Sonoco Products Company
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY
STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities
Exchange Act of 1934 (Amendment No.
)
Filed by the Registrant
x
Filed by a Party other than the Registrant
o
Check the appropriate box:
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o Preliminary
Proxy Statement
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o Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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x Definitive
Proxy Statement
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o Definitive
Additional Materials
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o Soliciting
Material under Rule 14a-12
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Sonoco Products Company
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if
other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11.
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(1) |
Title of each class of securities to which
transaction applies:
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(2) |
Aggregate number of securities to which
transaction applies:
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Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11
(set forth the amount on which the filing fee is calculated and
state how it was determined):
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(4) |
Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and identify the
filing for which the offsetting fee was paid previously.
Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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(1) |
Amount Previously Paid:
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(2) |
Form, Schedule or Registration Statement No.:
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SONOCO PRODUCTS COMPANY
1 NORTH SECOND STREET
HARTSVILLE, SOUTH CAROLINA 29550 USA
March 20,
2006
To Our Shareholders:
You are cordially invited to attend our Annual
Shareholders Meeting to be held at the Center Theater, 212
North Fifth Street, Hartsville, South Carolina, on Wednesday,
April 19, 2006, at 11:00 a.m.
We have enclosed a Notice of 2006 Annual Meeting of Shareholders
and Proxy Statement that cover the details of matters to be
presented at the meeting.
In addition to acting on the matters listed in the Notice of
Annual Meeting of Shareholders, we will discuss the
Companys progress, and you will be given an opportunity to
ask questions of general interest to all shareholders.
We have also enclosed a copy of our 2005 Annual Report,
which reviews the Companys past years events and
discusses strategy and the outlook for the future (or we have
delivered one copy of the Annual Report for all shareholders at
your address).
We hope that you will come to the 2006 Annual Meeting of
Shareholders in person; however, even if you plan to attend, we
strongly encourage you to complete the enclosed proxy card and
return it to us in the enclosed business reply envelope. Or, you
can vote by telephone (if you live in the United States or
Canada) or via the Internet. Instructions are shown on your
proxy card. If you are a shareholder of record and later find
you can be present or if for any reason you desire to revoke
your proxy, you can do so at any time before the voting. Your
vote is important and will be greatly appreciated.
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![(-s- Harris E. DeLoach, Jr.)](g99166g9916604.gif) |
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Harris E. DeLoach, Jr. |
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Chairman, President &
Chief Executive Officer |
NOTICE OF 2006 ANNUAL
SHAREHOLDERS MEETING
and
PROXY STATEMENT
TABLE OF CONTENTS
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3
SONOCO PRODUCTS COMPANY
1 NORTH SECOND STREET
HARTSVILLE, SOUTH CAROLINA 29550 USA
NOTICE OF 2006 ANNUAL MEETING OF SHAREHOLDERS
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TIME
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11:00 a.m. on Wednesday, April 19, 2006 |
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PLACE
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The Center Theater, 212 North Fifth Street, Hartsville,
South Carolina |
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PURPOSES
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(1) To elect six members of the Board of Directors, five to
serve for the next three years and one for the next two years. |
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(2) To transact any other business that properly comes
before the meeting or any adjournment of the meeting. |
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RECORD DATE
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You can vote if you were a shareholder of record at the close of
business on February 17, 2006. |
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ANNUAL REPORT
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We have enclosed a copy of the 2005 Annual Report or we
have delivered a single copy of the Annual Report for all
shareholders at your address. The Annual Report is not part of
the proxy soliciting material. |
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PROXY VOTING
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It is important that your shares be represented and voted at the
meeting. Please vote in one of these three ways: |
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(1) USE THE TOLL-FREE TELEPHONE
NUMBER shown on your proxy card if you live in the United States
or Canada; |
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(2) VISIT THE WEB SITE shown on
your proxy card and vote via the Internet; or |
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(3) MARK, SIGN, DATE AND PROMPTLY
RETURN the enclosed proxy card in the postage-paid envelope. |
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By order of the Board of Directors, |
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![(-s- CHARLES J. HUPFER)](g99166g9916603.gif) |
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Charles J. Hupfer |
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Secretary |
March 20, 2006
4
SONOCO PRODUCTS COMPANY
1 NORTH SECOND STREET
HARTSVILLE, SOUTH CAROLINA 29550 USA
PROXY STATEMENT
INFORMATION CONCERNING THE SOLICITATION
We are sending you these proxy materials in connection with the
solicitation by the Board of Directors of Sonoco Products
Company of proxies to be used at the Annual Meeting of
Shareholders (Annual Meeting) to be held on
Wednesday, April 19, 2006, at 11:00 a.m. at The Center
Theater, 212 North Fifth Street, Hartsville, S.C., and at
any adjournment or postponement of the meeting. We,
our, us, Sonoco and
the Company all refer to Sonoco Products Company.
The proxy materials are being mailed on or about March 20,
2006.
Who May Vote
You will only be entitled to vote at the Annual Meeting if our
records show that you held your shares on February 17,
2006. At the close of business on February 17, 2006, a
total of 100,584,498 shares of Common Stock were outstanding and
entitled to vote. Each share of Common Stock has one vote.
Voting by Proxy
If your shares are held by a broker, bank or other nominee, it
will send you instructions that you must follow to have your
shares voted at the Annual Meeting. If you hold your shares in
your own name as a record holder, you may instruct the proxy
agents how to vote your shares by completing, signing, dating
and mailing the proxy card in the enclosed postage-paid
envelope; by dialing the toll-free telephone number shown on
your proxy card (if you live in the United States or Canada); or
by accessing the Web site shown on your proxy card. Of course,
you can always attend the meeting and vote your shares in person.
The proxy agents will vote your shares as you instruct. If you
sign and return your proxy card without giving instructions, the
proxy agents will vote your shares FOR each person named
in this Proxy Statement as a nominee for election to the Board
of Directors. The proxy agents will vote according to their best
judgment on any other matter that properly comes before the
Annual Meeting. At present, the Board of Directors does not know
of any other such matters.
5
How to Revoke Your Proxy
You may revoke your proxy at any time before it is voted. If you
hold your shares in your own name as a record shareholder, you
may revoke your proxy in any of the following ways:
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by giving notice of revocation at the Annual Meeting; |
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by delivering to the Secretary of the Company, 1 North Second
Street, Hartsville, SC 29550 USA, written instructions revoking
your proxy; or |
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by delivering to the Secretary an executed proxy bearing a later
date. |
Subsequent voting by telephone or via the Internet cancels your
previous vote. If you are a shareholder of record, you may also
attend the meeting and vote in person, in which case your proxy
vote will not be used.
If your shares are held in street name by a broker, bank or
other nominee, you may revoke your voting instructions by
submitting new voting instructions to the broker or other
nominee who holds your shares.
How Votes Will Be Counted
The Annual Meeting will be held if a majority of the outstanding
shares of Common Stock entitled to vote (a quorum)
is represented at the meeting. If you have submitted valid proxy
instructions or attend the meeting in person, your shares will
be counted for the purpose of determining whether there is a
quorum, even if you wish to abstain from voting on some or all
matters introduced. Broker non-votes also count in
determining whether a quorum is present. A broker
non-vote occurs when a broker, bank or nominee who holds
shares for a beneficial owner attends the meeting in person or
by proxy but does not vote on a particular proposal because the
broker, bank or nominee does not have discretionary voting power
for that proposal and has not received voting instructions from
the beneficial owner.
If a quorum is present at the Annual Meeting, directors will be
elected by a plurality of the votes cast by shares present and
entitled to vote at the Annual Meeting. Votes that are withheld
or that are not voted in the election of directors will have no
effect on the outcome of the election. Cumulative voting is not
permitted.
Approval of any other matter that may be brought before the
meeting requires that the votes cast in favor of the matter
exceed the votes cast against the matter. Votes that are
withheld or shares that are not voted will have no effect on the
outcome of such matters.
Cost of this Proxy Solicitation
We will pay the cost of this proxy solicitation. In addition to
soliciting proxies by mail, we expect that some of our officers
and regular employees will solicit proxies by telephone, fax,
email or personal contact. None of these officers or employees
will receive any additional or special compensation for doing
this.
6
ELECTION OF DIRECTORS
The Board of Directors has fixed the number of directors of the
Company at 15. At our Annual Meeting, six directors will be
elected. Messrs. H.E. DeLoach, Jr., E.H.
Lawton, III, J.M. Micali and J.E. Linville and
Dr. P.L. Davies have been nominated to hold office for
the next three years, their terms expiring at the Annual
Shareholders Meeting in 2009, or when their successors are
duly elected and qualify to serve. Mr. M.D. Oken, who was
elected by the Board of Directors in February 2006 to fill the
vacancy created by the retirement of Mr. C.W. Coker, has
been nominated to hold office for the next two years. His term
will expire at the Annual Shareholders Meeting in 2008, or
when his successor is duly elected and qualified to serve. The
proxy agents intend to vote FOR the election of the six
persons named above unless you withhold authority to vote for
all or any of the nominees. The Board of Directors recommends
that you vote FOR each nominee for election.
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Name, Age, Principal Occupation for Last Five |
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Years and Directorships in Public Corporations |
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Director Since | |
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![(PHOTO H. E. DeLOACH, JR.)](g99166g9916607.gif) |
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HARRIS E. DeLOACH, JR. (61). Mr. DeLoach has been
Chairman since 2005 and President and Chief Executive Officer of
the Company since 2000. He was Chief Operating Officer of the
Company from April 2000 to July 2000, Senior Executive Vice
President from 1999 to 2000, Executive Vice President from 1996
to 1999, Group Vice President from 1993 to 1996, Vice
President Film, Plastics and Special Products from
February 1993 to October 1993, Vice President High
Density Film Products division from 1990 to 1993 and Vice
President Administration and General Counsel from
1986 to 1990. Mr. DeLoach is a director of Goodrich
Corporation. |
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1998 |
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![(PHOTO E. H. LAWTON, III)](g99166g9916608.gif) |
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EDGAR H. LAWTON, III (45). Mr. Lawton has been
President and Treasurer of Hartsville Oil Mill (vegetable oil
processor), Darlington, S.C., since 2000, and he has been a
director of Hartsville Oil Mill since 1991. Mr. Lawton was
Vice President of Hartsville Oil Mill from 1991 to 2000. |
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2001 |
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![(PHOTO J. M. MICALI)](g99166g9916609.gif) |
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JAMES M. MICALI (58). Mr. Micali has been Chairman
and President of Michelin North America, Inc. (tire
manufacturer), Greenville, S.C., since 1996. In 2001, he became
a member of Michelin Groups Executive Council.
Mr. Micali was Executive Vice President, Legal and Finance,
of Michelin North America from 1990 to 1996, and prior to that
was General Counsel and Secretary from 1985 to 1990.
Mr. Micali is a director of Lafarge North America. |
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2003 |
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Name, Age, Principal Occupation for Last Five |
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Years and Directorships in Public Corporations |
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Director Since | |
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![(PHOTO PAMELA L. DAVIES)](g99166g9916610.gif) |
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DR. PAMELA L. DAVIES (49). Dr. Davies has been
President of Queens University of Charlotte (institution of
higher learning), Charlotte, N.C., since 2002. Prior to that she
was Dean of the McColl School of Business at Queens University
of Charlotte from 2000 to 2002. Dr. Davies was Professor of
Management and Dean of the LeBow College of Business at Drexel
University from 1997 to 2000. She is a director of Charming
Shoppes and of C&D Technologies, Inc. |
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2004 |
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![(PHOTO JOHN E. LINVILLE)](g99166g9916611.gif) |
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JOHN E. LINVILLE (60). Mr. Linville has been an
attorney in private practice in New York, N.Y., since November
2004. Prior to that he had been Counsel with Manatt,
Phelps & Phillips, LLP from January 2003 to 2004. He
joined the firm through its merger with his prior
firm Kalkines, Arky, Zall & Bernstein, LLP
(KAZB). Mr. Linville joined KAZB in 1990 after
having been General Counsel and then Acting President of the New
York Health & Hospitals Corporation. |
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2004 |
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![(PHOTO MARC D. OKEN)](g99166g9916625.gif) |
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MARC D. OKEN (59). Mr. Oken has been Managing
Partner of Falfurrias Capital Partners, Charlotte, N.C. (a
private equity firm) since January 2006. He held executive
officer positions (most recently as Chief Financial Officer) at
Bank of America Corporation from 1989 until he retired in
January 2006. Prior to joining Bank of America, he was a partner
at Price Waterhouse LLP, serving there for 13 years. From
1981 to 1983 Mr. Oken was a Fellow with the Securities and
Exchange Commission. He is a director of Marsh &
McLennan Companies, Inc. and Star Scientific, Inc. |
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2006 |
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The Corporate Governance and Nominating Committee recommends to
the Board of Directors nominees to fill vacancies on the Board
of Directors as they occur and recommends candidates for
election as directors at Annual Meetings of Shareholders.
Mr. Oken was nominated to become a director through this
process by the independent directors of the Corporate Governance
and Nominating Committee. Mr. Oken was recommended to the
Committee by one of our current non-management directors. See
page 19 for further information regarding Sonocos
procedures for nominating directors.
8
INFORMATION CONCERNING DIRECTORS WHOSE TERMS CONTINUE
Members of the Board of Directors whose terms of office will
continue until our Annual Shareholders Meeting in 2007 are:
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Name, Age, Principal Occupation for Last Five |
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Years and Directorships in Public Corporations |
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Director Since | |
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![(PHOTO F. L. H. COKER)](g99166g9916624.gif) |
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*FITZ L. H. COKER (70). Mr. Coker is retired. He was
President and a director of Sea Corporation of Myrtle Beach,
Inc. (private investments), Myrtle Beach, S.C., from 1983 to
1989. At the time of his retirement from the Company in 1979,
Mr. Coker had been Senior Vice President since 1976. |
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1964 |
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![(PHOTO C. C. FORT)](g99166g9916614.gif) |
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CALEB C. FORT (44). Mr. Fort has been
Co-Chairman of The Merit Group, Inc. (distributors of
residential and commercial paint-related products and various
industrial supplies), Spartanburg, S.C., since 1998. He was a
principal of Lancaster Distributing Company from 1990 to 1998. |
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2001 |
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![(PHOTO B. L. M. KASRIEL)](g99166g9916615.gif) |
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BERNARD L. M. KASRIEL (59). Mr. Kasriel has been
Vice- Chairman of the Board of Lafarge (construction materials
group), Paris, France, since January 2006. He was Chief
Executive Officer of Lafarge from 2003 to January 2006 and
Vice-Chairman and Chief Operating Officer from 1995 to 2003. He
had been Managing Director of Lafarge from 1989 to 1995, Senior
Executive Vice President from 1987 to 1989 and Executive Vice
President from 1982 to 1987. Mr. Kasriel is a director of
Lafarge and Lafarge North America. |
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1995 |
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F.L.H. Coker is a first cousin of J.L. Coker. |
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Name, Age, Principal Occupation for Last Five |
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Years and Directorships in Public Corporations |
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Director Since | |
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![(PHOTO JOHN H. MULLIN, III)](g99166g9916616.gif) |
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JOHN H. MULLIN, III (64). Mr. Mullin has been
Chairman of Ridgeway Farm LLC (privately held timber and farming
business), Brookneal, Va., since 1989. He was associated with
Dillon, Read & Co. Inc. from 1969 to 1989, last serving
as Managing Director. Mr. Mullin is a director of Progress
Energy, Inc. and its subsidiary companies, Progress Energy
Carolinas, Inc. and Florida Progress Corporation; and is a
trustee of The Putnam Funds. |
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2002 |
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![(PHOTO T. E. WHIDDON)](g99166g9916617.gif) |
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THOMAS E. WHIDDON (53). Mr. Whiddon has been an
Advisory Director of Berkshire Partners, LLC (a Boston-based
private equity firm) since October 2005. He has been acting
Chief Operating Officer of Waterworks, Inc. (luxury bath
retailer), Danbury, Conn., a Berkshire portfolio
company since January 2006. He was Executive Vice
President Logistics and Technology of Lowes
Companies, Inc. from 2000 until he retired in 2003. He was
Executive Vice President and Chief Financial Officer of
Lowes from 1996 to 2000; he also held senior financial
positions at Zale Corporation and Eckerd Corporation.
Mr. Whiddon is a director of Carters Inc. and Dollar
Tree Stores, Inc. |
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2001 |
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Members of the Board of Directors whose terms of office will
continue until our Annual Shareholders Meeting in 2008 are:
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Name, Age, Principal Occupation for Last Five |
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Years and Directorships in Public Corporations |
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![(PHOTO C. J. BRADSHAW)](g99166g9916618.gif) |
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CHARLES J. BRADSHAW (69). Mr. Bradshaw has been
President and a director of Bradshaw Investments, Inc. (private
investments), Georgetown, S.C., since 1986. He was President and
Chief Operating Officer of Transworld Corporation from 1984 to
1986 and Chairman and Chief Executive Officer of Spartan Food
Systems, Inc. from 1961 to 1986. |
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1986 |
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Name, Age, Principal Occupation for Last Five |
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![(PHOTO R. J. BROWN)](g99166g9916619.gif) |
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ROBERT J. BROWN (71). Mr. Brown, founder of B&C
Associates, Inc. (management consulting, marketing research and
public relations firm), High Point, N.C., has been Chairman and
Chief Executive Officer of his company since 1973. He is a
director of Wachovia Corporation, AutoNation, Inc. and
Aaipharma, Inc. |
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1993 |
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![(PHOTO J. L. COKER)](g99166g9916620.gif) |
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*JAMES L. COKER (65). Mr. Coker has been President
of JLC Enterprises (private investments), Stonington, Conn.,
since 1979. He was Secretary of the Company from 1969 to 1995
and was President of Sonoco Limited, Canada, from 1972 to 1979. |
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1969 |
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![(PHOTO PAUL FULTON)](g99166g9916621.gif) |
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PAUL FULTON (71). Mr. Fulton has been Chairman since
2000 and a director since 1997 of Bassett Furniture Industries,
Inc. (furniture maker), Bassett, Va. He was Chief Executive
Officer of Bassett from 1997 to 2000, Dean of The Kenan-Flagler
Business School, The University of North Carolina from 1994 to
1997, and President of Sara Lee Corporation from 1988 to 1993.
Mr. Fulton is a director of Bank of America Corporation,
Carters, Inc. and Lowes Companies, Inc. |
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1989 |
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F.L.H. Coker is a first cousin of J.L. Coker. |
11
DIRECTOR INDEPENDENCE POLICIES
Our listing agreement with the New York Stock Exchange requires
that at least a majority of the members of our Board of
Directors be independent. Under the Exchanges standards,
independent means that a director has been
determined by the Board to have no material relationship with
Sonoco (either directly or as a partner, shareholder or officer
of an organization that has a relationship with Sonoco). To
assist us in making these determinations we have adopted the
following guidelines, which are also the guidelines set forth in
the New York Stock Exchange Listing Standards.
A director will not be considered independent if:
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The director is, or in the past three years has been, an
employee of Sonoco, or has an immediate family member who is, or
in the past three years has been, an executive officer of Sonoco; |
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The director or an immediate family member is a current partner
of a firm that is Sonocos internal or external auditor or
the director is a current employee of such a firm; |
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The director has an immediate family member who is a current
employee of a firm that is Sonocos internal or external
auditor and who participates in the firms audit, assurance
or tax compliance (but not tax planning) practice; |
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The director or an immediate family member was within the last
three years (but is no longer) a partner or employee of
Sonocos internal or external audit firm and personally
worked on Sonocos audit within that time; |
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The director or an immediate family member is, or in the past
three years has been, an executive officer of another company
where any of Sonocos present executives at the same time
serves or served on that companys compensation committee; |
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The director is a current employee, or has an immediate family
member who is a current executive officer of another company
that has made payments to, or received payments from, Sonoco for
property or services in an amount which, in any of the last
three fiscal years, exceeds the greater of $1 million or 2%
of such other companys consolidated gross revenues; or |
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The director has received, or has an immediate family member
(other than an immediate family member who is a non-executive
employee) who has received, during any twelve-month period
within the past three years, more than $100,000 in direct
compensation from Sonoco (other than director fees and pension
or other forms of deferred compensation for prior service that
is not contingent in any way on continued service). |
The following relationships will not be considered to be
material relationships that would impair a directors
independence:
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Being a current employee, or having an immediate family member
who is a current executive officer of another company that has
made payments to, or received payments from, Sonoco for property
or services in an amount which, in any of the last three fiscal
years, is less than the greater of $1 million or 2% of such
other companys consolidated gross revenues. |
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Based on the stated criteria and the New York Stock
Exchanges independence standards, the Board of Directors
has determined that the following directors, who constitute a
majority of the Board, are independent:
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C.J. Bradshaw, R.J. Brown, J.L. Coker, P.L. Davies, C.C. Fort,
Paul Fulton, B.L.M. Kasriel, E.H. Lawton, III, J.E.
Linville, J.M. Micali, J.H. Mullin, III, M.D. Oken and
T.E. Whiddon. |
All of the members of the Audit Committee, the Corporate
Governance and Nominating Committee, and the Executive
Compensation Committee have also been determined to be
independent under the New York Stock Exchange Listing Standards.
MEETINGS OF NON-MANAGEMENT DIRECTORS
Our non-management directors meet at regularly scheduled
executive sessions without management present. The presiding
director for each meeting is elected by those directors in
attendance at that meeting. Shareholders and other interested
parties may communicate with the non-management directors by
writing to Non-Management Directors, c/o Corporate
Secretary, Sonoco Products Company, 1 North Second Street,
Hartsville, SC 29550 USA.
CORPORATE GOVERNANCE GUIDELINES AND
CODE OF BUSINESS CONDUCT AND ETHICS
We have adopted Corporate Governance Guidelines and a Code of
Business Conduct and Ethics for directors, officers and
employees. Copies of these governance guidelines and the Code of
Business Conduct are available through our Web site at
www.sonoco.com. Printed versions are available to our
shareholders on request to the Corporate Secretary, Sonoco
Products Company, 1 North Second Street, Hartsville,
SC 29550 USA.
13
BOARD COMMITTEES AND MEETINGS
During 2005, the Board of Directors held four regularly
scheduled meetings and one special meeting to review significant
developments affecting the Company and to act on matters
requiring the Board of Directors approval. To assist it in
performing its duties, the Board of Directors has established
the six committees discussed below.
All committees operate pursuant to written charters. The
charters are available to shareholders through the Investor
Relations page of our Web site at www.sonoco.com. These charters
are also available in print to any shareholder upon request to
the Corporate Secretary, Sonoco Products Company, 1 North
Second Street, Hartsville, SC 29550 USA. Each member
of the Audit, Corporate Governance and Nominating, and Executive
Compensation committees has been determined by the Board of
Directors to be independent, as defined in the New York Stock
Exchanges listing standards as adopted in November 2004.
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Number of | |
Committee |
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2005 | |
Name |
|
Purpose |
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Members |
|
Meetings | |
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| |
Audit Committee (established in accordance with
Section 3(a)(58)(A) of the Securities Exchange Act of 1934) |
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At least annually, appoint or replace the
independent auditor and oversee the work of such independent
auditor who shall report directly to the committee;
Pre-approve all auditing services and
permitted non-audit services to be performed by the independent
auditor;
Evaluate the qualifications, independence and
performance of the independent auditor;
Review and concur in the appointment,
reassignment or dismissal of the director of internal audit.
Also review the internal audit department annual budget,
staffing and audit plan;
Review compliance with major accounting and
financial policies of the Company;
Review managements assessment of the
adequacy of internal controls;
Review significant findings of the independent
auditor and the internal audit department together with
managements responses; |
|
T.E. Whiddon Chair
J.L. Coker
P.L. Davies
C.C. Fort
E.H. Lawton, III
J.M. Micali
M.D. Oken |
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8 |
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14
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Committee |
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Name |
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Purpose |
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Audit Committee (continued)
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Review with the independent auditor any
problems or difficulties together with managements
responses. Consider any reports or communications to the
Committee from the auditor;
Review the results of the annual external
audit with the independent auditor;
Discuss the annual and quarterly financial
statements and all disclosures thereto with the auditor,
management and the director of internal audit, including major
issues regarding accounting principles, analyses of alternative
GAAP treatments, the effect of regulatory and accounting
initiatives, and the type and presentation of information to be
included in earnings press releases;
Discuss CEO and CFO certifications regarding
filings with the Securities and Exchange
Commission(SEC);
Discuss guidelines and policies by which
management assesses and manages the Companys exposure to
risk. Evaluate the steps management has taken to monitor and
control such exposures;
Recommend to the Board of Directors whether to
accept the audited financial statements;
Establish procedures for (1) receipt and
treatment of complaints about accounting, internal controls or
auditing matters; and (2) the confidential, anonymous submission
by employees of concerns regarding questionable accounting
matters; and
Review monitoring of compliance with the
Companys Code of Business Conduct. |
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15
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Number of | |
Committee |
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|
2005 | |
Name |
|
Purpose |
|
Members |
|
Meetings | |
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| |
Executive Compensation
Committee |
|
Establish the Companys general
compensation philosophy and oversee the development and
implementation of compensation programs;
Review and approve corporate goals and
objectives relevant to the compensation of the CEO, evaluate the
performance of the CEO in light of those goals and establish the
CEOs compensation based on this evaluation and other
factors;
Review and approve the executive officer
compensation programs;
Evaluate and administer the Companys
incentive plans;
Working with management, oversee regulatory
compliance on compensation matters; and
Review management development and succession
plans. |
|
J.H. Mullin, III Chair
C.J. Bradshaw
Paul Fulton
B.L.M. Kasriel
J.E. Linville
M.D. Oken |
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4 |
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16
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Number of | |
Committee |
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2005 | |
Name |
|
Purpose |
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Members |
|
Meetings | |
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| |
Employee and
Public
Responsibility
Committee |
|
Oversee the Companys commitment to
employee health and safety;
Provide oversight on diversity strategy, goals
and progress;
Review charitable giving policies and
practices;
Review employee morale through survey results
or other means;
Oversee the Companys stance, response
and programs related to the environment and to other emerging
issues;
Monitor major litigation and disputes and
provide guidance in responding to such issues;
Review actions taken by management relating to
current or emerging public policy issues or significant
political and social changes that may affect the Company; and
Oversee the Companys commitment to
ethical business practices. |
|
C.C. Fort Chair
R.J. Brown
F.L.H. Coker
P.L. Davies
E.H. Lawton, III |
|
|
2 |
|
17
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Number of | |
Committee |
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2005 | |
Name |
|
Purpose |
|
Members |
|
Meetings | |
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Corporate
Governance
and Nominating
Committee |
|
Recommend to the Board of Directors amendments
to the bylaws;
Develop and recommend to the Board of
Directors a set of corporate governance guidelines and review
those guidelines at least annually. These recommendations shall
include the structure, mission, practices and policies of the
Board of Directors and the composition, structure and mission of
Board committees;
Identify individuals believed to be qualified
to become board members and recommend them as needed for
election by the Board of Directors to fill vacancies or by the
shareholders;
Review with the Board of Directors, on an
annual basis, the skills and characteristics of the then-current
Board members;
Recommend to the Board of Directors the
directors to serve on each of the Boards committees;
Ensure that processes are in place for annual
CEO performance and compensation appraisal and for reviews of
succession planning and management development;
Recommend to the Board of Directors a
corporate philosophy and strategy governing director
compensation and benefits; and
Oversee the evaluation of the Board of
Directors and of management. |
|
Paul Fulton Chair C.J. Bradshaw
R.J. Brown
C.C. Fort
J.H. Mullin, III |
|
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5 |
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18
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Number of | |
Committee |
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|
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|
|
2005 | |
Name |
|
Purpose |
|
Members |
|
Meetings | |
|
|
|
|
|
|
| |
Financial Policy Committee |
|
Review the Companys annual operating and
long-range plans for purposes of understanding changes to the
Companys capital structure and projected sources and uses
of cash;
Review as needed any significant financings by
the Company;
Review the Companys financial risk
management policies, practices and exposures;
Evaluate the Companys dividend
policy;
Review the funding and investment management
of the Companys defined benefit and postretirement benefit
plans; and
Review the Companys key financial
leverage ratios and ratings implications. |
|
J.M. Micali Chair
C.J. Bradshaw
J.L. Coker
B.L.M. Kasriel
J.E. Linville
J.H. Mullin, III |
|
|
5 |
|
|
Executive
Committee |
|
Empowered to exercise all of the authority of
the Board of Directors between regularly scheduled meetings,
except as limited by South Carolina law. |
|
H.E. DeLoach, Jr.
Paul Fulton
J.H. Mullin, III |
|
|
1 |
|
During 2005, all directors attended 75% or more of the aggregate
number of meetings of the Board of Directors and committees of
which they were members, except Mr. Brown (who attended
71%).
The Company encourages, but does not require, its directors to
attend the Annual Meeting of Shareholders. In 2005, fifteen of
sixteen directors attended the Annual Meeting.
Director Nomination Process
The Corporate Governance and Nominating Committee recommends to
the Board of Directors nominees to fill vacancies on the Board
of Directors as they occur, and recommends candidates for
election as directors at Annual Meetings of Shareholders. Such
candidates are routinely identified through personal and
business relationships and contacts of the directors and
executive officers.
In recommending candidates, the Corporate Governance and
Nominating Committee evaluates such factors as it deems
appropriate based on the Companys current needs. These
factors may include diversity, age, skills such as understanding
of appropriate technologies and general finance, decision-making
ability, interpersonal skills, experience with businesses and
other organizations of comparable size, and the
inter-relationship between the candidates experience and
business background and other Board members experience and
business background. Additionally, candidates for director
should possess the highest personal and professional ethics, and
they should be committed to the long-term interests of the
shareholders.
19
The Corporate Governance and Nominating Committee will consider
director candidates recommended by shareholders, if the
shareholders comply with the following requirements. If you wish
to recommend a director candidate to the Corporate Governance
and Nominating Committee for consideration as a Board of
Directors nominee, you must submit in writing to the
Corporate Governance and Nominating Committee your recommended
candidates name, a brief resume setting forth the
recommended candidates business and educational background
and qualifications for service, and a notarized consent signed
by the recommended candidate stating the recommended
candidates willingness to be nominated and to serve. This
information must be delivered to the Chairperson of the
Corporate Governance and Nominating Committee at the
Companys address and must be received no later than
January 5 in any year to be considered by the Committee as
a potential Board of Directors nominee. The Corporate
Governance and Nominating Committee may request further
information if it determines a potential candidate may be an
appropriate nominee. Director candidates recommended by
shareholders that comply with these requirements will receive
the same consideration that the Committees other
candidates receive.
Director candidates recommended by shareholders will not be
considered by the Corporate Governance and Nominating Committee
for election at an annual meeting unless the shareholder
recommendations are received no later than January 5 of the year
of the meeting. In addition to making such recommendations,
shareholders have the right to nominate candidates for election
as directors at an annual meeting if they make a written
nomination at least 60 days prior to the meeting. Any such
nomination should be submitted to the Companys address. No
such nominations have been made for this Annual Meeting.
20
DIRECTORS COMPENSATION
Employee directors do not receive any additional compensation
for serving on the Board of Directors. Compensation for
non-employee directors is summarized below.
2005 Program. In 2005, non-employee directors were paid a
$12,500 quarterly retainer and a fee of $1,500 for each Board of
Directors and committee meeting attended. Committee chairs
received an additional $500 per committee meeting.
Effective July 1, 2004, the Audit Committee chair began
receiving a committee chair retainer of $1,250 per quarter.
Directors could elect to defer part or all of their 2005
retainer and meeting fees. Such elections had to be made in the
prior calendar year. Directors could choose to have their
deferrals earn interest credits at a market rate (the Merrill
Lynch Ten-year High Quality Bond Index) or be treated as if
invested in equivalent units of Sonoco Common Stock (which are
credited with reinvested dividend equivalents). Alternatively,
directors could elect to receive stock options under the 1996
Non-employee Directors Stock Plan (the
Directors Plan) instead of receiving any part
of their cash compensation. If a director chose this
alternative, he or she received an option to purchase $4 worth
of Common Stock at the fair market value of the Common Stock on
the date the option was granted for each $1 of cash compensation
the director chose not to receive. During 2005, no directors
were issued stock options instead of cash compensation.
As in prior years, at the first regularly scheduled meeting of
the Board of Directors during a calendar year, each non-employee
director was granted options to purchase shares of Common Stock
at an exercise price equal to the fair market value of the
common stock as of the date the options were granted. In 2005,
each director was granted options to purchase 5,000 shares.
Options are immediately vested but may not be exercised until
one year after the grant date.
2006 Program. In an effort to bring the Sonoco plan in
line with emerging compensation practices for non-employee
directors, the Board of Directors approved significant changes
to the director compensation program effective January 1,
2006.
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|
The quarterly retainer was increased from $12,500 to $25,000. At
least 50% of this retainer must be deferred into full value
stock units, which will accrue dividend equivalents and be
distributed upon termination of Board service. |
|
|
|
Directors may continue to elect to defer up to the remaining 50%
of retainers and meeting fees into the market-rate interest
account (which is 5.73% for 2006) and/or equivalent units of
Sonoco stock. |
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|
|
The annual stock option grant (5,000 shares in 2005) was
discontinued as a component of director compensation, but may be
reinstated by the Board at any time. |
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|
|
Directors are no longer permitted to defer retainer and meeting
fees into stock options. |
|
|
|
The meeting fees for Committee chairs were increased from $2,000
to $2,500. The special additional retainer of $1,250 per
quarter for the Audit Committee chair remains in place. |
These changes were based on comparisons of Sonoco to national
surveys of director compensation, surveys of companies in our
industry, an independent study and recommendations by an outside
consultant.
21
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
Members of the Executive Compensation Committee during the year
ended December 31, 2005 were:
|
|
|
C.J. Bradshaw, Paul Fulton, B.L.M. Kasriel, J.E. Linville and
J.H. Mullin, III. |
Mr. Fulton is a director of Bank of America Corporation.
During the third quarter of 2004, a Bank of America subsidiary
managed the syndication and participated as agent to provide a
five-year committed revolving line of credit for $350,000,000 to
support our commercial paper program and for general corporate
purposes. Bank of Americas commitment to this facility is
$36,000,000. A committed line of credit from Bank of America has
been in place since 1987 and has been renewed, amended and
increased or decreased according to our needs. Bank of America
has extended other lines of credit to us as support for letters
of credit, overdrafts and other corporate needs. It also
provides treasury management services to us. We pay fees to the
bank for these services and for the availability of the lines of
credit, as well as interest on any borrowed funds.
All transactions were handled on a competitive basis. Management
believes that the rates and provisions were as favorable to us
as we could have obtained from similar sources.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Paul Fulton is a director of Bank of America
Corporation. See Compensation Committee Interlocks and
Insider Participation for information about our
transactions with Bank of America.
Mr. R.J. Brown is a director of Wachovia Corporation.
Wachovia Bank, N.A., a subsidiary of Wachovia Corporation,
committed $36,000,000 to the revolving line of credit syndicated
by Bank of America to support our commercial paper program and
for general corporate purposes. Wachovia Bank, N.A. also
provides other lines of credit to support stand-by letters of
credit, and it provides trustee services. We pay fees to
Wachovia Bank, N.A. for the availability of the credit lines and
for the trustee services, as well as interest on any borrowed
funds. A subsidiary of Wachovia Corporation is also providing
services to us in connection with the share repurchase program
announced in December 2005.
Our management believes the prices and terms of the transactions
reported above were comparable to those we could have obtained
from other sources. We anticipate engaging in similar business
transactions in 2006. The Board of Directors considered these
relationships when making its determinations of independence.
During 2005, the Company employed family members of two of the
directors of the Company. Charles W. Coker, Jr., currently
Division VP/General Manager of the Flexible Packaging Division,
Thomas L. Coker, formerly Division VP/General Manager of
the Flexible Packaging Division, and R. Howard Coker,
currently Division VP/General Manager of Sonoco Phoenix, are
sons of retired director Charles W. Coker. Their 2005
earnings were $336 thousand, $258 thousand, and
$252 thousand, respectively. John W. DeLoach, Plant
Manager in the Recovered Paper Division, Harris E.
DeLoach, III, also Plant Manager in the Recovered Paper
Division, and Jeanette D. Florence, Senior Organization
Development Specialist, are sons and daughter of Harris E.
DeLoach, Jr., Chairman, President and CEO. Their 2005
earnings were $71 thousand, $64 thousand and $63 thousand,
respectively. Each of these employees also received the usual
employee benefits available to all employees at their levels.
22
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table shows information as of December 31,
2005, about persons known to us to be the beneficial owners of
more than 5% of our Common Shares. This information was obtained
from Schedules 13G and 13F filed by the entities named
below with the SEC, and we have not independently verified it.
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|
|
Amount of | |
|
|
|
|
|
|
Beneficial | |
|
Percent | |
Title of Class |
|
Name and Address of Beneficial Owner |
|
Ownership | |
|
of Class | |
|
|
|
|
| |
|
| |
No Par Value Common
|
|
Barclays Global Investors, Ltd.(1) |
|
|
5,192,992 |
|
|
|
5.24% |
|
|
|
Murray House
1 Royal Mint Court
London, England, United Kingdom |
|
|
|
|
|
|
|
|
|
No Par Value Common
|
|
Atlantic Investment Management, Inc. |
|
|
6,140,000 |
|
|
|
6.14% |
|
|
|
666 Fifth Avenue
New York, NY 10103 |
|
|
|
|
|
|
|
|
|
|
(1) |
Barclays Global Investors is a parent holding company that
has subsidiaries which act as investment advisors to manage
discretionary investment accounts on behalf of their clients. |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Our directors and executive officers are required to file
reports with the SEC and the New York Stock Exchange showing the
number of shares of any class of our equity securities they
owned when they became a director or executive officer, and,
after that, any changes in their ownership of our securities.
These reports are required by Section 16(a) of the
Securities Exchange Act of 1934.
Based on a review of Section 16(a) reports and any written
representations made to us, it appears that all such filings for
2005 were made in a timely manner, except:
Director F.L.H. Coker inadvertently failed to timely report
one transaction on Form 4, which he subsequently filed
approximately two weeks late.
Executive Vice President Charles L. Sullivan, Jr. failed to
timely report three transactions on Form 4 due to
administrative error. The forms were subsequently filed between
one and two months late.
Senior Vice President Cynthia A. Hartley inadvertently filed one
Form 4 late due to administrative error. The corrected form
was filed as soon as the error was discovered.
23
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows the number of shares beneficially
owned as of February 15, 2006, directly or indirectly, by
each director and by each executive officer named in the Summary
Compensation Table.
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|
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|
|
|
|
|
|
|
|
Deferred | |
|
|
|
|
Total Number | |
|
Percent | |
|
Restricted | |
|
Compensation | |
|
Performance- | |
|
|
of Shares | |
|
of | |
|
Stock | |
|
and Restoration | |
|
Contingent | |
Name and Position |
|
Owned(1) | |
|
Class(2) | |
|
Rights(6) | |
|
Units(7) | |
|
Stock Units(8) | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
C.J. Bradshaw
Director
|
|
|
55,430 |
(3) |
|
|
|
|
|
|
|
|
|
|
5,312 |
|
|
|
|
|
R.J. Brown
Director
|
|
|
42,150 |
|
|
|
|
|
|
|
|
|
|
|
7,753 |
|
|
|
|
|
F.L.H. Coker
Director
|
|
|
879,403 |
|
|
|
|
|
|
|
|
|
|
|
427 |
|
|
|
|
|
J.L. Coker
Director
|
|
|
125,000 |
|
|
|
|
|
|
|
|
|
|
|
427 |
|
|
|
|
|
P.L. Davies
Director
|
|
|
7,000 |
|
|
|
|
|
|
|
|
|
|
|
427 |
|
|
|
|
|
C.C. Fort
Director
|
|
|
319,596 |
|
|
|
|
|
|
|
|
|
|
|
427 |
|
|
|
|
|
Paul Fulton
Director
|
|
|
40,648 |
(4) |
|
|
|
|
|
|
|
|
|
|
427 |
|
|
|
|
|
B.L.M. Kasriel
Director
|
|
|
43,973 |
|
|
|
|
|
|
|
|
|
|
|
5,321 |
|
|
|
|
|
E.H. Lawton, III
Director
|
|
|
98,885 |
|
|
|
|
|
|
|
|
|
|
|
427 |
|
|
|
|
|
J.E. Linville
Director
|
|
|
760,215 |
|
|
|
|
|
|
|
|
|
|
|
427 |
|
|
|
|
|
J.M. Micali
Director
|
|
|
15,105 |
|
|
|
|
|
|
|
|
|
|
|
427 |
|
|
|
|
|
J.H. Mullin, III
Director
|
|
|
25,000 |
|
|
|
|
|
|
|
|
|
|
|
3,619 |
|
|
|
|
|
M.D. Oken
Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
376 |
|
|
|
|
|
T.E. Whiddon
Director
|
|
|
25,000 |
|
|
|
|
|
|
|
|
|
|
|
427 |
|
|
|
|
|
H.E. DeLoach, Jr.
Chairman, President, Chief Executive Officer and Director
|
|
|
1,226,332 |
(5) |
|
|
1.2 |
% |
|
|
234,140 |
|
|
|
20,025 |
|
|
|
22,771 |
|
C.L. Sullivan, Jr.
Executive Vice President
|
|
|
207,200 |
|
|
|
|
|
|
|
11,944 |
|
|
|
5,595 |
|
|
|
7,292 |
|
R.E. Holley
Senior Vice President
|
|
|
255,390 |
|
|
|
|
|
|
|
16,163 |
|
|
|
7,057 |
|
|
|
7,292 |
|
24
|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred | |
|
|
|
|
Total Number | |
|
Percent | |
|
Restricted | |
|
Compensation | |
|
Performance- | |
|
|
of Shares | |
|
of | |
|
Stock | |
|
and Restoration | |
|
Contingent | |
Name and Position |
|
Owned(1) | |
|
Class(2) | |
|
Rights(6) | |
|
Units(7) | |
|
Stock Units(8) | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
J.C. Bowen
Senior Vice President
|
|
|
187,748 |
|
|
|
|
|
|
|
14,424 |
|
|
|
4,618 |
|
|
|
7,292 |
|
C.J. Hupfer
Senior Vice President and Chief Financial Officer
|
|
|
165,598 |
|
|
|
|
|
|
|
7,553 |
|
|
|
3,553 |
|
|
|
7,292 |
|
All Executive Officers and Directors as a group (29 persons)
|
|
|
5,217,201 |
|
|
|
5.2 |
% |
|
|
353,244 |
|
|
|
96,171 |
|
|
|
80,621 |
|
|
|
(1) |
The directors and the named executive officers have sole voting
and investment power over the shares unless otherwise indicated
in the footnotes. The number includes shares subject to
currently exercisable options and options exercisable within
60 days granted by the Company under the 1991 Key Employee
Stock Plan (the 1991 Plan) and the Directors
Plan for the following directors and named executive officers:
C.J. Bradshaw 29,400; R.J. Brown 41,688;
F.L.H. Coker 13,200; J.L. Coker 26,400;
P.L. Davies 7,000; C.C. Fort
18,500; Paul Fulton 29,400; B.L.M.
Kasriel 41,858; E.H. Lawton, III 40,315;
J.E. Linville 6,000; J.M. Micali 11,000;
J.H. Mullin, III 15,000; T.E.
Whiddon 20,000; H.E. DeLoach, Jr.
938,700; C.L. Sullivan, Jr. 205,000; R.E.
Holley 201,100; J.C. Bowen 182,600 and
C.J. Hupfer 162,000. |
|
|
Also included are shares held in the Companys Dividend
Reinvestment Plan (1,901) and shares held in the Companys
Savings Plan (29,801). |
|
|
Shareholdings in this column do not include Restricted Stock
Rights granted under the 1991 Plan, issuance of which has been
deferred until retirement, or Deferred Compensation and
Restoration Units. Please see the right-hand columns and
footnotes 6 and 7 below. |
|
(2) |
Percentages not shown are less than 1%. |
|
(3) |
Includes 4,840 shares of Common Stock owned by
Mrs. Bradshaw. Mr. Bradshaw disclaims beneficial
ownership of these shares. |
|
(4) |
Includes 507 shares of Common Stock owned by
Mrs. Fulton. Mr. Fulton disclaims beneficial ownership
of these shares. |
|
(5) |
Includes 12,365 shares of Common Stock owned by
Mrs. DeLoach. Mr. DeLoach disclaims beneficial
ownership of these shares. Also includes 226,197 shares of
Common Stock owned by trusts of which Mr. DeLoach is
trustee. Mr. DeLoach has no pecuniary interest in these
trusts and disclaims beneficial ownership of these shares. |
|
(6) |
Issuance of these shares, most of which have vested, has been
deferred until retirement; thus, no present voting rights are
associated with them. |
|
(7) |
These figures represent Deferred Compensation Units and
Restoration Units connected with the Sonoco Savings Plan. No
voting rights are associated with these units. |
|
(8) |
These figures represent the Performance-Contingent Stock Unit
payouts which vested under the Long-term Incentive Plan for the
period ended December 31, 2005. |
On April 15, 2003, the Board of Directors adopted a
resolution establishing stock ownership guidelines for outside
directors. The guidelines establish a target level of ownership
of Sonoco Products Company Common Stock based on years of
service as a director from the date the guidelines were
established. The guidelines are as follows: 3,000 shares,
5,000 shares and 8,000 shares after two, four and six
years of service, respectively.
25
EXECUTIVE COMPENSATION COMMITTEE REPORT TO SHAREHOLDERS
The purpose of the Executive Compensation Committee (the
Committee) is to discharge the responsibilities of
the Board of Directors of Sonoco Products Company (the
Company) relating to compensation of the
Companys executive officers by overseeing the
administration of the Companys executive officer
compensation programs relating to salaries, incentives, benefits
and perquisites, establishing the compensation for the Chief
Executive Officer (CEO) and all other executive
officers, and preparing any reports on executive compensation
required by the rules and regulations of the Securities and
Exchange Commission. In addition, the Committee reviews top
management succession and development plans. The basic duties
and responsibilities of the Committee are outlined on page 16 of
this Proxy Statement.
The Committee consists entirely of independent directors as
defined by the Corporate Governance Standards of the New York
Stock Exchange. In accordance with its charter, the Committee
engages an independent compensation consultant to advise the
Committee on compensation matters related to the CEO and other
executive officers. The Committee met four times during 2005 and
had met one time in 2006, as of the printing of this report.
Philosophy
The executive compensation program consists of base salary,
annual cash bonus opportunities and long-term incentives, which
include stock options and performance-contingent stock units.
Performance measures for both annual and long-term compensation
plans are aligned and integrated to effectively link the
critical drivers of corporate performance, and are designed to
provide an appropriate balance between short and long-term
reward opportunities. The compensation program has been designed
to attract, motivate, reward and retain senior management by
providing competitive total compensation opportunities based on
performance, leadership, teamwork and the creation of
shareholder value.
In order to determine competitive compensation levels, the
Company annually participates in a number of national surveys
conducted by independent consulting firms. These surveys cover a
large number of similar executive officer positions across
American industry. When information about comparable positions
is available, the Company matches its corporate officer
positions to survey data for a broad range of companies in a
variety of manufacturing industries which have sales in the
$1 billion to $5 billion range. Likewise, officer
positions with division level responsibility are matched to a
comparable division revenue range. From these surveys, the
Committee develops executive compensation levels for base
salaries, total cash compensation (TCC), which
consists of base salary plus annual target bonus, and total
direct compensation (TDC), which is comprised of TCC
plus long-term incentives. Periodically the Committees
consultant may also prepare customized compensation studies of
companies in the Companys industry group and/or of
companies similar in size or provide the Committee with other
relevant information.
Base salary midpoints are targeted to be at the median (50th
percentile) of the surveyed market. To provide greater emphasis
on the performance-based components of the program, incentive
pay (consisting of annual cash bonuses, annual stock option
awards and
performance-contingent
stock units) is targeted to
26
provide a total compensation package between the median and the
75th percentile of the survey data. The incentive pay portion of
the TDC program is structured so that, if performance targets
are not met, actual total compensation for individual executive
officers will normally fall below the survey median for their
positions.
In further support of the Companys pay-for-performance
philosophy, executive perquisites are limited and provide a
lower level of benefits than the median of the surveyed
positions. Some of the more common perquisites that the Company
does not make available to its executive officers include
country club memberships, company cars or drivers, metropolitan
city apartments, vacation retreats, executive dining services or
reserved parking.
The Company has a long standing practice of not providing
employment contracts, pre-termination severance agreements,
change-in-control agreements, or other such financial security
arrangements for its executive officers.
In the past, the benefits program consisting of a Supplemental
Executive Retirement Plan (SERP) and split-dollar
life insurance provided a benefit that was higher than the
market median. This benefits program, in particular the
split-dollar life insurance program, was designed to enhance
retention of executives until normal retirement age, at a modest
long-term net cost to the Company. Recent regulatory changes
made this form of executive life insurance no longer viable or
cost-effective. The Company has taken actions to convert the
split-dollar agreements into permanent life insurance policies
in order to meet its executive life insurance obligations to
officers covered by the old contracts. The life insurance
benefit for officers not covered by the old contracts has been
significantly reduced and consists of term insurance in line
with the industry median.
To evaluate the competitiveness of the executive compensation
program, each year at its April meeting the Committee reviews
the total compensation package for each executive officer. This
includes a discussion of the history of base salary adjustments,
bonus awards and total cash compensation for the last ten years
(or term as an officer, if less), stock options outstanding and
the option price, vested and unvested restricted stock units,
projected annual pension at age 65, and the amount of executive
life insurance coverage.
The Committee has taken, and it intends to continue taking,
steps necessary to assure the federal tax deductibility of
senior executive compensation. However, to the extent that such
steps would not be practical or would not be consistent with the
Committees compensation objectives, there is the
possibility that future compensation in some circumstances may
not meet tax deductibility requirements.
The following sections of this report include a discussion of
each element of the executive compensation program. In each
section we, the Committee, are providing a description of the
actions we have taken with regard to 2005 executive compensation
and the rationale for those actions. More specifically, we
discuss our decisions regarding the compensation of
Mr. DeLoach for performing the duties of Chairman,
President and CEO of the Company. The tables, accompanying
narrative and footnotes which follow this report reflect the
decisions covered by the discussions below.
27
Stock Ownership Guidelines
To emphasize the importance of linking executive officer and
shareholder interests, in 2003, the Board of Directors adopted
stock ownership guidelines for executive officers. The target
level of ownership of Sonoco stock (or Common Stock equivalents)
is established as a fixed number of shares. The target level for
the CEO is 140,000 shares. The targets for Executive and Senior
Vice Presidents are 33,000 and 24,000 shares, respectively, and
the target for other officers is 7,000 shares. Each employee
subject to the guidelines is expected to achieve the ownership
target within five years from the date on which the employee
became subject to the guidelines. Common stock held in the
Sonoco Savings Plan, stock equivalents earned through
non-qualified deferred compensation programs, time vesting
restricted stock which vests within five years, and any other
beneficially owned shares of common stock are included in
determining compliance with the guidelines. Shares that
executives have the right to acquire through the exercise of
stock options are not included in the calculation of stock
ownership for guideline purposes. As of the printing of this
report, the CEO and all other officers with more than one year
in their current positions met the above ownership guidelines.
Base Salary
The Companys salary ranges and market prices for all
salaried positions, including the CEO and other executive
officers, are based on the combination of (1) a structured
job evaluation system which ranks each position in the proper
order and determines the appropriate separation between
positions and (2) a market pricing system which matches
individual jobs to independent salary surveys (for external
competitiveness). This process places a relative value on the
duties and responsibilities of each position.
Each year the Committee reviews the base salary of all senior
executives, including Mr. DeLoach and the other executive
officers named in the Summary Compensation Table
(the NEOs) on page 34, at its April meeting.
The total amount of merit increases for the officer group as a
whole takes into account survey data as to the projected salary
movement for executive positions during the calendar year, the
average wage increase being given to other classes of employees
within the Company, and the current economic environment in
which the Company is operating. Individual merit increase awards
are based on each executives performance in his or her
position during the past year, and the relationship of his or
her current salary to salaries of persons in comparable
positions at the companies surveyed. The Committee used these
criteria to determine salary adjustments for the CEO and for
each of the executive officers in 2005.
In 2005, the Committee awarded Mr. DeLoach a merit increase
of 4.0% based on its evaluation of his performance and an upward
movement in the salaries paid to persons at the CEO level in the
companies surveyed. With this increase, his salary equated to
106% of the 2005 median of those salaries.
Two other NEOs, Messrs. Holley and Bowen, were awarded merit
increases of 3.4% and 3.5%, respectively. These were essentially
the same as the average merit increase awarded to all of the
Companys U.S. salaried employees.
The two other NEOs, Messrs. Sullivan and Hupfer, received a
combination promotional and merit increase. Mr. Sullivan
was promoted to Executive Vice President and received an
increase totaling 9.4%.
28
Mr. Hupfer was promoted to Senior Vice President and
received an increase totaling 7.5%. In relation to normal
practices for the overall salaried population at Sonoco, both of
these combination merit and promotion increases would be
considered relatively modest. As a group, these four NEOs
salaries equate to 104% of the 2005 median of salaries paid to
persons in comparable positions at the surveyed companies.
Annual Bonus Awards
In 2002, the Board of Directors adopted and the shareholders
approved The Performance Based Annual Incentive Plan for
Executive Officers (the 2002 Incentive Plan). Under
the terms of the 2002 Incentive Plan, a maximum of 2.75% of
Income from Operations (as defined in the plan) was established
as an incentive pool fund for the CEO and the four named
executive officers in the proxy. For 2005, this maximum bonus
pool exceeded the amount of bonus awards made by the Committee
to these participants. Actual awards made by the Committee are
based on Company and individual performance (as described below)
within the performance-based maximum.
In 2004, the Committee provided the management team with bonus
awards that reflected outstanding performance, as they exceeded
all of their performance targets. More challenging improvement
targets were established by the Committee for 2005 and in most
instances these, too, have been met or exceeded.
During 2005, the Companys base earnings per share (which
is defined as the Companys GAAP earnings excluding the
impact of restructuring charges and non-recurring, infrequent or
unusual items), increased by 16% from 2004. This was in addition
to a 21% increase from 2003 to 2004.
During this same period of increased profit the Company placed a
strong emphasis on Net Sales growth which resulted in an 11.8%
increase in revenue in 2005, in addition to a 14.4% increase in
2004 (excluding divestitures).
As shown in the comparative performance graph on page 33,
the Companys total shareholder return for this two year
period was 28%, as compared with 19% for the Dow Jones Container
and Packaging group and 16% for the S&P 500 Stock Index.
Over the last five years the Company has put in place a number
of strategic initiatives to meet a significantly changed
business environment. The positive results in the last two
years, some of which are cited above, are strong indications
that these initiatives were appropriate, and that execution of
them by the management team has been effective.
For 2005, financial performance goals were weighted from 80% to
90% of total bonus opportunity. For senior executives with
corporate responsibility, 75% of the Plans financial goals
were based on corporate earnings per share and the remainder on
revenue growth. For executives with business unit
responsibility, 25% of the bonus opportunity available for
financial performance was based on business unit revenue growth,
56.25% on business unit profit, and 18.75% on corporate earnings
per share.
Personal performance objectives for 2005 were also established
for each officer and were weighted at 20% of salary (or 20% to
10% of total bonus opportunity).
29
On January 31, 2006, the Committee reviewed and approved
the 2005 annual bonus awards for executive officers.
Mr. DeLoachs bonus was based on predetermined targets
in the financial measures cited above and the Committees
assessment of his achievement in meeting his predetermined
personal objectives.
As shown under the Bonus caption in the
Summary Compensation Table on page 34,
Mr. DeLoach was awarded a bonus of $1,826,660, which
represented an increase of 4.9% over his bonus for the prior
year. Since the Company met or exceeded its performance
improvement targets for both years, most of this increase was
due to Mr. DeLoachs higher base salary in 2005 (as
discussed previously).
For the other four NEOs, bonus awards ranged from 99.1% to
116.3% of the prior year and reflect the same improved corporate
financial performance as cited for Mr. DeLoach.
Long-term Incentive Plans
The Companys Long-term Incentive Plan (LTIP)
is designed to encourage and reward the creation of long-term
value for shareholders.
On December 31, 2002, the Committee granted awards of
performance-contingent stock units to 33 executives including
Mr. DeLoach and the four other NEOs. The vesting of these
shares was dependent on cumulative earnings per share
(EPS) and average return on net assets employed
(RONAE) for the three-year performance period from
January 1, 2003 through December 31, 2005.
Based on the measurement criteria established in the plan, 140%
of the target EPS shares and 0% of the target RONAE shares
vested on December 31, 2005, for a combined vesting of
93.4% of total target shares. The value of the shares vesting
under this plan for Mr. DeLoach and the four other NEOs is
shown in the Summary Compensation Table on
page 34. As provided for under the plan, corporate officers
including Mr. DeLoach and the four NEOs, must defer receipt
of all vested shares until one year following their separation
from service with the Company.
In 2005, the Companys LTIP was comprised of two
components: non-qualified stock options
(NQSO) and performance-contingent stock units
(PCSU).
Beginning in 2004, the Committee shifted the balance in the two
components for the officer group. The total number of NQSOs
available for grants to officers was reduced by 48%. This was
offset by an increase in the number of PCSUs awarded. At target,
this results in an overall mix in the officers LTIP of 25%
NQSO and 75% PCSU. In general, 1 PCSU was substituted for 5
NQSOs (1:5). This action is in keeping with trends in executive
compensation and the Company believes it is generally viewed
favorably by institutional and individual investors.
Furthermore, the substitution ratio approved by the Committee
can be considered conservative in that many companies making
this shift have used more aggressive substitution ratios of 1:4
or less.
This change emphasized the importance of Company performance in
both total shareholder return and earnings per share growth. In
addition, this shift enhanced the officer-retention component in
the Companys compensation program, reduced potential
dilution and promoted stock ownership.
30
In the valuation of equity grants under the LTIP, the Committee
uses a Binomial formula to value NQSOs, and uses the market
value of Sonoco stock to value PCSUs. These calculations assume
a constant stock price to avoid year-to-year, purely
price-related fluctuations in the number of shares granted.
To determine the target number of equity shares to be awarded to
the officer group under the LTIP, the Committee looks at the TDC
target for each officer position. The base salary median and the
target annual bonus are subtracted from TDC to arrive at the
target dollars available for the long-term component of the
compensation plan. These dollars are then converted to shares of
NQSOs and PCSUs based on the 25%/75% mix described above.
Stock Options
Under a plan previously approved by the Companys
shareholders, the Committee approved 2005 NQSO grants to 1,041
key employees, including Mr. DeLoach and the other
executive officers. The price of these options was set at the
closing market price of Company common stock on the date of
grant. Accordingly these options will be valuable to the
recipients only if the market price of the Company stock
increases. Stock options for Mr. DeLoach and the other
named officers are included in the Summary Compensation
Table on page 34, under the caption Securities
Underlying Options Granted and in the Option Grants
in Last Fiscal Year table on page 37.
Mr. DeLoachs target grant was calculated by the
formula described above. The actual number of stock options
granted to Mr. DeLoach and the other officers was based on
the Committees assessment of each persons relative
performance.
Performance-Contingent Stock Units (PCSUs)
On February 1, 2005, the Committee approved PCSU grants to
28 executives, including Mr. DeLoach and the other
executive officers, under a shareholder approved stock plan.
These are shown in the Long-term Incentive
Plans Awards in Last Fiscal Year table on page
35. The number of PCSUs granted to each individual was based on
his or her target award as described previously, and adjusted
upward or downward from target based on the Committees
judgment of the individuals performance.
The award to Mr. DeLoach reflects his leadership in
achieving a significant improvement in financial performance for
the Company during his five-year tenure as CEO and successful
completion of major acquisitions and strategic joint ventures.
As described in detail on page 35, the number of these PCSUs
that will vest is dependent on cumulative EPS and average RONAE
for the three-year performance period. To encourage continued
employment, the plan provides that if less than 50% of a
participants target shares vest at the end of the
three-year performance period, the remainder of that 50% of
target shares will time vest after five years, subject to the
participants continued employment for that period. Except
for death, disability, or retirement other than for cause,
termination of a participants employment prior to vesting
will result in forfeiture of any unvested award. Officers who do
not meet the Sonoco stock ownership guidelines for their
31
positions may not dispose of any shares that vest under this
plan until such guidelines are met and maintained.
Perquisites
As mentioned in the Committees Philosophy
statement, perquisites for Corporate officers are very modest.
Corporate officers are allowed an annual financial planning/tax
assistance allowance of up to 2% of base salary or $5,000
(whichever is greater).
Officers are provided very limited tax gross-ups
that are not provided for all employees. These are for financial
planning reimbursement and imputed income for executive life
insurance premiums paid by the Company. These amounts are listed
under Other Annual Compensation column in the
Summary Compensation Table on page 34. No other
special tax gross-ups are provided for executive
officers.
Corporate officers may occasionally use the Companys
aircraft for personal travel, and six officers did so in 2005.
This use is valued at the Aggregate Incremental Cost
to the Company, and was less than $50,000 in 2005 for the
officer group as a whole.
J.H. Mullin, III (Chair) C.J.
Bradshaw Paul Fulton
B.L.M. Kasriel J.E. Linville
32
COMPARATIVE COMPANY PERFORMANCE
The following line graph compares cumulative total shareholder
return, assuming the reinvestment of dividends, for the Company
with the cumulative total return of the S&P 500 Stock Index
and a nationally recognized industry index, the Dow Jones
U.S. Containers & Packaging Group (which includes
the Company), from December 31, 2000, through
December 31, 2005. The graph assumes that $100 was invested
on December 31, 2000, in Sonoco Products Company Common
Stock, the S&P 500 Stock Index and the Dow Jones
Containers & Packaging Group.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG SONOCO PRODUCTS COMPANY, THE S&P 500 INDEX
AND THE DOW JONES U.S. CONTAINERS & PACKAGING
INDEX
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative Total Value | |
|
|
| |
|
|
12/00 | |
|
12/01 | |
|
12/02 | |
|
12/03 | |
|
12/04 | |
|
12/05 | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Sonoco Products Company
|
|
$ |
100.00 |
|
|
$ |
127.00 |
|
|
$ |
113.21 |
|
|
$ |
126.40 |
|
|
$ |
157.47 |
|
|
$ |
161.34 |
|
S&P 500 Stock Index
|
|
|
100.00 |
|
|
|
88.12 |
|
|
|
68.64 |
|
|
|
88.33 |
|
|
|
97.94 |
|
|
|
102.75 |
|
Dow Jones U.S. Containers & Packaging Index
|
|
|
100.00 |
|
|
|
125.64 |
|
|
|
135.18 |
|
|
|
160.97 |
|
|
|
192.58 |
|
|
|
191.37 |
|
33
SUMMARY COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term Compensation | |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
Awards(2) | |
|
Payouts | |
|
|
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
|
|
|
|
|
Annual Compensation | |
|
|
|
Securities | |
|
|
|
|
|
|
|
|
|
|
| |
|
Restricted | |
|
Underlying | |
|
|
|
|
|
|
|
|
|
|
|
|
Other Annual | |
|
Stock | |
|
Options | |
|
LTIP | |
|
All Other | |
Name and Principal Position |
|
Year | |
|
Salary | |
|
Bonus | |
|
Compensation(1) | |
|
Awards | |
|
Granted | |
|
Payouts(3) | |
|
Compensation(4) | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Harris E. DeLoach, Jr.
|
|
|
2005 |
|
|
$ |
913,330 |
|
|
$ |
1,826,660 |
|
|
$ |
100,908 |
|
|
$ |
1,350,500 |
(5) |
|
|
80,000 |
|
|
$ |
669,467 |
|
|
$ |
316,145 |
|
|
Chairman, President and
|
|
|
2004 |
|
|
|
874,802 |
|
|
|
1,740,856 |
|
|
|
66,550 |
|
|
|
0 |
|
|
|
73,000 |
|
|
|
0 |
|
|
|
251,690 |
|
|
Chief Executive Officer
|
|
|
2003 |
|
|
|
839,588 |
|
|
|
660,588 |
|
|
|
0 |
|
|
|
0 |
|
|
|
175,000 |
|
|
|
0 |
|
|
|
122,217 |
|
|
Charles L. Sullivan, Jr.
|
|
|
2005 |
|
|
$ |
448,335 |
|
|
$ |
717,336 |
|
|
$ |
57,675 |
|
|
|
0 |
|
|
|
30,000 |
|
|
$ |
213,003 |
|
|
$ |
126,990 |
|
|
Executive Vice President |
|
|
2004 |
|
|
|
416,669 |
|
|
|
616,670 |
|
|
|
37,851 |
|
|
|
0 |
|
|
|
25,000 |
|
|
|
0 |
|
|
|
103,632 |
|
|
|
|
|
2003 |
|
|
|
398,750 |
|
|
|
235,701 |
|
|
|
0 |
|
|
|
0 |
|
|
|
45,000 |
|
|
|
0 |
|
|
|
31,799 |
|
|
Ronald E. Holley
|
|
|
2005 |
|
|
$ |
394,586 |
|
|
$ |
591,879 |
|
|
$ |
19,338 |
|
|
|
0 |
|
|
|
25,000 |
|
|
$ |
213,003 |
|
|
$ |
74,410 |
|
|
Senior Vice President |
|
|
2004 |
|
|
|
382,012 |
|
|
|
573,018 |
|
|
|
12,737 |
|
|
|
0 |
|
|
|
20,000 |
|
|
|
0 |
|
|
|
55,937 |
|
|
|
|
|
2003 |
|
|
|
370,842 |
|
|
|
211,788 |
|
|
|
0 |
|
|
|
0 |
|
|
|
42,500 |
|
|
|
0 |
|
|
|
29,551 |
|
|
Charles J. Hupfer
|
|
|
2005 |
|
|
$ |
373,751 |
|
|
$ |
560,627 |
|
|
$ |
13,591 |
|
|
|
0 |
|
|
|
25,000 |
|
|
$ |
213,003 |
|
|
$ |
68,432 |
|
|
Senior Vice President and |
|
|
2004 |
|
|
|
350,923 |
|
|
|
491,292 |
|
|
|
8,891 |
|
|
|
0 |
|
|
|
24,000 |
|
|
|
0 |
|
|
|
45,217 |
|
|
Chief Financial Officer |
|
|
2003 |
|
|
|
316,004 |
|
|
|
188,939 |
|
|
|
0 |
|
|
|
0 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
24,427 |
|
|
Jim C. Bowen
|
|
|
2005 |
|
|
$ |
362,290 |
|
|
$ |
521,698 |
|
|
$ |
36,238 |
|
|
|
0 |
|
|
|
19,000 |
|
|
$ |
213,003 |
|
|
$ |
80,336 |
|
|
Senior Vice President |
|
|
2004 |
|
|
|
350,831 |
|
|
|
526,247 |
|
|
|
27,797 |
|
|
|
0 |
|
|
|
15,000 |
|
|
|
0 |
|
|
|
66,395 |
|
|
|
|
|
2003 |
|
|
|
338,750 |
|
|
|
179,910 |
|
|
|
0 |
|
|
|
0 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
26,651 |
|
|
|
(1) |
The amounts in this column represent reimbursement during 2005
for the payment of taxes on Company-provided
premiums/allocations to the Executive Bonus Life Insurance Plan
that replaced the former post-1995 split-dollar life insurance
arrangements and tax gross-up of reimbursements for financial
planning services. None of the officers received perquisites or
personal benefits which totaled the lesser of $50,000 or 10% of
their respective salary plus bonus payments. |
|
(2) |
The number and dollar value of restricted stock rights held on
December 31, 2005, including target amounts of
performance-contingent share units, and dividend equivalents,
based on the closing stock price on December 31, 2005, of
$29.40 per share were: Mr. DeLoach
156,223 shares ($4,592,956); Mr. Sullivan
28,750 shares ($845,250); Mr. Holley
24,000 shares ($705,600); Mr. Hupfer
27,250 shares ($801,150); and Mr. Bowen
17,750 shares ($521,850). |
|
(3) |
These amounts represent the dollar value of shares which vested
on December 31, 2005, pursuant to the contingent share unit
awards granted in 2002. The awards included the crediting of
dividend equivalents and equal the number of vesting shares
times the closing price on December 31, 2005 of $29.40. As
provided for under the plan, receipt of these shares must be
deferred until one year following separation from service with
the Company. |
34
|
|
(4) |
All other compensation for 2005 consisted of the following
components for each named officer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company Contributions and | |
|
|
|
|
|
|
Accruals to Defined | |
|
|
|
|
Executive Life | |
|
Contribution | |
|
Deferred | |
Name |
|
Insurance(a) | |
|
Retirement Plans(b) | |
|
Compensation(c) | |
|
|
| |
|
| |
|
| |
H.E. DeLoach, Jr.
|
|
$ |
159,981 |
|
|
$ |
106,167 |
|
|
$ |
49,997 |
|
C.L. Sullivan, Jr.
|
|
|
84,390 |
|
|
|
42,600 |
|
|
|
|
|
R.E. Holley
|
|
|
35,706 |
|
|
|
38,704 |
|
|
|
|
|
C.J. Hupfer
|
|
|
33,597 |
|
|
|
34,835 |
|
|
|
|
|
J.C. Bowen
|
|
|
44,794 |
|
|
|
35,542 |
|
|
|
|
|
|
|
|
|
(a) |
Includes Company contributions under the Companys
Executive Life Insurance program (that replaced certain
split-dollar contracts canceled due to regulatory changes) and
the economic value of frozen split-dollar life insurance
arrangements. |
|
|
(b) |
Comprised of contributions to the Sonoco Savings Plan and
accruals to individual accounts in the Companys Omnibus
Benefit Restoration Plan in order to keep employees whole with
respect to Company contribution amounts that were limited by tax
law. |
|
|
(c) |
Amounts in this column represent the above market portion of
interest credits on previously earned compensation for which
payment has been deferred. The corresponding amount for
Mr. DeLoach in 2003, which was included in Other
Annual Compensation in that year, has been reclassified to
All Other Compensation. |
|
|
(5) |
Award of 50,000 restricted stock units on April 20, 2005,
upon Mr. DeLoachs election to Chairman of the Board
of Directors. These units vest on April 20, 2010, if
Mr. DeLoach is actively employed by the Company on that
date. The dollar amount shown is based on the closing per share
price of $27.01 on April 20, 2005. Dividend equivalents are
being added to these units. |
LONG-TERM INCENTIVE PLANS AWARDS IN LAST FISCAL
YEAR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maximum | |
|
Performance Period | |
|
Estimated Future Payouts | |
|
|
Number of | |
|
until Maturation | |
|
| |
Name |
|
Share Units | |
|
or Payout | |
|
Threshold(#) | |
|
Target(#) | |
|
Maximum(#) | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
H.E. DeLoach, Jr
|
|
|
82,500 |
|
|
|
1/1/05-12/31/07 |
|
|
|
27,500 |
|
|
|
55,000 |
|
|
|
82,500 |
|
C.L. Sullivan, Jr.
|
|
|
22,500 |
|
|
|
1/1/05-12/31/07 |
|
|
|
7,500 |
|
|
|
15,000 |
|
|
|
22,500 |
|
R.E. Holley
|
|
|
18,750 |
|
|
|
1/1/05-12/31/07 |
|
|
|
6,250 |
|
|
|
12,500 |
|
|
|
18,750 |
|
C.J. Hupfer
|
|
|
21,000 |
|
|
|
1/1/05-12/31/07 |
|
|
|
7,000 |
|
|
|
14,000 |
|
|
|
21,000 |
|
J.C. Bowen
|
|
|
14,250 |
|
|
|
1/1/05-12/31/07 |
|
|
|
4,750 |
|
|
|
9,500 |
|
|
|
14,250 |
|
Awards are made in the form of performance-contingent stock
units. The vesting of awards is tied to growth in earnings
(cumulative EPS) and improved capital effectiveness (average
RONAE) over a three-year period as described in the Compensation
Committees Report that begins on page 26. Both
measures are exclusive of the impact of
year-to-year change in
pension expense (income), net of normal service cost
35
measures. For two-thirds of the designated shares, threshold
vesting is earned if three-year cumulative EPS is 96.28% of
target, and maximum vesting is earned if three-year cumulative
EPS is 107.80% or more of target. For the remaining one-third of
designated shares, three targets have been established for
average RONAE, depending on the amount of capital the Company
invests in acquisitions during the three-year performance
period. For the RONAE targets, threshold vesting is earned if
three-year average performance is from 94.44% to 95.00% of
target, and maximum vesting is earned if three-year average
performance is from 105.00% to 105.56% of target. For all
measures, the target shares vest when performance is 100% of
target. If less than the threshold number of stock units vest at
the end of the three-year performance period, the remaining
number of threshold shares will vest after five years
(December 31, 2009).
OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares | |
|
|
|
|
|
|
|
|
Underlying | |
|
Value of Unexercised | |
|
|
Number of | |
|
|
|
Unexercised Options | |
|
In-the-Money Options | |
|
|
Shares | |
|
|
|
as of 12/31/2005 | |
|
as of 12/31/2005 (2) | |
|
|
Acquired on | |
|
Value | |
|
| |
|
| |
Name |
|
Exercise | |
|
Realized(1) | |
|
Exercisable | |
|
Unexercisable | |
|
Exercisable(3) | |
|
Unexercisable | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
H.E. DeLoach, Jr.
|
|
|
27,500 |
|
|
$ |
98,603 |
|
|
|
991,000 |
|
|
|
0 |
|
|
$ |
5,575,945 |
|
|
|
0 |
|
C.L. Sullivan, Jr.
|
|
|
0 |
|
|
|
0 |
|
|
|
205,000 |
|
|
|
0 |
|
|
|
1,222,563 |
|
|
|
0 |
|
R.E. Holley
|
|
|
16,500 |
|
|
|
64,094 |
|
|
|
235,700 |
|
|
|
0 |
|
|
|
1,188,428 |
|
|
|
0 |
|
C.J. Hupfer
|
|
|
11,000 |
|
|
|
38,000 |
|
|
|
184,000 |
|
|
|
0 |
|
|
|
840,813 |
|
|
|
0 |
|
J.C. Bowen
|
|
|
7,700 |
|
|
|
26,660 |
|
|
|
206,300 |
|
|
|
0 |
|
|
|
1,043,940 |
|
|
|
0 |
|
|
|
(1) |
The difference between the exercise price paid and the value of
the acquired shares, based on the closing price of the
Companys stock on the exercise date. |
|
(2) |
Based on the December 31, 2005 closing price of
$29.40 per share. |
|
(3) |
Based on the exercise prices ranging from $19.19 to
$28.93 per share. |
36
OPTION GRANTS IN LAST FISCAL YEAR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individual Grants | |
| |
|
|
Number of | |
|
% of Total | |
|
|
|
|
Securities | |
|
Options | |
|
|
|
|
Underlying | |
|
Granted to | |
|
Exercise | |
|
|
|
|
Options | |
|
Employees | |
|
Price | |
|
Expiration | |
|
Grant Date | |
Name |
|
Granted(1) | |
|
in 2005 | |
|
(per share) | |
|
Date | |
|
Present Value(2) | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
H.E. DeLoach, Jr.
|
|
|
80,000 |
|
|
|
7.5 |
|
|
$ |
27.31 |
|
|
|
02/02/2015 |
|
|
$ |
433,600 |
|
C.L. Sullivan, Jr.
|
|
|
30,000 |
|
|
|
2.8 |
|
|
$ |
27.31 |
|
|
|
02/02/2015 |
|
|
|
162,600 |
|
R.E. Holley
|
|
|
25,000 |
|
|
|
2.3 |
|
|
$ |
27.31 |
|
|
|
02/02/2015 |
|
|
|
135,500 |
|
C.J. Hupfer
|
|
|
25,000 |
|
|
|
2.3 |
|
|
$ |
27.31 |
|
|
|
02/02/2015 |
|
|
|
135,500 |
|
J.C. Bowen
|
|
|
19,000 |
|
|
|
1.8 |
|
|
$ |
27.31 |
|
|
|
02/02/2015 |
|
|
|
102,980 |
|
|
|
(1) |
These options were granted on February 2, 2005. All options
have exercise prices equal to the closing market prices on the
dates of the grant. They became exercisable on the date of the
grant and were granted for a period of ten years, subject to
earlier expiration in certain events related to termination of
employment. The exercise price can be paid by cash or by the
delivery of previously owned shares. Tax obligations also can be
paid by an offset of the underlying shares. |
|
(2) |
The Grant Date Present Values were derived using the Binomial
Option Pricing Model in accordance with the rules and
regulations of the SEC and are not intended to forecast
appreciation of the Companys stock price. The options had
a grant date present value of $5.42. The Binomial model was used
with the following assumptions: term
4.52 years; stock price volatility 26.16%;
dividend yield 3.53%; and discount rate
3.77%. |
37
PENSION PLAN TABLE
Named executive officers participate in a non-contributory
defined benefit supplemental executive retirement plan program
which provides for a maximum annual lifetime retirement benefit
equal to 60% of final average compensation computed as a
straight-life annuity, based on the highest three of the last
seven calendar years. In order to receive the full benefit, the
executive must have at least 15 years of service and retire
no earlier than age 65. Eligible spouses (married one year
or longer at the executives retirement date) receive
survivor benefits at a rate of 75% of the benefit paid to the
executives. The total benefit provided by the Company is offset
by 100% of primary U.S. Social Security.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Age 65 Retirement | |
Final |
|
Years of Service | |
Average |
|
| |
Compensation (1) |
|
5 | |
|
10 | |
|
15 or More (2) | |
|
|
| |
|
| |
|
| |
$ 300,000
|
|
$ |
60,000 |
|
|
$ |
120,000 |
|
|
$ |
180,000 |
|
|
400,000
|
|
|
80,000 |
|
|
|
160,000 |
|
|
|
240,000 |
|
|
500,000
|
|
|
100,000 |
|
|
|
200,000 |
|
|
|
300,000 |
|
|
600,000
|
|
|
120,000 |
|
|
|
240,000 |
|
|
|
360,000 |
|
|
700,000
|
|
|
140,000 |
|
|
|
280,000 |
|
|
|
420,000 |
|
|
800,000
|
|
|
160,000 |
|
|
|
320,000 |
|
|
|
480,000 |
|
|
900,000
|
|
|
180,000 |
|
|
|
360,000 |
|
|
|
540,000 |
|
1,000,000
|
|
|
200,000 |
|
|
|
400,000 |
|
|
|
600,000 |
|
1,100,000
|
|
|
220,000 |
|
|
|
440,000 |
|
|
|
660,000 |
|
1,200,000
|
|
|
240,000 |
|
|
|
480,000 |
|
|
|
720,000 |
|
1,300,000
|
|
|
260,000 |
|
|
|
520,000 |
|
|
|
780,000 |
|
1,400,000
|
|
|
280,000 |
|
|
|
560,000 |
|
|
|
840,000 |
|
1,500,000
|
|
|
300,000 |
|
|
|
600,000 |
|
|
|
900,000 |
|
1,600,000
|
|
|
320,000 |
|
|
|
640,000 |
|
|
|
960,000 |
|
1,700,000
|
|
|
340,000 |
|
|
|
680,000 |
|
|
|
1,020,000 |
|
1,800,000
|
|
|
360,000 |
|
|
|
720,000 |
|
|
|
1,080,000 |
|
1,900,000
|
|
|
380,000 |
|
|
|
760,000 |
|
|
|
1,140,000 |
|
2,000,000
|
|
|
400,000 |
|
|
|
800,000 |
|
|
|
1,200,000 |
|
2,100,000
|
|
|
420,000 |
|
|
|
840,000 |
|
|
|
1,260,000 |
|
2,200,000
|
|
|
440,000 |
|
|
|
880,000 |
|
|
|
1,320,000 |
|
2,300,000
|
|
|
460,000 |
|
|
|
920,000 |
|
|
|
1,380,000 |
|
2,400,000
|
|
|
480,000 |
|
|
|
960,000 |
|
|
|
1,440,000 |
|
2,500,000
|
|
|
500,000 |
|
|
|
1,000,000 |
|
|
|
1,500,000 |
|
38
|
|
(1) |
Final average compensation includes salary and bonus. Age, years
of service and final average compensation as of
December 31, 2005, for the named officers are as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years of | |
|
Final Average | |
Name |
|
Age | |
|
Service | |
|
Compensation | |
|
|
| |
|
| |
|
| |
H.E. DeLoach, Jr.
|
|
|
61 |
|
|
|
20 |
|
|
$ |
2,357,862 |
|
C.L. Sullivan, Jr.
|
|
|
62 |
|
|
|
8 |
(3) |
|
|
944,487 |
|
R.E. Holley
|
|
|
63 |
|
|
|
41 |
|
|
|
848,962 |
|
C.J. Hupfer
|
|
|
59 |
|
|
|
31 |
|
|
|
760,512 |
|
J.C. Bowen
|
|
|
55 |
|
|
|
33 |
|
|
|
777,278 |
|
|
|
(2) |
Years of service beyond fifteen do not provide for any
additional benefit. |
|
(3) |
In addition to his actual years of service (5.33 years on
December 31, 2005), Mr. Sullivan will be credited with
an additional three years of service, provided he works to
age 65 or beyond. |
39
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors has reviewed and
discussed with management and our independent auditors
PricewaterhouseCoopers LLP (PWC) our audited
financial statements for the year ended December 31, 2005.
The Audit Committee has discussed with PWC the matters required
to be discussed by Statement on Auditing Standards No. 61,
as amended, (Communication with Audit Committees)
and Public Company Accounting Oversight Board Auditing Standard
No. 2, (An Audit of Internal Control Over Financial
Reporting Performed in Conjunction with an Audit of Financial
Statements). The Committee has received the written
disclosures and the letter from PWC required by Independence
Standards Board Standard No. 1 (Independence
Discussions with Audit Committees), as may be modified or
supplemented, and has discussed with PWC such firms
independence. The Committee has also reviewed the services
provided by PWC discussed below, and has considered whether
provision of such services is compatible with maintaining
auditor independence.
During the year 2005, management updated the documentation and
completed the testing and evaluation of the Companys
system of internal control over financial reporting in response
to the requirements set forth in Section 404 of the
Sarbanes-Oxley Act of 2002 and related regulations. The Audit
Committee was kept apprised of the progress of the evaluation
and provided oversight and advice to management during the
process. In connection with this oversight, the Committee
received periodic updates provided by management and PWC at each
regularly scheduled Committee meeting. At the conclusion of the
process, management provided the Committee with a report on the
effectiveness of the Companys internal control over
financial reporting. The Committee also reviewed
Managements Report on Internal Control over Financial
Reporting, as well as PWCs Report of Independent
Registered Public Accounting Firm, which were included in the
Companys Annual Report on
Form 10-K for the
year ended December 31, 2005, as filed with the SEC.
PWCs report related to its audit of (i) the
consolidated financial statements, (ii) managements
assessment of the effectiveness of internal control over
financial reporting, and (iii) the effectiveness of
internal control over financial reporting. The Committee
continues to oversee the Companys efforts related to its
internal control over financial reporting and managements
preparations for the evaluation in fiscal 2006.
Based on the review and discussions referenced above, the Audit
Committee recommended to the Board of Directors that the audited
financial statements be included in our Annual Report on
Form 10-K for the
year ended December 31, 2005, for filing with the SEC.
T.E. Whiddon (Chair), J.L. Coker, P.L. Davies, C.C. Fort,
E.H. Lawton, III, J.M. Micali, M.D. Oken
INDEPENDENT AUDITORS
PWC served as the Companys principal auditors for 2005.
The Audit Committee has tentatively selected PWC to serve as the
Companys principal auditors for 2006, pending agreement
over the terms of their engagement.
40
Representatives of PWC will be present and available to answer
appropriate questions at the Annual Meeting and may make a
statement if they wish.
Fees Paid to PWC
The following table sets forth a summary of fees billed by PWC
for professional services rendered in connection with the
consolidated financial statements and reports for the years
ended December 31, 2005 and 2004 and for other services
rendered during 2005 and 2004 on behalf of the Company and its
subsidiaries:
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Audit Fees
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$ |
2,632 |
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72.2 |
% |
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$ |
3,370 |
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76.5 |
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Audit-related Fees
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83 |
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2.3 |
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176 |
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4.0 |
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Tax Fees
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931 |
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25.5 |
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857 |
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19.5 |
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Total Fees
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$ |
3,646 |
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100.0 |
% |
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$ |
4,403 |
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100.0 |
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Audit Fees: Audit fees include fees billed for
professional services rendered for the audit of the
Companys consolidated financial statements and review of
the interim condensed consolidated financial statements included
in quarterly reports and services that are normally provided by
PWC in connection with statutory and regulatory filings or
engagements. (Note that approximately 50% of the audit fees
relate to audits outside of the United States with statutory
audits performed in 18 countries.) Audit Fees also include
services provided to the Company in connection with its
compliance with Section 404 of the Sarbanes-Oxley Act of
2002. Approximately $830 thousand and $978 thousand of the
fiscal 2005 and 2004 audit fees relate to Section 404 work.
Audit-related Fees: Audit-related fees include fees
billed for assurance and related services that are reasonably
related to the performance of the audit or review of the
Companys consolidated financial statements and are not
reported under Audit Fees. These services include
employee benefit plan audits, due-diligence and accounting
consultations in connection with acquisitions and divestitures,
attest services that are not required by statute or regulation
and consultations concerning financial accounting and reporting
standards.
Tax Fees: Tax fees include fees for tax
compliance/preparation and other tax services. Tax
compliance/preparation includes fees billed for professional
services related to federal, state and international tax
compliance, assistance with tax audits and appeals, expatriate
tax services and assistance related to the impact of mergers,
acquisitions and divestitures on tax return preparation. Other
tax services include fees billed for ongoing assistance with tax
consulting and planning.
Audit Committee Pre-approval of Audit and Permissible
Non-audit Services of Independent Auditors
The Audit Committee pre-approves all audit and permitted
non-audit services (including the fees and terms of such
services) provided by the independent auditors, subject to
limited exceptions for non-audit services described in
Section 10A of the Securities Exchange Act of 1934, which
are approved by the Audit Committee prior to completion of the
audit. The Committee Chairperson is empowered to pre-
41
approve PWC services between meetings, provided all such
services are brought to the Committee at its next regularly
scheduled meeting. General pre-approval of certain audit,
audit-related and tax services is granted by the Committee at
the first quarter Committee meeting. The Committee subsequently
reviews fees paid. Specific pre-approval is required for all
other services. These projects are reviewed quarterly, and the
status of all such services is reviewed with the Committee.
During 2005, all audit and permitted non-audit services were
pre-approved by the Committee.
Change of Auditors by Sonoco Savings Plan
On April 7, 2005, the Sonoco Savings Plan (the
Plan) dismissed PWC as the independent registered
public accounting firm for the Plan. This change pertains only
to the financial statements of the Plan and does not affect
PWCs engagement as the independent registered public
accounting firm of Sonoco Products Company for its 2005 fiscal
year. The reports of PWC on the financial statements of the Plan
as of and for the years ended December 31, 2003 and 2002
did not contain an adverse opinion or disclaimer of opinion, nor
were they qualified or modified as to uncertainty, audit scope
or accounting principle. During the years ended
December 31, 2003 and 2002 and through April 7, 2005,
there were no disagreements with PWC on any matter of accounting
principles or practices, financial statement disclosure or
auditing scope of procedure, which disagreements, if not
resolved to the satisfaction of PWC, would have caused PWC to
make reference to the subject matter of the disagreement in
connection with its reports on the Plans financial
statements for such years. During the years ended
December 31, 2003 and 2002 and through April 7, 2005,
there were no reportable events with respect to the
Plan as that term is defined in Item 304(a)(1)(v) of
Regulation S-K.
On April 20, 2005, the Plan appointed McGladrey &
Pullen, LLP (M&P) as the independent registered
public accounting firm for the Plan for the year ended
December 31, 2004. During the years ended December 31,
2003 and 2002 and through April 7, 2005, the Plan did not
consult with M&P with respect to the Plan regarding any of
the matters or events set forth in Item 304(a)(2)(i) or
(ii) of
Regulation S-K.
The change in the registered public accounting firm described
above was approved by the Sonoco Benefits Committee, which has
delegated authority to do so.
INCORPORATION BY REFERENCE
The Report of the Compensation Committee of the Board on
Executive Compensation and the Audit Committee Report and the
Stock Price Performance Graph are not deemed filed with the SEC
and shall not be deemed incorporated by reference into any prior
or future filings made by the Company under the Securities Act
of 1933, as amended, or the Securities Exchange Act of 1934,
except to the extent that the Company specifically incorporates
such information by reference.
References to our Web site address throughout this Proxy
Statement are for information purposes only and are not intended
to incorporate our Web site by reference into this Proxy
Statement.
42
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
If you want to present a shareholder proposal to be voted on at
our Annual Meeting in 2007, you must submit the proposal to the
Secretary of the Company in writing by February 2, 2007.
However, if you want us to include your shareholder proposal in
our proxy materials for our Annual Meeting in 2007, you must be
sure the Secretary of the Company receives your written proposal
by November 20, 2006. All shareholder proposals must comply
with the requirements of our bylaws. The proxy agents for the
Company will use their discretionary authority to vote on any
shareholder proposal that the Secretary of the Company does not
receive by February 3, 2007.
SHAREHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Any shareholder who wishes to send communications to any member
of the Board of Directors should mail them addressed to the
intended recipient by name or position in care of: Corporate
Secretary, Sonoco Products Company, 1 North Second Street,
Hartsville, SC 29550 USA. Upon receipt of any such
communications, the Corporate Secretary will determine the
identity of the intended recipient and whether the communication
is an appropriate shareholder communication. The Corporate
Secretary will send all appropriate shareholder communications
to the intended recipient. An appropriate shareholder
communication is a communication from a person claiming to
be a shareholder in the communication the subject of which
relates solely to the senders interest as a shareholder
and not to any other personal or business interest.
In the case of communications addressed to the Board of
Directors, the Corporate Secretary will send appropriate
shareholder communications to the Chair of the Corporate
Governance and Nominating Committee. In the case of
communications addressed to the independent or non-management
directors, the Corporate Secretary will send appropriate
shareholder communications to the Chair of the Corporate
Governance and Nominating Committee. In the case of
communications addressed to committees of the Board, the
Corporate Secretary will send appropriate shareholder
communications to the Chair of such committee.
The Corporate Secretary is required to maintain a record of all
communications received that were addressed to one or more
directors, including those determined not to be appropriate
shareholder communications. Such record will include the name of
the addressee, the disposition by the Corporate Secretary and,
in the case of communications determined not to be appropriate,
a brief description of the nature of the communication. The
Corporate Secretary is required to provide a copy of any
additions to the record to the Chair of the Corporate Governance
and Nominating Committee quarterly.
DELIVERY OF DOCUMENTS TO SHAREHOLDERS SHARING AN ADDRESS
We have begun delivering a single copy of the Annual Report to
multiple shareholders sharing one address unless we received
contrary instructions from one or more of the shareholders at
such address. Upon oral or written request to The Bank of New
York, Investor Services Department, P.O. Box 11258, New
York, NY 10286-1258 USA, (800)524-4458, The Bank of New York
will promptly deliver a
43
separate copy of the Annual Report to a shareholder at a shared
address to which a single copy was delivered. If you are
currently receiving a single copy of the Annual Report for
multiple shareholders at your address and would prefer to
receive separate copies in the future, please write or call The
Bank of New York at the address or telephone number above and
ask them to send you separate copies. If you are still currently
receiving multiple copies of the Annual Report for multiple
shareholders at your address and would prefer to receive a
single copy in the future, please write or call The Bank of New
York at the address or telephone number above, and ask them to
send a single copy to your address.
ELECTRONIC ACCESS TO ANNUAL MEETING MATERIALS
Sonocos Annual Report and Proxy Statement can be accessed
via the Internet at
www.sonoco.com/annualreportandproxystatement. As a shareholder
of record, you can elect to receive future Annual Reports and
Proxy Statements, as well as quarterly financial and other
shareholder information, electronically. Instructions are
provided on the voting site if you vote via the Internet.
Instructions also are provided if you electronically access your
shareholder account, and you are not already receiving your
Annual Meeting materials electronically. If you select
electronic receipt, you will be notified via email by The Bank
of New York, our transfer agent, as to when the information will
be available for your access. Your election to receive
information electronically will remain in effect until you
notify The Bank of New York in writing or by telephone that you
wish to resume paper delivery by mail of these materials. If you
own Sonoco shares through a broker or a bank, please contact
that institution regarding instructions about receiving Annual
Meeting materials and other financial information electronically.
OTHER MATTERS
As of the date of this statement, management knows of no
business that will be presented for consideration at the meeting
other than that stated in the notice of the meeting. The proxy
agents will vote in their best judgment on any other business
that properly comes before the meeting.
To assure your representation at the meeting, please vote by
telephone (if you live in the United States or Canada), via the
Internet or mark, sign, date and return your proxy card as
promptly as possible. Please sign exactly as your name appears
on the accompanying proxy.
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Charles J. Hupfer |
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Secretary |
March 20, 2006
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SONOCO PRODUCTS COMPANY
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YOUR VOTE IS IMPORTANT
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VOTE BY INTERNET / TELEPHONE |
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24 HOURS A DAY, 7 DAYS A WEEK |
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VOTE BY INTERNET |
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OR |
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VOTE BY TELEPHONE |
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https://www.proxyvotenow.com/son |
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1-866-776-5643
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Go to the website address listed above.
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Use any touch-tone telephone. |
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Have your proxy card ready.
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Have your proxy card ready. |
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Follow the simple instructions that appear
on your computer screen.
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Follow the simple recorded instructions. |
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If you vote over the internet or by telephone, please do not mail your card. |
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6 DETACH PROXY CARD HERE IF YOU ARE NOT VOTING BY TELEPHONE OR INTERNET 6 |
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x |
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Votes must be indicated |
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(x) in Black or Blue ink. |
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The Board of Directors recommends a vote FOR item 1. |
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To elect a board of directors. |
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Mark box at right if comments or an address
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FOR
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WITHHOLD
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EXCEPTIONS*
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change has been noted on the reverse side of this |
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ALL
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FOR ALL
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card. |
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Nominees
Three-Year Term:
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01 H.E. DeLoach, Jr., 02 E.H. Lawton, III
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To include any comments, please mark this box.
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03 J.M. Micali, 04 P.L. Davies, 05 J.E. Linville |
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Nominee Two-Year Term:
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06 M.D. Oken |
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(Instructions: To withhold authority to vote for any individual nominee, mark the |
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Exceptions box and write that nominees name on the following blank line.) |
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SCAN LINE |
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Please sign exactly as your name(s) appear(s) hereon.
When shares are held by joint tenants, both should sign.
When signing as an attorney, executor, administrator,
trustee or guardian, please give your full title as such.
If a corporation, please sign in full corporate name by
president or other authorized officer. If a partnership,
please sign in partnership name by an authorized person. |
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Date
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Share Owner sign here
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Co-Owner sign here |
This Proxy is Solicited on Behalf of the Board of Directors
SONOCO PRODUCTS COMPANY
1 NORTH SECOND STREET HARTSVILLE, SOUTH CAROLINA 29550 USA
The undersigned hereby appoints Charles J. Hupfer, Senior Vice President, Chief Financial
Officer and Secretary, or Ritchie L. Bond, Staff Vice President and Treasurer, as proxy agent, each
with the power to appoint his/her substitute, and hereby authorizes him/her to represent and to
vote, as designated below, all the shares of Common Stock of Sonoco Products Company held of record
by the undersigned on February 17, 2006 at the Annual Meeting of Shareholders to be held on
April 19, 2006, or at any adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES FOR DIRECTOR.
This card also constitutes voting instructions to the plan Trustee for shares of Sonoco Products
Company held in the Sonoco Products Company Savings Plan. You may direct the Trustee how to vote
your shares as indicated on this card. If you fail to give voting instructions to the Trustee, your
shares will be voted by the Trustee in the same proportion as the shares for which valid
instructions have been received.
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HAS YOUR ADDRESS CHANGED?
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DO YOU HAVE ANY COMMENTS? |
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SONOCO PRODUCTS COMPANY |
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P.O. BOX 11153
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NEW YORK, N.Y. 10203-0153
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(CONTINUED AND IS TO BE SIGNED ON REVERSE SIDE)