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Deltic Timber DEF 14A 2016

Documents found in this filing:

  1. Def 14A
  2. Graphic
  3. Graphic
  4. Graphic
  5. Graphic
  6. Graphic
DEF 14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a)

of the Securities Exchange Act of 1934

(Amendment No.     )

Filed by the Registrant  x

Filed by a Party other than the Registrant  ¨

Check the appropriate box:

 

¨

   Preliminary Proxy Statement    ¨    Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

x

   Definitive Proxy Statement      

¨

   Definitive Additional Materials      

¨

   Soliciting Material Pursuant to §240.14a-12      

DELTIC TIMBER CORPORATION

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

 

x  No fee required.

 

¨  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

  (1)  Title of each class of securities to which transaction applies:

 

 

  (2)  Aggregate number of securities to which transaction applies:

 

 

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

 

 

  (4)  Proposed maximum aggregate value of transaction:

 

 

  (5)  Total fee paid:

 

 

 

¨  Fee paid previously with preliminary materials.

 

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

 

  (1)  Amount Previously Paid:

 

 

  (2)  Form, Schedule or Registration Statement No.:

 

 

  (3)  Filing Party:

 

 

  (4)  Date Filed:

 

 


LOGO

DELTIC TIMBER CORPORATION

NOTICE OF ANNUAL MEETING

 

 

To The Stockholders of

Deltic Timber Corporation:

The Annual Meeting of Stockholders of Deltic Timber Corporation (“Deltic” or “the Company”) will be held at the South Arkansas Arts Center, 110 East 5th Street, El Dorado, Arkansas, on Thursday, April 28, 2016, at 10:00 a.m., Central Daylight Savings Time, for the following purposes:

 

Item 1:    To elect four Class II directors to hold office for a three-year term;
Item 2:    To express approval or disapproval of the action of the Audit Committee of the Board of Directors in appointing KPMG LLP as the Company’s independent auditors for 2016;
Item 3:    Advisory approval of the Company’s executive compensation; and

To transact such other business as may properly come before the meeting and any adjournment thereof.

Holders of record of Deltic Common Stock at the close of business on March 7, 2016, will be entitled to vote with respect to this solicitation. Stockholders are reminded that your shares of Deltic Common Stock cannot be voted unless you follow the telephonic or internet voting procedures set forth on the enclosed proxy card, or execute and return the enclosed proxy card, or make other arrangements to have your shares represented at the meeting.

A copy of the 2015 Annual Report to Stockholders and Annual Report on Securities and Exchange Commission (“SEC”) Form 10-K are enclosed.

By Order of the Board of Directors,

Jim F. Andrews, Jr.

Secretary

El Dorado, Arkansas

March 21, 2016

YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE VOTE EITHER TELEPHONICALLY OR ON THE INTERNET AS INSTRUCTED ON THE ENCLOSED PROXY CARD OR YOU MAY COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.

 

 

Important notice regarding the availability of proxy materials for the Annual Meeting to be held on April 28, 2016. The Company’s Proxy Statement and Annual Report to security holders for the fiscal year ended December 31, 2015 are also available at http://www.deltic.com.             

 

 


DELTIC TIMBER CORPORATION

210 East Elm Street

El Dorado, Arkansas 71730

 

 

PROXY STATEMENT

 

 

GENERAL

This Proxy Statement and the accompanying proxy card are being furnished in connection with the solicitation of proxies on behalf of the Board of Directors of Deltic Timber Corporation (“Deltic” or the “Company”) for the Annual Meeting of Stockholders (“Annual Meeting”) to be held on April 28, 2016, in El Dorado, Arkansas. Only stockholders of record at the close of business on March 7, 2016, (the “Record Date”) are entitled to notice of, and to vote at, the meeting. There were 12,144,139 shares of Deltic Common Stock outstanding and entitled to vote on March 7, 2016. This amount does not include 669,740 shares of treasury stock. Each share of outstanding Deltic Common Stock is entitled to one vote on each matter properly brought before the meeting.

Commencing approximately on March 21, 2016, the Company will mail its Annual Report for the year ended December 31, 2015 and its Annual Report on Form 10-K for 2015 as filed with the Securities and Exchange Commission (“SEC”), together with this Proxy Statement and the enclosed proxy card to holders of Deltic Common Stock on the Record Date.

VOTING OF PROXIES

Your vote is important. Shares can be voted at the Annual Meeting only if you are present in person or represented by proxy. Even if you plan to attend the meeting, you are urged to vote either telephonically or on the internet or to sign, date and return the accompanying proxy card.

When you vote by one of these three methods, stock represented by the proxy will be voted in accordance with your directions. You can specify your voting instructions by following the instructions for telephonic or internet voting on the enclosed proxy card or by marking the appropriate spaces on the proxy card and signing, dating and returning the proxy card. If you so elect when prompted in the telephonic or internet voting process, or if your proxy card is signed and returned without specific voting instructions, your shares of Deltic Common Stock will be voted as recommended by the Board of Directors: “FOR” the election of the four nominees for director named in the proxy card; “FOR” the ratification of the selection of KPMG LLP as the Company’s independent auditors for 2016; and “FOR” the Company’s executive compensation.

You may change your voting instructions or revoke your proxy at any time before it is voted at the meeting by: (a) re-voting telephonically or on the internet at any time up to 1:00 a.m. CDT on April 28, 2016, the date of the meeting (only the latest telephonic or internet votes will be counted); (b) executing a later-dated proxy; (c) voting by ballot at the meeting, however your mere attendance at the meeting will not revoke your proxy unless you vote in person at the meeting; or, (d) filing a notice of revocation with the inspectors of election in care of the Secretary of the Company at the above address.

 

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VOTES REQUIRED

The presence, in person or by proxy, of the holders of at least a majority of the shares of Deltic Common Stock outstanding on the Record Date is necessary to have a quorum for the Annual Meeting. Abstentions and broker “non-votes” are counted as present for purposes of determining a quorum. A broker “non-vote” occurs when a nominee holding shares of Deltic Common Stock for a beneficial owner does not vote on a particular non-routine proposal because the nominee does not have discretionary voting power with respect to that item pursuant to the applicable rules of the New York Stock Exchange (“NYSE”) and has not otherwise received voting instructions from the beneficial owner.

The election of directors (Item 1), and the advisory approval of the Company’s executive compensation (Item 3) are considered “non-routine” matters under applicable NYSE rules and, therefore, if you hold your shares through a bank, broker or other similar organization, the organization may not vote your shares on these voting items absent specific instructions from you. Accordingly, there may be broker “non-votes” with respect to these matters.

Pursuant to Delaware law and assuming a quorum is present, the affirmative vote of a plurality of the votes cast by the shares entitled to vote in the election of directors (Item 1) at the Annual Meeting is required for the election of each nominee to the Board of Directors. Abstentions and broker “non-votes” are not counted as votes cast and will have no effect on the outcome of the vote.

Generally, our bylaws provide that approval of any matter presented to stockholders (other than the election of directors) requires the affirmative vote of a majority of the shares present, in person or by proxy, at the Annual Meeting and entitled to vote on the subject matter. Accordingly, the affirmative vote of a majority of the shares present, in person or by proxy, at the Annual Meeting is required to approve the appointment of KPMG LLP as independent auditors of the Company for the year 2016 (Item 2). Abstentions will have the same effect as a vote “against” this voting item. Brokers, banks and other nominees holding shares of Deltic Common Stock for beneficial owners have discretionary voting power on this voting item, and broker “non-votes” will not occur with respect to this matter.

The vote required for the approval of the Company’s executive compensation (Item 3) is merely advisory and is not binding on the Company, the Board of Directors, or the Executive Compensation Committee of the Board of Directors. Despite the fact this vote is non-binding, the Board of Directors will take the results of this vote under advisement. With respect to Item 3, abstentions will have the same effect as a vote “against”, but broker “non-votes” will not be counted as votes cast and will have no effect on the outcome of the vote.

SOLICITATION OF PROXIES

Solicitation of proxies may be made by directors, officers, or employees of the Company through the mail, in person and by telecommunications. The cost of soliciting proxies will be borne by the Company. In accordance with the regulations of the SEC and the NYSE, the Company will also reimburse brokerage houses and other custodians, nominees, and fiduciaries for their expenses incurred in sending proxies and proxy materials to the beneficial owners of Deltic Common Stock.

PROCEDURES FOR STOCKHOLDER NOMINATIONS AND PROPOSALS

Nominations. Under the Company’s Amended and Restated Bylaws (the “Bylaws”), nominations for director may be made only by the Board of Directors (or a committee of the Board of Directors), or by a stockholder that meets the requirements set forth in the Bylaws. The Bylaws require that for stockholder nominations, a written notice be delivered to the Company’s Secretary at the Company’s principal executive

 

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offices, which are located at 210 East Elm Street, El Dorado, Arkansas 71730, not less than 90 days prior to the first anniversary of the most recent annual meeting of stockholders, which for the 2017 Annual Meeting of Stockholders, will be January 28, 2017. The written notice must be made by a stockholder of record at the time of giving the notice and who shall be entitled to vote for election of directors at the meeting for which the stockholder’s nomination relates. The written notice shall set forth as to the candidate all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, including such candidate’s written consent to be named in the Proxy Statement as a nominee and to serving as a director if elected. The notice shall also set forth as to the stockholder, the name and address as they appear on the Company’s books of such stockholder and the number of shares of the Company’s Common Stock that are beneficially owned by the stockholder. The Board of Directors’ Nominating and Corporate Governance Committee (“Committee”) has been delegated the responsibility to oversee searches for, and to identify, qualified individuals for membership on the Company’s Board of Directors. The Committee will duly consider candidates for nomination that may be submitted by stockholders in compliance with the applicable provisions of the Bylaws, and will not apply different criteria to candidates submitted by a stockholder than it applies to other candidates. Generally, the Committee reviews a candidate’s qualifications by considering criteria approved by the Board of Directors, a candidate’s satisfaction of applicable “independence” measures (and enhanced independence, financial literacy and financial expertise standards for potential Audit Committee members), while also taking into consideration current challenges and needs of the Board of Directors regarding issues of judgment, age, skills, background and experience. In addition, although the Company does not have a specific diversity policy, it considers the diversity of the candidate with regard to viewpoint, professional experience, education and skills that are relevant to the Company’s activities. Other specific criteria used by the Committee in reviewing a candidate’s qualifications are that the candidate shall have the highest personal and professional ethics, integrity and values and have evidenced in their personal and professional affairs proper judgment, independence, business acumen and an understanding of the Company’s, or related, industries.

Proposals. The Bylaws also provide that, except for stockholder proposals submitted in a timely manner for annual stockholders’ meetings, no business may be brought before any stockholders’ meeting unless specified in the notice of meeting or at the direction of the Board of Directors. The Bylaws further set forth procedures and requirements, including notice to the Company, for stockholders to submit business for proper consideration at annual meetings. Any stockholder who is a stockholder of record at the time of his/her notice, maintains his/her stock ownership so that he/she is entitled to vote at the annual stockholders’ meeting and adheres to the Bylaws’ procedures and requirements, shall be entitled to present business for consideration at such meeting. In order to present business for consideration at an annual stockholders’ meeting, a stockholder must submit a notice which sets forth a description of the nature of the business to be considered, the stockholder’s name and address as it appears in the records of the Company, the number of shares beneficially owned and any material interest of the stockholder in the business sought to be included. In order to be timely, the notice must be received by the Company’s Secretary at the principal executive office of the Company not less than 90 days prior to the anniversary of the preceding annual meeting, which for the 2017 Annual Meeting of Stockholders will be January 28, 2017. These requirements are separate and apart from, and in addition to, the SEC’s requirements that a stockholder must comply with in order to have a stockholder proposal included in the Company’s proxy materials.

Any stockholder proposal to be presented at the 2017 Annual Meeting of Stockholders should be directed to the Secretary of the Company, and must be received by the Company on or before November 21, 2016 in order to be eligible for inclusion in the Company’s proxy statement and form of proxy. Any such proposal must comply with the requirements of Rule 14a-8 of the Securities Exchange Act of 1934 (or any successor rule) and with the requirements of the Company’s Bylaws.

A copy of the full text of the Company’s Amended and Restated Bylaws may be obtained upon written request to the Company’s Secretary at the above provided Company address.

 

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STOCKHOLDER, EMPLOYEE, AND INTERESTED PARTY

COMMUNICATION WITH DIRECTORS

As set forth in the Company’s Corporate Governance Guidelines, it is the policy of the Board of Directors that stockholders, employees, and other interested parties are able to communicate directly with members of the Board of Directors, including non-management and independent directors. All communications should be directed to the Company’s Secretary, at the Company’s principal executive offices, 210 East Elm Street, El Dorado, Arkansas 71730, and should prominently indicate on the outside of the envelope that it is intended for a specified director or to the non-management or independent directors of the Company as a group. Each communication intended for a director and received by the Secretary which is related to the operation or governance of the Company, and is not otherwise commercial in nature, will be promptly forwarded to the specified party following its clearance through normal security procedures. Employees of the Company may also utilize this communication procedure. Alternatively, employees may, if they so desire, utilize the confidential and/or anonymous procedures to send written, electronic, or toll-free telephonic communications through a third party as established under the Company’s “whistle-blower” policy. Communications of a financial or fraudulent nature under the whistle-blower policy are initially directed to the Chairman of the Board of Directors’ Audit Committee.

THE COMPANY

The Company was incorporated in Delaware on September 4, 1996, in anticipation of the spin-off by Murphy Oil Corporation of its farm, timber and real estate business, then conducted by Deltic Farm & Timber Co. Inc., an Arkansas corporation (“Deltic Farm & Timber”). Effective December 17, 1996, Deltic Farm & Timber was merged with and into the Company and, effective December 31, 1996, Murphy Oil Corporation distributed all of the shares of the Company’s Common Stock.

THE BOARD OF DIRECTORS

The responsibility and authority for managing the business of the Company rest with its Board of Directors (also the “Board”), which is elected by the Company’s stockholders. The Chairman of the Board of Directors, the independent directors, and the Chief Executive Officer bring different perspectives and roles to the Company’s management, oversight and strategic development. The Company’s directors bring experience and expertise from both inside and outside the Company and its industry, while the Chief Executive Officer is most familiar with the Company’s business and its industry, and most capable of leading the execution of the Company’s strategy. The Board has determined that it remains advantageous and a benefit for the Company and its stockholders that the positions of Chairman of the Board and President and Chief Executive Officer be bifurcated because it provides the appropriate balance between strategy development and independent oversight of management. Pursuant to this structure, the Chairman is responsible for running the Board and the Chief Executive Officer is responsible for running the Company. The position of the Company’s Chairman of the Board is held by Robert C. Nolan, who is not an employee or executive of the Company. As Chairman, Mr. Nolan provides leadership to the Board and facilitates communication among the directors. He also works with the Chief Executive Officer in setting the Board agenda and regularly conducts executive sessions of the Board in which management does not participate. The Board of Directors sets strategic policy, approves business plans, and delegates authority to execute its policies and plans to the President and Chief Executive Officer.

Management is responsible for the day-to-day risk management processes of the Company, subject to Board oversight. The Board exercises risk management oversight both directly and indirectly, the latter through various Board Committees. The Board reviews information regarding the Company’s credit, liquidity and operations, including the risks associated with each at its regularly scheduled Board meetings and Board Committee meetings. The Company’s Executive Compensation Committee is responsible for overseeing the management of

 

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risks relating to the Company’s executive compensation plans and arrangements including the retention of capable, competent, and qualified people in management positions. The Audit Committee is responsible for oversight of financial risks, including the steps the Company has taken to monitor and mitigate these risks. The Nominating & Governance Committee, in its role of reviewing and maintaining the Company’s corporate governance guidelines, manages risks associated with the independence of the Board and potential conflicts of interest. While each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire Board is regularly informed through committee reports about such risks. The Board’s risk management oversight role has not specifically affected the Board’s leadership structure.

During 2015, Deltic’s Board of Directors held five regularly scheduled meetings. Also during the year, the Board’s Audit Committee, Executive Committee, Executive Compensation Committee, and Nominating and Corporate Governance Committee, held nine, five, two, and nine meetings, respectively. It is the policy of the Board of Directors that directors attend stockholder, Board of Directors, and committee meetings unless extenuating circumstances make such attendance impracticable. During 2015, all directors attended at least 90% of the aggregate number of Board meetings and their respective Board committee meetings. All directors attended the Company’s 2015 Annual Meeting of Stockholders.

COMMITTEES

To assist in fulfilling its responsibilities, Deltic’s Board of Directors has established four principal committees: the Audit Committee; the Executive Committee; the Executive Compensation Committee and the Nominating and Corporate Governance Committee. These committees are briefly described as follows:

The Audit Committee meets regularly with the Company’s independent auditors and internal auditor to assist the Board of Directors in fulfilling its oversight responsibility relating to the integrity of the Company’s financial statements and other public disclosures, and the Company’s compliance with legal and regulatory requirements, as well as assessing the qualifications, performance and independence of the Company’s independent auditors and the performance of the Company’s internal audit function. The Committee is responsible for selecting the Company’s independent auditors. The Committee approves all audit, audit-related and non-audit services of the independent auditors. The Committee is chaired by Mr. Roach with its other members being Messrs. Coley, Pierson, Lemmon, and Ms. Sullivan. Each member of the Committee has been affirmatively determined by the Board of Directors to be “independent” under applicable criteria for Committee membership under Section 10A-3(b)(1) of the Securities Exchange Act of 1934, as amended, and Section 303A of the NYSE’s Corporate Governance rules, and to meet financial literacy standards. In addition, the Board of Directors has designated Mr. Roach as the Committee’s “financial expert” based upon his professional experience and attributes. A copy of the Committee’s written charter can be accessed on the Company’s website at www.deltic.com under the Corporate Governance part of the Investor Relations section. Please see pp. 51-52 of this Proxy Statement for the Committee’s 2015 report.

The Executive Committee generally meets in the months that no meeting of the Board of Directors is scheduled and acts as surrogate for the Board of Directors by maintaining surveillance over operations and exercising the general powers of the Board of Directors when the Board of Directors is not in session. The Committee does not have the power, among other things, to: declare dividends; issue stock; amend the Bylaws; or, approve any merger or share exchange. The Committee is chaired by Mr. Nolan with its other members being Messrs. Dillon, Murphy, and Roach. Except for Mr. Dillon, each member of the Committee has been affirmatively determined by the Board of Directors to be “independent” under applicable criteria established in Section 303A of the NYSE’s Corporate Governance rules.

The Executive Compensation Committee represents for some matters and otherwise acts to assist the Board of Directors, in other matters, in fulfilling its oversight responsibility for the Company, to oversee the Company’s equity-based and other compensation and benefits plans and policies. The Committee administers the

 

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Company’s annual incentive and stock incentive plans and is authorized under the Company’s stock incentive plans to make awards of incentive and non-qualified stock options, restricted stock, performance units and other types of awards permitted under the plans. The Committee also acts upon the recommendations of the Nominating and Corporate Governance Committee regarding equity-based compensation for the Company’s non-employee directors under the Company’s 2002 Stock Incentive Plan, as amended by the Company’s stockholders on April 26, 2012. Additionally, the Committee reviews the performance levels of Deltic’s executive officers and determines base salaries and short and long-term incentive awards for such executive officers, including the Company’s President and Chief Executive Officer. Further, the Committee reviews and reports to the Board of Directors on the Company’s succession planning. The Committee is chaired by Mr. Murphy, with its other members being Messrs. Nolan, ex officio, Pierson, Tudor, Lemmon, Jones, and Rev. Keller. Each member has been affirmatively determined by the Board of Directors to be “independent” under applicable criteria established in Section 303A of the NYSE’s Corporate Governance rules. A written charter for the Committee can be accessed on the Company’s website at www.deltic.com under the Corporate Governance part of the Investor Relations section.

The duties of the Board of Directors’ Nominating and Corporate Governance Committee include: the identification of individuals qualified to become directors and recommendation to the Board of Directors of nominees for election at the next annual or special meeting of stockholders at which directors are to be elected, or to fill vacancies or newly created directorships that may occur between such meetings; recommendation of directors for appointment to the committees of the Board of Directors; oversight of the evaluation of the Board of Directors and each of its committees and members; establishment of the cash component of compensation of non-employee directors and recommendation to the Board’s Executive Compensation Committee of equity components of compensation of the non-employee directors of the Company; and, the review, suggestion of changes to and oversight of compliance with the Company’s Corporate Governance Guidelines and Code of Business Conduct and Ethics. More specific responsibilities of the Committee on governance related matters include: the evaluation of the appropriateness of continued membership on the Company’s Board of Directors upon a change in circumstance in and to professional roles and responsibilities of a director, or upon a director deciding to serve on another public company board that would be expected to require a significant devotion of time by such director; the review of any requests for waivers from provisions of the Company’s Code of Business Conduct and Ethics; the review of situations that may involve a potential conflict of interest on the part of a director; and the review of and authority to approve or disapprove all proposed related party transactions between the Company and its directors. The Committee is chaired by Rev. Keller with its other members being Messrs. Murphy, Nolan, ex officio, Roach and Coley. Each member has been affirmatively determined by the Board of Directors to be “independent” under applicable criteria established in Section 303A of the NYSE’s Corporate Governance rules. A written charter for the Committee can be accessed on the Company’s website at www.deltic.com under the Corporate Governance part of the Investor Relations section.

CORPORATE GOVERNANCE

Preceding sections of this Proxy Statement have referenced the determination of the Board of Directors regarding the “independence” of the Company’s directors, the Company’s Code of Business Conduct and Ethics and Corporate Governance Guidelines. This section provides additional information concerning these subjects.

Annually, or if the circumstances dictate a more frequent basis, the Board of Directors considers the independence of each director. To be considered independent, a director must be affirmatively determined by resolution to have no material relation with the Company other than as a director. In each case, broad consideration is given to all relevant facts and circumstances, not only as to the respective director, but also as to persons or organizations with which the director has an affiliation. Consistent with published commentary by the NYSE regarding determinations of independence, the Board of Directors has deemed that a primary consideration is independence from the Company’s management, so that the Board of Directors’ essential oversight role over the affairs of the Company is not compromised due to any such relationship. Ownership of

 

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even a significant amount of the Company’s stock, by itself, is not viewed as a bar to an independence determination, but rather, stock ownership by the Company’s directors is required in order to align directors’ interests with those of all stockholders and to provide additional incentive for proper and effective stewardship.

Categorical standards adopted by the Board of Directors to assist in its independence determinations are: (a) a director will not be determined to be independent if, (i) within the preceding three years, the director was an employee of the Company or an immediate family member was employed by the Company or its subsidiaries as an executive officer, or (ii) the director is currently an employee or partner of the Company’s independent auditor, or an immediate family member is a current partner or an employee of the Company’s independent auditor who participated in the Company’s audit, assurance or tax compliance practice, or was within the last three years (but is no longer) or the director or an immediate family member was a partner or employee of such firm and personally worked on the Company’s audit within that time, or (iii) any executive officer of the Company was a member of the compensation committee of the board of directors of a company that employed either the director or an immediate family member of the director as an executive officer; (b) a director will not be determined to be independent if the director or an immediate family member has received more than $120,000 in direct compensation (not including director and committee fees) from the Company during any twelve month period within the last three years; (c) a director will not be determined to be independent under applicable standards for Audit Committee membership if the director or the director’s immediate family members and/or affiliates have received during the last three years any consulting, advisory or other compensatory fee from the Company and its subsidiaries other than director and committee fees, or if the director is an affiliated person of the Company owning 10 percent or more of the Company’s stock; and, (d) a director will not be determined to be independent if the director is an employee of, or whose immediate family members is a current executive officer of, another company that has made payments to or received payments from the Company for property or services in an amount that in any of the last three fiscal years exceeds the greater of $1,000,000 or two percent of the other company’s consolidated gross revenues.

During its deliberations regarding director independence, in addition to the categories and factors identified above, the Board of Directors also reviewed the extent of all commercial relationships, including immaterial relationships, between the Company and its directors and their respective immediate family members and affiliates. Land management services provided by the Company were on the same terms and conditions as for all land management clients and were specifically reviewed and determined to be immaterial relationships that did not affect director independence. Sales of the Company’s lumber products were similarly reviewed and determined to be immaterial relationships and did not affect direct independence. The Company’s 2015 purchase of the office building used as its corporate headquarters from Union Holdings, LLC, in which Mr. Murphy has an indirect interest was also specifically reviewed and determined to be an immaterial relationship and did not affect his independence.

Following its deliberations, the Board of Directors affirmatively determined that Messrs. Coley, Jones, Lemmon, Murphy, Nolan, Pierson, Roach, Ms. Sullivan, Mr. Tudor, and Reverend Keller met applicable standards, and each was determined to be independent. In addition, specific consideration of the enhanced independence requirements for members of the Company’s Audit Committee was made and all members of the Audit Committee were determined to be independent and financially literate under applicable SEC and NYSE requirements. The Board of Directors also discussed the professional experience and attributes of Mr. Roach and designated him as the Audit Committee’s “financial expert” and determined that his service as chairman of the Audit Committee of another public company would not impair his ability to effectively chair the Company’s Audit Committee. Further, that Mr. Coley’s and Mr. Lemmon’s respective service on the Audit Committee of one other public company each would not impair either director’s ability to effectively serve on the Company’s Audit Committee. Further, specific consideration of the enhanced independence requirements for members of the Company’s Executive Compensation Committee was made and all members of the Executive Compensation Committee were determined to be independent under the applicable SEC and NYSE requirements.

All of Deltic’s directors and employees, including its President and Chief Executive Officer, Chief Financial Officer, and Principal Accounting Officer are required to adhere to the provisions of the Company’s Code of

 

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Business Conduct and Ethics (the “Code”). The Code addresses areas of professional conduct deemed to be essential in carrying out the Company’s business in a legal and ethical manner. Specific areas included are employment practices, conflicts of interest, and protection of confidential information and prohibition of its use for personal gain, as well as strict adherence to all laws applicable to the conduct of Deltic’s business. Under the Code, employees are required to report any conduct they believe to be an actual or apparent violation of the Code. Biannual certifications of compliance with the Code are required. No waivers to the provisions of the Code have been requested, but should any waivers to the provisions of the Code ever be allowed by the Board of Directors’ Nominating and Corporate Governance Committee, such action will be promptly posted on the Company’s website, www.deltic.com under the Corporate Governance part of the Investor Relations section, and disclosed in a current report on Form 8-K that will be filed with the SEC within four business days of such determination. The Code can be accessed on the Company’s website at www.deltic.com under Corporate Governance of the Investor Relations section.

Deltic’s Board of Directors has also adopted written Corporate Governance Guidelines (the “Guidelines”) that along with the Bylaws of the Company, its policies and procedures, and the charters of the Board of Directors’ committees provide the framework for the governance of the Company. The Guidelines provide generally that the Company’s business is conducted by its employees, managers and officers under the direction of the President and Chief Executive Officer and the oversight of the Board of Directors is to enhance the value of the Company for its stockholders. The guidelines address several important subjects, including: composition of the Board of Directors and criteria for membership; director qualifications; bifurcation of the duties of Chairman and President and Chief Executive Officer; conflicts of interest and prohibition of loans; director responsibilities, including participation and preparation for meetings; director access to management and employees and authority to hire independent legal, financial or other advisors; director orientation and continuing education; evaluation of management performance and succession; stockholder, employee, and other interested party communication with directors; and, annual performance evaluations of the Board of Directors, each of the Board of Directors’ committees and each individual director. The Guidelines also codify the Company’s practice of conducting regular executive sessions of the independent members of the Board of Directors in lieu of regular meetings of non-management directors. Mr. Nolan, the non-employee Chairman of the Board of Directors, has been affirmatively determined to be independent, presides at all such executive sessions of the Board of Directors. Should Mr. Nolan’s independence status change, the Guidelines establish procedures for selection of an appropriate director to preside at such executive session meetings. The Guidelines can be accessed on the Company’s website at www.deltic.com under the Corporate Governance of the Investor Relations section.

ELECTION OF CLASS II DIRECTORS

(ITEM A ON PROXY CARD)

The Board of Directors currently consists of eleven members. Directors are divided into three classes, as equal in number as possible. Directors hold office for staggered terms of three years (or less if they are filling a vacancy) until their successors are elected and qualified. One of the three classes is elected each year to succeed the directors whose terms are expiring. The directors in Class I were elected at the 2015 Annual Meeting to serve for a three-year term expiring at the Company’s Annual Meeting in the year 2018. Three of the directors in Class II, Messrs. Coley, Pierson, and Roach, were elected at the 2013 Annual Meeting to serve for a three-year term. Ms. Sullivan was elected as a Class II director on June 18, 2015 to fill an additional position created on that same date by the Board of Directors in accordance with the Company’s Bylaws. All Class II directors will stand for re-election for a three-year term at this year’s 2016 Annual Meeting. Three directors in Class III, Rev. Keller and Messrs Lemmon and Murphy, were elected at the 2014 Annual Meeting to serve for a three-year term expiring at the Company’s Annual Meeting in the year 2017. Mr. Jones was elected as a Class III director on June 18, 2015 to fill an additional position created on that same date by the Board of Directors in accordance with the Company’s Bylaws to serve a term expiring at the Company’s Annual Meeting in the year 2017.

The Board of Directors, acting through the Nominating and Corporate Governance Committee, is responsible for assembling a group of nominees each year that have the experience, qualifications, attributes and

 

8


skills necessary and appropriate for serving as a Board member. Notwithstanding the staggered terms of office, the Board of Directors also undergoes an evaluation process each year to ensure that all members of the Board of Directors continue to meet the criteria for a Board member, as enumerated on p. 3. In addition, the Nominating and Corporate Governance Committee regularly reviews the composition of the entire Board of Directors in light of the Company’s changing requirements and its assessment of the Board’s performance. As a result of these reviews and evaluations, Deltic’s Board of Directors: (i) affirms that each member of the Board of Directors possesses the requisite experience, qualifications, attributes and skills necessary for membership on Deltic’s Board of Directors; and (ii) proposes the following nominees for re-election as directors at the 2016 Annual Meeting:

NOMINEES FOR CLASS II DIRECTORS

With Terms Expiring at the Annual Meeting in the Year 2019:

Randolph C. Coley

R. Hunter Pierson, Jr.

J. Thurston Roach

Lenore M. Sullivan

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION OF THE ABOVE-NAMED NOMINEES AS DIRECTORS FOR A TERM OF THREE YEARS.

Information is provided below with respect to each nominee for election and for each director whose term expires in subsequent years. Should one or more of these nominees be unavailable to accept nomination or election as a director, the individuals named as proxies on the enclosed proxy card will vote the shares that they represent for the election of such other persons as the Board of Directors may recommend unless the Board of Directors reduces the number of directors. The Board of Directors knows of no reason why any of the nominees will be unavailable or unable to serve if elected.

 

9


NOMINEES FOR ELECTION AS DIRECTOR

Class II – Terms Expiring in 2019

Randolph C. Coley, 69, has been a director since February 15, 2007. Mr. Coley is a retired partner of King & Spalding LLP, an AmLaw 100 law firm, where his practice was concentrated in advising corporate clients in the areas of corporate law, corporate governance, and securities law. Mr. Coley was the head of the firm’s corporate group from 1994 to 1996, and was managing partner of the firm’s Houston office from 2001 to 2005. Mr. Coley was also Executive Managing Director and head of Investment Banking for Morgan Keegan & Company, Inc. from 1996 to 1998. Mr. Coley holds a law degree from Vanderbilt University and has also taught numerous accounting and legal continuing education courses.

Mr. Coley’s legal practice experience in corporate governance while a partner in a nationally-recognized law firm provides invaluable corporate governance expertise and counsel to the Board. Mr. Coley’s legal and investment banking experience provides an invaluable financial perspective as to Company operations and brings additional financial expertise to the Board which qualifies him to serve on the Company’s Board and to serve on its Audit Committee and its Nominating and Corporate Governance Committee.

 

Other Public Boards:   Gastar Exploration, Inc.   January 2010 – Present   Audit, Executive and Nominating and Governance Committees (Chair)
  Trade Street Residential, Inc.   June 2012 – September 2015   Audit Committee, and Nominating and Corporate Governance Committee (Chair)
Deltic Committees:   Audit Committee; Nominating and Corporate Governance Committee

R. Hunter Pierson, Jr., 64, has been a director since December 16, 1999 and, as a result, is intimately familiar with the Company’s history and operations. Following ten years as a commercial lending officer serving large private and public companies at First National Bank of Commerce, which is now JP Morgan Chase, Mr. Pierson has been engaged since 1981 in private investments, including timberlands, commercial real estate development, and securities.

Mr. Pierson’s career in banking, which included analyzing financial statements and analyzing credit risks, as well as his investment experience in timberlands and commercial real estate development, provides a broad base of relevant financial and operations experience to the Board. Mr. Pierson’s knowledge of the Company acquired through years of service to the Company, combined with his personal stake in its success, qualifies him to serve on the Company’s Board and on its Audit Committee and its Executive Compensation Committee.

 

Deltic Committees:   Audit Committee; Executive Compensation Committee

 

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Class II – Terms Expiring in 2019, continued

 

J. Thurston Roach, 74, has been a director since December 18, 2000 and, as a result, is intimately familiar with the Company’s history and operations. Mr. Roach is a retired executive and has been engaged since 2002 in private investments. Previously he served as President, Chief Executive Officer, and a director of HaloSource Corporation, (2000 – 2001), a leading clean water and antimicrobial technology company, and as Chief Financial Officer and Senior Vice President of Owens Corning (1998 – 2000), a market-leading innovator of glass fiber technology. From 1979 – 1998, Mr. Roach served in a variety of executive positions with Simpson Timber Company and its successor, including Senior Vice President and Chief Financial Officer, President, and retiring as Vice-Chairman. Mr. Roach also holds a Master of Business Administration degree from Stanford University.

Mr. Roach’s career experience as a corporate Chief Executive Officer and also as a Chief Financial Officer provides invaluable executive insight and financial expertise to the Board. His extensive timber industry experience supplements the Board’s extensive collective expertise and qualifies him to serve on the Company’s Board and on its Audit Committee, Executive Committee, and its Nominating and Corporate Governance Committee.

 

Other Public Boards:   Pope Resources, DLP   March 2003 – Present   Audit (Chair from 2005), and Human Resources Committees
Deltic Committees:   Audit Committee (Chair & Financial Expert); Executive Committee; Nominating and Corporate Governance Committee

Lenore M. Sullivan, 58, has been a director since June 18, 2015 and is a retired partner from Perella Weinberg Partners where she served as portfolio manager for the firm’s Agility Real Return Asset Fund. She currently serves on the Investment Advisory Committee of the Employee Retirement System of Texas and previously served as the Associate Director for the Real Estate and Finance and Investment Center at the University of Texas at Austin from 2002 to 2007. From 2000 to 2002, she was Vice President of Hunt Private Equity Group, Inc. and from 1992 to 2000 she was President and co-owner of Stonegate Advisors, a private equity firm. From 1995 to 1996, Ms. Sullivan was Chief Financial Officer of Canizaro Interests and from 1990 to 1992 she was a Vice President, Treasurer and acting Chief Financial Officer of Wyndham Hotel Group. Ms. Sullivan also holds a Master of Business Administration degree from Harvard University.

Ms. Sullivan’s extensive knowledge of real estate, financing, and related capital markets as well as her corporate financial experience in analyzing and evaluating financial statements and her executive experience supplements the Board’s extensive collective expertise in these areas and qualifies her to serve on the Company’s Board and on its Audit Committee.

 

Other Public Boards:   HFF, Inc.   2007 – Present   Compensation (Chair), and Nominating & Governance Committees
  RREEF America II REIT   July 2015 – Present  
Deltic Committees:   Audit Committee

 

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DIRECTORS WHOSE TERMS IN OFFICE CONTINUE

Class I – Terms Expiring in 2018

Ray C. Dillon, 60, has been the Company’s President and Chief Executive Officer and a director since July 1, 2003. Mr. Dillon has over 38 years experience in the paper and forest products industry. Prior to his present position, Mr. Dillon served in various executive positions with Gaylord Container Corporation, a manufacturer and distributor of corrugated containers, containerboard, unbleached kraft paper, multiwall bags, grocery bags and sacks, and specialty chemicals, from 1994 through mid-2003, including Executive Vice President from 2000 through mid-2003, Vice President Primary Products from 1997 through 2000, and Vice President Mill Operations from 1994 through 1997. Mr. Dillon also holds a Master of Business Administration degree from the University of Chicago.

Mr. Dillon’s day-to-day experience as the Company’s President and Chief Executive Officer gives him intimate executive insight into the Company’s challenges, opportunities, and operations. Mr. Dillon’s extensive experience in the paper and forest products industry, combined with his personal stake in the success of the Company, qualifies him to serve on the Company’s Board and to serve on its Executive Committee.

 

Other Public Boards:    U.S. Concrete   

May 2009 –

August 2010

   Executive Compensation, and Nominating and Governance Committees
Deltic Committees:    Executive Committee

Robert C. Nolan, 74, has been the Company’s non-employee Chairman of the Board of Directors since December 17, 1996 and, as a result, is intimately familiar with the Company’s history and operations. For more than 51 years, Mr. Nolan has been Managing Member of Munoco Company L.C., an Arkansas limited liability company, engaged in, among other activities, the exploration for and production of oil and gas and timberland management. Mr. Nolan is also Managing Member of Cherry Ridge, LLC, an Arkansas limited liability company for Munoco’s real estate and timberland holdings.

Mr. Nolan’s extensive experience in timberland management and oil and gas exploration and development provides broad and critical expertise on these subjects for the Board in its oversight of Company operations. Mr. Nolan’s knowledge of the Company, acquired through years of service to the Company, combined with his personal stake in its success qualifies him to serve on the Company’s Board and as an ex officio member of all Board Committees (except the Audit Committee).

 

Other Public Boards:

   BancorpSouth, Inc.    September 2000 – Present    Director
     

October 2001 –

Present

   Executive and Nominating Committees
     

October 2004 –

Present

   Executive Compensation Committee
     

October 2013 –

Present

   Directors Loan Committee

Deltic Committees:

   Serves as an ex officio member of all committees of the Board of Directors, except the Audit Committee, with full voting rights

 

12


Class I – Terms Expiring in 2018, continued

 

Robert B. Tudor, III, 56, has been a director since February 15, 2007. Mr. Tudor has been the Chairman and Chief Executive Officer and a partner of Tudor, Pickering, Holt & Co., LLC since 2006. Tudor, Pickering, Holt & Co., LLC is an integrated energy investment and merchant banking boutique providing high quality advice and services to institutional and corporate clients. Prior to the formation of Tudor, Pickering, Holt & Co., LLC, Mr. Tudor had a 20-year career as an investment banker with Goldman Sachs, where he worked in the New York, London, and Houston offices, in varying capacities including head of the southwest region and head of the European Industrial & Natural Resources Group. Mr. Tudor also holds a Juris Doctor degree from Tulane University Law School.

Mr. Tudor’s legal and investment banking experience with the internationally-recognized firm of Goldman Sachs provides an invaluable financial perspective as to Company operations and brings additional financial expertise to the Board. While at Goldman Sachs, Mr. Tudor was an advisor in the Company’s spin-off from its former parent corporation. His knowledge of the Company and executive experience qualifies him to serve on the Company’s Board and to serve on its Executive Compensation Committee.

 

Deltic Committees:   Executive Compensation Committee

DIRECTORS WHOSE TERMS IN OFFICE CONTINUE

Class III – Terms Expiring in 2017

Bert H. Jones, 64, has been a director since June 18, 2015 and has been the owner and president of Mid-States Wood Preservers, LLC since 1979. From 2003 through the present, Mr. Jones has served on the Board of Governors for the softwood lumber inspection agency, Southern Pine Inspection Bureau (SPIB), and currently serves as its Vice Chairman. Mr. Jones is a former Chairman of the Board of Directors for the Treated Wood Council (TWC), with a membership of over 400 companies, which serves companies that harvest and saw wood, manufacture wood preservatives, produce pressure-treated wood products, or serve the treated wood industry.

Mr. Jones’ executive experience and leadership within the lumber and wood products industry provides invaluable insight and supplemental expertise to the Board for its manufacturing and marketing strategies. His extensive industry experience and his own day-to-day executive manufacturing experience qualifies him to serve on the Company’s Board and to serve on its Executive Compensation Committee.

 

Deltic Committees:   Executive Compensation Committee

 

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Class III – Terms Expiring in 2017, continued

 

The Very Reverend Dr. Christoph Keller, III, 61, has been a director since December 17, 1996 and as a result, is intimately familiar with the Company’s history and operations. Rev. Keller has been an Episcopal priest since 1982, and is currently the Dean and Rector of Trinity Episcopal Cathedral in Little Rock, Arkansas. He was founding pastor of St. Margaret’s Episcopal Church in Little Rock, Arkansas, serving from 1991 to 1998. In that role, he was in charge of all business operations of the church including budgeting, accounting and auditing. He is a member of the Board of Trustees of General Theological Seminary in New York City, and a past board member of the Episcopal Church Building Fund, also in New York City. Reverend Keller has served as manager of Keller Enterprises, L.L.C., a firm with farming operations and real estate and venture capital investments (1998-2008), has served on its board and currently chairs its Executive Compensation Committee.

Reverend Keller’s farming operations and real estate experience provides relevant insights for the Board’s timberland management and real estate development strategies. Reverend Keller’s theological background provides a unique perspective for the Board committees upon which he serves. Reverend Keller’s knowledge of the Company, acquired through years of service to the Company, combined with his personal stake in its success qualifies him to serve on the Company’s Board and its Executive Compensation Committee and its Nominating and Corporate Governance Committee.

 

Other Public Boards:

  Murphy USA Inc.   August 2013 – Present   Nominating and Corporate Governance Committee; Executive Compensation Committee

Deltic Committees:

  Nominating and Corporate Governance Committee (Chair); Executive Compensation Committee

David L. Lemmon, 73, has been a director since February 15, 2007. From November 1997 until his retirement in March 2006, Mr. Lemmon served as President and Chief Executive Officer of Colonial Pipeline, an interstate common carrier of petroleum products, which delivers daily an average of 100 million gallons of gasolines, kerosenes, home heating oils, diesel fuels and national defense fuels to shipper terminals in 12 states and the District of Columbia. Prior to his tenure at Colonial Pipeline, Mr. Lemmon held various positions, including President, with Amoco Pipeline Co., which is now BP Amoco – Pipelines North America, another large interstate common carrier of petroleum products, for over thirty-two years. Mr. Lemmon also holds a Bachelor of Science degree in accounting.

Mr. Lemmon’s experience as a corporate President and Chief Executive Officer, which included supervision of the financial officers in the preparing, auditing, analyzing, and evaluating of quarterly and annual financial statements, as well as his current service on the Audit Committee of another public company, and prior Audit Committee service to another public company, provides invaluable operational insight and financial expertise for the Board and the Board Committees on which he serves. Additionally, Mr. Lemmon’s knowledge and experience attained while in Board service to the National Council of Economic Education (NCEE) provides keen macroeconomic insight that qualifies him to serve on the Company’s Board and its Audit Committee and Executive Compensation Committee.

 

Other Public Boards:

  Kirby Corporation  

April 2006 –

April 2014

  Audit Committee
  Teekay Offshore Partners   December 2006 – Present   Audit, Conflicts, and Governance Committees

Deltic Committees:

  Audit Committee; Executive Compensation Committee

 

14


Class III – Terms Expiring in 2017, continued

 

Robert Madison Murphy, 58, has been a director since December 17, 1996 and, as a result, is intimately familiar with the Company’s history and operations. Mr. Murphy is currently Chairman of the Board of Directors for Murphy USA Inc., a Fortune 500 company, and has been the Managing Member of Murphy Family Management, LLC since 1998, which is engaged in investments, farm, timber and real estate operations. Mr. Murphy has been the President of The Murphy Foundation since 1994 which is a substantial private foundation providing charitable support for a range of initiatives, predominantly in Arkansas, with an emphasis on education, scholarships and support. Mr. Murphy is also the owner of Presqu’ile Winery and Vineyards and the owner of the Sumac Company, LLC, which is engaged in investments, timber, and vineyard operations. Prior to these positions, Mr. Murphy held various executive level positions with Murphy Oil Corporation, a Fortune 500 company, including Chairman of the Board of Directors (1994-2004) and Chief Financial Officer (1992-1994).

Mr. Murphy’s corporate experience, along with his current board service to Murphy USA Inc. and Murphy Oil Corporation and previous board service to BancorpSouth, Inc., provides invaluable corporate leadership and financial expertise for the Board and for the Board Committees on which he serves. Mr. Murphy’s extensive experience in timberland management and real estate operations provides relevant insights to the Board’s timberland management and real estate development strategies. Mr. Murphy’s knowledge of the Company, acquired through years of service to the Company, combined with his personal stake in its success qualifies him to serve on the Company’s Board and its Executive Committee, Executive Compensation Committee, and Nominating and Corporate Governance Committee.

 

Other Public Boards:

  Murphy Oil Corporation   1993 – Present   Audit (Chair), and Executive Committees
  BancorpSouth, Inc.   2000 – 2011   Audit Committee
  Murphy USA Inc.   2013 – Present   Board of Directors (Chair), Executive Committee (Chair)

Deltic Committees:

  Executive Compensation Committee (Chair); Executive Committee; and Nominating and Corporate Governance Committee

 

15


 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Messrs. Murphy, Nolan and Rev. Keller are first cousins and Mr. Pierson is the spouse of a first cousin of Messrs. Murphy, Nolan and Rev. Keller. These four directors, their spouses, and members of their extended families directly or indirectly own in the aggregate approximately 26 percent of the outstanding stock of the Company. The members of these extended families cover four generations and number approximately in excess of a hundred individuals. There is no formal or informal agreement to act in concert or as a group regarding each family member’s investment in the Company. No member of these extended families is employed by the Company. See also “Ownership of Directors and Officers” on pp. 18-19 of this Proxy Statement.

The Nominating and Corporate Governance Committee, pursuant to its charter, reviews all related party transactions and determines whether such transactions are appropriate for the Company to undertake. With respect to Company employees, officers, and directors, the review is governed by the Company’s Code of Business Conduct and Ethics (the “Code”), which provides that waivers are disfavored and may only be granted by the Board and must be promptly disclosed to stockholders. A copy of the Code can be accessed under the “Investor Relations” section on the Company’s website at www.deltic.com. The review, with respect to directors, also entails an analysis of whether a proposed transaction could affect a director’s independence determination under applicable rules of the NYSE and the SEC. In addition, each January, every officer and director receives a questionnaire, which asks questions, among other things, relating to possible relationships, transactions and indebtedness that could lead to a reportable related party transaction. In 2015, no reportable material related party transactions occurred and no waivers were requested or granted.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Under the securities laws and regulations promulgated thereunder, the Company’s directors and executive officers are required to report their beneficial ownership (as defined in such laws and regulations) of the Company’s Common Stock and any changes in that ownership to the SEC and NYSE. Specific due dates for the reports have been established and the Company is required to report in this Proxy Statement any failure to file by said due dates. Based solely upon a review of Form 4s filed during the year 2015, Form 5s filed with respect to such year, and information provided in the annual director and officer questionnaires, we believe each of the Company’s directors and executive officers satisfied their filing requirements for our fiscal year ended December 31, 2015 except for one transaction dated December 8, 2014, which entailed a gift of 76 shares to a trust for Mr. Murphy’s children. Said transaction was reported on a Form 5 dated February 10, 2016.

CERTAIN STOCK OWNERSHIP

The following tables set forth information, by the categories listed, concerning beneficial ownership of Common Stock of the Company with respect to (i) each person or entity who has filed reports with the Company pursuant to applicable SEC rules disclosing ownership of as much as five percent or more of the Company’s Common Stock, (ii) for each director (including those nominated for re-election), (iii) each of the named executives listed in the “Summary Compensation Table” on p. 32 of this Proxy Statement, and (iv) directors and officers as a group.

 

16


 

OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

 

Name and Address of Beneficial Owner    Amount and
Nature of beneficial
Ownership(1)
    Percentage
(2)
 

Southeastern Asset Management, Inc.

     1,827,558 (3)      14.76

    6410 Poplar Ave., Suite 900

    

    Memphis, TN 38119

    

Wellington Management Group, LLP

     1,350,021 (4)      10.90

    280 Congress Street

    

    Boston, MA 02210

    

BlackRock, Inc.

     1,126,116 (5)      9.09

    55 East 52nd Street

    

    New York, NY 10055

    

The Vanguard Group

     861,158 (6)      6.95

    100 Vanguard Blvd.

    

    Malvern, PA 19355

    

Pictet Asset Management, SA

     767,803 (7)      6.20

    60 Route des Acacias

    

    1211 Geneva 73

    

    Switzerland

    

First Eagle Investment Management, LLC

     720,553 (8)      5.82

    1345 Avenue of the Americas

    

    New York, NY 10105

    

 

(1) Includes Common Stock for which the indicated owner has a beneficial interest as indicated in the owner’s Schedule 13G filing for the period ended December 31, 2015.

 

(2) Percentage ownership is as of December 31, 2015 and based upon total outstanding shares of 12,383,639.

 

(3) An investment company registered under Section 8 of the Investment Company Act - Longleaf Partners Small-Cap Fund, a series of Longleaf Partners Funds Trust, holding sole dispositive power for 19,400 shares and shared voting and dispositive power for 1,808,158 shares.

 

(4) Effective January 1, 2015, Wellington Management Company, LLP changed its name to Wellington Management Group LLP. An investment adviser in accordance with §240.13d-1(b)(1)(ii)(E) holding beneficial interest and shared dispositive power for all shares listed and shared voting power as to 1,003,456 of the shares listed.

 

(5) A parent holding company or control person in accordance with Rule 13d-1(b)(1)(ii)(G) holding sole dispositive and beneficial interest for all shares listed and sole voting power for 1,096,446 of the shares listed.

 

(6) An investment adviser in accordance with §240.13d-1(b)(1)(ii)(E) holding sole voting power of 24,406 shares and sole dispositive power of 835,552 of the shares listed and shared dispositive power of 25,606 of the shares listed. Vanguard Fiduciary Trust Company and Vanguard Investments Australia, Ltd., each a wholly-owned subsidiary of the Vanguard Group, Inc., are the beneficial owner of 23,706 shares and 2,600 shares, respectively.

 

(7) An investment company registered under the Investment Advisers Act of 1940 and an investment advisor in accordance with §240.13d-1(b)(1)(ii)(E) holding shared dispositive power, beneficial interest, and voting power for all shares listed.

 

(8) An investment advisor in accordance with §240.13d-1(b)(1)(ii)(E) holding beneficial interest and sole dispositive power for all shares listed and sole voting power for 698,393 shares.

 

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OWNERSHIP OF DIRECTORS AND OFFICERS(1)

 

     Name   Personal,
with full
voting and
investing
power(2)
    Personal, as
beneficiary
of trust(s)
    Spouse and
other
household
members(3)
    Voting and
investment
power only,
and not
included in
other
columns(4)
    Subject to
options
exercisable
within
60 days
    Total     Percent of
outstanding
(if greater
than .9%)
 

Directors

  Randolph C. Coley     12,112        —          —          —          —          12,112        —     
  Ray C. Dillon     117,883        —          —          —          43,787        161,670        1.3
  Bert H. Jones     2,884        —          —          —          —          2,884        —     
  Rev. Christoph Keller, III     57,004        63,980        —          111,133 (5)      —          232,117        1.9
  David L. Lemmon     12,112        —          —          —          —          12,112        —     
  R. Madison Murphy     83,159        135,633        26,818        394,621 (6)      —          640,231        5.3
  Robert C. Nolan     84,341        —          2,805        22,941 (7)      —          110,087        —     
  R. Hunter Pierson, Jr.     42,433 (8)      —          107,453        241,961 (9)      —          391,847        3.2
  J. Thurston Roach     11,112        —          —          —          —          11,112        —     
  Lenore M. Sullivan     2,484        —          —          —          —          2,484        —     
  Robert B. Tudor, III     12,112        —          —          —          —          12,112        —     
Named Executive Officers   Kenneth D. Mann     36,378        —          —          —          15,892        52,270        —     
  Kent L. Streeter     19,740        —          —          —          9,335        29,075        —     
  David V. Meghreblian     26,767        —          —          —          13,580        40,347        —     
  Jim F. Andrews, Jr.     14,294        —          —          —          7,755        22,049        —     
All   All directors, together with six executive officers, as a group     542,786        199,613        137,076        770,656        93,005        1,743,136        14.4

 

(1) Share totals and percentage of outstanding are as of February 25, 2016 based on total outstanding shares of 12,111,169.

 

(2) Included are shares of “time-based restricted stock” and/or “performance-based restricted stock” awarded in February 2013, 2014, 2015, and 2016 pursuant to the Company’s 2002 Stock Incentive Plan, as amended. Such shares are subject to time vesting requirements or to time and performance vesting requirements, but the recipients are entitled to vote the non-vested shares represented by the awards upon their grant and receive dividends declared on the Common Stock of the Company. The amounts of these categories of non-vested stock for each individual are: Mr. Dillon, 40,731 shares; Mr. Mann, 15,686 shares; Mr. Streeter, 11,014 shares; Mr. Meghreblian, 9,103 shares; Mr. Andrews, 9,277 shares; Messrs. Coley, Lemmon, Tudor, Keller, Nolan, Murphy, Pierson and Roach 4,744 shares each; and Mr. Jones and Ms. Sullivan 2,484 shares each.

 

(3) Includes shares directly owned and shares owned as beneficiary of trust(s).

 

(4) Includes shares held as a trustee for others and shares owned by a corporation or other organization of which the named person or an immediate family member is an officer, director, partner or member, and has sole or shared investment power.

 

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(5) Includes shares for which Rev. Keller is trustee and/or co-trustee under a family trust. Beneficial interest is expressly disclaimed.

 

(6) Includes shares for which Mr. Murphy is co-trustee (137,410) for the benefit of others, and 57,211 shares owned by The Murphy Foundation of which Mr. Murphy is President, and 200,000 shares held by a limited partnership of which he is a member of the LLC that is the corporate general partner. Beneficial ownership is claimed in 40,881 shares held by the limited partnership; beneficial interest in all other shares is expressly disclaimed. Mr. Murphy’s spouse also has a beneficial interest in 225 shares held by the limited partnership which are listed in the “spouse and other household members” column to avoid double counting.

 

(7) Includes shares for which Mr. Nolan is co-trustee for the benefit of others: (a) shares held by the Nolan Foundation (6,915) and (b) shares held by the Robert C. Nolan 1972 Trust (16,026), all for which beneficial ownership is expressly disclaimed. Does not include 2,805 shares held by Mr. Nolan’s spouse, which is reported in the “spouse and other household members” column.

 

(8) Shares reported include 28,886 shares contained in an investment account, which was pledged as collateral for a line of credit extended to Mr. Pierson and his spouse by JP Morgan Chase. As of March 3, 2016, no amounts were drawn on that line of credit.

 

(9) Mr. Pierson’s spouse shares investment authority by virtue of being an officer and director of a private company, which serves as general partner to family limited partnerships. Beneficial interest is expressly disclaimed.

COMPENSATION DISCUSSION AND ANALYSIS

Our Compensation Discussion and Analysis provides a detailed description of our executive compensation philosophy and programs as well as the relevant decisions and factors considered by the Executive Compensation Committee (“Committee”) in establishing our executive compensation programs for 2015. For 2015, our Named Executive Officers (“NEOs”) were:

 

Name    Position

Ray C. Dillon

   President & Chief Executive Officer (CEO)

Kenneth D. Mann

   Vice President, Treasurer, & Chief Financial Officer (CFO)

Kent L. Streeter

   Vice President, Operations

David V. Meghreblian

   Vice President, Real Estate

Jim F. Andrews, Jr.

   Vice President, General Counsel, & Secretary

Executive Summary

In 2015, Deltic achieved many notable financial and operational milestones and implemented multiple strategic initiatives that will be instrumental to our future success. Key accomplishments for 2015 include:

 

  Ø The generation of $29.7 million of cash flow from operations

 

  Ø The repurchase of 250,789 shares of Deltic common stock, or 2 percent of the shares outstanding

 

  Ø The securing of a $100 million ten-year term note at a low, fixed interest rate

 

  Ø The harvest of 755,417 tons of pine sawtimber, an increase of 21.3 percent from 2014

 

  Ø The harvest of 394,165 tons of pine pulpwood, performing critical forest maintenance

 

  Ø The investment of $24.4 million of capital in projects in the Company’s manufacturing facilities to increase the hourly lumber production rate in the sawmills, improve critical operating metrics in the medium density fiberboard plant, and improve efficiencies in all facilities

 

19


  Ø The development and offering for sale of 105 newly developed residential lots in two of the Company’s real estate developments

 

  Ø The sale of 100 residential lots during the year

Despite these financial and strategic achievements during 2015, Deltic did not achieve the 2015 threshold GAAP net income goal of $19 million established by the Committee under our annual cash incentive program. Therefore, the CEO (and two other NEOs, including the CFO) did not receive a cash incentive award for 2015. In addition, Deltic’s total shareholder return (“TSR”) versus the peer group established by the Committee for the performance-based restricted stock awards with a four-year vesting period ending in February 2016 (i.e., performance-based restricted stock awards granted in February 2012) was below the threshold level required for any shares to vest. Thus, the CEO (and the other NEOs) did not receive any payouts related to these awards.

Overall, our program is designed to attract and retain talented, competent, and high caliber executives capable of leading a natural resource company in meeting its fair, but aggressive, performance targets. Consistent with prior years, our 2015 executive compensation program was based upon the following guiding principles:

 

  Ø Emphasizing pay for performance

 

  Ø Designing compensation programs that are aligned with best practices in the market

 

  Ø Providing compensation opportunities at levels competitive to those of our comparator groups

 

  Ø Ensuring alignment with shareholder value creation

These guiding principles are reinforced further by the following best practices found in our compensation programs:

 

What We Do

ü

   Pay for performance

ü

   Capped incentive plan (annual and long-term) opportunities

ü

   A majority of long-term incentives are performance-based

ü

   Limited perquisites

ü

   Double-trigger change-in-control cash severance

ü

   Annual risk assessment for compensation programs

ü

   Clawback policy

ü

   Robust stock ownership guidelines

ü

   Use of an independent compensation consultant

ü

   Tally sheets reviewed as part of compensation setting process

 

20


What We Do NOT Do

×

   Excise tax gross-ups in new or amended agreements

×

   Allow hedging of company shares (anti-hedging policy)

×

   Re-pricing of underwater options

×

   Employment agreements

×

   Gross-ups on perquisites

×

   Gross-ups on new long-term incentive grants

Shareholder Outreach and Key Changes to 2015 Executive Compensation Program

In 2015, our Say on Pay vote received over 98% support. Overall, the Committee considered this result as evidence of stockholder support of its executive compensation decisions and policies.

Consistent with prior years, the Committee viewed shareholder outreach, as it does every year, as an opportunity to receive further feedback on the Company’s compensation program, as well as consider any needed modifications to the program. Comments received in 2015 – along with those gathered in recent years – were carefully considered and thoroughly reviewed by the Committee, with the following changes made and effective for 2015.

Key Program Changes for 2015

Based upon the comments and feedback received during our shareholder outreach efforts, as well as the annual review of our executive compensation programs against market best practices, we decided to make the following program changes that were in effect for 2015:

 

  ü Modified the 2015 target long-term incentive (“LTI”) mix to include 50% performance-based restricted stock (“PBRS”), 25% stock options, and 25% time-based restricted stock. This change also increased the overall weighting of performance-based LTI (PBRS plus stock options) to 75% from 67%

 

  ü Capped payouts for the 2015 performance-based restricted stock grants at 50% of the target opportunity if Deltic’s absolute TSR is negative (regardless of relative positioning)

 

  ü Adopted a more robust TSR Peer Group that better reflects companies against which we compete on an operational basis and/or for equity investment dollars

As in prior years, the Committee will continue to review the annual shareholder “Say on Pay” vote results, as well as other feedback from our shareholders, and determine whether to make any future changes in light of the comments it receives and prevailing market practices.

 

21


Key Components of Our Executive Compensation Program

The following table outlines the key components of our executive compensation program as well as how each component reinforces one or more facets of our executive compensation philosophy and goals:

 

Component    Rationale/Purpose

Base Salary

  

•    Attract and retain high performing individuals

 

•    Reflect an individual’s skills, experience, and performance

Annual Cash Incentive

  

•    Drive achievement of annual financial and strategic goals

 

•    Align interests and wealth creation with those of shareholders

Performance-based Restricted Stock and Stock Options

  

•    Drive achievement of long-term financial and strategic goals

 

•    Align interests and wealth creation with those of shareholders

Time-based Restricted Stock

  

•    Facilitate retention

 

•    Align interests and wealth creation with those of shareholders

Retirement Programs:

-Defined Benefit Plan

-Defined Contribution Plan

-Supplemental Retirement Plan

  

•    Attract and retain high performing individuals

 

•    Recognize sustained value-added contributions of executives over time

Change-in-Control (“CIC”) and Severance Agreements

  

•    Encourage attraction and retention of executives critical to our long-term success and competitiveness

 

•    In the case of a CIC, align interests and wealth creation with those of shareholders while also ensuring leadership stability during the transaction

Perquisites

  

•    Provided on a limited basis

 

•    Attract and retain high performing individuals

 

•    Helps to ensure executive can remain focused on execution of the business strategy

Establishing Annual Compensation Levels

In setting annual compensation levels for our executive officers, the Committee thoughtfully considered all elements of Deltic’s compensation programs, both separately and as a total package, to help ensure that our executive compensation objectives are met. In making its decisions, the Committee considers multiple relevant internal and external factors as it deems appropriate, including but not limited to: the Company’s business objectives and strategy, market best practices and trends with respect to compensation program design and levels, executive talent attraction and retention needs, and each executive’s role/responsibilities.

Comparator Groups

In order to ensure that our executive compensation program is reasonable and competitive in the marketplace, the Committee compares our program to those at other companies against which we compete on an operational basis and/or for executive talent. For 2015, the Committee used a holistic approach in selecting the comparator groups used to benchmark our executive compensation program. This approach considered key relevant factors, such as industry and “size” (defined primarily by revenue and market value) and consisted of the following sources:

 

  Ø Custom survey of 19 companies that operate in the forest products sector

 

  Ø Market compensation surveys focusing on companies of a size similar to that of Deltic and that operate in the forest products sector, with an average of 32 companies per survey

 

22


  Ø Market compensation surveys focusing on companies of a size similar to that of Deltic and that operate in the manufacturing sector, with an average of 35 companies per survey

 

  Ø Market compensation surveys focusing on companies of a size similar to that of Deltic from all industry sectors

This holistic approach allows the Committee to understand the competitive marketplace from multiple different perspectives, as well as adjust for Deltic’s size relative to the comparator group companies, when setting executive compensation levels. The total number of participants from the various comparator groups used were too numerous to be listed out individually.

The Committee (working with compensation consultants retained separately by the Committee and the Company) reviews its holistic approach annually to ensure that it continues to serve as an appropriate methodology for benchmarking our executive compensation program and levels.

Base Salary

Base salary levels for our NEOs are established annually and are set at competitive levels based upon market data as well as an individual’s skills, experience, and performance. This helps to ensure that we attract and retain the high caliber executives necessary to successfully execute our business strategy. In general, base salaries for our NEOs have been set at or near the market median levels for comparable roles.

The following table shows the base salaries effective for the NEOs for 2015. Increases were provided to two NEOs in order to position their base salaries more competitively with the market median levels for comparable roles. Base salaries for the other three NEOs were determined to already be aligned with the market median, and thus no increases were provided:

 

Name    Base Salary
As of 12/31/2014
     Base Salary
Effective 3/1/2015
     Percentage
Change
 

Ray C. Dillon

   $ 578,000       $ 578,000         0.0

Kenneth D. Mann

   $ 361,000       $ 361,000         0.0

Kent L. Streeter

   $ 293,000       $ 293,000         0.0

David V. Meghreblian

   $ 231,000       $ 238,000         3.0

Jim F. Andrews, Jr.

   $ 264,000       $ 270,000         2.3

Annual Cash Incentive Compensation

Consistent with our strong pay for performance philosophy and in order to align our executive officers’ interests with those of our shareholders, the Committee established an annual cash incentive program to motivate and reward executives for achieving annual performance objectives.

 

23


At the beginning of each year, the Committee establishes target annual cash incentive award opportunities, expressed as a percentage of base salary, for each of the NEOs. These target opportunities are set at competitive levels relative to comparable roles in the market based upon a review of market compensation data. For 2015, the target opportunities for the NEOs were:

 

Name    Target Cash
Incentive Award
(% of Base Salary)
 

Ray C. Dillon

     85

Kenneth D. Mann

     56

Kent L. Streeter

     50

David V. Meghreblian

     50

Jim F. Andrews, Jr.

     50

Annual award opportunities are capped at 2.0x the target amounts shown in the table above.

Similar to 2013 and 2014, the Committee determined that the primary metric for the 2015 annual cash incentive program would be audited GAAP net income. The Committee selected this metric because it believes that net income is a primary driver of shareholder value, provides direct accountability for the executive officers, and is an objective component in the calculation of non-equity incentive compensation. For those NEOs with segment-specific responsibilities (Messrs. Streeter and Meghreblian), overall annual cash incentive targets are split equally between corporate-level goals and segment operating performance, which is set in accordance with the Board-approved financial budget for the year (goals for these segments are not provided given their commercially sensitive nature):

 

Name    Metrics and Weightings

Ray C. Dillon

   Audited GAAP Net Income = 100%

Kenneth D. Mann

   Audited GAAP Net Income = 100%

Kent L. Streeter

   Audited GAAP Net Income = 50%
Operations Performance = 50%

David V. Meghreblian

  

Audited GAAP Net Income = 50%

Real Estate Segment Performance = 50%

Jim F. Andrews, Jr.

   Audited GAAP Net Income = 100%

The Committee established the following performance levels and payout percentages related to the 2015 audited GAAP net income metric under the annual cash incentive plan:

 

2015 Audited

GAAP Net Income

   Payout
(% of Target)
 

$45 million or higher

     200

$34.619 million

     100

$19 million

     50

Less than $19 million

     0

 

24


For audited GAAP net income performance between the levels shown in the table above, payouts would be linearly interpolated. Given that the Company achieved less than $19 million ($2.654 million) in audited GAAP net income, no payouts were made with respect to this metric. In addition, performance for both the Woodlands and Manufacturing segments (“Operations”) and the Real Estate segment was below their respective target levels, resulting in payouts of 7.2% of target (for Operations) and 16.2% of target (for the Real Estate segment). Final 2015 annual cash incentive payouts are shown in the following table:

 

Name   Metrics and Weightings   Performance Factor   Final
2015 Award

Ray C. Dillon

  Audited GAAP Net Income = 100%   Audited GAAP Net Income = 0.0x   $           0

Kenneth D. Mann

  Audited GAAP Net Income = 100%   Audited GAAP Net Income = 0.0x   $           0

Kent L. Streeter

  Audited GAAP Net Income = 50%
Operations Segment Performance = 50%
  Audited GAAP Net Income = 0.0x
Operations Segment Performance = .072x
  $           0
$    9,440

David V. Meghreblian

 

Audited GAAP Net Income = 50%

Real Estate Segment Performance = 50%

 

Audited GAAP Net Income = 0.0x

Real Estate Segment Performance = .162x

  $    9,609

Jim F. Andrews, Jr.

  Audited GAAP Net Income = 100%   Audited GAAP Net Income = 0.0x   $           0

Long-Term Equity-Based Compensation (“LTI”)

Long-term incentive awards are intended to drive sustained value creation and are set at market competitive levels. At its annual February meeting, the Committee, with the assistance of Mercer (its independent compensation consultant), determines a specific dollar amount for each Named Executive Officer or key employee eligible for LTI awards. The specific dollar amount is calculated, taking into consideration the nature of the NEO’s or key employee’s position, his/her responsibilities and contributions to the Company, and equivalent awards to NEOs or key employees in similar positions at companies comparable to Deltic.

As in prior years, the LTI mix for 2015 consisted of stock options, time-based restricted stock, and performance-based restricted stock. Beginning in 2015, we increased the weighting on performance-based restricted stock to 50%, with stock options and time-based restricted shares each being weighted 25%. Thus, 75% of our NEO’s LTI awards are performance-based (stock options plus performance-based restricted stock). For 2015, the Committee granted the following LTI awards to our NEOs:

 

Name   

Target
LTI

$ Value

     # of Perf.-
Based
Restricted
Shares
    # of Time-
Based
Restricted
Shares
    # of
Stock
Options
 

Ray C. Dillon

   $     837,000         7,316        3,219        8,107   

Kenneth D. Mann

   $ 341,000         2,981        1,312        3,303   

Kent L. Streeter

   $ 200,250         1,750        770        1,940   

David V. Meghreblian

   $ 187,000         1,635        719        1,811   

Jim F. Andrews, Jr.

   $ 194,000         1,696        746        1,879   

Weighting

        50%        25%        25%   

Performance-based Awards

        ü          ü   

 

25


Performance-Based Restricted Stock

Performance-based restricted stock (PBRS) grants help to emphasize our strong pay for performance philosophy while incentivizing our executives to successfully execute our long-term business strategy.

 

Vesting Criteria    Performance/
Vesting Period
   Metric &
Weighting
    

Relative

Metric

   Comparator
Group
 

Performance and

Continued Service

   4 years      TSR (100%)       Yes      TSR Peer Group  

The actual number of shares (if any) that vest for each of the Named Executive Officers will be determined at the end of a four-year period, and will be dependent upon the Company’s Total Stockholder Return (TSR) performance relative to the composite TSR for a select group of companies. The TSR peer group for the 2015 performance-based restricted stock grants was comprised of the following companies (in addition to Deltic Timber Corporation):

 

2015 TSR Peer Group

CatchMark Timber Trust

   Neenah Paper    Schweitzer-Mauduit

Clearwater Paper

   P.H. Glatfelter    St. Joe

Forestar Group

   Plum Creek Timber    Universal Forest Products

International Paper

   Pope Resources    Verso Paper

KapStone Paper & Packaging

   Potlatch    Wausau Paper

Louisiana-Pacific

   Rayonier    Weyerhaeuser

MeadWestvaco

     

The Committee, in its collective business judgment, selected this group as it best represents the companies against which Deltic competes for equity investment dollars. The Committee believes that TSR is a key factor for investors that choose to invest in the industry sectors in which Deltic operates and competes.

The performance scale and payout percentages for the 2015 performance-based restricted stock grants are shown in the following table:

 

Deltic TSR vs. Peers    Payout
(% of Target
Shares that Vest)

75th Percentile

   200%

50th Percentile

   100%

25th Percentile

   50%

Less than 25th percentile

   0%

For TSR performance between the levels shown, payouts would be linearly interpolated. Also, if Deltic’s absolute TSR is negative, the maximum payout is capped at 50% of target even if the Company’s relative TSR versus the TSR Peer Group would indicate a higher payout percentage.

On February 16, 2015, the performance period for the 2011 award of performance-based restricted stock ended. Because the Company’s TSR over this period was less than 80% of the Composite Total Stockholder

 

26


Return for the same period, no shares related to this performance cycle vested or were awarded to any participants, including the NEOs.

Time-based Restricted Stock

Time-based restricted stock grants help facilitate retention of our NEOs while ultimately linking the value they receive to value created for our shareholders via stock price performance.

 

Vesting Criteria    Vesting

Continued Service

   100% after 4 years

Stock Options

Stock options serve as the second of our performance-based LTI vehicles (in addition to performance-based restricted stock) and will ultimately only have value to the extent our stock price increases and is above the exercise price.

 

Vesting Criteria    Vesting    Term    Exercise Price

Continued Service

   25% on each of the first four anniversaries of the grant date    10 years    Equal to the closing price of Deltic common stock on the NYSE on the date of grant

Summary of 2015 President & CEO Compensation

The following table summarizes the difference between amounts granted (at target) to Mr. Dillon in 2015 and those amounts he actually received in 2015.

 

Pay Component    2015
Target Amounts
     2015
Actual Amounts
     % Difference  

Base Salary

   $ 578,000       $ 578,000         0

Bonus

   $ 491,300       $ 0         -100

Stock Options

   $ 209,250       $ 285,779         37

Time-based Rest. Stock

   $ 209,250       $ 386,830         85

Perf.-based Rest. Stock

   $ 418,500       $ 0         -100

Total Compensation

   $ 1,906,300       $ 1,250,609         -34

 

27


Stock Ownership Guidelines

In 2013, the Company adopted stock ownership guidelines for its executives (see the following table). Executives have until the end of February 2018 to comply with this requirement, if not already in compliance.

 

Position    Multiple of
Base Salary
 

President & CEO

     5.0x   

Vice Presidents

     2.0x   

Both the President and Chief Executive Officer and the Vice President and Chief Financial Officer are already in compliance with this requirement, with the Company’s three other Vice Presidents either also in compliance or in position to be so by or before February 2018.

Clawback Policy

Beginning in 2013, the Committee extended the clawback requirement that already existed under the Sarbanes-Oxley Act for the Company’s President and Chief Executive Officer and Vice President and Chief Financial Officer to the Company’s other Named Executive Officers. This requirement will remain in place until legal guidance is given pursuant to the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. At that time, the Company will implement a clawback policy for its Named Executive Officers consistent with these new requirements.

Retirement Benefits and Plans

The Company offers certain retirement benefits and a retirement savings plan to its employees, including the Named Executive Officers. These retirement benefits and retirement savings plans are described as follows:

Retirement Plan

All of the Company’s current Named Executive Officers, are eligible to participate in the Retirement Plan of Deltic Timber Corporation (the “Retirement Plan”), a qualified defined benefit retirement plan, upon achieving 1,000 hours of service during a 12 month period after beginning employment with the Company. Participants earn the right to receive a monthly benefit for life upon retirement. The retirement benefit is defined by a calculation, which is illustrated below:

 

   

[1.6% x Average Monthly Compensation x years of benefit service] minus

 

   

[1.5% x Primary Monthly Social Security Benefit x years of benefit service (limited to 33 1/3 years)]

“Average Monthly Compensation” is calculated using the participant’s highest 36 consecutive months of total compensation (salary plus non-equity compensation) out of his/her final 120 months of employment covered by the Retirement Plan.

“Primary Monthly Social Security Benefit” is defined as the monthly amount of the estimated Social Security benefit available upon the employee’s retirement.

If a participant retires between the ages of 55 and 61 and has 10 or more years of vesting service, the participant can begin receiving a reduced monthly benefit as defined by the formula in the Retirement Plan. The Retirement Plan does not require participants to retire at the normal retirement age. For those participants that retire later, the benefit calculation will use the actual retirement date and in no event will such benefit be less than that accrued at the normal retirement date.

 

28


The entire cost of the Retirement Plan is paid by the Company (the “Sponsor”), and participants are neither required nor permitted to make contributions to the Retirement Plan. Five years of service is the vesting period for the Retirement Plan. The provisions of the Retirement Plan, and the investment of its assets, are overseen by the Company’s Pension Investment and Employee Benefits Committee, whose members are appointed by the Board. These members are currently Ray C. Dillon, Kenneth D. Mann, and Jim F. Andrews, Jr., who deliver a report annually to the Executive Compensation Committee. SunTrust Institutional Investment Solutions, a subsidiary of SunTrust Bank of Nashville, Tennessee, serves as the Retirement Plan’s trustee and the Pension Investment and Employee Benefits Committee has retained the firm of Merrill-Lynch to assist it in investment management oversight. The independent employee benefits consulting firm of Bryan, Pendleton, Swats and McAllister of Jackson, Mississippi, serves as actuary for the Retirement Plan.

Retirement Savings Plan

The Company also offers a qualified defined contribution savings plan [Internal Revenue Code Section 401(k)] to its Named Executive Officers, known as the Thrift Plan of Deltic Timber Corporation (the “Thrift Plan”), for which the Company fully matches the first 5% of tax-deferred base salary and non-equity compensation contributed by employees eligible to participate in the Retirement Plan. For employees not eligible to participate in the Retirement Plan, the Company contributes the 5% match and also contributes an additional 4% of base salary to the Retirement Savings Plan on their behalf. All contributions, including the Company match, are fully vested upon contribution. No Company matching level exists beyond the employee’s 5% contribution, but employees are otherwise able to contribute up to the limit prescribed by the Internal Revenue Code to the plan on a pre-tax basis. All employees may also make contributions to a supplemental account on an after-tax basis.

The Thrift Plan provides various investment funds to which employee contributions, along with the Company’s match, may be directed by the employee for investment. With limited exceptions as provided by the Internal Revenue Code, the before-tax invested funds may not be withdrawn until the participate reaches age 59  1/2. The provisions of the Thrift Plan, and the investment of its assets, are overseen by the Company’s Pension Investment and Employee Benefits Committee, described above. SunTrust Bank of Nashville, Tennessee serves as the trustee and the administrator. The Thrift Plan began in 1983 and was amended to its current form, in conjunction with the Company’s stock becoming publicly traded, effective January 1, 1997.

Supplemental Executive Retirement Plan

In addition to the Retirement Plan and Thrift Plan listed above, which are provided to all employees, the Company provides a supplemental executive retirement plan (the “SERP”) to its Named Executive Officers. The current SERP was amended and restated effective January 1, 2005 for conformance with the requirements of Internal Revenue Code Section 409A and has the intended purpose of restoring Retirement Plan and Thrift Plan benefits that would otherwise be unavailable to the Named Executive Officer due to limitations imposed by the Internal Revenue Code. The SERP constitutes an unsecured promise of the Company to pay benefits to the Named Executive Officers, and their beneficiaries, in the future upon the occurrence of certain payment events. Currently, the SERP is unfunded for federal tax purposes and for purposes of Title I of the Employee Retirement Income Security Act (“ERISA”) of 1974. Though unfunded, the SERP account of each Named Executive Officer remains an unsecured contractual obligation of the Company. The amounts of those obligations are detailed in the 2015 Non-Qualified Deferred Compensation Table, p. 41.

The provisions of the SERP, and the investment of its assets, are overseen by the Committee. Investment options available to the Named Executive Officers in their SERP accounts are the same as those available to all employees under the Thrift Plan. Accordingly, the earnings on these investments are not regarded as “preferential”.

 

29


Perquisites and Other Benefits

Overall, we provided limited perquisites to our NEOs, and our NEOs also receive the same benefits as those provided to all other employees. For the 2015 fiscal year, none of the NEOs reported receiving total perquisites and personal benefits that met the disclosure threshold of $10,000. Like other employees of the Company, the NEOs receive a Company match on Thrift Plan contributions and the sale of up to two weeks accrued, but unused, vacation time back to the Company each year. These other income items are detailed for each of the NEOs in the 2015 All Other Compensation Table in footnote 7 on p. 33.

Role of Executive Officers in Compensation Decisions

The Committee annually reviews each component of the total compensation paid to each Named Executive Officer during its February meeting. This review covers base salary as well as the establishment of performance targets related to the Company’s incentive compensation plans, among other issues. At this meeting, the President and Chief Executive Officer presents his evaluation of the performance of the other Named Executive Officers and his compensation recommendations to the Committee. The Committee exercises its discretion in accepting or modifying these recommendations and independently makes the performance evaluation and compensation decisions with regard to the President and Chief Executive Officer. No other Named Executive Officer presents compensation recommendations to the Committee. The Committee members also interact with the Named Executive Officers through the Company’s internal reporting procedures and during the Board meetings and Board Committee meetings during which their own personal performance evaluations of the Named Executive Officers can be made.

Role of Executive Compensation Committee

The Executive Compensation Committee administers our executive compensation programs and establishes and monitors the overall compensation strategy to ensure that these programs support the Company’s goals and objectives. The Committee is responsible for setting the compensation of the CEO and all other executive officers. As part of this process, the Committee, with assistance from its compensation consultant, reviews the total compensation packages (including using tally sheets), the components of the compensation packages, and market best practices with respect to comparable executives at similarly-situated companies. The Committee also consults with the other independent directors on the Board before setting annual compensation for our executive officers. In addition, the Chairman of the Committee regularly reports on Committee actions at Board meetings.

Role of Independent Compensation Consultant

To assist in its review, the Committee retained the services of a compensation consultant, Mercer, an independent and nationally recognized firm. At its meeting on February 17, 2016, the Committee affirmatively determined that neither Mercer, nor its representative, had a conflict of interest with either the Company or the Committee in regard to the compensation consulting services provided.

Compensation Risk Assessment

On an annual basis, the Company conducts a risk assessment with respect to compensation of the executive officers, with the assistance of Mercer. This risk assessment includes an analysis of the alignment of the Board’s expressed compensation philosophy and compensation goals with the Company’s strategic goals, short-term and long-term focus and timing issues, compensation drivers and potential risks of each type of pay component, vesting periods, stock ownership, and other factors. Benefit plans, stock plans, and compensation policies are also examined. This assessment is also reviewed annually with the Committee. As a result of this process, the conclusion was that the Company’s 2015 compensation policies were not reasonably likely to have a material adverse effect on the Company.

 

30


Agreements between the Company and the NEOs

Deltic does not have employment agreements with any of its NEOs. Each of the NEOs is subject to a Change-in-Control Agreement and in the case of Mr. Dillon only, an Involuntary Severance Agreement that provides for certain levels of compensation related to select events. Additional details on these provisions and amounts can be found in the section of this proxy entitled “2015 Potential Payments Upon Termination or Change In Control Table” beginning on page 44.

Non-Qualified Deferred Compensation

The tax rules applicable to non-qualified deferred compensation arrangements were impacted by the enactment of the American Jobs Creation Act on October 22, 2004, codified as Internal Revenue Code Section 409A. As of December 31, 2015, the Company is in full compliance with Internal Revenue Code Section 409A.

Tax Deductibility of Executive Compensation

The Committee annually reviews and considers the deductibility of executive officer compensation under Section 162(m) of the Internal Revenue Code, which is discussed herein on p. 50.

Executive Compensation Committee Report

The Executive Compensation Committee of the Board of Directors for Deltic Timber Corporation has reviewed and discussed the contents of this Compensation Discussion and Analysis, required by Item 402(b) of SEC Regulation S-K, with the Company’s management and its executive officers, and based on such review and discussions, recommended to the Board that it be included in this Proxy Statement.

THE EXECUTIVE COMPENSATION COMMITTEE

R. Madison Murphy, Chairman

Christoph Keller, III

Robert C. Nolan, ex officio

R. Hunter Pierson, Jr.

Bert H. Jones

David L. Lemmon

Robert B. Tudor, III

 

31


2015 SUMMARY COMPENSATION TABLE

The Summary Compensation Table shown below summarizes the total compensation earned by the Company’s Chief Executive Officer, Chief Financial Officer, and its three other most highly compensated officers – the “Named Executive Officers” or “NEOs” for the year ended December 31, 2015. Messrs. Dillon, Mann, Streeter, Meghreblian and Andrews served in their individual capacities, as designated below, during the entire year.

As shown below, the Named Executive Officers received base salary, equity awards, option awards, non-equity incentive plan compensation, and other forms of compensation during the year. The Company’s method for determining the total compensation paid to these officers is discussed under the heading “Compensation Discussion and Analysis” starting at p. 19.

 

Name and Principal
Position

(a)

  Year
(b)
   

Base
Salary(1)
$

(c)

   

Bonus(2)
$

(d)

   

Stock
Awards(3)
$

(e)

   

Option
Awards(4)
$

(f)

   

Non-Equity
Incentive Plan
Compensation(5)
$

(g)

   

Change in
Pension

Value and
Nonqualified
Deferred
Compensation
Earnings(6)

$

(h)

   

All Other
Compensation(7)
$

(i)

   

Total

$

(j)

 

Ray C. Dillon

President & Chief Executive Officer

    2015        578,000        —          779,236        197,811        —          136,926        197,416        1,889,389   
    2014        578,000        —          791,614        204,047        —          108,103        251,751        1,933,515   
    2013        572,500        —          915,500        233,390        867,000        5,525        278,726        2,872,641   

Kenneth D. Mann

Vice President, Treasurer & Chief Financial Officer

    2015        361,000        —          317,535        80,593        —          62,864        92,884        914,876   
    2014        360,000        —          298,663        76,961        —          270,449        102,975        1,109,048   
    2013        352,833        —          332,681        84,914        355,000        (64,960     108,634        1,169,102   
                 

Kent L. Streeter

Vice President, Operations

    2015        293,000        —          186,395        47,336        17,536        41,237        68,591        654,095   
    2014        292,166        —          222,244        57,278        17,536        107,788        76,087        773,099   
    2013        283,333        —          250,050        63,535        170,640        (3,354     83,134        847,338   

David V. Meghreblian

Vice President Real Estate

    2015        236,833        —          174,120        44,188        35,747        45,646        58,286        594,820   
    2014        229,500        —          179,583        46,802        35,747        214,954        63,378        769,964   
    2013        221,833        —          202,895        51,509        121,617        (9,910     71,217        659,161   

Jim F. Andrews, Jr.

Vice President, General Counsel, Secretary

    2015        269,000        —          180,628        45,848        —          54,185        52,140        601,801   
    2014        258,333        —          181,531        46,277        —          109,720        33,514        629,375   
    2013        225,000        —          200,492        51,195        230,000        35,671        26,246        768,604   

 

(1) The amounts shown in column (c) are strictly base salary amounts included on IRS Form W-2 for the years shown. Except for Thrift Plan contributions, no amounts of salary were deferred.

 

(2) None of the Named Executive Officers received payments that, for these disclosure purposes, the Company characterizes as “Bonus” for any of the reporting periods. The incentive cash award earned by, and as applicable to, each during 2013, 2014, and 2015 is classified herein as “Non-Equity Incentive Plan Compensation” disclosed at column (g).

 

(3) The amounts shown in column (e) reflect the full grant date fair value of the restricted stock awards (both time-based and performance-based) granted under the Company’s 2002 SIP for the years shown in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. During 2015, there were no re-pricings or modifications of stock awards and there were no forfeitures by any of the above Named Executive Officers. In valuing the performance-based restricted stock, the target share amounts were utilized as the most probable outcome for these performance units. As to performance-based restricted stock, and assuming achievement of the highest performance conditions upon vesting in 2019, the reported amounts for 2015 would be increased by the following amounts: Mr. Dillon, $567,136; Mr. Mann $231,087; Mr. Streeter, $135,660; Mr. Meghreblian, $126,746; and Mr. Andrews, $131,474.

 

32


(4) The amounts shown in column (f) reflect the full grant date fair value of the option awards granted under the Company’s 2002 SIP for the years shown, in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, utilizing the Binomial Model value of $24.40 per share for 2015; $21.87 per share for 2014; and $26.20 per share for 2013. The exercise price of these option grants was determined by the closing price on the date of grant. During 2015, there were no re-pricings or modifications of option awards and there were no forfeitures by any of the above Named Executive Officers.

 

(5) The amounts reported in column (g) reflect performance-based cash incentive awards and fall outside the scope of the fair value-based measurement method. These amounts were earned during the year ended December 31, 2015, were reviewed by the Committee on February 17, 2016, and paid in full by the Company on February 24, 2016. No amounts payable under the performance-based cash incentive awards were deferred, either at the election of the Named Executive Officers, or per the Committee’s direction. In calculating the non-equity incentive compensation payable from the formulas shown on pp. 24-25, the Committee uses the Named Executive Officer’s annualized monthly salary at year’s end. The annualized amount differs from the amount reported in column (c) as the Committee conducts a salary review during its February meeting each year. In 2015, any increase received by a Named Executive Officer would be effective March 1, 2015. These annualized salary amounts used for the non-equity incentive compensation calculation were: Mr. Dillon, $578,000; Mr. Mann, $361,000; Mr. Streeter, $293,000; Mr. Meghreblian, $238,000; and Mr. Andrews, $270,000.

 

(6) The amounts shown in column (h) and reported for 2015 reflect changes in the actuarial present values in the defined benefit pension plan for the Named Executive Officers and as calculated from December 31, 2014 to December 31, 2015. Calculations are based on Financial Accounting Standards Board Accounting Standards Codification Topic 715-20 assumptions and are determined by the Company’s actuary.

 

(7) The amounts reflected in column (i) for 2015 are detailed in the table below:

 

Name

(a)(1)

  

Year

(b)

     Vacation
Sold Back
To
Company(2)
($)
(c)
     Vacation
Paid To
Retirees
($)
(d)
     Insurance
Premiums
($)
(e)
    

Company
Contributions
to Retirement
and 401(k)
Plans

($)
(f)

     Gross-Ups
on Vested
Equity(3)
($)
(g)
     Change in
Control
Payments /
Accruals
($)
(h)
     Total
($)
(i)
 

Ray C. Dillon, CEO

     2015       $ 33,346       $ 0       $ 4,560       $ 30,567       $ 128,943       $ 0       $ 197,416   

Kenneth D. Mann, CFO

     2015       $ 20,827       $ 0       $ 3,297       $ 19,091       $ 49,669       $ 0       $ 92,884   

Kent L. Streeter

     2015       $ 11,269       $ 0       $ 2,677       $ 16,090       $ 38,555       $ 0       $ 68,591   

David V. Meghreblian

     2015       $ 11,900       $ 0       $ 2,164       $ 14,224       $ 29,998       $ 0       $ 58,286   

Jim F. Andrews, Jr.

     2015       $ 5,192       $ 0       $ 2,453       $ 13,710       $ 30,785       $ 0       $ 52,140   

 

(1) The amounts shown in this table do not include any amounts for perquisites as such received by the Named Executive officers during the 2015 fiscal year did not meet the SEC’s disclosure threshold of $10,000.

 

(2) The amounts shown in column (c) reflect compensation paid to each Named Executive Officer for the sale of up to two weeks of accrued, but unused vacation back to the Company.

 

(3) The amounts shown in column (g) reflect tax gross-ups paid by the Company for 2011 time-based restricted equity awards that vested in 2015. As reported herein, the Company discontinued the payment of tax gross-ups on all equity awards granted after December 31, 2012.

 

33


The 2002 Stock Incentive Plan

The 2002 Stock Incentive Plan. The Deltic Timber Corporation 2002 Stock Incentive Plan or (the “2002 SIP”) was approved by the Company’s stockholders at its Annual Meeting of Stockholders on April 25, 2002 as the successor plan to the 1996 Deltic Timber Corporation Stock Incentive Plan. The Company filed its registration statement for 1,800,000 common shares designated for the 2002 SIP with the Securities and Exchange Commission on June 7, 2002. At the Company’s 2012 Annual Meeting, the Company’s stockholders approved a ten-year extension for the term of the 2002 SIP, which will now expire on April 26, 2022. As of December 31, 2015, there were 796,413 common shares previously registered with the Securities and Exchange Commission on June 7, 2002 that remained available for award of equity-based compensation under the 2002 SIP.

The Executive Compensation Committee administers the 2002 SIP and has broad discretion in the granting of awards including, but not limited to, the number of shares and provisions regarding grant price, expiration date, exercisability, vesting, forfeiture, transfer restrictions and payment and the impact, if any, of termination of employment on the foregoing. Awards that may be granted to the Company’s employees, including its Named Executive Officers, and its non-employee directors by the Committee include:

(1) Options. The Committee may grant incentive stock options (“ISOs”) or non-qualified stock options, which are the contractual right to purchase a specified number of shares of the Company’s common stock at a specified price (the exercise price) within a time period not to exceed ten years after the grant date. Originally, the Company granted a combination of both ISOs and non-qualified stock options, but has not issued any ISOs since 1999. Exercise of options, subject to the rules imposed by the Committee, may be paid in whole or in part in (i) cash, (ii) whole shares of common stock valued at the fair market value on the date of exercise, (iii) by a combination, or (iv) by such methods of payment or other consideration as shall be approved by the Committee.

(2) Performance Units. The Committee may grant performance units, subject to the terms of the plan, which may be payable in cash, stock (to include restricted stock), other securities, or other awards or other property, and which shall confer on the participant a contractual right to redeem, in whole or in part, upon the achievement of such performance goals as the Committee shall establish for the respective performance period. The Committee determines the performance goals (discussed in the Compensation Discussion and Analysis section) to be achieved, the length of the performance period, the amount of the performance units granted and the amount of any payment or transfer to be made pursuant to any performance unit. Thus far, the performance units that have been granted have been in the form of performance-based restricted stock.

(3) Restricted Stock and Restricted Stock Units. The Committee may grant restricted stock and restricted stock units, although, to date, only restricted stock has been issued. Shares of restricted stock will be subject to the conditions as the Committee may impose, which may include prohibitions against selling, transferring, pledging, assigning or other alienation or hypothecation until such time or until the satisfaction of such conditions or the occurrence of such events as shall be determined by the Committee either at or after the time of grant. Participants holding shares of restricted stock may exercise full voting rights with respect to those shares during the time such are restricted and, subject to forfeiture and transfer restrictions, be entitled to receive all dividends and other distributions paid with respect to those shares.

(4) Other Stock-Based Awards. The Committee may grant other stock-based awards including stock appreciation rights (“SARs”), rights to dividends, and dividend equivalents, but, to date, has not issued any such awards. An SAR represents the contractual right to receive, upon exercise, an amount equal to the excess, if any, of the fair market value of underlying shares over the pre-established exercise price. SARs may be granted to participants at such times as shall be determined by the Committee and subject to the terms and conditions, not inconsistent with the plan, as the Committee may impose.

 

34


2015 GRANTS OF PLAN-BASED AWARDS TABLE

The “2015 Grants of Plan-Based Awards Table” shown below details the non-equity incentive (cash) awards and the equity-based awards granted to the Named Executive Officers by the Executive Compensation Committee on February 18, 2015. The equity-based awards were granted under the Company’s 2002 Stock Incentive Plan. These grants include stock options, time-based restricted stock awards and performance-based restricted stock awards.

 

         

 

Estimated Future Payout Under

 

Non-Equity Incentive Plan Awards

   

 

Estimated Future Payout Under

 

Equity Incentive Plan Awards

   

All
Other
Stock
Awards:
Number
of
Shares
of Stock
or
Units(4)

(#)

(i)

   

All Other
Option
Awards:
Number of
Securities
Underlying
Options(5)

(#)

(j)

   

Exercise
or Base
Price of
Option
Awards

($/Sh)(6)

(k)

   

Grant

Date Fair
Value of
Stock

and Option

Awards($)
(l)

 

Name

(a)

 

Grant(1)
Date

(b)

   

Threshold(2)
($)

(c)

   

Target(2)

($)

(d)

   

Maximum(2)

($)

(e)

   

Threshold(3)
(#)

(f)

   

Target(3)

(#)

(g)

   

Maximum(3)

(#)

(h)

         

Ray C. Dillon

    2/18/2015      $ 245,650      $ 491,300      $ 982,600        3,658        7,316        14,632                              $ 567,136(7)   

CEO

    2/18/2015                    3,219          $ 212,100(8)   
    2/18/2015                      8,107      $ 65.89      $ 197,811(9)   

Kenneth D. Mann

    2/18/2015      $ 101,080      $ 202,160      $ 404,320        1,491        2,981        5,962            $ 231,087(7)   

CFO

    2/18/2015                    1,312          $ 86,448(8)   
    2/18/2015                      3,303      $ 65.89      $ 80,593(9)   

Kent L. Streeter

    2/18/2015      $ 73,250      $ 146,500      $ 293,000        875        1,750        3,500            $ 135,660(7)   
    2/18/2015                    770          $ 50,735(8)   
    2/18/2015                      1,940      $ 65.89      $ 47,336(9)   

David V. Meghreblian

    2/18/2015      $ 59,500      $ 119,000      $ 238,000        818        1,635        3,270            $ 126,745(7)   
    2/18/2015                    719          $ 47,375(8)   
    2/18/2015                      1,811      $ 65.89      $ 44,188(9)   

Jim F. Andrews, Jr.

    2/18/2015      $ 67,500      $ 135,000      $ 270,000        848        1,696        3,392            $ 131,474(7)   
    2/18/2015                    746          $ 49,154(8)   
    2/18/2015                      1,879      $ 65.89      $ 45,848(9)   

 

As to all footnote references to gross-ups under this table, the Company has discontinued the payment of gross-ups on all equity awards granted after December 31, 2012. Gross-ups for income taxes on equity awards granted prior to said date will remain payable upon vesting in accordance with the Company’s executive compensation program in effect at the time of grant.

 

(1) The grant date in column (b) above reflects the fair value-based measurement method grant date, which was also the date upon which the Executive Compensation Committee granted the awards.

 

(2) The amounts shown in columns (c), (d), and (e) reflect the threshold, target, and maximum amounts, respectively, payable under the Company’s 2015 non-equity (cash) incentive plan. The specific calculations for the amounts actually paid to each of the Named Executive Officers are detailed in a table located on p. 25.

 

(3) The amounts shown in columns (f), (g), and (h) reflect the threshold, target, and maximum amounts, respectively, payable in performance-based restricted stock under the Company’s 2002 SIP. Discussion of the calculation of these numbers can be found in the Long-Term Equity Based Compensation (“LTI”) Section on pp. 25-27.

 

(4) The amounts shown in column (i) reflect grants of time-based restricted shares that do not have a performance element for vesting. These shares vest four years after their grant date.

 

35


(5) The amounts shown in column (j) reflect grants of non-qualified stock options that do not have a performance element for vesting, but will ultimately only have value to the extent our stock price increases and is above the exercise price. These time-based options vest at the rate of 25% per year upon each anniversary of their grant date. Accordingly, these grants will be fully vested on February 18, 2019.

 

(6) The exercise price of the option awards granted, shown in column (j), is determined by the Committee at the time of grant. For 2015, the exercise price is the NYSE closing price of $65.89 per share for the Company’s stock on the date of grant, February 18, 2015.

 

(7) Reflects the number of target shares reported in column (g) multiplied by $77.52 per share, which represents the fair value at the time of the grant utilizing the Monte Carlo Simulation Approach as appropriate for performance-based shares.

 

(8) Reflects the number of shares reported in column (i) multiplied by $65.89 per share, which represents the fair value at the time of the grant utilizing the market’s per share closing price on the grant date as appropriate for time-based awards.

 

(9) Reflects the number of shares reported in column (j) multiplied by $24.40 per share, which reflects the fair value at the time of the grant utilizing the Binomial Model as appropriate for options.

 

36


2015 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE

The “2015 Outstanding Equity Awards At Fiscal Year-End Table” shown below details the number of stock options, both vested and unvested, and their respective exercise prices and expiration dates held by each of the Named Executive Officers as of December 31, 2015. The table also shows the number of shares of restricted stock or performance units, and the respective vesting status, also held by each of the Named Executive Officers as of December 31, 2015. All awards shown below were granted under the provisions of the Company’s 2002 Stock Incentive Plan, as amended by the Company’s stockholders in 2012.

 

     Option Awards      Stock Awards  
    

Number of
Securities
Underlying
Unexercised
Options

(#)

    

Number of
Securities
Underlying
Unexercised
Options

(#)

   

Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options

(#)

  

Option
Exercise
Price

($)

    

Option
Expiration

Date

    

Number of
Shares or
Units of
Stock
That Have
Not
Vested

(#)

   

Market
Value of
Shares or
Units of
Stock That
Have Not
Vested(13)

($)

    

Equity Incentive
Plan Awards:
Number of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested

(#)

   

Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested(13)

($)

 
Name    Exercisable      Unexercisable                    

Ray C. Dillon

              8,107 (1)           65.890         02/18/2025         3,219 (5)    $ 189,503         7,316 (9)    $ 430,693   

CEO

     2,333         6,997 (2)         63.210         02/19/2024         5,115 (6)    $ 301,120         5,813 (10)    $ 342,211   
     4,454         4,454 (3)         71.350         02/20/2023         5,352 (7)    $ 315,072         6,082 (11)    $ 358,047   
     7,173         2,390 (4)         67.670         02/15/2022         3,667 (8)    $ 215,876         4,167 (12)    $ 245,311   
     9,732              63.540         02/16/2021             
     2,462              51.370         02/20/2018             
     8,657              53.010         02/14/2017             

Kenneth D. Mann

        3,303 (1)         65.890         02/18/2025         1,312 (5)    $ 77,237         2,981 (9)    $ 175,491   

CFO

     880         2,639 (2)         63.210         02/19/2024         1,930 (6)    $ 113,619         2,193 (10)    $ 129,102   
     1,621         1,620 (3)         71.350         02/20/2023         1,945 (7)    $ 114,502         2,210 (11)    $ 130,103   
     2,853         950 (4)         67.670         02/15/2022         1,458 (8)    $ 85,832         1,657 (12)    $ 97,548   
     3,749              63.540         02/16/2021             
     3,323              53.010         02/14/2017             

Kent L. Streeter

        1,940 (1)         65.890         02/18/2025         770 (5)    $ 45,330         1,750 (9)    $ 103,023   
     655         1,964 (2)         63.210         02/19/2024         1,436 (6)    $ 84,537         1,632 (10)    $ 96,076   
     1,213         1,212 (3)         71.350         02/20/2023         1,462 (7)    $ 86,068         1,661 (11)    $ 97,783   
     2,109         703 (4)         67.670         02/15/2022         1,078 (8)    $ 63,462         1,225 (12)    $ 72,116   
     2,909              63.540         02/16/2021             

David V. Meghreblian

        1,811 (1)         65.890         02/18/2025         719 (5)    $ 42,328         1,635 (9)    $ 96,252   
     529         1,587 (2)         63.210         02/19/2024         1,160 (6)    $ 68,289         1,319 (10)    $ 77,650   
     983         983 (3)         71.350         02/20/2023         1,186 (7)    $ 69,820         1,348 (11)    $ 79,357   
     1,590         529 (4)         67.670         02/15/2022         813 (8)    $ 47,861         923 (12)    $ 54,337   
     2,264              63.540         02/16/2021             
     1,356              44.840         02/17/2020             
     2,599              51.370         02/20/2018             
     2,256              53.010         02/14/2017             

Jim F. Andrews, Jr.

        1,879 (1)         65.890         02/18/2025         746 (5)    $ 43,917         1,696 (9)    $ 99,844   
     535         1,605 (2)         63.210         02/19/2024         1,173 (6)    $ 69,055         1,333 (10)    $ 78,474   
     977         977 (3)         71.350         02/20/2023         1,172 (7)    $ 68,996         1,332 (11)    $ 78,415   
     1,671         557 (4)         67.670         02/15/2022         854 (8)    $ 50,275         971 (12)    $ 57,163   
     2,324              63.540         02/16/2021             
     56              44.840         02/17/2020             
     32              34.410         02/18/2019             
     109              51.370         02/20/2018             

 

37


 

As to all footnote references to gross-ups under this table, the Company has discontinued the payment of gross-ups on all equity awards granted after December 31, 2012. Gross-ups for income taxes on equity awards granted prior to said date will remain payable upon vesting in accordance with the Company’s executive compensation program in effect at the time of grant. Information pertaining to these grant dates is provided below in the footnotes to this table.

 

(1) Stock options granted on 2/18/15 vest at the rate of 25% per year with vesting dates of 2/18/16, 2/18/17, 2/18/18, and 2/18/19.

 

(2) Stock options granted on 2/19/14 vest at the rate of 25% per year with vesting dates of 2/19/15, 2/19/16, 2/19/17, and 2/19/18.

 

(3) Stock options granted on 2/20/13 vest at the rate of 25% per year with vesting dates of 2/20/14, 2/20/15, 2/20/16, and 2/20/17.

 

(4) Stock options granted on 2/15/12 vest at the rate of 25% per year with vesting dates of 2/15/13, 2/15/14, 2/15/15, and 2/15/16.

 

(5) Time vesting restricted stock shares granted on 2/18/15 that will vest four years after grant date in 2019.

 

(6) Time vesting restricted stock shares granted on 2/19/14 that will vest four years after grant date in 2018.

 

(7) Time vesting restricted stock shares granted on 2/20/13 that will vest four years after grant date in 2017.

 

(8) Time vesting restricted stock shares granted on 2/15/12 that will vest four years after grant date in 2016.

 

(9) Performance units granted on 2/18/15 with a restricted period through 2019. Vesting of target number of shares (shown) is contingent upon the Company’s achievement of 100% of the total stockholder returns achieved by the composite of the companies listed on p. 26 within the restricted period. Should these awards vest either at the threshold, target, or maximum levels at the end of the restricted period, no tax gross-up will be applied.

 

(10) Performance units granted on 2/19/14 with a restricted period through 2018. Vesting of target number of shares (shown) is contingent upon the Company’s achievement of 100% of the total stockholder returns achieved by the composite of the 2014 TSR Peer Group within the restricted period. Should these awards vest either at the threshold, target, or maximum levels at the end of the restricted period, no tax gross-up will be applied.

 

(11) Performance units granted on 2/20/13 with a restricted period through 2017. Vesting of target number of shares (shown) is contingent upon the Company’s achievement of 100% of the total stockholder returns achieved by the composite of the 2013 TSR Peer Group within the restricted period. Should these awards vest either at the threshold, target, or maximum levels at the end of the restricted period, no tax gross-up will be applied.

 

(12) Performance units granted on 2/15/12 with a restricted period through 2016. Vesting of target number of shares (shown) is contingent upon the Company’s achievement of 100% of the total stockholder returns achieved by the composite of the 2012 TSR Peer Group within the restricted period. Should these awards vest either at the threshold, target, or maximum levels at the end of the restricted period, a 50% tax gross-up will be applied.

 

(13) Market value of these awards reflects the 2015 market closing price of the Company’s shares on December 31, 2015 ($58.87 per share), which is multiplied times the number of shares shown in the column to the immediate left.

 

38


2015 OPTION EXERCISES AND STOCK VESTED TABLE

The “2015 Option Exercises and Stock Vested Table” shown below details the value received by the Named Executive Officers upon their exercise of vested stock option awards (“Option Awards”) during the year ended December 31, 2015. These awards are measured in shares. The table also details the number of shares and value realized by each affected NEO upon the vesting of time-based stock on February 16, 2015. No performance-based stock awards vested for any of the Named Executive Officers during 2015.

 

     Option Awards      Stock Awards  
Name    Number of Shares
Acquired on Exercise
(#)
     Value Realized
on Exercise(1)
($)
     Number of Shares
Acquired on Vesting
(#)
     Value Realized
on Vesting(2)
($)
 

Ray C. Dillon, CEO

     17,706       $ 288,026         3,933       $ 251,987   

Kenneth D. Mann, CFO

     3,101       $ 76,744         1,515       $ 97,066   

Kent L. Streeter

     0       $ 0         1,176       $ 75,346   

David V. Meghreblian

     3,710       $ 57,130         915       $ 58,624   

Jim F. Andrews, Jr.

     0       $ 0         939       $ 60,162   

 

(1) Value realized is the difference between the per share exercise price of the stock option and the per share market price at the time the stock option is exercised, and represents ordinary income for federal and state income tax purposes.

 

(2) Value realized reflects the market closing price of the Company’s shares on February 17, 2015 ($64.07 per share), which is multiplied times the number of shares shown in the column to the immediate left. The vesting date for these shares, February 16, 2015, was a federal holiday (President’s Day) on which the market was closed.

 

39


2015 PENSION BENEFITS TABLE

The “2015 Pension Benefits Table” below shows the actuarial present values of accumulated benefits payable to each of the Named Executive Officers, upon retirement, under The Retirement Plan of Deltic Timber Corporation (“Retirement Plan”) and under The Supplemental Executive Retirement Plan of Deltic Timber Corporation (“SERP”) as of December 31, 2015. All NEOs were participants in the SERP. Details regarding the accounting policies used by the Company for its pension plans are discussed under Item 8, Financial Statements and Supplementary Data, at Note 1, “Significant Accounting Policies” and at Note 16, “Employee and Retiree Benefit Plans” in the Company’s annual report filed on Form 10-K with the SEC on March 4, 2016. Information regarding these plans, such as the Retirement Plan benefit formula, can be found under the heading Retirement Benefits and Plans at p. 28-29.

 

Name (a)   

Plan Name

(b)

  

Number of Years
Credited Service
(#)

(c)

    

Present Value
of Accumulated
Benefit

($)

(d)

    

Payments During Last

Fiscal Year

($)

(e)

 

Ray C. Dillon

   Retirement Plan      12.5       $ 477,469       $ 0   

CEO

   SERP      12.5       $ 1,613,887       $ 0   

Kenneth D. Mann

   Retirement Plan      33.0       $ 1,130,975       $ 0   

CFO

   SERP      33.0       $ 1,381,801       $ 0   

Kent L. Streeter

   Retirement Plan      12.1       $ 389,819       $ 0   
   SERP      12.1       $ 228,926       $ 0   

David V. Meghreblian

   Retirement Plan      27.0       $ 908,225       $ 0   
   SERP      27.0       $ 195,269       $ 0   

Jim F. Andrews, Jr.

   Retirement Plan      14.4       $ 373,331       $ 0   
   SERP      14.4       $ 177,873       $ 0   

 

40


2015 NON-QUALIFIED DEFERRED COMPENSATION TABLE

The “2015 Non-Qualified Deferred Compensation Table” shown below details the elections of non-qualified deferral of salary amounts, in excess of Internal Revenue Code limits for 401(k) contributions, by each of the Named Executive Officers for the year 2015. These deferrals are made under the Company’s Supplemental Executive Retirement Plan (“SERP”) and include the Company’s matching contributions. The SERP, discussed supra, exists to restore retirement savings benefits, on a pre-tax basis, to the Named Executive Officers that would otherwise be lost due to limitations imposed by the Internal Revenue Code. Deferred salary contribution amounts are permitted up to 50% of salary.

 

Name

(a)

  

Executive
Contributions
In Last Fiscal
Year(1)

($)

(b)

    

Company
Contributions
In Last Fiscal
Year(2)

($)

(c)

    

Aggregate
Earnings
in Last Fiscal
Year(3)

($)

(d)

   

Aggregate
Withdrawals /
Distributions
($)

(e)

    

Aggregate
Balance at
Last Fiscal
Year-End (4)
($)

(f)

 

Ray C. Dillon, CEO

   $ 12,567       $ 17,317       $ (38,930   $ 0       $ 748,121   

Kenneth D. Mann, CFO

   $ 1,091       $ 5,841       $ (12,439   $ 0       $ 161,312   

Kent L. Streeter

   $ 17,399       $ 2,840       $ (12,501   $ 0       $ 320,843   

David V. Meghreblian

   $ 4,758       $ 974       $ (14,165   $ 0       $ 154,586   

Jim F. Andrews, Jr.

   $ 3,685       $ 460       $ (4,544   $ 0       $ 87,577   

 

(1) These contributions are solely contributed from salary as a payroll deduction at the election of the Named Executive Officer. The amounts shown in column (b) are included in the salary amounts for each of the Named Executive Officers in column (c) of the Summary Compensation Table, p. 32.

 

(2) Company matching contributions are, for all deferred compensation purposes (qualified and non-qualified), capped at 5% of the employee’s salary. The amounts included in column (c) above are reported in column (i) of the Summary Compensation Table, p. 32.

 

(3) For the Named Executive Officers’ SERP contributions, along with the Company match, the Named Executive Officers may select from the same investment choices as provided to all other employees under the Company’s qualified deferred compensation 401(k) plan. These investment choices include the Company’s stock and a variety of publicly traded mutual funds. None of the amounts in column (d) were reported as compensation or deductions in the Summary Compensation Table, p. 32.

 

(4) The aggregate balance at December 31, 2015, as reported above, reflects Company contribution amounts that have been reported as compensation in the Summary Compensation Table for 2015, and in prior years, except for the aggregate earnings on deferred compensation.

 

41


2015 DIRECTOR COMPENSATION TABLE

A combination of cash and equity-based compensation is utilized to attract, retain, and compensate qualified candidates to serve on the Company’s Board of Directors. Director compensation, which consists of fees paid for meetings attended and an annual retainer, is determined by the Nominating and Corporate Governance Committee. Equity awards (granted under the Company’s 2002 SIP), are granted by the Executive Compensation Committee based upon the determination of the Board’s Nominating and Corporate Governance Committee. For the year ended December 31, 2015, the non-employee directors were entitled to receive an annual cash retainer of $35,000, $1,500 for each Board meeting physically attended and $750 for each Board meeting telephonically attended, $1,000 for each Board committee meeting physically attended and $500 for each Board committee meeting telephonically attended, except for Audit Committee meetings, which were compensated at $1,000 per meeting regardless of physical or telephonic attendance. The Chairman of each of the Board’s committees received additional compensation, as detailed below, for the additional responsibility that each assumed in those roles. Retainer fees and meeting fees are paid quarterly in arrears. Directors are also reimbursed for their travel, meal, and lodging expenses for attending meetings. A portion of director compensation is based on equity awards to further align their financial interests with those of the Company’s stockholders.

 

Name

(a)

 

Fees Earned
Or Paid in
Cash(1)

($)

(b)

   

Stock
Awards(2)
($)

(c)

   

Option
Awards(3)
($)

(d)

   

Non-Equity
Incentive Plan
Compensation(4)
($)

(e)

   

Change

in Pension

Value and
Nonqualified
Deferred
Compensation
Earnings(5)

($)

(f)

   

All Other
Compensation (6)

($)

(g)

   

Total

($)

(h)

 

Robert C. Nolan

  $ 157,000      $ 84,000      $ 0      $ 0      $ 0      $ 32,785      $ 273,785   

R. Madison Murphy

  $ 62,250      $ 84,000      $ 0      $ 0      $ 0      $ 32,785      $ 179,035   

Rev. Christoph Keller, III

  $ 57,000      $ 84,000      $ 0      $ 0      $ 0      $ 32,785      $ 173,785   

J. Thurston Roach

  $ 71,250      $ 84,000      $ 0      $ 0      $ 0      $ 42,785      $ 198,035   

R. Hunter Pierson, Jr.

  $ 52,500      $ 84,000      $ 0      $ 0      $ 0      $ 32,785      $ 169,285   

Randolph C. Coley

  $ 59,000      $ 84,000      $ 0      $ 0      $ 0      $ 32,785      $ 175,785   

Bert H. Jones

  $ 24,250      $ 56,290      $ 0      $ 0      $ 0      $ 0      $ 80,540   

David L. Lemmon

  $ 52,500      $ 84,000      $ 0      $ 0      $ 0      $ 37,785      $ 174,285   

Lenore M. Sullivan

  $ 28,250      $ 56,290      $ 0      $ 0      $ 0      $ 0      $ 84,540   

Robert B. Tudor, III

  $ 44,000      $ 84,000      $ 0      $ 0      $ 0      $ 32,785      $ 160,785   

Ray C. Dillon

  $ 0      $ 0      $ 0      $ 0      $ 0      $ 0      $ 0   

 

(1) The information in column (b) reflects the payments of retainer fees, chairman fees and meeting fees to the non-employee directors during the year ended December 31, 2015 as follows:

 

   

Mr. Nolan, Chairman of the Board of Directors, chair fee, $100,000; retainer fee, $35,000; meeting fees, $22,000;

 

   

Mr. Murphy, Chairman of the Executive Compensation Committee, chair fee, $6,750; retainer fee, $35,000; meeting fees, $20,500;

 

42


   

Rev. Christoph Keller, III, Chairman of the Nominating and Corporate Governance Committee, chair fee, $5,000; retainer fee, $35,000; meeting fees, $17,000;

 

   

Mr. Roach, Chairman of the Audit Committee, chair fee, $12,500; retainer fee, $35,000; meeting fees, $23,750;

 

   

Mr. Pierson, retainer fee, $35,000; meeting fees, $17,500;

 

   

Mr. Coley, retainer fee, $35,000; meeting fees, $24,000;

 

   

Mr. Jones, retainer fee, $35,000 (prorated for Board service that began on June 18, 2015); meeting fees, $5,500;

 

   

Mr. Lemmon, retainer fee, $35,000; meeting fees, $17,500;

 

   

Ms. Sullivan, retainer fee, $35,000 (prorated for Board service that began on June 18, 2015); meeting fees, $9,500;

 

   

Mr. Tudor, retainer fee, $35,000; meeting fees, $9,000;

 

   

Mr. Dillon, President and Chief Executive Officer of the Company, serves as an employee director on its Board, but is not compensated with a director retainer, meeting fees, or additional equity awards for his Board service.

 

(2) The stock awards value in column (c) represents the amount of the annual equity awards granted to each director based upon director compensation information regarding such equity awards received from Mercer, the Company’s independent Executive Compensation Committee Consultant. To determine the actual number of time-based restricted stock shares granted to each director, the dollar value amount is divided by a share price that is chosen by the Committee, which approximates the trading value of the Company’s stock before its February meeting. In 2015, the stock price chosen was $65.00. The stock award values for Mr. Jones and Ms. Sullivan are prorated for Board service that began on June 18, 2015.

 

(3) No option awards were granted by the Committee to the non-employee directors during 2015. Option awards granted to Mr. Dillon during the year are reflected in the Grants of Plan-Based Awards Table, p. 35.

 

(4) No non-equity incentive plan compensation awards were granted to the non-employee directors during 2015. Any non-equity incentive plan compensation granted to Mr. Dillon during the year is reflected in the Summary Compensation Table, p. 32.

 

(5) Currently, the Company provides no pension plan benefits and no non-qualified deferred compensation plans to its non-employee directors.

 

(6) Payments reflect the value of tax gross-ups paid for 2011 equity awards that vested in 2015. The Company has discontinued the payment of gross-ups on all equity awards granted after December 31, 2012. Gross-ups for income taxes on equity awards granted prior to said date will remain payable upon vesting in accordance with the Company’s executive compensation program in effect at the time of grant. Additional amount of $10,000 and $5,000 are reflected for Messrs. Roach and Lemmon, respectively, for the incremental costs incurred by the Company to match gifts made by these directors to qualified charitable and/or educational institutions under the Company’s matching gift program.

 

43


2015 POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL TABLE

The “2015 Potential Payments upon Termination or Change in Control Table” shown below reflects the amount of compensation payable, as of December 31, 2015, to each of the Named Executive Officers in the event of: (1) involuntary severance without cause; (2) a change in control of the Company with involuntary dismissal within two years without cause or (i) a reduction in salary and potential bonus and/or (ii) a meaningful diminution in job responsibility as a result of such change; (3) voluntary severance other than retirement; (4) death; (5) long-term disability; (6) early retirement and (7) retirement at normal retirement age. In each case, the actual amounts to be paid can only be determined at the time the Named Executive Officer separates from the Company.

 

Name    Benefit      Involuntary
Severance
Termination
w/o Cause
or for Good
Reason
    Change in
Control
Termination
w/o Cause
or for Good
Reason
    Voluntary
Severance
Other
Than
Retirement
    Death     Long-
Term
Disability
    Early
Retirement
    Retirement
At Normal
Retirement
Age
 

Ray C. Dillon

   Salary      $ 1,156,000      $ 1,156,000        0        0      $ 150,000 (8)      0        0   

CEO

   Non-equity comp.      $ 982,600      $ 982,600        0        0        0        0        0   
   Stock options      $ 69,195      $ 69,195        0      $ 69,195 (2)    $ 69,195 (2)    $ 69,195 (2)    $ 69,195 (2) 
   Restricted stock      $ 1,532,357 (1)    $ 1,532,357 (1)      0      $ 712,874 (3)    $ 712,874 (3)    $ 712,874 (3)    $ 712,874 (3) 
   Performance units      $ 2,064,393 (1)    $ 2,064,393 (1)      0      $ 855,325 (4)    $ 855,325 (4)    $ 855,325 (4)    $ 855,325 (4) 
   Outplacement payment      $ 30,000 (1)    $ 30,000 (1)      0        0        0        0        0   
   Health benefits      $ 13,556 (5)    $ 13,556 (5)      0        0      $ 4,925 (9)    $ 4,925 (10)    $ 5,784 (10) 
   Life insurance benefit        0        0        0      $ 1,000,000 (7)      0      $ 12,500 (11)    $ 25,000 (11) 
   Accrued pension benefit      $ 2,091,356 (12)    $ 2,091,356 (12)    $ 2,091,356 (12)    $ 2,091,356 (12)    $ 2,091,356 (12)    $ 2,091,356 (12)    $ 2,091,356 (12) 
       

 

 

 

Total Potential Payment:

     $ 7,939,457      $ 7,939,457      $ 2,091,356      $ 4,728,750      $ 3,883,675      $ 3,746,175      $ 3,759,534   

Kenneth D. Mann

   Salary        0      $ 361,000        0        0      $ 150,000 (8)      0        0   

CFO

   Non-equity comp.        0      $ 404,320        0        0        0        0        0   
   Stock options        0      $ 19,473        0      $ 19,473 (2)    $ 19,473 (2)    $ 19,473 (2)    $ 19,473 (2) 
   Restricted stock        0      $ 586,785 (1)      0      $ 273,380 (3)    $ 273,380 (3)    $ 273,380 (3)    $ 273,380 (3) 
   Performance units        0      $ 798,366 (1)      0      $ 329,082 (4)    $ 329,082 (4)    $ 329,082 (4)    $ 329,082 (4) 
   Outplacement payment        0      $ 30,000 (1)      0        0        0        0        0   
   Health benefits        0      $ 6,778 (6)      0        0      $ 4,925 (9)    $ 4,925 (10)    $ 5,784 (10) 
   Life insurance benefit        0        0        0      $ 722,000 (7)      0      $ 12,500 (11)    $ 25,000 (11) 
   Accrued pension benefit      $ 2,512,776 (12)    $ 2,512,776 (12)    $ 2,512,776 (12)    $ 2,512,776 (12)    $ 2,512,776 (12)    $ 2,512,776 (12)    $ 2,512,776 (12) 
       

 

 

 

Total Potential Payment:

     $ 2,512,776      $ 4,719,498      $ 2,512,776      $ 3,856,711      $ 3,289,636      $ 3,152,136      $ 3,165,495   

 

44


2015 POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL TABLE, continued

 

Name   Benefit   Involuntary
Severance
Termination
w/o Cause
or for Good
Reason
    Change in
Control
Termination
w/o Cause
or for Good
Reason
    Voluntary
Severance
Other
Than
Retirement
    Death     Long-
Term
Disability
    Early
Retirement
    Retirement
At Normal
Retirement
Age
 

Kent L. Streeter

  Salary     0      $ 293,000        0        0      $ 150,000 (8)      0        0   
  Non-equity comp.     0      $ 165,380        0        0        0        0        0   
  Stock options     0        0        0        0        0        0        0   
  Restricted stock     0      $ 419,096 (1)      0      $ 200,900 (3)    $ 200,900 (3)    $ 200,900 (3)    $ 200,900 (3) 
  Performance units     0      $ 553,497 (1)      0      $ 239,102 (4)    $ 239,102 (4)    $ 239,102 (4)    $ 239,102 (4) 
  Outplacement payment     0      $ 30,000 (1)      0        0        0        0        0   
  Health benefits     0      $ 7,897 (6)      0        0      $ 5,568 (9)    $ 5,568 (10)    $ 6,654 (10) 
  Life insurance benefit     0        0        0      $ 586,000 (7)      0      $ 12,500 (11)    $ 25,000 (11) 
  Accrued pension benefit   $ 618,745 (12)    $ 618,745 (12)    $ 618,745 (12)    $ 618,745 (12)    $ 618,745 (12)    $ 618,745 (12)    $ 618,745 (12) 
   

 

 

 

Total Potential Payment:

  $ 618,745      $ 2,087,615      $ 618,745      $ 1,644,747      $ 1,214,315      $ 1,076,815      $ 1,090,401   

David V. Meghreblian

  Salary     0      $ 238,000        0        0      $ 142,800 (8)      0        0   
  Non-equity comp.     0      $ 138,218        0        0        0        0        0   
  Stock options     0      $ 51,737        0      $ 51,737 (2)    $ 51,737 (2)    $ 51,737 (2)    $ 51,737 (2) 
  Restricted stock     0      $ 342,447 (1)      0      $ 158,794 (3)    $ 158,794 (3)    $ 158,794 (3)    $ 158,794 (3) 
  Performance units     0      $ 461,394 (1)      0      $ 190,520 (4)    $ 190,520 (4)    $ 190,520 (4)    $ 190,520 (4) 
  Outplacement payment     0      $ 30,000 (1)      0        0        0        0        0   
  Health benefits     0      $ 10,428 (6)      0        0      $ 7,708 (9)    $ 7,708 (10)    $ 8,964 (10) 
  Life insurance benefit     0        0        0      $ 476,000 (7)      0      $ 12,500 (11)    $ 25,000 (11) 
  Accrued pension benefit   $ 1,103,494 (12)    $ 1,103,494 (12)    $ 1,103,494 (12)    $ 1,103,494 (12)    $ 1,103,494 (12)    $ 1,103,494 (12)    $ 1,103,494 (12) 
   

 

 

 

Total Potential Payment:

  $ 1,103,494      $ 2,375,718      $ 1,103,494      $ 1,980,545      $ 1,655,053      $ 1,524,753      $ 1,538,509   

Jim F. Andrews, Jr.

  Salary     0      $ 270,000        0        0      $ 150,000 (8)      0        0   
  Non-equity comp.     0      $ 270,000        0        0        0        0        0   
  Stock options     0      $ 2,386        0      $ 2,386 (2)    $ 2,386 (2)    $ 2,386 (2)    $ 2,386 (2) 
  Restricted stock     0      $ 348,365 (1)      0      $ 162,371 (3)    $ 162,371 (3)    $ 162,371 (3)    $ 162,371 (3) 
  Performance units     0      $ 470,844 (1)      0      $ 195,054 (4)    $ 195,054 (4)    $ 195,054 (4)    $ 195,054 (4) 
  Outplacement payment     0      $ 30,000 (1)      0        0        0        0        0   
  Health benefits     0      $ 10,428 (6)      0        0      $ 7,708 (9)    $ 7,708 (10)    $ 8,964 (10) 
  Life insurance benefit     0        0        0      $ 540,000 (7)      0      $ 12,500 (11)    $ 25,000 (11) 
  Accrued pension benefit   $ 551,204      $ 551,204 (12)    $ 551,204 (12)    $ 551,204 (12)    $ 551,204 (12)    $ 551,204 (12)    $ 551,204 (12) 
   

 

 

 

Total Potential Payment:

  $ 551,204      $ 1,953,227      $ 551,204      $ 1,451,015      $ 1,068,723      $ 931,223      $ 944,979   

 

45


Unless otherwise denoted, all payments shown above represent amounts payable in lump sum and without tax gross-up or tax reimbursement.

In the case of an involuntary severance without cause, and except in the case of Mr. Dillon as shown above, the Named Executive Officer’s retention of his vested stock options, restricted stock, and performance units is subject to Company approval. Otherwise, such are forfeited. In the case of involuntary severance for cause, all vested and unvested stock options, restricted stock, and performance units are forfeited. Also, in the cases of an involuntary severance without cause and involuntary severance for cause, the Named Executive Officer may continue to participate in the Company’s health care coverage under the provisions of the Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA). Except in the case of Mr. Dillon, as shown above, such participation is not funded by the Company.

For the Named Executive Officers and in the case of change in control