US: Shouting Drowns Out Positive Weyerhaeuser Report

Publisher Name: 
Seattle Post-Intelligencer

The normally staid annual shareholders meeting of
Weyerhaeuser Co. was anything but a buttoned-down affair yesterday,
with representatives of labor, environmental and Canadian tribal groups
shouting at the company's chief executive and demanding an opportunity
to present their criticisms of the forest-product company.

The meeting was held as usual at Weyerhaeuser's corporate
headquarters but it came to a somewhat unusual end with Chief Executive
Steve Rogel calling critics disruptive and the critics calling Rogel
and Weyerhaeuser disrespectful.

Lost amid the hubbub was Weyerhaeuser's report of first-quarter
earnings that were nearly double its profit in the year-ago period.
Weyerhaeuser also announced its first increase in the quarterly
dividend in 10 years.

Annual shareholder meetings in this region are normally sedate
affairs; even when there are controversial issues or proposals on the
agenda, question-and-answer sessions tend to be orderly and muted.

That wasn't the case yesterday as groups ranging from the Haida
nation to the United Steelworkers union to the Rainforest Action
Network had representatives on hand to pose questions to Rogel.

Labor representatives said they wanted to ask about issues ranging
from safety in the mills and forests to executive compensation to wages
and benefits.

"Every round of bargaining we go into in Canada, we're fighting
takebacks and concessions," said Scott Lunny with the Canadian office
of the United Steelworkers of America. "We read the annual report too.
(The company) seems to be making a fair amount of money. We wonder why
we're fighting when the executives are doing quite well."

Lunny said union members and others wanted to speak at the meeting
to "call them out on the bull- - - -," to counter what he called the
company's line that "we get along with everybody."

Tribal and environmental groups, meanwhile, said they wanted to take
Weyerhaeuser to task for such issues as logging in cedar forests on the
British Columbia coast and its relations with the Haida nation.

The testiness began when David Ortman of the Northwest Corporate
Accountability Project, presenting a resolution on Weyerhaeuser's
purchase of federal timber, said he wanted to address other subjects as
well. Rogel told him to limit his comments to the resolution.

"Your presentation went on for 30 minutes," Ortman said.

"My job is to report on company operations," Rogel said. "We're moving on."

In past years, Rogel has taken questions from the floor; this year,
shareholders were asked to fill out question and comment cards. Rogel
said the change was made because of disruptions at past meetings during
the Q-and-A.

Even before the Q-and-A started, audience members began asking
questions. When Rogel ruled one questioner out of order, he answered,
"Are you telling me as a shareholder I can't ask questions?"

Rogel answered questions that were read off cards by another company
official. When he concluded that portion of the meeting and moved to
the announcement of the vote on directors and shareholder proposals,
audience members again started yelling questions and complaining that
their questions hadn't been answered. Rogel said those questions not
answered at the meeting would be answered in writing, then adjourned
the meeting to boos and applause. "I'm sorry we've got such disruptive"
people in the audience, he said, having tried at several points to
gavel the meeting back to order.

After the meeting, union and environmental groups issued statements
blasting Weyerhaeuser. The Rainforest Action Network said,
"Weyerhaeuser is not only out of touch with moral values and best
practices but ... is uninterested in learning what shareholders think
about important issues."

"Obviously there are elements of society that want to have their
views heard in any way possible," Rogel said afterward. "What people
don't realize is every one of these groups we've had extensive
discussions with."

Weyerhaeuser reported first-quarter net income of $239 million, or
98 cents a share, up from $121 million, or 54 cents a share, a year
ago. Revenues rose 10 percent to $5.5 billion. Increased earnings in
Weyerhaeuser's timberlands, pulp and paper, container board and
packaging and real estate operations were partially offset by a decline
in the wood-product segment.

It also increased the quarterly common-stock dividend by 10 cents a share to 50 cents.

"We think it's time to reward shareholders," Rogel said. The
company's efforts in recent years have been focusing on reducing debt
accumulated through its acquisition of Willamette. With that
accomplished, cash flow appears sufficient to support a $2 a year
dividend, he said.

If cash flow continues to improve, he added, "We'll look at it more often, not just every 10 years."

Although the company isn't likely to make any big acquisitions, it
might consider what Rogel termed "bolt-on opportunities" to add

Despite the improvement and the dividend increase, Weyerhaeuser
stock fell $1.42 a share, to $64, on a day when the markets overall
were up.

Paul Latta, an analyst with McAdams Wright Ragen Inc. in Seattle,
sad the stock's drop could be blamed on earnings coming in short of
expectations, as well as a recent report on a sharp drop in housing
starts, which are a key indicator for lumber producers such as

But Latta said he was "a little surprised" by the degree of the
decline. "The results were a touch worse than expected, but the outlook
was a touch better than expected."

As for the dividend increase not providing any offsetting lift to
the stock price, "The type of people who sell on short-term
disappointments are not dividend people," he said.

A shareholder resolution calling on Weyerhaeuser to record stock
options as expenses was approved by 68 percent of the votes cast. The
company has said it will do so now that the Financial Accounting
Standards Board has enacted rules.

Shareholders voted in favor (74 percent) of a proposal to elect all
directors every year, but only 32 percent of shares were cast in favor
of a proposal for performance-based executive stock options. A proposal
calling on the company to report on the impact of ending all federal
timber purchases got just 4 percent of shares; Weyerhaeuser says less
than 1 percent of the raw material used in its U.S. mills came from
federal lands.

AMP Section Name:Natural Resources
  • 183 Environment