Clayton Ellis
INTERNATIONAL PAPER CO /NEW/About Clayton Ellis
Clayton R. Ellis is Senior Vice President, Global Cellulose Fibers at International Paper, with 33 years at the company (joined 1992) and in his current role since January 2023; prior roles include SVP, Enterprise Operational Excellence (2016–2020), VP—Pulp (2014–2016), and VP, Manufacturing, North American Papers, reflecting deep operations and pulp leadership experience . Company performance drivers tied to his pay included 2024 AIP metrics that paid at 179.1% of target (Adjusted EBITDA at 200% payout; Cash Conversion at 200%; Revenue at 95.4%), and 2022–2024 PSP that vested at 131.88% on Adjusted ROIC and relative TSR (86th percentile), supporting pay-for-performance alignment . In 2024, Ellis’s realized compensation included base salary of $545,833, AIP award of $850,730 (179.1% of target), PSP payout of 27,651 shares (including reinvested dividends), and 2023 RSU tranche of $79,737 .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| International Paper | SVP, Global Cellulose Fibers | Jan 2023–present | Leads global cellulose fibers business; core pulp and fiber execution |
| International Paper | SVP, Enterprise Operational Excellence | 2016–2020 | Drove operational excellence initiatives enterprise-wide |
| International Paper | VP—Pulp | 2014–2016 | Oversaw pulp operations and strategy |
| International Paper | VP, Manufacturing, North American Papers | Prior to 2014 | Led NA Papers manufacturing footprint |
| International Paper | Various roles | 1992–2014 | Progressive leadership roles after joining in 1992 |
Fixed Compensation
| Item | Amount | Notes |
|---|---|---|
| 2024 Base salary earned | $545,833 | From Summary Compensation Table |
| 2024 base rate (Jan–Feb) | $525,000 | Pre-merit rate |
| 2024 base rate (Mar–Dec) | $550,000 | 4.8% merit increase effective Mar 1, 2024 |
| Current base salary (2025) | $575,000 | Increase effective Mar 1, 2025 |
Performance Compensation
Annual Incentive Plan (AIP) – Plan Design and Company Achievement (2024)
| Metric | Weight | Threshold | Target | Maximum | Actual | % of Target Earned | Weighted % |
|---|---|---|---|---|---|---|---|
| Adjusted EBITDA | 70% | $1.237B | $1.546B | $1.855B | $1.986B | 200.0% | 140.0% |
| Revenue | 20% | $16.911B | $18.790B | $19.730B | $18.618B | 95.4% | 19.1% |
| Cash Conversion | 10% | 45.5% | 56.9% | 62.6% | 67.0% | 200.0% | 20.0% |
| Total | 100% | — | — | — | — | — | 179.1% |
| Ellis – AIP Outcome (2024) | Value |
|---|---|
| Target AIP opportunity (Plan-based awards) | $475,000 |
| Actual AIP paid | $850,730 (179.1% of target) |
| Individual modifier | 100% (awards solely based on company performance in 2024) |
Long-Term Incentives (LTIP/PSP)
-
2024–2026 LTIP PSU metrics and payout curve:
- Adjusted ROIC (50% weight): Threshold 3.0%, Target 5.0%, Max 8.0% .
- Relative TSR (50% weight): Threshold 25th percentile (25% payout), Target 50th percentile (100%), Max 75th percentile (200%) .
-
2022–2024 PSP Performance Result:
- Adjusted ROIC: 7.55% vs 9.0% target → 63.75% of target (50% weight → 31.88%) .
- Relative TSR: 86th percentile vs 50th target → 200% of target (50% weight → 100.00%) .
- Total payout: 131.88% of target .
| Ellis – 2024 Grants of Plan-Based Awards | Shares/Units | Grant Date FV ($) |
|---|---|---|
| 2024 LTIP RSUs | 6,529 | $236,023 |
| 2024 LTIP PSUs (Target) | 24,961 | $944,150 |
| 2024 Recognition RSU (retention) | 20,000 | $723,000 |
| Total 2024 stock awards (SCT) | — | $1,903,173 |
| Ellis – 2024 Realized Equity-Linked Outcomes | Amount |
|---|---|
| 2022–2024 PSP payout | 27,651 shares incl. reinvested dividends; valued at $1,550,411 |
| 2023 RSU payout (1st tranche) | $79,737 |
Equity Ownership & Alignment
| Beneficial Ownership (as of Mar 14, 2025) | Amount |
|---|---|
| Shares of common stock held | 59,931 |
| Stock units (DCSP) | 7,756 (cash-settled, not counted as shares) |
| % of shares outstanding | <1% (asterisked) |
| Unvested/Outstanding Equity (as of Dec 31, 2024) | Units | Value ($) |
|---|---|---|
| 2022 PSP PSUs | 20,968 | $1,128,490 |
| 2023 LTIP RSUs | 4,636 | $249,514 |
| 2023 LTIP PSUs | 26,471 | $1,424,689 |
| 2024 LTIP RSUs | 6,797 | $365,840 |
| 2024 LTIP PSUs | 25,987 | $1,398,642 |
| 2024 Recognition RSUs | 20,822 | $1,120,662 |
Alignment policies and constraints:
- Stock ownership guidelines: SVP = 3x base pay; officers must retain 50% of net shares until compliant; unvested RSUs/PSUs do not count .
- Hedging/pledging: Strictly prohibited for officers and directors; no margin accounts; no short sales or derivatives .
- Trading controls: Section 16 officers must pre-clear and trade only in open windows .
Employment Terms
| Term | Details |
|---|---|
| Employment agreement | None; U.S.-based executive officers are at-will; no employment contracts |
| Clawback | Mandatory for current/former executive officers upon accounting restatement; committee discretion for detrimental conduct/non-compete violations |
| Non-compete / Non-solicit | Required; violations can trigger clawback/forfeiture |
| Tax gross-ups | None (general policy) |
Severance and CIC Economics (Ellis)
| Scenario | Cash Severance | Pension Lump Sum | Continued Benefits | Accelerated/Prorated Equity | Total Pre-Tax Benefit | Pension Annuity |
|---|---|---|---|---|---|---|
| Involuntary termination without cause (Dec 31, 2024 assumption) | $1,682,499 | — | $50,706 | $3,383,069 | — | $137,651/yr |
| Sources | Lump-sum severance under Salaried Employee Severance Plan formula; includes unused vacation and actual 2024 AIP; benefits include medical/dental and outplacement; equity reflects prorated 2023–2025 and 2024–2026 LTIP PSUs/RSUs (2024 Recognition Awards not prorated) | |||||
| CIC with qualifying termination (double-trigger) | $2,050,000 | $2,248,712 | $29,830 | $5,251,203 | $9,579,745 | $43,166/yr |
| Sources | 2x (base salary + target AIP) multiple; benefits coverage (2 years); accelerated equity valued at $53.82 (12/31/24 close); double-trigger vesting applies if replacement awards provided |
Retirement and Deferred Compensation
| Retirement Eligibility/Annuity (assumed retire Dec 31, 2024) | Amount |
|---|---|
| Retirement Plan annuity | $43,166/yr |
| Pension Restoration Plan annuity | $33,306/yr |
| Total annuity | $76,472/yr |
| Notes | Early retirement eligibility generally at age 55 with 10 years service; details per plan |
| Nonqualified Deferred Compensation (2024) | Amount |
|---|---|
| Executive contributions | $0 |
| Company contributions (RSAc/match) | $14,857 |
| Aggregate earnings | $131,151 |
| Ending balance | $385,844 |
Governance and compliance notes:
- No stock options (discontinued since 2005); no repricing permitted under the plan .
- Section 16 reporting: one late Form 4 in 2023 across several officers (including Ellis) due to administrative oversight on RSU grants; processes enhanced thereafter .
Compensation Structure Analysis
- High at-risk mix: AIP and LTIP dominate pay; AIP paid 179.1% on EBITDA and Cash Conversion outperformance (Revenue slightly under target), reinforcing pay-for-performance linkage .
- Shift to PSU-heavy LTI: LTIP uses 50% Adjusted ROIC and 50% Relative TSR with a 0–200% payout curve; plus 2024 recognition RSUs for key ELT members during CEO transition, signaling targeted retention incentives .
- No options, no gross-ups, strict anti-hedging/pledging, and robust clawback reduce shareholder alignment risk and discourage speculation .
Investment Implications
- Alignment: Ellis’s significant unvested equity across multiple cycles (e.g., 2022 PSP PSUs, 2023–2024 LTIP RSUs/PSUs, and 2024 recognition RSUs) creates multi-year alignment with Adjusted ROIC and relative TSR outcomes; 2022–2024 PSP paid 131.88% on 86th percentile TSR, illustrating incentives tied to value creation .
- Retention: 2024 recognition RSUs (20,000 units) alongside baseline LTIP awards increase retention hooks through vesting; non-compete/non-solicit, 50% net-share retention, and trading-window controls further moderate near-term selling pressure .
- Downside/CIC protections: Double-trigger CIC with a 2x multiple (base + target AIP) for Ellis is moderate versus market and includes accelerated equity, limiting windfall risk absent a termination; no tax gross-ups and no employment agreement reduce governance risk .
- Performance sensitivity: 2024 AIP outcomes emphasize EBITDA and cash efficiency (200% payout on both EBITDA and Cash Conversion), suggesting near-term pay sensitivity to operating execution and working capital cadence—important drivers for Global Cellulose Fibers profitability .