-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, rGDZB/o+/fEkPcV2JerymQoTqr+pv8Lc/8sg5y6LwvVbPXpF7wTuxhBrx8vNj5kE xCCcNg2K6181VElQUA7XaA== 0000950134-95-000454.txt : 19950612 0000950134-95-000454.hdr.sgml : 19950612 ACCESSION NUMBER: 0000950134-95-000454 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950505 FILED AS OF DATE: 19950324 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TEMPLE INLAND INC CENTRAL INDEX KEY: 0000731939 STANDARD INDUSTRIAL CLASSIFICATION: 2631 IRS NUMBER: 751903917 STATE OF INCORPORATION: DE FISCAL YEAR END: 1230 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 002-87570 FILM NUMBER: 95522888 BUSINESS ADDRESS: STREET 1: 303 S TEMPLE DR STREET 2: PO DRAWER N CITY: DIBOLL STATE: TX ZIP: 75941 BUSINESS PHONE: 4098292211 MAIL ADDRESS: STREET 1: 303 SOUTH TEMPLE DIRVE CITY: DIBOLL STATE: TX ZIP: 75941 DEF 14A 1 DEFINITIVE NOTICE AND PROXY STATEMENT 1 SCHEDULE 14A (RULE 14a-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION 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 Rule 14a-11(c) or Rule 14a-12 TEMPLE-INLAND INC. - - -------------------------------------------------------------------------------- (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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or Item 22(a)(2) of Schedule 14A. / / $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3). / / 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: - - -------------------------------------------------------------------------------- 2 (LOGO) 303 SOUTH TEMPLE DRIVE DIBOLL, TEXAS 75941 --------------------- NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD FRIDAY, MAY 5, 1995 To the Stockholders of Temple-Inland Inc. NOTICE IS HEREBY GIVEN that the 1995 Annual Meeting of Stockholders of Temple-Inland Inc., a Delaware corporation (the "Company"), will be held at the principal executive offices of the Company, 303 S. Temple Dr., Diboll, Texas 75941, on Friday, May 5, 1995, at 9:00 a.m., local time, for the following purposes: 1. To elect three (3) directors to the Board of Directors of the Company to hold office until the expiration of their terms or until their respective successors have been duly elected and have qualified; 2. To ratify the appointment by the Board of Directors of Ernst & Young LLP as independent auditors for the Company for the fiscal year ending December 30, 1995; and 3. To transact such other business as may properly come before the Annual Meeting or any adjournment(s) thereof. The Board of Directors has fixed the close of business on March 8, 1995 as the record date (the "Record Date") for the determination of stockholders entitled to notice of and to vote at the Annual Meeting or any adjournment(s) thereof. Only stockholders of record on the Record Date will be entitled to notice of and to vote at the Annual Meeting. By Order of the Board of Directors M. RICHARD WARNER Secretary Diboll, Texas March 24, 1995 YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. HOWEVER, WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE MEETING, YOU ARE URGED TO MARK, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED, SELF-ADDRESSED, STAMPED ENVELOPE PROMPTLY SO THAT YOUR SHARES OF COMMON STOCK MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND IN ORDER THAT THE PRESENCE OF A QUORUM MAY BE ASSURED AT THE MEETING. YOUR PROXY WILL BE RETURNED TO YOU IF YOU SHOULD REQUEST SUCH RETURN IN THE MANNER PROVIDED FOR REVOCATION OF PROXIES ON THE INITIAL PAGE OF THE ENCLOSED PROXY STATEMENT. 3 (LOGO) 303 SOUTH TEMPLE DRIVE DIBOLL, TEXAS 75941 --------------------- PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS SOLICITATION AND REVOCABILITY OF PROXIES This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of Temple-Inland Inc. (the "Company") for use at the 1995 Annual Meeting of Stockholders to be held on Friday, May 5, 1995, at the time and place and for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders, and at any adjournment(s) thereof. This Proxy Statement and form of proxy are first being sent to the stockholders of the Company on or about March 24, 1995. The accompanying form of proxy is designed to permit each stockholder entitled to vote at the Annual Meeting to vote for or withhold voting for any or all nominees for election as director, to vote for or against or to abstain from voting on proposal 2, and in the discretion of the proxies with respect to any other proposal brought before the Annual Meeting. When a stockholder's proxy card specifies a choice with respect to a voting matter, the shares will be voted and will be voted as specified. If no such specifications are made, the accompanying form of proxy will be voted at the Annual Meeting: For the election of the nominees under the caption "Election of Directors;" and For ratification of the selection of Ernst & Young LLP as independent auditors for the Company for the fiscal year ending December 30, 1995. Execution of the accompanying proxy will not affect a stockholder's right to attend the Annual Meeting and vote in person. Any stockholder giving a proxy has the right to revoke it by giving written notice of revocation to the Secretary of the Company at its principal executive offices at any time before the proxy is voted or by executing and delivering a later-dated proxy or by attending the Annual Meeting and voting his or her shares in person. No such notice of revocation or later-dated proxy, however, will be effective until received by the Company at or prior to the Annual Meeting. The Company has retained D.F. King & Co., Inc., a professional proxy solicitation firm ("D.F. King"), to assist in the solicitation of proxies. In addition to the solicitation of proxies by use of the mail, employees of D.F. King and officers and regular employees of the Company may solicit the return of proxies by personal interview, mail, telephone and telegraph. Officers and employees of the Company will not receive additional compensation, but will be reimbursed for out-of-pocket expenses. D.F. King will be reimbursed for its expenses in soliciting proxies and, in addition, will receive a proxy solicitation fee not to exceed $11,500. Brokerage houses and other custodians, nominees and fiduciaries will be requested to forward solicitation material to the beneficial owners of stock. All costs of solicitation are to be borne by the Company. The Annual Report to Shareholders, covering the Company's fiscal year ended December 31, 1994 and including audited financial statements, is enclosed herewith. The Annual Report does not form any part of the material for the solicitation of proxies. 4 PURPOSES OF THE MEETING At the Annual Meeting, the stockholders of the Company will consider and vote upon the following matters: 1. The election of three (3) directors to the Board of Directors of the Company to hold office until the expiration of their terms or until their respective successors have been duly elected and have qualified; 2. The ratification of the appointment by the Board of Directors of Ernst & Young LLP as independent auditors for the Company for the fiscal year ending December 30, 1995; and 3. Such other business as may properly come before the Annual Meeting or any adjournment(s) thereof. VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS GENERAL The Board of Directors of the Company has fixed the close of business on March 8, 1995 as the record date (the "Record Date") for the determination of stockholders entitled to notice of and to vote at the Annual Meeting. On the Record Date, there were 56,085,135 shares of Common Stock of the Company issued and outstanding. The Common Stock is the only class of stock outstanding and entitled to vote at the Annual Meeting. Each share of Common Stock is entitled to one vote on all matters to be acted on at the Annual Meeting. The attendance, in person or by proxy, of the holders of a majority of the issued and outstanding shares of Common Stock entitled to vote at the Annual Meeting is necessary to constitute a quorum to transact business. CONFIDENTIAL VOTING POLICY On February 5, 1993, the Board of Directors of the Company adopted a confidential voting policy. The policy provides that stockholder proxies, ballots, and voting tabulations that identify the vote of the specific stockholder will not be disclosed to the Company, its directors, officers, or employees except in certain limited situations such as when legally necessary or when expressly requested by a stockholder. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS The following table and notes thereto indicate the name, address and stock ownership of each person or group of persons known by the Company to own beneficially more than five percent (5%) of the outstanding shares of Common Stock as of February 13, 1995.
AMOUNT AND NATURE NAME AND ADDRESS OF BENEFICIAL PERCENT OF OF BENEFICIAL OWNER OWNERSHIP CLASS ---------------------------------------------------------- ------------- ---------- Oppenheimer Group, Inc.................................... 4,497,860(1) 8.05%(2) Oppenheimer Tower World Financial Center New York, New York 10281 Wellington Management Company............................. 3,188,630(3) 5.71%(4) 75 State Street Boston, Massachusetts 02109 FMR Corp.................................................. 6,693,072(5) 11.98%(6) 82 Devonshire Street Boston, Massachusetts 02109
2 5 - - --------------- (1) Based on a statement on Schedule 13G dated February 9, 1990 and Amendments No. 1, 2, 3, 4, 5, 6 and 7 thereto dated November 8, 1990, February 11, 1991, February 6, 1992, February 1, 1993, July 6, 1993, February 1, 1994, and February 1, 1995, respectively, (the "Oppenheimer Group 13G") filed with the Securities and Exchange Commission, Oppenheimer Group, Inc. disclaims beneficial ownership or shared voting power with regard to such shares, which shares are collectively owned by Oppenheimer Capital, a registered investment advisor; Oppenheimer & Co., LP; Oppenheimer Group, Inc.'s subsidiaries; or certain investment advisory clients. (2) Based upon the calculation in the Oppenheimer Group 13G, which assumes 55,874,037 shares of Common Stock outstanding. (3) Based on a statement on Schedule 13G dated February 10, 1994 and Amendment No. 1 thereto dated January 30, 1995 (the "Wellington 13G") filed with the Securities and Exchange Commission, Wellington Management Company, in its capacity as investment advisor, may be deemed beneficial owner of these shares which are owned by numerous investment counseling clients. (4) Based upon the calculation in the Wellington 13G, which assumes 55,842,907 shares of Common Stock outstanding. (5) Based on a statement on Schedule 13G dated February 11, 1994 and Amendments No. 1 and 2 thereto dated September 8, 1994 and February 13, 1995, respectively, (the "FMR 13G") filed with the Securities and Exchange Commission, Fidelity Management and Research Company, a wholly-owned subsidiary of FMR Corp., in its capacity as investment advisor, may be deemed beneficial owner of certain of these shares which are owned by several investment companies, and the balance may be deemed beneficially owned by affiliates of FMR Corp. (6) Based upon the calculation in the FMR 13G, which assumes 55,868,715 shares of Common Stock outstanding. SECURITY OWNERSHIP OF MANAGEMENT The following table and notes thereto set forth certain information regarding the beneficial ownership of the Common Stock as of February 3, 1995 by (i) each of the Company's directors and nominees for director, (ii) the Chief Executive Officer and the four other most highly compensated executive officers, (iii) one former executive officer, and (iv) all directors and executive officers of the Company as a group.
AMOUNT AND NATURE OF BENEFICIAL PERCENT BENEFICIAL OWNER OWNERSHIP(1) OF CLASS(2) ------------------------------------------ ------------- ----------- Robert F. Adelizzi........................ 28,536(3)(4)(6) * Paul M. Anderson.......................... 13,000(3)(4) * David L. Ashcraft......................... 76,559(3)(4)(6) * Robert Cizik.............................. 24,540(3)(4) * Anthony M. Frank.......................... 10,500(4) * Clifford J. Grum.......................... 401,391(3)(4)(5)(6) * William B. Howes.......................... 51,916(3)(4)(6) * Bobby R. Inman............................ 10,500(3) * Kenneth M. Jastrow, II.................... 28,928(3)(4)(6) * Harold C. Maxwell......................... 78,148(3)(4)(6) * Herbert A. Sklenar........................ 13,000(3)(4) * Walter P. Stern........................... 42,880(3)(4)(5)(7) * Arthur Temple III......................... 315,804(3)(5)(8) * Charlotte Temple.......................... 236,698(3)(4)(9) * Larry E. Temple........................... 11,000(4) * All directors and executive officers (18 persons) as a group..................... 1,378,179(3)(4)(5)(6)(7)(8)(9) 2.46%
- - --------------- * Represents less than one percent. 3 6 (1) Beneficial ownership as reported in the above table has been determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended ("Rule 13d-3"), with additional information included as set forth in footnote (4) below. Unless otherwise indicated, beneficial ownership includes both sole voting and sole dispositive power. Unless otherwise indicated, the above table does not include any shares that may be held by pension and profit-sharing plans of the corporations or endowment funds of educational and charitable institutions for which various directors and officers serve as directors or trustees. (2) Based upon a total of 56,022,030 shares of Common Stock issued and outstanding on January 28, 1995. (3) Includes the following number of shares of Common Stock issuable upon the exercise of options exercisable within a period of 60 days from February 3, 1995: Mr. Adelizzi -- 16,664; Mr. Anderson -- 1,000; Mr. Ashcraft -- 22,423; Mr. Cizik -- 22,000; Mr. Grum -- 37,158; Mr. Howes -- 29,324; Mr. Inman -- 10,000; Mr. Jastrow -- 15,374; Mr. Maxwell -- 22,423; Mr. Sklenar -- 1,000; Mr. Stern -- 22,000; Mr. Temple III -- 10,000; Ms. C. Temple -- 1,000; and all directors and executive officers (18 persons) as a group -- 232,616. (4) Also includes the following number of shares of Common Stock issuable upon the exercise of options with exercise dates ranging from six months to six years from February 3, 1995: Mr. Adelizzi -- 11,652; Mr. Anderson -- 11,000; Mr. Ashcraft -- 13,597; Mr. Cizik -- 2,000; Mr. Frank -- 10,000; Mr. Grum -- 20,492; Mr. Howes -- 17,388; Mr. Jastrow -- 12,874; Mr. Maxwell -- 13,597; Mr. Sklenar -- 11,000; Mr. Stern -- 2,000; Ms. C. Temple -- 9,000; and Mr. L. Temple -- 10,000; and all directors and executive officers (18 persons) as a group -- 170,731. These options are not required to be reported under Rule 13d-3 and the shares underlying these options are not considered "beneficially owned" under Rule 13d-3. (5) Includes 3,512, 52,202, 2,680 and 2,000 shares of Common Stock owned by certain relatives of Ms. C. Temple and Messrs. Grum, Stern and Temple III, respectively. Also includes, with respect to Mr. Grum, 3,550 shares of Common Stock held by a corporation controlled by a relative of Mr. Grum and 4,000 shares held by a family foundation. All of these shares are considered by the Securities and Exchange Commission to be beneficially owned for purposes of this Proxy Statement. Certain of the named individuals disclaim any beneficial interest in such shares. (6) Includes 220, 2,470, 3,168, 211, 680, and 1,098 shares of Common Stock held for Messrs. Adelizzi, Ashcraft, Grum, Howes, Jastrow, and Maxwell respectively, and 9,911 shares of Common Stock held for all directors and executive officers (18 persons) as a group by trusts under three (3) employee stock plans of the Company's subsidiaries. These shares are considered by the Securities and Exchange Commission to be beneficially owned for purposes of this Proxy Statement. (7) Does not include Common Stock held by clients of The Capital Group Companies, Inc., of which Mr. Stern is a director. Mr. Stern has advised the Company that he does not have voting or dispositive power over securities held directly by clients of The Capital Group Companies, Inc. (8) Includes 134,460 shares of Common Stock held in a trust over which Mr. Temple III is trustee. Mr. Temple III has a future income interest with respect to 33,615 of these shares and a remainder interest with respect to 33,615 of these shares. Also includes 26,828 shares held by various trusts and custodial accounts, with respect to which Mr. Temple III has sole voting and dispositive power. Mr. Temple III disclaims any beneficial ownership with respect to these 26,828 shares. Includes 137,190 shares held in two trusts for Mr. Temple III and certain of his relatives with respect to which he has a present income interest but no voting or dispositive power. Mr. Temple III has a remainder interest with respect to 58,500 of the shares held in one of these trusts. Does not include 10,536 shares held by various trusts and custodial accounts, with respect to which Mr. Temple III has sole voting and dispositive power. Mr. Temple III disclaims any beneficial ownership with respect to these 10,536 shares. Does not include 1,260,626 shares of Common Stock held by the T.L.L. Temple Foundation, a charitable trust, of which Mr. Temple III is one of five trustees and shares voting and dispositive power. Mr. Temple III disclaims any beneficial ownership with respect to such shares. 4 7 (9) Includes 67,230 shares of Common Stock held in a trust. Ms. C. Temple has a future income interest with respect to 33,615 of these shares and a remainder interest with respect to 33,615 of these shares. Also includes 137,190 shares held in two trusts for Ms. C. Temple and certain of her relatives with respect to which she has a present income interest but no voting or dispositive power. Ms. C. Temple has a remainder interest with respect to 58,500 of the shares held in one of these trusts. ELECTION OF DIRECTORS The By-laws of the Company provide that the number of directors that constitutes the Board of Directors shall be established by vote of the Board of Directors and that the directors shall be classified with respect to the time for which they severally hold office into three classes, which classes shall as nearly as possible be equal in size. The Board of Directors has set the number of directors at ten (10), with two classes of three (3) directors each and one class of four (4) directors. Directors are elected by a plurality of the votes cast by the holders of the Company's Common Stock at a meeting at which a quorum is present. "Plurality" means that the individuals who receive the largest number of votes cast are elected as directors up to the maximum number of directors to be chosen at the meeting. Consequently, any shares not voted (whether by abstention, broker nonvote or otherwise) have no impact in the election of directors except to the extent the failure to vote for an individual results in another individual receiving a larger number of votes. NOMINEES Unless otherwise indicated in the enclosed form of proxy, the persons named in such proxy intend to nominate and vote for the election of the following nominees for the office of director of the Company, to serve as directors for three (3) years or until their respective successors have been duly elected and have qualified. All nominees are presently serving as directors. NOMINEES FOR DIRECTOR TO BE ELECTED AT THE 1995 ANNUAL MEETING OF STOCKHOLDERS
NAME AND YEAR FIRST PRINCIPAL OCCUPATION ELECTED DIRECTOR AND OTHER INFORMATION - - ----------------------------------- -------------------------------------------------------- Clifford J. Grum................... Chairman and Chief Executive Officer of the Company. Mr. 1983 Grum, 60, served as President and Chief Executive Officer of the Company from October 1983 until his election as Chairman in 1991. Mr. Grum is also a director of Cooper Industries, Inc. and Premark International. Bobby R. Inman..................... Admiral Inman, 63, served as Chairman of the Board of 1987 Westmark Systems, Inc., a Texas-based electronics industry holding company, from September 1986, and as its Chief Executive Officer from December 31, 1986, until December 31, 1989. From January 1983 until December 1986, Admiral Inman was President and Chief Executive Officer of the Microelectronics and Computer Technology Corp. in Austin, Texas. Admiral Inman retired from active duty with the United States Navy with permanent four star rank on July 1, 1982. Admiral Inman served as Chairman of the Federal Reserve Bank of Dallas from January 1987 to December 1990. He is a director of Fluor Corporation, Southwestern Bell Telephone Company, Science Applications International Corp. and Xerox Corporation.
5 8
NAME AND YEAR FIRST PRINCIPAL OCCUPATION ELECTED DIRECTOR AND OTHER INFORMATION - - ----------------------------------- -------------------------------------------------------- Herbert A. Sklenar................. Chairman of the Board and Chief Executive Officer of 1993 Vulcan Materials Company, a producer of construction materials and chemicals. Mr. Sklenar, 63, served as President of Vulcan Materials Company from 1983 until his election as Chairman in 1992 and has served as its Chief Executive Officer since 1986. In addition to being a director of Vulcan Materials Company, he is also a director of AmSouth Bancorporation and Protective Life Corporation.
Although the Company does not anticipate that any of the above-named nominees will refuse or be unable to accept or serve as a director of the Company, the persons named in the enclosed form of proxy intend, if any nominee becomes unavailable, to vote the shares represented by the proxy for the election of such other person or persons as may be nominated or designated by management, unless they are directed by the proxy to do otherwise. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF MESSRS. GRUM, INMAN AND SKLENAR AS DIRECTORS OF THE COMPANY. CONTINUING DIRECTORS The following information is provided with respect to directors who will continue to serve as directors of the Company until the expiration of their terms at the times indicated. DIRECTORS TO SERVE UNTIL THE 1996 ANNUAL MEETING OF STOCKHOLDERS
NAME AND YEAR FIRST PRINCIPAL OCCUPATION ELECTED DIRECTOR AND OTHER INFORMATION - - ----------------------------------- -------------------------------------------------------- Anthony M. Frank................... Chairman of Acrogen Inc. Mr. Frank, 63, served as 1992 Postmaster General of the United States from 1988 until 1992. Prior to his appointment as Postmaster General, Mr. Frank served as Chairman of the Board and Chief Executive Officer of the San Francisco-based First Nationwide Bank. He has also served as Chairman of the Federal Home Loan Bank of San Francisco and Chairman of the California Housing Finance Agency, and was the first Chairman of the Federal Home Loan Mortgage Corporation Advisory Board. Mr. Frank is also a director of The Charles Schwab Corporation, General American Investors Company, Inc., Bedford Properties, Inc., Crescent Real Estate Equities, Irvine Apartment Communities, and Living Centers of America.
6 9
NAME AND YEAR FIRST PRINCIPAL OCCUPATION ELECTED DIRECTOR AND OTHER INFORMATION - - ----------------------------------- -------------------------------------------------------- Walter P. Stern.................... Chairman of the Board of Capital Group International, 1984 Inc., a wholly-owned subsidiary of The Capital Group Companies, Inc., since March 1988; Mr. Stern, 66, also serves as Vice Chairman of the Board of Capital Research International, a partially-owned subsidiary (also owned by subsidiaries of The Capital Group Companies, Inc.) of Capital Research and Management Company, an investment management organization that serves as an investment advisor to over thirty public and private investment funds, including The American Balanced Fund, The Growth Fund of America, The AMCAP Fund, The Income Fund of America, Inc., Fundamental Investors, Inc., EuroPacific Growth Fund and New Perspective Fund, Inc., of each of which Mr. Stern is Chairman of the Board. Mr. Stern is also Chairman and a director of the Emerging Markets Growth Fund, Inc; and a director of The Capital Group Companies, Inc., which owns all of the stock of Capital Research and Management Company. Mr. Stern is also a director of Birla Capital International AMC Ltd. (Bombay). Charlotte Temple................... Investor. During the past five years, Ms. Temple, 55, 1994 has been associated with various civic organizations while pursuing private interests. Prior to that time, her experience was in the real estate investment area. Ms. Temple is also a director of Exeter Investment Company.
DIRECTORS TO SERVE UNTIL THE 1997 ANNUAL MEETING OF STOCKHOLDERS
NAME AND YEAR FIRST PRINCIPAL OCCUPATION ELECTED DIRECTOR AND OTHER INFORMATION - - ----------------------------------- -------------------------------------------------------- Paul M. Anderson................... President and director of Panhandle Eastern Corporation. 1994 Mr. Anderson, 49, has served as President of Panhandle Eastern Corporation since 1993, as Group Vice President from 1991 through 1993, and as President of its subsidiary Panhandle Eastern Pipe Line Company since 1991. From February 1990 until 1991, he served as Vice President, Finance and Chief Financial Officer of Inland Steel Industries, Inc. Mr. Anderson served in a number of management positions with Texas Eastern Corporation beginning in 1977 and was Senior Vice President when that company was acquired by Panhandle Eastern Corporation in 1989. He serves on the boards of the Gas Research Institute, the Institute of Gas Technology and TEPPCO Partners, L.P. Robert Cizik....................... Chairman of the Board and Chief Executive Officer of 1984 Cooper Industries, Inc. Mr. Cizik, 63, served as President of Cooper Industries, Inc., a diversified manufacturing company, from April 1973 until September 1992, and has served as its Chief Executive Officer since April 1973 and as its Chairman of the Board since April 1983. Mr. Cizik is also a director of Harris Corporation, Panhandle Eastern Corporation, and Air Products and Chemicals, Inc.
7 10
NAME AND YEAR FIRST PRINCIPAL OCCUPATION ELECTED DIRECTOR AND OTHER INFORMATION - - ----------------------------------- -------------------------------------------------------- Arthur Temple III.................. Chairman of the Board and Chief Executive Officer of 1984 Exeter Investment Company. Mr. Temple III, 53, has served as Chairman of the Board of Exeter Investment Company from 1975 to early 1982 and since March 1986. From January 1981 until March 1986 he served as a member of the Railroad Commission of Texas, which regulates mineral resources and for-hire highway transportation in Texas. Larry E. Temple.................... Mr. Temple, 59, is an attorney and during the last five 1991 years has been in private practice. He has served as Chairman of the Texas Select Committee on Higher Education, as Chairman of the Texas Higher Education Coordinating Board, and as a member of the Texas Guaranteed Student Loan Corporation. Mr. Temple has also served on several boards of the University of Texas and is a member of the Board of the Lyndon B. Johnson Foundation. Mr. Temple formerly served as Special Counsel to President Lyndon B. Johnson and as an Executive Assistant to Texas Governor John Connally. Mr. Temple is also a director of CRSS Inc.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS There is no family relationship between any of the nominees, continuing directors and executive officers of the Company other than Mr. Temple III and Ms. C. Temple, who are brother and sister. Mr. Temple III is a director, officer and 66 2/3% stockholder of Demco Manufacturing Company ("Demco"). During 1994, Demco performed machinery repair services for Temple-Inland Forest Products Corporation, a wholly-owned subsidiary of the Company, in the ordinary course of business at an aggregate cost to Temple-Inland Forest Products Corporation of $178,645. It is expected that Demco will continue to perform services for subsidiaries of the Company in the future. In 1994, Temple-Inland Forest Products Corporation purchased 770.351 acres of land from a third party for $341,295.00 and conveyed it to Arthur and Lottie Temple in exchange for standing timber valued at $341,295.00 on 247.27 acres of land owned by Mr. and Mrs. Temple. Mr. Temple is the father of Mr. Temple III and Ms. C. Temple. The value of the timber was determined by an appraisal conducted by the Company's foresters. Guaranty Federal Bank, F.S.B., a consumer savings bank that is a wholly-owned subsidiary of the Company, made a loan during 1994 to a limited partnership, one of whose limited partners is Harold C. Maxwell, a Group Vice President of the Company, and another of whose limited partners is a corporation, 25% of the stock of which is owned by another corporation that is effectively controlled by the family of Mr. Temple III and Ms. C. Temple. The loan was made in the ordinary course of business, was made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons, and did not involve more than the normal risk of collectibility or present other unfavorable features. COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to the Company pursuant to Rule 16a-3(e) during its most recent fiscal year and Forms 5 and amendments thereto or written representations in lieu of Form 5 furnished to the Company with respect to its most recent fiscal year, the Company has not identified any person who failed to file on a timely basis, as disclosed in the above forms, reports required by Section 16(a) of the Exchange Act during the most recent fiscal year or prior fiscal years. 8 11 COMMITTEES OF THE BOARD OF DIRECTORS The Company has six standing committees of the Board. Set forth below is a description of the functions of those committees and the members of the Board serving on such committees. Audit Committee. The primary responsibility of the Audit Committee is to provide the Board of Directors assistance in fulfilling its fiduciary responsibility to the stockholders, and the investment community, relating to the accounting and reporting practices of the Company, the adequacy of corporate financial controls, and the quality and integrity of the financial statements of the Company and all of its wholly and majority owned subsidiaries, except for Guaranty Federal Bank, F.S.B., which has its own board of directors and audit committee. The functions of the Audit Committee include the review of the professional services and independence of the Company's independent auditors; the review, in consultation with the independent and internal auditors, of the plan and results of the annual audit, the adequacy of the Company's internal control systems and the results of the Company's internal audits; and the review, with management and the independent auditors, of the Company's annual report to stockholders and financial reporting practices. The Audit Committee annually considers the qualifications of the Company's independent auditors and makes recommendations to the Board as to their selection. The members of the Audit Committee are Messrs. Stern (Chairman), Frank, L. Temple and Ms. C. Temple. The Chairman of the Board is a nonvoting ex-officio member. During 1994, the Audit Committee met three (3) times. Executive Committee. The Executive Committee may exercise all the authority of the Board of Directors in the management of the business and affairs of the Company, except for matters related to the composition of the Board, changes in the By-laws and certain other significant corporate matters. The members of the Executive Committee are the Chairman of the Board, who will serve as Chairman of the Executive Committee, and the Chairman of each standing committee of the Board. The Executive Committee did not meet in 1994. Finance Committee. The Finance Committee reviews the Company's financial planning, structure, condition and requirements for funds; makes recommendations to the Board of Directors concerning all forms of major financing, including the issuance of securities, corporate borrowings, and investments; monitors the Company's relationship with its lenders, compliance with financing agreements, and financial disclosure policies; reviews capital expenditures and makes recommendations to the Board concerning the financing thereof; makes recommendations to the Board concerning the Company's dividend policy; makes recommendations to the Board concerning the stock repurchase program; and oversees the Company's employee benefit plan investment committee and policies. The members of the Finance Committee are Messrs. Cizik (Chairman), Anderson, Sklenar, and Temple III. The Chairman of the Board is a nonvoting ex-officio member. The Finance Committee met two (2) times during 1994. Management Development and Executive Compensation Committee. The Management Development and Executive Compensation Committee ("Compensation Committee") is responsible for ensuring that a proper system of short and long-term compensation is in place to provide performance-oriented incentives to management; overseeing management succession and development programs; making recommendations concerning compensation programs, retirement plans and other employee benefit programs; approving the salaries and bonuses of all officers of the Company and certain other personnel; and making recommendations with respect to bonus, stock option, restricted stock, phantom stock, stock performance, stock appreciation right or other current or proposed incentive plans. The members of the Compensation Committee are Messrs. Frank (Chairman), Inman, Sklenar, and Stern. The Chairman of the Board is a nonvoting ex-officio member. During 1994, the Compensation Committee met four (4) times. Nominating Committee. The Nominating Committee periodically reviews the structure of the Board to assure that the proper skills and experience are represented on the Board, recommends nominees to serve on the Board of Directors, reviews potential conflicts of prospective Board members, recommends the size of the Board, recommends the membership of the committees, and reviews outside directorships in other publicly held companies by senior officers of the Company. Nominees to serve on the Board of Directors are selected on the basis of recognized achievements and their ability to bring various skills and experience to the deliberations of the Board. In carrying out its responsibilities, the Nominating Committee considers 9 12 candidates recommended by other directors and employees of the Company. The members of the Nominating Committee are Messrs. Temple III (Chairman), Cizik, Inman, and Sklenar. The Chairman of the Board is a nonvoting ex-officio member. The Nominating Committee met one (1) time during 1994. Pursuant to the Company's By-laws, notice of a stockholder's intent to make a nomination for the Board of Directors must contain certain specified information regarding the nominating stockholder and the nominee and must be received by the Secretary of the Company not less than 75 days nor more than 100 days prior to the anniversary date of the immediately preceding annual meeting of stockholders (or in the case of an annual meeting called for a date more than 50 days prior to such anniversary date or in the case of a special meeting of stockholders, not later than the close of business on the 10th day following the date on which notice of such annual meeting or special meeting is first mailed to stockholders or made public, whichever occurs first.) Public Policy/Environmental Committee. The Public Policy/Environmental Committee acts in an advisory and consulting capacity to the Board of Directors regarding the Company's activities that relate to matters of public policy and the environment. In fulfilling its responsibilities, the committee considers and reviews from time to time the Company's policies and practices that address issues of social and public concern, as well as significant legislative, regulatory and social trends. The members of the Public Policy/Environmental Committee are Messrs. L. Temple (Chairman), Anderson, Cizik and Ms. C. Temple. The Chairman of the Board is a nonvoting ex-officio member. The Public Policy/Environmental Committee met two (2) times during 1994. BOARD MEETINGS During 1994, the Board of Directors held four (4) meetings. Each director attended at least 75% of the aggregate of the total number of meetings of the Board of Directors and the total number of meetings held by all committees of the Board on which he served except for Mr. Cizik, who was unable to attend one (1) Board meeting and one (1) meeting of two (2) committees due to a sudden illness. DIRECTOR COMPENSATION Directors who are not employees of the Company will receive in 1995 an annual retainer of $30,000 and a $2,000 fee for attendance at regular and special Board meetings. Directors who serve on committees of the Board receive $500 for each committee meeting held in conjunction with a Board meeting and $1,500 for each other committee meeting. The chairmen of committees of the Board receive an additional annual retainer of $2,500. Directors are reimbursed for expenses incurred in attending Board and committee meetings, including those for travel, food and lodging. Directors and members of committees of the Board who are employees of the Company are not compensated for their Board and committee activities. Under the Company's Stock Option Plan, each person who is first elected a non-employee director is automatically granted upon such election a nonqualified stock option covering 10,000 shares of Common Stock at an exercise price per share equal to the fair market value of the stock on the date the option is granted. Any non-employee director may also, pursuant to the terms of the Company's Stock Option Plan, make an election to receive nonqualified stock options in lieu of his annual retainer fees. Under the Retirement and Deferred Compensation Plan for Directors of Temple-Inland Inc. (the "Directors' Retirement Plan"), a non-employee director who remains a member of the Board until retirement age or who retires earlier after serving on the Board for a period of at least ten (10) years is entitled to receive an annual retirement benefit equal to the then current annual retainer fee. The benefit will be paid for a number of years equal to the greater of (i) the number of years the director served as a member of the Board, or (ii) five (5) years. In the event of the director's death, the remainder of the benefit will be paid to his spouse if living. In lieu of the retirement benefits previously described, if a non-employee director ceases to be a member of the Board at any time within two (2) years after the occurrence of a change in control of the Company for any reason other than the director's retirement or death, the director will be paid a lump-sum retirement benefit equal to the product of (A) and (B), where (A) is the greater of five (5) or the number of years the 10 13 director served as a member of the Board, and (B) is the greater of the annual retainer fee being paid to directors at the time the director ceases to be a member of the Board or the annual retainer fee in effect immediately prior to the change in control. In the event that the retirement benefit payable to a director is subject to the 20% excise tax imposed under the Internal Revenue Code of 1986 with respect to certain payments made in connection with a change in control, the Directors' Retirement Plan provides for an additional payment to be made to the director such that he retains on an after-tax basis the same amount as he would have if no excise tax had been imposed. Under the Directors' Retirement Plan, a non-employee director may also elect to defer his Board fees until the earlier of retirement, death, or, in certain circumstances, termination of membership on the Board. Any Board fees that are deferred accrue interest at the prime commercial lending rate. EXECUTIVE COMPENSATION Report of the Management Development and Executive Compensation Committee on Executive Compensation The Company's executive compensation program is designed to align compensation with business strategy, performance, and stockholder values. The program includes salary, short term cash incentives, and a long term program primarily based on stock options. The Committee considers all elements of the compensation package in total, rather than any one element in isolation. In 1994, for example, salaries were maintained at existing levels, while incentive bonuses were used to reward performance and long term incentive awards were made as motivation for future performance. In making compensation decisions, the Committee uses a general process and exercises its business judgment to determine the amounts. It is the Company's policy to obtain the maximum deduction on its tax return for compensation paid to its executive officers consistent with the Company's compensation goals. All compensation paid in 1994 should qualify for a deduction under Section 162(m) of the Internal Revenue Code. Temple-Inland has had essentially the same executive compensation program as outlined below since its inception in 1984. During this period, the compensation philosophy has been to ensure that shareholder returns are a top priority in evaluating the effectiveness of the compensation program. The following paragraphs outline the Compensation Committee's objectives. Base Salary. Base salaries are maintained at competitive levels considering the performance and longevity of the employee. To ensure that the Company's compensation remains competitive, the Committee from time to time reviews information from several independent surveys of comparably-sized companies. Since the market for executive talent extends beyond any particular industry, the survey data includes both companies in the industry as well as companies outside the industrial classification represented in the Paper Industry Index referred to below under "Performance Graph." While the Committee does not target salary levels to the high, median or low end of the ranges or to any particular percentile, surveys indicate base salaries for the Company's named executive officers are currently below the 50th percentile for the average of similar companies. Instead, the Committee places its emphasis on the particular executive's experience, responsibilities, and performance. No specific formula is applied to determine the weight of each factor. However, the Company has historically followed a policy of using the incentive bonus rather than base salary to reward outstanding performance. Incentive Bonus. Short term cash incentive awards are largely based on individual performance and on the performance of the group or business segment in which the individual is a key employee. Included in the evaluation of an employee are the current earnings of the group, personal performance, and the degree to which the employee's actions have laid the groundwork for future earnings. Financial performance of the executive officer's group is given greater weight than other business accomplishments in determining bonus payments. The types and relative importance of specific financial and other business factors vary among the Company's executives depending on their positions and the particular operations or functions for which they are responsible. The evaluation of the CEO is based on the consolidated results of the Company. 11 14 The Committee does not establish targeted award levels or goals at the beginning of the year. Instead, the Committee reviews actual earnings and performance (including comparisons to the competitors above) after the end of the year and determines in its business judgment the size of each executive's award. For instance, the Building Materials Group increased its earnings from $99.1 Million in 1993 to $132.6 Million in 1994 and the award to the Group Vice President of this segment increased from $200,000 in 1993 to $275,000 in 1994. The Corrugated Container Group increased its earnings from $21 Million in 1993 to $102 Million in 1994 and its Group Vice President had his bonus increased from $70,000 in 1993 to $175,000 in 1994. Although the earnings of the Financial Services Group declined from $67.5 Million in 1993 to $56.3 Million in 1994, the executive officer in this group assumed increased responsibilities during the year as a result of the transfer of the former group vice president of this segment. The current executive officer therefore received a bonus of $250,000 in 1994, the same as his $250,000 bonus in 1993, while the former executive officer received a bonus of $150,000 taking into account both his partial year's performance in the Financial Services Group and his performance in the Bleached Paperboard Group following his transfer, compared to his bonus of $275,000 in 1993. Although the Bleached Paperboard Group had a loss of $22.1 Million for 1994, the Group Vice President of this segment received a bonus of $75,000 in 1994 compared with no bonus in 1993 as a result of his contributions to the mill's expansion program and efforts to position this segment for future profitability. No specific weightings have been assigned under the bonus program to the factors considered by the Committee in the exercise of its business judgment. Long Term Incentive Awards. Long term incentive awards in the Company's Long Term Incentive Award Program for those key executives listed in the proxy statement are an annual tandem grant of stock options and performance units. There is no other long term incentive program. The primary emphasis of the program is the stock option grant, which is a dollar value of options based on the executive's position and importance to the Company's long range performance. These options are granted at market and expire in five (5) years. Option awards are basically set at a percentage of targeted compensation. However, within these guidelines, the Committee also considers previous option grants, tenure, and responsibilities of the executive. In the case of new key executives, an initial grant above targeted levels may be made to correlate potential compensation with shareholder results. Since the tandem Performance Unit Plan was adopted, the Committee has held the belief that the cash award should have less potential than the tandem stock option award as an additional incentive for the executive to attempt to increase shareholder value. The potential cash award under the Performance Unit Plan is not only reduced to 50% of the option value, but is also capped at 150% of the initial grant value. The tandem performance unit grant expires in four (4) years. The performance unit is terminated by an exercise of the option granted at the same time. If the performance unit is paid, the related stock option is canceled. The performance unit has certain hurdles to ensure that the Company's performance in the next four (4) years exceeds its performance in the past four (4) years as well as inflation, but its main objective is related to the Company's performance compared to a selected group of competitors in both earnings per share growth and return on equity. Reference is made to page 15 for a more complete explanation of the potential payouts under the Performance Unit Plan. Although annual awards have been made since 1984, the specified formulas have only generated one (1) cash payment which occurred in 1991. In all other years, the performance unit awards have been terminated without payment, although the related stock option awards continued for another year. Likewise, on February 2, 1995, the Committee determined that the performance units awarded on February 1, 1991 did not meet the performance hurdles over the award period from 1991 through 1994 and terminated the performance units without payment. The related stock option award granted in 1991 continues until February 1996. With the exception of an initial award to Mr. Howes upon his employment in 1990 to replace awards from his former employer that were forfeited, the key executives included in the proxy statement do not receive restricted stock awards. The Company maintains a policy of having this alternative available to attract new executives. 12 15 The Chief Executive Officer. In reviewing Mr. Grum's performance, the Committee considers all of the factors set forth in the above paragraphs. However, the Committee focuses primarily on the Company's performance, measured in large part by its net earnings. The Company's 1994 earnings per share were $2.35, up 94% from the prior year's $1.21 (net of accounting changes) and Mr. Grum's bonus was increased from $100,000 in 1993 to $300,000 in 1994. Mr. Grum received a $50,000 increase in base salary in February 1993 and no change was made to his base salary in 1994. A comparison of Mr. Grum's cash compensation for the last three (3) years with the Company's net earnings during that period is set forth in the following table:
INCENTIVE NET EARNINGS YEAR SALARY COMPENSATION TOTAL OF THE COMPANY --------------------------------------- -------- ------------ ------------ --------------- 1994................................... $503,000 $300,000 $803,000..... $131.4 Million 1993................................... $495,250 $100,000 $595,250..... $117.3 Million 1992................................... $450,000 $250,000 $700,000..... $146.9 Million
As noted above, the size of long term incentive awards is set in accordance with the individual executive's responsibilities, other awards, and performance. Mr. Grum's awards were determined in this same manner. He received 6,000 options in 1992, 7,912 in 1993, and 11,428 in 1994. The difference in the number of options granted from year to year is due to variations in the stock price on the date of award ($54.19 in 1992, $50.56 in 1993, and $52.50 in 1994), as well as adjustments made by the Committee in consideration of previous grants. The grant in 1994 reflected an increase due to the Committee's determination that the number of units granted should be revised upward to reflect competitive incentive program practices for other companies within the competitive universe. In each case, he received a tandem performance unit award equal to one-half (1/2) the number of options. Other Information. Reference is made to the following charts and tables for actual compensation grants and awards to key executives, as well as the Company's performance for the last five (5) years, and to pages 1 and 25 of the Company's Annual Report to Shareholders for information concerning the Company's profitability. Anthony M. Frank, Chairman Bobby R. Inman Herbert A. Sklenar Walter P. Stern 13 16 The following table summarizes all compensation paid during the Company's last fiscal year to (i) the Chief Executive Officer, (ii) the four other most highly compensated executive officers who were serving as executive officers at the end of the last completed fiscal year, and (iii) one additional individual who would have been included in the preceding category but for the fact that he was not serving as an executive officer at the end of the last completed fiscal year: TABLE 1: SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION ANNUAL COMPENSATION ------------------------------------- -------------------------------- AWARDS PAYOUTS OTHER ----------------------- ----------- ANNUAL RESTRICTED SECURITIES COMPEN- STOCK UNDERLYING LTIP ALL OTHER NAME AND SATION AWARD(S) OPTIONS/ PAYOUTS COMPENSATION PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($)(1) ($)(2) SARS (#) ($) ($)(3) - - ---------------------------- ----- ---------- --------- ------- ---------- ---------- ----------- ------------ (A) (B) (C) (D) (E) (F) (G) (H) (I) Clifford J. Grum, 1994 $503,000 $300,000 N/A $0 11,428 $ 0 $ 2,500 Chairman and Chief 1993 495,250 100,000 N/A 0 7,912 0 2,500 Executive Officer 1992 450,000 250,000 N/A 0 6,000 0 2,500 William B. Howes, 1994 $325,620 $175,000 N/A $0 7,620 $ 0 $ 2,500 Group Vice President 1993 299,370 70,000 N/A 0 7,912 0 2,500 1992 268,785 140,000 N/A 0 4,612 0 2,500 Kenneth M. Jastrow, II, 1994 $200,000 $250,000 N/A $0 5,716 $ 0 $ 2,500 Chief Financial Officer 1993 196,154 250,000 N/A 0 5,936 0 2,500 1992 175,000 250,000 N/A 0 3,692 0 2,500 Harold C. Maxwell, 1994 $233,000 $275,000 N/A $0 6,668 $ 0 $ 2,500 Group Vice President 1993 230,635 200,000 N/A 0 6,924 0 2,500 1992 211,539 110,000 N/A 0 5,536 0 2,500 David L. Ashcraft, 1994 $243,000 $ 75,000 N/A $0 6,668 $ 0 $ 2,500 Group Vice President 1993 240,635 0 N/A 0 6,924 0 2,500 1992 219,231 70,000 N/A 0 5,536 0 2,500 Robert F. Adelizzi, 1994 $316,584 $150,000 N/A $0 7,620 $ 0 $ 19,286 formerly Group Vice 1993 325,000 275,000 N/A 0 7,912 0 11,754 President (4) 1992 303,125 302,000 N/A 0 6,920 0 11,510
- - --------------- (1) Not applicable. The dollar value of perquisites and other personal benefits, or securities or property paid or earned during the fiscal year other than pursuant to a plan, does not exceed the lesser of $50,000 or 10% of the annual salary and bonus reported for each officer and is therefore not reported. (2) Mr. Howes was awarded 6,000 restricted incentive shares on August 3, 1990 upon his employment to replace awards from his former employer that were forfeited. One-half ( 1/2) of these shares vested on August 3, 1994. The other half ( 1/2), which vests on August 3, 1995 and which Mr. Howes still holds, would be valued at $135,375 based on the closing price of $45 1/8 of a share of unrestricted Temple-Inland Inc. common stock on the New York Stock Exchange on December 30, 1994. Until the shares vest, Mr. Howes is paid compensation in lieu of dividends on these shares. The compensation is equal to dividends paid on an equal number of unrestricted shares. (3) Amounts shown are annual contributions or other allocations to defined contribution plans. (4) During 1994, Mr. Adelizzi resigned as Group Vice President of the Company and also resigned as Chairman and Chief Executive Officer of Temple-Inland Financial Services Inc., a wholly owned subsidiary of the Company. Mr. Adelizzi continued to act as a consultant to the Company and later transferred to the Company's Bleached Paperboard operation as its Vice-President, Sales and Administration. As part of his transfer and corresponding reduction in compensation, Mr. Adelizzi was guaranteed that at the time of his retirement, the accrued value of his retirement benefits would be no less than $700,000. If Mr. Adelizzi's accrued retirement benefits do not equal such amount, the Company will pay him the balance. In his new position, Mr. Adelizzi is no longer considered an executive officer by the Company. None of the five (5) current executive officers named above has an employment contract with the Company or an agreement providing for severance payments in the event his employment is terminated. 14 17 During 1994, the Company had a stock option plan in place under which options were granted to employees. Employees also exercised options granted under a prior plan. Each of the plans was approved by the stockholders and administered by non-employee members of the Board of Directors. The options were granted at full market value on the date of the grant, and these exercise prices have never been reduced. Options have been granted to approximately 325 current middle and upper level company employees who have direct responsibilities to improve the profitability of the Company. The following table summarizes the stock options granted to the five (5) named executive officers and one (1) former executive officer in the last fiscal year: TABLE 2: OPTION/SAR GRANTS IN LAST FISCAL YEAR (1)
POTENTIAL REALIZABLE VALUE AT ASSUMED ANNUAL RATES OF STOCK PRICE APPRECIATION FOR OPTION INDIVIDUAL GRANTS TERM - - -------------------------------------------------------------------------------------------------- ------------------------- NUMBER OF PERCENT OF TOTAL SECURITIES OPTIONS/ UNDERLYING SARS EXERCISE OPTIONS/ GRANTED TO OR BASE SARS GRANTED EMPLOYEES IN PRICE EXPIRATION NAME (#) FISCAL YEAR ($/SH) DATE 5%($) 10%($) - - ---------------------------------- ------------- ---------------- -------- ---------- ---------- ---------- (A) (B) (C) (D) (E) (F) (G) - - ---------------------------------- ------------- ---------------- -------- ---------- ---------- ---------- Clifford J. Grum.................. 11,428 4.7% $52.50 02/03/99 $ 166,000 $ 366,000 William B. Howes.................. 7,620 3.1% $52.50 02/03/99 110,000 244,000 Kenneth M. Jastrow, II............ 5,716 2.3% $52.50 02/03/99 83,000 183,000 Harold C. Maxwell................. 6,668 2.7% $52.50 02/03/99 97,000 214,000 David L. Ashcraft................. 6,668 2.7% $52.50 02/03/99 97,000 214,000 Robert F. Adelizzi................ 7,620 3.1% $52.50 02/03/99 110,000 244,000
- - --------------- (1) Options to purchase Temple-Inland Inc. common stock. The exercise price is the average of the high and low sales price of a share of Company Common Stock on the New York Stock Exchange on the date of grant. Exercise prices have never been repriced. Withholding taxes may be paid with exercised shares. No general or freestanding stock appreciation rights ("SARs") were granted. All grants to the named executive officers under the Stock Option Plan include a provision for acceleration of vesting in certain change of control situations. Options become exercisable in 25% increments on 08/03/94, 02/03/95, 02/03/96, and 02/03/97. Each of the named executives was granted one (1) tandem performance unit valued at $52.50, the fair market value of a share of the Company's common stock on the date of grant, for every two (2) options granted. The performance goals for this award will be measured over the four (4) year period from 1994 through 1997. Under the terms of the Performance Unit Plan, a cash award is possible only if (i) the Company's average earnings per share during the four (4) year grant period exceeds the average earnings per share for the four (4) years prior to the date of grant, (ii) the Company's growth in earnings per share during the grant period exceeds that of industry competitors, and (iii) the Company's average return on equity exceeds 9%, which will be adjusted upward if that rate does not exceed the average rate of inflation plus 3%. The group of competitors for this plan is eight (8) selected paper and forest products companies with product mix similar to the Company's. These standards would yield a threshold award of $12,500 on a $100,000 grant. To the extent the threshold levels are exceeded, it is possible to receive a maximum award of 150% of the initial value. The maximum award on a $100,000 grant would be $150,000. Performance units are cancelled if the related stock options are exercised, and the stock options are cancelled if the performance units are paid. 15 18 The following table summarizes the stock option exercises and value of options held at year-end of the five (5) named executive officers and one (1) former officer: TABLE 3: AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
NUMBER OF SECURITIES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS SHARES AT FISCAL YEAR-END (#)(1) AT FISCAL YEAR-END ($)(3) ACQUIRED ON VALUE -------------------------- -------------------------- NAME EXERCISE (#) REALIZED ($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE - - ---------------------------- ------------ --------------- ----------- ------------- ----------- ------------- (A) (B) (C) (D) (E) - - ---------------------------- ------------ --------------- -------------------------- -------------------------- Clifford J. Grum.............. 22,808 $ 414,878 30,823 14,027 $ 185,345 $ 0 William B. Howes.............. 0 0 24,288 12,824 $ 163,236 $ 24,260 Kenneth M. Jastrow, II........ 0 0 11,538 8,178 $ 0 $ 0 Harold C. Maxwell............. 9,776 $ 153,972 17,641 9,847 $ 79,420 $ 0 David L. Ashcraft............. 9,776 $ 194,249 17,641 9,847 $ 79,420 $ 0 Robert F. Adelizzi............ 0 0 11,051 11,401 $ 0 $ 0
- - --------------- (1) Some of the options listed in the chart include an equal number of tandem limited SARs, which can only be exercised in certain change of control situations. The number of options with tandem limited SARs held by Messrs. Grum, Howes, Jastrow, Maxwell, Ashcraft, and Adelizzi is 33,422, 19,492, 14,000, 20,820, 20,820, and 14,832, respectively. Since there have been no change of control situations, none of these SARs have ever been exercised. Tandem limited SARs are not granted under the Company's current Stock Option Plan. (2) Value based on the average of the high and low sales prices of a share of Temple-Inland Inc. common stock on the New York Stock Exchange on the date of exercise, which is the valuation used in the Stock Option Plan. (3) Value based on the average of the high and low sales prices of a share of Temple-Inland Inc. common stock on the New York Stock Exchange on December 30, 1994. 16 19 PERFORMANCE GRAPH During the five preceding fiscal years, the Company's cumulative total stockholder return compared to the Standard & Poor's 500 Stock Index and to the Standard & Poor's Paper Industry Index was as shown in the following Table 4: TABLE 4: TEMPLE-INLAND INC. COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
MEASUREMENT PERIOD TEMPLE-INLAND (FISCAL YEAR COVERED) INC. S&P 500 S&P PAPER 1989 100.00 100.00 100.00 1990 93.71 96.89 90.34 1991 155.13 126.42 114.59 1992 158.10 136.05 131.02 1993 157.96 149.76 144.40 1994 144.40 151.74 150.46
ASSUMES $100 INVESTED ON DECEMBER 31, 1989 *TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS The five (5) named executive officers and one (1) former executive officer also participate in defined benefit pension plans of the Company's subsidiaries, with estimated benefits shown below. TABLE 5: PENSION PLAN TABLE
YEARS OF SERVICE ----------------------------------------------------------------------- REMUNERATION 10 15 20 25 30 35 - - ---------------------------- --------- --------- --------- --------- --------- ----------- $ 125,000................... $ 19,000 $ 28,000 $ 38,000 $ 47,000 $ 57,000 $ 66,000 150,000.................. 23,000 34,000 46,000 57,000 69,000 80,000 175,000.................. 27,000 40,000 54,000 67,000 81,000 94,000 200,000.................. 31,000 46,000 62,000 77,000 93,000 108,000 225,000.................. 35,000 52,000 70,000 87,000 105,000 122,000 250,000.................. 39,000 58,000 78,000 97,000 117,000 136,000 300,000.................. 47,000 70,000 94,000 117,000 141,000 164,000 350,000.................. 55,000 82,000 110,000 137,000 165,000 192,000 400,000.................. 63,000 94,000 126,000 157,000 189,000 220,000 450,000.................. 71,000 106,000 142,000 177,000 213,000 248,000 500,000.................. 79,000 118,000 158,000 197,000 237,000 276,000 600,000.................. 95,000 142,000 190,000 237,000 285,000 332,000 700,000.................. 111,000 166,000 222,000 277,000 333,000 388,000 800,000.................. 127,000 190,000 254,000 317,000 381,000 444,000 900,000.................. 143,000 214,000 286,000 357,000 429,000 500,000 1,000,000.................. 159,000 238,000 318,000 397,000 477,000 556,000
The above table shows the estimated annual pension payable upon retirement to employees in specified remuneration and years-of-service classifications. Retirement benefits are calculated using final average pay based on the highest five (5) of the employee's last ten (10) years of service. Compensation covered by the 17 20 Company's retirement plans includes salaries and bonuses, but excludes all other forms of compensation shown in the foregoing tables such as restricted shares, stock options, and performance units. Messrs. Adelizzi, Ashcraft, Grum, Howes, Jastrow and Maxwell are currently credited with approximately 3, 26, 26, 4, 16 and 31 years of service, respectively. If such officers continue in the employ of the Company until their respective retirement dates, at such time they would be credited with approximately 8, 42, 31, 11, 33 and 42 years of service, respectively. The estimated amounts are based on the assumption that payments under the Company's retirement plans will commence upon normal retirement (age 65), that the Company's retirement plans will continue in force and that the benefit payment will be in the form of a life annuity. Amounts shown in the table above are not subject to any deduction for Social Security or other offset amounts. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION During the last completed fiscal year, there were no compensation committee interlocks or insider participation. PROPOSAL TO RATIFY THE SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 30, 1995 Upon the recommendation of the Audit Committee of the Board of Directors, none of whose members is an officer of the Company, the Board of Directors has selected Ernst & Young LLP as independent auditors for the Company to examine its consolidated financial statements for the fiscal year ending December 30, 1995 and has determined that it would be desirable to request that the stockholders ratify such selection. Ernst & Young LLP currently serves the Company and its subsidiaries as independent auditors. Representatives of Ernst & Young LLP will be present at the Annual Meeting with the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions from stockholders. Stockholder ratification is not required for the selection of Ernst & Young LLP, since the Board of Directors has the responsibility for selecting the Company's independent auditors. The selection, however, is being submitted for ratification at the Annual Meeting. No determination has been made as to what action the Board of Directors would take if stockholders do not ratify the selection. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 30, 1995. OTHER BUSINESS The Board of Directors knows of no other business that may properly be, or which is likely to be, brought before the Annual Meeting. If, however, any other business should properly be presented to the Annual Meeting, the persons named in the accompanying proxy will vote the proxy as in their discretion they may deem appropriate. 18 21 DATE FOR RECEIPT OF STOCKHOLDER PROPOSALS Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended, stockholders may present proper proposals for inclusion in the Company's proxy statement and for consideration at its Annual Meeting of Stockholders by submitting their proposals to the Company in a timely manner. In order to be so included for the 1996 Annual Meeting, stockholder proposals must be received by the Company by November 25, 1995 and must otherwise comply with the requirements of Rule 14a-8. The Company's By-laws contain an advance notice procedure with regard to items of business to be brought before an Annual Meeting of Stockholders by a stockholder. These procedures require that notice be made in writing to the Secretary of the Company and that such notice be received at the executive offices of the Company not less than 75 days nor more than 100 days prior to the anniversary date of the immediately preceding Annual Meeting of Stockholders (or in the case of an annual meeting called for a date more than 50 days prior to such anniversary date, not later than the close of business on the 10th day following the date on which notice of such annual meeting is first mailed to stockholders or made public, whichever occurs first). The By-laws require that the notice of the proposal contain certain information concerning the proposing stockholder and the proposal. The Company's By-laws also contain an advance notice procedure for the nomination of candidates for election to the Board of Directors by stockholders. For a brief description of such procedures, see "Committees of the Board of Directors -- Nominating Committee." A copy of the By-law advance notice provision may be obtained, without charge, upon written request to the Secretary of the Company at the address set forth on page 1 of this Proxy Statement. By Order of the Board of Directors M. RICHARD WARNER Secretary Diboll, Texas March 24, 1995 19 22 [FRONT OF CARD] TEMPLE-INLAND INC. 303 SOUTH TEMPLE DRIVE DIBOLL, TEXAS 75941 PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY FOR THE ANNUAL MEETING ON MAY 5, 1995 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS P R O X Y The undersigned hereby acknowledges receipt of the Notice of the Annual Meeting of Stockholders and proxy statement each dated March 24, 1995 and does hereby appoint Clifford J. Grum, David H. Dolben, and M. Richard Warner, and each of them as Proxies, each with the power to appoint his substitute and hereby authorizes each of them to represent and vote, as designated below, all the shares of Common Stock, par value $1.00 per share, of Temple-Inland Inc. held of record by the undersigned on March 8, 1995 at the annual meeting of stockholders to be held on Friday, May 5, 1995, and any adjournment(s) thereof: CONTINUED AND TO BE SIGNED ON REVERSE SIDE OF THIS CARD. DO NOT FOLD. PLEASE VOTE. ********************** * * * SEE REVERSE SIDE * * * ********************** - - -------------------------------------------------------------------------------- [BACK OF CARD] Please mark your votes /X/ as in this example. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NOT DIRECTION IS MADE THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2. FOR WITHHOLD AUTHORITY / / / / 1. Proposal to select as Directors of Temple-Inland Inc. the following persons to hold office until the expiration of their terms or until their successors have been duly elected and have qualified. Nominees for Director: Clifford J. Grum, Bobby R. Inman, and Herbert A. Sklenar (INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR INDIVIDUAL NOMINEES WRITE THE NAMES OF SUCH NOMINEES IN THE SPACE PROVIDED BELOW.) _________________________________ FOR AGAINST ABSTAIN / / / / / / 2. Proposal to ratify the selection of Ernst & Young L.L.P. as independent auditors of Temple-Inland Inc. for the fiscal year ending December 30, 1995. 3. In their discretion the proxies are authorized to vote upon such other business as may properly come before the meeting. Please sign exactly as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. _________________________ _________________________ SIGNATURE(S) DATE -----END PRIVACY-ENHANCED MESSAGE-----