Form DEF 14A Clearwater Paper Corp

CLEARWATER PAPER CORPORATION

ANNUAL MEETING OF STOCKHOLDERS

  May 11, 2023  

NOTICE OF ANNUAL MEETING

AND

PROXY STATEMENT

Clearwater Paper Corporation 2023

LETTER FROM OUR CEO

		Dear Clearwater Paper stockholders and stakeholders,   We continued to perform well in 2022 as we offset the impacts of inflation with pricing and a focus on productivity. We generated strong cash flows, reduced debt, and improved our overall financial flexibility. Since 2020, we have reduced net debt by $377 million, putting us in a stronger position to take advantage of opportunities to create stockholder value. I am pleased with our progress and believe that we are well positioned for another strong year in 2023.   Performance in our paperboard business in 2022 remained strong, with robust demand and higher pricing. Our team did an excellent job of capitalizing on a strong market while servicing customers and maintaining longstanding relationships. Performance in our tissue business improved, with
strong market demand and improved operational performance. Private branded share of the tissue market continued to grow as consumers looked for ways to offset inflation. Our team continued to focus on recovering margins through higher productivity and pricing.

You can find a more detailed summary of our 2022 performance highlights on page 2.

As we look out into 2023, we expect a normalization of paperboard market conditions and a strengthening in our tissue business. Inflation is moderating and we expect previously announced price increases to offset the impacts of higher costs. We are challenging our teams to accelerate our operating performance, particularly in manufacturing and supply chain areas.

We continue to make progress in areas of sustainability. While our products are inherently renewable, we now offer paperboard containing post-consumer recycled content and a compostable cup alternative. We have also set targets to reduce greenhouse gas emissions by 2030. You can read more about our commitments in the company’s 2022 ESG report.

Our people are the core to everything that we do. We are focused on providing an attractive employee proposition, including competitive wages and comprehensive benefits. In addition, we are centered on fostering a diverse and inclusive environment that is critical to attracting the talent that we need. We are committed to increasing representation of underrepresented groups within our ranks to better represent the communities in which we operate.

We seek your voting support for the items described in this proxy statement. Thank you for your investment and trust in Clearwater Paper.

Sincerely,

Arsen S. Kitch

President and Chief Executive Officer

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LETTER FROM OUR CHAIR OF THE BOARD

Dear Clearwater Paper stockholders and stakeholders,

As Arsen has described in his letter, the company performed strongly last year and has continued to improve its financial position. The Board deeply appreciates the hard work and efforts of our employees and management that have made 2022 a success.

Last year I outlined in my letter how the Board works together to provide independent oversight of management and stewardship of your interests. An updated summary of this outline is included on pages 3-4. This year I want to provide you with some insights into topics our Board regularly discusses with management. This is by no means a complete list and much of the detail is commercially sensitive or confidential.

The Board and management are constantly trying to “look around the corner” to understand what changes will appear in our external environment. The current most immediate topic is inflation. We expect the pace of inflation to moderate, but for it to persist well beyond this year. Another set of important issues is the current and anticipated changes in the markets of our customers and the resulting changes to the products and services they expect from Clearwater Paper. Related to that discussion are the potential changes in the demand and supply balances in each of our markets. Looking longer term, but with high urgency, is our work to find ways to meet our sustainability targets in an economically responsible manner.

We are also focused on two subjects that are key to building a successful future for our company, employees, stockholders, and communities. Those subjects include: the activities necessary to accelerate the rate of improvement in the company’s operating performance in its manufacturing and supply chain and, what we need to do to draw on the talents of our people more effectively and capture the benefits of greater diversity in our ranks. The 2022 ESG report includes our targets for greenhouse gas emission reductions and our diversity goals and is available on our website.

Finally, we intend to seek shareholder approval at our 2024 annual stockholder meeting to declassify our Board.

The Board is committed to serving your interests and we look forward to continued conversations in the years to come.

Thank you for your support.

Alexander Toeldte

Chair of the Board

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PROXY STATEMENT TABLE OF CONTENTS

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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

MEETING AGENDA / PROPOSALS

We are holding this meeting to:

Financial and other information concerning Clearwater Paper is contained in our Annual Report to Stockholders for the fiscal year ended December 31, 2022. This proxy statement and our 2022 Annual Report to Stockholders are available on our website at www.clearwaterpaper.com by selecting “Investors,” “Financial Info” and then “Annual Reports.” Additionally, and in accordance with SEC rules, you may access our proxy materials at www.proxyvote.com which does not have “cookies” that identify visitors to the site.

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1. KEY PERFORMANCE, CSR AND ENVIRONMENTAL HIGHLIGHTS

2022 PERFORMANCE HIGHLIGHTS

We are a premier private brand tissue manufacturer and producer of high-quality paperboard products. Our products can provide more sustainable alternatives to products made from non-renewable resources. 2022 was a year of solid performance with continued strong results in paperboard and improvements in tissue. Overall net sales were up 17% to $2.1 billion and net income was $46 million or $2.68 per diluted shares, up from a net loss in 2021.

Our pulp and paperboard division generated $1.1 billion in net sales, a 20% increase over 2021 results. Our consumer products segment tracked similar growth year over year, generating $950 million in net sales, a 14% increase over 2021.

In 2022 we continued to execute on our near-term strategy to prioritize free cash flow while paying down debt. In that respect, in 2022, we reduced net debt by $108 million for a total reduction of $377 million since 2020.

CORPORATE SOCIAL RESPONSIBILITY (CSR) AND ENVIRONMENTAL HIGHLIGHTS

Clearwater Paper’s Board and management carefully consider the impact our decisions have beyond our bottom line. Our commitment to the environment, the communities in which we do business, and the health, safety and equal opportunity for all of our employees is the foundation of our long-term success. We are proud to highlight this commitment in the Corporate Responsibility section of this proxy and in our Corporate and Social Responsibility report, which can be found on our website at www.clearwaterpaper.com under “Sustainability.” The Corporate and Social Responsibility report was updated in 2022 and includes our goals to reduce greenhouse gas emissions and diversity goals.

We completed our second report, extended form, through the Carbon Disclosure Project (CDP), with disclosure of our greenhouse gas (GHG) emissions. In 2022, we submitted a 30% GHG emission reduction by 2030 goal to the Science Based Targets initiative (SBTi). In the year reported, 2021, we completed 6 energy efficiency projects, requiring an aggregate capital investment of $2.39 million to reduce overall energy consumption, emissions and operating expenses. We also reduced our water usage by 8% from 2020 and continue to clean and redeploy a majority of our water to its original source. We continue working with a globally recognized sustainability consultant to help us analyze and reduce our scope 1, 2 and 3 GHG emissions.

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2. CORPORATE GOVERNANCE AND BOARD OF DIRECTORS

GOVERNANCE HIGHLIGHTS

Commitment to Strong Governance Standards: We follow and abide by the following best practices:

Independence, Board Composition and Refreshment

Board Practices

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Leadership Structure

Voting and Nominating

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BOARD OF DIRECTORS

Audit – Audit committee        Compensation – Compensation committee        Nom. & Gov. – Nominating and Governance committee

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BOARD SKILLS SUMMARY

DIRECTOR NOMINEES

This table provides a summary of information regarding our three director nominees.

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Our Board of Directors is divided into three classes serving staggered three-year terms. The average tenure of our independent directors is 4.6 years. At the Annual Meeting, our stockholders will be asked to elect three individuals to serve as directors until the 2026 Annual Meeting. See “Proposal No. 1—Election of Directors.” Our Bylaws require our directors to be elected by a majority vote of the shares of common stock present or represented by proxy and entitled to vote at the Annual Meeting.

Below are the names and ages of our nine directors as of the date of this proxy statement, the year each became a director, each director’s principal occupation or employment for at least the past five years, and other public company directorships held by each director during the past five years. Unless authority is withheld, the persons named as proxies in the voting materials made available to you or in the accompanying proxy will vote for the election of the nominees listed below. We have no reason to believe that any of these nominees will be unable to serve as a director. If any of the nominees becomes unavailable to serve, however, the persons named as proxies will have discretionary authority to vote for a substitute nominee.

NOMINEES FOR ELECTION AT THIS MEETING FOR A TERM EXPIRING IN 2026 (CLASS III)

Joe W. Laymon    

Biography: Mr. Laymon (age 70) has been a director since May 2019. Mr. Laymon served as vice president, human resources and corporate services at Chevron Corporation (NYSE:CVX), a leading global integrated energy company from 2008 until his retirement in 2017.

Current Public Directorships: Mr. Laymon has served on the board of directors for Peabody Energy (NYSE:BTU), a global coal company, since 2017 and serves as the chair of the compensation committee as well as a member of the health, safety, security & environmental committee.

Qualifications: Our Nominating Committee believes Mr. Laymon’s leadership and executive compensation, diversity and inclusion, ESG, cybersecurity, and human capital management experience and experience as a chair of the compensation committee of another public company make him an asset to our Board.

John P. O’Donnell    

Biography: Mr. O’Donnell (age 62) has been a director since April 2016, including chair of our Nominating Committee since May 2020. Mr. O’Donnell served as president and CEO of Neenah, Inc. (NYSE: NP), a global specialty materials company, from May 2011 and as a director from November 2010 until his retirement in July 2020. He served as Neenah Inc.’s COO from June 2010 to May 2011 and as president, Fine Paper from 2007 to June 2010. Mr. O’Donnell was employed by Georgia-Pacific Corporation from 1985 until 2007 and held increasingly senior management positions in the consumer products division where he served as president of the north american retail business from 2004 through 2007, and as president of the north american commercial tissue business from 2002 through 2004.

Qualifications: Our Nominating Committee believes Mr. O’Donnell’s leadership, strategic planning, human capital management, M&A, supply chain and consumer product paper industry experience make him an asset to our Board.

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Christine M. Vickers Tucker    

Biography: Ms. Vickers Tucker (age 55) has been a director since May 2021. Ms. Vickers Tucker served as the vice president and general manager, The Clorox Company Professional Products Company, a business unit of The Clorox Company, (NYSE:CLX), a leading manufacturer and marketer of consumer and professional products, from April 2020 until her retirement in October 2021. Prior to that she was the vice president and general manager of The Clorox Professional Products Company & Retail Laundry Division from September 2018 to April 2020, and vice president and general manager, The Clorox Professional Products Company from October 2014 through August 2018, and vice president and general manager of The Clorox Company of Canada from October 2012 through October 2014.

Qualifications: Our Nominating Committee believes Ms. Vickers Tucker’s knowledge of and experience with human capital management, professional and consumer products, strategic planning, business-to-business sales and marketing and manufacturing operations make her an asset to our Board.

DIRECTORS CONTINUING IN OFFICE UNTIL 2024 (CLASS I)

John J. Corkrean    

Biography: Mr. Corkrean (age 57) has been a director since May 2019, serving as Chair of our Audit Committee since September 2019. Mr. Corkrean currently serves as executive vice president and chief financial officer for H.B. Fuller Company (NYSE:FUL), a global adhesive, sealants and chemical products manufacturer, a position he has held since 2016. Prior to that he was employed by Ecolab for 17 years in a series of financial leadership roles from 2014 through 2016 concluding as senior vice president, finance for the global energy service division.

Qualifications: Our Nominating Committee believes Mr. Corkrean’s financial, cybersecurity, executive compensation, and public company expertise and leadership background make him an asset to our Board.

Arsen S. Kitch

Biography: Mr. Kitch (age 41) has been a director since April 1, 2020. He has served as the company’s President and CEO since April 1, 2020. He served as the company’s Senior Vice President, General Manager, Consumer Products Division from May 2018 to April 2020 and served as Vice President, General Manager, Consumer Products Division from January 2018 to May 2018. He served as the company’s Vice President, Finance and Vice President Financial Planning and Analysis from January 2015 through December 2017, and served as senior director, strategy and planning from August 2013 through December 2014.

Qualifications: Our Nominating Committee believes as the CEO, Mr. Kitch’s knowledge of our day-to-day operations and the effectiveness of our business strategies provides a valuable perspective to the Board. Additionally, Mr. Kitch’s experience, knowledge, skills and expertise acquired having served as CEO, Senior Vice President of a major division, and Vice President in the financial and strategical planning aspects of the company, M&A, human capital management, and ESG experience make him an asset to our Board.

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Alexander Toeldte    

Biography: Mr. Toeldte (age 63) has been a director since April 2016, serving as Chair of the Board since September 2018 including as Independent Executive Chair from March 2020 to May 2022. Mr. Toeldte served as the chairman of Jitasa, Inc., a privately held provider of accounting and financial management services for not-for-profit organizations from 2014 to 2022. He served as a director of Xerium Technologies, Inc. (NYSE:XRM), a global provider of industrial products and services from 2016 until the company’s sale in 2018 and was a member of its compensation and governance committees. He served as an operating director at Paine & Partners, LLC, a private equity firm until 2016. Mr. Toeldte served as president, CEO and a director of Boise Inc., a paper manufacturer, from February 2008 to 2013 and at Boise Cascade as its executive vice president, paper and packaging from October 2005 to 2008. Mr. Toeldte’s previous experience includes serving as executive vice President of Fonterra Co-operative Group, a New Zealand based global dairy company, and CEO of Fonterra Enterprises. Beforehand Mr. Toeldte served in various capacities with Fletcher Challenge Limited Group, a New Zealand based natural resources conglomerate, including as CEO of Fletcher Challenge Building and Fletcher Challenge Paper, as well as Group CFO. He also served as chair of the board of Fletcher Challenge Canada. Mr. Toeldte was a member of the board of the American Forest & Paper Association, which he chaired in 2012, from 2008 to 2013 and from 2020 to 2022. Before his executive career Mr. Toeldte was a partner at McKinsey in Canada and Sweden.

Qualifications: Our Nominating Committee believes Mr. Toeldte’s global experience in the consumer products and paper industries, along with experience in other related industries, executive compensation, financial expertise, M&A, and leadership and board experience make him an asset to our Board.

DIRECTORS CONTINUING IN OFFICE UNTIL 2025 (CLASS II)

Jeanne M. Hillman    

Biography: Ms. Hillman (age 63) has been a director since October 2022. Ms. Hillman served as the vice president, enterprise technology and governance, at Weyerhaeuser (NYSE:WY) a timber, wood products and real estate company from May 2019 until her retirement in March 2020. At Weyerhaeuser, Ms. Hillman served as vice president, chief accounting officer from August 2013 to May 2019 and April 2006 to October 2010. From October 2010 to August 2013, she served as vice president, finance operations for a wood products business improvement initiative. She served in senior financial roles which included accountability for strategic planning, capital investment, and multiple acquisitions and divestitures from 2002 through 2016. Ms. Hillman held various financial and information technology roles beginning in May 1984.

Qualifications: Our Nominating Committee, believes Ms. Hillman’s experience in the wood products industry, financial expertise, governance, information technology, M&A, business operations, strategic planning and executive management experience make her an asset to our Board.

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Kevin J. Hunt    

Biography: Mr. Hunt (age 71) has been a director since January 2013, including as Chair of the Compensation Committee since May 2016. From January 2013 to January 2014, he served as a consultant to ConAgra Foods, Inc., which acquired Ralcorp Holdings Inc. in January 2013. Mr. Hunt served as president, CEO and a director of Ralcorp Holdings Inc., a producer of private-brand foods and food service products from January 2012 to January 2013. He served as co-CEO and president of Ralcorp from 2003 until 2012 and as a director from 2004 until the company’s acquisition in 2013. Prior to that period, Mr. Hunt was corporate vice president and president of Bremner Food Group. Mr. Hunt served as an advisory director of Berkshire Partners LLC, a private equity firm, from 2013 to 2015. He served as a director of Vi Jon, a manufacturer of private label personal care products owned by Berkshire Partners, from 2012 to 2017. He served as a senior advisor for C.H. Guenther and Son, Inc., a leading producer of branded and private-label food products from August 2018 until December 31, 2021.

Current Public Directorships: Mr. Hunt has served as a director of Energizer Holdings, Inc. (NYSE: ENR), a manufacturer of primary batteries, automotive care and portable lighting products since its spin-off from Edgewell Personal Care Company (NYSE: EPC) in July 2015. He is a member of Energizer’s human capital committee and serves as chairman of its finance and oversight committee.

Qualifications: Our Nominating Committee believes Mr. Hunt’s experience with private label consumer product companies, human capital management, M&A, business operations, financial expertise, strategic planning and both executive management and board experience make him an asset to our Board.

Ann C. Nelson    

Biography: Ms. Nelson (age 63) has been a director since May 2020. Ms. Nelson served as a lead audit partner of KPMG, LLP, an audit services firm, from May 1994 until her retirement in September 2019. Prior to that, starting in August 1982, she served in various roles with KPMG.

Current Public Directorships: Ms. Nelson has served as a director and chair of the audit committee and is a member of the nominating and corporate governance committee of Rayonier, Inc. (NYSE: RYN), a timber REIT since 2020.

Qualifications: Our Nominating Committee believes Ms. Nelson’s leadership capabilities, knowledge of the paper industry as well as experience with cybersecurity, and human capital management, expertise in account and financial reporting, and experience as a chair of the audit committee of another public company make her an asset to our Board.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF THE THREE NOMINEES FOR DIRECTOR.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

This table shows the number of shares of common stock beneficially owned, by each owner of more than 5% of our common stock, each of our directors, each executive officer for whom compensation is reported in this proxy statement, and all directors and executive officers as a group. Except for our 5% holders, the table shows beneficial ownership as of March 13, 2023. The number of shares reported is based on data provided to us by the beneficial owners of the shares. The percentage ownership data is based on 16,984,699 shares of common stock outstanding as of March 13, 2023. Under SEC rules, beneficial ownership includes shares over which the person or entity exercises voting or investment power and any shares that the person or entity has the right to acquire within 60 days of March 13, 2023. Except as noted, and subject to applicable community property laws, each owner has sole voting and investment power over the shares shown in this table.

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CORPORATE GOVERNANCE

CORPORATE GOVERNANCE GUIDELINES; CODE OF BUSINESS CONDUCT AND ETHICS

We have established a corporate governance program to help guide our company and our employees, officers and directors in carrying out their responsibilities and duties as well as to set standards for their professional conduct. Our Board has adopted Corporate Governance Guidelines, or Governance Guidelines, which provide standards and practices of corporate governance that we have designed to help contribute to our success and to assure public confidence in our company. Our Governance Guidelines may be found on our website at www.clearwaterpaper.com under “Investors,” then “Governance.” In addition, all standing committees of the Board operate under charters that describe the responsibilities and practices of each committee.

We have adopted a Code of Business Conduct and Ethics, or Ethics Code, which provides ethical standards and corporate policies that apply to all our directors, officers and employees. Our Ethics Code requires, among other things, that our directors, officers and employees act with integrity and the highest ethical standards, comply with laws and other legal requirements, engage in fair competition, avoid conflicts of interest, and otherwise act in our best interests. We have also adopted a Code of Ethics for Senior Officers that applies to senior management and provides for accurate, full, fair and timely financial reporting and the reporting of information related to significant deficiencies in internal controls, fraud and legal compliance.

We have established procedures for confidentially and anonymously reporting concerns and potential violations regarding accounting, internal controls and auditing matters, as well as concerns regarding, or potential violations of, our ethics codes and other matters.

DIRECTOR INDEPENDENCE

The role of our Board is to oversee and provide policy guidance on our business and affairs. The Board believes that it will best serve our stockholders if the majority of its members are independent. As of March 30, 2023, our Board had nine members, eight of whom are outside (non-employee) directors. The Chair of our Board, Alexander Toeldte, is an outside director. With the exception of Arsen S. Kitch, who served as our President and Chief Executive Officer, the Board has determined that none of our directors or their immediate family members have a material relationship with the company (either directly or as a partner, stockholder or officer of an organization that has a relationship with us), and none of our directors or their immediate family members are employees of our independent registered public accounting firm, KPMG LLP. All our outside directors are independent within the meaning of the New York Stock Exchange, or NYSE, listing standards and our Director Independence Policy.

Our Board meets regularly in executive session without members of management present and as the Board or its individual members deem necessary. Mr. Toeldte, as the Chair, presides over these sessions. Each standing committee of the Board also meets in executive session regularly and as the committee or its individual members deem necessary. Our directors are also invited to attend the meetings of committees of which they are not members, and regularly do so.

BOARD MEETINGS

Our Board and its committees met a total of 22 times in 2022. All directors serving in 2022 attended all Board meetings and all directors attended all Board committees meetings for which they were a committee member during 2022, except for one director who missed one committee meeting. The Board does not have a policy requiring director attendance at annual meetings of our stockholders. However, all our directors attended our 2022 annual stockholders meeting by webcast and we anticipate that all will attend our 2023 annual stockholders meeting as well.

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NOMINEES FOR DIRECTOR

Our Nominating Committee is responsible for identifying, evaluating, recruiting and recommending qualified candidates to our Board for nomination or election. The Board nominates directors for election at each annual meeting of stockholders and elects new directors to fill vacancies if they occur.

Our Board strives to find directors who are experienced and dedicated individuals with diverse backgrounds, perspectives and skills. Our Governance Guidelines contain membership criteria that call for candidates to be selected for their character, judgment, diversity of experience, business acumen and ability to act on behalf of and in the best interest of all stockholders. While we do not have a formal policy or requirement with respect to director diversity, we value members who represent diverse backgrounds and viewpoints and strive towards a board composition that encompasses such diversity. We added a new female Director in each of 2020, 2021 and 2022. The Nominating Committee will continue to review all measurable objectives for achieving diversity on the Board and recommend them to the Board for consideration. In addition, we expect each director to be committed to enhancing stockholder value and to have sufficient time to effectively carry out his or her duties as a director. Our Nominating Committee seeks to ensure that a majority of our directors are independent under NYSE rules as well as our policies, and that one or more of our directors is an “Audit Committee Financial Expert” under SEC rules.

Prior to our annual meeting of stockholders, our Nominating Committee identifies director nominees by first evaluating the current directors whose terms will expire at the annual meeting and who are willing to continue in service. These candidates are evaluated based on the criteria described above, the candidate’s prior service as a director, and the needs of the Board for any particular talents and experience. If a director no longer wishes to continue in service, if the Nominating Committee decides not to re-nominate a director, or if a vacancy is created on the Board because of a resignation or an increase in the size of the Board or other event, then the committee considers whether to replace such director or to decrease the size of the Board. If the decision is to replace a director, then the Nominating Committee considers various candidates for Board membership, including those suggested by committee members, by other Board members, a director search firm engaged by the committee, or our stockholders. Prospective nominees are evaluated by the Nominating Committee based on the membership criteria described above and set forth in our Governance Guidelines.

A stockholder who wishes to recommend a prospective nominee to the Board for consideration by the Nominating Committee must notify our Corporate Secretary in writing at our principal executive office located at 601 West Riverside Avenue, Suite 1100, Spokane, WA 99201. Each notice must include the information about the prospective nominee as would be required under our Amended and Restated Bylaws, or Bylaws. Such notice must be delivered to our offices by the deadline relating to stockholder proposals to be considered for inclusion in our proxy materials, as described under “General Information—Stockholder Proposals for 2024” in this proxy statement.

Each notice delivered by a stockholder who wishes to recommend a prospective nominee to the Board for consideration by the Nominating Committee generally must include the following information about the prospective nominee:

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The Nominating Committee may require any prospective nominee recommended by a stockholder to furnish such other information as the Nominating Committee may reasonably require to determine the eligibility of such person to serve as an independent director or that could be material to a stockholder’s understanding of the independence, or lack thereof, of such person.

The foregoing is only a summary of the detailed requirements set forth in our Bylaws regarding director nominations by stockholders that would apply when a stockholder wishes to recommend a prospective nominee to the Board for consideration by the Nominating Committee. A more detailed description of the information that must be provided as to a prospective nominee is set forth in Article 3 of our Bylaws, which are available on our website at www.clearwaterpaper.com by selecting “Investors” and then “Governance.”

BOARD SUCCESSION PLANNING AND RECRUITMENT

Identifying and recommending qualified individuals for appointment or election to our Board with an evaluation based on the requirements in our Bylaws and Corporate Governance Guidelines is a core responsibility of the Nominating Committee. The committee carries out this responsibility through a year-round process described below

Evaluation of Board Composition

Each year the Nominating Committee evaluates the size and composition of the Board to assess whether they are appropriate in light of the company’s evolving needs. In making this evaluation, the committee considers the company’s strategic direction, current director qualifications, the results of Board and committee self-assessments, and legal and investor relations review.

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BOARD LEADERSHIP STRUCTURE

Traditionally, the Board has elected to appoint one of its independent members to serve as Chair. In that role, Alexander Toeldte, acts as the lead independent director and, among other responsibilities, provides an independent contact to allow the other directors to communicate their views and concerns to management as well as presides over non-management executive sessions of Board meetings. From March 1, 2020 to May 16, 2022, the Board appointed Mr. Toeldte to serve as the Independent Executive Chair on an interim basis to perform additional services to help facilitate the leadership change in our CEO position. Additionally, in that role Mr. Toeldte mentored and advised our CEO, Arsen S. Kitch, and other senior management and assisted with major stockholder engagement and management in their role in strategic planning when requested by the CEO. Our Board believes that an independent Chair with prior corporate governance experience combined with a President and CEO who manages the day-to-day operations of our company while also serving as a director, provides our Board with an optimal balance in terms of leadership structure at this point in time.

In the future, the Board may elect to have the role of Board Chair and CEO performed by the same person, as other companies in our industry do. If we were to adopt that structure, the Board would appoint one of its independent members to serve as Vice Chair, who would act as the lead independent director and, among other responsibilities, provide an independent contact to allow the other directors to communicate their views, and concerns to management as well as preside over non-management executive sessions of Board meetings.

BOARD COMMITTEES

Our Board currently has three standing committees, as described below. The current charters of each of these committees are available on our website at www.clearwaterpaper.com by selecting “Investors” and then “Governance.”

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BOARD AND RISK OVERSIGHT

Board of Directors

One of the responsibilities of our Board is to provide oversight of our risk management practices in order to ensure appropriate risk management systems are employed throughout the company. Management, which is responsible for the day-to-day assessment and mitigation of our risks, utilizes an enterprise risk management, or ERM, program, which is an enterprise-wide program designed to enable effective and efficient identification and management of critical enterprise risks and to facilitate the incorporation of risk considerations into

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decision making. To assist and strengthen management’s risk assessment and mitigation efforts, we have a Risk Management Committee whose management members represent a company-wide perspective and provide subject matter expertise as part of our ERM process. Through the ERM process, management identifies, monitors, and mitigates risks and regularly reports to the Board or a committee of the Board as to the assessment and management of those risks.

The Board’s standing committees support the Board by regularly addressing various issues within their respective areas of oversight.

Audit Committee

The Audit Committee’s responsibilities include reviewing and overseeing major financial risk and cybersecurity exposures and the steps management has taken to monitor and control these exposures. As ESG matters become a part of regular public company reporting obligations, the Audit Committee will be involved in the oversight of such reporting and related controls. Our Audit Committee also reviews with our independent auditors the adequacy and effectiveness of our internal controls over financial reporting. Additionally, our head of Internal Audit provides the Audit Committee with regular updates on our systems of internal controls over financial reporting, and our General Counsel reviews with the committee significant litigation, claims and regulatory and legal compliance matters.

Compensation Committee

The Compensation Committee assists the Board in fulfilling its risk management oversight responsibilities associated with risks arising from our compensation policies and programs. Each year management and the Compensation Committee review whether risks arising from our compensation policies and practices for our employees are reasonably likely to have a material adverse effect on the company. The Compensation Committee is also responsible for overseeing and reviewing development and implementation of company practices, strategies and policies across human capital management with increasing focus on these areas to help advance the company’s DE&I efforts.

Nominating and Governance Committee

The Nominating Committee assists the Board in fulfilling its risk management oversight responsibilities associated with risks related to corporate governance structures and processes. In addition to Board-related duties, the Nominating Committee is responsible for overseeing and reviewing ESG efforts with senior management across various company functions.

Each of the committee chairs, as appropriate, reports to the full Board at regular meetings concerning the activities of the committee, any significant issues it has discussed, and the actions taken by the committee.

The Board’s role in risk oversight is consistent with its leadership structure. We believe that our Board’s leadership structure facilitates its oversight of our risk management practices by combining the day-to-day knowledge of our business possessed by our President and CEO as a member of the Board, with the independence provided by our Independent Chair and independent Board committees.

Cybersecurity

One important aspect of our risk mitigation is cybersecurity, which we prioritize across our enterprise, and regularly review with our Board. We use a risk assessment methodology derived from industry standards to identify, rank, and remediate cybersecurity risks. We also model our security policies on ISO 27001 standards and employ a cybersecurity architecture which relies on defense in-depth strategies to protect the company against continually evolving security threats. Our security tooling, which covers both IT and OT systems, are based on concepts of SASE, Zero Trust Architecture, Secure Identity and Privileged Access Management,

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Adaptive Multi-factor authentication, System Hardening and detailed system logging. Security is managed by a dedicated 24x7 security operations center that reviews security threats using an AI and machine-learning enabled SIEM system that collects, and collates events and logs from infrastructure devices, and business applications. In addition, we reinforce our back-end security practices with required annual security awareness training for system users, and periodic phishing and other security simulations to reinforce security concepts. Training content is provided and updated periodically by a leading security training company. We experienced no security breaches during 2022.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

John J. Corkrean, Kevin J. Hunt, Joe W. Laymon, Alexander Toeldte and Christine M. Vickers Tucker each served as a member of our Compensation Committee during 2022. All are outside directors, and none of our named executive officers served as a director or as a member of a compensation committee of any business entity employing any of our directors during 2022.

COMMUNICATIONS WITH DIRECTORS

Stockholders and interested parties may contact our directors to provide comments, to report concerns, or to ask a question, by mail at the following address:

Corporate Secretary

Clearwater Paper Corporation

601 West Riverside Ave., Suite 1100

Spokane, Washington 99201

Stockholders and interested parties may also communicate with our directors as a group by using the form on our website at www.clearwaterpaper.com, by selecting “Investors,” then “Governance” and “Contact the Board.” All communications received will be processed by our Corporate Secretary. We forward all communications, other than those that are unrelated to the duties and responsibilities of the Board, to the intended director(s).

Our Audit Committee has established procedures to address concerns and reports of potential irregularities or violations regarding accounting, internal controls and auditing matters. Reports may be made on a confidential and anonymous basis. All such reports are directed through an independent, third-party hotline provider and are routed directly to the Chair of the Audit Committee. The procedures and hotline number are available by going to our public website at www.clearwaterpaper.com, and selecting “Investors,” then “Governance,” and “Procedures for the Reporting of Questionable Accounting and Auditing Matters.” Reports may also be made via the hotline provider’s website that is accessed through our intranet website.

TRANSACTIONS WITH RELATED PERSONS

Securities laws require us to disclose certain business transactions that are considered related person transactions. In order to comply with these requirements, our Board has adopted a Related Person Transactions Policy that applies to our directors and executive officers, any beneficial owner of more than 5% of our voting stock, any immediate family member of any of the foregoing persons, and any entity that employs any of the foregoing persons, or in which any of the foregoing persons is a general partner, principal or 10% or greater beneficial owner. Transactions covered by this policy are those in which (a) we or any of our subsidiaries participate, (b) the amount involved exceeds $120,000, and (c) any related person had, has or will have a direct or indirect material interest, as defined in the policy.

Any proposed related person transaction is reviewed by our Audit Committee at its next regularly scheduled meeting, unless our General Counsel and Corporate Secretary determines that it is not practicable or desirable

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to wait until the next scheduled meeting for a particular transaction, in which case the Chair of the Audit Committee has the authority to review and consider the proposed transaction. Only those transactions determined to be fair and in our best interests are approved, after taking into account all factors deemed relevant by the Audit Committee, or its Chair, as the case may be. If the Chair approves any related person transaction, then that approval is reported to the Audit Committee at its next regularly scheduled meeting.

We did not conduct any transactions with related persons in 2022 that would require disclosure in this proxy statement or that required approval by the Audit Committee pursuant to the policy described above.

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COMPENSATION OF DIRECTORS

Our Nominating Committee reviews and makes recommendations to our Board concerning independent director compensation. Similar to our philosophy regarding executive compensation, our philosophy regarding director compensation is to provide our directors a fair compensation package that is tied to the services they perform as well as to the performance of the company, with the objective of recruiting and retaining an outstanding group of directors.

The Nominating Committee, pursuant to the authority granted under its charter, engaged Semler Brossy Consulting Group to advise it on director compensation matters for 2022. Semler Brossy’s assessment was taken into consideration in establishing our current director compensation, which is targeted to be at the median of compensation paid by comparable companies.

2022 Compensation of Non-Employee Directors

During 2022, one of our directors, Arsen S. Kitch, also served as our CEO. As a result, he did not receive compensation for his services as a director during 2022. The compensation received by Mr. Kitch is shown in the 2022 Summary Compensation Table” provided elsewhere in this proxy statement.

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Retainer and Fees

Our independent directors’ cash compensation in 2022 was at the following rates:

We also reimburse directors for their reasonable out-of-pocket expenses for attending Board and committee meetings as well as educational seminars and conferences.

Directors may defer receiving all or any portion of their fees under the terms of our Deferred Compensation Plan for Directors, or Directors Plan. When a director elects to defer fees, he or she must elect a payment date or dates for the deferred amount and elect to have the deferred fees converted into phantom common stock units or, if not converted, then credited with annual interest at 120% of the long-term applicable federal rate published by the Internal Revenue Service, with quarterly compounding. The common stock units are credited with amounts in common stock units equal in value to any dividends that are paid on the same amount of common stock. Upon separation from service as a director, the common stock units credited to the director are converted to cash based upon the then market price of the common stock and paid to the director according to the plan the shares were deferred under.

Long-Term Incentive Awards. In May 2022, each of our outside directors then serving, received an annual equity award that vests in May 2023. An outside director who joins the Board after the grant of the annual award receives a pro rata portion. These annual awards were granted in the form of phantom common stock units. The number of phantom common stock units actually awarded was determined by dividing $120,000 by the average closing price of a share of our common stock over a twenty-day period that ended on the date of the grant. The common stock units awarded are credited with additional common stock units equal in value to any dividends that are paid on the same amount of common stock. Upon separation from service as a director, the common stock units credited to the director are converted to cash based upon the then market price of the common stock and paid to the director according to the plan the shares were granted under.

Other Benefits. Directors and their spouses are also eligible to participate in our matching gifts programs, which match contributions within certain dollar limits to specified institutions or for specific causes. In 2023 we made matching donations on behalf of three of our outside directors under this program.

Director Stock Ownership Guidelines and Limitations on Securities Trading. In the interest of promoting and increasing equity ownership by our directors and to further align our directors’ long-term interests with those of our stockholders, we have adopted stock ownership guidelines. Each director must acquire and hold within five years of becoming a director, Clearwater Paper Corporation stock with a value of at least five times the annual cash retainer. Shares held in a brokerage account, an account with our transfer agent, or in the form of vested common stock units owned as a result of deferred director fees or annual equity awards paid under our company plans, all count towards the ownership requirement. The value of the shares held by a director will be

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measured by the greater of the value of the shares at (i) the time acquired or vested or (ii) the applicable annual measurement date, based on the twenty-day average closing price of our stock before that measurement date. Each of our directors is in compliance with his or her current equity ownership requirement. The stock ownership of all our directors as of March 13, 2023 is presented in this proxy. See “Security Ownership of Certain Beneficial Owners and Management.”

Annually a report is presented to the Board detailing each director’s stock ownership and progress toward meeting these guidelines.

Pursuant to our Insider Trading Policy, directors, officers and other employees, are prohibited from engaging in short sales of company securities, pledging company securities, purchasing company securities on margin and engaging in transactions in puts, calls or other derivatives trading on an exchange in regards to company securities.

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3. CORPORATE RESPONSIBILITY

OUR FOCUS AREAS

		Sustainable Products
		Responsible Sourcing
		Energy Efficiency and Emission Reduction
		Water and Land Stewardship
		Health & Safety

Environmental stewardship and conservation are integral to the success of our business and our industry. We believe in careful utilization of natural resources and understand our role in conserving and protecting the planet’s air, water and land. To support this mission, we are making significant investments across our operations to develop sustainable paper products in ways that lead to a more sustainable future.

While we continue to face the impacts of climate change, social challenges and economic uncertainty, we are making progress in key areas of our business, including safety, sustainability and building a more diverse and inclusive workplace. We are taking the next step by setting multi-year targets in these areas to ensure that Clearwater Paper is part of the solution and remains a company of which we can all be proud. We also incorporated sustainability targets into our 2023 operating plan.

ENVIRONMENTAL

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				Sustainable products

				Responsible Sourcing

Responsible forestry and raw material usage have always been a part of our story. All of our paper products are available with Sustainable Forestry Initiative (SFI^®), Forest Stewardship Council^® (FSC C051250) or Programme for the Endorsement of Forest Certification (PEFC^™) certification, ensuring that Clearwater Paper and our suppliers are actively contributing to responsible forest management. As a result, 100% of our fiber is sourced using rigorous systems to promote responsible managed forests and recycled pulp. We also continue to expand our recyclable, compostable or marine-degradable grades.

				Energy Efficiency and Emission Reduction

GHG emissions

In 2022, we submitted our greenhouse gas emission targets for Scope 1,2 and 3 reductions to the Science Based Targets initiative (SBTi) for validation. Through this process we will work to assure our efforts are well aligned with the current climate science. Additionally, we expanded the visibility of our climate action through a second year of disclosure through the CDP. Our submission was upgraded to an overall rating (or grade) of a B. In 2022, we set goals of reducing our Scope 1 and 2 emissions by 30%, and reducing our Scope 3 emissions by 25%, by 2030.

Investment in Alternative Energy and Energy Efficiency

We continue to make significant investments in energy efficiency to support our emissions reduction and climate-related goals. In 2021, we completed 6 energy efficiency projects, requiring an aggregate capital investment of $2.4M to reduce overall energy consumption, emissions and operating expenses. We continued to implement energy efficiency projects in 2022 and will provide updated information through our participation in CDP.

Expansion of the utilization of renewable energy is a key piece of establishing and working towards our GHG goal with an increasing focus on identifying and sourcing renewable energy sources and continuing to utilize steam to generate electricity (or self-generating).

Our energy needs are split between 45% from purchased energy (electricity and natural gas) and 55% percent being self-generated from renewable sources. For example, the kraft paper manufacturing processes at our Idaho and Arkansas mills generate organic components from wood chips that we use as a renewable fuel to generate steam which is converted to electricity, reducing the need for external energy or fuel. We also capture and reuse process heat from our manufacturing operations that would otherwise be wasted.

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				Water and Land Stewardship

Waste Management and Recycling

Our waste management programs utilize best practices for usage, treatment and recycling and revolve around three tenets: identifying all waste; reducing waste generation when possible; and reusing, recycling and repurposing as much as possible. We have implemented a waste management standard requiring each facility to map waste streams for further analysis and to identify improvements to optimize beneficial uses, both as inputs to our manufacturing process and partnering with others for innovative solutions to reuse.

Water Management

Through 2022, we reduced our water usage by 8% from a 2020 baseline and continued to implement water stewardship projects. We treat and redeploy more than 94% our water withdrawn back to the environment. In 2023 we will perform a water assessment at our paper production sites as part of our continuing focus in this area.

SOCIAL

				Safe Workplace

Proactive worksite risk assessments are a key tenet of our EHS excellence strategy. We have formalized, enterprise-wide programs to identify workplace hazards prior to an incident occurring. On an annual basis, we establish targets for each site to implement controls against these hazard assessments and track completion of these controls through our internal EHS scorecard. In 2022 we implemented several proactive safety controls which resulted in a 26% reduction in safety risk during the year.

				Diverse and Inclusive Workplace

We are dedicated to fostering a sense of belonging where every employee is respected for who they are and are valued for their individual knowledge, skills, experiences, and backgrounds each bring to our culture. Diversity and inclusion starts at the top, and our senior leadership team and our board of directors prioritize building a workforce that reflects the communities where we operate. We also have utilized a diversity and inclusion steering committee comprised of salaried volunteer employees representing several company functions. We emphasize our commitment to respecting and observing human rights by conducting all aspects of our business with the highest level of integrity and ethical standards, as emphasized in our Human Rights Policy.

				Investing in Our People

We actively work to attract and retain the best-qualified talent by offering competitive benefits, including market-competitive compensation, healthcare, paid time off, parental leave, retirement benefits, tuition assistance, employee skills development and leadership development. We have training and development programs that are designed to provide equal opportunities for all employees. We offer an attractive employee value proposition with a set of ethical core values: commitment, collaboration, communication, courage, and character.

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				Community Involvement

Because our employees are in the best position to identify the needs and high-impact giving opportunities within their communities, we empower our facility-based teams to participate in and give toward local causes. During 2022, we gave approximately $200,000 to support the communities in which we do business, with donations supporting local schools, cultural institutions including the Spokane Symphony, and mission driven organizations such as Second Harvest foodbank, United Way, McGehee Arkansas Boys and Girls Club, Palouse-Clearwater Environmental Institute, Northwest Children’s Home, Hopeful Tails Animal Rescue and Shelby’s Communities in Schools.

GOVERNANCE

				Board Oversight

Our Board and its principal committees all have an oversight role in our ESG framework.

Our anti-corruption policy incorporates safeguards designed to prevent bad actors from attempting to bribe our employees or relevant third parties.

Our human rights policy applies to the employment practices of each of the contractors in our supply chain and requires that they procure sustainable materials from responsible sources.

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4. EXECUTIVE COMPENSATION DISCUSSION AND TABLES

COMPENSATION COMMITTEE REPORT

The Compensation Committee of the Board of Directors has reviewed and discussed the Executive Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and based on such review and discussions, the committee recommended to the Board that the Executive Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into our 2023 Annual Report on Form 10-K.

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