def14a
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 þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-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):
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Fee paid previously with preliminary materials. |
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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. |
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NOTICE OF THE
2010 ANNUAL MEETING
OF STOCKHOLDERS
AND
PROXY STATEMENT
PLEASE
VOTE!
BROKERS CAN NO LONGER VOTE YOUR SHARES FOR THE ELECTION OF
DIRECTORS
WITHOUT YOUR INSTRUCTIONS. EVERY VOTE MATTERS!
1300 South MoPac
Expressway, 3rd Floor
Austin, Texas 78746
NOTICE OF THE 2010 ANNUAL MEETING OF STOCKHOLDERS
To Be Held Friday, May 7, 2010
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When and Where the Annual Meeting of Stockholders Will
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The 2010 annual meeting of our stockholders will be held at our
offices located at 303 South Temple Drive, Diboll, Texas 75941,
on Friday, May 7, 2010, at 9:00 a.m. local time. |
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Purposes of the Meeting |
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The meeting will be held for the following purposes: |
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1. To elect three (3) directors to our board of directors.
These three directors will serve as directors until their terms
expire or, if later, until replacement directors are elected who
meet all necessary qualifications.
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2. To approve the adoption of the Temple-Inland 2010 Incentive
Plan.
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3. To ratify the Audit Committees appointment of
Ernst & Young LLP as our independent registered
public accounting firm for the year 2010.
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4. To transact any other business that is properly raised for
discussion at the annual meeting or any later meeting if the
annual meeting is adjourned or postponed.
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Who Can Attend and Vote |
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The board of directors has fixed the close of business on
March 10, 2010 as the record date for determining
stockholders entitled to receive notices about the annual
meeting and to vote at the annual meeting or any later meeting
if the annual meeting is adjourned or postponed. Only
stockholders who own stock at the close of business on the
record date are entitled to receive notices about the annual
meeting and to vote at the annual meeting. |
If you need help in voting your shares, please call D. F.
King & Co., Inc., our proxy solicitation firm, at
800-549-6697.
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March 23, 2010
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Leslie K. ONeal
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Austin, Texas
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Vice President and Corporate Secretary
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Your vote is important. You are invited to attend the meeting
in person. Whether or not you plan to attend, and no matter how
many shares you own, please mark your vote on the enclosed proxy
card, sign it, date it, and return it by mail or vote by
telephone or on the internet. By voting before the meeting, you
will help us ensure that there are enough stockholders voting to
hold a meeting and avoid added proxy solicitation costs. If you
attend the meeting, you may vote in person, even if you have
previously submitted a proxy. You may revoke your proxy at any
time before the vote is taken by delivering to the Corporate
Secretary a written revocation or a proxy with a later date or
by voting your shares in person at the meeting, in which case
your prior proxy will be disregarded. Please see the
instructions under Questions and Answers about the
Annual Meeting How can I vote my shares before the
annual meeting?
Important Notice Regarding the Availability of Proxy
Materials for the Annual Meeting of Stockholders to be Held on
May 7, 2010. The 2010 Proxy Statement and 2009 Annual
Report to Stockholders are available at
http://www.templeinland.com/proxy.htm.
TABLE OF
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iii
1300 South MoPac
Expressway, 3rd Floor
Austin, Texas 78746
PROXY STATEMENT
FOR 2010 ANNUAL MEETING OF STOCKHOLDERS
QUESTIONS
AND ANSWERS ABOUT THE ANNUAL MEETING OF STOCKHOLDERS
How are we
asking for your
vote?
Our board of directors seeks your proxy for use in voting at our
2010 annual meeting of stockholders to be held on Friday,
May 7, 2010 and at any later meeting if the annual meeting
is adjourned or postponed. This proxy statement and proxy card
were mailed beginning on March 23, 2010 to all holders of
our common stock entitled to vote at the annual meeting.
We have enclosed with this proxy statement our 2009 Annual
Report to Stockholders, which includes audited financial
statements. The Annual Report does not constitute any part of
the material for the solicitation of proxies.
Who is
entitled to vote at the annual
meeting?
Holders of Temple-Inland common stock as of the close of
business on the record date, March 10, 2010, may vote at
the 2010 annual meeting, either in person or by proxy. As of the
close of business on March 10, 2010, there were
107,530,247 shares of common stock issued and outstanding
and entitled to vote at the annual meeting. The common stock is
the only authorized voting security of the Company, and each
share of common stock is entitled to one vote on each matter
properly brought before the annual meeting.
What matters
will be voted on at the annual
meeting?
At the annual meeting, stockholders will be asked to vote on the
following proposals:
Proposal No. 1: To elect three
(3) directors to our board of directors. These three
directors will serve as directors until their terms expire or,
if later, until replacement directors are elected who meet all
necessary qualifications.
Proposal No. 2: To approve the
adoption of the Temple-Inland 2010 Incentive Plan.
Proposal No. 3: To ratify the Audit
Committees appointment of Ernst & Young LLP as
our independent registered public accounting firm for the year
2010.
What is the
difference between holding shares as a stockholder of record and
as a beneficial
owner?
If your shares are registered directly in your name with our
transfer agent, Computershare Trust Company, N.A., you are
considered the stockholder of record with respect to
those shares. This proxy statement and the enclosed proxy card
and 2009 Annual Report to Stockholders have been sent directly
to you.
If your shares are held in a stock brokerage account or by a
bank or other nominee, those shares are held in street
name and you are considered the beneficial
owner of the shares. The proxy statement, 2009 Annual
Report to Stockholders and other materials have been forwarded
to you by your broker, bank or other nominee, who is the
stockholder of record. You will receive separate instructions
from your broker, bank or other holder of record describing how
to vote your shares.
1
How can I vote
my shares before the annual
meeting?
If you hold shares in your own name as a stockholder of record,
you can cast your vote before the annual meeting by authorizing
the individuals named on the enclosed proxy card to serve as
your proxy to vote your shares at the annual meeting in the
manner you indicate. You may do so by completing, signing and
dating the enclosed proxy card and returning it in the enclosed
postage-paid envelope. The telephone and internet voting
instructions serve the same purpose as the proxy card. When your
proxy card or telephone or internet vote specifies a choice with
respect to a voting matter, the named individuals on the proxy
card will vote your shares as you have specified. Submitting a
proxy or voting through the telephone or the internet will not
affect your right to attend the annual meeting and vote in
person.
If you are a beneficial owner of shares held in street name,
your broker, bank or other nominee will provide you with
materials and instructions for voting your shares. The
availability of telephonic or internet voting will depend on the
banks or brokers voting process. Please check with
your bank or broker and follow the voting procedures your bank
or broker provides to vote your shares.
How will my
shares be voted if I give my proxy but do not specify how my
shares should be
voted?
If your shares are held in your own name as a stockholder of
record and you return your signed proxy card but do not specify
a voting choice on your proxy card, your shares will be voted as
follows:
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FOR the election of each of the director nominees under
the caption Election of Directors.
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FOR approval of the adoption of the Temple-Inland 2010
Incentive Plan.
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FOR ratification of the appointment of Ernst &
Young LLP as independent registered public accounting firm for
the year 2010.
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If I am the
beneficial owner of shares held in street name by my broker,
will my broker automatically vote my shares for
me?
New York Stock Exchange (NYSE) rules applicable to
broker-dealers grant your broker discretionary authority to vote
your shares without receiving your instructions only on certain
matters, which include the ratification of the appointment of
the independent registered public accounting firm. However,
your broker does not have discretionary authority to vote
your shares for certain other types of matters, including the
election of directors or the adoption of the 2010 Incentive
Plan. If your broker does not receive voting instructions from
you regarding these proposals, your shares will not be voted on
these proposals.
Can I vote in
person at the annual
meeting?
Yes. If you hold shares in your own name as a stockholder of
record, you are invited to attend the annual meeting and cast
your vote at the meeting by properly completing and submitting a
ballot at the meeting. If you are the beneficial owner of shares
held in the name of your broker, bank or other nominee, you are
invited to attend the meeting in person, but in order to vote at
the meeting you must first obtain a legal proxy from your
broker, bank or other nominee giving you the right to vote those
shares and submit that proxy along with a properly completed
ballot at the meeting. Please check with your broker or other
nominee and follow the procedures they require.
How can I
change or revoke my
vote?
If you hold shares in your own name as a stockholder of record,
you may change your vote or revoke your proxy at any time before
voting begins at the annual meeting by:
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giving written notice of revocation to our Corporate Secretary
at our principal executive offices at any time before the voting
is closed; or
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signing and delivering a proxy that is dated after the proxy you
wish to revoke; or
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attending the annual meeting and voting in person by properly
completing and submitting a ballot. (Attendance at the meeting,
in and of itself, will not cause your previously granted proxy
to be revoked unless you vote at the meeting.)
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We must receive your notice of revocation or later-dated proxy
at or prior to voting at the annual meeting for it to be
effective. It should be delivered to:
Temple-Inland
Inc.
Attn: Leslie K. ONeal, Vice President
and Corporate Secretary
1300 South MoPac Expressway, 3rd Floor
Austin, Texas 78746
Alternatively, you may hand deliver a written revocation notice,
or a later-dated proxy, to the Corporate Secretary at the annual
meeting before the polls close.
If you are the beneficial owner of your shares held in street
name, please check with your bank or broker and follow the
procedures your bank or broker provides if you wish to change
your vote.
What is the
quorum for the annual meeting and what happens if a
quorum is not
present?
The presence at the annual meeting, in person or by proxy, of
the holders of 53,765,124 shares (a majority of the number
of shares of common stock issued and outstanding and entitled to
vote as of the record date) is required to constitute a quorum
to transact business at the annual meeting. Proxies marked
abstain and broker non-votes (each of
which are explained below) will be counted in determining the
presence of a quorum.
If the shares present in person or represented by proxy at the
annual meeting are not sufficient to constitute a quorum, the
stockholders by a vote of the holders of a majority of the votes
entitled to be cast by the stockholders, present in person or by
proxy (which may be voted by the proxyholders at the meeting),
may, without further notice to any stockholder (unless a new
record date is set or the adjournment is for more than
30 days), adjourn the meeting to a different time and place
to permit further solicitations of proxies sufficient to
constitute a quorum. At any such adjourned meeting at which a
quorum may be present, any business may be transacted that might
have been transacted at the meeting as originally called.
What is an
abstention and how would it affect the
vote?
An abstention occurs when a stockholder sends in a proxy with
explicit instructions to decline to vote regarding a particular
proposal. An abstention with respect to a proposal will not be
counted as a vote cast for or against the proposal
other than the approval of the 2010 Incentive Plan.
Consequently, an abstention with respect to any of the proposals
scheduled for a vote at the annual meeting will not affect the
outcome of the vote, except with respect to the approval of the
adoption of the 2010 Incentive Plan, as explained below in
What are the voting requirements to elect directors and
approve the proposals described in the proxy statement?
What is a
broker non-vote and how would it affect the
vote?
Broker non-votes are shares held by brokers or
nominees for which voting instructions have not been received
from the beneficial owners or the persons entitled to vote those
shares. If the broker or nominee does not have discretionary
voting power under rules applicable to broker-dealers, then the
broker is unable to vote those uninstructed shares. Brokers and
nominees have discretionary voting power to vote shares with
respect to the ratification of the appointment of the
independent registered public accounting firm, but do not have
discretionary voting power regarding the election of directors
or the proposal to approve the adoption of the 2010 Incentive
Plan. A broker non-vote with respect to
Proposals 1 and 2 will not be counted as a vote
cast for or against the proposals. Consequently, a
broker non-vote with respect to the election of
directors or the adoption of the 2010 Incentive Plan will not
affect the outcome of the vote,
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except to the extent it has the effect of causing the percentage
of the total number of shares voting on the proposals to be less
than that required by the rules of the New York Stock Exchange
for approval of the proposals, as explained immediately below.
What are the
voting requirements to elect directors and approve the proposals
described in the proxy
statement?
Election of Directors: The
affirmative vote of a majority of the votes cast by the
stockholders present in person or represented by proxy is
required for the election of each director nominee named in
Proposal 1. This means that the votes cast for
that nominee must exceed the votes cast against that
nominee. Any shares not voted (whether by abstention or
otherwise) will not be counted as votes cast and will have no
effect on the outcome of the vote. In accordance with our
Corporate Governance Guidelines, each incumbent nominee will
submit, prior to the annual meeting, an irrevocable resignation
contingent on the nominee failing to receive the required vote
for election and the board accepting the resignation. For more
information on the operation of our majority voting standard,
see
Election of Directors. Stockholders may
not cumulate votes in the election of directors.
2010 Incentive Plan: The
affirmative vote of a majority of the votes cast by the
stockholders present in person or represented by proxy (provided
that the total votes cast on the proposal represents over 50% of
the total number of shares entitled to vote on the proposal) is
required for approval of the adoption of the 2010 Incentive Plan
in Proposal 2. Broker non-votes are not treated as votes
cast. However, for this proposal only, the NYSE considers
abstentions as votes cast. As a result, abstentions have the
same effect on this proposal as votes cast against the proposal.
Accordingly, beneficial owners of shares should instruct their
brokers or nominees how to vote with respect to this proposal.
Ratification of
Auditors: The affirmative vote of a majority of
the votes cast by stockholders entitled to vote at the annual
meeting is required for the ratification of the appointment of
our independent registered public accounting firm in
Proposal 3. Any shares not voted (whether by abstention or
otherwise) will not be counted as votes cast and will have no
effect on the outcome of the vote on this proposal.
Who will
conduct and pay for the proxy
solicitation?
We are soliciting your proxy for the annual meeting and will pay
all the costs of the proxy solicitation process. We have
retained D.F. King & Co., Inc., a professional proxy
solicitation firm, to assist in the solicitation of proxies.
D.F. Kings employees and our directors, officers and
employees may solicit the return of proxies by personal contact,
mail, electronic mail, facsimile, telephone or the internet. We
may also issue press releases asking for your vote or post
letters or notices to you on our website,
www.templeinland.com. Our directors, officers and
employees 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 $12,500. D.F. King expects that
approximately 20 of its employees will assist in the
solicitation. We will reimburse brokerage houses and other
custodians, nominees and fiduciaries for their reasonable
out-of-pocket
expenses for forwarding solicitation materials to the beneficial
owners of our common stock.
Who will count
the
votes?
Representatives of our transfer agent, Computershare, will
tabulate the votes and act as inspectors of election to certify
the results.
4
VOTING
SECURITIES AND PRINCIPAL STOCKHOLDERS
Security
Ownership of Certain Beneficial Owners
The name, address and stock ownership of each person or group of
persons known by us to own beneficially more than five percent
(5%) of the outstanding shares of our common stock as of
March 10, 2010 follows:
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Name and Address of
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Amount and Nature of
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Percent of
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Beneficial Owner
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Beneficial Ownership
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Class(1)
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BlackRock,
Inc.(2)
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10,785,714
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10.03%
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There were 107,530,247 shares of common stock outstanding
on March 10, 2010. |
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Based solely on information reported on a Schedule 13G/A
filed with the SEC on February 8, 2010 for the period
ending January 29, 2010, BlackRock, Inc. may be deemed
beneficial owner of 10,785,714 shares. |
Security
Ownership of Management
The following table sets forth information regarding the
beneficial ownership of our common stock as of March 10,
2010 by:
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each of our directors and nominees for director, including our
Chairman and Chief Executive Officer and our President and Chief
Operating Officer,
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our Chief Financial Officer and our three most highly
compensated executive officers other than the CEO and CFO, and,
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all directors and executive officers as a group.
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We determined beneficial ownership as reported in the table in
accordance with
Rule 13d-3
under the Securities Exchange Act of 1934, as amended (which we
will refer to in this Proxy Statement as the Exchange Act).
Unless otherwise indicated, beneficial ownership includes both
sole voting and sole dispositive power. Even though SEC rules
require reporting of all the shares listed in the table, the
directors and executive officers do not claim beneficial
ownership of all of these shares. For example, a director or
executive officer might not claim ownership of shares owned by a
relative. Unless otherwise indicated, the 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.
5
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SECURITY OWNERSHIP OF
MANAGEMENT
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Beneficial Ownership
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Additional
Ownership(5)
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Shares Issuable
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on Stock Options
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Amount and
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Beneficial
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Exercisable
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Restricted Stock
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Restricted Stock
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Nature of
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Ownership
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More than 60
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Units and
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Units Deferred and
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Beneficial
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Percent
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Days After
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Performance
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Payable upon
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Total Beneficial and
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Beneficial Owner
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Ownership(1)
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of Class
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Record Date
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Stock
Units(6)
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Retirement(7)
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Additional Ownership
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(a)
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(b)
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(c)
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(d)
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(e)
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(f)
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(g)
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Directors:
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Donald M. Carlton
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22,000
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(1)
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*
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92,305
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114,305
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Cassandra C. Carr
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22,000
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(1)
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*
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76,987
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98,987
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E. Linn Draper, Jr.
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20,000
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(1)
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*
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89,901
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109,901
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Larry R. Faulkner
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20,200
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(1)
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*
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71,098
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91,298
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Jeffrey M. Heller
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20,000
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(1)
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*
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97,550
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117,550
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J. Patrick Maley III
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397,376
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(1)(2)
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*
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369,280
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460,972
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1,227,628
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W. Allen Reed
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13,000
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(1)
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*
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97,464
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110,464
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Doyle R. Simons
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469,345
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(1)(2)
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*
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459,550
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576,214
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1,505,109
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Richard M. Smith
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30,000
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(1)
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*
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65,115
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95,115
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Arthur Temple III
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781,538
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(1)(3)(4)
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*
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91,970
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873,508
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R.A. Walker
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8,000
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(1)
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*
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12,000
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30,770
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50,770
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Executives:
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Randall D. Levy
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369,563
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(1)(2)
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*
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209,778
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243,289
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822,630
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Larry C. Norton
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82,208
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(1)(2)
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*
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163,511
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231,665
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477,384
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Dennis J. Vesci
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143,276
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(1)(2)
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*
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165,588
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192,948
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12,041
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513,853
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All Directors and Executive Officers as a Group:
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22 Persons
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3,464,207
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(1)(2)(3)(4)
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3.16
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%
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2,133,122
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2,559,888
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725,201
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8,882,418
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* |
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Percentage is less than 1% of Temple-Inland common stock
outstanding |
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(1) |
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Includes the following number of shares of common stock issuable
upon the exercise of options exercisable within a period of
60 days from March 10, 2010: |
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Directors:
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Donald M. Carlton
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20,000
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Cassandra C. Carr
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20,000
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E. Linn Draper, Jr.
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20,000
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Larry R. Faulkner
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20,000
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Jeffrey M. Heller
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20,000
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J. Patrick Maley III
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298,312
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W. Allen Reed
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8,000
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Doyle R. Simons
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366,540
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Richard M. Smith
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20,000
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Arthur Temple III
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12,000
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R.A. Walker
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8,000
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Executives:
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Randall D. Levy
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280,397
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Larry C. Norton
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71,436
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Dennis J. Vesci
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117,274
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All Directors and Executive Officers as a Group:
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(22 Persons)
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2,098,483
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6
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(2) |
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Includes shares held by trustees under Temple-Inland 401(k)
plans for: |
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Named Executive Officers
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Doyle R. Simons
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6,694
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J. Patrick Maley III
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609
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Randall D. Levy
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3,765
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Larry C. Norton
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|
93
|
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Dennis J. Vesci
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|
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2,897
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|
All Executive Officers as a Group
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|
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|
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13 Persons
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52,864
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|
(3) |
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Includes 2,000 shares owned by certain relatives of
Mr. Temple. SEC rules consider these shares to be
beneficially owned, but Mr. Temple disclaims any beneficial
interest in such shares. These 2,000 shares are the only
shares owned by relatives included in the total number of shares
owned by all directors and officers as a group (22 persons). |
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(4) |
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Includes 134,460 shares held in a trust over which
Mr. Temple is trustee. Mr. Temple has a future income
interest with respect to 67,230 of these shares and a remainder
interest with respect to 67,230 of these shares. Also includes
20,166 shares held by various trusts and custodial
accounts, with respect to which Mr. Temple has sole voting
and dispositive power. Mr. Temple disclaims any beneficial
ownership with respect to these 20,166 shares. Includes
157,380 shares held in a trust for Mr. Temple with
respect to which he has a present income interest and is also a
co-trustee. Does not include 2,521,252 shares of common
stock held by the T.L.L. Temple Foundation, a charitable trust,
of which Mr. Temple is Chairman of the Board of Trustees.
Mr. Temple shares voting and dispositive power of the
shares held by the foundation. Mr. Temple disclaims any
beneficial ownership with respect to such shares. |
|
(5) |
|
The items included in Additional Ownership are not
included in the SECs definition of Beneficial
Ownership. These figures also include awards granted to
officers by the board on February 5, 2010, and that are
subject to stockholder approval of the 2010 Incentive Program.
See the table in the section entitled Proposal to Adopt
2010 Incentive Plan. |
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(6) |
|
Restricted stock units and performance stock units vest on the
third anniversary from the date of grant if performance criteria
are met. Units will be settled in cash or stock as set forth in
the award agreements. |
|
(7) |
|
Restricted stock units deferred through 2005 are payable in
shares of common stock at retirement. Restricted stock units
deferred in 2006 and later are payable in cash based on the
stock price at retirement. |
Section 16(a)
Beneficial Ownership Reporting Compliance
We have not identified any person who failed to file on a timely
basis reports required by Section 16(a) of the Exchange Act
during the most recent fiscal year or prior fiscal years. For
this purpose, we only reviewed Forms 3 and 4, and any
amendments to these forms, as well as written representations
supplied to us in lieu of Forms 5 under the SECs
Section 16 rules for the most recent fiscal year.
Our Bylaws specify that the board of directors will establish by
vote how many directors will serve on the board. The Bylaws also
provide that the directors will be divided into three classes,
which will as nearly as possible be equal in size. The board of
directors has set the number of directors at ten following the
retirement of Dr. Carlton at the May 2010 annual meeting of
stockholders, with two classes of three directors each and one
class of four directors.
Pursuant to our Bylaws, a director nominee is elected if the
number of votes cast for the nominee exceeds the
number of votes cast against the nominee. In
contested elections (that is, those in which the
7
number of nominees exceeds the number of directors to be
elected), the voting standard will be a plurality of votes cast,
which 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.
In the event that a director does not receive the requisite
majority of votes cast for his or her election, that
director is required by our resignation policy to resign (please
see the director resignation policy set forth in the Corporate
Governance Guidelines available on our website at
www.templeinland.com). Therefore, prior to each annual
meeting of stockholders, director nominees will submit an
irrevocable resignation contingent on the nominee failing to
receive the required vote for election and the board accepting
the resignation. If a nominee fails to receive the required vote
for election, the Nominating and Governance Committee will make
a recommendation to the board on whether to accept or reject the
resignation. The board will act on the committees
recommendation and publicly disclose its decision and the
rationale behind it within 90 days from the date of the
certification of the election results. The director whose
resignation is under consideration will not participate in the
committees or boards decision. If a resignation is
not accepted by the board, the director will continue to serve.
If the failure of a nominee to be elected at the annual meeting
results in a vacancy on the board, that vacancy can be filled by
action of the board. The policy also provides that the board
shall nominate for election or re-election as directors only
candidates who agree to tender irrevocable resignations
consistent with the policy, and the board shall fill director
vacancies and new directorships only with candidates who agree
to tender the same form of resignation tendered by other
directors.
Selection of
Nominees
Our Nominating and Governance Committee selects nominees on the
basis of recognized achievements and their ability to bring
various skills and experience to the deliberations of the board,
as described in more detail in the Corporate Governance
Guidelines available on our website at www.templeinland.com.
Non-employee director nominees must be independent as
defined in the listing standards of the NYSE. Nominees must not
have a prohibited conflict of interest with our business or
ownership. Priority will be given to individuals with
outstanding business experience and who currently serve or have
served as the chief executive officer of a company.
Our Nominating and Governance Committee considers director
candidates recommended by the directors. After reviewing a
potential directors qualifications, a suitable candidate
will be invited to meet with the CEO, Lead Director, Chair of
the Nominating and Governance Committee, and full board to
determine further interest. As set forth in our Governance
Guidelines, diversity is one of the factors considered by our
board in evaluating nominees for director. We implement this
policy by seeking recommendations from our current directors of
persons who fulfill our requirements and who have diverse
characteristics. Although we are pleased with the effectiveness
of our selection of candidates with diverse skills, backgrounds,
ages, and other characteristics, the board is committed to
identifying candidates with diverse race and gender.
Our Nominating and Governance Committee will also consider
director candidates recommended by stockholders who are entitled
to vote for the election of directors at the stockholders
meeting. In considering candidates submitted by stockholders,
the Nominating and Governance Committee will take into
consideration the needs of the board and the qualifications of
the candidate. Under our corporate governance guidelines, the
Nominating and Governance Committee may establish procedures,
from time to time, regarding stockholder submission of
candidates. A director candidate recommendation must include the
following information:
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the name and address of the stockholder making the
recommendation and evidence of his or her beneficial ownership
of Temple-Inland common stock, including the number of shares
and period of ownership, and
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the name of the candidate, the candidates résumé
or a listing of his or her qualifications to be a director of
the Company and the persons consent to be named as a
director if selected by the Nominating and Governance Committee
and nominated by the board.
|
8
We may require a stockholder-recommended candidate to furnish
such other information as may reasonably be required by us to
determine the eligibility of the proposed nominee to serve as a
director.
In addition, stockholders may also nominate director candidates
by following the procedures described in the Companys
Bylaws. For information regarding the deadlines and procedures
for director nominations by stockholders, please see
Date for Receipt of Stockholder Proposals and
Nominations.
Nominees
Unless you specify otherwise on your proxy, the persons named in
such proxy intend to vote for the election of the nominees
listed below to serve as directors.
Except as noted otherwise, directors will serve for a term of
three years, or until their replacements are duly elected and
meet all requirements. All nominees are presently serving as
directors. After review of their qualifications, the Nominating
and Governance Committee recommended them as nominees to the
full board, and the full board subsequently voted unanimously to
recommend them to the stockholders as nominees. We did not pay a
fee to any third party to identify or evaluate or to assist in
identifying or evaluating potential nominees.
Each of the nominees has consented to being named in the proxy
statement and to serve if elected. If any nominee becomes
unavailable to serve, however, the persons named in the enclosed
form of proxy intend to vote the shares represented by the proxy
for the election of such other person or persons as may be
nominated or designated by the board, unless they are directed
by the proxy to do otherwise.
In selecting our directors, we reviewed their specific
experience, qualifications, attributes, and skills both
individually and as a group. Our inside directors were selected
for their knowledge of our industry, their leadership roles
within our Company, and their experience managing our business.
Some of the attributes that led us to the conclusion that the
following individuals should serve as our directors, in light of
our business and structure, include:
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Ms. Carr has extensive experience as a senior executive
officer, including service for SBC Communications, Inc. from
1988 through 2002 as Senior Vice President-Finance and
Treasurer, Senior Vice President-Human Resources, Corporate
Compliance Officer, Senior Executive Vice President-External
Affairs, and has served on two other boards, Destec from 1992 to
1996 and YRCW from 1997 to the present.
|
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Dr. Draper served as Chief Executive Officer of Gulf States
Utilities and American Electric Power and has served on the
boards of nine other public companies, totaling approximately
70 years service in the aggregate. AEP is a large
trader of electricity and gas, and Dr. Draper was
ultimately responsible for managing that risk.
|
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Dr. Faulkner has 12 years experience as a Chief
Executive Officer and 4 years experience as Chief
Operating Officer and Chief Budget Officer of billion-dollar
organizations, professional expertise in the materials
industries, national service as chair of a Presidential panel on
mathematics education and as a board member of ExxonMobil
Corporation and Sandia National Laboratories, knowledge of
national infrastructure issues as Chair of the Board of Internet
2, and a decade of combined service on public company boards.
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Mr. Heller currently serves as a member of the Audit
Committee of Mutual of Omaha and served as Chairman of its Audit
Committee from May 2003 until May 2009. In his career with EDS,
he designed, developed and implemented operationally supported
financial reporting systems for EDS as well as for large
corporate and government customers. In addition, Mr. Heller
had operating responsibility for large divisions of EDS. He has
experience supervising the Chief Financial Officer of EDS, the
corporate controller, as well as division controllers of
multi-billion dollar divisions. He has interacted with outside
auditors and internal audit departments. Mr. Heller also
previously served on the Audit Committee for Trammell Crow
Company. The internal audit function and the external auditors
reported to the Audit Committee that he chaired from November
1997 until November 2004.
|
9
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Mr. Maley currently serves as our President and Chief
Operating Officer and as such brings industry expertise and
knowledge of our operations to the board. He was previously
named Executive Vice President Paper in November
2004 following his appointment as Group Vice President in May
2003. Mr. Maley has 27 years of industry experience,
including 11 years at International Paper from 1992 to 2003
where he served as Director of Manufacturing of the
containerboard and kraft division. Prior to that assignment,
Mr. Maley served as Segment General Manager of the
container business.
|
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Mr. Reed has prior experience as a financial officer at
Delta Airlines, Hughes Electronics and General Motors, including
Chairman, President and CEO of General Motors Asset Management
Corporation, Chairman and CEO of the GM Trust Bank, and a
Corporate Vice President of General Motors Corporation.
Mr. Reed is one of the nations top pension executives
and ran the largest corporate defined benefit fund at GM.
Mr. Reed also previously served on the boards at FLIR
Systems, The Taubman Companies, GMAC and iShares, Inc. and
currently serves as the Lead Director for Legg Mason. He
currently holds the Chartered Financial Analyst designation.
|
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|
Mr. Simons currently serves as our Chairman and Chief
Executive Officer and as such brings industry expertise and
knowledge of our operations to the board. He was previously
named Executive Vice President in February 2005 following his
service as Chief Administrative Officer since November 2003.
Mr. Simons served as Vice President, Administration from
November 2000 to November 2003 and Director of Investor
Relations from 1994 through 2000. Mr. Simons is an attorney
and joined Temple-Inland in 1992. He is also a director of
Fiserv, Inc. and the American Forest & Paper
Association.
|
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|
Mr. Smith served for 17 years as Chief Executive
Officer of Newsweek Magazine, a major division of the Washington
Post, a company with operations throughout the United States and
in more than 140 countries around the world. As
Editor-in-Chief
of the magazine for 23 years, he presided over coverage of
major political, economic and social trends, including reporting
on corporate governance and social responsibility, technological
change and innovation, financial and political malfeasance and
business successes and failures at home and abroad. As
non-executive Chairman of Newsweek, he continues to advise the
CEO and key editors on a range of news and media industry
issues, and conducts a series of interviews for the magazine and
the Kaplan University MBA program on the subject of leadership.
His interview subjects so far have included the chief executives
of some of the worlds largest corporations and non-profit
institutions. Mr. Smith also serves on the board of one
other public company (Forestar Group Inc.), one private
technology
start-up
company (TalkMarket.com) and the board or oversight committees
of the Magazine Publishers of America, the Harvard AIDS
initiative, The Smithsonian Institutions National Design
Museum, Albion College and the Columbia University Graduate
School of Journalism.
|
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Mr. Temple has spent many years as director and chairman of
First Bank & Trust, East Texas (FB&T), and many
years as Chief Executive Officer of an investment company, in
addition to serving as chairman of a private foundation.
Mr. Temple served as a member of the Texas legislature and
as Chairman of the Railroad Commission of Texas, which regulates
mineral resources in Texas, bringing legislative and regulatory
insight to the board.
|
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|
Mr. Walker served for 13 years as an institutional
investor for a leading American insurance company where, at the
time of departure, he was responsible for $32 billion in
assets under management. He has previously served on the boards
of nine publicly traded companies, including serving as chairman
of an audit committee for two of the companies. Mr. Walker
has been the Chief Financial Officer of a Fortune
200 company for 4 years and the Chief Operating
Officer of same for 1 year.
|
10
Nominees for
Directors to Be Elected at the 2010 Annual Meeting of
Stockholders to Serve Until 2013
|
|
|
Name and Year First
Elected
|
|
Principal Occupation and Other
Information
|
|
E. Linn Draper, Jr.
2004
|
|
Dr. Draper, 68, served as Chairman of the Board of American
Electric Power Company Inc. from April 1993 until his retirement
in February 2004 and also served as President and CEO from April
1993 until December 2003. Dr. Draper also served as
President of Ohio Valley Electric Corporation and
Indiana-Kentucky Electric Corporation from 2002 until March
2004. Dr. Draper is a director of Northwestern Corporation
(2004), Alpha Natural Resources (2004), Alliance Data Systems
(2005), and TransCanada Corporation (2005). Dr. Draper
currently serves as our Lead Director and currently serves on
our Compensation (Chair) and Executive Committees.
|
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J. Patrick Maley III
2007
|
|
Mr. Maley, 48, became our President and Chief Operating Officer
in December 2007. He was previously named Executive Vice
President Paper in November 2004 following his
appointment as Group Vice President in May 2003. Prior to
joining Temple-Inland, Mr. Maley served in various capacities
from 1992 to 2003 at International Paper.
|
|
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|
W. Allen Reed
2000
|
|
Mr. Reed, 63, retired as Chairman of General Motors Asset
Management Corporation in April 2006. Mr. Reed served as
President and Chief Executive Officer of GMAMC from July 1994
until December 31, 2005. He also served as Chairman and CEO of
the GM Trust Bank and as a Corporate Vice President of General
Motors Corporation until December 31, 2005. Since 2006, Mr.
Reed has been a private investor. He is currently a director of
Legg Mason, Inc. (2006), 180 mutual funds in the Morgan Stanley
Mutual Funds complex (2006), and the Auburn University
Foundation Fund (2007). Mr. Reed has also been a Senior Advisor
to Aetos Capital, a private real estate and alternative
investments firm. Mr. Reed currently serves on our Nominating
and Governance and Audit Committees.
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THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF MESSRS.
DRAPER,
MALEY AND REED AS DIRECTORS OF TEMPLE-INLAND.
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Continuing
Directors
The following information is provided with respect to directors
who will continue to serve as directors until the expiration of
their terms.
Directors to
Serve Until the 2011 Annual Meeting of
Stockholders
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Name and Year First
Elected
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Principal Occupation and Other
Information
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Larry R. Faulkner
2005
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Dr. Faulkner, 65, has served as President of Houston
Endowment Inc. since February 2006. Houston Endowment is one of
the largest private foundations in Texas. Dr. Faulkner
served as President of The University of Texas from April 1998
until January 2006. He was previously Provost and Vice
Chancellor for Academic Affairs, Dean of the College of Liberal
Arts and Sciences, and Head of the Department of Chemistry at
the University of Illinois at Urbana-Champaign.
Dr. Faulkner serves on the boards of ExxonMobil Corporation
(2008) and the Lyndon Baines Johnson Foundation (1998).
Dr. Faulkner also served as director with Guaranty
Financial Group from 2007 to 2009. Dr. Faulkner currently
serves on our Nominating and Governance and Audit Committees.
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Jeffrey M. Heller
2004
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Mr. Heller, 70, served as Vice Chairman of Electronic Data
Systems, Inc. (EDS) from October 2006 until September 2008. Mr.
Heller rejoined EDS in March 2003 after a brief retirement,
served as President and Chief Operating Officer until October
2005, and as President until October 2006. Mr. Heller previously
served as Vice Chairman of EDS from November 2000 until
retirement in February 2002. Mr. Heller is also a director of
Mutual of Omaha (1998). Mr. Heller currently serves on our
Compensation, Audit (Chair), and Executive Committees.
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Doyle R. Simons
2007
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Mr. Simons, 46, became our Chairman of the Board and Chief
Executive Officer in December 2007. He was previously named
Executive Vice President in February 2005 following his service
as Chief Administrative Officer since November 2003. Mr. Simons
served as Vice President, Administration from November 2000 to
November 2003 and Director of Investor Relations from 1994
through 2000. Mr. Simons joined Temple-Inland in 1992. He is
also a director of Fiserv, Inc. (2007).
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Directors to
Serve Until the 2012 Annual Meeting of
Stockholders
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Name and Year First
Elected
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Principal Occupation and Other
Information
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Cassandra C. Carr
2004
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Ms. Carr, 65, is Senior Advisor, Public Strategies, Inc. (2002).
Public Strategies, Inc. is a strategic consulting and
communications firm which manages campaigns around issues
affecting businesses. Ms. Carr was Senior Executive Vice
President, External Affairs, SBC Communications, Inc.,
San Antonio, TX (telecommunications) from October 1998
through March 2002, and Senior Vice President, Human Resources
from May 1994 through September 1998. Ms. Carr is a director of
YRC Worldwide Inc. (1997). Ms. Carr currently serves on our
Management Development and Executive Compensation and Audit
Committees.
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Name and Year First
Elected
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Principal Occupation and Other
Information
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Richard M. Smith
2006
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Mr. Smith, 64, is Chairman of Newsweek. Until December 2007,
Mr. Smith served as Editor-in-Chief of the magazine since
1984 and CEO since 1991. He became Chairman in March 1998. Mr.
Smith was Chairman of the Magazine Publishers of America (MPA)
from 1996 to 1997 and the founding chairman of the MPAs
New Media Committee. In 2002, he received the magazine
industrys highest honor, the Henry Johnson Fisher Award
for Lifetime Achievement. He is also a former board member of
the American Society of Magazine Editors. Mr. Smith is also a
director of Forestar Group Inc. (2007) and Talkmarket.com
(2009). Mr. Smith currently serves on our Compensation and
Audit Committees.
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Arthur Temple III
1983
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Mr. Temple, 68, is Chairman of the Board of First Bank &
Trust, East Texas (FB&T), a position he has held since
March 1992. FB&T is a locally owned community bank
headquartered in Diboll, Texas. FB&T is owned by Diboll
Bancshares, Inc., a locally-owned bank holding company. Since
November 2000, Mr. Temple has also served as Chairman of the
T.L.L. Temple Foundation, a charitable foundation. Mr. Temple
served as Chairman of the Board of Exeter Investment from 1975
to early 1982 and from March 1986 until June 2002. From 1973
until 1980 Mr. Temple served as a member of the Texas
legislature and from January 1981 until March 1986 he served as
a member and Chairman of the Railroad Commission of Texas, which
regulates mineral resources in Texas. Mr. Temple currently
serves on our Nominating and Governance and Audit Committees.
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R.A. Walker
2008
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Mr. Walker, 53, is currently President and Chief Operating
Officer of Anadarko Petroleum Corporation, having joined the
company in 2005 as Senior Vice President and Chief Financial
Officer. Prior to joining Anadarko, he was a Managing Director
for the Global Energy Group of UBS Investment Bank from 2003 to
2005. He is a director of Western Gas Holdings, LLC, a
subsidiary of Anadarko and general partner to Western Gas
Partners, LP, having previously served as the Chairman of the
Board of this company until 2009. Mr. Walker also serves on the
Board of Trustees for the United Way of Greater Houston and the
Houston Museum of Natural Science. Mr. Walker currently serves
on our Nominating and Governance and Audit Committees.
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What is our
Leadership Structure?
Our board has chosen to combine the positions of Chairman of the
Board and Chief Executive Officer. When our board elected
Mr. Simons as Chairman and CEO at the end of 2007, it
evaluated alternative board structures and determined a combined
Chairman and CEO to be the best structure for Temple-Inland. It
was especially important following our restructuring at the end
of 2007 that we have a clear leader with the authority to enact
our strategy. Temple-Inland has been successful in executing its
strategy over the past two years. Our board also believes that a
single Chairman and CEO is able to serve most effectively as a
bridge between management and the board, ensuring that both act
with a common purpose to serve the stockholders. The combined
role fosters efficiency and effectiveness in leadership and
ensures that we communicate to stockholders and other
constituents with a unified voice. Mr. Simons is able to
dedicate the appropriate amount of time to his Chairman and CEO
responsibilities because we have an effective President and
Chief Operating Officer who assumes many operational
responsibilities.
The board has adopted strong governance principles to ensure
that an appropriate balance of power exists between the
independent members of the board and management, including:
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appointment of a Lead Director
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requiring a majority of independent directors
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only independent directors serving on all board committees
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non-management executive sessions at each board meeting, and
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only independent directors evaluating the CEOs performance
annually and approving the CEOs pay.
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E. Linn Draper, Jr. currently serves as our Lead
Director. In appointing an independent lead director, the board
considered it to be useful and appropriate to designate an
independent director to serve in a lead capacity to coordinate
the other activities of the independent directors and to perform
such other duties and responsibilities as the board of directors
may determine. Specifically, those duties include:
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advise the Chairman as to an appropriate schedule of board
meetings, seeking to ensure that the independent directors can
perform their duties responsibly while not interfering with
operations;
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provide the Chairman with input as to the preparation of the
agendas for the board and committee meetings and assuring that
there is sufficient time for discussion of all agenda items;
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advise the Chairman as to the quality, quantity and timeliness
of the flow of information from management that is necessary for
the independent directors to perform their duties effectively
and responsibly. Although management is responsible for the
preparation of materials for the board, the Lead Director may
specifically request the inclusion of certain material;
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recommend to the Chairman the retention of consultants who
report directly to the board of directors;
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interview all board candidates, and make recommendations to the
Nominating and Governance Committee and the board of directors;
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assist the board of directors and our officers in assuring
compliance with and implementation of the Companys
Corporate Governance Guidelines;
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have the authority to call meetings of the independent directors
and develop the agenda for and moderate any such meetings and
executive sessions of the independent directors;
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act as principal liaison between the independent directors and
the Chairman on sensitive issues;
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evaluate, along with the members of the full board, the
CEOs performance and meet with the CEO to discuss the
boards evaluation; and
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work with the Nominating and Governance Committee to recommend
the membership of the various board committees, as well as
selection of the committee chairs.
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To protect against entrenchment, our board has also imposed term
limits on the Lead Director to ensure the independence of the
position.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Director
Independence
The board of directors has determined that the following
directors meet its independence standards: Donald C. Carlton,
Cassandra C. Carr, E. Linn Draper, Jr., Larry R. Faulkner,
Jeffrey M. Heller, W. Allen Reed, Richard M. Smith, Arthur
Temple III and R.A. Walker. Messrs. Simons and Maley
do not meet the independence standards because they are our
employees. The boards independence standards are described
in our Corporate Governance Guidelines on our website at
www.templeinland.com. The board defines independence as
meeting the requirements to be considered independent directors
as defined under the current rules of the NYSE. The board has
established the following additional guidelines to assist it in
determining director independence:
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If not otherwise prohibited by the rules of the NYSE, any
commercial or charitable relationship that is not required to be
reported in the proxy statement to stockholders will not be
considered a material relationship that would impair a
directors independence.
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To serve as a member of any committee of the board, the director
must meet any additional requirements of independence set forth
in the committees charter or applicable law.
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There were no material transactions or relationships between us
and any director during 2009. In making its determination that
our non-employee directors are independent, the board considered:
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All transactions with companies of which its directors are
executive officers.
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Mr. Temple is a director of Contractors Supplies,
Inc., and members of Mr. Temples immediate family own
approximately 11% of its outstanding capital stock. During 2009,
in the ordinary course of business, we sold building materials,
lumber and fiberboard to Contractors. Mr. Temple is
also a director, officer, and
662/3%
stockholder of Demco Manufacturing Company. During 2009, in the
ordinary course of business, Demco performed machinery repair
services for us. Mr. Temple is an 8% partner in three
partnerships, Diboll Leasing Company, DLCO, and DLCO I Ltd. that
own and lease rail cars. During 2009, in the ordinary course of
business, we participated in transactions with DLCO and DLCO I
Ltd. for rail car repairs, rail car rental, and management fees.
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The board believes that none of these transactions affected any
directors independence because they do not have a direct
or indirect material interest in these transactions and the
transactions do not exceed the greater of $1 million or 2%
of either companys consolidated gross revenues.
There is no family relationship between any of our nominees,
continuing directors, or executive officers.
Related
Transactions
We maintain a written policy enumerating procedures for the
review, approval or ratification, or rejection of any related
party transaction. A related party, for purposes of our policy,
means:
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any person who is, or at any time since the beginning of our
last fiscal year was, a director or executive officer or a
nominee for director or executive officer,
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any person known to be the beneficial owner of more than 5% of
our common stock, and
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any immediate family member of the foregoing persons.
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Under the related party transaction policy, any transaction,
arrangement or relationship between us and a related party must
be reviewed by the Nominating and Governance Committee, except
that the following transactions, arrangements or relationships
are pre-approved under the policy:
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compensation arrangements required to be reported under the
director or executive compensation sections of the proxy
statement,
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business expense reimbursements,
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transactions with an entity in which the related party owns less
than 10% of the other entity, is a director only, or is not an
executive officer, and
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indebtedness for transactions in the ordinary course of business.
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There are no transactions required to be reported above since
the beginning of our fiscal year where the related party
policies and procedures did not require review, approval or
ratification or where the policies and procedures were not
followed.
Business
Conduct and Ethics
All of our directors, officers and employees are required to
abide by our Standards of Business Conduct and Ethics. This code
covers all areas of professional conduct, including conflicts of
interest, unfair or unethical use of corporate opportunities,
protection of confidential information, compliance with all
applicable laws and regulations, and oversight and compliance.
Our Chief Executive Officer, Chief Operating Officer, Chief
Financial Officer & Treasurer, Chief Governance
Officer, Vice President, Investor Relations &
Treasury, and Corporate Controller (Principal Accounting
Officer) are also required to abide by the Code of Ethics for
Senior Financial Officers. These ethics codes form the
foundation of a comprehensive program of compliance with our
corporate policies and procedures to ensure that our business is
conducted ethically and in strict adherence to all laws and
regulations applicable to us. Our directors, officers and
employees are not to tolerate violations of the standards set
out in our ethics codes, and are responsible for reporting any
violation, including situations or matters that may be
considered to be unethical or a conflict of interest under the
ethics codes.
The full texts of the Standards of Business Conduct and Ethics
and Code of Ethics for Senior Financial Officers are available
under the Investor Relations Corporate
Governance section of our website at
www.templeinland.com. Any future amendments to either of
these codes, and any waiver of the Code of Ethics for Senior
Financial Officers and of certain provisions of the Standards of
Business Conduct and Ethics for directors or executive officers
will be disclosed on our website promptly following the
amendment or waiver.
Risk
Oversight
We face a variety of risks, including strategic risk, liquidity
risk, and operational risk. Our boards role is to oversee
senior managements process to identify and manage the
material risks we face. Our management regularly considers risk
as part of its strategic and operating decision-making process,
and discusses these risks with the board. Annually, our
management conducts an enterprise risk management review that is
coordinated by our Internal Audit Department using the framework
of the Committee of Sponsoring Organizations of the Treadway
Commission. Management reviews the enterprise risk management
processes with our Audit Committee and our significant risks
with the board. The Audit Committee oversees managements
handling of risks related to financial reporting. The Audit
Committee has direct access to the Vice President, Internal
Audit at regular meetings and in executive sessions outside the
presence of other management. Our Nominating and Governance
Committee engages in regular discussions of environmental,
legal, regulatory, public policy, and governance risks with our
Vice President, Environmental, Safety and Health, our Chief
Governance Officer, our Chief Administrative Officer, and our
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General Counsel. In addition, our Compensation Committee
oversees managements compensation risk management
activities, including an annual compensation risk assessment,
and engages in regular discussions of compensation risk with our
Vice President and Corporate Secretary.
COMMITTEES
OF THE BOARD OF DIRECTORS, MEETINGS AND COMMUNICATIONS
The board performs a number of its functions through committees.
All members and chairs of our Audit Committee, Management
Development and Executive Compensation Committee, and Nominating
and Governance Committee are independent directors under the
current rules of the NYSE. Each committees charter
expressly provides that the committee has the sole discretion to
retain, compensate, and terminate its advisors. Current copies
of the charters of our Audit Committee, Management Development
and Executive Compensation Committee, and Nominating and
Governance Committee are available on our website at
www.templeinland.com.
Information about these committees follows:
Audit Committee: The responsibilities of
the Audit Committee are to assist the board in its oversight of:
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the integrity of our financial statements,
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compliance with legal and regulatory requirements,
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the independent registered public accounting firms
qualifications and independence; and
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the performance of the internal audit function and independent
registered public accounting firm.
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The Audit Committee is also responsible for preparing the report
that the rules of the SEC require be included in the annual
proxy statement.
The Audit Committee has the sole authority to retain and
terminate any audit consultants or other professional advisors,
including the independent registered public accounting firm. The
board has determined that there is at least one Audit Committee
financial expert serving on the Audit Committee,
Mr. Heller, who is an independent director. In addition,
the board has determined that all members of the Audit Committee
are financially literate and independent as defined in the NYSE
Corporate Governance Standards. The members of the Audit
Committee following Dr. Carltons retirement in 2010
are Mr. Heller (Chairman), Ms. Carr,
Dr. Faulkner, Mr. Reed, Mr. Smith,
Mr. Temple, and Mr. Walker. The Audit Committee met 8
times in 2009.
Management Development and Executive Compensation
Committee: The responsibilities of the
Management Development and Executive Compensation Committee are:
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review and approve corporate goals and objectives relevant to
CEO compensation, evaluate the CEOs performance in light
of those goals and objectives, and together with the other
independent directors determine and approve the CEOs
compensation level based on this evaluation;
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make recommendations to the board with respect to non-CEO
executive officer compensation, incentive-compensation plans and
equity-based plans that are subject to board approval;
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review and discuss with management the Companys
compensation discussion and analysis to be included in the
Companys annual proxy statement or annual report on
Form 10-K
filed with the SEC; and
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prepare the disclosure required by Item 407(e) of
Regulation S-K.
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The Vice President and Corporate Secretary and the CEO recommend
executive compensation amounts and programs to the Compensation
Committee, except that the CEO does not participate in
discussions regarding his own compensation. Hewitt Associates
LLC, a compensation consultant, is engaged by the Compensation
Committee to provide market data regarding executive
compensation and advice about proposed compensation programs and
amounts. The Compensation Committee obtains specific data from
Hewitt upon request. The Compensation Committee also invites a
Hewitt representative to attend meetings
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of the committee from time to time. The Compensation Committee
meets with the Hewitt representative in executive session
periodically. Once the full board approves any compensation
recommendations of the Compensation Committee, administration of
the compensation programs is delegated to the Vice President and
Corporate Secretary.
The Compensation Committee has the sole authority to retain and
terminate any compensation consultant or other professional
advisor. The members of the Compensation Committee are
Dr. Draper (Chairman), Ms. Carr, Mr. Heller and
Mr. Smith. The board has determined all of these directors
are independent as defined in the NYSE Corporate Governance
Standards. The Compensation Committee met 5 times in 2009.
Compensation Committee Interlocks and Insider
Participation: There are no compensation committee
interlocks among the members of the board, and no member of the
Compensation Committee has a transaction reported under
Certain Relationships and Related Transactions.
Nominating and Governance Committee: The
responsibilities of the Nominating and Governance Committee are:
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consider and make recommendations to the board of directors
concerning the appropriate size, functions, and needs of the
board of directors and identify and recommend candidates to fill
positions on the board of directors;
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recommend the director compensation program to the board;
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develop and recommend to the board the corporate governance
practices to be followed by the Company; and
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oversee the evaluation of the board.
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The Vice President and Corporate Secretary and the CEO recommend
director compensation amounts and programs to the Nominating and
Governance Committee. Hewitt is engaged by the Nominating and
Governance Committee to provide market data regarding director
compensation and advice about proposed director compensation
programs and amounts. The Nominating and Governance Committee
obtains specific data from Hewitt on an annual basis and at
other times upon request. The Nominating and Governance
Committee also invites a Hewitt representative to attend
meetings of the committee from time to time. The Nominating and
Governance Committee meets with the Hewitt representative in
executive session periodically. Once the full board approves any
director compensation recommendations of the Nominating and
Governance Committee, administration of the compensation
programs is delegated to the Vice President and Corporate
Secretary.
The Nominating and Governance Committee has the sole authority
to retain and terminate any search firms, consultants, lawyers,
accountants, or other professional advisor. The members of the
Nominating and Governance Committee (following
Dr. Carltons retirement) are: Dr. Faulkner
(Chairman), Mr. Reed, Mr. Temple, and Mr. Walker.
The board has determined all of these directors are independent
as defined in the NYSE Corporate Governance Standards. The
Nominating and Governance Committee met 5 times in 2009.
Executive Committee: The Executive
Committee may exercise all the authority of the board in the
management of our business except:
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matters related to the composition of the board,
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changes in the Bylaws, and
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certain other significant corporate matters.
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The members of the Executive Committee are the Chairman of the
Board, who serves as Chairman of the Executive Committee
(Mr. Simons), the Lead Director (Dr. Draper) and the
Chairman of each standing committee of the board. After the
retirement of Dr. Carlton, the members of the Executive
Committee are: Mr. Simons, Dr. Draper,
Dr. Faulkner and Mr. Heller. The Executive Committee
met one time in 2009.
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Board Meetings: During 2009, the board of
directors met five times. 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 or she served. Health
permitting, all board members are expected to attend our annual
meeting of stockholders. In 2009, all board members attended the
annual meeting of stockholders. The board holds regularly
scheduled executive sessions of the board with only
non-management directors present. A session with only
independent directors was held in conjunction with each of the
four regularly scheduled board meetings in 2009. The lead
director, Dr. Draper, presided over the non-management
executive sessions.
Communication with Directors: Stockholders and
other interested parties may communicate with non-management
directors by forwarding their written comments to an independent
third party that has agreed to forward the comments to
Dr. Draper, our Lead Director, with a copy to our General
Counsel. The independent third party is The Network and such
comments may be mailed to:
The Network
333 Research Court
Norcross, GA 30092
Attention: Call Center Temple-Inland
Alternatively, interested parties may send comments to The
Network at www.tnwinc.com/webreport.
Any changes in the Lead Director or the independent third party
for purposes of communicating with the Lead Director after
publication of this proxy statement will be posted on our
website at www.templeinland.com.
Our director compensation program is designed to recognize the
time commitment and preparations required for directors to
fulfill their responsibilities. Our program also aligns director
compensation with stockholder returns. Alignment with
stockholders is emphasized through stock ownership requirements
and an annual restricted stock unit grant.
2009 Director
Fee Schedule
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Annual Retainer Fee
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$
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70,000
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Covers 5 board meetings and 5 meetings for each committee
per year
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Meeting Fee
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$
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2,500
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Each additional meeting in excess of 5 board meetings and 5
meetings for each committee per year
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Lead Director Annual Retainer Fee
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$
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20,000
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Audit Committee Chairman Annual Retainer Fee
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$
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20,000
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Other Committee Chairman Annual Retainer Fee
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$
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12,500
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Committee Member Annual Retainer Fee
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$
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7,500
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Stock Option Grant
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20,000
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Upon initial election to the board
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Annual Restricted Stock Unit Grant
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$
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50,000
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Payment deferred until retirement
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Match for Deferring Fees in Lieu of Cash Payment
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133%
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Deferred until retirement
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Matching Gift to Charity
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Up to $
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6,000
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Funded by the Temple-Inland Foundation
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2010 Director Fee
Changes: To decrease the impact caused by
mark-to-market
accounting of directors deferred compensation based on
changes in our stock price and to decrease the total director
fees, the directors revised the director fee schedule beginning
in 2010. The 133% match for deferral in stock was eliminated,
and directors who defer will instead be paid interest at
retirement equal to 120% of the
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quarterly applicable federal long-term rate published by the
IRS. To maintain alignment with stockholders, the annual
restricted stock unit grant was increased to $90,000. The
Temple-Inland Foundation has reduced its matching gifts for
directors effective in 2010 to $3,000 maximum per year.
Initial Stock Option
Grant: Directors receive a grant of 20,000
options at the time of their initial election to the board.
Options are granted at fair market value on the grant date,
which is the date of the board meeting at which the director is
elected. The option vests in three installments:
8,000 shares on the first anniversary, 8,000 shares on
the second anniversary, and 4,000 shares on the third
anniversary of the date of election. The option term is ten
years. We do not have any program, plan or practice to time
option grants to our directors in coordination with the release
of material non-public information. We do not set the grant date
of stock option grants to new directors in coordination with the
release of material non-public information. We do not time our
release of material non-public information for the purpose of
affecting the value of director compensation.
Stock Ownership
Guidelines: Directors are required to hold
Temple-Inland stock valued at five times their annual retainer
fee under the boards stock ownership guidelines within
five years of their election to the board. This stock ownership
policy is contained in our Corporate Governance Guidelines,
which are available on our website at
www.templeinland.com.
Shares of stock owned by the directors and their immediate
family members count toward this requirement. Restricted stock
units also count toward this requirement. All our independent
directors, except Mr. Walker who just joined our board in
2008, currently meet these ownership requirements.
Fee Deferral Plan: Through
2009, directors participated in a fee deferral plan that
encouraged stock ownership by granting a match of 133% in the
form of restricted stock units on amounts deferred until
retirement. The number of restricted stock units was determined
by dividing the deferred amount by the fair market value of
Temple-Inlands stock on the date deferred. Dividend
equivalents are credited on the restricted stock units equal to
the amount of dividends Temple-Inland pays on its common stock.
Dividend equivalents are paid to the directors in cash. At
retirement, the director will receive stock for fees deferred
through 2005 and cash for fees deferred beginning in 2006 in
payment of the restricted stock units. Cash payments will be
based on the fair market value of the stock on the payment date.
Fair market value in all cases is equal to the closing price of
Temple-Inland stock on the NYSE on the applicable date. The
director does not get any payment until retirement. Payment may
be taken in a lump sum or in up to fifteen annual installments.
Directors may retire at any time, but must retire by the annual
meeting following their 72nd birthday. Effective
January 1, 2010, the match has been eliminated. Fees
deferred after that date will accrue interest payable at
retirement equal to 120% of the quarterly applicable federal
long-term rate published by the IRS.
Frozen Retirement
Plan: There is no retirement plan for directors
except for a plan that was discontinued in 2000. Under that
plan, the following directors will receive at retirement $35,000
per year for the following number of years as a retirement
benefit: Mr. Reed 1 year and
Mr. Temple 17 years. Retirement benefits
will be paid to the surviving spouse if the director does not
live to receive the full payment, and terminate if the spouse
does not live to receive the remaining payment. This plan was
discontinued in 2000 and no additional accruals are made under
this plan.
Change in Control
Provision: Both the directors fee
deferral plan and the frozen directors retirement plan
contain provisions for accelerating payment in the event the
directors service terminates due to a change in control,
along with a
gross-up
provision in the event the director is required to pay excise
tax on the accelerated payment.
Charitable
Contributions: Directors are eligible for the
Temple-Inland Foundations matching gifts program, which
matched donations made by employees and directors in 2009:
3-for-1 for
the first $1,000;
2-for-1 for
the next $1,000; and
1-for-1 for
the next $1,000, for total possible matching donations of up to
$6,000 per person. Beginning in 2010, donations will only be
matched
1-for-1 up
to the maximum match of $3,000.
20
Insurance and
Indemnification: Directors are covered under
our business travel accident insurance policy for $100,000 while
traveling on our business. Directors are also covered under our
director and officer liability insurance policies for claims
alleged in connection with their service as a director. We have
entered into indemnification agreements with each of our outside
directors agreeing to indemnify them to the fullest extent
permitted by law for claims alleged in connection with their
service as a director.
2009 Director
Compensation: All of our directors elected to
defer their 2009 fees until retirement. Messrs. Simons and
Maley receive no compensation for their services as directors
other than their employee pay. We computed the value of fees
earned by our directors using SEC rules which require us to
calculate the value of the restricted stock units acquired
through deferral of fees and match using the stock price on the
date the fees are earned. However, directors do not receive any
payment of the deferred fees or match until they retire. At
retirement, a director receives actual shares of common stock
and cash equal in value to the restricted stock units held in
his or her account. The value of the shares and cash to be paid
at the time the director retires may be different than the value
of restricted stock units awarded at the time the fee is earned.
The following table shows the compensation our directors
received for 2009:
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|
|
|
|
|
|
|
|
2009 DIRECTOR COMPENSATION
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|
|
|
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Fees Earned or
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|
|
All Other
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|
|
|
Name
|
|
Paid in
Cash(1)
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|
Stock
Awards(2)
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|
Compensation(3)
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|
|
Total
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|
Donald M. Carlton
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|
$
|
154
|
|
|
$
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271,196
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|
|
$
|
6,000
|
|
|
$
|
277,350
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|
Cassandra C. Carr
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|
$
|
123
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|
|
$
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247,927
|
|
|
|
|
|
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$
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248,050
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E. Linn Draper, Jr.
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|
$
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141
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|
|
$
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288,684
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|
|
|
|
|
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$
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288,825
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Larry R. Faulkner
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$
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123
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|
|
$
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247,927
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|
|
|
|
|
|
$
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248,050
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Jeffrey M. Heller
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|
$
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166
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|
|
$
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294,484
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|
|
|
|
|
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$
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294,650
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W. Allen Reed
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$
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115
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|
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$
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242,110
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|
|
|
|
|
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$
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242,225
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Richard M. Smith
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|
$
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123
|
|
|
$
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247,927
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|
|
$
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6,000
|
|
|
$
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254,050
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Arthur Temple III
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|
$
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123
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|
|
$
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247,927
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|
|
$
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6,000
|
|
|
$
|
254,050
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R.A. Walker
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|
$
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123
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|
|
$
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247,927
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|
|
|
|
|
|
$
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248,050
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|
|
|
|
(1) |
|
Director fees were converted into stock units and any left over
balances were paid in cash. |
|
(2) |
|
Includes the aggregate grant date fair value computed in
accordance with Financial Accounting Standards Board Accounting
Standards
Codificationtm
(FAS ASC Topic 718 Stock Compensation),
applying the same valuation model and assumptions used for
financial reporting purposes as outlined in Note 10 to our
consolidated financial statements contained in our 2009 Annual
Report, disregarding the estimate of forfeitures related to
service-based vesting conditions. The fees shown in Stock
Awards consist of fees that were earned in 2009 but deferred
until retirement. The deferred fees earned a match of 133% and
were converted into restricted stock units. At year end 2009,
the directors held the following aggregate number of restricted
stock units in the Fee Deferral Plan: |
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|
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Deferred Restricted
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Director
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Stock Units
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Donald M. Carlton
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90,959
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Cassandra C. Carr
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75,641
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E. Linn Draper, Jr.
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88,555
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Larry R. Faulkner
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69,752
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Jeffrey M. Heller
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96,204
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W. Allen Reed
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96,118
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Richard M. Smith
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63,769
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Arthur Temple III
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90,624
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R.A. Walker
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|
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29,424
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|
At fiscal year end, the directors held the following aggregate
number of stock options: Donald M. Carlton 20,000,
Cassandra C. Carr 20,000, E. Linn
Draper, Jr. 20,000, Larry R. Faulkner
21
20,000, Jeffrey M. Heller 20,000, W.
Allen Reed 13,000, Richard M. Smith
20,000, Arthur Temple III 12,000, and R. A.
Walker 20,000. Expiration dates for these options
range from 2010 through 2018. To see option exercise prices,
vesting dates, and terms for each directors options, you
may look at his or her latest Form 4 under Investor
Relations, SEC Filings, on our website at
www.templeinland.com.
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|
|
(3) |
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The amounts in All Other Compensation consist of matching
charitable donations of $6,000 made by the Temple-Inland
Foundation. |
REPORT OF THE
MANAGEMENT DEVELOPMENT
AND EXECUTIVE COMPENSATION COMMITTEE
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis with management and, based
on this review and discussion, recommended that it be included
in the Companys Annual Report on
Form 10-K
for the year 2009 and in this proxy statement.
E. Linn Draper, Jr., Chairman
Cassandra C. Carr
Jeffrey M. Heller
Richard M. Smith
COMPENSATION
DISCUSSION AND ANALYSIS
Executive
Summary
We delivered strong relative operational and financial
performance in 2009, despite continued tough economic
conditions. 2009 highlights included:
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Our total return to stockholders was 363%, outpacing our peer
group
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We reduced debt by $482 million, significantly
strengthening our balance sheet, lowering our interest expense
and providing additional financial flexibility
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Corrugated Packaging earned a record $347 million
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Corrugated Packaging
return-on-investment
(ROI) was 16.5%
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Building Products generated positive EBITDA of $17 million,
a $9 million improvement over 2008 despite a 39% decline in
housing starts
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|
General and administrative expenses (not included in our
segments) were down 8% (following a 24% reduction in 2008)
|
During the year, the Compensation Committee continued to review
our compensation philosophy to ensure that it provides
appropriate incentive and reward based upon its
pay-for-performance
objectives focused on maximizing ROI and profitably growing our
business. As more fully described below, the executive
compensation programs in place during 2009 operated as intended.
For example, our record earnings and ROI in our corrugated
packaging business resulted in our corrugated packaging business
executives being awarded short-term incentive compensation at
the high-end of the range. In addition, due to a disciplined
debt reduction effort and our operational successes, management
has significantly strengthened our financial position for the
continued uncertain economic environment and enabled a focus on
future growth. We attribute a significant portion of our success
to the incentive programs that were designed to pay for
performance and to align our executives interests with
those of stockholders.
22
As we move forward, the Compensation Committee understands the
continued uncertain economic environment and the challenges that
this environment may create with respect to executive
compensation. The Compensation Committee will continue to
monitor trends and developments to ensure that we provide the
appropriate incentives to drive performance and attract and
retain top executive talent.
The Compensation Committee believes that the total compensation
program does not encourage management to take excessive risks
and serves the stockholders best interests; it includes an
appropriate balance of short- and long-term performance periods,
significant stock ownership and extended vesting schedules. In
combination, we believe that these elements tie our executive
compensation to our sustained long-term performance.
What is our
compensation
philosophy?
Our two key objectives at Temple-Inland are to maximize ROI and
profitably grow our business. Our compensation program is
designed to attract and retain our executives, and appropriately
motivate and reward them for maximizing ROI and profitably
growing our business. It is also designed to be transparent,
easy to explain and easy to understand.
We are focused on maximizing ROI because we fundamentally
believe there is direct correlation between ROI and stockholder
value. We will look for opportunities to profitably grow our
business because we can create additional value for stockholders
through disciplined growth focused on ROI. We believe
accomplishing these objectives creates value for our
stockholders.
What are the
elements of our compensation
program?
The elements of our compensation program and their purposes are:
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Compensation Elements
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Primary Purpose
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Salary
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Attract and retain
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Health & Welfare Benefits
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Attract and retain
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Change in Control Agreements
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Attract and retain
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Annual Incentive Award
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Motivate and reward performance
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Long-term Incentives
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Motivate and reward performance
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Retirement & 401(k) Benefits
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Attract and retain; reward performance
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Salaries are paid in cash to attract or retain executives.
Health and welfare benefits are standard in our industry and
also serve to attract or retain executives. In our industry, it
is standard to provide change in control agreements and they are
necessary to attract and retain talent in our ever-consolidating
industry. Change in control agreements help ensure that our
executives continue to work in the best interest of our
stockholders and help alleviate concerns during any potential
change in control situations that might otherwise lead our
executives to work somewhere else.
Incentive cash awards are considered on an annual basis and
reward short-term performance based primarily on consolidated
ROI for corporate executives or segment ROI for segment
executives. Long-term incentives reward long-term performance
and align our executives interests with stockholders. Both
cash annual incentive awards and long-term incentive awards are
designed to align the executives interests with our
business strategy and motivate performance to maximize ROI.
Long-term incentive awards also help retain executives because
they contain forfeiture provisions if the executive terminates
employment other than for retirement, death, disability, or
change in control. Retirement benefits help to retain executives
and reward long-term service. Retirement benefits also reward
performance because our formulas include both base salary and
annual incentive award in calculating average pay for pension
purposes.
23
How is each
element of compensation
determined?
Generally speaking, each element of compensation is evaluated
independently to determine whether it is competitive within our
industry, or within the market as a whole.
Once a year, the Compensation Committee views a tally sheet that
shows all elements of compensation for each named executive
officer. The entire board is also furnished with tally sheets
for the named executive officers, and makes all decisions
concerning the CEOs pay.
Although the Compensation Committee has not established specific
preset allocation formulas to determine the proportion of each
element of compensation in relation to other elements, it
generally tries to maintain a balance between the different
elements:
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Compensation Elements
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Performance Measure
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Measurement Period
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Salary
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Continued service subject to annual evaluation
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1 Year
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Annual incentive award
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ROI and lowering cost/profitable growth
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1 Year
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Long-term incentives
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Restricted stock units
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Time vested with minimum ROI threshold
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3 Years
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Performance stock units
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ROI vs. Peers
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3 Years
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Options
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Stock price
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10 Years
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Retirement benefits
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Dependent on salary and annual incentive awards
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Career
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Health & welfare benefits
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None
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None
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Change in control agreement
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None
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None
|
Year to year, the exact allocation between elements may vary,
but the overall mix is strongly weighted to pay-for-performance
in accordance with our philosophy. For Mr. Simons, over 80%
of his 2009 compensation was performance related:
How are
salaries
determined?
To ensure that our compensation remains competitive, the
Compensation Committee from time to time reviews information
from Hewitts independent survey of comparative companies.
Because the market for executive talent extends beyond any
particular industry, the survey data includes both companies in
our industry as well as companies outside our industry. For
example, in 2009 the group of comparative companies consisted
of: AbitibiBowater Inc., Appleton Papers Inc., Ball Corporation,
Boise Inc., Domtar Corp, Georgia Pacific Corporation, Glatfelter
P H Co, Graphic Packaging Holding Co, International Paper
Company, Martin Marietta Materials, Inc., MeadWestvaco Corp,
Mercer International Inc., Neenah Paper Inc, Owens Corning,
Packaging Corp of America, Pactiv Corporation, PPG Industries,
Inc., Rock-Tenn Co, Smurfit Stone Container Corp, Sonoco
Products Company, Trinity Industries, USG Corporation and Verso
Paper Holdings LLC. Our performance peer group and Hewitts
comparative group overlap but are not identical due to practical
considerations related to the availability of financial data
versus compensation data. At the request of the Compensation
Committee, Hewitt uses data from these companies to establish
the relationship
24
between revenues and compensation from which a market value of
pay can be calculated for a specific revenue size, using a
statistical technique known as regression analysis. Salaries are
reviewed annually and are paid in cash. In making its
discretionary salary decisions, the Compensation Committee
emphasizes the executives experience, responsibilities,
and performance, along with relative rank to other executives
for internal pay equity. No specific formula is applied to
determine the weight of each factor and no specific targets are
applied. The Compensation Committee has historically followed a
policy of using annual incentive awards rather than base salary
to reward outstanding performance.
|
|
|
2009 Salary Review
|
|
Our named executive officers did
not receive a salary increase in 2009, partially due to the
uncertain economic environment and because surveys indicate base
salaries for most of our named executive officers were generally
at or above the mid-ranges of the applicable comparative
companies.
|
How are annual
incentive awards
determined?
Annual incentive awards are paid in cash based on overall ROI
for corporate executives and segment ROI (adjusted downward for
overhead) for segment executives under a stockholder-approved
plan. The plan also allows the Compensation Committee to factor
in pre-established performance objectives focused on lowering
cost and profitable growth. For Section 162(m) purposes, a
potential maximum annual incentive award of 250% of target is
payable under the plan for positive ROI. The annual incentive
award for any executive will not exceed 250% of the
executives target annual incentive award. For the CEO and
President, target is 125% of salary. For all other executives,
target is 100% of salary. The Compensation Committee retains the
discretion to reduce the size of any annual incentive award.
The level of ROI performance necessary for paying the threshold,
target and maximum levels is set by the Compensation Committee
annually and is not subject to adjustment by management. The
following schedule was used by the Compensation Committee in
making its ROI component payment determinations for 2009:
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|
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|
|
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|
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Threshold
|
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Target
|
|
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Maximum
|
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ROI
|
|
|
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1
|
%
|
|
|
9.0
|
%
|
|
|
14.0
|
%
|
Annual Incentive Award expressed as a % of Target
|
|
|
|
10
|
%
|
|
|
100
|
%
|
|
|
200
|
%
|
The Compensation Committee may also pay up to an additional 100%
of the target annual incentive award amount for satisfactory
achievement of qualitative objectives focused on lowering cost,
profitable growth, and promoting a high performance culture
focused on our values set forth on our Vision/Mission/Values
statement. The total of the ROI component and the qualitative
component together may not exceed 250% of the target annual
incentive award.
|
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|
|
|
2009 Performance Results
|
|
ROI Component
|
|
In 2009, Temple-Inland had an
ROI of 7.0%, up from 4.5% in 2008. Messrs. Simons, Maley,
and Levy received a 78% of target annual incentive award under
the ROI component of the program ($760,500, $609,375 and
$331,500, respectively). The Corrugated Packaging segment had
ROI of 16.5%, and Messrs. Norton and Vesci received an
annual incentive award of approximately 200% of target ($700,000
each).
|
|
Qualitative Component
|
|
In addition, we lowered our costs significantly and
profitably grew the Company in 2009:
|
|
Driving for low costs
|
25
|
|
|
|
|
|
We began to reap the benefits of our box plant transformation
in 2009. This effort has resulted in fewer plants, fewer
machines and fewer people, and reduced our cost by
$70 million per year.
|
|
In Building Products, we reduced our costs by 18% in 2009. As a
result, we generated positive EBITDA in this business despite
historic low housing starts.
|
|
We also reduced our general and administrative expenses (not
included in our segments) by 8% in 2009 following a 24%
reduction in 2008. Our ratio of selling, general and
administrative expense to total cost ratio was 8.4% for the
first 9 months of 2009, compared with an industry average
of approximately 10.6%.
|
|
Profitably Growing our
Business
|
|
In July 2008, we acquired the remaining 50% interest in
Premier Boxboard Limited. In 2009, we successfully integrated
the mill into our system and have realized annual synergies from
improving the mills productivity and reducing costs of
over $20 million, well above target. We produced
approximately 130,000 tons of white-top linerboard at this mill
in 2009 which we have historically purchased from competitors,
adding another $30 million to earnings. The benefits from
our acquisition of PBL have exceeded our expectations.
|
|
In Building
Products, we grew our market share in all products and expanded
the market for
GreenGlasstm
our fiberglass-faced gypsum sheathing product introduced in
2008. This product is used in commercial applications under a
broad range of exterior veneers and has an exceptionally high
level of recycled content.
|
|
Based on these specific achievements and the general
achievements outlined in the Executive Summary, the Compensation
Committee granted an additional qualitative award of $640,000
each to Mr. Simons and Mr. Maley. Total annual
incentive awards are shown in the Non-equity Incentive Plan
Compensation column in the Summary Compensation Table.
|
How are the
long-term incentive awards
determined?
Historically, our long-term incentive awards have included:
|
|
|
|
|
Stock options
|
|
|
|
Restricted stock units (RSUs)
|
|
|
|
Performance stock units (PSUs)
|
The Compensation Committee considers previous grants, tenure,
and relative responsibilities of the executive in determining
size of awards. In the case of a new key executive, or an
executive assuming new responsibilities, an initial grant may be
made above usual annual levels. Using its discretion, the
Compensation Committee establishes a dollar value for the stock
awards in consultation with Hewitt after reviewing competitive
market data for similar executives at other companies inside and
outside the paper and forest products industries, as well as
relative rank to other executives for internal pay equity. This
dollar value includes a performance component and may be above
the mid-range of what other companies may offer in any given
year; no specific targets are applied.
|
|
|
2009 Annual LTI Awards
|
|
At the beginning of 2009, we, our peers and the market in
general experienced very depressed stock prices. We considered
the impact our low stock price would have on our annual
long-term incentive grants, which are made at our February board
meeting each year. The low stock price would require an
increased number of shares to be issued to approximate the same
value as in prior years, and would exceed the number of shares
available under our stock plan.
|
|
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|
|
|
|
26
|
|
|
The low stock price would also increase the accounting
volatility of our cash-settled restricted stock units as our
stock price rebounded, since these units are
marked-
to-market
each quarter. To mitigate these effects, we adjusted the mix and
terms of our long-term incentive grant for 2009 as follows:
|
|
We reduced our nonqualified
option grants from 50% to 15% of the long-term incentive value
to be awarded to reduce the number of shares required.
|
|
As planned, we resumed the
use of performance stock unit grants in 2009. The PSUs pay 100%
for top quartile ROI ranking against our performance peer group,
75% for second quartile ranking, and 0% for bottom half ROI
ranking. The PSUs are payable in cash, so there is no dilution
to stockholder value. Although they are payable based on the
stock price, and therefore subject to accounting volatility, we
felt it was important to maintain alignment to stockholder
values for this component of the compensation award. PSUs equal
35% of the long- term incentive value awarded.
|
|
Instead of restricted stock
units, we issued fixed- value restricted unit awards equal to
50% of the long-term incentive value to be awarded. These awards
were not tied to the stock price. This helped us avoid the
potential for a large accounting impact when the stock price
recovers, and at the same time provided a stable measure of
retention value for our executives. As in prior years, our
restricted unit awards have threshold ROI criteria to maintain
their deductibility under IRS Section 162(m). Given the
uncertain market, we added relative ROI criteria compared to the
peer group as an alternative criteria.
|
In a non-management executive session of our board, our
directors expressed concern that our consistent relative
outperformance of our peers made our executives attractive
candidates for recruitment by competitors. At its August
meeting, the Compensation Committee evaluated the retention
value of our long-term incentives and the retention value of our
executive retirement program, which is most effective as
executives begin to approach retirement eligibility. To
strengthen the retention value and bridge the gap between the
existing long-term incentive vesting cycle and the vesting of
the SERP, the board granted a special fixed-value performance
award to four key officers: $2.5 million to the CEO,
$2 million to the COO, and $1 million each to the
Group Vice Presidents over our Corrugated Packaging segment. The
awards are payable in cash if threshold ROI criteria is attained
over the second half of 2009 and 2010, 2011, and 2012 to
preserve our tax deduction under Section 162(m). The awards
are payable in one-third installments in 2013, 2014, and 2015 if
the executives remain employed through the payment dates (or
age 65 if earlier).
27
What are the
material terms of the stock
awards?
The stock awards have the following terms:
|
|
|
Non-qualified Options
|
|
Options are granted at fair market value on the date of grant,
become exercisable 25% each year over four years, provide for
accelerated vesting upon retirement, disability, death, or if
there is a change in control, and expire in ten (10) years.
Income tax withholding may be paid with exercised shares. The
exercise price is the closing price of Temple-Inland stock on
the NYSE on the grant date.
|
Restricted Stock Units
|
|
Restricted stock units vest on the third anniversary from the
date of grant if Temple-Inland has either (i) an ROI of at least
one percent (annualized) over the three-year award period or
(ii) an ROI over the award period that falls within the top
three quartiles as compared to the peer group. RSUs are settled
in stock or cash based on the closing price of Temple-Inland
stock on the NYSE on the vesting or payment date as specified in
the award agreement. RSUs provide for accelerated or continued
vesting upon retirement, disability, death, or if there is a
change in control of Temple-Inland. In 2009, in lieu of RSUs,
the Compensation Committee granted fixed-value restricted units
that are paid in cash in a fixed amount set on the grant date.
|
Performance Stock
Units
|
|
Performance stock units are restricted stock units that vest 0%,
75%, or 100% on the third anniversary from the date of grant
depending on our ROI during the three years beginning in the
year of the grant compared to the peer group ROI. If performance
is in the top quartile, then there is a 100% payment and if in
the second quartile, then there is a 75% payment. No payment is
made if performance is below the top half compared to the peer
group. Performance stock units also provide for accelerated or
continued vesting upon retirement, disability, death or if there
is a change in control. All grants are payable in cash.
|
ROI, for purposes of our long-term incentive performance
criteria, is defined as set forth in Item 6 of our 2009
Form 10-K.
Our long-term incentive plan provides for equitable adjustment
in the event of stock splits or other equity restructurings.
Awardees generally receive the same adjustment stockholders
receive.
We chose our peer group by including the companies that compete
with us for capital from equity and debt investors. Within the
S&P Paper & Forest Products group, we excluded
any companies that are not SEC registrants, since their
financial data is not publicly available. We also excluded
timber companies, since we sold our timberlands, and single
product building products companies since they do not
principally manufacture paper. Our peer group consists of North
American papermakers/converters, some of whom also manufacture
some building products or make some grade of paper and
manufacture a portfolio of building products or make some grade
of paper and manufacture a portfolio of building products, as
follows: AbitibiBowater Inc.; Appleton Papers Inc.; Boise Inc.;
Canfor Corporation; Caraustar Industries Inc.; Cascades Inc.;
Catalyst Paper; Domtar Corporation; Glatfelter; Graphic
Packaging Holding Co.; International Paper Company; MeadWestvaco
Corporation; Mercer International Inc.; Neenah Paper Corp.;
Newark Group, Inc.; NewPage Corp.; Packaging Corporation of
America; Rock-Tenn Co.; Smurfit-Stone Container Corporation;
Verso Paper Corp.; Wausau Paper Corporation; and West Fraser
Timber Co. Ltd. The Compensation Committee will periodically
adjust the peer group to reflect mergers, consolidations, and
similar restructurings.
Do we pay
dividends on RSUs and PSUs? If so,
why?
Dividends are not paid on fixed-value restricted units.
Dividends are only paid on RSUs and PSUs if the underlying
awards are earned to further align interest with stockholders
and provide a retention device.
28
Do executives
have to meet stock ownership
guidelines?
Yes. The Compensation Committee adopted minimum stock ownership
guidelines as follows:
|
|
|
Position
|
|
Multiple of Salary
|
|
Chief Executive Officer
|
|
5x
|
Other Named Executive Officers
|
|
3x
|
Shares owned by the executive and their immediate family members
count toward the ownership guidelines. Shares held in the 401(k)
plan and RSUs and PSUs also count toward the total. Options do
not count until they are exercised. Executives have five years
from hiring or pay increases to meet the guidelines.
Our named executive officers hold in excess of these required
amounts. Our compensation program is structured so that
approximately 75% of our executive pay is long-term in nature.
To further our executives long-term focus, we changed our
vesting provisions in 2009 so that when an executive retires,
the last 2 years awards of restricted units and
performance stock units before retirement will be payable one
year after retirement for one award, and two years after
retirement for the last award, dependent on achievement of
applicable performance criteria. Both our CEO and COO purchased
shares in open market transactions in 2009.
Are there
mandatory holding periods for stock acquired through exercise of
options?
Yes. Our executive officers are required to hold 100% of the net
shares acquired through the exercise of options until they meet
our ownership guidelines. The Compensation Committee maintains
discretion to reduce or eliminate future long-term incentive
awards for an executive who is not making adequate progress
toward meeting the stock ownership guidelines or does not retain
the required level of net shares acquired through the exercise
of options.
Are gains from
prior stock awards considered in setting other benefits such as
retirement?
No. Gains from exercising stock options and the vested value of
long-term incentive awards are not considered in setting other
benefits such as life insurance, disability benefits, or
retirement benefits.
How many more
shares can be issued under our long-term incentive
plans?
The following table sets forth information as of the end of 2009
related to compensation plans under which our shares may be
issued:
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
Remaining
|
|
|
|
|
|
|
Available for Future Issuance
|
|
|
Number of Securities
|
|
|
|
Under Equity Compensation
|
|
|
to be Issued Upon
|
|
Weighted-Average Exercise
|
|
Plans (Excluding Securities to
be
|
|
|
Exercise of
|
|
Price of Outstanding
|
|
Issued Upon Exercise of
|
|
|
Outstanding Options,
|
|
Options, Warrants and
|
|
Outstanding Options, Warrants
|
Plan Category
|
|
Warrants and
Rights(1)
|
|
Rights
|
|
and Rights)
|
|
Equity compensation plans approved by security holders
|
|
7,874,322
|
|
$15
|
|
0
|
Equity compensation plans not approved by security holders
|
|
None
|
|
None
|
|
0
|
Total
|
|
7,874,322
|
|
$15
|
|
0
|
|
|
|
(1) |
|
Includes 7,874,322 options outstanding, of which 7,316,920
relate to our employees and have a weighted average term of
7 years and 557,402 relate to employees of spun-off
entities Guaranty Financial Group Inc. and Forestar Group Inc.,
and have a weighted average term of 5 years. Of the |
29
|
|
|
|
|
7,316,920 related to Temple-Inland employees, this figure
includes 143,446 shares payable to directors for deferred
fees and 14,672 stock-settled restricted stock units that
related to deferred annual incentive awards and deferred vested
restricted shares that could not be paid out until after
retirement due to Code Section 162(m) policy. |
Do we have a
deferred compensation
plan?
No. We eliminated our deferred compensation program in 2009.
Do we provide
qualified retirement benefits to
executives?
Yes. Our named executive officers receive the same tax-qualified
retirement benefits as other salaried employees. The
Compensation Committee and the board had multiple discussions
over a period of several years about whether to continue our
defined benefit retirement plan or to change to a defined
contribution plan. Following a review of paper industry trade
association data and data provided by our actuary, and extensive
analysis by our human resources, finance and accounting
departments, the board in 2007 approved a continuation of our
defined benefit retirement plan with a simpler formula for new
hires. In addition, early retirement subsidies were reduced and
other cost-saving measures were adopted for newly hired
employees effective January 1, 2008. We believe a defined
benefit plan offers a competitive advantage in recruiting new
executives and is no more costly than a defined contribution
plan. Executive officers and other employees hired prior to
January 1, 2008 receive the better of the old or the new
formula. Only salary and annual incentive awards are taken into
account for retirement formula purposes.
Do we offer a
Supplemental Executive Retirement Plan
(SERP)?
Yes. The Internal Revenue Code limits the amount of compensation
that can be used in calculations under a tax-qualified defined
benefit retirement plan. In 2009, this limit was $245,000. As a
result, any retirement benefits that cannot be paid under our
tax-qualified defined benefit plan due to these limitations are
paid under a SERP, which is not a tax-qualified plan.
The SERP also provides unreduced retirement at age 60 with
15 years of service for certain designated executives,
including Mr. Simons, Mr. Maley, and Mr. Levy.
Under this plan, the designated executives retirement
benefits from all retirement plans will be at least equal to 50%
of the executives final average compensation for the
highest five years out of the last ten years of employment.
Benefits are reduced for early retirement, which may be taken at
age 55 with 15 years of service, by 5% for each year
prior to age 60. Benefits are paid in a lump sum amount.
The lump sum is calculated based on the
30-year
Treasury rate set in November of the year prior to retirement.
The SERP is unfunded and subject to acceleration of payment in
the event of a change in control. The SERP is a valuable
incentive to attract executives. It is also a valuable retention
tool for existing executives who must meet service criteria to
qualify for the plan.
Can executives
retire
early?
Yes. An employee may retire at age 55 or later if the
employee has five years of service, but benefits are reduced for
each year before age 62 by factors ranging from 3% to 6%
based on years of service under the tax qualified plan and
regular SERP.
Do we grant
extra years of credited service under our retirement
plan?
No. Extra years of credited service are granted only under our
change in control agreements and our CEO employment agreement
but not for any other reason.
Do executives
participate in a 401(k)
plan?
Yes. We offer the same 401(k) plan to all of our salaried and
non-union hourly employees. For each dollar that an employee
contributes to his or her 401(k) savings account, we contribute
a match of $1 up to
30
3% of the employees compensation. For each $1 that an
employee contributes of his or her next 3% of pay, we contribute
50 cents. The match vests after 2 years of employment.
Do we offer
health and welfare
benefits?
Yes. We offer the same health and welfare benefits to all
salaried employees. These benefits include medical benefits,
dental benefits, vision benefits, life insurance, salary
continuation for short-term disability, long-term disability
insurance, accidental death and dismemberment insurance,
dependent care spending account, health care spending account,
health savings account, and other similar benefits. Because
these benefits are offered to a broad class of employees, the
cost is not required by SEC rules to be included in the Summary
Compensation Table. The named executive officers pay more for
their medical benefits than other employees who receive less
compensation. Executives and other salaried employees may
participate in a post-retirement health plan that provides
access to health coverage. We pay a one-time contribution equal
to $600 per year of service up to 2004 under a frozen plan for
this coverage. Once the employee exhausts this contribution, he
or she must pay the full cost for coverage.
Do we offer
employment
agreements?
Occasionally we sign a letter agreement with a new executive
upon hiring which generally does not cover more than the first
years pay and annual incentive award. Except for
Mr. Simons, none of our other named executive officers has
an employment agreement. We entered into the agreement with
Mr. Simons in 2007 upon his election as CEO, after careful
study and review of Hewitt data concerning terms applicable to
CEOs in the general marketplace. The term of
Mr. Simons agreement is three years, but it is
automatically extended by one year on each anniversary unless
notice of nonrenewal is given at least one year in advance of
such anniversary date. During the term of the agreement,
Mr. Simons will receive a base salary which may not be
reduced below its level at the time the agreement was initially
entered into ($780,000) or any increase subsequently granted. He
will be eligible for a performance-based annual cash incentive
award, employee benefits, equity (long-term incentive plan)
grants, and other perquisites. Other perquisites consist of use
of the Temple-Inland aircraft (subject to imputation of income
under IRS regulations) and umbrella insurance, all on terms
substantially no less favorable than in effect prior to the
effective date of the agreement. The performance-based annual
incentive award program is entirely within the discretion of the
Compensation Committee, except that it shall be substantially no
less favorable than the program in effect prior to the effective
date of the agreement. Under his agreement, our CEO receives no
severance if he is terminated with cause and forfeits any
unvested long-term incentives. If we terminate him without
cause, our CEO agrees not to compete in our industry for two
years and not to recruit our executives, which we think is
critical given our success in executing our strategy and the
quality of our management team. We think it is only fair to pay
him under that circumstance since he is not allowed to work, and
to vest the long-term incentives that he would otherwise
forfeit. We added performance criteria to these awards in 2009
to preserve our tax deduction for this compensation under
Section 162(m).
Do we offer
any severance benefits for executives whose employment
terminates?
No. We do not have a plan or policy to provide severance
benefits to executives whose employment terminates. Generally
speaking, severance is a matter that is individually negotiated
with the executive and the amount depends on the circumstances
of his or her departure. The CEO is the only executive who has
an employment agreement with pre-established severance benefits,
other than the change in control agreements discussed below. In
return for the post-employment benefits, the CEO agreed not to
compete with our Company for two years after his departure.
Do we have a
policy on clawback of
compensation?
If an executive leaves under circumstances that call into
question whether any compensation amounts paid to him or her
were validly earned, we would pursue any legal rights we deemed
appropriate under the circumstances. Clawback provisions will
also be included in all awards under our 2010 Incentive Plan.
Under the clawback provision, the board may require an employee
to repay the portion of any annual incentive
31
awards and long-term incentive awards that was not earned due to
a restatement of our financial statements. If the
employees fraud or misconduct was a significant
contributing factor to the restatement, all outstanding
long-term incentive awards may be cancelled.
Do we offer
Change In Control
Agreements?
Yes. All of the named executive officers hold change in control
agreements. During a potential change in control, we do not want
executives leaving to pursue other employment out of concern for
the security of their jobs. As a retention incentive, we offer
change in control agreements that provide severance benefits to
executives whose employment terminates as a result of a change
in control. These agreements contain a double
trigger, meaning that severance is payable only if
an executives employment is terminated within two years
following a change in control event. Termination of employment
is deemed to occur if the executive terminates employment for a
good reason such as a substantial reduction in the
executives base salary or failure to provide benefits
substantially similar to the material benefits enjoyed by the
executive immediately prior to the change in control. We
evaluated these agreements and found them to be competitive in
their terms compared to our paper industry peers. Vesting of
long-term incentive compensation is accelerated when there is a
change in control event in some cases with and in some cases
without termination of the executive depending on the nature of
the event. In some cases, the event itself triggers the vesting
to allow executives to exercise and vote their shares. In our
opinion, these agreements are necessary to ensure attraction and
retention of executives in our industry, which has experienced
ongoing consolidation. In 2008, our Compensation Committee
adopted a new form of change in control agreement for any new
executive that does not include a
gross-up
provision. Legacy agreements issued prior to 2008 do contain
gross up provisions. If an executive loses his or her job
following a change in control event that meets certain IRS
criteria, the executive must pay an additional 20% excise tax
simply for collecting the pay that is due. The gross up makes
the executive whole by paying the 20% tax amount. It does
not pay the executives normal income taxes. Due to
the IRSs change in a long-standing Section 162(m)
position, we made minor modifications to our change in control
agreements with our named executive officers and our CEO
employment agreement to preserve our tax deduction under
Section 162(m). These modifications were cost neutral to
the Company, consisting of a covenant not to terminate named
executive officers at the request of an acquirer before a change
in control is consummated, and the addition of threshold
performance criteria to our CEOs employment agreement.
What are our
governance practices regarding
compensation?
Again this year, we performed a risk assessment of our executive
compensation programs. Our programs are transparent,
administered with good governance, and do not encourage our
named executive officers to take unnecessary and excessive risks
that threaten the value of our Company. This year we also
performed a risk assessment of compensation programs for general
employees and did not note any concerns that were reasonably
likely to have a material adverse effect on the Company.
32
Our governance practices divide responsibility for compensation
oversight into three levels:
|
|
|
Stockholders:
|
|
Stockholders approve all stock incentive plans. We do not have
any stock plans that are not stockholder-approved.
|
Board and Compensation Committee:
|
|
The Compensation Committee, composed entirely of independent,
outside directors, establishes and administers compensation
programs and philosophies. The Compensation Committee ensures
that stockholder-approved plans are administered in accordance
with good governance practices and stockholder intent. The
Compensation Committee is responsible for approval of salaries,
annual incentive awards and long-term incentive compensation
paid to executive officers, bonus pools for non-executive
employees, retirement formulas for executive officers, and
employment and change in control agreements. The full board
reviews tally sheets for the NEOs, evaluates CEO performance,
approves CEO pay, approves succession plans, and acts on
recommendations of the Compensation Committee.
|
Management:
|
|
Management approves health and welfare programs for all
employees, divides bonus pool amounts approved by the
Compensation Committee into individual employee bonuses,
approves any retirement plan changes and formulas other than
those for executive officers, and administers all employee
benefit and incentive plans on a day-to-day basis. Within
management, the CEO and Vice President and Corporate Secretary
serve as liaisons with the Compensation Committee.
|
What are the
roles of executive officers in determining
compensation?
Our Compensation Committee establishes and administers
compensation programs and philosophies. Our Vice President and
Corporate Secretary and CEO work closely with the Compensation
Committee and recommend executive compensation amounts, except
that the CEO does not participate in discussions regarding his
own compensation. These executives consult with the other
executive officers about compensation amounts for executives and
other employees who report to them. The Compensation Committee
has final approval of all compensation amounts or formulas
applicable to benefit plans in which executive officers
participate.
The Compensation Committee establishes and approves bonus
programs for non-executive employees and approves the aggregate
amount of bonus pools for each business segment. Each executive
officer recommends individual bonus amounts for employees under
his or her direction, and the executive officer in charge of the
applicable business segment approves the individual amounts.
The Compensation Committee approves all stock award recipients
and the amount of each award. No executive is involved in
setting the exercise price of the awards.
The Compensation Committee has delegated to the CEO the
responsibility for approving health and welfare programs for all
employees. Executive officers participate in the same health and
welfare programs as other salaried employees. Our health
programs require executives who earn more to pay more for their
benefits.
The Compensation Committee has also delegated to certain of our
executive officers the responsibility to maintain the tax
qualification status of the retirement and 401(k) plans, to
approve retirement and 401(k) plan provisions and formulas
applicable to employees who are not executive officers, and to
oversee the administration of all of the plans.
33
In addition, an investment committee, whose members are
executive officers, oversees the investment of retirement plan
assets and 401(k) plan fund choices. The investment committee
reports annually to the board.
What are our
stock option governance
practices?
Our policy for setting the timing of stock option grants does
not allow executives to have any role in choosing the price of
their options or other stock awards. We do not back
date, spring load or reprice options or other
stock awards. Our general practice is to make annual grants each
year at the February board meeting. The Compensation Committee
approves awards, including the specific number of shares granted
to specific individuals, which are ratified by the full board
and valued at the closing price of our common stock on the NYSE
on the grant date. On occasion, newly hired high-level employees
may be granted awards by the Compensation Committee in
connection with the start of their employment other than at the
February board meeting. Any such grants are ratified by the full
board and are priced at the closing price of our common stock on
the NYSE on the date of the board meeting at which the award is
approved. We do not have any program, plan or practice to time
option grants or other stock awards in coordination with the
release of material non-public information nor do we time the
release of material non-public information for the purpose of
affecting the value of executive compensation.
How is the
CEOs performance evaluated? Who determines CEO
pay?
The independent members of the board complete an evaluation of
the CEO each year, which is compiled confidentially by Hewitt
and provided to the Compensation Committee. Factors evaluated
include ROI, profitable growth of our business, lowering costs
and other financial and non-financial performance measures and
objectives, including leadership, ethics, strategic planning,
financial results, succession planning, human resources/EEO,
communications, external relations, and board relations.
The Compensation Committee recommends CEO pay to the independent
board members who determine CEO pay with assistance from Hewitt.
The Compensation Committee discusses CEO pay in executive
session and reports its recommendations to the independent
members of the board. The independent members of the board
approve all actions related to the CEOs compensation.
Does the
Compensation Committee use a compensation
consultant?
Yes. The Compensation Committee engaged Hewitt as its
compensation consultant independently, and not through a
management recommendation. Hewitt provides annual market and
other specific information on executive pay and also attends
Compensation Committee meetings on request of the committee. The
Compensation Committee periodically meets in executive session
with Hewitt. Hewitt also serves as consultant to the Nominating
and Governance Committee on director compensation.
The Compensation Committee annually assesses the independence of
its consultant. With the Compensation Committees approval,
Hewitt also prepares the change in control calculations for
disclosure in the proxy statement and models the number of
shares to be requested for new stock plans. In 2009, Hewitt did
not perform any additional services for the Company.
Do we use
tally
sheets?
Yes. Tally sheets for each of the named executive officers are
reviewed by the Compensation Committee and the board for
compensation each year. These tally sheets list the
executives salary, proposed annual incentive award and
stock awards, and the 401(k) matching contribution, retirement,
health and welfare benefits.
What is our
policy on Internal Revenue Code
Section 162(m)?
Our policy is to obtain the maximum possible tax deduction for
compensation paid to executive officers, but we may forego all
or some portion of a deduction to conform to our compensation
goals and objectives.
34
Except for amounts that are not material, all compensation paid
in 2009 should qualify for a deduction under Section 162(m)
of the Internal Revenue Code.
What is the
accounting and tax treatment of each form of
compensation?
For accounting purposes, salaries, annual incentive awards, the
fair value of stock-based compensation and other benefits are
charged to expense as earned. For tax purposes, salaries, annual
incentive awards and other benefits are taken as a tax deduction
when paid to the executive or contributed to a tax-qualified
retirement plan subject to the Section 162(m) limitation
described above. For tax purposes, stock-based compensation
awards are generally taken as a tax deduction when the award is
vested or exercised by the executive.
Summary
Compensation
The following table summarizes all compensation earned in 2007,
2008 and 2009 by our Chairman and CEO, our Chief Financial
Officer, and the three other most highly compensated executive
officers who were serving as executive officers at year-end 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 SUMMARY
COMPENSATION
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Incentive Plan
|
|
Compensation
|
|
All Other
|
|
|
Executive Officer
|
|
Year
|
|
Salary(2)
|
|
Awards(4)
|
|
Awards(5)
|
|
Compensation
|
|
Earnings(6)
|
|
Compensation(7)
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Doyle R.
Simons(1)
|
|
|
2009
|
|
|
$
|
810,000
|
|
|
$
|
1,612,002
|
|
|
$
|
682,138
|
|
|
$
|
1,401,125
|
|
|
$
|
1,092,114
|
|
|
$
|
18,792
|
|
|
$
|
5,616,171
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chairman and CEO
|
|
|
2008
|
|
|
$
|
774,538
|
|
|
$
|
1,432,685
|
|
|
$
|
642,041
|
|
|
$
|
487,500
|
|
|
$
|
970,848
|
|
|
$
|
18,118
|
|
|
$
|
4,325,730
|
|
|
|
|
2007
|
|
|
$
|
425,000
|
|
|
$
|
4,843,000
|
|
|
$
|
409,016
|
|
|
$
|
900,000
|
|
|
$
|
762,923
|
|
|
$
|
13,634
|
|
|
$
|
7,353,573
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Patrick Maley
III(1)
|
|
|
2009
|
|
|
$
|
649,039
|
|
|
$
|
1,289,603
|
|
|
$
|
545,711
|
|
|
$
|
1,250,000
|
|
|
$
|
1,180,704
|
|
|
$
|
27,388
|
|
|
$
|
4,942,445
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President and COO
|
|
|
2008
|
|
|
$
|
621,926
|
|
|
$
|
1,146,152
|
|
|
$
|
513,633
|
|
|
$
|
700,000
|
|
|
$
|
904,977
|
|
|
$
|
26,576
|
|
|
$
|
3,913,264
|
|
|
|
|
2007
|
|
|
$
|
425,000
|
|
|
$
|
4,230,700
|
|
|
$
|
409,016
|
|
|
$
|
1,250,000
|
|
|
$
|
674,353
|
|
|
$
|
41,429
|
|
|
$
|
7,030,498
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Randall D. Levy
|
|
|
2009
|
|
|
$
|
441,346
|
|
|
$
|
736,257
|
|
|
$
|
311,556
|
|
|
$
|
331,500
|
|
|
$
|
590,930
|
|
|
$
|
12,333
|
|
|
$
|
2,423,922
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Financial Officer
|
|
|
2008
|
|
|
$
|
425,000
|
|
|
$
|
711,867
|
|
|
$
|
281,047
|
|
|
$
|
212,500
|
|
|
$
|
856,694
|
|
|
$
|
15,500
|
|
|
$
|
2,502,608
|
|
|
|
|
2007
|
|
|
$
|
425,000
|
|
|
$
|
1,247,050
|
|
|
$
|
306,762
|
|
|
$
|
600,000
|
|
|
$
|
1,020,556
|
|
|
$
|
10,125
|
|
|
$
|
3,609,493
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry C.
Norton(3)
|
|
|
2009
|
|
|
$
|
389,422
|
|
|
$
|
593,198
|
|
|
$
|
251,017
|
|
|
$
|
700,000
|
|
|
$
|
81,004
|
|
|
$
|
14,166
|
|
|
$
|
2,028,807
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group Vice President
|
|
|
2008
|
|
|
$
|
372,115
|
|
|
$
|
586,190
|
|
|
$
|
223,775
|
|
|
$
|
375,000
|
|
|
$
|
58,493
|
|
|
$
|
11,000
|
|
|
$
|
1,626,573
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis J.
Vesci(8)
|
|
|
2009
|
|
|
$
|
363,461
|
|
|
$
|
582,979
|
|
|
$
|
246,694
|
|
|
$
|
700,000
|
|
|
$
|
884,505
|
|
|
$
|
26,884
|
|
|
$
|
2,804,523
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group Vice President
|
|
|
2008
|
|
|
$
|
347,106
|
|
|
$
|
569,712
|
|
|
$
|
221,282
|
|
|
$
|
350,000
|
|
|
$
|
564,716
|
|
|
$
|
31,958
|
|
|
$
|
2,084,774
|
|
|
|
|
2007
|
|
|
$
|
319,231
|
|
|
$
|
1,018,000
|
|
|
$
|
230,072
|
|
|
$
|
420,000
|
|
|
$
|
373,416
|
|
|
$
|
24,831
|
|
|
$
|
2,385,550
|
|
|
|
|
|
(1)
|
Until December 28, 2007, Mr. Simons and Mr. Maley
served as Executive Vice President and Executive Vice
President-Paper, respectively. Upon his promotion to Chairman
and CEO on December 28, 2007, Mr. Simons received an
increase in salary to $780,000. Upon his promotion to President
and COO on December 28, 2007, Mr. Maley received an
increase in salary to $625,000.
|
|
|
(2)
|
The named executive officers did not receive any salary
increases in 2009. Because we operate under a 52/53 week
fiscal calendar, actual pay received varies based on the number
of biweekly pay periods occurring in the year. Annual rates of
pay for Messrs Simons, Maley, Levy, Norton and Vesci are
$780,000, $625,000, $425,000, $375,000 and $350,000,
respectively.
|
|
|
(3)
|
Mr. Norton was not a named executive officer in 2007.
|
|
|
(4)
|
The table above shows the value of the awards on the grant date
calculated in accordance with FAS ASC Topic 718 and assumes
maximum pay-out of restricted stock units and performance stock
|
35
|
|
|
|
|
units. All of these units are payable in cash. In 2007,
Mr. Simons received a special grant of 50,000 restricted
stock units upon his promotion to Chairman and CEO. In 2007,
Mr. Maley received a special grant of 40,000 restricted
stock units upon his promotion to President and COO. The stock
awards that were issued in 2007 were adjusted at the time of
spin-off into three separate awards for Temple-Inland awards,
Guaranty awards and Forestar awards, and were also adjusted to
take into account a special dividend of $10.25 paid to all
shareholders that reduced the value of the option awards. The
Guaranty awards no longer have any value. The Temple-Inland and
Forestar awards will be valued for payment purposes at the
closing price of each companys respective stock on the
vesting date.
|
|
|
|
|
(5)
|
The grant date fair value of stock options for the named
executive officers was determined in accordance with
FAS ASC Topic 718. Fair value of the option awards was
determined using the Black-Scholes-Merton option pricing model
(for 2007, value includes Temple-Inland, Forestar and Guaranty
awards). The following table lists the per share fair values by
grant date for our named executive officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Fair
|
|
Expected
|
|
Expected
|
|
Risk-Free
|
|
|
|
|
Value Per Share of
|
|
Dividend
|
|
Stock Price
|
|
Interest
|
|
Expected Life
|
Grant Date
|
|
Options Granted
|
|
Yield
|
|
Volatility
|
|
Rate
|
|
of Option
|
|
2/3/2007
|
|
$
|
12.47
|
|
|
|
2.3
|
%
|
|
|
22.8
|
%
|
|
|
4.9
|
%
|
|
|
6
|
|
2/1/2008
|
|
$
|
2.42
|
|
|
|
2.1
|
%
|
|
|
28.2
|
%
|
|
|
3.6
|
%
|
|
|
10
|
|
2/6/2009
|
|
$
|
2.49
|
|
|
|
3.2
|
%
|
|
|
56.6
|
%
|
|
|
2.7
|
%
|
|
|
8
|
|
|
|
|
|
(6)
|
Represents the change in the actuarial present value of
accumulated pension benefits from December 31, 2008 to
December 31, 2009. There were no above-market or
preferential earnings on deferred compensation.
|
|
|
(7)
|
All Other Compensation for 2009 includes a match of $11,025 for
each officer under a broad-based employee 401(k) plan. Also
includes perquisites for 2009 as shown below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal
|
|
|
|
Umbrella
|
|
|
|
|
|
|
Use of
|
|
|
|
Liability
|
|
Charitable
|
|
|
Named Executive
|
|
Aircraft(a)
|
|
Club Dues
|
|
Insurance
|
|
Contributions
|
|
Other(c)
|
|
Doyle R.
Simons(b)
|
|
|
|
|
|
$
|
1,809
|
|
|
$
|
558
|
|
|
$
|
5,400
|
|
|
|
|
|
J. Patrick Maley
III(c)
|
|
$
|
10,617
|
|
|
|
|
|
|
$
|
558
|
|
|
|
|
|
|
$
|
5,188
|
|
Randall D. Levy
|
|
|
|
|
|
|
|
|
|
$
|
558
|
|
|
$
|
750
|
|
|
|
|
|
Larry C.
Norton(c)
|
|
$
|
1,383
|
|
|
|
|
|
|
$
|
558
|
|
|
|
|
|
|
$
|
1,200
|
|
Dennis J.
Vesci(c)
|
|
$
|
2,193
|
|
|
$
|
4,108
|
|
|
$
|
558
|
|
|
|
|
|
|
$
|
9,000
|
|
|
|
|
|
(a)
|
Incremental cost of personal use of aircraft includes fuel
costs, engine maintenance expenses, crew expenses, ground fees,
and other miscellaneous expenses such as meals. One personal
flight (total cost of $2,766) was shared by Mr. Maley and
Mr. Norton and allocated 50% to each officer.
|
|
|
(b)
|
Mr. Simons holds a membership to a dinner club for use in
hosting Company functions.
|
|
|
|
|
(c)
|
Other compensation for Mr. Maley and Mr. Norton is for
their individual personal use of Company facilities, and for
Mr. Vesci, an automobile allowance.
|
|
|
|
|
(8)
|
Mr. Vesci elected to defer $105,000 of his 2007 non-equity
compensation into restricted stock units. The table shows the
full amount of the award.
|
36
Grants of
Plan-Based Awards
The following table summarizes grants of plan-based compensation
awards made during 2009 to the named executive officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 GRANTS OF PLAN-BASED
AWARDS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts
|
|
|
Payouts Under Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Under Non-Equity
|
|
|
Incentive Plan
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan Awards
|
|
|
Awards(4)
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards(5)
|
|
|
Exercise
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
or Base
|
|
|
Grant Date Fair
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
Price of
|
|
|
Value of Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying
|
|
|
Option
|
|
|
and Option
|
|
|
|
Grant
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target/Maximum
|
|
|
Options
|
|
|
Awards
|
|
|
Awards
|
|
Name
|
|
Date
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
($/sh)
|
|
|
($)
|
|
|
Doyle R. Simons
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
|
2/6/2009
|
|
|
$
|
97,500
|
|
|
$
|
975,000
|
|
|
$
|
2,437,500
|
|
|
|
214,362
|
|
|
|
285,816
|
|
|
|
273,951
|
|
|
$
|
5.64
|
|
|
$
|
2,294,140
|
|
(2)
|
|
|
2/6/2009
|
|
|
|
|
|
|
$
|
1,577,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
|
|
8/7/2009
|
|
|
|
|
|
|
$
|
2,500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Patrick Maley III
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
|
2/6/2009
|
|
|
$
|
78,125
|
|
|
$
|
781,250
|
|
|
$
|
1,953,125
|
|
|
|
171,490
|
|
|
|
228,653
|
|
|
|
219,161
|
|
|
$
|
5.64
|
|
|
$
|
1,835,314
|
|
(2)
|
|
|
2/6/2009
|
|
|
|
|
|
|
$
|
1,262,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
|
|
8/7/2009
|
|
|
|
|
|
|
$
|
2,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Randall D. Levy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
|
2/6/2009
|
|
|
$
|
42,500
|
|
|
$
|
425,000
|
|
|
$
|
1,062,500
|
|
|
|
97,907
|
|
|
|
130,542
|
|
|
|
125,123
|
|
|
$
|
5.64
|
|
|
$
|
1,047,813
|
|
(2)
|
|
|
2/6/2009
|
|
|
|
|
|
|
$
|
720,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry C. Norton
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
|
2/6/2009
|
|
|
$
|
37,500
|
|
|
$
|
375,000
|
|
|
$
|
937,500
|
|
|
|
78,883
|
|
|
|
105,177
|
|
|
|
100,810
|
|
|
$
|
5.64
|
|
|
$
|
844,215
|
|
(2)
|
|
|
2/6/2009
|
|
|
|
|
|
|
$
|
580,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
|
|
8/7/2009
|
|
|
|
|
|
|
$
|
1,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis J. Vesci
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
|
2/6/2009
|
|
|
$
|
35,000
|
|
|
$
|
350,000
|
|
|
$
|
875,000
|
|
|
|
77,524
|
|
|
|
103,365
|
|
|
|
99,074
|
|
|
$
|
5.64
|
|
|
$
|
829,673
|
|
(2)
|
|
|
2/6/2009
|
|
|
|
|
|
|
$
|
570,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
|
|
8/7/2009
|
|
|
|
|
|
|
$
|
1,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Threshold is 10% of target annual incentive award payable if ROI
is 1%. Target bonus is 125% of salary for CEO and COO for ROI of
9%, 100% of salary for all others. Maximum is 200% of target for
ROI of 14%. Up to an additional 100% of target may be paid for
achievement of growth and value objectives pre-approved by the
Compensation Committee; however, a maximum payout for both the
ROI component and the growth/value component may not exceed 250%
of target. |
|
(2) |
|
The performance goal for the 2009 fixed-value RUs is
Temple-Inland having either (i) an ROI of at least one
percent (annualized) over the three-year award period or
(ii) an ROI over the award period that falls within the top
three quartiles as compared to the Companys peer group.
There are no dividends on the fixed-value RUs. ROI means
operating income (as currently shown on the Companys
income statement, or the reported equivalent in the event of any
change in reporting), excluding significant unusual items
(currently reported as other operating income (expense) not
allocated to segments, or the reported equivalent in the event
of any change in reporting) divided by beginning of year
investment defined as the Companys total assets (or the
reported equivalent in the event of any change in reporting),
less certain assets (assets held for sale, municipal bonds
related to capital leases included in other assets and
acquisitions/divestitures) and certain liabilities (current
liabilities, excluding |
37
|
|
|
|
|
current portion of long-term debt). ROI, for purposes of our
long-term incentive performance criteria is defined as set forth
in Item 6 of our 2009
Form 10-K. |
|
(3) |
|
The special retention RUs will vest at 100% if
Temple-Inlands average ROI over the second half of 2009,
2010, 2011, and 2012 is in the top 2/3 of the peer group and are
payable in 1/3 installments only if the executive remains
employed in February 2013, February 2014, and February 2015 or
until his 65th birthday (if earlier). See discussion under
How are the long-term incentive awards
determined? |
|
(4) |
|
The PSUs are restricted stock units that vest 0%, 75%, or 100%
on the third anniversary from the date of grant depending on our
ROI during the three years beginning in the year of the grant
compared to the peer group ROI. If performance is in the top
quartile, then there is a 100% payment and if in the second
quartile, then there is a 75% payment. No payment is made if
performance is below the top half compared to the peer group.
Performance stock units provide for continued vesting upon
retirement, death or if there is a change in control if
performance criteria is achieved. The 2009 PSUs are payable in
cash. Dividends on PSUs are accrued and payable only if the
underlying awards are paid. |
|
(5) |
|
Options granted February 6, 2009 to purchase our common
stock. 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
Incentive Plan include a provision for acceleration of vesting
in certain change of control situations. All options awarded to
the executives become exercisable in 25% increments on February
6 in years 2010, 2011, 2012 and 2013, and have a ten-year term
expiring February 6, 2019. |
Outstanding
Equity Awards At Year-End 2009
The following table summarizes stock-based compensation awards
outstanding at year-end 2009 for the named executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 Outstanding Equity
Awards
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
Payout
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Unearned Shares,
|
|
|
Unearned
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Units or
|
|
|
Shares, Units or
|
|
|
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
Other Rights
|
|
|
Other Rights that
|
|
|
|
|
|
|
Options
|
|
|
Options
|
|
|
Exercise
|
|
|
Option
|
|
|
that Have not
|
|
|
Have not
|
|
|
|
|
|
|
(#)
|
|
|
(#)
|
|
|
Price(1)
|
|
|
Expiration
|
|
|
Vested(1)(2)(4)
|
|
|
Vested
(1)(2)(4)
|
|
|
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)
|
|
|
Vesting Date
|
|
|
Doyle R. Simons
Chairman & CEO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
$
|
9.37
|
|
|
|
02/02/11
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
20,000
|
|
|
|
|
|
|
$
|
10.56
|
|
|
|
02/01/12
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
20,000
|
|
|
|
|
|
|
$
|
6.92
|
|
|
|
02/07/13
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
16,000
|
|
|
|
|
|
|
$
|
11.96
|
|
|
|
02/06/14
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
32,000
|
|
|
|
|
|
|
$
|
16.14
|
|
|
|
02/04/15
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
24,600
|
|
|
|
|
|
|
$
|
21.55
|
|
|
|
02/03/16
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
|
|
|
8,200
|
|
|
$
|
21.55
|
|
|
|
02/03/16
|
|
|
|
|
|
|
|
|
|
|
|
02/03/10
|
|
|
|
|
16,400
|
|
|
|
|
|
|
$
|
24.34
|
|
|
|
02/02/17
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
|
|
|
8,200
|
|
|
$
|
24.34
|
|
|
|
02/02/17
|
|
|
|
|
|
|
|
|
|
|
|
02/02/10
|
|
|
|
|
|
|
|
|
8,200
|
|
|
$
|
24.34
|
|
|
|
02/02/17
|
|
|
|
|
|
|
|
|
|
|
|
02/02/11
|
|
|
|
|
66,326
|
|
|
|
|
|
|
$
|
19.50
|
|
|
|
02/01/18
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
|
|
|
66,327
|
|
|
$
|
19.50
|
|
|
|
02/01/18
|
|
|
|
|
|
|
|
|
|
|
|
02/01/10
|
|
|
|
|
|
|
|
|
66,326
|
|
|
$
|
19.50
|
|
|
|
02/01/18
|
|
|
|
|
|
|
|
|
|
|
|
02/01/11
|
|
38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
Payout
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Unearned Shares,
|
|
|
Unearned
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Units or
|
|
|
Shares, Units or
|
|
|
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
Other Rights
|
|
|
Other Rights that
|
|
|
|
|
|
|
Options
|
|
|
Options
|
|
|
Exercise
|
|
|
Option
|
|
|
that Have not
|
|
|
Have not
|
|
|
|
|
|
|
(#)
|
|
|
(#)
|
|
|
Price(1)
|
|
|
Expiration
|
|
|
Vested(1)(2)(4)
|
|
|
Vested
(1)(2)(4)
|
|
|
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)
|
|
|
Vesting Date
|
|
|
Doyle R. Simons
(contd)
|
|
|
|
|
|
|
66,327
|
|
|
$
|
19.50
|
|
|
|
02/01/18
|
|
|
|
|
|
|
|
|
|
|
|
02/01/12
|
|
|
|
|
|
|
|
|
68,487
|
|
|
$
|
5.64
|
|
|
|
02/06/19
|
|
|
|
|
|
|
|
|
|
|
|
02/06/10
|
|
|
|
|
|
|
|
|
68,488
|
|
|
$
|
5.64
|
|
|
|
02/06/19
|
|
|
|
|
|
|
|
|
|
|
|
02/06/11
|
|
|
|
|
|
|
|
|
68,488
|
|
|
$
|
5.64
|
|
|
|
02/06/19
|
|
|
|
|
|
|
|
|
|
|
|
02/06/12
|
|
|
|
|
|
|
|
|
68,488
|
|
|
$
|
5.64
|
|
|
|
02/06/19
|
|
|
|
|
|
|
|
|
|
|
|
02/06/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,000
|
|
|
$
|
738,850
|
|
|
|
02/02/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
$
|
1,055,500
|
|
|
|
05/04/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
73,471
|
|
|
$
|
1,550,973
|
|
|
|
02/01/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
285,816
|
|
|
$
|
6,033,576
|
|
|
|
02/06/12
|
|
Total
|
|
|
215,326
|
|
|
|
497,531
|
|
|
|
|
|
|
|
|
|
|
|
444,287
|
|
|
$
|
9,378,899
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Patrick Maley III
President & COO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
|
|
|
$
|
7.56
|
|
|
|
05/07/13
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
18,000
|
|
|
|
|
|
|
$
|
11.96
|
|
|
|
02/06/14
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
32,000
|
|
|
|
|
|
|
$
|
16.14
|
|
|
|
02/04/15
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
24,600
|
|
|
|
|
|
|
$
|
21.55
|
|
|
|
02/03/16
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
|
|
|
8,200
|
|
|
$
|
21.55
|
|
|
|
02/03/16
|
|
|
|
|
|
|
|
|
|
|
|
02/03/10
|
|
|
|
|
16,400
|
|
|
|
|
|
|
$
|
24.34
|
|
|
|
02/02/17
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
|
|
|
8,200
|
|
|
$
|
24.34
|
|
|
|
02/02/17
|
|
|
|
|
|
|
|
|
|
|
|
02/02/10
|
|
|
|
|
|
|
|
|
8,200
|
|
|
$
|
24.34
|
|
|
|
02/02/17
|
|
|
|
|
|
|
|
|
|
|
|
02/02/11
|
|
|
|
|
53,061
|
|
|
|
|
|
|
$
|
19.50
|
|
|
|
02/01/18
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
|
|
|
53,061
|
|
|
$
|
19.50
|
|
|
|
02/01/18
|
|
|
|
|
|
|
|
|
|
|
|
02/01/10
|
|
|
|
|
|
|
|
|
53,061
|
|
|
$
|
19.50
|
|
|
|
02/01/18
|
|
|
|
|
|
|
|
|
|
|
|
02/01/11
|
|
|
|
|
|
|
|
|
53,062
|
|
|
$
|
19.50
|
|
|
|
02/01/18
|
|
|
|
|
|
|
|
|
|
|
|
02/01/12
|
|
|
|
|
|
|
|
|
54,790
|
|
|
$
|
5.64
|
|
|
|
02/06/19
|
|
|
|
|
|
|
|
|
|
|
|
02/06/10
|
|
|
|
|
|
|
|
|
54,790
|
|
|
$
|
5.64
|
|
|
|
02/06/19
|
|
|
|
|
|
|
|
|
|
|
|
02/06/11
|
|
|
|
|
|
|
|
|
54,790
|
|
|
$
|
5.64
|
|
|
|
02/06/19
|
|
|
|
|
|
|
|
|
|
|
|
02/06/12
|
|
|
|
|
|
|
|
|
54,791
|
|
|
$
|
5.64
|
|
|
|
02/06/19
|
|
|
|
|
|
|
|
|
|
|
|
02/06/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,000
|
|
|
$
|
738,850
|
|
|
|
02/02/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
$
|
844,400
|
|
|
|
05/04/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58,777
|
|
|
$
|
1,240,782
|
|
|
|
02/01/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
228,653
|
|
|
$
|
4,826,865
|
|
|
|
02/06/12
|
|
Total
|
|
|
174,061
|
|
|
|
402,945
|
|
|
|
|
|
|
|
|
|
|
|
362,430
|
|
|
$
|
7,650,897
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Randall D. Levy
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
|
|
|
$
|
9.37
|
|
|
|
02/02/11
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
40,000
|
|
|
|
|
|
|
$
|
10.56
|
|
|
|
02/01/12
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
30,000
|
|
|
|
|
|
|
$
|
6.92
|
|
|
|
02/07/13
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
24,000
|
|
|
|
|
|
|
$
|
11.96
|
|
|
|
02/06/14
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
24,000
|
|
|
|
|
|
|
$
|
16.14
|
|
|
|
02/04/15
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
Payout
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Unearned Shares,
|
|
|
Unearned
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Units or
|
|
|
Shares, Units or
|
|
|
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
Other Rights
|
|
|
Other Rights that
|
|
|
|
|
|
|
Options
|
|
|
Options
|
|
|
Exercise
|
|
|
Option
|
|
|
that Have not
|
|
|
Have not
|
|
|
|
|
|
|
(#)
|
|
|
(#)
|
|
|
Price(1)
|
|
|
Expiration
|
|
|
Vested(1)(2)(4)
|
|
|
Vested
(1)(2)(4)
|
|
|
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)
|
|
|
Vesting Date
|
|
|
Randall D. Levy
(contd)
|
|
|
18,450
|
|
|
|
|
|
|
$
|
21.55
|
|
|
|
02/03/16
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
|
|
|
6,150
|
|
|
$
|
21.55
|
|
|
|
02/03/16
|
|
|
|
|
|
|
|
|
|
|
|
02/03/10
|
|
|
|
|
12,300
|
|
|
|
|
|
|
$
|
24.34
|
|
|
|
02/02/14
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
|
|
|
6,150
|
|
|
$
|
24.34
|
|
|
|
02/02/14
|
|
|
|
|
|
|
|
|
|
|
|
02/02/10
|
|
|
|
|
|
|
|
|
6,150
|
|
|
$
|
24.34
|
|
|
|
02/02/14
|
|
|
|
|
|
|
|
|
|
|
|
02/02/11
|
|
|
|
|
29,033
|
|
|
|
|
|
|
$
|
19.50
|
|
|
|
02/01/18
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
|
|
|
29,034
|
|
|
$
|
19.50
|
|
|
|
02/01/18
|
|
|
|
|
|
|
|
|
|
|
|
02/01/10
|
|
|
|
|
|
|
|
|
29,034
|
|
|
$
|
19.50
|
|
|
|
02/01/18
|
|
|
|
|
|
|
|
|
|
|
|
02/01/11
|
|
|
|
|
|
|
|
|
29,034
|
|
|
$
|
19.50
|
|
|
|
02/01/18
|
|
|
|
|
|
|
|
|
|
|
|
02/01/12
|
|
|
|
|
|
|
|
|
31,280
|
|
|
$
|
5.64
|
|
|
|
02/06/19
|
|
|
|
|
|
|
|
|
|
|
|
02/06/10
|
|
|
|
|
|
|
|
|
31,281
|
|
|
$
|
5.64
|
|
|
|
02/06/19
|
|
|
|
|
|
|
|
|
|
|
|
02/06/11
|
|
|
|
|
|
|
|
|
31,281
|
|
|
$
|
5.64
|
|
|
|
02/06/19
|
|
|
|
|
|
|
|
|
|
|
|
02/06/12
|
|
|
|
|
|
|
|
|
31,281
|
|
|
$
|
5.64
|
|
|
|
02/06/19
|
|
|
|
|
|
|
|
|
|
|
|
02/06/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,500
|
|
|
$
|
517,195
|
|
|
|
02/02/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,506
|
|
|
$
|
770,642
|
|
|
|
02/01/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
130,542
|
|
|
$
|
2,755,742
|
|
|
|
02/06/12
|
|
Total
|
|
|
207,783
|
|
|
|
230,675
|
|
|
|
|
|
|
|
|
|
|
|
191,548
|
|
|
$
|
4,043,578
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry C. Norton Group Vice
President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,117
|
|
|
|
|
|
|
$
|
19.50
|
|
|
|
02/01/18
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
|
|
|
23,117
|
|
|
$
|
19.50
|
|
|
|
02/01/18
|
|
|
|
|
|
|
|
|
|
|
|
02/01/10
|
|
|
|
|
|
|
|
|
23,117
|
|
|
$
|
19.50
|
|
|
|
02/01/18
|
|
|
|
|
|
|
|
|
|
|
|
02/01/11
|
|
|
|
|
|
|
|
|
23,118
|
|
|
$
|
19.50
|
|
|
|
02/01/18
|
|
|
|
|
|
|
|
|
|
|
|
02/01/12
|
|
|
|
|
|
|
|
|
25,202
|
|
|
$
|
5.64
|
|
|
|
02/06/19
|
|
|
|
|
|
|
|
|
|
|
|
02/06/10
|
|
|
|
|
|
|
|
|
25,203
|
|
|
$
|
5.64
|
|
|
|
02/06/19
|
|
|
|
|
|
|
|
|
|
|
|
02/06/11
|
|
|
|
|
|
|
|
|
25,202
|
|
|
$
|
5.64
|
|
|
|
02/06/19
|
|
|
|
|
|
|
|
|
|
|
|
02/06/12
|
|
|
|
|
|
|
|
|
25,203
|
|
|
$
|
5.64
|
|
|
|
02/06/19
|
|
|
|
|
|
|
|
|
|
|
|
02/06/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,000
|
|
|
$
|
738,850
|
|
|
|
05/04/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,061
|
|
|
$
|
634,588
|
|
|
|
02/01/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
105,177
|
|
|
$
|
2,220,286
|
|
|
|
02/06/12
|
|
Total
|
|
|
23,117
|
|
|
|
170,162
|
|
|
|
|
|
|
|
|
|
|
|
170,238
|
|
|
$
|
3,593,724
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis J.
Vesci(3)
Group Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,500
|
|
|
|
|
|
|
$
|
10.56
|
|
|
|
02/01/12
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
3,000
|
|
|
|
|
|
|
$
|
6.92
|
|
|
|
02/07/13
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
5,000
|
|
|
|
|
|
|
$
|
11.96
|
|
|
|
02/06/14
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
5,000
|
|
|
|
|
|
|
$
|
16.14
|
|
|
|
02/04/15
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
13,837
|
|
|
|
|
|
|
$
|
21.55
|
|
|
|
02/03/16
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
|
|
|
4,613
|
|
|
$
|
21.55
|
|
|
|
02/03/16
|
|
|
|
|
|
|
|
|
|
|
|
02/03/10
|
|
|
|
|
9,225
|
|
|
|
|
|
|
$
|
24.34
|
|
|
|
02/02/17
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
Payout
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Unearned Shares,
|
|
|
Unearned
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Units or
|
|
|
Shares, Units or
|
|
|
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
Other Rights
|
|
|
Other Rights that
|
|
|
|
|
|
|
Options
|
|
|
Options
|
|
|
Exercise
|
|
|
Option
|
|
|
that Have not
|
|
|
Have not
|
|
|
|
|
|
|
(#)
|
|
|
(#)
|
|
|
Price(1)
|
|
|
Expiration
|
|
|
Vested(1)(2)(4)
|
|
|
Vested
(1)(2)(4)
|
|
|
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)
|
|
|
Vesting Date
|
|
|
Dennis J.
Vesci(3)
(contd)
|
|
|
|
|
|
|
4,612
|
|
|
$
|
24.34
|
|
|
|
02/02/17
|
|
|
|
|
|
|
|
|
|
|
|
02/02/10
|
|
|
|
|
|
|
|
|
4,613
|
|
|
$
|
24.34
|
|
|
|
02/02/17
|
|
|
|
|
|
|
|
|
|
|
|
02/02/11
|
|
|
|
|
22,859
|
|
|
|
|
|
|
$
|
19.50
|
|
|
|
02/01/18
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
|
|
|
22,860
|
|
|
$
|
19.50
|
|
|
|
02/01/18
|
|
|
|
|
|
|
|
|
|
|
|
02/01/10
|
|
|
|
|
|
|
|
|
22,860
|
|
|
$
|
19.50
|
|
|
|
02/01/18
|
|
|
|
|
|
|
|
|
|
|
|
02/01/11
|
|
|
|
|
|
|
|
|
22,860
|
|
|
$
|
19.50
|
|
|
|
02/01/18
|
|
|
|
|
|
|
|
|
|
|
|
02/01/12
|
|
|
|
|
|
|
|
|
24,768
|
|
|
$
|
5.64
|
|
|
|
02/06/19
|
|
|
|
|
|
|
|
|
|
|
|
02/06/10
|
|
|
|
|
|
|
|
|
24,769
|
|
|
$
|
5.64
|
|
|
|
02/06/19
|
|
|
|
|
|
|
|
|
|
|
|
02/06/11
|
|
|
|
|
|
|
|
|
24,768
|
|
|
$
|
5.64
|
|
|
|
02/06/19
|
|
|
|
|
|
|
|
|
|
|
|
02/06/12
|
|
|
|
|
|
|
|
|
24,769
|
|
|
$
|
5.64
|
|
|
|
02/06/19
|
|
|
|
|
|
|
|
|
|
|
|
02/06/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
$
|
422,200
|
|
|
|
02/02/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,216
|
|
|
$
|
616,750
|
|
|
|
02/01/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
103,365
|
|
|
$
|
2,182,035
|
|
|
|
02/06/12
|
|
Total
|
|
|
60,421
|
|
|
|
181,492
|
|
|
|
|
|
|
|
|
|
|
|
152,581
|
|
|
$
|
3,220,985
|
|
|
|
|
|
|
|
|
(1) |
|
The Temple-Inland awards were adjusted at the time of the
spin-off into three separate awards for Temple-Inland shares,
Guaranty shares and Forestar shares. As units vest that are
payable in stock, each entity would issue the shares to the
employees of each respective company. As shares vest that are
payable in cash, each employer pays the cash amount owed to its
own employees. |
|
(2) |
|
Value based on the closing market price of our common stock on
December 31, 2009, the last trading day prior to our
year-end date of January 2, 2010, of $21.11. RSUs vest
three years after the date of grant. RSUs vest only if minimum
performance criteria are met. Market value shown assumes all
performance criteria are met and the maximum value is paid. |
|
(3) |
|
In addition to the above Outstanding Equity Awards,
Mr. Vesci holds the following restricted stock units
pursuant to his participation in a deferred annual incentive
award program: |
|
|
|
Date Deferred
|
|
Units
|
|
02/15/01
|
|
3,324
|
02/01/02
|
|
1,359
|
02/07/03
|
|
1,529
|
02/01/08
|
|
5,829
|
|
|
|
|
|
Restricted stock units deferred in 2001, 2002, and 2003 are
payable in shares of common stock at retirement. Restricted
stock units deferred in 2008 are payable in cash based on the
stock price at retirement. |
|
(4) |
|
The named executive officers have the following Forestar awards
attributable to the spin-off adjustments. The value is based on
the price of Forestars closing market price on
December 31, 2009, which was $21.98. The Guaranty awards
were of no value at year end. |
41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding Equity Awards at
Fiscal Year-End 2009 Forestar Group Inc.
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
Payout
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Unearned
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Unearned
|
|
|
Shares,
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Shares,
|
|
|
Units or
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Units or
|
|
|
Other
|
|
|
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
Other Rights
|
|
|
Rights that
|
|
|
|
|
|
|
Options
|
|
|
Options
|
|
|
Exercise
|
|
|
Option
|
|
|
that Have
|
|
|
Have not
|
|
|
|
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Price
|
|
|
Expiration
|
|
|
not Vested
|
|
|
Vested
|
|
|
Vesting
|
|
Forestar Securities Held By:
|
|
(#)
|
|
|
(#)
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)
|
|
|
Date
|
|
|
Doyle R. Simons
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,666
|
|
|
|
|
|
|
$
|
11.76
|
|
|
|
02/02/11
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
6,666
|
|
|
|
|
|
|
$
|
13.26
|
|
|
|
02/01/12
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
6,666
|
|
|
|
|
|
|
$
|
8.68
|
|
|
|
02/07/13
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
5,333
|
|
|
|
|
|
|
$
|
15.02
|
|
|
|
02/06/14
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
8,000
|
|
|
|
|
|
|
$
|
20.26
|
|
|
|
02/04/15
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
2,666
|
|
|
|
|
|
|
$
|
20.26
|
|
|
|
02/04/15
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
5,466
|
|
|
|
|
|
|
$
|
27.06
|
|
|
|
02/03/16
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
2,734
|
|
|
|
|
|
|
$
|
27.06
|
|
|
|
02/03/16
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
|
|
|
|
2,733
|
|
|
$
|
27.06
|
|
|
|
02/03/16
|
|
|
|
|
|
|
|
|
|
|
|
02/03/10
|
|
|
|
|
|
2,733
|
|
|
|
|
|
|
$
|
30.56
|
|
|
|
02/02/17
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
2,733
|
|
|
|
|
|
|
$
|
30.56
|
|
|
|
02/02/17
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
|
|
|
|
2,734
|
|
|
$
|
30.56
|
|
|
|
02/02/17
|
|
|
|
|
|
|
|
|
|
|
|
02/02/10
|
|
|
|
|
|
|
|
|
|
2,733
|
|
|
$
|
30.56
|
|
|
|
02/02/17
|
|
|
|
|
|
|
|
|
|
|
|
02/02/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,666
|
|
|
$
|
256,419
|
|
|
|
02/02/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,666
|
|
|
$
|
366,319
|
|
|
|
05/04/10
|
|
Total
|
|
|
|
49,663
|
|
|
|
8,200
|
|
|
|
|
|
|
|
|
|
|
|
28,332
|
|
|
$
|
622,737
|
|
|
|
|
|
J. Patrick Maley III
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
|
|
|
$
|
9.49
|
|
|
|
05/07/13
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
6,000
|
|
|
|
|
|
|
$
|
15.02
|
|
|
|
02/06/14
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
8,000
|
|
|
|
|
|
|
$
|
20.26
|
|
|
|
02/04/15
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
2,666
|
|
|
|
|
|
|
$
|
20.26
|
|
|
|
02/04/15
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
5,466
|
|
|
|
|
|
|
$
|
27.06
|
|
|
|
02/03/16
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
2,734
|
|
|
|
|
|
|
$
|
27.06
|
|
|
|
02/03/16
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
|
|
|
|
2,733
|
|
|
$
|
27.06
|
|
|
|
02/03/16
|
|
|
|
|
|
|
|
|
|
|
|
02/03/10
|
|
|
|
|
|
2,733
|
|
|
|
|
|
|
$
|
30.56
|
|
|
|
02/02/17
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
2,733
|
|
|
|
|
|
|
$
|
30.56
|
|
|
|
02/02/17
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
|
|
|
|
2,734
|
|
|
$
|
30.56
|
|
|
|
02/02/17
|
|
|
|
|
|
|
|
|
|
|
|
02/02/10
|
|
|
|
|
|
|
|
|
|
2,733
|
|
|
$
|
30.56
|
|
|
|
02/02/17
|
|
|
|
|
|
|
|
|
|
|
|
02/02/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,666
|
|
|
$
|
256,419
|
|
|
|
02/02/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,333
|
|
|
$
|
293,059
|
|
|
|
05/04/10
|
|
Total
|
|
|
|
40,332
|
|
|
|
8,200
|
|
|
|
|
|
|
|
|
|
|
|
24,999
|
|
|
$
|
549,478
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Randall D. Levy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
|
|
|
$
|
11.76
|
|
|
|
02/02/11
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
13,333
|
|
|
|
|
|
|
$
|
13.26
|
|
|
|
02/01/12
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
10,000
|
|
|
|
|
|
|
$
|
8.68
|
|
|
|
02/07/13
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
8,000
|
|
|
|
|
|
|
$
|
15.02
|
|
|
|
02/06/14
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
6,000
|
|
|
|
|
|
|
$
|
20.26
|
|
|
|
02/04/15
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
Payout
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Unearned
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Unearned
|
|
|
Shares,
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Shares,
|
|
|
Units or
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Units or
|
|
|
Other
|
|
|
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
Other Rights
|
|
|
Rights that
|
|
|
|
|
|
|
Options
|
|
|
Options
|
|
|
Exercise
|
|
|
Option
|
|
|
that Have
|
|
|
Have not
|
|
|
|
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Price
|
|
|
Expiration
|
|
|
not Vested
|
|
|
Vested
|
|
|
Vesting
|
|
Forestar Securities Held By:
|
|
(#)
|
|
|
(#)
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)
|
|
|
Date
|
|
|
Randall D. Levy
(contd)
|
|
|
|
2,000
|
|
|
|
|
|
|
$
|
20.26
|
|
|
|
02/04/15
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
4,100
|
|
|
|
|
|
|
$
|
27.06
|
|
|
|
02/03/16
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
2,050
|
|
|
|
|
|
|
$
|
27.06
|
|
|
|
02/03/16
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
|
|
|
|
2,050
|
|
|
$
|
27.06
|
|
|
|
02/03/16
|
|
|
|
|
|
|
|
|
|
|
|
02/03/10
|
|
|
|
|
|
2,050
|
|
|
|
|
|
|
$
|
30.56
|
|
|
|
02/02/17
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
2,050
|
|
|
|
|
|
|
$
|
30.56
|
|
|
|
02/02/17
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
|
|
|
|
2,050
|
|
|
$
|
30.56
|
|
|
|
02/02/17
|
|
|
|
|
|
|
|
|
|
|
|
02/02/11
|
|
|
|
|
|
|
|
|
|
2,050
|
|
|
$
|
30.56
|
|
|
|
02/02/17
|
|
|
|
|
|
|
|
|
|
|
|
02/02/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,166
|
|
|
$
|
179,489
|
|
|
|
02/02/10
|
|
Total
|
|
|
|
59,583
|
|
|
|
6,150
|
|
|
|
|
|
|
|
|
|
|
|
8,166
|
|
|
$
|
179,489
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry C. Norton
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,666
|
|
|
$
|
256,419
|
|
|
|
02/02/10
|
|
Total
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
11,666
|
|
|
$
|
256,419
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis J.
Vesci(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500
|
|
|
|
|
|
|
$
|
13.26
|
|
|
|
02/01/12
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
1,000
|
|
|
|
|
|
|
$
|
8.68
|
|
|
|
02/07/12
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
1,666
|
|
|
|
|
|
|
$
|
15.02
|
|
|
|
02/06/14
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
1,666
|
|
|
|
|
|
|
$
|
20.26
|
|
|
|
02/04/15
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
4,612
|
|
|
|
|
|
|
$
|
27.06
|
|
|
|
02/03/16
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
|
|
|
|
1,538
|
|
|
$
|
27.06
|
|
|
|
02/03/16
|
|
|
|
|
|
|
|
|
|
|
|
02/03/10
|
|
|
|
|
|
3,075
|
|
|
|
|
|
|
$
|
30.56
|
|
|
|
02/02/17
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
|
|
|
|
1,537
|
|
|
$
|
30.56
|
|
|
|
02/02/17
|
|
|
|
|
|
|
|
|
|
|
|
02/02/10
|
|
|
|
|
|
|
|
|
|
1,538
|
|
|
$
|
30.56
|
|
|
|
02/02/17
|
|
|
|
|
|
|
|
|
|
|
|
02/02/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,666
|
|
|
$
|
146,519
|
|
|
|
02/02/10
|
|
Total
|
|
|
|
12,519
|
|
|
|
4,613
|
|
|
|
|
|
|
|
|
|
|
|
6,666
|
|
|
$
|
146,519
|
|
|
|
|
|
|
|
|
(5) |
|
In addition to the above Outstanding Equity Awards with
Forestar, Mr. Vesci holds the following restricted stock
units shares pursuant to his participation in a deferred annual
incentive award program: |
|
|
|
Date Deferred
|
|
Units
|
|
02/15/01
|
|
1,108
|
02/01/02
|
|
453
|
02/07/03
|
|
509
|
|
|
|
|
|
Restricted stock units deferred in 2001, 2002, and 2003 are
payable in shares of common stock at retirement. |
43
Option Exercises
And Stock Vested Fiscal Year-End 2009
The following table summarizes stock-based compensation awards
exercised and RSUs vesting during 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 Option Exercises and Stock Vested
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of Shares
|
|
|
Value Realized on
|
|
|
Number of Shares
|
|
|
Value Realized on
|
|
Executive Officer
|
|
Acquired on Exercise
|
|
|
Exercise
|
|
|
Acquired on Vesting
|
|
|
Vesting(1)
|
|
|
Doyle R. Simons
|
|
|
10,000
|
|
|
$
|
110,500
|
|
|
|
4,000
|
|
|
$
|
204,168
|
|
J. Patrick Maley III
|
|
|
|
|
|
$
|
|
|
|
|
10,000
|
|
|
$
|
299,608
|
|
Randall D. Levy
|
|
|
36,000
|
|
|
$
|
357,840
|
|
|
|
6,355
|
|
|
$
|
165,562
|
|
Larry C. Norton
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
Dennis J. Vesci
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
103,776
|
|
|
|
|
(1) |
|
Stock Awards Value Realized includes RSUs that were settled in
cash for which no shares were transferred. 2006 RSUs met the
minimum 1% ROI criteria for Temple-Inland and Forestar. Guaranty
RSUs did not meet the ROA criteria and expired without payment.
The value of these RSUs was based on the number of units set
forth below: |
|
|
|
Doyle R. Simons
|
|
32,200
|
J. Patrick Maley III
|
|
32,200
|
Randall D. Levy
|
|
23,000
|
Larry C. Norton
|
|
|
Dennis J. Vesci
|
|
18,400
|
Pension
Benefits
The following table summarizes the actuarial present value of
the accumulated benefits under our qualified pension and SERP
plan at December 31, 2009 for the named executive officers:
|
|
|
|
|
|
|
|
|
|
|
2009 PENSION BENEFITS TABLE
|
|
|
|
|
|
|
|
|
Present Value of
|
|
|
|
|
|
Number of Years
|
|
|
Accumulated
|
|
Named Executive
|
|
Plan Name
|
|
- Credited Service
|
|
|
Benefit(1)
|
|
|
Doyle R. Simons
|
|
Temple-Inland Retirement Plan
|
|
|
17.33
|
|
|
$
|
239,110
|
|
|
|
Temple-Inland SERP
|
|
|
|
|
|
$
|
3,690,765
|
|
J. Patrick Maley III
|
|
Temple-Inland Retirement Plan
|
|
|
6.58
|
|
|
$
|
101,793
|
|
|
|
Temple-Inland SERP
|
|
|
|
|
|
$
|
4,482,905
|
|
Randall D.
Levy(2)
|
|
Temple-Inland Retirement Plan
|
|
|
20.42
|
|
|
$
|
492,969
|
|
|
|
Temple-Inland SERP
|
|
|
|
|
|
$
|
5,193,832
|
|
Larry C. Norton
|
|
Temple-Inland Retirement Plan
|
|
|
2.58
|
|
|
$
|
41,042
|
|
|
|
Temple-Inland SERP
|
|
|
|
|
|
$
|
133,621
|
|
Dennis J.
Vesci(2)
|
|
Temple-Inland Retirement Plan
|
|
|
34.42
|
|
|
$
|
960,074
|
|
|
|
Temple-Inland SERP
|
|
|
|
|
|
$
|
2,082,067
|
|
|
|
|
(1) |
|
Present value of the accumulated benefit under the tax-qualified
defined benefit plan is based on present value at normal
retirement date using disclosure assumptions (5.79% interest and
the 1994 Group Annuity Mortality Table for males and females)
discounted based on disclosure interest rate to |
44
|
|
|
|
|
December 31, 2009. Present value of the accumulated benefit
under the nonqualified supplemental executive retirement plan
(SERP) is based on present value at normal retirement date using
lump sum assumptions (4.00% interest and Applicable Mortality
Table under IRC Section 417(e)(3) (2009 PPA Unisex
Mortality)) discounted based on disclosure interest rate to
December 31, 2009. Retirement benefits under the
tax-qualified defined benefit plan and the nonqualified
supplemental executive retirement plan (SERP) are calculated
using final average compensation based on the higher of
(a) the highest five (5) of the employees last
ten (10) years of service or (b) the highest 60
consecutive months out of the last 120 months. Final
average compensation normally includes salaries and annual
incentive awards, but the board can designate a payment as
ineligible under the plan. Final average compensation excludes
other forms of compensation such as dividends, severance pay,
relocation, long-term disability, stock options, restricted
stock units, and performance stock units. The formula for normal
retirement is (1) the greater of (a) .95% of final average
compensation plus .65% of final average compensation in excess
of Social Security covered compensation as determined using a
35 year average of SS maximum wage bases during year of
termination multiplied by years of service up to 35 years
and .8% of final average compensation multiplied by years of
service over 35 years or (b) 1% X final average
compensation X years of service + .65% X final average
compensation in excess of Social Security covered compensation
as determined using a 35 year average of Social Security
maximum wage bases to a participants Social Security
normal retirement age X years of service up to
35 years. For example, assume an employee has a final
average pay of $1 million and has worked for 40 years.
His pension is determined as the greater of the following two
formulas: [((.0095 x $1,000,000) + (.0065 x
($1,000,000 $48,816))) x 35] + (.008 x $1,000,000 x
5) = $588,894 (annual life only benefit) or [(.01 x 1,000,000 x
40) + (.0065 x ($1,000,000 $56,484) X 35))] =
$614,650 (annual life only benefit). Thus, the greater of two
formulas is $614,650. Five years of service or attainment of
age 65 is required to vest in the retirement benefit.
Normal retirement age is 65. Benefits are reduced for early
retirement. Lump sum distributions for benefits with a present
value greater than $10,000 are not permitted under the qualified
plan. Benefits are paid in the form of a monthly annuity for the
life of the executive and his or her spouse or other contingent
annuitant depending on the option the executive selects. The
amount of the monthly benefit is affected by the age or life
expectancy of the employee and spouse and how much will be paid
to the survivor if the employee dies based on the payment
election selected by the employee. However, the total value of
the benefit does not vary. For example, assume Employee A and
Employee B each have accrued benefits with a total value of
$100,000. Employee A is age 65 and Employee B is 55.
Employee A will receive a larger monthly benefit than Employee B
because Employee B is younger and has a longer life expectancy,
so his or her payments are spread over a longer time. The
nonqualified plan or SERP is paid as a lump sum distribution.
The SERP pays any retirement benefits that cannot be paid under
the qualified plan due to IRS limits and also provides a benefit
formula for designated executives. The Internal Revenue Code
limits the amount of compensation that can be used in
calculations under a tax-qualified defined benefit retirement
plan. In 2009, this limit was $245,000. As a result, any
retirement benefits that cannot be paid under our tax-qualified
defined benefit plan due to these limitations are paid under a
SERP, which is not a tax-qualified plan. The SERP also provides
unreduced retirement at age 60 with 15 years of
service for designated executives, including Mr. Levy,
Mr. Maley, and Mr. Simons. Under this plan, the
designated executives retirement benefits from all
retirement plans will be at least equal to 50% of the
executives final average compensation for the highest five
years out of the last ten years of employment. Benefits are
reduced for early retirement, which may be taken at age 55
with 15 years of service, by 5% for each year prior to
age 60. Benefits will be paid in a lump sum amount.
Nonqualified plan lump sums are calculated in any given year
using the prior November
30-year
weighted average Treasury rate. For retirements in 2009, the
November 2008 rate of 4.0% would apply. This supplemental plan
is unfunded and contains a provision for acceleration of payment
in the event of a change in control. The SERP is a valuable
incentive to attract executives who are leaving career-based
retirement plans at other companies. It is also a valuable
retention tool for existing executives who must meet service
criteria to qualify for the plan. Mr. Levy formerly
participated in a defined contribution plan and related SERP
when he worked for the financial services segment. His balance
under the defined contribution plan and SERP will offset any
amount he receives under the defined benefit plan and SERP, and
is included |
45
|
|
|
|
|
in the total shown above. Extra years of credited service are
granted only under our change in control agreements with
executive officers and our CEO employment agreement but not for
any other reason. |
|
(2) |
|
Early retirement may be taken at age 55 or later if the
employee has five years of service, but benefits are reduced for
each year prior to age 62 by factors ranging from 3% to 6%
based on years of service. Under the SERP, a designated
executive can retire with a reduction of benefits of 5% per year
for each year before age 60 if he has attained age 55
and has 15 years of service. In 2009, Mr. Levy met the
criteria for executive SERP retirement. This is included in the
amounts shown below. The table below lists the executives who
are eligible for early retirement and estimated payment assuming
each retired on December 31, 2009: |
|
|
|
|
|
|
|
|
|
|
|
Monthly Payment
|
|
|
Lump Sum Payment
|
|
Executive
|
|
Under Qualified Plan
|
|
|
Under SERP
|
|
|
Randall D. Levy
|
|
$
|
3,224
|
|
|
$
|
5,382,863
|
|
Dennis J. Vesci
|
|
$
|
7,866
|
|
|
$
|
2,434,930
|
|
Nonqualified
Deferred Compensation
We no longer have a deferred compensation plan. The following
table summarizes deferred compensation under a frozen plan for
the named executive officers:
|
|
|
|
|
|
|
|
|
2009 Non-Qualified Deferred Compensation
|
|
|
|
|
|
|
Aggregate
|
|
|
|
Aggregate Withdrawals or
|
|
|
Balance at
|
|
Name
|
|
Distributions(1)
|
|
|
Last FYE
|
|
|
Doyle R. Simons
|
|
|
|
|
|
|
|
|
J. Patrick Maley III
|
|
|
|
|
|
|
|
|
Randall D. Levy
|
|
$
|
124,188
|
|
|
$
|
|
|
Larry C. Norton
|
|
|
|
|
|
|
|
|
Dennis J. Vesci
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Mr. Levy formerly participated in a SERP maintained by our
financial services segment that spun off in 2007. Mr. Levy
received a distribution of his account in 2009 due to the
spinoff. |
Potential
Payments Upon Termination or Change in Control
Under our stock awards, an employee whose employment terminates
has different vesting rights depending on the reason for
termination:
|
|
|
|
|
|
|
Vested Option Exercise
|
|
Treatment of Unvested
|
Termination
|
|
Period
|
|
Options, RSUs, and PSUs
|
|
Voluntary or Involuntary Termination of Employment
|
|
3 months
|
|
Forfeited
|
Death
|
|
12 months
|
|
Immediately Vest
|
Disability
|
|
36 months
|
|
Immediately Vest
|
Retirement
|
|
Until Expiration of Option
|
|
Options vest immediately; RSUs and PSUs vest when performance
achieved
|
Change in Control
|
|
Until Expiration of Option
|
|
Immediately Vest
|
Mr. Simons has an employment agreement that provides for
payments upon certain termination events. If Mr. Simons
voluntarily terminates or he is terminated for cause, he is not
entitled to any payments under the agreement. If
Mr. Simons employment is terminated within two years
after a change in control, he will
46
be entitled to three years salary, annual incentive
awards, and benefits. If Mr. Simons employment is
terminated by the Company without cause or by Mr. Simons
for good reason (including failure to be re-elected to the
board, required relocation, or failure to pay compensation and
benefits) at any time other than following a change in control,
he will be entitled to two years salary, annual incentive
awards, and benefits. If Mr. Simons dies or becomes
disabled, he or his estate will receive a benefit equal to his
salary and target annual incentive award for the portion of the
year in which his death or disability occurred.
Each of the other named executive officers entered into a change
in control agreement that provides for three years pay and
benefits in the event his employment is terminated following
defined change in control events. These events include:
|
|
|
|
|
any person or entity acquiring or becoming beneficial owner as
defined in SEC regulations of 20% or more of the combined voting
power of our securities;
|
|
|
|
the pre-event directors ceasing to constitute a majority of our
directors within any
24-month
period;
|
|
|
|
consummation of a merger, consolidation, or recapitalization
(unless the directors continue to represent a majority of the
directors on the board, at least 60% of the pre-event ownership
survives, and, in the event of a recapitalization, no person
owns 25% or more of the voting power of the securities);
|
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|
|
the stockholders approve liquidation or dissolution;
|
|
|
|
consummation of an agreement to sell, lease, or dispose of
substantially all the assets of Temple-Inland; or
|
|
|
|
any other event that the board determines to be a change in
control.
|
Messrs. Maley, Norton, Vesci and Levy have legacy
agreements that also define consummation of a sale of our
corrugated packaging operations as a change in control, and
Mr. Levys legacy agreement also defines consummation
of a sale of our forest products operations as a change in
control.
Under the change in control agreements, payments are triggered
by two events, a change in control plus a termination of
employment. Termination of employment includes both involuntary
termination and voluntary termination by the executive for good
reason. Good reason includes assignment of duties substantially
inconsistent with the executives status as a senior
executive officer, substantial reduction in base salary,
relocation of place of employment more than 50 miles,
failure to pay compensation, or failure to provide benefits or a
reduction in benefits. The change in control agreements contain
a double trigger requirement of a change in control event plus a
termination of employment because they provide for severance
payments. The stock plan agreements provide for accelerated
vesting of stock awards the executive has already received, not
for additional payments. These agreements require a single
trigger, the change in control event. In other words, if there
is a change in control event, the accelerated vesting of
stock-based compensation will occur whether or not the
executives employment is terminated. This further protects
the executive because it provides him or her with an opportunity
to vote any vested restricted shares and exercise and vote the
option shares as a stockholder.
Under the change in control agreements and stock plan
agreements, or in the case of Mr. Simons, his employment
agreement, the executives will receive:
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|
|
|
their current year annual incentive award pro-rated if the
termination is before the end of the first six months in the
year; full annual incentive award if during the second half of
the year;
|
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|
|
lump sum severance equal to three times their current salary and
three times target annual incentive award, or if higher, the
salary or target annual incentive award (Mr. Simons
receives the higher of actual salary or annual incentive award)
in any of the last three years;
|
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|
|
health and welfare benefits provided through third party
insurance for three years at no greater cost than currently paid;
|
47
|
|
|
|
|
acceleration of vesting of all options;
|
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|
|
acceleration of vesting of all restricted shares and restricted
stock units;
|
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|
|
acceleration of vesting of all performance stock units (maximum
amount);
|
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|
|
credit for three additional years service in the pension
plan at the highest pay over the last three years;
|
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|
|
lump sum payment of all nonqualified pension and deferred
compensation;
|
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|
|
lump sum payment equal to three years match on 401(k) plan;
|
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|
|
any retiree medical benefits to which the executive is entitled;
|
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|
|
reimbursement for outplacement services not to exceed 15% of
base salary and target annual incentive award; and
|
|
|
|
three years continuation of perquisites.
|
The change in control agreements for the named executive
officers also contain
gross-up
provisions in the event the officer is required to pay excise
tax on these amounts. The
gross-up
will only be paid if the change in control payments exceed 110%
of the amount that would not be subject to excise tax.
Otherwise, payments are reduced to the maximum amount that will
not trigger the excise tax. The gross up provisions will not be
offered to any new executives on or after November 7, 2008.
The amount of severance and benefits was determined based on
competitive market practices for executives at this level.
Executives at this level generally require a longer timeframe to
find comparable jobs because there are fewer jobs at this level
in the market. The executives often have a large percentage of
their personal wealth dependent on the status of our Company,
given the requirement to hold a multiple of their salary in
stock and the fact that a large part of their compensation is
stock-based. In exchange for the promise of this compensation
and benefits, the executive agrees to continue working during
any potential change in control event until the earliest of six
months from the potential change in control event, until the
date of the change in control event, or until the executive is
terminated or terminates employment for good reason.
48
The following table summarizes the estimated value to each of
the named executive officers of payments triggered by different
termination events assuming such events occurred at year-end
2009. For pension benefits and non-qualified deferred
compensation, see Pension Benefits Table and Non-qualified
Deferred Compensation Table.
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Target
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual
|
|
|
Value of
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Stock
|
|
|
Performance
|
|
|
|
|
|
Health &
|
|
|
|
|
|
Excise Tax & Gross-
|
|
|
|
|
|
|
|
|
|
Award
|
|
|
Options
|
|
|
Stock that
|
|
|
Retirement
|
|
|
Welfare
|
|
|
|
|
|
Up/ (Required
|
|
|
Aggregate
|
|
Executive
|
|
Severance(1)
|
|
|
Payment(1)
|
|
|
that Vest
|
|
|
Vests(2)
|
|
|
Benefit
|
|
|
Benefits
|
|
|
Outplacement
|
|
|
Forfeiture)
|
|
|
Payments
|
|
|
Doyle R. Simons
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
Control(3)
|
|
$
|
5,980,176
|
|
|
$
|
975,000
|
|
|
$
|
4,558,378
|
|
|
$
|
14,079,136
|
|
|
$
|
1,623,196
|
|
|
$
|
25,367
|
|
|
$
|
117,000
|
|
|
$
|
10,126,556
|
|
|
$
|
37,484,809
|
|
Death(4)
|
|
$
|
1,755,000
|
|
|
|
|
|
|
$
|
4,558,378
|
|
|
$
|
14,079,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
20,392,514
|
|
Disability(4)
|
|
$
|
1,755,000
|
|
|
|
|
|
|
$
|
4,558,378
|
|
|
$
|
14,079,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
20,392,514
|
|
Termination Without
Cause(5)
|
|
$
|
3,536,782
|
|
|
$
|
975,000
|
|
|
$
|
4,558,378
|
|
|
$
|
14,079,136
|
|
|
$
|
1,368,770
|
|
|
$
|
17,060
|
|
|
$
|
117,000
|
|
|
|
|
|
|
$
|
24,652,126
|
|
Termination For
Cause(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Patrick Maley III
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
Control(3)
|
|
$
|
4,253,499
|
|
|
$
|
781,250
|
|
|
$
|
3,646,706
|
|
|
$
|
11,462,375
|
|
|
$
|
2,106,398
|
|
|
$
|
18,282
|
|
|
$
|
210,938
|
|
|
$
|
8,193,584
|
|
|
$
|
30,673,032
|
|
Death(4)
|
|
|
|
|
|
|
|
|
|
$
|
3,646,706
|
|
|
$
|
11,462,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
15,109,081
|
|
Disability(4)
|
|
|
|
|
|
|
|
|
|
$
|
3,646,706
|
|
|
$
|
11,462,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
15,109,081
|
|
Termination Without
Cause(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0
|
|
Termination For
Cause(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Randall D. Levy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
Control(3)
|
|
$
|
2,584,749
|
|
|
$
|
425,000
|
|
|
|
|
|
|
$
|
720,500
|
|
|
$
|
2,402,630
|
|
|
$
|
27,794
|
|
|
$
|
127,500
|
|
|
$
|
2,223,223
|
|
|
$
|
8,511,396
|
|
Death(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
720,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
720,500
|
|
Disability(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
720,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
720,500
|
|
Termination Without
Cause(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0
|
|
Termination For
Cause(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry C. Norton
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
Control(3)
|
|
$
|
2,284,749
|
|
|
$
|
375,000
|
|
|
$
|
1,671,186
|
|
|
$
|
5,430,643
|
|
|
$
|
204,548
|
|
|
$
|
17,166
|
|
|
$
|
112,500
|
|
|
$
|
3,612,501
|
|
|
$
|
13,708,293
|
|
Death(4)
|
|
|
|
|
|
|
|
|
|
$
|
1,671,186
|
|
|
$
|
5,430,643
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
7,101,829
|
|
Disability(4)
|
|
|
|
|
|
|
|
|
|
$
|
1,671,186
|
|
|
$
|
5,430,643
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
7,101,829
|
|
Termination Without
Cause(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0
|
|
Termination For
Cause(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis J. Vesci
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
Control(3)
|
|
$
|
2,174,073
|
|
|
$
|
350,000
|
|
|
|
|
|
|
$
|
1,570,500
|
|
|
$
|
1,169,634
|
|
|
$
|
21,075
|
|
|
$
|
105,000
|
|
|
$
|
2,175,412
|
|
|
$
|
7,565,694
|
|
Death(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,570,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,570,500
|
|
Disability(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,570,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,570,500
|
|
Termination Without
Cause(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0
|
|
Termination For
Cause(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0
|
|
|
|
|
(1) |
|
Assumes a target annual incentive award based on 9% ROI. |
|
(2) |
|
Assumes performance criteria are ultimately met, where
applicable. |
|
(3) |
|
Assumes a target annual incentive award based on 9% ROI. Also
includes 3X 401(k) match for each executive of $11,025 and 3X
perks of $2,367 for Mr. Simons. Assumes for illustration
only that the IRS considers the whole payment to be a
parachute payment subject to a 20% excise tax. Any
compensation not deemed to be a parachute payment
will reduce the amount of excise tax and
gross-up
payable. |
49
|
|
|
(4) |
|
In return for a release of all claims, Mr. Simons
employment agreement provides a lump sum benefit in the year of
his termination of employment due to death or disability equal
to his base salary and target annual incentive award multiplied
by a fraction, the numerator of which is the number of days
during the applicable performance period for which the Executive
was employed hereunder and the denominator of which is the
number of days in such performance period. For illustration
purposes only, the full year benefit is shown. Except for
Mr. Simons employment agreement, on termination of
employment by death or disability, executives receive no payment
other than through life insurance or disability insurance
purchased by the executive and available to salaried employees
generally. |
|
(5) |
|
Termination without a change in control not for cause or by
executive for good reason. Generally speaking, severance is a
matter that is individually negotiated with the executive and
the amount depends on the circumstances of his or her departure.
The CEO is the only executive who has an employment agreement
with pre-established severance benefits, other than the change
in control agreements. In return for the post-employment
benefits, the CEO agreed not to compete with our Company for two
years after his departure. |
|
(6) |
|
Termination without a change in control for cause or by
executive without good reason. We do not have a plan or policy
to provide severance benefits to executives whose employment
terminates for cause. |
PROPOSAL TO
APPROVE THE ADOPTION OF
THE TEMPLE-INLAND 2010 INCENTIVE PLAN
We are asking the stockholders to approve the Temple-Inland Inc.
2010 Incentive Plan (the Plan), the material terms
of which are more fully described below. The board of directors
approved the Plan on February 5, 2010, subject to the
stockholder approval solicited by this proxy statement. The
purpose of the Plan is to assist us in attracting, retaining and
providing incentives to employees and directors and consultants
and independent contractors by offering them the opportunity to
acquire or increase their proprietary interest in Temple-Inland
and to promote the identification of their interests with those
of our stockholders.
The Plan provides for the grant of stock options and other
stock-based awards, as well as cash-based performance awards. If
the stockholders approve the Plan, no new awards will be granted
under the Temple-Inland Inc. 2008 Incentive Plan (the
Prior Plan).
Awards granted under the Plan prior to stockholder approval of
the Plan are subject to and conditioned upon receipt of such
approval on or before May 7, 2010. Should such stockholder
approval not be obtained on or before such date, the Plan will
terminate and any awards granted pursuant to the Plan will
terminate and cease to be outstanding.
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The Compensation Committee has directed that all awards
issued
under the 2010 Incentive Plan contain a clawback
provision.
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Under the clawback provision, the
board may require an employee to repay the portion of any annual
incentive awards and long-term incentive awards that was not
earned due to a restatement of our financial statements. If the
employees fraud or misconduct was a significant
contributing factor to the restatement, all outstanding
long-term incentive awards may be cancelled.
|
Description of
the Plan
The Plan permits the grant of Options, Restricted Stock,
Restricted Stock Units (RSUs), Performance Awards,
and Other Stock-Based Awards (each, an Award). The
following summary of the material features of the Plan is
entirely qualified by reference to the full text of the Plan, a
copy of which is attached hereto as Appendix A. Unless
otherwise specified, capitalized terms used in this summary have
the meanings assigned to them in the Plan.
50
Eligibility
All employees and non-employee directors, and consultants and
independent contractors of the Company (Eligible
Persons) are eligible to receive grants of Awards under
the Plan. It is currently expected that approximately 75 upper
level salaried employees will participate in the Plan, along
with eight non-employee directors who serve on the
Companys board of directors. Except as noted above in
regard to Awards granted under the Plan that are subject to
stockholder approval of this proposal, information cannot be
provided with respect to the number of awards to be received by
any individual employee or group of employees pursuant to the
Plan, since the grant of such awards is within the discretion of
the Compensation Committee.
On February 5, 2010 the following awards were granted under
the Plan, subject to stockholder approval of the Plan:
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Number of
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Number of
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Shares
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Restricted
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Underlying
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Name and Position
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Total Dollar Value
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Stock Units
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Options
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Doyle R. Simons
Chairman and CEO
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$
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2,401,820
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87,695
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113,233
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J. Patrick Maley III
President and COO
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$
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1,921,453
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70,156
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90,586
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Randall D. Levy
Chief Financial Officer
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$
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1,096,985
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40,053
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51,717
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Larry C. Norton
Group Vice President
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$
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883,843
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32,271
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41,668
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Dennis J. Vesci
Group Vice President
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$
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868,589
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31,714
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40,949
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Groups:
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Executive Group
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$
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10,111,749
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369,201
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476,711
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Non-Executive Director Group
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Non-Executive Officer Employee Group
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$
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1,290,049
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152,308
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Nominees for Director
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Associates of Directors, Executive Officers, or Nominees
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Each Other Person Receiving 5% of Options
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This includes the 2010 stock option and RSU grants actually made
subject to stockholder approval.
The stock options granted on February 5, 2010 have an
exercise price of $16.71, vest 25% on each anniversary over four
(4) years, and expire after ten years. The fair value of
stock options will be determined in accordance with FAS ASC
Topic 718. The 2010 stock options are subject to stockholder
approval. The weighted average Black-Scholes-Merton value as
disclosed below is an estimate based on the market price on date
of grant (February 5, 2010) for illustration purposes.
Fair value of the option awards was determined using the
Black-Scholes-Merton option pricing model, with an estimated
weighted average fair value of $8.32, expected dividend yield of
3.2%, expected stock price volatility of 66.1% weighted average
risk free interest rate of 3.2% and weighted average expected
life of option of 8 years. However, the
Black-Scholes-Merton value for the 2010 stock options will be
determined as of May 7, 2010 if the stockholders approve
the plan on such date, and the expense related to these options
will be recognized over the vesting period beginning second
quarter 2010.
No stock-based Awards will be granted under the Prior Plan or
any other stock incentive plan between the record date and the
date of the stockholders meeting.
51
Administration
Except with respect to Awards granted to non-employee directors,
the Plan is administered by the Compensation Committee, unless
the board of directors appoints another committee or person(s)
for such purpose. With respect to Awards granted to non-employee
directors, the board of directors serves as the
committee, unless the board appoints another
committee or person(s) for such purpose. The Committee has
plenary authority and discretion to determine the Eligible
Persons to whom Awards are granted (participants)
and the terms of all Awards under the Plan. The Committee may,
in its discretion, grant Awards that include terms and
conditions relating to the effect of a change in control (as
defined in the Plan). Subject to the provisions of the Plan, the
Committee has authority to interpret the Plan and agreements
under the Plan and to make all other determinations relating to
the administration of the Plan.
Stock Subject to
the Plan
The maximum number of shares of common stock that may be issued
under the Plan is 4,000,000 shares. The number of shares
authorized to be issued under the Plan will be decreased by
1.4 shares for each share of common stock issued pursuant
to Awards payable in shares that are not Options (such Awards
being Full Value Awards). If an Option expires or
terminates for any reason without having been fully exercised,
if any shares of Restricted Stock are forfeited, or if any Award
terminates, expires or is settled without all or a portion of
the shares of common stock covered by the Award being issued,
such shares are available for the grant of additional Awards.
However, any shares that are withheld (or delivered) to pay
withholding taxes or to pay the exercise price of an Option are
not available for the grant of additional Awards.
The maximum number of shares of common stock with respect to
which an employee may be granted Awards under the Plan during
any calendar year is 1,000,000 shares.
On March 10, 2010 the closing per share price of the common
stock on the NYSE was $19.75.
Options
The Plan authorizes the grant of Nonqualified Stock Options and
Incentive Stock Options. Incentive Stock Options are stock
options that satisfy the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended (the
Code). Nonqualified Stock Options are stock options
that do not satisfy the requirements of Section 422 of the
Code. The exercise of an Option permits the participant to
purchase shares of common stock from the Company at a specified
exercise price per share. Options granted under the Plan are
exercisable upon such terms and conditions as the Committee
shall determine. The exercise price per share and manner of
payment for shares purchased pursuant to Options are determined
by the Committee, subject to the terms of the Plan. The per
share exercise price of Options granted under the Plan may not
be less than 100% of the fair market value per share on the date
of grant. The Plan provides that the term during which Options
may be exercised is determined by the Committee, except that no
Option may be exercised more than ten years after its date of
grant.
Restricted Stock
Awards
The Plan authorizes the Committee to grant Restricted Stock
Awards. Shares of common stock covered by a Restricted Stock
Award are restricted against transfer and subject to forfeiture
and such other terms and conditions as the Committee determines.
Such terms and conditions may provide, in the discretion of the
committee, for the vesting of awards of Restricted Stock to be
contingent upon the achievement of one or more Performance Goals
as described below.
Restricted Stock
Units
RSU Awards granted under the Plan are contingent awards of
common stock or the cash equivalent thereof. Pursuant to such
Awards, shares of common stock are issued, or the cash value of
the shares is paid, subject to such terms and conditions as the
Committee deems appropriate. Unlike in the case of
52
awards of Restricted Stock, shares of common stock are not
issued immediately upon the award of RSUs, but instead shares of
common stock are issued or the cash value of the shares is paid
upon the satisfaction of such terms and conditions as the
Committee may specify, including the achievement of one or more
Performance Goals.
Performance
Awards
The Plan authorizes the grant of Performance Awards. Performance
Awards provide for payments in cash, shares of common stock or a
combination thereof contingent upon the attainment of one or
more Performance Goals (described below) established by the
Committee. For purposes of the limit on the number of shares of
common stock with respect to which an employee may be granted
Awards during any calendar year, a Performance Award is deemed
to cover the number of shares of common stock equal to the
maximum number of shares that may be issued upon payment of the
Award. The maximum cash amount that may be paid to any
participant pursuant to all Performance Awards granted to such
participant during a calendar year may not exceed
$10 million.
Other Stock-Based
Awards
The Plan authorizes the grant of Other Stock-Based Awards
(including the issuance or offer for sale of unrestricted shares
of common stock) covering such number of shares and having such
terms and conditions as the Committee may determine, including
terms that condition the payment or vesting of Other Stock-Based
Awards upon the achievement of one or more Performance Goals.
Dividends and
Dividend Equivalents
The terms of an Award (other than an Option) may, at the
Committees discretion, provide a Participant with the
right to receive dividend payments or dividend equivalent
payments with respect to Shares covered by the Award. The
payments may be either made currently or credited to an account
established for the Participant, and may be settled in cash or
shares, as determined by the Committee. Payment of dividends and
dividend equivalents may be contingent upon the achievement of
one or more Performance Goals, and will not be paid with respect
to any unvested Performance Awards.
Performance
Goals
As described above, the terms and conditions of an Award may
provide for the grant, vesting or payment of Awards to be
contingent upon the achievement of one or more specified
Performance Goals established by the Committee. For this
purpose, Performance Goals means performance goals
established by the Committee which may be based on satisfactory
internal or external audits, achievement of balance sheet or
income statement objectives, cash flow, customer satisfaction
metrics and achievement of customer satisfaction goals, dividend
payments, earnings (including before or after taxes, interest,
depreciation, and amortization), earnings growth, earnings per
share, economic value added, expenses (including plant costs and
sales, general and administrative expenses), improvement of
financial ratings, internal rate of return, market share, net
asset value, net income, net operating gross margin, net
operating profit after taxes (NOPAT), net sales
growth, NOPAT growth, operating income, operating margin,
comparisons to the performance of other companies, pro forma
income, regulatory compliance, return measures (including return
on assets, designated assets, capital, committed capital, net
capital employed, equity, sales, or stockholder equity, and
return versus the Companys cost of capital), revenues,
sales, stock price (including growth measures and total
stockholder return), comparison to stock market indices,
implementation or completion of one or more projects or
transactions (including mergers, acquisitions, dispositions, and
restructurings), working capital, or any other objective goals
that the Committee establishes. Performance Goals may be
absolute in their terms or measured against or in relationship
to other companies comparably, similarly or otherwise situated.
Performance Goals may be particular to an Eligible Person or the
department, branch, Affiliate, or division in which the Eligible
Person works, or may be based on the performance of the Company,
one or more Affiliates, or the Company and one or more
Affiliates, and may cover such period as the Committee may
specify.
53
Capital
Adjustments
If the outstanding common stock of the Company changes as a
result of a stock dividend, stock split, reverse stock split,
spin-off,
split-up,
recapitalization, reclassification, combination or exchange of
shares, merger, consolidation or liquidation, or the like, the
Committee shall substitute or adjust: (a) the number and
class of securities subject to outstanding Awards, (b) the
consideration to be received upon exercise or payment of an
Award, (c) the exercise price of Options, (d) the
aggregate number and class of securities for which Awards may be
granted under the Plan,
and/or
(e) the maximum number of securities with respect to which
an employee may be granted Awards during any calendar year. In
the event of a merger or consolidation to which the Company is a
party, the Committee may cause any Award granted under the Plan
to be cancelled in consideration of a cash payment equal to the
fair value of the cancelled Award, as determined by the
Committee in its discretion. The fair value of an Option,
however, is deemed to be equal to the difference between the
exercise price of the Option and the fair market value of the
shares covered by the Option.
Withholding
The Company is generally required to withhold tax on the amount
of income recognized by a participant with respect to an Award.
Withholding requirements may be satisfied, as provided in the
agreement evidencing the Award, by (a) tender of a cash
payment to the Company, (b) withholding of shares of common
stock otherwise issuable, or (c) delivery to the Company by
the participant of unencumbered shares of common stock.
Termination and
Amendment; Term of Plan
The board of directors may amend or terminate the Plan at any
time. However, after the Plan has been approved by the
stockholders of the Company, the board of directors may not
amend or terminate the Plan without the approval of (a) the
Companys stockholders if stockholder approval of the
amendment is required by applicable law, rules or regulations,
and (b) each affected participant if such amendment or
termination would adversely affect such participants
rights or obligations under any Awards granted prior to the date
of the amendment or termination.
Unless sooner terminated by the board of directors, the Plan
will terminate on February 5, 2020. Once the Plan is
terminated, no further Awards may be granted or awarded under
the Plan. Termination of the Plan will not affect the validity
of any Awards outstanding on the date of termination.
Summary of
Certain Federal Income Tax Consequences
The following discussion briefly summarizes certain United
States federal income tax aspects of Options, Restricted Stock,
RSUs, and Performance Awards granted pursuant to the Plan.
State, local and foreign tax consequences may differ.
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|
|
Incentive Stock Options. A participant who is
granted an Incentive Stock Option will not recognize income on
the grant or exercise of the Option. However, the difference
between the exercise price and the fair market value of the
stock on the date of exercise is an adjustment item for purposes
of the alternative minimum tax. If a participant does not
exercise an Incentive Stock Option within certain specified
periods after termination of employment, the participant will
recognize ordinary income on the exercise of the Incentive Stock
Option in the same manner as on the exercise of a Nonstatutory
Stock Option, as described below.
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|
Nonstatutory Stock Options, RSUs, Performance Awards and
Other Stock-Based Awards. A participant generally is
not required to recognize income on the grant of a Nonstatutory
Stock Option, RSU, Performance Award or Other Stock-Based Award.
Instead, ordinary income generally is required to be recognized
on the date the Nonstatutory Stock Option is exercised, or in
the case of an RSU, Performance Award, or Other Stock Based
Award on the date of payment of such Award in cash
and/or
shares of common stock. In general, the amount of ordinary
income required to be recognized is: (a) in the case of a
Nonstatutory Stock Option, an amount equal to the excess, if
any, of the fair market value of the shares of common stock on
the date of exercise over the exercise price; and (b) in
the case of an RSU, Performance Award, or Other Stock-Based
Award, the amount of cash
and/or the
fair market value of any shares of common stock received.
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54
|
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|
|
Restricted Stock. A participant who is granted
Restricted Stock under the Plan is not required to recognize
income with respect to the shares until the shares vest, unless
the participant makes a special tax election to recognize income
upon award of the shares. In either case, the amount of income
the participant recognizes equals the fair market value of the
shares of common stock at the time income is recognized.
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Gain or Loss on Sale or Exchange of Shares. In
general, gain or loss from the sale or exchange of shares of
common stock granted or awarded under the Plan will be treated
as capital gain or loss, provided that the shares are held as
capital assets at the time of the sale or exchange. However, if
certain holding period requirements are not satisfied at the
time of a sale or exchange of shares of common stock acquired
upon exercise of an Incentive Stock Option (a
disqualifying disposition), a participant generally
will be required to recognize ordinary income upon such
disposition.
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Deductibility by Company. The Company generally is
not allowed a deduction in connection with the grant or exercise
of an Incentive Stock Option. However, if a participant is
required to recognize ordinary income as a result of a
disqualifying disposition, the Company generally will be
entitled to a deduction equal to the amount of ordinary income
so recognized. In general, in the case of a Nonstatutory Stock
Option (including an Incentive Stock Option that is treated as a
Nonstatutory Stock Option, as described above), a Performance
Award, a Restricted Stock Award, an RSU, or an Other Stock-Based
Award, the Company will be allowed a deduction in an amount
equal to the amount of ordinary income recognized by the
participant.
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|
Performance-Based Compensation. Subject to certain
exceptions, Section 162(m) of the Code disallows federal
income tax deductions for compensation paid by a publicly-held
corporation to certain executives to the extent the amount paid
to an executive exceeds $1 million for the taxable year.
The Plan has been designed to allow the grant of Awards that
qualify under an exception to the deduction limit of
Section 162(m) for performance-based
compensation.
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Parachute Payments. Where payments to certain
persons that are contingent on a change in control exceed limits
specified in the Code, the person generally is liable for a
20 percent excise tax on, and the corporation or other
entity making the payment generally is not entitled to any
deduction for, a specified portion of such payments. Under the
Plan, the committee has plenary authority and discretion to
determine the vesting schedule of Awards. Any Award under which
vesting is accelerated by a change in control of the Company
would be relevant in determining whether the excise tax and
deduction disallowance rules would be triggered.
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|
Tax Rules Affecting Nonqualified Deferred Compensation
Plans. Section 409A of the Code imposes tax rules
that apply to nonqualified deferred compensation
plans. Failure to comply with, or to qualify for an
exemption from, the new rules with respect to an Award could
result in significant adverse tax results to the Award
recipient, including immediate taxation upon vesting, and an
additional income tax of 20 percent of the amount of income
so recognized. The Plan is intended to allow the granting of
Awards that comply with, or qualify for an exemption from,
Section 409A of the Code.
|
Vote Required
and Board of Directors Recommendation
The affirmative vote of a majority of the votes cast by the
stockholders present in person or represented by proxy (provided
that the total votes cast on the proposal represents over 50% of
the total number shares entitled to vote on the proposal) is
required for approval of the adoption of the 2010 Incentive
Plan. Broker non-votes are not treated as votes cast. However,
for this proposal only, the NYSE considers abstentions as votes
cast. As a result, abstentions have the same effect on this
proposal as votes cast against the proposal. Accordingly,
beneficial owners of shares should instruct their brokers or
nominees how to vote with respect to this proposal.
THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR THE
APPROVAL OF THE 2010 INCENTIVE PLAN
55
AUDIT
MATTERS
REPORT OF THE AUDIT COMMITTEE
The following report of the Audit Committee of the Company
shall not be deemed to be soliciting material or to
be filed with the Securities and Exchange
Commission, nor shall this report be incorporated by reference
into any filing made by the Company under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as
amended.
The Audit Committee assists the board of directors in its
oversight of (1) the integrity of the Companys
financial statements; (2) compliance with legal and
regulatory requirements; (3) the independent registered
public accounting firms qualifications and independence;
and (4) the performance of the internal audit function and
independent registered public accounting firm. Our duties and
responsibilities are more fully described in our charter, which
is available on Temple-Inlands website
(www.templeinland.com).
Management is responsible for the financial statements, the
effectiveness of internal control over financial reporting, and
compliance with legal and regulatory requirements. The
independent registered public accounting firm, Ernst &
Young LLP, is responsible for auditing the financial statements
and the effectiveness of internal control over financial
reporting and expressing its opinion on the conformity of the
financial statements with generally accepted accounting
principles and the effectiveness of internal control over
financial reporting. The internal auditors are responsible for
evaluating the effectiveness of processes and related controls
on behalf of management.
In fulfilling our oversight responsibilities, we met eight times
during 2009 with the independent registered public accounting
firm, the Vice President of Internal Audit, and management. At
four of the meetings, we also met in executive session without
management present. During the course of these meetings, we
reviewed and discussed with management and with
Ernst & Young LLP the audited financial statements for
the year 2009. We also reviewed and discussed the effectiveness
of internal control over financial reporting, the audit plans
and results, and the matters required to be discussed with
Ernst & Young LLP by Statement of Auditing Standards
No. 61, Communications with Audit Committees, as amended,
as adopted by the Public Company Accounting Oversight Board in
Rule 3200T. In addition, we reviewed the written
disclosures and the letter from Ernst & Young LLP
required by applicable requirements of the Public Company
Accounting Oversight Board regarding the firms
independence, and have discussed with Ernst & Young
their independence.
Based on the reviews and discussions described above, we
recommended to the board of directors that the audited financial
statements be included in the Annual Report on
Form 10-K
for the year ended January 2, 2010, for filing with the
Securities and Exchange Commission. In addition, we reported to
the board of directors that, subject to ratification by the
stockholders, we selected Ernst & Young LLP as
Temple-Inlands independent registered public accounting
firm for the year 2010.
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Jeffrey M. Heller, Chairman
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Donald M. Carlton
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Richard M. Smith
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Cassandra C. Carr
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Arthur Temple III
|
|
Larry R. Faulkner
|
R.A. Walker
|
|
W. Allen Reed
|
56
PROPOSAL TO
RATIFY THE SELECTION OF ERNST & YOUNG LLP
AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has selected Ernst & Young LLP as
the independent registered public accounting firm to audit our
consolidated financial statements for 2010. Ernst &
Young LLP currently serves as our independent registered public
accounting firm.
Fees paid to Ernst & Young LLP for the last two years
were:
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|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Audit
Fees(1)
|
|
$
|
1,524
|
|
|
$
|
1,560
|
|
Audit-Related
Fees(2)
|
|
|
360
|
|
|
|
309
|
|
Tax
Fees(3)
|
|
|
40
|
|
|
|
45
|
|
All Other Fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,924
|
|
|
$
|
1,914
|
|
|
|
|
(1) |
|
Audit fees include the annual audit and quarterly reviews of our
financial statements, annual statutory audits of foreign
subsidiaries financial statements, consultation on new
accounting standards and current transactions, and normal
assistance with annual and periodic filings of our financial
statements with the Securities and Exchange Commission. |
|
(2) |
|
Audit-related fees include audits of our employee benefit plans,
consultation on the application of proposed accounting
standards, and consultation on accounting for proposed
transactions. |
|
(3) |
|
Tax fees include assistance in the preparation of our federal,
state, and foreign income and franchise tax returns and in the
periodic examinations thereof by regulatory authorities and
consultation on the tax treatment for transactions. |
All services provided by the independent registered public
accounting firm must be pre-approved by the Audit Committee.
Under the pre-approval policy, the Audit Committee pre-approves
by type and amount the services expected to be provided by the
independent registered public accounting firm during the coming
year. This pre-approval is done annually and is documented as an
exhibit to the minutes of the Audit Committee meeting. The types
of services the Audit Committee pre-approves annually are the
audit, audit-related, and certain tax services described above.
A pre-approval subcommittee consisting of the Chairman of the
Audit Committee and one other member of the Audit Committee may
grant approvals between Audit Committee meetings for services
not approved as part of the annual approval process. Such
approvals must be reported to the full Audit Committee at its
next meeting. Pre-approval is not required for non-audit
services that were not recognized as non-audit services at the
time of engagement, if the aggregate amount of such services
does not exceed the lesser of $100,000 or 5% of the total amount
of revenues paid to the independent registered public accounting
firm during that fiscal year and such services are promptly
brought to the attention of and approved by the Audit Committee
prior to completion of the current years audit. During
2009, no services were approved pursuant to this exception.
In addition, the Audit Committee must separately pre-approve any
significant changes in scope or fees for any approved service.
No pre-approval authority is delegated to management. Quarterly,
the committee reviews the specific services that have been
provided and the related fees.
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, because the Audit Committee has the
responsibility for selecting our independent registered public
accounting firm. The selection, however, is being submitted for
ratification by the stockholders at the annual meeting. No
57
determination has been made as to what action the Audit
Committee would take if stockholders do not ratify the selection.
Vote Required
and Board of Directors Recommendation
The affirmative vote of a majority of the votes cast by
stockholders entitled to vote at the annual meeting is required
for the ratification of the Audit Committees appointment
of Ernst & Young LLP as independent registered public
accounting firm for 2010. Any shares not voted (whether by
abstention or otherwise) will not be counted as votes cast and
will have no effect on the outcome of the vote.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
RATIFICATION OF ERNST & YOUNG LLP AS
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR
2010.
Other Business
to be Presented
Our board of directors knows of no other business that may
properly be, or that is likely to be, brought before the annual
meeting. If, however, any other matters are properly presented
for consideration at the meeting, including, among other things,
consideration of a motion to adjourn the meeting to another time
or place, the persons named in the accompanying proxy will vote
the proxy as in their discretion they may deem appropriate.
DATE
FOR RECEIPT OF STOCKHOLDER PROPOSALS AND
NOMINATIONS
Pursuant to
Rule 14a-8
under the Securities Exchange Act of 1934, as amended,
stockholders may present proposals for inclusion in our proxy
statement and for consideration at our annual meeting of
stockholders by submitting their proposals to us in a timely
manner. To be included for the 2011 annual meeting, stockholder
proposals must be received by us by November 23, 2010 and
must comply with the requirements of
Rule 14a-8.
Our Bylaws contain an advance notice procedure with regard to
stockholder proposals submitted outside the processes of
Rule 14a-8
and stockholder nominations of directors to be brought before an
annual meeting of stockholders. This advance notice period is
intended to allow all stockholders an opportunity to consider
all business and nominees expected to be considered at the
meeting. These procedures require that notice be made in writing
to our Corporate Secretary. The notice must be received at our
executive offices not earlier than the close of business on the
100th day and not later than the close of business on the
75th day prior to the first anniversary of the preceding
years annual meeting; provided, however, that in the event
that the date of the annual meeting is more than 30 days
before or more than 60 days after such anniversary date,
notice by the stockholder to be timely must be so delivered not
earlier than the close of business on the 100th day prior
to the date of such annual meeting and not later than the close
of business on the later of the 75th day prior to the date
of such annual meeting or, if the first public announcement of
the date of such annual meeting is less than 90 days prior
to the date of such annual meeting, the 10th day following
the day on which public announcement of the date of such meeting
is first made by the Company. Stockholder proposals submitted
outside the processes of
Rule 14a-8
and stockholder nominations of directors will be considered
untimely if they are submitted before January 27, 2011 or
after February 21, 2011. Our Bylaws require that the notice
of the proposal contain certain information concerning the
proposing stockholder and the proposal or nomination. A copy of
the Bylaws advance notice provision may be obtained,
without charge, upon written request to our Corporate Secretary
at 1300 South MoPac Expressway,
3rd
Floor, Austin, Texas 78746.
58
VOTING
QUESTIONS OR ASSISTANCE
If you have any questions or require assistance with the voting
process, please contact:
D. F. King & Co., Inc.
48 Wall Street
New York, New York 10005
800-549-6697
This Proxy Statement is being sent to you by the Temple-Inland
board of directors.
Leslie K. ONeal
Corporate Secretary
Austin, Texas
March 23, 2010
59
TEMPLE-INLAND
INC.
2010 INCENTIVE PLAN
1. Definitions. In
the Plan, except where the context otherwise indicates, the
following definitions shall apply:
1.1. Affiliate means a
corporation, partnership, business trust, limited liability
company, or other form of business organization at least a
majority of the total combined voting power of all classes of
stock or other equity interests of which is owned by the
Company, either directly or indirectly, and any other entity
designated by the Committee in which the Company has a
significant interest.
1.2. Agreement means an
agreement or other document evidencing an Award. An Agreement
may be in written or such other form as the Committee may
specify in its discretion, and the Committee may, but need not,
require a Participant to sign an Agreement.
1.3. Award means a
grant of an Option, Restricted Stock, a Restricted Stock Unit, a
Performance Award, or an Other Stock-Based Award.
1.4. Board means the
Board of Directors of the Company.
1.5. Code means the
Internal Revenue Code of 1986, as amended.
1.6. Committee means
the Management Development and Executive Compensation Committee
of the Board or such other committee(s), subcommittee(s) or
person(s) the Board appoints to administer the Plan or to make
and/or
administer specific Awards hereunder. If no such appointment is
in effect at any time, Committee shall mean the
Board. Notwithstanding the foregoing, Committee
means the Board for purposes of granting Awards to members of
the Board who are not Employees, and administering the Plan with
respect to those Awards, unless the Board determines otherwise.
1.7. Common Stock means
the Companys common stock, par value $1.00 per share.
1.8. Company means
Temple-Inland Inc. and any successor thereto.
1.9. Date of Exercise
means the date on which the Company receives notice of the
exercise of an Option in accordance with Section 7.
1.10. Date of Grant
means the date on which an Award is granted under the Plan.
1.11. Eligible Person
means any person who is (a) an Employee, (b) a member
of the Board or the board of directors of an Affiliate, or
(c) a consultant or independent contractor to the Company
or an Affiliate.
1.12. Employee means
any person who the Committee determines to be an employee of the
Company or an Affiliate.
1.13. Exercise Price
means the price per Share at which an Option may be exercised.
1.14. Fair Market Value
means, unless otherwise determined by the Committee, the closing
price of a share of Common Stock on the New York Stock Exchange
(NYSE) as of the relevant date.
1.15. Incentive Stock
Option means an Option that the Committee designates as an
incentive stock option under Section 422 of the Code.
1.16. Nonqualified Stock
Option means an Option that is not an Incentive Stock
Option.
1.17. Option means an
option to purchase Shares granted pursuant to Section 6.
1.18. Option Period
means the period during which an Option may be exercised.
1.19. Other Stock-Based
Award means an Award granted pursuant to Section 11.
1.20. Participant means
an Eligible Person who has been granted an Award.
Appendix A Page 1
1.21. Performance Award
means a performance award granted pursuant to Section 10.
1.22. Performance Goals
means performance goals that the Committee establishes, which
may be based on satisfactory internal or external audits,
achievement of balance sheet or income statement objectives,
cash flow, customer satisfaction metrics and achievement of
customer satisfaction goals, dividend payments, earnings
(including before or after taxes, interest, depreciation, and
amortization), earnings growth, earnings per share; economic
value added, expenses (including plant costs and sales, general
and administrative expenses), improvement of financial ratings,
internal rate of return, market share, net asset value, net
income, net operating gross margin, net operating profit after
taxes (NOPAT), net sales growth, NOPAT growth,
operating income, operating margin, comparisons to the
performance of other companies, pro forma income, regulatory
compliance, return measures (including return on assets,
designated assets, capital, committed capital, net capital
employed, equity, sales, or stockholder equity, and return
versus the Companys cost of capital), revenues, sales,
stock price (including growth measures and total stockholder
return), comparison to stock market indices, implementation or
completion of one or more projects or transactions (including
mergers, acquisitions, dispositions, and restructurings),
working capital, or any other objective goals that the Committee
establishes. Performance Goals may be absolute in their terms or
measured against or in relationship to other companies
comparably, similarly or otherwise situated. Performance Goals
may be particular to an Eligible Person or the department,
branch, Affiliate, or division in which the Eligible Person
works, or may be based on the performance of the Company, one or
more Affiliates, or the Company and one or more Affiliates, and
may cover such period as the Committee may specify.
1.23. Plan means this
Temple-Inland Inc. 2010 Incentive Plan, as amended from time to
time.
1.24. Restricted Stock
means Shares granted pursuant to Section 8.
1.25. Restricted Stock
Units means an Award providing for the contingent grant of
Shares (or the cash equivalent thereof) pursuant to
Section 9.
1.26. Section 422
Employee means an Employee who is employed by the Company
or a parent corporation or subsidiary
corporation (each as defined in Sections 424(e) and
(f) of the Code) with respect to the Company, including a
parent corporation or subsidiary
corporation that becomes such after adoption of the Plan.
1.27. Share means a
share of Common Stock.
1.28. Ten-Percent
Stockholder means a Section 422 Employee who
(applying the rules of Section 424(d) of the Code) owns
stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or
a parent corporation or subsidiary
corporation (each as defined in Sections 424(e) and
(f) of the Code) with respect to the Company.
1.29. Unless the context expressly
requires the contrary, references in the Plan to (a) the
term Section refers to the sections of the Plan, and
(b) the word including means including
(without limitation).
2. Purpose. The Plan is
intended to assist the Company and its Affiliates in attracting
and retaining Eligible Persons of outstanding ability and to
promote the alignment of their interests with those of the
stockholders of the Company.
3. Administration. The
Committee shall administer the Plan and shall have plenary
authority, in its discretion, to grant Awards to Eligible
Persons, subject to the provisions of the Plan. The Committee
shall have plenary authority and discretion, subject to the
provisions of the Plan, to determine the Eligible Persons to
whom it grants Awards, the terms (which terms need not be
identical) of all Awards, including without limitation, the
Exercise Price of Options, the time or times at which Awards are
granted, the number of Shares covered by Awards, whether an
Option shall be an Incentive Stock Option or a Nonqualified
Stock Option, any exceptions to nontransferability, any
Performance Goals applicable to Awards, any provisions relating
to vesting, and the periods during which Options may be
exercised and
Appendix A Page 2
Restricted Stock shall be subject to restrictions. In making
these determinations, the Committee may take into account the
nature of the services rendered or to be rendered by Award
recipients, their present and potential contributions to the
success of the Company and its Affiliates, and such other
factors as the Committee in its discretion shall deem relevant.
Subject to the provisions of the Plan, the Committee shall have
plenary authority to interpret the Plan and Agreements,
prescribe, amend and rescind rules and regulations relating to
them, and make all other determinations deemed necessary or
advisable for the administration of the Plan and Awards granted
hereunder. The determinations of the Committee on the matters
referred to in this Section 3 shall be binding and final.
The Committee may delegate its authority under this
Section 3 and the terms of the Plan to such extent it deems
desirable and is consistent with the requirements of applicable
law.
4. Eligibility. Awards
may be granted only to Eligible Persons, provided that
(a) Incentive Stock Options may be granted only to Eligible
Persons who are Section 422 Employees; and (b) Options
may be granted only to persons with respect to whom Shares
constitute stock of the service recipient (within the meaning of
Section 409A of the Code and the applicable Treasury
Regulations thereunder).
5. Stock Subject to Plan.
5.1. Subject to adjustment as
provided in Section 13, the maximum number of Shares that
may be issued pursuant to Awards (including Incentive Stock
Options) under the Plan is 4,000,000 Shares. Shares issued
under the Plan may, in whole or in part, be authorized but
unissued Shares or Shares that shall have been, or may be,
reacquired by the Company in the open market, in private
transactions, or otherwise. The number of Shares authorized for
issuance under the Plan shall be decreased by 1.4 Shares
for each Share issued pursuant to Awards that are not Options
(any Awards payable in Shares that are not Options being
Full Value Awards).
5.2. Subject to adjustment as
provided in Section 13, the maximum number of Shares with
respect to which an Employee may be granted Awards under the
Plan (whether settled in Shares or the cash equivalent thereof)
during any calendar year is 1,000,000. The maximum number
of Shares with respect to which an Employee has been granted
Awards shall be determined in accordance with
Section 162(m) of the Code.
5.3. If an Option expires or
terminates for any reason without having been fully exercised,
if shares of Restricted Stock are forfeited, or if Shares
covered by an Award are not issued or are forfeited, the
unissued or forfeited Shares that had been subject to the Award
shall be available for the grant of additional Awards; provided,
however, that: (a) in the case of Full Value Awards, the
number of Shares that again become available for the grant of
Awards under the Plan shall reflect the last sentence of
Section 5.1, so that, by way of example, if 100 shares
of Restricted Stock are forfeited, 140 Shares shall again
be available for the grant of Awards, subject to the last
sentence of Section 5.1; (b) in the case of Shares
that are withheld (or delivered) to pay withholding taxes, no
such withheld (or delivered) Shares shall be available for the
grant of Awards hereunder; (c) in the case of the surrender
of all or a portion of an Option pursuant to Section 6.4
hereof, the excess of the number of Shares as to which the
Option is surrendered over the number of Shares issued to the
Participant in consideration for such surrender shall not be
available for the grant of Awards hereunder; and (d) in the
case of delivery of Shares pursuant to Section 7.2 hereof
as payment of the Exercise Price, no such Shares shall be
available for the grant of Awards hereunder.
6. Options.
6.1. Options granted under the Plan
shall be either Incentive Stock Options or Nonqualified Stock
Options, as designated by the Committee. Each Option granted
under the Plan shall be a Nonqualified Stock Option unless
expressly identified as an Incentive Stock Option, and each
Option shall be evidenced by an Agreement that specifies the
terms and conditions of the Option. Options shall be subject to
the terms and conditions set forth in this Section 6 and
such other terms and conditions not inconsistent with the Plan
as the Committee may specify. The Committee, in its discretion,
may condition the grant or vesting of an Option upon the
achievement of one or more specified Performance Goals.
Appendix A Page 3
6.2. The Exercise Price of an
Option granted under the Plan shall not be less than 100% of the
Fair Market Value of a Share on the Date of Grant.
Notwithstanding the foregoing, in the case of an Incentive Stock
Option granted to an Employee who, on the Date of Grant is a
Ten-Percent Shareholder, the Exercise Price shall not be less
than 110% of the Fair Market Value of a Share on the Date of
Grant.
6.3. The Committee shall determine
the Option Period for an Option, which shall be specifically set
forth in the Agreement, provided that an Option shall not be
exercisable after ten years (five years in the case of an
Incentive Stock Option granted to an Employee who on the Date of
Grant is a Ten-Percent Stockholder) from its Date of Grant.
6.4. To the extent authorized by
the Committee, and in accordance with such rules as the
Committee may prescribe, a Participant may surrender to the
Company an Option (or a portion thereof) that has become
exercisable and receive upon such surrender, without any payment
to the Company (other than required tax withholding amounts)
that number of Shares (equal to the highest whole number of
Shares) having an aggregate Fair Market Value as of the date of
surrender equal to that number of Shares subject to the Option
(or portion thereof) being surrendered multiplied by an amount
equal to the excess of (i) the Fair Market Value on the
date of surrender over (ii) the Exercise Price, plus an
amount of cash equal to the fair market value of any fractional
Share to which the Participant would be entitled but for the
parenthetical above relating to the issuance of a whole number
of Shares. Any such surrender shall be treated as the exercise
of the Option (or portion thereof).
7. Exercise of Options.
7.1. Subject to the terms of the
applicable Agreement, an Option may be exercised, in whole or in
part, by delivering to the Company a notice of the exercise, in
such form as the Committee may prescribe, accompanied by
(a) full payment for the Shares with respect to which the
Option is exercised or (b) to the extent provided in the
applicable Agreement, irrevocable instructions to a broker to
deliver promptly to the Company cash equal to the exercise price
of the Option.
7.2. To the extent provided in the
applicable Agreement or otherwise authorized by the Committee,
payment may be made by delivery (including constructive
delivery) of Shares (provided that such Shares, if acquired
pursuant to an Option or other Award granted hereunder or under
any other compensation plan maintained by the Company or any
Affiliate, have been held by the Participant for such period, if
any, as the Committee may specify) valued at Fair Market Value
on the Date of Exercise or surrender of the Option (or portion
thereof) as provided in Section 6.4.
8. Restricted Stock
Awards. Each grant of Restricted Stock under the Plan
shall be subject to an Agreement specifying the terms and
conditions of the Award. Restricted Stock granted under the Plan
shall consist of Shares that are restricted as to transfer,
subject to forfeiture, and subject to such other terms and
conditions as the Committee may specify. Such terms and
conditions may provide, in the discretion of the Committee, for
the lapse of such transfer restrictions or forfeiture provisions
to be contingent upon the achievement of one or more specified
Performance Goals.
9. Restricted Stock Unit
Awards. Each grant of Restricted Stock Units under the
Plan shall be evidenced by an Agreement that (a) provides
for the issuance of Shares (or the cash equivalent thereof) to a
Participant at such time(s) as the Committee may specify and
(b) contains such other terms and conditions as the
Committee may specify, including, terms that condition the
issuance or vesting of Restricted Stock Unit Awards upon the
achievement of one or more specified Performance Goals.
10. Performance
Awards. Each Performance Award granted under the Plan
shall be evidenced by an Agreement that (a) provides for
the payment of cash or issuance of Shares to a Participant
contingent upon the attainment of one or more specified
Performance Goals over such period as the Committee may specify,
and (b) contains such other terms and conditions as the
Committee may specify. If the terms of a Performance Award
provide for payment in the form of Shares, for purposes of
Section 5.2, the Performance Award shall be deemed to cover
a number of Shares equal to the maximum number of Shares that
may be issued upon payment of the Award. The maximum cash amount
payable to any Employee pursuant to all Performance Awards
granted to an Employee during a calendar year shall not exceed
$10 million. The
Appendix A Page 4
Committee may, in its discretion, grant Performance Awards
pursuant to which the amount and payment of the Award is
determined by reference to a percentage of a bonus or incentive
pool that applies to more than one Participant, and the amount
of the bonus or incentive pool may, in the discretion of the
Committee, be either fixed in amount or determined based upon
the achievement of one or more Performance Goals.
11. Other Stock-Based
Awards. The Committee may in its discretion grant
stock-based awards (including awards based on dividends) of a
type other than those otherwise provided for in the Plan,
including the issuance or offer for sale of unrestricted Shares
(Other Stock-Based Awards). Other Stock-Based Awards
shall cover such number of Shares and have such terms and
conditions as the Committee shall determine, including terms
that condition the payment or vesting the Other Stock-Based
Award upon the achievement of one or more Performance Goals.
12. Dividends and Dividend
Equivalents. The terms of an Award, other than an
Option, may provide a Participant with the right, subject to
such terms and conditions as the Committee may specify, to
receive dividend payments or dividend equivalent payments with
respect to Shares covered by such Award, which payments
(a) may be either made currently or credited to an account
established for the Participant, (b) contingent upon the
achievement of one or more Performance Goals, and (c) may
be settled in cash or Shares, as determined by the Committee;
provided, however, that in no event shall any dividends or
dividend equivalents be paid out with respect to any unvested
performance Awards.
13. Capital Events and
Adjustments.
13.1. In the event of any change in
the outstanding Common Stock by reason of any stock dividend,
stock split, reverse stock split, spin-off, split-off,
recapitalization, reclassification, combination or exchange of
shares, merger, consolidation, liquidation or the like, the
Committee shall provide for a substitution for or adjustment in:
(a) the number and class of securities subject to
outstanding Awards or the type of consideration to be received
upon the exercise or vesting of outstanding Awards, (b) the
Exercise Price of Options, (c) the aggregate number and
class of Shares for which Awards thereafter may be granted under
the Plan, and (d) the maximum number of Shares with respect
to which an Employee may be granted Awards during any calendar
year.
13.2. Any provision of the Plan or
any Agreement to the contrary notwithstanding, in the event of a
merger or consolidation to which the Company is a party, the
Committee shall take such actions, if any, as it deems necessary
or appropriate to prevent the enlargement or diminishment of
Participants rights under the Plan and Awards granted
hereunder, and may, in its discretion, cause any Award granted
hereunder to be canceled in consideration of a cash payment
equal to the fair value of the canceled Award, as determined by
the Committee in its discretion. The fair value of an Option
shall be deemed to be equal to the product of (a) the
number of Shares the Option covers (and has not previously been
exercised) and (b) the excess, if any, of the Fair Market
Value of a Share as of the date of cancellation over the
Exercise Price of the Option.
14. Change in Control.
14.1. The Committee may in its
discretion grant Awards that include terms and conditions
relating to the effect of a Change in Control (which shall have
the meaning set forth in Section 14.2).
14.2. For purposes of this Plan, a
Change in Control shall be deemed to have occurred
if the event set forth in any one of the following paragraphs
shall have occurred:
(I) any Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the
Company (not including in the securities beneficially owned by
such Person any securities acquired directly from the Company or
its Affiliates) representing 20% or more of the combined voting
power of the Companys then outstanding securities,
excluding any Person who becomes such a Beneficial Owner in
connection with a transaction described in clauses (a),
(b) or (c) of paragraph (III) below;
(II) within any twenty-four
(24) month period, the following individuals cease for any
reason to constitute a majority of the number of directors then
serving on the Board: individuals who, on
Appendix A Page 5
the date of the Award, constitute the Board and any new director
(other than a director whose initial assumption of office is in
connection with an actual or threatened election contest,
including but not limited to a consent solicitation, relating to
the election of directors of the Company) whose appointment or
election by the Board or nomination for election by the
Companys shareholders was approved or recommended by a
vote of at least two-thirds (2/3) of the directors then still in
office who either were directors on the date of the Award or
whose appointment, election or nomination for election was
previously so approved or recommended;
(III) there is consummated a
merger, consolidation of the Company or any direct or indirect
subsidiary of the Company with any other corporation or any
recapitalization of the Company (for purposes of this paragraph
(III), a Business Event) unless, immediately
following such Business Event (a) the directors of the
Company immediately prior to such Business Event continue to
constitute at least a majority of the board of directors of the
Company, the surviving entity or any parent thereof,
(b) the voting securities of the Company outstanding
immediately prior to such Business Event continue to represent
(either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent
thereof), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit
plan of the Company or any subsidiary of the Company, at least
60% of the combined voting power of the securities of the
Company or such surviving entity or any parent thereof
outstanding immediately after such Business Event, and
(c) in the event of a recapitalization, no Person is or
becomes the Beneficial Owner, directly or indirectly, of
securities of the Company or such surviving entity or any parent
thereof (not including in the securities Beneficially Owned by
such Person any securities acquired directly from the Company or
its Affiliates) representing 20% or more of the combined voting
power of the then outstanding securities of the Company or such
surviving entity or any parent thereof (except to the extent
such ownership existed prior to the Business Event);
(IV) the shareholders of the
Company approve a plan of complete liquidation or dissolution of
the Company; or
(V) there is consummated an
agreement for the sale, disposition or long-term lease by the
Company of substantially all of the Companys assets, other
than (a) such a sale, disposition or lease to an entity, at
least 50% of the combined voting power of the voting securities
of which are owned by shareholders of the Company in
substantially the same proportions as their ownership of the
Company immediately prior to such sale or disposition or
(b) the distribution directly to the Companys
shareholders (in one distribution or a series of related
distributions) of all of the stock of one or more subsidiaries
of the Company that represent substantially all of the
Companys assets.
Notwithstanding the foregoing, a Change in Control
under clauses (I) through (V) above shall not be
deemed to have occurred by virtue of the consummation of any
transaction or series of integrated transactions immediately
following which the record holders of the common stock of the
Company immediately prior to such transaction or series of
transactions continue to have substantially the same
proportionate ownership in one or more entities which, singly or
together, immediately following such transaction or series of
transactions, own all or substantially all of the assets of the
Company as constituted immediately prior to such transaction or
series of transactions.
14.3. For purposes of
Section 14.2:
Affiliate shall have the meaning set forth in
Rule 12b-2
promulgated under Section 12 of the Exchange Act.
Beneficial Owner shall have the meaning set forth in
Rule 13d-3
under the Exchange Act.
Exchange Act shall mean the Securities Exchange Act
of 1934, as amended from time to time.
Person shall have the meaning given in
Section 3(a)(9) of the Exchange Act, as modified and used
in Sections 13(d) and 14(d) thereof, except that such term
shall not include (i) the Company or any of its
subsidiaries, (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any
of its Affiliates, (iii) an underwriter temporarily holding
securities pursuant to an offering of
Appendix A Page 6
such securities, or (iv) a corporation owned, directly or
indirectly, by the stockholders of the Company in substantially
the same proportions as their ownership of stock of the Company.
15. Termination or
Amendment. The Board may amend or terminate the Plan in
any respect at any time; provided, however, that after the
stockholders of the Company have approved the Plan, the Board
shall not amend or terminate the Plan without approval of
(a) the Companys stockholders to the extent
applicable law or regulations or the requirements of the
principal exchange or interdealer quotation system on which the
Common Stock is listed or quoted, if any, requires stockholder
approval of the amendment or termination, and (b) each
affected Participant if the amendment or termination would
adversely affect the Participants rights or obligations
under any Award granted prior to the date of the amendment or
termination.
16. Modification, Substitution
of Awards. Subject to the terms and conditions of the Plan,
the Committee may modify the terms of any outstanding Awards;
provided, however, that (a) no modification of an Award
shall, without the consent of the Participant, alter or impair
any of the Participants rights or obligations under such
Award, and (b) subject to Section 13, in no event may an
Option be (i) modified to reduce the Exercise Price of the
Option or (ii) cancelled or surrendered in consideration
for cash, other Awards, or the grant of a new Option with a
lower Exercise Price.
17. Foreign
Employees. Without amendment of the Plan, the Committee
may grant Awards to Eligible Persons who are subject to the laws
of foreign countries or jurisdictions on such terms and
conditions different from those specified in the Plan as may in
the judgment of the Committee be necessary or desirable to
foster and promote achievement of the purposes of the Plan. The
Committee may make such modifications, amendments, procedures,
sub-plans
and the like as may be necessary or advisable to comply with
provisions of laws of other countries or jurisdictions in which
the Company or any Affiliate operates or has employees.
18. Stockholder
Approval. The Plan, and any amendments hereto requiring
stockholder approval pursuant to Section 14 are subject to
approval by vote of the stockholders of the Company at the next
annual or special meeting of stockholders following adoption by
the Board.
19. Withholding. The
Companys obligation to issue or deliver Shares or pay any
amount pursuant to the terms of any Award granted hereunder
shall be subject to satisfaction of applicable federal, state,
local, and foreign tax withholding requirements. To the extent
authorized by the Committee, and in accordance with such rules
as the Committee may prescribe, a Participant may satisfy any
withholding tax requirements by one or any combination of the
following means: (a) tendering a cash payment,
(b) authorizing the Company to withhold Shares otherwise
issuable to the Participant, or (c) delivering to the
Company already-owned and unencumbered Shares.
20. Term of
Plan. Unless sooner terminated by the Board pursuant to
Section 14, the Plan shall terminate on the date that is
ten years after the earlier of the date that the Plan is adopted
by the Board or approved by the Companys stockholders, and
no Awards may be granted or awarded after such date. The
termination of the Plan shall not affect the validity of any
Award outstanding on the date of termination.
21. Indemnification of
Committee. In addition to such other rights of
indemnification as they may have as members of the Board or
Committee, the Company shall indemnify members of the Committee
against all reasonable expenses, including attorneys fees,
actually and reasonably incurred in connection with the defense
of any action, suit or proceeding, or in connection with any
appeal therein, to which they or any of them may be a party by
reason of any action taken or failure to act under or in
connection with the Plan or any Award granted hereunder, and
against all amounts reasonably paid by them in settlement
thereof or paid by them in satisfaction of a judgment in any
such action, suit or proceeding, if such members acted in good
faith and in a manner which they believed to be in, and not
opposed to, the best interests of the Company.
Appendix A Page 7
22. General Provisions.
22.1. The establishment of the Plan
shall not confer upon any Eligible Person any legal or equitable
right against the Company, any Affiliate or the Committee,
except as expressly provided in the Plan. Participation in the
Plan shall not give an Eligible Person any right to be retained
in the service of the Company or any Affiliate.
22.2. Neither the adoption of the
Plan nor its submission to the Companys stockholders shall
be taken to impose any limitations on the powers of the Company
or its Affiliates to issue, grant or assume options, warrants,
rights, restricted stock or other awards otherwise than under
the Plan, or to adopt other stock option, restricted stock, or
other plans, or to impose any requirement of stockholder
approval upon the same.
22.3. The interests of any Eligible
Person under the Plan
and/or any
Award granted hereunder are not subject to the claims of
creditors and may not, in any way, be transferred, assigned,
alienated or encumbered except to the extent provided in an
Agreement.
22.4. The Plan shall be governed,
construed and administered in accordance with the laws of the
State of Texas without giving effect to the conflict of laws
principles.
22.5. The Committee may require
each person acquiring Shares pursuant to Awards granted
hereunder to represent to and agree with the Company in writing
that such person is acquiring the Shares without a view to
distribution thereof. The certificates for such Shares may
include any legend which the Committee deems appropriate to
reflect any restrictions on transfer. All certificates for
Shares issued pursuant to the Plan shall be subject to such
stock transfer orders and other restrictions as the Committee
may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any
stock exchange upon which the Common Stock is then listed or
interdealer quotation system upon which the Common Stock is then
quoted, and any applicable federal or state securities laws. The
Committee may place a legend or legends on any such certificates
to make appropriate reference to such restrictions.
22.6. The Company shall not be
required to issue any certificate or certificates for Shares
with respect to Awards granted under the Plan, or record any
person as a holder of record of Shares, without obtaining, to
the complete satisfaction of the Committee, the approval of all
regulatory bodies the Committee deems necessary, and without
complying to the Boards or Committees complete
satisfaction, with all rules and regulations under federal,
state or local law the Committee deems applicable.
22.7. To the extent that the Plan
provides for issuance of stock certificates to reflect the
issuance of Shares, the issuance may be effected on a
noncertificated basis, to the extent not prohibited by
applicable law or the rules of any stock exchange or automated
dealer quotation system on which the Shares are traded. No
fractional Shares shall be issued or delivered pursuant to the
Plan or any Award. The Committee shall determine whether cash,
other Awards, or other property shall be issued or paid in lieu
of any fractional Shares or whether any fractional Shares or any
rights thereto shall be forfeited or otherwise eliminated.
Appendix A Page 8
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Using a black ink pen, mark your votes with an X as shown in
this example. Please do not write outside the designated areas.
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X |
Electronic Voting Instructions
You can vote by Internet or telephone!
Available 24 hours a day, 7 days a week!
Instead of mailing your proxy, you may choose one of the two voting
methods outlined below to vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
Proxies submitted by the Internet or telephone must be received by
1:00 a.m., Central Time, on May 7, 2010.
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Vote by Internet
Log on to the Internet and go to
www.investorvote.com/TIN
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Follow the steps outlined on the secured website. |
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Vote by telephone
Call toll free 1-800-652-VOTE (8683) within the USA,
US territories & Canada any time on a touch tone
telephone. There is NO CHARGE to you for the call.
Follow the instructions provided by the recorded message. |
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Annual Meeting Proxy Card |
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IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. |
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A Proposals The Directors of Temple-Inland Inc. recommend voting FOR proposals 1, 2 and 3.
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To elect three (3) directors to the Board of Directors. These three directors will serve as directors until their terms expire or, if later, until replacement directors are elected who
meet all necessary qualifications. |
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For
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For
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01 - E. Linn Draper, Jr.
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02 - J. Patrick Maley III
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03 - W. Allen Reed
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2. To approve the adoption of the Temple-Inland 2010
Incentive Plan. |
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3. To ratify the Audit Committees appointment of Ernst &
Young LLP as independent registered public accounting firm
for the year 2010.
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B
Non-Voting Items
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Change of Address Please print new address below.
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Comments Please print your comments below.
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C
Authorized Signatures This section must be completed for
your vote to be counted. Date and Sign Below
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as
attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give
full title.
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Date (mm/dd/yyyy) Please print date below. |
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Signature 1 Please keep signature within the box. |
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Signature 2 Please keep signature within the box. |
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6 IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. 6
Proxy Temple-Inland Inc.
This
Proxy is Solicited on Behalf of the Board of Directors
for the Annual Meeting on May 7, 2010
The undersigned hereby acknowledges receipt of the notice of the Annual Meeting of
Stockholders and proxy statement each dated March 23, 2010 and does hereby appoint Doyle R. Simons,
J. Patrick Maley III and J. Bradley Johnston 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 10, 2010 at the annual meeting of stockholders to be held on
Friday, May 7, 2010, and any adjournment(s) thereof.
YOUR VOTE IS IMPORTANT
Regardless of whether you plan to attend the Annual Meeting of Stockholders, you can be sure your
shares are represented at the meeting by promptly returning your proxy in the enclosed envelope, or
by voting via the internet or telephone, as described on the reverse side.
This proxy, when properly executed, will be voted in the manner directed herein by the undersigned.
Unless otherwise specified, the shares will be voted FOR the election of the three Director
nominees named on the reverse side, FOR approval of the adoption of the Temple-Inland 2010
Incentive Plan, and FOR the ratification of the appointment of Ernst & Young LLP as the Companys
independent registered public accounting firm for the 2010 fiscal year.
In their discretion, the Proxies are authorized to vote upon such other business as may properly
come before the meeting.
(Items to be voted on appear on reverse side.)