(Amendment No. )☑Filed by the Registrant☐ Filed by a party other than the RegistrantCHECK THE APPROPRIATE BOX:☐Preliminary Proxy Statement ☐ ☑☒ Definitive Proxy Statement ☐ Definitive Additional Materials ☐ under §240.14a-12Pursuant to
In Itsin its Charter)PAYMENT OF FILING FEE (CHECK ALL BOXES THAT APPLY):☑☒ No fee requiredrequired.☐ Fee paid previously with preliminary materialsmaterials.☐ Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 0-11
March 29, 2022
DearShareowner:
We invite you to join us for our 2022 Annual Meeting of Shareowners on May 9, which we plan to hold in person in Memphis, Tennessee. Whether or not you plan to attend, please review the enclosed materials and vote your shares. This Proxy Statement, includes a summary that highlights policy updates and provides an overview of key performance metrics.
Also enclosed is a copy of the International Paper 2021 Annual Report, which highlights our key accomplishments.
Last year, we again delivered solid earnings and cash generation despite significant inflationary cost pressure, pandemic-related supply chain disruptions and operational challenges. In fact, 2021 marks the 12th consecutive year that we generated returns above the cost of capital. I’m incredibly proud and appreciative of the commitment of our employees who delivered these results while taking care of each other and our customers throughout the pandemic. They demonstrated the character, leadership and agility that are hallmarks of our team.
We continued to execute on the key components of our cash allocation strategy in 2021, which includes strategic investments, a strong balance sheet and returning cash to shareowners. We used $2.5 billion of cash to reduce debt, and strengthened our packaging business through targeted investments. We returned $1.6 billion of cash to our shareowners through dividends and share repurchases. This brings our five-year total to $6 billion of cash returned demonstrating our sustainable dividend policy and strong commitment to shareowners.
Positioning the Company for future success through the guidance and support of our Board of Directors is essential. We took significant steps to accelerate value creation for our shareowners in 2021, most notably through the spin-off of our global printing papers business and sale of our pulp and paper mill in Kwidzyn, Poland. With a more focused portfolio, we plan to accelerate profitable growth at International Paper through value-returning investments in our packaging
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| We Also enclosed is a copy of the International Paper 2023 Annual Report, which highlights our key accomplishments. Looking back on 2023, the macro-economic environment generated considerable challenges, including lower demand for our products and significant cost inflation. We worked closely with our customers to use the scale, scope and geographic reach of our extensive manufacturing system to innovate, create value and serve their needs. Our teams navigated these conditions, aggressively pursuing cost reduction actions. Through our Building a Better IP initiatives, we delivered $260 million of earnings benefits in 2023, exceeding our targets and demonstrating the commercial and operational excellence mindset embedded in our culture. In September, we completed the sale of our ownership interest in the Ilim joint venture in Russia. We also invested in our packaging system and achieved mix and margin improvements through our strong segment-based value propositions. Our business leaders took strategic actions to structurally reduce fixed costs and optimize our mills. The impact of our commercial and operational improvement actions was diluted in 2023 due to the challenging economic cycle, but we believe these actions will contribute to our long-term strategic focus and future results. | |||
In addition, in 2023, we preserved our solid balance sheet. We remained committed to our dividend policy and returned approximately $840 million to our shareowners. In terms of cash returned to shareholders through dividends and stock repurchases, this brings our five-year total to $6.4 billion. As we previously announced, after serving as International Paper Company’s chief executive officer for the last decade and a 40-year career with the Company, I have decided to retire following completion of our chief executive officer succession plan. The Board conducted an extensive search, which considered both internal and external candidates for the CEO role. In March, the Board appointed Andrew (“Andy”) K. Silvernail as the Company’s new Chief Executive Officer effective May 1, 2024. Andy | ||||
joins International Paper with more than two decades of experience leading global manufacturing and technology-based companies. He has been a catalyst for creating value and strengthening engagement and is skilled at helping talented organizations achieve next-level performance. Our Board plans to elect Andy to our Board of Directors at the Board meeting following the Annual Meeting of Shareholders. I will continue my role as Chairman of the Board for a transition period. The Board and I have tremendous confidence that Andy’s unique experiences, paired with the industry expertise of our senior executives, will amplify the Company’s success going forward. Andy has a passion for leadership and for making a difference. He is the right leader for the Company’s next chapter and will be a great addition to our strong leadership team. International Paper makes products that matter. We are a global producer of sustainable packaging, pulp and other fiber-based products, and one of the world’s largest recyclers. Our talented team members are dedicated to taking care of our customers, operating safely, giving back to the communities in which we operate, and advancing our Vision 2030 goals. Given our strategic customer relationships, world-class assets, and market expertise, we are positioned to maximize long-term value for all our stakeholders, and we On behalf of International Paper’s Board of Directors and our
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business and materially lower our cost structure. Through these Building a Better IP initiatives, we expect to deliver $350 to $400 million in incremental earnings growth by 2024.
Looking ahead, we will continue to be guided by our core values of safety, ethics and stewardship. We are focused on delivering sustainable business outcomes while being responsible stewards of the world’s resources. Through our Vision 2030 goals, which are aligned with the global priorities of the United Nations’ Sustainable Development Goals, we continue to drive meaningful, sustainable improvements for people, communities, the environment and our customers and shareowners.
Our 124-year history includes a solid track record of evolving to meet new challenges. We are committed to Building a Better IP for all our stakeholders, and we are excited about leveraging our focused portfolio and financial strength to accelerate profitable growth. On behalf of our 38,000 employees and Board of Directors, thank you for your ownership and continued support of our efforts to pursue our vision to be among the most successful, sustainable and responsible companies in the world.
Sincerely,
Mark S. Sutton
Chairman and
Chief Executive Officer
Notice of AnnualMeeting of Shareowners
To the Owners of Common Stock of International Paper Company:
| A diverse and agile leadership team with a winning mindset is critical to guiding the company’s improvement efforts and driving our success. Effective May 1st , Andy Silvernail will become the Company’s new CEO. The following senior leaders took on new responsibilities in 2023 aligned with our commitment to leadership development: Clay Ellis, Senior Vice President, Global Cellulose Fibers Aimee Gregg, Senior Vice President, Supply Chain and Information Technology Tom Hamic, Senior Vice President, North American Container and Chief Commercial Officer Allison Magness, Senior Vice President, Manufacturing and Environment, Health and Safety Tom Plath, Senior Vice President, Human Resources and Corporate Affairs Jay Royalty, Senior Vice President, Containerboard and Recycling Ksenia Sosnina, Senior Vice President, Europe, the Middle East and Africa | |||||
Notice of Annual
Meeting of Shareowners
Date and Time Monday, May 13, 2024, at 11:00 a.m. CDT Place International Paper Company |
Your vote is important!
Vote on the Internet
Go to the website address shown in the Notice of Internet Availability or proxy card provided to you. You will need the 16-digit control number printed on the Notice of Internet Availability or proxy card.
Vote by telephone
Dial the toll-free number shown in the Notice of Internet Availability or proxy card provided to you. You will need the 16-digit control number printed on the Notice of Internet Availability or proxy card.
Vote by mail
Mark, sign and date your proxy card and return it in the postage-paid envelope that was included with the proxy card.
| Items of Business | Board Recommendation | |||
| ITEM 1 | Election of | FOR | ||||
| ITEM 2 | Ratify Deloitte & Touche LLP as our independent auditor for | FOR | ||||
| ITEM 3 | Non-binding resolution to approve the compensation of our | FOR | ||||
| ITEM 4 | Approval of 2024 Long-Term Incentive Compensation Plan | FOR | ||||
| ITEM 5 | Shareowner | AGAINST | ||||
| ITEM 6 | Shareowner | AGAINST | ||||
| Consider any other business properly brought before the meeting | ||||||
Record Date
March 10, 2022. Holders of record of International Paper common stock par value $1.00 per share, at the close of business on that date,March 15, 2024, are entitled to vote at the meeting.
By order of the Board of Directors,
Sharon
Joseph R. RyanSaab
Senior Vice President,
General Counsel and Corporate SecretaryMarch 29, 2022
April 2, 2024
Important Notice Regarding the Availability of Proxy Materials for the Shareowner Meeting to Be Held on May 9, 2022:13, 2024:
The following materials are available for viewing and printing at materials.proxyvote.com/460146:
| • | The Notice of Annual Meeting of Shareowners to be held on May |
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International Paper’s |
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International Paper’s |
A Notice of Internet Availability of Proxy Materials (the “Notice of Internet Availability”) or the proxy statement, proxy card and annual report are first being sent to’to shareowners on or about March 29, 2022.April 2, 2024. Information contained in this Proxy Statement does not take into account changes effective after the mail date unless otherwise noted.
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Table of Contents
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Index of Frequently Requested Information
| 2 \ | International Paper 2024 Proxy Statement |
Forward-Looking Statements. Certain statements in this proxy statement that are not historical in nature may be considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “expects”, “anticipates”, “believes”, “estimates” and similar expressions identify forward-looking statements. These statements are not guarantees of future performance and reflect management’s current views and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these statements. Moreover, any targets or goals with respect to climate change or other ESG matters discussed herein or in our global citizenship and sustainability reports as noted below are forward-looking statements and may be aspirational. These targets or goals are not guarantees of future results, and involve assumptions and known and unknown risks and uncertainties, some of which are beyond our control. Such risks and other factors that may impact forward-looking statements are discussed in our filings with the SEC, including in Item 1A under the caption “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2023, filed on February 16, 2024, and the risks and uncertainties discussed in any subsequent reports that we file or furnish with the SEC from time to time. The information contained herein speaks as of the date hereof, and we do not have or undertake any obligation to update or revise our forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by law.
No Incorporation by Reference. Information that is in our 2020 Global Citizenship2022 Sustainability Report, any information that will be in our 20212023 Sustainability Report to be filedpublished later in 2022,2024, and any other information on our website that we may refer to in this proxy statementProxy Statement is not incorporated by reference into, and does not form any part of, this proxy statement.Proxy Statement.
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This summary highlights information contained elsewhere in this proxy statement.Proxy Statement. This summary does not contain all of the information you should consider, and you should read the entire proxy statementProxy Statement before voting.
MEETING AGENDA AND VOTING RECOMMENDATIONSMeeting Agenda and Voting Recommendations
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| Board Recommendation | ||||||
ITEM 1 Election of 9 Directors | FOR  | |||||
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ITEM 2 Ratify Deloitte & Touche LLP as the Company’s Independent Auditor for | FOR | |||||
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| 42 – 45 | ||||||
ITEM 3 | ||||||
Non-Binding Resolution to Approve the Compensation of Our Named Executive Officers | FOR | |||||
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ITEM 4 Approval of 2024 Long-Term Incentive Compensation Plan | FOR | |||||
| See page |  See pages 99 – 108 | |||||
ITEM 5 Shareowner Proposal Concerning Shareowner Opportunity to Vote on Excessive Golden Parachutes | AGAINST  | |||||
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| See pages | ||||||
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ITEM 6 Shareowner Proposal Concerning a Report on | AGAINST | |||||
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| Consider any other business properly brought before the meeting. | ||||||
| 4 \ | International Paper |
Proxy Summary / 2023 Financial Performance Highlights |
Proxy Summary| 20212023 Financial Performance Highlights
2021 FINANCIAL PERFORMANCE HIGHLIGHTS
|  | Solid Execution in a Challenging We generated $382 million of Earnings from Continuing Operations Before Income Taxes and Equity Earnings (GAAP) and achieved $2.2 billion of Adjusted EBITDA1 | ||
 | Returned approximately $840 Million of Cash to Shareowners | |||
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 |  | Maintained a Strong Balance Sheet | ||
| 1. | 2. | 3. | ||||||||
| In 2021, we grew revenue and earnings under highly challenging conditions that included significant operational and supply chain constraints.2 | With the successful spinoff of our global printing papers business, we have refocused our portfolio around corrugated packaging. | We initiated meaningful actions to set the stage for profitable growth, and to materially lower our cost structure. | ||||||||
| We advanced our strategies to improve profitability across our portfolio. | ||||||
| 2. | ||||||
| We delivered $260 million of earnings benefits from our Build a Better IP initiatives. | ||||||
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| We executed on strategic actions, including investing in our packaging business and optimizing our mill system to reduce fixed costs. | ||||||
| 1 | Adjusted EBITDA is a non-GAAP financial measure. See Appendix |
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Proxy Summary / Our Commitment to |
Proxy Summary| Our Commitment to Environmental, Social and Governance Matters (ESG)Sustainability
OUR COMMITMENT TO ENVIRONMENTAL, SOCIAL AND GOVERNANCE MATTERS (ESG)
AtFor more than 125 years, International Paper has championed the sustainable management of natural resources. As part of our goal iscommitment to build a better future, forwe are working to advance our Vision 2030 goals and targets in order to deliver sustainable outcomes through our businesses. We believe that by using resources responsibly and efficiently, creating renewable fiber-based solutions, taking action to reduce our emissions and water consumption and investing in our peoplethe planet and our Company. Our strategic framework, The IP Way Forward, ensures thatcommunities, we will ensure our business strategy deliversis safe, successful and sustainable outcomes for all our stakeholders—employees, customers, suppliers, communities, governmental and non-governmental organizations and shareowners—for generations to come.
2021
2023 Sustainability Highlights | ||||||||
43M tons of forest-based fiber purchased | 7M tons of recovered fiber collected, consumed and marketed each year | 70% of our mill energy is derived from renewable biomass residuals | ||||||
732,000 acres of significant forestland conserved and restored since 2020 | 48% of manufacturing waste diverted was beneficially used | $20M contributed to charitable organizations | ||||||
Our approach to sustainability considers our entire value chain, from sourcing raw materials responsibly and working safely, to making renewable, recyclable products and providing a pivotal yearmarket for recovered products. To help focus our ESG efforts, focusedsustainability strategy and determine what areas to prioritize, we developed Vision 2030, a set of four enterprise-wide goals designed to ensure we remain the supplier of choice for customers, the company of choice for employees and the investment of choice for shareowners.
In 2023, we continued our focus on building out implementation plans for our Vision 2030 goals:
Healthy and Lead forest stewardship efforts globally | ||||||||||||
Renewable Solutions Accelerate the transition to a low-carbon economy through innovative fiber-based products | ||||||||||||
Sustainable Improve our climate impact and advance water stewardship | ||||||||||||
Thriving People and Communities Promote employee well-being by providing safe, caring and inclusive workplaces and strengthening the resilience of our communities |
We have also strengthenedbelieve that Vision 2030 is accelerating our commitment to ESG transparency. In 2022, we plan to reportprogress toward achieving our vision of being among the most successful, sustainable, and responsible companies in accordance with the standards of the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB). In addition, in 2022, we intend to follow the disclosure recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD), as we recognize the importance of understanding and communicating our climate risks to our stakeholders.world.
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Proxy Summary / Our Commitment to |
We believe we can achieve these goals by doing things through The IP Way – by doing the right things, in the right ways, for the right reasons.reasons, all of the time. We are proud to have been included in FORTUNE Magazine’s World’s Most Admired Companies for 1920 years and Ethisphere Institute’s World’s Most Ethical Companies for 1618 consecutive years.
ESG OversightOur Approach to Climate
We believe global citizenship is a key element of our corporate governance, promoted by our Board of Directors, CEO and Senior Leadership Team.
To reach our Vision 2030 goals, we are implementing a top-down approach, with buy-in from leadership and a governance structure that integrates ESG considerations into the business.
The Company has an integrated Board and executive-level governance structure to oversee its climate-related and other ESG initiatives. The Public Policy and Environment Committee of our Board of Directors has overall responsibility for overseeing and assessing environmental and sustainability (including climate change), public policy, legal, health and safety issues and risks impacting the Company. Our Board’s Governance Committee also has oversight of certain public policy and sustainability matters. At the operational level, our stewardship council, a cross-functional leadership team with representatives from businesses and functional teams, guides and supports our ESG strategy and tactics. Within this framework, our Vice-President and Chief Sustainability Officer leads our ESG strategy and initiatives day-to-day (including with respect to climate change and community engagement), while our senior Vice President of Human Resources and Global Citizenship leads our efforts with respect to certain other ESG-related human capital strategies and programs. Finally, our Board receives regular updates regarding ESG issues and risks, including updates regarding our ESG strategies and programs, from relevant Board committees, our Chief Sustainability Officer and members of management.
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Proxy Summary| Our Commitment to Environmental, Social and Governance Matters (ESG)
Climate Strategy
The Company recognizesrecognize the impacts of climate change on people and our planet. To manage climate-related risks and opportunities, we are taking actions throughout our value chain to help advance a low-carbon circular economy.
We transform renewable resources into recyclable products that people depend on every day. This cycle begins with sourcing renewable fiber from responsibly managed forests and atrecovered materials. At the end of use, our low-carbon products are packaging is recycled into new products at a higher rate than any other base material. We are advancing the shift to a low-carbon, circular economy.
We also use carbon-neutral biomass and manufacturing residuals (rather than fossil fuels) to generate mostmuch of the manufacturing energy at our mills. We believe our efforts to advance sustainable forest management and restore forest landscapes are an important lever for mitigating climate change through carbon storage in forests. Through improvements in operations, equipment, energy efficiency and fuel diversity, we have achieved significant company-wide reductions in Scope 1 and Scope 2 emissions. For example, we reduced our greenhouse gas (GHG) emissions by approximately 20% from 2010 to 2022. Furthermore, ourOur Vision 2030 goals include targeted incremental reductions of 35% ina target to reduce our Scope 1, 2, and 3 GHG emissions by 35% in comparison to 2019 levels. In December 2021, theThe Science Based Targets initiative (SBTi) approved these targetsthis target as consistentaligned with levels required to meet the goals of the 2015 Paris Agreement. We will continue to evaluate our progress and implement improvements as we pursue our Vision 2030 GHG goal.
One way we are demonstrating our commitment to climate sustainability is by increased transparency. In 2023, we reported in accordance with the standards of the Global Reporting Initiative and the Sustainability Accounting Standards Board (SASB). In addition, in the 2023 reporting cycle, we aligned our annual sustainability reporting with the Task Force on Climate-Related Financial Disclosures. In addition, we have committed to be an inaugural early adopter for Taskforce on Nature-related Financial Disclosure (“TNFD”). We anticipate that we will start making disclosures aligned with the TNFD recommendations in our corporate reporting by financial year 2025. We recognize the importance of understanding and communicating our climate and nature risks to our stakeholders.
Additional information regarding climate change and our Company is available in our 2020 Global Citizenship Report and will be available in our upcoming 20212023 Sustainability Report, to be filed later in 2022, both of which can be, or will be, foundwhen published, available on our corporate website at www.internationalpaper.com/planetsustainability. The information in our 2023 Sustainability Report and all other content on our website is not incorporated by reference in, and does not form a part of this Proxy Statement.
Social ImpactThriving People and Communities
Safety
Our top priority is the safety of our employees. Our stated Vision 2030 Goalgoal is to achieve zero serious injuries for employees and contractors. To accomplish this goal, we focus on The IP Way of doing things – we do the right things, in the right ways, for the right reasons, all of the time. In 2021,2023, 94% of our sites operated without a serious injury, which we define as a life-altering specific injury, to our employees.
Diversity and Inclusion
We believe in an inclusive workforce where diverse backgrounds are represented, engaged and empowered to inspire innovative ideas and decisions. To foster a more diverse and inclusive workplace, we are focused on promoting a culture of diversity and inclusion that leverages the talents of all employees, and implementing practices that attract, recruit, and retain diversea broad diversity of top talent. Our Vision 2030 goal is to achieve 30% overall representation of women and 50% women in salaried positions and to implement regional diversity plans by 2030, including 30% racial and ethnic minority representation in U.S. salaried positions.
CitizenshipEmployee Engagement
We seek to foster employee well-being and performance through a people development process that includes engagement, health and wellness programs, training, and enterprise-wide employee-led networking circles. We know that a highly engaged culture leads to better safety and business success. Our evolving employee engagement seeks to gather real-time ongoing feedback about employee experiences to measure important factors that affect engagement — how employees feel about their work environment, the people they work with and the Company’s vision.
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Proxy Summary / Our Commitment to Sustainability |
Community Engagement
We encourage our employees to support the communities in which they live and in which the Company operates. Our citizenshipcommunity engagement efforts extend across the globe and support social and educational needs. To that end, in 20212023 we invested more than $23$20 million to address critical needs in the communities in which we work and live.our local communities. Our Vision 2030 goal is to strengthen the resilience of our communities and improve the lives of 100 million people, in our communities, including through supporting education, reducing hunger, promoting health and wellness, and supporting disaster relief.
Sustainability Oversight
Sustainability is a key element of corporate governance promoted by our Board of Directors (the “Board”), committees of the Board, and senior management.
| 8 \ | International Paper 2024 Proxy Statement |
Proxy Summary / Board Nominees |
Proxy Summary| Board Nominees
BOARD NOMINEES
All nominees are currently directors of International Paper. The following table lists the names, primary occupations, and agesIn addition, one of the nominees as of the date of theour existing directors, Ray G. Young, is not standing for re-election at this Annual Meeting, the year each first became a director of International Paper, and the Meeting. All directors are independent except Mark S. Sutton.
| Board Committees | ||||||||||||||
| Name | Primary Occupation | Age | Director Since | A&F | GOV | MDCC | PP&E | |||||||
Christopher M. Connor* Lead Director | Retired Chairman and Chief Executive Officer, The Sherwin-Williams Company | 68 | 2017 |  |  | |||||||||
Ahmet C. Dorduncu | Retired Chief Executive Officer, Akkök Group | 69 | 2011 | | | |||||||||
Ilene S. Gordon | Retired Chairman, President and Chief Executive Officer, Ingredion Incorporated | 70 | 2012 |  | | |||||||||
Anders Gustafsson* | Executive Chairman, Zebra Technologies Corporation | 63 | 2019 | | | |||||||||
Jacqueline C. Hinman | Chief Executive Officer, Atlas Technical Consultants | 62 | 2017 | | | |||||||||
Clinton A. Lewis, Jr. | Chief Executive Officer, AgroFresh Solutions, Inc. | 57 | 2017 | | | |||||||||
Kathryn D. Sullivan | Senior Fellow Potomac Institute for Policy Studies; Ambassador-at- Large, Smithsonian National Air & Space Museum | 72 | 2017 | | | |||||||||
Mark S. Sutton | Chairman and Chief Executive Officer, International Paper Company | 62 | 2014 | |||||||||||
Anton V. Vincent | President, Mars Wrigley North America | 59 | 2021 | | | |||||||||
A&F: Audit and Finance GOV: Governance | MDCC: Management Development and Compensation PP&E: Public Policy and Environment | | Member | | Committee Chair |
*Denotes Audit Committee Financial Expert
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Proxy Summary / Board Nominees |
Board committees on which they serve.Nominees Snapshot
| All Directors are independent except Mark S. Sutton. | Board Committees | ||||||
| Name | Primary Occupation | Age | Director Since | A&F | GOV | MDCC | PP&E |
| Christopher M. Connor | Retired Chairman and Chief Executive Officer The Sherwin-Williams Company | 66 | 2017 |  |  | ||
| Ahmet C. Dorduncu | Chief Executive Officer Akkök Group | 68 | 2011 | | | ||
| Ilene S. Gordon Presiding Director | Retired Chairman, President and Chief Executive Officer Ingredion Incorporated | 68 | 2012 | | | ||
| Anders Gustafsson | Chief Executive Officer Zebra Technologies Corporation | 61 | 2019 | | | ||
| Jacqueline C. Hinman | Retired Chairman, President and Chief Executive Officer CH2M HILL Companies, Ltd. | 60 | 2017 | | | ||
| Clinton A. Lewis, Jr. | Chief Executive Officer AgroFresh Solutions, Inc. | 55 | 2017 | | | ||
| DG Macpherson | Chairman of the Board and Chief Executive Officer W.W. Grainger, Inc. | 54 | 2021 | | | ||
| Kathryn D. Sullivan | Senior Fellow Potomac Institute for Policy Studies Ambassador-at-Large Smithsonian National Air & Space Museum | 70 | 2017 | | | ||
| Mark S. Sutton | Chairman and Chief Executive Officer International Paper Company | 60 | 2014 | ||||
| Anton V. Vincent | President Mars Wrigley North America | 57 | 2021 | | | ||
| Ray G. Young | Vice Chairman and Chief Financial Officer Archer-Daniels-Midland Company | 60 | 2014 | | | ||
Tenure |
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Background
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Independent Director Experience | |||||||
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75% CEO Leadership Experience 63% Environmental, Social & Governance 63% Financial Expert 75% International Operations 63% Manufacturing 88% Marketing 100% Strategic Planning 63% Supply Chain 38% Technology/Cybersecurity | |||||||
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Proxy Summary / Governance Highlights |
Proxy Summary | Board Nominees
Board Snapshot
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Proxy Summary | Governance Highlights
GOVERNANCE HIGHLIGHTS
We believe sound corporate governance is critical to achieving business success and serves the best interests of our shareowners. Highlights of our commitment to sound governance practices include:are shown below.
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2021 EXECUTIVE COMPENSATION OVERVIEW2023 Executive Compensation Overview
Our executive compensation program is designed around two guiding principles:
1. Pay for Performance
We reward achievement of specific goals that improve our financial performance and drive strategic initiatives to ensure sustainable long-term profitability.
2021 Outcomes
2023 Outcomes | ||||||
 | Payouts under our Performance Share Plan (“PSP”) and Long-Term Incentive Plan (“ | |||||
| The CEO’s | |||||
| Achievement against the Company metrics for our STI plan | |||||
| 2021-2023 performance-based awards under | |||||
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Proxy |
Proxy Summary | 2021 Executive Compensation Overview2. Pay at Risk
We believe a significant portion of an executive’s compensation should be specifically tied to performance—performance — both Company performance and individual performance. For 2021,2023, 90% of our CEO’s target compensation and, on average, 79%80% of our other Named Executive Officers’ (NEOs’(“NEOs”) target compensation, werewas based on Company and/or stock performance and werewas therefore at risk, as shown below.
CEO Target Pay Mix
Average Other NEOs Target Pay Mix
ESG Modifier for | ||||||||
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The Board of Directors currently consists of 1110 members, each of whom (other than Ray G. Young) has been nominated by the Board for reelection by shareowners at the annual meeting. For information about each of these individuals, see “Board Nominees” below.
In addition, our Board plans to appoint Mr. Silvernail to the Board at its first regular meeting following this Annual Meeting of Shareowners. For background information regarding Mr. Silvernail and this appointment, please see our Current Report on Form 8-K filed on March 19, 2024.
All nominees, if elected, will hold office until our 20232025 annual meeting or until a qualified successor has been elected, absent an earlier death, resignation or retirement. We know of no reason why any nominee would be unable to, or for good cause would not,unwilling to serve if elected. If, prior to the election, a nominee becomes unable or unwilling to serve, the shares represented by all valid proxies will be voted for the election of such other person as the Board may nominate, or the Board may choose to reduce its size.
If a director does not receive a majority of votes cast “for” his or her election, he or she must submit a letter of resignation, and the Board, through its Governance Committee (excluding the nominee in question), will decide whether to accept the resignation at its next regularly scheduled meeting. If the resignation is not accepted, the Board will disclose the explanation of its decision via a Form 8-K.
There are no other nominees competing for seats on the Board. Under our Amended and Restated Certificate of Incorporation and Amended and Restated By-Laws, directors in non-contested elections must receive an affirmative majority of votes cast. You may vote FOR or AGAINST a nominee, or you may abstain from voting with respect to a nominee. Abstentions and “broker non-votes” will have no effect on the results.
If you hold your shares in street name, your failure to indicateprovide voting instructions to your bank or broker will cause your shares to be considered “broker non-votes” not entitled to vote with respect to Item 1.the proposal.
Our Board of Directors unanimously recommends that you vote FOR each of the |
| Christopher M. Connor | Jacqueline C. Hinman | Mark S. Sutton | ||
| | Clinton A. Lewis, Jr. | Anton V. Vincent | ||
| | DG Macpherson | Ray G. Young | ||
| | Kathryn D. Sullivan | |||
| 9 nominees. |
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Item 1: Election of Directors / How We Build the Right Board for Our Company |
Item 1: Election of 11 Directors | How We Build the Right Board for Our Company
HOW WE BUILD THE RIGHT BOARD FOR OUR COMPANY
Director Qualification Criteria
We seek director candidates with ample experience and a proven record of professional success, leadership and the highest level of personal and professional ethics, integrity and values.
Our Board has adopted Director Qualification Criteria and Independence Standards, which it uses to evaluate incumbent directors being considered for reelection at each annual meeting, as well as new director candidates.candidates and incumbent directors. The Governance Committee of our Board is responsible for recommending, screening, and evaluating qualified director nominees for election to the Board.
The Governance Committee also considers whether a candidate demonstrates the following:
| • | The highest level of personal and professional ethics, reputation, integrity and values; |
| • | Commitment to the Company’s mission and purpose, and loyalty to the interests of the Company and its shareowners; |
| • | Ability to exercise objectivity and independence in making informed business decisions; |
| • | Willingness and commitment to devote the extensive time necessary to fulfill |
| • | Ability to communicate effectively and collegially with other Board members and contribute to the diversity of perspectives that enhances Board and Committee deliberations and decision making; and |
| • | Skills, knowledge and expertise relevant to the Company’s |
The Governance Committee and the Board, through ongoing consideration of directors and nominees and through the Board’s annual self-evaluation process, ensure that all directors are qualified, and that other criteria and objectives are implemented and satisfied.
Shareowner Recommendations for Director Candidates
Shareowners may submit recommendations for director candidates to the Governance Committee by writing to the Corporate SecretarySecretary. Shareowners interested in accordancenominating a director candidate must follow the procedures set forth in our By-Laws, including complying with our By-Laws. Thethe prescribed time periods. Recommended candidates should meet the director qualifications criteria described above. The Governance Committee applies the same criteria in evaluating candidates recommended by shareowners as thoseit does for candidates from other sources. If a shareowner would like to nominate a director candidate, the shareowner must follow the procedures set forth in our By-Laws, including making such nominations within the applicable time periods set forth in our By-Laws. See “Information About the Annual Meeting” beginning on page 105 below for additional information. For information on our proxy access provision, see “Commitment to Sound Corporate Governance and Ethical Conduct” below.
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Item 1: Election of Directors / How We Build the Right Board for Our Company |
Item 1: Election of 11 Directors| How We Build the Right Board for Our Company
Diversity of Our Directors
Our Board and the Governance Committee have assembled a Board comprised of experienced directors who are currently, or have recently been, leaders of major companies and institutions, are independent thinkers, and bring to the boardroom a diverse range of backgrounds, tenures and skills. The Board believes that such diversity enhances the quality of its deliberations and decisions.
Diversity of Background
The Governance Committee Charter specifically directs the Committee to seek qualified candidates with diverse backgrounds, including but not limited to, such factors as race, gender, and ethnicity. While the Company does not have a formal policy on Board diversity, theThe Governance Committee actively considers diversity in the recruitment and nomination of directors. In this regard, when the Company engages third-party search firms to identify potential candidates, the Governance Committee emphasizes to such firms the importance of diversity and requests the inclusion of diverse candidates for consideration.
The current composition of ourOur Board reflectsnominees reflect those efforts and the importance of diversity to our Board:
Diversity of Tenure
The Board seeks to have a mix of tenures among its members so it can benefit from a blend of institutional knowledge and fresh perspectives. Its recent refreshmentRefreshment efforts have resulted in an average tenure for our current directors of 5.18.4 years, and have brought more women and African-Americans to our Board.
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Item 1: Election of 11 Directors| Our Nominees
Diversity of Skills and Experience
Our Board believes that its membership should include individuals with a diverse background in the broadest sense,backgrounds, and is particularly interested in maintaining a mix of skills and experience that includes the following:following among our independent director nominees:
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 | Item 1: Election of Directors / How We Build the Right Board for Our Company |
Summary of Independent Director Nominees’ Core Competencies
The following 11chart summarizes the core competencies that the Board considers valuable to effective governance and successful oversight of our corporate strategy and illustrates how our current non-management Board member nominees individually and collectively represent these key competencies. The lack of an indicator for a particular item does not mean the director does not possess that qualification, skill or experience, rather, the indicator represents that the item is a core competency of that director.
| Skills and Experience |  |  |  |  |  |  |  |  | ||||||||||||
 | CEO Leadership Experience Public company CEO leadership that contributes to the understanding and oversight of large complex organizations | • | • | • | • | • | • | |||||||||||||
 | Environmental, Social & Governance Strengthens the Board’s oversight of climate risks and our environmental, safety and sustainability initiatives | • | • | • | • | • | ||||||||||||||
 | Financial Expert Meets the SEC and NYSE criteria as an independent “audit committee financial expert” | • | • | • | • | • | ||||||||||||||
 | International Operations Contributes to the understanding of operations and business strategy abroad | • | • | • | • | • | • | |||||||||||||
 | Manufacturing Contributes to the understanding of the challenges of complex manufacturing | • | • | • | • | • | ||||||||||||||
 | Marketing Brings expertise in marketing and sales at a global scale | • | • | • | • | • | • | • | ||||||||||||
 | Strategic Planning Brings expertise in the process of setting goals and creating a blueprint for the Company’s future | • | • | • | • | • | • | • | • | |||||||||||
 | Supply Chain Brings expertise in supply chain management | • | • | • | • | • | ||||||||||||||
 | Technology/Cybersecurity Contributes to the understanding and oversight of cybersecurity threats and digital transformation | • | • | • | ||||||||||||||||
| Other Board Demographics | ||||||||||||||||||||
Caucasian/White | • | • | • | • | • | • | ||||||||||||||
African American/Black | • | • | ||||||||||||||||||
Gender (Male/Female) | M | M | F | M | F | M | F | M | ||||||||||||
Age | 68 | 71 | 70 | 63 | 62 | 57 | 72 | 59 | ||||||||||||
Tenure (Rounded years) | 6 | 13 | 11 | 5 | 6 | 6 | 7 | 3 | ||||||||||||
| 16 \ | International Paper 2024 Proxy Statement |
Item 1: Election of Directors / Our Nominees |
Our Nominees
The following 9 individuals are nominated for election at the 20222024 annual meeting. Each of these nominees is standing for electionmeeting to serve a term that will expire in 2023. In addition to biographical information and committee memberships as of the date of the annual meeting for each director nominee, we describe the specific experience, qualifications, attributes or skills that led our Board to conclude such person should serve as a director in light of the Company’s business.until 2025.
 | Christopher M. Connor
Mr. Connor retired as executive chairman of The Sherwin-Williams Company, a global manufacturer of paint, architectural coatings, industrial finishes, and associated supplies, in December 2016. Mr. Connor joined The Sherwin-Williams Company in 1983 and served as its chairman and chief executive officer from 2000 to December 2015. Board Qualifications Having served as CEO and executive chairman of The Sherwin-Williams Company, Mr. Connor brings significant senior management experience and strong financial expertise to the Board. He understands the various issues facing a large, global manufacturing company, including operational, financial, and strategic issues. His technical background and long tenure with The Sherwin-Williams Company bring industrial expertise, which further strengthens our Board. Other Yum! Brands, Inc. (fast food) (NYSE:YUM) Other Affiliations Mr. Connor serves on the board of directors of the Rock & Roll Hall of Fame in Cleveland, Key Skills & Experience
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Item 1: Election of 11 Directors| Our Nominees
  | Ahmet C. Dorduncu
Mr. Dorduncu retired as chief executive officer of Akkök Group, a financial and industrial conglomerate located in Turkey, in December 2022, after serving in that position since Board Qualifications As the retired CEO of Akkök Group and retired chairman and CEO of Sabanci Holding, two leading financial and industrial conglomerates, Mr. Dorduncu brings vast experience in international manufacturing operations and specific experience in industrial packaging. His knowledge of geographic regions of key importance to the Company brings even greater perspective to our Board. Other Public Boards None Other Affiliations Mr. Dorduncu is the Chair of the Turkish Network of the United Nations Global Compact. Key Skills & Experience
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Item 1: Election of Directors / Our Nominees |
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 | Ilene S. Gordon
Ms. Gordon retired as executive chairman of Ingredion Incorporated (formerly Corn Products International, Inc.), a publicly traded global ingredient solutions company, Board Qualifications As the former chairman, CEO and president of Ingredion Incorporated, Ms. Gordon brings senior management expertise and leadership capabilities, as well as broad understanding of the operational, financial and strategic issues facing public companies. Her previous experience at Rio Tinto’s Alcan Packaging includes manufacturing, supply chain and marketing. She has experience with operations overseas, including South America, Asia Pacific and Europe. Ms. Gordon also brings strong financial expertise to our Board. Other
Lockheed Martin Corporation International Flavors & Fragrances Other Affiliations Ms. Gordon served on the board of trustees of The Conference Board from 2010 to 2021, previously served on the board of trustees of MIT (known as the Corporation) Key Skills & Experience
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Item 1: Election of 11 Directors| Our Nominees
  | Anders Gustafsson
Mr. Gustafsson has been executive Board Qualifications As Other
Zebra Technologies Dycom Industries NetApp (NASDAQ: NTAP) (a data infrastructure service provider) Other Affiliations Mr. Gustafsson serves as a trustee of the Shedd Aquarium. Key Skills & Experience
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Item 1: Election of Directors / Our Nominees |
 | Jacqueline C. Hinman
Ms. Hinman has been Chief Executive Officer of Atlas Technical Consultants, a privately held company that provides professional testing, inspection, engineering, environmental and consulting services nationwide, since January 2024. Ms. Hinman previously served as chairman, president, and chief executive officer of CH2M HILL Companies, Ltd., a Fortune 500 engineering and consulting firm focused on delivering infrastructure, energy, environmental and industrial solutions for clients and communities around the world, until December 2017, when the firm was acquired by Jacobs Engineering. Prior to becoming chairman in September 2014 and president and chief executive officer in January 2014, Ms. Hinman served as president of CH2M’s International Division from Board Qualifications
As Chief Executive Officer of Atlas and having served as chairman, president, and chief executive officer of CH2M HILL Companies, Ms. Hinman brings senior management and leadership capabilities to the Board, as well as Other Dow Inc. (multinational chemical corporation) (NYSE: DOW) AECOM (infrastructure) (formerly) (NYSE: ACM) Other Affiliations Ms. Hinman Key Skills & Experience
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Item 1: Election of 11 Directors | Our Nominees
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Item 1: Election of Directors / Our Nominees |
 | Clinton A. Lewis, Jr.
Mr. Lewis has been chief executive officer of AgroFresh Solutions, Inc., a global leader in produce freshness solutions, since April 2021. From Board Qualifications
Mr. Lewis’ current role at AgroFresh Solutions, and Other None Other Affiliations Mr. Lewis serves on the Key Skills & Experience
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Item 1: Election of 11 Directors| Our Nominees
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Item 1: Election of Directors / Our Nominees |
 | Kathryn D. Sullivan Dr. Sullivan is Ambassador-at-Large at the Smithsonian National Air and Space Museum, where she served as The Charles A. Lindbergh Fellow of Aerospace History from March 2017 through August 2017. Dr. Sullivan is also a Senior Fellow at the Potomac Institute for Policy Studies. Board Qualifications Dr. Sullivan’s service at NOAA brings a valuable perspective on current issues in sustainability, which is a critical issue to the Company. As a former NASA space shuttle astronaut, she also brings a strong technical background, leadership capabilities, and strategic planning experience. Dr. Sullivan’s service on other public company boards gives her experience Other Dr. Sullivan Other Affiliations Dr. Sullivan serves on the board of directors of Accenture Federal Services, LLC and the advisory board of Terra Alpha Investments, LLC. She is a member of the National Academy of Engineering, the American Academy of Arts and Sciences and the National Academy of Public Administration. Key Skills & Experience
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Item 1: Election of 11 Directors| Our Nominees
  | Mark S. Sutton Mr. Sutton has been Chairman Board Qualifications Mr. Sutton has been with International Paper Other The Kroger Company (retail grocery company) (NYSE: KR) Other Affiliations Mr. Sutton
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 | Anton V. Vincent
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has been President of Mars Wrigley North America, part of Mars, Incorporated, a global family-owned business with Board Qualifications As Other Public Boards None Other Affiliations None Key Skills & Experience
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Governance Practices
Our Board believes that a shareowner-focused governance model is the right fit for the Company. The below table highlights our sound corporate governance practices.
Shareowner Rights |
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Board Independence |
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Other Governance Practices |
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In each of these areas, we have embraced sound principles, policies, and procedures to ensure that our Board and our management goals are aligned with our shareowners’ interests.
How the Board Operates
Age: 57Director since:2021
Committees
• Governance
• Public Policy and Environment
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Item 1: Election of 11 Directors| Our Nominees
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Board Leadership Structure
Our Board believes that the Company and its shareowners are best served by havingwhen the Board has the flexibility to determine the right leadership structure for the Company at any given point in time, taking into consideration the current business environment and shareholdershareowner landscape. We currently combine the role of Chairman and CEO and believe this is the most effective leadership structure for the Company at this time. When Mr. Sutton was appointed as CEO in 2014, and duringevery year as part of its succession planning process, the Board considers whether continuing to combine the role of Chairman and CEO is in the best interests of the Company and the shareowners. The Board has concluded that maintaining the combined position of Chairman and CEO is appropriate to further strengthen the Company’s
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Corporate Governance / How the Board Operates |
governance structure by promoting unified leadership and direction for the Company, fostering accountability, and allowing for a single, clear focus for management to execute the Company’s strategy and business plans. Based on similar rationale, the Board plans to appoint Mr. Silvernail as Chairman of the Board following a transition period.
As a counterbalance, we have an independent PresidingLead Director, Ilene S. Gordon,Christopher M. Connor, whose role and responsibilities provide strong independent leadership in the boardroom. The authority and duties of our independent PresidingLead Director are set forth in our Corporate Governance Guidelines and summarized below.
Role of the PresidingLead Director
The PresidingLead Director is elected each year by the independent directors for a term of not less than one year. Effective January 1, 2018, the independent directors elected Ilene S. GordonMr. Connor has served as PresidingLead Director and she has held that position since that date.February 2023. The Presiding Director has authority to call meetings of independent directors. She may consult and directly communicate with certain shareowners if requested. The other duties of the PresidingLead Director include:
Determining a schedule and agenda for regular executive sessions in which independent directors meet without management present, and presiding over these sessions; |
Suggesting agenda items for Board meetings; |
| • | Presiding over meetings of the Board when the Chairman is not present; |
Serving as liaison between the Chairman and independent directors; |
Approving agendas of the Board and meeting schedules to ensure ample discussion time; |
Approving information sent to the Board; |
Organizing the process for evaluating the performance of the Chairman and CEO not less than annually, in consultation with the |
| • | Assuring that a succession plan is in place for the Lead Director role; |
| • | Acting as a resource for, and |
| • | Being available for consultation and direct communication if requested by major shareowners. |
| • | Retaining independent legal advisors or other independent consultants and advisors, as appropriate, who report directly to the Board on Board-related issues; and |
| • | Collaborating and consulting with Committee chairs concerning schedules, agendas and written materials. |
The Board considers its own leadership structure as part of the Company’s succession planning process. The Board will continue to evaluate this structure going forward in light of factors and considerations prevailing at the time to determine whether a combined CEOChairman and ChairmanCEO role is in the best interests of the Company and its shareowners.
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Corporate Governance | How the Board Operates
Board Policies and Practices
Annual Board, Committee and Individual Director Self-Assessment
The Board is committed to a robust and constructive evaluation process designed to promote continuous improvement and overall Board effectiveness. To that end, the Board conducts an annual self-assessment of its own and its committees’ performance following a procedure established by the Governance Committee.
As directed by the Governance Committee, the General Counsel conducts interviews with each of the directors based on a questionnaire. Topics covered include, among others:
Effectiveness of Board and committee leadership structure; | ||
| • | Board and committee skills, composition, diversity, and succession planning; |
| • | Effectiveness of each individual director’s performance and contributions to the |
| • | Board culture and dynamics, including the effectiveness of discussion and debate at meetings; and |
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Corporate Governance / How the Board Operates |
| • | Board and management dynamics, including the quality of management presentations and information provided to the Board. | |
Board,The results of the interviews are conveyed to both the Governance Committee and Annual Meeting Attendanceto the Board.
Separately, the Governance Committee and the Chairman of the Board conduct an assessment of individual Board members before they are nominated for re-election by shareowners, in accordance with our Director Qualification Criteria and Independence Standards.
Meeting Attendance and Executive Sessions The Board met eight times during | ||
99%.
Executive Sessions of Non-Management and Independent Directors
| After each regularly scheduled Board and committee meeting, | |
As expected by our Corporate Governance Guidelines, all those who were directors at | |
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Table of ContentsThe independent directors may engage, at the Company’s expense, independent legal, financial, accounting and other advisors as they may deem appropriate, without obtaining management’s approval.
Corporate Governance | How the Board Operates
Orientation and Continuing Education
Our new directors participate in a director orientation that includes written materials and presentations by Company employees who are subject-matter experts, as well as meetings with senior management, our independent auditor, and both the Company’s and the MDCC’s compensation consultants. New directors also visit several of our facilities and meet with employees.
Continuing education occurs at Board and committee meetings, with specific topics of interest covered by management or outside experts. Directors are encouraged to attend director education programs provided by third parties.
From time to time, directors attend meetings of Company officers, and, at each Board meeting, they meet informally and formally with senior leaders of the Company.
Mandatory Retirement Policies
Our Corporate Governance Guidelines provide that non-employee directors are required to retire from our Board effective December 31st of the year in which they turn 75. In addition, our mandatory retirement policy requires the CEO to retire effective on the first day after the month in which he or she turns 65. The Board does not have any term limits.
Resignation Policies
If a director’s principal occupation changes substantially, he or she must tender a resignation for consideration by the Governance Committee. The Governance Committee then recommends to the Board whether to accept the resignation using the Company’s Director Qualification Criteria and Independence Standards.
Under our By-Laws, any director nominee in a non-contested election who fails to receive the requisite majority of votes cast “for” his or her election must tender a resignation, and the Board, through its Governance Committee (excluding the nominee in question), will determine whether to accept the resignation at its next regularly scheduled meeting. In case the resignation is not accepted, the Board will disclose the reasoning behind its decision via a Current Report on Form 8-K.
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Corporate Governance | |
Resignation Policies
Overboarding Policy
The Board does not categorically restrict directors from serving on the boards of other public companies. However, because of the time commitment required for membership on the Board, directors are expected to consult with the Chairman of the Board and the Chair of the Governance Committee before accepting an invitation to serve on another public company board.
Board Committees
In order to fulfill its responsibilities, the Board has delegated certain authority to its committees. The Board has four standing committees: Audit and Finance; Governance; Management Development and Compensation; and Public Policy and Environment. The Board also has an Executive Committee, which meets only if Board action is required and a quorum of the full Board cannot be convened on a timely basis.
Each committee has a charter, which is reviewed annually to ensure compliance with applicable law and sound governance practices. Each committeescommittee reviews its own charters,charter, except that the Governance Committee also assesses the Executive Committee’s charter. Committee charters are available at www.internationalpaper.comunder the “CompanyInvestors” tab at the top of the page followed by the “LeadershipGovernance” link and then under the “Board Committees” link. A paper copy islinks. Paper copies of the charters are available at no cost by written request to the Corporate Secretary.
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Corporate Governance / How the Board Operates |
Corporate Governance | How the Board Operates
Committee Assignments
Independent Board members are assigned to one or more committees. The Governance Committee recommends any changes in assignments to the entire Board. Committee chairs are rotated periodically, usually every three to five years.
Governance Committee
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4 | Meetings in 2023
| 100% | Attendance Rate
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Current Members Ilene S. Gordon (Chair) Christopher M. Connor Jaqueline C. Hinman Clinton A. Lewis, Jr. All Members are INDEPENDENT |  | ||||||||
Meetings Meeting agendas are developed by the Chair in | |||||||||
Current Members
Ilene S. Gordon (Chair)
Clinton A. Lewis, Jr.
DG Macpherson
Kathryn D. Sullivan
Anton V. Vincent
All Members are
Independent
Meetings
Meeting agendas are developed by the Chair in consultation with committee members and senior leaders, who regularly attend the meetings.
Responsibilities
Responsibilities •Assuring the Company abides by sound corporate governance principles, including compliance with the Company’s Certificate of Incorporation, By-Laws, and Corporate Governance Guidelines, and reviewing conflicts of interest, including related person transactions under our Related Person Transactions Policy and | |
| Procedures. •In its capacity as the Board’s nominating committee, identifying and recommending individuals qualified to become Board members and | |
•Assuring that shareowner communications, including shareowner proposals, are addressed appropriately by the Board or Company management. | |
•Recommending non-employee director compensation and assisting the Board in its annual self-assessment. |
Audit and Finance Committee
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6 | Meetings in 2023
| 100% | Attendance Rate
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Corporate Governance | How the Board Operates
Current Members Anders Gustafsson (Chair)* Christopher. M. Connor* Ahmet C. Dorduncu Kathryn D. Sullivan All Members are INDEPENDENT *The Board has determined that these directors qualify as Audit |  | |||||||||
Meetings Meeting agendas are developed by the Chair in | ||||||||||
Current Members
Ray G. Young (Chair)
Christopher M. Connor
Ahmet C. Dorduncu
Anders Gustafsson
Jacqueline C. Hinman
All Members are
Independent
Meetings
Meeting agendas are developed by the Chair in consultation with committee members and senior management, who regularly attend the meetings. At each meeting, the committee also holds executive sessions without members of management, and it also meets privately with representatives from our independent auditor, and separately with the Chief Financial Officer, General Counsel, chief audit executive, and Corporate Controller.
Responsibilities
Responsibilities •Assisting our Board in monitoring the integrity of our financial statements and financial reporting procedures. | |
•Reviewing the independent auditor’s qualifications and independence, as well as overseeing the performance of our internal audit function and the independent auditor. | |
•Coordinating our compliance with legal and regulatory requirements relating to the use and development of our financial resources, as well as ensuring that controls are in place to prevent, deter and detect financial fraud by • Review cybersecurity and information risk management programs and controls, including identification and reporting of material cybersecurity incidents. In overseeing the performance of our internal audit function and independent auditor, the committee discusses the scope, significant risks and plans for the independent audit as well as the annual internal audit workplan. Throughout the year, at committee meetings and in private sessions, the committee discusses issues encountered or any changes in planned audit scopes. These meetings may include key members of the audit teams, subject matter experts, and key members of the management team. |
In overseeing the performance of our internal audit function and independent auditor, the committee discusses the scope, significant risks and plans for the independent audit as well as the annual internal audit workplan. Throughout the year, at committee meetings and in private sessions, the committee discusses issues encountered or any changes in planned audit scopes. These meetings may include key members of the audit teams, subject matter experts, and key members of the management team.
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Corporate Governance / How the Board Operates |
Public Policy and Environment Committee
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5 | Meetings
| 100% | Attendance Rate
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Current Members Kathryn D. Sullivan (Chair) Ahmet C. Dorduncu Anders Gustafsson Anton V. Vincent Ray G. Young All Members are INDEPENDENT |  | |||||||
Meetings Meeting agendas are developed by the Chair in | ||||||||
Current Members
Kathryn D. Sullivan (Chair)
Ahmet C. Dorduncu
Anders Gustafsson
DG Macpherson
Anton V. Vincent
All Members are
Independent
Meetings
Meeting agendas are developed by the Chair in consultation with committee members and senior leaders, who regularly attend the meetings.
Responsibilities
Responsibilities •Reviewing environmental, sustainability and | |
•Reviewing the Company’s health and safety policies, as well as environmental policies, to ensure continuous improvement and compliance. | |
•Reviewing the Company’s policies and procedures for complying with certain of its legal and regulatory obligations, including our Code of Conduct, and reviewing our charitable and political |
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Corporate Governance | How the Board Operates
Executive Committee |
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0 | Meetings in 2023 | NA | Attendance Rate | |||||||
Current Members Mark S. Sutton (Chair) Christopher M. Connor Ilene S. Gordon Anders Gustafsson Jacqueline C. Hinman Kathryn D. Sullivan |  | |||||||
Current Members
Mark S. Sutton (Chair)
Christopher M. Connor
Ilene S. Gordon
Kathryn D. Sullivan
Ray G. Young
•The Executive Committee may act for our Board, to the extent permitted by law, if Board action is required and a quorum of our full Board cannot be convened on a timely basis in person or telephonically. | |
•The Chairman of our Board, the independent |
Management Development and Compensation Committee
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7 | Meetings
| 100% | Attendance Rate
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Current Members Jacqueline C. Hinman (Chair) Ilene S. Gordon Clinton A. Lewis, Jr. Anton V. Vincent All Members are INDEPENDENT |  | ||||||||
Meetings Meeting agendas are developed by the Chair in | |||||||||
Current Members
Christopher M. Connor (Chair)
Ilene S. Gordon
Jacqueline C. Hinman
Clinton A. Lewis, Jr.
Ray G. Young
All Members are
Independent
Meetings
Meeting agendas are developed by the Chair in consultation with committee members and senior leaders, who regularly attend the meetings. An executive session without management present is held at each meeting. The committee’s independent compensation consultant, Frederic W. Cook & Co., Inc. (FW Cook)consultation with committee members and senior leaders, who regularly attend the meetings. An executive session without management present is held at each meeting. The committee’s independent compensation consultant, Frederic W. Cook & Co., Inc. (“FW Cook”), regularly attends meetings.
Responsibilities
Responsibilities •Overseeing our overall compensation program and approving the compensation of our senior management (other than the CEO); conducting performance evaluations of the Chairman and CEO at least annually, in accordance with the process organized by the | |
•Discussing with Company management the required disclosure under Item 407(e)(5) of Regulation S-K, including the Compensation Discussion & Analysis (“CD&A”) that is prepared as part of this | |
| Proxy Statement. •Ensuring | |
•Overseeing our retirement and benefit plans for senior | |
| CEO. •Overseeing our succession planning and talent management strategies and programs, including with respect to diversity, equity and inclusion. |
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Corporate Governance | How the Board Operates
Role of Independent Consultant. The Management Development and Compensation Committee engaged FW Cook, commencing in mid-2011, to serve as its independent, external compensation consultant. The committee has sole authority for retaining or terminating FW Cook, as well as approving the terms of engagement, including fees. FW Cook works exclusively for the committee and provides no services to the Company, other than services provided in the firm’s capacity as the committee’s consultant. FW Cook is expected to achieve the following objectives:
Corporate Governance / How the | |
Compensation Committee Interlocks and Insider Participation
During 2021, the members2023, no member of the committee were Mr. Connor, Chair, Ms. Gordon, Ms. Hinman, Mr. Lewis and Mr. Young. None of these individualsMDCC was during the fiscal year, an employee or a current or former officer of the Company. See “Transactions with Related Persons” below for certain requiredCompany, or has any relationship that would require disclosure relating to membersunder Item 404 of the committee.
Regulation S-K. In addition, during 2023 no executive officer of the Company served as either a director or a member of the compensation committee (or its equivalent) of any entity that had one of its executive officers serving on our Management Development and Compensation CommitteeMDCC or our Board.
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Corporate Governance | Commitment to Sound Corporate Governance and Ethical Conduct
COMMITMENT TO SOUND CORPORATE GOVERNANCE AND ETHICAL CONDUCT
We believe good corporate governance is critical to achieving business success and serves the best interests of our shareowners. We value the perspectives of our shareowners and other stakeholders, including our employees and the communities in which we operate, and take steps to address their concerns where warranted.
Our Corporate Governance Guidelines. Our Board has adopted our Corporate Governance Guidelines that reflect its commitment to sound governance practices. In addition, each of our Board committees has its own charter to assure that our Board fully discharges its responsibilities to our shareowners. Our Board reviews its Corporate Governance Guidelines and committee charters at least annually and makes changes from time to time to reflect developments in the law and corporate governance practices. Our Amended and Restated Certificate of Incorporation permits the size of our Board to range from nine to 18 members. Currently, the size of our Board is 11 members. Our Board maintains four standing committees, as well as an Executive Committee, which is comprised of the CEO, the Presiding Director and the chairs of each of the standing committees.
Our Code of Conduct. Our Board has adopted a Code of Conduct (the “Code”) that applies to our directors, officers and all employees to ensure we conduct business in a legal and ethical manner.
Our Global Ethics and Compliance office is located at our global headquarters in Memphis, Tennessee. If an employee, customer, vendor or shareowner has a concern about ethics or business practices of the Company or any of its employees or representatives, he or she may contact the Global Ethics and Compliance office in person, via mail, e-mail, facsimile or telephone. The Code describes multiple channels by which employees may report a concern, such as through their managers, a human resources professional, legal counsel or our internal audit department.
Our HelpLine is also available 24 hours a day, seven days a week, to receive calls from anyone wishing to report a concern or complaint, whether anonymous or otherwise.
Our HelpLine contact information can be found at www.internationalpaper.com, under the “Company” tab at the top of the page, then under “Ethics” and “HelpLine.”
Employee Engagement Policy. We seek to foster employee well-being and performance through a people development process that includes engagement, health and wellness programs, training and business/region-specific people councils. We know that a highly engaged culture leads to better safety and business success. Our annual employee engagement survey allows us to measure important factors that affect engagement — how employees feel about their work environment, the people they work with and the Company’s vision.
Our Corporate Governance Guidelines, Code of Conduct and Board committee charters are available at www.internationalpaper.com under the “Company” tab. Paper copies are also available by written request to the Corporate Secretary at the address on page 111 of this proxy statement.
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Corporate Governance | Commitment to Sound Corporate Governance and Ethical Conduct
Shareowner Engagement
We believe that thoughtful shareowner engagement is important, and we have a long history of such engagement. We have an active shareowner engagement program, including through regular calls and meetings, (including virtual meetings, during the pandemic), which allows us to better understand our shareowners’ priorities, perspectives, and concerns, and enables the companyCompany to effectively address issues that matter most to our shareowners.
20212023 Shareowner Engagement Highlights
shareowners | In | Topics we engaged on included: Strategy and Portfolio Capital Allocation Build a Better IP Value Drivers Performance ESG & Vision 2030 |
Proxy AccessIn 2023, our discussions with investors on ESG-related topics included the following areas:
| • | Decarbonization and our climate goals |
| • | Fiber sourcing and sustainable forestry |
| • | Nature impacts |
| • | Governance of sustainability issues |
| • | Executive compensation |
| • | Transparency in disclosure |
Our conversations with investors helped inform the content of our annual reporting and have encouraged our increased disclosure on our climate goal and decarbonization roadmap; information regarding our ForSiteTM fiber traceability tool; enhanced disclosure regarding our governance and Board structure for sustainability; and increased disclosure detail on executive compensation as it relates to ESG metrics, and on alignment of lobbying activities with sustainability goals.
www.internationalpaper.com | / 29 |
Corporate Governance / Commitment to Sound Corporate Governance and Ethical Conduct |
Proxy Access
Our proxy access By-Law | ||||
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Our By-Laws are available at www.internationalpaper.com, under the “ | |||
Corporate Governance | Board Oversight of the Company
Governance Practices
Our Board believes that a shareowner-focused governance model is the right fit for the Company. The below table highlights our sound corporate governance practices:
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In each of the areas discussed below, we have embraced sound principles, policies and procedures to ensure that our Board and our management goals are aligned with our shareowners’ interests
BOARD OVERSIGHT OF THE COMPANY
The Board is responsible for assuringensuring appropriate alignment of its leadership structure and oversight of management with the interests of shareowners and the communities in which the Company operates. The Company’s Corporate Governance Guidelines provide the foundation upon which the Board oversees a working system of principled goal-setting and effective decision-making. The goal is to establish a vital, agile, and ethical corporate entity that provides value to the shareowners who invest in the Company, the communities in which we operate, and all of our stakeholders.
Oversight of Succession Planning and Talent Management
Our Board is actively engaged and involved in succession planning and talent management. Our Board oversees and annually reviews leadership development and assessment initiatives, as well as short- and long-term succession plans for our senior management. In addition, our Board regularly reviews our talent strategy to ensure that it supports our business strategy. In addition, theThe Board considers its own leadership structure as part of the succession planning process.
Corporate Governance | Board OversightIn connection with the previously announced final phase of the CompanyCEO succession process with respect to our current CEO, Andy Silvernail will succeed Mark Sutton as our CEO effective May 1, 2024.
| 30 \ | International Paper 2024 Proxy Statement |
Corporate Governance / Board Oversight of the Company |
Risk Oversight
Pursuant to delegated authority as permitted by the Company’s By-Laws,Corporate Governance Guidelines, and committee charters, the Board’s four standing committees oversee certain risks.
Full Board The Board exercises oversight of the Company’s enterprise risk management | ||||||||||
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Management/ The ERM Council is a management-level team comprised of | ||||||||||
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Chief Information Security Officer Our Chief Information Security Officer | ||||||||||
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Audit and Finance Committee The Audit and Finance Committee coordinates the risk oversight role exercised by
• Oversees the integrity of the Company’s financial statements and other disclosures, the effectiveness of the internal control environment, the internal audit function and the external auditors, and compliance with legal and regulatory requirements to mitigate risk.
• Reviews risks related to management’s cybersecurity and information security risk management programs and controls, including processes for identification and reporting of material cybersecurity incidents.
• Monitors the risk of financial fraud involving management and ensuring that controls are in place to prevent, deter and detect fraud. | ||||||||||
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Governance Committee Oversees risks related to:
• Governance
• Director | Management Development and Compensation Committee Oversees risks related to:
• Organizational and
• Talent
• Succession
• Executive | Public Policy and Environment Committee Oversees risks related to:
• Litigation, government regulation and governmental enforcement
• Technology issues including information and operational technology, cybersecurity and data security |
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Corporate Governance / Board Oversight of the Company |
Corporate Governance | Board Oversight of the CompanyCompliance
Review ofThe Global Ethics and Compliance officer oversees our compliance program. Employees can report violations through our Helpline Reports. or through other reporting channels. All HelpLineHelpline reports are immediately forwarded to the Global Ethics and Compliance office for further action and for a response to the person reporting, unless he or she has chosen to remain anonymous. A report made through any of our other reporting channels that involves an impropriety relating to our accounting, internal controls or other financial or audit matters is also forwarded immediately to the Global Ethics and Compliance office. That office has responsibility for investigating all such matters, and will report certain of those matters, unfiltered, to the chair of our Audit and Finance Committee in accordance with the procedures established by the Audit and Finance Committee to ensure compliance with the Sarbanes-Oxley Act of 2002.2002, as amended.
Assessment and ManagementOversight of Compensation-Related Risk. Risk
The Management Development and Compensation CommitteeMDCC is committed to completing an annual risk assessment to evaluate the Company’s compensation plans and practices. In 2021,2023, at the committee’s request, its independent consultant Frederic W. Cook & Co. (“FW CookCook”). conducted a risk assessment with the objective of identifying any compensation plans and practices that may encourage employees to take unnecessary or excessive risks that could threaten the Company. No such plans or practices were identified. The results of this 20212023 evaluation indicated, and the committeeMDCC thus concluded, that there are no significant compensation-related risk areas at the Company, and that our compensation plans and practices do not encourage unnecessary or excessive risk-taking and do not create risks that are reasonably likely to have a material adverse effect on the Company. Also, based on this evaluation, the committee concluded that the Company’s executive compensation program appropriately aligns compensation with long-term shareowner value creation and avoids short-term rewards for decisions that could pose long-term risks to the Company. These conclusions were based on the following factors:
Our compensation mix is appropriately balanced and incentive compensation is not overly weighted toward short-term performance at the expense of long-term value creation; |
Our short-term incentive compensation award pool is appropriately capped, thereby limiting payout potential; |
Our performance is measured against both absolute and relative metrics to ensure quality and sustainability of Company performance; |
We have adopted several programs that serve to mitigate potential risk, including officer stock ownership requirements, a Clawback Policy and clawback |
The committee maintains strict controls over the Company’s equity granting practices, and our incentive compensation plan prohibits option re-pricing without shareowner approval. |
Oversight of Information Security and Cybersecurity
The Company places the utmost importance on information security and privacy in lightwhich are key components of theour governance and risk management framework. We value we place on maintaining the trust and confidence of our consumers,customers, employees and other stakeholders.
The Board has primary oversight of our ERM program, which includes information security and cybersecurity. The Board of Directors is supported in its oversight by the Audit and Finance Committee have primaryand PPE Committee, which share oversight responsibility regardingresponsibilities related to the Company’s information security programs, including cybersecurity and procedures, data privacy and network security.program, as noted above. The Board, and Audit and Finance Committee receiveand PPE Committee each receives periodic updates from management, including our CISO, and outside experts, covering the Company’s programs for managing information security risks, including data privacy and data protection risks. The Company has adopted the NIST CSFNational Institute of Standards and Technology Cybersecurity Framework framework to assess the maturity of its cybersecurity programs and guide continual improvement. Other
| 32 \ | International Paper 2024 Proxy Statement |
Corporate Governance / Oversight of Compensation-Related Risk |
Key aspects of the Company’s comprehensive information securitycybersecurity program include:include the following:
layered technical protective capabilities and |
utilizing |
| • | courses and awareness training on information security for employees with Company email or access to Company devices, including phishing, social engineering and other cybersecurity training as well as targeted training for specific roles based on responsibilities and risk level; |
Corporate Governance | Independence of Directors
global security and privacy policies; and |
business continuity, incident response and disaster recovery procedures, including tabletop exercises involving senior |
Our management regularly monitors best practices in this area and seeks to implement changes to the Company’s security programs as needed to ensure that the Company maintains a robust data and privacy program. In addition, the Company maintains an information security riskcyber insurance policy thatwhich provides coverage in connection with cybersecurity breaches. For more information in our cybersecurity, risk identification and management program, see Item 1C of our Annual Report on Form 10-K for data security breaches.the fiscal year ended December 31, 2023, filed on February 16, 2024.
INDEPENDENCE OF DIRECTORSIndependence of Directors
Director Independence Standards
It is the policy of our Board that, in accordance with the rules of the New York Stock Exchange (“NYSE”), a majority of its members be independent from the Company, its management and its independent auditor. Based on the Governance Committee’s review of our current directors, our Board has determined that all of our non-employee directors are independent (Christopher M. Connor; Ahmet C. Dorduncu; Ilene S. Gordon; Anders Gustafsson; Jacqueline C. Hinman; Clinton A. Lewis, Jr.; DG Macpherson; Kathryn D. Sullivan; Anton V. Vincent; and Ray G. Young).independent. We have one employee-director, our Chairman, Mark S. Sutton, who is not independent. Each standing committee of the Board is comprised entirely of independent directors.
Further, the Governance Committee has concluded and recommended to our Board, and our Board has determined, that each of our non-employee directors meets the independence requirements for service on our Audit and Finance Committee, the Management Development and Compensation Committee, and the Governance Committee.
Director Independence Determination Process and Standards
Annually, our Board determines the independence of directors based on a review conducted by the Governance Committee and the Company’s General Counsel. The Governance Committee and the Board evaluate and determine each director’s independence under the NYSE Listed Company Manual’s NYSE’s independence standards for listed companies and the Company’s Director Qualification Criteria and Independence Standards, which are consistent with, but more rigorous than, the NYSE standards, as well asstandards. The Board also considers independence standards applicable to service on particular committees of the Board under SEC rules and the NYSE Listed Company Manual.rules.
Under SEC rules, the Governance Committee is required to analyze and describe any transactions, relationships or arrangements not specifically disclosed as a related party transaction in this proxy statementProxy Statement that were considered in determining our directors’ independence. To facilitate this process, the Governance Committee reviews directors’ responses to our annual Directors’ and Officers’ Questionnaire, which requires disclosure of each director’s and his or her immediate family’s relationships to the Company, as well as any potential conflicts of interest.
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Corporate Governance / Independence of Directors |
Corporate Governance | Independence of Directors
In this context, the Governance Committee considered the relationships described below. Based on its analysis of these relationships and our independence standards, the Governance Committee concluded and recommended to our Board that none of these relationships impaired the independence of any non-employee director, including: director. Among other things, none of our directors serve as an executive officer of any organization to which we make charitable contributions. In addition, recognizing that several of our directors serve as an executive officer at a company with which we may do business, the Governance Committee determined that commercial relationships involving routine, arms-length purchases and sales transactions between International Paper and these companies were not material under our independence standards. These standards provide that payments that the Company makes to, or receives from, a company at which a member of our Board serves as an executive officer do not create a material relationship that would impair the director’s independence if they are for property or services valued at less than the greater of $750,000 or 1.75 percent of such other company’s consolidated gross revenue. We provide additional details about these relationships in the following table.
Transactions Considered in Analysis of Director Independence
| Director | Name of Employer | Business Relationship (including affiliated companies) | Dollar Amount of Routine Sales Transactions (approximate) | Does amount exceed greater of $750,000 or 1.75% of other company’s gross revenue? | ||||
| Anton V. Vincent | Mars, Inc. | Routine sales to Mars | $ | No | ||||
| Routine purchases from Mars | $26.5 million in total, representing less than 0.06% of Mars’s gross revenue in 2023 | No | ||||||
| Ray G. Young | Archer-Daniels- Midland Company (through December 2022) | Routine sales to ADM | $3.2 million in total, representing less than 0.02% of International Paper’s gross revenue in | No | ||||
| Routine purchases from | ||||||||
ADM | $ | |||||||
| No |
| 34 \ | International Paper 2024 Proxy Statement |
Corporate Governance / Transactions with Related Persons |
Corporate Governance | Transactions with Related Persons
TRANSACTIONS WITH RELATED PERSONS
Related Person Transactions Covered.Policy and Procedures. Our Board has adopted a written policyRelated Person Transactions Policy and proceduresProcedures for the review and approval or ratification of transactions involving the Company and “related persons” (directors, director nominees and executive officers and their immediate family members, or shareowners owning 5 percent5% or greater of our outstanding common stock and their immediate family members). The policy covers any related person transaction or currently proposed transaction in which the Company was a participant or is to be a participant and (i) the amount involved exceededexceeds or is expected to exceed $120,000 in any fiscal year, and (ii) a related person had or will have a direct or indirect material interest. The policy also sets forth certain clarifications and exceptions with respect to the policy’s application to certain types of transactions.
The policy works in tandem and as a supplement to our Code of Conduct and Conflicts of Interest Policy.
Identifying Related Persons. Our directors and executive officers complete and sign a questionnaire at the end of each fiscal year to confirm that there are no material relationships or related person transactions between those individuals and the Company other than those previously disclosed.
Additionally, the Company reviews public filings on Schedules 13D and 13G to identify our 5% beneficial owners.
Transaction Review Procedures.Related person transactions must be approved in advance by the Governance Committee. We disclose in our proxy statement any transactions that are required to be disclosed in accordance with Item 404(a) of Regulation S-K.
Prior to entering into a related person transaction (as defined in our policy), a related person must provide the details of the transaction to the General Counsel, including the relationship of the person to the Company, the dollar amount involved, and whether the related person or his or her family member has or will have a direct or indirect interest in the transaction. The General Counsel then evaluates the transaction to determine if the Company or the related person has a direct or indirect material interest in the transaction and whether the policy otherwise applies to such transaction. If so,such determination is made, the General Counsel submits the factsdetails of the transaction to the Governance Committee for review. The Governance Committee may then make a determination to approveapproves a related person transaction based on the guidelines set forth in our related person transactions policy if the Committee determines that the transaction is not inconsistent with the interests of the Company and its shareowners and does not violate the Company’s Code of Conduct or Conflicts of Interest Policy. Our policy also sets forth procedures whereby, if the Company becomes aware of a completed related person transaction that is subject to the policy and which inadvertently was not previously approved, the Governance Committee must either (i) ratify the transaction, or (ii) require the related person to terminate the transaction. In addition, the Governance Committee evaluates existing related person transactions on a periodic basis to determine whether the related person transaction should continue.
Transactions With Related Person Transactions.SincePersons. Except as otherwise noted below, since January 1, 2021,2023, the Company has not been a participant in any transaction, and is not a participant in any currently proposed transaction, in which any related personparty had or will have a direct or indirect material interest that would require disclosure under Item 404(a) of Regulation S-K.
Beneficial Owners of More Than Five Percent of Voting Securities. Since January 1, 2023 entities or affiliates that are the beneficial owner of more than 5% of our outstanding common stock have provided, and are contemplated to provide, certain services to the Company in the ordinary course of business. The nature and value of these services provided by these 5% shareowners and their affiliates is described below.
An affiliate of BlackRock Inc. (“BlackRock”), a 5% shareowner, has provided investment management services related to certain benefit plans of the Company. In 2023 BlackRock received fees totaling approximately $1.5 million for providing these services.
Additionally, State Street Corporation (“State Street”), a 5% shareowner, has provided trustee and similar services to the Company serving as the trustee of the Company’s Defined Contribution Plans Master Trust, Retirement Plan Master Trust, Commingled Investment Group Trust, and Retiree Medical Savings Plan Trust, and as an independent monitoring fiduciary with respect to the Company Stock Fund in the Savings plan. During 2023, the Company paid approximately $3.3 million to State Street for these trustee and similar services. Additionally, there is currently a proposed transaction
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Corporate Governance / Transactions with Related Persons |
with State Street pursuant to which State Street would provide management services under several new target date and index fund in the Company’s Savings (401(k)) plan. This currently proposed transaction is scheduled to be finalized later in 2024 and in the first year is expected to involve payments by us to State Street in excess of $460,000.
The agreements with BlackRock and State Street are negotiated arms-length transactions in the ordinary course of business. Additionally, we believe the agreements represent standard terms and conditions for investment management and trustee services.
In compliance with our policy, the Governance Committee has approved the currently proposed State Street investment management services transaction and approved and ratified both existing State Street and BlackRock transactions.
Our Related Person Transaction Policy areand Procedures is available at www.internationalpaper.com under the “Company”Investors” tab at the top of the page followed by the “Leadership”Governance” link and then under the “Governance”Governance Documents” link. A paper copy is available at no cost by written request to the Corporate Secretary.
Commitment to Sound Corporate Governance and Ethical Conduct
We believe good corporate governance is critical to achieving business success and serves the best interests of our shareowners. We value the perspectives of our shareowners and other stakeholders, including our employees and the communities in which we operate, and take steps to address their concerns where warranted.
| 36 \ | International Paper |
Corporate Governance / Commitment to Sound Corporate Governance and Ethical Conduct |
COMPENSATION PHILOSOPHY
Our Corporate Governance Guidelines. Our Board has adopted Corporate Governance Guidelines that reflect its commitment to sound governance practices. In addition, each of our Board committees has its own charter to ensure that our Board fully discharges its responsibilities to our shareowners. Our Board reviews its Corporate Governance Guidelines and committee charters at least annually and makes changes from time to time to reflect developments in the law and corporate governance practices. Our Code of Conduct. Our Board has adopted a Code of Conduct that applies to our directors, officers, and all employees to ensure we conduct business in a legal and ethical manner. Our Global Ethics and Compliance office is located at our global headquarters in Memphis, Tennessee. If an employee, customer, vendor, or shareowner has a concern about ethics or business practices of the Company or any of its employees or representatives, that individual may contact the Global Ethics and Compliance office in person, via e-mail or telephone. The Code of Conduct describes multiple channels by which employees may report a concern, such as through their managers, a human resources professional, legal counsel or our internal audit department. Our Helpline is also available 24 hours a day, seven days a week, to receive calls from anyone wishing to report a concern or complaint, whether anonymous or otherwise. Our Helpline contact information can be found at www.internationalpaper.com, under the “Company” tab at the top of the page, then under “Ethics & Compliance.” Our Corporate Governance Guidelines, Code of Conduct and Board committee charters are available at www.internationalpaper.com under the “Investors” tab. Paper copies are also available by written request to the Corporate Secretary at the address below. |
Communicating with the Board
Shareowners or other interested parties may communicate with our entire Board, the Chairman, the independent directors as a group, the Lead Director, or any one of the directors by writing to the Senior Vice President, General Counsel, and Corporate Secretary, at the address set forth below. Our Corporate Secretary will forward all communications relating to International Paper’s interests, other than business solicitations, advertisements, job inquiries or similar communications, directly to the appropriate director(s).
In addition, as described in detail under “Corporate Governance – Commitment to Sound Governance and Ethical Conduct” our Global Ethics and Compliance office has a Helpline that is available 24 hours a day, seven days a week, to receive calls, emails, and letters to report a concern or complaint, anonymous or otherwise.
Direct all Board correspondence to:
Corporate Secretary
International Paper Company
6400 Poplar Avenue
Memphis, TN 38197
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Compensation Philosophy
We believe our compensation program for non-employee directors is guided by certain principles. We believe our director compensation program should:
Provide total compensation comprising both cash and equity elements that targets the median level of compensation paid by our Compensation Comparator Group (“CCG”), which is described in the Compensation Discussion & Analysis section of this |
Align the interests of our directors with the interests of our shareowners; |
Attract and retain top director talent; and |
Be flexible enough to meet the needs of a diverse group of directors. |
Each element of director compensation discussed below is recommended by the Governance Committee and approved by our Board. Mr. Sutton does not receive compensation for his service as a director.
On at least a biennial basis, we evaluate the reasonableness and appropriateness of the total compensation paid to our directors in comparison to peer companies who comprise our CCG. We target our total director compensation at the median of our CCG.
We believe our director compensation program appropriately compensates our directors for their time and commitment to the Company, and is consistent with our compensation philosophy, as shown in the following table.
| Our Director Pay Principles | Our | |||
| Target compensation at median of CCG | •Maintained mix of cash and equity in line with cross-section of similar companies (CCG), which total compensation was at the median level of companies included in our CCG | ||
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| Align the interests of our directors with the interests of our shareowners | •Paid | ||
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| Attract and retain top director talent | •Compensated directors competitively, based on a cross-section of similar companies (CCG) | ||
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| Maintain flexibility to meet the needs of a diverse group of directors | •Continued to allow directors to elect to take equity in place of cash and to elect to defer their fees until retirement | ||
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Director Compensation / Elements of Our Director Compensation Program |
Elements of Contents
Our Director Compensation| Stock Ownership Requirements
STOCK OWNERSHIP REQUIREMENTS
Our director stock ownership policy requires our directors to hold equity of the Company valued at two times the total annual Board retainer, which, through April 30, 2022, is equivalent to 4.7 times the annual cash retainer (and requires ownership of Company stock equivalent to $566,000). We believe this helps align the interests of our directors with the interests of our shareowners. New directors have four years from the date of their election to meet the ownership requirement. As of December 31, 2021, all directors who were required to meet the ownership levels held the requisite amount of equity.
ELEMENTS OF OUR DIRECTOR COMPENSATION PROGRAM Program
For the May 20212023 to April 20222024 service year, compensation for our non-employee directors consists of:
An annual retainer |
Additional retainers for committee chairs, the Lead Director, |
Life insurance, business travel accident insurance, and liability insurance. |
There were no changes made to the fees payable to our non-employee directors for the May 2023 to April 2024 service year in comparison to the prior service year.
| Type of Fee | 2023-2024 Fee Amount ($) | |||
| Board Fees | ||||
| Cash Retainer | 120,000 | |||
| Equity Retainer | 163,000 | |||
| Committee Fees | ||||
| Audit and Finance Committee Chair | 25,000 | |||
| Audit and Finance Committee Non-Chair Member | 10,000 | |||
| Management Development and Compensation Committee Chair | 20,000 | |||
| Governance Committee Chair | 20,000 | |||
| Public Policy and Environment Chair | 20,000 | |||
| Lead Director | 27,500 | |||
Annual Retainer
The annual retainer fee is $283,000, of which $120,000 (42 percent) is payable in cash in monthly installments and $163,000 (58 percent) is payable in equity. A director may elect to convert all or 50 percent of his or her cash retainer fee (plus any committee fees and PresidingLead Director fees, as discussed below) into shares of restricted stock. To encourage director stock ownership, a director who makes this election receives a 20 percent premium of this converted cash award in additional shares of restricted stock. Eight of the 10 current non-employee directors haveserving during 2023 elected to receive stock in lieu of all or 50 percent of the cash award and are receiving the applicable premium. Restrictions on shares awarded to our directors under our current compensation plan lapse one year from the date of grant, and then the shares are freely transferable, subject to our director stock ownership requirement and securities regulations.
Directors may also elect to defer receipt of some or all of their equity retainer fee.retainer. Directors who make this election receive restricted stock units (“RSUs”) in lieu of restricted stock. In the event this election is made, these RSUs are not transferable until a director’s retirement from the Board, death or disability. The cash value of RSUs is paid in January following retirement, death or disability. Four of the 10 current non-employee directors haveserving during 2023 elected to defer payment of all or a portion of their equity compensation until retirement, death or disability. Elections with regard to form of payment and deferrals are made in December preceding each service year.
We use the closing market price of the Company’s common stock on the day preceding our annual meeting in May to calculate the equivalent number of shares for the $163,000 equity retainer and any restricted stock elected by our directors in lieu of their cash retainer fee.retainer. RSUs are settled in cash based on the closing price of the Company’s common stock as of December 31st of the year of the director’s retirement.retirement, death or disability.
Directors earn dividends on their shares of stock and RSUs, which they may elect to receive either as cash or in the form of additional shares of restricted stock or RSUs. Dividends are paid to the director at the time the underlying award is vested or settled.
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Director Compensation / Elements of our Director Compensation Program |
Director Compensation| Elements of Our Director Compensation Program
Fees for Committee Service
In addition, as referenced above, each committee chair receives a fee for his or her service in such role. For 2021, Messrs. Connor and2023, Mr. Young and Mses. Gordon, Hinman and Sullivan each received a committee chair fee. Members of our Audit and Finance Committee also receive an additional fee for their services on this committee. For 2021,2023, Messrs. Connor, Dorduncu, Gustafsson, Vincent and Young and Ms. HinmanDr. Sullivan each received an Audit and Finance Committee member fee. As PresidingLead Director, Ms. Gordon alsoMr. Connor received a Presiding Director fee for 2021.2023.
The fees payable to our non-employee directors during the May 2021 through April 2022 service year are shown below. There were no changes made to the fees payable to our non-employee directors for the May 2021 to April 2022 service year in comparison to the prior service year, except that the cash retainer amount was increased from $112,000 to $120,000.
Insurance and Indemnification Contracts
We provide life insurance in the amount of $10,500 to each of our non-employee directors, and travel accident insurance in the amount of $500,000 that covers a director if he or she dies or suffers certain injuries while traveling on Company business.
We provide liability insurance for our directors, officers, and certain other employees at an annual cost of approximately $4$3 million. The primary underwriters of coverage, which was renewed in 2021 and extends to JulyApril 1, 2022,2025, are XL Specialty Insurance Company and ACE American Insurance Company.
Our By-Laws provide for standard indemnification of our directors and officers in accordance with New York law. We also have contractual arrangements with our directors that indemnify them in certain circumstances for costs and liabilities incurred in actions brought against them while acting as our directors.
Stock Ownership Requirements
Our director stock ownership policy requires our directors to hold equity of the Company valued at two times the total annual Board retainer, which, through April 30, 2024, is equivalent to 4.7 times the annual cash retainer (and requires ownership of Company stock equivalent to $566,000). We believe this requirement helps align the interests of our directors with the interests of our shareowners. New directors have four years from the date of their election to meet the ownership requirement. As of December 31, 2023, all directors who were required to meet the ownership levels held the requisite amount of equity.
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Director Compensation / Non-employee Director Compensation Table |
Director Compensation| Non-EmployeeNon-employee Director Compensation Table
NON-EMPLOYEE DIRECTOR COMPENSATION TABLE
The following table provides information on 20212023 compensation for non-employee directors. directors who served during 2023. It shows fiscal year 20212023 compensation based on the SEC’s compensation disclosure requirements, though we pay our directors on a May to April service year. Amounts in the table show differences among directors because (i) each director makes an individual election to receive his or her fees in cash and/or equity;equity in the manner described above; (ii) certain directors receive committee chair fees, a PresidingLead Director fee, and/or Audit and Finance Committee member fees; and (iii) directors may join our Board on different dates, so their compensation is prorated for the year.
| Name of Director | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | Total ($) | |||
| William J. Burns (retired on 2/28/2021) | 18,667 | — | 18,667 | |||
| Christopher M. Connor | — | 336,924 | 336,924 | |||
| Ahmet C. Dorduncu | 128,608 | 162,976 | 291,584 | |||
| Ilene S. Gordon | — | 354,430 | 354,430 | |||
| Anders Gustafsson | — | 316,953 | 316,953 | |||
| Jacqueline C. Hinman | — | 316,953 | 316,953 | |||
| Clinton A. Lewis, Jr. | — | 306,967 | 306,967 | |||
| DG Macpherson | — | 395,914 | 395,914 | |||
| Kathryn D. Sullivan | 68,667 | 244,957 | 313,624 | |||
| Anton V. Vincent | — | 395,914 | 395,914 | |||
| Ray G. Young | — | 331,993 | 331,993 |
| Name of Director | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | Total ($) | |||||||||
| Christopher M. Connor | 334,499 | 334,499 | ||||||||||
| Ahmet C. Dorduncu | 132,837 | 163,012 | 295,849 | |||||||||
| Ilene S. Gordon | 326,994 | 326,994 | ||||||||||
| Anders Gustafsson | 316,998 | 316,998 | ||||||||||
| Jacqueline C. Hinman | 326,994 | 326,994 | ||||||||||
| Clinton A. Lewis, Jr. | 307,002 | 307,002 | ||||||||||
| DG Macpherson* | 307,002 | 307,002 | ||||||||||
| Kathryn D. Sullivan | 72,917 | 250,033 | 322,950 | |||||||||
| Anton V. Vincent | 316,998 | 316,998 | ||||||||||
| Ray G. Young | 332,008 | 332,008 | ||||||||||
| (1) | As described above, certain directors elected to receive shares of restricted stock in lieu of cash and therefore had no cash compensation during |
| (2) | The value of stock awards shown in the “Stock Awards” column is based on grant date fair value calculated under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. The grant date fair value of the equity awards shown in the “Stock Awards” column is based on the closing price of the Company’s common stock on the last business day immediately preceding the date of grant, which was May |
| * | Mr. Macpherson |
The following table shows the aggregate number of unvested shares of restricted stock and RSUs outstanding as of December 31, 2021,2023, for each non-employee director who served as of that date. The number of unvested shares of restricted stock and RSUs held by our non-employee directors was adjusted (by providing additional shares of restricted stock and RSUs to such directors) to preserve the value of such awards immediately prior to the spin-off of Sylvamo Corporation which was completed on October 1, 2021 to ensure that the value of such awards was not impacted by such transaction.
| Name of Director | Aggregate Number of Shares Outstanding That Have Not Vested and RSUs (#) | |||
| Christopher M. Connor | 59, 132 | |||
| Ahmet C. Dorduncu | 5,039 | |||
| Ilene S. Gordon | 10,108 | |||
| Anders Gustafsson | 9,799 | |||
| Jacqueline C. Hinman | 12,053 | |||
| Clinton A. Lewis, Jr. | ||||
| 53,961 | ||||
| 20,950 | ||||
| Kathryn D. Sullivan | 9,298 | |||
| Anton V. Vincent | 24,847 | |||
| Ray G. Young | 85,956 | |||
| Total | 291,143 |
| * |
|
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Item 2:Ratify Deloitte & Toucheas Our IndependentAuditor for 2022
Our Audit and Finance Committee has selected Deloitte & Touche LLP (“Deloitte & Touche”) to serve as the Company’s independent auditor for 2022.2024. Although shareowner ratification is not required by our By-Laws or otherwise, the Board is submitting the selection of Deloitte & Touche to our shareowners because we value your views on the Company’s independent auditor. Our Audit and Finance Committee will consider, but is not bound by, the outcome of this vote. Even if the selection of Deloitte & Touche is ratified, the Audit and Finance Committee may change the appointment at any time during the year if it determines that a change would be in the best interests of the Company and our shareowners.
To ratify the selection of our independent auditor, the affirmative vote of a majority of a quorum at the annual meeting is required. You may vote FOR or AGAINST the ratification of the selection of our independent auditor, or you may abstain from voting. Abstentions will have the same effect as votes against this proposal because they are considered votes present for purposes of a quorum on the vote.
We do not expect there to be any “broker non-votes” associated with this proposal, as the ratification of our independent auditor is a routine matter. As a result, ifproposal. If your shares are held in street name and you do not give your bank or broker instructions on how to vote, your shares may be voted by the broker in its discretion.
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Our Board of Directors unanimously recommends that you vote FOR the ratification of |  FOR | |
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Item 2: Ratify Deloitte & Touche as Our Independent Auditor for 2024 / Background on our Independent Auditor |
Item 2: Ratify Deloitte & Touche as Our Independent Auditor for 2022| Background on Ourour Independent Auditor
BACKGROUND ON OUR INDEPENDENT AUDITOR
The Audit and Finance Committee is responsible for the appointment, compensation, retention, and oversight of the independent external audit firm retained to audit the Company’s financial statements. The committee has evaluated the qualifications, performance, and independence of Deloitte & Touche, including discussions regarding Public Company Accounting Oversight Board (“PCAOB”) inspection results, peer reviews and any other internal inspection results and trends in their internal system of quality controls, and appointed Deloitte & Touche as the Company’s independent external auditor for the fiscal year 2022.2024.
Deloitte & Touche has served as International Paper’s independent external auditor continuously since 2002. In order to assureensure continuing auditor independence, the Audit and Finance Committee periodically considers whether there should be a rotation of the independent external audit firm. The members of the Audit and Finance Committee and the Board believe the continued retention of Deloitte & Touche to serve as the Company’s independent external auditor is in the best interests of International Paper and its shareowners. In making this determination, the Audit and Finance Committee and Board have taken into accountconsidered Deloitte & Touche’s significant institutional knowledge of our business, operations, accounting policies and financial systems, and internal controls framework, as well as Deloitte’s global capabilities, technical expertise, depth of resources, quality, efficiency of services, quality of communications with the Audit and Finance Committee and management, and independence. In addition, in accordance with applicable rules on partner rotation, Deloitte & Touche rotates its lead audit engagement partner not less than every five years. The Audit and Finance Committee is involved in considering the selection of Deloitte & Touche’s primary engagement partner when there is a rotation.
Deloitte & Touche’s reports on the consolidated financial statements for each of the three fiscal years in the period ended December 31, 2021,2023, which were included in the Company’s 20212023 Annual Report on Form 10-K, did not contain an adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles. Representatives of Deloitte & Touche will be present at the 20222024 annual meeting to answer questions, and they also will have the opportunity to make a statement if they desire to do so.
INDEPENDENT AUDITOR FEESIndependent Auditor Fees
The Audit and Finance Committee engaged Deloitte & Touche to perform an annual integrated audit of the Company’s financial statements, which includes an audit of the Company’s internal controls over financial reporting, for the years ended December 31, 2020,2022, and December 31, 2021.2023. The total fees and expenses paid to Deloitte & Touche are as follows:
| 2020 | 2021 | |||
| ($, in thousands) | ($, in thousands) | |||
| Audit Fees | 14,780 | 13,345 | ||
| Audit-Related Fees | 359 | 4,987 | ||
| Tax Fees | 1,956 | 3,391 | ||
| All Other Fees | 253 | 49 | ||
| Total Fees | 17,348 | 21,772 |
| 2023 | 2022 | |||||||
| ($, in thousands) | ($, in thousands) | |||||||
| Audit Fees | 12,091 | 11,752 | ||||||
| Audit-Related Fees | 355 | 470 | ||||||
| Tax Fees | 4,194 | 1,865 | ||||||
| All Other Fees | 345 | 286 | ||||||
| Total Fees | 16,985 | 14,373 | ||||||
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Item 2: Ratify Deloitte & Touche as Our Independent Auditor for 2024 / Services Provided by the Independent Auditor |
Item 2: Ratify Deloitte & Touche as Our Independent Auditor for 2022| Services Provided by the Independent Auditor
SERVICES PROVIDED BY THE INDEPENDENT AUDITOR
All services rendered by Deloitte & Touche are permissible under applicable laws and regulations and are pre-approved by the Audit and Finance Committee. For a complete copy of International Paper’s “Guidelines of International Paper Company Audit and Finance Committee for Pre-Approval of Independent Auditor Services,” please write to the Corporate Secretary, or visit us on our website, www.internationalpaper.com, under the “Company” tab, followed by the “Leadership” link, and then the “Governance” link.Contact Us.”
Pursuant to rules adopted by the SEC, the fees paid to Deloitte & Touche for services provided are presented in the table above under the following categories:
| 1. | Audit Fees – Fees for professional services performed by Deloitte & Touche for the audit and review of our annual financial statements, the review of our financial statements included in our quarterly reports on Form 10-Q, |
| 2. | Audit-Related Fees – Fees for assurance and related services performed by Deloitte & Touche that are reasonably related to the performance of the audit or review of our financial statements. This includes employee benefit and compensation plan audits, accounting consultations on divestitures and acquisitions, attestations by Deloitte & Touche that are not required by statute or regulation, consulting on financial accounting and reporting standards, and |
| 3. | Tax Fees – Fees for professional services performed by Deloitte & Touche with respect to tax compliance, tax advice and tax planning. This includes consultations on preparation of original and amended tax returns for the Company and its consolidated subsidiaries, refund claims, |
| 4. | All Other Fees – Fees for other permissible work performed by Deloitte & Touche that do not meet the above category descriptions. These services relate to various consultations that are permissible under applicable laws and regulations, which are primarily related to engagements to provide advice, observations, and recommendations regarding operations, infrastructure and distribution to be considered by the Company. |
Item 2: Ratify Deloitte & Touche as Our Independent Auditor for 2022| Audit and Finance Committee Report
Audit and Finance Committee Report
The following is the report of the Audit and Finance Committee with respect to the Company’s audited financial statements for the fiscal year ended December 31, 2021.
The Audit and Finance Committee assists the Board of Directors in its oversight of the Company’s financial reporting process and implementation and maintenance of effective controls to prevent, deter and detect fraud by management. The Audit and Finance Committee’s responsibilities are more fully described in its charter, which is accessible on the Company’s website at www.internationalpaper.comunder the “Company” tab at the top of the page and then under the “Leadership” link and the “Board Committees” section. Paper copies of the Audit and Finance Committee charter may be obtained, without cost, by written request to Ms. Sharon R. Ryan, Corporate Secretary, International Paper Company, 6400 Poplar Avenue, Memphis, TN 38197.
In fulfilling its oversight responsibilities, the Audit and Finance Committee has reviewed and discussed the Company’s annual audited and quarterly consolidated financial statements for the 2021 fiscal year with management and Deloitte & Touche LLP (“Deloitte & Touche”), the Company’s independent registered public accounting firm, including discussions related to significant accounting policies and critical accounting estimates and their related disclosures. In addition, the Audit and Finance Committee has reviewed, and discussed with management and Deloitte & Touche, management’s assessment of the effectiveness of the Company’s internal control over financial reporting, and the evaluation by Deloitte & Touche of the Company’s internal control over financial reporting. The Audit and Finance Committee has discussed with Deloitte & Touche the matters required to be discussed by Auditing Standard No. 1301, “Communications with Audit Committees,” issued by the Public Company Accounting Oversight Board (United States). The Audit and Finance Committee has received the written disclosures and the letter from Deloitte & Touche required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the audit committee concerning independence, and has discussed with Deloitte & Touche its independence from the Company and its management. The Audit and Finance Committee has also considered whether the provision of non-audit services by Deloitte & Touche is compatible with maintaining the firm’s independence.
The Board has determined that the following members of the Audit and Finance Committee are audit committee financial experts as defined in Item 407(d)(5)(ii) of Regulation S-K: Christopher M. Connor, Anders Gustafsson, Jacqueline C. Hinman and Ray G. Young. The Board has determined that each member of the Audit and Finance Committee meets the independence and financial literacy requirements for audit committee members set forth under the listing standards of the NYSE and our independence standards, as well as applicable independence requirements under SEC rules.
Based on the review and discussions referred to above, the Audit and Finance Committee recommended to the Company’s Board of Directors that the Company’s audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
The Audit and Finance Committee has approved and selected, and the Board of Directors has ratified, Deloitte & Touche as the Company’s independent registered public accounting firm for 2022.
Audit and Finance Committee
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 |  International Paper 2024 Proxy Statement |
Item 2: Ratify Deloitte & Touche as Our Independent Auditor for 2024 / Audit and Finance Committee Report |
Audit and Finance Committee Report The following is the report of the Audit and Finance Committee with respect to the Company’s audited financial statements for the fiscal year ended December 31, 2023. The Audit and Finance Committee assists the Board of Directors in its oversight of the Company’s financial reporting process and implementation and maintenance of effective controls to prevent, deter and detect fraud by management. The Audit and Finance Committee’s responsibilities are more fully described in its charter, which is accessible on the Company’s website at www.internationalpaper.com under the “Investors” tab and then under the “Governance” link and the “Board Committees” section. Paper copies of the Audit and Finance Committee charter may be obtained, without cost, by written request to Mr. Joseph R. Saab, Corporate Secretary, International Paper Company, 6400 Poplar Avenue, Memphis, TN 38197. In fulfilling its oversight responsibilities, the Audit and Finance Committee has reviewed and discussed the Company’s annual audited consolidated financial statements for the 2023 fiscal year with management and Deloitte & Touche LLP (“Deloitte & Touche”), the Company’s independent registered public accounting firm, including discussions related to significant accounting policies and critical accounting estimates and their related disclosures. In addition, the Audit and Finance Committee has reviewed, and discussed with management and Deloitte & Touche, management’s assessment of the effectiveness of the Company’s internal control over financial reporting, and the evaluation by Deloitte & Touche of the Company’s internal control over financial reporting. The Audit and Finance Committee has discussed with Deloitte & Touche the matters required to be discussed under the applicable requirements of the Public Company Accounting Oversight Board (United States) and the Securities and Exchange Commission (“SEC”). The Audit and Finance Committee has received the written disclosures and the letter from Deloitte & Touche required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the audit committee concerning independence, and has discussed with Deloitte & Touche its independence from the Company and its management. The Audit and Finance Committee has also considered whether the provision of non-audit services by Deloitte & Touche is compatible with maintaining the firm’s independence. The Board has determined that the following members of the Audit and Finance Committee are audit committee financial experts as defined in Item 407(d)(5)(ii) of Regulation S-K: Anders Gustafsson and Christopher M. Connor. The Board has determined that each member of the Audit and Finance Committee meets the independence and financial literacy requirements for audit committee members set forth under the listing standards of the New York Stock Exchange and our independence standards, as well as applicable independence requirements under SEC rules. Based on the review and discussions referred to above, the Audit and Finance Committee recommended to the Company’s Board of Directors that the Company’s audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023. The Audit and Finance Committee has approved and selected, and the Board of Directors has ratified, Deloitte & Touche as the Company’s independent registered public accounting firm for 2024. | ||||
Audit and Finance Committee | ||||
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Anders Gustafsson, Chair | Christopher M. Connor | |||
 |  | |||
| Ahmet C. Dorduncu | Kathryn D. Sullivan | |||
www.internationalpaper.com | / 45 |
Item 3:Non-Binding Resolutionto Approve theCompensation of OurNamed Executive Officers
Our Board of Directors seeks your approval of the compensation of our Named Executive Officers (“NEOs”), who are listed in the Summary Compensation Table of this proxy statement.Proxy Statement. Information describing the compensation of our NEOs is disclosed in the Compensation Discussion & Analysis section, the accompanying tables and narrative contained in this proxy statementProxy Statement pursuant to Item 402 of Regulation S-K under the Securities Exchange Act.Act of 1934, as amended (the “Exchange Act”). This vote is being provided as required pursuant to Section 14A of the Exchange Act and is non-binding.
Shareowners are asked to approve the following non-binding advisory resolution:
“Resolved, that the compensation paid to the Company’s Named Executive Officers, as disclosed in this proxy statementProxy Statement pursuant to Item 402 of Regulation S-K under the Exchange Act, including in the Compensation Discussion & Analysis, the related compensation tables and narrative disclosure, is hereby approved.”
To approve this proposal, commonly referred to as a “Say on Pay”“Say-on-Pay” proposal, the affirmative vote of a majority of a quorum at the annual meeting is required. You may vote FOR or AGAINST this non-binding proposal, or you may abstain from voting. Abstentions will have the same effect as votes against this proposal because they are considered votes present for purposes of a quorum on the vote.
If you hold your shares in street name, your failure to indicate voting instructions to your bank or broker will cause your shares to be considered “broker non-votes” not entitled to vote with respect to Item 3. Broker non-votes will have the same effect as votes against this proposal because they are considered votes present for purposes of a quorum on the vote.
Our Board of Directors unanimously recommends that you vote FOR the approval of the compensation of our Named Executive Officers as disclosed pursuant to Item 402 of Regulation S-K under the Exchange Act. | FOR | |
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This Compensation Discussion & Analysis (CD&A)
This (“CD&A&A”) describes our compensation program that applies to all of our executive officers, including our CEO and Senior Vice Presidents, whom we refer to as our Senior Leadership Team (“SLT”). or executive officers. It is designed to provide shareowners with an understanding of our compensation philosophy, core design principles and decision-making process. This narrative also explains how our Management Development and Compensation Committee (“MDCC”) oversees and designs the compensation program and reviewsexplains the 20212023 compensation of our Named Executive Officers (“NEOs”) as shown below:.
2023 Named Executive Officers (NEOs)
| Mark S. Sutton | Chairman of the Board and Chief Executive Officer (Principal Executive Officer) | |
| Timothy S. Nicholls | Senior Vice President and Chief Financial Officer (Principal Financial Officer) | |
| Senior Vice President, | ||
| Joseph R. Saab | Senior Vice President, General Counsel and Corporate Secretary | |
| Senior Vice President, | ||
| Former Senior Vice President | ||
On October 1, 2021, we completed the spin-off of our global papers business into a new, standalone publicly-traded company called Sylvamo Corporation. Immediately prior to the spin-off, Jean-Michel Ribiéras was serving as Senior Vice President - Global Papers of the Company through September 30, 2021, and effective October 1, 2021, became Chairman and Chief Executive Officer of Sylvamo Corporation. Mr. Amick leftWanta retired from the Company effective MarchSeptember 30, 2023, after a long and successful career spanning 32 years.
Compensation Committee Report
On behalf of the Board of Directors, the MDCC oversees the Company’s compensation programs. In fulfilling its oversight responsibilities, the MDCC has reviewed and discussed the CD&A included in this Proxy Statement with the Company’s management.
Based on the review and discussions referred to above, the MDCC recommended to the Board of Directors that the CD&A be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
Management Development and Compensation Committee
2023 Financial Highlights International Paper delivered solid
2023 Executive Compensation
The following section briefly highlights the current structure of our program, the MDCC’s key compensation decisions for Key Highlights for
Changes to Our 2023 Incentive Compensation Plans We recognize that incentive plans evolve over time and should respond to the changing needs and strategies of the Company. At a minimum of every five years, the Company conducts a comprehensive review of both the short-term and long-term incentive compensation plans to confirm our plans are competitive, while also ensuring the plan design aligns with the strategic goals of the business. The 2022 review included an analysis of best market practices for elements of both design and administration for each of the plans. Management conducted an assessment utilizing studies performed by three consulting firms: WTW (formerly Willis Towers Watson), Exequity and FW Cook. Additionally, internal teams conducted extensive back-testing (testing design changes using historical data to understand implications). Following a robust review by the MDCC, the changes described below went into effect in January 2023, with the exception of the expansion of the short-term incentive plan which was implemented effective July 1, 2022. As described in last year’s proxy statement, the MDCC reviewed the detailed findings of the various studies prior to adopting the changes in October 2022. The MDCC also discussed and fine-tuned the design and administration elements for each plan. 2023 Incentive Compensation Plan Changes
The chart below demonstrates our commitment to
Average Other NEOs Target Pay Mix
2023 Base Salary Changes The Committee elected to increase Mr.
2023 Incentive Plan Design Overview with Metrics and Weightings 2023 Short-Term Incentive Plan Annual Incentive Plan (AIP) Component Weightings
Annual Incentive Plan Payout Scale All Metrics: Below Threshold (0% Payout) Threshold (50% Payout) Target (100% Payout) Maximum (200% Payout) 2023-2025 Long-Term Incentive Plan Long-Term Incentive Plan (LTIP) Award
Performance Stock Units (PSUs) Component Weightings
Performance Stock Units Payout Scale ROIC (50%) Below Threshold (0% Payout) Threshold (50% Payout) Target (100% Payout) Maximum (200% Payout) Relative TSR (50%) Below 25th percentile (0% Payout) 25th percentile (25% Payout) 50th percentile (100% Payout) At or above 75th percentile (200% Payout) * See page 62 for definitions.
2023 STI Performance Achievement
Compensation Governance Best Practices
Our executive compensation program
The MDCC reviews our CEO’s pay in relation to the Company’s performance to ensure Historical CEO Pay-for-Performance Alignment The following table demonstrates the close alignment between our CEO’s realizable pay and the Company’s performance over the past five three-year performance periods as compared to our CCG.
Current CEO Pay-for-Performance Alignment Each point on the graph below represents a CCG CEO’s three-year realizable compensation (the cash compensation actually paid plus the economic value of equity-based grants) relative to Compared to our CCG, our CEO’s realizable compensation was at the
CEO Realizable Pay vs. TSR Performance (2020-2022)
The MDCC,
We use published survey dataas our primary market reference point to ensure a robust sample size of organizations, thereby reducing year-over-year volatility in pay comparison. This survey data represents the average of two large, general industry surveys administered by WTW (formerly Willis Towers
We
Role of the Management Development and Compensation Committee The MDCC is responsible for the Company’s executive compensation program design and decision-making process for SLT compensation. The MDCC:
In addition, in a process established by the Lead Director, the MDCC during Executive Session:
All elements of CEO pay are approved by the independent directors of the Board. Role of Management The CEO makes recommendations to the MDCC concerning the strategic direction of our executive compensation program. Our Senior Vice President, Human Resources and Corporate Affairs, is responsible for making recommendations to the MDCC concerning program design and administration, and our General Counsel provides legal advice to the MDCC concerning disclosure obligations, governance and its oversight responsibilities. The CEO reviews the performance of SLT members against their annual, individual pre-established performance objectives and discusses his individual performance with the MDCC. In consultation with our Senior Vice President, Human Resources and Corporate Affairs, the CEO makes individual recommendations on base salary, incentive plan opportunities, and annual incentive award payments for members of the SLT. The MDCC reviews these recommendations, and with input from its compensation consultant, discusses, modifies and approves, each SLT member’s compensation. The CEO does not participate in any MDCC or Board deliberations that involve the CEO’s own compensation. Role of Compensation Consultants The MDCC continued to engage Frederic W. Cook & Co. Inc. (“FW Cook”) in 2023 to serve as its independent, external compensation consultant. FW Cook has served as the MDCC’s independent, compensation consultant since 2011. The MDCC has sole authority for retaining or terminating FW Cook, as well as approving the terms of engagement, including fees. The MDCC relies on FW Cook to advise on its compensation decision-making process and has sole authority to retain and terminate the relationship, as well as to approve the terms of engagement, including fees. FW Cook works exclusively for the MDCC and provides no services to the Company, other than services provided in the firm’s capacity as the MDCC’s consultant. Accordingly, the MDCC has determined that FW Cook is independent from the Company. Separately, FW Cook has attested in writing as to its independence from the Company. The Company retains Exequity and WTW as its primary compensation consultants to advise on program design, provide and analyze benchmarking data, apprise management of evolving practices and trends, and perform other consulting services as needed. From time to time, the Company engages other consultants for special projects as needed.
The primary elements of our executive compensation program
Total Direct Compensation (“TDC”) is the combination of fixed and variable compensation. Other compensation elements, such as our limited executive benefits, are not part of TDC, but the MDCC also reviews these elements.
Base salary is the only fixed element of TDC. The MDCC considers base salary The Committee increased both Mr. Hamic’s and Mr. Plath’s base salary effective January 1, 2023, as a result of organizational changes. Mr. Hamic’s base salary was increased by 14.3% in recognition of his appointment to Senior Vice President – North American Container, our largest business. Mr. Plath’s base salary was increased by 2.7% in recognition of his increased responsibilities overseeing Corporate Affairs. Effective March 1, 2023, Mr. Saab’s base salary was increased by 10.0% to reflect his development in the role and to more closely align with market median. The 2024 increases shown below in March are the result of market adjustments made effective March 1, 2024. The following table shows the annual base salary in effect during
Performance-Based Compensation
We do not have guaranteed bonuses.
Other equity awards, including awards of stock and
How and Why We Chose Our Performance Metrics Our incentive compensation plan design is based upon achievement of pre-established performance objectives that we believe will drive improved financial performance of the Company. Each year the MDCC assesses the appropriateness of the performance metrics, and periodically makes adjustments based on the financial objectives most critical to the Company’s success. No changes were made to our 2023 performance metrics in comparison to those used for our 2022 incentive compensation plans. We explain below why the MDCC chose the performance metrics
The footnotes below explain the details of our performance metric calculations for purposes of our incentive compensation plans:
Why We Use Different Peer Groups In the chart below, we explain why we use different peer groups for compensation benchmarking and for measuring the Company’s TSR performance in our incentive plans.
Our Peer Group for TSR Performance The TSR Peer Group was selected using a formulaic process. The 2023 TSR Peer Group includes member companies from the following indices:
The goal is to select closely correlated peers to minimize the influence of market factors outside of IP’s control on our relative performance achievement. Since the share prices of the companies selected are impacted by many of the same macroeconomic and industry factors that impact IP, external/market factors have less bearing on relative performance.
Overview The
The
The chart below shows the specific design elements and how the award was earned.
As shown in the chart above, if our actual year-end result in any one of the metrics falls below the established threshold performance, no payment was earned for that portion of the award. In the event that our actual year-end result in any one of the metrics above
The Company’s The MDCC has Individual
We
The Long-Term Incentive Long-Term Incentive Plan (LTIP) Overview The LTIP is our long-term, equity-based incentive compensation plan designed to motivate employees to create long-term shareowner value. For each member of our SLT, including the NEOs, LTIP awards are weighted 80% PSUs and 20% RSUs.
Performance Stock Units PSUs are earned over a three-year performance period based solely on the Company’s performance achievement in
The MDCC does not have discretion to increase the Company’s performance achievement, but may decrease it in the event the Company experiences negative Adjusted ROIC or negative TSR. In addition, if the Company’s absolute TSR over the three-year performance period is negative, performance achievement for the TSR portion of the
Restricted Stock Units RSUs are time-based and therefore earned based on the passage of time and, in most cases, dependent on continued employment with the Company. The amount ultimately earned may include the reinvestment of dividends earned on shares actually paid upon vesting and is dependent on the Company’s stock price on the vest date. RSUs vest annually in equal, one-third tranches over the three-year grant period on each February 1st commencing after the first anniversary of the grant. The Company makes an off-cycle grant to newly-hired and newly-eligible participants annually each November 1st, which are subject to the same terms and conditions.
Performance Metrics and Objectives
earned for results in either metric Payout Calculation Based on market data, each
For the
Other Compensation
Change-in-Control (“CIC”) Agreements The Company has entered into CIC agreements with certain executives, including all members of the
The compensation benchmarking review used to establish NEO target We do not have, nor do we believe we need, a policy that dictates a specific ratio of CEO compensation to other NEOs or the SLT. Generally, we base our compensation decisions on principles of internal equity and external market competitiveness. The difference that exists between our CEO’s compensation and the compensation of our other NEOs is based on the complexity of the CEO’s leadership responsibilities for the global enterprise.
In this The Target amount includes:
The Actual amount represents what we believe is the appropriate way to illustrate
The chart below compares Mr. Sutton’s
Target LTI is based on Actual LTI is based on
The chart below compares Mr.
Target LTI is based on Actual LTI is based on
The chart below compares Mr.
Target LTI is based on Actual LTIis based on www.internationalpaper.com
2023 Realized Compensation
The chart below compares Mr. Saab’s 2023 actual compensation paid against targeted compensation amounts.
Target LTI is based on 5,223 target shares valued at $52.75 using the 20-day average stock price as of December 31, 2020. Actual LTI is based on 4,751 shares, which includes the original target shares plus reinvested dividends and an anti- dilution adjustment related to the spin-off of Sylvamo, multiplied by 75.17% performance achievement and valued at $35.26, the Company’s closing share price on February 9, 2024.
The chart below compares Mr. Plath’s
Target LTIis based on Actual LTIis based on
The chart below compares Mr.
Target LTI is based on Actual LTIis based on
The Company has adopted comprehensive and detailed policies that regulate trading in Company securities by our insiders, including the SLT and Board members. Officer Stock Ownership and
All of our officers are expected to own shares of our common stock with a minimum market value based on a multiple of base pay. This policy is intended to align our officers’ interests with those of our shareowners and encourage long-term shareowner value creation by requiring officers to have a significant equity stake in the Company. Our stock ownership requirements are based on position:
The following Officers are required to retain 50 percent of their net shares paid under any Company long-term incentive plan or program Board Policy on Personal Use of
The Board encourages the CEO to use Company aircraft for business continuity and efficiency purposes, where appropriate. Use of the Company aircraft allows the CEO to be available at all times for business needs, whether on business or personal travel. Pursuant to Board resolutions and
A supplemental severance payment to the CEO must be approved by the independent directors of the Board. A supplemental severance payment to any other SLT member must be approved by the MDCC. Moreover, pursuant to a 2005 Board policy, in the absence of a change in control,
As required by Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) and Exchange Act Rule 10D-1, the Company’s Board of Directors on October 10, 2023, adopted a Clawback Policy, effective December 1, 2023. The Clawback Policy is administered by the MDCC and is compliant with the SEC final rule and NYSE listing standards and supplements clawback provisions under our plan documents. Both AIP and LTIP awards for current and former executive officers are subject to mandatory clawback under our new Dodd-Frank compliant Clawback Policy. Additional discretionary clawback provisions apply under our plan documents. Our Clawback Policy requires mandatory clawback of incentive-based compensation received by current and former executive officers in the event of an accounting restatement regardless of whether the executive officer was responsible for the causes of the restatement. Under our plan documents, the MDCC has discretion to clawback compensation if the Company’s financial statements are restated as a result of errors, omission, or fraud. In addition, the MDCC may, at its discretion, based on the facts and circumstances, require all or a portion of AIP and LTIP awards to be forfeited in the event a participant engages in conduct that is detrimental to the business interests or reputation of the Company, including any violation of any Non-Competition and Non-Solicitation Agreement to which such participant is a party or violation of the Code of Conduct. Additionally, the MDCC may, in its discretion, based on the facts and circumstances, require an SLT member who does not provide one-year’s notice of retirement to forfeit his or her AIP and LTIP awards. Non-Competition and Non-Solicitation Agreements The Company Prohibition on Repricing; No Stock Option Grants The Company has not granted stock options
The Company does not have any program, plan or practice to time, and has not timed, equity grants to coordinate with the release of material, non-public information. Annual equity grants
The framework for making grants set
Executive Compensation
Section 162(m) of the Internal Revenue Code (“Code”) limits the tax deductibility of compensation that is more than $1 million for certain executive officers of publicly-held In designing our executive compensation program and determining the compensation of our executive officers, including our
The accounting treatment of stock-based compensation
The following table
The table below shows payout ranges for our NEOs under the
The amount shown in the “Threshold” column is the possible payout for each NEO based on threshold Company performance achievement of 50 percent of target. The threshold is the minimum performance level required to earn a payment under any of the following performance metrics: Narrative to the Grants of Plan-Based Awards Table Estimated Future Payouts under Non-Equity Incentive Plan Awards These columns show the threshold, target and maximum payouts under the The amount shown in the “Threshold” column The amount shown in the “Maximum” column
Estimated Future Payouts under Equity Incentive Plan Awards These columns show the threshold, target and maximum payouts under the The amount shown in the “Threshold” column is the number of shares each NEO would receive if the Company achieved only the minimum performance level required in one of the following performance metrics: The amount shown in the “Maximum” column is the possible number of shares each NEO would receive based on maximum Company performance of 200 Grant Date Fair Value of Stock Awards The amounts shown in this column reflect the grant date fair value of the awards granted to each NEO under the The amount ultimately paid to
The following table shows the outstanding equity awards held by our NEOs as of December 31,
Stock Vested in 2023 The following table shows the value received upon the vesting in
The following table shows the present value of benefits payable to our NEOs under our Retirement Plan, Pension Restoration Plan, or SERP at December 31,
All
Narrative to Pension Benefits Table Retirement Plan of International Paper Company Our Retirement Plan is a funded, tax-qualified plan that covers all U.S. salaried employees hired prior to July 1, 2004. U.S. employees hired on or after July 1, 2004, are eligible for a Company-paid Retirement Savings Account contribution to our Salaried Savings Plan and Deferred Compensation Savings Plan in lieu of participation in the Retirement Plan. All We calculate the benefit under the Retirement Plan at the rate of 1.67% of the participant’s average pensionable earnings received over the highest five consecutive calendar years of the last 10 calendar years, multiplied by his or her years of service, then reduced by a portion of Social Security benefits. We include as pensionable earnings the participant’s base salary plus International Paper Company Pension Restoration Plan for Salaried Employees Our supplemental retirement plan for our salaried employees is an unfunded, We calculate the benefit under the Pension Restoration Plan in the same manner as the Retirement Plan and then reduce the benefit by the amount payable under the Retirement Plan. Effective December 31, 2018, credited service and compensation under the Restoration Plan were frozen for all salaried employees, including the NEOs. The International Paper Company Unfunded Supplemental Retirement Plan for Senior Managers Our SERP is an alternative retirement plan available to certain senior A participant who has
Our change-in-control agreements described elsewhere in this
employment following a change in control. The change-in-control agreements for Mr. Sutton and Mr. Nicholls
Eligibility for Early Retirement Benefits Normal retirement under our Retirement Plan and Pension Restoration Plan is age 65. Participants, including the NEOs, are eligible for early retirement under the Retirement Plan, the Pension Restoration Plan and the SERP at age 55 with 10 years of service. However, a participant’s accrued benefit is reduced by 4% for each year that the participant retires before reaching age 62. Eligible active employees may receive an unreduced benefit once they reach age 61 and have completed at least 20 years of service.
The following table shows contributions in
The DCSP allows participants to save for retirement by deferring up to 85% of eligible cash compensation, which includes base salary and For
Mr. Saab contributed 9% of his base salary, Mr. Wanta did not contribute, and Mr. Plath contributed 8% of all eligible cash Participant contributions are credited with earnings (or losses) based on the participant’s choice of investment fund equivalents. Investment fund equivalents match the investment returns of the funds available in the 401(k) plan. Investment elections may be changed daily subject to securities laws restrictions. Differences in earnings reported in the Participants are fully vested in their contributions at all times. Amounts contributed by the Company become vested upon completing three years of service, reaching age 65, death, disability, termination of employment as a result of the permanent closing of the participant’s facility, or eligibility for severance under the Salaried Employee Severance Plan. Participant accounts are divided into contribution accounts for amounts deferred prior to January 1, 2005, and contribution accounts for amounts deferred after January 1, 2005. Distributions of amounts contributed on or after January 1, 2005, may only be made in the event of termination of employment, death, disability or through an in-service distribution at a date elected during the initial enrollment period. Participants must elect their distribution form of payment in an initial deferral election, which may only be changed under a subsequent distribution election that meets the requirements under IRC Section 409A. In the event no election has been made, the participant will receive a lump-sum form of payment. In-service withdrawals are limited to unforeseeable emergencies.
The disclosure below sets forth potential payments and/or benefits that would be provided to our Potential Payments Upon Death or Disability The Company provides
The Company provides the same benefits to the beneficiary of an SLT member (including a NEO) upon death as are available to our U.S. salaried employees, with two additional benefits:
In the event of disability or death, PSP and performance-based LTIP awards are prorated based upon the number of months the participant worked during the performance period, and are paid at the end of the three-year performance period based on actual Company performance.
Potential Payments Upon Retirement The following table presents the potential payments to our NEOs (other than Mr.
Potential Payments Upon Involuntary Termination Without Cause The following table represents all amounts that would be payable to our NEOs (other than Mr.
Potential Payments Upon Involuntary Termination The following table represents all amounts that would be payable to our NEOs (other than Mr. An executive officer
Potential Payments Upon Qualifying Termination After Change in Control The following table represents amounts that would be payable to our NEOs (other than Mr.
Narrative to Potential Payments Upon Qualifying Termination After Change in Control The Company has entered into change-in-control agreements with certain executives, including our NEOs, that provide severance and other benefits in the event of a change in control of the Company. Our Board believes that maintaining change-in-control agreements is a sound business practice that protects shareowner value prior to, during and after a change in control, and allows us to recruit and retain top executive talent. Our program is available only to the SLT, except for those vice presidents We believe this program aligns executive and shareowner interests by enabling leaders of the Company to focus on the interests of shareowners and other constituents when considering a potential change in control, without undue concern for their own financial and employment security. Key components of our change-in-control agreements include:
This comparison
As shown in greater detail in the above table, our change-in-control agreements provide the following benefits to NEOs only if there has been both a change in control of the Company and a qualifying termination of employment, i.e., they are terminated without cause by the new employer or the employee departs for “good reason” within two years of the change in control (“double-trigger” benefits):
Medical and dental insurance for three years (two years for Mr. Plath, Mr. Hamic and Mr. Saab); and
A “change in control” is defined in our agreements as any of the following events:
The lump sum cash severance benefit shown above is payable only in the event of termination of employment without cause within two years following a change in control. This includes voluntary resignation only in limited situations that meet the definition of “good reason,” listed below. Under no circumstance will an executive receive a cash severance benefit under the agreement if he or she leaves voluntarily other than for “good reason,” which is defined as:
We have offered these limited single-trigger benefits for the purpose of:
In light of the difficulty in determining relative performance achievement in our
Pay Versus Performance As required by Section 953(a) of the Dodd-Frank Act and Item 402(v) of Regulation S-K, the following tables comprise the Company’s Pay Versus Performance disclosures. The following table shows the total compensation for our NEOs for the past four fiscal years as set forth in the Summary Compensation Table, the “compensation actually paid” to our CEO and, on an average basis, our other NEOs (in each case, as determined under SEC rules), our TSR, the TSR of our peer group over the same period, our net income/(loss), and our financial performance measure for compensatory purposes, Adjusted EBITDA.
CEO SCT Total to CAP Reconciliation:
Supplemental CEO Equity Component of CAP for FY 2023:
Average Other NEOs SCT Total to CAP Reconciliation:
Supplemental Average Other NEOs Equity Component of CAP for FY 2023:
Most Important Performance Measures In the Company’s assessment, the following represent the three most important financial performance measures used by the Company to link compensation actually paid to our NEOs, for the most recently completed fiscal year, to Company performance. Please see Appendix B for an explanation of the non-GAAP financial measures.Relative Total Shareholder Return (TSR) Net Income Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA)
International Paper is one of the world’s leading To determine the pay ratio required by Item 402(u) of Regulation S-K, the Company first identified the median employee using our global employee population as of October 1, Once the median employee was identified, we then determined the median employee’s annual total compensation using the Summary Compensation Table methodology as detailed in Item 402(c)(2)(x) of Regulation S-K, and compared it to the total compensation of Mr. Sutton, our Chairman and CEO, as detailed in the Summary Compensation Table for
Our pension plans were frozen for all salaried employees as of December 31, 2018. Therefore, Mr. Sutton’s actual accrued pension benefit did not change in
The following table
ITEM 4 : Approval of 2024 Long-Term Incentive Compensation Plan Our equity-based incentive compensation plan, as currently set forth in the Amended and Restated 2009 Incentive Compensation Plan (the “2009 Plan”), is a key component of our compensation program and is designed to attract, retain and motivate our executive officers, key employees and directors to deliver Company performance that builds long-term shareowner value. The primary purpose of our equity compensation program is to align the interests of the participants to those of the Company’s shareowners. On February 13, 2024, the Board of Directors, upon the recommendation of the Management Development and Compensation Committee (the “Committee”), authorized adoption of a 2024 Long-Term Incentive Compensation Plan (the “2024 Plan”) to replace the 2009 Plan, subject to shareowner approval. If approved by our shareowners at the annual meeting, the 2024 Plan will become effective as of that date (the “Effective Date”). The 2024 Plan will enable us to continue to grant customary annual long-term incentive awards and other equity awards to our employees going forward. Shareowners are asked to approve the following resolution: “Resolved, that the 2024 Long-Term Incentive Compensation Plan, a copy of which is attached as Appendix A , is hereby approved.” If the 2024 Plan is approved, no new equity awards will be granted under the 2009 Plan. To approve the 2024 Plan, the affirmative vote of a majority of a quorum at the annual meeting is required. You may vote “for” or “against” this item, or you may “abstain” from voting. “Abstentions” shall not constitute a vote cast. If you hold your shares in street name, your failure to indicate voting instructions to your bank or broker will cause your shares to be considered broker non-votes not entitled to vote with respect to this Item 4. Broker non-votes will have the same effect as a vote against this item. Among other things, the 2024 Plan establishes the number of shares of common stock authorized for future grants. If approved by our shareowners, up to 9,250,000 shares of our Class A common stock, par value $1.00 per share, will be available for awards under the 2024 Plan. This number will be increased by any shares underlying awards outstanding under the 2009 Plan as of the Effective Date that are canceled, terminate, expire, forfeited or lapse for any reason. Please keep in mind the following key points in reviewing and considering this item:
Consequences of Failing to Approve Item 4 If the proposed 2024 Plan is not approved by our shareowners, then the 2009 Plan will remain in full force and effect. Whether the 2024 Plan is approved by our shareowners or not, each award granted under the 2009 Plan will continue to
be subject to the terms and provisions applicable to such award under the applicable award agreement and the 2009 Plan. Once the share reserve under the 2009 Plan is exhausted, the Company may elect to provide compensation through other means, such as cash-settled awards or other cash compensation, to assure that the Company and its affiliates can attract and retain qualified personnel. However, without adoption of the 2024 Plan, we will be at a significant competitive disadvantage in attracting, retaining and motivating employees who contribute to our continued success.
Background and Purpose for Adopting the 2024 Plan The 2009 Plan was initially approved by the Board on February 9, 2009, and approved by shareowners on May 11, 2009, at the 2009 Annual Meeting of Shareowners. The 2009 Plan was amended and restated by the Board on February 11, 2014, to re-approve material terms of performance goals for qualified performance-based awards. On May 12, 2014, the 2009 Plan was amended and restated effective upon approval by shareowners at the 2014 Annual Meeting of Shareowners. The 2009 Plan authorizes awards to be granted covering up to 15,400,000 shares, subject to adjustment in accordance with the terms of the 2009 Plan upon certain changes in capitalization and similar events.
If the 2024 Plan is approved by our shareowners, up to 9,250,000 shares will be authorized for issuance. No more than 610,000 shares will be granted under the 2009 Plan between March 15, 2024, and May 13, 2024, the date of the Annual Meeting. Thereafter, no new awards will be granted under the 2009 Plan. In determining the requested amount of shares under the 2024 Plan, the Committee and the Board considered our historical and anticipated grant practices, peer group industry data presented by our third-party compensation consultant, and the policy guidelines of major proxy advisory firms. The following factors also were taken into account in arriving at the requested number of shares for future awards: the Company’s historical “burn rate” (which measures how rapidly a company depletes its shares reserved for equity compensation); the number of shares remaining available under the 2009 Plan for future awards; the number of unvested restricted shares and restricted share units outstanding; dilution resulting from the proposed maximum number of shares available for issuance under the 2024 Plan; and the length of time the shares authorized under the 2024 Plan will last. Historical Grant Practices To align our share authorization with the equity vehicles utilized in our compensation program as revised in 2023, we are seeking to establish the 5,530,784 shares available at December 31, 2023 (3,758,894 at March 15, 2024) into 9,250,000 shares that may be used for our Awards.
To determine our burn rate, we monitor share usage by reviewing the number of shares subject to grant on an annual basis. The burn rate is then determined by dividing the number of shares granted under the Company’s equity incentive plan in a given fiscal year with the weighted average common shares outstanding during that fiscal year. Average burn rate for the Company across the 2023, 2022, and 2021 fiscal years is .45 percent, based on the following:
The Company has not granted options to employees since 2005. All previously granted stock options expired in 2015. Impact of Stock Repurchase Program: The Company’s share repurchase program offsets the dilutive effect of our equity awards granted. From 2019-2023, we repurchased approximately 61,763,894 shares for an aggregate repurchase price of $2.8 billion, which offsets the amount of the proposed equity incentive plan amount that may be issued pursuant to the 2024 Plan. For additional information regarding equity-based awards previously granted under the 2009 Plan, please see Note 20 to our consolidated financial statements filed with our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. As of March 15, 2024, there were 347,322,081 shares outstanding. The closing price per share on the New York Stock Exchange on March 15, 2024, was $36.35. Highlights of the 2024 Plan Highlights of material terms of the 2024 Plan are set forth below. The following summary does not purport to be a complete description of all the provisions of the 2024 Plan and is qualified in its entirety by reference to the 2024 Plan included as Appendix A, which is incorporated by reference into this Item No. 4. The 2024 Plan provides for potential grants of: (i) options, including incentive stock options and nonqualified stock options, (ii) RSUs, (iii) other stock-based awards, including stock appreciation rights, restricted shares, performance shares, deferred share units, and share-denominated performance units (other than RSUs), (iv) cash awards, (v) substitute awards, and (vi) dividend equivalents (together, the “Awards”). Key features of the 2024 Plan designed to protect shareowner value and reflect corporate governance best practices include:
Securities Offered Subject to adjustment in the event of certain transactions or changes of capitalization in accordance with the 2024 Plan, a total of 9,250,000 shares have been initially reserved for issuance pursuant to Awards under the 2024 Plan. Out of such aggregate, the maximum number of shares that may be covered by options that are designated as “incentive stock options” within the meaning of Section 422 of the Internal Revenue Code (the “Code”) may not exceed 9,250,000 shares. If shares are withheld to pay the exercise price of an option or base price of a stock appreciation right or to satisfy any tax withholding requirement in connection with an option or stock appreciation right, both the shares issued (if any) and the shares withheld will be deemed delivered for purposes of determining the number of shares that are available for delivery under the 2024 Plan. Excluding stock options and stock appreciation rights, if any other award under the 2024 Plan is canceled, terminates, expires, is forfeited or lapses for any reason, any unissued or forfeited shares subject to the award shall be again available for issuance. Likewise, to the extent that shares are withheld from an award to satisfy any tax withholding requirements, such shares, excluding stock options and stock appreciation rights, shall be again available for issuance. Substitute awards (discussed below) shall not count against the number of shares otherwise available for issuance under the 2024 Plan. Administration The 2024 Plan will be administered by the Committee or, at the discretion of the Board from time to time, the Plan may be administered by the Board. The Committee will have full discretionary authority to administer the 2024 Plan, including discretionary authority to designate participants of the 2024 Plan; determine the types of awards to be granted to each participant and the number, terms and conditions of each award; interpret and construe any and all provisions of the 2024 Plan and any award agreement thereunder; and to adopt, amend and rescind from time to time such rules, regulations, guidelines and procedures for the administration of the 2024 Plan, including rules and regulations related to sub-plans that may be established for the purpose of satisfying applicable foreign laws and/or qualifying for preferred tax treatment under applicable foreign tax laws, as the Committee may deem necessary or appropriate. Decisions of the Committee, including the Committee’s interpretations of the 2024 Plan, will be final, binding and conclusive on all parties. The Committee may exercise all discretion granted to it under the 2024 Plan in a non-uniform manner among participants.
Additionally, the Committee may delegate the administration of the 2024 Plan to one or more officers or employees of the Company. In no case will any such administrator be authorized (i) to take any action inconsistent with Section 409A of the Code with respect to any award subject to such provision or (ii) to take any action inconsistent with applicable law. Eligibility Employees and, under a subplan, the non-employee directors of our Company and its affiliates are eligible to receive Awards under the 2024 Plan. Eligible individuals to whom an Award is granted under the 2024 Plan are referred to as “participants.” As of March 15, 2024, the Company and its affiliates have over 39,000 employees and non-employee directors eligible to participate in the 2024 Plan. The basis of participation in the 2024 Plan is in the Committee’s sole discretion and judgment (except with respect to non-employee directors, for whom such awards are set in accordance with a separate policy) that an award to an eligible participant will further the stated purpose of the 2024 Plan. In a typical year, the Company expects to approve awards under the 2024 Plan to executives and management as well as select employees for purposes of recruitment, retention and recognition. Awards to Non-Employee Directors Awards granted to the Company’s non-employee directors will be made only in accordance with the terms, conditions and parameters of the Company’s director compensation plan, which will be a sub-plan of the 2024 Plan and administered in accordance with the 2024 Plan. Our director compensation program is described in the Director Compensation section of this Proxy Statement. The Governance Committee reviews and approves any equity-based compensation plans for non-employee directors. The Governance Committee may not make discretionary grants under the director compensation plan to non-employee directors. Non-Employee Director Compensation Limits The sum of the grant date fair value of the awards and the amount of any cash-based payments that may be granted to a non-employee member of the Board during any calendar year will be approved and changed from time to time by the independent members of the Board. Types of Awards The 2024 Plan authorizes the grant of the following types of Awards to employees and non-employee directors:
Options may be exercised as the Committee determines. Except for nonqualified stock options granted to participants outside the United States, no option granted under the 2024 Plan shall be exercisable for more than ten years from the date of grant. The Committee determines the methods and form of payment for the exercise price of an option and the methods and forms in which our shares will be delivered to a participant. No incentive stock option may be granted to an individual if, at the time of the proposed grant, such individual owns stock possessing more than 10% of the total combined “voting power” (within the meaning of Section 422 of the Code) of all classes of stock of the Company or any of its “subsidiaries” (within the meaning of Section 424 of the Code), unless (i) the exercise price of such incentive stock option is at least 110% of the fair market value of a share at the time such incentive stock option is granted and (ii) such incentive stock option is not exercisable after the expiration of five years from the date such incentive stock option is granted.
Awards will be evidenced by an award agreement specifying the number of shares awarded and other terms and conditions of each award. Certain Transactions In the event of any stock dividend or split, recapitalization, merger, consolidation, combination or exchange of shares, spin-off or similar corporate structure change or extraordinary cash dividend, the maximum aggregate number of shares with respect to which the Committee may grant awards, the number of shares subject to awards, the exercise price of any option or base price of any stock appreciation right and the applicable performance targets or criteria will be equitably
adjusted or substituted by the Committee to prevent enlargement or dilution in rights granted under the award. In the event of any change in the number of shares outstanding by reason of any other event or transaction, the Committee will make such adjustments to the type or number of shares with respect to which awards may be granted and/or to the number of shares subject to awards. Change-in-Control Rights Under the 2024 Plan, a change in control means the occurrence of one or more of the following events:
Under the 2024 Plan (unless provided in an award certificate or any separate agreement or plan governing the award), awards are treated as follows:
Dividends and Dividend Equivalent Rights Any dividends or dividend equivalent rights granted will be payable to the participant only if, when and to the extent such underlying award vests. Dividends and dividend equivalent rights granted with respect to Awards that do not vest will be forfeited. No dividends or dividend equivalent rights will be granted with respect to stock options or stock appreciation rights. Recoupment Notwithstanding anything in the 2024 Plan or in any award agreement to the contrary, the Company will be entitled to recoup compensation of whatever kind paid by the Company to the extent required by (i) applicable law, (ii) the requirements of an exchange on which the Company’s shares are listed for trading or (iii) any policy or guidelines adopted by the Company, in each case, as in effect at the time of the recoupment. Plan Amendment and Termination The Board or Committee may at any time amend, modify, or terminate the 2024 Plan without shareowner approval; provided, however, that to the extent that any applicable law, tax requirement, or rule of a stock exchange requires shareowner approval in order for any such revision or amendment to be effective, such revision or amendment will not be effective without such approval. The preceding sentence will not restrict the Committee’s ability to exercise its discretionary authority under the 2024 Plan, which discretion may be exercised without amendment to the 2024 Plan. No grants of awards may be made under the 2024 Plan after the tenth anniversary of the date upon which the 2024 Plan was approved by the Company’s shareowners, or after the tenth anniversary of the date upon which shareowners approve an amendment to the 2024 Plan that increases the number of shares subject to the 2024 Plan. Expenses All expenses related to administration of the 2024 Plan will be paid for by the Company. Material U.S. Federal Income Tax Consequences The following is a general summary under current law of the principal United States federal income tax consequences related to awards under the 2024 Plan. This summary deals with the general federal income tax principles that apply and is provided only for general information. Some taxes, such as state, local and foreign income taxes and federal employment taxes, are not discussed. This summary is not intended as tax advice to participants, who should consult their personal tax advisor.
Any gain that the optionee realizes upon sale or disposition of the option shares will be short-term or long-term capital gain, depending on how long the shares were held, subject to any applicable limitations under Code Section 162(m).
Section 409A of the Code Certain types of awards under the 2024 Plan may constitute, or provide for, a deferral of compensation subject to Section 409A of the Code. Unless certain requirements set forth in Section 409A of the Code are complied with, holders of such awards may be taxed earlier than would otherwise be the case (e.g., at the time of vesting instead of the time of payment) and may be subject to an additional 20% penalty tax (and, potentially, certain interest, penalties and additional state taxes). To the extent applicable, the 2024 Plan and awards granted under the 2024 Plan are intended to be structured and interpreted in a manner intended to either comply with or be exempt from Section 409A of the Code and the Department of Treasury regulations and other interpretive guidance that may be issued under Section 409A of the
Code. To the extent determined necessary or appropriate by the Committee, the 2024 Plan and applicable award agreements may be amended to further comply with Section 409A of the Code or to exempt the applicable awards from Section 409A of the Code. Tax Withholding The Company has the right to deduct or withhold, or require a participant to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes (including employment taxes) required by law to be withheld with respect to any exercise, lapse of restriction or other taxable event arising as a result of the 2024 Plan. Certain participants, including the Company’s senior vice presidents and above, may elect additional withholding for payment of income taxes. The discussion above is intended only as a summary and does not purport to be a complete discussion of all potential tax effects related to awards under the 2024 Plan. Among other items, this discussion does not address tax consequences under the laws of any state, locality or foreign jurisdiction, or any tax treaties or conventions between the United States and foreign jurisdictions. This discussion is based upon current law and interpretational authorities which are subject to change at any time. New Plan Benefits Grants of awards under the 2024 Plan to our executive officers, non-executive directors and other eligible participants are subject to the discretion of the Committee. The Committee has not determined future awards or who might receive them. Therefore, it is not possible to determine the future benefits that will be received by these participants under the 2024 Plan as of March 15, 2024. As a result, the benefits and amounts that will be received or allocated is not determinable at this time, and the Company has not included a table that reflects such future awards. Notwithstanding the foregoing, it is possible that the equity awards to be granted under our 2009 Plan to Andy Silvernail, our incoming CEO, in connection with his commencement of employment (as disclosed in our Form 8-K filed on March 19, 2024) will need to be satisfied by delivering shares under our 2024 Plan, because they are PSUs that have the possibility of vesting at 200% of target. The precise number is not determinable at this time. The following table provides information, as of December 31, 2023, regarding compensation plans under which our equity securities are authorized for issuance.
Registration with the SEC If the 2024 Plan is approved by shareowners, we intend to file, pursuant to the Securities Act of 1933, as amended, a registration statement on Form S-8 to register the shares available for issuance under the 2024 Plan.
Security Ownership of Certain Beneficial Owners The following table contains information concerning beneficial ownership of our common stock by persons known to us to own more than 5 percent of our common stock outstanding as of March
The following table shows the number of shares of our common stock beneficially owned by each of our directors and NEOs, and by all
The following table provides information, as of December 31,
We expect the following shareowner proposal to be presented at the The shareowner proposal will be approved if a majority of a quorum at the annual meeting is voted
Shareholders request that the Board Golden parachute payments include cash, equity or other compensation that is paid out or vests due to a senior executive’s termination for any reason. Payments include those provided under employment agreements, severance plans, and
The Board
This proposal places no limit on long-term equity pay or any other type pay. This proposal thus has no impact on the ability to attract executive talent or discourage the use of long-term equity pay because it places no limit on golden parachutes. It simply requires that extra large golden parachutes be subject to a non-binding shareholder vote at a shareholder meeting already scheduled for other matters.
This proposal is relevant because the annual say on executive pay vote does not have a separate section for approving or rejecting golden parachutes. The topic
Please vote yes: Shareholder Proposal
The Board has carefully considered this proposal The Company already has a policy in place limiting cash severance payments to certain senior executive officers outside of the context of a change in control, and Pursuant to the Company’s Board Policy on Severance Agreements with Senior Executives that was adopted in 2005 (the “Policy”), aggregate cash severance payments to be paid to any of the Company’s Chairman, Chief Executive Officer, President, Executive Vice Presidents, Senior Vice Presidents or Controller (collectively, the “Senior Executives”), in the absence of a change in control, may not exceed (i) two times the sum of such Senior Executive’s base salary plus (ii) such Senior Executive’s target cash bonus (not including any severance payments in accordance with the terms of the Company’s Severance Plan in effect at the time of such termination). Under the Policy, any larger cash severance amount must be approved in advance by our shareowners. We believe that the Policy addresses many of the issues raised in the proposal and provides shareowners the event of a change in control of the Company. Our Board believes that While the Board is cognizant of the concerns surrounding excessive severance compensation, it has already taken appropriate action to address these concerns through the adoption of the Policy and the terms of the Company’s change-in-control agreements, and as such this proposal is unnecessary. We believe that this proposal discourages the use of long-term equity awards designed to focus our executives on creating long-term shareowner value. By including the value of equity awards, if vesting is accelerated or a performance condition is waived, due to termination, in the severance multiple set forth in the proposal, this proposal would potentially require shareowner approval in order for any Section 16 officer to be We believe that the overly broad policy requested by the proposal would Implementing the proposal may require certain aspects of employment offers to Section 16 officers to be subject to shareowner approval, particularly severance arrangements providing for accelerated vesting of equity awards. This conditionality would put us at a competitive disadvantage in the labor market because the types of termination payments
and Our shareowners already have the opportunity to express their views regarding our severance programs and policies. We provide detailed disclosure of our severance policies and potential post-termination payments in our annual proxy statement and believe our annual Say-on-Pay vote is the
Further, as discussed above, we maintain an active shareowner engagement program, which allows us to better understand our shareowners’ priorities, perspectives, and concerns. In 2023, the Company met with 38 institutional investors, representing 53 million shares, or 15% of institutional shares, and no investor raised the topic of our severance practices as an area of concern during these meetings. As such, the proposal’s request for a shareholder vote on a specific component of the Company’s The The MDCC is As a result of the
For the
We expect the following shareowner proposal to be presented at the The shareowner proposal will be approved if a majority of a quorum at the annual meeting is voted
RESOLVED, Shareholders This report,
Numerous studies have pointed to the benefits of effective workforce management and found that companies can retain employees through inclusive policies. In addition, the U.S. Chamber of Commerce Foundation observed in its report, Business Success and Growth Through LGBT-Inclusive Culture: “Companies that adopt LGBT-inclusive practices tend to improve their financial standing and do better than companies that do not adopt them. Additionally, employees,
regardless of their sexual orientation or gender identity, express greater job satisfaction at companies where these practices are Considering the Company’s support for the business case for inclusion, the Company’s support for inclusive policies, and the
The Board has carefully considered this proposal and believes that its adoption would not be in the best interests of the Company or our shareowners in light of
connection therewith. The Board believes that As a
Consistent with these priorities, the Company maintains a Global Diversity and Inclusion Council comprised of senior leaders in the Company. Additionally, the Company supports various employee-led networking groups that are open to all employees and provide a forum to communicate and exchange ideas, build a network of relationships across the Company, and pursue personal and professional development. These networking groups include IPride, a networking circle focused on supporting individuals who identify with the The Company is committed to accomplishing its diversity and inclusion goals in a transparent manner, highlighted by its continued disclosure initiatives in this space. The Company acknowledges the
Requiring the Company to produce an additional report limited to a subset of its overall diversity, equity and The Board unanimously recommends that you vote AGAINST this proposal.
Delinquent Section 16(a) Reports Our executive officers, Directors, and persons who beneficially own more than 10% of our common stock (the “Reporting Persons”) must file reports with the SEC under Section 16(a) of the Securities Exchange Act of 1934, as amended, about their ownership of and transactions in Based solely on our review of
Information About the Annual Meeting
How do I attend the annual meeting? All shareowners of record and You must bring proof of ownership and a valid photo identification If you hold your shares in street name and you decide to attend the meeting, you must bring Why am I receiving these proxy materials? We have made these materials available to you online or delivered paper copies to you by mail because you are an International Paper shareowner of record as of March What is a proxy? A proxy is your legal designation of another person (your “proxy”) to vote the stock you own.
What is included in the proxy materials? The proxy materials for our Why did I receive a Notice of the Internet Availability of Proxy Materials instead of We
paper documents. If you receive a Notice of Internet Availability by mail, you will not receive a printed copy of the proxy How many votes must be present to hold the annual meeting? As of March 15, 2024, there were 347,322,081 shares of International Paper common stock issued and outstanding. Holders of International Paper common stock, present in person or represented by proxy, representing one-third of the number of votes entitled to be cast upon any proposal to be considered at the meeting (at least We urge you to vote by proxy even if you plan to attend the meeting. That will help us know as soon as possible that we have enough votes to hold the meeting. Returning your proxy will not affect your right to revoke your proxy or
How do I vote my shares? If you are a holder of record (that is, if your shares are registered in your own name with our transfer agent), you have several options. You may vote in advance of the meeting on the Internet at www.proxyvote.com, by telephone or by mail using a written proxy card. You also may If you hold your shares in street name
If I hold shares in the International Paper Company Salaried Savings Plan, how do I vote my shares? If you hold shares in the International Paper Company Salaried Savings Plan, you may instruct the trustee, State Street Bank and Trust Company, to vote your shares in the Company Stock Fund by returning the proxy/voting instruction card that you received in the mail or by providing voting instructions on the Internet or by telephone as directed on the Notice of Internet Availability or proxy/voting instruction card that you received. If you do not return the proxy/voting instruction card or provide voting instructions, or if your instructions are unclear or incomplete, the trustee will vote your shares at its discretion.
Can I change or revoke my vote or proxy? Yes, you may change your vote or revoke your proxy at any time at or before the annual meeting. If you are a holder of record, you may change your vote or revoke your proxy through any of the following means:
If you hold your shares in street name, you may change your voting instructions by contacting your broker, bank or other holder of record prior to the annual meeting.
What if I am a record holder and I do not indicate my vote for one or more of the matters on my proxy card? If you are a holder of record and you return a signed proxy card without indicating your vote, your shares will be voted as follows: for the Company’s proposal to elect the 9 nominees named in this Proxy Statement to the Company’s Board of Directors in Item 1; for the Company’s proposal to ratify the appointment of the Company’s independent auditor for 2024 in Item 2; for the Company’s proposal to approve the compensation of our named executive officers in Item 3; for the Company’s proposal to approve the 2024 Long-Term Incentive Compensation Plan in Item 4; against the shareowner proposal concerning shareowner opportunity to vote on excessive golden parachutes in Item 5; against the shareowner proposal concerning a report on the Company’s LGBTQ+ equity and inclusion efforts Item 6. If you are a holder of record and you do not return a proxy card or vote at the annual meeting, your shares will not be What if I am a street name holder and If your shares are held in street name and you do not give your bank or broker instructions on how to vote, your shares will still be counted toward the quorum requirement for the annual meeting provided that your bank or broker votes your shares utilizing its discretionary authority for Item 2 as noted below. The failure to instruct your bank or broker how to vote will have one of three effects on the proposals for consideration at the annual meeting, depending upon the type of proposal. For all voting items, other than Item 2 to ratify our independent auditor for
If you hold shares in the International Paper Company Salaried Savings Plan and you do not provide voting instructions, the trustee will vote your shares at its discretion. Will my vote be confidential? Yes. Your vote is confidential and will not be disclosed to our directors or employees, unless in accordance with law. Will our directors attend the annual meeting? Yes. The Company’s Corporate Governance Guidelines state that directors are expected to attend our annual meeting. Who will be soliciting proxies on our behalf? The Company pays the cost of preparing proxy materials and soliciting your vote. Proxies may be solicited on our behalf by our directors, officers or employees by telephone, electronic or facsimile transmission or in person, without compensation. We have hired Alliance Advisors, LLC to solicit proxies for an estimated fee of approximately
We have adopted “householding,” a We will deliver promptly, upon written or oral request, a separate copy of the Notice of Internet Availability or the proxy materials to a shareowner at a shared address to which a single copy of the documents was delivered. To make such a request, How do I change future proxy delivery options? If you hold your shares in street name and wish to receive separate copies of future Notices of Internet Availability or sets of proxy materials or if you currently receive multiple copies of the Notice of Internet Availability or multiple sets of proxy materials, and would like to receive a single copy or set, please send your written request to: Broadridge Financial Solutions, Inc. Householding Dept. Mercedes Way Edgewood, NY 11717 or call 1-866-540-7095
What is the deadline for consideration of Rule 14a-8 shareowner proposals for the
Can I nominate a director in connection with the Yes. If you would like to make
Is there a way for shareowners to include their director nominees in the Company’s Yes. Can I raise other business at the Yes. If you would like to raise any business (other than director nominations) that is not already the subject of a proposal submitted for inclusion in our proxy statement for the
INTERNATIONAL PAPER COMPANY 2024 LONG-TERM INCENTIVE COMPENSATION PLAN
TABLE OF CONTENTS
ARTICLE 9 RESTRICTED STOCK, RESTRICTED STOCK UNITS AND DEFERRED STOCK UNITS
ARTICLE 15 AMENDMENT, MODIFICATION AND TERMINATION
INTERNATIONAL PAPER COMPANY 2024 Long-Term Incentive Compensation Plan ARTICLE 1 PURPOSE 1.1. GENERAL. The purpose of the International Paper Company 2024 Long-Term Incentive Compensation Plan (the “Plan”) is to provide incentive for non-employee directors and designated employees of International Paper Company, a New York corporation (the “Company”), or any Affiliate, to improve the performance of the Company on a long-term basis, and to attract and retain certain persons in the employ of the Company. Accordingly, the Plan permits the grant of incentive awards from time to time to directors of the Company, as needed, and to selected designated employees of the Company and its Affiliates. ARTICLE 2 DEFINITIONS 2.1. DEFINITIONS. The following words and phrases shall have the following meanings:
ARTICLE 3 EFFECTIVE TERM OF PLAN 3.1. EFFECTIVE DATE. The Plan shall be effective as of the date it is approved by both the Board and the shareowners of the Company (the “Effective Date”). 3.2. TERMINATION OF PLAN. Unless earlier terminated as provided herein, the Plan shall continue in effect until the date of the 2034 annual shareowners’ meeting or, if the shareowners approve an amendment to the Plan that increases the number of Shares subject to the Plan, the tenth anniversary of the date of such approval. The termination of the Plan shall not affect the validity of any Award outstanding on the date of termination, which shall continue to be governed by the applicable terms and conditions of this Plan. Notwithstanding the foregoing, no Incentive Stock Options may be granted more than ten years after the earlier of (a) adoption of this Plan by the Board, or (b) the Effective Date. ARTICLE 4 ADMINISTRATION 4.1. COMMITTEE. The Plan shall be administered by a Committee appointed by the Board or, at 4.2. ACTION AND INTERPRETATIONS BY THE COMMITTEE. For purposes of administering the Plan, the Committee may from time to time adopt rules, regulations, guidelines and procedures for carrying out the provisions and purposes of the Plan and make such other determinations, not inconsistent with the Plan, as the Committee may deem appropriate. The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any Award in the manner and to the extent it deems necessary to carry out the intent of the Plan. The Committee’s interpretation of the Plan, any Awards granted under the Plan, any Award Certificate and all decisions and determinations by the Committee with respect to the Plan are final, binding, and conclusive on all parties. Each member of the Committee is entitled to, in good faith, rely or act upon any report or other information furnished to that member by any employee of the Company 4.3. AUTHORITY OF COMMITTEE. Except as provided in Section 4.1 hereof, the Committee has the exclusive power, authority and discretion to:
Notwithstanding the foregoing, grants of Awards to Non-Employee Directors hereunder shall be made only in accordance with the terms, conditions and parameters of a plan, program or policy for the compensation of Non-Employee Directors as in effect from time to time that is approved and administered by a committee of the Board consisting solely of independent directors, and the Committee may not make other discretionary grants hereunder to Non-Employee Directors. 4.4. DELEGATION.
ARTICLE 5 SHARES SUBJECT TO THE PLAN 5.1. NUMBER OF SHARES. Subject to adjustment as provided in Sections 5.2 and 14.1, the aggregate number of Shares reserved and available for issuance pursuant to Awards granted under the Plan shall be 9,250,000 Shares plus a number of additional Shares underlying awards outstanding as of the Effective Date under the Company’s Amended and Restated 2009 Incentive Compensation Plan, as amended and restated February 11, 2014, that thereafter terminate or expire unexercised, or are cancelled, forfeited or lapse for any reason. The maximum number of Shares that may be issued upon exercise of Incentive Stock Options granted under the Plan shall be 9,250,000. 5.2. SHARE COUNTING. Shares covered by an Award shall be subtracted from the Plan share reserve as of the Grant Date, but shall be added back to the Plan share reserve in accordance with this Section 5.2.
5.3. STOCK DISTRIBUTED. Any Stock distributed pursuant to an Award may consist, in whole or in part, of authorized and unissued Stock, treasury Stock or Stock purchased on the open market.
ARTICLE 6 ELIGIBILITY 6.1. GENERAL. Awards may be granted only to Eligible Participants. Eligible Participants who are service providers to an Affiliate may be granted Options or SARs under this Plan only if the Affiliate qualifies as an “eligible issuer of service recipient stock” within the meaning of §1.409A-1(b)(5)(iii)(E) of the final regulations under Section 409A of the Code. ARTICLE 7 STOCK OPTIONS 7.1. GENERAL. The Committee is authorized to grant Options to Participants on the following terms and conditions:
7.2. INCENTIVE STOCK OPTIONS. Incentive Stock Options may be granted only to Eligible Participants who are employees of the Company or a Parent or Subsidiary as defined in Section 424(e) and (f) of the Code. The terms of any Incentive Stock Options granted under the Plan must comply with the requirements of Section 422 of the Code. If all of the requirements of Section 422 of the Code are not met, the Option shall automatically become a Non-qualified Stock Option.
ARTICLE 8 STOCK APPRECIATION RIGHTS 8.1. GRANT OF STOCK APPRECIATION RIGHTS. The Committee is authorized to grant SARs to Participants on the following terms and conditions:
ARTICLE 9 RESTRICTED STOCK, RESTRICTED STOCK UNITS AND DEFERRED STOCK UNITS 9.1. GRANT OF RESTRICTED STOCK, RESTRICTED STOCK UNITS AND DEFERRED STOCK UNITS. The Committee is authorized to make Awards of Restricted Stock, Restricted Stock Units or Deferred Stock Units to Participants in such amounts and subject to such terms and conditions as may be selected by the Committee. An Award of Restricted Stock, Restricted Stock Units or Deferred Stock Units shall be evidenced by an Award Certificate setting forth the terms, conditions, and restrictions applicable to the Award. 9.2. ISSUANCE AND RESTRICTIONS. Restricted Stock, Restricted Stock Units or Deferred Stock Units shall be subject to such restrictions on transferability and other restrictions as the Committee may impose (including, without limitation, limitations on the right to vote Restricted Stock or the right to receive dividends on the Restricted Stock). These restrictions may lapse separately or in combination at such times, under such circumstances, in such installments, upon the satisfaction of performance goals or otherwise, as the Committee determines at the
applicable Award Certificate, Awards of Restricted Stock will be entitled to full dividend rights. Pursuant to Section 11.1 and as set forth in the applicable Award Certificate or any special Plan document governing an Award, the Committee may provide that dividends on Awards of Restricted Stock will be deemed to have been reinvested in additional Shares or otherwise reinvested; provided, however, that in no event shall such Shares or other reinvestments be distributed or paid prior to the lapse of all restrictions to which the Restricted Stock are subject at the discretion of the Committee under this Section 9.2. 9.3. GRANT OF DIVIDEND EQUIVALENTS. The Committee is authorized to grant Dividend Equivalents with respect to Full-Value Awards (other than Restricted Stock) granted hereunder, subject to such terms and conditions as may be selected by the
9.5. DELIVERY OF RESTRICTED STOCK. Shares of Restricted Stock shall be delivered to the Participant on the Grant Date either by book-entry registration or by delivering to the Participant, or a custodian or escrow agent (including, without limitation, the Company or one or more of its employees) designated by the Committee, a stock certificate or certificates registered in the name of the Participant. If physical certificates representing shares of Restricted Stock are registered in the name of the Participant, such certificates must bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock. ARTICLE 10 PERFORMANCE AWARDS 10.1. GRANT OF PERFORMANCE AWARDS. The Committee is authorized to grant any Award under this Plan, including cash-settled Awards with performance-based vesting criteria, on such terms and conditions as may be selected by the Committee. Any such Awards with performance-based vesting criteria are referred to herein as Performance Awards. The Committee shall have the complete discretion to determine the number of Performance Awards granted to each Participant, subject to Section 5.1 and to designate the provisions of such Performance Awards as provided in Section 4.3. All Performance Awards shall be evidenced by an Award Certificate or a written program established by the Committee, pursuant to which Performance Awards are awarded under the Plan under uniform terms, conditions and restrictions set forth in such written program. All Dividend Equivalents credited on Performance Shares during a performance period shall be reinvested in additional Performance Shares, which shall be allocated to the same performance period and shall be subject to being earned by the Participant on the same basis as the original Award. 10.2. PERFORMANCE GOALS. The Committee may establish performance goals for Performance Awards which may be based on any criteria selected by the Committee. Such performance goals may be described in terms of Company-wide objectives or in terms of objectives that relate to the performance of the Participant, an Affiliate or a
division, region, department or function within the Company or an Affiliate. If the Committee determines that events or circumstances render the performance goals to be unsuitable, the Committee may modify such performance goals in whole or in part, as the Committee deems appropriate. If a Participant is promoted, demoted or transferred to a different business unit or function during a performance period, the Committee may determine that the performance goals or performance period are no longer appropriate and may (i) adjust, change or eliminate the performance goals or the applicable performance period as it deems appropriate to make such goals and period comparable to the initial goals and period, or (ii) make a cash payment to the participant in an amount determined by the Committee. ARTICLE 11 DIVIDEND EQUIVALENTS 11.1. GRANT OF DIVIDEND EQUIVALENTS. The Committee is authorized to grant Dividend Equivalents with respect to Full-Value Awards granted hereunder, subject to such terms and conditions as may be selected by the Committee; provided, however, that in no event may any Dividend Equivalents be distributed or paid to a Participant in respect of a Full-Value Award before the underlying shares subject to the Full-Value Award have become vested. Dividend Equivalents shall entitle the Participant to receive payments equal to ordinary cash dividends or distributions with respect to all or a portion of the number of vested Shares subject to a Full-Value Award, as determined by the Committee. The Committee may provide that Dividend Equivalents (i) will be deemed to have been reinvested in additional Shares or otherwise reinvested, or (ii) except in the case of Performance Awards, will be paid or distributed to the Participant as accrued (in which case, such Dividend Equivalents must be paid or distributed no later than the 15th day of the third month following the later of (i) the calendar year in which the corresponding dividends were paid to shareowners, or (ii) the first calendar year in which the Participant’s right to such Dividends Equivalents is no longer subject to a substantial risk of forfeiture. ARTICLE 12 STOCK OR OTHER STOCK-BASED AWARDS 12.1. GRANT OF STOCK OR OTHER STOCK-BASED AWARDS. The Committee is authorized, subject to limitations under applicable law, to grant to Participants such other Awards that are payable in, valued in whole or in part by reference to, or otherwise based on or related to Shares, as deemed by the Committee to be consistent with the
PROVISIONS APPLICABLE TO AWARDS 13.1. AWARD CERTIFICATES. Each Award shall be evidenced by an Award Certificate. Each Award Certificate shall include such provisions, not inconsistent with the Plan, as may be specified by the Committee. 13.2. FORM OF PAYMENT AWARDS. At the discretion of the Committee, payment of Awards may be made in cash, Stock, a combination of cash and Stock, or any other form of property as the Committee shall determine. In addition, payment of Awards may include such terms, conditions, restrictions and/or limitations, if any, as the Committee deems appropriate, including, in the case of Awards paid in the form of Stock, restrictions on transfer and forfeiture provisions. Further, payment of Awards may be made in the form of a lump sum, or in installments, as determined by the Committee.
13.3. LIMITS ON TRANSFER. No right or interest of a Participant in any unexercised or restricted Award may be pledged, encumbered, or hypothecated to or in favor of any party other than the Company or an Affiliate, or shall be subject to any lien, obligation, or liability of such Participant to any other party other than the Company or an Affiliate. No unexercised or restricted Award shall be assignable or transferable by a Participant other than by will or the laws of descent and distribution or, except in the case of an Incentive Stock Option, pursuant to a domestic relations order that would satisfy Section 414(p)(1)(A) of the Code if such Section applied to an Award under the Plan; provided, however, that the Committee may (but need not) permit other transfers (other than transfers for value) where the Committee concludes that such transferability (i) does not result in accelerated taxation, (ii) does not cause any Option intended to be an Incentive Stock Option to fail to be described in Section 422(b) of the Code, and (iii) is otherwise appropriate and desirable, taking into account any factors deemed relevant, including without limitation, state or federal tax or securities laws applicable to transferable Awards. 13.4. BENEFICIARIES. Notwithstanding Section 13.3, a Participant may, in the manner determined by the Committee, designate a beneficiary to exercise the rights of the Participant and to receive any distribution with respect to any Award upon the Participant’s death. A beneficiary, legal guardian, legal representative, or other 13.5. STOCK TRADING RESTRICTIONS. All Stock issuable under the 13.6. TREATMENT UPON DEATH OR DISABILITY. Except as otherwise provided in the Award Certificate or any special Plan document governing an Award, upon the termination of a person’s Continuous Service by reason of death or Disability:
To the extent that this provision causes Incentive Stock Options to exceed the dollar limitation set forth in Section 422(d) of the 13.7. EFFECT OF A CHANGE IN CONTROL. The provisions of this Section 13.7 shall apply in the
13.8. ACCELERATION FOR ANY OTHER REASON. Regardless of whether an event has occurred as described in
differentiate among Participants and among Awards granted to a Participant in exercising its discretion pursuant to this Section 13.8. Notwithstanding anything in the Plan, including this Section 13.8, the Committee may not accelerate the payment of any Award if such acceleration would violate Section 409A(a)(3) of the Code. 13.9. FORFEITURE EVENTS. Awards under 13.10. SUBSTITUTE AWARDS. The Committee may grant Awards under the Plan in substitution for stock and stock-based awards held by employees of another entity who become employees of the Company or an Affiliate as a result of a merger or consolidation of the former employing entity with the Company or an Affiliate or the acquisition by the Company or an Affiliate of property or stock of the former employing corporation. The Committee may direct that the substitute awards be granted on such terms and conditions as the Committee considers appropriate in the circumstances. 13.11. MINIMUM VESTING REQUIREMENTS. Notwithstanding anything to the contrary herein, and subject to Section 13.7 and Article 14, Awards shall vest over a period of not less than one year following the date of grant. For the avoidance of doubt, such minimum vesting requirements shall not apply in the event of (i) the Participant’s death or disability, (ii) a Change in Control (subject to the requirements of Section 13.7) and (iii) the Committee granting Awards that are not subject to such minimum vesting requirements with respect to 5 percent or less of the Shares available ARTICLE 14 CHANGES IN CAPITAL STRUCTURE 14.1. Mandatory Adjustments. In the event of a
14.2. DISCRETIONARY ADJUSTMENTS. Upon the occurrence or in anticipation of any corporate event or transaction involving the Company (including, without limitation, any merger, reorganization, recapitalization, combination or exchange of shares, or any transaction described in Section 14.1), the Committee may, in its sole discretion, provide (i) that Awards will be settled in cash rather than Stock, (ii) that Awards will become immediately vested and exercisable (in whole or in part) and will expire after a designated period of time to the extent not then exercised, (iii) that Awards will be assumed by another party to a transaction or otherwise be equitably converted or substituted in connection with such transaction, (iv) that outstanding Awards may be settled by payment in cash or cash equivalents equal to the excess of the Fair Market Value of the underlying Stock, as of a specified date associated with the transaction, over the exercise or base price of the Award, (v) that performance targets and performance periods for Performance Awards will be modified, or (vi) any combination of the foregoing. The Committee’s determination need not be uniform and may be different for different Participants whether or not such Participants are similarly situated. 14.3. GENERAL. Any discretionary adjustments made pursuant to this Article 14 shall be subject to the provisions of Section 15.2. To the extent that any adjustments made pursuant to this Article 14 cause Incentive Stock Options to cease to qualify as Incentive Stock Options, such Options shall be deemed to be Non-qualified Stock Options. ARTICLE 15 AMENDMENT, MODIFICATION AND TERMINATION 15.1. AMENDMENT, MODIFICATION AND TERMINATION. The Board or the Committee may, at any time and from time to time, amend, modify or terminate the Plan without shareowner approval; provided, however, that, if an amendment to the Plan would, in the reasonable opinion of the Board or the Committee, either (i) materially increase the number of Shares available under the Plan, (ii) expand the types of awards under the Plan, (iii) materially expand the class of participants eligible to participate in the Plan, (iv) materially extend the term of the Plan, or (v) otherwise constitute a material change requiring shareowner approval under applicable laws, policies or regulations or the applicable listing or other requirements of an Exchange, then such amendment shall be subject to shareowner approval; and provided, further, that the Board or Committee may condition any other amendment or modification on the approval of shareowners of the Company for any reason, including by reason of such approval being necessary or deemed advisable (i) to comply with the listing or other requirements of an Exchange, or (ii) to satisfy any other tax, securities or other applicable laws, policies or regulations. 15.2. AWARDS PREVIOUSLY GRANTED. At any time and from time to time, the Committee may amend, modify or terminate any outstanding Award without approval of the Participant; provided, however, that:
15.3. COMPLIANCE AMENDMENTS. Notwithstanding anything in the Plan or in any Award Certificate to the contrary, the Board may amend the Plan or an Award Certificate, to take effect retroactively or otherwise, as deemed necessary or advisable for the purpose of conforming the Plan or Award Certificate to any present or future law relating to plans of this or similar nature (including, but not limited to, Section 409A of the Code), and to the administrative regulations and rulings promulgated thereunder. By accepting an Award under this Plan, a Participant agrees to any amendment made pursuant to this Section 15.3 to any Award granted under the Plan without further consideration or action. ARTICLE 16 GENERAL PROVISIONS 16.1. RIGHTS OF PARTICIPANTS.
16.2. WITHHOLDING. The Company or any Affiliate shall have the authority and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes (including the Participant’s FICA obligation in the United States and any social tax obligations for any non-U.S. jurisdiction) required by law to be withheld with respect to any exercise, lapse of restriction or other taxable event arising as a result of the Plan. The obligations of the Company under the Plan will be conditioned on such payment or arrangements and the Company or such Affiliate will, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the Participant. Unless otherwise determined by the Committee at the time the Award is granted or thereafter, any such withholding requirement may be satisfied, in whole or in part, by withholding from the Award Shares having a Fair Market Value on the date of withholding equal to the minimum amount (and not any greater amount) required to be withheld for tax purposes, all in accordance with such procedures as the Committee establishes. All such elections shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate.
16.3. SPECIAL PROVISIONS RELATED TO SECTION 409A OF THE CODE.
For purposes of
rule of Section 409A(a)(2)(B)(i) of the Code shall be determined in accordance with rules adopted by the Board or any committee of the Board, which shall be applied consistently with respect to all nonqualified deferred compensation arrangements of the Company, including this Plan.
16.4. UNFUNDED STATUS OF AWARDS. The Plan is intended to be an “unfunded” plan for incentive and deferred compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award Certificate shall give the Participant any rights that are greater than those of a general creditor of the Company or any Affiliate. This Plan is not intended to be subject to ERISA. 16.5. RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan shall be taken into account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance, welfare or benefit plan of the Company or any Affiliate unless provided otherwise in such other plan. 16.6. EXPENSES. The expenses of administering the Plan shall be borne by the Company and its Affiliates. 16.7. TITLES AND HEADINGS. The titles and headings of the Sections in the Plan are for convenience of reference only, and in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control. 16.8. GENDER AND NUMBER. Except where otherwise indicated by the context, any masculine, feminine or non-binary term used herein also shall include the other terms; the plural shall include the singular and the singular shall include the plural. 16.9. GOVERNMENT AND OTHER REGULATIONS.
16.10. GOVERNING LAW. To the extent not governed by federal law, the Plan and all Award Certificates shall be construed in accordance with and governed by the laws of the State of New York. 16.11. SEVERABILITY. In the event that any provision of this Plan is found to be invalid or otherwise unenforceable under any applicable law, such invalidity or unenforceability will not be construed as rendering any other provisions contained herein as invalid or unenforceable, and all such other provisions will be given full force and effect to the same extent as though the invalid or unenforceable provision was not contained herein. 16.12. NO LIMITATIONS ON RIGHTS OF COMPANY. The grant of any Award shall not in any way affect the right or power of the Company to make adjustments, reclassification or changes in its capital or business structure or to merge, consolidate, dissolve, liquidate, sell or transfer all or any part of its business or assets. The Plan shall not restrict the authority of the Company, for proper corporate purposes, to draft or assume awards, other than under the Plan, to or with respect to any person. If the Committee so directs, the Company may issue or transfer Shares to an Affiliate, for such lawful consideration as the Committee may specify, upon the condition or understanding that the Affiliate will transfer such Shares to a Participant in accordance with the terms of an Award granted to such Participant and specified by the Committee pursuant to the provisions of the Plan. 16.13. INDEMNIFICATION. The Company shall indemnify each officer or director who is made, or threatened to be made, a party to any claim, action, suit or proceeding by reason of any action taken or failure to act under the Plan, to the fullest extent permitted by applicable law. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s charter or bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.
Appendix The tables below present reconciliations of the non-GAAP financial measures presented in this
Adjusted EBITDA is a non-GAAP financial measure presented as a supplemental measure of our performance and the most directly comparable GAAP measure is Earnings (Loss) from Continuing Operations Before Income Taxes and Equity Earnings.
Free cash flow is a non-GAAP financial measure and the most directly comparable GAAP measure is cash provided by operations. Management believes that free cash flow is useful to investors as a liquidity measure because it measures the
amount of cash generated that is available, after reinvesting in the business, to maintain a strong balance sheet, pay dividends, repurchase stock, service debt and make investments for future growth. It should not be inferred that the entire free cash flow amount is available for discretionary expenditures. By adjusting for certain items that are not indicative of the Company’s ongoing performance, free cash flow also enables investors to perform meaningful comparisons between past and present periods.
Adjusted operating earnings per share is a non-GAAP financial measure and the most directly comparable GAAP measure is Diluted Earnings per Common Share as reported. The Company defines and calculates adjusted operating earnings per share by excluding the after-tax effect of discontinued operations, non-operating pension expense and items considered by management to be unusual (net special items) from the earnings reported under GAAP. Management believes that adjusted operating earnings per share is useful to investors because it enables them to perform meaningful comparisons of past and present consolidated operating results.
Adjusted Operating Earnings Before Net Interest Expense is a non-GAAP financial measure, and the most directly comparable GAAP measure is Earnings (Loss) From Continuing Operations Before Income Taxes and Equity Earnings. The Company calculates Adjusted Operating Earnings Before Net Interest Expense by excluding net interest expense, the after-tax effect of non-operating pension expense and items considered by management to be unusual (net special items) from the earnings reported under GAAP. Management uses this measure to focus on on-going operations and believes that it is useful to investors because it enables them to perform meaningful comparisons of past and present operating results.
The Company considers adjusted return on invested capital (“Adjusted ROIC”), a non-GAAP financial measure, to be a meaningful indicator of our operating performance, and we evaluate this metric because it measures how effectively and efficiently we use the capital invested in our business. The Company defines and calculates Adjusted ROIC using in the numerator Adjusted Operating Earnings Before Net Interest Expense,
Adjusted ROIC = Adjusted Operating Earnings Before Net Interest Expense / Average Invested Capital Average Invested Capital = Equity (adjusted to remove pension-related amounts in OCI, net of tax) + interest-bearing debt
The Company considers Cash Conversion, a non-GAAP financial measure, to be a meaningful indicator of our operating performance, and we evaluate this metric because it measures how effectively and efficiently we generate cash from normal business operations after non-strategic capital spending. The Company defines and calculates Cash Conversion using in the numerator Adjusted EBITDA (as defined above) less Non-Strategic Capital Spending plus/minus changes in Operating Working Capital for Cash Conversion. The Company calculates Non-Strategic Capital Spending by excluding spending from projects intended to improve market position or customer service/ satisfaction, but including volume increases and performance or quality improvements from the Invested in Capital Projects amount on the Consolidated Cash Flow Statement reported under GAAP. Operating Working Capital for Cash Conversion is defined and calculated as Trade Accounts and Notes Receivable plus Contract Assets plus Inventories less Trade Accounts Payable as reported on the Consolidated Balance Sheet under GAAP, excluding Corporate Operating Working Capital and other adjustments. Non-Strategic Capital Spending and changes in Operating Capital may be adjusted, in the Committee’s discretion, for any impact of acquisitions, divestitures and/or the effect of changes in tax laws, accounting principles or other laws or provisions affecting reported results. Management uses this measure to focus on on-going operations and believes it is useful to investors because it enables them to perform meaningful comparisons of past and present operating results. Cash Conversion = Adjusted EBITDA – Non-Strategic Capital Spending +/- Changes in Operating Working Capital / Adjusted EBITDA
 INTERNATIONAL PAPER COMPANY P.O. BOX 43004 PROVIDENCE, RI 02940-3004  VOTE BY You may use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. EDT May VOTE BY PHONE-1-800-690-6903 You may use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. EDT May 12, 2024, except that participants in the International Paper Company Salaried Savings Plan or International Paper Company Hourly Savings Plan must provide voting instructions on or before 11:59 P.M. EDT May 8, 2024. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Please mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to International Paper Company, c/o Broadridge Financial Solutions, Inc., 51 Mercedes Way, Edgewood, NY 11717 so that it is received by May 12, 2024. Voting instructions provided by participants in the International Paper Company Salaried Savings Plan or International Paper Company Hourly Savings Plan must be received by May 8, 2024. ELECTRONIC DELIVERY OF FUTURE SHAREOWNER COMMUNICATIONS
If you or your duly appointed proxy holder are planning to attend the the proxies This are proxy/voting authorized to instruction vote upon card, such other when business properly as executed, may properly will be voted in the manner directed herein by the undersigned shareowner. If no direction is made, this proxy/voting instruction card will be voted FOR all of the nominees in Item1, FOR the Proposals in Items 2, 3 and 4, and AGAINST the Proposals in Items 5 and 6. If you are a participant in one or more of the plans shown on the reverse side of this proxy/voting instruction card, the shares will be voted by the Trustee in its discretion. Yes No Please indicate if you plan to attend this Annual Meeting. ! ! Please sign exactly as your name appears on this proxy. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee Important Notice Regarding the Availability of Proxy Materials for the www.proxyvote.com V37128-P04830 INTERNATIONAL PAPER COMPANY SHAREOWNER PROXY AND CONFIDENTIAL VOTING INSTRUCTION CARD 13, 2024 THIS PROXY/VOTING INSTRUCTION CARD IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF INTERNATIONAL PAPER COMPANY AND BY THE TRUSTEES OF THE PLANS LISTED BELOW. THIS MAY ONLY BE USED AT THE ANNUAL MEETING OF SHAREOWNERS TO BE HELD ON MAY If you are a registered shareowner, by submitting this proxy you are appointing If you are a participant in either the International Paper Company Salaried Savings Plan or the International Paper Company Hourly Savings Plan, by signing this proxy/voting instruction card, you are instructing the Trustee to vote the shares of common stock in accordance with your voting instructions. The Company has authorized Broadridge as the agent to tabulate the votes under each of the plans. Any shares held by the Trustee for which it has not received voting instructions by Internet, phone or mail by 11:59 P.M. EDT May 8, 2024. The proxies are instructed to vote as indicated on the reverse side. This proxy revokes all prior proxies given by you. Please sign on the reverse side exactly as your name or names appear(s) there. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give your full title. If a corporation, please sign in full corporate name by authorized officer. If a partnership or LLC, please sign in firm name by authorized partner or member. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual elections and majority voting for directors, with a director resignation policy
Competition
AGAINST
