International Paper Co. (NYSE:IP), a $19.28 billion market cap paper and packaging company that has delivered an impressive 58.31% return year-to-date, has announced changes to its executive compensation structure, which will take effect at the start of 2025.
The Memphis-based company's Management Development and Compensation Committee approved the 2025 Long-Term Incentive Compensation Plan (LTIP) on Monday, December 9, 2024. According to InvestingPro analysis, the company maintains a FAIR financial health score, suggesting stable operational performance.
Under the new plan, equity-based long-term incentive awards for executive officers will consist entirely of performance stock units (PSUs). This marks a shift from the previous year's mix of 80% PSUs and 20% restricted stock units. The sole performance metric for these PSUs will be relative total shareowner return (TSR), which measures stock appreciation and dividends over time.
The 2025 LTIP will use an expanded TSR peer group, comprising the 40 constituents of the S&P Composite 1500 Materials Index with the highest three-year stock price correlation with International Paper. The PSUs will vest after a three-year performance period, with the performance goal range set between 0% and 200%.
The company has set the award values for its top executives in connection with the annual equity grants to be issued on January 1, 2025. Chairman and Chief Executive Officer Andrew K. Silvernail is set to receive $12.5 million, Senior Vice President and Chief Financial Officer Timothy S. Nicholls will get $3.5 million, and Executive Vice President and President – North American Packaging (NYSE:PKG) Solutions W. Thomas Hamic is slated for $2.8 million. Additionally, Senior Vice President, General Counsel and Corporate Secretary Joseph R. Saab will receive $2 million.
The adjustments also include an increase in total direct compensation for Nicholls and Saab, aligning their pay closer to market rates. Notably, International Paper has maintained dividend payments for 54 consecutive years, demonstrating long-term shareholder commitment.
InvestingPro subscribers can access detailed analysis of executive compensation trends and their correlation with company performance in the comprehensive Pro Research Report, available for over 1,400 US stocks.
In other recent news, International Paper continues to make significant strides in its ongoing acquisition of DS Smith (LON:SMDS) Plc. The company has released a supplementary prospectus related to its UK listing, a necessary step towards the completion of this all-stock transaction. Additionally, Jefferies has raised International Paper's price target from $56.00 to $66.00, maintaining a Buy rating, indicating confidence in the company's ongoing transformation and future earnings potential.
In the company's Q3 earnings report, adjusted operating earnings per share declined to $0.44 from $0.44 in the previous quarter due to lower volumes and higher operating costs. However, the company expects improved earnings in Q4 due to price increases and operational efficiencies.
Moreover, International Paper is planning to close five plants to streamline operations and is evaluating strategic options for its Global Cellulose Fibers business with the assistance of Morgan Stanley (NYSE:MS).
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