Edgar Filing: KAPSTONE PAPER & PACKAGING CORP

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )


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KAPSTONE PAPER AND PACKAGING CORPORATION
(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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April 15, 2011

Dear Stockholder:

This year's Annual Meeting of Stockholders will be held on Wednesday, May 25, 2011 at 11:00 a.m., Central Daylight Savings Time, at the Renaissance Hotel, 933 Skokie Boulevard, Northbrook, Illinois. You are cordially invited to attend.

The Notice of Annual Meeting of Stockholders and a Proxy Statement, which describe the formal business to be conducted at the meeting, follow this letter.

After reading the Proxy Statement, please make sure to vote your shares by promptly dating, signing, and returning the enclosed proxy card or attending the annual meeting in person. Regardless of the number of shares you own, your careful consideration of, and vote on, the matters before the Company's stockholders are important.

A copy of the Company's 2010 Annual Report is also enclosed.

I look forward to seeing you at the Annual Meeting.

Very truly yours,

Roger W. Stone
Chairman and Chief Executive Officer

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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD MAY 25, 2011

To the Stockholders:

The Annual Meeting of Stockholders of KapStone Paper and Packaging Corporation ("KapStone" or the "Company"), will be held on Wednesday, May 25, 2011, at 11:00 a.m., Central Daylight Savings Time, at the Renaissance Hotel, 933 Skokie Boulevard, Northbrook, Illinois, for the following purposes:

1.: To vote upon the election of the three Class B directors identified in the proxy statement that accompanies this notice, each to hold office for a three-year term and until his respective successor is elected and qualified. The Board of Directors has nominated the following persons for election as Class B directors at the meeting: John M. Chapman, Matthew Kaplan and Ronald J. Gidwitz.
2.: To ratify the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm for the year ending December 31, 2011.
3.: To hold a non-binding vote to approve executive compensation.
4.: To hold an advisory vote on the frequency of holding future non-binding votes on executive compensation.
5.: To transact such other business as may properly come before the meeting or any adjournment or postponement thereof.

Stockholders of record at the close of business on April 5, 2011, are entitled to notice of, and to vote at, the Annual Meeting and any adjournments or postponements thereof. For ten days prior to the Annual Meeting, a complete list of the stockholders of record on April 5, 2011, will be available at the Company's principal offices for examination during ordinary business hours by any stockholder for any purpose relating to the meeting.

YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" ALL DIRECTOR NOMINEES, "FOR" PROPOSALS 2 AND 3, AND "EVERY YEAR" FOR PROPOSAL 4.


		By Order of the Board of Directors,
		Roger W. Stone Chairman and Chief Executive Officer
Northbrook, Illinois
April 15, 2011

IMPORTANT: Please promptly fill in, date, sign and return the enclosed proxy card in the accompanying pre-paid envelope to ensure that your shares are represented at the meeting. You may revoke your proxy before it is voted. If you attend the meeting, you may choose to vote in person even if you have previously sent in your proxy card.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders To Be Held on May 25, 2011

The Company's Proxy Statement for the 2011 Annual Meeting of Stockholders and
the Annual Report to Stockholders for the fiscal year ended December 31, 2010,
are available at www.ir.kapstonepaper.com

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TABLE OF CONTENTS


NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS		1
ABOUT THE MEETING
	What am I voting on?	1
	How does the Board recommend I vote?	1
	Who is entitled to vote at the meeting?	1
	How many votes am I entitled to?	2
	How do I vote shares held in my name?	2
	Can I change my vote after I return my proxy card?	2
	How do I vote my shares held by my broker?	2
	How many votes must be present to constitute a quorum?	2
	May my shares be voted if I do not provide my proxy?	2
	What vote is needed to approve proposals?	2
	How are we soliciting this proxy?	3
STOCK OWNERSHIP		4
	Security ownership of management	4
	Security ownership of certain beneficial stockholders	5
	Securities authorized for issuance under equity compensation plans	5
PROPOSAL 1—ELECTION OF DIRECTORS		6
	Nominees for election at the 2011 Annual Meeting of Stockholders	6
GOVERNANCE STRUCTURE		11
	Role of the Board	11
	Board leadership structure	11
	Who are the independent directors?	11
	How often did the Board meet during 2010?	12
	What is the Company's policy regarding attendance by the Board of Directors at the Annual Meeting of stockholders?	12
	What committees has the Board of Directors established?	12
	How are directors nominated?	13
	How are directors compensated?	14
	2010 Director Compensation	14
	Director Outstanding Equity Awards at 2010	15
	Risk Oversight	15
REPORT OF THE AUDIT COMMITTEE		16
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		18
	Fees of Independent Registered Public Accounting Firm	18
	Pre-Approval of Independent Registered Public Accounting Firm Services	18
EXECUTIVE OFFICERS		19
EXECUTIVE COMPENSATION		21
	Compensation Discussion and Analysis	21
	Compensation Policies and Objectives	21
	Overview of Compensation Program and Process	22
	Benchmarking	23
	Components of Executive Compensation	24
	Report of the Compensation Committee of the Board of Directors	28
	Compensation Committee Interlocks and Insider Participation	28
SUMMARY COMPENSATION TABLE		29
GRANTS OF PLAN-BASED AWARDS TABLE		30
OUTSTANDING EQUITY AWARDS AS OF DECEMBER 31, 2009		31
OPTION EXERCISES AND STOCK VESTED		31
STOCK PRICE PERFORMANCE PRESENTATION		32

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POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL			32
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS			32
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE			33
CODE OF ETHICS			33
PROPOSAL 2—RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			34
PROPOSAL 3—NON-BINDING RESOLUTION TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS			35
PROPOSAL 4—ADVISORY VOTE ON THE FREQUENCY OF THE NON-BINDING RESOLUTION TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS			36
ADDITIONAL INFORMATION			36
WHERE YOU CAN FIND MORE INFORMATION			37
TRANSACTION OF OTHER BUSINESS			38

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KapStone Paper and Packaging Corporation
1101 Skokie Boulevard
Suite 300
Northbrook, Illinois 60062

PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS

The accompanying proxy is being solicited by the Board of Directors of KapStone Paper and Packaging Corporation (the "Company") and contains information related to the Annual Meeting of Stockholders to be held on Wednesday, May 25, 2011, at 11:00 a.m., Central Daylight Savings Time, or any adjournment or postponement thereof, for the purposes described in the accompanying Notice of Annual Meeting. The Annual Meeting will be held at the Renaissance Hotel, 933 Skokie Boulevard, Northbrook, Illinois. This Proxy Statement was filed with the Securities and Exchange Commission (the "SEC") and is first being sent or given to stockholders on April 20, 2011.

FREQUENTLY ASKED QUESTIONS

What am I voting on?

You will be voting on:

•: The election of three (3) directors to serve on the Board of Directors;
•: The ratification of the reappointment of Ernst & Young LLP as the Company's independent registered public accountants;
•: A non-binding resolution approving the Company's compensation of the named executive officers (Say on Pay);
•: The frequency of the shareholder vote on a non-binding resolution approving the compensation of the Company's named executive officers (Say on Pay Interval);
•: Other matters properly brought before the meeting.

How does the Board recommend that I vote?

The Company's Board of Directors recommends that you vote:

•: FOR each of the director nominees;
•: FOR ratification of the appointment of Ernst & Young as the Company's independent registered accountants for the fiscal year ending December 31, 2011.
•: FOR the approval of the resolution relating to the Company's compensation of the Company's named executive officers as disclosed in the Compensation, Discussion and Analysis section and accompanying compensation tables and related narratives contained in this Proxy Statement; and
•: FOR a frequency of EVERY YEAR for future non-binding shareholder advisory votes on the compensation of our named executive officers.

Who is entitled to vote at the meeting?

Holders of record of the Company's Common Stock at the close of business on April 5, 2011, (the "Record Date") will be entitled to vote. As of the close of business on the Record Date, there were 46,154,300 shares of Common Stock outstanding and entitled to vote.

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How many votes am I entitled to?

You are entitled to one vote for each share of Common Stock that you own.

How do I vote shares held in my name?

You may vote in person at the annual meeting or by proxy. If you properly complete and sign the enclosed proxy card, the shares held in your name will be voted as you direct. If you sign and return the proxy card but do not include voting instructions, the shares held in your name will be voted FOR the three nominee directors named in this Proxy Statement, FOR the ratification of Ernst & Young as the Company's independent registered accountants, FOR the approval of the Say on Pay resolution, and FOR the approval of a one-year Say on Pay Interval.

Can I change my vote after I return my proxy card?

You may change your vote at any time before the polls close at the annual meeting by taking any of the following actions:

•: Delivering a later dated proxy;
•: Giving written notice to the Company's Secretary;
•: Voting in person at the annual meeting.

How do I vote my shares held by my broker?

If your shares are held in street name, you must either direct your broker as to how to vote your shares, or vote in person at the annual meeting. In order to vote in person the shares held by your broker, you will need to obtain a proxy from your broker to vote at the meeting.

How many votes must be present to constitute a quorum?

A quorum is the presence at the annual meeting in person or by proxy of a majority of the outstanding Common Stock. There needs to be a quorum in order for the annual meeting to be held. Broker non-votes and proxies received but marked as abstentions will count for purposes of establishing a quorum. Broker non-votes occur when a broker holding shares for a beneficial owner does not vote on a particular proposal because the broker does not have discretionary voting power for the particular matter and has not received voting instructions from the beneficial owner.

May my shares be voted if I do not provide my proxy?

If your shares are held in street name, they may be voted on matters that the New York Stock Exchange considers "routine" even if you do not instruct your broker how to vote your shares. Accordingly, if you do not instruct your broker how to vote your shares, your broker can vote your shares to approve the appointment of Ernst & Young as the Company's independent registered accountants, but your broker cannot vote your shares on the election of directors, the approval of the Say on Pay resolution, or the Say on Pay Interval.

What vote is required to approve each proposal, assuming a quorum is present at the Annual Meeting?

It will depend on each proposal.

•: For Proposal One: Shareholders will elect the three director nominees receiving the greatest number of votes.

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•: For Proposal Two: The affirmative vote of the holders of a majority of the shares of Common Stock represented at the meeting and entitled to vote is required for the ratification of Ernst & Young as the Company's independent registered accountants.
•: For Proposal Three: The affirmative vote of the holders of a majority of the shares of Common Stock represented at the meeting and entitled to vote is required for approval of the compensation of our named executive officers. Because the vote is advisory, it will not be binding on the Board or the Company. However, the Board will review the voting results and take them into consideration when making future decisions regarding executive compensation.
•: For Proposal Four: The frequency of the advisory vote on compensation of our named executive officers receiving the greatest number of votes—every three years, every two years or every year—will be the frequency that shareholders approve. Because your vote is advisory, it will not be binding on the Board or the Company. However, the Board will review the voting results and take them into consideration when making future decisions regarding the frequency of the advisory vote on executive compensation.

How are we soliciting this proxy?

The Company may solicit stockholder proxies by mail and through certain of its directors, officers and employees. The Company will bear all costs of soliciting proxies, including, upon request, reimbursing brokers forwarding proxy materials to the beneficial owners of Common Stock.

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SECURITY OWNERSHIP OF MANAGEMENT

The following table shows the amount of the Company's Common Stock beneficially owned, unless otherwise indicated, by the Company's directors, the named executive officers, and the directors and executive officers as a group as of March 31, 2011. Except as otherwise specified, the named beneficial owner has sole voting and investment power over the shares listed. The total number of shares of Common Stock outstanding is 46,154,300.

Name of Beneficial Owner

Roger W. Stone(2)	4,526,041	411,157	110,657	9.8	%
Matthew Kaplan	2,027,670	411,157	110,657	4.4	%
John M. Chapman	549,925	55,996	3,706	1.2	%
Jonathan R. Furer	855,997	55,996	3,706	1.9	%
Brian R. Gamache	10,000	—	3,706	—	%
Ronald J. Gidwitz	31,416	11,415	3,706	—	%
Matthew H. Paull	6,000	—	1,505	—	%
S. Jay Stewart	65,997	55,996	3,706	0.1	%
David P. Storch	10,000	—	3,706	—	%
Andrea K. Tarbox	128,939	93,395	40,711	0.3	%
Timothy P. Keneally	132,412	90,522	40,711	0.3	%

All directors and executive officers as a group (eleven individuals)	8,344,397	1,185,634	326,477	18	%

(1): Includes options currently exercisable or exercisable within 60 days and restricted stock units vesting within 60 days.
(2): 1,573,400 shares of Common Stock are owned by Mr. Stone's family foundation of which Mr. Stone is director and has sole voting control and investment discretion over such shares. The business address of Mr. Stone and each of these entities is Kapstone Paper and Packaging Corporation, 1101 Skokie Boulevard, Suite 300, Northbrook, IL 60062.
(3): Restricted stock units (RSUs) granted under the Company's Amended and Restated 2006 Incentive Plan which are not vesting within 60 days. RSUs do not have voting rights. RSUs are converted into shares of Common Stock as the vesting period lapses.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL STOCKHOLDERS

The following table sets forth information regarding each person, with the exception of Roger W. Stone, who the Company believes beneficially owned more than 5% of the Company's outstanding Common Stock as of March 31, 2011.

Name and Address of Beneficial Owner

BlackRock, Inc.(1)	3,228,905	7.02	%
Richard A. Rubin/Hawkeye Capital Management, LLC(2)	2,620,929	5.70	%
Ronald Guttfleish/Elm Ridge Capital Management, LLC(3)	2,315,361	5.03	%

(1): Derived from a Schedule 13G dated January 21, 2011, filed by BlackRock, Inc. The business address of the reporting person is 40 East 52^nd Street, New York, NY 10022.
(2): Derived from a joint Schedule 13G/A dated January 7, 2011, filed by Richard A. Rubin, Hawkeye Capital Management, LLC and Hawkeye Capital Master. The business address of the reporting persons other than Hawkeye Capital Master is 800 Third Avenue, 9^th Floor, New York, New York 10022. The business address of Hawkeye Capital Master is P.O. Box 897GT, One Capital Place, Georgetown, Grand Cayman, Cayman Islands.
(3): Derived from Schedule 13G dated February 14, 2011, filed by Ronald Guttfleish, Elm Ridge Capital Management, LLC, Elm Ridge Management, LLC, and Elm Ridge Offshore Master Fund, Ltd. The business address of the reporting persons other than Elm Ridge Offshore Master Fund, Ltd., is 3 West Main Street, 2^nd Floor, Irvington, NY 10533. The business address of Elm Ridge Offshore Master Fund, Ltd., is c/o Goldman Sachs (Cayman) Trust, Limited, P.O. Box 896, Harbour Centre, 2^nd Floor, Georgetown, Grand Cayman, Cayman Islands.

Securities Authorized For Issuance Under Equity Compensation Plan

Information about the Company's equity compensation plan at December 31, 2010 is as follows:

Plan Category		Weighted Average Exercise Price of Outstanding Options

Equity compensation plan approved by stockholders(1)	2,998,149	$	6.62	3,188,529	(2)
Equity compensation plans not approved by stockholders	—	$	—	—

Total	2,998,149	$	6.62	3,188,529

(1): Pursuant to the Amended and Restated 2006 Incentive Plan
(2): Includes 500,000 shares issuable under the 2009 Employee Stock Purchase Plan, 486,678 of such shares are presently subject to purchase.

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PROPOSAL 1

ELECTION OF DIRECTORS

The Company has a classified Board of Directors currently consisting of three Class A directors (Brian R. Gamache, S. Jay Stewart and David P. Storch) who have terms expiring at the 2013 Annual Meeting of Stockholders, three Class B directors (John M. Chapman, Matthew Kaplan and Ronald J. Gidwitz) who have terms expiring at the 2011 Annual Meeting of Stockholders, and three Class C directors (Jonathan R. Furer, Matthew H. Paull, and Roger W. Stone) who have terms expiring at the 2012 Annual Meeting of Stockholders. Directors in a class are elected for a term of three years to succeed the directors in such class whose terms expire at such annual meeting, or a shorter term to fill a vacancy in another class of directors.

The nominees for election at the 2011 Annual Meeting of Stockholders to fill the three Class B positions on the Board of Directors are John M. Chapman, Matthew Kaplan and Ronald J. Gidwitz. If elected, the nominees for the Class B directors will be elected to serve three-year terms expiring at the Annual Meeting of Stockholders in 2014. If a quorum is present and voting at the meeting, the three nominees for Class B director receiving the most votes will be elected Class B directors. Neither abstentions nor broker non-votes will have any effect upon the outcome of voting with respect to the election of directors.

We believe our Board should be composed of individuals with sophistication and experience in many substantive areas that impact our business. We believe experience, qualifications or skills in the following areas are important: paper industry background; sales; manufacturing; capital markets; finance; accounting; leadership of complex organizations; international operations; and familiarity with board practices of major corporations. We believe that all of our Board members possess the professional and personal qualifications necessary for board service, and have highlighted particularly noteworthy attributes of each Board member in the individual biographies below.

The following information relates to the nominees listed above and to the Company's other directors whose terms of office will extend beyond the 2011 Annual Meeting of Stockholders.

Nominees for election at the 2011 Annual Meeting of Stockholders

Class B
(Term Ends 2014)


John M. Chapman (age 51)		A director since the Company's inception, Mr. Chapman is a co-founder and has been a managing member of Arcade Partners LLC, a private equity firm, since November 2003. Mr. Chapman was a founding director and chief financial officer of Arcade Acquisition Corporation, a blank check acquisition company that completed its initial public offering in May 2007, and which dissolved in May 2009. Since January 2004, he has been a Managing Director of Washington & Congress Managers, a private equity firm. From March 1990 through December 2003, he was employed by Triumph Capital Group, Inc, a private equity firm, last serving as a Managing Director. Mr. Chapman received a B.A. from Bates College and an M.B.A. from the Tuck School of Business at Dartmouth College. Mr. Chapman's qualifications to serve on the Board include his experience in capital markets, finance and accounting.

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Matthew Kaplan (age 54)		President and Secretary and a director since the Company's inception, Mr. Kaplan was Manager of Stone-Kaplan Investments, LLC, a private investment company, from July 2004 through December 2007. He was President, Chief Operating Officer and a director of Box USA Holdings, Inc., a corrugated box manufacturer, from July 2000 until the sale of the company in July 2004. Mr. Kaplan began his career at Stone Container Corporation in 1979 and was serving as its Senior Vice President and General Manager of North American Operations when Stone Container Corporation merged with Jefferson Smurfit Corporation in November 1998. He was Vice President/ General Manager Container Division with Smurfit-Stone Container Corporation and a director of the company until March 1999. Mr. Kaplan has served on the board of directors of Victory Packaging since January 2007. In addition, Mr. Kaplan formerly served on the board of directors of Magnetar Spectrum Fund. Mr. Kaplan received a B.A. in Economics from the University of Pennsylvania and an M.B.A. from the University of Chicago. Mr. Kaplan is the son-in-law of Roger W. Stone. Mr. Kaplan's qualifications to serve on the Board include his experience in the paper industry, sales, manufacturing, capital markets, leadership of complex organizations, and familiarity with board practices of major corporations and his service as an executive officer of the Company.
Ronald J. Gidwitz (age 65)		A director appointed in October 2008, Mr. Gidwitz co-founded GCG Partners, a strategic consulting and equity firm, in 1998 and has since served as a partner at that firm. Since 1979 he has served as a director of Continental Materials Corporation. From 1996 to 1998, he was President and Chief Executive Officer of the Unilever HPC Helene Curtis Business Unit. Previously, Mr. Gidwitz served as President, Chief Executive Officer and Director of Helene Curtis. Mr. Gidwitz is a graduate of Brown University. Mr. Gidwitz's qualifications to serve on the Board include his experience in sales, manufacturing, leadership of complex organizations, international operations, and familiarity with board practices of major corporations.

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Role of the Board—The Board, which is elected by the stockholders, is the ultimate decision-making body of the Company, except with respect to matters reserved to stockholders. The primary function of the Board is oversight. The Board, in exercising its business judgment, acts as an advisor and counselor to senior management and defines and enforces standards of accountability—all with a view to enabling senior management to execute their responsibilities fully and in the interests of stockholders. The following are the Board's primary responsibilities, some of which may be carried out by one or more Committees of the Board or the independent Directors as appropriate:

In performing its oversight function, the Board is entitled to rely on the advice, reports and opinions of management, counsel, auditors and outside experts. In that regard, the Board and its Committees shall be entitled, at the expense of the Company, to engage such independent legal, financial or other advisors as they deem appropriate, without consulting or obtaining the approval of any officer of the Company.

Board Leadership Structure—Our bylaws require that our Chairman shall be a member of the Board of Directors and may or may not be an officer or employee of the Company. The principal duty of the Company's Chairman is to lead and oversee the Board of Directors. The Chairman should facilitate an open flow of information between management and the Board, and should lead a critical evaluation of Company management, practices and adherence to the Company's strategic plan and objectives.

The Company's business is conducted by its employees, managers and officers, under the direction of senior management and led by the CEO. In carrying out the Company's business, the CEO and senior management are accountable to the Board and ultimately to stockholders. Management's primary responsibilities include the day-to-day operation of the Company's business, strategic planning, budgeting, financial reporting and risk management.

Roger W. Stone is the company's Chairman of the Board and Chief Executive Officer. The Board believes that Mr. Stone's holding of both positions is in the best interests of the Company due to his vast experience in and knowledge of the paper industry. Mr. Stone's biography can be found on page 9 of this Proxy.

The Board of Directors does not have a lead independent director. However, Brian R. Gamache is the presiding Director at the meetings of the Board held in executive session.

Our Corporate Governance Guidelines require that all Directors except the Chief Executive Officer and President be independent. An independent Director is one who is free of any relationship

with the Company or its management that may impair, or appear to impair, the Director's ability to make independent judgments, and who meets the New York Stock Exchange's definition of independence. All members of the Audit, Compensation, and Nominating and Governance Committees shall be independent. The Board of Directors determines the independence of each Director in accordance with the NYSE Rules and the Corporate Governance Guidelines. The Board has determined that John M. Chapman, Jonathan R. Furer, Brian R. Gamache, Ronald J. Gidwitz, Matthew H. Paull, S. Jay Stewart and David P. Storch are "independent" Directors as that term is defined in the listing standards of the NYSE.

During the year ended December 31, 2010, the Board of Directors held six meetings. During his respective term in office each director serving on the Board of Directors in 2010 attended at least 75% of the meetings of the Board of Directors and the committees on which he served. The Board meets in executive session, without any members of management present, at each regularly scheduled meeting of the Board of Directors. Brian R. Gamache is the presiding Director at the executive sessions.

What is the Company's policy regarding attendance by the Board of Directors at the Annual Meeting of Stockholders?

Members of the Board are strongly encouraged to attend the 2011 Annual Meeting of Stockholders. Nine of the members of the Board then in office attended the 2010 Annual Meeting of Stockholders.

The Board of Directors has established an Audit Committee, a Compensation Committee, and a Nominating and Governance Committee. Each committee operates under a written charter approved by the Board of Directors. All of the members of the committees of the Board are independent.

Audit Committee. The Audit Committee's function is to review, with the Company's independent registered public accountants and management, the annual financial statements and independent registered public accountants' opinion, review and maintain direct oversight of the plan, scope and results of the audit by the independent registered public accountants, review and approve all professional services performed and related fees charged by the independent registered public accountants, be solely responsible for the retention or replacement of the independent registered public accountants, and monitor the adequacy of the Company's accounting and financial policies, controls, and reporting systems. In addition, the Audit Committee is responsible for risk oversight of the Company and provides risk assessment reports to the Board. The Audit Committee held nine meetings in 2010. None of the members serve on more than three audit committees. All of the members are "financially literate" under NYSE Rules, and the Board has determined that S. Jay Stewart, Brian

Gamache and Matthew H. Paull are "audit committee financial experts" within the meaning of relevant SEC regulations.

Compensation Committee. The functions of the Compensation Committee include providing guidance to management and assisting the Board of Directors in matters relating to the compensation of the Chief Executive Officer and executive officers, the organizational structure of the Company, the Company's compensation and benefits programs, the Company's succession, retention and training programs, and such other matters that have a direct impact on the success of the Company's human resources. The Compensation Committee held two meetings in 2010. The details of the process and procedures followed by the Compensation Committee are disclosed in the Compensation Discussion and Analysis and report of the Compensation Committee included in this Proxy Statement.

Nominating and Governance Committee. The Nominating and Governance Committee performs the following functions: assists the Board by identifying prospective Director nominees and recommends to the Board the nominees for the annual meeting of stockholders; oversees the Board performance evaluation process; evaluates the composition, organization and governance of the Board and its committees; and oversees the Company's Corporate Governance Guidelines. The Nominating and Governance Committee held three meetings in 2010.

In addition, if any incumbent Director fails to receive the required vote for re-election, the Nominating and Governance Committee is responsible for making its recommendation to the Board about whether to accept the Director's resignation.

The Company's Nominating and Governance Committee establishes criteria for Director nominees, screens candidates, and recommends Director nominees who are approved by the Board.

Nominees to be evaluated by the Nominating and Governance Committee for future vacancies on the Board will be selected from candidates recommended by multiple sources, including business and personal contacts of the members of the Committee, other members of the Board, stockholders, and other sources, all of whom will be evaluated based on the same criteria. The Committee may, at the Company's expense, retain search firms, consultants and other advisors to identify candidates. Ronald Gidwitz and Matthew Paull were appointed to the Board on October 3, 2008, and July 28, 2010, respectively. Both Mr. Gidwitz and Mr. Paull were recommended to the Board by Mr. Stone.

We do not have a formal policy regarding board diversity. While diversity and variety of experiences and viewpoints represented on the Board should be considered in selecting nominees to the Board, our director nominees should not be chosen or excluded solely or largely because of race, gender, religious beliefs or national origin.

In selecting non-incumbent candidates and reviewing the qualifications of incumbent candidates for the Board of Directors, the Committee considers a candidate's integrity and values, commitment to representing the long-term interests of the stockholders, experience at policy-making levels in business, ability to constructively engage fellow Board members, the CEO and other members of management in dialogue and decision making.

Any stockholder who wishes to recommend for the Nominating and Governance Committee's consideration a nominee to serve on the Board of Directors may do so by giving the candidate's name and qualifications in writing to the Company's Secretary at the following address: KapStone Paper and Packaging Corporation, 1101 Skokie Blvd., Suite 300, Northbrook, IL 60062.

Each non-employee director of the Company will receive the following compensation for service as a director in 2011:

Audit, Compensation and Nominating and Governance chairpersons receive an additional quarterly fee of $2,500, $1,500 and $1,500, respectively.

Each year, non-employee directors also receive a grant of stock options and/or restricted stock units with a grant date fair value of approximately $54,000. Each option vests 50% on the second anniversary of the grant date and the remaining 50% on the third anniversary of the grant date. Restricted stock units vest on the third anniversary of the grant date.

The following table provides certain summary information concerning cash and certain other compensation the non-employee directors earned for 2010.


Name	Fees Earned or Paid in Cash $(1)		Option Awards ($)(2)		Restricted Stock Units ($)(3)	All Other Compensation($)		Total ($)
John M. Chapman	$	60,500		$	29,145	$	25,003		—	$	114,648
James Doughan(4)	$	68,000		$	29,145	$	25,003		—	$	122,148
Jonathan R. Furer	$	57,500		$	29,145	$	25,003		—	$	111,648
Brian R. Gamache	$	57,500		$	29,145	$	25,003		—	$	111,648
Ronald J. Gidwitz	$	51,500		$	29,145	$	25,003		—	$	105,648
Matthew H Paull(5)	$	14,677		$	—	$	—		—	$	14,677
Muhit U. Rahman(6)	$	23,583		$	—	$	—		—	$	23,583
S. Jay Stewart	$	72,000		$	29,145	$	25,003		—	$	126,148
David P. Storch(3)	$	48,500		$	29,145	$	25,003		—	$	102,648

The following corporate governance materials are available from the Governance section of our Web site at http://www.governance.kapstonepaper.com: (1) Corporate Governance Guidelines; (2) Code of Conduct; and (3) the Charters of our Audit, Compensation, and Nominating and Governance Committees. We will provide a copy of these documents to our stockholders, without charge, upon written request addressed to 1101 Skokie blvd., Suite 300, Northbrook, IL 60062, attention: Secretary.

The Board of Directors' involvement in risk oversight involves both the Audit Committee and the full Board of Directors. Risk oversight is a standing agenda item at each Audit Committee meeting. The Committee receives reports from the Company's Director of Internal Audit and independent registered public accountants at each Audit Committee meeting. The Company's Vice President and Chief Financial Officer and Vice President and Controller both provide reports to the Committee regarding risk factors, including, but not limited to, risks pertaining to credit and liquidity. The General Counsel keeps the Audit Committee abreast of issues pertaining to litigation, regulatory matters, and compliance. The Chairman of the Audit Committee reports on the activities of the Committee regarding risk at each meeting of the full Board of Directors. Other committees of our Board may also practice risk oversight related directly to such committee's responsibilities. In addition, each regularly scheduled meeting of the Board of Directors includes a report from the Company's Chief Executive Officer, Chief Operating Officer and its Vice President and General Manager regarding operating risks at each facility, and the industry as a whole.

During the year ended December 31, 2010, the Audit Committee held nine meetings. The purpose of the Audit Committee is to assist the Board in its general oversight of KapStone's financial reporting, internal controls, risk and audit functions. The Audit Committee was formed by the Board in January 2007.

As described in the Audit Committee Charter, the Committee has oversight responsibilities to stockholders, potential stockholders, the investment community, and other stakeholders related to the:

The Audit Committee has reviewed and discussed the consolidated financial statements with management and Ernst & Young LLP, the Company's independent registered public accountants. Management is responsible for the preparation, presentation and integrity of KapStone's financial statements; accounting and financial reporting principles; establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)); establishing and maintaining internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)); evaluating the effectiveness of disclosure controls and procedures; evaluating the effectiveness of internal control over financial reporting; and evaluating any change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting. Ernst & Young LLP is responsible for performing an independent audit of the consolidated financial statements and expressing an opinion on the conformity of those financial statements with accounting principles generally accepted in the United States of America, as well as expressing an opinion on the effectiveness of internal control over financial reporting.

The Audit Committee provided oversight and advice to management relating to management's assessment of the adequacy of KapStone's internal control over financial reporting in accordance with the requirements of the Sarbanes Oxley Act of 2002. The Audit Committee held private sessions with Ernst & Young LLP to discuss the annual audit. At the conclusion of the process, the Audit Committee reviewed a report from management on the effectiveness of the Company's internal control over financial reporting. The Committee also reviewed the report of management contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2010, filed with the SEC, as well as Ernst & Young LLP's Report of Independent Registered Public Accounting Firm included in the Company's Annual Report on Form 10-K related to its audit of (i) the consolidated financial statements and financial statement schedule and (ii) the effectiveness of internal control over financial reporting.

The Audit Committee has discussed with Ernst & Young LLP the matters required to be discussed by AM Section 380 of the Public Company Auditing Oversight Board (PCAOB) Audit Standards, other professional standards, and regulatory requirements in effect. In addition, Ernst & Young LLP has provided the Audit Committee with the written disclosures and the letter required by applicable requirements of the PCAOB regarding the independent accountant's communications with the audit committee regarding independence, and the Audit Committee has discussed with Ernst & Young LLP

their firm's independence. In addressing the quality of management's accounting judgments, the Audit Committee asked for management's representations and reviewed certifications prepared by the Chief Executive Officer and Chief Financial Officer that the audited consolidated financial statements of the Company fairly present, in all material respects, the financial condition and results of operations of the Company.

Based on the review of the consolidated financial statements and discussions with and representations from management and Ernst & Young LLP referred to above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in KapStone's Annual Report on Form 10-K for the year ended December 31, 2010, for filing with the Securities and Exchange Commission.

In accordance with Audit Committee policy and the requirements of law, the Audit Committee pre-approves all non-audit services to be provided by Ernst & Young LLP. In addition, the Audit Committee pre-approves all audit and audit related services provided by Ernst & Young LLP. A further discussion of the fees paid to Ernst & Young LLP for audit and non-audit expenses is included below under the heading "INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM."

Ernst & Young LLP acted as the independent registered public accounting firm for the Company during the Company's 2006 through 2010 fiscal years. During such period Ernst & Young LLP also provided certain audit-related and permitted non-audit services. The Audit Committee's policy is to approve all audit, audit-related, tax and permitted non-audit services performed by Ernst & Young, LLP, for the Company in accordance with Section 10A(i) of the Securities Exchange Act of 1934, as amended, and the Securities and Exchange Commission's rules adopted thereunder. In 2009 and 2010, the Audit Committee approved in advance all engagements by Ernst & Young LLP on a specific project-by-project basis, including audit, audit-related, tax and permitted non-audit services. No services were rendered by Ernst & Young LLP to the Company in 2009-2010 pursuant to Rule 2-01(c)(7)(i)(C) of Regulation S-X.

Ernst & Young LLP fees for services provided for the years ended December 31, 2010 and 2009, respectively, are as follows:

No services were provided to the Company that are specifically prohibited by the Sarbanes-Oxley Act of 2002. Permitted services are pre-approved by the Audit Committee.

The following individuals have been elected by our Board of Directors to serve in the capacities set forth below until the next Annual Meeting of our Board of Directors and until their respective successors are elected and qualify.

Roger W. Stone has been Chairman of the Board and Chief Executive Officer since our inception. Mr. Stone was Manager of Stone-Kaplan Investments, LLC, a private investment company, from July 2004 through December 2007. He was Chairman and Chief Executive Officer of Box USA Holdings, Inc., a corrugated box manufacturer, from July 2000 until the sale of that company in July 2004. Mr. Stone was Chairman, President and Chief Executive Officer of Stone Container Corporation, a multinational paper company primarily producing and selling pulp, paper and packaging products, from March 1987 to November 1998 when Stone Container Corporation merged with Jefferson Smurfit Corporation, at which time he became President and Chief Executive Officer of Smurfit-Stone Container Corporation until March 1999. Mr. Stone has served on the board of directors of McDonald's Corporation since 1989. Mr. Stone received a B.S. in Economics from the Wharton School at the University of Pennsylvania. Mr. Stone is the father-in-law of Matthew Kaplan.

Matthew Kaplan has been our President and Secretary since our inception. Mr. Kaplan was Manager of Stone-Kaplan Investments, LLC, a private investment company, from July 2004 through December 2007. He was President, Chief Operating Officer and a director of Box USA Holdings, Inc., a corrugated box manufacturer, from July 2000 until the sale of the company in July 2004. Mr. Kaplan began his career at Stone Container Corporation in 1979 and was serving as its Senior Vice President and General Manager of North American Operations when Stone Container Corporation merged with Jefferson Smurfit Corporation in November 1998. He was Vice President/General Manager, Container Division, with Smurfit-Stone Container Corporation until March 1999. Mr. Kaplan has served on the board of advisors of Victory Packaging since January 2007. In addition, Mr. Kaplan formerly served on the board of trustees of Magnetar Spectrum Fund. Mr. Kaplan received a B.A. in Economics from the Wharton School at the University of Pennsylvania and an M.B.A. from the University of Chicago. Mr. Kaplan is the son-in-law of Roger W. Stone.

Andrea K. Tarbox was appointed Vice President and Chief Financial Officer in January 2007. Ms. Tarbox served as a financial consultant to the Company from April 2006 until her appointment as Vice President and Chief Financial Officer. Ms. Tarbox played a key financial role in the acquisition by the Company of the Kraft Papers Business from International Paper Company. From March 2003 through March 2006, Ms. Tarbox served as Chief Financial and Administrative Officer for Uniscribe Professional Services, Inc. From July 1994 until February 2003, Ms. Tarbox was employed by Gartner Inc., last serving as Group Vice President-Finance and Treasurer. Prior to that, Ms. Tarbox assumed financial positions of increasing responsibility in several global companies including British Petroleum, p.l.c. and Fortune Brands, Inc. Ms. Tarbox began her career with Ernst & Young LLP and is a Certified Public Accountant. Ms. Tarbox earned a B.A. degree in Psychology from Connecticut College and an M.B.A. from the University of Rhode Island.

Timothy P. Keneally has been our Vice President and General Manager of the Company and President of the Company's kraft paper business since its acquisition from International Paper Company ("IP") in January 2007. Previously, Mr. Keneally served as Vice President of Industrial Packaging of IP from 2000 to December 2006 and led the IP team that assessed the review of strategic alternatives relating to the kraft paper business. He was the lead person in presenting the historical performance of the business and assisted in defining the future strategy for the business, and was the lead operating person during the Charleston Kraft Division acquisition. Mr. Keneally has 39 years of experience in the paper and packaging industry. Mr. Keneally earned a B.A. degree in History from Marist College in Poughkeepsie, N.Y.

Our compensation programs for executive officers are administered by the Compensation Committee (the "Committee"), which is composed solely of independent directors as defined by rules of the New York Stock Exchange. The Committee operates under a written charter adopted by the Board.

The Committee has reviewed and approved the following discussion and analysis, which analyzes the objectives and results for 2010 of the Company's compensation policies and procedures for its four executive officers: Roger W. Stone, the Company's Chief Executive Officer; Matthew Kaplan, the Company's President and Secretary; Timothy P. Keneally, the Company's Vice President and General Manager; and Andrea K. Tarbox, the Company's Vice President and Chief Financial Officer (the "Named Executive Officers"). The Company's compensation programs have been adopted in order to implement the Committee's compensation philosophy, while taking into account the Company's financial performance. The Committee periodically reviews the Company's compensation programs and practices in light of the Committee's compensation philosophy, changes in laws and regulations, and the Company's financial goals.

The Committee believes that compensation for executive officers should be determined according to a competitive framework, taking into account the financial performance of the Company, individual contributions and the external market in which the Company competes for executive talent. In determining the compensation of the Company's executive officers, the Committee seeks to achieve the following objectives through a combination of fixed and variable compensation.

A total compensation package should be competitive. For executive officers, including the Company's Chief Executive Officer, the Committee considers the level of compensation paid to individuals in comparable executive positions in the Company's peer group and at other paper and packaging companies with which the Company competes in order to recruit and retain executive talent.

Our compensation practices are designed to create a direct link between the aggregate compensation paid to each executive officer and the financial performance of the Company. In order to accomplish this, the Committee considers the individual performance of each executive officer by reviewing, among other factors, the achievement of pre-established corporate and individual performance objectives as well as the recommendations of the Chief Executive Officer. The amount of each component of an executive officer's compensation is based in part on the Committee's assessment of that individual's performance as well as the other factors discussed in this section.

Our compensation practices are also designed to link a portion of each executive officer's compensation opportunity directly to the value of the Company's Common Stock through the use of stock-based awards.

To accomplish its compensation objectives and philosophy, the Committee relies on the following elements of compensation, each of which is discussed in more detail below:

When approving the compensation of the Company's executive officers, the Committee reviews all of the elements of the Company's executive compensation program.

Each component of executive compensation is designed for a specific purpose. For example, salaries are a significant component of cash-based annual compensation. Salaries are set to compensate each executive based on that executive's employment and salary history, position within the Company and comparable competitive salaries at other companies. With regard to the more variable components of the compensation package, annual cash bonuses are tied generally to the Company's short-term financial performance, while equity-based compensation is directed towards successful results over a longer period. The purpose of the combination of salary, annual cash bonus and equity awards is to provide the appropriate level of total annual cash compensation and long term incentives, combined with an appropriate performance-based component. The Committee places the greatest emphasis on performance-based compensation through annual cash bonus awards and long term equity-based awards, which together comprise the largest portion of executive officer compensation. The Committee believes that the Company's executive compensation package, consisting of these components, is comparable to the compensation provided in the market in which the Company competes for executive talent and is critical to accomplishing its recruitment and retention aims.

The Company does not have employment contracts with any Named Executive Officer. The Named Executive Officers do not have any severance arrangements.

The Committee is responsible for reviewing and recommending to the Board of Directors the base salaries and annual performance-based cash bonuses and long-term incentive compensation for the Company's executive officers. These responsibilities are not delegated to others. The Committee also approves and recommends to the Board of Directors employee compensation and benefit programs, as appropriate.

Management assists the Committee in fulfilling its responsibilities with respect to evaluating executive performance, proposing appropriate performance targets for the annual and long-term incentive plans and developing recommendations as to appropriate salary levels and award amounts. The Committee ultimately used its collective judgment to determine the compensation of the executive officers.

As part of its process, the Compensation Committee utilized the assistance of Lockton Companies, LLC, an executive compensation consulting company ("Lockton"), to assist in evaluating executive compensation programs and in evaluating executive officers' compensation compared to an

established peer group of similar companies. Lockton communicated directly with the Compensation Committee and was paid $10,500 for the assistance it provided in evaluating executive compensation. In determining compensation for 2010, the Committee considered the Lockton report completed in March 2010 which reviewed, assessed and compared a variety of compensation surveys, and compared our executive compensation to a peer group of 14 companies. The companies included in the peer group are set forth in the Proxy within the section entitled "Benchmarking."

In 2010 Lockton provided the Company with the following additional services: health and welfare benefits broker; pension consultant; and job benchmarking for international jobs ("Additional Services"). The Company paid Lockton $220,000 for the Additional Services. The decision to engage Lockton to provide the Additional Services was made by management and was not approved by the Committee or the Board of Directors.

The Compensation Committee has changed the procedure for retaining compensation consultants. Beginning in 2011, the Compensation Committee will hire the compensation consultant used by the Committee to assist in the evaluation of executive compensation.

For 2010, the Company's Chief Executive Officer, Mr. Stone, provided to the Committee his recommendations with respect to potential compensation of the other Named Executive Officers. The Committee reviewed and gave considerable weight to these recommendations because of Mr. Stone's direct knowledge of other executives' performance and contributions. With respect to those officers, the Committee ultimately used its collective judgment to determine the compensation levels, including base salary, annual performance-based cash bonuses and long-term equity award grants. Mr. Stone recommended that his compensation levels be identical to those of the Company's President, Mr. Kaplan, due to the current and historical level of work and responsibilities shared by them. The Committee ultimately determined and approved Mr. Stone's compensation independently based on its collective judgment, and accepted his recommendation to compensate Mr. Kaplan in the same manner.

While the Committee makes many of its compensation decisions during the first quarter of the year, the Committee continues to plan and review compensation matters throughout the year.

The Committee reviews survey information of executive compensation, both with respect to target and actual compensation data available, payable by a designated peer group as well as the competitive median of total compensation of general industry groups. The purpose of this review is to ensure that the Company's total executive compensation levels, including base salaries, annual bonus and equity awards, remain reasonable, competitive and appropriate. The Committee considers executive compensation paid at the peer companies when setting executive compensation levels at the Company, but the Committee does not attempt to maintain a specified target percentile within this peer group to determine executive compensation. In light of the request by Mr. Stone that he and Mr. Kaplan receive the same level of compensation, the Committee compares the aggregate compensation for Messrs. Stone and Kaplan against the aggregate compensation for the chief executive officer and chief operating officer of the peer group companies.

The peer group of companies is comprised of firms that are similar to the Company in terms of business lines, market conditions, and size. The Committee expects to reevaluate from time to time the composition of the designated peer group as the Company executes its strategy of organic and strategic growth.

The following provides an analysis of each element of compensation, what each is designed to reward and why the Committee chose to include it as an element of the Company's executive compensation

Base salaries are reviewed annually in the context of the Committee's consideration of the effect of base compensation on recruiting and retaining executive talent. Accordingly, the Committee considers the executive compensation of the peer group. In establishing each executive officer's base salary, the Committee considers several factors, including individual job performance, salary history, competitive external market conditions for recruiting and retaining executive talent, the scope of the executive's position and level of experience and changes in responsibilities.

During 2010, the base salaries of executive officers were established in accordance with the foregoing practices. Salaries for the Named Executive Officers were reviewed in March and increases, based on the compensation objectives discussed above, became effective April 1, 2010. Of the Named Executive Officers, the Compensation Committee maintained the salaries of Mr. Stone and Mr. Kaplan at $420,000. Although the Committee believed that an increase to the salaries of Mr. Stone and Mr. Kaplan was appropriate, both Mr. Stone and Mr. Kaplan requested that the Committee maintain their salaries at the 2009 level. The Committee increased the salary of Mr. Keneally from $305,000 to $330,000 and the salary of Ms. Tarbox from $275,000 to $305,000. These salary increases reflected that neither Mr. Keneally nor Ms. Tarbox had received a salary increase since 2008, and that their salaries were not competitive with the salaries of similarly-situated executives at peer companies. The Committee also took into consideration their respective roles navigating the Company through the economic turbulence of 2009. During 2009, the operating rates at the mills increased from 72% in the first quarter to a high 90% range by year end. Net debt was reduced from $436 million on December 31, 2008, to $150 million on December 31, 2009. In addition, the Company sold its non-strategic dunnage bag business in the first quarter of 2009 for $36 million.

The Committee ties a significant portion of each Named Executive Officer's total potential compensation to Company performance and/or individual performance. In setting financial and operating performance targets, which are established early in the year, the Committee considers the Company's annual budget and certain short-term operating and financial objectives.

In March 2010, the Compensation Committee set the 2010 annual management incentive plan targets for the Named Executive Officers. Incentive plan payment potentials for the Named Executive Officers were set at percentages of their base salaries. The maximum incentive plan payment potential for each of Mr. Stone and Mr. Kaplan for 2010 was set at 150% of his base salary (or $630,000). The maximum bonus potential for each of Mr. Keneally and Ms. Tarbox was set at 100% of his or her salary ($330,000 and $305,000 respectively).

The objective of the annual bonus element of compensation is to align the interest of the Named Executive Officers with the Company's financial goals for the year and also to encourage and reward the achievement of individual goals. To achieve this, the Committee established the following measures to determine bonus payouts for 2010: for each of Mr. Stone and Mr. Kaplan, bonus was weighted 100% on the achievement of the Company's EBITDA goals; for Mr. Keneally, bonus was weighted 85% based on EBITDA performance and 15% based on individual performance goals; and for Ms. Tarbox, bonus was weighted 80% based on EBITDA performance and 20% on individual performance goals. We have not disclosed the specific individual performance targets of Mr. Keneally or Ms. Tarbox because we believe such disclosure would result in competitive harm to us. Mr. Keneally's targets relate to safety and environmental matters, margin improvement, production performance, and growth in certain markets. Ms. Tarbox's targets relate to investor relations, integrity of internal controls, strategic support, human resources, financing and capital structure.

With respect to the Company's EBITDA goals for 2010, the Compensation Committee established the following target payout levels:

EBITDA is defined as earnings excluding interest, income taxes, depreciation and amortization, extraordinary items and the cumulative effect of accounting changes. This non-GAAP EBITDA measure used is the same measure management uses internally to manage and to evaluate the business of the Company. At the time it set these target payout levels, the Compensation Committee believed that, based on the Company's budget, it would be difficult for executives to achieve payouts towards the high end of the EBITDA target payout levels. However, as a result of the Company's strong performance in 2010, the executives were able to achieve payouts at the high end of the range established by the Compensation Committee. In 2010, the Company set records in tons produced (1,268,000), tons sold (1,284,000), operating rate (98.5%), and net sales ($783 million).

In 2010, the Company's actual EBITDA of $113,282,000 exceeded the incentive plan's 200% target payout level of $96,300,000. Accordingly, Mr. Stone and Mr. Kaplan each achieved and were paid their maximum incentive plan payment potential of 150% of their base salary (or $630,000).

The Compensation Committee, after consultation with Mr. Stone, determined the Mr. Keneally was entitled to receive a 10% bonus on his personal performance objective compared to a maximum opportunity of 15%, and that Ms. Tarbox was entitled to receive an 18.4% bonus on her personal performance objectives compared to a maximum opportunity of 20%. Based on the foregoing and the maximum incentive plan payment potential linked to EBITDA, the Compensation Committee awarded Mr. Keneally a bonus of $313,500 and Ms. Tarbox a bonus of $300,120.

The Committee determines the awards of long-term compensation through equity incentives (in the form of stock options, restricted stock and restricted stock units) granted to executive officers as well as other eligible employees. The Committee believes that including an equity component in executive compensation closely aligns the interests of the executives and the Company's stockholders and rewards executives in line with stockholder gains. The practice of the Committee is to consider annual equity grants to key employees, including the Named Executive Officers, at its regularly scheduled meeting in March or April. Option grants at other times depend upon circumstances such as promotions or new hires.

Equity awards are made under the Amended and Restated 2006 Incentive Plan, which provides for the grant of non-qualified stock options, incentive stock options, restricted stock, restricted stock units and other stock-based awards. The Committee determined that it would be advisable to consider the

award of restricted stock in combination with stock options in appropriate cases. This determination reflected the desire to maintain a strong long-term equity component in executive compensation, to reduce the number of equity units required to provide such component and to adjust compensation practices appropriately in light of Accounting Standards Codification No. 718, Compensation—Stock Compensation, which requires companies to recognize the compensation cost related to "share-based payment transactions," like stock options, in their financial statements. To date, only non-qualified stock options, restricted stock units and restricted stock have been granted under the 2006 Incentive Plan.

Equity grants made during 2010 to executive officers and senior management, including the Named Executive Officers, were determined by the Committee based upon the compensation objectives of the Committee, as discussed above, and informed by the evolving nature of executive compensation practices. In determining the size of the equity grants for the Named Executive Officers, the Committee made an evaluation of a number of factors, including: competitive market practices; the level of responsibility of the individual; the individual's job performance and ability to influence corporate results; and the cost to the Company and the related effect of equity grants on earnings per share dilution. The Committee's intention was to deliver approximately the same economic value through the restricted stock component of the award as the stock option component. Accordingly, during 2010, shares of restricted stock units were awarded in a ratio of 1 unit of restricted stock for each approximately 2.7 stock options awarded. This reflects the relationship between the value of restricted stock, which is based on the market value of the underlying Common Stock, and the fair market value of stock options (which is generally two or three to one).

Stock options produce value for executives and employees only if the Common Stock price increases over the exercise price, which is set at the closing price on the date of grant. Also, through vesting and forfeiture provisions, stock options create incentives for executive officers and senior management to remain with the Company. Stock options granted in 2010 to executive officers and senior management, including the Named Executive Officers, have a ten-year term, vest 50% on the second anniversary of the grant date and the remaining 50% on the third anniversary of the grant date.

On May 27, 2010, the Committee granted the following equity awards under the Amended and Restated 2006 Incentive Plan to the Named Executive Officers:

Each of the stock options has an exercise price of $11.36 per share (the closing stock price on the date of grant). All stock options that were granted vest 50% on the second anniversary of the grant date and the remaining 50% on the third anniversary of the grant date. Restricted stock units granted will vest 100% on the third anniversary of the grant date. All stock options and restricted stock units vest immediately upon the death, disability or retirement of a recipient who has attained the age of 65.

Clawback provisions are included in all awards under the Amended and Restated 2006 Incentive Plan. Pursuant to those provisions, the Board may require an employee who engaged in fraud or misconduct to repay annual performance-based cash bonus awards and long-term incentive awards

The Dodd-Frank Financial Reform Act requires the national securities exchanges, including the New York Stock Exchange, to adopt rules which will require issuers to develop and implement clawback policies. Under the policies, an issuer will be required to recover from any current of former

executive officer any incentive-based compensation paid during the 3 years preceding any accounting restatement due to a material noncompliance with SEC reporting requirements, to the extent in excess of the compensation that would have been paid based on the restatement. The new clawback policies will apply regardless of whether there has been misconduct on the part of the issuer or the executive officer receiving incentive-based compensation. Our existing incentive-based compensation plans will need to be reviewed for consistency with the clawback policies of the New York Stock Exchange, when adopted.

The Company does not agree in advance to provide post-termination or change-in-control benefits to executive officers in the event that they terminate employment with the Company. The Company reserves the right to provide severance benefits to executives when they terminate employment with the Company. None of the Named Executive Officers has an employment agreement that provides for termination, severance or change-in-control benefits.

The Company does not have formal change-in-control provisions in the Amended and Restated 2006 Incentive Plan. However, the Amended and Restated 2006 Incentive Plan provides the Board with the discretion to adjust equity awards in the event of certain corporate transactions, including a change-in-control. This adjustment may include the assumption of awards by an acquiring or successor entity, the termination of unexercised awards upon a change-in-control and the cashout of awards in the event of a sale or similar transaction which results in the Company's shareholders receiving a payment for their share of Common Stock. The Committee may also provide for the acceleration and vesting of awards at any time, including upon a change-in-control.

Stock options and restricted stock units awarded under the Amended and Restated 2006 Incentive Plan vest immediately upon an award recipient's death, Retirement or Disability. The terms "Retirement" and "Disability" are defined in the Amended and Restated 2006 Incentive Plan.

The Performance Incentive Plan provides that if a participant is terminated by the Company following a change-in-control but prior to the payment of an annual incentive award for a performance period thereunder, the participant will be entitled to such award only if the applicable performance goals are achieved, such award to be prorated for the actual number of months worked in the year.

The Committee believes that the provisions provided under both the Amended and Restated 2006 Incentive Plan and the Performance Incentive Plan are appropriate since an employee's position could be adversely affected by a change in control even if he or she is not terminated.

The Company provides only a very limited amount of perquisites to its Named Executive Officers. These perquisites are not considered to be a central part of the Company's compensation program for its Named Executive Officers.

The Company provides pension or retirement benefits to the Named Executive Officers consisting of the 401(k) plan with company matching contributions and retirement savings account contributions. Pursuant to the 401k plan, the Company makes a matching contribution equal to 100% of the first 4% of the employee's pay contributed to the plan plus 50% of the next 2% of pay contributed. At the end of each 401(k) plan year, the Company makes an additional retirement savings account contribution based upon the age of the respective Named Executive Officer at the end of the plan year and total earnings for the year. The Committee does not believe that pension or other supplemental retirement

benefits other than the 401(k) plan are necessary to further the objectives of the Company's executive compensation program.

All full-time employees, including our Named Executive Officers, may participate in our health and welfare benefit program, including medical, dental and vision care coverage, disability insurance and life insurance.

Section 162(m) of the Internal Revenue Code generally denies a publicly traded company a Federal income tax deduction for compensation in excess of $1.0 million paid to certain of its executive officers, unless the amount of such excess is payable based solely upon the attainment of objective performance criteria. The Company has undertaken to qualify substantial components of the incentive compensation it makes available to its executive officers for the performance exception to non-deductibility. Most equity-based awards available for grant under the Company's equity compensation plans, and all of the equity-based awards actually granted to executive officers, are intended to so qualify. Amounts payable under the Performance Incentive Plan, if approved by stockholders, are also intended to be exempt from the application of Section 162(m) as performance-based compensation. However, in appropriate circumstances, the Committee may deem it appropriate to pay compensation or make incentive or retentive awards that do not meet the performance based criteria and therefore may not be deductible by reason of Section 162(m).

In light of the significant ownership of Common Stock by its executives, the Company has not adopted a formal stock ownership guideline for executives. However, the Company's executives are encouraged to maintain a significant ownership interest in the Company in order to align their interests with the interests of the stockholders.

The Committee reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of SEC Regulation S-K with management. Based on such review and discussions, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the registrant's Annual Report on Form 10-K and this Proxy Statement.

There were no interlocks or other relationships among the Company's executive officers and directors that are required to be disclosed under applicable executive compensation disclosure requirements.

The following table summarizes the total 2010 compensation earned by or paid to the Named Executive Officers for the years ended December 31, 2008, 2009 and 20010.

The following table provides information on non-equity incentives, restricted stock units and stock options granted in 2010 to each of the Named Executive Officers.

The following table set forth certain information with regard to all unexercised options and all unvested restricted stock held by the Named Executive Officers at December 31, 2010.

The following graph compares a $100 investment in Company stock in August 31, 2005, with a $100 investment in each of our ROI Peer Group and the S&P 500 also made in August 31, 2005. The graph portrays total return, 2005-2010, assuming reinvestment of dividends.

As discussed in the Compensation Discussion and Analysis, the Company generally does not agree in advance to provide post-termination or change-in-control benefit to its executive officers in the event that they terminate employment with us. None of the Company's Named Executive Officers has an agreement of any sort that provides for termination, severance or change-in-control benefits.

As also discussed in the Compensation Discussion and Analysis, the Committee has the authority to cause all equity awards made under the 2006 Incentive Plan to vest upon a change-in-control.

The Board recognizes that Related Person Transactions (as defined below) can present potential or actual conflicts of interest and create the appearance that Company decisions are based on considerations other than the best interests of the Company and its stockholders. In March 2008, the Board delegated authority to the Nominating and Governance Committee to review and approve Related Person Transactions, and the Committee has adopted written procedures for the review, approval, or ratification of Related Person Transactions. Under such procedures, a "Related Person Transaction" is any transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness), or any series of similar transactions, arrangements or relationships, in which (a) the aggregate amount involved will or may be expected to exceed $120,000 in any fiscal year, (b) the

Company is or was a participant, and (c) any Related Person has or will have a direct or indirect interest (other than solely as a result of being a director or trustee (or any similar position) or a less than 10 percent beneficial owner of another entity). A "Related Person" is any (a) person who is an executive officer, director or nominee for election as a director of the Company, (b) greater than 5 percent beneficial owner of the Company's outstanding Common Stock, or (c) Immediate Family Member of any of the foregoing. An "Immediate Family Member" is any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law and any person (other than a tenant or employee) sharing the household of a person. The Committee reviews all of the relevant facts and circumstances of all Related Person Transactions that require the Committee's approval and either approves or disapproves of the entry into the Related Person Transaction. In determining whether to approve or ratify a Related Person Transaction, the Committee will take into account, among other factors it deems appropriate, whether the Related Person Transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the Related Person's interest in the transaction.

From time to time, the Company retains the services of White Oak Aviation, LLC, an aviation services company owned by Messrs. Stone and Kaplan, for the use of an airplane to transport the Company's executive officers and directors, as well as advisors retained by the Company traveling with them, on business matters. During the year ended December 31, 2010, the Company paid White Oak Aviation an aggregate of $177,000. White Oak Aviation, LLC, invoices the Company using hourly rates and fuel charges and associated costs that are equal to or less than the market prices that it charges its third party customers. These payments were not designed to be, nor did they amount to, compensation to Messrs. Stone and Kaplan.

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's executive officers, directors and persons who beneficially own more than 10% of the Company's Common Stock to file initial reports of ownership and reports of changes in ownership with the Securities and Exchange Commission ("SEC"). SEC regulations require these individuals to give the Company copies of all Section 16(a) forms they file.

Based solely on its review of forms that were furnished to the Company and written representations from reporting persons, The Company believes that its executive officers, directors and greater than 10% stockholders complied with all filing requirements related to Section 16(a) during 2010.

The Company adopted a Code of Conduct and Ethics applicable to all directors, executive officers and employees of the Company including its Chief Executive Officer and Chief Financial Officer. The Code of Conduct and Ethics addresses, among other things, the items included in the definition of "code of ethics" included in Item 406 of the SEC's Regulation S-K. The Code of Conduct and Ethics is included on the Company's Web site at the following address: http://www.governance.kapstonepaper.com.

The Audit Committee of the Board of Directors has selected Ernst & Young LLP as the independent registered public accountants to audit the Company's consolidated financial statements for the fiscal year ended December 31, 2011. Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting of Stockholders with the opportunity to make a statement if the representatives desire to do so, and to be available to respond to appropriate questions.

The affirmative vote of the holders of a majority of the shares of Common Stock represented and entitled to vote at the meeting is required for ratification of this selection. Abstentions and broker non-votes will be counted for purposes of determining the presence or absence of a quorum. Neither abstentions nor broker non-votes will have any effect upon the outcome of voting with respect to the ratification of independent registered public accountants.

Although there is no requirement that Ernst & Young LLP's appointment be terminated if the ratification fails, the Audit Committee will consider the appointment of other independent registered public accounting firms if the stockholders choose not to ratify the appointment of Ernst & Young LLP. The Audit Committee may terminate the appointment of Ernst & Young LLP as the Company's independent registered accounting firm without the approval of the stockholders whenever the Audit Committee deems such termination appropriate.

Amounts paid by the Company to Ernst & Young LLP for all services rendered in 2009 and 2010 are disclosed on page 18 of this Proxy Statement.

The Board of Directors and the Audit Committee Recommend a Vote "For" The Appointment
of Ernst & Young LLP as the Company's Independent Registered Public
Accountants for the Fiscal Year Ending December 31, 2011.

The recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, requires us to provide our shareholders with a vote to approve, on an advisory (non-binding) basis, the compensation of our named executive officers as disclosed in this Proxy Statement in accordance with the SEC's rules. As described in detail under the heading "Executive Compensation," and in related tables and disclosures, our executive compensation programs are designed to attract, motivate, and retain our named executive officers, who are critical to our success. We are asking our shareholders to indicate their support for our named executive officer compensation as described in this Proxy Statement. This proposal, commonly known as a "say-on-pay" proposal, gives our shareholders the opportunity to express their views on our named executive officer compensation.

Even though this Say-on-Pay vote is advisory and therefore will not be binding on the Company, the Compensation Committee and the Board value the opinions of our stockholders. The outcome of the vote, along with other relevant factors, will be considered when making future executive compensation decisions.

For the reasons discussed above and under the heading "Executive Compensation," we are asking our shareholders to indicate their support of our named executive officer compensation by voting FOR the following resolution at the Annual Meeting.

RESOLVED, that the Company's shareholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in this Proxy Statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission (which disclosure includes the Compensation Discussion and Analysis, the Summary Compensation Table and other related tables and disclosure).

The Board of Directors Recommends a Vote "For" the Approval of the Advisory Resolution Relating to
the Company's Compensation of Our Named Executive Officers as Disclosed in this Proxy Statement.

PROPOSAL 4
ADVISORY VOTE ON THE FREQUENCY OF AN ADVISORY VOTE ON EXECUTIVE COMPENSATION

The Dodd-Frank Act also requires us to provide our shareholders with a vote on how frequently the Company should seek an advisory vote on the compensation of our named executive officers. By voting on this Proposal 4, shareholders may indicate whether they would prefer an advisory vote on named executive compensation every one, two or three years. Shareholders may also abstain from voting. The Company requests that you support a one-year interval. An advisory vote every year will be the most effective timeframe for the Company to respond to shareholders' feedback.

The option of one year, two years or three years that receives the highest number of votes cast by shareholders will be the frequency for the advisory vote on executive compensation that has been selected by shareholders. Even though your vote is advisory and therefore will not be binding on the Company, the Board and the Compensation Committee value the opinions of our stockholders and will consider our stockholders' vote. Nonetheless, the Board may decide that it is in the best interests of our stockholders and the Company to hold an advisory vote on executive compensation more or less frequently than the option voted by our stockholders.

The Board of Directors Recommends a Vote "For" Holding an Advisory Vote on Compensation of Our
Named Executive Officers Every Year.

Our bylaws contain procedures governing how stockholders can propose other business to be considered at a stockholder meeting. The SEC has also adopted regulations (Rule 14a-8 under the Exchange Act) that govern the inclusion of stockholder proposals in the Company's annual proxy materials.

Notice Requirements. A stockholder wishing to propose business to be considered at a meeting must provide a brief description of the proposed business, along with the text of the proposal. The stockholder also must set forth the reasons for conducting such business at the meeting, and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made. Such notice must also contain information specified in the Company's bylaws as to the proposal of other business, information about the stockholder making the proposal and the beneficial owner, if any, on whose behalf the proposal is made, including name and address, class and number of shares owned, and representations regarding the intention to make such a proposal and to solicit proxies in support of it.

Notice Deadlines. Stockholder proposals submitted pursuant to Rule 14a-8 for possible inclusion in the Company's proxy materials relating to its 2012 Annual Meeting must be received by December 21, 2011.

Alternatively, under the Company's bylaws, if a stockholder wants to submit a proposal for the 2011 Annual Meeting but does not want to include it in the Company's proxy materials, written notice of such stockholder proposal of other business must be delivered to the Company's Corporate Secretary not less than 90 nor more than 120 days prior to the first anniversary of the date on which the Company first mailed its proxy materials for the prior year's annual meeting. However, if the Company's annual meeting is advanced or delayed by more than 30 days from the anniversary of the previous year's meeting, a stockholder's written notice will be timely if it is delivered not earlier than 120 days prior to such annual meeting and by the later of the 90th day prior to such annual meeting or the 10th day following the announcement of the date of the meeting.

For next year's 2012 Annual Meeting for stockholder proposals not proposed to be included in the Company's proxy materials, our bylaws therefore require that such stockholder proposals must be delivered between December 21, 2011, and January 20, 2012, unless the Company's 2012 Annual Meeting takes place before April 25, 2012, or after June 24, 2012, in which case stockholder proposals must be delivered not earlier than 120 days prior to the 2012 Annual Meeting and before the later of 90 days before the date of the 2012 Annual Meeting or the 10th day following the announcement of the date of the 2012 Annual Meeting.

If stockholders do not comply with these bylaw notice deadlines, the Company reserves the right not to submit the stockholder proposals to a vote at its annual meetings. If the Company is not notified of a stockholder proposal by February 29, 2012, then the management personnel who have been appointed as proxies may have the discretion to vote for or against such stockholder proposal, even though such proposal is not discussed in the proxy statement.

Where to Send Notice. Stockholder proposals must be addressed to the Company at its principal executive offices at 1101 Skokie Boulevard, Suite 300, Northbrook, IL 60062, Attn: Corporate Secretary.

At a special meeting of stockholders, only such business shall be conducted as shall have been brought before the meeting pursuant to the Company's notice of meeting.

Stockholders should carefully review the Company's bylaws and Rule 14a-8 under the Exchange Act to ensure that they have satisfied all of the requirements necessary either to propose other business at a stockholder meeting or to request the inclusion of a stockholder proposal in the Company's annual proxy materials.

Anyone desiring to communicate directly with the Board or the non-management Directors, individually or as a group, may do so by written communication addressed to them at KapStone Paper and Packaging Corporation, 1101 Skokie Blvd., Suite 300, Northbrook, IL 60062.

The Company files annual and quarterly reports, proxy statements and other information with the Securities and Exchange Commission (the "SEC"). Stockholders may read and copy any reports, statements or other information that the Company file at the SEC's public reference rooms, Washington, D.C., New York, New York, and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information about the public reference rooms. The Company's public filings are also available for commercial document retrieval services and at the Internet Web site maintained by the SEC at http://www.sec.gov. The Company's Annual Report on Form 10-K was mailed along with this Proxy Statement.

At the date of this Proxy Statement, the only business the Board of Directors intends to present or knows that others will present at the Annual Meeting is as set forth above. If any other matter or matters are properly brought before the meeting, or any adjournment thereof, it is the intention of the persons named in the accompanying form of proxy to vote the proxy on such matters in accordance with their best judgment.


Brian R. Gamache (Age 51)		A director appointed in October 2009, Mr. Gamache has served as the Chief Executive Officer of WMS Industries, a leading supplier to the gaming industry, since 2001 and was named Chairman of that company in July 2008. Mr. Gamache was originally appointed as President and Chief Operating Officer of WMS Industries in April of 2000, and was subsequently named that company's President and Chief Executive Officer concurrently with his appointment to its Board of Directors in June 2001. Mr. Gamache is a member of the Board of the American Gaming Association, serving as the Chair of its Finance Committee, and is a Trustee of Lake Forest Academy and the Lake Forest Country Day School. He received a B.S. in Business Administration from the University of Florida. Mr. Gamache's qualifications to serve on the Board include his experience in sales, leadership of complex organizations, and familiarity with board practices of major corporations.
S. Jay Stewart (age 72)		A director appointed in January 2007, Mr. Stewart retired as the non-executive chairman of Autoliv, Inc., in 2007 and was appointed its lead director. From 2005 through 2007 he served as a director of HSBC North American Holdings, Inc. He served as Chairman and Chief Executive Officer of Morton International, Inc., from 1994-1999, and as Vice Chairman of Rohm and Haas Company for one year thereafter. He is a former director of Household International, Inc., Burns International Services Corp., Box USA, Inc., Rohm and Haas Company, Morton International, Inc., and Morton Thiokol, Inc. Mr. Stewart holds a B.S. Degree in Chemical Engineering from the University of Cincinnati and an M.B.A. degree from West Virginia University. Mr. Stewart's qualifications to serve on the Board include his experience in manufacturing, capital markets, finance, accounting, leadership of complex organizations, international operations, and familiarity with board practices of major corporations.


Matthew H. Paull (Age 59)		A director appointed in September 2010, Mr. Paull was Senior Executive Vice President and Chief Financial Officer of McDonald's Corporation from July 2001 until he retired from that position in January 2008. He was named to the Best Buy Co., Inc. Board of Directors in September 2003 and in June 2010 was elected the Lead Independent Director of the Best Buy Board of Directors. Mr. Paull also serves as an Advisory Director of Pershing Square Capital and on the Advisory Board of the One Acre Fund, a charity focused on improving the productivity of family farms in Africa. Previously Mr. Paull served as a board member of the Loyola Ronald McDonald House and as an advisory council member for the Federal Reserve Board of Chicago. He is a former executive professor in residence at the University of San Diego. Mr. Paull earned his Bachelor of Arts degree and Master's degree in accounting at the University of Illinois. Because of his professional experience, Mr. Paull has significant financial acumen, knowledge of hedge funds and investments, broad experience in global operations and extensive experience in tax matters, all of which enable Mr. Paull to make valuable considerations to our Board.
Roger W. Stone (age 76)		Chairman of the Board and Chief Executive Officer since the Company's inception, Mr. Stone was Manager of Stone-Kaplan Investments, LLC, a private investment company, from July 2004 through December 2007. He was Chairman and Chief Executive Officer of Box USA Holdings, Inc., a corrugated box manufacturer, from July 2000 until the sale of that company in July 2004. Mr. Stone was Chairman, President and Chief Executive Officer of Stone Container Corporation, a multinational paper company primarily producing and selling pulp, paper and packaging products, from March 1987 to November 1998, when Stone Container Corporation merged with Jefferson Smurfit Corporation, at which time he became President and Chief Executive Officer of Smurfit-Stone Container Corporation until March 1999. He is a former director of Smurfit-Stone Container Corporation, Morton International, Inc., Morton Throkol, Inc., and Autoliv Inc. Mr. Stone has served on the board of directors of McDonald's Corporation since 1989. Mr. Stone received a B.S. in Economics from the Wharton School at the University of Pennsylvania. Mr. Stone is the father-in-law of Matthew Kaplan. Mr. Stone's qualifications to serve on the Board include his experience in the paper industry, sales, manufacturing, capital markets, finance, leadership of complex organizations, international operations, and familiarity with board practices of major corporations and his service as an executive officer of the Company.

Name

Roger W. Stone	587,184	140,545
Matthew Kaplan	587,184	140,545
John M. Chapman	73,360	2,201
James Doughan	73,360	2,201
Jonathan R. Furer	73,360	2,201
Brian R. Gamache	5,948	2,201
Ronald J. Gidwitz	28,779	2,201
Matthew H. Paull	—	—
S. Jay Stewart	73,360	2,201
David P. Storch	5,948	2,201

Type of Fees	2010		2009

Audit fees(1)	$	1,413,275	$	1,929,982
Tax fees(2)		163,988		125,700
All other fees		—		—

	$	1,577,263	$	2,055,682


AEP Industries		Mercer International
Buckeye Technologies		Myers Industries
BWAY Holding		Neenah Paper
Clearwater Paper Corp.		Schweitzer-Mavdvit Int'l
Ennis, Inc.		Standard Register Co.
Glatfelter		Verso Paper Corp.
Kadant Inc.		Wausau Paper


David P. Storch (age 58)		A director appointed in October 2009, Mr. Storch has served as the Chairman and Chief Executive Officer of AAR, a leading provider of diverse products and value-added services to the worldwide aviation/aerospace industry, since June 2007. From October 2005 until June 2007 he served as Chairman, President and Chief Executive Officer of AAR. From 1996 to October 2005 he served as President and Chief Executive Officer of AAR. Mr. Storch has served on the board of Unitrim, Inc., since May of 2010. He has served on the boards of The Executive Club of Chicago and the Chicago Urban League. He currently is a member of the Economics Club of Chicago and the World Presidents' Organization, and serves on the board of the Wings Club. He holds a Bachelor of Arts Degree from Ithaca College. Mr. Storch's qualifications to serve on the Board include his experience in sales, manufacturing, leadership of complex organizations, international operations, and familiarity with board practices of major corporations.


Jonathan R. Furer (age 54)		A director since the Company's inception, Mr. Furer is a co-founder and has been a managing member of Arcade Partners LLC, a private equity firm, since November 2003 and was a founding director and chief executive officer of Arcade Acquisition Corporation, a blank check acquisition company that was founded in January 2007 and completed its initial public offering in May 2007. Arcade Acquisition Corporation was dissolved in May 2009. Mr. Furer has been a director of Home Care Industries, a consumer products company engaged in the manufacture and distribution of floor care products, and in May 2010, was appointed its chairman. Mr. Furer received a B.B.A. in international business from George Washington University. Mr. Furer's qualifications to serve on the Board include his experience in turnarounds, mergers and acquisitions, capital markets, finance and accounting.

Audit Committee	Compensation Committee	Nominating and Governance Committee

S. Jay Stewart*	Jonathan R. Furer*	Brian R. Gamache*
John M. Chapman	John M. Chapman	Jonathan R. Furer
Brian R. Gamache	S. Jay Stewart	Ronald J. Gidwitz
Matthew Paull	Ronald J. Gidwitz	David P. Storch
	Matthew Paull
	David P Storch

Name	Age	Position

Roger W. Stone	76	Chairman and Chief Executive Officer
Matthew Kaplan	54	President and Secretary
Andrea K. Tarbox	60	Vice President and Chief Financial Officer
Timothy P. Keneally	63	Vice President and General Manager

Executive Officers

Roger W. Stone	92,192	34,111
Matthew Kaplan	92,192	34,111
Timothy P. Keneally	34,498	12,764
Andrea K. Tarbox	34,498	12,764


		Jonathan R. Furer (Chairman) John M. Chapman Ronald J. Gidwitz Matthew H. Paull S. Jay Stewart David P. Storch

Name and Principal Position			Salary ($)		Bonus ($)		Stock Awards(1) ($)		Option Awards(1) ($)		Non-Equity Incentive Plan Compensation(2) ($)			All Other Compensation(5) ($)		Total ($)

Roger W. Stone		2010	$	420,000	$	—	$	387,501	$	451,741	$	630,000		$	26,950	$	1,916,192
	Chairman of the Board and	2009	$	420,000	$	—	$	196,903	$	299,743	$	—	(3)	$	17,450	$	934,096
	Chief Executive Officer	2008	$	420,000	$	—	$	367,197	$	366,857	$	—	(4)	$	25,300	$	1,179,304
Matthew Kaplan		2010	$	420,000	$	—	$	387,501	$	451,741	$	630,000		$	24,500	$	1,913,742
	President and Secretary	2009	$	420,000	$	—	$	196,903	$	299,743	$	—	(3)	$	15,000	$	931,646
		2008	$	420,000	$	—	$	367,197	$	366,857	$	—	(4)	$	23,000	$	1,177,304
Timothy P. Keneally		2010	$	330,000	$	—	$	145,000	$	169,040	$	313,500		$	26,950	$	984,490
	Vice President and	2009	$	305,000	$	—	$	71,103	$	108,241	$	—	(3)	$	17,153	$	501,497
	General Manager	2008	$	305,000	$	—	$	132,597	$	132,476	$	144,055		$	25,300	$	739,428
Andrea K. Tarbox		2010	$	305,000	$	—	$	145,000	$	169,040	$	300,120		$	26,950	$	946,110
	Vice President and	2009	$	275,000	$	—	$	71,103	$	108,241	$	—	(3)	$	14,484	$	468,829
	Chief Financial Officer	2008	$	275,000	$	—	$	132,597	$	132,476	$	129,886		$	34,598	$	704,557

Name	401(k) Plan Matching Contributions ($)		Retirement Savings Account ($)		Other ($)		Total ($)

Roger W. Stone	$	12,250	$	14,700	$	—	$	26,950
Matthew Kaplan	$	12,250	$	12,250	$	—	$	24,500
Timothy P. Keneally	$	12,250	$	14,700	$	—	$	26,950
Andrea K. Tarbox	$	12,250	$	14,700	$	—	$	26,950



			Estimated Possible Payouts, Under Non-Equity Incentive Plan Awards(1)						All Other Stock Awards: Number of Shares of Stock(2) (#)			Exercise or Base Price of Option Awards(3) ($/Sh)		Grant Date Fair Value of Stock and Option Awards(4) ($)
Name	Grant Date		Threshold ($)		Target ($)		Maximum ($)		All Other Stock Awards: Number of Shares of Stock(2) (#)			Exercise or Base Price of Option Awards(3) ($/Sh)		Grant Date Fair Value of Stock and Option Awards(4) ($)
Roger W. Stone		5/27/2010									92,192	$	4.90		451,741
		5/27/2010								34,111		$	11.36		387,501
		5/27/2010	$	168,000	$	315,000	$	630,000
Matthew Kaplan		5/27/2010									92,192	$	4.90		451,741
		5/27/2010								34,111		$	11.36		387,501
		5/27/2010	$	168,000	$	315,000	$	630,000
Timothy P. Keneally		5/27/2010									34,498	$	4.90		169,040
		5/27/2010								12,764		$	11.36		145,000
		5/27/2010	$	132,000	$	165,000	$	330,000
Andrea K. Tarbox		5/27/2010									34,498	$	4.90		169,040
		5/27/2010								12,764		$	11.36		145,000
		5/27/2010	$	122,000	$	152,500	$	305,000

	Option Awards										Restricted Stock Unit Awards

Name	Grant Date		Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options(1) (#) Unexercisable		Option Exercise Price ($)		Option Expiration Date		Grant Date		Number of Shares of Stock That Have Not Vested(2) (#)		Market Value of Shares of Stock That Have Not Vested(3) ($)
Roger W. Stone		5/27/2010		—		92,192	$	11.36		5/27/2020		5/27/2010		34,111	$	521,898
		5/13/2009		—		167,671	$	3.70		5/13/2019		5/13/2009		53,217	$	814,220
		4/10/2008		83,836		83,835	$	6.90		4/10/2018		4/10/2008		53,217	$	814,220
		4/5/2007		159,650		—	$	6.76		4/5/2014
Matthew Kaplan		5/27/2010		—		92,192	$	11.36		5/27/2020		5/27/2010		34,111	$	521,898
		5/13/2009		—		167,671	$	3.70		5/13/2019		5/13/2009		53,217	$	814,220
		4/10/2008		83,836		83,835	$	6.90		4/10/2018		4/10/2008		53,217	$	814,220
		4/5/2007		159,650		—	$	6.76		4/5/2014
Timothy P. Keneally		5/27/2010		—		34,498	$	11.36		5/27/2020		5/27/2010		12,764	$	195,289
		5/13/2009		—		60,548	$	3.70		5/13/2019		5/13/2009		19,217	$	294,020
		4/10/2008		30,274		30,274	$	6.90		4/10/2018		4/10/2008		19,217	$	294,020
		4/5/2007		8,350		—	$	6.76		4/5/2014
Andrea K. Tarbox		5/27/2010		—		34,498	$	11.36		5/27/2020		5/27/2010		12,764	$	195,289
		5/13/2009		—		60,548	$	3.70		5/13/2019		5/13/2009		19,217	$	294,020
		4/10/2008		30,274		30,274	$	6.90		4/10/2018		4/10/2008		19,217	$	294,020
		4/5/2007		16,825		—	$	6.76		4/5/2014

		40%			100%			200%

EBITDA		$	62,700,000		$	83,600,000		$	96,300,000

	Option Awards				Restricted Stock Awards

Name	Number of Shares Acquired on Exercise (#)		Value Realized on Exercise ($)		Number of Shares Acquired on Vesting (#)		Value Realized on Vesting ($)(1)
Roger W Stone		—		—		54,300	$	680,922
Matthew Kaplan		—		—		54,300	$	680,922
Timothy P. Keneally		49,300	$	330,901		19,600	$	245,784
Andrea K Tarbox		40,825	$	199,858		19,600	$	245,784


		By Order of the Board of Directors Roger W. Stone Chairman and Chief Executive Officer