UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
☐ | Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted byRule 14a-6(e)(2)) | ||||
☒ | Definitive Proxy Statement | |||
☐ | Definitive Additional Materials | |||
☐ | Soliciting Material | |||
RESOLUTE FOREST PRODUCTS INC.
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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Fee paid previously with preliminary | ||||
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materials. |
☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. |
Resolute Forest Products Inc.
111 Robert-Bourassa Boulevard,1010 De La Gauchetière Street West, Suite 5000400
Montreal, Quebec
H3C 2M1H3B 2N2, Canada
April 2, 202014, 2022
Dear Stockholder:
We cordially invite you to attend the annual meeting of stockholders of Resolute Forest Products Inc. to be held on Friday, May 27, 2022, at 8:00 a.m. (Eastern). This year’s annual meeting of stockholders will be conducted both online through a virtual web conference at https://web.lumiagm.com/172118479 on Tuesday, May 12, 2020,295854943 and in person at 9:00 a.m. (Eastern). The annualthe Montreal Marriott Chateau Champlain, located at 1050 De La Gauchetière Street West, Montreal, Quebec, H3B 4C9, Canada. This hybrid format provides you with the option of attending the meeting is being held entirely online duein person, subject to public health restrictions relating to the emerging public health impactCOVID-19 pandemic at the time of the coronavirus outbreak (COVID-19) and to allow us to continue to proceed withmeeting, or joining the meeting while mitigating health and safety risks to participants. You will be ableonline. Whether you choose to attend and participate in the annual meetingperson or online, at https://web.lumiagm.com/172118479, where you will be able to listen to the meeting live, submit questions and vote your shares. We strongly encourage you to review guidance from public health authorities, which could limit the number of in-person attendees or require stockholders to attend the annual meeting virtually to mitigate health and safety risks to participants. Please monitor our annual meeting website at www.resolutefp.com/Investors for any updates regarding our annual meeting.
The Noticenotice of Internet Availabilityinternet availability of proxy materials provides you with information on how to access the proxy materials and obtain the details of the business to be conducted at the meeting.
In addition to the formal items of business to be brought before the meeting, we will report on our business and respond to stockholderstockholders’ questions.
Whether or not you plan to attend the meeting, be it online or in person, you can ensure that your shares are represented at the meeting by promptly voting and submitting your proxy or voting instruction card by Internetinternet or, if you have requested to receive a paper copy of the proxy materials, by completing, signing, dating and returning your proxy form in the enclosed envelope. You will find the proxy card or voting instruction card by accessing the Internetinternet websites mentioned on the Noticenotice of Internet Availabilityinternet availability and by following the instructions thereon.
Resolute’s annual report for 20192021 is available by Internetinternet or by mail in accordance with the instructions found on the Noticenotice of Internet Availability,internet availability, and we urge you to read it carefully.
We look forward to your attendance at the annual meeting.
Sincerely,
Yves LaflammeRemi G. Lalonde
President and chief executive officer
Bradley P. MartinDuncan K. Davies
ChairChairman of the board
Resolute Forest Products Inc.
111 Robert-Bourassa Boulevard,1010 De La Gauchetière Street West, Suite 5000400
Montreal, Quebec
H3C 2M1H3B 2N2, Canada
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 12, 202027, 2022
April 2, 202014, 2022
Dear Stockholder:
The 20202022 annual meeting of stockholders of Resolute Forest Products Inc. will be held on Friday, May 27, 2022, at 8:00 a.m. (Eastern) online through a virtual web conference at https://web.lumiagm.com/172118479 on Tuesday, May 12, 2020,295854943 and in person at 9:00 a.m. (Eastern),the Montreal Marriott Chateau Champlain, located at 1050 De La Gauchetière Street West, Montreal, Quebec, H3B 4C9, Canada, for the purpose of voting on the following matters:
1. | the election of directors for the ensuing year; |
2. | the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the |
3. | an advisory vote to approve executive compensation, or the “say-on-pay” vote; and |
4. |
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such other business as may properly come before the annual meeting or any adjournment or postponement thereof. |
The record date for the determination of the stockholders entitled to vote at our annual meeting, and any adjournment or postponement thereof, is the close of business on March 16, 2020.29, 2022.
Important notice regarding the availability of proxy materials for the annual meeting of
stockholders to be held on May 12, 2020:27, 2022:
The proxy statement and our 20192021 annual report are available at
http:https://www.astproxyportal.com/AST/RFP_EN.RFP_EN.
TheThis year’s annual meeting is being held entirely online due to the emerging public health impact of the coronavirus outbreak (COVID-19) and to allow us to continue to proceed with the meeting while mitigating health and safety risks to participants. Youstockholders will be able to attend and participate in the annual meetingconducted both online through a virtual web conference at https://web.lumiagm.com/172118479,295854943 and in person at the Montreal Marriott Chateau Champlain, located at 1050 De La Gauchetière Street West, Montreal, Quebec, H3B 4C9, Canada. This hybrid format provides you with the option of attending the meeting in person, subject to public health restrictions relating to the COVID-19 pandemic at the time of the meeting, or joining the meeting online where you will be able to listen to the meeting live, submit questions and vote your shares. You may also forward your questions in advance to ir@resolutefp.com, and the company will respond to as many appropriate questions as time permits during the meeting, to the extent relevant to the business of the meeting. Please make sure your email clearly identifies your name and whether you are a stockholder. To join the annual meeting online, you will need to have your 11- or 12-digit control number, which is included on your notice of internet availability and proxy card and the following password: resolute2022. If you are not a stockholder of record, you must obtain a legal proxy from your intermediary institution and contact our transfer agent at proxy@astfinancial.com, at least five business days prior to May 27, 2022, to secure a proxy card with the 11- or 12-digit control number in order to vote your shares at the annual meeting. Please monitor our annual meeting website at www.resolutefp.com/Investors for any updates regarding our annual meeting.
By order of the board of directors,
Jacques P. VachonStephanie Leclaire
Corporate secretary
April 2, 202014, 2022, Montreal, Quebec, Canada
Questions and Answers About the Annual General Meeting and Voting | 1 | |||
Board Leadership Structure; Communication with Independent Directors | ||||
Director Qualifications, | ||||
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Item 2 – Vote on the Ratification of the Appointment of PricewaterhouseCoopers LLP | ||||
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PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of proxies by Resolute Forest Products Inc. on behalf of our board of directors for the 20202022 annual meeting of stockholders. TheThis year’s annual meeting of stockholders will be heldconducted on Friday, May 27, 2022, at 8:00 a.m. (Eastern) both online through a virtual web conference at https://web.lumiagm.com/172118479 on Tuesday, May 12, 2020,295854943 and in person at 9:00 a.m. (Eastern).the Montreal Marriott Chateau Champlain, located at 1050 De La Gauchetière Street West, Montreal, Quebec, H3B 4C9, Canada, subject to public health restrictions relating to the COVID-19 pandemic at the time of the meeting. Proxy materials for the annual meeting are being made available on or about April 2, 2020.14, 2022.
When we use the terms “Resolute,” “the Company,company,” “we,” “us” and “our,” we mean Resolute Forest Products Inc., a Delaware corporation, and its consolidated subsidiaries, unless the context indicates otherwise.
Except for documents filed with the Securities and Exchange Commission, or the “SEC” and expressly incorporated by reference in this proxy statement, the information on the company’s website is not a part of, and is not incorporated by reference in this proxy statement.
QUESTIONSAND ANSWERS ABOUTTHE ANNUAL GENERAL MEETINGAND VOTING
What is the Noticenotice of Internet Availabilityinternet availability and why did I not receive a full set of proxy materials?
Notice and Access Rules adopted by the Securities and Exchange Commission, or the “SEC”,SEC, allow companies to choose the method for delivering proxy materials to stockholders. We have again elected this year to use the Notice and Access Rules and therefore to mail a notice regarding the availability of proxy materials on the Internetinternet (the “Notice“notice of Internet Availability”internet availability”) instead of sending a full set of proxy materials in the mail to our stockholders. This Noticenotice of Internet Availabilityinternet availability will be mailed to our stockholders approximately on April 2, 2020,14, 2022, and our proxy materials will be posted on both our corporate website (www.resolutefp.com/Investors/Financial_Reports), the website referenced in the Noticenotice of Internet Availabilityinternet availability as well as on http:https://www.astproxyportal.com/AST/RFP_EN on the same day. Utilizing this method of delivery expedites receipt of proxy materials by our stockholders and lowers the costcosts of the annual meeting. If you are a stockholder and would like to receive a paper or email copy of the proxy materials, you should follow the instructions in the Noticenotice of Internet Availabilityinternet availability for requesting copies.
Who is entitled to vote at the annual meeting?
Owners of Resolute’s common stock at the close of business on March 16, 2020,29, 2022, the record date for the annual meeting, are entitled to receive the Noticenotice of Internet Availabilityinternet availability and to vote their shares at the meeting. On that date, there were 87,355,67776,796,573 shares of common stock outstanding and entitled to vote. Each share of common stock is entitled to one vote for each matter to be voted on at the annual meeting.
What is the difference between holding shares as a stockholder of record and through an intermediary?
You are a stockholder of record if you own shares of common stock that are registered in your name with our transfer agent, American Stock Transfer & Trust Company, LLC. If you are a stockholder of record, the transfer agent is sending the Noticenotice of Internet Availabilityinternet availability to you directly. As a stockholder of record, you may vote at the annual meeting by attending the annual meeting in person or online andby following the instructions posted at https://web.lumiagm.com/172118479,295854943, or you may vote by proxy. To join the annual meeting, you will need to have your 11- or 12-digit control number, which is included on your notice of internet availability and proxy card and the following password: resolute2022.
If you hold shares of common stock indirectly through a broker, bank or similar institution (which we refer to as an “intermediary institution”), you are a “street name” holder and the Noticenotice of Internet Availabilityinternet availability is being sent to you by the intermediary institution through which you hold your shares. If you provide specific voting
instructions by mail, telephone or the Internet,internet, your intermediary institution will vote your shares as you have directed. You are also invited to attend the annual meeting in person or online at https://web.lumiagm.com/172118479.295854943. However, since you are not a stockholder of record, you may not vote your shares at the annual meeting by attending the meeting in person or online unless you request and obtain a legal proxy from your intermediary institution. If you obtain a legal proxy from your intermediary institution, you must contact our transfer agent at help@astfinancial.comproxy@astfinancial.com at least five business days prior to May 27, 2022, to secure a proxy card with the 11-digit11- or 12-digit control number in order to vote.vote during the meeting online. To join the annual meeting online, you will also need the following password: resolute2022.
What do I need to do to attend the annual meeting?
TheThis year’s annual meeting is being held entirelyof stockholders will be conducted both online duethrough a virtual web conference at https://web.lumiagm.com/295854943 and in person at the Montreal Marriott Chateau Champlain, located at 1050 De La Gauchetière Street West, Montreal, Quebec, H3B 4C9, Canada. This hybrid format provides stockholders with the option of attending the meeting in person, subject to public health restrictions relating to the emerging public health impactCOVID-19 pandemic at the time of the coronavirus outbreak (COVID-19) and to allow us to continue to proceed withmeeting, or joining the meeting while mitigating healthonline. Whether stockholders choose to attend in person or online, they will be able to listen to the meeting live, submit questions and safety
risks to participants.vote their shares. Stockholders of record as of March 16, 202029, 2022, will be able to attend and participate in the annual meeting.
Joining online: The live audio webcast of the annual meeting online by accessing https://web.lumiagm.com/172118479.will begin promptly at 8:00 a.m. (Eastern) on May 27, 2022. Online access to the audio webcast will be available approximately 60 minutes prior to the start of the annual meeting to allow time for you to log in and test the system. To joinattend the online annual meeting, you will need to havelog in at https://web.lumiagm.com/295854943. You will need your 11-digitunique 11- or 12-digit control number, which is includedappears on your Noticenotice of Internet Availabilityinternet availability and the following password: resolute2022. If your shares are held by an intermediary institution, you are considered the beneficial owner of the shares. Since a beneficial owner is not a stockholder of record, you may not attend the meeting and vote your shares online at the annual meeting unless you obtain a legal proxy card.from the intermediary institution that holds your shares that gives you the right to vote at the annual meeting. If you obtain a legal proxy from your intermediary institution, you must contact our transfer agent at proxy@astfinancial.com at least five business days prior to May 27, 2022, to secure a proxy card with the 11- or 12-digit control number in order to vote. To join the annual meeting online, you will also need the following password: resolute2022. Please monitor our annual meeting website at www.resolutefp.com/Investors for any updates regarding our online annual meeting.
Even ifJoining in person: Attendance in person at the annual meeting is generally limited to our stockholders and their authorized representatives. All stockholders must bring an acceptable form of identification, such as a driver’s license, to attend the meeting in person. If you dohold your shares in street name and you plan to attend the annual meeting, you must bring an account statement or other suitable evidence that you held shares of common stock as of the record date to be admitted to the meeting. For directions to the annual meeting, you may contact our investor relations department by following the instructions on our website at www.resolutefp.com/Investors. Any representative of a stockholder who wishes to attend must present acceptable documentation evidencing his or her authority, suitable evidence of ownership by the stockholder of common stock as described above and an acceptable form of identification. We reserve the right to limit the number of representatives for any stockholder who may attend the meeting. Sanitary measures established by the local authorities could limit the number of persons in attendance or impose other limitations. Please monitor our annual meeting website at www.resolutefp.com/Investors for any updates regarding our in-person annual meeting.
Whether you plan to attend the annual meeting online or in person, we recommend that you also vote by proxy as described herein as early as possible so that your vote will be counted if you decide not to attend the annual meeting.
An audio recording of the annual meeting will be available on our annual meeting website at www.resolutefp.com/Investors after the meeting.
Access to the Audio Webcast. The live audio webcast of the annual meeting will begin promptly at 9:00 a.m. (Eastern) on May 12, 2020. Online access to the audio webcast will be available approximately 30 minutes prior to the start of the annual meeting to allow time for you to log in and test the system.
To attend the online annual meeting, you will need to log in at https://web.lumiagm.com/172118479. You will need your unique 11-digit control number, which appears on your Notice of Internet Availability. In the event that you do not have a control number, please contact your intermediary institution as soon as possible, so that you can be provided with a control number and gain access to the meeting.
Please monitor our annual meeting website at www.resolutefp.com/Investors for any further updates regarding our online annual meeting.
Submitting Questions. We will hold a live question and answer session in connection with the annual meeting. Stockholders may submit questions in person or via our virtual shareholderstockholder meeting website at https://web.lumiagm.com/172118479.295854943. We intend to answer properly submitted questions that are pertinentrelating to the Companycompany and the meeting matters, as time permits. However, we reserve the right to edit profanity or other inappropriate language, or to exclude questions that are not pertinentrelevant to meeting matters or that are otherwise inappropriate. Questions and answers willmay be grouped by topic and substantially similar questions will be grouped and answered once. You may also forward your questions in advance to ir@resolutefp.com. Please make sure your email clearly identifies your name and provide evidence that you are a stockholder. We will strive to answer appropriate questions that have not been answered during the meeting by posting an answer on our annual meeting website after the meeting.
Technical Assistance. If you experience technical difficulties joining the annual meeting online or during the meeting online please call (877) 283-0324 (toll free for Canada and the U.S.) or (718) 921-8300 for assistance.
What methods can I use to vote?
If you are a registered holder, you may vote:
• | By mail. If you would like to receive a paper copy of the proxy card, you should follow the instructions on the |
• | By |
• | By |
• | By attending the meeting online. You may vote online |
If you are a street name holder, you may vote:
• | By mail. If you would like to receive a paper copy of the voting instruction form, you should follow the instructions on the |
• | By |
• | By |
• | By attending the meeting online. If your shares are held by an intermediary institution, you are considered the beneficial owner of the shares. |
proxy@astfinancial.com at least five business days prior to May 27, 2022, to secure a proxy card with the |
What is a brokernon-vote?
If you are a street name holder, you must instruct your intermediary institution how to vote your shares. If you do not, your shares will not be voted on any proposal for which the broker does not have discretionary authority to vote, which is referred to as a “brokernon-vote”, in accordance with the rules of the New York Stock Exchange, or “NYSE.” Under those rules, your intermediary institution has discretionary voting authority to vote your shares on the ratification of PricewaterhouseCoopers LLP as our independent registered public accounting firm, even if it does not receive voting instructions from you. But the election of directors and the advisorysay-on-pay vote and the adoption of the First Amendment to the Resolute Forest Products 2019 Equity Incentive Plan arenon-discretionary items, and they may not be voted upon by your broker without specific voting instructions from you. Accordingly, your shares would not be voted on these matters.
Is there a list of stockholders entitled to vote at the annual meeting?
A list of stockholders of record entitled to vote at the meeting will be available for inspection for the ten days before the meeting for any purpose germane to the meeting during ordinary business hours at Resolute Forest Products Inc., 111 Robert-Bourassa Boulevard,1010 De La Gauchetière Street West, Suite 5000,400, Montreal, Quebec, H3C 2M1,H3B 2N2, Canada from May 1, 2020,17, 2022, through May 11, 2020.26, 2022. During the annual meeting, the list of stockholders of record entitled to vote at the meeting will be available for inspection upon request in person or at https://web.lumiagm.com/172118479.295854943.
What is the quorum for the annual meeting?
The presence of the holders of shares of common stock representing at leastone-third of the voting power of all common stock issued and outstanding and entitled to vote at the meeting, participating online, at https://web.lumiagm.com/172118479in person or by proxy, is necessary to constitute a quorum for the transaction of business at the annual meeting. Abstentions and brokernon-votes are considered present for purposes of determining a quorum.
How will my shares be voted at the annual meeting?
At the meeting, the persons named in the proxy card or, if applicable, their substitute(s) will vote your shares as you instruct. If you sign your proxy card and return it without indicating how you would like to vote your shares, your shares will be voted:
FOR the election of each director nominee;
FOR the proposal to ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm;
FOR the advisory resolution approving executive compensation; and
FORAt the approvaldiscretion of the First Amendment toproxy holders on any other matter that may properly come before the Resolute Forest Products 2019 Equity Incentive Plan.meeting.
Can I revoke my proxy?
If you are a stockholder of record, you can revoke your proxy before it is exercised by:
giving written notice to the Company’scompany’s corporate secretary;
delivering a valid, later-dated proxy, or later-dated vote on the Internet,internet, before the annual meeting; or
• | attending the annual meeting online and voting by following the instructions at https://web.lumiagm.com/295854943. See What do I need to do to attend the annual meeting? for instructions on how to join the meeting online; or |
attending the annual meeting onlinein person and voting by following the instructions at https://web.lumiagm.com/172118479.your shares.
If you are a street name holder, you can submit new voting instructions by contacting your intermediary institution. All shares for which proxies have been properly submitted and not revoked will be voted at the annual meeting.
What are the voting requirements for the approval of each matter presented at the annual meeting?
• | Election of directors. Since the number of nominees for director is the same as the number of positions on the board to be filled, election of directors at this annual meeting is deemed“non-contested.” As a result, under ourby-laws, |
• | Ratification of PricewaterhouseCoopers LLP. The ratification of the appointment of an independent registered public accounting firm is not required under ourby-laws, but we are asking as a matter of good governance. A majority of the votes present and entitled to vote at the meeting must vote to approve the ratification of PricewaterhouseCoopers LLP as our independent registered accounting firm for the |
• | Advisory vote on executive compensation. Under ourby-laws, in order for it to pass, a majority of the votes present and entitled to vote at the meeting must vote to adopt, on an advisory basis, the resolution approving compensation of our named executive officers. Abstentions will have the same effect as a vote against this proposal. Broker |
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Will my vote be confidential?
Yes. We have a policy of confidentiality in the voting of stockholder proxies. Individual stockholder votes are kept confidential, unless disclosure is necessary to meet applicable legal requirements to assert or defend claims for or against the Companycompany or made during a contested proxy solicitation, tender offer or other change of control situation.
Who will pay for the cost of this proxy solicitation?
We will pay the cost of soliciting proxies for the annual meeting. In addition to the solicitation of proxies by mail, solicitation may be made by certain of our directors, officers or employees telephonically, electronically or by other means of communication. Our directors, officers and employees will receive no additional compensation for any such solicitation. We will reimburse brokers and other similar institutions for costs incurred by them in mailing proxy materials to beneficial owners.
What information is available via the Internet?internet?
These documents can be found at http:https://www.astproxyportal.com/AST/RFP_EN:
notice of annual meeting;
proxy statement; and
20192021 annual report.
Your proxy card or voting information form can also be found at the internet address mentioned on the Noticenotice of Internet Availability.internet availability.
Can I obtain printed materials of the proxy materials?
Yes, follow the instructions on the Noticenotice of Internet Availabilityinternet availability to receive printed proxy materials in time enough to vote your shares.
What should I do if I receive more than one set of proxy materials?
You may receive more than one set of proxy materials. For example, if you hold your shares in more than one brokerage account, you will receive separate proxy materials for each brokerage account in which you hold shares. If you are a stockholder of record and your shares are registered in more than one name, you may receive more than one set of proxy materials. Please follow the instructions on each of the Noticesnotices of Internet Availabilityinternet availability that you receive in order to vote all of your shares. If you would like to consolidate multiple accounts at our transfer agent, please contact American Stock Transfer & Trust Company, LLC at(877) 283-0324 (toll free for Canada and the U.S.) or (718)921-8300.
What is “householding” and how does it affect me?
We have adopted a procedure, approved by the SEC, called “householding,” pursuant to which stockholders of record who have the same address and last name and do not participate in electronic delivery of proxy materials will receive only one set of proxy materials, unless we are notified that one or more of these stockholders wishes to continue receiving individual copies. This procedure will reduce our printing costs and postage fees.
Stockholders who participate in householding will continue to receive separate Noticesnotices of Internet Availability.internet availability. Householding would not in any way affect dividend check mailings, if any. If you participate in householding and wish to receive a separate copy of proxy materials, or if you do not wish to continue to participate in householding and prefer to receive separate copies of these documents in the future, please contact our transfer agent.agent, American Stock Transfer & Trust Company, LLC, at (877) 283-0324 (toll free for Canada and the U.S.) or (718) 921-8300 (800- 937-5449 or 718-921-8300), or at 6201 15th Avenue, Brooklyn NY 11219. If you are a street name holder, you can request information about householding from your intermediary institution.
CORPORATE GOVERNANCEAND BOARD MATTERS
Corporate Governance Principles
The board has adopted a formal set of corporate governance principles and practices, which we refer to as the “corporate governance principles.” The purpose of the corporate governance principles, which are available on our website (www.resolutefp.com/about_us/corporate_governance), is to provide a structure within which directors can effectively pursue the Company’scompany’s objectives for the benefit of stockholders and supervise the management of the Company.company. The corporate governance principles are guidelines intended to serve as a flexible framework within which the board may conduct its business, and not as a set of legally binding obligations.
The corporate governance principles outline the board’s responsibilities and the interplay among the board and its committees in furthering the Company’scompany’s overall objectives. The corporate governance principles noteprovide information on the
board’s role in advising management on significant issues facing the Companycompany and in
reviewing and approving significant actions. In addition, the corporate governance principles highlightactions, as well as the principal roles of certain committees of the board, including:
the board’s selection and evaluation of senior executive officers, including the president and chief executive officer, with assistance from the human resources and compensation/nominating and governance committee (the “HRCNG committee”), and succession planning;
the administration of executive and director compensation by the human resources and compensation/nominating and governanceHRCNG committee, with final approval of the president and chief executive officer and director compensation by the board;
the selection and oversight of our independent registered public accounting firm and oversight of public financial reporting by the audit committee; and
the evaluation of candidates for board membership and the oversight of the structure and practices of the board, the committees and corporate governance matters in general by the human resources and compensation/nominating and governanceHRCNG committee, including annual assessment (collectively and on an individual basis) of board and committee effectiveness.effectiveness; and
the HRCNG committee, the environmental, health, safety and sustainability committee together with the board are responsible for overseeing the company’s sustainability plans and strategies as well as the company’s environmental, social and governance (“ESG”) performance.
Our corporate governance principles also include, among other things:
general qualifications for board membership, including independence requirements (with, among other things, the categorical standards for board determinations of independence);
director responsibilities, including board and stockholder meeting attendance and advance review of meeting materials;
provisions for director access to management and independent advisors, and for director orientation and continuing education; and
an outline of management’s responsibilities, including production of financial reports and disclosures, implementation and monitoring of internal controls and disclosure controls and procedures, development, presentation and implementation of strategic plans and setting a strong ethical “tone at the top.”
The Company’scompany’s corporate governance principles also include standards concerning the independence of board members. Those standards are designed to comply with those established by the SEC and the NYSE. They include the following:
Each member of the board, except for the president and chief executive officer and, at the discretion of the board, up to two additional directors, must be independent. The definition of independence is based on the NYSE’s corporate governance standards, which also requirerequires a majority of directors to be independent, and rules established by the SEC.
Each member of the audit committee and the human resources and compensation/nominating and governanceHRCNG committee must be independent.
The independent directors must meet in executive session at least annually without anynon-independent director or executive officer. The independent directors will also meet in executive session at the end of any board meeting at the request of any independent director. The lead directorchairman presides at these meetings.
On the basis of information solicited from each director, and upon the advice and recommendation of our human resources and compensation/nominating and governanceHRCNG committee, the board has determined that at the date of this proxy statement six out of the Company’scompany’s eight incumbentnominee directors are independent, as defined in the NYSE’s corporate governance standards and ourby-laws, namely: Randall C. Benson, Suzanne Blanchet, Duncan K. Davies, Jennifer C. Dolan, Richard D. Falconer, Alain Rhéaume and Michael S. Rousseau. Jeffrey A. Hearn, who resigned as director as of August 21, 2019 was also independent, as defined in the NYSE’s corporate governance standards and ourby-laws.
The board has also determined that each member of the audit committee and the human resources and compensation/nominating and governanceHRCNG committee satisfies the requirements for independence, including the additional independence standards under NYSE rules for audit committee members and compensationHRCNG committee members. As part of these determinations, which included considering the relationships described below underRelated Party Transactions, as applicable, business relationships among our directors, and the categories of relationships below, the board determined that none of the independent directors has a direct or indirect material relationship with the Companycompany other than as a director, or any relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
Our corporate governance principles reflect the board’s determination that the following categories of relationships alone are not material and will not impair a director���sdirector’s independence:
ownership of less than 5% of the equity of, or being a director of, another company that does business with the Companycompany where the annual sales to, or purchases from, the Companycompany are less than 5% of the annual revenues of either company;
ownership of less than 5% of the equity of, or being an executive officer or director of, an unaffiliated company that is indebted to the Companycompany (or to which the Companycompany is indebted), where the total amount of either company’s indebtedness to the other is less than 5% of the total consolidated assets of either company; and
serving as an officer, director or trustee of a charitable organization, where the Company’scompany’s charitable contributions to the organization are less than 2% of that organization’s total annual charitable receipts, or $20,000 per year, whichever is less.
The human resources and compensation/nominating and governanceHRCNG committee, in consultation with the audit committee when appropriate, is responsible for reviewing and overseeing related party transactions and conflicts of interest situations involving the Company,company, its directors, executive officers, the chief accounting officer, and related parties. The board has adopted a formal written policy on related person transactions applicable to directors and executives, formalizing the process of review and requiring prior approval of certain related person transactions. See “Related Party Transactions” below.
We have adopted a written code of business conduct that applies to all hourly and salaried employees, including our president and chief executive officer, chief financial officer and chief accounting officer, and to Companycompany directors. The code of business conduct establishes the fundamental ethical values and standards the Companycompany expects in the work and business activities of its employees, officers and directors. The code of conduct provides that responsible environmental stewardship is both an ethical obligation and a business imperative, integral to our overall commitment to sustainable development.
Among other things, the code of business conduct requires that each employee and officer disclose any actual, potential or apparent conflict of interest in the manner set out in the code.
The Company’scompany’s corporate governance principles and the related person transactions policy describe the policy concerningprocess applicable to the disclosure, review and approval of conflicts of interest orand related partyperson transactions, with respect to directors.including situations involving directors and executive officers. The corporate governance principles, together with the code of business conduct, provide guidance to directors in handling unforeseen situations as they arise, and theycompany’s policies provide that each director:
must avoid every conflict of interest with the Companycompany and must recuse himself or herself from any board decision where a conflict of interest may exist;
must promptly report any related person transaction to the HRCNG committee;
owes a duty to the Companycompany to advance its legitimate interests when the opportunity to do so arises;interests;
must maintain the confidentiality of information entrusted to him or her;
must comply, and oversee the compliance by employees, officers and other directors, with applicable laws, rules and regulations;
must deal fairly, and must oversee fair dealing by employees and officers, with the Company’scompany’s customers, suppliers, competitors and employees;
should promote ethical behavior; and
must protect the Company’scompany’s assets and ensure their efficient use.
The code of business conduct is available on our website (www.resolutefp.com/about_us/corporate_governance). The Companycompany will post on its website any waiver or amendment to the code of business conduct.
Board Leadership Structure; Communication with Independent Directors
The Company’scompany’s business is managed under the direction of the board, with the board delegating the management of the Companycompany to the president and chief executive officer, working with other executive officers, in a manner consistent with the Company’scompany’s objectives and in accordance with itsby-laws. This delegation of authority is not intended to minimize the board’s supervisory duties, as more fully set forth in our corporate governance principles.
As board chair,chairman, Mr. MartinDavies presides over board meetings. Because he is not considered an independent director, pursuant to ourby-laws, a majoritythe position of lead director, held by Mr. Rhéaume up until Mr. Davies’s nomination on the board on September 13, 2021, was eliminated and Mr. Martin has been appointed vice chair of the independent board members selectedboard. Mr. Rhéaume, an independent director, to serve as the board’s lead director. HisMartin’s responsibilities as such include, among other things, chairing any meeting of the independent directors in executive session.the absence of the chairman.
As indicated in the Company’scompany’s corporate governance principles, it is the Company’scompany’s current intent that the chairchairman not also concurrently hold the position of president and chief executive officer and, accordingly, the positions are separated. This allows the president and chief executive officer to focus on managing the Company,company, and the chair, together with the lead director,chairman to lead the board in providing advice to, and independent oversight of, management. We believe that this structure recognizes the time and effort that our president and chief executive officer is called to devote to his position, and facilitates the independent functioning of the board, thus enhancing the fulfillment of its oversight responsibilities, and setting the tone for the board in fostering ethical and responsible decision-making and sound corporate governance practices.
Stockholders and other interested persons that would like tomay communicate with the independent directors may sendby sending ane-mail to independentdirectors@resolutefp.com or send a written communication to: Resolute Forest Products Inc. Independent Directors, c/o Resolute Forest Products Corporate Secretary, 111 Robert-Bourassa Boulevard,1010 De La Gauchetière Street West, Suite 5000,400, Montreal, Quebec, H3C 2M1,H3B 2N2, Canada. The Company’scompany’s corporate secretary will forward those communications to the intended recipients and will retain copies for the Company’scompany’s records.
Regardless of the method of communication, no message will be screened or edited before it is delivered to the intended recipient(s), who will determine whether to relay the message to other members of the board.
Board’s Role in Risk Oversight
Management is responsible for assessing and managing risk, subject to oversight by our board.board oversight. The board executes its oversight responsibility for risk assessment and risk management directly and through its committees, as follows:
• | Audit committee. The audit committee periodically reviews management’s plans to manage the |
technology and cybersecurity risk exposures, and reviews contingent liabilities and risks that could be material to the |
• | Environmental, health, safety and |
|
• | Finance committee. The finance committee reviews at least annually a report prepared by management on the financial health, from an actuarial perspective, of the benefit plans of the |
• | Human resources and compensation/nominating and governance committee or HRCNG. The |
The board does not view risk in isolation. Risks are considered in virtually every business decision, including those related to the Company’scompany’s strategic plan and capital structure.
Director Qualifications, and Nomination Process and Diversity Policy
We believe that each director should possess high personal and professional ethics, integrity and values, an inquiring and independent mind as well as practical wisdom, vision and mature judgment. He or sheDirectors should also have substantial traininga breadth and experience atdiversity of expertise and backgrounds, as contemplated by the policy-making level in business, government, or education and/orboard and executive leadership diversity policy, and expertise that is useful to the Companycompany and complementary to the background and experience of other board members so that an optimum balance of expertise among members on the board can be achieved and maintained. In light of other business and personal commitments, he or shedirectors should also be willing and able to devote the required amount of time to diligently fulfill the duties and responsibilities of board membership, and be committed to serve on the board over a period of years to develop knowledge about the Company’scompany’s operations.
With respect to the human resources and compensation/nominating and governanceHRCNG committee’s evaluation of nominee candidates, including those recommended by stockholders, the committee has no formal requirement or minimum standard for the evaluation of nominees. Rather, the committee considers each candidate on his or her own merits. But in evaluating candidates, some ofThe HRCNG committee takes into account the specific areas of expertiseskills and experience that we believe to be important in light of our business are listed below; ideally, these areas should be represented by at least one board member:
professional services, such as lawyers, investment bankers and university professors;
politics/government relations;
management/operating experience, such as a chief executive officer, chief operating officer or senior manager; and
financial/accounting experience, such as a chief financial officer, certified financial analyst or professional accountant or analyst.
The applicable aspects of each director’s experience, qualifications and skillsdirector to ensure that the board considered in their nomination in light ofcomposition is properly balanced. When selecting nominee candidates, the foregoing are included in their individual biographies below. It is also desirable that each member of the board has recent experience as a member of the board of at least one other company, preferably a public company. When evaluating the performance of the board and its members, the human resources and compensation/nominating and governanceHRCNG committee also considers tenure and board renewal aspects. The table below lists the skill sets and experience that are considered important for the company’s directors to possess, along with the number of director nominees who possess them. A description of each individual director’s experience, qualifications and skills considered in the nomination process (focused on the criteria contained in our corporate governance standards) is also included in the directors’ individual biographies below.
While
Director Skills And Experience | Total # (over 8 directors) | |
Senior executive experience | 8 | |
Industry experience | 4 | |
Financial and/or accounting experience | 7 | |
Strategic planning and capital allocation | 6 | |
Risk management | 6 | |
Capital markets/mergers & acquisition experience | 7 | |
Human resources and compensation experience | 6 | |
Public policy/government relations experience | 5 | |
Governance and compliance experience | 6 | |
Environment, health & safety experience | 4 | |
Information technology, cybersecurity and digitalization | 2 | |
Public company board experience | 6 | |
ESG, sustainability | 4 | |
Sales & marketing | 3 | |
Supply chain & logistics | 4 | |
Operations | 5 | |
Innovation | 4 | |
Senior role with major customer in relevant industry | 2 | |
Global expertise | 5 |
In 2020, the board does not haveadopted a formal written diversity policy for the board of directors and the company’s executives. The board and the human resources and compensation/nominating and governanceHRCNG committee advocate diversity in the broadest sense.sense, including diversity of experience, expertise and personal characteristics. Diversity, including gender diversity, is important because we believe a variety of points of view contribute to a more effective decision-making process. Although not specifiedWhile maintaining the appropriate mix of skills and experience reflecting the strategic needs of the business and the nature of the environment in which the charter,company operates, the human resources and compensation/nominating and governanceHRCNG committee will actively seeksseek out a broad pool of candidates for board positions from diverse ethnic, race, gender and cultural background. The board will strive to maintain a minimum representation of 25% of men and 25% of women directors on the board. As of last year’s annual meeting, 29% of the members of the board were women. Currently there are two women on the board and with the proposed candidates all being elected at the annual meeting, the board will continue to have a 28%25% representation of women. After careful consideration as to the mix of skills, experience and personal characteristics that is desired at the board to ensure optimal performance, the board, in consultation with the HRCNG committee, has decided that it is in the best interest of the company to waive Ms. Dolan’s mandatory retirement at age 75 so that she may stand for reelection exceptionally this year. Ms. Dolan’s breadth of industry experience, deep knowledge of the business, as well as the diversity characteristics she brings to the board as a woman director are factors that have been considered in this decision. The board has hired a recruitment firm to assist in its renewal process and in particular, in its search for women nominee candidates with a view to increase women’s representation on the board to 30% by 2024.
The company also values having a diversity of personal characteristics within its executive leadership. Accordingly, fostering diversity, inclusive of the representation of men and women, is a key factor in the
company’s talent management strategy, which seeks to identify, mentor and develop current executives and employees for more senior positions within the organization. As part of its mandate to monitor the talent management strategy, the HRCNG committee ensures that such policy objectives are taken into account when implementing the talent management strategy and when identifying and evaluating internal or external candidates for executive leadership positions.
The following table illustrates the evolution of the representation of women on the board and at the executive level:
Women on the board | Women executive officers | |||
2020 annual meeting | 2/7 or 29% | 1/9 or 11% | ||
2021 annual meeting | 2/7 or 29% | 1/9 or 11% | ||
2022 annual meeting (provided all candidates are elected at the annual meeting) | 2/8 or 25% | 2/9 or 22% |
The company also has in place a diversity policy to ensure that all employees are afforded equal consideration and opportunities. The first meeting of the company’s diversity, equity and inclusion working committee took place in early 2022. Composed of employees from all our business segments and corporate functions, the working committee provides recommendations on decisions relating to diversity, equity and inclusion projects and initiatives.
Stockholders who wish to submit director candidates for consideration by our human resources and compensation/nominating and governanceHRCNG committee at the 20212023 annual meeting may do so by submitting in writing such candidates’ names, in compliance with the procedures and along with the other information required by ourby-laws, to the corporate secretary, Resolute Forest Products Inc., 111 Robert-Bourassa Boulevard,1010 De La Gauchetière Street West, Suite 5000,400, Montreal, Quebec, H3C 2M1,H3B 2N2, Canada no earlier than February 11, 2021,26, 2023, and no later than March 13, 2021.28, 2023.
The board met eightten times in 2019. No incumbent2021. Each director attended fewer than 75% of the aggregate number ofall regular and special meetings of the board and all regular and special meetings of the committees on which the director sits.
We expect each director to attend all regular board meetings, all meetings of the committee(s) on which the director sits and all annual and special meetings of stockholders. All directors standing for reelection attended last year’s annual meeting of stockholders. For detailed attendance information for incumbent directors, please see their individual biographical information below.
The board has adopted a written charter for each of its four standing committees: the audit committee, the human resources and compensation/nominating and governanceHRCNG committee, the environmental health, safety and safetysustainability committee and the finance committee. Each committee’s charter is available on our website at www.resolutefp.com/about_us/corporate_governance.
Audit Committee
The members of the audit committee are: Suzanne Blanchet, Jennifer C. Dolan, Suzanne, Blanchet (as of May 24, 2019), Richard D. Falconer, Alain Rhéaume and Michael S. Rousseau (chair). The board has determined that each member of the audit committee is “independent” in accordance with the NYSE’s corporate governance standards, ourby-laws and rule10A-3 promulgated pursuant to the Securities Exchange Act of 1934, as amended, or the “Exchange Act.” The board has determined that each member qualified as an “audit committee financial expert” in accordance with SEC rules.
The audit committee oversees our financial reporting, internal controls and audit function process on behalf of the board. Its purposes and responsibilities include:
Monitoring the integrity of our financial reporting process, systems of internal control and financial statements.
Monitoring the independence and qualifications of our independent registered public accounting firm.
Overseeing the audit of the Company’scompany’s financial statements.
Monitoring the performance of our internal audit function and independent registered public accounting firm.
Monitoring our compliance with legal and regulatory requirements that could have an impact on the Company’scompany’s financial statements.
Fostering open communications among the board, management, the independent registered public accounting firm and internal auditors.
Reviewing management’s plans to manage the Company’scompany’s exposure to financial risk and report or make recommendations on significant issues to the board.
Overseeing other matters mandated by applicable rules and regulations as well as listing standards of the NYSE.
The audit committee met eightseven times in 2019.2021.
Environmental, Health, Safety and SafetySustainability Committee
The members of the environmental, health, safety and safetysustainability committee are: Suzanne Blanchet (became a member as of May 24, 2019 and chair as of August 22, 2019), Randall C. Benson, Suzanne Blanchet (chair), Jennifer C. Dolan and Bradley P. Martin. Jeffrey A. Hearn was also a member and chair of the environmental, health and safety committee until his resignation as of August 21, 2019. The environmental, health, safety and safetysustainability committee monitors the policies, management systems and performance of the Company’scompany’s environmental and occupational health and safety matters on behalf of the board. The environmental, health, safety and sustainability committee, together with the board and the HRCNG committee, are responsible for overseeing the company’s sustainability plans and strategies as well as the company’s environmental, social and governance (ESG) performance. The committee was renamed in 2021 to add sustainability to its name to better reflect the sustainability role it was already responsible for.
The primary responsibilities of the environmental, health, safety and safetysustainability committee include:
Reviewing the adequacy of the environmental, health and safety programs and performance of the Company.company.
Reviewing annually the Company’scompany’s environmental, health and safety (i) vision and policies and (ii) strategies and objectives.
Reviewing outstanding and potential liabilities for environmental, health and safety matters.
Reviewing with management all significant environmental incidents or occupational accidents within the Companycompany and any event of materialnon-compliance.
Monitoring the Company’scompany’s relationships with external environmental, health and safety regulatory authorities and with other stakeholders.
Reviewing the company’s strategies, activities, policies and communications regarding sustainability and other related matters.
Reporting to the board, at a minimum on an annual basis, on the sustainability performance of the company, more specifically, the identification and management of risks and opportunities relating to environmental, health, safety and social matters.
The environmental, health, safety and safetysustainability committee met four times in 2019.2021.
Finance Committee
The members of the finance committee are: Randall C. Benson (chair as of May 24, 2019)(chair), Suzanne Blanchet, (as of May 24, 2019), Richard D. Falconer (chair until May 24, 2019),Duncan K. Davies, Bradley P. Martin, Alain Rhéaume and Michael S. Rousseau. The primary responsibilities of the finance committee include:
Reviewing as needed the adequacy of management’s plans to manage the Company’scompany’s exposure to financial risk and insurance principles and coverage, including those associated with the use of derivatives, currency and interest rate swaps and other risk management techniques.
Reviewing as needed the actual and projected financial situation and capital needs of the Company.company.
Reviewing at least annually the Company’scompany’s tax situation and tax strategy.
Reviewing as needed the Company’scompany’s investor profile and related investor relations and stockholder services of the Company.company.
Reviewing potential merger, acquisition, divestiture, joint venture and other similar transactions and capital expenditure projects to be submitted to the board.
Reviewing at least once a year a report prepared by management on the financial health, from an actuarial perspective, of the benefit plans of the Company’scompany’s subsidiaries, and related funding obligations.
The finance committee met fivesix times in 2019.2021.
Human Resources, and Compensation/Nominating and Governance Committee or HRCNG
The members of the human resources and compensation/nominating and governanceHRCNG committee are: Randall C. Benson, Duncan K. Davies, Jennifer C. Dolan, Richard D. Falconer, Michael S. Rousseau and Alain Rhéaume (chair). and Michael S. Rousseau. The human resources and compensation/nominating and governanceHRCNG committee’s primary responsibilities include:
• | Human resources and compensation |
Reviewing from time to time and approving the structure of the Company’scompany’s executive compensation to ensure the structure is appropriate to achieve the Company’scompany’s objectives.
Evaluating annually the president and chief executive officer’s performance and compensation, and participating in such evaluation as it relates to other executive officers of the Company.company.
At least annually, working with the chairchairman of the board and the president and chief executive officer to plan for the president and chief executive officer succession and reviewing the succession planning with the board.
Recommending to the board the appropriate structure and amount of compensation fornon-employee directors.
Periodically evaluating the Company’scompany’s executive incentive plans and approving proposed amendments to executive benefit plans.
Reviewing and approving employment, severance and change in control agreements.
Considering the impact of the Company’scompany’s executive compensation program and the incentives created by compensation awards on the Company’scompany’s risk profile, and reviewing all of the Company’scompany’s compensation policies and procedures.
Recommending to the board nominees to serve as officers of the Company.company.
• | Corporate governance |
Overseeing and monitoring compliance with the Company’scompany’s code of business conduct.
Reviewing and overseeing related party transactions and conflicts of interest situations involving the Company,company, its directors, executive officers, the chief accounting officer, and related persons, in consultation with the audit committee as appropriate.
Developing and recommending the Company’scompany’s corporate governance principles to the board.
Making recommendations to the board regarding stockholder proposals and any other matters relating to corporate governance.
• | Board of directors and board committees |
Annually evaluating the size and composition of the board.
Making recommendations to the board regarding any resignation tendered by a director that fails to receive a majority of the votes cast in an uncontested election.
Identifying and recommending qualified director candidates to the board and submitting a slate of nominees for election by stockholders at the annual meeting.
Considering director candidates proposed by stockholders in accordance with the Company’scompany’s by-laws.
Ensuring a process by which the board can assess its performance.
Assessing the performance of each board committee annually, including a review of board committee charters.
The human resources
Overseeing the company’s sustainability plans and compensation/nominatingstrategies as well as its environmental, social and governance (ESG) performance, together with the environmental, health, safety and sustainability committee and the board.
The HRCNG committee met fivesix times in 2019.2021.
The board has adopted a related person transactions policy requiring that transactions with certain persons related to the company be subject to approval of the HRCNG committee. “Related person transactions” are generally relationships and transactions in which the company is a participant and in which any director, executive officer, holder of more than 5% of our outstanding common stock or any of their immediate family members has a direct or indirect material interest. In accordance with the policy, certain types of transactions are deemed pre-approved by the committee, such as relationships or transactions involving less than $120,000.
According to the policy, each director, executive officer and the chief accounting officer of the company must promptly notify the senior vice president, corporate affairs and chief legal officer when he or she learns of any proposed or existing related person transaction not previously disclosed to the HRCNG committee, including those deemed pre-approved by the committee under the policy. The senior vice president, corporate affairs and chief legal officer shall review the transaction for the purpose of determining whether it involves a direct or indirect material interest of a related person and inform the HRCNG committee accordingly when its approval is required.
In determining whether to approve or ratify a related person transaction, the HRCNG committee, in consultation with the audit committee when appropriate, will take into account factors it deems appropriate, including whether the related person transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances, whether the transaction was undertaken in the ordinary course of business, whether there are business reasons for the company to enter into the transaction, the purpose and the potential benefits of the transaction to the company and the related person, the extent of the related person’s interest in the transaction and whether the proposed transaction was initiated by the company or the related person. The HRCNG committee shall prohibit any related person transaction (including those deemed pre-approved by the committee under the policy) if it determines the related person transaction to be inconsistent with the interests of the company and its stockholders or if any legal requirements applicable to the related person transaction have not been complied with.
In accordance with the company’s corporate governance principles, the HRCNG committee, in consultation with the audit committee when appropriate, is responsible for implementing and overseeing policies and procedures for related party transactions and conflict of interest situations, and also reviews, in addition to related party transactions, potential conflict of interest situations involving the company, its directors, executive officers, the chief accounting officer and related parties. The board may also create special independent committees from time to time to review certain transactions, including related party transactions. The corporate governance principles provide that directors may not enter into a transaction with the company without first disclosing the transaction and obtaining advance approval by the board and the HRCNG committee, and the director must recuse himself or herself from board consideration and decision on any such transaction.
To our knowledge, there are no related party transaction in the fiscal year 2021 and up to the date of this proxy statement that require disclosure under applicable laws.
Director Compensation for 20192021
Name | Fees Earned or Paid in Cash(1)(2) | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation(3) | Change in Pension Value and Nonqualified Deferred Compensation Earnings(4) | All Other Compensation | Total | Fees Earned or Paid in Cash(1)(2) | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation(3) | Change in Pension Value and Nonqualified Deferred Compensation Earnings(4) | All Other Compensation(5) | Total | ||||||||||||||||||||||||||||||||||||||||||
Randall C. Benson | $ | 82,500 | (8) | $ | — | $ | — | $ | 75,000 | (9) | $ | 6,455 | $ | — | $ | 163,955 | $ | 90,000 | (7) | $ | — | $ | — | $ | 85,506 | (8) | $ | 11,407 | $ | 171,955 | $ | 358,868 | ||||||||||||||||||||||||
Suzanne Blanchet | 78,750 | (8) | — | — | 75,000 | (9) | — | — | 153,750 | 90,000 | (7) | — | — | 85,506 | (8) | — | 42,955 | 218,460 | ||||||||||||||||||||||||||||||||||||||
Duncan K. Davies | 67,255 | 22,603 | (9) | 7,375 | — | 97,233 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Jennifer C. Dolan | 75,000 | — | — | 75,000 | (10) | — | — | 150,000 | 75,000 | — | — | 85,506 | (10) | — | 24,569 | 185,075 | ||||||||||||||||||||||||||||||||||||||||
Richard D. Falconer | 82,500 | (8) | — | — | 75,000 | (9) | 3,100 | — | 160,600 | |||||||||||||||||||||||||||||||||||||||||||||||
Jeffrey A. Hearn(6) | 67,500 | (8) | — | — | 75,000 | (10) | — | — | 142,500 | |||||||||||||||||||||||||||||||||||||||||||||||
Yves Laflamme(7) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Yves Laflamme(6) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Remi G. Lalonde(6) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Bradley P. Martin | 225,000 | (8) | — | — | 75,000 | (9) | 17,258 | — | 317,258 | 192,500 | (7) | — | — | 85,506 | (8) | 25,089 | 585,345 | 888,439 | ||||||||||||||||||||||||||||||||||||||
Alain Rhéaume | 110,000 | (8) | — | — | 75,000 | (9) | — | — | 185,000 | 105,000 | (7) | — | — | 85,506 | (8) | — | 142,087 | 332,593 | ||||||||||||||||||||||||||||||||||||||
Michael S. Rousseau | 100,000 | (8) | — | — | 75,000 | (9) | — | — | 175,000 | 100,000 | (7) | — | — | 85,506 | (8) | — | 142,087 | 327,593 |
1. | Retainer fees of all directors were payable in cash, except those of Messrs. Benson, |
2. | The director fees are paid quarterly. |
3. | These amounts represent cash-settled awards granted to each outside director. On February |
Canadian directors received the award in the form of deferred stock units, or “DSUs,“DSUs,” and U.S. directors received the award in the form of restricted stock units, or “RSUs”“RSUs” (collectively,“2019 “2021 cash-settled awards”). The 2019With the exception of Mr. Davies’ award, which vested on December 31, 2021, the 2021 cash-settled awards vested in 25% tranches on the last day of each calendar quarter of 2019. The 20192021. As a result, the 2021 cash-settled awards for all active directors, activeincluding Mr. Davies, as of December 31, 20192021, were
fully vested. The value of each director’s 20192021 cash-settled award based on theper-share closing trading price on the NYSE of shares of the Company’scompany’s common stock on the last trading day of the year, December 31, 2019,2021, or $4.20,$15.27, is shown below in the table under “Cash“Equity Award Component.”
4. | These amounts represent “premium stock units” credited to the accounts of Messrs. Benson, |
5. |
|
|
As permitted under SEC rules, all of |
Until Mr. Davies’ September 13, 2021, appointment to the board as chairman, Mr. Martin |
The |
9. | The 2021 cash-settled award to Mr. Davies was in the form of DSUs. |
10. | The |
Cash ComponentReview of Director Compensation
Compensation payable to thenon-employee directors isDirectors receive total compensation based on an annual retainer fee, payable ina combination of cash in equal quarterly installments. The annual retainer fee has remained unchanged since 2011 at $75,000.and equity for their service on the board. In recognition of their added accountabilities, the board chairman, the new board vice chair role, the former lead director and the committee chairs receive additional annual fees, payable in cash in equal quarterly installments. The additional annual fees alsofees. Because director compensation had remained unchanged since 2011, at $150,000in 2021, with assistance from an independent compensation consultant, WTW (formerly, Willis Towers Watson), the board conducted a director compensation review to assess alignment of total director compensation with market practices. The directors’ compensation structure was reviewed on a total compensation basis and an analysis of the mix between cash and equity was also performed.
The peer group identified for benchmarking purposes used the same peer group described in the CD&A for executive compensation benchmarking plus three additional companies from the manufacturing sector. The three
additional companies were Applied Industrial Technologies Inc., Curtiss-Wright Corporation and Gates Industrial Corporation Plc. These three companies were included because the board felt it was appropriate to have additional industrial peers for the benchmarking. The review showed that total director compensation was approximately 25% below the median for its peer group.
As a result of this review, effective January 1, 2022, the board chair, $25,000 forapproved an increase in the audit committee chairtotal compensation and $15,000 fora change of the other committee chairs.cash/equity mix to allocate more compensation to equity. The leadcash/equity mix will change from 50/50 to 40/60. In addition, as further discussed below, the stock ownership guidelines will also increase. These changes result in total director receives an additional annual fee of $20,000. The Companycompensation in line with, or slightly above, the peer group.
2021 | 2022 | |||||||||||||||||||||||
Board service | Member | Lead director | Chairman | Member | Vice chair | Chairman | ||||||||||||||||||
Annual cash retainer1 | $ | 75,000 | $ | 95,000 | $ | 225,000 | $ | 86,000 | $ | 94,000 | $ | 130,000 | ||||||||||||
Board meeting fees | $0 | $0 | $0 | $0 | $0 | $0 | ||||||||||||||||||
Annual equity grant | $ | 75,000 | $ | 75,000 | $ | 75,000 | $ | 129,000 | $ | 141,000 | $ | 195,000 | ||||||||||||
Audit committee service | ||||||||||||||||||||||||
Chair retainer | $25,000 | $25,000 | ||||||||||||||||||||||
Member retainer | $0 | $0 | ||||||||||||||||||||||
Meeting fee | $0 | $0 | ||||||||||||||||||||||
Other committee service | ||||||||||||||||||||||||
Chair retainer | $15,000 | $15,000 | ||||||||||||||||||||||
Member retainer | $0 | $0 | ||||||||||||||||||||||
Meeting fee | $0 | $0 | ||||||||||||||||||||||
Total direct compensation2 | ||||||||||||||||||||||||
Member (no service as chair) | $150,000 | $215,000 | ||||||||||||||||||||||
Committee chair (other than audit) | $165,000 | $230,000 | ||||||||||||||||||||||
Audit committee chair | $175,000 | $240,000 | ||||||||||||||||||||||
Vice chair or former lead director | $170,000 (former lead director) | $235,000 (vice chair) | ||||||||||||||||||||||
Chairman | $300,000 | $325,000 |
1. | All cash fees are payable in equal quarterly installments. |
2. | In addition, the company reimburses all directors for reasonable expenses incurred in connection with attending board and committee meetings. |
Resolute Forest Products Outside Director Deferred Compensation Plan
Non-employee directors have an opportunity to defer all or a portion of their cash fees under the director deferred compensation plan. Fees deferred pursuant to the director deferred compensation plan are credited as DSUs for Canadian directors and as RSUs for U.S. directors. The number of deferred compensation DSUs and RSUs is determined by dividingmultiplying 110% oftimes the amount of fees deferred and dividing this amount by the volume weighted average of the highest and lowest prices per share at which the Company’scompany’s common stock was traded on the NYSE on each of the five business days immediately before the date the fees would otherwise be paid, resultingpaid. This formula results in a 10% incentive (referred to in the director deferred compensation plan as the “premium“premium stock units”units”).
The following table describes how DSUs and RSUs are vested and paid under the director deferred compensation plan:
Key Provisions | DSUs under Director Deferred Compensation Plan | RSUs under Director Deferred Compensation Plan | ||
Vesting | • Non-premium
| • Non-premium are always 100% vested | ||
• Premium | • Premium vest one-third on March 31 of the first three calendar years following the year in which they are credited, but with automatic 100% vesting upon termination of board service for any reason other than cause | |||
Form of Payment | • Lump sum payment in cash | • Installment payments in cash | ||
Timing of Payment | •
• If the director is not subject to Code Section 409A, allnon-premium DSUs and vested premium DSUs are paid by December 15 of the calendar year following the calendar year of his or her termination of board service, unless the director provides advance written notice specifying an earlier settlement date after his or her termination | • Generally,one-third of allnon-premium RSUs and all vested premium RSUs are paid as soon as administratively feasible after
• Allnon-premium RSUs and vested premium RSUs are paid as soon as administratively feasible after termination of board service for any reason other than cause |
In addition toThe 2021 annual cash-settled award and its terms are highlighted in the cash fee componentDirector Compensation Table above and the accompanying footnotes. The annual cash-settled awards vested in 25% tranches on the last day of the directors’ compensation, to ensure the directors’ interests are aligned with thoseeach calendar quarter of the stockholders, we grant an annual equity-based award to each director.2021. The 2019 equity award settles in cash. The human resources and compensation/nominating and governanceHRCNG committee (“compensation committee”) adheres to a policy that sets the grant date for the annual awards (whether granted as a stock-settled award or cash-settled award) as the eighth trading date after the release of fourth quarter earnings. For the 20192021 cash-settled award, the grant date was February 12, 2019.
The 2019 annual cash-settled award and its terms are highlighted in the Director Compensation table above and the accompanying footnotes.16, 2021 (other than Mr. Davies). In addition to the terms noted above, the following table describes how the 20192021 annual cash-settled award is vested and settled:
Key Provisions | DSU Awards | RSU Awards | ||
Time vesting | • 25% on the last day of each calendar quarter of the year of grant | • 25% on the last day of each calendar quarter of the year of grant | ||
Vesting upon Termination of Service | • Upon failure to bere-elected or mandatory retirement,pro rata vesting
• Upon death or disability, accelerated vesting of the tranche
• Upon termination for cause, forfeiture of all vested and unvested
• Upon any other termination (including resignation), forfeiture of all unvested | • Upon failure to be re-elected or • Upon death or disability, accelerated vesting of the tranche scheduled to vest at the end of the calendar quarter of the director’s termination date • Upon termination for cause, forfeiture of all vested and unvested awards • Upon any other termination (including resignation), forfeiture of all unvested awards | ||
Form of Settlement | Lump sum payment in cash | Installment payments in cash | ||
Timing of Settlement | • Vested DSUs will be settled upon termination of board service | • Generally, vested RSUs will be settled inone-third increments on March 31 of
• Accelerated settlement upon termination of service for any reason other than cause | ||
Cash Amount | • Amount payable in cash based on the volume weighted average of the highest and lowest prices per share at which the | • Amount payable in cash based on the volume weighted average of the highest and lowest prices per share at which the company’s common stock was traded on the NYSE on each of the five business days immediately before the settlement date |
The following table shows the annualequity awards (DSUs for Canadian directors and RSUs for U.S. directors) granted to the directors sinceupon their appointment onand annually and the board and thefair market value of each award at December 31, 2019. Each2021. The fair market value shown is based on the per-share closing trading price on the NYSE of shares of the company’s common stock on December 31, 2021, or $15.27. Except for awards made upon appointment to the board, each annual award had an initial grant value of $75,000. All awards are vested. At December 31, 2019,2021, each active director continues to hold all shares settled for awards granted in prior years.The number of units below reflect the number awarded at grant amounts below plus dividend equivalents that were issued.issued in connection with dividend payments made to all shareholders.
Messrs. Laflamme and Lalonde’s equity awards are set forth in the Summary Compensation Table as permitted under SEC rules.
Name(1) | Grant Date | Number of Stock Units and Dividend Equivalents(2) | Market Value at 12/31/19(3) | |||||||||
Messrs. Falconer, Hearn, Rhéaume and Rousseau | 04/08/11 | 3,188 | $ | 13,390 | ||||||||
02/27/12 | 5,749 | $ | 24,146 | |||||||||
02/18/13 | 6,419 | $ | 26,960 | |||||||||
02/11/14 | 4,553 | $ | 19,123 | |||||||||
02/16/15 | 4,788 | $ | 20,110 | |||||||||
02/15/16 | 21,199 | $ | 89,036 | |||||||||
02/13/17 | 19,171 | $ | 80,518 | |||||||||
02/12/18 | 11,292 | $ | 47,426 | |||||||||
02/12/19 | 9,352 | $ | 39,278 | |||||||||
Ms. Blanchet at 12/31/19 | 02/12/19 | 9,352 | $ | 39,278 | ||||||||
Mr. Martin at 12/31/19 | 08/06/12 | 3,869 | $ | 16,250 | ||||||||
02/18/13 | 6,419 | $ | 26,960 | |||||||||
02/11/14 | 4,553 | $ | 19,123 | |||||||||
02/16/15 | 4,788 | $ | 20,110 | |||||||||
02/15/16 | 21,199 | $ | 89,036 | |||||||||
02/13/17 | 19,171 | $ | 80,518 | |||||||||
02/12/18 | 11,292 | $ | 47,426 | |||||||||
02/12/19 | 9,352 | $ | 39,278 | |||||||||
Ms. Dolan at 12/31/19 | 08/07/13 | 2,835 | $ | 11,907 | ||||||||
02/11/14 | 3,872 | $ | 16,262 | |||||||||
02/16/15 | 4,072 | $ | 17,102 | |||||||||
02/15/16 | 19,085 | $ | 80,157 | |||||||||
02/13/17 | 18,215 | $ | 76,503 | |||||||||
02/12/18 | 11,292 | $ | 47,426 | |||||||||
02/12/19 | 9,352 | $ | 39,278 | |||||||||
Mr. Benson at 12/31/19 | 08/14/17 | 9,564 | $ | 40,169 | ||||||||
02/12/18 | 11,292 | $ | 47,426 | |||||||||
02/12/19 | 9,352 | $ | 39,278 |
|
|
|
Name | Grant Date | Number of Stock Units and Dividend Equivalents | Market Value at 12/31/21 | |||||||||
Messrs. Rhéaume and Rousseau at 12/31/21 | 04/08/11 | 3,459 | $ | 52,819 | ||||||||
02/27/12 | 6,238 | $ | 95,254 | |||||||||
02/18/13 | 6,965 | $ | 106,356 | |||||||||
02/11/14 | 4,940 | $ | 75,434 | |||||||||
02/16/15 | 5,195 | $ | 79,328 | |||||||||
02/15/16 | 23,002 | $ | 351,241 | |||||||||
02/13/17 | 20,801 | $ | 317,631 | |||||||||
02/12/18 | 12,251 | $ | 187,073 | |||||||||
02/12/19 | 10,147 | $ | 154,945 | |||||||||
02/11/20 | 25,752 | $ | 393,233 | |||||||||
02/16/21 | 8,779 | $ | 134,055 | |||||||||
Mr. Martin at 12/31/21 | 08/06/12 | 4,198 | $ | 64,103 | ||||||||
02/18/13 | 6,965 | $ | 106,356 | |||||||||
02/11/14 | 4,940 | $ | 75,434 | |||||||||
02/16/15 | 5,195 | $ | 79,328 | |||||||||
02/15/16 | 23,002 | $ | 351,241 | |||||||||
02/13/17 | 20,801 | $ | 317,631 | |||||||||
02/12/18 | 12,251 | $ | 187,073 | |||||||||
02/12/19 | 10,147 | $ | 154,945 | |||||||||
02/11/20 | 25,752 | $ | 393,233 | |||||||||
02/16/21 | 8,779 | $ | 134,055 | |||||||||
Ms. Dolan at 12/31/21 | 08/07/13 | 2,835 | $ | 43,290 | ||||||||
02/11/14 | 3,872 | $ | 59,125 | |||||||||
02/16/15 | 4,072 | $ | 62,179 | |||||||||
02/15/16 | 19,085 | $ | 291,428 | |||||||||
02/13/17 | 18,215 | $ | 278,143 | |||||||||
02/12/18 | 11,291 | $ | 172,414 | |||||||||
02/12/19 | 9,617 | $ | 146,852 | |||||||||
02/11/20 | 25,079 | $ | 382,956 | |||||||||
02/16/21 | 8,779 | $ | 134,055 | |||||||||
Mr. Benson at 12/31/21 | 08/14/17 | 10,377 | $ | 158,457 | ||||||||
02/12/18 | 12,251 | $ | 187,073 | |||||||||
02/12/19 | 10,147 | $ | 154,945 | |||||||||
02/11/20 | 25,752 | $ | 393,233 | |||||||||
02/16/21 | 8,779 | $ | 134,055 | |||||||||
Ms. Blanchet at 12/31/21 | 02/12/19 | 10,147 | $ | 154,945 | ||||||||
02/11/20 | 25,752 | $ | 393,233 | |||||||||
02/16/21 | 8,779 | $ | 134,055 | |||||||||
Mr. Davies at 12/31/21 | 09/13/21 | 1,859 | $ | 28,387 |
In addition, on January 9, 2011, and upon the Company’scompany’s emergence from creditor protection proceedings in 2010, Messrs. Falconer, Hearn, Rhéaume and Rousseau received aone-time option grant. The option award covered
9,302 shares with a $23.05 exercise price. The option award iswas fully exercisable, with abut expired on January 9, 2021 expiration date.2021. Option awards are not a part of the directors’ annual compensation program.
Stock Ownership Guidelines
We have established stock ownership guidelines for directors to ensure that they are also stockholders, thereby aligning their interests with those of other Companycompany stockholders. UnderAs part of the guidelines, eachrecently completed director must own shares or share equivalents of Companycompensation review, the board increased the stock equal to three times the annual cash retainer fee ($225,000 in total as of December 31, 2019). ownership requirement.
Position | ||
All directors | $225,000 (before January 1, 2022) | |
All directors other than Chairman | $375,000 (effective January 1, 2022) | |
Chairman | $475,000 (effective January 1, 2022) |
For purposes of the guidelines, all shares directly owned and deferred stock units (whether DSUs or RSUs, and whether vested or unvested)unvested, and cash or stock-settled) are included in the calculation. Unexercised stock options are not included in the calculation. Until the stock ownership requirement is met, the guidelines require directors to hold all shares received upon settlement of stock units (excluding shares sold to pay taxes associated with settled shares) and a number of shares equal to 50% of any gain realized upon option exercise. In 2017, the compensationHRCNG committee updated the guidelines to require a director who does not meet the guidelines to purchase shares or share equivalents with the net proceeds of any cash-settled awards. To determine whether a director has met the stock ownership requirement, the shares held by each director are calculated on the basis of the higher of the (i) price at time of settlement and (ii) fair market value of the common stock at the time of measurement, while share equivalents are calculated on the basis of the higher of the (i) price at time of grant and (ii) fair market value of the common stock at the time of measurement.
As of December 31, 2019,2021, all members of the board of directors, except Ms. Blanchet,Mr. Davies, own sufficient shares or share equivalents to meet the stock ownership requirement, based on the December 31, 20192021, per-share closing price of $4.20. Ms. Blanchet continues to hold her shares pursuant to$15.27. Given his short tenure on the guidelines, butboard, Mr. Davies did not meet the stock ownership requirement as of December 31, 2019 given her shorter tenure on2021, but continues to hold his shares or share equivalents pursuant to the board.guidelines.
The Company’s corporate governance principles provide the framework under which we consider “related party transactions,” which are generally relationships and transactions involving more than $120,000 in any fiscal year in which the Company is a participant and in which any director, executive officer, holder of more than 5% of our outstanding common stock or any of their immediate family members has a direct or indirect material interest. The human resources and compensation/nominating and governance committee, in consultation with the audit committee when appropriate, is responsible for implementing and overseeing policies and procedures for related party transactions and conflict of interest situations, and also reviews all related party transactions or potential conflict of interest situations involving the Company, its directors, executive officers, the chief accounting officer and related persons. The board may also create special independent committees from time to time to review certain transactions, including related party transactions. The corporate governance principles provide that directors may not enter into a transaction with the Company without first disclosing the transaction and obtaining advance approval by the board and the human resources and compensation/nominating and governance committee, and the director must recuse himself or herself from board consideration and decision on any such transaction.
Compensation Discussion & Analysis
Executive Summary
This Compensation Discussion and Analysis, or “CD“CD&A,,” summarizes our executive compensation philosophy and programs,program, the decisions made under those programs and any changes made to reflect our business objectives. While the executive compensation program is generally applicable to the president and chief executive officer and the senior management, this CD&A focuses on the compensation of our “named executive officers” (“NEOs”) for 2019:2021:
Remi G. Lalonde, president and chief executive officer (beginning March 1, 2021) and senior vice president and chief financial officer (through March 1, 2021)
Yves Laflamme, president and chief executive officer (through February 28, 2021) and special advisor (beginning April 1, 2021)
Remi Lalonde,Sylvain A. Girard, senior vice president and chief financial officer (beginning March 2, 2021)
Patrice Minguez,Hugues Simon, president, tissue groupwood products (beginning March 1, 2021)
Richard Tremblay, senior vice president, pulp and paper operations
Jacques P. Vachon, senior vice president, corporate affairs and chief legal officer
Mr. Minguez joined the Company in August 2017 inLaflamme stepped down and retired from the position of president tissue group. At the timeand chief executive officer effective as of hire,11:59 PM on February 28, 2021. On March 1, 2021, Mr. Minguez negotiated with the CompanyLalonde was appointed to receive base salarythis position after serving as senior vice president and no other compensatory benefits except broad-based retirement and benefits plans, aschief financial officer. These events were disclosed in his offer letter filed with the Company’s Quarterly Reporta current report on Form10-Q8-K
filed on November 10, 2020. In accordance with SEC rules, this CD&A and the information provided in the “Tabular Disclosure of Executive Compensation” following the CD&A describe the compensation in effect for their respective positions in 2021.
Mr. Girard joined the quarter that ended June 30, 2017.company as special advisor to Mr. Minguez became eligibleLalonde on February 15, 2021, prior to receive equity awards underhis appointment as senior vice president and chief financial officer effective March 2, 2021. Mr. Simon similarly joined the Company’s long-term equity incentive plan (“LTIP”) in 2018.company as a special advisor to Mr. Lalonde on January 4, 2021, prior to his appointment as president, wood products effective March 1, 2021.
Overview of Compensation Program
Our executive compensation program is designed to meet the following objectives:
Attract and retain team members with superior management ability, insight and judgment who will pursue the repositioninglong-term growth objectives of the Company for long-term growth,company, with a focus on operational and asset performance excellence and the creation of a sustainable and diversified portfolio of products;
Motivate and reward the named executive officers for their contributions to the Company’scompany’s growth and profitability on a short- and long-term basis by linking a significant portion of the compensation package to the achievement of specific financial measures and other Companycompany goals and objectives;
Encourage superior individual performance by recognizing individual performance in the short-term incentive plan and rewarding, through limited discretionary cash awards, demonstrated effectiveness and remarkable initiatives, namely behaviors that enhance overall corporate performance; and
Ensure a strong alignment between named executive officers and all stockholder interests.
To further these objectives, the following chart shows the primary compensation elements, which are further detailed under “Elements of Our Executive Compensation Program.”
In developing the executive compensation program, the compensationHRCNG committee incorporates best practices, including the following:practices:
Stock ownership guidelines
What we do | What we do not do | |
• ���Pay-for-performance philosophy • Use of an independent compensation consultant • Rigorous leadership assessments • Regular comparator group reviews for compensation benchmarking purposes • Target compensation in line with median level for comparator group • Formula to cap annual incentive compensation paid to the named executive officers and other senior vice presidents • Long-term incentive plan (“LTIP”) design with multiple, long-term and both absolute and relative measures, including total shareholder return • Stock ownership guidelines • A significant portion of the named executive officers’ direct compensation at risk • Double-trigger change in control provision for named executive officers • Recoupment policy in place | • No tax gross-ups • No excessive perquisites • No hedging, pledging, short selling or monetization of our stock • No excessive risk taking encouraged • No backdating or repricing of outstanding options • No more grants of options since 2013 |
Executive Compensation Process
Role of the CompensationHRCNG Committee
The compensationHRCNG committee independently assesses the performance goals and objectives of the president and chief executive officer and makes recommendations to the board as to the amounts and individual elements of his total compensation. The independent directors of the board ultimately approve the final compensation package for the president and chief executive officer. For the other named executive officers, the compensationHRCNG committee evaluates and approves all elements of total compensation. The compensationHRCNG committee exercises discretion as needed for a given executive’s compensation.
Since 2014, the Company implemented andThe company uses an integrated leadership system designed to increase organizational capabilities. The leadership system is designed to:
Optimize the organization’s structure;
Clarify each employee’s role and accountabilities;
Provide a robust approach to evaluating employees’ demonstrated effectiveness and long-term potential;
Improve leadership practices to enhance each employee’s opportunity to drive success individually and, ultimately, for the Company;company;
Better link compensation to individual performance; and
Improve the succession-planning process.
By focusing on providing the right tools for individual success, the Companycompany strives to provide its employees with the means to reach their full potential and, therefore, enhance shareholder value, product quality for our clients, and the health and safety of our employees.employees, and execute our sustainability strategy.
As part of this system, each year, the named executive officers reporting to the president and chief executive officer are appraised on three elements: mastery of their basic roles, remarkable initiatives and behaviors that can have an adverse effect on their own effectiveness or that ofon the team. The appraisal reviews also identify areas for improvement. These reviews influence the adjustments made to the compensation amounts of these named executive officers.
Role of the Independent Compensation Consultant
Consistent with its authority under its charter, the compensationHRCNG committee selects and retains its own independent advisors to provide guidance on the competitiveness and appropriateness of the compensation programs for the named executive officers. For 2019,2021, the compensationHRCNG committee retained Hugessen Consulting to provide this advice. In 2019,2021, Hugessen Consulting’s aggregate fees were $25,880$36,865 (converted from Canadian dollars to U.S. dollars based on the average exchange rate for 2019,2021, or $0.7537)$0.7979).
As more fully described below, Hugessen Consulting assists the compensationHRCNG committee in benchmarking certain elements of the executive compensation program against the Company’scompany’s comparator groups (described below) and advises on the risk elements of the program. Hugessen also provides management advice on these matters, as directed by the chair of the compensationHRCNG committee. While internal and external information and advice have been used in the ongoing assessment of the executive compensation programs, the compensationHRCNG committee and the independent members of the board retained the full responsibility for all decisions related to the Company’scompany’s compensation programs and plans as well as their implementation.
Role of Management
The compensationHRCNG committee and the president and chief executive officer meet to discuss his performance against the objectives established for him in the beginning of the year. The compensationHRCNG committee reviews his performance and shares its evaluation with the president and chief executive officer.
The president and chief executive officer provides the compensationHRCNG committee with his feedback on the performance of the other named executive officers. While the compensationHRCNG committee considers the president and chief executive officer feedback and any recommendations, the compensationHRCNG committee makes the final determinations of the compensation decisions for the named executive officers.
Timing of Compensation Decisions
The compensationHRCNG committee evaluates total direct compensation (comprising of base salary and short-term and long-term incentives) against the median level of the Company’scompany’s comparator groups. It makes its compensation decisions on various elements at different times in the year:
• | Recommended for approval and the independent members of the board of directors approved, the | |||
• | Reviewed the main elements of the executive compensation program, including perquisites, to assess any changes to the | |||
• | Reviewed named executive officers’ compliance with stock ownership | |||
• | Recommended for approval and the independent members of the board | |||
October | • | Recommended for approval and the independent members of the board approved the annual equity grant for named executive | ||
• | Reviewed the assessment made by the president and chief executive officer of the performance of the other named executive | |||
December | • | Assessed | ||
• | Evaluated the compensation risk | |||
• | Recommended for approval, and the independent members of the board of directors approved, the |
20192021 Say-on-Pay Vote
Stockholders approved our executive compensation with 91%99.33% of the votes cast in favor of thenon-binding resolution approving executive compensation, or the“say-on-pay” vote, at the 20192021 annual meeting of stockholders.
Setting Compensation Levels — Benchmarking Data
Our executive compensation structure adheres to apay-for-performance framework with a mix of cash andnon-cash elements. There is no formal policy for allocating a certain percentage of pay between cash andnon-cash or short-term or long-term pay. The compensationHRCNG committee favors a mix that is more weighted to variable pay through aSTIP and aLTIP, which puts a significant portion of compensation at risk. The following shows the intended mix for the three main elements of pay.
President and Chief Executive Officer | All Other Named Executives | |||
The weighted mix, as shown above, is based on the following assumptions: (i) base salary in effect at December 31, 2019;2021; (ii) a 20192021 STIP target payout of 100% of base salary; (iii) the value of the annual equity grants (described below) based on 125% of base salary (225% for the president and chief executive officer); and (iv) assuming a fixed exchange rate between the Canadian and U.S. dollars throughout the year.
The compensationHRCNG committee annuallyregularly assesses the competitiveness of aggregate total direct compensation (base salary, target short-term incentive and long-term incentives) and each element individually for the named executive officers. To make this assessment, the compensationHRCNG committee uses market data based on two comparator groups:an industry comparator group and a blended comparator group. In 2021, the HRCNG committee reviewed and updated the industry comparator group with the assistance of Hugessen. The industry comparator group was reduced to 11 peers from 12. Bemis Company Inc. and KapStone Paper and Packaging Corporation were removed because they were acquired and Stella-Jones Inc. was added.
Industry Comparator Group | Blended Comparator Group | |||||||
| 42 companies representing a | |||||||
Canfor Pulp Products, Inc. Cascades Inc. Clearwater Paper Corporation Domtar Corporation Graphic Packaging Holding Company Louisiana-Pacific Corporation | Packaging Corporation of America P. H. Glatfelter Company Sonoco Products Company Stella-Jones Inc. Western Forest Products Inc. | blend of | ||||||
|
|
1. | The |
narrowing the industry comparator group and both Canfor Pulp Products, Inc. and Western Forest Products Inc. |
2. | In the blended comparator group, only |
The compensation committee updates the information regularly, with the last update in 2018. In consultation with Hugessen, because the compensation committee reassessed the comparator groups and market data in 2018, the compensationHRCNG committee used the 20182020 comparator group market data, adjustedaged by 2.8%3% when making its compensation assessments in 2019.for 2021.
While total direct compensation for each named executive officer was compared against both comparator groups each time a comparable position existed in both groups, the compensationHRCNG committee assessed compensation adjustments against a given comparator group for each named executive officer. In addition, when benchmarking to either comparator group, the comparison was made based on position, on a currency neutral basis, and against the median for the respective comparator group.
The following chart shows the resulting comparisons against the respective comparator group, using salary levels in effect after the June 20192021 base salary adjustments described further below underBase Salary.
Level | Comparator Group | Base Salary | Term Incentive (at Target Payout) | Target Total Cash | Equity Award Value | Total Direct Compensation | ||||||
President and chief executive officer1 | Industry | Below Median | Below Median | Below Median | Below Median | Below Median | ||||||
Senior vice president and chief financial officer2 | Blended | Below Median | Above Median | Median | Below Median | Below Median | ||||||
President, | Industry | In Line | ||||||||||
| Median | Above Median | Above Median | Below Median | Above Median | |||||||
Senior vice president, | Below Median | Above Median | In Line Median | Below Median | Below Median | |||||||
Senior vice president, corporate affairs and chief legal officer | Blended4 | Below Median | Above Median | Above Median | Below Median | In Line Median |
1. | For the president and chief executive officer position, Mr. Lalonde’s compensation levels were used for the resulting comparisons shown above. |
2. | For the senior vice president and chief financial officer position, Mr. Girard’s compensation levels were used for the resulting comparisons shown above. |
3. | The industry comparator group was appropriate for these positions because the positions require specific knowledge of the forest products industry to implement the |
The blended comparator group was appropriate for these positions because each of these positions perform corporate functions and have a skill set that is transferable across industries. |
Elements of Our Executive Compensation Program
The following highlights the elements of the Company’scompany’s executive compensation program and the basis for the elements:elements.
Base salary
We provide named executive officers with a level of assured cash compensation in the form of base salary. The compensationHRCNG committee considers a number of factors when making future adjustments in base salary as a result of salary. These include:
changes in accountabilities and performance, including progression in mastery of the defined roles, or if other circumstances warrant a change in base salary. When considering base salary adjustments, the compensation committee takes into account the salary;
demonstrated effectiveness appraisal rating of the named executive officers reporting to the president and chief executive officer.officer; and
When assessing the adjustments, the compensation committee also considers the
base salary ranges for the comparator groups to assess each officer’s proximity to the median for the comparator groups.
Following the compensationHRCNG committee’s review of the benchmarking data and the performance assessment for all named executive officers, the compensationHRCNG committee recommended, and the independent members of the board approved, effective June 1, 2019,2021, base salary adjustments for the named executive officers as follows: a 2.5%
Name | % Base Salary Increase | |
Mr. Lalonde | 1.5% | |
Mr. Girard | 1.5% | |
Mr. Simon | 15.87% plus a $25,682 lump sum payment | |
Mr. Tremblay | 1.5% | |
Mr. Vachon | 1.75% |
Mr. Simon’s base salary increase for Messrs. Laflamme and Vachon,lump sum payment resulted in a 2%compensation commensurate with his responsibilities and better aligned Mr. Simon’s base salary increase for Mr. Minguez and a 15% base salary increase for Mr. Lalonde. In October 2019, Mr. Lalonde received an additional 5%off-cycle base salary adjustment. When Mr. Lalonde was appointed senior vice president and chief financial officer in 2018,with that of his base salary was established at a level considerably lower than the peer group benchmark. Theoff-cycle adjustment was intended to narrow the gap between Mr. Lalonde’s base salary and the benchmark.
The compensationHRCNG committee established a currency policy in 2014 to address currency fluctuations that can impact parity among its named executive officers. Base salary is established assuming parity in Canadian and U.S. dollars, with a portion paid in Canadian dollars and a portion paid in U.S. dollars based on the geographic location of the Company’scompany’s pulp, paper and tissue production capacity as of the prior December 31. As a result, for 2019, 61.3%2021, 63.5% of an executive’s salary was paid in Canadian dollars and 38.7%36.5% in U.S. dollars. Except for Messrs. LaflammeMr. Laflamme’s salary as president and Minguez who arechief executive officer that was paid in U.S. dollars, the numbers shown in the Summary Compensation Table have been converted to U.S. dollars at exchange rates disclosed in the footnotes to the table. For 2020,2022, the portion of base salary paid in Canadian dollars versus U.S. dollars will continue to be 68.9%63.5% and 31.1%36.5%, respectively, based on the geographic mix of the Company’scompany’s pulp, paper and tissue production capacity as of December 31, 2019.2021.
20192021 STIP
The annual short-term incentive plan rewards the eligible named executive officers for the achievement of the following performance measures that reflect the Company’scompany’s business strategy and factors driving shareholder value:value, which are based on budget targets relating to:
Generating targeted income from operations;
Controlling selling, general and administration costs, or “SG&A costs;”
Improving safety performance;
Improving environmental performance; and
Improving environmental performance.operational performance by reaching budget targets for productivity, fixed costs and usage.
The 20192021 STIP primarily focused on rewarding individuals for achieving our business objectives while balancing stockholder return. The STIP is calculated as follows for all NEOs.
To determine the full STIP payout, two amounts are determined – one amount is attributable to achievement of Company performance goals and a second amount is attributable to individual performance. The two amounts are added together for a final STIP payout amount.
To determine the amount attributable to achievement for the Company performance goals, the eligible named executive officer’s STIP compensation target is first multiplied by the actual percentage payout for the Company performance metrics. This amount is further multiplied by 85%.
To determine the amount, if any, attributable to individual performance, the eligible named executive officer’s STIP compensation target is multiplied by the actual percentage payout for the Company performance metrics and by a percentage up to 30% reflecting the executive’s individual payout factor.
The individual payout factor is qualitative and is based on the executive’s achievement of goals, exceptional personal or team contribution or results, level of demonstrated effectiveness in the role and remarkable
initiatives, subject to the individual performance STIP pool. The individual payout factor can represent a maximum of 30% of an executive’s STIP payout. For the eligible named executive officers and other senior vice presidents, the individual performance STIP pool is the sum of all eligible executives’ base salary, multiplied by the actual achievement of the Companycompany performance metrics, further multiplied by 15%.
For 2019,2021, the total amount payable to the eligible named executive officers and the other senior vice presidents,, as well as to certain other eligible employees for the portion of their incentive attributable to the achievement of business objectives, is subject to a further limited tolimit not exceeding 5% of free cash flow. The limit applied even ifflow, whether or not performance levels were achieved. For this purpose, free cash flow is defined as net cash provided by operating activities, less asset maintenance capital expenditures, adjusted for special items.
NamedUnless the HRCNG committee determines otherwise, named executive officers remain eligible for prorated awards if they retire during the year or are terminated other than for cause after July 1, 2019.2021. Named executive officers who voluntarily resign or are terminated for cause before payment is made will not be eligible. The Companycompany may adjust financial and cost metrics, and may adjust any and all awards in its discretion. Awards are discretionary and subject to modification until they are made, including increases, decreases, cancellations, deferrals and other conditions, even if performance levels have been met. For the eligible named executive officers, payout levels were established as a percentage of base salary (as in effect on December 31, 2019)2021). No officer or individual was guaranteed a minimum payout under the 20192021 STIP. The 20192021 STIP also provided authority to the compensationHRCNG committee to adjust or cancel awards under the 20192021 STIP at its discretion.
2019 STIP Payout Levels (Percentage of Base Salary at 12/31/19) | ||||||||
2021 STIP Payout Levels | 2021 STIP Payout Levels | |||||||
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Threshold | Target | Maximum | Target | Maximum | ||||
42.5% | 100% | 172.5% | 100% | 172.5% | ||||
Assumes 50% achievement of company performance x 85% and no individual payout factor | Assumes 150% achievement of company performance x 115% (85% attributable to achievement of business objectives and 30% attributable to individual performance) |
In establishing the payout percentages, the compensationHRCNG committee used benchmarking data from its comparator groups. In general, the incentive target of 100% is above the median for our comparator groups, but, combined with the 5% of free cash flow limit on STIP payments described above plus lower base salary levels in its comparator groups, reflects the compensationHRCNG committee’s adherence to conditioning a significant portion of pay on Companycompany performance. The 42.5% threshold payout level assumes a percentage payout for the Company performance metrics of 50% multiplied by 85% attributable to achievement of business objectives and no amount attributable to individual performance. The 172.5% maximum payout level assumes a percentage payout for the Company performance metrics of 150% multiplied by 115%, 85% being attributable to achievement of business objectives and 30% being attributable to individual performance.
The table below sets forth the performance measures approved by the compensationHRCNG committee for the 20192021 STIP that apply to the eligible named executive officers, the associated weight given to each measure and the business objective to which it relates.
Performance Measure | Weighting | Business Objective/Core Value | ||||
Income from operations | % | Maximizing profitability | ||||
SG&A cost control | 20 | % | Maximizing profitability | |||
Safety | 20 | % | Continuous improvement of safety performance | |||
Environmental | 5 | % | Continuous improvement of environmental performance | |||
Productivity | 7 | % | Operational improvement | |||
Fixed costs | 4 | % | Operational improvement | |||
Usage | 4 | % | Operational improvement |
The eligible named executive officers earned a 20192021 award at 53%126% of their annual base salary based on weighted Companycompany performance measures. As a result of the 5% of free cash flow limit on the STIP payout to certain eligible employees, the respective 2019 STIP payouts based on Company performance metrics were reduced as shown in the table below. The STIP amounts set forth in the Summary Compensation Table reflect the full value of each eligible named executive officer’s STIP award, including the amount attributed for individual performance. The STIP payouts did not need to be reduced as a result of the 5% limit on free cash flow in 2021 because the free cash flow generated by the company was sufficient to pay the full amount of the payouts.
Performance Measure | Threshold | Target Performance | Maximum Performance | Actual Performance | Actual Payout Percentage by Performance Measure | Weight | Weighted Payout Percentage Before Overall Cap of Free Cash Flow(1) | Weighted Payout Percentage After Overall Cap of Free Cash Flow(1) | Threshold | Target Performance | Maximum Performance | Actual Performance | Actual Payout Percentage by Performance Measure | Weight | Weighted Payout Percentage Before Overall Cap of Free Cash Flow(1) | Weighted Payout Percentage After Overall Cap of Free Cash Flow(1) | ||||||||||||||||||||||||||||||||||||||||||||
Income from operations | $348.5M | $435.6M | $ | 522.7M | $ | 77.5 M | 0% | 55% | 0% | 0% | $152.6M | $190.7M | $ | 228.9M | $ | 843.5M | 150% | 40% | 60% | 60% | ||||||||||||||||||||||||||||||||||||||||
SG&A cost control | $136.6M | $133.9M | $ | 129.2M | $ | 131.9M | 120% | 20% | 24% | 18% | $121.2M | $118.8M | $ | 115.2M | $ | 110.9M | 150% | 20% | 30% | 30% | ||||||||||||||||||||||||||||||||||||||||
Safety — Frequency Rate(2) | 0.75 | 0.65 | £ .50 | 0.59 | 110% | 15% | 17% | 12% | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Safety — Severity Rate(3) | 19 | 17 | £ 15 | 16 | 120% | 5% | 6% | 4% | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Environmental Incidents(4) | 25 | 20 | £ 15 | 18 | 120% | 5% | 6% | 4% | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Safety – Frequency rate(2) | 0.70 | 0.60 | ≤.50 | 0.47 | 107% | 15% | 16% | 16% | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Safety – Severity rate(3) | 20 | 16 | ≤14 | 21.6 | 116% | 5% | 6% | 6% | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Environmental incidents(4) | 17 | 15 | ≤12 | 12 | 147% | 5% | 7% | 7% | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Productivity average(5) TPD or mmbf/hour basis | 95% of budget | Budget | | 102% of budget | | — | (5) | 38% | 7% | 3% | 3% | |||||||||||||||||||||||||||||||||||||||||||||||||
Fixed costs(5) | +2% of budget | Budget | | -3% of budget | | — | (5) | 69% | 4% | 3% | 3% | |||||||||||||||||||||||||||||||||||||||||||||||||
Usage of variable components(5) | +2% of budget | Budget | | -3% of budget | | — | (5) | 37% | 4% | 1% | 1% | |||||||||||||||||||||||||||||||||||||||||||||||||
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All measures | 100% | 53% | 38% | 100% | 126% | 126% |
1. | Expressed as a percentage of annual base salary. |
2. | The frequency of safety incidents is the OSHA incident rate measured by the number of recordable incidents (lost time plus temporary assignments or restricted work plus medical treatments), multiplied by 200,000 and divided by the total number of hours worked. The payout is the weighted average of the operations’ results. |
3. | The severity of safety incidents is measured by the number of days lost due to lost time incidents and incidents resulting in temporary assignments or restricted work, multiplied by 200,000 and divided by the total number of hours worked. The payout is the weighted average of the operations’ results. |
4. | Environmental incidents are measured by the number of Class 1 & 2 environmental incidents. Class 1 environmental incidents are high severity incidents with risk of significant adverse environmental impact, contamination, liability, damage to the company’s reputation and/or legal action and fines. Class 2 environmental incidents are reportable incidents,non-administrative infractions, regulatory audit findings and conditions that have a moderate risk of potential adverse impact, contamination, liability or damage to the company’s reputation. The payout is the weighted average of the operations’ results. |
5. | The productivity (TPD or tons per day/mm or board feet/hour basis), fixed costs and usage of variable components metrics reflect metrics established for measuring improvement in operational performance. The threshold, target and maximum performance targets set forth in the table above are established for each of the company’s sites. The payout for the NEOs is determined as an average of the payouts for each of the sites. Because these metrics are company site specific, the specific site metrics are unique to that site and vary across the organization. As a result, it is not possible or practical to include a single value for “Actual Performance.” Further, the NEOs receive a payout that is determined as an average of the payouts for each of the sites. The actual payout percentage received is shown in the “Actual Payout Percentage by Performance Measure” column of the table. |
On January 28, 2020,February 2, 2022, the independent members of the board approved the 20202022 STIP withretaining the same performance measures for corporate performance as the 2019 STIP.2021 STIP and adding a new metric, namely the
reduction of greenhouse gas (GHG) emissions, in the ESG category with a 5% weighting. As a result, the independent members of the board adjusted the weighting of other metrics to account for the new ESG metric. Specifically, the weighting for the SG&A cost control metric was reduced from 20% to 15% and the safety — frequency rate metric was reduced from 15% to 10%. In contrast, the weighting of the following three operational performance metrics were increased: the productivity metric increased from 7% to 10%; the fixed costs metric increased from 4% to 5%, and the usage of variable components from 4% to 5%.
Category of Performance Measure | Performance Measure | Weight | ||||
Financials | Income from operations | 40% | ||||
SG&A cost control | 15% | |||||
Operations | Productivity average TPD or mmbf/hour basis | 10% | ||||
Fixed costs | 5% | |||||
Usage of variable components | 5% | |||||
ESG | Safety – Frequency rate | 10% | ||||
Safety – Severity rate | 5% | |||||
Environmental Incidents | 5% | |||||
GHG Tons of reduction | 5% | |||||
All measures | 100% | |||||
Individual Discretionary Awards
The independent members of the board of directors have historically focused on rewarding achievement of certain levels of performance based on corporate measures under the short-term incentive plan. With the implementation of an integrated leadership system, they have considered whether they should exercise their discretion in grantingto grant additional cash awards for individual performance on a limited and ad hoc basis. When granted, the awards are discretionary and intended to reward high effectiveness in an individual’s role and/or remarkable initiatives. Remarkable initiatives are measured based on three criteria: intensity, integration and innovation. At management’s recommendation, theThe committee did not approve any individual discretionary awards be granted to the named executive officers for 2019.2021.
LTIP
The compensationHRCNG committee grants equity awards as a long-term incentive and a significant portion of an executive’s total compensation package. With a significant portion of compensation tied to equity, the compensationHRCNG committee believes that named executive officers can stay focused on maximizing stockholder value over the long term. Since 2014, the annual equity award consists of an equity
The HRCNG committee grants a mix of 50% in RSUs and 50% in performance share units (“PSU”s). This combination emphasizes (i)(PSUs) and restricted stock units (RSUs) on the terms generally described below. Both PSUs and RSUs create a retention elementincentive for executives with key differences. Each unit, whether it is a PSU or an RSU, has a value equal to a share of company stock.
RSUs are earned, pro rata, over a four-year employment period.
In contrast, PSUs are earned over a three-year period based on both continued employment and the achievement of certain performance measures established by the HRCNG committee. The PSUs are intended to increase the value of the equity awards, (ii)organization by focusing attention on achieving certain performance measures. Depending on the “at risk” naturelevel of performance achievement, NEOs may earn less than the PSUs initially awarded, all PSUs awarded or more than those awarded.
Key Features of the equityLTIP awards and (iii) the tie to company performance for the PSUs.are:
Equity Award Mix | • 50% PSUs • 50% RSUs | |
Grant Date | Eighth trading day after the release of third quarter earnings or November 16, 2021 | |
Grant size | Percentage of salary • CEO: 225% of base salary • Other NEOs: 125% of base salary | |
Determination of Number of RSUs and PSUs Awarded | 50% of the dollar value of the equity award divided by the volume weighted average of the highest and lowest prices per share at which our common stock was traded on the NYSE on each of the five business days immediately before the grant date, or $10.95 | |
Vesting | • PSUs: 39 month vesting period from grant date through February 28, 2025 • RSUs: 48 month vesting period with 25% vesting on December 1 of each calendar year after the year of grant |
For the named executive officers, the compensationHRCNG committee made an annual equity award grant at its October 20192021 meeting. It has a policy to set the grant date for annual awards in advance without regard to anticipated earnings or other major announcements and as a precaution against potential claims that equity awards are made at a time when the Companycompany and named executive officers are in possession of materialnon-public information. The compensation committee policy sets the grant date for the named executive officers’ annual awards as the eighth trading date after the release of third quarter earnings. This year’s annual equity award was approved by the independent members of the board with a November 11, 2019 grant date.
The size of the equity awards is based on a percentage of salary. While the compensationHRCNG committee has discretion to adjust the size of the equity awards for an executive’s performance, the compensationHRCNG committee chose not to exercise this discretion in respect of the 20192021 annual equity award. The independent members of
In addition to the board granted Mr. Laflamme anannual equity award, with a value equal to 225% of his base salaryMessrs. Girard and the other named executive officersSimon received an initial equity awards with a value equal to 125% of their base salaries.
The equity awards for the named executive officers are stock-settled and are subject to certain individual stock limits under the LTIP as an anti-dilution measure. The numberaward of RSUs and PSUs awarded under the 2019 annual equity grant for the named executive officers was determined by dividing 50% of the dollar value of the equity award by the volume weighted average of the highest and lowest prices per share at which our common stock was traded on the New York Stock Exchange on each of the five business days immediately before the November 11, 2019with a grant date or $3.88. However, using this formula, the number of RSUsMarch 2, 2021, and PSUs covered by Mr. Laflamme’s equityJanuary 4, 2021, respectively. This award would have exceeded the LTIP individual stock limits. As a result, Mr. Laflamme’s awards for 2019 were limited to 200,000 RSUs and 200,000 PSUs. To allow Mr. Laflamme to realize the full potential of his awardhad an initial grant value the independent members of the board also granted Mr. Laflamme a cash-settled RSU award covering 134,954 RSUs.
The stock-settled RSU award will vest 25% on December 1 of each of the four calendar years after the year of grant for a 48 month vesting period. Mr. Laflamme’s cash-settled RSU will vest, ratably, on December 1 of each of the three calendar years after the year of grant for a 36 month vesting period. The three calendar year vesting period for cash-settled RSUs is intended to comply with Canadian tax law. For each vested cash-settled RSU at settlement, Mr. Laflamme will receive an amount in cash equal to an average market value. For this purpose, average market value is equal to the volume weighted average8 months of the highestMr. Girard’s annual base salary and lowest prices per share at which our common stock is traded on the New York Stock Exchange on each12 months of the five business days immediately preceding each vesting date.
In contrast, the 2019 PSU award will vest on February 28, 2023 and will be earned and payable as follows.Performance Share Units — Payout of the 20192021 PSU award is based on achievement of the following three metrics, which have different weightings. Multiple metrics balances both market performance and financial performance. Each performance measure has a payout range of 0% to 200%.
Performance Measure | Weight | Business Objective | ||||
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Total shareholder return (“ | 50 | % | Relative measure to peers; tracks shareholder experience | |||
Return on strategic investments | 20 | % | Direct link to financial priorities and efficient use of capital | |||
Asset performance improvement | 30 | % | Direct link to financial priorities and efficient use of capital |
For the strategic business objective, the compensation committee has established EBITDA targets for its tissue business to be achieved in 2021. The Company is not disclosing these EBITDA targets because they are internal forecasts and confidential information that we believe would cause us competitive harm if disclosed. We believe these targets are sufficiently high to encourage a high level of performance and deliver on the Company’s strategic plans. We also believe it will be difficult, although not unattainable, for the targets to be reached, and therefore, no more likely than unlikely that the targets will be reached.
TSR will be measured against a peer group and will payout dependingdepends on relative performance as follows:
TSR vs. Peers During | 20 percentage points below median | 10 percentage points below median | Median | 10 percentage points above median | 20 percentage points above median | |||||||||||||||
Payout | 0 | % | 50 | % | 100 | % | 150 | % | 200 | % |
Relative TSR will be measured each calendar year in the performance period. The payout levels for each calendar year will be divided by three to determine final payout of the TSR measure. However, if the company’s TSR is negative over the performance period, payouts that otherwise would have been more than 100% of target will be capped at 100% of target.
The peer group for measuring relative TSR includes the following companies, which has and may be adjusted as the compensationHRCNG committee, in its sole discretion, deems appropriate. The HRCNG committee adjusted the peer group by removing Domtar Corporation following its purchase by Paper Excellence Group and added
UPM-Kymmene OYJ and Weyerhaeuser Co to bring the peer group to 10. The peer group was determined by focusing primarily on Canadian and U.S. public companies in the same business segments with more than 50% of sales generated from pulp, lumber, paper and/or tissue to provide alignment with our segment mix and business exposure. The peer group was calibrated to limit overexposure to any one segment. This peer group is different from the peer group used for compensation benchmarking which focuses on peers in similar industries with revenues and total enterprise value within a reasonable range of those of the Company.company.
Canfor Corp | UPM-Kymmene OYJ | |
Clearwater Paper Corp | ||
| Verso Corp — A | |
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Interfor Corp | West Fraser Timber Co. Ltd. | |
Mercer International Inc. | Western Forest Products Inc. | |
Rayonier Advanced Materials Inc. | Weyerhaeuser Co |
Conifex Timber Inc. was removed from the peer group effective as of December 31, 2019 and replaced by Western Forest Products Inc. effective as of January 1, 2020 as a result of the announcement on December 24, 2019 of the contemplated acquisition by the Company of all of the equity and membership interests in certain U.S. subsidiaries of Conifex Timber Inc. The transaction was completed on February 1, 2020.
Orchids Paper Products Co. was included in the original peer group, but due to its acquisition by Cascades before the end of the first year in the three year performance beginning January 1, 2019, Orchids Paper Products Co. will not be considered as part of the peer group.
The finalsecond measure focuses on the return on investment for strategic projects approved on or after January 1, 2018. Total payout will be calculated using a weighted average. Capital projects included for this performance measure
include all tissue projects with an appropriation of funds greater than $400,000, wood products projects with an appropriation of funds greater than $500,000, pulp and paper projects with an appropriation of funds greater than $1,000,000 and corporate projects with an appropriation of funds greater than $1,000,000 and an assigned internal rate of return. Tissue projects are excluded because the tissue business is the focus of a separate performance measure discussed above.
Original internal rate | < 80% of original IRR | 90% of original IRR | 100% of original IRR | 110% of original IRR | > 120% of original IRR | |||||||||||||||||||||||||||||||||||
Original internal rate | < 80% of original IRR | 90% of original IRR | 100% of original IRR | 110% of original IRR | > 120% of original IRR | |||||||||||||||||||||||||||||||||||
Payout | 0 | % | 50 | % | 100 | % | 150 | % | 200 | % | 0 | % | 50 | % | 100 | % | 150 | % | 200 | % |
The third measure focuses on asset performance improvement. Performance targets will be established for each calendar year in the performance period and over the three-year performance period. The payout levels for each calendar year are determined independently with each weighted 20% and the three-year performance period with a weight of 40%.
Performance Target | ≤ 50% of target | 75% of target | 100% of target | 110% of target | ||||||||||||
Payout | 0 | % | 50 | % | 100 | % | 200 | % |
Asset performance for each year in the performance period is based on the company’s “realized production unit growth” versus the current year’s “budgeted production unit growth.” For this purpose, realized production unit growth is efficiency improvements and increases in operational shifts, excluding mergers and acquisitions, closures and market downtime. Budgeted production unit growth is based on actual production for a given year versus the budgeted production for the following year.
Asset performance is established and measured for each business segment using the foregoing formula. The overall asset performance of the company is then determined as a weighted average of each segment using the budgeted revenues of the year.
Asset performance for the three-year performance period is measured as the company’s realized production unit growth as of December 31, 2024, versus the three-year targeted production unit growth as of December 31, 2021. A targeted production unit growth will be established and measured for each segment, with an overall asset performance of the company determined as a weighted average of each segment using the budgeted revenues of 2024.
All of the equity awards contain customary provisions for accelerating vesting upon certain terminations and events, such as death and disability, all as further described in the narratives to the Summary Compensation Table. In all cases, the number of PSUs payable will be determined by actual performance results, subject to an individual maximum stock payout of 200,000 shares.
In addition, if a named executive officer retires, the equity awards — both RSUs and PSUs — may continue to vest. This feature is intended to attract and retain management with significant experience and encourage named executive officers to postpone retirement. As a result, if a named executive officer retires at least six months after the grant date, he will be permitted to continue vesting in the award. For this purpose, “retirement” means the named executive officer is at least age 58 with at least two years of service, and the sum of his age and years of service equals or exceeds 62.5. In addition, the named executive officer must not be entitled tosimultaneously receive a severance package.
Retirement Plans and DCMake-Up Program
For 2019,2021, the named executive officers earned retirement benefits only under atax-qualified retirement plan, subject to either Canadian or U.S. law. Thetax-qualified retirement plans are offered to all eligible employees (not just named executive officers).
Since 2012, the Companycompany has not offered any supplemental retirement plan that allows named executive officers to currently accumulate, on atax-deferred basis, additional retirement income. However, Companycompany contributions are limited in amount and type under thetax-qualified plans and the Companycompany believes named executive officers should receive the benefit of the plans without regard to the limits. For simplified administration, since 2012, underUnder the DCMake-Up Program, the Companycompany pays named executive officers a cash payment equal to the Companycompany contributions prescribed under the applicabletax-qualified plan formulas that exceed statutory limits. In addition, Canadian named executive officers receive a cash payment equal to the employer contribution they would have received on their annual incentive awards as if the broad-based plan had provided an employer contribution on these awards. The DCMake-Up Program does not allow named executive officers to accumulate earnings on a deferred basis. The named executive officers pay tax on the cash payment and nogross-up or other earnings are provided on these payments. When combined with the Companycompany contributions received under thetax-qualified plans, Messrs. Laflamme, Lalonde and Vachon each received an aggregate 20192021 defined contribution program benefit totaling 10% of their compensation. Messrs. LalondeGirard and TremblaySimon received an aggregate 20192021 defined contribution program benefit totaling 9% and 9.5% of their compensation respectively.and Mr. Minguez is not eligible to participate in the DCMake-Up Program. HeTremblay received contributions under the tax qualified plan representing 4.5%9.5% of his base salary.compensation.
Even though the Companycompany does not offer any supplemental retirement benefits that accumulate on atax-deferred basis currently to named executive officers, Messrs. Laflamme and Vachon previously earned supplemental defined benefits under Companycompany plans that were terminated effective upon the Company’scompany’s 2010 emergence from creditor protection proceedings. The supplemental defined benefits were reinstated under new arrangements pursuant to the plans of reorganization for Messrs. Laflamme and Vachon, and other employees who waived and forfeited all claims they had, or may have had, in the creditor protection proceedings in respect of any terminated supplemental retirement plan. The reinstated benefits are provided solely to honor prior contractual obligations,
but with all supplemental defined benefits frozen as of December 31, 2010, based on service and earnings up to that date. None of the other named executive officers have any reinstated supplemental retirement benefits.
Benefits provided through defined benefit plans are described more fully under “Pension Benefits”. The defined contribution plan benefits are described under “DCMake-Up Program”.
Severance and Change in Control Arrangements
We believe that the Companycompany should provide reasonable severance benefits to its employees in the event of an involuntary termination without cause. With respect to the president and chief executive officer and the senior vice presidents, these severance benefits should reflect the fact that it may be difficult for them to find comparable employment within a short period of time. Severance benefits should help provide an opportunity for the Companycompany and former employees to part ways in an efficient and effective manner.
In the event of a change in control, we believe that the interests of stockholders will be best served if the interests of the named executive officers are aligned with them, and providing change in control benefits should eliminate, or at least reduce, the reluctance of named executive officers to pursue potential change in control transactions that may be in the best interests of stockholders.
For each named executive officer except for Messrs. Laflamme and Minguez,Lalonde, severance protection is provided pursuant to the Company’scompany’s executive severance policy. Since March 1, 2021, Mr. MinguezLalonde is not eligible forentitled to severance pay. Mr. Laflamme’sprotection pursuant to employment and change in control agreements, provide him with severance protection, the terms of which have beenare disclosed in required SEC filings. The severance pay and benefits offered under the executive severance policy and Mr. Laflamme’sLalonde’s employment and change in control agreements are described later under “Severance and Change in Control Arrangements.” The pay and benefits received by Mr. Laflamme as president and chief executive officer upon his termination were previously disclosed in the Proxy Statement filed on April 9, 2021.
Perquisites
Perquisites are a small part of a named executive officers compensation. They are designed to give the executive officers flexibility in selecting the perquisites that are suitable to their needs for a given year, provide additional medical coverage and, if applicable, limit the executive’s tax liability to the liability in the executive’s home country. In short, the perquisites are:
A fixed annual allowance intended to cover expenses for fiscal and financial advice, and such other perquisites as chosen by the executive. If an executive is not covered by the Company’s Frequent Business Travelers Policy,company’s frequent business travelers policy, then the annual allowance may also be used for tax preparation fees. A fixed allowance balances the market practice of providing a certain level of perquisites with controlling costs to ensure the perquisites are not excessive.
Comprehensive annual medical examination as well as a medical concierge service to allow for coordination of health needs in the event of medical issues, including while traveling abroad.
If any of the named executive officers are subject to taxation in both Canada and the U.S. as a result of their business travel, he is provided a payment under the Company’s Tax Equalization Policycompany’s tax equalization policy generally equal to the difference between his respective home tax liability and actual taxes paid, as well as agross-up on that difference.
The compensationHRCNG committee has discretion to approve additional perquisites from time to time. The named executive officers are responsible for any tax consequences related to their use and receipt of the perquisites. Mr. Minguez is not eligible to receive any perquisites.
Stock Ownership Guidelines
The compensationHRCNG committee adopted stock ownership guidelines for its senior management, including each of the named executive officers,NEOs, and certain of its vice presidents. The ownership guideline is a multiple of the executive’s base salary. Under the guidelines, the president and chief executive officer must own shares or share equivalents of Company stock equal to 4.5 times base salary while the other named executive officers must own shares or share equivalents of Company stock equal to 2.5 times base salary.
Position | Multiple of Base Salary | |||
President and chief executive officer | 4.5 | |||
All other named executive officers | 2.5 |
For purposes of the guidelines, all shares directly owned and unvested RSUs are included in the calculation. PSUs and unexercised stock options are not included in the calculation. Until the stock ownership requirement is met, named executive officers must hold all shares (excluding shares withheld for taxes) received upon settlement of RSUs and PSUs and a number of shares equal to 50% of any gain realized upon option exercise. In 2017, the compensation committee updated the guidelines to requireIf an executive who does not meet the guidelines, tothe executive must purchase shares with the net proceeds of any cash-settled awards.
To determine whether a named executive officer has met the stock ownership requirement, each named executive officer’s base salary is converted to U.S. dollars using the exchange rate at the time of measurement. The shares or share equivalents held by the named executive officer are calculated on the basis of the higher of the (i) price at time of settlement and (ii) fair market value of the common stock at the time of measurement. For each unvested RSU, the higher of
the (i) grant value and (ii) fair market value of the common stock at the time of measurement is used in the calculation. The compensationHRCNG committee annually reviews the extent to which the named executive officers have met the stock ownership requirement. As of December 31, 2019,2021, other than Messrs. TremblayGirard and VachonSimon, each named executive officer held their shares in compliance with the guidelines and met the stock ownership requirement. Mr Laflamme held,requirement consistent with their position as of such date. Given Messrs. Girard and Mr. Lalonde held and purchased, shares pursuant toSimon short tenure with the guidelines, but didcompany, they do not meet the stock ownership requirementguidelines as of December 31, 2019 given their shorter tenure in their roles. Mr. Minguez held shares pursuant to the guidelines, but did not meet the stock ownership requirement as of December 31, 2019 given that he has only been eligible for the LTIP since 2018.2021.
Recoupment Policy
The Companycompany has maintained a recoupment policy since 2013, which applies to the named executive officers and all other current and former Section 16 officers of the Company.company. In general, excess incentive and/or equity compensation is subject to recoupment if the Companycompany is required to restate its financial statements due to material noncompliance with a financial reporting requirement, whether or not as a result of misconduct by one or more officers covered by the policy. The Company’scompany’s recoupment policy applies a look back to recoup such compensation received during the three year period before the date on which the Companycompany is required to prepare a restatement. The Companycompany also has discretion to recoup incentive and/or equity compensation paid to an officer who engages in misconduct in the performance of his or her duties, regardless of whether the misconduct involves a restatement of its financial statements. The Companycompany has the discretion to make all determinations under the policy.
Anti-Hedging and Anti-Pledging Policy
The Companycompany has adopted a policy prohibiting directors, officers and employees holding a title or function of vice president and higher from engaging in hedging, pledging, short selling or monetization of the Company’scompany’s securities.
Deductibility of Compensation — Section 162(m) of the U.S. Internal Revenue Code
Following the elimination of the performance-based exception under Section 162(m) of the Code, the Company considers the deductibility rules of Section 162(m) of the Code to the extent applicable, with respect to compensation awards in effect before 2019 and grandfathered.
Compensation Committee ReportHRCNG COMMITTEE REPORT
The following report does not constitute soliciting material and is not considered filed or incorporated by reference into any other filing by Resolute Forest Products Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.
The independent members of the compensationHRCNG committee have reviewed and discussed the Compensation Discussion and Analysis above with management and, based on such review and discussion, the independent members of the compensationHRCNG committee recommended to the board that the Compensation Discussion and Analysis be included in this proxy statement and in the Company’scompany’s Annual Report on Form10-K for the year ended December 31, 2019.2021.
Alain Rhéaume (Chair)
Jennifer C. Dolan
Randall C. Benson
Richard D. FalconerJennifer C. Dolan
Michael S. Rousseau
Tabular Disclosure of Executive Compensation
The following table sets forth information concerning all compensation earned by the Company’scompany’s named executive officers for 2017, 20182019, 2020 and 2019:2021:
Summary Compensation Table
Name and Position | Year | Salary(1) | Bonus | Stock Awards(2) | Option Awards | Non-Equity Incentive Plan Compensation(3) | Change in Pension Value and Nonqualified Deferred Compensation Earnings(4) | All Other Compen- sation(5) | Total | |||||||||||||||||||||||||||
Yves Laflamme | 2019 | $ | 913,125 | $ | — | $ | 1,552,000 | $ | — | $ | 882,290 | $ | 198,791 | $ | 265,980 | $ | 3,812,186 | |||||||||||||||||||
President and chief executive officer | 2018 | 857,989 | — | 2,236,826 | — | 1,242,147 | — | 411,149 | 4,748,111 | |||||||||||||||||||||||||||
2017 | 387,643 | 493,888 | 266,510 | 17,689 | 70,396 | 1,236,126 | ||||||||||||||||||||||||||||||
Remi Lalonde | 2019 | 325,881 | — | 450,236 | — | 146,482 | — | 62,630 | 985,229 | |||||||||||||||||||||||||||
Senior vice president and chief financial officer | 2018 | 204,977 | — | 257,954 | — | 361,177 | — | 99,488 | 923,596 | |||||||||||||||||||||||||||
Patrice Minguez | 2019 | 455,250 | — | 573,752 | — | — | — | 25,200 | 1,054,202 | |||||||||||||||||||||||||||
President, tissue group | ||||||||||||||||||||||||||||||||||||
Richard Tremblay | 2019 | 378,363 | — | 474,826 | — | 136,092 | — | 116,809 | 1,106,090 | |||||||||||||||||||||||||||
Senior vice president, | 2018 | 390,582 | — | 540,624 | — | 478,764 | — | 384,059 | 1,794,029 | |||||||||||||||||||||||||||
pulp and paper group | 2017 | 385,796 | — | 490,201 | — | 264,524 | — | 77,355 | 1,217,876 | |||||||||||||||||||||||||||
Jacques Vachon | 2019 | 350,621 | — | 444,710 | — | 137,794 | 204,368 | 102,228 | 1,239,721 | |||||||||||||||||||||||||||
Senior vice president, | 2018 | 355,600 | — | 493,978 | — | 496,574 | — | 299,703 | 1,645,855 | |||||||||||||||||||||||||||
corporate affairs and chief legal officer | 2017 | 348,146 | — | 443,565 | — | 239,355 | 216,011 | 62,717 | 1,309,794 |
Name and Position | Year | Salary(1) | Bonus | Stock Awards(2) | Option Awards | Non-Equity Incentive Plan Compensation(3) | Change in Pension Value and Nonqualified Deferred Compensation Earnings(4) | All Other Compen- sation(5) | Total | |||||||||||||||||||||||||||
Remi G. Lalonde | 2021 | $ | 674,632 | $ | — | $ | 1,645,895 | $ | — | $ | 920,850 | $ | — | $ | 738,228 | $ | 3,979,605 | |||||||||||||||||||
President and chief executive officer | 2020 | 362,052 | — | 1,556,644 | — | 514,704 | — | 67,377 | 2,500,776 | |||||||||||||||||||||||||||
2019 | 325,881 | — | 450,236 | — | 146,482 | — | 62,630 | 985,229 | ||||||||||||||||||||||||||||
Yves Laflamme | 2021 | 313,661 | — | — | — | 200,982 | — | 191,272 | 705,915 | |||||||||||||||||||||||||||
President and chief executive officer | 2020 | 894,633 | — | 1,988,000 | — | 1,363,222 | 124,732 | 184,617 | 4,555,204 | |||||||||||||||||||||||||||
2019 | 913,125 | — | 1,552,000 | — | 882,290 | 198,791 | 265,980 | 3,812,186 | ||||||||||||||||||||||||||||
Sylvain A. Girard | 2021 | 387,280 | — | 952,204 | — | 489,285 | — | 51,053 | 1,879,822 | |||||||||||||||||||||||||||
Senior vice president and chief financial officer | ||||||||||||||||||||||||||||||||||||
Hugues Simon | 2021 | 427,071 | — | 1,118,862 | — | 568,683 | — | 86,613 | 2,201,229 | |||||||||||||||||||||||||||
President, wood products | ||||||||||||||||||||||||||||||||||||
Richard Tremblay | 2021 | 393,213 | — | 501,401 | — | 504,953 | — | 499,684 | 1,899,251 | |||||||||||||||||||||||||||
Senior vice president, | 2020 | 360,867 | — | 474,218 | — | 469,213 | — | 148,552 | 1,452,850 | |||||||||||||||||||||||||||
pulp and paper group | 2019 | 378,363 | — | 474,826 | — | 136,092 | — | 116,809 | 1,106,090 | |||||||||||||||||||||||||||
Jacques P. Vachon | 2021 | 373,985 | — | 471,923 | — | 475,254 | — | 399,686 | 1,720,848 | |||||||||||||||||||||||||||
Senior vice president, | 2020 | 338,719 | — | 445,232 | — | 462,558 | 236,468 | 67,193 | 1,550,170 | |||||||||||||||||||||||||||
corporate affairs and chief legal officer | 2019 | 350,621 | — | 444,710 | — | 137,794 | 204,368 | 102,228 | 1,239,721 |
1. | As described in the CD&A, in |
2. | Amounts in these columns reflect the aggregate grant date fair |
equity award that are settled in stock. |
The following shows the grant date fair values for RSU awards and target PSU awards, excluding associated dividend equivalents for Mr. Girard and Simon credited under their new hire grants, as well as the grant date fair value for the 20192021 PSU awards based on the maximum level of payout. For Mr. Laflamme, the table also shows his additional grant of 134,954 RSUs that will settle exclusively in cash, as described in the CD&A.
Name | 2019 Annual RSU Award | 2019 Annual RSU Award- Cash Settled | 2019 Annual Target PSU Award | Total 2019 Equity Awards | 2019 Annual Maximum (200% of Target PSU Award) | 2021 Annual RSU Award | 2021 Annual Target PSU Award | Total 2021 Equity Awards | 2021 Annual Maximum (200% of Target PSU Award) | |||||||||||||||||||||||||||
Remi G. Lalonde | $ | 822,947 | $ | 822,947 | $ | 1,645,895 | $ | 1,645,895 | ||||||||||||||||||||||||||||
Yves Laflamme | $ | 776,000 | $ | 523,622 | $ | 776,000 | $ | 2,075,622 | $ | 1,552,000 | — | — | — | — | ||||||||||||||||||||||
Remi Lalonde | 225,118 | — | 225,118 | 450,236 | 450,236 | |||||||||||||||||||||||||||||||
Patrice Minguez | 286,876 | — | 286,876 | 573,752 | 573,752 | |||||||||||||||||||||||||||||||
Sylvain A. Girard | 277,090 | 277,090 | 554,180 | 554,180 | ||||||||||||||||||||||||||||||||
Hugues Simon | 284,689 | 284,689 | 569,378 | 569,378 | ||||||||||||||||||||||||||||||||
Richard Tremblay | 237,413 | — | 237,413 | 474,826 | 474,826 | 250,700 | 250,700 | 501,401 | 501,401 | |||||||||||||||||||||||||||
Jacques Vachon | 222,355 | — | 222,355 | 444,710 | 444,710 | |||||||||||||||||||||||||||||||
Jacques P. Vachon | 235,962 | 235,962 | 471,923 | 471,923 |
The 20192021 annual equity awards granted to the named executive officers represents a percentage of the named executive officer’s base salary at the grant date: 225% for Mr. LaflammeLalonde and 125% for the other named executive officers. With the exception of Mr. Laflamme, theThe number of RSUs and PSUs awarded was determined by dividing 50% of the dollar value of the equity award by the volume weighted average of the highest and lowest prices per share at which our common stock was traded on the New York Stock ExchangeNYSE on each of the five business days immediately before the November 11, 201916, 2021 grant date, or $3.88. Mr. Laflamme’s grant is described above.$10.95. The number of RSUs and target PSUs granted are shown below under the “Grants of Plan-Based Awards.” Each 20192021 PSU award is subject to a maximum stock payout of 200,000 shares to any one individual.
In addition to their 2021 annual equity award, Messrs. Girard and Simon received an initial equity award of RSUs and PSUs with a March 2, 2021 and January 4, 2021 grant date, respectively. This award had an initial grant value equal to 8 months of Mr. Girard’s annual base salary and 12 months of Mr. Simon’s annual base salary. The following shows the grant date values of their initial RSU awards and target PSU awards, without associated dividend equivalents.
Name | 2021 Initial RSU Award | 2021 Initial PSU Award | Total 2021 Initial Award | 2021 Annual Award | Total 2021 Award | |||||||||||||||
Sylvain A. Girard | $ | 180,988 | $ | 180,988 | $ | 361,976 | $ | 554,180 | $ | 916,156 | ||||||||||
Hugues Simon | 239,067 | 239,067 | 478,134 | 569,378 | 1,047,512 |
3. | Amounts shown for |
4. | Using discount rate and life expectancy assumptions consistent with those used in the |
5. | Amounts paid in 2021 include the following basic company contributions allocated on behalf of the named executive officers pursuant to the registered defined contribution plans and additional cash payments to the named executive officers under the DCMake-Up Program equal to (i) company contributions under the registered plan formulas in excess of statutory limits, and (ii) the employer contribution they would have received on their annual incentive awards as if the registered plan had provided an employer contribution on these awards: |
Name | Basic Company Contribution | Additional Cash Payment | ||||||
Yves Laflamme | $ | 11,727 | $ | 205,574 | ||||
Remi Lalonde | 11,946 | 34,247 | ||||||
Patrice Minguez | 12,600 | — | ||||||
Richard Tremblay | 26,600 | 54,370 | ||||||
Jacques Vachon | 11,754 | 73,641 |
As described in the CD&A, Mr. Minguez is not eligible for the DCMake-Up Program.
Name | Basic Company Contribution | Additional Cash Payment | ||||||
Remi G. Lalonde | $ | 13,020 | $ | 107,920 | ||||
Yves Laflamme | 13,044 | 134,200 | ||||||
Sylvain A. Girard | 13,315 | 19,294 | ||||||
Hugues Simon | 13,250 | 23,318 | ||||||
Richard Tremblay | 27,550 | 54,800 | ||||||
Jacques P. Vachon | 12,937 | 73,239 |
For all named executive officers other than Messrs.Mr. Tremblay, and Minguez, the cash payments shown above and the perquisite allowances next described were established in Canadian dollars and have been converted to U.S. dollars using the exchange rate for Canadian to U.S. dollars as of December 31, 2019,2021, or $0.7698.$0.7913. The cash payment and the perquisite allowance were paid in U.S. dollars to Mr. Tremblay. As described in the CD&A, Mr. Minguez is not eligible to receive perquisites.
Additional perquisites include (i) a perquisite amount of $38,490$39,565 for Mr. Lalonde and Mr. Laflamme, $9,496 for Messrs. Girard, Simon and Vachon and $12,000 for Mr. Tremblay and $9,238 for Messrs. Lalonde and Vachon covering personal transportation, fiscal/financial advice, etc., (ii) a comprehensive annual medical examination with a value up to $2,310of $1,291 for Mr. Laflamme as well as his spouseLalonde, $1,926 for Mr. Simon and up to $1,155$2,492 for Messrs. Lalonde, Tremblay andMr. Vachon covering the executive and their spouses (if any), (iii) an annual medical referral with a value up to $770 for all named executive officers, other than Mr. Minguez, and their spouses and dependents (if any), (iv) a medical concierge service with a value of $1,155$1,187 for all named executive officers except Mr. Minguez, (v)(iv) coverage under the Company’scompany’s broad-based welfare benefit programs for salaried employees, (vi)(v) parking for all named executive officers, other than Mr. Minguez, and (vii)(vi) annual membership dues for one private club for Messrs. Laflamme, Lalonde, Girard, Simon and Vachon which memberships are used for business purposes only. Mr. Lalonde also received an allowance of $554$570 for his personal mobile phone.
Additionally, amounts in this column include the value of dividend equivalents issued in 2021 attributable to outstanding equity awards granted in prior years. The dividend equivalents relate to a special dividend issued by the company to all stockholders. The value of those equivalents for each named executive officer are as follows:
Mr. Lalonde | Mr. Girard | Mr. Simon | Mr. Tremblay | Mr. Vachon | ||||
$566,120 | $ — | $ — | $315,829 | $294,772 |
This column excludes cash severance payments made to Mr. Laflamme in 2021 equal to two times his base salary and his average two year STIP cash payout in reliance on Item 402(a)(2) of Regulation S-K and previously disclosed beginning on page 46 of the Company’s Definitive Proxy Statement on Schedule 14A as filed with the SEC on April 9, 2021, in the table under the heading “Severance and Change in Control Arrangements — Potential Payments Upon Termination” and footnote 6 to such table.
Finally, for Mr. Tremblay, the amount in this column includes a $8,245$73,147 payment under the Company’s Tax Equalization Policy,company’s tax equalization policy, as described in the CD&A, in respect of his total compensation, which was subject to taxation in the U.S. and Canada.Canada, and for Mr. Simon includes a relocation package in the amount of $30,000.
Grants of Plan-Based Awards
Name | Equity Award Grant Date | Date of Board Approval of Equity Award | Estimated Possible Payouts UnderNon-Equity Incentive Plan Awards(1) | Estimated Possible Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock or Units(3) | Grant Date Fair Value of Stock and Option Awards(4) ($) | Equity Award Grant Date | Date of Board Approval of Equity Award | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Possible Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock or Units(3) | Grant Date Fair Value of Stock and Option Awards(4) ($) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Remi G. Lalonde | 11/16/21 | 10/28/21 | 75,155 | 822,947 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
11/16/21 | 10/28/21 | 75,155 | 150,310 | 822,947 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
n/a | n/a | 308,721 | 726,402 | 1,253,044 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Yves Laflamme | 11/11/2019 | 10/24/2019 | 334,954 | 1,299,622 | 11/16/21 | 10/28/21 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
11/11/2019 | 10/24/2019 | 200,000 | 200,000 | 776,000 | 11/16/21 | 10/28/21 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
n/a | n/a | 392,063 | 922,500 | 1,591,313 | n/a | n/a | 66,487 | 156,441 | 269,860 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
11/11/2019 | 10/24/2019 | 58,020 | 225,118 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Remi Lalonde | 11/11/2019 | 10/24/2019 | 58,020 | 116,040 | 225,118 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sylvain A. Girard | 11/16/21 | 10/28/21 | 25,305 | 277,090 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
n/a | n/a | 154,269 | 362,987 | 626,153 | 11/16/21 | 10/28/21 | 25,305 | 50,610 | 277,090 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
03/02/21 | 02/03/21 | 19,357 | 199,012 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Patrice Minguez | 11/11/2019 | 10/24/2019 | 73,937 | 286,876 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
03/02/21 | 02/03/21 | 19,357 | 38,714 | 199,012 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
n/a | n/a | 164,036 | 385,967 | 665,793 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Hugues Simon | 11/16/21 | 10/28/21 | 25,999 | 284,689 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
11/16/21 | 10/28/21 | 25,999 | 51,998 | 284,689 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
01/04/21 | 12/14/20(5) | 38,312 | 274,742 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
01/04/21 | 12/14/20(5) | 38,312 | 76,624 | 274,742 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
11/11/2019 | 10/24/2019 | 73,937 | 147,874 | 286,876 | n/a | n/a | 190,128 | 447,360 | 771,697 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
n/a | n/a | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Richard Tremblay | 11/11/2019 | 10/24/2019 | 61,189 | 237,413 | 11/16/21 | 10/28/21 | 22,895 | 250,700 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
11/11/2019 | 10/24/2019 | 61,189 | 122,378 | 237,413 | 11/16/21 | 10/28/21 | 22,895 | 45,790 | 250,700 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
n/a | n/a | 162,695 | 382,812 | 660,351 | n/a | n/a | 166,787 | 392,440 | 676,959 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jacques Vachon | 11/11/2019 | 10/24/2019 | 57,308 | 222,355 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jacques P. Vachon | 11/16/21 | 10/28/21 | 21,549 | 235,962 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
11/11/2019 | 10/24/2019 | 57,308 | 114,616 | 222,355 | 11/16/21 | 10/28/21 | 21,549 | 43,098 | 235,962 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
n/a | n/a | 152,375 | 358,529 | 618,463 | n/a | n/a | 159,332 | 374,899 | 646,700 |
1. | The amounts shown in these columns represent the “Threshold,” “Target” and “Maximum” payout potential under the |
2. | Amounts shown in these columns represent the potential number of shares of |
3. | Amounts shown in this column show the number of RSUs awarded in |
4. | Amounts reflect grant date fair market value of |
5. | This date reflects the equity grant approved by the independent members of the board of directors for Mr. Simon in 2020, contingent on his commencement of employment in January 2021. |
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
The following table provides additional detail to the quantitative information and footnotes set forth in the Summary Compensation Table and Grants of Plan-Based Awards table above.
Long-Term Incentive Compensation — Equity Awards
The following table describes key grant provisions of the RSUs and PSUs and the effect of a named executive officer’s termination before the applicable vesting dates:dates. In connection with Mr. Vachon’s retirement and as reported in a current report on Form 8-K filed October 29, 2021, all of Mr. Vachon’s outstanding equity awards vested in full as of December 31, 2021.
Key Provisions | RSU Awards | PSU Awards | ||
General Provisions | ||||
Vesting and Settlement | 25% on December 1 of each of the four calendar years after the year of grant as long as the executive remains employed through the applicable vesting dates
| 100% on February 28, | ||
Dividend Equivalents | Additional RSUs and PSUs will be credited in additional share units on unvested RSUs and PSUs, respectively, representing a number that is equivalent to any dividends that the | |||
Payout Value | Each stock-settled RSU has a value equal to one share of stock
| The number of shares of | ||
Termination for Cause / Resignation Before Age 55 | ||||
Vesting and Settlement | All unsettled RSUs will be canceled | All unsettled PSUs will be canceled | ||
Retirement On or After May | ||||
Vesting | RSUs continue to vest on each vesting date through December 1, | PSUs continue to vest through February 28, | ||
Settlement | RSUs are settled following each vesting date | PSUs are settled immediately following February 28, |
|
|
| ||||||
Retirement Before May | ||||||||
Vesting | Pro rata vesting of RSUs equal to (i) the total number of RSUs awarded plus any dividend equivalents, multiplied by (ii) a fraction, the numerator of which is the number of months elapsed from December 1 after the grant date | Pro rata vesting of PSUs equal to (i) the total number of PSUs awarded plus any dividend equivalents, multiplied by (ii) a fraction, the numerator of which is the number of months elapsed from December 1 |
Key Provisions | RSU Awards | PSU Awards | ||
and the denominator of which is 48, including the portion that has already vested | after the grant date through the retirement date or last day worked and the denominator of which is 39 | |||
Settlement | RSUs are settled following the retirement, resignation or termination date | PSUs are settled on February 28, | ||
Death | ||||
Vesting | Pro ratavesting of RSUs equal to (i) the number of RSUs vested plus any dividend equivalents as of the date of death plus (ii) the RSUs scheduled to vest on the next vesting date | During the Performance Period: Pro rata vesting of PSUs equal to (i) the total number of PSUs awarded plus any dividend equivalents, multiplied by (ii) a fraction, the numerator of which is the number of months elapsed from December 1 after the grant date through December 31 of the year of death and the denominator of which is 39 | ||
On/After Grant Date and Before the Performance Period: Pro rata vesting of PSUs equal to (i) the total number of PSUs awarded plus any dividend equivalents, multiplied by (ii) a fraction, the numerator of which is the number of months elapsed from December 1 after the grant date through December 31 of the first calendar year of the performance period and the denominator of which is 39 | ||||
Settlement | RSUs are settled following the death | PSUs are settled following the death based on estimated actual performance as of December 31 of the calendar year | ||
Disability | ||||
Vesting | Pro ratavesting of RSUs equal to (i) the number of RSUs settled plus any dividend equivalents as of the date of disability plus (ii) the RSUs scheduled to vest on the next vesting date | During the Performance Period: Pro rata vesting of PSUs equal to (i) the total number of PSUs awarded plus any dividend equivalents, multiplied by (ii) a fraction, the numerator of which is the number of months elapsed from December 1 after the grant |
|
|
| ||
date through December 31 of the year the participant becomes disabled plus any months after the participant returns to active employment through the end of the vesting period and the denominator of which is 39 | ||||
On/After Grant Date and Before the Performance Period: Pro rata vesting of PSUs equal to (i) the total number of PSUs |
Key Provisions | RSU Awards | PSU Awards | ||
awarded plus any dividend equivalents, multiplied by (ii) a fraction, the numerator of which is the number of months elapsed from December 1 after the grant date through December 31 of the first calendar year of the performance period plus any months after the participant returns to active employment after the first calendar year and the denominator of which is 39 | ||||
Settlement | The additional tranche of the RSUs are settled as of the next scheduled vesting date after the participant’s disability | PSUs are settled on February 28, |
Outstanding Equity Awards at FiscalYear-End 20192021
Option Awards | Stock Awards | |||||||||||||||||||||||||||
Grant Date(1) | Number of Securities Underlying Unexercised Options | Option Exercise Price | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units That Have Not Vested(2) | |||||||||||||||||||||||
Name | Exercisable | Unexercisable | ||||||||||||||||||||||||||
Yves Laflamme | 01/09/2011 | (3) | 24,092 | $ | 23.05 | 01/09/2021 | — | $ | — | |||||||||||||||||||
11/03/2011 | (3) | 6,354 | — | 16.45 | 11/03/2021 | — | — | |||||||||||||||||||||
11/08/2012 | (3) | 21,228 | — | 11.41 | 11/08/2022 | — | — | |||||||||||||||||||||
11/06/2013 | (3) | 22,898 | — | 15.66 | 11/06/2023 | — | — | |||||||||||||||||||||
11/14/2016 | — | — | — | — | 17,593 | (4) | 73,891 | |||||||||||||||||||||
11/14/2016 | — | — | — | — | 70,372 | (5) | 295,562 | |||||||||||||||||||||
11/13/2017 | — | — | — | — | 16,823 | (6) | 70,657 | |||||||||||||||||||||
11/13/2017 | — | — | — | — | 33,647 | (7) | 141,317 | |||||||||||||||||||||
11/12/2018 | — | — | — | — | 66,985 | (8) | 281,337 | |||||||||||||||||||||
11/12/2018 | — | — | — | — | 89,313 | (9) | 375,115 | |||||||||||||||||||||
11/11/2019 | — | — | — | — | 200,000 | (10) | 840,000 | |||||||||||||||||||||
11/11/2019 | — | — | — | — | 200,000 | (11) | 840,000 | |||||||||||||||||||||
Remi Lalonde | 11/03/2011 | (3) | 4,067 | — | 16.45 | 11/03/2021 | — | — | ||||||||||||||||||||
11/08/2012 | (3) | 6,328 | — | 11.41 | 11/08/2022 | — | — | |||||||||||||||||||||
11/06/2013 | (3) | 4,883 | — | 15.66 | 11/06/2023 | — | — | |||||||||||||||||||||
11/14/2016 | — | — | — | — | 5,249 | (4) | 22,046 | |||||||||||||||||||||
11/14/2016 | — | — | — | — | 20,997 | (5) | 88,187 | |||||||||||||||||||||
11/28/2018 | — | — | — | — | 9,176 | (8) | 38,539 | |||||||||||||||||||||
11/28/2018 | — | — | — | — | 12,236 | (9) | 51,391 | |||||||||||||||||||||
11/11/2019 | — | — | — | — | 58,020 | (10) | 243,684 | |||||||||||||||||||||
11/11/2019 | — | — | — | — | 58,020 | (11) | 243,684 | |||||||||||||||||||||
Patrice Minguez | 11/12/2018 | — | — | — | — | 18,607 | (8) | 78,149 | ||||||||||||||||||||
11/12/2018 | — | — | — | — | 24,809 | (9) | 104,198 | |||||||||||||||||||||
11/11/2019 | — | — | — | — | 73,937 | (10) | 310,535 | |||||||||||||||||||||
11/11/2019 | — | — | — | — | 73,937 | (11) | 310,535 | |||||||||||||||||||||
Richard Tremblay | 11/03/2011 | (3) | 11,483 | — | 16.45 | 11/03/2021 | — | — | ||||||||||||||||||||
11/08/2012 | (3) | 17,937 | — | 11.41 | 11/08/2022 | — | — | |||||||||||||||||||||
11/06/2013 | (3) | 13,435 | — | 15.66 | 11/06/2023 | — | — | |||||||||||||||||||||
11/14/2016 | — | — | — | — | 17,547 | (4) | 73,697 | |||||||||||||||||||||
11/14/2016 | — | — | — | — | 70,191 | (5) | 294,802 | |||||||||||||||||||||
11/13/2017 | — | — | — | — | 16,698 | (6) | 70,132 | |||||||||||||||||||||
11/13/2017 | — | — | — | — | 33,395 | (7) | 140,259 | |||||||||||||||||||||
11/12/2018 | — | — | — | — | 16,189 | (8) | 67,994 | |||||||||||||||||||||
11/12/2018 | — | — | — | — | 21,586 | (9) | 90,661 | |||||||||||||||||||||
11/11/2019 | — | — | — | — | 61,189 | (10) | 256,994 | |||||||||||||||||||||
11/11/2019 | — | — | — | — | 61,189 | (11) | 256,994 | |||||||||||||||||||||
Jacques Vachon | 01/09/2011 | (3) | 25,203 | — | 23.05 | 01/09/2021 | — | — | ||||||||||||||||||||
11/03/2011 | (3) | 21,606 | — | 16.45 | 11/03/2021 | — | — | |||||||||||||||||||||
11/08/2012 | (3) | 37,064 | — | 11.41 | 11/08/2022 | — | — | |||||||||||||||||||||
11/06/2013 | (3) | 26,652 | — | 15.66 | 11/06/2023 | — | — | |||||||||||||||||||||
11/14/2016 | — | — | — | — | 15,800 | (4) | 66,360 | |||||||||||||||||||||
11/14/2016 | — | — | — | — | 63,202 | (5) | 265,448 | |||||||||||||||||||||
11/13/2017 | — | — | — | — | 15,108 | (6) | 63,454 | |||||||||||||||||||||
11/13/2017 | — | — | — | — | 30,218 | (7) | 126,916 | |||||||||||||||||||||
11/12/2018 | — | — | — | — | 14,792 | (8) | 62,126 | |||||||||||||||||||||
11/12/2018 | — | — | — | — | 19,724 | (9) | 82,841 | |||||||||||||||||||||
11/11/2019 | — | — | — | — | 57,308 | (10) | 240,694 | |||||||||||||||||||||
11/11/2019 | — | — | — | — | 57,308 | (11) | 240,694 |
Option Awards | Stock Awards | |||||||||||||||||||||||||||
Name | Grant Date(1) | Number of Securities Underlying Unexercised Options | Option Exercise Price | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units That Have Not Vested(2) | ||||||||||||||||||||||
Exercisable | Unexercisable | |||||||||||||||||||||||||||
Remi G. Lalonde | 11/08/2012 | (3) | 6,328 | — | $ | 11.41 | 11/08/2022 | — | $ | — | ||||||||||||||||||
11/06/2013 | (3) | 4,883 | — | 15.66 | 11/06/2023 | — | — | |||||||||||||||||||||
11/28/2018 | — | — | — | — | 3,318 | (4) | 50,672 | |||||||||||||||||||||
11/28/2018 | — | — | — | — | 13,275 | (5) | 202,709 | |||||||||||||||||||||
11/11/2019 | — | — | — | — | 31,477 | (6) | 480,654 | |||||||||||||||||||||
11/11/2019 | — | — | — | — | 62,954 | (7) | 961,308 | |||||||||||||||||||||
11/16/2020 | — | — | — | — | 127,441 | (8) | 1,946,024 | |||||||||||||||||||||
11/16/2020 | — | — | — | — | 169,921 | (9) | 2,594,694 | |||||||||||||||||||||
11/16/2021 | — | — | — | — | 75,155 | (10) | 1,147,617 | |||||||||||||||||||||
11/16/2021 | — | — | — | — | 75,155 | (11) | 1,147,617 | |||||||||||||||||||||
Yves Laflamme | 11/06/2013 | (3) | 22,898 | 15.66 | 2/28/2022 | — | — | |||||||||||||||||||||
Sylvain A. Girard | 03/02/2021 | — | — | — | — | 15,753 | (10) | 240,548 | ||||||||||||||||||||
03/02/2021 | — | — | — | — | 21,003 | (11) | 320,716 | |||||||||||||||||||||
11/16/2021 | — | — | — | — | 25,305 | (10) | 386,407 | |||||||||||||||||||||
11/16/2021 | — | — | — | — | 25,305 | (11) | 386,407 | |||||||||||||||||||||
Hugues Simon | 03/01/2021 | — | — | — | — | 31,177 | (10) | 476,073 | ||||||||||||||||||||
03/01/2021 | — | — | — | — | 41,570 | (11) | 634,774 | |||||||||||||||||||||
11/16/2021 | — | — | — | — | 25,999 | (10) | 397,005 | |||||||||||||||||||||
11/16/2021 | — | — | — | — | 25,999 | (11) | 397,005 | |||||||||||||||||||||
Richard Tremblay | 11/08/2012 | (3) | 17,937 | — | 11.41 | 11/08/2022 | — | — | ||||||||||||||||||||
11/06/2013 | (3) | 13,435 | — | 15.66 | 11/06/2023 | — | — | |||||||||||||||||||||
11/12/2018 | — | — | — | — | 5,855 | (4) | 89,405 | |||||||||||||||||||||
11/12/2018 | — | — | — | — | 23,422 | (5) | 357,654 | |||||||||||||||||||||
11/11/2019 | — | — | — | — | 33,195 | (6) | 506,888 | |||||||||||||||||||||
11/11/2019 | — | — | — | — | 66,392 | (7) | 1,013,806 | |||||||||||||||||||||
11/16/2020 | — | — | — | — | 38,824 | (8) | 592,842 | |||||||||||||||||||||
11/16/2020 | — | — | — | — | 51,765 | (9) | 790,452 | |||||||||||||||||||||
11/16/2021 | — | — | — | — | 22,895 | (10) | 349,607 | |||||||||||||||||||||
11/16/2021 | — | — | — | — | 22,895 | (11) | 349,607 | |||||||||||||||||||||
Jacques P. Vachon | 11/06/2013 | (3) | 26,652 | — | 15.66 | 11/06/2023 | — | — | ||||||||||||||||||||
11/12/2018 | — | — | — | — | 5,349 | (4) | 81,679 | |||||||||||||||||||||
11/12/2018 | — | — | — | — | 21,400 | (5) | 326,778 | |||||||||||||||||||||
11/11/2019 | — | — | — | — | 31,091 | (6) | 474,760 | |||||||||||||||||||||
11/11/2019 | — | — | — | — | 62,181 | (7) | 949,504 | |||||||||||||||||||||
11/16/2020 | — | — | — | — | 36,451 | (8) | 556,607 | |||||||||||||||||||||
11/16/2020 | — | — | — | — | 48,601 | (9) | 742,137 | |||||||||||||||||||||
11/16/2021 | — | — | — | — | 21,549 | (10) | 329,053 | |||||||||||||||||||||
11/16/2021 | — | — | — | — | 21,549 | (11) | 329,053 |
1. | The equity awards made to the named executive officers that were outstanding as of December 31, |
2. | The fair market value shown is based on theper-share closing trading price on the NYSE of shares of the |
3. | These awards are fully vested and exercisable. Mr. |
4. | The |
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The 2018 PSU award is unvested until February 28, 2022. The award will become 100% vested on February 28, 2022, with the number of shares paid out dependent on performance conditions as described in the |
The 2019 RSU award vests ratably inone-fourth tranches on December 1 of each calendar |
The 2019 PSU award is unvested until February 28, 2023. The award will become 100% vested on February 28, 2023, with the number of shares paid out dependent on performance conditions as described in the |
8. | The 2020 RSU award vests ratably in one-fourth tranches on December 1 of each calendar year following the year of grant. The first tranche vested on December 1, 2021, leaving December 1, 2022, December 1, 2023, and December 1, 2024, to vest. |
9. | The 2020 PSU award is unvested until February 28, 2024. The award will become 100% vested on February 28, 2024, with the number of shares paid out dependent on performance conditions as described in the CD&A for the 2020 proxy. |
10. | The annual 2021 RSU award vests ratably in one-fourth tranches on December 1 of each calendar year following the year of grant: December 1, 2022, December 1, 2023, December 1, 2024, and December 1, 2025. The initial RSU awards issued to Messrs. Girard and Simon also vest ratably in one-fourth tranches beginning on December 1 of the calendar year following the grant. The first tranche vested on December 1, 2021, leaving December 1, 2022, December 1, 2023, and December 1, 2024, to vest. |
11. | The annual 2021 PSU award is unvested until February 28, 2025. The award will become 100% vested on February 28, 2025, with the number of shares paid out dependent on performance conditions as described in the CD&A. The initial PSU awards issued to Messrs. Girard and Simon will become 100% vested on February 28, 2024. |
Option Exercises and Stock Vested for 20192021
The options that were exercisable in 20192021 were approved upon emergence with aand granted in 2012 through annual equity awards. The options approved on January 9, 2011, grant date, and theNovember 3, 2011, through 2013 annual equity awards. None of the named executive officers exercised options in 2019. Mr. Minguez did not previously receive any options because such grants predated his commencement of employmentexpired on August 1, 2017.January 8, 2021, and November 2, 2021, respectively.
The number of shares acquired on the exercise of options and vesting of outstanding RSUs granted under the 20152017 through 20182020 annual equity awards, and the value realized on the applicable exercise and vesting dates, are set forth in the following table. For the 20152017 annual equity award, the table also includes the number of shares acquired and value realized upon vesting of the PSUs in 2019. As described in the CD&A, Mr. Minguez did not receive an RSU and PSU grant until he became eligible for the LTIP in 2018.2021.
Stock Awards | Option Awards | Stock Awards | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2015 Annual Equity Award | 2016 Annual Equity Award | 2017 Annual Equity Award | 2018 Annual Equity Award | Aggregate number of shares acquired on vesting in 2019 | Aggregate value realized on vesting in 2019 | Number of shares acquired on exercise | Value realized on exercise | 2017 Annual Equity Award | 2018 Annual Equity Award | 2019 Annual Equity Award | 2020 Annual Equity Award | Aggregate number of shares acquired on vesting in 2021 | Aggregate value realized on vesting in 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Number of shares acquired on vesting | Value realized on vesting | Number of shares acquired on vesting | Value realized on vesting | Number of shares acquired on vesting | Value realized on vesting | Number of shares acquired on vesting | Value realized on vesting | Number of shares acquired on vesting | Value realized on vesting | Number of shares acquired on vesting | Value realized on vesting | Number of shares acquired on vesting | Value realized on vesting | Number of shares acquired on vesting | Value realized on vesting | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Remi G. Lalonde | — | $ | — | — | $ | — | 19,562 | $ | 197,112 | 15,738 | $ | 182,718 | 42,480 | $ | 493,193 | 77,780 | $ | 873,023 | (1) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Yves Laflamme | 50,250 | $ | 382,434 | 17,593 | $ | 68,965 | 8,412 | $ | 32,807 | 22,328 | $ | 87,080 | 98,583 | $ | 571,286 | 21,228 | 98,710 | (3) | — | — | — | — | — | — | — | — | — | — | (4) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Remi Lalonde | 14,700 | 111,878 | 5,249 | 20,576 | — | — | 5,953 | 23,218 | 25,902 | 155,672 | (1) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Patrice Minguez | — | — | — | — | — | — | 6,203 | 24,190 | 6,203 | 24,190 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sylvain A. Girard | — | — | — | — | — | — | — | — | 5,250 | 60,953 | 5,250 | 60,953 | (2) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Hugues Simon | — | — | — | — | — | — | — | — | 10,393 | 120,663 | 10,393 | 120,663 | (2) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Richard Tremblay | 50,611 | 385,184 | 17,547 | 68,785 | 8,349 | 32,559 | 5,397 | 21,049 | 81,904 | 507,577 | — | — | 46,862 | 457,498 | 5,856 | 67,990 | 16,599 | 192,714 | 12,941 | 150,245 | 82,258 | 868,447 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jacques Vachon | 43,851 | 333,736 | 15,800 | 61,936 | 7,555 | 29,464 | 4,932 | 19,233 | 72,138 | 444,369 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jacques P. Vachon | 37,064 | 169,753 | (3) | 42,404 | 413,974 | 5,352 | 62,131 | 15,545 | 180,477 | 12,150 | 141,062 | 75,450 | 797,644 |
1. | Under Mr. Lalonde’s February 2018 cash-settled award, he received the |
2. | The amounts shown as vesting for Messrs. Girard and Simon under the 2020 Annual Equity Award column relate to the first tranche of units settled on December 1, 2021, pursuant to the initial RSU award they each received with grant dates of March 2, 2021, and January 4, 2021, respectively. |
3. | Both Messrs. Laflamme and Vachon exercised their options granted on November 8, 2012, to purchase shares at a price of $11.41 per share. Mr. Laflamme exercised his options on May 10, 2021, and Mr. Vachon exercised his options on May 7, 2021. |
4. | During his employment with the company, Mr. Laflamme held both cash-settled and stock-settled RSU awards that remained outstanding as of his February 28, 2021, termination date. Pursuant to his severance agreement and as previously disclosed beginning on page 46 of the Company’s Definitive Proxy Statement on Schedule 14A as filed with the SEC on April 9, 2021, in the table under the heading “Severance and Change in Control Arrangements—Potential Payments Upon Termination” and in footnote 8 to such table, 403,068 units became immediately vested and were settled, in either cash or stock pursuant to the terms of his respective award agreement, using the per-share price on February 28, 2021, of $9.32. |
Annually, the Company,company, through an internal committee, assesses whether any elements of the Company’scompany’s compensation policies and practices encourage excessive and unnecessary risk-taking, and, if so, whether the level of risk encouraged is reasonably likely to have a material adverse effect on the Company.company. The internal committee is composed of the senior vice president and chief financial officer; the senior vice president, corporate affairs and chief legal officer; the senior vice president, human resources; and members of the human resources staff. At inception, Hugessen Consulting provided input into the process and elements to review and provided information on market best practices. The process identified the compensation plans and practices and related key features, assessed the risk related to each of them (taking into account enterprise risk) and compared the plan and practices with market best practices. In 2019,2021, Hugessen Consulting provided updated information on market best practices and the internal committee concluded that no changes to the Company’scompany’s compensation policies and practices were advisable. The compensationHRCNG committee and Hugessen Consulting reviewed and commented on the internal committee’s findings.
Following this review, we believe that the design of our compensation policies and practices encourages employees to remain focused on both our short-term and long-term goals, and the compensation programs are not reasonably likely to have a material adverse effect on the Company.company.
This section describes the accumulated benefits, if any, of each of the named executive officers under Company-sponsoredcompany-sponsored defined benefit pension plans. The table below shows the present value of accumulated benefits, if any, payable to each of the named executive officers, including the number of years of service credited to them under each applicable plan. The benefits were determined using the discount rates and life expectancy assumptions consistent with those used in the Company’scompany’s financial statements.
Pension Benefits for 20192021
Name(1) | Plan Name | Number of Years Credited Service | Present Value of Accumulated Benefit(2) | Payments During Last Fiscal Year | Plan Name | Number of Years Credited Service | Present Value of Accumulated Benefit(2) | Payments During Last Fiscal Year | ||||||||||||||||||||
Remi G. Lalonde | n/a | — | — | — | ||||||||||||||||||||||||
Yves Laflamme | Registered Plan (Canada) | 28.51 | $ | 1,442,965 | $ | — | Registered Plan (Canada) | 28.51 | $ | 1,417,055 | $ | 62,539 | ||||||||||||||||
Supplemental Plan (Canada) | 28.51 | 1,868,015 | — | Supplemental Plan (Canada) | 28.51 | 1,696,713 | 93,025 | |||||||||||||||||||||
Remi Lalonde | n/a | — | — | — | ||||||||||||||||||||||||
Patrice Minguez | n/a | — | — | — | ||||||||||||||||||||||||
Sylvain A. Girard | n/a | — | — | — | ||||||||||||||||||||||||
Hugues Simon | n/a | — | — | — | ||||||||||||||||||||||||
Richard Tremblay | n/a | — | — | — | n/a | — | — | — | ||||||||||||||||||||
Jacques Vachon | Registered Plan (Canada) | 11.58 | 754,050 | — | ||||||||||||||||||||||||
Jacques P. Vachon | Registered Plan (Canada) | 11.58 | 815,477 | — | ||||||||||||||||||||||||
Supplemental Plan (Canada) | 25.50 | 2,855,003 | — | Supplemental Plan (Canada) | 25.50 | 2,726,447 | — |
1. | Messrs. Lalonde, |
2. | The present value of accumulated benefits under the Canadian registered and supplemental pension plans sponsored by Resolute FP Canada Inc. or Resolute is determined based on the assumptions used in the |
The following discussion describes the terms of the pension plans applicable to Messrs. Laflamme and Vachon for service and earnings before January 1, 2011. No other named executive officer has pension benefits accrued under defined benefit pension plans (either registered or the reinstated supplemental plans, both as described below).
Before their pension benefits were frozen as described below, Messrs. Laflamme and Vachon earned benefits under Canadian pension plans that were either registered ornon-registered. A “registered plan”“registered plan” means the plan is intended to be qualified for favorable tax treatment under the Canadian Income Tax Act, or the “Income“Income Tax Act.Act.” In contrast, a “non-registered plan”plan” is not qualified for this favorable tax treatment and provides to a select group of management and highly compensated employees’ additional pension benefits that cannot be provided under the registered plans because of statutory limitations or an overall benefit that is offset by the benefit provided under the registered plan.
Pursuant to the plans of reorganization, thenon-registered plans were terminated and those accumulated benefits were reinstated under newnon-registered plans, “the“the 2010 Canadian DB SERPs,,” for certain participants, including Messrs. Laflamme and Vachon. The reinstated benefits were frozen as to benefit service and earnings (but not vesting service) as of December 31, 2010.
Messrs. Laflamme and Vachon have pension benefits payable under legacy Abitibi Canadian pension plans (now sponsored by Resolute FP Canada Inc. and Resolute Forest Products Inc.). Pension benefits under the 2010 Canadian DB SERPs were frozen for Messrs. Laflamme and Vachon effective December 31, 2010. However, the maximum pension payable from a registered plan under theIncome Tax Act is indexed annually and it impacts what is payable between the 2010 Canadian DB SERPs and the registered plan. The following describes the pension benefits payable under these plans.
The reinstated accrued benefits provided to Messrs. Laflamme and Vachon under the 2010 Canadian DB SERPs are determined pursuant to a traditional pension plan formula based on years of credited service and a percentage of final average compensation. The 2010 Canadian DB SERPs provide an overall pension benefit that is offset by the benefit payable under the registered plans, including any registered plan benefits that have been commuted. The registered plans limit the amount of the pension benefit payable due to statutory constraints.
Pension Formula
These Canadian pension plans generally provide total pension benefits equal to 2% of final average compensation multiplied by years of credited service with the Companycompany and its related entities, up to 35 years of service. As a result of the benefit service freeze described above, the pension benefits for Messrs. Laflamme and Vachon under the 2010 Canadian DB SERPs take into account their years of credited service through December 31, 2010.
Compensation used under the formulas depends on the period for which years of service are credited. For years of credited service through December 31, 2008, final average compensation is the sum of (i) average monthly base salary based on the best 60 consecutive months of base salary within the last 120 months and (ii) the best five annual incentive awards in the last 10 years. For years of credited service after December 31, 2008, final average compensation is the average of the 5 highest consecutive calendar years of eligible earnings in the last 10 years. Eligible earnings in a given calendar year is the sum of the base salary and the incentive award paid under an annual incentive plan (excluding any special incentive awards unless authorized by the Company)company). The paid incentive award component is capped at 125% of the target incentive award of each year.
Beginning January 1, 2009, through December 31, 2010, Messrs. Laflamme and Vachon were required to contribute to the Abitibi registered plan. Their contributions were equal to 5% of their pensionable earnings up to the U.S. compensation limit ($245,000 in 2009 and 2010). Contributions were credited with interest at the average net rate of return of the pension fund of the Abitibi registered plan over the preceding two calendar years.
Once participants attain age 55, they can retire early. The total pension payable is unreduced if the participant retires at age 58 and the sum of his age and years of service is at least 80. Messrs. Laflamme and Vachon are both eligible to retire with unreduced pension benefits.
Time and Form of Payment
The legacy Abitibi Canadian pension plans provide for payment in an annuity with a participant option to select payment among different types of annuities, any of which will provide monthly payments for the life of the participant and his spouse, if any. The Companycompany has secured the Canadian DB SERP benefits of Messrs. Laflamme and Vachon by a letter of credit pursuant to a retirement compensation arrangement without adverse tax consequences to the executive.
Assumptions for Pension Benefits Table Value
The accrued benefit amounts identified in the Pension Benefits table above show the present value of the future monthly payments if calculated as a lump sum. A discount rate and mortality table providing for current life expectancies are used to calculate the present value amount as of December 31, 2019.2021. The discount rate and mortality table used are the same as those used for our financial statements, which are a 2.9%2.8% discount rate and the 2014 Private Sector Canadian Pensioner’s Mortality Table including a decrease of the rates of 5.7%, projected generationally using Scale B, and no assumption forpre-retirement mortality. Benefits were calculated assuming retirement on the date an executive attained age 58 with the sum of his age and years of service equaling at least 80 (or current age, if older). In addition, the final average earnings used for the calculation of the accumulated benefit as of December 31, 2019,2021, as shown in the Pension Benefits table, are: for years of service credited through December 31, 2008, Mr. Laflamme, $314,020$322,791 and Mr. Vachon, $385,051;$395,806; and for years of service credited after December 31, 2008, Mr. Laflamme, $281,066$288,916 and Mr. Vachon, $358,770.$368,790.
Severance and Change in Control Arrangements
The following is a discussion of the policies and arrangements to which a named executive officer becomes subject upon certain termination events, with or without a change in control of the Company.company. During 2019,2021, all named executive officers except Messrs. Laflamme and MinguezMr. Lalonde, were covered by the Company’scompany’s executive severance policy. Mr. Minguez is not eligible for severance pay.
Severance protection for Mr. Laflammethe president and chief executive officer of the company is provided under histhe president and chief executive officer’s individual employment agreement and related documents and, in the case of a termination with a change in control, a separate change in control agreement.
As described in the CD&A, effective at 11:59 PM on February 28, 2021, Mr. Laflamme stepped down and retired from the position of president and chief executive officer. Upon his departure, Mr. Laflamme received certain severance and other benefits provided under his agreements and received full vesting of his outstanding equity awards and remained eligible for a prorated award under the 2021 STIP. In reliance on Item 402(a)(2) of Regulation S-K, the payments and benefits made to Mr. Laflamme in 2021 were previously disclosed beginning on page 46 of the Company’s Definitive Proxy Statement on Schedule 14A as filed with the SEC on April 9, 2021, in the table under the heading “Severance and Change in Control Arrangements—Potential Payments Upon Termination” and in footnote 6 to such table.
In all cases, to be eligible for severance benefits, the named executive officers must agree to certain restrictive covenants intended to mitigate the competitive disadvantage that would result from losing executive talent to competitors of the Company:company:
The executive severance policy requires eligible named executive officers to protect confidential information. In addition, to receive benefits under the executive severance policy, an eligible executive must sign a release containingnon-compete,non-solicitation and confidentiality covenants.
Mr. Laflamme’sThe president and chief executive officer’s employment agreement includes covenants not to compete with the Company,company, solicit customers of the Companycompany or interfere with suppliers of the Companycompany for a12-month period following a termination for any reason, except that these covenants do not apply in the case of a termination without “cause” by the Companycompany or for “good reason” by Mr. Laflammethe president and chief executive officer pursuant to the change in control agreement (as defined thereunder). In addition, a confidentiality covenant is effective for a five-year period following a termination for any reason.
The above covenants remain in place following table describes the material terms of the executive severance policy and the severance provisions of Mr. Laflamme’s employment and change in control agreements (with all descriptions qualified by the actual terms of the policy and agreements).departure.
The executive severance policy, in both a change in control ornon-change in control context, does not provide any enhanced benefits in the form of, for example, subsidized continued health coverage ortax-gross ups. The terms Cause, Change in Control, Good Reason are defined in the respective severance policy or agreement, as applicable. The material terms of the executive severance policy and the severance provisions of Mr. Lalonde’s employment and change in control agreements are as follows, with all descriptions qualified by the actual terms of the policy and agreements.
Key Provisions | Executive Severance Policy | Mr. | ||
Termination Without Cause (No Change in Control) | ||||
Severance pay(1) | • Lump sum payment equal to 6 weeks of eligible pay per year of continuous service, with a minimum of 52 weeks and a maximum of 104 weeks • “Eligible pay” is base pay, plus the lesser of (i) average of last 2 incentive awards paid or (ii) 125% of target incentive award for year of termination • Pro rata vesting of equity awards pursuant to the terms of the award agreements • In addition to severance pay, in accordance with the Short-Term Incentive Plan, for a termination on or after July 1, prorated payment of the incentive award for the year of termination | • Two times eligible pay • “Eligible pay” is base pay, plus the lesser of (i) average of last 2 incentive awards paid or (ii) 125% of target incentive award for year of termination • Pro rata vesting of equity awards pursuant to the terms of the award agreements, except in the case of a good leaver • In addition to severance pay, in accordance with the Short-Term Incentive Plan, for a termination on or after July 1, prorated payment of the incentive award for the year of termination • If Mr. Lalonde’s termination without cause is a good leaver termination, full vesting of equity awards, which shall remain exercisable in accordance with the plan and award agreement, and continued eligibility for grants during a transition period of active employment • “Good leaver” means termination without cause and the executive continues to discharge assigned duties and responsibilities during a transition and succession planning period | ||
Termination Without Cause or for Good Reason On or After Change in Control | ||||
Time period during which change in control benefits are payable | • Eligible termination within 12 months after change in control | • Eligible termination within 24 months after change in control |
Key Provisions | Executive Severance Policy | Mr. Lalonde’s Employment and Change in Control | ||
Severance pay(1) | • Same severance pay as when there is no change in control • In addition to severance pay, in accordance with the Short-Term Incentive Plan, for a termination on or after July 1, pro rata payment of the incentive award of the year of termination | • The following amounts, reduced to minimize excise tax liability under Code Section 4999:(2)
Lump sum payment equal to:
• Immediate vesting of outstanding equity awards • Eligibility for Company-provided health care and life insurance coverage, with premiums payable at the rates then in effect for named executive officers, until the earlier of 36 months after his termination date or the date he becomes covered under another employer’s health care and life insurance programs • In addition to severance pay, in accordance with the Short-Term Incentive Plan, for a termination on or after July 1, prorated payment of the incentive award for the year of termination |
1. | For the named executive officers other than Mr. |
2. | If the aggregate amount of pay and benefits payable to Mr. |
Potential Payments Upon Termination
The table below shows amounts triggered upon the termination events identified below, and does not includewhich excludes amounts that are not payable or otherwise forfeited upon a for cause termination or certainnon-retirement terminations. In
these circumstances, other than legally required amounts such as accrued salary, no additional amounts would be payable and any vested and unvested rights to equity would be forfeited.
Base Salary ($)(1) | Avg. of Last Two STIP Awards ($)(2) | Regular 2019 Cash Incentive Awards ($) | Equity Awards ($)(3) | All Other Compensation ($)(4) | Total Post Termination Payment & Benefit Value ($) | Base Salary ($)(1) | Avg. of Last Two STIP Awards ($)(2) | Non-Equity Incentive Plan Compensation ($) | Equity Awards ($)(3) | All Other Compensation ($)(4) | Total Post Termination Payment & Benefit Value ($) | |||||||||||||||||||||||||||||||||||||
Yves Laflamme | ||||||||||||||||||||||||||||||||||||||||||||||||
Remi G. Lalonde | ||||||||||||||||||||||||||||||||||||||||||||||||
Company initiated (not for cause) termination of employee without a change in control | 1,845,000 | 1,505,746 | 358,668 | 524,105 | (5) | 19,245 | 4,252,764 | 1,452,805 | 699,895 | 913,233 | 1,795,652 | (5) | 19,783 | 4,881,368 | (6) | |||||||||||||||||||||||||||||||||
Company initiated (not for cause) termination of employee with a change in control or good reason termination by employee following a change in control | 2,306,250 | 1,882,183 | 358,668 | 3,303,808 | (6) | 574,904 | 8,425,813 | (7) | 1,816,006 | 874,868 | 913,233 | 8,521,361 | (5) | 342,114 | 12,467,582 | (6) | ||||||||||||||||||||||||||||||||
Retirement | — | — | 358,668 | 1,111,786 | (8) | — | 1,470,454 | — | — | (7) | — | — | — | — | ||||||||||||||||||||||||||||||||||
Death | — | — | 358,668 | 1,075,874 | (9) | — | 1,434,542 | — | — | 913,233 | 4,377,168 | (9) | — | 5,290,401 | ||||||||||||||||||||||||||||||||||
Long-Term Disability | — | — | 358,668 | 1,075,874 | (9) | — | 1,434,542 | — | — | 913,233 | 4,377,168 | (9) | — | 5,290,401 | ||||||||||||||||||||||||||||||||||
Remi Lalonde | ||||||||||||||||||||||||||||||||||||||||||||||||
Sylvain A. Girard | ||||||||||||||||||||||||||||||||||||||||||||||||
Company initiated (not for cause) termination of employee with or without a change in control or good reason termination by employee following change in control | 435,585 | 147,891 | 146,482 | 127,403 | (5) | 19,245 | 876,606 | (7) | 440,244 | — | 485,238 | 93,686 | (5) | 19,783 | 1,038,951 | |||||||||||||||||||||||||||||||||
Retirement | — | — | — | (10) | — | (8) | — | — | — | — | (7) | — | — | — | — | |||||||||||||||||||||||||||||||||
Death | — | — | 146,482 | 222,323 | (9) | — | 368,805 | — | — | 485,238 | 479,311 | (9) | — | 964,549 | ||||||||||||||||||||||||||||||||||
Long-Term Disability | — | — | 146,482 | 222,323 | (9) | — | 368,805 | — | — | 485,238 | 479,311 | (9) | — | 964,549 | ||||||||||||||||||||||||||||||||||
Patrice Minguez | ||||||||||||||||||||||||||||||||||||||||||||||||
Hugues Simon | ||||||||||||||||||||||||||||||||||||||||||||||||
Company initiated (not for cause) termination of employee with or without a change in control or good reason termination by employee following change in control | 452,317 | — | 563,979 | 232,130 | (5) | 19,783 | 1,268,209 | |||||||||||||||||||||||||||||||||||||||||
Retirement | — | — | (7) | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Death | — | — | 563,979 | 791,187 | (9) | — | 1,355,166 | |||||||||||||||||||||||||||||||||||||||||
Long-Term Disability | — | — | 563,979 | 791,187 | (9) | — | 1,355,166 | |||||||||||||||||||||||||||||||||||||||||
Richard Tremblay | ||||||||||||||||||||||||||||||||||||||||||||||||
Company initiated (not for cause) termination of employee with or without a change in control or good reason termination by employee following a change in control | — | — | — | 32,130 | (5) | — | 32,130 | (7) | 475,457 | 366,676 | 504,953 | 1,297,332 | (5) | 5,800 | 2,650,218 | |||||||||||||||||||||||||||||||||
Retirement | — | — | — | 32,130 | (8) | — | 32,130 | — | — | (7) | — | 1,297,332 | (8) | — | 1,297,332 | |||||||||||||||||||||||||||||||||
Death | — | — | — | 127,174 | (9) | — | 127,174 | — | — | 504,953 | 2,553,045 | (9) | — | 3,057,998 | ||||||||||||||||||||||||||||||||||
Long-Term Disability | — | — | — | 127,174 | (9) | — | 127,174 | — | — | 504,953 | 2,553,045 | (9) | — | 3,057,998 |
Base Salary ($)(1) | Avg. of Last Two STIP Awards ($)(2) | Regular 2019 Cash Incentive Awards ($) | Equity Awards ($)(3) | All Other Compensation ($)(4) | Total Post Termination Payment & Benefit Value ($) | Base Salary ($)(1) | Avg. of Last Two STIP Awards ($)(2) | Non-Equity Incentive Plan Compensation ($) | Equity Awards ($)(3) | All Other Compensation ($)(4) | Total Post Termination Payment & Benefit Value ($) | |||||||||||||||||||||||||||||||||||||
Richard Tremblay | ||||||||||||||||||||||||||||||||||||||||||||||||
Jacques P. Vachon(10) | ||||||||||||||||||||||||||||||||||||||||||||||||
Company initiated (not for cause) termination of employee with or without a change in control or good reason termination by employee following a change in control | 382,812 | 286,092 | 136,092 | 431,453 | (5) | 5,800 | 1,242,249 | (7) | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Retirement | — | — | — | (10) | 431,453 | (8) | — | 431,453 | — | — | 471,323 | 3,773,559 | (8) | — | 4,244,882 | |||||||||||||||||||||||||||||||||
Death | — | — | 136,092 | 610,823 | (9) | — | 746,915 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Long-Term Disability | — | — | 136,092 | 610,823 | (9) | — | 746,915 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Jacques Vachon | ||||||||||||||||||||||||||||||||||||||||||||||||
Company initiated (not for cause) termination of employee with or without a change in control or good reason termination by employee following a change in control | 717,058 | 734,680 | 137,794 | 389,546 | (5) | 19,245 | 1,998,323 | (7) | ||||||||||||||||||||||||||||||||||||||||
Retirement | — | — | 137,794 | 656,376 | (8) | — | 794,170 | |||||||||||||||||||||||||||||||||||||||||
Death | — | — | 137,794 | 553,597 | (9) | — | 691,391 | |||||||||||||||||||||||||||||||||||||||||
Long-Term Disability | — | — | 137,794 | 553,597 | (9) | — | 691,391 |
1. |
|
2. | The amounts shown for Messrs. |
3. | The value of RSUs and PSUs is based on theper-share closing trading price on the NYSE of shares of the |
4. | For Mr. |
5. | Assumes one month ofpro rata vesting of pending RSUs awards andpro rata vesting of pending PSUs awards. The number of RSUs and PSUs that would vest upon a termination without cause is as follows: |
Mr. Laflamme | Mr. Lalonde | Mr. Minguez | Mr. Tremblay | Mr. Vachon | Mr. Lalonde | Mr. Girard | Mr. Simon | Mr. Tremblay | Mr. Vachon | |||||||||||||||||||||||||||||||
RSUs | 11,944 | 2,142 | 2,057 | 3,883 | 3,552 | 6,694 | 1,111 | 1,408 | 3,426 | — | ||||||||||||||||||||||||||||||
PSUs | 112,843 | 28,192 | 5,593 | 98,844 | 89,197 | 110,900 | 5,025 | 13,794 | 81,533 | — |
6. |
|
To the extent |
To the extent Mr. Lalonde was subject to U.S. taxation in 2019, he would not have been subject to the change in control excise tax under Section 4999 of the Code. Messrs. Minguez and Tremblay, who were subject to U.S. taxation similarly would not have been subject to the change in control excise tax under Section 4999 of the Code. In no event would they have been entitled togross-up payments in respect of such tax pursuant to the executive severance policy or their individual award agreements.
|
8. | For |
Mr. Laflamme | Mr. Lalonde | Mr. Minguez | Mr. Tremblay | Mr. Vachon | Mr. Lalonde | Mr. Girard | Mr. Simon | Mr. Tremblay | Mr. Vachon | |||||||||||||||||||||||||||||||
RSUs | 109,317 | — | 2,057 | 3,883 | 46,895 | — | — | — | 3,426 | 94,440 | ||||||||||||||||||||||||||||||
PSUs | 155,394 | — | 5,593 | 98,844 | 109,386 | — | — | — | 81,533 | 152,682 |
Mr.Messrs. Lalonde, Girard and Simon would not have been entitled to any equity awards as of December 31, 20192021, because he hasthey have not attained age 55.
9. | For all named executive officers, assumes immediate vesting of the next tranche of RSUs under the |
Mr. Laflamme | Mr. Lalonde | Mr. Minguez | Mr. Tremblay | Mr. Vachon | Mr. Lalonde | Mr. Girard | Mr. Simon | Mr. Tremblay | Mr. Vachon | |||||||||||||||||||||||||||||||
RSUs | 143,317 | 24,742 | 24,686 | 46,590 | 46,612 | 80,326 | 13,327 | 16,892 | 41,118 | |||||||||||||||||||||||||||||||
PSUs | 112,843 | 28,192 | 5,593 | 98,844 | 89,197 | 206,325 | 18,062 | 34,921 | 126,076 |
10. |
|
For 2019, we used the same median employee from 2017 to calculate the ratio,2021, as permittedrequired under Instruction 2 to Item 402(u) of RegulationS-K.S-K, Therewe have not been changesupdated the median employee used to calculate the CEO pay ratio. To identify the median employee, we measured our employee population or to our employee compensation arrangements that we reasonably believe would result in a significant change in the ratio. The median employee used in 2017 remains employed with the Company in the same position.
Our employee population was measured onas of October 1, 2017 and2020, which consisted of approximately 7,5916,899 individuals, split between Canada and the U.S. We have excluded all employees in all other countries as permitted by the SEC rules under the de minimis rule since such employees represent less than 5% of our total employees. The excluded population was comprised of the following: 43 employees from the United Kingdom; 2 from Brazil; 1 from Belgium; 1 from Singapore.Kingdom.
The compensation definition used to determine our median employee was cash compensation — this included base pay, cash incentives, overtime and cash perquisites. For most employees, we used 20162019 cash compensation as reported on 20162019 income tax slips. For employees hired in 2016,2019, but before April 1, 2016,2019, we annualized their 20162019 cash compensation. For all other employees, we annualized their 20172020 year-to-date cash compensation.
To find the median of the annual total compensation of all our employees (other than our CEO), we used a commonly accepted random sampling methodology on our employee population. We conducted our analysis using a sample of 380377 employees (95% confidence interval — and ±5% precision).
Using this methodology, we identified our median employee and calculated the elements of the employee’s annual total compensation for fiscal 20192021 in accordance with the requirements to be in the amount of $75,029.$105,213. With respect to the annual total compensation of our CEO, we used the amount reported in the “Total” column of our 20192021 Summary Compensation Table — $3,812,186.$3,979,605. The ratio of the annual total compensation of our CEO to the median of the annual total compensation of all employees is therefore 5138 to 1.
INFORMATION ON STOCK OWNERSHIP
The following table includes all stock-based holdings, as of March 16, 2020,29, 2022, of: each of our directors and named executive officers; our directors and executive officers as a group; and all those known by us to be beneficial owners of more than five percent of our common stock.
Name and Address of Beneficial Holder | Number of Shares of Common Stock Beneficially Owned | Percent of Class(1) | Number of Shares of Common Stock Beneficially Owned | Percent of Class(1) | ||||||||||||
Fairfax Financial Holdings Limited 95 Wellington Street West, Suite 800 Toronto, Ontario M5J 2N7 Canada | 30,548,190 | (2) | 35.0 | % | 30,548,190 | (2) | 39.8 | % | ||||||||
Donald Smith & Co., Inc. 152 West 57th Street New York, New York 10019 | 4,853,982 | (3) | 5.6 | % | ||||||||||||
Chou Associates Management Inc. 110 Sheppard Avenue, Suite 301, Box 18 Toronto, Ontario M2N 6Y8 Canada | 5,256,960 | (3) | 6.8 | % | ||||||||||||
Dimensional Fund Advisors LP Building One 6300 Bee Cave Road Austin, Texas 78746 | 4,854,000 | (4) | 5.6 | % | 4,477,965 | (4) | 5.8 | % | ||||||||
Chou Associates Management Inc. 110 Sheppard Avenue, Suite 301, Box 18 Toronto, Ontario M2N 6Y8 Canada | 4,571,960 | (5) | 5.2 | % | ||||||||||||
Randall C. Benson | 34,364 | (6) | * | 35,177 | (5) | * | ||||||||||
Suzanne Blanchet | — | (7) | — | 13,300 | (6) | * | ||||||||||
Duncan K. Davies | 3,360 | (7) | * | |||||||||||||
Jennifer C. Dolan | 48,895 | (8) | * | 50,039 | (8) | * | ||||||||||
Richard D. Falconer | 74,369 | (9) | * | |||||||||||||
Sylvain A. Girard | 2,451 | * | ||||||||||||||
Yves Laflamme | 193,216 | (10) | * | 43,033 | (9) | * | ||||||||||
Rémi Lalonde | 53,514 | (11) | * | |||||||||||||
Remi G. Lalonde | 94,730 | (10) | * | |||||||||||||
Bradley P. Martin | 59,999 | (12) | * | 65,101 | (11) | * | ||||||||||
Patrice Minguez | 16,053 | (13) | * | |||||||||||||
Alain Rhéaume | 74,369 | (14) | * | 70,600 | (12) | * | ||||||||||
Michael S. Rousseau | 94,369 | (15) | * | 90,600 | (13) | * | ||||||||||
Richard Tremblay | 190,077 | (16) | * | 140,499 | (14) | * | ||||||||||
Jacques Vachon | 176,342 | (17) | * | |||||||||||||
Directors (including nominees) and executive officers as a group (15 persons) | 1.4 | % | ||||||||||||||
Hugues Simon | 8,441 | (15) | * | |||||||||||||
Jacques P. Vachon | 53,633 | (16) | * | |||||||||||||
Directors (including nominees) and executive officers as a group (18 persons) | 1.3% |
* | Less than 1% |
1. | Based on |
2. | Based on an amended Schedule 13D filed on |
Insurance Company, |
3. | Based on a Schedule 13G filed on |
4. | Based on a Schedule 13G filed on February |
5. |
|
Includes 24,800 shares of common stock acquired in open market purchases and held indirectly through R&J Benson Investments Ltd. and |
6. | Includes 13,300 shares of common stock acquired in open market purchases. |
7. |
|
8. | Includes |
9. | Information as of March 17, 2022. |
10. | Includes 13,245 shares of common stock acquired in open market purchases and |
|
11. | Represents 65,101 vested DSUs. |
Represents 70,600 vested DSUs. |
13. | Represents 70,600 vested DSUs and 20,000 shares of common stock acquired in open market purchases. |
14. | Includes |
Includes |
|
|
Includes |
|
|
|
Item 1 — Vote on the Election of Directors
Composition of the Board
The board fixed the board size at seveneight members; seven of the eight current members of the board are standing for reelection to hold office until the 20212023 annual meeting of stockholders; Richard D. Falconer, having reachedDuncan K. Davies was appointed director by the board as of September 13, 2021, in accordance with the company’s by-laws, and he is standing for election for the first time. The candidacy of Mr. Duncan K. Davies as director and chairman was submitted to the HRCNG committee for review after being highly recommended by a director. After considering Mr. Davies’ industry and other relevant experience and skillset, including his extensive experience as president and chief executive officer in the wood products sector, and after taking into account his interest in joining the board and his willingness to devote the necessary time and effort required to act as chairman of the board and his overall candidacy, the HRCNG committee recommended his nomination to the board and the board accepted such recommendation.
After careful consideration as to the mix of skills, experience and personal characteristics that is desired at the board to ensure optimal performance, the board, in consultation with the HRCNG committee, has decided that it is in the best interest of the company to waive Ms. Dolan’s mandatory retirement at age 75 so that she may stand for reelection exceptionally this year. Ms. Dolan’s breadth of retirement,industry experience, deep knowledge of the business, as well as the diversity characteristics she brings to the board as a woman director are factors that have been considered in this decision. The board has not been nominatedhired a recruitment firm to assist in its renewal process and in particular, in its search forre-election. women nominee candidates with a view to increase women’s representation on the board to 30% by 2024.
Each director nominee has been recommended for election by the human resources and compensation/nominating and governanceHRCNG committee and approved and nominated for election by the board. Each director will hold office until his or her successor has been elected and qualified or until the director’s earlier resignation or removal. Each director nominee has consented to serve if elected. Should any director nominee be unable to stand for election at the annual meeting, proxies will be voted in favor of such other person, if any, recommended by the human resources and compensation/nominating and governanceHRCNG committee and designated by the board.
Pursuant to ourby-laws, as amended in December 2014, if any director nominee fails to receive a majority of the votes cast in an uncontested election of directors, such as the 20202022 annual meeting, that director must promptly tender his or her resignation to the board. The human resources and compensation/nominating and governanceHRCNG committee will make a recommendation to the full board whether or not to accept the resignation. The board will publicly announce its decision regarding a tendered resignation within 90 days from the date the results of the election are certified.
Board Recommendation
The board unanimously recommends a vote FOR the election to the board of each of Randall C. Benson, Suzanne Blanchet, Duncan K. Davies, Jennifer C. Dolan, Yves Laflamme,Remi G. Lalonde, Bradley P. Martin, Alain Rhéaume and Michael S. Rousseau. What follows is biographical information for each nominee and the qualifications considered in nominating each of themcandidate for director to the board. Attendance information for 2021 is also provided for current directors.
Nominees
Randall C. Benson Age: Director since: 2017 Board attendance: 100% Total attendance: 100% | Current Committee(s): | • • Finance (chair) • Environment, Health, Safety and | Attendance 6/6 Attendance 6/6 Attendance 4/4 | |||
Mr. Benson has served on the
He has been the principal of R.C. Benson Consulting Inc. since 1999, providing strategic analysis, management, financial and operational restructuring and recapitalization expertise to companies, including those considered distressed or underperforming. From May 2012 to August 2016, Mr. Benson was alsoCo-Lead of the National Restructuring practice (Canada) at KPMG LLP. In addition, Mr. Benson has experience in finance, operations, sales, and general management gained through various roles he has held in operating companies, including as the chief financial officer of public and private companiesCall-Net Enterprises Inc. (which owned Sprint Canada Inc.) and Beatrice Foods Inc., and as divisional president of Parmalat Canada’s Dairy Group.
Mr. Benson was chair of the board and chair of the audit committee of Advanz Pharma Corp (TSX) until December 31, 2019. He is a member of the advisory board of the Canadian Deposit Insurance Corporation and serves on the board of other private companies.
Director qualifications:
•
• • Public policy/government relations • Human resources & |
Suzanne Blanchet Age: Director since 2019 Board attendance: 100% Total attendance: 100% | Current Committee(s): | • Audit • Finance • Environment, Health, Safety and | Attendance 7/7 Attendance 6/6 Attendance 4/4 | |||
Ms. Blanchet was appointed to the
She spent over 30 years with Cascades Inc., including as senior vice president, corporate development, from 2014 to 2017. From 1997 to 2014, she was president and chief executive officer of Cascades Tissue Group.
Ms. Blanchet is a graduate of the Directors Education Program of the Institute of Corporate Directors and currently serves as a director of
Director qualifications:
• Management/manufacturing/operating experience
• Financial/accounting experience • Governance/compliance/ESG • Human resources & compensation • Public policy/government relations |
Duncan K. Davies Age: 71 Director since: 2021 Chairman Board attendance: 100% Total attendance: 100% | Current Committee(s): | • HRCNG committee • Finance committee | Attendance 2/2 Attendance 1/1 | |||
Mr. Davies was appointed to the board on September 13, 2021, and he is chairman of the board. He was president and chief executive officer and a director of Interfor Corporation (TSX) for nearly 20 years until he stepped down in 2019. Most recently, he served as chief executive officer of Pinnacle Renewable Energy Inc. (TSX) from November 2020 to May 2021 where he also served as director from April 2020 to April 2021. He also previously served as an officer of two other integrated forest products companies, and worked as an investment banker, specializing in forest products activities. Mr. Davies is currently vice chair of the Binational Softwood Lumber Council. He previously served on the Softwood Lumber Board, BC Lumber Trade Council and Canadian Lumber Trade Alliance, where he was involved in industry-wide promotion and trade-related matters involving softwood lumber. Mr. Davies holds a Bachelor of Arts (Economics) from the University of Victoria and a Master of Science (Forestry Economics) from the University of British Columbia. Director qualifications: • Management/manufacturing/operating experience and industry expertise • Financial/accounting experience • Public policy/government relations • Governance/compliance/ESG • Human resources & compensation |
Jennifer C. Dolan Age: Director since: 2013 Board attendance: 100% Total attendance: 100% | Current Committee(s): | • Audit • • Environment, Health, Safety and | Attendance 7/7 Attendance 6/6 Attendance 4/4 | |||
Ms. Dolan has served on the
She retired from The New York Times Company in 2012 after a33-year career, the last ten of which she spent as vice president of forest products, where she managed paper procurement and oversaw its equity investments in two paper mills, including as a member of the board of Donohue Malbaie Inc., while it was a joint venture with the
Director qualifications:
• Management/manufacturing/operating experience
• |
Age: Director since: President and CEO Board attendance: 100% Total attendance: 100% | Mr.
Mr. Lalonde has been with the company since 2009. He previously
Mr. Mr. Lalonde currently serves as
Director qualifications:
• Management/
• Financial/accounting • Governance/compliance/ESG • Public policy/government relations |
Bradley P. Martin Age: Director since: 2012
Board attendance: 100% Total attendance: 100% | Current Committee(s): | • Finance • Environment, Health, Safety and | Attendance 6/6 Attendance 4/4 | |||
Mr. Martin has served on the board since the 2012 annual meeting of stockholders. He was chair of the board until September 13, 2021.
Since March 9, 2012, he has served as vice president for strategic investments with Fairfax Financial Holdings Limited. He had been its vice president and chief operating officer since January 2007, and its corporate secretary since 2002. Before joining Fairfax in 1998, he was a partner with Torys LLP, a leading Canadian business law firm, specializing in mergers and acquisitions and securities law.
Mr. Martin currently serves as a member of the boards of Eurobank Ergasias S.A. (Athens Stock Exchange), AGT Food and Ingredients Inc. (TSX; no longer a public company) and two private companies. He has served in the last five years on the
Director qualifications:
•
• • Human resources & compensation |
Alain Rhéaume Age: Director since: 2010
Total attendance: 100% | Current Committee(s): | • Audit • • Finance | Attendance 7/7 Attendance 6/6 Attendance 6/6 | |||
Mr. Rhéaume has served on the
He is founder and a managing partner at Trio Capital Inc. Until 2005, he was executive vice president and president of Fido, a subsidiary of Rogers Wireless Communications Inc. Previously, Mr. Rhéaume was president and chief operating officer and chief financial officer of Microcell. Previously, Mr. Rhéaume was associate deputy minister of finance from 1987 to 1992 and deputy minister of finance from 1992 to 1996 in the provincial government of Québec.
He currently serves as a director of Boralex Inc. (TSX) and was a director of SNC-Lavalin Group Inc. (TSX)
Director qualifications:
•
• • Public policy/government relations • Governance/compliance/ESG • Human resources & compensation |
Michael S. Rousseau Age: Director since: 2010 Board attendance: 100% Total attendance: 100% | Current Committee(s): | • Audit (chair) • Finance • | Attendance 7/7 Attendance 6/6 Attendance 6/6 | |||
Mr. Rousseau has served on the
He is president and chief executive officer of Air Canada since February 16, 2021. Previously, he was deputy chief executive officer and chief financial officer of Air Canada since January 1,
Mr. Rousseau currently serves on the board of
Director qualifications:
• Management/manufacturing/operating experience
• • Governance/compliance/ESG • Human resources & |
Item 2 — Vote on the Ratification of the Appointment of PricewaterhouseCoopers LLP
The audit committee appointed PricewaterhouseCoopers LLP (“PwC”) as the Company’scompany’s independent registered public accounting firm for the fiscal year ending December 31, 2020.2022. Our organizational documents do not require that our stockholders ratify the appointment of the independent registered public accounting firm, but we do so because we believe it is a matter of good corporate practice. If the stockholders do not ratify the appointment, the audit committee will reconsider whether to retain PwC, but still may retain them. Even if the appointment is ratified, the audit committee may change, in its discretion, the appointment at any time if it determines that it would be in the best interests of our Companycompany and our stockholders to do so.
Audit CommitteePre-Approval of Audit and PermissibleNon-Audit Services
The audit committee’s policy is topre-approve all audit andnon-audit services performed by the Company’scompany’s independent registered public accounting firm, including audit-related, tax and other services. The audit committeepre-approved all audit and permissiblenon-audit services provided by PwC in 2019.2021.
The Company’scompany’s chief financial officer, chief accounting officer (or another officer designated by the board) and the independent registered public accounting firm must submit to the audit committee a request to provide any service that requirespre-approval. Each request must include a statement as to whether the independent registered public accounting firm and the submitting officer view the provision of the requested services as consistent with the SEC’s rules on auditor independence. The request must be sufficiently detailed to enable the audit committee to precisely identify the services requested. The audit committee may delegatepre-approval authority to its chair or one or more other committee members, but not to management. Any committee member with delegated authority must report allpre-approval decisions to the audit committee at its next scheduled meeting.
Other Information
A representative of PricewaterhouseCoopers LLP is expected to be present at the annual meeting, will have the opportunity to make a statement if he or she desires to do so and will be available to respond to appropriate questions from stockholders.
Audit Fees and All Other Fees
Fees paid. The following table contains certain information on the fees paid to PwC for professional services rendered in the years ended December 31, 2019,2021, and 2018,2020, converted from Canadian to U.S. dollars at the average exchange rate in the applicable year.
Fee category | 2019 fees | 2018 fees | 2021 fees | 2020 fees | ||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||
Audit fees | $ | 2,055 | $ | 2,101 | $ | 2,096 | $ | 2,109 | ||||||||||||
Audit-related fees | 181 | 68 | 88 | 74 | ||||||||||||||||
Tax fees | 119 | 50 | 64 | 127 | ||||||||||||||||
All other fees | 86 | 56 | 68 | 84 | ||||||||||||||||
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Total fees | $ | 2,441 | $ | 2,275 | $ | 2,316 | 2,394 | |||||||||||||
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• | Audit fees. Audit fees consist of fees billed for professional services rendered in respect of the audits of annual consolidated financial statements and internal control over financial reporting for the years indicated, review of interim consolidated financial statements included in quarterly reports on Form10-Q and other services provided in connection with statutory and regulatory filings or engagements. |
• | Audit-related fees. Audit-related fees consist primarily of fees for other attestation engagements in respect of the fiscal years indicated. |
• | Tax fees. Tax fees in each of |
• | All other fees. All other fees in each of |
Board Recommendation
The board unanimously recommends a vote FOR ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the 20202022 fiscal year. Unless a contrary choice is specified, proxies solicited by the board will be voted FOR ratification of the appointment.
Item 3 — Advisory Vote to Approve Executive Compensation
Rule14a-21 under the Exchange Act requires that we give our stockholders the ability to cast anon-binding advisory vote on the compensation of our named executive officers. This vote is commonly referred to as the“say-on-pay” vote. At our 2017 annual meeting, a majority of stockholders voted, consistent with the recommendation of the Company’scompany’s board of directors, to hold a stockholder advisory vote on a resolution to approve the compensation of the Company’scompany’s named executive officers annually. Accordingly, we intend to continue to provide annualsay-on-pay votes.
The compensation of our executive officers is based on a design that ties a substantial percentage of an executive’s compensation to the attainment of financial and other performance measures that, the board believes, serve to promote the creation of long-term stockholder value and to position the Companycompany for long-term success. As described more fully in theCompensation Discussion and Analysis section of this proxy statement, the mix of
fixed and performance-based compensation and short-term and long-term incentive awards is designed to enable the Companycompany to attract and retain top quality executive talent while, at the same time, creating a close relationship between performance and compensation. Our human resources and compensation/nominating and governanceHRCNG committee and the board believe that the design of the program and the compensation awarded to our named executive officers thereunder fulfill this objective.
We are asking for stockholder approval of the compensation of our named executive officers, as we have disclosed in this proxy statement in accordance with SEC rules. The compensation disclosures are contained under the headingCompensation Discussion and Analysis, the compensation tables and the narrative discussion accompanying the compensation tables. This vote is not intended to address any specific item of compensation but rather the overall compensation of our named executive officers and the policies and practices described in this proxy statement.
Accordingly, the board is requesting your approval of the followingnon-binding resolution:
RESOLVED, that the Company’scompany’s stockholders approve, on anon-binding advisory basis, the compensation of the Company’scompany’s named executive officers, as disclosed in the proxy statement for this annual meeting pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the 20192021 Summary Compensation Table, the other related tables and the accompanying narrative.
This vote is advisory and therefore not binding on the Company,company, our human resources and compensation/nominating and governanceHRCNG committee, or the board. Nevertheless, the board and human resources and compensation/nominating and governancethe HRCNG committee value the opinions of our stockholders and will review the voting results in connection with their ongoing evaluation of the Company’scompany’s compensation programs.
Board Recommendation
The board unanimously recommends a vote FOR the approval of the Company’scompany’s executive compensation. Unless a contrary choice is specified, proxies solicited by the board will be voted FOR this proposal.
Item 4 — Vote to Approve the First Amendment to the Resolute Forest Products 2019 Equity Incentive Plan
The board of directors adopted the Resolute Forest Products 2019 Equity Incentive Plan (the “2019 Incentive Plan”) on March 28, 2019, and submitted it to our shareholders for their approval at the 2019 annual meeting. The 2019 Incentive Plan was approved by shareholders on May 24, 2019. The 2019 Incentive Plan provides stock-based compensation to employees and consultants of the Company, its subsidiaries and affiliates andnon-employee directors of the Company. Prior to the adoption of the 2019 Incentive Plan, stock-based compensation was provided under the Resolute Forest Products Equity Incentive Plan (the “2010 Incentive Plan”).
The human resources compensation/nominating and governance committee (the “compensation committee”) believes that it is in the best interests of our shareholders to amend the 2019 Incentive Plan to increase the number of authorized shares for issuance and to add a minimum vesting period for stock-settled awards under the 2019 Incentive Plan. The compensation committee adopted a proposed amendment to the 2019 Incentive Plan on March 23, 2020, subject to stockholder approval, which includes the following material changes to the 2019 Incentive Plan (the “First Amendment”):
Increase the number of shares of common stock available under the 2019 Incentive Plan from 3,000,000 shares to 5,300,000 shares; and
Add a minimum vesting schedule of one year for all stock-settled awards granted under the 2019 Incentive Plan.
Under the 2019 Incentive Plan, an aggregate of 3,000,000 shares were authorized and reserved for issuance for awards. As of December 31, 2019, a total of 1,380,647 shares were available for new grants under the 2019 Incentive Plan. As of December 31, 2019, a total of 2,359,499 shares of our common stock remained in the 2010 Incentive Plan, none of which will be available for new grants.
The compensation committee believes that the share increase under the proposed First Amendment is necessary in order to continue providing incentives to Company employees, including executive officers, and to ensure that the Company has a sufficient number of shares reserved under the 2019 Incentive Plan to make future grants of awards in light of current share price conditions. In order to attract and retain desired employees, the Company is committed to providing a significant portion of employees’ pay at risk through the use of stock-settled shares. The compensation committee believes that these objectives are aligned with the Company’s pay philosophy and stockholder interests, and provides a sense of real-share ownership for employees. In considering the proposed First Amendment, the compensation committee noted that the Company had repurchased 4.8 million shares of common stock in 2019 under its share repurchase program.
In addition, the proposed First Amendment would amend the 2019 Incentive Plan to have a one year minimum vesting schedule for all stock-settled awards granted under the 2019 Incentive Plan. The one year minimum vesting schedule would formalize the Company’s past and current vesting practice in relation to stock-settled equity awards.
If approved by stockholders, the proposed First Amendment will become effective on May 12, 2020 (the “Effective Date”). A copy of the proposed First Amendment is attached as Appendix A hereto. The following is a summary of the material features of the 2019 Incentive Plan. A copy of the 2019 Incentive Plan was filed as Appendix A to the Company’s definitive Proxy Statement on Schedule 14A as filed with the Securities and Exchange Commission on April 10, 2019 and is incorporated herein by reference.
With respect to the First Amendment to the 2019 Incentive Plan, we have been advised by the Toronto Stock Exchange (“TSX”) that we are entitled to rely on an exemption from the various requirements of the TSX Company Manual relating to security based compensation arrangements since we are an “Eligible Interlisted Issuer” as defined in Section 602.1 of the TSX Company Manual.
Annual Limits
As a part of good governance and despite the elimination of the performance based compensation exception for deductibility under Section 162(m) of the Code, the 2019 Incentive Plan provides for the following limits on the number of shares that may be granted to any one individual per award per calendar year (except as noted):
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Outstanding Awards
As of December 31, 2019, 1,380,647 shares were available for new grants under our 2019 Incentive Plan. The table below presents the number of shares, including dividend equivalents, which were subject to various outstanding equity awards at December 31, 2019 under our 2019 Incentive Plan and the 2010 Incentive Plan, both of which are equity compensation plans approved by stockholders.
Plan | (a) Number of securities to be issued upon exercise of outstanding options, warrants and rights | (b) Weighted-average exercise price of outstanding options, warrants and rights | (c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in (a)) | |||||||||
2019 Incentive Plan | — | — | 1,380,647 | |||||||||
2010 Incentive Plan | 959,399 | $ | 16.08 | 2,359,499 | * | |||||||
Total | 959,399 | — | 3,740,146 |
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Administration
The compensation committee (or such other committee designated by the board of directors to administer the 2019 Incentive Plan) has full and exclusive discretionary authority to operate, manage and administer the 2019 Incentive Plan in accordance with its terms. This authority includes, but is not limited to, determining eligibility, award recipients, all terms and conditions of awards and related award agreements, achievement of any performance goals, and waiver of any terms or acceleration of vesting.
The compensation committee’s decisions and actions concerning the 2019 Incentive Plan will be final and conclusive. Within the limitations of the 2019 Incentive Plan and applicable law, the compensation committee may delegate its responsibilities. Any action or determination specifically affecting or relating to an award granted to anon-employee director shall be taken, or approved or ratified, by the board of directors or the compensation committee.
Eligibility
Employees of the Company, its subsidiaries and affiliates as well asnon-employee directors of the Company are eligible to receive awards under the 2019 Incentive Plan. At present, it is not possible to specify the benefits that would be received under the proposed First Amendment by employees andnon-employee directors if the proposed First Amendment is approved by the stockholders.
Restricted Stock and Restricted Stock Units
Restricted stock awards are shares of our common stock that are awarded to a participant subject to the satisfaction of the terms and conditions established by the compensation committee. Until the applicable restrictions lapse, shares of restricted stock are subject to forfeiture and may not be sold, assigned, pledged or otherwise disposed of by the participant who holds those shares. Restricted stock units are denominated in units of shares of our common stock, except that no shares are actually issued to the participant on the grant date. When a restricted stock unit award vests, the participant is entitled to receive shares of our common stock, a cash payment based on the value of shares of our common stock or a combination of shares and cash, as set out in the Award Agreement. Vesting of restricted stock awards and restricted stock units may be based on continued employment or service or other conditions established by the compensation committee. Under the proposed First Amendment, stock-settled restricted stock units would be subject to a minimum vesting period of one year. The number of shares of restricted stock and/or restricted stock units granted to a participant will be determined by
the compensation committee subject to the annual limits described above under the caption “Share Reserve and Annual Limits”. The terms and conditions, including vesting conditions, will be established by the compensation committee when the award is made.
Performance Stock Units and Performance Shares
Performance stock units and performance shares granted to a participant are amounts credited to a bookkeeping account established for the participant. A performance stock unit has an initial value that is established by the compensation committee at the time of its grant. A performance share has an initial value equal to the fair market value of a share of our common stock on the date of grant. Whether a performance stock unit or performance share award actually will result in a payment to a participant will depend upon the extent to which performance goals or other conditions established by the compensation committee are satisfied over a performance period of at least 12 months. After a performance stock unit or performance share award has vested, the participant will be entitled to receive a payout of cash, shares of our common stock or a combination thereof, as determined by the compensation committee. Under the proposed First Amendment, performance stock units would be subject to a minimum vesting period of one year. The number of performance stock units and performance shares granted to a participant will be determined by the compensation committee subject to the annual limits described above under the caption “Share Reserve and Annual Limits”. The terms and conditions, including vesting conditions, will be established by the compensation committee when the award is made.
Other Equity-Based
The compensation committee may grant to participants other equity-based awards under the 2019 Incentive Plan, which are valued in whole or in part by reference to, or otherwise based on, shares of our common stock, excluding stock options and stock appreciation rights. The form of any other equity-based awards will be determined by the compensation committee, and may include a grant or sale of unrestricted shares of our common stock. Other equity-based awards may be paid in shares of our common stock or cash, according to the award agreement. The number of shares of our common stock related to another equity-based award will be determined by the compensation committee subject to the annual limits described above under the caption “Share Reserve and Annual Limits.” Under the proposed First Amendment, other equity-based awards would be subject to a minimum vesting period of one year. The terms and conditions, including vesting conditions, will be established by the compensation committee when the award is made.
Change in Control
Under the 2019 Incentive Plan, the board retains the discretion to determine a different treatment upon a change in control. Absent a determination, awards will not automatically vest upon a change in control.
Termination of Employment
Under the 2019 Incentive Plan, the compensation committee will determine and provide in the applicable award agreement the effect, if any, on an award of the occurrence of the award holder’s termination of employment or service from the Company. In determining whether a termination occurs and unless the Committee determines otherwise, if there is a Company transaction, such as a sale orspin-off of a division or subsidiary that employs a participant, the participant’s employment shall terminate for purposes of any outstanding awards.
Transferability of Awards
During the lifetime of the holder of an award under the 2019 Incentive Plan, the award will be exercisable only by the holder. In general, unvested restricted stock and other awards under the 2019 Incentive Plan generally may not be sold or otherwise transferred except by will or the laws of descent and distribution.
Changes in Capital
In the event of any corporate event or transaction (including, but not limited to, a change in the shares of the Company or the capitalization of the Company) such as a merger, consolidation, reorganization, recapitalization, separation, partial or complete liquidation, stock dividend, stock split, reverse stock split, split up,spin-off, or other distribution (whether in the form of cash or stock), combination of shares, exchange of shares, dividend in kind, or other like change in capital structure, number of outstanding shares, or distribution (other than normal and special cash dividends) to shareholders of the Company, or any similar corporate event or transaction, or in the event of unusual or nonrecurring events affecting the Company or the financial statements of the Company or of changes in applicable laws, regulations, or accounting principles, the compensation committee, in order to prevent dilution or enlargement of participants’ rights under this Plan, shall substitute or adjust, as applicable, the number and kind of shares that may be granted under this Plan or under particular forms of awards, the number and kind of shares subject to outstanding awards, the annual award limits, and other value determinations applicable to outstanding awards; provided, however that the number of shares subject to any award shall always be a whole number. The compensation committee, in its discretion, shall determine the methodology or manner of making such substitution or adjustment.
Amendment and Termination
The compensation committee may amend, alter, suspend or terminate the 2019 Incentive Plan; except that no amendment will be made without stockholder approval if such stockholder approval is required by law, regulation, or a stock exchange rule. The proposed First Amendment requires stockholder approval.
The compensation committee may amend outstanding awards. However, no amendment or termination of the 2019 Incentive Plan or amendment of outstanding awards may adversely affect in any material way any award previously granted without the award holder’s written consent, unless the board of directors or the compensation committee determines that the amendment is necessary or advisable to comply with laws, regulations, rules or accounting standards.
Forfeiture Events
The compensation committee shall have the authority to determine that a participant’s rights, payments and benefits with respect to any award shall be subject to reduction, cancellation, forfeiture or recoupment in the event of certain terminations of employment or detrimental activity. Certain participants may be required to reimburse us for the amount of any payment in settlement of an award if we are required to prepare an accounting restatement due to our material noncompliance with any financial reporting requirement under the securities laws. Awards may also be subject to recoupment or clawback as may be required by applicable law, or any applicable recoupment or “clawback” policy adopted by us, as may be amended from time to time.
Tax Withholding Obligations
The 2019 Incentive Plan authorizes us to withhold all applicable taxes from any award or payment under the 2019 Incentive Plan and to take other actions necessary or appropriate to satisfy those tax obligations.
Certain Federal Income Tax Consequences
The following is a brief summary of certain significant United States Federal income tax consequences, under the Code, as in effect on the date of this summary, applicable to us and participants in connection with awards under the 2019 Incentive Plan. This summary assumes that all awards will be exempt from, or comply with, the rules under Section 409A of the Code regarding nonqualified deferred compensation. If an award constitutes nonqualified deferred compensation and fails to comply with Section 409A of the Code, the award will be subject to immediate taxation and tax penalties in the year the award vests. This summary is not intended to be
exhaustive, and, among other things, does not describe state, local ornon-United States tax consequences, or the effect of gift, estate or inheritance taxes.
Restricted Stock.A participant will not recognize any taxable income upon the award of shares of restricted stock which are not transferable and are subject to a substantial risk of forfeiture. Generally, the participant will recognize taxable ordinary income at the time those shares first become transferable or are no longer subject to a substantial risk of forfeiture, in an amount equal to the fair market value of those shares when the restrictions lapse. However, a participant may elect to recognize taxable ordinary income upon the award date of restricted stock based on the fair market value of the shares of our common stock subject to the award on the date of the award. If a participant makes that election, any dividends paid with respect to that restricted stock will not be treated as compensation income, but rather as dividend income, and the participant will not recognize additional taxable income when the restrictions applicable to his or her restricted stock award lapse. Assuming compliance with the applicable tax withholding and reporting requirements, we will be entitled to a tax deduction equal to the amount of ordinary income recognized by a participant in connection with his or her restricted stock award in our taxable year in which that participant recognizes that ordinary income.
Restricted Stock Units.The granting of restricted stock units does not result in taxable income to the recipient of a restricted stock unit or a tax deduction for us. The amount of cash paid or the then-current fair market value of our common stock received upon settlement of the restricted stock units is taxable to the recipient as ordinary income and deductible by us.
Performance Stock Units, Performance Shares and Other Awards.The granting of a performance stock unit, performance share, other equity-based award or dividend equivalent right generally should not result in the recognition of taxable income by the recipient or a tax deduction by us. The payment or settlement of a performance stock unit, performance share, other equity-based award or dividend equivalent right should generally result in immediate recognition of taxable ordinary income by the recipient equal to the amount of any cash paid or the then-current fair market value of the shares of our common stock received, and a corresponding tax deduction by us. If the shares covered by the award are not transferable and subject to a substantial risk of forfeiture, the tax consequences to us and the participant will be similar to the tax consequences of restricted stock awards, described above. If the award consists of unrestricted shares of our common stock, the recipient of those shares will immediately recognize as taxable ordinary income the fair market value of those shares on the date of the award, and we will be entitled to a corresponding tax deduction.
Section 162(m).Under Section 162(m) of the Code, we will be limited as to federal income tax deductions to the extent that total annual compensation in excess of $1 million is paid to our chief executive officer or any “covered employee” within the meaning of Section 162(m) (generally the three highest paid executives other than the chief executive officer and chief financial officer). With the elimination of the performance-based compensation exception, deductions for any new grants issued under the 2019 Incentive Plan will be limited by Section 162(m).
Section 280G.Under certain circumstances, accelerated vesting, exercise or payment of awards under the 2019 Incentive Plan in connection with a “change of control” of the Company might be deemed an “excess parachute payment” for purposes of the golden parachute payment provisions of Section 280G of the Code. To the extent it is so considered, the participant holding the award would be subject to an excise tax equal to 20% of the amount of the excess parachute payment, and we would be denied a tax deduction for the excess parachute payment.
New Plan Benefits
The 2019 Incentive Plan gives the compensation committee (or in the case ofnon-employee directors, the board of directors or the compensation committee) discretion to determine which employees of the Company, its subsidiaries or affiliates andnon-employee directors of the Company will receive awards under the 2019 Incentive Plan. Because of this discretion element, it is not possible at present to specify the persons to whom
awards will be granted in the future or the amounts and types of individual grants if the proposed First Amendment is approved by stockholders. See the “Grants of Plan-Based Awards” table on page 36 for a description of the incentive equity awards made to our NEOs during the year ended December 31, 2019 under the 2019 Incentive Plan.
Board Recommendation
The board of directors unanimously recommends a vote FOR the approval of the proposed First Amendment to the Resolute Forest Products 2019 Equity Incentive Plan.
The audit committee of the board of directors oversees our financial reporting, internal controls and audit function process on behalf of the board. The Company’scompany’s management is responsible for the financial statements and for maintaining effective internal control over financial reporting.
In carrying out its oversight responsibilities, the audit committee has reviewed and discussed with management and PricewaterhouseCoopers LLP the audited financial statements for the year ended December 31, 2019.2021. The audit committee has discussed with PricewaterhouseCoopers LLP the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board, or the “PCAOB.” The audit committee has received from PricewaterhouseCoopers LLP the written disclosures and the letter required by the applicable requirements of the PCAOB regarding the independent auditors’ communications with the audit committee concerning independence, and the audit committee has discussed with PricewaterhouseCoopers LLP the firm’s independence.
Based on the review and discussions referred to above, the audit committee recommended to the board that the audited financial statements for the year ended December 31, 2019,2021, be included in the Company’s 2019company’s 2021 annual report on Form10-K for filing with the SEC.
Suzanne Blanchet
Jennifer C. Dolan
Richard D. Falconer
Alain Rhéaume
Michael S. Rousseau (chair)
DELINQUENT SECTION 16(A)16(A) REPORTS
Section 16(a) of the Exchange Act requires the Company’scompany’s directors, executive officers and 10% stockholders to file reports of holdings and transactions in common stock with the SEC. Those persons are also required to furnish the Companycompany with copies of all section 16(a) reports they file, which we post on our website atresolutefp.mediaroom.com/sec-filings.
As a practical matter, the Companycompany assists its directors and officers by monitoring transactions and completing and filing section 16 reports on their behalf. Based on a review of the copies of such reports and on written representations from the Company’scompany’s directors and executive officers, the Companycompany believes that all section 16(a) filing requirements applicable to the Company’scompany’s directors, executive officers and stockholders were complied with during the most recent fiscal year, except that the Form 4 filings for Yves Laflamme, Remi Lalonde, Richard Tremblay, Jacques Vachon, John Lafave and Daniel Ouellet that should have been filed no later than February 1, 2019 indicating the vesting of previously awarded PSU following the determination by the board on January 30, 2019 of the performance criteria, were inadvertently filed late on March 30, 2019, at the time of their settlement in common stock.year.
CHOMPENSATIONRCNG COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the individuals who served as members of the human resources and compensation/nominating and governanceHRCNG committee during 20192021 was an officer or employee of the Companycompany during 20192021 or at any time in the past nor had reportable transactions with the Company.company. During 2019,2021, none of the Company’scompany’s executive officers served on the board of directors or compensationcompensation/nominating and governance committee of any other entity that had an executive officer serving as a member of the Company’scompany’s board of directors or compensation/nominating and governanceHRCNG committee.
There is no other matter that the board currently intends to present, or has reason to believe others will present, at the annual meeting. If other matters come before the meeting, the persons named in the accompanying form of proxy will vote on them in accordance with their best judgment.
STOCKHOLDER PROPOSALS FOR INCLUSION IN NEXT YEAR’S PROXY
To be considered for inclusion in next year’s proxy statement, stockholder proposals submitted in accordance with the SEC’s Rule14a-814a- 8 must be received at our principal executive offices no later than the close of business on December 3, 2020.15, 2022. Proposals should be addressed to the corporate secretary, Resolute Forest Products Inc., 111 Robert-Bourassa Boulevard,1010 De La Gauchetière Street West, Suite 5000,400, Montreal, Quebec, H3C 2M1,H3B 2N2, Canada.
STOCKHOLDER PROPOSALS FOR 20212023 ANNUAL MEETING
Ourby-laws require that any stockholder proposal that is not submitted for inclusion in next year’s proxy statement under SEC Rule14a-814a- 8 but instead is sought to be presented directly at the 20212023 annual meeting be made by way of a “notice of business,” as further described in theby-laws. To be timely, the notice of business must be delivered personally or mailed to, and received at, our principal executive offices, addressed to the corporate secretary, by no earlier than 90 days and no later than 60 days before the first anniversary of the date of the prior year’s annual meeting of stockholders. Accordingly, a notice of business must be received no earlier than February 11, 202126, 2023, and no later than March 13, 2021.28, 2023. The notice of business should be addressed to the corporate secretary, Resolute Forest Products Inc., 111 Robert-Bourassa Boulevard,1010 De La Gauchetière Street West, Suite 5000,400, Montreal, Quebec, H3C 2M1,H3B 2N2, Canada.
We will furnish, without charge to a stockholder, a copy of the annual report on Form10-K (including the financial statements and financial schedules incorporated by reference therein but not including the exhibits, which are available upon payment of a reasonable fee) for the year ended December 31, 2019,2021, filed with the SEC. A copy of the report can be obtained upon written request to the Companycompany at Corporate Secretary, Resolute Forest Products Inc., 111 Robert-Bourassa Boulevard,1010 De La Gauchetière Street West, Suite 5000,400, Montreal, Quebec, H3C 2M1,H3B 2N2, Canada. The annual report on Form10-K and all of the Company’scompany’s filings with the SEC can be accessed through our website atresolutefp.mediaroom.com/sec-filings.
Appendix A — First Amendment to the Resolute Forest Products 2019 Equity Incentive Plan
FIRST AMENDMENT TO THE
RESOLUTE FOREST PRODUCTS 2019 EQUITY INCENTIVE PLAN
The Resolute Forest Products 2019 Equity Incentive Plan (the “Plan”), as established by Resolute Forest Products Inc. (the “Company”), is hereby amended as follows, pursuant to a resolution adopted by the Human Resources and Compensation/Nominating and Governance Committee of the Board of Directors of the Company on March 23, 2020 and the authority retained in Section 14 of the Plan.
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“(d) determine the terms and conditions of Awards,provided that any Award (other than a cash settled only Award) granted under the Plan shall have a minimum vesting period of one year following the Grant Date of any such Award;”
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“(a) The Shares with respect to which Awards may be made under the Plan shall be Shares currently authorized but unissued or, to the extent permitted by applicable law, currently held or acquired by the Company as treasury Shares, including Shares purchased in the open market or in private transactions or a combination of the foregoing. Subject to adjustment in accordance with Section 4.3, no more than 5,300,000 Shares shall be available for the grant of Awards under the Plan (the “Total Share Reserve”).”
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IN WITNESS WHEREOF, the Company has caused this First Amendment to be executed by a duly authorized officer this 23rd day of March, 2020.
ANNUAL MEETING OF STOCKHOLDERS OF RESOLUTE FOREST PRODUCTS INC. May 12, 2020 PROXY VOTING INSTRUCTIONS Access “ “ and follow the on-screen instructions or scan the QR code with your smartphone. Have your proxy card available when you access the web page. Vote online until 11:59 PM EST the day before the meeting. MAIL - Sign, date and mail your proxy card in the envelope provided as soon as possible. AT THE MEETING - You may vote your shares by attending the Annual Meeting online and following the instructions posted at https://web.lumiagm.com/172118479 E-CONSENT - e-Consent makes it easy to go paperless.27, 2022 With e-Consent, you can quickly access your proxy material, statements and other eligible documents online. Enroll today via www.astfinancial.com to enjoy online access. COMPANY NUMBER ACCOUNT NUMBER NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL: The Noticenotice of Meeting, Proxy Statementmeeting, proxy statement and Proxy Cardproxy card are available at http:https://www.astproxyportal.com/ast/RFP_EN Please sign, date and mail your proxy card in the envelope provided as soon as possible. Please detach along perforated line and mail in the envelope provided IF you are not voting via the Internet.provided. 00003333333333001000 4 051220052722 THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” ALL THE NOMINEES LISTED AND “FOR” PROPOSALS 2 – 4.3. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x[X] The annual meeting is being heldof stockholders will be conducted on Friday, May 27, 2022, at 8:00 a.m. (Eastern) both online duethrough a virtual web conference at https://web.lumiagm.com/295854943 and in person at the Montreal Marriott Chateau Champlain, located at 1050 de La Gauchetière Street West, Montreal, Quebec, H3B 4C9, Canada, subject to public health restrictions relating to the emerging public health impactCOVID-19 pandemic at the time of the coronavirus outbreak (COVID-19). Stockholders of record as of March 16, 2020 will be able to attend and participate in the annual meeting online by accessing https://web.lumiagm.com/172118479.meeting. Please monitor our annual meeting website at www.resolutefp.com/Investors for any further updates regarding our online annual meeting. To Joinjoin the annual meeting online, you will need to have your 11-digit control number, which is included on this Noticethe notice of Internet Availabilityinternet availability and proxy card. JOHN SMITH 1234 MAIN STREET APT. 203 NEW YORK, NY 10038card, and the following password: resolute2022. Stockholders attending the meeting in person must bring an acceptable form of identification. To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method. 1. Election of Directors: NOMINEES: FOR AGAINST ABSTAIN Randall C. Benson [ ] [ ] [ ] Suzanne Blanchet [ ] [ ] [ ] Duncan K. Davies [ ] [ ] [ ] Jennifer C. Dolan Yves Laflamme[ ] [ ] [ ] Remi G. Lalonde [ ] [ ] [ ] Bradley P. Martin [ ] [ ] [ ] Alain Rhéaume [ ] [ ] [ ] Michael S. Rousseau [ ] [ ] [ ] 2. Ratification of PricewaterhouseCoopers LLP appointment. [ ] [ ] [ ] 3. Advisory vote to approve executive compensation (“say-on-pay”). 4. Vote to approve the First Amendment to the Resolute Forest Products 2019 Equity Incentive Plan. MARKK”X” [ ] [ ] [ ] MARK “X” HERE IF YOU PLAN TO ATTEND THE MEETING. [ ] Signature of ShareholderStockholder Date: Signature of ShareholderStockholder Date: Note: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.
0[ ] RESOLUTE FOREST PRODUCTS INC. Proxy for Annual Meeting of ShareholdersStockholders on May 12, 202027, 2022 Solicited on Behalf of the Board of Directors Yves Laflamme, Remi G. Lalonde, Sylvain A. Girard and Jacques P. VachonStephanie Leclaire (the “Proxies”), or any of them, each with the power of substitution, are hereby authorized to represent and vote the shares of the undersigned, with all the powers which the undersigned would possess if personally present, at the Annual Meeting of ShareholdersStockholders of Resolute Forest Products Inc. to be held both online through a virtual web conference at https://web.lumiagm.com/172118479295854943 and in person at the Montreal Marriott Chateau Champlain, located at 1050 De La Gauchetière Street West, Montreal, Quebec, H3B 4C9, Canada (subject to public health restrictions relating to the COVID-19 pandemic at the time of the meeting), on May 12, 202027, 2022 at 9:8:00 a.m. (Eastern Time) or at any postponement or adjournment thereof. Shares represented by this proxy will be voted as directed by the stockholder on the reverse side of this proxy card. If no such directions are indicated, the Proxies will have authority to vote FOR the election of the Board of Directors and FOR items 2-4.2-3. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. 1.1 (Continued and to be signed on the reverse side) 1.1 14475