DEF 14A: Packaging Corporation of America Announces 2024 Annual Meeting and Proxy Statement

Packaging Corporation of America (PCA) has released its proxy statement for the 2024 Annual Meeting of Stockholders, detailing proposals for director elections, auditor ratification, executive compensation, and other corporate governance matters.

Summary

• Packaging Corporation of America (PCA) has announced its 2024 Annual Meeting of Stockholders to be held on May 8, 2024.
• The meeting will address the election of eleven director nominees, ratification of KPMG LLP as the independent auditor, approval of the Second Amended and Restated 1999 Long-Term Equity Incentive Plan, a non-binding vote on executive compensation, and a shareholder proposal regarding director resignations.
• The Board of Directors recommends voting for the election of each director nominee, for Items 2 through 4, and against Item 5.
• The proxy materials were first mailed on or about March 28, 2024, to stockholders of record as of March 15, 2024.
• The company's board currently has ten directors, but will be increased to 11 directors effective upon the time of the 2024 annual meeting.
• The company's board met four times during 2023.
• The company's audit committee met nine times during 2023.
• The company's nominating and governance committee met four times during 2023.
• The company's compensation committee met five times during 2023.
• The company's sustainability committee met four times during 2023.
• Fees to KPMG LLP for audit services totaled approximately $3,849,500 for 2023.
• The company is requesting additional shares in connection with the amendment and restatement of the Plan in order to continue to grant equity and equity-based awards and achieve its overall long term compensation objectives.
• The maximum number of shares of common stock that may be delivered pursuant to the exercise of Incentive Stock Options under the Plan cannot exceed the Plan limit of 14,340,000.
• The value of any awards made to a non-employee director under the plan, together with other compensation payable to such non-employee director, may not exceed $650,000 during any annual period.
• The company's CEO's 2023 salary was $1.4 million.
• The company's CEO's target award of $2.45 million was 18% of target awarded compensation.
• The grant date value of the long-term equity awards for the company's CEO was $9.6 million.
• The company's actual awarded compensation for 2023 for the company's CEO increased approximately 18% from 2022 awarded compensation.
• The company's one-year total stockholder return is 31.9%.
• The company's three-year total stockholder return is 30.5%.
• The company's five-year total stockholder return is 129.7%.

Sentiment

Score: 7

Explanation: The document presents a balanced view of PCA's corporate governance and financial performance, with a positive outlook on its strategy and shareholder returns. The sentiment is moderately positive.

Positives

• The company maintains a majority voting by-law.
• The company has adopted several other corporate governance best practices that allow shareholders to hold the board accountable, including the ability for shareholders to remove a director without cause with support of a majority of the outstanding shares, the ability to elect all directors annually (i.e., no classified board), and customary proxy access rights.

Risks

• The company could maintain a governance, environmental or social policy that is not consistent with the policies of one or more proxy advisory firms, and accordingly such proxy advisory firms may recommend votes against the chair of a particular board committee, and that could lead to an individual director failing to receive a majority of the votes cast solely by virtue of his or her status as committee chair and the application of a particular proxy advisory firm policy.

Future Outlook

The company's strategy focuses on operational excellence and capital allocation to further such operational excellence.

Industry Context

The document provides insights into PCA's corporate governance practices, executive compensation structure, and financial performance, which are relevant to understanding its competitive positioning within the paper and packaging industry.

Comparison to Industry Standards

• PCA's revenues are between the 25th percentile and the median of its peer group.
• PCA's market capitalization is above the 75th percentile of its peer group.
• PCA's one-year total stockholder return is above the 75th percentile of its peer group.
• PCA's three-year total stockholder return is between the median and the 75th percentile of its peer group.
• PCA's approved annual director compensation in 2022 was at approximately the median of the peer group.

Related Party Transactions

• Nathaniel Carter, son of our Executive Vice President, Charles J. Carter, is employed by PCA as a manager.
• Tyler Hassfurther, son of our Executive Vice President, Thomas A. Hassfurther, was employed by PCA as a manager through December 31, 2023.
• Stephen Johnson, brother-in-law of our Senior Vice President, D. Ray Shirley, is employed by PCA as a manager.
• Karen E. Gowland, nominee for director, was employed by Boise Inc. before her retirement in March 2014.
• Madison Dearborn Partners, which employs Mr. Souleles as co-Chief Executive Officer, is a private equity firm that invests in companies that may purchase products or services from, or sell products and services to, us in the ordinary course of business in amounts that are not material in amount or significance.
• We sold approximately $877,000 of products in the ordinary course of business to The Bazooka Company, of which Madison Dearborn holds an interest of more than 10%.

Stakeholder Impact

• The proposals outlined in the proxy statement will directly impact shareholders through voting rights and decisions on director elections, executive compensation, and corporate governance matters.
• Employees are affected by the equity incentive plan and executive compensation decisions.
• The outcome of the shareholder proposal regarding director resignations could influence the accountability of the board to shareholders.

Next Steps

• Stockholders are urged to vote their shares by following the voting instructions on their notice of availability of proxy materials or their proxy or voting instruction card.
• The Board of Directors will act on the tendered resignation, and publicly disclose its decision, within 90 days following certification of the stockholder vote.

Key Dates

Keywords

proxy statement, annual meeting, directors, executive compensation, KPMG, equity incentive plan, shareholder proposal, corporate governance, PCA, Packaging Corporation of America