UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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MESSAGE FROM OUR PRESIDENT AND CEO

Dear Fellow Stockholders:

On behalf of the entire Board of Directors of WestRock Company, I am pleased to invite you to join us virtually on January 29, 2021 for WestRock’s annual meeting of stockholders.

We Responded Quickly and Effectively to the COVID-19 Pandemic

Our business in fiscal 2020 was significantly impacted by COVID-19. We acted to navigate an ever-changing supply chain to meet the demand for essential products and services needed by our customers and consumers. We are reminded daily that our solutions enable our customers to package and deliver food, beverages, healthcare products, cleaning products and other essential goods to consumers all over the world.

Throughout this crisis, we have remained focused on protecting the health and safety of our teammates while serving the needs of our customers. We responded decisively to the uncertainties introduced by COVID-19 in May 2020, when we initiated the WestRock Pandemic Action Plan and committed ourselves to, among other things, taking actions to provide an additional $1 billion in cash that we could use to reduce our outstanding debt through the end of fiscal 2021.

While the pandemic caused us to experience increased demand from certain end markets (e.g., e-commerce, food and healthcare), demand declined in other end markets (e.g., commercial print and high-end consumer products). We continued to deliver customized, value-added solutions that help our customers win in their markets and our financial results demonstrate the continued momentum that we have generated from successfully executing our strategy.

We Delivered Solid Financial Results in Fiscal 2020 and are Optimistic About Fiscal 2021

We delivered net sales of $17.6 billion, segment EBITDA of $2.8 billion and net cash provided by operating activities of $2.1 billion. We reduced our total debt by $633 million. The actions that we took pursuant to the WestRock Pandemic Action Plan resulted in more than $350 million in additional cash that we used to reduce our outstanding indebtedness.

As we have entered fiscal 2021, demand across most packaging markets has improved. As we execute our disciplined capital allocation strategy, in the near-term, we will focus on reducing our leverage, completing our strategic capital projects and maintaining a competitive dividend.

We are Committed to Sustainability

In September 2020, we announced our continued commitment to sustainability – Imagining and Delivering on the Promise of a Sustainable Future – that focuses on three key areas:

 

•

Supporting people and communities.

•

Bettering the planet.

•

Innovating for our customers and their customers.

Our progress is already evident. For the first time, we were named to the 2020 Dow Jones Sustainability North America and World Indices in recognition of our sustainable business practices.

We are Committed to Promoting Diversity, Inclusion, Equity and Belonging

We promote diversity, inclusion, equity and belonging at WestRock and are committed to increasing the diversity of our board of directors and management team. I am proud that women comprise 33% of our director nominee slate for the upcoming annual meeting, compared to 17% in 2017, and that many women and minorities serve on our management team, including in the roles of Chief Human Resources Officer, Chief Communications Officer, Chief Accounting Officer, Chief Information and Digital Officer, Chief Information Security Officer, Chief Environmental Officer, Chief Sustainability Officer, Chief Marketing Officer and Senior Vice President, Science and Innovation.

We are committed to continuing to improve in these areas. In October 2020, the Board adopted the WestRock Company Diversity Search Policy, pursuant to which we will include qualified female and racially or ethnically diverse candidates on the initial lists of candidates from which new management-supported director nominees and chief executive officers recruited from outside WestRock are chosen by the Board.

Our Capabilities and Approach are Unique in Our Industry

We differentiate ourselves in the marketplace with our ability to provide paper, packaging, machinery and displays – and to help manage complex supply chains. Our capabilities and approach are unique in our industry and support our vision to be the premier partner and unrivaled provider of winning solutions for our customers. As our customers increase their demand for higher value, more functional packaging solutions, the mix of our business is shifting toward higher value packaging solutions and away from lower margin paper markets.

WestRock is the premier partner and unrivaled provider of sustainable, winning paper and packaging solutions for our customers and we are delivering value for all our stakeholders including our customers, teammates and stockholders.

On behalf of the Board and our 50,000 incredible teammates around the world, thank you for your investment in

WestRock. We remain confident that WestRock will emerge from the pandemic a stronger company that will be positioned to generate consistent, profitable growth over the long term.

Very truly yours,

 

 

Steven C. Voorhees, President and Chief Executive Officer

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

 

TIME AND DATE:		9:00 a.m., Eastern Time, on Friday, January 29, 2021
PLACE:		Online via webcast at www.virtualshareholdermeeting.com/WRK2021.
		Due to concerns related to COVID-19, the annual meeting of stockholders will be a virtual meeting, conducted exclusively via live audio webcast. There will not be a physical location for the annual meeting, and you will not be able to attend the meeting in person.
ITEMS OF BUSINESS:		(1)  To elect 12 directors
		(2)  To hold an advisory vote to approve executive compensation
		(3)  To approve the WestRock Company 2020 Incentive Stock Plan
		(4)  To ratify the appointment of Ernst & Young LLP to serve as our independent registered public accounting firm
		(5)  To transact any other business that properly comes before the meeting or any adjournment of the meeting
WHO MAY VOTE:		You may vote if you were a holder of our common stock of record on December 4, 2020
DATE THESE PROXY MATERIALS WERE FIRST MADE AVAILABLE ON THE INTERNET:		December 14, 2020

TABLE OF CONTENTS

 

PROXY STATEMENT SUMMARY
Meeting Information			1
Meeting Agenda			1
Director Nominees			1
Performance Highlights and Key Accomplishments			2
Governance Highlights			3
Compensation Highlights			4
BOARD AND GOVERNANCE MATTERS
Item 1. Election of Directors			5
Governance Framework			5
Board Composition			6

Board Operations			12
Director Compensation			17
Certain Relationships and Related Transactions			18
Communicating with the Board			18
COMPENSATION MATTERS
Item 2. Advisory Vote to Approve Executive Compensation			19
Item 3. Approval of the WestRock Company 2020 Incentive Stock Plan			20
Compensation Discussion and Analysis			24
Executive Compensation Tables			38
CEO Pay Ratio			46
AUDIT MATTERS
Item 4. Ratification of Appointment of Ernst & Young, LLP			47
Report of the Audit Committee			47
Fees of the Independent Registered Public Accounting Firm			48
Pre-Approval Policies and Procedures			48
OTHER IMPORTANT INFORMATION
Beneficial Ownership of Common Stock			49
Stockholder Proposals or Director Nominations for 2021 Annual Meeting			50
Delinquent Section 16(a) Reports			50
Annual Report on Form 10-K			51
Frequently Asked Questions Regarding the Annual Meeting and Voting			51
Forward Looking Statements			53
Non-GAAP Financial Measures			53

WestRock Company 2020 Incentive Stock Plan			Ex. A.

PROXY STATEMENT SUMMARY

This summary highlights information contained elsewhere in this Proxy Statement. You should read this entire Proxy Statement carefully before voting.

MEETING INFORMATION

 

Time and Date		9:00 a.m., Eastern Time, on Friday, January 29, 2021
Location		Online via webcast at www.virtualshareholdermeeting.com/WRK2021
Record Date		December 4, 2020

MEETING AGENDA

Proposals		Board Recommendation		Page
Election of 12 Directors		FOR each nominee		5
Advisory Vote to Approve Executive Compensation		FOR		19
Approval of the WestRock Company 2020 Incentive Stock Plan		FOR		20
Ratification of Appointment of Ernst & Young, LLP		FOR		47

DIRECTOR NOMINEES

 

Name		Age		Director Since		Experience		Committee Memberships		Other Public Company Boards
Colleen F. Arnold *		63		2018		Former Senior Vice President, Sales and Distribution, International Business Machines Corporation		CC, NCG		0
Timothy J. Bernlohr *		61		2015		Managing Member, TJB Management Consulting, LLC		EC, CC **, NCG		3
J. Powell Brown *		53		2015		President and CEO, Brown & Brown, Inc.		NCG, FC		1
Terrell K. Crews *		65		2015		Former Executive Vice President, CFO, Monsanto Corporation		AC, FC**		2
Russell M. Currey *		59		2015		President, Boxwood Capital, LLC		AC, FC		0
Suzan F. Harrison *		63		2020		Former President, Global Oral Care, Colgate-Palmolive Company		AC, FC		1
John A. Luke		72		2015		Non-Executive Chairman, WestRock Company; Former Chairman and CEO, MeadWestvaco Corporation		EC **		1
Gracia C. Martore *		69		2015		Former President and CEO, TEGNA, Inc.		EC, AC **, CC		2
James E. Nevels *		68		2015		Chairman, The Swarthmore Group		CC, NCG		1
Steven C. Voorhees		66		2015		President and CEO, WestRock Company		EC		1
Bettina M. Whyte *		71		2015		President/Owner, Bettina Whyte Consultants, LLC		CC, NCG		0
Alan D. Wilson *§		63		2015		Former Chairman and CEO, McCormick & Company, Inc.		EC, NCG**, FC		1

*	Denotes Independent Director or Nominee; ** Denotes Committee Chair; § Denotes Lead Independent Director

AC	= Audit Committee; CC = Compensation Committee; EC = Executive Committee; FC = Finance Committee; NCG = Governance Committee

 

1

PERFORMANCE HIGHLIGHTS AND KEY ACCOMPLISHMENTS

Our fiscal 2020 performance highlights include:

 

$17.6 billion Net Sales				$2.1 billion Net Cash Provided by Operating Activities				$2.8 billion Segment EBITDA

Our fiscal 2020 key accomplishments include:

 

 

 

 

2

GOVERNANCE HIGHLIGHTS

We believe good corporate governance supports long-term value creation for our stockholders. The “Board and Governance Matters” section beginning on page 5 describes our corporate governance framework, which supports independent oversight and accountability.

 

Independent Oversight				Accountability
•   11 of 12 director nominees are independent   •   Lead Independent Director   •   All independent committees (other than Executive Committee)   •   Mandatory director retirement age				•   Annual election of all directors   •   Majority voting in uncontested elections   •   Annual Board and committee self-evaluations   •   Annual advisory vote on executive compensation   •   Stock ownership guidelines and stock retention policy   •   Over-boarding policy

Our current directors possess relevant skills and experiences that facilitate the oversight of our strategy and management.

 

46% Other Public Company CEO Experience

92% Other Public Company Board Experience

62% Manufacturing Experience

69% Enterprise Risk Management Experience

Board Refreshment and Diversity

We recognize the importance of board refreshment. The Nominating and Corporate Governance Committee (the “Governance Committee”) engaged a consultant in 2017 to support a multi-year board refreshment process. Colleen Arnold and Suzan Harrison joined the Board in 2018 and 2020, respectively. The addition of these directors demonstrates the Board’s commitment to refreshment with independent nominees who provide perspectives and experience to advance our business strategy. Additionally, we recognize the importance of board diversity. The number of our female director nominees has increased from 17% of our total director nominees in 2017 to 33% in 2020.

In October 2020, the Board adopted the WestRock Company Diversity Search Policy, pursuant to which we will include qualified female and racially or ethnically diverse candidates on the initial lists of candidates from which new management-supported director nominees recruited from outside WestRock are chosen by the Board.

Environment, Social and Governance Oversight

We recently amended the Governance Committee’s charter to provide that one of its principle duties and responsibilities is to oversee our policies, strategies and programs related to environment, social and governance (“ESG”) matters, including sustainability matters. We believe this change positions us to continue to respond effectively to ESG matters as they arise.

Human Capital Management

The Board believes that effective human capital management is essential to our success and the Board is actively engaged and involved in talent management and succession planning. For example, the Board oversees and annually reviews leadership development and assessment initiatives, as well as short- and long-term succession plans for our CEO and senior management. As part of an ongoing leadership succession planning process and working closely with our CEO and Chief Human Resources Officer, the Board regularly reviews our talent strategy. In fiscal 2020, the Board discussed talent management and/or succession planning at each of its quarterly meetings.

Stockholder Engagement

We conduct year-round, proactive stockholder engagement to ensure that management and the Board understand and consider the issues that matter most to our stockholders. In addition to our regular engagement with our stockholders, we conducted an outreach program in the fall of 2020. We requested meetings with the corporate governance teams at stockholders representing 53% of our outstanding shares, as a result of which we engaged with teams at stockholders representing 19% of our outstanding shares. Among the topics discussed were capital allocation priorities, sustainability and diversity.

 

3

COMPENSATION HIGHLIGHTS

Pay for Performance

Our executive compensation program is based on a pay-for-performance model. For fiscal 2020:

 

g

100% of our named executive officers’ (“NEOs”) STI goals were tied to a combination of Company, segment and/or unit performance

 

g

75% of our NEOs’ long-term incentive (“LTI”) award value was tied to overall Company performance

 

g

Due to the impact and potential impact of COVID-19 on our business and financial results, in May 2020 the Compensation Committee determined to:

 

•

Reduce our CEO’s base salary by 25% and our other NEOs’ base salaries by 15% each, in all cases from May 1, 2020 through December 31, 2020

 

•

Set payments under the fiscal 2020 STI program at the threshold level (50% of the target opportunity) and make payouts following the end of fiscal 2020 in the form of Common Stock, rather than cash – payouts to our NEOs were later increased by 5% based on the results of a safety modifier that exceeded objectives for fiscal 2020

Pay at Risk

A significant portion of our NEOs’ compensation is tied to performance. This allocation of variable target direct compensation aligns with our compensation philosophy of motivating our executive officers to achieve our business objectives in the short term and to grow our business to create long-term value for our stockholders.

 

The value realized by our CEO from LTI is based entirely on the value of our Common Stock and our financial and operational performance. Due to the strong alignment between pay and performance over the last three years, our CEO’s total realizable pay in fiscal 2020 is 34% lower than his targeted pay for the same period.

 

CEO and President Realizable Pay

 

Amounts are shown in thousands of dollars. Amounts shown for each target pay column reflect (a) base salary paid during the fiscal year, (b) the target annual performance bonus amount and (c) the fair value of equity (derived by multiplying the number of shares at target by the closing price of our Common Stock on the grant date). Amounts shown for each realizable pay column reflect (i) base salary paid during the fiscal year, (ii) the annual performance bonus amount paid, (iii) the value of time-based restricted stock based on the closing price of our Common Stock on September 30, 2020 and (iv) the expected value of performance-based restricted stock based on our cash flow performance and relative total shareholder return performance through September 30, 2020.

 

4

BOARD AND GOVERNANCE MATTERS

 

GOVERNANCE FRAMEWORK

All of our corporate powers are exercised by or under the authority of our board of directors (the “Board”), and our business and affairs are managed under the direction of the Board, subject to limitations and other requirements in our charter documents or in applicable statutes, rules and regulations, including those of the Securities and Exchange Commission (“SEC”) and the New York Stock Exchange (the “NYSE”).

Our governance framework supports independent oversight and accountability.

 

		Independent Oversight				Accountability
		•   11 of 12 director nominees are independent				•   Annual election of all directors
		•   Lead Independent Director				•   Majority voting in uncontested elections
		•   All independent committees (other than Executive Committee)				•   Annual Board and committee self-evaluations
		•   Mandatory director retirement age				•   Annual advisory vote on executive compensation
						•   Stock ownership guidelines and stock retention policy
						•   Over-boarding policy

Our governance framework is based on the key governance documents listed below, each of which is reviewed by the Board at least annually, except for our Bylaws (as defined below) and certificate of incorporation, which are reviewed periodically:

 

•

Amended and Restated Bylaws (our “Bylaws”)

 

•

Amended and Restated Certificate of Incorporation

 

•

Corporate Governance Guidelines (the “Guidelines”)

 

•

Charters of the Audit Committee, Compensation Committee, Governance Committee and Finance Committee

 

•

Code of Conduct

 

•

Code of Business Conduct and Ethics for Directors

 

•

Code of Ethical Conduct for CEO and Senior Financial Officers.

Copies of these documents are available on our website, www.westrock.com, or upon written request sent to our Corporate Secretary. The information on our website is not part of this Proxy Statement.

 

5

BOARD COMPOSITION

The Board consists of 13 directors. Mr. Powers has not been nominated for re-election because he has reached the age of 72, which is our mandatory director retirement age. Pursuant to the Guidelines, Mr. Powers will retire from the Board effective at the annual meeting of stockholders scheduled for January 29, 2021 (the “2021 Annual Meeting”).

Director Independence

Under the Guidelines and the NYSE corporate governance listing standards (the “NYSE Standards”), the Board must consist of a majority of independent directors. The Board annually reviews director independence under standards set forth in the Guidelines. The Board has affirmatively determined that all director nominees, other than Mr. Voorhees (who is an employee of WestRock), are independent.

In the normal course of business, we purchase products and services from many suppliers and we sell products and services to many customers. In some cases, these transactions have occurred with companies with which our directors have relationships as directors or executive officers. Board members also have relationships as directors with companies that hold or held our securities. In 2020, the Board considered a lease of office space for Bradley Currey, the retired chairman and CEO of RockTenn and father of Russell Currey, a Board member. The Board determined that these relationships were not material (individually or collectively) for purposes of its affirmative determinations of director independence.

Director Nomination Process

The Governance Committee is responsible for evaluating and recommending Board candidates. After completing its evaluation of candidates, the Governance Committee presents its recommendations to the Board for consideration and approval.

 

Candidates   recommended to   Governance Committee

®

Governance Committee   considers candidates’   qualifications

®

Governance Committee   recommends candidates   to Board

®

Board determines   nominees for election

The Governance Committee periodically assesses the Board to ensure that it has the right mix of experience, qualifications and skills. A list of the skills and experiences that the Governance Committee considers important in light of our current business strategy and structure, along with an indication of how many director nominees possess each category of skill or experience, appears on page 7. The director nominees’ biographies beginning on page 8 include each director nominee’s relevant experience, qualifications and skills.

The Governance Committee periodically assesses the appropriate size of the Board and any vacancies that are expected due to retirement or otherwise. If no vacancies are anticipated, the Governance Committee considers the qualifications of incumbent directors. If vacancies arise or are anticipated, it considers potential director candidates who may come to the attention of the Governance Committee through current directors, professional search firms and advisors or other individuals, including stockholders. To nominate a candidate for next year’s annual meeting of stockholders, a stockholder must deliver or mail its nomination submission to WestRock Company, 1000 Abernathy Road NE, Atlanta, Georgia 30328, Attention: Corporate Secretary in accordance with the timing requirements included in our Bylaws as specified in “Other Important Information — Stockholder Proposals or Director Nominations for 2022 Annual Meeting”.

The Governance Committee evaluates potential candidates against the standards and qualifications set forth in the Guidelines, as well as other relevant factors it deems appropriate. In addition, each candidate must:

 

•

Be free of conflicts of interest and other legal and ethical issues that would interfere with the proper performance of the responsibilities of a director (recognizing that some directors may also be executive officers of the Company).

 

•

Be committed to discharging directors’ duties in accordance with the Guidelines and applicable law.

 

•

Be willing and able to devote sufficient time and energy to carrying out the director’s duties effectively and be committed to serving on the Board for an extended period of time.

 

•

Have sufficient experience to enable the director to meaningfully participate in deliberations of the Board and one or more of its committees, and to otherwise fulfill the director’s duties.

 

6

 

7

Majority Voting Standard in Uncontested Elections

Our directors are elected by a majority of the votes cast for them in uncontested elections. If a director does not receive a greater number of “for” votes than “against” votes, then the director must tender his or her resignation to the Board. The Board then determines whether to accept the resignation. Our directors are elected by a plurality vote standard in contested elections.

Over-Boarding Policy

Our directors may not serve on more than four other public company boards, and a director who serves as a CEO must limit his or her other public company directorships to two. None of our director nominees serves on more than three other public company boards.

Director Nominees

After many years of distinguished service, Mr. Powers will retire from the Board at the 2021 Annual Meeting – he reached age 72 during 2020 and has not been nominated for re-election pursuant to our mandatory director retirement age policy. We would like to take this opportunity to thank Mr. Powers for many years of effective service to the Board.

After evaluating each director and the composition of the Board, the Governance Committee recommended all of the current directors (other than Mr. Powers) for election at the 2021 Annual Meeting. If elected, each of the 12 nominees will hold office until the next annual meeting of stockholders and until his or her successor is elected and qualified. Each nominee has agreed to serve as a director if elected. If for some unforeseen reason a nominee becomes unwilling or unable to serve, proxies will be voted as recommended by the Board to elect substitute nominees recommended by the Board or the Board may allow the vacancy created to remain open until such time as it is filled by the Board, or the Board may determine not to elect substitute nominees and may instead determine to reduce the size of the Board.

Information about the nominees, including information concerning their qualifications for office, is set forth below.

 

COLLEEN F. ARNOLD
Age: 63     Director Since: 2018     Independent     Board Committees:   •  Compensation •  Governance     Other public company boards:   •  None     Other public company boards   within 5 years:   •   Cardinal Health, Inc.		Background: Ms. Arnold has served as a director of the Company since 2018. She served as senior vice president, sales and distribution for International Business Machines Corporation (“IBM”) from 2014 to 2016. Prior to that, Ms. Arnold held a number of senior positions with IBM from 1998 to 2014, including senior vice president, application management services, IBM Global Business Services; general manager of GBS Strategy, Global Consulting Services, Global Industries and Global Application Services; general manager, Europe; general manager, Australia and New Zealand Global Services; and chief executive officer of Global Services Australia.
		Key Qualifications and Skills: Ms. Arnold’s experience serving in a number of senior roles with a large, global technology company provides her with global business experience, senior executive experience, consumer markets experience, technology experience and experience working for a company with significant scale.

 

8

TIMOTHY J. BERNLOHR
Age: 61   Director Since: 2015   Independent   Board Committees:   •  Compensation (Chair) •  Executive •  Governance   Other public company boards:   •  Atlas Air Worldwide Holdings, Inc. •  International Seaways •  Skyline Champion Corp.   Other public company boards within 5 years:   •  Chemtura Corp. •  Overseas Shipholding Group, Inc.		Background: Mr. Bernlohr served as a director of Smurfit-Stone Container Corporation (“Smurfit-Stone”) from 2010 until it was acquired by RockTenn in 2011, and he served as a director of RockTenn from 2011 until the effective date of the 2015 merger of RockTenn Company and MeadWestvaco Corporation (the “Combination”) when he became a director of the Company. Mr. Bernlohr is the managing member of TJB Management Consulting, LLC, a consultant to businesses in transformation and a provider of interim executive management and strategic planning services. From 1997 to 2005, he served in various executive capacities, including as president and CEO, at RBX Industries, Inc. Prior to joining RBX Industries, Mr. Bernlohr spent 16 years in various management positions with Armstrong World Industries, Inc.
		Key Qualifications and Skills: Mr. Bernlohr’s experience as a strategic consultant, a director of various publicly traded companies and as the CEO of an international manufacturing company provides him with broad corporate strategy and general business knowledge.

 

J. POWELL BROWN
Age: 53   Director Since: 2015   Independent   Board Committees:   •  Governance •  Finance   Other public company boards:   •  Brown & Brown, Inc.   Other public company boards within 5 years:   •  None		Background: Mr. Brown served as a director of RockTenn from 2010 until the effective date of the Combination when he became a director of the Company. He has served as president of Brown & Brown, Inc. since 2007 and as CEO since 2009. Mr. Brown previously served as a regional executive vice president of the company. From 2006 to 2009, he served on the board of directors of SunTrust Bank/ Central Florida, a commercial bank and subsidiary of SunTrust Banks, Inc.
		Key Qualifications and Skills: Mr. Brown’s experience as a CEO of a publicly traded insurance services company provides him with broad experience and knowledge of risk management and loss minimization and mitigation, as well as perspective on leadership of publicly traded companies.

 

TERRELL K. CREWS
Age: 65   Director Since: 2015   Independent   Board Committees:   •  Audit •  Finance (Chair)   Other public company boards:   •  Hormel Foods Corporation •  Archer Daniels Midland Company   Other public company boards within 5 years:   •  None		Background: Mr. Crews served as a director of Smurfit-Stone from 2010 until it was acquired by RockTenn in 2011, and he served as a director of RockTenn from 2011 until the effective date of the Combination when he became a director of the Company. Mr. Crews served as executive vice president and CFO of Monsanto Company from 2000 to 2009, and as the CEO of Monsanto’s vegetable business from 2008 to 2009.
		Key Qualifications and Skills: Mr. Crews’ experience as a CFO and executive of a publicly traded company and as a director of other public companies provides him with broad business knowledge and in-depth experience in complex financial matters. He also has experience working for a company with significant scale.

 

9

RUSSELL M. CURREY
Age: 59   Director Since: 2015   Independent   Board Committees:   •  Audit •  Finance   Other public company boards:   •  None   Other public company boards within 5 years:   •  None		Background: Mr. Currey served as a director of RockTenn from 2003 until the effective date of the Combination when he became a director of the Company. He has served as the president of Boxwood Capital, LLC, a private investment company, since 2013. Mr. Currey worked for RockTenn from 1983 to 2008 and served as executive vice president and general manager of its corrugated packaging division from 2003 to 2008.
		Key Qualifications and Skills: Mr. Currey’s experience with RockTenn in a number of leadership roles over a period of 25 years provides him with substantial knowledge of our industry, business and customers.

 

SUZAN F. HARRISON
Age: 63   Director Since: 2020   Independent   Board Committees:   •  Audit •  Finance   Other public company boards:   •  Archer Daniels Midland Company   Other public company boards within 5 years:   •  None		Background: Ms. Harrison has served as a director of the Company since January 2020. She served as President of Global Oral Care at Colgate-Palmolive Company (“Colgate”), a worldwide consumer products company focused on the production, distribution, and provision of household, health care, and personal products, from 2012 to 2019. Previously, Ms. Harrison served as President of Hill’s Pet Nutrition Inc. North America from 2009 to 2011, Vice President, Marketing for Colgate U.S. from 2006 to 2009 and Vice President and General Manager of Colgate Oral Pharmaceuticals, North America and Europe from 2005 to 2006. She held a number of other leadership roles at Colgate beginning in 1983.
		Key Qualifications and Skills: Ms. Harrison’s experience serving in a number of senior roles with a large, global consumer products company provides her with global business experience, senior executive experience, consumer markets experience and experience working for a company with significant scale.

 

JOHN A. LUKE
Age: 72   Director Since: 2015   Independent   Non-Executive Chairman   Board Committees   •  Executive (Chair)   Other public company boards:   •  The Timken Company   Other public company boards within 5 years:   •  The Bank of New York Mellon Corporation •  Dominion Energy Midstream Partners, L.P.		Background: Mr. Luke served as chairman and CEO of MeadWestvaco from 2002 until the effective date of the Combination when he became a director and our Non-Executive Chairman. He spent 36 years with MeadWestvaco and its predecessor company, Westvaco Corporation, serving in a variety of positions. From 1996 to 2002, Mr. Luke served as chairman, president and CEO of Westvaco. He has served as a director of FM Global, a privately-held mutual insurance company, since 1999.
		Key Qualifications and Skills: Mr. Luke’s background, experience and judgment, and his unique knowledge and understanding of MeadWestvaco’s operations, provide him with valuable leadership, business and governance skills, as well as significant experience in the paper and packaging industry.

 

10

GRACIA C. MARTORE
Age: 69   Director Since: 2015   Independent   Board Committees:   •  Audit (Chair) •  Compensation •  Executive   Other public company boards:   •  United Rentals Inc. •  Omnicom Group Inc.   Other public company boards within 5 years:   •  TEGNA Inc. (formerly Gannett Co., Inc.)		Background: Ms. Martore served as a director of MeadWestvaco from 2012 until the effective date of the Combination when she became a director of the Company. She served as the president and CEO and as a director of TEGNA Inc. (formerly Gannett Co., Inc.) from 2011 to 2017, and she served as president and COO of Gannett from 2010 to 2011. Ms. Martore also served as Gannett’s executive vice president and CFO from 2006 to 2010, its senior vice president and CFO from 2003 to 2006 and in various other executive capacities beginning in 1985. She has served as a director of FM Global since 2005, of The Associated Press since 2013 and of Learning Tree International (a company whose shares previously traded over-the-counter until 2018 when it terminated its registration under the Exchange Act) since January 2019.
		Key Qualifications and Skills: Ms. Martore’s background, experience and judgment as CEO and CFO of a publicly traded company provide her with leadership, business, financial and governance skills. She also has experience working for a company with significant scale.

 

JAMES E. NEVELS
Age: 68   Director Since: 2015   Independent   Board Committees:   •  Compensation •  Governance   Other public company boards:   •  Alcoa Corp.   Other public company boards within 5 years:   •  The Hershey Company •  XL Group Ltd. •  First Data Corp.		Background: Mr. Nevels served as a director of MeadWestvaco from 2014 until the effective date of the Combination when he became a director of the Company. He has served as chairman of The Swarthmore Group, an investment advisory firm, since 1991. Mr. Nevels served as a director of The Hershey Company from 2007 to 2017 and as the lead independent director of The Hershey Company from 2015 to 2017, and he served as chairman of the company from 2009 to 2015. Mr. Nevels also served as a director of the Federal Reserve Bank of Philadelphia from 2010 to 2015 (and as its chairman from 2014 to 2015) and of MMG Insurance Company, a privately-held provider of insurance services. He served as our Lead Independent Director from September 2017 through February 2019.
		Key Qualifications and Skills: Mr. Nevels’ background and experience as an investment advisor and board member, chairman and lead independent director of public companies provide him with financial expertise and broad knowledge and perspective on the governance and leadership of publicly traded companies.

 

STEVEN C. VOORHEES
Age: 66   Director Since: 2015   President and CEO   Board Committees:   •  Executive   Other public company boards:   •  Truist Financial Corp. (formerly SunTrust Banks, Inc.)   Other public company boards within 5 years:   •  None		Background: Mr. Voorhees served as a director of RockTenn from 2013 until the effective date of the Combination when he became a director of the Company. He served as RockTenn’s CEO from 2013 until the effective date of the Combination when he became our president and CEO. Mr. Voorhees served as RockTenn’s executive vice president and CFO from 2000 to 2013, chief administrative officer from 2008 to 2013 and president and COO in 2013.
		Key Qualifications and Skills: Mr. Voorhees’ experience with RockTenn and his service as our president and CEO provide him with extensive knowledge of our business, strategy and capabilities. The Board also believes Mr. Voorhees’ presence on the Board helps provide a unified focus for management to execute our strategy and business plans.

 

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BETTINA M. WHYTE
Age: 71   Director Since: 2015   Independent   Board Committees:   •  Compensation •  Governance   Other public company boards:   •  None   Other public company boards within 5 years:   •  AGL Resources Inc.		Background: Ms. Whyte served as a director of RockTenn from 2007 until the effective date of the Combination when she became a director of the Company. She has been the president and owner of Bettina Whyte Consultants, LLC since 2015. Ms. Whyte served as a managing director and senior advisor at Alvarez and Marsal Holdings, LLC, a world-wide business consulting firm, from 2011 to 2015. She has served as an interim CEO and crisis manager of numerous billion dollar corporations and has been instrumental in the debt restructuring of Puerto Rico. Ms. Whyte has served as a director of Amerisure Insurance since 2002, and she serves as a trustee of the National Museum of Wildlife Art of the United States.
		Key Qualifications and Skills: Ms. Whyte’s roles in the financial and operational restructuring of complex international and domestic businesses, her service as an executive of numerous troubled multinational public and private companies and her past service as a director of other public companies provide her with broad experience with financial and operational issues, as well as with governance issues.

 

ALAN D. WILSON
Age: 63   Director Since: 2015   Lead Independent Director   Board Committees:   •  Executive •  Finance •  Governance (Chair)   Other public company boards:   •  T. Rowe Price Group Inc.   Other public company boards within 5 years:   •  McCormick & Company, Inc.		Background: Mr. Wilson served as a director of MeadWestvaco from 2011 until the effective date of the Combination when he became a director of the Company. He served as chairman of the board of McCormick & Company, Inc. from 2009 to 2017 and he served as its CEO from 2008 to 2016. Mr. Wilson joined McCormick in 1993 and served in a variety of other positions, including as president from 2007 to 2015, president of North American Consumer Products from 2005 to 2006, president of the U.S. Consumer Foods Group from 2003 to 2005 and vice president - sales and marketing for the U.S. Consumer Foods Group from 2001 to 2003.
		Key Qualifications and Skills: Mr. Wilson’s background, experience and judgment as CEO of a publicly traded multinational consumer food company provides him with leadership, market expertise, and business and governance skills. He also has experience working for a company with significant scale.

BOARD OPERATIONS

Board Leadership Structure

Our Bylaws separate the roles of CEO and Non-Executive Chairman and provide for a Lead Independent Director. The Board believes this leadership structure is the most effective for us at this time because it allows our CEO to focus on running our business and combines a strong Non-Executive Chairman and Lead Independent Director to pursue sound governance practices that benefit the long-term interests of our stockholders.

 

Position		Role
CEO and President		•  Has general supervision of our business and affairs, and is recognized as our leader by business partners, employees, stockholders and other parties.
		•  Provides oversight, direction and leadership to the Board, and facilitates communication among directors and the regular flow of information between management and directors.
Non-Executive Chairman		•  Serves as chair of the Executive Committee.
		•  Presides during Board and stockholder meetings.
		•  Provides input, as appropriate, with respect to the CEO performance evaluation process, the Board performance self-evaluation process and Board succession planning.
		•  Presides during meetings of the Board at which our Non-Executive Chairman is not present, including executive sessions of the independent directors.
Lead Independent Director		•  May call meetings of the independent directors.
		•  Serves as a liaison between our Non-Executive Chairman and the independent directors.
		•  If requested by a major stockholder, ensures he or she is available for consultation and direct communication.

 

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Board Committees

The Board assigns responsibilities and delegates authority to its committees, which regularly report on their activities and actions to the Board. The Board has determined that each current member of each committee (other than the Executive Committee) is “independent” within the meaning of the NYSE Standards and the Guidelines and meets any applicable additional committee-specific independence requirements. The purpose and principle responsibilities of each committee are summarized below and set forth in more detail in each committee’s written charter (other than the Executive Committee, which does not have a charter), which can be found on our website.

 

		AUDIT COMMITTEE   Members: Gracia C. Martore (Chair) Terrell K. Crews Russell M. Currey Suzan F. Harrison Timothy H. Powers (1)   Meetings in Fiscal 2020: 8   Attendance Rate: 100%   * All members meet the independence requirements of Rule 10A-3 of the Exchange Act, the NYSE and the Guidelines, and are “financially literate” within the meaning of the NYSE Standards. Each of Ms. Martore and Messrs. Crews and Powers is an “audit committee financial expert” within the meaning of SEC regulations.				Purpose:   •   Assists the Board in fulfilling its responsibilities with respect to oversight of:   -  the integrity of our financial statements   -  our system of internal control over financial reporting   -  the performance of our internal audit function   -  our system of compliance with legal and regulatory requirements.   •   Oversees the independence, qualifications and performance of our independent auditor.     Principal Responsibilities:   •   Directly appoints, compensates, retains and oversees the work of our independent auditor.   •   Discusses with management policies with respect to risk assessment and risk management.
		COMPENSATION COMMITTEE   Members: Timothy J. Bernlohr (Chair) Colleen F. Arnold Gracia C. Martore James E. Nevels Timothy H. Powers (1) Bettina M. Whyte   Meetings in Fiscal 2020: 5   Attendance Rate: 97%   * All members meet the independence requirements of the NYSE, the outside director requirements of the Internal Revenue Code of 1986 (the “Tax Code”) and the Guidelines, and qualify as “non-employee directors” for purposes of Rule 16b-3(b)(3)(i) of the Exchange Act.				Purpose:   •   Assists the Board in fulfilling its responsibilities with respect to compensation of our executives and non-employee directors, and oversight of matters relating to our equity compensation and employee benefits plans.   Principal Responsibilities:   •   Sets the overall compensation strategy and compensation policies for our executives and non-employee directors.   •   Approves corporate goals/objectives relating to CEO and senior executive compensation, evaluates CEO’s performance and determines/approves CEO’s compensation level and approves senior executives’ compensation.   •   Makes recommendations for compensating our non-employee directors.   •   Reviews our incentive compensation arrangements to confirm that incentive pay does not encourage inappropriate risk taking.   •   Directly appoints, terminates, compensates and oversees the work of its advisors.
		GOVERNANCE COMMITTEE   Members: Alan D. Wilson (Chair) Colleen F. Arnold Timothy J. Bernlohr J. Powell Brown James E. Nevels Bettina M. Whyte   Meetings in Fiscal 2020: 4   Attendance Rate: 100%   * All members meet the independence requirements of the NYSE and the Guidelines.				Purpose   •   Assists the Board in fulfilling its responsibilities with respect to:   -  identifying and recommending qualified candidates for the Board   -  overseeing the evaluation of the effectiveness of the Board and its committees   -  reviewing matters on corporate governance, including trends and practices   -  maintaining the Guidelines and other governance policies and procedures   -  overseeing our policies, strategies and programs related to ESG matters   -  CEO succession   -  Board refreshment.   Principal Responsibilities:   •   Evaluates and recommends Board candidates.   •   Evaluates and recommends changes to the size, composition and structure of the Board and its committees.

 

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		FINANCE COMMITTEE   Members: Terrell K. Crews (Chair) J. Powell Brown Russell M. Currey Suzan F. Harrison Alan D. Wilson   Meetings in Fiscal 2020: 5   Attendance Rate: 100%				Purpose   •   Assists the Board in fulfilling its responsibilities with respect to overseeing our financial management and resources.   Principal Responsibilities:   •   Reviews and recommends capital budgets to the Board for approval.   •   Reviews management’s assessment of our capital structure, including dividend policies and stock repurchase programs, debt capacity and liquidity.   •   Reviews financing and liquidity initiatives proposed by management.
		EXECUTIVE COMMITTEE   Members:   John A. Luke (Chair) Timothy J. Bernlohr Gracia C. Martore Steven C. Voorhees Alan D. Wilson   Meetings in Fiscal 2020: 0				Principal Responsibilities:   •   Exercises the authority of the Board in managing our business and affairs; however, it does not have the power to (i) approve, adopt or recommend to our stockholders any action or matter (other than the election or removal of directors) that Delaware law requires to be approved by stockholders or (ii) adopt, amend or repeal our Bylaws.

 

(1)

Mr. Powers is a current director and member of the Audit Committee and Compensation Committee. He was not nominated for election at the 2021 Annual Meeting due to his anticipated retirement.

 

Meeting Attendance in Fiscal 2020 In fiscal 2020, the Board held seven meetings and its committees held a total of 22 meetings. Overall attendance was approximately 99%, and each director attended 75% or more of the aggregate of all meetings of the Board and the committees on which he or she served. Each director attended our annual meeting of stockholders on January 31, 2020.   Meetings of Non-Management Directors and Independent Directors Our non-management directors meet in regularly scheduled executive sessions conducted outside the presence of officers or management directors, unless non-management directors request managers to attend. Independent directors meet separately from other directors in executive session at least once a year.		Governance Spotlight In addition to the formal meetings of the Board and its committees held in fiscal 2020, the Board held 20 optional meetings. These meetings were initiated in response to the potential risks to our business posed by COVID-19 and were used by the Board to ensure its effective oversight of the Company during uncertain times.

Stockholder Engagement

Stockholder engagement is a key pillar of our corporate governance framework. We conduct year-round, proactive stockholder engagement to ensure management and the Board understand and consider the issues that matter most to our stockholders. We believe ongoing engagement with our stockholders allows us to respond effectively to stockholder concerns.

We provide regular updates regarding our financial performance and strategic actions to the investor community through our participation in investor conferences, one-on-one meetings, earnings calls, and educational investor and analyst conversations. We also communicate with stockholders and other stakeholders through our SEC filings, press releases, website and sustainability report. In addition to our regular engagement initiatives, in the fall of 2020 we conducted an outreach program with the corporate governance teams of our largest stockholders. We requested meetings with the corporate governance teams at stockholders collectively representing 53% of our outstanding shares. As a result, we conducted meetings with corporate governance teams at stockholders representing 19% of our outstanding shares. We discussed, among other topics, capital allocation priorities, sustainability and diversity, and we shared feedback from these meetings with the Board.

 

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Human Capital Management

The Board believes that effective talent development and human capital management are important to our success. The Board is actively engaged and involved in management succession planning and talent management – it oversees and annually reviews leadership development and assessment initiatives, as well as short- and long-term succession plans for our CEO and senior management. For example, as part of an ongoing leadership succession planning process and working closely with our CEO and Chief Human Resources Officer, the Board regularly reviews our talent strategy to ensure that it supports our business strategy. Succession plans for executive officers are reviewed by the Board at least annually, and successor candidates are identified with input from our CEO. Our CEO also meets annually in executive session with the Board to review our internal talent pipeline. High-potential leaders are given exposure to directors through formal presentations and informal events. In fiscal 2020, the Board discussed talent management or succession planning at each of its quarterly meetings.		Governance Spotlight In fiscal 2020, we established five WestRock Resource Groups as a way for our employees to get involved with the conversations shaping our company: Women + Allies, African American/Black + Allies, Early Career + Allies, Hispanic/LatinX + Allies and Veterans + Allies.

In fiscal 2018, we engaged a consultant to assess our senior-most leaders, capture perspectives from their teams and colleagues, and contribute to their individual development plans. In fiscal 2019 and fiscal 2020, we conducted a similar process. We believe that this work, combined with our annual talent and organizational discussions for each business and function, enables us to build effective management succession plans and ensure continuity of leadership.

Sustainability

As sustainability has become increasingly important to our customers, employees and business strategy, we have become even more focused on operating our business in a sustainable manner. In 2015, we set a number of sustainability goals. The following table addresses the progress we have achieved through the end of fiscal 2020.

 

Goal		Progress
Forestry – certify all of our wholly-owned manufacturing facilities to internationally recognized chain of custody standards by 2025.		• 81% of facilities have been certified
Climate – reduce greenhouse gas emissions by 20% per ton from 2015 baseline by 2025.		• 15% intensity reduction; 21% absolute reduction
Water – map the water use at our most water-intensive operations by 2018 and develop water use reduction plans for strategic watersheds by 2020.		• Accomplished
Innovation – apply sustainability principles to all of our product designs.		• 30 new products with defined sustainability benefits launched in fiscal 2020
Supplier Diversity – increase managed spend with minority/diverse suppliers.		• More than $900 million of spend in fiscal 2020
Communities – give back to the communities where we live and work.		• More than $2.4 million of grants provided through the WestRock Employee Relief Fund since 2015

In September 2020, we announced a renewed commitment to sustainability – Imagining and Delivering on the Promise of a Sustainable Future – that focuses on three key areas:

 

•

Supporting People and Communities – we are committed to supporting people and communities through a relentless focus on building a 100% safe work environment for our teammates – a workplace where everyone feels welcome, heard, valued and safe.

 

•

Bettering the Planet – we will build on our 100-year heritage of championing sustainable forestry to ensure that we remain forest-positive where we operate, meaning that we help sustain and grow more trees than we use.

 

•

Innovating for Our Customers and Their Customers – we will innovate for our customers and their customers through continued development of our recyclable, reusable and compostable product portfolio, while reducing waste from our operations that is sent to landfills.

See our website (www.westrock.com/sustainability) for more information, including information in our 2019 GRI Report. The information on our website and in our 2019 GRI Report is not part of this Proxy Statement.

Director Orientation and Continuing Education

New directors participate in an orientation program and receive materials and briefings to become familiar with our business, strategies and governance policies and other documents. Continuing education is provided for all directors through board materials and presentations (including by outside speakers), discussions with management, visits to our facilities and other sources. During fiscal 2020, a third party delivered a presentation to the Board on capital allocation and the Audit Committee received cybersecurity updates from our chief information and digital officer at each of its quarterly meetings. Although we have historically included visits to our facilities as part of our continuing education program, no such visits took place during fiscal 2020 due to concerns related to COVID-19.

 

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Self-Evaluations

The Board and each committee (other than the Executive Committee) conducts an annual self-evaluation. The Governance Committee, which oversees the process and implementation of the self-evaluations, assesses the process of conducting self-evaluations annually and has used a variety of methods over the years to conduct the self-evaluations, including written questionnaires, interviews and discussions. For fiscal 2020, the Governance Committee engaged a consultant to develop a new written questionnaire.

 

Step 1. Process Review In September 2019, the Governance Committee reviewed the self-evaluation process to ensure that it facilitates a candid assessment and discussion of the effectiveness of the Board and each Committee.		®		Step 2. Self-Evaluation Questionnaires In October and November 2019, directors completed written questionnaires that had been developed by a consultant.
Step 3. Evaluation Interviews Between November 2019 and January 2020, our Non- Executive Chairman and Lead Director used the results of the written questionnaires to conduct one-on-one interviews with each director.		®		Step 4. Board and Committee Review In January 2020, the Board discussed the results of the self- evaluation process, including three common themes:   •  Board refreshment   •  Succession planning   •  Strategy   Among other things, the results suggested that the Board and committees are functioning effectively and Board dynamics are healthy.

Risk Oversight

The Board provides oversight of our risk management processes. The Board performs this function as a whole and by delegating to its committees (other than Executive Committee), each of which meets regularly and reports back to the Board. These committees’ risk oversight responsibilities are summarized below. While the Board and its committees oversee risk management, management is charged with managing enterprise risks. The Board recognizes that it is neither possible nor desirable to eliminate all risk; rather, the Board views appropriate risk taking as essential to our long-term success and seeks to understand and oversee critical business risks in the context of our business strategy, the magnitude of the particular risks and the proper allocation of our risk management and mitigation resources.		Governance Spotlight In fiscal 2020, the Board received detailed reports on our compliance programs related to antitrust, trade and product stewardship. In addition, the Audit Committee reviewed cybersecurity compliance matters at each of its quarterly meetings.

The full Board has been, and continues to be, engaged in oversight of our response to COVID-19.

Our internal control environment facilitates the identification and management of risks and regular communications with the Board. Our internal audit department conducts an annual companywide risk assessment that includes interviews with more than 50 leaders to identify and assess our highest impact risks. The Board and its committees receive regular reports from senior managers on areas of material risk, including operational, financial, strategic, competitive, reputational, legal and regulatory risks, and how those risks are managed. Our general counsel informs each committee and the Board of significant and relevant legal and compliance issues. Each committee has access to outside counsel and may engage independent counsel.

 

		AUDIT COMMITTEE   • Oversees risk management related to -  financial statements -  financial reporting and disclosure processes -  financial and other internal controls -  accounting -  legal/compliance matters -  information technology -  cybersecurity   • Oversees the internal audit function.   • Meets separately on a regular basis with representatives of our independent auditing firm and the head of our internal audit department.		COMPENSATION COMMITTEE   •  Oversees risk management related to our compensation philosophy and programs.   •  Reviews our incentive compensation arrangements to confirm incentive pay does not encourage inappropriate risk.   GOVERNANCE COMMITTEE   •  Oversees risk management related to governance policies and procedures, and board organization and membership.   FINANCE COMMITTEE •  Oversees risk management related to our annual capital budget plans and capital structure, and reviews financing and liquidity initiatives.

 

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DIRECTOR COMPENSATION

The Compensation Committee is responsible for setting the overall compensation strategy and policies for our non-employee directors and for recommending to the Board the compensation of non-employee directors. Directors who also serve as employees do not receive payment for service as directors.

In making decisions concerning compensation for non-employee directors, the Compensation Committee considers the director compensation practices of peer companies and whether compensation recommendations align with the interests of our stockholders. We seek to align total non-employee director compensation with the approximate median of peer group total director compensation.

 

In fiscal 2020, the compensation consultant to the Compensation Committee analyzed the competitive position of our director compensation program against the peer group used for executive compensation purposes and examined how each element of our director compensation program compared to those for members of the peer group. Based on this analysis, the compensation consultant determined that our total director pay was approximately 9% below the peer group median. After reviewing these results, and considering other factors, the Compensation Committee recommended to the Board that the value of the annual stock award to directors be increased from $135,000 to $160,000. The Board considered and approved this recommendation in January 2020.		Governance Spotlight In response to COVID-19, the Board decreased the level of our directors’ cash retainers by 25% each between July 1, 2020 and December 31, 2020.

Our non-employee director compensation in fiscal 2020 included the following components:

 

Component		Compensation ($)
Annual cash retainer		115,000
Annual stock award		160,000
Annual Non-Executive Chairman fee		40,000
Annual Lead Independent Director fee		20,000
Annual Committee Chair fees
Audit Committee		20,000
Compensation Committee		20,000
Finance Committee; Governance Committee		17,500

Director Compensation for 2020

 

Name		Fees Earned or Paid in Cash ($)		Stock Awards ($)		All Other Compensation ($)		Total ($)
Colleen F. Arnold		100,626		160,017		0		260,643
Timothy J. Bernlohr		127,813		160,017		0		287,830
J. Powell Brown		100,626		160,017		0		260,643
Terrell K. Crews		118,126		160,017		0		278,143
Russell M. Currey		100,626		160,017		0		260,643
Suzan F. Harrison		100,626		160,017		0		260,643
John A. Luke, Jr.		140,626		160,017		0		300,643
Gracia C. Martore		120,626		160,017		0		280,643
James E. Nevels		100,626		160,017		0		260,643
Timothy H. Powers (1)		100,626		160,017		0		260,643
Bettina M. Whyte		100,626		160,017		0		260,643
Alan D. Wilson		138,126		160,017		0		298,143

(1) Mr. Powers was not nominated for election at the 2021 Annual Meeting because he has reached our mandatory director retirement age.

The amounts reported in the Fees Earned or Paid in Cash column reflect the cash fees earned by each non-employee director in fiscal 2020, whether or not such fees were deferred. These fees were paid in connection with the annual cash retainer, the Non-Executive Chairman’s annual fee, the Lead Independent Director’s annual fee and each Committee Chair’s annual fee.

 

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The amounts reported in the Stock Awards column reflect the grant date fair value associated with stock awards made in fiscal 2020, calculated in accordance with the provisions of Accounting Standards Codification (“ASC”) 718. On January 31, 2020, each non-employee director received 4,103 restricted shares of Common Stock, or restricted stock units (for directors who elected to defer their equity awards pursuant to the WestRock Company 2016 Deferred Compensation Plan for Non-Employee Directors (the “Deferred Compensation Plan”)). See “— Deferred Compensation.” The number of shares and units associated with this award was determined by dividing the value of the annual stock award by the closing price of Common Stock as reported on the NYSE on the grant date.

Deferred Compensation

Non-employee directors may elect annually to defer all of their cash compensation and/or equity award pursuant to the terms of the Deferred Compensation Plan. At the director’s option, we credit his or her (i) cash deferred account with the cash compensation he or she elected to defer and (ii) stock unit account for each restricted share of Common Stock that he or she elected to defer. The rights of the director in the balance credited to his or her deferred cash account are vested at all times, whereas rights in the balance of the stock unit account vest in accordance with the vesting schedule for the related restricted Common Stock grants. During fiscal 2020, Messrs. Powers and Wilson deferred both their cash compensation and equity award, Ms. Harrison deferred only her cash award and Mmes. Arnold, Martore and Whyte deferred only their equity award.

Director Stock Ownership and Retention Requirements

Each non-employee director is required to own at least the greater of (i) 5,000 shares of Common Stock or (ii) a number of shares of Common Stock having a value of not less than five times the annual cash retainer. In determining compliance with these guidelines, stock ownership includes vested and unvested restricted stock awards and restricted stock units. Directors have five years from the date of their initial election to achieve the targeted level of ownership. All non-employee directors are in compliance with these guidelines.

Our non-employee directors are required to retain 50% of the restricted stock, net of any shares used to satisfy any related tax liability upon vesting, awarded to the individual for a period of two years following the vesting of the restricted stock, or until the individual no longer serves as a director. The retention period does not apply to any shares to the extent the recipient continues to own an amount of Common Stock at least equal to the number of shares required under the preceding sentence, plus the number of shares required to be held under our stock ownership guidelines.

Anti-Hedging/Anti-Pledging Policy

We maintain a policy that prohibits our directors and officers, members of our leadership team and other designated employees, if any, from entering into derivative or hedging transactions in our securities, pledging our securities as collateral for a loan or short-selling our securities.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

We require that each executive officer, director and director nominee complete an annual questionnaire and report all transactions since the beginning of the last fiscal year that exceed $120,000 in which we were a participant and in which those persons (or their associates or immediate family members) had or will have a direct or indirect material interest. Management reviews responses to the questionnaires and, if any such transactions are disclosed, the Governance Committee then makes recommendations to the Board with respect to the appropriateness of such transactions. We do not have a formal written policy for approval or ratification of these transactions. Information included in directors’ responses to the questionnaires is reviewed annually by the Board for the purpose of assessing independence under the Guidelines, applicable rules and regulations of the SEC and the NYSE Standards, and we review all responses to ensure that any such transactions adhere to the standards set forth above as well as our various codes of conduct. There was no transaction during fiscal 2020, and there are no currently proposed transactions, in which we were or are to be a participant, the amount involved exceeds $120,000 and an executive officer, director, director nominee, a beneficial owner of five percent or more of our Common Stock or any immediate family members of such persons had or will have a direct or indirect material interest.

COMMUNICATING WITH THE BOARD

Stockholders and other interested parties may communicate with directors (i) by mail at WestRock Company, 1000 Abernathy Road NE, Atlanta, Georgia 30328, (ii) by facsimile at (770) 263-4402 or by using our website contact form. Communications intended specifically for our non-executive chairman and other non-management directors should be marked “Attention: Independent Director Communications,” while all other director communications should be marked “Attention: Director Communications.” Communications regarding accounting, internal accounting controls or auditing matters may be reported to the Audit Committee using the above address and marking the communication “Attention: Audit Committee Communications.”

 

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COMPENSATION MATTERS

 

In accordance with SEC rules, our stockholders are being asked to approve, on an advisory basis, the compensation of our NEOs as disclosed in this Proxy Statement. We have historically received high levels of support from our stockholders on advisory votes to approve executive compensation.

 

Historical Support for Say-on-Pay Proposals
2018:  98%		2019:  94%		2020:  96%

As described in detail in the Compensation Discussion and Analysis section beginning on page 23, we believe our compensation policies and procedures are competitive, focused on pay-for-performance principles and strongly aligned with the long-term interests of our stockholders. Our executive compensation philosophy is based on the belief that the compensation of our employees, including our NEOs, should be set at levels that allow us to attract and retain employees who are committed to achieving high performance and who demonstrate the ability to do so. Our objectives include creating a clear path between realized compensation and the successful execution of our business strategy and enhancing each individual executive’s performance. We seek to provide an executive compensation package that is driven by our overall financial performance, increased stockholder value, the success of areas of our business directly impacted by the executive’s performance and the performance of the individual executive.

We believe that our executive compensation program has been instrumental in helping us to achieve our strong historical financial performance, and that the emphasis of the program on pay-for-performance has benefited the Company and our stockholders.

The advisory vote on this resolution is not intended to address any specific element of compensation; rather, it relates to the overall compensation of our NEOs, as well as the compensation philosophy, policies and practices described in this Proxy Statement. Our stockholders have the opportunity to vote for or against, or to abstain from voting on, the following resolution:

RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of our named executive officers determined by the compensation committee, as described in the Compensation Discussion and Analysis section and the tabular disclosure regarding named executive officer compensation (together with the accompanying narrative disclosure) in this Proxy Statement.

Because the required vote is advisory, it will not be binding on the Board. The Compensation Committee will, however, take into account the outcome of the vote when considering future executive compensation decisions.

We provide our stockholders with this advisory vote to approve executive compensation on an annual basis and we expect that the next such vote will occur at the 2022 annual meeting of stockholders.

 

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ITEM 3. APPROVAL OF THE WESTROCK COMPANY 2020 INCENTIVE STOCK PLAN   What am I voting on? The Board is asking our stockholders to approve the WestRock Company 2020 Incentive Stock Plan   Voting Recommendation: FOR the proposal   Vote Required: An affirmative vote requires the majority of those shares present in person or represented by proxy and entitled to vote   Broker Discretionary Voting Allowed: No. Broker non-votes have no effect   Abstentions: Vote against

The Board is asking our stockholders to approve the WestRock Company 2020 Incentive Stock Plan (the “2020 LTI Plan”).

The Board believes that the 2020 LTI Plan is integral to our compensation strategies and programs and allows us to:

 

•

Attract and retain key employees and non-employee directors

 

•

Provide these individuals with an additional incentive to work to increase the value of our Common Stock

 

•

Provide these individuals with a stake in our future that corresponds to the stake of our stockholders.

MATERIAL FEATURES OF THE 2020 LTI PLAN

 

•

No liberal share recycling. The 2020 LTI Plan prohibits the reuse of shares withheld to satisfy the exercise price of an option or stock appreciation right (“SAR”) or to satisfy tax withholding obligations. The 2020 LTI Plan also prohibits “net share counting” upon the exercise of SARs.

 

•

Double-trigger vesting upon a change in control. Subject to the applicable award agreement, if awards granted under the 2020 LTI Plan are assumed by an acquirer in connection with a change in control, such awards will not automatically vest or pay out solely upon consummation of the change in control.

 

•

No liberal change in control definition. The definition of change in control would require consummation, not only stockholder approval, of a merger or similar corporate transaction.

 

•

No repricing of options or SARs. Stockholder approval would be required to reprice options or SARs with an exercise price that is less than the original exercise price.

 

•

No discount options or SARs. The 2020 LTI Plan prohibits the grant of options or SARs with an exercise price that is less than the fair market value of a share of Common Stock as of the grant date.

 

•

Awards subject to clawback. Awards under the 2020 LTI Plan would be subject to recoupment under certain circumstances under our clawback policy.

2016 LTI PLAN USE AND NET BURN RATE

The calculations set forth below have been impacted by COVID-19 and the actions we have taken in response to it. We took steps to conserve cash, which we felt was in the best interests of us and our stockholders, but which resulted in additional shares of our Common Stock being issued in fiscal 2020 – for example, we made 401(k) Company contributions in the form of Common Stock. Although this action increased our share usage and negatively impacted the calculations below, it, along with other cost control actions, provided us with more than $350 million in cash that we used to reduce our outstanding indebtedness through the end of fiscal 2020.

 

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Burn Rate Calculation

The following table provides an overview of our grant history and burn rate calculation during the past three fiscal years. As shown in the table, the number of awards we have granted under the 2016 LTI Plan as a percentage of our shares of Common Stock outstanding, which is commonly referred to as the “burn rate,” averaged 0.75% over the last three fiscal years.

 

		2018				2019				2020
						(shares in millions)
Equity awards (before forfeitures and withholding reductions) 1			1,116,111				3,673,445				4,446,175
Adjustment for actual / estimated forfeitures			(178,010	)			(353,687	)			(715,671	)
Adjustment for actual / estimated withholding reductions			(245,910	)			(913,746	)			(990,830	)
Total equity awards (after forfeitures and withholding reductions)			692,191				2,406,012				2,739,674
Common Stock outstanding 2			259,800,000				259,100,000				259,200,000
Burn rate (taking into account forfeitures and withholding reductions)			0.27%				0.93%				1.06%

1) Fiscal 2019 equity awards exclude stock options issued by us in connection with our acquisition of KapStone Paper and Packaging Corporation.

2) Weighted-average fully diluted common shares outstanding at fiscal year end.

Dilution Calculation

To provide another potential measure of the dilutive effect of annual equity-based compensation, the table below shows the total potential equity awards that may be made under the 2020 LTI Plan, together with outstanding unvested awards.

 

		Share Allocation and         Potential Dilution
Maximum requested shares under the 2020 LTI Plan			4,950,000
Shares available for future issuance under the 2016 LTI Plan as of September 30, 2020			1,207,899
Issued but unvested awards as of September 30, 2020			10,088,646
Total Potential Unvested Equity Awards			16,246,545
Common Stock outstanding as of record date			263,089,661
Maximum requested shares under the 2020 LTI Plan			4,950,000
Shares available for future issuance under the 2016 LTI Plan as of September 30, 2020			1,207,899
Issued but unvested awards under the 2016 LTI Plan as of September 30, 2020			10,088,646
Total Shares and Share Equivalents			279,336,206
Total potential dilution			5.82%

POTENTIAL COMPENSATION SHARE NEEDS

In considering the appropriate number of shares to request under the 2020 LTI Plan, we reviewed our historical information and the awards that we have actually granted over the past three fiscal years. We further considered the potential impact of a variety of factors beyond our control that may impact the number of equity awards that we could issue in future years, including the price of our Common Stock at the time of equity award grants. Based on this information, we currently believe it is reasonable to expect that the 4,950,000 shares requested under the 2020 LTI Plan may last for the next three fiscal years.

We do not, as a matter of course, make forecasts, public or otherwise, as to our grants of equity awards due to the unpredictability of the underlying assumptions and estimates, including our actual share price at the time of the applicable grant, but have included the information above to give our stockholders access to this information for purposes of evaluating the 2020 LTI Plan. The information above is not, and should not be regarded as, an indication of actual future outcomes, and should not be relied upon as such. Neither we nor any other person makes any representation regarding potential or actual outcomes compared to the information set forth above.

 

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SUMMARY OF 2020 LTI PLAN

The 2020 LTI Plan was adopted by the Board on October 30, 2020. The following summary of the 2020 LTI Plan is qualified in its entirety by reference to the full text of the 2020 LTI Plan. See Exhibit A.

Administration and Eligibility

The 2020 LTI Plan is administered by the Compensation Committee. The Compensation Committee has the authority to select eligible employees or directors to whom awards may be granted, determine the number of shares covered by those awards and set the terms, conditions and provisions of those awards. The Committee may, subject to any limits imposed by Delaware law, delegate its authority under the 2020 LTI Plan to one or more officers of the Company. All non-employee directors and approximately 925 employees will be eligible to receive awards under the 2020 LTI Plan.

Award Types

Under the 2020 LTI Plan, the Compensation Committee may grant:

 

•

stock options, including incentive stock options intended to qualify for special tax treatment under Section 422 of the Tax Code,

 

•

SARs, in tandem with stock options or freestanding,

 

•

stock, which could or could not be subject to issuance or forfeiture conditions,

 

•

stock units, which could or could not be subject to forfeiture conditions, and

 

•

cash bonus incentives.

Shares Available for Issuance

4,950,000 shares have been reserved for issuance under the 2020 LTI Plan. Shares reserved for issuance under the 2020 LTI Plan are reserved from authorized but unissued shares and treasury shares. All shares remain available for issuance under the 2020 LTI Plan until issued pursuant to the exercise of an option or SAR or issued pursuant to a stock or stock unit grant. Any shares that are forfeited after grant again become available for issuance under the 2020 LTI Plan, other than shares that are withheld to satisfy any tax liability or exercise price. In the case of SARs, the number of shares deemed issued will be equal to the number of shares with respect to which the share appreciation is measured. Regardless of whether the 2020 LTI Plan is approved, we will retain the ability to grant awards under the 2016 LTI Plan until it has expired in accordance with its terms. On December 8, 2020, the closing price of the Common Stock was $45.11.

Award Limits

The 2020 LTI Plan stipulates that no individual may receive awards or cash retainers in any calendar year having an aggregate fair market value that exceeds $750,000 for service as a non-employee director. The number of shares that can be issued as incentive stock options may not exceed the number of shares reserved for issuance under the 2020 LTI Plan.

Adjustments

In the event the shares of Common Stock are affected by any equity restructuring or change in capitalization of the Company, including spin-offs, stock dividends or splits, large non-reoccurring dividends or rights offerings, or any merger, consolidation, acquisition of property or stock, separation, reorganization, liquidation or other transaction described in Section 424(a) of the Tax Code that did not constitute a change in control, the Compensation Committee will adjust the aggregate number and class of shares which could be issued under the 2020 LTI Plan and the number, class and price of shares subject to outstanding awards granted under the 2020 LTI Plan, as it deems reasonable and equitable to maintain the aggregate intrinsic value of the outstanding grants immediately before any such transaction.

Change in Control

If there is a “change in control” (as defined in the 2020 LTI Plan) of the Company and there is no continuation or assumption of an outstanding award that had been made pursuant to the 2020 LTI Plan, then the rights of each eligible employee and director in the then outstanding grants under the 2020 LTI Plan that were not so continued or assumed will vest 100% on the effective date of the “change in control” and automatically be cancelled in exchange for certain payments as set forth in the 2020 LTI Plan. If there is a “change in control” and the vesting of an outstanding award made pursuant to the 2020 LTI Plan was based in whole or in part on the satisfaction of one or more performance conditions that had a “target” level of performance, then the performance “target,” or each such performance condition, will be deemed to have been met at 100% of the “target” on the effective date of the “change in control” unless the Compensation Committee determines that the performance level which is reasonably projected to be achieved will exceed 100% of the target performance level (in which event the Compensation Committee would determine the appropriate level of performance with respect to such award) or the related performance measurement period had expired before the effective date of the “change in control”.

 

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Amendment and Termination

The Board may amend the 2020 LTI Plan from time to time to the extent that the Board deems necessary or appropriate, provided no amendment may be made without stockholder approval to the extent approval is required under applicable law and, following the date of a change in control, no amendment may adversely affect any rights in respect of awards that vest in connection with such change in control.

The Board may suspend the granting of awards under the 2020 LTI Plan and terminate the 2020 LTI Plan at any time, provided that the Board may not modify, amend or cancel an award made before such suspension or termination unless the participant consents in writing or there is a dissolution or liquidation of the Company or a corporate transaction described under “Adjustments” or “Change in Control” above.

Life of the Plan

The 2020 LTI Plan stipulates that no grants may be made on or after the earlier of the tenth anniversary of the effective date of the 2020 LTI Plan, meaning the tenth anniversary of the date on which the 2020 LTI Plan is approved by our stockholders, and the date on which all shares of Common Stock reserved for issuance have been issued or are no longer available for use.

United States Federal Income Tax Consequences

The following discussion is a general summary of the principal U.S. federal income tax consequences under U.S. law relating to awards granted to employees under the 2020 LTI Plan. This summary is not intended to be exhaustive and, among other things, does not describe state, local or foreign income and other tax consequences. The federal income tax law and regulations are frequently amended, and participants should rely on their own tax counsel for advice regarding federal income tax treatment under the 2020 LTI Plan.

Stock Options and SARs. The grant of an option or SAR will create no tax consequences for the participant or the Company. A participant will generally have no taxable income upon exercise of an incentive stock option, except that the aggregate fair market value of the shares acquired minus the aggregate exercise price will count as “alternative minimum taxable income”, which, depending on the facts, could result in the alternative minimum tax applying. Upon exercise of an option other than an incentive stock option, a participant generally must recognize ordinary income equal to the aggregate fair market value of the shares acquired minus the aggregate exercise price. Upon exercise of a SAR, a participant generally must recognize ordinary income equal to the value of the cash received (generally the difference between the fair market value of the Common Stock and the base price of the SAR). When disposing of shares acquired by exercise of an incentive stock option before the end of the later of the two-year anniversary of the grant of the option and the one-year anniversary of the exercise of the option (a “disqualifying disposition”), the participant generally must recognize ordinary income equal to the lesser of the aggregate fair market value of the shares at the date of exercise minus the aggregate exercise price or the amount realized upon the disposition of the shares minus the aggregate exercise price. Otherwise, a participant’s disposition of shares acquired upon the exercise of an option (including an incentive stock option other than pursuant to a disqualifying disposition) generally will result in only capital gain or loss.

Other Awards. Other awards under the 2020 LTI Plan generally will result in ordinary income to the participant at the later of the time of delivery of cash, shares or other property underlying such awards, and the time that either the risk of forfeiture or restriction on transferability lapses on previously delivered cash, shares or other awards.

Company Deduction. Except as discussed below, we are generally entitled to a tax deduction equal to the amount recognized as ordinary income by the participant in connection with options, SARs or other awards, but not for amounts the participant recognizes as capital gain. Thus, we will not be entitled to any tax deduction with respect to an incentive stock option if the participant does not dispose of the shares in a disqualifying disposition. Our ability to claim a deduction will be contingent on applicable reporting requirements having been met and that the income is not an “excess parachute payment” within the meaning of Section 280G of the Tax Code and is not disallowed by reason of the $1 million limitation on certain executive compensation under Section 162(m), as amended by the Tax Cuts and Jobs Act.

Section 409A. Section 409A of the Tax Code provides special tax rules applicable to certain compensation arrangements that provide for a deferral of compensation. Failure to comply with those requirements will result in accelerated recognition of income for tax purposes along with an additional 20% penalty tax. The 2020 LTI Plan and awards thereunder are generally intended to be designed and administered so that any awards that are considered to be deferred compensation will not give rise to any negative tax consequences to the recipient under these provisions.

Plan Benefits

All future awards to directors, executive officers and employees will be made at the discretion of the Compensation Committee or the Board. Therefore, we cannot determine future benefits under the 2020 LTI Plan at this time. Information regarding our recent practices with respect to equity-based compensation under our 2016 LTI Plan is presented elsewhere in this Proxy Statement and in our annual report on Form 10-K for the fiscal year ended September 30, 2020.

 

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COMPENSATION DISCUSSION AND ANALYSIS

This section explains our compensation philosophy, summarizes our executive compensation programs and discusses compensation decisions for the following named executive officers (“NEOs”):

 

Name		Title
Steven C. Voorhees		President and CEO
Ward H. Dickson		Executive Vice President and CFO
James B. Porter III (1)		President, Business Development and Latin America
Jeffrey W. Chalovich		Chief Commercial Officer and President, Corrugated Packaging
Patrick E. Lindner		Chief Innovation Officer and President, Consumer Packaging
Marc P. Shore (2)		Former President, Multi Packaging Solutions (“MPS”)

 

(1)

Mr. Porter will retire from the Company effective December 31, 2020.

(2)

Mr. Shore resigned from the Company effective August 17, 2020.

EXECUTIVE SUMMARY

We use our executive compensation program as a strategic tool to support the successful execution of our business strategy.

The Compensation Committee has primary oversight over the design and execution of our executive compensation program. The program is based on a pay-for-performance model – it uses short-term incentives (“STI”) and long-term incentives (“LTI”) to drive multiple dimensions of performance and align the interests of our executives with those of our stockholders.

Compensation Governance and Practices

 

Pay-for-Performance   •   100% of 2020 STI goals were tied to Company, segment and/or unit performance   •   75% of 2020 LTI award value was tied to multi-year overall Company performance   •   89% of CEO’s total 2020 target compensation was at risk; an average of 77% for other NEOs				Risk Mitigation   •   Annual review of compensation plans, policies and practices includes risk assessment   •   Anti-hedging/pledging policy   •   Clawback provisions   •   Stock ownership guidelines and stock retention policy				Program Features   •   Independent oversight   •   Competitive benchmarking   •   Limited perquisites   •   No dividend or dividend equivalents paid until equity awards vest

Say-on-Pay Results

At our annual meeting of stockholders held on January 31, 2020, 96% of the votes cast were in favor of the advisory vote to approve executive compensation. The Compensation Committee took these results into account by continuing to emphasize our pay-for-performance philosophy and utilizing challenging performance measures that provide incentives to deliver value to our stockholders. We have historically received high levels of support from our stockholders on advisory votes to approve executive compensation.

 

2018 Support   98%				2019 Support   94%				2020 Support   96%

 

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Fiscal 2020 Compensation Highlights

Business Strategy Alignment

Our business strategy in fiscal 2020 continued to focus on generating earnings and cash flow, and realizing productivity improvements. The Compensation Committee aligned our executive compensation program with our business strategy by placing substantial weight on achieving these goals. For fiscal 2020, 100% of the STI goals for our NEOs were based on achieving EBITDA, EBITDA margin and productivity goals, and 50% of LTI award value was based on a cash flow per share measure, while another 25% of LTI award value was based on a relative total shareholder return metric.

Changes to Executive Compensation Program

Listed below are the changes that the Compensation Committee made to our executive compensation program for fiscal 2020.

 

What We Did				Why We Did It
•  Added EBITDA margin measure to STI program				•  To drive added focus on quality of EBITDA being delivered
•  Reduced weighting of EBITDA measure in STI program from 85% to 70%				•  To accommodate addition of EBITDA margin measure weighted at 15%
•  Increased weighting of time-based restricted stock unit component of LTI program from 20% to 25% and reduced weighting of performance-based restricted stock units measured using relative total shareholder return from 30% to 25%				•  To increase focus on retention while retaining a significant portion of overall LTI award value based on performance

Pay-for-Performance Alignment

Our executive compensation program design for fiscal 2020 reflects our commitment to pay-for-performance – 100% of our NEOs’ STI goals were tied to a combination of Company, segment and/or unit performance and 75% of our NEOs’ LTI award value was tied to overall Company performance. Further, the value realized by our CEO from LTI is based entirely on the value of our Common Stock and our financial and operational performance. Due to the strong alignment between pay and performance over the last three years, our CEO’s total realizable pay in fiscal 2020 is 34% lower than his targeted pay for the same period.

 

CEO and President Realizable Pay

Amounts are shown in thousands of dollars. Amounts shown for each target pay column reflect (a) base salary paid during the fiscal year, (b) the target annual performance bonus amount and (c) the fair value of equity (derived by multiplying the number of shares at target by the closing price of our Common Stock on the grant date). Amounts shown for each realizable pay column reflect (i) base salary paid during the fiscal year, (ii) the annual performance bonus amount paid, (iii) the value of time-based restricted stock based on the closing price of our Common Stock on September 30, 2020 and (iv) the expected value of performance-based restricted stock based on our cash flow performance and relative total shareholder return performance through September 30, 2020.

Response to Impact of COVID-19

Our business in fiscal 2020 was significantly impacted by COVID-19. While the pandemic caused us to experience increased demand from certain end markets (e.g., e-commerce, food and healthcare), demand declined in other end markets (e.g., commercial print and high-end consumer products). Because we faced a high degree of uncertainty in the early stages of the pandemic, in May 2020 we announced the WestRock Pandemic Action Plan, pursuant to which we undertook a series of actions designed to provide an additional $1 billion in cash that we could use to reduce debt through the end of fiscal 2021. Among the actions, the Compensation Committee determined to (i) reduce our CEO’s salary by 25% and our other NEOs’ salaries by 15% each and (ii) pay our fiscal 2020 STI in the form of Common Stock and set fiscal 2020 STI performance at the threshold level (i.e. 50% of target performance). The Compensation Committee took these actions, in part, to conserve cash and align the interests of STI participants and focus our employees’ attention on operating safely and effectively serving our customers.

 

25

EXECUTIVE COMPENSATION PROGRAM OVERVIEW

Philosophy and Objectives

Our executive compensation philosophy is based on the belief that the compensation of our employees, including our NEOs, should be set at levels that allow us to attract and retain employees who are committed to achieving high performance and who demonstrate the ability to do so. We seek to provide an executive compensation package that is driven by our overall financial performance, increased stockholder value, the success of areas of our business directly impacted by the executive’s performance and the executive’s leadership. Core principles of our executive compensation program include:

 

•

Overall compensation must be competitive relative to other comparable organizations in order to attract and retain superior executives.

 

•

A substantial portion of target total direct compensation should be linked to variable, at-risk pay.

 

•

Compensation should reflect an employee’s level of responsibility and contribution, and the greater the responsibility, the greater the share of an employee’s compensation that should be at-risk with respect to performance.

 

•

LTI should be used (in addition to STI and cash compensation) to encourage a focus on long-term strategy and execution, and to align our executives’ and stockholders’ interests.

Pay-for-Performance

Our executive compensation program is based on a pay-for-performance model. In fiscal 2020, the Compensation Committee tied 100% of our NEOs’ STI goals and 75% of our NEOs’ LTI award value to a combination of Company, segment and/or unit performance.

The Compensation Committee structures our NEOs’ compensation so that a significant portion is at risk. This allocation of variable target direct compensation aligns with our compensation philosophy of motivating our executive officers to achieve our business objectives in the short term and to grow our business to create long-term value for our stockholders. As noted below, in fiscal 2020, approximately 89% of targeted total direct compensation for our CEO was at risk, and only 11% of his compensation was fixed, ensuring a strong link between his targeted total direct compensation and our financial and operating results. An average of approximately 77% of targeted total direct compensation for the other NEOs was at risk in fiscal 2020.

 

 

 

26

ADMINISTRATION

Peer Group

In July 2019, with the assistance of its compensation consultant, the Compensation Committee reviewed the then current compensation peer group to ensure that it reflected companies with which we compete for talent, that compete in our industry or adjacent industries or that have a similar scope and scale of organization to us. The Compensation Committee also considered companies with revenue similar to ours and those included in our relative total shareholder return and ISS peer groups. Based on this analysis and the recommendation of its compensation consultant, the Compensation Committee determined not to make any changes to the compensation peer group for fiscal 2020 set forth below:

 

2020 Peer Group
3M Company		Kimberly-Clark Corporation
Avery Dennison Corp.		LyondellBasell Industries NV
Ball Corporation		Nucor Corporation
Crown Holdings, Inc.		Packaging Corporation of America
Freeport McMoRan Inc.		PPG Industries Inc.
The Goodyear Tire & Rubber Company		Sherwin-Williams Company
Honeywell International, Inc.		United States Steel Corporation
International Paper Company		Weyerhaeuser Company
		Revenue (in 000s of $) (1)
75th Percentile		$23,895
Median		$16,398
25th Percentile		$11,691
WestRock Company		$20,300(2)
WestRock Company Percentile Rank		69%

(1)

Trailing twelve months revenue as of June 30, 2019.

(2)

Reflected the estimated revenue impact of KapStone, which we acquired on November 2, 2018.

Benchmarking

The Compensation Committee uses competitive market data regarding base salary, STI and LTI to evaluate overall compensation levels in light of practices at companies that we compete with for talent, and seeks to ensure that pay opportunities do not deviate significantly from a range around the market median, but does not target a specific level of compensation. Individual pay levels are determined based on a review of each individual executive’s responsibilities, performance and experience, as well as the Compensation Committee’s judgment regarding competitive requirements and internal equity.

While the Compensation Committee reviews competitive market data regarding the various components of compensation for each NEO and certain other executives, the primary data point used to assess executive compensation is target total direct compensation, which is comprised of target total cash compensation (base salary and target STI opportunity), plus target LTI award value. The Compensation Committee has a bias to include more performance-based pay, particularly LTI, to deliver competitive pay.

 

27

Role of the Compensation Consultant

The Compensation Committee has sole discretion to retain and obtain the advice of a compensation consultant, and is directly responsible for the appointment, termination, compensation and oversight of the work of the compensation consultant. The Compensation Committee retains a compensation consultant to provide it with objective analysis, advice and information (including competitive market data and compensation recommendations). The compensation consultant reports to the Chair of the Compensation Committee and has direct access to other Compensation Committee members. The compensation consultant attends all significant meetings of the Compensation Committee and meets with the Compensation Committee in person in executive sessions without management present.

Meridian Compensation Partners, LLC (“Meridian”) serves as the Compensation Committee’s compensation consultant. The Compensation Committee engaged Meridian in fiscal 2018 after completing a request for proposal involving multiple firms. The Compensation Committee requested and received a letter from Meridian addressing its independence in light of the standards embodied in SEC rules and NYSE Standards. The Compensation Committee considered these and other factors relevant to Meridian’s independence and concluded that Meridian was independent and the engagement would not raise any conflict of interest. The Compensation Committee reaffirmed Meridian’s independence in July 2019 and July 2020.

Role of Management

The Compensation Committee considers input from our CEO in making determinations regarding our overall executive compensation program and the individual compensation of our other senior executives. As part of the annual planning process, our CEO develops targets for our annual bonus program and presents them to the Compensation Committee for consideration. Based on performance appraisals and information regarding competitive market practices provided by the compensation consultant, our CEO recommends base salary adjustments, STI opportunities and LTI levels for our other senior executives. Our CEO also presents his evaluation of each senior executive’s contributions and performance over the past year, strengths and development needs and actions.

Setting Compensation Levels

After considering advice and recommendations from our CEO and the compensation consultant, the Compensation Committee determines what changes, if any, should be made to the executive compensation program and sets the level of compensation for each senior executive with respect to each compensation element. The Compensation Committee reviews a detailed analysis of each executive’s annual total direct compensation and the value of benefits under retirement plans, as well as compensation tally sheets for our most senior executives.

COMPENSATION ELEMENTS

We provide a combination of pay elements and benefits to accomplish our executive compensation objectives. STI focus on the performance goals we believe drive stockholder value and for which our executives are responsible. LTI are equity based and include a combination of performance-based restricted stock and time-based restricted stock. We believe LTI are critical in aligning our executives’ and stockholders’ interests, and creating an effective retention measure. Together, we believe that these incentives focus our executives on making decisions that will benefit our stockholders.

Our executive compensation program includes the following primary components: base salary, STI, LTI and retirement benefits.

 

Factors		Base Salary		Annual Performance Bonus (STI)		Performance-Based Restricted Stock (LTI)		Time-Based Restricted Stock (LTI)
Form of Compensation		Cash				Equity
		Fixed		Performance-Based		Performance-Based		Time-Based
Performance Timing		Short-Term Emphasis				Long-Term Emphasis
Measurement Period		Annual and Ongoing		1 year		Vests at end of 3-year period		Vests at end of 3-year period
Key Performance Metrics     Applicable		—		EBITDA, EBITDA Margin and Productivity		Cash Flow Per Share; Relative Total Shareholder Return; Stock Price		Stock Price
Determination of Performance-     Based Payouts		—		Formulaic with Discretion (Safety)		Formulaic with Negative Discretion		—

 

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Base Salary

Base salary is designed to provide competitive levels of compensation to executives based on their responsibilities, performance and experience. No specific formula is applied to determine the weight of each of these factors. We pay base salaries because they provide a basic level of compensation and are necessary to recruit and retain executives. At lower executive levels, base salaries represent a larger portion of total compensation in accordance with our pay philosophy. At more senior executive levels, a greater portion of overall compensation is progressively replaced with variable compensation opportunities.				Compensation Highlight In response to COVID-19, the Compensation Committee decreased our CEO’s base salary by 25% and our other NEOs’ base salaries by 15% each.
Due to the uncertainties caused by COVID-19, in May 2020 we announced the WestRock Pandemic Action Plan, pursuant to which we undertook a series of actions designed to provide an additional $1 billion in cash that we could use to reduce debt through the end of fiscal 2021. In part, the Compensation Committee determined to reduce our CEO’s base salary by 25% and our other NEOs’ base salaries by 15% each, in each case from May 1 through December 31, 2020. The Compensation Committee made this decision in order to conserve cash. In connection with his resignation, effective August 17, 2020, the Compensation Committee restored the 15% base salary reduction that had applied to Mr. Shore.

The following pay increases were approved by the Compensation Committee as a result of a review of competitive market data for similarly situated positions, as well as internal equity considerations.

 

NEO		2019 Base Salary ($)(1)				Percentage Increase (%)				2020 Base Salary ($)  (2)
Steven C. Voorhees			1,245,000				2.9				1,281,000
Ward H. Dickson			680,000				6.6 (3)				725,000
James B. Porter III			628,000				0				628,000
Jeffrey W. Chalovich			725,000				3.4				750,000
Patrick E. Lindner			650,000				11.5 (4)				725,000
Marc P. Shore			795,000				1.9				810,000

(1)

Reflects the base salaries at September 30, 2019.

(2)

Reflects the base salaries at September 30, 2020, except for Mr. Shore, who resigned effective August 17, 2020. Does not reflect the COVID-19 salary reductions discussed above. See “Executive Compensation Tables – Summary Compensation Tables” for information related to the salaries paid to our NEOs during fiscal 2020.

(3)

Reflects an increase of 3.7% effective January 1, 2020, reflecting the Compensation Committee’s annual review of our executives’ base salaries, and an increase of 2.8% effective August 1, 2020, reflecting a review of overall market competitiveness, both internal and external.

(4)

Reflects an increase of 7.7% effective January 1, 2020, reflecting the Compensation Committee’s annual review of our executives’ base salaries, and an increase of 3.6% effective August 1, 2020, in each case reflecting a review of overall external market competitiveness and internal equity considerations.

Annual Performance Bonus (STI)

Our annual executive bonus program is designed to motivate senior executives and reward the achievement of specific performance goals that support our business strategy. Annual bonus goals are established for each executive who participates in the program, including each NEO. Consistent with our philosophy of paying for performance, our NEOs’ performance-based compensation rises and falls with our overall achievement of performance goals. The size of the target annual executive bonus program opportunities is designed to provide competitive levels of compensation to executives based upon their experience, duties and scope of responsibilities. Target awards are based on a percentage of the executive’s base salary.

The amount actually paid to an executive under the annual executive bonus program is a function of the following variables:

 

•

The executive’s target bonus opportunity

 

•

The goals established by the Compensation Committee

 

•

For each goal, the attainment of minimum achievement levels (threshold), capped by maximum achievement levels, and the Compensation Committee’s determination of the extent to which the executive’s goals were met.

Awards earned under the annual executive bonus program are contingent upon continued employment through the end of the fiscal year (which is our performance period) and are subject to the discretion of the Compensation Committee (based on safety performance) to adjust the payout, as appropriate.

 

29

Performance Goals

At the beginning of fiscal 2020, the Compensation Committee established the primary performance goals for each of our NEOs: EBITDA, EBITDA margin and productivity results.

 

EBITDA Measure		Threshold (in 000s of $)				Target (in 000s of $)				Maximum (in 000s of $)				Actual (in 000s of $)
Consolidated			2,485,000				3,100,000				3,500,000				2,777,000
Brazil (1)			377,000				443,000				510,000				433,000
Integrated NA Corrugated			1,566,000				2,023,000				2,281,000				1,855,000
Multi Packaging Solutions			209,000				245,000				282,000				214,000
Integrated Consumer			810,000				1,011,000				1,060,000				861,000

 

(1)

Performance benchmark is presented in local currency (Brazilian Real).

 

EBITDA Margin Measure		Threshold (%)				Target (%)				Maximum (%)				Actual (in %)
Consolidated			15.0				16.8				18.0				15.8
Integrated NA Corrugated			17.2				20.3				21.6				19.3
Integrated Consumer			13.9				15.3				16.5				13.6

 

 

 

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The fiscal 2020 bonus goals for Messrs. Voorhees and Dickson were based exclusively on consolidated Company measures because their positions had a substantial impact on the achievement of those measures. The fiscal 2020 bonus goals for Messrs. Porter, Chalovich, Lindner and Shore were based on a combination of consolidated Company measures (i.e. EBITDA, EBITDA margin and productivity) and measures focused on the results of the businesses they oversaw (Brazil EBITDA for Mr. Porter, Integrated North American Corrugated Packaging EBITDA and EBITDA margin for Mr. Chalovich, Integrated Consumer Packaging EBITDA and EBITDA margin for Mr. Lindner and MPS EBITDA for Mr. Shore). Each NEO’s target bonus amount was set at a percentage of his base salary, with payouts of 50% and 200% of that amount for threshold and maximum performance, respectively. Performance below threshold for a particular measure would result in no payout for that measure.

For fiscal 2020, Mr. Voorhees was eligible to earn a maximum cash bonus of 305% of his fiscal year base salary and each other NEO was eligible to earn a maximum cash bonus of 205% of his fiscal year base salary, in each case, to the extent that we achieved each of the applicable performance goals at or in excess of the maximum performance benchmarks and the Compensation Committee exercised its discretion to increase the STI payout by 5% based on achieving our safety objectives.

The following table provides the weighting assigned to each goal for each NEO.

 

Goal		NEOs – Weight (% of Target)
		S. Voorhees				W. Dickson				J. Porter				J. Chalovich				P. Lindner				M. Shore
EBITDA – Consolidated Company			70%				70%				45%				40%				40%				35%
EBITDA – Brazil (1)			-				-				25%				-				-				-
EBITDA – Corrugated Packaging Segment			-				-				-				20%				-				-
EBITDA – MPS			-				-				-				-				-				20%
EBITDA – Consumer Packaging Segment			-				-				-				-				20%				20%
EBITDA Margin – Consolidated Company			15%				15%				15%				15%				15%				-
EBITDA Margin – Corrugated Packaging Segment			-				-				-				10%				-				-
EBITDA Margin – Consumer Packaging Segment			-				-				-				-				10%				10%
Productivity (Realized) – Consolidated Company			15%				15%				15%				15%				15%				15%

 

*	Results between performance levels are interpolated on a straight-line basis

(1)

Performance goals are presented in local currency (Brazilian Real).

The Compensation Committee sets performance goals at the beginning of each fiscal year, and as needed to account for changes in the Company after considering management’s recommendations, the confidential business plan and the budget for that fiscal year. The Compensation Committee sets the required performance goals to achieve a maximum payout for a particular performance goal at ambitious levels that the Compensation Committee believes can only be attained when applicable results are exceptional and justify the higher award payments.

Potential bonus payouts under the STI plan are determined by modifying the executive’s target bonus amount based on the relative weightings of the performance goals and the level at which they are achieved against the target values. The range of potential payouts were 40% of target at threshold performance (assuming the greatest possible reduction on the safety modifier) to 305% of target at maximum performance for the CEO and 205% of target at maximum performance for each other NEO (in each case, assuming the greatest possible increase on the safety modifier).

 

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Fiscal 2020 Payouts

The Compensation Committee is responsible for assessing actual performance relative to performance goals for each goal and, in doing so, determines and certifies the amount of any final bonus payout.

 

Due to the uncertainties caused by COVID-19, in May 2020 we announced the WestRock Pandemic Action Plan, pursuant to which we undertook a series of actions designed to provide an additional $1 billion in cash that we could use to reduce debt through the end of fiscal 2021. In part, the Compensation Committee determined to pay our fiscal 2020 STI in the form of Common Stock and set fiscal 2020 STI performance at the threshold level (i.e. 50% of target performance). The number of shares was determined in May 2020 and paid following the end of our fiscal year in October 2020, with an adjustment only to reflect the impact of the safety modifier. The value realized by recipients was impacted by the change in the trading price		Compensation Highlight In response to COVID-19, the Compensation Committee determined in May 2020 to pay our fiscal 2020 STI in the form of Common Stock and set fiscal 2020 STI performance at threshold performance (i.e. 50% of target performance).

of Common Stock from the grant date through the payout date. The Compensation Committee made these decisions because it viewed the fiscal 2020 STI goals as no longer meaningful in light of the impact of COVID-19 on our business and desired to align the interests of STI participants and focus their attention on promoting the health and safety of our teammates and effectively serving our customers.

Set forth below under the “Hypothetical” column heading are the final bonus payouts that would have been earned by each NEO based on the actual performance on each metric as described above had the Compensation Committee not determined in May 2020 to set fiscal 2020 STI performance at the threshold performance level. Based on these actual results, STI would have paid out above the threshold performance level for each NEO.

Set forth below under the “Granted in May 2020” column heading are the actual bonus payouts that were approved by the

Compensation Committee in May 2020. The number of shares of Common Stock and the value of these shares of Common Stock do not reflect the potential impact of the application of the safety modifier, as described above. Following the end of fiscal 2020, and after reviewing and certifying the applicable safety results, the Compensation Committee determined and certified the final bonus payouts (in the form of Common Stock) set forth below under the “Realized in October 2020” column heading. The actual award values reflect a 5% increase in STI payouts for our NEOs as a result of the Compensation Committee certifying that our safety results exceeded our performance objectives and an increase in the trading price of Common Stock from the grant date through the payout date.

 

		Hypothetical								Granted in May 2020												Realized in October 2020
NEO		2020 Executive Bonus Payout ($)				2020 Executive Bonus (% of  Target)				Common Stock – Number of Shares (#)(2)(3)				Value of Common Stock ($)(2)(3)				2020 Executive Bonus (% of  Target)				Common Stock – Number of Shares (#)(2)(4)				Value of Common Stock ($)(5)				2020 Executive Bonus (% of  Target)
Steven C. Voorhees			1,268,190				66.0				37,960				960,767				50				39,858				1,511,415				78.7
Ward H. Dickson			478,500				66.0				13,928				352,517				50				14,625				554,580				78.7
James B. Porter III			508,680				81.0				12,407				314,021				50				13,028				494,021				78.7
Jeffrey W. Chalovich			510,000				68.0				14,817				375,018				50				15,558				589,959				78.7
Patrick E. Lindner			398,750				55.0				13,829				350,011				50				14,521				550,636				78.7
Marc P. Shore (1)			0				0				16,002				405,010				50				0				0				0

 

(1)

Mr. Shore resigned effective August 17, 2020 and did not receive a bonus for fiscal 2020.

(2)

The fair market value of the shares of Common Stock (i.e. $25.43) was determined based on the average closing price of Common Stock on the NYSE for the 10-day trading period commencing May 7, 2020.

(3)

Excludes the potential impact of the application of the safety modifier, which was determined following the end of fiscal 2020.

(4)

Includes the following number of shares received in connection with the application of the safety modifier: Mr. Voorhees, 1,898 shares; Mr. Dickson, 697 shares; Mr. Porter, 621 shares; Mr. Chalovich, 741 shares; and Mr. Lindner, 692 shares.

(5)

Based on the closing price of Common Stock ($37.92) on the NYSE on October 13, 2020, the date on which the Compensation Committee certified the final bonus payouts.

Bonus – Marc Shore

In connection with Mr. Shore’s resignation, which was effective August 17, 2020, the Compensation Committee approved a one-time cash payment to Mr. Shore of $145,890. This payment was intended to compensate Mr. Shore for the pro rata value of a one-time equity award he received when he joined us in June 2017 and which vested on June 7, 2020, which he would not otherwise have received commensurate value for the period from June 7, 2020 through August 17, 2020.

 

 

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