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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.          )

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April 18, 20121, 2013

Dear Stockholder:

        This year's Annual Meeting of Stockholders will be held on Wednesday,Thursday, May 16, 20122013 at 11:00 a.m., Central Daylight Savings Time, at 1033 Skokie Boulevard, Suite 100, Northbrook, Illinois. You are cordially invited to attend.

        The Notice of Annual Meeting of Stockholders and a Proxy Statement, which describe the formal business to be conducted at the meeting, follow this letter.

        After reading the Proxy Statement, please make sure to vote your shares by promptly dating, signing, and returning the enclosed proxy card or attending the annual meeting in person. Regardless of the number of shares you own, your careful consideration of, and vote on, the matters before the Company's stockholders are important.

        A copy of the Company's 20112012 Annual Report is also enclosed.

        I look forward to seeing you at the Annual Meeting.

		Very truly yours, Roger W. Stone Chairman and Chief Executive Officer

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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD MAY 16, 2012

To the Stockholders:

        The Annual Meeting of Stockholders of KapStone Paper and Packaging Corporation ("KapStone" or the "Company"), will be held on Wednesday, May 16, 2012, at 11:00 a.m., Central Daylight Savings Time, at 1033 Skokie Boulevard, Suite 100, Northbrook, Illinois, for the following purposes:

1.

To vote upon the election of the three Class C directors identified in the proxy statement that accompanies this notice, each to hold office for a three-year term and until his respective successor is elected and qualified. The Board of Directors has nominated the following persons for election as Class C directors at the meeting: Jonathan R. Furer, Matthew H. Paull, Roger W. Stone.



2.

To ratify the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm for the year ending December 31, 2012.



3.

To hold a non-binding vote to approve the Company's executive compensation.



4.

To transact such other business as may properly come before the meeting or any adjournment or postponement thereof.

        Stockholders of record at the close of business on April 16, 2012, are entitled to notice of, and to vote at, the Annual Meeting and any adjournments or postponements thereof. For ten days prior to the Annual Meeting, a complete list of the stockholders of record on April 16, 2012, will be available at the Company's principal offices for examination during ordinary business hours by any stockholder for any purpose relating to the meeting.

YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" ALL DIRECTOR NOMINEES, AND "FOR" PROPOSALS 2 AND 3.

		By Order of the Board of Directors, Roger W. Stone Chairman and Chief Executive Officer

Northbrook, Illinois
April 18, 2012

        IMPORTANT:    Please promptly fill in, date, sign and return the enclosed proxy card in the accompanying pre-paid envelope to ensure that your shares are represented at the meeting. You may revoke your proxy before it is voted. If you attend the meeting, you may choose to vote in person even if you have previously sent in your proxy card.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders To Be Held on May 16, 2012

The Company's Proxy Statement for the 2012 Annual Meeting of Stockholders and the Annual Report to Stockholders for the fiscal year ended December 31, 2011, are available at www.ir.kapstonepaper.com

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PROXY SUMMARY

        This summary contains highlights about our Company and the upcoming 20122013 Annual Meeting of Stockholders. This summary does not contain all of the information that you should consider in advance of the meeting, and we encourage you to read the entire Proxy Statement carefully before voting.

GOVERNANCE HIGHLIGHTS

Board of Directors

•

9 directors; 7 are independent;independent



•

All Committee members are independent;independent



•

Executive sessions at each regularly scheduled Board meeting;meeting



•

Annual Board and Committee self-assessments;self-assessments



•

Stock ownership requirements for each non-employee director;



•

No former employees serve as directors.director

Stockholder Interests

•

No stockholder rights plan;plan



•

A no-hedging policyPolicies against hedging or pledging applicable to employees and directors;directors



•

StockIncreased stock ownership requirements for Named Executive Officers;Officers (see page 29)



•

Annual advisory vote to approve compensation of Named Executive Officers;



•

Annual advisory vote to ratify independent auditor.Officers


EXECUTIVE COMPENSATION HIGHLIGHTS


        We believe that compensation for executives should be determined according to a competitive framework taking into account the financial performance of the Company, individual contributions and the external market in which the Company competes for executive talent. The Company relies on the following elements of compensation:

•

Base salary;salary



•

Annual performance-based cash bonus awards;awards



•

Long-term incentive compensation in the form of stock options and restricted stock units.units

        TheIn 2012, the Compensation Committee utilized the assistance of Frederic W. Cook & Co., an executive compensation consulting company, to assist in evaluating executive compensation programs and in evaluating executive officers' compensation compared to an established peer group of similar companies.

        Best practices associated with our executive compensation programs include:

•

Stock ownership requirements;No employment agreements



•

No severance arrangements



•

Capped performance-based cash bonus awards;awards



•

Clawback provisions;



•

No employment agreements;provisions



•

Benchmarking



•

No severance arrangements.Increased stock ownership requirements




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VOTING MATTERS


Management Proposals:		Board Vote Recommendation		Page Reference
Agenda Items   Board Vote Recommendation   Page Reference     1.   Election of three directors, each for a three-year term   FOR each director nominee     7     2.   Vote to ratify appointment of Ernst & Young LLP as independent auditor for 2013   FOR     37     3.   Advisory vote to approve executive compensation   FOR     38     4.   Vote to approve Amended and Restated 2008 Performance Incentive Plan   FOR     39     Election of three directors, each for a three-year term		FOR each director nominee			9
Vote to ratify appointment of Ernst & Young LLP as independent auditor for 2012		FOR			38
Advisory vote to approve executive compensation		FOR			39

Election of Directors (Proposal No. 1)

        The following table provides summary information about our nominees for election to the Board of Directors. Additional information for all directors, including nominees, may be found beginning on page 97 of this Proxy Statement.

Vote to Ratify Appointment of Independent Auditor (Proposal No. 2)

        We are asking stockholders to ratify the appointment of Ernst & Young LLP as our independent auditor for 2012. Set forth below is information about its2013. We paid Ernst & Young LLP a total of $2,490,150 in fees in 20112012. Additional information regarding our independent auditor and 2010.audit fees may be found beginning on page 20 of this Proxy Statement.

Advisory Vote to Approve Executive Compensation (Proposal No. 3)

        We are asking stockholders to cast an advisory, nonbinding vote to approve the compensation awarded to our Named Executive Officers. Additional information regarding our executive compensation may be found beginning on page 23 in22 of this Proxy Statement.

Vote to Approve the Company's Amended and Restated 2008 Performance Incentive Plan (Proposal No. 4)

        We are asking stockholders to approve our Amended and Restated 2008 Performance Incentive Plan. Additional information regarding this plan may be found beginning on page 39 of this Proxy Statement

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MEETING INFORMATION

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BOARD COMMITTEESNOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD MAY 16, 2013

To the Stockholders:

        The Board has established three standing committees: Audit, Compensation,Annual Meeting of Stockholders of KapStone Paper and Nominating and Governance. AllPackaging Corporation ("KapStone" or the "Company") will be held on Thursday, May 16, 2013, at 11:00 a.m., Central Daylight Time, at 1033 Skokie Boulevard, Suite 100, Northbrook, Illinois, for the following purposes:

1.

To vote upon the election of the membersthree Class A directors identified in the proxy statement that accompanies this notice, each to hold office for a three-year term and until his respective successor is elected and qualified. The Board of Directors has nominated the following persons for election as Class A directors at the meeting: Brian R. Gamache, S. Jay Stewart, and David P. Storch.



2.

To ratify the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm for the year ending December 31, 2013.



3.

To hold a non-binding vote to approve the Company's executive compensation.



4.

To approve the Company's Amended and Restated 2008 Performance Incentive Plan.



5.

To transact such other business as may properly come before the meeting or any adjournment or postponement thereof.

        Stockholders of record at the close of business on March 18, 2013 are entitled to notice of, and to vote at, the Annual Meeting and any adjournments or postponements thereof. For ten days prior to the Annual Meeting, a complete list of the Committees are independent. Committee charters arestockholders of record on March 18, 2013 will be available onat the Company's website at www.kapstonepaper.com.principal offices for examination during ordinary business hours by any stockholder for any purpose relating to the meeting.

YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" ALL DIRECTOR NOMINEES, AND "FOR" PROPOSALS 2, 3, AND 4.

Committee		Current Members		Primary responsibilities		Number of 2011 Meetings
Audit		S. Jay Stewart* John M. Chapman Brian R. Gamache Matthew H. Paull		• Oversee integrity of financial statements • Oversee financial reporting process • Review systems of internal audit function • Review performance of independent registered public accountants • Pre-approve all audit and permitted non-audit services • Oversee compliance with ethics policies and legal and regulatory requirements • Oversee risk			8	By Order of the Board of Directors,
							Roger W. Stone
Compensation		Jonathan R. Furer* John M. Chapman Ronald J. Gidwitz Matthew Paull S. Jay Stewart David P. Storch		• Determine compensation of CEOChairman and other NamedChief Executive Officers Officer • Provide guidance on Company's compensation and benefit programs			3
Nominating and Governance		Brian R. Gamache* Jonathan R. Furer Ronald J. Gidwitz David P. Storch		• Assist Board in identifying prospective director nominees • Oversee Board performance evaluation process • Monitor the composition of the Board and its committees • Oversee Corporate Governance Guidelines			3

BoardNorthbrook, Illinois
April 1, 2013

        IMPORTANT: Please promptly fill in, date, sign and Committee Meetingsreturn the enclosed proxy card in the accompanying pre-paid envelope to ensure that your shares are represented at the meeting. You may revoke your proxy before it is voted. If you attend the meeting, you may choose to vote in person even if you have previously sent in your proxy card.

        Directors are expected to attendImportant Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders all Board meetings, and meetings ofTo Be Held on May 16, 2013

The Company's Proxy Statement for the Committees on which they serve. At each regularly scheduled Board meeting, our independent directors meet in executive session. Each director attended over 75% of the total number of meetings of the Board and relevant Committees. All directors attended the 20112013 Annual Meeting of Stockholders.

Director Compensation

        The Governance Committee recommends to the Board the form and amount of compensation for non-employee directors. Only non-employee directors are paid for their service on the Board. In 2012, each non-employee director will receive the following:

•

A quarterly retainer of $10,250;



•

A fee of $1,500 for each Board meeting and each Committee meeting attended;



•

Reimbursement of reasonable expenses to attend Board and Committee meetings;

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Grant of stock options and restricted stock units with a grant date value of approximately $54,000 (each option vests 50% on the second anniversary of the grant dateStockholders and the remaining 50% onAnnual Report to Stockholders for the third anniversary of the grant date; restricted stock units vest on the third anniversary of the grant date).

        Audit, Compensation, and Nominating and Governance Committee chairpersons will receive an additional quarterly fee of $2,500, $1,500 and $1,500 respectively.

Risk Oversight

        The Board's involvement in risk oversight involves both the Audit Committee and the full Board. Risk oversight is a standing agenda itemfiscal year ended December 31, 2012, are available at each Audit Committee meeting. The Committee receives reports from the Company's Director of Internal Audit and independent registered public accountants at each Audit Committee meeting. The Company's Vice President and Chief Financial Officer and Vice President and Controller both provide reports to the Committee regarding risk factors, including, but not limited to, risks pertaining to credit and liquidity. The General Counsel keeps the Audit Committee abreast of issues pertaining to litigation, regulatory matters, and compliance. The Chairman of the Audit Committee reports on the activities of the Committee regarding risk at each meeting of the full Board. Other committees of our Board may also practice risk oversight related directly to such committee's responsibilities. In addition, each regularly scheduled meeting of the Board includes a report from the Company's Chief Executive Officer, Chief Operating Officer and its Vice President and General Manager regarding operating risks at each facility, and the industry as a whole.http://ir.kapstonepaper.com.

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KapStone Paper and Packaging Corporation

1101 Skokie Boulevard
Suite 300
Northbrook, Illinois 60062

PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS

        The accompanying proxy is being solicited by the Board of Directors (the "Board") of KapStone Paper and Packaging Corporation (the "Company" or "KapStone") and contains information related to the Annual Meeting of Stockholders to be held on Wednesday,Thursday, May 16, 2012,2013, at 11:00 a.m., Central Daylight Savings Time, or any adjournment or postponement thereof, for the purposes described in the accompanying Notice of Annual Meeting. The Annual Meeting will be held at 1033 Skokie Boulevard, Suite 100, Northbrook, Illinois. This Proxy Statement was filed with the Securities and Exchange Commission (the "SEC") and is first being sent or given to stockholders on or about April 20, 2012.1, 2013.

FREQUENTLY ASKED QUESTIONS

What am I voting on?

        You will be voting on:

•

The election of three (3) directors to serve on the Board;



•

The ratification of the appointment of Ernst & Young LLP as the Company's independent registered public accountants;accounting firm for 2013;



•

Advisory approval of the Company's executive compensation;



•

Approval of the Company's Amended and Restated 2008 Performance Incentive Plan; and



•

Other matters properly brought before the meeting.

How does the Board recommend that I vote?

        The Company's Board recommends that you vote:

•

FOR each of the director nominees;



•

FOR ratification of the appointment of Ernst & Young LLP as the Company's independent registered public accountantsaccounting firm for the fiscal year ending December 31, 2012;2013;



•

FOR the approval of the non-binding resolution relating to the Company's compensation of the Company's named executive officers as disclosed in the Compensation, Discussion and Analysis section and accompanying compensation tables and related narratives contained in this Proxy Statement.Statement (the "Say-on-Pay resolution"); and



•

FOR the approval of the Company's Amended and Restated 2008 Performance Incentive Plan.

Who is entitled to vote at the meeting?

        Holders of record of the Company's Common Stock at the close of business on April 16, 2012,March 18, 2013, (the "Record Date") will be entitled to vote. As of the close of business on the Record Date, there were 46,586,80847,504,683 shares of Common Stock outstanding and entitled to vote.

How many votes am I entitled to?

        You are entitled to one vote for each share of Common Stock that you own.

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How do I vote shares held in my name?

        You may vote in person at the annual meeting or by proxy. If you properly complete and sign the enclosed proxy card, the shares held in your name will be voted as you direct. If you sign and return

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the proxy card but do not include voting instructions, the shares held in your name will be voted FOR the three nominee directors named in this Proxy Statement, FOR the ratification of the appointment of Ernst & Young LLP as the Company's independent registered public accountants,accounting firm, FOR the approval of the Say-on-Pay resolution, and FOR the approval of the Say on Pay resolution.Company's Amended and Restated 2008 Performance Incentive Plan.

Can I change my vote after I return my proxy card?

        You may change your vote or revoke your proxy at any time before the polls close at the annual meeting by taking any of the following actions:

•

Delivering a later datedlater-dated proxy;



•

Giving written notice to the Company's Secretary; or



•

Voting in person at the annual meeting.

How do I vote my shares held by my broker?

        If your shares are held in street name, you must either direct your broker as to how to vote your shares, or vote in person at the annual meeting. In order to vote in person the shares held by your broker, you will need to obtain a proxy from your broker giving you the right to vote the shares in person at the annual meeting.

How many votes must be present to constitute a quorum?

        A quorum is the presence at the annual meeting in person or by proxy of a majority of the outstanding shares of Common Stock. There needs to be a quorum in order for the annual meeting to be held. Broker non-votes and proxies received but marked as abstentions will count for purposes of establishing a quorum. Broker non-votes occur when a broker holding shares for a beneficial owner does not vote on a particular proposal because the broker does not have discretionary voting power for the particular matter and has not received voting instructions from the beneficial owner.

May my shares be voted if I do not provide my proxy?

        If your shares are held in street name, they may be voted on matters that the New York Stock Exchange (the "NYSE") considers "routine" even if you do not instruct your broker how to vote your shares. Accordingly, if you do not instruct your broker how to vote your shares, your broker can vote your shares to approve the appointment of Ernst & Young LLP as the Company's independent registered accountants,accounting firm, but your broker cannot vote your shares on the election of directors, the approval of the Say-on-Pay resolution, or the approval of the Say on Pay resolution.Company's Amended and Restated 2008 Performance Incentive Plan.

What vote is required to approve each proposal, assuming a quorum is present at the Annual Meeting?

        It will depend on each proposal.

•

For Proposal One:    Stockholders will elect the three director nominees receiving the greatest number of votes.



•

For Proposal Two:    The affirmative vote of the holders of a majority of the shares of Common Stock represented at the meeting and entitled to vote is required for the ratification of the

appointment of Ernst & Young LLP as the Company's independent registered public accountants.

accounting firm for 2013.

•

For Proposal Three:    The affirmative vote of the holders of a majority of the shares of Common Stock represented at the meeting and entitled to vote is required for approval of the compensation of our named executive officers. Because the vote is advisory, it will not be binding on the Board or the Company. However, the Board will review the voting results and take them into consideration when making future decisions regarding executive compensation.



•

For Proposal Four:    The affirmative vote of the holders of a majority of the shares of Common Stock represented at the meeting and entitled to vote is required for approval of the Company's Amended and Restated 2008 Performance Incentive Plan.

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How are we soliciting this proxy?

        We have retained Phoenix Advisory Partners to aid in the solicitation of proxy materials for a fee of $6,000 plus expenses. In addition, theThe Company may solicit stockholder proxies by mail, andtelephone, Internet, or personally through certain of its directors, officers and employees.employees who will receive no extra compensation for their services. The Company will bear all costs of soliciting proxies, including, upon request, reimbursing brokers for the reasonable expenses incurred by them in forwarding proxy materials to the beneficial owners of Common Stock.

How can I contact the Board?

        Anyone desiring to communicate directly with the Board or the non-management directors, individually or as a group, may do so by written communication addressed to them at KapStone Paper and Packaging Corporation, 1101 Skokie Boulevard.,Boulevard, Suite 300, Northbrook, IL 60062, Attention: Secretary. Relevant communications will be forwarded by the Secretary to the appropriate directors depending on the facts and circumstances outlined in the communication.

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SECURITY OWNERSHIP OF MANAGEMENT

        The following table shows the amount of the Company's Common Stock beneficially owned, unless otherwise indicated, by the Company's directors, the named executive officers, and the directors and executive officers as a group as of March 31, 2012.18, 2013. Except as otherwise specified, the named beneficial owner has sole voting and investment power over the shares listed. None of the shares are pledged as security. The total number of shares of Common Stock outstanding as of March 18, 2013 is 46,546,808.47,504,683.

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Table of Common Stock when the vesting period lapses. Messrs. Stone and Kaplan each have 79,959 RSUs that do not vest within 60 days of March 31, 2012. Ms. Tarbox and Mr. Keneally each have 19,217 RSUs that do not vest within 60 days of March 31, 2012. Messrs. Chapman, Furer, Gamache, Gidwitz, Paull, Stewart, and Storch each have 5016 RSUs that do not vest within 60 days of March 31, 2012.Contents

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL STOCKHOLDERS

        The following table sets forth information regarding each person,shows those persons known to us as of March 18, 2013 to be the beneficial owners of more than 5% of the Company's Common Stock, with the exception of Roger W. Stone, whowhose ownership is included in the Security Ownership of Management table above. In furnishing the information below, we have relied upon filings made by the beneficial owners with the SEC.

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Securities Authorized For Issuance Under Equity Compensation PlanSECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLAN

        Information about the Company's equity compensation plan at December 31, 20112012 is as follows:

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PROPOSAL 1

ELECTION OF DIRECTORS

        The Company has a classified Board of Directors currently consisting of three Class A directors (Brian R. Gamache, S. Jay Stewart and David P. Storch) who have terms expiring at the 2013 Annual Meeting of Stockholders, three Class B directors (John M. Chapman, Matthew Kaplan and Ronald J. Gidwitz) who have terms expiring at the 2014 Annual Meeting of Stockholders, and three Class C directors (Jonathan R. Furer, Matthew H. Paull, and Roger W. Stone) who have terms expiring at the 20122015 Annual Meeting of Stockholders. Directors in a class are elected for a term of three years to succeed the directors in such class whose terms expire at such annual meeting, or a shorter term to fill a vacancy in another class of directors.

        The nominees for election at the 20122013 Annual Meeting of Stockholders to fill the three Class CA positions on the Board of Directors are JonathanBrian R. Furer, Matthew H. PaullGamache, S. Jay Stewart, and Roger W. Stone.David P. Storch. If elected, the nominees for the Class CA directors will be elected to serve three-year terms expiring at the Annual Meeting of Stockholders in 2015.2016. If a quorum is present and voting at the meeting, the three nominees for Class CA director receiving the most votes will be elected Class CA directors. Neither abstentions nor broker non-votes will have any effect upon the outcome of voting with respect to the election of directors.

        We believe our Board should be composed of individuals with sophistication and experience in many substantive areas that impact our business. We believe experience, qualifications or skills in the following areas are important: paper industry background; sales; manufacturing; capital markets; finance; accounting; leadership of complex organizations; international operations; and familiarity with board practices of major corporations. We believe that all of our Board members possess the professional and personal qualifications necessary for board service, and have highlighted particularly noteworthy attributes of each Board member in the individual biographies below.

        The following information relates to the nominees listed above and to the Company's other directors whose terms of office will extend beyond the 20122013 Annual Meeting of Stockholders.

Nominees for election at the 20122013 Annual Meeting of Stockholders

Class A
(Term Ends 2013)

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THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES NAMED ABOVE.

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Class B
(Term Ends 2014)

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Class C
(Term Ends 2015)

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THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES NAMED ABOVE.

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Class A
(Term Ends 2013)

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Class B
(Term Ends 2014)

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GOVERNANCE STRUCTURE

        Role of the Board—The Board which is elected by the stockholders, is the ultimate decision-making body of the Company, except with respect to matters reserved to stockholders. The primary function of the Board is oversight. The Board, in exercising its business judgment, acts as an advisor and counselor to senior management and defines and enforces standards of accountability—all with a view to enabling senior management to execute their responsibilities fully and in the interests of stockholders. The following are the Board's primary responsibilities, some of which may be carried out by one or more Committees of the Board or the independent directors as appropriate:

•

Overseeing the conduct of the Company's business so that it is effectively managed in the long-term interestinterests of stockholders;



•

Selecting, evaluating and compensating the Chief Executive Officer (CEO) and planning for CEO succession, as well as monitoring management's succession planning for other key executives;

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Overseeing and reviewing the Company's strategic direction and objectives;



•

Monitoring the Company's accounting and financial reporting practices and reviewing the Company's financial and other controls;



•

Overseeing the Company's compliance with applicable laws and regulations; and



•

Overseeing the processes that are in place to safeguard the Company's assets and mitigate risks.

        In performing its oversight function, the Board is entitled to rely on the advice, reports and opinions of management, counsel, auditors and outside experts. In that regard, the Board and its Committees shall be entitled, at the expense of the Company, to engage such independent legal, financial or other advisors as they deem appropriate, without consulting or obtaining the approval of any officer of the Company.

        Board Leadership Structure—Our bylawsBylaws require that our Chairman shall be a member of the Board of Directors and may or may not be an officer or employee of the Company. The principal duty of the Company's Chairman is to lead and oversee the Board. The Chairman should facilitate an open flow of information between management and the Board, and should lead a critical evaluation of Company management, practices and adherence to the Company's strategic plan and objectives.

        The Company's business is conducted by its employees, managers and officers, under the direction of senior management and led by the CEO. In carrying out the Company's business, the CEO and senior management are accountable to the Board and ultimately to stockholders. Management's primary responsibilities include the day-to-day operation of the Company's business, strategic planning, budgeting, financial reporting and risk management.

        Roger W. Stone is the company's Chairman of the Board and Chief Executive Officer. The Board believes that Mr. Stone's holding of both positions is in the best interests of the Company due to his vast experience in and knowledge of the paper industry. In addition, having the same person serve as Chairman of the Board and Chief Executive Officer facilitates information flow between management and the Board and helps to assure that the Company speaks with one voice. Mr. Stone's biography can be found on page 1011 of this Proxy Statement.

        The Board does not have a lead independent director. However, Brian R. Gamache is the presiding director at the meetings of the Board held in executive session.

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Who are the independent directors?

        Our Corporate Governance Guidelines require that all directors except the Chief Executive Officer and President be independent. An independent director is one who is free of any relationship with the Company or its management that may impair, or appear to impair, the director's ability to make independent judgments, and who meets the NYSE's definition of independence. All members of the Audit, Compensation, and Nominating and Governance Committees shall be independent. The Board determines the independence of each director in accordance with the NYSE Ruleslisting standards and the Corporate Governance Guidelines. The Board has determined that John M. Chapman, Jonathan R. Furer, Brian R. Gamache, Ronald J. Gidwitz, Matthew H. Paull, S. Jay Stewart and David P. Storch are "independent" directors as that term is defined in the NYSE listing standards of the NYSE.standards.

How often did the Board meet during 2011?2012?

        Directors are expected to attend the Annual Meeting of Stockholders, all Board meetings, and meetings of the Committees on which they serve. During the year ended December 31, 2011,2012, the Board held fivesix meetings. Each director serving on the Board in 20112012 attended at least 75%all of the meetings of the Board and at least 85% of the meetings of the committees on which he served. The Board meetsBoard's independent directors meet in executive session, without any members of management present, at each regularly scheduled meeting of the Board. Brian R. Gamache is the presiding director at the executive sessions.

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What is the Company's policy regarding attendance by the directors at the Annual Meeting of Stockholders?

        Members of the Board are strongly encouraged to attend the 2012 Annual MeetingCompany's annual meeting of Stockholders.stockholders. All of the members of the Board then in office attended the 20112012 Annual Meeting of Stockholders.

What committees has the Board established?

        The Board has established anthree standing committees: Audit, Committee, a Compensation, Committee, and a Nominating and Governance Committee. Each committee operates under a written charter approved by the Board of Directors.Governance. All of the members of the committeesCommittees are independent in accordance with applicable SEC regulations, the NYSE listing standards and the Company's Corporate Governance Guidelines. Committee charters are available on the Governance tab of the Board are independent.

        The current members of the Board committees are as follows:

        The members of the Audit Committee are S. Jay Stewart (Chairman), John M. Chapman, Brian R. Gamache and Matthew H. Paull.

        The members of the Compensation Committee are Jonathan R. Furer (Chairman), John M. Chapman, Ronald J. Gidwitz, Matthew H. Paull, S. Jay Stewart and David P. Storch.

        The members of the Nominating and Governance Committee are Brian R. Gamache (Chairman), Jonathan R. Furer, Ronald J. Gidwitz and David P. Storch.

Company's website at http://governance.kapstonepaper.com. Each Committee performs its own annual self assessment.self-assessment.

        Audit Committee.    The Audit Committee's function is to review, with the Company's independent registered public accountantsaccounting firm and management, the annual financial statements and independent

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registered public accountants'accounting firm's opinion, review and maintain direct oversight of the plan, scope and results of the audit by the independent registered public accountants,accounting firm, review and approve all professional services performed and related fees charged by the independent registered public accountants,accounting firm, be solely responsible for the retention or replacement of the independent registered public accountants,accounting firm, and monitor the adequacy of the Company's accounting and financial policies, controls, and reporting systems. In addition, the Audit Committee is responsible for risk oversight of the Company and provides risk assessment reports to the Board. The Audit Committee held eight meetings in 2011. None of the members serve on more than three public company audit committees. All of the members are "financially literate" under the NYSE Rules,listing standards, and the Board has determined that S. Jay Stewart, Brian Gamache and Matthew H. Paullall of the Audit Committee members are "audit committee financial experts" within the meaning of relevant SEC regulations. The Audit Committee held eight meetings in 2012.

        Compensation Committee.    The functions of the Compensation Committee include providing guidance to management and assisting the Board in matters relating to the compensation of the Chief Executive Officer and executive officers, the organizational structure of the Company, the Company's compensation and benefits programs, the Company's succession, retention and training programs, and such other matters that have a direct impact on the success of the Company's human resources. The Compensation Committee held three meetings in 2011. The details of the process and procedures followed by the Compensation Committee are disclosed in thethis Proxy Statement under the headings "Compensation Discussion and Analysis" and Report"Report of the Compensation Committee." The Compensation Committee includedheld three meetings in this Proxy Statement.2012.

        Nominating and Governance Committee.    The Nominating and Governance Committee performs the following functions: assists the Board by identifying prospective director nominees and recommends to the Board the nominees for the annual meeting of stockholders; oversees the Board performance annual evaluation process; evaluates the composition, organization and governance of the Board and its committees; and oversees the Company's Corporate Governance Guidelines. The Nominating and Governance Committee held three meetings in 2011.

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In addition, if any incumbent director fails to receive the required vote for re-election, the Nominating and Governance Committee is responsible for making itsa recommendation to the Board about whether to accept the director's resignation. The Nominating and Governance Committee held two meetings in 2012.

How are directors nominated?

        The Nominating and Governance Committee is responsible for selecting candidates for Board membership, subject to Board approval, and for extending invitations to join the Board. In selecting candidates, the Board endeavors to find individuals of high integrity who have a solid record of accomplishment in their chosen fields and who display the independence of mind and strength of character to effectively represent the best interests of the stockholders. Candidates are selected for their ability to exercise good judgment, and to provide practical insights. Consistent with its charter, the Nominating and Governance Committee is responsible for screening candidates, establishing criteria for nominees, and for recommending to the Board a slate of candidates for election to the Board at the Annual Meeting of Stockholders. In performing these tasks, the Nominating and Governance Committee has the sole authority to retain and terminate any search firm to be used to identify candidates. Candidates are approved by the full Board.

        All directors except the Chief Executive Officer and the President are required to be independent. An independent Director is one who is free of any relationship with the Company or its management that may impair, or appear to impair, the Director's ability to make independent judgments, and who meets the NYSE's definition of independence.

        We do not have a specific diversity policy for our Board, however, we consider diversity to be a critical factor in evaluating the composition of the Board, and that for this purpose diversity includes perspectives, experience, differences and viewpoints, as well as race, ethnicity and gender. The

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Company values diversity and has women and/or minorities serving in several key positions including Chief Financial Officer, Treasurer, Vice President of Mill Operations and Vice President of Sales.

        The Nominating and Governance Committee will consider director candidates recommended by stockholders.stockholders on the same basis as it considers director candidates identified by the Committee. A stockholder who wishes to recommend a prospective nominee to the Board for consideration by the Nominating and Governance Committee needs tomust send a written notice to the corporate secretary at the principal office of the Company. Each notice must include the information about the prospective nominee as required by our Bylaws. Such notice must be delivered to our offices by the deadline relating to stockholder proposals to be considered for inclusion in our proxy material, as described in thethis Proxy Statement under the heading "Additional Information".Information."

        Each notice delivered by a stockholder who wishes to recommend a prospective nominee to the Board for consideration by the Nominating and Governance Committee must include the following information:

•

the name, age, business address and residence address of such person;



•

the class and number of shares of capital stock of the Company which are beneficially owned by such person and any other indirect pecuniary or economic interest in any capital stock of the Company, including, without limitation, derivative instrument, swap, option, warrant, short interest, hedge or profit sharing arrangement;



•

the principal occupation or employment of such person;



•

written consent to being named in the proxy statement as a nominee and to serving as a director if elected; and



•

a description of all arrangements or understandings between such stockholder and the beneficial owner, if any, on whose behalf the nomination is made.

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        The Nominating and Governance Committee may require any prospective nominee to furnish such other information as the Committee may reasonably require to determine the qualifications of such nominee to serve as a director of the Company.

        The foregoing is only a summary of the detailed requirements set forth in our Bylaws regarding director nominations by stockholders that would apply when a stockholder wishes to recommend a prospective nominee. A full description of the information that must be provided as to a prospective nominee is set forth in Article II, Section 4 of the Company's Bylaws, which are available on our Web sitethe Governance tab of the Company's website at www.kapstonepaper.com by selecting "Governance."http://governance.kapstonepaper.com.

How are directors compensated?2012 Director Compensation

        The Nominating and Governance Committee recommends to the Board the form and amount of compensation for non-employee directors. Only non-employee directors are paid for their service on the Board. Each non-employee director of the Company will receivereceived the following compensation for service as a director in 2012:

•

a quarterly retainer of $10,250;



•

a fee of $1,500 for each board meeting and each committee meeting attended by such director; and



•

reimbursement of reasonable expenses to attend board and committee meetings.meetings; and

        Audit, Compensation and Nominating and Governance Committee chairpersons will receive an additional quarterly fee of $2,500, $1,500 and $1,500, respectively.

        Each year, non-employee directors also receive

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2011 Director

        Audit, Compensation
and Nominating and Governance Committee chairpersons received an additional quarterly fee of $2,500, $1,500 and $1,500, respectively.

        The following table provides certain summary information concerning cash and certain otherregarding the compensation of the non-employee directors earned for 2011.2012.

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Director Outstanding Equity Awards at 20112012 Fiscal Year End Table

Director Stock Ownership Requirements

        Our Board has adopted stock ownership requirements applicable to our non-employee directors. Under these requirements, each non-employee director must own shares of the Company's Common Stock which, in the aggregate, are equal in value to at least three (3) times the current annual Board cash retainer. Restricted stock unit awards and vested stock options count toward the ownership requirements. Under the policy, newly appointed or elected directors will have four (4) years from joining

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the Board to comply with these requirements. Discretion may be applied in periods of volatile markets. All directors currently comply with these restrictions.requirements.

Corporate Governance

        The following corporate governance materials are available fromon the Governance sectiontab of ourthe Company's website at http://www.governance.kapstonepaper.com:governance.kapstonepaper.com: (1) Corporate Governance Guidelines; (2) Code of Conduct;Conduct and Ethics; and (3) the Charters of our Audit, Compensation, and Nominating and Governance Committees. We will provide a copy of these documents to our stockholders, without charge, upon written request addressed to the Company at 1101 Skokie Blvd., Suite 300, Northbrook, IL 60062, attention:Attention: Secretary.

Risk Oversight

        The Board'Board's involvement in risk oversight involves both the Audit Committee and the full Board. Risk oversight is a standing agenda item at each Audit Committee meeting. The Committee receives reports from the Company's Director of Internal Audit and independent registered public accountantsaccounting firm at each Audit Committee meeting. The Company's Vice President and Chief Financial Officer and Vice President and Controller both provide reports to the Audit Committee regarding risk factors, including, but not limited to, risks pertaining to credit and liquidity. The General Counsel keeps the Audit Committee abreast of issues pertaining to litigation, regulatory matters, and compliance. The Chairman of the Audit Committee reports on the activities of the Committee regarding risk at each meeting of the full Board. Other committees of our Board may also practice risk oversight related directly to such committee'scommittees' responsibilities. In addition, each regularly scheduled meeting of the Board includes a report from the Company's Chief Executive Officer, Chief Operating Officer and its Vice President and General Manager regarding operating risks at each facility, and risks affecting the industry as a whole.

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REPORT OF THE AUDIT COMMITTEE

        During the year ended December 31, 2011, the Audit Committee held eight meetings.        The purpose of the Audit Committee is to assist the Board in its general oversight of KapStone's financial reporting, internal controls, risk and audit functions. The Audit Committee was formed by the Board in January 2007.

        As described in the Audit Committee Charter, the Committee has oversight responsibilities to stockholders, potential stockholders, the investment community, and other stakeholders related to the:

•

integrity of the Company's financial statements;



•

financial reporting process;



•

systems of internal accounting and financial controls;



•

performance of the Company's internal audit function and independent registered public accountants;accounting firm;



•

independent registered public accountants'accounting firm's qualifications and independence;



•

compliance with ethics policies and legal and regulatory requirements; and



•

risk oversight.

        The Audit Committee has reviewed and discussed the consolidated financial statements with management and Ernst & Young LLP, the Company's independent registered public accountants.accounting firm. Management is responsible for the preparation, presentation and integrity of KapStone's financial statements; accounting and financial reporting principles; establishing and maintaining disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 as amended (the "Exchange Act") Rule 13a-15(e)); establishing and maintaining internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)); evaluating the effectiveness of disclosure controls and procedures; evaluating the effectiveness of internal control over financial reporting; and evaluating any change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting. Ernst & Young LLP is responsible for performing an independent audit of the consolidated financial statements and expressing an opinion on the conformity of those financial statements with accounting principles generally accepted in the United States of America, as well as expressing an opinion on the effectiveness of internal control over financial reporting.

        The Audit Committee provided oversight and advice to management relating to management's assessment of the adequacy of KapStone's internal control over financial reporting in accordance with the requirements of the Sarbanes Oxley Act of 2002. The Audit Committee held private sessions with Ernst & Young LLP to discuss the annual audit. At the conclusion of the process, the Audit Committee reviewed a report from management on the effectiveness of the Company's internal control over financial reporting. The Committee also reviewed the report of management contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2011,2012, filed with the SEC, as well as Ernst & Young LLP's Report of Independent Registered Public Accounting Firm included in the Company's Annual Report on Form 10-K related to its audit of (i) the consolidated financial statements and financial statement schedule and (ii) the effectiveness of internal control over financial reporting.

        The Audit Committee has discussed with Ernst & Young LLP the matters required to be discussed under Statement on Auditing Standards No. 61 (Communications with Audit Committees(545 61)) as amended and as adopted by the Public Company Accounting Oversight Board (the "PCAOB") in Rule 3200.3200T. In addition, the Audit Committee has received from Ernst & Young LLP the written disclosures regarding the auditors' independence required by PCAOB Ethics and Independence Rule 3526,Communication

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with Audit Committees Concerning Independence, and has discussed with Ernst & Young LLP'sLLP its independence. In addressing the quality of management's accounting judgments, the Audit Committee

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asked for management's representations and reviewed certifications prepared by the Chief Executive Officer and Chief Financial Officer that the audited consolidated financial statements of the Company fairly present, in all material respects, the financial condition and results of operations of the Company.

Based on the review of the consolidated financial statements and discussions with and representations from management and Ernst & Young LLP referred to above, the Audit Committee recommended to the Board that the audited consolidated financial statements be included in KapStone's Annual Report on Form 10-K for the year ended December 31, 2011,2012, for filing with the SEC.

        In accordance with Audit Committee policy and the requirements of law, the Audit Committee pre-approves all non-audit services to be provided by Ernst & Young LLP. In addition, the Audit Committee pre-approves all audit and audit related services provided by Ernst & Young LLP. A further discussion of the fees paid to Ernst & Young LLP for audit and non-audit expenses is included below under the heading "Independent Registered Public Accounting Firm."

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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Fees of Independent Registered Public Accounting Firm

        Ernst & Young LLP acted as the independent registered public accounting firm for the Company during the Company's 2006 through 20112012 fiscal years. During such period Ernst & Young LLP also provided certain audit-related and permitted non-audit services. The Audit Committee's policy is to approve all audit, audit-related, tax and permitted non-audit services performed by Ernst & Young, LLP for the Company in accordance with Section 10A(i) of the Exchange Act, and the SEC's rules adopted thereunder. In 20102012 and 2011, the Audit Committee approved in advance all engagements by Ernst & Young LLP on a specific project-by-project basis, including audit, audit-related, tax and permitted non-audit services. No services were rendered by Ernst & Young LLP to the Company in 2010-20112012 or 2011 pursuant to Rule 2-01(c)(7)(i)(C) of Regulation S-X.

        Ernst & Young LLPLLP's fees for services provided for the years ended December 31, 20112012 and 2010,2011, respectively, are as follows:

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EXECUTIVE OFFICERS

        The following individuals have been elected by our Board to serve in the capacities set forth below until the next Annual Meeting of our Board and until their respective successors are elected and qualify.below.

        Biographical information regarding Mr. Stone and Mr. Kaplan is included under the heading "Election of Directors."

        Andrea K. Tarbox was appointed as our Vice President and Chief Financial Officer in January 2007. Ms. Tarbox served as a financial consultant to the Company from April 2006 until her appointment as Vice President and Chief Financial Officer. Ms. Tarbox played a key financial role in the acquisition by the Company of the Kraft Papers Business from International Paper Company.Company in January 2007. From March 2003 through March 2006, Ms. Tarbox served as Chief Financial and Administrative Officer for Uniscribe Professional Services, Inc. From July 1994 until February 2003, Ms. Tarbox was employed by Gartner Inc., last serving as Group Vice President-Finance and Treasurer. Prior to that, Ms. Tarbox assumed financial positions of increasing responsibility in several global companies including British Petroleum, p.l.c. and Fortune Brands, Inc. Ms. Tarbox began her career with Ernst & Young LLP and is a Certified Public Accountant. Ms. Tarbox earned a B.A. degree in Psychology from Connecticut College and an M.B.A. from the University of Rhode Island. In 2012, Ms. Tarbox received the Chicago CFO of the Year® Award from the Financial Executives International Chicago Chapter.

        Timothy P. Keneally has been our Vice President and General Manager of the Company and President of the Company's kraft paper businessKraft Papers Business since its acquisition from International Paper Company ("IP") in January 2007. Previously, Mr. Keneally served as Vice President of Industrial Packaging of IP from 2000 to December 2006 and led the IP team that assessed the review of strategic alternatives relating to the kraft paper and containerboard business. He was the lead person in presenting the historical performance of the business and assisted in defining the future strategy for the business, and was the lead operating person during the Charleston Kraft Division acquisition and the U.S. Corrugated acquisition. Mr. Keneally has 40 years of experience in the paper and packaging industry. Mr. Keneally earned a B.A. degree in History from Marist College in Poughkeepsie, N.Y.NY.

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

        Our compensation programs for executive officers are administered by the Compensation Committee (the "Committee"), which is composed solely of independent directors as defined by rules ofin the NYSE.NYSE listing standards. The Committee operates under a written charter adopted by the Board.

        The Committee has reviewed and approved the following discussion and analysis, which analyzes the objectives and results for 20112012 of the Company's compensation policies and procedures for its four executive officers: Roger W. Stone, the Company's Chief Executive Officer; Matthew Kaplan, the Company's President and Chief Operating Officer; Timothy P. Keneally, the Company's Vice President and General Manager; and Andrea K. Tarbox, the Company's Vice President and Chief Financial Officer (the "Named Executive Officers"). The Company's compensation programs have been adopted in order to implement the Committee's compensation philosophy, while taking into account the Company's financial performance. The Committee periodically reviews the Company's compensation programs and practices in light of the Committee's compensation philosophy, changes in laws and regulations, and the Company's financial goals.

Compensation Policies and Objectives

        The Committee believes that compensation for executive officers should be determined according to a competitive framework, taking into account the financial performance of the Company, individual contributions and the external market in which the Company competes for executive talent. In determining the compensation of the Company's executive officers, the Committee seeks to achieve the following objectives through a combination of fixed and variable compensation.

Pay Competitively

        A total compensation package should be competitive. For executive officers, including the Company's Chief Executive Officer, the Committee considers the level of compensation paid to individuals in comparable executive positions in the Company's peer group and at other paper and packaging companies with which the Company competes in order to recruit and retain executive talent.

Pay for Performance

        Our compensation practices are designed to create a direct link between the aggregate compensation paid to each executive officer and the financial performance of the Company. In order to accomplish this, the Committee considers the individual performance of each executive officer by reviewing, among other factors, the achievement of pre-established corporate and individual performance objectives as well as the recommendations of the Chief Executive Officer. The amount of each component of an executive officer's compensation is based in part on the Committee's assessment of that individual's performance as well as the other factors discussed in this section.

Executives as Stockholders

        Our compensation practices are also designed to link a portion of each executive officer's compensation opportunity directly to the value of the Company's Common Stock through the use of stock-based awards.

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Elements of Compensation

        To accomplish its compensation objectives and philosophy, the Committee relies on the following elements of compensation, each of which is discussed in more detail below:

•

Base salarysalary;



•

Annual performance-based cash bonus awardsawards; and



•

Long-term incentive compensation (in the form of stock options restricted stock and restricted stock units).

        When approving the compensation of the Company's executive officers, the Committee reviews all of the elements of the Company's executive compensation program.

        Each component of executive compensation is designed for a specific purpose. For example, salaries are a significant component of cash-based annual compensation. Salaries are set to compensate each executive based on that executive's employment and salary history and position within the Company and comparable competitive salaries at other companies.companies included in our peer group and the survey data. With regard to the more variable components of the compensation package, annual performance-based cash bonusesawards are tied generally to the Company's short-term financial performance, while equity-based compensation is directed towards the Company's successful results over a longer period. The purpose of the combination of salary, annual cash bonusawards, and equity awards is to provide the appropriate level of total annual cash compensation and long term incentives, combined with an appropriate performance-based component. The Committee places the greatest emphasis on performance-based compensation through annual cash bonus awards and long term equity-based awards, which together comprise the largest portion of executive officer compensation. The Committee believes that the Company's executive compensation package, consisting of these components, is comparable to the compensation provided in the market in which the Company competes for executive talent and is critical to accomplishing its recruitment and retention aims.

No Severance Agreements

        The Company does not have employment agreements or severance arrangements with any of the Named Executive Officers.

Overview of Compensation Program and Process

Role of Committee

        The Committee is responsible for reviewing and recommending to the Board the base salaries, and annual performance-based cash bonusesawards, and long-term incentive compensation for the Company's executive officers. These responsibilities are not delegated to others. The Committee also approves and recommends to the Board employee compensation and benefit programs, as appropriate.

Role of Management

        Management assists the Committee in fulfilling its responsibilities with respect to evaluating executive performance, proposing appropriate performance targets for the annual and long-term incentive plans and developing recommendations as to appropriate salary levels and award amounts. The Committee ultimately used its collective judgment to determine the compensation of the executive officers.

Role of Compensation Consultant

        As part of its process, the Committee utilized the assistance of Frederic W. Cook & Co., an executive compensation consulting company ("Cook"), to assist in evaluating executive compensation programs and in evaluating executive officers' compensation compared to an established peer group of similar companies. Cook was engaged by and communicated directly with the Committee. In

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determining compensation for 2011, the Committee considered the Cook report completed in March 2011 which reviewed, assessed and compared a variety of compensation surveys, and compared our executive compensation to a peer group of 13 companies. The companies included in the peer group are set forth in this Proxy Statement heading "Benchmarking."

        Other than as described herein, Cook did not provide any other services to the Company or the Committee in 2011.

Role of Chief Executive Officer

For 2011,2012, the Company's Chief Executive Officer, Mr. Stone, provided to the Committee his recommendations with respect to potential compensation of the other Named Executive Officers. The Committee reviewed and gave considerable weight to these recommendations because of Mr. Stone's direct knowledge of the other executives' performance and contributions. With respect to those officers, the Committee ultimately used its collective judgment to determine the compensation levels, including base salaries, annual performance-based cash bonusesawards and long-term equity award grants. Mr. Stone recommended that his compensation levels be identical to those of the Company's President, Mr. Kaplan, due to the current and historical level of work and responsibilities shared by them. The

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Committee ultimately determined and approved Mr. Stone's compensation independently based on its collective judgment, and accepted his recommendation to compensate Mr. Kaplan in the same manner.

Continuing ProcessRole of Compensation Consultant

        WhileAs part of its process, the Committee makes manyutilized the assistance of itsFrederic W. Cook & Co., an executive compensation decisions duringconsulting company ("Cook"), to assist in evaluating executive compensation programs and in evaluating executive officers' compensation compared to an established peer group of similar companies. Cook was engaged by and communicated directly with the first quarter of the year,Committee. In determining compensation for 2012, the Committee continuesconsidered a market analysis prepared by Cook in early 2012 which reviewed, assessed and compared a variety of compensation surveys, and compared our executive compensation to plan and review compensation matters throughouta peer group of 15 companies. The companies included in the year.peer group are set forth in this Proxy Statement under the heading "Benchmarking."

        Other than as described herein, Cook did not provide any other services to the Company or the Committee in 2012. The Committee concluded that the work performed by Cook did not raise any conflict of interest.

Results of Advisory Votes

        At the 20112012 Annual Meeting of Stockholders, the Company's stockholders approved, on a non-binding advisory basis, with approximately 99% of the votes cast in favor of the overall compensation of the Company's Named Executive Officers as presented in the Proxy Statement for that meeting.meeting, with approximately 99% of the votes cast in favor. Given the high level of stockholder support, the Compensation Committee determined that no significantdid not make any changes to the Company's executive compensation philosophy, principles, and principles were required during fiscal 2011 as a result ofelements in response to the vote.

Benchmarking

        The Committee reviews survey information of executive compensation, both with respect to target and actual compensation data available, payable by a designated peer group as well as the competitive median of total compensation of general industry groups.group. The purpose of this review is to ensure that the Company's total executive compensation levels, including(including base salaries, annual bonuscash awards, and equity awards,awards) remain reasonable, competitive, and appropriate. The Committee considers executive compensation paid at the peer companies when setting executive compensation levels at the Company, but the Committee does not attempt to maintain a specified target percentile within this peer group to determine executive compensation. In light of the request by Mr. Stone that he and Mr. Kaplan receive the same level of compensation, the Committee compares the aggregate compensation for Messrs. Stone and Kaplan against the aggregate compensation for the chief executive officerofficers and chief operating officerofficers of the peer group companies.

        The peer group of companies is comprised of firms that are similar to the Company in terms of business lines, market conditions, and size. The Committee expects to reevaluate from time to time the composition of the designated peer group as the Company executes its strategy of organic and strategic growth. In 2012, the Committee added Greif, Inc. and Rock-Tenn Company to the peer group due to their similar product lines. The addition of these two companies resulted in a comparison group of fifteen companies with a median revenue of approximately $1.4 billion.

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20112012 Peer Group

Components of Executive Compensation

        The following provides an analysis of each element of compensation, what each is designed to reward and why the Committee chose to include it as an element of the Company's executive compensation

Base Salary

        Base salaries are reviewed annually in the context of the Committee's consideration of the effect of base compensation on recruiting and retaining executive talent. Accordingly, the Committee considers the executive compensation of the peer group. In establishing each executive officer's base salary, the Committee considers several factors, including individual job performance, salary history, competitive external market conditions for recruiting and retaining executive talent, the scope of the executive's position and level of experience and changes in responsibilities.

        In March 2011,2012, the base salaries of executive officers were established in accordance with the foregoing practices. Salaries for the Named Executive Officers were reviewed in March and increases, based on the compensation objectives discussed above, became effective April 1, 2011.2012. Of the Named Executive Officers, the Committee increased the salaries of Mr. Stone and Mr. Kaplan from $420,000$500,000 to $500,000.$515,000. The Committee increased the salary of Mr. Keneally from $330,000$345,000 to $345,000$356,000 and the salary of Ms. Tarbox from $305,000$320,000 to $320,000.$350,000.

        The salary increases for the executive officers reflect the performance of the Company in 2010. In 20102011, including:

•

Successful completion of the Company had recordacquisition of U.S. Corrugated, Inc.;



•

Record net sales of $783$906 million, up 24%16% versus 2009, and generated cash2010;



•

Cash flow from operations of $136.1 million.

$136.4 million; and



•

Net income of $124 million, up 91% versus 2010.

Annual Performance-Based Cash Bonus Awards

        The objective of the annual bonusperformance-based cash award element of compensation is to align the interests of the Named Executive Officers with the Company's financial goals for the year and also to encourage and reward the achievement of individual goals.year. In setting financial and operating targets, which are established in the first calendar quarter, the Committee considers the Company's annual budget and certain short-term operating and financial objectives.

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        With respect to the Company's EBITDA goalsgoal for 2011,2012, the Committee established the following target payout levels in March of 2011:2012:

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EBITDA is defined as net earnings excluding interest, income taxes, depreciation and amortization, extraordinary items and the cumulative effect of accounting changes. This non-GAAP measure is the same measure management uses internally to manage and to evaluate the business and performance of the Company. At the time it set these target payout levels, the Committee believed that, based on the Company's budget, it would be difficult for executives to achieve payouts towards the high end of the EBITDA target payout levels. The Company's EBITDA for 20112012 used for incentive plan calculations was $157,026,000$180,172,000 resulting in the Named Executive Officers achieving payouts of 148.1%92.27% of the EBITDA targetstarget ("EBITDA Achievement"). For purposes of measuring the Company's 2011 EBITDA performance, the Committee excluded the earnings of the former U.S. Corrugated facilities acquired on October 31, 2011, and the due diligence and start-up expenses associated with the acquisition.

        In 2011,2012, Mr. Stone and Mr. Kaplan had an approved target of 75%100% of their respective salary, or $375,000,$515,000, and a maximum of 150%200% of their salary, or $750,000.$1,030,000. Their bonuscash award was weighted 100% on the achievement of the Company's EBITDA goals.goal. Accordingly, each achieved and was paid the incentive of $555,375$475,192 ($375,000515,000 × 148.1%92.27%).

        Mr. Keneally's performance measures for 2011 werecash award was weighted 85% based upon100% on the achievement of the Company's EBITDA performance and 15% upon individual performance goals. He had angoal. His approved plan target was 60% of 50%his salary, or $213,600, and a maximum of 100%120% of his salary. The Committee, in consultation with Mr. Stone, determined that Mr. Keneally earned 93.33% of his individual performance goals.salary, or $427,200. Therefore, Mr. Keneally achieved and was paid an incentive of $265,452 which was calculated as follows:$197,089 ($213,600 × 92.27%).

EBITDA Component

Individual Goals Component

        Ms. Tarbox's performance measures for 2011 werecash award was weighted 80% based upon100% on the achievement of the Company's EBITDA performance and 20% upon individual performance goals. She had angoal. Her approved plan target was 60% of 50%her salary, or $210,000, and a maximum of 100%120% of her salary. The Committee, in consultation with Mr. Stone, determined that Ms. Tarbox earned 98.75% of her individual performance goals.salary, or $420,000. Therefore, Ms. Tarbox achieved and was paid an incentive payment of $252,768 which was calculated as follows:$193,768 ($210,000 × 92.27%).

EBITDA Component

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Individual Goals Component

        We have not disclosed the specific individual performance targets of Mr. Keneally and Ms. Tarbox because we believe such disclosure would result in competitive harm to us. Mr. Keneally's targets relate to succession planning, safety, costs, production performance and sales performance. Ms. Tarbox's targets relate to investor relations, integrity of internal controls, strategic support, human resources, financing and capital structure.

        For 2011, Mr. Keneally and Ms. Tarbox submitted written appraisals with their own assessments of the level of achievement of their respective individual performance targets in 2011 compared to their own personal objectives. The CEO reviewed and discussed the appraisals with each of them. The CEO used his judgment of their performance against the objectives, considered completion of objectives, relative weightings and the quality of work performed to reach his assessment of the achievement levels prior to submitting them for approval by the Committee.

Long-Term Incentive Compensation

        The Committee determines the awards of long-term compensation through equity incentives (in the form of stock options restricted stock and restricted stock units) granted to executive officers as well as other eligible employees. The Committee believes that including an equity component in executive compensation closely aligns the interests of the executives and the Company's stockholders and rewards executives in line with stockholder gains. The practice of the Committee is to consider annual equity grants to key employees, including the Named Executive Officers, at its regularly scheduled meeting in March or April. Option grants at other times depend upon extraordinary circumstances such as promotions or new hires.

        Equity awards are made under the Amended and Restated 2006 Incentive Plan, which provides for the grant of non-qualified stock options, incentive stock options, restricted stock, restricted stock units and other stock-based awards. The Committee determined that it would be advisable to consider the awardCompany's long term incentive compensation for 2012 consisted of stock options and restricted stock in combination with stock options in appropriate cases.units. This determination reflected the desire to maintain a strong long-term equity component in executive compensation, to reduce the number of equity units required to provide such component and to adjust compensation practices appropriately in light of Accounting Standards Codification No. 718, Compensation—Stock Compensation, which requires companies to recognize the compensation cost related to "share-based payment transactions," like stock options, in their financial statements. To date, only non-qualified stock options, restricted stock units and restricted stock have been granted under the Amended and Restated 2006 Incentive Plan.

        Equity grants made during 20112012 to executive officers and senior management, including the Named Executive Officers, were determined by the Committee based upon the compensation objectives of the Committee, as discussed above, and informed by the evolving nature of executive compensation

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practices. In determining the size of the equity grants for the Named Executive Officers, the Committee made an evaluation of a number of factors, including: competitive market practices; the level of responsibility of the individual; the individual's job performance and ability to influence corporate results; and the cost to the Company and the related effect of equity grants on earnings per share dilution. The Committee's intention was to deliver approximately the same economic value

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through the restricted stock unit component of the award as the stock option component. Accordingly, during 2011,2012, restricted stock units were awarded in a ratio of 1 unit of restricted stock for each approximatelyevery 2.5 stock options awarded. This reflects the relationship between the value of restricted stock units, which is based on the market value of the underlying Common Stock on the date of grant, and the fair market value of stock options (which is generally two or three to one).

        As previously disclosed, the Company approved a special dividend of $2.00 per share payable on December 20, 2012 to stockholders of record of the Company's common stock at the close of business on December 10, 2012. As a result of the change in the company's capitalization arising out of the special dividend, the Compensation Committee adjusted the purchase price to be paid for shares subject to outstanding stock option awards by decreasing the exercise price by the amount of the special dividend. The Amended and Restated 2006 Incentive Plan requires an adjustment upon a change in capitalization to equitably reflect such an event.

        On November 28, 2012, following approval by the Compensation Committee, the Company amended the vesting date for grantees awarded restricted stock units in May 2010 from May 27, 2013 to November 28, 2012. This amendment did not apply to Mr. Stone, Mr. Kaplan nor any grantee who attained the age of 65 on or before November 28, 2012 (including Mr. Keneally). The Company further amended its Restricted Stock Unit Agreement with Ms. Tarbox to provide that, in the event she is not employed by the Company on May 27, 2013 for a reason other than death or disability, Ms. Tarbox shall pay the Company an amount equal to the value of the restricted stock units plus any special dividends arising out of her ownership of the Company's common stock converted from such units. In addition, the 2012 Performance-Based Cash Awards for Mr. Keneally and Ms. Tarbox had an accelerated payment. The accelerated payments were conditioned on each NEO's agreement to repay the accelerated payment if the NEO's employment terminates under circumstances requiring forfeiture of the accelerated payment. The Committee approved the accelerated vesting dates for RSUs and accelerated incentive award payments to permit the NEOs to recognize such taxable income in 2012 rather than 2013 in view of the likelihood that effective federal income tax rates applicable to the NEOs will increase substantially in 2013.

        Stock options produce value for executives and employees only if the Common Stock price increases over the exercise price, which is set at the closing price on the date of grant. Also, through vesting and forfeiture provisions, stock options and RSUs create incentives for executive officers and senior management to remain with the Company. Stock options granted in 2011 to executive officers and senior management, including the Named Executive Officers, have a ten-year term, vest 50% on the second anniversary of the grant date and the remaining 50% on the third anniversary of the grant date.

Plan ChangesChanges: Prohibition on Repricing of Options Without Stockholder Approval

        On March 8, 2012, the Board authorized an amendment and restatement of the 2006 Incentive Plan, effective for all awards granted under the plan on or after March 8, 2012. The amendment prohibits the purchase of underwater options and the repricing of options. The 2006 Incentive Plan also prohibits buy-outs of options or restricted stock units without stockholder approval.

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20112012 Awards

        On March 3, 2011,7, 2012, the Committee granted the following equity awards under the Amended and Restated 2006 Incentive Plan to the Named Executive Officers:

        Each of the stock options has an exercise price of $16.61$19.75 per share (the closing price of the Company's Common Stock on the date of grant). All stock options that were granted vest 50% on the second anniversary of the grant date and the remaining 50% on the third anniversary of the grant date. Restricted stock units granted will vest 100% on the third anniversary of the grant date. All stock options and restricted stock units vest immediately upon the death, disability or retirement of a recipient who has attained the age of 65.

Clawback of Compensation

        Clawback provisions are included in all awards under the Amended and Restated 2006 Incentive Plan. Pursuant to those provisions, the Board may require an employee who engaged in fraud or misconduct to repay annual performance-based cash bonus awards and long-term incentive awardsawards.

No Pledging of Stock

        The Dodd-Frank Wall Street Financial ReformCompany's Insider Trading Policy prohibits its employees and Consumer Protection Act (the "Dodd-Frank Act") requires the nationaldirectors from pledging Company securities exchanges, including the NYSE, to adopt rules which will require issuers to develop and implement clawback policies. Under the policies, an issuer will be required to recover from any current of former executive officer any incentive-based compensation paid during the three years preceding any accounting restatement due to material noncompliance with SEC reporting requirements, to the extent such compensation is in excess of the compensation that would have been paid based on the restatement. The new clawback policies will apply regardless of whether there has been misconduct on the part of the issuer or the executive officer who received the incentive-based compensation. Our existing incentive-based compensation plans will need to be reviewedas collateral for consistency with the clawback requirements of the NYSE, when adopted.

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No Hedging Transactions

        The Company has enacted an anti-hedging policy onregarding Company stocksecurities applicable to all employees and directors.

Severance and Change-in-Control Benefits

        The Company does not agree in advance to provide post-termination or change-in-control benefits to executive officers in the event that they terminate employment with the Company. The Company reserves the right to provide severance benefits to executives when they terminate employment with the Company. None of the Named Executive Officers has an employment agreement that provides for termination, severance or change-in-control benefits.

        The Company does not have formal change-in-control provisions in the Amended and Restated 2006 Incentive Plan. However, the Amended and Restated 2006 Incentive Plan provides the Board with the discretion to adjust equity awards in the event of certain corporate transactions, including a change-in-control. This adjustment may include the assumption of awards by an acquiring or successor entity, the termination of unexercised awards upon a change-in-control and the cashoutcash-out of awards in the event of a sale or similar transaction which results in the Company's stockholders receiving a payment for their shares of Common Stock. The Committee may also provide for the acceleration and vesting of awards at any time, including upon a change-in-control.

        Stock options and restricted stock units awarded under the Amended and Restated 2006 Incentive Plan vest immediately upon an award recipient's death, Retirement or Disability. The terms "Retirement" and "Disability" are defined in the Amended and Restated 2006 Incentive Plan.

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        The Performance Incentive Plan provides that if a participant is terminated by the Company following a change-in-control but prior to the payment of an annual incentive award for a performance period thereunder, the participant will be entitled to such award only if the applicable performance goals are achieved, such award to be prorated for the actual number of months worked in the year.

        The Committee believes that the provisions provided under both the Amended and Restated 2006 Incentive Plan and the Performance Incentive Plan are appropriate because an employee's position could be adversely affected by a change in control even if he or she is not terminated.

Perquisites and Personal Benefits

        In general, the Company does not provide perquisites or personal benefits to the Named Executive Officers that are not available to other employees.

Pension Benefits or Supplemental Retirement Benefits

        The Company provides pension or retirement benefits to the Named Executive Officers consisting of the 401(k) plan with company matching contributions and retirement savings account contributions. Pursuant to the 401k401(k) plan, the Company makes a matching contribution equal to 100% of the first 4% of the employee's pay contributed to the plan plus 50% of the next 2% of pay contributed. At the end of each 401(k) plan year, the Company makes an additional retirement savings account contribution based upon the age of the respective Named Executive Officer at the end of the plan year and total earnings for the year subject to maximum amount of $245,000$250,000 in accordance with Internal Revenue Service regulations. The Committee does not believe that pension or other supplemental retirement benefits other than the 401(k) plan are necessary to further the objectives of the Company's executive compensation program.

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Health and Welfare Benefits

        All full-time employees, including our Named Executive Officers, may participate in our health and welfare benefit program, including medical, dental and vision care coverage, disability insurance and life insurance.

Regulatory Considerations

        Section 162(m) of the Internal Revenue Code generally denies a publicly traded company a Federal income tax deduction for compensation in excess of $1.0 million paid to certain of its executive officers, unless the amount of such excessofficers. Performance-based compensation is payable based solely upon the attainment of objective performance criteria. The Company has undertaken to qualify substantial components of the incentive compensation it makes available to its executive officers for the performance exception to non-deductibility. Most equity-based awards available for grant under the Company's equity compensation plans, and all of the equity-based awards actually granted to executive officers, are intended to so qualify. Amounts payable under the Performance Incentive Plan, if approved by stockholders, are also intended to be exempt from the applicationdeduction limit, however, if certain requirements are met. The Compensation Committee structures compensation to take advantage of this exemption under Section 162(m) to the extent practicable, while satisfying the Company's compensation policies and objectives. Because the Compensation Committee also recognizes the need to retain flexibility to make compensation decisions that may not meet the standards of Section 162(m) as performance-based compensation. However,when necessary to enable the Company to continue to attract, retain, and motivate highly-qualified executives, it reserves the authority to approve potentially non-deductible compensation in appropriate circumstances, the Committee may deem it appropriate to pay compensation or make incentive or retentive awards that do not meet the performance criteria and therefore may not be deductible by reason of Section 162(m).circumstances.

Named Executive Officer Stock Ownership Requirements

        OurOn March 7, 2013, our Board has adoptedincreased the stock ownership requirements applicable to the Named Executive Officers. EachOfficers based on a multiple of annual base salary. The Board originally created stock ownership requirements in 2011 to further align the interests of our Named Executive Officer is required to own sharesOfficers with those of the Company's Common Stock whichstockholders and encourage long-term stockholder value by requiring our

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Named Executive Officers to hold a significant equity stake in the Company. The following table illustrates the current stock ownership requirements:

        The revised guidelines more than double the required ownership levels, expressed as multiples of salary, compared with the original requirements. Named Executive Officers may aggregate are equal in valuetheir shareholdings to at least his or her annual salary. Restrictedaccomplish their ownership requirement, and restricted stock units and vested options will count toward the ownership requirements. Newly appointed Named Executive Officers will have four (4) years from their appointment to comply with the requirements. DiscretionThe Board may, be appliedin its discretion, make exceptions to the policy in periods of volatile markets. AllAs of the record date, all Named Executive Officers currently complycomplied with these requirements.

Report of the Compensation Committee

        The Committee reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of SEC Regulation S-K with management. Based on such review and discussions, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the registrant's Annual Report on Form 10-K and this Proxy Statement.

Compensation Committee Interlocks and Insider Participation

        There were no interlocks or other relationships among the Company's executive officers and directors during 20112012 that are required to be disclosed under applicable SEC disclosure requirements.

RISK OVERSIGHT OF COMPENSATION

        The Compensation Committee assesses the risks and rewards associated with our company's compensation programs. The Committee reviews and approves compensation programs with features designed to reward long-term achievement and discourage excessive short-term risk taking. As discussed in the Compensation Discussion & Analysis, an independent executive compensation consulting firm hired by the Committee advises the committee with respect to our executive compensation practices and programs, including their associated risks. The Committee concluded that the Company's compensation programs, taken as a whole and considered within the other financial control and approval processes in place at the Company, do not present a reasonable likelihood of having a material adverse effect on the Company.

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SUMMARY COMPENSATION TABLE

        The following table summarizes the total compensation earned by or paid to the Named Executive Officers for the years ended December 31, 2012, 2011, 2010 and 2009.2010.