SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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 Rule 14a-11(c) or Rule 14a-12
SONOCO PRODUCTS COMPANY
--------------------------------------------------------------------------------
(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:
(SONOCO LOGO)
SONOCO PRODUCTS COMPANY
NORTH SECOND STREET
HARTSVILLE, SOUTH CAROLINA 29550 USA
March 15, 2002
TO OUR SHAREHOLDERS:
You are cordially invited to attend our Annual Shareholders' Meeting to be
held at the Center Theater, 212 North Fifth Street, Hartsville, South Carolina,
on Wednesday, April 17, 2002, at 11:00 A.M.
We have enclosed a Notice of Annual Meeting of Shareholders and Proxy
Statement that cover the details of matters to be presented at the meeting.
In addition to acting on the matters listed in the Notice of Annual Meeting
of Shareholders, we will discuss the Company's progress, and you will be given
an opportunity to ask questions of general interest to all shareholders.
We have also enclosed a copy of the 2001 Annual Report, which reviews the
Company's past year's events and discusses strategy and the outlook for the
future (or, if you have previously consented in writing, we have delivered a
single copy of the Annual Report for all shareholders at your address).
We hope that you will come to the Annual Meeting in person; but even if you
plan to come, we strongly encourage you to complete the enclosed proxy
appointment and return it to us in the enclosed business reply envelope. Or, you
can vote by telephone or via the Internet. Instructions are shown on your proxy
card. If you are a shareholder of record and later find you can be present or if
for any reason you desire to revoke your proxy, you can do so at any time before
the voting. Your vote is important and will be greatly appreciated.
/s/ Charles W. Coker /s/ Harris E. DeLoach, Jr.
Charles W. Coker Harris E. DeLoach, Jr.
Chairman President & Chief Executive
Officer
SONOCO PRODUCTS COMPANY
NORTH SECOND STREET
HARTSVILLE, SOUTH CAROLINA 29550 USA
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TIME................................. 11:00 A.M. on Wednesday, April 17, 2002.
PLACE................................ The Center Theater, 212 North Fifth Street, Hartsville,
South Carolina.
PURPOSES............................. (1) To elect seven members of the Board of Directors, five
to serve for the next three years, one for the next two
years and one for the next year.
(2) To approve the selection of independent accountants.
(3) To transact any other business that properly comes
before the meeting or any adjournment of the meeting.
RECORD DATE.......................... You can vote if you were a shareholder of record at the
close of business February 22, 2002.
ANNUAL REPORT........................ We have enclosed a copy of the 2001 Annual Report (or, if
you have previously consented in writing, we have delivered
a single copy of the Annual Report for all shareholders at
your address). The Annual Report is not part of the proxy
soliciting material.
PROXY VOTING......................... It is important that your shares be represented and voted at
the meeting. Please vote in one of these three ways:
(1) USE THE TOLL-FREE TELEPHONE NUMBER shown on your proxy
card if you live in the United States or call the toll
telephone number shown on your proxy card COLLECT if you
live outside the United States;
(2) VISIT THE WEB SITE shown on your proxy card and vote via
the Internet; OR
(3) MARK, SIGN, DATE AND PROMPTLY RETURN the enclosed proxy
card in the postage-paid envelope.
Any proxy may be revoked at any time prior to its exercise
at the Annual Meeting.
By order of the Board of Directors,
Charles J. Hupfer
Secretary
March 15, 2002
2
SONOCO PRODUCTS COMPANY
NORTH SECOND STREET
HARTSVILLE, SOUTH CAROLINA 29550 USA
PROXY STATEMENT
GENERAL INFORMATION
INFORMATION CONCERNING THE SOLICITATION
We are sending you these proxy materials in connection with the
solicitation by the Board of Directors of Sonoco Products Company of proxies to
be used at the Annual Meeting of Shareholders ("Annual Meeting") to be held on
April 17, 2002, and at any adjournment or postponement of the meeting. "We",
"our", "us", "Sonoco", and "the Company" all refer to Sonoco Products Company.
The proxy materials are first being mailed on or about March 15, 2002.
WHO MAY VOTE
You will only be entitled to vote at the Annual Meeting if our records show
that you held your shares on February 22, 2002. At the close of business on
February 22, 2002, a total of 95,630,835 shares of Common Stock were outstanding
and entitled to vote. Each share of Common Stock has one vote.
VOTING BY PROXIES
If your shares are held by a broker, bank or other nominee, they will send
you instructions that you must follow to have your shares voted at the Annual
Meeting. If you hold your shares in your own name as a record holder, you may
instruct the proxy agents how to vote your shares by completing, signing, dating
and mailing the proxy card in the enclosed postage-paid envelope; by dialing the
toll-free or collect telephone numbers shown on your proxy card; or by accessing
the Internet Web site shown on your proxy card. Of course, you can always come
to the meeting and vote your shares in person.
The proxy agents will vote your shares as you instruct. If you sign and
return your proxy card without giving instructions, the proxy agents will vote
your shares FOR each person named in this Proxy Statement as a nominee for
election to the Board of Directors and FOR approval of the selection of
PricewaterhouseCoopers LLP as the Company's independent accountants for the
fiscal year ending December 31, 2002. The proxy agents will vote according to
their best judgment on any other matter that properly comes before the Annual
Meeting. At present, the Board does not know of any other such matters.
3
HOW TO REVOKE YOUR PROXY
You may revoke your proxy at any time before it is voted. If you are a
record shareholder, you may revoke your proxy in any of the following ways:
- by giving notice of revocation at the Annual Meeting;
- by delivering to the Secretary of the Company, North Second Street,
Hartsville, South Carolina, 29550 USA, written instructions revoking your
proxy; or
- by delivering to the Secretary an executed proxy bearing a later date.
Subsequent voting by telephone or via the Internet cancels your previous
vote. If you are a shareholder of record, you may also attend the meeting and
vote in person, in which case your proxy vote will not be used.
HOW VOTES WILL BE COUNTED
The Annual Meeting will be held if a majority of the outstanding shares of
Common Stock entitled to vote (a "quorum") is represented at the meeting. If you
have submitted valid proxy instructions or attend the meeting in person, your
shares will be counted for the purpose of determining whether there is a quorum,
even if you wish to abstain from voting on some or all matters introduced.
"Broker non-votes" also count in determining whether a quorum is present. A
"broker non-vote" occurs when a broker, bank or nominee who holds shares for a
beneficial owner does not vote on a particular proposal because the nominee does
not have discretionary voting power for that proposal and has not received
voting instructions from the beneficial owner.
If a quorum is present at the Annual Meeting, directors will be elected by
a plurality of the votes cast by shares present and entitled to vote at the
Annual Meeting. Votes that are withheld or that are not voted in the election of
directors will have no effect on the outcome of election of directors.
Cumulative voting is not permitted.
Approval of the selection of PricewaterhouseCoopers LLP as independent
accountants and approval of any other matter that may be brought before the
meeting require that the votes cast in favor of the matter exceed the votes cast
against the matter. Votes that are withheld or shares that are not voted will
have no effect on the outcome of such matters.
COST OF THIS PROXY SOLICITATION
We will pay the cost of this proxy solicitation. In addition to soliciting
proxies by mail, we expect that some of our officers and regular employees will
solicit proxies by telephone, telefacsimile, e-mail or personal contact. None of
these officers or employees will receive any additional or special compensation
for doing this.
4
ELECTION OF DIRECTORS
At our Annual Meeting, seven directors will be elected. Five will hold
office for the next three years; one will hold office for the next two years,
and one will hold office for the next year. Their terms will expire at our
Annual Shareholders' Meetings in 2005, 2004 and 2003, respectively, or when
their successors are duly elected and qualify. The proxy agents intend to vote
FOR the election of the seven persons named below unless you withhold authority
to vote for all or any of the nominees. The proxy agents will not vote for more
persons than the number of nominees named. The Board of Directors recommends
that you vote FOR each nominee for election.
INFORMATION CONCERNING NOMINEES
NAME, AGE, PRINCIPAL OCCUPATION FOR LAST FIVE SERVED AS A
YEARS AND DIRECTORSHIPS IN PUBLIC CORPORATIONS DIRECTOR SINCE
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(PHOTO C. J. C. J. BRADSHAW (65). Mr. Bradshaw has been President and 1986
BRADSHAW) Director of Bradshaw Investments, Inc. (private
investments), Georgetown, South Carolina, since 1986. He
was President and Chief Operating Officer of Transworld
Corporation, New York, New York, from 1984 to 1986 and
Chairman of the Board and Chief Executive Officer of
Spartan Food Systems, Inc., Spartanburg, South Carolina,
from 1961 to 1986.
(PHOTO R. J. BROWN) R. J. BROWN (67). Mr. Brown, Founder of B&C Associates, 1993
Inc. (management consulting, marketing research and public
relations firm), High Point, North Carolina, has been
Chairman and Chief Executive Officer of his company since
1973. He is a director of Wachovia Corporation, Duke
Energy Corporation and AutoNation, Inc.
(PHOTO J. L. COKER) *J. L. COKER (61). Mr. Coker has been President of JLC 1969
Enterprises (private investments), Stonington,
Connecticut, since 1979. He was Secretary of the Company
from 1969 to 1995 and was President of Sonoco Limited,
Canada, from 1972 to 1979.
---------------
* C. W. Coker and F. L. H. Coker are brothers and are first cousins of J. L. Coker.
5
NAME, AGE, PRINCIPAL OCCUPATION FOR LAST FIVE SERVED AS A
YEARS AND DIRECTORSHIPS IN PUBLIC CORPORATIONS DIRECTOR SINCE
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(PHOTO PAUL FULTON) PAUL FULTON (67). Mr. Fulton has been Chairman since 2000 1989
and a director since 1997 of Bassett Furniture Industries,
Inc., Bassett, Virginia. He was Chief Executive Officer of
Bassett from 1997 to 2000. Mr. Fulton was Dean of The
Kenan-Flagler Business School, The University of North
Carolina, Chapel Hill, North Carolina, from 1994 to 1997.
He was President of Sara Lee Corporation (manufacturer and
marketer of consumer products), Chicago, Illinois, from
1988 through 1993. Mr. Fulton is a director of Bank of
America Corporation, Cato Corporation and Lowe's
Companies, Inc.
(PHOTO H. L. McCOLL, H. L. MCCOLL, JR. (66). Mr. McColl has been Chairman of 1972
JR.) McColl Brothers Lockwood (private bankers), Charlotte,
North Carolina, since his retirement from Bank of America
in 2001. He was Chairman and Chief Executive Officer and a
director of Bank of America Corporation and NB Holdings
Corporation and was Chief Executive Officer of Bank of
America, N.A., Charlotte, North Carolina, from 1998 to
2001. He was Chief Executive Officer of the former
NationsBank Corporation and its predecessor, NCNB
Corporation, from 1983 to 1998. Mr. McColl is a director
of Ruddick Corporation, Cousins Properties, Inc., General
Parts, Inc. and Sykes Enterprises, Inc.
(PHOTO C. C. Fort) C. C. FORT (40). Mr. Fort has been Co-Chairman of The 2001
Merit Group, Inc. (suppliers to the paint and wallcovering
industry), Spartanburg, South Carolina, since 1998. He was
a principal of Lancaster Distributing Company (suppliers
to the paint and wallcovering industry), Spartanburg,
South Carolina, from 1990 to 1998.
6
NAME, AGE, PRINCIPAL OCCUPATION FOR LAST FIVE SERVED AS A
YEARS AND DIRECTORSHIPS IN PUBLIC CORPORATIONS DIRECTOR SINCE
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(PHOTO E. H. LAWTON, E. H. LAWTON, III (41). Mr. Lawton has been President and 2001
III) Treasurer since 2000 and a director since 1991 of
Hartsville Oil Mill (vegetable oils processor),
Darlington, South Carolina. He was Vice President of
Hartsville Oil Mill from 1991 to 2000.
All nominees previously have been elected to the Board of Directors by the
Common Shareholders except Mr. C. C. Fort and Mr. E. H. Lawton, III.
Mr. E. H. Lawton, Jr., whose term would have expired at the 2004 Annual
Meeting, reached mandatory retirement age and retired from the Board on July 12,
2001. Mr. Fort was elected by the Board on July 17, 2001, to fill the vacancy
created by the retirement of Mr. Lawton, Jr. until this Annual Meeting.
Mr. C. D. Spangler, Jr., whose term would have expired at the Annual
Shareholders' Meeting in 2003, resigned on December 18, 2000, for personal
reasons. Mr. Lawton, III was elected by the Board on July 17, 2001, to fill the
vacancy created by the resignation of Mr. Spangler until this Annual Meeting.
The Corporate Governance Committee of the Board of Directors recommends Mr.
Fort and Mr. Lawton for election by the Common Shareholders.
The Board of Directors has fixed the number of directors of the Company at
15.
The Corporate Governance Committee recommends to the Board of Directors
nominees to fill vacancies on the Board as they occur and recommends candidates
for election as directors at Annual Meetings of Shareholders. If you wish to
recommend nominees to the Corporate Governance Committee for election to the
Board of Directors, you must submit in writing to the Corporate Governance
Committee of the Company the names of the persons, their qualifications for
service and evidence of their willingness to serve. Our Restated Articles of
Incorporation require that nominations for any person who is not a director of
the Company must be submitted to the Secretary at least 60 days prior to the
Annual Meeting. No other nominations have been timely made for election at this
Annual Meeting.
7
Members of the Board of Directors whose terms of office will continue until
our Annual Shareholders' Meeting in 2003 are:
NAME, AGE, PRINCIPAL OCCUPATION FOR LAST FIVE SERVED AS A
YEARS AND DIRECTORSHIPS IN PUBLIC CORPORATIONS DIRECTOR SINCE
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(PHOTO C. W. COKER) *C. W. COKER (68). Mr. Coker has been Chairman of the 1962
Company since 1990. He also was Chief Executive Officer of
the Company from 1990 to 1998. Mr. Coker was President
from 1970 to 1990 and was reappointed President in 1994,
serving until 1996, while maintaining the title and
responsibility of Chairman and Chief Executive Officer of
the Company. Mr. Coker is a director of Bank of America
Corporation; Progress Energy Inc. and its subsidiary
companies, Carolina Power & Light Company and Florida
Progress Corporation; and Sara Lee Corporation.
(PHOTO H. E. H. E. DELOACH, JR. (57). Mr. DeLoach has been President 1998
DeLOACH, JR.) and Chief Executive Officer of the Company since 2000. He
was Chief Operating Officer from April 2000 to July 2000
and was Senior Executive Vice President from 1999 to 2000,
Executive Vice President from 1996 to 1999, Group Vice
President from 1993 to 1996, Vice President -- Film,
Plastics and Special Products from February 1993 to
October 1993, Vice President -- High Density Film Products
Division from 1990 to 1993, and Vice President --
Administration and General Counsel from 1986 to 1990. Mr.
DeLoach is a director of Goodrich Corporation.
(PHOTO A. T. A. T. DICKSON (70). Mr. Dickson has been Chairman since 1981
DICKSON) 1994 and a director since 1968 of Ruddick Corporation
(diversified holding company), Charlotte, North Carolina.
He was President of Ruddick Corporation from 1968 to 1994.
Mr. Dickson is a director of Lance, Inc. and Bassett
Furniture Industries, Inc.
---------------
* C. W. Coker and F. L. H. Coker are brothers and are first cousins of J. L. Coker.
8
NAME, AGE, PRINCIPAL OCCUPATION FOR LAST FIVE SERVED AS A
YEARS AND DIRECTORSHIPS IN PUBLIC CORPORATIONS DIRECTOR SINCE
---------------------------------------------- --------------
(PHOTO DONA DAVIS DONA DAVIS YOUNG (48). Ms. Young has been President and 1995
YOUNG) Chief Operating Officer of The Phoenix Companies, Inc.
(provider of wealth management products and services to
individuals and institutions), Hartford, Connecticut,
since 2001 and a director since 2000. She has been
President and Chief Operating Officer of its subsidiary,
Phoenix Life Insurance Company, since 2001, was appointed
President in 2000, and has been a director since 1998.
Previously, she was Executive Vice President and General
Counsel of Phoenix Life from 1994 to 2000 and Senior Vice
President and General Counsel from 1989 to 1994. She
joined Phoenix in 1980. Ms. Young is a director of Foot
Locker, Inc. and Wachovia Corporation.
Members of the Board of Directors whose terms of office will continue until
the Annual Shareholders' Meeting in 2004 are:
NAME, AGE, PRINCIPAL OCCUPATION FOR LAST FIVE SERVED AS A
YEARS AND DIRECTORSHIPS IN PUBLIC CORPORATIONS DIRECTOR SINCE
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(PHOTO F. L. H. *F. L. H. COKER (66). Mr. Coker is retired. He was 1964
COKER) President and Director of Sea Corporation of Myrtle Beach,
Inc. (private investments), Myrtle Beach, South Carolina,
from 1983 to 1989. At the time of his retirement from the
Company in 1979, Mr. Coker had been Senior Vice President
since 1976.
(PHOTO T. C. COXE, T. C. COXE, III (71). Mr. Coxe is retired. He was Senior 1982
III) Executive Vice President of the Company from 1993 to 1996
and was Executive Vice President from 1985 to 1993. Mr.
Coxe is a director emeritus of Wachovia Bank of South
Carolina, N.A.
---------------
* C. W. Coker and F. L. H. Coker are brothers and are first cousins of J. L. Coker.
9
NAME, AGE, PRINCIPAL OCCUPATION FOR LAST FIVE SERVED AS A
YEARS AND DIRECTORSHIPS IN PUBLIC CORPORATIONS DIRECTOR SINCE
---------------------------------------------- --------------
(PHOTO B. L. M. B. L. M. KASRIEL (55). Mr. Kasriel has been Vice Chairman 1995
KASRIEL) and Chief Operating Officer of Lafarge (construction
materials group), Paris, France, since 1995. He was
Managing Director of Lafarge Coppee from 1989 to 1994,
Senior Executive Vice President from 1987 to 1989 and
Executive Vice President from 1982 to 1987. Mr. Kasriel is
a director of Lafarge and Lafarge North America.
(PHOTO T. E. T. E. WHIDDON (49). Mr. Whiddon has been Executive Vice 2001
WHIDDON) President -- Logistics and Technology of Lowe's Companies,
Inc. (home improvement retailer), North Wilkesboro, North
Carolina, since 2000. He was Executive Vice President and
Chief Financial Officer of Lowe's from 1996 to 2000. Prior
to joining Lowe's, Mr. Whiddon was Senior Vice President
and Chief Financial Officer of Zale Corporation
(jewelers), Dallas, Texas, from 1995 to 1996 and was
Senior Vice President and Treasurer from 1994 to 1995.
Prior to joining Zale, he was Vice President and Treasurer
of Eckerd Corporation (drugstores), Largo, Florida, from
1989 to 1994.
10
BOARD COMMITTEES
During 2001, the Board of Directors held four regularly scheduled meetings
and two special meetings to review significant developments affecting the
Company and to act on matters requiring Board approval. To assist it in
performing its duties, the Board has established five committees:
NUMBER OF
COMMITTEE CURRENT 2001
NAME PURPOSE MEMBERS MEETINGS
--------------- ------------------------------------------- -------------------- ---------
Audit Committee - Review compliance with major accounting B. L. M. Kasriel -- 4
and financial policies of the Company; Chairperson
C. J. Bradshaw
- Review adequacy of internal controls; R. J. Brown
J. L. Coker
- Review significant findings of the Paul Fulton
independent accountant and the internal E. H. Lawton, III
audit department; T. E. Whiddon
- Review results of the annual external
audit with the independent accountant;
- Review legal and regulatory matters that
may have a material impact on the Company's
financial statements;
- Review monitoring of compliance with the
Company's code of business conduct;
- Recommend to the Board of Directors
annually the appointment of the
independent accountant;
- Review the scope of and fees for the
prospective annual audit;
- Review the operation of the Company's
internal audit department; and
- Act as liaison among the internal
auditors, the independent accountant and
the Board of Directors.
The Audit Committee acts pursuant to a written charter adopted by the Board of
Directors. A copy of the charter was attached to the Proxy Statement dated March 16, 2001, as
Appendix A. On February 6, 2002, the charter was amended to state that the Committee would
"consist of a minimum of three or more independent members of the Board, who are all
financially literate and at least one of whom has accounting or related financial management
expertise." Previously, the charter indicated "a minimum of three and no more than six
independent members." Each member of the Audit Committee is independent as defined in
Sections 303.01(B)(2)(a) and (3) of the New York Stock Exchange's listing standards.
11
NUMBER OF
COMMITTEE CURRENT 2001
NAME PURPOSE MEMBERS MEETINGS
--------------- ------------------------------------------- -------------------- ---------
Executive - Periodically examine the executive A. T. Dickson -- 4
Compensation officer compensation programs; Chairperson
Committee C. J. Bradshaw
- Set officer base salary compensation Paul Fulton
rates; B. L. M. Kasriel
H. L. McColl, Jr.
- Administer all annual and long-term D. D. Young
incentive plans;
- Administer the Company's Stock Option
Plans; and
- Review with the Chief Executive Officer
the performance of corporate management,
management development and succession
plans.
Employee - Oversee the Company's commitment to D. D. Young -- 2
and Public employee health and safety; Chairperson
Responsibility R. J. Brown
Committee - Provide oversight on diversity strategy, F. L. H. Coker
goals and progress; J. L. Coker
T. C. Coxe, III
- Review charitable giving policies and C. C. Fort
practices; T. E. Whiddon
- Review employee morale through survey
results or other means;
- Oversee the Company's stance, response
and programs related to the environment and
to other emerging issues;
- Monitor major litigation and disputes
and provide guidance in responding to such
issues;
- Review actions taken by management
relating to current or emerging public
policy issues or significant political
and social changes that may affect the
Company; and
- Oversee the Company's commitment to
ethical business practices.
12
NUMBER OF
COMMITTEE CURRENT 2001
NAME PURPOSE MEMBERS MEETINGS
--------------- ------------------------------------------- -------------------- ---------
Corporate - Recommend to the Board of Directors Paul Fulton -- 4
Governance amendments to the By-Laws; Chairperson
Committee T. C. Coxe, III
- Recommend to the Board governance A. T. Dickson
policies and practices; B. L. M. Kasriel
D. D. Young
- Ensure that processes are in place for
annual Chief Executive Officer performance
appraisal and reviews of succession
planning and management development;
- Review with the Board on an annual basis
the appropriate skills and characteristics
required of Board members;
- Recommend to the Board a corporate
philosophy and strategy governing
director compensation and benefits;
- Recommend to the Board a policy
regarding assignment and rotation of
committee membership and chairmanships;
and
- Conduct a process for assessment of
Board performance.
Executive - Empowered to exercise all of the C. W. Coker 2
Committee authority of the Board of Directors H. E. DeLoach, Jr.
between regularly scheduled meetings, A. T. Dickson
except as limited by South Carolina law. H. L. McColl, Jr.
During 2001, all directors attended 75% or more of the aggregate number of
meetings of the Board and committees of which they were members, except Mr.
Fulton who attended 72%.
13
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table shows information as of December 31, 2001, about
persons known to us to be the beneficial owner of more than 5% of our Common
Shares. This information was obtained from Schedules 13G filed by these entities
with the Securities and Exchange Commission, and we have not independently
verified it.
AMOUNT OF
TITLE OF NAME AND ADDRESS OF BENEFICIAL PERCENT
CLASS BENEFICIAL OWNER OWNERSHIP OF CLASS
------------------- -------------------------------------- ---------- --------
No Par Value Common State Street Bank and Trust Company(1) 5,470,095 5.73%
225 Franklin Street
Boston, MA 02110
No Par Value Common Alliance Capital Management L.P.(2) 8,998,502 9.43%
1345 Avenue of the Americas
New York, NY 10105
---------------
(1) State Street Bank and Trust Company is a bank that holds shares in various
fiduciary capacities. Of the shares shown above, 3,374,432 are held by the
bank as trustee of the Company's Employee Savings and Stock Ownership Plan.
(2) Alliance Capital Management L.P. is an investment advisor that manages
discretionary investment accounts on behalf of its clients. Alliance Capital
Management L.P. is a subsidiary of AXA Financial, Inc., a Delaware
corporation, which is controlled by AXA and The Mutuelles AXA. The AXA
entities have disclaimed beneficial ownership of the Sonoco shares.
14
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows the number of shares beneficially owned as of
December 31, 2001, directly or indirectly, by each director and named executive
officer.
DEFERRED
TOTAL NUMBER PERCENT COMPENSATION
OF SHARES OF RESTRICTED AND RESTORATION
NAME AND POSITION OWNED(1) CLASS(2) STOCK(6) UNITS(7)
----------------------------------------------- ------------ -------- ---------- ---------------
C. J. Bradshaw 40,630 - - 4,269
Director
R. J. Brown 23,611 - - 3,847
Director
F. L. H. Coker 958,443 1.0% - -
Director
J. L. Coker 231,953 - - -
Director
T. C. Coxe, III 388,987 - - -
Director
A. T. Dickson 83,455 - - 5,185
Director
C. C. Fort 290,743 - - -
Director
Paul Fulton 25,623(3) - - -
Director
B. L. M. Kasriel 27,205 - - -
Director
E. H. Lawton, III 43,570 - - -
Director
H. L. McColl, Jr. 30,931(4) - - 9,034
Director
T. E. Whiddon 3,000 - - -
Director
D. D. Young 14,930 - - 12,010
Director
C. W. Coker 1,919,682 2.0% 113,013 11,870
Chairman and Director
H. E. DeLoach, Jr. 808,179(5) - 159,862 7,971
President, Chief Executive Officer and
Director
C. L. Sullivan, Jr. 66,200 - 10,438 281
Senior Vice President
R. E. Holley 238,716 - 14,126 3,390
Senior Vice President
J. C. Bowen 127,158 - 12,606 1,588
Senior Vice President
15
DEFERRED
TOTAL NUMBER PERCENT COMPENSATION
OF SHARES OF RESTRICTED AND RESTORATION
NAME AND POSITION OWNED(1) CLASS(2) STOCK(6) UNITS(7)
----------------------------------------------- ------------ -------- ---------- ---------------
F. T. Hill, Jr.(8) 244,040 - 14,126 3,428
Vice President and Chief Financial Officer
All Executive Officers and Directors (30 6,901,046 7.0% 451,382 82,666
persons)
---------------
(1) The directors and the named executive officers have sole voting and
investment power over the shares unless otherwise indicated in the
footnotes. The number includes shares subject to currently exercisable
options, granted by the Company under the 1983 Key Employee Stock Option
Plan, the 1991 Key Employee Stock Plan (the "1991 Plan") and the 1996
Non-Employee Directors' Stock Plan for the following directors and named
executive officers: C. J. Bradshaw -- 14,600; R. J. Brown -- 23,149; F. L.
H. Coker -- 14,600; J. L. Coker -- 14,600; T. C. Coxe, III -- 84,758; A. T.
Dickson -- 14,600; Paul Fulton -- 14,600; B. L. M. Kasriel -- 25,090; H. L.
McColl, Jr. -- 14,600; T. E. Whiddon -- 3,000; D. D. Young -- 10,200; C. W.
Coker -- 809,308; H. E. DeLoach, Jr. -- 515,500; C. L. Sullivan,
Jr. -- 65,000; R. E. Holley -- 170,322; J. C. Bowen -- 122,556; and F. T.
Hill, Jr. -- 211,721.
Also included are shares held in the Company's Dividend Reinvestment Plan
(11,036) and shares held in the Company's Employee Savings and Stock
Ownership Plan (47,835).
Shareholdings do not include Restricted Stock Rights, which have been
deferred until retirement, granted under the 1991 Plan or Deferred
Compensation and Restoration Units.
Shareholdings do not include the awards listed in the Long-Term Incentive
Plans -- Awards in Last Fiscal Year table shown on Page 23.
(2) Percentages not shown are less than 1%.
(3) Includes 507 shares of Common Stock owned by Mrs. Fulton. Mr. Fulton
disclaims beneficial ownership of these shares.
(4) Includes 11,882 shares of Common Stock owned by Mrs. McColl. Mr. McColl
disclaims beneficial ownership of these shares.
(5) Includes 238,010 shares of Common Stock owned by trusts and an estate for
which Mr. DeLoach is trustee and personal representative, respectively. Mr.
DeLoach has no pecuniary interest in these trusts and the estate and
disclaims beneficial ownership of these shares.
(6) Issuance of these shares, most of which have vested, has been deferred
until retirement; thus, no voting rights are associated with them.
(7) These figures represent deferred compensation units and restoration units
connected with the Sonoco Savings Plan. No voting rights are associated
with these units.
(8) Mr. Hill resigned on February 11, 2002.
16
EXECUTIVE COMPENSATION COMMITTEE REPORT TO SHAREHOLDERS
The Executive Compensation Committee of the Board of Directors (the
"Committee") is responsible for setting the remuneration levels for executives
of the Company. It also oversees the Company's various executive compensation
plans, as well as the overall management compensation program. Additionally, the
Committee reviews and plans for top management succession and reviews executive
job performance. The Committee periodically evaluates the Company's executive
compensation program in terms of appropriateness, including competitive
positioning relative to other companies' practices. The Committee obtains
independent and impartial advice from external compensation consulting firms in
order to maintain objectivity in executing its responsibilities. The Committee
met four times during 2001 and had met once in 2002 as of the printing of this
report.
PHILOSOPHY
The executive compensation program has been designed to attract, motivate,
reward and retain senior management by providing competitive total compensation
opportunities based on performance, teamwork and the creation of shareholder
value. The program currently consists of salary, annual cash bonus awards,
annual stock options, periodic contingent share awards, perquisites and employee
benefits.
In order to determine competitive compensation levels, the Company
participates in a number of surveys conducted by independent consulting firms.
In these surveys, executive compensation levels are developed by looking at
large numbers of similar positions across American industry and reflect
adjustments based on company revenues. The Dow Jones Containers & Packaging
Group Index ("Index"), which includes the Company, was used in the five-year
shareholder return performance graph that appears on Page 21. The companies in
this Index also are included, as available, among the companies whose survey
data is used in the Company's compensation studies. From time to time, the
Company contracts with independent consulting firms to perform customized
compensation studies of companies in its industry group and/or of companies
having similar long-term financial performance results.
The total compensation package for executives for 2001 was generally
structured to be competitive with the 75th percentile of total pay practices for
executives of similar size corporations if challenging annual financial targets
and corresponding longer term increases in shareholder value were achieved. The
base salary midpoints were targeted to be at the median of surveyed market
rates. Incentive compensation, consisting of annual cash bonuses, annual stock
option awards and periodic contingent share awards, constitutes the Company's
performance-based compensation element. The levels of the combined award
opportunities reflected 75th percentile competitive total annual and long-term
incentive compensation opportunities for similar positions. These awards
provided opportunities to motivate and reward executives for exceptional
performance. If performance targets were not met, total compensation levels
would fall below competitive median practice. In further support of the
Company's pay-for-performance philosophy, executive perquisites were limited and
provided a lower level of benefits than the market median. The benefits program
for executives provided a benefit that was somewhat higher than the market
median. This benefits program, in particular the retirement and life insurance
plans, was designed to enhance retention of executives until normal retirement
age.
17
The Committee has taken, and it intends to continue to take, steps
necessary to assure the federal tax deductibility of compensation realized by
senior executives. However, to the extent that such steps would not be practical
or would not be consistent with the Committee's compensation objectives, there
is the possibility that future compensation, in some circumstances, may not meet
tax deductibility requirements.
Following is a discussion of elements of the executive compensation
program, along with a description of the decisions and actions taken by the
Committee, with regard to 2001 compensation. Also included is a specific
discussion of the decisions regarding the compensation of Mr. DeLoach for
performing the duties of President and Chief Executive Officer ("CEO"). The
tables and accompanying narrative and footnotes that follow this report reflect
the decisions covered by the discussions.
SALARY
The Company's salary ranges and resulting salaries are based on a relative
valuing of the duties and responsibilities of each position. The Committee
reviews the base salaries of all senior executives on an annual basis.
Merit salary increases are based on consideration of each executive's
performance and position in his or her salary range. Promotional salary
increases are awarded to recognize increased responsibilities and
accountabilities. The Committee used these criteria to determine salary
adjustments for Mr. DeLoach and for each of the executive officers, except Mr.
Coker.
Mr. Coker, who remains an active employee of the Company as Chairman of the
Board, has elected to begin receiving his supplemental executive retirement plan
(SERP) benefit for which he became eligible at his normal retirement date. Upon
initiation of these payments, Mr. Coker's base salary was reduced to zero.
ANNUAL BONUS AWARDS
The Company has an annual bonus plan that provides for cash incentive
opportunities, based upon achievement of pre-determined annual financial
performance goals, as well as attainment of key strategic and operational
objectives. The purpose of this plan is to link a significant portion of
executive pay to both the Company's operating performance for the year and to
critical issues affecting the long-term health of the Company.
Financial performance goals were weighted from 80% to 100% of total bonus
opportunity. For senior executives with corporate responsibility, the plan's
financial goals were based on corporate earnings per share from ongoing
operations. For executives with business unit responsibility, one-fourth of the
bonus opportunity available for financial performance was based on corporate
earnings per share, and the remainder was based on business unit profit before
interest and taxes.
The strategic and operational objectives for 2001 were weighted from 0% to
20% of total bonus opportunity and were comprised of employee safety, growth
initiatives, productivity and purchasing improvement, effective use of capital
and diversity.
18
On February 5, 2002, the Committee reviewed and approved the 2001 annual
bonus payments for executive officers. Initial bonus amounts were assigned to
each executive officer (except Messrs. DeLoach, Sullivan, Hill, Holley and
Bowen), based on the scoring of financial goal attainment and subjective
evaluations of how well their strategic and operational objectives were met. In
some cases, the Committee used additional discretion based on its assessment of
individual performance and internal equity in the determination of final bonus
amounts. Mr. DeLoach's bonus, which reflects the Committee's assessment of his
contribution and efforts in 2001, is shown under the "Bonus" caption in the
Summary Compensation Table on Page 22. In determining the amount, the Committee
considered the challenges associated with the position of CEO, the Company's
financial performance, his role in completing a major restructuring of the
Company's organization and his role in carrying out a major acquisitions
program. The bonus awards for Messrs. Sullivan, Hill, Holley and Bowen were
determined in the same manner as the bonus award for Mr. DeLoach. In lieu of any
fixed compensation, Mr. Coker participated in a special variable-pay incentive
compensation plan, based solely on earnings per share goals.
STOCK OPTIONS
In 2001, the Committee granted to Mr. DeLoach, the executive officers and
other key management employees options to purchase shares of Common Stock under
a plan which previously had been approved by the Company's shareholders. The
price of these options was set at the prevailing market price on the date the
options were awarded. Accordingly, these options will be valuable to the
recipients only if the market price of Company stock increases. Stock option
awards for Mr. DeLoach and the other named officers are included in the Summary
Compensation Table on Page 22 under the caption "Number of Securities Underlying
Options Granted" and in the Option Grants in Last Fiscal Year table on Page 25.
OTHER
Effective December 31, 2001, the Committee granted awards of contingent
share units to thirty-one executives, including Mr. DeLoach and four other
executive officers named in the Summary Compensation Table. These awards,
consisting of performance-based share units, were granted to provide corporate
and business unit managers with an additional compensation opportunity that can
be realized only if targeted creation of shareholder value also is achieved. The
number of restricted shares granted was based on the Committee's judgment as to
the appropriate size of an award, the individual's level within the Company and
the earlier mentioned surveys of competitive compensation levels. Any shares
disbursed as a part of this program will be funded from shares allocated in the
1991 Key Employee Stock Plan and, in order to minimize dilution, will consist
entirely of previously issued shares that are acquired by the Company and
retired or cancelled.
The award to Mr. DeLoach reflects the Committee's recognition of his
leadership in the development of a comprehensive plan for sustainable growth for
the Company. The awards to the other participants also are intended to reward
achievement of performance goals that are expected to lead to above-average
shareholder returns. As described in more detail on Page 24, awards will vest
depending on cumulative earnings per share (EPS) and average return on net
assets employed (RONAE) for the three-year
19
performance period. Except for death, disability or retirement other than for
cause, termination of a participant's employment prior to the end of the
performance period will result in forfeiture of an award.
A. T. Dickson (Chairperson) C. J. Bradshaw Paul Fulton
B. L. M. Kasriel E. H. Lawton, Jr. H. L. McColl, Jr. D. D. Young
20
COMPARATIVE COMPANY PERFORMANCE
The following line graph compares cumulative total shareholder return for
the Company with the cumulative total return of the S&P 500 Stock Index and a
nationally recognized industry index, the Dow Jones Containers & Packaging Group
(which includes the Company), from December 31, 1996, through December 31, 2001.
The graph assumes $100 invested on December 31, 1996, in Sonoco Products Company
Common Stock, the S&P 500 Stock Index and the Dow Jones Containers & Packaging
Group.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
AMONG SONOCO PRODUCTS COMPANY**, THE S&P 500 STOCK INDEX AND
THE DOW JONES CONTAINERS & PACKAGING GROUP
[PERFORMANCE GRAPH]
1996 1997 1998 1999 2000 2001
------- ------- ------- ------- ------- -------
Sonoco Products Company $100.00 $137.21 $131.74 $104.16 $103.04 $130.86
S&P 500 Stock Index 100.00 133.36 171.47 207.56 188.66 166.24
Dow Jones Containers & Packaging Group 100.00 118.15 105.97 101.21 65.71 82.56
* TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS
** FISCAL YEAR ENDING DECEMBER 31
21
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION AWARDS
-----------------------
ANNUAL COMPENSATION NUMBER OF
------------------------------------- SECURITIES
OTHER RESTRICTED UNDERLYING
ANNUAL STOCK OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) AWARDED(2) GRANTED COMPENSATION(3)
--------------------------- ---- -------- -------- --------------- ---------- ---------- ---------------
H. E. DeLoach, Jr. 2001 $718,746 $600,000 $ 28,030 $ -0- 175,000 $ 58,793
President and 2000 660,660 371,847 24,274 2,162,500(4) 165,000 57,499
Chief Executive Officer 1999 459,170 390,295 21,029 -0- 60,000 49,429
C. L. Sullivan, Jr. 2001 335,001 198,536 -0- -0- 40,000 9,752
Senior Vice President 2000 110,000 66,667 -0- 191,875(5) 25,000 -0-
1999 -0- -0- -0- -0- -0- -0-
R. E. Holley 2001 323,751 204,138 -0- -0- 40,000 15,434
Senior Vice President 2000 283,096 204,809 -0- -0- 17,000 17,197
1999 258,721 152,387 -0- -0- 16,000 18,028
J. C. Bowen 2001 283,998 181,240 -0- -0- 40,000 13,600
Senior Vice President 2000 247,861 190,691 -0- -0- 16,000 13,188
1999 226,081 165,040 -0- -0- 16,000 9,921
F. T. Hill, Jr. 2001 326,556 45,718 1,039 -0- 40,000 17,618
Vice President and 2000 320,076 113,755 940 -0- 36,000 23,853
Chief Financial Officer 1999 306,004 212,000 851 -0- 35,000 23,034
C. W. Coker 2001 -0- 200,000 77,641 -0- 100,000 117,197
Chairman 2000 -0- 162,225 79,458 -0- 75,000 140,445
1999 246,668 466,666 81,025 -0- 100,000 192,487
---------------
(1) None of the executive officers received perquisites or personal benefits
that totaled the lesser of $50,000 or 10% of their respective salary plus
bonus payments. Amounts in this column represent the above-market portion of
interest credits on previously earned compensation for which payment has
been deferred.
(2) The number and dollar value of restricted stock rights held, including
target contingent share units, and dividend equivalents, based on the
closing stock price on December 31, 2001, of $26.58 per share were: H. E.
DeLoach, Jr. -- 206,684 shares ($5,493,660); C. L. Sullivan, Jr. -- 41,213
shares ($1,095,442); R. E. Holley -- 25,707 shares ($683,292); J. C.
Bowen -- 25,707 shares ($683,292); F. T. Hill, Jr. -- 21,079 shares
($560,280); and C. W. Coker -- 51,798 shares ($1,376,791).
22
(3) All other compensation for 2001 consisted of the following components for
each named officer:
COMPANY CONTRIBUTIONS AND
SPLIT-DOLLAR ACCRUALS TO DEFINED CONTRIBUTION
NAME LIFE INSURANCE RETIREMENT PLANS(a)
------------------ -------------- --------------------------------
H. E. DeLoach, Jr. $ 26,075 $32,718
C. L. Sullivan, Jr. 527 9,225
R. E. Holley 3,906 11,528
J. C. Bowen 1,059 12,541
F. T. Hill, Jr. 6,090 11,528
C. W. Coker 112,330 4,867
---------------
(a) Comprised of contributions to the Sonoco Savings Plan and accruals to
individual accounts in the Company's Omnibus Benefit Restoration Plan
in order to keep employees whole with respect to Company contribution
amounts that were limited by tax law.
(4) Award of 100,000 units of restricted stock rights that become vested on
December 31, 2005, if Mr. DeLoach is actively employed by the Company on
that date. Dollar amount shown is based on the per share stock price of
$21.625 on December 31, 2000, the date of grant. Dividend equivalents are
being added to these rights.
(5) Mr. Sullivan received an award of 10,000 restricted stock rights upon his
employment as a corporate officer of the Company. The rights accumulate
dividend equivalents and vest in three generally equal increments on
September 1 of 2003, 2004 and 2005. The dollar amount shown is based on the
per share stock price of $19.1875 on September 1, 2000, the date of grant.
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
MAXIMUM PERFORMANCE PERIOD ESTIMATED FUTURE PAYOUTS
NUMBER OF UNTIL MATURATION -------------------------------------
NAME SHARE UNITS OR PAYOUT THRESHOLD(#) TARGET(#) MAXIMUM(#)
------------------ ----------- ------------------ ------------ --------- ----------
H. E. DeLoach, Jr. 66,667 1/1/02-12/31/04 16,667 33,333 66,667
C. L. Sullivan, Jr. 20,000 1/1/02-12/31/04 5,000 10,000 20,000
R. E. Holley 20,000 1/1/02-12/31/04 5,000 10,000 20,000
J. C. Bowen 20,000 1/1/02-12/31/04 5,000 10,000 20,000
C. W. Coker 33,333 1/1/02-12/31/04 8,333 16,667 33,333
23
Awards are made in the form of contingent Company share units. The vesting
of awards is tied to growth in earnings (cumulative EPS) and improved capital
effectiveness (average RONAE) over a three-year period as described in the
Compensation Committee's Report on Page 17. For two-thirds of the designated
shares, threshold vesting is earned if three-year cumulative EPS is 96.25% of
target, and maximum vesting is earned if three-year cumulative EPS is 105.82% or
more of target. For the remaining one-third of the designated shares, threshold
vesting is earned if three-year average RONAE is 95.24% of target, and maximum
vesting is earned if three-year average RONAE is 104.76% of target. For both
measures, the target shares vest when performance is 100% of target. The stock
units applicable to each performance measure will be forfeited if the minimum
(threshold) performance level is not achieved. Dividend equivalents with respect
to such shares are automatically reinvested in additional stock units, subject
to vesting conditions previously described.
OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
AGGREGATED OPTION EXERCISES IN 2001 AND 2001 YEAR-END VALUES
NUMBER OF SHARES
UNDERLYING VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AS OF 12/31/01 AS OF 12/31/01(2)
ACQUIRED ON VALUE --------------------------- ---------------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE(3) UNEXERCISABLE(4)
------------------ ----------- ----------- ----------- ------------- -------------- ----------------
H. E. DeLoach, Jr. -0- $ -0- 340,500 175,000 $1,250,039 $486,500
C. L. Sullivan, Jr. -0- -0- 25,000 40,000 184,812 111,200
R. E. Holley 11,550 101,135 130,322 40,000 491,407 111,200
J. C. Bowen 3,696 35,098 82,556 40,000 266,100 111,200
F. T. Hill, Jr. -0- -0- 171,722 40,000 503,791 111,200
C. W. Coker 92,400 541,122 709,308 100,000 2,460,334 278,000
---------------
(1) The difference between the exercise price paid and the value of the acquired
shares, based on the closing price of the Company's stock on the exercise
date.
(2) Based on $26.58 per share, the December 31, 2001, closing price.
(3) Based on exercise prices ranging from $18.0736 to $24.5455 per share.
(4) Based on an exercise price of $23.80 per share.
24
OPTION GRANTS IN LAST FISCAL YEAR
2001 STOCK OPTION GRANTS
INDIVIDUAL GRANTS
-----------------------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES PRICE EXPIRATION PRESENT
NAME GRANTED(1) IN 2001 (PER SHARE) DATE VALUE(2)
------------------ ---------- ----------- ----------- ---------- -------------
H. E. DeLoach, Jr. 175,000 10.1 $23.80 2/7/2011 $838,250
C. L. Sullivan, Jr. 40,000 2.3 23.80 2/7/2011 191,600
R. E. Holley 40,000 2.3 23.80 2/7/2011 191,600
J. C. Bowen 40,000 2.3 23.80 2/7/2011 191,600
F. T. Hill, Jr. 40,000 2.3 23.80 2/7/2011 191,600
C. W. Coker 100,000 5.7 23.80 2/7/2011 479,000
---------------
(1) These options were granted on February 7, 2001, at the closing market price.
They became exercisable on February 7, 2002, and were granted for a period
of ten years, subject to earlier expiration in certain events related to
termination of employment. The exercise price can be paid by cash or by the
delivery of previously owned shares. Tax obligations also can be paid by an
offset of the underlying shares.
(2) The Grant Date Present Values were derived using the Black-Scholes Option
Pricing Model in accordance with the rules and regulations of the Securities
and Exchange Commission and are not intended to forecast appreciation of the
Company's stock price. The options had a grant date present value of $4.79.
The Black-Scholes model was used with the following assumptions: stock price
volatility of 20%, dividend yield of 2.59%, risk-free investment rate of
4.9% and a five-year option life.
25
PENSION TABLE
Named executive officers participate in a non-contributory defined benefit
program that provides for a maximum annual lifetime retirement benefit equal to
60% of final average compensation, computed as a straight life annuity, based on
the highest three of the last seven calendar years. In order to receive the full
benefit the executive must have at least 15 years of service and retire no
earlier than age 65. Eligible spouses (married one year or longer at the
executive's retirement date) receive survivor benefits at a rate of 75% of the
benefit paid to the executives. The total benefit provided by the Company is
offset by 100% of primary U.S. Social Security.
AGE 65 RETIREMENT
YEARS OF SERVICE
FINAL --------------------------------
AVERAGE 15 OR
COMPENSATION(1) 5 10 MORE(2)
--------------- -------- -------- ----------
$ 300,000 $ 60,000 $120,000 $ 180,000
400,000 80,000 160,000 240,000
500,000 100,000 200,000 300,000
600,000 120,000 240,000 360,000
700,000 140,000 280,000 420,000
800,000 160,000 320,000 480,000
900,000 180,000 360,000 540,000
1,000,000 200,000 400,000 600,000
1,100,000 220,000 440,000 660,000
1,200,000 240,000 480,000 720,000
1,300,000 260,000 520,000 780,000
1,400,000 280,000 560,000 840,000
1,500,000 300,000 600,000 900,000
1,600,000 320,000 640,000 960,000
1,700,000 340,000 680,000 1,020,000
---------------
(1) Final average compensation includes salary and bonus. Age, years of service
and final average compensation as of December 31, 2001, for the named
officers are as follows:
YEARS OF FINAL AVERAGE
NAME AGE SERVICE COMPENSATION
------------------ --- -------- -------------
H. E. DeLoach, Jr. 57 16 $1,048,908
C. L. Sullivan, Jr. 58 1 532,666
R. E. Holley 59 37 480,524
J. C. Bowen 51 29 431,637
F. T. Hill, Jr. 49 22 518,004
C. W. Coker(3) 68 44 --
(2) Years of service beyond 15 do not provide for any additional benefit.
(3) On May 1, 1999, Mr. Coker elected to begin receiving his supplemental
retirement benefit in lieu of any fixed compensation. This benefit amounts
to $955,500 per year and will not be offset by the Sonoco pension plan or
Social Security until Mr. Coker retires.
26
DIRECTORS' COMPENSATION
Employee directors do not receive any additional compensation for serving
on the Board of Directors. Non-employee directors were paid an $11,000 quarterly
retainer fee and a $1,000 attendance fee for special meetings in which they
participated during 2001.
Directors may elect annually to defer part or all of their retainer and
special meeting fees. Directors can choose to have their deferrals earn interest
credits at a market rate (the Merrill Lynch Ten-Year High Quality Bond Index) or
be treated as if invested in equivalent units of Sonoco Common Stock (which are
credited with reinvested dividend equivalents). Alternatively, directors can
elect to receive stock options under the 1996 Non-Employee Directors' Stock Plan
(the "Directors' Plan") instead of any part of their cash compensation. If a
director chooses this alternative, he or she will receive an option to purchase
four dollars worth of Sonoco Common Stock at the fair market value of the Common
Stock on the date the option is granted for each one dollar of cash compensation
the director chooses not to receive. During 2001, three directors received the
following number of stock options instead of cash compensation: R. J.
Brown -- 1,515 shares, E. H. Lawton, Jr. -- 6,408 shares and B. L. M.
Kasriel -- 4,245 shares.
Under the Directors' Plan, at the first regularly scheduled meeting of the
Board of Directors during a calendar year, each non-employee director is granted
an option to purchase 3,000 shares of Common Stock at a price equal to 100% of
the fair market value as of the date the options are granted. Any person who
later becomes a non-employee director also receives an option to purchase shares
of Common Stock at the fair market value of the Common Stock on the date the
option is granted. The number of shares for which options are granted is reduced
25% for each full quarter of the calendar year during which the person does not
serve as a non-employee director. During 2001, each non-employee director
received an option covering 3,000 shares. Effective with the first Board of
Directors' meeting in 2002, the annual non-employee director's stock option was
increased to 4,000 shares in accordance with the terms of this plan. Option
shares are immediately vested but may not be exercised until one year after the
grant date.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. A. T. Dickson, C. J. Bradshaw, Paul Fulton, B. L. M. Kasriel, E. H.
Lawton, Jr., H. L. McColl, Jr. and Ms. D. D. Young served on our Executive
Compensation Committee during the year ended December 31, 2001.
Mr. Paul Fulton is a director of Bank of America Corporation. Mr. A. T.
Dickson was a director of Bank of America Corporation until April 2001. Mr. H.
L. McColl, Jr. was Chairman and Chief Executive Officer and a director of Bank
of America Corporation until April 2001. Mr. C. W. Coker, our Chairman, is a
director of Bank of America Corporation. During the third quarter of 2001, a
Bank of America subsidiary managed the syndication and participated as agent to
provide a 364-day committed revolving line of credit with a one-year term out
option for $450,000,000 to support our commercial paper program and for general
corporate purposes. Bank of America's commitment to this facility is
$45,000,000. During the fourth quarter of 2001, a Bank of America subsidiary
co-led a syndicate of financial institutions that underwrote, sold and
distributed $250,000,000 in unsecured 12-year term notes that were used to pay
down maturing commercial paper. A committed line of credit from Bank of America
has been in place since
27
1987 and has been renewed, amended and increased or decreased according to our
needs. Bank of America has extended other lines of credit to us as support for
letters of credit, overdrafts and other corporate needs. It also provides
treasury management services to us. We pay fees to the bank for these services
and for the availability of the lines of credit, as well as interest on borrowed
funds. All transactions were handled on a competitive basis. Management believes
that the rates and provisions were as favorable to us as we could have obtained
from similar sources.
Mr. B. L. M. Kasriel is a member of our Executive Compensation Committee
and is Vice Chairman and Chief Operating Officer of Lafarge of which Lafarge
Platres International is a subsidiary. Sonoco Hongwen Paper Company, Ltd. (SHW),
a subsidiary of Sonoco Asia, LLC, and Lafarge Onoda Gypsum, Shanghai, (LOGS), a
subsidiary of China Plasterboard Corporation Holding Company (British Virgin
Islands), a subsidiary of Lafarge Platres International, entered into an
agreement in 1998 whereby LOGS will provide technical assistance to SHW in the
development and manufacture of plasterboard liner. SHW will supply the
plasterboard liner to LOGS at prevailing market prices. Lafarge Platres
International, through China Plasterboard Corporation, has funded 50% of the
capital costs ($450,000) for implementation of the project. The balance of
approximately $450,000 has been met by Sonoco Asia, LLC through SHW.
Ms. D. D. Young is a member of our Executive Compensation Committee and she
is a director of Wachovia Corporation. Following a merger in 2001, the new
Wachovia Corporation became the parent company of Wachovia Bank, N.A. and of
First Union National Bank. Each bank provides a line of credit of $41,250,000
like that of Bank of America to support our commercial paper program and for
general corporate purposes. We pay fees to Wachovia Bank, N.A. and to First
Union National Bank for the availability of the credit lines. First Union
National Bank, N.A. also provides trustee services, and we pay fees to First
Union for the trustee services. Ms. Young is also an executive officer and a
director of The Phoenix Companies, Inc. During 2001, we paid approximately
$654,000 to The Phoenix Companies, Inc. for premiums for split-dollar life
insurance policies covering certain of our officers and directors.
TRANSACTIONS WITH MANAGEMENT
Mr. H. L. McColl, Jr. was Chairman and Chief Executive Officer and a
director of Bank of America Corporation until April 2001. Mr. C. W. Coker and
Mr. Paul Fulton are directors of Bank of America Corporation. Mr. A. T. Dickson
was a director of Bank of America Corporation until April 2001. See
"Compensation Committee Interlocks and Insider Participation."
Mr. R. J. Brown is a director of Wachovia Corporation. Following a merger
in 2001, the new Wachovia Corporation became the parent company of Wachovia
Bank, N.A. and of First Union National Bank. Each bank provides a line of credit
of $41,250,000 like that of Bank of America to support our commercial paper
program and for general corporate purposes. We pay fees to Wachovia Bank, N.A.
and to First Union National Bank for the availability of the credit lines. First
Union National Bank, N.A. also provides trustee services, and we pay fees to
First Union for the trustee services.
28
Mr. B. L. M. Kasriel is Vice Chairman and Chief Operating Officer of
Lafarge. Lafarge Platres International is a subsidiary of Lafarge. See
"Compensation Committee Interlocks and Insider Participation."
During 2001, we purchased timber from a trust of which Mr. T. C. Coxe, III,
one of our directors and a former executive officer, is trustee and more than a
10% beneficial owner. The aggregate purchase price of the timber was
approximately $814,251.
Ms. D. D. Young is an executive officer and director of The Phoenix
Companies, Inc., and she is a director of Wachovia Corporation. See
"Compensation Committee Interlocks and Insider Participation."
During 2001, we sold plastic bags to Lowe's through one of their
distributors. The aggregate value of these sales to Lowe's was $3,786,650. Mr.
T. E. Whiddon, a director of our Company, is Executive Vice
President -- Logistics and Technology of Lowe's Companies, Inc.
We anticipate that we will continue to engage in similar business
transactions in 2002.
Our management believes the prices and terms of the transactions reported
above were comparable to those we could have obtained from other sources.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors has reviewed and discussed
with management our audited financial statements for the year ended December 31,
2001. The Audit Committee has discussed with our independent accountants,
PricewaterhouseCoopers LLP, the matters required to be discussed by Statements
on Auditing Standards 61. The Audit Committee has also received the written
disclosures and the letter from PricewaterhouseCoopers LLP required by
Independence Standards Board Standard No. 1 and has discussed with
PricewaterhouseCoopers LLP their independence. Based on the review and
discussions referred to above, the Audit Committee recommended to the Board of
Directors that the audited financial statements be included in our Annual Report
on Form 10-K for the year ended December 31, 2001. The Committee has also
reviewed the services provided by PricewaterhouseCoopers LLP, discussed under
the captions "Financial Information Systems Design and Implementation Fees" and
"All Other Fees", and has considered whether provision of such services is
compatible with maintaining auditor independence.
B. L. M. Kasriel (Chairperson) C. J. Bradshaw R. J . Brown J. L. Coker
Paul Fulton E. H. Lawton, III T. E. Whiddon
Audit Fees
During 2001, PricewaterhouseCoopers LLP billed the Company an aggregate of
approximately $403,000 for professional services rendered for the audit of the
Company's annual financial statements for the year ended December 31, 2001, and
for reviews of the financial statements included in the Company's Forms 10-Q for
that year. The Company estimates that the total fees for the audit of its annual
financial statements for the year ended December 31, 2001, will be approximately
$1,076,000.
29
Financial Information Systems Design and Implementation Fees
For the year ended December 31, 2001, PricewaterhouseCoopers LLP did not
provide the Company with any professional services in connection with financial
information systems design and implementation.
All Other Fees
For the year ended December 31, 2001, PricewaterhouseCoopers LLP billed the
Company an aggregate of approximately $1,703,000 for professional services and
expenses primarily related to tax compliance and consulting services.
APPROVAL OF INDEPENDENT ACCOUNTANTS
Upon recommendation of the Audit Committee, the Board of Directors has
appointed PricewaterhouseCoopers LLP, Certified Public Accountants, as our
independent accountants to examine our financial statements for the year ending
December 31, 2002. You will be asked to approve this selection at the Annual
Meeting. PricewaterhouseCoopers LLP, or its predecessors, has audited our books
and records for many years. Representatives of PricewaterhouseCoopers LLP will
be present and available to answer questions at the Annual Meeting and may make
a statement if they so desire.
The Board of Directors recommends that you vote FOR the approval of the
selection of PricewaterhouseCoopers LLP as independent accountants for the
Company for the current year.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Our directors and executive officers are required to file reports with the
Securities and Exchange Commission and the New York Stock Exchange, showing the
number of shares of any class of our equity securities they owned when they
became a director or executive officer, and, after that, any changes in their
ownership of our securities. These reports are required by Section 16(a) of the
Securities Exchange Act of 1934.
Based on a review of Section 16(a) reports and any representations made to
us, it appears that all such filings were timely made, except the Company failed
to file on a timely basis one report on Form 4, due December 10, 2001, for Mr.
F. L. H. Coker, a director of the Company, covering sales of shares on November
15 and November 19, 2001. These sales were reported on his Form 4 filed January
9, 2002.
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
If you want to present a shareholder proposal to be voted on at our Annual
Meeting in 2003, you must submit the proposal to the Secretary of the Company in
writing by January 31, 2003. However, if you want us to include your shareholder
proposal in our proxy materials for our Annual Meeting in 2003, you must be sure
the Secretary of the Company receives your written proposal by November 15,
2002. All shareholder proposals must comply with the requirements of our
By-Laws. The proxy agents for the
30
Company will use their discretionary authority to vote on any shareholder
proposal that the Secretary of the Company does not receive before January 29,
2003.
DELIVERY OF DOCUMENTS TO SHAREHOLDERS SHARING AN ADDRESS
We will deliver a single copy of the Annual Report to multiple shareholders
sharing one address if all of those shareholders have consented in writing to
delivery of a single Annual Report to their address. Upon oral or written
request to EquiServe, Post Office Box 43012, Providence, RI 02940-3012,
1-800-633-4236, we will promptly deliver a separate copy of the Annual Report to
a shareholder at a shared address to which a single copy was delivered. If you
are currently receiving a single copy of the Annual Report for multiple
shareholders at your address and would prefer to receive separate copies in the
future, please write or call us at the address or telephone number above and ask
us to send you separate copies. If shareholders at your address are currently
receiving separate copies of the Annual Report and you would prefer to receive
only one copy at your address, you may also write to us at the address above and
ask us to send only one copy.
OTHER MATTERS
As of the date of this statement, management knows of no business that will
be presented for consideration at the meeting other than that stated in the
notice of the meeting. The proxy agents will vote in their best judgment on any
other business that properly comes before the meeting.
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE VOTE BY TELEPHONE, VIA
THE INTERNET OR MARK, SIGN, DATE AND RETURN YOUR PROXY CARD AS PROMPTLY AS
POSSIBLE. PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON THE ACCOMPANYING PROXY.
Charles J. Hupfer
Secretary
March 15, 2002
31
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SONOCO PRODUCTS COMPANY
NORTH SECOND STREET - HARTSVILLE, SOUTH CAROLINA 29550 - USA
The undersigned hereby appoints Harris E. DeLoach, Jr., President and Chief
Executive Officer, or Charles J. Hupfer, Vice President, Secretary and
Treasurer, as proxy agents, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote, as designated below, all the
shares of Common Stock of Sonoco Products Company held of record by the
undersigned on February 22, 2002, at the Annual Meeting of Shareholders to be
held on April 17, 2002, or at any adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND
RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
Please sign exactly as your name(s) appear(s) hereon. When shares are held by
joint tenants, both should sign. When signing as an attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by an authorized
person.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
----------------------------------- ----------------------------------------
----------------------------------- ----------------------------------------
----------------------------------- ----------------------------------------
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
1. Election of Directors:
For Withheld
------------------------------------- All On All For
SONOCO PRODUCTS COMPANY NOMINEES - THREE-YEAR TERM: Nom- Nom- All
------------------------------------- (01) C.J. Bradshaw, (02) R.J. Brown, inees inees Except
COMMON STOCK (03) J.L. Coker, (04) Paul Fulton,
(05) H.L. McColl, Jr. [ ] [ ] [ ]
NOMINEE - TWO-YEAR TERM:
Mark box at right if an address change or comment has been [ ] (06) C.C. Fort
noted on the reverse side of this card. NOMINEE - ONE-YEAR TERM:
CONTROL NUMBER: (07) E.H. Lawton, III
NOTE: If you do not wish your shares voted "For" a particular
nominee, mark the "For All Except" box and strike a line through
the name(s) of the nominee(s). Your shares will be voted for the
remaining nominee(s).
For Against Abstain
2. Proposal to approve the selection of
PricewaterhouseCoopers LLP, Certified [ ] [ ] [ ]
Public Accountants, as independent
accountants of the corporation.
Please be sure to sign and date this Proxy. Date 3. In their discretion the proxy agents are authorized to vote upon
---------------------------------------------------------- such other business as may properly come before the meeting.
------Shareholder Sign Here----------Co-owner Sign-------- DIRECTORS RECOMMEND VOTING FOR 1 AND 2.
Here
DETACH CARD DETACH CARD
VOTE BY TELEPHONE VOTE BY INTERNET
It's fast, convenient, and immediate! It's fast, convenient, and your vote is immediately
Call Toll-Free on a Touch-Tone Phone. confirmed and posted.
FOLLOW THESE FOUR EASY STEPS: FOLLOW THESE FOUR EASY STEPS:
1. Read the accompanying Proxy Statement/Prospectus and Proxy 1. Read the accompanying Proxy Statement/Prospectus and Proxy
Card. Card.
2. Call the toll-free number: 2. Go to the Website:
1-877-PRX-VOTE (1-877-779-8683) or call collect on a touch- http://www.eproxyvote.com/son
tone phone 1-201-536-8073. There is NO CHARGE for this call.
3. Enter your Control Number located on your Proxy Card. 3. Enter your Control Number located on your Proxy Card.
4. Follow the recorded instructions. 4. Follow the instructions provided.
YOUR VOTE IS IMPORTANT! YOUR VOTE IS IMPORTANT!
Call 1-877-PRX-VOTE anytime! Go to http://www.eproxyvote.com/son anytime!
DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR INTERNET.