Odd allies shake up Weyerhaeuser Page 1 of 2

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Odd allies shake up Weyerhaeuser

Unstaggered board terms are favored

Wednesday, April 19, 2000

By BILL VIRGIN
SEATTLE POST-INTELLIGENCER REPORTER

Institutional investors and environmentalists have very little in common except this: They hate corporate
boards of directors whose members have staggered terms.

The seemingly unlikely combination of the environmental movement and institutional investors --
mutual funds, pension plans and others holding big blocks of shares -- yesterday passed an advisory
resolution among Weyerhaeuser Co. shareholders calling for the company to dump its system of
staggered three-year terms in favor of electing all board members each year.

The resolution was passed over the opposition of Weyerhaeuser management. It's the second time in
recent years Weyerhaeuser shareholders have approved a shareholder resolution; in 1996 an investor
group won a majority for a resolution for the company to drop its anti-takeover poison-pill plan.

Political, social and environmental issues typically receive scant support from shareholders when they
appear on proxy ballots. But when institutional investors get interested, it gets the attention of
management. That certainly appeared to be the case this time. Even before the vote, Weyerhaeuser Chief
Executive Steve Rogel said at yesterday's meeting the board "plans to review the classified board
structure in the coming year."

Both environmentalists and institutional investors say they object to staggered, or classified, board terms
because they decrease management accountability. Where they differ is on issues for which that
accountability important.

In the case of Weyerhaeuser, environmentalists contend having all board members elected every year
might make them more sensitive to environmental issues, specifically the Huckleberry land exchange
between the U.S. Forest Service and Weyerhaeuser for land in the Cascades near Enumclaw. The land
swap was challenged in court, and the U.S. 9th Circuit Court of Appeals recently told the Forest Service
to do more evaluating of its effects.

Janine Blaeloch, executive director of the Western Land Exchange Project, said Weyerhaeuser has made
"a series of bad decisions" on a case that has cost it millions in legal fees and has increased public
mistrust of the company. She spoke on behalf of Barton Naylor, a Virginia investor who officially filed
the resolution.

Institutional investors, meanwhile, don't like staggered board terms because they believe that entrenched
board members may try to block an acquisition bid and thus deprive shareholders of the highest possible
value for their stock. If the entire board could be replaced at a single election a bidder could either install
a board more receptive to a takeover bid, or have more sway over existing board members.

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Odd allies shake up Weyerhaeuser Page 2 of 2

Rogel believes board members with staggered terms are just as effective at getting the best value for
shareholders, and provide a company with continuity. But with nearly 58 percent of the shares voted in
favor of the resolution, Rogel said the board will study the matter.

Rogel said changing the way the company's board members are elected will require a change in the
bylaws with an 80 percent approval vote.

Interestingly, another Naylor resolution fared much worse on the proxy ballot for yesterday's
Washington Mutual Inc. annual meeting.

That resolution called for the company to give the same proxy statement prominence to board candidates
nominated by those who own at least 3 percent of the company's stock as is given to the board's
nominees; that proposal got just 7 percent approval. Another proposal, calling for management to hire
independent advisers to evaluate management proposals for shareholders, got just 4 percent.

P-I reporter Bill Virgin can be reached at 206-448-8319 or billvirgin@seattle-pi.com

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