SCHEDULE 14A
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INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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Check the appropriate box:
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/ / Definitive Proxy Statement Commission Only (as permitted
/ / Definitive Additional Materials by Rule 14a-6(e)(2))
/ / Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
MAIL-WELL, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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MAIL-WELL, INC.
[LOGO]
8310 South Valley Highway, #400
Englewood, Colorado 80112
(303) 790-8023
NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
To Our Stockholders:
On Thursday, April 29, 2004, Mail-Well will hold its 2004 annual
meeting of stockholders at its principal executive offices, 8310 South
Valley Highway, #400, Englewood, Colorado. The meeting will begin at 8:30
a.m. Mountain Time.
Stockholders who owned shares of our common stock at the close of
business on March 5, 2004, may attend and vote at the meeting. We ask that
all stockholders be present at the meeting in person or by proxy so that we
have a quorum. At the meeting, you will be asked to:
1. Elect seven directors for terms expiring at the 2005 annual meeting
of stockholders;
2. Amend our articles of incorporation to change our corporate name to
"Cenveo, Inc.";
3. Amend our long-term equity incentive plan to (a) increase by
3,025,000 the number of shares which may be granted under the plan
and (b) amend the limitation that only 800,000 shares may be
granted as awards other than options;
4. Ratify the selection of Ernst & Young, LLP as our independent
auditors for 2004; and
5. Attend to any other business properly presented at the meeting.
We do not know of any other business that will come before the
meeting. In order to vote without attending the meeting, you may sign and
date the enclosed proxy card and return it in the postage prepaid envelope.
A copy of our 2003 Annual Report is enclosed. This notice and proxy
statement, the proxy card and the 2003 Annual Report are being mailed on or
about March 19, 2004.
Regardless of whether you plan to attend the meeting in person, we
urge you to vote in favor of each of the proposals as soon as possible.
By Order of the Board of Directors,
Mark L. Zoeller
Vice President-General Counsel and Secretary
Englewood, Colorado
March 19, 2004
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PROXY STATEMENT TABLE OF CONTENTS
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QUESTIONS AND ANSWERS......................................................1
PROPOSALS TO BE VOTED ON...................................................4
NOMINEES FOR THE BOARD OF DIRECTORS........................................6
GOVERNANCE, BOARD COMMITTEES AND BOARD COMPENSATION........................8
OWNERSHIP OF VOTING SECURITIES............................................11
EXECUTIVE OFFICERS AND KEY EMPLOYEES......................................13
COMPENSATION OF EXECUTIVE OFFICERS........................................15
REPORT ON EXECUTIVE COMPENSATION..........................................20
AMENDMENT OF LONG-TERM EQUITY INCENTIVE PLAN..............................23
REPORT OF THE AUDIT COMMITTEE.............................................26
INDEPENDENT PUBLIC AUDITORS...............................................28
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN...........................29
OTHER INFORMATION.........................................................31
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QUESTIONS AND ANSWERS
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1. Q: WHY AM I RECEIVING THESE MATERIALS?
A: The Board of Directors of Mail-Well is providing these
proxy materials to you in connection with Mail-Well's
annual meeting of stockholders which will take place on
April 29, 2004. As a stockholder, you are invited to
attend the meeting and may vote on the proposals described
in this proxy statement.
2. Q: WHAT INFORMATION IS CONTAINED IN THESE MATERIALS?
A: The information included in this proxy statement relates
to the proposals to be voted on at the meeting, the voting
process, the compensation of directors and executive
officers and certain other required information. Our 2003
Annual Report is also enclosed.
3. Q: WHO MAY VOTE AT THE MEETING?
A: Only stockholders of record at the close of business on
March 5, 2004, may vote at the meeting. As of the record
date, [48,348,123] shares of Mail-Well's common stock were
issued and outstanding. Each stockholder is entitled to
one vote for each share of common stock held on the record
date.
4. Q: WHAT IS THE DIFFERENCE BETWEEN HOLDING SHARES AS A
STOCKHOLDER OF RECORD AND AS A BENEFICIAL OWNER?
A: Most stockholders hold shares through a stockbroker, bank
or other nominee rather than directly in their own name.
There are some distinctions between shares held of record
and shares owned beneficially, which are summarized below:
Stockholder of Record. If your shares are registered
directly in your name with our transfer agent,
Computershare Trust Company, Inc., you are considered to
be the stockholder of record of those shares and these
proxy materials are being sent directly to you by
Mail-Well. As the stockholder of record, you have the
right to vote by proxy or to vote in person at the
meeting. In that case, we have enclosed a proxy card for
you to use.
Beneficial Owner. If your shares are held in a stock
brokerage account or by a bank or other nominee, you are
considered the beneficial owner of shares held in street
name, and these proxy materials are being forwarded to you
by your broker or bank which is considered to be the
stockholder of record of those shares. As the beneficial
owner, you have the right to direct your broker how to
vote and are also invited to attend the meeting. If you
wish to vote these shares at the meeting, you must contact
your bank or broker for instructions as to how to do so.
Your broker or bank has enclosed a voting instruction card
for you to use in directing the broker or nominee how to
vote your shares for you.
5. Q: WHAT MAY I VOTE ON AT THE MEETING?
A: You may vote to elect seven nominees to serve on
Mail-Well's Board of Directors for terms expiring at the
next annual meeting, to amend our articles of
incorporation to change our corporate name to "Cenveo,
Inc.," to amend our long-term equity incentive plan and to
ratify the selection of Ernst & Young, LLP as our
independent auditors for 2004.
6. Q: HOW DOES THE BOARD OF DIRECTORS RECOMMEND I VOTE?
A: The Board of Directors recommends that you vote your
shares FOR each of the seven listed director nominees, FOR
the amendment to our articles of incorporation, FOR the
amendment of our long-term equity incentive plan and FOR
the ratification of the independent auditors.
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7. Q: HOW CAN I VOTE MY SHARES?
A: You may vote either in person at the meeting or by
appointing a proxy. Please refer to the instructions
included on your proxy card to vote by proxy. If you hold
your shares through a bank, broker or other record holder,
then you may vote by the methods your bank or broker makes
available using the instructions the bank or broker has
included with this proxy statement.
8. Q: HOW ARE VOTES COUNTED?
A: In the election of directors, you may vote FOR all of the
director nominees or your vote may be WITHHELD with
respect to one or more nominees. You may vote FOR, AGAINST
or ABSTAIN on the proposals to amend the articles of
incorporation to change our corporate name, amend our
long-term equity incentive plan and ratify the auditors.
9. Q: HOW ARE ABSTENTIONS AND BROKER NON-VOTES TREATED?
A: Assuming a quorum is present at the meeting, if a majority
of our outstanding shares vote in favor of a proposal,
then the proposal will be approved (other than in the
election of directors). Abstentions and broker non-votes
will be counted for purposes of determining whether a
quorum is present. Abstentions and broker non-votes will
have the effect of voting against the proposals.
10. Q: CAN I CHANGE MY VOTE?
A: You have the right to revoke your proxy at any time before
the meeting by:
o providing written notice to Mail-Well's corporate
secretary that you revoke your proxy,
o voting in person at the meeting, or
o appointing a new proxy before the meeting begins.
Attending the meeting will not by itself revoke a proxy
unless you specifically revoke your proxy in writing.
11. Q: WHO WILL COUNT THE VOTES?
A: ADP/Investor Communication Services will count the votes
and Jeff Dykes, our assistant secretary, will report on
the results at the meeting as the inspector of election.
12. Q: WHAT DOES IT MEAN IF I GET MORE THAN ONE PROXY CARD?
A: If your shares are registered differently and are held in
more than one account, then you will receive more than one
proxy card. Be sure to vote all of your accounts so that
all of your shares are voted. We encourage you to have all
accounts registered in the same name and address whenever
possible. You can do this by contacting ADP/Investor
Communication Services at 51 Mercedes Way, Edgewood, New
Jersey 11717, phone (631) 274-8024.
13. Q: HOW WILL VOTING ON ANY OTHER BUSINESS BE CONDUCTED?
A: We do not know of any business to be considered at the
meeting other than:
o election of seven directors,
o amendment of our articles of incorporation to change
our corporate name to Cenveo, Inc.,
o amendment of our long-term equity incentive plan to
(a) increase by 3,025,000 the number of shares which
may be granted under the plan and (b) amend the
limitation that only 800,000 shares may be granted as
awards other than options, and
o ratification of our independent auditors.
If any other business is properly presented at the
meeting, your proxy gives Herbert H. Davis, our senior
vice president--corporate development and chief legal
officer, and Mark L. Zoeller, our vice president--general
counsel and secretary, authority to vote on these matters
in their discretion.
14. Q: WHO MAY ATTEND THE MEETING?
A: All stockholders who owned shares of our common stock on
March 5, 2004 may attend the meeting. You may indicate on
the enclosed proxy card if you plan to attend the meeting.
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15. Q: WHERE AND WHEN WILL I BE ABLE TO FIND THE RESULTS OF THE
VOTING?
A: The results of the voting will be announced at the
meeting. We will also publish the final results in our
quarterly report on Form 10-Q for the second quarter of
2004 to be filed with the Securities and Exchange
Commission.
16. Q: IS MY VOTE CONFIDENTIAL?
A: Proxy instructions, ballots and voting tabulations that
identify individual stockholders are handled in a manner
that protects your voting privacy. Your vote will not be
disclosed either within Mail-Well or to third parties
except:
o as necessary to meet applicable legal requirements,
o to allow for the counting and certification of votes,
or
o to help our Board solicit proxies.
17. Q: WHEN ARE STOCKHOLDER PROPOSALS FOR THE 2005 ANNUAL MEETING
DUE?
A: All stockholder proposals to be considered for inclusion
in our proxy statement for the 2005 annual meeting must be
received by our corporate secretary at our principal
office by November 10, 2004.
18. Q: WHO WILL BEAR THE COST OF SOLICITING PROXIES FOR THE
MEETING AND HOW WILL THESE PROXIES BE SOLICITED?
A: We will pay the cost of preparing, assembling, printing,
mailing and distributing these proxy materials, including
the charges and expenses of brokers, banks, nominees and
other fiduciaries who forward proxy materials to their
principals. Proxies may be solicited by mail, in person,
by telephone or by electronic communication by our
officers and employees who will not receive any additional
compensation for these solicitation activities.
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PROPOSALS TO BE VOTED ON
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PROPOSAL 1--ELECTION OF DIRECTORS
Seven directors will be elected this year for terms expiring in 2005. The
nominees for election are:
Paul V. Reilly Thomas E. Costello Martin J. Maloney David M. Olivier
Jerome W. Pickholz Alister W. Reynolds Susan O. Rheney
Each nominee is currently serving as a director of Mail-Well. Each person
elected as a director will serve until the 2005 annual meeting of
stockholders or until his or her successor has been elected and qualified.
The seven nominees receiving the most affirmative votes at the meeting will
be elected as directors assuming a quorum is present. Consequently any
shares not voted at the meeting, whether by abstention or otherwise, will
have no effect on the election of directors. If any of the nominees should
unexpectedly decline or become unable to serve, the proxies we are
soliciting may be voted for a substitute nominee or the Board may reduce the
number of directors to be elected. Stockholders may not cumulate their votes
when electing directors.
Brief biographies of the director nominees are included beginning at page 6.
These biographies include their age, business experience and the names of
publicly held and certain other corporations of which they are also
directors. Unless stated otherwise, each director has been engaged in his or
her present occupation for at least the past five years.
The Board recommends a vote FOR election of these seven director nominees.
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PROPOSAL 2--AMENDMENT OF OUR ARTICLES OF INCORPORATION TO CHANGE OUR CORPORATE
NAME TO "CENVEO, INC."
On October 29, 2003, we announced that we were reorganizing Mail-Well into
two business segments which focus on Mail-Well's customer base: commercial
and resale. Our commercial segment serves the needs of direct customers
while our resale segment serves wholesalers and value-added resellers. This
reorganization is part of our overall strategy to align our business to our
customers' needs. To further the goals of our reorganization and our
strategy, our Board approved management's recommendation that we conduct our
business under a new name: "Cenveo" (senn-VAY-oh). By adopting a new common
name for each of our operating locations, we believe we will be better able
to execute our "total customer solutions" strategy which offers customers
one-stop shopping for all of their visual communications needs.
To conform our corporate name with the name under which we will be doing
business, on February 5, 2004, our Board approved the following amendment to
Article I of our articles of incorporation: "The name of the corporation is
Cenveo, Inc."
Our Board believes that changing our corporate name from Mail-Well to Cenveo
is the natural next step in our strategy to unite our company and
differentiate our brand. The Cenveo name - which will replace the multiple
names of our local and regional companies - is expected to strengthen our
identity with customers and raise our profile as the industry's most capable
"total solutions" provider. In addition to being a major building block in
our sales strategy, the new name will reinforce our workplace identity as
one company with 10,000 employees working together to maximize our
resources, strengths and opportunities.
You are being asked to approve the change of our corporate name to "Cenveo,
Inc." The amendment to our articles of incorporation must be approved by the
affirmative vote of a majority of our outstanding shares and then filed with
the Colorado Secretary of State before it becomes effective.
The Board recommends a vote FOR this amendment to our articles of
incorporation to change our corporate name to "Cenveo, Inc."
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PROPOSAL 3--AMENDMENT OF OUR LONG-TERM EQUITY INCENTIVE PLAN
You are being asked to amend our long-term equity incentive plan to (a)
increase by 3,025,000, from 4,425,000 to 7,450,000 the number of shares
which may be issued under the plan and (b) amend the limitation that only
800,000 shares may be granted as awards other than options. The amendments
to our long-term equity incentive plan are described beginning at page 22.
The amendments will be effective if they are approved by the affirmative
vote of a majority of our outstanding shares.
This plan promotes the interests of Mail-Well and our stockholders by:
o attracting and retaining key officers, employees, directors and
consultants,
o motivating these individuals by granting them
performance-related incentives to achieve long-range
performance goals, and
o linking their compensation to the long-term interests of
Mail-Well and our stockholders.
The Board recommends a vote FOR amendment of our long-term equity incentive
plan to (a) increase by 3,025,000 from 4,425,000 to 7,450,000 the number of
shares which may be issued under the plan and (b) amend the limitation that
only 800,000 shares may be granted as awards other than options.
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PROPOSAL 4--RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The firm of Ernst & Young, LLP served as our independent auditor for 2003
and our audit committee has selected the firm as our independent auditors
for 2004. Representatives of Ernst & Young will attend the annual meeting
and will have the opportunity to make a statement and to answer questions.
The following audit services were performed by Ernst & Young for the year
ended December 31, 2003:
o examination of the financial statements of Mail-Well and our
subsidiaries and employee benefit plans,
o services related to our filings with the Securities and
Exchange Commission, and
o consultation on matters related to accounting and financial
reporting.
Additional information concerning Ernst & Young's services for Mail-Well can
be found on pages 26-28. The affirmative vote of a majority of our
outstanding shares will ratify the selection of Ernst & Young as our
independent auditors.
The Board recommends a vote FOR ratification of Ernst & Young as our
independent auditor for 2004.
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NOMINEES FOR THE BOARD OF DIRECTORS
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Biographies
-----------
o Paul V. Reilly
o Thomas E. Costello
o Martin J. Maloney
o David M. Olivier
o Jerome W. Pickholz
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The following nominees are currently serving as Board members of Mail-Well
and are standing for re-election.
PAUL V. REILLY
Paul Reilly, age 51, has served as our president, chief executive officer
and chairman of the Board since 2001. He has been a director since 1998. Mr.
Reilly was our president and chief operating officer from 1998 to 2001 and
was senior vice president--finance and chief financial officer from 1995 to
1998. Mr. Reilly spent 14 years with Polychrome Corporation, a prepress
supplier to the printing industry, where he held a number of positions
including assistant corporate treasurer, corporate treasurer, vice president
and chief financial officer and general manager of United States operations.
Mr. Reilly is a certified public accountant.
THOMAS E. COSTELLO
Thomas Costello, age 64, became a director in 2003. From 1991 through
retirement in 2002, Mr. Costello served as chief executive officer of Xpedx,
a multi-billion dollar distributor of printing and packaging products, and
senior vice president of International Paper Co. Xpedx is a wholly owned
division of International Paper. He is also a director of Cadmus
Communications Corporation, a customized printer, and Intertape Polymer
Group, a manufacturer of tape for plastic packaging. Mr. Costello is a
member of our compensation and human resources committee and our health,
safety and environmental committee.
MARTIN J. MALONEY
Martin Maloney, age 59, became a director in 2003. Since 1984 Mr. Maloney
has served as chairman and co-founder of Broadford and Maloney, Inc., an
agency specializing in public relations, advertising and marketing
communications for graphic arts related companies. Since 1989 he has served
on the Board of advisors of the New York University Center for Graphic Arts
Management. He is also a director of the Association of Graphic
Communications and serves on the board of governors of Legatus. Mr. Maloney
served as internal auditor and prepared annual reports for companies for
over 20 years. Mr. Maloney is a member of our audit committee and our
compensation and human resources committee.
DAVID M. OLIVIER
David Olivier, age 60, became a director in 2003. Mr. Olivier was with Wyeth
Corporation, a pharmaceutical company, and its affiliated entities for over
35 years when he retired in 2002. He was a director and senior vice
president at the time of his retirement. He is also a director of Summerset
Medical Center, a director and advisor to Taratec, a management consulting
company, and an advisor to AIG Healthcare Partners, a private equity firm.
Mr. Olivier is a member of our compensation and human resources committee
and our health, safety and environmental committee.
JEROME W. PICKHOLZ
Jerome Pickholz, age 71, has been a director since 1994. Mr. Pickholz is
chairman emeritus of Ogilvy & Mather Direct Worldwide, a direct advertising
agency, where he served as chief executive officer from 1978 until 1994, and
as chairman in 1994 and 1995. Mr. Pickholz served as founder and chairman of
Pickholz, Tweedy, Cowan, L.L.C., a marketing communications company, from
1996 until 2001 and he has been a direct marketing consultant since 2001. He
is a certified public accountant. Mr. Pickholz serves as chair of our audit
committee and is a member of our governance and nominating committee.
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o Alister W. Reynolds
o Susan O. Rheney
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ALISTER W. REYNOLDS
Alister Reynolds, age 46, has been a director since 2002. Mr. Reynolds has
been employed by Quest Diagnostics, Inc., a provider of diagnostic
laboratory testing services, and its former parent company, Corning
Incorporated, since 1982 in various positions, including senior vice
president-United States operations and, most recently, senior advisor to the
office of the chairman. Mr. Reynolds received an MBA in finance from Cornell
University. He is also a director of Soma Logic Incorporated, a privately
held biotechnology company, Health Care Waste Solutions and Viecore, Inc., a
privately held software integration company. Mr. Reynolds serves as chairman
of our compensation and human resources committee and is a member of our
audit committee.
SUSAN O. RHENEY
Susan Rheney, age 44, has been a director since 2003. Ms. Rheney previously
served as a director of Mail-Well from 1993 to 1997. She was a principal in
The Sterling Group, L.P., a private investment company, from 1992 to 2001.
Ms. Rheney is also a director of Genesis Energy LP, an oil pipeline company,
and Texas Petrochemical Holdings, Inc., a chemical manufacturer. From 1999
through 2003 she served as a director of American Plumbing and Mechanical,
Inc., a plumbing contractor. Texas Petrochemical filed a voluntary petition
for reorganization under Chapter 11 of the United States Bankruptcy Code in
July 2003. In connection with this filing, the holder of discount notes
issued by Texas Petrochemical filed a lawsuit against the directors and
officers of Texas Petrochemical in December 2003. Ms. Rheney received an MBA
from Harvard University. She is a certified public accountant and was a
public accounting auditor for the accounting firm of Deloitte & Touche. Ms.
Rheney is a member of our audit committee and our governance and nominating
committee.
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GOVERNANCE, BOARD COMMITTEES AND
BOARD COMPENSATION
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NOMINATION OF DIRECTORS
Our governance and nominating committee identifies and selects, or
recommends that the Board select, the director nominees for each annual
meeting of stockholders using the criteria set forth in our corporate
governance guidelines. Our guidelines provide that all directors must have
such education, training, experience, skills and expertise as will allow him
or her to perform the duties of a director. The committee has not
established any specific minimum qualification standards for Board nominees.
However, the committee may identify certain skills or attributes as being
particularly desirable for specific director nominees in order to complement
the existing Board composition.
To date, the committee has identified and evaluated nominees for directors
based on several factors, including:
o referrals from our management, existing directors and advisors,
o business and industry experience,
o education,
o diversity,
o leadership abilities,
o professional reputation and affiliation, and
o personal interviews.
The committee currently has no policy in place regarding the consideration
of director candidates recommended by stockholders and generally will not
consider nominees recommended by stockholders. Instead, it considers
nominees identified in the manner described above. We believe that our
independent committee can successfully identify appropriate candidates for
our board. Mail-Well does not currently pay any fee to a third party to
identify or evaluate potential director nominees, although it may retain
search firms to assist in finding qualified candidates.
This year each nominee is an existing director standing for re-election. We
did not receive any unsolicited proposals for director nominees from
stockholders. Two of our current directors, Mr. Frank Diassi and Mr. Frank
J. Hevrdejs, have declined the committee's nomination for re-election as a
director at the annual meeting for personal reasons. The Board size will be
set at seven directors on April 29, 2004, and the committee will continue to
seek qualified potential director candidates.
CORPORATE GOVERNANCE
Our Board and management are committed to diligently exercising their
oversight responsibilities throughout Mail-Well and managing our affairs
consistent with the highest principles of business ethics. We have adopted a
code of business conduct and ethics that applies to all employees, including
our senior officers. We continue to review our corporate governance policies
and practices along with the provisions of the Sarbanes-Oxley Act of 2002,
the new rules of the Securities and Exchange Commission and the new listing
standards of the New York Stock Exchange. Since our 2003 annual stockholders
meeting the Board has:
o updated our corporate governance guidelines,
o updated the charter for our audit committee,
o updated the charter for our compensation and human resources
committee,
o affirmatively determined that all of our directors and director
nominees, except for Mr. Reilly, qualify as independent directors
as defined by the rules of the New York Stock Exchange and our
corporate governance guidelines, and
o affirmatively determined that three of our directors qualify as an
audit committee financial expert under the rules of the Securities
and Exchange Commission.
You can view the current committee charters for three of our Board
committees, our corporate governance guidelines and our code of business
conduct and ethics on our website at www.mailwell.com under "investor
relations--governance," or receive copies by writing to our corporate
secretary at Mail-Well, Inc., 8310 South Valley Highway, #400, Englewood,
Colorado 80112, phone 303-790-8023.
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BOARD PROCEDURES AND COMMITTEES
Our full Board of directors considers all major decisions. However, we have
established an audit committee, a compensation and human resources
committee, a governance and nominating committee, and a health, safety and
environmental committee so that some matters can be addressed in more depth
than may be possible in a full Board meeting. These four committees each
operate under a written charter. The Board has affirmatively determined that
each member of the following committees are independent as defined by
Sections 303.01(B)(2)(a) and (3) and 303A of the New York Stock Exchange's
listing standards and our corporate governance guidelines.
Governance and Nominating Committee. The current members of the governance
and nominating committee are Mr. Hevrdejs (Chair), Mr. Diassi, Mr. Pickholz
and Ms. Rheney. This committee:
o identifies candidates for open director positions,
o selects, or recommends that our Board select, the director nominees
for each annual stockholders meeting,
o oversees the evaluation of our Board's effectiveness, and
o develops and recommends to our Board our corporate governance
principles.
The governance and nominating committee met four times in 2003.
Health, Safety and Environmental Committee. The current members of our
health, safety and environmental committee are Mr. Diassi (Chair), Mr.
Costello and Mr. Olivier. This committee reviews with management:
o our health, safety and environmental policies and plans,
o our safety results, including employee incident rates,
o our compliance with health, safety and environmental laws, and
o our programs and procedures for promoting safety and protecting the
environment.
This committee met four times in 2003.
Audit Committee. The current members of our audit committee are Mr. Pickholz
(Chair), Mr. Hevrdejs, Mr. Maloney, Mr. Reynolds and Ms. Rheney. The Board
has determined that Mr. Pickholz and Ms. Rheney are each audit committee
financial experts and that each member of the committee is financially
literate and independent under the New York Stock Exchange's listing
standards. A description of each committee member's qualifications and
business experience is found beginning on page 6. The audit committee met
four times during 2003. Our audit committee:
o monitors the integrity of our financial statements, including our
financial reporting process,
o monitors our systems of internal controls regarding finance,
accounting, and compliance with legal and regulatory requirements,
o monitors the independence and performance of our independent
auditor,
o monitors the performance of our internal audit function and our
financial executives,
o reviews our annual and quarterly financial statements and earnings
press releases, and
o annually retains our independent auditor and approves the terms and
scope of the work to be performed.
For more information on the audit committee, see the report of the audit
committee beginning at page 26.
Compensation and Human Resources Committee. The current members of our
compensation and human resources committee are Mr. Reynolds (Chair), Mr.
Costello, Mr. Maloney and Mr. Olivier. This committee:
o reviews and administers our executive compensation programs,
o reviews matters relating to management advancement and succession,
o reviews and recommends to our Board the compensation for our
officers and directors, including incentive compensation plans and
equity-based plans, and
o reviews and approves corporate goals for our chief executive
officer's compensation and evaluates his performance of those
goals.
The compensation and human resources committee held six meetings in 2003.
For more information on the compensation and human resources committee, see
the report of the compensation and human resources committee beginning at
page 20.
- 9 -
BOARD MEETINGS AND ATTENDANCE
Our Board met six times during 2003. Each director attended at least 75% of
our Board meetings and the meetings of the Board committees on which they
served, except for Mr. Hevrdejs who attended 69%. We strongly encourage each
director to attend our annual stockholders meetings, although this is not
stated in a formal policy. In 2003, all of our directors attended the annual
meeting.
Our corporate governance guidelines provide that each regular Board meeting
be scheduled for at least eight hours, including at least one hour for
executive sessions of our independent directors. All non-management
directors meet in executive session at each regular Board meeting. These
executive sessions are chaired by the non-management director then serving
as lead director. Our non-management directors serve as lead directors on a
rotating basis each quarter based on their tenure on the Board. In 2004 Mr.
Hevrdejs will serve as lead director during the first quarter, Mr. Pickholz
will serve during the second quarter, Mr. Reynolds will serve during the
third quarter and Mr. Costello will serve during the fourth quarter.
COMPENSATION AND HUMAN RESOURCES COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the compensation and human resources committee is an officer,
or former officer, or employee of Mail-Well. No executive officer of
Mail-Well had any interlocking relationship with any other for-profit entity
during 2003.
BOARD COMPENSATION
During 2003 each non-employee director received:
o an annual retainer of $20,000,
o 3,424 shares of restricted stock valued at $9,998 on May 1, 2003,
o $1,500 for each Board meeting attended in person,
o $750 for each Board or committee meeting attended by telephone,
o $1,000 for each Board committee meeting attended in person, and
o non-qualified options for 5,000 shares of common stock under our
long-term equity incentive plan described on page 17. These options
may be exercised six months following the grant date.
In addition, the chairman of the audit committee received $7,500, the
chairman of the compensation and human resources committee received $5,000
and the chairmen of the other Board committees received $3,500. Directors
who are employees of Mail-Well do not receive compensation for their service
on the Board. Board members are reimbursed for expenses incurred in
connection with their attendance at Board meetings and in complying with our
corporate governance policies. Mail-Well also provides directors' and
officers' liability insurance and indemnity agreements for its directors.
- 10 -
-------------------------------------------------------------------------------
OWNERSHIP OF VOTING SECURITIES
-------------------------------------------------------------------------------
This chart shows the common stock ownership for each director and director
nominee, the executive officers named on page 13, and owners of more than 5
percent of our outstanding common stock as of March 5, 2004. Each
stockholder has direct ownership and sole voting and investment power for
the shares listed unless otherwise noted.
-------------------------------------------------------------------------------------------------------------
PERCENTAGE OF
AMOUNT OF SHARES COMMON STOCK
BENEFICIAL OWNERS BENEFICIALLY OWNED OUTSTANDING
-------------------------------------------------------------------------------------------------------------
5% Holders
Wallace R. Weitz & Company 12,125,400 (1) 25.1%
1125 South 103 Street, Suite 600
Omaha, Nebraska 68124
Mail-Well 401(k) Savings and Retirement Plan 2,776,373 (2) 6.4%
c/o Mail-Well, Inc.
8310 S. Valley Hwy., #400
Englewood, Colorado 80112
FMR Corp. 2,533,100 (3) 5.7%
82 Devonshire Street
Boston, Massachusetts 02109
Mail-Well Employee Stock Ownership Plan (ESOP) 2,524,285 (2) 5.2%
c/o Mail-Well, Inc.
8310 S. Valley Hwy., #400
Englewood, Colorado 80112
5.2%
Directors and Executive Officers
Paul V. Reilly 974,644 (4)
Thomas E. Costello 13,424 (5) 2.0%
Frank P. Diassi 1,251,275 (6) *
Frank J. Hevrdejs 1,770,635 (7) 2.6%
Martin J. Maloney 13,424 (8) 3.7%
David M. Olivier 13,424 (9) *
Jerome W. Pickholz 87,311 (10) *
Alister W. Reynolds 105,321 (11) *
Susan O. Rheney 64,600 (12) *
Gordon A. Griffiths 134,497 (13) *
Robert A. Hart 120,997 (14) *
Herbert H. Davis III 128,947 (15) *
Michel Salbaing 92,879 (16) *
All directors and executive officers as a group (20 3,553,805 (17) 7.3%
persons)
-------------------------------------------------------------------------------------------------------------
*Less than 1%.
(1) Wallace R. Weitz & Company is a registered investment adviser. This
amount reflects the shares held by its clients.
(2) Shares held are voted by trustee Putnam Fiduciary Trust Company at
the direction of participants.
- 11 -
(3) Fidelity Management & Research Company is a registered investment
adviser and a wholly owned subsidiary of FMR Corp. This amount
reflects the shares held by its clients.
(4) Includes 26,698 shares held by his spouse, 696 shares held by a
trust benefiting his child of which Mr. Reilly is trustee, stock
options for 837,725 shares, 1,823 shares allocated under the ESOP
to Mr. Reilly, and 644 shares held by one of his children. Mr.
Reilly disclaims beneficial ownership of the shares held by his
child. Excludes 291,000 shares of restricted stock which have not
vested.
(5) Includes stock options for 10,000 shares.
(6) Includes 82,396 shares held by two trusts benefiting members of Mr.
Diassi's immediate family, 645,438 shares held by Winged Lion
Holdings II L.L.C., which is controlled by Mr. Diassi, 369,041
shares held jointly with his spouse, 112,000 shares held by his
children of which he retains sole voting rights, and stock options
for 42,400 shares. Mr. Diassi has declined the nomination to stand
for re-election as a director at the annual meeting for personal
reasons.
(7) Includes 19,914 shares held by his spouse, 350,000 shares held by
First Sterling Ventures Corp., which is controlled by Mr. Hevrdejs,
and stock options for 42,400 shares.
(8) Includes stock options for 10,000 shares.
(9) Includes stock options for 10,000 shares.
(10) Includes stock options for 42,400 shares.
(11) Includes 95,321 shares held jointly with his spouse and stock
options for 10,000 shares.
(12) Includes shares held by the Rheney Living Trust of which Ms. Rheney
is a trustee and stock options for 10,000 shares.
(13) Includes 45,000 shares held by his spouse and stock options for
39,497 shares. Excludes 57,000 shares of restricted stock which
have not vested.
(14) Includes 2,000 shares held by family members and stock options for
101,497 shares. Mr. Hart disclaims beneficial ownership of the
shares held by family members. Excludes 57,000 shares of restricted
stock which have not vested.
(15) Includes 20,000 shares held in an individual retirement account,
2,000 shares held by his father's estate and stock options for
51,248 shares. Excludes 57,000 shares of restricted stock which
have not vested.
(16) Includes 966 shares allocated under the ESOP to Mr. Salbaing and
stock options for 83,247 shares. Excludes 57,000 shares of
restricted stock which have not vested.
(17) Includes stock options for 1,463,224 shares and 3,455 shares
allocated under the ESOP to executive officers. Excludes 644,000
shares of restricted stock which have not vested.
- 12 -
-------------------------------------------------------------------------------
EXECUTIVE OFFICERS AND KEY EMPLOYEES
-------------------------------------------------------------------------------
Biographies
-----------
o Paul V. Reilly
o Gordon A. Griffiths
o Robert C. Hart
o Herbert H.
("Woody") Davis III
o Michel P. Salbaing
------------------------------------------------------------------------------
PAUL V. REILLY
Information about Mr. Reilly can be found on page 6.
GORDON A. GRIFFITHS
Gordon Griffiths, age 61, has served as senior vice president since 2002 and
as president of our commercial segment since our reorganization in October
2003. From April 2002 until October 2003 he served as president and chief
executive officer of our former commercial printing division. From 2000
until April 2002 Mr. Griffiths was chief executive officer of Pareto
Corporation, a Canadian knowledge services provider. He continues to serve
as a director of Pareto Corporation. In 2000 Mr. Griffiths co-founded the
Caxton Group, a marketing services agency, which became a public company in
2001. He was president of St. Joseph Corporation, Canada's largest privately
owned printer, from 1997 until 2000.
ROBERT C. HART
Bob Hart, age 66, has served as senior vice president since 2000 and as
president of our resale segment since our reorganization in October 2003.
From 2000 until October 2003 he served as president and chief executive
officer of our former envelope division. From 1998 until he joined
Mail-Well, Mr. Hart owned his own consulting firm after having spent over 30
years with Riverwood International, a paperboard and packaging company.
While at Riverwood, Mr. Hart served as vice president and mill manager, vice
president of sales and marketing, vice president and general manager of
paperboard operations. As senior vice president of its paperboard operation,
Mr. Hart directed the operations of three paper mills.
HERBERT H. ("WOODY") DAVIS III
Woody Davis, age 56, has served as senior vice president--corporate
development and chief legal officer since 2001. Before that Mr. Davis was in
the private practice of law and was a partner at the Denver, Colorado law
firm of Rothgerber Johnson & Lyons LLP for over 20 years. Mr. Davis remains
"Of Counsel" at Rothgerber Johnson & Lyons LLP.
MICHEL P. SALBAING
Michel Salbaing, age 58, has served as senior vice president--finance and
chief financial officer since 2000. From 1996 to 2000, Mr. Salbaing was with
Quebecor World, the largest North American printer, where he held a number
of positions including chief financial officer of the overall corporation,
president and chief executive officer of Quebecor Printing Europe and senior
vice president and chief financial officer of Quebecor World North America.
Before 1996 Mr. Salbaing held various senior financial positions with three
large Canadian manufacturing firms and spent eight years with Ernst & Young,
LLP. Mr. Salbaing is a member of the Canadian Institute of Chartered
Accountants.
------------------------------------------------------------------------------
- 13 -
o Brian P. Hairston
o William W. Huffman,
Jr.
o D. Robert Meyer, Jr.
o Matthew H. Mitchell
o Keith T. Pratt
o Wayne M. Wolberg
o Mark L. Zoeller
------------------------------------------------------------------------------
BRIAN P. HAIRSTON
Brian Hairston, age 46, has been vice president--human resources since
August 2002. From 2001 through August 2002 he was a human resources
consultant for a variety of firms. From 1999 to 2001 he was senior vice
president--human resources for Kellogg Corporation, a cereal producer. From
1997 to 1999 he served as vice president--human resources for CitiGroup, a
financial institution.
WILLIAM W. HUFFMAN, JR.
Bill Huffman, age 55, has been vice president--corporate controller since
2000. From 1999 to 2000 he was vice president--chief financial officer of
our commercial printing division. In 1997 and 1998 he was a financial
consultant. Mr. Huffman began his career with the accounting firm of Coopers
& Lybrand and is a certified public accountant.
D. ROBERT MEYER, JR.
Rob Meyer, age 47, has been vice president--treasurer since 1998. From 1994
to 1998 Mr. Meyer was a partner in the tax department of the accounting firm
of Deloitte & Touche LLP. Mr. Meyer is a licensed attorney, certified public
accountant and certified financial planner.
MATTHEW H. MITCHELL
Matthew Mitchell, age 39, has been vice president--chief information officer
since December 2003. From 1996 to November 2003 he served as vice
president--information services with Aramark Educational Resources, Inc., an
educational service provider.
KEITH T. PRATT
Keith Pratt, age 57, has been vice president--purchasing and supply chain
management since 1998. From 1994 to 1998 Mr. Pratt was vice president of
material sourcing and logistics of Ply Gem Industries, a subsidiary of
Nortek, Inc., a building products manufacturer.
WAYNE M. WOLBERG
Wayne Wolberg, age 54, has been vice president--general auditor since 2001.
From 2000 to 2001 he served as vice president--finance of AT&T Broadband.
Mr. Wolberg was vice president and general auditor of MediaOne from 1996 to
2000. He is a certified management accountant.
MARK L. ZOELLER
Mark Zoeller, age 44, has been vice president--general counsel and secretary
since January 2003. He joined Mail-Well in 1997 as corporate counsel, served
as assistant general counsel from 2000 to 2001 and was vice
president--corporate development from 2001 until January 2003. He is a
licensed attorney.
------------------------------------------------------------------------------
- 14 -
-------------------------------------------------------------------------------
COMPENSATION OF EXECUTIVE OFFICERS
-------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
The following table presents information concerning all compensation
received by our chief executive officer and the four other most highly
compensated executive officers for all services rendered during 2003, 2002
and 2001.
--------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG-TERM COMPENSATION
-----------------------------------------------------------
OTHER SECURITIES
ANNUAL RESTRICTED UNDERLYING ALL OTHER
NAME AND COMPEN- STOCK OPTIONS COMPEN-
PRINCIPAL POSITION YEAR SALARY BONUS(1) SATION AWARDS(2) GRANTED SATION
--------------------------------------------------------------------------------------------------------------
Paul V. Reilly, 2003 $618,077 $ 0 (3) $ 0 90,000 $ 0
President and Chief 2002 579,231 192,000 (3) 0 0 0
Executive Officer 2001 586,732 180,000(4) (3) 1,193,100 536,000 0
--------------------------------------------------------------------------------------------------------------
Gordon A. Griffiths 2003 432,921 0 (3) 0 33,750 0
President--Commercial 2002 271,176(5) 75,000 (3) 142,500 85,000 9,881(6)
Segment
--------------------------------------------------------------------------------------------------------------
Robert A. Hart 2003 349,038 0 (3) 0 33,750 33,805(7)
President--Resale 2002 325,691 75,000 (3) 0 0 25,000(8)
Segment 2001 325,000 107,250 (3) 233,700 85,000 0
--------------------------------------------------------------------------------------------------------------
Herbert H. Davis III 2003 336,750 0 (3) 0 25,875 0
Senior Vice President-- 2002 313,750 75,000 (3) 0 0 0
Corporate Development 2001 132,500 100,000 (3) 142,500 85,000 0
and Chief Legal Officer
--------------------------------------------------------------------------------------------------------------
Michel P. Salbaing 2003 349,038 0 (3) 0 25,875 0
Senior Vice President 2002 325,692 75,000 (3) 0 0 0
and Chief Financial 2001 325,000 100,000 (3) 233,700 105,000 0
Officer
--------------------------------------------------------------------------------------------------------------
(1) Bonus amounts are shown for the year earned and are paid in the
following year.
(2) Reflect the grant of performance accelerated restricted stock under
our long-term equity incentive plan described on page 17, based on
the closing sale price of our common stock as quoted on the New
York Stock Exchange on December 31, 2003 ($4.61 per share). None of
these shares has vested. Dividends on unvested shares are paid to
the named executive.
(3) None of the named executive officers has received perquisites the
value of which exceeded the lesser of either $50,000 or 10% of his
total salary and bonus. Perquisites paid include contributions to
each person's 401(k) account, tax reimbursements and car allowance.
(4) Due to the impact of industry and general economic conditions on
Mail-Well, Mr. Reilly elected not to accept his 2001 bonus.
(5) $209,133.50 of this amount was paid to Gordon Group Enterprises as
a consulting fee. Mr. Griffiths is the sole owner of Gordon Group
Enterprises.
(6) Reflects relocation expenses.
(7) Reflects club dues of $2,616 and loan forgiveness of $31,189. The
loan to Mr. Hart is described on page 16.
(8) Reflects loan forgiveness for the loan to Mr. Hart described on
page 16.
- 15 -
EXECUTIVE AGREEMENTS
Employment and Executive Severance Agreement. In 2003 Mail-Well entered into
an employment and executive severance agreement with Mr. Reilly. This
agreement provides that if his employment is terminated under certain
circumstances which are not for "cause," Mr. Reilly will receive a payment
equal to two years' salary and bonus. If he is terminated under certain
circumstances relating to a change of control, Mr. Reilly will receive an
additional payment equal to one years' salary. Mr. Reilly would also be
reimbursed for post-termination medical premiums and receive any salary or
other benefits owed to him under Mail-Well's various employee benefit plans
and programs.
Change of Control Agreement. In 2002 Mail-Well entered into a change in
control agreement with Mr. Griffiths. This agreement provides that if his
employment is terminated under certain circumstances relating to a change in
control, Mr. Griffiths will receive a payment equal to one years' base
salary. Mr. Griffiths would also receive any salary or other benefits owed
to him under Mail-Well's various employee benefit plans and programs.
Severance Agreements. Mail-Well has entered into severance agreements with
Mr. Salbaing, Mr. Hart and Mr. Davis. These agreements provide that if the
executive's employment is terminated in certain circumstances relating to a
change of control, the executive will receive:
o a payment equal to two years' base salary plus two years' target
annual bonus plus the target bonus for the portion of the year
completed before termination,
o reimbursement of post-termination medical and dental premiums, and
o reimbursement of up to $10,000 for outplacement services.
These agreements include covenants from the executive not to compete with
Mail-Well during his employment and for a period of two years after he
leaves Mail-Well's employ.
Indemnity Agreements. Mail-Well has entered into indemnity agreements with
each executive officer which provide that Mail-Well will indemnify the
executives in lawsuits brought against any executive in his capacity as an
officer of Mail-Well.
Loan to Mr. Salbaing. During 2000 Mail-Well loaned $100,000 to Mr. Salbaing
to help him purchase a home in Colorado as part of his relocation. The loan
bears interest at 5% and is due upon the earliest to occur of Mr. Salbaing's
cessation of employment with Mail-Well, his sale of certain real property
located in Canada or the sale of Mr. Salbaing's home in Colorado.
Loan to Mr. Hart. During 2000 Mail-Well loaned $50,000 to Mr. Hart to assist
in his relocation to Colorado. The loan bears interest at 8%. Half of this
loan was forgiven in 2002 and the remaining half was forgiven in 2003.
In accordance with our corporate governance guidelines adopted in 2002, we
no longer make loans to executives or employees.
COMPENSATION PLANS FOR EXECUTIVES, DIRECTORS AND KEY EMPLOYEES
Cash Bonus Annual Incentive Plan. We have a cash bonus annual incentive plan
which provides bonus compensation to our executives and other key employees.
The bonus plan is designed to promote achievement of our financial goals by
making a portion of each participant's compensation depend on his
achievement of goals established by the Board and individual performance
objectives. Participants must be employed on the date the incentive payments
are paid before they can receive any payment under the bonus plan. The
report on executive compensation beginning on page 20 further describes the
cash bonus plan.
Key Employee Share Option Plan. We adopted a key employee share option plan
in 1997 for executive officers and other key employees. Under the plan,
participants receive options to purchase shares in regulated investment
companies from Mail-Well at exercise prices set by the administering
committee. This plan was amended in 2002 to "freeze" both participation and
future contributions to the plan. Participants with balances
- 16 -
at December 31, 2002, maintain their accounts and distributions to them will
continue to be allowed at retirement, disability, death or other termination
from employment. Account balances are held in trust and are invested in
various mutual funds.
Long-Term Equity Incentive Plan. In 2001 we adopted a long-term equity
incentive plan which provides incentive compensation to key officers,
employees, directors and consultants. Our former stock option plans were
merged into this plan in 2001 and no longer separately exist. However,
options still outstanding under the old stock option plans continue to be
governed by their grant agreements but are administered under this plan.
Awards may be granted under this plan for:
o options for our common stock,
o stock appreciation rights based on our common stock,
o restricted shares of our common stock,
o restricted share units based on our common stock, and
o performance awards.
As of March 5, 2004, there were options for [2,253,899] shares outstanding
under this plan. Options for an additional [1,486,703] shares are available
for grant in the future. Vesting schedules are determined individually for
each grant. All stock options have been granted at exercise prices equal to
the fair market value of our stock at the date of grant. Stock options
either vest over a five-year period or over 4 1/2 years unless accelerated.
We have granted 684,398 shares of performance accelerated restricted stock
and 750 shares of stock as performance awards under this plan. No stock
appreciation rights or restricted share units have been granted under the
plan. The charts below show the stock options and restricted shares which
were granted to the named executive officers in 2003. In addition, there
were options for 3,482,671 shares outstanding under our old stock option
plans which were merged into our long-term equity incentive plan in 2001.
Shareholders are being asked to amend this plan to increase by 3,025,000
from 4,425,000 to 7,450,000 the number of shares which may be issued under
the plan and to amend the limitation on the number of shares which may be
granted as awards other than options under the plan. Additional information
concerning the plan and the proposed amendments can be found beginning on
page 22.
STOCK OPTION GRANTS IN 2003
The following table presents information concerning stock options granted to
each of the named executive officers in 2003 under our long-term equity
incentive plan and the potential realizable value for those stock options
based on future appreciation assumptions:
-------------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS
---------------------------------------------------------------------------------------
POTENTIAL REALIZABLE VALUE
NUMBER OF AT ASSUMED ANNUAL RATES OF
SECURITIES % OF TOTAL STOCK PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED FOR OPTION TERM(1)
OPTIONS TO EMPLOYEES IN EXERCISE EXPIRATION ---------------------------
NAME GRANTED 2003 PRICE DATE 5%($) 10%($)
-------------------------------------------------------------------------------------------------------------
Paul V. Reilly 90,000 10.45% $2.16 02-27-08 $53,709 $118,683
-------------------------------------------------------------------------------------------------------------
Gordon A. Griffiths 33,750 3.92% $2.16 02-27-08 20,141 44,506
-------------------------------------------------------------------------------------------------------------
Robert C. Hart 33,750 3.92% $2.16 02-27-08 20,141 44,506
-------------------------------------------------------------------------------------------------------------
Herbert H. Davis 25,875 3.00% $2.16 02-27-08 15,441 34,121
-------------------------------------------------------------------------------------------------------------
Michel P. Salbaing 25,875 3.00% $2.16 02-27-08 15,442 34,121
-------------------------------------------------------------------------------------------------------------
(1) Potential realizable value is based on an assumption that the
market price of our common stock will appreciate at the stated
rates (5% and 10%), compounded annually from the date of grant
until the end of the term. The values are calculated based on rules
of the Securities and Exchange Commission and do not reflect our
estimate or projection of future stock prices. Actual gains, if
any, on stock option exercises will depend on the future
performance of the price of our common stock and the timing of
exercises.
- 17 -
STOCK OPTIONS EXERCISED IN 2003 AND 2003 YEAR-END OPTION VALUES
The following table presents information about the number and value of stock
options exercised in 2003 and held at December 31, 2003 by each named
executive officer. A stock option is "in-the-money" if the closing market
price of Mail-Well stock exceeds the exercise price of the stock option.
-----------------------------------------------------------------------------------------------------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED
NUMBER OF VALUE UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES RECEIVED OPTIONS AT 12-31-03 12-31-03(1)
ACQUIRED UPON -----------------------------------------------------------
NAME ON EXERCISE EXERCISE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-----------------------------------------------------------------------------------------------------------
Paul V. Reilly 0 -- 924,388 208,944 $491,329 $(220,473)
-----------------------------------------------------------------------------------------------------------
Gordon A. Griffiths 0 -- 84,495 34,255 183,893 (8,555)
-----------------------------------------------------------------------------------------------------------
Robert C. Hart 0 -- 146,495 47,255 181,000 (72,250)
-----------------------------------------------------------------------------------------------------------
Herbert H. Davis 0 -- 85,747 25,128 126,780 (63,386)
-----------------------------------------------------------------------------------------------------------
Michel P. Salbaing 0 -- 117,745 53,130 133,735 (52,942)
-----------------------------------------------------------------------------------------------------------
(1) Based on the closing price per share of Mail-Well stock as quoted
on the New York Stock Exchange on December 31, 2003 ($4.61 per
share).
No performance accelerated restricted stock awards or other long-term equity
incentives were granted to the named executive officers in 2003 under our
long-term equity incentive plan.
EQUITY COMPENSATION PLAN INFORMATION
The following table shows shares reserved for issuance for outstanding
options, stock appreciation rights and warrants granted under our equity
compensation plans as of December 31, 2003. All of our equity compensation
plans have been approved by our stockholders.
---------------------------------------------------------------------------------------------------------------
NUMBER OF SECURITIES
NUMBER OF SECURITIES REMAINING AVAILABLE FOR
TO BE ISSUED UPON WEIGHTED AVERAGE ISSUANCE UNDER EQUITY
EXERCISE OF OUTSTANDING EXERCISE PRICE OF COMPENSATION PLANS
OPTIONS, WARRANTS AND OUTSTANDING OPTIONS, (EXCLUDING SECURITIES
PLAN CATEGORY RIGHTS WARRANTS AND RIGHTS REFLECTED IN COLUMN (A))
---------------------------------------------------------------------------------------------------------------
Equity compensation plans not 0 NA 0
approved by stockholders
---------------------------------------------------------------------------------------------------------------
Equity compensation plans approved 5,738,569 $6.16 1,397,769
by stockholders
---------------------------------------------------------------------------------------------------------------
Total 5,738,569 $6.16 1,397,769
---------------------------------------------------------------------------------------------------------------
OTHER BENEFIT PLANS
We do not provide any defined benefit or actuarial plan that is payable upon
retirement to the named executive officers. The named executive officers may
also participate in Mail-Well's employee stock ownership plans and other
benefits available to all employees, some of which are described below.
401(k) Savings Retirement Plan. We adopted a 401(k) savings and retirement
plan in 1994 for non-union employees. United States based, union-free
employees of Mail-Well and affiliated companies who are classified as an
employee expected to work a minimum of 1,000 hours per year are eligible to
participate in the plan. For 2003 a participant could contribute to the plan
up to the lesser of $12,000 or 50% of his compensation. A maximum of
$200,000 is considered for purposes of plan contributions. Contributions are
not included in the participant's current taxable income. During 2003
Mail-Well made a matching contribution to participant accounts equal to 50%
of the participant's contributions, up to a maximum of 6% of the
participant's compensation.
- 18 -
We also sponsor a 401(k) savings and retirement plan for union employees.
Collective bargaining agreements determine eligibility for participation and
the amount of employer match.
Plan assets are held in trust. A plan participant can direct the investment
of his contributions and the matching contributions into one of twelve
mutual funds and other investment vehicles, one of which is Mail-Well common
stock. Participant contributions to the plan are always fully vested.
Mail-Well contributions vest at a rate of 20% for each year of service
completed by the participant. Generally, a participant's vested plan benefit
is distributable upon his retirement, disability, death or other separation
from employment.
Employee Stock Ownership Plan. We adopted an employee stock ownership plan
in 1994. This plan was amended in January 2001 to "freeze" both
participation and future contributions to the plan. Participants with
balances at December 31, 2000 maintain their accounts and distributions to
them will continue to be allowed at retirement, disability, death or other
termination from employment. A participant's account will continue to become
non-forfeitable in increments of 20% for each year of service completed by
the participant. Amounts that are forfeited from a partially vested
participant's account are allocated to the remaining participants' accounts
as an additional contribution or used to offset administration expenses.
Funds are held in trust and primarily invested in Mail-Well's common stock.
- 19 -
-------------------------------------------------------------------------------
REPORT ON EXECUTIVE COMPENSATION
-------------------------------------------------------------------------------
TO OUR STOCKHOLDERS:
The report of the compensation and human resources committee for 2003
includes our activities related to compensation review and recommendations
for the chief executive officer and the other executive officers named on
page 13. In 2003, the committee engaged independent compensation consultants
to conduct a comprehensive review of the overall executive compensation
program. This resulted in significant changes in the design and philosophy
of our executive compensation programs, which were submitted to the full
Board for approval. These changes are discussed below. The committee intends
to continue to regularly evaluate the impact of the executive compensation
program on the performance of the executives and Mail-Well, and will make
changes it believes are necessary to assist in our success.
COMPENSATION PHILOSOPHY
Our executive compensation policies are designed to:
o link executive compensation with our annual and long-term
performance goals,
o attract and retain a highly qualified and motivated management
team,
o reward individual performance, and
o link the interests of the executive officers directly with those of
our stockholders through the use of stock-based incentives as a
compensation vehicle.
We implement these policies by setting salaries and incentive pay for our
executives which are at the 50th percentile for salaries and bonuses given
to executives in similar positions, with an opportunity to exceed the 50th
percentile for outstanding performance. We designed our policies to
compensate our executives at the 50th percentile when compared to
counterparts at similar companies, which include, among others, the
companies listed in Mail-Well's peer group index in the performance chart on
page 29. This compensation program emphasizes long-term incentives that will
encourage our executives to maintain their focus on long-term stockholder
interests. In the future the committee intends to use a variety of equity
awards as long-term incentives for executives rather than only stock options
that vest over time.
COMPONENTS OF COMPENSATION
We set total compensation for each executive officer at competitive levels
related to companies of a similar type and size based on a study and
recommendations provided by an independent compensation consultant.
Executive compensation packages include salary, participation in the cash
bonus annual incentive plan discussed on page 16, and awards under the
long-term incentive plan discussed on page 17 using equity in the form of:
o stock options,
o restricted stock,
o performance restricted stock,
o performance restricted units payable in stock,
o free-standing stock appreciation rights, and
o other stock vehicles appropriate for supporting long-term
performance.
To develop and implement Mail-Well's strategic plan, some executive officers
also received severance and non-competition agreements described on page 16.
We usually set our executive officers' compensation in February or March of
each year to be effective at the beginning of April.
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to public corporations for compensation over $1,000,000 paid in
any fiscal year to a corporation's chief executive officer and to the four
other most highly paid executive officers. However, this statute exempts
qualifying performance-based compensation from the deduction limit if
certain requirements are met. The committee believes it is in Mail-Well's
best interest to try to satisfy the requirements of Section 162(m) by
structuring performance-based compensation to executive officers to satisfy
the statute's requirements, such as grants of stock options and restricted
shares, and cash bonus incentive plan payments. However, we also recognize
the need to keep flexible when making compensation decisions so that
Mail-Well may meet its overall objectives, even if it may not meet the
statute's standards and Mail-Well may not be able to deduct all of the
compensation. Accordingly, the Board and the committee have expressly kept
the right to award non-deductible compensation when appropriate. Because of
uncertainties as to the interpretation of Section 162(m) and related
regulations, in spite of
- 20 -
Mail-Well's efforts, it is not certain that compensation intended by
Mail-Well to satisfy the deductibility requirements under Section 162(m)
will in fact satisfy those requirements.
Base Salary. We review our executives' salaries each year. We fix base
salaries with appropriate performance requirements at levels at or around
the mid-point for amounts paid to senior executives with similar
qualifications, experience and responsibilities at similar companies. Our
chairman and chief executive officer submits salary recommendations each
year to the committee for all other officers. In determining the salary to
be paid, the committee considers financial and operating performance
compared to Mail-Well's internal operating plan and external benchmarking
data, as well as whether management has reached certain long-term and
short-term strategic goals.
In addition, the base salaries take into account the individual's experience
within the industry and with Mail-Well and its predecessors, and their
support of Mail-Well's values. The committee believes that compensation for
our executive officers has been competitive, appropriate and comparable to
similarly-situated companies.
Based on its evaluation of these factors, the committee believes that senior
management is dedicated to achieving long-term financial improvements and
that our compensation policies, plans and programs contribute to
management's goals. The committee tries to consider all of these factors
when it makes its compensation decisions. However, the committee recognizes
that its decisions are primarily subjective in nature. The committee does
not assign any specified weight to the factors it considers.
Cash Bonus Incentive Compensation. We pay bonus incentive compensation to
officers under our cash bonus annual incentive plan described on page 16.
Incentive compensation is usually paid as a percentage of each executive's
base salary and is based on how well an executive meets pre-established
financial goals established by the Board and individual performance goals.
Minimum, target and maximum goals are set by the committee. The weighting of
the goals for officers varies from year to year based on the strategic
business plan. For 2003, the performance measures included EBITDA and
significant safety, productivity and satisfaction measures tied to our
strategic plan. We consider the profitability and growth of Mail-Well and
the executive officer's job performance in paying incentive compensation.
Due to Mail-Well's performance, none of the named executive officers was
paid an incentive bonus under the bonus plan for 2003.
Long-Term Equity Incentive Plan. We believe that the interests of
stockholders and our key employees, including officers and directors, are
more closely linked when key employees are given the opportunity to own our
common stock. We grant officers, directors and other key employees options
to purchase common stock under our long-term equity incentive plan described
on page 17. Mail-Well has only granted stock options at a price equal to or
greater than fair market value. The number of options granted by the
committee is based on the committee's evaluation of:
o anticipated performance requirements and potential contributions of
each employee,
o recommendations of senior management,
o equity participation levels of executives and key employees at
comparable companies,
o total compensation levels of our executives as compared to
comparable companies, and
o prior grants.
In 2003 the committee granted options representing 284,875 shares of common
stock to executive officers. These grants were made to keep our executives'
interests linked to that of our stockholders by providing incentives to
reach Mail-Well's long-range goals.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Reilly, our chief executive officer and chairman of the Board, received
a salary of $618,077 in 2003 and a bonus of $192,000 for 2002 which was paid
in 2003. Due to Mail-Well's performance, Mr. Reilly was not eligible for an
incentive payment under our cash bonus annual incentive plan for 2003. In
2003 the committee granted options for 90,000 shares of common stock to Mr.
Reilly under our long-term equity incentive plan.
CONCLUSION
In summary, we believe that our policy of linking executive compensation to
Mail-Well's performance was met. We believe that Mail-Well's compensation
levels properly reflect our philosophy. In addition, we believe that
Mail-Well's executive compensation programs and policies support our overall
objective to enhance stockholder value through the profitable management of
Mail-Well's operations.
- 21 -
RESPECTFULLY SUBMITTED:
Alister W. Reynolds (Chair)
Thomas E. Costello
Martin J. Maloney
David M. Olivier
- 22 -
-------------------------------------------------------------------------------
AMENDMENT OF LONG-TERM EQUITY INCENTIVE PLAN
-------------------------------------------------------------------------------
GENERAL PROPOSAL
On February 4, 2004, our compensation and human resources committee approved
amendments to our long-term equity incentive plan to (a) increase by
3,025,000 from 4,425,000 to 7,450,000 the number of shares which may be
granted under the plan and (b) amend the limitation that only 800,000 shares
may be granted as awards other than options under the plan to provide that:
o no more than 1,500,000 shares may be issued in connection with
free-standing stock appreciation rights,
o no more than 1,000,000 shares may be granted as restricted stock, and
o no more than 750,000 shares may be granted as performance
restricted stock or performance restricted units payable in stock.
We are asking shareholders to approve these amendments.
The compensation and human resources committee has identified that the
number of shares remaining is not sufficient to make future awards to our
directors, officers, employees and consultants. The committee also believes
that expanding the types of equity vehicles which may be granted as awards
other than options under the plan, and providing limitations to the number
of shares available for each of those vehicles, will expand the committee's
ability to effectively provide long-term incentives to our directors,
officers, employees and consultants.
Our Board believes it to be in our best interest to adopt these amendments
in order to continue to use the plan awards as incentives to:
o attract and retain qualified officers, directors and employees in a
competitive labor market,
o encourage their increased stock ownership, and
o promote long-term performance.
We believe that our people are essential to Mail-Well's long-term growth and
success. The plan is summarized below. Please also review the equity
compensation chart on page 19 when considering approval of the amendments to
this plan.
SHARES AVAILABLE FOR AWARDS UNDER THE PLAN
Under the plan, awards may be granted to our officers, directors, employees
and consultants for:
o options for our common stock,
o free-standing stock appreciation rights based on our common stock,
o restricted shares of our common stock,
o performance restricted share units based on our common stock, and
o performance awards.
Currently the maximum number of shares of common stock which may be granted
under the plan is 4,425,000, of which no more than 800,000 shares may be
granted as awards other than options. As of March 5, 2004, we had granted
stock options for [2,253,899] shares and [685,148] shares of restricted
stock so there are only [1,486,703] shares left available for future grant
under the plan of which only [115,102] shares may be granted as awards other
than options.
The additional 3,025,000 shares, which would then be reserved for issuance
under the plan if the amendments are approved by shareholders, represented
approximately [6.3%] of our outstanding shares on March 5, 2004. Based
solely on the closing price of our common stock as reported on the New York
Stock Exchange on that date of $________ per share, the total market value
of the 3,025,000 additional shares which may then be issued under the plan
would be $_____________.
Shares subject to an award that are cancelled, expire unexercised,
forfeited, settled in cash or otherwise terminated remain available for
awards under the plan. Shares issued under the plan may be either newly
issued shares or shares which we have reacquired. Shares issued as
substitute awards when we assume outstanding awards previously granted by a
company which we acquire do not reduce the number of shares available for
awards.
The plan imposes individual limitations on the amount of certain awards in
order to comply with Section 162(m) of the Internal Revenue Code of
- 23 -
1986. Under these limitations no single participant may generally receive
options or stock appreciation rights in any calendar year that relate to
more than $1 million. Finally, awards may generally be adjusted to prevent
dilution or enlargement of benefits when certain events occur, such as a
stock dividend, reorganization, recapitalization, stock split, combination,
merger or consolidation.
ELIGIBILITY
Current and prospective officers, employees, directors and consultants of
Mail-Well or its subsidiaries or affiliates may be granted awards under the
plan. As of March 5, 2004, approximately [270] individuals were eligible to
participate in the plan. Our compensation and human resources committee has
not yet determined the individuals who will receive new awards under the
plan if the amendment is approved by stockholders.
ADMINISTRATION
The plan is administered by our compensation and human resources committee.
Awards to directors serving on the committee are determined and administered
by the full Board of Directors. The committee may:
o select participants,
o determine the type and number of awards to be granted,
o determine the exercise or purchase price, vesting periods and
performance goals, if any,
o determine and later amend the terms and conditions of any award,
o interpret the rules relating to the plan, and
o otherwise administer the plan.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
The committee may grant both incentive stock options, which can result in
potentially favorable tax treatment to the participant, and non-qualified
stock options. The committee may also grant stock appreciation rights either
with or without a related option. The committee determines the terms and
vesting provisions, including the exercise price that generally may not be
less than the fair market value of a share of common stock on the date of
the grant. Although the plan currently provides that an accelerated
ownership feature may be added to any option granted under the plan, this
feature is being eliminated by the Board's amendment to the plan.
RESTRICTED SHARES AND RESTRICTED SHARE UNITS
The committee may grant restricted shares of common stock and restricted
share units. Restricted shares are shares of common stock with transfer
restrictions. These restrictions lapse on the basis of performance and/or
continued employment as determined in advance by the committee. They may be
forfeited by participants as specified by the committee in the award
agreement. A participant who has received a grant of restricted shares will
receive dividends and the right to vote those shares. Restricted shares may
not be transferred, encumbered or disposed of during the restricted period
or until after the restrictive conditions are met.
Each restricted share unit has a value equal to the fair market value of a
share of our common stock on the date of grant. The committee determines the
restrictions applicable to the restricted share units. A participant is
credited with dividend equivalents on any vested restricted share units when
dividends are paid to stockholders. Restricted share units generally may not
be transferred, encumbered or disposed of unless the participant is
continuously employed by Mail-Well during the restricted period or until
after the restrictive conditions are met.
PERFORMANCE AWARDS
A performance award is a right that is denominated in cash or shares of
common stock, and valued by the achievement of certain performance goals
during performance periods as established by the committee. The plan
specifies the types of goals the committee may consider when granting
performance awards. The committee determines the form, time and type of
payment. Performance awards may be forfeited when employment is terminated
other than for death or total disability. A participant's rights to any
performance award may not be transferred, encumbered or disposed of in any
manner, except by will or the laws of descent and distribution.
OTHER TERMS
Other Stock-Based Awards. The committee may grant any other type of awards
that are payable in or valued by our common stock. The committee determines
the terms and conditions of these awards.
Change in Control. All outstanding awards vest, become immediately
exercisable or payable and have all restrictions lifted immediately when
Mail-Well experiences a change in control.
- 24 -
Amendment and Termination. The Board may amend or terminate the plan subject
to applicable stockholder approval. The committee may not amend the terms of
previously granted options to reduce the exercise price or cancel options
and grant substitute options with a lower exercise price than the cancelled
options. The committee also may not adversely affect the rights of any award
holder without the award holder's consent.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Following is a brief description of the federal income tax consequences
generally arising for awards under the plan. Tax consequences to Mail-Well
and to participants receiving awards will vary with the type of award.
Effects on Participants. Generally, a participant will not recognize income,
and Mail-Well is not entitled to take a deduction, when an incentive stock
option, a nonqualified option, a stock appreciation right or a restricted
share award are granted. A participant generally will not have taxable
income when he exercises an incentive stock option. When a participant
exercises an option other than an incentive stock option, he must generally
recognize ordinary income equal to the difference between the exercise price
and fair market value of the shares acquired on the date of exercise.
If a participant sells shares of common stock acquired from an incentive
stock option before the end of two years from the date of grant and one year
from the date of exercise, the participant must generally recognize ordinary
income equal to the difference between the fair market value of the shares
at the date of exercise and the exercise price. Otherwise, a participant's
disposition of shares acquired upon the exercise of an option generally will
result in short-term or long-term capital gain or loss measured by the
difference between the sale price and the participant's tax basis in the
shares.
Effects on Mail-Well. Mail-Well generally may receive a tax deduction equal
to the amount recognized as ordinary income by the participant in connection
with an option. Mail-Well generally is not entitled to a tax deduction
relating to amounts that represent a capital gain to a participant.
Accordingly, Mail-Well will not be entitled to any tax deduction with
respect to an incentive stock option if the participant holds the shares of
common stock for the incentive stock option holding periods prior to selling
the shares.
Similarly, the exercise of a stock appreciation right will result in
ordinary income on the value of the stock appreciation right to the
participant at the time of exercise. Mail-Well will be allowed a deduction
for the amount of ordinary income recognized by a participant with respect
to a stock appreciation right. When restricted stock is granted the
participant will recognize ordinary income on the fair market value at the
time shares of restricted stock become vested unless a participant makes an
election under Section 83(b) of the Internal Revenue Code to be taxed at the
time of grant. The participant also is subject to capital gains treatment on
the sale of any common stock acquired through the exercise of a stock
appreciation right or restricted share award. For this purpose, the
participant's basis in the common stock is generally its fair market value
at the time the stock appreciation right is exercised or the restricted
share becomes vested. Payments made under performance awards are taxable as
ordinary income at the time an individual attains the performance goals and
the payments are made available to the participant.
Performance-based Compensation. Section 162(m) of the Internal Revenue Code
generally disallows a public company's tax deduction for compensation paid
in excess of $1 million in any tax year to its five most highly compensated
executives. However, compensation that qualifies as "performance-based
compensation" is excluded from this $1 million deduction limit and therefore
remains fully deductible by Mail-Well. Mail-Well intends that the following
grants will qualify as "performance-based compensation" so that these awards
will not be subject to the Section 162(m) deduction limitations:
o performance awards,
o options granted with an exercise price at least equal to 100% of
fair market value of the underlying shares of common stock at the
date of grant, and
o options granted to employees that the committee expects to be named
executive officers at the time a deduction arises.
- 25 -
-------------------------------------------------------------------------------
REPORT OF THE AUDIT COMMITTEE
-------------------------------------------------------------------------------
All members of Mail-Well's audit committee are independent directors. The
committee assists the Board in fulfilling its responsibility for oversight
of the quality and integrity of its accounting, auditing and reporting
practices as summarized on page 9. The full responsibilities of the
committee are described in its charter which can be accessed on Mail-Well's
website at www.mailwell.com under "investor relations--governance."
Management is responsible for internal controls and the financial reporting
process, including the system of internal controls. Ernst & Young, LLP,
Mail-Well's independent auditor, is responsible for expressing an opinion on
the conformity of Mail-Well's audited consolidated financial statements with
generally accepted accounting principles. The committee has reviewed and
discussed Mail-Well's audited consolidated financial statements with
management and Ernst & Young. The committee has also discussed with Ernst &
Young the matters required to be discussed by Statement on Auditing
Standards No. 61 (communication with audit committees).
The audit committee has reviewed and implemented the provisions of the
Sarbanes-Oxley Act, the new rules of the Securities and Exchange Commission
and the new listing standards of the New York Stock Exchange. The committee
engaged independent legal counsel to review, assess and make recommendations
on procedures required by the Sarbanes-Oxley Act. The committee also
continues to follow the procedures recommended in the report of the Blue
Ribbon Committee on Improving the Effectiveness of Corporate Audit
Committees issued in February 1999 which is sponsored by the major
securities markets.
At each of its four regular meetings in 2003 the audit committee met with
Ernst & Young and the senior members of Mail-Well's financial management
team, including Mail-Well's senior vice president--finance and chief
financial officer, vice president and general auditor, vice president--
controller and our senior vice president--corporate development and chief
legal officer. During 2003 the committee also met periodically with the
chief financial officers and controllers of Mail-Well's operating segments.
The committee reviewed with the financial management team:
o overall audit scopes and plans,
o results of internal and external audit examinations,
o evaluations of Mail-Well's internal controls by Ernst & Young, and
o quality of Mail-Well's financial reporting.
The committee considered the need to ensure the independence of Mail-Well's
auditors while recognizing that in certain situations Ernst & Young may
possess the expertise and be in the best position to advise Mail-Well on
issues and matters other than accounting and auditing. All audit services
and fees payable to Ernst & Young for audit services must be pre-approved.
The committee's charter allows a general pre-approval by the committee of
audit-related services without a specific case-by-case consideration of each
service to be performed by Ernst & Young. The committee's charter requires
that any other services, including any permitted non-audit services, be
approved by the committee or by a committee member. The committee then
communicates its approval to management. All audit and non-audit services
performed by Ernst & Young during 2003 were pre-approved under these
procedures.
Management reviewed Mail-Well's 2003 audited financial statements with the
audit committee. In addressing the quality of management's accounting
judgments, the committee asked for management's representations that the
audited consolidated financial statements have been prepared in conformity
with generally accepted accounting principles. The committee expressed to
both management and Ernst & Young its general preference for conservative
policies when a range of accounting options is available.
- 26 -
The committee had a private session at each of its four regular meetings
with Ernst & Young to candidly discuss financial management, accounting and
internal control issues. The committee asked Ernst & Young to address
several questions that committee members believe are particularly relevant
to the committee's oversight, including whether:
o there are any significant accounting judgments made by management
in preparing the financial statements that would have been made
differently had Ernst & Young prepared and been responsible for the
financial statements,
o Mail-Well's financial statements fairly present to investors, with
clarity and completeness, its financial position and performance
for the reporting period in accordance with generally accepted
accounting principles and disclosure requirements of the Securities
and Exchange Commission,
o Mail-Well has implemented internal controls and internal audit
procedures that are appropriate for it, and
o Ernst & Young had discovered any accounting adjustments made by
management during the year that would have been more properly
reflected in prior year results.
The audit committee believes that by focusing its discussions with Ernst &
Young, it can promote a meaningful dialogue that provides a basis for its
oversight judgments.
Based on the audit committee's review and discussions with management and
Ernst & Young, the audit committee recommended to the Board of Directors,
and the Board approved, that the audited financial statements be included in
Mail-Well's annual report on Form 10-K for the year ending December 31,
2003, for filing with the Securities and Exchange Commission.
RESPECTFULLY SUBMITTED:
Jerome W. Pickholz (Chair)
Frank J. Hevrdejs
Martin J. Maloney
Alister W. Reynolds
Susan O. Rheney
- 27 -
-------------------------------------------------------------------------------
INDEPENDENT PUBLIC AUDITORS
-------------------------------------------------------------------------------
The audit committee selected Ernst & Young, LLP as our independent auditors
for 2004. Representatives of Ernst & Young are expected to attend the annual
meeting and will have the opportunity to make a statement and answer
questions.
FEES
The following table shows the fees we paid to Ernst & Young in 2003 and
2002:
----------------------------------------------------------------------------------
2003 2002
----------------------------------------------------------------------------------
Audit fees(1) $751,000 $ 716,000
----------------------------------------------------------------------------------
Audit-related fees(2) 167,000 590,000
----------------------------------------------------------------------------------
Tax fees(3) 31,000 67,000
----------------------------------------------------------------------------------
All other fees 0 0
----------------------------------------------------------------------------------
Total $949,000 $1,456,000
======== ==========
----------------------------------------------------------------------------------
(1) For auditing our annual consolidated financial statements and
accounting consultations during the audit and reviews of our
interim financial statements in our reports filed with the
Securities and Exchange Commission.
(2) For audits of our six employee benefit plans, accounting and
auditing consultation services, assistance with our debt offering
and audits of separate subsidiary financial statements.
(3) For tax return review and preparation and tax advice and planning.
AUDITOR INDEPENDENCE
The audit committee considered the effect that provision of the services
described above under "tax fees" and "all other fees" may have on the
independence of Ernst & Young. These fees amounted to approximately 3.27% of
our total fees paid to Ernst & Young in 2003 and approximately 4.60% of our
total fees paid in 2002. The committee approved these services and
determined that those non-audit services were compatible with maintaining
the independence of Ernst & Young as our principal auditor. Ernst & Young
provided the committee with the written disclosures required by Independence
Standards Board Standard No. 1 (independence discussions with audit
committees), and the committee discussed with Ernst & Young their
independence.
- 28 -
-------------------------------------------------------------------------------
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
-------------------------------------------------------------------------------
The following graph presents the cumulative total yearly stockholder return
from investing $100 on December 31, 1998, in each of:
o Mail-Well's common stock,
o Standard & Poor's 500 Index which is broad equity market index
published by Standard & Poor's, and
o a peer group chosen by Mail-Well with companies similar to
Mail-Well, weighted by market capitalization, which includes
Consolidated Graphics, Inc., Deluxe Corporation, R. R. Donnelley &
Sons Company, Moore/Wallace, Inc. and Standard Register Company.
Our common stock is listed on the New York Stock Exchange under the symbol
"MWL." If stockholders approve the change of our corporate name to Cenveo,
Inc., our new ticker symbol will be "CVO."
[GRAPH]
- 29 -
MAIL-WELL PEER GROUP S&P 500
----------- ------------ ---------
31-Dec-98 100.00 100.00 100.00
31-Mar-99 245.04 106.04 169.98
30-Jun-99 296.56 123.87 181.39
30-Sep-99 254.20 101.62 169.49
31-Dec-99 247.33 88.14 194.14
31-Mar-00 159.16 77.61 198.02
30-Jun-00 158.02 80.17 192.21
30-Sep-00 87.02 85.43 189.82
31-Dec-00 79.01 94.36 174.46
31-Mar-01 89.40 92.66 153.32
30-Jun-01 77.86 104.26 161.79
30-Sep-01 67.79 101.23 137.55
31-Dec-01 75.11 115.15 151.70
31-Mar-02 33.16 109.72 122.52
30-Jun-02 27.46 101.05 105.70
30-Sep-02 5.49 94.64 87.06
31-Dec-02 13.20 90.78 93.95
31-Mar-03 10.72 80.17 90.57
30-Jun-03 13.31 99.56 104.06
30-Sep-03 18.48 95.53 106.35
31-Dec-03 24.34 108.25 118.74
- 30 -
-------------------------------------------------------------------------------
OTHER INFORMATION
-------------------------------------------------------------------------------
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Our directors, executive officers and some other stockholders are required
to report their ownership of our common stock and any changes in that
ownership to the Securities and Exchange Commission and New York Stock
Exchange. To the best of our knowledge, all required filings in 2003 were
properly made in a timely fashion. In making these statements, we have
relied on the representations of the persons involved and on copies of their
reports filed with the Commission.
FINANCIAL MATERIALS
Stockholders may request free copies of our financial materials (annual
report, Form 10-K and proxy statement) from Mail-Well, 8310 South Valley
Highway, #400, Englewood, CO 80112, Attention: Corporate Secretary. These
materials may also be accessed on our web site at www.mailwell.com.
CONTACT THE BOARD
Stockholders may at any time direct questions to the independent lead
director of the Board by sending an e-mail to leaddirector@mailwell.com. All
communications required by law or regulation to be relayed to the Board will
be promptly delivered to the lead director. The lead director monitors these
e-mail messages and facilitates an appropriate response. The lead directors
for 2004 are listed on page 9. We also encourage stockholders to attend the
annual meeting to ask questions of directors concerning Mail-Well.
Employees and others may confidentially or anonymously report potential
violations of laws, rules, regulations or our code of business conduct and
ethics, including questionable accounting or auditing practices, by calling
our ethics and business conduct hotline at 1-800-513-4056 or via the
internet at www.mysafeworkplace.com.
- 31 -
[MAIL-WELL LOGO]
MAIL-WELL, INC.
8310 S. VALLEY HWY., #400
ENGLEWOOD, CO 80112
VOTE BY INTERNET - www.proxyvote.com
-----------------
Use the Internet to transmit your voting instructions and for electronic
delivery of information up until 11:59 P.M. Eastern Time the day before the
cut-off date or meeting date. Have your proxy card in hand when you access
the web site and follow the instructions to obtain your records and to
create an electronic voting instruction form.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until
11:59 P.M. Eastern Time the day before the cut-off date or meeting date.
Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid
envelope we've provided or return to Mail-Well, Inc., c/o ADP, 51 Mercedes
Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
MAILWL KEEP THIS PORTION FOR YOUR RECORDS
-------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
===============================================================================
MAIL-WELL, INC.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE FOLLOWING
---
ITEMS:
(1) To elect as directors the nominees listed below.
Paul V. Reilly, Thomas E. Costello, Martin J. Maloney, David M.
Olivier, Jerome W. Pickholz, Alister W. Reynolds, and Susan O. Rheney
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT
/ / / / / /
To withhold authority to vote, mark "For All Except" and write the
nominee's name on the line below.
----------------------------------------------
VOTE ON PROPOSALS
(2) Amend our articles of incorporation to change our corporate
name to Cenveo, Inc.
FOR AGAINST ABSTAIN
/ / / / / /
(3) Amend our long-term equity incentive plan to (a) increase by
3,025,000 the number of shares which may be granted under the plan,
and (b) amend the limitation that only 800,000 shares may be granted
as awards other than options.
FOR AGAINST ABSTAIN
/ / / / / /
(4) To ratify the selection of Ernst & Young LLP, as our independent
auditors for the year ending December 31, 2004.
FOR AGAINST ABSTAIN
/ / / / / /
NOTE: In their discretion, the proxy holders are authorized to
vote upon such other business as may properly come before
the meeting or matters incidental to the conduct of the
meeting.
THIS PROXY IS SOLICITED BY, AND ON BEHALF OF, THE BOARD OF
DIRECTORS, AND MAY BE REVOKED PRIOR TO ITS EXERCISE. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3 AND 4. THIS PROXY,
---
WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO DIRECTION
IS MADE, IT WILL BE VOTED FOR PROPOSALS 1, 2, 3 AND 4.
---
(Please sign exactly as name appears hereon. When signing as attorney,
executor, administrator, trustee or guardian, give full title as such.
If a corporation, please affix corporate seal. If a partnership, please
sign in partnership name by authorized persons. If joint tenants, each
joint tenant should sign.)
------------------------------------------------------- --------------
------------------------------------------------------- --------------
Signature [PLEASE SIGN WITHIN BOX] Date
------------------------------------------------------- --------------
------------------------------------------------------- --------------
Signature (Joint Owners) Date
===============================================================================
-------------------------------------------------------------------------------
===============================================================================
REVOCABLE PROXY MAIL-WELL, INC.
SOLICITED BY THE BOARD OF DIRECTORS FOR
ANNUAL MEETING OF STOCKHOLDERS, APRIL 29, 2004
The undersigned holder of common stock of Mail-Well, Inc., a Colorado
corporation (the "Company"), acknowledges receipt of a copy of the Notice of
Annual Meeting of Stockholders dated March 19, 2004, and, revoking any proxy
heretofore given, hereby appoints Mark L. Zoeller and Herbert H. Davis,
and each of them, with full power to each of substitution, as attorneys and
proxies, to appear and vote all shares of common stock of the Company
registered in the name(s) of the undersigned and held by the undersigned of
record as of March 5, 2004, at the Annual Meeting of Stockholders of the
Company to be held at the Company's principal executive offices, 8310 S.
Valley Hwy., #400, Englewood, Colorado, on April 29, 2004, at 8:30 a.m., and at
any postponements and adjournments thereof, upon the following items, as set
forth in the Notice of Annual Meeting, and to vote according to their
discretion on all other matters which may be properly presented for action
at the meeting. All properly executed proxies will be voted as indicated.
WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE MARK, SIGN, DATE AND
RETURN THIS PROXY CARD PROMPTLY BY USING THE ENCLOSED POSTAGE-PAID ENVELOPE.
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APPENDIX
Page 29 of the printed proxy statement contains a Graph. The
information contained within the graph is presented in a tabular format
immediately following the graph.