SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
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Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
GREIF BROS. CORPORATION
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NOT APPLICABLE
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[LOGO OF GREIF BROS. CORPORATION]
GREIF BROS. CORPORATION
425 Winter Road
Delaware, Ohio 43015
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NOTICE OF ANNUAL MEETING OF CLASS B STOCKHOLDERS
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To the Class B Stockholders of Greif Bros. Corporation:
Notice is hereby given that the Annual Meeting of Class B Stockholders of
Greif Bros. Corporation (the "Company") will be held at the principal executive
offices of the Company, 425 Winter Road, Delaware, Ohio 43015, on February 25,
2002, at 10:00 A.M., E.S.T., for the following purposes:
1. To elect nine directors to serve for a one-year term;
2. To consider and vote upon a proposal to approve the Company's Long-
Term Incentive Plan;
3. To consider and vote upon a proposal to approve the material terms of
the performance goals under the Company's Performance-Based Incentive
Compensation Plan; and
4. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
Only stockholders of record of the Class B Common Stock at the close of
business on January 10, 2002, will be entitled to notice of and to vote at this
meeting.
Whether or not you plan to attend this meeting, we hope that you will sign
the enclosed proxy and return it promptly in the enclosed envelope. If you are
able to attend the meeting and wish to vote in person, at your request we will
cancel your proxy.
/s/ Joseph W. Reed
January 25, 2002 Joseph W. Reed
Secretary
[GREIF BROS. CORPORATION LOGO]
GREIF BROS. CORPORATION
425 Winter Road
Delaware, Ohio 43015
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PROXY STATEMENT
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ANNUAL MEETING OF CLASS B STOCKHOLDERS
TO BE HELD FEBRUARY 25, 2002
To the Class B Stockholders of Greif Bros. Corporation:
This Proxy Statement is being furnished to the Class B stockholders of Greif
Bros. Corporation, a Delaware corporation (the "Company"), in connection with
the solicitation by management of proxies that will be used at the Annual
Meeting scheduled to be held on February 25, 2002, at 10:00 A.M., E.S.T., at
the Company's principal executive offices, 425 Winter Road, Delaware, Ohio
43015. It is anticipated that this Proxy Statement and form of proxy will first
be sent to the Class B stockholders on or about January 25, 2002.
PROXIES AND VOTING
At the meeting, the Class B stockholders will vote upon: (1) the election of
nine directors; (2) a proposal to approve the Company's Long-Term Incentive
Plan; (3) a proposal to approve the material terms of the performance goals of
the Company's Performance-Based Incentive Compensation Plan; and (4) such other
business as may properly come before the meeting or any and all adjournments.
Class B stockholders do not have the right to cumulate their votes in the
election of directors, and the nine nominees receiving the highest number of
votes will be elected as directors. The vote required for the approval of the
Company's Long-Term Incentive Plan and the material terms of the performance
goals of the Company's Performance-Based Incentive Compensation Plan is the
favorable vote of a majority of the outstanding shares of the Class B Common
Stock present, in person or by proxy, at the Annual Meeting.
Shares of Class B Common Stock represented by properly executed proxies will
be voted at the Annual Meeting in accordance with the choices indicated on the
proxy. If no choices are indicated on a proxy, the shares represented by that
proxy will be voted in favor of the nine nominees described in this Proxy
Statement and to approve the proposals regarding the Company's Long-Term
Incentive Plan and the Performance-Based Incentive Compensation Plan. Any proxy
may be revoked at any time prior to its exercise by delivering to the Company a
subsequently dated proxy or by giving notice of revocation to the Company in
writing or in open meeting. A Class B stockholder's presence at the Annual
Meeting does not by itself revoke the proxy.
Abstentions will be considered as shares of Class B Common Stock present and
entitled to vote at the Annual Meeting and will be counted for purposes of
determining whether a quorum is present. Abstentions will not be counted in
determining the votes cast for the election of directors and will not have a
positive or
1
negative effect on the outcome of the election. Because the proposals to
approve the Company's Long-Term Incentive Plan and the material terms of the
performance goals of the Performance-Based Incentive Compensation Plan require
the favorable vote of a majority of the outstanding shares of Class B Common
Stock present, in person or by proxy, at the Annual Meeting, abstentions will
have the same effect as a vote against these proposals.
If your Class B Common Stock is held in street name, you will need to
instruct your broker regarding how to vote your Class B Common Stock. If you do
not provide your broker with voting instructions regarding the election of
directors, your broker will nevertheless have the discretion to vote your
shares of Class B Common Stock for the election of directors. There are certain
other matters, however, over which your broker does not have discretion to vote
your Class B Common Stock without your instructions--these situations are
referred to as "broker non-votes." The proposals regarding the Company's Long-
Term Incentive Plan and the Performance-Based Incentive Compensation Plan fall
into this category. If you do not provide your broker with voting instructions
on these proposals, your shares of Class B Common Stock will not be voted on
these proposals. Because broker non-votes will be considered as shares of Class
B Common Stock present and entitled to vote for these proposals, broker non-
votes will have the same effect as votes against these proposals.
The close of business on January 10, 2002, has been fixed as the record date
for the determination of Class B stockholders entitled to notice of and to vote
at the Annual Meeting and any adjournment thereof. On the record date, there
were outstanding and entitled to vote 11,812,859 shares of Class B Common
Stock. Each share is entitled to one vote.
2
PROPOSAL NO. 1--ELECTION OF NINE DIRECTORS FOR ONE-YEAR TERM
The number of directors currently is fixed at nine, with each director
serving for a one-year term. At the Annual Meeting, shares of the Class B
Common Stock represented by the proxies, unless otherwise specified, will be
voted to elect as directors Michael J. Gasser, Charles R. Chandler, Michael H.
Dempsey, Naomi C. Dempsey, Daniel J. Gunsett, John C. Kane, Robert C. Macauley,
David J. Olderman and William B. Sparks, Jr., the nine persons nominated by the
Nominating Committee of the Board of Directors, all of whom are currently
directors of the Company and have served continuously since their first
election or appointment. Each of the nominees has consented to being named in
the Proxy Statement and to serve if elected.
If any nominee is unable to accept the office of director, or will not
serve, which is not anticipated, the persons named in the proxy will not have
authority to vote for another nominee.
Directors' Biographies
Michael J. Gasser, 50, has been a director since 1991. He has been Chairman
of the Board of Directors and Chief Executive Officer of the Company since
1994. He has been an executive officer of the Company since 1988. He is a
member of the Executive, Nominating and Stock Repurchase Committees. He is also
a director for Bob Evans Farms, Inc., a restaurant and food products company.
Charles R. Chandler, 66, has been a director since 1987. He has been Vice
Chairman of the Company since 1996. During 1999, Mr. Chandler also became
President of Soterra LLC, a subsidiary of the Company. Prior to 1996, and for
more than five years, Mr. Chandler had been the President and Chief Operating
Officer of Virginia Fibre Corporation, a former subsidiary of the Company. He
is a member of the Executive Committee.
Michael H. Dempsey, 45, has been a director since 1996. He is an investor.
Prior to 1997, and for more than five years, he had been the President of
Kuschall of America, a wheelchair manufacturing company. He is a member of the
Audit, Compensation, Executive and Stock Option Committees. Mr. Dempsey is the
son of Naomi C. Dempsey.
Naomi C. Dempsey, 85, has been a director since 1995. She is an investor and
member of the Nominating Committee. Mrs. Dempsey is the mother of Michael H.
Dempsey.
Daniel J. Gunsett, 53, has been a director since 1996. For more than five
years, he has been a partner with the law firm of Baker & Hostetler LLP. He is
a member of the Audit, Compensation, Executive, Nominating, Stock Option and
Stock Repurchase Committees.
John C. Kane, 62, has been a director since 1999. Prior to 2001, and for
more than five years, he was President and Chief Operating Officer of Cardinal
Health, Inc., a health-care services company, and was a director for Cardinal
Health, Inc. He is a member of the Audit, Compensation and Stock Option
Committees. He is also a director of Connetics Corporation, a biopharmaceutical
company.
Robert C. Macauley, 78, has been a director since 1979. He is an investor.
He is the founder of AmeriCares Foundation. Prior to 1998, and for more than
five years, he had been the Chief Executive Officer of Virginia Fibre
Corporation, a former subsidiary of the Company.
David J. Olderman, 66, has been a director since 1996. He is an investor.
Prior to 1997, and for more than five years, he had been Chairman, owner and
Chief Executive Officer of Carret and Company, Inc., an investment consulting
firm. He is a member of the Audit, Compensation and Stock Option Committees.
William B. Sparks, Jr., 60, has been a director since 1995. He has been
President and Chief Operating Officer of the Company since 1995. Prior to that
time, and for more than five years, Mr. Sparks was Chief Executive Officer of
Down River International, Inc., a former subsidiary of the Company. He is a
member of the Executive Committee.
In the tabulating of votes, abstentions and broker non-votes will be
disregarded and have no effect on the outcome of the vote.
3
PROPOSAL NO. 2--APPROVAL OF THE LONG-TERM INCENTIVE PLAN
At the Annual Meeting, the Class B stockholders will be requested to
consider and act upon a proposal to approve the Company's Long-Term Incentive
Plan (the "Incentive Plan").
On May 1, 2001, the Board of Directors adopted the Incentive Plan, subject
to approval by the Company's stockholders, effective as of May 1, 2001. The
primary purposes of the Incentive Plan are to retain, motivate and attract top
caliber executives, focus management on the key measures that drive superior
performance, provide compensation opportunities that are externally competitive
and internally consistent with the Company's total compensation strategies, and
provide award opportunities that are comparable in both character and magnitude
to those provided through stock-based plans. Incentive compensation awards to
participants are paid 80% in cash and 20% in restricted shares of the Company's
Class A and/or Class B Common Stock.
Description of the Incentive Plan
The following discussion describes important aspects of the Incentive Plan.
This discussion is intended to be a summary of the material provisions of the
Incentive Plan. Because it is a summary, some details that may be important to
you are not included. For this reason, the entire Incentive Plan is attached as
Exhibit A to this Proxy Statement. You are encouraged to read the Incentive
Plan in its entirety.
Administration. The Incentive Plan will be administered by the Special
Subcommittee on Incentive Compensation of the Board (the "Subcommittee"). This
Subcommittee will be composed of independent directors, meaning directors who
are not officers or employees of the Company. Among other things, the
Subcommittee will have the authority to select employees to participate in the
Incentive Plan, to determine the size and types of award opportunities and
final awards, and to determine the other terms and conditions of award
opportunities under the Incentive Plan (subject to the terms of the Incentive
Plan). The Subcommittee also will have the authority to establish and amend
rules and regulations relating to the Incentive Plan and to make all other
determinations necessary or advisable for the administration of the Incentive
Plan. All decisions made by the Subcommittee pursuant to the Incentive Plan
will be made in the Subcommittee's sole discretion and will be final and
binding.
Eligibility. Employees of the Company who are designated by the Subcommittee
as "key employees" are eligible to participate and receive awards under the
Incentive Plan. In general, an employee may be designated as a key employee if
he or she is responsible for or contributes to the management, growth, and/or
profitability of the business of the Company in a material way. Key employees
who are chosen to participate in the Incentive Plan for any given performance
period are so notified in writing and are apprised of the performance criteria
and related award opportunities determined for them for the relevant
performance period. Performance periods are consecutive and overlapping three-
year cycles beginning on November 1 of each year, with an 18-month transition
cycle which begins on May 1, 2001.
Establishment of Performance Goals/Criteria. Prior to the beginning of each
performance period, the Subcommittee will select and establish performance
goals for that performance period which, if met, will entitle participants to
the payment of the incentive compensation award. The performance goals will be
based on targeted levels of increases in (a) earnings per share, and (b) "free
cash flow" (as defined in the Incentive Plan) or (c) such other measures of
performance success as the Subcommittee may determine. The Subcommittee may
establish a range of performance goals which correspond to, and will entitle
participants to receive, various levels of award opportunities based on
percentage multiples of the "target incentive award," which is the incentive
compensation amount to be paid to participants when the performance criteria
designated as the "100% award level" is met. In addition, each range may
include levels of performance above and below the 100% performance level,
ranging from a minimum of 0% to a maximum of 200% of the target incentive
award. The Subcommittee may also establish minimum levels of performance goal
achievement below which no awards are paid to any participant. Notwithstanding
any other provision in the Incentive Plan to the contrary,
4
the performance criteria applicable to any participant who is, or who is
determined by the Subcommittee to be likely to become, a "covered employee"
will be limited to growth, improvement or attainment of certain levels of
return on capital, equity, or operating costs, economic value added, margins,
total stockholder return on market value, operating profit or net income, cash
flow, earnings before interest and taxes, earnings before interest, taxes and
depreciation, or earnings before interest, taxes, depreciation and
amortization, sales, throughput, or product volumes, or costs or expenses.
These performance criteria may be expressed either on an absolute basis or
relative to other companies selected by the Subcommittee. Covered employees, as
defined in Section 162(m) of the Internal Revenue Code of 1986, as amended from
time to time (the "Code"), are the Company's chief executive officer and its
four other most highly compensated executive officers. This requirement is
intended to ensure compliance with the exception from Section 162(m) of the
Code for qualified performance-based compensation.
Establishment of Awards; Final Awards. After the performance goals are
established, the Subcommittee will align the achievement of the performance
goals with the award opportunities, such that the level of achievement of the
pre-established performance goals at the end of the performance period will
determine the "final awards" (i.e., the actual incentive compensation earned
during the performance period by the participant). After establishing the
performance criteria, the Subcommittee will establish the award opportunities
for the participants which correspond to various levels of achievement of the
pre-established performance criteria. The established award opportunities will
vary in relation to the job classification of each participant. Once
established, the performance criteria normally will not be changed during the
performance period. However, if the Subcommittee determines that external or
internal changes or other unanticipated business conditions materially affected
the fairness of the goals or render the performance criteria unsuitable, then
the Subcommittee may approve appropriate adjustments to the performance
criteria (either up or down) during the performance period to participants
other than covered employees. In addition, at the time the award subject to
performance criteria is made and performance criteria are established, the
Subcommittee is authorized to determine the manner in which the performance
criteria will be calculated or measured to take into account certain factors
over which participants have no or limited control. At the end of each
performance period, the Subcommittee will certify the extent to which the
performance criteria were met during the performance period and determine the
final awards for the participants.
Termination of Employment. A participant whose employment terminates because
of death, disability, or retirement during the performance period for an award
will receive a pro rata portion of the award, based upon the extent to which
the performance goals had been achieved before such termination. A participant
whose employment terminates for any other reason before the end of the
performance period for an award will not be entitled to any payment with
respect to the award.
Amendment and Termination. The Incentive Plan may be amended, modified or
terminated by the Subcommittee at any time, but no such amendment, modification
or termination may materially reduce the right of a participant to a payment or
distribution under the Incentive Plan to which such participant has already
become entitled, without the consent of such participant. In addition, any
amendment which will make a change which may require stockholder approval under
the rules of any exchange on which the Company's Common Stock is traded, or in
order for awards granted under the Incentive Plan to qualify for an exemption
from Section 162(m) of the Code, will require stockholder approval.
Reasons for Stockholder Approval
Nasdaq Stock Market issuers, such as the Company, are required to receive
stockholder approval of a stock option or stock purchase plan prior to its
establishment when, under such plan, stock may be acquired by officers or
directors, other than broad-based plans which include other employees. Because
restricted stock may be issued to officers of the Company under the Incentive
Plan, and the Incentive Plan is not broad-based, the stockholders of the
Company are being asked to approve the Incentive Plan.
5
In addition, the Incentive Plan has been designed to take into account
certain limits on the ability of a public corporation to claim tax deductions
for compensation paid to certain highly compensated executives. Section 162(m)
of the Code generally denies a corporate tax deduction for annual compensation
exceeding $1.0 million paid to the chief executive officer and the four other
most highly compensated officers of a public corporation. However, "qualified
performance-based compensation" is exempt from this limitation. Qualified
performance-based compensation is compensation paid based solely upon the
achievement of objective performance goals, the material terms of which are
approved by the stockholders of the paying corporation. The stockholders of the
Company are thus being asked to approve the material terms of the performance
goals under the Incentive Plan to permit a corporate tax deduction in this
situation.
It should be noted that awards paid after the death or disability of any
participant may not be exempt from the limitations imposed by Section 162(m) of
the Code.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
INCENTIVE PLAN.
6
PROPOSAL NO. 3--APPROVAL OF THE MATERIAL TERMS OF THE PERFORMANCE GOALS UNDER
THE PERFORMANCE-BASED INCENTIVE COMPENSATION PLAN
At the Annual Meeting, the Class B stockholders will be requested to
consider and act upon a proposal to approve the material terms of the
performance goals under the Company's Performance-Based Incentive Compensation
Plan (the "Performance-Based Plan").
On January 16, 2002, the Board of Directors adopted the Performance-Based
Plan, subject to approval by the Company's stockholders of the material terms
of the performance goals thereunder, effective as of November 1, 2001. The
purposes of the Performance-Based Plan are to give the Company a competitive
advantage in attracting, retaining and motivating executive employees at the
Chairman's office level and to provide the Company with the ability to provide
incentive compensation that is linked to the profitability of the Company's
businesses, and which is not subject to the deduction limitation rules
described below.
Description of the Performance-Based Plan
The following discussion describes important aspects of the Performance-
Based Plan. This discussion is intended to be a summary of the material
provisions of the Performance-Based Plan. Because it is a summary, some details
that may be important to you are not included. For this reason, the entire
Performance-Based Plan is attached as Exhibit B to this Proxy Statement. You
are encouraged to read the Performance-Based Plan in its entirety.
Administration. The Performance-Based Plan will be administered by the
Subcommittee. Among other things, the Subcommittee will have the authority to
select participants in the Performance-Based Plan from among the Company's
executive employees at the Chairman's office level, and to determine the
performance goals, target amounts and other terms and conditions of awards
under the Performance-Based Plan (subject to the terms of the Performance-Based
Plan). The Subcommittee also will have the authority to establish and amend
rules and regulations relating to the Performance-Based Plan and to make all
other determinations necessary and advisable for the administration of the
Performance-Based Plan. All decisions made by the Subcommittee pursuant to the
Performance-Based Plan will be made in the Subcommittee's sole discretion and
will be final and binding.
Eligibility. Executive level employees of the Company at the Chairman's
office level who are designated by the Subcommittee are eligible to be granted
awards under the Performance-Based Plan.
Terms of Awards. Awards under the Performance-Based Plan will consist of
cash amounts payable upon the achievement, during a specified performance
period, of specified objective performance goals. At the beginning of a
performance period for a given award, the Subcommittee will establish the
performance goal(s) and the target amount of the award, which will be earned if
the performance goal(s) are achieved in full, together with any lesser amount
that will be earned if the performance goal(s) are only partially achieved.
After the end of the performance period, the Subcommittee will certify the
extent to which the performance goals are achieved and determine the amount of
the award that is payable; provided, that the Subcommittee will have the
discretion to determine that the actual amount paid with respect to an award
will be less than (but not greater than) the amount earned.
Performance Goals; Maximum Award. The performance goals for awards will be
based upon the achievement of targeted measures of return on assets (and/or
such other objective business criteria as the stockholders may approve from
time to time) by the Company and/or one or more operating groups of the
Company. The maximum award that may be paid to any participant for any
performance period is $1.5 million times the number of twelve-month periods
contained within the performance period. For example, if the performance period
for an award is two years, the maximum award would be $3 million, and if the
performance period is six months, the maximum award would be $750,000.
7
Termination of Employment. A participant whose employment terminates because
of death or disability during the performance period for an award will receive
a pro rata portion of the award, based upon the extent to which the performance
goals had been achieved before such termination, unless the Subcommittee
determines otherwise. A participant whose employment terminates for any other
reason before the end of the performance period for an award will not be
entitled to any payment with respect to the award.
Amendment and Termination. The Performance-Based Plan may be amended,
modified or terminated by the Subcommittee at any time, but no such amendment,
modification or termination will affect the payment of any award for a
performance period that has already ended or increase the amount of any award.
Reason for Stockholder Approval
The Performance-Based Plan has been designed to take into account certain
limits on the ability of a public corporation to claim tax deductions for
compensation paid to certain highly compensated executives. Section 162(m) of
the Code generally denies a corporate tax deduction for annual compensation
exceeding $1.0 million paid to the chief executive officer and the four other
most highly compensated officers of a public corporation. However, "qualified
performance-based compensation" is exempt from this limitation. Qualified
performance-based compensation is compensation paid based solely upon the
achievement of objective performance goals, the material terms of which are
approved by the stockholders of the paying corporation. The stockholders of the
Company are thus being asked to approve the material terms of the performance
goals under the Performance-Based Plan to permit a corporate tax deduction in
this situation.
It should be noted that awards paid after the death or disability of any
participant may not be exempt from the limitations imposed by Section 162(m) of
the Code.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
MATERIAL TERMS OF THE PERFORMANCE GOALS UNDER THE PERFORMANCE-BASED PLAN.
8
BOARD OF DIRECTORS COMMITTEES AND MEETINGS
The Board held four meetings during the 2001 fiscal year. Each director
attended at least 75% of the meetings held by the Board and committees on which
he or she served during the 2001 fiscal year.
The Board has established an Executive Committee, a Compensation Committee,
an Audit Committee, a Stock Option Committee, a Stock Repurchase Committee and
a Nominating Committee.
The Executive Committee, whose current members are Messrs. Gasser, Chandler,
Dempsey, Gunsett and Sparks, has the same authority, subject to certain
limitations, as the Board during intervals between meetings of the Board. The
Executive Committee held eight meetings during the 2001 fiscal year.
The Compensation Committee, whose current members are Messrs. Dempsey,
Gunsett, Kane and Olderman, is responsible for evaluating the compensation,
fringe benefits and perquisites provided to the Company's officers and adopting
compensation policies applicable to the Company's executive officers, including
the specific relationship, if any, of corporate performance to executive
compensation and the factors and criteria upon which the compensation of the
Company's Chief Executive Officer should be based. The Compensation Committee
held three meetings during the 2001 fiscal year.
The Audit Committee, whose current members are Messrs. Dempsey, Gunsett,
Kane and Olderman, is responsible for recommending the appointment of the
Company's auditors to the Board, reviewing with such auditors the scope and
results of their audit, reviewing the Company's accounting functions,
operations and management, and considering the adequacy and effectiveness of
the internal accounting controls and internal auditing methods, policies and
procedures of the Company. The Audit Committee held six meetings during the
2001 fiscal year.
The Stock Option Committee, whose current members are Messrs. Dempsey,
Gunsett, Kane and Olderman, is responsible for administering the Company's
Incentive Stock Option Plan which provides for the granting of options for
shares of the Company's Class A Common Stock to key employees. The Stock Option
Committee held one meeting during the 2001 fiscal year.
The Stock Repurchase Committee, whose current members are Messrs. Gasser and
Gunsett, is responsible for administering the Company's Stock Repurchase
Program. The Stock Repurchase Committee held one meeting during the 2001 fiscal
year.
The Nominating Committee, whose current members are Mrs. Dempsey and Messrs.
Gasser and Gunsett, is responsible for nominating members to the Board and
committees. The Nominating Committee held one meeting to consider and nominate
the nine persons described in this Proxy Statement.
The Nominating Committee will consider for nomination as directors of the
Company persons recommended by the stockholders of the Company. In order to
recommend a person for the 2003 Annual Meeting, a stockholder must deliver a
written recommendation to the Secretary of the Company on or prior to 120 days
in advance of the first anniversary of the date of this Proxy Statement (the
"Notice Date"). In order to be considered by the Nominating Committee, the
written recommendation must contain the following information: (a) the name and
address, as they appear on the Company's books, of the stockholder making the
recommendation; (b) the class and number of shares of capital stock of the
Company beneficially owned by such stockholder; (c) the name and address of the
person recommended as a nominee and a brief description of the background,
experience and qualifications of such person which will assist the Nominating
Committee in evaluating such person as a potential director of the Company; and
(d) any material interest of such stockholder or such nominee in the business
to be presented at the 2003 Annual Meeting. After the Notice Date, the
Nominating Committee will meet and consider all persons recommended by
stockholders as nominees for directors. Within 30 days after the Notice Date,
the Secretary of the Company will notify in writing the stockholder
recommending the nominee whether or not the Nominating Committee intends to
nominate for election as a director at the 2003 Annual Meeting the person he or
she recommended.
9
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of January 10, 2002,
with respect to the only persons known by the Company to be the beneficial
owners of 5% or more of the Class B Common Stock, the Company's only class of
voting securities:
Class Percent
of Number of of
Name and Address Stock Type of Ownership Shares Class
---------------- ------- ----------------------- --------- -------
Naomi C. Dempsey .......... Class B See (1) below 5,861,404 49.62%
782 W. Orange Road
Delaware, Ohio
Naomi A. Coyle Trust....... Class B See (2) below 1,663,040 14.08%
c/o Michael H. Dempsey,
Trustee
2240 Encinitas Boulevard
Suite D-403
Encinitas, California
Michael H. Dempsey......... Class B See (3) below 1,919,377 16.25%
2240 Encinitas Boulevard
Suite D-403
Encinitas, California
Robert C. Macauley ........ Class B Record and Beneficially 1,150,000 9.74%
161 Cherry Street
New Canaan, Connecticut
--------
(1) Held by Naomi C. Dempsey as trustee of the Naomi C. Dempsey Living Trust
(5,425,904 shares) and the John C. Dempsey Trust (435,500 shares).
(2) Held of record and beneficially by the Naomi A. Coyle Trust. Michael H.
Dempsey is the trustee of this Trust. See (3) below.
(3) Held by Michael H. Dempsey (129,052 shares), Michael H. Dempsey as trustee
of the Naomi A. Coyle Trust (1,663,040 shares) and Michael H. Dempsey as
trustee of the Naomi C. Dempsey Charitable Lead Annuity Trust (127,285
shares).
The following table sets forth certain information, as of January 10, 2002,
with respect to the Class A Common Stock and Class B Common Stock (the only
equity securities of the Company) beneficially owned, directly or indirectly,
by each director and each executive officer named in the summary compensation
table:
Title and
Percent
of Class(1)
--------------
Name Class A %
---- ------- ---
Charles R. Chandler............................................. 81,900 *
Michael H. Dempsey.............................................. 12,000 *
Naomi C. Dempsey................................................ 17,240(2) *
Michael J. Gasser............................................... 130,000 *
Daniel J. Gunsett............................................... 12,000 *
John C. Kane.................................................... 9,000 *
John S. Lilak................................................... 10,000 *
Robert C. Macauley.............................................. 0 *
David J. Olderman............................................... 19,000 *
Joseph W. Reed.................................................. 26,000 *
William B. Sparks, Jr. ......................................... 82,086 *
10
Title and Percent
of Class(1)
--------------------
Name Class B %
---- ----------- ------
Charles R. Chandler....................................... 4,000 *
Michael H. Dempsey........................................ 1,919,377(3) 16.25%
Naomi C. Dempsey.......................................... 5,861,404(4) 49.62%
Michael J. Gasser......................................... 11,798 *
Daniel J. Gunsett......................................... 1,000 *
John C. Kane.............................................. 0 *
John S. Lilak............................................. 0 *
Robert C. Macauley........................................ 1,150,000 9.74%
David J. Olderman......................................... 36,674 *
Joseph W. Reed............................................ 0 *
William B. Sparks, Jr. ................................... 6,248 *
--------
* Less than one percent.
(1) Except as otherwise indicated below, the persons named in the table (and
their spouses, if applicable) have sole voting and investment power with
respect to all shares of Class A Common Stock or Class B Common Stock owned
by them. This table includes shares for Class A Common Stock subject to
currently exercisable options, or options exercisable within 60 days of
January 10, 2002, granted by the Company under the Incentive Stock Option
Plan and the 1996 Directors' Stock Option Plan, for the following directors
and named executive officers: Mr. Chandler--81,000; Mr. Dempsey--12,000;
Mrs. Dempsey--12,000; Mr. Gasser--130,000; Mr. Gunsett--12,000; Mr. Kane--
4,000; Mr. Lilak--10,000; Mr. Olderman--12,000; Mr. Reed--26,000 and Mr.
Sparks--81,000.
(2) Held by Naomi C. Dempsey as trustee of the John C. Dempsey Trust (5,240
shares) plus the exercisable options discussed in (1) above.
(3) Held by Michael H. Dempsey (129,052 shares), Michael H. Dempsey as trustee
of the Naomi A. Coyle Trust (1,663,040 shares) and Michael H. Dempsey as
trustee of the Naomi C. Dempsey Charitable Lead Annuity Trust (127,285
shares).
(4) Held by Naomi C. Dempsey as trustee of the Naomi C. Dempsey Living Trust
(5,425,904 shares) and the John C. Dempsey Trust (435,500 shares).
The Class A Common Stock has no voting power, except when four quarterly
cumulative dividends upon the Class A Common Stock are in arrears.
The following table sets forth the equity securities owned or controlled by
all directors and executive officers as a group (19 persons) as of January 10,
2002:
Percent
Amount of
Title of class of stock beneficially owned class
----------------------- ------------------ -------
Class A Common Stock(1)....................... 431,426 4.10%
Class B Common Stock.......................... 8,991,351 76.11%
--------
(1) Shares represent the number of shares beneficially owned, directly or
indirectly, by each director and executive officer as of January 10, 2002.
The number includes shares subject to currently exercisable options or
options exercisable within 60 days of January 10, 2002, granted by the
Company under the Incentive Stock Option Plan and the 1996 Directors' Stock
Option Plan, for the directors and executive officers as a group--411,950.
11
EXECUTIVE COMPENSATION
The following table sets forth the compensation for the three years ended
October 31, 2001 for the Company's Chief Executive Officer and the Company's
four other most highly compensated executive officers:
Long-term
Annual Compensation Compensation
-------------------------------------- ------------
Number of
Stock
Deferred All Options
Name & Position Year Salary Bonus Compensation Other Granted
--------------- ---- -------- -------- ------------ ------- ------------
Michael J. Gasser....... 2001 $568,351 $301,600 $ 2,970 35,000
Chairman and Chief
Executive Officer 2000 510,090 298,403 3,000 28,000
1999 486,667 171,378 4,513 25,000
Charles R. Chandler..... 2001 346,037 126,689 $193,554 5,340 0
Vice Chairman and
President of 2000 492,609 221,675 312,121 6,544 16,000
Soterra LLC (subsidiary
company) 1999 470,174 165,623 325,757 14,034 16,000
John S. Lilak........... 2001 274,342 112,000 3,750 12,500
Executive Vice
President, 2000 246,045 110,720 162,576 12,500
Containerboard &
Corrugated 1999 78,333 59,792 2,009 10,000
Products
Joseph W. Reed.......... 2001 263,677 120,000 1,980 0
Chief Financial Officer
and Secretary 2000 247,054 111,175 1,980 10,000
1999 235,802 83,063 2,415 5,000
William B. Sparks, Jr... 2001 413,191 184,801 3,679 20,000
Director, President and 2000 379,132 187,671 4,134 17,000
Chief
Operating Officer 1999 361,834 127,470 6,300 16,000
Michael J. Gasser, Chairman and Chief Executive Officer, on November 1,
1995, entered into an employment agreement with the Company providing for (a)
the employment of Mr. Gasser as Chairman and Chief Executive Officer for a term
of 15 years; (b) the right of Mr. Gasser to extend his employment on a year-to-
year basis until he reaches the age of 65; (c) the agreement of Mr. Gasser to
devote all of his time, attention, skill and effort to the performance of his
duties as an officer and employee of the Company; and (d) the fixing of the
minimum basic salary during such period of employment to the current year's
salary plus any additional raises authorized by the Board of Directors within
two fiscal years following October 31, 1995. The minimum basic salary is
currently fixed at $470,000 per year.
Charles R. Chandler, Vice Chairman and President of Soterra LLC (subsidiary
company), on August 1, 1986, and amended in 1988, 1992 and 1996, entered into
an employment agreement, principally providing for: (a) the employment of Mr.
Chandler as Vice Chairman until 2000; (b) the agreement of Mr. Chandler to
devote all of his time, attention, skill and effort to the performance of his
duties as an officer and employee of the Company; and (c) the fixing of minimum
basic salary during such period of employment at $424,356 per year. The
employment contract with Mr. Chandler gave him the right to extend his
employment beyond the original term for up to five additional years. The
original employment term expired on May 1, 2001, and at that time Mr.
Chandler's employment converted to a relationship terminable at any time by
either the Company or Mr. Chandler.
Joseph W. Reed, Chief Financial Officer and Secretary, on August 18, 1997,
entered into an employment agreement with the Company, principally providing
for: (a) the employment of Mr. Reed as Chief Financial Officer and Secretary
for a term of three years; (b) the agreement of Mr. Reed to devote all of his
time, attention, skill and effort to the performance of his duties as an
officer and employee of the Company; and (c) the fixing of the minimum basic
salary during such period of employment at $220,000 per year. On August 18,
2000 (the end of the three-year term), the term of Mr. Reed's employment
converted to a month-to-month relationship terminable at any time by either the
Company or Mr. Reed.
12
William B. Sparks, Jr., President and Chief Operating Officer, on November
1, 1995 entered into an employment agreement with the Company, principally
providing for: (a) the employment of Mr. Sparks as President and Chief
Operating Officer for a term of 11 years; (b) the agreement of Mr. Sparks to
devote all of his time, attention, skill and effort to the performance of his
duties as an officer and employee of the Company; and (c) the fixing of the
minimum basic salary during such period of employment to the current year's
salary plus any additional raises authorized by the Board of Directors within
two fiscal years following October 31, 1995. The minimum basic salary is
currently fixed at $350,000 per year.
No Directors' fees are paid to Directors who are full-time employees of the
Company or its subsidiary companies. Directors who are not employees of the
Company receive $30,000 per year, plus $1,500 for each Board meeting and $1,250
for each committee meeting that they attend. Committee chairs also receive an
additional $4,000 per year. Directors may defer all or a portion of their fees
pursuant to a deferred compensation plan.
During 1996, a Directors' Stock Option Plan was adopted which provides for
the granting of stock options to directors who are not employees of the
Company. The aggregate number of shares of the Company's Class A Common Stock
for which options may be granted shall not exceed 100,000. Beginning in 1997,
each outside director was granted an annual option to purchase 2,000 shares
immediately following each Annual Meeting of Stockholders. Each eligible
director also received a one-time grant in 1996 to purchase 2,000 shares. Under
the terms of the Directors' Stock Option Plan, options are granted at exercise
prices equal to the market value on the date the options are granted and become
exercisable immediately. In 2001, 10,000 options were granted to outside
directors with option prices of $27.375 per share. Options expire ten years
after the date of grant.
The Compensation Committee of the Board of Directors voted in favor of
bonuses for employees in 2001, based upon the progress of the Company, the
contributions of the particular employees to that progress, and individual
merit.
The Company and Charles R. Chandler are parties to a deferred compensation
contract entered into in June 1992. This contract will supplement Mr.
Chandler's retirement benefits under the Greif Bros. Riverville Mill's defined
benefit pension plan (the "Riverville Mill Plan"). The annual amounts payable
to Mr. Chandler or his surviving spouse under this contract are diminished by
the amounts he receives under the Riverville Mill Plan. Mr. Chandler's
estimated accrued benefits under this contract is currently $339,290 per year
for 10 years and $234,103 per year for an additional five years.
With respect to Messrs. Gasser, Chandler, Lilak and Sparks, the dollar
amount in the all other category relates to the Company match for the 401(k)
plan and premiums paid for life insurance. With respect to Mr. Reed, the dollar
amount in the all other category relates to premiums paid for life insurance.
The Company's 2001 Management Equity Incentive and Compensation Plan (the
"2001 Plan") provides for the awarding of incentive and nonqualified stock
options and restricted and performance shares of Class A Common Stock to key
employees. The maximum number of shares that may be issued each year is
determined by a formula that takes into consideration the total number of
shares outstanding and is also subject to certain limits. In addition, the
maximum number of shares that that may be issued under the 2001 Plan during its
term for incentive stock options is 2,500,000 shares.
Prior to the adoption of the 2001 Plan, the Company granted stock options
under the Company's Incentive Stock Option Plan (the "Incentive Plan"). The
Incentive Plan provides for the discretionary granting of incentive stock
options to key employees and nonstatutory options for non-employees for shares
of the Company's Class A Common Stock. The maximum number of shares that could
be issued under the Incentive Plan was 1,000,000 shares.
13
The following table sets forth certain information with respect to options
to purchase Class A Common Stock granted during the fiscal year ended October
31, 2001, under the 2001 Plan to each of the named executive officers:
Option Grants Table
Individual Grants
-----------------------------------------------
Potential Net
Realizable Value at
Assumed Annual
Percent of Rates of Stock
Total Options Price Appreciation
Number of Granted to for Option Term
Options Employees in Exercise Price Date -------------------
Name Granted(1) Fiscal Year Per Share Expires 5%(2) 10%(2)
---- ---------- ------------- -------------- ------- -------- ----------
M.J. Gasser............. 35,000 8% $30.59 9/5/11 $673,326 $1,706,340
J.S. Lilak.............. 12,500 3 30.59 9/5/11 240,474 609,407
W.B. Sparks, Jr. ....... 20,000 4 30.59 9/5/11 384,758 975,052
--------
(1) The options are exercisable on September 5, 2003.
(2) The values shown are based on the indicated assumed rates of appreciation
compounded annually. Actual gains realized, if any, are based on the
performance of the Class A Common Stock. There is no assurance that the
values shown will be achieved.
The following table sets forth certain information with the respect to the
exercise of options to purchase Class A Common Stock during the fiscal year
ended October 31, 2001, and the unexercised options held and the value thereof
at that date, by each of the named executive officers:
Aggregate Option Exercises and Fiscal
Year-End Option Values Table
Shares Value Number of Unexercised Value of In-The-Money
Acquired Realized Options Held at Year-End Options Held at Year-End
on Upon ------------------------- -------------------------
Name Exercise Exercise Exercisable Unexercisable Exercisable Unexercisable
---- -------- -------- ----------- ------------- ----------- -------------
M.J. Gasser............. 0 $ 0 130,000 63,000 $13,750 $ 0
C.R. Chandler........... 0 0 81,000 16,000 8,800 0
J.S. Lilak.............. 0 0 10,000 25,000 5,500 0
J.W. Reed............... 0 0 26,000 10,000 2,750 0
W.B. Sparks, Jr. ....... 0 0 81,000 37,000 8,800 0
The following table illustrates the amount of annual pension benefits for
eligible employees upon retirement based on the specified remuneration and
years of service classifications under the Company's defined benefit pension
plan:
Defined Benefit Pension Plan Table
Annual Benefit for Years of
Service
-------------------------------
Remuneration 15 20 25 30
------------ ------- ------- ------- -------
$300,000.................................... $28,000 $37,333 $46,667 $56,000
600,000.................................... 28,000 37,333 46,667 56,000
900,000.................................... 28,000 37,333 46,667 56,000
14
The following table sets forth certain information with respect to benefits
under the defined benefit pension plans of the Company and Greif Bros.
Riverville Mill for each of the named executive officers:
Name of Remuneration Estimated annual
individual used for benefit under
or number of Credited calculation Estimated annual supplemental
persons in years of of annual benefit under retirement
group service benefit retirement plan benefit agreement
------------ -------- ------------ ---------------- -----------------
M.J. Gasser............. 22 $778,830 $41,067 $158,833
C.R. Chandler*.......... 29 219,224 63,575 0
J.S. Lilak.............. 2 256,411 3,733 2,250
J.W. Reed............... 4 353,590 7,467 40,000**
W.B. Sparks, Jr. ....... 7 551,366 13,067 31,962
--------
* Defined benefit pension plan of Greif Bros. Riverville Mill.
**Individual supplemental employee retirement benefits.
The Company's pension plan is a defined benefit pension plan with benefits
based upon the average of the three consecutive highest-paying years of salary
and bonus and upon years of credited service up to 30 years. Supplementing the
pension benefits of the Company's pension plan, a supplemental retirement
benefit agreement has been entered into with a select group of management and
highly compensated employees to replace any benefits that the executive would
otherwise receive if not for limitations imposed by the Internal Revenue Code
of 1986.
The annual retirement benefits under the defined benefit pension plan of the
Greif Bros. Riverville Mill are calculated at 1% per year based upon the
average of the five highest out of the last ten years of salary compensation.
None of the pension benefits described in this item are subject to offset
because of the receipt of Social Security benefits or otherwise.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons owning more than 10% of a registered class
of the Company's equity securities, to file reports of ownership with the
Securities and Exchange Commission. Officers, directors and greater than 10%
stockholders are required by the Securities and Exchange Commission's
regulations to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on a review of the copies of such forms furnished to the
Company, the Company believes that during its 2001 fiscal year all Section
16(a) filing requirements applicable to its officers, directors and greater
than 10% stockholders were complied with by such persons, except that Robert S.
Zimmerman, who became an executive officer of the Company in fiscal 2001, did
not timely file a Form 3 within 10 days of becoming an executive officer.
However, a Form 3 was subsequently filed within 30 days of Mr. Zimmerman
becoming an executive officer.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
John C. Kane, David J. Olderman, Michael H. Dempsey and Daniel J. Gunsett
served as members of the Company's Compensation Committee for the 2001 fiscal
year. During fiscal year 2001, the Company retained the law firm of Baker &
Hostetler LLP to perform legal services on its behalf, and it anticipates
retaining such firm in 2002. Mr. Gunsett is a partner of Baker & Hostetler LLP.
No executive officer of the Company served during the 2001 fiscal year as a
member of a Compensation Committee or as a director of any entity of which any
of the Company's directors served as an executive officer.
15
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following is the report of the Company's Compensation Committee, whose
members are identified below, with respect to compensation reported for 2001 as
reflected in the Summary Compensation Table set forth above.
Compensation Policy; Committee Responsibilities
The Company's compensation policy is designed to align compensation with
business objectives and performance to enable the Company to attract, retain
and reward individuals who contribute to the long-term success of the Company.
The Company believes in a consistent policy for all individuals.
The Company realizes that to accomplish its objectives it needs to pay
competitive compensation. The Compensation Committee reviews competitive
positions in the market to periodically confirm the competitive nature of the
compensation for the Chief Executive Officer and the Company's five highest
paid individuals.
The Compensation Committee believes that a varying portion of compensation
must be linked to the Company's performance. In that regard, the Company has
implemented a discretionary bonus plan which links the payment of cash bonuses
to the achievement of certain predetermined return on assets thresholds.
The Company believes that an alignment of stockholder value with employees'
compensation is of utmost importance. The Company has addressed this concern by
implementing an incentive stock option plan which is administered by the
members of the Stock Option Committee.
The Compensation Committee's responsibilities include the following:
. Review the compensation of the Chief Executive Officer and the Company's
five highest paid individuals to ensure that their compensation is
consistent with the above policy.
. Review the operation of the discretionary bonus plan.
. Review the grant of stock options.
. Recommend the action to resolve compensation, discretionary bonus and
stock option issues to the full Board of Directors.
Compensation of the Chief Executive Officer
In December 2001, the Compensation Committee met to review the 2001
performance of Michael J. Gasser, the Company's Chairman of the Board and Chief
Executive Officer. Consistent with the Company's compensation policies, Mr.
Gasser's compensation package consists of three components, salary, cash bonus
and stock options. The Compensation Committee believes that a portion of Mr.
Gasser's compensation package should be at-risk, and that this is accomplished
through the grant of incentive stock options and the award of a cash bonus
pursuant to the Company's incentive bonus plan. The Compensation Committee also
attempts to establish a compensation package that appropriately balances risk
and reward. Finally, the Compensation Committee attempts to establish a
compensation package that is comprised of both a subjective component, such as
the grant of incentive stock options, and an objective component, such as an
award under the incentive bonus plan which is based upon the return on assets
performance of the Company with threshold levels.
In evaluating the performance of Mr. Gasser with respect to each of the
categories of his compensation, the Compensation Committee specifically
discussed and recognized the following factors: his leadership, his vision for
the future of the Company, his dedication and focus on the short-term and long-
term interests of the Company and its stockholders, and his professionalism,
integrity and competence; the Company enjoying the most profitable year in its
history; and his demonstrated dedication and high performance in leadership,
guidance and strategic planning for the Company, its Board of Directors and its
executives. None of the factors were given specific relative weight.
16
Based upon its evaluation of the foregoing factors, the Compensation
Committee increased Mr. Gasser's base salary to $650,000 for calendar year 2002
from $580,000 for calendar year 2001. In addition, the Compensation Committee
determined that the Company had met the threshold for incentive bonuses for
fiscal year 2001, and that Mr. Gasser qualified for an incentive bonus of 80%
of the 100% level bonus of $377,000 for his position and recommended that he
receive a bonus of $301,600.
In September 2001, incentive stock options were granted to Mr. Gasser and
other employees at the then market price for Class A Common Stock. Mr. Gasser
was granted options to purchase 35,000 shares of Class A Common Stock, which
options were granted primarily as incentive for future performance. The basis
for granting stock options to Mr. Gasser and other employees included his
continued leadership, vision for the future of the Company, guidance in
unification of Company goals and assimilation and reorganization of Company
acquisitions.
John C. Kane, Committee Chairman
David J. Olderman
Michael H. Dempsey
Daniel J. Gunsett
17
PERFORMANCE GRAPH
The following graph compares the Company's stock performance to that of the
Standard and Poor's 500 Index and the Company's industry group (Peer Index).
The graph does not purport to represent the value of the Company.
GBC S&P 500 Peer
Stock Index Index
----- ----- -----
10/31/96 $ 100 $ 100 $ 100
10/31/97 $ 125 $ 130 $ 111
10/31/98 $ 119 $ 154 $ 91
10/31/99 $ 108 $ 193 $ 122
10/31/00 $ 123 $ 203 $ 88
10/31/01 $ 99 $ 174 $ 116
The Peer Index is comprised of the paper containers index and paper and
forest products index as shown in the Standard & Poor's Statistical Services
Guide.
18
REPORT OF THE AUDIT COMMITTEE
The Audit Committee is responsible to monitor and review the Company's
financial reporting process on behalf of the Board of Directors. Management has
the primary responsibility for the financial statements and the reporting
process, including the systems of internal controls and preparation of the
consolidated financial statements in accordance with accounting principles
generally accepted in the United States. In fulfilling its responsibilities,
the Audit Committee reviewed the audited financial statements in the Annual
Report on Form 10-K for the Company's 2001 fiscal year with management,
including a discussion of the quality, not just the acceptability, of the
accounting principles, the reasonableness of significant judgments, and the
clarity of disclosures in the financial statements.
The Audit Committee reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of those audited
financial statements with accounting principles generally accepted in the
United States, their judgments as to the quality, not just the acceptability,
of the Company's accounting principles and such other matters as are required
to be discussed with the Audit Committee under auditing standards generally
accepted in the United States. In addition, the Audit Committee discussed with
the independent auditors the auditors' independence from management and the
Company, including the matters in the written disclosures required by the
Independence Standards Board and considered the compatibility of nonaudit
services with the auditors' independence.
The Audit Committee discussed with the Company's internal and independent
auditors the overall scope and plans for their respective audits. The Audit
Committee meets with the internal and independent auditors, with and without
management present, to discuss the results of their examinations, their
evaluations of the Company's internal controls, and the overall quality of the
Company's financial reporting. The Committee held six meetings during the 2001
fiscal year, and each member of the Audit Committee attended at least 75% of
the meetings.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors (and the Board has approved)
that the audited financial statements be included in the Annual Report on Form
10-K for the 2001 fiscal year for filing with the Securities and Exchange
Commission. The Committee also recommended to the Board of Directors (and the
Board has approved) the selection of the Company's independent auditors for the
2002 fiscal year.
The Company's Board of Directors has adopted a written charter for the Audit
Committee. This charter is included as an exhibit to the Company's Form 10-K.
As discussed above, the Audit Committee is responsible to monitor and review
the Company's financial reporting process on behalf of the Board of Directors.
It is not the duty or responsibility of the Audit Committee to conduct auditing
or accounting reviews or procedures. Members of the Audit Committee are not
employees of the Company, and some members may not be accountants or auditors
by profession or experts in the fields of accounting or auditing. Therefore,
the Audit Committee has relied, without independent verification, on
management's representation that the financial statements have been prepared
with integrity and objectivity and in conformity with accounting principles
generally accepted in the United States and on the representations of the
independent auditors included in their report on the Company's financial
statements. The Audit Committee's review does not provide its members with an
independent basis to determine that management has maintained appropriate
accounting and financial reporting principles or policies, or appropriate
internal controls and procedures designed to assure compliance with accounting
standards and applicable laws and regulations. Furthermore, the Audit
Committee's considerations and discussions with management and the independent
auditors do not assure that the Company's financial statements are presented in
accordance with accounting principles generally accepted in the United States,
that the audit of the Company's financial statements has been carried out in
accordance with auditing standards generally accepted in the United States, or
that the Company's independent accountants are in fact "independent."
19
All of the members of the Audit Committee are independent directors as
defined by the rules and regulations of the Nasdaq Stock Market.
Daniel J. Gunsett, Committee
Chairman
Michael H. Dempsey
John C. Kane
David J. Olderman
INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young LLP served as the independent public accountants of the
Company for the fiscal year ended October 31, 2001. It is currently expected
that a representative of Ernst & Young LLP will be present at the Annual
Meeting, will have an opportunity to make a statement if such representative so
desires and will be available to respond to appropriate questions from
stockholders. Ernst & Young LLP have been retained as the Company's independent
public accountants for its current fiscal year.
AUDIT FEES
The aggregate fees for the audit of the Company's 2001 consolidated
financial statements were $1.1 million. Fees for all other services were $3.6
million including audit related services of $2.0 million and non-audit services
of $1.6 million. Audit related services generally include fees for pensions and
statutory audits, business acquisitions, accounting consultations and filings
with the Securities and Exchange Commission. Non-audit services generally
include tax consultation.
20
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During fiscal year 2001, the Company retained the law firm of Baker &
Hostetler LLP to perform legal services on its behalf. Daniel J. Gunsett, a
partner in that firm, is a member of the Audit, Compensation, Executive,
Nominating, Stock Option and Stock Repurchase Committees and a director of the
Company. The Company anticipates retaining Baker & Hostetler LLP in 2002. The
Company believes that this relationship does not violate the Nasdaq Stock
Market independent director and audit committee requirements.
The Company has made loans to certain employees, including certain directors
and executive officers of the Company. The following is a summary of these
loans for the fiscal year ended October 31, 2001:
Balance Balance
at at End
Beginning New Amount of
Name of Debtor of Period Loans Collected Period
-------------- --------- ----- --------- --------
Charles R. Chandler......................... $306,972 $ -- $16,338 $290,634
Michael J. Gasser........................... 119,973 -- 20,335 99,638
Sharon R. Maxwell........................... 92,073 -- 2,905 89,168
William B. Sparks, Jr. ..................... 345,759 -- 22,335 323,424
-------- ---- ------- --------
$864,777 $ 0 $61,913 $802,864
======== ==== ======= ========
Charles R. Chandler is Vice Chairman of the Company and President of Soterra
LLC. The loan is secured by a first mortgage on a house and lot in Ohio and
interest is payable at 5% per annum.
Michael J. Gasser is Chairman and Chief Executive Officer of the Company.
The loan is secured by 5,599 shares of the Company's Class B Common Stock and a
first mortgage on a house and lot in Ohio. Interest is payable at 3% per annum.
Sharon R. Maxwell is Assistant Secretary of the Company. The loan is secured
by a first mortgage on a house and lot in Ohio and interest is payable at 7
1/4% per annum.
William B. Sparks, Jr. is President and Chief Operating Officer of the
Company. The loan is secured by 6,248 shares of the Company's Class B Common
Stock and 1,000 shares of the Company's Class A Common Stock. Interest is
payable at 3% per annum. An additional loan is secured by a first mortgage on a
house and lot in Ohio with interest payable at 5% per annum.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 2003 Annual
Meeting of Stockholders (expected to be held in February 2003) must be received
by the Company for inclusion in the Proxy Statement and form of proxy on or
prior to 120 days in advance of the first anniversary of the date of this Proxy
Statement. If a stockholder intends to present a proposal at the 2003 Annual
Meeting, but does not seek to include such proposal in the Company's Proxy
Statement and form of proxy, such proposal must be received by the Company on
or prior to 45 days in advance of the first anniversary of the date of this
Proxy Statement or the persons named in the form of proxy for the 2003 Annual
Meeting will be entitled to use their discretionary voting authority should
such proposal then be raised at such meeting, without any discussion of the
matter in the Company's Proxy Statement or form of proxy. Furthermore,
stockholders must follow the procedures set forth in Article I, Section 8, of
the Company's Amended and Restated By-Laws in order to present proposals at the
2003 Annual Meeting.
21
OTHER MATTERS
The proxy enclosed with this Proxy Statement is solicited by and on behalf
of the Management of the Company. A person giving the proxy has the power to
revoke it.
The expense for soliciting proxies for this Annual Meeting of Class B
Stockholders is to be paid by the Company. Solicitations of proxies also may be
made by personal calls upon or telephone or telegraphic communications with
stockholders, or their representatives, by not more than five officers or
regular employees of the Company who will receive no compensation for doing so
other than their regular salaries.
The Management knows of no matters to be presented at the Annual Meeting
other than the above proposals. However, if any other matters properly come
before the Annual Meeting, it is the intention of the persons named in the
accompanying form of proxy to vote the proxy in accordance with their judgment
on such matters.
/s/ Joseph W. Reed
January 25, 2002 Joseph W. Reed
Secretary
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EXHIBIT A
LONG-TERM INCENTIVE PLAN
Article 1. Establishment and Purpose
1.1. Establishment of Plan. Greif Bros. Corporation (the "Company") hereby
establishes a long-term incentive compensation plan to be known as the "Greif
Bros. Corporation Long-Term Incentive Plan," as set forth in this document.
The Plan shall become effective as of May 1, 2001 and shall remain in
effect until October 31, 2011, or earlier termination of the Plan by the Board
or the Committee, subject to approval of the Plan by holders of a majority of
the securities of the Company present, or represented, and entitled to vote at
a meeting of stockholders duly held in accordance with the laws of the State
of Delaware within twelve (12) months following adoption of the Plan.
1.2. Purpose. The primary purposes of the Greif Bros. Corporation Long-Term
Incentive Plan are to:
(a) Retain, motivate and attract top caliber executives;
(b) Focus management on key measures that drive superior performance and
thus, creation of value for the Company;
(c) Provide compensation opportunities that are externally competitive
and internally consistent with the Company's total compensation strategies;
and
(d) Provide award opportunities that are comparable in both character
and magnitude to those provided through stock-based plans.
Article 2. Definitions
Whenever used in the Plan, the following terms shall have the meanings set
forth below and, when the defined meaning is intended, the term is
capitalized:
2.1. "Adopted Child" or "Adopted Children" means one or more persons
adopted by court proceedings, the finality of which is not being contested at
the time of the Participant's death.
2.2. "Award Opportunity" means the various levels of incentive
compensation, payable in cash and/or Shares, which a Participant may earn
under the Plan, as established by the Committee pursuant to Article 4 herein.
2.3. "Board" or "Board of Directors" means the Board of Directors of the
Company.
2.4. "Child" or "Children" means a Participant's natural and Adopted
Children living or deceased on the date of the Participant's death, but such
terms do not include a child born to the Participant's marriage through
artificial insemination. A Child who was conceived but not yet born on the
date of the Participant's death shall be regarded for purposes of this Plan as
though such Child were living on that date, but only if such Child survives
birth.
2.5. "Code" means the Internal Revenue Code of 1986, as amended.
2.6. "Committee" means the Special Subcommittee on Incentive Compensation,
comprised of two (2) or more individuals appointed by the Board to administer
the Plan, pursuant to Article 8 herein.
2.7. "Company" means Greif Bros. Corporation, or any successor thereto.
2.8. "Covered Employee" means any Participant who is, or who is determined
by the Committee to be likely to become, a "covered employee" within the
meaning of Code 162(m).
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2.9. "Descendants" means legitimate descendants of whatever degree,
including descendants both by blood and Adopted Children.
2.10. "Disability" shall have the meaning ascribed to such term in the
disability plan maintained by the Participant's employer at the time that the
determination regarding Disability is made hereunder.
2.11. "Effective Date" means the date the Plan becomes effective, as set
forth in Section 1.1 herein.
2.12. "Employee" means any employee of the Company. Directors who are not
employed by the Company shall not be considered Employees under this Plan.
2.13. "Exchange Act" means the Securities Exchange Act of 1934, as amended.
2.14. "Final Award" means the actual incentive compensation earned during a
Performance Period by a Participant, as determined by the Committee following
the end of the Performance Period.
2.15. "Final Award Agreement" means an agreement entered into by the Company
and each respective Participant setting forth the terms and provisions
applicable to his Final Award, determined in accordance with Articles 4 and 5.
2.16. "Participant" means an Employee who meets the eligibility requirements
of Article 3 with respect to one or more Performance Periods.
2.17. "Performance Criteria" shall have the meaning set forth in Article 4.
2.18. "Performance Period" means the eighteen-month Transition Cycle which
begins on May 1, 2001, Cycle I which begins May 1, 2001 and ends October 31,
2003, and the consecutive and overlapping three-year cycles beginning on
November 1, 2001 and on each November 1st thereafter, during the term of the
Plan.
2.19. "Period of Restriction" means the period during which the transfer of
Restricted Shares is limited based on the passage of time, as determined by the
Committee in its sole discretion.
2.20. "Plan" means the Greif Bros. Corporation Long-Term Incentive Plan, as
set forth herein and as amended from time to time.
2.21. "Restricted Shares" means the portion of a Final Award granted to a
Participant in accordance with Article 4, which is payable in Shares in
accordance with Article 5.
2.22. "Rule 16b-3" means Rule 16b-3 adopted by the Securities and Exchange
Commission under the Exchange Act.
2.23. "Share" means a share of the Company's no par value Class A and/or
Class B common stock.
2.24. "Target Incentive Award" means the incentive compensation amount, or
formula to determine such amount, to be paid to Participants when the
Performance Criteria designated as the "100% Award Level" are met, as
established by the Committee for a Performance Period.
Article 3. Eligibility and Participation
3.1. Eligibility. All Employees who are designated by the Committee to be
key Employees shall be eligible to receive an Award Opportunity under this
Plan. In general, an Employee may be designated as a key Employee if such
Employee is responsible for or contributes to the management, growth, and/or
profitability of the business of the Company in a material way.
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3.2. Participation. Participation in the Plan shall be determined annually
or for each Performance Period by the Committee based upon the criteria set
forth in Section 3.1 herein. Employees who are chosen to participate in the
Plan for any given Performance Period shall be so notified in writing, and
shall be apprised of the Performance Criteria and related Award Opportunities
determined for them for the relevant Performance Period, as soon as is
practicable after such Award Opportunities are established.
3.3. Partial Performance Period Participation. An Employee who becomes
eligible after the beginning of a Performance Period may participate in the
Plan for that Performance Period. Such situations may include, but are not
limited to (a) new hires; or (b) when an Employee is promoted from a position
which did not previously meet the eligibility criteria.
The Committee, in its sole discretion, retains the right to prohibit or
allow participation in the initial Performance Period of eligibility for any of
the aforementioned Employees.
3.4. No Right to Participate. No Participant or other Employee shall at any
time have a right to be selected for participation in the Plan for any
Performance Period, whether or not he previously participated in the Plan.
Article 4. Award Determination
4.1. Performance Criteria. Prior to the beginning of each Performance
Period, or as soon as practicable thereafter (but in no event later than 90
days following the first day of the Performance Period), the Committee shall
select and establish performance goals for that Performance Period, which, if
met, will entitle Participants to the payment of the Award Opportunities. Such
performance goals shall be established without regard to length of service with
the Company, and shall be based on targeted levels of increase in (a) earnings
per share, and (b) free cash flow, as hereinafter defined, or (c) such other
measures of performance success as the Committee may determine. For purposes of
this Plan, "free cash flow" means the Company's net income for the Performance
Period, plus depreciation and amortization, less cash dividends/1/, equity in
earnings of affiliates and capital expenditures, and plus or minus changes in
working capital, changes in deferred taxes and such other adjustments that the
Committee determines are necessary or proper to reflect accurately the free
cash flow of the Company.
For each Performance Period, the Committee may in its discretion, establish
a range of performance goals which correspond to, and will entitle Participants
to receive, various levels of Award Opportunities based on percentage multiples
of the Target Incentive Award. Each performance goal range shall include a
level of performance designated as the "100% Award Level" at which the Target
Incentive Award shall be earned. In addition, each range may include levels of
performance above and below the one hundred percent (100%) performance level,
ranging from a minimum of 0% to a maximum of 200% of the Target Incentive
Award.
After the performance goals are established, the Committee will align the
achievement of the performance goals with the Award Opportunities (as described
in Section 4.2 herein), such that the level of achievement of the pre-
established performance goals at the end of the Performance Period will
determine the Final Awards.
4.2. Award Opportunities. As soon as practicable after establishing
Performance Criteria in accordance with Section 4.1 above, but in no event
later than 90 days following the first day of each Performance Period, the
Committee shall establish, in writing, Award Opportunities, which correspond to
various levels of achievement of the pre-established Performance Criteria. The
established Award Opportunities shall vary in relation to the job
classification of each Participant. In the event a Participant changes job
levels during a Performance Period, the Participant's Award Opportunity may,
subject to Section 4.3 below, be adjusted to reflect the amount of time at each
job level during the Performance Period.
--------
/1/Includes dividends received from CorrChoice and dividends paid on Class A
and B shares.
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4.3. Adjustment of Performance Criteria. Once established, the Performance
Criteria normally shall not be changed during the Performance Period. However,
if the Committee determines that external changes or other unanticipated
business conditions have materially affected the fairness of the goals, or that
a change in the business, operations, corporate structure or capital structure
of the Company, or the manner in which it conducts its business, or other
events or circumstances render the Performance Criteria unsuitable, then the
Committee may approve appropriate adjustments to the Performance Criteria
(either up or down) during the Performance Period as such criteria apply to the
Award Opportunities of specified Participants; provided, however, that no
modification shall be made in the case of any award to a Participant who is, or
is determined by the Committee to be likely to become, a Covered Employee if
the effect would be to cause the award to fail to qualify for the performance-
based exception to Code Section 162(m). In addition, at the time the award
subject to Performance Criteria is made and Performance Criteria are
established, the Committee is authorized to determine the manner in which the
Performance Criteria will be calculated or measured to take into account
certain factors over which Participants have no or limited control, including
market related changes in inventory value, changes in industry margins, changes
in accounting principles, and extraordinary charges to income.
4.4. Final Award Determinations. Subject to the provisions of Section 6.3,
at the end of each Performance Period, the Committee shall certify in writing
the extent to which the Performance Criteria were met during the Performance
Period. Thereafter, the Committee shall determine and compile Final Awards for
each Participant. Final Award amounts shall be described in the Final Award
Agreements, and may vary above or below the Target Incentive Award based on the
level of achievement of the pre-established corporate, divisional, and/or
individual performance goals, provided, however, that the range of such
variance shall be between 0% and 200% of the Target Incentive Award.
4.5. Threshold Levels of Performance. The Committee may establish minimum
levels of performance goal achievement under the Performance Criteria, below
which no payouts of Final Awards shall be made to any Participant.
4.6. Performance Criteria Applicable to Covered Employees. Notwithstanding
any other provision herein to the contrary, the Performance Criteria applicable
to any Participant who is, or who is determined by the Committee to be likely
to become, a Covered Employee shall be limited to growth, improvement or
attainment of certain levels of:
(a) return on capital, equity, or operating costs;
(b) economic value added;
(c) margins;
(d) total stockholder return on market value;
(e) operating profit or net income;
(f) cash flow, earnings before interest and taxes, earnings before
interest, taxes and depreciation, or earnings before interest, taxes,
depreciation and amortization;
(g) sales, throughput, or product volumes; or
(h) costs or expenses.
Such Performance Criteria may be expressed either on an absolute basis or
relative to other companies selected by the Committee. This Section 4.6 is
intended to ensure compliance with the exception from Code Section 162(m) for
qualified performance-based compensation, and shall be construed, applied and
administered accordingly.
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Article 5. Payment of Final Awards
5.1. Form and Timing of Payment.
(a) Generally. Each Participant's Final Award shall be paid 80% in cash
and 20% in Restricted Shares, in one lump sum, no sooner than 75 days after
the end of each Performance Period. The value of the Restricted Shares
shall be the closing price of such Shares on the last trading day that
precedes the day on which the Final Award is paid to the Participant. The
Company, in its sole discretion, shall determine whether an award of
Restricted Shares shall be Class A, Class B, or a combination of Class A
and Class B Shares.
(b) Transfer of Restricted Shares. A Participant may not sell, transfer,
pledge, assign, or otherwise alienate or hypothecate Restricted Shares
granted hereunder until the end of the applicable Period of Restriction, as
set forth in the Participant's Final Award Agreement. All rights with
respect to Restricted Shares granted to a Participant under the Plan shall
be available during his lifetime only to such Participant. The Company
shall retain the certificates representing Restricted Shares in the
Company's possession until such time as the applicable Periods of
Restriction have expired. Restricted Shares awarded under this Plan shall
become freely transferable by the Participant after the last day of the
applicable Period of Restriction, subject to any applicable securities
laws.
5.2. Unsecured Interest. No Participant or any other party claiming an
interest in amounts earned under the Plan shall have any interest whatsoever in
any specific asset of the Company. To the extent that any party acquires a
right to receive cash or Restricted Shares under the Plan, such right shall be
equivalent to that of an unsecured general creditor of the Company.
Article 6. Termination of Employment
6.1. Termination of Employment Due to Death, Disability, or Retirement. In
the event a Participant's employment is terminated by reason of death,
Disability, or retirement, the Final Award determined in accordance with
Section 4.4 herein shall be reduced to reflect participation prior to
termination only. The reduced award shall be determined by multiplying said
Final Award by a fraction, the numerator of which is the number of days of
employment in the Performance Period through the date of employment
termination, and the denominator of which is the number of days in the
Performance Period. In the case of a Participant's Disability, the employment
termination shall be deemed to have occurred on the date that the Committee
determines the definition of Disability to have been satisfied. The Final Award
thus determined shall be paid as soon as practicable and reasonable following
the end of the Performance Period in which employment termination occurs, but
in no event shall such amount be paid sooner than 75 days after the end of such
Performance Period.
6.2. Beneficiary Designations.
(a) General. Each Participant under the Plan may, from time to time,
name any beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit under the Plan is to be paid in case of
his or her death before he receives any or all of such benefit. Each
designation will revoke all prior designations by the same Participant,
shall be in a form prescribed by the Committee, and will be effective only
when filed by the Participant in writing with the Committee during his or
her lifetime.
(b) Invalidity of Powers of Attorney. This Plan shall not recognize
beneficiary designations made on a Participant's behalf by the
Participant's attorney in fact, or by any person acting under a power of
attorney or any instrument by which the Participant has appointed another
person as his agent, thereby conferring upon him the authority to perform
certain specified acts on the Participant's behalf.
(c) Failure of Beneficiary Designation. In the absence of a beneficiary
designation made by the Participant in accordance with Section 6.2(a), or
if the beneficiary named by a Participant predeceases
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him, then the Committee shall pay any benefits remaining unpaid at the
Participant's death to the Participant's surviving spouse. If the
Participant has no surviving spouse at his date of death, then the
Committee shall pay the remaining benefit hereunder to the Participant's
Children per capita and to any deceased Child's Descendants per stirpes. If
no spouse, Children or Descendants survive the Participant, then the
Committee shall pay any remaining benefits hereunder to the Participant's
estate.
6.3. Termination of Employment for Other Reasons. In the event a
Participant's employment is terminated before the date payment of the Final
Award is made for any reason other than death, Disability, or retirement (of
which the Committee shall be the sole judge), all of the Participant's rights
to any unpaid Final Award shall be forfeited.
Article 7. Rights of Participants
7.1. Employment. Nothing in the Plan shall interfere with or limit in any
way the right of the Company to terminate any Participant's employment at any
time, nor confer upon any Participant any right to continue in the employ of
the Company.
7.2. Nontransferability. No right or interest of any Participant in the Plan
shall be assignable or transferable, or subject to any lien, directly, by
operation of law or otherwise, including, but not limited to, execution, levy,
garnishment, attachment, pledge, and bankruptcy.
7.3. Stockholder Rights. No Participant shall be deemed for any purpose to
be or to have the rights and privileges of the owner of any Restricted Shares
to be awarded under the Plan until such Participant shall have become the
holder thereof. Notwithstanding the foregoing sentence, a Participant who has
received a Final Award shall have the following rights during the Period of
Restriction:
(a) Voting Rights. Such Participants may exercise full voting rights
with respect to Restricted Shares.
(b) Dividends and Other Distributions. Such Participants shall receive
regular cash dividends paid by the Company with respect to the underlying
Shares while they are so held.
7.4. Foreign Participants. Subject to the provisions Section 4.3, the
Committee may, in order to fulfill the Plan purposes and without amending the
Plan, modify Award Opportunities granted to Participants who are foreign
nationals or employed outside the United States to the extent necessary to
recognize differences in local law, tax policy or custom.
Article 8. Administration
8.1. The Committee. The Committee, as defined in Section 2.6, shall
administer the Plan. The members of the Committee shall be appointed by, and
shall serve at the discretion of, the Board. All Committee members shall be
members of the Board, and must be "non-employee directors," as such term is
described in Rule 16b-3, if and as such Rule is in effect, and "outside
directors" within the meaning of Code Section 162(m). Appointment of Committee
members shall be effective upon acceptance of appointment. Committee members
may resign at any time by delivering written notice to the Board. The Board
shall fill vacancies in the Committee.
8.2. Authority of the Committee.
(a) General. Except as limited by law or by the Certificate of
Incorporation or Bylaws of the Company, and subject to the provisions
herein, the Committee shall have full power to select Employees who shall
participate in the Plan; determine the size and types of Award
Opportunities and Final Awards; determine the terms and conditions of Award
Opportunities in a manner consistent with the Plan; construe and interpret
the Plan and any agreement or instrument entered into under the Plan;
establish, amend, or
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waive rules and regulations for the Plan's administration; and (subject to
the provisions of Article 4 herein) amend the terms and conditions of any
outstanding Award Opportunity to the extent such terms and conditions are
within the discretion of the Committee as provided in the Plan. Further,
the Committee shall make all other determinations, which may be necessary
or advisable for the administration of the Plan. As permitted by law, the
Board, the Compensation Committee of the Board, and the Committee may
employ attorneys, consultants, accountants, appraisers and other persons,
and may delegate as appropriate its authorities as identified hereunder.
The Committee, the Company and its officers and directors shall be entitled
to rely upon the advice, opinions or evaluations of any such persons.
(b) Facility of Payment. If the Committee deems any person entitled to
receive any amount under the provisions of this Plan to be incapable of
receiving or disbursing the same by reason of minority, illness or
infirmity, mental incompetency, or incapacity of any kind, the Committee
may, in its sole discretion, take any one or more of the following actions:
(i) apply such amount directly for the comfort, support and
maintenance of such person;
(ii) reimburse any person for any such support theretofore supplied
to the person entitled to receive any such payment;
(iii) pay such amount to any person selected by the Committee to
disburse it for such comfort, support and maintenance, including
without limitation, any relative who has undertaken, wholly or
partially, the expense of such person's comfort, care and maintenance,
or any institution in whose care or custody the person entitled to the
amount may be; or
(iv) with respect to any amount due to a minor, deposit such amount
to his credit in any savings or commercial bank of the Committee's
choice, direct that such distribution be paid to the legal guardian, or
if none, to a parent of such person or a responsible adult with whom
the minor maintains his residence, or to the custodian for such person
under the Uniform Gift to Minors Act or Gift to Minors Act, if such
payment is permitted by the laws of the state in which the minor
resides.
Payment pursuant to this Section 8.2(b) shall fully discharge the Company,
the Board, the Compensation Committee of the Board, the Committee, and the Plan
from further liability on account thereof.
8.3. Majority Rule. The Committee shall act by a majority of its members.
8.4. Decisions Binding. All determinations and decisions of the Committee as
to any disputed question arising under the Plan, including questions of
construction and interpretation, shall be final, binding and conclusive upon
all parties.
8.5. Indemnification. Each person who is or shall have been a member of the
Committee, the Compensation Committee of the Board, or the Board shall be
indemnified and held harmless by the Company against and from any loss, cost,
liability, or expense that may be imposed upon or reasonably incurred by him in
connection with or resulting from any claim, action, suit, or proceeding to
which he may be a party, or in which he may be involved by reason of any action
taken or failure to act under the Plan, and against and from any and all
amounts paid by him in settlement thereof, with the Company's approval, or paid
by him in satisfaction of any judgment in any such action, suit, or proceeding
against him, provided he shall give the Company an opportunity, at its own
expense, to handle and defend the same before he undertakes to handle and
defend it on his or her own behalf.
The foregoing right of indemnification shall not be exclusive of any other
rights of indemnification to which such persons may be entitled as a matter of
law, or otherwise, or any power that the Company may have to indemnify them or
hold them harmless.
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Article 9. Amendments
The Board or the Committee, without notice, at any time and from time to
time, may modify or amend, in whole or in part, any or all of the provisions of
the Plan, or suspend or terminate it entirely; provided, however, that:
(a) no such modification, amendment, suspension, or termination may,
without the consent of a Participant materially reduce the right of a
Participant to a payment or distribution hereunder to which he has already
become entitled, as determined under Sections 4.4 and 6.3; and
(b) no amendment shall be effective unless approved by the affirmative
vote of a majority of the votes eligible to be cast at a meeting of
stockholders of the Company held within twelve (12) months of the date of
adoption of such amendment and prior to payment of any compensation
pursuant to such amendment, where such amendment will make any change which
may require stockholder approval under the rules of any exchange on which
Shares are traded, or in order for awards granted under the Plan to qualify
for an exception from Code Section 162(m).
No Award Opportunity may be granted during any period of suspension of the
Plan or after termination of the Plan, and in no event may any Award
Opportunities be granted after October 31, 2011.
Article 10. Miscellaneous
10.1. Regulations and Other Approvals; Governing Law.
(a) The obligation of the Company to deliver Shares with respect to any
Final Award granted under the Plan shall be subject to all applicable laws,
rules and regulations, including all applicable federal and state
securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.
(b) The portion of each Final Award payable in Restricted Shares is
subject to the requirement that, if at any time the Committee determines,
in its sole discretion, that the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in
connection with the issuance of Restricted Shares, no such Shares will be
issued unless such consent or approval has been effected or obtained free
of any conditions and as acceptable to the Committee.
(c) In the event that the disposition of Restricted Shares acquired
under the Plan is not covered by a then current registration statement
under the Exchange Act and is not otherwise exempt from registration, such
Shares shall be restricted against transfer to the extent required by the
Exchange Act or regulations thereunder, and the Committee may require any
individual receiving Shares pursuant to the Plan, as a condition precedent
to receipt of such Shares, to represent to the Company in writing that the
Shares acquired by such individual are acquired for investment only and not
with a view to distribution. The certificate for any Shares acquired
pursuant to the Plan shall include any legend that the Committee deems
appropriate to reflect any restrictions on transfer.
10.2. Choice of Law. The Plan and all agreements hereunder, shall be
governed by and construed in accordance with the laws of the state of Ohio.
10.3. Withholding Taxes. The Company shall have the right to deduct from all
cash payments under the Plan any federal, state, or local taxes required by law
to be withheld with respect to any Final Award.
10.4. Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural
shall include the singular, and the singular shall include the plural.
10.5. Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.
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10.6. Costs of the Plan. All costs of implementing and administering the
Plan shall be borne by the Company.
10.7. Successors. All obligations of the Company under the Plan shall be
binding upon and inure to the benefit of any successor to the Company, whether
the existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the
business and/or assets of the Company.
10.8. Titles; Construction. Titles are provided herein for convenience only
and are not to serve as a basis for interpretation or construction of the Plan.
The masculine pronoun shall include the feminine and neuter and the singular
shall include the plural, when the context so indicates. Any reference to a
section (other than to a section of the Plan) shall also include a successor to
such section.
Executed this 23rd day of August, 2001.
GREIF BROS. CORPORATION
/s/ Michael J. Gasser
By: _________________________________
Title: Chairman and Chief Executive
Officer
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EXHIBIT B
PERFORMANCE-BASED INCENTIVE COMPENSATION PLAN
Section 1. Purpose. The purpose of the Greif Bros. Corporation Performance-
Based Incentive Compensation Plan (the "Plan") is to advance the interests of
Greif Bros. Corporation and its stockholders by providing certain of its key
executives with incentive compensation which is tied to the achievement of pre-
established and objective performance goals. The Plan is intended to provide
participants with incentive compensation which is not subject to the deduction
limitation rules prescribed under Section 162(m) ("Section 162(m)") of the
Internal Revenue Code of 1986, as amended from time to time (the "Code"), and
should be construed to the extent possible as providing for remuneration which
is performance-based compensation within the meaning of Section 162(m) of the
Code and the regulations promulgated thereunder.
Section 2. Definitions. Whenever used herein, the following terms shall have
their respective meanings set forth below:
a. "Award" means the amount payable to a Participant in accordance with
Section 6 of the Plan.
b. "Committee" means the Special Subcommittee on Incentive Compensation
of the Board of Directors of Greif Bros. Corporation. The Committee shall
be comprised of two or more "outside directors" as that term is defined in
Section 162(m) of the Code and the regulations promulgated thereunder, as
amended from time to time.
c. "Company" means Greif Bros. Corporation and its subsidiaries.
d. "Effective Date" means the date set forth in Section 9(a) of the
Plan.
e. "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
f. "Participant" means an individual eligible to participate hereunder,
as determined by the Committee, each of whom shall be an executive level
employee of the Company at the Chairman's office level.
g. "Performance Period" means any time period established by the
Committee for which the attainment of Performance Goal(s) relating to an
Award will be determined.
h. "Performance Goal" means any performance goal determined by the
Committee in accordance with Section 5 of the Plan.
i. "Target Award" means the amount of any Award as established by the
Committee that would be payable to a Participant for any Performance Period
if the Performance Goals for the Performance Period were fully (100%)
achieved and no negative discretion was exercised by the Committee in
regard to that Award pursuant to the last sentence of Section 6.
Section 3. Administration. The Plan shall be administered by the Committee.
Subject to the provisions of the Plan, the Committee will have full authority
to interpret the Plan, to establish and amend rules and regulations relating to
it, to determine the terms and provisions for making Awards and to make all
other determinations necessary or advisable for the administration of the Plan.
All decisions made by the Committee pursuant to the provisions hereof shall be
made in the Committee's sole discretion and shall be final and binding on all
persons.
Section 4. Eligibility. The Committee shall designate the Participants
eligible to receive Awards for each Performance Period and establish the
Performance Goals applicable to each Participant for each Performance Period.
An individual who becomes eligible to participate in the Plan during the
Performance Period may be approved by the Committee for a partial period of
participation. In such case, the Participant's Target Award and Award will be
based upon performance during the portion of the Performance Period during
which the Participant participates in the Plan, and the amount of the Target
Award will be pro-rated based on the percentage of time the Participant
participates in the Plan during the Performance Period.
B-1
Section 5. Establishment of Target Awards, Performance Periods and
Performance Goals. For each Performance Period established by the Committee,
the Committee shall establish a Target Award for each Participant. Awards shall
be earned based upon the financial performance of the Company or one or more
operating groups of the Company during a Performance Period; provided, however,
the maximum Award that may be paid to any single Participant for any
Performance Period is the product of $1.5 million multiplied by the number of
12-month periods contained within the relevant Performance Period. As to each
Performance Period, within such time as established by Section 162(m) of the
Code, the Committee will establish in writing Performance Goals based on the
following performance measures of the Company (and/or one or more operating
groups of the Company, if applicable) over the Performance Period:
(i) return on assets, and/or
(ii) any other objective business criteria approved by the stockholders
of Greif Bros. Corporation in accordance with the requirements for
"qualified performance-based compensation" within the meaning of the
regulations under Section 162(m). Except as otherwise provided herein, the
extent to which the Performance Goals are satisfied will determine the
amount of the Award, if any, that will be earned by each Participant. The
Performance Goals may vary for different Performance Periods and need not
be the same for each Participant eligible for an Award for a Performance
Period.
Section 6. Earning of Awards. At the end of each Performance Period, the
Award will be computed for each Participant. Payment of Awards, if any, will be
made in cash, subject to applicable tax withholding. Prior to payment of any
Award, the Committee shall certify in writing the extent to which the
established Performance Goals have been achieved. If the Performance Goals are
not satisfied to the fullest extent, a recipient may earn less than the full
Target Award or no Award at all. In addition, the Committee may, in its sole
discretion, reduce individual Awards otherwise payable pursuant to the
Performance Goals.
Section 7. Termination of Employment. In the event the employment of a
Participant is terminated by reason of death or disability during a Performance
Period, unless determined otherwise by the Committee, the Participant or his
legal representative, as applicable, shall receive a prorated payout with
respect to the Award relating to such Performance Period. The prorated payout
shall be based upon the length of time that the Participant was employed by the
Company during the Performance Period and the progress toward achievement of
the established Performance Goal(s) during the portion of the Performance
Period during which the Participant was employed by the Company. Payment of the
Award, if any, shall be made at the same time payments are made to Participants
who did not terminate employment during the applicable Performance Period. In
the event of a Participant's termination of employment by the Company for any
other reason prior to the end of the Performance Period with respect to an
Award, the Participant shall not be entitled to any payment with respect to
such Award.
Section 8. Amendment and Termination. The Committee may amend, modify or
terminate the Plan at any time and from time to time. Shareholder approval of
such actions will be required only as required by applicable law.
Notwithstanding the foregoing, no amendment, modification or termination shall
affect the payment of an Award for a Performance Period that has already ended
or increase the amount of any Award.
Section 9. General Provisions.
a. Effective Date. The Plan shall become effective as of November 1,
2001, subject to its approval by the stockholders of Greif Bros.
Corporation
b. Non-Transferability. Any interest of any Participant under the Plan
may not be sold, transferred, alienated, assigned or encumbered, other than
by will or pursuant to the laws of descent and distribution, and any
attempt to take any such action shall be null and void.
c. Severability. In the event any provision of the Plan is held to be
illegal or invalid for any reason, such illegality or invalidity shall not
affect the remaining provisions of the Plan, and the Plan shall be
construed and enforced as if such illegal or invalid provisions had never
been contained in the Plan.
B-2
d. Additional Arrangements. Nothing contained in this Plan shall prevent
the Company from adopting other or additional compensation arrangements for
any Participant.
e. No Right to Award or Employment; Uniformity. No person shall have any
claim or right to be granted an Award under this Plan and the grant of an
Award shall not confer upon any Participant any right to be retained as an
employee of Greif Bros. Corporation or any of its subsidiaries, nor shall
it interfere in any way with the right of Greif Bros. Corporation or any
subsidiary to terminate the employment of any Participant at any time or to
increase or decrease the compensation of any Participant. There is no
obligation for uniformity of treatment of Participants.
f. Tax Withholding. The Company shall have the right to withhold or
require Participants to pay the Company the amount of any taxes which the
Company is required to withhold with respect to such Award.
g. Beneficiaries. The Committee may establish such procedures as it
deems appropriate for a Participant to designate a beneficiary to whom any
amounts payable in the event of the participant's death are to be paid. If
no beneficiary is designated, the right of the Participant to receive any
payment under this Plan will pass to the Participant's estate.
h. Laws Governing. The Plan and all Awards made and action taken
hereunder shall be governed by and construed in accordance with the laws of
the State of Delaware, except to the extent superseded by federal law.
i. Government Regulation. Notwithstanding any provisions of the Plan or
any agreement made pursuant to the Plan, the Company's obligations under
the Plan and such agreement shall be subject to all applicable laws, rules
and regulations, and to such approvals as may be required by, any
governmental or regulatory agencies.
j. Unfunded Status of Plan. The Plan is intended to constitute an
unfunded plan for incentive compensation. With respect to any payments not
yet made by the Company to a Participant or beneficiary, nothing contained
herein shall give any such Participant or beneficiary any rights that are
greater than those of a general creditor of the Company.
Executed this 16th day of January 2002.
GREIF BROS. CORPORATION
/s/ Michael J. Gasser
By: _________________________________
Title: Chairman and Chief Executive
Officer
B-3
GREIF BROS. CORPORATION
CLASS B PROXY
FOR THE ANNUAL MEETING OF CLASS B STOCKHOLDERS
CALLED FOR FEBRUARY 25, 2002
This Proxy is Solicited on Behalf of Management
The undersigned, being the record holder of Class B Common Stock and having
received the Notice of Meeting and Proxy Statement dated January 25, 2002,
hereby appoints Michael J. Gasser, Charles R. Chandler, Michael H. Dempsey,
Naomi C. Dempsey, Daniel J. Gunsett, John C. Kane, Robert C. Macauley, David J.
Olderman and William B. Sparks, Jr., and each or any of them as proxies, with
full power of substitution, to represent the undersigned and to vote all shares
of Class B Common Stock of Greif Bros. Corporation, which the undersigned is
entitled to vote at the Annual Meeting of Class B Stockholders of the
Corporation to be held at 425 Winter Road, Delaware, Ohio 43015, at 10:00
o'clock A.M., E.S.T., on February 25, 2002, and at any adjournment thereof; as
follows:
1. FOR [ ] OR AGAINST [ ] THE ELECTION OF ALL NOMINEES LISTED BELOW (except as
marked to the contrary below):
Michael J. Gasser Charles R. Chandler Michael H. Dempsey
Naomi C. Dempsey Daniel J. Gunsett John C. Kane
Robert C. Macauley David J. Olderman William B. Sparks, Jr.
Instruction: To withhold authority to vote for any individual nominee,
strike a line through his or her name.
2. Proposal to approve the Greif Bros. Corporation Long-Term Incentive Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Proposal to approve the material terms of the performance goals under Greif
Bros. Corporation Performance-Based Incentive Compensation Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENT
THEREOF.
The Shares represented by this Proxy will be voted upon the proposals
listed above in accordance with the instructions given by the undersigned, but
if no instructions are given, this Proxy will be voted to elect all of the
nominees for directors as set forth in Item 1, above, to approve the Company's
Long-Term Incentive Plan as set forth in Item 2, above, to approve the material
terms of the performance goals under the Company's Performance-Based Incentive
Compensation Plan as set forth in Item 3, above, and in the discretion of the
proxies on any other matter which properly comes before the Annual Meeting.
Record Holder Number of Class B Shares Held
Dated___________________, 2002 ___________________________
___________________________
Please date and sign proxy exactly as your name appears above, joint owners
---- ---- ----
should each sign personally. Trustees and others signing in a representative
capacity should indicate the capacity in which they sign.