Deltic Timber relaxes board rules to keep chairman on board through executive transitions

As Deltic Timber Corp. prepares for its annual board meeting on April 27, the El Dorado-based publicly traded concern is asking its stockholders to keep Robert Nolan on board as chairman beyond the company’s mandatory retirement age of 75.

According to Deltic’s recent proxy filing with the federal Securities and Exchange Commission, the 12-person board of directors determined on March 28 “it was in the company’s and in the stockholders’ best interests” for Nolan continue in his role as chairman of the board through the company’s 2018 annual meeting, when his term as a Class I director expires.

“The Board determined that Mr. Nolan’s continued leadership as Chairman of the Board of Directors for another year would be beneficial to the Company, and waived his retirement requirement accordingly,” the board said in proxy statement on March 30.

Deltic’s corporate governance guidelines provide that directors shall not be nominated, elected or stand for re-election after reaching the age of 75. Also, directors who reach the age of 75 during their term are to retire no later than the date of the company’s annual meeting following their 75th birthday. Nolan, 75, had been scheduled to retire from the board after Deltic’s annual meeting later this month.

In making the decision to waive the company’s retirement requirements for Nolan, the board said it considered the relative inexperience of company CEO and President John Enlow and the recent firing of former CFO Kenneth Mann. A month ago, Deltic appointed Enlow as president and CEO of the Arkansas timberland and real estate company after the unexpected resignation of longtime President and CEO Ray Dillon in December. Enlow also took over Dillon’s position on the Deltic board as a Class I director.

Deltic also announced the board’s decision last month to terminate Mann as the company’s CFO. Today, Byrom Walker is acting as Deltic’s interim chief financial officer. Deltic said the company’s search for a permanent replacement “is still in process.” Walker has served as the controller of Deltic since May 2007. He has been with the company for 11 years, having joined Deltic in 2006 as manager of financial reporting. Deltic officials said the firing of Mann was completed after the board “became aware that he misappropriated certain company assets for personal use.”

“Mr. Nolan’s leadership during the investigation of the former Chief Financial Officer’s conduct and the continuing executive search has greatly assisted the Board and management,” the SEC filing stated.

Nolan, along with board members Robert Madison Murphy and Rev. Chris Keller III, are all first cousins and members of the Murphy family that also has stock interests in Murphy Corp. and Murphy USA in El Dorado. Deltic board director R. Hunter Pierson is also part of the Murphy family by marriage.

Deltic’s efforts to shore up its executive ranks comes as its biggest institutional investor, Memphis-based Southeastern Asset Management, is putting pressure on the board to considered a merger or takeover by a larger timberland Real Estate Investment Trust (REIT) such as Weyerhaeuser, Rayonier or Potlatch Corp.

In an SEC filing on Feb. 22, Southeastern said it switched from a so-called Schedule 13G designation to a 13D because it wanted to play a bigger role and possibly participate in talks to help Deltic build “intrinsic value per share or to cause the company’s true economic value to be recognized.” Southeastern, which holds a 15% stake in the former spin-off of Murphy Oil Corp., also said a REIT with “superior, experience corporate leadership” would remove the need for Deltic to hire a new CEO in a change of control situation that could lead to possible misuse of company assets.