01—Abstract
Summary
Summary of the 8-K filed March 19, 2024. Cited figures are marked; the original filing is the authoritative source.
On March 19, 2024, International Paper Company (NYSE: IP) filed an 8-K announcing that its Board of Directors appointed Andrew K.
Silvernail, 53, as chief executive officer, effective May 1, 2024 or such other date as the parties may mutually agree. He succeeds Mark S. Sutton, who has served as CEO since 2014 and will continue as Chairman of the Board.
Silvernail most recently was an executive advisor at KKR & Co., Inc. since 2022, and previously was chair and CEO of Madison Industries and of IDEX Corporation (2011-2020). He also sits on the Board of Stryker Corporation. The filing sets out his Offer Letter dated March 14, 2024.
It provides a base salary of $1,000,000a and an annual incentive target of 150% of base salary. It also includes a one-time inducement performance share unit award with a grant date fair market value of $8,500,000, vesting over three years based on the average stock price relative to the grant-date closing price plus $10, $20 and $30 hurdles. In addition, he will receive a 2024 long-term incentive PSU grant with a grant date fair value of $12,500,000, not prorated for partial-year service.
Severance is 2.0 times the sum of base salary and target annual incentive outside a change in control, and 2.99 times in a change in control. A $200,000b relocation payment is subject to repayment if he leaves voluntarily before May 1, 2025. The company also issued a press release the same day announcing the appointment, which is furnished as Exhibit 99.1.
02—Key points
Key Highlights
- Andrew K. Silvernail, 53, appointed CEO effective May 1, 2024 or another mutually agreed date, succeeding Mark S. Sutton, who remains Chairman of the Board.
- Mr. Sutton has served as CEO since 2014 and as Chairman since 2015.
- Silvernail's base salary is $1,000,000 with an annual incentive target of 150% of base salary; his 2024 AIP payment is based on the greater of actual performance or 75% of target pro-rata opportunity.
- One-time inducement PSU award with a grant date fair market value of $8,500,000, vesting after three years and tied to a 90-day average stock price against hurdles at the grant-date closing price plus $10, $20 and $30, paying 100%, 150% and 200% of target shares respectively.
- 2024 LTIP grant of PSUs with a grant date fair value of $12,500,000, not prorated for partial-year service.
- Severance of 2.0 times base salary plus target AIP without a change in control, and 2.99 times with a change in control; personal aircraft use is limited to $150,000 per year of value before reimbursement.
- Press release dated March 19, 2024 (Exhibit 99.1) announces the appointment; the offer letter is filed as Exhibit 10.1.
03—Questions
Frequently Asked Questions
Who is replacing Mark Sutton as CEO of International Paper?
Andrew K. Silvernail, 53, has been appointed chief executive officer effective May 1, 2024, or another date the parties mutually agree. Mr. Sutton will continue as Chairman of the Board.
What is Mr. Silvernail's pay package?
He receives an annual base salary of $1,000,000 and an annual bonus target of 150% of base salary under the Annual Incentive Plan. He also receives an inducement PSU award with a grant date fair market value of $8,500,000 and a 2024 LTIP PSU grant with a grant date fair value of $12,500,000.
How does the inducement PSU award vest?
No portion vests unless he remains employed through the third anniversary of the Effective Date, subject to exceptions. The payout depends on the 90-day average closing stock price ending on the third anniversary: 0% below the grant-date closing price plus $10, 100% of target at plus $10, 150% at plus $20, and 200% at plus $30 or more, with linear interpolation between hurdles.
What severance protections does Mr. Silvernail have?
If terminated without cause or resigns for good reason, he receives a lump-sum cash severance of 2.0 times the sum of base salary and target AIP, a pro-rata bonus based on actual performance, six months of subsidized health and welfare continuation, and outplacement services. In a change in control, cash severance is 2.99 times that sum, with three years of benefits continuation.
Are there any relocation or other perquisites?
He receives standard relocation benefits plus a one-time $200,000 cash payment, repayable if he voluntarily leaves before May 1, 2025, and reimbursement of up to $50,000 in legal fees. He may use company aircraft for personal travel under a Time Sharing Agreement, reimbursing incremental cost above $150,000 per year.
04—Continue