SCHEDULE 14A
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INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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(ROCK-TENN COMPANY LOGO)
December 19, 2001
To our Shareholders:
It is our pleasure to invite you to attend our annual meeting of
shareholders, which is to be held on January 25, 2002 at the Northeast Atlanta
Hilton at Peachtree Corners, 5993 Peachtree Industrial Boulevard, Norcross,
Georgia 30092. The meeting will start at 9:00 a.m., local time.
On the ballot at this year's annual meeting are our proposals to elect two
directors to our board of directors and to approve the material terms of our
annual executive bonus program. A representative of Ernst & Young LLP, our
independent auditors, will be at the annual meeting. We look forward to
answering your questions at the annual meeting.
We hope that you will attend the annual meeting. In the meantime, please
complete, sign and return your proxy in the enclosed envelope or follow the
other voting procedures described in the proxy statement as soon as possible to
ensure that your shares will be represented and voted at the annual meeting. If
you attend the annual meeting, you may vote your shares in person even though
you have previously voted your proxy.
Sincerely,
/s/ James A. Rubright
James A. Rubright
Chairman and
Chief Executive Officer
(ROCK-TENN COMPANY LOGO)
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on January 25, 2002
TIME: 9:00 a.m., local time on Friday, January 25, 2002
PLACE: Northeast Atlanta Hilton at Peachtree Corners
5993 Peachtree Industrial Boulevard
Norcross, Georgia 30092
ITEMS OF BUSINESS: (1) To elect two directors.
(2) To approve the material terms of our annual
executive bonus program.
(3) To transact any other business that properly
comes before the meeting or any adjournment of the
annual meeting.
WHO MAY VOTE: You can vote if you were a holder of Class A Common
Stock or Class B Common Stock of record on December
6, 2001.
ANNUAL REPORT: A copy of our Annual Report is enclosed.
DATE OF NOTICE: December 19, 2001.
DATE OF MAILING: This notice and the proxy statement are first being
mailed to shareholders on or about December 19,
2001.
ROCK-TENN COMPANY
504 THRASHER STREET
NORCROSS, GEORGIA 30071
------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 25, 2002
------------------------
ABOUT THE MEETING
WHO IS FURNISHING THIS PROXY STATEMENT?
This proxy statement is being furnished to our shareholders by our board of
directors in connection with the solicitation of proxies by the board of
directors. The proxies will be used at our annual meeting of shareholders to be
held on January 25, 2002.
WHAT AM I VOTING ON?
You will be voting on the following:
- To elect two directors,
- To approve the material terms of our annual executive bonus program, and
- To transact any other business that properly comes before the annual
meeting or any adjournment of the annual meeting.
You may not cumulate your votes for any matter being voted on at the annual
meeting and you are not entitled to appraisal or dissenters' rights.
WHO CAN VOTE?
You may vote if you owned Class A Common Stock or Class B Common Stock as
of the close of business on December 6, 2001. As of December 6, 2001, there were
23,040,671 shares of Class A Common Stock and 10,601,853 shares of Class B
Common Stock outstanding.
HOW DO I VOTE?
You have four voting options. You may vote:
- over the Internet at the address shown on your proxy card; if you have
access to the Internet, we encourage you to vote in this manner,
- by telephone through the number shown on your proxy card,
- by completing, signing and returning the enclosed proxy, or
- by attending the annual meeting and voting in person.
If you hold your shares in the name of a bank or broker, the availability
of telephone and Internet voting depends on their voting processes. Please
follow the directions on your proxy card carefully.
CAN I VOTE AT THE ANNUAL MEETING?
You may vote your shares at the annual meeting if you attend in person.
Even if you plan to be present at the annual meeting, we encourage you to vote
your shares by proxy. You may vote your proxy via the Internet, by telephone or
by mail.
WHAT IF MY SHARES ARE REGISTERED IN MORE THAN ONE PERSON'S NAME?
If you own shares that are registered in the name of more than one person,
each person should sign the enclosed proxy. If the proxy is signed by an
attorney, executor, administrator, trustee, guardian or by any other person in a
representative capacity, the full title of the person signing the proxy should
be given and a certificate should be furnished showing evidence of appointment.
WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY?
It means you have multiple accounts with brokers and/or our transfer agent.
Please vote all of these shares. We recommend that you contact your broker
and/or our transfer agent to consolidate as many accounts as possible under the
same name and address. Our transfer agent is SunTrust Bank, Atlanta, Mail Code
258, P.O. Box 4625 Atlanta, Georgia 30302, and may be reached at 1-800-568-3476.
WHAT IF I RETURN MY PROXY BUT DO NOT PROVIDE VOTING INSTRUCTIONS?
If you sign and return your proxy but do not include voting instructions,
your proxy will be voted:
- FOR the election of the two nominee directors named on page 4 of this
proxy statement, and
- FOR the approval of the material terms of our annual executive bonus
program.
CAN I CHANGE MY MIND AFTER I VOTE?
You may change your vote at any time before the polls close at the annual
meeting. You may do this by:
- voting again by telephone or over the Internet prior to 11:59 p.m., E.T.,
on January 24, 2002,
- giving written notice to the Secretary of our company,
- delivering a later-dated proxy, or
- voting in person at the annual meeting.
HOW MANY VOTES AM I ENTITLED TO?
If you own Class A Common Stock, you are entitled to one vote for each
share you own. If you own Class B Common Stock, you are entitled to ten votes
for each share you own. Holders of Class A Common Stock and Class B Common Stock
will vote together as a single voting group for all matters to be voted on at
the annual meeting. Sometimes in this proxy statement we refer to the Class A
Common Stock and the Class B Common Stock collectively as the Common Stock.
HOW MANY VOTES MUST BE PRESENT TO HOLD THE ANNUAL MEETING?
In order for us to conduct the annual meeting the holders of a majority of
the votes of the Common Stock outstanding as of December 6, 2001 must be present
at the annual meeting. This is referred to as a quorum. Your shares will be
counted as present at the annual meeting if you:
- vote via the Internet or by telephone,
- return a properly executed proxy (even if you do not provide voting
instructions), or
- attend the annual meeting and vote in person.
2
HOW MANY VOTES ARE NEEDED TO ELECT DIRECTORS?
The two nominees receiving the highest number of "yes" votes will be
elected directors. This number is called a plurality.
HOW MANY VOTES ARE NEEDED TO APPROVE THE MATERIAL TERMS OF THE ANNUAL EXECUTIVE
BONUS PROGRAM?
To approve the material terms of the annual executive bonus program, the
"yes" votes cast at the annual meeting must exceed the "no" votes cast at the
annual meeting.
HOW MANY VOTES ARE NEEDED FOR OTHER MATTERS?
To approve any other matter that properly comes before the annual meeting,
the "yes" votes cast in favor of the matter must exceed the "no" votes cast
against the matter.
WILL MY SHARES BE VOTED IF I DO NOT PROVIDE MY PROXY?
Your shares may be voted under certain circumstances if they are held in
the name of a brokerage firm. Brokerage firms have the authority under the New
York Stock Exchange rules to vote customers' unvoted shares on "routine"
matters, which includes the election of directors and the approval of the
material terms of our annual executive bonus program. Accordingly, if a
brokerage firm votes your shares on these matters in accordance with these
rules, your shares will count as present at the annual meeting for purposes of
establishing a quorum and will count as "yes" votes or "no" votes, as the case
may be, with respect to all "routine" matters voted on at the annual meeting.
ELECTION OF DIRECTORS
(ITEM 1)
BOARD OF DIRECTORS
Our board of directors currently has 12 members and two vacant seats. The
directors are divided into three classes with the directors in each class
serving a term of three years. Directors for each class are elected at the
annual meeting of shareholders held in the year in which the term for their
class expires. At the annual meeting on January 25, 2002, two nominees for
director are to be elected to serve on our board of directors. Both of the
nominees will be elected to serve until the annual meeting in 2005, or until
their successors are qualified and elected. Our directors must retire when they
reach the age of 72, although they may continue to serve until the next annual
or special meeting of shareholders at which directors are to be elected. One of
our directors, Mr. C. Randolph Sexton, will retire as a director at this year's
annual meeting. Following Mr. Sexton's retirement, our board of directors will
have 11 members. Following the annual meeting of shareholders our board of
directors intends to reduce the size of the board to 11 members. Our board is
authorized to increase the size of the board thereafter and our board is
authorized to fill the vacancies created. Any such directors elected by the
board in this manner will stand for re-election at the next annual meeting of
shareholders after their election even if that class of directors is not subject
to election in that year.
We do not believe that any of the nominees for director will be unwilling
or unable to serve as director. However, if at the time of the annual meeting
any of the nominees should be unwilling or unable to serve, proxies will be
voted as recommended by the board of directors either:
- to elect substitute nominees recommended by the board,
- to allow the vacancy created to remain open until filled by the board, or
- to reduce the number of directors for the ensuing year.
In no event, however, can a proxy be voted to elect more than two
directors.
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RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR J. HYATT BROWN AND G. STEPHEN
FELKER TO HOLD OFFICE UNTIL THE ANNUAL MEETING OF SHAREHOLDERS IN 2005, OR UNTIL
THEIR SUCCESSORS ARE QUALIFIED AND ELECTED. PROXIES RETURNED WITHOUT
INSTRUCTIONS WILL BE VOTED FOR THESE NOMINEES.
NOMINEES FOR ELECTION -- TERM EXPIRING 2005
J. Hyatt Brown, 64, has served as a director since 1971. Mr. Brown has
served as chairman, president and chief executive officer of Brown & Brown,
Inc., an insurance agency, for more than five years. Mr. Brown is also a
director of SunTrust Banks, Inc., a bank holding company, BellSouth Corporation,
a telephone communications company, FPL Group, Inc., an electric utility
company, International Speedway Corp., a motor sports company, and SCPIE
Holdings, Inc., a healthcare liability insurance provider. Mr. Brown is the
brother-in-law of Lou Brown Jewell, a director of our company.
G. Stephen Felker, 49, has served as chairman of the board of Avondale
Incorporated, a textile manufacturer, since 1992, president and chief executive
officer of Avondale since 1980, and in various other capacities at Avondale
since 1974. Mr. Felker serves as chairman of the Georgia State Advisory Board of
Wachovia Bank, N.A. and is a director of Avondale Mills, Inc., a textile
manufacturer.
INCUMBENT DIRECTORS -- TERM EXPIRING 2004
Stephen G. Anderson, 63, has served as a director since 1977. In June 2001,
Dr. Anderson retired from his private practice in Winston-Salem, North Carolina,
where he had been a physician for more than five years.
Robert B. Currey, 61, has served as a director since 1989. Mr. Currey
founded Currey & Company, Inc., a producer of consumer lighting products, and
has served as chairman, president and chief executive officer of that business
for more than five years. Mr. Currey is the brother of Bradley Currey, Jr., a
director of our company, and the uncle of Russell M. Currey, the executive vice
president and general manager of the corrugated packaging division of our
company.
L.L. Gellerstedt, III, 45, has served as a director since January 1998. Mr.
Gellerstedt has served as the president and chief operating officer of The
Integral Group, a real estate development company, since January 2001. Mr.
Gellerstedt served as chairman of Children's Healthcare of Atlanta from August
1999 until January 2001. From May 1998 until August 1999, Mr. Gellerstedt was
chairman and chief executive officer of American Business Products Inc., a
printing company. Mr. Gellerstedt was chairman and chief executive officer of
Beers Construction Company, a construction company, from June 1994 to May 1998.
Mr. Gellerstedt is a director of SunTrust Bank, Atlanta, a commercial bank, and
Alltel Corporation, a nationwide telecommunications services company.
John W. Spiegel, 60, has served as a director since 1989. Mr. Spiegel
served as executive vice president and chief financial officer of SunTrust
Banks, Inc., a bank holding company, for more than five years, until August
2000, when he became vice chairman and chief financial officer. Mr. Spiegel is
also a director of Suburban Lodges of America, a real estate investment trust.
INCUMBENT DIRECTORS -- TERM EXPIRING 2003
Bradley Currey, Jr., 71, has served as a director since 1967. Mr. Currey
joined our company in 1976 and served as chairman of the board of the company
from July 1993 until January 2000. Mr. Currey served as chief executive officer
from 1989 until October 1999 and president from 1978 until October 1995. Mr.
Currey is also a director of Genuine Parts Company, an auto parts wholesaler,
Brown & Brown, Inc., an insurance agency, and Enzymatic Deinking Technologies
LLC, a bioindustrial company. Mr. Currey is the father of Russell M. Currey, the
executive vice president and general manager of the corrugated packaging
division of the company, and the brother of Robert B. Currey, a director of our
company.
4
John D. Hopkins, 63, has served as a director since 1989. Mr. Hopkins has
served as executive vice president and general counsel of Jefferson-Pilot
Corporation, a holding company with insurance and broadcasting subsidiaries,
since April 1993.
Lou Brown Jewell, 70, has served as a director since January 1994 and has
been a homemaker for more than five years. Mrs. Jewell is a member of the board
of Visiting Nurse Health System and chairman of the Mary Louise Morris Brown
Charitable Trust. She was a trustee of Stetson University from June 1992 until
June 1999. Mrs. Jewell is the sister-in-law of J. Hyatt Brown, a director of our
company.
James W. Johnson, 60, has served as a director since 1984. Mr. Johnson has
served as president of McCranie Tractor Company, a John Deere tractor
dealership, for more than five years. Mr. Johnson is also a director of Flag
Financial Corporation, a holding company, and he has served on the board of
Taylor Regional Hospital for over 20 years.
James A. Rubright, 55, has served as chairman of the board since January
2000 and chief executive officer since October 1999. Prior to joining our
company, from February 1994 until October 1999, Mr. Rubright served as an
executive officer of Sonat, Inc., an energy company. From 1995 to 1996 Mr.
Rubright was senior vice president, general counsel and chief accounting officer
of Sonat, Inc. In 1996 Mr. Rubright became senior vice president of Sonat, Inc.
and head of Sonat's interstate natural gas pipeline group, and in 1998 he became
executive vice president of Sonat, Inc. with responsibility for Sonat's
interstate natural gas pipeline group and energy services businesses. Mr.
Rubright is also a director of AGL Resources Inc., an energy company, and
Avondale Incorporated, a textile manufacturing company.
INCUMBENT DIRECTOR -- TERM EXPIRING 2002
C. Randolph Sexton, 72, has served as a director since 1967. Mr. Sexton
owns and manages a citrus packing plant in Vero Beach, Florida, which he has
done for more than five years. Mr. Sexton will retire as a director at this
year's annual meeting.
MEETINGS OF THE BOARD OF DIRECTORS
The board of directors met four times during fiscal 2001. Each director
attended at least 75% of all meetings of the board and committees combined on
which they served in fiscal 2001.
COMMITTEES OF THE BOARD OF DIRECTORS
The board of directors has an executive committee, an audit committee and a
compensation and options committee.
Executive Committee. Messrs. J. Hyatt Brown, Bradley Currey, Jr., John D.
Hopkins, James A. Rubright and John W. Spiegel are members of the executive
committee. Mr. Brown is chairman of the committee. The executive committee is
authorized to exercise the authority of the full board in managing the business
and affairs of our company. However, the executive committee does not have the
power to:
- approve or propose to shareholders action that Georgia law requires to be
approved by shareholders,
- fill vacancies on the board or any of its committees,
- amend our charter,
- adopt, amend or repeal our bylaws, or
- approve a plan of merger not requiring shareholder approval.
This committee held three meetings in fiscal 2001.
5
Audit Committee. Dr. Stephen G. Anderson, Mr. G. Stephen Felker and Mr.
John W. Spiegel are members of the audit committee. Mr. Spiegel is chairman of
the committee. None of the members of the committee are employees of our
company. The audit committee is responsible for:
- recommending independent auditors,
- discussing with our independent auditors their independence from
management,
- reviewing with our independent auditors and internal audit staff the
scope and results of their respective audits,
- discussing with management and our independent auditors the interim and
annual financial statements that we file with the SEC, and
- reviewing and monitoring our accounting policies and financial and
accounting controls.
The audit committee may exercise additional authority prescribed from time
to time by the board of directors.
This committee held two meetings in fiscal 2001.
Compensation and Options Committee. Mrs. Lou Brown Jewell and Messrs. L.L.
Gellerstedt, III, John D. Hopkins and James W. Johnson are members of the
compensation and options committee. Mr. Johnson is chairman of the committee.
The compensation and options committee is responsible for:
- establishing salaries, bonuses and other compensation for our chief
executive officer, and
- administering our stock option plans, employee stock purchase plan,
key-employee incentive bonus plan, supplemental executive retirement plan
and annual executive bonus program.
This committee held two meetings in fiscal 2001.
COMPENSATION OF DIRECTORS
Directors who are not employees of our company receive $14,000 each year
plus $1,500 for each board and committee meeting attended. Each director who
chairs a committee receives $5,000 each year if he or she is not an employee of
our company. In addition, directors receive each year a stock option grant of
2,000 shares of our Class A Common Stock and are reimbursed for their
out-of-pocket expenses in attending meetings.
On January 26, 2001 each of our non-employee directors received the annual
stock option grant pursuant to our 2000 Incentive Stock Plan to purchase 2,000
shares of our Class A Common Stock at the Fair Market Value (as defined in the
Plan) of such shares on January 26, 2001. The options will vest in one-third
increments on January 26, 2002, 2003 and 2004, respectively, and will expire on
January 26, 2011.
6
COMMON STOCK OWNERSHIP BY MANAGEMENT
AND PRINCIPAL SHAREHOLDERS
The table below shows, as of December 6, 2001, how many shares of each
class of our Common Stock were beneficially owned by our directors, named
executive officers, owners of 5% or more of our Common Stock and our directors
and executive officers as a group. Under the rules of the SEC, a person
"beneficially owns" securities if that person has or shares the power to vote or
dispose of the securities. The person also "beneficially owns" securities which
that person has the right to purchase within 60 days. Under these rules, more
than one person may be deemed to beneficially own the same securities, and a
person may be deemed to beneficially own securities in which he or she has no
financial interest. Except as shown in the table, the shareholders named below
have the sole power to vote or dispose of the shares shown as beneficially owned
by them.
BENEFICIAL OWNERSHIP OF BENEFICIAL OWNERSHIP OF
CLASS A COMMON STOCK(1) CLASS B COMMON STOCK
--------------------------- ------------------------ PERCENTAGE
NUMBER PERCENT NUMBER PERCENT OF COMBINED
OF SHARES(2) OF CLASS(3) OF SHARES OF CLASS(4) VOTING POWER
------------ ----------- --------- ----------- ------------
James A. Rubright.............. 328,334(5) 1.41 70,000 * *
David E. Dreibelbis............ 397,083(6) 1.70 192,046(7) 1.81 2.02
Nicholas G. George............. 195,711(8) * 16,066 * *
Steven C. Voorhees............. 94,467(9) * 45,800 * *
James K. Hansen................ 206,570(10) * 68,061(11) * *
Russell M. Currey(12).......... 1,642,550(13) 6.66 1,532,316(14) 14.44 13.26
Steven G. Anderson............. 725,459(15) 3.11 307,150(16) 2.90 2.94
J. Hyatt Brown(17)............. 4,739,884(18) 18.32 2,828,736(19) 26.68 25.59
Bradley Currey, Jr.(20)........ 2,817,665(21) 11.08 2,388,621(22) 22.53 20.69
Robert B. Currey............... 145,210(23) * 70,461(24) * *
G. Stephen Felker.............. 5,667(25) * 0 * *
L.L. Gellerstedt, III.......... 2,667(26) * 0 * *
John D. Hopkins................ 898,066(27) 3.82 440,388(28) 4.15 4.11
Lou Brown Jewell(29)........... 2,136,723(30) 8.74 1,398,296(31) 13.19 12.49
James W. Johnson............... 153,197(32) * 71,965(33) * *
C. Randolph Sexton............. 511,835(34) 2.18 405,888 3.83 3.54
John W. Spiegel................ 48,986(35) * 47,094 * *
All directors and executive
officers as a group (25
persons)..................... 12,057,286(36) 37.74 7,917,425(37) 74.45 63.91
---------------
* Less than 1%.
(1) Each share of Class B Common Stock is convertible into one share of Class A
Common Stock at any time subject to compliance with certain first offer
rights. As a result, shares of Class A Common Stock shown in the table as
beneficially owned by any individual include shares of Class A Common Stock
issuable upon conversion of Class B Common Stock beneficially owned by such
individual.
(2) These shares include restricted stock grants that were made to our officers
on May 16, 2001 and which are fully votable by the grantees as of that
date. Unless vested (pursuant to net income performance criteria) or
forfeited (e.g. by termination of employment) at an earlier date, the
shares will vest in one-third increments on, and may not be transferred
before, May 16, 2004, 2005 and 2006, respectively.
(3) Based on an aggregate of 23,040,671 shares of Class A Common Stock issued
and outstanding as of December 6, 2001 plus, for each individual,
7
- the number of shares of Class A Common Stock issuable upon conversion of
shares of Class B Common Stock beneficially owned by such individual,
- the number of shares of Class A Common Stock issuable upon exercise of
outstanding stock options which are or will become exercisable prior to
February 4, 2002, and
- the number of shares of Class A Common Stock issuable upon conversion of
shares of Class B Common Stock issuable upon exercise of outstanding
stock options which are or will become exercisable prior to February 4,
2002.
(4) Based on an aggregate of 10,601,853 shares of Class B Common Stock issued
and outstanding as of December 6, 2001 plus, for each individual, the
number of shares of Class B Common Stock issuable upon exercise of
outstanding stock options which are or will become exercisable prior to
February 4, 2002.
(5) These amounts reflect:
- 233,334 shares issuable upon exercise of stock options beneficially owned
by Mr. Rubright,
- 70,000 shares issuable upon conversion of shares of Class B Common Stock
beneficially owned by Mr. Rubright, and
- 25,000 shares of restricted stock granted to Mr. Rubright.
(6) These amounts include:
- 155,054 shares issuable upon exercise of stock options beneficially owned
by Mr. Dreibelbis,
- 177,526 shares issuable upon conversion of shares of Class B Common Stock
beneficially owned by Mr. Dreibelbis,
- 14,520 shares issuable upon conversion of shares of Class B Common Stock
issuable upon exercise of stock options beneficially owned by Mr.
Dreibelbis, and
- 15,000 shares of restricted stock granted to Mr. Dreibelbis.
(7) These amounts include 14,520 shares issuable upon exercise of stock options
beneficially owned by Mr. Dreibelbis.
(8) These shares include:
- 143,034 shares issuable upon exercise of stock options beneficially owned
by Mr. George,
- 16,066 shares issuable upon conversion of Class B Common Stock
beneficially owned by Mr. George, and
- 15,000 shares of restricted stock granted to Mr. George.
(9) These amounts reflect:
- 16,667 shares issuable upon exercise of stock options beneficially owned
by Mr. Voorhees,
- 45,800 shares issuable upon conversion of shares of Class B Common Stock
beneficially owned by Mr. Voorhees,
- 15,000 shares of restricted stock granted to Mr. Voorhees, and
- 2,000 shares beneficially owned by Mr. Voorhees as custodian for two
trusts for the benefit of Paul Daniel Voorhees and Dorothy Boston
Voorhees, respectively.
(10) These amounts include:
- 82,087 shares issuable upon exercise of stock options beneficially owned
by Mr. Hansen,
- 68,061 shares issuable upon conversion of Class B Common Stock
beneficially owned by Mr. Hansen,
8
- 11,220 shares issuable upon conversion of Class B Common Stock upon
exercise of stock options beneficially owned by Mr. Hansen, and
- 8,000 shares of restricted stock granted to Mr. Hansen.
(11) These shares include 11,200 shares issuable upon exercise of stock options
beneficially owned by Mr. Hansen.
(12) Mr. Currey's address is c/o Rock-Tenn Company, 504 Thrasher Street,
Norcross, Georgia 30071.
(13) These amounts reflect:
- 100,734 shares issuable upon exercise of stock options beneficially owned
by Mr. Currey,
- 1,532,316 shares issuable upon conversion of shares of Class B Common
Stock beneficially owned by Mr. Currey,
- 6,600 shares issuable upon conversion of shares of Class B Common Stock
issuable upon exercise of stock options beneficially owned by Mr. Currey,
and
- 8,000 shares of restricted stock granted to Mr. Currey.
(14) These shares include:
- 658,758 shares deemed beneficially owned by Mr. Currey as trustee of two
trusts for the benefit of the spouse of Mr. Bradley Currey, Jr.,
- 2,468 shares held by Mr. Currey's spouse,
- 6,600 shares issuable upon exercise of stock options beneficially owned
by Mr. Currey, and
- 743,992 shares beneficially owned by Currey Family Investments, L.P.,
with respect to which Mr. Currey serves as general partner (which shares
are also shown as beneficially owned by Mr. Bradley Currey, Jr.).
(15) These shares include:
- 3,500 shares deemed beneficially owned by Dr. Anderson as trustee of the
Corryne H. Taylor Trust,
- 667 shares issuable upon exercise of stock options beneficially owned by
Dr. Anderson,
- 262,944 shares held by Dr. Anderson's spouse, and
- 143,998 and 163,152 shares issuable upon conversion of shares of Class B
Common Stock beneficially owned by Dr. Anderson and Dr. Anderson's
spouse, respectively.
(16) These shares include 163,152 shares held by Dr. Anderson's spouse.
(17) Mr. Brown's address is P.O. Drawer 2412, Daytona Beach, Florida 32115. Mr.
Brown serves as chairman and chief executive officer of Brown & Brown,
Inc., which together with its predecessor has provided certain insurance
services to our company. See "Certain Transactions."
(18) These amounts reflect:
- 716,100 shares beneficially owned by Ormond Riverside Ltd. Partnership,
for which Mr. Brown serves as general partner,
- 388,977 shares deemed beneficially owned by Mr. Brown as co-trustee with
Messrs. Bradley Currey, Jr. and John D. Hopkins of a trust for the
benefit of Mrs. Lou Brown Jewell (which shares are also shown as being
beneficially owned by Messrs. Bradley Currey, Jr. and John D. Hopkins),
- 197,485 shares held indirectly by Brown & Brown, Inc., of which Mr. Brown
serves as chairman and chief executive officer,
9
- 2,828,736 shares issuable upon conversion of shares of Class B Common
Stock beneficially owned by Mr. Brown,
- 607,919 shares deemed beneficially owned by Mr. Brown as trustee of the
Custodial TR U/W A. Worley Brown, QTIPB, and
- 667 shares issuable upon exercise of stock options beneficially owned by
Mr. Brown.
(19) These amounts reflect:
- 1,046,100 shares deemed beneficially owned by Mr. Brown as general
partner of Ormond Riverside Ltd. Partnership,
- 380,424 shares deemed beneficially owned by Mr. Brown as co-trustee with
Messrs. Bradley Currey, Jr. and John D. Hopkins of a trust for the
benefit of Mrs. Lou Brown Jewell (which shares are also shown as being
beneficially owned by Messrs. Bradley Currey, Jr. and John D. Hopkins),
- 362,485 shares held indirectly by Brown & Brown, Inc., of which Mr. Brown
serves as chairman and chief executive officer, and
- 1,039,727 shares deemed beneficially owned by Mr. Brown as trustee of the
Custodial TR U/W A. Worley Brown, QTIPB.
(20) Mr. Currey's address is 50 Hurt Plaza, Suite 1295, Atlanta, Georgia 30303.
(21) These shares reflect:
- 2,388,621 shares issuable upon conversion of shares of Class B Common
Stock beneficially owned by Mr. Currey,
- 388,977 shares deemed beneficially owned by Mr. Currey as co-trustee with
Messrs. J. Hyatt Brown and John D. Hopkins of a trust for the benefit of
Mrs. Lou Brown Jewell (which shares are also shown as being beneficially
owned by Messrs. J. Hyatt Brown and John D. Hopkins), and
- 667 shares issuable upon exercise of stock options beneficially owned by
Mr. Currey.
(22) These shares include:
- 242,712 shares beneficially owned by Mr. Currey's spouse,
- 743,992 shares beneficially owned by Currey Family Investments, L.P., for
which Mr. Currey serves as general partner (which shares are also shown
as beneficially owned by Mr. Russell M. Currey), and
- 380,424 shares deemed beneficially owned by Mr. Currey as co-trustee with
Messrs. J. Hyatt Brown and John D. Hopkins of a trust for the benefit of
Mrs. Lou Brown Jewell (which shares are also shown as being beneficially
owned by Messrs. J. Hyatt Brown and John D. Hopkins).
(23) These shares reflect:
- 74,082 shares held in joint tenancy with Mr. Currey's spouse,
- 69,841 shares issuable upon conversion of shares of Class B Common Stock
beneficially owned by Mr. Currey, and
- 667 shares issuable upon exercise of stock options beneficially owned by
Mr. Currey.
(24) These shares include 69,841 shares held in joint tenancy with Mr. Currey's
spouse.
(25) These shares include 667 shares issuable upon exercise of stock options
beneficially owned by Mr. Felker.
(26) These shares include 667 shares issuable upon exercise of stock options
beneficially owned by Mr. Gellerstedt.
10
(27) These shares reflect:
- 388,977 shares deemed beneficially owned by Mr. Hopkins as co-trustee
with Messrs. Bradley Currey, Jr. and J. Hyatt Brown of a trust for the
benefit of Mrs. Lou Brown Jewell (which shares are also shown as being
beneficially owned by Messrs. Bradley Currey, Jr. and J. Hyatt Brown),
- 440,388 shares issuable upon conversion of shares of Class B Common Stock
beneficially owned by Mr. Hopkins, and
- 667 shares issuable upon exercise of stock options beneficially owned by
Mr. Hopkins.
(28) These shares reflect 380,424 shares deemed beneficially owned by Mr.
Hopkins as co-trustee with Messrs. Bradley Currey, Jr. and J. Hyatt Brown
of a trust for the benefit of Mrs. Lou Brown Jewell (which shares are also
shown as being beneficially owned by Messrs. Bradley Currey, Jr. and J.
Hyatt Brown).
(29) Mrs. Jewell's address is 2800 Cravey Trail, Atlanta, Georgia 30345.
(30) These amounts reflect:
- 607,919 shares beneficially owned by Custodial TR U/W A. Worley Brown,
QTIPB, of which Mrs. Jewell is the beneficiary,
- 128,049 shares deemed beneficially owned by Mrs. Jewell as co-trustee of
two separate trusts for the benefit of Nancy Louise Brown Markham and
Elizabeth Irene Brown Dixon, respectively,
- 1,778,720 shares issuable upon conversion of shares of Class B Common
Stock beneficially owned by Mrs. Jewell,
- 500 shares held by Mrs. Jewell's spouse, and
- 667 shares issuable upon exercise of stock options beneficially owned by
Mrs. Jewell.
(31) These shares include:
- 1,039,727 shares beneficially owned by the Custodial TR U/W A. Worley
Brown, QTIPB, of which Mrs. Jewell is the beneficiary, and
- 192,059 shares deemed beneficially owned by Mrs. Jewell as co-trustee of
two separate trusts for the benefit of Nancy Louise Brown Markham and
Elizabeth Irene Brown Dixon, respectively.
(32) These shares include:
- 16,209 shares held by Mr. Johnson's spouse,
- 8,600 shares deemed beneficially owned by Mr. Johnson as trustee of a
trust for the benefit of the McCranie Companies Profit Sharing Plan,
- 667 shares issuable upon exercise of stock options beneficially owned by
Mr. Johnson, and
- 71,965 shares issuable upon conversion of shares of Class B Common Stock
beneficially owned by Mr. Johnson.
(33) These shares include 16,209 shares held by Mr. Johnson's spouse.
(34) These shares include:
- 405,888 shares issuable upon conversion of shares of Class B Common Stock
beneficially owned by Mr. Sexton,
- 7,480 shares held by Mr. Sexton's spouse, and
- 667 shares issuable upon exercise of options beneficially owned by Mr.
Sexton.
11
(35) These shares include:
- 47,094 shares issuable upon conversion of shares of Class B Common Stock
beneficially owned by Mr. Spiegel, and
- 667 shares issuable upon exercise of stock options beneficially owned by
Mr. Spiegel.
(36) These amounts reflect:
- 3,152,261 shares beneficially owned by such directors and executive
officers,
- 987,600 shares issuable upon exercise of stock options beneficially owned
by such directors and executive officers,
- 7,885,085 shares issuable upon conversion of shares of Class B Common
Stock beneficially owned by such directors and executive officers, and
- 32,340 shares issuable upon conversion of shares of Class B Common Stock
issuable upon exercise of stock options beneficially owned by such
directors and executive officers.
(37) These amounts reflect:
- 7,885,085 shares beneficially owned by such directors and executive
officers, and
- 32,340 shares issuable upon exercise of stock options beneficially owned
by such directors and executive officers.
12
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The table below shows the compensation earned during fiscal 2001, 2000 and
1999 by our chief executive officer and our named executive officers, which
include our four other most highly compensated executive officers, who were
serving at the end of the fiscal 2001. These individuals are called the named
executive officers.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION -------------------------
------------------------------------------- RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
FISCAL COMPENSATION AWARDS OPTIONS/SARS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (1) (2) (#) (3)
--------------------------- ------ -------- -------- ------------ ---------- ------------ ------------
James A. Rubright........... 2001 $630,000 $227,623 -- $281,250 100,000 $4,965
Chairman and Chief 2000 565,798 316,975(4) -- -- 100,000 4,091
Executive Officer 1999 17,355 0 -- -- 300,000(5) --
David D. Dreibelbis......... 2001 314,000 70,493 -- 168,750 40,000 3,109
Executive Vice President 2000 305,000 40,401 -- -- 40,000 3,039
and General Manager of 1999 290,000 39,150 -- -- 29,000 3,039
the Paperboard Group
Nicholas G. George.......... 2001 265,000 81,937 -- 168,750 40,000 4,820
Executive Vice President 2000 247,000 63,534 -- -- 40,000 4,751
and General Manager of 1999 235,000 31,725 -- -- 23,000 4,751
the Folding Carton
Division
Steven C. Voorhees.......... 2001 265,000 78,458 -- 168,750 40,000 2,983
Executive Vice President 2000 12,060 34,275(6) -- -- 50,000(7) --
and Chief Financial
Officer
James K. Hansen............. 2001 225,000 70,768 -- 90,000 20,000 5,959
Executive Vice President 2000 219,375 25,556 -- -- 20,000 5,890
and General Manger of the 1999 211,125 28,215 -- -- 15,000 5,890
Coated Paperboard Division
---------------
(1) Unless reported in this column, the aggregate amount of perquisites and
other personal benefits did not exceed the lesser of $50,000 or 10% of the
total annual salary and bonus reported for a named executive officer.
(2) Dollar amounts shown equal the number of shares of restricted stock
multiplied by the closing market price of our unrestricted stock on the date
of grant (i.e. $11.25 on May 16, 2001).
The number and value of the aggregate restricted stock holdings at the end
of fiscal 2001 based on the closing market price of our unrestricted stock
on September 28, 2001 of $11.00 were as follows: Mr. Rubright, 25,000 shares
($275,000), Messrs. Dreibelbis, George and Voorhees, 15,000 shares each
($165,000 each) and Mr. Hansen, 8,000 shares ($88,000).
Unless vested (pursuant to net income performance criteria) or forfeited
(e.g., by termination of employment) at an earlier date, the shares will
vest in one-third increments on, and may not be transferred before, May 16,
2004, 2005 and 2006, respectively.
Dividends are paid on all shares of restricted stock at the same rate as on
unrestricted shares.
(3) Unless otherwise noted, these amounts reflect life insurance premiums paid
by us.
(4) This amount includes a one-time $250,000 cash bonus paid to Mr. Rubright in
November 1999.
(5) Mr. Rubright joined our company in September 1999 and was issued options to
purchase 300,000 shares of Class A Common Stock.
13
(6) Mr. Voorhees was paid a one-time $34,275 cash bonus on the day he joined our
company.
(7) Mr. Voorhees joined our company in September 2000 and was issued options to
purchase 50,000 shares of Class A Common Stock.
OPTION GRANTS TABLE
The table below shows information relating to the options granted during
fiscal 2001 to each named executive officer.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR(1)
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS OPTION TERM FOR OPTION TERM
---------------------------- ------------------------ ---------------------
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE OR
UNDERLYING GRANTED TO BASE PRICE
OPTIONS/SARS EMPLOYEES IN PER SHARE EXPIRATION
NAME GRANTED(#)(1) FISCAL YEAR ($/SH)(2) DATE 5%($) 10%($)
---- ------------- ------------ ----------- ---------- -------- ----------
James A. Rubright......... 100,000 11.5% $11.25 5/16/2011 $707,506 $1,792,960
David E. Dreibelbis....... 40,000 4.6 11.25 5/16/2011 283,003 717,184
Nicholas G. George........ 40,000 4.6 11.25 5/16/2011 283,003 717,184
Steven C. Voorhees........ 40,000 4.6 11.25 5/16/2011 283,003 717,184
James K. Hansen........... 20,000 2.3 11.25 5/16/2011 141,501 358,592
---------------
(1) The options shown in the table are options to purchase Class A Common Stock.
The options will vest in one-third increments on May 16, 2002, 2003 and
2004, respectively. The option price can be paid in cash or shares of Class
A Common Stock that have been held for at least six months, and have a fair
market value at least equal to the option exercise price.
(2) The option exercise price for the options shown in the table is equal to the
closing price per share of Class A Common Stock on May 16, 2001 as reported
on the New York Stock Exchange.
AGGREGATED OPTIONS TABLE
The table below shows information with respect to options exercised during
fiscal 2001 and options held at the end of fiscal 2001 by each named executive
officer. Unless otherwise indicated, all options are options to purchase Class A
Common Stock.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES TABLE
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES FISCAL YEAR-END(#) FISCAL YEAR-END($)(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
James A. Rubright............... -- -- 233,344 266,666 $ 68,751 $137,499
David E. Dreibelbis............. -- -- 169,574(2) 81,166 152,062 54,999
Nicholas G. George.............. -- -- 143,034 78,166 27,501 54,999
Steven C. Voorhees.............. -- -- 16,667 73,333 12,500 25,000
James K. Hansen................. -- -- 93,307(3) 40,833 114,933 27,499
14
---------------
(1) These amounts reflect the difference between:
- the fair market value of the shares of Common Stock underlying the
options held by each officer based on the last reported closing price per
share of Class A Common Stock of $11.00 on September 28, 2001 as reported
on the New York Stock Exchange, and
- the aggregate exercise price of such options.
(2) These amounts reflect options to purchase 155,054 shares of Class A Common
Stock and 14,520 shares of Class B Common Stock.
(3) These amounts reflect options to purchase 82,087 shares of Class A Common
Stock and 11,220 shares of Class B Common Stock.
PENSION PLAN TABLE
The table below shows the annual retirement benefits payable under our
pension plan, which we refer to as the pension plan, and the supplemental
executive retirement plan, which we refer to as the SERP, to the "grandfathered
participants" upon retirement if their "old benefit formula" is greater than
their "new benefit formula." These terms, as well as the pension plan and the
SERP, are discussed below the table.
YEARS OF SERVICE
-------------------------------------------------------------
REMUNERATION 10 15 20 25 30 35
------------ ------- ------- -------- -------- -------- --------
$125,000............................. $21,600 $32,300 $ 43,100 $ 53,900 $ 53,900 $ 53,900
$150,000............................. $26,600 $39,800 $ 53,100 $ 66,400 $ 66,400 $ 66,400
$175,000............................. $31,600 $47,300 $ 63,100 $ 78,900 $ 78,900 $ 78,900
$200,000............................. $36,600 $54,800 $ 73,100 $ 91,400 $ 91,400 $ 91,400
$225,000............................. $41,600 $62,300 $ 83,100 $103,900 $103,900 $103,900
$250,000............................. $46,600 $69,800 $ 93,100 $116,400 $116,400 $116,400
$275,000............................. $51,600 $77,300 $103,100 $128,900 $128,900 $128,900
$300,000............................. $51,600 $77,300 $103,100 $128,900 $128,900 $128,900
There were approximately 300 grandfathered participants on January 1, 1998
one of whom was Mr. Hansen. Messrs. Rubright, Dreibelbis, George and Voorhees
are not grandfathered participants.
Only covered employees are eligible to participate in our pension plan. A
"covered employee" is one of our or our participating subsidiaries' employees
who is not:
- a leased employee,
- eligible to participate in any other defined benefit plan maintained in
whole or in part by contributions from an "Affiliate" (as defined), or
- a member of a collective bargaining unit that has not reached an
agreement with us to participate in the pension plan.
A covered employee is eligible to begin to participate in our pension plan
on the first entry date that follows completion of 12 months of service in one,
or more than one, period of employment (as defined in the pension plan) and upon
reaching age 21.
Our pension plan was amended effective as of January 1, 1998 to add a new
benefit formula. For each calendar year after 1997, the new benefit formula
equals 1.2% of a participant's total "compensation" (as defined in the pension
plan) plus .5% of a participant's compensation in excess of 50% of the social
security wage base for each such calendar year (as such base is announced by the
Internal Revenue Service). This new formula produces a benefit payable at a
participant's normal retirement age as an annuity payable only for the life of
the participant. The amendment to our pension plan also froze the benefit
accrued under the old four part benefit formula, which we refer to as the "old
benefit formula", for all participants (except the grandfathered participants)
as of December 31, 1997 so that all participants (except the grandfathered
15
participants) will receive a benefit at retirement equal to the sum of their
benefit accrued as of December 31, 1997 under the old benefit formula and their
benefit accrued after that date under the new benefit formula.
A "grandfathered participant" is a pension plan participant who reached at
least age 55 and completed at least 10 years of service as of January 1, 1998. A
grandfathered participant will receive a benefit at retirement based either
completely on the old benefit formula or on the same combination of the old
benefit formula and the new benefit formula as all other participants, whichever
results in the greater benefit for the grandfathered participant.
Under our pension plan, "compensation" for hourly paid participants is
defined as total compensation paid which is reportable as taxable income on Form
W-2, plus any elective deferrals under any 401(k) plan or Code sec. 125
Cafeteria Plan. Compensation for salaried employees is defined as base pay.
Therefore, it does not include any bonuses, overtime, commissions, reimbursed
expenses of any kind, severance pay, income imputed from insurance coverage or
the like, or payments under the pension plan or any other employee benefit plan
or any income from a stock option. No employee's compensation for purposes of
the pension plan includes amounts in excess of the limit, which we refer to as
the code compensation limit, imposed by the Internal Revenue Code of 1986, as
amended, which we refer to as the Code, and as adjusted for inflation by the
Secretary of the Treasury. For calendar year 1999, the code compensation limit
was $160,000, and for calendar years 2000 and 2001, the compensation code limit
was $170,000.
An employee's right to benefits under our pension plan vests after five
years of service or at normal retirement age, whichever is earlier. The plan is
a defined benefit plan qualified under the Code and, as such, is subject to
certain limits on the amount of benefits which may be paid under it.
For fiscal 2001, $275,000 $275,000, $265,000 and $225,000 of the
compensation paid to Messrs. Rubright, Dreibelbis, George and Hansen,
respectively, was compensation for purposes of the pension plan and the SERP. As
of September 30, 2001, Messrs. Rubright, Dreibelbis, George and Hansen, had
approximately 2, 27, 21 and 22 years of benefit service as defined under our
pension plan, respectively. For fiscal 2001, Mr. Voorhees was not eligible to
participate in our pension plan or the SERP. The table set forth above displays
the approximate annual retirement benefits payable under our plan (using the old
benefit formula in effect prior to January 1, 1998) as a life annuity, based on
various levels of average compensation and years of service at a grandfathered
participant's retirement date. In addition, the amounts shown in the table have
been calculated without regard to current limitations on compensation and
benefits.
The SERP is designed to supplement a participant's benefit under our
pension plan and is paid in the same form and at the same time as a
participant's benefit is paid under our pension plan. The supplement is designed
to make up for the loss in benefits the participant will receive under our
pension plan due to the reduction in the code compensation limit from $235,840
to $150,000 in 1994, indexed thereafter. The compensation and options committee
determines who will participate in the SERP. Currently, there are 22
participants in the SERP.
The estimated annual benefit payable at the normal retirement age under the
new benefit formula and the SERP for Messrs. Rubright, Dreibelbis and George is
$56,000, $181,000 and $134,000, respectively. Mr. Hansen's estimated benefit
payable under the old benefit formula currently is greater than his estimated
benefit payable under the new benefit formula.
CERTAIN TRANSACTIONS
John W. Spiegel, a director of our company, is an officer of SunTrust
Banks, Inc. J. Hyatt Brown, a director, is also a director of SunTrust Banks,
Inc. During fiscal 2001, we maintained a syndicated credit facility pursuant to
a loan agreement under which SunTrust Bank, Atlanta, a wholly owned subsidiary
of SunTrust Banks, Inc., serves as agent. Under the credit agreement, we have
aggregate borrowing availability as of September 30, 2001 of $300,000,000. As of
September 30, 2001, we had $8,000,000 of borrowings outstanding under the credit
agreement. In addition, during fiscal 2001 we paid approximately $18,852,000 and
$1,402,000 in interest and facility fees, respectively, under the credit
agreement.
16
We also maintained a synthetic lease facility pursuant to a credit
agreement under which SunTrust Bank, Atlanta, a wholly owned subsidiary of
SunTrust Banks, Inc. serves as agent. Under this credit agreement, we have an
aggregate borrowing availability of $24,800,000. As of September 30, 2001, we
had outstanding borrowings of $24,500,000 under such loan agreement and during
fiscal year 2001 we paid approximately $1,565,000 and $84,000 in interest and
facility fees, respectively. In addition, we are also a party with SunTrust
Banks, Inc. to a master letter of credit agreement relating to industrial
revenue bonds issued in connection with certain of our manufacturing facilities.
SunTrust Banks, Inc. has performed other banking services for us over the past
fiscal year. Our aggregate payments to SunTrust Banks for these services did not
exceed 5% of our net sales or SunTrust Banks' gross revenues in fiscal 2001.
J. Hyatt Brown, a director of our company, is president and a shareholder
of Brown & Brown, Inc. During fiscal 2001, Brown & Brown, Inc. performed
insurance services for us for which we paid Brown & Brown, Inc. $2,923,360.
Robert B. Currey, a director of our company, is chief executive officer of
Currey & Company, Inc., which purchased $611,503 of corrugated boxes from us in
fiscal 2001.
C. Randolph Sexton, a director, owns and operates Driftwood Fruit Company.
During fiscal 2001, we purchased $73,053 of fruit from Driftwood Fruit Company.
REPORT OF THE AUDIT COMMITTEE
The audit committee, which operates under a written charter adopted by our
board of directors, oversees our company's financial reporting process on behalf
of the board of directors. Our management has the primary responsibility for the
financial statements and the reporting process including the systems of internal
controls. In fulfilling its oversight responsibilities, the audit committee
discussed the audited financial statements to be included in the annual report
on Form 10-K for the year ended September 30, 2001, with management including a
discussion of the quality, not just the acceptability, of the accounting
principles, the reasonableness of significant judgments and the clarity of
disclosures in the financial statements.
The committee discussed with the independent auditors, who are responsible
for expressing an opinion on the conformity of those audited financial
statements with generally accepted accounting principles, their judgments as to
the quality, not just the acceptability, of our company's accounting principles
and such other matters as are required to be discussed with the audit committee
under generally accepted auditing standards. In addition, the audit committee
has discussed with the independent auditors the auditors' independence from
management and our company including the matters in the written disclosures
required by the Independence Standards Board.
The audit committee discussed with our company's internal and independent
auditors the overall scope and plans for their respective audits. The audit
committee meets with the internal and independent auditors, with and without
management present, to discuss the results of their examinations, their
evaluations of our company's internal controls, and the overall quality of our
company's financial reporting. The audit committee held two meetings during
fiscal 2001. The audit committee also conducted informal telephonic reviews of
our press releases.
In reliance on the reviews and discussions referred to above, the audit
committee recommended to the board of directors (and the board approved) that
the audited financial statements be included in the annual report on Form 10-K
for the year ended September 30, 2001 for filing with the Securities and
Exchange Commission. The audit committee and the board have also recommended the
selection of our company's independent auditors.
John Spiegel, audit committee chairman
G. Stephen Felker, audit committee member
Stephen G. Anderson, audit committee
member
17
Audit Fees. Our company has been billed a total of approximately $639,500
by Ernst & Young LLP, our independent auditors, for professional services
rendered for the audit of our annual financial statements for the fiscal year
ended September 30, 2001 and the reviews of interim financial statements
included in our quarterly reports on Form 10-Q for that fiscal year.
Financial Information Systems Design and Implementation Fees. Our company
has not been billed any amount for professional services rendered by Ernst &
Young LLP in connection with financial information systems design and
implementation services during the fiscal year ended September 30, 2001.
All Other Fees. Our company has been billed a total of approximately
$436,000 for all other services rendered by Ernst & Young LLP during the fiscal
year ended September 30, 2001 that are not set forth above. The audit committee
considered the effects that the provision of non-audit services may have on the
auditors' independence.
THE FOREGOING REPORT SHOULD NOT BE DEEMED INCORPORATED BY REFERENCE BY ANY
GENERAL STATEMENT BY REFERENCE THIS PROXY STATEMENT INTO ANY FILING UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES EXCHANGE ACT OF
1934, EXCEPT TO THE EXTENT THAT WE SPECIFICALLY INCORPORATE THIS INFORMATION BY
REFERENCE, AND SHALL NOT OTHERWISE BE DEEMED FILED UNDER SUCH ACTS.
REPORT ON EXECUTIVE COMPENSATION
During fiscal 2001, the compensation and options committee consisted of
Mrs. Lou Brown Jewell and Messrs. L.L. Gellerstedt, III, John D. Hopkins and
James W. Johnson. The compensation and options committee is responsible for:
- establishing salaries, bonuses and other compensation for our chief
executive officer, and
- administering our stock option plans, employee stock purchase plan,
key-employee incentive bonus plan, supplemental executive retirement plan
and annual executive bonus program.
Mr. Rubright, our chief executive officer, was responsible for establishing
the salaries for all of the other executive officers.
The compensation and options committee has reviewed the applicability of
Section 162(m) of the Internal Revenue Code of 1986, as amended by the Omnibus
Budget Reconciliation Act of 1993. Section 162(m) may in certain circumstances
deny a federal income tax deduction for compensation to an executive officer in
excess of $1 million per year. One executive officer may be paid compensation
during fiscal 2002 that exceeds $1 million.
Compensation Policy. Our executive compensation policy is designed to
attract, retain and motivate executive officers to maximize our performance and
shareholder value by:
- providing base salaries that are market-competitive;
- rewarding the achievement of our business plan goals and return over
capital cost objectives; and
- creating stock ownership opportunities to align the interests of
executive officers with those of shareholders.
Base Salary. Each executive officer's base salary, including each named
executive officer's base salary and the chief executive officer's base salary,
is determined based upon a number of factors including the executive officer's
responsibilities, contribution to the achievement of our business plan goals,
demonstrated leadership skills and overall effectiveness, and length of service.
Base salaries are also designed to be competitive with those offered in the
various markets in which we compete for executive talent and are analyzed with a
view towards desired base salary levels over a three- to five-year time period.
Each executive officer's salary is reviewed annually and although these and
other factors are considered in setting base salaries, no specific weight is
given to any one factor. During fiscal 2001, the base salary of each of our
named executive officers, excluding our chief executive officer, increased from
2.6% to 7.3% over each such executive officer's fiscal 2000 base salary. During
fiscal 2001, the base salary of our chief executive office increased 11.3% over
18
his fiscal 2000 base salary. The committee based our chief executive officer's
base salary increase on a variety of criteria, including the performance of our
company, as well as comparative compensation data of chief executive officers of
companies similarly situated and of those within our industry.
Cash Bonuses. Each of our executive officers, including our chief
executive officer, is eligible to receive an annual cash bonus. Our cash bonus
program is designed to motivate key managers and sales people as well as
executive officers and reward the achievement of specific business plan goals.
Under our bonus plan, in fiscal 2001, executive officers were eligible to earn a
cash bonus ranging from a maximum of 50% to 100% of their respective base
salaries to the extent we achieved certain financial objectives established by
the compensation committee. During fiscal 2001, under this plan, our named
executive officers, excluding our chief executive officer, earned bonuses
ranging from 22.5% to 31.5% of their respective base salaries. During fiscal
2001, under this plan, our chief executive officer earned a bonus that was 36.1%
of his base salary.
Stock Options and Restricted Stock. The grant of stock options and
restricted stock is designed to align the interests of executive officers with
those of shareholders in our long-term performance. Stock options granted have
exercise prices equal to the fair market value of the underlying shares on the
date of grant so that compensation is earned only through long-term appreciation
in the fair market value of the underlying shares. Stock options are generally
granted on an annual basis if warranted by our growth and profitability and
individual grants are based on, among other things, the executive officer's
responsibilities and individual performance. To encourage an executive officer's
long-term performance, commencing with grants in fiscal 1994, stock options
generally vest over three years and terminate ten years after the date of grant.
On May 16, 2001, our named executive officers, excluding our chief executive
officer, received stock option grants in respect of fiscal 2001 ranging from
options to purchase 20,000 to 40,000 shares. On May 16, 2001, our chief
executive officer received stock option grants in respect of fiscal 2001 to
purchase 100,000 shares. In accordance with the provisions of our 2000 Incentive
Stock Plan, on May 16, 2001 we made restricted stock grants ranging from 8,000
to 15,000 shares to our named executive officers, excluding our chief executive
officer, which are fully votable by the grantees as of that date. Similarly, in
accordance with the provisions of our 2000 Incentive Stock Plan, on May 16, 2001
we made a restricted stock grant of 25,000 shares to our chief executive officer
which are fully votable by him as of that date. Unless vested (pursuant to net
income performance criteria) or forfeited (e.g., by termination of employment)
at an earlier date, the shares will vest in one-third increments on, and may not
be transferred before, May 16, 2004, 2005 and 2006, respectively. These
restricted stock grants were intended to fulfill the purpose of our 2000
Incentive Stock Plan which is to provide additional incentives to our key
employees through the award of the shares, thereby increasing their personal
stake in our continued success and growth and to encourage them to remain with
our company.
L.L. Gellerstedt, III
John D. Hopkins
Lou Brown Jewell
James W. Johnson
THE FOREGOING REPORT SHOULD NOT BE DEEMED INCORPORATED BY REFERENCE BY ANY
GENERAL STATEMENT INCORPORATING BY REFERENCE THIS PROXY STATEMENT INTO ANY
FILING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES
EXCHANGE ACT OF 1934, EXCEPT TO THE EXTENT THAT WE SPECIFICALLY INCORPORATE THIS
INFORMATION BY REFERENCE, AND SHALL NOT OTHERWISE BE DEEMED FILED UNDER SUCH
ACTS.
19
STOCK PRICE PERFORMANCE GRAPH
The graph below reflects cumulative shareholder return (assuming the
reinvestment of dividends) on our Class A Common Stock compared to the return on
the S&P 500 Index and the S&P Paper & Forest Products Index. The graph reflects
the investment of $100 on September 30, 1996 in our Class A Common Stock, the
S&P 500 Index and the S&P Paper & Forest Products Index and the reinvestment of
dividends.
(PERFORMANCE GRAPH)
-------------------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001
-------------------------------------------------------------------------------------
ROCK-TENN COMPANY 100.00 110.21 62.23 82.99 58.64 66.92
S & P 500 100.00 140.45 153.15 195.74 221.74 162.71
S & P PAPER & FOREST
PRODUCTS 100.00 131.64 97.92 126.35 91.21 112.86
THE STOCK PRICE PERFORMANCE GRAPH SHALL NOT BE DEEMED INCORPORATED BY
REFERENCE BY ANY GENERAL STATEMENT INCORPORATING BY REFERENCE THIS PROXY
STATEMENT INTO ANY FILING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER
THE SECURITIES EXCHANGE ACT OF 1934, EXCEPT TO THE EXTENT THAT WE SPECIFICALLY
INCORPORATE THIS INFORMATION BY REFERENCE, AND SHALL NOT OTHERWISE BE DEEMED
FILED UNDER SUCH ACTS.
APPROVAL OF THE MATERIAL TERMS
OF OUR ANNUAL EXECUTIVE BONUS PROGRAM
(ITEM 2)
The following information regarding the material terms of our annual
executive bonus program is being provided to you in connection with the
solicitation of proxies for approval of the material terms of our annual
executive bonus program. The following description of the annual executive bonus
program is a summary only and does not purport to be complete. The summary is
qualified in its entirety by reference to the text of the program.
PROGRAM DESCRIPTION
Background. Under section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"), our company cannot deduct compensation paid in any fiscal
year to our chief executive officer or our other four most highly compensated
executive officers (our "covered officers") for such year which exceeds $1
million unless such compensation meets the requirements for performance-based
compensation under section 162(m). No compensation paid to any covered officer
to date has been subject to this deduction
20
limitation. However, our compensation and options committee (our "committee")
proposes that any annual bonus paid to any covered officer in the future meet
(to the extent practicable) the requirements for performance-based compensation.
One of those requirements under section 162(m) is that our shareholders approve
the material terms of our annual executive bonus program.
Purpose. The purpose of our program is to give each participant the
opportunity to receive an annual bonus for each fiscal year payable in cash if,
and to the extent, the committee determines that the performance goals set by
our committee for each participant for such year have been satisfied.
Administration. Our program is administered by our committee, each member
of which is an "outside director" within the meaning of section 162(m) of the
Code.
Individuals Eligible. Each of our executive officers, including our chief
executive officer, and each of our other employees who our committee deems a key
employee will be eligible to be a participant in the program for any fiscal
year. Our committee in the exercise of its discretion will pick for each fiscal
year which executive officers and key employees actually will be participants in
the program for such fiscal year.
Business Criteria Upon Which Performance Goals Are Based. Our committee
will establish performance goals for each participant for each fiscal year no
later than 90 days after the beginning of such year. The performance goals for
participants may be different and, further, each participant's performance goals
may be based on different business criteria. However, all performance goals will
be based on one or more of the following business criteria: (1) our return over
capital costs or increases in our return over capital costs, (2) our safety
record, (3) our score on our customer satisfaction survey, (4) our total
earnings or the growth in such earnings, (5) our consolidated earnings or the
growth in such earnings, (6) our earnings per share or the growth in such
earnings, (7) our net earnings or the growth in such earnings, (8) our earnings
before interest expense, taxes, depreciation, amortization and other non-cash
items or the growth in such earnings, (9) our earnings before interest and taxes
or the growth in such earnings, (10) our consolidated net income or the growth
in such income, (11) the value of our common stock or the growth in such value,
(12) our stock price or the growth in such price, (13) our tons of paperboard or
grades of paperboard produced or converted by us, (14) our return on assets or
the growth on such return, (15) our cash flow or the growth in our cash flow,
(16) our total shareholder return or the growth in such return, (17) our
expenses or the reduction of our expenses, (18) our sales growth, (19) our
overhead ratios or changes in such ratios, (20) our expense-to-sales ratios or
the changes in such ratios, and (21) our economic value added or changes in such
value added. The performance goals for our chief executive officer will be based
on criteria related to our company-wide performance while the performance goals
for other participants will (as our committee deems appropriate) be based on
criteria related to company-wide performance, division-specific performance
(where the committee can apply the program's business criteria on a
division-specific basis), plant or facility-specific performance,
department-specific performance, personal goal performance or any combination of
the performance-based criteria. Our committee no later than 90 days after the
beginning of each fiscal year will establish objective rules for determining
whether each participant's performance goals for such year have been satisfied.
Maximum Annual Bonus. The maximum annual bonus payable under the program
to any participant for any fiscal year cannot exceed 200% of the base salary
which is paid to such participant in such fiscal year or $2 million, whichever
is less. However, a bonus will be paid to a participant under the program for a
fiscal year only to the extent the participant satisfies his or her performance
goals for such bonus for such fiscal year, and our committee shall certify the
extent, if any to which a participant has satisfied his or her performance goals
for each fiscal year. Finally, our committee shall have the discretion to reduce
(but not to increase) the bonus payable under the program to any participant if
the committee for any reason deems such reduction appropriate under the
circumstance.
Shareholder Approval Requirements. Since section 162(m) only limits our
company's income tax deductions for compensation paid in any fiscal year to a
covered officer, we are seeking shareholder approval only with respect to the
material terms of the annual executive bonus program as the program relates to
our covered officers. If the material terms of the program are not approved by
our shareholders, the program
21
nevertheless can remain in effect and bonuses can be paid to participants who
are not covered officers. Further, our committee retains the authority to
develop and implement alternative means of fairly compensating our officers and
other executives, including any covered officers, and such compensation may be
paid in addition to, or in lieu of, compensation paid under our annual executive
bonus program.
ESTIMATE OF BENEFITS
Our committee has (subject to our shareholders approving the material terms
of the program) set performance goals under the program for each participant for
the current fiscal year based on our company's return over capital costs, our
safety record, our score on our customer satisfaction survey,
department-specific performance and personal goal performance and has set a cap
on each participant's bonus equal to a range of 50% to 100% of such
participant's base salary paid in fiscal year 2002. It is not possible to
predict today the extent to which any performance goals will be satisfied for
fiscal year 2002 or what each participant's base salary will be paid in fiscal
year 2002 and thus what bonuses will be for this year. However, if the same
performance goals had been in effect for each participant during fiscal year
2001, the bonus for fiscal year 2001 for each participant would have been as
follows:
ANNUAL EXECUTIVE BONUS PROGRAM
NAME AND POSITION DOLLAR VALUE
----------------- ------------
James A. Rubright........................................... $ 446,838
Chairman and Chief Executive Officer
David D. Dreibelbis......................................... 110,898
Executive Vice President and General Manager of the
Paperboard Group
Nicholas G. George.......................................... 125,075
Executive Vice President and General Manager of the
Folding Carton Division
Steven C. Voorhees.......................................... 94,334
Executive Vice President and Chief Financial Officer
James K. Hansen............................................. 109,103
Executive Vice President and General Manager of the Coated
Paperboard Division
All current executive officers as a group................... 1,308,583
RECOMMENDATION OF THE BOARD OF DIRECTORS
The board of directors recommends a vote FOR the proposal to approve the
material terms of our annual executive bonus program. Proxies returned without
instructions will be voted FOR the approval of the material terms of our annual
executive bonus program.
OTHER MATTERS
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that our
officers and directors and persons who beneficially own more than ten percent of
our Class A Common Stock file with the SEC certain reports, and to furnish
copies thereof to us, with respect to each such person's beneficial ownership of
our equity securities. Based solely upon a review of the copies of such reports
furnished to us and certain representations of such persons, all such persons
complied with the applicable reporting requirements except that the annual
statement of beneficial ownership of securities on Form 5 required to be filed
by (1) Stephen G. Anderson, a director of our company, to report the purchase of
shares of Class A Common Stock and his beneficial ownership of shares of Class A
Common Stock pursuant to a trust for which he is trustee was filed late; and (2)
Paul J. England, an officer of our company, to report the disposition of shares
of Class A Common Stock was filed late.
22
ANNUAL REPORT ON FORM 10-K
We will provide without charge, at the written request of any shareholder
of record as of December 6, 2001, a copy of our Annual Report on Form 10-K,
including the financial statements and financial statement schedule, as filed
with the SEC, excluding exhibits. We will provide copies of the exhibits if they
are requested by eligible shareholders. We may impose a reasonable fee for
providing the exhibits. Requests for copies of our Annual Report on Form 10-K
should be mailed to: Rock-Tenn Company, 504 Thrasher Street, Norcross, Georgia
30071, Attention: Chief Financial Officer.
SHAREHOLDER NOMINATIONS FOR ELECTION OF DIRECTORS
Under our bylaws, only persons nominated in accordance with certain
procedures will be eligible for election as directors. Shareholders are entitled
to nominate persons for election to the board of directors only if:
- the shareholder is otherwise entitled to vote generally in the election
of directors, and
- timely notice in writing is sent to our Secretary.
To be timely, a shareholder's notice must be received at our principal
executive offices not less than 130 days prior to the meeting.
If less than 60 days' notice or prior public disclosure of the date of the
annual meeting is given or made to shareholders, notice by the shareholder must
be received no later than the close of business on the 10th day following the
day on which such notice of the date of the meeting was mailed or such public
disclosure was made, whichever occurs first.
The shareholder's notice must set forth for each person to be nominated for
election as a director:
- the name, age, business address and residence address of the person,
- the principal occupation or employment of the person,
- the number of shares of each class of Common Stock beneficially owned by
the person, and
- other information that would be required to be disclosed in connection
with the solicitation of proxies for the election of directors pursuant
to Regulation 14(a) under the Exchange Act.
The shareholder's notice must also set forth, with respect to the
shareholder giving such notice:
- the name and address of the shareholder, and
- the number of shares of each class of Common Stock beneficially owned by
the shareholder.
We may require any proposed nominee to furnish such other information as
may reasonably be required by us to determine the eligibility of such proposed
nominee to serve as a director.
SHAREHOLDER PROPOSALS
Any shareholder proposals intended to be presented at our 2003 annual
meeting of shareholders pursuant to Rule 14a-8 under the Securities Exchange Act
of 1934 must be received no later than August 21, 2002 in order to be considered
for inclusion in the proxy materials to be distributed by the Board of Directors
in connection with the meeting. Any shareholder proposals intended to be
presented at our 2003 annual meeting of shareholders but not to be included in
the board's proxy materials under Rule 14a-8 must be received no later than
September 16, 2002 in order to be considered at the 2003 annual meeting.
However, if we give less than 60 days' notice of our 2003 annual meeting of
shareholders, then shareholder proposals intended to be presented at the meeting
but not to be included in the board's proxy materials under Rule 14a-8 must be
received no later than ten days after notice of the 2003 annual meeting is
mailed or a press release announcing the meeting date is made.
23
EXPENSES OF SOLICITATION
We will bear the cost of solicitation of proxies by the board of directors
in connection with the annual meeting. We will reimburse brokers, fiduciaries
and custodians for reasonable expenses incurred by them in forwarding proxy
materials to beneficial owners of Common Stock held in their names.
By Order of the Board of Directors
/s/ Robert B. McIntosh
Robert B. McIntosh
Secretary
OUR ANNUAL REPORT TO SHAREHOLDERS FOR FISCAL 2001, WHICH INCLUDES AUDITED
FINANCIAL STATEMENTS, ACCOMPANIES THIS PROXY STATEMENT. THE ANNUAL REPORT DOES
NOT FORM ANY PART OF THE MATERIAL FOR THE SOLICITATION OF PROXIES.
24
APPENDIX A
ROCK-TENN COMPANY
ANNUAL EXECUTIVE BONUS PROGRAM
ss. 1
PURPOSE
The purpose of the Program is to give each participant the
opportunity to receive an annual bonus for each Fiscal Year payable in cash if,
and to the extent, the Committee determines that the Performance Goals set by
the Committee for such Participant for such year have been met.
ss. 2
DEFINITIONS
1.1. Business Criteria. The term "Business Criteria" for
purposes of this Program means (1) Rock-Tenn Company's return over capital costs
or increases in Rock-Tenn Company's return over capital costs, (2) Rock-Tenn
Company's safety record, (3) Rock-Tenn Company's score on Rock-Tenn Company's
customer satisfaction survey, (4) Rock-Tenn Company's total earnings or the
growth in such earnings, (5) Rock-Tenn Company's consolidated earnings or the
growth in such earnings, (6) Rock-Tenn Company's earnings per share or the
growth in such earnings, (7) Rock-Tenn Company's net earnings or the growth in
such earnings, (8) Rock-Tenn Company's earnings before interest expense, taxes,
depreciation, amortization and other non-cash items or the growth in such
earnings, (9) Rock-Tenn Company's earnings before interest and taxes or the
growth in such earnings, (10) Rock-Tenn Company's consolidated net income or the
growth in such income, (11) the value of Rock-Tenn Company's common stock or the
growth in such value, (12) Rock-Tenn Company's stock price or the growth in such
price, (13) the tons of paperboard or grades of paperboard produced or converted
by Rock-Tenn Company, (14) Rock-Tenn Company's return on assets or the growth on
such return, (15) Rock-Tenn Company's cash flow or the growth in such cash flow,
(16) Rock-Tenn Company's total shareholder return or the growth in such return,
(17) Rock-Tenn Company's expenses or the reduction of Rock-Tenn Company's
expenses, (18) Rock-Tenn Company's sales growth, (19) Rock-Tenn Company's
overhead ratios or changes in such ratios, (20) Rock-Tenn Company's
expense-to-sales ratios or the changes in such ratios, and (21) Rock-Tenn
Company's economic value added or changes in such value added.
1.2. Code. The term "Code" for purposes of this Program
means the Internal Revenue Code of 1986, as amended from time to time.
1.3. Committee. The term "Committee" for purposes of this
Program means the Compensation and Options Committee of the Board of Directors
of Rock-Tenn Company, or, if all the members of such Committee fail to satisfy
the requirements to be an "outside director" under ss. 162(m) of the code, a
sub-committee of such committee which consists solely of members who satisfy
such requirements.
1.4. Covered Executive. A "Covered Executive" for purposes
of this Program means for each Fiscal Year Rock-Tenn Company's chief executive
officer and its four other executive officers who are treated under ss. 162(m)
of the Code as a "covered employee" for such Fiscal Year.
1.5. Fiscal Year. The term "Fiscal Year" for purposes of
this Program means Rock-Tenn Company's fiscal year.
1.6. Participant. The term "Participant" for purposes of
this Program means for each Fiscal Year each individual who is designated as
such by the Committee under ss. 3.
1.7. Performance Goals. The term "Performance Goals" for
purposes of this Program means the goal, or the combination of goals, set under
ss. 4 by the Committee for each Participant for each Fiscal Year with respect to
the Business Criteria selected by the Committee for such Fiscal Year.
1.8. Program. The term "Program" means this Rock-Tenn
Company Annual Executive Bonus Program as in effect from time to time.
1.9. Rock-Tenn Company. The term "Rock-Tenn Company" for
purposes of this Program means the Rock-Tenn Company, a Georgia corporation, and
any successor to Rock-Tenn Company.
ss. 3
PARTICIPATION
The Committee for each Fiscal Year shall have the right to
designate any executive officer of Rock-Tenn Company , including Rock-Tenn
Company's chief executive officer, and any other employee of Rock-Tenn Company
who the Committee deems a key employee as a Participant in this Program provided
such designation is made no later than 90 days after the beginning of such
Fiscal Year.
ss. 4
PERFORMANCE GOALS
The Committee shall set in writing the Performance Goals for each Participant
for each Fiscal Year no later than 90 days after the beginning of such Fiscal
Year based on such
-2-
Business Criteria as the Committee deems appropriate under the circumstances.
The Committee shall have the right to use different Business Criteria for
different Participants, and the Committee shall have the right to set different
Performance Goals for Participants whose goals look to the same Business
Criteria. The Business Criteria for a Participant who is Rock-Tenn Company's
chief executive officer shall be based on Rock-Tenn Company's company-wide
performance while the Business Criteria for each other Participant may be based
on company-wide performance, division-specific performance, department-specific
performance, plant or facility-specific performance, personal performance or on
any combination of such criteria. When the Committee sets the Performance Goals
for a Participant, the Committee shall establish the general, objective rules
which the Committee will use to determine the extent, if any, that a
Participant's Performance Goals have been met and the specific, objective rules,
if any, regarding any exceptions to the use of such general rules, and any such
specific, objective rules may be designed as the Committee deems appropriate to
take into account any extraordinary or one-time or other non-recurring items of
income or expense or gain or loss or any events, transactions or other
circumstances that the Committee deems relevant in light of the nature of the
Performance Goals set for the Participant or the assumptions made by the
Committee regarding such goals.
ss. 5
CERTIFICATION
The Committee at the end of each Fiscal Year shall certify the
extent, if any, to which the Performance Goals set for each Participant for such
Fiscal Year have been met and shall determine the bonus payable to each
Participant based on the extent, if any, to which he or she met his or her
Performance Goals. However, the Committee shall have the right to reduce the
bonus determined under this ss. 5 to the extent that the Committee acting in its
discretion determines that the Performance Goals set for a Participant for a
Fiscal Year no longer were appropriate for such Participant at the end of such
Fiscal Year. If the Committee certifies that a bonus is payable to a Participant
for any Fiscal Year, such bonus shall be paid in cash as soon as practical after
such certification has been made. However, no Participant shall have a right to
the payment of a bonus for any Fiscal Year if his or her employment with
Rock-Tenn Company has terminated for any reason whatsoever before the date the
bonus is actually paid unless the Committee in the exercise of its absolute
discretion affirmatively directs Rock-Tenn Company to pay such bonus to, or on
behalf of, such Participant.
ss. 6
BONUS CAP
No bonus shall be paid to any Participant for any Fiscal Year
under this Program to the extent such bonus would exceed 200% of the
Participant's base salary paid to the Participant during such Fiscal Year or $2
million, whichever is less.
-3-
However, the Committee shall have the discretion to set a lower cap on the bonus
payable to any Participant for any Fiscal Year.
ss. 7
ADMINISTRATION
The Committee shall have the power to interpret and administer
this Program as the Committee in its absolute discretion deems in the best
interest of Rock-Tenn Company and the Committee to the extent practicable shall
do so to protect Rock-Tenn Company's right to deduct any bonus payable to a
Covered Executive in light of ss. 162(m) of the Code.
ss. 8
AMENDMENT AND TERMINATION
The Committee shall have the power to amend this program from
time to time as the Committee deems necessary or appropriate and to terminate
this program if the Committee deems such termination in the best interest of
Rock-Tenn Company.
ss. 9
MISCELLANEOUS
9.1. General Assets. Any bonus payable under this Program
shall be paid exclusively from Rock-Tenn Company's general assets.
9.2. General Creditor Status. The status of each
Participant with respect to his or her claim for the payment of a bonus under
this Program shall be the same as the status of a general and unsecured creditor
of Rock-Tenn Company.
9.3. No Assignment. No Participant shall have the right to
assign or otherwise alienate or commute all or any part of the bonus which might
be payable to such Participant under this Program, and any attempt to do so
shall be null and void.
9.4. No Contract of Employment. The designation of any
individual as a Participant in this Plan shall not constitute an agreement by
Rock-Tenn Company to employ any such individual for any period of time or affect
Rock-Tenn Company's right to terminate his or her employment at any time and for
any reason or for no reason.
-4-
ROCK-TENN COMPANY
PROXY FOR CLASS A COMMON STOCK
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS ON JANUARY 25, 2002
The undersigned hereby appoints James A. Rubright and Steven C. Voorhees and
each of them, proxies, with full power of substitution and resubstitution, for
and in the name of the undersigned, to vote all shares of Class A Common Stock
of Rock-Tenn Company that the undersigned would be entitled to vote if
personally present at the annual meeting of shareholders to be held on January
25, 2002, at 9:00 a.m., local time, at the Northeast Atlanta Hilton at Peachtree
Corners, 5993 Peachtree Industrial Boulevard, Norcross, Georgia 30092, or at any
adjournment thereof, upon the matters described in the accompanying Notice of
Annual Meeting of Shareholders and Proxy Statement, receipt of which is hereby
acknowledged, and upon any other business that may properly come before the
annual meeting or any adjournment thereof. Said proxies are directed to vote on
the matters described in the Notice of Annual Meeting of Shareholders and Proxy
Statement as follows, and otherwise in their discretion upon such other business
as may properly come before the meeting or any adjournment thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO DIRECTION IS INDICATED, THE
PROXY WILL BE VOTED FOR ITEMS 1 AND 2.
Unless you are voting electronically or by telephone, please sign exactly as
your name or names appear hereon. For more than one owner as shown above, each
should sign. When signing in a fiduciary or representative capacity, please give
full title. If this proxy is submitted by a corporation, it should be executed
in the full corporate name by a duly authorized officer, if a partnership,
please sign in partnership name by authorized person.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
--------------------------------------------------------------------------------
-- FOLD AND DETACH HERE --
PLEASE MARK
YOUR VOTE AS [X]
INDICATED IN
THIS EXAMPLE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
WITHHELD
FOR FOR ALL UNLESS YOU ARE VOTING ELECTRONICALLY OR BY TELEPHONE, PLEASE COM-
[ ] [ ] PLETE, DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
1. To elect two (2) directors: MEETING ON JANUARY 25, 2002. IF YOU ATTEND THE ANNUAL MEETING, YOU
Nominees: (01) J. Hyatt Brown; MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY
(02) G. Stephen Felker RETURNED YOUR PROXY OR VOTED ELECTRONICALLY OR BY TELEPHONE.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR
ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE
NOMINEES NAME IN THE LIST ABOVE.)
2. To approve the material terms of the annual executive FOR AGAINST ABSTAIN
bonus program. [ ] [ ] [ ]
Signature____________________________________ Signature________________________ Date:________________________
Shareholder sign here Co-owner sign here
Please be sure to sign and date the Proxy
--------------------------------------------------------------------------------
-- DETACH HERE FROM PROXY VOTING CARD --
VOTE BY INTERNET OR TELEPHONE
QUICK * EASY * IMMEDIATE
AVAILABLE 24 HOURS A DAY * 7 DAYS/WEEK
UNTIL 11:59 P.M., E.T., JANUARY 24, 2002
Rock-Tenn Company encourages you to take advantage of two cost-effective and
convenient ways to vote your shares. You may now vote your proxy 24 hours a day,
7 days a week, using either a touch-tone telephone or through the Internet. Your
telephone or Internet vote authorizes you to vote your shares in the same manner
as if you marked, signed and returned your proxy card.
TO VOTE BY INTERNET: TO VOTE BY TELEPHONE: TO VOTE BY MAIL:
POINT YOUR BROWSER TO THE WEB ADDRESS: CALL TOLL-FREE ON A TOUCH-TONE TELEPHONE
http:\\www.proxyvoting.com/rkt 1-800-542-1160 ANYTIME Simply mark, sign
You will be asked to enter the 11 digit Voter (THERE IS NO CHARGE TO YOU FOR THIS CALL). and date your
Control Number located in the lower left corner of OR You will be asked to enter the 11 digit Voter OR proxy card and
this form. Then simply follow the instructions. Control Number located in the lower left corner of return it in the
this form. Then simply follow the instructions. enclosed
postage-paid
envelope.
IF YOU ARE VOTING BY TELEPHONE OR INTERNET,
PLEASE DO NOT MAIL YOUR PROXY CARD.
YOUR CONTROL NUMBER IS:
[ ]
ROCK-TENN COMPANY
PROXY FOR CLASS B COMMON STOCK
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS ON JANUARY 25, 2002
The undersigned hereby appoints James A. Rubright and Steven C. Voorhees and
each of them, proxies, with full power of substitution and resubstitution, for
and in the name of the undersigned, to vote all shares of Class A Common Stock
of Rock-Tenn Company that the undersigned would be entitled to vote if
personally present at the annual meeting of shareholders to be held on January
25, 2002, at 9:00 a.m., local time, at the Northeast Atlanta Hilton at Peachtree
Corners, 5993 Peachtree Industrial Boulevard, Norcross, Georgia 30092, or at any
adjournment thereof, upon the matters described in the accompanying Notice of
Annual Meeting of Shareholders and Proxy Statement, receipt of which is hereby
acknowledged, and upon any other business that may properly come before the
annual meeting or any adjournment thereof. Said proxies are directed to vote on
the matters described in the Notice of Annual Meeting of Shareholders and Proxy
Statement as follows, and otherwise in their discretion upon such other business
as may properly come before the meeting or any adjournment thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO DIRECTION IS INDICATED, THE
PROXY WILL BE VOTED FOR ITEMS 1 AND 2.
Unless you are voting electronically or by telephone, please sign exactly as
your name or names appear hereon. For more than one owner as shown above, each
should sign. When signing in a fiduciary or representative capacity, please give
full title. If this proxy is submitted by a corporation, it should be executed
in the full corporate name by a duly authorized officer, if a partnership,
please sign in partnership name by authorized person.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
--------------------------------------------------------------------------------
-- FOLD AND DETACH HERE --
PLEASE MARK
YOUR VOTE AS [X]
INDICATED IN
THIS EXAMPLE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
WITHHELD
FOR FOR ALL UNLESS YOU ARE VOTING ELECTRONICALLY OR BY TELEPHONE, PLEASE COM-
[ ] [ ] PLETE, DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
1. To elect two (2) directors: MEETING ON JANUARY 25, 2002. IF YOU ATTEND THE ANNUAL MEETING, YOU
Nominees: (01) J. Hyatt Brown; MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY
(02) G. Stephen Felker RETURNED YOUR PROXY OR VOTED ELECTRONICALLY OR BY TELEPHONE.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR
ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE
NOMINEES NAME IN THE LIST ABOVE.)
2. To approve the material terms of the annual executive FOR AGAINST ABSTAIN
bonus program. [ ] [ ] [ ]
Signature____________________________________ Signature________________________ Date:________________________
Shareholder sign here Co-owner sign here
Please be sure to sign and date the Proxy
--------------------------------------------------------------------------------
* DETACH HERE FROM PROXY VOTING CARD *
VOTE BY INTERNET OR TELEPHONE
QUICK * EASY * IMMEDIATE
AVAILABLE 24 HOURS A DAY * 7 DAYS/WEEK
UNTIL 11:59 P.M., E.T., JANUARY 24, 2002
Rock-Tenn Company encourages you to take advantage of two cost-effective and
convenient ways to vote your shares. You may now vote your proxy 24 hours a day,
7 days a week, using either a touch-tone telephone or through the Internet. Your
telephone or Internet vote authorizes you to vote your shares in the same manner
as if you marked, signed and returned your proxy card.
TO VOTE BY INTERNET: TO VOTE BY TELEPHONE: TO VOTE BY MAIL:
POINT YOUR BROWSER TO THE WEB ADDRESS: CALL TOLL-FREE ON A TOUCH-TONE TELEPHONE
http:\\www.proxyvoting.com/rkt 1-800-542-1160 ANYTIME Simply mark, sign
You will be asked to enter the 11 digit Voter (THERE IS NO CHARGE TO YOU FOR THIS CALL). and date your
Control Number located in the lower left corner of OR You will be asked to enter the 11 digit Voter OR proxy card and
this form. Then simply follow the instructions. Control Number located in the lower left corner of return it in the
this form. Then simply follow the instructions. enclosed
postage-paid
envelope.
IF YOU ARE VOTING BY TELEPHONE OR INTERNET,
PLEASE DO NOT MAIL YOUR PROXY CARD.
YOUR CONTROL NUMBER IS:
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