SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant ☒ Filed by a Party other than the Registrant ☐
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☐ | Preliminary Proxy Statement |
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☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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☒ | Definitive Proxy Statement |
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☐ | Definitive Additional Materials |
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☐ | Soliciting Material Pursuant to § 240.14a-11(c) or § 240.14a-12 |
CLEARWATER PAPER CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Clearwater Paper Corporation 20192021
CLEARWATER PAPER CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
May 13, 201917, 2021
NOTICE OF ANNUAL MEETING
AND
PROXY STATEMENT
Clearwater Paper Corporation 20192021
Clearwater Paper Corporation 601 West Riverside, Suite 1100 Spokane, WA 99201 |
Dear Clearwater Paper stockholders and stakeholders:
As the COVID pandemic spread across our country, we at Clearwater Paper focused on two key priorities: keeping our people healthy and safe, and meeting the significant increase in demand for our essential products that were rapidly becoming in short supply. We managed to do both. I could not be prouder of our team of over 3,300 people across the country who made this happen – through their vigilance, commitment, and hard work. We took several steps to protect, support and thank our people during this time, including enhanced benefits, product distributions, and a discretionary bonus for more than 2,800 of our people.
While focusing on our people and customers, we delivered solid operational and financial results. We strengthened our balance sheet by reducing net debt by $200 million, re-financing our 2023 notes, and improving liquidity. You can read more about our 2020 accomplishments in the Business Highlights section.
2020 was certainly a challenging year, but we believe that we are well-positioned to benefit from key trends in the long run:
Our products are inherently renewable.
o | The primary raw material we use is wood that we procure from sustainable sources. |
o | As the world’s growing population places greater demands on scarce resources, the need to rely on renewable ones is growing. |
As a leading provider of private-brand tissue products, we are positioned to benefit from consumers shift away from major brands.
Our expertise in tissue manufacturing, supply chain, and transportation is a key differentiator.
As a producer of high-quality paperboard, we are well-positioned to support the trend towards more sustainable packaging and foodservice products.
We operate well-invested paperboard assets, with a geographic footprint enabling us to efficiently service our customers.
We have a strong governance foundation, a gender-diverse leadership team, a diversity, equity and inclusion program, a wide array of employee benefits, and an ethics-based culture.
We are delivering strong business results that position us to continue to innovate and grow.
We seek your voting support for the items described in this proxy statement and encourage you to participate in our annual meeting. I am truly honored and humbled to lead such a strong team and am grateful for your investment and trust in all of us.
Sincerely,
Arsen Kitch
Chief Executive Officer
Clearwater Paper Corporation 2021
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PROXY STATEMENT TABLE OF CONTENTS
1 | PROXY SUMMARY AND BUSINESS HIGHLIGHTS |
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2 | CORPORATE GOVERNANCE AND BOARD OF DIRECTORS |
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Corporate Governance Guidelines; Code of Business Conduct and Ethics |
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Nominees for Election at this Meeting for a Term Expiring in 2024 (Class I) |
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT |
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3 | EXECUTIVE COMPENSATION DISCUSSION AND TABLES |
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4 | AUDIT COMMITTEE REPORT |
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Clearwater Paper Corporation 2021
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5 | ANNUAL MEETING INFORMATION |
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6 | PROPOSALS |
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PROPOSAL 3—ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER |
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Clearwater Paper Corporation 2021
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Date: Monday, May
Time: 9:00 a.m. Pacific
Place:
Via webcast: https://register.proxypush.com/CLW Record Date: March 18, |
| YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the Annual Meeting of Stockholders, we urge you to vote and submit your proxy in order to ensure the presence of a quorum. Each attendee must present the proper form of documentation (as described in the section “Annual Meeting Information”) to be admitted. | ||||||
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| You may vote your shares in one of four ways: |
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| Return the proxy card by mail in the postage paid envelope |
| INTERNET go to www.proxyvote.com |
| TELEPHONE call the toll free number 1-800-690-6903 |
| IN PERSON Attend the annual meeting with your ID. | |
Meeting Agenda / Proposals |
We are holding this meeting to:
elect twothree directors to the Clearwater Paper Corporation Board of Directors;
ratify the appointment of our independent registered public accounting firm for 2019;2021;
hold an advisory vote to approve the compensation of our named executive officers; and
transact any other business that properly comes before the meeting.
Financial and other information concerning Clearwater Paper is contained in our Annual Report to Stockholders for the fiscal year ended December 31, 2018.2020. This proxy statement and our 20182020 Annual Report to Stockholders are available on our website at www.clearwaterpaper.com by selecting “Investor Relations” and then “Financial Information & SEC Filings.” Additionally, and in accordance with SEC rules, you may access our proxy materials at www.proxyvote.com which does not have “cookies” that identify visitors to the site.
Notice Regarding the Availability of Proxy Materials | By Order of the Board of Directors, |
On or about April | |
MICHAEL S. GADD | |
Senior Vice President, General Counsel and Corporate Secretary |
Clearwater Paper Corporation 20192021
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1 | PROXY SUMMARY AND BUSINESS HIGHLIGHTS | 2 | CORPORATE GOVERNANCE AND BOARD OF DIRECTORS | 3 | EXECUTIVE COMPENSATION DISCUSSION AND TABLES | 4 | AUDIT COMMITTEE REPORT | 5 | ANNUAL MEETING INFORMATION | 6 | PROPOSALS |
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1. PROXY SUMMARY AND BUSINESS HIGHLIGHTS
CLEARWATER PAPER CORPORATION PROXY STATEMENT for the 2021 ANNUAL MEETING OF STOCKHOLDERS This proxy statement is being furnished to stockholders of Clearwater Paper Corporation in connection with the solicitation of proxies by our Board of Directors for use at our 2021 Annual Meeting of Stockholders, which is described below. References to “Clearwater Paper,” “the company,” “we,” “us” or “our” throughout this proxy statement mean Clearwater Paper Corporation. |
This summary highlights important information you will find elsewhere in this Proxy Statement. It is only a summary and you should review the entire Proxy Statement before you vote.
Meeting Information
Date and Time | Location | Record Date | Mailing Date | |
Monday, May |
| March 18, | On or about | |
Via webcast: https://register.proxypush.com/CLW | ||||
Meeting Agenda / Proposals | ||||
Proposal | Board of Directors’ Recommendation | |||
1. Elect | FOR each nominee | |||
2. Ratify the appointment of our independent registered public accounting firm for | FOR | |||
3. Hold an advisory vote to approve the compensation of our named executive officers | FOR | |||
4. Transact any other business that properly comes before the meeting | ||||
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Information regarding our executive compensation program can be found under the “Executive Compensation Discussion and Analysis” section found later in this proxy. |
Clearwater Paper Corporation 2021
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1 | PROXY SUMMARY AND BUSINESS HIGHLIGHTS | 2 | CORPORATE GOVERNANCE AND BOARD OF DIRECTORS | 3 | EXECUTIVE COMPENSATION DISCUSSION AND TABLES | 4 | AUDIT COMMITTEE REPORT | 5 | ANNUAL MEETING INFORMATION | 6 | PROPOSALS |
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Board Composition and Diversity
Average tenure 5.2 years
The above charts reflect information for all nominees and continuing directors.
Three independent directors have been added to the Board in the past two years.
Director Nominees
This table provides a summary of some of the information regarding our twothree director nominees. For more information regarding these nominees and our other directors see the “Board of Directors” section later in this Proxy Statement.
Name | Age | Director Since | Current Principal Occupation | Independent | Current Committee Memberships | Other Public Boards | Age | Director Since | Current Principal Occupation | Independent | Current Committee Memberships | Other Public Boards | ||||
Audit | Compensation | Nominating and Corporate Governance |
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Kevin J. Hunt | 67 | 2013 | Director of Energizer Holdings, Inc | Yes | • | • |
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William D. Larsson | 73 | 2008 | Director of Schnitzer Steel Industries, Inc. | Yes | • |
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John J. Corkrean | 55 | 2019 | CFO of H.B. Fuller | Yes | * | * |
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Arsen S. Kitch | 39 | 2020 | President & CEO of Clearwater Paper Corporation | No |
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Alexander Toeldte | 61 | 2016 | Retired CEO | Yes |
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Clearwater Paper Corporation 20192021
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1 | PROXY SUMMARY AND BUSINESS HIGHLIGHTS | 2 | CORPORATE GOVERNANCE AND BOARD OF DIRECTORS | 3 | EXECUTIVE COMPENSATION DISCUSSION AND TABLES | 4 | AUDIT COMMITTEE REPORT | 5 | ANNUAL MEETING INFORMATION | 6 | PROPOSALS |
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Business highlights and sustainability
Corporate Governance Highlights
Independence |
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•There are three standing committees made up entirely of independent directors. |
•Independent directors regularly meet without management present. |
Board Practices |
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•Each standing committee operates under a committee charter. |
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Leadership Structure |
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Majority Vote |
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Stock Ownership Requirements |
•We have a comprehensive insider trading policy that covers directors, officers and |
•We have an anti-hedging and anti-pledging policy for our stock. |
•Directors and executive officers are all |
Clearwater Paper Corporation 2019
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Clearwater Paper Corporation 2019
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Clearwater Paper Corporation 20192021
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1 | PROXY SUMMARY AND BUSINESS HIGHLIGHTS | 2 | CORPORATE GOVERNANCE AND BOARD OF DIRECTORS | 3 | EXECUTIVE COMPENSATION DISCUSSION AND TABLES | 4 | AUDIT COMMITTEE REPORT | 5 | ANNUAL MEETING INFORMATION | 6 | PROPOSALS |
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2018 SUSTAINABILITY2020 Business Highlights
We are a premier private brand tissue manufacturer and safety SUCCESSproducer of high-quality paperboard products. Our products can provide more sustainable alternatives to products made from non-renewable resources.
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•Implemented risk mitigation plan to protect employees and continue serving customers during the COVID-19 pandemic | •Enhanced benefits to support employees through COVID-19 | •Awarded bonuses to approximately 2,800 front-line workers | •Appointed President & Chief Executive Officer - Arsen Kitch, Senior Vice President & Chief Financial Officer - Mike Murphy and Senior Vice President and Consumer Products General Manager - Joanne Shufelt •Ratified Lewiston contracts with United Steelworkers & International Brotherhood of Electrical Workers •Reduced net debt by $200 million •Repaid $160.8 million of term loan and refinanced 2023 notes with 2028 notes •Established the Diversity, Equity, and Inclusion steering committee |
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•Adjusted business operations to support unprecedented tissue demand •Achieved Shelby, North Carolina paper machine ramp-up, new paper machine reached full production run rate •Expanded retailers’ capacity to grow their private brands through innovation of quality products •Received awards for outstanding support, execution, partnership, and distribution from major customers | |||
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•Maintained strong and stable performance during COVID-19 pandemic | |||
•Received industry awards for paperboard packaging innovation and sustainability |
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Clearwater Paper Corporation 20192021
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1 | PROXY SUMMARY AND BUSINESS HIGHLIGHTS | 2 | CORPORATE GOVERNANCE AND BOARD OF DIRECTORS | 3 | EXECUTIVE COMPENSATION DISCUSSION AND TABLES | 4 | AUDIT COMMITTEE REPORT | 5 | ANNUAL MEETING INFORMATION | 6 | PROPOSALS |
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Sustainability and Human Capital Management
•We believe in careful utilization of our limited natural resources and understand our role in conserving and protecting the planet’s air, water, and land, and in managing climate change risk: oThe primary raw material in both our tissue and paperboard products is wood, which is 100% renewable and a commonly recycled resource. o100% of our wood comes from sustainably managed forests either controlled or certified by fiber sourcing standards, including Forest Stewardship Council (FSC®) Chain of Custody, Sustainable Forestry Initiative (SFI®), and Programme for the Endorsement of Forest Certification (PEFCTM). oOur paperboard products enable our customers to use renewable packaging rather than plastics. |
•Since 2012, we have reduced our costs and our environmental impact by designing out waste and pollution: oReduced our greenhouse gas emissions intensity by 3%. oReduced purchased energy intensity by 6%. oImproved water usage intensity by 11%. oIntroduced two new products with recycled content. NuVo®, cupstock with up to 35% post-consumer recycled fiber, and ReMagine™, a folding carton board with up to 30% post-consumer recycled fiber. oSignificantly reduced our waste-to-landfill intensity by 68%. |
•We support the principles of a circular economy and apply a management systems approach in each of our focus areas to support priorities and goals. |
•We utilize Global Reporting Initiative (GRI) Reporting Principles as the framework for our reporting and are committed to sharing our Environmental, Social and Governance (ESG) performance results and encourage open dialogue and feedback that helps make us better. |
•Our ESG reporting is both Sustainability Accounting Standards Board (SASB) and Task Force on Climate Related Financial Disclosure (TCFD) aligned. Our Environmental disclosures include: oWood Source Type, oWood Source Location, oTotal Energy and Energy Intensity, oEnergy Use by Source, oElectricity Use and Electricity Intensity, oPercentage Renewable Energy, oTotal CO2 Emissions and Emissions Intensity, and oWater Use and Water Intensity. |
Clearwater Paper Corporation 2021
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1 | PROXY SUMMARY AND BUSINESS HIGHLIGHTS | 2 | CORPORATE GOVERNANCE AND BOARD OF DIRECTORS | 3 | EXECUTIVE COMPENSATION DISCUSSION AND TABLES | 4 | AUDIT COMMITTEE REPORT | 5 | ANNUAL MEETING INFORMATION | 6 | PROPOSALS |
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•We were recognized in 2020 for our safety and innovation efforts. |
oPulp & Paper Safety Association - Safety Innovator Award ▪Awarded for the development and implementation of an enclosed process that allows employees to safely sample chemical lines. oRISI - Packaging Innovation Award ▪Awarded for our NuVo® Cup Stock which has increased levels of post-consumer recycled fiber content while providing a hot cup print surface that allows for high-definition graphic design with less ink usage. |
•We believe that a sustained commitment to diversity, equity, and inclusion makes us a stronger organization. We are dedicated to fostering and sustaining an environment where our teammates, who stand beside us and work with us, are valued for their unique backgrounds, knowledge, skills, and experiences. |
•We maintain a human capital policy that supports a diverse and energized workforce with career advancement, role mobility opportunities, and strong health, safety, and wellness initiatives. Our values guide us beyond producing financial returns to serving our communities and developing our people. |
•We offer competitive benefits, including market-competitive compensation, healthcare, paid time off, parental leave, retirement benefits, tuition assistance, employee skills development, and leadership development, to attract and retain the best available talent. |
•We aspire to achieve zero workplace injuries and provide a safe, open, and accountable work environment for our employees. We provide several channels for all employees to speak up, ask for guidance, and report concerns related to ethics or safety violations. We address employee concerns and take appropriate actions that uphold our Clearwater Paper values, which include: oCommitment oCollaboration oCommunication oCourage oCharacter |
CLEARWATER PAPER CORPORATION
PROXY STATEMENT
for the
2019 ANNUAL MEETING OF STOCKHOLDERS
This proxy statement is being furnished to stockholders of Clearwater Paper Corporation in connection with the solicitation of proxies by our Board of Directors for use at our 2019 Annual Meeting of Stockholders, which is described below. References to “Clearwater Paper,” “the company,” “we,” “us” or “our” throughout this proxy statement mean Clearwater Paper Corporation.2021
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1 | PROXY SUMMARY AND BUSINESS HIGHLIGHTS | 2 | CORPORATE GOVERNANCE AND BOARD OF DIRECTORS | 3 | EXECUTIVE COMPENSATION DISCUSSION AND TABLES | 4 | AUDIT COMMITTEE REPORT | 5 | ANNUAL MEETING INFORMATION | 6 | PROPOSALS |
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2. CORPORATE GOVERNANCE AND BOARD OF DIRECTORS
INTERNET AVAILABILITY OF ANNUAL MEETING MATERIALS
Under Securities and Exchange Commission (“SEC”) rules, we have elected to make our proxy materials available to most of our stockholders over the Internet, rather than mailing paper copies of those materials to each stockholder. On or about April 2, 2019, we mailed to most of our stockholders a Notice of Internet Availability of Proxy Materials (the “Notice”) directing stockholders to a website where they can access our 2019 Proxy Statement and 2018 Annual Report and view instructions on how to vote via the Internet or by phone. If you received the Notice and would like to receive a paper copy of the proxy materials, please follow the instructions printed on the Notice to request that a paper copy be mailed. Some of our stockholders were not mailed the Notice and were instead delivered paper copies of the documents accessible on the Internet.
Date, Time and Place of the Meeting
The 2019 Annual Meeting of Stockholders will be held on Monday, May 13, 2019, at 9:00 a.m., local time, at the Grand Hyatt, 721 Pine Street, Seattle, Washington 98101.
Purpose of the Meeting
The purpose of the meeting is to:
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Recommendation of the Board of Directors
Our Board unanimously recommends that you vote FOR each director nominee, FOR the ratification of the appointment of our independent registered public accounting firm for 2019, and FOR approval of the compensation of our named executive officers.
Clearwater Paper Corporation 2019
Stockholders who owned common stock at the close of business on March 18, 2019, the record date for the Annual Meeting, may vote at the meeting. For each share of common stock held, stockholders are entitled to one vote for as many separate nominees as there are directors to be elected and one vote on any other matter presented.
Proxy Solicitation
Certain of our directors, officers and employees and our proxy solicitor, D.F. King & Co. may solicit proxies on our behalf by mail, phone, fax, e-mail, or in person. We will bear the cost of the solicitation of proxies, including D.F. King’s fee of $6,000 plus out-of-pocket expenses, and we will reimburse banks, brokers, custodians, nominees and fiduciaries for their reasonable charges and expenses to forward our proxy materials to the beneficial owners of Clearwater Paper common stock. No additional compensation will be paid to our directors, officers or employees who may be involved in the solicitation of proxies.
Tabulation of Votes—Inspector of Election
Broadridge Financial Solutions, Inc., or Broadridge, will act as the inspector of election at the Annual Meeting and we will reimburse reasonable charges and expenses related to the tabulation of votes.
Voting
You may vote your shares in one of several ways, depending upon how you own your shares.
Shares registered directly in your name with Clearwater Paper (through our transfer agent, Computershare):
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Shares held in a Clearwater Paper 401(k) Savings Plan (through Fidelity Management Trust Company):
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Clearwater Paper Corporation 2019
IMPORTANT NOTE TO 401(K) SAVING PLANS PARTICIPANTS: Broadridge, our proxy agent, must receive your voting instructions by 11:59 p.m., Eastern Daylight Time, on May 8, 2019, in order to tabulate the voting instructions of 401(k) Savings Plans participants who have voted and communicate those instructions to the 401(k) Savings Plans trustee, who will ultimately vote your shares.
If the 401(k) Savings Plan trustee does not timely receive voting directions from a 401(k) Savings Plans participant or beneficiary, the participant or beneficiary shall be deemed to have directed the 401(k) Savings Plan trustee to vote his or her company stock account in accordance with the pro rata percentage of voting directions received for the allocated stock. Conversely, if voting directions are timely received, they will proportionally control how unallocated or undirected company stocks are voted.
Shares held in “street” or “nominee” name (through a bank, broker or other nominee):
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If you vote via the Internet, by telephone or return a proxy card by mail, but do not select a voting preference, the persons who are authorized on the proxy card, voting instruction forms and through the Internet and telephone voting facilities to vote your shares will vote FOR each director nominee, FOR the ratification of the appointment of our independent registered public accounting firm for 2019 and FOR advisory approval of the vote on the compensation of our named executive officers. If you have any questions or need assistance in voting your shares, please contact D.F. King & Co. toll-free at 1-800-578-5378 or Robin Yim, Vice President, Investor Relations at 1-509-344-5906.
Revoking your Proxy
If you are a stockholder of record, you may revoke your proxy at any time before the Annual Meeting by giving our Corporate Secretary written notice of your revocation by mailing to Clearwater Paper Corporation, Corporate Secretary, 601 West Riverside Avenue, Suite 1100, Spokane WA, 99201 and by submitting a later-dated proxy, or you may revoke your proxy at the Annual Meeting by voting by ballot. Attendance at the meeting, by itself, will not revoke a proxy. If shares are registered in your name, you may revoke your proxy by telephone by calling 1-800-690-6903 and following the instructions or via the Internet by going to www.proxyvote.com and following the instructions.
If your shares are held in one of the 401(k) Savings Plans (through Fidelity Management Trust Company), you may revoke your proxy by telephone by calling 1-800-690-6903 and following the instructions or via the Internet by going to www.proxyvote.com and following the instructions. Broadridge, our proxy agent, must receive your revocation by 11:59 p.m., Eastern Daylight Time, on May 8, 2019, in order for the revocation to be communicated to the 401(k) Savings Plans trustee.
If you are a stockholder in “street” or “nominee” name, you may revoke your voting instructions by informing the bank, broker or other nominee in accordance with that entity’s procedures for revoking your voting instructions.
Clearwater Paper Corporation 2019
On March 18, 2019, the record date, we had 16,515,156 shares of common stock outstanding. Voting can take place at the Annual Meeting only if stockholders owning a majority of the total number of shares issued and outstanding and entitled to vote on the record date are present either in person or by proxy. Abstentions and broker non-votes will both be treated as present for purposes of determining the existence of a quorum.
Votes Needed
The affirmative vote of a majority of the common stock present in person or by proxy at the Annual Meeting and entitled to vote is required to elect each of the nominees for director listed in Proposal 1 and to ratify the appointment of our independent registered public accounting firm as set forth in Proposal 2.
The votes presented in Proposal 3 is an advisory vote and therefore are not binding on the company, our Compensation Committee or our Board of Directors. We, however, value the opinions of our stockholders. The Compensation Committee will, as it did with respect to previous stockholder advisory votes regarding named executive officer compensation, take into account the result of the advisory vote when determining future executive compensation.
The inspector of election will tabulate affirmative and negative votes, abstentions and broker non-votes. For Proposals 1 and 2 withheld votes and abstentions will have the same effect as negative votes. Broker non-votes will not be counted in determining the number of shares entitled to vote.
Majority Vote Standard in Uncontested Director Elections
We have adopted majority voting procedures for the election of directors in uncontested elections. In an uncontested election, each nominee is elected by the vote of a majority of the voting power of the capital stock issued and outstanding, present in person or by proxy and entitled to vote for the election of directors. As provided in our bylaws, an “uncontested election” is one in which the number of nominees equals the number of directors to be elected in such election.
In accordance with our bylaws, our Board of Directors may nominate or elect as a director only persons who agree to tender, promptly following his or her election or re-election to the Board, an irrevocable resignation that will be effective upon (i) the failure of the candidate to receive the required vote at the next annual meeting at which he or she faces re-election and (ii) the acceptance by the Board of such resignation.
If an incumbent director fails to receive the required vote for re-election in an uncontested election, the Nominating and Governance Committee determines whether such director’s resignation should be accepted and makes a recommendation to the Board, which makes the final determination whether to accept the resignation. The Board must publicly disclose its decision within 90 days from the date of certification of the election results. If a director’s resignation is accepted by the Board, then the Board may fill the resulting vacancy or may decrease the size of the Board.
Annual Meeting Attendance
We cordially invite and encourage all of our stockholders to attend the meeting. Persons who are not stockholders may attend only if invited by us. You should be prepared to present photo identification for admittance.
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Clearwater Paper Corporation 2019
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If you do not provide photo identification and comply with the other procedures outlined above, you may not be admitted to the Annual Meeting.
Other Matters Presented at Annual Meeting
We do not expect any matters, other than those included in this proxy statement, to be presented at the 2019 Annual Meeting. If other matters are presented, the individuals named as proxies will have discretionary authority to vote your shares on such matters.
Clearwater Paper Corporation 2019
Corporate Governance Guidelines; Code of Business Conduct and Ethics
We have established a corporate governance program to help guide our company and our employees, officers and directors in carrying out their responsibilities and duties as well as to set standards for their professional conduct. Our Board has adopted Corporate Governance Guidelines, or Governance Guidelines, which provide standards and practices of corporate governance that we have designed to help contribute to our success and to assure public confidence in our company. The company’sOur Governance Guidelines may be found on the company’sour website at www.clearwaterpaper.com under “Investor Relations,“Investors,” then “Corporate Governance.“Governance.” In addition, all standing committees of the Board operate under charters that describe the responsibilities and practices of each committee.
We have adopted a Code of Business Conduct and Ethics, or Ethics Code, which provides ethical standards and corporate policies that apply to all of our directors, officers and employees. Our Ethics Code requires, among other things, that our directors, officers and employees act with integrity and the highest ethical standards, comply with laws and other legal requirements, engage in fair competition, avoid conflicts of interest, and otherwise act in our best interests. We have also adopted a Code of Ethics for Senior Financial Officers that applies to senior management and provides for accurate, full, fair and timely financial reporting and the reporting of information related to significant deficiencies in internal controls, fraud and legal compliance.
We have established procedures for confidentially and anonymously reporting concerns and potential violations regarding accounting, internal controls and auditing matters, as well as concerns regarding, or potential violations of, our ethics codes and other matters.
The role of our Board is to oversee and provide policy guidance on our business and affairs. The Board believes that it will best serve our stockholders if the majority of its members are independent. As of March 18, 2019,April 6, 2021, our Board had fiveeight members, fourseven of whom are outside (non-employee) directors. The Independent Executive Chair of our Board, Alexander Toeldte, is an outside director. With the exception of Linda K. Massman, who servesserved as our current President and Chief Executive Officer until April 1, 2020, and Arsen S. Kitch who began serving as President and Chief Executive Officer on April 1, 2020, the Board has determined that none of our directors or their immediate family members have a material relationship with the company (either directly or as a partner, stockholder or officer of an organization that has a relationship with us), and none of our directors or their immediate family members are employees of our independent registered public accounting firm, KPMG LLP. All of our outside directors are independent within the meaning of the New York Stock Exchange, or NYSE, listing standards and our Director Independence Policy.
Our Board meets regularly in executive session without members of management present and as the Board or its individual members deem necessary. Mr. Toeldte, as the Independent Executive Chair, presides over these sessions. Each standing committee of the Board also meets in executive session regularly and as the committee or its individual members deem necessary. Our directors are also invited to attend the meetings of committees of which they are not members, and regularly do so.
Clearwater Paper Corporation 2021
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1 | PROXY SUMMARY AND BUSINESS HIGHLIGHTS | 2 | CORPORATE GOVERNANCE AND BOARD OF DIRECTORS | 3 | EXECUTIVE COMPENSATION DISCUSSION AND TABLES | 4 | AUDIT COMMITTEE REPORT | 5 | ANNUAL MEETING INFORMATION | 6 | PROPOSALS |
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Our Board and its committees met a total of 3128 times in 2018.2020. All directors serving in 2020 attended all Board meetings of the Board and all meetings of Board committees meetings for which they were a committee member during 2018, except for one committee meeting missed by a single member of that committee and three Board meetings missed by a director for medical reasons.2020. The Board does not have a policy requiring director attendance at annual meetings of our stockholders. However, all of our directors attended our 20182020 annual stockholders meeting by webcast and we anticipate that all will attend our 20192021 annual stockholders meeting.meeting by webcast as well.
Clearwater Paper Corporation 2019
Stockholders and interested parties may contact our directors to provide comments, to report concerns, or to ask a question, by mail at the following address:
Corporate Secretary
Clearwater Paper Corporation
601 West Riverside Ave., Suite 1100
Spokane, Washington 99201
Stockholders and interested parties may also communicate with our directors as a group by using the form on our website at www.clearwaterpaper.com, by selecting “Investor Relations,“Investors,” then “Corporate Governance”“Governance” and “Contact the Board.” All communications received will be processed by our Corporate Secretary. We forward all communications, other than those that are unrelated to the duties and responsibilities of the Board, to the intended director(s).
Our Audit Committee has established procedures to address concerns and reports of potential irregularities or violations regarding accounting, internal controls and auditing matters. EmployeesReports may make such reportsbe made on a confidential and anonymous basis. All such reports are directed through an independent, third-party hotline provider and are routed directly to the Chair of the Audit Committee. The procedures and hotline number are available by going to our public website at www.clearwaterpaper.com, and selecting “Investor Relations,“Investors,” then “Corporate Governance,“Governance,” and “Procedures for the Reporting of Questionable Accounting and Auditing Matters.” Our employeesReports may also accessbe made via the procedures and hotline numberprovider’s website that is accessed through our website or intranet site.
Our Nominating and Governance Committee, or Nominating Committee, is responsible for identifying, evaluating, recruiting and recommending qualified candidates to our Board for nomination or election. The Board nominates directors for election at each annual meeting of stockholders and elects new directors to fill vacancies if they occur.
Our Board strives to find directors who are experienced and dedicated individuals with diverse backgrounds, perspectives and skills. Our Governance Guidelines contain membership criteria that call for candidates to be selected for their character, judgment, diversity of experience, business acumen and ability to act on behalf of and in the best interest of all stockholders. While we do not have a formal policy or requirement with respect to director diversity, we value members who represent diverse backgrounds and viewpoints and strive towards a board composition that encompasses such diversity. We added a new female Director in 2020 and the Nominating Committee is focused in the near term on identifying and nominating additional qualified female director candidates for the Board. To the extent it is able to do so in a manner consistent with our bylaws and Governance Guidelines, the Board seeks to have at least two female members before year-end 2021. The Nominating Committee will continue to review all measurable objectives for achieving diversity on the Board and recommend them to the Board for consideration. In addition, we expect each director to be committed to enhancing stockholder value and to have sufficient time to effectively carry out his or her duties as a director. Our Nominating Committee also seeks to ensure that a majority of our directors are independent under NYSE rules as well as our policies, and that one or more of our directors is an “audit committee financial expert”“Audit Committee Financial Expert” under SEC rules.
Clearwater Paper Corporation 2021
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1 | PROXY SUMMARY AND BUSINESS HIGHLIGHTS | 2 | CORPORATE GOVERNANCE AND BOARD OF DIRECTORS | 3 | EXECUTIVE COMPENSATION DISCUSSION AND TABLES | 4 | AUDIT COMMITTEE REPORT | 5 | ANNUAL MEETING INFORMATION | 6 | PROPOSALS |
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Prior to our annual meeting of stockholders, our Nominating Committee identifies director nominees by first evaluating the current directors whose terms will expire at the annual meeting and who are willing to continue in service. These candidates are evaluated based on the criteria described above, the candidate’s prior service as a director, and the needs of the Board for any particular talents and experience. If a director no longer wishes to continue in service, if the Nominating Committee decides not to re-nominate a director, or if a vacancy is created on the Board because of a resignation or an increase in the size of the Board or other event, then the committee considers whether to replace such director or to decrease the size of the Board. If the decision is to replace a director, then the Nominating Committee considers various candidates for Board membership, including those suggested by committee members, by other Board members, a director search firm engaged by the committee, or our stockholders. Prospective nominees are evaluated by the Nominating Committee based on the membership criteria described above and set forth in our Governance Guidelines.
Clearwater Paper Corporation 2019
A stockholder who wishes to recommend a prospective nominee to the Board for consideration by the Nominating Committee must notify our Corporate Secretary in writing at our principal executive office located at 601 West Riverside Avenue, Suite 1100, Spokane, WA 99201. Each notice must include the information about the prospective nominee as would be required if the stockholder were nominating a person to the Board under our Amended and Restated Bylaws, or bylaws. Such notice must be delivered to our offices by the deadline relating to stockholder proposals to be considered for inclusion in our proxy materials, as described under “General Information—Stockholder Proposals for 2020”2022” in this proxy statement.
Each notice delivered by a stockholder who wishes to recommend a prospective nominee to the Board for consideration by the Nominating Committee generally must include the following information about the prospective nominee:
| ▪ | the name, age, business address and residence address of the person; |
| ▪ | the principal occupation of the person; |
| ▪ | the number of shares of Clearwater Paper common stock owned by the person; |
| ▪ | a statement whether the person, if elected, intends to tender an irrevocable resignation effective upon (i) such person’s failure to receive the required vote for re-election and (ii) acceptance of such resignation by the Board; |
| ▪ | a description of all compensation and other relationships during the past three years between the stockholder and the person; |
| ▪ | any other information relating to the person required to be disclosed pursuant to Section 14 of the Exchange Act, and |
| ▪ | the person’s written consent to serve as a director if elected. |
The Nominating Committee may require any prospective nominee recommended by a stockholder to furnish such other information as the Nominating Committee may reasonably require to determine the eligibility of such person to serve as an independent director or that could be material to a stockholder’s understanding of the independence, or lack thereof, of such person.
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 to the Board for consideration by the Nominating Committee. A more detailed description of the information that must be provided as to a prospective nominee is set forth in Article 3 of our bylaws, which are available on our website at www.clearwaterpaper.com by selecting “Investor Relations”“Investors” and then “Corporate Governance.“Governance.”
Clearwater Paper Corporation 2021
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1 | PROXY SUMMARY AND BUSINESS HIGHLIGHTS | 2 | CORPORATE GOVERNANCE AND BOARD OF DIRECTORS | 3 | EXECUTIVE COMPENSATION DISCUSSION AND TABLES | 4 | AUDIT COMMITTEE REPORT | 5 | ANNUAL MEETING INFORMATION | 6 | PROPOSALS |
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Our Board currently has three standing committees, as described below. The current charters of each of these committees are available on our website at www.clearwaterpaper.com by selecting “Investor Relations”“Investors” and then “Corporate Governance.“Governance.”
TheTraditionally, the Board has elected to appoint one of its independent members to serve as Chair. Our Chair,In that role, Alexander Toeldte, acts as the lead independent director and, among other responsibilities, provides an independent contact to allow the other directors to communicate their views and concerns to management as well as presides over non-management executive sessions of Board meetings. Beginning on March 1, 2020, the Board appointed Mr. Toeldte to serve as the Independent Executive Chair on an interim basis to perform additional services to help facilitate the leadership change in our CEO position. Additionally, in that role Mr. Toeldte mentors and advises our new CEO, Arsen S. Kitch, and other senior management and assists with major stockholder engagement and management in their role in strategic planning when requested by the CEO. Our Board believes that an independent Chair with prior corporate governance experience combined with a President and CEO who manages the day-to-day operations of our company while also serving as a director, provides our Board with an optimal balance in terms of leadership structure at this point in time.
Clearwater Paper Corporation 2019
In the future, the Board may elect to have the role of Board Chair and CEO performed by the same person, as other companies in our industry do. If we were to adopt that structure, the Board would appoint one of its independent members to serve as Vice Chair, who would act as the lead independent director and, among other responsibilities, provide an independent contact to allow the other directors to communicate their views, and concerns to management as well as preside over non-management executive sessions of Board meetings.
One of the responsibilities of our Board is to provide oversight of our risk management practices in order to ensure appropriate risk management systems are employed throughout the company. Management, which is responsible for the day-to-day assessment and mitigation of our risks, utilizes an enterprise risk management, or ERM, program, which is an enterprise-wide program designed to enable effective and efficient identification and management of critical enterprise risks and to facilitate the incorporation of risk considerations into decision making. To assist and strengthen management’s risk assessment and mitigation efforts, we have a Risk Management Committee whose management members represent a company-wide perspective and provide subject matter expertise as part of our ERM process. Through the ERM process, management identifies, monitors and managesmitigates risks and regularly reports to the Board or a committee of the Board as to the assessment and management of those risks.
The Board’s standing committees support the Board by regularly addressing various issues within their respective areas of oversight. The Audit Committee’s responsibilities include reviewing and overseeing major financial risk exposures and the steps management has taken to monitor and control these exposures. Management, on a regular basis, provides the committee with its assessment and mitigation efforts in regardsregard to particular risks facing the company that have been identified through the ERM process or other processes. Our Audit Committee also reviews with our independent auditors the adequacy and effectiveness of our internal controls over financial reporting. Additionally, our Vice President, Internal Audit provides the Audit Committee with regular updates on our systems of internal controls over financial reporting, and our General Counsel reviews with the committee significant litigation, claims and regulatory and legal compliance matters.
Clearwater Paper Corporation 2021
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1 | PROXY SUMMARY AND BUSINESS HIGHLIGHTS | 2 | CORPORATE GOVERNANCE AND BOARD OF DIRECTORS | 3 | EXECUTIVE COMPENSATION DISCUSSION AND TABLES | 4 | AUDIT COMMITTEE REPORT | 5 | ANNUAL MEETING INFORMATION | 6 | PROPOSALS |
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The Compensation Committee assists the Board in fulfilling its risk management oversight responsibilities associated with risks arising from our compensation policies and programs. Each year management and the Compensation Committee review whether risks arising from our compensation policies and practices for our employees are reasonably likely to have a material adverse effect on the company. The Nominating Committee assists the Board in fulfilling its risk management oversight responsibilities associated with risks related to corporate governance structures and processes. Each of the committee chairs, as appropriate, reports to the full Board at regular meetings concerning the activities of the committee, any significant issues it has discussed, and the actions taken by the committee.
The Board’s role in risk oversight is consistent with its leadership structure. We believe that our Board’s leadership structure facilitates its oversight of our risk management practices by combining the day-to-day knowledge of our business possessed by our President and CEO as a member of the Board, with the independence provided by our Independent Executive Chair and independent Board committees.
Clearwater Paper Corporation 2019
The following table shows the membership of each committee as of March 18, 2019:April 6, 2021:
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| Audit |
| Compensation |
| and Governance |
| Audit |
| Compensation |
| and Governance |
Name |
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| Committee |
| Committee |
| Committee |
| Committee |
| Committee |
John J. Corkrean |
| X (Chair) |
| X |
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Kevin J. Hunt |
| X |
| X (Chair) |
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| X (Chair) |
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Arsen S. Kitch |
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William D. Larsson |
| X (Chair) |
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| X |
| X |
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Linda K. Massman |
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Joe W. Laymon |
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| X |
| X | ||||||
Ann C. Nelson |
| X |
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John P. O'Donnell |
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| X |
| X |
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Alexander Toeldte (Chair of the Board) |
| X |
| X |
| X (Chair) | ||||||
Meetings in Fiscal 2018 |
| 10 |
| 5 |
| 4 | ||||||
Alexander Toeldte (Independent Executive Chair of the Board) |
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| X |
| X | ||||||
Meetings in Fiscal 2020 |
| 8 |
| 6 |
| 5 |
Clearwater Paper Corporation 2021
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1 | PROXY SUMMARY AND BUSINESS HIGHLIGHTS | 2 | CORPORATE GOVERNANCE AND BOARD OF DIRECTORS | 3 | EXECUTIVE COMPENSATION DISCUSSION AND TABLES | 4 | AUDIT COMMITTEE REPORT | 5 | ANNUAL MEETING INFORMATION | 6 | PROPOSALS |
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Current Members:
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* Audit Committee financial expert as defined by NYSE and |
Each member has been determined by the Board to be independent within the meaning of the NYSE listing standards and our Director Independence Policy. |
Description and Key Responsibilities: |
•Assists the Board in its oversight of our accounting, financial reporting and internal accounting control matters. • •Exercises sole authority to select, compensate and terminate our independent registered public accounting firm as well as the committee’s own consultants and advisors. •Oversees the • •Pre-approves the independent registered public accounting firm’s audit fees and non-audit services and fees in accordance with criteria adopted by the committee. |
Clearwater Paper Corporation 2019
Current Members: Kevin J. Hunt (Chair) (since January 2013 and Chair since May 2016) |
Each member has been determined by the Board to be independent within the meaning of the NYSE listing standards and our Director Independence Policy. |
Description and Key Responsibilities: |
•Oversees our executive compensation and benefits programs, including establishing the performance measurements and targets for executive officers’ incentive pay. •Annually reviews and approves executive compensation. •Coordinates with our Board Chair the annual performance review of our Chief Executive Officer. •Reviews the “Executive Compensation Discussion and Analysis” contained in this proxy statement and recommends its inclusion to the full Board for approval. • |
Clearwater Paper Corporation 2021
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1 | PROXY SUMMARY AND BUSINESS HIGHLIGHTS | 2 | CORPORATE GOVERNANCE AND BOARD OF DIRECTORS | 3 | EXECUTIVE COMPENSATION DISCUSSION AND TABLES | 4 | AUDIT COMMITTEE REPORT | 5 | ANNUAL MEETING INFORMATION | 6 | PROPOSALS |
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Current Members:
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Each member has been determined by the Board to be independent within the meaning of the NYSE listing standards and our Director Independence Policy. |
Description and Key Responsibilities: |
•Identifies, evaluates, recruits and recommends to the Board nominees for election as directors. •Develops and recommends to the Board corporate governance principles. •Oversees the evaluation of the Board and assists in the evaluation of management. •Director succession planning is also a focus of the Nominating Committee with striking a balance between •Exercises sole authority to select, compensate and terminate its own consultants and advisors. |
Compensation Committee Interlocks and Insider Participation
John J. Corkrean, Kevin J. Hunt, Joe W. Laymon, John P. O’Donnell, and Alexander Toeldte each served as membersa member of our Compensation Committee during 2018.2020. All are outside directors, and none of our named executive officers served as a
Clearwater Paper Corporation 2019
director or as a member of a compensation committeeCompensation Committee of any business entity employing any of our directors during 2018.2020.
Transactions with Related Persons
Securities laws require us to disclose certain business transactions that are considered related person transactions. In order to comply with these requirements, our Board has adopted a Related Person Transactions Policy that applies to our directors and executive officers, any beneficial owner of more than 5% of our voting stock, any immediate family member of any of the foregoing persons, and any entity that employs any of the foregoing persons, or in which any of the foregoing persons is a general partner, principal or 10% or greater beneficial owner. Transactions covered by this policy are those in which (a) we or any of our subsidiaries participate, (b) the amount involved exceeds $120,000, and (c) any related person had, has or will have a direct or indirect material interest, as defined in the policy.
Any proposed related person transaction is reviewed by our Audit Committee at its next regularly scheduled meeting, unless our General Counsel and Corporate Secretary determines that it is not practicable or desirable to wait until the next scheduled meeting for a particular transaction, in which case the Chair of the Audit Committee has the authority to review and consider the proposed transaction. Only those transactions determined to be fair and in our best interests are approved, after taking into account all factors deemed relevant by the Audit Committee, or its Chair, as the case may be. If the Chair
Clearwater Paper Corporation 2021
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1 | PROXY SUMMARY AND BUSINESS HIGHLIGHTS | 2 | CORPORATE GOVERNANCE AND BOARD OF DIRECTORS | 3 | EXECUTIVE COMPENSATION DISCUSSION AND TABLES | 4 | AUDIT COMMITTEE REPORT | 5 | ANNUAL MEETING INFORMATION | 6 | PROPOSALS |
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approves any related person transaction, then that approval is reported to the Audit Committee at its next regularly scheduled meeting.
We did not conduct any transactions with related persons in 20182020 that would require disclosure in this proxy statement or that required approval by the Audit Committee pursuant to the policy described above.
Clearwater Paper Corporation 20192021
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1 | PROXY SUMMARY AND BUSINESS HIGHLIGHTS | 2 | CORPORATE GOVERNANCE AND BOARD OF DIRECTORS | 3 | EXECUTIVE COMPENSATION DISCUSSION AND TABLES | 4 | AUDIT COMMITTEE REPORT | 5 | ANNUAL MEETING INFORMATION | 6 | PROPOSALS |
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Our Board of Directors is divided into three classes serving staggered three-year terms. The average tenure of our directors is 5.65.2 years. At the Annual Meeting, our stockholders will be asked to elect twothree individuals to serve as directors until the 20222024 Annual Meeting. See “Proposal No. 1—Election of Directors.” Our bylaws require our directors to be elected by a majority vote of the shares of common stock present or represented by proxy and entitled to vote at the Annual Meeting.
Below are the names and ages of our fiveeight directors as of the date of this proxy statement, the year each of them became a director, each director’s principal occupation or employment for at least the past five years, and other public company directorships held by each director during the past five years. Unless authority is withheld, the persons named as proxies in the voting materials made available to you or in the accompanying proxy will vote for the election of the nominees listed below. We have no reason to believe that any of these nominees will be unable to serve as a director. If any of the nominees becomes unavailable to serve, however, the persons named as proxies will have discretionary authority to vote for a substitute nominee.
Nominees for Election at this Meeting for a Term Expiring in 20222024 (Class II)I)
Biography:Mr. HuntCorkrean (age 67)55) has been a director since January 2013. From January 2013 to January 2014 he servedMay 2019. Mr. Corkrean currently serves as a consultant to ConAgra Foods, Inc., which acquired Ralcorp Holdings Inc. in January 2013. Mr. Hunt served as President, CEOexecutive vice president and a Director of Ralcorp Holdings Inc.chief financial officer for H.B. Fuller Company (NYSE:FUL), a producer of private-brand foodsglobal adhesive, sealants and food servicechemical products from January 2012 to January 2013. He served as Co-CEO and President of Ralcorp from 2003 until 2012 and asmanufacturer, a director from 2004 until the company’s acquisition.position he has held since 2016. Prior to that period, Mr. Hunthe was Corporate Vice President and Presidentemployed by Ecolab for 17 years in a series of Bremner Food Group. Mr. Hunt servedfinancial leadership roles concluding from 2014-2016 as an advisory director of Berkshire Partners, a private equity firm, from 2013 to 2015. He served as a director of Vi Jon, a manufacturer of private label personal care products owned by Berkshire Partners, from 2012 to 2017. Mr. Hunt has served as a director of Energizer Holdings, Inc. (NYSE: ENR), a manufacturer of primary batteries and portable lighting products, since its spin-off from Edgewell Personal Care Company in July 2015 and is a member of its Nominating and Compensation Committee. In August 2018, he began serving as a senior advisorvice president, finance for CH Guenther and Sons, a leading producer of branded and private-label food products.the global energy service division.
Qualifications: Our Nominating Committee believes Mr. Corkrean’s financial and Governance Committee believe his experience with private label consumer product companies, financialpublic company expertise strategical thinking and both management and board experienceleadership background make him an asset to our Board.
William D. Larsson
Arsen S. Kitch
Biography:Mr. LarssonKitch (age 73) has been a director since December 2008. Mr. Larsson served as Senior Vice President and CFO of Precision Castparts Corp., an industrial manufacturing company, from August 2000 until his retirement in December 2008. Mr. Larsson serves as a director and chair of the Nominating and Corporate Governance Committee and is a member of the Audit Committee of Schnitzer Steel Industries, Inc. (NASDAQ: SCHN), a manufacturer of recycled metal products. Mr. Larsson served as lead director of Schnitzer Steel from 2008 to 2014. Our Nominating and Governance Committee believe his experience as a founding director, as a financial expert, and experience as a lead independent director of another company make him an asset to our Board.
The Board and Nominating and Governance Committee considered that Mr. Larsson will have reached the age of retirement under our Corporate Governance Guidelines prior to the Annual
Clearwater Paper Corporation 2019
Meeting and accordingly would not be eligible to be nominated for re-election to the Board at the Annual meeting absent a waiver of the Corporate Governance Guidelines age limit. The Board and Nominating and Governance Committee considered Mr. Larsson’s expertise, his extensive experience with the Company, his position as a founding Board member, as well as the needs of the Company and the benefit his continued service on the Board could provide and decided to waive the age limit with respect to Mr. Larsson this year to allow for his nomination for election at the Annual Meeting.
Directors Continuing in Office until 2020 (Class III)
John P. O’Donnell
Mr. O’Donnell (age 58)39) has been a director since April 2016. Mr. O’Donnell1, 2020. He has served as Presidentthe company’s president and CEO of Neenah, Inc. (NYSE: NP), a global specialty materials company, since May 2011 and as a director since November 2010.April 1, 2020. He served as Neenah Inc.’s COOthe company’s senior vice president, general manager, consumer products division from June 2010May 2018 to May 2011 and as President, Fine Paper from 2007 to June 2010. Mr. O'Donnell was employed by Georgia-Pacific Corporation from 1985 until 2007 and held increasingly senior management positions in the Consumer Products division where he served as President of the North American Retail Business from 2004 through 2007, and as President of the North American Commercial Tissue business from 2002 through 2004. Our Nominating and Governance Committee believe Mr. O’Donnell’s leadership and consumer product paper industry experience make him an asset to our Board.
Directors Continuing in Office until 2021 (Class I)
Linda K. Massman
Ms. Massman (age 52) has been a director since January 2013. Ms. Massman has served as President and CEO of Clearwater Paper since January 1, 2013April 2020 and served as President and COOvice president, general manager, consumer products division from November 2011January 2018 to December 2012. Ms. MassmanMay 2018. He served as CFOthe company’s vice president, finance and Senior Vice President, Financevice president financial planning and analysis from May 2011 to November 2011,January 2015 through December 2017, and as CFO and Vice President, Finance from December 2008 to May 2011. From September 2008 to December 2008, Ms. Massman served as Vice Presidentsenior director, strategy and planning from August 2013 through December 2014.
Qualifications: Our Nominating Committee believes as the CEO, Mr. Kitch’s knowledge of Potlatch Corporation pending completionour day-to-day operations and effectiveness of our business strategies provides a valuable perspective to the Board. Additionally, Mr. Kitch’s experience, knowledge, skills and expertise acquired having served as CEO, senior vice president of a major division and vice president in the financial and strategical planning aspects of the spin-off of company, add significant value to the Board.
Clearwater Paper Corporation. From May 2002 to August 2008, Ms. Massman was Group Vice President, Finance and Corporate Planning, for SUPERVALU Inc., a grocery retail company. Ms. Massman has served as a director of TreeHouse Foods, Inc. (NYSE:THS) since 2016 and is a member of its Audit Committee. She served as a member of their Nominating and Governance Committee from 2016 to 2018. Ms. Massman also served as a Director for Black Hills Corporation (NYSE: BKH), an energy company, from 2015 to 2018 and was a member of its Compensation Committee. In 2017, Ms. Massman served as board chair for the American Forest & Paper Association, the national trade association of the forest products industry. Our Nominating and Governance Committee believe Ms. Massman’s extensive experience with our Company and financial background make her an asset to our Board.2021
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1 | PROXY SUMMARY AND BUSINESS HIGHLIGHTS | 2 | CORPORATE GOVERNANCE AND BOARD OF DIRECTORS | 3 | EXECUTIVE COMPENSATION DISCUSSION AND TABLES | 4 | AUDIT COMMITTEE REPORT | 5 | ANNUAL MEETING INFORMATION | 6 | PROPOSALS |
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Alexander Toeldte
Biography: Mr. Toeldte (age 59)61) has been a director since April 2016. Mr. Toeldte has served as the Chairmanchairman of Jitasa, Inc., a privately held provider of softwareaccounting and accountingfinancial management services for non-profit organizations, since 2014 and is a member of its Compensation Committee.compensation committee. He served as a director of Xerium Technologies, Inc. (NYSE:XRM), a global provider of industrial consumable products and services from 2016 until the company’s sale in 2018 and was a member of its
Clearwater Paper Corporation 2019
Compensation Committee compensation committee and Governance Committee.governance committee. He served as an operating director at Paine & Partners, LLC, a private equity firm from 2015 to 2016. Mr. Toeldte served as President,president, CEO and a director of Boise Inc., a paper manufacturer, from February 2008 to 2013 and at Boise Cascade and as its Executive Vice President,executive vice president, paper, packaging and newsprint segments from October 2005 to 2008. Mr. Toeldte’s previous experience includes serving as Executive Viceexecutive vice President of Fonterra Co-operative Group from 2001 to 2003, a New Zealand based global dairy company, and CEO of Fonterra Enterprises. Mr. Toeldte served in various capacities with Fletcher Challenge Limited Group from 1999 to 2001, a New Zealand based group with holdings in paper, forestry, building materials, and energy, including as CEO of Fletcher Challenge Building from 2000 to 2001 and Fletcher Challenge Paper from 1999 to 2000, as well as Group CFO in 1999. He also served as Chairchair of the board of Fletcher Challenge Canada. Mr. Toeldte served in 2012 as chairman and is currently a partner at McKinsey & Company from 1986 to 1999 in Toronto, Brussels, Montreal, and Stockholm, and as Chairmanmember of the board of the American Forest & Paper Association in 2012. Association.
Qualifications: Our Nominating and Governance Committee believebelieves Mr. Toeldte’s experience in the consumer products and paper industries, financial expertise, and leadership and board experience make him an asset to our Board
Directors Continuing in Office until 2022 (Class II)
Biography: Mr. Hunt (age 69) has been a director since January 2013. From January 2013 to January 2014, he served as a consultant to ConAgra Foods, Inc., which acquired Ralcorp Holdings Inc. in January 2013. Mr. Hunt served as president, CEO and a director of Ralcorp Holdings Inc., a producer of private-brand foods and food service products from January 2012 to January 2013. He served as co-CEO and president of Ralcorp from 2003 until 2012 and as a director from 2004 until the company’s acquisition in 2013. Prior to that period, Mr. Hunt was corporate vice president and president of Bremner Food Group. Mr. Hunt served as an advisory director of Berkshire Partners LLC, a private equity firm, from 2013 to 2015. He served as a director of Vi Jon, a manufacturer of private label personal care products owned by Berkshire Partners, from 2012 to 2017. Since August 2018, he has served as a senior advisor for C.H. Guenther and Son, Inc., a leading producer of branded and private-label food products.
Current Public Directorships: Mr. Hunt has served as a director of Energizer Holdings, Inc. (NYSE: ENR), a manufacturer of primary batteries and portable lighting products since its spin-off from Edgewell Personal Care Company (NYSE: EPC) in July 2015. He is a member of Energizer’s human capital committee and serves as chairman of its finance and oversight committee.
Qualifications: Our Nominating Committee believes his experience with private label consumer product companies, financial expertise, strategic planning and both management and board experience make him an asset to our Board.
Clearwater Paper Corporation 2021
17
1 | PROXY SUMMARY AND BUSINESS HIGHLIGHTS | 2 | CORPORATE GOVERNANCE AND BOARD OF DIRECTORS | 3 | EXECUTIVE COMPENSATION DISCUSSION AND TABLES | 4 | AUDIT COMMITTEE REPORT | 5 | ANNUAL MEETING INFORMATION | 6 | PROPOSALS |
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William D. Larsson
Biography: Mr. Larsson (age 75) has been a director since December 2008. Mr. Larsson served as senior vice president and CFO of Precision Castparts Corp., an industrial manufacturing company, from August 2000 until his retirement in December 2008.
Current Public Directorships: Mr. Larsson has served as a director and chair of the nominating and corporate governance committee and is a member of the audit committee of Schnitzer Steel Industries, Inc. (NASDAQ: SCHN), a manufacturer of recycled metal products. Mr. Larsson served as lead director of Schnitzer Steel from 2008 to 2014.
Qualifications: Our Nominating Committee believes his experience as a founding director, as a financial expert, and experience as a lead independent director of another public company make him an asset to our Board.
Ann C. Nelson
Biography: Ms. Nelson (age 61) has been a director since May 2020. Ms. Nelson served as a lead audit partner of KPMG, LLP., an audit services firm, from August 1982 until her retirement in September 2019. Prior to that she served in various positions with KPMG including lead client partner.
Current Public Directorships: Ms. Nelson has served as a director and chair of the audit committee and is a member of the nominating and corporate governance committee of Rayonier, Inc. (NYSE: RYN), a timber REIT since 2020.
Qualifications: Our Nominating Committee believes Ms. Nelson’s leadership capabilities, knowledge of the paper industry as well as experience as a financial expert, and experience as a chair of the audit committee of another public company make her an asset to our Board.
Directors Continuing in Office until 2023 (Class III)
Joe W. Laymon
Biography: Mr. Laymon (age 68) has been a director since May 2019. Mr. Laymon served as vice president, human resources and corporate services at Chevron Corporation (NYSE:CVX), a leading global integrated energy company from 2008 until his retirement in 2017.
Current Public Directorships: Mr. Laymon has served on the board of directors for Peabody Energy (NYSE:BTU), a global coal company, since 2017 and serves as the chair of the compensation committee as well as is a member of the health, safety, security & environmental committee.
Qualifications: Our Nominating Committee believes Mr. Laymon’s leadership and executive compensation and human resources experience and experience as a chair of the compensation committee of another public company make him an asset to our Board.
John P. O’Donnell
Biography: Mr. O’Donnell (age 60) has been a director since April 2016. Mr. O’Donnell served as president and CEO of Neenah, Inc. (NYSE: NP), a global specialty materials company, from May 2011 and as a director from November 2010 until his retirement in July 2020. He served as Neenah
Clearwater Paper Corporation 2021
18
1 | PROXY SUMMARY AND BUSINESS HIGHLIGHTS | 2 | CORPORATE GOVERNANCE AND BOARD OF DIRECTORS | 3 | EXECUTIVE COMPENSATION DISCUSSION AND TABLES | 4 | AUDIT COMMITTEE REPORT | 5 | ANNUAL MEETING INFORMATION | 6 | PROPOSALS |
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Inc.’s COO from June 2010 to May 2011 and as president, Fine Paper from 2007 to June 2010. Mr. O'Donnell was employed by Georgia-Pacific Corporation from 1985 until 2007 and held increasingly senior management positions in the consumer products division where he served as president of the north american retail business from 2004 through 2007, and as president of the north american commercial tissue business from 2002 through 2004.
Qualifications: Our Nominating Committee believes Mr. O’Donnell’s leadership, strategic planning and consumer product paper industry experience make him an asset to our Board.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF THE TWOTHREE NOMINEES FOR DIRECTOR.
Clearwater Paper Corporation 20192021
19
1 | PROXY SUMMARY AND BUSINESS HIGHLIGHTS | 2 | CORPORATE GOVERNANCE AND BOARD OF DIRECTORS | 3 | EXECUTIVE COMPENSATION DISCUSSION AND TABLES | 4 | AUDIT COMMITTEE REPORT | 5 | ANNUAL MEETING INFORMATION | 6 | PROPOSALS |
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SECURITY OWNERSHIP OFOF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
This table shows the number of shares of common stock beneficially owned, by each owner of more than 5% of our common stock, each of our directors, each executive officer for whom compensation is reported in this proxy statement, and all directors and executive officers as a group. Except for our 5% holders, the table shows beneficial ownership as of March 7, 2019.18, 2021. The number of shares reported is based on data provided to us by the beneficial owners of the shares. The percentage ownership data is based on 16,515,15616,678,422 shares of common stock outstanding as of March 7, 2019.18, 2021. Under SEC rules, beneficial ownership includes shares over which the person or entity exercises voting or investment power and also any shares that the person or entity has the right to acquire within 60 days of March 7, 2019.18, 2021. Except as noted, and subject to applicable community property laws, each owner has sole voting and investment power over the shares shown in this table.
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| Amount and Nature of Common Stock Beneficially Owned |
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| Number of Shares Beneficially Owned |
| Percent of Class |
| Common Stock Units (1) |
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Stockholders Owning More Than 5% |
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BlackRock, Inc. 55 East 52nd Street New York, NY 10055 |
| 2,476,961 | (2) | 15.00% |
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The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355 |
| 1,749,020 | (3) | 10.59% |
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Dimensional Fund Advisors LP |
| 1,359,634 | (4) | 8.23% |
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Building One, 6300 Bee Cave Road |
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Austin, TX 78746 |
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T. Rowe Price Associates, Inc. 100 E. Pratt Street Baltimore, MD 21202 |
| 1,013,609 | (5) | 6.14% |
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Goldman Sachs & Co. LLC and Goldman Sachs Group, Inc. 200 West Street New York, NY 10282 |
| 1,037,896 | (6) | 6.28% |
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Directors and Named Executive Officers |
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Kevin J. Hunt |
| - |
| * |
| 13,306 | (7) |
William D. Larsson |
| 1,000 |
| * |
| 56,614 | (7) |
Linda K. Massman |
| 435,311 | (8) | 2.60% |
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John P. O'Donnell |
| - |
| * |
| 7,756 | (7) |
Alexander Toeldte |
| - |
| * |
| 7,756 | (7) |
Michael S. Gadd |
| 112,955 | (9) | * |
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John D. Hertz |
| 75,369 | (10) | * |
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Arsen S. Kitch |
| 17,720 | (11) | * |
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Kari G. Moyes |
| 26,127 | (12) | * |
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Directors and Executive Officers as a Group |
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(10 persons) |
| 668,482 |
| 3.97% |
| 323,663 |
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Clearwater Paper Corporation 2019
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| Amount and Nature of Common Stock Beneficially Owned |
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| Number of Shares Beneficially Owned |
| Percent of Class |
| Common Stock Units (1) |
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Stockholders Owning More Than 5% |
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BlackRock, Inc. 55 East 52nd Street New York, NY 10055 |
| 2,551,890 | (2) | 15.30% |
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T. Rowe Price Associates, Inc. 100 E. Pratt Street Baltimore, MD 21202 |
| 1,776,885 | (3) | 10.65% |
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Dimensional Fund Advisors LP 6300 Bee Cave Road, Building One Austin, TX 78746 |
| 1,354,725 | (4) | 8.12% |
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The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355 |
| 1,080,073 | (5) | 6.48% |
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Directors and Named Executive Officers |
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John J. Corkrean |
| - |
| * |
| 9,278 |
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Kevin J. Hunt |
| - |
| * |
| 22,585 |
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Arsen S. Kitch |
| 34,129 | (6) |
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William D. Larsson |
| 1,000 |
| * |
| 65,892 |
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Joe W. Laymon |
| - |
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| 9,278 |
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Linda K. Massman |
| 25,500 | (7) | * |
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Ann C. Nelson |
| 3,000 | (8) |
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| 4,053 |
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John P. O'Donnell |
| - |
| * |
| 17,034 |
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Alexander Toeldte |
| - |
| * |
| 17,034 |
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Steve M. Bowden |
| 3,269 |
| * |
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Michael S. Gadd |
| 91,624 | (9) | * |
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Robert G. Hrivnak |
| 1,098 | (10) |
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Kari G. Moyes |
| 38,516 | (11) | * |
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Michael J. Murphy |
| 2,376 | (12) | * |
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Directors and Executive Officers as a Group |
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(13 persons) |
| 340,559 |
| 2.01% |
| 259,217 |
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Clearwater Paper Corporation 2021
20
1 | PROXY SUMMARY AND BUSINESS HIGHLIGHTS | 2 | CORPORATE GOVERNANCE AND BOARD OF DIRECTORS | 3 | EXECUTIVE COMPENSATION DISCUSSION AND TABLES | 4 | AUDIT COMMITTEE REPORT | 5 | ANNUAL MEETING INFORMATION | 6 | PROPOSALS |
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(1) | Represents vested common stock units as of March |
(2) | Based on the stockholders’ Schedule |
(3) | Based on the stockholders’ Schedule 13G/A filed jointly on February |
(4) | Based on the |
(5) | Based on the stockholders’ Schedule 13G/A filed on February |
Clearwater Paper Corporation 2019
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| April 1, 2020. Includes |
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(7) | Ms. |
(8) | Ms. Nelson joined the Board on May 13, 2020. |
(9) | Includes (i) |
(10) |
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(11) | Ms. Moyes shares includes 29,169 shares of common stock exercisable under vested stock options. |
(12) | Mr. Murphy joined the Company as Senior Vice President, CFO on April 13, 2020. Includes 2,376 restricted stock units that will vest on April 13, 2021. |
(11) Includes 13,829 sharesClearwater Paper Corporation 2021
21
1 | PROXY SUMMARY AND BUSINESS HIGHLIGHTS | 2 | CORPORATE GOVERNANCE AND BOARD OF DIRECTORS | 3 | EXECUTIVE COMPENSATION DISCUSSION AND TABLES | 4 | AUDIT COMMITTEE REPORT | 5 | ANNUAL MEETING INFORMATION | 6 | PROPOSALS |
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Our Nominating Committee reviews and makes recommendations to our Board concerning director compensation. Similar to our philosophy regarding executive compensation, our philosophy regarding director compensation is to provide our directors a fair compensation package that is tied to the services they perform as well as to the performance of the company, with the objective of recruiting and retaining an outstanding group of directors.
The Nominating Committee, pursuant to the authority granted under its charter, engaged Semler Brossy Consulting Group to advise it on director compensation matters for 2020. Semler Brossy’s assessment was taken into consideration in establishing our current director compensation, which is targeted to be at the median of compensation paid by comparable companies.
2020 Compensation of Non-Employee Directors
Name |
| Fees Earned or Paid in Cash ($)(1) |
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| Stock Awards ($)(2) |
| All Other Compensation ($) |
| Total ($) |
John J. Corkrean |
| $108,750 |
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| $114,714 |
| - |
| $223,464 |
Kevin J. Hunt |
| $110,500 |
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| $114,714 |
| - |
| $225,214 |
William D. Larsson |
| $94,000 |
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| $114,714 |
| - |
| $208,714 |
Joe L. Laymon |
| $83,500 |
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| $114,714 |
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| $198,214 |
Ann C. Nelson |
| $57,692 | (3) |
| $114,714 |
| - |
| $172,406 |
John P. O'Donnell |
| $92,250 |
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| $114,714 |
| - |
| $206,964 |
Alexander Toeldte |
| $278,167 |
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| $114,714 |
| - |
| $392,881 |
(1) | Represents annual retainers for 2020, as well as any amounts earned for service as Chair or committee Chair as well as committee membership retainers. |
(2) | This column shows the aggregate grant date fair value, computed in accordance with FASB ASC Topic 718, of stock units granted in 2020. In accordance with FASB ASC Topic 718, the grant date fair value reported for all stock units was computed by multiplying the number of stock units by the closing price of our stock on the grant date. The aggregate number of vested and unvested phantom common stock units credited for service and deferred fees as a director outstanding as of December 31, 2020 for each non-employee director was as follows: Mr. Corkrean— 9,278 units; Mr. Hunt—22,585 units; Mr. Larsson—65,892 units; Mr. Laymon— 9,278 units; Ms. Nelson— 4,053 units; Mr. O’Donnell—17,034 units and Mr. Toeldte—17,034 units. |
(3) | Ms. Nelson joined the company on May 1, 2020. |
During 2020, one of our directors, Arsen S. Kitch, also served as our CEO. As a result, he did not receive compensation for his services as a director during 2020. The compensation received by Mr. Kitch is shown in the “2020 Summary Compensation Table” provided elsewhere in this proxy statement.
Clearwater Paper Corporation 2021
22
1 | PROXY SUMMARY AND BUSINESS HIGHLIGHTS | 2 | CORPORATE GOVERNANCE AND BOARD OF DIRECTORS | 3 | EXECUTIVE COMPENSATION DISCUSSION AND TABLES | 4 | AUDIT COMMITTEE REPORT | 5 | ANNUAL MEETING INFORMATION | 6 | PROPOSALS |
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Retainer and Fees
Our outside directors cash compensation in 2020 was at the following rates:
Annual retainer fee | $70,000 | |
Annual retainer fee for Audit Committee membership | $15,000 | |
Annual retainer fee for Compensation Committee membership | $7,500 | |
Annual retainer fee for Nominating & Governance Committee membership | $6,000 | |
Annual retainer fee for Chair (if not CEO) | $75,000 | |
Annual Retainer Fee for Independent Executive Chair | $200,000 | |
Annual retainer fee for Chair of the Audit Committee | $20,000 | |
Annual retainer fee for Chair of the Compensation Committee | $15,000 | |
Annual retainer fee for Chair of the Nominating and Governance Committee | $10,000 | |
Attendance fee for each Board or Committee meeting in excess of 12 meetings, respectively | $1,500 |
We also reimburse directors for their reasonable out-of-pocket expenses for attending Board and committee meetings as well as educational seminars and conferences.
Directors may defer receiving all or any portion of their fees under the terms of our Deferred Compensation Plan for Directors, or Directors Plan. When a director elects to defer fees, he or she must elect a payment date or dates for the deferred amount and elect to have the deferred fees converted into phantom common stock units or, if not converted, then credited with annual interest at 120% of the long-term applicable federal rate published by the Internal Revenue Service, with quarterly compounding. The common stock units are credited with amounts in common stock units equal in value to any dividends that are paid on the same amount of common stock. Upon separation from service as a director, the common stock exercisable under vestedunits credited to the director are converted to cash based upon the then market price of the common stock options.and paid to the director according to the plan the shares were deferred under.
(12) Includes 21,943 sharesLong-Term Incentive Awards. In May 2020, each of our outside directors received an annual equity award that vests in May 2021. These annual awards were granted in the form of phantom common stock units. The number of phantom common stock units actually awarded was determined by dividing $100,000 by the average closing price of a share of our common stock over a twenty-day period that ended on the date of the grant. The common stock units awarded are credited with additional common stock units equal in value to any dividends that are paid on the same amount of common stock. Upon separation from service as a director, the common stock exercisableunits credited to the director are converted to cash based upon the then market price of the common stock and paid to the director according to the plan the shares were granted under.
Other Benefits. Directors and their spouses are also eligible to participate in our Matching Gifts to Education Program, which matches contributions of up to $1,500 per year to eligible educational institutions. In 2020 we made one matching donation for $1,500 on behalf of outside directors under this program.
Clearwater Paper Corporation 2021
23
1 | PROXY SUMMARY AND BUSINESS HIGHLIGHTS | 2 | CORPORATE GOVERNANCE AND BOARD OF DIRECTORS | 3 | EXECUTIVE COMPENSATION DISCUSSION AND TABLES | 4 | AUDIT COMMITTEE REPORT | 5 | ANNUAL MEETING INFORMATION | 6 | PROPOSALS |
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Director Stock Ownership Guidelines and Limitations on Securities Trading. In the interest of promoting and increasing equity ownership by our directors and to further align our directors’ long-term interests with those of our stockholders, we have adopted stock ownership guidelines. Each director must acquire and hold within five years of becoming a director, Clearwater Paper Corporation stock with a value of at least $350,000. Directors are expected to achieve their ownership guideline within a five-year period from their appointment as a director. Shares held in a brokerage account, an account with our transfer agent, or in the form of vested common stock options. units owned as a result of deferred director fees or annual equity awards paid under our company plans, all count towards the ownership requirement. The value of the shares held by a director will be measured by the greater of the value of the shares at (i) the time acquired or vested or (ii) the applicable annual measurement date, based on the twenty-day average closing price of our stock before that measurement date. Each of our directors is in compliance with his or her current equity ownership requirement. The stock ownership of all our directors as of March 18, 2021 is presented in this proxy. See “Security Ownership of Certain Beneficial Owners and Management.”
Annually a report is presented to the Board detailing each director’s stock ownership and progress toward meeting these guidelines.
Pursuant to our Insider Trading Policy, directors, officers and other employees, are prohibited from engaging in short sales of company securities, pledging company securities, purchasing company securities on margin and engaging in transactions in puts, calls or other derivatives trading on an exchange in regards to company securities.
Clearwater Paper Corporation 20192021
24
1 | PROXY SUMMARY AND BUSINESS HIGHLIGHTS | 2 | CORPORATE GOVERNANCE AND BOARD OF DIRECTORS | 3 | EXECUTIVE COMPENSATION DISCUSSION AND TABLES | 4 | AUDIT COMMITTEE REPORT | 5 | ANNUAL MEETING INFORMATION | 6 | PROPOSALS |
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3. EXECUTIVE COMPENSATION DISCUSSION AND TABLES
COMPENSATION COMMITTEECOMMITTEE REPORT
The Compensation Committee of the Board of Directors has reviewed and discussed the Executive Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and based on such review and discussions, the committee recommended to the Board that the Executive Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into our 20182020 Annual Report on Form 10-K.
The Compensation Committee Members: |
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Kevin J. Hunt, Chair John Joe W. Laymon Alexander Toeldte |
Clearwater Paper Corporation 20192021
25
1 | PROXY SUMMARY AND BUSINESS HIGHLIGHTS | 2 | CORPORATE GOVERNANCE AND BOARD OF DIRECTORS | 3 | EXECUTIVE COMPENSATION DISCUSSION AND TABLES | 4 | AUDIT COMMITTEE REPORT | 5 | ANNUAL MEETING INFORMATION | 6 | PROPOSALS |
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EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS
TheThe following portion of our proxy statement discusses and analyzes the 20182020 compensation programs and decisions applicable to the following executive officers of the company, which we sometimes refer to as the “named executive officers” or “NEOs”:
Named Executive Officer |
| Title |
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| President and Chief Executive Officer |
| Former President and Chief Executive Officer | |
Michael J. Murphy** |
| Senior Vice President, Finance and Chief Financial Officer |
| Former Senior Vice President, Finance and Chief Financial Officer | |
Steve M. Bowden |
| Senior Vice President, General Manager, |
Michael S. Gadd |
| Senior Vice President, General Counsel and Corporate Secretary |
Kari G. Moyes |
| Senior Vice President, Human Resources |
* Mr. Kitch was elected President and Chief Executive Officer and Ms. Massman resigned those offices and ceased being an employee, both effective as of April 1, 2020. ** Mr. Hrivnak departed the company effective April 10, 2020, and Mr. Murphy joined the company April 13, 2020. |
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Clearwater Paper Corporation 20192021
26
1 | PROXY SUMMARY AND BUSINESS HIGHLIGHTS | 2 | CORPORATE GOVERNANCE AND BOARD OF DIRECTORS | 3 | EXECUTIVE COMPENSATION DISCUSSION AND TABLES | 4 | AUDIT COMMITTEE REPORT | 5 | ANNUAL MEETING INFORMATION | 6 | PROPOSALS |
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2020 was a year of change. On April 1, 2020, Mr. Kitch was promoted to President and CEO replacing Ms. Massman. During 2020, we had strong financial results due to significantly greater than expected demand in tissue products due to the 201COVID-19 pandemic, strong operational performance, and favorable cost trends, and saw our stock price grow. During this extraordinary time, we prioritized the health and safety of our people while safely operating our facilities to meet the needs of our customers. We continued to strengthen our commitment to our communities, our customers, our planet, and the sustainability of our products. Below are performance and compensation highlights for 2020 at a glance.
During 2020, we delivered strong performance due to elevated demand for tissue products, steady demand for paperboard, and solid operational execution. We delivered these results while prioritizing the health and safety of our employees and meeting the needs of our customers. Our performance highlights were as follows:
8 Say on Pay Vote2020 EBITDA – up 69% from 2019; and
Share price – strong recovery in absolute share price in 2020 – up 76% from 2019.
On April 1, 2020, Mr. Kitch was promoted to President and CEO replacing Ms. Massman. The table below reflects the difference in target Compensation between Ms. Massman and Mr. Kitch.
The Salary, AIP and LTIP shown above are the target amounts, and are different from the amounts reported in the Summary Compensation Table for such years. Mr. Kitch was also granted, in connection with the CEO leadership change, a one-time retention RSU in April of 2020 with a target value of $1,000,000.
The Compensation Committee relies on regular stockholder outreach and engagement activities as well as more formal channels to communicate with stockholders, including the opportunity for stockholders to cast a non-binding advisory vote regarding executive compensation at the annual meeting of our stockholders. In 2018,2020, our proposal to approve our executive compensation program received majority support from our stockholders by a narrow margin, with 53%approximately 93.5% voting in favor. We were disappointed by
In evaluating our compensation practices in 2020, the vote outcome, a substantial decline from our track record of +90% since our first vote in 2011. In response, the Chair of our Compensation Committee and memberswas mindful of the executive and investor relations team undertook a comprehensive stockholder outreach initiative to determine concerns and collect input onsupport our stockholders expressed for the company’s executive compensation program and other governance matters. As a result of that engagement, we spoke with stockholders representing over 50% of our outstanding shares and with proxy advisors ISS and Glass Lewis.the practice
Clearwater Paper Corporation 2021
Overall, our discussions with stockholders centered around five areas:27
Our equity mix for long-term incentives;
Our performance targets and related disclosure of incentive performance targets and associated payouts;
Our peer groups for compensation benchmarking;
Our peer group used for the TSR performance measurement, as well as our TSR performance markers; and
CEO pay in connection with recent Company performance.
1 | PROXY SUMMARY AND BUSINESS HIGHLIGHTS | 2 | CORPORATE GOVERNANCE AND BOARD OF DIRECTORS | 3 | EXECUTIVE COMPENSATION DISCUSSION AND TABLES | 4 | AUDIT COMMITTEE REPORT | 5 | ANNUAL MEETING INFORMATION | 6 | PROPOSALS |
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Although there was not a consensus view across these areas fromof linking compensation to operational objectives and the enhancement of stockholder value. The Compensation Committee will continue to monitor our stockholders,executive compensation program to ensure compensation is aligned with company performance.
Executive Compensation Practices
Our executive compensation programs have strong governance components that further strengthen our pay-for-performance compensation philosophy, including the input we received informed the following actions with respect to our 2018 and 2019 executive pay programs, (each covered in more detail in the sections that follow):following:
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Clearwater Paper Corporation 2019
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Committee | The Compensation Committee consists entirely of | |||
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| The Compensation Committee utilizes an independent compensation consultant, Semler Brossy, which is retained directly by the Compensation Committee and provides no other services to the company’s management. | |||
Pay | The Compensation Committee is committed to oversee, evaluate, and improve our executive compensation pay design and administration. The executive compensation mix is targeted to favor performance-based compensation and executive compensation targets are determined based on a case-by-case basis using competitive market data with a range of opportunities above and below target to reflect actual performance. | |||
Risk Assessment | The Compensation Committee performs an annual review of the risks related to our compensation programs. | |||
Performance Goals | We | |||
Stock Ownership Guidelines | We require stock ownership by executives to further align our executives’ and stockholders’ interests. | |||
We provide for clawbacks in stock incentive and annual incentive plans. | ||||
Caps on Incentive Compensation | There is a maximum limit on the amount of annual cash incentive and performance share payouts. | |||
No Hedging or Pledging | Under our insider trading policy, all employees (including officers) are prohibited from short selling, purchasing on margin, pledging of company stock or other securities, and buying or selling puts or calls in company stock or other company securities. | |||
No Perks | We do not provide perks to executive officers. | |||
No Gross Ups | We do not provide for excise tax gross ups in our executive compensation | |||
No Change in Control Vesting Acceleration | We do not provide for outstanding equity awards to payout after a change in control absent a termination of employment (PSUs, RSUs, and | |||
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No Repricing | Our 2017
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Clearwater Paper Corporation 2019
Performance and CEO compensation highlights for 2018 are as follows:
Our CEO compensation for 2018 is heavily performance based.
Despite the 2018 AIP EBITDA target being higher than 2017 results, our 2018 results did not match
2017 results. In addition, our 2018 TSR was down. Accordingly, our CEO’s 2018 AIP bonus was less,
her options are “underwater” and her 2016-2018 performance shares did not result in 2018 payouts.
Clearwater Paper Corporation 2019
Our CEO’s target compensation did not change from 2017 to 2018 (see table below).
Year over Year Compensation | ||
Type | 2017 | 2018 |
Actual Salary* | $915,385 | $925,000 |
Actual Annual Incentive (AIP) | $770,000 | $529,600 |
Target Long Term Incentive** (LTIP) | $2,500,000 | $2,500,000 |
Total Pay | $4,185,385 | $3,954,600 |
*We set annual base pay at $925,000 in the beginning of 2017, which did not go into effect until March of 2017, and did not raise it in 2018.2021
**LTIP reflects the value that the Compensation Committee intended to deliver to our CEO, consisting of performance shares (assuming target performance), RSUs, and stock options.
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1 | PROXY SUMMARY AND BUSINESS HIGHLIGHTS | 2 | CORPORATE GOVERNANCE AND BOARD OF DIRECTORS | 3 | EXECUTIVE COMPENSATION DISCUSSION AND TABLES | 4 | AUDIT COMMITTEE REPORT | 5 | ANNUAL MEETING INFORMATION | 6 | PROPOSALS |
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2016-2018 Compensation Outcomes
Strong Links between Pay and Performance, and Payout History
Our named executive officers’ performance-based variable compensation represents the majority of their total compensation. This variable compensation, for the past three years, saw a direct and significant reduction, specifically:
2 out of 3 performance share awards resulted in zero payout;
2 out of 3 annual incentive payments were below target; and
all stock option awards had an “underwater” exercise price at the end of the year.
Clearwater Paper Corporation 2019
2016 –2018 CEO Target Pay vs. Realized Pay
During the 2016-2018 period, when our TSR was -43.2%, our CEO’s realized pay was 54% lower than average target pay, demonstrating the strong link between pay outcomes and company stock price performance. Specifically, our CEO’s realized pay was directly and significantly reduced by:
below-target annual incentive pay outcomes;
below-threshold or zero performance share pay outcomes; and
Clearwater Paper Corporation 2019
20182020 Executive Compensation ProgramPractice
Our compensation philosophy remains consistent and straightforward—pay our executives competitive and fair compensation that is linked to individual and company performance. The objectives of our executive compensation program are to attract, retain, motivate, and reward executives in order to enhance the long-term profitability of the company, foster stockholder value creation, and align executives’ interests with those of our stockholders.
Our Compensation Committee works with its independent compensation consultant, Semler Brossy, Consulting Group LLC or Semler Brossy, and management, and ultimately uses its judgement, in the design of and selection of performance metrics used in our executive compensation program. The committee strives to identify the financial and operational levers that will help us achieve our overall business strategy and direction as well as align with stockholders’ interests. We have consistently included discrete and distinct financial metrics in both our cash-based compensation programs and in our equity-based compensation programs to link our compensation to company performance.
Clearwater Paper Corporation 2021
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1 | PROXY SUMMARY AND BUSINESS HIGHLIGHTS | 2 | CORPORATE GOVERNANCE AND BOARD OF DIRECTORS | 3 | EXECUTIVE COMPENSATION DISCUSSION AND TABLES | 4 | AUDIT COMMITTEE REPORT | 5 | ANNUAL MEETING INFORMATION | 6 | PROPOSALS |
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| Overview | Key Benchmarks/ Performance Metrics |
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Annual Salary | Fixed Cash compensation meant to attract and retain executives by balancing at-risk compensation | •The Compensation Committee targets base salaries with reference to our compensation peer group as well as level of experience, job performance, and long-term potential and tenure |
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Annual Incentive Plan | Links executive compensation to annual financial, operational, and strategic performance by awarding cash bonuses for achieving pre-defined targets | •For executives
•For executives in charge of a business unit:
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Long-Term Incentive Plan (LTIP) Performance Shares ( | Intended to reward employees when the company performs in-line with long-term strategic direction and achieves total stockholder returns that exceed those of our applicable comparator index | •
Weighting of performance shares in the overall mix to 70% •Payout modifier is applied based on relative - target performance level of the
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Clearwater Paper Corporation 2019
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Restricted Stock Units (“RSU”) (30% of LTIP) | Intended to recruit and retain key employees while aligning interests of executives with long-term best interests of our stockholders | •Vest ratably over a three-year period, subject to continued employment |
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Executive Compensation Practices
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20182020 Executive Compensation Peer GroupOur independent compensation consultant,
Semler Brossy annually reviews our compensation peer group based on objective criteria with the goal of ensuring that it is reflective of the size of our company and the competitive environment in which we operate. Understanding that our market capitalization has substantially changed, and in recognition that company size is often highly correlated with executive pay, our Compensation Committee made substantial changes to our peer group based on Semler Brossy’s recommendation.
Based on their recommendation for fiscal year 2018, we removed twoPeer companies (Sonoco Products Co. and Packaging Corp. of America) and added six new companies (Resolute Forest Products Inc., Verso Corp., Multi-Color Corp., Ferro Corp., Mercer International, Inc., and Intertape Polymer Group, Inc.) increasing our overall peer group size to 18 companies. The companies removed were no longer reflective of our size, while another was subject to merger and acquisition activities, as noted below. New companies were selectedare targeted with consideration to comparability in company size and industry (paper products and paper packagingpackaging) and adjacent industries, including metal, glass, and containers, and specialty chemicals).chemicals.
Clearwater Paper Corporation 2021
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1 | PROXY SUMMARY AND BUSINESS HIGHLIGHTS | 2 | CORPORATE GOVERNANCE AND BOARD OF DIRECTORS | 3 | EXECUTIVE COMPENSATION DISCUSSION AND TABLES | 4 | AUDIT COMMITTEE REPORT | 5 | ANNUAL MEETING INFORMATION | 6 | PROPOSALS |
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In 2020, we maintained the same peer group as in 2019, save for the removals of Bemis Company Inc., Multi-Color Corp., and OMNOVA Solutions Inc., due to M&A activity. The changes have placed us near the median in terms of revenue and closer to more companies in market valuevalue.
Clearwater Paper Corporation 2019
The committee will continue to monitor pay for our executive officers with an emphasis on company performance and appropriate competitive benchmarks, including our updated peer group.
Company Name (1) |
| GICS Sub-Industry |
| Revenue (In millions)(2) |
| Market Capitalization (In millions)(3) |
Graphic Packaging Holding Co. |
| Paper Packaging |
| $5,625 |
| $3,302 |
Domtar Corp. |
| Paper Products |
| $5,409 |
| $2,210 |
Silgan Holdings, Inc. |
| Metal & Glass Containers |
| $4,374 |
| $2,613 |
Bemis Co., Inc. |
| Paper Packaging |
| $4,091 |
| $4,178 |
Greif, Inc. |
| Metal & Glass Containers |
| $3,874 |
| $1,940 |
Resolute Forest Products, Inc.* |
| Paper Products |
| $3,722 |
| $720 |
AptarGroup, Inc. |
| Metal & Glass Containers |
| $2,706 |
| $5,909 |
Verso Corp.* |
| Paper Products |
| $2,626 |
| $774 |
Multi-Color Corp.* |
| Commercial Printing |
| $1,693 |
| $720 |
P.H. Glatfelter Co. |
| Paper Products |
| $1,642 |
| $427 |
Ferro Corp.* |
| Specialty Chemicals |
| $1,594 |
| $1,306 |
Innospec, Inc. |
| Specialty Chemicals |
| $1,436 |
| $1,508 |
Mercer International, Inc.* |
| Paper Products |
| $1,383 |
| $680 |
Neenah, Inc. |
| Paper Products |
| $1,038 |
| $994 |
Schweitzer-Mauduit International, Inc. |
| Paper Products |
| $1,028 |
| $771 |
Intertape Polymer Group, Inc.* |
| Metal & Glass Containers |
| $1,003 |
| $996 |
OMNOVA Solutions, Inc. |
| Specialty Chemicals |
| $765 |
| $329 |
Myers Industries, Inc. |
| Metal & Glass Containers |
| $568 |
| $534 |
25th Percentile |
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| $1,124 |
| $720 |
Median |
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| $1,668 |
| $995 |
75th Percentile |
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| $3,836 |
| $2,142 |
Clearwater Paper Corporation |
| Paper Products |
| $1,732 |
| $401 |
Percentile Rank |
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| 53rd percentile |
| 4th percentile |
Company Name |
| GICS Sub-Industry |
| Revenue (In millions)(1) |
| Market Capitalization (In millions)(2) |
AptarGroup, Inc. |
| Metal and Glass Containers |
| $2,851 |
| $8,860 |
Domtar Corporation |
| Paper Products |
| $4,658 |
| $1,747 |
Ferro Corporation |
| Specialty Chemicals |
| $948 |
| $1,204 |
Glatfelter Corporation |
| Paper Products |
| $912 |
| $727 |
Graphic Packaging Holding Company |
| Paper Packaging |
| $6,428 |
| $4,587 |
Greif, Inc. |
| Metal and Glass Containers |
| $4,515 |
| $2,304 |
Innospec Inc. |
| Specialty Chemicals |
| $1,273 |
| $2,230 |
Intertape Polymer Group Inc. |
| Metal and Glass Containers |
| $1,160 |
| $1,424 |
Mercer International Inc. |
| Paper Products |
| $1,356 |
| $674 |
Myers Industries, Inc. |
| Metal and Glass Containers |
| $490 |
| $744 |
Neenah, Inc. |
| Paper Products |
| $799 |
| $930 |
Resolute Forest Products Inc. |
| Paper Products |
| $2,699 |
| $530 |
Schweitzer-Mauduit International, Inc. |
| Paper Products |
| $1,034 |
| $1,260 |
Silgan Holdings Inc. |
| Metal and Glass Containers |
| $4,744 |
| $4,101 |
Verso Corporation |
| Paper Products |
| $1,632 |
| $405 |
75th Percentile |
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| $3,683 |
| $2,267 |
Median |
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| $1,356 |
| $1,260 |
25th Percentile |
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| $991 |
| $736 |
Clearwater Paper Corporation |
| Paper Products |
| $1,851 |
| $626 |
Percentile Rank |
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| 59th percentile |
| 12th percentile |
(1)KapStone Paper & Packaging Corp. was removed from the peer group due to M&A activity.
(2)Represents revenues for the most recent four quarters as reported by each company as of December 31, 2018.
(3)Share price as of December 31, 2018,
(1) | Represents revenues for the most recent four quarters as reported by each company as of December 31, 2020. |