o | Preliminary Proxy Statement | |
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
þ | Definitive Proxy Statement | |
o | Definitive Additional Materials | |
o | Soliciting Material Pursuant to §240.14a-12 |
þ | No fee required. | |
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
(1) | Title of each class of securities to which transaction applies: | ||
(2) | Aggregate number of securities to which transaction applies: | ||
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | ||
(4) | Proposed maximum aggregate value of transaction: | ||
(5) | Total fee paid: | ||
o | Fee paid previously with preliminary materials. | |
o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
(1) | Amount Previously Paid: | ||
(2) | Form, Schedule or Registration Statement No.: | ||
(3) | Filing Party: | ||
(4) | Date Filed: | ||
When and Where Will the Annual Meeting of Stockholders be Held? | The 2011 annual meeting of our stockholders will be held at our offices located at 303 South Temple Drive, Diboll, Texas 75941, on Friday, May 6, 2011, at 9:00 a.m. local time. | |
What are the Purposes of the Meeting? | The meeting will be held for the following purposes: | |
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 hold an advisory stockholder vote regarding the
Companys executive compensation.
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3. To hold an advisory stockholder vote regarding whether
to establish an annual, biannual or triennial schedule for the
advisory vote regarding the Companys executive
compensation program.
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4. To ratify the Audit Committees appointment of
Ernst & Young LLP as our independent registered public
accounting firm for the year 2011.
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5. 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? | The board of directors has fixed the close of business on March 10, 2011 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. |
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March 23, 2011
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Senior Vice President/Corporate Secretary | |
Austin, Texas
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1
| FOR the election of each of the director nominees under the caption Election of Directors. |
| FOR the resolution approving the compensation paid to the Companys named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion in this Proxy Statement. |
| To schedule the advisory (non-binding) votes on executive compensation on an annual basis. |
| FOR the ratification of the appointment of Ernst & Young LLP as independent registered public accounting firm for the year 2011. |
2
| giving written notice of revocation to our Corporate Secretary at our principal executive offices at any time before the voting is closed; or | |
| signing and delivering a proxy that is dated after the proxy you wish to revoke; or | |
| 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.) |
3
4
5
Name and Address of |
Amount and Nature of |
Percent of |
||||||||
Beneficial Owner | Beneficial Ownership | Class(1)(2) | ||||||||
BlackRock, Inc.
|
7,734,003 | 7.17% | ||||||||
40 East 52nd Street New York, NY 10022 |
(1) | There were 108,290,457 shares of common stock outstanding on March 10, 2011. | |
(2) | Based solely on information reported on an Amended Schedule 13G/A filed with the SEC on February 9, 2011. |
| each of our directors and nominees for director, including our Chairman and Chief Executive Officer and our President and Chief Operating Officer, | |
| our Chief Financial Officer and our three most highly compensated executive officers other than the CEO and CFO, and, | |
| all directors and executive officers as a group. |
6
SECURITY OWNERSHIP OF
MANAGEMENT |
||||||||||||||||||||||||
Beneficial
Ownership(1) |
Additional
Ownership(2) |
|||||||||||||||||||||||
Shares Issuable |
||||||||||||||||||||||||
on Stock Options |
||||||||||||||||||||||||
Amount and |
Beneficial |
Exercisable |
Restricted Stock |
Restricted Stock |
||||||||||||||||||||
Nature of |
Ownership |
More than 60 |
Units and |
Units Deferred and |
||||||||||||||||||||
Beneficial |
Percent |
Days After |
Performance |
Payable upon |
Total Beneficial and |
|||||||||||||||||||
Beneficial Owner | Ownership | of Class | Record Date | Stock Units(3) | Retirement(4) | Additional Ownership | ||||||||||||||||||
Directors:
|
||||||||||||||||||||||||
Cassandra C. Carr
|
22,000 | (1) | * | 81,267 | 103,267 | |||||||||||||||||||
E. Linn Draper Jr.
|
20,000 | (1) | * | 94,181 | 114,181 | |||||||||||||||||||
Larry R. Faulkner
|
20,200 | (1) | * | 75,378 | 95,578 | |||||||||||||||||||
Jeffrey M. Heller
|
20,000 | (1) | * | 101,830 | 121,830 | |||||||||||||||||||
J. Patrick Maley III
|
535,464 | (1) | * | 300,611 | 462,093 | 1,298,168 | ||||||||||||||||||
W. Allen Reed
|
8,000 | (1) | * | 101,744 | 109,744 | |||||||||||||||||||
Doyle R. Simons
|
633,973 | (1) | * | 375,763 | 577,616 | 1,587,352 | ||||||||||||||||||
Richard M. Smith
|
30,000 | (1) | * | 69,395 | 99,395 | |||||||||||||||||||
Arthur Temple III
|
792,448 | (1)(5) | * | 96,250 | 888,698 | |||||||||||||||||||
R. A. Walker
|
16,000 | (1) | * | 4,000 | 35,050 | 55,050 | ||||||||||||||||||
Former Director:
|
||||||||||||||||||||||||
Donald M. Carlton
|
12,000 | (1) | * | 64,272 | 76,272 | |||||||||||||||||||
Named Executive Officers:
|
||||||||||||||||||||||||
Randall D. Levy
|
425,953 | (1) | * | 165,362 | 256,681 | 847,996 | ||||||||||||||||||
Larry C. Norton
|
140,913 | (1) | * | 132,956 | 206,806 | 480,675 | ||||||||||||||||||
Dennis J. Vesci
|
194,149 | (1) | * | 130,804 | 203,240 | 10,426 | 538,619 | |||||||||||||||||
All Directors and Executive Officers as a Group:
|
||||||||||||||||||||||||
21 persons
|
3,719,199 | (1)(5) | 3.2 | % | 1,566,675 | 2,412,906 | 729,793 | 8,428,573 |
* | Percentage is less than 1% of Temple-Inland common stock outstanding | |
(1) | 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, 2011: |
Directors | Options | |||||||
Cassandra C. Carr
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20,000 | |||||||
E. Linn Draper Jr.
|
| |||||||
Larry R. Faulkner
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20,000 | |||||||
Jeffrey M. Heller
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20,000 | |||||||
J. Patrick Maley III
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437,009 | |||||||
W. Allen Reed
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6,000 | |||||||
Doyle R. Simons
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517,862 | |||||||
Richard M. Smith
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20,000 | |||||||
Arthur Temple III
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12,000 | |||||||
R. A. Walker
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16,000 | |||||||
Former Director:
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Donald M. Carlton
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10,000 | |||||||
Named Executive Officers:
|
||||||||
Randall D. Levy
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329,791 | |||||||
Larry C. Norton
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130,173 | |||||||
Dennis J. Vesci
|
170,253 | |||||||
All Directors and Executive Officers as a Group:
|
||||||||
Number of Persons
|
21 | 2,390,701 |
7
(2) | The items included in Additional Ownership are not included in the SECs definition of Beneficial Ownership. | |
(3) | 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 stock or in cash based on the stock price as set forth in the award agreements. | |
(4) | 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. | |
(5) | 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 (21 persons). Also 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 2,565,252 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. |
| 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, | |
| any person known to be the beneficial owner of more than 5% of our common stock, and | |
| any immediate family member of the foregoing persons. |
| compensation arrangements required to be reported under the director or executive compensation sections of the proxy statement, | |
| business expense reimbursements, | |
| 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 | |
| indebtedness for transactions in the ordinary course of business. |
8
| 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. | |
| 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. |
| Sales of building materials, lumber and fiberboard to Contractors Supplies, Inc. (in which Mr. Temple and his immediate family own approximately 11% of its outstanding capital stock); | |
| Repair services performed by Demco Manufacturing Company (in which Mr. Temple is a director, officer and owns 662/3% of its outstanding capital stock); and, |
9
| Payment of management fees by Diboll Leasing Company (a partnership in which Mr. Temple and his immediate family own interests totaling approximately 25%) to a railroad subsidiary of the Company that collects rentals and repair costs on rail cars and passes them through to Diboll Leasing. |
| the integrity of our financial statements; | |
| compliance with legal and regulatory requirements; | |
| the independent registered public accounting firms qualifications and independence; and | |
| the performance of the internal audit function and independent registered public accounting firm. |
10
| 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; | |
| 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; | |
| 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 | |
| prepare the disclosure that the rules of the SEC require to be included in the annual proxy statement. |
| 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; | |
| recommend the director compensation program to the board; | |
| develop and recommend to the board the corporate governance practices to be followed by the Company; and | |
| oversee the evaluation of the board. |
11
| matters related to the composition of the board; | |
| changes in the Bylaws; and | |
| certain other significant corporate matters. |
12
| appointment of a Lead Director; | |
| requiring a majority of independent directors; | |
| only independent directors serving on all board committees; | |
| non-management executive sessions at each board meeting; and | |
| only independent directors evaluating the CEOs performance annually and approving the CEOs pay. |
| 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; | |
| 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; | |
| 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; | |
| recommend to the Chairman the retention of consultants who report directly to the board of directors; | |
| interview all board candidates, and make recommendations to the Nominating and Governance Committee and the board of directors; | |
| assist the board of directors and our officers in assuring compliance with and implementation of the Companys Corporate Governance Guidelines; | |
| 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; | |
| act as principal liaison between the independent directors and the Chairman on sensitive issues; | |
| evaluate, along with the members of the full board, the CEOs performance and meet with the CEO to discuss the boards evaluation; and | |
| work with the Nominating and Governance Committee to recommend the membership of the various board committees, as well as selection of the committee chairs. |
13
Annual Retainer Fee
|
$ | 70,000 | Covers 5 board meetings and 5 meetings for each committee per year | |||
Meeting Fee
|
$ | 2,500 | Each additional meeting in excess of 5 board meetings and 5 meetings for each committee per year | |||
Lead Director Annual Retainer Fee
|
$ | 20,000 | ||||
Audit Committee Chairman Annual Retainer Fee
|
$ | 20,000 | ||||
Other Committee Chairman Annual Retainer Fee
|
$ | 12,500 | ||||
Committee Member Annual Retainer Fee
|
$ | 7,500 | ||||
Stock Option Grant
|
20,000 | Upon initial election to the board | ||||
Annual Restricted Stock Unit Grant
|
$ | 90,000 | Payment deferred until retirement | |||
Matching Gift to Charity
|
Up to $ | 3,000 | Funded by the Temple-Inland Foundation |
14
15
2010 DIRECTOR COMPENSATION | ||||||||||||||||
Director |
Fees Earned or |
All Other |
||||||||||||||
Current Directors: | Paid in Cash(1) | Stock Awards(2) | Compensation(3) | Total | ||||||||||||
Cassandra C. Carr
|
$ | 80,031 | $ | 89,969 | $ | 170,000 | ||||||||||
E. Linn Draper Jr.
|
$ | 112,531 | $ | 89,969 | $ | 6,000 | $ | 208,500 | ||||||||
Larry R. Faulkner
|
$ | 83,781 | $ | 89,969 | $ | 173,750 | ||||||||||
Jeffrey M. Heller
|
$ | 100,031 | $ | 89,969 | $ | 190,000 | ||||||||||
W. Allen Reed
|
$ | 77,531 | $ | 89,969 | $ | 167,500 | ||||||||||
Richard M. Smith
|
$ | 80,031 | $ | 89,969 | $ | 6,000 | $ | 176,000 | ||||||||
Arthur Temple III
|
$ | 77,531 | $ | 89,969 | $ | 6,000 | $ | 173,500 | ||||||||
R. A. Walker
|
$ | 77,531 | $ | 89,969 | $ | 167,500 | ||||||||||
Former Director:
|
||||||||||||||||
Donald M. Carlton
|
$ | 45,014 | $ | 44,986 | $ | 31,000 | $ | 121,000 |
(1) | Dr. Draper and Mr. Heller deferred all fees, and their fees will be paid following retirement. | |
(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 11 to our consolidated financial statements contained in our 2010 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 2010 but deferred until retirement. At year-end 2010, the directors held the following aggregate number of deferred restricted stock units: |
Director |
Deferred Restricted |
|||
Current Directors | Stock Units | |||
Cassandra C. Carr
|
80,345 | |||
E. Linn Draper Jr.
|
93,259 | |||
Larry R. Faulkner
|
74,456 | |||
Jeffrey M. Heller
|
100,908 | |||
W. Allen Reed
|
100,822 | |||
Richard M. Smith
|
68,473 | |||
Arthur Temple III
|
95,328 | |||
R. A. Walker
|
34,128 | |||
Former Director
|
||||
Donald M. Carlton
|
64,272 |
Director |
||||
Current Directors | Stock Options | |||
Cassandra C. Carr
|
20,000 | |||
E. Linn Draper Jr.
|
| |||
Larry R. Faulkner
|
20,000 | |||
Jeffrey M. Heller
|
20,000 | |||
W. Allen Reed
|
6,000 | |||
Richard M. Smith
|
20,000 | |||
Arthur Temple III
|
12,000 | |||
R. A. Walker
|
20,000 | |||
Former Director
|
||||
Donald M. Carlton
|
10,000 |
16
(3) | The amounts in All Other Compensation consist of matching charitable donations of $6,000 made by the Temple-Inland Foundation (for grants made in 2009 when the match amount was $6,000), and a $25,000 charitable contribution to honor Dr. Carlton on his retirement. |
| 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 | |
| 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. |
17
18
Name and Year First Elected | Principal Occupation and Other Information | |
Larry R. Faulkner 2005 |
Dr. Faulkner, 66, has served as President of Houston Endowment Inc., one of the largest private foundations in Texas, since February 2006. 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 a director with Guaranty Financial Group from 2007 to 2009. Dr. Faulkner currently serves on our Nominating and Governance (Chair) and Audit Committees. Dr. Faulkner has experience as a leader 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 over a decade of combined service on public company boards. | |
Jeffrey M. Heller 2004 |
Mr. Heller, 71, 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. In addition to executive and operating responsibility for EDS, Mr. Heller designed, developed, implemented and operationally supported financial reporting systems for EDS as well as for large corporate and government customers, has supervised CFO and audit functions, and has chaired and served as a member of audit committees for other public companies. Mr. Heller will retire at the May 2012 annual stockholders meeting. | |
Doyle R. Simons 2007 |
Mr. Simons, 47, 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). Mr. Simons has broad industry experience and financial and legal expertise. |
19
Name and Year First Elected | Principal Occupation and Other Information | |
Cassandra C. Carr 2004 |
Ms. Carr, 66, 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 was a director of YRC Worldwide Inc. from 1997 to 2010. Ms. Carr currently serves on our Compensation and Audit Committees. Ms. Carr has extensive expertise in finance, human resources, and executive compensation matters as well as public relations. | |
Richard M. Smith 2006 |
Mr. Smith, 65, is President of Pinkerton Foundation, a New York-based non-profit organization, and former Chairman of Newsweek. Until December 2007, Mr. Smith served as Editor-in-Chief of the magazine since 1984 and CEO (1991 through 2007). 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), and director and non-executive chairman of Merryck & Co. (2010), a leading CEO mentoring firm. Mr. Smith currently serves on our Compensation and Audit Committees. Mr. Smith has knowledge of major political, economic and social trends, as well as expertise on the subject of leadership and governance. | |
Arthur Temple III 1983 |
Mr. Temple, 69, 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. Mr. Temple brings knowledge of the industry as well as legislative background to the board. |
20
Name and Year First Elected | Principal Occupation and Other Information | |
R.A. Walker 2008 |
Mr. Walker, 54, is 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 Centerpoint Energy, Inc. (2010) and 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. Mr. Walker brings financial and energy expertise to the board, has supervised CFO and audit functions, and has chaired and served as a member of audit committees for other public companies. |
Name and Year First Elected | Principal Occupation and Other Information | |
E. Linn Draper, Jr. 2004 |
Dr. Draper, 69, 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 1992 until March 2004. Dr. Draper is a director of Northwestern Energy Corporation (2004), Alpha Natural Resources (2004), Alliance Data Systems (2005), and TransCanada Corporation (2005). Dr. Draper currently serves as our Lead Director and serves on our Compensation (Chair) and Executive Committees. Dr. Draper has expertise in energy, risk management, executive compensation, and public company operations, has supervised CFO and audit functions, and has chaired and served as a member of compensation committees for other public companies. | |
J. Patrick Maley III 2007 |
Mr. Maley, 49, 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. Mr. Maley brings extensive industry and operating experience to the board. |
21
Name and Year First Elected | Principal Occupation and Other Information | |
W. Allen Reed 2000 |
Mr. Reed, 64, 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 also serves as 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. Mr. Reed brings extensive financial and governance expertise to our board, having served as one of the nations top pension executives for GM and having served on the NYSE Board of Executives. |
| increased the performance/time vested ratio of our long-term incentives to 60%/40% | |
| adopted a hedging policy, and | |
| expanded our clawback policy. |
22
Compensation Elements | Primary Purpose | Performance Measure | Measurement Period | |||
Salary
|
Attract and retain | Annual evaluation | 1 Year | |||
Annual Incentive Bonus
|
Motivate and reward performance | ROI and profitable growth/lower cost | 1 Year | |||
Long-term Incentives
|
||||||
RSUs
|
Motivate and reward performance | Time vested with minimum ROI threshold | 3 Years | |||
PSUs
|
Motivate and reward performance | ROI vs. Peers; no payout if in bottom half | 3 Years | |||
Options
|
Motivate and reward performance | Stock price | 10 Years | |||
Retirement Benefits
|
Attract and retain; reward performance | Formula includes salary & bonus | Career | |||
Change in Control Agreements
|
Attract and retain | None | None |
23
2010 Salary Review | ||
Our named executive officers did not receive a salary increase in 2010. Although surveys indicate base salaries for most of our named executive officers were generally below the mid-ranges of the applicable comparative companies, we chose to forgo salary increases for the third consecutive year in 2010. |
24
Threshold | Target | Maximum | |||||||||||
ROI
|
1 | % | 9.0 | % | 14.0 | % | |||||||
Annual Incentive Award expressed as a % of Target
|
10 | % | 100 | % | 200 | % |
2010 Annual Incentive Bonus Awards | ||
In 2010, our ROI was 8.2%, up from 7% in 2009 and 4.5% in 2008, resulting in a payment of 91.2% of target for our corporate executives. ROI for our Corrugated Packaging segment, adjusted downward for overhead, was 14.4%, resulting in the maximum payout of 200% of target for our Corrugated Packaging executives, Messrs. Norton and Vesci, as provided for in the plan. In determining the 2010 incentive bonus awards for Messrs. Simons and Maley, the Committee also considered other achievements, including record Corrugated Packaging ROI, completion of Box Plant Transformation I (46% ROI), 6% growth in high value, local box sales, improvement in Building Products EBITDA despite difficult markets, growth in market share for lumber, gypsum, particleboard, and MDF, lower general and administrative costs, and record safety and environmental performance. Based on these achievements, the Compensation Committee awarded Mr. Simons a payment of $760,800, and Mr. Maley a payment of $737,500. |
25
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 depending on the terms of the awards when granted at a value based on the closing price of Temple-Inland stock on the NYSE on the vesting date. RSUs provide for accelerated vesting upon disability, death, or if there is a change in control of Temple-Inland, or continued vesting at retirement. Dividends are only paid if the underlying awards are earned to further align interest with stockholders and provide a retention device. | |
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, reflecting our strong commitment to pay-for-performance and our belief that ROI drives stockholder value. PSUs provide for accelerated vesting upon disability, death or if there is a change in control, or continued vesting at retirement. All grants are payable in cash. Dividends are only paid if the underlying awards are earned to further align interest with stockholders and provide a retention device. | |
Grant Practices
|
Our longstanding practice is to make annual grants each year at the February board meeting which are valued at the closing price of our common stock on the NYSE on the grant date. Executives do not 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. The full independent board approves awards to the CEO and ratifies awards granted by the Compensation Committee to other executives. 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 and an initial grant may be made above usual annual levels. 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. 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. |
26
2010 Annual LTI Awards | ||
To further strengthen our pay-for-performance culture, the Committee increased the performance/time vested mix of our long term incentives from 50%/50% to 60%/40% in 2010 as follows: |
||
30% options |
||
30% performance stock units |
||
40% restricted stock units |
||
In 2009 we issued fixed value awards in place of restricted stock units to minimize potential volatility in our stock based compensation expense when the stock price recovered, as well as to provide a stable retention value for executives. The fixed value awards had the same term and performance criteria as our restricted stock units. In 2010, the Committee returned to granting restricted stock units at our February meeting in accordance with our longstanding belief that RSUs are aligned with stockholder value. The value of the 2009 awards and 2010 awards is approximately the same, but the two types of awards are reported differently under SEC rules. See the Important Note to the Summary Compensation Table for further information. |
||
We amended our stock plan to formally recognize our policy that time-vested full value awards payable in stock have a minimum vesting period of not less than three (3) years and performance-based full value awards payable in stock have a minimum vesting period of not less than one (1) year. |
Required |
||||||
Named Executive |
Multiple of |
|||||
Officer | Position | Salary | ||||
Doyle R. Simons
|
Chief Executive Officer | 5 | ||||
J. Patrick Maley III
|
President and Chief Operating Officer | 3 | ||||
Randall D. Levy
|
Chief Financial Officer | 3 | ||||
Larry C. Norton
|
Group Vice President | 3 | ||||
Dennis J. Vesci
|
Group Vice President | 3 |
27
28
Stockholders:
|
Stockholders approve all stock incentive plans. We do not have any stock plans that are not stockholder-approved. | |
Board:
|
The full independent board evaluates CEO performance and approves CEO pay, approves succession plans, and reviews tally sheets for the named executive officers. The inside directors, Mr. Simons and Mr. Maley, do not participate in discussions of their pay. | |
The Compensation Committee, composed entirely of independent, outside directors: | ||
establishes and administers
compensation programs and philosophies.
|
||
approves employment agreements,
salaries, annual incentive bonus awards, long-term incentive
awards, retirement formulas, and all other compensation paid to
executive officers.
|
||
approves all change in control
agreements.
|
||
approves bonus pools for
non-executive employees.
|
||
reviews an annual compensation
risk assessment.
|
||
Management:
|
The CEO and Senior Vice President/Corporate Secretary serve as liaisons with the Compensation Committee and oversee administration of actions approved by the Compensation Committee. Management also approves all compensation programs relative to non-executive employees. |
2010 Governance Actions | ||
In 2010, we made the following changes to our governance practices: |
||
We expanded our clawback policy that allows the Board to recoup unearned compensation in the event of a material restatement of our financial statements. This policy is broader than the policy contained in the SECs regulations. |
||
We adopted a policy prohibiting named executive officers and directors from entering into transactions that are designed to hedge or offset any decrease in the market value of Company stock. |
| Tally sheets: 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. | |
| CEO Evaluation and Pay by Independent Directors: The independent members of the board complete an evaluation of the CEO each year, which is compiled confidentially by Aon Hewitt and provided to the Compensation Committee. Factors evaluated include ROI, profitable growth of our |
29
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 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. |
| Risk Assessment: Each year, we perform a risk assessment of our executive and employee compensation programs as part of our annual enterprise risk management process. Senior officers analyze whether our compensation philosophy is aligned with our strategic goals, whether our compensation policies and programs contain any metrics, provisions, or features that incentivize risk, and the existence of controls and safeguards that prevent or mitigate risk. This risk assessment is reviewed with the Compensation Committee. | |
| Independent Consultant: The Compensation Committee engaged Aon Hewitt as its compensation consultant independently, and not through a management recommendation. Aon 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 Aon Hewitt. Aon 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, Aon 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. Hewitt merged with Aon in 2010. In 2010, Hewitt was the Committees compensation consultant and did not perform any additional services for the Company. Prior to Hewitts merger with Aon, Aon performed a small amount of work for the Company, which was discontinued following the merger. | |
| Policy on clawback of compensation: Clawback provisions are 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 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. 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. | |
| Hedging Policy: Named Executives and Directors are prohibited from entering into transactions that are designed to hedge or offset any decrease in the market value of our stock. |
30
31
Cash |
Long Term |
|||||||||||||||||||
Stock |
Stock |
Option |
Performance |
Incentive Total |
||||||||||||||||
Price | Awards | Awards | Units* | Value | ||||||||||||||||
2010 Award
|
$ | 19.56 | $ | 3,039,281 | $ | 1,150,447 | $ | 4,189,728 | ||||||||||||
2009 Award
|
$ | 5.64 | $ | 1,612,002 | $ | 682,138 | $ | 1,577,500 | $ | 3,871,640 |
* | Not reportable in the Summary Compensation Table under SEC Rules. See footnote 2 to the Summary Compensation Table for further information on stock award values. |
2010 SUMMARY COMPENSATION TABLE | ||||||||||||||||||||||||||||||||
Change in Pension |
||||||||||||||||||||||||||||||||
Value and |
||||||||||||||||||||||||||||||||
Nonqualified |
||||||||||||||||||||||||||||||||
Non-Equity |
Deferred |
|||||||||||||||||||||||||||||||
Stock |
Option |
Incentive Plan |
Compensation |
All Other |
||||||||||||||||||||||||||||
Named Executive Officer | Year | Salary(1) | Awards(2) | Awards(2)(3) | Compensation | Earnings(4) | Compensation(5) | Total | ||||||||||||||||||||||||
Doyle R. Simons
|
2010 | $ | 780,000 | $ | 3,039,281 | $ | 1,150,447 | $ | 1,650,000 | $ | 1,573,109 | $ | 16,421 | $ | 8,209,258 | |||||||||||||||||
Chairman and CEO
|
2009 | $ | 810,000 | $ | 1,612,002 | $ | 682,138 | $ | 1,401,125 | $ | 1,092,114 | $ | 18,792 | $ | 5,616,171 | |||||||||||||||||
2008 | $ | 774,538 | $ | 1,432,685 | $ | 642,041 | $ | 487,500 | $ | 970,848 | $ | 18,118 | $ | 4,325,730 | ||||||||||||||||||
J. Patrick Maley III
|
2010 | $ | 625,000 | $ | 2,431,431 | $ | 920,354 | $ | 1,450,000 | $ | 1,344,970 | $ | 42,071 | $ | 6,813,826 | |||||||||||||||||
President and COO
|
2009 | $ | 649,039 | $ | 1,289,603 | $ | 545,711 | $ | 1,250,000 | $ | 1,180,704 | $ | 27,388 | $ | 4,942,445 | |||||||||||||||||
2008 | $ | 621,926 | $ | 1,146,152 | $ | 513,633 | $ | 700,000 | $ | 904,977 | $ | 26,576 | $ | 3,913,264 | ||||||||||||||||||
Randall D. Levy
|
2010 | $ | 425,000 | $ | 1,388,138 | $ | 525,445 | $ | 387,600 | $ | 334,925 | $ | 12,112 | $ | 3,073,220 | |||||||||||||||||
Chief Financial Officer
|
2009 | $ | 441,346 | $ | 736,257 | $ | 311,556 | $ | 331,500 | $ | 590,930 | $ | 12,333 | $ | 2,423,922 | |||||||||||||||||
2008 | $ | 425,000 | $ | 711,867 | $ | 281,047 | $ | 212,500 | $ | 856,694 | $ | 15,500 | $ | 2,502,608 | ||||||||||||||||||
Larry C. Norton
|
2010 | $ | 374,999 | $ | 1,118,418 | $ | 423,347 | $ | 750,000 | $ | 127,121 | $ | 19,829 | $ | 2,813,714 | |||||||||||||||||
Group Vice President
|
2009 | $ | 389,422 | $ | 593,198 | $ | 251,017 | $ | 700,000 | $ | 81,004 | $ | 14,166 | $ | 2,028,807 | |||||||||||||||||
2008 | $ | 372,115 | $ | 586,190 | $ | 223,775 | $ | 375,000 | $ | 58,493 | $ | 11,000 | $ | 1,626,573 | ||||||||||||||||||
Dennis J. Vesci
|
2010 | $ | 350,000 | $ | 1,099,117 | $ | 416,042 | $ | 700,000 | $ | 1,234,052 | $ | 36,081 | $ | 3,835,292 | |||||||||||||||||
Group Vice President
|
2009 | $ | 363,461 | $ | 582,979 | $ | 246,694 | $ | 700,000 | $ | 884,505 | $ | 26,884 | $ | 2,804,523 | |||||||||||||||||
2008 | $ | 347,106 | $ | 569,712 | $ | 221,282 | $ | 350,000 | $ | 564,716 | $ | 31,958 | $ | 2,084,774 |
(1) | The named executive officers did not receive any salary increases in 2009 or 2010. 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 in 2010 were $780,000, $625,000, $425,000, $375,000 and $350,000, the same as in 2009. |
32
(2) | The value of the stock awards was determined in accordance with FAS ASC Topic 718 and assumes maximum pay-out in stock or in cash based on the stock price at the time of vesting. In 2010, the Committee awarded our named executive officers long term incentive awards at our February meeting in accordance with our longstanding practice. The Committees compensation consultant estimated these grants to approximate the same value as our 2009 awards. SEC reporting requirements, however, result in a greater value being reported in the Summary Compensation Table for the 2010 awards compared with the 2009 awards. The closing price on the February 5, 2010 date of grant was $16.71, which was used by the Committee in determining value and the option exercise price. Certain of these grants were subject to stockholder approval of a new plan, which was received on May 7, 2010 when the closing price was $19.56. SEC rules require the $19.56 price to be used in the Summary Compensation Table for any awards subject to stockholder approval. The fact that our stock price increased 17% after the date of grant, as well as the fact noted above that 2009 cash performance units are not reported in this table until they are paid out, results in the 2010 awards being reported at a greater value than the 2009 awards. | |
(3) | 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. 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 | |||||||||||||||
2/5/2010
|
$ | 10.16 | 3.2 | % | 64.8 | % | 3.4 | % | 8 | |||||||||||
2/6/2009
|
$ | 2.49 | 3.2 | % | 56.6 | % | 2.7 | % | 8 | |||||||||||
2/1/2008
|
$ | 2.42 | 2.1 | % | 28.2 | % | 3.6 | % | 10 |
(4) | Represents the 2010 change in the actuarial present value of accumulated pension benefits. We do not have a deferred compensation program. | |
(5) | All Other Compensation for 2010 includes: |
Personal |
Umbrella |
|||||||||||||||||||||||
401(k) |
Use of |
Club |
Liability |
Charitable |
||||||||||||||||||||
Named Executive Officer | Match(a) | Aircraft(b) | Dues(c) | Insurance | Contributions | Other(d) | ||||||||||||||||||
Doyle R.
Simons(c)
|
$ | 11,025 | $ | 1,809 | $ | 587 | $ | 3,000 | ||||||||||||||||
J. Patrick Maley
III(d)
|
$ | 11,025 | $ | 21,459 | $ | 587 | $ | 9,000 | ||||||||||||||||
Randall D. Levy
|
$ | 11,025 | $ | 587 | $ | 500 | ||||||||||||||||||
Larry C.
Norton(d)
|
$ | 11,025 | $ | 7,017 | $ | 587 | $ | 1,200 | ||||||||||||||||
Dennis J. Vesci
|
$ | 11,025 | $ | 19,527 | $ | 4,942 | $ | 587 |
(a) | For each dollar that an employee contributes to his or her 401(k) savings account, we contribute a match of $1 up to 3% of the employees compensation. For each $1 that an employee contributes of his or her next 3% of pay, we contribute 50 cents. The match vests after 2 years of employment. | |
(b) | Incremental cost of personal use of aircraft includes fuel costs, engine maintenance expenses, crew expenses, ground fees, and other miscellaneous expenses such as meals. |
(c) | Mr. Simons holds a membership to a dinner club for use in hosting business functions. |
(d) | Other for Mr. Maley and Mr. Norton is for personal use of our facilities. |
33
Estimated Future |
||||||||||||||||||||||||||||||||||||||||
Payouts Under |
||||||||||||||||||||||||||||||||||||||||
Estimated Future Payouts |
Equity |
|||||||||||||||||||||||||||||||||||||||
Under Non-Equity |
Incentive Plan |
|||||||||||||||||||||||||||||||||||||||
Incentive Plan Awards(1) | Awards(2)(3) | |||||||||||||||||||||||||||||||||||||||
All Other |
||||||||||||||||||||||||||||||||||||||||
Option |
Grant |
|||||||||||||||||||||||||||||||||||||||
Awards: |
Exercise |
Date Fair |
||||||||||||||||||||||||||||||||||||||
Number of |
or Base |
Value of |
||||||||||||||||||||||||||||||||||||||
Securities |
Price of |
Stock and |
||||||||||||||||||||||||||||||||||||||
Board |
Target/ |
Underlying |
Option |
Option |
||||||||||||||||||||||||||||||||||||
Grant |
Approval |
Threshold |
Target |
Maximum |
Threshold |
Maximum |
Options(2)(4) |
Awards(2)(4) |
Awards(2)(4) |
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Name | Date(4) | Date | ($) | ($) | ($) | (#) | (#) | (#) | ($/Sh) | ($) | ||||||||||||||||||||||||||||||
Doyle R. Simons
|
||||||||||||||||||||||||||||||||||||||||
(5)
|
5/7/2010 | 2/5/2010 | $ | 97,500 | $ | 975,000 | $ | 2,437,500 | 87,695 | 113,233 | $ | 16.71 | $ | 4,189,728 | ||||||||||||||||||||||||||
(6)
|
5/7/2010 | 2/5/2010 | 59,424 | 79,232 | ||||||||||||||||||||||||||||||||||||
J. Patrick Maley III
|
||||||||||||||||||||||||||||||||||||||||
(5)
|
5/7/2010 | 2/5/2010 | $ | 78,125 | $ | 781,250 | $ | 1,953,125 | 70,156 | 90,586 | $ | 16.71 | $ | 3,351,785 | ||||||||||||||||||||||||||
(6)
|
5/7/2010 | 2/5/2010 | 47,540 | 63,386 | ||||||||||||||||||||||||||||||||||||
Randall D. Levy
|
||||||||||||||||||||||||||||||||||||||||
(5)
|
5/7/2010 | 2/5/2010 | $ | 42,500 | $ | 425,000 | $ | 1,062,500 | 40,053 | 51,717 | $ | 16.71 | $ | 1,913,582 | ||||||||||||||||||||||||||
(6)
|
5/7/2010 | 2/5/2010 | 27,141 | 36,188 | ||||||||||||||||||||||||||||||||||||
Larry C. Norton
|
||||||||||||||||||||||||||||||||||||||||
(5)
|
5/7/2010 | 2/5/2010 | $ | 37,500 | $ | 375,000 | $ | 937,500 | 32,271 | 41,668 | $ | 16.71 | $ | 1,541,765 | ||||||||||||||||||||||||||
(6)
|
5/7/2010 | 2/5/2010 | 21,867 | 29,156 | ||||||||||||||||||||||||||||||||||||
Dennis J. Vesci
|
||||||||||||||||||||||||||||||||||||||||
(5)
|
5/7/2010 | 2/5/2010 | $ | 35,000 | $ | 350,000 | $ | 875,000 | 31,714 | 40,949 | $ | 16.71 | $ | 1,515,159 | ||||||||||||||||||||||||||
(6)
|
5/7/2010 | 2/5/2010 | 21,490 | 28,653 |
(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%. An additional amount 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 other achievements component may not exceed 250% of target. | |
(2) | 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. | |
(3) | ROI, for purposes of our long-term incentive performance criteria, is defined and calculated as set forth in Item 7 of our 2010 Form 10-K. RSU and PSU awards contain performance criteria that uses a peer group. 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, because their financial data is not publicly available. We also excluded timber companies, because we sold our timberlands, and single product building products companies because 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, as follows: AbitibiBowater Inc.; Appleton Papers Inc.; Boise Inc.; Canfor Corporation; Cascades Inc.; Catalyst Paper; Domtar Corporation; P.H. Glatfelter; Graphic Packaging Holding Co.; International Paper Company; MeadWestvaco Corporation; Mercer International Inc.; Neenah Paper Corp.; 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. |
34
(4) | Options granted February 5, 2010 to purchase our common stock. The exercise price is the $16.71 closing price of Temple-Inland stock on the NYSE on February 5, 2010, the date the options were granted by the Committee. These grants were subject to stockholder approval of a new plan, which was approved by the stockholders on May 7, 2010 when the closing price of Temple-Inland stock was $19.56. FAS rules consider the grant date to be the date when all conditions to grant are met, and therefore the grant date value is shown as the value on the date when stockholders approved the new plan. All grants to the named executive officers provide for accelerated vesting upon retirement, disability, death, or if there is a change in control. Withholding taxes may be paid with exercised shares. No general or freestanding stock appreciation rights (SARs) were granted. All options awarded to the executives become exercisable in 25% increments on February 5 in years 2011, 2012, 2013, and 2014, and have a ten-year term expiring February 5, 2020. | |
(5) | The performance goal for the 2010 RSUs 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. The RSUs are payable in shares of stock. Dividends on the RSUs are accrued and payable only if the underlying awards are paid. 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 current portion of long-term debt). ROI, for purposes of our long-term incentive performance criteria is defined and calculated as set forth in Item 7 of our 2010 Form 10-K. RSUs provide for continued vesting after retirement if performance criteria are achieved, or accelerated vesting upon death, disability, or a change of control. | |
(6) | The PSUs are restricted stock units that vest 100%, 75%, or 0% 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, there is a 100% payment and if performance is in the second quartile, there is a 75% payment. No payment is made if performance is below the top half compared to the peer group. PSUs provide for continued vesting after retirement if performance criteria are achieved, or accelerated vesting upon death, disability, or a change of control. The 2010 PSUs are payable in cash. Dividends on PSUs are accrued and payable only if the underlying awards are paid. |
35
2010 Outstanding Equity Awards Temple Inland Inc. | ||||||||||||||||||||||||||||
Option Awards | Stock Awards | |||||||||||||||||||||||||||
Equity Incentive |
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Plan Awards: |
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Equity Incentive |
Market or |
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Plan Awards: |
Payout |
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Number of |
Value of |
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Unearned Shares, |
Unearned |
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Number of Securities |
Units or |
Shares, Units or |
||||||||||||||||||||||||||
Underlying Unexercised |
Option |
Other Rights |
Other Rights that |
|||||||||||||||||||||||||
Options |
Exercise |
Option |
that Have not |
Have not |
||||||||||||||||||||||||
Exercisable |
Unexercisable |
Price |
Expiration |
Vested(1)(2)(3) |
Vested(1)(2)(3) |
|||||||||||||||||||||||
Name | (#) | (#) | ($) | Date | (#) | ($) | Vesting Date | |||||||||||||||||||||
Doyle R. Simons Chairman & CEO |
||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||
32,800 | $ | 21.55 | 02/03/16 | Vested | ||||||||||||||||||||||||
24,600 | $ | 24.34 | 02/02/17 | Vested | ||||||||||||||||||||||||
8,200 | $ | 24.34 | 02/02/17 | 02/02/11 | ||||||||||||||||||||||||
132,653 | $ | 19.50 | 02/01/18 | Vested | ||||||||||||||||||||||||
66,326 | $ | 19.50 | 02/01/18 | 02/01/11 | ||||||||||||||||||||||||
66,327 | $ | 19.50 | 02/01/18 | 02/01/12 | ||||||||||||||||||||||||
68,487 | $ | 5.64 | 02/06/19 | Vested | ||||||||||||||||||||||||
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 | ||||||||||||||||||||||||
28,308 | $ | 16.71 | 02/05/20 | 02/05/11 | ||||||||||||||||||||||||
28,308 | $ | 16.71 | 02/05/20 | 02/05/12 | ||||||||||||||||||||||||
28,308 | $ | 16.71 | 02/05/20 | 02/05/13 | ||||||||||||||||||||||||
28,309 | $ | 16.71 | 02/05/20 | 02/05/14 | ||||||||||||||||||||||||
2/1/2011 | 73,471 | $ | 1,560,524 | 02/01/11 | ||||||||||||||||||||||||
2/6/2012 | 285,816 | $ | 6,070,732 | 02/06/12 | ||||||||||||||||||||||||
2/5/2013 | 87,695 | $ | 1,862,642 | 02/05/13 | ||||||||||||||||||||||||
2/5/2013 | 79,232 | $ | 1,682,888 | 02/05/13 | ||||||||||||||||||||||||
Totals
|
346,540 | 459,550 | 526,214 | $ | 11,176,786 | |||||||||||||||||||||||
J. Patrick Maley III
President & CEO |
||||||||||||||||||||||||||||
30,000 | $ | 7.56 | 05/07/13 | Vested | ||||||||||||||||||||||||
18,000 | $ | 11.96 | 02/06/14 | Vested | ||||||||||||||||||||||||
32,000 | $ | 16.14 | 02/04/15 | Vested | ||||||||||||||||||||||||
32,800 | $ | 21.55 | 02/03/16 | Vested | ||||||||||||||||||||||||
24,600 | $ | 24.34 | 02/02/17 | Vested | ||||||||||||||||||||||||
8,200 | $ | 24.34 | 02/02/17 | 02/02/11 | ||||||||||||||||||||||||
106,122 | $ | 19.50 | 02/01/18 | Vested | ||||||||||||||||||||||||
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 | Vested |
36
Option Awards | Stock Awards | |||||||||||||||||||||||||||
Equity Incentive |
||||||||||||||||||||||||||||
Plan Awards: |
||||||||||||||||||||||||||||
Equity Incentive |
Market or |
|||||||||||||||||||||||||||
Plan Awards: |
Payout |
|||||||||||||||||||||||||||
Number of |
Value of |
|||||||||||||||||||||||||||
Unearned Shares, |
Unearned |
|||||||||||||||||||||||||||
Number of Securities |
Units or |
Shares, Units or |
||||||||||||||||||||||||||
Underlying Unexercised |
Option |
Other Rights |
Other Rights that |
|||||||||||||||||||||||||
Options |
Exercise |
Option |
that Have not |
Have not |
||||||||||||||||||||||||
Exercisable |
Unexercisable |
Price |
Expiration |
Vested(1)(2)(3) |
Vested(1)(2)(3) |
|||||||||||||||||||||||
Name | (#) | (#) | ($) | Date | (#) | ($) | Vesting Date | |||||||||||||||||||||
J. Patrick Maley III
(contd)
|
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 | ||||||||||||||||||||||||
22,646 | $ | 16.71 | 02/05/20 | 02/05/11 | ||||||||||||||||||||||||
22,647 | $ | 16.71 | 02/05/20 | 02/05/12 | ||||||||||||||||||||||||
22,646 | $ | 16.71 | 02/05/20 | 02/05/13 | ||||||||||||||||||||||||
22,647 | $ | 16.71 | 02/05/20 | 02/05/14 | ||||||||||||||||||||||||
2/1/2011 | 58,777 | $ | 1,248,423 | 02/01/11 | ||||||||||||||||||||||||
2/6/2012 | 228,653 | $ | 4,856,590 | 02/06/12 | ||||||||||||||||||||||||
2/5/2013 | 70,156 | $ | 1,490,113 | 02/05/13 | ||||||||||||||||||||||||
2/5/2013 | 63,386 | $ | 1,346,319 | 02/05/13 | ||||||||||||||||||||||||
Totals
|
298,312 | 369,280 | 420,972 | $ | 8,941,445 | |||||||||||||||||||||||
Randall D. Levy
Chief Financial Officer |
||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||
24,600 | $ | 21.55 | 02/03/16 | Vested | ||||||||||||||||||||||||
18,450 | $ | 24.34 | 02/02/17 | Vested | ||||||||||||||||||||||||
6,150 | $ | 24.34 | 02/02/17 | 02/02/11 | ||||||||||||||||||||||||
58,067 | $ | 19.50 | 02/01/18 | Vested | ||||||||||||||||||||||||
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 | Vested | ||||||||||||||||||||||||
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 | ||||||||||||||||||||||||
12,929 | $ | 16.71 | 02/05/20 | 02/05/11 | ||||||||||||||||||||||||
12,929 | $ | 16.71 | 02/05/20 | 02/05/12 | ||||||||||||||||||||||||
12,929 | $ | 16.71 | 02/05/20 | 02/05/13 | ||||||||||||||||||||||||
12,930 | $ | 16.71 | 02/05/20 | 02/05/14 | ||||||||||||||||||||||||
2/1/2011 | 36,506 | $ | 775,387 | 02/01/11 | ||||||||||||||||||||||||
2/6/2012 | 130,542 | $ | 2,772,712 | 02/06/12 | ||||||||||||||||||||||||
2/5/2013 | 40,053 | $ | 850,726 | 02/05/13 | ||||||||||||||||||||||||
2/5/2013 | 36,188 | $ | 768,633 | 02/05/13 | ||||||||||||||||||||||||
Totals
|
250,397 | 209,778 | 243,289 | $ | 5,167,458 | |||||||||||||||||||||||
37
Option Awards | Stock Awards | |||||||||||||||||||||||||||
Equity Incentive |
||||||||||||||||||||||||||||
Plan Awards: |
||||||||||||||||||||||||||||
Equity Incentive |
Market or |
|||||||||||||||||||||||||||
Plan Awards: |
Payout |
|||||||||||||||||||||||||||
Number of |
Value of |
|||||||||||||||||||||||||||
Unearned Shares, |
Unearned |
|||||||||||||||||||||||||||
Number of Securities |
Units or |
Shares, Units or |
||||||||||||||||||||||||||
Underlying Unexercised |
Option |
Other Rights |
Other Rights that |
|||||||||||||||||||||||||
Options |
Exercise |
Option |
that Have not |
Have not |
||||||||||||||||||||||||
Exercisable |
Unexercisable |
Price |
Expiration |
Vested(1)(2)(3) |
Vested(1)(2)(3) |
|||||||||||||||||||||||
Name | (#) | (#) | ($) | Date | (#) | ($) | Vesting Date | |||||||||||||||||||||
Larry C. Norton
Group VP-Paperboard |
||||||||||||||||||||||||||||
46,234 | $ | 19.50 | 02/01/18 | Vested | ||||||||||||||||||||||||
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 | Vested | ||||||||||||||||||||||||
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 | 02/03/13 | ||||||||||||||||||||||||
10,417 | $ | 16.71 | 02/05/20 | 02/05/11 | ||||||||||||||||||||||||
10,417 | $ | 16.71 | 02/05/20 | 02/05/12 | ||||||||||||||||||||||||
10,417 | $ | 16.71 | 02/05/20 | 02/05/13 | ||||||||||||||||||||||||
10,417 | $ | 16.71 | 02/05/20 | 02/05/14 | ||||||||||||||||||||||||
2/1/2011 | 30,061 | $ | 638,496 | 02/01/11 | ||||||||||||||||||||||||
2/6/2012 | 105,177 | $ | 2,233,959 | 02/06/12 | ||||||||||||||||||||||||
2/5/2013 | 32,271 | $ | 685,436 | 02/05/13 | ||||||||||||||||||||||||
2/5/2013 | 29,156 | $ | 619,273 | 02/04/14 | ||||||||||||||||||||||||
Totals
|
71,436 | 163,511 | 196,665 | $ | 4,177,164 | |||||||||||||||||||||||
Dennis J.
Vesci(2)(4)
Group VP-Corrugated |
||||||||||||||||||||||||||||
5,000 | $ | 16.14 | 02/04/15 | Vested | ||||||||||||||||||||||||
18,450 | $ | 21.55 | 02/03/16 | Vested | ||||||||||||||||||||||||
13,837 | $ | 24.34 | 02/02/17 | Vested | ||||||||||||||||||||||||
4,613 | $ | 24.34 | 02/02/17 | 02/02/11 | ||||||||||||||||||||||||
45,719 | $ | 19.50 | 02/01/18 | Vested | ||||||||||||||||||||||||
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 | Vested | ||||||||||||||||||||||||
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 | ||||||||||||||||||||||||
10,237 | $ | 16.71 | 02/05/20 | 02/05/11 | ||||||||||||||||||||||||
10,237 | $ | 16.71 | 02/05/20 | 02/05/12 | ||||||||||||||||||||||||
10,237 | $ | 16.71 | 02/05/20 | 02/05/13 | ||||||||||||||||||||||||
10,238 | $ | 16.71 | 02/05/20 | 02/05/14 | ||||||||||||||||||||||||
2/1/2011 | 29,216 | $ | 620,548 | 02/01/11 | ||||||||||||||||||||||||
2/6/2012 | 103,365 | $ | 2,195,473 | 02/06/12 | ||||||||||||||||||||||||
2/5/2013 | 31,714 | $ | 673,605 | 02/05/13 | ||||||||||||||||||||||||
2/5/2013 | 28,653 | $ | 608,590 | 02/05/13 | ||||||||||||||||||||||||
Totals
|
107,774 | 165,588 | 192,948 | $ | 4,098,216 |
38
(1) | Value based on the closing market price of our common stock on December 31, 2010, the last trading day prior to our year-end date of January 1, 2011, of $21.24. RSUs and PSUs vest three years after the date of grant only if minimum performance criteria are met. Market value shown assumes all performance criteria are met and the maximum value is paid. | |
(2) | 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: |
RSUs Payable in |
RSUs Payable in |
|||||||
Date Deferred | Shares | Cash | ||||||
02/15/2001
|
1,217 | 398 | ||||||
02/01/2002
|
656 | 214 | ||||||
02/07/2003
|
1,920 | 627 | ||||||
02/04/2005
|
234 | 76 | ||||||
02/02/2007
|
656 | 214 | ||||||
02/01/2008
|
5,829 | |||||||
Total
|
4,683 | 7,358 | ||||||
(3) | Following our spin offs of Guaranty Financial Group and Forestar Group at the end of 2007, 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, 2010, which was $19.30. The Guaranty awards were of no value at year end. |
39
2010 Outstanding Equity
Awards Forestar Group Inc. |
|||||||||||||||||||||||||||||
Option Awards | Stock Awards | ||||||||||||||||||||||||||||
Equity |
|||||||||||||||||||||||||||||
Equity |
Incentive Plan |
||||||||||||||||||||||||||||
Incentive Plan |
Awards: |
||||||||||||||||||||||||||||
Awards: |
Market or |
||||||||||||||||||||||||||||
Number of |
Payout Value |
||||||||||||||||||||||||||||
Unearned |
of Unearned |
||||||||||||||||||||||||||||
Shares, Units |
Shares, Units |
||||||||||||||||||||||||||||
Number of Securities |
or Other |
or Other |
|||||||||||||||||||||||||||
Underlying Unexercised |
Option |
Rights that |
Rights that |
||||||||||||||||||||||||||
Options |
Exercise |
Option |
Have not |
Have not |
|||||||||||||||||||||||||
Exercisable |
Unexercisable |
Price |
Expiration |
Vested(1)(2)(3) |
Vested(1)(2)(3) |
Vesting |
|||||||||||||||||||||||
Name | (#) | (#) | ($) | 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 | |||||||||||||||||||||||||
10,666 | $ | 20.26 | 02/04/15 | Vested | |||||||||||||||||||||||||
10,933 | $ | 27.06 | 02/03/16 | Vested | |||||||||||||||||||||||||
8,200 | $ | 30.56 | 02/02/17 | Vested | |||||||||||||||||||||||||
2,733 | $ | 30.56 | 02/02/17 | 02/02/11 | |||||||||||||||||||||||||
Totals
|
55,130 | 2,733 | 0 | $ | 0 | ||||||||||||||||||||||||
J. Patrick
Maley III
|
|||||||||||||||||||||||||||||
10,000 | $ | 9.49 | 05/07/13 | Vested | |||||||||||||||||||||||||
6,000 | $ | 15.02 | 02/06/14 | Vested | |||||||||||||||||||||||||
10,666 | $ | 20.26 | 02/04/15 | Vested | |||||||||||||||||||||||||
10,933 | $ | 27.06 | 02/03/16 | Vested | |||||||||||||||||||||||||
8,200 | $ | 30.56 | 02/02/17 | Vested | |||||||||||||||||||||||||
2,733 | $ | 30.56 | 02/02/17 | 02/02/11 | |||||||||||||||||||||||||
Totals
|
45,799 | 2,733 | 0 | $ | 0 | ||||||||||||||||||||||||
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 | |||||||||||||||||||||||||
8,000 | $ | 20.26 | 02/04/15 | Vested | |||||||||||||||||||||||||
8,200 | $ | 27.06 | 02/03/16 | Vested | |||||||||||||||||||||||||
6,150 | $ | 30.56 | 02/02/17 | Vested | |||||||||||||||||||||||||
2,050 | $ | 30.56 | 02/02/17 | 02/02/11 | |||||||||||||||||||||||||
Totals
|
63,683 | 2,050 | 0 | $ | 0 | ||||||||||||||||||||||||
Larry C. Norton
|
|||||||||||||||||||||||||||||
Totals
|
0 | 0 | 0 | $ | 0 | ||||||||||||||||||||||||
Dennis J. Vesci
|
|||||||||||||||||||||||||||||
500 | $ | 13.26 | 02/01/12 | Vested | |||||||||||||||||||||||||
1,000 | $ | 8.68 | 02/07/13 | Vested | |||||||||||||||||||||||||
1,666 | $ | 15.02 | 02/06/14 | Vested | |||||||||||||||||||||||||
1,666 | $ | 20.26 | 02/04/15 | Vested | |||||||||||||||||||||||||
6,150 | $ | 27.06 | 02/03/16 | Vested | |||||||||||||||||||||||||
4,612 | $ | 30.56 | 02/02/17 | Vested | |||||||||||||||||||||||||
1,538 | $ | 30.56 | 02/02/17 | 02/02/11 | |||||||||||||||||||||||||
Totals
|
15,594 | 1,538 | 0 | $ | 0 |
40
(4) | 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: |
RSUs Payable in |
RSUs Payable in |
|||
Date Deferred | Shares | Cash | ||
02/15/2001
|
406 | 133 | ||
02/01/2002
|
219 | 72 | ||
02/07/2003
|
78 | 25 | ||
02/04/2005
|
218 | 71 | ||
02/02/2007
|
640 | 208 | ||
Total
|
1,561 | 509 | ||
2010 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
|
20,000 | $ | 230,400 | | $ | 2,372,339 | ||||||||||
J. Patrick Maley III
|
| | | $ | 2,070,913 | |||||||||||
Randall D. Levy
|
30,000 | $ | 345,900 | | $ | 605,627 | ||||||||||
Larry C. Norton
|
| | | $ | 1,055,002 | |||||||||||
Dennis J. Vesci
|
9,500 | $ | 100,535 | | $ | 494,387 |
(1) | Stock Awards Value Realized consists of 2007 Temple-Inland and Forestar RSUs that met their respective minimum 1% ROI criteria and were settled in cash for which no shares were transferred. The payment for the Temple-Inland and Forestar RSUs was based on the number of units set forth below: |
Temple-Inland |
Forestar |
|||||||
Executive Officer | Cash-Settled RSUs | Cash-Settled RSUs | ||||||
Doyle R. Simons
|
85,000 | 28,332 | ||||||
J. Patrick Maley III
|
75,000 | 24,999 | ||||||
Randall D. Levy
|
24,500 | 8,166 | ||||||
Larry C. Norton
|
35,000 | 11,666 | ||||||
Dennis J. Vesci
|
20,000 | 6,666 |
41
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
|
8,361,407 | $14.66 | 2,854,100 | |||
Equity compensation plans not approved by security holders
|
None | N/A | None | |||
Total
|
8,361,407 | $14.66 | 2,854,100 |
(1) | Includes (a) 7,853,917 options outstanding, of which 7,416,105 relate to our employees and have a weighted average term of 6 years and 437,812 relate to employees of spun-off entities Guaranty Financial Group Inc. and Forestar Group Inc., and have a weighted average term of 5 years; (b) 369,201 restricted shares outstanding that relate to our employees; (c) 125,870 shares payable to directors for deferred fees; and (d) 12,419 stock-settled restricted stock units that relate to deferred bonuses and deferred vested restricted shares that could not be paid out until after retirement due to Code Section 162(m) policy. |
2010 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 | 18.33 | $ | 306,949 | ||||||
Temple-Inland SERP | $ | 5,196,035 | ||||||||
J. Patrick Maley III
|
Temple-Inland Retirement Plan | 7.58 | $ | 140,932 | ||||||
Temple-Inland SERP | $ | 5,788,736 | ||||||||
Randall D.
Levy(2)
|
Temple-Inland Retirement Plan | 21.42 | $ | 599,668 | ||||||
Temple-Inland SERP | $ | 5,422,058 | ||||||||
Larry C. Norton
|
Temple-Inland Retirement Plan | 3.58 | $ | 67,391 | ||||||
Temple-Inland SERP | $ | 234,393 | ||||||||
Dennis J.
Vesci(2)
|
Temple-Inland Retirement Plan | 35.42 | $ | 1,135,151 | ||||||
Temple-Inland SERP | $ | 3,141,042 |
(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 (5.28% interest and the 1994 Group Annuity Mortality Table for males and females) discounted based on disclosure interest rate to December 31, 2010. Present value of the accumulated benefit under the nonqualified supplemental |
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executive retirement plan (SERP) is based on present value at normal retirement date using lump sum assumptions (4.31% interest and Applicable Mortality Table under IRC Section 417(e)(3) (2010 PPA Unisex Mortality)) discounted based on disclosure interest rate to December 31, 2010. 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 2010, 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. In 2010, the plan was amended to clarify that benefits are not reduced for mortality or death if the executive continues working beyond the normal retirement age of 60. Benefits will be paid in a lump sum amount. Nonqualified plan lump sums are calculated in any given year using the prior November monthly average market yield on U.S. Treasury Securities at 30-year constant maturity. For retirements in 2010, the November 2009 rate of 4.31% 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 our former financial services segment and received a distribution of |
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his financial services benefit. The amount in the table above has been reduced to reflect the offset for the benefit he already received. 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. Mr. Levy formerly participated in a defined contribution plan and related SERP when he worked for our former financial services segment and received a distribution of his financial services benefit. The amount in the table below has been reduced to reflect the offset for the benefit he already received. The table below lists the executives who are eligible for early retirement and estimated payment assuming each retired on December 31, 2010: |
Monthly Payment |
Lump Sum Payment |
|||||||
Executive Officer | Under Qualified Plan | Under SERP | ||||||
Randall D. Levy
|
$ | 3,822 | $ | 5,455,811 | ||||
Dennis J. Vesci
|
$ | 8,513 | $ | 3,452,734 |
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 |
| 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); | |
| the stockholders approve liquidation or dissolution; |
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| 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. |
| the amount of any annual incentive award that has been allocated or awarded for a completed annual bonus cycle and their current year annual incentive award (pro-rated if the termination is before the end of the first six months in the year or full annual incentive award if during the second half of the year) based on achievement of target performance (or, for executives other than the CEO, if higher, projected actual performance); | |
| 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; | |
| health and welfare benefits provided through third party insurance for three years at no greater cost than currently paid; | |
| acceleration of vesting of all options, restricted shares, restricted stock units, and performance stock units (maximum amount); | |
| credit for three additional years service in the pension plan at the highest pay over the last three years; | |
| lump sum payment of all nonqualified pension and deferred compensation; | |
| lump sum payment equal to three years match on 401(k) plan; | |
| any retiree medical or life insurance benefits to which the executive is entitled or would have been entitled within 3 years of termination; | |
| reimbursement for outplacement services not to exceed 15% of base salary and, for executives other than the CEO, 15% of target annual incentive award; and | |
| three years continuation of perquisites. |
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Potential Payments Upon Termination or Change in Control | ||||||||||||||||||||||||||||||||||||
Estimated |
||||||||||||||||||||||||||||||||||||
Target |
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Annual |
Value of |
Value of |
Excise Tax & |
|||||||||||||||||||||||||||||||||
Incentive |
Stock |
Performance |
Health & |
Gross-Up/ |
||||||||||||||||||||||||||||||||
Award |
Options |
Stock that |
Retirement |
Welfare |
(Required |
Aggregate |
||||||||||||||||||||||||||||||
Executive | Severance(1) | Payment(1) | that Vest | Vests(2) | Benefit | Benefits | Outplacement | Forfeiture) | Payments | |||||||||||||||||||||||||||
Doyle R. Simons
|
||||||||||||||||||||||||||||||||||||
Change in
Control(3)
|
$ | 6,583,639 | $ | 975,000 | $ | 3,949,000 | $ | 15,254,285 | $ | 2,117,422 | $ | 26,198 | $ | 117,000 | $ | 10,846,684 | $ | 39,869,228 | ||||||||||||||||||
Death(4)
|
$ | 1,755,000 | $ | 3,949,000 | $ | 15,254,285 | $ | 20,958,285 | ||||||||||||||||||||||||||||
Disability(4)
|
$ | 1,755,000 | $ | 3,949,000 | $ | 15,254,285 | $ | 20,958,285 | ||||||||||||||||||||||||||||
Termination Without
Cause(5)
|
$ | 4,389,093 | $ | 975,000 | $ | 3,949,000 | $ | 15,254,285 | $ | 1,707,080 | $ | 17,802 | $ | 117,000 | $ | 26,409,260 | ||||||||||||||||||||
Termination For
Cause(6)
|
$ | 0 | ||||||||||||||||||||||||||||||||||
J. Patrick Maley III
|
||||||||||||||||||||||||||||||||||||
Change in
Control(3)
|
$ | 4,253,587 | $ | 781,250 | $ | 3,159,196 | $ | 12,203,445 | $ | 1,697,060 | $ | 18,034 | $ | 210,938 | $ | 8,075,944 | $ | 30,399,454 | ||||||||||||||||||
Death(4)
|
$ | 3,159,196 | $ | 12,203,445 | $ | 15,362,641 | ||||||||||||||||||||||||||||||
Disability(4)
|
$ | 3,159,196 | $ | 12,203,445 | $ | 15,362,641 | ||||||||||||||||||||||||||||||
Termination Without
Cause(5)
|
$ | 0 | ||||||||||||||||||||||||||||||||||
Termination For
Cause(6)
|
$ | 0 | ||||||||||||||||||||||||||||||||||
Randall D. Levy
|
||||||||||||||||||||||||||||||||||||
Change in
Control(3)
|
$ | 2,584,837 | $ | 425,000 | $ | 5,112,571 | $ | 1,251,420 | $ | 24,392 | $ | 127,500 | $ | 3,635,873 | $ | 13,161,593 | ||||||||||||||||||||
Death(4)
|
$ | 5,112,571 | $ | 5,112,571 | ||||||||||||||||||||||||||||||||
Disability(4)
|
$ | 5,112,571 | $ | 5,112,571 | ||||||||||||||||||||||||||||||||
Termination Without
Cause(5)
|
$ | 0 | ||||||||||||||||||||||||||||||||||
Termination For
Cause(6)
|
$ | 0 | ||||||||||||||||||||||||||||||||||
Larry C. Norton
|
||||||||||||||||||||||||||||||||||||
Change in
Control(3)
|
$ | 2,284,837 | $ | 375,000 | $ | 1,448,690 | $ | 5,757,665 | $ | 371,745 | $ | 17,269 | $ | 112,500 | $ | 3,792,097 | $ | 14,159,803 | ||||||||||||||||||
Death(4)
|
$ | 1,448,690 | $ | 5,757,665 | $ | 7,206,355 | ||||||||||||||||||||||||||||||
Disability(4)
|
$ | 1,448,690 | $ | 5,757,665 | $ | 7,206,355 | ||||||||||||||||||||||||||||||
Termination Without
Cause(5)
|
$ | 0 | ||||||||||||||||||||||||||||||||||
Termination For
Cause(6)
|
$ | 0 | ||||||||||||||||||||||||||||||||||
Dennis J. Vesci
|
||||||||||||||||||||||||||||||||||||
Change in
Control(3)
|
$ | 2,149,663 | $ | 350,000 | $ | 5,048,168 | $ | 2,210,978 | $ | 16,946 | $ | 105,000 | $ | 4,196,763 | $ | 14,077,518 | ||||||||||||||||||||
Death(4)
|
$ | 5,048,168 | $ | 5,048,168 | ||||||||||||||||||||||||||||||||
Disability(4)
|
$ | 5,048,168 | $ | 5,048,168 | ||||||||||||||||||||||||||||||||
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 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 $2,396 for Mr. Simons. Assumes for illustration only that the IRS considers the entire 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. | |
(4) | In return for a release of all claims, Mr. Simonss 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 Mr. Simons was employed and the denominator of |
46
which is the number of days in such performance period. For illustration purposes only, the full year benefit is shown. Except for Mr. Simonss 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. Mr. Simons, our 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, Mr. Simons 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. |
47
48
Jeffrey M. Heller, Chairman
|
||
Cassandra C. Carr
|
Richard M. Smith | |
Larry R. Faulkner
|
Arthur Temple III | |
W. Allen Reed
|
R. A. Walker |
49
Fees
|
2010 | 2009 | ||||||
Audit
Fees(1)
|
$ | 1,686 | $ | 1,524 | ||||
Audit-Related
Fees(2)
|
155 | 360 | ||||||
Tax
Fees(3)
|
8 | 40 | ||||||
All Other Fees
|
| | ||||||
Total
|
$ | 1,849 | $ | 1,924 |
(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. |
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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 | ||
1. | Election of Directors: | + |
For | Against | Abstain | For | Against | Abstain | For | Against | Abstain | |||||||||||||||
01 - Larry R. Faulkner
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o | o | o | 02 - Jeffrey M. Heller | o | o | o | 03 - Doyle R. Simons | o | o | o |
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For | Against | Abstain | 1 Yr | 2 Yrs | 3 Yrs | Abstain | ||||||||||
2. Say on Pay - An advisory vote on the approval of executive compensation. |
o | o | o | 3. Say When on Pay - An advisory vote on the frequency of shareholder votes on executive compensation. |
o | o | o | o | ||||||||
2. To ratify the Audit Committees appointment of Ernst &
Young LLP as independent registered public accounting firm for the year 2011. |
o | o | o |
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