UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

 

 

Form 8-K

 

 

Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

 

Date of report (Date of earliest event reported): February 21, 2017

 

Deltic Timber Corporation
(Exact Name of Registrant as Specified in Its Charter)

 

 

Delaware
(State or Other Jurisdiction of Incorporation or Organization) 		1-12147
(Commission File Number) 		71-0795870
(IRS Employer Identification No.)
210 East Elm Street, El Dorado, Arkansas
(Address of Principal Executive Offices) 		71730
(Zip Code)

 

Registrant’s telephone number, including area code: (870) 881-9400

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

   

Item 5.02. Other Events. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

(b)

 

The information in the fifth and sixth paragraphs under Item 5.02(c) below is incorporated herein by reference.

 

(c)

 

On February 27, 2017, Deltic Timber Corporation (the “Company”) announced the appointment of John D. Enlow as its new President and Chief Executive Officer, effective March 8, 2017. Mr. Enlow, age 49, most recently served as Vice President, Real Estate and Southern Timberlands for Weyerhaeuser Company, from 2014 to 2016. Prior to that, Mr. Enlow was employed by Rayonier Inc., which he joined in 1997 and where he served as Region Director, Northern and Region Director, Atlantic from 2012 to 2014, and Region Director, Atlantic from 2007 to 2012. Mr. Enlow began his professional career at Union Camp Corporation, where he was employed from 1990 to 1997. He currently serves as a member of the Board of Directors of the Georgia Forestry Association & Wood Supply Research Institute and Forest Resources Association. Mr. Enlow received his B.S. in Forestry from Mississippi State University in 1990 and his M.B.A. from Brenau University in 1992.

 

Mr. Enlow will receive an annual base salary of $500,000 and a target annual incentive opportunity equal to 85% of his base salary. He will receive a sign-on bonus of $75,000 and a sign-on equity award with an aggregate value of $650,000, as follows: (i) 50% in performance-based restricted stock units which may be earned at 0%-200% based on four-year performance targets to be set by the Board of Directors; (ii) 25% in stock options vesting in equal annual installments over four years; and (iii) 25% in restricted stock cliff vesting after four years, in each case subject to Mr. Enlow’s continued employment.

 

In the event that Mr. Enlow’s employment is terminated by the Company without cause or by Mr. Enlow for good reason (as defined in his offer letter), Mr. Enlow will be entitled to a severance payment equal to one times his annual salary and target annual incentive and pro rata vesting of his sign-on equity awards, subject to performance through his termination date in the case of his performance-based restricted stock units. In the event such a termination occurs within two years following a change in control of the Company, his severance will be two times his base salary and target annual incentive, his sign-on equity award will vest in full, subject to performance in the case of his performance-based restricted stock units, and he will be entitled to a pro rata annual incentive and outplacement benefits of up to $20,000. Mr. Enlow will also be entitled to continuation of his Company medical benefits for up to two years. These severance benefits are subject to Mr. Enlow’s execution of a customary release of claims in favor of the Company.

 

Mr. Enlow’s offer letter is attached hereto as Exhibit 10.1 and the Company’s press release announcing Mr. Enlow’s appointment is attached hereto as Exhibit 99.1.

 

D. Mark Leland, who has served as interim President and Chief Executive Officer of the Company since October 10, 2016, will step down from that position upon effectiveness of Mr. Enlow’s appointment. Thereafter, Mr. Leland will continue to serve as an independent member of the Company’s Board of Directors.

 

1

 

Separately, on February 21, 2017, Kenneth D. Mann, Vice President, Finance and Administration, Treasurer and Chief Financial Officer of the Company, was placed on administrative leave and his responsibilities, including those as principal financial officer, were assigned on an interim basis to Byrom L. Walker, the Company’s Controller and principal accounting officer. Mr. Mann’s employment was terminated for cause by the Board of Directors on February 24, 2017, at which time the Board formally appointed Mr. Walker as interim Vice President, Finance and Administration, Treasurer and Chief Financial Officer.

 

Mr. Walker, age 55, is continuing to serve as the Company’s Controller and principal accounting officer. Mr. Walker has served as Controller since 2007. From 2006 to 2007, Mr. Walker was Manager of Financial Reporting for the Company. Prior to joining the Company, Mr. Walker was Corporate Controller for Teris, LLC, a division of Suez S.A., a position he held from 2004. Mr. Walker received his B.A. in Accounting from Baylor University.

 

(e)

 

The information in the second and third paragraphs under Item 5.02(c) above is incorporated herein by reference.

 

Item 7.01. Regulation FD Disclosure.

 

On February 20, 2017, Mr. Mann informed the Company’s General Counsel that he misappropriated certain Company assets for personal use. As noted under Item 5.02(c), on February 21, 2017, Mr. Mann was placed on administrative leave and on February 24, 2017 his employment was terminated for cause. Upon termination, the Company’s Board of Directors revoked all of Mr. Mann’s unvested equity awards, his 2017 cash incentive bonus, and equity awards that vested on February 20, 2017. The amount of assets Mr. Mann indicated he misappropriated is not financially material to the Company and is less than the value of the revoked cash incentive bonus.

 

The Audit Committee of the Company’s Board of Directors has retained Davis Polk & Wardwell LLP to assist in its review of matters involving Mr. Mann. Upon conclusion of this review, the Company intends to seek full reimbursement from Mr. Mann for all misappropriated amounts.

 

Subject to information that may come to light in connection with the Audit Committee’s ongoing review, the Company currently does not expect that matters involving Mr. Mann will have a material impact on its previously issued financial statements, and the Company currently intends to file its Annual Report on Form 10-K for the year ended December 31, 2016 by the due date therefor of March 16, 2017.

 

The information in this Item 7.01 is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), or otherwise subject to the liabilities of that Section and shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise expressly stated in such filing.

 

2

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits

 

10.1 Offer letter to John Enlow.

 

99.1 Press release dated February 27, 2017.

 

3

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: February 27, 2017 Deltic Timber Corporation
   
   
  By:  /s/ Jim F. Andrews, Jr.
    Name: Jim F. Andrews, Jr.
Title:   Secretary

   

4

 

INDEX TO EXHIBITS

 

Exhibit
Number

Description 

10.1 Offer letter to John Enlow.
99.1 Press release dated February 27, 2017.

 

5

 

Exhibit 10.1

 

February 24, 2017

 

Mr. John Enlow

5 Noyant Court

Little Rock, AR 72223

 

Offer Letter

 

Dear John:

 

On behalf of Deltic Timber Corporation (the “ Company ”), I am pleased to extend an offer of employment to you for the position of Chief Executive Officer, reporting to the Board of Directors of the Company (the “ Board ”). The terms of our offer are set forth in this offer letter (this “ Offer Letter ”). Terms not defined in the body of this Offer Letter will have the meaning set forth in Appendix A to the Offer Letter.

 

1.       Employment Term. Your employment will be on an “at-will” basis, pursuant to the terms and conditions of this Offer Letter. Your employment with the Company will begin on March 8, 2017 (the “ Effective Date ”) and will continue until such time as it is terminated.

 

2.       Title and Nature of Duties. You will be employed as Chief Executive Officer of the Company, reporting to the Board. You will have such duties and obligations as are customary for such position and will perform such other duties as may be assigned from time to time by the Board.

 

3.       Compensation and Benefits.

 

a.       Base Salary. You will be paid an annual base salary of $500,000, payable in accordance with the Company’s normal payroll procedures and subject to annual Board review for any increases as determined by the Board.

 

 

b.       Annual Cash Incentive. You will be eligible to participate in the Company’s annual cash incentive plan (the “ Annual Cash Incentive Plan ”), with a target annual bonus of 85% of annual base salary. Should you accept this offer of employment, you will be credited with a full year of participation under the Annual Cash Incentive Plan for 2017.

 

c.       Long Term Incentive. You will be eligible to receive the following awards under the Company’s long term incentive plan upon commencement of employment, subject to annual Board review for any increases as determined by the Board:

 

· Stock Options : $162,500, which shall vest ratably in equal annual installments over four years from the date of grant and bear a 10-year term, subject to your continued employment (except as provided in paragraph 4 below).

 

· Time-Based Restricted Stock : $162,500, which shall vest four years following the date of grant, subject to your continued employment (except as provided in paragraph 4 below).

 

· Performance-Based Restricted Stock : $325,000, which shall vest four years following the date of grant, subject to your continued employment (except as provided in paragraph 4 below), and be eligible for payment at between 0% and 200%, based upon the satisfaction of pre-determined performance criteria.

 

Each of the above awards will be subject to terms of a written award agreement in a form approved by the Board.

 

d.       Benefits. You will be entitled to participate in all employee benefit plans and programs which are generally made available to other Company employees, subject to the terms of each plan. You will also be entitled to participate in the Company’s executive life insurance plan, subject to the terms of the plan.

 

e.       Retirement Plans. You will be eligible to participate in the Company’s qualified defined contribution savings plan (the “ Thrift Plan ”). The Company currently makes contributions of 4% of base salary to the Thrift Plan, vesting over three years, plus a matching contribution up to 5% of base salary which is fully vested when made. You will also be eligible to participate in the Company’s elective deferral supplemental retirement plan (the “ SERP ”), under which you may defer up to 50% of your base salary.

 

f.       Vacation. You will be entitled to four weeks of paid time off, along with standard paid holidays in accordance with the Company’s vacation policies and procedures.

 

2

 

4.       Sign-On Bonus: You will receive a cash sign-on bonus of $75,000, payable within 10 days of the start of your employment with the Company. Should you leave the Company voluntarily prior to the completion of one year of service, you will repay the Company a pro rata portion of the sign-on bonus based on the time between termination and one-year of service.

 

5.       Termination Benefits. You will be eligible to receive the following payments and benefits should you or the Board terminate your employment as provided below:

 

a.       Termination For Cause or Without Good Reason. If the Board terminates your employment for cause, or if you terminate your employment without good reason, you will be entitled to receive any accrued but unpaid installments of base salary through the date of termination and any benefits to which you are entitled under the Company’s broad-based benefit plans, and the Company will have no other obligations to you from and after the date of termination.

 

b.       Termination Without Cause or For Good Reason Not in Connection with a Change in Control. If the Board terminates your employment without Cause, or if you terminate your employment for Good Reason, you will be entitled to receive the following payments and benefits:

 

· A payment of one times current base salary plus target bonus.

 

· Accrued but unpaid installments of base salary.

 

· Pro-rated vesting of stock options and time-based restricted stock, based on the portion of the vesting period for which service has been completed.

 

· Pro-rated vesting of performance-based restricted stock based on actual performance through the date of termination and the portion of the performance period for which service has been completed.

 

· Company-paid continuation of medical benefits for one year following the date of termination.

 

c.       Termination Without Cause or For Good Reason Following a Change in Control. If the Board terminates your employment without Cause, or if you terminate your employment for Good Reason within the two year period following a Change in Control, you will be entitled to receive the following payments and benefits:

 

· A severance payment of two times the sum of your base salary plus your target bonus paid in a lump sum upon your termination.

 

· A pro-rated bonus for the year of termination based on your target annual bonus for such year and paid upon your termination.

 

3

 

· Accrued but unpaid installments of base salary.

 

· Full accelerated vesting of any unvested portion of the stock options and time-based restricted stock. Full accelerated vesting of any unvested portion of the performance-based restricted stock based on actual performance through the date of Change in Control.

 

· If the CIC occurs within one year of the Start Date, company-paid continuation of medical benefits for two years following the date of termination.

 

· Company-paid continuation of medical benefits for two years following the date of termination.

 

· Outplacement services for up to a two year period following termination with a maximum cost of $20,000.

 

Your entitlement to the termination payments and benefits under this paragraph 4 is contingent upon your execution and non-revocation of a customary release of claims against Company, its affiliates and their respective officers and board members which shall be provided to you by the Company within three days of your termination of employment.

 

6.       Stock Ownership Guidelines. As Chief Executive Officer of the Company, you will be expected to acquire ownership of five times your base salary in shares of Deltic stock within five years of the Effective Date. Shares that count toward the ownership guidelines are: those acquired through independent purchase; shares acquired and held in Deltic’s Thrift Plan and SERP; those acquired through Deltic’s long term incentive plan, including unvested time-based restricted stock. Progress towards the ownership guidelines will be assessed annually by the Executive Compensation Committee.

 

The payments and benefits under this Offer Letter are subject to the added provisions set forth in Appendix A to this Offer Letter.

 

We hope that you find the prospect of working for the Company to be an exciting opportunity, as we do. You may accept this offer of employment by signing and dating the enclosed duplicate original of this letter and returning it to us c/o R. Madison Murphy, Deltic Timber Corporation, 210 East Elm Street, El Dorado, AR 71730. We look forward to having you join us.

 

4

 

  Very truly yours,
   
   
  By:  /s/ R. Madison Murphy
    R. Madison Murphy
Compensation Committee Chair

   

 

I have read and accepted this offer of employment.

/s/ John Enlow  
John Enlow  
2/24/17  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

 

Appendix A to John Enlow Offer Letter

 

“ Cause ” means (i) your willful and continued failure substantially to perform your duties hereunder (other than as a result of total or partial incapacity due to physical or mental illness), (ii) dishonesty in the performance of your duties hereunder, (iii) an act or acts on your part constituting a felony under the laws of the United States or any state thereof or (iv) any other act or omission by you in relation to your services with the Company which involves gross negligence or bad faith and is materially injurious to the financial condition or business reputation of the Company or any of its affiliates or (v) the material violation of any Company policy by you, or the commission by you of an act involving moral turpitude, in each case, that adversely and substantially affects the reputation or business of the Company or any affiliate.

 

“ Change in Control ” shall have the meaning given to the term “Change in Control”, “Change of Control” or such similar term set forth in the Company’s principal stock incentive plan.

 

“ Good Reason ” means: (i) a material diminution in your title, role, authority or responsibilities (including your reporting responsibility) from the position described in paragraph 2 of the Offer Letter, (ii) a reduction in your base salary or target annual bonus or a failure by the Company to pay any agreed amounts vested and due to you under your terms of employment or (iii) the movement of your principal office more than 50 miles from its original location or any subsequent location otherwise agreed by you. Good Reason shall not be deemed to exist solely as a result of (A) the Company’s appointment of an interim Chief Executive Officer, with all related authorities and duties, to fill your role and exercise such authorities and duties during the period of any absence by you from your role, other than vacation and (B) the Board placing you on garden leave for a period not longer than 30 days, without any change to your compensation and benefit entitlements, to the extent that the Board deems such leave necessary in good faith to enable the Company to investigate and assess any facts or circumstances that might constitute grounds for the termination of your employment for Cause. Notwithstanding the foregoing, no event of “Good Reason” shall be deemed to have occurred unless you provide written notice, within ninety (90) days of the initial occurrence of such event, to the Board specifying in reasonable detail the facts or circumstances that you believe constitute Good Reason, such facts or circumstances are not corrected or otherwise cured by the Company within thirty (30) days after the Board’s receipt of such notice, and you actually terminate your employment within sixty (60) days after the end of the foregoing 30-day period.

 

Internal Revenue Code Section 409A Provisions Applicable to the
Payments and Benefits Provided Under the Offer Letter

 

To the fullest extent possible, amounts and other benefits payable under the Offer Letter are intended to be exempt from the definition of “nonqualified deferred compensation” under Internal Revenue Code Section 409A (“Section 409A”) in accordance with one or more exemptions available under Section 409A. To the extent that any such amount or benefit is or becomes subject to Section 409A, this Offer Letter

 

6

 

is intended to comply with the applicable requirements of Section 409A with respect to those amounts or benefits so as to avoid the imposition of taxes and penalties. This Offer Letter will be interpreted and administered to the extent possible in a manner consistent with the foregoing statement of intent. If any payment or benefit to be provided under the Offer Letter constitute “nonqualified deferred compensation” under Section 409A at a time when you are a “specified employees” within the meaning of Section 409A, notwithstanding any other provision of the Offer Letter, such payment or benefit shall be delayed until the first day of the seventh month following our separation from service and any such delayed payment shall at that time be paid in a lump sum (or, in the case of a non-cash benefit, shall be provided in a manner that is consistent with Section 409A). For purposes of Section 409A each installment of any payment or benefit due under the Offer Letter shall be regarded as a separate payment. In no event whatsoever will the Company or any of its affiliates be liable for any additional tax, interest or penalties that may be imposed on you by Section 409A or any damages for failing to comply with Section 409A.

 

7

Exhibit 99.1

 

 

 

 

 

 

 

Deltic Timber Announces Appointment of John D. Enlow as President and Chief Executive Officer

 

EL DORADO, AR – Deltic Timber Corporation (NYSE-DEL), a vertically integrated natural resources company, today announced that John D. Enlow has been appointed President and Chief Executive Officer, effective March 8, 2017. A seasoned forest resources executive, Mr. Enlow joins Deltic having most recently served as Vice President, Real Estate and Southern Timberlands at Weyerhaeuser, from 2014 to 2016, after serving over 16 years in roles of increasing responsibility at Rayonier Inc.

 

“We are pleased to welcome a proven leader of John’s caliber and experience to the Deltic team,” said Robert C. Nolan, Chairman of the Board. “John’s broad industry expertise in forestry, real estate development, finance and operations will be invaluable as the Company continues to capitalize on momentum in the housing and wood products markets. Deltic has a strong foundation in place and we are confident that, under John’s leadership, Deltic will continue to deliver high quality products, achieve strong financial and operational performance and enhance shareholder value.”

 

Mr. Nolan continued, “We also want to thank Mark Leland for stepping in to lead the Company on an interim basis while the Board conducted its search process.”

 

“I am honored to join the talented team at Deltic and am excited about the opportunities that lie ahead for the Company,” said Mr. Enlow. “Deltic has an outstanding asset base and strong manufacturing operations. I look forward to working closely with the Board and other members of the management team to set and execute the Company’s strategy and continue creating value for all of Deltic’s shareholders.”

 

1  

 

 

About John D. Enlow  

Mr. Enlow brings more than 25 years of experience in the forest resources industry to Deltic. He most recently served as Vice President, Real Estate and Southern Timberlands at Weyerhaeuser, where he was responsible for setting business strategy, developing talent and overseeing forest operations as well as real estate sales, development and strategic acquisitions. Previously, Mr. Enlow served as director of the Atlantic and Northern timberlands regions at Rayonier Inc. Prior to those roles, he served in various roles across Rayonier Inc. including Manager Business Development, Procurement Operations Manager-East Area, Chip Procurement Manager and Manager Operations Analysis. Before joining Rayonier, Mr. Enlow held roles in sales, finance and forestry at Union Camp Corporation. Mr. Enlow holds a Bachelor of Science degree from Mississippi State University and an MBA from Brenau University. He also is a graduate of Wharton’s Executive Strategy program and serves on the Board of Directors of the Georgia Forestry Association & Wood Supply Research Institute and Forest Resources Association.

 

Forward-Looking Statements

Statements included herein that are not historical in nature are intended to be, and are hereby identified as, “forward-looking statements” within the meaning of the federal securities laws. Such statements reflect the Company’s current expectations and involve certain risks and uncertainties. Actual results could differ materially from those included in such forward-looking statements. Factors that could cause such differences include, but are not limited to, the cyclical nature of the industry, changes in interest rates, credit availability, general economic conditions, adverse weather, cost and availability of materials used to manufacture the Company’s products, natural gas pricing and volumes produced, and the other risk factors described from time to time in the reports and disclosure documents filed by the Company with the Securities and Exchange Commission.

 

About Deltic

Deltic Timber Corporation is a natural resources company focused on the efficient and environmentally responsible management of its land holdings. The Company owns approximately 530,000 acres of timberland, operates two sawmills and a medium density fiberboard plant, and is engaged in real estate development. Headquartered in El Dorado, Arkansas, the Company’s operations are located primarily in Arkansas and north Louisiana.

 

CONTACT:       Deltic Investor Relations

(870) 881-6432 

ir@deltic.com

 

 

 

2