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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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Plum Creek Timber Company, Inc.
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[PLUM CREEK LOGO]
PLUM CREEK TIMBER COMPANY, INC.
999 THIRD AVENUE, SUITE 2300
SEATTLE, WASHINGTON 98104-4096
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Dear Stockholder:
It is a pleasure to invite you to Plum Creek's Annual Meeting of
Stockholders on Tuesday, May 8, 2001 beginning at 2:00 p.m., at the Washington
Athletic Club in Seattle, Washington.
Your vote is very important. Whether or not you plan to attend the Annual
Meeting in person, I urge you to vote your proxy as soon as possible. You can
vote over the Internet, by telephone or by mailing back a traditional proxy
card. Voting in any of these ways will ensure your representation at the Annual
Meeting if you do not attend in person. Please review the instructions on the
proxy card regarding each of these options. If you do attend the meeting in
person, you will have the opportunity, if you desire, to change your vote at the
meeting.
The agenda for the Annual Meeting includes the election of three directors
to serve until the 2004 Annual Meeting and consideration of two stockholder
proposals (if they are properly presented at the meeting). The Board of
Directors recommends that you vote "FOR" the slate of director nominees and
"AGAINST" each of the stockholder proposals. In addition to these specific
matters, there will be a report on the progress of the Company and an
opportunity to ask questions of general interest to stockholders.
If you have any questions concerning the Annual Meeting or the proposals,
please contact our Investor Relations Department at (800) 858-5347 (within the
U.S. and Canada) or (206) 467-3600 (outside the U.S. and Canada, call collect).
I look forward to seeing you on May 8 in Seattle.
Sincerely yours,
/s/ RICK R. HOLLEY
Rick R. Holley
President and Chief Executive Officer
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[PLUM CREEK LOGO]
PLUM CREEK TIMBER COMPANY, INC.
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 8, 2001
NOTICE is hereby given to the stockholders of Plum Creek Timber Company,
Inc., a Delaware corporation ("Plum Creek" or the "Company") that the Annual
Meeting of Stockholders of Plum Creek will be held at 2:00 p.m., on May 8, 2001,
at the Washington Athletic Club located at 1325 Sixth Avenue, Seattle,
Washington, for the following purposes:
1. To elect three (3) persons to serve on the Board of Directors for
three-year terms expiring at the Annual Meeting of Stockholders to be
held in 2004;
2. To consider and act upon two (2) stockholder proposals (if they are
properly presented at the meeting); and
3. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
RECORD DATE You are entitled to vote if you were a stockholder of record
at the close of business on March 15, 2001.
ADMISSION If your Plum Creek stock is held in "street name" by a
broker, bank or other nominee, you are not the holder of
record of the stock and your name does not appear on the
Company's list of stockholders. However, you are considered
the beneficial owner of these shares and these proxy
materials are being forwarded to you by your broker, the
bank or other nominee as the holder of record of the stock.
If your stock is held in street name: (1) to be admitted to
the meeting, you must bring with you a letter or account
statement showing that you were the beneficial owner of Plum
Creek stock on the record date; and (2) to vote in person at
the meeting, you must also obtain and bring with you a
proxy, executed in your favor, from your broker, bank or
other nominee as the holder of record.
PROXY VOTING Please submit a proxy as soon as possible so that your
shares can be voted at the meeting. Submitting the enclosed
form of proxy will appoint Rick R. Holley, William R. Brown
and James A. Kraft as your proxies. You may submit your
proxy (1) over the Internet, (2) by telephone, or (3) by
mail. For instructions, please refer to the proxy card.
By Order of the Board of Directors
/s/ JAMES A. KRAFT
James A. Kraft
Vice President, General Counsel and Secretary
March 27, 2001
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PLUM CREEK TIMBER COMPANY, INC.
999 THIRD AVENUE, SUITE 2300
SEATTLE, WASHINGTON 98104-4096
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PROXY STATEMENT FOR THE 2001 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 8, 2001
The Date of this Proxy Statement is March 27, 2001.
PROXIES IN THE FORM ENCLOSED ARE SOLICITED BY THE BOARD OF DIRECTORS OF
PLUM CREEK TIMBER COMPANY, INC. TO BE VOTED AT THE ANNUAL MEETING OF
STOCKHOLDERS ON MAY 8, 2001, AT 2:00 P.M., AND AT ANY ADJOURNMENT THEREOF, FOR
THE PURPOSES SET FORTH IN THE ATTACHED NOTICE OF ANNUAL MEETING OF STOCKHOLDERS.
PLUM CREEK ANTICIPATES THAT THE NOTICE, THIS PROXY STATEMENT AND THE FORM OF
PROXY ENCLOSED WILL FIRST BE SENT TO ITS STOCKHOLDERS ON OR ABOUT APRIL 2, 2001.
SOLICITATION OF PROXY AND REVOCABILITY
This Proxy Statement is furnished to stockholders of Plum Creek Timber
Company, Inc. ("Plum Creek" or the "Company") in connection with the Board of
Directors' solicitation of proxies to be voted at the Annual Meeting of
stockholders of the Company on May 8, 2001, or any adjournment thereof (the
"Annual Meeting"). Proxies in the form enclosed which are properly executed and
returned to the Company or voted by telephone or Internet, and not later
revoked, will be voted at the Annual Meeting in accordance with the instructions
specified on the proxy card. Proxies received without specific voting
instructions, unless revoked before exercised, will be voted:
- "For" the nominees for director listed in these materials and on the
proxy; and
- "Against" each of the two stockholder proposals.
Any person giving a proxy may revoke it at any time prior to its exercise.
A proxy may be revoked by filing with the Secretary of the Company an instrument
of revocation, by voting by telephone or Internet at a later date, or by signing
and submitting another proxy card with a later date. A proxy may also be revoked
by attending the meeting and voting in person. If your shares of Plum Creek
common stock are held in street name (in the name of a bank, broker or other
nominee as the holder of record), you must obtain a proxy, executed in your
favor, from the holder of record to be able to vote in person at the Annual
Meeting.
The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing and mailing of this Proxy Statement, the
proxies, and any additional material which may be furnished to stockholders. In
accordance with the regulations of the Securities and Exchange Commission (the
"SEC") and the New York Stock Exchange, the Company will also reimburse
brokerage firms and other custodians, nominees and fiduciaries for their
expenses incurred in sending proxies and proxy materials to the beneficial
owners of shares of Plum Creek's common stock. Proxies may be solicited by
directors, officers, or other employees of the Company either in person or by
telephone.
VOTE REQUIRED AND METHOD OF COUNTING VOTES
Under Delaware law and the Company's Amended and Restated Bylaws, the
presence at the Annual Meeting, in person or by duly authorized proxy, of the
holders of a majority of the outstanding shares of stock entitled to vote at the
meeting constitutes a quorum for the transaction of business. Abstentions and
broker "non-votes" are counted as present and entitled to vote for purposes of
determining a quorum. A broker "non-vote" occurs when a nominee, as record
holder of the shares for a beneficial owner, votes on at least one proposal but
not on another because the nominee does not have discretionary voting power with
respect to that item and has not received instructions from the beneficial
owner.
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Each share of Plum Creek common stock and Plum Creek special voting stock
entitles the holder to one vote on each of the three proposals to be presented
at the Annual Meeting.
For Proposal No. 1, the election of directors, stockholders may vote in
favor of all nominees, or withhold their votes as to all nominees, or withhold
their votes as to specific nominees. Checking the box that withholds authority
to vote for a nominee is the equivalent of abstaining. The three nominees who
receive the greatest number of votes cast for the election of directors by
shares entitled to vote and present in person or by proxy at the Annual Meeting
will be elected directors. In an uncontested plurality election, such as this,
abstentions and broker non-votes have no effect, since approval by a percentage
of the shares present or outstanding is not required.
For each of Proposal No. 2 and Proposal No. 3, the stockholder proposals,
the affirmative vote of the majority of shares present in person or by proxy and
entitled to vote at the Annual Meeting is required. An abstention or a broker
non-vote will have the same effect as a vote against the proposal.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL
Pursuant to the Delaware General Corporation Law (the "DGCL") and the
Company's Amended and Restated Bylaws, the business, property and affairs of
Plum Creek are managed under the direction of the Board of Directors. Members of
the Board are kept informed of Plum Creek's business through discussions with
Plum Creek's officers, by reviewing materials provided to them and by
participating in meetings of the Board and its committees.
The current eight-member Board of Directors is divided into three classes,
with a class of directors elected each year for a three-year term and until
successors of such directors are elected. The three directors whose terms are
expiring in 2001 are David D. Leland, John G. McDonald and William E. Oberndorf,
and each has been nominated for re-election as a director at the Annual Meeting.
The remaining five directors will continue to serve as set forth below. In
the absence of instructions to the contrary, the proxy holders will vote the
proxies received by them for the election of Messrs. Leland, McDonald and
Oberndorf. Discretionary authority is reserved to cast votes for the election of
a substitute should any of the nominees be unable or unwilling to serve as a
director. Each of the nominees has agreed to serve as a director if elected and
the Company believes that each of them will be available to serve.
The names and ages of the nominees and the other directors and their
principal occupations or employment during the past five years are set forth
below.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS, FOR TERMS EXPIRING IN 2004:
David D. Leland
Mr. Leland, 65, served from December 1992 through our conversion to a REIT
in July 1999 as a director and Chairman of the Board of PC Advisory Corp I
("Corp I"), which was the general partner of Plum Creek Management Company, L.P.
(the "Management Partnership"), the former general partner of Plum Creek Timber
Company, L.P. From December 1992 to December 1993, Mr. Leland also served as the
President and Chief Executive Officer of the Management Partnership. Mr. Leland
was elected a director and the Chairman of the Board of the Company on July 1,
1999.
John G. McDonald
Professor McDonald, 63, was elected a director of the Company on July 1,
1999. Professor McDonald is the IBJ Professor of Finance in the Graduate School
of Business at Stanford University, where he has been a faculty member since
1968. He serves as a director of Varian, Inc.; Scholastic Corp.; iStar Financial
Inc.; and eight mutual funds managed by Capital Research and Management Company.
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William E. Oberndorf
Mr. Oberndorf, 47, served as a director of Corp I from November 1992
through our conversion to a REIT, and was elected a director of the Company on
July 1, 1999. Since 1991, Mr. Oberndorf's principal occupation has been as a
managing director of SPO Partners & Co., a private investment firm that is an
affiliate of the Management Partnership. Mr. Oberndorf also serves as a director
for Bell & Howell Company, Inc.
DIRECTORS WHOSE TERMS WILL EXPIRE IN 2002:
Rick R. Holley
Mr. Holley, 49, served as the President and Chief Executive Officer of the
Management Partnership from January 1994 through our conversion to a REIT, and
continues in the same position with the Company. Mr. Holley served as a director
of Corp I from January 1994 through our conversion to a REIT, and was elected a
director of the Company on July 1, 1999.
Ian B. Davidson
Mr. Davidson, 69, served as a director of Corp I from December 1992 through
our conversion to a REIT, and was elected a director of the Company on July 1,
1999. Mr. Davidson is the Chairman of Davidson Companies, the holding company
that owns the brokerage firm D.A. Davidson & Co.
William J. Patterson
Mr. Patterson, 39, served as a director of Corp I from November 1992
through our conversion to a REIT, and was elected a director of the Company on
July 1, 1999. Since 1991, Mr. Patterson's principal occupation has been as a
managing director of SPO Partners & Co., a private investment firm that is an
affiliate of the Management Partnership.
DIRECTORS WHOSE TERMS WILL EXPIRE IN 2003:
Hamid R. Moghadam
Mr. Moghadam, 44, was elected a director of the Company on July 1, 1999. He
is the Chief Executive Officer of AMB Property Corporation and Chairman of its
Board of Directors. Mr. Moghadam is also one of the founders of AMB (in 1983),
which is one of the largest public REITs in the country focusing on high
throughput industrial properties.
John H. Scully
Mr. Scully, 56, served as a director of Corp I from November 1992 through
our conversion to a REIT, and was elected a director of the Company on July 1,
1999. Since 1991, Mr. Scully's principal occupation has been as a managing
director of SPO Partners & Co., a private investment firm that is an affiliate
of the Management Partnership. Mr. Scully also serves as a director for Bell &
Howell Company, Inc.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES. UNLESS
INDICATED OTHERWISE ON THE ENCLOSED PROXY CARD, THE SHARES WILL BE VOTED "FOR"
THE ELECTION OF SUCH NOMINEES.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors held four regularly scheduled meetings and one
special telephonic meeting in 2000.
COMPENSATION COMMITTEE
The Compensation Committee of the Board held two meetings during fiscal
year 2000. The Compensation Committee is responsible for reviewing and
evaluating compensation policies and plans and recom-
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mending such policies and plans for Board approval, including the compensation
policies and plans for the Company's executive officers. The Compensation
Committee is also responsible for making recommendations to the Board concerning
amendments to the compensation plans and, in certain instances, making
amendments to such plans. The current members of this committee are Messrs.
Oberndorf (Chairman), Moghadam and Patterson.
NOMINATING COMMITTEE
The Nominating Committee of the Board, which held one telephonic meeting
during fiscal year 2000, is responsible for making recommendations to the Board
on nominees to be designated by the Board for election as directors. The current
members of this committee are Messrs. Leland (Chairman), Scully and Holley.
The Nominating Committee will consider nominee recommendations from
stockholders. Stockholder recommendations must be in writing and addressed to
the Chairman of the Nominating Committee, c/o Corporate Secretary, Plum Creek
Timber Company, Inc., 999 Third Avenue, Suite 2300, Seattle, Washington,
98104-4096. If a stockholder intends to make a nomination at any Annual Meeting,
the Bylaws of the Company require that the stockholder deliver written notice to
the Company not more than 90 days nor less than 60 days prior to the anniversary
date of the Company's previous year's Annual Meeting of stockholders. The notice
must set forth, among other things: (1) the name and address of the stockholder
who intends to make the nomination; (2) the name, age, address and principal
occupation of the proposed nominee or nominees; (3) a representation that the
stockholder is entitled to vote at such meeting and intends to appear in person
or by proxy at the meeting to nominate the person or persons specified in the
notice; (4) the consent of each proposed nominee to serve as a director of the
Company if so elected; and (5) the number of shares of common stock of the
Company owned by the notifying stockholder and by the proposed nominee or
nominees. These Bylaw provisions afford the Board of Directors the opportunity
to consider the qualifications of the proposed nominees and, to the extent
deemed necessary or desirable by the Board, to inform stockholders about such
qualifications.
Under the terms of the Company's conversion to a REIT in 1999, so long as
Messrs. Scully, Patterson and Oberndorf continue to own, directly and
indirectly, at least five million shares of the Company's common or special
voting stock, they are entitled to designate, for nomination purposes only, a
sufficient number of the Company's nominees for the Board that, in addition to
previously elected designees, would constitute a majority of the Board. If their
ownership drops below five million shares but is greater than three million
shares, they are entitled to designate the number of nominees that, in addition
to previously elected designees, would equal two members of the Board.
AUDIT AND COMPLIANCE COMMITTEE
During fiscal year 2000, the Audit and Compliance Committee of the Board
met two times. This committee has the responsibility to review and approve the
scope of the annual audit, to recommend to the Board the appointment of the
independent public accountants, to interview the independent public accountants
for review and analysis of the Company's financial systems and controls, and to
review the independence of, and any non-audit services by, the independent
public accountants. The Audit and Compliance Committee is also charged with
reviewing the Company's Environmental Management Program and other compliance
programs.
During fiscal year 2000, the Board of Directors adopted an Audit and
Compliance Committee Charter, a copy of which is attached as Appendix A to this
Proxy Statement. Furthermore, the Board of Directors determined that the members
of the Audit and Compliance Committee were independent in accordance with the
New York Stock Exchange listing standards. Current members of the Audit and
Compliance Committee are Messrs. Davidson (Chairman), Leland and McDonald.
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REPORT OF THE AUDIT AND COMPLIANCE COMMITTEE
In connection with the Audit and Compliance Committee's review of the
Company's financial statements for the year ended December 31, 2000, the
committee has performed the following:
1. The Audit and Compliance Committee has reviewed and discussed the
audited financial statements with management of the Company;
2. The Audit and Compliance Committee has discussed with the independent
auditors the matters required to be discussed by Statement on Auditing
Standards No. 61, which includes among other things:
a. The auditors' responsibility under Generally Accepted Auditing
Standards.
b. Significant accounting policies of the Company.
c. Management's judgment regarding accounting estimates.
d. Audit adjustments.
e. The auditors' judgment about the quality of the Company's accounting
principles.
f. Disagreements with management, if any.
g. Difficulties encountered in performing the audit, if any.
3. The Audit and Compliance Committee has received the written disclosures
and the letter from the independent auditors required by Independence
Standards Board Standard No. 1 and has discussed with the independent
auditors the independent auditors' independence; and
4. Based on the review and discussions of the above three items, the Audit
and Compliance Committee recommended to the Board of Directors that the
audited financial statements be included in the Company's Annual Report
on Form 10-K.
Ian B. Davidson -- Chairman
David D. Leland and John G. McDonald
DIRECTOR COMPENSATION
Each non-employee director receives an annual fee of $40,000 and no
per-meeting compensation for any meetings, including committee meetings,
attended. The Chairman of the Board and each committee chairman each receive an
additional annual fee of $5,000 for serving in such capacities. In addition,
each director was reimbursed for expenses incurred in connection with these
meetings. Directors may also elect to take their Board fees in common stock of
the Company and may defer all or part of their compensation.
Certain incidental expenses are paid on behalf of the Chairman of the
Board, Mr. Leland, which totaled $30,932 for 2000.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Company's
common stock (including 634,566 shares of special voting stock convertible into
common stock) as of March 27, 2001 held by each director and officer, all
directors and officers as a group, and any person or entity known to the Company
to beneficially own more than 5% of the Company's common stock:
NUMBER OF SHARES PERCENT
NAME OF INDIVIDUAL OR IDENTITY OF GROUP BENEFICIALLY OWNED OF CLASS
--------------------------------------- ------------------ --------
Beneficial Owners of more than 5%
PC Advisory Partners I, L.P. ........................ 17,133,275(a) 24.75%
PC Intermediate Holdings, L.P. ...................... 17,133,275(a) 24.75%
Georgia-Pacific Corporation.......................... 17,133,275(b) 24.75%
133 Peachtree Street, N.E.
Atlanta, GA 30303
Directors
Ian B. Davidson...................................... 28,644(c) *
Rick R. Holley....................................... 714,636(d)(e) *
David D. Leland...................................... 112,625(f) *
John G. McDonald..................................... 2,000 *
Hamid R. Moghadam.................................... 2,480 *
William E. Oberndorf................................. 17,136,881(g) 24.76%
William J. Patterson................................. 17,136,630(g) 24.76%
John H. Scully....................................... 17,141,401(g)(h) 24.77%
Executive Officers
William R. Brown..................................... 59,437(i) *
James A. Kraft....................................... 116,250(j) *
Michael J. Covey..................................... 18,145(k) *
Barbara L. Crowe..................................... 15,750(l) *
All 12 Executive Officers and Directors as a Group..... 18,218,329 26.32%
========== =====
- ---------------
* Represents less than 1.0% of the outstanding shares of common stock, based
on 69,206,575 shares of common stock outstanding as of March 27, 2001.
Unless otherwise indicated, the address of each person is c/o Plum Creek
Timber Company, Inc., 999 Third Avenue, Suite 2300, Seattle, Washington,
98104-4096.
(a) PC Advisory Partners I, L.P. ("PC Advisory Partners") and PC Intermediate
Holdings, L.P. ("PC Intermediate Holdings") are deemed to be under common
control. Each is deemed, therefore, to beneficially own shares of common
stock held by the other. PC Advisory Partners directly owns 164,987 shares
of common stock and 6,346 shares of special voting stock, which is
convertible into common stock. PC Intermediate Holdings directly owns
16,333,722 shares of common stock and 628,220 shares of special voting
stock.
(b) Plum Creek, Georgia-Pacific Corporation ("Georgia-Pacific") and certain
wholly owned subsidiaries of Georgia-Pacific have entered into a merger
agreement dated as of July 18, 2000 (the "Merger Agreement") pursuant to
which such subsidiaries of Georgia-Pacific will merge with and into Plum
Creek, with Plum Creek as the surviving corporation (the "Merger").
Concurrently with the execution and delivery of the Merger Agreement, Plum
Creek, Georgia-Pacific, PC Advisory Partners and PC Intermediate Holdings
entered into a Voting Agreement and Consent dated as of July 18, 2000,
pursuant to which PC Advisory Partners and PC Intermediate Holdings agreed
to vote to approve the Merger, the Merger Agreement and the transactions
contemplated therein, and each has granted a proxy to certain officers of
Georgia-Pacific to vote their shares of common stock in such a manner. As a
result of the Voting Agreement and Consent, Georgia-Pacific may be deemed
to be the beneficial owner of 16,498,709 shares of common stock and 634,566
shares of special voting stock.
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(c) Includes 300 shares of common stock owned by Mr. Davidson's wife.
(d) Includes 113,133 shares of common stock receipt of which has been deferred
pursuant to an election under an employee benefits plan. Also includes
25,000 shares of common stock issuable under stock options exercisable
within sixty days of March 27, 2001.
(e) Includes 374,014 shares of common stock owned by an employee benefits trust
as to which Mr. Holley, as President and Chief Executive Officer, has
voting and dispositive power. Mr. Holley disclaims beneficial ownership of
the shares of common stock held by the trust.
(f) Includes 32,000 shares of common stock held by Mr. Leland's wife.
(g) Includes 164,987 shares of common stock and 6,346 shares of special voting
stock held by PC Advisory Partners. Also includes 16,333,722 shares of
common stock and 628,220 shares of special voting stock held by PC
Intermediate Holdings. Messrs. Oberndorf, Patterson and Scully have shared
control of, and have an indirect pecuniary interest in, PC Advisory
Partners and PC Intermediate Holdings.
(h) Includes 5,000 shares of common stock held in a trust over which Mr. Scully
has voting and dispositive power.
(i) Includes 16,681 shares of common stock receipt of which has been deferred
pursuant to an election under an employee benefits plan. Also includes
8,750 shares of common stock issuable under stock options exercisable
within sixty days of March 27, 2001.
(j) Includes 48,486 shares of common stock receipt of which has been deferred
pursuant to an election under an employee benefits plan. Also includes
3,220 shares of common stock held by Mr. Kraft's children and 4,375 shares
of common stock issuable under stock options exercisable within sixty days
of March 27, 2001.
(k) Includes 5,643 shares of common stock receipt of which has been deferred
pursuant to an election under an employee benefits plan. Also includes
7,500 shares of common stock issuable under stock options exercisable
within sixty days of March 27, 2001.
(l) Includes 3,892 shares of common stock receipt of which has been deferred
pursuant to an election under an employee benefits plan. Also includes
3,625 shares of common stock issuable under stock options exercisable
within sixty days of March 27, 2001.
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EXECUTIVE COMPENSATION
The following table sets forth a summary of compensation for the three
fiscal years ended December 31, 2000 for the President and Chief Executive
Officer and the Company's four other most highly compensated executive officers
for services rendered in all capacities. In accordance with SEC disclosure
rules, a summary of compensation for the three fiscal years ended December 31,
2000 is also set forth for Mr. Charles P. Grenier. Mr. Grenier left the Company
on August 15, 2000; prior to his departure he was one of the Company's four
other most highly compensated executive officers. Compensation amounts are on an
accrual basis and include amounts deferred at the officer's election.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
-----------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
---------------------------------- ---------- ----------
(A) (B) (C)
OTHER RESTRICTED SECURITIES (D) (E)
ANNUAL STOCK UNDERLYING LTIP ALL OTHER
SALARY BONUS COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
- --------------------------- ---- -------- -------- ------------ ---------- ---------- ---------- ------------
Rick R. Holley 2000 $520,000 $480,200 $186,474 100,000 $ 9,370
President and 1999 $470,000 $470,000 $128,990
Chief Executive Officer 1998 $456,000 $114,000 $ 2,994 $114,000 $8,450,148 $ 53,840
William R. Brown 2000 $250,000 $179,500 $ 20,204 35,000 $ 8,580
Executive Vice President 1999 $215,625 $225,000 $ 36,413
And Chief Financial 1998 $175,000 $ 50,000 $ 1,088 $ 50,000 $1,245,868 $ 15,450
Officer
Michael J. Covey 2000 $209,375 $162,000 $ 12,847 30,000 $ 8,261
Senior Vice President, 1999 $174,375 $180,000 $ 17,159
Resources 1998 $148,830 $ 37,500 $ 37,500 $ 518,167 $ 20,007
James A. Kraft 2000 $248,042 $173,600 $ 83,624 17,500 $ 8,498
Vice President, General 1999 $238,500 $238,500 $ 60,243
Counsel and Secretary 1998 $232,000 $ 55,000 $ 1,559 $ 55,000 $3,621,491 $ 27,503
Barbara L. Crowe 2000 $151,600 $106,120 $ 7,609 14,500 $ 6,181
Vice President, Human 1999 $144,600 $144,600 $ 16,806
Resources 1998 $140,400 $ 34,000 $ 34,000 $ 290,731 $ 12,474
Charles P. Grenier 2000 $263,941 $218,907 $ 1,968
Executive Vice President 1999 $363,000 $320,000 $ 88,375
(former officer) 1998 $356,000 $ 75,000 $ 2,723 $ 75,000 $6,035,820 $ 42,200
- ---------------
(a) Amounts in the Bonus column represent cash payments under the Plum Creek
Annual Incentive Plan (the "AIP") and the Management Incentive Plan
("MIP"). Under the terms of the AIP, which replaced the MIP in 2000, awards
are paid entirely in cash. Under the terms of the MIP, one half of any MIP
award is paid in cash and the remaining half in shadow stock. Payment of
the stock portion of MIP awards is made three years following the plan year
for which the award is made. The shadow stock portion of MIP awards is
reflected under the Restricted Stock Awards column of the Summary
Compensation Table.
(b) Other Annual Compensation represents reimbursements for certain taxes
related to the 1997 MIP award and the termination of the supplemental
thrift portion of the Plum Creek Supplemental Benefits Plan in 2000. The
amount for Mr. Grenier includes a perquisite in the amount of $37,583 for a
vehicle provided by the Company.
(c) The amounts under the Restricted Stock Awards column of the Summary
Compensation Table represent the value of shares of shadow stock awarded
under the MIP. Once shares of shadow stock have been credited to a
participant's account, additional shares of shadow stock are credited to
the participant's account with respect to subsequent cash distributions
made by the Company until the shares of shadow stock convert to shares of
common stock. As of December 31, 2000, the following shares of shadow stock
(each share of which converts into one share of common stock) had been
awarded to Messrs. Holley, Grenier, Kraft, Brown and Covey and Ms. Crowe,
respectively, as part of
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their respective MIP awards: 13,338, 9,846, 6,711, 5,359, 4,248 and 1,465.
The market value of the total shares of shadow stock awarded under the MIP
to Messrs. Holley, Grenier, Kraft, Brown and Covey and Ms. Crowe, based on
the closing price of Plum Creek common stock on December 29, 2000 (the last
trading day for fiscal year 2000), was $346,788, $255,996, $174,486,
$139,334, $41,938 and $106,600, respectively.
(d) The amounts under the LTIP Payouts column of the Summary Compensation Table
represent shadow stock earned over a five-year period under the 1994
Long-term incentive plan ("1994 LTIP"). The performance period under the
1994 LTIP ended December 31, 1998, at which time all shares of shadow stock
credited to participants' accounts vested.
(e) Amounts in the All Other Compensation column represent thrift contributions
in the Plum Creek qualified and supplemental Thrift and Profit Sharing
Plans. The supplemental thrift portion of the Supplemental Benefits Plan
was terminated in 2000.
GRANTS OF STOCK OPTIONS IN 2000
The following table sets forth information on stock option grants during
the fiscal year 2000 to the named executive officers. The options set forth in
the table below were granted on May 10, 2000 as part of the recipient's 2000
compensation.
(A) PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS (B)
UNDERLYING GRANTED TO GRANT DATE
OPTIONS EMPLOYEES IN EXERCISE PRICE EXPIRATION PRESENT
NAME GRANTED FISCAL YEAR ($/SHARE) DATE VALUE
---- ---------- ------------ -------------- ---------- ----------
Rick R. Holley.......... 100,000 30.0% $25.625 5/10/10 $293,000
William R. Brown........ 35,000 10.5% $25.625 5/10/10 $102,550
Michael J. Covey........ 30,000 9.0% $25.625 5/10/10 $ 87,900
James A. Kraft.......... 17,500 5.3% $25.625 5/10/10 $ 51,275
Barbara L. Crowe........ 14,500 4.4% $25.625 5/10/10 $ 42,485
Charles P. Grenier...... 35,000 10.5% $25.625 5/10/10 $102,550
- ---------------
(a) Each of the options reflected in this table was granted to the respective
named executive officer under the Stock Incentive Plan. The exercise price
of each option is equal to the fair market value of common stock on the date
of grant. The options have a 10-year term and vest in equal amounts over
four years. Mr. Grenier forfeited all of his stock options upon his
resignation from the Company in August 2000.
Dividend equivalent rights have been granted in tandem with each option
granted to the named executive officer. Under the terms of the Stock
Incentive Plan, dividend equivalent rights represent the right to receive a
payment equal in value to the per-share dividend paid over a five year
period by the Company multiplied by the number of unexercised stock options.
Each year during the five-year performance period, a participant may earn
for each dividend equivalent right an amount equal to the Company's current
year dividend plus prior year unearned dividends if the Company's total
stockholder return, on an annualized basis, equals or exceeds 13% for 15
trading days out of any 30 trading day period in any given year. The total
stockholder return computation consists of the Company's stock price
appreciation plus dividends paid. Payments related to the achievement of any
performance goal will be made at the end of the five-year performance
period, and will be made half in cash and half in Plum Creek common stock.
If a participant terminates employment prior to the end of the five-year
performance period, a cash payment will be made for any performance goals
achieved in connection with vested stock options through the last day of
employment. Payment related to unvested stock options and performance goals
achieved after termination of employment are forfeited.
(b) The value has been calculated using the Black-Scholes stock option valuation
methodology. The applied model used the grant date of May 10, 2000 and an
option price of $25.625. It also assumed a risk-free rate of return of 6.5%,
a dividend yield of 8.4%, and a stock price volatility of 24%. Options have
an exercise
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period of ten years, but the estimated effective option life is
approximately seven years, taking into account the four-year vesting
schedule.
AGGREGATE OPTION EXERCISES IN 2000 AND YEAR-END OPTION VALUES
The following table sets forth information on the exercise of stock options
during fiscal year 2000 by each of the named executive officers and the value of
unexercised options at December 31, 2000.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES VALUE OPTIONS AT FISCAL YEAR-END FISCAL YEAR END
ACQUIRED ON REALIZED --------------------------- ---------------------------
NAME EXERCISE(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
Rick R. Holley....... 100,000 $37,500
William R. Brown..... 35,000 $13,125
Michael J. Covey..... 30,000 $11,250
James A. Kraft....... 17,500 $ 6,563
Barbara L. Crowe..... 14,500 $ 5,438
Charles P. Grenier... 0 $ 0
The value of unexercised stock options is based on the difference between
the exercise price of $25.625 and $26.00, the fair market value of Plum Creek
common stock on December 29, 2000, the last trading day of the fiscal year. Mr.
Grenier forfeited all of his stock options upon his resignation from the Company
in August 2000.
LONG TERM INCENTIVE PLAN AWARDS
Value Management Awards Table
The following table sets forth information about certain value management
incentive awards granted to each of the named executive officers on May 10, 2000
under the Stock Incentive Plan.
NUMBER OF PERFORMANCE PERIOD
NAME UNITS UNTIL MATURATION
---- --------- ------------------
Rick R. Holley...................... 15,800 December 31, 2002
William R. Brown.................... 4,800 December 31, 2002
Michael J. Covey.................... 4,400 December 31, 2002
James A. Kraft...................... 3,500 December 31, 2002
Barbara L. Crowe.................... 3,000 December 31, 2002
Charles P. Grenier.................. 4,800 December 31, 2002
A value management award is an incentive compensation award that is
contingent upon attainment of specified performance goals during a three-year
performance period. These performance goals are determined by the Compensation
Committee of the Board of Directors, and are tied directly to total stockholder
return relative to a peer group of forest product companies selected by the
Compensation Committee. As defined in the Stock Incentive Plan, total
stockholder return is a computation consisting of stock price appreciation (or
depreciation) plus dividends paid, as calculated by the Compensation Committee
in its reasonable discretion. Value management awards are earned in whole or in
part based on a sliding scale. No value management award is earned if the
Company's total stockholder return is below the 50th percentile of the peer
group. Two times the face value of the value management award is earned if the
corporation's total stockholder return is at or above the 75th percentile.
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For each value management award granted to Messrs. Holley, Kraft, Brown and
Covey and Ms. Crowe, the Compensation Committee has specified a $100 per unit
face value and the following performance goals and corresponding award amounts:
TOTAL STOCKHOLDER RETURN VALUE MANAGEMENT AWARD EARNED
------------------------ -----------------------------
At or above the 75th percentile 200% of face value
Between the 50th and 75th percentiles Sliding scale between 0 and 200%
Below the 50th percentile 0% of face value
Upon a determination by the Compensation Committee that the performance
goals have been achieved, appropriate amounts will be credited to each named
executive officer and will earn interest at a market rate selected from time to
time by the Compensation Committee. Unless otherwise determined by the
Compensation Committee, amounts credited to each recipient will be paid out 50%
at the beginning of the 4th year following grant of the award and 50% at the
beginning of the 5th year following grant of the award. Each installment is paid
50% in cash and 50% in Plum Creek common stock.
Mr. Grenier forfeited all of his value management awards upon his
resignation from the Company in August 2000.
PENSION PLAN
Estimated annual benefit levels under the supplemental, non-qualified
pension plan of the Company ("Pension Plan"), based on earnings and years of
credited service at age 65, are as follows:
PENSION PLAN TABLE
YEARS OF CREDITED SERVICE
FINAL AVERAGE ------------------------------------------
EARNINGS 15 20 25 30
- ------------- -------- -------- -------- ---------
$ 100,000 $ 21,990 $ 29,320 $ 36,650 $ 43,980
$ 300,000 $ 69,990 $ 93,320 $116,650 $ 139,980
$ 500,000 $117,990 $157,320 $196,650 $ 235,980
$ 700,000 $165,990 $221,320 $276,650 $ 331,980
$ 900,000 $213,990 $285,320 $356,650 $ 427,980
$1,100,000 $261,990 $349,320 $436,650 $ 593,980
$1,300,000 $309,990 $413,320 $516,650 $ 619,980
$1,500,000 $357,990 $477,320 $596,650 $ 715,980
Benefit accruals under the Pension Plan are based on the gross amount of
salary and incentive bonuses, including bonuses awarded in shares under the MIP
(included in the Restricted Stock Column of the Summary Compensation Table), but
excluding all commissions and other extra or added compensation or benefits of
any kind or nature. Benefit amounts in the table above are shown as a single
life annuity.
The Pension Plan formula for retirement at age 65 is 1.1% of the highest
five-year average earnings, plus 0.5% of the highest five-year average earnings
in excess of one-third of the FICA taxable wage base in effect during the year
of termination, times the number of years of credited service up to a maximum of
30 years. An early retirement supplement equal to 1% of the highest five-year
average earnings up to one-third of the FICA taxable wage base in effect in the
year of termination, times the number of years of credited service up to a
maximum of 30 years, is payable until age 62. Both the basic benefit and the
supplement benefit are reduced by 2% for each year the employee's actual
retirement date precedes the date the employee would have attained age 65, or
the date the employee could have retired after attaining age 60 with 30 years of
credited service, if earlier. In addition, the basic benefit and the
supplemental benefit will be reduced by any previously accrued and distributed
benefits, increased for an assumed interest factor, under the Burlington
Resources Inc. Pension Plan, under which participation was terminated on
December 31, 1992 for the officers of the former General Partner of the Company.
Years of service under the Pension Plan at age 65 for Messrs. Holley, Kraft,
Covey, Grenier, Brown and Ms. Crowe would be 30, 30, 30, 27, 26 and 18
respectively. Years of service under the
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Pension Plan as of December 31, 2000 for Messrs. Holley, Kraft, Covey, Grenier,
Brown and Crowe were 18, 18, 18, 14, 10, and 4, respectively.
RELATED PARTY TRANSACTIONS
On January 1, 2001, the Company, through certain of its subsidiaries,
purchased the voting stock of its unconsolidated subsidiaries from three of its
current officers and one of its former officers. These unconsolidated
subsidiaries were formed in connection with the Company's July 1, 1999
conversion from a master limited partnership to a Delaware corporation electing
to be taxed as a real estate investment trust (a "REIT").
In connection with its REIT conversion, the Company transferred to various
unconsolidated subsidiary corporations substantially all assets and associated
liabilities related to the Company's manufacturing operations and harvesting
activities. The Company had previously sold some of its higher and better use
lands to these entities. Following the transfer and sale, the Company was
entitled to approximately 99% of the economic value of the unconsolidated
subsidiary corporations through a combination of preferred stock and nonvoting
common stock ownership. Certain officers of the Company, in their individual
capacities, purchased the remaining 1% of the economic value and 100% of the
voting control of these unconsolidated subsidiaries at fair market value. Mr.
Holley purchased 34 shares for $646,000, while Messrs. Brown, Covey and Grenier
each purchased 22 shares for $418,000.
In late 1999, Congress amended the Internal Revenue Code (the "Code") to
simplify several of the qualification requirements applicable to REITs,
including the circumstances under which a REIT may own the voting stock of
entities that do not generate qualified REIT income. As a result of this change
in tax law, the Company offered to purchase, and each of the holders agreed to
sell, the voting stock of the unconsolidated subsidiaries for $19,400 per share
(the fair market value), thereby consolidating the equity ownership in these
business entities. Mr. Holley was paid $659,600 for his shares of the voting
stock, while each of Messrs. Brown, Covey and Grenier were paid $426,800 for
their respective shares. Mr. Grenier was no longer an officer of the Company at
the time of the sale of his shares of the voting stock. The fair market value of
the stock was based on a discounted cash flow analysis and approved by a special
committee of the Board comprised of Messrs. Patterson and Davidson.
INDEBTEDNESS OF MANAGEMENT
As discussed above, one former and three current officers of the Company
purchased all of the voting common stock of the Company's corporate subsidiaries
that generate non-REIT-qualified income. The Company's operating partnership
loaned these officers a total of $1.9 million to fund the acquisition of the
voting stock, in individual amounts as follows: $646,000 to Mr. Holley; and
$418,000 to each of Messrs. Brown, Covey and Grenier. The interest rate on each
of these loans was 9% and the shares of voting stock were pledged as collateral
for the loans. Loan payments were required to be made in July of each year, and
the first such payments occurred in July 2000. On January 1, 2001, each of the
individual officers repaid the entire principal and accrued interest amounts of
these loans.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee do not have any compensation
committee interlocks or other insider participation to report.
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COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors, consisting entirely
of non-employee directors, has furnished the following report on executive
compensation:
COMPENSATION PHILOSOPHY
The philosophy of the Company's compensation programs is to enhance the
Company's performance and stockholder value by aligning the financial interests
of the Company's executives and senior managers with those of its stockholders,
while keeping the overall compensation package competitive. This philosophy is
implemented by providing competitive base salaries and linking incentive
compensation to absolute and relative stock performance measures (with relative
performance compared to our peer group). The compensation package for officers
includes a number of components that are designed to align individual
compensation with the short-term and long-term performance of the Company.
The compensation package for each of the officers in 2000 consisted of four
elements: (1) base salary, (2) annual incentive-based bonus (3) long-term
incentive plan and (4) various other benefits.
BASE SALARY
It is the Company's objective to pay base salaries at levels that are
competitive (at or near the median) with those paid to senior executives of
similar companies in the forest products industry. The Company believes that
this is necessary to attract and retain the executive management required to
lead the Company. Salaries are reviewed annually in connection with performance
reviews. Rick R. Holley, President and Chief Executive Officer, reviews the
other executives' performance on an annual basis and makes salary
recommendations to the Compensation Committee. The Compensation Committee
independently reviews these recommendations and approves, with any modifications
it deems appropriate, the annual salary for each executive. In addition to job
performance, industry, peer group and national survey results are also
considered in making salary determinations.
ANNUAL INCENTIVE, STOCK OPTION AND PERFORMANCE BASED PLANS
In 1999 the Compensation Committee recommended, and the Board approved,
adoption of the Plum Creek Annual Incentive Plan (the "AIP") to replace the Plum
Creek Management Incentive Plan (the "MIP"). The AIP is substantially similar to
the MIP, except that awards are paid entirely in cash immediately following the
end of the year. The Board also adopted the Plum Creek 2000 Stock Incentive Plan
(the "Stock Incentive Plan"), which was presented to, and approved by, the
Company's stockholders at the 2000 Annual Meeting. The Stock Incentive Plan
replaced the 1994 Long-term Incentive Plan. The primary reason for these changes
was to ensure the Company's ability to attract and retain key employees.
ANNUAL INCENTIVE COMPENSATION
Each officer was provided an opportunity during fiscal year 2000 to earn an
annual incentive bonus under the AIP based upon the performance of the Company.
The incentive bonus potential for 2000 for each officer other than the CEO was
100% of the officer's base salary and was paid entirely in cash. The AIP bonus
was calculated at year-end based on certain financial, management and strategic
performance goals for the Company established by the Compensation Committee at
the beginning of the fiscal year. The financial goals set for the 2000 fiscal
year were based on operating income and free cash flow (generally defined as
cash flow before dividend payments). At the end of the fiscal year, the
Compensation Committee reviewed the Company's performance against these
pre-established goals, and the results of this review process were used to
determine the AIP bonus amount for each officer. For 2000, the percentage amount
of incentive bonus potential earned by the executive officers ranged from 70% to
72% of each officer's year-end base salary.
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STOCK INCENTIVE PLAN
The Stock Incentive Plan provides for the grant of stock options, dividend
equivalent rights and value management awards. Dividend equivalent rights
represent the right to receive a payment equal in value to the per-share
dividend paid on each share of common stock underlying awarded stock options.
Dividend equivalent rights are earned only if the Company achieves a target
stockholder return on an annualized basis over a five-year performance period.
Value management awards are based upon and tied to the achievement, over a
three-year performance period, of a measure of total stockholder return relative
to that of a selected group of peer companies. Grants of stock options, dividend
equivalent rights and value management awards under the Stock Incentive Plan are
designed to provide short and long-term incentives for executive officers and
senior managers that are directly linked to the enhancement of long-term
stockholder value. Stock options and tandem dividend equivalent rights are
awarded every year, while value management awards are granted every other year.
Because value management awards were granted in May of 2000, none have or will
be granted in 2001.
The Compensation Committee selects the executive officers who will receive
stock options, dividend equivalent rights and value management awards and
determines the number of shares underlying each option. The size of the
individual option grants is generally intended to reflect the officer's position
within the Company and his or her performance and contributions to the Company.
OTHER BENEFITS
Officers participate in the Company's Thrift and Profit Sharing Plan,
medical, dental, life, disability and other miscellaneous benefit programs that
are made available to salaried employees. Officers are provided a vehicle for
their business and personal use and also have the opportunity to participate in
a non-qualified supplemental pension plan entitling them to receive larger
allocations than are permitted by the Code for qualified plans.
CEO COMPENSATION
The Company adheres to the same general compensation principles described
above to determine Mr. Holley's compensation as President and Chief Executive
Officer. Mr. Holley's base salary was set at $520,000 for fiscal year 2000, and
for fiscal year 2001 his base salary was increased by approximately 10.6% to
$575,000. The salary adjustment reflects the Compensation Committee's assessment
of Mr. Holley's performance and the results of competitive compensation surveys
for persons with comparable experience in the forest products industry. For
purposes of this review, the Compensation Committee considers the same surveys
as are used for all officers described above. For 2000, Mr. Holley's potential
AIP incentive bonus was 130% of his base salary. Mr. Holley was awarded an
incentive cash bonus for fiscal 2000 equaling 92% of his base salary, reflecting
the Compensation Committee's assessment of Mr. Holley's performance with respect
to the Company's financial and strategic goals.
LIMITATION ON DEDUCTIBILITY OF CERTAIN COMPENSATION FOR FEDERAL INCOME TAX
PURPOSES
The Code precludes the Company from taking a deduction for compensation in
excess of $1 million for the officers named in the Summary Compensation table.
Certain performance-based compensation is specifically exempt from the deduction
limit. The Company's policy is to qualify, to the extent reasonable, the
compensation of executive officers for deductibility under the Code.
However, the Compensation Committee believes that its primary
responsibility is to provide a compensation program that will attract, retain
and reward the executive talent necessary to further the Company's success.
Consequently, the Compensation Committee recognizes that the loss of a tax
deduction may be necessary in some circumstances. The new Stock Incentive Plan
is designed to qualify as a performance-based plan within the meaning of the
Code so as to preserve the deductibility of compensation.
William E. Oberndorf -- Chairman
Hamid R. Moghadam and William J. Patterson
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COMPANY STOCK PRICE PERFORMANCE
The following graph shows a five-year comparison of cumulative total
stockholder returns for the Company, the Standard & Poor's Midcap 400 Index and
the Standard & Poor's Paper and Forest Product Stock Index for the five years
ending December 31, 2000. The total stockholder return assumes $100 invested at
the beginning of the period in the Company's common stock, the Standard & Poor's
Midcap 400 Index and the Standard & Poor's Paper and Forest Product Stock Index.
It also assumes reinvestment of all dividends.
[PERFORMANCE GRAPH]
TOTAL STOCKHOLDER RETURN FOR THE PREVIOUS 1 YEAR:
- ----------------------------------------------------------------------
12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
- ----------------------------------------------------------------------
Plum Creek Timber 18.07% 24.09% -6.81% 4.37% 14.16%
S&P Paper and Forest
Product Stock Index 10.62% 7.22% 1.98% 39.82% -18.11%
S&P Midcap 400 Index 19.19% 32.25% 19.11% 14.72% 17.49%
- ----------------------------------------------------------------------
INDEXED TOTAL RETURN: STOCK PRICE PLUS REINVESTED DIVIDENDS
- --------------------------------------------------------------------------------------
12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
- --------------------------------------------------------------------------------------
Plum Creek Timber $100.00 $118.07 $146.52 $136.53 $142.51 $162.68
S&P Paper and
Forest Product
Stock Index $100.00 $110.62 $118.61 $120.96 $169.13 $138.50
S&P Midcap 400
Index $100.00 $119.19 $157.63 $187.76 $215.39 $253.08
- --------------------------------------------------------------------------------------
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended (the "Exchange Act") that might incorporate
future filings, including this Proxy Statement, in whole or in part, the
preceding Compensation Committee Report on Executive Compensation and the
preceding Company Stock Price Performance Graph shall not be incorporated by
reference into any such filings; nor shall such Report or Graph be incorporated
by reference into any future filings.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The members of the Board of Directors, the executive officers of the
Company and persons who hold more than 10 percent of the Company's common stock
are subject to the reporting requirements of Section 16(a) of the Exchange Act,
which require them to file reports with respect to their ownership of and
transactions in the Company's securities, and furnish the Company copies of all
such reports they file. Based upon the copies of those reports furnished to the
Company, and written representations that no other reports were required to be
filed, the Company believes that all reporting requirements under Section 16(a)
for the
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fiscal year ended December 31, 2000 were met in a timely manner by its executive
officers, Board members and greater than 10 percent stockholders.
PROPOSAL NO. 2
STOCKHOLDER PROPOSAL
Mr. Bartlett Naylor, 1255 N. Buchanan, Arlington, Virginia 22205, owner of
300 shares of common stock, notified the Company that he intends to present a
proposal at the Annual Meeting. The proponent's proposal and supporting
statement, for which the Company has no responsibility, is set forth below. The
Board of Directors unanimously opposes this proposal.
STOCKHOLDER STATEMENT
"That shareholders urge that the board of directors will solicit
shareholder approval for any "shareholder rights" plan that might be adopted,
and that if this approval is not granted in the form of a majority of shares
voted, then any rights plan be redeemed.
"Supporting Statement: Shareholder rights plans, sometimes called "poison
pills," may be adopted by boards at any time. Our company might redeem a pill,
adopt another, and redeem that one, three separate moves, between the time this
resolution is filed in the fall of 2000, and the time of the 2001 annual meeting
in the spring. Yet I believe shareholders frequently oppose pills when they are
asked in a vote. This resolution merely urges the board to secure shareholder
approval if and when a pill is put in place by the board. The case of Fleming
Companies, Inc. and its unpopular pill should serve as a cautionary tale to any
board that believes its will supplants shareholder interest.
"Broadly, a poison pill compromises management accountability to
shareholders. With Plum Creek, that accountability inevitably involves
environmental issues. Increasingly, many shareholders aim to steer their
companies toward enlightened practices that result in long-term, sustainable
profits.
"Plum Creek confronts numerous serious environmental challenges as our
company's public documents explain. A number of species indigenous to our
timberlands have been listed as threatened or endangered or have been proposed
for this status under the Endangered Species Act.
"In December 1995, we entered into an agreement to conserve grizzly bears
covering 83,000 acres of our timberlands in the Swan Valley in western Montana.
In 1998, the United States Fish and Wildlife Service listed some population
segments of the bull trout as threatened under the Endangered Species Act. Bull
trout are present in numerous streams and rivers which flow across our lands in
Montana, Idaho and Washington. In addition, the red-cockaded woodpecker, listed
as threatened, is found on our lands in Louisiana and Arkansas.
"Our forest practices are and will in the future be subject to specialized
statutes and regulations in the states where we operate, which currently include
Montana, Washington, Idaho, Louisiana, Arkansas and Maine. Among other
requirements, these laws impose some reforestation obligations on the owners of
forest lands.
"Other state laws and regulations control slash burning and harvesting
during fire hazard periods; activities that affect water courses or are in
proximity to inland shore lines; activities that affect water quality, and some
grading and road construction activities.
"As our management navigates these and other operational concerns, it is
vital that they remain attuned to shareholder interests. Management should not
reflexively seek minimal compliance with efforts to protect the environment, but
make sure they are aware of what shareholders want.
"By adopting a policy that any shareholder rights plan would be ratified by
a shareholder vote, our board could demonstrate a commitment to insure the
greatest management care for shareholders."
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THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "AGAINST" THE
ADOPTION OF THIS PROPOSAL FOR THE FOLLOWING REASONS:
COMPANY STATEMENT
At the outset, there are two important points to make regarding this
proposal, both of which are beyond dispute. First, the Company does not have a
stockholder rights plan, has never had a stockholder rights plan, and the Board
of Directors is not currently considering adopting any form of stockholder
rights plan. Second, while this proposal, on its face, relates to stockholder
rights plans, it is, in fact, a proposal that relates to the Company's
environmental policies.
While the Board is not considering adopting any form of stockholder rights
plan, the proposal, if implemented, could limit the Board's ability to implement
such a plan if, in the exercise of its fiduciary obligations, it determined that
doing so was in the stockholders' best interests. Under Delaware law, decisions
relating to stockholder rights plans are appropriately placed within the scope
of responsibility of the Board of Directors acting in its fiduciary capacity on
behalf of the Company's stockholders.
The Board of Directors is similarly required to make decisions relating to
operational matters that include implementing sound environmental policies. The
Company prides itself as a leader in environmentally responsible resource
management. As such, the Company manages its forest resources according to its
own stringent environmental principles and in strict adherence to applicable
laws and regulations. The Company also subscribes to the principles and
objectives of the Sustainable Forestry Initiative(SM) adopted by the American
Forest and Paper Association which sets forth a comprehensive approach to
responsible forest stewardship. These principles are designed to ensure that
forest management is integrated with the conservation of soil, air and water
resources, wildlife and fish habitat, and aesthetics. In 1999, we retained
PricewaterhouseCoopers LLP, an internationally recognized auditing firm, to
independently audit our forest practices against the standards and objectives of
the Sustainable Forestry Initiative(SM). The audit verified that we were in
compliance with the objectives of the Sustainable Forestry Initiative(SM) on our
timberlands in all material respects. The Company is also in the forefront of
the habitat conservation planning movement, with over 1.8 million acres of the
Company's forestlands covered under three separate conservation agreements.
Through all of these initiatives, the Company responsibly manages its
forestlands and creates long-term value for its stockholders.
THE BOARD OF DIRECTORS UNANIMOUSLY OPPOSES THIS PROPOSAL AND RECOMMENDS
THAT YOU VOTE "AGAINST" THE PROPOSAL ON THE ENCLOSED PROXY CARD.
PROPOSAL NO. 3
STOCKHOLDER PROPOSAL
Mr. George Withrow, P.O. Box 1491, Fort Benton, Montana, 59442-1491, owner
of 500 shares of common stock, notified the Company that he intends to present a
proposal at the Annual Meeting. The proponent's proposal and supporting
statement, for which the Company has no responsibility, are set forth below. The
Board of Directors unanimously opposes this proposal.
STOCKHOLDER STATEMENT
"Whereas: The common practice of designing a proxy which automatically,
when signed by the shareowner, grants authority to cast that shareowner's vote
on "such other business as may properly come before the meeting or any
adjournment thereof" is an assumption that is completely unwarranted. Such votes
should be cast according to the best judgement of the shareowner, not that of
the designated corporate representative.
"Resolved: That shareholders direct to the Board of Directors of the
Corporation to delete any such automatic assumption of the shareowners'
prerogatives from all future proxy forms used by the corporation.
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"Supporting Statement: Corporate proxy voting is primarily for the benefit
of the corporation. Few companies would be able to attain a quorum and qualify
to conduct business without it. I appreciate the opportunity to participate in
the important decisions of the corporate board.
"However, I believe the corporate proxy vote should be restricted to those
items specifically authorized by the shareholder.
"The now common practice of assuming that signing the proxy automatically
confers the authority to act on "such other business as may properly come before
the meeting or any adjournment thereof' is, in my opinion, totally unacceptable.
I, at least, have no intention of granting it to persons whom I do not know.
"Presumably this authority is seldom used. That, however, does not justify
usurping the shareholder's rights.
"I have no objection if that request for authority is listed as a regular
item on the proxy so that the shareholder has the power to approve or disapprove
it."
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "AGAINST" THE
ADOPTION OF THIS PROPOSAL FOR THE FOLLOWING REASONS:
COMPANY STATEMENT
The primary purpose for granting discretionary voting authority with
respect to proxies is to ensure that proposals properly brought before a meeting
of stockholders, but not otherwise included in the Company's proxy materials
because they are untimely (commonly referred to as "floor proposals"), can be
acted upon in a prompt fashion. In the absence of this discretionary authority
there will not be, in the vast majority of circumstances, a sufficient number of
shares to approve any such floor proposals.
Under the DGCL, each stockholder of the Company is entitled to participate
at the Company's stockholder meetings by either attending in person or
submitting an executed proxy. However, as is the case with most publicly traded
companies, the overwhelming majority of the Company's stockholders participate
in stockholder meetings by executing a proxy, while a very small percentage of
stockholders attend meetings in person.
To act on any proposal presented at a meeting for a stockholder vote, the
DGCL and the Company's By-laws require that a quorum be present. A quorum
consists of a majority of the outstanding shares of the Company's voting stock.
Once a quorum is established, the Company's by-laws require the affirmative vote
of a majority of the shares represented and entitled to vote at the meeting for
approval of most matters. This means that approval under most circumstances
requires that a majority of the shares represented in person and by proxy at the
stockholder meeting vote in favor of the proposal.
Thus, without discretionary proxy authority, standard voting requirements
would make it extraordinarily difficult to ever obtain stockholder approval for
any floor proposal submitted at a stockholder meeting. Without proxy authority,
only the very small percentage of shares held by stockholders physically present
at the meeting would have an opportunity to vote on any such floor proposal. But
because the vast majority of the Company's stockholders do not attend
stockholder meetings in person, even the affirmative vote of every share present
in person at a meeting would still, in most cases, not be enough to approve or
otherwise act upon a floor proposal. Any proxy authority conferred in connection
with floor proposals must be discretionary because the content of such proposals
are usually unknown at the time that proxy materials are delivered to
stockholders. Only with discretionary proxy authority can the designated
proxies, in the exercise of their fiduciary obligations, use their best judgment
and decide how to vote on any particular floor proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY OPPOSES THIS PROPOSAL AND RECOMMENDS
THAT YOU VOTE "AGAINST" THE PROPOSAL ON THE ENCLOSED PROXY CARD.
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OUTSTANDING CAPITAL STOCK
The common stock and the special voting stock of the Company are its only
classes of voting capital stock. The Company's common stock is traded on the New
York Stock Exchange and the Pacific Exchange. The record date for stockholders
entitled to vote at the meeting is the close of business on March 15, 2001. At
the close of business on that date, the Company had issued and outstanding
634,566 shares of special voting stock, convertible into common stock, and
68,572,009 shares of common stock, $.01 par value. The closing price of the
Company's common stock on that date was $24.50.
INDEPENDENT AUDITORS
The Board has selected the accounting firm of PricewaterhouseCoopers LLP to
continue to serve as the Company's independent auditors for the fiscal year
ending December 31, 2001. A representative of PricewaterhouseCoopers LLP is
expected to attend the Annual Meeting and will be available to respond to
appropriate questions and have the opportunity to make a statement if he or she
desires to do so.
PricewaterhouseCoopers LLP billed the Company for the following services
during the year ended December 31, 2000:
Audit Fees............................................... $ 287,164
Financial Information Systems
Design and Implementation Fees......................... --
All Other Fees........................................... 1,118,052
----------
Total Fees............................................... $1,405,216
==========
Audit services provided by PricewaterhouseCoopers LLP in fiscal year 2000
included the examination of the Company's consolidated financial statements for
the year ended December 31, 2000 and the review of quarterly and annual filings
with the Securities and Exchange Commission. The Audit and Compliance Committee
of the Board approved the audit services provided to the Company by
PricewaterhouseCoopers LLP prior to such services being rendered. Other specific
services, including tax and financial reporting consulting in connection with
the Company's pending merger with The Timber Company and tax compliance, were
approved by the Audit and Compliance Committee after a determination that none
of such services would affect PricewaterhouseCoopers LLP's independence as
auditors of the Company's financial statements.
STOCKHOLDER PROPOSALS
The Company anticipates that the next Annual Meeting of Stockholders will
be held in May of 2002. Any stockholder of record who desires to submit a
proposal for inclusion in the proxy material related to the next Annual Meeting
of Stockholders must do so in writing and it must be received at the Company's
principal executive offices on or before November 27, 2001. The proposals must
comply with the requirements of Rule 14a-8 under the Exchange Act.
If a stockholder intends to present a proposal at the 2002 Annual Meeting
of stockholders that is not included in the Company's proxy statement, and the
stockholder fails to properly notify the Company of such proposal in writing
between February 7, 2002 and March 9, 2002, then such proposals shall be
considered untimely. Article II, Section 5 of the Company's bylaws governs
submission of matters for presentation at stockholder meetings.
ANNUAL REPORT
This Proxy Statement has been preceded or accompanied by the Annual Report
for the fiscal year ended December 31, 2000. Stockholders are referred to such
report for financial and other information about the activities of the Company.
Except for those pages specifically incorporated in this Proxy Statement, such
report is not to be deemed a part of the proxy soliciting material.
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FORM 10-K
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM A COPY OF
THIS PROXY STATEMENT IS DELIVERED, ON THE WRITTEN REQUEST OF ANY SUCH PERSON, A
COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION (NOT INCLUDING EXHIBITS TO THE FORM 10-K). WRITTEN REQUESTS
FOR SUCH COPIES SHOULD BE DIRECTED TO PLUM CREEK TIMBER COMPANY, INC., INVESTOR
RELATIONS, 999 THIRD AVENUE, SUITE 2300, SEATTLE, WASHINGTON, 98104-4096.
INCORPORATION BY REFERENCE
According to the provisions of Schedule 14A under the Exchange Act, the
following document or portion thereof is incorporated by reference: "Executive
Officers of the Registrant" from Part I of the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 2000.
OTHER MATTERS
In the event that any matter not described herein may properly come before
the meeting, or any adjournment thereof, the persons named in the form of proxy
will vote in accordance with their best judgment. At the time this proxy
statement went to press, the Company knew of no other matters that might be
presented for stockholder action at the meeting.
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APPENDIX A
PLUM CREEK TIMBER COMPANY, INC.
AUDIT COMMITTEE CHARTER
Primary Purpose
To ensure that the Board of Directors has direct contact with the
independent auditor, the internal auditor and the financial management of the
company in order to assist the Board in the discharge of its fiduciary
obligations to the shareholders.
Structure
The Audit Committee will be composed of at least three (3) "independent"
directors, as that term is defined in Rule 303.01 of the New York Stock
Exchange's Listed Company Manual. Each member of the Committee shall be
"financially literate," as such qualification is interpreted by the Board of
Directors in its business judgment, and at least one member of the Committee
must have accounting or related financial management expertise, as such
qualification is interpreted by the Board of Directors in its business judgment.
Scope
1. Nominate and recommend to the Board the independent auditor.
2. Review the scope of the proposed financial audit to be performed and how
effective the scope relates to the company's special problem areas.
3. Review the results of the financial audit with the independent auditor,
as well as discuss the financial statements.
4. Review the adequacy of the internal financial and operational controls
of the company with both the staff performing internal auditing and the
independent auditor, and keep the Board informed of its findings.
5. Review the Environmental Management Program and other compliance
programs of the company.
6. Investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel for this purpose if, in
its judgment, that is appropriate.
General Guidelines
1. Meetings: The Committee should meet on a regular basis and special
meetings should be called as circumstances require. The Committee should
meet privately with management and the independent auditor. Written
minutes should be kept for all such meetings.
2. Reporting to the Board: The Committee should report its activities to
the full Board on a regular basis so that the Board is kept informed of
its activities on a current basis.
3. Audit Plans: The Committee should review with the internal auditor and
the independent auditor their annual financial audit plans, including
the degree of coordination of the respective plans. The Committee should
review with management and the independent auditor all environmental
audit plans.
4. Internal Controls: The Committee should discuss with the internal audit
staff and independent auditor the adequacy of the company's internal
controls, including computerized information system controls and
security.
5. Accounting Issues and Contingencies: The Committee should inquire of
both management and the independent auditor about significant accounting
issues (e.g., accounting standards or rules proposed
A-1
25
by FASB or the SEC); the Committee should also inquire about significant
contingencies (e.g., workers' compensation reserves).
6. Risk Assessment: The Committee should inquire of management, the
internal auditor and the independent auditor about significant risks or
exposures and assess the steps management has taken to minimize such
risks to the company.
7. SEC Filings: The Committee should review all filings with the SEC which
contain the company's financial statements.
8. Audit Committee Charter: The Committee shall review and reassess the
adequacy of this Charter annually.
Independent Auditor Oversight
The independent auditor shall be ultimately accountable to the Board of
Directors and to the Audit Committee. The Audit Committee and Board of Directors
shall have the ultimate authority and responsibility to nominate and select,
and, where appropriate, replace the independent auditor. In nominating and
selecting the independent auditor, the Committee should consider the following
guidelines:
1. Opinions on the performance of the independent auditor by appropriate
management personnel.
2. The proposed audit fee and explanation of fee changes.
3. The professional competency of the firm through inquiry about its latest
peer review and any significant litigation problems or disciplinary
actions by the SEC or others.
4. The Committee shall ensure that the independent auditor submits on a
periodic basis to the Committee a formal written statement delineating
all relationships between the independent auditor and the company. The
Committee shall thoroughly discuss with the independent auditor any
disclosed relationships or services that may impact the objectivity and
independence of the outside auditor and shall recommend to the Board
appropriate action in response to the independent auditor's report to
satisfy itself of the independent auditor's independence.
Pre-Audit and Post-Audit Review Guidelines
1. The Committee should receive and review a draft of the financial section
of the annual report to shareholders, complete with footnotes, and the
Management's Discussion and Analysis (MD&A) section which should be
consistent with other sections of the annual report.
2. The Committee should request an explanation from management and the
independent auditor about the effect of significant changes in
accounting practices or policies.
3. The Committee should inquire of management and the independent auditor
if there were any significant financial reporting issues discussed
during the current audit and, if so, how they were resolved.
4. The Committee should review, with management and the independent
auditor, proposed accounting standards or rules proposed by FASB or the
SEC that will have a significant effect on the company's financial
statements.
5. The Committee should meet privately with the independent auditor to
determine the quality of the financial and accounting personnel and
internal audit staff.
6. The Committee should request a letter from the independent auditor
concerning any significant weaknesses or breaches in internal control
discovered during their audit.
7. The Committee should discuss with management and the independent auditor
the substance of any significant issues raised by outside counsel
concerning litigation, contingencies or other claims, and how such
matters affect the company's financial statements.
A-2
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DETACH HERE
PROXY
PLUM CREEK TIMBER COMPANY, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
THE 2001 ANNUAL MEETING OF STOCKHOLDERS, MAY 8, 2001
The undersigned acknowledges receipt of (a) Notice of 2001 Annual Meeting
of the Stockholders of Plum Creek Timber Company, Inc. (the "Company"), (b)
accompanying Proxy Statement, and (c) Annual Report of the Company for its
fiscal year ended December 31, 2000. Rick R. Holley, William R. Brown and James
A. Kraft, or any one of them, with power of substitution and revocation, are
hereby appointed Proxies of the undersigned to vote all stock of the Company
which the undersigned is entitled to vote at the 2001 Annual Meeting of
Stockholders to be held at the Washington Athletic Club, located at 1325 Sixth
Avenue, Seattle, Washington, on May 8, 2001, or any adjournment thereof, with
all powers which the undersigned would possess if personally present, upon such
business as may properly come before the meeting or any adjournment thereof.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEM 1 AND SHARES WILL
BE SO VOTED UNLESS OTHERWISE DIRECTED.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" EACH OF ITEM 2 AND
ITEM 3, AND SHARES WILL BE SO VOTED UNLESS OTHERWISE DIRECTED.
YOU MAY ALSO VOTE VIA TELEPHONE OR INTERNET. SEE INSTRUCTIONS ON THE REVERSE
SIDE.
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
27
VOTE BY TELEPHONE
It's fast, convenient, and immediate!
Call Toll-Free on a Touch-Tone Phone
1-877-PRX-VOTE (1-877-779-8683).
FOLLOW THESE FOUR EASY STEPS:
1. READ THE ACCOMPANYING PROXY STATEMENT AND
PROXY CARD.
2. CALL THE TOLL-FREE NUMBER
1-877-PRX-VOTE (1-877-779-8683).
3. ENTER YOUR 14-DIGIT VOTER CONTROL NUMBER
LOCATED ON YOUR PROXY CARD ABOVE YOUR NAME.
4. FOLLOW THE RECORDED INSTRUCTIONS.
YOUR VOTE IS IMPORTANT!
Call 1-877-PRX-VOTE anytime!
VOTE BY INTERNET
It's fast, convenient, and your vote is immediately
confirmed and posted.
FOLLOW THESE FOUR EASY STEPS:
1. READ THE ACCOMPANYING PROXY STATEMENT AND
PROXY CARD.
2. GO TO THE WEBSITE
http://www.eproxyvote.com/pcl
3. ENTER YOUR 14-DIGIT VOTER CONTROL NUMBER
LOCATED ON YOUR PROXY CARD ABOVE YOUR NAME.
4. FOLLOW THE INSTRUCTIONS PROVIDED.
YOUR VOTE IS IMPORTANT!
Go to http://www.eproxyvote.com/pcl anytime!
DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR INTERNET
DETACH HERE
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED "FOR" PROPOSAL NO. 1 AND "AGAINST" EACH OF PROPOSAL NO. 2 AND PROPOSAL
NO. 3.
1. ELECTION OF DIRECTORS.
NOMINEES: (01) David D. Leland, (02) John G. McDonald,
and (03) William E. Oberndorf.
FOR [ ] WITHHELD [ ]
[ ]
------------------------------------------------------------
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided above).
2. Stockholder Proposal regarding Stockholder Rights Plans.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Stockholder Proposal regarding discretionary voting of proxies for matters
not included in the Company's proxy materials.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
In their discretion the Proxies are authorized to vote on such other matters as
may properly come before the Annual Meeting or any adjournment thereof.
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS. IF ACTING AS ATTORNEY, EXECUTOR,
TRUSTEE, OR IN REPRESENTATIVE CAPACITY, SIGN NAME AND TITLE.
Signature: Date: Signature: Date:
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