DEF 14A 1 d712398ddef14a.htm DEF 14A DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934

Filed by the Registrant  

Filed by a Party other than the Registrant  

Check the appropriate box:

 

Preliminary Proxy Statement

 

CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14A-6(E)(2))

 

Definitive Proxy Statement

 

Definitive Additional Materials

 

Soliciting Material Pursuant to §240.14a-12

 

 

LOGO

RAYONIER ADVANCED MATERIALS INC.

Incorporated in the State of Delaware

I.R.S. Employer Identification No. 46-4559529

1301 RIVERPLACE BOULEVARD, SUITE 2300

JACKSONVILLE, FL 32207

(Principal Executive Office)

Telephone Number: (904) 357-4600

Payment of Filing Fee (Check the appropriate box):

 

No fee required.

 

Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

 

  (1)

Title of each class of securities to which transaction applies:

 

  (2)

Aggregate number of securities to which transaction applies:

 

  (3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

  (4)

Proposed maximum aggregate value of transaction:

 

  (5)

Total fee paid:

 

Fee paid previously with preliminary materials.

 

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

  (1)

Amount Previously Paid:

 

  (2)

Form, Schedule or Registration Statement No.:

 

  (3)

Filing Party:

 

  (4)

Date Filed:

 

 

 


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LOGO

2019 Annual Meeting of Stockholders and Proxy Statement


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LOGO

 

LOGO

PAUL G. BOYNTON

Chairman, President and

Chief Executive Officer

 

                       LOGO

 

    

Dear Stockholder:

 

We are pleased to invite you to attend our Annual Meeting of Stockholders on May 20, 2019, at the DoubleTree Hotel, 1201 Riverplace Boulevard, Jacksonville, Florida, at 4:00 p.m. local time. In the following Notice of 2019 Annual Meeting and Proxy Statement, we describe the matters upon which you will be asked to vote at the meeting.

 

Our team successfully managed a number of opportunities and challenges in 2018, resulting in another very solid year of financial and strategic achievements:

 

LOGO  Delivered a 74% improvement to Adjusted Net Income per share

 

LOGO  Generated $152 million of Adjusted Free Cash Flows, a 134% increase

 

LOGO  Successfully completed our ambitious four-year $140 million Cost Transformation initiative

 

LOGO  Successfully integrated the 2017 Tembec acquisition, including achieving $28 million in synergies, nearly double our first-year target

 

LOGO  Executed a balanced capital allocation strategy, including $45 million in debt repayment and $72 million in return of capital to stockholders via buybacks and dividends

 

We look forward to a successful 2019, as we expect to continue to execute on our Four Strategic Pillars: Cost Transformation, Market Optimization, New Products and value-enhancing Investments. We are confident that our strategies will continue to create long-term value for our stockholders.

 

Please review the proxy/notice card for instructions on how to vote over the Internet, by telephone or by mail in order to be certain that your shares of stock are represented at the meeting, even if you plan to attend. It is important that all Rayonier Advanced Materials stockholders vote and participate in the affairs and governance of our Company.

 

Thank you for your continued trust, confidence and investment in Rayonier Advanced Materials.

 

LOGO

 

PAUL G. BOYNTON

Chairman, President and

Chief Executive Officer

 

April 8, 2019


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Corporate Headquarters

LOGO

April 8, 2019

Notice of 2019 Annual Meeting

TO OUR STOCKHOLDERS:

Notice is hereby given that the 2019 Annual Meeting of Stockholders of Rayonier Advanced Materials Inc., a Delaware corporation, will be held at the DoubleTree Hotel, 1201 Riverplace Boulevard, Jacksonville, Florida on Monday, May 20, 2019 at 4:00 p.m. local time, for purposes of:

 

  1)

Electing three Class II directors to terms expiring in 2022

 

  2)

Approving an amendment to the Company’s Amended and Restated Certificate of Incorporation to declassify the board of directors

 

  3)

Approving an amendment to the Company’s Amended and Restated Certificate of Incorporation to eliminate the supermajority voting provisions

 

  4)

Approving, in a non-binding vote, the compensation of our named executive officers as disclosed in the accompanying Proxy Statement

 

  5)

Ratifying the appointment of Grant Thornton as our independent registered public accounting firm for 2019; and

 

  6)

Acting upon such other matters as may properly come before the meeting

All stockholders holding Rayonier Advanced Materials common stock of record at the close of business on March 22, 2019 are entitled to vote at the meeting.

WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE PROMPTLY SUBMIT YOUR PROXY OR VOTING INSTRUCTION. Most stockholders have a choice of voting over the Internet, by telephone or by using a traditional proxy card. Please refer to the enclosed proxy materials or the information forwarded by your bank, broker or other holder of record to determine which voting methods are available to you. We urge you to complete and submit your proxy electronically or by telephone (if those options are available to you) as a means of reducing the Company’s expenses related to the meeting.

Please be aware that, if you own shares in a brokerage account, you must instruct your broker on how to vote your shares. New York Stock Exchange rules do not allow your broker to vote your shares without your instructions on any of the proposals except the ratification of the appointment of the Company’s independent registered public accounting firm. Please exercise your right as a stockholder to vote on all proposals, including the election of directors, by instructing your broker by proxy.

We urge you to vote your stock, by any of the available methods, at your earliest convenience.

 

By:  

LOGO

 

Michael R. Herman

Corporate Secretary


Table of Contents

Table of Contents

 

ITEM    PAGE  
NOTE ABOUT FORWARD-LOOKING STATEMENTS   
NOTE ABOUT NON-GAAP FINANCIAL MEASURES   
GENERAL INFORMATION ABOUT THE ANNUAL MEETING AND PROXY STATEMENT   

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting

  
PROXY STATEMENT SUMMARY      1  
COMMITMENT TO BEST PRACTICES IN CORPORATE GOVERNANCE      2  

Corporate Governance Highlights

     2  

Corporate Governance Principles

     4  

Director Independence

     4  

Independent Lead Director

     4  

Independent Non-Management Director Meetings

     4  

Board Diversity

     5  

Board Evaluation and Assessment

     5  

Succession Planning

     6  

Oversight of Risk

     6  

Engagement by Management and our Board with our Stockholders

     7  

Standard of Ethics and Code of Corporate Conduct

     7  

Sustainability of our Business, Community and Environment

     8  

Director Compensation

     9  

Anti-Hedging/Anti-Pledging Policy

     10  

Related Person Transactions

     11  
PROPOSAL 1: ELECTION OF DIRECTORS      12  

Director Qualifications

     12  

Biographical and Qualifications Information of the Three Nominees for Election to the Board of Directors

     13  

Biographical and Qualifications Information of Other Directors

     15  

Director Skills and Experience Matrix

     20  

Director Nomination Process

     21  

Formal Director Onboarding Process

     21  

Director Attendance at Annual Meeting of Stockholders

     21  

Committees of the Board of Directors

     22  
PROPOSAL 2: APPROVAL OF AMENDMENT TO AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO DECLASSIFY THE BOARD OF DIRECTORS      23  
PROPOSAL 3: APPROVAL OF AMENDMENT TO AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO ELIMINATE THE SUPERMAJORITY VOTING PROVISIONS      24  
PROPOSAL 4: ADVISORY VOTE ON EXECUTIVE COMPENSATION      26  

A Letter from our Compensation Committee Chairman

     26  

Advisory Resolution to Approve Executive Compensation

     28  
ITEM    PAGE  

COMPENSATION DISCUSSION AND ANALYSIS

     29  

Executive Summary

     29  

2018 Chief Executive Officer Compensation Summary

     30  

Executive Compensation Principles

     31  

Appropriate Mix of Pay Components

     34  

2018 Executive Compensation Awards

     38  

Disciplined and Transparent Executive Compensation Practices

     41  
REPORT OF THE COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE      46  

EXECUTIVE COMPENSATION TABLES AND RELATED INFORMATION

     47  

2018 Summary Compensation Table

     47  

All other 2018 Compensation

     48  

Grants of Plan-Based Awards in 2018

     49  

Outstanding Equity Awards at 2018 Fiscal Year End

     50  

Option Exercises and Stock Vested in 2018

     51  

Pension Benefits

     52  

Non-Qualified Deferred Compensation

     53  

Potential Payments Upon Termination or Change in Control

     55  

CEO Pay Ratio

     57  

Stock Ownership of Directors and Executive Officers

     58  

Executive Officers

     59  

Security Ownership of Certain Beneficial Owners

     61  

Compensation Committee Independence; Compensation Committee Interlocks and Insider Participation

     62  
PROPOSAL 5: RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM      63  

Appointment of Grant Thornton as Independent Registered Public Accounting Firm for Fiscal Year 2019

     63  

Report of the Audit Committee

     63  

Audit Committee Financial Experts

     64  

Information Regarding Independent Registered Public Accounting Firm

     65  
APPENDICES   
A. PROPOSED AMENDMENT TO AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO DECLASSIFY THE BOARD OF DIRECTORS      A-1  
B. PROPOSED AMENDMENT TO AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO ELIMINATE THE SUPERMAJORITY VOTING PROVISIONS      B-1  
C. PEER GROUPS      C-1  
D. AUDIT COMMITTEE POLICIES AND PROCEDURES: PRE-APPROVAL OF SERVICES PROVIDED BY THE INDEPENDENT AUDITOR      D-1  
E. NON-GAAP FINANCIAL MEASURES      E-1  
F. QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING      F-1  
 

 

 


 

 

 

    


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NOTE ABOUT FORWARD-LOOKING STATEMENTS

Certain statements in this Proxy Statement, including statements in the Compensation Discussion and Analysis, (also referred to as CD&A) regarding anticipated financial, business, legal or other outcomes, including business and market conditions, outlook and other similar statements relating to Rayonier Advanced Materials’ future events, developments, or financial or operational performance or results, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements are identified by the use of words such as “may,” “will,” “should,” “expect,” “estimate,” “believe,” “intend,” “forecast,” “anticipate,” “guidance” and other similar language. However, the absence of these or similar words or expressions does not mean a statement is not forward-looking. While we believe these forward-looking statements are reasonable when made, forward-looking statements are not guarantees of future performance or events and undue reliance should not be placed on these statements. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance these expectations will be attained and it is possible actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks and uncertainties. A detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in Item 1A-Risk Factors in our Annual Report on Form 10-K for the year ended 2018.

NOTE ABOUT NON-GAAP FINANCIAL MEASURES

This document contains certain non-GAAP (as defined below) financial measures, including Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), Adjusted Net Income Per Share, Adjusted EBITDA, and Adjusted Free Cash Flows. These non-GAAP measures are reconciled to each of their respective most directly comparable U.S. Generally Accepted Accounting Principles (GAAP) financial measures in Appendix E.

We believe these non-GAAP measures provide useful information to our board of directors, management and investors regarding certain trends relating to our financial condition and results of operations. Our management uses these non-GAAP measures to compare our performance to that of prior periods for trend analyses, for purposes of determining management incentive compensation and for budgeting, forecasting and planning purposes.

We do not consider non-GAAP measures an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is they may exclude significant expense and income items that are required by GAAP to be recognized in our consolidated financial statements. In addition, they reflect the exercise of management’s judgment about which expense and income items are excluded or included in determining these non-GAAP financial measures. In order to compensate for these limitations, reconciliations of the non-GAAP financial measures we use to their most directly comparable GAAP measures are provided. Non-GAAP financial measures should not be relied upon, in whole or part, in evaluating the financial condition, results of operations or future prospects of the Company.

 


 

 

 

    


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General Information about this Proxy Statement and the Annual Meeting

2019 ANNUAL MEETING OF STOCKHOLDERS OF RAYONIER ADVANCED MATERIALS INC.

MONDAY, MAY 20, 2019

The 2019 Annual Meeting of Stockholders of Rayonier Advanced Materials Inc. (the Annual Meeting) will be held on May 20, 2019, for the purposes set forth in the accompanying Notice of 2019 Annual Meeting. This Proxy Statement and the accompanying proxy card are furnished in connection with the solicitation by the Board of Directors of proxies to be used at the meeting and at any adjournment of the meeting. We may refer to Rayonier Advanced Materials Inc. in this Proxy Statement as “we,” “us,” “our,” the “Company” or “Rayonier Advanced Materials.”

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting

We are utilizing Securities and Exchange Commission (the SEC) rules that allow companies to furnish proxy materials to stockholders via the Internet. If you received an Important Notice Regarding the Availability of Proxy Materials (the Internet Notice) by mail, you will not receive a printed copy of the proxy materials unless you specifically request one. The Internet Notice tells you how to access and review the Proxy Statement, form of proxy card and our 2019 Annual Report to Stockholders (the Annual Report), which includes our 2018 Annual Report on Form 10-K, as well as instructions for how to submit your proxy over the Internet. If you received the Internet Notice and would still like to receive a printed copy of our proxy materials, simply follow the instructions for requesting printed materials included in the Internet Notice.

The Internet Notice, these proxy solicitation materials and our Annual Report were first made available on the Internet and mailed to certain stockholders on or about April 8, 2019.

The Notice of 2019 Annual Meeting, this Proxy Statement and our Annual Report are available at www.ProxyVote.com.

Annual Report

A copy of our Annual Report, which includes the 2018 Annual Report on Form 10-K, is available on the Internet at www.proxyvote.com as set forth in the Internet Notice. However, we will send a copy of our 2018 Annual Report on Form 10-K (with financial statements but without exhibits) to any stockholder without charge upon written request addressed to:

Rayonier Advanced Materials Inc.

Investor Relations

1301 Riverplace Boulevard

Suite 2300

Jacksonville, Florida 32207, USA

Delivery Of Materials to Stockholders Sharing an Address

In addition to furnishing proxy materials over the Internet, the Company takes advantage of the SEC’s householding rules to reduce the delivery cost of materials. Under such rules, only one Internet Notice or, if paper copies are requested, only one Proxy Statement and Annual Report, will be delivered to multiple stockholders sharing an address unless the Company has received contrary instructions from one or more of the stockholders. If you are a stockholder who resides in the same household with another stockholder and you wish to receive a separate Proxy Statement and Annual Report or Notice of Internet Availability of Proxy Materials for each account, please contact Broadridge, toll free at 1-866-540-7095. You may also write to Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11717. Any stockholder making such request will promptly receive a separate copy of the proxy materials, and separate copies of all future proxy materials. Any stockholder currently sharing an address with another stockholder, but nonetheless receiving separate copies of the materials, may request delivery of a single copy in the future by contacting Broadridge Householding Department by telephone or mail as indicated above.

 


 

 

 

    


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Proxy Statement Summary

 

This summary highlights selected information that is provided in more detail throughout this Proxy Statement. This summary does not contain all of the information you should consider before voting, and you should read the entire Proxy Statement before casting your vote.

 

            

 

2019 ANNUAL MEETING INFORMATION

 

LOGO

 

 

LOGO

 

LOGO

  

Date & Time

May 20, 2019

4:00 p.m. local time

 

Location

DoubleTree Hotel

1201 Riverplace Boulevard

Jacksonville, Florida

 

Record Date

Record holders of our Common Stock as of March 22, 2019 are entitled to notice of, and to vote at, the Annual Meeting

  

Voting

Stockholders holding our Common Stock as of the close of business on the record date, which is the close of business on March 22, 2019 (Record Date), are entitled to vote. Each share of Common Stock is entitled to one vote for each matter to be voted upon.

 

Admission

To attend the Annual Meeting, you will need to bring (1) proof of ownership of Common Stock as of the record date and (2) a valid government-issued photo identification. If you do not have proof of ownership together with a valid picture identification, you will not be admitted to the meeting.

 

Admission to the Annual Meeting is limited to stockholders holding our Common Stock as of the record date and one immediate family member; one individual properly designated as a stockholder’s authorized proxy holder; or one qualified representative authorized to present a stockholder proposal properly before the meeting.

 

No cameras, recording equipment, large bags, briefcases, or packages will be permitted in the Annual Meeting. The Company may implement additional security procedures to ensure the safety of the meeting attendees.

 

Questions and Answers about the Annual Meeting can be found in Appendix F.

  

2018 HIGHLIGHTS

 

 

 

74%

increase to Adjusted Net Income per Share

 

        

 

 

$152 million

of Adjusted Free Cash Flows, a 134% increase

 

        

 

 

$28 million

in synergies from our Tembec acquisition, nearly double our 2018 target

 

        

 

 

$72 million

returned to stockholders through dividends and buybacks

 

PROPOSALS

 

MATTER

 

  

BOARD VOTE

RECOMMENDATION

 

  

PAGE REFERENCE
(FOR MORE DETAIL)

 

 

Proposal 1

  

 

Election of three Class II directors to terms expiring in 2022

  

 

FOR

each nominee

 

   12

 

 

Proposal 2

  

 

Approving an amendment to the Company’s Amended and Restated Certificate of Incorporation to declassify the Board of Directors

 

  

 

FOR

   23

 

Proposal 3

  

 

Approving an amendment to the Company’s Amended and Restated Certificate of Incorporation to eliminate the supermajority voting provisions

 

  

 

FOR

   24

 

Proposal 4

  

 

Approving, in a non-binding vote, the compensation of our named executive officers as disclosed in this Proxy Statement

 

  

 

FOR

   26

 

 

Proposal 5

  

 

Ratification of the appointment of Grant Thornton as our independent registered public accounting firm for 2019

 

  

 

FOR

   63

 

 


 

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Commitment to Best Practices in Corporate Governance

CORPORATE GOVERNANCE HIGHLIGHTS

Our Board of Directors (the Board) has implemented an effective corporate governance structure that allows our Board and management to focus primarily on the creation of long-term value for our stockholders while also considering the interests of our employees and the communities in which we do business. Supporting that philosophy, we have adopted many leading corporate governance practices, including:

 

STOCKHOLDER RIGHTS

Management Proposal to Declassify the Board of Directors

   Management has submitted a proposal to be voted on by stockholders at the 2019 Annual Meeting to declassify the Company’s Board of Directors.

Management Proposal to Eliminate Supermajority Voting Provisions

   Management has submitted a proposal to be voted on by stockholders at the 2019 Annual Meeting to eliminate supermajority voting provisions from the Company’s Amended and Restated Certificate of Incorporation in favor of a majority voting standard.

Single Voting Class

   All holders of Rayonier Advanced Materials Common Stock have the same voting rights - one vote per share of stock.

Majority Voting Standard for Director Elections

   Our Amended and Restated Bylaws mandate that directors be elected under a majority voting standard in uncontested elections. Each director must receive more votes “For” his or her election than votes “Against” in order to be elected.

Director Resignation

   Any incumbent nominee for director who does not receive the affirmative vote of a majority of the votes cast in any uncontested election must promptly offer to resign. The Nominating and Corporate Governance Committee (Nominating Committee) will make a recommendation on the offer and the Board must accept or reject the offer and publicly disclose its decision and rationale.

No Poison Pill

   We do not have a stockholder rights plan, also known as a poison pill, in place.

 


 

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COMMITMENT TO BEST PRACTICES IN CORPORATE GOVERNANCE     

 

 

 

BOARD COMPOSITION AND ACCOUNTABILITY

Independence

   Our Corporate Governance Principles (CGPs) require that not less than 75% of our directors must be independent. During 2018, 90% (nine of ten) of our directors were independent, and each of our Board committees consisted entirely of independent directors. See Director Independence section.

Diversity

   The composition of our Board represents a diverse and broad mix of skills, experience, knowledge and perspectives relevant to our business. We have two female directors on our Board. A summary of relevant director experience and qualifications can be found in the Director Qualifications section.

Independent Lead Director

   Our CGPs require an Independent Lead Director with specific responsibilities to ensure independent oversight of management whenever our CEO is also the Chair of the Board. See Independent Lead Director section.

Annual Management Succession Planning Review

   Our Board conducts an annual review of management development and succession planning for the CEO and Company senior leadership. See Management Succession Planning section.

Director Tenure

   Our CGPs provide that no director may be nominated for election following the director’s 74th birthday. In addition, a director is required to submit an offer of resignation for consideration by the Board upon any significant change in the director’s principal employment or personal circumstance that could adversely impact his or her reputation or the reputation of the Company. See Director Qualifications section.

Director Overboarding

Limits

   Our CGPs contain provisions to ensure that each of our directors is able to dedicate the meaningful amount of time and attention necessary to be a highly effective member of the Board. A director who is not serving as CEO of a public company may serve on no more than three public company boards (in addition to our Board) and a director serving as the CEO of a public company (including our CEO) may serve on no more than one other public company board (in addition to our Board). No director serving on the Company’s Audit Committee may also serve on the Audit Committee of more than two other public companies.

Mandatory Stock

Ownership

   Each of our directors is required to own Company stock totaling not less than the number of shares constituting the cash portion of his or her annual retainer for the previous five years. See Mandatory Stock Ownership section.

Limit on Equity Awards

   Our Incentive Stock Plan limits annual director equity awards. See Limit on Annual Equity Awards section.

 


 

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COMMITMENT TO BEST PRACTICES IN CORPORATE GOVERNANCE

 

 

CORPORATE GOVERNANCE PRINCIPLES

Our Board of Directors has adopted a set of Corporate Governance Principles (CGPs), which includes guidelines for determining director independence and consideration of potential director nominees. Our CGPs are found on the Company’s website at www.rayonieram.com. The Board, through its Nominating Committee, regularly reviews developments in corporate governance and best practices and modifies the CGPs, committee charters and key practices as necessary or desirable.

DIRECTOR INDEPENDENCE

The Company’s Common Stock is listed on the New York Stock Exchange (NYSE). In accordance with NYSE listing standards, the Board makes affirmative determinations annually as to the independence of each director and nominee for election as a director. To assist in making such determinations, the Board has adopted a set of Director Independence Standards which conform to or, in some cases, are more exacting than, the independence requirements set forth in the NYSE listing standards. Our Director Independence Standards are appended to the Company’s CGPs and are available at www.rayonieram.com. Based on our Director Independence Standards, the Board has affirmatively determined in its business judgment that all persons who have served as directors of our Company at any time since January 1, 2018, other than Mr. Boynton, are independent (i.e., nine of ten directors in 2018).

INDEPENDENT LEAD DIRECTOR

Our Independent Lead Director is nominated and elected to a two-year term by the other independent Board members. In 2018, the independent non-management Board members re-elected C. David Brown, II to a two-year term.

The Independent Lead Director has comprehensive, clearly delineated duties including:

 

LOGO

Presiding at all meetings of the Board at which the Chairman/CEO is not present, including executive sessions and separate meetings of the independent directors

 

LOGO

Serving as liaison between the Chairman/CEO and the independent directors

 

LOGO

Approving meeting agendas for the Board

 

LOGO

Approving information sent to the Board

 

LOGO

Approving meeting schedules to assure there is sufficient time for discussion of all agenda items

 

LOGO

Having the authority to call meetings of the independent directors

 

LOGO

If requested by major stockholders, ensuring he or she is available for consultation and direct communication

Paul Boynton has served as Chairman of the Board and CEO of the Company since June 2014. We believe that the appropriate leadership structure for our Company is to have a combined Chairman and CEO, and also an Independent Lead Director. The combined Chairman and CEO role provides unambiguous reporting lines for management and allows the Company to communicate to customers, suppliers, stockholders, employees and other stakeholders with a single, consistent and knowledgeable voice.

INDEPENDENT NON-MANAGEMENT DIRECTOR MEETINGS

Our independent non-management directors met separately (without the Chairman and CEO or any members of management) during six regularly scheduled meetings in 2018; these meetings were chaired by our Independent Lead Director. Independent non-management directors on our Board committees also have the opportunity to meet without management present at Board committee meetings.

 


 

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COMMITMENT TO BEST PRACTICES IN CORPORATE GOVERNANCE     

 

 

BOARD DIVERSITY

 

LOGO

Our Nominating Committee evaluates the specific personal and professional attributes of each director candidate versus those of the existing Board members to ensure diversity of competencies, experience, personal history and background, thought, skills and expertise across the full Board. While our Nominating Committee has not adopted a formal diversity policy in connection with the evaluation of director candidates or the selection of nominees, consideration is also given to diversity in terms of gender, ethnic background, age and other similar attributes that could contribute to Board perspective and effectiveness. The Nominating Committee also assesses diversity through its annual assessment of Board structure and composition and review of the annual Board and committee performance evaluations. The Nominating Committee and the Board believe that considering diversity is consistent with the goal of creating a Board that best serves the needs of the Company and the interests of its stockholders, and it is one of the many factors that they consider when identifying individuals for Board membership. In addition, we believe that diversity with respect to tenure is important to provide both fresh perspectives and deep experience and knowledge of the Company. Therefore, we aim to maintain an appropriate balance of tenure across our directors. In furtherance of the Board’s active role in Board succession planning, the Board has appointed three new directors since 2015. Our Board currently has two experienced, highly skilled female directors.

BOARD EVALUATION AND ASSESSMENT

Annual self-evaluation and assessment of Board performance helps ensure that the Board and its committees function effectively and in the best interest of our stockholders. This process also promotes good governance and helps set expectations about the relationship and interaction of the Board and management. The Board’s annual self-evaluation and assessment process, which is overseen by our Independent Lead Director, is structured and carried out as follows:

 

LOGO

The Nominating Committee reviews the prior year’s process of self-evaluation and assessment for the Board and Board committees, as well as current trends and best practices.

 

LOGO

Under the auspices of the Nominating Committee, the Corporate Secretary facilitates the process agreed upon by the Committee. In 2018, this process consisted of preparation of suggested general topics of discussion, which were disseminated to all directors, followed by confidential interviews of each Board member by the Corporate Secretary.

 

LOGO

The feedback generated from the interviews is summarized by the Corporate Secretary and shared with the Lead Director and Chairman.

 

LOGO

These results are then communicated in executive session to the full Board and each committee, as well as to individual directors, as appropriate, which fosters good discussion and consensus on actions to be undertaken.

 

LOGO

Changes to policies and practices, as warranted, are implemented as directed by the Board.

 


 

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COMMITMENT TO BEST PRACTICES IN CORPORATE GOVERNANCE

 

 

SUCCESSION PLANNING

One of the primary responsibilities of our Board is to ensure that the Company has a high-performing management team in place. Our full Board has responsibility for management succession planning. The Board manages the succession planning process and, on an annual basis, reviews and approves succession plans for the CEO and other senior executives. This detailed process is designed to maximize the pool of qualified internal candidates who can assume top management positions. To assist the Board, the CEO annually provides our Board with an assessment of senior managers and the potential of each manager to succeed to the CEO position. The CEO also provides the Board with an assessment of persons considered potential successors to senior management positions.

OVERSIGHT OF RISK

We have a robust risk assessment and mitigation process, overseen by our Board of Directors, which includes extensive interaction among our Board, CEO and members of senior management.

 

BOARD OF

DIRECTORS

 

        

ENTERPRISE RISK MANAGEMENT

COMMITTEE

 

        

AUDIT

COMMITTEE

 

        

COMPENSATION AND MANAGEMENT

DEVELOPMENT

COMMITTEE

 

       

The Board oversees risk management through a management-led assessment process that involves direct Board committee oversight. The Board annually appoints the members of the Enterprise Risk Management (ERM) Committee, which is chaired by the CEO, who also serves as the Company’s Chief Risk Officer. Senior executives of the Company are members of the ERM Committee.

 

 

 

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The ERM Committee appoints the members of business unit and staff function-level Risk Assessment and Mitigation teams, which continually identify and assess the risks facing their respective business or function and submit semi-annual reports to the ERM Committee. These reports form the basis of the ERM Committee’s annual risk assessment. This assessment is used to develop a list of enterprise-level material risks which are reported to the Audit Committee for review and evaluation of mitigation strategies.

 

 

 

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  The Audit Committee then assigns ongoing Board-level oversight responsibility for each material risk identified by the ERM Committee to either the full Board or the appropriate Board committee. Presentations and other communications regarding each risk are made periodically during the year.  

 

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  The ERM Committee’s annual risk assessment of the Company’s overall compensation policies and practices is presented to the Compensation and Management Development Committee.

 

 


 

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COMMITMENT TO BEST PRACTICES IN CORPORATE GOVERNANCE     

 

 

ENGAGEMENT BY MANAGEMENT AND OUR BOARD WITH OUR STOCKHOLDERS

 

      

 

>250

  

INVESTMENT COMMUNITY OUTREACH

Calls, meetings and other personal engagements

 

      
  
      

 

>50%

  

STOCKHOLDER ENGAGEMENT

Percentage of common stock reached through calls, meetings and other personal engagements

 

      
  
      

 

>90%

  

ANNUAL MEETING ENGAGEMENT

Percentage of common stock represented by vote at the 2018 Annual Meeting

 

      

To foster effective two-way communication with our stockholders, since our inception as a public company in 2014, we have maintained an active engagement and outreach program speaking and, in many cases, meeting with stockholders throughout each year. In 2018 we had more than 250 calls and meetings with investors and analysts, as well as discussions with leading proxy advisors who serve our investors. In addition, in 2018 we presented at five industry conferences, held nine road shows, and in March of 2019 held an Investor Day at the New York Stock Exchange, where investors and analysts heard presentations from our senior management about our business and strategy for future value creation. Additional information provided at our March 2019 Investor Day can be found on our website at www.rayonieram.com.

To continuously improve our stockholder communication and outreach, we review with our Board the key feedback from these meetings. Our directors carefully consider and evaluate this valuable information and modify our outreach programs to advance our stockholder engagement efforts.

Stockholders and other interested parties who would like to communicate with one or more members of the Board, a Board committee, the Independent Lead Director or the independent non-management directors as a group may do so by writing to any such party at Rayonier Advanced Materials Inc., c/o Corporate Secretary, 1301 Riverplace Boulevard, Suite 2300, Jacksonville, Florida 32207. All communications received will be forwarded to the intended or appropriate recipient.

STANDARD OF ETHICS AND CODE OF CORPORATE CONDUCT

The Company’s Standard of Ethics and Code of Corporate Conduct (code of conduct) is available on the Company’s website at www.rayonieram.com. Any waivers or amendments to the Code of Conduct will also be available on the Company’s website.

 


 

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COMMITMENT TO BEST PRACTICES IN CORPORATE GOVERNANCE

 

 

SUSTAINABILITY OF OUR BUSINESS, COMMUNITY AND ENVIRONMENT

Our sustainability programs start with compliance with laws and regulations. But we know that compliance is only the starting point, and that our employees, customers, investors and communities expect more. They expect us to be a responsible steward of the business. For us, stewardship means managing forests responsibly; mitigating the environmental impact of our plant operations; engaging with indigenous communities, other community stakeholders and our workforce to identify opportunities for continuous improvement; and driving best practices through the supply chain. Stewardship is at the heart of our sustainability practices.

To translate our ideals into action, our Board of Directors chartered the RYAM Sustainability Council. The Sustainability Council is comprised of members of our senior management who represent the diverse aspects of our operations and services. The Sustainability Council’s role is to identify and assess the sustainability issues that directly affect our business and the communities in which we operate.

As stakeholder expectations have changed through the years, our approach to sustainability has also evolved. We are committed to doing business the right way and, because we understand that sustainability is important to our stakeholders, we are committed to doing more to measure, report and communicate our performance and progress to meet their expectations. The 2017 acquisition of Tembec expanded our products and markets from our core strength in specialty cellulose to include lumber and paper-related products and provided an opportunity to refresh and refocus our sustainability objectives.

In 2018 the Sustainability Council embarked on a multi-year program to identify the sustainability issues most critical to our business and our stakeholders, recommend programs to advance the Company’s sustainability objectives, and identify the data we need to collect to measure and report our progress in identified areas. The Sustainability Council completed the assessment phase at year end 2018 and will make its policy and program recommendations to the Board in the first half of 2019.

Based on the 2018 assessment, the Sustainability Council will recommend three focus areas:

 

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Climate and Energy

 

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Talent and Diversity

 

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Community Engagement

 

 

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As part of its responsibility to understand and monitor all material risks to the Company’s business and operations, and to stay abreast of the issues important to our investors and other stakeholders, the Board reviews progress on the Sustainability Council’s work and on all environmental and social issues several times a year.

Additional information on our sustainability programs and objectives can be found on our website at www.rayonieram.com.

 


 

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COMMITMENT TO BEST PRACTICES IN CORPORATE GOVERNANCE     

 

 

DIRECTOR COMPENSATION

The Company uses a combination of cash and stock-based incentive compensation to attract and retain qualified candidates to serve on the Board. In setting director compensation, the Board considers the significant time commitment and the skills and experience level necessary for directors to fulfill their duties.

The Nominating Committee’s annual compensation review includes a periodic analysis of data, comparing the Company’s director compensation levels against a peer group of publicly held companies. Exequity, LLP (Exequity), the Board’s independent compensation consultant, provides the Nominating Committee with advice and recommendations on the composition of the peer group and competitive data used for benchmarking our director compensation program. The Nominating Committee uses the information provided by Exequity, as well as other trend data to reach an independent recommendation regarding compensation to be paid to our directors. The Nominating Committee’s recommendation is then provided to the full Board for review and final approval.

Our directors are subject to minimum stock ownership and time-based stock retention requirements, as discussed in the Mandatory Stock Ownership section below.

2018/2019 Cash Compensation

Non-management director compensation is set by the Board after considering the recommendation of the Nominating Committee. For the twelve-month 2018-2019 director compensation period, which ends with the May 20, 2019 Annual Stockholders Meeting, each non-management director receives the following cash compensation (which is prorated for partial year service):

 

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Annual cash retainer of $85,000, payable in equal quarterly installments

 

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Additional annual cash retainers for the chairs of the Audit, Compensation and Nominating Committees of $20,000, $15,000 and $10,000, respectively, payable in equal quarterly installments; and

 

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Additional annual cash retainer for the Independent Lead Director of $25,000, payable in equal quarterly installments

Annual Equity Awards

For the 2018-2019 period, on or about May 22, 2018, each non-management director received a restricted stock unit award equivalent to $105,000 based on grant date value (which is prorated for partial year service), to vest on May 22, 2019 if the director has not voluntarily left the Board prior to such date (other than due to the director’s death or disability or in the event of other extraordinary circumstances as determined by the Nominating Committee).

Dividends on the restricted stock unit award accrue in a separate account and are paid upon vesting, together with interest theron at a rate equal to the Prime Rate as reported in The Wall Street Journal, adjusted and compounded annually as of each December 31 (the Prime Rate).

Limit on Annual Equity Awards

Our Equity Incentive Plan caps annual equity awards to each director at not more than $300,000 per year. As described above, each Director’s annual equity award in the 2018-2019 period was valued at $105,000.

Cash Fees Deferral Plan

Directors may defer up to 100% of their cash compensation. Any deferred amounts are paid to the director in a single lump sum on the later of the date the director turns 74, the conclusion of the director’s term, or upon termination as a director, if prior to age 74. Any deferred amounts earn interest at a rate equal to the Prime Rate.

Mandatory Stock Ownership

Each of our directors is required to own Company stock totaling not less than the number of shares constituting the cash portion of his or her annual retainer for the previous five years. Information on stock ownership by our directors is provided in the CD&A.

 


 

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COMMITMENT TO BEST PRACTICES IN CORPORATE GOVERNANCE

 

 

2018 Director Compensation Table

The following table provides compensation information for the one-year period ended December 31, 2018 for all individuals serving on our Board of Directors at any time from January 1, 2018 until December 31, 2018.

 

NAME

   FEES EARNED
OR PAID IN
CASH ($)
   STOCK
AWARDS ($)(1)
   ALL OTHER
COMPENSATION ($)(2)
   TOTAL ($)

Charles E. Adair

    

 

96,875

    

 

105,013

    

 

2,058

    

 

203,946

DeLyle W. Bloomquist

    

 

82,500

    

 

105,013

    

 

2,058

    

 

189,571

Paul G. Boynton(3)

    

 

-  

    

 

-  

    

 

-  

    

 

-  

C. David Brown, II

    

 

105,625

    

 

105,013

    

 

2,058

    

 

212,696

Julie A. Dill

    

 

63,750

    

 

105,013

    

 

-  

    

 

168,763

Mark E. Gaumond

    

 

98,750

    

 

105,013

    

 

2,058

    

 

205,821

Matthew P. Hepler

    

 

63,750

    

 

105,013

    

 

-  

    

 

168,763

James F. Kirsch

    

 

81,875

    

 

105,013

    

 

2,058

    

 

188,946

Thomas I. Morgan

    

 

86,250

    

 

105,013

    

 

2,058

    

 

193,321

Lisa M. Palumbo

    

 

89,375

    

 

105,013

    

 

2,058

    

 

196,446

Ronald Townsend(4)

    

 

19,375

    

 

-  

    

 

2,058

    

 

21,433

 

(1)

Represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. A discussion of the assumptions used in calculating these values may be found in Note 15 Incentive Stock Plans included in the notes to financial statements in our 2018 Annual Report on Form 10-K. On May 22, 2018, each non-management director was granted a restricted stock unit award equivalent to $105,000 which, based on grant date value ($18.26), corresponded to 5,751 restricted stock units, for a total award of $105,013 after rounding (because the Company does not issue fractional shares for director equity awards).

 

(2)

Represents accrued dividends and interest on restricted stock awards during 2018.

 

(3)

Mr. Boynton, as an executive officer of the Company, was not compensated for service as a director. See the Summary Compensation Table for compensation information relating to Mr. Boynton during 2018.

 

(4)

Mr. Townsend retired from the Board on May 21, 2018.

ANTI-HEDGING/ANTI-PLEDGING POLICY

We have adopted a stringent anti-hedging and anti-pledging policy that applies to all (1) employees of the Company who are officers, (2) directors, and (3) immediate family members of employees who are officers and directors and other members of their households, as well as entities controlled by any of them. Under our policy, the Company may also designate, from time to time, in our discretion, other key employees to be subject to our anti-hedging policy.

The policy precludes all hedging or other offsetting of any potential decrease in the market value of the Company’s equity securities as well as pledging of Company securities. Although not limited to these specific types of transactions, under the Company’s policy the following are specifically prohibited:

 

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Short sales

 

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Trading in options

 

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Hedging transactions of all types, including the use of financial instruments such as prepaid variable forwards, equity swaps, collars and exchange funds

 

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Pledges of Company securities, such as collateral for margin loans or margin accounts

 

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Standing or limit orders, unless under a Rule 10b5-1 plan that meets all requirements of the Company’s applicable policy and is approved by the Company’s Corporate Secretary

 


 

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COMMITMENT TO BEST PRACTICES IN CORPORATE GOVERNANCE     

 

 

RELATED PERSON TRANSACTIONS

Our Board has adopted a written policy designed to minimize potential conflicts of interest in connection with Company transactions with related persons. Our policy defines a Related Person to include any director, executive officer or person owning more than five percent of the Company’s stock, any of their immediate family members and any entity with which any of the foregoing persons are employed or affiliated. A Related Person Transaction is defined as a transaction, arrangement or relationship in which the Company is a participant, the amount involved exceeds $120,000 and a Related Person has or will have a direct or indirect material interest.

To implement the policy, each year a Related Person list is compiled based on information obtained from our annual Director and Officer Questionnaires and, after review and consolidation by our Corporate Secretary, is provided to business unit, accounts payable, accounts receivable, financial, legal and communications managers and other persons responsible for purchasing or selling goods or services for the Company. Prior to entering into any transaction with a Related Person, the manager responsible for the potential transaction, or the Related Person, must provide notice to the Corporate Secretary setting out the facts and circumstances of the proposed transaction. If the Corporate Secretary determines the transaction would constitute a Related Person Transaction, it is then submitted for consideration by the Audit Committee, which will approve only those transactions determined to be in, or not inconsistent with, the best interests of the Company and its stockholders. In reviewing Related Person Transactions, the Audit Committee considers:

 

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The Related Person’s relationship to the Company and interest in any transaction with the Company

 

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The material terms of a transaction with the Company, including the type and amount

 

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The benefits to the Company of any proposed or actual transaction

 

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The availability of other sources of comparable products and services that are part of a transaction with the Company; and

 

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If applicable, the impact on a director’s independence

In the event we become aware of a completed or ongoing Related Person Transaction that has not been previously approved, it is promptly submitted to the Audit Committee for evaluation and, if deemed appropriate, ratification.

In addition, each year the persons and entities identified as Related Persons are matched against the Company’s accounts payable and accounts receivable records to determine whether any Related Person participated in a transaction with the Company, regardless of the amount involved. A report of all such transactions is prepared by the Corporate Secretary and reviewed with the Audit Committee to determine if any would constitute a Related Person Transaction under our policy or would require Proxy Statement disclosure under applicable SEC rules and regulations. After conclusion of this process, the Audit Committee did not identify any Related Person Transactions occurring in 2018 that would require Proxy Statement disclosure.

 


 

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PROPOSAL 1-ELECTION OF DIRECTORS

 

 

Proposal 1-Election of Directors

Our Board of Directors is responsible for establishing overall corporate policy and for overseeing management and the ultimate performance of the Company. Our Board reviews strategy and significant developments affecting the Company and acts on matters requiring Board approval. Our Board held 13 meetings during 2018 and each director attended at least 75% of the combined total of all (i) Board meetings and (ii) meetings of committees of the Board of which the director was a member during his or her tenure as a Board member.

Our Board currently consists of ten directors divided as evenly as possible into three classes (I, II and III) serving staggered three-year terms. Directors for each class will be voted on at the annual meeting of stockholders held in the year in which the term for that class expires, and after election, will serve for a term of three years. The terms of the Class II directors will expire at the 2019 Annual Meeting of Stockholders and such directors are nominees for election. The terms of the Class III directors will expire at the 2020 Annual Meeting of Stockholders, and the terms of the Class I directors are set to expire at the 2021 Annual Meeting of Stockholders.

Accordingly, stockholders are being asked to vote on the election of the three Class II directors, each to serve until the 2022 Annual Meeting of Stockholders (and their successors are duly elected and qualified). Each of the nominees has consented to stand for election. Our Board has no reason to believe any nominee will be unable to serve as a director. If, however, a nominee should be unable to serve at the time of the 2019 Annual Meeting of Stockholders, Common Stock properly represented by valid proxies will be voted for a substitute nominee nominated by the Board. Alternatively, our Board may either allow the vacancy to remain unfilled until an appropriate candidate is located or may reduce the authorized number of directors to eliminate the unfilled seat.

If any incumbent nominee for director should fail to receive the required affirmative vote of a majority of the votes cast with regard to his or her election, then under Delaware law (the Company’s state of incorporation) the director would remain in office as a holdover director until a successor is elected or the director resigns, retires or is otherwise removed. In such a situation, our CGPs require the director to tender his or her resignation to our Board. The Nominating Committee would then consider such resignation and make a recommendation to our Board as to whether to accept or decline the resignation. Our Board would then make a determination and publicly disclose its decision and rationale within 90 days after receipt of the tendered resignation.

DIRECTOR QUALIFICATIONS

We believe the members of our Board of Directors have an optimal mix of relevant and diverse experience, qualifications, attributes, and skills given the Company’s business, together with demonstrated integrity, judgment, leadership and collegiality, to effectively advise and oversee management in executing our strategy. There are no specific minimum qualifications for director nominees other than, as required by our CGPs, no director nominee may stand for election after he or she has reached the age of 74. In identifying and evaluating potential nominees, our Nominating Committee seeks individuals who have the experience, skills, knowledge, expertise and personal and professional integrity to be effective, in conjunction with our other Board members, in collectively serving the long-term interests of our stockholders. Criteria for Board membership are periodically evaluated by the Nominating Committee taking into account the Company’s strategy, objectives, markets, operations, regulatory environment and other relevant factors, as well as changes, if any, in applicable laws and NYSE listing standards.

The Nominating Committee believes that each of our directors has an established record of accomplishment in areas relevant to our business and objectives and possesses the characteristics identified in our CGPs as essential to a well-functioning and deliberative governing body, including integrity, independence and commitment.

Each of the directors listed below, including the three nominees for election, has experience as a senior executive and also is serving or has served as a director of one or more private or public companies and on a variety of board committees. As such, each has executive experience, as either or both a director or senior executive, in most, if

 


 

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PROPOSAL 1-ELECTION OF DIRECTORS     

 

 

not all, of the following areas, which are critical to the conduct of the Company’s business: strategy development and implementation; global operations; risk assessment and management; accounting and financial reporting; internal controls; capital markets and corporate finance; the evaluation, compensation, motivation and retention of senior executive talent; public policy as it impacts global industrial companies; compliance program oversight; and corporate governance. Many of the directors also bring insights into specific end-markets and geographic markets that are important to the Company. Our directors collectively provide a range of perspectives, experiences and competencies well-suited to providing advice and counsel to management and to overseeing the Company’s business and operations. See Director Skills and Experience Matrix.

A biography of each member of the Company’s Board of Directors, including the three nominees for election, is set forth below, along with a statement of each director’s qualifications to serve on the Board.

 

    

 

The Board of Directors recommends that you vote “for”    

each of the three nominees named below for election to    

the Board of Directors for a term to expire at the 2022    

Annual Meeting of Stockholders.    

 

    
  

BIOGRAPHICAL AND QUALIFICATIONS INFORMATION OF THE THREE NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS

Class II, Terms to Expire in 2022, if Re-elected

 

LOGO     C. DAVID BROWN, II   

AGE: 67

  

DIRECTOR SINCE: 2014

  Mr. Brown is currently a partner at Nelson Mullins Broad and Cassel, (a law firm based in Columbia, South Carolina). He is the former Chairman of Broad and Cassel (a law firm which was based in Orlando, Florida and merged with Nelson Mullins Riley & Scarborough in August 2018), a position he held from 2000 to 2018. Previously, he served as Managing Partner of Broad and Cassel’s Orlando office from 1990 to 2018. Mr. Brown serves on the Board of Directors of CVS Health Corporation and previously served as Vice Chairman of the Board of Orlando Health, a not-for-profit healthcare network. Mr. Brown formerly served as a director of Rayonier Inc. (November 2006 through June 2014), ITT Educational Services Inc. (April 2015 through September 2016), Old Florida National Bank, N.A. (January 2005 through February 2015), and as Chairman of the Board of Trustees for the University of Florida through January 2015. He holds bachelor’s and juris doctorate degrees from the University of Florida.   

EXPERIENCE:

Over a 41-year legal career, Mr. Brown has developed and demonstrated extensive expertise in public company corporate governance, strategy and finance, as well as extensive experience in structuring corporate transactions, both domestically and internationally. We believe his experience and expertise facilitate our Board’s oversight of our corporate strategy, capital structure and commercial transactions.

  

 


 

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PROPOSAL 1-ELECTION OF DIRECTORS

 

 

  
LOGO     THOMAS I. MORGAN   

AGE: 65

  

DIRECTOR SINCE: 2014

  Mr. Morgan is a Senior Advisor to AEA Investors LP (a New York private equity firm). He was formerly a partner and Lead Director of the Advisory Board of BPV Capital Management LLC (an investment manager of mutual funds) from April 2013 to May 2016. Mr. Morgan also served as the Chairman of Baker & Taylor, Inc. (a leading distributor of books, videos and music products to libraries, institutions and retailers) from July 2008 to January 2014, and served as the CEO from 2008 to 2012. Mr. Morgan also served as the CEO of Hughes Supply Inc. (a diversified wholesale distributor of construction, repair and maintenance-related products) from 2003 to 2006, as President from 2001 to 2006, and as Chief Operating Officer from 2001 to 2003. Previously, he served as CEO of Enfotrust Networks, LLC, Value America, Inc. and US Office Products Co. He also served for 22 years at Genuine Parts Company in positions of increasing responsibility from 1975 to 1997. Mr. Morgan has been a director of Tech Data Corporation since 2007. He formerly served as a director of ITT Educational Services, Inc. (January 2013 to September 2016), Rayonier Inc. (January 2012 to June 2014), Baker & Taylor, Inc. and Waste Management, Inc. Mr. Morgan holds a bachelor’s degree in Business Administration from the University of Tennessee.   

EXPERIENCE:

Mr. Morgan brings both public and private company leadership and public company CEO experience and a deep understanding of distribution and global supply chain management. As a result, we believe he is particularly well-suited to contribute to Board oversight of overall management and governance issues and our global high-purity cellulose business.

  
LOGO     LISA M. PALUMBO   

AGE: 61

  

DIRECTOR SINCE: 2014

  Ms. Palumbo served as the Senior Vice President, General Counsel and Secretary of Parsons Brinckerhoff Group Inc. (a global consulting firm providing planning, design, construction and program management services for critical infrastructure projects) from 2008 until her retirement in January 2015. Prior to that, Ms. Palumbo served as Senior Vice President, General Counsel and Secretary of EDO Corporation (a defense technology company) from 2002 to 2008. In 2001, Ms. Palumbo served as Senior Vice President, General Counsel and Secretary of Moore Corporation; from 1997 to 2001 she served as Vice President, General Counsel and Secretary of Rayonier Inc., and from 1987 to 1997 she served in positions of increasing responsibility, including Assistant General Counsel and Assistant Secretary for Avnet, Inc. (a global distributor of technology products). Ms. Palumbo holds bachelor’s and juris doctorate degrees from Rutgers University.   

EXPERIENCE:

With over 27 years of legal experience with international, public and private companies, Ms. Palumbo brings substantial expertise in the areas of law, corporate governance, enterprise risk management, health and safety and compliance. We believe this experience and expertise, together with her prior experience as the General Counsel of Rayonier Inc., uniquely qualify her to contribute to our Board regarding the Company’s business and to assist with our Board’s oversight of the Company’s risk management, legal and compliance responsibilities.

 


 

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PROPOSAL 1-ELECTION OF DIRECTORS     

 

 

BIOGRAPHICAL AND QUALIFICATIONS INFORMATION OF OTHER DIRECTORS

 

Class I, Terms to Expire in 2021

 

LOGO     CHARLES E. ADAIR   

AGE: 71

  

DIRECTOR SINCE: 2015

  Mr. Adair is the President of Kowaliga Capital, Inc., an investment company, since 1993. Mr. Adair previously worked for Durr-Fillauer Medical, Inc. where he served in various capacities including President and Chief Operating Officer from 1973 to 1992. Mr. Adair has served on the Board of Directors of Tech Data Corporation since 1995 and Torchmark Corporation since 2003. Mr. Adair also served on the Board of Directors of PSS World Medical, Inc. (PSS), from 2002 through February 2013, when PSS was acquired by McKesson Corp. Mr. Adair is a Certified Public Accountant (inactive) and holds a B.S. degree in Accounting from the University of Alabama.   

EXPERIENCE:

Mr. Adair brings significant experience in public company governance as a director, financial management and accounting, as well as extensive distribution and global supply chain expertise. As a result, we believe he is particularly well-suited to contribute to Board oversight of the Company’s governance and overall financial performance, auditing and its external auditors, and controls over financial reporting.

 

LOGO     JULIE A. DILL   

AGE: 59

  

DIRECTOR SINCE: 2018

  Ms. Dill most recently served as the Chief Communications Officer for Spectra Energy Corp. (Spectra) (which operated in three key areas of the natural gas industry: transmission and storage, distribution, and gathering and processing) from 2013 until Spectra’s merger with Enbridge, Inc. in February 2017. She previously served as the Group Vice President of Strategy for Spectra and the President and CEO of Spectra Energy Partners, LP from 2012 until 2013, and prior to that served as President of Union Gas Limited from 2007 until 2011. Previously, Ms. Dill served in various financial and operational roles with Duke Energy, Duke Energy International and Shell Oil Company. She serves on the Board of Directors of QEP Resources, Inc. and InterPipeline Ltd., on the advisory board of Centuri Construction Group and Southern Star Energy Inc. Ms. Dill is a member of the Advisory Council for the College of Business and Economics at New Mexico State University and sits on the Community Relations Committee of the Health System Board of Memorial Hermann Hospital. Previously, she sat on the board of directors of Spectra Energy Partners, LP from 2012 to February 2017. Ms. Dill holds a B.B.A. from New Mexico State University and graduated from the Harvard University Graduate School of Business Advanced Management Program.   

EXPERIENCE:

As a result of Ms. Dill’s experience as the President and CEO of a publicly-traded energy company, her strong financial background, investor relations and communications experience and her more than 35 years of experience in the energy industry, including in Canada, we believe she provides valuable insight and knowledge to our Board’s oversight of the Company’s internal operations, investor relations and communications strategies.

  

 


 

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PROPOSAL 1-ELECTION OF DIRECTORS

 

 

LOGO     JAMES F. KIRSCH   

AGE: 61

  

DIRECTOR SINCE: 2014

  Mr. Kirsch served as the Chairman, President and CEO of Ferro Corporation (a leading producer of specialty materials and chemicals) from 2006 to 2012. He joined Ferro in October 2004 as its President and Chief Operating Officer, was appointed CEO and Director in November 2005 and was elected Chairman in December 2006. Prior to that, from 2002 through 2004, he served as President of Quantum Composites, Inc. (a manufacturer of thermoset molding compounds, parts and sub-assemblies for the automotive, aerospace, electrical and HVAC industries). From 2000 through 2002, he served as President and director of Ballard Generation Systems, Inc. and Vice President for Ballard Power Systems Inc. in Burnaby, British Columbia, Canada. Mr. Kirsch began his career with The Dow Chemical Company, where he spent 19 years and held various positions of increasing responsibility, including global business director of Propylene Oxide and Derivatives and Global Vice President of Electrochemicals. He serves as a director of GCP Applied Technologies Inc., since October 2018. Mr. Kirsch formerly served as a director of Cleveland-Cliffs, Inc., formerly known as Cliffs Natural Resources, Inc. from March 2010 to August 2014 and as the Executive Chairman from January 2014 to August 2014. He is a graduate of The Ohio State University.   

EXPERIENCE:

Mr. Kirsch brings a wealth of senior management experience with major organizations with international operations, and has substantial experience in the areas of specialty materials and chemicals. As a former chairman, president and CEO of a NYSE-listed company, he brings considerable senior leadership experience to our Board and the committees thereof on which he serves.

 


 

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PROPOSAL 1-ELECTION OF DIRECTORS     

 

 

 

Class III, Terms to Expire in 2020

 

  
LOGO     DE LYLE W. BLOOMQUIST   

AGE: 60

  

DIRECTOR SINCE: 2014

  Mr. Bloomquist is currently a partner for Windrunner Management Advisors LLC (a management advisory services business). He retired in March 2015 as President, Global Chemical Business of Tata Chemicals Limited (an international inorganic chemical and fertilizer manufacturing company), a position he held since 2009. Previously, he served as President and Chief Executive Officer (CEO) of General Chemical Industrial Products Inc. (which was acquired by Tata Chemicals Limited in 2008) from 2004 to 2009. Prior to that, Mr. Bloomquist served at General Chemical Group Inc. in positions of increasing responsibility from 1991 to 2004, including Division Vice President and General Manager, Industrial Chemicals and Vice President and Chief Operating Officer. Mr. Bloomquist serves on the Board of Directors of Crystal Peak Minerals Inc. (f/k/a EPM Mining Ventures Inc.), Gran Colombia Gold Inc., Huber Engineered Materials, PDS Biotechnology Corporation (f/k/a Edge Therapeutics Inc.), Ciner Wyoming LLC and Scientia Vascular LLC. He is currently a partner for Ranch Estates LLC (a real estate developer). Mr. Bloomquist also served as a director of Vivos Therapeautics Inc., from April 2018 to March 2019, Costa Farms, Inc. from July 2016 to July 2017, a director of PDS Biotechnology Corporation from December 2014 to March 2019 and ANSAC from January 1998 to July 2009. He also serves on the Board of Business Advisors for the Tepper School of Business at Carnegie Mellon University, and on the Board of Advisors for Sonoran Capital. Mr. Bloomquist is a graduate of Brigham Young University and holds an MBA from Carnegie Mellon University.   

EXPERIENCE:

Mr. Bloomquist has over 25 years of domestic and international experience in the chemicals industry, including in the areas of finance, sales, logistics, operations, IT, strategy and business development, as well as CEO and other senior leadership experience. We believe Mr. Bloomquist’s depth and breadth of experience and expertise in the chemicals industry makes him particularly well-suited to assist our Board with operational and strategic decisions about the Company’s business.

  

 


 

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Table of Contents

 

PROPOSAL 1-ELECTION OF DIRECTORS

 

 

LOGO     PAUL G. BOYNTON   

AGE: 54

  

DIRECTOR SINCE: 2014

  Mr. Boynton is Chairman, President and CEO of the Company, a position he has held since June 2014. He previously held a number of positions of increasing responsibility with Rayonier Inc., including Senior Vice President, Performance Fibers from 2002 to 2008, Senior Vice President, Performance Fibers and Wood Products from 2008 to 2009, Executive Vice President, Forest Resources and Real Estate from 2009 to 2010, President and Chief Operating Officer from 2010 to 2011, President and CEO from January 2012 to May 2012 and Chairman, President and CEO from May 2012 to June 2014. Mr. Boynton joined Rayonier Inc. as Director, Specialty Pulp Marketing and Sales in 1999. Prior to joining Rayonier Inc., he held positions with 3M Corporation from 1990 to 1999, including as Global Brand Manager, 3M Home Care Division. Mr. Boynton has served on the Board of Directors of The Brink’s Company since 2010, and is a member of the Board of Governors and Executive Committee of the National Council for Air and Stream Improvement, a member of the Board of Directors of the National Association of Manufacturers and a member of the Board of Directors of the Federal Reserve Bank of Atlanta’s Jacksonville Branch. From 2012 until 2014 Mr. Boynton also served as a director of Rayonier Inc. He holds a bachelor’s degree in Mechanical Engineering from Iowa State University, an MBA from the University of Iowa and graduated from the Harvard University Graduate School of Business Advanced Management Program.   

EXPERIENCE:

As a result of Mr. Boynton’s service as the Company’s President and CEO, and his prior service as an officer and director of Rayonier Inc., he has developed valuable business, management and leadership experience, as well as extensive knowledge of the Company and long-standing relationships with its major customers. We believe this experience, together with his marketing and engineering background, make Mr. Boynton uniquely well-suited to help lead our Board’s considerations of strategic and operational decisions and manage the Company’s business.

 


 

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PROPOSAL 1-ELECTION OF DIRECTORS     

 

 

LOGO     MARK E. GAUMOND   

AGE: 68

  

DIRECTOR SINCE: 2014

 

Mr. Gaumond is the former Americas Senior Vice Chair – Markets of Ernst & Young (a global leader in assurance, tax, transaction and advisory services), a position he held from 2006 to 2010. Previously he served as Ernst & Young’s Managing Partner, San Francisco from 2003 to 2006 and as an audit partner on several major clients. Prior to joining Ernst & Young, Mr. Gaumond was a Managing Partner with Arthur Andersen from 1994 to 2002 and a partner in the firm’s audit practice from 1986 to 1994. Mr. Gaumond serves on the Boards of Directors of Booz Allen Hamilton Holding Corporation, First American Funds, Inc., the Fishers Island Development Corporation and the Walsh Park Benevolent Corporation. He formerly served as a director of Cleveland-Cliffs, Inc., formerly known as Cliffs Natural Resources, Inc. from July 2013 to September 2014, Rayonier Inc. from November 2010 to June 2014, and is a former trustee of the California Academy of Sciences. Mr. Gaumond holds a bachelor’s degree from Georgetown University, College of Arts and Sciences and an MBA from the Leonard N. Stern School of Business, New York University. In addition, Mr. Gaumond is a member of The American Institute of Certified Public Accountants.

 

  

EXPERIENCE:

Mr. Gaumond has 35 years of managerial, financial and accounting experience working extensively with senior management, audit committees and boards of directors of public companies. We believe Mr. Gaumond’s experience and financial expertise allow him to significantly contribute to our Board’s oversight of the Company’s overall financial performance, auditing and its external auditors, and controls over financial reporting.

LOGO     MATTHEW P. HEPLER   

AGE: 39

  

DIRECTOR SINCE: 2018

  Mr. Hepler is currently a Partner at Marcato Capital Management L.P. (Marcato), a registered investment adviser. Prior to joining Marcato in March 2016, Mr. Hepler was a partner at Red Mountain Capital Partners LLC, an investment firm, from March 2015 to December 2015, and was a Managing Director at Relational Investors LLC from 2008 until 2015 where he led the firm’s research team focusing on the industrials and materials sector. Prior to joining Relational Investors LLC in 2008, he spent six years as a Vice President in the investment banking division of Credit Suisse. Mr. Hepler began his career as an analyst in the technology investment banking group at Robertson Stephens. Mr. Hepler has served on the Board of Directors of Terex Corporation since February 2017. He holds a bachelor’s degree in economics from The Wharton School of Business at the University of Pennsylvania.   

EXPERIENCE:

Mr. Hepler has strong knowledge of the chemical industry, manufacturing, capital markets and investment community interests and strategies. He has experience executing value-enhancing initiatives through active engagement with portfolio companies in which his firms have invested. As a result, we believe Mr. Hepler provides insight and knowledge to the Board on matters of importance to many of the Company’s more significant stockholders.

 


 

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PROPOSAL 1-ELECTION OF DIRECTORS

 

 

DIRECTOR SKILLS AND EXPERIENCE MATRIX

The table below shows the skills and experience each director brings to our Board.

 

 

SKILLS/EXPERIENCE

  LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO

PUBLIC COMPANY CEO (CURRENT OR PAST)

          LOGO       LOGO           LOGO   LOGO    

OTHER PUBLIC COMPANY BOARD SERVICE

  LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO    

FINANCIAL REPORTING AND INTERNAL

CONTROLS

  LOGO   LOGO       LOGO   LOGO   LOGO       LOGO   LOGO    

CAPITAL MARKETS AND FINANCE

  LOGO   LOGO   LOGO   LOGO       LOGO       LOGO   LOGO    

INTERNATIONAL/GLOBAL TRADE

  LOGO   LOGO   LOGO       LOGO           LOGO   LOGO   LOGO

INVESTOR RELATIONS/

COMMUNICATIONS

 

         

LOGO

 

 

LOGO

 

 

LOGO

 

     

LOGO

 

           

FOREST PRODUCTS INDUSTRY

          LOGO   LOGO       LOGO           LOGO   LOGO

CHEMICAL INDUSTRY

      LOGO   LOGO               LOGO   LOGO        

MANUFACTURING/DISTRIBUTION

  LOGO   LOGO   LOGO       LOGO       LOGO   LOGO   LOGO   LOGO

GOVERNMENT/LEGAL/REGULATORY

              LOGO   LOGO                   LOGO

DIVERSITY

                  LOGO                   LOGO

 

 


 

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PROPOSAL 1-ELECTION OF DIRECTORS     

 

 

DIRECTOR NOMINATION PROCESS

Potential director candidates may come to the attention of the Nominating Committee through current directors, management, business leaders, stockholders and others. The Nominating Committee also has, from time to time, utilized independent third-party search firms to identify potential director candidates and may do so in the future. Our Nominating Committee will consider director nominees submitted by stockholders based on the same criteria used in evaluating candidates for Board membership identified from any other source. The directions for stockholders to submit director nominations for the 2020 Annual Meeting of Stockholders are set forth in Appendix F under When Are Stockholder Proposals for the 2020 Annual Meeting of Stockholders Due?

FORMAL DIRECTOR ONBOARDING PROCESS

Upon joining our Board, new directors receive a comprehensive orientation and formal onboarding process to facilitate their transition onto our Board. Our onboarding process familiarizes new directors with the Company’s businesses, strategic plans, governance program, Board policies, and the director’s responsibilities on assigned Board committees. New directors hold meetings with the Company’s senior leadership and key management team members to learn about the Company and its opportunities, challenges and risks, and participate in site visits to learn about our manufacturing, quality and supply chain operations. Based on feedback received, we believe this onboarding program, coupled with participation in regular Board and Board committee meetings, provides new directors with a strong foundation in our Company’s business and accelerates their ability to fully engage in Board discussions.

DIRECTOR ATTENDANCE AT ANNUAL MEETING OF STOCKHOLDERS

Directors are encouraged to attend each Annual Meeting of Stockholders. At the 2018 Annual Meeting of Stockholders, all directors were in attendance.

 


 

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PROPOSAL 1-ELECTION OF DIRECTORS

 

 

COMMITTEES OF THE BOARD OF DIRECTORS

Our Board of Directors has three standing committees, each of which operates under a written charter available in the Investor Relations section of the Company’s website at www.rayonieram.com.

 

   
AUDIT    NUMBER OF MEETINGS IN 2018: 10

 

This committee advises our Board concerning the capital structure of the Company and oversees our accounting and financial reporting policies, processes and systems, as well as our systems for internal control, including:

 

LOGO  overseeing financial reporting, controls and audit performance

LOGO  monitoring and oversight of the independence and performance of our independent registered public accounting firm, with responsibility for such firm’s selection, evaluation, compensation and, if applicable, discharge

LOGO  approving, in advance, all of the audit and non-audit services provided to the Company by the independent registered public accounting firm

LOGO  facilitating open communication among our Board, senior management, internal audit and the independent registered public accounting firm

LOGO  overseeing our enterprise risk management, cybersecurity, and legal compliance and ethics programs, including our Standard of Ethics and Code of Corporate Conduct

LOGO  overseeing financing and hedging activity

LOGO  overseeing our investment policies and financial performance of the assets invested in our pension and savings plans

 

  

 

MEMBERS:

Charles E. Adair, Chair

De Lyle W. Bloomquist

Julie A. Dill

Mark E. Gaumond

Matthew P. Hepler

James F. Kirsch

  
   
COMPENSATION AND MANAGEMENT DEVELOPMENT    NUMBER OF MEETINGS IN 2018: 5

 

This committee oversees the compensation and benefits of senior-level employees, including:

 

LOGO  evaluating senior management performance, succession planning and development matters

LOGO  establishing executive compensation

LOGO  reviewing and approving the Compensation Discussion and Analysis included in the annual Proxy Statement

LOGO  recommending compensation actions regarding our CEO for approval by non-management directors of our Board

LOGO  approving individual compensation actions for all senior executives other than our CEO (which is approved by the Board)

 

  

 

MEMBERS:

Mark E. Gaumond, Chair

De Lyle W. Bloomquist

C. David Brown, II

Julie A. Dill

Thomas I. Morgan

Lisa M. Palumbo

  
   
NOMINATING AND CORPORATE GOVERNANCE    NUMBER OF MEETINGS IN 2018: 4

 

This committee advises our Board with regard to Board structure, composition and governance, including:

 

LOGO  establishing criteria for Board nominees and identifying qualified individuals for nomination to become Board members, including engaging advisors to assist in the search process where appropriate, and considering potential nominees recommended by stockholders

LOGO  recommending the structure and composition of Board committees

LOGO  overseeing evaluation of Board and committee effectiveness

LOGO  recommending director compensation and benefits programs to our Board

LOGO  overseeing our corporate governance structure and practices, including our CGPs

LOGO  reviewing and approving changes to the charters of the other Board committees

 

  

 

MEMBERS:

Lisa M. Palumbo, Chair

Charles E. Adair

C. David Brown, II

Matthew P. Hepler

James F. Kirsch

Thomas I. Morgan

 


 

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PROPOSAL 2 – APPROVAL OF AMENDMENT TO AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO DECLASSIFY THE BOARD OF DIRECTORS

 

 

Proposal 2 – Approval of Amendment to Amended and Restated Certificate of Incorporation to Declassify the Board of Directors

The Company’s Amended and Restated Certificate of Incorporation (the Certificate of Incorporation) provides for a classified board of directors divided into three classes of directors, with each class elected for staggered three-year terms. This structure was put in place by the Company’s former parent company at the time of the spin-off of the Company in 2014, to provide the then-new Company with stability and continuity to deliberately develop and implement the best long-term, strategic course for the Company to create value.

Our Nominating and Corporate Governance Committee and Board frequently review the Company’s governance structure and practices. In late 2018, after considering the steps taken by the Company since the spin-off toward implementing the Company’s strategy, dialogue with our stockholders, current best governance practices and the advantages and disadvantages of declassification, our Board determined it is in the best interests of the Company and its stockholders to amend the Company’s Certificate of Incorporation and our Amended and Restated Bylaws (the Bylaws) to declassify the Board.

The proposed amendment to the Certificate of Incorporation would eliminate the classification of the Board over a three-year period beginning at the 2020 Annual Meeting of Stockholders, with directors each elected to a one-year term following the expiration of their existing terms, and provide for the annual election of all directors beginning at the 2022 Annual Meeting of Stockholders. This Proposal will not affect the existing terms of our directors, and the directors who are nominated for election at the 2019 Annual Meeting of Stockholders, will still be elected for three-year terms, even if the proposed amendment is approved.

The proposed amendment to the Certificate of Incorporation would become effective upon the filing of a Certificate of Amendment with the Secretary of State of the State of Delaware, which the Company would file promptly following the 2019 Annual Meeting of Stockholders, if our stockholders approve the proposed amendment. The proposed amendment would not change the present number of directors or the Board’s authority to change that number and to fill any vacancies or newly created directorships.

Delaware law provides, unless otherwise addressed in the certificate of incorporation, that members of a board that is classified may be removed only for cause. The proposed amendment would provide that once the Rayonier Advanced Materials Board is fully declassified as of the 2022 Annual Meeting of Stockholders, directors may be removed with or without cause.

The proposed amendment to the Certificate of Incorporation described in this proposal is attached to this Proxy Statement as Appendix A. The affirmative vote of the holders of not less than 80% of the outstanding shares of stock entitled to vote generally in the election of directors on the Record Date is required to approve this proposed amendment pursuant to the Certificate of Incorporation. If our stockholders approve the proposed amendment to the Certificate of Incorporation, the Board will make certain conforming changes to the Company’s Bylaws and CGPs.

 

    

 

The Board of Directors recommends that you
vote “
for” the management proposal to amend
the Certificate of Incorporation to declassify
the Board of Directors and allow for annual
elections of directors.

 

    
  

 


 

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PROPOSAL 3 – APPROVAL OF AMENDMENT TO AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO ELIMINATE THE SUPERMAJORITY VOTING PROVISIONS    

 

 

Proposal 3 – Approval of Amendment to Amended and Restated Certificate of Incorporation to Eliminate the Supermajority Voting Provisions

The Company’s Certificate of Incorporation and Bylaws each require the affirmative vote of shares representing not less than 80% of the Company’s outstanding shares of stock entitled to vote generally in the election of directors (a Supermajority Vote), to alter, amend or repeal certain provisions of those documents.

Specifically, Article XIII of the Certificate of Incorporation provides that any alteration, amendment, or repeal of, or the adoption of any provision inconsistent with, the following provisions of the Certificate of Incorporation, must be approved by a Supermajority Vote:

 

LOGO

Issuance of preferred stock (Section 3 of Article IV of the Certificate of Incorporation);

 

LOGO

Size, tenure, classes of directors, vacancies and director removal relating to the Board of Directors (Article VI);

 

LOGO

Stockholder action, including written consents and special meetings (Article VII);

 

LOGO

Indemnification of officers and directors (Article X); and

 

LOGO

Amendments to the Certificate of Incorporation to change the Supermajority Voting Requirements (Article XIII).

In addition, Section 9.1 of the Bylaws provides that any alteration, amendment, or repeal of, or the adoption of any provision inconsistent with the following provisions of the Bylaws, also must be approved by a Supermajority Vote:

 

LOGO

Special meetings of stockholders and written consents by stockholders (Article II, Sections 2.2 and 2.13, respectively)

 

LOGO

Board size and tenure, classes of directors, board vacancies, and director removal (Article III, Sections 3.2, 3.10 and 3.12, respectively)

 

LOGO

Indemnification of directors and officers (Article VI); and

 

LOGO

Amendments to the Bylaws (Article IX)

We refer to these requirements of the Certificate of Incorporation and Bylaws as the Supermajority Voting Provisions.

The Supermajority Voting Provisions were included in the Certificate of Incorporation and Bylaws by the Company’s former parent company at the time of the spin-off in 2014, to provide the then-new entity with stability and continuity to deliberately develop and implement the best long-term, strategic course for the Company and create value over the long term.

Our Nominating and Corporate Governance Committee and Board frequently review the Company’s governance structure and practices. In late 2018, after considering the steps taken by the Company since the spin-off toward implementing the Company’s strategy, dialogue with our stockholders, current best governance practices and the advantages and disadvantages of the Supermajority Voting Provisions, our Board determined it is in the best interests of the Company and its stockholders to amend the Company’s Certificate of Incorporation and Bylaws to modify those provisions. As such, the Board approved, and recommends that stockholders approve an amendment to the Certificate of Incorporation to remove the Supermajority Voting Provisions. If the amendment is approved, future proposed amendments to the Certificate of Incorporation provisions summarized above will not be subject to a Supermajority Vote and will instead require the affirmative vote of a majority of the Company’s outstanding shares of stock entitled to vote generally in the election of directors.

 


 

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PROPOSAL 3 – APPROVAL OF AMENDMENT TO AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO ELIMINATE THE SUPERMAJORITY VOTING PROVISIONS

 

 

The proposed amendment to the Certificate of Incorporation described in this proposal is attached to this proxy statement as Appendix B, which the Company would file promptly following the 2019 Annual Meeting if our stockholders approve the amendment. The affirmative vote of the holders of not less than 80% of the outstanding shares of stock entitled to vote generally in the election of directors on the Record Date is required to approve this proposal pursuant to the Certificate of Incorporation. If our stockholders approve the proposed amendment to the Certificate of Incorporation, the Board will make certain conforming changes to the Company’s Bylaws and CGPs.

 

    

 

The Board of Directors recommends that you vote “for” the management proposal
to amend the Certificate of Incorporation to eliminate supermajority voting provisions.

 

    
  

 


 

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PROPOSAL 4 – ADVISORY VOTE ON EXECUTIVE COMPENSATION    

 

 

Proposal 4 – Advisory Vote on Executive Compensation

A LETTER FROM OUR COMPENSATION COMMITTEE CHAIRMAN

On behalf of the Compensation and Management Development Committee (the Compensation Committee or the Committee), I am pleased to present an overview of the Company’s compensation programs and the performance-based pay for its Named Executive Officers (NEOs).

It is the responsibility of the Committee to ensure that the pay structure of the Company’s NEOs underpins the Company’s strategic goals and aligns the executives’ interests with those of our stockholders. When the value of the Company grows and stockholders benefit, management should, too. This has been the Committee’s guiding principle since the Company’s spin-off as a public company in 2014.

My colleagues and I oversee the compensation program, which has explicit performance criteria based on financial, operational and strategic goals, and we conduct a rigorous assessment of each NEO against these metrics. Importantly, these programs are not strictly formula-based; we have the discretion to adjust pay when performance is materially different from expectations, and we have done so in the past. In the 2018 executive compensation program, we reduced the overall bonus pool by 10% in light of lower-than-expected performance on safety matters.

The Committee ensures that as the Company’s business strategy and priorities change, key performance metrics and compensation-based targets are adjusted to reflect these changes. In 2018, we modified two elements of our long-term incentive compensation program to better align with our evolving business priorities. First, we added a three-year merger-synergy performance metric to the 2018 performance share equity program, reflecting the importance our Board places on the effective integration of the Tembec acquisition. Second, we changed the measurement period for Return on Invested Capital (ROIC), the key performance metric for our long-term incentive plan. We now use one three-year ROIC measure rather than aggregating three separate one-year ROIC periods to form a three-year view of ROIC performance. The Committee believes both of these changes will better support long-term value creation for our stockholders.

While tying performance to value creation is our key objective, we also believe that attracting, motivating and retaining outstanding people is crucial to the Company’s long-term success. Having an appropriate balance among base pay, annual cash incentive and long-term equity awards helps us achieve this goal. We also monitor the competitive environment and benchmark the Company’s pay practices against appropriate peer groups that reflect the markets in which the Company operates and competes for talent.

The Committee’s executive compensation decisions reflect the Company’s solid business results in 2018. The notable achievements were:

 

LOGO

Adjusted EBITDA of $364 million(1)

 

LOGO

Adjusted Free Cash Flows of $152 million(1)

 

LOGO

Adjusted Net Income per share increase of 74%, to $1.69(1)

 

LOGO

ROIC of 12.6%, driven by increased operating profit, strong free cash flows and disciplined capital allocation

 

LOGO

Successful integration of Tembec: achieved $28 million in synergies in our first year of ownership, nearly double the original $15 million target

 

LOGO

Successful completion of the Company’s four-year Cost Transformation program: achieved $25 million of savings during the year, to reach our announced four-year objective of $140 million

 

(1) 

Reconciliations of GAAP to non-GAAP financial measures are provided in Appendix E.

 


 

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PROPOSAL 4 – ADVISORY VOTE ON EXECUTIVE COMPENSATION

 

 

The Compensation Discussion and Analysis set forth in the following pages includes information relevant to your Say-on-Pay vote. It describes our pay-for-performance framework and compensation philosophy and discusses how our executive compensation is aligned with the Company’s performance and with your interests as our stockholders. We encourage you to read this CD&A carefully.

We currently hold our advisory vote to approve the compensation of our NEOs annually. Stockholders have an opportunity to cast an advisory vote on the frequency of Say-on-Pay votes at least every six years, and the next advisory vote on frequency will be at our 2021 Annual Meeting of Stockholders.

We appreciate and carefully listen to the constructive feedback we receive from our stockholders, which provides the Committee with valuable insights. We welcome your thoughtful comments and, as we have in the past, will take them into consideration as we determine future compensation arrangements for the Company’s executives.

 

LOGO

MARK E. GAUMOND

Chair

Compensation and Management Development Committee

 

 


 

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PROPOSAL 4 – ADVISORY VOTE ON EXECUTIVE COMPENSATION

 

 

ADVISORY RESOLUTION TO APPROVE EXECUTIVE COMPENSATION

As required by Section 14A of the Securities Exchange Act of 1934, as amended, this proposal seeks a stockholder advisory vote to approve the compensation of our NEOs pursuant to Item 402 of Regulation S-K through the following resolution:

Resolved, that stockholders approve, on an advisory basis, the Company’s compensation of its Named Executive Officers as discussed and disclosed in the Compensation Discussion and Analysis, the compensation tables, and any related material contained in the Proxy Statement for this meeting.

Because this is an advisory vote, it will not be binding upon the Board of Directors. However, the Compensation and Management Development Committee will take into account the outcome of the vote when considering future executive compensation arrangements.

 

    

 

The Board of Directors recommends that you vote “for” this advisory resolution to approve the compensation of our Named Executive Officers (NEOs) as disclosed in this Proxy Statement.

 

    
  

 


 

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Compensation Discussion and Analysis

EXECUTIVE SUMMARY

The Company’s executive compensation programs, policies and practices are designed to achieve the following goals:

 

LOGO

Align executive compensation with our stockholders’ interests

 

LOGO

Attract, motivate and retain key executive talent

 

LOGO

Reward strong business and individual performance

 

LOGO

Maintain an appropriate mix of base pay, annual cash incentive and long-term equity awards to incentivize focus on creation of long-term value for our stockholders

Best Practices in Compensation

 

What We Do

 

 

What We Don’t Do

 

 

ü  Heavy emphasis on at-risk performance-based compensation; 70% of each annual long-term incentive grant vests based on performance metrics

 

 

ü  Rigorous stock ownership guidelines

 

 

ü  Clawback provisions in equity plan

 

 

ü  Independent compensation consultant reporting to the Compensation and Management Development Committee of the Board

 

 

ü  Risk assessment performed annually

 

 

×  No single trigger change-in-control (CIC) cash payments or equity acceleration

 

 

 

×  No tax gross-ups

 

 

×  No option or other equity award repricing

 

 

×  No hedging or pledging of Company securities by executives

 

 

 

×  No NEO employment agreements

 

 

×  No significant perquisites

 

A Year of Solid Results and Strategic Achievements

In 2018, the Company reported solid financial results and made significant progress on its strategic objectives. These accomplishments were achieved despite a very challenging economic environment, characterized by weakening prices in certain key product lines, tariffs on some of our products, and slowing demand from China, one of our principal markets.

During the year, the management team achieved significant increases in Adjusted EBITDA and Adjusted Free Cash Flows (reconciliations of GAAP to non-GAAP financial measures are provided in Appendix E), driven by execution of our Four Strategic Pillars. In particular, our successful Cost Transformation initiative, integration of the 2017 Tembec acquisition, and completion of the $140 million cost-reduction program begun in 2015 after the spin-off contributed to our solid financial performance in 2018.

The Company also continued its disciplined capital-allocation strategy in 2018, reducing its debt by $45 million, making $37 million of strategic investments in its facilities, and returning $72 million to stockholders through dividends and stock repurchases.

 


 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

2018 CHIEF EXECUTIVE OFFICER COMPENSATION SUMMARY

The Compensation Committee awarded our CEO, Paul Boynton, the following compensation based on the Company’s 2018 performance as compared to its financial and strategic goals.

 

     

2017

$

    

2018

$

 

Base Salary

     951,000        988,750  

Annual Cash Incentive

     1,325,000        1,451,000  

Equity Incentive (at target)

     2,800,000        3,100,000  

Tembec Integration Equity Incentive (at target) split 70% PSUs and 30% RSUs

     -          3,100,000  

Total 2018 Compensation Decisions

     5,076,000        8,639,750  

One-time retention award granted in 2014 and paid in 2018, as described below.

     -          4,587,529  

Mr. Boynton has been CEO of the Company since it was formed in 2014, and the majority of his compensation has been pay-at-risk. In 2018 approximately 88% of his total direct compensation at target was performance-based. This included a special equity incentive grant the Board awarded Mr. Boynton for achieving the critical goal of integrating the Tembec acquisition, as described on page 39.

In the view of the Board, the compensation for Mr. Boynton appropriately recognizes his valuable contributions to the Company’s performance in 2018. Under his leadership, the Company:

 

LOGO

Delivered a dramatic improvement in Adjusted Net Income per share of 74% to $1.69, as well as significant increases in Adjusted Free Cash Flows and Adjusted EBITDA(1)

 

LOGO

Successfully completed its four-year $140 million Cost Transformation program

 

LOGO

Integrated the operations of Tembec, achieving first-year acquisition synergies of $28 million, nearly double our $15 million target

 

LOGO

Invested $37 million in Company facilities

 

LOGO

Returned $72 million to stockholders through stock repurchases and dividends

 

LOGO

Paid down $45 million in debt

In August 2018, Mr. Boynton received a one-time cash payment pursuant to the retention agreement executed at the time of the Company’s spin-off in 2014. That agreement awarded Mr. Boynton a $4.6 million cash payment so long as he continued to be employed with the Company through August 2018. Additional information regarding this retention agreement can be found on page 40.

 

  

 

(1) 

Reconciliations of GAAP to non-GAAP financial measures are provided in Appendix E.

 


 

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Table of Contents

 

COMPENSATION DISCUSSION AND ANALYSIS

 

 

EXECUTIVE COMPENSATION PRINCIPLES

Our executive compensation program is based on the principle of pay for performance, under which a substantial majority of an executive’s pay is tied to achieving specific and measurable annual and long-term objectives. This enables us to attract, motivate and retain exceptional leaders who can develop and achieve short- and long-term business objectives that we believe will create sustained stockholder value over time. The Compensation Committee regularly assesses our compensation program and practices to ensure they support these principles. Active dialogue with stockholders is also an important part of this process.

Alignment with Stockholders’ Interests

The alignment of executive pay and stockholders’ interests is at the core of our compensation philosophy. We use long-term equity grants to reward strong business performance that demonstrably increases stockholder value. NEO compensation is tied directly to how well our executives execute the Company’s business strategy. In determining executive compensation, we carefully consider progress against our Four Strategic Pillars: Cost Transformation, Market Optimization, New Products and Investments. The chart on the following page demonstrates how execution of the Company’s business strategy directly impacts compensation of our NEOs.

 

 

Key Terms Used in this CD&A

 

We use certain key terms throughout this CD&A. The following provides a brief description of what these terms mean:

 

LOGOAnnual Cash Incentive Program refers to the annual cash incentive program that we generally establish at the beginning of each year. Under this program, our eligible employees, including our NEOs, can earn cash incentives based on performance during the year. When we use the term cash incentive award, we are referring to cash awards paid under our 2018 Annual Cash Incentive Program.

 

LOGOThe term Equity Incentive Program generally refers to equity awards granted on an annual basis under our Rayonier Advanced Materials Inc. 2017 Incentive Stock Plan, which we sometimes refer to as our Equity Incentive Plan.

 

LOGO  When we use the term performance metrics, objectives or goals, we are referring to pre-established performance goals, which may be based on financial, strategic or individual performance objectives, that must be reached under our Annual Cash Incentive Program and our performance share awards in order to earn any bonus or shares of Company stock with respect to these awards.

 

LOGO  The terms target, threshold and maximum are defined on page 36.

 

 
 
   

 


 

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Table of Contents

 

COMPENSATION DISCUSSION AND ANALYSIS

 

 

 

Business Strategy and Compensation

 

LOGO

Pay for performance and alignment of our executives’ interests with those of the stockholders have been the foundation of our compensation philosophy since our spin-off. A look at executive compensation outcomes over the past four years demonstrates our adherence to these principles.

The chart on the following page illustrates the link between our NEOs’ annual cash incentive payments over the past four years and the achievement of annual Adjusted EBITDA and Adjusted Free Cash Flows financial objectives.

 

 

(1) 

See page 37 for definition of ROIC.

 


 

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Table of Contents

 

COMPENSATION DISCUSSION AND ANALYSIS

 

 

Annual Cash Incentive and Financial Performance

 

 

LOGO

Our compensation program recognizes the importance of creating stockholder value, and we also link our long-term equity incentives to achieving a strong Total Shareholder Return (TSR) relative to a list of 49 publicly traded peer companies selected by the Compensation Committee. The list of peer companies for this TSR measurement is provided in Appendix C. The following table shows PSUs awarded to the NEOs in previous equity incentive programs based on the achievement of ROIC goals and adjusted for TSR. When TSR performance was below threshold, no payout of performance shares occurred (2014 Plan); when TSR was at or below the 25th percentile, the payout was reduced by 25% (2015 Plan); and when TSR was at or above the 75th percentile, the payout was increased by 25% (2016 Plan). Final payouts are shown below as a percentage of the target award and as a dollar amount reflecting the fair market value at vesting.

Performance Share Unit Payouts, by Plan Year

 

     

PERFORMANCE
OUTCOME

(% OF

TARGET)

     TSR
PERCENTILE
RANK
    TSR
ADJUSTMENT
(%)
     FINAL PAYOUT  
   % OF
TARGET
     VALUE
($MM)
 

2014 Program

  

 

0

 

  

 

5

th 

 
 

 

-100

 

  

 

0

 

  

 

0

 

2015 Program

  

 

200

 

  

 

19

th 

 
 

 

-25

 

  

 

150

 

  

 

5.63

 

2016 Program

  

 

200

 

  

 

75

th 

 
 

 

+25

 

  

 

250

 

  

 

22.13

 

2017 Program

  

 

Program currently in progress

 

2018 Program

  

 

Program currently in progress

 

 


 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

Competitive Compensation Levels

We are mindful of the competitive global environment in which we operate, and we set target compensation at a level comparable to that being offered to individuals in similar positions at companies with which we compete for talent. We focus on both a small group of comparable companies in the specialty chemical industry and a larger group of mid-size industrial companies with whom we compete for talent in executive, operations, finance, human resources, sales, marketing and technology roles. (See Appendix C for list of peer group companies.) When benchmarking, we use the median of our peer groups as a reference for comparing total compensation for our NEOs.

Active Stockholder Engagement

Active engagement with stockholders helps shape our compensation policies and decisions. Based on feedback we heard from investors, we took several actions related to our compensation program for 2018 and 2019. These actions and resulting changes are summarized in the table below.

 

STOCKHOLDER
FEEDBACK

   CHANGE    RATIONALE    PROGRAM YEAR
IMPLEMENTED

Long-term incentive plan ROIC measure

   From three one-year measurement periods, to one aggregate three-year measurement period    Measure return results over a longer period    2018

Peer group composition

   None: Affirmation of appropriateness of existing groups    Per stockholders’ request, commissioned independent consultant assessment of peer group appropriateness    Ongoing

Annual cash incentive plan metrics weightings

   Increased target Adjusted EBITDA and Adjusted Free Cash Flows weightings on core high-purity cellulose results    Ensure greater emphasis on core high-purity cellulose business    2019

APPROPRIATE MIX OF PAY COMPONENTS

We use an appropriate mix of fixed and variable pay elements for NEO compensation. The principal elements of executive pay include a fixed base salary, a variable short-term annual bonus payable in cash, and a variable long-term equity incentive program that consists primarily of PSUs, together with time-based RSUs.

 


 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

The Elements of Executive Pay

 

PAY ELEMENT

   TYPE    DESCRIPTION    VESTING   

PERFORMANCE

METRICS – 2018

Fixed

                   

Base Salary

   Cash   

Provide a fixed, competitive salary relative to similar positions at other companies to attract and retain executive talent

 

   N.A.    N.A.

Variable

                   

Annual

Cash Incentive

   Cash   

Short-term incentive program to focus executives on achieving annual financial and strategic objectives that drive stockholder value

 

   N.A.   

80% Financial goals (Adjusted EBITDA,

Adjusted Free Cash Flows)

20% Strategic goals

Equity Incentive

Program

   Equity   

Long-term incentive program to drive execution of financial goals that generate long-term stockholder value and support executive retention;

Awards are 70% PSUs, 30% RSUs

  

PSUs: 3 years, based on financial performance

RSUs: 3 years, cliff vest, subject to continued employment in good standing

   ROIC, and a three-year synergy target, with overall results adjusted based on TSR

In keeping with our pay-for-performance philosophy, a substantial portion of the compensation for our NEOs is variable. The illustration below shows the components of their total direct compensation, which consists of annual base salary, and annual target cash incentive opportunity and equity incentive awards, each measured at target.

Assuming payouts at target, the component of total direct compensation in 2018 that is variable is 88% for our CEO and averages 72% for our other NEOs.

 

CEO Compensation(1)    Other NEOs’ Average Compensation
LOGO    LOGO

 

(1) 

Does not include the one-time 2014 retention award paid in 2018. Additional information regarding this retention award can be found on page 40.

 


 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

Base Salary

Each of our NEOs has a competitive fixed annual base salary. Every year the Compensation Committee reviews NEO base salaries to determine appropriate adjustments, if any. In making adjustments to base salary levels, the Compensation Committee considers:

 

LOGO

Budgeted levels for annual salary based on benchmarking of competitors for talent

 

LOGO

The executive’s level of responsibility

 

LOGO

The executive’s experience and breadth of knowledge

 

LOGO

The executive’s annual performance review

 

LOGO

The executive’s role in management continuity and development plans

 

LOGO

The perceived retention risk

Variable Compensation

 

 

Performance Metrics for Determining Variable Compensation

 

We use the terms target, threshold and maximum to describe the levels of performance that must be met to earn specified payout amounts under our Annual Cash Incentive Program and our Equity Incentive Program.

 

LOGOTarget refers to the amount an employee would earn if the applicable performance metrics were achieved at a level consistent with those set by the Compensation Committee and approved by the full Board.

 

LOGOThreshold refers to the minimum amount an employee would earn under the applicable program/award for performance achievement at no lower than a specified level below our target.

 

LOGOMaximum refers to the maximum amount an employee would earn under the applicable program/award for performance achievement at or above a specified level above our target.

 

 
 
   

Annual Cash Incentive Program

The Annual Cash Incentive Program provides our NEOs the opportunity to earn a performance-based annual cash incentive.

Target annual cash incentive opportunities are expressed as a percentage of base salary and established based on the NEO’s level of responsibility and ability to affect overall results. The Compensation Committee also considers market data in setting target award percentages.

Threshold, target and maximum cash incentive award opportunities for 2018 as a percentage of base salary are presented below.

 

NEO

   THRESHOLD AWARD     TARGET AWARD     MAXIMUM AWARD  

Paul G. Boynton

     16.0     100     200

Frank A. Ruperto

     9.8     61     122

Michael R. Herman

     9.8     61     122

William R. Manzer

     8.2     51     102

James L. Posze, Jr.

     8.2     51     102

 


 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

80% of an individual NEO’s annual cash incentive award is based on the achievement of financial metrics set in the annual operating budget, and 20% is based on the achievement of annually established strategic objectives.

The financial metrics used to set annual cash incentive targets are levels of Adjusted EBITDA and Adjusted Free Cash Flows measured against the annual budget approved by the Board of Directors. The Compensation Committee selected these financial metrics because it believes they are currently the most important indicators of the true performance of the Company’s business as well as critical drivers of value.

The Compensation Committee also reviews progress toward achievement of strategic objectives under our Four Strategic Pillars: Cost Reduction, Market Optimization, New Products, and Investments. Progress on objectives such as safety, continuous improvement, innovation and customer focus do not contribute toward the cash incentive calculation, but if not achieved, can have a negative impact on cash incentive. For example, in the past two years the Committee has reduced the total annual cash incentive pool between 10 and 19 percentage points because of lower-than-expected progress on safety, which is one of management’s non-financial strategic objectives.

Separate from performance relating to the financial metrics and strategic objectives, the Compensation Committee may also exercise its judgment to increase an individual NEO’s cash incentive award by up to 30% or decrease the award by up to 100% to reflect performance against individual objectives.

Long-Term Incentives: Equity Awards

Our NEOs are eligible to receive equity awards under programs established under the Company’s Equity Incentive Plan. These awards may take the form of PSUs, time-based RSUs, or options, among other forms of securities. (See Appendix A to the Company’s 2018 Proxy Statement, filed with the SEC on April 6, 2018, for a copy of this plan.) In 2018, equity awards were in the form of PSUs and time-based RSUs. Our time-based RSUs are subject to three-year cliff vesting and continued employment at the close of the three-year period. The Compensation Committee believes these time-based RSU awards are an important retention tool, given the fully at-risk nature of the PSUs. The PSUs vest following the end of the three-year performance period based on the achievement of performance metrics established by the Compensation Committee, and are paid contingent upon continued employment.

The performance metrics for the 2018 long-term equity incentive plan are ROIC(1) , a three-year merger-integration synergy target, and TSR. ROIC is the preferred metric to reflect longer term growth in value, given the capital-intensive nature of our business and because investment, both internal and external, is a core pillar of our growth strategy. In 2018, as a result of discussions with investors, the Compensation Committee changed the performance metric to use a three-year ROIC rather than the aggregation of three one-year periods, which had been the metric used for the 2015, 2016, and 2017 grants. The merger-synergy objective was added for only the 2018 program because the Board believes that the effective integration of Tembec is critical to advance the Company’s strategy.

We use TSR as a secondary metric to adjust equity awards upward or downward, consistent with our aim of ensuring executive compensation aligns executives’ and stockholders’ interests. After calculating equity incentive awards based on the financial metrics, the Compensation Committee looks at our three-year TSR relative to those of our peer-group companies. If our TSR is below the 25th percentile of the peer groups, the equity award is decreased by 25%. If the relative TSR is above the 75th percentile of the peer group, the award is increased by 25%. And if the relative TSR is between the 25th and 75th percentile of the peer group, we make no adjustment to the calculated equity award.

 

 

(1)

ROIC = NOPAT / [Debt – Cash + Stockholder Equity (Deficit) – Deferred tax asset associated with Tembec Net Operating Losses]. Note that:

  a.

NOPAT = (Operating profit after taxes less excluded items) x (1-estimated cash tax rate of 10.0%)

  b.

Net Operating Losses are a result of deferred tax losses acquired with the acquisition of Tembec Inc.

 


 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

2018 EXECUTIVE COMPENSATION AWARDS

The Compensation Committee approved the following compensation awards for our NEOs for 2018 based on each individual’s achievements and the Company’s performance against its financial and strategic objectives.

2018 Summary Compensation

 

      SALARY
($)
     ANNUAL
CASH
INCENTIVE
($)
     EQUITY
INCENTIVES
($)(1)
     2018 TOTAL
($)
     2017 TOTAL
($)
 

Paul G. Boynton

  

 

988,750

 

  

 

1,451,000

 

  

 

6,697,650

 

  

 

9,137,400

 

  

 

5,395,589

 

Frank A. Ruperto

  

 

455,000

 

  

 

410,000

 

  

 

1,890,471

 

  

 

2,755,471

 

  

 

1,777,727

 

Michael R. Herman

  

 

402,500

 

  

 

360,000

 

  

 

594,164

 

  

 

1,356,664

 

  

 

1,427,408

 

William R. Manzer

  

 

377,500

 

  

 

320,100

 

  

 

540,156

 

  

 

1,237,756

 

  

 

958,152

 

James L. Posze, Jr.

  

 

324,500

 

  

 

250,000

 

  

 

432,137

 

  

 

1,006,637

 

  

 

896,799

 

 

(1)

PSU and RSU awards based on the fair market value at the time of grant. Actual value to be realized by our NEOs will depend on the number of PSUs that vest and our market price at the time of vesting.

Base Salary

The base salaries for our NEOs are benchmarked against peers (see Appendix C) each year, and any adjustments are effective on July 1. In 2018, base salary adjustments were made for our NEOs to ensure that their pay levels were competitive in the marketplace. The Compensation Committee approved the following annual base salaries:

 

      BASE SALARY ($) 2017    BASE SALARY ($) 2018

Paul G. Boynton

    

 

975,000

    

 

1,005,000

Frank A. Ruperto

    

 

445,000

    

 

465,000

Michael R. Herman

    

 

395,000

    

 

410,000

William R. Manzer

    

 

365,000

    

 

390,000

James L. Posze, Jr.

    

 

314,000

    

 

335,000

Messrs. Manzer and Posze were given above-average adjustments to better position them relative to market benchmarks that presented to the Compensation Committee by its independent compensation consultant, Exequity.

Annual Cash Incentive

In 2018, as shown in the table below, the Company exceeded the financial performance goals established by the Compensation Committee for Adjusted EBITDA and Adjusted Free Cash Flows. Combined, these two financial goals account for 80% of the annual cash incentive award, and the outperformance on these metrics resulted in a potential cash incentive payout at 138.9% of target.

 

METRIC

   2018 TARGET ($MM)(1)    2018 ACTUAL ($MM)

Adjusted EBITDA

    

 

311

    

 

344

(2)

 

Adjusted Free Cash Flows

    

 

125

    

 


169


(3)


 

 

(1)

Threshold is established at 85% of target number and maximum is established at 120% of target. Actual performance and results are interpolated in between.

(2)

Does not include about $20 million of currency Fluxuation-related EBITDA, for purposes of 2018 cash incentive calculation.

 

(3)

Includes $17 million of proceeds from sale of the Company’s Resins business that were included for 2018 cash incentive purposes.

 


 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

The remaining 20% of the annual cash incentive pool is determined by progress against strategic goals.

During 2018, key strategic objectives were achieved. The Company made important advances in creating a unified culture through the achievement of our One Company-One Team goals: all employees are now fully aligned with and focused on executing our Four Strategic Pillars strategy.

This strategic achievement resulted in a contribution of 21.5% to the annual cash incentive payout, for a total possible payout opportunity of 160.4% of target (combined financial and strategic performance). However, in light of the safety performance in 2018, the Compensation Committee exercised its discretion and reduced the overall cash incentive pool by 10%, which resulted in actual cash incentive award payouts of 144.4% of target.

The cash incentive awards for each NEO are shown in the table below.

 

      FINANCIAL
OBJECTIVES
($)
     STRATEGIC
OBJECTIVES
($)
     DISCRETIONARY
ADJUSTMENT
($)
    INDIVIDUAL
ADJUSTMENT
    TOTAL
BONUS
PAID ($)
 

Paul G. Boynton

  

 

1,290,000

 

  

 

322,000

 

  

 

(161,000

 

 

0

 

 

 

1,451,000

 

Frank A. Ruperto

  

 

364,000

 

  

 

91,000

 

  

 

(45,000

 

 

0

 

 

 

410,000

 

Michael R. Herman

  

 

320,000

 

  

 

80,000

 

  

 

(40,000

 

 

0

 

 

 

360,000

 

William R. Manzer

  

 

259,000

 

  

 

64,000

 

  

 

(32,000

 

 

+10

 

 

320,100

 

James L. Posze, Jr.

  

 

222,000

 

  

 

56,000

 

  

 

(28,000

 

 

0

 

 

 

250,000

 

The Compensation Committee may also adjust an individual NEO’s cash incentive award to reflect their performance against personal objectives. Mr. Manzer was recognized for the significant progress his organization made in the integration of Tembec.

Equity Incentive Program Awards in 2018

Each NEO is eligible to receive long-term equity awards that are earned and vest based on the Company’s long-term financial performance, consistent with our pay-for-performance philosophy. 70% of an executive’s equity award is in the form of PSUs, and 30% is in the form of time-based RSUs.

The following table shows the target Equity Incentive Program award values granted for 2018 for each NEO.

 

 

     2018      2017  
     

PSU
VALUE ($)(1)

    

RSU
VALUE ($)(1)

     TOTAL
TARGET
VALUE ($)
     TOTAL
TARGET
VALUE ($)
 

Paul G. Boynton

     4,340,000        1,860,000        6,200,000        2,800,000  

Frank A. Ruperto

     1,225,000        525,000        1,750,000        900,000  

Michael R. Herman

     385,000        165,000        550,000        700,000  

William R. Manzer

     350,000        150,000        500,000        400,000  

James L. Posze, Jr.

     280,000        120,000        400,000        375,000  

 

(1)

The number of PSUs and RSUs were determined based on the average closing stock price for the ten trading days prior to March 1, 2018.

 

The 2018 equity incentive grants for each of Messrs. Boynton and Ruperto include a special incentive element intended to align our CEO and CFO with the critical goal of integrating the Tembec acquisition. The amount of the incentive-related grants equal $3.1 million for Mr. Boynton and $.75 million for Mr. Ruperto. The Compensation Committee elected to add these amounts to their annual equity incentive grants, rather than through separate agreements. Mr. Herman’s award was reduced to better align his long-term incentive compensation with the market; the reduction in no way reflects upon his performance or contributions to the Company.

 


 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

Payout of Previously Awarded Performance Share Units

At the end of 2018, the three-year performance measurement period for PSUs awarded in 2016 concluded. The payout for these awards is measured based on pre-established levels of ROIC over the three-year period as shown in the following table:

 

      2016    2017    2018

Threshold

   6.7%    2.8%    2.3%

Target

   > 8.9%, but < 9.4%    > 5.2%, but < 6.1%    > 4.7%, but < 6.2%

Maximum

   11.6%    8.4%    8.6%

Actual ROIC Achieved

   13.3%    9.4%    12.6%

Based on the Company’s ROIC of 12.6% in 2018, 9.4% in 2017 and 13.3% in 2016, the 2016 PSUs were earned at 200% of target, the maximum under the program. The three-year cumulative TSR of 28.5 % was in the 75th percentile of our peer group, resulting in a 25% increase in the 2016 award to 250% of target.

The PSUs awarded in 2017 were earned at 200% based on the ROIC of 12.6% achieved in 2018 for the second year of the three-year performance measurement period, which will conclude at the end of 2019. These awards will be paid in March 2020. The final number of shares awarded will be adjusted based on the cumulative three-year TSR at the end of the measurement period in 2019.

Spin-Off Retention Agreement

On May 27, 2014, the Board of Directors of our former parent company approved a retention agreement with Mr. Boynton in his capacity as President and CEO to ensure necessary management continuity of the newly formed Company. The agreement provided Mr. Boynton with a $4 million retention award payable subject to his continued employment with the Company through August 31, 2018. The original agreement provided that the award would be payable in shares of Common Stock, plus dividend equivalents and interest thereon.

However, based on fluctuations in the Company’s share price, in 2015 the Compensation Committee recommended, and the Board approved, amending the agreement to provide the award be payable solely in cash. As a result, in 2018 Mr. Boynton received a one-time cash payment of $4.6 million, which included the $4 million retention award plus $0.6 million in interest based on a fixed interest rate of 3.25%. The interest rate was fixed to aid in predictability of the expense.

 


 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

DISCIPLINED AND TRANSPARENT EXECUTIVE COMPENSATION PRACTICES

Compensation Responsibilities and Process

The Compensation Committee has responsibility for establishing our compensation principles, monitoring executive performance, and approving executive compensation levels and programs, as detailed below.

 

COMPENSATION COMMITTEE RESPONSIBILITIES    TIMING
Review and approve compensation levels for all our executive officers   

Annually

Review and approve all compensation-related programs for executive officers   

LOGO February, Annual Cash Incentive payments

LOGO May, base/Annual Cash Incentive relative to market

LOGO December, Equity Incentive awards for March

Establish annual performance objectives for the CEO   

Annually, in January

Evaluate CEO accomplishments and performance   

Regular meetings and prior year’s performance review conducted in February

Makes recommendations on CEO base salary for approval by the independent members of our Board   

Annually, in May

Ensure all major considerations relating to compensation, including metrics used to set compensation targets and awards, are appropriately evaluated, and that compensation and benefit programs are properly designed, implemented and monitored   

Regular meetings throughout the year, with special meetings held as needed to address matters outside the normal compensation cycle

Confer with external compensation and outside counsel for compensation-related advice and benchmarking   

Routinely

The Compensation Committee invites members of management to attend meetings as the Committee deems necessary to discuss and report on issues within their specific areas of expertise or responsibility. While the CEO recommends other NEOs’ compensation levels to the Compensation Committee for its consideration and approval, the CEO does not participate in the deliberations of the Compensation Committee or the Board regarding his own compensation.

The Compensation Committee has engaged Exequity to provide advice, relevant market and benchmarking data and information relating to best practices to consider when making compensation decisions. The Compensation Committee has assessed the independence of Exequity against the specific criteria under applicable SEC and NYSE rules and determined, in its business judgment, that Exequity is independent and no conflict of interest is raised by Exequity’s work for the Compensation Committee.

 

 

In 2018, in response to investor feedback the Compensation Committee engaged our independent compensation consultant to help us assess the appropriateness of the metrics we use to determine equity incentive awards. After a thorough review of our long-term equity incentive program and those of our peer-group companies, our external compensation consultant and the Compensation Committee concluded that ROIC and TSR were still the most appropriate indicators of long-term value creation for our Company given our business portfolio and competitive environment. The Compensation Committee did, however, change the measurement period for the ROIC metric to one aggregate three-year period instead of three one-year periods (see page 37).

 

 
 
   

 

 


 

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Table of Contents

 

COMPENSATION DISCUSSION AND ANALYSIS

 

 

Benchmarking to Compensation Peer Groups

Skilled executive-level talent is essential to our success, and we compete with global companies in many industries for top people. The Compensation Committee studies market norms across the specialty chemicals industry, as well as the standards within the broader community of general industry U.S. manufacturing companies to assess and understand the competitive environment.

Consistent with our commitment to competitive pay practices, we generally expect our base salaries, annual cash incentive target opportunities and equity incentive program target award opportunities to be at or near the 50th percentile for the applicable positions, as measured against our chosen peer groups. However, variations from this benchmark may occur based on various facts and circumstances relating to the individual’s expertise and experience, his or her contributions and the competitive market for his or her skill set. For 2018, base salary and annual cash incentive and equity incentive program target award opportunities for our NEOs were consistent with these general parameters. The Compensation Committee does not establish any individual executive’s compensation level to any specific peer group benchmark.

In evaluating 2018 overall compensation levels for senior executives, the Compensation Committee reviewed prevailing base salary, annual cash incentive and equity incentive program compensation levels among 749 comparably sized, publicly-traded manufacturing companies from across general industry using a regression analysis methodology to define median compensation elements. These companies have annual revenue of between $1 billion and $6 billion. The Compensation Committee’s reliance on this benchmark community when assessing senior officer pay ensures its compensation decisions reflect the standards in effect both within the principal industry in which the Company operates and across the broader labor market in which the Company competes for high-level executive talent.

 

 

In response to investor questions, in 2018 our Compensation Committee engaged our independent compensation consultant to conduct a thorough assessment of the size and composition of our peer groups for compensation benchmarking purposes. The Compensation Committee concluded that the companies within each peer group were still the most appropriate companies against which to benchmark our executive compensation, given our business portfolio and competitive environment. (See Appendix C for a list of companies within each peer group.)

 

 
 
   

Stock Ownership and Retention Requirements

We believe that meaningful stock ownership further focuses the senior management team on the long-term success of our business and aligns the interests of our management team with those of our stockholders. All executives at the Vice President level and higher are subject to rigorous stock ownership guidelines that require them, within five years after taking such position, to acquire and hold our stock with a value equal to a designated multiple of their base salary as follows:

 

TITLE

   MULTIPLE OF BASE SALARY  

Chairman, President & CEO

  

 

6x

 

Executive Vice President

  

 

3x

 

Chief Financial Officer

  

 

3x

 

Senior Vice President

  

 

2x

 

Vice President

  

 

1x

 

Prior to satisfying the ownership requirement, executives are subject to retention requirements that prohibit them from selling any of our stock, other than stock withheld or sold to satisfy taxes in connection with the vesting of a stock-based award or stock option exercise. The types of securities that count toward satisfaction of the

 


 

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ownership requirements include common stock, restricted stock, restricted stock units and vested options, but exclude performance shares, unvested options and preferred stock.

Each year the Compensation Committee reviews each executive’s progress toward meeting the guidelines, and has determined that each of our executive officers is in compliance with all of our stock ownership and retention guidelines.

Clawback Policy

In addition to the clawback provisions in our Equity Incentive Plan and the Non-Equity Incentive Plan, which provide that any clawbacks shall be determined at the discretion of the Compensation Committee, each year our NEOs sign a Supplemental Agreement in connection with their respective awards describing the types of detrimental conduct that will trigger a clawback. Specific detrimental conduct includes: committing an illegal act, including but not limited to embezzlement or misappropriation of Company funds, and willful failure to comply with the material policies and procedures of the Company as determined by the Compensation Committee.

Risk Assessment

We undertake a thorough risk assessment of our compensation programs annually. The first phase of the assessment is an analysis by the Company’s human resources compensation function, which is reviewed with the Company’s Enterprise Risk Management (ERM) Committee, staffed by members of senior management. The review includes the individual programs and potential and probable risks, along with mitigation efforts established to reduce or eliminate these risks. The results of the ERM assessment are then presented to the Compensation Committee for their review and approval. Based on its assessment of our compensation programs for our employees and executives for 2018, the Compensation Committee determined that our compensation programs and practices do not motivate behavior that is reasonably likely to have a material adverse impact on the Company.

Severance and Change in Control Benefits

Executive Severance Pay Plan-Change in Control

As with all publicly traded companies, it is possible that our Company could face a change in control (CIC) and our business and stockholder value could be negatively affected by the uncertainty created by such a situation. To reduce such potential negative effects, encourage executive retention, and foster the continued attention and dedication of senior executives even in the case of threat, rumor or occurrence of a change in control, the Compensation Committee established the Executive Severance Pay Plan, as amended, otherwise known as the Change in Control Plan (CIC Severance Plan). The intent is to align executive and stockholder interests by enabling executives to consider corporate transactions that may be in the best interests of stockholders and other constituents without undue concern over whether a transaction would jeopardize the executives’ employment or significantly disrupt or change the culture or environment of their employment.

The CIC Severance Plan achieves these objectives by providing benefits to our NEOs and other eligible executives designated by the Compensation Committee, in the event of a CIC. Under the plan, if the executive is involuntarily terminated (other than for cause or due to death or disability) or terminates his or her employment for good reason (as defined in the CIC Severance Plan) within 24 months of the CIC, he or she will be entitled to enhanced severance benefits, which depend on the executive’s status and level of responsibility.

The CIC Severance Plan does not provide any tax gross-up protection for our NEOs. It includes a net best provision pursuant to which a participant is entitled to the greater of (i) full CIC severance benefits with the participant responsible for payment of the excise tax, or (ii) a capped benefit, with the CIC severance benefits reduced to an amount just below the threshold for triggering the excise tax. In addition, the plan provides that outstanding stock options, time-based restricted stock and RSU awards will not automatically vest upon a CIC, but instead will vest upon the participant’s involuntary termination of employment by the Company (other than for cause or due to

 


 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

death or disability) or termination for good reason occurring within two years following a change in control transaction. Under the CIC Severance Plan, performance shares or PSUs that remain outstanding upon a qualifying termination will vest at target if the performance period is not more than 50% complete at the time of such termination; if the performance period is more than 50% complete at the time of the qualifying termination, outstanding performance shares or PSUs will vest at the greater of target or actual performance achievement through the time of such termination as determined pursuant to CIC Severance Plan terms.

The Compensation Committee reviews the CIC Severance Plan annually and has discretion to terminate or amend the Plan, or include or exclude any executive, including any NEO, at any time prior to a CIC.

Executive Severance Non-Change in Control Plan

Our Executive Severance Non-Change in Control Plan (Non-CIC Severance Plan) provides enhanced severance benefits to all salaried employees at the level of vice-president (or their internal equivalent) and above, including the NEOs, in the event their employment is terminated other than for cause or other non-qualifying terminations defined in the plan. Benefits may range from nine months to 24 months of severance, and the level of benefits depends on the executive’s status and level of responsibility. In the event of an executive termination triggered by a change in control, the executive would receive severance benefits only under the CIC Severance Plan.

The potential payments and other benefits under the CIC Severance Plan and the Non-CIC Severance Plan are calculated in the Potential Payments Upon Termination or Change in Control table on page 55. Such potential payments do not affect the Compensation Committee’s decisions regarding executive compensation, including base salary, annual bonus and long-term incentive award levels.

Retirement Benefits

Our Compensation Committee has adopted each of the tax-qualified pension and 401(k) plans and non-qualified excess pension and excess savings/deferred compensation plans described below. Our Compensation Committee undertakes an annual, comprehensive review of these plans, to determine if any modifications are necessary or appropriate in light of current trends and best practices, the nature of our business and competitive factors.

We place great value on the long-term commitment that many of our employees and NEOs have made to the Company and wish to incentivize our employees to remain with the Company and focus on building sustainable value over the long term. Therefore, we have determined that it is appropriate to provide employees with competitive retirement benefits as part of their overall compensation package.

We maintain the following plans and programs to provide retirement benefits to the NEOs:

 

LOGO

The Rayonier Advanced Materials Inc. Investment and Savings Plan for Salaried Employees (401(k) Plan)

 

LOGO

The Rayonier Advanced Materials Inc. Excess Savings and Deferred Compensation Plan (Excess Savings and Deferred Compensation Plan)

 

LOGO

The Retirement Plan for Salaried Employees of Rayonier Advanced Materials Inc. (the Retirement Plan) for those employees hired before January 1, 2006

 

LOGO

The Rayonier Advanced Materials Inc. Excess Benefit Plan (Excess Retirement Plan) for employees hired before January 1, 2006

 

LOGO

The Rayonier Advanced Materials Inc. Salaried Pre-65 Retiree Medical Plan (the Pre-65 Retiree Medical Plan) for those employees hired before January 1, 2006

For additional information regarding our Excess Savings and Deferred Compensation Plan, see the discussion following the Nonqualified Deferred Compensation table beginning on page 53.

 

 


 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

Consistent with the predecessor plans at our former parent company, which were closed to new employees on January 1, 2006, our Retirement Plan, Excess Retirement Plan and the Pre-65 Retiree Medical Plan are closed to any new participants. Therefore, only two of our NEOs, Messrs. Boynton and Herman, are participants in these plans. For additional information regarding our Retirement Plan and Excess Retirement Plan, see the discussion following the Pension Benefits table beginning on page 52.

The Pre-65 Retiree Medical Plan benefit is extended on an equivalent basis to all eligible retirees.

These programs are generally not considered in setting the level of key elements of compensation for the NEOs.

Limited Perquisites

We provide our NEOs with limited perquisites, which are reviewed annually by our Compensation Committee. Under our perquisites program, in addition to personal benefits that are available broadly to our employees, our NEOs are eligible to participate in two programs.

 

LOGO

Executive Physical Program-Each executive-level employee is encouraged to have a physical examination every other year until age 50, and every year after 50.

 

LOGO

Senior Executive Tax and Financial Planning Program-This program provides reimbursement to senior executives, including our NEOs, for expenses incurred for financial and estate planning and for preparation of annual income tax returns. Reimbursements are taxable to the recipient and are not grossed-up for tax purposes. The annual reimbursement limit for 2018 was $25,000 for Mr. Boynton and $10,000 for all other participants.

The total cost to the Company of these programs for 2018 was $75,053. We do not provide company cars; pay car allowances, personal club membership dues, or home-security expenses; or provide chartered aircraft for personal use.

 


 

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REPORT OF THE COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE

The Compensation and Management Development Committee of the Rayonier Advanced Materials Inc. Board of Directors has reviewed and discussed the Compensation Discussion and Analysis as required by Item 402(b) of SEC Regulation S-K with management and, based on such review and discussions, the Compensation and Management Development Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement, which is incorporated by reference into the Company’s 2018 Annual Report on Form 10-K filed with the SEC.

The Compensation and Management Development Committee

Mark E. Gaumond, Chair

De Lyle W. Bloomquist    

C. David Brown, II    

Julie A. Dill

Thomas I. Morgan    

Lisa M. Palumbo

 


 

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Table of Contents

 

EXECUTIVE COMPENSATION TABLES AND RELATED INFORMATION

 

 

EXECUTIVE COMPENSATION TABLES AND RELATED INFORMATION

2018 Summary Compensation Table

 

NAME AND PRINCIPAL

POSITION

 

 

YEAR

 

 

SALARY
($)

 

 

BONUS
($)(3)

 

 

STOCK
AWARDS
($)(1)(2)

 

 

OPTION
AWARDS
($)(1)

 

 

NON-EQUITY
INCENTIVE PLAN
COMPENSATION
($)(3)

 

 

CHANGE IN
PENSION VALUE
AND
NON-QUALIFIED
DEFERRED
COMPENSATION
EARNINGS ($)(4)

 

 

ALL OTHER
COMPENSATION
($)(5)

 

 

TOTAL

($)

 

 

Paul G. Boynton

Chairman, President and

Chief Executive Officer

   

 

 

 

 

2018

 

 

 

   

 

 

 

 

988,750

 

 

 

   

 

 

 

 

4,587,529

 

 

 

   

 

 

 

 

6,697,650

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

1,451,000

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

90,170

 

 

 

   

 

 

 

 

13,815,099

 

 

 

   

 

 

 

 

2017

 

 

 

   

 

 

 

 

951,000

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

3,119,589

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

1,325,000

 

 

 

   

 

 

 

 

2,477,194

 

 

 

   

 

 

 

 

99,224

 

 

 

   

 

 

 

 

7,972,007

 

 

 

   

 

 

 

 

2016

 

 

 

   

 

 

 

 

927,000

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

2,999,793

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

1,715,000

 

 

 

   

 

 

 

 

1,439,992

 

 

 

   

 

 

 

 

77,779

 

 

 

   

 

 

 

 

7,159,564

 

 

 

 

Frank A. Ruperto

Chief Financial Officer and

Senior Vice President,

Finance and Strategy

   

 

 

 

 

2018

 

 

 

   

 

 

 

 

455,000

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

1,890,471

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

410,000

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

45,322

 

 

 

   

 

 

 

 

2,800,793

 

 

 

   

 

 

 

 

2017

 

 

 

   

 

 

 

 

430,000

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

1,002,727

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

345,000

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

48,751

 

 

 

   

 

 

 

 

1,826,478

 

 

 

   

 

 

 

 

2016

 

 

 

   

 

 

 

 

415,000

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

1,074,624

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

470,000

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

258,307

 

 

 

   

 

 

 

 

2,217,931

 

 

 

 

Michael R. Herman

Senior Vice President,

General Counsel and

Corporate Secretary

   

 

 

 

 

2018

 

 

 

   

 

 

 

 

402,500

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

594,164

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

360,000

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

27,396

 

 

 

   

 

 

 

 

1,384,060

 

 

 

   

 

 

 

 

2017

 

 

 

   

 

 

 

 

387,500

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

779,908

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

260,000

 

 

 

   

 

 

 

 

509,489

 

 

 

   

 

 

 

 

28,672

 

 

 

   

 

 

 

 

1,965,569

 

 

 

   

 

 

 

 

2016

 

 

 

   

 

 

 

 

380,000

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

768,198

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

430,000

 

 

 

   

 

 

 

 

280,053

 

 

 

   

 

 

 

 

33,992

 

 

 

   

 

 

 

 

1,892,243

 

 

 

 

William R. Manzer

Senior Vice President,

Manufacturing Operations

   

 

 

 

 

2018

 

 

 

   

 

 

 

 

377,500

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

540,156

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

320,100

 

 

 

             

 

 

 

 

62,224

 

 

 

   

 

 

 

 

1,299,980

 

 

 

   

 

 

 

 

2017

 

 

 

   

 

 

 

 

337,500

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

445,652

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

175,000

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

20,178

 

 

 

   

 

 

 

 

978,330

 

 

 

   

 

 

 

 

2016

 

 

 

   

 

 

 

 

300,250

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

522,272

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

285,000

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

24,452

 

 

 

   

 

 

 

 

1,131,974

 

 

 

 

James L. Posze Jr.

Senior Vice President,

Human Resources

   

 

 

 

 

2018

 

 

 

   

 

 

 

 

324,500

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

432,137

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

250,000

 

 

 

             

 

 

 

 

38,807

 

 

 

   

 

 

 

 

1,045,444

 

 

 

   

 

 

 

 

2017

 

 

 

   

 

 

 

 

304,000

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

417,799

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

175,000

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

40,192

 

 

 

   

 

 

 

 

936,991

 

 

 

   

 

 

 

 

2016

 

 

 

   

 

 

 

 

294,000

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

411,532

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

280,000

 

 

 

   

 

 

 

 

-  

 

 

 

   

 

 

 

 

38,254

 

 

 

   

 

 

 

 

1,023,786

 

 

 

 

(1)

Represents the aggregate grant date fair value of restricted stock, restricted stock units and performance stock units computed in accordance with FASB ASC Topic 718. A discussion of the assumptions used in calculating these values may be found in the Incentive Stock Plans section in the notes to our financial statements included in our Annual Reports on Form 10-K for 2018, 2017 and 2016.

 

  

The grant date fair value of the 2018 PSU awards is as follows: Mr. Boynton, $4,863,176; Mr. Ruperto, $1,372,679; Mr. Herman, $431,414; Mr. Manzer, $392,207 and Mr. Posze, $313,770.

 

  

The grant date fair value of the 2018 RSU awards is as follows: Mr. Boynton, $1,834,474; Mr. Ruperto, $517,792; Mr. Herman, $162,750; Mr. Manzer, $147,949 and Mr. Posze, $118,367.

 

(2)

The grant date fair value of performance stock unit awards as reported in footnote (1), is computed based on the probable outcome of the performance condition as of the grant date for the award. The following amounts reflect the grant date award value assuming maximum performance is achieved under the 2018 performance stock unit awards: Mr. Boynton, $12,157,939; Mr. Ruperto, $3,431,709; Mr. Herman, $1,078,535; Mr. Manzer, $980,518 and Mr. Posze, $784,437.

 

(3)

Amounts under the Non-Equity Incentive Plan Compensation column represent annual cash incentive awards under our 2018, 2017 and 2016 Annual Cash Incentive Programs. The amount under the Bonus column for 2018 represents the payment of a retention award described in the 2014 Proxy Statement. Mr. Boynton received a $4 million cash payment together with interest at a fixed rate of 3.25%.

 

(4)

Represents the annual change in actuarial present value of the participant’s pension benefit under the Company’s retirement plans and non-qualified deferred compensation in 2018. The actuarial present values declined in 2018 compared to 2017. The change in pension values are as follows: Mr. Boynton, $44,810 decrease and Mr. Herman, $146,778 decrease.

 

(5)

The All Other Compensation column in the Summary Compensation Table above includes the following for 2018: tax services and wellness reimbursements, executive physicals, 401(k) Company contributions, 401(k) retirement contribution/enhanced match, Excess Savings Plans, basic life insurance premiums, cell phone stipend, and relocation.

 


 

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EXECUTIVE COMPENSATION TABLES AND RELATED INFORMATION

 

 

All Other 2018 Compensation

 

     PAUL G.
BOYNTON
    FRANK A.
RUPERTO
     MICHAEL R.
HERMAN
     WILLIAM R.
MANZER
     JAMES L.
POSZE JR.
 
     

($)

 

   

($)

 

    

($)

 

    

($)

 

    

($)

 

 

Financial/tax planning services

     53,475 (1)       -          10,000        -          10,000  

Executive annual physical(2)

     -         1,578        -          -          -    

Life insurance premiums

     1,229       684        607        561        482  

401(k) Plan Company contributions

     11,000       11,000        11,000        9,338        11,000  

401(k) Retirement contribution/Enhanced Match

     -         8,250        -          8,250        8,250  

Cell Phone Stipend

     360       360        360        360        360  

Excess Savings Plan Company contributions

     23,606       22,950        4,929        8,325        8,715  

Wellness

     500       500        500        -          -    

Relocation

     -         -          -          33,449        -    

Gross-up on relocation benefit

     -         -          -          1,941        -    

Total

     90,170       45,322        27,396        62,224        38,807  

 

(1)

Financial/tax planning services for Mr. Boynton are capped at $25,000 for each year; however, unused funds from the prior two years may be added to the current year’s available balance, which creates a three-year rolling look back period.

(2)

All executives had physical examinations in 2018; due to timing of invoicing by health care providers, only Mr. Ruperto’s examination was paid for in 2018.

 


 

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Table of Contents

 

EXECUTIVE COMPENSATION TABLES AND RELATED INFORMATION

 

 

GRANTS OF PLAN BASED AWARDS IN 2018

 

NAME

 

 

GRANT
DATE

 

    

APPROVAL
DATE(1)

 

   

 

ESTIMATED FUTURE PAYOUTS
UNDER NON-EQUITY INCENTIVE
PLAN AWARDS(2)

 

         

 

ESTIMATED FUTURE PAYOUTS
UNDER EQUITY INCENTIVE

PLAN AWARDS(3)

 

   

ALL
OTHER
STOCK
AWARDS:
NUMBER
OF
SHARES
OF
STOCK
OR UNITS
(#)(4)

 

   

GRANT
DATE
FAIR
VALUE OF
STOCK
AND
OPTION
AWARDS
($)(5)

 

 
 

THRESHOLD
($)

 

   

TARGET
($)

 

   

MAXIMUM
($)

 

          

THRESHOLD
(#)

 

   

TARGET
(#)

 

   

MAXIMUM
(#)

 

 

 

Paul G. Boynton

          

 

 

 

 

12/14/2017

 

 

 

 

 

 

 

 

 

158,200

 

 

 

 

 

 

 

 

 

988,750

 

 

 

 

 

 

 

 

 

1,977,500

 

 

 

 

                                               
 

 

 

 

 

3/6/2018

 

 

 

 

  

 

 

 

 

3/5/2018

 

 

 

 

                                 

 

 

 

 

63,855

 

 

 

 

 

 

 

 

 

212,850

 

 

 

 

 

 

 

 

 

532,125

 

 

 

 

         

 

 

 

 

4,863,176

 

 

 

 

   

 

 

 

 

3/6/2018

 

 

 

 

  

 

 

 

 

3/5/2018

 

 

 

 

                                                         

 

 

 

 

91,222

 

 

 

 

 

 

 

 

 

1,834,474

 

 

 

 

 

Frank A. Ruperto

          

 

 

 

 

12/14/2017

 

 

 

 

 

 

 

 

 

44,408

 

 

 

 

 

 

 

 

 

277,550

 

 

 

 

 

 

 

 

 

555,100

 

 

 

 

                                               
 

 

 

 

 

3/6/2018

 

 

 

 

  

 

 

 

 

3/5/2018

 

 

 

 

                                 

 

 

 

 

18,024

 

 

 

 

 

 

 

 

 

60,079

 

 

 

 

 

 

 

 

 

150,198

 

 

 

 

         

 

 

 

 

1,372,679

 

 

 

 

   

 

 

 

 

3/6/2018

 

 

 

 

  

 

 

 

 

3/5/2018

 

 

 

 

                                                         

 

 

 

 

25,748

 

 

 

 

 

 

 

 

 

517,792

 

 

 

 

 

Michael R. Herman

          

 

 

 

 

12/14/2017

 

 

 

 

 

 

 

 

 

39,284

 

 

 

 

 

 

 

 

 

245,525

 

 

 

 

 

 

 

 

 

491,050

 

 

 

 

                                               
 

 

 

 

 

3/6/2018

 

 

 

 

  

 

 

 

 

12/14/2017

 

 

 

 

                                 

 

 

 

 

5,665

 

 

 

 

 

 

 

 

 

18,882

 

 

 

 

 

 

 

 

 

47,205

 

 

 

 

         

 

 

 

 

431,414

 

 

 

 

   

 

 

 

 

3/6/2018

 

 

 

 

  

 

 

 

 

12/14/2017

 

 

 

 

                                                         

 

 

 

 

8,093

 

 

 

 

 

 

 

 

 

162,750

 

 

 

 

 

William R. Manzer

          

 

 

 

 

12/14/2017

 

 

 

 

 

 

 

 

 

30,804

 

 

 

 

 

 

 

 

 

192,525

 

 

 

 

 

 

 

 

 

385,050

 

 

 

 

                                               
 

 

 

 

 

3/6/2018

 

 

 

 

  

 

 

 

 

12/14/2017

 

 

 

 

                                 

 

 

 

 

5,150

 

 

 

 

 

 

 

 

 

17,166

 

 

 

 

 

 

 

 

 

42,915

 

 

 

 

         

 

 

 

 

392,207

 

 

 

 

   

 

 

 

 

3/6/2018

 

 

 

 

  

 

 

 

 

12/14/2017

 

 

 

 

                                                         

 

 

 

 

7,357

 

 

 

 

 

 

 

 

 

147,949

 

 

 

 

 

James L. Posze Jr.

          

 

 

 

 

12/14/2017

 

 

 

 

 

 

 

 

 

26,479

 

 

 

 

 

 

 

 

 

165,495

 

 

 

 

 

 

 

 

 

330,990

 

 

 

 

                                               
 

 

 

 

 

3/6/2018

 

 

 

 

  

 

 

 

 

12/14/2017

 

 

 

 

                                 

 

 

 

 

4,120

 

 

 

 

 

 

 

 

 

13,733

 

 

 

 

 

 

 

 

 

34,333

 

 

 

 

         

 

 

 

 

313,770

 

 

 

 

   

 

 

 

 

3/6/2018

 

 

 

 

  

 

 

 

 

12/14/2017

 

 

 

 

                                                         

 

 

 

 

5,886

 

 

 

 

 

 

 

 

 

118,367

 

 

 

 

 

(1)

2018 Equity Incentive Program grants were approved in December 14, 2017 (except Mr. Boynton’s and Mr. Ruperto’s awards, which were approved March 5, 2018) and the grant date reflects the date on which the Compensation Committee approved the applicable performance measures. The number of units granted was determined as of March 6, 2018, using the average closing market price from the ten trading days prior to March 6, 2018. For the Non-Equity Incentive Plan Awards, the approval date reflects the date on which the Compensation Committee approved the 2018 Annual Cash Incentive Program.

 

(2)

Reflects potential cash incentive awards under the 2018 Annual Cash Incentive Program. Awards can range from 0% to 200% of the target cash incentive award. See the 2018 Annual Cash Incentive Program section of the CD&A. The actual amount earned by each named executive officer for 2018 is reflected in the Summary Compensation Table under the Non-Equity Incentive Plan Compensation column.

 

(3)

Reflects potential payouts, in numbers of shares, under the 2018 PSU unit awards, which are part of the overall 2018 Equity Incentive Program. Awards can range from 0% to 200% of the target award based on ROIC performance plus a potential additional 25% based on the cumulative TSR modifier. Please refer to the Long-Term Incentives: Equity Award section of the CD&A.

 

(4)

Reflects time-based RSU awards for 2018, granted as part of our 2018 Equity Incentive Program, which vest on the third anniversary of the grant date.

 

(5)

Reflects the grant date fair value of each equity award computed in accordance with FASB Topic 718. For performance stock units, the grant date fair value is computed using the Monte Carlo simulation model, which utilizes multiple input variables that determine the probability of satisfying the performance conditions stipulated in the award to determine the fair market value.

 


 

              2019 RYAM PROXY STATEMENT              49
          

 



Table of Contents

 

EXECUTIVE COMPENSATION TABLES AND RELATED INFORMATION    

 

 

OUTSTANDING EQUITY AWARDS AT 2018 FISCAL YEAR END

 

NAME

 

  OPTION AWARDS(4)           STOCK AWARDS(4)  
 

NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS (#)
EXERCISABLE

 

   

NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS (#)
UNEXERCISABLE(1)

 

   

OPTION
EXERCISE
PRICE ($)

 

   

OPTION
GRANT
DATE

 

   

OPTION
EXPIRATION
DATE

 

          

STOCK
AWARD
GRANT
DATE

 

   

NUMBER OF
SHARES OR
UNITS OF
STOCK
THAT HAVE
NOT VESTED
(#)(1)

 

   

MARKET
VALUE OF
SHARES OR
UNITS OF
STOCK
THAT HAVE
NOT VESTED
($)(3)

 

    EQUITY INCENTIVE PLAN AWARDS  
 

NUMBER OF
UNEARNED
SHARES, UNITS
OR OTHER

RIGHTS THAT
HAVE
NOT VESTED

(#)(2)

 

   

MARKET
OR PAYOUT
VALUE OF
UNEARNED
SHARES, UNITS
OR OTHER

RIGHTS
THAT HAVE
NOT VESTED

($)(3)

 

 

Paul G. Boynton

    20,091               36.5528       1/2/2014       1/2/2024                                                  
    13,986               45.2121       1/2/2013       1/2/2023                                                  
    13,774               38.1593       1/3/2012       1/3/2022                                                  
    7,523               31.8108       1/3/2011       1/3/2021                                                  
    8,957               24.2426       1/4/2010       1/3/2020