UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
MEADWESTVACO CORPORATION
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(Name of Registrant as Specified In Its Certificate)
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Reg. (S)240.14a-101.
SEC 1913 (3-99)
[LOGO] MeadWestvaco
March 8, 2002
Dear Fellow Shareholders:
We cordially invite you to join us at the 2002 Annual Meeting of Shareholders
of MeadWestvaco Corporation, our first annual meeting since the merger of The
Mead Corporation and Westvaco Corporation was completed in January of this
year. The meeting will be held at 10 o'clock in the morning of Tuesday, April
23, 2002. The meeting will take place at the J.P. Morgan Chase World
Headquarters, 270 Park Avenue, 3/rd/ Floor, in New York City.
This year our proxy material includes three proposals. We ask for your support
in voting FOR Proposal 1, the election of our directors; FOR Proposal 2, the
appointment of our independent accountants; and FOR Proposal 3, the approval of
the equity compensation portions of the MeadWestvaco Corporation Compensation
Plan for Non-Employee Directors.
Your interest in your company as demonstrated by the representation of your
shares at our annual meeting is a great source of strength for your company.
Your vote is very important to us and, accordingly, whether or not you expect
to attend the meeting, we ask that you sign, date and promptly return the
enclosed proxy.
Very truly yours,
/s/ Jerome F. Tatar /s/ John A. Luke, Jr.
Jerome F. Tatar John A. Luke, Jr.
Chairman of the Board President and Chief Executive Officer
MeadWestvaco Corporation
World Headquarters
One High Ridge Park
Stamford, Connecticut 06905
[LOGO] MeadWestvaco
Notice of 2002 Annual Meeting of Shareholders
and Proxy Statement
The 2002 Annual Meeting of Shareholders of MeadWestvaco Corporation will be
held at the J.P. Morgan Chase World Headquarters, 270 Park Avenue, 3/rd/ Floor,
in New York City, on Tuesday, April 23, 2002, at 10 o'clock in the morning for
the following purposes:
1. To elect five directors for terms of three years each;
2. To consider and vote upon a proposal to ratify the action of the Board of
Directors in appointing PricewaterhouseCoopers LLP as independent
accountants for the corporation for the fiscal year 2002; and
3. To consider and vote upon the equity compensation portions of the
MeadWestvaco Corporation Compensation Plan for Non-Employee Directors.
All holders of common stock of record at the close of business on March 8, 2002
will be entitled to receive notice of and to vote at the annual meeting.
Whether or not you expect to be at the meeting, please sign, date and promptly
return the enclosed proxy.
By Order of the Board of Directors
John W. Hetherington
Vice President and Secretary
March 8, 2002
Proxy Statement
MeadWestvaco Corporation
World Headquarters
One High Ridge Park
Stamford, Connecticut 06905
Your Board of Directors is providing you with this Proxy Statement in
connection with the Board's solicitation of proxies for MeadWestvaco
Corporation's ("MeadWestvaco" or the "Company") Annual Meeting of Shareholders
to be held on April 23, 2002. On or about March 21, 2002, we will mail the
Proxy Statement, a proxy card, and the Financial Report of MeadWestvaco to
shareholders of record of MeadWestvaco common stock at the close of business on
March 8, 2002. Only those holders of record will be entitled to vote, each
share of stock being entitled to one vote. Although the Financial Report and
Proxy Statement are being mailed together, the Financial Report should not be
deemed to be part of the Proxy Statement.
MeadWestvaco was incorporated in Delaware in 2001 in connection with the merger
of The Mead Corporation ("Mead") with Westvaco Corporation ("Westvaco"), which
occurred on January 29, 2002. Mead and Westvaco shareholders received common
stock of MeadWestvaco in consideration for their respective shares of Mead and
Westvaco. The former shareholders of Mead and Westvaco each held approximately
50% of the MeadWestvaco common stock immediately following the combination.
A majority of the outstanding shares of common stock, represented in person or
by proxy at the meeting, will constitute a quorum. The five director nominees
receiving the highest number of all votes cast for directors will be elected.
Accordingly, abstentions and broker non-votes will not affect the outcome of
the election. All other matters to be voted on will be decided by a majority
vote of the shares represented at the meeting and entitled to vote. On any such
matter, an abstention will have the same effect as a negative vote but, because
shares held by brokers, even though represented, are not entitled to vote on
any matters as to which the brokers lack authority to vote, a broker non-vote
will have no effect on the vote.
On March 8, 2002, there were 199,507,979 outstanding shares of MeadWestvaco
common stock. The following investment advisers are believed to have beneficial
ownership (as defined for certain purposes by the Securities and Exchange
Commission) of more than 5% of the Company's common stock by virtue of having
investment authority and, to some extent, voting authority over the number of
shares indicated.
Percent
Shares* of Class*
---------- ---------
AXA Financial, Inc. and related entities**
757 Fifth Avenue
New York, NY 10153 21,423,153 10.8%
Capital Research & Management Co.***
333 South Hope Street
Los Angeles, CA 90071 16,956,881 8.5%
- --------
* As of January 31, 2002.
** Based on Schedule 13G/A filed by AXA Financial, Inc. on February 11, 2002.
*** Based on Schedule 13G/A filed by Capital Research & Management Co. for each
of Mead and Westvaco on February 11, 2002.
The Mead and Westvaco stock ownership plans for salaried and hourly employees
held, as of March 8, 2002, an aggregate amount of 20,498,464 MeadWestvaco
shares, or 10.3% of the total outstanding, for which full voting rights are
exercisable by members of the plans. As of that date, there were approximately
24,380 current or former employees of MeadWestvaco and its subsidiaries
participating in these plans.
1
OWNERSHIP BY OFFICERS AND DIRECTORS
Shares Options
Beneficially Exercisable Percent of
Name Owned(1) Within 60 Days Shares
- ---- ------------ -------------- ----------
Directors
John G. Breen.................................. 15,915 4,863 *
Michael E. Campbell............................ 5,335 4,365 *
Dr. Thomas W. Cole, Jr......................... 10,719 10,185 *
Duane E. Collins............................... 8,942 2,830 *
William E. Hoglund (2)......................... 13,967 4,863 *
James G. Kaiser................................ 10,451 4,863 *
Richard B. Kelson.............................. 287 0 *
John A. Krol................................... 10,544 4,863 *
Susan J. Kropf................................. 10,581 4,863 *
Douglas S. Luke (3)............................ 54,327 7,275 *
John A. Luke, Jr. (4).......................... 959,149 795,786 *
Robert C. McCormack............................ 1,940 0 *
Lee J. Styslinger, Jr.......................... 51,655 4,863 *
Jerome F. Tatar (5)............................ 900,900 818,784 *
Jane L. Warner................................. 6,984 5,044 *
J. Lawrence Wilson............................. 10,646 4,220 *
Richard A. Zimmerman........................... 13,434 10,185 *
Other Named Executive Officers
Richard H. Block (5)........................... 78,642 38,800 *
James A. Buzzard (5)........................... 172,455 157,622 *
Raymond W. Lane (5)............................ 373,126 331,033 *
Karen R. Osar (5).............................. 63,997 58,200 *
All Directors and Executive Officers as a Group 3,502,643 2,844,263 1.8%
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* Less than 1% of MeadWestvaco common stock.
(1) Information concerning beneficial ownership of shares is as of February 28,
2002, the most recent practicable date. Includes the number of shares of
which such person has the right to acquire beneficial ownership as of
February 28, 2002, and which such person will have the right to acquire
beneficial ownership within 60 days thereafter (which shares are also set
forth in the column "Options Exercisable Within 60 Days").
(2) Includes 2,000 MeadWestvaco shares held indirectly through an IRA.
(3) Includes 23,278 MeadWestvaco shares held in a trust of which Mr. Luke is a
co-trustee.
(4) Includes 62,990 MeadWestvaco shares held indirectly through employee
benefit plans and 18,874 shares held in trust for members of Mr. Luke's
family.
(5) Includes MeadWestvaco shares held indirectly through employee benefit plans
by Messrs. Tatar, Block, Buzzard and Lane and Ms. Osar in the amounts of
4,729 shares, 1,042 shares, 14,590 shares, 4,515 shares, and 5,797 shares,
respectively.
Attendance at the meeting will be limited to holders of record as of March 8,
2002, or their authorized representatives (not to exceed one per shareholder),
and guests of management.
It is important that your stock be represented at the meeting. Whether or not
you plan to attend, please sign, date and return the enclosed proxy promptly in
order to be sure that your shares will be voted. You may revoke your proxy at
any time before it is voted at the meeting by submitting a written revocation
or a new proxy, or by attending and voting at the annual meeting.
In addition to solicitation by mail, officers and assistant officers of
MeadWestvaco may solicit proxies by telephone or other electronic
communication, or by personal contact. The cost of solicitation of proxies will
be borne by MeadWestvaco. MeadWestvaco may engage the services of D.F. King &
Co. Inc., and Orion Investor Relations for the solicitation of proxies on a
limited basis at a cost which is estimated not to exceed $17,500 in aggregate
fees, and somewhat more than half that amount in expenses.
2
1. Election of directors
Five directors will be elected to hold office for the terms set forth below
and, in all cases, until their successors are elected and shall qualify. There
is no provision for cumulative voting in the election of directors. At the
meeting, one of the persons named in the enclosed proxy (or a substitute) will,
if authorized, vote the shares covered by such proxy for election of the five
nominees for directors listed on the following pages.
The present nominees, Michael E. Campbell, Dr. Thomas W. Cole, Jr., Duane E.
Collins, Susan J. Kropf, and J. Lawrence Wilson, if elected, will be elected
for terms expiring at the 2005 Annual Meeting of Shareholders. The Board of
Directors unanimously recommends a vote FOR the named nominees. Should any of
these nominees become unavailable for election for any reason presently
unknown, a person named in the enclosed proxy (or a substitute) will vote for
the election of such other person or persons as the Board of Directors may
recommend.
John G. Breen, James G. Kaiser, Richard B. Kelson, John A. Krol, John A. Luke,
Jr., and Richard A. Zimmerman will continue to serve for a term expiring at the
2003 Annual Meeting. William E. Hoglund, Douglas S. Luke, Robert C. McCormack,
Lee J. Styslinger, Jr., Jerome F. Tatar, and Jane L. Warner will continue to
serve for a term expiring at the 2004 Annual Meeting.
All of the preceding 17 persons currently serve as directors of MeadWestvaco
and have done so since the combination of Mead and Westvaco was completed in
January 2002.
Nominees for Election as Directors
for a Term of Three Years Expiring in 2005
Director of Mead or
Name Age Westvaco Since
---- --- -------------------
MICHAEL E. CAMPBELL 54 1998 (Westvaco)
Chairman, President and Chief Executive Officer,
Arch Chemicals, Inc., since 1999. Executive Vice
President, Olin Corporation, 1996-1999.
DR. THOMAS W. COLE, JR. 60 1994 (Westvaco)
President, Clark Atlanta University, since 1989.
Director: First Union Bank of Georgia, West Virginia
Wesleyan College. Trustee: Knoxville College.
DUANE E. COLLINS 65 1999 (Mead)
Chairman, Parker Hannifin Corporation, since 1999;
Chief Executive Officer, 1993-2001; President, 1993-
2000. Director: National City Corporation, The
Sherwin-Williams Company.
3
Director of Mead or
Name Age Westvaco Since
---- --- -------------------
SUSAN J. KROPF 53 1996 (Mead)
President and Chief Operating Officer, Avon
Products, Inc., since 2001; Chief Operating Officer of
North America and Global Business Operations,
1999-2001; Executive Vice President and President,
North America, 1998-1999; Executive Vice President
and President, Avon U.S., 1997-1998. Director: Avon
Products, Inc., Fragrance Foundation.
J. LAWRENCE WILSON 65 1997 (Mead)
Chairman and Chief Executive Officer, Rohm and
Haas Company, 1988-1999. Director: Cummins Inc.,
The Vanguard Group of Investment Companies,
AmeriSource Bergen Corporation.
Directors Whose Terms Expire in 2003
Director of Mead or
Name Age Westvaco Since
---- --- -------------------
JOHN G. BREEN 67 1986 (Mead)
Chairman, The Sherwin-Williams Company, 1980-
2000; Chief Executive Officer, 1979-1999. Director:
National City Corporation, Parker Hannifin
Corporation, Goodyear Tire & Rubber Company, The
Stanley Works, The Sherwin-Williams Company.
JAMES G. KAISER 58 1995 (Mead)
Chairman and Chief Executive Officer, Avenir
Partners, Inc., since 1998. President and Chief
Executive Officer, Quanterra Incorporated, 1994-
1996. Director: Sunoco, Inc., AutoTradeCenter.com.
RICHARD B. KELSON 55 2001 (Westvaco)
Executive Vice President and Chief Financial Officer,
Alcoa, Inc., since 1997; Executive Vice President and
General Counsel, Environment, Health and Safety,
1994-1997. Member: University of Pittsburgh Law
School Board of Visitors. Trustee: Carnegie Mellon
University.
JOHN A. KROL 65 1994 (Mead)
Chairman of E.I. du Pont de Nemours and Company,
1997-1998; Chief Executive Officer, 1995-1998;
President, 1995-1997. Director: Armstrong World
Industries, Inc., Milliken & Company, Inc., Molecular
Circuitry, Inc., ACE Insurance, Ltd.
4
Director of Mead or
Name Age Westvaco Since
---- --- -------------------
JOHN A. LUKE, JR. 53 1989 (Westvaco)
President and Chief Executive Officer,
MeadWestvaco Corporation, since 2002. Chairman,
President and Chief Executive Officer, Westvaco
Corporation, 1996-2002; President and Chief
Executive Officer, 1992-1996. Director: American
Forest and Paper Association, The Bank of New
York, The Timken Company, United Negro College
Fund. Trustee: Lawrence University, American
Enterprise Institute for Public Policy Research.
Governor: National Council for Air and Stream
Improvement, Inc.
RICHARD A. ZIMMERMAN 69 1989 (Westvaco)
Chairman and Chief Executive Officer, Hershey
Foods Corporation, 1985-1993. Director: Eastman
Kodak Corporation, Stabler Companies, Inc. Trustee:
United Theological Seminary.
Directors Whose Terms Expire in 2004
Director of Mead or
Name Age Westvaco Since
---- --- -------------------
WILLIAM E. HOGLUND 67 1993 (Mead)
Director and Executive Vice President, Corporate
Affairs and Staff Support Group, General Motors
Corporation, 1992-1994. Trustee: The Sloan
Foundation, Capital Automotive REIT.
DOUGLAS S. LUKE 60 1996 (Westvaco)
President and Chief Executive Officer, HL Capital,
Inc., since 1999, a private investment company with
diversified interests in marketable securities and
private equities. President and Chief Executive
Officer, WLD Enterprises, Inc., 1991-1998, a private
investment company with generally similar interests.
Director: Regency Realty Corporation.
ROBERT C. MCCORMACK 62 2001 (Westvaco)
Partner, Trident Capital, a private equity investment
firm, since 1993. Assistant Secretary of the Navy
(Financial Management) and Comptroller of the
Navy, 1990-1993. Director: DeVry, Inc., Illinois Tool
Works, Inc., The Northern Trust Corporation.
LEE J. STYSLINGER, JR. 68 1992 (Mead)
Chairman, ALTEC Industries, Inc., since 1989.
Director: Global Rental Company, Jemison
Investment Company, Inc., Regions Financial
Corporation, Electronic Healthcare Systems.
5
Director of Mead or
Name Age Westvaco Since:
---- --- -------------------
JEROME F. TATAR 55 1996 (Mead)
Chairman, MeadWestvaco Corporation, since 2002;
Chairman, President and Chief Executive Officer,
Mead Corporation, 1997-2002; President and Chief
Operating Officer; 1996-1997. Director: Robbins &
Myers, Inc., National City Corporation.
JANE L. WARNER 54 1997 (Westvaco)
President, Global Automotive Industry Group EDS,
since 2002; Managing Director, 2000-2002.
President, Kautex Textron, North America, 1998-
1999. Executive Vice President, Textron Automotive
Company, 1994-1999. Director: Kettering University,
Automotive Industry Action Group (AIAG), Federal-
Mogul Corporation.
Director Compensation
During 2001, the current directors did not serve as directors of the Company
but instead served either on the Board of Directors of Mead or Westvaco. The
non-employee directors of Mead during 2001 received $24,000 as an annual
payment for services as a director, $1,500 per meeting for attendance at
meetings of the Board, and $1,200 per meeting for attendance at Committee
meetings of the board. The non-employee directors of Mead also received a grant
of restricted shares pursuant to Mead's 1987 Restricted Stock Plan
(subsequently amended in 1996). The automatic annual grant to non-employee
directors of Mead as of January 1, 2001, equaled $22,355. Directors of Mead who
were also employees of Mead were not additionally compensated for their Board
activities.
The non-employee directors of Westvaco during 2001 received an annual Board
retainer of $30,000, Board and Committee meeting attendance fees of $1,000 per
meeting, and an automatic grant of options to purchase 1,500 shares of Westvaco
common stock.
The individuals who served as directors of MeadWestvaco immediately prior to
the date of the merger were then employees of Mead or Westvaco and received no
additional compensation for service as directors of MeadWestvaco. From and
after the merger, members of the Board who are not employees of MeadWestvaco
will receive $30,000 as an annual payment for services as a director, $1,500
per meeting for attendance at meetings of the Board, and $1,200 per meeting for
attendance at Committee meetings of the Board. Board members may elect to defer
this compensation under the MeadWestvaco Corporation Compensation Plan for
Non-Employee Directors. In addition, if the shareholders approve the equity
compensation provisions of this plan as requested in this Proxy Statement,
non-employee directors will also receive long-term incentive supplemental
compensation in the form of stock units and stock options. A full description
of this plan is provided in the description of the third proposal in this Proxy
Statement. Directors who are officers of or employed by MeadWestvaco are not
additionally compensated for their Board and Committee participation.
6
Board Committees
MeadWestvaco currently has six principal standing Committees of the Board of
Directors: Audit; Compensation and Organization Development; Executive;
Finance; Nominating and Governance; and Safety, Health and Environment. Because
the Committees were not created and the Board and committee members were not
appointed until the completion of the merger of Mead and Westvaco in early
2002, no Board of Directors or Committee meetings were held during 2001. During
2001, the Board of Directors of each of Mead and Westvaco met 10 and 12 times,
respectively, and no incumbent director attended fewer than 75% of the total
number of meetings of the Board of Directors and the Committees of which he or
she was a member.
The current members of the Board Committees are as follows:
Audit Finance
----- -------
Michael E. Campbell, Chairman Douglas S. Luke, Chairman
Duane E. Collins John G. Breen
James G. Kaiser Michael E. Campbell
Richard B. Kelson William E. Hoglund
Lee J. Styslinger, Jr. Robert C. McCormack
Jane L. Warner J. Lawrence Wilson
(all non-employee directors)
Compensation and Organization Development Nominating and Governance
----------------------------------------- -------------------------
John G. Breen, Chairman Richard A. Zimmerman, Chairman
Dr. Thomas W. Cole, Jr. William E. Hoglund
Duane E. Collins John A. Krol
Susan J. Kropf Susan J. Kropf
Robert C. McCormack Douglas S. Luke
Lee J. Styslinger, Jr. J. Lawrence Wilson
Richard A. Zimmerman
(all non-employee directors)
Executive Safety, Health and Environment
--------- ------------------------------
Jerome F. Tatar, Chairman John A. Krol, Chairman
John G. Breen Dr. Thomas W. Cole, Jr.
Michael E. Campbell James G. Kaiser
John A. Krol Richard B. Kelson
Douglas S. Luke Jane L. Warner
John A. Luke, Jr.
Richard A. Zimmerman
The functions of the current Board Committees are as follows:
Audit Committee
Reviews the audit examination and annual financial reports of the Company, and
meets with and remains accessible to the internal auditors and independent
accountants of the Company. The Committee assists the Board of Directors in
monitoring (1) the integrity of the financial statements of the Company, (2)
the compliance by the Company with legal and regulatory requirements, and (3)
the independence and performance of the Company's internal and external
auditors. Please refer to the report of the Audit Committee which follows.
Compensation and Organization Development Committee
Reviews and approves the Company's compensation philosophy. It is charged with
the broad responsibility of assuring that officers and key management personnel
are effectively
7
compensated in terms that are motivating, internally equitable and externally
competitive. The Committee must approve compensation of senior management, set
the criteria for awards under incentive plans and determine whether such
criteria have been met. The Committee will generally oversee policies and
practices of the Company that advance its organizational development, including
those designed to achieve the most productive engagement of the Company's
workforce and the attainment of greater diversity. Please refer to the report
of the Compensation and Organization Development Committee which follows.
Executive Committee
Provides for the exercise of certain powers of the Board between meetings of
the Board when a special meeting of the Board is impractical or inconvenient,
or is not warranted under the circumstances.
Finance Committee
Charged with overseeing the Company's financial affairs and recommending those
financial actions and policies that are most appropriate to accommodate the
Company's operating strategies while maintaining a sound financial condition.
The Committee reviews the Company's financial forecasts and budgets as well as
strategic actions proposed by the Company's management. The Committee also
reviews funding recommendations concerning the salaried and hourly pension
plans together with the investment performance of such plans and the Company's
risk management policies and practices.
Nominating and Governance Committee
Charged with studying and making recommendations concerning the qualifications
of all directors, selecting and recommending candidates for election and
re-election to the Board, and persons to fill vacancies on the Board, as well
as the compensation paid to non-employee directors. The Committee also reviews
and considers other matters of corporate governance, including trends and
emerging expectations, as well as what may be deemed best practices. In
advising the Board and management, the Committee may consider a range of
governance matters, including Board structure, Board composition, Committees
and criteria for Committee appointment, Board meeting policies, and the ongoing
relationship between the Board and management. The Committee will consider
nominees for directors recommended by shareholders of MeadWestvaco.
Committee on Safety, Health and the Environment
Reviews implementation of the Company's workplace safety and health program.
The Committee also reviews the stewardship of the Company with respect to
conservation of natural resources and its ability to protect the natural
environment. The Committee receives regular reports from management, reviews
safety, health and environmental matters with management, and makes
recommendations as needed.
Report of the Audit Committee of the Board of Directors
Membership and Role of the Audit Committee
The Audit Committee consists of six members of the Company's Board of
Directors. Each member of the Audit Committee is independent and possesses
other qualifications as required by the New York Stock Exchange. The Audit
Committee operates under a written charter adopted by the Board of Directors,
which is included in this Proxy Statement as Exhibit A.
The primary function of the Audit Committee is to assist the Board of Directors
in monitoring (1) the integrity of the financial statements of the Company, (2)
the compliance by the Company with legal and regulatory requirements, and (3)
the independence and performance of the Company's internal and external
auditors.
8
Review of the Company's Audited Financial Statements for the Fiscal Year ended
October 31, 2001, and Transition Period ended December 31, 2001
Because, under generally accepted accounting principles, Westvaco is considered
the acquiror in the combination of Mead and Westvaco, the audited financial
statements of Westvaco are considered the audited financial statements of
MeadWestvaco. Such audited financial statements for the fiscal year ended
October 31, 2001 and transition period ended December 31, 2001 are included in
the transition period Form 10-K filed by MeadWestvaco with the Securities and
Exchange Commission (the "SEC"). This transition period report is required
because of the change from Westvaco's October 31 fiscal year to MeadWestvaco's
December 31 fiscal year.
Prior to the completion of the combination on January 30, 2002, the Audit
Committee of Westvaco reviewed, and by its Chairman discussed with management
of Westvaco, the audited financial statements of Westvaco for the fiscal year
ended October 31, 2001. The Audit Committee of Westvaco discussed with
PricewaterhouseCoopers LLP, Westvaco's independent accountants and the firm
that has been selected as MeadWestvaco's independent accountants, the matters
required to be discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees).
The Audit Committee of Westvaco also received the written disclosures and the
letter from PricewaterhouseCoopers LLP required by Independence Standards Board
Standard No. 1 (Independence Discussion with Audit Committees), and the Audit
Committee of Westvaco discussed the independence of PricewaterhouseCoopers LLP
with that firm. Based on the review and discussions noted above, the Audit
Committee of Westvaco recommended to the Board of Directors of Westvaco that
Westvaco's audited financial statements for the fiscal year ended October 31,
2001 be included in its Annual Report on Form 10-K for that fiscal year, which
was filed with the SEC on January 22, 2002.
The Audit Committee of MeadWestvaco reviewed the foregoing as reflected in the
minutes of the Audit Committee of Westvaco, and on the basis of that review
recommended to the Board of Directors that the audited financial statements of
Westvaco for the fiscal year ended October 31, 2001 be included in the Form
10-K for the transition period ended December 31, 2001 for filing by
MeadWestvaco with the SEC.
The Audit Committee of MeadWestvaco also reviewed, and by its Chairman
discussed with management of MeadWestvaco, the audited financial statements of
Westvaco for the two-month transition period ended December 31, 2001, and the
matters required to be discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees).
The Audit Committee of MeadWestvaco also received the written disclosures and
the letter from PricewaterhouseCoopers LLP required by Independence Standards
Board Standard No. 1 (Independence Discussion with Audit Committees), and the
Audit Committee of MeadWestvaco discussed the independence of
PricewaterhouseCoopers LLP with that firm. Based on the review and discussions
noted above, the Audit Committee of MeadWestvaco recommended to the Board of
Directors of MeadWestvaco that Westvaco's audited financial statements for the
two-month transition period ended December 31, 2001 be included in the Form
10-K for that transition period.
9
PricewaterhouseCoopers received the following fees from Westvaco in the fiscal
year ended October 31, 2001 and the two-month transition period ended December
31, 2001:
Audit fees relating to the fiscal year ended October 31, 2001 and the two-month
transition period ended December 31, 2001.................................... $2,639,000
==========
Financial information systems design and implementation fees............. $ -0-
==========
All other fees
Audits of employee benefit plans......................................... $ 102,000
SEC filings and related matters.......................................... 325,000
Merger and acquisition due diligence and related accounting matters...... 584,000
Tax compliance and other tax services.................................... 476,000
Sustainable Forestry Initiative audits................................... 370,000
Controls evaluation and review........................................... 729,000
Other audit related...................................................... 62,000
----------
Total all other fees.................................................. $2,648,000
==========
Prior to the completion of the merger on January 30, 2002, the Audit Committee
of Mead reviewed, and by its Chairman discussed with management of Mead, the
audited financial statements of Mead for the fiscal year ended December 31,
2001. The Audit Committee of Mead discussed with Deloitte&Touche LLP, Mead's
independent accountants, the matters required to be discussed by Statement on
Auditing Standards No. 61 (Communication with Audit Committees).
The Audit Committee of Mead also received the written disclosures and the
letter from Deloitte&Touche LLP required by Independence Standards Board
Standard No. 1 (Independence Discussion with Audit Committees), and the Audit
Committee of Mead discussed the independence of Deloitte&Touche LLP with that
firm. Based on the review and discussions noted above, the Audit Committee of
Mead recommended to the Board of Directors of Mead that Mead's audited
financial statements could be included in subsequent SEC filings.
Submitted by:
Michael E. Campbell, Chairman Richard B. Kelson
Duane E. Collins Lee J. Styslinger, Jr.
James G. Kaiser Jane L. Warner
Prior Accountants of Mead
The merger of Mead and Westvaco is being accounted for as an acquisition of
Mead by Westvaco and, consequently, the historical financial statements of
Westvaco become the historical financial statements of MeadWestvaco. Deloitte &
Touche LLP had been the independent accountants for Mead and for MW Holding
Corporation (the predecessor of MeadWestvaco, which was created to effectuate
the merger of Mead and Westvaco) and PricewaterhouseCoopers LLP has been the
long-standing independent accountants of Westvaco. MeadWestvaco's audit
committee and board of directors participated in and approved the decision to
retain PricewaterhouseCoopers LLP as its independent accountants, replacing
Deloitte & Touche LLP.
The reports of Deloitte & Touche LLP relating to the Mead and MW Holding
Corporation financial statements for the past two years contained no adverse
opinion or disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope or accounting principle. In conection with its audits
of Mead and MW Holding Corporation for the two most recent fiscal years and
through January 30, 2002, there have been no disagreements with Deloitte &
Touche LLP on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements, if
not resolved to the satisfaction of Deloitte & Touche LLP, would have caused
them to make reference thereto in their report on the financial statements for
such years.
10
Executive Compensation
Report of the Compensation and Organization Development Committee
The Compensation and Organization Development Committee, a Board committee,
consists of seven members of the Company's Board of Directors, none of whom is
or has been at any time an employee of the Company or its subsidiaries or is
receiving any compensation from the Company or its subsidiaries other than as a
director. The Committee is charged with the broad responsibility for assuring
that our executive officers are effectively compensated in terms that are
motivating, internally equitable and externally competitive. The Committee is
responsible for the consideration and approval of all compensation of senior
management, setting the criteria for awards under incentive compensation plans
and determining whether such criteria have been met, overseeing matters
relating to MeadWestvaco's stock option plans, and reviewing the management of,
and proposed changes to, the Company's various employee benefit plans.
The Committee was formed following the consummation of the business combination
leading to the creation of MeadWestvaco in early 2002. The respective
compensation committees of Mead and Westvaco established the cash compensation
and equity-based awards at their respective companies in 2001. The members of
the Committee, therefore, are primarily reporting on determinations made by
these prior compensation committees.
Compensation Philosophies
Both Mead's and Westvaco's executive compensation programs were principally
designed to give executives strong incentives to achieve the Company's business
objectives and to increase the value of the Company for its shareholders over
the long term. The contribution of an individual to the execution of corporate
strategies, and the pursuit of the foregoing objectives, were a principal basis
on which our predecessor committees evaluated job performance and, therefore,
were significant factors in their determining salaries, awards of bonuses, and
grants of stock options.
Key elements of each of the incentive compensation programs were annual
performance-based bonuses and equity-based compensation, to provide substantial
medium- and long-term financial rewards to an executive only if the
stockholders also realize long-term stock price appreciation. Each company also
viewed its compensation practices as critical tools to retain and recruit key
executive talent. The Committee expects to continue to emphasize stock-based
compensation and Company-wide performance goals, as well as the attraction and
retention of key executives.
Cash Compensation
Mead and Westvaco executive compensation programs each made the base salaries
of their executives dependent on the compensation paid to executive officers at
comparable companies, and on the performance of their respective companies in
relation to their peers. Salary range midpoints at Mead were set to approximate
those midpoints of industrial companies of similar size to Mead, as annually
reported in the Hay Industrial Management USA survey, representing
approximately 300 parent organizations and 500 independent operating units of
all types of industrial employers in the United States (which we refer to as
the "Hay Competition"). Around these midpoints for each salary grade is an
established salary range, characterized by a defined minimum and maximum.
Actual salaries paid to Mead executives were targeted to be competitive with
the average salaries for that same survey group, with a particular comparison
to a selected group of Forest and Paper company competitive peers. These peers
were the Boise Cascade Corporation, Bowater Incorporated, Georgia-Pacific
Corporation, International Paper Company, Potlatch Corporation, Smurfit Stone
Container Corporation, Temple-Inland Inc., Westvaco Corporation, Weyerhaeuser
Company, and Willamette Industries, Inc. Salary increases for the executive
group as a whole were determined primarily by a review of Mead's competitive
position relative to the Hay Competition, and an assessment of competitive
salary increase movement. The salary increase for each named executive officer
was determined by individual performance, influenced to a minor degree by that
individual's position in the salary range. A fundamental basis of Mead's
compensation philosophy
11
was to provide only moderate salary increases and to favor incentive payouts
that reward for the performance of the company and the contribution of the
executive.
The cash compensation of Mead executives also included a significant annual
bonus opportunity. The annual incentive targets were set at levels that achieve
a combined salary midpoint plus incentive target that equal actual competitive
average base salaries plus annual bonuses, as determined by an analysis of the
total cash compensation paid by the Hay Competition. No annual incentive
payments were made to Mead executives for 2001.
Westvaco's compensation committee also believed that it was important for
executive officers to be compensated at a level that was competitive with that
paid by comparable companies. The competitiveness of the compensation of the
CEO and the other executive officers of Westvaco identified in the Summary
Compensation Table was evaluated through assessment of total annual cash
compensation paid by the eight companies that constituted the Dow Jones Paper
Index and by other companies comparable in size to Westvaco. The committee also
reviewed the results of past executive compensation surveys as part of its
evaluation process, which permitted the committee to establish actual
compensation levels taking into account both individual job performance and the
competitive dynamics of executive recruitment and retention.
The incentive compensation of Westvaco executives was based on the Westvaco
Corporation Annual and Long-Term Incentive Plan, approved by Westvaco
shareholders in 2001, which placed a significant portion of a senior
executive's compensation at risk and tied it to company and personal
performance. The Westvaco compensation committee administered the Plan by
establishing objective performance goals that triggered payment of both annual
and long-term awards for the current year and for succeeding fiscal years. The
committee designed the Plan to comply with the provisions of the Internal
Revenue Code to deduct bonuses for federal income tax purposes. See
"Deductibility of Executive Compensation" below. Key criteria for individual
performance focused on improved Westvaco shareholder value through financial
and operating performance, advancement of Westvaco's business strategy, and
support of Westvaco's strategic focus on those markets with the highest growth
and profitability potential. As a result of the challenging market conditions
in 2001, the minimum performance goals set for 2001 relating to return on
capital invested were not achieved and no awards were made to Westvaco
executives for 2001 under this Plan.
Equity-Based Compensation
The compensation committees of both Mead and Westvaco believed that a
significant portion of their senior executives' compensation must reflect the
desire for sustained operational excellence, reward competitive long-term
financial results, and be linked to the returns realized by shareholders. Thus,
a major portion of the compensation package reflects awards for long-term
results.
Grants of stock options were made by both compensation committees to the
executives of their respective companies to create a direct tie between the
interests of those key employees and the shareholders of their companies. At
both companies, in general, options were granted with an exercise price equal
to the market price of the related shares on the date of grant, so that
individuals receiving those grants would benefit only if shareholders benefited
through subsequent appreciation in the value of the related shares. The
Committee expects to take a similar approach with the senior executives of
MeadWestvaco, creating a link between their compensation and the future
appreciation of MeadWestvaco stock.
Mead's long-term compensation was delivered through a collection of incentive
plans, each involving the grant of incentive awards, including restricted
stock, for attaining shareholder value at or above specified levels. Westvaco
relied primarily upon stock option grants as long-term awards for its executive
management.
12
Compensation for the Chief Executive Officer
In the case of both Mead and Westvaco, specific performance criteria were
established against which the committees measured the performance of their
respective chief executive officers. The annual cash compensation of each
company's chief executive officer included a base salary and variable
compensation. With regard to variable cash compensation, the executive
compensation policies of both companies reflected a disciplined focus on
shareholder returns and directly related funding for variable compensation
awards to company performance.
Mr. Tatar's 2001 salary was set by the Board of Directors of Mead to assure
continued competitiveness for such a leadership role, and payments received by
Mr. Tatar in base salary increased by 4.2% during 2001. His salary for the year
remained below the salary midpoint for his position and slightly below the
level of the Hay Competition. As a result of difficult market conditions, the
2001 annual incentives for Mr. Tatar were below target levels, and since the
improvement in Mead's operating financial performance was exceeded by the
financial improvement of the FP Peer group, no annual incentive payment was
made to Mr. Tatar for 2001, and no payout was made under Mead's long-term
incentive plan. The Mead compensation committee did, however, recommend the
payment of a special bonus of $400,000 for Mr. Tatar in recognition of his
exceptional contribution in bringing about the merger of Mead and Westvaco,
which is discussed in more detail below.
At his own request, Westvaco's chief executive officer, John A. Luke, Jr., did
not receive a salary increase in 2001. Nor did he receive a cash bonus for 2001
under the Westvaco Corporation Annual and Long-Term Incentive Plan. As
discussed in more detail in the next paragraph, the Westvaco compensation
committee did, however, grant Mr. Luke a restricted stock award to recognize
his extraordinary efforts in bringing about the merger of Mead and Westvaco.
The Westvaco compensation committee believed the total cash compensation
opportunity for John A. Luke, Jr., was appropriate when compared to the total
cash compensation opportunity for similar positions in the Dow Jones Paper
Index companies. In November 2001, the Westvaco compensation committee granted
stock options to John A. Luke, Jr. for 160,000 shares and simultaneously made
grants to 612 other officers and salaried employees, all of which were granted
at market value on the date of grant.
Special Bonuses Related to the Merger
The compensation committees of Mead and Westvaco each believed that the merger
of their two companies created substantial shareholder value. Effecting the
merger posed exceptional challenges for the management of Mead and Westvaco,
both in negotiating the terms of the transaction, and in taking the steps
necessary to consummate the transaction after the agreements had been executed.
Given the extraordinary efforts displayed by certain senior executives in
connection with bringing about the merger, the compensation committees of both
companies awarded cash bonuses to recognize their exemplary performance. In the
case of Mr. Luke, the Westvaco compensation committee granted a restricted
stock award with a value of $298,185, based on the trading value of the
Westvaco stock as of January 16, 2002. Generally, this restricted stock award
will vest in full two years following the grant date, unless Mr. Luke
voluntarily terminates employment, although the Committee retains the
discretion to accelerate vesting if it deems it appropriate.
Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code generally disallows a tax deduction
to public companies for individual compensation over one million dollars per
year paid to a company's chief executive officer and to the four other most
highly compensated executive officers. The Compensation Committees of both Mead
and Westvaco carefully considered the effect of Section 162(m) on their
respective company's executive compensation program with respect to the
combined effects of deductibility of their respective company's executive
compensation, the competitiveness of executive compensation levels, and the
impact of other employee benefits.
In the case of both companies, their respective compensation committees took
their actions recognizing the implications of Section 162(m), but noting the
need to recognize and reward the
13
exemplary performance of their officers, particularly given the difficult
market conditions as well as their efforts to effectuate the merger of Mead and
Westvaco. Mead's compensation programs gave executives an opportunity to defer
income so as to allow Mead to maximize the deductibility of the executive
compensation within the limits of Section 162(m). Westvaco's incentive
compensation program was designed to comply with the provisions of Section
162(m) and in general to allow for full deductibility. It is possible, however,
that awards issued in relation to the merger of Mead and Westvaco may exceed,
in future years, the deductible limit of Section 162(m).
Both Compensation Committees believed that their respective executive
compensation programs should be managed in the overall best interest of the
company's shareholders, and our Committee shares the same belief with regard to
MeadWestvaco's executive compensation programs. We do not currently believe
that Section 162(m) will affect Mead or Westvaco's tax deductions for
compensation in 2001.
Summary
The compensation committees of Mead and Westvaco believed that the caliber and
motivation of their executives and all of their employees were extremely
important to their companies' ability to meet future challenges and to deliver
long-term value to their shareholders. We are convinced that this will continue
to be the case at MeadWestvaco in the future. The compensation programs of the
two companies delivered a mix of compensation elements for 2001 (base pay,
annual incentives, long-term incentives and deferral opportunities) that was an
effective tool in supporting executive excellence. We are confident that these
elements of an executive compensation program are key in rewarding executives
who contribute to the success of their company.
Submitted By:
John G. Breen, Chairman Robert C. McCormack
Thomas W. Cole, Jr. Lee J. Styslinger, Jr.
Duane E. Collins Richard A. Zimmerman
Susan J. Kropf
Compensation Committee Interlocks and Insider Participation
No employee of Mead or Westvaco served as a member of the compensation
committee of either company during such company's past fiscal year, or as a
member of the compensation committee of the Board of any company where an
executive officer of such company was a member of the compensation committee of
either Mead or Westvaco.
Section 16(a) Beneficial Ownership Reporting Compliance
Prior to the merger, Section 16(a) of the Securities Exchange Act of 1934
required reporting by directors and certain officers of Mead and Westvaco
concerning their holdings and transactions in Mead or Westvaco common stock. A
review of Mead's and Westvaco's records indicates that, to the best knowledge
of the Company, all reports required under the Section 16(a) rules were filed
in a timely manner since November 1, 2000, with the exception of a report on
Form 4 relating to the net acquisition of 432 shares of Westvaco stock by Mr.
R. Scott Wallinger on August 3, 2001, which was filed approximately one month
late.
14
[CHART]
Westvaco The Mead S&P 500 Dow Jones
Corp. Corp. Index Paper Index
----------- ----------- ------ -----------
10-31-96 100.00 100.00 100.00 100.00
10-31-97 118.56 107.57 132.11 112.32
10-31-98 92.48 114.76 161.18 98.78
10-31-99 114.56 132.99 202.54 127.41
10-31-00 113.16 110.29 214.89 114.27
10-31-01 100.81 104.95 161.40 110.94
12-31-01 117.71 115.66 176.92 126.04
This graph compares the cumulative total return to shareholders on MeadWestvaco
common stock for a 62 month period ended December 31, 2001 with the return on
the Standard & Poor's 500 Stock Index (S&P 500) and the Dow Jones Paper Index.
This graph should not be taken to imply any assurance that past performance is
predictive of future performance.
15
Summary Compensation Table
Prior to the date of the merger, the Company's executive officers functioned as
executive officers of, and were compensated by, Mead or Westvaco, as the case
may be. The following table presents information concerning total compensation
paid to the Chief Executive Officer and certain other executive officers of the
Company (collectively, the "named executive officers") by either Mead or
Westvaco. Messrs. Tatar and Lane served with Mead prior to the merger, and
Messrs. Luke, Buzzard and Block and Ms. Osar, served with Westvaco prior to the
merger. This compensation information relates to compensation received by the
named executive officer while employed by Mead or Westvaco prior to the merger.
Prior to the merger, Westvaco's fiscal year ended on October 31. In connection
with the merger, Westvaco changed its fiscal year to a calendar year. As a
result, the compensation shown for Messrs. Luke, Buzzard and Block, and Ms.
Osar, is that paid with respect to Westvaco's last three fiscal years and the
last two months of 2001 (which we refer to as the "transition period"). All
information related to common stock has been adjusted to reflect the exchange
ratios of common stock of Mead and Westvaco for common stock of MeadWestvaco.
Long-term Compensation
---------------------------------------------------
Annual Compensation Awards Payouts
----------------------------------- ------------------------- -------------------------
Name and Principal Restricted Securities All Other
Position with Other Stock Underlying LTIP Compensation
MeadWestvaco Year Salary Bonus(1) Compensation(2) Awards Options(#) Payouts (4, 5)
- ------------------------ ------ -------- --------- ---------------- ----------- ---------- ----------- -------------
Jerome F. Tatar 2001 $854,904 $ 400,000 -- -- 114,113 -- $ 64,477
Chairman of the Board 2000 820,838 530,000 -- $ 383,950 98,678 $ 383,950 62,468
1999 762,508 550,000 $ 55,118 150,000 139,474 1,093,600 63,026
John A. Luke, Jr. T/P*** $145,833 -- -- -- 155,200 -- $ 6,563
CEO and President 2001 875,000 -- -- $ 298,185(3) 150,350 -- 39,375
2000 875,000 $ 500,000 -- -- 116,400 -- 74,250
1999 875,000 -- -- -- 92,150 -- 39,375
James A. Buzzard T/P*** $ 75,000 -- -- -- 58,200 -- $ 3,375
Executive Vice President 2001 450,000 $ 150,000 -- -- 48,500 -- 27,000
2000 341,667 300,000 -- -- 29,100 -- 34,650
1999 250,000 -- -- -- 19,400 -- 11,250
Raymond W. Lane 2001 $453,000 $ 100,000 -- -- 33,923 -- $ 30,327
Executive Vice President 2000 433,600 200,000 -- $ 72,875 30,000 $ 218,625 28,927
1999 407,508 205,000 $ 121,311 62,000 41,000 234,050 30,253
Karen R. Osar* T/P*** $ 75,000 -- -- -- 33,950 -- $ 3,375
Senior Vice President 2001 450,000 $ 100,000 -- -- 33,950 -- 24,750
and CFO 2000 441,923 300,000 -- -- 24,250 -- 36,450
Richard H. Block** T/P*** $ 66,667 -- -- -- 38,800 -- $ 3,000
Senior Vice President 2001 400,000 $ 132,813 -- -- 38,800 -- 16,113
2000 133,333 100,000 -- -- -- -- --
- --------------------------------------------------------------------------------
* Joined Westvaco in November 1999.
** Joined Westvaco in July 2000.
*** References to "T/P" refer to the transition period from November 1, 2001
through December 31, 2001, representing the gap between the end of
Westvaco's 2001 fiscal year and the end of Mead's 2001 fiscal year.
(1) The awards for fiscal year 2001 paid to executives of Mead and Westvaco,
except for that paid to Richard H. Block, were made by the Westvaco
Compensation Committee and the Mead Compensation Committee, as the case may
be, to recognize exemplary performance in connection with the then-pending
MeadWestvaco merger. Richard H. Block's bonus amount in fiscal year 2001
represented an employment retention bonus. The awards to Westvaco
executives in 2000 represented the variable component of total annual
compensation under Westvaco's Annual Incentive Plan. All Westvaco options
were granted in November of each calendar year.
(2) "Other Compensation" consists of interest on deferred compensation accounts
in excess of the IRS rate.
16
(3) This represents the dollar value, on January 16, 2002, of 10,300 shares of
restricted Westvaco stock granted to John A. Luke, Jr. by the Westvaco
Compensation Committee in recognition of his outstanding service to the
Company regarding the negotiation of the MeadWestvaco merger during fiscal
year 2001, based on the stock price of Westvaco on the award date.
(4) With regard to Messrs. Tatar and Lane, "All Other Compensation" consists of
executive life insurance premiums and company matches to qualified and
non-qualified savings plans.
(5) With regard to Messrs. Luke, Buzzard and Block and Ms. Osar, for the
transition period, "All Other Compensation" represents Company
contributions of $6,563 for John A. Luke, Jr., $3,375 for James A. Buzzard,
$3,000 for Richard H. Block and $3,375 for Karen R. Osar, to Westvaco's
Savings and Investment Restoration Plan. These four executive officers held
interests equivalent to a total of 93,313 shares under such plans as of
December 31, 2001. For 2001, the applicable figures in this column
represent Company contributions of $7,650 and $31,725 for John A. Luke,
Jr., $7,650 and $19,350 for James A. Buzzard, and $6,188 and $18,562 for
Karen R. Osar, to the Savings and Investment Plan and the Savings and
Investment Restoration Plan, respectively. These three executive officers
held interests equivalent to a total of 102,953 shares of Westvaco under
these plans as of October 31, 2001.
17
Option/SAR Grants in the Fiscal Year Ended December 31, 2001*
Potential Realizable
Value at Assumed Annual Rates of
Stock Appreciation for Option
Individual Grants Term(1)
-------------------------------------------- --------------------------------
% of Total
Number of Options
Securities Granted to
Underlying Employees
Options in Fiscal Exercise Expiration
Name Granted Year(2) Price($/Sh) Date 5% 10%
- ---- ---------- ---------- ----------- ---------- -------------- --------------
Jerome F. Tatar 114,113 4.46% $26.157 6/27/2011 $1,877,158 $4,757,088
John A. Luke, Jr. 155,200 6.06 29.56 11/27/2011 2,885,166 7,311,620
James A. Buzzard 58,200 2.27 29.56 11/27/2011 1,081,937 2,741,856
Raymond W. Lane 33,923 1.33 26.157 6/27/2011 558,033 1,414,166
Karen R. Osar 33,950 1.33 29.56 11/27/2011 631,130 1,599,417
Richard H. Block 38,800 1.52 29.56 11/27/2011 721,291 1,827,905
All Optionees, Mead
and Westvaco 2,559,509 100% $ 44,308,018 $ 112,285,586
All shareholders(3) $3,476,769,083 $8,810,842,681
Optionees gain as % of
all shareholder gain 1.27% 1.27%
- ----------------------------------------------------------------------------------------------------
* In the case of disclosure with regard to both Westvaco and Mead executives,
this time period is from January 1, 2001 through December 31, 2001. All
information related to "securities" has been adjusted to reflect the
exchange ratios of common stock of Mead and Westvaco for common stock of
MeadWestvaco (Mead shareholders received one share of MeadWestvaco for each
share of Mead common stock that they held, and Westvaco shareholders
received 0.97 shares of MeadWestvaco for each share of Westvaco common stock
that they held). The numbers set forth in this table represent the number of
shares of MeadWestvaco common stock into which the issued options are
convertible after the merger.
(1) The dollar amounts under these columns are not intended to and may not
accurately forecast possible future appreciation, if any, of MeadWestvaco's
common stock price. These are purely hypothetical amounts resulting from
calculations at the 5% and 10% rates required by the Securities and
Exchange Commission.
(2) All options were granted at market value on the date of grant. The options
issued to Messrs. Luke, Buzzard and Block and Ms. Osar become exercisable
twelve months from the date of grant. The options issued to Messrs. Tatar
and Lane become exercisable upon the completion of the merger of Mead and
Westvaco.
(3) As of December 31, 2001, there were 102,554,826 and 99,096,180 shares of
common stock of Westvaco and Mead outstanding, respectively. The
calculations shown are based on the assumed rates of appreciation,
compounded annually, from the stock's fair market value of $29.56 on
November 27, 2001, in the case of Westvaco, and $26.157 on June 27, 2001,
in the case of Mead.
18
Aggregated Option Exercises in Last Fiscal Year*
and December 31, 2001 Option Values
Number of Value of Unexercised
Shares Unexercised Options at In-the-Money Options at
Acquired on Value December 31, 2001(2) December 31, 2001(2)
Name Exercise Realized(1) Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ----------- ----------- ------------------------- -------------------------
Jerome F. Tatar 5,187 $ 44,687 818,784/0 $ 3,574,624/0
John A. Luke, Jr. 37,499 113,827 789,336/155,200 1,387,915/60,800
James A. Buzzard -- -- 157,622/58,200 241,366/22,500
Raymond W. Lane -- -- 331,033/0 1,779,456/0
Karen R. Osar -- -- 58,200/33,950 39,725/13,125
Richard H. Block -- -- 38,800/38,800 45,400/15,000
- --------------------------------------------------------------------------------
* In the case of disclosure with regard to both Mead and Westvaco executives,
this time period is from January 1, 2001, through December 31, 2001. All
information related to "shares" has been adjusted to reflect the exchange
ratios of common stock of Mead and Westvaco for common stock of MeadWestvaco
(Mead shareholders received one share of MeadWestvaco for each share of Mead
common stock that they held, and Westvaco shareholders received 0.97 shares
of MeadWestvaco for each share of Westvaco common stock that they held). The
numbers set forth in this table represent the number of shares of
MeadWestvaco common stock into which the issued options are convertible
after the merger.
(1) The value realized on stock option exercises represents the difference
between the grant price of the options and the market price of the shares
of underlying stock as of the date of exercise multiplied by the number of
options exercised. All grants are made at the fair market value of the
stock on the date of grant.
(2) The value of unexercised in-the-money options represents the difference
between the grant price of the options and the market price of the
underlying security at December 31, 2001, multiplied by the number of
in-the-money options outstanding.
19
Pension Plan Tables for Fiscal Year 2001
Mead
Years of Service
-------------------------------------------------------
Remuneration 5 15 20 25 30 35
------------ ------- -------- --------- --------- --------- --------
$ 225,000 $13,500 $47,250 $ 64,125 $ 81,000 $ 97,875 $114,750
500,000 30,000 105,000 142,500 180,000 217,500 255,000
700,000 42,000 147,000 199,500 252,000 304,500 357,000
900,000 54,000 189,000 256,500 324,000 391,500 459,000
1,100,000 66,000 231,000 313,500 396,000 478,500 561,000
1,300,000 78,000 315,000 427,500 540,000 652,500 765,000
Salaried employees of Mead were participants in Mead's non-contributory
retirement plan which provides retirement income upon years of employment and
average annual earnings for the five highest years during the last 11 years of
employment. Benefits under the retirement plan become vested after five years.
The table above sets forth the approximate annual benefits payable under the
plan's formula assuming the recipient retires at age 65, on a straight life
annuity basis without regard to option forms of payment. As of December 31,
2001, Mr. Tatar had 27 years of service credit under the plan, and Mr. Lane had
26 years of service credit under the plan.
Westvaco
Years of Service
-----------------------------------------------------
Remuneration 5 15 20 25 30 35
------------ ------- --------- -------- -------- -------- --------
$ 400,000 $27,500 $ 82,600 $110,200 $137,700 $165,300 $192,800
560,000 39,000 116,900 155,900 194,900 233,900 272,800
720,000 50,400 151,200 201,600 252,000 302,400 352,900
880,000 61,800 185,500 247,400 309,200 371,000 432,900
1,040,000 73,300 219,800 293,100 366,300 439,600 513,900
1,200,000 84,700 254,100 338,800 423,500 508,200 592,900
Westvaco's contributions to its retirement plan for salaried employees were
computed on an aggregate actuarial basis with no specific allocation of
contributions to individuals. The table above shows the approximate annual
retirement benefits net of social security benefits that would be received
under current plan provisions based upon the noted compensation levels and
years of service. As of December 31, 2001, Mr. Luke had 23 years of service
credit under the plan, Mr. Buzzard had 24 years of service credit under the
plan, Ms. Osar had two years of service credit under the plan, and Mr. Block
does not participate in the plan. These approximated annual retirement benefits
have been calculated under the plan's 50% joint and survivor annuity form of
pension and on the assumption of retirement benefits beginning at age 62 or age
65.
The obligations under these Mead and Westvaco pension plans have been assumed
by MeadWestvaco, and MeadWestvaco intends to continue to maintain these plans.
Change of Control Agreements
Since November 1986, Mead had intermittently entered into change of control
agreements with some of its officers, including Messrs. Tatar and Lane. The
merger of Mead and Westvaco qualified as a change of control under these
agreements. Upon the completion of the merger of Mead and Westvaco,
MeadWestvaco assumed the obligations under each of these change in control
agreements other than Mr. Tatar's change in control agreement, which was
superseded by his new employment agreement with MeadWestvaco, which is
described below.
20
Under the Mead change in control agreements, MeadWestvaco is obligated to
provide severance benefits to the executive officer in the event of certain
qualifying terminations of employment within the two-year period immediately
following a change in control, including a termination by MeadWestvaco without
cause or by the officer with good reason (as defined in the relevant
agreement). The severance benefits include cash severance equal to two and
one-half times the executive officer's base salary and annual and long-term
incentive compensation; a supplemental pension benefit computed taking into
account the base salary and annual incentive compensation components of the
foregoing cash severance amount and crediting the executive officer with an
additional three years of age and service; two years' continuation of health
and welfare benefits; and, at the executive officer's election, a cash payment
in cancellation of his or her stock options, computed based upon the higher of
the closing price on the date of termination of employment or the Mead merger
consideration. In addition, to the extent any payments or benefits received by
the executive officer are subject to the excise tax imposed by Section 4999 of
the Internal Revenue Code, the executive officer will receive a payment to
restore him or her to the after-tax position that he or she would have been in,
had the excise tax not been imposed.
Since January 1999, Westvaco also had previously entered into change in control
agreements with a number of its executive officers, including with Messrs.
Luke, Buzzard and Block, and Ms. Osar. The merger of Mead and Westvaco
constituted a change in control under these agreements. As discussed below, Mr.
Luke's new employment agreement will supersede his change in control agreement.
From and after completion of the mergers, MeadWestvaco will assume and honor
the other Westvaco change in control agreements, including those with Messrs.
Buzzard and Block and Ms. Osar.
Under the Westvaco change in control agreements, MeadWestvaco is obligated to
provide severance benefits to each such executive officer in the event his or
her employment is terminated by MeadWestvaco without cause or by the executive
officer for good reason (as defined in the relevant agreement). The severance
benefits include a pro-rata annual bonus for the year of termination; cash
severance equal to three times the executive officer's base salary, annual
bonus and annual company contribution to his or her defined contribution plan
benefits; a lump sum supplemental pension benefit equal to the additional
benefits the executive officer would have accrued, had he or she remained
employed for three additional years; and three years' continuation of health
and welfare benefits. In addition, to the extent that any payments or benefits
received by the executive officer are subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code and exceed 110% of the maximum that
can be received without the tax being imposed, the executive officer will
receive a payment to restore him or her to the after-tax position that he or
she would have been in, had the excise tax not been imposed.
Employment Agreements with Messrs. Tatar and Luke
MeadWestvaco has entered into an employment agreement with Mr. Tatar under
which he is employed as Chairman of the Board of MeadWestvaco and as an
executive officer of MeadWestvaco. The agreement provides that Mr. Tatar will
serve in that capacity until he and the MeadWestvaco Board of Directors agree
that the transition and integration of Mead and Westvaco have been successfully
completed or until December 31, 2004, whichever occurs first. The determination
as to whether the transition and integration of Mead and Westvaco have been
successfully completed will be made mutually by Mr. Tatar and the MeadWestvaco
Board of Directors based upon the factors they deem relevant at the time.
MeadWestvaco expects that the transition and integration process will be
completed before December 31, 2004.
In exchange for his services, Mr. Tatar receives, among other things, an annual
base salary no less than $854,904. Mr. Tatar is also entitled to participate in
an annual incentive plan, long-term incentive plans, stock option and other
stock-based plans, supplemental retirement, deferred compensation and other
benefit plans and arrangements (including welfare benefit plans) on a basis at
least as favorable as his participation in Mead's corresponding plans prior to
the effective
21
time of the merger of Mead and Westvaco and substantially at the same level as
the participation of Mr. Luke. Mr. Tatar will also be entitled to a pro-rata
annual bonus upon his retirement and a supplemental pension benefit upon any
termination of his employment equal to an amount that is no less than the
benefits he would receive, calculated as of his termination, under the
provisions of Mead's corresponding benefit plans prior to the effective time of
the merger of Mead and Westvaco.
In the event Mr. Tatar's employment is terminated in a qualifying termination,
MeadWestvaco will be obligated to provide Mr. Tatar with cash severance equal
to 3.5 times his base salary and annual and long-term incentive compensation, a
supplemental pension benefit computed taking into account the foregoing cash
severance amount and crediting Mr. Tatar with an additional three years of age
and service, and continuation of health and welfare benefits for him and his
spouse until each of them becomes eligible for Medicare, and for his dependents
while they remain eligible. Mr. Tatar will also be entitled to receive
financial and tax planning services until he attains age 65 at a cost not to
exceed $20,000 per year. In addition, any MeadWestvaco stock options held by
Mr. Tatar immediately before a qualifying termination will vest on the date of
termination. If Mr. Tatar's employment is terminated by MeadWestvaco for cause
or otherwise not in a qualifying termination, then MeadWestvaco has no further
obligation to Mr. Tatar under the employment agreement other than to pay his
base salary through the date of termination and other normal post-termination
compensation and benefits. Finally, to the extent any payments or benefits
received by Mr. Tatar are subject to the excise tax imposed by Section 4999 of
the Internal Revenue Code, Mr. Tatar will receive a payment to restore him to
the after-tax position that he would have been in, had the excise tax not been
imposed.
For purposes of Mr. Tatar's new employment agreement, a qualifying termination
includes: Mr. Tatar's retirement with the consent of the MeadWestvaco Board of
Directors, including upon agreement with MeadWestvaco's board that the
transition and integration of MeadWestvaco have been successfully completed; a
termination for disability or by death; a termination by MeadWestvaco without
cause; a termination by Mr. Tatar following a material breach of the employment
agreement by MeadWestvaco that has not been cured; and any termination of
employment during the 2004 calendar year (other than for cause).
MeadWestvaco has entered into an employment agreement with Mr. Luke under which
he is employed as President and Chief Executive Officer of MeadWestvaco. The
term of this agreement began upon the completion of the merger of Mead and
Westvaco and ends on its third anniversary. Mr. Luke's new employment agreement
provides that he will immediately assume the position of Chairman of the Board
when Mr. Tatar ceases to serve as Chairman of the Board.
In exchange for his services, Mr. Luke will receive, among other things, an
annual base salary no less than $875,000. Mr. Luke is also entitled to
participate in all incentive, savings and retirement plans, practices, policies
and programs applicable generally to other peer executives of MeadWestvaco,
with incentive, savings and retirement opportunities that are no less favorable
than those provided to Mr. Luke by Westvaco before the merger.
In the event Mr. Luke's employment is terminated by MeadWestvaco without cause
or by Mr. Luke for good reason, MeadWestvaco will be obligated to provide Mr.
Luke with a pro-rata annual bonus for the year of termination, cash severance
equal to three times his base salary, annual bonus and annual company
contribution to his or her defined contribution plan benefits, a lump sum
supplemental pension benefit equal to the additional benefits would have
accrued, had he remained employed for three additional years, and three years'
continuation of health and welfare benefits. If Mr. Luke's employment is
terminated for cause or by Mr. Luke without good reason, then MeadWestvaco has
no further obligation to Mr. Luke under the employment agreement other than to
pay his base salary through the date of termination, the amount of any
compensation previously deferred, and other benefits that may be unpaid, and,
in the case of a termination by
22
Mr. Luke without good reason, a pro-rata bonus for the year of termination.
Finally, to the extent any payments or benefits received by Mr. Luke are
subject to the excise tax imposed by Section 4999 of the Internal Revenue Code
and exceed 110% of the maximum that can be received without the excise tax
being imposed, Mr. Luke will receive a payment to restore him to the after-tax
position that he would have been in, had the excise tax not been imposed.
For purposes of Mr. Luke's new employment agreement, good reason includes,
among other things, assignment of duties inconsistent with, or other action
that results in a diminution of, his position as Chief Executive Officer and
failure by the MeadWestvaco to pay his compensation.
2. Proposal to ratify appointment of independent accountants
The Board of Directors, pursuant to the recommendation of its Audit Committee,
has appointed PricewaterhouseCoopers LLP to serve as independent accountants
for the Corporation for the 2002 fiscal year subject to approval by the
shareholders at the 2002 Annual Meeting. PricewaterhouseCoopers LLP currently
serves as the Corporation's independent accountants, and received $2,270,500 in
fees and expenses during the fiscal year ending October 31, 2001 for
audit-related services provided to Westvaco. The Audit Committee has been
advised by PricewaterhouseCoopers LLP that neither the firm, nor any of its
partners or staff, has any direct financial interest or material indirect
financial interest in the Corporation or any of its subsidiaries.
Representatives of PricewaterhouseCoopers LLP will attend the annual meeting,
will have an opportunity to make a statement if they desire and will be
available to respond to appropriate questions. If the shareholders do not
ratify this appointment, the appointment of other independent public
accountants will be considered by the Audit Committee.
The Board of Directors unanimously recommends a vote FOR the ratification of
the appointment of PricewaterhouseCoopers LLP as independent accountants.
3. Proposal to approve the MeadWestvaco Corporation Compensation Plan for
Non-Employee Directors
Introduction. You are being asked to approve the equity compensation portions
of the MeadWestvaco Corporation Compensation Plan for Non-Employee Directors
provides members of the Company's Board of Directors who are not employed by
MeadWestvaco with an opportunity to defer cash compensation. In addition, if
approved by the shareholders, the plan will provide non-employee directors with
long-term supplemental compensation in the form of stock units and options with
respect to MeadWestvaco common stock. A copy of the plan is attached to this
Proxy Statement as Exhibit B.
Shares of Stock Subject to the Plan. Subject to shareholder approval and to
adjustments as described below, the total number of shares that may be subject
to stock units and options is 500,000 shares of MeadWestvaco common stock. The
shares subject to the plan may be treasury shares or newly issued shares, at
the discretion of the Board. Any share which is subject to an option which for
any reason expires or is terminated unexercised may again be subject to an
option or a stock unit under the plan. The number of shares of common stock
available for the grant of options and stock units under the plan will not be
diminished by any grants of any kind under any plan created or maintained by
any Company acquired by MeadWestvaco or with which MeadWestvaco is merged or
combined.
Administration. A committee of management employees designated by the Chief
Executive Officer of MeadWestvaco (the "Administration Committee") will be
responsible for administering the
23
plan, with authority to, among other things, establish rules and regulations
for the operation of the plan, prepare, distribute, collect and administer
forms made pursuant to the plan, and interpret the plan and all associated
documentation. The Administration Committee may delegate any or all of its
respective responsibilities to one or more of its members or to appropriate
MeadWestvaco employees. To the extent necessary to ensure the exemption of
transactions pursuant to the plan from Section 16 of the Exchange Act, the
Board or the Compensation Committee shall be responsible for such
administration.
Deferral Accounts. All non-employee directors will have the opportunity under
the plan to elect to defer all or a portion of their cash compensation received
for service as directors of MeadWestvaco. The Administration Committee may
establish minimum deferral amounts, specified percentages of compensation that
can be deferred, and similar requirements and limitations, as it may determine
to be appropriate for convenience of administration of the plan. Deferral
elections will remain in effect until the year after the deferral election is
revoked or a new deferral election is made. A deferral account will be
maintained for each participant who elects to defer compensation under the
plan. A committee of management employees will establish one or more
hypothetical investment funds, as it may from time to time determine and
participants may allocate their deferral accounts among the hypothetical
investment funds pursuant to procedures established by the Administration
Committee. Unless and until hypothetical funds are established, all deferral
accounts will be deemed invested in a money market fund. A participant's
deferral account will be adjusted (but not below zero) based on the positive or
negative investment experience of the account, from time to time. These cash
deferral provisions of the plan are currently in effect and are not subject to
shareholder approval.
Stock Unit Accounts. If the equity provisions of the plan are approved by
shareholders, non-employee directors will be credited in a stock unit account
with a number of stock units equal to $30,000 (or another value determined by
the Board) on the date the plan is approved and on each annual meeting date
thereafter. Each stock unit account will be credited with additional stock
units (including fractions thereof) on each payment date for any dividend or
distribution made with respect to the MeadWestvaco common stock with a record
date that occurs while there is a positive balance in such stock unit account.
Stock units will be settled in MeadWestvaco common stock of MeadWestvaco and
will be vested at all times.
Distribution of Accounts. The balance in each participant's account(s) will be
paid on the earliest practicable date following the end of the calendar quarter
in which the participant ceases to be a member of the Board in a single
distribution, unless elected otherwise by the participant. All distributions
from a participant's deferral account will be made in cash and all
distributions from a participant's stock unit account will be made in shares of
common stock.
Stock Options. If the equity provisions of the plan are approved by
shareholders, each non-employee director will be granted options to purchase
1,500 shares of MeadWestvaco common stock on the date the plan is approved and
on each annual meeting date thereafter, with a per-share exercise price equal
to the fair market value of the MeadWestvaco common stock on the date of grant,
and other terms as determined by the Board. Each option will be vested on the
date it is granted. The exercise price of options may be paid in cash, common
stock, or any other property satisfactory to the company; provided that any
such common stock has been either purchased on the open market or held for more
than six months. In addition, if the Compensation Committee so provides,
payment may be made through a cashless exercise program. A participant may
exercise options during his or her tenure as a non-employee director and for
five years after termination as a non-employee director, but not later than the
tenth year after the grant date of the option. However, if the director dies
while serving as a director and within one year of the tenth anniversary of the
date of grant of an option, the option will remain exercisable for one year
from the date of death.
24
Adjustments. In the event of any change in corporate capitalization, such as a
stock split, or a corporate transaction, such as any merger, consolidation,
separation, including a spin-off, or other distribution of stock or property of
MeadWestvaco, any reorganization or any partial or complete liquidation of
MeadWestvaco, the Compensation Committee or Board may make such substitution or
adjustments in the aggregate number and kind of shares issuable under the plan,
in the number of options to be automatically granted under the plan, and in the
number, kind and option price of shares subject to outstanding stock units and
options, and/or other equitable substitution or adjustments as it may determine
to be appropriate.
Unfunded Plan. The plan will be unfunded and participants will be general
creditors of MeadWestvaco with respect to their account balances. Even if
MeadWestvaco chooses to set aside funds in a trust or otherwise for the payment
of account balances under the Plan, the funds shall at all times be subject to
the claims of the creditors of MeadWestvaco in the event of its bankruptcy or
insolvency.
Non-Transferability. None of the rights of participants under the plan or with
respect to their accounts or options are transferable, except by will or by the
laws of descent and distribution, by operation of law, or, if permitted by law
and under uniform standards adopted by the Compensation Committee, to immediate
family members of the participant, or to trusts whose beneficiaries are the
participant or immediate family members.
Amendment and Termination. The plan can be amended or terminated at any time
by the Board, but no amendment or termination can reduce the balance of any
participant's accounts, change the requirements for vesting of any unvested
portion of any option previously granted, or change the timing of distributions
from any account, without the consent of the affected participant or
beneficiary, as applicable.
Tax Treatment. The following is a brief description of certain federal income
tax consequences of the plan under current law. It should not be taken as tax
advice by participants, who are urged to consult their tax advisors. A
participant will not be subject to tax upon deferred compensation upon the
crediting of deferred compensation to his or her deferral account or upon the
crediting of stock units to his or her stock unit account. Amounts or shares
distributed to a participant will be taxed as compensation upon receipt by the
participant. A recipient of stock options under the plan incurs no income tax
liability as a result of having been granted the options. The exercise by an
individual of such stock options results in the immediate realization of
taxable income by the individual of the difference between the fair market
value on the date of exercise of the stock which is being purchased and the
price being paid for such stock. An individual who sells stock which was
acquired upon the exercise of a stock option granted under the plan will
recognize short-term or long-term capital gains, depending upon the holding
period of the stock sold. MeadWestvaco will generally be entitled to take an
income tax deduction in the same amount and at the same time as the participant
recognizes compensation income pursuant to awards under the plan.
The Board of Directors unanimously recommends a vote FOR the approval of the
equity compensation portions of the MeadWestvaco Corporation Compensation Plan
for Non-Employee Directors.
25
Shareholder proposals and nominations
Shareholder proposals intended for inclusion in next year's Proxy Statement
must be received by the Secretary of the Company not later than November 21,
2002. In addition, MeadWestvaco's bylaws outline procedures that a shareholder
must follow to nominate directors or to bring other business before
shareholders' meetings. For a shareholder to nominate a candidate for director
at the 2003 Annual Meeting of Shareholders, notice of such nomination must be
given to the Secretary of the Company not later than 90 days in advance of such
meeting. The notice must describe various matters regarding the nominee and
conform to requirements specified in the Company's bylaws. For a shareholder to
bring other business before the 2003 Annual Meeting of Shareholders, notice
must be given to the Secretary of the Company between December 24, 2002 and
January 23, 2003 and must include a description of the proposed business, the
reason for conducting such business and other specified matters.
John W. Hetherington
Vice President and Secretary
March 8, 2002
26
EXHIBIT A
MEADWESTVACO CORPORATION
AUDIT COMMITTEE CHARTER
Authority
The Board by resolution dated January 30, 2002, established the Audit Committee
and adopted this Charter.
Purpose
The Audit Committee is appointed by the Board to assist the Board in monitoring
(1) the integrity of the financial statements of the Company, (2) the
compliance by the Company with legal and regulatory requirements and, (3) the
independence and performance of the Company's internal and external auditors.
Duties and Responsibilities
The Audit Committee shall make regular reports to the Board.
In discharge of its responsibilities, the Audit Committee shall:
1. Review and reassess the adequacy of this Charter annually and recommend any
proposed changes to the Board for approval.
2. Review the annual audited financial statements and major issues with
management, including those issues regarding accounting and auditing
principles and practices as well as the adequacy of internal controls that
could significantly affect the Company's financial statements.
3. Discuss with management and the independent auditor significant financial
reporting issues and judgements made in connection with the preparation of
the Company's annual and interim financial statements.
4. Be available each quarter to review as necessary with management and the
independent auditor, either by the full Committee or by its chairman, the
Company's quarterly financial statements prior to the filing of its Form
10-Q.
5. Meet periodically with management to review the Company's major financial
risk exposures and the steps management has taken to monitor and control
such exposures.
6. Review major changes to the company's auditing and accounting principles
and practices as suggested by the independent auditor, internal auditors or
management.
7. Recommend to the Board the appointment of the independent auditor, which
firm is ultimately accountable to the Audit Committee and the Board.
8. Approve the fees to be paid to the independent auditor.
9. Receive periodic reports from the independent auditor regarding the
auditor's independence, discuss such reports with the auditor, and, if so
determined by the Audit Committee, recommend that the Board take
appropriate action to satisfy itself of the independence of the auditor.
10. Evaluate together with the Board the performance of the independent auditor
and, if so determined by the Audit Committee, recommend that the Board
replace the independent auditor.
11. Review the appointment and replacement of the senior internal auditing
executive.
12. Review the significant reports to management prepared by the internal
auditing department and management's responses.
13. Meet with the independent auditor prior to the annual audit to review the
planning and staffing of the audit.
14. Obtain from the independent auditor assurance that it will inform the
Company's management concerning any information coming to the auditor's
attention indicating that an illegal act has or may have occurred, and
assure that such information has been conveyed, as appropriate, to the
Audit Committee.
15. Discuss with management, the Company's senior internal auditing executive
and the independent auditor any condition which comes to their attention
indicating that the Company's subsidiaries and affiliated entities,
domestic and foreign, are not conforming to applicable legal requirements
or the Company's Code of Conduct.
16. Discuss with the independent auditor the matters required to be discussed
by Statement on Auditing Standards No. 61.
17. Review with the independent auditor any problems or difficulties the
auditor may have encountered and any management letter provided by the
auditor and the company's response to that letter. Such review should
include:
a) Any difficulties encountered in the course of the audit work, including
any restrictions on the scope of activities or access to required
information.
b) Any changes required in the planned scope of the internal audit.
c) The internal audit department's support of the annual independent audit.
18. Prepare the report required by the rules of the Securities and Exchange
Commission to be included in the Company's annual proxy statement.
19. Advise the Board with respect to the Company's policies and procedures
regarding compliance with applicable laws and regulations.
20. Review with the Company's General Counsel legal matters that may have a
material impact on the financial statements, the Company's compliance
policies, and any material reports or inquiries received from regulators or
governmental agencies.
21. Meet at least annually with the Company's financial management, the senior
internal auditing executive, and the independent auditor in separate
executive sessions.
Membership
. The Committee shall have a minimum of three directors.
. The Board shall appoint the Committee members and a Chairman.
. The Board may fill vacancies on the Committee.
. The Committee members shall possess the independence and other
qualifications required by the New York Stock Exchange.
. The Board may remove a Committee member from the membership of the
Committee with or without cause.
Consultants and Others to Assist Committee
The Audit Committee shall have the authority to retain special legal,
accounting or other consultants to advise the Committee.
It may also request any officer or employee of the Company, or the Company's
outside counsel or independent auditor, to attend a meeting of the Committee or
to meet with any members of, or consultants to, the Committee.
A-2
Committee Meetings and Action
. The Committee will meet at the call of its Chairman or the Chairman of
the Board.
. A majority of the Committee members will be a quorum for the transaction
of business.
. The action of a majority of those present at a meeting at which a quorum
is present will be the action of the Committee.
. Any action required to be taken at a meeting of the Committee will be
deemed the action of the Committee without a meeting if all of the
members executed, either before or after the action is taken, a written
consent and the consent is filed with the Corporate Secretary.
. The Chairman will report from time to time to the Board on Committee
actions and on the fulfillment of the Committee's duties under its
Charter.
. The Committee Secretary (who will be the Corporate Secretary) will keep
minutes of all Committee meetings, which will be available to all Board
members.
The Company's management is responsible for preparing the Company's financial
statements and the independent auditors are responsible for auditing those
financial statements. The Committee regularly reviews these matters with
management and the independent auditors.
A-3
EXHIBIT B
MEADWESTVACO CORPORATION COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
Article I
Purpose and General Provisions
Section 1.1 Purpose of Plan; Shareholder Approval; Shares Available.
(a) The purpose of the Plan is to provide members of the Company's Board of
Directors who are not employed by the Company with an opportunity to defer
cash compensation and provide long-term supplemental compensation in the
form of Stock Units and Options with respect to Common Stock.
Notwithstanding any other provision of the Plan, Articles IV and VI of the
Plan (providing for Stock Units and Options, respectively) shall not become
effective unless and until they shall have been approved by the Company's
stockholders.
(b) Subject to shareholder approval as provided in Section 1.1(a) of the
Plan and to adjustment as provided in Section 8.2 of the Plan, the total
number of shares that may be subject to Stock Units and Options is 500,000
shares of the Common Stock. The source of shares for the Plan may be
treasury shares or newly issued shares, at the discretion of the Board. Any
share which is subject to an Option which for any reason expires or is
terminated unexercised may again be subject to an Option or a Stock Unit
under the Plan. Shares of Common Stock available for the grant of Options
and Stock Units under the Plan shall not be diminished by any grants of any
kind under any plan created or maintained by any company acquired by the
Company or with which the Company is merged or combined.
Section 1.2 Definitions. The following terms shall have the meanings set
forth below for purposes of the Plan.
Account: a Deferral Account or a Stock Unit Account.
Administration Committee: a committee of management employees designated by
the Chief Executive Officer of the Company from time to time to serve as the
body charged with serving as such under the Plan.
Adoption Date: the date on which the Plan is adopted by the Board.
Annual Meeting Date: any date on which an annual meeting of the Company's
stockholders occurs.
Approval Date: the date of the meeting of the Company's stockholders at
which the approval described in Section 1.1(a) is obtained.
Average Fair Market Value: the average of the Fair Market Values of a share
of Common Stock of the Company during the period of 10 trading days ending
on the designated date.
Beneficiary: in the case of any Participant who dies, the person or persons
named on the most recent Beneficiary Election Form filed and not revoked by
the Participant, in each case, in accordance with procedures established by
the Administration Committee or, if no such procedures have been established
or the Participant has not properly filed any Beneficiary Election Form, the
Participant's estate.
Board: the Board of Directors of the Company.
Common Stock: shares of Common Stock of the Company, subject to adjustments
made under Section 8.2 of the Plan or by operation of law.
Company: MeadWestvaco Corporation, a Delaware corporation.
Compensation Committee: the Compensation Committee of the Board or any
subcommittee thereof, or any other committee or subcommittee of the Board,
as determined by the Board from time to time; provided, that such committee
or subcommittee shall consist solely of two or more members of the Board who
are "Non-Employee Directors" within the meaning of Rule 16b-3 promulgated
under the Exchange Act.
Deferral Account: a bookkeeping account for a Participant representing the
Eligible Compensation that the Participant has elected to defer under
Article II of the Plan, as adjusted to reflect earnings, losses,
contributions and distributions in accordance with Articles III and V of the
Plan.
Deferral Election: an election by an Eligible Director to defer Eligible
Compensation pursuant to Article II of the Plan.
Deferred Compensation: an amount of Eligible Compensation that an Eligible
Director elects to defer under Article II of the Plan in accordance with the
provision of the Plan.
Distribution Election: an election by a Participant of the time(s) and
manner in which he or she wishes to receive distributions from his or her
Account(s).
Dividend Equivalent: the amount of any cash dividend or other cash
distribution paid by the Company, or the Fair Market Value of any dividend
or other distribution in the form of property other than Common Stock
distributed by the Company, on a number of shares of Common Stock equal to
the number of Stock Units credited, as of the applicable record date, to an
Eligible Director's Stock Unit Account.
Effective Date: with respect to the exercise of any Option, the last
business day preceding (1) in the case of delivery of a completed exercise
form, the date received by the person designated by the Administration
Committee to receive such forms, or (2) in the case of mailed forms, the
postmark date for such mailing.
Election Form: a form effecting a Beneficiary Election (a "Beneficiary
Election Form"), a form effecting a Deferral Election (a "Deferral Election
Form"), a form effecting a Distribution Election (a "Distribution Election
Form"), or a form effecting an Investment Election (an "Investment Election
Form"), or a single form combining all of such elections.
Eligible Compensation: with respect to any Eligible Director, 100% of the
Eligible Director's total cash compensation from the Company for service on
the Board and/or on any committee of the Board.
Eligible Director: any member of the Board who is not employed by the
Company or any of its subsidiaries or affiliates.
Exchange Act: the Securities Exchange Act of 1934.
Fair Market Value: with respect to the Common Stock, the mean of the high
and low prices at which the Common Stock is traded on the New York Stock
Exchange during normal business hours on the designated date; with respect
to any other security that is traded on any national securities exchange, or
on NASDAQ, the mean of the high and low prices at which Company's common
stock is thus traded during normal business hours on the designated date;
and with respect to any other property, the fair market value thereof as
determined by the Compensation Committee.
Finance Committee: a committee of management employees designated by the
Chief Executive Officer of the Company from time to time to serve as the
body charged with serving as such under the Plan.
B-2
Investment Election: an election by an Eligible Director to have Deferred
Compensation invested in an Investment Fund as defined in Section 3.3(a).
Option: an option to acquire Common Stock granted pursuant to Article VI of
the Plan.
Optionee: the Eligible Director to whom any Option is granted and any other
person who may be entitled to exercise such Option pursuant to the Plan.
Participant: an Eligible Director who has elected to defer Eligible
Compensation under the Plan or to whose Stock Unit Account Stock Units have
been credited and who has a positive balance in his or her Account(s).
Plan: the MeadWestvaco Corporation Compensation Plan for Non-Employee
Directors, as set forth herein.
Plan Year: generally, the calendar year; provided, that the first Plan Year
shall be the period from January 30, 2002 through December 31, 2002.
Stock Unit: a unit credited to a Participant's Stock Unit Account
representing one hypothetical share of Common Stock. Fractional Stock Units
shall be permitted.
Stock Unit Account: a bookkeeping account for a Participant representing
the Stock Units that have been credited to the Participant under Article IV
of the Plan.
Stock Unit Value: as defined in Section 4.1 of the Plan.
Termination Distribution: a distribution from a Participant's Account
following the Participant's Termination of Membership on the Company's Board
of Directors.
Termination of Board Membership: with respect to any Participant, the date
on which the Participant ceases, for any reason, to be a member of the
Company's Board of Directors.
Section 1.3 Administration. Except as specifically provided in the Plan, the
Administration Committee shall be responsible for administering the Plan in all
other respects, including establishing rules and regulations for the operation
of the Plan, preparing, distributing, collecting and administering Election
Forms, and interpreting the Plan and all associated documentation (including
without limitation Election Forms). The Administration Committee may delegate
any or all of their respective responsibilities to one or more of their members
or to appropriate employees of the Company. Notwithstanding the foregoing, to
the extent necessary to ensure the exemption of transactions pursuant to the
Plan from Section 16 of the Exchange Act, the Board or the Compensation
Committee shall be responsible for such administration.
Section 1.4 Unfunded Plan. The Plan is intended to be an unfunded plan
providing current and deferred compensation. Participants are and shall at all
times be general creditors of the Company with respect to their Account
balances. If the Finance Committee or the Company chooses to set aside funds in
a trust or otherwise for the payment of Account balances under the Plan, such
funds shall at all times be subject to the claims of the creditors of the
Company in the event of its bankruptcy or insolvency.
Section 1.5 Non-Transferability. None of the rights of Participants under the
Plan or with respect to their Accounts or Options shall be transferable, except
as specifically provided in Sections 5.3 and 6.6 of the Plan.
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Article II
Deferral Elections
Section 2.1 Eligible Compensation. All Eligible Directors shall be provided
with the opportunity to elect to defer all or a portion of their Eligible
Compensation. The Administration Committee may establish such minimum deferral
amounts, specified percentages of Eligible Compensation that may be deferred,
and similar requirements and limitations, as it may determine to be appropriate
for convenience of administration of the Plan.
Section 2.2 Deferral Election Forms. Deferral Election Forms shall be in such
form, and shall be filed and revoked in such manner as the Administration
Committee shall from time to time determine.
Section 2.3 Time for Filing Deferral Election Forms. Each individual who is
expected to be an Eligible Director on the Adoption Date has been provided the
opportunity, in advance of the Adoption Date, to file a Deferral Election to
defer Eligible Compensation that is earned on or after the Adoption Date. An
individual who becomes an Eligible Director after the Adoption Date may file an
initial Deferral Election within 30 days after becoming an Eligible Director,
but such Deferral Election may only apply to Eligible Compensation earned after
it is filed. Subsequent Deferral Elections may be filed in December of any Plan
Year to defer Eligible Compensation earned during subsequent Plan Years. Once
filed, a Deferral Election shall remain in effect until the Plan Year after the
Plan Year (if any) during which the Participant files a new Deferral Election
or revokes such Deferral Election.
Article III
Deferral Accounts and Investments
Section 3.1 Establishment and Maintenance of Deferral Account. The
Administration Committee shall cause the Company to establish and maintain a
Deferral Account for each Participant who elects to defer Eligible
Compensation. A Participant's Deferral Account shall be credited and debited
from time to time as provided in Section 3.2, adjusted for investment
experience, from time to time as provided in Section 3.3, and debited for
amounts distributed in accordance with Article V.
Section 3.2 Contributions to Deferral Accounts. A Participant's Deferral
Account shall be credited from time to time with his or her Deferred
Compensation, as of the day on which
such Deferred Compensation would otherwise be paid to him or her. Such amounts
shall be vested at all times.
Section 3.3 Earnings and Losses on Deferral Accounts.
(a) Investment Elections. The Finance Committee shall from time to time
establish one or more hypothetical investment funds (each, an "Investment
Fund") based upon such criteria as it may from time to time determine. The
Administration Committee shall establish procedures to permit Participants
to make Investment Elections from time to time indicating in which of the
available Investment Funds their Deferral Accounts shall be deemed invested.
Unless and until the Finance Committee provides otherwise, all Deferral
Accounts shall be deemed invested in the CitiStreet Money Market Fund.
(b) Adjustment of Accounts. The Administration Committee shall cause
Participants' Deferral Accounts to be adjusted upwards or downwards, at such
intervals as it may from time to time determine, to reflect the net
investment return (whether positive or negative) of the particular
Investment Fund(s) elected; provided, that no Deferral Account may at any
time have a balance less than zero.
B-4
Section 3.4 Reports. The Administration Committee shall provide, or cause to
be provided, to each Participant at regular intervals, but at least annually, a
statement of his or her Deferral Account balance and the activity therein since
the date of the last such statement.
Article IV
Stock Unit Accounts
Section 4.1 Credits of Stock Units. On the Approval Date and each Annual
Meeting Date thereafter, the Stock Unit Account of each person who is an
Eligible Director at the adjournment of the stockholders' meeting occurring on
that Annual Meeting Date shall be credited with a number of Units (including
fractions thereof) determined by dividing the Stock Unit Value by the Average
Fair Market Value of the Common Stock on such Annual Meeting Date. The "Stock
Unit Value" shall mean $30,000 or such other amount as the Board may hereafter
establish by resolution.
Section 4.2 Dividend Equivalents. Each Stock Unit Account shall be credited
with additional Stock Units (including fractions thereof) on each payment date
for any dividend or distribution made with respect to the Common Stock with a
record date that occurs while there is a positive balance in such Stock Unit
Account. The number of Stock Units so credited shall equal the amount of the
applicable Dividend Equivalent, divided by the Fair Market Value of a share of
Common Stock as of the applicable payment date for the dividend or distribution
in question.
Section 4.3 Vesting of Share Units. The rights of each Eligible Director in
respect of Stock Units credited to his or her Stock Unit Account shall be
vested at all times.
Article V
Distributions
Section 5.1 Termination of Board Membership. The balance in each
Participant's Account(s) shall be paid on the earliest practicable date
following the end of the calendar quarter in which the Participant's
Termination of Board Membership occurs, in a single distribution, unless
elected otherwise by the Participant in accordance with Section 5.2 of the Plan.
Section 5.2 Distribution Election Form. The Administration Committee may from
time to time, in its discretion, establish rules and procedures for
participants to file a Distribution Election Form, on which they may make
elections to receive distributions of their Stock Unit Accounts and/or Deferred
Accounts in installments rather than a lump sum and at a time or times other
than as provided in Section 5.1. Such procedures may include special rules
applicable in the event of the death of a Participant, and such other rules,
limitations and conditions as the Committee may determine to be appropriate.
Any such procedures shall require that Distribution Election Form (or amendment
or revocation thereof) must be submitted at least six months prior to the
Termination of Board Membership in order to be effective.
Section 5.3 Form of Distributions. All distributions from a Participant's
Deferral Account shall be made in cash. All distributions from a Participant's
Stock Unit Account shall be made in shares of Common Stock, except that any
fractional shares that would otherwise be distributable shall be paid in cash
based on the Fair Market Value of the Common Stock on the most recent
practicable date preceding the date of the distribution.
B-5
Article VI
Stock Options
Section 6.1 Grants of Options. On the Approval Date and each Annual Meeting
Date thereafter, Options to purchase 1,500 shares of Common Stock shall
automatically be granted to each individual who, at the adjournment of the
stockholders' meeting occurring, is an Eligible Director. All Options shall be
evidenced by written agreements and shall be granted on the terms hereafter set
forth, together with such other terms, not inconsistent with the terms of the
Plan, as the Board or the Compensation Committee, in its discretion, may from
time to time approve.
Section 6.2 Option Price. The per-share exercise price for each Option shall
be 100% of the Fair Market Value of a share of Common Stock on the date the
Option is granted.
Section 6.3 Medium and Time of Payment. Stock purchased pursuant to an Option
shall be paid for in full at the time of purchase in such manner as the
Administration Committee or the Compensation Committee shall determine. The
medium of payment shall be cash, Common Stock valued at Fair Market Value, or
any other property satisfactory to the Company, valued as of the Effective Date
of the exercise; provided, that any such Common Stock shall have been either
purchased by the Participant on the open market or held for more than six
months. In addition, if the Compensation Committee so provides, payment may be
made through a broker cashless exercise program. Following receipt of payment,
the Company shall deliver to the Optionee a certificate or certificates for
such shares due upon exercise of an Option.
Section 6.4 Period of Exercise of Options. Each Option shall be vested and
exercisable from and after the date on which it is granted. Unless the
Compensation Committee provides otherwise in connection with the grant of an
Option, the Option shall remain exercisable as follows. Generally, the Option
shall expire on the tenth anniversary of the date of grant. However, if the
Eligible Director to whom it is granted has a Termination of Board Membership
for any reason, each of his or her then-outstanding Options shall expire on
earlier of the fifth anniversary of the date of such Termination of Board
Membership and the tenth anniversary of the date of grant; provided, that in
the case of the Eligible Director's Termination of Board Membership by reason
of his or her death within one year before the tenth anniversary of the date of
grant of an Option, the Option shall remain exercisable for one year from the
date of death. All of the periods within which Options are exercisable are
subject always to such further limitations as may be required to maintain
favorable treatment under the securities and tax laws.
Section 6.5 Rights as a Stockholder. An Optionee shall have no rights as a
stockholder with respect to any shares issuable or transferable upon exercise
thereof until the date of issuance of a stock certificate for such shares.
Except as provided in Section 8.2, no adjustment shall be made for dividends or
other rights for which the record date is prior to the date as of which such
stock certificate is issued.
Section 6.6 Non-Assignability. No Option shall be assignable or transferable
except by will or by the laws of descent and distribution, by operation of law,
or, if permitted by law and under uniform standards adopted by the Compensation
Committee, to immediate family members of the Optionee, or to trusts whose
beneficiaries are the Optionee or immediate family members.
Article VII
General
Section 7.1 General Restriction. The grant or exercise of any Option or the
issuance or transfer of any Common Stock pursuant to this Plan is conditioned
upon such listing, registration, qualification and regulatory approvals as the
Board, the Compensation Committee or the Administration Committee, in their
respective discretion, may deem necessary or desirable. The Board, the
Compensation Committee or the Administration Committee, respectively, may also
place such restrictions or legends or additional legends on stock issued or
transferred as it determines to be required or advisable to comply with
applicable laws or regulations, or the listing requirements of any exchange
upon which the Common Stock is traded or intended to be traded.
B-6
Section 7.2 Adjustment for Changes in Capitalization. In the event of any
change in corporate capitalization (including, but not limited to, a change in
the number of shares of Common Stock outstanding), such as a stock split or a
corporate transaction, such as any merger, consolidation, separation, including
a spin-off, or other distribution of stock or property of the Company, any
reorganization (whether or not such reorganization comes within the definition
of such term in Section 368 of the Code) or any partial or complete liquidation
of the Company, the Compensation Committee or Board may make such substitution
or adjustments in the aggregate number and kind of shares provided for under
Section 1(a) of the Plan, in the number of Options to be granted automatically
pursuant to Article VI, and in the number, kind and option price of shares
subject to outstanding Stock Units and Options, and/or such other equitable
substitution or adjustments as it may determine to be appropriate in its sole
discretion; provided, that no such substitution or adjustment shall be made to
outstanding Stock Units with respect to any dividend or other distribution for
which Dividend Equivalents are credited to the applicable Stock Unit Account as
provided in Section 4.2 of the Plan; and provided, further, that any resulting
fractional share that would otherwise be subject to an Option shall be
eliminated.
Section 7.3 Compliance with Section 16 of the Exchange Act. Notwithstanding
any other provision of the Plan, the Administrative Committee may impose such
restrictions, rules and regulations on the terms and conditions of
participation in the Plan as it may determine to be necessary or appropriate to
avoid subjecting Eligible Directors to liability or potential liability under
Section 16. Any transaction pursuant to the Plan (including without limitation
elections to move Deferred Compensation into or out of any Common Stock Fund)
that would result in liability or potential liability under said Section 16
shall be void ab initio.
Section 7.4 Governing Law. The Plan shall be governed by the law of the state
of Delaware.
Article VIII
Amendment and Termination of Plan
The Plan may be amended or terminated at any time by resolution of the Board of
Directors of the Company; provided, that no such amendment or termination may
reduce the balance of any Participant's Accounts, change the requirements for
vesting of any unvested portion of any Option previously granted, or change the
timing of distributions from any Account, without the consent of the affected
Participant or Beneficiary, as applicable.
B-7
[LOGO] MeadWestvaco
MeadWestvaco Corporation
World Headquarters
One High Ridge Park
Stamford, Connecticut 06905
Corporate Secretary
203 461 7500
For shareholder information
Call toll free 1 800 432 9874
MeadWestvaco on the World Wide Web
Earnings, corporate news releases,
product information, financial and
environmental reports and other
company information can be found
on MeadWestvaco's Internet site:
http://www.meadwestvaco.com
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The cover of this proxy statement is printed on 80 lb. Text Mead Gloss paper
manufactured at MeadWestvaco's Chillicothe fine papers mill and the inside
pages of this proxy statement are printed on 45 lb. Escanaba Matte Text paper
manufactured at MeadWestvaco's Escanaba fine papers mill.
[LOGO OF MEADWESTVACO] YOUR VOTE IS IMPORTANT
VOTE BY TELEPHONE
24 HOURS A DAY, 7 DAYS A WEEK
TELEPHONE MAIL
866-593-3354
. Use any touch-tone telephone . Mark, sign and date your
. Have your Proxy Form in hand OR Proxy Card.
. Enter the Control Number . Detach card from Proxy
located in the box below Form
. Follow the simple recorded . Return the card in the
instructions postage-paid envelope provided
Your telephone vote authorizes the named proxies to vote your shares in the same
manner as if you marked, signed and returned the proxy card. If you have
submitted your proxy by telephone there is no need for you to mail back your
proxy.
CONTROL NUMBER FOR
TELEPHONE VOTING
866-593-3354
CALL TOLL-FREE TO VOTE
DETACH PROXY CARD HERE IF YOU ARE NOT VOTING BY TELEPHONE
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote "FOR" all nominees listed below, "FOR" proposal 2 and "FOR" proposal 3.
For all nominees [_] Withhold Authority to vote [_] Exceptions* [_]
(1) Election of Directors listed below for all nominees listed below
Nominees: 01-Michael E. Campbell, 02-Dr. Thomas W. Cole, Jr., 03-Duane E. Collins, 04-Susan J. Kropf, and 05-J. Lawrence Wilson
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the "Exceptions" box and write that nominee's name in
the space provided below)
*Exceptions:
-------------------------------------------------------------
(2) Appointment of PricewaterhouseCoopers LLP as independent accountants for 2002.
For [_] Against [_] Abstain [_]
(3) Approval of the proposed MeadWestvaco Corporation Compensation Plan for Non-Employee Directors.
For [_] Against [_] Abstain [_]
The proxies are directed to vote as specified above and
in their discretion on any matters properly coming
before the meeting and any adjournment thereof. If no
direction is made, the proxies will vote FOR all
nominees listed above, FOR Proposal 2 and FOR
Proposal 3. Please date, sign, and return this proxy
promptly. Please sign exactly as your name appears on
this proxy. If signing for estates, trusts or
corporations, title or capacity should be stated.
Date: Share Owner sign here Co-Owner sign here
[ ] [ ] [ ]
----------------- ------------------------------ -----------------------------
Please Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope.
MEADWESTVACO CORPORTION
Annual Meeting of MeadWestvaco Stockholders, April 23, 2002
The undersigned holder(s) of Common Stock of MEADWESTVACO CORPORATION,
a Delaware corporation (hereinafter referred to as the "Company"), hereby
appoints John A. Luke, Jr., Wendell L. Willkie II, and John W. Hetherington, and
each of them, attorneys of the undersigned, with power of substitution, to vote
all of the Common Stock of the undersigned entitled to vote at the Annual
Meeting of MeadWestvaco Stockholders to be held at JP Morgan Chase World
Headquarters, 270 Park Avenue, New York, NY on Tuesday, April 23, 2002 at 10:00
a.m. and at any and all adjournments of such meeting, upon the matters set forth
on the reverse side hereof, and in their discretion, the Proxies are authorized
to vote upon such other business as may properly come before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
COMPANY. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO INSTRUCTION IS INDICATED, THE
SHARES WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE DIRECTORS.
(CONTINUED AND TO BE VOTED AND SIGNED ON REVERSE SIDE)
MEADWESTVACO CORPORATION
P.O. BOX 11016
NEW YORK, N.Y. 10203-0016
To change your address, please mark this box. [ ]