting restrictions or forfeiture provisions shall continue with respect to any shares of the Successor Company or other consideration that may be received with respect to such Award. If and to the extent that such Awards are not converted, assumed, substituted for or replaced by the Successor Company, such Awards shall become fully vested and exercisable or payable, and all applicable
restrictions or forfeiture provisions shall lapse, immediately prior to the Change of Control and such Awards shall terminate at the effective time of the Change of Control.
If the Change of Control is not a Business Combination in which Awards, other than Performance Shares and Performance Units, could be converted, assumed, substituted for or replaced by the Successor Company, all outstanding Awards, other than Performance Shares and Performance Units, shall become fully vested and exercisable or payable, and all applicable restrictions or forfeiture provisions shall lapse, immediately prior to the Change of Control and shall terminate at the effective time of the Change of Control.
For the purposes of this Section 14.3(a), an Award shall be considered converted, assumed, substituted for or replaced by the Successor Company if following the Business Combination the option or right confers the right to purchase or receive, for each share of Common Stock subject to the Award immediately prior to the Business Combination, the consideration (whether stock, cash or other securities or property) received in the Business Combination by holders of Common Stock for each share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares); provided, however, that if such consideration received in the Business Combination is not solely common stock of the Successor Company, the Committee may, with the consent of the Successor Company, provide for the consideration to be received pursuant to the Award, for each share of Common Stock subject thereto, to be solely common stock of the Successor Company substantially equal in Fair Market Value to the per share consideration received by holders of Common Stock in the Business Combination. The determination of such substantial equality of value of consideration shall be made by the Committee, and its determination shall be conclusive and binding.
(b) All Performance Shares or Performance Units earned and outstanding as of the date the Change of Control is determined to have occurred and for which the payout level has been determined shall be payable in full in accordance with the payout schedule pursuant to the instrument evidencing the Award. Any remaining outstanding Performance Shares or Performance Units (including any applicable performance period) for which the payout level has not been determined shall be payable in accordance with the terms and payout schedule pursuant to the instrument evidencing the Award. Any existing deferrals or other restrictions not waived by the Committee in its sole discretion shall remain in effect.
(c) Notwithstanding the foregoing, the Committee, in its sole discretion, may instead provide in the event of a Change of Control that is a Business Combination that a Participant’s outstanding Awards shall terminate upon or immediately prior to such Business Combination and that such Participant shall receive, in exchange therefor, a cash payment equal to the amount (if any) by which (x) the value of the per share consideration received by holders of Common Stock in the Business Combination, or, in the event the Business Combination is one of the transactions listed under subsection (c) in the definition of Business Combination or otherwise does not result in direct receipt of consideration by holders of Common Stock, the value of the deemed per share consideration received, in each case as determined by the Committee in its sole discretion, multiplied by the number of shares of Common Stock subject to such outstanding Awards (to the extent then vested and exercisable or whether or not then vested and exercisable, as determined by the Committee in its sole discretion) exceeds (y) if applicable, the respective aggregate exercise price or grant price for such Awards.
(d) For the avoidance of doubt, nothing in this Section 14.3 requires all outstanding Awards to be treated similarly.
14.4 Further Adjustment of Awards
Subject to Sections 14.2 and 14.3, the Committee shall have the discretion, exercisable at any time before a sale, merger, consolidation, reorganization, liquidation, dissolution or change of control of the Company, as defined by the Committee, to take such further action as it determines to be necessary or advisable with respect to Awards. Such authorized action may include (but shall not be limited to) establishing, amending or waiving the type, terms, conditions, or duration of, or restrictions on, Awards so as to provide for earlier,
later, extended or additional time for exercise, lifting restrictions and other modifications, and the Committee may take such actions with respect to all Participants, to certain categories of Participants or only to individual Participants. The Committee may take such action before or after granting Awards to which the action relates and before or after any public announcement with respect to such sale, merger, consolidation, reorganization, liquidation, dissolution or change of control that is the reason for such action.
14.5 No Limitations
The grant of Awards shall in no way affect the Company’s right to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.
14.6 No Fractional Shares
In the event of any adjustment in the number of shares covered by any Award, each such Award shall cover only the number of full shares resulting from such adjustment, and any fractional shares resulting from such adjustment shall be disregarded.
14.7 Section 409A
Notwithstanding any other provision of the Plan to the contrary, (a) any adjustments made pursuant to this Section 14 to Awards that are considered “deferred compensation” within the meaning of Section 409A shall be made in compliance with the requirements of Section 409A and (b) any adjustments made pursuant to this Section 15 to Awards that are not considered “deferred compensation” subject to Section 409A shall be made in such a manner as to ensure that after such adjustment the Awards either (i) continue not to be subject to Section 409A or (ii) comply with the requirements of Section 409A.
SECTION 15. SECTION 162(M) PROVISIONS
15.1 Terms of Section 162(m) Awards Generally
Notwithstanding any other provision of the Plan to the contrary, if the Committee determines, at the time Awards are granted to a Participant who is, or is likely to be as of the end of the tax year in which the Company would claim a tax deduction in connection with such Award, a Covered Employee, then the Committee may provide that this Section 15 is applicable to such Award.
15.2 Performance Criteria
This Section 15 is not intended to apply to any Options or SARs granted under the Plan. However, if an Award is subject to this Section 15, then the lapsing of restrictions thereon and the distribution of cash, shares of Common Stock or other property pursuant thereto, as applicable, shall be subject to the achievement of one or more objective performance goals established by the Committee, which shall be based on the attainment of specified levels of one of or any combination of the following “performance criteria” for the Company as a whole or any affiliate or business unit of the Company, as reported or calculated by the Company: cash flows (including, but not limited to, operating cash flow, free cash flow or cash flow return on capital); working capital; earnings per share; book value per share; operating income (including or excluding depreciation, amortization, extraordinary items, restructuring charges or other expenses); funds from operations and funds from operations per share; revenues; operating margins; return on assets; return on equity; return on net assets; debt; debt plus equity; market or economic value added; stock price appreciation; total shareholder return; cost control; strategic initiatives; market share; net income; return on invested capital; improvements in capital structure; or customer satisfaction, employee satisfaction, services performance, subscriber, cash management or asset management metrics (together, the“Performance Criteria”).
Such performance goals also may be based on the achievement of specified levels of Company performance (or performance of an applicable affiliate or business unit of the Company) under one or more of the Performance Criteria described above relative to the performance of other corporations or a market index. Such performance goals shall be set by the Committee within the time period prescribed by, and shall
otherwise comply with the requirements of, Section 162(m) of the Code, or any successor provision thereto, and the regulations thereunder.
The Committee may provide in any such Award that any evaluation of performance may include or exclude any of the following events that occurs during a performance period: (i) asset write-downs, (ii) litigation or claim judgments or settlements, (iii) the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results, (iv) any reorganization and restructuring programs, (v) extraordinary nonrecurring items as described in Accounting Standards Codification 225-20 or in Management’s Discussion and Analysis of Financial Condition and Results of Operations appearing in the Company’s annual report to shareholders for the applicable year, (vi) acquisitions or divestitures, (vii) foreign exchange gains and losses, (viii) gains and losses on asset sales, and (ix) impairments. To the extent such inclusions or exclusions affect Awards to Covered Employees, they shall be prescribed in a form that satisfies the requirements for “performance-based compensation” within the meaning of Section 162(m)(4)(C) of the Code, or any successor provision thereto.
The Committee shall certify in writing that any Performance Criteria have been met prior to settling any Award subject to Performance Criteria.
15.3 Adjustment of Awards
Notwithstanding any provision of the Plan other than Section 15, with respect to any Award that is subject to this Section 15, the Committee may adjust downwards, but not upwards, the amount payable pursuant to such Award, and the Committee may not waive the achievement of the applicable performance goals except in the case of the death or Disability of the Covered Employee or a Change in Control.
15.4 Limitations
Subject to adjustment from time to time as provided in Section 14.1, no Participant may be granted during any calendar year (i) Options or SARs with respect to more than 2,000,000 shares, and (ii) Awards other than Options and SARs that are intended to comply with the performance-based exception under Code Section 162(m) and are denominated in shares under which more than 1,000,000 shares of Common Stock may be earned in each 12 months in the performance period. During any calendar year, no Participant may be granted Awards other than Options and SARs that are intended to comply with the performance-based exception under Code Section 162(m) and are denominated in cash under which more than $10,000,000 may be earned in each 12 months in the performance period. Each of the limitations in this section shall be multiplied by two with respect to Awards granted to a Participant during the first calendar year in which the Participant commences employment with the Company. If an Award is cancelled, the cancelled Award shall continue to be counted toward the applicable limitation in this section.
The Committee shall have the power to impose such other restrictions on Awards subject to this Section 15 as it may deem necessary or appropriate to ensure that such Awards satisfy all requirements for “performance-based compensation” within the meaning of Section 162(m)(4)(C) of the Code, or any successor provision thereto.
SECTION 16. AMENDMENT AND TERMINATION
16.1 Amendment, Suspension or Termination of the Plan
The Board or the Compensation Committee of the Board may amend, suspend or terminate the Plan or any portion of the Plan at any time and in such respects as it shall deem advisable; provided, however, that, to the extent required by applicable law, regulation or stock exchange rule other than Section 162(m) of the Code, shareholder approval shall be required for any amendment to the Plan; and provided, further, that any amendment that requires shareholder approval may be made only by the Board. Subject to Section 16.3, the Committee may amend the terms of any outstanding Award, prospectively or retroactively.
16.2 Term of the Plan
Unless sooner terminated as provided herein, the Plan shall terminate 10 years from the Effective Date. After the Plan is terminated, no future Awards may be granted, but Awards previously granted shall remain outstanding in accordance with their applicable terms and conditions and the Plan’s terms and conditions. Notwithstanding the foregoing, no Incentive Stock Options may be granted more than 10 years after the earlier of approval by the Board or the shareholders of the Plan (or any amendment to the Plan that constitutes the adoption of a new plan for purposes of Section 422 of the Code).
16.3 Consent of Participant
The amendment, suspension or termination of the Plan or a portion thereof or the amendment of an outstanding Award shall not, without the Participant’s consent, materially adversely affect any rights under any outstanding Award under the Plan. Except as otherwise determined by the Committee, any change or adjustment to an outstanding Incentive Stock Option shall not, without the consent of the Participant, be made in a manner so as to constitute a “modification” that would cause such Incentive Stock Option to fail to continue to qualify as an Incentive Stock Option. Notwithstanding the foregoing, any adjustments made pursuant to Section 14 shall not be subject to these restrictions.
SECTION 17. GENERAL
17.1 No Individual Rights
(a) person or Participant shall have any claim to be granted any Award under the Plan, and the Company has no obligation for uniformity of treatment of Participants under the Plan.
(b) Nothing in the Plan or any Award granted under the Plan shall be deemed to constitute an employment contract or confer or be deemed to confer on any Participant any right to continue in the employ of, or to continue any other relationship with, the Company or any Related Company or limit in any way the right of the Company or any Related Company to terminate a Participant’s employment or other relationship at any time, with or without cause.
17.2 Issuance of Shares
(a) Notwithstanding any other provision of the Plan, the Company shall have no obligation to issue or deliver any shares of Common Stock under the Plan or make any other distribution of benefits under the Plan unless, in the opinion of the Company’s counsel, such issuance, delivery or distribution would comply with all applicable laws (including, without limitation, the requirements of the Securities Act or the laws of any state or foreign jurisdiction) and the applicable requirements of any securities exchange or similar entity.
(b) The Company shall be under no obligation to any Participant to register for offering or resale or to qualify for exemption under the Securities Act, or to register or qualify under the laws of any state or foreign jurisdiction, any shares of Common Stock, security or interest in a security paid or issued under, or created by, the Plan, or to continue in effect any such registrations or qualifications if made.
(c) As a condition to the exercise of an Option or any other receipt of Common Stock pursuant to an Award under the Plan, the Company may require (i) the Participant to represent and warrant at the time of any such exercise or receipt that such shares are being purchased or received only for the Participant’s own account and without any present intention to sell or distribute such shares and (ii) such other action or agreement by the Participant as may from time to time be necessary to comply with the federal, state and foreign securities laws. At the option of the Company, a stop-transfer order against any such shares may be placed on the official stock books and records of the Company, and a legend indicating that such shares may not be pledged, sold or otherwise transferred, unless an opinion of counsel is provided (concurred in by counsel for the Company) stating that such transfer is not in violation of any applicable law or regulation, may be stamped on stock certificates to ensure exemption from registration. The Committee may also require the
Participant to execute and deliver to the Company a purchase agreement or such other agreement as may be in use by the Company at such time that describes certain terms and conditions applicable to the shares.
(d) To the extent the Plan or any instrument evidencing an Award provides for issuance of stock certificates to reflect the issuance of shares of Common Stock, the issuance may be effected on a non-certificated basis, to the extent not prohibited by applicable law or the applicable rules of any stock exchange.
17.3 Indemnification
Each person who is or shall have been a member of the Board or a committee appointed by the Board or an officer of the Company to whom authority was delegated in accordance with Section 3, shall be indemnified and held harmless by the Company against and from any loss, cost, liability or expense that may be imposed upon or reasonably incurred by such person in connection with or resulting from any claim, action, suit or proceeding to which such person may be a party or in which such person may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by such person in settlement thereof, with the Company’s approval, or paid by such person in satisfaction of any judgment in any such claim, action, suit or proceeding against such person; provided, however, that such person shall give the Company an opportunity, at its own expense, to handle and defend the same before such person undertakes to handle and defend it on such person’s own behalf, unless such loss, cost, liability or expense is a result of such person’s own willful misconduct or except as expressly provided by statute.
The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such person may be entitled under the Company’s certificate of incorporation or bylaws, as a matter of law, or otherwise, or of any power that the Company may have to indemnify or hold harmless.
17.4 No Rights as a Shareholder
Unless otherwise provided by the instrument evidencing the Award or, if not provided in such instrument, in a written employment or services agreement, no Award other than a Stock Award, shall entitle the Participant to any cash dividend, voting or other right of a shareholder unless and until the date of issuance under the Plan of the shares that are the subject of such Award.
17.5 Compliance with Laws and Regulations
(a) In interpreting and applying the provisions of the Plan, any Option granted as an Incentive Stock Option pursuant to the Plan shall, to the extent permitted by law, be construed as an “incentive stock option” within the meaning of Section 422 of the Code.
(b) The Plan and Awards granted under the Plan are intended to be exempt from the requirements of Section 409A of the Code to the maximum extent possible, whether pursuant to the short-term deferral exception described in Treasury Regulation Section 1.409A-1(b)(4), the exclusion applicable to stock options, stock appreciation rights and certain other equity-based compensation under Treasury Regulation Section 1.409A-1(b)(5), or otherwise. To the extent Code Section 409A is applicable to the Plan or any Award granted under the Plan, it is intended that the Plan and any Awards granted under the Plan comply with the deferral, payout and other limitations and restrictions imposed under Code Section 409A. Notwithstanding any other provision of the Plan or any Award granted under the Plan to the contrary, the Plan and any Award granted under the Plan shall be interpreted, operated and administered in a manner consistent with such intentions.
Without limiting the generality of the foregoing, and notwithstanding any other provision of the Plan or any Award granted under the Plan to the contrary, with respect to any payments and benefits under the Plan or any Award granted under the Plan to which Code Section 409A applies, all references in the Plan or any Award granted under the Plan to the termination of the Participant's employment or service are intended to mean the Participant's“separation from service” within the meaning of Code Section 409A(a)(2)(A)(i). In
addition, if the Participant is a“specified employee” within the meaning of Code Section 409, then to the extent necessary to avoid subjecting the Participant to the imposition of any additional tax under Code Section 409A, amounts that would otherwise be payable under the Plan or any Award granted under the Plan during the six-month period immediately following the Participant's“separation from service” within the meaning of Code Section 409A(a)(2)(A)(i), shall not be paid to the Participant during such period, but shall instead be accumulated and paid to the Participant (or, in the event of the Participant's death, the Participant's estate) in a lump sum on the first business day after the earlier of the date that is six months following the Participant's separation from service or the Participant's death.
Notwithstanding any other provision in the Plan to the contrary, the Committee, to the extent it deems necessary or advisable in its sole discretion, reserves the right, but shall not be required, to unilaterally amend or modify the Plan and any Award granted under the Plan so that the Award qualifies for exemption from or complies with Code Section 409A; provided, however, that the Committee makes no representations that Awards granted under the Plan shall be exempt from or comply with Code Section 409A and makes no undertaking to preclude Code Section 409A from applying to Awards granted under the Plan.
17.6 Participants in Other Countries
Without amending the Plan, the Committee may grant Awards to Eligible Persons who are foreign nationals on such terms and conditions different from those specified in the Plan as may, in the judgment of the Committee, be necessary or desirable to foster and promote achievement of the purposes of the Plan and shall have the authority to adopt such modifications, procedures and subplans and the like as may be necessary or desirable to comply with provisions of the laws of other countries in which the Company or any Related Company may operate or have employees to ensure the viability of the benefits from Awards granted to Participants employed in such countries or jurisdictions, meet the requirements that permit the Plan to operate in a qualified or tax-efficient manner, comply with applicable foreign laws and to meet the objectives of the Plan.
17.7 No Trust or Fund
The Plan is intended to constitute an“unfunded” plan. Nothing contained herein shall require the Company to segregate any monies or other property, or shares of Common Stock, or to create any trusts, or to make any special deposits for any immediate or deferred amounts payable to any Participant, and no Participant shall have any rights that are greater than those of a general unsecured creditor of the Company.
17.8 Successors
All obligations of the Company under the Plan with respect to Awards shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all the business or assets of the Company.
17.9 Severability
If any provision of the Plan or any Award is determined to be invalid, illegal or unenforceable in any jurisdiction, or as to any person, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or, if it cannot be so construed or deemed amended without, in the Committee’s determination, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, person or Award, and the remainder of the Plan and any such Award shall remain in full force and effect.
17.10 Choice of Law
The Plan, all Awards granted thereunder and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by the laws of the United States, shall be governed by the laws of the State of Washington without giving effect to principles of conflicts of law. Participants irrevocably consent to the nonexclusive jurisdiction and venue of the state and federal courts located in the State of Washington.
17.11 Legal Requirements
The granting of Awards and the issuance of shares of Common Stock under the Plan are subject to all applicable laws, rules and regulations and to such approvals by any governmental agencies or national securities exchanges as may be required.
SECTION 18. EFFECTIVE DATE
The effective date (the“Effective Date”) is the date on which the Plan is approved by the shareholders of the Company. If the shareholders of the Company do not approve the Plan within 12 months after the Board’s adoption of the Plan, any Incentive Stock Options granted under the Plan will be treated as Nonqualified Stock Options.
TO REACH CORPORATE HEADQUARTERS
From
From Seattle: Drive approximately 24 miles south from city center on Interstate 5, following the signs for “Tacoma/Portland” and takeExit 143 (Federal Way/S. 320th St.). Turn left ontoS. 320th, cross over the freeway and go through two lights to the light atWeyerhaeuser Way
From Tacoma: Drive north on Interstate 5, approximately 8 miles from city center, and takeExit 142A (Auburn, Highway 18, North Bend). Stay in the far right lane. Take the exit toWeyerhaeuser Way South. Turn left at the light, cross the overpass, and go through the traffic circle. Turn left again at the East Entrance sign and follow the directions for parking. |
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IMPORTANT ANNUAL MEETING INFORMATION Admission Ticket Electronic Voting Instructions Available 24 hours a day, 7 days a week! Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy. VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. Proxies submitted by the Internet or telephone must be received by 11:59 p.m., Eastern Time, on May 21, 2015 (11:59 p.m., Eastern Time, on May 19, 2015 for participants under the Plans). Vote by Internet • Go to http://www.envisionreports.com/WY • Or scan the QR code with your smartphone • Follow the steps outlined on the secure website Vote by telephone • Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch tone telephone • Follow the instructions provided by the recorded message Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. Annual Meeting Proxy Card
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qIF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q
Proposals — The Board of Directors recommends a vote “FOR” each of the following nominees and “FOR” items 2 and 3.
For Against Abstain 1.1 - David P. Bozeman 1.4 - John I. Kieckhefer 1.7 - Doyle R. Simons 1. Election of Directors: 1.10 - Charles R. Williamson For Against Abstain 1.2 - Debra A. Cafaro 1.5 - Wayne W. Murdy 1.8 - D. Michael Steuert For Against Abstain 1.3 - Mark A. Emmert 1.6 - Nicole W. Piasecki 1.9 - Kim Williams For Against Abstain 2. Approval, on an advisory basis, of the compensation of the named executive officers For Against Abstain 3. Ratification of selection of independent registered public accounting firm The proxies are authorized to vote in their discretion upon other matters that may properly come before the meeting. Non-Voting Items Change of Address — Please print new address below. Comments — Please print your comments below. Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below
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For | Against | Abstain | For | Against | Abstain | |||||||||||||||||
2. | Proposal to approve the Weyerhaeuser Company 2013 Long-Term Incentive Plan | ¨ | ¨ | ¨ | 3. | Approval, on an advisory basis, of executive compensation | ¨ | ¨ | ¨ | |||||||||||||
4. | Approval, on an advisory basis, of the appointment of auditors | ¨ | ¨ | ¨ | The proxies are authorized to vote in their discretion upon other matters that may properly come before the meeting. |
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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.
Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. 1 U P X 020DFE
PLEASE NOTE THAT YOU WILL NEED TO PRESENT THE ADMISSION TICKET PROVIDED BELOW TO OBTAIN ADMISSION
TO THE ANNUAL MEETING. ACCORDINGLY, THE ADMISSION TICKET SHOULD NOT BE RETURNED WITH THIS PROXY
CARD IF YOU VOTE BY MAIL.
ADMISSION TICKET
Annual Meeting of the Shareholders
Date-April 11, 2013 – May 22, 2015
Time- – 9:00 a.m. Pacific Time
Location- – Weyerhaeuser Company
Corporate Headquarters Building
33663 Weyerhaeuser Way South
Federal Way, Washington 98003
ADMITTANCE MAY BE DENIED WITHOUT A TICKET
Please present this admission ticket for admittance to the Annual Meeting.
If you plan to attend the Annual Meeting in person, do not return this admission ticket with the proxy card if you vote your shares by mail.
For security purposes, no banners, placards, signs, literature for distribution or cameras may be taken into the meeting.
Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Shareholders.
The Proxy Statement and the 20122014 Annual Report to Shareholders are available at:
www.envisionreports.com/WY.WY.
qIF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q
Proxy
ANNUAL MEETING OF SHAREHOLDERS MAY 22, 2015
APRIL 11, 2013
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Charles R. Williamson, Daniel S. FultonDoyle R. Simons and Claire S. Grace,Devin W. Stockfish, and each of them, with full power to act without the other and with full power of substitution, as proxies to represent and to vote, as directed herein, all shares not held in Benefit Plan accounts the undersigned is entitled to vote at the annual meeting of the shareholders of Weyerhaeuser Company to be held at the Corporate Headquarters Building, Federal Way,
Washington, on Thursday, April 11, 2013,Friday, May 22, 2015, at 9 am, and all adjournments or postponements thereof. Shares will be voted as directed on the reverse side of this Proxyproxy card. If the card is signed and returned without specific instructions for voting, the shares will be voted in accordance with the
recommendations of the Board of Directors.
If there are shares allocated to the undersigned in the Weyerhaeuser Company 401(k), or Weyerhaeuser Company Ltd. Investment Growth Plans (the “Plans”), the undersigned hereby directs the Trustee to vote all full and fractional shares as indicated on the reverse side of this card. The Trustee must receive your proxy instructions no later than 11:59 p.m., Eastern Time, on May 19, 2015. If the card is signed and returned without specific instructions for voting, the shares will be voted in accordance with the recommendations of the Board of Directors. Shares for which no voting instructions are received will be voted as provided by the Plans.
(Continued and to be marked, dated and signed, on the other side) Proxy