Domtar Corporation (TSX: UFS, NYSE: UFS) is the largest integrated producer of uncoated freesheet paper in North America and the second largest in the world based on production capacity, and is also a manufacturer of papergrade pulp.
Domtar designs, manufactures, markets and distributes a wide range of business, commercial printing, publication as well as technical and specialty papers with recognized brands such as Cougar, Lynx Opaque Ultra, Husky Opaque Offset, First Choice and Domtar EarthChoice Office Paper, part of a family of environmentally and socially responsible papers.
Domtar owns and operates Domtar Distribution Group, an extensive network of strategically located paper distribution facilities. The company employs nearly 10,000 people. Its head office is in Montreal and its operations center is in Fort Mill, South Carolina.
The Code of Business Conduct and Ethics of Domtar Corporation and each of its subsidiaries (collectively, the “Company”) applies to all employees, including officers (an “Employee” and, collectively, the “Employees”), and must be strictly observed. Failure to do so could result in disciplinary action, up to and including termination.
The Company is committed to the highest standards of ethics and business conduct. The Company conducts its business as a good corporate citizen and complies with all laws, rules and regulations applicable to it or the conduct of its business. This commitment and standard of conduct governs our relationships with customers, suppliers, shareholders, competitors, the communities in which we operate, and with each other as Employees at every organizational level.
The Code is an expression of our core values and represents a framework for decision-making. To this end, Employees are responsible for understanding the Code and acting in accordance with it. The Code cannot and is not intended to cover every applicable law, rule or regulation or provide answers to all questions that may arise; for that, we must ultimately rely on each Employee’s good sense of what is right, including a sense of when it is proper to seek guidance from others with respect to the appropriate course of conduct. Questions regarding any law, rule, regulation, or principle discussed in this Code which may govern business conduct, should be directed to your supervisor, your local human resources department, the Chief Legal Officer of the Company or the confidential Ethics Hotline at 866-323-3653.
The Code does not in any way constitute an employment contract or an assurance of continued employment. It is for the sole and exclusive benefit of the Company and may not be used or relied upon by any other party. The Company may modify or repeal the provisions of the Code or adopt a new Code at any time it deems appropriate, with or without notice.
Compliance with Laws, Rules & Regulations
Employees are required to comply fully with all laws, rules and regulations affecting the Company’s business and its conduct in business matters. The Company does business in a number of jurisdictions where applicable laws, rules, regulations, customs and social requirements may be different from those in the United States and/or Canada. It is the Company’s policy to abide by the national and local laws of nations and communities in which business of the Company is conducted. The fact that in some countries certain standards of conduct are legally prohibited, but these prohibitions are not enforced in practice, or their violation is not subject to public criticism or censure, will not excuse any illegal action by an Employee. In the case of any conflict between foreign and United States and/or Canadian law, or in any situation where an Employee has a doubt as to the proper course of conduct, it is incumbent upon an Employee to immediately consult the Chief Legal Officer of the Company.
Beyond the strictly legal aspects involved, Employees at all times are expected to act honestly and maintain the highest standards of ethics and business conduct, consistent with the professional image of the Company.
Visual monitoring shall be documented and records maintained at the facility along with the Stormwater
Pollution Prevention Plan. Copies of analytical monitoring results shall also be maintained on-site. The
permittee shall retain records of all monitoring information, including all calibration and maintenance
records and all original strip chart recordings for continuous monitoring instrumentation, and copies of all
reports required by this individual permit for a period of at least 5 years from the date of the sample,
measurement, report or application. This period may be extended by request of the Director at any time.
The evolution of Domtar over the past
ten years has been nothing short of
remarkable. From a company in the ‘90s
with too broad a product mix, frequent management
changes and seemingly no clear
direction, to what it has become today—the
largest producer of uncoated freesheet (UFS)
in North America and a company that
thrives on a management philosophy focused
on customers, shareholders and employees.
Domtar
Who’s been driving the “New Domtar” for
over a decade now? Raymond Royer—a
firm believer in people and that a mindset for
continuous improvement must flow throughout
the company.
In fact, Mr. Royer embraces and credits Kaizen—a
Japanese methodology of continuous improvement and problem
solving—as one the key elements to well-functioning
teams working within Domtar.
He has also pushed the company to the front of the class
in environmental stewardship, and on behalf of Domtar, was
honored in 2006 by FSC Canada with its first “Winds of
Change Award,” which recognizes exceptional contributions
to safeguarding the future of our forests.
During his tenure as president and CEO, Royer has engineered
some big deals that have helped Domtar gain inroads
to U.S. markets and a bigger slice of UFS pie—the latest feat
being the $3.3 billion transaction that combined the assets of
Weyerhaeuser’s fine paper division with Domtar. There have
been other moves along the way, the most notable being the
2001 acquisition of four Georgia-Pacific pulp and paper mills
in the U.S. for $1.65 billion.
In an exclusive interview, Raymond Royer talks about the
internal workings at Domtar, the integration of
Weyerhaeuser’s fine paper business, and his views on how
Domtar can get even better.
Employees must base business decisions and actions on the best interest of the Company. Accordingly, Company policy prohibits conflicts of interest. A conflict of interest occurs when an individual’s personal interest interferes in any way—or even appears to interfere—with the interests of the Company as a whole. A conflict situation can arise when an Employee or a member of his or her family takes actions or has interests that may make it difficult to perform his or her Company work objectively and effectively. Conflicts of interest also arise when an Employee, or a member of his or her family, receives improper personal benefits as a result of his or her position in the Company. Such conflicts of interest can undermine our business judgment and our responsibility to the Company and threaten the Company’s business and reputation. Accordingly, all apparent, potential, and actual conflicts of interest should be scrupulously avoided. Though it is not possible to list every activity or situation that might raise a conflict of interest issue(s), the list below is included to help you recognize some of the more significant ones:
Corporate Opportunities. Taking personally opportunities that are discovered through the use of corporate property, information or position, or using corporate property, information or position for personal gain or competing with the Company. Such action is prohibited.
Gifts. Receiving from, or giving to, a supplier, customer or competitor, gifts, gratuities, special allowances, discounts or other benefits not generally available of more than nominal value.
Loans. Providing loans to, or guarantees of obligations of, Employees or their family members will not be allowed without the prior written approval of the President of the Company, and if appropriate, the Board of Directors or a committee of the Board. The Company will not extend, maintain or arrange for any personal loan to or for any executive officer (or the equivalent thereof).
Outside Activity. Engaging in any outside activity that materially detracts from or interferes with the performance by an Employee of his or her services to the Company.
Outside Employment. Serving as a director, representative, employee, partner, consultant or agent of, or providing services to, an enterprise that is a supplier, customer or competitor of the Company.
Personal Interests. Having a direct or indirect personal interest in a transaction involving the Company.
Personal Investments. Directly or indirectly, owning a material amount of stock in, being a creditor of, or having another financial interest in a supplier, customer or competitor.
In addition to the number of trees required, paper production can
contaminate natural environments through the improper use and
disposal of bleaches and sludge waste. Though recycled fiber can
be part of the solution, it is not a panacea; wood fiber cannot be
recycled indefinitely, and in many regions, there is not enough
supply to meet demand.
Even though paper production can have a significant impact on
the environment, it is possible to manage forests responsibly
while still meeting the needs of communities and businesses. The
Rainforest Alliance has spent 20 years promoting the sustainable
management of forestland around the world. As an independent
FSC certifier, the Rainforest Alliance’s SmartWood program evaluates
all forest types and sizes; it awards the FSC and Rainforest
Alliance CertifiedTM seals to those businesses that meet a comprehensive
set of criteria, which protect soils, waterways, wildlife
habitat and the rights and welfare of workers and local communities.
Chain-of-Custody certification is awarded to paper and wood
product manufacturers and printers that can trace their products
from the sales floor all the way back to FSC-certified forests.
Performance Goals that May be Applied under the Omnibus Plan. Performance-based awards under the Omnibus Plan will be subject to the achievement of performance goals. Performance goals applicable to performance-based awards intended to qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code will be based on the relative or comparative achievement of one or more of the following criteria, whether in absolute terms or relative to the performance of one or more similarly situated companies or a published index covering the performance of a number of companies: operating earnings, net earnings, income, earnings before interest and taxes, earnings before interest, taxes, depreciation and amortization, return on the Corporation’s assets, increase in the Corporation’s earnings or earnings per share, revenue growth, share price performance, return on invested capital, operating income, pre- or post-tax, income, net income, economic value added, cash flow, improvement in or attainment of expense levels, improvement in or attainment of working capital levels, return on equity, debt reduction, gross profit, market share, cost reductions, workplace safety goals, workforce satisfaction and diversity goals, employee retention, completion of key projects, strategic plan development and implementation and achievement of synergy targets, and, in the case of persons who are not covered executives, such other criteria as may be determined by the Human Resources Committee. Performance goals may be in respect of the performance of the Corporation, any of its subsidiaries, any of its divisions, or business units.
To ensure that we remain a competitive employer, total compensation is targeted at the market median for the appropriate peer group. To address the volatility in compensation experienced by senior executives in our industry, which has historically arisen from the cyclical nature of our industry and factors beyond management’s control, base salaries are anchored at 110% of the applicable market median (see “Components of Executive Compensation — Base Salary”). To maintain our desired target total compensation at the median for the appropriate pay peer group, we provide below-median long-term incentive opportunities, with a portion vesting based on the passage of time to reward retention and a portion vesting subject to the achievement of corporate performance objectives so that our executives are motivated to realize long-term shareholder value creation (see “Components of Executive Compensation — Long-Term Equity Incentives”).
As described further below under the headings “Base Salary” and “Performance-Based Annual Cash Bonuses”, base salary and annual bonus amounts for these executives were determined in accordance with our total compensation policy. While the target value of the equity awards allocated to Messrs. Royer and Cooper was determined using the same methods that were applied to determine target equity value for our other senior executives, their awards were structured to achieve the special objectives set forth above. As further described below under the heading “Long-Term Equity Incentives”, equity awards granted to Messrs. Royer and Cooper in 2007 were one-time grants intended to ensure retention of these executives for the requisite period and to emphasize their expected role in achieving our business integration and synergy goals, with 50% vesting on their anticipated retirement dates and 50% vesting subject to attainment of these goals. If 50% of the target equity value awarded to these executives in 2007 is allocated to 2008 and 50% to 2007, the 2007 target value of long-term equity incentives, combined with 2007 base salary and target annual cash bonus amounts, would total approximately CDN $4.4 million for Mr. Royer and U.S. $2.4 million for Mr. Cooper. These totals represent approximately the sum of (i) median total annual direct compensation for similar positions within the appropriate pay peer group and (ii) a one-time equity-based business integration incentive award worth 50% of base salary per year at target. The latter is consistent in value with one-time equity-based business integration incentive awards provided to our other named executive officers (see “Business Integration Incentive Program — Synergy PCRSUs”, below). The Corporation does not intend to grant additional equity awards to Mr. Royer or Mr. Cooper in 2008.
Domtar designs, manufactures, markets and distributes a wide range of business, commercial printing, publication as well as technical and specialty papers with recognized brands such as Cougar, Lynx Opaque Ultra, Husky Opaque Offset, First Choice and Domtar EarthChoice Office Paper, part of a family of environmentally and socially responsible papers.
Domtar owns and operates Domtar Distribution Group, an extensive network of strategically located paper distribution facilities. The company employs nearly 10,000 people. Its head office is in Montreal and its operations center is in Fort Mill, South Carolina.
The Code of Business Conduct and Ethics of Domtar Corporation and each of its subsidiaries (collectively, the “Company”) applies to all employees, including officers (an “Employee” and, collectively, the “Employees”), and must be strictly observed. Failure to do so could result in disciplinary action, up to and including termination.
The Company is committed to the highest standards of ethics and business conduct. The Company conducts its business as a good corporate citizen and complies with all laws, rules and regulations applicable to it or the conduct of its business. This commitment and standard of conduct governs our relationships with customers, suppliers, shareholders, competitors, the communities in which we operate, and with each other as Employees at every organizational level.
The Code is an expression of our core values and represents a framework for decision-making. To this end, Employees are responsible for understanding the Code and acting in accordance with it. The Code cannot and is not intended to cover every applicable law, rule or regulation or provide answers to all questions that may arise; for that, we must ultimately rely on each Employee’s good sense of what is right, including a sense of when it is proper to seek guidance from others with respect to the appropriate course of conduct. Questions regarding any law, rule, regulation, or principle discussed in this Code which may govern business conduct, should be directed to your supervisor, your local human resources department, the Chief Legal Officer of the Company or the confidential Ethics Hotline at 866-323-3653.
The Code does not in any way constitute an employment contract or an assurance of continued employment. It is for the sole and exclusive benefit of the Company and may not be used or relied upon by any other party. The Company may modify or repeal the provisions of the Code or adopt a new Code at any time it deems appropriate, with or without notice.
Compliance with Laws, Rules & Regulations
Employees are required to comply fully with all laws, rules and regulations affecting the Company’s business and its conduct in business matters. The Company does business in a number of jurisdictions where applicable laws, rules, regulations, customs and social requirements may be different from those in the United States and/or Canada. It is the Company’s policy to abide by the national and local laws of nations and communities in which business of the Company is conducted. The fact that in some countries certain standards of conduct are legally prohibited, but these prohibitions are not enforced in practice, or their violation is not subject to public criticism or censure, will not excuse any illegal action by an Employee. In the case of any conflict between foreign and United States and/or Canadian law, or in any situation where an Employee has a doubt as to the proper course of conduct, it is incumbent upon an Employee to immediately consult the Chief Legal Officer of the Company.
Beyond the strictly legal aspects involved, Employees at all times are expected to act honestly and maintain the highest standards of ethics and business conduct, consistent with the professional image of the Company.
Visual monitoring shall be documented and records maintained at the facility along with the Stormwater
Pollution Prevention Plan. Copies of analytical monitoring results shall also be maintained on-site. The
permittee shall retain records of all monitoring information, including all calibration and maintenance
records and all original strip chart recordings for continuous monitoring instrumentation, and copies of all
reports required by this individual permit for a period of at least 5 years from the date of the sample,
measurement, report or application. This period may be extended by request of the Director at any time.
The evolution of Domtar over the past
ten years has been nothing short of
remarkable. From a company in the ‘90s
with too broad a product mix, frequent management
changes and seemingly no clear
direction, to what it has become today—the
largest producer of uncoated freesheet (UFS)
in North America and a company that
thrives on a management philosophy focused
on customers, shareholders and employees.
Domtar
Who’s been driving the “New Domtar” for
over a decade now? Raymond Royer—a
firm believer in people and that a mindset for
continuous improvement must flow throughout
the company.
In fact, Mr. Royer embraces and credits Kaizen—a
Japanese methodology of continuous improvement and problem
solving—as one the key elements to well-functioning
teams working within Domtar.
He has also pushed the company to the front of the class
in environmental stewardship, and on behalf of Domtar, was
honored in 2006 by FSC Canada with its first “Winds of
Change Award,” which recognizes exceptional contributions
to safeguarding the future of our forests.
During his tenure as president and CEO, Royer has engineered
some big deals that have helped Domtar gain inroads
to U.S. markets and a bigger slice of UFS pie—the latest feat
being the $3.3 billion transaction that combined the assets of
Weyerhaeuser’s fine paper division with Domtar. There have
been other moves along the way, the most notable being the
2001 acquisition of four Georgia-Pacific pulp and paper mills
in the U.S. for $1.65 billion.
In an exclusive interview, Raymond Royer talks about the
internal workings at Domtar, the integration of
Weyerhaeuser’s fine paper business, and his views on how
Domtar can get even better.
Employees must base business decisions and actions on the best interest of the Company. Accordingly, Company policy prohibits conflicts of interest. A conflict of interest occurs when an individual’s personal interest interferes in any way—or even appears to interfere—with the interests of the Company as a whole. A conflict situation can arise when an Employee or a member of his or her family takes actions or has interests that may make it difficult to perform his or her Company work objectively and effectively. Conflicts of interest also arise when an Employee, or a member of his or her family, receives improper personal benefits as a result of his or her position in the Company. Such conflicts of interest can undermine our business judgment and our responsibility to the Company and threaten the Company’s business and reputation. Accordingly, all apparent, potential, and actual conflicts of interest should be scrupulously avoided. Though it is not possible to list every activity or situation that might raise a conflict of interest issue(s), the list below is included to help you recognize some of the more significant ones:
Corporate Opportunities. Taking personally opportunities that are discovered through the use of corporate property, information or position, or using corporate property, information or position for personal gain or competing with the Company. Such action is prohibited.
Gifts. Receiving from, or giving to, a supplier, customer or competitor, gifts, gratuities, special allowances, discounts or other benefits not generally available of more than nominal value.
Loans. Providing loans to, or guarantees of obligations of, Employees or their family members will not be allowed without the prior written approval of the President of the Company, and if appropriate, the Board of Directors or a committee of the Board. The Company will not extend, maintain or arrange for any personal loan to or for any executive officer (or the equivalent thereof).
Outside Activity. Engaging in any outside activity that materially detracts from or interferes with the performance by an Employee of his or her services to the Company.
Outside Employment. Serving as a director, representative, employee, partner, consultant or agent of, or providing services to, an enterprise that is a supplier, customer or competitor of the Company.
Personal Interests. Having a direct or indirect personal interest in a transaction involving the Company.
Personal Investments. Directly or indirectly, owning a material amount of stock in, being a creditor of, or having another financial interest in a supplier, customer or competitor.
In addition to the number of trees required, paper production can
contaminate natural environments through the improper use and
disposal of bleaches and sludge waste. Though recycled fiber can
be part of the solution, it is not a panacea; wood fiber cannot be
recycled indefinitely, and in many regions, there is not enough
supply to meet demand.
Even though paper production can have a significant impact on
the environment, it is possible to manage forests responsibly
while still meeting the needs of communities and businesses. The
Rainforest Alliance has spent 20 years promoting the sustainable
management of forestland around the world. As an independent
FSC certifier, the Rainforest Alliance’s SmartWood program evaluates
all forest types and sizes; it awards the FSC and Rainforest
Alliance CertifiedTM seals to those businesses that meet a comprehensive
set of criteria, which protect soils, waterways, wildlife
habitat and the rights and welfare of workers and local communities.
Chain-of-Custody certification is awarded to paper and wood
product manufacturers and printers that can trace their products
from the sales floor all the way back to FSC-certified forests.
Performance Goals that May be Applied under the Omnibus Plan. Performance-based awards under the Omnibus Plan will be subject to the achievement of performance goals. Performance goals applicable to performance-based awards intended to qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code will be based on the relative or comparative achievement of one or more of the following criteria, whether in absolute terms or relative to the performance of one or more similarly situated companies or a published index covering the performance of a number of companies: operating earnings, net earnings, income, earnings before interest and taxes, earnings before interest, taxes, depreciation and amortization, return on the Corporation’s assets, increase in the Corporation’s earnings or earnings per share, revenue growth, share price performance, return on invested capital, operating income, pre- or post-tax, income, net income, economic value added, cash flow, improvement in or attainment of expense levels, improvement in or attainment of working capital levels, return on equity, debt reduction, gross profit, market share, cost reductions, workplace safety goals, workforce satisfaction and diversity goals, employee retention, completion of key projects, strategic plan development and implementation and achievement of synergy targets, and, in the case of persons who are not covered executives, such other criteria as may be determined by the Human Resources Committee. Performance goals may be in respect of the performance of the Corporation, any of its subsidiaries, any of its divisions, or business units.
To ensure that we remain a competitive employer, total compensation is targeted at the market median for the appropriate peer group. To address the volatility in compensation experienced by senior executives in our industry, which has historically arisen from the cyclical nature of our industry and factors beyond management’s control, base salaries are anchored at 110% of the applicable market median (see “Components of Executive Compensation — Base Salary”). To maintain our desired target total compensation at the median for the appropriate pay peer group, we provide below-median long-term incentive opportunities, with a portion vesting based on the passage of time to reward retention and a portion vesting subject to the achievement of corporate performance objectives so that our executives are motivated to realize long-term shareholder value creation (see “Components of Executive Compensation — Long-Term Equity Incentives”).
As described further below under the headings “Base Salary” and “Performance-Based Annual Cash Bonuses”, base salary and annual bonus amounts for these executives were determined in accordance with our total compensation policy. While the target value of the equity awards allocated to Messrs. Royer and Cooper was determined using the same methods that were applied to determine target equity value for our other senior executives, their awards were structured to achieve the special objectives set forth above. As further described below under the heading “Long-Term Equity Incentives”, equity awards granted to Messrs. Royer and Cooper in 2007 were one-time grants intended to ensure retention of these executives for the requisite period and to emphasize their expected role in achieving our business integration and synergy goals, with 50% vesting on their anticipated retirement dates and 50% vesting subject to attainment of these goals. If 50% of the target equity value awarded to these executives in 2007 is allocated to 2008 and 50% to 2007, the 2007 target value of long-term equity incentives, combined with 2007 base salary and target annual cash bonus amounts, would total approximately CDN $4.4 million for Mr. Royer and U.S. $2.4 million for Mr. Cooper. These totals represent approximately the sum of (i) median total annual direct compensation for similar positions within the appropriate pay peer group and (ii) a one-time equity-based business integration incentive award worth 50% of base salary per year at target. The latter is consistent in value with one-time equity-based business integration incentive awards provided to our other named executive officers (see “Business Integration Incentive Program — Synergy PCRSUs”, below). The Corporation does not intend to grant additional equity awards to Mr. Royer or Mr. Cooper in 2008.
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