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:
o |
|
Preliminary Proxy Statement |
o |
|
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
þ |
|
Definitive Proxy Statement |
o |
|
Definitive Additional Materials |
o |
|
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):
þ |
|
No fee required. |
o |
|
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
|
(1) |
|
Title of each class of securities to which transaction applies: |
|
|
|
|
|
|
|
|
|
|
|
(2) |
|
Aggregate number of securities to which transaction applies: |
|
|
|
|
|
|
|
|
|
|
|
(3) |
|
Per unit or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was
determined): |
|
|
|
|
|
|
|
|
|
|
|
(4) |
|
Proposed maximum aggregate value of transaction: |
|
|
|
|
|
|
|
|
|
|
|
(5) |
|
Total fee paid: |
|
|
|
|
|
|
|
|
|
o |
|
Fee paid previously with preliminary materials. |
|
o |
|
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of its
filing. |
|
(1) |
|
Amount Previously Paid: |
|
|
|
|
|
|
|
|
|
|
|
(2) |
|
Form, Schedule or Registration Statement No.: |
|
|
|
|
|
|
|
|
|
|
|
(3) |
|
Filing Party: |
|
|
|
|
|
|
|
|
|
|
|
(4) |
|
Date Filed: |
|
|
|
|
|
|
|
|
|
P. H. GLATFELTER COMPANY
96 South George Street, Suite 500
York, Pennsylvania 17401
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS
TO BE HELD ON
May 4, 2011
TO SHAREHOLDERS:
The 2011 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 4, 2011 at 10:00 a.
m., to consider
and act upon the following items:
|
|
|
|
|
the election of eight (8) members of the Board of Directors
to serve until our next Annual Meeting and until their
successors are elected and qualified;
|
|
|
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,
2011;
|
|
|
a non-binding advisory vote on a resolution to approve the
Companys executive compensation and pay practices;
|
|
|
a non-binding advisory vote to determine the frequency with
which shareholders will be asked to give an advisory vote on
executive compensation; and
|
|
|
such other business as may properly come before the meeting.
|
Only holders of record of the Companys common stock at the
close of business on March 10, 2011 (the Record
Date) 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 vote your proxy by telephone at 1-866-540-5760,
on line at
http://www.proxyvoting.com/glt,
or by completing and signing the enclosed proxy card and
returning 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 if you
previously voted by telephone, internet or by mailing a
completed proxy card.
Thomas G. Jackson
Secretary
March 30, 2011
IMPORTANT NOTICE
REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE 2011 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 4,
2011.
P. H. Glatfelter Companys proxy statement for the
2011 Annual Meeting of Shareholders and P. H. Glatfelter
Companys 2010 Annual Report, are available via the
Internet at
www.glatfelter.com/about_us/investor_relations/sec_filings.aspx,
as well as on line at
http://www.proxyvoting.com/glt.
TABLE OF CONTENTS
|
|
|
|
|
|
|
Page
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
10
|
|
|
|
|
|
|
|
|
|
10
|
|
|
|
|
|
|
|
|
|
10
|
|
|
|
|
|
|
|
|
|
17
|
|
|
|
|
|
|
|
|
|
18
|
|
|
|
|
|
|
|
|
|
18
|
|
|
|
|
|
|
|
|
|
27
|
|
|
|
|
|
|
|
|
|
28
|
|
|
|
|
|
|
|
|
|
29
|
|
|
|
|
|
|
|
|
|
30
|
|
|
|
|
|
|
|
|
|
31
|
|
|
|
|
|
|
|
|
|
32
|
|
|
|
|
|
|
|
|
|
34
|
|
|
|
|
|
|
|
|
|
35
|
|
|
|
|
|
|
|
|
|
40
|
|
|
|
|
|
|
|
|
|
41
|
|
|
|
|
|
|
|
|
|
42
|
|
|
|
|
|
|
|
|
|
42
|
|
|
|
|
|
|
|
|
|
42
|
|
|
|
|
|
|
|
|
|
42
|
|
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 2011 Annual Meeting of shareholders to be
held on Wednesday, May 4, 2011 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 on or about March 30, 2011 to shareholders
of record as of March 10, 2011.
What is the
purpose of the Annual Meeting?
At the Annual Meeting, shareholders will be asked to consider
and act upon the following matters:
|
|
|
|
|
the election of eight (8) directors to serve on the Board
for a one year term expiring in 2012;
|
|
|
|
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,
2011;
|
|
|
|
a vote on a non-binding advisory resolution regarding executive
compensation;
|
|
|
|
a vote to determine the frequency with which the Company will
conduct a non-binding advisory vote on executive
compensation; and
|
|
|
|
such other business as may properly come before the meeting.
|
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 for
the matters to be considered at the 2011 Annual Meeting, and,
therefore, shareholders are encouraged to read this proxy
statement and to vote their shares by mailing the attached proxy
card, voting on line or by telephone, or voting in person at the
Annual Meeting. The Board has appointed directors Richard L.
Smoot and Lee C. Stewart, or either of them (the Proxy
Holders) 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 10, 2011, the record date, may vote at the Annual
Meeting. At the close of business on March 10, 2011, there
were 45,999,846 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 10, 2011 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 those
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 the beneficial owner of any shares held
in street name, a shareholder has the right to direct the broker
or other agent that is holding the shareholders shares how
to vote those shares on those matters which will be considered
at the Annual Meeting.
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 that 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 eight directors, a shareholder may cast that total number of
votes For, or Withhold all of those
votes from, a single nominee, or may distribute or withhold the
total number of votes between the eight nominees as the
shareholder determines, up to the number of shares of common
stock that are owned by the shareholder on the record date,
multiplied by eight. The persons named in the accompanying proxy
card as Proxy Holders will vote the shareholders shares as
the shareholder designates on the 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 ratify the appointment of
Deloitte & Touche LLP as the Companys
independent registered public accounting firm for the fiscal
year ending December 31, 2011, a shareholder may vote
For or Against or Abstain
from voting.
For the advisory vote on executive compensation, commonly known
as a
say-on-pay
vote, a shareholder may vote For or
Against the proposal, or Abstain from
voting.
For the non-binding advisory vote on the frequency with which
the Company will conduct a non-binding advisory vote on
executive compensation, a shareholder may vote that such
-1-
a vote be taken every year, every two years, or every three
years, or may abstain from voting.
Only shareholders of the Companys common stock on the
Record Date may attend the Annual Meeting, and those
shareholders attending in person will need an admission ticket
or other proof of stock ownership to be admitted to the Annual
Meeting.
|
|
|
|
|
For registered shareholders of the Company, an admission ticket
is attached to their proxy card. Registered shareholders who
plan to attend the Annual Meeting are requested to vote in
advance of the Annual Meeting by telephone, internet or by
completing and mailing in their proxy card, but should retain
the admission ticket and bring it with them to the Annual
Meeting if they plan to attend.
|
|
|
|
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.
|
|
|
|
To vote in person at the Annual Meeting, beneficial owners may
obtain an admission ticket from their broker or agent, or may
present proof at the Annual Meeting of their ownership of
Company stock as of the Record Date. 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 the Record Date for the Annual Meeting.
|
How can a
shareholder change his vote?
A shareholder of record can revoke their proxy at any time
before their shares are voted if they (1) deliver a written
revocation of their proxy to the Companys Secretary;
(2) submit a later dated proxy (or voting instruction form
if they hold their shares in street name); or (3) vote in
person at the Annual Meeting. A shareholder who is a beneficial
owner should follow the instructions provided by their broker or
bank to change their vote.
What is a
quorum?
As of March 10, 2011, there were 45,999,846 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, the Boards
appointed Proxy Holders will have discretion to vote the
shareholders shares on behalf of the shareholder at the
Annual Meeting as recommended by the Board.
If a shareholder who is a beneficial owner of shares does not
provide the bank or broker that holds such shares with specific
voting instructions, under the rules of various national and
regional securities exchanges, the shareholders bank or
broker may generally vote on routine matters but cannot vote on
non-routine matters. Proposal 1 (election of directors),
Proposal 3 (advisory vote on executive compensation) and
Proposal 4 (advisory vote on the frequency of the vote on
executive compensation) are not routine matters. The Company
believes Proposal 2 (ratification of auditors) will be
considered routine.
If a shareholders bank or broker does not receive
instructions from the shareholder on how to vote their shares on
a non-routine matter, the shareholders 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 bank, broker or agent that holds their
shares by carefully following the instructions in the notice
provided by the shareholders bank, broker or agent.
What is the
Boards recommendation?
The Board recommends a vote:
|
|
|
|
|
FOR the election of the eight (8) nominees for
director;
|
|
|
|
FOR the ratification of Deloitte & Touche LLP
as the Companys independent registered public accounting
firm;
|
|
|
|
FOR approval of the Companys compensation policies
and practices, and current executive compensation as discussed
in this proxy statement;
|
|
|
|
That the Company will conduct a
Say-on-Pay
advisory vote on executive compensation every three
(3) years.
|
-2-
What vote is
needed to elect directors and for the proposals to be
adopted?
|
|
|
|
|
Election of Directors. The eight 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 than
votes for his or her 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.
|
|
|
|
Ratification of Auditors. A majority of the votes
entitled to be cast at the meeting, in person or by proxy, must
vote for the ratification of Deloitte &
Touche LLP as the Companys independent public accounting
firm for the proposal to be adopted.
|
|
|
|
Approval of Executive Compensation. This proposal
gives you, as a shareholder, the opportunity to endorse, not
endorse, or take no position on our compensation program for the
Named Executive Officers. While our Board of Directors intends
to carefully consider the shareholder vote on this proposal,
this vote is not binding on the Company but is advisory in
nature.
|
|
|
|
Frequency of
Say-on-Pay
Voting. This proposal gives you, as a shareholder, the
opportunity to inform the Company as to how often you wish the
Company to conduct a
Say-on-Pay
advisory vote on executive compensation. While our Board of
Directors intends to carefully consider the shareholder vote on
this proposal, this vote is not binding on the Company but is
advisory in nature.
|
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 our 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 2011 Annual Meeting to the
Company by November 30, 2010, 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,
shareholder proposals or other matters will be considered at the
2011 Annual Meeting.
When are
shareholder proposals due for inclusion in the proxy statement
for the 2012 Annual Meeting?
A proposal that a shareholder would like to present at the 2012
Annual Meeting must be submitted to the Companys Secretary
prior to the preparation of the 2012 proxy statement. To be
included in the proxy statement for the 2012 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 29, 2011.
The Companys by-laws prescribe the procedures a
shareholder must follow to bring business before shareholder
meetings. To bring matters before the 2012 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 29,
2011.
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 director nominee
recommendations 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 2012 Annual Meeting,
notice of the nomination must be in writing and delivered to, or
mailed and received at the Company, no later than
November 29, 2011.
-3-
What must be
included in the notice to submit a shareholder proposal or to
nominate a director candidate?
The notice must include:
|
|
|
|
|
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;
|
|
|
|
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;
|
|
|
|
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;
|
|
|
|
a representation that the shareholder will attend the 2012
Annual Meeting and submit the proposal or nominate the nominee;
|
|
|
|
a description of any hedging arrangements that the shareholder
has entered into with respect to our stock; and
|
|
|
|
a statement of whether the shareholder intends to solicit, or
participate in the solicitation of, proxies with respect to the
proposal or nomination.
|
This is a general description of the notice required to submit a
proposal or nomination for consideration at the 2012 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 website 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).
-4-
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 10, 2011, (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 of which a
person has the right to acquire beneficial ownership within
sixty 60 days are considered beneficially owned by that
person.
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Beneficial
|
|
Shares Beneficially
|
|
Total Number of
|
|
|
Owner
|
|
Owned (1)
|
|
Shares Owned (1)
|
|
% of Class
|
|
|
Dimensional Fund Advisors LP
|
|
|
3,803,075
|
|
|
|
3,803,075
|
(2)
|
|
|
8.27
|
%
|
Third Avenue Management LLC
|
|
|
2,865,933
|
|
|
|
2,865,933
|
(3)
|
|
|
6.23
|
%
|
Janus Capital Management LLC
|
|
|
2,856,827
|
|
|
|
2,856,827
|
(4)
|
|
|
6.21
|
%
|
BlackRock, Inc.
|
|
|
2,558,613
|
|
|
|
2,558,613
|
(5)
|
|
|
5.56
|
%
|
Perkins Small Cap Value
|
|
|
2,511,538
|
|
|
|
2,511,538
|
(4)
|
|
|
5.46
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
|
|
|
|
|
Name of Beneficial
|
|
|
|
Directly
|
|
Indirectly
|
|
Options
|
|
Total Number of
|
|
|
Owner
|
|
Position
|
|
Owned
|
|
Owned
|
|
to Purchase
|
|
Shares Owned (1)
|
|
% of Class
|
|
|
Kathleen A. Dahlberg
|
|
Director
|
|
|
17,015
|
|
|
|
|
|
|
|
7,500
|
|
|
|
24,515
|
|
|
|
*
|
|
Nicholas DeBenedictis
|
|
Director
|
|
|
14,667
|
|
|
|
|
|
|
|
2,500
|
|
|
|
17,167
|
|
|
|
*
|
|
George H. Glatfelter II
|
|
Chairman of the Board
|
|
|
186,975
|
|
|
|
5,823
|
(6)
|
|
|
142,600
|
|
|
|
335,398
|
|
|
|
*
|
|
J. Robert Hall
|
|
Director
|
|
|
17,015
|
|
|
|
|
|
|
|
7,500
|
|
|
|
24,515
|
|
|
|
*
|
|
Richard C. Ill
|
|
Director
|
|
|
15,195
|
|
|
|
|
|
|
|
2,500
|
|
|
|
17,695
|
|
|
|
*
|
|
John P. Jacunski
|
|
Senior V. P. & CFO
|
|
|
26,206
|
|
|
|
2,774
|
(7)
|
|
|
|
|
|
|
28,980
|
|
|
|
*
|
|
Debabrata Mukherjee
|
|
V. P. & GM, Specialty
Papers Business Unit
|
|
|
7,070
|
|
|
|
541
|
(8)
|
|
|
|
|
|
|
7,611
|
|
|
|
*
|
|
Ronald J. Naples
|
|
Director
|
|
|
16,189
|
|
|
|
|
|
|
|
9,000
|
|
|
|
25,189
|
|
|
|
*
|
|
Dante C. Parrini
|
|
Director, President & CEO
|
|
|
41,861
|
|
|
|
6,588
|
(9)
|
|
|
|
|
|
|
48,449
|
|
|
|
*
|
|
Martin Rapp
|
|
V. P. & GM, Composite
Fibers Business Unit
|
|
|
8,782
|
|
|
|
|
|
|
|
|
|
|
|
8,782
|
|
|
|
*
|
|
Richard L. Smoot
|
|
Director
|
|
|
18,515
|
|
|
|
|
|
|
|
2,500
|
|
|
|
21,015
|
|
|
|
*
|
|
Lee C. Stewart
|
|
Director
|
|
|
17,015
|
|
|
|
|
|
|
|
7,500
|
|
|
|
24,515
|
|
|
|
*
|
|
All directors and executive officers as a group
(17 individuals)
|
|
|
|
|
428,509
|
|
|
|
19,697
|
|
|
|
181,600
|
|
|
|
629,806
|
|
|
|
1.37
|
%
|
|
* 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
filed on February 11, 2011, consists of shares beneficially
owned, as of December 31, 2010, by Dimensional
Fund Advisors LP. Dimensional Fund Advisors LP possesses
sole voting power over 3,731,042 shares and investment
authority over 3,803,075 shares. Dimensional
Fund Advisors LP is an investment advisor registered under
Section 203 of the Investment Advisors Act of 1940. All
3,803,075 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 14, 2011, consists of shares beneficially
owned, as of December 31, 2010, 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
2,865,933 shares beneficially owned. Met Investors
Series Trust-Third
Avenue Small Cap
|
-5-
|
|
|
Portfolio, 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, 1,088,840 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, 1,717,406 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, 10,500 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, 49,187 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
filed jointly by Janus Capital Management LLC and Perkins Small
Cap Value on February 14, 2011, consists of
2,511,538 shares held by Perkins Small Cap Value. Janus
Capital has a direct 94.5% ownership stake in INTECH Investment
Management (INTECH) and a direct 77.8% ownership
stake in Perkins Investment Management LLC
(Perkins). Due to the above ownership structure,
holdings for Janus Capital, Perkins and INTECH are aggregated
for purposes of this filing. Janus Capital, Perkins and INTECH
are registered investment advisers, each furnishing investment
advice to various investment companies registered under
Section 8 of the Investment Company Act of 1940 and to
individual and institutional clients (collectively referred to
herein as Managed Portfolios). As a result of its
role as investment adviser or
sub-adviser
to the Managed Portfolios, Perkins may be deemed to be the
beneficial owner of 2,856,827 shares or 6.21% of the shares
outstanding of P. H. Glatfelter Company Common Stock held by
such Managed Portfolios. However, Perkins does not have the
right to receive any dividends from, or the proceeds from the
sale of, the securities held in the Managed Portfolios and
disclaims any ownership associated with such rights. Perkins
Small Cap Value is an investment company registered under the
Investment Company Act of 1940 and is one of the Managed
Portfolios to which Janus Capital provides investment advice.
The interest of Perkins Small Cap Value in P. H. Glatfelter Co
Common Stock amounted to 2,511,538 shares or 5.46% of the
total outstanding Common Stock.
|
|
(5)
|
Pursuant to a Schedule 13G
filed on January 21, 2011, consists of shares beneficially
owned, as of December 31, 2010, by BlackRock, Inc.
BlackRock, Inc. is a parent holding company which has sole
voting and investment authority over 2,558,613 shares.
BlackRock Advisors (UK) Limited, 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
5,823 shares held by Mr. Glatfelter in the
Companys 401(k) Plan.
|
|
(7)
|
Consists of approximately
2,774 shares held by Mr. Jacunski through the
Companys 401(k) Plan.
|
|
(8)
|
Consists of approximately
541 shares held by Mr. Mukherjee through the
Companys 401(k) Plan.
|
|
(9)
|
Consists of approximately
6,588 shares held by Mr. Parrini through the
Companys 401(k) Plan.
|
-6-
EQUITY
COMPENSATION PLAN INFORMATION
The following table provides certain information as of
December 31, 2010 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
|
|
|
3,003,728
|
|
|
$
|
12.61
|
|
|
|
2,661,632
|
|
Equity compensation plans not approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,003,728
|
|
|
$
|
12.61
|
|
|
|
2,661,632
|
|
|
|
|
(1)
|
Includes 362,050 non-qualified
stock options, 579,801 restricted stock units (RSUs) and
2,061,877 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 (10%) 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
2010, 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 on a
timely basis, except that, due to a change in administrative
personnel responsible for filing such reports, Form 4s were
filed late in May 2010 to report common stock received by each
non-employee director as part of the directors annual
retainer fee.
-7-
PROPOSAL 1:
ELECTION OF DIRECTORS
At the Annual Meeting, the Companys shareholders will vote
to fill eight (8) director positions, each for one-year
terms expiring on the date of the Companys 2012 Annual
Meeting of Shareholders and until their respective successors
are elected and qualified. The Board recommends that
shareholders vote For each of the following director
nominees: Kathleen A. Dahlberg, Nicholas DeBenedictis, J. Robert
Hall, Richard C. Ill, Ronald J. Naples, Dante C. Parrini,
Richard L. Smoot and Lee C. Stewart, each of whom are currently
serving as directors of the Company, for one-year terms expiring
at the 2012 annual meeting of shareholders and until their
respective successors are duly elected and qualified. 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
Annual 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 on the director
nominees. 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
2012
|
|
|
|
|
|
|
|
|
|
Kathleen A. Dahlberg
Ms. Dahlberg has been the Chief Executive Officer of 2Unify LLC, a private company specializing in strategic consulting and emergency planning and communications for a broad range of industries since 2006, and serves as a director of Theragenics Corporation, a NYSE-listed company, since May 2008. Ms. Dahlberg has held Vice-Presidential positions with McDonalds, Amoco, BP, Viacom, Grand Metropolitan plc and American Broadcasting Corporation. Overall, Ms. Dahlberg has more than 14 years of experience as a director of public companies, and 7 years with private technology and service companies. She has significant experience in emerging technologies, acquisitions and divestitures, new product development, strategic planning and manufacturing optimization.
|
|
|
58
|
|
|
|
2001
|
|
|
|
|
|
|
|
|
|
|
Nicholas DeBenedictis
Mr. DeBenedictis has been the Chairman, Chief Executive Officer and President of Aqua America, Inc., a publicly-traded water company, since May 1993. He 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 was President of the Greater Philadelphia Chamber of Commerce from 1986 to 1989. He 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, Mr. DeBenedictis served in senior level positions with the U.S. Environmental Protection Agency. He has more than 18 years of experience as a director of public companies.
|
|
|
65
|
|
|
|
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 general management, acquisitions & divestitures, marketing, sales, operations, strategic planning, new product development and research & development.
|
|
|
58
|
|
|
|
2002
|
|
|
|
|
|
|
|
|
|
|
Richard C. Ill
Mr. Ill has been the Chairman of Triumph Group, Inc., a public, international aviation services company since 2009 and a director, 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 Triumph Group. Mr. Ill has over 45 years of public company experience both in management, manufacturing and operations. Mr. Ill was recently appointed a director of Mohawk Industries, Inc., and was also a director of Airgas, Inc. from July 2004 through September 2010. Mr. Ill has 18 years of experience as a director of public companies.
|
|
|
67
|
|
|
|
2004
|
|
|
|
|
|
|
|
|
|
|
Ronald J. Naples
Mr. Naples served 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, from April 2009 until February 2011. From 1997 until May 2009, Mr. Naples was the Chairman of Quaker Chemical Corporation, a public, specialty chemical company serving the metalworking and manufacturing industries worldwide, 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 currently 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.
|
|
|
65
|
|
|
|
2000
|
|
|
|
|
|
|
|
|
|
|
Dante C. Parrini
Mr. Parrini was elected to the Board of Directors in June 2010. Mr. Parrini joined the Company in 1997, and is currently the President and Chief Executive Officer, a position to which he was promoted effective January 2011. He previously served as Glatfelters Executive Vice President and Chief Operating Officer from 2005 until 2010. Prior to 2005, Mr. Parrini was Senior Vice President and General Manager, a position that he held since January 2003. Having had full global P&L responsibility in his EVP and COO capacity, Mr. Parrini has had experience leading worldwide operations, international and domestic sales, marketing, new product development, global supply chain, information technology and corporate program management.
|
|
|
46
|
|
|
|
2010
|
|
-8-
|
|
|
|
|
|
|
|
|
|
|
|
|
Year First
|
|
|
|
|
Elected
|
|
|
Age
|
|
Director
|
|
|
|
|
|
|
|
|
|
|
|
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. From July 1991 to December 2000, 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
|
|
|
70
|
|
|
|
1994
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
62
|
|
|
|
2002
|
|
|
|
|
|
|
|
|
|
|
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 each
nominee.
|
|
|
|
|
|
|
|
|
PROPOSAL 2:
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 2011, subject to ratification by the
Companys shareholders. Deloitte audited the Companys
consolidated financial statements for the fiscal year ended
December 31, 2010.
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
2010 and 2009?
For the years ended December 31, 2010 and 2009, the
aggregate fees billed to and paid by the Company by Deloitte
were as follows:
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
Audit Fees(1)
|
|
$
|
2,426,974
|
|
|
$
|
1,632,741
|
|
Audit Related Fees(2)
|
|
|
|
|
|
|
8,577
|
|
Tax Fees(3)
|
|
|
95,000
|
|
|
|
359,500
|
|
|
|
|
|
|
|
|
|
|
Total Fees
|
|
$
|
2,521,974
|
|
|
$
|
2,000,818
|
|
|
|
|
|
(1)
|
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.
|
|
(2)
|
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.
|
|
(3)
|
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.
|
All services rendered for the Company by Deloitte in 2010 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
(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 this
authority in writing 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.
-9-
The Board believes that the ratification of Deloitte as the
Companys independent registered public accounting firm for
the year ending December 31, 2011 is in the best interest
of the Company and the shareholders, and unanimously recommends
a vote FOR the proposal.
PROPOSAL NO. 3:
ADVISORY VOTE ON EXECUTIVE COMPENSATION (also known as a
Say-on-Pay
Vote)
Executive compensation is an important matter for our
shareholders. At the core of our executive compensation
philosophy is the belief that compensation should reflect
performance, be fair, competitive and reasonable, and should be
determined in a manner consistent with the Companys
long-term strategy, competitive industry practice, sound
corporate governance principles, and shareholder interests. We
believe our compensation program is strongly aligned with the
long-term interests of our shareholders. We urge our
shareholders to read the Compensation Discussion and Analysis
(CD&A) section of this proxy statement for
additional details on the Companys compensation philosophy
and objectives and the 2010 compensation of the Named Executive
Officers.
We are asking shareholders to vote on the following resolution:
RESOLVED, that the shareholders of P. H. Glatfelter
Company (the Company) approve the compensation
philosophy, policies and procedures described in the
Compensation Discussion & Analysis, and the
compensation of the Companys Named Executive Officers as
disclosed in this proxy statement in accordance with the
Securities Exchange Act of 1934 and the implementing rules of
the U.S. Securities and Exchange Commission.
As an advisory vote, the results of the voting on this proposal
are non-binding. Nevertheless, the Board of Directors and the
Compensation Committee value the opinions of our shareholders,
and will consider the outcome of the vote when making future
compensation decisions for our Named Executive Officers.
Vote
Required
The affirmative vote of a majority of the shares of the
Companys common stock present or represented by proxy and
voting at the Annual Meeting, together with the affirmative vote
of a majority of the required quorum, is required for approval
of this proposal. If you own shares through a bank, broker or
other holder of record, you must instruct your bank, broker or
other holder of record how to vote in order for them to vote
your shares so that your vote can be counted on this proposal.
The Board of Directors recommends that the shareholders vote
FOR Proposal No. 3.
PROPOSAL NO. 4:
SHAREHOLDER VOTE ON THE FREQUENCY WITH WHICH ADVISORY VOTES ON
EXECUTIVE COMPENSATION WILL BE TAKEN
Recently enacted
Say-on-Pay
legislation requires that companies ask their shareholders how
often they would like to be presented with the
say-on-pay
vote: every year, every two years, or once every three years.
Accordingly, we are asking shareholders to choose the frequency
of the
Say-on-Pay
advisory vote by choosing every year, every two years, or every
three years on the proxy card, or by abstaining if they do not
wish to vote on this matter. The option that receives the most
votes will be deemed to be the shareholders recommendation
with respect to the frequency with which the
Say-on-Pay
vote appears in the Companys proxy statement.
As an advisory vote, the results of the voting on this proposal
are non-binding. Nevertheless, the Board of Directors values the
opinions of our shareholders, and will consider the outcome of
the vote when determining how often a
Say-on-Pay
proposal will appear in the Companys proxy statement.
Vote
Required
The affirmative vote of a majority of the shares of the
Companys common stock present or represented by proxy and
voting at the Annual Meeting, together with the affirmative vote
of a majority of the required quorum, is required for approval
of this proposal. If you own shares through a bank, broker or
other holder of record, you must instruct your bank, broker or
other holder of record how to vote in order for them to vote
your shares so that your vote can be counted on this proposal.
The Board of Directors recommends that an advisory vote on
executive compensation be held every three (3) years in
order to allow shareholders adequate time to assess the
effectiveness of the Companys programs and to make
recommendations for changes, if applicable, prior to the next
say-on-pay
vote.
CORPORATE
GOVERNANCE AND BOARD OF DIRECTORS
The Board 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 520, York, PA
17401-1434.
What is the
composition of the Board?
The Board currently consists of nine (9) members, but will
be reduced to eight (8) members at the close of the Annual
Meeting. Each year, the Board elects one of its members to serve
as Chairman. The Company does not have a lead independent
director.
-10-
In conjunction with its election of a Chairman, the Board
reviews its governance structure and the qualifications of each
director and determines which director is best qualified to
chair the Board.
Under the Boards governance structure, the Chairman:
|
|
|
|
|
Chairs all meetings of the Board other than executive sessions
|
|
|
|
Identifies strategic issues that should be considered for the
Board agenda; and
|
|
|
|
Consults with directors in the development of the schedule,
agenda and materials for all meetings of 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 Companys industry, and who can best execute the
strategic plan approved by the Board. Although the Board
believes that the interests of the Company and the shareholders
are best served by having the same person serve as both Chairman
and Chief Executive Officer (CEO), the Board
determined that the roles of CEO and Chairman should be briefly
held by two separate people. Based on his extensive experience
and knowledge of the Companys operations, industry,
competitive challenges and opportunities, the Board has
determined that, at this time, Dante C. Parrini is the director
best qualified to serve in the role of Chairman, and in March
2011 elected Mr. Parrini to be Chairman, subject to his
re-election as a director at the Annual Meeting.
Effective January 2011, Dante C. Parrini was promoted to
President and CEO. Mr. Parrini, who previously was
Executive Vice President and Chief Operating Officer of the
Company, and who has held various executive positions with the
Company since 1997, was elected to the Board in June 2010 to
facilitate the execution of its executive succession plan for
Mr. Glatfelter, who retired at the end of 2010 as CEO.
The Board believes that shareholders are best served by this
leadership structure. The Corporate Governance Principles 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 designed in part to provide information
to assist the Board in determining 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 and Mr. Parrini have a material
relationship with the Company because Mr. Glatfelter is the
former CEO, and Mr. Parrini is the President and Chief
Executive Officer. Thus, Mr. Glatfelter and
Mr. Parrini are deemed not to be independent directors 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 each year for
one-year terms which expire at the close of the following
years Annual Meeting of shareholders.
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 520, 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 (4) 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. Hall, DeBenedictis, 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 ten
(10) meetings during 2010.
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:
|
|
|
|
|
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;
|
-11-
|
|
|
|
|
has the sole responsibility for pre-approving all audit and
non-audit services provided by the Companys independent
registered public accounting firm and fees related thereto
pursuant to its Pre-Approval Policy;
|
|
|
|
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;
|
|
|
|
reviews with management and the independent registered public
accounting firm the Companys earnings press releases prior
to release to the public;
|
|
|
|
discusses any significant changes to the Companys
accounting policies;
|
|
|
|
reviews the quality and adequacy of the Companys
accounting systems, disclosure controls and procedures and
internal controls over financial reporting;
|
|
|
|
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;
|
|
|
|
monitors compliance with legal prohibitions on loans to
directors and executive officers of the Company;
|
|
|
|
reviews and assesses the adequacy of the Companys hiring
guidelines for employees or former employees of the independent
auditors;
|
|
|
|
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 employees of concerns
regarding questionable accounting or auditing matters, in
addition to other compliance matters; and
|
|
|
|
participates in the annual performance evaluation of the Manager
of Internal Audit.
|
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 (5) 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 nine (9) meetings during 2010.
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:
|
|
|
|
|
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;
|
|
|
|
reviews and (except in the case of the CEO) approves the general
compensation and salary structure for executives and other key
employees of the Company and its subsidiaries, which takes into
account business and financial objectives, industry and labor
market best practices, and such other information as it may deem
appropriate;
|
|
|
|
annually reviews and recommends to the independent members of
the Board corporate goals and objectives relevant to the
compensation of the CEO, and manages and executes the evaluation
of the CEO conducted by the independent members of the Board in
light of these goals and objectives;
|
|
|
|
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;
|
|
|
|
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;
|
|
|
|
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
|
-12-
|
|
|
|
|
approves the payment of incentive compensation upon Board
determination that such targets or measures have been met;
|
|
|
|
|
|
reviews the Compensation Discussion & Analysis
(CD&A) and recommends to the Board that the
CD&A be included in the proxy statement;
|
|
|
|
reviews and recommends to the Board any modifications of the
non-employee directors compensation program; and
|
|
|
|
reviews and recommends for approval by the Board new incentive
compensation plans or changes and amendments to existing plans.
|
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 CD&A, for review by management and
the committee 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 with development of recommended changes in
such compensation for approval by the Board of Directors. The
Consultant also provides advice to the committee and management
on other executive and Board compensation issues that arise
throughout the year. During 2010, the scope of the
Consultants assignments included a
pay-for-performance
analysis of the Companys bonus pay versus that of its peer
group, advice on the design of the Companys Management
Incentive Plan and long term incentive programs for 2010 and for
2011, as discussed in the CD&A; and advice on executive
succession planning.
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, the Vice President of Human Resources, and the
Secretary generally attend, and the Chief Financial Officer
occasionally attends, Compensation Committee meetings, but none
are present for executive sessions or any discussion of their
own compensation.
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.
Finance Committee. The Finance Committee
currently consists of five (5) directors: Mr. Ill,
(Chair) and Messrs. Glatfelter, Hall, Parrini 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:
|
|
|
|
|
reviews and recommends for approval by the Board, the
Companys operating and capital budgets;
|
|
|
|
reviews the performance of the Companys pension funds and
the Companys recommendations regarding investment
objectives, strategies
and/or
managers as warranted;
|
|
|
|
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;
|
|
|
|
oversees the development and monitors execution of the
Companys financial policies, including financial
objectives, strategies and plans, exclusive of accounting and
other matters, which are within the oversight responsibilities
of the Audit Committee; and
|
|
|
|
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.
|
The Finance Committee held three (3) meetings during 2010.
-13-
Nominating and Corporate Governance
Committee. The Nominating and Corporate Governance
Committee currently consists of five (5) 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:
|
|
|
|
|
provides advice to the Board regarding all corporate governance
matters;
|
|
|
|
makes recommendations to the Board regarding the Boards
size and composition and the tenure and retirement age of
directors;
|
|
|
|
reviews the qualifications of candidates for the Board
|
|
|
|
recommends to the Board the nominees for election to the Board
at each Annual Meeting;
|
|
|
|
considers nominees for the Board recommended by shareholders;
|
|
|
|
makes nominations of directors and officers of the Company;
|
|
|
|
nominates persons to fill vacancies on the Board occurring
between annual meetings;
|
|
|
|
nominates directors for committee membership and committee
chairpersons;
|
|
|
|
reviews and approves related party transactions; and
|
|
|
|
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.
|
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.
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
director candidate for election or re-election, including for
incumbent directors, the directors 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 director must consent to
stand for election, and each director nominee must agree in
writing to abide by the Companys majority voting policy.
After the committee has completed its evaluation of all director
candidates, it presents its recommended slate of directors to
the Board for consideration and approval. The committee also
discusses with the Board any candidates who were 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
http://www.glatfelter.com/about_us/corporate_governance/default.aspx.
On March 3, 2011, Mr. Glatfelter informed the Board
that he did not intend to stand for re-election at the Annual
Meeting. Based on the process described above, the committee
recommended and the Board determined to nominate each of the
remaining incumbent directors for re-election at the Annual
Meeting. The committee and Board concluded that each of the
remaining incumbent directors should be nominated for
re-election based on their individual experience,
qualifications, attributes and skills which are summarized in
the biographical information contained under Election of
directors on pages 8-9. The committee and the Board
assessed these factors in light of the Companys
businesses, which provide a diverse line of specialty papers and
fiber-based engineered materials. In particular, the committee
and the Board considered the following factors:
|
|
|
|
|
Each nominee has extensive experience guiding large, complex
organizations as executive leaders or board members;
|
|
|
|
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), professional services (Ms. Dahlberg,
Mr. Ill, Mr. Naples, Mr. Smoot, and
Mr. Stewart), public interest (Mr. Parrini,
Mr. DeBenedictis, Mr. Naples and Mr. Smoot),
financial services (Mr. Hall, Mr. Stewart and
Mr. Smoot), and manufacturing (Ms. Dahlberg,
Mr. Parrini, Mr. Hall, Mr. Ill and
Mr. Naples);
|
-14-
|
|
|
|
|
The nominees backgrounds 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. Ill, Mr. Parrini), international operations
(Mr. Ill, Mr. Parrini and Mr. Naples), strategic
partnerships (Mr. Ill) and regulated industries
(Mr. DeBenedictis); and
|
|
|
|
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, Mr. Smoot and Mr. Stewart), strategic
planning (all of the nominees), operations management (all of
the nominees), corporate governance (Ms. Dahlberg,
Mr. DeBenedictis, Mr. Hall, Mr. Ill,
Mr. Smoot and Mr. Stewart) and risk management (all of
the nominees).
|
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. The Nominating and Corporate Governance Committee
held six (6) meetings during 2010.
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),
c/o 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 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.
Alternatively, the Board has established a method for interested
parties to communicate directly with the entire Board or any
non-management director by calling the Companys toll-free
Helpline at
800-346-1676.
Does the
Company have a majority-voting policy?
Yes. The Companys Governance Principles include a
majority-voting policy for the election of directors. A summary
of the Companys majority voting policy is provided on
page 3.
In the event of a Majority Withheld Vote, the Nominating and
Corporate Governance Committee will consider the resignation
which is tendered by the affected director 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 ninety (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 may 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 will 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 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 the Board should fill any vacancy or amend the
Companys by-laws to reduce the size of Board.
-15-
What is the
Companys policy regarding director attendance at the
Annual Meeting?
The Company does not have a policy regarding director attendance
at the Annual Meeting, however directors, including persons
nominated for election at the Annual Meeting, generally attend
the Annual Meeting.
How often did
the Board meet during 2010?
The Board held eight (8) meetings during
2010. The standing committees established by the
Board held a total of twenty-eight (28) meetings in 2010.
Each of the incumbent directors attended at least 96% of the
aggregate of the meetings of the Board and Board committees on
which he or she served in 2010. 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 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, 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, and one third paid in cash. In
addition to the annual retainer, non-employee directors were
paid in cash $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
annually in cash. In addition, each non-employee director
received an annual restricted stock unit (RSU) 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 1 and
November 1. RSUs granted to directors since 2009 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 or for serving as a chairperson of a committee of
the Board. No such elections were made with respect to fees
earned in 2010.
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 shares of the Companys common stock which, in
aggregate, are equal in value to at least 5X the current annual
Board retainer, which equates to 14,600 shares based on a
stock price of $12.00 per share. Directors have up to five
(5) years to attain this guideline share ownership level.
Shares owned directly by the director, unvested restricted stock
and RSUs, and stock units held in the Deferred Compensation Plan
are counted toward satisfying the share ownership guideline for
directors. As of December 31, 2010, all of the non-employee
directors were in compliance with the share ownership guideline.
-16-
NON-EMPLOYEE
DIRECTOR COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
Fees Earned
|
|
|
|
|
|
|
|
|
or Paid
|
|
|
|
All Other
|
|
|
|
|
in Cash
|
|
Stock Awards
|
|
Compensation
|
|
Total
|
Name
|
|
(1)
|
|
(2)
|
|
(3)
|
|
($)
|
|
|
Kathleen A. Dahlberg
|
|
$
|
47,666
|
|
|
$
|
53,354
|
|
|
$
|
2,664
|
|
|
$
|
103,684
|
|
Nicholas DeBenedictis
|
|
|
56,666
|
|
|
|
53,354
|
|
|
|
2,664
|
|
|
|
112,684
|
|
J. Robert Hall
|
|
|
59,166
|
|
|
|
53,354
|
|
|
|
2,664
|
|
|
|
115,184
|
|
Richard C. Ill
|
|
|
48,166
|
|
|
|
53,354
|
|
|
|
2,664
|
|
|
|
104,184
|
|
Ronald J. Naples
|
|
|
63,666
|
|
|
|
53,354
|
|
|
|
2,664
|
|
|
|
119,684
|
|
Richard L. Smoot
|
|
|
46,166
|
|
|
|
53,354
|
|
|
|
2,664
|
|
|
|
102,184
|
|
Lee C. Stewart
|
|
|
55,666
|
|
|
|
53,354
|
|
|
|
2,664
|
|
|
|
111,684
|
|
|
|
|
|
(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 are comprised of the fair market value
of $14.69 in accordance with FASB ASC 718 for RSUs granted
on May 1, 2010 and the fair market value (the closing price
on the respective share issuance dates) of the two-thirds
portion of the annual retainer fee that was paid in stock.
|
|
(3)
|
Represents dividend equivalents paid to the non-employee
directors in 2010. The directors earn dividend equivalents on
their outstanding RSUs.
|
-17-
EXECUTIVE
COMPENSATION
COMPENSATION
DISCUSSION & ANALYSIS
Executive
Summary
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 Companys success.
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 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,
minimal 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. Though both are subject to downward
adjustment based on individual performance, annual variable
compensation is contingent on the achievement of specific
Company financial goals, while long-term variable compensation
is contingent on the achievement of specific Company financial
goals (depending on program design for a given year) and is
subject to future stock price performance. All variable
compensation is also designed to align the NEOs interests
with those of shareholders. The opportunity to earn at-risk
variable compensation is different for each NEO and generally
increases commensurate with the NEOs level of
responsibility within the Company. As discussed on page 12
of this proxy statement, the Committee annually reviews the
Companys incentive compensation plans to determine whether
those plans present undue risk to 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.
For 2010, the Companys annual compensation was cash-based,
while long-term compensation consisted primarily of
performance-based equity awards. For 2011, annual compensation
will continue to be cash-based, but long-term compensation will
be modified to consist 100% of performance-based equity awards.
The Committee does not specifically target any particular
allocation between cash and equity-based compensation or between
annual and long-term incentive compensation; instead, the
Committee sets each component of compensation for the NEOs to
generally target the 50th percentile of market levels, as
described below. However, the Committee does review the mix of
compensation components for each NEO to ensure that they are in
an appropriate range relative to the market.
In 2010, the Companys annual net sales grew by 22.9% from
$1.2 billion in 2009 to $1.5 billion, reflecting
growth in the legacy businesses as well as the successful
addition of the Companys new Advanced Airlaid Materials
business. Adjusted earnings (which exclude certain unusual,
non-recurring items) also increased in 2010 by 38% from
$29.4 million ($0.64 per diluted share) in 2009 to
$40.9 million ($0.88 per diluted share).
The Committee (and the Board of Directors in the case of the
CEO) approved the following items with respect to the
Companys executive compensation programs for 2010:
|
|
|
|
|
Effective as of February 1, 2010, base salaries were
increased in a range from 3% to 6% for all but one of the NEOs
who received an increase of 20% due to the fact that he was
significantly below the 50th percentile of the market.
There were no base salary increases in 2009 (with the exception
of a 10% increase for one NEO who was considered to be
significantly below the 50th percentile of the market).
|
|
|
|
In August 2010, the CFOs base salary was further increased
by 10% to reflect the addition of the Companys global IT
organization to his responsibilities.
|
|
|
|
The performance metrics for the NEOs annual incentive
bonuses under the Companys Management Incentive Plan (the
MIP) were changed from 2009. For 2010, the Company
adopted an MIP design that incorporated Operating Net Income
(ONI) but replaced the Leverage Ratio used in 2009
with Free Cash Flow, and assigned weightings of 80% and 20% to
ONI and Free Cash Flow, respectively, to encourage a focus not
only on earnings but also on cash flow generation. This same MIP
design has been continued for 2011, although a business unit
operating profit metric was added for the business unit leaders
given that the Company has grown from two to now three business
units. Target bonus percentages for the NEOs are generally
targeted at the 50th percentile of market levels.
|
|
|
|
Based on 2010 performance levels, the Company paid cash bonuses
under the MIP to the NEOs equal to 97% of each individuals
target amount for the
|
-18-
|
|
|
|
|
year, reflecting the fact that performance of ONI was somewhat
below the pre-established target level for the year and Free
Cash Flow was somewhat above the pre-established target level.
|
|
|
|
|
|
The Companys long-term incentive program for 2010
consisted of time-vested restricted stock units
(RSUs) and stock-only stock appreciation rights
(SOSARs). Approximately 20% of each NEOs
long-term incentive compensation opportunity was in the form of
RSUs, and approximately 80% of the long-term incentive
compensation opportunity was in the form of SOSARs. For 2011,
the long-term incentive program has been changed to consist of a
combination of SOSARs and a performance-based stock plan, both
weighted at 50% of each NEOs total long-term incentive
compensation opportunity. The Committee believes the
Companys long-term incentive program provides the
appropriate level of performance-based grants and also aligns
the NEOs interests with those of shareholders.
|
|
|
|
Based on the Companys performance over the period 2008
through 2010 (the 2008 Performance Period), the
Committee approved cash payments to the NEOs under the
Companys cash long-term incentive plan (Cash
LTIP). Under the terms of the Cash LTIP, NEOs were
eligible to receive performance based cash awards following the
close of a three-year performance period if the Company achieved
pre-established cumulative ONI and average Return on Capital
Employed (ROCE) targets, which were based on the
Companys long-term strategic objectives at the time of
grant, were reached. As a result of the Companys
performance during the 2008 Performance Period, the Committee
approved payments to the NEOs in amounts equal to 88.6% of each
NEOs target amount under this plan based on the fact that
the Companys cumulative ONI performance during the
Performance Period was below the pre-established ONI target
level and the Companys ROCE performance over the
Performance Period slightly exceeded the pre-established ROCE
target level. The Cash LTIP was suspended by the Committee in
2009.
|
|
|
|
In June 2010, the Company announced an executive succession plan
under which Mr. Parrini would become President &
CEO following Mr. Glatfelters retirement on
December 31, 2010. In conjunction with
Mr. Parrinis promotion, the Board approved an
increase in Mr. Parrinis base salary to $630,000
(effective as of January 1, 2011) as well as a
one-time award of 55,360 RSUs for Mr. Parrini on
June 28, 2010.
|
In addition, the Company has adopted other policies that it
believes align the interests of the Companys executives
with the interests of shareholders while still attracting,
retaining, motivating, and rewarding its executives. To that
end, the Company maintains executive share ownership guidelines
that require senior executives, including the NEOs, to meet
minimum stock ownership levels. These guidelines are discussed
below under the heading Other Equity Ownership
Policies.
In 2009, the Company also modified all future awards of RSUs and
SOSARs to provide for double-trigger vesting
(requiring a termination without Good Cause or for
Good Reason in order for vesting to be accelerated)
upon a change in control of the Company. This modification was
intended to parallel a double trigger provision which was
already in place for cash severance payments upon a change in
control. Since the Committee believes that perquisites should be
a minimal part of executive compensation, the Company offers
perquisites to certain NEOs that represent only a small portion
of each NEOs total compensation. In fact, two of the NEOs
received no perquisites during 2010, and the value of
perquisites for each of the other three NEOs was below $25,000.
The Compensation
Process
Except in the case of the CEO (whose compensation is approved by
the Board), the Committee determines the overall compensation
strategy and policies for the NEOs and other key executives, and
approves their compensation. In doing so, the Committee, as
appropriate, seeks input from certain NEOs and other executives
with respect to compensation decisions. Specifically:
|
|
|
|
|
the Committee retains an external compensation consultant
(Consultant) to provide independent advice,
information, and analysis on executive compensation and benefits;
|
|
|
|
the Committee, as appropriate, consults with the Companys
Vice President of Human Resources and the Consultant to develop
the design of compensation programs and make compensation
decisions;
|
|
|
|
the Committee, as appropriate, consults with the CEO and CFO and
the Consultant to obtain background regarding the Companys
key financial objectives, metrics and performance and
recommendations for design of the Companys annual and
long-term compensation programs;
|
|
|
|
compensation decisions which pertain to the NEOs other than the
CEO are made by the Committee in consultation with and based on
recommendations received from the CEO (after consultation with
the Companys Vice President of Human Resources), and based
on guidance received from the Consultant; and
|
|
|
|
the Companys General Counsel and the Companys Human
Resources staff provide legal and governance advice and other
technical support to the Committee.
|
-19-
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
after receiving 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 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 personnel,
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 2010, the Committee retained
Compensation Strategies, Inc. (CSI) as its
Consultant. In preparation to establish fiscal year 2010
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, and (v) executive
succession planning, and to conduct research and analysis as
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
2010 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.
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. Management periodically 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 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
2010, the review included 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.
This process ensures that all market compensation data is
properly adjusted to reflect the Companys current size. 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 Companys peer group for compensation benchmarking
(Compensation Peer Group) for 2010 is unchanged from
2009. The annual revenues of the companies included in the
Compensation Peer Group for 2010 ranged from $250 million
-20-
to $6.0 billion with a median revenue of $1.5 billion
(which approximates the Companys 2010 annual revenue).
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. The companies
which are included in the Compensation Peer Group, together with
information on which of these companies are also included in the
performance graph that appears in 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 package,
the nature and complexity of the job duties, the performance of
the NEO 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.
For 2010, the Committee, after reviewing the base salaries of
the NEOs as well as each NEOs performance, approved base
salary increases ranging from 3% to 6% for all but one of the
NEOs who received an increase of 20% due to the fact that he was
significantly below the 50th percentile of the market, effective
as of February 1, 2010. Subsequently, in August 2010, the
CFOs base salary was further increased by 10% to reflect
the addition of the Companys global IT organization to his
responsibilities. As a group, the NEOs base salaries were
virtually equal to the 50th percentile of the market for
2010.
For 2011, the Committee has approved base salary increases for
the NEOs other than Mr. Parrini ranging from 0% to 8%,
effective as of February 1, 2011. Mr. Parrini received
a base salary increase to $630,000 as of January 1, 2011,
in connection with his promotion to President & Chief
Executive Officer. Mr. Parrini does not have an employment
agreement with the Company. As a group, the NEOs base
salaries are slightly below the 50th percentile of the
market for 2011.
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
salary 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. Given that the NEOs 2010
base salaries were generally equal to 50th percentile of the
market as a group and each NEOs target bonus percentage
was either at or slightly below the 50th percentile, the
NEOs target bonuses, as a dollar amount, were slightly
below the 50th percentile of the market. For 2010, the Committee
did not modify the target bonus percentages for any of the NEOs
from the levels established during 2009. For 2011, target bonus
percentages for the NEOs, with the exception of
Mr. Jacunski and Mr. Parrini,
-21-
remain unchanged from 2010. The 2011 target bonus percentage for
Mr. Jacunski has been increased from 55% to 60% to reflect
additional responsibilities which have been assigned to
Mr. Jacunski, and Mr. Parrinis target bonus has
been increased to 80% as a result of his new responsibilities as
President and CEO.
The following table sets forth targeted bonus levels for each
NEO:
|
|
|
|
|
|
|
|
|
|
|
2010 Target Bonus (as
|
|
2010
|
Named Executive
|
|
a percentage of 2010
|
|
Target
|
Officer
|
|
Base Salary)
|
|
Bonus
|
|
|
Glatfelter
|
|
|
80
|
%
|
|
$
|
560,400
|
|
Jacunski
|
|
|
55
|
|
|
|
193,805
|
|
Parrini
|
|
|
65
|
|
|
|
347,963
|
|
Mukherjee
|
|
|
45
|
|
|
|
137,250
|
|
Rapp
|
|
|
45
|
|
|
|
158,999
|
|
|
|
Usually, in February each year, after the Companys
audited, consolidated, year-end financial results are available,
the Committee recommends to the Board whether the
pre-established MIP corporate performance metrics have been met
and, based upon the Boards determination that the metrics
have been met, 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.
For 2010, the Committee adopted a MIP design which incorporates
the following two metrics: ONI and Free Cash Flow for all NEOs
including the leaders of the Companys business units.
These metrics were chosen to focus the NEOs and other key
executives not only on earnings but also on cash flow
management. As in previous years, ONI consisted 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, and the benefit of a one-time tax credit. Free Cash
Flow consisted of operating cash flows minus capital
expenditures. These metrics were weighted 80% ONI and 20% Free
Cash Flow. The target performance level of ONI accounted for the
additional net income that was expected to be realized from the
Companys acquisition of Concert Industries and was
established slightly higher than the Companys 2010 budget
to encourage management to successfully integrate that
acquisition. The target performance level of Free Cash Flow was
set at the Companys budgeted level of Free Cash Flow.
In keeping with past practice, the Committee also incorporated a
design feature in the 2010 MIP which required that the Company
achieve a pre-established minimum level of performance for each
MIP metric before any bonus may be earned by any eligible
executive, including the NEOs, under the MIP (Bonus
Threshold Performance Level). For 2010, the Bonus
Threshold Performance Level was 80%% of the targeted performance
level for each MIP metric. Payment amounts for achievement of
the Bonus Threshold Performance Levels remained unchanged from
prior years at 50% of the target opportunities, and payment
amounts for achievement of the maximum performance levels also
remained unchanged at 200% of the target opportunities.
The following table summarizes the level of Company performance
associated with each MIP metric and the corresponding target
bonus level for the NEOs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent of targeted bonus
|
|
|
50%
|
|
100%
|
|
200%
|
|
|
Performance metric (millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Net Income
|
|
$
|
27.2
|
|
|
$
|
34.0
|
|
|
$
|
47.6
|
|
Free Cash Flow
|
|
$
|
51.3
|
|
|
$
|
64.1
|
|
|
$
|
89.7
|
|
|
|
In 2010, the Companys ONI totaled $32.0 million and
Free Cash Flow totaled $75.4 million, resulting in a bonus
payout level for the NEOs of 97% of the NEOs bonus target
level.
The Committee believes the ONI and Free Cash Flow 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 the NEOs target bonus opportunities for 2010 as
a percentage of their base salaries:
|
|
|
|
|
|
|
|
|
|
|
|
|
Target Bonus
|
|
|
Range (Percent of
|
MIP Performance Level
|
|
Base Salary)
|
|
|
Minimum (50% of performance target)
|
|
|
22.5
|
|
|
To
|
|
|
40.0
|
|
Target (100% of performance target)
|
|
|
45.0
|
|
|
To
|
|
|
80.0
|
|
Maximum (200% of performance target)
|
|
|
90.0
|
|
|
To
|
|
|
160.0
|
|
|
|
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 Free Cash
Flow performance of the Company; no portion of a NEOs MIP
payment is based on the individual performance of the 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 2010.
For 2011, the Committee has adopted a MIP design that continues
to use ONI and Free Cash Flow for all NEOs. ONI will, again,
consist of net income determined in accordance with US GAAP
adjusted to exclude certain items as determined by the
Committee. Free Cash Flow will continue to consist of operating
cash flows minus capital expenditures. For those NEOs who are
not leaders of the Companys business units, these metrics
will continue to be weighted 80% ONI and 20% Free Cash Flow.
However, for the business unit leaders, ONI and Free Cash Flow
will make up only 60% of their total MIP opportunity; the
remaining 40% will consist
-22-
of performance against business unit operating profit goals for
their respective units. The target performance level of ONI,
Free Cash Flow, and business unit Operating Profit have been set
at the Companys budgeted levels for 2011. Payment amounts
for achievement of the threshold performance levels remained
unchanged from prior years at 50% of the target opportunities,
and payment amounts for achievement of the maximum performance
levels also remained unchanged at 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. 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.
2008 2010 Cash LTIP. In 2008, the
Committee supported a cash component of long-term incentive
compensation, representing 40% of each NEOs total
long-term incentive opportunity. The Cash LTIP was designed to
provide performance-based cash awards to participants if the
Company achieved preset financial targets by the end of a
specified multi-year period and to reduce the number of shares
of the Companys common stock that would be required to be
issued under the LTIP. Under the terms of the Cash LTIP, NEOs
were eligible to receive cash payments following the close of a
three-year period if certain pre-established cumulative ONI and
average ROCE goals are met. The ONI portion of the Cash LTIP
represented 40% of the total award, while the remaining 60% was
dependent on the Companys three-year average ROCE
performance. The target performance goals were consistent with
the Companys long-term strategic objectives at the time of
grant and, in the Committees opinion, represented
reasonably aggressive performance levels. Payment amounts for
achievement of the threshold performance goals were designed to
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 following table sets forth targeted cash LTIP levels for
each NEO:
|
|
|
|
|
|
|
|
|
|
|
Target Level (as a
|
|
|
Named Executive
|
|
Percentage of 2010
|
|
Target
|
Officer
|
|
Base Salary)
|
|
Level
|
|
|
Glatfelter
|
|
|
46
|
%
|
|
$
|
319,000
|
|
Jacunski
|
|
|
38
|
|
|
|
134,970
|
|
Parrini
|
|
|
42
|
|
|
|
226,600
|
|
Mukherjee
|
|
|
19
|
|
|
|
59,290
|
|
Rapp
|
|
|
22
|
|
|
|
76,230
|
|
|
|
The following table summarizes the level of Company performance
associated with each cash LTIP metric and the corresponding
payment levels for the NEOs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent of target opportunity
|
|
|
50%
|
|
100%
|
|
150%
|
|
|
Performance metric (millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Net Income
|
|
$
|
97.8
|
|
|
$
|
122.3
|
|
|
$
|
146.8
|
|
ROCE
|
|
|
6.4
|
%
|
|
|
8.0
|
%
|
|
|
9.6
|
%
|
|
|
For the period 2008 2010, the Companys
cumulative ONI totaled $105.3 million and its three-year
average ROCE was 8.1%. As a result, the NEOs earned
payments under the Cash LTIP which were equal to 88.6% of each
NEOs target opportunity.
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 suspend the
Cash LTIP.
2010 Long-Term Incentive Program. For 2010, the
Companys LTIP consisted of RSUs and SOSARS, with RSUs
representing 20% and SOSARs representing 80% of each NEOs
total long-term incentive. Based on market information provided
by the Consultant, the Committee believes this mix of
equity-based compensation, at the relative weightings discussed
above provided the appropriate balance of performance-based and
retention-based grants.
RSUs. During 2010, the Committee granted RSUs under the
LTIP to the NEOs and certain of the Companys other
executives. The number of RSUs granted to the NEOs during 2010
ranged from 2,020 to 8,190, depending on the position of the
NEO, the NEOs performance and information provided by the
Consultant regarding competitive market compensation practices
for each NEO. The NEOs, like each grant recipient of RSUs,
received cash payments during 2010 equal to the dividends paid
on an equivalent number of shares of the Companys common
stock. The RSUs granted to the NEOs vest ratably over a
five-year period, 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. There is no
required holding period for RSU grants. RSU grants made by the
Committee in 2005, 2006 and 2007 either vested or resulted in
the payment of dividend
-23-
equivalent payments to the NEOs in 2010, as indicated in the
Summary Compensation Table.
SOSARs. During 2010, the Committee also granted SOSARs
under the LTIP to the NEOs and certain of the Companys
other 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 common stock price from the date the awards
are granted. The SOSARs granted to the NEOs during 2010 ranged
from 25,300 to 102,500 depending on the position of the NEO, the
NEOs performance, and information provided by the
Committees external compensation consultant regarding
competitive market compensation practices for each position. The
SOSARs granted by the Committee during 2010 had an exercise
price equal to the Companys closing common stock price on
the date of grant, or $13.95, 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 is designed to retain the NEOs and other key
executives of the Company for an appropriate length of time
prior to the SOSARs becoming vested or exercisable. Upon
exercise of a vested SOSAR, the NEO 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.
RSU Grant to Mr. Parrini. In addition to the RSU
grants described above, on June 28, 2010, Mr. Parrini
received an award of 55,360 RSUs which will vest 100% on the
fifth anniversary of grant. This award was made in conjunction
with the Companys announcement that Mr. Parrini was
being promoted to President & Chief Executive Officer
and as consideration for a non-compete agreement which
Mr. Parrini signed with the Company.
Mr. Glatfelters Outstanding Grants. Pursuant
to its authority under the LTIP, the Committee agreed to treat
Mr. Glatfelters retirement as a qualifying retirement
event under the LTIP. As a result, a pro-rated portion of
Mr. Glatfelters outstanding and unvested SOSARs and
RSUs became vested as of his retirement date which was
December 31, 2010. This treatment resulted in the vesting
of 192,877 SOSARs and 19,061 RSUs which had previously been
granted to Mr. Glatfelter. In addition, Mr. Glatfelter
will be eligible to exercise any vested SOSARs and options
during the three-year period following his retirement date,
instead of ninety (90) days.
Stock Options. In response to changes in the accounting
rules governing the treatment of the cost of granting stock
options, the Committee has not approved any stock option awards
to any of the NEOs or other key executives since 2004 and only
one NEO still holds unexpired options that were granted in prior
periods. Those stock options were granted with an exercise price
equal to the closing price of Companys common stock on the
grant date. There is no required holding period for stock
options. Like SOSARs, stock options reward the option holder if
the Companys common stock price rises above the exercise
price specified in the stock option. The Company does not
reprice options.
The Companys 2011 LTIP design has been modified to be 100%
performance-based. For 2011, the Company has replaced RSUs,
which were used in the program in past years and which had a
time-based vesting schedule, with a grant of the Companys
common stock which will only vest upon the achievement of
specified corporate performance goals (Performance
Shares). Under the 2011 LTIP, each NEOs total
long-term incentive will consist of 50% SOSARs and 50%
Performance Shares. NEOs may receive Performance Shares if,
following the close of a three-year period ending with fiscal
year 2013, certain pre-established performance criteria are met.
The Committee has selected cumulative adjusted EBITDA (i.e.,
earnings before interest, taxes, depreciation, amortization, and
pension expense and excluding unusual items) and ROCE as the
dual criteria for determining the vesting of Performance Shares.
The Committee believes that cumulative adjusted EBITDA and ROCE
are key drivers to the Companys strategic plan and are
directly associated with increasing shareholder value. To that
end, 40% of the NEOs Performance Share award will be
dependent on the Companys achievement of the cumulative
adjusted EBITDA criteria and 60% of the NEOs Performance
Share award will be dependent on the Companys achievement
of a three-year average ROCE goal. Payment amounts for
achievement of the threshold performance levels equal 50% of the
target opportunities, and achievement of the maximum performance
levels results in payments equal to 200% of the target
opportunities. The number of SOSARs granted to the NEOs on
March 3, 2011 ranged from 21,860 to 88,140, and the target
number of Performance Shares granted to the NEOs also on
March 3, 2011 ranged from 6,100 to 24,610, depending on the
position of the NEO, the NEOs performance, 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 $12.56.
On March 3, 2011, the Committee also approved, as a
one-time award, 4,700 RSUs for Mr. Rapp in recognition of
additional responsibilities which were temporarily assigned to
him in connection with a recent acquisition. The RSUs granted to
the Mr. Rapp will vest ratably over a three-year period,
with one-third of the units vesting on the first, second and
third anniversaries of his grant.
Based on market information provided by the Consultant, the
Committee believes this mix of equity based compensation, at the
relative weightings discussed above, provides the appropriate
level of performance-based grants and aligns the NEOs
interests with those of shareholders.
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
-24-
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.
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 of the Companys
common stock 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 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, 2010, 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ownership
|
|
|
|
|
|
|
Guideline
|
|
|
|
|
|
|
(Market
|
|
|
|
|
|
|
value relative
|
|
|
|
|
|
|
to Starting
|
|
|
|
# of Shares
|
|
|
Base
|
|
# of Shares
|
|
held as of
|
Name
|
|
Salary)
|
|
Required
|
|
12/31/2010
|
|
|
Glatfelter
|
|
|
4
|
X
|
|
|
146,500
|
|
|
|
207,336
|
|
Jacunski
|
|
|
2
|
X
|
|
|
30,400
|
|
|
|
43,929
|
|
Parrini
|
|
|
3
|
X
|
|
|
53,700
|
|
|
|
126,612
|
|
Mukherjee
|
|
|
1
|
X
|
|
|
16,300
|
|
|
|
20,059
|
|
Rapp
|
|
|
1
|
X
|
|
|
22,800
|
|
|
|
14,256
|
|
|
|
Blackout Periods and Pre-Clearance of Securities
Transactions. The Companys Insider Trading
Policy prohibits 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 (a Blackout
Period). The Company may also impose additional blackout
periods on its executives if it concludes that executives are in
possession 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 37-38
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.
-25-
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 (6) months will accelerate vesting only upon such
a termination that occurs within two (2) 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, 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 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 five (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. As of 2010, only
Mr. Glatfelter and Mr. Parrini were eligible for the
FAC Pension and each has elected, under the transition rule, a
lump sum distribution of their FAC Pension. Given
Mr. Glatfelters retirement as of December 31,
2010, Mr. Parrini is currently the only eligible
participant in the FAC Pension.
The Committee has also established a Supplemental Management
Pension Plan (SMPP) consisting of two
(2) 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 (5) full consecutive
years of employment in which his pensionable compensation was
the highest. Prior to its elimination, Mr. Glatfelter
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 need for the MIP Adjustment Supplement
has ended The second
-26-
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 thirty-six (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 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,
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 individual and 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.
Clawback
Policy
The Committee intends to adopt an executive compensation
clawback policy with respect to the Companys incentive
programs that is in compliance with the new requirements under
the Dodd-Frank Wall Street Reform and Consumer Protection Act
after the SEC issues final rules implementing these requirements.
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 2010 MIP bonus payments,
payments under the cash LTIP or Performance Shares, 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.
REPORT OF THE
COMPENSATION COMMITTEE
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis set forth on pages 18
through 27 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.
Ronald J. Naples (Chair)
Kathleen A. Dahlberg
Nicholas DeBenedictis
Richard L. Smoot
Lee C. Stewart
-27-
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 2010 other
than the Chief Executive Officer and the Chief Financial
Officer. The titles in the table below were current as of
December 31, 2010, however Mr. Glatfelter retired as
CEO on that date and was succeeded by Mr. Parrini.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and Non
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Qualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive
|
|
|
Deferred Comp
|
|
|
All Other
|
|
|
|
|
|
|
|
Name and Principal
|
|
|
|
|
|
|
|
Awards
|
|
|
Awards
|
|
|
Plan Comp
|
|
|
Earnings
|
|
|
Compensation
|
|
|
|
|
|
|
|
Position in 2010
|
|
Year
|
|
|
Salary
|
|
|
(1)
|
|
|
(2)
|
|
|
(3)
|
|
|
(4)
|
|
|
(5)
|
|
|
Total
|
|
|
|
|
|
|
|
George H. Glatfelter II
|
|
|
2010
|
|
|
$
|
697,192
|
|
|
$
|
114,251
|
|
|
$
|
483,677
|
|
|
$
|
826,222
|
|
|
$
|
3,288,000
|
|
|
$
|
47,987
|
|
|
$
|
5,457,328
|
|
|
|
|
|
Chairman & Chief
|
|
|
2009
|
|
|
|
660,800
|
|
|
|
146,866
|
|
|
|
743,384
|
|
|
|
951,552
|
|
|
|
1,659,000
|
|
|
|
34,640
|
|
|
|
4,196,242
|
|
|
|
|
|
Executive Officer
|
|
|
2008
|
|
|
|
654,600
|
|
|
|
122,304
|
|
|
|
239,940
|
|
|
|
642,660
|
|
|
|
151,719
|
|
|
|
45,778
|
|
|
|
1,857,001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dante C. Parrini
|
|
|
2010
|
|
|
|
532,802
|
|
|
|
703,932
|
|
|
|
312,856
|
|
|
|
538,292
|
|
|
|
322,000
|
|
|
|
37,141
|
|
|
|
2,447,023
|
|
|
|
|
|
Exec. Vice President &
|
|
|
2009
|
|
|
|
505,025
|
|
|
|
104,154
|
|
|
|
479,713
|
|
|
|
590,879
|
|
|
|
239,000
|
|
|
|
30,394
|
|
|
|
1,967,749
|
|
|
|
|
|
Chief Operating Officer
|
|
|
2008
|
|
|
|
498,011
|
|
|
|
86,534
|
|
|
|
170,227
|
|
|
|
399,073
|
|
|
|
86,000
|
|
|
|
38,045
|
|
|
|
1,277,910
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John P. Jacunski
|
|
|
2010
|
|
|
|
365,392
|
|
|
|
50,081
|
|
|
|
211,780
|
|
|
|
307,573
|
|
|
|
93,000
|
|
|
|
12,779
|
|
|
|
1,040,604
|
|
|
|
|
|
Senior Vice President &
|
|
|
2009
|
|
|
|
332,426
|
|
|
|
62,136
|
|
|
|
286,311
|
|
|
|
329,102
|
|
|
|
24,000
|
|
|
|
13,396
|
|
|
|
1,047,371
|
|
|
|
|
|
Chief Financial Officer
|
|
|
2008
|
|
|
|
329,458
|
|
|
|
51,475
|
|
|
|
101,370
|
|
|
|
222,272
|
|
|
|
14,000
|
|
|
|
13,943
|
|
|
|
732,518
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debabrata Mukherjee
|
|
|
2010
|
|
|
|
300,667
|
|
|
|
36,410
|
|
|
|
153,644
|
|
|
|
185,664
|
|
|
|
126,000
|
|
|
|
8,881
|
|
|
|
811,265
|
|
|
|
|
|
Vice President & General
Manager, SPBU
|
|
|
2009
|
|
|
|
251,083
|
|
|
|
45,982
|
|
|
|
211,882
|
|
|
|
204,930
|
|
|
|
37,000
|
|
|
|
7,538
|
|
|
|
758,415
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martin Rapp(6)
|
|
|
2010
|
|
|
|
352,482
|
|
|
|
28,179
|
|
|
|
119,386
|
|
|
|
221,775
|
|
|
|
162,000
|
|
|
|
17,149
|
|
|
|
900,971
|
|
|
|
|
|
Vice President & General
|
|
|
2009
|
|
|
|
359,688
|
|
|
|
38,253
|
|
|
|
160,999
|
|
|
|
300,402
|
|
|
|
107,000
|
|
|
|
16,477
|
|
|
|
984,578
|
|
|
|
|
|
Manager, CFBU
|
|
|
2008
|
|
|
|
377,476
|
|
|
|
29,165
|
|
|
|
57,251
|
|
|
|
168,126
|
|
|
|
41,000
|
|
|
|
23,741
|
|
|
|
696,759
|
|
|
|
|
|
|
|
|
|
(1)
|
The amounts reflect the fair market value of RSUs granted on
March 3, 2010, May 5, 2009 and March 5, 2008. The
method used to calculate these amounts is indicated in
footnote 9 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 2010, 2009 and 2008. The
method used to calculate these amounts is indicated in
footnote 9 to the Companys audited financial
statements included in the Companys Annual Report on
Form 10-K
for the year ended December 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
2008
|
|
|
|
|
Dividend yield
|
|
|
2.58%
|
|
|
|
3.63%
|
|
|
|
2.68%
|
|
|
|
|
|
Risk-free rate of return
|
|
|
2.54
|
|
|
|
2.26
|
|
|
|
3.69
|
|
|
|
|
|
Volatility
|
|
|
42.31
|
|
|
|
40.59
|
|
|
|
31.90
|
|
|
|
|
|
Term
|
|
|
6 years
|
|
|
|
6 years
|
|
|
|
6 years
|
|
|
|
|
|
|
|
|
|
(3)
|
The 2010, 2009, and 2008 amounts reflect cash payments under the
Companys 2005 Management Incentive Plan (the
MIP) as amended and restated and the
2008-2010
Cash LTIP. See discussion of the MIP in the Compensation
Discussion and Analysis beginning on page 21 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 2010 amount represents a
$3,288,000 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
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, and 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.
Mr. Glatfelters deferred compensation is credited
quarterly with interest based on the prime rate at JP Morgan
Chase Bank in 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
|
|
|
|
|
|
|
Match
|
|
(i), (ii), (iii)
|
|
Dividends
|
|
Total
|
|
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Glatfelter
|
|
$
|
1,509
|
|
|
$
|
23,294
|
|
|
$
|
23,184
|
|
|
$
|
47,987
|
|
|
|
|
|
Parrini
|
|
|
4,125
|
|
|
|
8,525
|
|
|
|
24,491
|
|
|
|
37,141
|
|
|
|
|
|
Jacunski
|
|
|
4,125
|
|
|
|
|
|
|
|
8,654
|
|
|
|
12,779
|
|
|
|
|
|
Mukherjee
|
|
|
4,125
|
|
|
|
|
|
|
|
4,756
|
|
|
|
8,881
|
|
|
|
|
|
Rapp
|
|
|
|
|
|
|
11,976
|
|
|
|
5,173
|
|
|
|
17,149
|
|
|
|
|
|
|
|
|
|
|
|
i.
|
The amount included in the Perquisites column for
Mr. Glatfelter includes the cost of travel and meals for
Mr. Glatfelters spouse who accompanied
Mr. Glatfelter for portions of his pre-retirement
transitional visits to the Companys primary facilities in
the United States, Canada and Europe and costs related to
retirement mementos and retirement dinners in honor of
Mr. Glatfelter for which the Company paid.
|
|
|
|
|
ii.
|
The amount included in the Perquisites column for
Mr. Parrini represents country club dues paid by the
Company.
|
|
|
|
|
iii.
|
The amounts included in the Perquisites column for
Mr. Rapp represents a car allowance paid for by the Company.
|
|
|
(6) |
Mr. Rapps cash compensation is paid in Euros
(). Amounts presented here have been converted to United
States dollars ($) using the exchange rate on December 31,
2010, or 1.3252 $/. Mr. Rapps cash compensation
(not including automobile expense reimbursement) was
265,984, 257,839, and 246,034 for 2010, 2009,
and 2008, respectively.
|
-28-
GRANTS OF
PLAN-BASED AWARDS
The following table sets forth information concerning grants of
plan-based awards in 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards:
|
|
Option
|
|
Exercise
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Awards:
|
|
or Base
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
Shares of
|
|
Number of
|
|
Price of
|
|
Fair Value
|
|
|
|
|
Estimated Possible Payouts Under Non-
|
|
Stock or
|
|
Securities
|
|
Option
|
|
of Stock
|
|
|
|
|
Equity Incentive Plan (1)
|
|
Units
|
|
Underlying
|
|
Awards
|
|
and Option
|
Name
|
|
Grant Date
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
(2)
|
|
(3)
|
|
($/Share)
|
|
Awards
|
|
|
Glatfelter
|
|
|
02/17/10
|
|
|
|
280,200
|
|
|
|
560,400
|
|
|
|
1,120,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/03/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,190
|
|
|
|
|
|
|
|
|
|
|
$
|
114,251
|
|
|
|
|
03/03/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
102,500
|
|
|
|
13.95
|
|
|
|
483,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parrini
|
|
|
02/17/10
|
|
|
|
173,981
|
|
|
|
347,963
|
|
|
|
695,925
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/03/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,300
|
|
|
|
|
|
|
|
|
|
|
|
73,935
|
|
|
|
|
03/03/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66,300
|
|
|
|
13.95
|
|
|
|
312,936
|
|
|
|
|
06/28/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,360
|
|
|
|
|
|
|
|
|
|
|
|
629,997
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jacunski
|
|
|
02/17/10
|
|
|
|
96,902
|
|
|
|
193,805
|
|
|
|
387,609
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/03/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,590
|
|
|
|
|
|
|
|
|
|
|
|
50,081
|
|
|
|
|
03/03/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,880
|
|
|
|
13.95
|
|
|
|
211,834
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mukherjee
|
|
|
02/17/10
|
|
|
|
68,625
|
|
|
|
137,250
|
|
|
|
274,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/03/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,610
|
|
|
|
|
|
|
|
|
|
|
|
36,410
|
|
|
|
|
03/03/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,560
|
|
|
|
13.95
|
|
|
|
153,683
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rapp
|
|
|
02/17/10
|
|
|
|
79,503
|
|
|
|
159,005
|
|
|
|
318,010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/03/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,020
|
|
|
|
|
|
|
|
|
|
|
|
28,179
|
|
|
|
|
03/03/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,300
|
|
|
|
13.95
|
|
|
|
119,416
|
|
|
|
|
|
(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 2010, the Companys operating net income
resulted in a MIP payment made in March 2011 equal to 97% 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, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
|
|
|
Unexercised
|
|
Unexercised
|
|
|
|
|
|
|
|
|
|
|
|
|
Options (#)
|
|
Options (#)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 ($)
|
|
Date
|
|
Date
|
|
Have Not Vested( #)
|
|
Not Vested ($)(1)
|
|
G. H. Glatfelter II
|
|
|
79,000
|
|
|
|
0
|
|
|
|
15.47
|
(2)
|
|
|
12/17/11
|
|
|
|
3/7/07
|
|
|
|
0
|
(2)
|
|
|
|
|
|
|
|
63,600
|
|
|
|
0
|
|
|
|
13.70
|
|
|
|
12/16/12
|
|
|
|
3/5/08
|
|
|
|
0
|
(2)
|
|
|
|
|
|
|
|
51,400
|
|
|
|
0
|
|
|
|
15.94
|
(3)
|
|
|
12/31/13
|
|
|
|
5/5/09
|
|
|
|
0
|
(2)
|
|
|
|
|
|
|
|
59,600
|
|
|
|
0
|
|
|
|
14.78
|
(4)
|
|
|
12/31/13
|
|
|
|
3/3/10
|
|
|
|
0
|
(2)
|
|
|
|
|
|
|
|
63,226
|
|
|
|
0
|
|
|
|
13.44
|
(5)
|
|
|
12/31/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
208,360
|
|
|
|
0
|
|
|
|
9.91
|
(6)
|
|
|
12/31/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51,851
|
|
|
|
0
|
|
|
|
13.95
|
(7)
|
|
|
12/31/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. P. Jacunski
|
|
|
21,500
|
|
|
|
0
|
|
|
|
15.94
|
(3)
|
|
|
03/07/17
|
|
|
|
3/7/07
|
|
|
|
2,066
|
(8)
|
|
$
|
25,350
|
|
|
|
|
24,900
|
|
|
|
0
|
|
|
|
14.78
|
(4)
|
|
|
12/19/17
|
|
|
|
3/5/08
|
|
|
|
3,830
|
(8)
|
|
|
46,994
|
|
|
|
|
18,167
|
|
|
|
9,083
|
|
|
|
13.44
|
(5)
|
|
|
03/05/18
|
|
|
|
5/5/09
|
|
|
|
6,270
|
(8)
|
|
|
76,933
|
|
|
|
|
33,724
|
|
|
|
67,446
|
|
|
|
9.91
|
(6)
|
|
|
05/05/19
|
|
|
|
3/3/10
|
|
|
|
3,590
|
(8)
|
|
|
44,049
|
|
|
|
|
0
|
|
|
|
44,880
|
|
|
|
13.95
|
(7)
|
|
|
03/03/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D. C. Parrini
|
|
|
36,900
|
|
|
|
0
|
|
|
|
15.94
|
(3)
|
|
|
12/18/10
|
|
|
|
3/7/07
|
|
|
|
3,466
|
(8)
|
|
|
42,528
|
|
|
|
|
42,800
|
|
|
|
0
|
|
|
|
14.78
|
(4)
|
|
|
03/07/17
|
|
|
|
3/5/08
|
|
|
|
6,440
|
(8)
|
|
|
79,019
|
|
|
|
|
30,507
|
|
|
|
15,253
|
|
|
|
13.44
|
(5)
|
|
|
12/19/17
|
|
|
|
5/5/09
|
|
|
|
10,510
|
(8)
|
|
|
128,958
|
|
|
|
|
56,504
|
|
|
|
113,006
|
|
|
|
9.91
|
(6)
|
|
|
03/05/18
|
|
|
|
3/3/10
|
|
|
|
5,300
|
(8)
|
|
|
65,031
|
|
|
|
|
0
|
|
|
|
66,300
|
|
|
|
13.95
|
(7)
|
|
|
05/05/19
|
|
|
|
6/28/10
|
|
|
|
55,360
|
(9)
|
|
|
679,267
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/03/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D. Mukherjee
|
|
|
9,700
|
|
|
|
0
|
|
|
|
15.94
|
(3)
|
|
|
03/07/17
|
|
|
|
3/7/07
|
|
|
|
800
|
(8)
|
|
|
9,816
|
|
|
|
|
11,200
|
|
|
|
0
|
|
|
|
14.78
|
(4)
|
|
|
12/19/17
|
|
|
|
3/5/08
|
|
|
|
1,680
|
(8)
|
|
|
20,614
|
|
|
|
|
7,980
|
|
|
|
3,990
|
|
|
|
13.44
|
(5)
|
|
|
03/05/18
|
|
|
|
5/5/09
|
|
|
|
4,640
|
(8)
|
|
|
56,933
|
|
|
|
|
24,957
|
|
|
|
49,913
|
|
|
|
9.91
|
(6)
|
|
|
03/05/19
|
|
|
|
3/3/10
|
|
|
|
2,610
|
(8)
|
|
|
32,025
|
|
|
|
|
0
|
|
|
|
32,560
|
|
|
|
13.95
|
(7)
|
|
|
03/03/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
M. Rapp
|
|
|
12,400
|
|
|
|
0
|
|
|
|
15.94
|
(3)
|
|
|
03/07/17
|
|
|
|
3/7/07
|
|
|
|
1,066
|
(8)
|
|
|
13,080
|
|
|
|
|
14,400
|
|
|
|
0
|
|
|
|
14.78
|
(4)
|
|
|
12/19/17
|
|
|
|
3/5/08
|
|
|
|
2,170
|
(8)
|
|
|
26,626
|
|
|
|
|
10,260
|
|
|
|
5,130
|
|
|
|
13.44
|
(5)
|
|
|
03/05/18
|
|
|
|
5/5/09
|
|
|
|
3,860
|
(8)
|
|
|
47,362
|
|
|
|
|
18,964
|
|
|
|
37,926
|
|
|
|
9.91
|
(6)
|
|
|
03/05/19
|
|
|
|
3/3/10
|
|
|
|
2,020
|
(8)
|
|
|
24,785
|
|
|
|
|
0
|
|
|
|
25,300
|
|
|
|
13.95
|
(7)
|
|
|
03/03/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Calculated based on the closing price of the Companys
common stock on 12/31/2010 ($12.27).
|
|
(2)
|
As a result of Mr. Glatfelters retirement as CEO on
12/31/2010, portions of his outstanding, unvested equity grants
as set forth in this table were either forfeited or accelerated
pursuant to the terms of the LTIP. Mr. Glatfelter received
6,613 and forfeited 687 RSUs from his 3/7/2007 grant; received
6,706 and forfeited 2,394 RSUs from his 3/5/2008 grant;
forfeited 1,274 SOSARs from his 3/5/2008 grant; received 6,406
and forfeited 8,414 RSUs from his 5/5/2009 grant; forfeited
54,320 SOSARs from his 5/5/2009 grant; received 1,770 and
forfeited 6,420 RSUs from his 3/3/2010 grant, and forfeited
50,649 SOSARs from his 3/3/2010 grant.
|
|
(3)
|
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 18
of this proxy statement.
|
|
(4)
|
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 18
of this proxy statement.
|
|
(5)
|
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 18
of this proxy statement.
|
|
(6)
|
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 18
of this proxy statement.
|
|
(7)
|
Represents SOSARs granted on March 3, 2010 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 18
of this proxy statement.
|
|
(8)
|
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.
|
|
(9)
|
Represents RSUs which vest 100% on the fifth anniversary of the
grant date, with all shares being delivered on the vesting date.
|
-30-
OPTION EXERCISES
AND STOCK VESTED
The following table sets forth information concerning options
exercised and stock grants which vested during fiscal 2010:
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
Number of Shares
|
|
Value Realized on
|
|
|
Acquired on Vesting (#)
|
|
Vesting ($)
|
|
|
G. H. Glatfelter II
|
|
|
29,850
|
(1)
|
|
|
375,447
|
|
J. P. Jacunski
|
|
|
9,788
|
(2)
|
|
|
125,459
|
|
D. C. Parrini
|
|
|
16,100
|
(3)
|
|
|
203,672
|
|
D. Mukherjee
|
|
|
4,438
|
(4)
|
|
|
56,752
|
|
M. Rapp
|
|
|
5,300
|
(5)
|
|
|
65,031
|
|
|
|
|
|
|
|
(1)
|
Represents 26,100 RSUs granted on 6/7/2006, on which all
restrictions lapsed and the shares were paid out on 12/31/2010,
and 3,750 RSUs granted on 3/7/2007, on which all restrictions
lapsed and shares were paid out, on 3/7/2010.
|
|
|
(2)
|
Represents 7,600 RSUs granted on 6/7/2006, on which all
restrictions lapsed and the shares were paid out on 12/31/2010,
and 2,188 RSUs granted on 3/7/2007, on which all restrictions
lapsed and shares were paid out, on 3/7/2010.
|
|
|
(3)
|
Represents 13,600 RSUs granted on 6/7/2006, on which all
restrictions lapsed and the shares were paid out on 12/31/2010,
and 2,500 RSUs granted on 3/7/2007, on which all restrictions
lapsed and shares were paid out, on 3/7/2010.
|
|
|
(4)
|
Represents 3,500 RSUs granted on 6/7/2006, on which all
restrictions lapsed and the shares were paid out on 12/31/2010,
and 938 RSUs granted on 3/7/2007, on which all restrictions
lapsed and shares were paid out, on 3/7/2010.
|
|
|
(5)
|
Represents 5,300 RSUs granted on 8/1/2006, on which all
restrictions lapsed and the shares were paid out on 12/31/2010.
|
-31-
PENSION
BENEFITS
The following table sets forth information concerning pension
benefits during fiscal year 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
34
|
|
|
|
991,000
|
|
|
|
0
|
|
|
|
SERP
|
|
|
34
|
|
|
|
7,588,000
|
|
|
|
0
|
|
J. P. Jacunski
|
|
Pension Plan
|
|
|
7
|
|
|
|
78,000
|
|
|
|
0
|
|
|
|
SMPP
|
|
|
7
|
|
|
|
27,000
|
|
|
|
0
|
|
|
|
SERP
|
|
|
7
|
|
|
|
66,000
|
|
|
|
0
|
|
D. C. Parrini
|
|
Pension Plan
|
|
|
13
|
|
|
|
185,000
|
|
|
|
0
|
|
|
|
SERP
|
|
|
13
|
|
|
|
823,000
|
|
|
|
0
|
|
D. Mukherjee
|
|
Pension Plan
|
|
|
13
|
|
|
|
147,000
|
|
|
|
0
|
|
|
|
SMPP
|
|
|
13
|
|
|
|
49,000
|
|
|
|
0
|
|
|
|
SERP
|
|
|
13
|
|
|
|
45,000
|
|
|
|
0
|
|
M. Rapp
|
|
Pension Plan
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
Contractual Agreement
|
|
|
8
|
(2)
|
|
|
501,000
|
|
|
|
0
|
|
|
|
|
|
|
|
(1)
|
Mr. Glatfelters present value calculation is based on
a 6.07% discount rate for the SERP and a 5.95% discount rate for
the Pension Plan, a 0% postretirement COLA rate, RP-2000
mortality projected to 2017, age 59 retirement, and no
pre-retirement decrements. Mr. Jacunskis present
value calculation is based on a 6.07% discount rate for the
SERP, a 5.74% 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 2017, age 62 retirement for
the SMPP and age 65 retirement for the SERP and the Pension
Plan, and no pre-retirement decrements. Mr. Parrinis
present value calculation is based on a 6.07% discount rate for
the SERP and a 5.95% discount rate for the Pension Plan, a 0%
postretirement COLA rate, RP-2000 mortality projected to 2017,
age 62 retirement for the SERP and age 63 retirement
for the Pension Plan, and no pre-retirement decrements.
Mr. Mukherjees present value calculation is based on
a 6.07% discount rate for the SERP, a 5.74% discount rate for
the SMPP and a 5.95% discount rate for the Pension Plan, a 0%
postretirement COLA rate, RP-2000 mortality projected to 2017,
age 59 retirement for the SMPP and age 62 retirement
for the SERP and the Pension Plan,, and no pre-retirement
decrements. Mr. Rapps present value calculation is
based on a 5% discount rate, a 2% postretirement COLA rate,
Heubeck Richtafeln 2005G mortality, age 65 retirement, and
no pre-retirement decrements.
|
|
|
(2)
|
Mr. Rapps years of credited service include four
(4) 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 $250,000.
|
As of December 31, 2010, 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 Restoration Pension and 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?
|
|
|
|
|
|
|
|
|
|
|
|
|
SERP
|
|
|
|
|
Pension
|
|
|
|
FAC
|
|
|
|
|
Plan
|
|
Restoration
|
|
Pension
|
|
SMPP
|
|
|
G. H. Glatfelter II
|
|
√
|
|
√
|
|
√
|
|
|
J. P. Jacunski
|
|
√
|
|
√
|
|
|
|
√
|
D. C. Parrini
|
|
√
|
|
√
|
|
√
|
|
|
D. Mukherjee
|
|
√
|
|
√
|
|
|
|
√
|
M. Rapp
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2010, 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 Restoration
portion of the Supplemental Executive Retirement Plan and 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:
|
|
|
|
|
1.4% of the participants final average compensation
multiplied by his or her years of benefit service (to a maximum
of 25), plus
|
-32-
|
|
|
|
|
0.5% of final average compensation for each year of benefit
service in excess of 25.
|
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
(5) consecutive calendar years of compensation, then final
average compensation is determined 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 2010). 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 NEOs participate
under the new benefit formula.
Qualified Pension Plan interests generally vest upon the first
to occur of five (5) 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. 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 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 (6) 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
-33-
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 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
(3) 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 (6) months
following retirement or termination.
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
(5) 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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
Registrant
|
|
|
Earnings
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
|
Contributions in
|
|
|
Contributions in
|
|
|
in Last FY
|
|
|
Withdrawals/
|
|
|
Balance
|
|
Name
|
|
Last FY
|
|
|
Last FY
|
|
|
(1)
|
|
|
Distributions
|
|
|
at Last FYE
|
|
|
|
|
George H. Glatfelter II
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
6,940
|
|
|
$
|
0
|
|
|
$
|
217,948
|
|
|
|
|
|
|
|
(1)
|
Of the $6,940 in interest earned in 2010, $-0- was reported as
above-market earnings on deferred compensation in the Summary
Compensation Table on page 28 of this proxy statement.
|
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
JP Morgan Chase Bank 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 thirty (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
pages 37-38
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, 2010, 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 32 of this proxy
statement. In addition to the Pension Plan, Mr. Glatfelter,
Mr. Jacunski, Mr. Parrini and Mr. Mukherjee 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, 2010, 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, Mr. Jacunski,
Mr. Parrini and Mr. Mukherjee (or, in certain
circumstances, their spouses) would be entitled to receive for
their lifetimes upon termination as of December 31, 2010,
under several different circumstances. The payments shown
reflect benefit commencement at the earliest possible age.
TERMINATION
PAYMENTS UNDER SERP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination Other
|
|
|
|
|
|
|
|
|
|
than Upon Death or
|
|
|
Termination as a
|
|
|
|
|
Name
|
|
Disability
|
|
|
Result of Death (1)
|
|
|
Disability (2)
|
|
|
|
|
G. H. Glatfelter II
|
|
$
|
43,000
|
(3)
|
|
$
|
27,000
|
|
|
$
|
20,000
|
|
J. P. Jacunski
|
|
|
0
|
(4)
|
|
|
700
|
|
|
|
0
|
|
D. C. Parrini
|
|
|
0
|
(4)
|
|
|
8,000
|
|
|
|
6,000
|
|
D. Mukherjee
|
|
|
0
|
(4)
|
|
|
400
|
|
|
|
0
|
|
|
|
|
|
(1)
|
Represents pension survivor benefits payable to the NEOs
spouse for her lifetime, commencing at the earliest possible age.
|
|
(2)
|
Represents FAC pension benefit payable beginning upon reaching
the age of 59 for Mr. Glatfelter and 62 for
Mr. Parrini. 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.
|
|
(3)
|
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. However, upon his retirement on
December 31, 2010, Mr. Glatfelter became eligible to
receive his vested SERP in the amount set forth in the table of
Pension Benefits on page 32 of this proxy statement, which
he has elected to receive in a lump sum.
Mr. Glatfelters SERP will be paid to him in July 2011.
|
|
(4)
|
Mr. Jacunski, Mr. Parrini and Mr. Mukherjee were
all under 55 years of age on December 31, 2010, so
voluntary termination would result in 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.
|
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.
Deferred Compensation. 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, 2010. Mr. Glatfelter, or his beneficiary
in the event of his
-35-
death, is entitled to receive the amount in his account in the
event of his termination. None of the other NEOs have deferred
compensation.
2005 Management Incentive Plan. The bonuses paid
to NEOs and other executives in 2010 under the 2005 Management
Incentive Plan were subject to a performance period that ended
on December 31, 2010. If a NEO had been terminated on
December 31, 2010 and the performance goals to which the
2010 awards were subject 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, in light of his
retirement, 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 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 $12.27 closing price
of the Companys common stock on December 31, 2010,
Mr. Glatfelter had no options to exercise that were
in-the-money.
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, 2010 (calculated based on the closing price of
the Companys common stock on December 31, 2010
($12.27):
|
|
|
|
|
|
|
Disability/Death/
|
|
|
Retirement
|
|
|
G. H. Glatfelter II
|
|
$
|
-0-
|
|
J. P. Jacunski
|
|
$
|
99,313
|
|
D. C. Parrini
|
|
$
|
234,001
|
|
D. Mukherjee
|
|
$
|
55,227
|
|
M. Rapp
|
|
$
|
56,761
|
|
|
|
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 (90) 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, 2010, exceeded the closing price of the
Companys common stock at December 31, 2010 ($12.27).
Accordingly, if any NEO would have died, become disabled or
retired during 2010, the NEO would not have realized any value
from SOSARs which would have become vested due to such events.
-36-
Change in
Control
Set forth in the table below are the amounts of compensation
payable to each NEO upon termination by the Company for cause,
termination by the NEO without good reason, termination by the
NEO for good reason, termination by the Company other than for
cause, death or disability, and termination in the event of
disability or death of the NEO. The amounts set forth in the
table below assume a change in control as of December 31,
2010, and termination of each executive upon the change in
control.
Potential Payments Upon a Termination of Employment Following
a Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Payment of
|
|
Cash Payment of
|
|
|
|
|
|
Value of
|
|
|
|
|
Cash
|
|
Present Value of
|
|
Unvested Section
|
|
Present Value of
|
|
|
|
Unvested
|
|
|
Executive/Type of
|
|
Severance
|
|
Incremental Pension
|
|
401(k) Company
|
|
Welfare Benefits
|
|
Excise Tax
|
|
SOSARs &
|
|
|
Termination
|
|
Payment ($)
|
|
Benefit ($)(1)
|
|
Match ($)(2)
|
|
Continuation ($)(3)
|
|
Gross-Up ($)
|
|
RSUs ($)(4)
|
|
Total ($)(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
George H. Glatfelter II
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
556,104
|
|
|
$
|
556,104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Disability
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
556,104
|
|
|
$
|
556,104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by Company for Cause
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by Executive Without Good Reason
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
171,371
|
|
|
$
|
171,371
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by Executive for Good Reason/by Company Other Than
for Cause, Death, Disability
|
|
$
|
5,270,900
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
49,213
|
|
|
$
|
1,858,107
|
|
|
$
|
866,987
|
|
|
$
|
8,045,206
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dante C. Parrini
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
443,560
|
|
|
$
|
443,560
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Disability
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
443,560
|
|
|
$
|
443,560
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by Company for Cause
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by Executive Without Good Reason
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
121,555
|
|
|
$
|
121,555
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by Executive for Good Reason/by Company Other Than
for Cause, Death, Disability
|
|
$
|
2,624,730
|
|
|
$
|
1,135,000
|
|
|
$
|
|
|
|
$
|
44,290
|
|
|
$
|
1,651,543
|
|
|
$
|
1,261,506
|
|
|
$
|
6,717,070
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John P. Jacunski
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
224,659
|
|
|
$
|
224,659
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Disability
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
224,659
|
|
|
$
|
224,659
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by Company for Cause
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by Executive Without Good Reason
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
72,352
|
|
|
$
|
72,352
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by Executive for Good Reason/by Company Other Than
for Cause, Death, Disability
|
|
$
|
1,649,552
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
29,107
|
|
|
$
|
583,712
|
|
|
$
|
352,508
|
|
|
$
|
2,614,879
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martin Rapp
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
126,977
|
|
|
$
|
126,977
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Disability
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
126,977
|
|
|
$
|
126,977
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by Company for Cause
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by Executive Without Good Reason
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
39,558
|
|
|
$
|
39,558
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by Executive for Good Reason/by Company Other Than
for Cause, Death, Disability
|
|
$
|
1,405,656
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
32,263
|
|
|
$
|
491,015
|
|
|
$
|
201,213
|
|
|
$
|
2,130,147
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deba Mukherjee
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
143,019
|
|
|
$
|
143,019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Disability
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
143,019
|
|
|
$
|
143,019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by Company for Cause
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by Executive Without Good Reason
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
30,430
|
|
|
$
|
30,430
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by Executive for Good Reason/by Company Other Than
for Cause, Death, Disability
|
|
$
|
1,126,159
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
28,224
|
|
|
$
|
444,533
|
|
|
$
|
237,183
|
|
|
$
|
1,836,099
|
|
|
|
|
|
(2)
|
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.
|
|
(3)
|
Represents value of unvested portion of Section 401(k)
Company match.
|
|
(4)
|
Based on current type of coverage and premium levels.
|
|
(5)
|
Assumes vesting (as determined under applicable award
agreements) and exercise on December 31, 2010.
|
|
(6)
|
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,
2008, 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
(2) 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
(2) 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 (30) 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 (5) 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 (5) 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 (5) 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:
|
|
|
|
|
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;
|
|
|
|
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
|
|
|
|
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.
|
Cause. For purposes of payments made upon termination of
employment cause means:
|
|
|
|
|
acts of personal dishonesty intended to result in substantial
personal enrichment of the NEO at the expense of the Company;
|
|
|
|
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;
|
|
|
|
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
|
|
|
|
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.
|
Good Reason. For purposes of payments made upon
termination of employment, Good Reason means:
|
|
|
|
|
a material diminution in the NEOs authority, duties or
responsibilities;
|
|
|
|
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;
|
|
|
|
any failure by the Company to comply with any of the provisions
of the Change in Control Employment Agreement; or
|
|
|
|
a material change in the office or location of the NEO other
than that described in the Change in Control Employment
Agreement.
|
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
(6) 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%.
SOSARs and RSUs. Prior to March 2009, upon a
change in control, all of the RSUs that have been held for at
least six (6) 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 (6) months will
accelerate vesting only upon such a termination that occurs
within two (2) 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:
|
|
|
|
|
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
|
|
|
|
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
|
|
|
|
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.
|
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:
|
|
|
|
|
Accrued salary and vacation pay;
|
|
|
|
Vested interests under the Pension Plan, as described in Pension
Benefits on pages 32 through 34 of this proxy statement;
|
|
|
|
Life insurance benefits; and
|
|
|
|
Distributions of plan balances under the Companys 401(k)
plan.
|
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 2010.
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:
|
|
|
|
|
The benefits to the Company of the transactions;
|
|
|
|
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;
|
|
|
|
The availability of other sources for comparable products or
services;
|
|
|
|
The terms of the transaction; and
|
|
|
|
The terms available from unrelated third parties or to employees
generally.
|
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 C. 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
reviews and considers 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 committees of the Board 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 the committees oversight
activities.
The Company 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. These programs and policies are
overseen, supervised and administered by management, which
periodically updates the Board and the committees of the Board
on material risks which have been identified or publicly
disclosed. The Companys Manager Internal
Audit, 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
Audit. The Audit Committee provides periodic reports to the
Board on 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, 2010 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, 2010, for filing with the
SEC.
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, 2010, 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 Annual 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
continue 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. The shareholder
should send a written request to Investor Relations, P. H.
Glatfelter Company, 96 South George Street, Suite 520,
York, PA 17401, or call us at
(717) 225-2724,
if the shareholder (i) wishes to receive a separate copy of
an Annual Report or proxy statement for this Meeting;
(ii) would like to receive separate copies of those
materials for future meetings; or (iii) is sharing an
address and wishes to request delivery of a single copy of
Annual Reports or proxy statements if the shareholder is now
receiving multiple copies of Annual Reports or proxy statements.
Thomas G. Jackson
Secretary
March 30, 2011
-42-
YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY.
We encourage you to take advantage of Internet or telephone voting.
Both are available 24 hours a day, 7 days a week.
Internet and telephone voting are available through 11:59 PM Eastern Time the day prior to the
shareholder meeting date.
INTERNET
http://www.proxyvoting.com/glt
Use the Internet to vote your proxy. Have your proxy card in hand when you access the web site.
OR
TELEPHONE
1-866-540-5760
Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when you call.
If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy card.
To vote by mail, mark, sign and date your proxy card and return it in the enclosed postage-paid
envelope.
Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner
as if you marked, signed and returned your proxy card.
2011
Annual Meeting Admission Ticket
Wednesday, May 4, 2011
York Expo Center, 334 Carlisle Avenue, York, PA 17404
Pennsylvania Room
Upon arrival, please present this admission ticket, photo
identification and any other required documents.
Number of shares:
WO#
93088-1
▼ PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. ▼
|
|
|
|
|
|
|
Using a black ink pen, please mark your votes |
|
x |
A
Proposals The Board of Directors recommends a vote FOR
all the nominees listed and FOR Proposals 2 and 3.
|
|
as indicated in this example. Please do not write |
|
|
|
outside the designated areas. |
|
1. Election of Directors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director Nominees |
|
|
|
Number of Votes |
|
|
o |
Mark here to vote FOR all nominees |
o |
01 Kathleen A. Dahlberg |
o |
07 Richard L. Smoot |
|
01 - Kathleen A. Dahlberg 02 - Nicholas DeBenedictis 03 - J. Robert Hall 04 - Richard C. Ill
05 - Ronald J. Naples 06 - Dante C. Parrini 07 - Richard L. Smoot 08 - Lee C. Stewart
Total Votes Cast |
|
|
|
___________ Votes FOR
___________ Votes FOR
___________ Votes FOR
___________ Votes FOR
___________ Votes FOR
___________ Votes FOR
___________ Votes FOR
___________ Votes FOR
___________
|
o |
Mark here to WITHHOLD vote from all nominees |
o |
02 Nicholas DeBenedictis |
o |
08 Lee C. Stewart |
|
|
|
|
s |
|
|
|
|
|
|
|
o |
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. |
o |
03 J. Robert
Hall |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR |
|
AGAINST |
|
ABSTAIN |
o |
CUMULATIVE VOTING: If you desire to allocate your votes to individual nominees on a cumulative basis, as explained on page 2 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 8. NOTE: If you
wish to use cumulative voting, you MUST vote your
proxy by mail. |
o
o
o |
04
Richard C. Ill
05 Ronald J.
Naples
06 Dante C. Parrini |
|
|
|
|
|
|
|
|
|
|
|
|
2.
3. |
Proposal to ratify the appointment of Deloitte & Touche LLP as the independent registered public accounting firm for the Company for the year ending December 31, 2011.
Proposal to approve the advisory (non-binding) resolution on executive compensation.
|
|
o
o |
|
o
o |
|
o
o |
|
|
|
|
The
Board of Directors recommends a vote for Shareholder approval every 3
years. |
|
|
|
|
|
|
|
|
|
1 year |
|
2 years |
|
3 years |
|
Abstain |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4. |
Executive Compensation Frequency of Shareholder vote |
|
o |
|
o |
|
o |
|
o |
|
|
|
|
|
|
|
|
Mark
Here for Address Change or Comments SEE REVERSE |
|
o |
B.
Authorized Signature In voting by mail 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, PA 17404
From the South:
Take I-83
North to Exit 15 (S. George Street - Business 83). Turn left at second traffic light.
Follow Country Club Road to Richland Avenue. Make a right on Richland and continue to Market
Street. Turn left on Market Street to York Fair Grounds.
From the North:
Take I-83 to Exit 22 N. George Street. Follow George St. South to traffic light at Route 30, and
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 2011
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 4, 2011.
P. H. Glatfelter Companys Proxy Statement for the 2011 Annual Meeting of Shareholders and the
Annual Report for the year ended December 31, 2010, are available via the Internet at
www.glatfelter.com//Files/about_us/investor_relations/2011Proxy.pdf and
www.glatfelter.com/Files/about_us/investor_relations/2010Annualreport.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/equityaccess 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 4, 2011, 10:00 A. M.
The undersigned shareholders of P. H. Glatfelter Company hereby appoints Richard L. Smoot and Lee
C. Stewart, 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, PA 17404 in the Pennsylvania
Room, on Wednesday, May 4, 2011, 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)
Address
Change/Comments
(Mark the corresponding box on the reverse side)
BNY MELLON SHAREOWNER SERVICES
P.O. BOX 3550
SOUTH HACKENSACK, NJ 07606-9250
WO#
93088-1