DEF 14A 1 d94363ddef14a.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:

 

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  (3)

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  (4)

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  (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:

 

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LOGO

 

LOGO

DE LYLE W. BLOOMQUIST

Chair of the Board

  

LOGO

PAUL G. BOYNTON

President and Chief Executive Officer

    

Dear Stockholder:

 

We are pleased to invite you to attend our Annual Meeting of Stockholders on May 17, 2021, at the DoubleTree Hotel, 1201 Riverplace Boulevard, Jacksonville, Florida, at 5:30 p.m. local time. In the following Notice of 2021 Annual Meeting and Proxy Statement, we describe the matters upon which you will be asked to vote at the meeting.

 

We are proud of what our team was able to accomplish during what turned out to be a rather tumultuous year for our Company and its many stakeholders. Despite the numerous difficulties confronted during 2020, we solidified our financial position and delivered on our financial commitments, all while maintaining an uncompromising commitment to keeping our employees healthy and safe. Building on our efforts in 2019, robust stockholder outreach and engagement continued to be a strong point of emphasis in 2020 and we took significant steps to more fully align with our stockholders in the areas of executive compensation, governance and sustainability. Our progress and accomplishments over the past year leave us well positioned to capitalize on recent market momentum and aggressively pursue value-creation opportunities in 2021 and beyond.

 

Please review the proxy/notice card for instructions on how to vote over the Internet, by telephone or by mail 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.

 

The Company continues to closely monitor COVID-19. The 2021 Annual Meeting will be held in keeping with then-applicable guidance from health authorities in addition to any other protocols deemed necessary or advisable by the Company at that time.

 

       

LOGO

 

DE LYLE W. BLOOMQUIST

Chair of the Board

 

    

LOGO

 

PAUL G. BOYNTON

President and Chief Executive Officer

 

        April 2, 2021     

 

LOGO


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Corporate Headquarters

1301 Riverplace Boulevard

Suite 2300

Jacksonville, Florida 32207

LOGO

April 2, 2021

Notice of 2021 Annual Meeting

TO OUR STOCKHOLDERS:

Notice is hereby given that the 2021 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 17, 2021 at 5:30 p.m. local time, to:

 

  1)

Elect the Board’s three nominees for Class I directors for terms expiring in 2024

 

  2)

Recommend, in a non-binding vote, whether future non-binding stockholder votes to approve the compensation of our named executive officers should occur every one, two or three years

 

  3)

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

 

  4)

Approve the Rayonier Advanced Materials Inc. 2021 Incentive Stock Plan

 

  5)

Ratify the appointment of Grant Thornton as our independent registered public accounting firm for 2021; and

 

  6)

Act 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 19, 2021 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
 

R. Colby Slaughter

Corporate Secretary

 


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Table of Contents

 

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

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  

Non-Executive Chair of the Board

     4  

Independent Non-Management Director Meetings

     5  

Board Diversity

     5  

Board Evaluation and Assessment

     5  

Succession Planning

     6  

Oversight of Risk

     6  

Engagement by Management and the Board with our Stockholders

     7  

Standard of Ethics and Code of Corporate Conduct

     9  

Sustainability – Invested in Nature, Investing in the Future

     10  

Director Compensation

     14  

Anti-Hedging/Anti-Pledging Policy

     15  

Related Person Transactions

     16  
PROPOSAL 1: ELECTION OF DIRECTORS      17  

Director Qualifications

     17  

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

     18  

Biographical and Qualifications Information of Other Directors

     21  

Director Skills, Experience and Diversity Matrix

     26  

Director Nomination Process

     27  

Formal Director Onboarding Process

     27  

Director Attendance at Annual Meeting of Stockholders

     27  

Committees of the Board of Directors

     28  
PROPOSAL 2: ADVISORY VOTE ON FREQUENCY OF FUTURE ADVISORY VOTES TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS      30  
PROPOSAL 3: ADVISORY VOTE ON EXECUTIVE COMPENSATION      31  

A Letter from Our Compensation Committee Chair

     31  

Advisory Resolution to Approve Executive Compensation

     33  
ITEM    PAGE  
COMPENSATION DISCUSSION AND ANALYSIS      34  

Executive Summary

     34  

2020 Executive Compensation Awards

     39  

Disciplined and Transparent Executive Compensation Practices

     44  
REPORT OF THE COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE      49  
EXECUTIVE COMPENSATION TABLES AND RELATED INFORMATION      50  

2020 Summary Compensation Table

     50  

All Other 2020 Compensation

     51  

Grants of Plan-Based Awards in 2020 Table

     51  

Outstanding Equity Awards at 2020 Fiscal Year End Table

     52  

Option Exercises and Stock Vested in 2020 Table

     53  

Pension Benefits Table

     53  

Non-Qualified Deferred Compensation Table

     54  

Potential Payments Upon Termination or Change in Control

     56  

CEO Pay Ratio

     58  

Stock Ownership of Directors and Executive Officers

     59  

Executive Officers

     60  

Security Ownership of Certain Beneficial Owners

     61  

Delinquent Section 16(a) Reports

     62  

Compensation Committee Independence; Compensation Committee Interlocks and Insider Participation

     62  
PROPOSAL 4: APPROVE THE RAYONIER ADVANCED MATERIALS INC. 2021 INCENTIVE STOCK PLAN      63  

Equity Compensation Plan Information

     71  
PROPOSAL 5: RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM      72  

Appointment of Grant Thornton as Independent Registered Public Accounting Firm for Fiscal Year 2021

     72  

Report of the Audit Committee

     72  

Audit Committee Financial Experts

     73  

Information Regarding Independent Registered Public Accounting Firm

     74  
APPENDICES   
A. QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING      A-1  
B. RAYONIER ADVANCED MATERIALS INC. 2021 INCENTIVE STOCK PLAN      B-1  
C. RAYONIER ADVANCED MATERIALS INC. AUDIT COMMITTEE POLICIES AND PROCEDURES      C-1  
D. NON-GAAP FINANCIAL MEASURES      D-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 2020.

NOTE ABOUT NON-GAAP FINANCIAL MEASURES

A “non-GAAP financial measure” is generally defined as a numerical measure of a company’s historical or future performance that excludes or includes amounts, or is subject to adjustments, so as to be different from the most directly comparable measure calculated and presented in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). This document contains certain non-GAAP financial measures, including Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), Adjusted EBITDA, Adjusted Operating Income, Adjusted Net Income, Adjusted Net Income Per Share, Adjusted Net Debt and Adjusted Free Cash Flows. These non-GAAP measures are reconciled to each of their respective most directly comparable GAAP financial measures in Appendix D.

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

2021 ANNUAL MEETING OF STOCKHOLDERS OF RAYONIER ADVANCED MATERIALS INC.

MONDAY, MAY 17, 2021

The 2021 Annual Meeting of Stockholders of Rayonier Advanced Materials Inc. (the “Annual Meeting”) will be held on May 17, 2021, for the purposes set forth in the accompanying Notice of 2021 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,” “RYAM” 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 2021 Annual Report to Stockholders (the Annual Report), which includes our 2020 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 the Annual Report were first made available on the Internet and mailed to certain stockholders on or about April 2, 2021.

The Notice of 2021 Annual Meeting, this Proxy Statement and the Annual Report are available at www.proxyvote.com.

Annual Report

A copy of the Annual Report, which includes the 2020 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 2020 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.

 

            

 

2021 ANNUAL MEETING INFORMATION

 

LOGO   

Date & Time

May 17, 2021

5:30 p.m. local time

  

Voting

Stockholders holding our Common Stock as of the close of business on the record date, which is the close of business on March 19, 2021 (Record Date), are entitled to vote. Each share of Common Stock is entitled to one vote for each matter to be voted upon.

LOGO   

Location

DoubleTree Hotel

1201 Riverplace Boulevard

Jacksonville, Florida

  

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 government-issued photo identification, you will not be admitted to the meeting.

LOGO   

Record Date

Record holders of our Common Stock as of March 19, 2021 are entitled to notice of and to vote at, the Annual 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 A.

PROPOSALS

 

MATTER

  

BOARD VOTE

RECOMMENDATION

   PAGE REFERENCE
(FOR MORE DETAIL)

 

Proposal 1

  

 

Elect the Board’s three nominees for Class I directors for terms expiring in 2024

   FOR

each nominee

  

 

17

 

Proposal 2

   Recommend, in a non-binding vote, whether future non-binding stockholder votes to approve the compensation of our named executive officers should occur every one, two or three years (Say-When-on-Pay)   

 

FOR ONE YEAR

  

 

30

 

Proposal 3

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

 

FOR

the proposal

  

 

31

 

Proposal 4

   Approve the Rayonier Advanced Materials Inc. 2021 Incentive Stock Plan   

 

FOR

the proposal

  

 

63

 

Proposal 5

   Ratify the appointment of Grant Thornton as our independent registered public accounting firm for 2021   

 

FOR

the proposal

  

 

72

 


 

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COMMITMENT TO BEST PRACTICES IN CORPORATE GOVERNANCE

 

 

Commitment to Best Practices in Corporate Governance

CORPORATE GOVERNANCE HIGHLIGHTS

Our corporate governance structure is designed to ensure that the Board of Directors (the Board) effectively exercises its responsibilities and oversight of management’s performance in creating long-term value for our stockholders. The Board also plays a critical role in monitoring adherence to our Core Values and Cultural Cornerstones and promoting the exercise of responsible corporate citizenship. The Board values the feedback we receive from our stockholders and has taken these perspectives into account in implementing actions to broaden stockholder rights and enrich Board composition. Our leading corporate governance practices include:

 

STOCKHOLDER RIGHTS
   
Independent, Non-Executive Chair of the Board    On May 19, 2020, we split the roles of Chair and CEO, with Paul Boynton continuing in his role as CEO and De Lyle Bloomquist assuming the role of Independent Non-Executive Chair. See Non-Executive Chair of the Board section.
   
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.
BOARD COMPOSITION AND ACCOUNTABILITY
Independence    Our Corporate Governance Principles (CGPs) require that not less than 75% of our directors be independent. At all times during 2020, 89% (eight of nine) of our directors were independent and each of our Audit, Compensation and Management Development and Nominating and Corporate Governance committees consisted entirely of independent directors. See Director Independence section.
Diversity    The composition of the Board represents a diverse and broad mix of skills, experience, attributes, knowledge and perspectives relevant to our business. Three of our nine directors are women and one of the remaining 6 is racially/ethnically diverse. A summary of relevant director experience and qualifications can be found in the Director Qualifications section.

 


 

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COMMITMENT TO BEST PRACTICES IN CORPORATE GOVERNANCE    

 

 

BOARD COMPOSITION AND ACCOUNTABILITY
   
Continuous Board Refreshment    Since 2015, the Board has appointed five new directors, representing refreshment of 55% of the current nine-member Board. Ivona Smith and David Mariano are the Board’s most recent additions, having been appointed in May 2020.
   
Annual Management Succession Planning Review    The Board conducts an annual review of management development and succession planning for the CEO and Company senior leadership. See Succession Planning section.
   
Director Tenure    Our CGPs provide that 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 Director Mandatory Stock Ownership and Retention Requirements 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 has adopted Corporate Governance Principles (CGPs) which govern the function, composition and operation of the Board. The CGPs establish, among other things, criteria for determining director independence and filling Board vacancies. Our CGPs are found on the Company’s website at www.rayonieram.com at the “Investors” tab under “Corporate Governance”. 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 at the “Investors” tab under “Corporate Governance”. 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, 2020, other than Mr. Boynton, are independent (i.e., eight of nine directors in 2020).

NON-EXECUTIVE CHAIR OF THE BOARD

On May 19, 2020, the Board separated the roles of CEO and Chair and elected an independent director, De Lyle Bloomquist, to serve as the Board’s Non-Executive Chair. Our Board believes that the separation of these roles is appropriate and in the best interests of our Company and its stockholders at this time. This separation recognizes the time and effort our CEO is required to devote to the strategy and day-to-day management of our business and allows our Chair to focus on governance and oversight practices that benefit the long-term interests of our stockholders.

The duties of our Non-Executive Chair of the Board include:

 

LOGO

Leading the Board’s oversight of the management of the Company

 

LOGO

Approving materials and agendas for Board meetings in consultation with other directors and management

 

LOGO

Presiding during stockholder meetings, Board meetings and executive sessions of the independent directors

 

LOGO

Facilitating communication among directors and the regular flow of information between management and directors

 

LOGO

Serving as principal liaison between independent directors and the CEO

 

LOGO

Leading independent directors in periodic reviews of the performance of the CEO

 

LOGO

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

 

LOGO

Recommending independent outside advisors who report directly to the Board on material issues

 

LOGO

Assisting the Board and the Company’s officers in adhering to the CGPs

 

LOGO

In collaboration with the Nominating Committee, leading the Board’s annual self-assessment, Committee assignment process and recruitment efforts

 


 

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COMMITMENT TO BEST PRACTICES IN CORPORATE GOVERNANCE    

 

 

INDEPENDENT NON-MANAGEMENT DIRECTOR MEETINGS

Our independent non-management directors met separately (without the CEO or any members of management) during eight regularly scheduled meetings in 2020; these meetings were chaired either by our Independent Lead Director (prior to our 2020 Annual Meeting) or our Non-Executive Chair of the Board (subsequent to our 2020 Annual Meeting). Independent directors also have the opportunity to meet without management present at their respective Board committee meetings.

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 the Board is well-rounded in the terms of competencies, experience, attributes, personal history, background, perspective, skills and expertise. Our Board views diversity as a priority and seeks representation across a range of attributes including gender, race, ethnicity, age and similar factors that can enhance overall Board perspective and effectiveness. Our current Board composition well reflects the Board’s commitment to these principles. The Board has appointed five new directors since 2015, representing a refreshment rate of 55% over that period and an overall average tenure of approximately 5 years. Three of the Board’s 9 directors are women and one is racially/ethnically diverse. The Nominating Committee assesses the Board’s diversity through its annual assessment of Board structure and composition and also through its review of the annual Board and committee performance evaluations.

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 was overseen by our Non-Executive Chair of the Board in 2020, is currently 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 2020, this process consisted of preparation of suggested topics of discussion (including key events that occurred during the prior year), 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 Non-Executive Chair of the Board.

 

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 robust discussion and consensus on actions to be undertaken.

 

LOGO

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

The structure of this process is reviewed annually by the Company’s Nominating Committee, which makes changes to the process as it deems appropriate in accordance with good governance practices.

 


 

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COMMITMENT TO BEST PRACTICES IN CORPORATE GOVERNANCE

 

 

SUCCESSION PLANNING

One of our Board’s primary responsibilities 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. Increasing the number of diverse candidates within this pool is a key priority for the Company. To assist with this process, 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, 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 to the Board and/or applicable Board committee 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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ENGAGEMENT BY MANAGEMENT AND OUR BOARD WITH OUR STOCKHOLDERS

 

      

 

>300

  

INVESTMENT COMMUNITY OUTREACH

Calls, meetings and other personal engagements

 

      
  
      

 

~60%/~35%

  

STOCKHOLDER ENGAGEMENT

Percentage of Common Stock reached out to/spoken with, through calls, meetings and other personal engagements

 

      
  
      

 

>85%

  

ANNUAL MEETING ENGAGEMENT

Percentage of Common Stock represented by vote at the 2020 Annual Meeting

 

      

Stockholder Engagement Overview

Our Board and management value and rely upon our stockholders’ perspectives. To help ensure we understand and focus on the priorities that matter most to our stockholders, our directors and senior management proactively conduct thorough and extensive investor outreach throughout the year. In addition to discussing business results and initiatives, strategy and capital structure, we engage with investors on various other matters integral to our business and the Company, such as governance practices, executive compensation and sustainability.

Specific Ways We Engaged with Stockholders in 2020

In 2020, we contacted stockholders representing almost 60% of our issued and outstanding shares and we were able to meet and engage directly, in person or telephonically, with approximately 35% of our stockholders. We hosted quarterly earnings calls with all investors, including the analysts covering our Company who we invite to ask questions. We also engaged with the leading proxy advisors who serve our investors. We presented at three industry conferences and held two virtual road shows. Our Board and management carefully considered and evaluated feedback received during these meetings.

Additionally, our independent directors continued to be closely and directly involved in our investor engagement efforts. Specifically, in 2020, our independent directors held outreach discussions with stockholders representing approximately 18% of our outstanding shares.

A key focus of our outreach was to continue our dialogue with investors regarding Say-on-Pay voting outcomes at our 2019 and 2020 Annual Meetings. This is discussed in more detail below and in the CD&A section.

Stockholders and other interested parties who would like to communicate with one or more members of the Board, a Board committee, the Non-Executive Chair of the Board 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 recipient(s).

 


 

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How We’ve Incorporated Stockholder Feedback Received Over the Past Year

In 2020, investors provided feedback on several governance, strategic and capital structure issues, which the Board and management have carefully evaluated. The feedback we received over the past year has helped guide the Company and influence our thinking and decision-making in several areas, including:

 

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Disclosure regarding the dynamic impact of COVID-19 on the Company and the measures we took to protect our employees and contractors and ensure our continued ability to operate safely and reliably.

 

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Increased oversight and disclosure with respect to Environmental, Social and Governance (ESG) issues. We recently published key metrics aligned with the Sustainability Accounting Standards Board (SASB) standard for our industry and also established a Diversity and Inclusion Advisory Group to help us build on and improve our culture.

 

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Further improvements to help align executive compensation with the stockholder experience. See Compensation Discussion and Analysis.

 

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Continued intense focus on cost reduction and cash generation in response to ongoing business climate headwinds, magnified by the impacts of COVID-19.

 

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The creation by our Board of a new committee, the Finance and Strategic Planning Committee, to closely oversee and advise management on the strategic planning process, growth through innovation and capital structuring priorities and initiatives.

 

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Completion of refinancing of term loans with $500 million senior secured notes and establishing a $200 million ABL credit facility, extending nearest maturity to 2024 and removing financial maintenance covenants.

 

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Strategic investments in sustainable innovation including the commissioning and start-up of a bioenergy plant at our Tartas, France facility and the development in the Temiscaming plant of our TEMSILK to serve the growing Lyocell textile market through strategic investment. In addition, we have recently invested in and partnered with Anomera Inc. (Anomera), an early-stage company based in Montreal whose patented break-through nanocellulose technology is aimed at displacing plastics in the cosmetics and skin care markets and serving as an eco-friendly ingredient in various industrial and other end-market applications.

 

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A continued disciplined approach to evaluation of opportunities with respect to our overall asset portfolio, with an emphasis on those assets not deemed core to our long-term strategy.

 

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The addition of two new directors to our Board. Ivona Smith and David C. Mariano were appointed to our Board on May 19, 2020, replacing retiring directors C. David Brown, II and Mark E. Gaumond. Since 2015, 55% of the Board has been refreshed.

 

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The splitting of the CEO and Chair roles on May 19, 2020, with Paul Boynton continuing to serve as CEO and De Lyle Bloomquist being appointed to the newly created role of independent Non-Executive Chair of the Board.

 

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The submission of separate proposals at our 2020 Annual Meeting of Stockholders wherein our Board and management asked stockholders to vote to declassify our Board and eliminate supermajority voting provisions from our Certificate of Incorporation and Bylaws. For the second year in row, these initiatives received insufficient votes for passage (65% passage against a requirement of 80%).

2020 Say-On-Pay Vote

At our 2020 Annual Meeting, approximately 78% of stockholders expressed support for the compensation of our named executives. We again conducted purposeful investor outreach, as described in our CD&A section, with our investors and proxy advisory firms to review our compensation actions and listen to their feedback. As part of its annual assessment of the Company’s executive compensation programs, the Compensation and Management Development Committee (Compensation Committee) evaluated this investor feedback, confirmed that actions taken in early 2020 were aligned with stockholder feedback and decided to take other various actions to strengthen the alignment between these programs and the interests of the Company’s stockholders. These steps are summarized in detail in the CD&A section.

 


 

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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 at the “Investors” tab under “Corporate Governance”. Any waivers or amendments to the Code of Conduct will also be available on the Company’s website.

 


 

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SUSTAINABILITY – INVESTED IN NATURE, INVESTING IN THE FUTURE

Overview

Throughout our over 90-year history pioneering cellulosics, a sustainable business model has been and remains, absolutely integral to our strategy to maximize long-term stockholder value. Our commitment to sustainability is reflected in our Core Values of Integrity, Accountability, Quality and People and in our Cultural Cornerstones of Safety, Innovation, Customer Focus and Continuous Improvement. Through every stage of our business cycle, we focus on conducting our business in the right way to ensure the sustained financial success of the Company while preserving resources for future generations, enhancing our communities and providing a safe, engaging and inclusive working environment for our colleagues.

Our vision is to further enhance and leverage a very sustainable business model – taking natural, renewable input materials and turning them into remarkable products for our customers. In our high purity cellulose business, we run four bio-refineries. Our goal is to optimize and align these assets to meet the increasing consumer demand for a more sustainable world.

 

Our Sustainability Council (the Council) works under the close oversight of our full Board to ensure the sustainability issues most critical to our business and stakeholders are identified and prioritized. The Council, a cross-functional team comprised of senior executives and other Company leaders from our sales and marketing, research and development (R&D), finance/accounting, environmental, human resources, legal, supply chain and other functional areas, helps ensure sustainability is approached not merely as an isolated concept, but as a cultural mindset ingrained in all we do. The Council meets regularly to collaborate and track key projects and drive advancement of the Company’s and its customers’ sustainability objectives.   LOGO

A progress update on our Sustainability program’s key focus areas follows.

Health and Safety

We place intense focus on our vision of every employee coming to work and going home every day injury free. In 2020, we progressed toward this vision, as the Company-wide injury rate decreased by 8% versus the prior year. To drive continuous focus and improvement toward this vision, we have used five leading metrics since 2019: housekeeping, leadership value exchanges, corrective action closure, elevated gas monitor minutes, and life safety programs. We rigorously track these metrics on a monthly basis with a firm belief that continuous improvement in these areas will create a safer work environment with fewer injuries. Five separate subcommittees, comprised of leaders from across the Company, are accountable for each of the respective leading metrics and these subcommittees report to a steering team chaired by our CEO.

 


 

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To further reinforce the everyday behaviors critical to fostering a strong culture of safety, our CEO and other Company leaders engage in regular and meaningful safety value exchanges with members of our workforce. While our Board will always have discretion to reduce executive compensation for overall poor safety performance, the Company’s measured performance against its five leading safety metrics is also a financial component of 2021 executive compensation as a strategic metric in the Annual Cash Incentive Program.

Human Rights; Diversity and Inclusion

Respect for People is one of our Core Values and reflects our belief that our success is directly tied to how we value our employees and their diverse backgrounds and experiences. Our published Human Rights and Diversity Policy (the Policy) that can be found at www.rayonieram.com at the “Sustainability” tab under “Resources”, further explains this Core Value to our employees and external stakeholders. As the Policy states, inclusion and diversity are not just words at RYAM – they are ideals ingrained in our Company values and projected through our business practices and human capital management programs.

In recognition of the importance of this principle and the role diversity plays in allowing us to learn and build solutions from different perspectives, the Company commissioned a Diversity and Inclusion Advisory Group (DIAG) in 2020 comprised of approximately a dozen employees that are a representative cross-section of the organization including union leadership. Over the course of 2021, the DIAG will be helping the Company build upon and improve its culture of inclusion and diversity through benchmarking best practices; identifying leading metrics that provide greater insight into the Company’s progress; and reporting progress and actionable recommendations to senior leadership and the Board on at least a quarterly basis. 

The Company has production facilities in the United States, Canada and France with sales offices in the United States, Canada, France, United Kingdom, Japan and China. Of our 3,850 employees, approximately 75% belong to unions. We have strong and open relationships with these employee representatives.

Forest Stewardship

Forests serve as the source of our most significant raw material input. They also provide vital wildlife habitat, enhance water quality and provide places for people to enjoy the outdoors. To ensure that forests thrive into the future, we invest in them and employ industry best practices in forestry management. We apply internationally recognized forest certification standards with third-party verification across our operations and we expect our suppliers to do the same. In Canada, we directly manage over 25 million acres of FSC-certified wood and globally, half of our wood is sourced from third-party certified forestlands. We are working with owners of forestlands to increase our share of certified wood over time to support growing customer demand.

During 2020, we worked closely with suppliers in the Southeast U.S. to drive increases in the overall quantity of wood fiber procured by our pulp mills from FSC®-certified lands. This is in addition to mill-level certifications (e.g., FSC and PEFC Chain of Custody) already in place which demonstrate fiber traceability to mitigate the risk of using wood from undesirable sources. To help communicate and measure progress in our wood-sourcing practices, we now publish on our website at www.rayonieram.com at the “Sustainability” tab, wood sourcing management metrics in accordance with the requirements of the SASB standard for Pulp & Paper Products.

Also, in 2020, our colleague Marie-Eve Sigouin was awarded the Order of Forest Engineers of Quebec’s 2019 Forest Engineer of the Year Award in recognition for her role in organizing the Detour/Kesagami Cross-Border Woodland Caribou Population Forum, which brought together various stakeholders from Ontario and Quebec to share information on caribou and define joint actions to aid the recovery of the regional caribou population. Ms. Sigouin became the first female recipient of this prestigious engineering award.

Climate Impact

Responsible emissions management is a key part of our operating strategy which is ingrained into our daily operations. To better track and communicate our climate-related performance in 2019, we published our first Company-wide greenhouse gas emissions inventory following the Greenhouse Gas Protocol. In 2020, we took the

 


 

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additional step of publishing (on our Company website) key metrics aligned with the Sustainability Accounting Standards Board (SASB) standard for Pulp and Paper Products, including with respect to greenhouse gas emissions, air quality, water management and supply chain management. Utilizing these metrics will help us better understand, assess, manage and provide disclosure with respect to climate-related risks and opportunities and ensure our strategic planning and risk management processes are assigning appropriate weight to such risks and opportunities.

The transition to a low carbon economy, as predicted by many investors and other stakeholders, poses both risks and opportunities for the Company. For example, similar to other manufacturers in our sector, we use biomass, natural gas, liquid fossil fuels and purchased electricity to power our plants. Changes in policy, regulation or technology related to fuels that we use, or our electricity providers use, could materially impact our costs. On the other hand, our products are made from renewable, natural materials with the potential to be used as a high-performing substitute for end markets which currently use fossil fuel-based products. We are seeking to better understand and quantify these and other risks and opportunities, including through our enterprise risk management and strategic planning processes.

Resource Conservation

In addition to our ongoing commitment to achieve full compliance with regulatory and permitting requirements, we continue to seek and invest significant capital in projects that help us more effectively measure and reduce consumption of resources, including wood, water, energy and chemicals. Throughout the process of converting wood into products that meet our customers’ exacting specifications, the Company strives to ensure that no part of the tree goes to waste. For example, the bark is utilized for its fuel value, the wood is milled into lumber and the wood chips are pulped into fibers for paperboard or used as the primary raw material for our high purity cellulose. Even the lignin, the natural glue that holds wood together, is separated, purified and sold for use as a natural chemical in construction, agricultural and other end markets. 

 

We continuously strive to improve our operating efficiency and to maximize energy generated with existing renewable resources. For example, we recently completed several interconnected projects (including recovery boilers and flue gas energy recovery improvements) and installations (biomass dryer, turbine generator) to significantly improve the energy efficiency of our Tartas plant. These installations and improvements qualified under the Commission de régulation de l’énergie CRE biomass programs which aim to identify French biomass-powered cogeneration projects. The Company’s improvement and installation projects were retained under the CRE programs and, as a result, all electrical energy produced by the plant can now be sold at a preferential purchase tariff (based on biomass utilization) under long-term contracts between the plant and the public utility. This green energy project not only yields significant environmental benefits, it helps the plant   

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improve its competitive position by improving its cost profile as a producer of high purity cellulose. We expect to make more of these types of strategic investments in our biorefinery assets as demand for natural solutions grows, including a potential for non-food source ethanol, known as second-generation fuels. 

 


 

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We constantly pursue the optimization of our systems to help maintain the water quality and availability in the communities where we operate. The Company collects and tracks water usage and discharge data for all of its operations. New projects are undertaken with a full understanding of their water usage implications and our expectation is that those projects should be at least water-usage neutral. The vast majority of water (approximately 91%) used by our facilities is returned to the environment, following multiple reuses, at a quality that meets or exceeds regulatory requirements.

Innovation

Our strength is innovatively converting renewable resources into remarkable products. Among other products, the Company produces a customized high purity cellulose utilized in specialty products for a wide range of applications. High purity cellulose is a remarkable bio-based polymer and natural building block for everyday products. Our customers can substitute renewable cellulose in place of petroleum-based chemicals to make plastics, yarn, fabrics and even LCD screens for televisions or smartphones. Our product is also used for its natural thickening or other properties in paints, plaster, pharmaceuticals, food and beauty products.

Through its R&D initiatives, the Company works with customers and other partners to identify and develop new products and/or end uses. Recent developments include our Biofloc XV20 dissolving wood pulp, which we believe is well positioned to grow and take market share from cotton lint pulp over time, as well as our Envirosmart quick-food-service bag grade developed in our newsprint facility. In addition, our new TEMSILK product is a unique pulp product produced at our Temiscaming, Quebec facility for use in the production of Lyocell, a “green” textile fiber with rapidly growing demand. Lyocell is produced in a closed loop system, which is more environmentally friendly and lower in cost than those used for other textile fibers and which produces a high-quality textile fabric with a silky feel. Only a few producers in the world are capable of making a pulp that works in this process and we have quickly positioned ourselves to become a leading supplier to this growing market.

We also seek out strategic investments and partnerships that help accelerate our innovative focus and positioning to serve an increasing demand for environmentally-friendly products and solutions. For example, we have recently invested in and partnered with Anomera, an early-stage company based in Montreal whose patented break-through nanocellulose technology is aimed at displacing plastics in the cosmetics and skin care markets and serving as an eco- friendly ingredient in various industrial and other end-market applications. It is a natural partnership with multiple synergies. Anomera, which is constructing a launch manufacturing facility at our Temiscaming, Quebec site, utilizes RYAM’s high purity cellulose as the key raw material in its process and will benefit from various RYAM site services during the construction and operational phases of the project.

The information on our website is not and shall not be deemed to be, a part of this Proxy Statement or incorporated into any other filings we make with the SEC.

 


 

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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. F. W. Cook, 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 F. W. Cook, as well as other data, to reach its 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 stock retention requirements, as discussed in the Director Mandatory Stock Ownership and Retention Requirements section below.

2020/2021 Cash Compensation

Non-management director compensation is set by the Board after considering the recommendation of the Nominating Committee. For the twelve-month 2020-2021 director compensation period, which ends with the 2021 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, Finance and Nominating Committees of $20,000, $15,000, $15,000 and $10,000, respectively, payable in equal quarterly installments; and

 

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Additional annual cash retainer for the Non-Executive Chair of the Board of $85,000, payable in equal quarterly installments

Annual Equity Awards

For the 2020-2021 period, on or about May 19, 2020, each non-management director received a restricted stock unit award equivalent to $105,000 based on a nominal per share value of $6.00 (which is prorated for partial year service), to vest on May 19, 2021 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 (if any) on the restricted stock unit award accrue in a separate account and are paid upon vesting, together with interest thereon 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 Stock 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 2020-2021 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.

 


 

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Director Mandatory Stock Ownership and Retention Requirements

Each of our directors having served on the Board for five years or more, is required to own Company stock valued at not less than the cash portion of his or her annual retainer for the previous five years. Prior to reaching their ownership requirement, a director is required to hold all Company shares received under his or her annual equity retainer. As of March 18, 2021, each of our directors is in compliance with our stock ownership and retention guidelines.

2020 Director Compensation Table

The following table provides compensation information for the one-year period ended December 31, 2020 for all individuals serving on our Board at any time from January 1, 2020 until December 31, 2020.

 

NAME

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

Charles E. Adair

 

105,000

 

105,000

 

967

 

210,967

De Lyle W. Bloomquist

 

148,750

 

105,000

 

967

 

254,717

Paul G. Boynton(3)

 

-  

 

-  

 

-  

 

-  

C. David Brown, II(4)

 

27,500

 

-  

 

967

 

28,467

Julie A. Dill

 

96,250

 

105,000

 

967

 

202,217

Mark E. Gaumond(4)

 

25,000

 

-  

 

967

 

25,967

James F. Kirsch

 

96,250

 

105,000

 

967

 

202,217

David C. Mariano

 

63,750

 

105,000

 

-  

 

168,750

Thomas I. Morgan

 

85,000

 

105,000

 

967

 

190,967

Lisa M. Palumbo

 

95,000

 

105,000

 

967

 

200,967

Ivona Smith

 

63,750

 

105,000

 

-  

 

168,750

 

(1)

Represents the aggregate grant date fair value computed in accordance with Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC) Topic 718. A discussion of the assumptions used in calculating these values may be found in Note 17 Incentive Stock Plans included in the notes to consolidated financial statements in our 2020 Annual Report on Form 10-K. On May 19, 2020, each non-management director was granted a restricted stock unit award equivalent to $105,000, based on a nominal share price of $6.00 per share. These awards will vest on May 19, 2021.

The aggregate number of restricted stock units outstanding on December 31, 2020 was 140,000.

 

(2)

Represents accrued dividends and interest on restricted stock awards which vested on May 21, 2020.

 

(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 2020.

 

(4)

Messrs. Brown and Gaumond retired from the Board May 18, 2020.

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

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 2020 that would require Proxy Statement disclosure.

 


 

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PROPOSAL 1-ELECTION OF DIRECTORS    

 

 

Proposal 1- Election of Directors

Our Board 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 15 meetings during 2020 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 nine directors divided 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 I directors will expire at the 2021 Annual Meeting of Stockholders and such directors are nominees for election. The terms of the Class II directors will expire at the 2022 Annual Meeting of Stockholders and the terms of the Class III directors are set to expire at the 2023 Annual Meeting of Stockholders.

Accordingly, stockholders are being asked to vote on the election of the three Class I directors, each to serve until their successors are duly elected and qualified at the 2024 Annual Meeting of Stockholders. 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 2021 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 on our Board 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

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 is 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 change, if any, in applicable laws and NYSE listing standards.

We believe the members of our Board have the optimal mix of relevant and diverse experience, qualifications, attributes and skills given the Company’s business, together with demonstrated integrity, judgement, leadership and collegiality, to effectively advise and oversee management in executing our strategy.

Each of the directors listed below, including the three nominees for election, has experience as a senior executive and 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 experience in most, if not all 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

 


 

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insights into specific end-markets and geographic regions 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, 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 its three nominees named below for election to    

the Board of Directors for a term to expire at the 2024    

Annual Meeting of Stockholders.    

 

    
  

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

Class I, Terms to Expire in 2024, if Re-elected

 

LOGO     CHARLES E. ADAIR    AGE: 73    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 Globe Life Inc. since 2003. Mr. Adair also served on the Board of Directors of Tech Data Corporation (TECD) from 1995 through June 2020 when TECD was acquired by Apollo Global Management, Inc. and 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 and is a graduate of the Advanced Management Program from Harvard University.   

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.

       

 


 

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LOGO     JULIE A. DILL    AGE: 61    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 (NYSE: SEP) 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 InterPipeline Ltd. and Southern Star and is on the advisory board of Centuri Construction Group. 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 QEP Resources, Inc., from 2013 to March 2021 and Spectra Energy Partners, LP from 2012 to February 2017. Ms. Dill holds a B.B.A. from New Mexico State University, is a graduate of the Advanced Management Program from Harvard University and has received her NACD Directorship Certification.   

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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LOGO     JAMES F. KIRSCH    AGE: 63    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 a 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. Mr. Kirsch formerly served as a director of GCP Applied Technologies Inc. from 2018 to 2020, 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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BIOGRAPHICAL AND QUALIFICATIONS INFORMATION OF OTHER DIRECTORS

Class II, Terms to Expire in 2022

 

LOGO     THOMAS I. MORGAN    AGE: 67    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 formerly served as a director of Tech Data Corporation (2007 to 2020), 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.

       

 


 

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LOGO     LISA M. PALUMBO    AGE: 63    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 28 years of legal experience with international, public and private companies, Ms. Palumbo brings substantial expertise in the areas of law, corporate governance, mergers and acquisitions, 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.

       
LOGO     IVONA SMITH    AGE: 51    DIRECTOR SINCE: 2020
  Ms. Smith is an advisor with Drivetrain LLC, an independent fiduciary services firm, a position she has held since 2016. Prior to joining Drivetrain LLC, she was Managing Director at Fair Oaks Capital LP, an investment advisory firm, from 2014 to 2016, Co-Founder of Restoration Capital Management LLC, an investment advisory firm from 2001-2012 and Co-Portfolio Manager at Tribeca Investments, LLC, the broker/dealer division of Citigroup/Traveler’s from 1999 to 2000. Ms. Smith was also an auditor, analyst and financial consultant at various accounting and investment banking firms, including Kidder Peabody and Ernst & Young. Ms. Smith previously served on the Board of Directors of ITN Networks LLC from 2017 to 2018 and The Weinstein Company from 2018 to present. Ms. Smith holds a bachelor’s degree in finance from Fordham University and an MBA from NYU Stern School of Business.   

EXPERIENCE:

Ms. Smith brings significant financial, capital markets, restructuring and accounting experience, working extensively with senior management teams and as a fiduciary to the investment community, including serving as an outside independent director for companies. Additionally, she has over 25 years of experience investing in or advising companies undergoing operational or financial challenges. Ms. Smith is particularly well-suited to contribute to the Board’s oversight of the Company’s capital structure, financial performance, auditing and its external auditors and controls over financial reporting.

 


 

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Class III, Terms to Expire in 2023

 

LOGO     DE LYLE W. BLOOMQUIST    AGE: 62    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., 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 Huber Engineered Materials from July 2010 to November 2020, Vivos Therapeautics Inc., from April 2018 to March 2019, Costa Farms, Inc. from July 2016 to July 2017 and a director of PDS Biotechnology Corporation from December 2014 to March 2019. 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, minerals and materials industries, 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 these industries makes him particularly well-suited to assist the Board with operational and strategic decisions about the Company’s business.

       

 


 

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LOGO     PAUL G. BOYNTON    AGE: 56    DIRECTOR SINCE: 2014
  Mr. Boynton is President and CEO of the Company, positions he has held since June 2014. He previously held the position of Chairman of the Board from 2014 to May 2020. Mr. Boynton 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 the Board’s consideration of strategic and operational decisions and manage the Company’s business.

       

 


 

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LOGO     DAVID C. MARIANO    AGE: 58    DIRECTOR SINCE: 2020
  Mr. Mariano is currently the Managing Director of DCM Capital, a private investment firm with holdings in the equity and debt of public and private companies, a position he has held since founding DCM in 2011. From 1998 to 2011, Mr. Mariano was Managing Partner of Wellspring Capital Management, a registered investment advisor focusing on turnaround and restructuring opportunities in a range of industries and served as Executive Chairman of the Board of Neucel Specialty Cellulose, a manufacturer and seller of dissolving wood pulp products, including high purity specialty cellulose and viscose pulps, from 2006 to 2011. Mr. Mariano was also a Managing Director at the Blackstone Group and a Senior Manager at Ernst & Young. He holds a bachelor’s degree in economics from Gustavus Adolphus College and an MBA from Duke University.   

EXPERIENCE:

Mr. Mariano has 33 years of experience investing in, managing and advising global businesses, with a focus over the past 15 years in the dissolving wood pulp industry, as well as significant experience in capital markets, restructurings and value-creating transactions. He is also a significant stockholder of the Company, currently holding approximately 1.31% of the Company’s Common Stock.

       

 


 

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DIRECTOR SKILLS, EXPERIENCE AND DIVERSITY MATRIX

The table below shows the skills, experience and diversity that each director brings to the Board.

 

LOGO

 


 

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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 2022 Annual Meeting of Stockholders are set forth in Appendix A under When Are Stockholder Proposals for the 2022 Annual Meeting of Stockholders Due?

FORMAL DIRECTOR ONBOARDING PROCESS

Upon joining the Board, new directors receive a comprehensive orientation and formal onboarding process to facilitate their transition onto the 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 2020 Annual Meeting of Stockholders, all directors were in attendance via conference telephone due to COVID-19 protocols in place in the United States at the time.

 


 

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COMMITTEES OF THE BOARD OF DIRECTORS

The Board has four standing committees, each of which operates under a written charter available on the Company’s website at www.rayonieram.com at the “Investors” tab under “Corporate Governance”.

 

   
AUDIT    NUMBER OF MEETINGS IN 2020: 9

 

This committee advises the 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 the 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

 

  

 

MEMBERS:

Charles E. Adair, Chair

James F. Kirsch

David C. Mariano

Lisa M. Palumbo

Ivona Smith

  
   
COMPENSATION AND MANAGEMENT DEVELOPMENT    NUMBER OF MEETINGS IN 2020: 7

 

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 the Board

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

 

  

 

MEMBERS:

Julie A. Dill, Chair

Charles E. Adair

De Lyle W. Bloomquist

Thomas I. Morgan

  
   
FINANCE AND STRATEGIC PLANNING    NUMBER OF MEETINGS IN 2020: 10

 

This committee advises the Board with regard to capital strategy, financial matters and strategic planning, including:

 

LOGO  reviewing the Company’s capital structure and capital allocation priorities, policies and guidelines

LOGO  advising management with respect to development of the Company’s strategic planning process

LOGO  providing review and oversight with respect to significant financings and banking relationships

LOGO  reviewing and recommending the registration, issuance and redemption of Company equity securities and evaluating the Company’s dividend policy

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

LOGO  ensuring robust focus on growth through innovation and new products

LOGO  providing oversight with respect to the Company’s tax strategy, hedging policies and financial aspects of insurance program

 

  

 

MEMBERS:

James F. Kirsch, Chair

Paul G. Boynton

David C. Mariano

Ivona Smith

  

 


 

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NOMINATING AND CORPORATE GOVERNANCE    NUMBER OF MEETINGS IN 2020: 4

 

This committee advises the 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 the 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

Julie A. Dill

Thomas I. Morgan

The Nominating Committee and Board annually review the Company’s committee structure and may make changes in accordance with best governance practices, the optimal operation of the Board and the best interests of the Company and its stockholders.

 


 

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PROPOSAL 2 – ADVISORY VOTE ON FREQUENCY OF STOCKHOLDER VOTES ON EXECUTIVE COMPENSATION

 

 

Proposal 2 – Advisory Vote on Frequency of Future Advisory Votes to Approve the Compensation of Our Named Executive Officers

As required by Section 14A of the Securities Exchange Act of 1934, as amended, stockholders will have an opportunity to cast an advisory, non-binding vote at least once every six years to determine whether a say-on-pay proposal should be included in the proxy materials every one, two, or three years. An advisory vote on frequency will occur at our 2021 Annual Meeting of Stockholders and it is expected that the next vote on a say-on-pay frequency proposal will occur at our 2027 Annual Meeting of Stockholders.

The Board recognizes the value of receiving regular input from our stockholders on important issues, including senior executive compensation. Accordingly, after careful consideration, the Board has concluded that holding an advisory stockholder vote on an annual basis (every one year) is appropriate at this time. Note that stockholders are not being asked to approve or disapprove of the Board’s recommendation, but rather to indicate their own preference among the frequency options.

This proposal provides stockholders with the opportunity to express their preferred voting frequency for future Say-on-Pay votes by choosing the option of one year, two years or three years. The option of one year, two years or three years that receives the highest number of votes cast by stockholders will be considered by the Board as the frequency that has been selected by stockholders for future advisory Say-on-Pay votes. While this vote is not binding on the Board or the Company, the Board values the opinions of our stockholders and will take into account the outcome of the vote when considering the frequency of future advisory Say-on-Pay votes.

 

    

 

The Board of Directors recommends that you vote “FOR” “ONE YEAR” with respect to the frequency of future advisory votes to approve the compensation of our Named Executive Officers.

 

    
  

 


 

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PROPOSAL 3 – ADVISORY VOTE ON EXECUTIVE COMPENSATION    

 

 

Proposal 3 – Advisory Vote on Executive Compensation

A LETTER FROM OUR COMPENSATION COMMITTEE CHAIR

Dear Fellow Stockholders:

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).

Rayonier Advanced Materials understands and values the importance of meaningful engagement with stockholders as we believe that transparency and informed dialogue with them is an important element to assist our Board in guiding the Corporation. We have made it a practice of engaging with our stockholders to better understand their perspectives on important governance and compensation matters and while we were pleased with the improvement in our Say-on-Pay vote in 2020, we recognize that continued engagement will allow us to better align our interests and goals.

Beginning in October 2020 – and specific to the 2020 Say-on-Pay vote – we reached out to the top 25 stockholders that represent approximately 57% of our outstanding shares. Out of those institutions we only received requests for a discussion from 2 parties (holding about 17.5% of our shares). We also received a request for a discussion with a holder outside the top 25 that represents 0.25% of the outstanding shares. Working with members of our management team, specifically the SVP Human Resources, General Counsel, VP Investor Relations and VP Environmental and Sustainability, I led these stockholder engagement meetings, which focused not only on our executive compensation program, but also on the Company’s environmental, social and governance initiatives along with our experiences and learnings from the COVID-19 pandemic. Other than seeking non-financial metrics aligned with environmental, social and governance activities in the short-term plan, the outreach efforts confirmed that the changes that were made in 2020 were well aligned with expectations.

Based on last year’s stockholder outreach, we:

Incorporated Stockholder-Friendly Changes to our 2020 Incentive Programs

Modified the 2020 Annual Cash Incentive Program

For the 2020 Annual Cash Incentive Program, we made changes in response to stockholder feedback and to further align the program with our business strategy. Specifically, we:

 

 

Removed non-formulaic, qualitative objectives. The 2020 Annual Cash Incentive Program is based 100% on formulaic, quantitative measures of earnings (measured by EBITDA) and working capital, thereby creating a heightened focus on cash generation

 

 

Removed the Committee’s discretion to increase individual NEO awards by up to 30 percent, but retained the Committee’s negative discretion to reduce awards by up to 100 percent

Modified the 2020 Equity Incentive Program

For the 2020 equity incentive program grants, we made several changes to our program to enhance NEO alignment with our stockholders. Specifically, we:

 

 

Changed the mix of equity incentive compensation delivered to NEOs for 2020 to be 100% performance share units (PSUs) versus 70% PSUs and 30% restricted share units (RSUs)

 


 

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Incorporated a margin improvement metric to drive profitability

 

 

Shifted the relative Total Shareholder Return (TSR) metric from a modifier to a weighted metric that measures both relative and absolute TSR improvements over a three-year period

 

 

Reduced the maximum payout opportunity under the PSU program from 250% to 200% of target

Used a $6.00 Share Price for the 2020 Equity Incentive Program Grant Levels

Our Long Term Incentive Program awards are set in dollars and converted to shares using the average price for the ten trading days before the grant date. In 2020, for purposes of determining the number of shares to be issued in settlement of the grants, we used a $6 share price which is approximately 300% more than the grant date share price. This had the effect of reducing the target value of the LTIP awards by approximately 57% or, said differently, our CEO’s total target compensation for 2020 is 38% lower than in 2019. For our other NEO’s their average compensation decreased 30% for 2020.

Provided specific information regarding objectives in the Annual Cash Incentive Program and the Equity Incentive Program

Effective with the 2020 Annual Cash Incentive Program and the 2020 Equity Incentive Program, we provided specific information relative to the objectives established by the Board, unless these reveal competitive information. This additional disclosure should provide investors and analysts with the necessary information to feel comfortable that our executives are challenged and aligned with our stockholders.

The Compensation Discussion and Analysis (CD&A) set forth in the following pages includes information relevant to your new 2021 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 greatly value the conversation we have had with our stockholders. We appreciate that this is an ongoing dialogue and look forward to continuing the conversation before, at and after our 2021 Annual Meeting.

Rayonier Advanced Materials is proud to be part of your portfolio and we thank you for your continued support.

 

LOGO

JULIE A. DILL

Chair

Compensation and Management Development Committee

 


 

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PROPOSAL 3 – 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 pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including 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

 

 

Compensation Discussion and Analysis

In this section, we describe our philosophy and material elements of our executive compensation program and explain how our Compensation and Management Development Committee (the Committee or the Compensation Committee) makes compensation decisions, including the changes we made based on engagement with our stockholders in 2020.

Our named executive officers, or NEOs, for 2020 are listed below.

 

 

Paul G.
Boynton

 

 

 

Marcus J.
Moeltner

 

 

Frank A.
Ruperto

 

 

William R.
Manzer

 

 

James L.
Posze, Jr.

President and Chief Executive Officer

  Chief Financial Officer and Senior Vice President, Finance   Executive Vice President, High Purity and High Yield Cellulose Business(1)   Senior Vice President, Manufacturing Operations   Senior Vice President, Human Resources(2)

EXECUTIVE SUMMARY

Compensation Philosophy and Objectives

The Company’s compensation philosophy is to provide executives with a competitive compensation package that is heavily weighted towards performance-based and at-risk compensation in order to encourage superior business, stock price and financial performance over the short and longer term and to closely align the interests of the Company’s NEOs with those of its stockholders. The Committee oversees the Company’s executive compensation program.

The executive compensation program has four primary objectives:

 

 

Align executive compensation with our stockholders’ interests

 

 

Attract, engage and retain key executive talent

 

 

Reward strong business and individual performance

 

 

Maintain a balanced mix of pay elements which focuses participants on creating sustainable long-term value for stockholders

Changes to 2020 Incentive Design

As we previously disclosed in our 2020 proxy statement, we made a number of enhancements to our 2020 Annual Cash Incentive Program and Equity Incentive Program to strengthen the alignment between executives and stockholders, including modifying our:

2020 Annual Cash Incentive Program

 

 

Based 100% on quantitative measures of earnings (Adjusted EBITDA(3)) and working capital

 

 

Removed the Committee’s discretion to increase awards by up to 30%, but retained the Committee’s negative discretion to reduce awards by up to 100%

2020 Equity Incentive Program

 

 

2020 grants to NEOs are 100% in PSUs, as opposed to 70% PSUs and 30% time-based RSUs in recent years

 

 

Shifted the relative TSR metric from a modifier to a weighted metric that measures both relative and absolute TSR improvements over a three-year period

 

 

Reduced maximum PSU payout opportunity from 250% to 200% of target

 

(1) 

Mr. Ruperto left the Company voluntarily on January 22, 2021.

(2) 

Effective February 22, 2021, Mr. Posze was named Chief Administrative Officer and Senior Vice President, Human Resources.

(3) 

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

 


 

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COMPENSATION DISCUSSION AND ANALYSIS    

 

 

 

Determined 2020 grant levels set in dollars and then converted to shares using a share price of $6.00 (slightly less than triple the grant date stock price), thereby reducing NEO equity shares granted values by approximately 57%. (This has the effect of reducing our CEO’s total target compensation for 2020 by 38% versus 2019. For our other NEO’s, they have experienced an average compensation decrease of 30% for 2020.)

Stockholder Engagement

The Company’s Say-on-Pay proposal received much improved support at the 2020 Annual Meeting with approval from 78% of our stockholders. While still not receiving the endorsement to our compensation actions that we strive for, the vote indicated that the actions we took in 2020 were indeed responsive to the stockholder feedback provided. We undertook a similar outreach program this year by contacting investors holding almost 60% of our shares. Many of the investors that engaged in 2019 declined discussions in 2020, which we view as a positive indication of their satisfaction with the measures we have taken. For those investors that did engage, their feedback was generally positive regarding the changes made to programs with the principal message being that they expect the Company’s performance to continue to improve relative to executive compensation and a desire to see more environmental, social and governance metrics in the short-term incentive plan.

Our outreach included the top 25 stockholders(1) who held about 57% of our

outstanding stock as of May 1, 2020

 

LOGO

 

(1)

As of September 1. 2020.

The feedback was shared with the full Board and changes were made in response. Below is a list of the key themes heard during these conversations with stockholders and the Committee’s actions in response:

 

    

What we heard:

 

  

What we did:

 

 
   

   Explain the methodology behind peer group choices

  

   Explained that one peer group is used for compensation benchmarking purposes and supplemented by broad market data and were necessary because there are no publicly traded US competitors

 

   Provided an overview of the use of the S&P SmallCap 600 Capped Materials Index for the TSR peer group and why this is different from the compensation benchmarking groups

 

 
   

   Enhance disclosure of pay programs in the CD&A

 

  

   Refined CD&A to clearly explain why we use each pay component and how they operate

 

 
   

   Continue to focus on stockholder alignment in the design of executive pay programs

  

   Confirmed through investor discussions that the changes made to the programs for 2020 were well received and aligned with their expectations

 

 


 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

2020: A Better Year Despite Challenges Associated with the COVID-19 Pandemic

At the start of 2020, our financial commitment was to focus on reducing operating and corporate costs, lowering capital expenditures and improving cash flow through working capital. With the emergence of COVID-19, our team took decisive action to meet the challenge head-on, including:

 

 

Establishing a COVID-19 task force to help us effectively navigate the pandemic and its varied and ever-changing impacts on and disruptions to, our global business and operations

 

 

Securing “essential operations” status for each of our manufacturing facilities, whether in the U.S., Canada or France

 

 

Incorporating strict social distancing, sanitization and other new safety protocols into our manufacturing operations and processes

 

 

Shifting our office workforce to home office environments

 

 

Adapting quickly to significant shifts in demand for many of our products, including taking downtime in facilities where price and demand were insufficient to meet our goals

 

 

Driving working capital improvements and restricting capital expenditures as we waited for the full impact of the pandemic to come into better focus

By the end of 2020, lumber markets had recovered and pulp markets were beginning to show signs of recovery. Once again, we adapted quickly, adjusting our production to capitalize on these favorable shifts. The results of our efforts were reflected in our financial results. Through it all, we never lost sight of and ultimately delivered on, our financial commitments. Net Income turned positive and Adjusted EBITDA more than doubled to $153 million. We generated $73 million of Free Cash Flow and reduced Adjusted Net Debt(1) by $23 million.

Additionally, we took significant action to position the Company for success in 2021 and beyond. In December 2020, seizing on an opportunity presented by favorable markets, we refinanced our secured debt. This extended our nearest significant debt maturity to 2024 and removed restrictive covenants, while maintaining solid liquidity for the Company to continue to aggressively pursue value-creation opportunities to benefit its stockholders.

2020 Compensation Overview

The Company’s performance met our targeted financial metrics with a substantial improvement of 125% in Adjusted EBITDA over 2019 and a share price improvement of 70%. However, because of the uncertainty surrounding COVID-19, the Committee still undertook decisive action by freezing pay of all NEO’s for 2020 except for the CFO who was new to his role and adjusted for market purposes. This is the second year in a row without base pay changes for four of the five NEOs.

 

(1) 

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

 


 

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COMPENSATION DISCUSSION AND ANALYSIS    

 

 

CEO Realizable Compensation/TSR Analysis

The graphic below illustrates the annual realizable compensation of the CEO, compared to his target total direct compensation (TDC) opportunity over the last three years. This demonstrates alignment between the Company’s TSR performance versus the S&P SmallCap 600 Capped Materials Index and annual realizable compensation over these periods.

 

LOGO

Note: Target TDC represents base salary, target annual cash incentive opportunity and the grant date fair value of equity incentive awards. Realizable compensation represents the actual base salary received in each year, the actual annual cash incentive paid for each year and the estimated value of all equity incentive awards granted each year (PSUs granted in 2018, 2019 and 2020 are estimated at 60%, 0% and 100% of target, respectively, based on the Company’s historical performance). Equity incentive grants are valued assuming a 12/31/20 stock price of $6.52. The value of the 2018 special equity grant is included in the above graphic.

 


 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

2020 Compensation Program Overview

The Company’s executive compensation program consists of base salary, annual cash incentive and equity incentive program.

 

PAY ELEMENT

   COMPONENT    METRICS    WHAT THE PAY ELEMENT REWARDS

    

        
Base Salary   

  Cash

  

  Fixed amount based on responsibilities, experience and market data

  

  Scope of core responsibilities, years of experience and potential to affect the Company’s overall performance

    

        
Annual Cash Incentive   

  Cash

  

  80% Adjusted EBITDA

  20% Working Capital

  

  Focus executives on achieving annual financial and strategic objectives that drive stockholder value

    

        
Equity Incentive Program   

  PSUs (100% of total)

  

  75% combination of relative and absolute TSR objectives

  25% Adjusted EBITDA margin(1) goal in 2022

  

  Drive execution of financial goals that generate long-term stockholder value and support executive retention

 

(1)

Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by Net Sales. Management believes this measure is useful to evaluate the Company’s performance. Adjusted EBITDA is reconciled to its most directly comparable U.S. Generally Accepted Accounting Principles (GAAP) financial measures in Appendix D.

Program Pay Mix

In keeping with our pay-for-performance philosophy, a substantial portion of the 2020 compensation for our NEOs is variable. The illustration below shows the components of their total direct compensation, which consists of annual base salary, annual cash incentive opportunity and equity incentive targets, measured at target.

 

CEO Compensation    Other NEOs’ Average Compensation
LOGO    LOGO

 


 

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COMPENSATION DISCUSSION AND ANALYSIS    

 

 

Compensation Best Practices

 

What We Do

 

 

 

What We Don’t Do

 

 

ü  Vast majority of pay is at-risk or variable, i.e., performance-based or equity-based or both

 

 

ü   Stringent stock ownership guidelines (6x base salary for CEO)

 

 

ü   Clawback provisions

 

 

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

 

 

ü  Risk assessment performed annually

 

 

ü   Engage with institutional investors regarding our executive compensation program

 

 

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

 

 

×  No excise tax reimbursement for payments made in connection with a change in control

 

 

×  No option or other equity award repricing

 

 

×  No hedging or pledging of Company securities by executives

 

 

 

×  No NEO employment agreements

 

 

×  No significant perquisites

 

 

×  No overlapping performance metrics

 

COMPENSATION DISCUSSION AND ANALYSIS IN DETAIL

2020 EXECUTIVE COMPENSATION AWARDS

The Compensation Committee approved the following compensation awards for our NEOs for 2020 based on the performance of each individual and the Company’s results against its financial and strategic objectives.

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:

 

Budgeted levels for annual salary based on benchmarking of the competitive compensation positioning of our CEO and other executive officers (see discussion below in this CD&A for further information regarding the Committee’s use of benchmarking)

 

The executive’s level of responsibility

 

The executive’s experience and breadth of knowledge

 

The executive’s annual performance review

 

The executive’s role in management continuity and development plans

The base salaries for our NEOs are benchmarked against peers each year and any adjustments are effective on July 1. In 2020, base salaries were frozen for the second year in a row because of the uncertainty of the impact from COVID-19 with the exception of Mr. Moeltner, who was promoted into his position in 2019 and had an additional salary adjustment on January 1, 2020, to continue to move him into market range.

 

     

BASE SALARY

($) 2019 (EOY)(1)

    

BASE SALARY

($) 2020 (EOY)(1)

 

Paul G. Boynton

     1,005,000        1,005,000  

Marcus J. Moeltner

     375,000        425,000  

William R. Manzer

     390,000        390,000  

James L. Posze, Jr.

     335,000        335,000  

Frank A. Ruperto

     465,000        465,000  

 

(1)

Reflects End of Year (EOY) base salary rather than actual base earnings through the 12-month period as reflected in the Summary Compensation Table.

 


 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

Annual Cash Incentive

The Annual Cash Incentive Program provides our NEOs the opportunity to earn a performance-based annual cash incentive. For 2020, to address stockholder feedback, the Committee removed qualitative scoring related to strategic objectives and placed the focus solely on financial metrics. Additionally, recognizing that a significant percentage of revenue and Adjusted EBITDA are impacted by commodity price changes, the Committee implemented a commodity price collar of 50%. This collar removes 50% of the positive or negative impact of commodity price changes which places management’s focus on operating results.

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.

In 2020, as shown in the table below, the Company exceeded the financial performance goals established by the Compensation Committee for Adjusted EBITDA (inclusive of a +$9.0 million special item adjustment to reflect key initiatives that the management team was directed to undertake by the Board that were not included in the initial 2020 budget, as well as unbudgeted expenses attributable to COVID, such as newsprint volume loses and expenses associated with increased health and safety measures and operating precautions, offset by reduced travel expenses) and Adjusted Working Capital Improvement. Combined, these two financial goals account for 100% of the annual cash incentive award and the adjusted performance on these metrics resulted in a calculated cash incentive payout at 115% of target.

 

METRIC

   WEIGHTING   2020 TARGET    2020 ADJUSTED
RESULTS(1)
   2020 PLAN
RESULTS(2)

Adjusted EBITDA

    

 

70

%

   

 

177.7M

    

 

185.0M

    

 

84

%

Adjusted Working Capital Improvement(3)

    

 

30

%

   

 

100%      

 

    

 

102%      

 

    

 

31

%

 

(1)

The Adjusted EBITDA results were adjusted to reflect key initiatives that the management team was directed to undertake by the Board that were not part of the initial budget as well as reflect an adjustment for unbudgeted expenses related to COVID-19. The unadjusted EBITDA results were 65%.

 

(2)

Adjusted EBITDA threshold is established at 87.5% of target and maximum is established at 120% of target. Working Capital threshold is established at 80.0% of target and maximum is established at 120% of target. Actual performance and results are interpolated.

 

 

(3)

Adjusted Working Capital Improvement target was based on a reduction in finished goods inventory based on budget costs, an improvement in days payable outstanding (DPO), improvement in days sales outstanding (DSO) and storeroom inventory.

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

 

      FINANCIAL
OBJECTIVES
($)
    

COMMITTEE
ADJUSTMENT

($)

    TOTAL
BONUS
PAID ($)1
 

Paul G. Boynton

  

 

1,115,750

 

  

 

0

 

 

 

1,115,000

 

Marcus J. Moeltner

  

 

298,137

 

  

 

0

 

 

 

300,000

 

William R. Manzer

  

 

228,735

 

  

 

0

 

 

 

230,000

 

James L. Posze, Jr.

  

 

196,477

 

  

 

0

 

 

 

200,000

 

Frank A. Ruperto2

  

 

326,197

 

  

 

(326,197

 

 

0

 

 

(1)

Rounded to nearest $5,000.

 

(2)

Mr. Ruperto resigned on January 22, 2021, forfeiting his 2020 annual cash incentive award.

The Compensation Committee can only exercise negative discretion with an NEO’s annual cash incentive award. In 2020, Mr. Ruperto’s was modified because of his resignation.

 


 

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COMPENSATION DISCUSSION AND ANALYSIS    

 

 

2021 Annual Cash Incentive Program

Beginning in 2020, based on input from our stockholder outreach efforts related to the importance of sustainability and governance, we made an enhancement to our 2021 Annual Cash Incentive Program by incorporating an enhancement to our 2021 Annual Cash Incentive Program by incorporating metrics that are strategic in nature which comprise 20% of the opportunity. For 2021, the program has the following elements:

 

 

Quantitative measures of earnings (Adjusted EBITDA) and adjusted working capital will continue to be used, but rather than representing 100% of the award it will be reduced to 80%

 

 

The remaining 20% of the award will be based on five forward-looking, safety-related measures that are quantifiable and measurable, along with two other initiatives that will either be achieved or not, and disclosed at a later date due to their business sensitivity

Equity Incentive Program Awards in 2020

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. 100% of an executive’s equity award for this grant is in the form of 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.

In addition to changing the program to entirely PSUs, the Compensation Committee determined that the share price at the time of the grant used to determine the number of shares in the program would be held at a floor price of $6.00. As the trading average was below this threshold at the time of the March 1 grant, the actual number of shares granted to each executive was reduced by 57% versus what they otherwise would have received.

The performance metrics for the 2020 grant were based on a TSR matrix comprised of relative and absolute TSR goals (weighted 75%) and a 2022 Adjusted EBITDA Margin goal (weighted 25%). The TSR matrix included a rigorous absolute TSR minimum of 25% from the start of the measurement period (1/1/20) before any awards could be earned. The following tables illustrate these difficult and challenging objectives:

TSR Matrix (75% Weight)

 

LOGO

 


 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

Adjusted EBITDA Margin(3) in FY2022 (25% Weight)

 

      THRESHOLD   TARGET   MAXIMUM  

Adjusted EBITDA Margin % Payout Range

       30 %       100 %       200 %

The following table shows the target Equity Incentive Program award value granted for 2020 for each NEO along with the actual payout received because of the $6.00 share price floor.

 

     2020  
      TARGET
GRANT
VALUE ($)(1)
     ACTUAL
PAYOUT ($)
 

Paul G. Boynton

  

 

3,100,000

 

  

 

1,069,051

 

Marcus J. Moeltner

  

 

425,000

 

  

 

146,626

 

William R. Manzer

  

 

600,000

 

  

 

207,000

 

James L. Posze, Jr.

  

 

425,000

 

  

 

146,626

 

Frank A. Ruperto

  

 

1,000,000

 

  

 

345,001

 

 

(1)

The target value of the grant before the reduction due to the $6.00 share price floor.

2021 Equity Incentive Program

The 2021 Equity Incentive Program maintains the same metrics as used in 2020 with the exception of absolute TSR being removed. Further, if RYAM’s absolute three-year TSR is negative, payouts for the TSR component would be capped at 100% unless RYAM’s relative TSR is above the 75th percentile of the peer group at which time the cap would become 150%; however, payouts under the Adjusted EBITDA Margin metric would be measured and scored separately.

The following are the objectives for this program:

Relative TSR (50% Weight)

 

LOGO

Adjusted EBITDA Margin(4) in FY2023 (50% Weight)

 

      THRESHOLD   TARGET   MAXIMUM  

Adjusted EBITDA Margin % Payout Range

       30 %       100 %       200 %

 

(3) 

Adjusted EBITDA margin goals and results are calculated excluding duties paid and will be disclosed when Program ends in 2023.

(4) 

Adjusted EBITDA margin goals and results are calculated excluding duties paid and will be disclosed when Program ends in 2024.

 


 

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COMPENSATION DISCUSSION AND ANALYSIS    

 

 

 

Performance shares are weighted at 35% of the total award with performance cash using the same metrics to determine the payout weighted at 35% of the total award (i.e., 70% of the LTI grant value is performance-based)

 

 

Restricted Stock Grant units are being reintroduced with a weighting of 30% of the total award. These awards will cliff vest after three years from the date of grant to maximize their retention effectiveness.

Payout of Previously Awarded Performance Share Units

At the end of 2020, the three-year performance measurement period for PSUs awarded in 2018 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 for 60% of the outcome:

 

      2018 PROGRAM

Threshold

   7.0%

Target

   > 8.5%, but < 9.5%

Maximum

   12.5%

Actual Average ROIC(1) Achieved

   3.2%

 

(1)

Return on Invested Capital averaged over the three-year period from 2018 to 2020.

Based on the Company’s ROIC of 1.7% in 2020, -3.7% in 2019 and 11.5% in 2018, the 2018 ROIC component of the PSUs at 3.2% was below threshold and therefore not earned.

The second component of the 2018 PSUs was a synergy objective related to the integration of the Tembec acquisition as shown in the following table for 40% of the outcome:

 

REALIZED COST SYNERGIES
OVER THE THREE-YEAR PROGRAM

   ACHIEVEMENT

$90M or greater

   Maximum = 200%

$85M – $89M

   158.25%, plus 8.35% for each
incremental $1M over $85M

$80 – $84M

   125%, plus 6.65% for each incremental
$1M over $80M

$76M – $80M

   100%, plus 5.0% for each incremental
$1M over $75M

$75M

   Target = 100%

Greater than $50M, but less than $75M

   30%, plus 2.8% for each incremental
$1M over $50M

$50M

   Threshold = 30%

Below $50M

   0%

Based on the achievement of integration synergies of $123M over this three-year period, the results of this component were earned at maximum for 80% achieved.

Adding the two components together resulted in a total outcome of 80%; however, the three-year TSR of negative 28.6% was in the bottom quartile of our peer group (S&P SmallCap 600 Capped Materials Index), resulting in a 25% decrease in the 2018 award to 60% of target for the NEOs.

 


 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

DISCIPLINED AND TRANSPARENT EXECUTIVE COMPENSATION PRACTICES

When making compensation recommendations and decisions, the Committee considers the CEO’s assessment of the performance of each NEO other than himself; the performance of the individual and the individual’s respective business unit or function; the scope of the individual’s responsibilities; years of experience with the Company (or in similar positions with other companies); skills and knowledge; market compensation data; market and economic conditions; Company performance; retention considerations; and RYAM’s compensation philosophy (collectively, the “compensation factors”). The Committee considers these compensation factors both subjectively and objectively and no single factor or combination of factors is determinative. With respect to CEO compensation, the Committee uses it’s discretion but generally seeks to set compensation in line with the anticipated market median for our compensation comparison group for a given year.

The Compensation Committee retained Frederic W. Cook & Co., Inc. (F. W. Cook), to provide services. The Committee uses broad market survey data and peer group information provided by its compensation consultant as market reference points. The Committee also considers information the Company learns through recruiting NEOs and the experience levels and responsibilities of NEOs prior to joining the Company as reference points in setting NEO compensation.

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 January – Set base salary and Annual Cash Incentive target compensation values for new fiscal year

LOGO February – Determine Annual Cash Incentive Program payouts in respect of prior fiscal year performance

LOGO December – Set target compensation values, as well as performance measures, weightings and targets, for Equity Incentive Program awards for new fiscal year, with grants to be made in March

Establish annual performance objectives for the CEO   Annually – January
Evaluate CEO accomplishments and performance   Regular meetings and prior fiscal year’s performance review conducted in February
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 advisor and outside counsel for compensation-related advice and benchmarking   Routinely

 


 

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Table of Contents

 

COMPENSATION DISCUSSION AND ANALYSIS    

 

 

The Compensation Committee regularly invites members of management to attend its meetings, as the Committee deems necessary or appropriate, 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 assessed the independence of F. W. Cook against the specific criteria under applicable SEC and NYSE criteria and rules and has determined, in its business judgment, that F. W. Cook is independent and no conflict of interest is raised by F. W. Cook’s work for the Compensation Committee.

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.

Our compensation comparison peer group is used to assess the competitiveness of the compensation of our CEO and other executive officers. For 2020, the following companies were included in the specialty chemicals industry peer group:

 

Albemarle Corporation

Ashland Global Holdings Inc.

Ferro Corporation

H.B. Fuller Company

Innospec Inc.

Kraton Corporation

Koppers Holdings

Minerals Technologies Inc.

P.H. Glatfelter Company

PolyOne Corporation (aka Avient)

Quaker Chemical Corporation

Sensient Technologies Corporation

Stepan Company

Tronox Holding Inc.

W.R. Grace & Co.

 

 

We seek to include companies that compete with us for executive talent and are similar to us in industry, business model, revenue and/or market capitalization. Our Compensation Committee periodically reviews the composition of this peer group and makes changes it determines are appropriate based on changes to our businesses or to the attributes of companies in the group or the availability of their compensation data. Our independent compensation consultant, our CEO and members of management provided input to our Compensation Committee regarding changes to the attributes of peer companies.

The Committee also considers broad market survey data related to compensation for all publicly traded manufacturing companies from across the general industry with annual revenues between $1 billion and $6 billion.

Executive Officer 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

President & CEO

    

 

6x

Executive Vice President

    

 

3x

Chief Financial Officer

    

 

3x

Senior Vice President

    

 

2x

Vice President

    

 

1x

 


 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

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

Each year the Compensation Committee reviews each executive’s progress toward meeting the guidelines and has determined that, as of January 1, 2021 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 Annual Cash 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 is defined as 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 2020, 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 Severance 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 following 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 “best net” 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.

 


 

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COMPENSATION DISCUSSION AND ANALYSIS    

 

 

The Compensation Committee reviews the CIC Severance Plan annually and generally has discretion to terminate or amend the Plan, or include or exclude any executive, including any NEO, at any time prior to a CIC; however, if a CIC is underway, as defined by the Plan, any changes or amendments are not effective for two years.

Equity Compensation Awards and Change in Control

In the event of a CIC, the governing documents provide that outstanding stock options, time-based restricted stock and RSU awards will not automatically vest upon a CIC, but instead will vest upon the award holder’s involuntary termination of employment by the Company (other than for cause or due to death or disability) or termination for good reason occurring within two years following a CIC transaction (a “double trigger”). Performance shares or PSUs that remain outstanding upon such 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.

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 base salary plus target Annual Cash Incentive, 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 CIC, 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 which also indicates the individual severance multiple for each NEO. Such potential payments do not affect the Compensation Committee’s decisions regarding executive compensation, including base salary, annual cash incentive and long-term incentive award levels.

Retirement Benefits

The 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 Non-Qualified Deferred Compensation Table.

 


 

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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 one of our NEOs, Mr. Boynton, is a participant in these plans. For additional information regarding our Retirement Plan and Excess Retirement Plan, see the discussion following the Pension Benefits Table.

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 2020 was $25,000 for Mr. Boynton and $10,000 for all other participants.

We do not provide Company cars, pay car allowances, personal club membership dues, or home-security expenses, or provide chartered aircraft for personal use.

Certain Tax Considerations

The exemption from Internal Revenue Code (IRC) Section 162(m)’s deduction limit for performance-based compensation has been repealed, effective for taxable years beginning after December 31, 2017, such that compensation paid to any “covered employee” in excess of $1 million will not be deductible, unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017. A “covered employee” under Section162(m) is any employee who has served as our CEO, CFO or other NEO for tax years after December 31, 2016. The Committee will continue to monitor issues concerning the deductibility of executive compensation. Since compensation design objectives may not always be consistent with the requirements for tax deductibility, the Committee will in its discretion and when it deems appropriate, enter into compensation arrangements under which payments will not be deductible under Section 162(m).

 


 

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COMPENSATION DISCUSSION AND ANALYSIS    

 

 

REPORT OF THE COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE

The following report of our Compensation and Management Development Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other previous or future filings by us under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,

The Compensation and Management Development Committee of the Rayonier Advanced Materials Inc. Board of Directors (the Compensation Committee) 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 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 2020 Annual Report on Form 10-K filed with the SEC.

The Compensation and Management Development Committee

Julie A. Dill, Chair

Charles E. Adair

De Lyle W. Bloomquist    

Thomas I. Morgan    

 


 

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Table of Contents

 

EXECUTIVE COMPENSATION TABLES AND RELATED INFORMATION

 

 

EXECUTIVE COMPENSATION TABLES AND RELATED INFORMATION

2020 Summary Compensation Table

 

NAME AND PRINCIPAL

POSITION

  YEAR     SALARY
($)
    BONUS
($)(1)
    STOCK
AWARDS
($)(2)(3)
    OPTION
AWARDS
($)(2)
    NON-EQUITY
INCENTIVE PLAN
COMPENSATION
($)(4)
    CHANGE IN
PENSION VALUE
AND
NON-QUALIFIED
DEFERRED
COMPENSATION
EARNINGS ($)(5)
    ALL OTHER
COMPENSATION
($)(6)
   

TOTAL

($)

 

Paul G. Boynton

President and

Chief Executive Officer

    2020       1,005,000       -         1,069,501       -         1,155,000       2,284,996       65,327       5,579,824  
    2019       1,005,000       357,875       3,186,766       -         195,000       2,540,259       63,493       7,348,393  
    2018       988,750       4,587,529       6,697,650       -         1,451,000       -         90,170       13,815,099  

Marcus J. Moeltner

Chief Financial Officer and

Senior Vice

President, Finance

    2020       425,000       -         146,626       -         300,000       -         32,332       903,958  
    2019       310,500       -         331,244       -         35,000       -         26,653       703,397  
    -         -         -         -         -         -         -         -            

Frank A. Ruperto

SVP, High Purity and

High Yield

Cellulose Business

    2020       465,000       -         345,001       -         0       -         35,224       845,225  
    2019       465,000       51,133       1,027,994       -         55,000       -         51,873       1,651,000  
    2018       455,000       -         1,890,471       -         410,000       -         45,322       2,800,793  

William R. Manzer

Senior Vice President,

Manufacturing Operations

    2020       390,000       -         207,000       -         230,000       -         25,909       852,909  
    2019       390,000       -         616,797       -         40,000       -         49,386       1,096,183  
    2018       377,500       -         540,156       -         320,100       -         62,224       1,299,980  

James L. Posze Jr.

Senior Vice President,

Human Resources(7)

    2020       335,000       -         146,626       -         200,000       -         35,995       717,621  
    2019       335,000       -         436,919       -         35,000       -         44,869       851,788  
    2018       324,500       -         432,137       -         250,000       -         38,807       1,045,444  

 

(1)

The amounts for 2019 represent payments for Mr. Boynton and Mr. Ruperto in connection with the payout of cash-settled performance stock unit awards granted in 2016; the payments are as follows: Mr. Boynton, $357,875 and Mr. Ruperto, $51,133. The amount 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%.

 

(2)

Represents the aggregate grant date fair value of 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” sections in the notes to our financial statement included in our Annual Reports on Form 10-K for 2020, 2019 and 2018.

 

 

The grant date fair value of the 2020 PSU awards is as follows: Mr. Boynton, $1,069,501; Mr. Moeltner, $146,626; Mr. Ruperto, $345,001; Mr. Manzer $207,000; and Mr. Posze, $146,626.

 

(3)

The grant date fair value of performance stock unit awards as reported in footnote (2), 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 2020 performance stock unit awards: Mr. Boynton, $2,139,002; Mr. Moeltner, $293,252; Mr. Ruperto, $690,002; Mr. Manzer, $414,000 and Mr. Posze, $293,252.

 

(4)

Amounts under the Non-Equity Incentive Plan Compensation column represent annual cash incentive awards under our 2020, 2019 and 2018 Annual Cash Incentive Programs.

 

(5)

Represents the annual change in actuarial present value of the participant’s pension benefit under the Company’s retirement plans in 2020. The actuarial present values increased in 2020 compared to 2019. The change in pension value for Mr. Boynton was a $2,284,996 increase. There were no above-market earnings on non-qualified deferred compensation.

 

(6)

The All Other Compensation column in the Summary Compensation Table above includes the following for 2020: financial planning and tax services, 401(k) retirement contribution/enhanced match, Excess Savings Plans and other miscellaneous items.

 

(7)

Effective February 22, 2021, Mr. Posze was named Chief Administrative Officer and Senior Vice President, Human Resources.

 


 

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Table of Contents

 

EXECUTIVE COMPENSATION TABLES AND RELATED INFORMATION    

 

 

All Other 2020 Compensation

 

     PAUL G.
BOYNTON
     MARCUS J.
MOELTNER
     FRANK A.
RUPERTO
     WILLIAM R.
MANZER
     JAMES L.
POSZE JR.
 
     

($)

 

    

($)

 

    

($)

 

    

($)

 

    

($)

 

 

Tax and Financial Planning services

  

 

25,000

 

  

 

0

 

  

 

0

 

  

 

0

 

  

 

10,000

 

401(k) Plan Company contributions

  

 

11,400

 

  

 

11,400

 

  

 

11,400

 

  

 

11,400

 

  

 

11,400

 

401(k) Retirement contribution/Enhanced Match

  

 

0

 

  

 

8,550

 

  

 

8,550

 

  

 

8,550

 

  

 

8,550

 

Excess Savings Plan Company contributions

  

 

23,775

 

  

 

11,729

 

  

 

14,200

 

  

 

5,000

 

  

 

4,810

 

Miscellaneous

  

 

5,152

 

  

 

653

 

  

 

1,074

 

  

 

959

 

  

 

1,235

 

Total

  

 

65,327

 

  

 

32,332

 

  

 

35,224

 

  

 

25,909

 

  

 

35,995

 

GRANTS OF PLAN BASED AWARDS IN 2020 TABLE

 

  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
(#)

 

   

GRANT
DATE
FAIR
VALUE OF
STOCK
AND
OPTION
AWARDS
($)(4)

 

 
 

THRESHOLD
($)

 

   

TARGET

($)

 

   

MAXIMUM
($)

 

          

THRESHOLD
(#)

 

   

TARGET
(#)

 

   

MAXIMUM
(#)

 

 

Paul G. Boynton

         

 

1/9/2020

 

 

 

60,300

 

 

 

1,005,000

 

 

 

2,010,000

 

                                               
   

 

3/1/2020

 

 

 

2/18/2020

 

                                 

 

38,750

 

 

 

516,667

 

 

 

1,033,334

 

         

 

1,069,501

 

Marcus J. Moeltner

         

 

1/9/2020

 

 

 

15,555

 

 

 

259,250

 

 

 

518,500

 

                                               
   

 

3/1/2020

 

 

 

2/18/2020

 

                                 

 

5,313

 

 

 

70,834

 

 

 

141,668

 

         

 

146,626

 

Frank A. Ruperto

         

 

1/9/2020

 

 

 

17,019

 

 

 

283,650

 

 

 

567,300

 

                                               
   

 

3/1/2020

 

 

 

2/18/2020

 

                                 

 

12,500

 

 

 

166,667

 

 

 

333,334

 

         

 

345,001

 

William R. Manzer

         

 

1/9/2020

 

 

 

11,934

 

 

 

198,900

 

 

 

397,800

 

                                               
   

 

3/1/2020

 

 

 

2/18/2020

 

                                 

 

7,500

 

 

 

100,000

 

 

 

200,000

 

         

 

207,000

 

James L. Posze Jr.

         

 

1/9/2020

 

 

 

10,251

 

 

 

170,850

 

 

 

341,700

 

                                               
   

 

3/1/2020

 

 

 

2/18/2020

 

                                 

 

5,313

 

 

 

70,834

 

 

 

141,668

 

         

 

146,626

 

 

(1)

2020 Equity Incentive Program grants were approved February 18, 2020 and the grant date reflects the date on which the Compensation Committee approved the applicable performance measures. Our equity incentive program awards typically are set in dollars and converted to shares using the average price for the ten trading days before the grant date, which was $2.60 per share. However, in 2020, for purposes of determining the number of shares to be issued, we used a $6 share price which had the effect of reducing the grant date value of the equity awards by approximately 57%.

 

(2)

Reflects potential cash incentive awards under the 2020 Annual Cash Incentive Program. Awards can range from 0% to 200% of the target cash incentive award. See the 2020 Annual Cash Incentive Program section of the CD&A. The actual amount earned by each named executive officer for 2020 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 2020 PSU awards, which are part of the overall 2020 Equity Incentive Program. Awards can range from 0% to 200% of the target award based on TSR (both relative and absolute) and Adjusted EBITDA Margin performance. Please refer to the Equity Incentive Program section of the CD&A.

 

(4)

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.

 


 

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EXECUTIVE COMPENSATION TABLES AND RELATED INFORMATION

 

 

OUTSTANDING EQUITY AWARDS AT 2020 FISCAL YEAR END TABLE

 

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       0       36.5528       1/2/2014       1/2/2024                                                            
      13,986       0       45.2121       1/2/2013       1/2/2023                                                            
      13,774       0       38.1593       1/3/2012       1/3/2022                                                            
      7,523       0       31.8108       1/3/2011       1/3/2021                                                            
                                                                  3/6/2018       91,222     $ 594,767                    
                                                                  3/1/2019       63,482     $ 413,903                    
                                                                  3/6/2018                           212,850     $ 1,387,782
                                                                  3/1/2019                           29,625     $ 193,155
                                                                   

 

3/1/2020

 

 

                         

 

1,033,334

 

 

    $

 

6,737,338

 

 

Marcus J. Moeltner

      0       0       0       -         -                                                              
                                                                  3/6/2018       2,453     $ 15,994                    
                                                                  3/1/2019       3,413     $ 22,253                    
                                                                  6/17/2019       10,045     $ 65,493                    
                                                                  3/6/2018                           2,453     $ 15,994
                                                                  3/1/2019                           683     $ 4,453
                                                                  6/17/2019                           4,688     $ 30,566
                                                                   

 

3/1/2020

 

 

                         

 

141,668

 

 

    $

 

923,675

 

 

Frank A. Ruperto

      4,173       0       39.4393       3/31/2014       3/31/2024                                                            
                                                                  3/6/2018       25,748     $ 167,877                    
                                                                  3/1/2019       20,478     $ 133,517                    
                                                                  3/6/2018                           60,079     $ 391,715
                                                                  3/1/2019                           9,557     $ 62,312
                                                                   

 

3/1/2020

 

 

                         

 

333,334

 

 

    $

 

2,173,338

 

 

William R. Manzer

      1,390       0       36.5528       1/2/2014       1/2/2024                                                            
      1,047       0       45.2121       1/2/2013       1/2/2023                                                            
      1,102       0       38.1593       1/3/2012       1/3/2022                                                            
      655       0       33.0651       1/24/2011       1/24/2021                                                            
                                                                  3/6/2018       7,357     $ 47,968                    
                                                                  3/1/2019       12,287     $ 80,111                    
                                                                  3/6/2018                           17,166     $ 111,922
                                                                  3/1/2019                           5,734     $ 37,386
                                                                   

 

3/1/2020

 

 

                         

 

57,338

 

 

    $

 

373,844

 

 

James L. Posze Jr.

      2,163       0       36.5528       1/2/2014       1/2/2024                                                            
      1,399       0       45.2121       1/2/2013       1/2/2023                                                            
      828       0       38.1593       1/3/2012       1/3/2022                                                            
      729       0       31.8108       1/3/2011       1/3/2021                                                            
                                                                  3/6/2018       5,886     $ 38,377                    
                                                                  3/1/2019       8,704     $ 56,750                    
                                                                  3/6/2018                           13,733     $ 89,539
                                                                  3/1/2019                           4,062     $ 26,484
                                                                    3/1/2020                           140,768     $ 917,807

 

(1)

Option awards vest and become exercisable in one-third increments on the first, second and third anniversaries of the grant date. Restricted stock and restricted stock unit awards vest on the third anniversary of the grant date. For Mr. Moeltner, his June 17, 2019 promotional award vests on March 1, 2022 with other 2019 grants.

 

(2)

Represents performance share and performance stock unit awards granted in 2018, 2019 and 2020, with a 36-month performance period. These awards are immediately vested following the completion of the performance period upon the determination of the amount earned, if any, based upon performance achievement. Under the terms of our PSU awards, the actual award value can range from zero to 200% of the target. The 2018 and 2019 grants contained a TSR modifier which was measured cumulatively over the three-year performance period and provided the opportunity to earn an additional 25%. See the Long-Term Incentives: Equity section of the CD&A. The amounts reported here for the 2018 PSUs are reflected at target level; actual amounts earned for the performance period ending December 31, 2020 are discussed in the CD&A. The amounts reported here for 2019 are reported at threshold and 2020 awards assume maximum performance achievement, but the amounts actually earned pursuant to these awards, if any, will not be determined until following the end of the respective performance periods on December 31, 2021 and December 31, 2022.

 

(3)

Value based on the December 31, 2020 closing price of Rayonier Advanced Materials stock of $6.52.

 

(4)

Share amounts and option exercise prices shown have been adjusted to reflect a June 2014 valuation adjustment due to our spinoff from our former parent company.

 


 

52                 LOGO                 
            

 



Table of Contents

 

EXECUTIVE COMPENSATION TABLES AND RELATED INFORMATION    

 

 

OPTION EXERCISES AND STOCK VESTED IN 2020 TABLE

 

     OPTION AWARDS

 

   STOCK AWARDS

 

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