Corporate Governance Guidelines

 

Georgia-Pacific Corporation conducts its business under the oversight of the Board of Directors in accordance with the Georgia Business Corporation Code and the Company's Articles of Incorporation and Bylaws. These Corporate Governance Guidelines provide the general framework for the governance of the Company. The Board has adopted these guidelines to codify many of its policies and procedures that have been in place since 1995, and to implement certain corporate governance changes contained in the Sarbanes-Oxley Act of 2002 and in the Listed Company Manual of The New York Stock Exchange, Inc. These guidelines are subject to change, as the Board may find necessary or advisable.

Board Composition and Selection

1.

Board Structure; Chairman. The Company's Bylaws set forth the number of directors constituting the Board, subject to amendment by the Board or the Company's shareholders. The Board currently believes that 12 to 15 directors is an appropriate number of directors for the Company, and the actual size of the Board from time to time will depend upon the availability of qualified candidates, retirements and other factors. The Chairman of the Board, who may also be the Company's Chief Executive Officer, will be selected each year at the Board meeting held in conjunction with the Annual Meeting of Shareholders. The Board believes it is important to have the flexibility to select a Chairman who is the best person for the position, regardless of whether that person is currently serving, or has previously served, as an officer of the Company.

2.

Lead Director. In any year when the Chairman of the Board is a member of management, the Board will designate a non-management director as Lead Director, taking into consideration recommendations from the Executive and Governance Committee, the talents and experience of each non-management director, and applicable laws, rules and regulations. The Lead Director will preside over executive sessions of the Board when non-management members of the Board meet. The Lead Director also will serve as a contact person to facilitate communications between interested parties and non-management members of the Board.

3.

Independence of Directors. No director of Georgia-Pacific will qualify as "independent" unless the Board of Directors affirmatively determines that the director has no material relationship with Georgia-Pacific, other than in his or her capacity as a director. In making such determinations, the Board will consider all relevant facts and circumstances, taking into account all applicable laws, regulations and stock exchange listing requirements.

General Standards. When assessing the materiality of a director's relationships with Georgia-Pacific, the Board shall apply the following categorical standards, pursuant to which a director will not be considered independent if:

  • The director is, or has been within the last three years, an employee of GP, or has an immediate family member who is, or has been within the last three years, an executive officer of GP.
  • The director is a current partner or employee of a firm that is GP's internal or external auditor; has an immediate family member who (i) is a current partner of such a firm or (ii) is a current employee of such a firm and who participates in the firm's audit, assurance or tax compliance (but not tax planning) practice; or the director was, or has an immediate family member who was, within the last three years (but is no longer) a partner or employee of such a firm and personally worked on GP's audit within that time.
  • The director or an immediate family member of the director is, or has been within the last three years, employed as an executive officer of a company where any of GP's present executive officers at the same time serves or served on that company's compensation committee.
  • The director has received, or has an immediate family member who has received, during any twelve-month period within the last three years, more than $100,000 in direct compensation from GP, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service).


Standards for Customer or Supplier Relationships. In addition to these general standards, a director will not be considered independent if the director is an executive officer or employee, or an immediate family member of the director is a current executive officer, of a company that has made payments to, or received payments from, GP for property or services in an amount that, in any of the last three fiscal years, exceeds the greater of $1 million, or 2% of such other company's consolidated gross revenues.

For a business relationship that does not exceed the threshold contained in the preceding standard, the determination of whether such relationship is material, and therefore whether the director is independent, will be made by the directors who satisfy all of GP's Independence Standards. In the ordinary course of business, Georgia-Pacific from time to time engages in transactions with other corporations or financial institutions whose officers or directors are also directors of the company. Generally, subject to the preceding standard, the Board does not consider material any customer or supplier relationship between Georgia-Pacific and a director-related company where the provision of goods or services is pursuant to published or tariff rates or terms that are fair and reasonable and at least as favorable to GP as those that may be obtained from unrelated parties.

Standards for Charitable Relationships. For purposes of these Independence Standards, a relationship between Georgia-Pacific and a charitable organization of which a director serves as an executive officer or director will not be considered to be a material relationship if the discretionary charitable contributions that Georgia-Pacific (including the Georgia-Pacific Foundation) has made to such charitable organization in any of the last three fiscal years are less than the greater of $1 million or 2% of that organization's consolidated gross revenues for such year.

For a charitable relationship that exceeds the threshold contained in the preceding standard, the determination of whether such relationship is material, and therefore whether the director is independent, will be made by the directors who satisfy all of these Independence Standards. If it is determined that the charitable relationship is not material, the Board will explain in Georgia-Pacific's next annual proxy statement the basis for such determination.

For purposes of these Independence Standards, the term "Georgia-Pacific" or "GP" means Georgia-Pacific Corporation and all of its consolidated subsidiaries. The term "immediate family member" means a person's spouse, parents, children, siblings, mother and father-in-law, sons and daughters-in-law, brothers and sisters-in-law and anyone (other than employees) who share such director's home.

4.

Qualifications of Directors. Directors should possess sound judgment, an understanding of the business issues affecting the Company, integrity and the highest personal and professional ethics. In searching for potential Board nominees, the Board seeks directors who have a range of business, management and civic experience appropriate for the Board to discharge its responsibilities. The Board believes that its membership should include a diverse group of people with skills in various areas including production, marketing, finance, public policy and international matters. Board members should also have an awareness of environmental concerns.

While the Board believes that the Chief Executive Officer of the Company should have direct and substantial input into the process of selecting Board nominees, the Board will select Board nominees. The Board has delegated to the Executive and Governance Committee the task of seeking qualified candidates, reviewing the qualifications of potential nominees, and making recommendations for new nominees.

In connection with the Board's selection of Board committee members, the Executive and Governance Committee will review the number of other public company boards and board committees on which a director serves to ensure that each committee member is able to devote sufficient time to perform his or her duties as a committee member. No director who is a member of the Audit Committee may, at the same time, serve on the audit committees of more than two other publicly held companies.

5.

Term Limits. The Board does not believe that the establishment of limits on the number of terms directors may serve is in the best interests of the Company. Term limits may cause the loss of experience and expertise important to the effectiveness of the Board. To ensure that the Board continues to be comprised of qualified individuals who are able to devote the requisite time and effort to Board responsibilities, the Executive and Governance Committee, in consultation with the Chairman, will review the qualifications and performance of each incumbent director prior to the expiration of his or her term.

6.

Retirement Policy; Changes in Outside Responsibilities and Commitments. Directors are required to retire at the Annual Meeting of Shareholders nearest to their 72nd birthday, even if the term of office to which they were elected would extend beyond such date, and may not be re-elected. In the event the principal employment or similar responsibility that a director had when he or she was elected to the Board changes, or in the event of a prolonged period of ill-health, the director should offer to resign from the Board. The Board, acting through the Executive and Governance Committee, would then review the continued appropriateness of the director's membership under the changed circumstances and evaluate whether the Board should accept the director's resignation. When a Chief Executive Officer resigns or retires, he or she shall simultaneously offer to resign from the Board. The Board, after consultation with the new Chief Executive Officer, will determine whether the former Chief Executive Officer should continue as a director.

 

Board Meetings; Access to Information

7.

Board Meetings. The schedule of Board meetings for each year will be set by the Chairman of the Board, in consultation with all of the directors. At least one Board meeting each year will include a review of the long-term strategic plans of the Company.

In exercising its responsibility to oversee the business affairs of the Company, the Board will normally review matters affecting the Company's business and operations including:

The annual operating plan and operating results of the Company.

The annual capital spending plan of the Company, and any capital spending proposal of the Company not included in such plan that individually, or combined with all other similar projects, would exceed $50 million.

Any proposal of the Company to acquire, dispose of or exchange any assets having a fair market value in excess of $50 million.

Any proposal for the Company to acquire any business or assets of any third party in any amount if the consideration in such acquisition would be in the form of securities of the Company.

Any proposal for the Company to issue securities of the Company, or to incur additional indebtedness in an amount in excess of $25 million (excluding borrowings under existing bank credit agreements or indebtedness incurred to repay or refinance existing indebtedness).

Any other matters which are reserved to the Board under the By-Laws of the Company.


Directors are expected to attend all of the meetings of the Board and the committees on which they serve and to devote the time and effort necessary to fulfill their responsibilities. Directors will be provided information that is important to their understanding of the topics and issues to come before the Board or a committee in ample time for review before each meeting. Sensitive matters or those being developed may, however, be presented for discussion at a meeting without prior submission to directors. The Chairman of the Board, or the Chief Executive Officer if the Chairman is not the Chief Executive Officer, will establish the agenda for each Board meeting. Each director is free to suggest the inclusion of items on the agenda for any particular meeting and to raise at any Board or committee meeting subjects that are not on the agenda for discussion.

8.

Executive Sessions of the Board. In conjunction with any regular or special meeting of the Board, the Chairman of the Board may at any time call for the Board to meet in executive session without members of management (other than directors who are members of management) present. The Chairman of the Board will preside at such executive sessions. The non-management directors will meet in executive session prior to or following each regular meeting of the Board, and the Chairman of the Board or the Lead Director may call for an executive session of non-management directors at any special meeting of the Board. The Lead Director will preside at such executive sessions. The Board may invite the Chief Executive Officer to attend any executive session in order to address topics of concern to the Board.

9.

Director Access to Officers and Other Employees. To enhance the Board's understanding of the Company's business and to ensure that directors obtain all information necessary to fulfill their duties, the Board will have complete access to senior members of management and to other employees of the Company. The Chairman of the Board will regularly invite senior officers of the Company to attend Board meetings. Management is encouraged to invite employees to attend Board meetings at which they can provide additional insight into items being discussed, or who have future management potential that should be known to the Board.

10.

Access to Independent Advisors. The Board and its committees have the right at any time to retain independent financial, legal or other advisors as they deem necessary, without consulting with or obtaining the approval of any officer of the Company in advance.

 

Board Committees

11.

Number and Type. The standing committees of the Board are the Audit Committee, the Compensation Committee, the Finance Committee and the Executive and Governance Committee. The Board may establish additional committees, as necessary or advisable. At its meeting held in conjunction with the Annual Meeting of Shareholders, the Board will designate the members of each committee, taking into consideration recommendations from the Executive and Governance Committee, the talents and experience of each director, and all applicable laws, rules and regulations.

12.

Committee Charters. Each committee will have its own written charter, which will comply with New York Stock Exchange listing standards and any other applicable laws, rules and regulations. Each of the committees will perform its duties as assigned by the Board in compliance with the Bylaws of the Company and the committee's charter.

13.

Composition; Committee Chairpersons. Only independent directors may serve on the Audit Committee, the Compensation Committee, the Finance Committee and the Executive and Governance Committee. In determining the independence of a committee member, the Board will apply the definition of "independent director" set forth in New York Stock Exchange listing standards, including the additional "independence" requirements applicable to Audit Committee members, and any other applicable laws, rules and regulations regarding independence in effect from time to time. In addition, at least a majority of the directors on the Compensation Committee will also qualify as "outside directors" for the purposes of Section 162 (m) of the Internal Revenue Code.

The Board has no fixed policy with respect to rotation of committee members. However, the Board generally considers rotating committee members at three to five-year intervals, giving due consideration to the particular talents and other commitments of directors, as well as situations where it is in the best interest of the Company either to continue an individual director's committee membership for a longer period of time or rotate a director to an alternative committee to encourage a broader range of experience and responsibility. The Board, taking into consideration recommendations of the Executive and Governance Committee, will designate the Chairperson of each committee. Each Chairperson will normally serve for three successive one-year terms, subject to review at the end of each year by the Executive and Governance Committee and the Board.

14.

Committee Meetings and Agenda. The Chairperson of each committee will determine the frequency and duration of committee meetings, consistent with the committee's charter and the needs of the Company. The Chairperson also is responsible for developing, in consultation with management, the agenda for committee meetings and for reporting to the Board the business conducted at such meetings. Each director may attend any meeting of any committee, whether or not he or she is a member of that committee.

 

Performance Evaluation; Succession Planning; Compensation

15.

Director Orientation and Continuing Education. All new directors must participate in an orientation program, which will be conducted within two months of their election to the Board. This orientation program will consist of presentations by senior management to familiarize new directors with the Company's strategic plans, financial statements, accounting and risk management policies and procedures, compliance programs, Code of Business Conduct and Ethics, Code of Ethics for Senior Financial Officers and other information that will assist directors in discharging their responsibilities. Directors will receive continuing education from time to time through presentations about the Company and new legal and regulatory developments relating to the Company and the duties of directors. Directors are encouraged to participate in various non-management director education seminars at the Company's expense.

16.

Self-assessment. Each year, the Board shall conduct a self-assessment, as part of which each director shall assess the effectiveness of the Board and the committees on which he or she serves. The individual assessments will be organized and summarized by the Executive and Governance Committee, which will report the assessment of the Board's performance at the Board's meeting held in conjunction with each Annual Meeting of Shareholders. The assessment shall be discussed by the full Board, with particular focus on areas in which the Board or any of its committees can improve.

17.

Annual Chief Executive Officer Performance Evaluation. To ensure that the Chief Executive Officer is providing the best leadership for the Company, the non-management directors, acting as a group, shall annually evaluate the performance of the Chief Executive Officer (typically, at the first Board meeting of each year). This evaluation shall be based on objective criteria such as the overall performance of the Company, accomplishment of long-term strategic objectives, management development, and performance against specified performance targets. This evaluation shall also take into account the Compensation Committee's annual review of the Chief Executive Officer's performance and eligibility for an annual bonus under the Corporation's Short Term Incentive Plan. When completed, the Board's evaluation shall be communicated to the Chief Executive Officer.

18.

Director Compensation. The form and amount of director compensation shall be determined from time to time by the Executive and Governance Committee and then recommended to the full Board for action. Director compensation may take the form of cash, stock in the Company and other in-kind consideration ordinarily available to directors, as well as regular benefits. Generally, the Board seeks to set director compensation at levels that fairly compensate directors for their responsibilities as directors, are consistent with compensation levels at companies of a similar size and nature to the Company, and that align the directors' interests with the long-term interests of the Company and its shareholders.

19.

Director and Officer Stock Ownership. To create a direct linkage with corporate performance and align more closely the long-term interests of shareholders of the Company and the Board and management, it is the policy of the Board that equity-based compensation shall constitute a meaningful portion of directors' compensation, as well as the compensation of senior management.

20.

Succession Plan. The Chief Executive Officer shall make an annual report to the Board on the overall process of management development and succession planning for the Company, including for his or her position, as part of the Board's annual assessment of the performance and development of senior management. As part of that report, the Chief Executive Officer shall recommend a successor should he or she should unexpectedly die or become disabled.

 

Miscellaneous

21.

Codes of Conduct and Ethics. The Company has a Code of Business Conduct and Ethics and other internal policies and guidelines, designed to ensure that the Company's business is conducted in compliance with all applicable laws, rules and regulations and with the highest standards of integrity and ethics. The Code of Business Conduct and Ethics applies to all directors, officers and employees of the Company and its subsidiaries. Directors, in the course of their Company duties, must comply fully with all federal and state laws, rules and regulations applicable to the Company and its businesses, and with applicable Company policies, including the Company's Policy Regarding Inside Information and Trading in Stock. Subject to any applicable laws, rules and regulations, the Audit Committee will monitor compliance with the Code of Business Conduct and Ethics, the Code of Ethics for Senior Financial Officers and other internal policies and guidelines.

22.

Independent Auditor Services. No director may engage the independent auditor of the Company for the purpose of providing any financial planning, tax preparation or other personal services.


Revised Feb. 3, 2005