-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LCX7tNcn5Aw2eW2RkFSUu0F9bhEdZYs635UqbXrGj0qyHT4A1pdoeLbfOifI31FA 3Wzc7AzL3tY/tVfFqXjdMw== 0000950131-00-001641.txt : 20000309 0000950131-00-001641.hdr.sgml : 20000309 ACCESSION NUMBER: 0000950131-00-001641 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000427 FILED AS OF DATE: 20000308 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEAD CORP CENTRAL INDEX KEY: 0000064394 STANDARD INDUSTRIAL CLASSIFICATION: PAPERBOARD MILLS [2631] IRS NUMBER: 310535759 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 001-02267 FILM NUMBER: 563413 BUSINESS ADDRESS: STREET 1: MEAD WORLD HEADQUARTERS STREET 2: COURTHOUSE PLZ NORTHEAST CITY: DAYTON STATE: OH ZIP: 45463 BUSINESS PHONE: 9374954439 DEF 14A 1 NOTICE AND PROXY STATEMENT =============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 14A Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant [X] Filed by a Party other than the Registrant [_] Check the appropriate box: [_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14A-6(E)(2)) [X] Definitive Proxy Statement [_] Definitive Additional Materials [_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12 Mead Corporation - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies: ------------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: ------------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): ------------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: ------------------------------------------------------------------------- (5) Total fee paid: ------------------------------------------------------------------------- [_] Fee paid previously with preliminary materials. [_] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: ------------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: ------------------------------------------------------------------------- (3) Filing Party: ------------------------------------------------------------------------- (4) Date Filed: ------------------------------------------------------------------------- Notes: [LOGO OF MEAD] The Mead Corporation Mead World Headquarters Courthouse Plaza Northeast Dayton, Ohio 45463 March 8, 2000 To the Holders of Common Shares: The Annual Meeting of Shareholders of The Mead Corporation will be held at the Frederick C. Smith Auditorium, Building 12, Sinclair Community College, 444 West Third Street, Dayton, Ohio, on Thursday, April 27, 2000 at 11:00 a.m. Formal Notice of the Meeting and Proxy Statement accompany this letter. Promptly signing and returning your proxy or voting your proxy by telephone will assure the presence of a quorum at the meeting and minimize the cost of the proxy solicitation. A postage paid envelope is enclosed for your convenience in replying. Very truly yours, /s/ Jerry Jerome F. Tatar Chairman of the Board [LOGO OF MEAD] Notice of Annual Meeting of Shareholders The Mead Corporation Dayton, Ohio Mead World Headquarters March 8, 2000 Courthouse Plaza Northeast Dayton, Ohio 45463 To the Holders of Common Shares of THE MEAD CORPORATION NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of The Mead Corporation will be held at the Frederick C. Smith Auditorium, Building 12, Sinclair Community College, 444 West Third Street, Dayton, Ohio, on Thursday, April 27, 2000 at 11:00 a.m., for the following purposes: 1. To elect twelve directors for a term of one year; 2. To transact such other business as may properly come before the meeting or any adjournment. The close of business on March 1, 2000 has been fixed as the record date for the determination of the shareholders entitled to notice and vote at the Annual Meeting and any adjournment. The stock transfer books will not be closed. Please complete, sign, date and return the enclosed proxy or vote your proxy by telephone promptly so that we may have the fullest expression possible of the wishes of the shareholders. By order of the Board of Directors Sue K. McDonnell Secretary [LOGO OF MEAD] Proxy Statement For 2000 Annual Meeting The Mead Corporation Mead World Headquarters Courthouse Plaza Northeast Dayton, Ohio 45463 March 8, 2000 This Proxy Statement is furnished in connection with the solicitation by the Board of Directors of The Mead Corporation ("Mead") of proxies to be used at the Annual Meeting of Shareholders to be held on April 27, 2000 and any adjournment. The close of business on March 1, 2000 was fixed as the record date for the determination of the holders of Common Shares entitled to notice and vote. There were outstanding on the record date 102,791,099 Common Shares. The holders of Common Shares are entitled to one vote per share upon all matters described in the Notice of the Annual Meeting. A shareholder signing and returning a proxy or voting a proxy by telephone has the power to revoke the proxy at any time prior to its exercise by giving notice to Mead in writing or in open meeting, but without affecting any vote previously taken. Beneficial owners who hold their shares in street name may not be able to revoke their proxies in person at the Annual Meeting because the shareholders of record who have the right to cast the vote may not be present. An owner should contact their broker or other agent before the Annual Meeting if beneficial owners wish to change their proxy after returning voting instructions. Unless revoked, the shares represented by the proxy will be voted as stated in the proxy. Election of Directors Mead's Regulations provide for the annual election of directors. At the 2000 Annual Meeting, the terms of John G. Breen, Duane E. Collins, William E. Hoglund, James G. Kaiser, Robert J. Kohlhepp, John A. Krol, Susan J. Kropf, Charles S. Mechem, Jr., Heidi G. Miller, Lee J. Styslinger, Jr., Jerome F. Tatar and J. Lawrence Wilson expire, and in accordance with a recommendation of the Board of Directors and its Nominating & Organization Committee, each of them will stand for re-election to a new one-year term expiring at the Annual Meeting in 2001. John C. Bogle, a member of the Board of Directors for 22 years, has reached retirement age for members of the Board and will retire from the Board on the date of the Annual Meeting. The business experience and other information concerning the nominees for director are described on pages 3 through 6. Directors are elected by a plurality of the votes cast. Abstentions and nonvotes are not considered. It is the intention of the persons named in the accompanying form of proxy, unless authorization to do so is withheld, to vote for the election of the twelve nominees and on such other business as may properly come before the meeting or any adjournment. The holders of the proxies may, in their discretion, vote for a substitute nominee(s) designated by the directors in the event that any nominee becomes unable to serve for any reason presently unknown. Under Ohio law, if a shareholder gives written notice to the President, a Vice President or the Secretary, not less than 48 hours before the time fixed for the Annual Meeting, that the shareholder wants the voting at the election of directors to be cumulative, and if an announcement of the giving of the notice is made upon the convening of the meeting by or on behalf of the shareholder giving the notice, then the directors will be elected by cumulative voting. In such event, each shareholder has the right to give one candidate a number of votes equal to the number of directors then being elected multiplied by the number of the shareholder's shares, or to distribute the shareholder's votes on the same principle among two or more candidates. In the event of cumulative voting for directors, unless otherwise indicated by the shareholder, a vote for the nominees of the Board of Directors will give the proxyholders discretionary authority to cumulate all votes to which the shareholder is entitled and to allocate them in favor of any one or more of the nominees as the persons named in the enclosed proxy determine. If a shareholder desires specifically to allocate votes among one or more nominees, the shareholder should specify the desire on the form of proxy or through direction by telephone. 2 - -------------------------------------------------------------------------------- Nominees for Director for a one-year term expiring in 2001 - -------------------------------------------------------------------------------- John G. Breen Mr. Breen is Chairman and a Director of The Sherwin- Williams Company. He was also Chief Executive Officer from 1979 through October 1999. Age: 65 Director Since: 1986 Committees: Compensation, Corporate Objectives, Executive, Finance, Nominating & Organization Other Directorships: National City Corporation, Parker-Hannifin Corporation and The Goodyear Tire & Rubber Company Duane E. Collins Mr. Collins is Chairman, Chief Executive Officer and a Director of Parker Hannifin Corporation. Age: 63 Director Since: 1999 Committees: Audit, Corporate Objectives, Corporate Responsibility, Nominating & Organization Other Directorships: National City Corporation and Sherwin-Williams Company William E. Hoglund Mr. Hoglund retired as Director and Executive Vice President, Corporate Affairs and Staff Support Group of General Motors Corporation in 1995. Age: 65 Director Since: 1993 Committees: Corporate Objectives, Corporate Responsibility, Executive, Finance, Nominating & Organization Other Directorships: Detroit Diesel Corporation and Capital Automotive REIT 3 - -------------------------------------------------------------------------------- Nominees for Director for a one-year term expiring in 2001 - -------------------------------------------------------------------------------- James G. Kaiser Mr. Kaiser is Chairman, Chief Executive Officer and a Director of Avenir Partners, Inc. Prior to that, he was President and Chief Executive Officer of Quanterra Incorporated from 1990 to 1996. Age: 57 Director Since: 1995 Committees: Corporate Objectives, Corporate Responsibility, Finance, Nominating & Organization Other Directorships: The Stanley Works, Sunoco, Inc. and Kaiser Services L.L.C. Robert J. Kohlhepp Mr. Kohlhepp is a Director of Cintas Corporation and has been Chief Executive Officer since 1995. Age: 56 Director Since: 1998 Committees: Audit, Corporate Objectives, Corporate Responsibility, Nominating & Organization John A. Krol Mr. Krol retired as Director and Chairman of E.I. du Pont de Nemours and Company in December 1998. He was Chief Executive Officer from 1995 through January 1998. Prior to that, he was Vice Chairman from April 1992 through September 1995. He was also President from 1995 through October 1997. Age: 63 Director Since: 1994 Committees: Corporate Objectives, Corporate Responsibility, Executive, Finance, Nominating & Organization Other Directorships: Armstrong World Industries, Inc., J. P. Morgan and Milliken & Company Inc. 4 - -------------------------------------------------------------------------------- Nominees for Director for a one-year term expiring in 2001 - -------------------------------------------------------------------------------- Susan J. Kropf Ms. Kropf is a Director of Avon Products, Inc. since March 1998 and is Chief Operating Officer of North America and Global Business Operations since December 1999. Prior to that, she was Executive Vice President and President, North America since March 1998. Prior to that, she was Executive Vice President and President, Avon U.S., since March 1997. Prior to that, she was Senior Vice President of Avon Products, Inc. and President, New and Emerging Markets since July 1996. Prior to that, she was Senior Vice President - Global Product and Business Development from 1994 to July 1996. Age: 51 Director Since: 1996 Committees: Audit, Compensation, Corporate Objectives, Nominating & Organization Other Directorships: Green Point Financial Corporation Charles S. Mechem, Jr. Mr. Mechem is Chairman and a Director of Convergys Corporation. Prior to that, he was Chairman of Cincinnati Bell Inc. from 1996 through 1998. Prior to that, he was Commissioner of the LPGA from 1991 through 1995. He was also Chairman of United States Shoe Corporation from April 1993 through May 1995. Age: 69 Director Since: 1976 Committees: Compensation, Corporate Objectives, Executive, Finance, Nominating & Organization Other Directorships: Ohio National Life Insurance Company, J.M. Smucker Company, The Arnold Palmer Golf Company and Myers Y. Cooper Company Heidi G. Miller Ms. Miller is Senior Executive Vice President, Chief Financial Officer and a Director of Priceline.com since February, 1999. Prior to that, she was Executive Vice President and Chief Financial Officer of Citigroup, Inc. from 1998 to February 1999. Prior to that, she was Executive Vice President and Chief Financial Officer of Travelers Group from 1994 to 1998. Age: 46 Director Since: 1999 Committees: Compensation, Corporate Objectives, Finance, Nominating & Organization Other Directorships: General Mills 5 - -------------------------------------------------------------------------------- Nominees for Director for a one-year term expiring in 2001 - -------------------------------------------------------------------------------- Lee J. Styslinger, Jr. Mr. Styslinger is Chairman and a Director of ALTEC Industries, Inc. Age: 66 Director Since: 1992 Committees: Audit, Compensation, Corporate Objectives, Executive, Nominating & Organization Other Directorships: Global Rental Company, Jemison Investment Company and Regions Financial Corporation Jerome F. Tatar Mr. Tatar is Chairman, President and Chief Executive Officer of Mead. Prior to November 1997, he was President and Chief Operating Officer. Prior to April 1996, he served as Vice President - Operating Officer. Age: 53 Director Since: 1996 Committee: Executive Other Directorships: Robbins & Myers, Inc. and National City Corporation J. Lawrence Wilson Mr. Wilson retired as Director, Chairman of the Board and Chief Executive Officer of Rohm and Haas Company in 1999. Age: 64 Director Since: 1997 Committees: Audit, Compensation, Corporate Objectives, Nominating & Organization Other Directorships: Cummins Engine Company, The Vanguard Group of Mutual Funds and AmeriSource Health Corporation 6 Certain Information Concerning the Board of Directors There were eight meetings of the Board of Directors during 1999. The seven standing committees of the Board and the number of meetings of each committee during 1999 follow: Number of Committee Meetings --------- --------- Audit 3 Compensation 3 Corporate Objectives 3 Corporate Responsibility 2 Executive 0 Finance 2 Nominating & Organization 2 The Chairman of the Board and Chief Executive Officer serves as an ex-officio, nonvoting member of all standing committees, other than the Executive Committee. Duties and Members Each standing committee of the Board of Directors is composed of directors who are not employed by Mead, except the Executive Committee. The duties of each committee and the membership following the Annual Meeting are as follows: The Audit Committee recommends annually to the Board for its approval the engagement of the independent certified public accountants, verifies and assures their independence, reviews the professional services they provide, reviews the fees charged for audit and non-audit services, reviews the broad scope of the internal and external audit programs, and reviews with the independent certified public accountants, at the completion of their audit, Mead's financial statements and matters relating to the audit. Members: Styslinger (chair), Collins, Kohlhepp, Kropf, Wilson - ------- The Compensation Committee is charged with the broad responsibility for assuring that officers and key management personnel are effectively compensated in terms which are internally equitable and externally competitive. The Committee authorizes the compensation of officers and senior management and recommends to the Board the compensation of the Chairman of the Board and the President and reviews the salaries of other key executives, reviews executive compensation policies and recommends modifications in existing retirement or benefit plans. The Committee also approves grants under and administers Mead's stock option and restricted stock plans. Members: Breen (chair), Kropf, Mechem, Miller, Styslinger - ------- 7 The Corporate Objectives Committee is charged with reviewing Mead's objectives and strategies and evaluating management's recommendations for long-term growth and profitability. The Committee also makes recommendations to the full Board with regard to specific proposals by management of major strategic importance, including acquisitions. The Committee monitors growth programs to measure progress and reviews the potential impact of economic and technological trends on operations. Members: Hoglund (chair), Breen, Collins, Kaiser, Kohlhepp, Krol, Kropf, Mechem, - ------- Miller, Styslinger, Wilson The Corporate Responsibility Committee is charged with questioning and evaluating Mead's plans and responses relating to changing needs and concerns of those major constituencies (both internal and external) which can be expected to judge Mead's behavior and social performance. Members: Krol (chair), Collins, Hoglund, Kaiser, Kohlhepp - ------- The Executive Committee is empowered under Ohio law to exercise the full authority of the Board, except as to matters not delegable. However, in practice, there are no scheduled meetings of this Committee and such powers would be exercised only in special situations. Members: Tatar (chair), Mechem (vice chair), Breen, Hoglund, Krol, Styslinger, - ------- Wilson The Finance Committee is charged with overseeing Mead's financial affairs and recommending those financial actions and policies that are most appropriate to accommodate Mead's strategic and operating strategies while maintaining a sound financial condition. The Committee reviews programs designed to inform, maintain and improve shareholder and financial community relations. Members: Wilson (chair), Breen, Hoglund, Kaiser, Krol, Mechem, Miller - ------- The Nominating & Organization Committee has as its principal concerns the nomination of candidates to the Board, the development of criteria and evaluation of the performance of the Chief Executive Officer, organizational development, and review of shareholder proposals and suggestions. The Committee also furnishes its evaluation of the Chief Executive Officer to the Compensation Committee and reviews the compensation set by the Compensation Committee to ensure it appropriately relates to shareholder value. Members: Mechem (chair), Breen, Collins, Hoglund, Kaiser, Kohlhepp, Krol, Kropf, - ------- Miller, Styslinger, Wilson Mead's Regulations require nominations for the Board from any shareholder to be delivered not less than 50 nor more than 75 days prior to the meeting of the shareholders to which the nomination relates, and to contain specified information about the nominee and the shareholder making the nomination. In addition to any nominations made under Mead's Regulations, the Nominating & Organization Committee will consider other suggestions for nominations to the Board as may be offered by shareholders. Such suggestions for nominations should be submitted 8 to Sue K. McDonnell, Secretary. Directors are selected on the basis of recognized achievements and their ability to bring essential skills and experience to the deliberations of the Board. Directors who were not employees in 1999 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. Directors who are Mead employees are not compensated for their services as directors. In 1999 each director, other than Mr. Styslinger, attended 75% or more of the Board and committee meetings. Mr. Styslinger attended 74% of the meetings. Mead has a deferred compensation plan for non-employee directors by which receipt of compensation for Board service, together with a credited return thereon, may be deferred until after termination of service. Non-employee directors received restricted shares from Mead in 1999. The 1987 Restricted Stock Plan was amended in 1996 by shareholders to provide for annual grants of Common Shares determined by formula. The automatic annual grant to non-employee directors as of January 1, 1999 equaled $13,105.99. Non-employee directors first elected after January 1 during 1999 received an automatic annual grant which equaled $13,092.19. The Plan also permits directors under certain conditions to defer a portion of their cash retainer in the form of restricted shares. Non-employee directors received stock options from Mead in 1999. The 1996 Stock Option Plan approved by shareholders provides for automatic grants of non-qualified options to non-employee directors calculated by a formula. Each non-employee director as of January 3, 1999 received a grant of options to purchase 680 shares for an aggregate exercise price of $19,550 (the market value on the date of grant). Non-employee directors first elected after January 3 during 1999 received a grant of options to purchase 600 shares for an aggregate exercise price of $24,937.50 (the market value on the date of grant). Securities Ownership Set forth in the following table is information as of January 25, 2000 with respect to the number of Common Shares beneficially owned by each director, each of the named executive officers, and by all directors and executive officers as a group. A person is considered to "beneficially own" any shares: (i) over which the person exercises sole or shared voting or investment power, or (ii) of which the person has the right to acquire beneficial ownership at any time within 60 days (e.g., through the exercise of stock options). 9 Unless otherwise indicated, voting and investment power is exercised solely by the beneficial owner or is shared with the owner's spouse or children. Ownership of Mead Common Shares ------------------------------- as of January 25, 2000/(1)/
Number of Shares Owned Including Number of Option Shares Option Shares Which May Which May Name of be Acquired be Acquired Beneficial Owner Within 60 Days/(1)/ Within 60 Days/(2)/ ---------------- ------------------- ------------------- John C. Bogle............................................ 12,130 2,560 John G. Breen............................................ 12,130 2,560 Duane E. Collins......................................... 2,630 -0- William E. Hoglund....................................... 10,182 2,560 James G. Kaiser.......................................... 6,666 2,560 Elias M. Karter.......................................... 291,723 254,096 Robert J. Kohlhepp....................................... 3,413 1,280 John A. Krol............................................. 6,759 2,560 Susan J. Kropf........................................... 6,796 2,560 Raymond W. Lane.......................................... 288,348 252,722 Charles S. Mechem, Jr.................................... 15,258 2,560 Heidi G. Miller.......................................... 2,069 -0- Wallace O. Nugent........................................ 206,468 169,900 A. Robert Rosenberger.................................... 73,682 70,300 Lee J. Styslinger, Jr.................................... 47,870 2,560 Jerome F. Tatar.......................................... 641,322 584,858 J. Lawrence Wilson....................................... 6,884 1,940 _____________________ All directors, nominees and executive officers as a group (21 persons).................................... 1,935,963 1,632,632
____________________ (1) Includes shares granted under Mead's Restricted Stock Plan, Dividend Reinvestment Plan and shares held in the named executive's common stock account as of December 31, 1999 in the Mead 401(k) Plan. The named executives may vote and direct the disposition of shares in their account, except with respect to disposition to the extent shares constitute Mead matching shares. (2) Amounts are included in the column entitled "Number Beneficially Owned Including Option Shares Which May be Acquired Within 60 Days". 10 As of January 25, 2000, the number of shares beneficially owned (excluding option shares which may be acquired within 60 days) (i) by the directors and executive officers as a group was less than 1% of outstanding, and (ii) by all directors and executive officers individually was less than 1% of outstanding. The following table describes certain information with respect to persons known to Mead to be beneficial owners of more than five percent of the outstanding Common Shares:
Percent of Common Number of Common Shares Shares Outstanding Name and Address of Beneficial Owners Beneficially Owned as of Recent Date - ------------------------------------- ----------------------- ------------------ Sanford C. Bernstein & Co., Inc. 8,680,103/(1)/ 8.50% 767 Fifth Avenue, New York, New York 10153 The Prudential Insurance Company of America 751 Broad Street, Newark, New Jersey 07102-3777 7,249,585/(2)/ 7.06% Morgan Stanley Dean Witter & Co. 1585 Broadway, New York, New York 10036 6,600,260/(3)/ 6.43%
(1) Source: Schedule 13G dated February 8, 2000, filed by beneficial owner with the SEC. (2) Source: Schedule 13G dated January 31, 2000, filed by beneficial owner with the SEC. (3) Source: Schedule 13G dated February 4, 2000, filed by beneficial owner with the SEC. Report of Compensation Committee on Executive Compensation The Compensation Committee is currently comprised of six Directors of the Board who are not employees of the company. This Committee is responsible for setting competitive compensation structures and approving payout levels for officers and senior management. Mr. Tatar, Chairman of the Board, President and Chief Executive Officer, serves as an ex-officio, nonvoting member of the Board's standing committees, including the Compensation Committee. He was not present during any discussion of his compensation. Mead's executive compensation structure is based on competitiveness within Mead's business environment. The actual compensation levels delivered to executives are designed to directly link to the financial performance of the company; align the interests of the executives with company performance, thus increasing shareholder value; to attract, retain and motivate executive talent; and provide a balanced total compensation package that recognizes the individual contributions of the executive and the business results of the company. Base Pay - -------- Salary range midpoints are 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 375 parent organizations and 575 independent operating units of all types of 11 industrial employers in the United States (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 executives are targeted to be competitive with the average salaries for that same survey group, with a particular comparison to a selected group of Forest Product company competitive peers. These peers (the "FP Peers") are Boise Cascade Corporation, Bowater Incorporated, Champion International Corporation, Consolidated Paper Corporation, 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 are determined primarily by a review of Mead's competitive position relative to the Hay Competition, and an assessment of competitive salary increase movement for the upcoming year. The salary increase for each named executive officer is 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 is to deliver moderate salary increases in favor of incentive payouts that reward for the performance of the company and the contribution of the executive. Mr. Tatar's 1999 salary reflects a first time increase since promotion to Chief Executive Officer. The salary was set by the Board on the basis of an assessment of his strength in leadership of the Corporation. Mr. Tatar's salary remains below the salary midpoint for his position and below the level of the Hay Competition. The salaries of the other named executives remain well below the Mead midpoint for their respective grades, and also lag the Hay Competition. Annual Incentives - ----------------- Annual incentive targets are set at levels that achieve a combined salary midpoint plus incentive target that equals actual competitive average base salaries plus annual bonuses, as determined by an analysis of the total cash compensation paid by the Hay Competition. Actual incentive payouts are determined under Mead's Corporate Annual Incentive Plan which is funded by a comparison of Mead Return on Total Capital ("ROTC") to both the FP Peers (as measured in the Value Line Report) and also to the company's cost of capital. The Mead ROTC comparison to the ROTC of each of the FP Peers and to the company's cost of capital is weighted equally. Mead's financial performance for 1999 improved from 1998 levels, reflecting the general trend in the paper and forest products industry. For incentive purposes, Mead's 1999 operating ROTC of 6.4% excludes the effect of a number of strategic actions, such as the divestiture of the Northwood, Inc. joint venture, the acquisition of At-A-Glance, and the restructuring of the Rumford Specialty business line. As a result of this financial performance, the 1999 annual incentives for all named executives, including Mr. Tatar, were below target levels, and since the 12 improvement in Mead's financial performance was exceeded by the improvement of the FP Peer group, the level of annual incentive payment decreased from 1998. The payout was delivered as 100% cash to all participants except Mr. Tatar. The Board of Directors required that Mr. Tatar defer 100% of his annual incentive payout until retirement. Long-Term Incentives - -------------------- The Compensation Committee believes that a significant portion of senior executive 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. Mead's long-term compensation can be delivered in three plans: . Performance Unit Plan . Restricted Stock Plan . Stock Option Plan The Corporate Long-Term Incentive Plan (the "LTIP") is a performance unit plan that provides long-term incentive awards for attaining shareholder value at or above the median of the FP Peers and is adjusted for a comparison of Mead total shareholder return ("TSR") to that of the S&P 500 Index of companies. The plan compares relative TSR over a two year period. For the two-year performance period ending December 31, 1999, Mead's TSR was third relative to the TSR of its twelve FP Peers, and exceeded the S&P 500 Index TSR. The resulting payout determined by the LTIP to all the named executives was well above target levels. For all participants, excluding Mr. Tatar, the payout was delivered as a minimum of 25% restricted stock, with the balance in cash. The payout to Mr. Tatar consisted of $150,000 in restricted stock, $252,700 in cash, with a mandatory deferral of the balance until retirement. Restricted stock with a minimum of six-month restrictions may be granted to encourage retention of key executives, or in lieu of payment of cash incentives, or for any other reason consistent with the purposes of Mead's Restricted Stock Plan. Restricted shares are granted at market prices. As indicated previously, a portion of the LTIP payout was delivered as restricted stock to all named executives, including Mr. Tatar. Stock option grants are based on competitive practices of the Hay Competition (rather than Mead's past corporate performance), are granted at market price and cannot be exercised for one year. The objective of stock option grants is to incent future company performance, rather than to reward for past contribution. Mead also believes that granting stock options to senior management further aligns their interests with shareholders. The size of annual option grants is based on the grade level of each recipient. Generally, the number of options granted increases approximately 30% with each grade level increase. Significant discretionary adjustments (plus or minus 30%) are made to grants to recognize the future potential of the individual. 13 For 1999, Mr. Tatar received a grant of 135,000 stock options, which the Compensation Committee believed appropriate with respect to the size of competitive grants for Mr. Tatar's grade level. Stock Ownership Guidelines - -------------------------- It is believed that executives are more significant contributors to the success of the business if they have a significant ownership position in the organization. The Compensation Committee believes the design of Mead's executive compensation plans deliver adequate opportunity for each executive to acquire Mead shares. For the named executive officers, the company has established guidelines that define a level of stock ownership that each executive is expected to achieve and maintain. The 1996 Stock Option Plan includes a strategic feature that enhances executive stock ownership: a provision of the plan provides Reload Stock Options, to be granted only to each executive who, upon exercising Incentive Stock Options, purchased and held shares. The Reload Stock Option is exercisable if the underlying shares from the Incentive Stock Option exercise are held for a minimum of three years. Compensation Deferral Opportunities - ----------------------------------- Mead maintains the Executive Capital Accumulation Plan (the "ExCAP") to provide executives with the opportunity to elect deferrals of earned compensation: base salary, annual incentive payout and long-term incentive payout (cash portions only). In addition, the plan provides for 401(k) contributions above the qualified plan limit to be placed in the same non-qualified account, along with a company match that is determined by the 401(k) formula. Funds deferred are credited at a rate set by one of several market-driven investment indices offered by the company. Payment of those amounts deferred commence in accordance with the executive's deferral election, and generally start at retirement or termination, or on a fixed date. For 1999, all named executives elected to participate through compensation deferrals and/or the 401(k) Top-Up. In addition, the Board of Directors mandated that all of Mr. Tatar's annual incentive payout and a portion of his long-term incentive payout be deferred until retirement in order to plan for the maximum tax deduction in 1999. 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 paid to a company's Chief Executive Officer and to the four other most highly compensated executive officers. For 1999, Mr. Tatar's compensation would normally have exceeded one million dollars. To manage executive compensation in the best interests of the company's shareowners, the Compensation Committee recommended and the Board of Directors approved a mandatory deferral of a portion of Mr. Tatar's long-term incentive payment and all the annual incentive payment to avoid 1999 compensation levels that would place Mr. Tatar over the Section 162(m) limit. 14 Summary - ------- The Mead compensation program delivered as the mix of compensation elements (base pay, annual incentives, long-term incentives and deferral opportunities) is an effective tool in supporting executive excellence. Mead's operating financial results increased in 1999 from the levels of 1998, but at a rate lower than that of the FP Peers, producing a decrease in annual incentive payments. From a long-term perspective, Mead's share price increase produced a total shareholder return that significantly exceeded the industry average and long- term incentive payments exceeded the level of last year. The Compensation Committee remains confident these elements of the executive compensation program are key in rewarding executives who contribute to the success of the company and in the demonstrated increase in shareholder value. Compensation Committee members: John G. Breen (chair) Susan J. Kropf Charles S. Mechem, Jr. Heidi G. Miller Lee J. Styslinger, Jr. J. Lawrence Wilson Jerome F. Tatar (ex-officio, nonvoting member) 15 Compensation Tables - ------------------- The compensation for services performed during the fiscal years ended December 31, 1997, 1998 and 1999 for Mr. Tatar and each of the other four most highly compensated executive officers and Mr. Graber (who retired effective December 1, 1999) is as follows. No stock appreciation rights were issued to the named executives during 1997-1999. SUMMARY COMPENSATION TABLE
Long-Term Compensation -------------------------------------------------------------- Annual Compensation Awards Payouts - ------------------------------------------------------------ -------------------------------------------------------------- Other Name Annual Restricted Securities All Other and Compen- Stock Underlying LTIP Compen- Principal sation Award(s) Options/ Payouts/(6)/ sation/(7)/ Position Year Salary($) Bonus($)/(1)/ ($)/(2)/ ($)/(3)/ SARs(#)/(4)(5)/ ($) ($) - -------- ---- --------- ------------- --------- --------- --------------- ------------ ----------- Jerome F. 1999 $762,508 $550,000 $ 55,118 $150,000 139,474 $1,093,600 $ 63,026 Tatar, 1998 700,008 625,000 18,631 144,900 150,000 0 43,211 Chairman, 1997 499,174 382,100 14,192 0 146,300 0 27,995 President and CEO Raymond 1999 $407,508 $205,000 $121,311 $234,050 58,678 $ 234,050 $ 30,253 W. Lane, 1998 381,940 240,000 30,116 62,200 41,000 0 22,906 Exec. VP 1997 349,800 212,200 16,028 0 50,000 0 18,630 Eli M. 1999 $400,284 $230,000 $211,676 $117,025 61,760 $ 351,075 $ 32,962 Karter, 1998 378,396 240,000 66,973 62,200 41,800 0 25,076 Exec. VP 1997 359,024 201,800 71,444 0 59,570 0 21,159 Wallace O. 1999 $278,598 $115,000 $472,508 $ 262,600 33,100 $ 0 $ 25,055 Nugent, 1998 262,346 132,000 130,199 42,000 18,000 0 18,348 VP, 1997 246,588 114,400 88,872 0 30,060 0 12,146 Purchasing & Logistics A. Robert 1999 $237,136 $120,000 $125,786 $ 65,650 25,000 $ 196,950 $ 16,419 Rosenberger, 1998 218,688 140,000 49,194 42,000 22,000 0 11,212 VP, HR 1997 179,444 118,100 6,000 0 5,000 0 10,742 William R. 1999 $317,537 $155,000 $228,042 $ 0 55,380 $ 369,500 $2,851,902 Graber, 1998 317,373 180,000 89,507 42,800 25,000 0 19,770 Retired 1997 277,710 141,800 30,466 0 32,262 0 16,538 VP/CFO/(8)/
_______________________ (footnotes on following page) 16 (1) Bonuses are earned in the year specified and paid in the following year. Except as otherwise noted, cash bonuses for 1999 consist of payments under the Corporate Annual Incentive Plan. Mr. Tatar deferred receipt of the award until after the completion of his Mead employment service. (2) Consists solely of interest on deferred compensation in excess of the applicable federal rate. Mead owns life insurance on the lives of employees participating in this deferred compensation program which supports the interest rates used. (3) Dividends are paid on Restricted Stock in the same manner and amount as paid on Mead's common shares. (4) Includes "reload options" granted for ISO exercises and stock held in 1997, 1998 or 1999, if any. (5) Numbers adjusted to give retroactive effect resulting from a two-for-one stock split distributed December 1, 1997. (6) The LTIP is a performance unit plan based on Total Shareholder Return versus the Total Shareholder Return of the S&P 500 Index and Mead's ranking within the selected Forest Products peer group. The performance period included 1998 and 1999. The payout for the performance period was made in February 2000, was delivered as 50% restricted stock and 50% cash to Mr. Lane; 25% restricted stock, 52.5% deferred to the ExCAP and 22.5% cash to Mr. Karter; 100% restricted stock to Mr. Nugent; 25% restricted stock, 37.5% to the ExCAP and 37.5% cash to Mr. Rosenberger; and 100% cash to Mr. Graber. (See Report on Compensation Committee on Executive Compensation as to Mr. Tatar). Restricted stock payouts are reported under "Restricted Stock Award(s)" and carry a restriction period of six months. Shares awarded: Mr. Tatar - 4,781; Mr. Lane - 7,460; Mr. Karter - 3,730; Mr. Nugent - 8,370; and, Mr. Rosenberger - 2,092, based on the fair market value, composite index, on the date of the award. (7) Amounts consist solely of executive life insurance premiums paid by Mead and matching contributions by Mead to qualified and non-qualified savings plans other than to Mr. Graber. Includes $2,827,159 lump sum amount paid, payable or accrued in 1999 under the retirement, excess and supplemental retirement plans for Mr. Graber. (8) Mr. Graber retired as Vice President and Chief Financial Officer effective December 1, 1999. 17 OPTION/SAR GRANTS IN LAST FISCAL YEAR The following table shows, for the named executive officers, additional information about option grants during the fiscal year ended December 31, 1999. No stock appreciation rights were granted in 1999.
Individual Grants - -------------------------------------------------------------------- Percent of Potential Number of Total Realizable Value at Securities Options/ Assumed Annual Underlying SARs Rates of Stock Price Options/ Granted to Exercise Appreciation SARs Employees or Base Expira- for Option Term/(2)/ ---------------------------------- Granted in Fiscal Price tion Name (#)/(1)/ Year ($/Sh) Date 0% ($) 5% ($) 10% ($) - ---- --------------- ---------- ----------- ------------- ------ ------ ------- Jerome F. Tatar 139,474 7.16% $29.8125 2/24/09 $0 $2,614,987 $6,626,891 Raymond W. Lane 55,000 2.82% 29.8125 2/24/09 0 1,031,191 2,613,240 3,678 .19% 35.7188 10/29/09 0 82,620 209,376 Eli M. Karter 50,000 2.56% 29.8125 2/24/09 0 937,446 2,375,672 11,760 .60% 41.5625 6/24/09 0 307,388 778,981 Wallace O. Nugent 26,800 1.38% 29.8125 2/24/09 0 502,471 1,273,360 6,300 .32% 41.5625 6/24/09 0 164,672 417,312 A. Robert Rosenberger 25,000 1.28% 29.8125 2/24/09 0 468,723 1,187,836 William R. Graber 40,000 2.05% 29.8125 2/24/09 0 749,957 1,900,538 3,460 .18% 41.5625 6/24/09 0 90,439 229,190 11,920 .61% 35.7188 10/29/09 0 267,763 678,565 - -------------------------------------------------------------------------------------------------------------------- 0%/(3)/ 5%/(3)/ 10%/(3)/ ------- ------- -------- Assumed Stock Price $29.8125 $48.56 $77.33 Market Value of All Shareholdings $3.06 billion $4.98 billion $7.93 billion Named Executives Percentage 0.38% 0.38%
_______________ (1) Options are granted with terms of ten years and may be exercised beginning one year or up to three years after date of grant, depending on the terms of the option. Limited Rights (described on page 24) have been granted to each of the named executive officers in an amount equal to the stock options granted. The holders of stock options may under certain conditions pay minimum withholding taxes due upon the exercise of stock options using shares previously owned. Also, reload option rights were included with the grant of incentive stock options (3,354 shares were granted to each named executive officer as an incentive stock option in 1999). Reload options state the option price for the reload is the fair market value as of the date of exercise (not grant) of the original option. Reload options are not exercisable unless the shares purchased upon exercise of the original option are owned for at least three years. (2) The dollar amounts under the 5% and 10% columns are set by the Securities and Exchange Commission and are not intended to forecast possible future appreciation of Mead's stock. (3) At an assumed 5% stock price appreciation over a ten-year period, Mead's stock price would increase from $29.8125 per share (the market price on the grant date) to $48.56 per share, and the aggregate market value of all shareholder holdings as of the grant date would increase from $3.06 billion to $4.98 billion. At an assumed 10% stock price appreciation over a ten- year period, Mead's stock price would increase from $29.8125 per share to $77.33 per share, and the aggregate market value of all shareholder holdings as of the grant date would increase to $7.93 billion. The named executives would receive 0.38% of any such increase in market value. 18 AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES The following table shows information about stock option exercises during 1999 and unexercised stock options at year end 1999 for the named executive officers and Mr. Graber. No stock appreciation rights were granted or exercised in 1999.
Number of Securities Value of Underlying Unexercised Unexercised In-the-Money Options/SARs at Options/SARs at FY-End (#) FY-End ($)/(2)/ Shares Acquired Exercisable/ Exercisable/ Name on Exercise(#) Value Realized ($)/(1)/ Unexercisable Unexercisable - ---- -------------- ----------------------- ------------- ------------- Jerome F. Tatar 4474 $28,940.96 443,558/145,774 $5,998,681/1,950,909 5460 106,811.25 3678 39,308.63 Raymond W. Lane 3678 21,838.13 197,722/58,678 2,997,853/763,095 500 10,250.00 8240 166,860.00 1000 21,625.00 8000 172,500.00 5460 110,565.00 Eli M. Karter 6300 145,884.69 204,096/76,130 3,126,893/859,882 5460 127,457.15 5770 117,563.75 6000 122,625.00 6404 134,946.07 Wallace O. Nugent 6300 134,662.50 147,900/39,160 2,768,132/442,923 4800 42,000.00 3000 24,375.00 1000 8,468.80 6700 148,656.25 A. Robert Rosenberger -0- -0- 45,300/25,000 603,367/334,375 William R. Graber 4474 48,235.09 114,480/57,642 1,688,439/655,097 3678 21,838.13 3460 80,769.55 3768 24,845.06 4904 100,225.50 500 10,281.25 4596 93,930.75
________________ (1) Based upon the difference between the fair market value (the average of the high and the low prices) of Mead common shares on the date of exercise and the exercise price of the stock option. (2) Based upon the difference between the fair market value (the average of the high and the low prices) of Mead common shares on the last trading day of 1999 and the exercise price of the stock option. 19 LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR The following table shows, for the named executive officers, additional information about the LTIP plan eligibility for the performance period that commenced in 1999.
Performance or Number of Other Period Estimated Future Payouts Shares, Until Under Non-Stock Units or Maturation/(1)/ Price - Based Plans ----------------------------------- Name Other Rights(#) or Payout Threshold($) Target($) Maximum($) - ---- --------------- ------------------ ------------ --------- ---------- Jerome F. Tatar 834,700 1/1/99 to 12/31/00 $0 $834,700 $1,669,400 Raymond W. Lane 316,800 1/1/99 to 12/31/00 0 316,800 633,600 Eli M. Karter 316,800 1/1/99 to 12/31/00 0 316,800 633,600 Wallace O. Nugent 178,300 1/1/99 to 12/31/00 0 178,300 356,600 A. Robert Rosenberger 178,300 1/1/99 to 12/31/00 0 178,300 356,600
________________ (1) Plan based on Mead's two-year Total Shareholder Return (share price growth plus dividends reinvested) versus the Total Shareholder Return - TSR - of the S&P 500 Index and Mead's TSR ranking within the selected Forest Products peer group. The TSR performance period is from December 31, 1998 to December 31, 2000. 20 PERFORMANCE GRAPH The following performance graph compares Mead's cumulative total shareholder return over a five year period, assuming $100 invested at December 31, 1994 in Mead common stock, in the S&P 500 Index, in the S&P Paper and Forest Products Composite Index and in the S&P Basic Materials Index. The information on these indices have been provided by Standard & Poor's Corporation. Shareholder return is based on increases in share price and dividends paid, assuming reinvestment of dividends. THE MEAD CORPORATION CUMULATIVE TOTAL RETURN: 1994-1999 [GRAPH APPEARS HERE]
Measurement Period (Fiscal Year Covered) Mead Corporation S&P 500 Index S&P Paper & F.P. S&P Basic Materials Measurement Pd - FYE 12/31/94 100.00 100.00 100.00 100.00 FYE 12/31/95 109.59 137.58 110.10 124.49 FYE 12/31/96 124.55 169.17 121.79 144.06 FYE 12/31/97 122.32 225.60 130.59 157.13 FYE 12/31/98 130.71 290.08 133.18 147.53 FYE 12/31/99 197.24 351.12 186.22 186.42 YEAR 1994 1995 1996 1997 1998 1999 Mead 100.00 109.59 124.55 122.32 130.71 197.24 S&P 500 100.00 137.58 169.17 225.60 290.08 351.12 S&P Paper & F.P. 100.00 110.10 121.79 130.59 133.18 186.22 S&P Basic Materials 100.00 124.49 144.06 157.13 147.53 186.42
Assumes $100 invested on December 31, 1994 in Mead common stock, S&P index, S&P Paper and Forest Products Index, and S&P Basic Materials Index. Assumes reinvestment of dividends. 21 Retirement Plans All salaried employees of Mead are participants in Mead's non-contributory retirement plan which provides retirement income based upon years of employment and average annual earnings for the five highest years during the last eleven years of employment. Benefits under the retirement plan become vested after five years. The table below sets forth the approximate annual benefits payable under the plan's formula at normal retirement date (age 65) on a straight life annuity basis without regard to optional forms of payment:
Years of Service ---------------- Remuneration 5 15 20 25 30 35 - ------------ -------- --------- --------- --------- --------- --------- 125,000 7,500 26,250 35,625 45,000 54,375 63,750 175,000 10,500 36,750 49,875 63,000 76,125 89,250 225,000 13,500 47,250 64,125 81,000 97,875 114,750 300,000 18,000 63,000 85,500 108,000 130,500 153,000 500,000 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
The named executives have the years of credited service indicated: Mr. Tatar, 25; Mr. Karter, 17; Mr. Lane, 24; Mr. Nugent, 31; Mr. Rosenberger, 25; Mr. Graber, 6. Earnings used for calculation of retirement income for the named executives are salary, bonus and incentive compensation (other than long-term incentive payments) paid as described in the Summary Compensation Table. The benefits payable under Mead's plan are reduced by one-half of the primary Social Security benefit. Under the Employee Retirement Income Security Act, an individual's normal annual benefit from a qualified retirement plan such as Mead's may not exceed specified limits. To the extent that the amounts calculated under Mead's non-contributory retirement plan exceed the limits, Mead pays the excess under an unfunded excess benefit plan. Mead also maintains an unfunded supplemental retirement plan for senior level management personnel who become eligible to participate in the plan after they have completed three years of employment in a qualified job classification. The plan provides annual retirement benefits of 55% of a participant's final average earnings (earnings include bonuses and incentive compensation other than long-term incentive payments, but may not exceed two times base compensation for any year) for the three highest years during the last eleven years of employment, less benefits received from other pension plans of Mead and from pension plans of previous employers. Benefits are also reduced by one-half of a participant's primary Social Security benefit. A participant may receive full benefits under this plan after he attains age 62. Messrs. Tatar, Karter, Lane and Nugent have completed three years of employment in a qualified job classification and are currently eligible to participate in this plan. 22 The approximate annual benefits, on a straight life annuity basis, payable to the named executive officers under the retirement plan, the excess and supplemental retirement plans, based on compensation levels to date and assuming retirement at age 62, calculated prior to the offsets described above, are as follows: Mr. Tatar, $589,232; Mr. Karter, $314,218; Mr. Lane, $321,094; Mr. Nugent, $223,059; and, Mr. Rosenberger, $167,499. The lump sum amount paid, payable or accrued in 1999 under the retirement plan, the excess and supplemental retirement plans for William R. Graber was $2,827,159. Benefit Trust A Benefit Trust has been established to preserve the benefits earned under Mead's unfunded supplemental retirement plan, incentive compensation election plan, the 1985 supplement to incentive compensation election plan, the LTIP, the deferred compensation plan for directors, the 1985 supplement to deferred compensation plan for directors, the former directors retirement plan, the excess earnings benefit plan, the directors capital accumulation plan, the executive capital accumulation plan, and the Section 415 excess benefit plan in the event of a change in control. Upon the occurrence of any potential change in control, as defined in the Benefit Trust, Mead will be obligated to contribute an amount of cash and other property to the Benefit Trust which is intended to be sufficient to pay, in accordance with the terms of the plans, the benefits authorized under the plans and certain related expenses. If the funds in the Benefit Trust are insufficient for any reason to pay amounts due under the plans, Mead will remain obligated to pay any deficiency. Termination Arrangements General Severance Program. Mead has a company-wide severance program for its salaried employees who are involuntarily terminated. The basic program provides severance pay in a lump sum equal to one week's salary for each full year of service plus an additional week for each $20,000 of base salary (or increment) subject to enhancement following a change in control. Medical, dental and life insurance coverages will be provided for a period of time equal to the number of weeks of severance, provided certain conditions are met. The maximum period for severance pay, depending on the salary level of the employee, will be limited to either 52 or 26 weeks. Based on current compensation, if the individuals named in the Summary Compensation Table had been terminated on December 31, 1999, the amounts payable to each of them would have been as follows: Mr. Tatar, $775,008; Mr. Karter, $298,153; Mr. Lane, $356,192; Mr. Nugent, $257,953; and, Mr. Rosenberger, $175,384. Severance Agreements. Mead has in place severance agreements with executive officers and other key executives. The severance agreements provide for the payment of certain benefits to a key executive (in lieu of amounts payable under the general severance program) if employment is terminated by Mead other than for "cause," or on account of death, disability or normal retirement, within two years after a "change in control" of Mead, or if employment is terminated by the key executive for "good reason" within the period, as such terms are defined in the severance agreements. In general, under such circumstances, the key executive is entitled to a cash payment of two times the sum of (i) the key executive's then current annual base salary, and (ii) the greater of the key executive's current target incentive under Mead's incentive plans or the most recent annual award under the plans. Based on levels of compensation as of December 31, 23 1999, if the individuals named in the Summary Compensation Table had been terminated on such date, the amounts payable to each of them would have been as follows: Mr. Tatar, $4,844,416; Mr. Karter, $2,056,000; Mr. Lane, $2,063,200; Mr. Nugent, $1,278,800; and, Mr. Rosenberger, $1,175,600. The severance agreements also provide for (i) the cancellation of all outstanding stock options granted to the key executive under any stock option plan of Mead in consideration for a cash or stock payment equal to the number of shares covered by the option multiplied by the difference between the exercise price per share and the higher of (a) the reported closing price per share on the date of the key executive's termination or (b) the highest price paid per share in connection with any change in control; (ii) a continuation of benefits under Mead's life insurance, medical and dental plans (or substantially similar benefits); and (iii) out placement counseling. If the aggregate severance benefits to any executive would be subject to an excise tax under the Internal Revenue Code, the actual benefits will be reduced to the extent necessary to avoid the imposition of the excise tax. Limited Stock Appreciation Rights Mead's stock option plans authorize the Compensation Committee to grant limited rights with respect to all or any portion of the shares covered by options. The Committee may grant limited rights simultaneously with the grant of an option or at any time during their respective terms. Limited rights have been granted to all named executive officers in an amount equal to stock options granted. In general, limited rights are exercisable only after certain events which constitute a change in control of Mead. Upon the exercise of a limited right, an optionee will receive an amount in cash or stock equal to the difference between (1) the exercise price per share of the option to which the limited right relates, and (2) a price which in general represents the value placed upon a common share in the change in control situation. When limited rights are exercised, the options to which they relate will cease to be exercisable. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934 requires the Company's executive officers and directors, and persons who beneficially own more than ten percent of a registered class of the Company's equity securities, to file reports of ownership and changes in ownership of such securities with the Securities Exchange Commission and the New York Stock Exchange. Copies of these reports must also be furnished to the Company. Based solely upon a review of the copies of the forms filed under Section 16(a) and furnished to the Company, or written representations from reporting persons after inquiry, the Company believes that all filing requirements applicable to its executive officers and directors were complied with during 1999. Compensation Committee Interlocks and Insider Participation The members of the Board's Compensation Committee until April 27, 2000 are Messrs. Breen, Mechem, Styslinger, Wilson, Ms. Kropf and Ms. Miller. The members of the Compensation Committee from and after April 27, 2000 will be Messrs. Breen, Mechem, Styslinger, Ms. Kropf and Ms. Miller. In addition, Mr. Tatar, Mead's Chairman, Chief Executive Officer and President, is an ex-officio nonvoting member of the Board's standing committees, including the Compensation Committee (although Mr. Tatar did not participate in any Compensation Committee discussions regarding his compensation). A. Robert Rosenberger, Mead's Vice 24 President, Human Resources, is the nonvoting Secretary of the Committee, but is not a member of the Committee. Except as described above, none of the members of the Compensation Committee are or were an officer or employee of Mead, or have any relationship requiring disclosure under the federal securities rules. Other Business The Board of Directors does not intend to present, and has no knowledge that others will present, any other business at the meeting. However, if any other matters are properly brought before the meeting, it is intended that the holders of proxies will vote thereon in their discretion. Independent Public Accountants The independent certified public accounting firm of Deloitte & Touche LLP has been appointed by the Board of Directors to serve as independent public accountants for Mead and its subsidiaries for the fiscal year ending December 31, 2000. Deloitte & Touche LLP served in such capacity for the fiscal year ended December 31, 1999. Representatives of Deloitte & Touche LLP will be present at the Annual Meeting, will have an opportunity to make a statement if they desire to do so, and will be available to respond to appropriate questions from shareholders. Shareholder Proposals Any proposal by a shareholder intended for inclusion in Mead's proxy statement and form of proxy for the 2001 Annual Meeting of Shareholders must be received by Mead on or before November 15, 2000 in order to be eligible for such inclusion. The date after which notice of a shareholder proposal submitted outside the process of Rule 14a-8 is considered untimely is January 29, 2001. Notices must be received by Mead at Courthouse Plaza, Northeast, Dayton, Ohio 45463, Attention: Sue K. McDonnell, Secretary. Solicitation of Proxies The entire cost of solicitation will be paid by Mead. In addition to the use of the mails, proxy solicitations may be made by officers and employees of Mead, personally or by telephone, telegram, or electronically. It is also anticipated that banks, brokerage houses and other custodians, nominees and fiduciaries will be requested to forward soliciting material to their principals and to obtain authorization for the execution of proxies. Mead has retained Georgeson Shareholder Communications, Inc. to aid in the solicitation of proxies, for which Mead will pay an estimated $14,000. In addition, Mead will reimburse Georgeson Shareholder Communications, Inc., banks, brokerage houses and other custodians, nominees and fiduciaries for their out-of-pocket expenses. The approximate number of shareholders both direct and beneficial, as of the record date, was 53,412. By order of the Board of Directors Jerome F. Tatar Chairman of the Board Printed on [50# New Era Matte] 25 ME252B DETACH HERE - ------------------------------------------------------------------------------- CONFIDENTIAL VOTING INSTRUCTIONS TO: FIDELITY MANAGEMENT TRUST COMPANY AS TRUSTEE UNDER THE MEAD 401(k) PLAN Annual Meeting of Shareholders: April 27, 2000 As a participant in the Mead 401(k) Plan, I hereby instruct the Trustee to vote (in person or by proxy) all Common Shares of THE MEAD CORPORATION which are credited to my account at the Annual Meeting of Mead to be held at the Frederick C. Smith Auditorium, Building 12, Sinclair Community College, 444 West Third Street, Dayton, Ohio, on Thursday, April 27, 2000, at 11:00 a.m. and at any and all adjournments thereof, on the matters set forth herein, and, in the Trustee's discretion, on such other business as may properly come before the meeting. THIS DIRECTION IS BEING SOLICITED BY FIDELITY MANAGEMENT TRUST COMPANY, AS TRUSTEE UNDER THE MEAD 401(k) PLAN. THIS DIRECTION WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED PARTICIPANT. IF NO INSTRUCTION IS INDICATED, THE TRUSTEE SHALL VOTE SUCH WHOLE SHARES IN THE SAME PORTION AS THE SHARES FOR WHICH INSTRUCTIONS ARE RECEIVED FROM OTHER PARTICIPANTS IN SUCH PLAN. - ----------- (CONTINUED AND TO BE VOTED AND SIGNED ON REVERSE SIDE) ----------- SEE REVERSE SEE REVERSE SIDE SIDE - ----------- ----------- Please note new location: ------------------------ The 2000 Annual Meeting of Shareholders Thursday, April 27, 2000 at 11:00 a.m. Sinclair Community College, F. C. Smith Auditorium, Building 12 Dayton, Ohio You may vote your proxy by returning the attached card in the enclosed envelope or by telephone. You need the Control Number printed on the proxy card if you vote by telephone. Call TOLL FREE 1-877-779-8683 - 24 hours a day - 7 days a week to vote by telephone. - ------------------------------------------------------------------------------- If you use the telephone to vote your proxy, do not mail back your proxy. - ------------------------------------------------------------------------------- ME252A DETACH HERE - ------------------------------------------------------------------------------- Please mark [X] votes as in this example - -------------------------------------------------------- The Board recommends a vote FOR the following proposal. - -------------------------------------------------------- 1. Election of Directors to serve until the Annual Meeting in the year 2001. Nominees: (01) John G. Breen, (02) Duane E. Collins, (03) William E. Hoglund, (04) James G. Kaiser, (05) Robert J. Kohlhepp, (06) John A. Krol, (07) Susan J. Kropf, (08) Charles S. Mechem, Jr., (09) Heidi G. Miller, (10) Lee J. Styslinger, Jr., (11) Jerome F. Tatar and (12) J. Lawrence Wilson. FOR WITHHELD ALL [_] [_] FROM ALL [_] --------------------------------------- For all nominees except as noted above MARK HERE IF YOU PLAN TO ATTEND THE MEETING [_] MARK HERE FOR ADDRESS CHANGE AND INDICATE NEW ADDRESS AT LEFT [_] Receipt is acknowledged of Notice of the Annual Meeting and Proxy Statement. Shareholders should mark, date this proxy and sign exactly as name(s) appears hereon and return in the enclosed envelope. If stock is held jointly, both owners should sign this proxy. Executors, administrators, trustees, guardians and others signing in a representative capacity should indicate the capacity in which they sign. Signature:________________ Date:_________ Signature:______________ Date:________ MED51B DETACH HERE - ------------------------------------------------------------------------------- THE MEAD CORPORATION Annual Meeting of Shareholders, April 27, 2000 The undersigned holder(s) of Common Shares of THE MEAD CORPORATION, an Ohio corporation (hereinafter referred to as the "Company"), hereby appoints Sue K. McDonnell, Charles S. Mechem, Jr. and Jerome F. Tatar, and each of them, attorneys of the undersigned, with power of substitution, to vote all of the Common Shares of the undersigned entitled to vote at the Annual Meeting of the Company to be held at the Frederick C. Smith Auditorium, Building 12, Sinclair Community College, 444 West Third Street, Dayton, Ohio on Thursday, April 27, 2000 at 11:00 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 SHAREHOLDER. IF NO INSTRUCTION IS INDICATED, THE SHARES WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE DIRECTORS. IN THE EVENT OF CUMULATIVE VOTING FOR DIRECTORS, EXCEPT AS OTHERWISE INDICATED BY THE UNDERSIGNED, A VOTE FOR THE NOMINEES LISTED HEREIN WILL GIVE THE PROXYHOLDERS DISCRETIONARY AUTHORITY TO CUMULATE ALL VOTES TO WHICH THE UNDERSIGNED IS ENTITLED AND TO ALLOCATE THEM IN FAVOR OF ANY ONE OR MORE OF THE NOMINEES, AS THE PROXYHOLDERS DETERMINE. - ------------- ------------- SEE REVERSE (CONTINUED AND TO BE VOTED AND SIGNED ON REVERSE SIDE) SEE REVERSE SIDE SIDE - ------------- ------------- Please note new location: ------------------------- The 2000 Annual Meeting of Shareholders Thursday, April 27, 2000 at 11:00 a.m. Sinclair Community College, F. C. Smith Auditorium, Building 12 Dayton, Ohio You may vote your proxy by returning the attached card in the enclosed envelope or by telephone. You need the Control Number printed on the proxy card if you vote by telephone. Call TOLL FREE 1-877-779-8683 - 24 hours a day - 7 days a week to vote by telephone. - ----------------------------------------------------------------------------- If you use the telephone to vote your proxy, do not mail back your proxy - ----------------------------------------------------------------------------- MED51A DETACH HERE - ----------------------------------------------------------------------------- Please mark [X] votes as in this example - ----------------------------------------------------------- The Board recommends a vote FOR the following proposal. - ----------------------------------------------------------- 1. Election of Directors to serve until the Annual Meeting in the year 2001. Nominees: (01) John G. Breen, (02) Duane E. Collins, (03) William E. Hoglund, (04) James G. Kaiser, (05) Robert J. Kohlhepp, (06) John A. Krol, (07) Susan J. Kropf, (08) Charles S. Mechem, Jr., (09) Heidi G. Miller, (10) Lee J. Styslinger, Jr., (11) Jerome F. Tatar and (12) J. Lawrence Wilson. FOR WITHHELD ALL [_] [_] FROM ALL [_] ___________________________________________ For all nominees except as noted above MARK HERE IF YOU PLAN TO ATTEND THE MEETING [_] MARK HERE FOR ADDRESS CHANGE AND INDICATE NEW ADDRESS AT LEFT [_] Receipt is acknowledged of Notice of the Annual Meeting and Proxy Statement. Shareholders should mark, date this proxy and sign exactly as name(s) appears hereon and return in the enclosed envelope. If stock is held jointly, both owners should sign this proxy. Executors, administrators, trustees, guardians and others signing in a representative capacity should indicate the capacity in which they sign. Signature:__________________ Date:_____ Signature:_________________ Date:______ -----END PRIVACY-ENHANCED MESSAGE-----