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Boise Cascade Corporation
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[LOGO]
BOISE CASCADE CORPORATION
------------------------
ANNUAL MEETING
OF SHAREHOLDERS
BOISE, IDAHO
APRIL 20, 2000
------------------------
NOTICE AND PROXY
STATEMENT
[LOGO]
NOTICE OF ANNUAL MEETING
Thursday, April 20, 2000
12 noon, Mountain Daylight Time
Boise Cascade Corporation Headquarters Building
1111 West Jefferson Street
Boise, Idaho
March 22, 2000
Dear Shareholder:
You are cordially invited to attend the 2000 Boise Cascade Corporation
annual meeting of shareholders to:
- elect four directors to serve three-year terms;
- approve appointment of Arthur Andersen LLP as independent auditors for
2000;
- approve an amendment to the 1984 Key Executive Stock Option Plan to
increase the number of shares of common stock available for issuance;
- approve an amendment to the Director Stock Option Plan to increase the
number of shares of common stock available for issuance;
- reapprove the Key Executive Performance Plan for Executive Officers;
- approve amendments to the Key Executive Performance Plan for Executive
Officers and the 1995 Executive Officer Deferred Compensation Plan to add
a deferred stock unit component to each plan;
- consider and act upon a shareholder proposal regarding our classified
board; and
- conduct other business properly brought before the meeting.
Shareholders who owned stock at the close of business on February 28, 2000,
can vote at the meeting.
Your vote is important. Whether you plan to attend or not, please sign,
date, and return the enclosed proxy card in the envelope provided. If you attend
the meeting and prefer to vote at that time, you may do so.
Thank you for your ongoing support of and continued interest in Boise
Cascade.
Sincerely yours,
[LOGO]
George J. Harad
Chairman and
Chief Executive Officer
TABLE OF CONTENTS
Notice of Annual Meeting
Boise Cascade Corporation................................... 1
Annual Meeting Information.................................. 1
Proxy Statement........................................... 1
Voting.................................................... 1
Boise Cascade Employees Who Are Shareholders.............. 2
Confidential Voting Policy................................ 2
Votes Necessary for Action to be Taken.................... 2
Proxy Solicitation........................................ 2
Proposals You May Vote On................................... 2
1. Election of Directors.................................. 2
2. Appointment of Independent Public Accountants.......... 3
3. Amendment of 1984 Key Executive Stock Option Plan...... 3
4. Amendment of Director Stock Option Plan................ 3
5. Reapproval of Key Executive Performance Plan for
Executive Officers..................................... 3
6. Amendment of Key Executive Performance Plan for
Executive Officers and 1995 Executive Officer Deferred
Compensation Plan...................................... 4
7. Shareholder Proposal Regarding Classified Board........ 4
8. Other Matters to be Presented at the Meeting........... 4
Board of Directors.......................................... 4
Structure................................................. 4
Directors Nominated This Year for Terms Expiring in
2003.................................................... 5
Directors Whose Terms Expire in 2002...................... 6
Directors Whose Terms Expire in 2001...................... 7
Business Relationships with Directors..................... 7
Meetings and Committees of the Board........................ 8
Committee of Outside Directors............................ 8
Executive Committee....................................... 8
Executive Compensation Committee.......................... 8
Audit Committee........................................... 9
Nominating Committee...................................... 9
Director Compensation....................................... 9
Director Stock Option Plan................................ 10
Director Stock Compensation Plan.......................... 10
Director Deferred Compensation Program.................... 10
Stock Ownership............................................. 11
Directors and Executive Officers.......................... 11
Ownership of More than 5% of Boise Cascade Stock.......... 13
Executive Compensation Committee Report..................... 14
Base Salary............................................... 15
Annual Variable Incentive Compensation.................... 15
Stock Options............................................. 16
Stock Ownership Guidelines and Stock Unit Purchases....... 17
Other Compensation Plans.................................. 17
i
Performance Graph........................................... 18
Compensation Tables......................................... 19
Stock Option Tables....................................... 20
Long-Term Incentive Plans Table........................... 22
Other Benefit Plans......................................... 22
Deferred Compensation..................................... 22
Pension Plan.............................................. 23
Supplemental Early Retirement Plan........................ 24
Executive Officer Agreements.............................. 24
Deferred Compensation and Benefits Trust.................. 25
Indemnification........................................... 25
Amendment of 1984 Key Executive Stock Option Plan........... 26
History and Operation of the KESOP........................ 26
Proposed Plan Amendment................................... 26
Federal Income Tax Consequences........................... 27
Additional Information.................................... 27
Amendment of Director Stock Option Plan..................... 27
History and Operation of the DSOP......................... 27
Proposed Plan Amendment................................... 28
Federal Income Tax Consequences........................... 28
Additional Information.................................... 29
Reapproval of Key Executive Performance Plan for Executive
Officers.................................................. 29
History and Operation of the KEPP......................... 29
Federal Income Tax Consequences........................... 30
Amendment of Key Executive Performance Plan for Executive
Officers and 1995 Executive Officer Deferred Compensation
Plan...................................................... 30
History and Operation of the Plans and Deferred Stock
Units................................................... 30
Proposed Plan Amendments.................................. 31
Additional Information.................................... 31
Shareholder Proposal Regarding Classified Board............. 31
Statement by Shareholder in Support of the Proposal....... 31
Statement by Directors in Opposition to the Proposal...... 32
Other Information........................................... 33
Section 16(a) Beneficial Ownership Reporting Compliance... 33
Boise Cascade's Annual Report and Form 10-K............... 33
Shareholder Proposals for the 2001 Annual Meeting......... 33
Shareholder Nominations for Directors..................... 33
ii
BOISE CASCADE CORPORATION
Boise Cascade is a major distributor of office products and building
materials and an integrated manufacturer and distributor of paper and wood
products. We also own and manage over 2 million acres of timberland in the
United States. The address of our corporate headquarters is 1111 West Jefferson
Street, P.O. Box 50, Boise, Idaho 83728-0001, and the telephone number is
(208) 384-6161. You can visit us on the Internet at www.bc.com.
ANNUAL MEETING INFORMATION
PROXY STATEMENT
This proxy statement summarizes information we must provide to you under the
rules of the Securities and Exchange Commission (SEC). It is designed to assist
you in voting your shares. We began mailing these proxy materials on or about
March 22, 2000.
VOTING
Shareholders can vote by mail or at the annual meeting by completing a proxy
card. If you submit a properly executed proxy card, the individuals named on the
card, as your proxies, will vote your shares in the manner you indicate. If you
sign and return the card without indicating your instructions, your shares will
be voted FOR:
- the election of the four nominees to serve three-year terms on our board
of directors;
- the appointment of Arthur Andersen LLP as our independent auditors for
2000;
- the amendment of the 1984 Key Executive Stock Option Plan;
- the amendment of the Director Stock Option Plan;
- the reapproval of the Key Executive Performance Plan for Executive
Officers; and
- the amendment of the Key Executive Performance Plan for Executive Officers
and the 1995 Executive Officer Deferred Compensation Plan
and AGAINST the shareholder proposal to declassify our board of directors.
You may revoke or change your proxy at any time prior to the vote at the
annual meeting. To do so:
- deliver a new proxy to the independent tabulator, Corporate Election
Services, Inc.;
- give us written notice of your change or revocation; or
- attend the annual meeting and vote in person.
Each share of Boise Cascade stock is entitled to one vote. As of
February 28, 2000 (the record date for determining shareholders entitled to vote
at the meeting), we had the following outstanding voting stock:
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NUMBER OF
TYPE/SERIES OF STOCK SHARES OUTSTANDING
- ---------------------------------------------------------------------------------
Common stock................................................ 57,217,861
Convertible preferred stock, Series D (ESOP)................ 4,940,830
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1
BOISE CASCADE EMPLOYEES WHO ARE SHAREHOLDERS
Employees participating in the Employee Stock Ownership Plan (ESOP) fund of
our Savings and Supplemental Retirement Plan (SSRP) or in the company's common
stock fund in one of our savings plans will receive one proxy for all their
shares in these plans. ESOP participants may instruct the plan's trustee how to
vote the shares allocated to their accounts, as well as a proportionate amount
of unallocated and unvoted shares. Participants in the company's common stock
fund may instruct the plans' trustee how to vote the shares allocated to their
accounts. If you do not provide instructions, the plans provide that the trustee
will vote your shares in the same proportion as shares for which other
participants have provided voting instructions.
CONFIDENTIAL VOTING POLICY
We have a confidential voting policy. Shareholders' votes on our proxy card
will not be disclosed to us other than in limited situations. The tabulator will
collect, tabulate, and retain all proxy cards and will forward any comments
written on the proxy cards to management.
VOTES NECESSARY FOR ACTION TO BE TAKEN
A quorum is necessary to hold a valid meeting. A quorum will exist if a
majority of the shareholders entitled to cast votes at the meeting are present
in person or by proxy.
The four nominees who receive the greatest number of votes at the annual
meeting will be elected as directors. The appointment of Arthur Andersen LLP as
our independent public accountants for 2000, approval of the plan amendments,
and approval of the Key Executive Performance Plan for Executive Officers
require an affirmative vote of the majority of the votes cast on these matters.
The shareholder proposal regarding declassifying our board of directors will
be approved if the votes for the proposal exceed the votes against the proposal.
Declassifying the board and reinstating an annual election of directors will not
automatically occur if this proposal is approved. Eliminating board
classification would require a formal amendment to our Certificate of
Incorporation. Amendment of the Certificate of Incorporation requires approval
by at least 80% of the outstanding shares entitled to vote.
Abstentions do not count as votes cast either for or against the directors
or for or against any of the proposals.
PROXY SOLICITATION
We will pay the expenses of soliciting proxies. We retained D. F. King and
Company Inc. to assist us in the distribution and solicitation of proxies. We
will pay D. F. King a fee of $14,000, plus expenses, for these services. Proxies
may also be solicited on our behalf by directors, officers, and other employees
in person or by telephone or electronic transmission. We will not, however,
specially compensate these persons for doing so.
PROPOSALS YOU MAY VOTE ON
1. ELECTION OF DIRECTORS
There are four nominees for election this year. Detailed information on each
nominee is provided on page 5. If a nominee is unavailable for election, either
we will vote the proxies for
2
another nominee recommended by the Nominating Committee and nominated by the
board of directors or the board may reduce the number of directors to be elected
at the meeting.
YOUR BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR"
EACH OF THESE NOMINEES.
2. APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Your board of directors, upon the recommendation of its Audit Committee, has
appointed Arthur Andersen LLP to serve as our independent auditors for 2000,
subject to shareholder approval. Arthur Andersen has served us in this capacity
since 1956. Representatives of Arthur Andersen will be present at the annual
meeting to answer questions. They will also have the opportunity to make a
statement if they desire to do so.
Audit services provided by Arthur Andersen during 1999 included an audit of
the consolidated financial statements included in our Annual Report, audits of
employee benefit plan financial statements, and a review of certain other
filings with the SEC and other governmental agencies. In addition, Arthur
Andersen provided various nonaudit services to us during the year.
YOUR BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPROVAL
OF ARTHUR ANDERSEN LLP AS OUR INDEPENDENT AUDITORS FOR 2000.
3. AMENDMENT OF 1984 KEY EXECUTIVE STOCK OPTION PLAN
We ask you to consider and approve an amendment (adopted by the board of
directors in February 2000) to our Key Executive Stock Option Plan. This
amendment, subject to your approval, increases the number of shares available
under the plan by 1,800,000 shares. You can find detailed information on the Key
Executive Stock Option Plan and this amendment beginning on page 26.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPROVAL
OF THE AMENDMENT TO THE KEY EXECUTIVE STOCK OPTION PLAN.
4. AMENDMENT OF DIRECTOR STOCK OPTION PLAN
We ask you to consider and approve an amendment (adopted by the board of
directors in December 1999) to our Director Stock Option Plan. This amendment,
subject to your approval, increases the number of shares available under the
plan by 100,000 shares. You can find detailed information on the Director Stock
Option Plan and this amendment beginning on page 27.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPROVAL
OF THE AMENDMENT TO THE DIRECTOR STOCK OPTION PLAN.
5. REAPPROVAL OF KEY EXECUTIVE PERFORMANCE PLAN FOR EXECUTIVE OFFICERS
Our shareholders approved the company's Key Executive Performance Plan for
Executive Officers in 1995. For us to be able to continue to fully deduct
compensation paid to our executive officers under the KEPP, federal tax laws
require that our shareholders approve the plan every five years. We ask you to
consider and again approve our Key Executive Performance Plan for Executive
Officers. You can find detailed information on the KEPP beginning on page 29.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE REAPPROVAL
OF THE KEY EXECUTIVE PERFORMANCE PLAN FOR EXECUTIVE OFFICERS.
3
6. AMENDMENT OF KEY EXECUTIVE PERFORMANCE PLAN FOR EXECUTIVE OFFICERS AND 1995
EXECUTIVE OFFICER DEFERRED COMPENSATION PLAN
We ask you to consider and approve amendments (adopted by the board of
directors in December 1998) to our Key Executive Performance Plan for Executive
Officers and to our 1995 Executive Officer Deferred Compensation Plan. These
amendments established deferred stock unit accounts in each of the plans, which,
subject to your approval, will be paid out in shares of company stock rather
than in cash. The total number of shares proposed for issuance to pay for the
deferred stock units will be 100,000 shares for each plan. You can find detailed
information on the plans and amendments beginning on page 30.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPROVAL
OF THE AMENDMENTS TO THE KEY EXECUTIVE PERFORMANCE PLAN FOR EXECUTIVE OFFICERS
AND THE 1995 EXECUTIVE OFFICER DEFERRED COMPENSATION PLAN.
7. SHAREHOLDER PROPOSAL REGARDING CLASSIFIED BOARD
In November 1999, we received a shareholder proposal to declassify our board
of directors. In 1985, the company's shareholders approved the creation of a
classified board, dividing it into three classes for purposes of election.
Shareholders elect one class at each annual meeting to serve for a three-year
term. Our directors and management believe the board is better able to increase
value to all shareholders by retaining the continuity and stability of the
classified board. You can find detailed information on the shareholder proposal
and our directors' point of view beginning on page 31.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "AGAINST"
THE PROPOSAL TO DECLASSIFY BOISE CASCADE'S BOARD.
8. OTHER MATTERS TO BE PRESENTED AT THE MEETING
Management does not know of any other matters to be voted on at the meeting.
If, however, other matters are presented for a vote at the meeting, the persons
named on the enclosed proxy card will vote your properly executed proxy
according to their judgment on those matters.
BOARD OF DIRECTORS
STRUCTURE
Mrs. Anne L. Armstrong and Mr. Paul J. Phoenix retired from the board in
February because they reached our mandatory retirement age for directors. We
thank Mrs. Armstrong and Mr. Phoenix for their many years of thoughtful counsel
and loyal service to our board.
Our board of directors, comprised of 13 persons after Mrs. Armstrong's and
Mr. Phoenix's retirement, is divided into three classes for purposes of
election. Shareholders elect one class at each annual meeting to serve for a
three-year term.
Four directors are nominees for reelection in 2000, each to hold office
until the annual meeting of shareholders in 2003.
4
Our other directors are not up for election this year and will continue in
office for the remainder of their terms or until they retire.
DIRECTORS NOMINATED THIS YEAR FOR TERMS EXPIRING IN 2003
EDWARD E. HAGENLOCKER, 60, joined our board of directors in
[PHOTO] 1998. He retired from Ford Motor Company, an automotive
manufacturer, after serving as its vice-chairman from 1996
to 1998 and serving as the chairman of Visteon Automotive
Systems, an automotive parts business and enterprise of Ford
Motor Company, from 1997 to 1998. Mr. Hagenlocker was the
president of Ford Automotive Operations from 1994 to 1996.
He is also a director of Air Products and Chemicals, Inc.,
AmeriSource Corporation, and Nanophase Technologies
Corporation.
GEORGE J. HARAD, 55, became a director and president of the
[PHOTO] company in 1991. He was elected chief executive officer of
Boise Cascade in 1994 and became chairman of the board in
1995. Mr. Harad has been an executive officer of the company
since 1982. He is also chairman of the board of Boise
Cascade Office Products Corporation and a director of US
West, Inc.
DONALD S. MACDONALD, 68, joined our board for the second
[PHOTO] time in 1996. He was originally elected in 1978 but resigned
in 1986. Between 1991 and 2000, Mr. Macdonald was of counsel
to the Toronto law firm of McCarthy Tetrault. He served as
Canadian High Commissioner to Great Britain and Northern
Ireland from 1988 to 1991. In addition, Mr. Macdonald was a
member of the Canadian House of Commons for 16 years and a
former chairman of the Royal Commission on the Economic
Union and Development Prospects for Canada. Between 1968 and
1977, he held the Cabinet positions of President of the
Privy Council; Minister of National Defence; Minister of
Energy, Mines, and Resources; and Minister of Finance.
Mr. Macdonald is a director of Aber Resources Limited,
Alberta Energy Company Limited, Sun Life Assurance Company
of Canada, TransCanada Pipelines Limited, and several
private companies.
JANE E. SHAW, 61, joined our board of directors in 1994. She
[PHOTO] has been chairman of the board and chief executive officer
of AeroGen, Inc., a private company specializing in the
development of pulmonary drug delivery systems, since 1998.
Dr. Shaw founded The Stable Network, a biopharmaceutical
consulting firm, in 1995. She was the president and chief
operating officer of ALZA Corporation, a therapeutic systems
company, from 1987 to 1994. Dr. Shaw is also a director of
Aviron, Intel Corporation, and McKesson HBOC, Inc.
5
DIRECTORS WHOSE TERMS EXPIRE IN 2002
ROBERT K. JAEDICKE, 71, joined our board of directors in
[PHOTO] 1983. He is professor (emeritus) of accounting at the
Stanford University Business School and served as dean of
Stanford's Graduate School of Business from 1983 to 1990.
Professor Jaedicke is also a director of Enron Corp.,
GenCorp Inc., and California Water Service Company.
FRANCESCA RUIZ DE LUZURIAGA, 45, joined our board of
[PHOTO] directors in 1998. She became the chief operating officer of
Mattel Interactive, a business unit of Mattel, Inc., one of
the major toy manufacturers in the world, in 1999. Prior to
holding this position, Ms. Luzuriaga served Mattel as its
executive vice president, worldwide business planning and
resources, from 1997 to 1999 and as its chief financial
officer from 1995 to 1997.
FRANK A. SHRONTZ, 68, joined our board of directors in 1989.
[PHOTO] He is chairman emeritus of The Boeing Company, an aerospace
company. Mr. Shrontz was the chairman of the board and chief
executive officer of The Boeing Company from 1988 to 1997.
He is also a director of Chevron Corporation and Minnesota
Mining & Manufacturing Co.
CAROLYN M. TICKNOR, 52, joined our board of directors in
[PHOTO] February 2000. She has been a vice president of
Hewlett-Packard Company, a global provider of computing,
printing, and imaging products and services, since 1995.
Ms. Ticknor became president of HP's Imaging and Printing
Systems, formerly LaserJet Imaging Systems, in 1999, having
served as its general manager since 1994. She is also a
director of Stamps.com.
WARD W. WOODS, JR., 57, joined our board of directors in
[PHOTO] 1992. He was president and chief executive officer of
Bessemer Securities, LLC, a privately held investment
company, from 1989 to 1999. Mr. Woods is a member, through
wholly owned corporations, of the general partner of
Bessemer Holdings, L.P., and affiliated investment
partnerships. He is also a special partner of Bessemer
Partners & Co. Mr. Woods is a director of Bessemer
Securities, LLC, Contour Energy Co., and several private
companies.
6
DIRECTORS WHOSE TERMS EXPIRE IN 2001
PHILIP J. CARROLL, 62, joined our board of directors in
[PHOTO] 1997. He became chairman of the board and chief executive
officer of Fluor Corporation, a global engineering,
construction, maintenance, and diversified services company,
in 1998. Mr. Carroll was the president and chief executive
officer of Shell Oil Company from 1993 to 1998. He is also a
director of Vulcan Materials Company.
RAKESH GANGWAL, 46, joined our board of directors in 1998.
[PHOTO] He became the president and chief executive officer of US
Airways Group, Inc., the parent corporation for US Airways'
mainline jet and express divisions as well as several
related companies, all in the air transportation industry,
in 1998. He also became the president and chief executive
officer of US Airways, Inc., the main operating arm of US
Airways Group, in 1998. Mr. Gangwal was the president and
chief operating officer of US Airways Group, Inc., and US
Airways, Inc., from 1996 to 1998. He was the executive vice
president, Planning and Development, of Air France from 1994
to 1996. Mr. Gangwal is also a director of US Airways
Group, Inc.
GARY G. MICHAEL, 59, joined our board of directors in 1997.
[PHOTO] He became chairman of the board and chief executive officer
of Albertson's, Inc., a retail food and drug company, in
1991. He is also a director of Questar Corporation and
chairman of the Federal Reserve Bank of San Francisco.
A. WILLIAM REYNOLDS, 66, joined our board of directors in
[PHOTO] 1989. He is the chief executive of Old Mill Group, a private
investment firm. Mr. Reynolds was the chairman of the board
and chief executive officer of GenCorp Inc., a diversified
manufacturing and service company, from 1987 to 1995. He is
also a director of Boise Cascade Office Products Corporation
and Eaton Corporation and former chairman of the Federal
Reserve Bank of Cleveland.
BUSINESS RELATIONSHIPS WITH DIRECTORS
Donald S. Macdonald was of counsel to the law firm of McCarthy Tetrault,
located in Toronto, Ontario, Canada, until he retired from this position in
early 2000. We and some of our affiliates occasionally used McCarthy Tetrault's
services in 1999 to advise us on Canadian legal matters. We expect to do the
same in 2000. We retain this firm independent of Mr. Macdonald's service on our
board of directors, and Mr. Macdonald derives no financial benefit from our use
of McCarthy Tetrault.
7
MEETINGS AND COMMITTEES OF THE BOARD
During 1999, our board of directors met seven times. In addition to meetings
of the full board, directors also attended meetings of board committees. All the
directors, except Ms. Ruiz de Luzuriaga and Mr. Carroll, attended at least 75%
of the meetings of the board and the committees on which they served. Overall,
our directors had an attendance rate of 93%.
THE BOARD OF DIRECTORS AND COMMITTEE MEMBERSHIP
- -------------------------------------------------------------------------------------------------------------------
EXECUTIVE
COMMITTEE OF EXECUTIVE COMPENSATION AUDIT NOMINATING
DIRECTOR OUTSIDE DIRECTORS COMMITTEE COMMITTEE COMMITTEE COMMITTEE
- -------------------------------------------------------------------------------------------------------------------
Anne L. Armstrong(1)................. X X X
Philip J. Carroll.................... X X X
Rakesh Gangwal....................... X X X
Edward E. Hagenlocker................ X X X
George J. Harad...................... X(2)
Robert K. Jaedicke................... X X
Donald S. Macdonald.................. X X(2) X
Gary G. Michael...................... X X X
Paul J. Phoenix(1)................... X X X
A. William Reynolds.................. X X X(2) X
Francesca Ruiz de Luzuriaga.......... X X X
Jane E. Shaw......................... X X X(2)
Frank A. Shrontz..................... X(2) X X
Carolyn M. Ticknor(3)................ X X X
Ward W. Woods, Jr.................... X X X
1999 Meetings........................ 2 2 3 3 2
- -------------------------------------------------------------------------------------------------------------------
(1) Mrs. Armstrong and Mr. Phoenix retired from the board in February 2000. In
1999, Mr. Phoenix served as chair of the Audit Committee.
(2) Committee chair.
(3) Ms. Ticknor was appointed to the board in February 2000.
COMMITTEE OF OUTSIDE DIRECTORS
The Committee of Outside Directors reviews the performance of the chief
executive officer against his individual and corporate goals and strategies. It
also reviews the performance and processes of the board of directors and
evaluates the communication among the board, management, and shareholders. The
committee meets at least twice each year without Mr. Harad (our only management
director) present.
EXECUTIVE COMMITTEE
In the absence of a full meeting of the board, the Executive Committee can
exercise most of the powers and authority of the full board to manage our
business and affairs.
EXECUTIVE COMPENSATION COMMITTEE
The Executive Compensation Committee, comprised entirely of independent
directors, establishes all executive officer compensation. In addition, it
reviews general compensation and benefit plans and oversees administration of
stock option and variable compensation programs that apply to officers and
directors. The committee also advises the board on nominees for executive
officer positions in the company.
8
AUDIT COMMITTEE
The Audit Committee, in keeping with its charter, is comprised entirely of
independent directors. The committee meets periodically with management, our
internal auditors, and our independent auditors to assure that appropriate
audits of our affairs are being conducted. Additionally, it reviews corporate
compliance policies and activities, the scope of internal and external audit
activities, and the results of the annual audit. The committee also recommends a
public accounting firm to serve as independent auditors each year. Both the
independent auditors and the internal auditors communicate directly with the
committee (outside the presence of management) regarding the results of their
examinations, the adequacy of internal accounting controls, and the integrity of
financial reporting.
NOMINATING COMMITTEE
The Nominating Committee, comprised entirely of independent directors,
reviews and recommends candidates for nomination to the board.
The board of directors has established qualifications for directors,
including the ability to apply good and independent judgment in a business
situation and the ability to represent the interests of all our shareholders and
constituencies. A director also must be free from any conflicts of interest that
would interfere with his or her loyalty to our shareholders and us. In
evaluating board candidates, the committee considers these qualifications as
well as several other factors, including but not limited to:
- demonstrated maturity and experience;
- geographic balance;
- expertise in business areas relevant to Boise Cascade;
- background as an educator in business, economics, or the sciences; and
- diversity of background, with particular consideration to female and
minority candidates.
DIRECTOR COMPENSATION
Of our current board members, only Mr. Harad is a salaried employee of Boise
Cascade. Board members that are not salaried employees receive separate
compensation for board service. In 1999, that compensation included:
Annual Retainer: $30,000
Committee Chair Stipend: $6,500 annually
Attendance Fees: $1,500 for each board meeting
$600 for each committee meeting
$600 for each board or committee meeting
conducted by telephone
$600 for taking any action by consent in lieu of
meeting
Expenses related to attendance
Stock Options: 1,500 annually
9
DIRECTOR STOCK OPTION PLAN
Through our shareholder-approved Director Stock Option Plan, each
nonemployee director receives an annual stock option grant. The options are
exercisable one year after the grant date, and they expire the earlier of
(a) three years after the director's retirement, resignation, death, or
termination as a director or (b) ten years after the grant date. Individuals who
are directors on January 1, or who are appointed between January 1 and July 31,
receive a grant on July 31. Directors appointed between August 1 and
December 31 receive a grant when they join our board.
In 1999, each nonemployee director was granted an option to purchase 1,500
shares of our common stock at a price equal to the stock's closing market price
on the grant date.
DIRECTOR STOCK COMPENSATION PLAN
Through our shareholder-approved Director Stock Compensation Plan,
nonemployee directors can elect to receive part or all of their retainers and
meeting fees in stock options rather than cash. Under the plan, the directors
must specify by December 31 of each year how much of their retainer and meeting
fees for the following year they wish to receive in the form of stock options.
Options are granted to participating directors at the end of each calendar
year, equal in value to the cash compensation that the participating directors
would otherwise have received. The number of option shares granted to a
participating director is based on the amount of compensation he or she elected
to have paid in options and the market value of our common stock on July 31 of
each year. The options have an exercise price of $2.50 per share, can be
exercised six months after the date of grant, and expire three years after the
director's resignation, retirement, or termination as director. Nine of the 13
eligible directors participated in this plan in 1999, and eight directors have
elected to participate in the plan in 2000.
DIRECTOR DEFERRED COMPENSATION PROGRAM
Our directors' deferred compensation program allows each nonemployee
director to defer all or a portion of his or her cash compensation.
Under this program, nonemployee directors may defer from a minimum of $5,000
to a maximum of 100% of their cash compensation in a calendar year. For
deferrals prior to 1988, interest is imputed on the deferred amount at a monthly
rate equal to Moody's Composite Average of Yields on Corporate Bonds plus four
percentage points. For deferrals from 1988 to the present, interest is imputed
at a rate equal to 130% of Moody's Composite Average of Yields on Corporate
Bonds. A minimum death benefit is also provided based on pre-1995 deferrals. We
have purchased corporate-owned life insurance policies to help offset the
expense of this program. In the event of a change in control, as defined in the
plans, a trust will pay our obligations under these plans. For more information
on this trust, see "Deferred Compensation and Benefits Trust" on page 25.
As of December 31, 1999, seven directors were participating in the deferred
compensation program.
10
STOCK OWNERSHIP
DIRECTORS AND EXECUTIVE OFFICERS
The directors, nominees for director, and executive officers furnished the
following information to us regarding the shares of our common stock that they
beneficially owned on December 31, 1999.
OWNERSHIP OF BOISE CASCADE CORPORATION STOCK
- -----------------------------------------------------------------------------------------------
AMOUNT AND NATURE OF PERCENT
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- -----------------------------------------------------------------------------------------------
DIRECTORS(1)
Anne L. Armstrong........................................... 15,183 *
Philip J. Carroll........................................... 7,579 *
Rakesh Gangwal.............................................. 3,588 *
Edward E. Hagenlocker....................................... 4,371 *
George J. Harad............................................. 763,702(2) 1.24%
Robert K. Jaedicke.......................................... 7,496 *
Donald S. Macdonald......................................... 8,130 *
Gary G. Michael............................................. 6,845 *
Paul J. Phoenix............................................. 9,944 *
A. William Reynolds......................................... 26,864 *
Francesca Ruiz de Luzuriaga................................. 4,417 *
Jane E. Shaw................................................ 11,098 *
Frank A. Shrontz............................................ 10,000 *
Carolyn M. Ticknor.......................................... 0(3) *
Ward W. Woods, Jr........................................... 29,154 *
OTHER NAMED EXECUTIVES
Christopher C. Milliken..................................... 0(2) *
N. David Spence............................................. 175,849(2) *
Theodore Crumley............................................ 211,463(2) *
John W. Holleran............................................ 165,169(2) *
All directors, nominees for director, and executive officers
as a group (1)(2)(4)...................................... 2,398,057 3.88%
* Less than 1% of class
- -----------------------------------------------------------------------------------------------
(1) Beneficial ownership for the directors includes all shares held of record or
in street name, plus options granted but unexercised under the Director
Stock Compensation Plan ("DSCP") and Director Stock Option Plan ("DSOP"),
described on page 10 under "Director Compensation." The number of shares
subject to options under the DSCP included in the beneficial ownership table
is as follows: Mrs. Armstrong, 6,683 shares; Ms. Ruiz de Luzuriaga, 417
shares; Ms. Shaw, 4,098 shares; and Messrs. Carroll, 3,079 shares; Gangwal,
588 shares; Hagenlocker, 1,371 shares; Macdonald, 930 shares; Michael, 611
shares; Phoenix, 2,611 shares; Reynolds, 9,864 shares; Woods, 12,154 shares;
and directors as a group, 42,406 shares. The number of shares subject to
options under the DSOP included in the beneficial ownership table is as
follows: Mrs. Armstrong, 7,000 shares; Ms. Ruiz de Luzuriaga, 3,000 shares;
Ms. Shaw, 7,000 shares; and Messrs. Carroll, 4,500 shares; Gangwal, 3,000
shares; Hagenlocker, 3,000 shares; Jaedicke, 7,000 shares; Macdonald, 6,000
shares; Michael, 4,500 shares; Phoenix, 7,000 shares; Reynolds, 7,000
shares; Shrontz, 7,000 shares; Woods, 7,000 shares; and directors as a
group, 73,000 shares.
(2) The beneficial ownership for these executive officers includes all shares
held of record or in street name, plus options granted but unexercised under
the Key Executive Stock Option Plan ("KESOP"), described on page 20 under
"Stock Option Tables;" interests in shares of common stock held in the Boise
Cascade Common Stock Fund by the trustee of the company's Savings and
Supplemental Retirement Plan ("SSRP"), a defined contribution plan qualified
under Section 401(a) of the Internal Revenue Code; and deferred stock units
held under the Key Executive Performance Plan for Executive Officers and the
1995 Executive Officer Deferred Compensation Plan. The following table
indicates the nature of each executive's stock ownership and also shows the
number of shares of convertible preferred stock, Series D, held in the
Employee Stock Ownership Plan ("ESOP") fund of the SSRP which are not
included in the beneficial ownership table.
11
COMMON UNEXERCISED DEFERRED SSRP ESOP
SHARES OPTION STOCK (COMMON (PREFERRED
OWNED SHARES UNITS STOCK) STOCK)
--------- ------------ --------- ---------- ----------
George J. Harad................................. 3,511 743,500 8,719 7,972 863
Christopher C. Milliken......................... 0 0 0 0 974
N. David Spence................................. 2,032 169,100 2,721 1,996 303
Theodore Crumley................................ 1,247 189,300 1,547 19,369 616
John W. Holleran................................ 70 161,200 2,789 1,110 960
All executive officers as a group............... 10,560 2,165,100 26,482 51,246 12,505
(3) Ms. Ticknor was appointed to the board in February 2000. As of December 31,
1999, she did not own any shares of the company's stock.
(4) Our executive officers (individually or as a group) do not own more than 1%
of the company's Series D Preferred Stock (ESOP).
On December 31, 1999, the following directors, nominees for director, and
executive officers beneficially owned or held options for the following number
of shares of common stock of Boise Cascade Office Products Corporation, our
majority-owned subsidiary.
OWNERSHIP OF BOISE CASCADE OFFICE PRODUCTS CORPORATION STOCK
- ----------------------------------------------------------------------------------------------------------------
COMMON UNEXERCISED SSRP
SHARES OPTION (COMMON TOTAL
NAME OF BENEFICIAL OWNER OWNED SHARES STOCK) SHARES(*)
- ----------------------------------------------------------------------------------------------------------------
DIRECTORS
Anne L. Armstrong........................................... 4,000 0 0 4,000
George J. Harad............................................. 2,000 0 0 2,000
A. William Reynolds......................................... 20,000 23,000 0 43,000
Jane E. Shaw................................................ 5,000 0 0 5,000
OTHER NAMED EXECUTIVES
Christopher C. Milliken..................................... 8,400 296,400 13,839 318,639
Theodore Crumley............................................ 1,000 0 0 1,000
John W. Holleran............................................ 0 0 598 598
All directors, nominees for director, and executive officers
as a group................................................ 45,600 583,800 50,871 680,271
- ----------------------------------------------------------------------------------------------------------------
(*) The individual and aggregate beneficial ownership represents less than 1% of
the outstanding shares.
12
OWNERSHIP OF MORE THAN 5% OF BOISE CASCADE STOCK
As of December 31, 1999, the table below describes each person or entity
that we know to be the beneficial owner of more than 5% of any class of our
voting securities.
- --------------------------------------------------------------------------------------------------------------------
TOTAL
VOTING AUTHORITY DISPOSITIVE AUTHORITY AMOUNT PERCENT
--------------------- --------------------- OF BENEFICIAL OF
NAME AND ADDRESS SOLE SHARED SOLE SHARED OWNERSHIP CLASS
- --------------------------------------------------------------------------------------------------------------------
COMMON STOCK, $2.50 PAR VALUE
Dodge & Cox 3,177,374 31,800 3,479,913 0 3,479,913 6.1%
One Sansome St.
35th Floor
San Francisco, CA 94104
Joint filing by Forstmann- 2,003,670 3,087,550 2,323,501 4,248,350 6,571,851 11.5%
Leff Associates, LLC;
FLA Asset Management, LLC;
Stamford Advisers LLC; and
FLA Advisers L.L.C.
590 Madison Avenue
New York, NY 10022
Morgan Stanley Dean 0 2,746,452 0 2,953,102 2,953,102 5.17%
Witter & Co.
1585 Broadway
New York, NY 10036
COMMON STOCK, $2.50 PAR VALUE,
AND COMMON STOCK EQUIVALENTS
State Street Bank and Trust Company* 1,677,308 5,903,236 1,792,524 4,924,581 6,717,105(1) 10.98%
225 Franklin St.
Boston, MA 02110
CONVERTIBLE PREFERRED STOCK, SERIES D
State Street Bank and Trust Company, as 0 4,982,209 0 4,982,209 4,982,209(2) 100%
Trustee for the Boise Cascade
Corporation
Employee Stock Ownership Plan (ESOP)
225 Franklin St.
Boston, MA 02110
*Approximately 13.7% of these shares are held by State Street Bank and Trust Company in its capacity as trustee for
the company's employee savings plans.
- --------------------------------------------------------------------------------------------------------------------
(1) State Street Bank and Trust Company, as trustee for three of the company's
defined contribution plans and for the Employee Stock Ownership Plan
("ESOP") fund of the Savings and Supplemental Retirement Plan, reported on a
Schedule 13G that it was the beneficial owner of 6,717,105 shares of the
company's common stock. This represents 2,713,551 shares of the company's
common stock and 4,982,209 shares of the company's Convertible Preferred
Stock, Series D (held by the ESOP). The shares of preferred stock held by
the ESOP are convertible into approximately 4,003,554 shares of common stock
(using a conversion ratio of 1 share of preferred stock = .80357 common
shares). Included in the reported shares were 921,027 shares of Boise
Cascade common stock held by State Street as trustee for the company's
defined contribution plans, representing approximately 1.6% of the company's
common stock outstanding as of December 31, 1999. The trustee, subject to
participants' instructions, has voting and investment authority for the
shares held in the company's plans and for the ESOP shares. State Street
Bank and Trust Company has sole voting power for 1,677,308 shares and sole
investment power for 1,792,524 shares not held as trustee for the company's
benefit plans.
(2) The shares of preferred stock held by the ESOP represent approximately 8% of
the company's voting securities outstanding as of December 31, 1999. For
further information regarding the Series D preferred stock, see footnote
(1) above.
13
EXECUTIVE COMPENSATION COMMITTEE REPORT
The Executive Compensation Committee of the board of directors approves the
individual salaries and compensation programs for executive officers. Some of
the company's executive officers are employed by Boise Cascade Office Products
Corporation ("BCOP") and receive their compensation from BCOP. BCOP's
Compensation Committee approves the compensation programs and salaries for these
officers. The following report explains the basis for the committee's
compensation decisions during 1999.
The company's salary policy provides for compensation at competitive levels
for all employees. Our executive compensation program is designed to:
- attract, motivate, reward, and retain the broad-based management talent
critical to achieving the company's business goals;
- link a portion of each executive officer's compensation to the performance
of both the company and the individual executive officer; and
- encourage ownership of company common stock by executive officers.
To ensure that compensation levels remain competitive, the company reviews
various reports and other information on the executive compensation practices of
59 other companies within the paper and forest products industry. These
companies are selected primarily because comparable levels of responsibility can
be identified for executives within those companies. Of these, 10 are included
in the paper and forest products company index contained in the performance
graph following this report.
The company also collects information on the compensation practices of
approximately 383 Fortune 500 manufacturing companies. Together, these paper and
forest products industry and manufacturing companies are referred to as "peer
group" companies in this report. In addition to the peer group companies'
compensation information, the company and committee use information regarding
executive compensation programs provided by human resource consulting firms,
including in 1999, Hewitt Associates, Management Compensation Group, and Stern
Stewart & Co.
The company's executive compensation program has four principal components:
- base salary;
- annual variable incentive compensation;
- stock options; and
- other compensation plans.
During 1999, the cash-based annual variable (at-risk) incentive component linked
executive compensation directly to the company's financial performance, and the
stock option component tied executive compensation to growth in its stock value.
The company's compensation plans reflect the committee's intent that the
compensation paid to executive officers will qualify for federal income tax
deduction by the company. Executive compensation decisions, however, necessarily
involve some subjective judgment. The committee reserves the authority to make
compensation payments that may not be deductible under federal tax law.
14
BASE SALARY
A salary guideline is established for each salaried position in the company,
including each executive officer position. The midpoint of each salary guideline
approximates the average salary, adjusted for company size (in sales), of
equivalent positions at the peer group companies. Annual base salary is designed
to compensate executives for their level of responsibility, sustained individual
performance, and performance of the business or staff unit which the executive
heads. Business or staff unit performance is measured by economic value added,
return on total capital, effective environmental management, achievement of
sales or production targets, effectiveness of cost-containment measures,
implementation of Total Quality process improvements, and other factors relevant
to the specific position. In weighing these factors, the committee must make
inherently subjective judgments.
Each year, the committee reviews the criteria discussed above and
establishes the chief executive officer's base salary. The chief executive
officer's performance is formally reviewed against a written performance plan.
In 1998, the committee set Mr. Harad's base salary at $800,004 per year. In
1999, the committee granted stock options under the stock option plan in lieu of
salary increases to the company's executive officers. Mr. Harad received a grant
of an option to purchase 23,400 shares of the company's common stock in lieu of
a salary increase in 1999, as reflected in the Summary Compensation and Stock
Option Tables.
Mr. Harad's salary reflects his 29 years of experience with the company, his
responsibilities as chief executive officer, and his role in the company's
strategic positioning, cost-effectiveness programs, and Total Quality evolution.
Mr. Harad's salary is approximately 7.2% below the midpoint of the designated
salary guideline ($862,000) for the company's chief executive officer.
ANNUAL VARIABLE INCENTIVE COMPENSATION
The committee establishes objective performance criteria for the variable
incentive compensation program. This program applies to all of the company's
salaried employees. The committee oversees administration of the plan covering
executive officers.
The criteria for the program specify percentages of the participants'
compensation to be paid as additional cash compensation based on improvements in
the company's "economic value added." Economic value added is determined by
calculating the company's operating profit and then subtracting a pretax charge
for the capital used to generate that profit. Studies indicate that, for the
company, increases in economic value added have a high positive correlation to
increases in shareholder value over time.
The committee establishes target payouts for each participating position.
The target payout for the chief executive officer, over a complete business
cycle, should average approximately 70% of the chief executive officer's base
salary, assuming the company performs satisfactorily. The actual payout under
the plan varies from year to year depending on the company's financial
performance for the year. Target payout amounts for executive officers and other
plan participants also vary, depending on the participants' level of
responsibility and on competitive compensation practices.
Under the 1999 program, Mr. Harad received a payment equal to 91.57% of his
base salary, as reported in the Summary Compensation Table.
15
Based on our 1999 review of competitive compensation data covering the peer
group companies, the committee determined that certain of the target payouts
under the company's annual variable incentive compensation program required
adjustment, beginning with the 1999 plan year. The committee awarded a special
discretionary incentive payment for individuals who were executive officers as
of January 1, 1999, to reflect this adjustment.
The Summary Compensation Table reflects amounts paid under this variable
incentive program.
STOCK OPTIONS
The purpose of the stock option plan is to further align management's
interests with the company's long-term performance and, therefore, the long-term
interests of the shareholders. The committee grants stock options to executive
officers and other key managers. It administers this plan and generally grants
stock options to plan participants each year. Stock options were granted under
this plan in 1999, in addition to the stock options granted in lieu of salary
increases for the company's executive officers. Since the exercise price of all
grants represents the fair market value of the common stock when granted, the
options have no value unless the common stock price exceeds the exercise price
of the options.
The committee determines the number of stock options to grant by:
- analyzing peer group companies' competitive compensation;
- considering consultants' recommendations; and
- taking each individual's salary guideline and responsibilities into
account.
The committee may also consider the number and exercise price of options granted
to an individual in the past. Corporate or business unit measures are not used
to determine the size of individual option grants.
The stock option plan limits the number of shares issued to any individual
over the life of the plan to 15% of the total number of shares authorized by
shareholders for issuance under the plan. This provision reflects the
committee's view that the plan is intended to provide long-term incentive
compensation to a relatively broad spectrum of the company's management.
During 1999, Mr. Harad was granted options to purchase 162,300 shares of the
company's common stock (including 23,400 common stock options in lieu of a
salary increase). In determining the number of shares to include in Mr. Harad's
grant, the committee considered:
- information about stock option grants to chairpersons and chief executive
officers of the peer group companies;
- the company's financial performance;
- the number of shares granted to other chief executive officers and the
value of those options;
- the size of grants offered to the company's other executive officers;
- the value of the expected salary increase Mr. Harad would otherwise have
received; and
- the number and exercise price of shares previously granted to Mr. Harad.
16
STOCK OWNERSHIP GUIDELINES AND STOCK UNIT PURCHASES
In 1999, the committee established stock ownership guidelines for executive
officers. These guidelines are intended to increase the officers' equity stake
in the company and more closely align their interests with those of our
shareholders. These voluntary guidelines provide that, over time:
- the chief executive officer should acquire stock ownership equal to three
times his base salary;
- the senior vice presidents should acquire stock ownership equal to twice
their base salary; and
- the vice presidents should acquire stock ownership equal to their base
salary.
The guidelines are not applicable to officers of Boise Cascade Office
Products Corporation.
After only a year of implementation, all of our executive officers made
significant progress toward meeting the stock ownership guidelines.
Approximately 75% of the company's officers have already met or exceeded their
goals.
In 1999, the committee also amended the company's Key Executive Performance
Plan for Executive Officers and the 1995 Executive Officer Deferred Compensation
Plan. These amendments permit executive officers to purchase stock units with
some or all of their compensation deferred under these plans. As an incentive to
encourage stock ownership, the company matches any deferrals used to purchase
stock units with additional stock units, which are subject to a vesting
schedule. The plans provide for the payout of the deferred stock units in shares
of our common stock when an officer retires or terminates employment. The stock
units are included in the stock ownership table on page 11 and are described
more fully on page 30 under management's proposal requesting shareholder
approval for the amendments to the plans.
OTHER COMPENSATION PLANS
The company's executive officers are entitled to receive additional
compensation in the form of payments, allocations, or accruals under various
other compensation and benefit plans. The plans are described more fully in the
footnotes to the Summary Compensation Table and on page 22 under "Other Benefit
Plans." Each of these plans is an integral part of the company's compensation
program.
EXECUTIVE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
A. William Reynolds, Chairman
Anne L. Armstrong
Philip J. Carroll
Edward E. Hagenlocker
Gary G. Michael
Francesca Ruiz de Luzuriaga
Ward W. Woods, Jr.
17
PERFORMANCE GRAPH
The following graph compares the five-year cumulative total return (assuming
dividend reinvestment) for the Standard & Poor's 500 index, the Standard &
Poor's paper and forest products company index, and Boise Cascade.
[LOGO]
BASE
PERIOD RETURN RETURN RETURN RETURN RETURN
COMPANY/INDEX NAME 1994 1995 1996 1997 1998 1999
- ------------------------------------------------------------------------------------------------------------------------
Boise Cascade Corp..................................... $100 $131.06 $122.65 $118.94 $124.28 $164.98
Paper & Forest Products................................ 100 110.10 121.79 130.59 133.18 186.22
S&P 500 Index.......................................... 100 137.58 169.17 225.60 290.08 351.12
- ------------------------------------------------------------------------------------------------------------------------
18
COMPENSATION TABLES
The following tables present compensation information for our chief
executive officer and the four next most highly compensated executive officers
during 1999.
This table sets forth compensation earned during each of the last three
years.
SUMMARY COMPENSATION TABLE
- ---------------------------------------------------------------------------------------------------------------------------------
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------------------- ------------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
SALARY ($) BONUS ($) COMPENSATION ($) OPTIONS/SARS (#) COMPENSATION ($)
NAME AND PRINCIPAL POSITION YEAR (2) (3) (4) (5) (6)
- ---------------------------------------------------------------------------------------------------------------------------------
George J. Harad, 1999 $800,004 $732,564 $ -- 162,300 $123,522
Chairman and Chief Executive 1998 791,628 751,284 1,891 102,800 98,029
Officer 1997 757,377 623,548 -- 85,000 69,756
Christopher C. Milliken, 1999 435,000 236,295 -- 0(1) 32,997
Senior Vice President (1) 1998 371,250 202,722 -- 0 26,050
1997 233,757 87,840 -- 0 22,042
N. David Spence, 1999 342,000 246,069 -- 32,700 56,235
Senior Vice President and 1998 338,502 206,465 3,054 23,100 50,421
General Manager, Paper 1997 324,006 171,548 135 23,800 43,207
Division
Theodore Crumley, 1999 338,669 250,386 -- 50,400 51,726
Senior Vice President and 1998 328,503 200,431 -- 28,700 45,470
Chief Financial Officer 1997 312,900 166,314 -- 24,300 40,418
John W. Holleran, 1999 290,938 222,757 -- 45,100 41,675
Senior Vice President, Human 1998 274,206 167,592 159 23,100 34,800
Resources, and General 1997 260,502 138,072 317 19,900 28,455
Counsel
- ---------------------------------------------------------------------------------------------------------------------------------
(1) All of Mr. Milliken's 1999 compensation was paid by Boise Cascade Office
Products Corporation with the exception of certain accruals of above-market
interest on executive officer deferred compensation plans maintained by the
company and to which he contributed prior to 1996. During 1999,
Mr. Milliken was not granted an option to purchase shares of Boise Cascade's
common stock but was granted an option by the Compensation Committee of the
Boise Cascade Office Products Corporation board of directors to purchase
118,000 shares of Boise Cascade Office Products Corporation's common stock
under its Key Executive Stock Option Plan.
(2) Includes amounts deferred under the company's SSRP and Executive Officer
Deferred Compensation Plans and, for Mr. Milliken, amounts deferred under
the Boise Cascade Office Products Corporation Deferred Compensation Plans.
(3) Payments, if any, under the company's and Boise Cascade Office Products
Corporation's variable incentive compensation program. See "Annual Variable
Incentive Compensation" on page 15.
(4) The amounts shown in this column reflect the amount of federal income tax
incurred by the named executive and paid by the company or Boise Cascade
Office Products Corporation relating to various executive officer benefits.
The cost incurred by the company during these years for various other
perquisites provided to each of the named executive officers is not included
in this column, because the amount did not exceed the lesser of $50,000 or
10% of the executive's compensation during each year.
(5) Grants under the company's Key Executive Stock Option Plan.
19
(6) Amounts disclosed in this column include the following:
-------------------------------------------------------------------------------------------------------------------
COMPANY ACCRUALS OF
MATCHING ABOVE-MARKET COMPANY COMPANY-
CONTRIBUTIONS INTEREST ON ALLOCATIONS PAID
TO THE EXECUTIVE OFFICER TO THE PORTION
EXECUTIVE OFFICER DEFERRED EMPLOYEE OF EXECUTIVE
DEFERRED COMPENSATION STOCK OWNERSHIP OFFICER LIFE
COMPENSATION PLANS PLAN INSURANCE
NAME YEAR OR SSRP PLANS ($)(*) BALANCES ($) ($) PROGRAMS ($)
-------------------------------------------------------------------------------------------------------------------
George J. Harad........... 1999 $65,154 $35,299 $ 500 $22,569
1998 59,347 25,762 800 12,120
1997 37,267 15,914 1,800 14,775
Christopher C. Milliken... 1999 18,961 10,588 0 3,448
1998 13,773 8,072 0 4,205
1997 12,993 6,356 0 2,693
N. David Spence........... 1999 23,036 20,796 395 12,008
1998 21,422 14,668 592 13,739
1997 15,358 9,708 1,242 16,899
Theodore Crumley.......... 1999 22,642 15,474 500 13,110
1998 20,782 10,600 800 13,288
1997 14,811 7,023 1,800 16,784
John W. Holleran.......... 1999 19,258 13,430 500 8,487
1998 17,316 9,126 780 7,578
1997 12,343 5,473 1,665 8,974
-------------------------------------------------------------------------------------------------------------------
(*) The company's Executive Officer Deferred Compensation Plans and Boise
Cascade Office Products Corporation's Deferred Compensation Plans are
unfunded plans pursuant to which executive officers may irrevocably elect
to defer receipt of a portion (6% to 20%) of their base salary until
termination of employment or beyond. Amounts deferred through
December 31, 1999, are generally credited with imputed interest at a rate
equal to 130% of Moody's Composite Average of Yields on Corporate Bonds
or, under the company's 1995 Executive Officer Deferred Compensation
Plan, with either imputed interest or stock units. Each stock unit is
equal in value to one share of the company's common stock. The company
makes an additional contribution to each participant's stock unit account
equal to 25% of the participant's contribution. Amounts reflected in this
column do not include the company's contribution to the listed officers'
stock unit accounts. Company contributions are set out in the Long-Term
Incentive Plans table on page 22. The company's SSRP, in which employees
of Boise Cascade Office Products Corporation may also participate, is a
profit-sharing plan qualified under Section 401(a) of the Internal
Revenue Code which contains a cash or deferred arrangement meeting the
requirements of Section 401(k) of the Code.
STOCK OPTION TABLES
This table details the 1999 option grants under our Key Executive Stock
Option Plan ("KESOP") to the five executives named in the Summary Compensation
Table, as well as to all executive officers as a group and nonofficer employees
as a group.
20
OPTION/SAR GRANTS IN 1999
- --------------------------------------------------------------------------------------------------------------------
GRANT DATE
INDIVIDUAL GRANTS VALUE
----------------------------------------------------------- ----------------
NUMBER OF
SECURITIES PERCENT OF
UNDERLYING TOTAL OPTIONS/ EXERCISE
OPTIONS/SARS SARS GRANTED TO OR BASE GRANT DATE
GRANTED EMPLOYEES IN PRICE EXPIRATION PRESENT VALUE(3)
NAME (#) FISCAL YEAR ($/SH)(2) DATE ($)
- --------------------------------------------------------------------------------------------------------------------
George J. Harad..................... 23,400 2.30% $29.3750 2/12/09 $ 182,988
138,900 13.67 38.0625 7/30/09 1,558,458
Christopher C. Milliken (1)......... 0 -- 0 -- 0
N. David Spence..................... 3,700 0.36 29.3750 2/12/09 28,934
29,000 2.85 38.0625 7/30/09 325,380
Theodore Crumley.................... 5,400 0.53 29.3750 2/12/09 42,228
45,000 4.43 38.0625 7/30/09 504,900
John W. Holleran.................... 7,600 0.75 29.3750 2/12/09 59,432
37,500 3.69 38.0625 7/30/09 420,750
2/12/09-
Executive officers as a group....... 565,400 55.64 36.82 7/30/09 6,072,396
Nonofficer employees as a group..... 450,800 44.36 38.0625 7/30/09 5,057,976
- --------------------------------------------------------------------------------------------------------------------
(1) During 1999, Mr. Milliken was not granted an option to purchase shares of
Boise Cascade's common stock but was granted an option, by the Compensation
Committee of the Boise Cascade Office Products Corporation board of
directors, to purchase 118,000 shares of Boise Cascade Office Products
Corporation's common stock under its Key Executive Stock Option Plan at an
exercise price of $12.8125/share. This option had a present value at the
grant date (using the Black-Scholes valuation model with assumptions of
risk-free interest rate of 5.05%, expected option term of 4.2 years, and
stock price volatility of 35%) of $540,440 (BCOP common stock currently pays
no dividends). This grant represents 11.44% of the percent of total option
grants to BCOP employees during 1999.
(2) Under the KESOP, the exercise price must be the fair market value at the
date of grant. Options granted under this plan during 1999 were fully vested
when granted. However, except under limited circumstances, the options are
not exercisable until one year after the date of the grant. Under the plan,
no options may be granted after July 24, 2004. The exercise price of options
granted to executive officers as a group is the weighted average of options
granted during 1999.
(3) "Grant Date Value" has been calculated using the Black-Scholes model of
option valuation, with assumptions of: (a) a risk-free interest rate of
5.8%, (b) expected stock price volatility of 30%, (c) expected option term
of 4.2 years, and (d) expected dividends of $.60/share. Based on this model,
the calculated values of the options on February 11, 1999, and July 29, 1999
(grant dates), are $7.82 and $11.22 per share granted. This value does not
necessarily represent the amount an option holder may ultimately realize
upon exercise of an option.
The following table sets forth the shares acquired and gross value (without
adjustment for personal income taxes and fees, if any) realized by the top five
executives when they exercised their stock options during 1999 and also states
the year-end gross value of unexercised stock options held by these executives.
AGGREGATE OPTION/SAR EXERCISES FOR 1999 AND 1999 OPTION/SAR VALUES
- -------------------------------------------------------------------------------------------------------------------
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS
12/31/99 (#) AT 12/31/99 ($)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME UPON EXERCISE REALIZED (1) UNEXERCISABLE UNEXERCISABLE (2)
- -------------------------------------------------------------------------------------------------------------------
George J. Harad........................... 12,000 $ 31,500 581,200/162,300 $6,153,400/598,894
Christopher C. Milliken................... 0 0 0/ 0 0/ 0
N. David Spence........................... 0 0 136,400/ 32,700 1,233,150/111,850
Theodore Crumley.......................... 1,300 3,413 138,900/ 50,400 1,227,438/169,763
John W. Holleran.......................... 0 0 116,100/ 45,100 1,180,188/175,956
- -------------------------------------------------------------------------------------------------------------------
(1) The "value realized" represents the difference between the option's exercise
price and the value of the company's common stock at the time of exercise.
(2) This column indicates the aggregate amount, if any, by which the common
stock share price on December 31, 1999, $40.50, exceeded the options'
exercise price.
21
LONG-TERM INCENTIVE PLANS TABLE
This table details the stock units contributed by the company during 1999
under our 1995 Executive Officer Deferred Compensation Plan ("DCP") and Key
Executive Performance Plan ("KEPP") to the five executives named in the Summary
Compensation Table. The company's contribution is equal to 25% of each
participant's contribution to the plans. Each stock unit is equal in value to
the market value of one share of the company's common stock. Stock units
accumulate "dividends" similar to normal stock ownership. These dividends are
included in the figures set out in this table.
LONG-TERM INCENTIVE PLANS--AWARDS IN 1999
- -----------------------------------------------------------------------------------------------------------------
PERFORMANCE
NUMBER OF NUMBER OF PERIOD UNTIL
NAME UNITS--DCP (1) UNITS--KEPP (2) MATURATION (3)
- -----------------------------------------------------------------------------------------------------------------
George J. Harad............................................. 1,744 0 1999-2003
Christopher C. Milliken..................................... 0 0 --
N. David Spence............................................. 544 0 1999-2003
Theodore Crumley............................................ 309 0 1999-2003
John W. Holleran............................................ 558 0 1999-2003
- -----------------------------------------------------------------------------------------------------------------
(1) The company's DCP is an unfunded plan pursuant to which executive officers
may irrevocably elect to defer receipt of a portion (6% to 20%) of their
base salary until termination of employment or beyond. Amounts deferred
through December 31, 1999, are generally credited with imputed interest at a
rate equal to 130% of Moody's Composite Average of Yields on Corporate Bonds
or stock units.
(2) The company's KEPP is an unfunded variable compensation plan pursuant to
which executive officers may irrevocably elect to defer all or a portion of
any payout. Deferred amounts are either credited with nominal interest at a
rate determined annually by the company (not less than the prime rate
offered by the Bank of America NT & SA each January 1) or credited with
stock units.
(3) These stock units vest 20% per year over a five-year period. They may be
paid out (in shares of company common stock) only after a participant's
employment with the company has ended.
OTHER BENEFIT PLANS
DEFERRED COMPENSATION
Under our 1982 Executive Officer Deferred Compensation Plan, executive
officers elected before January 1, 1987, could defer between 6% and 10% of their
total compensation earned during a period of four years. In addition, each
participant could elect to have an amount up to 3.6% of his or her compensation
imputed to deferrals under the plan in lieu of matching contributions to the
Savings and Supplemental Retirement Plan ("SSRP"). This plan is not funded, and
its cost is largely offset by participant salary deferrals.
The benefit payable to each participant under this plan upon retirement at
age 65 is determined by the amount of salary deferred, any amount we have
contributed, and the number of years to normal retirement age at the time of
contribution. We pay the benefits in equal monthly installments up to 15 years.
Participants may also elect to receive their accrued balance in a lump sum, but
they will incur a 10% penalty and will be suspended from making contributions to
any of our deferred compensation plans for a period of 12 months.
The following table outlines the contributions and benefits under this plan
for the named individual participating in the plan as of December 31, 1999.
- ----------------------------------------------------------------------------------------------------------------
PROJECTED
YEARS OF SERVICE
UPON ATTAINMENT PARTICIPANT'S ANNUAL BENEFIT
NAME OF AGE 65 DEFERRAL AT AGE 65
- ----------------------------------------------------------------------------------------------------------------
George J. Harad............................................. 38 $87,225 $118,120
- ----------------------------------------------------------------------------------------------------------------
22
PENSION PLAN
The estimated annual benefits payable upon retirement at age 65 under this
plan for specified high-five-year average remuneration and years-of-service
classifications are set out in the following table.
PENSION PLAN TABLE
- ---------------------------------------------------------------------------------------------
YEARS OF SERVICE
---------------------------------------------------------------------
REMUNERATION 15 20 25 30 35 40
- ---------------------------------------------------------------------------------------------
$ 200,000 $ 37,500 $ 50,000 $ 62,500 $ 75,000 $ 87,500 $100,000
250,000 46,875 62,500 78,125 93,750 109,375 125,000
300,000 56,250 75,000 93,750 112,500 131,250 150,000
400,000 75,000 100,000 125,000 150,000 175,000 200,000
500,000 93,750 125,000 156,250 187,500 218,750 250,000
600,000 112,500 150,000 187,500 225,000 262,500 300,000
700,000 131,250 175,000 218,750 262,500 306,250 350,000
800,000 150,000 200,000 250,000 300,000 350,000 400,000
900,000 168,750 225,000 281,250 337,500 393,750 450,000
1,000,000 187,500 250,000 312,500 375,000 437,500 500,000
- ---------------------------------------------------------------------------------------------
The pension plan entitles each vested employee, including executive
officers, to receive a pension benefit at normal retirement equal to 1 1/4% of
the highest average of any five consecutive years of compensation (as defined in
the plan) out of the last ten years of employment, multiplied by the employee's
years of service.
Boise Cascade Office Products Corporation is a participating employer in our
pension plan.
Under the plan, "compensation" is the employee's base salary plus any
amounts earned under the company's and Boise Cascade Office Products
Corporation's variable incentive compensation programs (only "Salary" and
"Bonus" from the Summary Compensation Table). As of December 31, 1999, the
highest average of annual compensation during any five consecutive years for
1990 through 1999 and the years of service for the named executives are as
follows:
- -----------------------------------------------------------------------------------------------
NAME COMPENSATION YEARS OF SERVICE
- -----------------------------------------------------------------------------------------------
George J. Harad............................................. $1,261,612 29
Christopher C. Milliken..................................... 422,224 22
N. David Spence............................................. 476,805 23
Theodore Crumley............................................ 457,010 29
John W. Holleran............................................ 368,879 21
- -----------------------------------------------------------------------------------------------
As shown in the Pension Plan Table above, benefits are computed on a
straight-life annuity basis and are not offset by social security or other
retirement-type benefits. An employee is 100% vested in his or her pension
benefit after five years of service, except for certain breaks in service. If an
employee is entitled to a greater benefit under the plan's formula than the
Internal Revenue Code allows for tax-qualified plans, the excess benefits will
be paid from the company's general assets under the unfunded Supplemental
Pension Plan. The benefit under the qualified pension plan is reduced by
compensation deferred under any nonqualified deferred compensation plan. The
Supplemental Pension Plan will also provide payments to the extent that
participation in these deferred compensation plans has the effect of reducing an
individual's pension benefit under the qualified plan.
In the event of a change in control (as defined in the plan), the plan
restricts our ability or our successor's ability to recoup surplus plan assets,
if any exist. In general, after a change in control,
23
the participants and beneficiaries will receive the plan's surplus assets, if
any, on a pro rata basis if the plan is terminated, merged or consolidated with
another plan, or the assets are transferred to another plan. After a change in
control, a majority (in both number and interest) of plan participants and
beneficiaries must consent to amend this provision.
SUPPLEMENTAL EARLY RETIREMENT PLAN
The Supplemental Early Retirement Plan applies to executive officers:
- 55 years old or older;
- who have ten or more years of service;
- who have served as an executive officer for at least five full years; and
- who retire before age 65.
Eligible officers receive an early retirement benefit prior to age 65 equal
to the benefit calculated under the Pension Plan for Salaried Employees without
reduction due to the officer's early retirement.
EXECUTIVE OFFICER AGREEMENTS
Our executive officers have agreements that formalize their severance
benefits if the executive officer is terminated after a change in control of the
company (as defined in the agreement). The agreements provide certain severance
benefits and protect other benefits that the officers have already earned or
reasonably expect to receive under our employee benefit plans. The officer will
receive the benefits provided under the agreement if, after a change in control,
the officer's employment is terminated other than for cause or disability (as
defined in the agreement) or if the officer terminates employment after actions,
specified in the agreement, which adversely affect the officer are taken. Under
the agreement, the officer must remain employed with us for six months following
the first potential change in control.
These agreements help ensure that we will have the benefit of these
officers' services without distraction in the face of a potential change in
control. The board of directors believes that the agreements are in the best
interests of our shareholders and the company.
The benefits under the agreements include:
- the officer's salary through the termination date;
- severance pay equal to three times the officer's annual base salary and
target incentive pay, less any severance pay that the officer receives
under the Severance Pay Policy for Executive Officers, which is currently
the amount of the officer's annual base salary;
- vacation pay according to our Vacation Policy;
- any earned but unpaid bonus under the Key Executive Performance Plan (or
any substitute plan) for the year preceding termination;
- an award under the Key Executive Performance Plan (or any substitute plan)
equal to the greater of:
(a) the officer's target award prorated through the month in which the
officer is terminated; or
(b) the actual award through the end of the month prior to termination
based upon the award criteria for the applicable plan, prorated
through the month in which the officer is terminated;
24
- benefits under the Supplemental Early Retirement Plan; and
- certain additional retirement and other employee benefits.
The agreements provide four additional benefits. First, we will maintain for up
to one year all employee benefit plans and programs in which the officer was
entitled to participate immediately prior to termination or we will substitute
similar arrangements. Second, we will maintain our participation in the
Split-Dollar Life Insurance Plan until the officer's insurance policy under that
plan is fully paid. Third, we will pay legal fees and expenses that the officer
incurs to enforce his or her rights or benefits under the agreement. Fourth, we
will increase the officer's total payments under the agreement to cover any
excise taxes imposed by the Internal Revenue Service as a result of such
payments.
The estimated amount of payments and other benefits (not including legal
fees, if any) each named executive officer would receive under the agreement
based on 1999 compensation figures (in excess of the benefits to which the
officer is entitled without the agreement) is:
- - George J. Harad.......................................... $4,740,222
- - Christopher C. Milliken
(from Boise Cascade Office Products Corporation)......... 3,313,484
- - N. David Spence.......................................... 1,713,093
- - Theodore Crumley......................................... 2,986,679
- - John W. Holleran......................................... 1,999,774
(Payments which would be made subsequent to the termination date have been
discounted as of December 31, 1999, at a rate of 7.12%, according to the
requirements of Section 280G of the Internal Revenue Code.) Actual payments made
under the agreements at any future date would vary, depending in part upon what
the executive has accrued under the variable compensation plans and benefit
plans and upon the market price of our common stock.
Each agreement is effective until December 31, 2002. The agreements are
automatically extended each January 1 for a new three-year period, unless we
notify the officers by September 30 of the preceding year that we do not wish to
extend the agreements.
DEFERRED COMPENSATION AND BENEFITS TRUST
The company has established a deferred compensation and benefits trust. This
trust is intended to ensure that participants and beneficiaries under our
nonqualified and unfunded deferred compensation plans and the executive officer
agreements will receive the benefits they have earned in the event of a change
in control of the company (as defined in the plans and the agreements). The
trust will not increase the benefits to which any individual participant is
entitled under the covered plans and agreements. If a potential change in
control occurs, the trust will be revocably funded. If an actual change in
control occurs, the trust will be irrevocably funded and will pay benefits to
participants in accordance with the plans and agreements. The trustee will
receive fees and expenses either from us or from the trust assets. If the
company becomes bankrupt or insolvent, the trust assets will be accessible to
the claims of the company's creditors.
INDEMNIFICATION
To the extent that Delaware law permits, we will indemnify our directors and
officers against liabilities they incur in connection with actual or threatened
proceedings to which they are or may become parties and which arise from their
status as directors and officers. We insure, within stated limits, the directors
and officers against these liabilities. The aggregate premium on the insurance
policies for 1999 was $597,928.
25
AMENDMENT OF 1984 KEY EXECUTIVE STOCK OPTION PLAN
HISTORY AND OPERATION OF THE KESOP
Under the KESOP, the Executive Compensation Committee of the board of
directors may grant options to key employees, including executive officers, to
purchase shares of the company's common stock. Nonemployees are not eligible for
grants under this plan. In 1999, 18 executive officers and 167 other key
employees received option grants under the plan.
Since the plan was adopted in 1983, options have been granted to purchase a
total of 11,496,034 shares of our common stock. Since then, 5,111,186 shares
have been purchased through the exercise of options, 2,029,905 options have
expired unexercised, and 4,354,943 shares remain subject to option. We have
337,605 shares currently available for future stock option grants under the
plan.
Options under the KESOP must be granted at the fair market value of the
company's common stock on the date of grant. As of February 28, 2000, the
closing price of our common stock on the New York Stock Exchange was $29.1875
per share. The plan does not permit "repricing" of previously granted options.
No incentive stock options or tax offset bonuses have been granted under the
plan. All previously granted stock appreciation rights were canceled effective
May 1, 1991, and no stock appreciation rights have been granted since then.
Employees exercising an option may pay the exercise price in the form of:
- cash;
- Boise Cascade stock which has a fair market value equal to the exercise
price;
- the proceeds of a loan authorized by the Executive Compensation Committee;
or
- any combination of the above methods (including a "cashless"
broker-assisted process).
The board of directors may amend the KESOP at any time and may make
adjustments to the KESOP and outstanding options, without your approval, to
reflect a stock split, stock dividend, recapitalization, merger, consolidation,
or other corporate events. Shareholders, however, must approve amendments which:
- change the number of shares subject to this plan;
- change employee eligibility requirements;
- change the method of pricing options on the grant date;
- allow any member of the committee to receive an option;
- change the manner of computing the amount to be paid through a stock
appreciation right;
- materially increase the cost of the KESOP to the company or the benefits
to participants; or
- extend the period for granting options or stock appreciation rights.
Options may not be granted under the KESOP after July 24, 2004. The plan,
however, will remain in effect until all stock subject to the plan has been
purchased through the exercise of options granted under the plan.
PROPOSED PLAN AMENDMENT
This amendment increases the number of shares available under the plan by
1,800,000 shares.
26
The board believes this amendment is essential to maintain our balanced and
competitive total compensation program. Without this amendment, we would not
have sufficient shares available under the plan to provide for continued option
grants in 2000 and beyond, consistent with the purpose of the plan and our
normal compensation practices. We use the KESOP to relate a portion of our key
employees' total compensation directly to improvement in shareholder value. The
KESOP also supports our ability to attract and retain highly qualified managers
in key positions. In order to maintain the continuity and consistency of the
program, as well as to minimize administrative costs and complexity, the board
recommends amending the plan to authorize additional shares rather than adopting
and implementing an entirely new plan.
This amendment will not be effective unless it is approved by our
shareholders.
FEDERAL INCOME TAX CONSEQUENCES
Under current federal law, an employee granted a stock option under the
KESOP has no income tax consequences at that time. If the employee exercises an
option, then at that time he or she will realize ordinary income equal to the
difference between the value of the common stock and the exercise price. In
general, shares acquired by exercising an option have a basis equal to the
market value of the stock on the date of exercise. When an employee exercises an
option, the company is entitled to a federal income tax deduction in the same
amount as the employee's realized income.
ADDITIONAL INFORMATION
We cannot determine the amount of options under the KESOP that will be
granted in 2000 to specific officers, officers as a group, or nonofficer
employees as a group. The plan, however, does not permit grants to any one
individual, during the life of the plan, of options to purchase more than 15% of
the total number of shares authorized for issuance under the plan. You can find
more information regarding options granted and exercised under the KESOP on
page 20 under "Stock Option Tables." The tables show the stock options granted
under the KESOP to our employees and executive officers in 1999. These amounts
would not have been different under the proposed amendment. A copy of the plan
is on file with the Securities and Exchange Commission.
AMENDMENT OF DIRECTOR STOCK OPTION PLAN
HISTORY AND OPERATION OF THE DSOP
Under the DSOP, options to purchase shares of the company's common stock are
granted automatically each year on July 31 to our nonemployee directors.
Directors appointed after July 31 will also receive a grant when they join our
board. In 1999, 14 directors received option grants under the plan.
Since the plan was adopted in 1994, options have been granted to purchase a
total of 91,500 shares of our common stock. Since then, 5,500 shares have been
purchased through the exercise of options, 2,000 options have expired
unexercised, and 84,000 shares remain subject to option. We have 10,500 shares
currently available for future stock option grants under the plan.
Options under the DSOP must be granted at the fair market value of the
company's common stock on the date of grant. As of February 28, 2000, the
closing price of our common stock on the New York Stock Exchange was $29.1875
per share. The plan does not permit "repricing" of previously granted options.
27
Directors exercising an option may pay the exercise price in the form of:
- cash;
- Boise Cascade stock which has a fair market value equal to the exercise
price;
- the proceeds of a loan authorized by the company; or
- a "cashless" broker-assisted method.
The board of directors may amend the DSOP at any time and may make
adjustments to the DSOP and outstanding options, without your approval, to
reflect a stock split, stock dividend, recapitalization, merger, consolidation,
or other corporate events. The board may also increase or decrease the number of
option shares to be granted, provided they do so at least six months prior to
July 31. Shareholders, however, must approve amendments which:
- change the number of shares subject to this plan;
- change director eligibility requirements;
- change the price of options; or
- materially increase the cost of the DSOP to the company or the benefits to
participants.
Options may not be granted under the DSOP after December 16, 2004. The plan,
however, will remain in effect until all stock subject to the plan has been
purchased through the exercise of options granted under the plan or until all
unexercised options have expired.
PROPOSED PLAN AMENDMENT
This amendment increases the number of shares available under the plan by
100,000 shares.
The board believes this amendment is essential to maintain our balanced and
competitive director compensation program. Without this amendment, we would not
have sufficient shares available under the plan to provide for continued option
grants in 2000 and beyond, consistent with the purpose of the plan and our
director compensation practices. We use the DSOP to relate a portion of our
directors' total compensation directly to improvement in shareholder value. In
order to maintain the continuity and consistency of the program, as well as to
minimize administrative costs and complexity, the board recommends amending the
plan to authorize additional shares rather than adopting and implementing an
entirely new plan.
This amendment will not be effective unless it is approved by our
shareholders.
FEDERAL INCOME TAX CONSEQUENCES
Under current federal law, a director granted a stock option under the DSOP
has no income tax consequences at that time. If the director exercises an
option, then at that time he or she will realize ordinary income equal to the
difference between the value of the common stock and the exercise price. In
general, shares acquired by exercising an option have a basis equal to the
market value of the stock on the date of exercise. When a director exercises an
option, the company is entitled to a federal income tax deduction in the same
amount as the director's realized income.
28
ADDITIONAL INFORMATION
The size of the option grant for each nonemployee director has been set at
2,000 shares for 2000, or a total of 26,000 shares for nonemployee directors as
a group. We cannot determine the amount of options under the DSOP that may be
granted after July 31, 2000, to newly elected directors, if any. You can find
more information regarding options granted under the DSOP on page 11 under
"Stock Ownership." Footnote 1 to the "Ownership of Boise Cascade Corporation
Stock" table indicates the number of stock options held under the DSOP by our
directors. The stock options to be granted on July 31, 2000, would not have been
different under the proposed amendment. A copy of the plan is on file with the
Securities and Exchange Commission.
REAPPROVAL OF KEY EXECUTIVE PERFORMANCE PLAN FOR EXECUTIVE OFFICERS
HISTORY AND OPERATION OF THE KEPP
Boise Cascade has maintained variable incentive compensation programs for
over 35 years. Our current program covers all our salaried employees. Under the
program, a percentage of each participant's base compensation may be paid as
additional cash compensation based on year-to-year improvements in our "economic
value added." Economic value added is determined by calculating our pretax
operating profit and then subtracting a charge for the capital used to generate
that profit. The KEPP is the portion of our current incentive program that
applies to executive officers.
The Executive Compensation Committee establishes target payouts for each
participating position. These targets vary, depending on the participants' level
of responsibility and on competitive compensation practices. Actual payments
under the program vary from year to year, depending on our financial performance
for the year.
We cannot determine the amounts which may be awarded to specific officers or
officers as a group under the KEPP program in 2000. You can find more
information regarding the awards previously earned by our five most highly
compensated executive officers on page 19 under the column "Bonus" in the
"Summary Compensation Table." The column shows the amounts awarded under the
variable incentive compensation program for 1997, 1998, and 1999. All our
executive officers, as a group, were awarded $3,187,471 under the KEPP program
for 1999. A copy of the plan is on file with the Securities and Exchange
Commission.
No more than $2.5 million may be paid to an executive officer under the plan
in any year. If an award exceeds this limit, payment of the excess amount will
be automatically deferred. Participants may also elect to defer receipt of all
or a portion of awards earned. These deferred amounts become unfunded general
obligations of Boise Cascade. Deferred amounts are either credited with nominal
interest at a rate determined annually by the company (not less than the prime
rate offered by the Bank of America NT & SA each January 1) or credited with
stock units (see management's proposal to amend the KEPP on page 30).
Because the KEPP is designed to provide executives with, among other things,
the opportunity to defer receipt of income until their retirement, the KEPP is
subject to regulation under the federal Employee Retirement Income Security Act
of 1974. In the event of a change in control, as defined in the plan, a trust
will pay the previously deferred awards. For more information on this trust, see
"Deferred Compensation and Benefits Trust" on page 25.
The Executive Compensation Committee is responsible for overseeing the
administration of the KEPP. The committee may amend or terminate the plan at any
time, but any amendment or termination may not adversely affect a participant's
earned or accrued benefits.
29
Executives who retire, become totally disabled, die, or must end their
employment due to various reasons (other than disciplinary) set out in the plan
may receive a prorated KEPP award for the year in which they leave. Executive
officers who otherwise leave the company, either voluntarily or involuntarily
for disciplinary reasons, are not eligible to receive a KEPP award for the year
in which they leave.
FEDERAL INCOME TAX CONSEQUENCES
Cash amounts received by executives under the KEPP are subject to income
taxation in the year received. Boise Cascade is entitled to deduct, as
compensation expense, amounts paid to executives under this plan.
Our shareholders first approved the KEPP in 1995 as required by federal tax
laws, which also require the KEPP to be reapproved by our shareholders every
five years. Shareholder approval ensures we may continue to fully deduct
compensation paid to our executive officers under this plan.
AMENDMENT OF KEY EXECUTIVE PERFORMANCE PLAN FOR EXECUTIVE OFFICERS AND
1995 EXECUTIVE OFFICER DEFERRED COMPENSATION PLAN
HISTORY AND OPERATION OF THE PLANS AND DEFERRED STOCK UNITS
The Key Executive Performance Plan for Executive Officers is part of our
variable incentive compensation program and is described beginning on page 29.
We also have deferred compensation programs for our executives. The 1995
Executive Officer Deferred Compensation Plan applies to executive officers. It
is an unfunded plan that allows each officer to defer a portion (6% to 20%) of
his or her cash compensation. Deferred amounts are either credited with imputed
interest (at a rate equal to 130% of Moody's Composite Average of Yields on
Corporate Bonds) or credited with stock units.
Each stock unit is equal in value to one share of our common stock. Payment
of benefits under these plans is either in cash or in company common stock.
As mentioned in the Executive Compensation Committee Report, executive
officers have stock ownership guidelines. The plan amendments establishing the
deferred stock unit accounts were designed to assist officers in achieving the
ownership goals.
The amendments permit executive officers to purchase stock units with some
or all of the compensation they defer under these plans. The company matches any
deferrals used to purchase stock units with a 25% premium in additional stock
units. Deferred stock units accumulate "dividends" similar to normal stock
ownership.
The executives' deferred stock units, including dividends, are fully vested
at all times. The company's match, including dividends, vests at 20% per year
and is 100% vested after five years of participation. If an executive
voluntarily terminates employment or is terminated for disciplinary reasons
prior to the end of the five-year vesting period, the unvested company matching
stock units are forfeited. The company matching stock units are fully vested
upon involuntary termination due to various reasons, including retirement,
death, total and permanent disability, or in the event of a change in control,
as defined in the plan. In the event of a change in control, a trust will pay
the previously deferred awards. For more information on this trust, see
"Deferred Compensation and Benefits Trust" on page 25.
30
Subject to your approval, the company will pay out the deferred stock units
in shares of our common stock when an officer retires or terminates employment.
The payout will be made in a lump sum or over a period of years, depending on
what method the executive has chosen under the KEPP or the deferred compensation
plan.
As of December 31, 1999, 17 of our current executive officers were
purchasing deferred stock units under these plans.
PROPOSED PLAN AMENDMENTS
The board believes the addition of the deferred stock unit feature to the
Key Executive Performance Plan for Executive Officers and the 1995 Executive
Officer Deferred Compensation Plan encourages ownership of our stock by
executive officers and will further align our executives' interests with the
interests of our shareholders. The total number of shares that may be issued in
payment of deferred stock units is 100,000 shares for each plan. No company
stock may be issued as a result of the amendments to these plans unless approved
by our shareholders.
ADDITIONAL INFORMATION
We cannot determine the amount of deferred stock units that will be
purchased by participating officers in 2000. The deferred stock units purchased
in 1999 by specific officers and officers as a group are included in the
directors and executive officers stock ownership table on page 11, under
footnote 2. Copies of the Key Executive Performance Plan for Executive Officers
and the 1995 Executive Officer Deferred Compensation Plan are on file with the
Securities and Exchange Commission.
SHAREHOLDER PROPOSAL REGARDING CLASSIFIED BOARD
John Osborn, M.D., 2421 W. Mission, Spokane, Washington 99201, who owns 105
shares of Boise Cascade common stock, has given us notice that he intends to
present the following proposal at the annual meeting.
RESOLVED: That Boise Cascade stockholders urge the Board of
Directors take the necessary steps, in compliance with state law, to
declassify the Board for the purpose of director elections. The Board
declassification shall be completed in a manner that does not affect the
unexpired terms of directors previously elected.
STATEMENT BY SHAREHOLDER IN SUPPORT OF THE PROPOSAL
Our company's board is divided into three classes of directors serving
staggered three-year terms. This means an individual director faces election
only once every three years, and shareholders only vote on roughly a third of
the board each year. Some companies contend a declassified [sic] board insures
continuity. We think continuity is insured through director reelections.
When directors are performing well they routinely are reelected with
majorities over 95%. We believe that annual elections can pave the way for
improved board sensitivity to important shareholder issues. Our board faces some
volatile issues. The "headlines" of our company's website attest to this: "Boise
Cascade responds to false allegations regarding former Mexico operations" and
"Boise Cascade responds to erroneous allegations about Chile business venture."
(Oct. 1999)
31
Chilean activists have traveled to the United States to speak out against
our company's proposed operations in Chile. These operations have sparked
opposition and prompted a demonstration at our 1999 shareholders meeting. We
continue to face conflict over logging in National Forests here at home.
Our board would benefit from more ambitious governance reforms; as a
beginning, however, let us modestly urge our board to run annually for
reelection, instead of once every three years.
We urge you to vote YES for this proposal.
STATEMENT BY DIRECTORS IN OPPOSITION TO THE PROPOSAL
Your board of directors recommends a vote AGAINST this proposal.
This proposal was submitted by Dr. John Osborn. Dr. Osborn is the founder
and a member of The Lands Council (formerly the Inland Empire Public Lands
Council), an organization which promotes itself as "a front-line activist-based
forest conservation group" according to its website. The proposal is, on its
face, a proposal to declassify the board of directors. However, Dr. Osborn's
supporting statement raises environmental issues completely unrelated to the
issue of board classification. Clearly, his proposal and supporting statement
serve solely to give him a public platform to espouse his environmental views,
not to educate the company's shareholders on the merits of any particular board
structure.
In 1985, the company's shareholders voted overwhelmingly to create a
classified board. The reasons shareholders voted in favor of a classified board
then are still valid today.
The company believes there are two primary benefits of a classified board:
- First, a classified board provides the assurance of continuity, stability,
and knowledge in the business affairs and financial strategies of the
company, since a majority of the directors will always have prior
experience as directors of the company. The shareholder's proposal itself
cites examples of the complex issues presented to our board. The assurance
of continuing directors ensures that the board has the necessary
background and knowledge to handle these issues and others in the way that
best enhances shareholder value.
- Second, with staggered elections, at least two annual shareholder meetings
would be required to effect a change in control of the board of directors.
This fact enhances the board's ability to negotiate with a person or
entity seeking to gain control of the company. We believe this enhanced
negotiating leverage puts the board in a better position to achieve higher
shareholder value were a change in control situation to arise.
Our board believes that each of the company's directors is accountable to
the company's shareholders whether he or she is elected for a one-year term or
for a three-year term. Board classification does not prevent shareholders from
voting for or against directors when they are presented for election. As no
nominee has received less than 96% of the votes cast in the last five years, the
board sees little reason for shareholders to vote more frequently for each
director.
32
OTHER INFORMATION
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our directors
and executive officers, and any person who owns more than 10% of a registered
class of our equity securities, to file reports of holdings and transactions in
Boise Cascade shares with the SEC and the New York Stock Exchange. Based on our
records and other information, we believe that in 1999 our directors and
executive officers met all applicable SEC filing requirements.
BOISE CASCADE'S ANNUAL REPORT AND FORM 10-K
We are mailing you our 1999 Annual Report with this proxy statement. We
filed our Form 10-K with the SEC in February. Copies of the 1999 Annual Report
to Shareholders and Annual Report on Form 10-K can be obtained at no charge from
our Corporate Communications Department, 1111 West Jefferson Street, P.O. Box
50, Boise, Idaho 83728-0001, 208/384-7990, or through our Internet home page at
www.bc.com. Our financial statements are also on file with the SEC and with the
New York and Chicago Stock Exchanges. You can obtain copies of these statements
through the Securities and Exchange Commission's web site at www.sec.gov.
SHAREHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING
If you wish to submit a proposal to be included in our 2001 proxy statement,
we must receive it no later than November 23, 2000.
All other proposals to be presented at the meeting must be delivered to our
corporate secretary, in writing, no later than February 6, 2001. According to
our bylaws, your notice must include:
- a brief description of the business you wish to bring before the meeting
and the reasons for conducting the business at the meeting;
- your name and address;
- the class and number of shares of our stock which you beneficially own;
and
- any material interest you have in the business to be brought before the
meeting.
The chairperson of the meeting may disregard any business not properly
brought before the meeting according to our bylaws.
SHAREHOLDER NOMINATIONS FOR DIRECTORS
If you wish to suggest a nominee for the Nominating Committee's
consideration, write to Karen E. Gowland, vice president and corporate
secretary, 1111 West Jefferson Street, P.O. Box 50, Boise, Idaho 83728-0001. You
should describe in detail your proposed nominee's qualifications and other
relevant biographical information and indicate whether the proposed nominee is
willing to accept nomination.
33
The Nominating Committee will consider director nominees from shareholders
for election at the annual shareholders meeting if our corporate secretary
receives a written nomination not less than 30 days or more than 60 days in
advance of the meeting. According to our bylaws, your notice of nomination must
include:
- your name and address;
- each nominee's name, age, and address;
- each nominee's principal occupation or employment;
- the number of shares of our stock which the nominee beneficially owns;
- the number of shares of our stock which you beneficially own;
- any other information that must be disclosed about nominees in proxy
solicitations under Regulation 14A of the Securities Exchange Act of 1934;
and
- each nominee's executed consent to serve as our director if elected.
The chairperson of the meeting may disregard any nomination not made in
accordance with the above procedures.
WE REQUEST THAT YOU PROMPTLY SIGN, DATE, AND RETURN THE ENCLOSED PROXY SO
THAT IT WILL BE AVAILABLE FOR USE AT THE MEETING.
Karen E. Gowland
Vice President
and Corporate Secretary
March 22, 2000
34
[BOISE CASCADE LOGO]
[RECYCLED LOGO]
This Notice and Proxy Statement is printed on recycled-content
ASPEN-TM- Lightweight Opaque paper produced by
Boise Cascade's papermakers at its St. Helens, Oregon, mill.
This paper is made with no less than 10% postconsumer fiber.
[LOGO] BOISE CASCADE CORPORATION - 1111 W. Jefferson Street (83702),
P.O. Box 50, Boise, Idaho 83728-0001
PROXY ANNUAL MEETING OF SHAREHOLDERS, APRIL 20, 2000
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The shareholder signing this card appoints George J. Harad, John W. Holleran,
and Karen E. Gowland as proxies, each with the power to appoint a substitute.
They are directed to vote all the shareholder's Boise Cascade Corporation stock
held on February 28, 2000, at the company's annual meeting to be held on April
20, 2000, and at any adjournment of that meeting. They are also given
discretionary authority to vote on any other matters that may properly be
presented at the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES LISTED BELOW, FOR
PROPOSALS 2 THROUGH 6, AND AGAINST PROPOSAL 7.
1. Election of Directors: EDWARD E. HAGENLOCKER GEORGE J. HARAD DONALD S. MACDONALD JANE E. SHAW
/ / FOR all nominees / / WITHHOLD AUTHORITY WITHHOLD AUTHORITY for the following nominee(s) only:
(except as you may for all nominees
indicate otherwise) -------------------------------------------------------------
-------------------------------------------------------------
2. Appointment of Arthur Andersen LLP as independent accountants for 2000. / / FOR / / AGAINST / / ABSTAIN
3. Approval of amendment to the 1984 Key Executive Stock Option Plan. / / FOR / / AGAINST / / ABSTAIN
4. Approval of amendment to the Director Stock Option Plan. / / FOR / / AGAINST / / ABSTAIN
5. Reapprove the Key Executive Performance Plan for Executive Officers. / / FOR / / AGAINST / / ABSTAIN
6. Approval of amendments to the Key Executive Performance Plan for / / FOR / / AGAINST / / ABSTAIN
Executive Officers and the 1995 Executive Officer Deferred Compensation Plan.
7. Shareholder proposal regarding classified board. / / FOR / / AGAINST / / ABSTAIN
THIS PROXY WILL BE VOTED ACCORDING TO YOUR INSTRUCTIONS. IF YOU SIGN AND RETURN
THE CARD BUT DO NOT VOTE ON THESE MATTERS, THEN PROPOSALS 1 THROUGH 6 WILL
RECEIVE FOR VOTES AND PROPOSAL 7 WILL RECEIVE AN AGAINST VOTE.
This card provides voting authority for all beneficial holdings of Boise Cascade
Corporation shares.
Please sign exactly as your name appears below and date this card. When shares
are held by joint tenants, both should sign. When signing as an attorney,
executor, administrator, trustee, or guardian, give full title as such. When
signing as a corporation, sign in full corporate name by an authorized officer.
When signing as a partnership, sign in partnership name by an authorized person.
---------------------------- ------------------
Signature of Shareholder Date
---------------------------- ------------------
Signature of Shareholder Date
Forward this card to D. F. King (solicitor) or to Corporate Election Services
(independent tabulator), P.O. Box 1150, Pittsburgh, PA 15230
[LOGO]
BOISE CASCADE CORPORATION
Dear Shareholder:
The Boise Cascade Corporation annual meeting of shareholders will be held in the
company's corporate headquarters building in Boise, Idaho, at noon, Mountain
daylight time, April 20, 2000. Shareholders of record on February 28, 2000, are
entitled to vote by proxy, before or at the meeting.
The proxy card attached to the bottom of this page is for your use in
designating proxies (for shareholders of record, including those holding shares
in the Dividend Reinvestment Plan) and providing voting instructions (for Boise
Cascade employee savings plan participants). As "named fiduciaries,"
participants in the Boise Cascade Corporation stock funds of the employee
savings plans are entitled to provide voting instructions to the Trustee, using
this card, for allocated shares and a portion of any unvoted or unallocated
shares in the savings plan fund(s) in which they participate.
Corporate Election Services, Inc., an independent tabulator, will receive and
tabulate individual proxy/voting instruction cards.
Please indicate your voting preferences on the card, SIGN and DATE the card, and
return it to the independent tabulator in the envelope provided. YOUR VOTES ARE
CONFIDENTIAL.
Thank you.
(fold and tear along perforation)
PROXY AND VOTING INSTRUCTION CARD BOISE CASCADE CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY AND THESE INSTRUCTIONS ARE SOLICITED APRIL 20, 2000
ON BEHALF OF THE BOARD OF DIRECTORS.
The shareholder signing this card appoints George J. Harad, John W. Holleran,
and Karen E. Gowland as proxies, each with the power to appoint a substitute.
They are directed to vote (as indicated on the reverse side of this card) all
the shareholder's Boise Cascade Corporation stock held on February 28, 2000, at
the company's annual meeting to be held on April 20, 2000, and at any
adjournment of that meeting. They are also given discretionary authority to vote
on any other matters that may properly be presented at the meeting. If the
shareholder is a current or former company employee, this card also provides
voting instructions to the Trustee for shares held in any Boise Cascade
Corporation employee savings plans.
This proxy will be voted according to your instructions. If you sign and return
the card but do not vote on these matters, then proposals 1 through 6 will
receive FOR votes and proposal 7 will receive an AGAINST vote.
Forward this card to Corporate Election Services,
Printed on Boise Cascade Corporation's SUMMIT-Registered Trademark- TAG-X, 100#
White, made in St. Helens, Oregon.
PROXY AND VOTING INSTRUCTION CARD BOISE CASCADE CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL APRIL 20, 2000
NOMINEES LISTED BELOW, FOR PROPOSALS 2 THROUGH 6, AND AGAINST PROPOSAL 7.
1. Election of Directors: EDWARD E. HAGENLOCKER GEORGE J. HARAD DONALD S. MACDONALD JANE E. SHAW
/ / FOR all nominees / / WITHHOLD AUTHORITY WITHHOLD AUTHORITY for the following nominee(s) only:
(except as you may for all nominees
indicate otherwise) ---------------------------------------------------------
---------------------------------------------------------
2. Appointment of Arthur Andersen LLP as independent accountants for 2000. / / FOR / / AGAINST / / ABSTAIN
3. Approval of amendment to the 1984 Key Executive Stock Option Plan. / / FOR / / AGAINST / / ABSTAIN
4. Approval of amendment to the Director Stock Option Plan. / / FOR / / AGAINST / / ABSTAIN
5. Reapprove the Key Executive Performance Plan for Executive Officers. / / FOR / / AGAINST / / ABSTAIN
6. Approval of amendments to the Key Executive Performance Plan for / / FOR / / AGAINST / / ABSTAIN
Executive Officers and the 1995 Executive Officer Deferred Compensation Plan.
7. Shareholder proposal regarding classified board. / / FOR / / AGAINST / / ABSTAIN
- ---------------------------- ----------- ---------------------------- -----------
Signature of Shareholder Date Signature of Shareholder Date
ANNUAL MEETING OF SHAREHOLDERS, APRIL 20, 2000
PROXY FOR THE
CONVERTIBLE PREFERRED STOCK, SERIES D
BOISE CASCADE CORPORATION - 1111 West Jefferson Street
P.O. Box 50
Boise Idaho 83728-0001
- ---------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The trustee signing this card appoints George J. Harad, John W. Holleran, and
Karen E. Gowland as proxies, each with the power to appoint a substitute. They
are directed to vote all the shares of Boise Cascade Corporation stock held of
record by the trustee on February 28, 2000, at the company's annual meeting to
be held on April 20, 2000, and at any adjournment of that meeting. They are also
given discretionary authority to vote on any other matters that may properly be
presented at the meeting.
The Board of Directors recommends a vote FOR all nominees listed below, FOR
proposals 2 through 6, and AGAINST proposal 7.
1. Election of Directors: EDWARD E. HAGENLOCKER DONALD S. MACDONALD
GEORGE J. HARAD JANE E. SHAW
FOR WITHHOLD
Edward E. Hagenlocker ____________ ____________
George J. Harad ____________ ____________
Donald S. Macdonald ____________ ____________
Jane E. Shaw ____________ ____________
2. Appointment of Arthur Andersen LLP as independent accountants for 2000.
SHARES FOR: SHARES AGAINST: SHARES ABSTAINING:
----------- -------------- ---------------
3. Approval of amendment to the 1984 Key Executive Stock Option Plan:
SHARES FOR: SHARES AGAINST: SHARES ABSTAINING:
----------- -------------- ---------------
4. Approval of amendment to the Director Stock Option Plan:
SHARES FOR: SHARES AGAINST: SHARES ABSTAINING:
----------- -------------- ---------------
5. Approval of the Key Executive Performance Plan for Executive Officers:
SHARES FOR: SHARES AGAINST: SHARES ABSTAINING:
----------- -------------- ---------------
6. Approval of amendments to the Key Executive Performance Plan for
Executive Officers and the 1995 Executive Officer Deferred Compensation
Plan:
SHARES FOR: SHARES AGAINST: SHARES ABSTAINING:
----------- -------------- ---------------
7. Shareholder proposal regarding classified board:
SHARES FOR: SHARES AGAINST: SHARES ABSTAINING:
----------- -------------- ---------------
THIS PROXY WILL BE VOTED ACCORDING TO YOUR INSTRUCTIONS. IF YOU SIGN AND RETURN
THIS PROXY BUT DO NOT VOTE ON THESE MATTERS, THEN PROPOSALS 1 THROUGH 6 WILL
RECEIVE FOR VOTES AND PROPOSAL 7 WILL RECEIVE AN AGAINST VOTE. YOU, AS TRUSTEE,
MUST SIGN AND RETURN THIS PROXY FOR THE PLAN SHARES TO BE COUNTED.
This proxy provides voting authority for all holdings of Boise Cascade
Corporation Convertible Preferred Stock, Series D (ESOP).
Please sign exactly as the name appears below, including your full title as
trustee.
STATE STREET BANK AND TRUST COMPANY, as 4,940,830 Shares
trustee for the Boise Cascade Corporation
Savings and Supplemental Retirement Plan
and Employee Stock Ownership Plan.
Date: April ___, 2000
Signature of Trustee _____________________________________
Forward this form to Corporate Election Services,
P.O. Box 1150, Pittsburgh, PA 15230-9954