def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by
the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
P. H. GLATFELTER COMPANY
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Per unit or other underlying value of transaction computed pursuant to Exchange Act
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Fee paid previously with preliminary materials. |
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of its
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Form, Schedule or Registration Statement No.: |
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Date Filed: |
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P. H. GLATFELTER COMPANY
96 South George Street, Suite 500
York, Pennsylvania 17401
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS
TO BE HELD ON
May 5, 2010
TO OUR SHAREHOLDERS:
The 2010 Annual Meeting of the Shareholders of P. H. Glatfelter
Company (Annual Meeting), a Pennsylvania
corporation, will be held at the York Expo Center, 334
Carlisle Avenue, York, Pennsylvania, in the Pennsylvania
Room, on Wednesday, May 5, at 10:00 a. m., to consider
and act upon the following items:
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the election of six members of the Board of Directors to serve
until our next Annual Meeting and until their successors are
elected and qualified;
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a proposal to approve the Amended and Restated 2005 Management
Incentive Plan for purposes of complying with
Section 162(m) of the Internal Revenue Code;
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a proposal to ratify the appointment of Deloitte &
Touche LLP as the independent registered public accounting firm
for the Company for the fiscal year ending December 31,
2010; and
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such other business as may properly come before the Meeting.
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Only holders of record of the Companys common stock at the
close of business on March 11, 2010, will be entitled to
notice of, and to vote at, the Annual Meeting.
It is important that your shares be represented and voted at the
Annual Meeting. Whether or not you currently plan to attend the
Meeting, please complete, date and sign the accompanying proxy
card and return it promptly in the enclosed envelope (requiring
no postage if mailed in the United States). If you choose, you
may still vote in person at the Annual Meeting, even though you
had previously submitted a proxy card.
Thomas G. Jackson
Vice President,
General Counsel and
Secretary
March 30, 2010
IMPORTANT NOTICE
REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE 2010 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 5,
2010.
P. H. Glatfelter Companys Proxy Statement for the
2010 Annual Meeting of Shareholders and the 2009 Annual Report,
are available via the Internet at
www.glatfelter.com/about_us/investor_relations/sec_filings.aspx
TABLE OF CONTENTS
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Page
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About the Meeting
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1
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4
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6
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8
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11
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11
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42
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42
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42
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Appendix A
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A-1
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P. H. GLATFELTER
COMPANY
PROXY
STATEMENT
The accompanying proxy is being solicited by the Board of
Directors (the Board) of P. H. Glatfelter Company
(we, us, or the Company), 96
South George Street, Suite 500, York, Pennsylvania 17401,
in connection with the 2010 Annual Meeting of shareholders to be
held on Wednesday, May 5, 2010 at 10:00 a.m., 334
Carlisle Avenue, York, Pennsylvania, in the Pennsylvania
Room. This proxy statement and the accompanying proxy card
are being mailed to the shareholders on or about March 30,
2010.
What is the
purpose of the Annual Meeting?
At the Annual Meeting, shareholders will be asked to consider
and act upon the following matters:
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the election of six directors to serve on the Board for a one
year term expiring in 2011;
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a proposal to approve the Amended and Restated 2005 Management
Incentive Plan for purposes of complying with
Section 162(m) of the U.S. Internal Revenue Code, as
amended (the Code);
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a proposal to ratify the appointment of Deloitte &
Touche LLP as the Companys independent registered public
accounting firm for the fiscal year ending December 31,
2010; and
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such other business as may properly come before the meeting.
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Why are
shareholders receiving these proxy materials?
Shareholders are receiving these proxy materials in connection
with the solicitation of proxies by the Board of Directors in
connection with the 2010 Annual Meeting and shareholders are
encouraged to read this proxy statement and to vote their shares
by mailing the attached proxy card or in person at the Annual
Meeting. The Board has appointed Director, Nicholas DeBenedictis
and Director, J. Robert Hall, or either of them with power of
substitution, to vote all properly executed proxies at the
Annual Meeting or at any adjournment of the Annual Meeting which
are received from shareholders who are entitled to vote.
Who may
vote?
Shareholders of record as of the close of business on
March 11, 2010, the record date, may vote at the Annual
Meeting. At the close of business on March 11, 2010, there
were 45,751,075 shares of the Companys common stock
issued and outstanding and eligible to vote at the Annual
Meeting.
What is a
beneficial owner?
If on March 11, 2010, a shareholders shares were not
held in the shareholders name, but rather in the name of a
brokerage firm, bank, dealer, or other similar organization,
then the shareholder is the beneficial owner of shares and the
shares are referred to as being held in street name.
The broker, bank or firm that is holding the shareholders
shares is the shareholder of record for purposes of voting at
the Annual Meeting. As a beneficial owner, a shareholder has the
right to direct the broker or other agent that is holding his
shares regarding how to vote the shareholders shares being
held by the broker.
How does a
shareholder vote?
The procedures for voting are fairly simple: A shareholder is
entitled to one vote per share of stock owned on the record date
on each item of business presented at the Annual Meeting, except
each shareholder has cumulative voting rights with respect to
electing directors. Cumulative voting means that a shareholder
is entitled to as many votes in electing directors as is equal
to the number of shares of common stock that are owned by the
shareholder on the record date, multiplied by the number of
directors to be elected. Accordingly, for the election of six
directors, a shareholder may cast his total number of votes
For or Withhold all of his votes from a
single nominee or may distribute or withhold his total number of
votes between the six nominees as he determines up to the number
of shares of common stock that are owned by the shareholder on
the record date, multiplied by six. The persons named in the
accompanying proxy card as Proxy Holders will vote the
shareholders shares as the shareholder designates on his
proxy card, including any exercise of cumulative voting rights
through the distribution of votes among the nominees as
indicated on the proxy card. Absent such designation, the Proxy
Holders may use their discretionary authority to vote the
shareholders shares as the proxy holders shall determine
including voting those shares cumulatively.
For the proposal to approve the Management Incentive Plan, as
amended and restated, a shareholder may vote For or
Against or abstain from voting.
For the proposal to ratify the appointment of
Deloitte & Touche LLP as the Companys
independent registered public accounting firm for the fiscal
year ending December 31, 2010, a shareholder may vote
For or Against or abstain from voting.
Only shareholders of the Companys common stock on the
record date of the Annual Meeting, March 11, 2010, may
attend the Annual Meeting, and those shareholders will need an
admission ticket or other proof of stock ownership to be
admitted to the Annual Meeting.
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For registered shareholders of the Company, an admission ticket
is attached to their proxy card.
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Registered shareholders who plan to attend the Annual Meeting
are requested to vote in advance of the Annual Meeting by
competing and mailing in their proxy card but retain the
admission ticket and bring it with them to the Annual Meeting if
they plan to attend.
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Shareholders whose shares are registered in the name of a bank,
broker or other institution are referred to as beneficial
owners of company stock. Beneficial owners should have
received voting instructions or a proxy card from their broker
or agent rather than from the Company. Shareholders who are
beneficial owners of Company stock should follow the voting
instructions provided by their broker or agent to ensure that
their vote is counted.
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To vote in person at the Annual Meeting, beneficial owners may
obtain an admission ticket from their broker or agent or at the
Annual Meeting by presenting proof of ownership of Company stock
as of the record date, which is March 11, 2010. For
example, a shareholder may bring an account statement or a
letter from his bank or broker confirming that the shareholder
owned Company common stock on March 11, 2010.
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How can a
shareholder change his vote?
A shareholder of record can revoke his proxy at any time before
his shares are voted if it (1) delivers a written
revocation to the Companys Secretary; (2) submits a
later dated proxy (or voting instruction form if it holds his
shares in street name); or (3) vote in person at the Annual
Meeting. A shareholder that is a beneficial owner should follow
the instructions provided by his broker or bank to change his
vote.
What is a
quorum?
As of March 11, 2010, there were 45,751,075 shares of
the Companys common stock outstanding and entitled to
vote. The presence of shareholders entitled to cast at least a
majority of the votes that all shareholders are entitled to cast
on a particular matter will constitute a quorum for the purposes
of such matter. Abstention or broker non-votes are
counted as present and entitled to vote for purposes of
determining a quorum. A broker non-vote occurs when
a broker or bank holding shares for a beneficial owner does not
vote on a particular matter because the broker or bank does not
have discretionary voting authority to vote on the proposal and
the beneficial owner has not provided voting instructions.
How does
discretionary voting authority apply?
If a shareholder of record signs and returns the accompanying
proxy card, but does not make any selections, Nicholas
DeBenedictis and J. Robert Hall, as proxy holders, will have
discretion to vote the shares and will vote those shares on
behalf of the shareholder at the Annual Meeting as recommended
by the Board.
If a beneficial owner does not provide the bank or broker that
holds his shares with specific voting instructions, under the
rules of various national and regional securities exchanges, the
beneficial owners bank or broker may generally vote on
routine matters but cannot vote on non-routine matters.
Proposal 1 (election of directors) is not a routine matter.
The Company believes Proposal 2 (approval of the Management
Incentive Plan) and Proposal 3 (ratification of auditors)
will be considered routine. If the beneficial owners bank
or broker does not receive instructions from them on how to vote
their shares on a non-routine matter, their bank or broker will
inform the Company that they do not have the authority to vote
on this matter with respect to the beneficial owners
shares. We encourage shareholders to provide voting instructions
to the organization that holds their shares by carefully
following the instructions provided in the notice.
What is the
Boards recommendation?
The Board recommends a vote:
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FOR the election of the six nominees for director;
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FOR the approval of the 2005 Amended and Restated
Management Incentive Plan for purposes of complying with
Section 162(m) of the Internal Revenue Code; and
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FOR the ratification of Deloitte & Touche LLP
as the Companys independent registered public accounting
firm.
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What vote is
needed to elect Directors and for the proposals to be
adopted?
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Election of Directors. The six nominees for
director receiving the highest number of votes cast by
shareholders will be elected to serve on the Board of Directors
of the Company. Pursuant to the Companys majority-voting
policy, in an uncontested election, if a nominee for director
receives a greater number of votes withheld from his
or her election than votes for such election, and no
successor has been elected at the Annual Meeting, the Director
must promptly tender his or her resignation following
certification of the shareholder vote.
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Amended and Restated Management Incentive Plan.
The approval of the Amended and Restated Management Incentive
Plan for purposes of complying with Section 162(m) of the
Code requires the affirmative vote of a majority of the votes
cast on this proposal. An abstention or a broker non-vote will
not be counted for voting purposes on this proposal.
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Ratification of Auditors. A majority of the votes
entitled to be cast at the meeting, in person or by
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proxy, must vote for the ratification of
Deloitte & Touche LLP as the Companys
independent public accounting firm for the proposal to be
adopted.
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Who pays for
the proxy solicitation related to the Annual
Meeting?
The Company pays the cost of preparing, printing, assembling and
mailing this Proxy Statement and other proxy solicitation
materials. The Company will also reimburse brokers and other
custodians, nominees and fiduciaries for their reasonable
out-of-pocket
expenses for forwarding the Proxy Statement and other proxy
soliciting materials to beneficial owners. In addition to the
solicitation of proxies by mail, some of the Directors,
Officers, other employees and agents may solicit proxies
personally, by telephone and by other means. The Officers and
Directors who may solicit proxies personally receive no special
compensation for any solicitation activities.
Will any
business other than that discussed in this proxy statement be
considered or acted upon at this Annual Meeting?
No. The Companys by-laws required shareholders to submit
advance notice of all director nominations and shareholder
proposals to be considered at the 2010 Annual Meeting to the
Company by November 25, 2009, regardless of whether the
shareholder seeks inclusion of their nomination or proposal in
this proxy statement, or intends to solicit proxies on their
own. Because the Company did not receive any such notice of
nominations or proposals, no other Director nominations or
shareholder proposals shall be considered at the 2010 Annual
Meeting.
When are
shareholder proposals due for inclusion in the proxy statement
for the 2011 Annual Meeting?
A proposal that a shareholder would like to present at the 2011
Annual Meeting must be submitted to the Companys Secretary
prior to the preparation of the 2011 Proxy Statement. To be
included in the proxy statement for the 2011 Annual Meeting, a
shareholder proposal must be submitted in writing to the
Companys Secretary and delivered to, or mailed and
received by the Company no later than November 30, 2010.
The Companys By-laws prescribe the procedures a
shareholder must follow to bring business before shareholder
meetings. To bring matters before the 2011 Annual Meeting, and
to include a matter in the Proxy Statement for that meeting, a
notice that includes all of the information required by the
Companys By-laws must be received by November 30,
2010.
How can a
shareholder nominate director candidates?
A shareholder may recommend nominees for consideration by the
Boards Nominating and Corporate Governance Committee for
nomination for election to the Board. Shareholder
recommendations for director nominees will receive the same
consideration by the Boards Nominating and Corporate
Governance Committee that all other nominations receive. If a
shareholder wishes to recommend a nominee for director, the
shareholder should submit such recommendation in writing,
together with any supporting materials deemed appropriate, to
the Companys Secretary.
A shareholder may nominate a person for election to the Board,
provided the recommendation is made in accordance with the
procedures described herein and in the Companys By-laws.
To nominate a candidate for director at the 2011 Annual Meeting,
notice of the nomination must be in writing and delivered to, or
mailed and received at the Company no later than
November 30, 2010.
What must be
included in the notice to submit a shareholder proposal or to
nominate a director candidate?
The notice must include:
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if a shareholder is submitting a proposal, a description of the
business desired to be brought before the meeting, the reasons
for conducting the business at the meeting, and any material
interest the shareholder has in the business;
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if a shareholder is submitting a nomination for election to the
Board, various matters regarding the nominee, including name,
address, occupation, shares held, and a representation by the
shareholder and the nominee that there are no undisclosed voting
arrangements;
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the shareholders name and address, a description of the
shares held, a description of any arrangement or agreement with
other shareholders or the nominee with respect to the nomination;
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a representation that the shareholder will attend the 2011
Annual Meeting and submit the proposal or nominate the nominee;
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a description of any hedging arrangements that the shareholder
has entered into with respect to our stock; and
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a statement of whether the shareholder intends to solicit, or
participate in the solicitation of proxies with respect to the
proposal or nomination.
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This is a general description of the notice required to submit a
proposal or nomination for consideration at the 2011 Annual
Meeting. The Companys By-laws contain a complete
description of the notice requirements for shareholder
proposals. Copies of the Companys By-laws may be obtained
from the Companys web site at
www.glatfelter.com/about_us/corporate_governance/bylaws.aspx or
free of charge from the Secretary.
The proposal and notice must otherwise comply with the
requirements of
Rule 14a-8
under the Securities Exchange Act of 1934, as amended (the
Exchange Act).
-3-
OWNERSHIP OF
COMPANY STOCK
SECURITY
OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
To the Companys knowledge, the following table sets forth
information regarding ownership of the Companys
outstanding common stock as of March 11, 2010, (except as
otherwise noted) by: (i) each person who is known by the
Company to own beneficially more than 5% of the common stock of
the Company; (ii) each Director, Director nominee and named
executive officer; and (iii) all Directors, Director
nominees and executive officers as a group. Except as otherwise
indicated and subject to applicable community property laws,
each owner has sole voting and investment powers with respect to
the securities listed. The number of shares beneficially owned
by each person is determined under the rules of the Securities
and Exchange Commission (SEC) and the information is
not necessarily indicative of beneficial ownership for any other
purpose. Under the rules of the SEC, all shares which a person
has the right to acquire beneficial ownership within
60 days are considered beneficially owned by that person.
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Name of Beneficial
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Shares Beneficially
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Total Number of
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Owner
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Owned (1)
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Shares Owned (1)
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% of Class
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Dimensional Fund Advisors LP
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3,712,306
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3,712,306
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8.11
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Third Avenue Management LLC
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2,937,883
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2,937,883
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(3)
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6.42
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The Vanguard Group
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2,918,614
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2,918,614
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6.37
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Blackrock, Inc.
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2,407,167
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2,407,167
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(5)
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5.26
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Outstanding
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Name of Beneficial
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Directly
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Indirectly
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Options
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Total Number of
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Owner
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Position
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Owned
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Owned
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to Purchase
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Shares Owned (1)
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% of Class
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Kathleen A. Dahlberg
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Director
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13,138
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7,500
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20,638
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*
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Nicholas DeBenedictis
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Director
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10,790
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2,500
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13,290
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*
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George H. Glatfelter II
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Chairman of the
Board & CEO
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90,975
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144,409
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(6)
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364,293
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599,677
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1.31
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J. Robert Hall
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Director
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13,138
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7,500
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20,638
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*
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Richard C. Ill
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Director
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11,318
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2,500
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13,818
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*
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John P. Jacunski
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Senior V. P. & CFO
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15,853
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1,758
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(7)
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89,991
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107,602
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Debabrata Mukherjee
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V. P. & GM, Specialty
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4,605
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57
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(8)
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50,104
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54,766
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*
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Papers Business Unit
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald J. Naples
|
|
Director
|
|
|
12,312
|
|
|
|
|
|
|
|
9,000
|
|
|
|
21,312
|
|
|
|
*
|
|
Dante C. Parrini
|
|
Executive V. P. & COO
|
|
|
22,2810
|
|
|
|
4,747
|
(9)
|
|
|
168,344
|
|
|
|
195,372
|
|
|
|
*
|
|
Martin Rapp
|
|
V. P. & GM, Composite
|
|
|
|
|
|
|
|
|
|
|
51,224
|
|
|
|
51,224
|
|
|
|
*
|
|
|
|
Fibers Business Unit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard L. Smoot
|
|
Director
|
|
|
14,638
|
|
|
|
|
|
|
|
2,500
|
|
|
|
17,138
|
|
|
|
*
|
|
Lee C. Stewart
|
|
Director
|
|
|
13,138
|
|
|
|
|
|
|
|
7,500
|
|
|
|
20,638
|
|
|
|
*
|
|
All Directors and executive officers as a group (16
individuals)
|
|
|
|
|
241,305
|
|
|
|
157,046
|
|
|
|
917,867
|
|
|
|
1,316,216
|
(10)
|
|
|
2.88
|
%
|
|
* Less than 1%
|
|
(1)
|
For purposes of the table, shares
of common stock are considered beneficially owned by a person if
such person has or shares voting or investment power with
respect to such stock. As a result, more than one person may
beneficially own the same security and, in some cases, the same
shares are listed opposite more than one name in the table. The
table includes, in some cases, shares beneficially held by
spouses or minor children, as to which beneficial ownership is
disclaimed. The address of each director, director nominee and
named executive officer of the Company is
c/o P.
H. Glatfelter Company, 96 South George Street, Suite 500,
York, PA 17401.
|
|
(2)
|
Pursuant to a Schedule 13G/A
filed on February 8, 2010, consists of shares beneficially
owned, as of December 31, 2009, by Dimensional
Fund Advisors LP. Dimensional Fund Advisors LP possesses
sole voting power over 3,655,877 shares and investment
authority over all 3,712,306 shares. Dimensional
Fund Advisors LP is an investment advisor registered under
Section 203 of the Investment Advisors Act of 1940. All
3,712,306 shares are owned by four investment companies
registered under Section 203 of the Investment Advisors Act
of 1940 to which Dimensional Fund Advisors LP furnishes
investment advice and certain other commingled group trusts and
separate accounts to which Dimensional Fund Advisors LP
serves as investment manager. Dimensional Fund Advisors LP
disclaims beneficial ownership of such shares. The address of
Dimensional Fund Advisors LP is Palisades West, Building
One, 6300 Bee Cave Road, Austin, TX 78746.
|
|
(3)
|
Pursuant to a Schedule 13G
filed on February 16, 2010, consists of shares beneficially
owned, as of December 31, 2009, by Third Avenue Management
LLC. Third Avenue Management LLC is an investment advisor
registered under Section 203 of the Investment Advisors Act
of 1940 and has sole voting and investment authority over all
shares beneficially owned. Met Investors
Series Trust-Third
Avenue Small Cap Portfolio, an investment company registered
under the Investment Company
|
-4-
|
|
|
Act of 1940, has the right to
receive dividends from, and the proceeds from the sale of,
1,163,840 of the shares reported by Third Avenue Management LLC.
Third Avenue Small Cap Value Fund, an investment company
registered under the Investment Company Act of 1940, has the
right to receive dividends from, and the proceeds from the sale
of, 1,708,906 of the shares reported by Third Avenue Management
LLC. Third Avenue Small Cap Fund UCITS, an umbrella
open-ended investment company authorized by the Irish Financial
Services Regulatory Authority under the European Communities
(Undertakings for Collective Investment in Transferable
Securities) Regulations, has the right to receive dividends
from, and the proceeds from the sale of, 950 of the shares
reported by Third Avenue Management LLC. Touchstone Variable
Series Trust Touchstone Third Avenue Value
Fund, an investment company registered under the Investment
Company Act of 1940, has the right to receive dividends from,
and the proceeds from the sale of, 64,187 of the shares reported
by Third Avenue Management LLC. The address of Third Avenue
Management LLC is 622 Third Avenue, 32nd Floor, New York, NY
10017.
|
|
|
(4)
|
Pursuant to a Schedule 13G/A
filed on February 5, 2010, consists of shares beneficially
owned, as of December 31, 2009, by The Vanguard Group, Inc.
The Vanguard Group, Inc. possesses sole voting power over
61,270 shares and investment authority over all
2,918,614 shares. The Vanguard Group, Inc. is an investment
advisor registered under Section 203 of the Investment Advisors
Act of 1940. Vanguard Fidelity Trust Company, a wholly
owned subsidiary of The Vanguard Group, Inc., is the beneficial
owner, and directs the voting of, 61,270 shares as a result
of its serving as investment manager of collective trust
accounts. The address of The Vanguard Group, Inc. is 100
Vanguard Boulevard, Malvern, PA 19355.
|
|
(5)
|
Pursuant to a Schedule 13G
filed on January 29, 2010, consists of shares beneficially
owned, as of December 31, 2009, by BlackRock, Inc.
BlackRock, Inc. is a parent holding company. BlackRock, Inc. has
sole voting and investment authority over all
2,407,167 shares. BlackRock Institutional
Trust Company, N.A., BlackRock Fund Advisors,
BlackRock Asset Management Australia Limited, BlackRock
Investment Management, LLC, BlackRock International Ltd. are
subsidiaries of BlackRock, Inc. that have acquired the shares
reported by BlackRock, Inc. The address of BlackRock, Inc. is 40
East 52nd Street, New York, NY 10022.
|
|
(6)
|
Consists of approximately
4,409 shares held by Mr. Glatfelter in the
Companys 401(k) Plan and 140,000 shares held in trust
as co-trustee with PNC Bank as to which Mr. Glatfelter
disclaims beneficial ownership.
|
|
(7)
|
Consists of approximately
1,758 shares held by Mr. Jacunski through the
Companys 401(k) Plan.
|
|
(8)
|
Consists of approximately
57 shares held by Mr. Mukherjee through the
Companys 401(k) Plan.
|
|
(9)
|
Consists of approximately
4,747 shares held by Mr. Parrini through the
Companys 401(k) Plan.
|
|
|
(10)
|
Consists of outstanding options to
purchase 917,867 shares, which were exercisable as of
March 11, 2010 or within 60 days from such date,
17,046 shares held by executive officers through the
Companys 401(k) Plan, 232,279 shares held directly
and 140,000 shares held in trust pursuant to which George
H. Glatfelter II acts as co-trustee with PNC Bank as to
which Mr. Glatfelter disclaims beneficial ownership. See
Notes 6 through 9.
|
-5-
EQUITY
COMPENSATION PLAN INFORMATION
The following table provides certain information as of
December 31, 2009 regarding the Companys equity
compensation plans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
(b)
|
|
(c)
|
|
|
|
|
|
|
Number of securities
|
|
|
|
|
|
|
remaining available for
|
|
|
Number of securities
|
|
|
|
future issuance under
|
|
|
to be issued upon
|
|
Weighted-average
|
|
equity compensation
|
|
|
exercise of
|
|
exercise price of
|
|
plans (excluding
|
|
|
outstanding options,
|
|
outstanding options,
|
|
securities reflected in
|
|
|
warrants and rights
|
|
warrants and rights
|
|
column (a))
|
Plan Category
|
|
(1)
|
|
(2)
|
|
(3)
|
|
|
Equity compensation plans approved by security holders
|
|
|
2,326,057
|
|
|
$
|
12.32
|
|
|
|
3,141,047
|
|
Equity compensation plans not approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,326,057
|
|
|
$
|
12.32
|
|
|
|
3,141,047
|
|
|
|
|
(1)
|
Includes 453,050 non-qualified stock options, 564,037 restricted
stock units (RSUs) and 1,762,020 stock-only stock appreciation
rights (SOSARs).
|
|
(2)
|
Weighted average exercise price is based on outstanding
non-qualified stock options and SOSAR prices only.
|
|
(3)
|
Represents the securities remaining available for issuance under
the Amended and Restated Long-Term Incentive Plan.
|
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the
Companys Directors and executive officers, and persons who
own more than ten percent of a registered class of the
Companys equity securities (10% Holders), to
file reports of holdings and transactions in the Companys
common stock with the SEC and the New York Stock Exchange (the
NYSE). Based on the Companys review of such
reports (and amendments thereto), the Company believes that, in
2009, its Directors, executive officers and 10% Holders filed
all required reports of holdings and transactions in the
Companys common stock with the SEC and the NYSE. George H.
Glatfelter II, Chairman and Chief Executive Officer of the
Company, is a co-trustee of the Irrevocable Trust of George H.
Glatfelter dated October 19, 1976 (the 1976
Trust) and the indirect beneficial owner of shares of
Company common stock held by the 1976 Trust. In 2008, the other
co-trustee of the 1976 Trust approved sales of the Company
common stock in a series of six transactions without the
knowledge of Mr. Glatfelter. Mr. Glatfelter filed a
Form 4 in December 2009 when he was informed of the sales.
-6-
PROPOSAL 1:
ELECTION OF DIRECTORS
At the Annual Meeting, the Companys shareholders will vote
to fill six Director positions, each for one-year terms expiring
on the date of the Companys 2011 Annual Meeting of
Shareholders and until their respective successors are elected
and qualified. The Board proposes that Kathleen A. Dahlberg,
George H. Glatfelter II, Richard C. Ill, Ronald J. Naples,
Richard L. Smoot and Lee C. Stewart, who are currently serving
as Directors of the Company, be re-elected as Directors for
terms expiring in 2011. The nominees have consented to serve if
elected to the Board.
If a nominee is unable to serve as a Director at the time of the
Meeting, an event that the Board does not anticipate, the
persons named in the accompanying proxy card will vote for such
substitute nominee as may be designated by the Board, unless the
Board reduces the number of Directors accordingly.
Board of
Directors
The following table sets forth information as to the nominees
and the other persons who are to continue as Directors of the
Company after the 2010 Annual Meeting of Shareholders. The
information included in the table was obtained in part from the
respective nominees and in part from the records of the Company.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year First
|
|
|
|
|
|
|
Elected
|
|
|
|
Age
|
|
|
Director
|
|
|
|
|
PROPOSAL 1: NOMINEES TO BE ELECTED FOR
TERMS EXPIRING IN 2011
|
|
|
|
|
|
|
|
|
|
The Board believes that the election of each of the above
nominees is in the best interests of the Company and its
shareholders and unanimously recommends a vote FOR the
proposal.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kathleen A. Dahlberg
Ms. Dahlberg has been the Chief Executive Officer of 2Unify LLC, a communications company, since 2006. Ms. Dahlberg has been the President and Chief Executive Officer of Open Vision Partners and a business consultant on the application of new technologies for business improvement and process change since September 2001. Ms. Dahlberg has held Vice-Presidential positions with BP Amoco, Viacom International, McDonalds Corporation, Grand Metropolitan plc and American Broadcasting. Additionally, she has been President of Galileo Group International Services. Ms. Dahlberg is also a Director of Theragenics Corporation and has more than 10 years of experience as a director of public companies. In addition, Ms. Dahlberg is a regular author and speaker on topics of business technology risk management, benefit realization and governance for profitability.
|
|
|
57
|
|
|
|
2001
|
|
|
|
|
|
|
|
|
|
|
George H. Glatfelter II
Mr. Glatfelter has been Chairman since April 2000 and the Companys Chief Executive Officer since June 1998. Mr. Glatfelter served as the President of the Company from June 1998 to February 2001 and as its Senior Vice President from September 1995 to June 1998. Mr. Glatfelter has also served as Chairman and President of Glatfelter Pulpwood Company, a wholly-owned subsidiary of the Company since 2000. Mr. Glatfelter has more than 15 years of experience as a director of public companies. He has held positions with the Company in human resources, maintenance and engineering, operations, planning, and sales and marketing. Mr. Glatfelter has been a director of Met-Pro Corp. since May 2004. He has been a director at American Forest & Paper Association Inc. since January 2010. He also serves as a director of The National Council of Air and Stream Improvement the Alliance For the Chesapeake Bay and is a Trustee of York College of Pennsylvania. Mr. Glatfelter has led a transformation of the Company focused on creating ever-increasing levels of value for customers and shareholders.
|
|
|
58
|
|
|
|
1992
|
|
|
|
|
|
|
|
|
|
|
Richard C. Ill
Mr. Ill has been the Chairman of Triumph Group, Inc., a public, international aviation services company since 2009 and President and Chief Executive Officer of Triumph Group since 1993. Previously, Mr. Ill held a variety of senior executive positions with Alco Standard Corporation until he, ultimately, founded what is now the Triumph Group. Mr. Ill has over 45 years of public company experience both in management, manufacturing and operations. Mr. Ill is also a director of Airgas, Inc. Mr. Ill has 14 years of experience as a director of public companies.
|
|
|
66
|
|
|
|
2004
|
|
|
|
|
|
|
|
|
|
|
Ronald J. Naples
Mr. Naples currently serves as Chairman of the Pennsylvania Stimulus Oversight Commission and Chief Accountability Officer for the Commonwealth of Pennsylvania, having been appointed to that position by the Governor of Pennsylvania in April 2009. Until May 2009, Mr. Naples was the Chairman of Quaker Chemical Corporation, a public, specialty chemical company serving the metalworking and manufacturing industries worldwide, a title that he held since 1997 and served as Quakers Chief Executive Officer from 1995 to 2008. Previously, Mr. Naples was Chairman and Chief Executive of Hunt Manufacturing Company, a public company, from 1981 to 1995. He is a former White House Fellow and served in the Ford Administration as Assistant to the Counselor to the President for Economic Affairs, and as a Special Assistant to the head of the Federal Energy Administration. Mr. Naples also serves as a director of Quaker Chemical Company and Glenmede Trust Company and is past Chairman of the Federal Reserve Bank of Philadelphia. Overall, Mr. Naples has over 28 years of experience as a director of public companies.
|
|
|
64
|
|
|
|
2000
|
|
|
|
|
|
|
|
|
|
|
Richard L. Smoot
Mr. Smoot retired in 2002 from the position of Regional Chairman, PNC Bank, Philadelphia/South Jersey markets a position he held since 2001. Previously, Mr. Smoot served as President and Chief Executive Officer of PNC Bank in Philadelphia and Southern New Jersey, and its predecessor, Provident National Bank. He also served as Executive Vice President responsible for Operations and Data Processing for the Bank from 1987 to 1991. Before joining PNC Bank, Mr. Smoot served as First Vice President and Chief Operating Officer of the Federal Reserve Bank of Philadelphia. Mr. Smoot also serves as a director of Aqua America Corporation and during his career has served in a variety of leadership positions for a host of governmental, for- and non-profit agencies and firms in both the public and private sector. Overall, Mr. Smoot has over 15 years of experience as a director of public companies.
|
|
|
69
|
|
|
|
1994
|
|
-7-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year First
|
|
|
|
|
|
|
Elected
|
|
|
|
Age
|
|
|
Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lee C. Stewart
Mr. Stewart is a private financial consultant with over 25 years experience as an investment banker. Previously, Mr. Stewart was a Vice President at Union Carbide Corporation from 1996 to 2001 where he was responsible for various Treasury and Finance functions, and formerly, from 2001 to 2002, was CFO of Foamex International, Inc. Mr. Stewart is also a director of AEP Industries, Inc., a NASDAQ-listed chemical company, a Director of Marsulex, Inc., a Toronto-listed chemical company and a director of ITC Holdings Corp. a NYSE-listed electricity transmission company Overall, Mr. Stewart has over 37 years of experience as a director of public companies.
|
|
|
61
|
|
|
|
2002
|
|
|
|
|
|
|
|
|
|
|
Directors continuing for terms expiring in 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nicholas DeBenedictis
Mr. DeBenedictis has been the Chairman, Chief Executive Officer and director of Aqua America, Inc., a publicly-traded water company, since May 1993. Mr. DeBenedictis also serves as a director of Exelon Corporation. Prior to joining Aqua America, Mr. DeBenedictis was Senior Vice President of Corporate and Public Affairs for PECO Energy, a $4 billion nuclear utility where he was responsible for government relations, economic development and environmental policies, plus implementation of the utilitys public policy positions. Mr. DeBenedictis also served in two cabinet positions in Pennsylvania government: Secretary of the Department of Environmental Resources and Director of the Office of Economic Development. Prior to that, he served in senior level positions with the U.S. Environmental Protection Agency. Mr. DeBenedictis has more than 18 years of experience as a director of public companies.
|
|
|
64
|
|
|
|
1995
|
|
|
|
|
|
|
|
|
|
|
J. Robert Hall
Mr. Hall has been the Chief Executive Officer of Ardale Enterprises LLC, a private company specializing in acquisition related activities in the food and consumer products industry since 1998. From September 2007 to November 2007, he also served as Chief Executive Officer of Castro Cheese Company Inc. Prior to joining Ardale, Mr. Hall spent over 20 years in the food industry holding various positions with Nabisco, Kraft and Nestle. While at Nabisco, he was President of Nabiscos Specialty Products Company in the United States and President of Christie Brown & Company, Ltd., the maker of Nabisco cookies and crackers in Canada. Mr. Hall has also been President of Lenox Brands. Mr. Hall has more than 10 years of experience as a director of public companies and significant experience with acquisitions & divestitures, marketing, sales, operations, strategic planning, new product development and research & development.
|
|
|
57
|
|
|
|
2002
|
|
PROPOSAL 2:
APPROVE THE AMENDED AND RESTATED 2005 MANAGEMENT INCENTIVE PLAN
FOR PURPOSES OF COMPLYING WITH SECTION 162(m) OF THE
INTERNAL REVENUE CODE
The Compensation Committee approved and recommended to the
Board, and the Board adopted and recommends that you approve the
Companys Amended and Restated 2005 Management Incentive
Plan (the Plan). The Company is seeking shareholder
approval of the Plan for purposes of complying with
Section 162(m) of the Code. Generally, Section 162(m)
of the Code does not allow publicly held companies like the
Company to take a tax deduction for compensation that is paid to
the CEO and the four most highly compensated executive officers
other than the CEO to the extent such compensation exceeds one
million dollars per officer in any year. However, awards which
are made by a publicly traded company pursuant to a
performance-based compensation plan that is approved by its
shareholders at least every five years will not be subject to
the deduction limit. In order to satisfy this requirement, the
Company is submitting the Plan for shareholder approval at this
Annual Meeting. The Plan was last approved by the shareholders
at the annual meeting held in 2005.
The Board believes that the Plan provides incentives to key
employees with significant responsibility for the success and
growth of the Company. The Plan is designed to: (1) promote
the attainment of the Companys significant business
objectives, (2) encourage and reward management teamwork
across the entire Company, and (3) assist in the attraction
and retention of employees vital to the Companys long-term
success. Please see pages 20-21 of this proxy statement for
a description of the awards made under the Plan to the Named
Executive Officers for 2009.
The Plan is set forth in full at Appendix A to this Proxy
Statement. A summary of the Plan is set forth below.
How is the
Plan administered?
The Plan is administered by the Compensation Committee and all
acts and authority of the Compensation Committee under the Plan
are subject to the provisions of its charter and such other
authority as may be delegated to the Compensation Committee by
the Board. The Compensation Committee has full authority and
discretion to determine eligibility for participation in the
Plan, make awards under the Plan, establish the terms and
conditions of such awards (including the performance goals and
performance measures to be utilized) and determine whether such
performance goals applicable to any performance measures for any
awards have been achieved. The Compensation Committee is
authorized to interpret the Plan, to adopt administrative rules,
regulations, procedures and guidelines for the Plan, and may
correct any defect, supply any omission or reconcile any
inconsistency or conflict in the Plan or in any award under it.
The Compensation Committee may, with respect to participants who
are not subject to Section 162(m) of the Code, delegate
-8-
such power and authority under the Plan to the Companys
officers, as it deems necessary or appropriate.
The Compensation Committee has the authority and discretion to
determine the extent to which awards under the Plan are
structured to conform to the requirements applicable to
performance-based compensation set forth in Section 162(m)
of the Code and the regulations issued thereunder.
Who is
eligible to participate in the Plan?
Participation in the Plan is limited to approximately 30
officers and key employees of the Company and its subsidiaries
who have significant responsibility for corporate, business
segment or facility-based operations. Each individual
participant must be nominated by management and approved by the
Compensation Committee for participation in the Plan.
What types of
awards are made under the Plan?
The Compensation Committee (or with respect to certain
executives, the CEO) may, in its discretion, make cash awards to
eligible participants under the Plan. The amount of a
participants award may be based on a percentage of such
participants salary or such other methods as may be
established by the Compensation Committee. The fact
and/or terms
of awards need not be uniform among all participants, or classes
or categories of participants. No award paid to a participant
for a particular performance period may exceed $2,000,000. A
performance period generally is a calendar year but can be
another period, as selected by the Compensation Committee, for
which performance is being measured.
What
performance measures are used?
For awards that are intended to be performance-based
compensation under Section 162(m) of the Code, each award
will be conditioned upon the Companys achievement of one
or more performance goal(s) with respect to one or more of the
following performance measures as established by the
Compensation Committee: cash flow; cash flow from operations;
earnings (including earnings before interest, taxes,
depreciation, and amortization, and pension income or expense,
or some variation thereof); earnings per share, diluted or
basic; earnings per share from continuing operations; net asset
turnover; inventory turnover; capital expenditures; debt; net
debt; debt reduction; working capital; return on investment;
return on sales; net or gross sales; market share; economic
value added; cost of capital; change in assets; expense
reduction levels; productivity; delivery performance; safety
record; stock price; return on equity; total shareholder return;
return on capital; return on assets or net assets; revenue;
income or net income; operating income or operating net income;
operating profit or net operating profit; gross margin,
operating margin or profit margin; and completion of
acquisitions, sales of significant assets, business expansion,
product diversification and other non-financial operating and
management performance objectives.
To the extent consistent with Section 162(m) of the Code,
the Compensation Committee may determine that certain
adjustments shall apply, in whole or in part, in such manner as
specified by the Compensation Committee, to exclude the effect
of any of the following events that occur during a performance
period: the impairment of tangible or intangible assets;
litigation or claim judgments or settlements; the effect of
changes in tax law, accounting standards or principles or other
such laws or provisions affecting reported results; accruals for
reorganization and restructuring programs, including but not
limited to reductions in force and early retirement incentives;
currency fluctuations; and any extraordinary, unusual,
infrequent or non-recurring items, including, but not limited
to, such items described in managements discussion and
analysis of financial condition and results of operations or the
financial statements and notes thereto appearing in the
Companys annual report to shareowners for the applicable
year.
Performance measures may be determined either individually,
alternatively or in any combination, applied to either the
Company as a whole or to a business unit or subsidiary entity
thereof, either individually, alternatively or in any
combination, and measured over a period of time including any
portion of a year, annually or cumulatively over a period of
years, on an absolute basis or relative to a pre-established
target, to previous years results or to a designated
comparison group, in each case as specified by the Compensation
Committee.
No later than ninety (90) days after the beginning of an
applicable performance period, the Compensation Committee will
establish in writing the performance goals, performance measures
and the method(s) for computing the amount of compensation which
will be payable under the Plan to each participant if the
performance goals established by the Compensation Committee are
attained; provided, that for a performance period of less than
one year, the Compensation Committee will take any action prior
to the lapse of 25% of the performance period. In addition to
establishing minimum performance goals below which no
compensation will be paid with respect to an award, the
Compensation Committee, in its discretion, may create a
performance schedule under which an amount less than or more
than the target award may be paid so long as the performance
goals have been achieved.
The Compensation Committee, in its discretion, may also
establish such additional restrictions or conditions that must
be satisfied as a condition precedent to the payment of all or a
portion of any awards. Such additional restrictions and
conditions may include the receipt by a participant of a
specified annual performance rating, continued employment by the
participant until a date that may be beyond the end of a
performance period, or the achievement of specified performance
goals by the Company, business unit or participant. The
Compensation Committee may, in its discretion, also reduce the
amount of any award if it concludes that such reduction is
necessary or appropriate based on: (i) an evaluation of a
participants performance; (ii) comparisons with
compensation received by other similarly
-9-
situated individuals working within the Companys industry;
(iii) the Companys financial results and conditions;
or (iv) other factors or conditions that the Compensation
Committee deems relevant. The Compensation Committee may not use
its discretionary authority to increase any award that is
intended to be performance-based compensation under
Section 162(m) of the Code.
When are
awards paid?
Payment of awards is made as promptly as practicable (but in no
event later than two and one-half months after the close of the
fiscal year in which the performance period ends) after the
Companys certified public accountants have completed their
examination of the Companys year-end consolidated
financial statements and the Compensation Committee has
certified in writing the extent to which the applicable
performance goals and other material terms have been achieved.
If an award is subject to a vesting requirement whereby payment
is contingent on the participants continued employment
beyond the end of a performance period, payment will be made as
soon as practicable following the participants
satisfaction of the vesting requirement.
Unless otherwise determined by the Compensation Committee and,
except in the case of death or disability as discussed in the
paragraph below, participants who have terminated employment
with the Company prior to the end of the performance period for
any reason other than death, retirement, or total and permanent
disability, will forfeit all rights to payment under any awards
then outstanding under the Plan and will not be entitled to any
cash payment for such period.
Unless otherwise determined by the Compensation Committee, if a
participants employment with the Company terminates during
a performance period by reason of death, retirement or total and
permanent disability, the participants award will be
pro-rated to reflect the period of service prior to
his/her
death, retirement or total or permanent disability, as the case
may be, subject to the Compensation Committees
certification that the applicable performance goals and
performance measures have been met.
Are awards
transferable?
No. A participants rights under the Plan may not be
assigned, pledged or otherwise transferred except, in the event
of the participants death, to the participants
designated beneficiary or by the laws of descent and
distribution.
Can the Plan
be amended or terminated?
Yes. Although the Company intends to continue to use the Plan
from year to year, the Company reserves the right, by action of
the Board or the Compensation Committee, to amend, modify or
terminate the Plan, at any time; provided, that no such
amendment, modification or termination will, without the
participants consent, materially adversely affect the
rights of such participant to any payment that has been
determined by the Compensation Committee to be due and owing to
the participant under the Plan, but not yet paid.
Notwithstanding the foregoing or any provision of the Plan to
the contrary, the Compensation Committee may at any time
(without the consent of participants) modify, amend, or
terminate any or all of the provisions of the Plan to the extent
necessary to conform the provisions of the Plan with
Section 409A of the Code.
What are the
Federal income tax consequences to participants?
When any part of an award is paid in cash to a participant, the
participant will realize compensation which is taxable to the
participant as ordinary income in the amount of the cash paid.
The Company will generally be entitled to a deduction in the
same amount of the award and at the same time as the participant
recognizes ordinary income.
Are there any
limitations on the Companys deductions?
With certain exceptions, Section 162(m) of the Code limits
the Companys deduction for compensation in excess of one
million dollars paid to the Companys CEO and its four
other highest-paid executive officers other than the CEO.
Compensation paid to such covered employees is not subject to
the deduction limitation if it is considered qualified
performance-based compensation within the meaning of
Section 162(m) of the Code. If the Companys
shareholders approve the Plan at the Annual Meeting, the Company
intends that performance awards (intended to be treated as
qualified performance-based compensation as defined in the Code)
granted to covered employees under the Plan will satisfy the
requirements of qualified performance-based compensation and
therefore the Company will be entitled to a deduction with
respect to the payment of such awards. However, with respect to
awards that are not intended to be treated as qualified
performance-based compensation as defined in the Code, the
deduction that the Company might otherwise receive with respect
to such awards to covered employees may be disallowed.
The Board believes that approval by shareholders of the
Amended and Restated 2005 Management Incentive Plan for purposes
of complying with Section 162(m) of the Internal Revenue
Code is in the best interests of the Company and its
shareholders and unanimously recommends a vote FOR the
proposal.
-10-
PROPOSAL 3:
RATIFICATION OF APPOINTMENT OF DELOITTE & TOUCHE
LLP
The Audit Committee of the Board of Directors has appointed
Deloitte & Touche LLP (Deloitte) as the
Companys independent registered public accounting firm for
the fiscal year 2010, subject to ratification by the
Companys shareholders. Deloitte audited the Companys
consolidated financial statements for the fiscal year ended
December 31, 2009.
A Deloitte representative is expected to attend the Annual
Meeting, will be given the opportunity to make a statement if he
or she chooses to do so, and will be available to respond to
appropriate shareholder questions.
What did the Company pay its independent registered public
accounting firm in 2009 and 2008?
For the years ended December 31, 2009 and 2008, the
aggregate fees billed to the Company by Deloitte were as follows:
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2009
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2008
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Audit Fees(1)
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$
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1,632,741
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$
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1,900,750
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Audit Related Fees(2)
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8,577
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Tax Fees(3)
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359,500
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412,542
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Total Fees
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$
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2,000,818
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$
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2.313,292
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(1)
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Audit Fees For professional services performed by
Deloitte for the audit of the Companys annual consolidated
financial statements, review of consolidated financial
statements included in the Companys Quarterly Reports on
Form 10-Q,
Sarbanes-Oxley Section 404 attestation services, due
diligence services and services that are normally provided in
connection with statutory and regulatory filings or engagements.
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(2)
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Audit-Related Fees For assurance and related
services performed by Deloitte that are reasonably related to
the performance of the audit or review of the Companys
consolidated financial statements and are not reported under
footnote (1) above.
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(3)
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Tax Fees For professional services performed by
Deloitte with respect to tax compliance, tax advice and tax
planning. This includes tax planning and consultations; tax
audit assistance; and tax work stemming from
Audit-Related items.
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All services rendered for the Company by Deloitte in 2009 were
permissible under applicable laws and regulations, and were
pre-approved by the Audit Committee. The Audit Committees
Audit and Non-Audit Services Pre-Approval Policy provides for
the pre-approval of audit and non-audit services performed by
the Companys independent registered public accounting
firm. Under the policy, the Audit Committee may pre-approve
specific services, including fee levels, by the independent
registered public accounting firm in a designated category
(audit, audit-related, tax services and all other services). The
Audit Committee may delegate, in writing, this authority to one
or more of its members, provided that the member or members to
whom such authority is delegated must report their decisions to
the Audit Committee at its next scheduled meeting.
The Board believes that the ratification of Deloitte as the
Companys independent registered public accounting firm for
the year ending December 31, 2010 is in the best interest
of the Company and the shareholders and unanimously recommends a
vote FOR the proposal.
CORPORATE
GOVERNANCE AND BOARD OF DIRECTORS
The Board of Directors and management of the Company are
dedicated to effective corporate governance. The Board has
adopted Corporate Governance Principles to provide a framework
for governance of the Company. These Corporate Governance
Principles are set forth in full on the Companys website
at
www.glatfelter.com/about_us/corporate_governance/principles.aspx
and available in print upon request directed to the Secretary of
the Company at 96 South George Street, Suite 500, York, PA
17401-1434.
What is the composition of the Board?
The Board currently consists of eight members. Each year, the
Board elects one of its members to serve as Chairman. The Board
reviews its governance structure and the qualifications of each
Director and determines which Director is best qualified to
chair the Board. The Board believes that the Company and its
shareholders are best served by having a Chairman who has a
wide-ranging, in-depth knowledge of the Companys business
operations and the competitive landscape and who can best
execute the strategic plan approved by the Board. Based on his
extensive experience and knowledge of the Companys
operations, industry, competitive challenges and opportunities,
the Board has determined that, at this time, the Chief Executive
Officer is the Director best qualified to serve in the role of
Chairman. More specifically the Chairman:
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Chairs all meetings of the Board other than executive sessions
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Identifies strategic issues that should be considered for the
Board agenda; and
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Consults with Directors in the development of the schedule,
agenda and materials for all meetings of the Board.
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In addition, the agenda for each Board meeting and the schedule
of meetings is available to all Directors in advance so that any
Director can review and request changes. Moreover, all Directors
have unrestricted access to management at all times and
communicate informally with management on a variety of topics.
The Board believes that shareholders are best served by the
Boards current leadership structure, because the Corporate
Governance Principals and the Companys policies and
procedures provide for an empowered, independent Board and the
full involvement of the independent members of the Board in the
Boards operations and its decision making.
In the Companys Governance Principles, the Board has
adopted the NYSE standards for determining the independence of
Directors, which require that a Director not have a material
relationship with the Company.
On an annual basis, each member of the Board is required to
complete a questionnaire which is designed, in part, to provide
information to assist the Board in determining
-11-
whether the director is independent under NYSE rules and our
Corporate Governance Principles. In addition, each Director or
nominee for Director has an affirmative duty to disclose to the
Nominating and Corporate Governance Committee relationships
between and among that director (or an immediate family member),
the Company,
and/or the
management of the Company.
The Board has determined the following Directors are independent
and do not have any material relationship with the Company:
Ms. Dahlberg and Messrs. DeBenedictis, Hall, Ill,
Naples, Smoot and Stewart. The Board determined that
Mr. Glatfelter has a material relationship with the Company
because he is the Chief Executive Officer of the Company. Thus,
Mr. Glatfelter is deemed not to be an independent Director
by NYSE standards and the Companys Governance Principles.
What committees has the Board established?
The Companys Board of Directors has four standing
committees: the Audit Committee, the Compensation Committee, the
Finance Committee, and the Nominating and Corporate Governance
Committee. The Board appoints the members of all of these
standing committees and their Chairpersons at its organizational
meeting held following the Companys Annual Meeting.
The Board has adopted a written charter for each of its standing
committees, all of which are posted on the Companys
corporate website at
www.glatfelter.com/about_us/corporate_governance/committees.aspx,
and available in print upon request directed to the Secretary of
the Company at 96 South George Street, Suite 500, York, PA
17401-1434.
Audit Committee. The Audit Committee, established
in accordance with Section 3(a)(58)(A) of the Exchange Act,
currently consists of four Directors: Messrs. Hall (Chair),
DeBenedictis, Ill and Naples. In the opinion of the Board, all
four Audit Committee members meet the Director independence
requirements set forth in the listing standards of the NYSE and
the applicable rules and regulations of the SEC in effect on the
date of this proxy statement. The Board has determined that,
based on their experience, Messrs. DeBenedictis, Hall, Ill
and Naples are audit committee financial experts, as that term
is defined in the applicable SEC regulations, and that all
members of the Audit Committee are financially literate within
the meaning of the NYSE listing standards. The Audit Committee
held 8 meetings during 2009.
In accordance with its Board-approved charter, the purpose of
the Audit Committee is to assist the Board in its oversight of
(i) the quality and integrity of the accounting, auditing,
and financial reporting practices of the Company, (ii) the
compliance by the Company, its directors and officers with
applicable laws and regulations and its Code of Business
Conduct, (iii) the independent auditors
qualifications and independence, and (iv) the performance
of the Companys internal audit function and independent
auditors. The Audit Committee:
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is directly responsible for the appointment, replacement, if
necessary, oversight, and evaluation of the Companys
independent auditors, which report directly to it, which
appointment is submitted to the Companys shareholders for
ratification at the Annual Meeting each year;
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has the sole responsibility for pre-approving all audit and
non-audit services provided by the Companys independent
auditors and fees related thereto pursuant to its Pre-Approval
policy;
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reviews and recommends for approval by the Board the
Companys audited consolidated financial statements for
inclusion in its annual reports on
Form 10-K,
and reviews with management the financial information contained
in the Companys annual reports on
Form 10-K
and quarterly reports on
Form 10-Q,
and managements discussion and analysis of financial
conditions and results of operations contained in the periodic
reports, and discusses them with management and the independent
auditors prior to filing with the SEC;
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reviews with management and the Companys independent
registered public accounting firm the Companys earnings
press releases prior to release to the public;
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discusses any significant changes to the Companys
accounting policies;
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reviews the quality and adequacy of the Companys
accounting systems, disclosure controls and procedures and
internal controls over financial reporting;
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provides guidance and oversight to the internal audit activities
of the Company, including reviewing the organization, plans and
results of such activities, and providing the internal auditor
full access to the Committee (and the Board) to report on any
and all appropriate matters;
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monitors compliance with legal prohibitions on loans to
Directors and executive officers of the Company;
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reviews and assesses the adequacy of the Companys hiring
guidelines for employees or former employees of the independent
registered public accounting firm;
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provides guidance to and oversight of the compliance program of
the Company, including the establishment and maintenance of
procedures for the receipt, retention and treatment of
complaints received by the Company regarding accounting,
internal accounting controls or auditing matters, and the
confidential, anonymous submission by
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employees of concerns regarding questionable accounting or
auditing matters, in addition to other compliance
matters; and
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participates in the annual performance evaluation of the
Director of Internal Audit.
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The Audit Committee has the authority to retain special legal,
accounting, or other experts as it deems necessary to carry out
its duties.
Compensation Committee. The Compensation Committee
currently consists of five Directors: Mr. Naples, (Chair),
Ms. Dahlberg, and Messrs. DeBenedictis, Smoot and
Stewart. In the opinion of the Board, all five Compensation
Committee members meet the Director independence requirements
set forth in the NYSE listing standards in effect on the date of
this proxy statement. The Compensation Committee held 7 meetings
during 2009.
In accordance with its Board-approved charter, the Compensation
Committee is responsible for discharging the Boards duties
related to compensation of the Companys executives and
also reviews, recommends for approval by the Board and oversees
the Companys management incentive and equity-based
incentive compensation plans, defined benefit and contribution
plans, and other welfare benefit plans. In addition to, or in
furtherance of, the Compensation Committees functions
described above, the Compensation Committee:
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recommends to the Board an executive compensation policy that is
designed to support overall business strategies and objectives,
attract and retain key executives, link compensation with
business objectives and organizational performance, align
executives interests with those of the Companys
shareholders and provide reasonable and competitive compensation
opportunities;
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reviews and approves periodically a general compensation policy
and salary structure for executives and other key employees of
the Company and its subsidiaries, which considers business and
financial objectives, industry and labor market best practices
and such other information as it may deem appropriate;
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annually reviews and recommends to the independent members of
the Board corporate goals and objectives relevant to the
compensation of the Chief Executive Officer (the
CEO), and manages and executes the evaluation
process conducted by the independent members of the Board of the
CEO in light of these goals and objectives;
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reviews and recommends to the independent members of the Board
the CEOs compensation, including salary, bonus, and other
incentive and equity-based compensation, based on the evaluation
of the CEOs performance;
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reviews and approves annually, with the CEOs involvement,
the salaries and equity-based grants, as well as discretionary
cash awards, for the Companys non-CEO executives;
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establishes individual target award levels for incentive
compensation payments to the Companys non-CEO executives,
in relation to Board-established financial target(s) or other
performance measures for such incentive compensation, recommends
to the Board whether such financial target(s) or other
performance measures have been achieved, and approves the
payment of incentive compensation upon Board determination that
such targets or measures have been met;
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reviews the Compensation Discussion & Analysis and
recommends to the Board that the Compensation
Discussion & Analysis be included in the proxy
statement;
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reviews and recommends to the Board any modifications of the
non-employee Directors compensation program; and
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reviews and recommends for approval by the Board new incentive
compensation plans or changes and amendments to existing plans.
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The Compensation Committee has the authority to engage
independent compensation consultants, legal counsel or advisors,
as it may deem appropriate in its sole discretion, and to
approve related fees and retention terms of such consultants,
counsel, or advisors, and routinely holds executive sessions
without management.
The Committee has engaged Compensation Strategies, Inc.,
(Consultant) an independent executive compensation
consulting firm, to provide advice and assistance to the
Committee and to the Companys management in the area of
executive and non-employee Directors compensation for the
Company. The Consultant reports directly to the Committee but
has been authorized by the Committee to work with certain
executive officers of the Company as well as other employees in
the Companys human resources, legal, and finance
departments. The Consultant conducts regular reviews of total
compensation of the Companys executive group, based on the
process described in the Compensation Discussion &
Analysis contained elsewhere in this proxy statement, for review
by management in determining the appropriate levels of
compensation for each executive.
The Consultant also conducts regular reviews of total
compensation of the Companys non-employee Directors and
assists the Committee in the development of recommended changes
in such compensation for approval by the Board of Directors. The
Consultant also provides advice to the Committee and management
with respect to other executive and Board compensation issues
that arise throughout the year. During 2009, the scope of the
Consultants assignments included a pay for performance
analysis of the Companys
-13-
bonus pay versus that of its peer group, advice on the design of
the MIP and long term incentive programs for 2009 and for 2010,
as discussed in the CD&A; and IRS Section 409A reviews
of the Companys benefit plans.
The Chair of the Compensation Committee is responsible for
leadership of the Committee and development of the meeting
agendas. The Committee may form subcommittees and delegate
authority to them, as it deems appropriate. The meetings of the
Compensation Committee are regularly attended by the CEO and the
Committees independent compensation consultant, but the
Committee usually meets in executive session at each meeting.
The CEO performs performance assessments and compensation
recommendations for each executive officer of the Company (other
than himself) on an annual basis. The Compensation Committee
considers the CEOs recommendations with the assistance of
the Consultant and approves the compensation of the executive
officers (other than the CEO). In the case of the CEO, the
Committee develops its own recommendation in executive session
without the CEO, or any other member of management, present and
then provides this recommendation to the independent members of
the Board for approval in executive session. The CEO, the Vice
President of Human Resources & Administration, and the
Vice President, General Counsel & Secretary generally
attend, and the Senior Vice President & Chief
Financial Officer occasionally attends, Compensation Committee
meetings but none are present for executive sessions or any
discussion of their own compensation.
Finance Committee. The Finance Committee currently
consists of four Directors: Mr. Ill, (Chair) and
Messrs. Glatfelter, Hall and Stewart. The Finance Committee
provides advice to the Board on the financial policies of the
Company and has oversight over matters of financial significance
to the Company. Specifically, pursuant to its Board-approved
charter, the Finance Committee:
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reviews and recommends for approval by the Board, the
Companys operating and capital budgets;
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reviews the performance of the Companys pension funds and
the Companys recommendations regarding investment
objectives, strategies
and/or
managers as warranted;
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reviews the range of investment vehicles available to
participants under the Companys 401(k) Plan and the
availability of Company stock as an investment option under the
401(k) Plan;
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oversees the development and monitoring execution of the
Companys financial policies, including financial
objectives, strategies and plans and the execution thereof,
exclusive of accounting and other matters, which are within the
oversight responsibilities of the Audit Committee; and
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convenes, at the request of management or the Board, to provide
insight and guidance on other issues of financial significance,
including any long-term financial plans of the Company.
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The Finance Committee held 4 meetings during 2009.
Nominating and Corporate Governance Committee. The
Nominating and Corporate Governance Committee currently consists
of five Directors: Mr. Stewart (Chair), Ms. Dahlberg,
and Messrs. DeBenedictis, Hall and Smoot. In the opinion of
the Board, all five members of the Nominating and Corporate
Governance Committee meet the Director independence requirements
as set forth in the NYSE listing standards in effect on the date
of this proxy statement. Pursuant to its Board-approved charter,
the Nominating and Corporate Governance Committee:
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provides advice to the Board regarding all corporate governance
matters (including the Companys Code of Business Conduct
and the Code of Business Ethics for the CEO and Senior Financial
Officers);
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makes recommendations to the Board regarding the Boards
size and composition and the tenure and retirement age of
Directors;
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reviews the qualifications of candidates for the Board
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recommends to the Board the nominees for election to the Board
at each Annual Meeting;
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considers nominees for the Board recommended by shareholders;
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makes nominations of Directors and officers of the Company;
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nominates persons to fill vacancies on the Board occurring
between annual meetings;
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nominates Directors for committee membership and committee
chairpersons;
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reviews and approves related party transactions; and
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reviews and approves Company contributions to affiliated persons
or entities and Company contributions in excess of $25,000, per
year to any other person or entity.
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The Nominating and Corporate Governance Committee reviews all
Director nominations submitted to the Company, including
individuals recommended by shareholders, Directors or members of
management. When evaluating whether to recommend an individual
for nomination or re-nomination, the Nominating and Corporate
Governance Committee will consider, at a minimum and in
accordance with the Companys Governance Principles, the
nominees independence, availability to serve on the Board
and the candidates knowledge, experience, skills,
expertise, wisdom, integrity, business acumen and understanding
of the Companys business environment.
-14-
In evaluating Director candidates, the Committee considers a
wide variety of qualifications, attributes and other factors and
recognizes that a diversity of viewpoints and practical
experiences can enhance the effectiveness of the Board.
Accordingly, as part of its evaluation of each Director
candidate, the Committee takes into account how that
candidates background, experience, qualifications,
attributes and skills may complement, supplement or duplicate
those of other prospective candidates.
The Committee specifically reviews the qualifications of each
candidate for election or re-election, including for incumbent
Directors, his or her understanding of the Companys
businesses and the environment within which the Company
operates, attendance and participation at meetings, and
independence, including any relationships with the Company.
Prior to nomination, each candidate for election must consent to
stand for election, and each nominee must agree in writing to
abide by the Companys majority voting policy.
After the Committee has completed its evaluation of all
candidates, it presents its recommendation to the Board for
consideration and approval. The Committee also discusses with
the Board any candidates who were submitted to and considered by
the Committee but not recommended for election or re-election as
Directors.
We will report any material change to this procedure in a
quarterly or annual filing with the SEC. In addition, we will
make any changes to this procedure available promptly by posting
that information on the Corporate Governance section of our
website at
www.glatfelter.com/about_us/corporate_governance/default.aspx.
Based on the process described above, the Committee recommended
and the Board determined to nominate each of the incumbent
Directors for re-election at the 2010 Annual Meeting of
Shareholders. The Committee and Board concluded that each of the
incumbent Directors should be nominated for re-election based on
the experience, qualifications, attributes and skills identified
in the biographical information contained under Election
of Directors on pages 7 to 8. The Committee and the
Board assessed these factors in light of the Companys
businesses, which provide a diverse line of specialty papers and
engineered products around the world. In particular, the
Committee and the Board considered the following factors:
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Each nominee has extensive experience guiding large, complex
organizations as executive leaders or board members;
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The nominees experiences relate to and derive from a broad
range of occupations and industries, which provides both
differing viewpoints among the nominees and familiarity with
many diverse markets targeted by the Companys businesses
and environments that can affect the implementation and
execution of the Companys business plans. These include
government and public policy (Mr. DeBenedictis,
Mr. Naples and Mr. Glatfelter), professional services
(Ms. Dahlberg, Mr. Ill, Mr. Naples,
Mr. Smoot, and Mr. Stewart,), public interest
(Mr. Glatfelter, Mr. DeBenedictis and Mr., Naples),
financial services (Mr. Hall, Mr. Stewart and
Mr. Smoot), and manufacturing (Ms. Dahlberg,
Mr. Glatfelter, Mr. Hall, Mr. Ill and
Mr. Naples);
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The nominees experiences include experience with several
business sectors and operational challenges applicable to the
Companys businesses. These areas include consumer goods
(Mr. Hall, Ms. Dahlberg), new product development
(Mr. Glatfelter. Mr. Ill), international operations
(Mr. Glatfelter, Mr. Ill and Mr. Naples),
strategic partnerships (Mr. Ill) and regulated
industries (Mr. DeBenedictis); and
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The nominees have significant substantive expertise in several
areas applicable to service on the Board and its Committees,
including finance and banking (Mr. Hall,
Mr. DeBenedictis, Mr. Naples, Mr. Smoot,
Mr. Stewart), public company accounting and financial
reporting (Mr. DeBenedictis Mr. Hall, Mr. Naples
and Mr. Smoot and Mr. Stewart), strategic planning
(Mr. Hall, Mr. Ill, Mr. Naples.
Mr. DeBenedictis, Mr. Glatfelter , Ms. Dahlberg),
operations management (all the nominees), corporate governance
(Mr. Ill, Mr. Smoot, Mr. Stewart) and risk
management (all of the nominees).
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Any shareholder who wishes to recommend a nominee for election
to the Board should follow the procedures set forth on
page 3 of this proxy statement.
The Committee periodically reviews and oversees orientation
programs for newly elected Directors and continuing education
programs for incumbent Directors. The Committee also reviews
shareholder proposals submitted for presentation at the Annual
Meeting and proposed responses from the Board, and makes
recommendations to the Board concerning Board procedures. The
Nominating and Corporate Governance Committee is charged with
developing and recommending corporate governance principles to
the Board and reviewing these principles for appropriateness and
compliance with SEC and NYSE requirements. The Nominating and
Corporate Governance Committee reviews the senior management
organization and succession plan.
The Nominating and Corporate Governance Committee has the
authority to retain Director search consultants, outside counsel
or other experts as it deems necessary to carry out its duties,
and the Company makes funds available to the Committee for such
retention. No third party Director search firms were engaged in
2009. The Nominating and Corporate Governance Committee held 3
meetings during 2009.
-15-
How may a shareholder communicate with the Companys
Board or the non-management Directors of the Company?
A shareholder may address written correspondence to the Board or
any individual Director (whether management or non-management),
to Mr. Thomas G. Jackson, Vice President General Counsel
and Secretary, P. H. Glatfelter Company, 96 South George Street,
Suite 500, York, PA
17401-1434.
The Companys Board has approved a process whereby the
Secretary of the Company will receive, review and, as
appropriate, forward any communications which are addressed to
the Board or a Director to the Board or named Director or the
Chair of the Committee responsible for the matter addressed in
the communication. All communications that relate to concerns
regarding accounting, internal controls or auditing matters will
be forwarded to the Chair of the Audit Committee.
Does the Company have a majority-voting policy?
The Companys Governance Principles include a
majority-voting policy for the election of Directors. Pursuant
to the majority-voting policy, in an uncontested election, if a
nominee for Director who is an incumbent Director receives a
greater number of votes withheld from his or her
election than votes for such election (a
Majority Withheld Vote), and no successor has been
elected at such meeting, the Director must tender his or her
resignation following certification of the shareholder vote. In
an uncontested election, if a nominee for Director who is not an
incumbent Director receives at any meeting for the election of
Directors at which a quorum is present a Majority Withheld Vote
(but does receive the requisite plurality vote), the nominee
will be deemed to have been elected to the Board and to have
immediately resigned. To be eligible to stand for election, each
person who agrees to be nominated must also agree, in writing,
to be bound by this provision.
In the event of a Majority Withheld Vote, the Nominating and
Corporate Governance Committee will consider the tendered
resignation and make a recommendation to the Board as to whether
or not to accept it. The Board will act on the Nominating and
Corporate Governance Committees recommendation within
90 days following certification of the shareholder vote. In
making their determinations, the Nominating and Corporate
Governance Committee and the Board may consider any factors or
other information that they consider appropriate or relevant.
Thereafter, the Board will promptly disclose its decision
whether or not to accept the Directors resignation (and
the reasons for rejecting the resignation, if applicable) in a
press release or filing with the SEC. Any Director who tenders
his or her resignation pursuant to this provision shall not
participate in the Nominating and Corporate Governance
Committees recommendation or Board action regarding
whether or not to accept the resignation. However, if each
member of the Nominating and Corporate Governance Committee
received a Majority Withheld Vote at the same meeting, then the
remaining independent Directors who did not receive a Majority
Withheld Vote shall consider the resignations and determine
whether or not to accept them. If the Directors who did not
receive a Majority Withheld Vote in the same election constitute
three or fewer Directors, all Directors may participate in the
action regarding whether to accept the resignations, provided,
however, that each Directors resignation will be acted
upon separately and no Director may participate in the Board
action regarding whether or not to accept his or her
resignation. A Director whose resignation is not accepted by the
Board shall continue to serve until the next annual meeting of
shareholders at which he or she is up for election and until his
or her successor is duly elected, or until his or her earlier
resignation or removal. If a Directors resignation is
accepted by the Board, or if a nominee for director who is not
an incumbent Director is deemed to have been elected and to have
immediately resigned, then the Board, in its sole discretion,
may fill any resulting vacancy pursuant to the Companys
By-laws or may amend the Companys By-laws to decrease the
size of the Board. The Nominating and Corporate Governance
Committee will make a recommendation to the Board as to whether
or not it should fill the vacancy or amend the Companys
By-laws to reduce the size of Board.
What is the Companys policy regarding Director
attendance at the Annual Meeting?
While the Company does not have a policy regarding Director
attendance at the annual meeting of shareholders, the
Companys Directors, including persons nominated for
election at an annual meeting, generally attend the annual
meeting.
How often did the Board meet during 2009?
The Board held 9 meetings during 2009. The
standing committees established by the Board held a total of 22
meetings in 2009. Each of the incumbent Directors attended at
least 91% of the aggregate of the meetings of the Board and
Board committees on which he or she served in 2009.
Non-management Directors meet in regularly scheduled executive
sessions (without management), at which the Chair of the
Nominating and Corporate Governance Committee presides.
Where can additional Corporate Governance and related
information be obtained?
The Companys corporate website (www.glatfelter.com)
includes a Corporate Governance page consisting of, among
others, the Companys Governance Principles and Code of
Business Conduct, a listing of our Board of Directors and
Executive Officers, Nominating, Audit and Compensation
Committees of the Board of Directors and their respective
Charters, the Companys Code of Business Conduct, the Code
of Business Ethics for the CEO and Senior Financial Officers of
Glatfelter and other related material. The Company intends to
satisfy the disclosure requirement for any future amendments to,
or waivers from, its Code of Business Conduct or Code of
Business Ethics for the CEO and Senior Financial Officers by
posting such information on its website. The Company will,
-16-
upon request, provide a copy of its Code of Business Conduct or
Code of Business Ethics for the CEO and Senior Financial
Officers, at no charge.
How were Directors compensated?
Base Compensation. Non-employee Directors received
an annual retainer fee of $35,000, two thirds of which consisted
of shares of the Companys common stock with an equivalent
market value on the grant date, with the balance paid in cash.
In addition to the annual retainer, non-employee Directors were
paid in cash $2,000 for attendance at the annual Board retreat
and $1,500 for each Board or committee meeting that they
attended. Non-employee Directors serving as committee
chairpersons of the Audit or Compensation Committees were paid
an additional $10,000 (in cash) annually for their service and
the Chairperson of the Finance and Nominating and Corporate
Governance Committees each received an additional $5,000 in
cash. In addition, each non-employee Director received an annual
restricted stock unit award valued at $30,000, on the grant
date. Such awards will vest over a three-year period. All
accrued, but unpaid, Director cash compensation payments are
made on each May 1st and November 1st. RSUs
granted to directors in 2009 and thereafter will immediately
vest upon a change in control. The RSUs granted to the directors
prior to 2009 do not vest upon a change in control.
Deferred Compensation. Pursuant to the
Companys Deferred Compensation Plan for Directors (the
Deferred Compensation Plan), every year each Director may elect
to defer 50%, 75% or 100% of his or her annual retainer paid to
such Director for serving on the Board, but not including any
fees paid to a Director for attending meetings of the Board or
any committee of the Board or for serving as a chairperson of a
committee of the Board. No such elections were made with respect
to fees earned in 2009.
Benefits. Each non-employee Director is covered by
the Companys Directors and officers liability
insurance, as well as the Companys travel accident
insurance.
Share Ownership Guidelines. The Company has
established share ownership guidelines for its non-employee
Directors in order to further enhance alignment with
shareholders. The share ownership guidelines require that each
Director own at least 7,200 shares of the Companys
common stock. Shares owned directly by the Director, unvested
restricted stock and RSUs, and stock units held in the Deferred
Compensation Plan are counted toward satisfying the share
ownership guideline for Directors. As of December 31, 2009,
all of the non-employee Directors were in compliance with the
share ownership guideline.
NON-EMPLOYEE
DIRECTOR COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
|
|
|
|
|
|
or Paid
|
|
|
|
All Other
|
|
|
|
|
in Cash
|
|
Stock Awards
|
|
Compensation
|
|
Total
|
Name
|
|
(1)
|
|
(2)
|
|
(3)
|
|
($)
|
|
|
Kathleen A. Dahlberg
|
|
$
|
41,669
|
|
|
$
|
29,998
|
|
|
$
|
2,179
|
|
|
$
|
73,846
|
|
Nicholas DeBenedictis
|
|
|
52,169
|
|
|
|
29,998
|
|
|
|
2,179
|
|
|
|
84,346
|
|
J. Robert Hall
|
|
|
57,669
|
|
|
|
29,998
|
|
|
|
2,179
|
|
|
|
89,846
|
|
Richard C. Ill
|
|
|
46,669
|
|
|
|
29,998
|
|
|
|
2,179
|
|
|
|
78,846
|
|
Ronald J. Naples
|
|
|
53,169
|
|
|
|
29,998
|
|
|
|
2,179
|
|
|
|
85,346
|
|
Richard L. Smoot
|
|
|
41,669
|
|
|
|
29,998
|
|
|
|
2,179
|
|
|
|
73,846
|
|
Lee C. Stewart
|
|
|
52,669
|
|
|
|
29,998
|
|
|
|
2,179
|
|
|
|
84,846
|
|
|
|
|
|
(1)
|
The amounts include the portion of annual retainer fees earned
and paid, or to be paid, in cash as well as meeting fees and
chairmanship fees earned and paid, or to be paid, in cash.
|
|
(2)
|
The amounts listed above reflect the fair market value for RSUs
granted on May 1, 2009, the closing price of Glatfelter
common stock was $9.23
|
|
(3)
|
Represents dividend equivalents paid to the non-employee
Directors in 2009. The Directors earn dividend equivalents on
their outstanding RSUs.
|
-17-
EXECUTIVE
COMPENSATION
COMPENSATION
DISCUSSION & ANALYSIS
Overview of
Compensation Program Objectives and Design
The Compensation Committee of the Board of Directors (the
Committee) approves the Companys compensation
philosophy and supervises the compensation program for the Named
Executive Officers (NEOs) and other executives of
the Company. The Committee has designed the Companys
compensation programs to attract, retain, motivate and reward
the executives who are crucial to the success of our business.
The Committee believes that compensation should reflect
performance and should be fair, competitive and reasonable in
light of a persons responsibilities and experience and the
overall profitability of the Company. The Committee believes
that executive pay should vary according to the performance of
the Company and that the best way to achieve these principles
and objectives is by providing a mix of compensation programs
that focus on long-term and short-term performance as well as
progress in furthering the goals of the Companys strategic
plan. The Committee wants the interests of the Companys
executives to be aligned with the interests of the
Companys shareholders. As a result, the total compensation
paid to the NEOs and other Company executives consists of
several forms of compensation, including base salary, annual
incentives, long-term incentives, limited perquisites, and
benefits. Moreover, the Committee generally structures total
compensation opportunities to target the 50th percentile of
market levels, which, it believes, provides a competitive level
of compensation relative to the Companys industry and is
consistent with its compensation philosophy. A significant
portion of each NEOs compensation opportunity consists of
annual and long-term variable compensation that is contingent on
the achievement of specific Company financial goals, reflects
individual performance, and is designed to align the NEOs
interests with those of the Companys shareholders. The
opportunity to earn variable compensation is different for each
NEO and generally increases commensurate with the NEOs
level of responsibility within the Company. In addition, the mix
of annual and long-term incentive compensation varies among the
NEOs in that the relative proportion of long-term incentive
compensation is greater for greater levels of responsibility.
Currently, the Companys annual compensation is cash-based,
while long-term compensation consists of equity-based awards.
The Company does not have specific allocation goals between cash
and equity-based compensation or between annual and long-term
incentive compensation; instead, the Company relies on the
process described below in its determination of compensation
levels for each NEO.
While the Committee determines overall compensation strategy and
policies for the NEOs other key executives and advisors and,
except in the case of the CEO, approves their compensation, it
seeks input from certain NEOs and other executives with respect
to both overall guidelines and discrete compensation decisions.
Specifically:
|
|
|
|
|
the Committee retains an external compensation consultant
(Consultant) to provide independent advice,
information, and analysis on executive compensation and benefits;
|
|
|
|
the Vice President of Human Resources and Administration works
with the Committee and the Consultant to develop the design of
compensation programs and decision-making frameworks for
determining compensation levels;
|
|
|
|
the CEO and CFO provide background and recommendations to the
Committee regarding the Companys key financial objectives
and metrics and performance against them;
|
|
|
|
compensation actions for NEOs other than the CEO are developed
and recommended by the CEO, in consultation with the Vice
President Human Resources and Administration, and
based on guidance received from the Consultant; and
|
|
|
|
the Companys General Counsel and Secretary and the
Companys Human Resources staff provide legal and
governance advice and other technical support to the Committee.
|
The NEOs noted above may, at the invitation of the Committee,
attend portions of the Committee meetings; however, the
Committees usual practice is to meet in executive session
both alone and with the Consultant to reach final decisions
about NEO compensation.
The compensation level for each NEO, except the CEO, is approved
by the Committee after consideration of the specific
recommendation of the CEO. In the case of the CEO, the
Committee, with assistance from the Consultant, develops
recommendations in executive session without the CEO or any
other member of management in attendance, and then provides its
recommendation to the independent members of the Companys
Board of Directors (the Board) for consideration and
approval in executive session. All references to actions by the
Committee with respect to setting the compensation of the NEOs
shall mean, without further reference, that the Committee acts
with respect to all NEOs except the CEO. Further, all references
to actions by the Committee with respect to CEO compensation
shall mean, without further reference, that the independent
members of the Board have acted with respect to CEO compensation
in accordance with the recommendation of the Committee.
The Committee has delegated to the Vice President, Human
Resources and Administration authority to take certain
administrative actions with respect to the Companys
incentive compensation plans and retirement and other benefit
plans. Moreover, within the limits and guidelines specified in
the Companys approved incentive compensation plans, the
CEO is authorized to determine incentive compensation for
employees
-18-
other than the NEOs and other officers of the Company, and,
depending on the vehicle used for such incentive compensation,
the amounts awarded by the CEO may be subject to terms and
overall amounts approved by the Committee. The design and
administration of pension, savings, welfare, and vacation
benefit plans and practices generally are handled by
Companys Human Resources, Finance, and Legal employees,
although the Committee retains authority for approving major
design changes, material changes to benefits that affect the
NEOs and other executive officers, and certain administrative
decisions that affect executive officers.
The Committee has sole authority to retain and terminate any
consultants directly assisting it. The Committee also has the
sole authority to approve the fees and other engagement terms
for its consultants. For 2009, the Committee retained
Compensation Strategies, Inc. (CSI) as its
Consultant. In preparation to establish fiscal year 2009
compensation, the Committee used CSI to assess the
competitiveness of the executive compensation program, to make
recommendations regarding the program design based on prevailing
market practices and business conditions, to advise the
Committee on: i) the level of each NEOs compensation,
ii) peer group composition, iii) incentive plan
performance metric conventions and design, (iv) external
trends and regulatory developments, (v) executive
succession planning, and (vi) to conduct research and
analysis directed by the Committee. The Consultant also
performed an analysis of bonuses paid under the Companys
Management Incentive Program relative to the Companys peer
group and financial performance. Moreover, the Consultant
continued to provide competitive market data on executive
compensation during 2009 which was used to evaluate the overall
competitiveness of the Companys compensation program and
to develop recommendations on the total compensation paid to
NEOs and other executives of the Company. The Consultant
attended portions of Committee meetings and regularly met in
executive session with the Committee with no members of
management present. the Consultant does not provide any other
human resources, benefits, or related services to the Company,
Committee, or Board of Directors.
During 2009, the Company also engaged Mercer Consulting
(Mercer) to perform a competitive market assessment
of the Companys executive pension programs and design and
to offer recommendations based on prevailing market practices.
Mercer has periodically advised the Company on pension
administration issues for the NEOs and other Company executives.
The Committee has established several practices to ensure the
Consultants independence, candor, and objectivity. The
Consultant is engaged by and reports directly to the Committee,
frequently meets separately with the Committee with no members
of management present, and consults with the Committees
Chairman between meetings. At each meeting of the Committee,
management reports to the Committee the fees paid for services
performed by the Consultant, and the Committee approves annually
the work plan and budget for the Consultant.
Determination of
Compensation Levels
As indicated above, the Committee generally structures total
compensation opportunities to target the 50th percentile of
market levels, which, it believes, provides a competitive level
of compensation relative to the Companys industry. In
order to determine the 50th percentile of market levels,
the Committee reviews a market analysis of total compensation
for similarly situated executives from peer group companies (as
discussed further below) and other broader-based market
compensation data that is prepared by the Consultant. This
market analysis is performed annually with respect to the CEO
and CFO positions and every other year with respect to remaining
NEOs. However, if market compensation levels with respect to the
CEO or CFO are found to have changed substantially during the
off-years, a full review of total compensation for the CEO, CFO
and the NEOs is conducted. For 2009, the review was scheduled to
include only the CEO and CFO; however, due to the economic
crisis that was experienced during 2009 and the impact of that
crisis on economic growth and compensation levels, the
Committee, on the recommendation of the Consultant, approved the
expansion of the compensation review to include a review of the
total compensation of all of the NEOs. Consistent with standard
practices, due to the varying sizes of the companies included in
the peer group companies, statistical analysis is used to
normalize the market compensation data collected to reflect the
relative annual revenues of the Company and each of the peer
group companies. In determining appropriate individual
compensation levels for the NEOs, the Committee considers the
adjusted market compensation data and the NEOs tenure,
experience, and particular set of skills as well as the
NEOs and Companys overall performance.
The annual revenues of the companies included in the
Compensation Peer Group for 2009 ranged from approximately
$260 million to $6.8 billion. Since the Company
competes for executive talent with a broad range of companies
and industries, the companies included in the Compensation Peer
Group are not the same as those companies which are included in
the Companys performance graph in the Companys
Annual Report to Shareholders. A listing of the companies
included in the Compensation Peer Group for 2009 and information
on which of these companies are also included in the performance
graph that appears in
-19-
the Companys Annual Report on
Form 10-K,
is provided below:
|
|
|
|
|
Performance
|
|
|
Graph
|
Compensation Peer
Group
|
|
Peer Group
|
|
|
Abitibibowater, Inc.
|
|
|
Avery Dennison
|
|
|
Bemis Co. Inc.
|
|
|
Buckeye Technologies, Inc.
|
|
ü
|
Caraustar Industries, Inc.
|
|
|
CSS Industries, Inc.
|
|
|
Graphic Packaging Holding Co.
|
|
|
Greif, Inc.
|
|
|
Lydall, Inc.
|
|
|
Meadwestvaco Corp.
|
|
|
Nashua Corp.
|
|
|
Neenah Paper Co.
|
|
ü
|
Packaging Corp. of America
|
|
|
Potlach Corp
|
|
|
Rayonier, Inc.
|
|
|
Rock-Tenn Co.
|
|
|
Schweitzer-Mauduit International, Inc.
|
|
ü
|
Sonoco Products Co.
|
|
|
Wausau Paper Corp
|
|
ü
|
|
|
Base
Salary
Although the Committee has structured the compensation of the
NEOs such that a significant portion of each NEOs
compensation opportunity consists of annual and long-term
variable compensation, it believes that reasonable, fixed,
annual compensation appropriately meets the Companys
compensation objectives. The base salaries of the NEOs are
reviewed and approved annually by the Committee, typically
during the first quarter of the calendar year. Consistent with
the Committees compensation philosophy, base salaries for
the NEOs are generally targeted at the 50th percentile of
the market. The Committee believes this compensation level is
sufficient to achieve the objectives of the Companys
compensation program. In addition to assessing base salaries
against comparable market data, in setting the annual base
salary of each NEO, the Committee considers several factors,
including salary recommendations from the CEO, the relative
importance of the job to the Company, the external
competitiveness of the NEOs total compensation packages,
the nature and complexity of their job duties, the performance
of the NEOs and the Company, as well as internal equity
considerations. The Committee does not assign relative
weightings to any of these factors. The Committee reviews base
salaries annually, but may adjust salaries at any point during
the year. The Committee does not necessarily adjust the
NEOs base salaries each year.
During 2009, based on the recommendation of the CEO and the
Committees independent assessment of market data and
economic outlook, the Committee opted not to adjust the base
salaries of the NEOs with the lone exception of an adjustment
that the Committee, upon the recommendation of the CEO, approved
to the base salary of a NEO which the Committee concluded was
significantly below the
50th
percentile of the market. The Committee adjusted that NEOs
salary 10% in 2009. Likewise, the Board, upon the recommendation
of the Committee, opted not to adjust the base salary of the
CEO. As a group, the NEOs base salaries remained slightly
below the
50th
percentile of the market during 2009.
For 2010, the Committee, after reviewing the current base
salaries of the NEOs, has approved base salary increases for the
NEOs ranging from 3% to 20% effective as of February 1,
2010. As a group, the NEOs adjusted base salaries remain
slightly below the 50th percentile of the market for 2010.
Annual
Incentives
The Committee believes that annual incentive awards, or bonuses,
provide important performance incentives for the NEOs and other
eligible Company executives and help to further the
Committees compensation philosophy. The Company currently
provides an annual incentive bonus opportunity to the NEOs under
the Companys Management Incentive Plan (the
MIP). By design, the incentive bonuses, which NEOs
are eligible to earn under the MIP, comprise a significant
portion of the NEOs total compensation. Consistent with
the Committees philosophy, the MIP is designed to ensure
that incentive bonus awards represent at-risk compensation for
the NEOs, to reward the achievement of corporate objectives that
are pre-established by the Committee, and to provide incentive
compensation that is competitive with the market for each
position.
Each year the Committee approves a target bonus under the MIP
for each NEO, expressed as a percentage of the NEOs base
salaries with the exception of the CEO, whose target bonus is
approved by the Board of Directors. The Committee generally
establishes target bonuses for the NEOs at the
50th
percentile of the competitive marketplace. However, given that
the NEOs 2009 base salaries were below-market, their
target bonuses, as a dollar amount, were also slightly below the
50th
percentile of the market. For 2009, the Committee did not modify
the target bonuses for any of the NEOs from the levels
established during 2008. For 2010, target bonus percentages for
the NEOs remain unchanged from 2009.
The following table sets forth targeted bonus levels for each
NEO as a percentage of the NEOs base salary:
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2009 Target Bonus (as
|
|
Named Executive
|
|
Target
|
|
|
a percentage of 2009
|
|
Officer
|
|
Bonus
|
|
|
Base Salary)
|
|
|
|
|
Glatfelter
|
|
$
|
528,640
|
|
|
|
80
|
%
|
Jacunski
|
|
|
182,834
|
|
|
|
55
|
|
Parrini
|
|
|
328,266
|
|
|
|
65
|
|
Mukherjee
|
|
|
113,850
|
|
|
|
45
|
|
Rapp
|
|
|
166,890
|
|
|
|
45
|
|
|
|
-20-
Usually, in February each year, after the Companys
audited, consolidated, year-end financial results are available,
the Committee confirms whether the pre-established MIP corporate
performance metrics have been met and decides whether and, at
what level, to award bonuses to the NEOs. As discussed further
below, the amount ultimately received by the NEOs and other
eligible executives is dependent on the extent of achievement of
performance metrics established annually by the Committee for
the MIP. The MIP provides that the Committee may, in its
discretion, adjust any bonus earned by any NEO or other
executive downward but the Committee does not have discretion to
increase any bonus earned by any NEO or other executive.
In recent years, with the lone exception of 2009, the amount of
a bonus has depended primarily on the Companys achievement
of profitability to judge the Companys overall
performance. For 2009, due to the uncertainty arising out of the
global economic crisis, the Committee concluded that it was
critical that the NEOs and other Company executives focus their
attention and efforts on maximizing the Companys cash
flows while preserving the strength of the Companys
balance sheet and, to that end, adopted a MIP design which
incorporated dual metrics: Operating Net Income
(ONI) and Leverage Ratio. ONI consists of net income
determined in accordance with United States generally
accepted accounting principles (US GAAP) adjusted to
exclude after-tax pension income or pension expense, gains from
the sale of timberlands, legal defense costs associated with a
significant environmental matter that is currently in
litigation, the proceeds of a one-time tax credit and certain
one-time costs which were associated with acquisitions. Leverage
Ratio is defined as net debt divided by earnings, before
interest, taxes, depreciation, amortization and net pension
income/expense (EBITDAP). In 2009, The Committee
weighted these metrics at 40% ONI and 60% Leverage Ratio.
As in past years, the Committee set the target level of ONI at
the Companys budgeted 2009 ONI. Likewise, the Committee
set the target level of Leverage Ratio at a level which
corresponded to the Companys budgeted level of EBITDAP. In
keeping with past practice, the Committee also incorporated a
design feature in the 2009 MIP which required that the Company
achieve a pre-established minimum level of performance for each
MIP metric before any bonus would be earned by any eligible
executive, including the NEOs, under the MIP (Bonus
Threshold Performance Level). For 2009, the Bonus
Threshold Performance Level was 80% of the targeted performance
level for each MIP metric. In addition to this minimum
performance requirement, the MIP design established by the
Committee provided that no bonus under the MIP would be earned
unless at least $16 million of ONI was achieved by the
Company. Further, the Committee capped the aggregate bonuses
payable under the 2009 MIP to all eligible executives, including
the NEOs, at 8.6% of the Companys 2009 ONI, on an
after-tax basis (the Aggregate Bonus Cap), which is
consistent with the amount of bonuses paid to eligible
executives under the MIP over the most recent five-year period.
Subject to the Aggregate Bonus Cap, targeted payment amounts for
achievement of the Bonus Threshold Performance Level remained
unchanged from prior years at 50% of the NEOs target bonus
levels, and achievement of the maximum performance level would
result in bonus payments which would be equal to 200% of the
NEOs target bonus levels.
The following table summarizes the level of Company performance
associated with each MIP metric and the corresponding target
bonus level for the NEOs:
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Percent of targeted bonus
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50%
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100%
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200%
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Performance metric (millions)
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Operating Net Income
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$
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19.0
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$
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23.7
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$
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33.2
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Leverage Ratio
|
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2.40
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|
|
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2.00
|
|
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1.20
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|
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|
In 2009, the Companys ONI totaled $37.2 million,
EBITDAP totaled $125.2 million and adjusted net debt was
$112.2 million resulting in a Leverage Ratio of 0.9x. Both
ONI and Leverage Ratio were each above the maximum performance
level, which, if no bonus cap were applicable, would have
triggered a payout level for the NEOs at bonus level that was
200% of the NEOs bonus target level. However, due to the
8.6% ONI cap described above, the bonus payout level for the
NEOs was reduced to 180% of the NEOs bonus target level.
The Committee believes the ONI and Leverage Ratio target levels
were set at levels to sufficiently challenge the NEOs, meet the
short term performance objectives of the Company and satisfy the
Companys compensation objectives. The following table
summarizes target bonus opportunities for 2009 as a percent of
base salaries:
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Target Bonus
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Range (Percent of
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MIP Performance Level
|
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Base Salary)
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Minimum (50% of performance target)
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22.5
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To
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40.0
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Target (100% of performance target)
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45.0
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To
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80.0
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Maximum (200% of performance target)
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90.0
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To
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160.0
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The ranges set forth above are based on advice received from the
Consultant regarding market practices. All payments to the NEOs
under the MIP are based entirely on actual ONI and Leverage
Ratio performance of the Company; no portion of the MIP payment
is based on individual performance of each NEO. However, the
Committee has the authority to reduce payments under the MIP
based on the Committees assessment of individual
performance during the year, with the approval of the
independent members of the Board of Directors in the case of the
CEO. No such reductions were made for 2009.
For 2010, the Committee has adopted a MIP design which
incorporates the following two metrics: ONI and Free Cash Flow
for all NEOs under the MIP including the leaders of the
Companys business units. ONI will, again, consist of net
income determined in accordance with United States
generally accepted accounting principles (US GAAP)
adjusted to exclude certain items as determined by the
-21-
Committee. Free Cash Flow will consist of operating cash flows
minus capital expenditures. These metrics will be weighted 80%
ONI and 20% Free Cash Flow. The target performance level of ONI
has been set at a level which accounts for the additional net
income that is expected to be realized from the Companys
recent acquisition of Concert Industries; the target performance
for ONI is established slightly higher than the Companys
2010 budget to encourage management to successfully integrate
that acquisition. Likewise, the target performance level of Free
Cash Flow has been set at the Companys budgeted level of
Free Cash Flow. Target bonus percentages for the NEOs remain
unchanged from 2009 and payment amounts for achievement of the
threshold performance levels will remain unchanged at 50% of the
target opportunities, and achievement of the maximum performance
level would result in payments equal to 200% of the target
opportunities.
Long-Term
Incentives
Over the long term, the Committee believes that executive
compensation should be substantially linked with corporate
performance and shareholder value creation. The Committee
believes that long-term compensation provides strong incentives
for executives to improve the Companys long-term
performance, deliver value to its shareholders and remain
employed by the Company. It also helps to retain the
Companys executives. Accordingly, again generally
targeting the 50th percentile of the competitive marketplace,
and with advice from the Consultant, the Committee determines
annually the amount of long-term compensation that will be
granted to executives under the Companys shareholder
approved Amended and Restated Long Term Incentive Plan
(LTIP). The Committee also reviews on an annual
basis the appropriateness and relative weightings of the
long-term incentive compensation vehicles available under the
LTIP. Most recently in 2008, the Committee supported a cash
component of long-term incentive compensation. The cash LTIP
(cash LTIP) component was intended to provide
performance-based cash awards to eligible executives if the
Company achieved preset financial targets by the end of a
specified multi-year period and to reduce the number of shares
of Company stock that are required to be issued under the LTIP.
Accordingly, the 2008 cash LTIP will provide cash payments to
eligible executives of the Company following the close of a
three-year period ending with fiscal year 2010 if certain
pre-set ONI and Return on Capital Employed goals are reached.
The ONI portion of the cash LTIP represents 40% of the total
award, while the remaining 60% is dependent on the
Companys Return on Capital Employed performance. The
target performance goals are consistent with the Companys
long-term strategic objectives and, in the Committees
opinion, represent reasonably aggressive performance levels.
Target opportunities for the NEOs range from $59,290 to
$319,000. Payment amounts for achievement of the threshold
performance levels would equal 50% of the target opportunities,
and achievement of the maximum performance levels would result
in payments equal to 150% of the target opportunities. The
Companys performance against the established targets is
measured over a three-year period, not on an annual basis.
Therefore, the Committee will not be in a position to measure
the Companys performance against these targets until the
end of the Companys 2010 fiscal year.
As a result of the uncertain impact of the global economic
crisis that continued during 2009, the Committee concluded that
setting multi-year financial performance targets for the Company
was too speculative, and that it was appropriate to temporarily
suspend the cash LTIP. To that end, the Committee designed the
2009 long-term incentive program to consist exclusively of
equity-based compensation in the form of restricted stock units
(RSUs) and stock-only stock appreciation rights
(SOSARs). Moreover, the 2009 design which was
approved by the Committee provided that RSUs would constitute
approximately 20% of each NEOs incentive compensation
opportunity under the program and that SOSARs would constitute
approximately 80% of the incentive compensation opportunity.
While the Committee believed that this relative weighting of
RSUs and SOSARs provided an appropriate long term
incentive compensation opportunity for the NEOs given the
economic conditions and outlook at that time, the Committee has
not ruled out reinstating the cash LTIP in future periods as
economic conditions stabilize.
RSUs. The Committee, on an annual basis, grants RSUs
under the LTIP to certain of the Companys executives with
each grant vesting over a five-year period. The number of RSUs
granted to the NEOs during 2009 ranged from 4,215 to 14,820,
depending on the position of the NEO and information provided by
the Committees external compensation consultant regarding
competitive market compensation practices for each NEO. Each
grant recipient of RSUs receives cash payments equal to the
dividends paid on an equivalent number of shares of the
Companys common stock. RSUs vest ratably, with one-third
of the units vesting on the third, fourth, and fifth
anniversaries of each grant. Upon full vesting of each grant of
RSUs, the units are converted to shares of the Companys
common stock at a 1:1 ratio, and those shares are transferred to
the RSU grant recipient. RSU grants made by the Committee in
2004, 2005 and 2006 either vested or resulted in the payment of
dividend equivalent payments to the NEOs in 2009, as indicated
in the Summary Compensation Table.
SOSARs. The Committee, also on an annual basis, grants
SOSARs under the LTIP to certain of the Companys
executives. SOSARs are intended to directly link executive
compensation to the interests of shareholders through awards
which have a value that is entirely dependent on appreciation in
the Companys stock price from the date the awards are
granted. The SOSARs granted to the NEOs during 2009 ranged from
68,060 to 262,680 depending on the position of the NEO and
information provided by the Committees external
compensation consultant regarding competitive market
compensation practices for each position. The SOSARs granted by
the Committee during 2009 had an exercise price equal to the
Companys closing common stock price on the
-22-
date of grant, or $9.91, have a ten-year expiration term, and
vest ratably, with one-third of the SOSARs vesting on the first,
second, and third anniversaries of the date of grant. This
vesting schedule ensures that recipients remain employed with
the Company for an appropriate length of time prior to being
able to exercise the SOSARs. Upon exercise of a vested SOSAR,
the executive will receive shares of Company common stock with a
value equal to the appreciation of the Companys common
stock from the date of grant. The re-pricing of SOSARs is not
permitted under the LTIP.
Based on its assessment of the competitive market practices and
data, the Committee believes that a mix of RSUs and SOSARs
provides an appropriate and competitive balance of
performance-based and time-vested compensation.
Stock Options. Once a popular compensation tool, stock
options grant the holder the right to buy stock of a company at
a fixed price for a fixed exercise period. Like SOSARs, stock
options reward executives if the Companys stock price
rises. Stock options provide no value if the stock price stays
flat or goes down. In past years, the Committee had regularly
granted nonqualified stock options to Companys executives
and other key employees to align the interests of the employees
with those of the Company. However, in response to recent
changes in the accounting rules governing the treatment of the
cost of granting options, the Committee has not granted options
to any of the NEOs or other key executives since 2004 but
several NEOs still hold unexpired options that were granted in
prior periods. Those stock options were also granted with an
exercise price equal to the closing price of Company stock on
the grant date. The Company does not reprice stock options.
For 2010, the LTIP will continue to include RSUs and SOSARS,
with RSUs again representing 20% and SOSARs representing 80%, of
each NEOs total long-term incentive. Due to the continuing
uncertainty in the global economy, the Committee elected to
continue the suspension of the cash LTIP for 2010. The number of
RSUs granted to the NEOs on March 3, 2010 ranged from 2,020
to 8,190 for the NEOs, depending on the position of the NEO and
information provided by the Committees compensation
consultant regarding competitive market practices for each
position. The SOSARs granted to the NEOs on March 3, 2010,
ranged from 25,300 to 102,500 for the NEOs, depending on the
position of the NEO and information provided by the
Committees compensation consultant regarding competitive
market practices for each position. The SOSARs had an exercise
price equal to the Companys closing common stock price on
the date of grant, or $13.95.
Based on market information provided by the Consultant, the
Committee continues to believe this mix of equity based
compensation, at the relative weightings discussed above,
provides the appropriate balance of performance-based and
retention-based grants.
In recent years it has been the Committees practice to
consider recommendations for equity-based grants to the NEOs and
certain other key executives of the Company at its meeting that
occurs in March of each year. If such equity-based grants are
approved by the Committee, the Committee then recommends to the
Board of Directors that it approve those grants at the March
meeting of the Board of Directors. However, in 2009, the
Committee deviated from its normal schedule for approving equity
grants as a result of managements determination in late
2008 that there would likely be an insufficient number of shares
available under the LTIP to support equity-based grants to the
NEOs and other key executives. Therefore, the approval of any
grants was deferred until after the Companys shareholders
approved an increase in the number of shares of common stock
available for awards under the LTIP. On April 29, 2009, the
Companys shareholders, on the recommendation of the Board,
approved an increase in the number of shares available for grant
under the LTIP and the Committee and the Board subsequently
approved equity-based grants of RSUs and SOSARs to NEOs
and certain other key executives on May 5, 2009.
Other Equity
Ownership Policies
The Company has established several policies for its NEOs and
certain other executives of the Company in order to reinforce
the importance of aligning the financial interests of executives
and shareholders, and that impose certain controls and
restrictions on the ability of an executive officer to buy or
sell securities.
Executive Share
Ownership Guidelines
The Companys executives historically have held a
significant portion of their personal wealth in the form of the
Companys common stock (or RSUs, stock options, or SOSARs
that mirror the performance of the Companys common stock).
The Committee believes it is important to require the
Companys senior executives, including the NEOs, to meet
minimum stock ownership guidelines (the Executive Share
Ownership Guidelines). These guidelines were established
in 2002 and updated in 2009; the minimum stock ownership targets
reflect a stock price valuation of approximately $13.00 (the
closing price on the date that the guidelines were initially
adopted) and the base salary at the time the individual became
subject to the guidelines. The Committee expresses these
guidelines in terms of the value of equity holdings as a
multiple of each senior executives base salary. Depending
on the executives position, the Executive Share Ownership
Guidelines require the executive to own a sufficient number of
shares of Company stock having a market value that ranges in
value from 1 times to, in the case of the CEO, 4 times the
senior executives base salary.
Equity interests that count toward satisfaction of the Executive
Share Ownership Guidelines include shares owned outright by the
executive, or his or her spouse and dependent children, vested
and unvested RSUs, shares held in a Section 401(k) or
deferred compensation account, and 50% of any appreciation on
either unexercised vested stock options or SOSARs. Newly hired
or promoted executives have up to five years from the
-23-
time that the executive became subject to the Executive Share
Ownership Guidelines to meet the applicable guideline. The
Committee may reduce future long-term incentive awards for any
executive who fails to meet the Executive Share Ownership
Guidelines, depending on the circumstances. Each year, the
Committee reviews whether the Companys executives meet the
Executive Share Ownership Guidelines. As of December 31,
2009, all NEOs were either in compliance with the applicable
guideline for their position or were on track to satisfy their
applicable guideline within the allotted period.
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Ownership
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Guideline
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(Market
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|
value relative
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|
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to Starting
|
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# of Shares
|
|
|
|
Base
|
|
|
# of Shares
|
|
|
currently
|
|
Name
|
|
Salary)
|
|
|
Required
|
|
|
held
|
|
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|
Glatfelter
|
|
|
4
|
X
|
|
|
146,500
|
|
|
|
160,894
|
|
Jacunski
|
|
|
2
|
X
|
|
|
30,400
|
|
|
|
42,001
|
|
Parrini
|
|
|
3
|
X
|
|
|
53,700
|
|
|
|
68,078
|
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Mukherjee
|
|
|
1
|
X
|
|
|
16,300
|
|
|
|
18,022
|
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Rapp
|
|
|
1
|
X
|
|
|
22,800
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|
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14,485
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|
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|
Blackout Periods and Pre-Clearance of Securities
Transactions. The Companys Code of Business Conduct
and Insider Trading Policies prohibit certain employees,
including all of the NEOs, from purchasing or selling the
Companys securities beginning on the first business day of
the last month of each calendar quarter until the second
business day after the Company releases its earnings for the
quarter. The Company may also impose additional blackout periods
on its executives due the availability of material, non-public
information regarding the Companys securities. In
addition, the Company requires certain employees, including all
of the NEOs, to pre-clear purchase or sale transactions
involving the Companys stock or securities, including
stock option and SOSARs exercises. The Committee regularly
reviews the list of Company Insiders who are subject
to these trading restrictions.
Change in Control
Arrangements
The Company has entered into
Change-in-Control
Employment Agreements with each of the NEOs, as well as certain
other executives of the Company, the terms of which are
discussed on pages 35 to 40 of this proxy statement.
Generally, these agreements provide for severance and other
benefits to be paid to executives upon a qualifying change of
control (as defined in the agreements), including an amount to
cover applicable excise taxes imposed under the Code. The
Committee intends that these arrangements will serve as an
incentive for executives to act in the interest of shareholders
during a takeover, despite the risk of losing their jobs.
Potential payments under these arrangements do not directly
impact the yearly decisions made regarding other elements of
executive compensation. The Companys equity grant
agreements outline the terms and conditions for the acceleration
of equity vesting when a change in control occurs.
In the wake of general marketplace and shareholder concerns
about executives potentially earning undue benefits that take
effect after mergers and acquisitions, the Committee, in March
2009, directed that all subsequent grants of RSUs and SOSARs
made to the NEOs and other eligible executives incorporate
double trigger change of control provisions. In
general, a single trigger provision provides that accelerated
vesting of equity awards would occur in the event of a change of
control irrespective of a corresponding termination. A double
trigger provision, by contrast, only accelerates vesting in the
event of a change of control and in the event that the executive
is terminated without Good Cause or quits with
Good Reason (as those terms are defined in the
applicable agreement). As a result, vesting of RSUs or SOSARS
that are granted after March 2009 and that have been held for at
least six months will accelerate vesting only upon such a
termination that occurs within two years of a
change-in-control
event. The Committee believes that the incorporation of the
double trigger provision will ensure continuity of management
during mergers and acquisitions and assist with attracting and
retaining key executives, ultimately benefitting shareholders.
Post-Employment
Compensation
The Company provides post-employment compensation to its
executives, including the NEOs, under the Companys
qualified pension plan for salaried employees (collectively the
Pension Plan). Compensation that is paid under the
Pension Plan is subject to legal limits specified in the Code.
The Committee believes that offering post-employment
compensation allows the Company to attract, retain, recruit and
motivate qualified employees and executives in the current
competitive marketplace. To that end, the Committee has
established a non-qualified Supplemental Executive Retirement
Plan (SERP) consisting of two post-employment benefits for
certain NEOs and other executives who have been nominated by the
Company and approved by the Committee to participate in this
plan. The first benefit available under the SERP, referred to as
the Restoration Pension Benefit provides those
executives whose benefits under the Pension Plan may be reduced
due to legal limits applicable to qualified pension plans under
the Code with a supplemental pension benefit, which will restore
the portion of the pension benefit that was earned under the
Pension Plan that cannot be paid from the Pension Plan due to
the legal limits provided in the Code. Eligible executives may
receive the Restoration Pension Benefit as an annuity or as a
lump sum, depending on the value of the benefit at the time the
executive terminates employment with the Company. Effective
February 10, 2010, the Committee approved a revision to the
Restoration Pension Benefit which revised the procedure for
approval of the executives who will be eligible for this
benefit. Subject to approval of the Committee, executives will
generally be eligible for the Restoration Pension Benefit if
they have at least one year of pensionable compensation in
excess of the Codes annual compensation limit for
qualified pension plans.
-24-
The second post-employment benefit available under the SERP is
referred to as the Final Average Compensation or FAC
Pension. The FAC Pension pays a monthly pension benefit equal to
a designated percentage of the executives average
compensation over the 5 years immediately preceding his
retirement, offset by an equivalent value of the
participants benefits under the Pension Plan and certain
Company-sponsored nonqualified defined benefit pension
arrangements, including the Restoration Pension. The FAC Pension
is payable following the executives retirement on or after
age 55 in the form of an annuity or a lump sum, depending
on the value of the benefit at the time it is scheduled to
commence. If the FAC Pension is payable prior to age 62,
the monthly amount of the benefit is reduced to reflect its
early commencement. A survivor benefit is also payable under the
FAC Pension to the participants surviving spouse in the
event of the participants death before the FAC Pension
commences. Pursuant to transition rules under Section 409A
of the Code, in 2008, participants in the FAC Pension were
afforded a one-time opportunity to elect to have their FAC
pensions paid as a lump sum. Currently, only the CEO and the COO
are eligible for the FAC Pension and each has elected, under the
transition rule, a lump sum distribution of their FAC Pension.
The Committee has also established a Supplemental Management
Pension Plan (SMPP) consisting of two benefits. The
first benefit, known as the MIP Adjustment Supplement is a
historic restoration benefit that currently benefits none of the
NEOs. Prior to 2005, the Companys MIP included a deferral
feature by which MIP recipients could defer payment of all or a
portion of their MIP bonuses. That deferral feature was
eliminated for MIP bonuses paid after 2005. However, under the
Companys Pension Plan, a deferred MIP bonus was not
considered as part of pensionable compensation under the terms
of the Pension Plan. The MIP Adjustment Supplement was intended
to restore the MIP deferral to pensionable compensation under
the Pension Plan and pays the difference, if any, between the
benefit earned by the employee under the Pension Plan and the
benefit that the executive would have earned had the MIP bonus
not been deferred and therefore eligible for inclusion as part
of pensionable earnings. The MIP Adjustment Supplement benefits
a smaller number of employees each year because (i) the MIP
Adjustment Supplement is currently not available to any
executive who receives a benefit under the Companys SERP,
and (ii) the Pension Plans final average compensation
formula takes into account a participants five full
consecutive years of employment in which his pensionable
compensation was the highest. Prior to its elimination, the CEO
deferred a portion of his prior MIP bonuses under this deferral
feature. Since no MIP deferrals have been permitted since 2005,
however, none of the other NEOs have or are eligible to benefit
from this feature and the Company anticipates that the need for
the MIP Adjustment Supplement will soon end. The second benefit,
known as the Early Retirement Supplement, is available to
certain management and executive employees, who are not eligible
for the FAC Pension under the SERP, who retire from employment
with the Company on or after age 55 but prior to
age 65, normal retirement age under the Companys
tax-qualified Pension Plan. The Pension Plan permits a
participant who retires early to receive a reduced monthly early
retirement pension that begins immediately following retirement,
or to postpone commencement of the pension until a later date,
but not later than normal retirement age. If the participant
agrees to postpone commencement of his or her Pension Plan
pension until at least 36 months following early retirement
(or, if earlier, until his or her normal retirement date
following attainment of age 65) (the Deferred Pension
Plan Commencement Date), then the Early Retirement
Supplement will pay a supplemental benefit during the
postponement period. The Early Retirement Supplement is equal to
the monthly amount of the Pension Plan pension (or the sum of
the Pension Plan pension and the Restoration Pension under the
SERP, if applicable) payable on the Deferred Pension Plan
Commencement Date in the form of a single life annuity. The
benefit begins on the first day of the month on or next
following early retirement and continues for 36 months (or
until normal retirement date) when the deferred Pension Plan
pension begins to be paid. There is a limited benefit payable
for the surviving spouse if the participant dies before the end
of the 36 month payment period.
Perquisites
Perquisites are offered by the Company to certain NEOs and other
executives on a limited basis in order for the Company to remain
competitive with the market and to attract and retain highly
qualified executive talent. The most recent perquisite market
analysis was performed in 2008. The Committee believes that
perquisites should be a minimal part of executive compensation.
The principal perquisites that the Company may provide to
certain of its executives include, in the United States, dining
and country club memberships and in Europe, a car allowance.
From time to time, the Company may provide additional
perquisites to an executive officer on an isolated basis. The
Company values perquisites based on their incremental cost to
the Company. Detail on perquisites offered to the NEOs can be
found in the Summary Compensation Table.
Deductibility of
Executive Compensation
Certain awards made under the LTIP and the 2005 Management
Incentive Plan will qualify as performance-based compensation
that will be exempt from the federal income tax $1 million
deduction limitation imposed under Section 162(m) of the
Code. However, while the Committee has established procedures to
help maximize tax deductibility, in order to design compensation
programs that address the Companys needs, the Committee
has not established a policy that requires that all executive
compensation be exempt from the limitations on business
deductions provided in Section 162(m) of the Code, as
amended. The Committee expects that all 2009 MIP bonus payments
or any compensation received by Company executives from the
exercise of stock options or SOSARs will be exempt from the
Section 162(m) deduction limitation as performance-based
compensation.
-25-
REPORT OF THE
COMPENSATION COMMITTEE
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis set forth on
pages 18 through 25 of this proxy statement (the
Compensation Discussion and Analysis) with the
management of the Company.
Based on the review and discussions describe above, the
Compensation Committee has recommended to the Companys
Board that the Companys Compensation Discussion and
Analysis be included in the Companys proxy statement for
the Annual Meeting.
The information disclosed in the Companys Report of the
Compensation Committee shall not be deemed to be
soliciting material, or to be filed with
the SEC or subject to Regulation 14A or 14C or to the
liabilities of Section 18 of the Exchange Act.
The Compensation Committee of the Board of Directors of
P. H. Glatfelter Company.
Ronald J. Naples (Chair)
Kathleen A. Dahlberg
Nicholas DeBenedictis
Richard L. Smoot
Lee C. Stewart
-26-
SUMMARY
COMPENSATION TABLE
The following table sets forth certain information concerning
compensation of the Chief Executive Officer of the Company, the
Chief Financial Officer of the Company and the Companys
three most highly compensated executive officers in 2009 other
than the Chief Executive Officer and the Chief Financial Officer.
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Change in
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Pension Value
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and Non
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|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Qualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive
|
|
|
Deferred Comp
|
|
|
All Other
|
|
|
|
|
|
|
|
Name and Principal
|
|
|
|
|
|
|
|
Awards
|
|
|
Awards
|
|
|
Plan Comp
|
|
|
Earnings
|
|
|
Compensation
|
|
|
|
|
|
|
|
Position
|
|
Year
|
|
|
Salary
|
|
|
(1)
|
|
|
(2)
|
|
|
(3)
|
|
|
(4)
|
|
|
(5)
|
|
|
Total
|
|
|
|
|
|
|
|
George H. Glatfelter II
|
|
|
2009
|
|
|
$
|
660,800
|
|
|
$
|
146,866
|
|
|
|
743,384
|
|
|
|
951,552
|
|
|
|
1,659,000
|
|
|
|
34,640
|
|
|
|
4,196,242
|
|
|
|
|
|
Chairman & Chief
|
|
|
2008
|
|
|
|
654,600
|
|
|
|
122,304
|
|
|
|
239,940
|
|
|
|
642,660
|
|
|
|
151,719
|
|
|
|
45,778
|
|
|
|
1,857,001
|
|
|
|
|
|
Executive Officer
|
|
|
2007
|
|
|
|
579,085
|
|
|
|
176,137
|
|
|
|
508,512
|
|
|
|
295,000
|
|
|
|
648,915
|
|
|
|
43,968
|
|
|
|
2,251,617
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John P. Jacunski
|
|
|
2009
|
|
|
|
332,426
|
|
|
|
62,136
|
|
|
|
286,311
|
|
|
|
329,102
|
|
|
|
24,000
|
|
|
|
13,396
|
|
|
|
1,047,371
|
|
|
|
|
|
Senior Vice President &
|
|
|
2008
|
|
|
|
329,458
|
|
|
|
51,475
|
|
|
|
101,370
|
|
|
|
222,272
|
|
|
|
14,000
|
|
|
|
13,943
|
|
|
|
732,518
|
|
|
|
|
|
Chief Financial Officer
|
|
|
2007
|
|
|
|
291,509
|
|
|
|
84,291
|
|
|
|
212,578
|
|
|
|
108,884
|
|
|
|
7,000
|
|
|
|
12,140
|
|
|
|
716,402
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dante C. Parrini
|
|
|
2009
|
|
|
|
505,025
|
|
|
|
104,154
|
|
|
|
479,713
|
|
|
|
590,879
|
|
|
|
239,000
|
|
|
|
30,394
|
|
|
|
1,967,749
|
|
|
|
|
|
Executive Vice
|
|
|
2008
|
|
|
|
498,011
|
|
|
|
86,534
|
|
|
|
170,227
|
|
|
|
399,073
|
|
|
|
86,000
|
|
|
|
38,045
|
|
|
|
1,277,910
|
|
|
|
|
|
President & Chief
|
|
|
2007
|
|
|
|
409,164
|
|
|
|
122,738
|
|
|
|
365,116
|
|
|
|
182,461
|
|
|
|
99,000
|
|
|
|
27,842
|
|
|
|
1,187,737
|
|
|
|
|
|
Operating Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debabrata Mukherjee
|
|
|
2009
|
|
|
|
251,083
|
|
|
|
45,982
|
|
|
|
211,882
|
|
|
|
204,930
|
|
|
|
37,000
|
|
|
|
7,538
|
|
|
|
758,415
|
|
|
|
|
|
Vice President & General Manager
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Specialty Papers Business Unit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martin Rapp(6)
|
|
|
2009
|
|
|
|
359,688
|
|
|
|
38,253
|
|
|
|
160,999
|
|
|
|
300,402
|
|
|
|
107,000
|
|
|
|
16,477
|
|
|
|
984,578
|
|
|
|
|
|
Vice President & General Manager
|
|
|
2008
|
|
|
|
377,476
|
|
|
|
29,165
|
|
|
|
57,251
|
|
|
|
168,126
|
|
|
|
41,000
|
|
|
|
23,741
|
|
|
|
696,759
|
|
|
|
|
|
Composite Fibers Business Unit
|
|
|
2007
|
|
|
|
337,138
|
|
|
|
25,504
|
|
|
|
122,768
|
|
|
|
108,512
|
|
|
|
191,000
|
|
|
|
18,217
|
|
|
|
803,139
|
|
|
|
|
|
|
|
|
|
(1)
|
The amounts reflect the fair market value of RSUs granted on
May 5, 2009, March 5, 2008 and March 3, 2007. The
method used to calculate these amounts is indicated in
footnote 10 to the Companys audited financial
statements included in the Companys Annual Report on
Form 10-K
for the year ended December 31, 2010. RSUs earn dividend
equivalents, with payment made on the payment date for dividends
declared on the Companys common stock.
|
|
(2)
|
The amounts reflect the dollar value recognized, in accordance
with the Financial Accounting Standards Board Accounting
Standards Codification FASB ASC, for financial
statement reporting purposes during 2009 and 2008 and 2007. The
method used to calculate these amounts is indicated in
footnote 10 to the Companys audited financial
statements included in the Companys Annual Report on
Form 10-K
for the year ended December 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
|
March
|
|
December
|
|
|
Dividend yield
|
|
|
3.63%
|
|
|
|
2.68%
|
|
|
|
2.26%
|
|
|
|
2.44%
|
|
Risk-free rate of return
|
|
|
2.26
|
|
|
|
3.69
|
|
|
|
4.50
|
|
|
|
4.06
|
|
Volatility
|
|
|
40.59
|
|
|
|
31.90
|
|
|
|
32.80
|
|
|
|
31.81
|
|
Term
|
|
|
6 years
|
|
|
|
6 years
|
|
|
|
6 years
|
|
|
|
6 years
|
|
|
|
|
|
(3)
|
The 2009, 2008 and 2007 amounts reflect cash payments under the
Companys 2005 Management Incentive Plan (the
MIP). See discussion of the MIP in the Compensation
Discussion and Analysis on page 20-22 of this proxy
statement.
|
|
(4)
|
For each of the named executive officers other than
Mr. Glatfelter, the amounts reflect the actuarial increase
in the present value of such named executive officers
benefits under all pension plans established by the Company
determined using interest and mortality rate assumptions
consistent with those used in the Companys financial
statements and includes amounts which the NEOs may not be
currently entitled to receive because such amounts are not
vested. For Mr. Glatfelter, the 2009 amount represents a
$1,659,000 actuarial increase in the present value of his
benefits under all pension plans established by the Company and
$0 of above-market interest earned on deferred compensation. The
2008 amount represents a $150,000 actuarial increase in the
present value of his benefits under all pension plans
established by the Company and $1,719 of above-market interest
earned on deferred compensation. The 2007 amount represents a
$645,000 actuarial increase in the present value of his benefits
under all pension plans established by the Company and $3,915 of
above-market interest earned on deferred compensation.
Mr. Glatfelters deferred compensation is credited
quarterly with interest based on the prime rate at Morgan
Guaranty Trust Company of New York. Above market interest was
calculated by subtracting the interest
Mr. Glatfelters deferred compensation would have
earned in a given year if the rate of interest was equal to 120%
of the applicable long-term federal rate for such year with
compounding from the actual interest earnings credited to such
deferred compensation in such year.
|
|
(5)
|
Other compensation includes the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k)
|
|
Perquisites
|
|
RSU
|
|
Other
|
|
|
|
|
Match
|
|
(i),(ii)
|
|
Dividends
|
|
(iii)
|
|
Total
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Glatfelter
|
|
$
|
1,509
|
|
|
$
|
|
|
|
$
|
29,506
|
|
|
$
|
3,625
|
|
|
$
|
34,640
|
|
Jacunski
|
|
|
4,125
|
|
|
|
|
|
|
|
9,271
|
|
|
|
|
|
|
|
13,396
|
|
Parrini
|
|
|
4,528
|
|
|
|
7,884
|
|
|
|
17,982
|
|
|
|
|
|
|
|
30,394
|
|
Mukherjee
|
|
|
3,311
|
|
|
|
|
|
|
|
4,227
|
|
|
|
|
|
|
|
7,538
|
|
Rapp
|
|
|
|
|
|
|
12,553
|
|
|
|
3,924
|
|
|
|
|
|
|
|
16,477
|
|
|
|
-27-
|
|
|
|
i.
|
The amount included in the Perquisites column for
Mr. Parrini represents country and dining club dues paid in
2009, by the Company.
|
|
|
|
|
ii.
|
The amounts included in the Perquisites column for
Mr. Rapp represents a car allowance paid for by the Company.
|
|
|
|
|
iii.
|
The amount included in the Other column for
Mr. Glatfelter consists of $3,600 in annual salary which
Mr. Glatfelter receives for serving as President and
Chairman of Glatfelter Pulpwood Company and an annual $25
payment made by the Company for Mr. Glatfelters
membership in the Companys Quarter Century Club. This Club
consists of Company employees and retirees who have been
continuously employed by the Company for 25 or more years. The
amount included for Mr. Rapp in the other column for 2007
represents life insurance policy premiums which are paid by the
Company on behalf of Mr. Rapp.
|
|
|
(6) |
Mr. Rapps cash compensation is paid in Euros
(). Amounts presented here have been converted to United
States dollars ($) using the average exchange rate for 2009 or
1.3968 $/. Mr. Rapps cash compensation (not
including automobile expense reimbursement) was 257,839,
246,034 and 99,206 for 2009, 2008, and 2007,
respectively.
|
-28-
GRANTS OF
PLAN-BASED AWARDS
The following table sets forth information concerning grants of
plan-based awards in 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards:
|
|
Option
|
|
Exercise
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Awards:
|
|
or Base
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
Shares of
|
|
Number of
|
|
Price of
|
|
Fair Value
|
|
|
|
|
Estimated Possible Payouts Under Non-
|
|
Stock or
|
|
Securities
|
|
Option
|
|
of Stock
|
|
|
|
|
Equity Incentive Plan (1)
|
|
Units
|
|
Underlying
|
|
Awards
|
|
and Option
|
Name
|
|
Grant Date
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
(2)
|
|
(3)
|
|
($/Share)
|
|
Awards
|
|
|
Glatfelter
|
|
|
02/17/10
|
|
|
$
|
264,320
|
|
|
$
|
528,640
|
|
|
$
|
1,057,280
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
05/05/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,820
|
|
|
|
|
|
|
|
|
|
|
|
146,866
|
|
|
|
|
05/05/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
262,680
|
|
|
|
9.91
|
|
|
|
743,384
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jacunski
|
|
|
02/17/10
|
|
|
|
91,417
|
|
|
|
182,834
|
|
|
|
365,668
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05/05/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,270
|
|
|
|
|
|
|
|
|
|
|
|
62,136
|
|
|
|
|
05/05/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101,170
|
|
|
|
9.91
|
|
|
|
286,311
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parrini
|
|
|
02/17/10
|
|
|
|
164,133
|
|
|
|
328,266
|
|
|
|
656,532
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05/05/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,510
|
|
|
|
|
|
|
|
|
|
|
|
104,154
|
|
|
|
|
05/05/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
169,510
|
|
|
|
9.91
|
|
|
|
479,713
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mukherjee
|
|
|
02/17/10
|
|
|
|
56,925
|
|
|
|
113,850
|
|
|
|
227,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05/05/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,640
|
|
|
|
|
|
|
|
|
|
|
|
45,982
|
|
|
|
|
05/05/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
74,870
|
|
|
|
9.91
|
|
|
|
211,882
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rapp
|
|
|
02/17/10
|
|
|
|
83,445
|
|
|
|
166,890
|
|
|
|
333,780
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05/05/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,860
|
|
|
|
|
|
|
|
|
|
|
|
38,253
|
|
|
|
|
05/05/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,890
|
|
|
|
9.91
|
|
|
|
160,999
|
|
|
|
|
|
(1)
|
The amount shown represent awards under the Companys
Management Incentive Plan. Threshold payments equal 50% of the
target amount and maximum payments equal 200% of the target
amount shown. For 2009, the Companys operating net income
resulted in a MIP payment equal to 180% of target. See
discussion in Compensation Discussion and Analysis beginning on
page 18 of this proxy statement.
|
|
(2)
|
The amounts shown reflect grants of RSUs to the named executive
officers under the Plan.
|
|
(3)
|
The amounts shown reflect grants of SOSARs to the named
executive officers under the Plan.
|
-29-
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
The following table sets forth information concerning
outstanding equity awards as of December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options (#)
|
|
|
Options (#)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
|
|
|
Market Value of
|
|
|
|
|
|
|
|
|
|
Option
|
|
|
Option
|
|
|
Award
|
|
|
Number of Shares or
|
|
|
Shares or Units of
|
|
|
|
|
|
|
|
|
|
Exercise
|
|
|
Expiration
|
|
|
Grant
|
|
|
Units of Stock That
|
|
|
Stock That Have
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Price
|
|
|
Date
|
|
|
Date
|
|
|
Have Not Vested( #)
|
|
|
Not Vested (4)
|
|
|
G. H. Glatfelter II
|
|
|
79,000
|
|
|
|
|
|
|
$
|
15.47
|
|
|
|
12/17/11
|
|
|
|
6/7/06
|
|
|
|
8,700
|
(1)
|
|
$
|
105,705
|
|
|
|
|
63,600
|
|
|
|
|
|
|
|
13.70
|
|
|
|
12/16/12
|
|
|
|
3/7/07
|
|
|
|
7,300
|
(2)
|
|
|
88,695
|
|
|
|
|
34,267
|
|
|
|
17,133
|
|
|
|
15.94
|
(5)
|
|
|
03/07/17
|
|
|
|
3/7/07
|
|
|
|
1,250
|
(3)
|
|
|
15,188
|
|
|
|
|
39,733
|
|
|
|
19,867
|
|
|
|
14.78
|
(6)
|
|
|
12/19/17
|
|
|
|
3/5/08
|
|
|
|
9,100
|
(2)
|
|
|
110,565
|
|
|
|
|
21,500
|
|
|
|
43,000
|
|
|
|
13.44
|
(7)
|
|
|
03/05/18
|
|
|
|
5/5/09
|
|
|
|
14,820
|
(2)
|
|
|
180,063
|
|
|
|
|
|
|
|
|
262,680
|
|
|
|
9.91
|
(8)
|
|
|
05/05/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. P. Jacunski
|
|
|
14,333
|
|
|
|
7,167
|
|
|
|
15.94
|
(5)
|
|
|
03/07/17
|
|
|
|
6/7/06
|
|
|
|
2,533
|
(1)
|
|
|
30,775
|
|
|
|
|
16,600
|
|
|
|
8,300
|
|
|
|
14.78
|
(6)
|
|
|
12/19/17
|
|
|
|
3/7/07
|
|
|
|
3,100
|
(2)
|
|
|
37,665
|
|
|
|
|
9,084
|
|
|
|
18,166
|
|
|
|
13.44
|
(7)
|
|
|
03/05/18
|
|
|
|
3/7/07
|
|
|
|
729
|
(3)
|
|
|
8,857
|
|
|
|
|
|
|
|
|
101,170
|
|
|
|
9.91
|
(8)
|
|
|
05/05/19
|
|
|
|
3/5/08
|
|
|
|
3,830
|
(2)
|
|
|
46,535
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/5/09
|
|
|
|
6,270
|
(2)
|
|
|
76,181
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D. C. Parrini
|
|
|
15,900
|
|
|
|
|
|
|
|
12.95
|
|
|
|
12/18/10
|
|
|
|
6/7/06
|
|
|
|
4,533
|
(1)
|
|
|
55,076
|
|
|
|
|
26,400
|
|
|
|
12,300
|
|
|
|
15.94
|
(5)
|
|
|
03/07/17
|
|
|
|
3/7/07
|
|
|
|
5,200
|
(2)
|
|
|
63,180
|
|
|
|
|
28,533
|
|
|
|
14,267
|
|
|
|
14.78
|
(6)
|
|
|
12/19/17
|
|
|
|
3/7/07
|
|
|
|
833
|
(3)
|
|
|
10,121
|
|
|
|
|
15,254
|
|
|
|
30,506
|
|
|
|
13.44
|
(7)
|
|
|
03/05/18
|
|
|
|
3/5/08
|
|
|
|
6,440
|
(2)
|
|
|
78,246
|
|
|
|
|
|
|
|
|
169,510
|
|
|
|
9.91
|
(8)
|
|
|
05/05/19
|
|
|
|
5/5/09
|
|
|
|
10,510
|
(2)
|
|
|
127,696
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D. Mukherjee
|
|
|
6,467
|
|
|
|
3,233
|
|
|
|
15.94
|
(5)
|
|
|
03/07/17
|
|
|
|
6/6/06
|
|
|
|
1,167
|
(1)
|
|
|
14,179
|
|
|
|
|
7,467
|
|
|
|
3,733
|
|
|
|
14.78
|
(6)
|
|
|
12/19/17
|
|
|
|
3/7/07
|
|
|
|
1,200
|
(2)
|
|
|
14,580
|
|
|
|
|
3,990
|
|
|
|
7,980
|
|
|
|
13.44
|
(7)
|
|
|
03/05/18
|
|
|
|
3/7/07
|
|
|
|
313
|
(3)
|
|
|
3,803
|
|
|
|
|
|
|
|
|
74,870
|
|
|
|
9.91
|
(8)
|
|
|
03/05/19
|
|
|
|
3/5/08
|
|
|
|
1,680
|
(2)
|
|
|
20,412
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/5/09
|
|
|
|
4,640
|
(2)
|
|
|
56,376
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
M. Rapp
|
|
|
8,267
|
|
|
|
4,133
|
|
|
|
15.94
|
(5)
|
|
|
03/07/17
|
|
|
|
8/1/06
|
|
|
|
1,733
|
(1)
|
|
|
21,056
|
|
|
|
|
9,600
|
|
|
|
4,800
|
|
|
|
14.78
|
(6)
|
|
|
12/19/17
|
|
|
|
3/7/07
|
|
|
|
1,600
|
(2)
|
|
|
19,440
|
|
|
|
|
5,130
|
|
|
|
10,260
|
|
|
|
13.44
|
(7)
|
|
|
03/05/18
|
|
|
|
3/5/08
|
|
|
|
2,170
|
(2)
|
|
|
26,366
|
|
|
|
|
|
|
|
|
56,890
|
|
|
|
9.91
|
(8)
|
|
|
03/05/19
|
|
|
|
5/5/09
|
|
|
|
3,860
|
(2)
|
|
|
46,899
|
|
|
|
|
|
(1)
|
Represents RSUs which vest ratably, with one third of the units
vesting on each December 31st of the second, third and
fourth full year after the RSUs are awarded, with all shares
delivered at the time of final vesting.
|
|
(2)
|
Represents RSUs which vest ratably, with one third of the units
vesting on the third, fourth and fifth anniversaries of the
grant date of the RSUs, with all shares delivered at the time of
final vesting.
|
|
(3)
|
Represents RSUs which vest ratably, with one third of the units
vesting on the first, second and third anniversaries of the
grant date of the RSUs, with all shares delivered at the time of
final vesting.
|
|
(4)
|
Calculated based on the closing price of the Companys
common stock on December 31, 2009 ($12.15).
|
|
(5)
|
Represents SOSARs granted on March 7, 2007 which vest
ratably, with one third of the grant vesting on the first,
second and third anniversaries of the grant date of the SOSARs.
All SOSARs are settled in shares of the Companys common
stock. See the discussion of SOSARs in Compensation
Discussion & Analysis beginning on page 22
of this proxy statement.
|
|
(6)
|
Represents SOSARs granted on December 19, 2007 which vest
ratably, with one third of the grant vesting on the first,
second and third anniversaries of the grant date of the SOSARs.
All SOSARs are settled in shares of the Companys common
stock. See the discussion of SOSARs in Compensation
Discussion & Analysis beginning on page 22
of this proxy statement.
|
|
(7)
|
Represents SOSARs granted on March 3, 2008 which vest
ratably, with one third of the grant vesting on the first,
second and third anniversaries of the grant date of the SOSARs.
All SOSARs are settled in shares of the Companys common
stock. See the discussion of SOSARs in Compensation
Discussion & Analysis beginning on page 22
of this proxy statement.
|
|
(8)
|
Represents SOSARs granted on May 5, 2009 which vest
ratably, with one third of the grant vesting on the first,
second and third anniversaries of the grant date of the SOSARs.
All SOSARs are settled in shares of the Companys common
stock. See the discussion of SOSARs in Compensation
Discussion & Analysis beginning on page 22
of this proxy statement.
|
-30-
OPTION EXERCISES
AND STOCK VESTED
The following table sets forth information concerning options
exercised and stock vested during fiscal 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of Shares
|
|
|
Value Realized
|
|
|
Number of Shares
|
|
|
Value Realized on
|
|
|
|
Acquired on Exercise
|
|
|
on Exercise
|
|
|
Acquired on Vesting
|
|
|
Vesting
|
|
|
|
|
G. H. Glatfelter II
|
|
|
|
|
|
$
|
|
|
|
|
48,200
|
(1)
|
|
$
|
585,630
|
|
J. P. Jacunski
|
|
|
|
|
|
|
|
|
|
|
12,426
|
(2)
|
|
|
150,976
|
|
D. C. Parrini
|
|
|
|
|
|
|
|
|
|
|
25,534
|
(3)
|
|
|
310,238
|
|
D. Mukherjee
|
|
|
|
|
|
|
|
|
|
|
5,058
|
(4)
|
|
|
61,458
|
|
M. Rapp
|
|
|
|
|
|
|
|
|
|
|
3,467
|
(5)
|
|
|
42,124
|
|
|
|
|
|
|
|
(1)
|
Represents 28,300 shares, the final tranche of an award
granted on March 9, 2005, and which lapsed and was paid out
on December 31, 2009, 17,400 shares that vested on
December 31, 2009, but to which, pursuant to terms of the
award, delivery is deferred until the final tranche of the award
vests on December 31, 2010, and 2,500 shares that
vested on March 7, 2009, but to which, pursuant to terms of
the award, delivery is deferred until the final tranche of the
award vests on March 7, 2010.
|
|
|
(2)
|
Represents 5,900 shares, the final tranche of an award
granted on March 9, 2005, and which lapsed and was paid out
on December 31, 2009, 5,067 shares that vested on
December 31, 2009, but to which, pursuant to terms of the
award, delivery is deferred until the final tranche of the award
vests on December 31, 2010, and 1,459 shares that
vested on March 7, 2009 but to which, pursuant to terms of
the award, delivery is deferred until the final tranche of the
award vests on March 7, 2010.
|
|
|
(3)
|
Represents 14,800 shares, the final tranche of an award
granted on March 9, 2005, and which lapsed and was paid out
on December 31, 2009, 49,067 shares that vested on
December 31, 2009, but to which, pursuant to terms of the
award, delivery is deferred until the final tranche of the award
vests on December 31, 2010, and 1,667 shares that
vested on March 7, 2009 but to which, pursuant to terms of
the award, delivery is deferred until the final tranche of the
award vests on March 7, 2010.
|
|
|
(4)
|
Represents 2,100 shares, the final tranche of an award
granted on March 9, 2005, and which lapsed and was paid out
on December 31, 2009, 2,333 shares that vested on
December 31, 2009, but to which, pursuant to terms of the
award, delivery is deferred until the final tranche of the award
vests on December 31, 2010, and 625 shares that vested
on March 7, 2009 but to which, pursuant to terms of the
award, delivery is deferred until the final tranche of the award
vests on March 7, 2010.
|
|
|
(5)
|
Represents 3,467 shares that vested on December 31,
2009 but to which, pursuant to terms of the award, delivery is
deferred until the final tranche of the award vests on
December 31, 2010
|
|
|
(6)
|
Represents 14,000 shares, the final tranche of an award
granted on March 9, 2005, and which lapsed and was paid out
on December 31, 2009, 3,600 shares that vested on
December 31, 2009 but to which, pursuant to terms of the
award, delivery is deferred until the final tranche of the award
vests on December 31, 2010 and 1,042 shares that
vested on March 7, 2009 but to which, pursuant to terms of
the award, delivery is deferred until the final tranche of the
award vests on March 7, 2010 .
|
-31-
PENSION
BENEFITS
The following table sets forth information concerning pension
benefits during fiscal year 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Present Value
|
|
|
|
|
|
|
|
|
Number of Years
|
|
|
of Accumulated
|
|
|
Payments During
|
|
|
|
|
|
Credited Services
|
|
|
Benefit
|
|
|
Last Fiscal Year
|
|
Name
|
|
Plan Name
|
|
(#)
|
|
|
($)(1)
|
|
|
($)
|
|
|
|
|
G. H. Glatfelter II
|
|
Pension Plan
|
|
|
33
|
|
|
|
790,000
|
|
|
|
|
|
|
|
SERP
|
|
|
33
|
|
|
|
4,501,000
|
|
|
|
|
|
J. P. Jacunski
|
|
Pension Plan
|
|
|
6
|
|
|
|
56,000
|
|
|
|
|
|
|
|
SMPP
|
|
|
6
|
|
|
|
22,000
|
|
|
|
|
|
D. C. Parrini
|
|
Pension Plan
|
|
|
12
|
|
|
|
137,000
|
|
|
|
|
|
|
|
SERP
|
|
|
12
|
|
|
|
549,000
|
|
|
|
|
|
D. Mukherjee
|
|
Pension Plan
|
|
|
12
|
|
|
|
82,000
|
|
|
|
|
|
|
|
SMPP
|
|
|
12
|
|
|
|
33,000
|
|
|
|
|
|
M. Rapp
|
|
Pension Plan
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
Contractual Agreement
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7
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(2)
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339,0002
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(1)
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Mr. Glatfelters present value calculation is based on
a 6.3% discount rate for the SERP and a 6.2% discount rate for
the Pension Plan, a 0% postretirement COLA rate, RP-2000
mortality projected to 2010, age 62 retirement, and no
pre-retirement decrements. Mr. Jacunskis present
value calculation is based on a 5.9% discount rate for the SMPP
and a 6.2% discount rate for the Pension Plan, a 0%
postretirement COLA rate, RP-2000 mortality projected to 2010,
age 62 retirement for the SMPP and age 65 retirement
for the Pension Plan, and no pre-retirement decrements.
Mr. Parrinis present value calculation is based on a
6.3% discount rate for the SERP and a 6.2% discount rate for the
Pension Plan, a 0% postretirement COLA rate, RP-2000 mortality
projected to 2010, age 62 retirement for the SERP and
age 65 retirement for the Pension Plan, and no
pre-retirement decrements. Mr. Mukherjees present
value calculation is based on a 5.9% discount rate for the SMPP
and a 6.2% discount rate for the Pension Plan, a 0%
postretirement COLA rate, RP-2000 mortality projected to 2010,
age 62 retirement, and no pre-retirement decrements.
Mr. Rapps present value calculation is based on a
5.9% discount rate, a 2% postretirement COLA rate, Heubeck
Richtafeln 2005G mortality, age 65 retirement, and no
pre-retirement decrements
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(2)
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Mr. Rapps years of credited service include four
years of pre-participation service that were granted under his
contractual agreement. The portion of the present value of
Mr. Rapps accumulated benefit attributable to this
four-year service credit is $194,000.
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As of December 31, 2009, only Messrs. Glatfelter and
Parrini were eligible for the FAC Pension (in addition to the
qualified pension plan). Messrs. Jacunski and Mukherjee
were eligible for the Early Retirement Supplement (in addition
to the qualified pension plan). Mr. Rapp was eligible for a
pension benefit as stipulated under his employment agreement. A
description of the various plans follows.
What employee retirement plans has the Company established
for Directors and Executive Officers?
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SERP
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Pension
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FAC
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Plan
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Restoration
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Pension
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SMPP
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G. H. Glatfelter II
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√
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√
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√
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J. P. Jacunski
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√
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√
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D. C. Parrini
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√
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√
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√
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D. Mukherjee
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√
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√
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M. Rapp
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As of December 31, 2009, all of the NEOs except
Mr. Rapp were eligible for the P. H. Glatfelter Company
Retirement Plan for Salaried Employees (the Qualified
Pension Plan). In addition, Mr. Glatfelter and
Mr. Parrini were eligible for both the FAC (final average
compensation) and Restoration portions of the Companys
Supplemental Executive Retirement Plan, and Mr. Jacunski
and Mr. Mukherjee were each eligible for the Early
Retirement Supplement portion of the Companys Supplemental
Management Pension Plan. Finally, Mr. Rapp was eligible for
a pension benefit through a special contractual agreement
between him and the Company.
The following describes all of these benefit plans/arrangements
in further detail.
Qualified Pension Plan. All eligible salaried
employees of the Company participate in the Qualified Pension
Plan. This is a tax-qualified defined benefit pension plan.
Salaried employees who were plan participants on January 1,
2007 are eligible for a normal retirement pension beginning at
age 65 equal to:
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1.4% of the participants final average compensation
multiplied by his or her years of benefit service (to a maximum
of 25), plus
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0.5% of final average compensation for each year of benefit
service in excess of 25.
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Final average compensation generally means the
participants highest average compensation over any
consecutive five year period which spans the ten year period
preceding the year of the participants retirement, during
which the participant had the highest average compensation.
However, if a participant does not have five consecutive
calendar years of compensation, then final average compensation
is determined
-32-
by dividing compensation over the entire period of participation
by the number of years (and fractions of years) in such period.
Eligible compensation generally includes salary as listed in the
Summary Compensation Table plus paid bonus (to a maximum of the
IRS limit, which was $245,000 for 2009). Eligible compensation,
however, does not include any MIP bonus that any NEO had elected
to defer. In 2005 the Company eliminated the deferral feature
for MIP bonuses.
The Qualified Pension Plan provides for early retirement
benefits for participants who retire at or after age 55 and
prior to age 65. The amount of the monthly early retirement
pension is reduced on account of its early commencement, at the
rate of 2.5% per year. Early retirees at or after age 62
with 30 or more years of benefit service can receive an
unreduced early retirement pension. Mr. Glatfelter is
currently eligible for a reduced early retirement benefit under
the Qualified Pension Plan.
The foregoing benefit formula based on final average
compensation does not apply to new hires on and after
January 1, 2007, who instead participate under a new
cash balance formula. None of the listed
executives participate under the new benefit formula.
Qualified Pension Plan interests generally vest upon the first
to occur of five years of service or the employee reaching
55 years of age. As of December 31, 2006, however, the
plan was amended to fully vest all participants on that date.
All of the listed executives (except Mr. Rapp, who does not
participate in the Qualified Pension Plan) became fully vested
on that date.
Supplemental Executive Retirement Plan. The
Company has a Supplemental Executive Retirement Plan
(SERP) consisting of two benefits, either or both of
which are available to those management and executive employees
who have been selected by the Companys Compensation
Committee for participation therein.
The first benefit, known as the Restoration Pension,
provides an additional pension benefit based on the
participants pension benefit earned under the terms of the
Qualified Pension Plan, which is intended to restore that
portion of the Qualified Pension Plans benefit that cannot
be paid from that plan due to legal limitations on the
compensation and total benefits payable under the Qualified
Pension Plan. Participants may receive the Restoration Pension
in a single sum or in any form permitted under the Qualified
Pension Plan, as elected by the participant at the time he or
she first becomes a participant. Mr. Glatfelter and
Mr. Parrini have both elected to receive their Restoration
Pensions in a single sum. Effective February 10, 2010, the
Committee approved a revision to the Restoration Pension Benefit
which revised the procedure for approval of the executives who
will be eligible for this benefit. Subject to approval of the
Committee, employees will generally be eligible for the
Restoration Pension Benefit if they have at least one year of
pensionable compensation in excess of the Codes annual
compensation limit for qualified pension plans.
The second benefit, known as the FAC Pension, pays a
benefit equal to 2% of the participants final average
compensation (as defined below) multiplied by the
participants years of benefit service under the Qualified
Pension Plan. This calculated amount is then offset by the
actuarial equivalent value of the participants benefits
under the Qualified Pension Plan, as well as certain
Company-sponsored nonqualified defined benefit pension
arrangements (including the Restoration Pension if applicable).
Final average compensation means the annualized average of the
participants eligible compensation for the sixty
(60) calendar months immediately preceding his or her
retirement. Eligible compensation generally means the salary and
annual incentive bonus amounts listed in the Summary
Compensation Table.
The FAC Pension can also be paid on an early retirement basis as
early as age 55, but reduced by 2.5% for each year by which
the early benefit commencement precedes the participants
attainment of age 62. Mr. Glatfelter is currently
eligible for an early-retirement FAC Pension benefit.
The FAC Pension is payable following the participants
retirement at or after age 62 in the form of a joint and
75% survivor annuity with the participants spouse or, if
so requested by the participant and approved by the Compensation
Committee, as a single sum. Mr. Glatfelter and
Mr. Parrini have each elected to receive their FAC Pensions
in a single sum (subject to Compensation Committee approval). A
survivor benefit is also payable under the FAC Pension to the
participants surviving spouse if the participant dies
before his or her benefit commencement date.
Distribution of any SERP benefit (Restoration or FAC) to a
participant who is a key employee under Internal
Revenue Service (IRS) rules must, under
Section 409A of the Code, as amended (the IRC),
be delayed until six months following retirement or termination.
Supplemental Management Pension Plan. The Company
has a Supplemental Management Pension Plan (SMPP)
consisting of two benefits.
The first benefit, known as the MIP Adjustment Supplement
provides an additional pension benefit based on the
participants pension benefit earned under the terms of the
Qualified Pension Plan (Pension Benefit), taking
into account any Management Incentive Plan bonus that the
participant elected to defer. (Prior to 2005, the terms of the
Companys Management Incentive Plan (MIP),
permitted a participant to defer a portion of his or her MIP
bonus. Such deferred MIP bonus is not included in determining
the participants final average compensation under the
Qualified Pension Plan.)
The second benefit, known as the Early Retirement Supplement,
provides an additional pension benefit based on
-33-
the participants Pension Benefit. In order to be eligible
for this benefit, an otherwise eligible management employee who
retires on or after age 55, must elect to defer
commencement of his or her Pension Benefit until three years
after retirement from the Company (or until his or her normal
retirement date under the Qualified Pension Plan, if earlier).
The participant is then eligible to receive monthly
bridge pension payments from date of his or her
retirement until the deferred commencement date of his or her
Pension Benefit. The monthly amount of the eligible
participants bridge payments will be equal to the monthly
Pension Benefit amount, if payable in the form of a single life
annuity beginning as of the deferred benefit commencement date
chosen by the participant under the Qualified Pension Plan.
Distribution of any SMPP benefit (MIP Adjustment Supplement or
Early Retirement Supplement) to a participant who is a key
employee under IRS rules must, under IRC
Section 409A, be delayed until six months following
retirement or termination. Also, it is anticipated that changes
will be made to the Early Retirement Supplement benefit to
address Section 409A compliance before final IRS guidance
takes effect.
Mr. Rapps Pension Agreement.
Mr. Rapp is covered under a special pension arrangement
with the Company that was entered into during 2007. Under this
arrangement, he is eligible for a normal retirement benefit
after having attained age 65.
Mr. Rapps normal retirement benefit is based on 1.5%
of his pensionable income multiplied by his years of
service (including the pre-service period from August 1,
2002 through July 31, 2006). Pensionable income
is the average of his base pay plus bonus for the five years
immediately preceding his retirement.
Mr. Rapp is eligible for an early retirement benefit under
his special arrangement after reaching age 60. His early
retirement benefit equals his normal retirement benefit reduced
by 2.5% per year.
Mr. Rapps normal form of benefit is a 60%
joint-and-survivor
annuity.
NONQUALIFIED
DEFERRED COMPENSATION
The following table sets forth information concerning
nonqualified deferred compensation of the NEOs:
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Aggregate
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Executive
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Registrant
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Earnings
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Aggregate
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Aggregate
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Contributions in
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Contributions in
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in Last FY
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Withdrawals/
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Balance
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Name
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Last FY
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Last FY
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(1)
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Distributions
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at Last FYE
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George H. Glatfelter II
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$
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$
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$
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6,700
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$
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$
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155,666
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(1)
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Of the $6,700 in interest earned in 2009, $-0- was reported as
above-market earnings on deferred compensation in the Summary
Compensation Table on page 27 of this proxy statement.
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The Nonqualified Deferred Compensation table above provides
information about deferral elections under the P.H. Glatfelter
Company Management Incentive Plans, effective January 1,
1982, as amended (the 1982 MIP). Pursuant to the
deferred compensation component of the 1982 MIP, certain
executive officers were entitled to defer receipt of any portion
of the incentive awards made under the 1982 MIP and irrevocably
elect a time for future payment in accordance with deferral
terms and options established by the Compensation Committee.
Mr. Glatfelter, who deferred payment of an award he
received under the MIP for the 1985 plan year until 2016, is the
only NEO who has a deferred award under the 1982 MIP. Under the
1982 MIP, the amount of deferred awards is adjusted by crediting
the cumulative deferred awards with interest at the end of each
calendar quarter. Pursuant to the 1982 MIP, for each calendar
quarter, Mr. Glatfelters deferred award is credited
with interest earned for the quarter at an interest rate equal
to the prime rate on the last business day of the quarter at the
Morgan Guaranty Trust Company of New York. If
Mr. Glatfelters deferred award is paid during a
quarter, interest on the accumulated award will be accrued at
the rate prevailing at the end of the previous quarter.
Mr. Glatfelters deferred award will be paid within
30 days of the date stipulated on his election form. The
payment of Mr. Glatfelters deferred award may be
accelerated if necessary upon the approval of the Boards
Compensation Committee. However, if Mr. Glatfelter
separates from the Company, the deferred award will be paid as
stipulated on his election form. If Mr. Glatfelter dies
before all awards are paid out, the unpaid amounts will be paid
in a lump sum to his designated beneficiary.
-34-
POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
As described on page 24 of this proxy statement, the NEOs
have each executed Change In Control Employment Agreements with
the Company. The information below describes and quantifies
compensation that would become payable to NEOs under those
agreements in the event of termination of the employment of the
NEOs under several different circumstances. The amounts shown
assume that termination was effective as of December 31,
2009, and include amounts earned through such time and estimates
of the amounts that would be paid to the NEOs upon their
termination. The actual amounts to be paid can only be
determined at the time of a NEOs separation from the
Company.
Termination Not
in Connection with a Change in Control
Severance. In addition to the items described
below, payments and benefits provided on a non-discriminatory
basis to salaried employees generally and in the change in
control context, discussed below, the Compensation Committee or
the independent Directors of the Board may authorize additional
severance benefits, although they are not obligated to do so. In
the past, the Company has agreed to provide additional severance
benefits to departing executive officers in order to enter into
definitive termination agreements on terms desirable to the
Company.
Pension Benefits. A general description of each pension
plan in which the NEOs participate, the years of service
credited and the present value of each NEOs accumulated
pension benefit are included on page 24 of this proxy
statement. In addition to the Pension Plan, Mr. Glatfelter
and Mr. Parrini each are eligible participants under the
SERP and Mr. Jacunski and Mr. Mukherjee are each
eligible participants under the SMPP. Neither the SERP nor the
SMPP are available on a non-discriminatory basis to salaried
employees generally.
SMPP. In the event of termination under any circumstance
on December 31, 2009, neither Mr. Jacunski nor
Mr. Mukherjee would be entitled to an Early Retirement
Supplement under the SMPP because they would have been under the
age of 55 at the time of termination. Neither Mr. Jacunski
nor Mr. Mukherjee has accrued any benefit under the MIP
Adjustment Supplement.
SERP. The table below sets forth the various
monthly payments that Mr. Glatfelter and Mr. Parrini
(or, in certain circumstances, their spouses) would be entitled
to receive for their lifetimes upon termination, as of
December 31, 2009, under several different circumstances.
TERMINATION
PAYMENTS UNDER SERP
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Termination Other
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than Upon Death or
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Termination as a
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Name
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Disability
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Result of Death (1)
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Disability (2)
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G. H. Glatfelter II
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$
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23,000
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(3)
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$
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18,000
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$
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26,000
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J. P. Jacunski
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D. C. Parrini
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(4)
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2,000
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6,000
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D. Mukherjee
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(1)
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Represents survivor benefit payable to the NEOs spouse for
her lifetime.
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(2)
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Represents FAC pension benefit payable beginning upon reaching
the age of 62. The Compensation Committee has the authority to
commence the FAC Pension when the SERP participant reaches 55,
if the participant requests, but the monthly FAC Pension amount
would be reduced at the rate of 2.5% per year for each year
between the participants age 62 normal retirement
date and his early benefit commencement date.
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(3)
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This represents payment in the form of a joint and 75% surviving
spouse annuity. In the event of death following the commencement
of benefits, the surviving spouse receives monthly payments for
her lifetime in an amount equal to 75% of the monthly benefit
payable to the NEO.
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(4)
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Mr. Parrini was under 55 years of age on
December 31, 2009, so voluntary termination would result in
his forfeiture of any benefits under the SERP. This represents
payment in the form of a joint and 75% surviving spouse annuity.
In the event of death following benefit commencement, the
surviving spouse receives monthly payments for her lifetime in
an amount equal to 75% of the monthly benefit payable to the NEO.
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If a SERP participant becomes an employee or officer of a
competitor of the Company or uses or discloses confidential
information of the Company (except as required by the SERP
participants duties as an employee of the Company), then
all benefits under the SERP are forfeited.
Mr. Glatfelter has deferred payment of an award he
previously earned under the MIP until 2016. The last column of
the Nonqualified Deferred Compensation table on page 34 of
this proxy statement reports Mr. Glatfelters
aggregate balance at December 31, 2009.
Mr. Glatfelter, or his beneficiary in the event of his
death, is entitled to receive the amount in his account in the
event of his termination. None of the other NEOs have deferred
compensation.
The bonuses paid to NEOs and other executives in 2009 under the
2005 Management Incentive Plan were subject to a performance
period that ended on December 31, 2009. If a NEO had been
terminated on December 31, 2009 and the performance goals
to which the 2009 awards were subject
-35-
had been achieved, then the NEO would be entitled to receive
payment of his or her full bonus under the 2005 Management
Incentive Plan. If a NEO is terminated during a performance
period that has been set for a bonus granted under the 2005
Management Incentive Plan, then the NEO forfeits his or her
award, except that in the case of termination of employment due
to the retirement, disability or death of a NEO, such award will
be prorated to reflect the period of service.
Stock Options. With regard to the outstanding
stock options held by Mr. Glatfelter and Mr. Parrini,
if Mr. Glatfelter or Mr. Parrini retires prior to the
expiration of the stock options, those options exercisable on
the date of his retirement will remain exercisable until the
first to occur of the third anniversary of his retirement or the
expiration of the stock options. In the event that
Mr. Glatfelter or Mr. Parrini dies after retirement,
options exercisable on the date of his death will remain
exercisable by his legal representative until the first to occur
of the first anniversary of the date of his death or the
expiration of such options. Based on a $12.15 closing price of
the Companys common stock on December 31, 2009,
Mr. Glatfelter and Mr. Parrini would have realized a
value of $98,580 and $12,720 had they each retired on
December 31, 2009 and immediately exercised all of their
in-the-money
options.
SOSARs & RSUs.
RSUs. Each of the NEOs holds RSUs granted under the Plan.
If the NEO ceases to be an employee of the Company for any
reason (voluntary or involuntary), other than death, disability
or retirement, then unvested RSUs are forfeited. If, subsequent
to vesting of the RSUs, the NEO ceases to be an employee for any
reason other than as a result of termination for cause (as
defined in the RSU award certificate), death, disability or
retirement, the restrictions with respect to the vested RSUs
shall continue until they would otherwise have lapsed if such
employment had not terminated. However, if, subsequent to
vesting of the RSUs, the NEO is terminated for cause, all
outstanding RSUs, whether vested or unvested, are forfeited.
Upon the death, disability or retirement of an NEO while
employed by the Company, an amount of unvested RSUs shall vest
equal to a percentage, the numerator of which equals the number
of days that has elapsed as of the date of death or retirement
or the date on which such disability commenced in the vesting
restriction period for each
1/3
tranche, and the denominator of which equals the total number of
days in each such vesting restriction period, and the Company
will issue in the NEOs name or in the name of the
NEOs legal representatives, beneficiaries or heirs, as the
case may be, in payment for the RSUs with respect to which all
restrictions have lapsed that number of shares of the
Companys common stock equal to the number of RSUs with
respect to which all restrictions have lapsed.
All unvested RSUs on the date of such death, disability or
retirement will be forfeited. The table below sets forth the
value of RSUs for which vesting accelerates based upon
termination as a result of disability, death or retirement on
December 31, 2009 (calculated based on the closing price of
the Companys common stock on December 31, 2009
($12.15):
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Disability/ Death/
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Retirement
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G. H. Glatfelter II
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$
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211,410
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J. P. Jacunski
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61,564
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D. C. Parrini
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110,164
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D. Mukherjee
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28,346
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M. Rapp
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42,124
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SOSARs. Each of the NEOs holds SOSARs granted under the
Plan. If an NEO ceases to be an employee of the Company for
reasons other than death, disability, retirement or involuntary
termination for cause (as defined in the SOSAR award
certificate) (an Other Termination), then, for a
period of ninety days following such Other Termination, the NEO
may exercise any SOSARs that vested prior to such Other
Termination. All unvested SOSARs on the date such Other
Termination will be immediately and irrevocably forfeited. If
the Company terminates the NEOs employment for cause, then
all outstanding SOSARs, whether vested or unvested, will be
immediately and irrevocably forfeited. Upon the death,
disability or retirement of an NEO while employed by the
Company, an amount of unvested SOSARs shall vest equal to a
percentage, the numerator of which equals the number of days
that have elapsed as of the date of death or retirement or the
date on which such disability commenced in the vesting
restriction period for each
1/3
tranche, and the denominator of which equals the total number of
days in each such vesting restriction period and all vested
SOSARs will be exercisable for three years from the date of such
death, disability or retirement. In the event that the vesting
set forth above yields a fractional number of SOSARs, the number
of SOSARs subject to vesting in any given year will be rounded
down to the nearest whole number of SOSARs. All unvested SOSARs
(after giving effect to the foregoing sentence) on the date of
such death, disability or retirement will be immediately and
irrevocably forfeited. The exercise price for all SOSARs which
have been granted to the NEOs and which vested on or prior to
December 31, 2009, exceeded the closing price of the
Companys common stock at December 31, 2009 ($12.15).
Accordingly, if any NEO would have died, become disabled or
retired during 2009, the NEO would not have realized any value
from SOSARs which would have become vested due to such events.
-36-
Change in
Control
Set forth in the table below are the amounts of compensation
payable to each NEO upon termination by the Company for cause,
termination by the NEO without good reason, termination by the
NEO for good reason, termination by the Company other than for
cause, death or disability, and termination in the event of
disability or death of the NEO. The amounts set forth in the
table below assume a change in control as of December 31,
2009, and termination of each executive upon the change in
control.
Potential
Payments Upon a Termination of Employment Following a Change in
Control
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Cash Payment of
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Cash Payment of
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Value of
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Cash
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Present Value of
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Unvested Section
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Present Value of
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Unvested
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Executive/Type of
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Severance
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Incremental Pension
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401(k) Company
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Welfare Benefits
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Excise Tax
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SOSARs &
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Termination
|
|
Payment ($)
|
|
|
Benefit ($)(1)
|
|
|
Match ($)(2)
|
|
|
Continuation ($)(3)
|
|
|
Gross-Up ($)
|
|
|
RSUs ($)(4)
|
|
|
Total ($)(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
George H. Glatfelter II
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,088,619
|
|
|
$
|
1,088,619
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Disability
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,088,619
|
|
|
$
|
1,088,619
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by Company for Cause
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by Executive Without Good Reason
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,088,619
|
|
|
$
|
1,088,619
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by Executive for Good Reason/by Company Other Than
for Cause, Death, Disability
|
|
$
|
4,820,349
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
48,194
|
|
|
$
|
1,892,807
|
|
|
$
|
1,088,619
|
|
|
$
|
7,849,970
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John P. Jacunski
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
426,634
|
|
|
$
|
426,634
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Disability
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
426,634
|
|
|
$
|
426,634
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by Company for Cause
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by Executive Without Good Reason
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
426,634
|
|
|
$
|
426,634
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by Executive for Good Reason/by Company Other Than
for Cause, Death, Disability
|
|
$
|
1,460,080
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
28,357
|
|
|
$
|
583,444
|
|
|
$
|
426,634
|
|
|
$
|
2,498,515
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dante C. Parrini
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
714,022
|
|
|
$
|
714,022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Disability
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
714,022
|
|
|
$
|
714,022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by Company for Cause
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by Executive Without Good Reason
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
714,022
|
|
|
$
|
714,022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by Executive for Good Reason/by Company Other Than
for Cause, Death, Disability
|
|
$
|
2,409,063
|
|
|
$
|
891,000
|
|
|
$
|
|
|
|
$
|
43,721
|
|
|
$
|
1,389,874
|
|
|
$
|
714,022
|
|
|
$
|
5,447,680
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debabrata Mukherjee
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
277,051
|
|
|
$
|
277,051
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Disability
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
277,051
|
|
|
$
|
277,051
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by Company for Cause
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by Executive Without Good Reason
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
277,051
|
|
|
$
|
277,051
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by Executive for Good Reason/by Company Other Than
for Cause, Death, Disability
|
|
$
|
935,131
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
27,507
|
|
|
$
|
414,548
|
|
|
$
|
277,051
|
|
|
$
|
1,654,237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martin Rapp
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
248,593
|
|
|
$
|
248,593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Disability
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
248,593
|
|
|
$
|
248,593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by Company for Cause
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by Executive Without Good Reason
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
248,593
|
|
|
$
|
248,593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by Executive for Good Reason/by Company Other Than
for Cause, Death, Disability
|
|
$
|
1,392,483
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
34,109
|
|
|
$
|
530,967
|
|
|
$
|
248,593
|
|
|
$
|
2,206,152
|
|
|
|
|
|
(1)
|
Represents actuarial present value of unvested retirement plans
based on the maximum benefit formula level; present values
calculated consistent with calculations in the Pension Benefits
table above.
|
|
(2)
|
Represents value of unvested portion of Section 401(k)
Company match.
|
|
(3)
|
Based on current type of coverage and premium levels.
|
|
(4)
|
Assumes full vesting and exercise on December 31, 2009.
|
|
(5)
|
Does not include payment of present value of vested accrued
benefits as listed in the Pension Benefits table, deferred
compensation balances as listed in the Nonqualified Deferred
Compensation table, or the value of vested options, SOSARs, or
RSUs.
|
-37-
Change in Control Agreements. As of December 31,
2009, the Company had entered into
change-in-control
agreements with each of the NEOs. Under the agreements, each
would become entitled to additional payments and benefits if his
employment was terminated under certain conditions within two
years following a change in control of the Company. Under the
agreements, each employees employment with the Company
would continue for two years from the date of a change in
control. During such period, the employee would continue in a
position at least equal to the position he held prior to the
change in control and shall receive compensation and benefits
from the Company at least equal to those paid to him prior to
the change in control. In the event of a termination following a
change in control, the following benefits would be provided to
the NEOs
Termination for Good Reason; Termination By the Company Other
than for Cause, Disability or Death. If, within two years
following a change in control, the employees employment is
terminated by the Company other than for cause, death or
disability, or is terminated by the employee for good reason, he
would receive his then current base salary through the date of
termination and accrued but unpaid vacation, plus the following
severance benefits:
|
|
|
|
|
Severance Payment. Within thirty days after the
date of termination, a lump sum payment in an amount which
consists of the following amounts:
|
|
|
|
|
|
A bonus payment for the year in which the date of termination
occurs, which is based on the greater of the NEOs
three-year average bonus and target bonus, pro-rated for the
NEOs term of service during the year; and
|
|
|
|
A severance payment in an amount equal to two times (three times
in the case of Mr. Glatfelter) (a) the NEOs
annual base salary (at the highest rate achieved before the date
of termination) plus (b) the NEOs annual bonus
defined as the greater of the NEOs three-year average
bonus and the NEOs target bonus under the Companys
Management Incentive Plan.
|
|
|
|
|
|
Health and Welfare Benefits. For a period of two
years (three years in the case of Mr. Glatfelter) after the
Date of Termination, or such longer period as any plan, program,
practice or policy may provide, the Company would continue to
provide group medical, prescription, dental, disability, salary
continuance, group life, accidental death and dismemberment and
travel accident insurance benefits at levels substantially equal
to those which would have been provided to them in accordance
with the Companys plans, programs, practices and policies
with respect to such benefits if the NEOs employment had not
been terminated.
|
|
|
|
401(k) and Pension. In the event that the NEO has not, as
of the date of termination, earned sufficient vesting service to
have earned (A) a non-forfeitable interest in his matching
contribution account under the Companys 401(k) plan, and
(B) a non-forfeitable interest in his accrued benefit under
the terms of the Companys Pension, the Company would pay
to the NEO a lump sum in cash (less applicable withholdings) in
an amount equal to the sum of:
|
|
|
|
|
|
the NEOs unvested matching contribution account under the
401(k) Plan, valued as of the date of termination; and
|
|
|
|
the actuarial present value of the NEOs unvested normal
retirement pension under the Pension Plan, based on the
NEOs accrued benefit under the plan as of the date of
termination, as determined by the Companys actuary
utilizing actuarial equivalency factors for determining single
sum amounts under the terms of the Pension Plan.
|
If the NEO is, as of the date of termination, a participant in
the Restoration Plan or the FAC Pension, the NEO would become
fully vested in the accrued benefit, and the vested benefit
would be paid in accordance with the terms of the respective
plans.
If the NEO is, as of the date of termination, a participant in
the P.H. Glatfelter Company Supplemental Pension Plan (the
SMPP) with at least five years of vesting service,
then the Company must contribute funds, to the extent it has not
already done so, to the trust serving as a funding vehicle for
that plan as follows:
|
|
|
|
|
If the NEO is a participant in the MIP Adjustment Supplement
under the SMPP, the Company shall fund the trust with sufficient
assets to pay the NEOs accrued benefit under the MIP
Adjustment Supplement within five days of the date of
termination; or
|
|
|
|
If the NEO is eligible to receive the Early Retirement
Supplement under the SMPP, the Company shall fund the trust with
sufficient assets to pay the NEOs accrued benefit under
the Early Retirement Supplement, within five days following the
later to occur of (i) the date of termination or
(ii) the benefit commencement date with respect to the
NEOs Early Retirement Supplement.
|
Termination for Cause; Termination By NEO Other than for Good
Reason; Termination by Death or Disability. If, within two
years following a change in control, the NEOs employment
is terminated by the NEO other than for good reason or by the
Company for cause or because of death or disability, the NEO or
the legal representatives of the NEO in the case of the
NEOs death, would receive obligations
-38-
accrued or earned and vested (if applicable) by the NEO as of
the date of termination (e.g., earned salary).
Change in Control. For purposes of payments made upon
termination of employment, a Change in Control means:
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the acquisition of direct or indirect beneficial ownership of
20% or more of the combined voting power of the Companys
outstanding voting securities by any person, entity or group,
excluding the Company, its subsidiaries, any employee benefit
plan of the Company or its subsidiaries, and any purchaser or
group of purchasers who are descendants of, or entities
controlled by descendants of, P. H. Glatfelter;
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in any twelve (12) month period, the ceasing of individuals
who constitute the Board to constitute at least a majority of
the Board, other than any person becoming a director whose
election was approved by at least a majority of incumbent
directors, excluding any such person whose initial election
occurs as a result of an actual or threatened election
contest; or
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the consummation of (i) a reorganization, merger or
consolidation in which shareholders of the Company immediately
prior to such event do not, immediately thereafter, beneficially
own more than 50% of the combined voting power of the
reorganized, merged or consolidated companys then
outstanding voting securities or (ii) a liquidation or
dissolution of the Company, or the sale of all or substantially
all of the assets of the Company to a Third Party.
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Cause. For purposes of payments made upon termination of
employment cause means:
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acts of personal dishonesty intended to result in substantial
personal enrichment of the NEO at the expense of the Company;
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repeated violation by the NEO of his obligations under the
Change in Control Employment Agreement or illegal conduct or
gross misconduct, which is materially injurious to the Company,
demonstrably willful and deliberate, and is not remedied in a
reasonable period of time after receipt of written notice from
the Company;
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violation of any of the Companys policies, including, but
not limited to, policies regarding sexual harassment, insider
trading, confidentiality, non-disclosure, non-competition,
non-disparagement, substance abuse and conflicts of interest and
any other written policy of the Company; or
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the conviction of a felony which is materially injurious to the
Company or a plea of guilty or no contest to a charge of a
felony which is materially injurious to the Company.
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Good Reason. For purposes of payments made upon
termination of employment, Good Reason means:
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a material diminution in the NEOs authority, duties or
responsibilities;
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a material diminution in the NEOs base salary or the
Companys failure to comply with certain provisions of the
Change in Control Employment Agreement relating to the
NEOs compensation;
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any failure by the Company to comply with any of the provisions
of the Change in Control Employment Agreement; or
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a material change in the office or location of the NEO other
than that described in the Change in Control Employment
Agreement.
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Tax
Gross-Up
Payments. During the two year period following a
change in control, if any payment or benefit to an NEO, whether
pursuant to the agreements or otherwise, is subject to the
excise tax imposed by the Code on excess parachute
payments, then an additional payment would be made to such
NEO so that the amount he receives on a net basis would be the
same amount that he would have received absent the applicability
of the excise tax.
409A. The Change in Control Employment
Agreement includes provisions in the nature of nonqualified
deferred compensation which must conform to the requirements of
IRC section 409A. Certain payments triggered by termination
of employment following a change in control, for persons who are
key employees under IRS rules, cannot begin before
six months after termination of employment.
SERP. In the event of a change of control, each SERP
participants right under the SERP becomes fixed and
non-forfeitable with respect to accrued benefits on that date of
the change in control. In addition, the designated percentage of
the participants final average compensation payable under
the FAC Pension (before adjustment for offsets) is fixed at
55 percent.
SOSARs and RSUs. Prior to March 2009, upon a
change in control, all of the RSUs that have been held for at
least six months become immediately and unconditionally vested,
and the restrictions with respect to such RSUs lapse. Similarly,
upon a change in control, all outstanding SOSARs will become
immediately and unconditionally vested.
In the wake of general marketplace and shareholder concerns
about executives potentially earning undue benefits that take
effect after mergers and acquisitions, the Committee, in March
2009, directed that all subsequent grants of RSUs and SOSARs
made to the NEOs and other eligible executives incorporate
double trigger change of control provisions. In
general, a single trigger provision provides that accelerated
vesting of equity awards would occur in the event of a change of
control irrespective of a corresponding termination. A double
trigger provision, by contrast, only accelerates vesting in the
event of a change of control and in the event
-39-
that the executive is terminated without Good Cause
or quits with Good Reason (as those terms are
defined in the applicable agreement). As a result, RSUs or
SOSARS that have been held for at least six months will
accelerate vesting only upon such a termination that occurs
within two years of a
change-in-control
event. The Committee believes that the incorporation of the
double trigger provision will ensure continuity of management
during mergers and acquisitions and assist with attracting and
retaining key executives, ultimately benefitting shareholders.
For the purposes of both SOSARs and RSUs, a change in control
means:
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the acquisition, by a third party, of beneficial ownership of
50% or more of the combined voting power of the Companys
then outstanding voting securities entitled to vote generally in
the election of directors; or
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individuals who constitute the Board at the time the SOSAR or
RSU is granted (the Incumbent Directors) cease to
constitute at least a majority of the Board, provided that any
person becoming a director whose election or nomination was
approved by a vote of at least a majority of the Incumbent
Directors who are directors at the time of such vote shall be an
Incumbent Director; or
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consummation of (i) a reorganization, merger or
consolidation, in each case, with respect to which persons who
were the shareholders of the Company immediately prior to such
reorganization, merger or consolidation (other than the
acquirer) do not, immediately thereafter, beneficially own more
than 50% of the combined voting power of the reorganized, merged
or consolidated company, or (ii) a liquidation or
dissolution of the Company or the sale of all or substantially
all of the assets of the Company to a third party.
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In addition to the foregoing, a change in control with respect
to an individual NEO shall be deemed to occur if the NEOs
employment with the Company is terminated prior to the date on
which a change in control occurs, and it is reasonably
demonstrated that such termination (i) was at the request
of a third party who has taken steps reasonably calculated to
effect a change in control or (ii) otherwise arose in
connection with or anticipation of a change in control.
Accrued Pay and
Regular Retirement Benefits
In addition to the benefits described above, the NEOs are also
entitled to certain payments and benefits upon termination of
employment that are provided on a non-discriminatory basis to
salaried employees generally upon termination of employment.
These include:
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Accrued salary and vacation pay;
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Vested interests under the Pension Plan, as described in Pension
Benefits on pages 24 through 25 of this proxy statement;
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Life insurance benefits; and
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Distributions of plan balances under the Companys 401(k)
plan.
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CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Related Party
Transactions Policy
The Nominating and Corporate Governance Committee (or its Chair,
under some circumstances) will review the relevant facts of all
proposed Related Person Transactions and either approve or
disapprove of the entry into the Related Person Transaction.
Under this policy, a Related Person Transaction is a
transaction, arrangement or relationship (or any series of
similar transactions, arrangements or relationships) involving
an amount which is at least $100,000, which the Company was, is
or will be a participant, and in which any Related Person had,
has or will have a direct or indirect material interest. A
Related Person is generally any person who is, or at
any time since the beginning of the Companys last fiscal
year was, (i) a Director or executive officer of the
Company or a nominee to become a Director of the Company;
(ii) any person who is known to be the beneficial owner of
more than 5% of any class of the Companys voting
securities; (iii) any immediate family member of any of the
foregoing persons; or (iv) any firm, corporation or other
entity in which any of the foregoing persons is employed or is a
general partner or principal or in a similar position, or in
which such person has a 5% or greater beneficial ownership
interest. There were no Related Person Transactions during 2009.
No Director may participate in any consideration or approval of
a Related Person Transaction with respect to which he or she or
any of his or her immediate family members is the Related
Person. Related Person Transactions are approved only if they
are determined to be in, or not inconsistent with, the best
interests of the Company and its shareholders.
If a Related Person Transaction which has not been previously
approved or previously ratified is discovered, the Nominating
and Corporate Governance Committee, or its Chair, will promptly
consider all of the relevant facts. If the transaction is
ongoing, the Committee will consider all options and may ratify,
amend or terminate the Related Person Transaction. If the
transaction has been completed, the Committee will consider if
rescission of the transaction is appropriate and whether
disciplinary action is warranted. In addition, the Committee
will review all ongoing Related Person Transactions on an annual
basis to determine whether to continue, modify or terminate the
Related Person Transaction.
In reviewing the relevant facts of all proposed Related Person
Transactions, the Nominating and Corporate Governance
-40-
Committee, or its Chair, will take into account, among other
factors it deems appropriate:
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The benefits to the Company of the transactions;
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The impact on a Directors independence, in the event the
Related Person is a Director, an immediate family
member of a Director or an entity in which a Director is a
partner, shareholder or executive officer;
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The availability of other sources for comparable products or
services;
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The terms of the transaction; and
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The terms available from unrelated third parties or to employees
generally.
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To the extent that the Nominating and Corporate Governance
Committee, or its Chair, needs additional information to make an
informed decision regarding a proposed Related Person
Transaction, the Nominating and Corporate Governance Committee,
or its Chair, may consult with management of the Company or
other members of the Board of Directors of the Company.
Compensation Committee Interlocks and Insider
Participation.
The current members of the Companys Compensation Committee
are Ronald J. Naples (Chair), Kathleen A. Dahlberg, Nicholas
DeBenedictis, Richard L. Smoot and Lee Stewart. No executive
officer of the Company has served as a Director or member of the
compensation committee (or other committee serving an equivalent
function) of any other entity whose executive officers served as
a Director or member of the Compensation Committee of the
Company.
RISK OVERSIGHT
The Board oversees the management of risks inherent in the
operation of the Companys businesses and the
implementation of its strategic plan. The Board performs this
oversight role by using several different levels of review. In
connection with its reviews of the operations of the
Companys business units and corporate functions, the Board
addresses the primary risks associated with those units and
functions. In addition, the Board reviews the risks associated
with the Companys strategic plan at an annual strategic
planning session and periodically throughout the year as part of
its consideration of the strategic direction of the Company.
Each of the Boards Committees also oversees the management
of Company risks that fall within the Committees areas of
responsibility. In performing this function, each Committee has
full access to management, as well as the ability to engage
advisors. At each meeting of the Board, the Chair of each
Committee reports to the Board on his Committees oversight
activities.
The Company is presently in the process of developing a formal
enterprise risk management program. In the interim, it continues
to manage its enterprise risks through a variety of policies,
programs and internal control functions and processes which are
designed to identify the primary risks to the Companys
business and update Management on those risks, and monitor and
evaluate the primary risks associated with particular business
units and functions These programs and policies are overseen,
supervised and administered by management which periodically
updates the Board and individual Committees of the Board on
material risks which have been identified or publicly disclosed.
The Companys Manager Internal Auditing, who
functionally reports directly to the Audit Committee, assists
the Company in identifying, evaluating and implementing risk
management controls and methodologies to address identified
risks. In connection with its risk management role, at each of
its meetings, the Audit Committee meets privately with
representatives from the Companys independent registered
public accounting firm, and the Companys
Manager Internal Auditing. The Audit Committee
provides reports to the Board that include these activities.
As part of its oversight of the Companys executive
compensation program, the Committee considers the impact of the
Companys executive compensation program, and the
incentives created by the compensation awards that it
administers, on the Companys risk profile. In addition,
the Company reviews all of its compensation policies and
procedures, including the incentives that such policies create
and factors that may reduce the likelihood of excessive risk
taking, to determine whether such policies present a significant
risk to the Company. Based on this review, the Compensation
Committee has concluded that the Companys compensation
policies and procedures are not reasonably likely to have a
material adverse effect on the Company.
-41-
REPORT OF THE
AUDIT COMMITTEE
The Audit Committee has reviewed and discussed the
Companys audited consolidated financial statements for the
year ended December 31, 2009 with the Companys
management and its independent registered public accounting
firm. The Companys management has advised the Audit
Committee that such audited consolidated financial statements
were prepared in accordance with accounting principles generally
accepted in the United States of America.
The Audit Committee has discussed with Deloitte &
Touche, LLP (Deloitte), the Companys
independent registered public accounting firm, certain matters
required to be discussed by Statement on Auditing Standards
No. 61, Communications with Audit Committees,
and SEC
Regulation S-X,
Rule 2-07.
The Audit Committee has also discussed with Deloitte their
independence from the Company and its management. The Audit
Committee has received a letter and written disclosures from
Deloitte required by applicable requirements of the Public
Company Accounting Oversight Board, disclosing all relationships
between Deloitte and its related entities and the Company. In
addition to the information provided by Deloitte, the Audit
Committee considered the level of non-audit and tax services
provided by Deloitte in determining that it was independent.
Based on the review and discussions described above, the Audit
Committee has recommended to the Companys Board that the
Companys audited consolidated financial statements be
included in the Companys Annual Report on
Form 10-K
for the year ended December 31, 2009, for filing with the
SEC.
The Audit Committee of the
Board of Directors of
P. H. Glatfelter Company
J. Robert Hall (Chair)
Nicholas DeBenedictis
Richard C. Ill
Ronald J. Naples
ANNUAL REPORT
ON
FORM 10-K
Copies of the Companys Annual Report on
Form 10-K
for the year ended December 31, 2009, as filed with the
SEC, are being mailed to shareholders with this Proxy Statement.
A shareholder may obtain a copy of the Annual Report without
charge by writing to: Investor Relations, P. H. Glatfelter
Company, 96 South George Street, Suite 500, York, PA 17401.
The 10-K,
Proxy Statement and Annual Report can also be obtained through
our website, www.glatfelter.com.
OTHER
BUSINESS
As of the date of this Proxy Statement, the Board knows of no
business that will be presented for consideration at the Annual
Meeting other than the items referred to above. If any other
matter is properly brought before the Meeting for action by
shareholders, the persons named in the accompanying proxy will
have discretionary authority to vote proxies with respect to
such matter in accordance with their best judgment.
ADDITIONAL
INFORMATION
The Company is permitted by SEC regulations to deliver a single
Annual Report or Proxy Statement to any household at which two
or more registered shareholders have the same last name and
address, unless the Company has received instructions to the
contrary from one or more of the shareholders. The Company will,
however, to include a separate proxy card for each registered
shareholder account.
The Company will deliver promptly, upon written or oral request,
a separate copy of the Annual Report or Proxy Statement, as
applicable, to a shareholder at a shared address to which a
single copy of the documents was delivered. Any shareholder who
desires to receive a separate copy of the Annual Report or Proxy
Statement should send a written request to Investor Relations,
P. H. Glatfelter Company, 96 South George Street,
Suite 500, York, PA 17401, or call us at
(717) 225-2724.
Thomas G. Jackson
Vice President,
General Counsel and Secretary
March 30, 2010
-42-
Appendix A
P. H. GLATFELTER
COMPANY
2005 MANAGEMENT
INCENTIVE PLAN
(as Amended and
Restated Effective January 1, 2010)
PURPOSE OF THE PLAN
The purpose of the Management Incentive Plan (hereinafter called
the Plan) is to advance the interests of the P. H.
Glatfelter Company and its shareholders by providing incentives
to key employees with significant responsibility for the success
and growth of the Company. The Plan is designed to:
(i) promote the attainment of the Companys
significant business objectives; (ii) encourage and reward
management teamwork across the entire Company; and
(iii) assist in the attraction and retention of employees
vital to the Companys long-term success.
This Plan was originally established effective January 1,
2005. The Plan was amended and restated effective
January 1, 2008 to conform its provisions to the
requirements of Section 409A of the Internal Revenue Code
(Code) and the final regulations thereunder. The
Plan is amended and restated again, effective as of
January 1, 2010.
DEFINITIONS
For the purpose of the Plan, the following definitions shall
apply:
Board means the Board of Directors of the Company.
Code means the Internal Revenue Code of 1986, as
amended, including any successor law thereto.
Committee means the Compensation Committee of the
Board, or such other committee as is appointed or designated by
the Board to administer the Plan, in each case which shall be
comprised solely of two or more outside Directors
(as defined under Section 162(m) of the Code and the
regulations promulgated thereunder).
Company means P. H. Glatfelter Company and any
subsidiary entity or affiliate thereof.
Participant means any person who has satisfied the
eligibility requirements set forth in Paragraph 4 and who
has been selected to participate in the Plan by the Committee.
Performance Goal means, in relation to any
Performance Period, the level of performance that must be
achieved with respect to a Performance Measure.
Performance Measures means any one or more of the
following performance criteria, either individually,
alternatively or in any combination, and subject to such
modifications as specified by the Committee, applied to either
the Company as a whole or to a business unit or subsidiary
entity thereof, either individually, alternatively or in any
combination, and measured over a period of time including any
portion of a year, annually or cumulatively over a period of
years, on an absolute basis or relative to a pre-established
target, to previous years results or to a designated
comparison group, in each case as specified by the Committee:
cash flow; cash flow from operations; earnings (including
earnings before interest, taxes, depreciation, and amortization,
and pension income or expense, or some variation thereof);
earnings per share, diluted or basic; earnings per share from
continuing operations; net asset turnover; inventory turnover;
capital expenditures; debt; net debt; debt reduction; working
capital; return on investment; return on sales; net or gross
sales; market share; economic value added; cost of capital;
change in assets; expense reduction levels; productivity;
delivery performance; safety record; stock price; return on
equity; total stockholder return; return on capital; return on
assets or net assets; revenue; income or net income; operating
income or operating net income; operating profit or net
operating profit; gross margin, operating margin or profit
margin; and completion of acquisitions, sales of significant
assets, business expansion, product diversification and other
non-financial operating and management performance objectives.
The Committee may determine that certain adjustments shall
apply, in whole or in part, in such manner as specified by the
Committee, to exclude the effect of any of the following events
that occur during a Performance Period, provided that if an
award is intended to constitute performance-based compensation
within the meaning of Section 162(m) of the Code, such
adjustments shall be applied consistent with the requirements of
that Code section and tax regulations thereunder: the impairment
of tangible or intangible assets; litigation or claim judgments
or settlements; the effect of changes in tax law, accounting
standards or principles or other such laws or provisions
affecting reported results; accruals for reorganization and
restructuring programs, including but not limited to reductions
in force and early retirement incentives; currency fluctuations;
and any extraordinary, unusual, infrequent or non-recurring
items, including, but not limited to, such items described in
managements discussion and analysis of financial condition
and results of operations or the financial statements and notes
thereto appearing in the Companys annual report to
shareowners for the applicable year.
A-1
Performance Period means, in relation to any award,
the calendar year or other period for which a Participants
performance is being calculated, with each such period
constituting a separate Performance Period.
Total and Permanent Disability means: (1) if
the Participant is insured under a long-term disability
insurance policy or plan which is paid for by the Company, the
Participant is totally disabled under the terms of that policy
or plan; or (2) if no such policy or plan exists, the
Participant shall be considered to be totally disabled as
determined by the Committee.
Retirement means retirement of an employee:
(1) as defined under any retirement plan of the Company
which is qualified under Section 401 of the Code; or
(2) as determined by the Committee.
Administration of the Plan
The management of the Plan shall be vested in the Committee;
provided, however, that all acts and authority of the Committee
pursuant to this Plan shall be subject to the provisions of the
Committees Charter, as amended from time to time, and such
other authority as may be delegated to the Committee by the
Board. The Committee may, with respect to Participants for whom
awards are not intended to be performance-based compensation
subject to Section 162(m) of the Code, delegate such of its
powers and authority under the Plan to the Companys
officers as it deems necessary or appropriate. In the event of
such delegation, all references to the Committee in this Plan
shall be deemed references to such officers as it relates to
those aspects of the Plan that have been delegated.
Subject to the terms of the Plan, the Committee shall, among
other things, have full authority and discretion to determine
eligibility for participation in the Plan, make awards under the
Plan, establish the terms and conditions of such awards
(including the Performance Goal(s) and Performance Measure(s) to
be utilized) and determine whether the Performance Goals
applicable to any Performance Measures for any awards have been
achieved. The Committees determinations under the Plan
need not be uniform among all Participants, or classes or
categories of Participants, and may be applied to such
Participants, or classes or categories of Participants, as the
Committee, in its sole and absolute discretion, considers
necessary, appropriate or desirable; provided however, that the
Committee shall not exercise its authority and discretion to
waive the satisfaction of the applicable Performance Goal(s) or
Performance Measure(s). The Committee is authorized to interpret
the Plan, to adopt administrative rules, procedures,
regulations, and guidelines for the Plan (including without
limitation procedures for the exercise of its discretion to
determine whether Performance Goals have been met
and/or to
reduce the amount of awards as set forth in Section 5(d)),
and may correct any defect, supply any omission or reconcile any
inconsistency or conflict in the Plan or in any award. All
determinations by the Committee shall be final, conclusive and
binding on the Company, the Participant and any and all
interested parties.
Subject to the provisions of the Plan, the Committee will have
the authority and discretion to determine the extent to which
awards under the Plan will be structured to conform to the
requirements applicable to performance-based compensation as
described in Section 162(m) of the Code, and to take such
action, establish such procedures, and impose such restrictions
at the time such awards are granted as the Committee determines
to be necessary or appropriate to conform to such requirements.
Notwithstanding any provision of the Plan to the contrary, if an
award under this Plan is intended to qualify as
performance-based compensation under Section 162(m) of the
Code and the regulations issued thereunder and a provision of
this Plan would prevent such award from so qualifying, such
provision shall be administered, interpreted and construed to
carry out such intention (or disregarded to the extent such
provision cannot be so administered, interpreted or construed).
Notwithstanding any provision of the Plan to the contrary, if
any benefit provided under this Plan is subject to the
provisions of Section 409A of the Code and the regulations
issued thereunder, the provisions of the Plan shall be
administered, interpreted and construed in a manner necessary to
comply with Section 409A and the regulations issued
thereunder (or disregarded to the extent such provision cannot
be so administered, interpreted, or construed.)
Participation in the Plan
Participation in the Plan is limited to officers and key
employees of the Company who have significant responsibility for
corporate, business segment or facility-based operations and who
are selected by the Committee for participation in the Plan.
Nothing herein contained shall be construed as giving any
employee the right to participate in the Plan.
Incentive Compensation Awards
The Committee may, in its discretion, from time to time make
awards to persons eligible for participation in the Plan
pursuant to which the Participant will earn cash compensation.
The amount of a Participants award may be based on a
percentage of such Participants salary or such other
methods as may be established by the Committee. Each award shall
be communicated to the Participant, and shall specify, among
other things, the terms and conditions of the award and the
Performance Goals to be achieved. In no event may an award paid
under the Plan to any Participant for any Performance Period
exceed USD $2,000,000.
With respect to awards that are intended to be performance-based
compensation under Section 162(m) of the Code, each award
shall be conditioned upon the Companys achievement of one
or more Performance Goal(s) with respect to the Performance
Measure(s)
A-2
established by the Committee. With respect to such awards, no
later than ninety (90) days after the beginning of the
applicable Performance Period, the Committee shall establish in
writing the Performance Goals, Performance Measures and the
amount(s) or objective method(s) for computing the amount(s) of
compensation which will be payable under the Plan to each
Participant if the Performance Goals established by the
Committee are attained; provided however, that for a Performance
Period of less than one year, the Committee shall take any such
actions prior to the lapse of 25% of the Performance Period. At
the time the Committee determines the Performance
Goal(s)/Performance Measure(s) for a Performance Period, in
addition to establishing minimum Performance Goals below which
no compensation shall be payable pursuant to an award, the
Committee, in its discretion, may create a performance schedule
under which an amount less than or more than the target award
may be paid so long as the Performance Goals have been achieved.
The Committee, in its sole discretion, may also establish such
additional restrictions or conditions that must be satisfied as
a condition precedent to the payment of all or a portion of any
awards. Such additional restrictions or conditions shall be
established no later than the date the Committee determines the
Performance Goal(s)/Performance Measure(s) for a Performance
Period. Such additional restrictions or conditions need not be
performance-based and may include, among other things, the
receipt by a Participant of a specified annual performance
rating, a vesting requirement of continued employment by the
Participant until a date which may be beyond the end of a
Performance Period,
and/or the
achievement of specified performance goals by the Company,
business unit or Participant.
Furthermore and notwithstanding any provision of this Plan to
the contrary, the Committee, in its sole discretion, may reduce
the amount of any award to a Participant if it concludes that
such reduction is necessary or appropriate based upon:
(i) an evaluation of such Participants performance;
(ii) comparisons with compensation received by other
similarly situated individuals working within the Companys
industry; (iii) the Companys financial results and
conditions; or (iv) such other factors or conditions that
the Committee deems relevant. Notwithstanding any provision of
this Plan to the contrary, the Committee shall not use its
discretionary authority, with respect to any award that is
intended to be performance-based compensation under
Section 162(m) of the Code, to increase, directly or
indirectly, the amount of a payment to any individual above
which it would be based on the pre-established Performance
Goal(s) in the absence of such exercise of discretion.
Payment of Individual Incentive Awards
Awards shall be paid as promptly as practicable (but in no event
later than
21/2
months after the close of the fiscal year in which the
Performance Period ends) after the Companys certified
public accountants have completed their examination of the
Companys year-end consolidated financial statements and
the Committee has certified in writing the extent to which the
applicable Performance Goals and any other material terms have
been achieved. For purposes of this provision, and for so long
as the Code permits, the approved minutes of the Committee
meeting in which the certification is made shall be treated as
written certification.
Notwithstanding paragraph (a) above, in the event the
Committee had, at the time the award was granted, imposed a
vesting requirement of continued employment until a specified
date before the award can be paid, the award shall be paid as
soon as practicable after the last to occur of (i) the
payment date described in paragraph (a) or (ii) the
vesting date, but in no event later than
21/2
months following the close of the fiscal year in which the later
of (i) or (ii) occurs.
Participants who have terminated employment with the Company
prior to the end of a Performance Period for any reason other
than death, Retirement or Total and Permanent Disability, shall
forfeit any and all rights to payment under any awards then
outstanding under the terms of the Plan and shall not be
entitled to any cash payment for such period. Unless otherwise
determined by the Committee, if a Participants employment
with the Company should terminate during a Performance Period by
reason of death, Retirement or Total and Permanent Disability,
the Participants award shall be prorated to reflect the
period of service prior to
his/her
death, Retirement or Total and Permanent Disability, and shall
be paid either to the Participant or, as appropriate, the
Participants estate, provided and subject to the
Committees certification that the applicable Performance
Goals and Performance Measures have been met. No award hereunder
shall be paid in the absence of the Committees
certification that the applicable Performance Goal(s) and
Performance Measure(s) have been met.
Amendment or Termination of the Plan
While the Company intends that the Plan shall continue in force
from year to year, the Company reserves the right by action of
its Board of Directors, or the Committee, to amend, modify or
terminate the Plan, at any time; provided, however, that no such
modification, amendment or termination shall, without the
consent of the Participant, materially adversely affect the
rights of such Participant to any payment that has been
determined by the Committee to be due and owing to the
Participant under the Plan but not yet paid.
Notwithstanding the foregoing or any provision of the Plan to
the contrary, the Committee may at any time (without the consent
of the Participant) modify, amend or terminate any or all of the
provisions of this Plan to the extent necessary to conform the
provisions of the Plan with Section 409A of the Code
regardless of whether such modification, amendment, or
termination of the Plan shall adversely affect the rights of a
Participant under the Plan.
A-3
Rights Not
Transferable
A Participants rights under the Plan may not be assigned,
pledged, or otherwise transferred except, in the event of a
Participants death, to the Participants designated
beneficiary, or in the absence of such a designation, by will or
by the laws of descent and distribution.
Funding
The Plan is not funded and all awards payable hereunder shall be
paid from the general assets of the Company. No provision
contained in this Plan and no action taken pursuant to the
provisions of this Plan shall create a trust of any kind or
require the Company to maintain or set aside any specific funds
to pay benefits hereunder. To the extent a Participant acquires
a right to receive payments from the Company under the Plan,
such right shall be no greater than the right of any unsecured
general creditor of the Company.
Withholdings
The Company shall have the right to withhold from any awards
payable under the Plan or other wages payable to a Participant
such amounts sufficient to satisfy federal, state and local tax
withholding obligations arising from or in connection with the
Participants participation in the Plan and such other
deductions as may be authorized by the Participant or as
required by applicable law.
No Employment or
Service Rights
Nothing contained in the Plan shall confer upon any Participant
any right with respect to continued employment with the Company
(or any of its affiliates) nor shall the Plan interfere in any
way with the right of the Company (or any of its affiliates) to
at any time reassign the Participant to a different job, change
the compensation of the Participant or terminate the
Participants employment for any reason.
Other
Compensation Plans
Nothing contained in this Plan shall prevent the Company from
adopting other or additional compensation arrangements for
employees of the Company.
Governing
Law
The Plan shall be governed by and construed in accordance with
the laws of the Commonwealth of Pennsylvania, without giving
effect to its conflict of law provisions.
Effective
Date
The Plan was originally effective January 1, 2005, with its
material terms approved by the Companys shareholders. It
was previously amended and restated effective January 1,
2008 to reflect the provisions of Section 409A of the
Internal Revenue Code and the final regulations thereunder. It
is hereby amended and restated again effective as of
January 1, 2010.
* * *
Pursuant to authority granted to William T. Yanavitch, Vice
President of Human Resources and Administration, in resolutions
of the Board of Directors adopted March 3, 2010, the
foregoing amended and restated 2005 Management Incentive Plan is
adopted this
3rd day
of March, 2010, to be effective as of this amended and restated
2005 management incentive plan is approved by the Companys
shareholders which is expected to be on May 5, 2010.
P.H. GLATFELTER COMPANY
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By:
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/s/ William
T. Yanavitch
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William T. Yanavitch,
Vice President of Human Resources and
Administration
A-4
2010 Annual Meeting Admission Ticket
Wednesday, May 5, 2010
York Expo Center
334 Carlisle Avenue
York, Pennsylvania
Pennsylvania Room
Upon arrival, please present this admission
ticket and photo identification and any
other required documents.
Number of shares:
WO#
68807-1
6
PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM
PORTION IN THE ENCLOSED ENVELOPE.
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A Proposals The Board of Directors recommends a vote
FOR all the nominees listed and FOR Proposals 2 and 3.
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Using a black ink pen, please mark your votes as indicated in this example. Please do not write outside the
designated areas.
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x |
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Mark here to vote FOR all nominees
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01 Kathleen A. Dahlberg
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03 Richard
C. III
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05 Richard L. Smoot |
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Mark here to WITHHOLD vote from all nominees
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02 George H. Glatfelter II
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04 Ronald J. Naples
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06 Lee C. Stewart |
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For
all EXCEPT - To withhold a vote for one or
more nominees, mark the box to the left, and the
corresponding numbered box(es) to the right.
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Director Nominees
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Number of Votes
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01-Kathleen A. Dahlberg
02-George H. Glatfelter II
03-Richard C. III
04-Ronald J. Naples
05-Richard L. Smoot
06-Lee C. Stewart
Total Votes Cast
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___________ Votes FOR
___________ Votes FOR
___________ Votes FOR
___________ Votes FOR
___________ Votes FOR
___________ Votes FOR
___________ |
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CUMULATIVE VOTING: If you desire to allocate your votes to individual nominees
on a cumulative basis, as explained on page 1 of the Proxy Statement, mark the
CUMULATIVE VOTING box and indicate the number of votes that you would like
to cast FOR each nominee. The total of the votes you cast on this proxy may not
exceed the number of shares you own times 6. NOTE: If you wish to use
cumulative voting, you MUST vote your proxy by mail. |
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FOR
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AGAINST |
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ABSTAIN |
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2. Proposal to approve the Amended and Restated 2005
Management Incentive Plan for purpose of complying with
Section 162(m) of the Internal Revenue Code.
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3. Proposal to ratify the appointment of Deloitte & Touche LLP
as the independent registered public accounting firm for the
Company for the fiscal year ending December 31, 2010.
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Mark Here for
Address Change
or Comments
SEE REVERSE |
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B.
Authorized Signature This section must be completed for your
vote to be counted Date and
Sign Below - Please sign exactly as name(s) appear hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian,
please give full title.
Signature
Date
Signature
Date
Driving Instructions
to the
York Expo Center, 334 Carlisle Avenue, York, Pennsylvania
From
the South:
Take I-83 North to Exit 15 (Old Exit 5) S. George Street - Business 83. Turn left at first
traffic light. Follow Country Club Road to Richland Avenue to Market Street. Turn left on
Market Street to York Fair Grounds.
From the North:
Take I-83 to Exit 22 (Old Exit 10) N. George Street. At first traffic light, take Route 30
West to Carlisle Avenue (Rte. 74) exit. Turn left on Carlisle Avenue to York Fair Grounds.
From the East:
Take Route 30 West to Carlisle Avenue (Rte. 74) exit. Turn left on Carlisle Avenue to York Fair
Grounds.
From the West:
Take Route 462 (W. Market Street) from Route 30. Follow Market Street to
Highland Avenue. Turn left on Highland Avenue and continue to Bannister. Turn right to Carlisle
Avenue. Turn right to York Fair Grounds.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2010
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 5, 2010.
P. H. Glatfelter Companys Proxy Statement for the 2010 Annual Meeting of Shareholders and
the Annual Report for the year ended December 31, 2009, are available via the Internet at
www.glatfelter.com//Files/about_us/investor_relations/2010Proxy.pdf and
www.glatfelter.com/Files/about_us/investor_relations/2009Annualreport.pdf.
Choose MLinkSM for fast, easy and secure 24/7 online access to your
future proxy materials, investment plan statements, tax documents and more.
Simply log on to Investor ServiceDirect® at www.bnymellon.com/shareowner/isd
where step-by-step instructions will prompt you through
enrollment.
PROXY
P. H. GLATFELTER COMPANY
YORK, PENNSYLVANIA
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY FOR THE ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD MAY 5, 2010, 10:00 A. M.
The undersigned shareholders of P. H. Glatfelter Company hereby appoints Nicholas DeBenedictis
and J. Robert Hall, each of them, attorneys and proxies, with power of substitution in each of
them, to vote and act for and on behalf of the undersigned at the annual meeting of shareholders of
the Company to be held at the York Expo Center, 334 Carlisle Avenue, York, Pennsylvania in the
Pennsylvania Room, on Wednesday, May 5, 2010, and at all adjournments thereof, according to the
number of shares which the undersigned would be entitled to vote if then personally present, as indicated hereon and in their discretion upon such other business as may come before the meeting and
hereby ratifies and confirms all that said attorneys and proxies may do or cause to be done by
virtue hereof.
When properly executed, this proxy will be voted as directed herein. It is agreed that, if no
direction is given or directed on the other side of this proxy card, said attorneys and proxies are
appointed WITH authority to vote FOR the re-election of each of the directors listed.
(PLEASE FILL IN, SIGN AND DATE ON THE OTHER SIDE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE)
(Continued and to be signed on reverse side)
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BNY MELLON SHAREOWNER SERVICES |
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Address Change/Comments
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(Mark the corresponding box on the reverse side)
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P.O. BOX 3536 |
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SOUTH HACKENSACK, NJ 07606-9236 |
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WO#
68807-1