Essendant (ESND) DEF 14A Definitive proxy

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No.     )

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¨ Preliminary Proxy Statement

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x Definitive Proxy Statement

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¨ Soliciting Material under Rule 14a-12

ESSENDANT INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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Essendant Inc.

One Parkway North Boulevard

Deerfield, Illinois 60015

April 13, 2016

Dear Stockholder:

On behalf of the Board of Directors and management of Essendant Inc., I cordially invite you to attend the 2016 Annual Meeting of Stockholders. The Annual Meeting will be held on Wednesday, May 25, 2016, at 2:00 p.m. Central Time, at the Company’s offices located at One Parkway North Boulevard, Deerfield, Illinois.

At this year’s Annual Meeting, the matters to be considered by stockholders are the election of three Class III directors to serve for a three-year term expiring in 2019, the ratification of the selection of the Company’s independent registered public accounting firm for 2016, an advisory vote on executive compensation and the transaction of such other business as may properly come before the meeting. The Board of Directors has unanimously recommended a vote “FOR” election of the nominees named in the accompanying Proxy Statement, “FOR” ratification of the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm, and “FOR” approval of our executive compensation.

Whether or not you plan to attend the Annual Meeting, we encourage you to read the accompanying Proxy Statement and vote promptly. To ensure that your shares are represented at the meeting, we recommend that you submit a proxy to vote your shares through the Internet by following the instructions set forth in the Notice of Internet Availability of Proxy Materials. You may also vote by telephone or mail by requesting a paper copy of the proxy materials, which will include a proxy card with instructions on how to vote. The Notice of Internet Availability of Proxy Materials contains instructions on how to request paper copies of the proxy materials. This way, your shares will be voted even if you are unable to attend the meeting. This will not, of course, limit your right to attend the meeting or prevent you from voting in person at the meeting if you wish to do so.

Your Directors and management look forward to personally meeting those of you who are able to attend.

Sincerely yours,

Charles K. Crovitz

Chairman of the Board

Essendant Inc.

One Parkway North Boulevard

Deerfield, Illinois 60015

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

Date:	Wednesday, May 25, 2016, at 2:00 p.m. Central Time
Location:	Company’s offices located at One Parkway North Boulevard, Deerfield, Illinois
Items of Business:	1.	To elect three Class III directors to serve for a three-year term expiring in 2019;
	2.	To ratify the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2016;
	3.	To cast an advisory vote on executive compensation; and
	4.	To transact such other business as may properly come before the meeting or any adjournments or postponements thereof.

The Board of Directors has unanimously recommended a vote “FOR” election of the nominees, “FOR” ratification of the selection of the independent registered public accounting firm, and “FOR” approval of our executive compensation.

The record date for the Annual Meeting is the close of business on Monday, March 28, 2016. Only stockholders of record as of that time and date are entitled to notice of, and to vote at, the meeting. Record holders of the Company’s Common Stock as of the record date may submit their proxies by following the voting instructions set forth in the Notice of Internet Availability of Proxy Materials.

By Order of the Board of Directors,

Eric A. Blanchard

Secretary

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS

FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY 25, 2016

The proxy statement and Form 10-K are available at

essendant.com/proxymaterials

TABLE OF CONTENTS

Table of Contents

	Page
Proxy and Voting Information		5
Proposal 1: Election of Directors		9
General		9
Director Nominees		10
Continuing Directors		11
Governance and Board Matters		14
Corporate Governance Principles		14
Code of Conduct		14
Board Independence		14
Board Leadership Structure		15
Board Diversity		15
Board’s Role in Risk Management		16
Executive Sessions		16
Self-Evaluation		16
Board Meetings and Attendance		17
Board Committees		17
Consideration of Director Nominees		20
Communications with the Board and Annual Meeting Attendance		21
Executive Compensation		22
Compensation Discussion and Analysis		24
Human Resources Committee Report		42
Summary Compensation Table		43
Grants of Plan-Based Awards During 2015		45
Outstanding Equity Awards at December 31, 2015		47
Option Exercises and Stock Vested in 2015		48
Retirement Benefits		48
Pension Benefits in 2015		49
Non-qualified Deferred Compensation in 2015		49
Employment Contracts and Employment Termination and Change of Control Arrangements		50
Potential Post-Employment Payments		54
Director Compensation		58
General		58
Cash Compensation		58
Deferred Compensation		58
Equity Compensation		59
2015 Director Compensation Table		59
Directors’ Outstanding Option and Stock Awards at December 31, 2015		60
Equity Compensation Plan Information		61
Overview		61
Compensation Committee Interlocks and Insider Participation		62

  2016 PROXY STATEMENT       

TABLE OF CONTENTS

	Page
Voting Securities and Principal Holders		63
Security Ownership of Certain Beneficial Owners		63
Security Ownership of Management		64
Section 16(a) Beneficial Ownership Reporting Compliance		64
Report of the Audit Committee		65
The Audit Committee		65
Audit Committee Charter and Responsibilities		65
Audit Committee Report		66
Certain Relationships and Related Party Transactions		67
Related Person Transaction Approval Policy		67
Proposal 2: Ratification of Selection of the Company’s Independent Registered Public Accounting Firm		68
General		68
Fee Information		68
Audit Committee Pre-Approval Policy		69
Proposal 3: Advisory Vote on Executive Compensation		70
Stockholder Proposals		71
Deadline for Inclusion in Proxy Statement		71
Deadline for Notice of Other Stockholder Proposals/Director Nominations		71
Other Business		72
APPENDIX A – Reconciliation Of Non-GAAP Financial Measures to GAAP Financial Measures		A-1

          2016 PROXY STATEMENT  

PROXY SUMMARY

Proxy Summary

This summary highlights selected information that is provided in more detail throughout this Proxy Statement. This summary does not contain all of the information you should consider before voting, and you should read the full Proxy Statement before casting your vote.

Annual Meeting Information
Date	May 25, 2016
Time	2:00 p.m. Central Time
Location	Company’s offices located at One Parkway North Boulevard, Deerfield, Illinois
How to Vote
•    By Internet	Access www.proxyvote.com
•    By Telephone	You must request a paper copy of the proxy materials, which will include a proxy card with instructions on how to vote by telephone.
•    By Mail	You must request a paper copy of the proxy materials, which will include a proxy card with instructions on how to vote by mail.
•    In Person	Attend the Annual Meeting and vote

Additional information about the Annual Meeting and voting can be found beginning on page 5.

  2016 PROXY STATEMENT            1  

PROXY SUMMARY

Voting Matters and Board Recommendations

At this year’s Annual Meeting, our shareholders will vote on the following matters:

Proposal	Board Recommendation	Additional Information
Proposal 1: Election of Directors	FOR	See pages 9 through 13 for more information on the nominees.
Proposal 2: Ratification of Selection of the Company’s Independent Registered Public Accounting Firm	FOR	See pages 68 and 69 for details.
Proposal 3: Advisory Vote on Executive Compensation	FOR	See page 70 for details.

Executive Compensation Highlights

• The primary elements of our compensation program are base salary, annual cash incentive awards and long-term equity incentive awards.

• We delivered solid financial performance in 2015 in the face of a challenging economic and industry environment.

• However, our performance was below our internal performance goals and as a result our payouts to executives were below target.

• Essendant’s compensation philosophy to pay for performance guided the 2015 executive compensation plan.

    2             2016 PROXY STATEMENT  

PROXY SUMMARY

Compensation Summary

Name and Principal Position	Salary ($)		Bonus ($)		Stock Awards ($)		Non-Equity Incentive Plan Compensation ($)		Change in Pension Value  and Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total Compensation ($)
Robert B. Aiken, Jr.		530,768		166,000		2,060,502		166,667		—		19,147		2,943,084
President and Chief Executive Officer
Earl C. Shanks		63,035		—		249,995		15,833		—		290,094		618,956
Senior Vice President and Chief Financial Officer
Timothy P. Connolly		471,417		53,624		1,221,059		105,150		—		29,578		1,880,827
Senior Vice President and Chief Operating Officer
Eric Blanchard		375,000		2,856		656,220		56,250		1,001		31,306		1,122,633
Senior Vice President, General Counsel and Secretary
Richard D. Phillips		375,000		—		656,220		46,875		—		28,748		1,106,843
Senior Vice President, Strategy and President, ORS Industrial
P. Cody Phipps		775,127		—		1,439,989		—		—		518,021		2,733,137
Former President and Chief Executive Officer
Todd A. Shelton		440,000		3,879		1,077,974		77,000		—		30,470		1,613,923
Former Senior Vice President and Chief Financial Officer

  2016 PROXY STATEMENT            3  

PROXY SUMMARY

Changes to Executive Compensation Program

• In 2015 we revised the Management Cash Incentive Awards Plan, replacing Adjusted Net Income with Adjusted EBIT as a more appropriate annual performance measure and changing the weightings of Adjusted Cost Factor and Adjusted Working Capital Efficiency.

• In 2015 we changed our Long-Term Incentive Plan, adopting three-year cliff vesting for performance-based awards, adding Adjusted Working Capital Efficiency as a second performance metric for performance-based awards, and adjusting the allocation of the target value of annual grants between performance-based restricted stock units and time-based restricted stock.

• In 2016 we introduced relative Total Stockholder Return (“TSR”) as a performance metric for performance-based awards under our Long-Term Incentive Plan.

Corporate Governance Highlights

Board Independence
Independent Directors	8 out of 9
Independent Chair of the Board	Charles Crovitz
Evaluating and Improving Board Performance
Board evaluations	Annual
Committee evaluations	Annual
Aligning Director and Executive Interest with Shareholder Interests
Director stock ownership requirements	Yes
Executive officer stock ownership requirements	Yes
Policy restricting trading and prohibiting hedging and short-selling of ESND stock	Yes
Compensation clawback policy for executive officers	Yes

    4             2016 PROXY STATEMENT  

PROXY AND VOTING INFORMATION                        

Proxy and Voting Information

The Board of Directors of Essendant Inc. (referred to as “we”, “our” or the “Company” in this Proxy Statement) is soliciting your proxy for use at our 2016 Annual Meeting of Stockholders and any adjournments or postponements thereof (the “Annual Meeting”).

What is a Notice of Internet Availability of Proxy Materials

Under rules of the Securities and Exchange Commission, we are furnishing proxy materials to our stockholders on the Internet, rather than mailing printed copies to our stockholders. If you received a Notice of Internet Availability of Proxy Materials by mail, you will not receive a printed copy of the proxy materials unless you request one as instructed in that notice. Instead, the Notice of Internet Availability of Proxy Materials will instruct you as to how you may access and review the proxy materials on the Internet as well as vote your shares online. You may also vote by telephone or mail by requesting a paper copy of the proxy materials, which will include a proxy card with instructions on how to vote. The Notice of Internet Availability of Proxy Materials contains instructions on how to request paper copies of the proxy materials. We expect to commence mailing the Notice of Internet Availability of Proxy Materials to our stockholders on or about April 13, 2016.

Who May Vote

Holders of record of our Common Stock at the close of business on Monday, March 28, 2016 (the “Record Date”) may vote at the Annual Meeting. On that date, 37,102,335 shares of our Common Stock were issued and outstanding. Each share entitles the holder to one vote.

How to Vote

If you are a holder of record of our Common Stock (meaning, the shares are registered by our transfer agent directly in your own name) on the Record Date, you may submit a proxy with your voting instructions by the applicable deadline shown on the Notice of Internet Availability of Proxy Materials or proxy card using any of the following methods:

• Through the Internet: Go to the websitehttp://www.proxyvote.comand follow the instructions on the Notice of Internet Availability of Proxy Materials to view the proxy materials online and vote your shares through the Internet.

• By Telephone:

^¡  You must request a paper copy of the proxy materials, which will include a proxy card with instructions on how to vote by telephone.

^¡  Please review the Notice of Internet Availability of Proxy Materials for instructions on how to order paper copies of the proxy materials.

• By Mail:

^¡  You must request a paper copy of the proxy materials, which will include a proxy card with instructions on how to vote by mail.

^¡  Please review the Notice of Internet Availability of Proxy Materials for instructions on how to order paper copies of the proxy materials.

If you choose to submit your proxy with voting instructions by telephone or through the Internet, you will be required to provide your assigned control number shown on the Notice of Internet Availability of Proxy Materials or proxy card before your proxy and voting instructions will be accepted. Once you

  2016 PROXY STATEMENT            5  

                         PROXY AND VOTING INFORMATION

have indicated how you want to vote in accordance with those instructions, you will receive confirmation that your proxy has been submitted successfully by telephone or through the Internet.

If you hold your shares of our Common Stock in “street name” through a broker, bank, custodian, fiduciary or other nominee, you should review the separate Notice of Internet Availability of Proxy Materials supplied by that firm to determine whether and how you may vote by mail, telephone or through the Internet. To vote these shares, you must use the appropriate voting instruction form or toll-free telephone number or website address specified on that firm’s voting instruction form for beneficial owners.

How Proxies Work

Giving your proxy means that you authorize the persons named as proxies to vote your shares at the Annual Meeting in the manner you direct. If you hold any shares in the Company’s Employee Stock Purchase Plan (“ESPP”), your proxy (whether given by mailing the proxy card or voting by telephone or through the Internet) will also serve as voting instructions to Computershare Trust Company, as nominee holder under the ESPP, with respect to the shares allocated to your account in the ESPP.

If you sign and return a proxy card, or use telephone or Internet voting, but do not specify how you want to vote your shares, the proxies will vote your shares “FOR” the election of each of the three director nominees, “FOR” the ratification of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2016, and “FOR” approval of our executive compensation. If you specify how you want to vote your shares on some matters but not others, the proxies will vote your shares as directed on the matters that you specify and as indicated above on the other matters described in this proxy statement. However, if you hold shares in the ESPP, Computershare Trust Company, as nominee holder under the ESPP, will not vote shares allocated to your ESPP account unless you indicate your voting instructions. The proxies will also vote your shares in their discretion on any other business that may properly come before the meeting.

Revocation of Proxies

If you have voted by submitting a proxy, you may revoke your proxy at any time before it is exercised at the Annual Meeting by any of the following methods:

• Requesting and submitting a new proxy card that is properly signed with a later date;

• Voting again at a later date by telephone or through the Internet — your latest voting instructions received before the deadline for telephone or Internet voting, 11:59 p.m. Eastern Time on May 24, 2016, will be counted and your earlier instructions revoked;

• Sending a properly signed written notice of your revocation to the Secretary of the Company at Essendant Inc., One Parkway North Boulevard, Deerfield, Illinois 60015-2559; or

• Voting in person at the Annual Meeting. Attendance at the Annual Meeting will not itself revoke an earlier submitted proxy.

A proxy card with a later date or written notice of revocation shall not constitute a revocation of a previously submitted proxy unless it is received by the Secretary of Essendant Inc. before the previously submitted proxy is exercised at the Annual Meeting.

Quorum

To conduct the business of the Annual Meeting, we must have a quorum. Under our current Bylaws, a quorum for the Annual Meeting requires the presence, in person or by proxy, of the holders of a majority

    6             2016 PROXY STATEMENT  

PROXY AND VOTING INFORMATION                            

of the 37,102,335 shares of our Common Stock issued and outstanding on the Record Date. Under Delaware law and our Bylaws, we count instructions to withhold voting authority for director nominees, any abstentions and broker non-votes as present at meetings of our stockholders for the purpose of determining the presence of a quorum.

Shares Held Through Broker or Other Nominee

In general, a broker who holds securities as a nominee in street name has limited authority to vote on matters submitted at a stockholders’ meeting in the absence of specific instructions from the beneficial owner. In the absence of instructions from the beneficial owner or authorization from the regulatory agency of which the broker is a member to vote on specific matters without the need to obtain instructions from the beneficial owner, a broker will specify a “non-vote” on those matters. Brokers are typically permitted to vote for the ratification of the selection of the independent registered public accounting firm if they have not received instructions from the beneficial owner; however, brokers may not vote on the other matters described in this Proxy Statement without specific instructions from the beneficial owner.

Required Votes

Election of Directors

The nominees for director will be elected by a plurality of the votes cast at the Annual Meeting. This means that the three nominees who receive the greatest number of votes will be elected as directors. Broker non-votes and instructions to withhold authority to vote for one or more nominees are not counted for this purpose and will not affect the outcome of this election.

We have adopted a so-called “plurality-plus” standard. In accordance with procedures set forth in the Company’s Corporate Governance Principles, any incumbent director (including the three nominees standing for election at the Annual Meeting) who receives a greater number of votes withheld from his or her election than votes “FOR” his or her election in an uncontested election will be expected to tender his or her resignation for consideration by the Company’s Governance Committee. The Governance Committee will consider the resignation and, within 45 days following the date of the applicable annual meeting, make a recommendation to the Board concerning the acceptance or rejection of the resignation. The Board will then take formal action on the Governance Committee’s recommendation no later than 90 days following the date of the annual meeting. Following the Board’s decision on the Committee’s recommendation, we will publicly disclose the Board’s decision together with an explanation of the process by which the decision was made and, if applicable, the Board’s reason or reasons for rejecting the tendered resignation.

Ratification of Ernst & Young

Ratification of the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm will require the affirmative vote of a majority of the shares of Common Stock represented at the Annual Meeting and entitled to vote on such matter. Abstentions will be counted as represented and entitled to vote for purposes of determining the total number of shares that are represented and entitled to vote with respect to this proposal. As a result, an abstention from voting on this proposal will have the same effect as a vote “AGAINST” the matter. Broker non-votes will not be considered as represented and entitled to vote with respect to this proposal and will have no effect on the voting on this matter.

  2016 PROXY STATEMENT            7  

                         PROXY AND VOTING INFORMATION

Advisory Vote on Executive Compensation

The vote on the approval of our executive compensation is advisory and non-binding. However, we will consider our stockholders to have approved our executive compensation if the number of votes “FOR” this proposal exceeds the number of votes “AGAINST” this proposal. Accordingly, abstentions and broker non-votes will not affect the outcome of this advisory vote.

We do not know of any other matters to be submitted for stockholder action at the Annual Meeting.

Costs of Proxy Solicitation

We will bear the costs of soliciting proxies for the Annual Meeting. In addition to the solicitation by mail, proxies may be solicited personally or by telephone, facsimile or electronic communication by our directors, officers and other employees. Directors, officers and other employees of the Company who participate in soliciting proxies will not receive any additional compensation from the Company for doing so. Upon request, we will reimburse brokers, banks, custodians and other nominee record holders for their out-of-pocket expenses in forwarding proxy materials to their principals who are the beneficial owners of our Common Stock as of the Record Date.

    8             2016 PROXY STATEMENT  

PROPOSAL 1: ELECTION OF DIRECTORS                            

Proposal 1: Election of Directors

General

The Company’s business and affairs are managed under the direction of our Board of Directors. The Board has responsibility for establishing broad corporate policies relating to the Company’s overall performance rather than day-to-day operating details.

Our Board of Directors currently consists of nine members. The Board is divided into three classes, each of which is elected for a three-year term. The terms of the three current Class III Directors expire in 2016. The Class III Directors are current directors standing as nominees at the Annual Meeting for reelection to a three-year term expiring in 2019.

The nominees have indicated that they are willing and able to serve as Company Directors. If any nominee becomes unavailable for election for any reason, the persons named as proxies in the enclosed proxy card will have discretionary authority to vote the shares they represent for any substitute nominee designated by the Board of Directors, upon recommendation of the Governance Committee.

Information regarding each of the Director nominees and the Directors continuing in office, including his or her age, principal occupation, other business experience during at least the last five years, directorships in other publicly held companies during the last five years and period of service as a Company Director, is set forth below. Also included below is a discussion of the specific experience, qualifications, attributes and skills that led to the conclusion that the Director nominee or Director should serve on the Board.

  2016 PROXY STATEMENT            9  

                         PROPOSAL 1: ELECTION OF DIRECTORS

Director Nominees

The nominees for election as Class III Directors at this year’s Annual Meeting, each to serve for a three-year term expiring in 2019, are set forth below:

Susan J. Riley   Ms. Riley is Chair of the Human Resources Committee and a member of the Audit Committee. Ms. Riley is the Chief Financial Officer of Vestis Retail LLC, a private equity-owned holding company for Bob’s Store, Eastern Mountain Sports, and Sport Chalet. She previously served as a financial consultant for several retail and other companies. From April 2006 through February 2011 Ms. Riley held several senior executive positions, including Executive Vice President, Finance and Administration, at The Children’s Place Retail Stores, Inc., a children’s clothing and accessories retailer. Previously she served as Executive Vice President and Chief Financial Officer of Klinger Advanced Aesthetics, Senior Vice President and Chief Financial Officer of Abercrombie & Fitch Company, Executive Vice President of Business and Finance of Mount Sinai Medical Center of New York, Vice President and Treasurer of Colgate-Palmolive Company, Executive Vice President and Chief Financial Officer of Dial Corporation and Senior Vice President and Chief Financial Officer of Tambrands, Inc. Ms. Riley is also designated as one of the financial experts on the Company’s Audit Committee. Qualification: Ms. Riley’s extensive knowledge in financial matters and her experience as chief financial officer of several companies contribute to the financial expertise on our Board and the Audit Committee. Her experience from serving as a senior executive and board member of several companies, including as the chair of the human resources committee of another board, enables Ms. Riley to provide key insights to our Human Resources Committee and to the Board operations in general. Ms. Riley earned a bachelor’s degree in accounting from the Rochester Institute of Technology and an MBA from Pace University. Age: 57 Director since: 2012

Alexander M. Schmelkin   Mr. Schmelkin is a member of the Human Resources and Technology Advisory Committees. Mr. Schmelkin is Co-Founder, Chief Executive Officer and a member of the board of directors of Alexander Interactive, a web design and engineering firm, and has held these positions since 2002. Before founding Alexander Interactive, Mr. Schmelkin co-founded New York-based Davanita Design, which was later acquired by Avatar Technology, where he served as President and Chief Executive Officer of the New York division. Qualification: Mr. Schmelkin brings to the Board and the Technology Advisory Committee extensive experience in technology and e-business, digital expertise and entrepreneurial insights as a CEO. Mr. Schmelkin earned a bachelor’s degree from Cornell University. Age: 39 Director since: 2012

Alex D. Zoghlin   Mr. Zoghlin was re-elected to the Company’s Board of Directors in May 2008. Mr. Zoghlin serves as Chair of the Technology Advisory Committee. Mr. Zoghlin is the Group President, Global Operations Center for Hyatt Hotels Corporation, a global hospitality company. Prior to joining Hyatt, Mr. Zoghlin served as the Chief Executive Officer of VHT, Inc., a marketing services provider for the real estate industry, from 2009 to February 2013. He previously served on the Board from November of 2000 until May 2006. He resigned at that time to focus primarily on building G2 Switchworks, a Chicago-based travel/technology firm, where he was President and Chief Executive Officer until its change of ownership in 2008. He previously served as Chairman, President and Chief Executive Officer of neoVentures Inc., a venture capital investment company for emerging technology companies. Prior to that, he was Chief Technology Officer of Orbitz, LLC, a consumer-oriented travel industry portal backed by major airline companies. Qualification: Mr. Zoghlin has a history of demonstrated leadership in enterprise technology and e-commerce. His experience in enterprise-wide programming, developing and implementing web-based solutions enables Mr. Zoghlin to offer key insights to our Technology Advisory Committee, which provides critical guidance on the Company’s portfolio of information technology assets and systems. Mr. Zoghlin also brings an entrepreneurial orientation to the Board’s deliberations. Mr. Zoghlin previously served as a director of State Farm Insurance Co., an insurance and financial services company. Age: 46 Director since: 2008 (previously served from November 2000 to May 2006)

THE COMPANY’S BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR”

THE ELECTION OF EACH OF THE INDIVIDUALS NOMINATED ABOVE.

    10             2016 PROXY STATEMENT  

PROPOSAL 1: ELECTION OF DIRECTORS                        

Continuing Directors

The other Directors, whose terms will continue after this year’s Annual Meeting, are as follows:

Class I Directors — Continuing in Office until 2017 Annual Meeting

Jean S. Blackwell   Ms. Blackwell serves as Chair of the Governance Committee and a member of the Finance Committee. Ms. Blackwell served as the Chief Executive Officer of the Cummins Foundation and Executive Vice President, Corporate Responsibility of Cummins Inc., an engine manufacturer, from 2008 until her retirement in March 2013. From 2003 until May of 2008, Ms. Blackwell served as the Executive Vice President and Chief Financial Officer for Cummins. Ms. Blackwell also served as Vice President and General Counsel; Vice President, Human Resources; and Vice President, Cummins Business Services. Ms. Blackwell was appointed as Executive Vice President of Cummins in 2005. Prior to joining Cummins, Ms. Blackwell was a partner in the Indianapolis law firm of Bose McKinney & Evans and also worked for the State of Indiana as Budget Director and for the State Lottery Commission as Executive Director. Qualification: Ms. Blackwell has an in-depth knowledge of the business operations of a publicly-traded company from her long tenure at Cummins and a strong financial acumen from her senior management experience. She also brings significant knowledge of human resource practices having served as Vice President of Human Resources at Cummins. Ms. Blackwell holds a BA degree in economics from the College of William and Mary and a law degree (Cum Laude) from the University of Michigan. Ms. Blackwell is a member of the board of directors of Celanese, Inc., a specialty chemicals company, and serves on its audit and nominating and governance committees. She previously served as a director of The Phoenix Companies, a life insurance company. Age: 61 Director since: 2007

Paul S. Williams   Mr. Williams is a member of the Audit and Human Resources Committees. Mr. Williams has been a partner at Major, Lindsey & Africa, LLC, a legal executive search firm, since 2005. Prior to joining Major, Lindsey & Africa he served as Executive Vice President, Chief Legal Officer and Secretary of Cardinal Health, Inc. Qualification: Mr. Williams brings extensive experience and knowledge of the business operations of publicly traded companies having served as a business executive and a director of several public company boards. His experience as an executive recruiter allows him to make significant contributions to the Human Resources Committee in its evaluation of compensation practices and succession planning. He also brings deep governance and M&A expertise. Mr. Williams holds a BA degree from Harvard University and a law degree from Yale University. Mr. Williams currently serves on the board of directors of Compass Minerals International, Inc., a salt and specialty fertilizer products company, and serves on its compensation and audit committees. He also serves on the Board of Directors of Bob Evans Farms, Inc., a food service processing and retail company, and serves on its compensation and nominating and governance committees. He previously served as a Director of State Auto Financial Corporation. Age: 56 Director since: 2014

  2016 PROXY STATEMENT            11  

                         PROPOSAL 1: ELECTION OF DIRECTORS

Class II Directors — Continuing in Office until 2018 Annual Meeting

Robert B. Aiken, Jr.   Mr. Aiken serves as a member of the Executive Committee. He previously served on the Company’s Board of Directors from December 2010 to May 2014, at which time he stepped down from the Board due to the demands of his position as the Chief Executive Officer of Feeding America, the nation’s leading hunger relief organization. Mr. Aiken was CEO of Feeding America from November 2012 to February 2015. Prior to this role, Mr. Aiken was the CEO of the food company portfolio at Bolder Capital, a private equity firm. Mr. Aiken previously served as Managing Director of Capwell Partners LLC, a private-equity firm focused on companies offering health and wellness products and services. Mr. Aiken was in the private-equity business from February 2010 until his appointment at Feeding America. Prior to that time, Mr. Aiken was the President and Chief Executive Officer of U.S. Foodservice, one of the country’s premier foodservice distributors. Mr. Aiken joined U.S. Foodservice in 2004 and held several senior executive positions including President and Chief Operating Officer and Executive Vice President of Strategy and Governance before being named Chief Executive Officer in 2007. From 2000 until 2004, Mr. Aiken also served as President and Principal of Milwaukee Sign Co., a privately-held manufacturing firm. From 1994 to 2000, Mr. Aiken was an executive with Specialty Foods Corporation, where he held several positions, including President and Chief Executive Officer of Metz Baking Company. Early in Mr. Aiken’s career, he worked as a business lawyer. Qualification: Mr. Aiken brings to the Board of Directors and to the Executive Committee his experience as a chief executive officer of both public and private corporations with significant operations and a large, labor-intensive workforce. He has a broad background in foodservice distribution, with particular expertise in acquisitions, finance, merchandising, operations, sales force effectiveness, supply chain and private label products. Mr. Aiken also holds accounting and law degrees from Georgetown University. Since February 2010, Mr. Aiken has served as a director of Red Robin Gourmet Burgers, a chain of casual dining restaurants. Age: 53 Director since: 2015

Charles K. Crovitz   Mr. Crovitz serves as Chair of the Executive Committee and as a member of the Technology Advisory and Governance Committees. In September 2007, Mr. Crovitz was appointed as the Interim Chief Executive Officer of The Children’s Place Retail Stores, Inc., a children’s clothing and accessories retailer, which position he held until his retirement in January 2010. Prior to this appointment, Mr. Crovitz was a member of the executive leadership team of Gap Inc. from 1993 until 2003, most recently serving as Executive Vice President and Chief Supply Chain Officer. During his ten-year career with Gap, Mr. Crovitz was also Executive Vice President, Supply Chain and Technology and Senior Vice President, Strategy and Business Development. Prior to that, he held various positions with Safeway Inc., including serving as a member of the operating committee, Senior Vice President and Chief Information Officer, and Vice President, Director of Marketing for Safeway Manufacturing Group. Mr. Crovitz also spent several years with McKinsey & Company, Inc. where he was an Engagement Manager, leading client service teams in retail, forest products, steel and personal computer industries. Qualification: Mr. Crovitz’ responsibility for information technology during his tenure at Gap and Safeway and his experience in supply chain management are particularly relevant to the strategic direction of the Company. His extensive operating experience allows him to make significant contributions to the Company’s continuing efforts to pursue growth strategies, increase productivity and reduce its cost structure making him an effective Chairman of the Board. Mr. Crovitz also holds an MBA and a law degree from Stanford University. Mr. Crovitz previously served as a board member for The Children’s Place Retail Stores, Inc. Age: 62 Director since: 2005

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PROPOSAL 1: ELECTION OF DIRECTORS                        

Roy W. Haley   Mr. Haley serves as Chair of the Audit Committee and a member of the Finance and Executive Committees. Mr. Haley also serves as the Non-Executive Chairman of the board of directors of Bluelinx Corporation, a wholesale supplier of building materials. Until his retirement in May 2011, Mr. Haley served as the Executive Chairman of WESCO International, Inc. (“WESCO”), a wholesale supplier of electrical and other industrial supplies and services, and, until September 2009, was the Chief Executive Officer. Prior to joining WESCO in February 1994, he was President and Chief Operating Officer of American General Corporation, one of the nation’s largest consumer financial services organizations. Mr. Haley has served as the Chair of the Company’s Audit Committee for the past 14 years, and served as the chair of the audit committee of Cambrex Corporation. Mr. Haley is also designated as one of the financial experts on the Company’s Audit Committee. Qualification: Mr. Haley has a history of public company board membership and leadership with significant knowledge and operating experience in a distribution company as Chairman and Chief Executive Officer of WESCO. This experience allows him to provide highly informed guidance and counsel regarding the operations and value proposition of a wholesale supplier supplemented with his direct knowledge of the Company’s lines of products. Through his present and past business experiences, Mr. Haley has acquired significant understanding and experience in financial matters of a publicly traded company, internal controls and the functions of an audit committee. Mr. Haley holds a Bachelor of Science in industrial management from Massachusetts Institute of Technology. In addition to his service as a director of WESCO, Mr. Haley served as a director of Cambrex Corporation, a supplier of pharmaceutical and life science industry products and services, for twelve years until his retirement in April 2010. He also served as a director of the Federal Reserve Bank of Cleveland until his retirement in December 2010. Age: 69 Director since: 1998

Stuart A. Taylor, II   Mr. Taylor is Chair of the Finance Committee and a member of the Governance Committee. Mr. Taylor is Chief Executive Officer of The Taylor Group LLC, a private equity firm, and has been with The Taylor Group since 2002. Prior to founding The Taylor Group in 2002, Mr. Taylor was Senior Managing Director of Bear Stearns Companies Inc., a brokerage firm. Over a span of 19 years, Mr. Taylor served as Managing Director of CIBC World Markets (US), Managing Director, Automotive Industry Group, BT Alex Brown, Inc. of Bankers Trust Company and as Vice President, Corporate Finance Department of Morgan Stanley & Company, Inc. Qualification: Mr. Taylor has demonstrated leadership as a CEO and is a seasoned investment banker. His extensive experience in finance, business development, strategic diversification and mergers and acquisitions allows him to make significant contributions to the company’s strategic initiatives and to the Finance and Governance Committees. Mr. Taylor holds an MBA in finance from Harvard Business School and an undergraduate degree from Yale University. Mr. Taylor currently serves as a director of Ball Corporation, a metal packaging company, and serves as chair of its human resources committee and a member of its audit committee. He also serves on the board of directors of Hillenbrand, Inc., an industrial company, and serves as the chair of the M&A committee and a member of the audit committee. Age: 55 Director since: 2011

  2016 PROXY STATEMENT            13  

                         GOVERNANCE AND BOARD MATTERS

Governance and Board Matters

Corporate Governance Principles

The Company is committed to the use of sound corporate governance principles and practices in the conduct of its business. The Company’s Board has adopted the Essendant Inc. Corporate Governance Principles (the “Governance Principles”) to address certain fundamental corporate governance issues. The Governance Principles provide a framework for Company governance activities and initiatives and cover, among other topics, Director independence and qualifications, Board and Committee composition and evaluation, Board access to members of management and independent outside advisors, Board meetings (including meetings in executive session without management present) and succession planning. These principles also provide for the separation of the position of Chairman of the Board, who would normally serve as the Company’s lead independent Director, from that of Chief Executive Officer. The Governance Principles are included under “Governance” as part of the “Investors” section available through the Company’s website at http://www.essendant.com. Neither the Governance Principles nor any other information contained on or available through the Company’s website and referred to in this Proxy Statement is incorporated by reference in, or considered to be part of, this Proxy Statement.

Code of Conduct

The Company’s Board of Directors also has adopted the Essendant Inc. Code of Business Conduct (the “Code of Conduct”). The Code of Conduct applies to all Directors, officers and employees, and covers topics such as compliance with laws and regulations, proper use of the Company’s assets, treatment of confidential information, ethical handling of actual or apparent conflicts of interest, accurate and timely public disclosures, prompt internal reporting of violations and accountability for adherence to its guidelines. A copy of the Code of Conduct is included under “Governance” as part of the “Investors” section available through the Company’s website at http://www.essendant.com.

Board Independence

The Company’s Board of Directors has affirmatively determined that all of its members and the nominees, other than Mr. Aiken, the Company’s President and Chief Executive Officer, are independent within the meaning of the Company’s independence standards set forth in its Governance Principles. The Company’s Governance Principles incorporate the director independence standards of The NASDAQ Stock Market, Inc. (“NASDAQ”), and reflect the Board’s policy that a substantial majority of the Directors who serve on the Company’s Board should be independent Directors. Indeed, for a number of years, a substantial majority of the Company’s Board of Directors has been comprised of independent Directors.

In determining that Mr. Taylor is independent, the Board considered that Mr. Taylor and his spouse are owners of Taylor Made Business Solutions (“TMBS”), where his spouse also serves as the Chief Executive Officer, and that TMBS purchased $11,280 of products and services from Essendant Co. (“ECO”), a wholly-owned subsidiary of the Company, during 2015. The amount of purchases was less than 5% of gross revenues of ECO. The Board concluded that such transactions constituted an insignificant percentage of TMBS’ purchases and the Company’s sales, that Mr. Taylor had no direct involvement in such transactions and that such transactions, therefore, did not affect Mr. Taylor’s independence. Based on the same information and the representations from the Company’s management that such transactions were in the ordinary course of business at the same prices and on the same terms as are available to customers of the Company generally, the Audit Committee of the

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GOVERNANCE AND BOARD MATTERS                        

Board concluded that such transactions were exempt under the Company’s related person transaction approval policy. The Governance Committee also reviewed the relationship and determined that there is no conflict with the Company’s Corporate Governance Principles, and that the relationship did not impair Mr. Taylor’s independence.

Board Leadership Structure

The Company’s Bylaws call for the Chairman of the Board to be elected by the Board from among its members and to have the powers and duties customarily associated with the position of a non-executive Chairman. Consistent with the Company’s Corporate Governance Principles, the Board expects that in most circumstances the only member of the Company’s management who would be invited to serve on the Board would be the Company’s chief executive officer. However, the Company’s Bylaws also provide that, while the Chairman may hold an officer position, under no circumstances may the Chairman also serve as the President or Chief Executive Officer of the Company. The Chairman of the Board normally serves as the Company’s lead independent Director and chairs executive sessions of the Board. Charles K. Crovitz has served as the Company’s independent Chairman since December 2011.

These principles are further enhanced in the Company’s Corporate Governance Principles which assist the Board in the exercise of its responsibilities and in serving the best interests of the Company and its stockholders. This structure is intended to serve as a framework within which the Board may conduct its business in accordance with applicable laws, regulations, and other corporate governance requirements.

Board Diversity

The Governance Committee is responsible for evaluating potential candidates for Board membership. In its evaluation process and to ensure that the Board benefits from diverse perspectives, the Committee considers such factors as the experience, perspective, background, skill sets, race, and gender makeup of the current Board as well as the candidate’s individual qualities in leadership, character, judgment and ethical standards. The Committee does not have a separate policy on diversity. However, pursuant to the Company’s Corporate Governance Principles, diversity is one of the criteria to be positively considered for board membership. For this purpose, the Committee considers diversity broadly as set forth above. The Governance Committee believes our directors represent a diverse base of perspectives and reflect the racial and gender diversity of the Company’s employees, customers and shareholders, as well as an appropriate level of tenure, as further illustrated below.

  2016 PROXY STATEMENT            15  

                         GOVERNANCE AND BOARD MATTERS

Board’s Role in Risk Management

The Board of Directors takes an active role in risk oversight of the Company both as a full Board and through its Committees.

Strategic risk, which is risk related to the Company properly defining and achieving its high-level goals and mission, as well as operating risk, which is risk relating to the effective and efficient use of resources and pursuit of opportunities, are regularly monitored by the full Board through regular and consistent review of the Company’s operating performance and strategic plan. For example, at each of the Board’s five regularly scheduled meetings throughout the year, management provides to the Board presentations on the Company’s various business units as well as the Company’s performance as a whole. In addition, the Board discusses risks related to the Company’s business strategy at the Board’s strategic planning meetings every year in July and September and at other meetings as appropriate. Similarly, significant transactions, such as acquisitions and financings, are brought to the Board and Finance Committee for approval.

Reporting risk and compliance risk are primarily overseen by the Audit Committee. Reporting risk relates to the reliability of the Company’s financial reporting, and compliance risk relates to the Company’s compliance with applicable laws and regulations. The Audit Committee meets at least four times per year and, pursuant to its charter and established processes, receives input directly from management as well as from the Company’s independent registered public accounting firm, Ernst & Young LLP, regarding the Company’s financial reporting process, internal controls, and public filings. The Company’s internal audit function leads an annual risk assessment to refresh its ongoing risk-based work plan which includes coverage of financial, operational, and compliance risks, reporting results to the Audit Committee on a regular basis. The Company’s Disclosure Committee, Compliance Committee, and Enterprise Risk Management Committee, each consisting of senior level staff from the legal, finance, human resources, and information technology departments, as well as each business unit, meet regularly to address financial reporting, compliance issues, and other enterprise-wide risks and identify any additional actions required to mitigate these risks. Each of these management committees reports its activities regularly to the Audit Committee. The Audit Committee also receives regular updates from the Company’s in-house attorneys regarding any Hotline reports, Code of Conduct issues or other legal compliance concerns. See “Board Committees — Audit Committee” below for further information on how the Audit Committee fulfills, and assists the Board of Directors’ oversight of, reporting and compliance risks.

Additionally, the Finance Committee, Technology Advisory Committee, and Human Resources Committee each provide risk oversight and monitoring with respect to the Company’s capital structure and corporate finance, cyber security, deployment of technology, and structure of compensation programs, respectively. See the individual descriptions of these committees for further information regarding their roles.

Executive Sessions

Non-management Directors meet regularly in executive sessions without management. In accordance with the Company’s Governance Principles, executive sessions are held at least four times a year. The Company’s independent Chairman of the Board presides at such sessions.

Self-Evaluation

The Board and each of the Audit, Governance, Human Resources, Executive, Finance, and Technology Advisory Committees conduct an annual self-evaluation, as contemplated by the

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GOVERNANCE AND BOARD MATTERS                        

Company’s Governance Principles and the charters of such Board committees. The Board also obtains peer evaluations of individual Director performance in the course of its self-evaluation process.

Board Meetings and Attendance

The Board of Directors held 13 meetings during 2015. Each Director attended more than 75% of the aggregate number of meetings of the Board of Directors and of the Board Committees on which he or she served.

Board Committees

General

The Board of Directors has established six standing committees — an Audit Committee, a Governance Committee, a Human Resources Committee, a Finance Committee, a Technology Advisory Committee, and an Executive Committee. The Governance Committee serves as and performs the functions of a Board nominating committee. Each of the standing committees operates under a written charter adopted by the Board. The charters for the committees are available at essendant.com/proxymaterials.

The current membership and number of meetings held by each such standing committee during 2015 are as follows:

Name	Audit	Governance	Human Resources	Executive	Finance	Technology  Advisory
Robert B. Aiken, Jr.(1) Director Since: 2015 Previously served as Director from December 2010 to May 2014.				ü
Jean S. Blackwell(2) Director Since: 2007		ü(C)			ü
Charles K. Crovitz Director Since: 2005		ü		ü(C)		ü
Roy W. Haley Director Since: 1998	ü(C)			ü	ü
Susan J. Riley Director Since: 2012	ü		ü(C)
Alexander M. Schmelkin Director Since: 2012			ü			ü
Stuart A. Taylor, II Director Since: 2011		ü			ü(C)
Paul S. Williams Director Since: 2014	ü		ü
Alex D. Zoghlin Director Since: 2008 Previously served as Director from November 2000 to May 2006.						ü(C)
Number of Meetings in 2015	7	7	8	6	6	5

(1) On May 4, 2015, Robert B. Aiken, Jr. stepped off the Finance Committee.

(2) On May 20, 2015, Jean S. Blackwell became a member of the Finance Committee.

(C) Committee Chair

Audit Committee. The Board has determined that all of the above members of the Audit Committee are independent pursuant to NASDAQ’s current listing standards and Rule 10A-3 of the Securities Exchange Act of 1934 (the “Exchange Act”). No member of the Audit Committee received any compensation from

  2016 PROXY STATEMENT            17  

                         GOVERNANCE AND BOARD MATTERS

the Company during 2015 other than for services as a member of the Board or one or more of its committees. The Board also has determined that all Audit Committee members are financially literate and have financial management expertise, in accordance with NASDAQ listing standards. In addition, the Board of Directors has determined that Roy W. Haley and Susan J. Riley qualify as “audit committee financial experts” within the meaning of applicable SEC regulations.

The principle functions of the Audit Committee involve assisting the Company’s Board of Directors in fulfilling its oversight responsibilities relating to: (1) the integrity of the Company’s financial statements; (2) the soundness of the Company’s internal control systems; (3) assessment of the independence, qualifications and performance of the Company’s independent registered public accounting firm; (4) performance of the internal audit function; and (5) the Company’s enterprise risk management, legal, regulatory, and ethical compliance programs. The Audit Committee’s seven meetings during 2015 included reviews with management and the Company’s independent registered public accounting firm regarding the Company’s financial statements before their inclusion in the Company’s annual and quarterly reports filed with the SEC. For additional information, see “Report of the Audit Committee.”

The Audit Committee operates under a written charter most recently amended as of October 5, 2015. The charter was last reviewed by the Committee in October 2015.

Governance Committee. The Governance Committee evaluates corporate governance principles and makes recommendations to the full Board regarding governance matters, including evaluating and recommending Director compensation, overseeing the evaluation by the Board of Directors of the performance of the Company’s Chief Executive Officer and the Board, and reviewing succession planning with respect to the Chief Executive Officer. The Company’s Board has determined that all of the members of the Governance Committee are independent pursuant to current NASDAQ listing standards. In performing the functions of a nominating committee, the Governance Committee reviews and makes recommendations to the full Board concerning the qualifications and selection of Director candidates, including any candidates that may be recommended by Company stockholders.

The Governance Committee operates under a written charter most recently amended as of December 8, 2015. The charter was last reviewed by the Committee in December 2015.

Human Resources Committee. The Human Resources Committee of the Board of Directors generally acts as a Board compensation committee. It reviews and approves or makes recommendations to the Board of Directors with respect to compensation, employment agreements, and benefits applicable to executive officers. The Human Resources Committee also oversees the development and administration of compensation and benefits.

The agendas, meetings, and calendar are developed and set by the Chair of the Human Resources Committee with input from the Human Resources Department and the Chief Executive Officer. The Chairman, Chief Executive Officer, other members of management, and outside advisors may be invited to attend all or a portion of a Human Resources Committee meeting, other than an executive session of the Human Resources Committee members, depending on the nature of the agenda items. Neither the Chief Executive Officer nor any other member of management votes on items before the Human Resources Committee; however, the Human Resources Committee and the Board of Directors solicit the views of the Chief Executive Officer on compensation matters, including the compensation of our executive officers.

Among its executive compensation oversight responsibilities, the Human Resources Committee approves the base salaries, annual incentive compensation targets, benefits, and perquisites of our executive officers, other than the Chief Executive Officer. In the case of compensation for the Chief

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GOVERNANCE AND BOARD MATTERS                        

Executive Officer, the Human Resources Committee makes a recommendation to the full Board of Directors for approval. The Human Resources Committee generally oversees the development and administration of our compensation and benefits plans, programs, and practices and reviews and makes determinations based on applicable data and analysis. Recommendations are made by the Committee to the Board on overall compensation and benefits objectives. With respect to our annual incentive programs, the Human Resources Committee approves performance targets under our 2015 Long-Term Incentive Plan or criteria applicable to other executive officer bonuses and reviews attainment of such targets or satisfaction of other relevant criteria. The Human Resources Committee also administers and approves equity grants to our executive officers under our 2015 Long-Term Incentive Plan. The Committee also advises and consults with the Governance Committee and the Board on non-employee director compensation.

At the request of the Board, a risk analysis of 2015 compensation policies and practices was conducted. The Human Resources Committee received a report from the Company’s Internal Audit department regarding Aon Hewitt’s analysis of whether the Company’s compensation policies and practices for all employees, including executive officers, are reasonably likely to incent employees to take excessive risks or other actions inconsistent with Company policy that would result in a material adverse effect on the Company. Aon Hewitt identified all compensation policies and practices, analyzed whether they might motivate employees to take inappropriate risks and also considered internal controls that mitigate any such risks. After completion of this analysis, Aon Hewitt and management reported to the Committee their conclusion that none of the Company’s compensation policies and practices is reasonably likely to incent employees to take excessive risks that would result in a material adverse effect on the Company, and the Committee concurred with their conclusion.

The Human Resources Committee may establish its own procedural rules except as otherwise prescribed by the Company’s Bylaws, applicable law, or the NASDAQ listing standards. The Human Resources Committee may delegate any of its responsibilities to a subcommittee comprised of one or more members of the Human Resources Committee, subject to such terms and conditions (including required reporting back to the full Committee) as the Human Resources Committee may prescribe.

The Human Resources Committee has the authority to retain directly (and terminate the engagement of) any outside compensation consultants, outside counsel, or other advisors that the Human Resources Committee in its discretion deems appropriate to assist it in the performance of its functions, with the sole authority to approve related retention terms and fees for any such advisors. We will provide for appropriate funding, as determined by the Human Resources Committee, for payment of compensation to such outside advisors the Human Resources Committee retains.

During 2015 the Human Resources Committee engaged the services of an independent consultant, Meridian Compensation Partners, LLC (“Meridian”). Meridian provided the Human Resources and Governance Committees with updates on compensation trends and regulatory developments, advice on proxy disclosures with regard to compensation matters, and other assistance in related items as requested by the Committees, including review of various materials prepared for the Committees by management. In completing its work, Meridian was engaged directly on behalf of the Committees, did no other work for the Company or any of its senior executives, and had no other ties to the Company. For additional information, see “Executive Compensation — Compensation Discussion and Analysis — Use of Consultants.”

The Human Resources Committee has assessed the independence of Meridian pursuant to the rules of the U.S. Securities and Exchange Commission and NASDAQ and concluded that no conflict of interest exists that would prevent Meridian from independently representing the Human Resources Committee.

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                         GOVERNANCE AND BOARD MATTERS

The Human Resources Committee operates under a written charter most recently amended as of June 1, 2015. The charter was last reviewed by the Committee in February 2014.

Executive Committee. The Executive Committee has the authority to act upon any corporate matters that require Board approval, except where Delaware law requires action by the full Board or where the matter is required to be approved by a committee of independent Directors in accordance with applicable regulatory requirements.

Finance Committee.The purpose of the Finance Committee is to review and provide guidance to the Company’s Board of Directors and management with respect to the Company’s: (1) present and future capital structure requirements and opportunities; (2) plans, strategies, policies, proposals, and transactions related to corporate finance; (3) potential acquisitions and divestitures; and (4) Company financial risk management activities and plans.

The Finance Committee operates under a written charter most recently amended as of June 1, 2015. The charter was last reviewed by the Committee in February 2014.

Technology Advisory Committee. The purpose of the Technology Advisory Committee is to assist the Company’s Board of Directors in fulfilling its oversight responsibilities relating to: (1) alignment of the Company’s information technology (“IT”) strategic direction, investment needs, and priorities with its overall business and marketing strategies; (2) the Company’s marketing initiatives, including Digital-based marketing and merchandising efforts; (3) assessment of the Company’s portfolio of IT assets and systems; (4) promotion of an effective, efficient, scalable, flexible, secure, and reliable IT infrastructure; and (5) consideration of the impact of emerging IT developments that may affect the IT function’s ability to support the needs of the business.

The Technology Advisory Committee operates under a written charter most recently amended as of February 10, 2016. The charter was last reviewed by the Committee in February 2016.

Consideration of Director Nominees

The Governance Committee periodically assesses the Board’s size and composition and whether there may be any near-term vacancies on the Board due to retirement or otherwise. The Governance Committee uses a variety of methods to identify and evaluate potential Director nominees when the need for a new or additional Director is identified. It may seek or receive candidate recommendations from other Board members, members of the Company’s senior management, stockholders, or other persons. In addition, if and when it deems appropriate, the Governance Committee may retain an independent executive search firm to assist it in identifying potential Director candidates. Any such candidates may be evaluated at regular or special meetings of the Governance Committee and the Governance Committee may solicit input from other Directors.

In evaluating any identified or submitted candidates for the Board, the Governance Committee seeks to achieve a balance of knowledge, skills, experience, and capability on the Board and to address the Board membership criteria set forth in the Company’s Governance Principles. In addition, the Governance Committee believes that candidates must have high personal and professional ethics and integrity, with values compatible with those of the Company; broad and substantial experience at a senior managerial or policy-making level as a basis for contributing wisdom and practical insights; the ability to make significant contributions to the Company’s success; and sufficient time to devote to their duties as a Director. In addition, the Governance Committee believes it is important that each Director represent the interests of all stockholders.

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GOVERNANCE AND BOARD MATTERS                        

The Governance Committee’s policy is to consider properly submitted stockholder nominations for Director candidates in the same manner as a committee-recommended nominee. To recommend any qualified candidate for consideration by the Governance Committee, a stockholder should submit a supporting written statement to the Company’s Secretary at Essendant Inc., One Parkway North Boulevard, Deerfield, Illinois 60015-2559 in accordance with the procedures described later in this Proxy Statement under the heading “Stockholder Proposals”. This written statement must contain: (i) as to each nominee, his or her name and all such other information as would be required to be disclosed in a proxy statement with respect to the election of such person as a Director pursuant to the Exchange Act; (ii) the name and address of the stockholder providing such recommendation, a representation that the stockholder is the record owner of shares entitled to vote at the meeting, the number of shares owned, the period of such ownership, and a representation that the stockholder intends to appear in person or by proxy to nominate the person specified in the statement; (iii) whether the nominee meets the objective criteria for independence of directors under applicable NASDAQ listing standards and the Company’s Governance Principles; (iv) a description of all arrangements or understandings, and any relationships, between the stockholder and the nominee or any other person or persons (naming such person(s)) pursuant to which the nomination is to be made by the stockholder; and (v) the written consent of each nominee to serve as a Director if so elected.

Communications with the Board and Annual Meeting Attendance

Any stockholder who desires to contact the Company’s Chairman of the Board, who serves as its lead independent Director, or the other members of the Board of Directors may do so by writing to: Chairman of the Board, or Board of Directors, Essendant Inc., One Parkway North Boulevard, Deerfield, Illinois 60015-2559. All such written communications will be forwarded to and collected by the Company’s Secretary and delivered in the form received to the Chairman of the Board or, if so addressed or deemed appropriate based on the facts and circumstances outlined in the communication, to another member of the Board or a chair of one of its standing committees. However, unsolicited advertisements, invitations or promotional materials may not be forwarded to Directors, in the discretion of the Secretary.

Directors are encouraged to attend annual meetings of the Company’s stockholders. All of the Company’s Directors then serving on the Board of Directors attended the 2015 Annual Meeting of Stockholders.

  2016 PROXY STATEMENT            21  

                         EXECUTIVE COMPENSATION

Executive Compensation – Table of Contents

Compensation Discussion and Analysis

Introduction
Executive Summary	24
Key Leadership Changes	25
2015 Business Result Highlights and Effect on Incentive Payouts
2015 Key Compensation Decisions	26
Compensation Governance Practices	27
Say-On Pay Vote	28
Target Total Compensation	28
Compensation Philosophy and Objectives	28
Compensation Decision-Making Process	29
Use of Consultants	29
Performance Management	29
Compensation Competitive Analysis	30
Elements of Compensation	31
Base Salary	31
Annual Bonus (Management Cash Incentive Awards Plan)	32
Sign-On Bonus	35
Long-Term Equity Incentive Awards	35
Mix of Equity Incentive Awards	36
2015 Restricted Stock Awards	36
2015 Performance-Based RSU Awards	36
Other 2015 Restricted Stock Awards	37
Management Team Transition Awards	37
New-Hire Awards	37
No Performance-Based Restricted Stock Units Earned in 2015	37
2016 Compensation Program	39
Additional Compensation Policies and Practices	39
Stock Ownership Guidelines	39
Recoupment (“Clawback”) Policy	40
Anti-Hedging and Pledging Policies	41
Tax Deductibility	41
Perquisites and Other Benefits	41
Severance Benefits	42

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EXECUTIVE COMPENSATION                        

Other Compensation Information

Human Resources Committee Report	42
Summary Compensation Table	43
Grants of Plan-Based Awards During 2015	45
Outstanding Equity Awards at December 31, 2015	47
Option Exercises and Stock Vested in 2015	48
Retirement Benefits	48
Pension Benefits in 2015	49
Non-qualified Deferred Compensation in 2015	49
Employment Contracts and Employment Termination and Change of Control Arrangements	50
CEO Employment Agreement	50
Other Named Executive Officer Agreements	52
Change of Control Terms Under the Long-Term Incentive Plan	53
Change of Control Terms Under the Management Incentive Plan	54
Phipps’ Employment and Separation Agreements	54
Shelton’s Employment and Separation Payments	54
Potential Post-Employment Payments	54
Severance Benefits	55
Retirement, Disability and Death	56
Phipps’ Resignation	56
Potential Change of Control Payments	56
Payments Triggered Upon a Change of Control	57
Payments Triggered Upon a Termination Following a Change of Control	57

  2016 PROXY STATEMENT            23  

                         EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

The following Compensation Discussion & Analysis (“CD&A”) describes the background, objectives and structure of our 2015 executive compensation programs. This CD&A is intended to be read in conjunction with the tables beginning on page 43, which provide further historical compensation information for our following named executive officers (“NEOs”):

Name	Title
NEOS – Current Employees
Robert B. Aiken Jr.	President and Chief Executive Officer
Timothy P. Connolly	Senior Vice President and Chief Operating Officer
Earl C. Shanks	Senior Vice President and Chief Financial Officer
Eric A. Blanchard	Senior Vice President, General Counsel and Secretary
Richard D. Phillips	Senior Vice President, Strategy, and President, ORS Industrial
NEOS – Former Employees
P. Cody Phipps	Former President and Chief Executive Officer
Todd A. Shelton	Former Senior Vice President and Chief Financial Officer

Cody Phipps resigned effective May 4, 2015.

Todd Shelton resigned as SVP and CFO as of November 12, 2015 and his employment terminated January 15, 2016.

Executive Summary

2015 Business Highlights

Essendant is a leading national wholesale distributor of workplace essentials including traditional office products and office furniture, janitorial, sanitation and breakroom supplies, technology products, industrial supplies, automotive aftermarket tools and equipment. We operated in a challenging environment in 2015. In addition to the continuing secular decline in office products consumption, we responded to a severe downturn in the oilfield and energy sectors that significantly affected the revenues and earnings of our ORS Industrial business. Despite these challenges, we achieved a number of financial, operational, and strategic goals in 2015:

• Achieved adjusted earnings per share of $3.08, equal to 2014 performance.¹

• Generated $131.3 million of free cash flow.

• Beat our expense budget by $13.8 million.

• Returned $88.5 million to stockholders via dividends and share repurchases.

• Converted 14 distribution centers to a common operating and IT platform as of year-end 2015.

• Restructured the business to create a platform for growth in 2016.

• Rebranded the Company as Essendant, reflecting our goal of being the fastest, most convenient solution for workplace essentials.

• Acquired Nestor Sales to strengthen our position in the automotive category.

• Exited non-strategic businesses.

¹  A reconciliation of adjusted EPS to GAAP EPS is provided in Appendix A.

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EXECUTIVE COMPENSATION                        

We believe our pay-for-performance compensation structure, which puts a substantial percentage of executives’ compensation at risk, and our compensation philosophy, which is designed to focus executives on building long-term stockholder value, were key drivers of the Company’s accomplishments in the face of significant market headwinds.

2015 Incentive Payouts

While we delivered solid financial performance in 2015, our performance was below our internal performance goals, which resulted in below-target incentive payouts under our annual cash incentive plan and under outstanding performance-based equity awards.

• The Human Resources Committee and the Board assessed the stockholder value created by the management accomplishments and actions described above as well as the performance against the metrics under the 2015 Management Cash Incentive Award Plan (“MIP”).

^¡  Based on this assessment, the Human Resources Committee and the Board approved a payout of 25% of the target payout under the MIP.

• Based on the Company’s adjusted net income for the two-year period ended December 31, 2015, no additional shares vested as of March 1, 2016 under the performance-based restricted stock unit (“RSU”) awards issued in March 2014. See “—Elements of Compensation—No Performance-Based Restricted Stock Units Earned in 2015”

• Based on the Company’s cumulative economic profit for the three-year period ended December 31, 2015, no additional shares vested as of March 1, 2016 under the RSU awards issued in March 2013. See “—Elements of Compensation—No Performance-Based Restricted Stock Units Earned in 2015”

Key Leadership Changes

We made several changes to our management team in 2015:

• On May 4, 2015, the Board of Directors appointed Mr. Aiken Interim President and Chief Executive Officer, following Mr. Phipps’ resignation. Mr. Aiken is a proven executive with a record of successfully leading large distribution companies. He was also integral in driving the Company’s strategic initiatives and achieving corporate objectives as a member of our Board from 2010 to May 2014, and he continued making these contributions upon rejoining the Board in February 2015. After assessing Mr. Aiken’s performance in the interim role, the Board appointed him President and CEO effective July 22, 2015.

• On November 12, 2015, Mr. Shanks joined the Company as Senior Vice President and Chief Financial Officer, following Mr. Shelton’s resignation. To ensure a smooth transition, Mr. Shelton remained with Essendant as a vice president through January 15, 2016.

• On November 12, 2015, we named Mr. Phillips President of our Industrial business. Under Mr. Phillips’ leadership we are refining the industrial channel value proposition to diversify and lessen its dependence on the oilfield and energy sectors.

• Other management changes included several internal promotions, including the promotions of Timothy Connolly to Senior Vice President and Chief Operating Officer, Girisha Chandraraj to Senior Vice President, Marketing and Chief Digital Officer; and Janet Zelenka to Senior Vice President and Chief Information Officer.

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                         EXECUTIVE COMPENSATION

2015 Key Compensation Decisions

The Company’s executive compensation program is designed to attract and retain talented executives and to reward them appropriately for their contributions to the Company. In making compensation decisions, the Human Resources Committee consults Meridian Compensation Partners, LLC, the Committee’s independent compensation consultant, and analyzes the Company’s compensation practices compared to the practices of a comparison group of companies.

The Human Resources Committee took into consideration several factors to determine 2015 compensation levels for our named executive officers, including our financial and business results and comparative compensation information. Key compensation decisions include:

• In July 2015, the Human Resources Committee and the Board as a whole agreed to employment terms with Mr. Aiken to join our Company as President and CEO after serving as Interim President and CEO since May 4, 2015. The terms were arrived at after the Committee and the Board considered peer group and general industry compensation data provided by Meridian. The terms of Mr. Aiken’s interim and permanent employment agreements include:

^¡  $800,000 base salary

^¡  Annual cash incentive target opportunity of 125% of base salary, pro-rated for 2015

^¡  Restricted stock awards with an economic value of $2,000,000 that vest ratably over three years. See “—Elements of Compensation—Long-Term Equity Incentive Awards—New Hire Awards.”

^¡  Annual equity grants with a target economic value of 300% of base salary, commencing in 2016

^¡  A $166,000 sign on bonus when he joined the Company as Interim President and CEO. See “—Elements of Compensation—Sign On Bonus.”

• In November 2015, the Committee approved the employment terms for Earl Shanks to join the Company as SVP and CFO. Mr. Shanks’ compensation includes:

^¡  $475,000 base salary

^¡  Annual cash incentive target of 80% of base salary, pro-rated for 2015

^¡  Annual equity grants with a target economic value of 150% of base salary, commencing in 2016

^¡  A grant of $250,000 of restricted stock award upon hire

^¡  In March 2016, a performance-based RSU award with a target economic value of $250,000 in addition to his annual March equity grant

^¡  A lump-sum relocation payment of $285,000 (with no gross up for taxes) based on a formula under the Company’s relocation policy

• The Committee approved increases to Mr. Connolly’s annual salary and long-term equity incentive target in connection with his promotion to Chief Operating Officer.

• The Committee approved an increase to Mr. Blanchard’s annual salary to bring his salary closer to the 50th percentile salary of executives in comparable positions at companies in our comparator group.

• All other components of the current NEOs’ compensation remained at the 2014 levels.

• The Committee approved changes to the design of the Management Cash Incentive Awards Plan, replacing Adjusted Net Income with Adjusted EBIT as a more appropriate annual performance measure and changing the weightings of Adjusted Cost Factor and Adjusted Working Capital Efficiency. See “—Elements of Compensation—Annual Bonus (Management Cash Incentive Awards Plan).”

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• The Committee approved changes to our 2015 Long-Term Incentive Plan awards to align our award structure with other companies in our industry and to incent executives to achieve long-term objectives that create stockholder value. See “—Elements of Compensation—Long-Term Equity Incentive Awards,” “—2015 Performance-Based RSU Awards” and “—Mix of Equity Incentive Awards.”

^¡  Vesting of RSUs was changed to cliff-vesting after three years based on cumulative performance against metrics from 2015-2017 (awards granted in prior years had the potential to vest in annual installments)

^¡  Adjusted Working Capital Efficiency was added as a second performance metric

^¡  The allocation of the target value of annual grants between performance-based RSUs and time-based restricted stock was changed. For NEOs other than the President and CEO, the target value of annual grants is now divided equally between RSUs and time-based restricted stock. The target value of annual grants to the President and CEO are split 60%-40% between RSUs and restricted stock. In prior years awards to all executive officers were split 70%-30% between RSUs and restricted stock

Compensation Governance Practices

Our solid compensation governance framework and pay-for-performance practices provide appropriate incentives to our executives to achieve our financial and strategic goals without encouraging them to take excessive risks in their business decisions.

Best Practices We Employ	Practices We Avoid
ü     Pay is closely linked to performance and targeted around the 50th percentile of a Human Resources Committee-approved comparator group of similar size and industry peers	×      Supplemental Executive Retirement Plan (SERP) benefits are not provided
ü     Performance metrics are directly tied to drivers of value creation	×      Hedging and short sales are not permitted
ü     Executives are subject to stock ownership guidelines consistent with market practices	×      Pledging is not permitted without pre-approval
ü     Appropriate caps on incentive plan payouts	×      Dividends and dividend equivalents are not provided on unearned performance awards
ü     Incentive compensation “clawback” policy	×      Incentive program designs do not encourage excessive risk taking
ü     Change-in-Control (“CIC”) severance requires a double trigger	×      Excise tax gross-ups were eliminated for all new agreements after December 31, 2010
ü     Our Human Resources Committee is comprised entirely of independent directors
ü     Our Human Resources Committee engages an independent consultant
ü     Our Human Resources Committee regularly meets in executive session without management present
ü     Annual risk assessment of the compensation program confirms incentives do not encourage excessive risk-taking

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                         EXECUTIVE COMPENSATION

Say-On-Pay Vote

At the 2015 Annual Meeting, our executive compensation was approved by approximately 99% of the shares voted. The Human Resources Committee views this vote result, which is in line with previous support levels, as a strong expression of our stockholders’ continued satisfaction with our executive compensation structure and philosophy. The Committee considered this strong support in determining to primarily continue the general philosophy and elements of the Company’s executive compensation programs for fiscal year 2016.

Target Total Compensation

The mix of pay between fixed and variable compensation and the portion of variable compensation linked to the value of Company common stock is consistent with the Human Resources Committee’s objective of promoting a strong pay-for-performance culture by putting a substantial percentage of executives’ compensation at risk. As reflected in the following charts, 80% of the Mr. Aiken’s 2016 target compensation will be variable or “at-risk,” and 74% of the 2015 target compensation for our other current NEOs was variable or “at risk.”

Compensation Philosophy and Objectives

The Company’s executive compensation program is designed to attract and retain talented executives and to reward them appropriately for their contributions to the Company. Our executive compensation program is intended to support our strategic objectives and align the interests of our executives and our stockholders.

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EXECUTIVE COMPENSATION                        

Our executive compensation program consists of base salary, annual cash incentives, and long-term equity incentives, as well as benefits that are generally available to our salaried employees and limited perquisites. We believe that spreading compensation across these three primary components achieves our compensation objectives as follows:

  ü     Pay-for-Performance

  ü     Competitive executive target pay levels

  ü     Balance fixed and at-risk compensation appropriately

  ü     Balance short-term and long-term goals appropriately

  ü     Align the interests of management and stockholders

  ü     Manage compensation risk

Compensation Decision-Making Process

Use of Consultants

In 2015, Aon Hewitt provided consulting services to management, including consulting on compensation philosophy and plan design, as well as executive job compensation analysis. The Company engages a compensation consulting firm to conduct a formal compensation benchmark study every other year. The information from the studies completed by Aon Hewitt in October 2012 and August 2014 were used to recommend compensation changes in 2014 and 2015, respectively.

The Human Resources Committee has separately retained an independent consultant, Meridian Compensation Partners, LLC, to advise the Committee on compensation matters (including its review of management recommendations with respect to base salary adjustments, annual cash incentive awards and long-term incentive equity awards for executive officers) and to inform the Committee of regulatory developments and implications. Meridian provides no other services to the Company.

Performance Management

The Governance Committee of our Board of Directors oversees the annual evaluation of our President and CEO’s performance. The Human Resources Committee recommends to the independent directors on the Board, for Board approval, adjustments to our President and CEO’s annual base salary, annual cash incentive award targets and long-term incentive targets. Our President and CEO annually reviews the performance of all other executive officers and makes recommendations to the Human Resources Committee, for its approval, with respect to their base salary adjustments and annual cash and long-term incentive targets. The Human Resources Committee approves the final base salary adjustments and incentive targets of the other named executive officers and exercises its discretion in modifying any recommended adjustments or incentive targets.

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                         EXECUTIVE COMPENSATION

Compensation Competitive Analysis

The Human Resources Committee reviewed the recommendations of management and Aon Hewitt and selected the companies listed below for our 2015 comparator group. The comparator group consists of companies that are comparable to us in revenue or number of employees, are in similar industries to ours, or are wholesalers.

2015 Peer Group

Comparator Company	Revenue (US$)		Employees		Type of Industry
Anixter International Inc.		6,445,500,000		9,100	Communication products
CDW Corporation		12,074,500,000		8,200	Technology products
Fastenal Company		3,733,500,000		18,417	Fasteners and other products
Genuine Parts Co.		15,341,647,000		39,000	Auto parts
HD Supply Holdings, Inc.		8,882,000,000		15,000	Industrial products
Insight Enterprises, Inc.		5,316,229,000		5,406	Computer hardware and software
MSC Industrial Direct Co. Inc.		2,910,379,000		6,642	Industrial products
Office Depot, Inc.		16,096,000,000		56,000	Office products
Patterson Companies, Inc.		4,375,020,000		7,000	Dental products
Pitney Bowes		3,821,504,000		15,000	Provider of software, hardware and services
Pool Corporation		2,246,000,000		3,400	Pools and related backyard products
Staples, Inc.		22,492,360,000		44,000	Office products
Steelcase		3,059,000,000		10,700	Workplace furnishings products
SYNNEX Corp.		13,338,397,000		72,500	Technology products
W.W. Grainger, Inc.		9,964,953,000		23,600	Facilities maintenance and other products
WESCO International, Inc.		7,889,600,000		9,400	Electrical products
Median of 16 companies		7,167,550,000		12,850
Essendant		5,363,046,000		6,224	Office, facilities and industrial products

(1) Revenue and Employees as of the most recent fiscal year reported by each comparator company as of January 31, 2016.

Due to variances in revenue between the Company and some of the companies in our comparator group, regression analysis— a statistical technique for investigating and modeling the relationship between variables— is used to estimate the effect that revenue variances have on executive compensation and to adjust the Compensation Data for such variances among the companies. This adjusted data is used to create marketplace compensation profiles for our executives. Our total compensation mix is targeted at setting base salary at the 50th percentile of these marketplace compensation profiles and setting annual cash and long-term target incentives at about the 50th percentile. Our targets generally allow us to recruit, motivate, and retain the executive talent necessary to develop and execute our strategy. However, we may depart from these targets when appropriate based on the performance level of an individual, his or her unique contributions to the Company, market factors, retention risks, or other considerations.

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Elements of Compensation

The chart below shows the elements that make up total direct compensation for our executives. Base salary is fixed pay that recognizes the executive’s role and responsibilities. Annual cash incentive awards are variable and reward achievement of annual financial, operating, and individual goals. Long-term incentives are awarded in the form of performance-based restricted stock units (RSUs) that support the achievement of our three-year financial plan and restricted stock that supports retention and the creation of long-term stockholder value. Annual cash incentives and long-term incentives are awarded under our 2015 Long-Term Incentive Plan (“LTIP”).

Base Salary

Base salaries are reviewed based on the following factors:

Ø Job performance: The executive’s performance relative to the specific financial targets or business objectives for the job;

Ø Market factors: The market compensation profile for similar jobs and the need to attract and retain qualified candidates for high-demand positions;

Ø Potential: The individual’s expected contribution to the Company’s future performance;

Ø Retention risk: The need to retain high performing and high potential executives; and

Ø Internal value of the executive’s role: The relative importance of the job within the Company’s executive ranks based on the scope of responsibility and performance expectation.

In 2015, Mr. Phipps’ salary was increased to match the 50^th percentile for chief executive officers of our comparator group. Mr. Blanchard’s salary was increased to bring it closer to the 50^th percentile. Mr. Connolly’s salary was increased in connection with his promotion to Chief Operating Officer.

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                         EXECUTIVE COMPENSATION

Annual Bonus (Management Cash Incentive Awards Plan)

All of our named executive officers participated in the MIP, which promotes the Company’s pay-for-performance philosophy by providing executives with direct financial incentives in the form of annual cash incentive awards for achieving Company performance goals.

Each named executive officer’s annual cash incentive award target under the MIP is set as a percentage of his or her base salary, which generally approximates the median for annual cash incentives awarded to similar level positions, subject to adjustment by the Human Resources Committee (or, in the case of the CEO’s award target, by the independent directors on the Board) to reflect the executive’s responsibilities, job performance and contribution to overall business goals. Each year, the Committee establishes target financial performance measures at levels that are consistent with our expectations. In 2015, the Committee established these measures based on the expectation that our long-term diluted earnings per share percentage growth rate will be in the high single digits.

The threshold, target and maximum levels of each performance measure are set each year with the following objectives:

• the relative difficulty of achieving each level is consistent from year to year;

• the target level is challenging but achievable, reflects planned Company performance and generally exceeds industry performance expectations;

• the performance ranges within which threshold and maximum incentive payouts can be earned are generally consistent with the range of financial results within which performance is expected to occur; and

• a threshold payment is made to reward partial achievement of the targets and a maximum payment rewards attainment of an aggressive, but potentially achievable, level of performance.

The table below shows the threshold, target, and maximum performance measure levels the Human Resources Committee established during the first quarter of 2015. This mix of performance measures encourages employees to focus appropriately on the Company’s key financial and strategic objectives. The potential payout on each performance measure was 0% to 200% of the target award related to that measure, depending on whether our performance on that measure was at or below threshold (payout of 0%), between threshold and target (payout greater than 0% but less than 100%), between target and maximum (payout between 100% and 200%), or at or above maximum (payout of 200%). For performance between Threshold and Target or Target and Maximum, the achievement percentage for each performance measure was determined by linear interpolation. The Committee certified the following actual performance level and percentage of target payout for each of the 2015 MIP performance measures for the named executive officers.

2015 Performance Metrics

Metric	Weight	Threshold	Target	Maximum	2015 Actual Performance
Adjusted EBIT	60%	$205.2M	$225.7M	$246.2M	$195.1
Adjusted Cost Factor	20%	15.75%	15.25%	14.75%	16.20%
Adjusted Working Capital Efficiency	20%	16.47%	15.97%	15.47%	17.27%

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EXECUTIVE COMPENSATION                        

For purposes of the MIP, “EBIT” is defined as earnings before interest and taxes after eliminating unusual or non-recurring items; “cost” is defined as operating expenses plus cost components of gross margin covering occupancy, advertising materials, distress loss, net delivery freight and net advertising freight; and “working capital” is defined as total current assets (excluding cash and cash equivalents) less total current liabilities (excluding short term debt). The Committee approved adjustments to the performance measures to eliminate the net impact of the following events (the “Adjustments”) on EBIT, cost as a percentage of net sales, and working capital as a percentage of net sales (as so adjusted, “Adjusted EBIT,” “Adjusted Cost Factor,” and “Adjusted Working Capital Efficiency,” respectively): write offs of previously capitalized costs from financing activities; the impact on financial results of any acquisitions or dispositions during 2015, such impact to be as projected in the final financial valuation of the transaction presented to the Board prior to the Board’s approval of the transaction; charitable contributions to the Essendant Charitable Foundation; impairment of goodwill and other intangible assets; curtailment, settlement or termination of any pension plans; litigation or claim judgments and settlements; and restructuring costs and extraordinary items identified in the Company’s audited financial statements, including footnotes.

Although management exceeded cost savings targets in 2015, our results fell short of the threshold levels of the MIP performance metrics. The Human Resources Committee determined that Adjusted Cost Factor, as defined, would not appropriately reward management for their cost savings achievements. The Adjusted Cost Factor definition measured costs against net sales after giving effect to the Adjustments (“Adjusted Revenue”). Revenue experienced declines in 2015 due primarily to weakness in the energy and industrial sectors; decreased sales of paper and janitorial and sanitation products were also contributing factors. Actual 2015 costs (as defined for purposes of MIP after giving effect to the Adjustments described above and the adjustments to operating expenses shown on Appendix A (to the extent not reflected in the Adjustments) and after eliminating reductions in variable costs attributable to the shortfall in actual net sales compared to net sales under our 2015 operating plan (“Plan Revenue”)) were $870 million, compared to 2015 operating plan costs of $883 million. Applying $870 million of costs against Plan Revenue would have resulted in an Adjusted Cost Factor of 15.01%, better than a MIP target of 15.25%. Although that level of achievement would have resulted in an overall MIP payout of approximately 30%, the Committee, taking into consideration all aspects of our performance, determined that a payout of 25% of MIP target was appropriate.

For each named executive officer, 20% of the payout approved by the Human Resources Committee for all executive officers as a group was subject to an adjustment by the Human Resources Committee (or the independent directors on the Board, in the case of Mr. Aiken), based on the Committee’s/Board’s assessment of the executive’s individual performance against specific individual performance targets. For outstanding performance, the executive’s total payout could have been increased up to 10%, from 25% to 27.5%. For unsatisfactory performance, the executive’s total payout could have been decreased as much as 20%, from 25% to 20%. The Human Resources Committee and, for Mr. Aiken, the Board assessed the achievements for each named executive officer against the performance goals and determined not to adjust the payouts for individual performance factors.

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                         EXECUTIVE COMPENSATION

2015 Payouts

	Target			Actual 2015
Name	% of Base     Salary			% of MIP     Target		Amount     ($)
Current NEOs
Robert B. Aiken Jr.(1)		125	%		25		$166,667
Timothy P. Connolly		90	%		25		$105,150
Earl C. Shanks(1)		80	%		25		$15,833
Eric A. Blanchard		60	%		25		$56,250
Richard D. Phillips		50	%		25		$46,875
Former NEOs
P. Cody Phipps(2)		125	%		–		$0
Todd A. Shelton		70	%		25		$77,000

(1) Mr. Aiken’s and Mr. Shanks’ 2015 cash incentive payouts were pro-rated based on the date their employment with the Company commenced.

(2) Mr. Phipps was not eligible to receive any award under the 2015 MIP.

The annual cash incentive award payout chart below reflects our achievement of the MIP performance measures for the past ten years and underscores our pay-for-performance approach. As shown in the chart, the MIP payout has been at or above the overall target level three times in the last ten years, but during that period we have never achieved the maximum performance level. The annual incentive payout percentage over the last ten years (excluding 2009 in which executive officers did not participate in the MIP) has averaged 83%:

In order for the Company to receive an income tax deduction for MIP amounts payable to MIP participants who are “covered employees” for purposes of Section 162(m) of the Internal Revenue Code (the “Code”), the payouts to Mr. Connolly, Mr. Blanchard, and Mr. Phillips as calculated under the MIP are paid from a separate pool established under the stockholder-approved LTIP (the “MIP incentive pool”). Mr. Aiken and Mr. Shanks were not covered by the MIP incentive pool because they joined the Company after the MIP incentive pool was established. The MIP incentive pool for 2015 was an amount

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EXECUTIVE COMPENSATION                        

equal to 10% of 2015 EBIT (as defined under the MIP). The Committee used its discretion to reduce the payouts to each participant covered by the MIP incentive pool to equal the 25% payout described above.

Sign On Bonus

Mr. Aiken received a $166,000 sign on bonus for joining the Company as Interim President and CEO. This bonus was paid to compensate Mr. Aiken for compensation he gave up as the Company asked him to leave his prior employer.

Long-Term Equity Incentive Awards

In 2015 the Human Resources Committee awarded long-term equity incentive awards to the Company’s executives, including the named executive officers. Executives participate in these programs based on their: (1) ability to make a substantial contribution to the Company’s financial results, (2) level of responsibility, (3) market practice for comparable roles, (4) performance, and (5) leadership potential. Executive participation (other than the CEO) is determined by the Committee based on the recommendations of the CEO, rather than automatically based on title, position, or salary level. The economic value of each named executive officer’s total LTIP awards is generally targeted at about the median value of equity awards to executives in similar positions based on comparator group and general industry compensation data, subject to adjustment by the Committee to reflect the foregoing factors, as well as the Company’s desire to retain executives.

As part of our recurring LTIP grant process, the targeted economic value of 2015 LTIP awards for each NEO was as follows:

Name	Target Economic Value of 2015 LTIP Awards % of Base Salary	Grant Date Value of RSU Awards	Grant Date Value of Restricted Stock Awards
Current NEOs
Robert B. Aiken Jr.(1)	–
Timothy P. Connolly(2)	110%/160%	$221,100	$400,000
Earl C. Shanks(1)	–
Eric A. Blanchard	100%	$187,500	$187,500
Richard D. Phillips	100%	$187,500	$187,500
Former NEOs
P. Cody Phipps	300%	$1,440,000	–
Todd A. Shelton	140%	$308,000	$308,000

(1) Mr. Aiken’s and Mr. Shanks’ 2015 LTIP awards were the product of negotiations in recruiting them to the Company rather than being a targeted percentage of their base salaries. See “—Other 2015 Restricted Stock Awards—New-Hire Awards.”

(2) The target economic value of Mr. Connolly’s 2015 LTIP awards was increased from 110% to 160% of base salary in connection with his promotion to Chief Operating Officer.

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                         EXECUTIVE COMPENSATION

Mix of Equity Incentive Awards

Our regular long-term equity compensation program consisted of two types of awards:

• Performance-based RSU awards; and

• Time-based restricted stock awards

Prior to 2015, awards to all NEOs were divided 70%-30% between performance-based RSUs and time-based restricted stock. In 2015 the Human Resources Committee and, for the President and the CEO, the Board modified the allocation between performance-based RSUs and time-based restricted stock to align with allocation practices typically used by companies in our comparator group and by industry generally. The economic grant date value of the awards made to Mr. Connolly, Mr. Blanchard, Mr. Phillips and Mr. Shelton was split evenly between performance-based RSUs and time-based restricted stock. The economic grant date value of Mr. Phipps’ 2015 performance-based RSU award was 60% of his full-year target. Mr. Phipps did not receive the balance of his 2015 full-year target economic value because he resigned prior to the September 2015 grant of time-based restricted stock.

All of the long-term equity incentive awards granted to Mr. Aiken and Mr. Shanks in 2015 were time-based restricted awards. See “—Other 2015 Restricted Stock Awards—New Hire Awards.” Commencing in 2016, the target economic value of Mr. Aiken’s long-term equity award will be split 60%-40% between performance-based RSUs and time-based restricted stock, and the target value of Mr. Shanks’ award will be split evenly between performance-based RSU awards and time-based restricted stock.

2015 Restricted Stock Awards

Except for the November 2015 award to Mr. Shanks discussed below, restricted stock granted to named executive officers in 2015 vests in three equal, annual increments, except that if the aggregate adjusted diluted earnings per share of the Company for the four quarters preceding a vesting date do not exceed $0.50, the restricted stock scheduled to vest on that date will be forfeited. (The $0.50 earnings per share requirement is designed to provide tax deductibility as described below. See “—Additional Compensation Policies and Practices —Tax Deductibility.”)

The Committee also approved and granted restricted stock awards that were not part of the annual granting cycle. See “—Other 2015 Restricted Stock Awards.”

2015 Performance-Based RSU Awards

In 2015, the Committee changed the design of the long-term performance award based on market best practices and the Committee’s determination of the most appropriate structure to incentivize and reward executives for pursuing the creation of long-term stockholder value. The 2015 awards, granted on March 15, 2015, have a three-year cumulative performance period, with cliff-vesting at the end of that time, and utilize two performance metrics: Adjusted Working Capital Efficiency (as defined above) and Adjusted Cumulative Net Income (defined as the sum of the Company’s net income for the three years ending December 31, 2017, as recalculated based on the Adjustments described on page 33). Prior to 2015, performance-based RSUs were eligible for annual vesting. The change to three-year cliff vesting avoids the complexity of rolling vesting and aligns with the vesting schedule for performance-based equity awards typically used by companies in our comparator group and by industry generally.

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EXECUTIVE COMPENSATION                        

Other 2015 Restricted Stock Awards

Management Team Transition Awards

Upon Mr. Phipps’ resignation, the Board wanted to ensure the continuity of the management team going forward. The experience and seniority of our leadership team is critical to our future success. Given the CEO change and the related uncertainty, the independent directors of the Board approved one-time retention awards for Messrs. Connolly, Shelton, Blanchard, and Phillips with a target economic value equal to 150% of each executive’s annual LTIP award target. Each awardee received fifty percent of this award in the form of restricted stock in June 2015, with grant date values of $599,982, $461,981, $281,261, and $281,261, repayments respectively. The Board believes that restricted stock is a strong retention vehicle. The remaining fifty percent of each award was delivered as a performance-based RSU grant in March 2016. The Company’s objective is to attract and retain the best talent available and to invest in those individuals who deliver long-term productivity; as such, the Board believed these awards were in the long-term interests of the Company and its stockholders.

New-Hire Awards

In connection with his appointment as President and CEO of the Company, initially on an interim basis and then on a permanent basis, Mr. Aiken received restricted stock awards with a grant date value of $2 million. The amount of these awards was determined based on comparison data, Mr. Aiken’s prior executive experience, and Essendant’s compensation practices for its previous president and chief executive officer. The Human Resources Committee and the Board approved these awards as time-based restricted stock because Mr. Aiken joined the Company after the Board had established the performance requirements for the 2015 performance-based awards and because Mr. Aiken did not have a management role in establishing the performance plan. Commencing in 2016, 60% of Mr. Aiken’s annual LTIP award is expected to be performance based and 40% is expected to be time based.

In connection with his hiring as CFO, Mr. Shanks received $250,000 in restricted stock in November 2015. In March 2016 Mr. Shanks received an award of performance-based RSUs with a target economic value of $250,000. The March 2016 award was in addition to his annual March award. The November 2015 award will cliff vest three years from the grant date. The March 2016 award will cliff vest three years from the grant date to the extent the applicable performance metrics have been achieved. In 2016 Mr. Shanks will also be eligible for annual LTIP awards, which are expected to be divided equally between performance-based RSUs and time-based restricted stock.

No Performance-Based Restricted Stock Units Earned in 2015

The 2013 and 2014 performance-based RSUs were scheduled to vest in three annual increments targeted at 1/3 of the number of units granted, but ranging from:

• 0 to 66.67% of the number of units granted based on the Company’s achievement of the applicable performance metric within a projected range for the first year of the performance period;

• 0 to 133.33% of the number of units granted (less any previously-vested units) based on the Company’s achievement of the applicable performance metric within a projected range for the first two years of the performance period; and

• 0 to 200% of the number of units granted (less any previously-vested units) based on the Company’s achievement of applicable performance metric within a projected range for the first year of the performance period for the full three-year performance period.

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                         EXECUTIVE COMPENSATION

The performance metric for the 2013 RSUs was economic profit.² The performance metric for the 2014 RSUs was adjusted net income.³

Company’s Cumulative Economic Profit and Adjusted Net Income Goals and

Corresponding Performance Factors During the Performance Periods Indicated

2013 RSU Awards ($ million)	1 Year Period Ended December 31, 2013					2 Year Period Ended December 31, 2014					3 Year Period Ended December 31, 2015
	EP Goal		Perf. Factor			EP Goal		Perf. Factor			EP Goal		Perf. Factor
Maximum		35M		200	%		83M		200	%		144M		200	%
Target		23M		100	%		47M		100	%		72M		100	%
Threshold		12M		0	%		24M		0	%		36M		0	%
Actual		24M		104	%		33M		40	%		48M		30	%
2014 RSU Awards ($ million)	1 Year Period Ended December 31, 2014					2 Year Period Ended December 31, 2015
	Adjusted Net Income Goal		Perf. Factor			Adjusted Net Income Goal		Perf. Factor
Maximum		142M		200	%		293M		200	%
Target		135M		100	%		273M		100	%
Threshold		126M		0	%		245M		0	%
Actual		129M		36	%		234M		0	%

The number of RSU awards earned by each executive as of any vesting date was calculated using the following formula:

(Performance Factor x Cumulative Unit Percentage x Number of RSUs Awarded) – Number of Previously Earned RSUs

The Performance Factor for each vesting date was derived from the table above based on the Company’s cumulative economic profit or adjusted net income, as applicable, through the applicable vesting date. The Performance Factors as of the vesting date for the performance periods ended December 31, 2015 under the 2013 and 2014 RSU awards were 30% and 0%, respectively. The December 31, 2015 Cumulative Unit Percentage was 66 2/3% for the 2014 RSUs and 100% for the 2013 RSUs. The Number of RSUs Awarded was the number of RSUs granted to the applicable

²  For purposes of the March 2013 restricted stock unit award, economic profit was defined as after-tax earnings before interest and taxes, after applying a capital charge based on the Company’s long-term weighted average cost of capital. Total capital used to calculate the capital charge included all assets and liabilities except cash and debt (including securitized accounts receivable). Both after-tax earnings and total capital were also adjusted to remove the impact of certain other pre-determined items in calculating the economic profit as defined in each respective award.

³  For purposes of the March 2014 restricted stock unit award, adjusted net income was defined as net income as reported in our audited financial statements, adjusted to eliminate the net impact of write offs of previously capitalized costs from refinancing activities; the impact on financial results during the year of completion and the year following of any acquisitions or dispositions with revenue for the most recently completed fiscal year of more than $50 million, such impact to be as projected in the final financial valuation of the transaction and its impacts presented to the Board prior to the Board’s approval of the transaction; the effects on financial results of charitable contributions to the Essendant Charitable Foundation; the effects of amounts accrued or paid related to prior period claims sold to Kemper Insurance; the expense associated with impairment of goodwill and other intangible assets; the interest expenses and any accrued interest associated with the cost of repurchases of our stock or issuance of dividends; the effects of any termination of any interest rate swap agreement; changes in the carrying value within the Company’s Other Comprehensive Income of the assets and liabilities associated with pension plans and interest rate swap agreements; and the effects of the termination, immunization, or changes in accounting principles of the Company pension plans, if any.

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EXECUTIVE COMPENSATION                        

executive by the Company. The Number of Previously Earned RSUs was the number of RSUs that had been earned on prior vesting dates.

Under the formula for determining the number of RSUs earned as of each vesting date, no RSUs would be earned if the economic profit or the adjusted net income, as applicable, as of the vesting date was equal to or less than the Threshold amount specified in the table. Based on the Company’s cumulative economic profit for the three-year period ended December 31, 2015, and the Company’s cumulative adjusted net income for the two-year period ended December 31, 2015, no additional shares vested on March 1, 2016 under the RSU award agreements issued in March 2013 and March 2014. These results demonstrate the alignment of compensation delivery with performance measure achievement.

2016 Compensation Program

The Human Resources Committee approved the following aspects of the 2016 compensation program for executive officers:

• No annual salary adjustments will be considered until the completion of Essendant’s bi-annual executive compensation study in July 2016.

• Annual cash incentive awards reflecting individual incentive targets, performance objectives, and other design features generally consistent with those provided in the 2015 MIP and the MIP incentive pool.

• March 15, 2016 RSU awards approved for the current NEOs.

^¡  The RSU award to Mr. Aiken was designed to deliver 60% of his 2016 annual LTIP economic value target.

^¡  The RSU awards to Mr. Connolly, Mr. Shanks, Mr. Blanchard, and Mr. Phillips were designed to deliver 50% of their 2016 annual LTIP economic value target (representing their annual performance-based RSU award). Additionally, the RSU awards to Mr. Connolly, Mr. Blanchard, and Mr. Phillips were designed to deliver the remaining half of their 2015 Management Team Transition Awards that were approved in June 2015, and the RSU award to Mr. Shanks was designed to deliver an additional $250,000 target economic value as contemplated by the employment terms approved for him by the Committee in November 2015.

^¡  The terms of the awards are generally the same as those set forth in the March 15, 2015 grant, except the March 2016 awards introduced relative Total Stockholder Return (“TSR”) as a performance metric. TSR will be calculated over a three-year period and weighted 15%. The weighting of adjusted cumulative net income will be reduced to 60% and the weighting of adjusted working capital efficiency will remain at 25%. The addition of TSR and the weighting of the three performance metrics continue the Committee’s practice of focusing performance measures on the factors that drive stockholder value.

Additional Compensation Policies and Practices

Stock Ownership Guidelines

The Company and its stockholders are best served by managing the business with a long-term perspective while delivering strong annual results. We believe stock ownership is an important tool to strengthen the alignment of interests of stockholders, directors, and executive officers. Our guidelines specify that each director and executive officer should retain 100% of any shares of Company common stock acquired (net of required tax withholding) through equity-based grants made by the Company

  2016 PROXY STATEMENT            39  

                         EXECUTIVE COMPENSATION

under our incentive plans, until he or she attains and continues to maintain ownership equal to at least the multiple of cash retainer or annual base salary set forth in the table below. As of December 31, 2015 all of the current directors and NEOs had attained such ownership, except for Mr. Aiken and Mr. Shanks, who joined the Company in 2015, and Mr. Williams, who joined the Board in 2014. All directors and executive officers complied with the retention aspects of the stock ownership guidelines in 2015.

NEO	Title	Required Salary Multiple
Robert B. Aiken, Jr.	President and CEO	Five x base salary
Timothy P. Connolly	Senior Vice President and COO	Three x base salary
Earl C. Shanks	Senior Vice President and CFO	Three x base salary
Eric A. Blanchard	Senior Vice President, General Counsel and Secretary	One x base salary
Richard D. Phillips	Senior Vice President, Strategy and President, ORS Industrial	One x base salary
Independent Directors		Five x annual cash retainer

The value of all of the following types of Company stock, stock units or stock options owned by or granted to the participant qualifies toward the participant’s attainment of the target multiple of pay:

• Vested and unvested restricted stock/stock units

• Shares owned outright/shares beneficially owned

• Shares owned through the Company’s employee stock purchase plan or 401(k) plan

• Shares attained through a deferred stock unit plan

• Vested in-the-money stock options reflecting the gross value equal to the spread between the strike price (closing stock price on the date of grant) and the fair market value

Based on an amendment to the stock ownership guidelines adopted by the Human Resources Committee in February 2014, unvested restricted stock units that are subject to performance conditions will cease to count toward share ownership in February 2017.

The Board and the Committee may reduce future long-term incentive grants or other compensation provided to executives who do not comply with the guidelines.

Recoupment (“Clawback”) Policy

Under our clawback policy, we are allowed to recoup incentive compensation previously paid to our executive officers if there is a restatement of financial statements or if any executive commits fraud or engages in other misconduct. The Committee adopted this policy in anticipation of SEC rules that will require such policies, and we intend to make any changes to our policy that may be required to comply with those final rules. Our form RSU and restricted stock award agreements include provisions requiring the forfeiture of any such awards, shares issued under such awards, and proceeds from the sale of any shares issued under such awards if the participant breaches certain covenants, including non-competition and non-solicitation restrictions that apply during the term of employment and for two years thereafter.

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EXECUTIVE COMPENSATION                        

Anti-Hedging and Pledging Policies

Under our insider trading policy, directors and executive officers, as well as other employees, are prohibited from the following activities with respect to Company common stock:

ü Hedging their interest or otherwise speculating in Company shares by selling short or trading or purchasing “put” or “call” options on our common stock or engaging in similar transactions; and

ü Pledging any shares of our common stock without prior clearance from the Company.

As of January 1, 2016, no shares of Company common stock were pledged by any director or executive officer.

Tax Deductibility

Section 162(m) of the Code generally limits the corporate tax deduction for compensation paid to the chief executive officer and the three other most highly compensated executives (other than the CFO) to $1 million annually, unless certain requirements are satisfied. To maximize the corporate tax deduction, the MIP, the LTIP and the MIP incentive pool were designed so that certain awards under those plans can comply with the requirements of Section 162(m) of the Code and the MIP and the MIP incentive pool were established under the stockholder-approved LTIP. As the $1 million limit does not apply to compensatory amounts that qualify as performance-based compensation under Section 162(m), certain of our performance-based awards made pursuant to these plans are intended to qualify for corporate tax deductibility.

We intend to use performance-based compensation to minimize the effect of the limits imposed by Section 162(m) to the extent that compliance with Code requirements does not conflict with our compensation objectives. In some cases, however, we believe the loss of some portion of a corporate tax deduction may be necessary and appropriate in order to provide the compensation necessary to attract and retain qualified executives.

Perquisites and Other Benefits

We provide cash allowances in lieu of separate perquisite programs such as auto allowances, financial planning reimbursements, physical examination reimbursements, and supplemental liability insurance. Based on the Compensation Data, the independent directors on the Board approve the perquisite allowance for Mr. Aiken and the Human Resource Committee approves the perquisite allowances for the other named executive officers.

Other executive benefits include:

Ø Group life insurance and accidental death and dismemberment insurance equal to 2 1/2 times the executive’s base salary, up to a maximum benefit of $1.2 million.

Ø $200,000 of business travel insurance.

Ø Supplemental Long-Term Disability Insurance

Our executives are eligible to participate in all of our other employee benefit plans, such as medical, dental, vision, long-term disability and 401(k) plan. Executives hired prior to January 1, 2008 are also eligible to receive a pension benefit from our frozen pension plan. See “Executive Compensation – Retirement Benefits.” We believe these benefits support our goal of attracting and retaining key executive talent, as well as promote the health, well-being, and financial security of our executives.

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                         EXECUTIVE COMPENSATION

Severance Benefits

We have entered into employment agreements with each of the NEOs except Mr. Shanks. Mr. Shanks is covered by the Company’s Executive Severance Plan. The employment agreements and the Executive Severance Plan provide for severance benefits in the event of termination by the Company without cause or by the executive for good reason. These benefits are intended to attract and retain executives and to facilitate an orderly transition upon certain terminations. See “Executive Compensation – Employment Contracts and Employment Termination and Change of Control Arrangements.”

The named executive officers’ benefits in the event of a change of control have a “double trigger,” meaning the executives are not automatically entitled to severance upon a change of control. Rather, they are entitled to receive severance following a change of control only if, within the period of time specified in their respective employment contracts or the Executive Severance Plan, their employment is terminated by the Company without cause or by the executive for good reason.

Change of control severance benefits help to maintain the named executive officers’ objectivity in decision-making on potential corporate transactions and provide another vehicle to align the interests of the named executive officers with the interests of our stockholders. The use of a double-trigger for the payment of change of control severance benefits encourages executives to remain with us through the closing of a change of control transaction, providing stability at a critical time.

Human Resources Committee Report

The Human Resources Committee of the Board of Directors has reviewed and discussed the Compensation Discussion and Analysis with management and, based on such review and discussions, the Human Resources Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference in the Company’s Annual Report on Form 10-K.

The Human Resources Committee:

Susan J. Riley, Chair

Alexander M. Schmelkin

Paul S. Williams

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EXECUTIVE COMPENSATION                        

Summary Compensation Table

The following table summarizes the compensation of all persons serving as principal executive officer (CEO) and principal financial officer (CFO) in fiscal 2015 and the next three highest compensated executive officers who were serving as such at December 31, 2015.

Name and Principal Position	Year		Salary(1) ($)		Bonus(2) ($)		Stock Awards(3) ($)		Option Awards(4) ($)		Non-Equity Incentive Plan Compensation(5) ($)		Change in Pension Value and Nonqualified Deferred Compensation Earnings(6) ($)		All Other Compensation(7) ($)		Total Compensation ($)
Robert B. Aiken, Jr.		2015		530,768		166,000		1,999,963		—		166,667		—		19,147		2,882,545
President and Chief Executive Officer
Timothy P. Connolly		2015		471,417		53,624		1,221,059		—		105,150		—		29,578		1,880,827
Senior Vice President and		2014		402,000		50,000		692,576		—		289,440		12,266		29,147		1,475,429
Chief Operating Officer		2013		398,000		—		433,664		442,195		255,496		—		32,813		1,562,168
Earl C. Shanks		2015		63,035		—		249,995		—		15,833		—		287,889		616,751
Senior Vice President and Chief Financial Officer
Eric A. Blanchard		2015		375,000		—		656,220		—		56,250		1,001		31,306		1,119,777
Senior Vice President, General		2014		330,500		—		330,462		—		169,384		5,311		—		835,658
Counsel and Secretary		2013		330,500		—		334,106		330,495		179,197		—		32,308		1,206,606
Richard D. Phillips		2015		375,000		—		656,220		—		46,875		—		28,748		1,106,843
Senior Vice President,		2014		375,000		—		392,495		—		150,000		—		28,408		945,903
Strategy and President-ORS Industrial		2013		356,730		150,000		312,036		374,992		155,745		—		28,154		1,377,657
P. Cody Phipps		2015		275,127		—		1,439,989		—		—				518,021		2,233,137
Former President and		2014		750,000		—		1,859,983		—		660,000		12,944		37,548		3,320,475
Chief Executive Officer		2013		750,000		—		1,799,953		1,799,996		745,470		—		37,700		5,133,119
Todd A. Shelton		2015		440,000		—		1,077,974		—		77,000		—		30,470		1,625,444
Former Senior Vice President		2014		440,000		—		620,966		—		246,400		—		30,354		1,337,720
and Chief Financial Officer		2013		423,334		—		456,972		456,490		264,775		—		35,515		1,637,086

(1) Reflects base salary amounts earned during the years listed, including any portions deferred under the 401(k) Savings Plan and the Deferred Compensation Plan of the Company’s wholly owned subsidiary, Essendant Co.

(2) Mr. Aiken received a cash sign-on bonus in the amount of $166,000 related to his transition to CEO. Mr. Connolly received the first half of his cash bonus related to his promotion to President, Business Transformation and Supply Chain in the amount of $50,000 in January 2014 and received the second half of the bonus in the amount of $50,000 payable in January 2015. Mr. Phillips received a cash sign-on bonus in the amount of $150,000.

(3) Amounts shown represent the grant date fair value of restricted stock awards and performance-based RSU awards that were granted in each year, computed in accordance with Financial Standards Board Accounting Standards Codification (ASC) Topic 718, Compensation—Stock Compensation and represent the probable outcome of the performance condition. For a discussion of the assumptions used in calculating these values. See Note 5, “Share-Based Compensation,” to the Company’s audited financial statements contained in our annual report on Form 10-K for the year ended December 31, 2015 and Note 3, “Share-Based Compensation,” to the Company’s audited financial statements contained in our annual reports on Form 10-K for the years ended December 31, 2014 and 2013. Assuming the highest level of performance was achieved, the grant date fair value of RSU awards in 2015 to the NEOs would have been $442,160 for Mr. Connolly, $374,924 for Mr. Blanchard, $374,924 for Mr. Phillips, $2,879,978 for Mr. Phipps, and $615,996 for Mr. Shelton.

(4) Amounts shown are based upon the fair value of option awards estimated on the grant date using a Black-Scholes option valuation model. For a discussion of the assumptions used in calculating these values, see Note 3, “Share-Based Compensation,” to the Company’s audited financial statements contained in our annual reports on Form 10-K for the year ended December 31, 2013.

(5) The amounts shown represent annual cash incentives earned based on 2015 performance and paid in March of 2016. These amounts were paid under the MIP pursuant to the Company’s LTIP. See “—Compensation Discussion and Analysis—Elements of Compensation—Annual Cash Incentive Awards.”

(6) This amount represents the positive change in value under the Company’s Pension Plan for the NEOs who are eligible for the Pension Plan. In addition, the pension value for Messrs. Connolly and Phipps declined by $879 and $312, respectively, in 2015, and the pension value for Messrs. Connolly, Blanchard and Phipps declined by $3,391, $173 and $3,014, respectively, in 2013. Earnings on deferred compensation are not reflected in this column because the investment options under the non-qualified Deferred Compensation Plan are

  2016 PROXY STATEMENT            43  

                         EXECUTIVE COMPENSATION

the same choices available to all employees under the 401(k) Savings Plan and the named executive officers do not receive preferential earnings on their investments.

(7) The amounts shown for 2015 include the following:

Name	401(k) Match		Cash Perq Allowance		Other Perqs(8)		Severance Payments(9)		Total All Other Compensation
Robert B. Aiken, Jr.		—		15,909		3,238				19,147
Timothy P. Connolly		7,950		18,000		3,628				29,578
Earl C. Shanks		594		2,250		285,045				287,889
Eric A. Blanchard		7,950		18,000		5,356				31,306
Richard D. Phillips		7,950		18,000		2,798				28,748
P. Cody Phipps		7,833		8,182		2,006		500,000		518,021
Todd A. Shelton		7,950		20,000		2,520				30,470

(8) Other perquisites include (1) the taxable cost of group-term life insurance, (2) cell phone stipend, and (3) spousal travel and entertainment. Mr. Shanks received a lump sum relocation payment of $285,000.

(9) Mr. Phipps entered into a separation agreement pursuant to which the Company agreed to pay him $500,000 over a six month period in consideration for transition services and his release of any claims against the Company.

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EXECUTIVE COMPENSATION                        

Grants of Plan-Based Awards During 2015

The compensation plans under which the grants in the following table were made are described under “—Compensation Discussion and Analysis—Elements of Compensation—Long-Term Equity Incentive Awards.” The LTIP permits different types of awards, including but not limited to stock options, restricted stock awards, stock appreciation rights, cash incentives awards, and performance-based awards. The LTIP requires that in the event of a corporate transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares), outstanding equity awards will be proportionately adjusted.

						Estimated Future Payouts Under Non-Equity Incentive Plan Awards(MIP)(1)					Estimated Future Payouts Under Equity Incentive Plan Awards(2)
NAME	GRANT DATE			Committee of the Board of Directors Action Date		Threshold ($)	Target ($)		Maximum ($)		Threshold ($)		Target ($)		Maximum ($)		All Other Option Awards: Number of Securities Underlying Options (#)	Exercise or Base Price of Option Awards (S/Shr)	Grant Date Fair Value of Stock and Option Awards ($)
Robert B. Aiken, Jr.		6/5/2015			6/3/2015							0		499,989		499,989				39.71
Robert B. Aiken, Jr.		9/1/2015			7/22/2015							0		1,499,974		1,499,974				33.25
Robert B. Aiken, Jr.								666,667		1,333,334
Timothy P. Connolly		3/15/2015			2/10/2015							0		221,080		442,160				38.82
Timothy P. Connolly		6/1/2015			5/19/2015							0		599,982		599,982				39.85
Timothy P. Connolly		9/1/2015			7/13/2015							0		399,998		399,998				33.25
Timothy P. Connolly								420,600		841,200
Earl C. Shanks		12/1/2015	(3)		11/5/2015							0		249,995		249,995				36.64
Earl C. Shanks								63,333		126,666
Eric A. Blanchard		3/15/2015			2/10/2015							0		187,462		374,924				38.82
Eric A. Blanchard		6/1/2015			5/19/2015							0		281,261		281,261				39.85
Eric A. Blanchard		9/1/2015			7/13/2015							0		187,497		187,497				33.25
Eric A. Blanchard								225,000		450,000
Richard D. Phillips		3/15/2015			2/10/2015							0		187,462		374,924				38.82
Richard D. Phillips		6/1/2015			5/19/2015							0		281,261		281,261				39.85
Richard D. Phillips		9/1/2015			7/13/2015							0		187,497		187,497				33.25
Richard D. Phillips								187,500		375,000
P. Cody Phipps		3/15/2015			2/10/2015							0		1,439,989		2,879,978				38.82
P. Cody Phipps								1,000,000		2,000,000
Todd A. Shelton		3/15/2015			2/10/2015							0		307,998		615,996				38.82
Todd A. Shelton		6/1/2015			5/19/2015							0		461,981		461,981				39.85
Todd A. Shelton		9/1/2015			7/13/2015							0		307,995		307,995				33.25
Todd A. Shelton								308,000		616,000

(1) These columns indicate the range of possible payouts for 2015 performance under the Company’s MIP as described in “—Compensation Discussion and Analysis—Annual Cash Incentive Awards.” The actual payouts for 2015, as reflected in the Summary Compensation Table, were as follows: Mr. Aiken, $166,667; Mr. Connolly, $105,150; Mr. Shanks, $15,833; Mr. Blanchard, $56,250; Mr. Phillips, $46,875; Mr. Shelton, $77,000. Mr. Phipps resigned on May 4, 2015 and did not receive a payout.

(2) Restricted stock unit (“RSU”) awards granted pursuant to the Company’s LTIP on March 15, 2015 will cliff vest on March 1, 2018 to the extent the Company achieves its cumulative net income and working capital efficiency goals for the performance period. Participants may earn a threshold of zero to a maximum of 200% of their target equity incentive award over the three-year period. See “—Compensation Discussion and Analysis—Elements of Compensation—Long-Term Equity Incentive Awards” for more information.

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                         EXECUTIVE COMPENSATION

Restricted stock awards granted pursuant to the Company’s LTIP on September 1, 2015 vest in three annual increments on each September 1st, provided that the Company’s aggregate adjusted diluted earnings per share exceed $0.50 for the four calendar quarters immediately preceding the vesting date.

(3) The restricted stock award granted to Mr. Shanks on December 1, 2015 pursuant to the Company’s LTIP, in connection with his acceptance of employment, will vest on December 1, 2018, provided that the Company’s aggregate adjusted diluted earnings per share exceed $0.50 for the four calendar quarters immediately preceding the vesting date.

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EXECUTIVE COMPENSATION                        

Outstanding Equity Awards at December 31, 2015

			Option Awards								Stock Awards(1)
NAME	GRANT DATE		Number of Securities Underlying Unexercised Options Exercisable (#)		Number of Securities Underlying Unexercised Options Unexercisable (#)		Option Exercise Price		Option Expiration Date		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Yet Vested(2) (#)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Yet Vested(3) ($)
Robert B. Aiken, Jr.		6/5/2015										12,591		409,333
Robert B. Aiken, Jr.		9/1/2015										45,112		1,466,591
Timothy P. Connolly		3/1/2013										2,686		87,322
Timothy P. Connolly		4/1/2013		–		34,861		38.69		4/1/2023
Timothy P. Connolly		9/1/2013										1,114		36,216
Timothy P. Connolly		1/1/2014										5,447		177,082
Timothy P. Connolly		3/15/2014										5,110		166,126
Timothy P. Connolly		9/1/2014										2,176		70,742
Timothy P. Connolly		3/15/2015										5,695		185,144
Timothy P. Connolly		6/1/2015										15,056		489,471
Timothy P. Connolly		9/1/2015										12,030		391,095
Eric A. Blanchard		9/1/2006		36,530		–		22.99		9/1/2016
Eric A. Blanchard		9/1/2007		18,096		–		29.51		9/1/2017
Eric A. Blanchard		3/1/2013										2,098		68,206
Eric A. Blanchard		4/1/2013		–		26,055		38.69		4/1/2023
Eric A. Blanchard		9/1/2013										832		27,048
Eric A. Blanchard		3/15/2014										3,814		123,993
Eric A. Blanchard		9/1/2014										1,627		52,894
Eric A. Blanchard		3/15/2015										4,829		156,991
Eric A. Blanchard		6/1/2015										7,058		229,456
Eric A. Blanchard		9/1/2015										5,639		183,324
Richard D. Phillips		4/1/2013		–		29,563		38.69		4/1/2023
Richard D. Phillips		5/17/2013										1,976		64,240
Richard D. Phillips		9/1/2013										941		30,592
Richard D. Phillips		3/15/2014										4,328		140,703
Richard D. Phillips		9/1/2014										2,133		69,344
Richard D. Phillips		3/15/2015										4,829		156,991
Richard D. Phillips		6/1/2015										7,058		229,456
Richard D. Phillips		9/1/2015										5,639		183,324
Earl C. Shanks		12/1/2015										6,823		221,816
Todd A. Shelton		9/1/2006		20,992		–		22.99		9/1/2016
Todd A. Shelton		9/1/2007		9,568		–		29.51		9/1/2017
Todd A. Shelton		3/1/2013										2,855		92,816
Todd A. Shelton		4/1/2013		–		35,988		38.69		4/1/2023
Todd A. Shelton		9/1/2013										1,150		37,387
Todd A. Shelton		3/15/2014										7,108		231,081
Todd A. Shelton		9/1/2014										3,113		101,204
Todd A. Shelton		3/15/2015										7,934		257,934
Todd A. Shelton		6/1/2015										11,593		376,888
Todd A. Shelton		9/1/2015										9,263		301,140

  2016 PROXY STATEMENT            47  

                         EXECUTIVE COMPENSATION

(1) Holders of shares of restricted stock are entitled to vote such shares, however they are not entitled to receive dividends.

(2) Restricted stock granted pursuant to the Company’s LTIP on September 1, 2015, 2014, and 2013 vest in three substantially equal annual increments, except that if the aggregate diluted adjusted earnings per share for the four quarters preceding a vesting date do not exceed $0.50, the stock award scheduled to vest on that date will be forfeited.

RSUs granted pursuant to the Company’s LTIP on March 15, 2015 will cliff-vest March 1 2018, to the extent the Company achieves its cumulative net income and working capital efficiency goals for the performance period ending December 31, 2017. RSUs granted pursuant to the Company’s LTIP on March 15, 2014 vest in three annual increments on each March 1, to the extent the Company achieves its cumulative net income goal for the periods ending December 31. RSUs granted pursuant to the

Company’s LTIP on March 1, 2013 vest in three annual increments on each March 1, to the extent the Company achieves its cumulative economic profit goal for the periods ending December 31. For the 2015, 2014 and 2013 grants, participants may earn a threshold of zero to a maximum of 200% of their target equity incentive award over the three-year period.

Non-qualified stock option awards granted pursuant to the Company’s LTIP on April 1, 2013 will cliff vest on April 1, 2016.

(3) The market value of restricted stock and RSU awards is equal to the number of shares awarded multiplied by the closing market price of the Company’s Common Stock on December 31, 2015, which was $32.51.

Option Exercises and Stock Vested in 2015

	Option Awards				Stock Awards
NAME	Number of Shares Acquired on Exercise (#)		Value Realized on Exercise(1) ($)		Number of Shares Acquired on Vesting (#)		Value Realized on Vesting(2) ($)
Timothy P. Connolly						8,358		302,332
Eric A. Blanchard		33,878		249,686		5,951		302,332
Richard D. Phillips						4,748		177,456
P. Cody Phipps						51,367		1,768,804
Todd A. Shelton						8,879		323,384

(1) The value realized is equal to the difference between the option exercise prices and the Company’s Common Stock price on the date of exercise multiplied by the number of options exercised.

(2) The value realized under stock awards is equal to the Company’s Common Stock price on the date the shares vested multiplied by the number of shares.

Retirement Benefits

The Company maintains the following two programs to provide retirement benefits to eligible employees, including executive officers:

• The Essendant 401(k) Savings Plan (Plan) is a defined contribution plan qualified under sections 401(a) and 401(k) of the Code. Eligible employees may elect to contribute pretax amounts up to 75% of their eligible compensation (generally, base pay and commissions), limited to the cap under the Code on pretax deferrals. In addition, participants may make after-tax contributions ranging from 1% to 10% of eligible compensation. The Plan provides for a discretionary matching contribution by the Company. Historically, employee contributions that qualify for matching contributions by the Company have been limited to 6% of eligible compensation. Eligible contributions by associates during 2015 were matched by the Company at a rate of 50%. The Plan also provides for discretionary profit-sharing contributions on behalf of each eligible participant. No discretionary matching contribution was made in 2015.

• The Company maintains a “frozen” noncontributory pension plan (the “Pension Plan”) covering over 50% of its employees, including Messrs. Connolly, Blanchard, and Phipps. The Pension Plan provides an annual benefit at age 65 equal to 1% of an employee’s career-average annual compensation (generally, base salary, commissions and bonus), multiplied by the number of years of credited service up to a maximum of 40 years, provided that no additional service credits may

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EXECUTIVE COMPENSATION                        

be earned or adjustments to compensation made after March 1, 2009. However, an employee’s annual compensation for each year of service prior to September 1989 is deemed to be the compensation earned by such employee during the 12 months ending on August 31, 1989. The Code limits the amount of annual compensation that is considered in calculating an employee’s benefits, which is adjusted annually for inflation. An employee’s pension rights fully vest after five years of service. These benefits are in addition to normal Social Security retirement benefits. Alternative benefit options of early retirement, joint and survivor annuity and disability are also available. Participants may select early retirement payments if the participant has attained the age of 55 prior to separation from the Company and completed ten years of service, or has attained the age of 65 prior to separation from the Company and completed five years of service. Early retirement benefits are actuarially reduced for early commencement using a 7.5% annual interest rate and the Unisex Pension 1984 Mortality Table set forward one year. The normal retirement age under the Pension Plan is 65. No employee first hired by the Company after December 31, 2007 is eligible to participate in the Pension Plan. As of March 1, 2009, the Company stopped providing additional service benefits to participants under the Pension Plan.

Pension Benefits in 2015

The table below shows the present value of annual retirement benefits that are estimated to be payable at normal retirement (age 65) under the Pension Plan to Messrs. Connolly, Blanchard, and Phipps. The benefits for these named executive officers are calculated on the basis of estimated years of service at retirement age and current levels of compensation.

Name(1)	Plan Name		Number of Years Credited Service (#)		Present Value of Accumulated Benefit(2) ($)		Payments During Last Fiscal Year ($)
Timothy P. Connolly		Tax-qualified plan		5.6		80,156		0
Eric A. Blanchard		Tax-qualified plan		3.2		54,232		0
P. Cody Phipps		Tax-qualified plan		5.5		93,205		0

(1) Messrs. Aiken, Shanks, Phillips, and Shelton are not eligible for participation in the Pension Plan.

(2) The calculation of the present value of accumulated benefit assumes a discount rate of 4.52%. In addition, the benefits were assumed to be paid as a lump sum at age 65, which is the earliest time a participant may retire under the plan without any benefit reduction due to age. The assumed lump sum interest rate was 5.5%. Additional information about the Company’s pension plan and assumptions may be found in Note 13, “Pension Plans and Defined Contribution Plan”, in the Company’s 2015 Annual Report on Form 10-K.

Non-qualified Deferred Compensation in 2015

The Essendant Co. Deferred Compensation Plan (the “Deferred Compensation Plan”) is a non-qualified deferred compensation plan that provides named executive officers, other executive officers and certain other employees the opportunity to defer salary and annual bonus payments under the MIP. Each participant may elect to defer up to 75% of future compensation, consisting of base salary and/or bonus. The elections must be made on or before December 31 of the year prior to the year in which the participant will earn the compensation. Deferred amounts are indexed against the mutual fund or funds selected by the participant from a number of mutual funds administered by Fidelity Investments, and earnings and losses on deferred compensation are determined based on the performance of the mutual fund or funds selected. Distribution of deferred amounts will be made in cash. Payment options include a lump sum or a series of periodic installments (monthly, quarterly, semi-annually, annually) that may be paid over a period of time not to exceed ten years. Payment to certain employees, payable by reason of a separation from service, may not be made until six months after separation. Amounts deferred under the Deferred Compensation Plan and investment returns on participants’ Deferred Compensation Plan balances are subject to forfeiture in the event of the Company’s bankruptcy.

  2016 PROXY STATEMENT            49  

                         EXECUTIVE COMPENSATION

The following table sets forth certain information regarding non-qualified deferred compensation of the named executive officers:

Name(1)	Executive Contributions in Last Fiscal  Year(2) ($)		Registrant Contributions in Last Fiscal Year ($)		Aggregate Earnings in Last Fiscal Year(3) ($)			Aggregate Withdrawals/ Distributions ($)		Aggregate Balance at Last  Fiscal Year-End ($)
Timothy P. Connolly		47,142		0		(1,048	)		0		46,094
Todd A. Shelton		46,090		0		5,409			0		709,470

(1) Messrs. Aiken, Shanks, Blanchard, Phillips, and Phipps did not participate in the Deferred Compensation Plan.

(2) The amounts disclosed in this column are also reported in the “Summary Compensation Table” with some of the amounts included in the “Salary” column for the current year and the remaining amounts included in the “Non-Equity Incentive Plan Compensation” column for the previous fiscal year.

(3) The mutual funds selected by Mr. Shelton earned $5,409, or .77%. The mutual funds selected by Mr. Connolly declined by $1,048 or 2.2%. Because the earnings accrued during 2015 and previous years were not preferential, these amounts are not reported in the 2015 Summary Compensation Table.

Employment Contracts and Employment Termination and Change of Control Arrangements

CEO Employment Agreement

The Company and ECO have entered into an Executive Employment Agreement with Mr. Aiken, as of July 22, 2015 (the “CEO Agreement”). Under the CEO Agreement, Mr. Aiken is employed to serve as the Company’s President and Chief Executive Officer.

General Terms—The CEO Agreement establishes Mr. Aiken’s annual salary as of July 22, 2015 and provides for Mr. Aiken’s participation in all stock option, incentive, savings and retirement plans, welfare benefit plans and programs, executive fringe benefits and perquisites programs, and other benefit practices, policies and programs generally available to the Company’s other senior executives.

Post-Termination Payments and Benefits—If Mr. Aiken’s employment is terminated during the employment term by the Company without Cause or by Mr. Aiken for Good Reason (as such capitalized terms are defined below), Mr. Aiken will be entitled to receive all accrued benefits, including any earned but unpaid salary and any accrued but unpaid incentive awards for the prior year and, subject to execution and non-rescission of a release of claims against the Company: (a) an amount equal to two times his then existing base salary payable over 24 months following termination (or three times his base salary generally payable in a lump sum within 90 days following the date of termination in the event such termination occurs within two years of a Change of Control (as such term is defined below)), except that in either case any amounts in excess of the amount that would cause the payments to constitute deferred compensation under Code Section 409A shall be paid in a lump sum on the first regular payroll date of the Company to occur following the date that is six months after the termination date; (b) an amount equal to two times his actual incentive compensation award for the year in which termination occurs payable at such time as the incentive award would otherwise be paid (or three times his target incentive compensation award for such year generally payable in a lump sum within 90 days following the date of termination in the event such termination occurs within two years of a Change of Control); (c) a pro rata portion of his actual incentive compensation award for the year in which termination occurs payable at such time as the incentive award would otherwise be paid (or, in the event such termination occurs within two years of a Change of Control, his target incentive compensation award for the year in which termination occurs payable in a lump sum within 90 days

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EXECUTIVE COMPENSATION                        

following the date of termination); (d) continued medical and/or dental insurance coverage until the earlier of 24 months from the date of termination (or three years in the event such termination occurs within two years of a Change of Control) or the date he receives substantially equivalent coverage from a subsequent employer; (e) a lump sum payment equal to the amount the Company would otherwise expend for 24 months’ life and disability coverage for him (or three years’ coverage in the event such termination occurs within two years of a Change of Control); and (f) career transition assistance services until December 31 of the year after the year when the termination occurs in an amount not to exceed ten percent of Mr. Aiken’s then existing base salary. Mr. Aiken cannot receive cash in lieu of these services. In the event of termination within two years of a Change of Control, Mr. Aiken also will be entitled to: (A) continued vesting of equity awards if permitted under the Company’s LTIP and provided for in his equity award agreement; and (B) reimbursement for reasonable attorneys’ fees incurred in conjunction with any disputes regarding the benefits provided for under the agreement in which he prevails in any material respect. In addition, the CEO Agreement prohibits Mr. Aiken from competing against the Company or soliciting any of the Company’s customers or employees for a period of two years following his employment termination.

Definitions—The definitions in the Executive Employment Agreements signed by the named executive officers are the same except for a slight variation in the definition of “Good Reason” in the CEO Agreement. Subject to these exceptions, when used in connection with a named executive officer’s rights under his or her employment agreement, the terms “Cause,” “Good Reason,” and “Change of Control” have the following definitions:

• “Cause” means (i) conviction of, or plea of no contest to, a felony; (ii) theft or embezzlement from the Company; (iii) illegal use of drugs; (iv) material breach of the employment agreement; (v) gross negligence or willful misconduct in the performance of the executive’s duties; (vi) breach of any fiduciary duty owed to the Company; or (vii) the executive’s willful refusal to perform the assigned duties for which the executive is qualified as directed by his or her supervisor or by the Board. Generally, in the case of an event constituting Cause that is curable by the executive, the executive must fail to cure the event within thirty days after receipt of notice of the event from the Company.

• “Good Reason” means (i) any material breach by the Company of the executive’s employment agreement without the executive’s written consent; (ii) in the case of the CEO Agreement, without the executive’s written consent, any change in the executive’s title or position as CEO reporting directly to the Board; or (iii) without the executive’s written consent, a material reduction in the executive’s base salary, or the relocation of the executive’s principal place of employment more than fifty (50) miles from its location on the date of the employment agreement.

• “Change of Control” is generally defined to mean (i) acquisition by a person or group of beneficial ownership of 30% or more of the combined voting power of the Company’s then outstanding voting securities entitled to vote generally in the election of directors; (ii) at any time during a period of two consecutive years, the individuals who at the beginning of such period constituted the Board cease for any reason to constitute more than 50% of the Board unless the new directors were approved by a vote of more than 50% of the Directors then comprising the incumbent Board; (iii) consummation of a merger, consolidation or reorganization or approval by the Company’s stockholders of a liquidation or dissolution of the Company or the occurrence of a liquidation or dissolution of the Company, unless, following such business combination, the Company’s stockholders continue to hold more than 50% of the voting power of the successor entity or other conditions are satisfied; and (iv) approval by the Company’s stockholders of an agreement for the assignment, sale, conveyance, transfer, lease or other disposition of all or substantially all of the assets of the Company to any Person.

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                         EXECUTIVE COMPENSATION

Other Named Executive Officer Agreements

General Terms—The Company and ECO have entered into Executive Employment Agreements with Messrs. Connolly and Blanchard, each of which was last amended and restated as of December 31, 2012. The Company and ECO have also entered into an Executive Employment Agreement with Mr. Phillips as of January 21, 2013. Each of these employment agreements establishes the executive’s annual salary as of its effective date and provides that the Board shall review the executive’s base salary from time to time and may, at the Board’s discretion, increase the base salary. Each of these employment agreements further provides for the executive’s participation in all stock option, equity award, incentive, savings and retirement plans, welfare benefit plans and programs, executive fringe benefits and perquisites programs, and other benefit practices, policies and programs generally available to the Company’s other executive officers. Messrs. Connolly and Blanchard also participate in ECO’s qualified pension plan, the benefits under which have been frozen effective March 1, 2009.

Post-Termination Payments and Benefits—Under the Executive Employment Agreements with Messrs. Connolly, Phillips and Blanchard, if the executive’s employment is terminated during the employment term by the Company without “Cause” (as defined above), or, by the executive for “Good Reason” (as defined above), the executive will be entitled to receive all accrued benefits, including any earned but unpaid salary and any accrued but unpaid incentive awards for the prior year and, subject to execution and non-rescission of a release of claims against the Company: (a) an amount equal to one and one-half times his then existing base salary payable over 18 months following termination (or two times his base salary generally payable in a lump sum within 90 days following the date of termination in the event such termination occurs within two years of a Change of Control (as defined above)), except that in either case any amounts in excess of the amount that would cause the payments to constitute deferred compensation under Code Section 409A shall be paid in a lump sum on the first regular payroll date of the Company to occur following the date that is six months after the termination date; (b) an amount equal to one and one-half times his actual incentive compensation award for the year in which termination occurs payable at such time as the incentive award would otherwise be paid (or two times his target incentive compensation award for such year generally payable in a lump sum within 90 days following the date of termination in the event such termination occurs within two years of a Change of Control); (c) a pro rata portion of his actual incentive compensation award for the year in which termination occurs payable at such time as the incentive award would otherwise be paid (or, in the event such termination occurs within two years of a Change of Control, his target incentive compensation award for the year in which termination occurs payable in a lump sum within 90 days following the date of termination); (d) continued medical and/or dental insurance coverage until the earlier of 18 months from the date of termination (or two years in the event such termination occurs within two years of a Change of Control) or the date he receives substantially equivalent coverage from a subsequent employer; (e) a lump sum payment equal to the amount the Company would otherwise expend for 18 months’ life and disability coverage for the executives (or two years’ coverage in the event such termination occurs within two years of a Change of Control); and (f) career transition assistance services until December 31 of the year after the year when the termination occurs in an amount not to exceed ten percent of the executive’s then existing base salary. The executive cannot receive cash in lieu of these services. In the event of termination within two years of a Change of Control, such executive also will be entitled to: (A) continued vesting of equity awards if permitted under the Company’s LTIP and provided for in his equity award agreement; and (B) reimbursement for reasonable attorneys’ fees incurred in conjunction with any disputes regarding the benefits provided for under the agreement in which the executive prevails in any material respect. In the event of termination following a Change of Control, Mr. Connolly & Mr. Blanchard will also be entitled to a lump sum

    52             2016 PROXY STATEMENT  

EXECUTIVE COMPENSATION                        

payment equal to the additional pension benefit value that would be payable to him if he had two additional years of age and service credits.

The Executive Employment Agreements with Messrs. Connolly, Phillips and Blanchard prohibit the executive from competing against the Company or soliciting any of the Company’s customers or employees for a period of 18 months following his employment termination.

Mr. Shanks receives substantially similar benefits and is subject to the Company’s restrictive covenants under the Company’s Executive Severance Plan.

Change of Control Terms Under the Long-Term Incentive Plan

The LTIP, which was adopted by the Company and most recently approved by stockholders in 2015, permits the Human Resources Committee to grant different types of awards, including options, stock appreciation rights, full value awards (including restricted stock) and cash incentive awards. The named executive officers have received grants of various awards under the LTIP. Under the terms of the LTIP & applicable award agreements, vesting of equity awards under the LTIP will accelerate under certain circumstances related to a Change of Control and the termination of the named executive officer’s employment either by the Company without Cause (as defined in the LTIP) or by the executive for Good Reason (as defined in the LTIP). The definition of “Change of Control” under the LTIP is similar to the definition of the same term described under “—CEO Employment Agreement,” above.

In the event of a Change of Control:

• 50% of the unvested RSUs granted on or prior to March 1, 2014 and 50% of the unvested restricted stock awards granted on or prior to March 1, 2015 will vest, and the committee that administers the LTIP has authority to provide accelerated vesting of all such awards to preserve the benefits of the awards, such as if the surviving company does not assume the awards or substitute similar awards;

• 100% of the unvested RSUs granted after March 1, 2014 will vest;

• 50% of the unvested restricted stock awards granted after March 1, 2015 will vest if the surviving company assumes the outstanding restricted stock awards or substitutes substantially similar awards, and 100% of such awards will vest if the surviving company does not assume the awards or substitute similar awards; and

• 100% of the unvested portion of cash incentive awards will vest at the target level.

In addition, if a named executive officer’s employment is terminated by the named executive officer for Good Reason, as defined in the LTIP, or by the Company without Cause, as defined in the LTIP, during the two-year period following a Change of Control, all awards granted prior to the Change of Control that have not vested prior to the named executive officer’s date of termination will become immediately vested as of such date.

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                         EXECUTIVE COMPENSATION

Change of Control Terms Under the Management Incentive Plan

The MIP provides that if the plan terminates upon or after a Change of Control (as defined in the MIP) during the plan year in which the Change of Control occurs, participants will be entitled to their target incentive award for such plan year. The definition of Change of Control in the MIP is similar to the definition under the LTIP.

Phipps’ Employment and Separation Agreements

The Company, ECO & Mr. Phipps were parties to an Executive Employment Agreement dated December 31, 2012 that set forth certain terms related to Mr. Phipps’ compensation and benefits prior to his resignation from the Company on May 4, 2015. In connection with Mr. Phipps’ resignation, the Company and Mr. Phipps entered into a Separation Agreement pursuant to which the Company agreed to pay Mr. Phipps $500,000 over a six month period in consideration for transition services and his release of any claims against the Company and its affiliates. The Separation Agreement also provides that Mr. Phipps remains subject to the confidentiality, non-compete and non-solicitation provisions set forth in his Executive Employment Agreement.

Shelton’s Employment Agreement and Separation Payments

The Company, ECO & Mr. Shelton were parties to an Executive Employment Agreement, which was last amended and restated December 31, 2012. The agreement set forth certain terms related to Mr. Shelton’s compensation and benefits. Mr. Shelton resigned as Senior Vice President and Chief Financial Officer effective November 12, 2015, and he continued as Vice President, Finance until January 15, 2016, at which time his employment terminated and he was entitled to severance benefits under his employment agreement. His severance benefits are the same as those described above for Messrs. Connolly, Phillips and Blanchard, the amounts of which are set forth below.

Potential Post-Employment Payments

As described above in the summaries of the employment agreements, our executive officers are eligible to receive benefits in the event their employment is terminated (1) by the Company without Cause, (2) in certain circumstances following a Change of Control, or (3) by the executive in the event he or she resigns for Good Reason. The amount of benefits will vary based on the reason for the termination.

The following sections present calculations as of December 31, 2015 of the estimated benefits our executive officers would have received had a triggering event occurred as of that date under the amended and restated Executive Employment Agreements or in the case of Mr. Shanks under the Executive Severance Plan. Although the calculations are intended to provide reasonable estimates of the potential benefits, they are based on numerous assumptions and may not represent the actual amount an executive would receive if a triggering event were to occur.

In addition to the amounts disclosed in the following sections, each executive officer would retain the amounts which he or she has earned or accrued over the course of his or her employment prior to the termination event, such as the executive’s balances under our deferred compensation plans, accrued retirement benefits and previously vested stock options (“Accrued Benefits”). For further information about previously earned and accrued amounts, see “Executive Compensation—Summary Compensation Table”, “Executive Compensation—Outstanding Equity Awards at December 31, 2015”, “Executive Compensation—Option Exercises and Stock Vested in 2015”, “Executive Compensation—Pension Benefits in 2015”, and “Executive Compensation—Non-Qualified Deferred Compensation in 2015”.

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EXECUTIVE COMPENSATION                        

Severance Benefits

If the employment of Messrs. Aiken, Connolly, Phillips or Blanchard is terminated by the Company for any reason other than Cause or the executive’s permanent disability (as defined in the Company’s Board-approved disability plan or policy as in effect from time to time), or if the executive’s employment is terminated by the executive for Good Reason, then he will be entitled to receive benefits pursuant to the executive’s Executive Employment Agreement described above. In the case of Mr. Shanks, he will be entitled to receive benefits pursuant to the Executive Severance Plan.

Severance-related benefits are provided only if the executive executes and does not rescind the Company’s then current standard release agreement as a condition to receiving any of the payments and benefits.

The following table presents the estimated separation benefits the Company would have been required to pay to each named executive officer if his employment had been terminated without Cause as of December 31, 2015. No amounts are shown for Mr. Phipps, who resigned May 4, 2015, and the benefits he received upon his resignation are described below. The amounts shown for Mr. Shelton reflect amounts actually paid or payable to him in connection with the termination of his employment on January 15, 2016.

Estimated Severance Pay

	Cash Compensation					Benefits		Other
Name	Salary ($)		Incentive Compensation ($)			Health and Welfare Benefits ($)		Outplacement ($)			Total ($)
Robert B. Aiken, Jr.		1,600,000		500,000	(1)		23,885		80,000			2,203,885
Timothy P. Connolly		750,000		262,875	(2)		20,577		50,000			1,083,452
Earl C. Shanks		712,500		585,833	(3)		3,732		0	(5)		1,302,065
Eric A. Blanchard		562,500		140,625	(2)		20,059		37,500			760,684
Richard D. Phillips		562,500		117,188	(2)		20,275		37,500			737,462
Todd A. Shelton		660,000		118,708	(4)		11,561		25,000			815,269

(1) For Mr. Aiken, the amount shown represents two times his actual 2015 MIP payout plus his actual 2015 MIP payout pro-rated through December 31, 2015.

(2) For Messrs. Connolly, Blanchard and Phillips, the amounts shown represent 1.5 times the NEO’s actual 2015 MIP payout plus his actual 2015 MIP payout pro-rated through December 31, 2015.

(3) For Mr. Shanks, the amount shown represents 1.5 times his target 2015 MIP payout plus his actual 2015 MIP payout pro-rated through December 31, 2015.

(4) For Mr. Shelton, the amount shown represents 1.5 times his actual 2015 MIP payout plus his actual 2015 MIP payout pro-rated based on his service from January 1, 2015 to January 15, 2015. Mr. Shelton’s actual incentive compensation component of his severance payment will be equal to 1.5 times his 2016 MIP award assuming he was employed for all of 2016 based on actual 2016 MIP results, plus a pro-rated payout of his 2016 MIP award based on actual 2016 MIP results, which pro-rated amount will be determined based on the period of his service from January 1, 2016 to January 15, 2016.

(5) Mr. Shanks would not be eligible for outplacement services under the Company’s Executive Severance Plan.

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                         EXECUTIVE COMPENSATION

Retirement, Disability and Death

If employment is terminated as a result of the executive’s death, disability, or retirement, then the executive shall be entitled to (i) his/her Accrued Benefits, (ii) any benefits that may be payable to the executive under any applicable Board-approved disability, life insurance, or retirement plan or policy in accordance with the terms of such plan or policy, and (iii) a lump sum payment in an amount equal to the pro-rata target incentive compensation award for the calendar year during which the termination date occurs by reason of the executive’s death or disability, or a lump sum payment in an amount equal to the pro-rata actual incentive compensation award for the calendar year during which the termination date occurs by reason of the executive’s retirement.

Phipps’ Resignation

In connection with Mr. Phipps’ resignation, the Company entered into a Severance Agreement with Mr. Phipps that provided certain payments to him in exchange for a release and confirmed Mr. Phipps’ continuing obligations under his Executive Employment Agreement. The Severance Agreement is described above under “Executive Employment Agreement—Employment Contracts and Employment Termination and Change of Control Arrangements—Phipps’ Employment and Separation Agreements.”

Payments Triggered Upon a Change of Control

Upon a Change of Control, outstanding unvested equity awards will vest as described under “—Employment Contracts and Employment and Change of Control Arrangements—Change of Control Terms Under the Long-Term Incentive Plan.” For each named executive officer who remains employed by the Company, the following table shows the value of unvested equity awards that would vest if a Change of Control had occurred on December 31, 2015 based on the closing price of the Company’s Common Stock on December 31, 2015, which was $32.51.

	Vesting of Unvested Equity Awards
Name	Stock Options ($)		Restricted Stock and Restricted Stock Units if Acquirer Assumes Awards ($)(1)		Restricted Stock and Restricted Stock Units if Acquirer Does Not Assume Awards ($)(2)
Robert B. Aiken, Jr.		—		937,962		1,875,925
Timothy P. Connolly		—		989,686		1,657,587
Earl C. Shanks		—		110,908		221,816
Eric A. Blanchard		—		572,143		885,345
Richard D. Phillips		—		595,892		849,649

(1) This column reflects the value of unvested awards that would vest upon a change of control if the surviving company assumes the outstanding awards or substitutes substantially similar awards.

(2) This column reflects the value of unvested awards that would vest upon a change of control if the surviving company does not assume the outstanding awards or substitute substantially similar awards. With respect to RSUs granted on or prior to March 1, 2014 and restricted stock awards granted on or prior to March 1, 2015, this column assumes the committee administering the LTIP accelerates the vesting of all such unvested awards in connection with a cancellation of the awards where the surviving company does not assume the awards or substitute similar awards.

    56             2016 PROXY STATEMENT  

EXECUTIVE COMPENSATION                        

Payments Triggered Upon a Termination Following a Change of Control

The following table assumes that each executive is terminated after a Change of Control for reasons other than for Cause, retirement, disability or death. These values are estimated as of December 31, 2015.

	Cash Compensation				Benefits
Name	Salary ($)		Incentive Compensation ($)		Health and Welfare Benefits		Value of Supplemental Pension Benefits ($)		Outplacement ($)		Vesting of Unvested Equity ($)		Total ($)
Robert B. Aiken, Jr.		2,400,000		3,663,014		44,678		—		80,000		1,875,925		8,063,616
Earl C. Shanks		950,000		823,333		11,196		—		25,000		221,816		2,031,345
Timothy P. Connolly(1)		1,000,000		129,379		27,436		40,924		50,000		1,657,587		2,905,326
Eric A. Blanchard		750,000		675,000		26,746		47,637		37,500		885,345		2,422,227
Richard D. Phillips		750,000		562,500		27,033		—		37,500		849,649		2,226,682

(1) Pursuant to Mr. Connolly’s employment agreement, the Incentive Compensation column reflects a reduction of $1,220,621, which eliminates any excise tax payment and results in a greater net after-tax payment to Mr. Connolly.

  2016 PROXY STATEMENT            57  

                         DIRECTOR COMPENSATION

Director Compensation

General

In 2015, the Governance Committee of the Company’s Board of Directors undertook one of its periodic reviews of the compensation paid to the Company’s non-employee Directors. The Governance Committee evaluated the current and recent historical cash, equity, and total compensation paid by the Company to its non-employee Directors in light of benchmark data from a comparator group of companies (consistent with that used by the Human Resources Committee in its management compensation reviews) and established a total target compensation level based on the benchmark data. As a result of this review, no adjustments were made to the cash and equity compensation payable to the Company’s non-employee Directors in 2015. The following table summarizes the total compensation paid to the Company’s non-employee Directors for 2015:

Retainer	$70,000
Retainer for Committee Chairs
- Audit Committee Chair	$25,000
- Human Resources Committee Chair	$15,000
- Other Committee Chairs	$12,000
2015 Restricted Stock Unit Grant
• Chairman of the Board	$180,000 award value
• All other non-employee Directors	$110,000 award value

Cash Compensation

The annual Board retainer and annual retainers for Board Committee Chairs remained unchanged for 2015. Board members also were reimbursed for reasonable travel and other business expenses incurred in connection with their attendance at Board and Committee meetings and other Company-requested functions and their performance of other responsibilities as Directors of the Company.

Deferred Compensation

Pursuant to the Essendant Inc. Nonemployee Directors’ Deferred Stock Compensation Plan (the “Directors’ Deferred Compensation Plan”), non-employee Directors may defer receipt of 50% or more of their retainer and meeting fees. Deferred fees are credited quarterly to each participating Director in the form of stock units, based on the fair market value of the Company’s Common Stock on the quarterly deferral date. Deferred stock unit accounts are eligible for additional dividend equivalent credits, if the Company declares and pays any dividends on the Company’s Common Stock during the relevant period.

Each stock unit account generally is distributed and settled in whole shares of the Company’s Common Stock on a one-for-one basis, with a cash-out of any fractional stock unit interests, after the participant ceases to serve as a Company Director. Participants in the Directors’ Deferred Compensation Plan may elect to receive settlement of their stock unit accounts either by delivery of the aggregate whole shares in their respective accounts after the cessation of their service as Directors or in substantially equal installments over a period of not more than five years thereafter. If a participating Director dies before the distribution of his or her entire stock unit account, the balance remaining in the account becomes payable in cash in a lump sum to the Director’s designated beneficiary.

    58             2016 PROXY STATEMENT  

DIRECTOR COMPENSATION                        

Equity Compensation

The economic value of equity compensation provided annually to Directors remained unchanged in 2015. Such economic value was $110,000 for each non-employee Director other than the Chairman of the Board, whose annual equity compensation economic value was $180,000. The Board approved the grant to each non-employee Director of restricted stock or restricted stock units (at the Director’s option) of the Company’s Common Stock, effective September 1, 2015. All restricted stock units vest in substantially equal installments over three years and will be settled upon the Director’s separation from service or in substantially equal installments over a period of not more than five years thereafter. However, if on the date of termination the Director is at least 60 years old and has served as a member of the Company’s Board for at least 6 years, and the Director has completed his or her final term as a member of the Board, then all restricted stock units that were not yet vested as of the date of termination will become fully vested as of the date of termination. All restricted stock vests in substantially equal annual installments over three years. The Company expects to make similar grants to its non-employee Directors on an annual basis.

2015 Director Compensation Table

In 2015, the Company provided the following annual compensation to Directors who are not employees. Mr. Aiken was a non-employee director from February 17, 2015 until his appointment as Interim President and Chief Executive Officer on May 4, 2015. Mr. Aiken ceased receiving additional compensation for serving on the Board of Directors as of May 4, 2015.

Name	Fees Earned or Paid in Cash(1) ($)		Stock Awards(2) ($)		All Other Compensation(3) ($)		Total ($)
Robert B. Aiken, Jr.(4)		22,379		60,540				82,919
Jean S. Blackwell		—		110,000		19,122		129,122
Charles K. Crovitz		82,000		180,000		12,600		274,600
Roy W. Haley		95,000		110,000		18,031		223,031
Susan J. Riley		85,000		110,000		3,912		198,912
Alexander M. Schmelkin		70,000		110,000		6,374		186,374
Stuart A. Taylor, II		82,000		110,000		8,288		200,288
Paul S. Williams(5)		70,000		203,122		2,172		275,294
Alex D. Zoghlin		82,000		110,000		13,064		205,064

(1) Amounts shown represent fees earned during 2015. Ms. Blackwell deferred $82,000 of her 2015 cash compensation under the Essendant Inc. Nonemployee Directors’ Deferred Stock Compensation Plan (as described above under “Director Compensation—Deferred Compensation”) and received 2,668 deferred shares in her account.

(2) Amounts shown are based upon the grant date fair value of equity awards computed in accordance with ASC Topic 718. During 2015, each non-employee Director other than Messrs. Crovitz and Zoghlin and Ms. Riley received a grant of 3,308 restricted stock units. Mr. Crovitz received a grant of 5,413 shares of restricted stock awards, in consideration of his additional responsibilities as Chairman of the Board. Ms. Riley and Mr. Zoghlin each received a grant of 3,308 shares of restricted stock. The Directors’ outstanding stock options, restricted stock units, and shares of restricted stock granted as of December 31, 2015 are shown below. See “Director Compensation—Equity Compensation” for more information.

(3) Amounts shown represent dividends earned or paid on deferred stock units and outstanding stock awards. Ms. Blackwell deferred dividends in the form of stock units, which are included in the number of Deferred Shares Added to Account in the table above.

(4) Mr. Aiken was appointed to the Company’s Board of Directors on February 17, 2015 and received a prorated equity grant as a non-employee Director in February 2015.

(5) Mr. Williams joined the Board of Directors in October 2014 and received a prorated equity grant in January 2015. He also received the 2015 annual equity grant for non-employee directors.

  2016 PROXY STATEMENT            59  

                         DIRECTOR COMPENSATION

Directors’ Outstanding Option and Stock Awards at December 31, 2015

Name	AggregateOption AwardsOutstanding (#)	Aggregate StockAwardsOutstanding (#)
Robert B. Aiken, Jr.		1,482(1)
Jean S. Blackwell	7,676	34,038
Charles K. Crovitz	15,216	32,505
Roy W. Haley	15,216	34,038
Susan J. Riley	–	12,138
Alexander M. Schmelkin	–	13,103
Stuart A. Taylor, II	–	16,540
Paul S. Williams	–	5,555
Alex D. Zoghlin	–	29,498

(1) Mr. Aiken received this grant as a non-employee Director in February 2015.

    60             2016 PROXY STATEMENT  

EQUITY COMPENSATION PLAN INFORMATION                        

Equity Compensation Plan Information

Overview

The following table provides information about the Company’s Common Stock that may be issued upon the exercise of stock options and the settlement of stock units outstanding under the Company’s equity compensation plans as of December 31, 2015:

Plan Category	Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights(1) (a)		Weighted Average Exercise Price of Outstanding Options, Warrants and Rights(2) (b)		Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c)
Equity compensation plans approved by security holders		1,127,714	$	33.31		1,321,796
Equity compensation plans not approved by security holders		—		—		—
Total		1,127,714	$	33.31		1,321,796

(1) Includes 0.4 million stock options and 0.7 million restricted stock units under the LTIP.

(2) The weighted average exercise price in the table does not include outstanding restricted stock units.

  2016 PROXY STATEMENT            61  

                         COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Compensation Committee Interlocks and Insider Participation

None of our executive officers serves as a member of the board of directors or compensation committee of any entity that has one or more of its executive officers serving as a member of the Human Resources Committee of our Board of Directors. In addition, none of our executive officers serves as a member of the compensation committee of any entity that has one or more of its executive officers serving as a member of our Board of Directors.

    62             2016 PROXY STATEMENT  

VOTING SECURITIES AND PRINCIPAL HOLDERS                        

Voting Securities and Principal Holders

Security Ownership of Certain Beneficial Owners

The following table sets forth information as of the dates indicated with respect to the beneficial ownership of Common Stock by each person or group who is known by the Company to own beneficially more than five percent of its outstanding Common Stock.

Name and Address of Beneficial Owner	Number of Shares of Common Stock Beneficially Owned		Percent of Class
FMR LLC, and various affiliated entities(1)		5,642,142		15.09	%
245 Summer Street, Boston, MA 02210
Blackrock, Inc. and various affiliated entities(2)		3,553,337		9.50	%
55 East 52nd Street, New York, NY 10055
The Vanguard Group, Inc. and various affiliated entities(3)		2,779,225		7.43	%
100 Vanguard Blvd., Malvern, PA 19355
Wellington Management Group, LLP(4)		2,578,655		6.90	%
280 Congress Street, Boston, MA 02210

(1) This information is based on a Schedule 13G Amendment filed with the SEC on February 12, 2016, reporting the shares of the Company’s Common Stock that may be deemed to be beneficially owned, as of December 31, 2015, by FMR LLC (“FMR”) in its capacity as investment adviser. FMR reported that it may be deemed to have beneficial ownership of 5,642,142 shares. FMR has sole voting power with respect to 217,000 shares, and sole dispositive power with respect to 5,642,142 beneficially owned shares. Fidelity Low-Priced Stock Fund (“Fidelity”) serves as investment advisor of FMR’s various investment funds. As such, Fidelity has beneficial ownership of 2,101,244 shares.

(2) This information is based on a Schedule 13G Amendment filed with the SEC on January 26, 2016, reporting the shares of the Company’s Common Stock that may be deemed to be beneficially owned, as of December 31, 2015, by Blackrock, Inc. Blackrock, Inc. reported that it may be deemed to have beneficial ownership of 3,553,337 shares. Blackrock has sole voting power with respect to 3,462,491 shares and sole dispositive power with respect to all the 3,553,337 shares reported as beneficially owned.

(3) This information is based on a Schedule 13G Amendment filed with the SEC on February 10, 2016, reporting the shares of the Company’s Common Stock that may be deemed to be beneficially owned, as of December 31, 2015, by The Vanguard Group, Inc. (“Vanguard”). Vanguard reported that it may be deemed to have beneficial ownership of 2,779,225 shares. Vanguard has sole voting power with respect to 48,185 shares, shared voting power with respect to 2,800 shares; sole dispositive power with respect to 2,730,440 shares, and shared dispositive power with respect to 48,785 shares. Vanguard Fiduciary Trust Company (“VFTC”), a wholly-owned subsidiary of Vanguard, is the beneficial owner of 45,985 shares as a result of its serving as investment manager of collective trust accounts. VFTC directs the voting of these shares. Vanguard Investments Australia, Ltd. (“VIA”), a wholly-owned subsidiary of Vanguard, is the beneficial owner of 5,000 shares as a result of its serving as investment manager of Australian investment offerings. VIA directs the voting of these shares.

(4) This information is based on a Schedule 13G filed with the SEC on February 11, 2016, reporting the shares of the Company’s Common Stock that Wellington Management Group, LLP (“WMG”) may be deemed to beneficially own, as of December 31, 2015, in its capacity as investment adviser. WMG reported that it may be deemed to have beneficial ownership of 2,578,655 shares. WMG has shared voting power with respect to 1,998,515 shares and shared dispositive power with respect to 2,578,655 beneficially owned shares. All such shares were reported to be owned of record by individual clients which have the sole right to receive and the power to direct the receipt of dividends or proceeds from the sale of such shares.

  2016 PROXY STATEMENT            63  

                         VOTING SECURITIES AND PRINCIPAL HOLDERS

Security Ownership of Management

To the Company’s knowledge, the following table reflects the beneficial ownership of the Company’s Common Stock as of March 28, 2016 by each Company Director, each named executive officer and all of the Company’s current Directors and executive officers as a group. Unless otherwise indicated, each beneficial owner listed in the table holds sole voting and investment power over the shares listed as beneficially owned by him or her.

Name of Beneficial Owner	Number of Shares of Common Stock Beneficially Owned(1)(2)			Percent of Class
Jean S. Blackwell		72,183	(3)		*
Charles K. Crovitz		55,217			*
Roy W. Haley		65,402			*
Susan J. Riley		15,662	(3)		*
Alexander M. Schmelkin		13,103			*
Stuart A. Taylor, II		16,540			*
Paul S. Williams		5,555			*
Alex D. Zoghlin		32,243			*
Robert B. Aiken, Jr.		61,685			*
Earl C. Shanks		11,823			*
Timothy P. Connolly		44,642			*
Richard D. Phillips		22,242			*
Eric A. Blanchard		109,563			*
P. Cody Phipps		0			*
Todd A. Shelton		76,852			*
All current Directors and executive officers as a group (16 persons)		577,369			1.6	%

* Represents less than 1%

(1) In accordance with applicable SEC beneficial ownership rules, includes shares of the Company’s Common Stock that may be acquired within 60 days after March 28, 2016 through the exercise of stock options, as follows: Ms. Blackwell, 7,676 shares; Mr. Crovitz, 15,216 shares; Mr. Haley, 15,306 shares; Mr. Blanchard, 54,626 shares; Mr. Shelton, 30,560 shares; and all current Directors and executive officers as a group, 92,824 shares.

(2) In accordance with applicable SEC beneficial ownership rules, includes shares of the Company’s Common Stock that may be acquired within 60 days after March 28, 2016 through the earning/vesting of restricted stock units, as follows: Ms. Blackwell, 34,038 shares; Mr. Crovitz, 22,629 shares; Mr. Haley, 34,038 shares; Ms. Riley, 7,025 shares; Mr. Schmelkin, 13,103 shares; Mr. Taylor, 16,540 shares; Mr. Williams, 5,555 shares; Mr. Zoghlin, 23,462 shares and all current Directors and executive officers as a group, 156,390 shares.

(3) Includes shares issuable shortly after the participant’s cessation of service as a Director on a one-for-one basis in satisfaction of fully vested deferred stock units credited under the Directors’ Deferred Compensation Plan, as follows: Ms. Blackwell, 28,469 shares; and Ms. Riley, 2,623  shares.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company’s Directors and executive officers and persons who own more than 10% of the Company’s Common Stock to file with the SEC reports of holdings and transactions in the Company’s Common Stock. Based on its review of such reports furnished to the Company and on written representations from the Company’s Directors and executive officers, the Company believes that all required Section 16 reports were timely filed in 2015.

    64             2016 PROXY STATEMENT  

REPORT OF THE AUDIT COMMITTEE                        

Report of the Audit Committee

The Audit Committee

The Audit Committee of the Company’s Board of Directors consists of the three non-employee Directors named below. Each member of the Audit Committee is independent, as defined by the current NASDAQ listing standards and Rule 10A-3 of the Exchange Act. No member of the Audit Committee received any compensation from the Company during 2015 other than for services as a member of the Board or one or more of its Committees.

The Board of Directors has determined that all Audit Committee members are financially literate and have financial management expertise in accordance with NASDAQ listing standards, and that Roy W. Haley and Susan J. Riley each qualify as an “audit committee financial expert” within the meaning of applicable SEC regulations.

Audit Committee Charter and Responsibilities

The Audit Committee operates under and regularly reviews a written charter originally adopted by the Board of Directors in February 2000, and amended as of October 5, 2015. The Audit Committee charter is available at essendant.com/proxymaterials.

The Audit Committee assists the Company’s Board of Directors in fulfilling its responsibilities for oversight of: (1) the integrity of the Company’s financial statements and its financial reporting and disclosure practices; (2) the soundness of the Company’s internal control systems; (3) assessment of the independence, qualifications and performance of the Company’s independent registered public accounting firm; (4) performance of the internal audit function; and (5) the Company’s legal, regulatory and ethical compliance programs. The Audit Committee monitors the Company’s compliance with legal and regulatory requirements that could have a material effect upon the financial position of the Company. The Committee also maintains procedures for the receipt, retention, and treatment of complaints regarding accounting or internal controls and the confidential anonymous submission by Company employees of concerns regarding accounting, internal control, or ethical matters. The Committee provides an open avenue for communication among the internal auditors, the outside auditors, management, and the Board of Directors. The Company’s management has primary responsibility for preparing the Company’s financial statements and for establishing and maintaining its financial reporting processes and internal controls. The Company’s independent registered public accounting firm is responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”) and expressing an opinion on the conformity of such financial statements with U.S. generally accepted accounting principles. In addition, the Company’s independent registered public accounting firm is responsible for auditing and expressing an opinion on the effectiveness of the Company’s internal control over financial reporting as well as management’s assessment of the effectiveness of the Company’s internal control over financial reporting in accordance with the standards of the PCAOB.

The Audit Committee has the sole authority to select, appoint, and, if appropriate, terminate the engagement of the independent registered public accounting firm, and reviews their fees. As described under “Proposal 2: Ratification of the Selection of Independent Registered Public Accounting Firm—Audit Committee Pre-Approval Policy” the Audit Committee maintains guidelines requiring review and pre-approval by the Audit Committee of all audit and permitted non-audit services performed for the Company by its independent registered public accounting firm.

  2016 PROXY STATEMENT            65  

                         REPORT OF THE AUDIT COMMITTEE

Additionally, the Audit Committee monitors the effectiveness of the relationship among the external auditors, internal auditors, management, and the Audit Committee.

Audit Committee Report

In this context, the Audit Committee reports as follows with respect to the Company’s audited financial statements and management’s assessment of the effectiveness of the Company’s internal control over financial reporting for the year ended December 31, 2015.

The Audit Committee has reviewed and discussed the Company’s audited financial statements, management’s assessment of the effectiveness of the Company’s internal control over financial reporting, the independent registered public accounting firm’s evaluation of the Company’s internal control over financial reporting, and the related reports of the independent registered public accounting firm with the Company’s management, its chief internal auditor, and its independent registered public accounting firm, with and without management present.

The Audit Committee has discussed with the independent registered public accounting firm matters relating to the independent registered public accounting firm’s judgment about the quality, as well as the acceptability, of the Company’s accounting principles as applied in its financial reporting, the reasonableness of significant judgments, and the clarity of financial statement disclosures, as required to be discussed by the PCAOB.

The Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence and has discussed with the independent registered public accounting firm its independence.

The Audit Committee has reviewed with the independent registered public accounting firm and the Company’s internal auditors their respective audit plans, audit scope, and identification of audit risks. It has discussed the internal audit function’s organization, responsibilities, and activities with the Company’s management, its internal auditors, and the independent registered public accounting firm. The Audit Committee periodically met with both the internal auditors and the independent registered public accounting firm, with and without management present, to discuss the results of their respective evaluations of the Company’s internal controls and the overall quality of the Company’s financial reporting. It also met periodically to discuss such matters in executive session.

Based upon the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors (and the Board subsequently approved the recommendation) that the Company’s audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 for filing with the SEC.

Members of the Audit Committee:

Roy W. Haley, Chair

Susan J. Riley

Paul S. Williams

    66             2016 PROXY STATEMENT  

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS                        

Certain Relationships and Related Party Transactions

No relationships and/or related party transactions have been identified for disclosure. See “Board Independence” above for information on the Company’s transactions with Taylor Made Business Solutions, which transactions were exempt under the Company’s related person transaction approval policy.

Related Person Transaction Approval Policy

In February 2016, our Board of Directors amended the Related Party Transaction Approval Policy, originally adopted in March 2008, which sets forth the Company’s policies and procedures for the review, approval, or ratification of any transaction required to be reported in the Company’s filings with the Securities and Exchange Commission. Our policy applies to any transaction, arrangement, or relationship or any series of similar transactions, arrangements, or relationships in which the Company (including any subsidiaries) is or will be a participant and in which a related person (as defined in Item 404 of Regulation S-K and Accounting Standards Codification (ASC) 850) has a direct or indirect interest, but exempts the following:

• payment of compensation by the Company to a related person for the related person’s service to the Company as a director, officer or employee;

• transactions available to all employees or all shareholders of the Company on the same terms;

• transactions which, when aggregated with the amount of all other transactions between the Company and a related person (or any entity in which the related person has an interest), involve less than $120,000 in a fiscal year; and

• transactions in the ordinary course of business at the same prices and on the same terms as are made available to customers of the Company generally.

The Audit Committee of our Board of Directors must approve any related person transaction subject to this policy before commencement of the related person transaction. If such a transaction is not identified until after it has commenced, it must then be brought to the Audit Committee, which will consider all options, including approval, ratification, amendment, denial, termination, or, if the transaction is completed, rescission. The Audit Committee will analyze the following factors, in addition to any other factors the Committee deems appropriate, in determining whether to approve or ratify a related person transaction:

• whether the terms are fair to the Company;

• whether the transaction is material to the Company;

• the role the related person has played in arranging the related person transaction;

• the structure of the related person transaction; and

• the interests of all related persons in the related person transaction.

The Audit Committee may, in its sole discretion, approve or deny any related person transaction. Approval of a related person transaction may be conditioned upon the Company and the related person taking any actions that the Audit Committee deems appropriate. The Audit Committee has delegated to its chairperson authority to approve or take any other action with respect to a related person transaction that the Committee itself would be authorized to take pursuant to this policy.

  2016 PROXY STATEMENT        ��   67  

                         PROPOSAL 2: RATIFICATION OF SELECTION OF THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Proposal 2: Ratification of Selection of the Company’s Independent Registered Public Accounting Firm

General

The Company has selected Ernst & Young LLP (“E&Y”) as the Company’s independent registered public accounting firm for 2016, as it has done since 1995. Although action by the stockholders in this matter is not required, the Audit Committee believes that it is appropriate to seek stockholder ratification of this appointment in light of the critical role played by the independent registered public accounting firm in maintaining the integrity of Company financial controls and reporting. Representatives of E&Y are expected to be present at the Annual Meeting to respond to appropriate questions and to make a statement, should they choose to do so.

The following proposal will be presented for action at the Annual Meeting by direction of the Board of Directors:

RESOLVED, that action by the Audit Committee appointing Ernst & Young LLP as the Company’s independent registered public accounting firm to conduct the annual audit of the financial statements of the Company and its subsidiaries for the fiscal year ending December 31, 2016 is hereby ratified, confirmed, and approved.

THE COMPANY’S BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.

Fee Information

General.The following table presents information with respect to fees incurred for the indicated professional services rendered by E&Y during each of the last two years (dollars in thousands).

Type of Fees	2015		2014
Audit Fees	$	1,938	$	1,645
Audit-Related Fees		0		66
Tax Fees		141		173
All Other Fees		—		—
Total	$	2,079	$	1,884

Audit Fees. “Audit Fees” included fees for professional services rendered for the 2015 and 2014 audits of the consolidated financial statements of the Company included in the Company’s Annual Reports on Form 10-K, reviews of the quarterly condensed consolidated financial statements included in the Company’s Quarterly Reports on Form 10-Q, statutory audits, regulatory filings or engagements, and accounting consultations on matters related to the annual audits or interim reviews. Audit fees for 2015 and 2014 also included the audit of management’s report on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2015 and 2014, as required by Section 404 of the Sarbanes-Oxley Act of 2002.

Audit-Related Fees. “Audit-Related Fees” are fees for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements. For 2014, these fees included employee benefit plan audits.

    68             2016 PROXY STATEMENT  

PROPOSAL 2: RATIFICATION OF SELECTION OF THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                        

Tax Fees. “Tax Fees” are fees for professional services performed by E&Y with respect to tax compliance, tax advice, and tax planning.

All Other Fees. “All Other Fees” are fees for any services not included in the first three categories.

Audit Committee Pre-Approval Policy

Under applicable SEC rules, the Audit Committee is required to pre-approve audit and non-audit services performed by the independent registered public accounting firm, subject to certainde minimis exceptions and prohibitions against the provision of certain types of non-audit services. The Audit Committee pre-approved all services and fees described above. These SEC rules are designed to assure that the provision of services by the independent registered public accounting firm does not impair its independence from the Company.

Consistent with applicable SEC rules, the Audit Committee has adopted an Audit and Non-Audit Services Pre-Approval Policy (the “Pre-Approval Policy”). The Pre-Approval Policy sets forth the procedures and conditions pursuant to which the Audit Committee may pre-approve audit and permissible non-audit services proposed to be performed by the independent registered public accounting firm.

Pursuant to the Pre-Approval Policy, the Audit Committee will consider annually and, if appropriate, approve the provision of all audit services to the Company by the independent registered public accounting firm. Any changes to any previously approved audit services, terms, or fees require the further specific pre-approval of the Audit Committee.

Under the Pre-Approval Policy, the Audit Committee also will consider and, if appropriate, pre-approve the provision by the independent registered public accounting firm of permitted audit-related, tax, or other non-audit services. The term of any such pre-approval is twelve months from the date of pre-approval, unless the Audit Committee provides for a different period or earlier terminates such services. Any such pre-approval will be subject to a dollar limit specified by the Audit Committee. The Audit Committee periodically reviews, and from time-to-time may revise, the list of general pre-approved services. Any proposed new services, and any previously approved services anticipated to exceed the respective fee limits previously established for such services, must be separately approved.

The Pre-Approval Policy authorizes the Audit Committee to delegate to one or more of its members pre-approval authority for permitted non-audit services. The member to whom such authority is delegated must report any pre-approval decisions, for informational purposes, to the Audit Committee at its next regularly scheduled meeting.

The Company’s Vice President, Controller, and Chief Accounting Officer monitors the performance of all services provided by the independent registered public accounting firm for compliance with the Pre-Approval Policy. The Audit Committee periodically reviews reports summarizing all services and related fees and expenses being provided to the Company by the independent registered public accounting firm.

  2016 PROXY STATEMENT            69  

                         PROPOSAL 3—ADVISORY VOTE ON EXECUTIVE COMPENSATION

Proposal 3—Advisory Vote on Executive Compensation

We are submitting to stockholders a vote to approve, on an advisory, non-binding basis, the compensation of our named executive officers as disclosed in this Proxy Statement in accordance with the SEC’s rules.

As described in detail under the heading “Executive Compensation—Compensation Discussion and Analysis,” our executive compensation programs are designed to attract, motivate, and retain our named executive officers, who are critical to our success. Under these programs, our named executive officers are rewarded for the achievement of specific annual, long-term, strategic, and corporate goals and the realization of increased stockholder value. Please read the “Compensation Discussion and Analysis” for additional details about our executive compensation programs, including information about the fiscal year 2015 compensation of our named executive officers.

The Human Resources Committee regularly reviews the compensation programs for our named executive officers to ensure they achieve the desired goals of aligning our executive compensation structure with our stockholders’ interests and current market practices. Please read the “Executive Summary” under “Compensation Discussion and Analysis” for information on changes made to our executive compensation practices during 2015.

We are asking our stockholders to indicate their support for our named executive officer compensation as described in this Proxy Statement. This proposal, commonly known as a “say-on-pay” proposal, gives our stockholders the opportunity to express their views on our named executive officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies, and practices described in this Proxy Statement. Accordingly, we recommend that our stockholders vote “FOR” the following resolution at the Annual Meeting:

RESOLVED, that the stockholders approve the compensation of the Company’s executives as disclosed in the Compensation Discussion and Analysis, the accompanying compensation tables, and the related narrative disclosure presented in this Proxy Statement.

The say-on-pay vote is advisory, and therefore not binding on the Company, the Human Resources Committee, or our Board of Directors. Our Board of Directors and our Human Resources Committee value the opinions of our stockholders and to the extent there is any significant vote against the named executive officer compensation as disclosed in this Proxy Statement, we will consider our stockholders’ concerns and the Human Resources Committee will evaluate whether any actions are necessary to address those concerns.

THE BOARD OF DIRECTORS, UPON RECOMMENDATION OF OUR HUMAN RESOURCES COMMITTEE, UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT.

    70             2016 PROXY STATEMENT  

STOCKHOLDER PROPOSALS                        

Stockholder Proposals

Deadline for Inclusion in Proxy Statement

Any proposal that a stockholder wants the Company to consider including in its Proxy Statement and form of proxy relating to the Company’s 2017 Annual Meeting of Stockholders must be received by the Secretary of the Company, c/o Essendant Inc., One Parkway North Boulevard, Deerfield, Illinois 60015, not later than December 14, 2016 and must otherwise satisfy the requirements of applicable SEC rules.

Deadline for Notice of Other Stockholder Proposals/Director Nominations

Any stockholder proposal that the stockholder does not want the Company to consider including in its proxy statement for an annual meeting of stockholders, but does intend to introduce at the meeting, as well as any proposed stockholder nomination for the election of directors at an annual meeting, must comply with the advance notice procedures set forth in the Company’s current Restated Certificate of Incorporation in order to be properly brought before that annual meeting. To comply with those procedures, a director nomination can be submitted only by a stockholder entitled to vote in the election of directors generally and written notice of such a stockholder’s intent to make such nomination at the Company’s 2017 Annual Meeting must be given to the Company’s Secretary at the address in the preceding paragraph not later than February 24, 2017. Our Restated Certificate of Incorporation also includes advance notice requirements applicable to special meetings of stockholders. Any other stockholder proposals must be submitted in writing to the Secretary of the Company at the address given in the prior paragraph not later than the close of business on the tenth day after notice of the Company’s 2017 Annual Meeting of Stockholders is first given to stockholders.

In addition to these timing requirements, the Company’s Second Restated Certificate of Incorporation also prescribes informational content requirements for director nominations and other proposals by stockholders. See “Governance and Board Matters—Consideration of Director Nominees” above for more information about the informational content requirements for stockholder notices relating to intended director nominations. Any other stockholder proposal notice generally must set forth a brief description of the matter proposed to be brought before the annual meeting, the name and address of the stockholder making the proposal, the number of shares beneficially owned by the stockholder, and any material interest of the stockholder in such proposed matter.

  2016 PROXY STATEMENT            71  

                         OTHER BUSINESS

Other Business

The Company does not know of any other matters to be presented or acted upon by stockholders at the Annual Meeting. If any matter is presented at the meeting on which a vote may properly be taken, the persons named as proxies in the proxy card will vote the shares they represent in accordance with their judgment as to the best interests of the Company.

Your vote is important. Please vote your shares as instructed in the Notice of Internet Availability.

By Order of the Board of Directors,

Eric A. Blanchard

Secretary

    72             2016 PROXY STATEMENT  

APPENDIX A                        

Appendix A

Reconciliation of Non-GAAP Financial Measures to GAAP Measures

The following table presents Adjusted Gross Profit, Adjusted Operating Income, Adjusted Net Income and Adjusted Diluted Earnings Per Share for the years ended December 31, 2015 and December 31, 2014 (in thousands, except share data). These amounts have been adjusted from Generally Accepted Accounting Principles (GAAP) as reflected in the following table.

	For the Years Ended December 31,
	2015			2014
Gross profit		$836,495			$802,529
ORS Industrial inventory obsolescence reserve		4,887			–
Adjusted gross profit		$841,382			$802,529
Operating expenses		$806,712			$603,907
Impairment of ORS Industrial goodwill and intangible assets		(115,825	)		–
Workforce reduction and facility closure charge		(18,575	)		–
Intangible asset impairment charge and accelerated amortization related to rebranding		(11,981	)		–
Notes receivable impairment		(10,738	)		–
Loss on disposition of business and related impairment charges		(16,999	)		(8,234	)
Adjusted operating expenses		$632,594			$595,673
Operating income		$29,783			$198,622
Gross profit and operating expense items noted above		179,005			8,234
Adjusted operating income		$208,788			$206,856
Depreciation and amortization		$41,917			$36,227
Equity compensation		7,895			8,195
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA)		$258,600			$251,278
Net income (loss)		$(44,342	)		$112,115
Gross profit and operating expense items noted above, net of tax		160,727			8,234
Adjusted net income		$116,385			$120,349
Diluted earnings per share(1)		$(1.17	)		$2.87
Per share gross profit and operating expense items noted above		4.25			0.21
Adjusted diluted earnings per share		$3.08			$3.08

(1) Diluted earnings per share for 2015 under GAAP reflect an adjustment to the basic earnings per share due to the net loss. The diluted earnings per share shown here does not reflect this adjustment.

  2016 PROXY STATEMENT            A-1  

ESSENDANT INC. BRAD KENNEDY ONE PARKWAY NORTH BOULEVARD DEERFIELD, IL 60015	VOTE BY INTERNET -www.proxyvote.com
	Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time on May 24, 2016. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
	ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
	If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
	VOTE BY PHONE - 1-800-690-6903
	Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time on May 24, 2016. Have your proxy card in hand when you call and then follow the instructions.
	VOTE BY MAIL
	Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:

E05804-P75977         KEEP THIS PORTION FOR YOUR RECORDS

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DETACH AND RETURN THIS PORTION ONLY  

THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.

ESSENDANT INC.				For All	Withhold All	For All Except	To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below.
	The Board of Directors recommends you vote FOR each of the nominees listed below:
	1.	Election of three Class III Directors to serve for a three-year term expiring in 2019.		¨	¨	¨
		Nominees:
		01)    Susan J. Riley 02)    Alexander M. Schmelkin 03)    Alex D. Zoghlin
	The Board of Directors recommends you vote FOR proposals 2 and 3.								For	Against	Abstain
	2.	Ratification of the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2016.							¨	¨	¨
	3.	Approval of advisory vote on executive compensation.							¨	¨	¨
	NOTE:In their discretion, the proxies may vote upon any other business as may properly come before the meeting or any adjournment thereof.
	Please indicate if you plan to attend this meeting.			¨	¨
				Yes	No
	Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.						This proxy is solicited on behalf of the Board of Directors of Essendant Inc. This proxy will be voted as directed by the undersigned. If no direction is given, this proxy will be voted as recommended by the Board of Directors on each of the proposals listed above.
	Signature [PLEASE SIGN WITHIN BOX]		Date				Signature (Joint Owners)	Date

YOUR VOTE IS IMPORTANT!

If you do not vote by telephone or Internet, please sign and date this proxy card and return it promptly in the enclosed postage-paid envelope so the shares may be represented at the Annual Meeting.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:

The Notice and Proxy Statement and Form 10-K are available at www.proxyvote.com.

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E05805-P75977        

ESSENDANT INC.

Annual Meeting of Stockholders

May 25, 2016 2:00 PM

This proxy is solicited by the Board of Directors

ESSENDANT INC.                                                                              PROXY/VOTING INSTRUCTION CARD

The undersigned hereby appoints Robert B. Aiken, Jr., Eric A. Blanchard, and Earl C. Shanks, or any of them, as proxies, with full power of substitution and with all the powers the undersigned would possess if present, to vote all the shares of common stock of ESSENDANT INC. (the "Company") which the undersigned is entitled to vote on all matters that may properly come before the Annual Meeting of Stockholders to be held at the Company's offices located at ONE PARKWAY NORTH BOULEVARD DEERFIELD, IL on Wednesday, May 25, 2016 at 2:00 p.m., Central Time, and at any adjournment thereof. This card also serves as voting instructions to Computershare Trust Company, as Plan Agent of the Essendant Inc. Employee Stock Purchase Plan. The Plan Agent will vote the shares of the Company's common stock allocated to the stockholder's account at the Annual Meeting of Stockholders as directed by the stockholders on the reverse side. If voting by mail, your vote must be received by 11:59 p.m., Eastern Time, on May 24, 2016 to ensure that the Employee Stock Purchase Plan shares are voted at the meeting.

This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors’ recommendations.

Continued and to be signed on reverse side