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Willamette Industries Inc – ‘DEFC14A’ on 4/2/01 re: Willamette Industries Inc

On: Monday, 4/2/01, at 10:10am ET · Accession #: 950130-1-1602 · File #: 1-12545

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 4/02/01  Willamette Industries Inc         DEFC14A                1:153K Willamette Industries Inc         Donnelley R R & S… 02/FA

Definitive Proxy Solicitation Material — Contested Solicitation — Schedule 14A
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: DEFC14A     Definitive Proxy Statement                            48    236K

Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Audit Fees Board Declassification Proposal Compensation Committee Compensation Committee Proposal Holders of Willamette Common Stock Option Grants in Last Fiscal Year Proxy Statement Stuart J. Shelk, Jr Termination of Employment and Change in Control Arrangements and Related Matters Willamette Industries, Inc
1	1st Page - Filing Submission
"	Willamette Industries, Inc
5	Proxy Statement
14	Item No. 2. Board Declassification Proposal
16	Item No. 3. Compensation Committee Proposal
19	Holders of Willamette Common Stock
22	Option Grants in Last Fiscal Year
24	Compensation Committee
29	Termination of Employment and Change in Control Arrangements and Related Matters
33	Audit Fees
37	Stuart J. Shelk, Jr

DEFC14A 1st Page of 48 TOC ↑Top Previous Next ↓Bottom Just 1st
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[ ] Preliminary Proxy Statement [_] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-12

Willamette Industries, Inc.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

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

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.

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

--------------------------------------------------------------------

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

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

--------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:

--------------------------------------------------------------------

(5) Total fee paid:

--------------------------------------------------------------------

[_] Fee paid previously with preliminary materials.

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

(1) Amount Previously Paid:
--------------------------------------------------------------------

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

--------------------------------------------------------------------

(3) Filing Party:

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(4) Date Filed:

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Notes:

DEFC14A 2nd Page of 48 TOC 1st Previous Next ↓Bottom Just 2nd
[LETTERHEAD OF WILLAMETTE INDUSTRIES, INC.]

April 2, 2001
Dear Fellow Shareholder:

It is our pleasure to invite you to attend the 2001 annual meeting of
shareholders of Willamette Industries, Inc. to be held at the Portland Art
Museum, Grand Ballroom, 1119 S.W. Park Avenue, Portland, Oregon, on Thursday,
June 7, 2001, at 11 a.m.

We urge you to participate in the business of the annual meeting by
completing and returning the enclosed GREEN proxy card as promptly as possible.
This annual meeting is of particular importance to all Willamette shareholders
because of the ongoing, hostile attempt to take over your company by
Weyerhaeuser Company.

As you know, Weyerhaeuser has commenced a hostile offer to acquire your
shares in Willamette for $48 per share in cash. At the annual meeting,
Weyerhaeuser is seeking to replace the three Willamette directors up for
reelection at the annual meeting from the existing Board of Directors of
Willamette with its own nominees. Additionally, you will be asked to vote upon
two shareholder proposals unrelated to Weyerhaeuser's offer.

THE BOARD'S UNANIMOUS VIEW HAS BEEN AND CONTINUES TO BE THAT THE WEYERHAEUSER
OFFER IS INADEQUATE AND NOT IN THE BEST INTERESTS OF WILLAMETTE, ITS
SHAREHOLDERS AND OTHER CONSTITUENCIES.

. The Board has determined that Weyerhaeuser's offer dramatically
undervalues what the Board believes to be the premier forest products
franchise.

. We believe our strategic plan will deliver greater long-term value than
Weyerhaeuser's offer.

. We believe that Willamette's nominees are highly qualified and will act
in your best interests.

. Weyerhaeuser's nominees have strong ties to Weyerhaeuser and have no
experience as directors of public companies.

ACCORDINGLY, THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE WILLAMETTE
NOMINEES FOR DIRECTOR AND "AGAINST" THE SHAREHOLDER PROPOSALS.

Your Board is acutely aware of its fiduciary duties and will at all times
continue to act in a manner consistent with those duties. Unlike the former
Weyerhaeuser officers and Weyerhaeuser's former outside attorney who
Weyerhaeuser wants to put on your Board, our sole obligation is to protect the
interests of Willamette, its shareholders and other constituencies.

DEFC14A 3rd Page of 48 TOC 1st Previous Next ↓Bottom Just 3rd
We have a history of delivering value to our shareholders: the average annual
return (including re-invested dividends) of Willamette's common stock has been
nearly four times that of the Industry Composite (defined herein) over the
period 1991 to November 10, 2000, and has nearly matched the S&P 500
performance over that period. We remain committed to enhancing our long-term
value by actively pursuing our strategic plan.

A GREEN proxy card is enclosed for your use. THE BOARD URGES YOU TO COMPLETE,
SIGN, DATE AND RETURN THE GREEN PROXY CARD IN THE ACCOMPANYING ENVELOPE, which
is postage-paid if mailed in the United States, Canada or the United Kingdom.

Your Board urges you NOT to sign or return any gold proxy card sent to you by
Weyerhaeuser. If you have previously signed a gold proxy card sent by
Weyerhaeuser, your Board urges you to sign, date and promptly mail the enclosed
GREEN proxy card, which will revoke any earlier dated proxy cards solicited by
Weyerhaeuser, which you may have signed. The best way for you to support your
Board is to vote "FOR" the Willamette nominees for director and "AGAINST" the
Shareholder Proposals on the GREEN proxy card sent to you by your Board.

On behalf of everyone at Willamette, we thank you for your continued support.
We remain committed to acting in your best interests. If you have any questions
with respect to voting, please feel free to call our proxy solicitor, MacKenzie
Partners, Inc. at (800) 322-2885 (toll-free) or (212) 929-5500 (collect).

Sincerely yours,

/s/ Duane C. McDougall /s/ William Swindells
Duane C. McDougall William Swindells
Chief Executive Officer Chairman of the Board

Your vote is extremely important to us. Please sign, date and promptly mail
your GREEN proxy card in the postage-paid envelope provided. Remember, your
Board urges you not to return any gold proxy card sent to you by Weyerhaeuser.
Withholding authority to vote for the Weyerhaeuser nominees on the gold
Weyerhaeuser proxy card is not the same as voting "FOR" the Willamette
nominees.

If your shares are registered in the name of a broker, only your broker can
execute a proxy and vote your shares and only after receiving your specific
instructions. Please sign, date and promptly mail the GREEN proxy card in the
envelope provided by your broker. Remember, your shares cannot be voted unless
you return a signed and executed proxy card to your broker. If you have any
questions or need further assistance in voting, please contact the firm
assisting us in the solicitation of proxies:

MacKenzie Partners, Inc.

Call (800) 322-2885 (toll-free in the United States) or (212) 929-5500 (collect)

DEFC14A 4th Page of 48 TOC 1st Previous Next ↓Bottom Just 4th
[Willamette Industries, Inc. Logo]

WILLAMETTE INDUSTRIES, INC.
1300 S.W. Fifth Avenue, Suite 3800
Portland, Oregon 97201

----------------

Notice of Annual Meeting of Shareholders
June 7, 2001

----------------

The annual meeting of shareholders of Willamette Industries, Inc. (the
"Company"), will be held at the Portland Art Museum, Grand Ballroom, 1119 S.W.
Park Avenue, Portland, Oregon, on Thursday, June 7, 2001, at 11 a.m., to
consider and vote on the following matters:

1. The election of three Class A directors. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE "FOR" THE ELECTION OF THE WILLAMETTE DIRECTOR NOMINEES.

2. A shareholder proposal concerning the classification of the Board of
Directors. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THIS
PROPOSAL.

3. A shareholder proposal concerning the compensation committee of the
Board of Directors. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THIS
PROPOSAL.

4. Such other business as may properly come before the meeting or any
adjournment thereof.

Only shareholders of record as of the close of business on April 16, 2001
will be entitled to notice of and to vote at the meeting.

SHAREHOLDERS ARE URGED TO PROMPTLY COMPLETE, SIGN, DATE, AND RETURN THE
ENCLOSED GREEN PROXY CARD IN THE SELF-ADDRESSED ENVELOPE (WHICH IS POSTAGE-PAID
FOR SHAREHOLDERS IN THE UNITED STATES, CANADA AND THE UNITED KINGDOM) WHETHER
OR NOT THEY EXPECT TO ATTEND THE MEETING. A SHAREHOLDER ATTENDING THE MEETING
MAY NEVERTHELESS VOTE IN PERSON.

By Order of the Board of Directors

/s/ G. W. Hawley

G. W. Hawley
Secretary

Portland, Oregon
April 2, 2001

THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY URGES YOU TO REJECT THE
PROXY SOLICITATION OF WEYERHAEUSER COMPANY AND NEITHER SIGN NOR RETURN ANY GOLD
PROXY CARD SENT TO YOU BY WEYERHAEUSER. EVEN IF YOU HAVE PREVIOUSLY SIGNED A
PROXY CARD SENT TO YOU BY WEYERHAEUSER, YOU CAN REVOKE THAT EARLIER PROXY BY
SIGNING, DATING AND MAILING THE ENCLOSED GREEN PROXY CARD IN THE ENVELOPE
PROVIDED.

IF YOU HAVE ANY QUESTIONS OR NEED ASSISTANCE, PLEASE CALL THE COMPANY AT
(503) 227-5581 OR OUR PROXY SOLICITOR, MACKENZIE PARTNERS, INC. AT (800) 322-
2885 (toll-free) or (212) 929-5500 (collect).

Printed on Willamette's 35# Providence Opaque(TM) Recycled, Vellum Finish

DEFC14A 5th Page of 48 TOC 1st Previous Next ↓Bottom Just 5th
PROXY STATEMENT

----------------

INTRODUCTION

This Proxy Statement is being furnished in connection with the solicitation
of proxies by the Board of Directors (the "Board") of Willamette Industries,
Inc. ("Willamette" or the "Company") to be voted at the Annual Meeting of
Shareholders of Willamette to be held on June 7, 2001, and at any and all
adjournments or postponements thereof (the "Annual Meeting"). The Board has
fixed the close of business on April 16, 2001 as the record date for
determining the shareholders entitled to notice of, and to vote at, the Annual
Meeting. This proxy statement (the "Proxy Statement") and the accompanying
GREEN proxy card are first being mailed to shareholders on or about April 2,
2001.

At the Annual Meeting, shareholders will consider and vote upon the election
of three Class A directors to hold office for three years. The Board has
nominated Kenneth W. Hergenhan, Duane C. McDougall and Robert M. Smelick
(together, the "Willamette Nominees") to serve as Class A directors. As you
know, Weyerhaeuser Company ("Weyerhaeuser"), a Washington corporation, and
Company Holdings, Inc. ("CHI"), a Washington corporation and a wholly owned
subsidiary of Weyerhaeuser, have commenced a proxy solicitation to replace the
three current directors standing for reelection with persons nominated to the
Board by Weyerhaeuser (the "Weyerhaeuser Nominees"), who have indicated their
intention, subject to their fiduciary duties, to support the Weyerhaeuser Offer
(as defined below) and the Second-Step Merger (as defined below).

Weyerhaeuser's nomination of an opposition slate of directors is solely
designed to further Weyerhaeuser's attempt to take over the Company by means of
a hostile tender offer (the "Weyerhaeuser Offer") to purchase (i) all of the
outstanding common stock, par value $0.50 per share (the "Willamette Common
Stock") of the Company, and (ii) unless validly redeemed by the Board, the
associated rights to purchase shares of Series B Junior Participating Preferred
Stock (the "Rights" and, together with the Willamette Common Stock, the
"Shares"), at a price of $48 per Share, net to the seller in cash, without
interest thereon (the "Offer Price"). Weyerhaeuser has announced that the
purpose of the Weyerhaeuser Offer is for Weyerhaeuser to acquire control of,
and ultimately the entire equity interest in, the Company. Weyerhaeuser has
also announced that, if the Weyerhaeuser Offer succeeds, Weyerhaeuser intends,
promptly following consummation of the Weyerhaeuser Offer, to seek to have the
Company consummate a second-step merger or similar business combination with
CHI or another direct or indirect wholly owned subsidiary of Weyerhaeuser (the
"Second-Step Merger"). At the Annual Meeting, shareholders will also consider
and vote upon two shareholder proposals unrelated to the Weyerhaeuser Offer
(the "Shareholder Proposals").

WHY YOU SHOULD VOTE FOR THE WILLAMETTE NOMINEES

The Board has unanimously concluded that the Weyerhaeuser Offer is inadequate
and not in the best interests of the Company, its shareholders and other
constituencies. We are confident we can deliver more value to our shareholders
over time than what Weyerhaeuser has offered. At the same time, the
Weyerhaeuser Nominees, all of whom are being compensated by Weyerhaeuser to run
for election to the Board, and all of whom have past affiliations with
Weyerhaeuser, have indicated their intention, subject to their fiduciary
duties, to support the sale of the Company to Weyerhaeuser at the Offer Price.
Accordingly, the Board unanimously recommends a vote "FOR" the Willamette
Nominees. Set forth below are the principal reasons to vote "FOR" the
Willamette Nominees.

THE BOARD HAS DETERMINED THAT THE WEYERHAEUSER OFFER IS INADEQUATE AND
DRAMATICALLY UNDERVALUES WHAT THE BOARD BELIEVES TO BE THE PREMIER FOREST
PRODUCTS FRANCHISE:

. The Board has received the opinion of Goldman, Sachs & Co., financial
advisor to the Company ("Goldman Sachs"), that, as of December 11, 2000, the
Offer Price is inadequate, from a financial point of view, to the Company's
shareholders.

DEFC14A 6th Page of 48 TOC 1st Previous Next ↓Bottom Just 6th
. The premiums and multiples implied by the Weyerhaeuser Offer are well below
those paid in recent comparable industry transactions. For instance, in its
acquisition of Consolidated Papers (another highly regarded company in the
sector), Stora Enso paid premiums of 69% relative to the day prior to the
announcement, 34% relative to the 52-week high, and 28% relative to the
all-time high. In addition, in a number of recent transactions in the
industry involving companies with business mixes similar to Willamette's,
the average premium relative to the day prior to announcement of the
transaction was 53%, 20% relative to the 52-week high, and 17% relative to
the all time high(/1/). The Weyerhaeuser Offer implies a 38% premium
relative to the day prior to the public announcement of Weyerhaeuser's
hostile proposal, and discounts of 1% to its 52-week high and 6% to
Willamette's all-time high.

. As of March 7, 2001, the average stock price of a composite of shares of
comparable companies in the industry (the "Industry Composite")(/2/) had
appreciated by approximately 26% since the public announcement of
Weyerhaeuser's hostile proposal, suggesting that the premium implied by the
Weyerhaeuser Offer is significantly lower than the 38% premium implied at
the time of the public announcement of Weyerhaeuser's hostile proposal. In
addition, as of March 7, 2001, the value of Weyerhaeuser's common stock had
appreciated by approximately 35% over the same period of time. According to
Weyerhaeuser, Willamette "is a unique fit with Weyerhaeuser's core products
portfolio" and therefore, by their logic, Weyerhaeuser is the best proxy
for Willamette. Although a portion of the recent appreciation in
Weyerhaeuser's common stock may be attributable to the proposed merger,
assuming Willamette had appreciated by 35%, the implied premium would be
only 3%.(/3/)

. Although the Company is not for sale, the Board believes that based on the
$300 million in synergies that Weyerhaeuser has publicly stated (and the
$330 to $645 million synergy range provided by Weyerhaeuser to the Company
in a meeting in September 1998), and Wall Street research analysts'
consensus earnings and cash flow estimates for Weyerhaeuser and the
Company, Weyerhaeuser could pay significantly in excess of the Offer Price
for Willamette. In November Weyerhaeuser referred to their proposed
transaction as "strongly accretive to cash flow and earnings per share"
which the Board believes is further evidence that the Weyerhaeuser Offer is
in the best interests of Weyerhaeuser's shareholders, not Willamette's.

. Please refer to Annex A for a more detailed list of factors considered by
the Board, at a meeting held on December 11, 2000, in concluding that the
Weyerhaeuser Offer is inadequate.

WE BELIEVE OUR STRATEGIC PLAN WILL DELIVER GREATER VALUE OVER THELONG-TERM
THAN THE WEYERHAEUSER OFFER:

. Willamette has historically generated superior returns for its
shareholders. The average annual return (including re-invested dividends)
of the Willamette Common Stock has been nearly four times that of the
Industry Composite over the period 1991 through November 10, 2000, and has
almost matched the Standard & Poors ("S&P") 500 performance over that
period (despite a very difficult decade for the industry and an
extraordinarily good performance for the S&P 500).

--------
(1) The selected transactions were Stora Enso Oyj/Consolidated Papers, Inc.,
International Paper Company/Champion International Corporation, and
International Paper Company/Union Camp Corporation.
(2) The "Industry Composite" is comprised of Boise Cascade Corporation,
Georgia-Pacific Corporation, International Paper Company, Louisiana-
Pacific Corporation, Smurfit-Stone Container Corporation,
Temple-Inland, Inc., and Weyerhaeuser. All of the companies in the Industry
Composite are included in the S&P Paper & Forest Products Index. Willamette
believes the companies included in the Industry Composite are most
representative of Willamette's business mix. The market capitalizations of
the companies in the Industry Composite range from $1.0 billion to $17.4
billion.
(3) The stock price appreciation figures in this paragraph with respect to
companies in the Industry Composite do not include reinvestment of
dividends.

DEFC14A 7th Page of 48 TOC 1st Previous Next ↓Bottom Just 7th
. Over the last ten years, the Company's average annual earnings per share
("EPS") growth rate has exceeded 9%, while the EPS growth rate of the
Industry Composite was approximately zero, on average. Willamette's EPS
growth rate over this period was three times that of a large cap composite
comprised of International Paper, Georgia-Pacific and Weyerhaeuser.

. Willamette has developed and executed a sound, proven strategy of increasing
earnings through sales growth, operating efficiency and cost-reduction. The
Company believes it is among the low-cost integrated producers in its brown
and white paper segments and highly competitive in its building products
segment. Willamette has consistently led the industry by most key financial
metrics, such as operating margins and returns. We believe that Willamette
is well-positioned to continue this outperformance.

. Willamette has undertaken significant value-enhancing initiatives over the
last few years aimed at reducing costs, growing market opportunities and,
most importantly, increasing EPS growth; management believes that, based on
the current pricing environment, these initiatives will add in excess of
$340 million to annual earnings before interest, taxes, depreciation and
amortization by 2004. The Board believes that this additional cash flow and
earnings stream has not yet been reflected in the Company's share price (nor
in the Weyerhaeuser Offer) and should result in higher long-term market
value.

. The Board believes that continuing the Company's strategic plan provides the
flexibility to consider potential strategic transactions at a time that is
more opportune for the Company's shareholders, not for Weyerhaeuser.

THE BOARD BELIEVES THAT THE WILLAMETTE NOMINEES ARE HIGHLY QUALIFIED AND WILL
ACT IN THE BEST INTERESTS OF THE COMPANY'S SHAREHOLDERS:

. The Willamette Nominees collectively have been associated with Willamette as
directors, executive officers, employees or outside advisors for over 70
years.

. The Willamette Nominees are intimately familiar with the business, financial
condition, prospects and current business strategy of the Company as well as
the nature of the industries in which the Company operates.

. As of February 28, 2001, the Willamette Nominees collectively held 28,893
shares of Willamette Common Stock and options to purchase 209,080 shares of
Willamette Common Stock; their interests are aligned with the Company's
shareholders and they are committed to protecting the best interests of the
Company, its shareholders and other constituencies, as well as enhancing the
long-term value of the Company.

WEYERHAEUSER'S NOMINEES HAVE STRONG TIES TO WEYERHAEUSER AND LACK EXPERIENCE AS
DIRECTORS:

. According to the proxy statement supplement filed by Weyerhaeuser on March
26, 2001, each of the Weyerhaeuser Nominees has been paid $25,000 by
Weyerhaeuser to run for election to the Board.

. Two of the Weyerhaeuser Nominees, Messrs. Luthy and Lane, are former
officers of, and, we believe, receive pension and retirement benefits from,
Weyerhaeuser. The remaining Weyerhaeuser Nominee, Ms. Sroufe, was a partner
at Weyerhaeuser's outside legal advisor. The Board believes that the
interests of the Weyerhaeuser Nominees are aligned with those of
Weyerhaeuser and its shareholders, and not with Willamette or its
shareholders.

. None of the Weyerhaeuser Nominees has any public company director experience
at all. In addition, not one of them was ever elected to serve on
Weyerhaeuser's own Board of Directors.

. The Company and Weyerhaeuser are direct competitors that vie for many of the
same customers and contracts. The Board recognizes that the Weyerhaeuser
Nominees, if elected, would have fiduciary duties to the Company and its
shareholders. Nonetheless, the Board and management may be hesitant to share
certain confidential information with individuals who were paid by
Weyerhaeuser to run for election to the Board, have strong past affiliations
with Weyerhaeuser and are expected, subject to their fiduciary duties, to
support a sale of the Company to Weyerhaeuser.

DEFC14A 8th Page of 48 TOC 1st Previous Next ↓Bottom Just 8th
. Given that it is in Weyerhaeuser's interest to acquire Willamette by paying
the lowest possible price for your shares, the Board believes that the
Weyerhaeuser Nominees would, subject to their fiduciary duties, have less
incentive to develop other alternatives that create more value for
Willamette shareholders.

GIVEN THESE REASONS, YOUR BOARD STRONGLY RECOMMENDS THAT YOU SUPPORT THE
WILLAMETTE NOMINEES, WHO THE BOARD BELIEVES ARE HIGHLY QUALIFIED AND ARE
RESPONSIBLE FOR WILLAMETTE'S SUPERIOR FINANCIAL PERFORMANCE, BY VOTING "FOR"
THE WILLAMETTE NOMINEES.

YOUR BOARD URGES YOU TO REJECT THE WEYERHAEUSER NOMINEES, WHO ARE LOYAL TO
WEYERHAEUSER AND WERE SELECTED TO ACHIEVE WEYERHAEUSER'S GOAL OF ACQUIRING
YOUR COMPANY AT THE LOWEST POSSIBLE PRICE.

EVEN IF YOU HAVE PREVIOUSLY SIGNED A PROXY CARD SENT TO YOU BY WEYERHAEUSER,
YOU CAN REVOKE THAT EARLIER PROXY BY SIGNING, DATING AND MAILING THE ENCLOSED
GREEN PROXY CARD IN THE ENVELOPE PROVIDED.

Your vote is important, regardless of how many shares you own. Please sign
and date the accompanying GREEN proxy card and mail it in the enclosed self-
addressed envelope (which is postage-paid for shareholders in the United
States, Canada and the United Kingdom) as promptly as possible, whether or not
you expect to attend the meeting.

Whether or not you have previously signed a gold proxy card sent by
Weyerhaeuser, your Board urges you to show your support for the Board by
signing, dating and promptly mailing the enclosed GREEN proxy card. By
signing, dating and returning the GREEN proxy card, you will revoke any
earlier dated gold proxy card solicited by Weyerhaeuser which you may have
signed. Your Board urges you NOT to return any gold proxy card sent to you by
Weyerhaeuser. THE BEST WAY TO SUPPORT THE WILLAMETTE NOMINEES AND THE BOARD'S
DETERMINATIONS IS TO VOTE "FOR" THE WILLAMETTE NOMINEES AND "AGAINST" THE
SHAREHOLDER PROPOSALS ON THE GREEN PROXY CARD.

IF YOUR SHARES ARE HELD IN THE NAME OF A BROKER, ONLY YOUR BROKER CAN
EXECUTE A PROXY AND VOTE YOUR SHARES AND ONLY AFTER RECEIVING YOUR SPECIFIC
INSTRUCTIONS. PLEASE SIGN, DATE AND PROMPTLY MAIL THE GREEN PROXY CARD IN THE
ENVELOPE PROVIDED BY YOUR BROKER. REMEMBER, YOUR SHARES CANNOT BE VOTED UNLESS
YOU RETURN A SIGNED AND EXECUTED PROXY CARD TO YOUR BROKER.

A proxy given pursuant to this solicitation may be revoked by the person
giving the proxy at any time prior to its exercise (i) by delivering written
notice of revocation to the Secretary of the Company, (ii) by executing a
subsequent proxy relating to the same shares which is delivered to the
Secretary or (iii) by attending the Annual Meeting and voting in person
(although attendance at the meeting in itself will not constitute revocation
of a proxy).

DEFC14A 9th Page of 48 TOC 1st Previous Next ↓Bottom Just 9th
VOTING PROCEDURES

The Board has fixed the close of business on April 16, 2001 as the record
date (the "Record Date") for determining the shareholders entitled to notice
of, and to vote at, the Annual Meeting. As of February 28, 2001 there were
109,535,146 shares of Willamette Common Stock outstanding and entitled to vote
at the Annual Meeting. The holders of the Willamette Common Stock are entitled
to one vote per share on each matter submitted to a vote at the Annual Meeting.
Shareholders do not have the right to cumulate votes in the election of
directors. All such shares entitled to vote at the Annual Meeting are referred
to herein as "Record Shares." The presence in person or by proxy of
shareholders holding a majority of the Record Shares will constitute a quorum
for the transaction of business at the Annual Meeting. Shares represented by
proxies that are marked "abstain" will be counted as Record Shares present for
purposes of determining the presence of a quorum on all matters. Proxies
relating to "street name" shares that are voted by brokers on some but not all
of the matters will be treated as Record Shares present for purposes of
determining the presence of a quorum on all matters, but they will not be
treated as shares entitled to vote at the Annual Meeting on those matters as to
which authority to vote is withheld by the broker ("broker non-votes").

Whether or not you plan to attend the meeting, you are urged to vote by
submitting the GREEN proxy card. Duly executed and unrevoked proxies received
by the Company prior to the Annual Meeting will be voted in accordance with the
shareholder's specifications marked thereon. If no specifications are marked
thereon, the GREEN proxies distributed by the Board will be voted "FOR" the
election of the Willamette Nominees and "AGAINST" the Shareholder Proposals.
Any shareholder giving a proxy may revoke it at any time prior to voting at the
Annual Meeting by filing with the Secretary of Willamette a duly executed
revocation, by submitting a later-dated proxy with respect to the same shares
or by attending the Annual Meeting and voting in person (although attendance at
the Annual Meeting will not in and of itself constitute a revocation of your
proxy).

A shareholder may, with respect to the election of directors, (i) vote for
the election of all three director nominees proposed by the Board, (ii)
withhold authority to vote for all such director nominees or (iii) withhold
authority to vote for any of the Willamette Nominees by so indicating in the
appropriate space on the proxy. Shareholders who have received Weyerhaeuser's
proxy statement or who attend the Annual Meeting will also have each of the
foregoing options in respect of the Weyerhaeuser Nominees. The Company's Bylaws
provide that at each meeting of shareholders at which a quorum is present,
directors shall be elected by a plurality of votes cast by shareholders holding
shares entitled to vote in the election at a meeting. The three nominees
receiving the highest vote totals will be elected as directors of the Company.
Consequently, votes that are withheld in the election of directors and broker
non-votes will not be taken into account for purposes of determining the
outcome of the election. The only way to vote by proxy "FOR" the Willamette
Nominees is to complete and return the GREEN proxy card. In that event, the
Board urges you not to sign or return any gold proxy card sent to you by
Weyerhaeuser. Withholding authority to vote for the Weyerhaeuser Nominees on
the gold Weyerhaeuser proxy card is not the same as voting "FOR" the Willamette
Nominees.

With respect to the Shareholder Proposals, a shareholder may vote for or
against such matters or abstain from voting. Approval of either Shareholder
Proposal would not, however, require that the action suggested by such proposal
be taken since both Shareholder Proposals are precatory rather than mandatory,
requesting rather than mandating action by the Board. Pursuant to the Company's
Bylaws, each Shareholder Proposal will be approved if the votes cast favoring a
Shareholder Proposal exceed the votes cast opposing such Shareholder Proposal
(assuming a quorum is present). Consequently, an abstention or a broker non-
vote on either Shareholder Proposal will not be taken into account for purposes
of determining the outcome of the vote on such Shareholder Proposal.
Accordingly, if you are opposed to either or both of the Shareholder Proposals,
you should vote "AGAINST" such proposals on the GREEN proxy card.

No dissenters' rights apply to any matter to be acted upon at this meeting.

The accompanying GREEN proxy card represents all of the shares you are
entitled to vote at the meeting. If you are a participant in Willamette's Stock
Purchase Plan, the trustee under the plan will provide you with a proxy card
representing the shares you are entitled to vote under the plan.

DEFC14A 10th Page of 48 TOC 1st Previous Next ↓Bottom Just 10th
ITEM NO. 1

ELECTION OF DIRECTORS

The Company's Bylaws provide for three classes of directors, with the term of
one class expiring at each annual meeting of shareholders. Pursuant to the
authority granted to the Board in Article VI of the Company's Restated Articles
of Incorporation, the Board has determined that effective on the date of the
Annual Meeting, the number of directors shall be fixed at nine, three in the
class whose term expires in 2002, three in the class whose term expires in 2003
and three in the class whose term expires in 2004. In connection with the
reduction in the number of directors from ten to nine, it is expected that
Benjamin R. Whiteley will resign as a Class A director effective on the date of
the Annual Meeting. Pursuant to the Company's Bylaws, Mr. Whiteley, who turns
72 on July 13, 2001, would have been required to resign from the Board no later
than the subsequent quarterly meeting of directors. In addition, pursuant to
the Company's Bylaws, Duane C. McDougall's term as an interim Class C director
will expire on the date of the Annual Meeting. The Board has nominated Messrs.
Kenneth W. Hergenhan, Duane C. McDougall and Robert M. Smelick to serve as
Class A directors until the annual meeting in 2004. Each nominee has consented
to serve for the specified term and to being named in the Proxy Statement. It
is intended that the shares represented by the accompanying proxy will be voted
for the election of Messrs. Hergenhan, Smelick and McDougall. The three Class B
directors, Messrs. Winslow H. Buxton, G. Joseph Prendergast and William
Swindells, and the three Class C directors, Messrs. Gerard K. Drummond, Stuart
J. Shelk and Michael G. Thorne, will continue to serve as directors until the
annual meetings in 2002 and 2003, respectively.

If for any reason any of the nominees named below should become unavailable
for election (an event that the Board does not anticipate), the proxy will be
voted for the election of such substitute nominee as may be designated by the
Board. Information with respect to each person nominated for election as a
director and each other person whose term of office as a director will continue
after the meeting is set forth below. Ages shown are as of December 31, 2000.

THE BOARD STRONGLY RECOMMENDS THAT YOU VOTE "FOR" THE WILLAMETTE NOMINEES AS
DIRECTORS OF THE COMPANY.

Weyerhaeuser is seeking the election of a slate of directors that is
committed, subject to their fiduciary duties, to supporting Weyerhaeuser's
hostile takeover attempt. The Board believes that the election of the
Weyerhaeuser Nominees to the Board would conflict with the best interests of
the Company, its shareholders and other constituencies. The Board opposes the
Weyerhaeuser Nominees for several reasons.

First, the Board, with the advice of the Company's financial advisor, Goldman
Sachs, has determined that the Weyerhaeuser Offer is inadequate and not in the
best interests of the Company, its shareholders and other constituencies. In
addition, as of March 7, 2001, the average stock price in the Industry
Composite had appreciated by approximately 26% since the public announcement of
Weyerhaeuser's hostile proposal, suggesting that the premium implied by the
Weyerhaeuser Offer is significantly lower than the 38% premium implied at the
time of the public announcement of Weyerhaeuser's hostile proposal. Further, as
of March 7, 2001, the value of Weyerhaeuser's common stock had appreciated by
approximately 35% over the same period of time. According to Weyerhaeuser,
Willamette "is a unique fit with Weyerhaeuser's core products portfolio" and
therefore, by their logic, Weyerhaeuser is the best proxy for Willamette.
Although a portion of the recent appreciation in Weyerhaeuser's common stock
may be attributable to the proposed merger, if Willamette had appreciated by
35%, the implied premium would be only 3%.(/1/)

Second, the Board has also determined that, in light of the terms of the
Weyerhaeuser Offer, the Company's inherent earnings power and long-term
strategic plan, the interests of the Company, its shareholders and other
constituencies would be best served by the Company continuing as an independent
entity. The Board believes that the Weyerhaeuser Nominees, having presumably
determined that $48 is an adequate price for the Willamette Common Stock and
indicating their support, subject to their fiduciary duties, for the sale of
the Company, may be less open-minded in objectively considering value-enhancing
opportunities other than selling the Company at $48 per Share.
--------
(1) The stock price appreciation figures in this paragraph with respect to
companies in the Industry Composite do not include reinvestment of dividends.

DEFC14A 11th Page of 48 TOC 1st Previous Next ↓Bottom Just 11th
Third, the Board, with the significant contributions of the Willamette
Nominees, has guided the Company to its coveted position as what the Board
believes to be the premier forest products franchise. Over the last ten years,
the Company's EPS growth rate has exceeded 9%, while the EPS growth of the
Industry Composite was approximately zero, on average. Willamette's EPS growth
rate over the period was three times that of a large cap composite comprised of
International Paper, Georgia-Pacific and Weyerhaeuser. The Board urges
shareholders not to remove the very directors who are responsible for
Willamette's superior performance.

Fourth, even if the Weyerhaeuser Nominees were elected, they could not by
themselves bring about the sale of the Company unless a majority of the Board
approved the transaction. The Board has unanimously determined that the Company
is not for sale, and that the Weyerhaeuser Offer does not reflect the long-term
value inherent in the Company or the significant value-enhancing initiatives
taken by the Company over the last few years. As a result, the election of the
Weyerhaeuser Nominees may serve to disrupt the management of the Company and
divert the Board from its pursuit of Willamette's current successful business
strategy.

Fifth, the Board believes that independence is a key qualification for a
director of the Company and that the Weyerhaeuser Nominees lack this quality.
Each of the Weyerhaeuser Nominees has a strong tie to Weyerhaeuser. Two of the
Weyerhaeuser Nominees, Messrs. Luthy and Lane, are former officers of, and, the
Board believes, continue to receive pension and retirement benefits from,
Weyerhaeuser. Ms. Sroufe, the third Weyerhaeuser Nominee, is a former partner
at Weyerhaeuser's outside legal advisor. Further, according to Weyerhaeuser's
proxy statement, each of the three Weyerhaeuser Nominees has been paid $25,000
by Weyerhaeuser to run for election to the Board. The Board believes the
Weyerhaeuser Nominees would be committed, subject to their fiduciary duties, to
furthering Weyerhaeuser's interests by virtue of these affiliations with
Weyerhaeuser, rather than your interests. On the other hand, the interests of
the Willamette Nominees are closely aligned with those of Willamette's
shareholders--as of February 28, 2001 they collectively held 28,893 shares of
Willamette Common Stock and options to purchase 209,080 shares of Willamette
Common Stock and are committed to protecting the best interests of the Company,
its shareholders and other constituencies, as well as enhancing the long-term
value of the Company.

Sixth, the Board believes that the Weyerhaeuser Nominees do not have the
requisite experience to merit entrusting them with what the Board believes is
the premier forest products franchise. None of the Weyerhaeuser Nominees has
any public company director experience at all. Conversely, the Willamette
Nominees collectively have been associated with Willamette as directors,
executive officers, employees or outside advisors for over 70 years. With such
experience, the Willamette Nominees are familiar with the business, financial
condition, prospects and current business strategy of the Company.

Finally, the Company and Weyerhaeuser are direct competitors that vie for
many of the same customers and contracts. The Board recognizes that the
Weyerhaeuser Nominees, if elected, would have fiduciary duties to the Company
and its shareholders. Nonetheless, the Board and management may be hesitant to
share certain confidential information with individuals who were paid by
Weyerhaeuser to run for election to the Board, have strong past affiliations
with Weyerhaeuser and are expected, subject to their fiduciary duties, to
support a sale of the Company to Weyerhaeuser.

FOR THESE REASONS, YOUR BOARD BELIEVES YOU WOULD BE FAR BETTER SERVED BY
ELECTING THE WILLAMETTE NOMINEES--KENNETH W. HERGENHAN, DUANE C. MCDOUGALL AND
ROBERT M. SMELICK--TO THE BOARD, AND YOU ARE URGED TO VOTE FOR THESE
INDIVIDUALS ON THE ENCLOSED GREEN PROXY CARD. THE BOARD URGES YOU NOT TO SIGN
ANY PROXY SENT TO YOU BY WEYERHAEUSER.

THE COMPANY NEEDS A QUALIFIED, EXPERIENCED, INDEPENDENT AND COHESIVE BOARD--
NOT A CONTENTIOUS BOARD WITH POTENTIALLY DIVIDED LOYALTIES.

DEFC14A 12th Page of 48 TOC 1st Previous Next ↓Bottom Just 12th
The following information relates to the Willamette Nominees for re-election
at the Annual Meeting as well as the other directors of the Company. There are
no family relationships among the directors and executive officers of the
Company. The Board held eight meetings during 2000. Each director attended at
least 75 percent of the total of (i) the meetings of the Board and (ii) the
meetings held by all committees of the Board on which he served.

Class A (Nominees whose terms of office will expire in 2004)

Kenneth W. Hergenhan, age 69, has been a director of the Company since 1997
and has been associated with Willamette since 1967. Mr. Hergenhan was a partner
in the law firm of Miller Nash LLP, and chair of the firm's business practice
group prior to his retirement in December 1996. He served as Chair of the
Oregon State Bar Association's business law and securities law committees. He
is a graduate of Lehigh University and Harvard Law School.(/1/)(/2/)

Duane C. McDougall, age 49, has been a director of the Company since 2000.
Mr. McDougall is President and Chief Executive Officer of the Company, a
position he has held since December 1998. Prior to becoming President and Chief
Executive Officer, he served as Chief Operating Officer, Executive Vice
President, and has worked for Willamette in a variety of positions for 21
years. Mr. McDougall also serves as a board member for several non-profit and
educational organizations, including the Oregon State University Foundation,
Nature Conservancy of Oregon, Portland Art Museum, American Forest & Paper
Association and Sustainable Forestry Board. Mr. McDougall earned a bachelor's
degree in business administration from Oregon State University. Pursuant to the
Company's Bylaws, Mr. McDougall's term as a Class C director will expire as of
the date of the Annual Meeting.(/1/)

Robert M. Smelick, age 58, has been a director of the Company since 1990 and
has been associated with Willamette since 1983. Mr. Smelick has been the
managing principal of Sterling Payot Company, an investment company, since
1989. Prior to forming Sterling Payot, he was Managing Director in charge of
First Boston's Investment Banking activities in the Western United States,
where he had been since 1979. Mr. Smelick serves as Chairman of the Board of
Accrue Software, Inc. He is a Trustee of the Hamlin School, and is a board
member of the San Francisco Ballet. Mr. Smelick holds an AB from Stanford
University and an MBA from Harvard Business School.(/3/)

Class B (Directors whose terms of office will expire in 2002)

Winslow H. Buxton, age 61, has been a director of the Company since February
1999. Mr. Buxton is Chairman and a director of Pentair, Inc., a diversified
manufacturing company that sells general industrial equipment and specialty
products. He is also a director of Bemis Company, Inc. and The Toro Company. He
retired in December 2000 as Chief Executive Officer of Pentair, Inc.(/3/)

G. Joseph Prendergast, age 55, has been a director of the Company since 1996.
Mr. Prendergast served as President and Chief Operating Officer of Wachovia
Corporation, a bank holding company, from April 1999 until his retirement in
January 2001. Prior to becoming President and Chief Operating Officer, he was
Senior Executive Vice President of Wachovia Corporation from October 1997 until
April 1999 and Executive Vice President from October 1988 until October 1997.
Mr. Prendergast served as a director of Wachovia Corporation and Wachovia Bank
N.A. from April 1999 until his retirement in January 2001. He also served as a
director of Wachovia Bank of Georgia, Wachovia Bank of South Carolina and
Wachovia Bank of North Carolina from April 1994 until April 1999. Mr.
Prendergast is also a director of The Georgia Power Company.(/3/)

William Swindells, age 70, has been a director of the Company since 1964. For
more than the past five years, Mr. Swindells has served as Chairman of the
Board. He served as Chief Executive Officer of the Company from November 1997
until December 1998, as well as for more than five years prior to September
1995. Mr. Swindells is also a director of Oregon Steel Mills, Inc., StanCorp
Financial Group, Inc., and Airborne, Inc.(/1/)

DEFC14A 13th Page of 48 TOC 1st Previous Next ↓Bottom Just 13th
Class C (Directors whose terms of office will expire in 2003)

Gerard K. Drummond, age 63, has been a director of the Company since 1991.
From July 1993 to June 1998, Mr. Drummond was of counsel to the law firm of
Stoel Rives LLP. Previously, he was Chairman of the Board of NERCO, Inc., a
natural resources company, its Chief Executive Officer (except during the
period February 1992 to November 1992), and Executive Vice President of
PacifiCorp, a public utility company.(/1/)(/2/)

Stuart J. Shelk, Jr., age 56, has been a director of the Company since 1983.
Mr. Shelk is Managing Director of Ochoco Management, Inc., which is the
managing general partner of Ochoco Lumber Company, a lumber manufacturer. Mr.
Shelk has been responsible for managing Ochoco Lumber Company for more than
five years. Mr. Shelk is also a director of Prineville Bancorp.(/3/)

Michael G. Thorne, age 60, has been a director of the Company since February
2000. Since 1991, Mr. Thorne has been executive director of the Port of
Portland, a public corporation whose primary purpose is providing facilities
and services to move cargo and people. Mr. Thorne is also a director of
StanCorp Financial Group, Inc.(/2/)

Other Current Director

Benjamin R. Whiteley, age 71, has been a director of the Company since 1990.
Mr. Whiteley retired as chairman of the board of Standard Insurance Company, a
life insurance company, of which he is also a director, in March 1998. He
served as chairman and chief executive officer of Standard Insurance Company
from January 1993 until August 1994 and, prior to that time, as president and
Chief Exective Officer. Mr. Whiteley is also a director of Northwest Natural
Gas Company, The Greenbrier Companies, Inc., and StanCorp Financial Group, Inc.
Mr. Whiteley is expected to resign from the Board effective as of the date of
the Annual Meeting.(/1/)(/2/)
--------
(1) Member of the Company's executive committee.
(2) Member of the Company's compensation and nomination committee (the
"Compensation Committee"). The Compensation Committee, which met four times
during 2000, reviews the compensation of the Company's directors and
officers prior to consideration of such matters by the Board as a whole and
administers the Company's 1986 Stock Option and Stock Appreciation Rights
Plan (the "1986 Plan"). A separate committee consisting of Messrs. Drummond
and Whiteley is responsible for administration of the 1995 Long-Term
Incentive Compensation Plan (the "1995 Plan") and met three times during
2000. The Compensation Committee also makes recommendations to the Board
concerning nominations of directors and selection of executive personnel.
The Compensation Committee will consider shareholder suggestions as to
nominees for directors; such suggestions should be addressed to the
Secretary of the Company at its principal executive offices. In order to be
considered prior to next year's annual meeting, such suggestions should be
received by December 31 of this year.
(3) Member of the Company's audit committee (the "Audit Committee"). The Audit
Committee, which met twice during 2000, is responsible for: (i)
recommending independent auditors annually for selection by the Board, (ii)
reviewing the effect of changes in accounting standards, policies and
practices and the scope of audit proposed to be performed, (iii) reviewing
the results of the past year's audit and independence issues with the
independent auditors, and (iv) reviewing the independent auditors'
suggestions and comments with respect to internal financial and operational
controls, including monitoring the steps taken to implement suggestions by
the independent auditors.

DEFC14A 14th Page of 48 TOC 1st Previous Next ↓Bottom Just 14th
ITEM NO. 2

BOARD DECLASSIFICATION PROPOSAL

The following proposal (the "Board Declassification Proposal") was submitted
by Glen D. Heck. Mr. Heck has informed the Company that his address is 139
Allen Dam Road, Natchitoches, LA 71457, and that he is the owner of 278 shares
of Willamette Common Stock.

BE IT RESOLVED: That the shareholders of Willamette Industries Inc. ("Company")
urge that the Board of Directors take the necessary steps to declassify the
Board of Directors for purpose of director elections. The Board
declassification shall be done in a manner that does not affect the unexpired
terms of directors previously elected.

SUPPORTING STATEMENT

The Board of Directors of the Company is divided into three classes serving
staggered three-year terms. It is my belief that the classification of the
Board of Directors is not in the best interest of the Company and its
shareholders.

The elimination of the staggered Board would require each director to stand
for election annually. This procedure would allow shareholders an opportunity
to annually register their views of the performance of the Board collectively
and each director individually. Concern that the annual election of all
directors would leave the company without experienced board members in the
event that all incumbents are voted out is unfounded. If the owners should
choose to replace the entire Board, it would be obvious that the incumbent
directors' contributions were not valued.

Under the Bylaws of the Company, shareholders are only permitted to remove a
director by the affirmative vote of the holders of not less than 80 percent of
the outstanding shares. The Company's super-majority director removal provision
and its classified Board of Directors have the combined effect of increasing
the likelihood that directors will serve long tenures regardless of the views
of shareholders. The National Association of Corporate Directors' Blue Ribbon
Commission on Director Professionalism's Report has explicitly rejected "the
notion of directorships as lifetime sinecures. . . . [C]ircumstances change,
and boards should anticipate and respond to company changes."

A classified board of directors protects the incumbency of the Board and
current management, which in turn limits accountability to shareholders. It is
my belief that this protection for incumbents, by reducing management's
accountability to shareholders, may negatively impact the Company's financial
performance. We [SIC] urge your support for this proposal.

STATEMENT OF BOARD OF DIRECTORS RECOMMENDING A VOTE AGAINST THE BOARD
DECLASSIFICATION PROPOSAL

The Board believes that the present system of electing directors of the
Company in three classes is in the best interests of the Company and its
shareholders and should not be changed.

A classified board offers important advantages to shareholders and is the
preferred method of governance for the majority of the companies in the S&P
500. Moreover, a classified board protects shareholders against potentially
coercive takeover tactics whereby a party attempts to acquire control on terms
that do not offer the greatest value to all shareholders. With this protection,
the Board gains the time necessary to evaluate any proposal, study alternatives
and seek the best result for all shareholders.

DEFC14A 15th Page of 48 TOC 1st Previous Next ↓Bottom Just 15th
The Board believes that a classified board enhances continuity and stability
in the Company's management and policies since a majority of the directors at
any given time will have had prior experience and familiarity with the business
of the Company. This continuity and stability facilitates more effective long-
term planning and is integral to increasing the Company's value to
shareholders. Moreover, such continuity helps the Company attract and retain
qualified individuals willing to commit the time and dedication necessary to
understand the Company, its operations and competitive environment.

The Board is committed to corporate accountability and does not accept the
proposition that a classified board insulates directors from responsibility. A
classified board permits shareholders to annually change one-third of the
directors and thereby substantially change the Board's composition and
character. Corporate accountability depends on the selection of responsible and
experienced individuals, not on whether they serve terms of one year or three.

The Company understands that the Board should be responsive to shareholders
and has taken steps to assure corporate accountability through such measures as
maintaining a majority of outside directors (seven of nine). In addition, to
encourage the alignment of the interests of the members of the Board with those
of the shareholders, on the date of each annual meeting of shareholders an
option for 2,000 shares of Willamette Common Stock is granted to each person
who is then a non-employee director and who is to continue to serve as a
director.

Your Board also believes that a director's performance and contribution is
best measured over a longer period such as the current three-year terms for
directors, rather than the short-term focus inherent in annual elections. The
longer terms permit the Board to avoid the temptation or compulsion to sell the
businesses or assets of the Company at times when highest valuations are less
achievable due to market conditions and is consistent with the Board's role in
making decisions that have a long-term impact.

Shareholders should also be aware that adoption of the Board Declassification
Proposal would not, by itself, eliminate board classification and institute the
annual election of directors, but would merely constitute a recommendation by
the shareholders that the Board consider enacting such a change. Furthermore,
even if the Board were to adopt the Board Declassification Proposal, it would
not have the effect of fully declassifying the Board until the annual meeting
in 2004 because, by its terms, the proposal suggests that the declassification
be done in a manner that does not affect the unexpired terms of directors
previously elected.

For the reasons outlined above, the Board has concluded that a classified
board is in the best interests of the Company and its shareholders and thus is
opposed to the Board Declassification Proposal.

FOR THE FOREGOING REASONS, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE AGAINST THE BOARD DECLASSIFICATION PROPOSAL.

DEFC14A 16th Page of 48 TOC 1st Previous Next ↓Bottom Just 16th
ITEM NO. 3

COMPENSATION COMMITTEE PROPOSAL

The following proposal (the "Compensation Committee Proposal") was submitted
on behalf of the Central Laborers' Pension, Welfare & Annuity Funds. They have
informed the Company that its address is P.O. Box 1267, Jacksonville, IL 62651,
and that it is the owner of 1,100 shares of Willamette Common Stock.

RESOLVED, that the shareholders of Willamette Industries, Inc. ("Company")
hereby request that the Company's Board of Directors take the necessary steps
to ensure that the Board's Executive Compensation Committee is composed
entirely of "independent" directors. For purposes of this resolution, a
director would not be considered independent if he or she is currently or
during the past five years has been:

. Employed by the company or an affiliate in an executive capacity;

. Employed by a firm that is one of the Company's paid advisors or
consultants;

. Employed by a significant customer or supplier;

. Employed by a tax-exempt organization that receives significant
contributions from the Company;

. Paid by the Company pursuant to any personal services contract with the
Company;

. Serving in an executive capacity or as a director of a corporation on
which the Company's chairman or chief executive officer is a board
member; or

. Related to a member of management of the Company.

SUPPORTING STATEMENT

The role of a board of director's executive compensation committee is
critically important to the long term success of the corporation. The executive
compensation committee establishes compensation policies and practices that
focus senior management on the development and implementation of corporate
strategies designed to maximize long-term corporate value.

Unfortunately, in recent years corporate executive compensation practices and
policies have drawn considerable public and shareholder attention for all the
wrong reasons. Excessive executive compensation levels highlight the tendency
of most compensation programs to provide handsome rewards for ordinary or less
than ordinary performance. Current executive compensation plans often present a
system of pay for performance, but they lack challenging performance benchmarks
by which executives' performance can be judged.

In order to ensure the integrity of the executive compensation process and
the effectiveness of a corporation's executive compensation policies and
practices, the Board's Executive Compensation Committee should be composed
entirely of directors independent of management. The definition of
"independent" director advanced in this resolution will ensure that those
members of the Executive Compensation Committee will be totally independent of
management and best able to undertake their responsibilities to develop fair
and understandable compensation policies and practices that focus management on
achieving long-term corporate success.

At present, the Company's Compensation Committee includes directors that do
not meet the "independent" director standard outlined in the resolution. Paul
N. McCracken and Samuel C. Wheeler both serve on the Compensation Committee.
Mr. McCracken is chairman of Tumac Lumber Co., Inc., a wood products broker,
which purchases building materials products from, and sells such products to,
the Company. During 1999, such transactions amounted to approximately
$6,087,000. Samuel C. Wheeler is vice president of Barclay Logging Company,
which performs contract logging services for the Company. During 1999, such
transactions amounted to approximately $643,000.

As long-term shareholders, we urge your support of this important corporate
governance reform that we believe will contribute to the Company's long-term
success.

DEFC14A 17th Page of 48 TOC 1st Previous Next ↓Bottom Just 17th
STATEMENT OF BOARD OF DIRECTORS RECOMMENDING A VOTE AGAINST THE COMPENSATION
COMMITTEE PROPOSAL

In common with the shareholders of the Company, the Board appreciates the
critical importance of the role played by the members of the Board's
Compensation Committee. The Board, however, believes that the proposal is not
the best means of ensuring that this role is performed properly. It is true
that the members of such a committee must be free from bias, but they must
also have the experience and business knowledge necessary to make informed
decisions and form realistic assessments of an executive's performance.

All of the members of the Compensation Committee also serve as members of
the Board. As directors, these individuals are required to oversee the
management of our Company and determine its future direction. Accordingly, it
is vital to the continued success of our Company that these individuals have
the necessary skills to perform this role as well as their role on the
Compensation Committee.

The Board as a whole cannot adequately govern the Company without the proper
balance of independence, experience, and expertise. Achieving this balance is
always a challenge. The Company must be free to select future members of the
Board from a variety of sources, taking into consideration potential biases or
other circumstances that might influence an individual candidate's decisions.

The Compensation Committee Proposal would inhibit the Company's ability to
choose future members of the Board based on their experience and ability to
contribute to the future success of the Company. Rather, the Company would be
compelled to focus on whether the candidates satisfy the proposal's definition
of "independence." Under the proposal's extremely restrictive independence
criteria, the majority of qualified candidates for membership on our Company's
Board could be ineligible as having some type of relationship with our
Company. It is through these very connections that such individuals have
gained sufficient knowledge about our Company's businesses and the nature of
the industry in which it operates to enable them to effectively contribute to
the decisions reached by the Board.

The Company does favor some restrictions on Compensation Committee
membership. No member of the Compensation Committee is an employee or officer
of the Company. The Company also complies with the proxy rules promulgated by
the Securities and Exchange Commission (the "SEC") requiring disclosure of
specific connections between the Company and members of the Compensation
Committee to the shareholders. With regard to the specific individuals named
in the proponent's supporting statement as not satisfying the proposal's
definition of independence, both Mr. McCracken and Mr. Wheeler have retired
from our Board and no longer serve on the Compensation Committee.

There is a common sense element that is missing from the proposal. For
example, it proscribes not only present relationships, but also relationships
arising from specified transactions or positions occurring as far back as five
years ago. It also lacks a minimum dollar threshold for transactions; in
contrast, the SEC's disclosure rules do not relate to transactions below
$60,000. Additionally, the proposal would not even allow a member of the
Compensation Committee to serve (or have served during the past five years) on
another corporation's board of directors with the Company's Chairman or Chief
Executive Officer.

If the proposal is adopted, the Company's ability to select directors (and
potential members of the Compensation Committee) based on their knowledge,
business judgment, experience, and talents would be severely circumscribed. As
a result, the Board and management might no longer be able to offer for the
shareholders' approval individuals that they believe would be the best
candidates for membership on the Board.

Shareholders should also be aware that approval of the Compensation
Committee Proposal would not, by itself, ensure that the Compensation
Committee be comprised solely of "independent" directors but would merely
constitute a recommendation by the shareholders that the Board consider
enacting such a change.

FOR THE FOREGOING REASONS, THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
THE COMPENSATION COMMITTEE PROPOSAL.

DEFC14A 18th Page of 48 TOC 1st Previous Next ↓Bottom Just 18th
OTHER MATTERS

Management knows of no matters to be brought before the meeting other than
those described above. However, should any other matters properly come before
the meeting, the persons named in the accompanying form of proxy will vote or
refrain from voting thereon in accordance with their judgment.

DEFC14A 19th Page of 48 TOC 1st Previous Next ↓Bottom Just 19th
HOLDERS OF WILLAMETTE COMMON STOCK

The following tables give certain information concerning the holdings of
Willamette Common Stock of (i) each person known to the Company to be the
beneficial owner of more than 5 percent of the outstanding Willamette Common
Stock and (ii) each of the directors and nominees, each of the named executive
officers referred to in the Summary Compensation Table below, and the Company's
current directors and executive officers as a group. The information as to
beneficial stock ownership is based on data furnished by the persons concerning
whom such information is given.

Five Percent Beneficial Owners

[Enlarge/Download Table]

Shares of Willamette Percent of
Common Stock Nature of Beneficial Outstanding Willamette
Name and Address Beneficially Owned Ownership(a) Common Stock
---------------- -------------------- ----------------------------- ----------------------

Maurie D. Clark*........ 3,386,110 Sole Voting and Disposition 3.09%
Suite 600 4,705,307 Shared Voting and Disposition 4.30%
1211 S.W. Fifth Avenue 8,091,417 Total 7.39%
Portland, Oregon 97204

Wells Fargo &
Company**.............. 1,567,066 Sole Voting 1.43%
420 Montgomery Street 6,411,095 Shared Voting 5.86%
San Francisco, 77,590 Sole Disposition 0.07%
California 94104 13,421,280 Shared Disposition 12.27%
13,554,523 Total 12.39%

--------
* As of February 28, 2001
** As of December 31, 2000

Directors and Executive Officers

[Download Table]

Shares of Willamette
Common Stock Percent of
Beneficially Owned At Outstanding Willamette
Name February 28, 2001(a) Common Stock
---- --------------------- ----------------------

Winslow H. Buxton.......... 4,865(b)(d) 0.00%
Marvin D. Cooper........... 114,868(b)(c) 0.10%
Gerard K. Drummond......... 10,800(d) 0.01%
Kenneth W. Hergenhan....... 7,972(d) 0.01%
William P. Kinnune......... 171,031(c)(e) 0.16%
Duane C. McDougall......... 146,515(b)(c) 0.13%
J. E. McMillan............. 78,086(c) 0.07%
Michael R. Onustock........ 151,176(c)(e) 0.14%
G. Joseph Prendergast...... 8,100(d) 0.01%
Stuart J. Shelk, Jr. ...... 1,685,715(b)(d) 1.54%
Robert M. Smelick.......... 10,800(d) 0.01%
William Swindells.......... 3,972,476(b)(d) 3.62%
Michael G. Thorne.......... 1,867(d) 0.00%
Benjamin R. Whiteley....... 14,300(d) 0.01%
All directors and executive
officers as a group (15
persons).................. 6,400,612(b)(c)(d)(e) 5.80%

--------
(a) Shares are included in the table as "beneficially owned" if the person
named has or shares the right to vote or direct the voting of or the right
to dispose or direct the disposition of such shares. Inclusion of shares in
the table does not necessarily imply that the persons named receive the
economic benefits of the shares so listed.

DEFC14A 20th Page of 48 TOC 1st Previous Next ↓Bottom Just 20th
(b) Includes shares as to which the individual shares voting and dispositive
power as follows: Mr. Buxton, 1,000 shares; Mr. Cooper, 1,400 shares; Mr.
McDougall, 32 shares; Mr. Shelk, 18,120 shares; and Mr. Swindells,
1,905,788 shares.

(c) Includes shares subject to employee stock options exercisable within 60
days after February 28, 2001, under the Company's 1995 Plan and 1986 Plan
as follows: Mr. Cooper, 82,610 shares; Mr. Kinnune, 112,117 shares; Mr.
McDougall, 123,994 shares; Mr. McMillan, 44,987 shares; Mr. Onustock,
98,717 shares; and all executive officers as a group, 482,959 shares.

(d) Includes shares subject to options exercisable within 60 days after
February 28, 2001, under the non-employee director provisions of the 1995
Plan as follows: Mr. Buxton, 2,533 shares; Messrs. Drummond, Shelk,
Smelick, and Whiteley, 6,800 shares each; Messrs. Hergenhan and
Prendergast, 5,600 shares each; Mr. Swindells, 3,600 shares; Mr. Thorne,
1,067 shares; and all non-employee directors as a group, 45,600 shares.

(e) Includes restricted shares of Willamette Common Stock awarded pursuant to
the 1995 Plan, as to which the individual has sole voting and shared
dispositive power, as follows: Mr. Kinnune, 705 shares; Mr. Onustock, 585
shares; and all executive officers as a group, 1,290 shares.

REPORT OF THE AUDIT COMMITTEE

The Audit Committee of the Board assists the Board in the discharge of its
fiduciary obligations to the Company's shareholders relating to the quality and
integrity of the Company's financial statements, its accounting and reporting
practices, and the independence and performance of the Company's outside
auditor and performance of its internal accounting staff. The Audit Committee
is comprised of four directors, each of whom has been determined by the Board
to meet the independence and financial literacy requirements set forth in the
corporate governance listing standards of the New York Stock Exchange, on which
the Willamette Common Stock is listed. A written charter revised by the Board
on February 8, 2001 governs the Audit Committee's activities. A copy of the
Audit Committee charter is attached to this Proxy Statement as Annex B.

In discharging its responsibilities, the Audit Committee and its individual
members have met with management, the internal auditor, and the Company's
outside auditor, KPMG LLP ("KPMG"), to review the Company's accounting
functions and the audit process and to discuss the Company's audited financial
statements for the year ended December 31, 2000. The Audit Committee discussed
and reviewed with its outside auditing firm all matters that the firm was
required to communicate and discuss with the Audit Committee under applicable
auditing standards, including those described in Statement on Auditing
Standards No. 61, as amended, regarding communications with audit committees.
The Audit Committee has also received from its outside auditor a formal written
statement relating to independence consistent with Independence Standards Board
Standard No. 1, "Independence Discussions with Audit Committees," and discussed
with the outside auditor any relationships that may adversely affect its
objectivity and independence.

Based on its review and discussions with management and the Company's outside
auditor, the Audit Committee recommended to the Board that the Company's
audited financial statements for the year ended December 31, 2000, be included
in the Company's Annual Report on Form 10-K filed with the SEC.

Submitted by the Audit Committee of the Board of Directors:

Stuart J. Shelk, Jr., Chair
Winslow H. Buxton
G. Joseph Prendergast
Robert M. Smelick

DEFC14A 21st Page of 48 TOC 1st Previous Next ↓Bottom Just 21st
EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth certain information concerning the
compensation of the Company's chief executive officer and each of its four
other most highly compensated executive officers (the "named executive
officers") for each of the years in the three-year period ended December 31,
2000.

[Download Table]

Long-Term
Compensation Awards
----------------------
Number of
Annual Restricted Securities
Name and Principal Compensation Stock Underlying All Other
Position(1) Year Salary Awards(2) Options (#) Compensation(3)
------------------ ---- ------------ ---------- ----------- ---------------

Duane C. McDougall..... 2000 $1,033,333 $-- 80,030 $25,807
President and Chief 1999 866,667 -- 50,800 26,936
Executive Officer 1998 525,000 -- 23,690 18,142

William P. Kinnune..... 2000 528,000 -- 32,010 30,390
Executive Vice 1999 498,333 -- 20,620 32,401
President 1998 481,333 -- 22,840 29,180

Michael R. Onustock.... 2000 528,000 -- 32,010 23,493
Executive Vice 1999 497,667 -- 20,530 24,607
President 1998 465,000 -- 20,660 22,115

Marvin D. Cooper(4).... 2000 453,333 -- 25,410 21,729
Executive Vice 1999 383,333 -- 14,820 20,728
President 1998 333,333 -- 14,580 20,373

J. E. McMillan(4)...... 2000 416,667 -- 22,230 20,891
Executive Vice 1999 333,333 -- 12,700 21,751
President 1998 257,000 -- 8,310 17,991

--------
(1) Includes principal capacities in which each officer served during 2000.

(2) The aggregate number of restricted shares of Willamette Common Stock held
by each named executive officer and the value of such shares on December
29, 2000 (based on the closing sale price of the Willamette Common Stock,
$46.9375, reported on the New York Stock Exchange), are as follows:

[Download Table]

Name No. of Shares Value
---- ------------- -------

Duane C. McDougall.... -- $ --
William P. Kinnune.... 705 33,091
Michael R. Onustock... 585 27,458
Marvin D. Cooper...... -- --
J. E. McMillan........ -- --

Dividends are paid on the restricted shares at the same rate as on other
shares of Willamette Common Stock.

(3) The amounts shown for 2000 represent (i) Company contributions to its
Stock Purchase Plan ("401(k) Plan"), a qualified plan under Section 401(a)
of the Internal Revenue Code of 1986, as amended (the "Internal Revenue
Code"), for the benefit of each of the named executive officers and to its
1993 Deferred Compensation Plan for the benefit of such officers to the
extent contributions would have been made to the 401(k) Plan had
compensation subject to such plan included deferred compensation and had
the Internal Revenue Code limits not been applicable and (ii) the imputed
value to the named executives of a portion of the premiums paid for life
insurance policies under which they are to receive an interest in the cash
surrender value. The amounts attributable to (i) 401(k) Plan and 1993
Deferred Compensation Plan contributions and (ii) the imputed value of
premiums, respectively, for each of the named executives for 2000 are as
follows: Mr. McDougall, $15,000, $10,807; Mr. Kinnune, $15,000, $15,390;
Mr. Onustock, $15,000, $8,493; Mr. Cooper, $15,000, $6,729; and Mr.
McMillan, $15,000, $5,891.

(4) Both Mr. Cooper and Mr. McMillan became executive officers of the Company
on April 21, 1998; the table reflects their compensation for all of 1998.

DEFC14A 22nd Page of 48 TOC 1st Previous Next ↓Bottom Just 22nd
Option Grants in Last Fiscal Year

The following table provides information as to options to purchase Willamette
Common Stock granted to the named executive officers during 2000 pursuant to
the Company's 1995 Plan. No stock appreciation rights ("SARs") were granted to
any named executive officers during 2000.

[Enlarge/Download Table]

Individual Grants(1)
---------------------------------------------
Potential Realizable
Value
at Assumed Annual
Rates
Number of Percent of of Stock Price
Securities Total Options Appreciation
Underlying Granted to Exercise for Option Term(4)
Options Employees in Price Per Expiration ---------------------
Name Granted(2) Fiscal Year Share(3) Date 5% 10%
---- ---------- ------------- --------- ---------- ---------- ----------

Duane C. McDougall...... 80,030 10.29% $37.00 April 2010 $1,862,226 $4,719,247
William P. Kinnune...... 32,010 4.12% 37.00 April 2010 744,844 1,887,581
Michael R. Onustock..... 32,010 4.12% 37.00 April 2010 744,844 1,887,581
Marvin D. Cooper........ 25,410 3.27% 37.00 April 2010 591,268 1,498,389
J. E. McMillan.......... 22,230 2.86% 37.00 April 2010 517,272 1,310,869

--------
(1) On August 2, 2000, the Long Term Incentive Committee (the "Awards
Committee") met for the purpose of considering annual equity incentive
awards for the 2001 fiscal year pursuant to the 1995 Plan. At this
meeting, the Awards Committee considered the recommendations, dated August
2, 2000, of Towers Perrin, the Company's human resources consultants,
regarding the amounts and structure of the awards. On March 7, 2001,
pursuant to the recommendations of Towers Perrin and consistent with
industry practices and in the ordinary course of business, the Awards
Committee determined to grant to the executive officers of Willamette an
aggregate of 368,990 options to acquire shares of Willamette Common Stock
at an exercise price of $47.16. These options are not reflected in the
table above because they were granted subsequent to the Company's 2000
fiscal year end.
(2) Options were granted for the numbers of shares indicated at an exercise
price equal to the fair market value of the Willamette Common Stock on the
date of grant. The options, which have terms of ten years and two days,
become exercisable as follows: 33 1/3 percent after one year, an
additional 33 1/3 percent after two years, and the remainder after three
years; provided that the options will become exercisable in full upon the
officer's death, disability or retirement.
(3) Subject to certain conditions, the exercise price and tax withholding
obligations related to exercise may be paid by delivery of previously
acquired shares of Willamette Common Stock.
(4) The amounts shown are hypothetical gains based on the indicated assumed
rates of appreciation of the Willamette Common Stock compounded annually
over the full term of the options. There can be no assurance that the
Willamette Common Stock will appreciate at any particular rate or at all.

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values

Information regarding exercises of stock options by the named executive
officers during 2000 and unexercised options held by them as of December 31,
2000, is summarized in the table set forth below. The named executives did not
exercise any SARs during 2000 and did not hold any in-the-money SARs at year-
end.

[Enlarge/Download Table]

Number of Shares
Underlying Unexercised Value of Unexercised In-
Number of Options at the-Money Options at
Shares December 31, 2000 December 31, 2000(2)
Acquired on Value ------------------------- -------------------------
Name Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ----------- ----------- ------------- ----------- -------------

Duane C. McDougall...... -- $-- 72,487 121,793 $ 863,197 $860,439
William P. Kinnune...... -- $-- 86,961 53,369 1,275,584 380,903
Michael R. Onustock..... -- $-- 74,317 52,583 1,065,429 374,909
Marvin D. Cooper........ -- $-- 64,340 40,150 1,126,137 292,603
J. E. McMillan.......... -- $-- 30,574 33,466 481,907 243,761

--------
(1) Represents the difference between the fair market value of the shares of
Willamette Common Stock received on exercise of stock options at the date
of exercise and the option exercise price.

DEFC14A 23rd Page of 48 TOC 1st Previous Next ↓Bottom Just 23rd
(2) Calculated based on the difference between the closing sale price of the
Willamette Common Stock, $46.9375, reported on the New York Stock Exchange
on December 29, 2000, and the aggregate exercise price of the unexercised
options. All options reflected in the table were granted at an exercise
price equal to the fair market value of a share of Willamette Common Stock
on the date of grant.

Pension Plan

The retirement plan ("Retirement Plan") that the Company maintains for its
salaried employees (including officers) provides for payment of retirement
benefits generally based upon an employee's years of service with the Company
and compensation level. Funding of the Retirement Plan is actuarially
determined. The Company also maintains a supplemental retirement plan
("Supplemental Plan") under which salaried employees (including officers)
receive retirement benefits substantially equal to those the Retirement Plan
would have provided but for certain limitations required by the Internal
Revenue Code.

The following table shows the aggregate estimated annual benefits payable
under the Retirement Plan and the Supplemental Plan upon retirement (assuming
normal retirement at age 65) for unmarried employees at specified compensation
levels (based upon the highest average of five consecutive years) with various
years of service (assuming continuous full-time employment with the Company
from date of hire to date of retirement):

[Download Table]

Years of Service
-----------------------------------------------
Remuneration 15 20 25 30 35 40
------------ ------- ------- ------- ------- ------- -------

$ 300,000...................... 71,459 95,279 119,099 142,918 166,738 189,238
400,000...................... 96,209 128,279 160,349 192,418 224,488 254,488
500,000...................... 120,959 161,279 201,599 241,918 282,238 319,738
600,000...................... 145,709 194,279 242,849 291,418 339,988 384,988
700,000...................... 170,459 227,279 284,099 340,918 397,738 450,238
800,000...................... 195,209 260,279 325,349 390,418 455,488 515,488
900,000...................... 219,959 293,279 366,599 439,918 513,238 580,738
1,000,000...................... 244,709 326,279 407,849 489,418 570,988 645,988
1,100,000...................... 269,459 359,279 449,099 538,918 628,738 711,238
1,200,000...................... 294,209 392,279 490,349 588,418 686,488 776,488
1,300,000...................... 318,959 425,279 531,599 637,918 744,238 841,738

Compensation used in determining retirement benefits consists of the
employee's regular fixed salary, including amounts deferred at the election of
the employee and contributed to the Company's 401(k) Plan. With respect to the
named executive officers, such compensation is the amount shown for the
officers under "Salary" in the Summary Compensation Table above.

The credited years of service for each of the named executive officers is as
follows: Mr. McDougall, 21; Mr. Kinnune, 39; Mr. Onustock, 28; Mr. Cooper, 21;
and Mr. McMillan, 29.

The benefits payable upon retirement are single-life annuity amounts and are
not subject to any deduction for Social Security or other offset amounts. The
level of benefits is based in part upon the average of the Social Security wage
bases for the 35 years ending with Social Security retirement age. Amounts
shown in the table are based upon the Social Security covered compensation for
an employee attaining age 65 in 2000. Retirement benefits may be reduced from
the amounts shown in the case of early retirement (or other early termination
of employment), in the case of a married employee whose benefits are paid in
the form of a joint and survivor annuity and in the case of an employee whose
employment with the Company has not been continuous. Special provisions in the
Retirement Plan may apply in the case of death or disability or upon a change
in control of the Company; there are also provisions relating to the
computation of years of service for vesting or benefit purposes in the case of
service with certain employers acquired by the Company at various times in the
past.

DEFC14A 24th Page of 48 TOC 1st Previous Next ↓Bottom Just 24th
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION

Compensation Committee

During 2000, Messrs. Drummond, Hergenhan, Thorne, and Whiteley served on the
Company's Compensation Committee, as well as now retired directors Paul N.
McCracken (retired August 2000) and Samuel C. Wheeler (retired February 2000).

Paul N. McCracken is chairman of Tumac Lumber Co., Inc., a wood products
broker, which purchases building materials products from, and sells such
products to, the Company in the ordinary course of business at prevailing
market prices. During 2000, such transactions amounted to approximately
$3,479,000.

Samuel C. Wheeler is vice president of Barclay Logging Company, which
performs contract logging services for the Company in the ordinary course of
business at prevailing market prices. During 2000, such transactions amounted
to approximately $627,000. Mr. Wheeler served as a vice president of the
Company until his resignation in 1973.

Other Transactions and Relationships

Ochoco Lumber Co. sells wood products to, and purchases such products from,
the Company in the ordinary course of business at prevailing market prices.
During 2000, such transactions amounted to approximately $1,106,000. Mr. Shelk
is managing director of the managing general partner of Ochoco Lumber Co.

In the ordinary course of business at prevailing market prices, the Company
has sold paper products to, and obtained credit and other banking and
financial services from, Wachovia Corporation. For the year 2000, such paper
sales amounted to approximately $76,000, and the financial services amounted
to approximately $230,000. Mr. Prendergast retired from his position as
president and chief operating officer of Wachovia Corporation last year.

REPORT OF THE COMPENSATION COMMITTEE

It is the responsibility of the Compensation Committee to oversee the
compensation of officers of the Company (25 persons). The Compensation
Committee's salary recommendations, when approved by the Board, set the levels
of compensation for all officers. In addition, the Compensation Committee
hears reports from the Company's chief executive officer, and considers the
performance of individual officers, planned succession and related matters. In
1996, responsibility for the administration of the 1995 Plan, including
selecting the officers and other key employees to receive awards and for
determining types, amounts and terms of such awards, was assigned to the
Awards Committee, presently consisting of Messrs. Drummond and Whiteley.

The compensation policy of the Company recognizes that the Company's
business is the conversion of timber and wood fiber into products which are
largely of a commodity nature and that the Company is integrated "from the
stump to the customer" with only the chief executive officer responsible for
all operations. For these two reasons--little control of sales prices in
commodity markets and little individual control over material costs and
transfer prices of specific business segments--the Company does not ordinarily
compensate employees with cash bonuses or other forms of short-term incentive
compensation. The Company's policy is to pay salaried employees, including all
officers, base salaries only with incentive compensation coming in the form of
longer-term programs such as stock options, stock appreciation rights or
restricted stock.

From time to time, including in 2000, the Compensation Committee receives
reports from compensation consultants regarding competitive industry salaries
and long-term incentive compensation programs. The Company also participates
in industry-wide salary surveys and conducts its own annual review of
compensation information in proxy statements of competing companies. From
these sources, the Compensation Committee evaluates compensation levels of a
peer group of thirteen other forest products companies which the Compensation
Committee, based on its general knowledge of the forest products industry,
believes are comparable to the Company. The Company uses these evaluations
when reviewing and approving

DEFC14A 25th Page of 48 TOC 1st Previous Next ↓Bottom Just 25th
management's recommendations regarding compensation. The thirteen companies
constituting the peer group include the other eight companies in the S&P Paper
& Forest Products Index referred to under "Performance Graph" below and five
other forest products companies.

In arriving at salary recommendations to the Board for individual officers
effective May 1, 2000, the Compensation Committee considered cash compensation
paid by the peer group to officers in comparable positions and taking into
account available information concerning comparable levels of responsibility,
recommendations by the Company's chief executive officer, relative
responsibilities compared to other officers and employees in the Company, and
various other factors including experience and performance. Each recommended
salary was intended to be within the range of and competitive with the cash
compensation paid to positions within the comparable industry. In formulating
its salary recommendations, the Compensation Committee did not consider stock
options and other non-cash compensation programs of the peer group companies or
the stock options granted to Company officers.

Effective May 1, 2000, based on the recommendation of the Compensation
Committee, the Board increased Mr. McDougall's annual salary level by 22.2
percent to $1,100,000. In recommending the increase in Mr. McDougall's salary,
the Compensation Committee considered salary levels of chief executive officers
in the Company's peer group, the responsibilities of the position, and Mr.
McDougall's performance and expectations.

As an incentive to stock ownership by employees and as a form of long-term
incentive compensation, annual grants of stock options are awarded to selected
key employees. During 2000, stock options were granted by the Awards Committee
based on a formula relating to base salary and the Company's return on
shareholders' equity ("ROE"). The formula does not take into account the number
of stock options previously granted to an officer. Under the formula, a target
number of options for each officer is determined by dividing a percentage of
the officer's salary (ranging, based on level of responsibility, from 140
percent for vice presidents to 350 percent for the chief executive officer) by
the market price of the Willamette Common Stock at the date of grant. The
target number is subject to downward adjustment based on the Company's ROE for
its most recent fiscal year. No adjustment is made if the Company's ROE exceeds
the weighted average ROE of eighteen forest products companies by 5 percentage
points as determined from published financial reports. If the specified margin
is not achieved, the options are reduced proportionately by up to 30 percent of
the target number. The Company's 1999 ROE exceeded the published industry
composite by four percentage points. Accordingly, option grants in 2000 were
reduced by 6 percent of the target number.

Restricted stock has been awarded in past years to executive officers based
upon the Compensation Committee's subjective evaluation of the Company's
performance. No restricted stock awards were granted during 2000.

Section 162(m) of the Internal Revenue Code generally disallows a federal
income tax deduction to the Company for compensation over $1 million paid to
the Company's chief executive officer or any of its four other most highly
compensated executive officers unless such compensation is payable only on
account of the attainment of one or more performance goals as determined by a
Board committee comprised solely of two or more outside directors and otherwise
qualifies as performance based pursuant to Section 162(m). The Company does not
have a policy favoring awards to executive officers that qualify as performance
based pursuant to Section 162(m). However, responsibility for the
administration of the 1995 Plan was assigned to the Awards Committee, which is
comprised solely of outside directors, so that stock options granted under the
1995 Plan may qualify as performance based within the meaning of Section
162(m).

Compensation Committee

Gerard K. Drummond, Chairman
Kenneth W. Hergenhan
Michael G. Thorne
Benjamin R. Whiteley

DEFC14A 26th Page of 48 TOC 1st Previous Next ↓Bottom Just 26th
PERFORMANCE GRAPHS

The following two graphs compare the annual change in the cumulative total
shareholder return on the Willamette Common Stock with the cumulative total
return of the S&P 500 Stock Index, the cumulative total return of the S&P Paper
& Forest Products Index and the cumulative total return of the Industry
Composite. We have included a comparison against the Industry Composite this
year because we believe that the companies that comprise it are most
representative of Willamette's business mix. The first graph assumes investment
of $100 on December 31, 1995, and reinvestment of dividends. The second graph
assumes investment of $100 on December 31, 1990, and reinvestment of dividends.

[LINE GRAPH]

[Download Table]

Cumulative Total Return
-----------------------------------------
12/95 12/96 12/97 12/98 12/99 12/00
------ ------ ------ ------ ------ ------

WILLAMETTE INDUSTRIES, INC........... 100.00 126.27 118.90 126.16 177.90 184.08
S&P 500.............................. 100.00 122.96 163.98 210.84 255.22 231.98
S&P PAPER & FOREST PRODUCTS.......... 100.00 110.62 118.61 120.96 169.13 138.50
INDUSTRY COMPOSITE................... 100.00 115.62 116.81 124.61 169.80 121.25

DEFC14A 27th Page of 48 TOC 1st Previous Next ↓Bottom Just 27th
[LINE GRAPH]

[Enlarge/Download Table]

Cumulative Total Return
----------------------------------------------------------------------------
12/90 12/91 12/92 12/93 12/94 12/95 12/96 12/97 12/98 12/99 12/00
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------

WILLAMETTE INDUSTRIES,
INC.................... 100.00 142.65 202.45 248.01 242.84 293.38 370.46 348.84 370.14 521.91 540.07
S&P 500................. 100.00 130.47 140.41 154.56 156.60 215.46 264.93 353.31 454.28 549.88 499.81
S&P PAPER & FOREST
PRODUCTS............... 100.00 126.84 145.03 159.84 166.55 183.38 202.85 217.51 221.82 310.16 253.99
INDUSTRY COMPOSITE...... 100.00 139.74 181.87 218.94 193.13 200.68 211.17 220.25 230.52 201.56 221.43

DEFC14A 28th Page of 48 TOC 1st Previous Next ↓Bottom Just 28th
COMPENSATION OF DIRECTORS

Fees

Each director of the Company who is not also an employee of the Company or a
subsidiary (a "non-employee director") receives a retainer fee of $30,000 per
year. Committee chairs receive an additional retainer of $2,500 per year. In
addition, each non-employee director receives a fee of $1,500 for each Board
meeting attended and $1,000 for each committee meeting attended.

In November 1999, the Company adopted the 1999 Deferred Compensation Plan for
non-employee directors pursuant to which they may elect to defer directors'
fees. The plan, which is unfunded, replaced a prior deferred compensation plan;
amounts deferred under the prior plan have been transferred to accounts under
the new plan. Deferred amounts accrue increases or decreases as if they were
invested in one or more of the investment funds available under the Company's
401(k) Plan as specified by a participating director.

In conjunction with the adoption of the 1999 Deferred Compensation Plan, the
Company terminated its retirement plan for non-employee directors. For active
directors, effective January 1, 2000, the present value of the benefits accrued
under the prior retirement plan was transferred to accounts under the Deferred
Compensation Plan and are treated as invested as described above.

Stock Options

Under the 1995 Plan, each person who was a non-employee director at the date
of the 1995 annual meeting of shareholders was granted an option to purchase
2,000 shares of Willamette Common Stock (an "Initial Option") and each person
who subsequently becomes a non-employee director, other than a former officer
of the Company or a subsidiary, is also granted an Initial Option. In addition,
on the date of each subsequent annual meeting of shareholders, an option for
1,200 shares of Willamette Common Stock (2,000 shares commencing with the 2001
annual meeting) (an "Annual Option") is granted to each person who is then a
non-employee director and who is to continue to serve as a director, including
former officers of the Company or its subsidiaries.

Options granted to non-employee directors under the 1995 Plan are granted at
an exercise price equal to the fair market value of the Willamette Common Stock
on the date of grant, have terms of ten years and two days, and are exercisable
as specified (i) in note (1) to the table under "Option Grants in Last Fiscal
Year" above and (ii) under the heading "Termination of Employment and Change in
Control Arrangements and Related Matters" below. Accordingly, the Annual
Options granted to the non-employee directors on the date of the 2000 annual
meeting were granted at an exercise price of $37.00 per share, the fair market
value of the Willamette Common Stock on that date. The Initial Option granted
to Mr. Thorne in February 2000 was granted at an exercise price of $38.125, the
fair market value of the Willamette Common Stock on the date of grant.

Consulting Agreement

The Company entered into a consulting agreement with Mr. Swindells effective
upon his ceasing to be chief executive officer of the Company under which Mr.
Swindells agreed to provide consulting services to the Company. Under the
consulting agreement, Mr. Swindells received consulting fees equal to $120,000
during 2000 as well as certain secretarial services and office space, and was
reimbursed for certain expenses including dues for a business club. The
consulting agreement provides that, while Mr. Swindells receives fees under the
agreement, he will not receive the annual retainer fees payable to other non-
employee directors of the Company. The consulting agreement was renewed in
December 2000 and is renewable for two additional one-year periods unless
terminated by either party upon 30 days' notice prior to renewal.

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TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS AND RELATED MATTERS

Change in Control Agreements

The Company has agreements (the "CIC Agreements") with certain of its key
employees, including the named executive officers, certain officers who may
assist in soliciting proxies from the Company's shareholders in connection with
the Annual Meeting, all other officers, and the Senior Employees (defined
below), that provide for severance compensation for the employees in the event
their employment with the Company is terminated subsequent to a Change in
Control (defined below) of the Company under the circumstances set forth in the
CIC Agreements. Pursuant to the CIC Agreements, each employee has agreed to
remain in the Company's employ following a tender offer or exchange offer for
more than 20 percent of the Company's outstanding voting securities until such
offer has been abandoned or terminated or a Change in Control has occurred and
unless the Company reduces the employee's compensation.

If, within 36 months following a Change in Control, the employee's employment
with the Company is terminated by the Company without Cause (defined below) and
other than by reason of disability or death or by the employee with Good Reason
(defined below), then the Company shall pay to the employee, upon demand, his
full base salary through the date of termination at the rate in effect on the
date of the Change in Control, plus severance compensation in an amount equal
to the Applicable Percentage (defined below) multiplied by the sum of (a) his
annual base salary at the above-specified rate, plus (b) the average of the two
most recent annual incentive compensation grants (if any) paid or accrued for
his benefit (prior to any deferrals) prior to the date on which the Change in
Control occurs, including compensation attributable to the value of stock
options or SARs (based on the Black-Scholes option pricing model) and
restricted stock granted during those two grant periods, plus (c) the average
annual matching contributions made by the Company on his behalf to the
Company's Stock Purchase Plan and 1993 Deferred Compensation Plan in respect of
the two fiscal years of the Company last ended prior to the fiscal year in
which the Change in Control occurs. The employee will also be entitled to a
cash payment equal to the sum of (A) the excess of the Change in Control Price
(defined below) over the option price for each share covered by outstanding
unexercised options (whether or not then exercisable) to purchase Willamette
Common Stock held by the employee on the date the Change in Control occurs
(unless exercised before the payment is made) plus (B) the product of the
Change in Control Price and the number of shares covered by outstanding
restricted stock awards. Any severance payments otherwise payable under the CIC
Agreements will be reduced by amounts payable under other Company plans or
employment agreements providing for severance benefits. Special payment
provisions apply in the event of the employee's death or disability.

The CIC Agreements further provide for the continuation of all employee
benefit plans and arrangements, with certain exceptions, until the earlier of
the expiration of the Benefit Term (defined below) or attaining the age of 65
following termination of employment after a Change in Control except by death,
by the Company for Cause or disability or by the employee other than for Good
Reason. All employees party to a CIC Agreement are also entitled to be
reimbursed for reasonable amounts incurred for outplacement services and for
any reasonable legal fees and expenses he may incur in enforcing his rights
under the CIC Agreement. The CIC Agreements also provide for reimbursement for
any excise tax imposed on such benefits plus any related federal, state, and
local income and excise taxes imposed on such reimbursement payments.

The CIC Agreements will continue in effect until December 31, 2002, and will
be extended for an additional year on each January 1 thereafter unless either
the Company or the employee gives 90 days' prior notice that the CIC Agreement
shall not be extended. In the event of a Change in Control while the CIC
Agreements are in effect, the CIC Agreements are automatically extended for
three calendar years beyond the calendar year in which the Change in Control
occurs. The CIC Agreements terminate upon termination of employment prior to a
Change in Control and will not extend beyond an employee's normal retirement
date under the Retirement Plan.

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The total amount that may be payable to employees of the Company covered by
CIC Agreements if, within 36 months following a Change in Control, all of such
employees' employment is terminated without Cause or with Good Reason, is $60
million plus additional payments that may be necessary to reimburse the
employees for any excise tax liabilities on such benefits and any related
income and excise taxes imposed on such reimbursement payments.

Complete definitions of Applicable Percentage, Cause, Change in Control,
Change in Control Price and Good Reason are included in the CIC Agreements.
Summaries of those definitions, which are necessarily incomplete, as well as
the definitions of Benefit Term and Senior Employees, are set forth below.

"Applicable Percentage" means (i) in the case of 25 key employees, 300
percent, (ii) in the case of the Senior Employees, 200 percent and (iii) in the
case of one additional employee, 100 percent, in each case reduced (if the
employee is age 62 or older as of the date of termination of employment) by
8.33 percent for each full month that his age exceeds 62 at that date.

"Benefit Term" means (i) in the case of 25 employees, 36 months, (ii) in the
case of the Senior Employees, 24 months and (iii) in the case of one additional
employee, 12 months.

"Cause" with respect to the termination of an employee's employment by the
Company means termination because, and only because, the employee committed an
act of fraud, embezzlement or theft constituting a felony, or an act
intentionally against the interest of the Company which causes it material
harm, or because of his repeated failure, after written notice, to perform his
responsibilities under the CIC Agreement.

"Change in Control" means, (a) subject to certain exceptions, the acquisition
by a person or group of beneficial ownership of 20 percent or more of the
combined voting power of the Company's outstanding voting securities, (b) a
change in the composition of the Board such that the directors at the date of
the CIC Agreement cease to constitute at least a majority of the Board, unless
the election or nomination of each new director was approved by two-thirds of
the directors then in office other than directors whose initial assumption of
office occurs as the result of an actual or threatened election contest or
solicitation of proxies other than on behalf of the Board of Directors, (c)
with certain exceptions, any reorganization, consolidation or merger of the
Company or any sale or other transfer of substantially all its assets or (d)
approval by the shareholders of the Company of a plan or proposal for its
liquidation or dissolution.

"Change in Control Price" means the greater of (a) the highest per share sale
price for the Willamette Common Stock as traded on the New York Stock Exchange
on the date of the Change in Control or (b) the total market value of the
highest amount of consideration to be received for a share of Willamette Common
Stock by any shareholder of the Company in connection with the Change in
Control.

"Good Reason" with respect to the termination by an employee of his
employment with the Company means (a) subject to certain exceptions, any change
in the employee's status or position with the Company which in his reasonable
judgment represents a demotion, (b) a reduction in the employee's base salary,
(c) the failure by the Company to continue in effect for the employee certain
benefit plans and policies or a material reduction in the employee's future
benefits thereunder, (d) the failure of the Company to credit the number of
paid vacation days to which the employee is entitled under the Company's normal
vacation policy, (e) the transfer of the employee to a different location, (f)
the failure of any successor to the Company to expressly assume the Company's
obligations under the CIC Agreement, (g) a purported termination by the Company
of the employee's employment which is not effected in accordance with the CIC
Agreement, (h) a refusal by the Company to continue to allow the employee to
engage in certain activities not related to the Company's business, or (i)
(with respect to 11 employees only, including the named executive officers, and
Greg W. Hawley, Executive Vice President and Chief Financial Officer and
Catherine A. Dunn, Vice President of Communications, two officers who may
assist in soliciting proxies from the Company's shareholders) the employee's
voluntary termination of employment during the 30-day period commencing with
the first anniversary of the Change in Control.

"Senior Employees" means 37 non-officer employees of the Company that receive
an annual salary equal to or greater than $144,000 and certain other employees
deemed advisable by the Board.

DEFC14A 31st Page of 48 TOC 1st Previous Next ↓Bottom Just 31st
1995 Long-Term Incentive Compensation Plan

Upon a change in control, whether or not it is approved by the Board, all
options outstanding under the 1995 Plan will become exercisable in full.
However, the Awards Committee may, in its discretion (except with respect to
certain changes in control that have not been approved by the Board), condition
such acceleration of vesting on the option holder's agreement to receive a cash
payment (based on the amount being received by the Company's shareholders in
connection with the change in control) in exchange for cancellation of the
option holder's option. With respect to a change in control approved by the
Board, such acceleration of exercisability will only occur if it would not
jeopardize the availability of "pooling of interests" accounting treatment. If
an optionee's employment terminates for any reason within two years following a
change in control (other than on account of conduct which constitutes a
felony), the options will expire upon the earlier of three years after
termination of employment or the expiration of their original terms. In
addition, upon a change in control that has not been approved by the Board,
each holder of an option granted prior to December 21, 2000, may make a "cash
exercise" of all or any portion of his or her options. Upon a cash exercise,
the option holder will be entitled to receive an amount in cash equal to the
excess of the fair market value of a share of Willamette Common Stock on the
date of exercise over the exercise price per share multiplied by the number of
options surrendered. A cash exercise may be made only during a 45-day period
beginning on the first day following the date on which the Company has
knowledge of an actual change in control. For purposes of the 1995 Plan, a
change in control is defined to include (i) a change in composition of the
Board following December 21, 2000, such that the directors in office on that
date, together with any additional directors elected thereafter with the
approval of two-thirds of the then directors, cease to constitute at least a
majority of the Board, (ii) a merger, reorganization or sale of substantially
all the assets of the Company, with certain exceptions, (iii) the acquisition
by a person or group (other than certain affiliates of the Company) of 20
percent or more of the combined voting power of the Company's outstanding
securities or (iv) the approval by the shareholders of a plan of liquidation or
dissolution of the Company.

Employee Retention Plans

In light of the Weyerhaeuser Offer, the Board and the Compensation Committee
have continued to consider the recommendations of the Company's human resources
consultants, Towers Perrin, and continued to review industry practices
concerning change in control severance benefits. In view of the continuing need
to minimize employee distraction, to retain employee loyalty and dedication to
the Company, to assure their attention to the Company's performance pending
resolution of the Weyerhaeuser Offer and to provide an incentive to prospective
employees to accept offers, the Board and the Compensation Committee approved
two employee retention plans, a Management Retention Benefits Plan and a Broad-
Based Retention Benefits Plan for Salaried Employees, that provide enhanced
change in control severance benefits to Willamette's salaried employees other
than officers and top management personnel. Under these plans a covered
employee, including certain employees who may assist in soliciting proxies from
the Company's shareholders in connection with the Annual Meeting, would be
provided severance protection, continuation of medical benefits, and
outplacement assistance if the employee's employment ends (due to involuntary
termination without "cause" or resignation for "good reason," as those terms
are defined in the plans) after a change in control of Willamette. Severance
benefits under the two new plans range from three weeks pay per year of service
(with a minimum of nine weeks) to six weeks pay per year of service (with a
maximum of 104 weeks).

Stock Purchase Plan

The 401(k) Plan provides that upon a change in control of the Company, all
participants' accounts under the 401(k) Plan become immediately and fully
vested.

Indemnification

Pursuant to the provisions of the Company's Restated Articles of
Incorporation and the provisions of indemnification agreements between the
Company and each of its directors and officers, the Company is obligated
(subject to certain conditions) to hold harmless and indemnify its directors
and officers, to the fullest

DEFC14A 32nd Page of 48 TOC 1st Previous Next ↓Bottom Just 32nd
extent authorized under the Oregon Business Corporation Act, against all
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlements actually and reasonably incurred by such indemnified person. In
addition, as permitted by its Restated Articles of Incorporation, the Company
maintains director and officer liability insurance coverage for its directors
and officers. The premiums thereon, which aggregate $225,000 for a twelve-month
period, are paid by the Company.

In November 2000, two Willamette shareholders filed derivative actions in the
Circuit Court of the State of Oregon for Multnomah County against Willamette
and each of its directors. The two actions were consolidated by order of the
court in December 2000. In their amended complaint filed on January 4, 2001,
the plaintiffs asserted derivative claims against the Board for breach of
fiduciary duty, breach of control, waste and unjust enrichment stemming from
the Board's rejection of Weyerhaeuser's hostile offer. On January 25, 2001, the
court entered an order staying discovery until such time as the court
determines that the plaintiffs have stated a claim for relief. The plaintiffs
have stated their intention to file a second amended complaint. As of March 28,
2001, Willamette had not provided any of the members of the Board with an
advance in connection with the shareholder litigation.

Under the provisions of the Company's Restated Articles of Incorporation, no
director of the Company shall have any personal liability to the Company or its
shareholders for monetary damages for conduct as a director, except that the
liability of a director for monetary damages is not eliminated or limited for
any breach of the director's duty of loyalty to the Company or its
shareholders, for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, for any distributions
that are unlawful under the Oregon Business Corporation Act, for any
transaction from which the director derived an improper personal benefit, or
for any act or omission that occurred prior to April 21, 1988.

ANNUAL REPORT

The Company's Annual Report to Shareholders for the year ended December 31,
2000, which is not a part of this Proxy Statement, was previously distributed
to shareholders on or about March 9, 2001. A copy of the annual report will be
provided by first-class mail without charge to any shareholder, including any
beneficial owner, upon oral or written request. Requests should be directed to
the Secretary of the Company at the Company's address set forth herein or by
phoning (503) 227-5581.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Under Section 16 of the Exchange Act, holders of more than 10 percent of the
Willamette Common Stock and directors and certain officers of the Company are
required to file reports ("Section 16 Statements") of beneficial ownership of
Willamette Common Stock and changes in such ownership with the SEC and the New
York Stock Exchange. The Company is required to identify in its proxy
statements those persons who to the Company's knowledge were required to file
Section 16 Statements and did not do so on a timely basis. Based solely on a
review of copies of Section 16 Statements furnished to the Company during and
with respect to its most recent fiscal year and on written representations from
reporting persons, the Company believes that each person who at any time during
the most recent fiscal year was a reporting person filed all required Section
16 Statements on a timely basis.

RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS

The firm of KPMG, independent public accountants, has audited the accounts of
the Company for a number of years and has been selected to do so for 2001.
Representatives of KPMG are expected to be present at the annual shareholders
meeting with the opportunity to make a statement if they desire to do so and to
be available to respond to appropriate questions.

DEFC14A 33rd Page of 48 TOC 1st Previous Next ↓Bottom Just 33rd
Audit Fees

The aggregate fees billed by KPMG for professional services rendered for the
audit of the Company's annual financial statements for 2000 and their review of
the financial statements included in the Company's quarterly reports on Form
10-Q filed during 2000 were $506,699.

Financial Information Systems Design and Implementation Fees

During 2000, KPMG did not provide any professional services to the Company
with regard to financial information systems design and implementation.

All Other Fees

Fees billed for services provided to the Company by KPMG during 2000, other
than the services described above under "Audit Fees," were $68,294. The Audit
Committee has determined that the provision of these services to the Company is
compatible with maintaining KPMG's independence.

SHAREHOLDER PROPOSALS FOR ANNUAL MEETING IN 2002

Shareholder proposals intended to be presented at the next annual meeting of
shareholders of the Company must be received by the Company no later than
December 3, 2001 and must contain the information required by the Company's
Bylaws in order to be included in the proxy statement and proxy card for such
meeting.

Under the Company's Bylaws, notice of any other matter intended to be
presented by a shareholder for action at next year's annual meeting must be
addressed to the principal executive offices of Willamette Industries, Inc.,
1300 S.W. Fifth Avenue, Suite 3800, Portland, Oregon 97201, marked for the
attention of the Secretary, and must contain the information required by the
Bylaws. The notice must be received at the Company's principal executive
offices during the period from February 7, 2002 through March 11, 2002, unless
the date of the annual meeting is advanced by more than 20 days or delayed by
more than 70 days from the anniversary date of this year's annual meeting, in
which case notice must be delivered not earlier than the 120th day prior to
such annual meeting and not later than the close of business on the later of
the 90th day prior to such annual meeting or the 10th day following the day on
which public announcement of the date of such meeting is first made.

A copy of the Company's Bylaws may be obtained by writing to the Secretary of
the Company at 1300 S.W. Fifth Avenue, Suite 3800, Portland, Oregon 97201 and
is filed with the SEC as an exhibit to the Schedule 14D-9 Amendment filed by
the Company on December 12, 2000.

PARTICIPANTS IN THE SOLICITATION

Under applicable regulations of the SEC, each member of the Board, certain
officers of Willamette and certain other persons may be deemed to be a
"participant" in Willamette's solicitations of proxies in connection with the
Annual Meeting. For information with respect to each participant in the
Company's solicitation of proxies in connection with the Annual Meeting please
refer to (i) the table of security ownership of directors and executive
officers under the heading "Holders of Willamette Common Stock", (ii) the
discussion under the heading "Termination of Employment and Change in Control
Arrangements and Related Matters" and (iii) Schedules I, II and III to this
Proxy Statement.

GENERAL

In addition to the matters described above, there will be an address by both
the Chairman and Chief Executive Officer at the Annual Meeting and a general
discussion period during which shareholders will have an opportunity to ask
questions about the business and operations of Willamette.

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SOLICITATION OF PROXIES

Proxies may be solicited by mail, advertisement, telephone, via the Internet
or in person. Solicitations may be made by directors, officers, investor
relations personnel and other employees of the Company, none of whom will
receive additional compensation for such solicitations.

The Company has retained MacKenzie Partners, Inc. ("MacKenzie") to provide
solicitation and advisory services in connection with the proxy solicitation,
for which MacKenzie is to receive a fee estimated at $325,000, together with
reimbursement for its reasonable out-of-pocket expenses and for payments made
to brokers and other nominees for their expenses in forwarding soliciting
material. MacKenzie will distribute proxy materials to beneficial owners and
solicit proxies by personal interview, mail, telephone and telegram, and via
the Internet, and will request brokerage houses and other custodians, nominees
and fiduciaries to forward soliciting material to the beneficial owners of
Willamette Common Stock. The Company has also agreed to indemnify MacKenzie
against certain liabilities and expenses. It is anticipated that MacKenzie will
employ approximately 75 persons to solicit shareholders for the Annual Meeting.
MacKenzie is also acting to assist the Company in connection with the
Weyerhaeuser Offer, for which MacKenzie will be paid customary compensation in
addition to reimbursement for reasonable out-of-pocket expenses.

Pursuant to a letter agreement dated September 4, 2000, Willamette retained
Goldman Sachs to render financial advisory services to the Company in
connection with the Weyerhaeuser Offer and certain related matters. Willamette
has agreed to pay Goldman Sachs a fee equal to 0.40% of the aggregate value of
any transaction in the event (i) at least 15% of the outstanding stock of
Willamette is acquired by a third party or (ii) all or substantially all of the
assets of Willamette are sold. If no transaction has been completed by
September 1, 2001, Willamette has agreed to pay Goldman Sachs a fee of
$30,000,000 upon the occurrence of certain triggering events. A triggering
event has occurred, and the first of five equal quarterly installments will be
paid on September 1, 2001 if no transaction has been consummated as of that
date. In addition, Willamette has agreed to reimburse Goldman Sachs for its
reasonable out-of-pocket expenses.

Costs incidental to these solicitations of proxies will be borne by the
Company and include expenditures for printing, postage, legal, accounting,
public relations, soliciting, advertising and related expenses and are expected
to be approximately $1,700,000 in addition to the fees of MacKenzie described
above (excluding the amount normally expended by the Company for the
solicitation of proxies at its annual meetings). Total costs incurred to date
for, in furtherance of, or in connection with these solicitations of proxies
are approximately $625,000.

Certain information about the directors and executive officers of the Company
and certain employees and other representatives of the Company who may also
solicit proxies is set forth in the attached Schedule I. Schedule II sets forth
certain information relating to shares of Willamette Common Stock owned by such
parties and certain transactions between any of them and the Company. Schedule
III sets forth certain information with respect to Goldman Sachs.

All expenses of solicitation of proxies will be borne by Willamette.

By Order of the Board of Directors

/s/ G.W. Hawley

G. W. Hawley
Secretary

Portland, Oregon
April 2, 2001

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SCHEDULE I

INFORMATION CONCERNING THE DIRECTORS AND CERTAIN EXECUTIVE OFFICERS AND
EMPLOYEES OF THE COMPANY

The following table sets forth the name and present principal occupation or
employment (except with respect to directors, whose principal occupation is set
forth in the Proxy Statement), and the name, principal business and address of
any corporation or other organization in which such employment is carried on,
of (1) the directors of the Company and (2) certain executive officers and
other employees of the Company who may assist in soliciting proxies from
shareholders of the Company. Unless otherwise indicated, the principal business
address of each such person is 1300 S.W. Fifth Avenue, Suite 3800, Portland,
Oregon 97201. Directors are indicated with a single asterisk. Ages shown are as
of December 31, 2000.

[Download Table]

Present Office or Other Principal
Name and Principal Business Address Occupation or Employment
----------------------------------- ---------------------------------

Winslow Buxton*......................... Pentair, Inc.
Waters Edge Plaza
1500 Country Road B2 West
St. Paul, MN 55113

Gerard K. Drummond*.....................

Kenneth W. Hergenhan*...................

Duane C. McDougall*.....................

G. Joseph Prendergast*..................

Stuart J. Shelk, Jr*.................... Ochoco Management, Inc.
P.O. Box 668
Prineville, OR 97754

Robert M. Smelick*...................... Sterling Payot Company
222 Sutter Street, 8th Floor
San Francisco, CA 94108

William Swindells*......................

Michael G. Thorne*...................... Port of Portland
121 N.W. Everett Street
Portland, OR 97201

Benjamin R. Whiteley*................... Standard Insurance Company
1100 S.W. Sixth Avenue, 17th Floor
Portland, OR 97204

CERTAIN EXECUTIVE OFFICERS AND EMPLOYEES OF THE COMPANY
WHO MAY ALSO SOLICIT PROXIES

Donald C. Atkinson (age 34)............. Paper Group Controller

Marvin D. Cooper (age 57)............... Executive Vice President-Pulp & Paper
Mills

Heather M. Crunchie (age 34)............ Advertising/Marketing Manager

April A. Davis (age 45)................. Employee Benefits Manager

Catherine A. Dunn (age 53).............. Vice President-Communications

Randall E. Dunn (age 60)................ Corporate Labor Relations Manager

Greig W. Goddard (age 44)............... Treasury Manager

Craig L. Hanneman (age 51).............. Government Affairs Manager

Greg W. Hawley (age 40)................. Executive Vice President and Chief
Financial Officer

Campbell A. Henderson (age 47).......... Vice President, Chief Information
Officer

John D. LeFors (age 57)................. Vice President-Building Material Group

J. Eddie McMillan (age 55).............. Executive Vice President-Building
Material Group

David W. Morthland (age 60)............. Vice President-Personnel & Industrial
Relations

D. Wayne Parker (age 60)................ Vice President-Building Material Group

Andrea R. Sliter (age 29)............... Assistant Corporate Controller

Linda M. Tenney (age 45)................ Corporate Office Personnel Manager

Donald S. Waddell (age 40).............. Corporate Controller

Donna L. Wecker (age 55)................ Corporate Administrative Coordinator

Ronald E. Whitehead (age 58)............ Corporate Purchasing Manager

I-1

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SCHEDULE II

INFORMATION REGARDING OWNERSHIP OF THE COMPANY'S
SECURITIES BY PARTICIPANTS

The number of shares of Willamette Common Stock held by directors and the
named executive officers is set forth in this Proxy Statement. The number of
shares of Willamette Common Stock held by the remaining participants as of
February 28, 2001 is set forth below.

[Download Table]

Shares of Willamette Common Stock
Name of Beneficial Owner Beneficially Owned(1)
------------------------ ---------------------------------

Donald C. Atkinson........................... 3,421(2)
Heather M. Crunchie.......................... 300
April A. Davis............................... 2,197(2)
Catherine A. Dunn............................ 66,892(2)(3)
Randall E. Dunn.............................. 66,892(2)(3)
Greig W. Goddard............................. 2,739
Craig L. Hanneman............................ 16,349(2)(3)
Greg W. Hawley............................... 22,040(2)
Campbell A. Henderson........................ 31,348(2)
John D. LeFors............................... 14,511(2)
David W. Morthland........................... 97,843(2)(3)
D. Wayne Parker.............................. 29,969(2)
Andrea R. Sliter............................. 12
Linda M. Tenney.............................. 2,473
Donald S. Waddell............................ 15,687(2)
Donna L. Wecker.............................. 1,837(3)
Ronald E. Whitehead.......................... 23,565(2)

--------
(1) Shares and options are included in the table as "beneficially owned" if
the person named has or shares the right to vote or direct the voting of
or the right to dispose or direct the disposition of such shares or
options.
(2) Includes shares subject to employee stock options exercisable within 60
days after February 28, 2001 under the Company's 1995 Plan and 1986 Plan
as follows: Mr. Atkinson, 2,407; Ms. Davis, 1,223; Ms. Dunn, 19,810; Mr.
Dunn, 19,100; Mr. Hanneman, 11,674; Mr. Hawley, 20,534; Mr. Henderson,
27,620; Mr. LeFors, 13,802; Mr. Morthland, 79,070; Mr. Parker, 14,644; Mr.
Waddell, 8,260; and Mr. Whitehead, 3,970.
(3) Includes shares and options as to which the individual shares voting and
dispositive power as follows: Ms. Dunn, 11,921 shares and 19,100 options;
Mr. Dunn, 16,229 shares and 19,810 options; Mr. Hanneman, 120 shares; and
Mr. Morthland, 800 shares.

II-1

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PURCHASES AND SALES OF SECURITIES

The following table sets forth information concerning all purchases and sales
of securities of the Company by the participants listed below during the past
two years.

[Download Table]

Number of
Shares of
Willamette
Date of Nature of Common
Name Transaction Transaction Stock
---- ----------- ----------- ----------

Winslow H. Buxton.................... August 9, 1999 Purchase 500
May 30, 2000 Purchase 1,000

Campbell A. Henderson................ March 7, 2000 Purchase(1) 300

Kenneth W. Hergenhan................. May 5, 2000 Purchase 300
June 19, 2000 Purchase 300

Stuart J. Shelk, Jr. ................ April 18, 2000 Purchase 200
April 18, 2000 Purchase 500
April 18, 2000 Purchase 300
May 30, 2000 Purchase 3,000
June 27, 2000 Purchase 6,000
June 27, 2000 Purchase 3,000
June 27, 2000 Purchase 2,000
June 29, 2000 Purchase 5,000
June 29, 2000 Purchase 3,500

William Swindells.................... June 4, 1999 Sale 7,700
July 23, 1999 Sale 2,000
July 26, 1999 Sale 8,200
August 17, 1999 Sale 13,300
September 30, 1999 Sale 7,100
December 17, 1999 Sale 7,700
February 22, 2000 Sale 3,588
April 6, 2000 Sale 10,800
April 12, 2000 Sale 7,735

Michael G. Thorne.................... June 8, 2000 Purchase 200
June 27, 2000 Purchase 200
August 24, 2000 Purchase 200
August 30, 2000 Purchase 200

--------
(1) Mr. Henderson financed a portion of the above-indicated purchase of
Willamette Common Stock with funds borrowed pursuant to a margin account,
$4,000 of which indebtedness was outstanding as of March 28, 2001.

II-2

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[Download Table]

Number of
Shares of
Willamette
Date of Nature of Common
Name Transaction Transaction Stock
---- ----------- ----------- ----------

Ronald E. Whitehead................... March 29, 1999 Sale 1,000
March 31, 1999 Purchase 1,100
March 31, 1999 Purchase 900
April 8, 1999 Purchase 500
April 13, 1999 Sale 2,500
April 19, 1999 Sale 500
April 19, 1999 Purchase 500
April 20, 1999 Purchase 300
April 20, 1999 Purchase 500
April 20, 1999 Purchase 500
April 28, 1999 Sale 500
April 28, 1999 Sale 300
April 29, 1999 Sale 500
May 10, 1999 Purchase 200
May 18, 1999 Sale 200
May 20, 1999 Purchase 200
May 21, 1999 Purchase 200
May 24, 1999 Sale 400
May 25, 1999 Purchase 200
June 14, 1999 Sale 200
July 27, 1999 Purchase 200
July 30, 1999 Purchase 200
August 2, 1999 Sale 200
August 4, 1999 Sale 200
August 9, 1999 Purchase 200
August 10, 1999 Purchase 100
August 12, 1999 Sale 300
August 25, 1999 Purchase 200
August 26, 1999 Purchase 200
August 31, 1999 Sale 400
September 27, 1999 Purchase 200
September 28, 1999 Purchase 200
September 28, 1999 Purchase 500
October 4, 1999 Purchase 500
October 4, 1999 Purchase 1,000
October 6, 1999 Purchase 600
October 29, 1999 Sale 1,500
November 1, 1999 Sale 500
November 2, 1999 Sale 1,000
November 22, 1999 Purchase 250
November 23, 1999 Purchase 250
December 13, 1999 Purchase 500
December 13, 1999 Purchase 500
December 15, 1999 Sale 500
December 15, 1999 Sale 1,000
January 3, 2000 Purchase 250
January 6, 2000 Sale 250

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[Download Table]

Number of
Shares of
Willamette
Date of Nature of Common
Name Transaction Transaction Stock
---- ----------- ----------- ----------

Ronald E. Whitehead (cont'd).......... January 7, 2000 Purchase 500
January 12, 2000 Sale 500
January 26, 2000 Purchase 250
January 27, 2000 Purchase 250
January 31, 2000 Sale 250
February 3, 2000 Purchase 250
February 18, 2000 Purchase 1,000
February 23, 2000 Sale 1,000
February 24, 2000 Purchase 500
February 25, 2000 Purchase 500
March 8, 2000 Sale 500
March 13, 2000 Sale 500
March 16, 2000 Sale 500
March 28, 2000 Purchase 250
March 29, 2000 Sale 250
April 14, 2000 Purchase 250
April 20, 2000 Purchase 500
April 25, 2000 Sale 750
May 3, 2000 Purchase 300
May 10, 2000 Sale 300
May 22, 2000 Purchase 750
May 23, 2000 Purchase 500
May 24, 2000 Purchase 1,000
May 26, 2000 Purchase 750
June 8, 2000 Purchase 500
June 13, 2000 Purchase 1,000
June 16, 2000 Purchase 1,000
July 14, 2000 Purchase 1,000
September 19, 2000 Purchase 450
October 19, 2000 Sale 850
October 30, 2000 Sale 6,100
November 1, 2000 Purchase 5,730
November 13, 2000 Sale 430
December 15, 2000 Purchase 300
February 9, 2001 Purchase 500
March 12, 2001 Sale 500
March 22, 2001 Purchase 670

Benjamin R. Whiteley.................. June 19, 2000 Purchase 1,000

William Swindells, Duane C. McDougall and Greg W. Hawley have agreed to serve
as the proxies on the Company's GREEN proxy card.

Other than as disclosed in this Schedule or in the Proxy Statement, none of
the Company, any of its directors, executive officers or the employees of the
Company named in Schedule I owns any securities of the Company or any
subsidiary of the Company, beneficially or of record, has purchased or sold any
of such securities within the past two years or is or was within the past year
a party to any contract, arrangement or understanding with any person with
respect to any such securities. Except as disclosed in this Schedule or in the
Proxy Statement, to the best knowledge of the Company, its directors and
executive officers or the employees of the Company named in Schedule I, none of
their associates beneficially owns, directly or indirectly, any securities of
the Company.

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Other than as disclosed in this Schedule or in the Proxy Statement, to the
knowledge of the Company, none of the Company, any of its directors, executive
officers or the employees of the Company named in Schedule I has any
substantial interest, direct or indirect, by security holdings or otherwise, in
any matter to be acted upon at the Annual Meeting.

Other than as disclosed in this Schedule or in the Proxy Statement, to the
knowledge of the Company, none of the Company, any of its directors, executive
officers or the employees of the Company named in Schedule I is, or has been
within the past year, a party to any contract, arrangement or understanding
with any person with respect to any securities of the Company, including, but
not limited to, joint ventures, loan or option arrangements, puts or calls,
guarantees against loss or guarantees of profit, division of losses or profits,
or the giving or withholding of proxies.

Other than as set forth in this Schedule or in the Proxy Statement, to the
knowledge of the Company, none of the Company, any of its directors, executive
officers or the employees of the Company named in Schedule I, or any of their
associates, has had or will have a direct or indirect material interest in any
transaction or series of similar transactions since the beginning of the
Company's last fiscal year or any currently proposed transactions, or series of
similar transactions, to which the Company or any of its subsidiaries was or is
to be a party in which the amount involved exceeds $60,000.

Other than as set forth in this Schedule or in the Proxy Statement, to the
knowledge of the Company, none of the Company, any of its directors, executive
officers or the employees of the Company named in Schedule I, or any of their
associates, has any arrangements or understandings with any person with respect
to any future employment by the Company or its affiliates or with respect to
any future transactions to which the Company or any of its affiliates will or
may be a party.

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SCHEDULE III

INFORMATION CONCERNING GOLDMAN, SACHS & CO.

In connection with the engagement of Goldman Sachs as financial advisor, the
Company anticipates that employees of Goldman Sachs may communicate in person,
by telephone or otherwise with certain institutions, brokers or other persons
who are shareholders for the purpose of assisting in the solicitation of
proxies. Although Goldman Sachs does not admit that it or any of its directors,
officers, employees or affiliates is a "participant," as defined in Schedule
14A promulgated under the Securities Exchange Act of 1934, as amended, by the
SEC, or that Schedule 14A requires the disclosure of certain information
concerning them, Robert Pace (Managing Director), Ravi Sinha (Managing
Director), Kirk Pulley (Vice President), Kevin Guidotti (Vice President),
Pauline An (Associate) and Kevin Sofield (Associate), in each case of Goldman
Sachs (collectively, the "Financial Advisor Participants"), may assist the
Company in the solicitation of proxies for the Annual Meeting. The principal
business address of Messrs. Pace, Guidotti, and Sofield, and Ms. An is 555
California Street, Suite 4500, San Francisco, CA 94101. The principal business
address of Mr. Sinha is 85 Broad Street, New York, NY 10004 and the principal
business address of Mr. Pulley is 2121 Avenue of the Stars, Suite 2600, Los
Angeles, CA 90067.

Goldman Sachs has provided financial advisory and investment banking services
to the Company from time to time for which they have received customary
compensation. In addition, Goldman Sachs has provided financial advisory and
investment banking services to Weyerhaeuser in the past for which it has
received customary compensation. Goldman Sachs engages in a full range of
investment banking, securities trading, market-making and brokerage services
for institutional and individual clients. In the ordinary course of its
business, Goldman Sachs may actively trade securities of the Company for its
own account and the account of its customers and, accordingly, may at any time
hold a long or short position in such securities. Goldman Sachs has advised the
Company that as of March 8, 2001, Goldman Sachs held a net long position of
approximately 42,944 shares of Willamette Common Stock. Except as set forth
above, to the Company's knowledge, none of Goldman Sachs, or any of the
Financial Advisor Participants, has any interest, direct or indirect, by
security holdings or otherwise, in the Company.

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Annex A

WHY THE BOARD BELIEVES THE WEYERHAEUSER OFFER IS INADEQUATE

FOR THE REASONS DESCRIBED BELOW, THE BOARD UNANIMOUSLY CONCLUDED THAT THE
WEYERHAEUSER OFFER IS INADEQUATE AND NOT IN THE BEST INTERESTS OF THE COMPANY,
ITS SHAREHOLDERS AND OTHER CONSTITUENCIES. ACCORDINGLY, THE BOARD UNANIMOUSLY
RECOMMENDS A VOTE "FOR" THE WILLAMETTE NOMINEES FOR DIRECTOR./1/

In reaching its conclusion with respect to the Weyerhaeuser Offer, the Board
considered a number of factors, including the following:

. The Board's belief, based on the factors further described below, that the
Offer Price is inadequate and that the Weyerhaeuser Offer does not reflect
the long-term value inherent in the Company;

. The Board's familiarity with the business, financial condition, prospects
and current business strategy of the Company, the nature of the industries
in which the Company operates and the Company's strong position in these
industries;

. The Board's belief that the Offer Price does not reflect the significant
value-enhancing initiatives taken by the Company over the last few years
aimed at cost reductions, growing market opportunities and, most
importantly, increasing earnings per share growth; and management's belief
that, based on the current pricing environment and the approximate $950
million cost (excluding the Cavenham acquisition) of implementing these
initiatives, if all of the value-enhancing initiatives were complete, they
would add in excess of $340 million to annual earnings before interest,
taxes, depreciation and amortization;

. The opinion of the Company's management as to the Company's prospects for
future growth and profitability, based on its knowledge of the Company's
businesses, its views as to the Company's long-term strategic plan, the
various value-enhancing opportunities available to the Company in the
future and recent trends and developments in the industry;

. The disruptive effect consummation of the Weyerhaeuser Offer would have on
the Company's employees, suppliers and customers and the communities and
geographical areas where the Company operates;

. The fact that over the last ten years, the Company's earnings per share
growth has been more than five times the Industry Composite/2/ and nearly
three times a large cap composite comprised of International Paper,
Georgia-Pacific and Weyerhaeuser;

. The fact that over the last two years ending November 10, 2000 (the last
trading day prior to the public announcement of Weyerhaeuser's $48 per
share "bear hug" proposal dated November 6, 2000 (the "November 6
Proposal")), the performance of the Willamette Common Stock has exceeded
both the S&P Paper and Forest Products Index and the S&P 500;

. The fact that the stock price performance of the Willamette Common Stock
has been double that of the S&P Paper and Forest Products Index over the
period 1991 to 2000 (through November 10, 2000), and has almost matched the
S&P 500 performance over that period (despite a very difficult decade for
the industry and an extraordinarily good performance for the S&P 500);
--------
1 These factors were included in the Company's Solicitation/Recommendation
Statement on Schedule 14D-9 mailed to shareholders on December 12, 2000.
The information set forth in this Annex A was based on facts existing as of
December 11, 2000.
2 For purposes of Annex A, the Industry Composite is comprised of Boise
Cascade Corporation, Bowater Inc., Chesapeake Corporation, Georgia-Pacific
Corporation, International Paper Company, Longview Fibre Company,
Louisiana-Pacific Corporation, Mead Corporation, Temple-Inland, Inc.,
Westvaco Corporation, and Weyerhaeuser.

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. The fact that, prior to the public announcement of the November 6 Proposal,
the Willamette Common Stock traded at a 52-week high of $50.50 in January
2000 and an all-time high of $52.13 in July 1999;

. The Board's belief, in light of the terms of the Weyerhaeuser Offer, the
Company's inherent earnings power and long-term strategic plan, that the
interests of the Company, its shareholders and other constituencies would
best be served by the Company continuing as an independent entity;

. The Board's view that the Weyerhaeuser Offer is an opportunistic attempt to
acquire one of the industry's leading franchises when stock prices are
depressed;

. The fact that the Company is not for sale, but that if it were for sale, the
Board noted the following factors that indicated that Weyerhaeuser or
another party should be willing to pay significantly in excess of the Offer
Price:

. The Board's belief that based on the $300 million in synergies that
Weyerhaeuser has publicly projected (and the $330 to $645 million
synergy range provided by Weyerhaeuser to the Company in a private
meeting in September 1998) and the analysts' consensus earnings, cash
flow estimates and earnings accretion for Weyerhaeuser and the Company,
Weyerhaeuser could pay significantly in excess of the Offer Price;

. The fact that premiums and multiples paid in recent comparable industry
transactions exceed the premiums and multiples implied by the
Weyerhaeuser Offer; for instance, Stora Enso paid a 69% premium
(relative to the day prior to the announcement) for Consolidated Papers,
a 34% premium to Consolidated Papers' 52-week high, and a 28% premium to
its all time high while the Weyerhaeuser Offer values the Willamette
Common Stock at a 38% premium relative to the day prior to the public
announcement of the November 6 Proposal, a 1% discount to its 52-week
high and a 6% discount to its all time high; and

. The Board's belief that, based on the increased stock prices of
comparable companies in the industry since November 10, 2000, the
premium implied by the Weyerhaeuser Offer (relative to the day prior to
the public announcement of the November 6 Proposal) is significantly
lower than 38%;

. The significant uncertainties and contingencies associated with the
Weyerhaeuser Offer, including conditions which are (a) in the sole
discretion of Weyerhaeuser, (b) subject to external events not directly
related to the Company or (c) not within the control of the Company or
Weyerhaeuser;

. The opinion of Goldman Sachs, financial advisor to the Company, after
reviewing with the Board many of the factors referred to herein and other
financial criteria used in assessing an offer, that, as of December 11,
2000, the Offer Price is inadequate, from a financial point of view, to the
Company's shareholders (other than Weyerhaeuser and its affiliates); and

. The Board's and management's commitment to protecting the best interests of
the shareholders of the Company and enhancing the long-term value of the
Company.

In light of the above factors, the Board unanimously concluded that the
Weyerhaeuser Offer is inadequate and not in the best interests of the Company,
its shareholders and other constituencies. ACCORDINGLY, THE BOARD UNANIMOUSLY
RECOMMENDS A VOTE "FOR" THE WILLAMETTE NOMINEES FOR DIRECTOR.

The foregoing discussion of the information and factors considered by the
Board is not intended to be exhaustive but includes all material factors
considered by the Board. In reaching its determination to reject the
Weyerhaeuser Offer, the Board did not assign any relative or specific weights
to the foregoing factors, and individual directors may have given differing
weights to different factors. Throughout its deliberations, the Board received
the advice of its legal and financial advisors.

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Annex B

WILLAMETTE INDUSTRIES, INC.
AUDIT COMMITTEE CHARTER

PRIMARY PURPOSE: The primary function of the Audit Committee is to assist the
Board of Directors in the discharge of its fiduciary obligations to the
Company's shareholders relating to the quality and integrity of the Company's
financial statements, its accounting and reporting practices, and the
independence and performance of the Company's outside auditor and performance
of its internal accounting staff. The Board, pursuant to the Audit Committee's
recommendation, has the ultimate authority and responsibility to select,
evaluate and, where appropriate, replace the Company's outside auditor.

COMPOSITION: The members of the Audit Committee shall be appointed by
resolution adopted by a majority of the full Board. The Audit Committee shall
have three or more members, each of whom is a director and meets the
independence and experience requirements specified in the corporate governance
listing standards of the New York Stock Exchange. The Board shall designate one
of the members of the Audit Committee to serve as chairman.

POWERS: The Audit Committee shall have the authority to retain, at the
Company's expense, outside legal, accounting or other consultants or experts to
advise the Company, which may or may not provide regular services to the
Company. The Audit Committee may request any officer or employee of the Company
or the Company's outside counsel or auditor to attend a committee meeting or to
meet with any members of, or consultants to, the Audit Committee.

MEETINGS: The Audit Committee shall meet on a regular basis as needed to
perform its duties. Special meetings will be called as circumstances require.
Written minutes will be kept for all regular and special meetings. In addition,
the chairman of the committee will review, with management and the outside
auditor, the company's quarterly financial results prior to the release of
earnings and filing of Form 10-Q. Attendance by other committee members is
optional at these reviews.

REPORTS TO THE BOARD: The Audit Committee shall report its activities to the
full Board on a regular basis.

DUTIES: The Audit Committee shall perform the following duties:

1. Review and reassess the adequacy of this charter annually and recommend
any proposed changes to the Board for approval.

2. Prepare a report of the committee in compliance with the SEC's proxy rules
for inclusion in the Company's proxy statement for its annual shareholders
meeting each year.

3. Annually recommend to the Board the appointment of the outside auditor to
perform the audit of the Company's annual financial statements, review of
interim financial statements, and other services for which it is engaged, which
firm is ultimately accountable to the Audit Committee and the Board. As part of
this review and recommendation process, the Audit Committee should consider the
following:

(a) Opinions on the performance of the outside auditor expressed by
appropriate Company management personnel.

(b) The proposed audit fee and explanation of fee changes.

(c) The professional competency of the firm through inquiry about its
most recent peer review and any significant recent litigation or
disciplinary actions brought by the SEC or other parties.

4. Ensure that the outside auditor submits, on a periodic basis to the Audit
Committee, a formal written statement delineating all relationships between the
auditor and the Company, discuss with the outside auditor pursuant to
Independence Standards Board Standard No. 1 any disclosed relationships or
services that may

B-1

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adversely affect the auditor's objectivity and independence and, if deemed
advisable by the Audit Committee, take, or recommend that the Board take,
appropriate action to satisfy itself of the auditor's independence.

5. Ensure that the outside auditor submits a formal written statement
detailing total fees billed for each of the following categories of services by
February 25 each year:

(a) Audit of the Company's annual financial statements for the most
recent fiscal year and reviews of the financial statements included
in the Company's reports on Form 10-Q for that fiscal year.

(b) Information technology consulting services during the most recent
fiscal year separately identifying fees for such services relating
to financial information systems design and implementation.

6. Meet with management, the outside auditor and the chief internal auditor
prior to commencement of the annual audit to review the planning and staffing
of the audit, including the degree of coordination between the internal and
external plans and how the planned scope of the audit addresses the Company's
particular issues.

7. Review and recommend to the Board that the Company's audited financial
statements, including footnotes, be included in the Company's annual report on
Form 10-K for the applicable fiscal year. In connection with this review, the
Audit Committee shall discuss the financial statements with management and
discuss with the outside auditor the matters required to be discussed by
Statement on Auditing Standards (SAS) No. 61 relating to the conduct of the
audit. The Audit Committee shall inquire of management and the outside auditor
regarding the effects of significant changes or proposed changes in accounting
standards, policies or practices and whether any significant financial
reporting issues were discussed during the audit and, if so, how they were
resolved.

8. Review with the outside auditor any problems the auditor may have
encountered in the course of the audit and any management letter provided by
the auditor and the Company's response to that letter.

9. Review a draft of the financial section of the annual report to
shareholders and management's discussion and analysis of results of operations
for completeness and consistency with the financial statements and other
portions of the annual report to shareholders.

10. Review the adequacy of the Company's internal financial and operational
controls with both the internal accounting staff and the outside auditor.
Obtain copies of significant reports to management by the internal accounting
staff and management's responses. Obtain from the outside auditor assurance
that no information requiring disclosure under Section 10A of the Securities
Exchange Act of 1934 has been discovered and a written summary of any
significant weaknesses in or breaches of internal controls discovered during
the audit.

11. Meet with management periodically to review the Company's major financial
risk exposures and the steps management has taken to monitor and control such
exposures, including significant tax items that are or may be in dispute and
the status of tax reserves and interest accruals, as well as any significant
issues raised by outside counsel concerning litigation, contingencies and other
claims and how such issues may affect the Company's financial statements.

12. Meet at least annually in separate executive sessions with the chief
financial officer, the chief internal auditor, and the outside auditor. Discuss
with the outside auditor the quality of the Company's financial and accounting
personnel and internal audit staff and submit recommendations to the Board as
to any replacements within the Board's purview as the Audit Committee deems
appropriate.

Revised February 8, 2001.

B-2

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IMPORTANT

Your proxy is important. No matter how many shares of Willamette Common Stock
you own, please give the Company your proxy "FOR" the election of the
Willamette Nominees for director and "AGAINST" the Shareholder Proposals by
signing, dating and returning the Company's GREEN proxy card today in the
postage prepaid envelope provided.

YOUR BOARD URGES YOU NOT TO RETURN ANY GOLD PROXY CARDS

YOU MAY HAVE RECEIVED FROM WEYERHAEUSER.

If you have already submitted a proxy to Weyerhaeuser for the Annual Meeting,
you may change your vote to a vote "FOR" the election of the Willamette
Nominees and "AGAINST" the Shareholder Proposals by signing, dating and
returning the Company's GREEN proxy card, which must be dated after any proxy
you may have submitted to Weyerhaeuser. Only your last dated proxy for the
Annual Meeting will count at the meeting.

If any of your shares of Willamette Common Stock are held in the name of a
brokerage firm, bank, nominee or other institution, only it can vote such
shares and only upon receipt of your specific instructions. Please sign, date
and promptly mail the GREEN proxy card in the envelope provided by your broker.
Remember, your shares cannot be voted unless you return a signed and executed
proxy card to your broker.

If you have any questions or require any additional information or
assistance, please call our proxy solicitor, MacKenzie Partners, at either
number set forth below.

MACKENZIE PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010

CALL (800) 322-2885 (TOLL FREE IN THE UNITED STATES)
OR (212) 929-5500 (COLLECT)

[LOGO of WILLAMETTE INDUSTRIES, INC.]

Willamette Industries, Inc.

[RECYCLE LOGO]

This notice and proxy statement is printed on 35# Providence
Opaque(TM) Recycled, Vellum Finish which was manufactured at
Willamette's fine paper mill in Johnsonburg, Pennsylvania.

DEFC14A 47th Page of 48 TOC 1st Previous Next ↓Bottom Just 47th
WILLAMETTE INDUSTRIES, INC.

PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
FOR ANNUAL MEETING ON JUNE 7, 2001

The undersigned hereby appoints William Swindells, Duane C. McDougall and
G. W. Hawley, and each of them, proxies with power of substitution, to represent
and vote, as directed below and in the discretion of the proxies on any other
matters which may properly come before the meeting, the common stock of
Willamette Industries, Inc. (the "Company"), which the undersigned may be
entitled to vote at the annual meeting of the Company's shareholders on June 7,
2001, or at any adjournment thereof, with all powers the undersigned would
possess if personally present. The proxies, or if only one proxy is present,
then that one, shall have all the powers granted herein.

By signing on the reverse, the undersigned acknowledges receipt of the
Notice of Annual Meeting (to be held June 7, 2001), and accompanying proxy
statement, and revokes all prior proxies for said meeting.

This proxy when properly executed will be voted in accordance with the
choices specified, or, if no choice is specified, will be voted FOR Item 1 and
AGAINST Items 2 and 3. If any other business properly comes before the meeting,
this proxy will be voted thereon in the discretion of the proxies named herein.

----------- -----------
SEE REVERSE SEE REVERSE
SIDE SIDE
----------- -----------
(Continued, and to be marked, dated and signed, on the other side)

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[Enlarge/Download Table]

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1.

1. ELECTION OF DIRECTORS: FOR [ ] WITHHELD [ ]
KENNETH W. HERGENHAN, ROBERT M. SMELICK, DUANE C. MCDOUGALL.

(If you do not wish your shares to be voted "FOR" a particular nominee or
nominees, strike a line through the nominee's name(s) only.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" ITEMS 2 AND 3.
2. The Board Declassification Proposal

FOR [ ] AGAINST [ ] ABSTAIN [ ]

3. The Compensation Committee Proposal

FOR [ ] AGAINST [ ] ABSTAIN [ ]

Please sign as name appears hereon. Joint
owners should each sign. When signing as attorney,
executor, administrator, trustee or guardian,
please give full title.

Date _________, 2001 Signature(s)_____________________________ Title or authority____________________________________

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘DEFC14A’ Filing	Date	First	Last	Other Filings

	12/31/02	29
	3/11/02	33
	2/7/02	33
	12/3/01	33		SC 14D9/A
	9/1/01	34
	7/13/01	10
	6/7/01	2	47	DFAN14A, SC 14D9/A, SC TO-T/A
	4/16/01	4	9	DEFA14A, SC 14D9/A
Filed on:	4/2/01	2	34	DFAN14A, SC 14D9/A, SC TO-T/A
	3/28/01	32	37
	3/26/01	7		DEFA14A, DFAN14A, SC 14D9/A, SC TO-T/A
	3/22/01	39
	3/12/01	39		DEFA14A, DFAN14A, SC 14D9/A, SC TO-T/A
	3/9/01	32		DEFA14A, PREC14A, SC 14D9/A
	3/8/01	41		DEFA14A, DFAN14A, SC 14D9/A, SC TO-T/A
	3/7/01	6	22
	2/28/01	7	36	DFAN14A, SC TO-T/A
	2/9/01	39		DEFA14A, DEFC14A, SC 14D9/A, SC TO-T/A
	2/8/01	20	45	SC TO-T/A
	1/25/01	32
	1/4/01	32		DFAN14A, SC TO-T/A
	12/31/00	10	35	10-K
	12/29/00	21	23	SC 14D9/A, SC TO-T/A
	12/21/00	31		DFAN14A, PREC14A, SC TO-T/A
	12/15/00	39		DFAN14A, SC TO-T/A
	12/12/00	33	42	SC 14D9/A
	12/11/00	5	43
	11/13/00	39		DFAN14A
	11/10/00	3	43
	11/6/00	42
	11/1/00	39
	10/30/00	39
	10/19/00	39
	9/19/00	39
	9/4/00	34
	8/30/00	37
	8/24/00	37
	8/2/00	22
	7/14/00	39
	6/29/00	37
	6/27/00	37		11-K
	6/19/00	37	39
	6/16/00	39
	6/13/00	39
	6/8/00	37	39
	5/30/00	37
	5/26/00	39
	5/24/00	39
	5/23/00	39
	5/22/00	39
	5/10/00	39
	5/5/00	37
	5/3/00	39
	5/1/00	25
	4/25/00	39
	4/20/00	39
	4/18/00	37		DEF 14A
	4/14/00	39
	4/12/00	37
	4/6/00	37
	3/29/00	39
	3/28/00	39
	3/16/00	39
	3/13/00	39
	3/8/00	39		DEF 14A
	3/7/00	37
	2/25/00	39		8-A12B, 8-K
	2/24/00	39
	2/23/00	39
	2/22/00	37
	2/18/00	39
	2/3/00	39
	1/31/00	39		SC 13G/A
	1/27/00	39
	1/26/00	39
	1/12/00	39
	1/7/00	39
	1/6/00	38
	1/3/00	38
	1/1/00	28
	12/17/99	37
	12/15/99	38
	12/13/99	38
	11/23/99	38
	11/22/99	38
	11/2/99	38
	11/1/99	38
	10/29/99	38
	10/6/99	38
	10/4/99	38
	9/30/99	37		10-Q
	9/28/99	38
	9/27/99	38
	8/31/99	38
	8/26/99	38
	8/25/99	38
	8/17/99	37
	8/12/99	38		10-Q
	8/10/99	38
	8/9/99	37	38
	8/4/99	38
	8/2/99	38
	7/30/99	38
	7/27/99	38
	7/26/99	37
	7/23/99	37
	6/14/99	38
	6/4/99	37
	5/25/99	38
	5/24/99	38
	5/21/99	38
	5/20/99	38
	5/18/99	38
	5/10/99	38
	4/29/99	38
	4/28/99	38
	4/20/99	38		DEF 14A
	4/19/99	38
	4/13/99	38
	4/8/99	38
	3/31/99	38		10-Q
	3/29/99	38
	4/21/98	21		DEF 14A
	12/31/95	26		10-K
				List all Filings

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Filing Submission 0000950130-01-001602 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Willamette Industries Inc – ‘DEFC14A’ on 4/2/01 re: Willamette Industries Inc

On: Monday, 4/2/01, at 10:10am ET · Accession #: 950130-1-1602 · File #: 1-12545

Definitive Proxy Solicitation Material — Contested Solicitation — Schedule 14AFiling Table of Contents

Document Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Definitive Proxy Solicitation Material — Contested Solicitation — Schedule 14A
Filing Table of Contents